An Introduction to Megmilk Snow Brand Group

Copyright ©MEGMILK SNOW BRAND Co.,Ltd. All Rights Reserved. 1

An Introduction to Megmilk Snow Brand Group

J u l y 2 0 2 1


Table of Contents

– Group Corporate Philosophy

– Company Profile

– Founders and History

– Business Domains

–– For the Realization of a Sustainable Society

– – Financial Data

Copyright ©MEGMILK SNOW BRAND Co.,Ltd. All Rights Reserved.

By pursuing this threefold mission while endowing milk with new value, Megmilk Snow Brand Group aims to continually contribute to a flourishing society.

Group Corporate Ph i losophy

3

Focus on

consumers

Contribute

to dairy

farming

production

Put our

hearts into

milk

Corporate Slogan

Make the Future with Milk


Company Prof i le

Corporate Logo

Trade name MEGMILK SNOW BRAND Co., Ltd.

Establishment date October 1, 2009

Head office location(Registered head office)

5-1 Yotsuya-Honshio-cho, Shinjuku-ku, Tokyo(1-1, Naebocho 6-chome, Higashi-ku, Sapporo City, Hokkaido)

Capital 20 billion yen

Number of employees(consolidated) 5,669 (as of March 31, 2021)

Stock exchange listing Tokyo Stock Exchange, Sapporo Securities Exchange

Representative Director and President Keiji Nishio

4

Company Profile


Founders

5

Torizo

Kurosawa

Zenshichi

Sato

Healthy land, healthy peopleSound land begets healthy food, and healthy food forms healthy people

Sentaro

Utsunomiya


History

6

First in Japan to begin mass productionof cheese

From around 1928, we began research, trial manufacturing and trial sales of cheese, and in 1932 we built a cheese plant and began production. As soon as the product went on sale in 1934, it became so popular that it was regularly out of stock, and in no time at all the plant became the first large-scale cheese production facility in Japan.

Opening up the future of milk throughour research

Our Research Department was established in 1933. It was engaged in research into processing technology, milk components and lactic acid bacteria. Later, we opened our Sapporo Research Laboratory, Technical Research Laboratory (now the Milk Science Research Institute in Saitama Prefecture) and Cheese Research Laboratory (Yamanashi Prefecture), allowing us to engage in full-scale research projects.

Our history began with Hokkaido butter

We began manufacturing butter as soon as we were founded. We launched a modernized factory in 1926 and sold only the best quality product as “Snow Brand Hokkaido Butter”, gaining the trust of our customers.


History

Zenrakuren Cooperative

History of MEGMILK SNOW BRAND Co., Ltd.

April 2011

Merger

October 2009

Management integration

January 2003

Business spin-off Dairy Products Business

Beverages and Desserts Business

Founded in 1925

2000

Snow Brand Milk Products Co., Ltd.food contamination incident

2002Snow Brand Food Co., Ltd. fraudulent beef labeling incident

1972Zenkoku Nohkyo Milk Whole Sales Co., Ltd. (“Zen-Noh”) establishedZen-Noh Chokuhan Co., Ltd. established

1954Zenrakuren Cooperative established

1996Japan Milk Net Co., Ltd. established

1948National Federation of Agricultural Sales Cooperative Associations and National Federation of Agricultural Purchasing Cooperative Associations established

MEGMILK SNOW BRAND Co., Ltd.

MEGMILK SNOW BRAND Co., Ltd.

Nippon Milk Community Co., Ltd.Snow Brand Milk Products Co., Ltd.

Hokkaido Cooperative Creamery Association

Japan Milk Net Co., Ltd. established

Zen-Noh

Zen-NohChokuhan

7

Snow Brand Milk Products Co., Ltd.

Nippon Milk Community Co., Ltd.Snow Brand Milk Products Co., Ltd.


Business

Butter, margarine, cheese (domestic and overseas), other dairy products, etc.

Milk and milk beverages, yogurt, fruit juice and vegetable juice, soft drinks, desserts, etc.

Infant formula (domestic and overseas), functional foods, supplements, functional ingredients, etc.

Feedstuffs, seeds (forage grass and crops, vegetables),landscape gardening, cattle fattening, etc.

Group Companies

MEGMILK SNOW BRAND Co., Ltd.KOHNAN OILS AND FATS MFG CO., LTD.Yatsugatake Milk Co., Ltd. SI SYSTEM CorporationCHESCO LTD.Snow Brand Australia Pty. Ltd. Udder Delights Australia Pty LtdPT. Megmilk Snow Brand Indonesia CRESCO CorporationNichiraku Machinery Co. Ltd., and others

MEGMILK SNOW BRAND Co., Ltd.Michinoku Milk Co., Ltd. Yatsugatake Milk Co., Ltd. Ibaraku Co., Ltd. SI SYSTEM CorporationMitsuwa Distribution Industry Co., Ltd.Chokuhan Haisou Co., Ltd.Greenservice Co., Ltd. CRESCO Corporation, and others

Bean Stalk Snow Co., Ltd. MEGMILK SNOW BRAND Co., Ltd.Snow Brand Taiwan Co., Ltd.Snow Brand Hong Kong Co., Ltd.Snow Brand Trading (Shanghai) Co., Ltd. Snow Brand Australia Pty. Ltd. EN Otsuka Pharmaceutical Co., Ltd. Amino Up Co., Ltd. Belle Neige Direct Co., LTD., and others

Snow Brand Seed Co., Ltd. Snow Brand Seed USA, Inc. Doto Feed CorporationRoyal Farm, Ltd.RF Penkel Farm Co., Ltd.RF Aomori Farm Co., Ltd., and others

Bus iness Domains

Business Segments and Profile

8

YBS Co., Ltd., Snow Brand Parlor Co., Ltd., Snow Brand KODOMO-NO-KUNI Ranch

Dairy Products

Beverages and Desserts

NutritionFeedstuffs andSeed Products


Dairy Products Bus iness

9

We began manufacturing and

selling butter in 1925, and deliver

unchanging flavor and new value in

our butter products.

Butter

We began manufacturing and

selling cheese in 1934, and have

also been manufacturing and

selling cheese in Indonesia since

2013.

Processed CheeseOur mainstay natural cheese

products are the YUKIJIRUSHI

HOKKAIDO 100 series of camembert

cheese , and Sakeru Cheese (string

cheese) made from 100% fresh milk

produced in Hokkaido.

Natural Cheese

We sell rich-tasting, melt-in-the-

mouth margarine products that

leverage our expertise in

manufacturing dairy products,

including in Southeast Asia.

Margarine


Cheese


10

Market Share (FYE3/2021) Household consumption based on nationwide monetary value

Butter

44%1st

Margarine

52%

26%

Skim milk

51%

1st

1st 1st

Source: Intage SRI



11

Net Sales and Growth Rates of Cheese

*Market: Intage SCI

100%102% 103%

107%

113%

117%

123% 122% 123%

126%

100% 101%103%

109%

112%

118%

122%123%

139%

100%

105%

110%

115%

120%

125%

130%

135%

140%

145%

0

10

20

30

40

50

60

70

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

(Billion yen) Household use Cheese

The Company

Cheese Market

100%

Net Sales

Growth rateCompared to FY2011)



12

Business Locations and Group Companies

Snow Brand Australia Pty. Ltd.

PT. Megmilk Snow Brand Indonesia(MSBI)

MEGMILK SNOW BRAND Co., Ltd. Head Office and Plants

MEGMILK SNOW BRAND Co., Ltd. Research Laboratory

MEGMILK SNOW BRAND Co., Ltd. Subsidiaries and Affiliates

Horonobe Plant

Sapporo Research Laboratory

KOHNAN OILS AND FATS MFG. CO., LTD.

Yatsugatake Milk Co., Ltd.

Cheese Research Laboratory

Ami Plant

CHESCO Ltd.

Milk Science Research Institute

Okoppe Plant

Nakashibetsu PlantBetsukai Plant

Isobunnai Plant

Taiki Plant

MEGMILK SNOW BRAND Co., Ltd. (Head Office)

Udder Delights Australia Pty Ltd



Research and Development

Megmilk Snow BrandMilk Science Research InstituteSapporo Research LaboratoryCheese Research Laboratory

These research laboratories play core roles in all of our research and development work as a comprehensive manufacturer of dairy products. We are engaged in a wide range of research projects across multiple areas relating to dairy products, including the taste and texture of dairy products, research into cheese and butter, and traditional methods of producing natural cheese. The results of our research are practically used to produce new and exciting products.


６Ｐcheese

Sakeru Cheese


TV Advertisements


Beverages and Desserts Bus iness

15

Megmilk Snow Brand milk, which

is made using a method that

retains the delicious flavor,

functional milk beverages with

fortified calcium, and more.

Milk and Milk Beverages

Dole® fruit juice beverages,

NOKYO vegetable juice

beverages, and more.

Fruit Juice and Other Beverages

Puddings, jelly, and other

products that show our

dedication to texture, flavor of

milk, and more.

Desserts

megumi series, featuring

Lactobacillus gasseri SP strain which

remains live in human intestines for

extended periods of time, and more.

Yogurt


Milk Milk Beverages

Yogurt Desserts


16

4% 15%

11% 15%

3rd 2nd

3rd 1st

Market Share (FYE3/2021) Household consumption based on nationwide monetary value Source: Intage SRI



Net Sales and Growth Rates of Yogurt

*Market: Intage SCI

100%

112%

121%124%

145%

149% 149%

157%159%

154%

100%

110%

117% 118%

130%

138%136% 135%

133%

140%

100%

110%

120%

130%

140%

150%

160%

170%

0

10

20

30

40

50

60

70

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

(Billion yen) Household use Yogurt

The Company

Yogurt Market

Net Sales

Growth rate(Compared to FY2011)

17



18


MEGMILK SNOW BRAND Co., Ltd. Head Office and Plants

MEGMILK SNOW BRAND Co., Ltd. Research Laboratory

MEGMILK SNOW BRAND Co., Ltd. Subsidiaries and Affiliates

Michinoku Milk Co., Ltd.

Kyoto Plant Noda Plant

Ebina Plant

MEGMILK SNOW BRAND Co. Ltd.(Head Office)

Sapporo Plant

Kyoto Plant Ikegami Branch Plant

Ibaraku Co., Ltd.


Kawagoe PlantMilk Science Research Institute

Fukuoka Plant

Kobe Plant

Toyohashi Plant

Yatsugatake Milk Co., Ltd.Luna Bussan



19


Megmilk Snow BrandMilk Science Research InstituteSapporo Research Laboratory

These research laboratories play core roles in all of our research and development work as a comprehensive manufacturer of dairy products. We are engaged in a wide range of research projects across multiple areas relating to beverages and desserts, including health-related functions of lactic acid bacteria and trace components of milk, processing technology, and packaging and containers. The results of our research are practically used to produce new and exciting products.



20

TV Advertisements

Gasseri SP Strain Drink Yogurt

MBP Drink


Nutr i t ion Bus iness

21

Taking advantage of our

research into breast milk for

over fifty years, we provide

mainly powdered milk giving you

confidence in child raising.

Powdered Milk

We offer a lineup of

supplements and functional

foods made from functional

materials such as MBP, which

is found in milk.

Functional Foods




22

Bean Stalk Snow Co., Ltd. Head Office and PlantsEN Otsuka Pharmaceutical Co., Ltd.Head Office and PlantsMegmilk Snow Brand Research LaboratoryMegmilk Snow Brand Group Subsidiaries and Affiliates


Bean Stalk Snow Co., Ltd. (Head Office)

Milk Science Research Institute

Snow Brand Australia Pty. Ltd.

Amino Up Co., Ltd. Bean Stalk Snow Co., Ltd. (Gunma Plant)

EN Otsuka Pharmaceutical Co., Ltd. (Tokyo Head Office)

Belle Neige Direct Co., Ltd.EN Otsuka Pharmaceutical Co., Ltd.

(Kitakami Plant)

EN Otsuka Pharmaceutical Co., Ltd. (Head Office, Hanamaki Plant, Research & Development Laboratory

Snow Brand Trading(Shanghai) Co., Ltd.

Snow Brand Taiwan Co., Ltd.

Snow Marketing Sdn. Bhd.

Snow Brand Hong Kong Co., Ltd.



23


Megmilk Snow Brand Co., Ltd.Milk Science Research InstituteSapporo Research Laboratory

As core players in all of our research and development work as a comprehensive manufacturer of dairy products, these institutes are engaged in a wide range of research projects across multiple areas relating to health-related functions of lactic acid bacteria and trace components of milk, as well as powdered milk. The results of our research are practically used to produce new and exciting products.

Bean Stalk Snow Co., Ltd.Product Development DepartmentPromoting mainly research into the components found in breast milk and their actions, and development of infant formula close to breast milk.

En Otsuka Pharmaceutical Co., Ltd.Research and Development LaboratoryEN Otsuka Pharmaceutical’s Research and Development Laboratory, which was jointly established with the Otsuka Group, is pursuing scientific investigation and verification of nutrition and advancing with the development of reliable and superior products in order to contribute to medical and nursing care.

Amino Up Co., Ltd.R&D DivisionEngaged in research that includes searching for new biologically active substances, determining the structure of active ingredients, and clarifying the mechanism of action.

Megmilk Snow Brand’s Sapporo Research Laboratory

Bean Stalk Snow’s Product Development DepartmentMegmilk Snow Brand’s Milk Science Research Institute


Feedstuf fs and Seed Products Bus iness

Integrated service from the

introduction of calves to be

raised as beef cattle to

fattening, shipping of fattened

cattle, and sale of carcasses.

Livestock Fattening

Seeds for pasture, forage

crops, vegetables, and green

manure crops, and flower

seedlings, etc.

Seeds

Construction and maintenance

of parks, trees along streets,

and gardens, rooftop

gardening, and turf works at

sports facilities.

Landscaping

Supplying compound feed for

dairy and beef cattle to match

conditions in each region from

dedicated production lines for

cattle feed.

Feedstuffs



25


Head Office and Plants

Research Institute and Research Station

Subsidiaries and AffiliatesSnow Brand Seed USA, Inc.

TACS Shibecha

Michinoku ShiryoCo., Ltd.

Ishinomaki Shiryo Co., Ltd.

Doto Feed Corporation

Royal Farm, Ltd.

Snow Brand Seed Co., Ltd. (Head Office)

Technical Research Institute

Hokkaido Research Station

Tomakomai Plant

Snow Brand Seed Co., Ltd.(Tokyo Headquarters)

Miyazaki Research Station

Kajima Plant

Chiba Research Station

Seed center

Chiba Seed center Kumamoto Seed center



26


Snow Brand Seed Co., LtdResearch Institute(Hokkaido)Built in June 2017

Snow Brand Seed Co., LtdResearch Stations(Hokkaido, Chiba, Miyazaki)Promoting the production of original

varieties and improved varieties of

pasture and forage crops, vegetables,

green manure crops,

flowers, and

turf and plants.


For the realization of a sustainable society

SDG stands for Sustainable Development Goals. These are international goals for the realization of a sustainable society adopted at the September 2015 UN Summit and aim to resolve social issues such as poverty, starvation, and gender inequality. Embracing the goal of ending starvation and malnutrition by 2030 and pursuing a sustainable future, the SDGs consist of 17 goals and 169 targets.

27


For the realization of a sustainable society

28

CSR Domain CSR Material Issues

Food andHealth

Milk for contributions to food and health

DairyFarming

Contributing to sustainabledairy farming

Environment Reducing environmental load

People andSociety

Realization of a diverse and motivating workplace

Contributing to local community


EEstablish and promote new KPI for environmental issues

SPromote health and productivity management, and utilization of diverse human resources

GStrengthen independence and objectivity of Board of Directors, and increase Board accountability

Environment

Social

Governance

For the Realization of a Sustainable Society

29


Established new reduction goals for water usage volumeBy FY2030, reduce by 9% relative to FY2013

Wastewater treatment facility at Isobunnai Plant

Establish and promote new KPI for environmental issues

Status of CO2 reduction efforts

FY2020 resulted in 21.1% reduction relative to FY2013

(KPI is 30% reduction relative to FY2013 by FY2030)

Freezer at Nakashibetsu Plant

For the Realization of a Sustainable Society (Environment)

30

（As of April 2021）


Promote health and productivity management, and utilization of diverse human resources

Establishing work environment for diverse human resources

FY2020 Efforts to acquire and maintain recognition as an Excellent Enterprise for Health and Productivity ManagementAchieved certification in FY2020 Aim for continued certification

KPI is to achieve 10% or more women in management positions by FY2025

For the Realization of a Sustainable Society (Society)

31


Strengthen independence and objectivity of Board of Directors, and increase Board accountability

Nomination Advisory Committee

Draft succession plan, draft management development plan

Establish 60-40 as the compensation ratio for basic compensation to performance-linked compensation for non-auditor directors. Of performance-linked compensation, make 25% stock-based compensation.

Compensation Advisory Committee

Validate decision guidelines and procedures Expand on performance-linked compensation

For the Realization of a Sustainable Society (Governance)

32


Financia l Data

Net sales Operating profit/Operating profit to net sales

(Million yen)(Million yen)

FYE3/2018

FYE3/2019

FYE3/2020

FYE3/2021

FYE3/2022

(FCST)Operating profit 19,363 17,230 17,998 19,780 20,500Operating profit to net

sales 3.2% 2.9% 2.9% 3.2% 3.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0

10,000

20,000

30,000Operating profit Operating profit to net sales

30

＊As net sales for the year ending March 31, 2022 (FY2021) are expected to decrease significantly due to the change in accounting standards (revenue recognition standards) and cannot be compared with the results for the year ended March 31, 2021 (FY2020).

FYE3/2018

FYE3/2019

FYE3/2020

FYE3/2021

FYE3/2022

(FCST)Net sales 596,158 603,378 613,405 615,186 570,000

500,000

550,000

600,000

＊


Financia l Data

Ordinary profit Profit attributable to owners of parent/Return on sales

(Million yen)(Million yen)

FYE3/2018

FYE3/2019

FYE3/2020

FYE3/2021

FYE3/2022

(FCST)Profit attributable

to owners of parent 13,386 10,754 12,165 14,913 12,500

Return on sales 2.2% 1.8% 2.0% 2.4% 2.2%

0.0%

1.0%

2.0%

3.0%

4.0%

0

10,000

20,000Profit attributableto owners of parent

Return on sales

FYE3/2018

FYE3/2019

FYE3/2020

FYE3/2021

FYE3/2022

(FCST)Ordinary

profit 20,996 19,014 19,600 21,662 21,500

0

10,000

20,000

31


Financia l Data

Sales by segment(Million yen)

Operating profit by segment(Million yen)

Daily Products , 262,337 ,

43%Beverages and

Desserts, 274,487 ,

44%

Feedstuffs and Seed

Products , 43,349 , 7%

Other, 35,012 ,

6%

Daily Products , 13,675 ,

68%

Beverages and

Desserts, 4,143 , 21%

Feedstuffs and Seed Products ,

1,123 ,6%

Other, 1,056 ,

5%

FYE3/2021FYE3/2021

32


Financia l Data

FYE3/2018 FYE3/2019 FYE3/2020 FYE3/2021

Total assets (million yen) 351,240 359,445 370,434 398,654

Equity (million yen) 155,021 166,295 175,112 195,213

Equity ratio 44.1% 46.3% 47.3% 49.0%

Return on equity (ROE) 9.0% 6.7% 7.1％ 8.1%

Return on assets 3.8% 3.0% 3.3% 3.7%

Profit per share-basic (yen) 197.36 158.64 179.71 220.64

Net asset per share (yen) 2,286.11 2,456.35 2,586.86 2,890.65

Cash flows from operating activities (million yen) 22,817 21,938 24,322 26,567

Cash flows from investing activities (million yen) (11,799) (14,248) (16,629) (27,076)

Cash flows from financing activities (million yen) (12,904) (7,396) (6,651) 6,771

33


Financia l Data

FYE3/2018 FYE3/2019 FYE3/2020 FYE3/2021

Capital expenditures (million yen) 15,915 14,448 24,388 26,631

Depreciation and amortization (million yen) 15,157 15,901 16,157 15,917

R&D expenses (million yen) 4,330 4,382 4,297 4,255

Dividend per share (yen) 40 40 40 40

Payout ratio 20.3% 25.2% 22.3% 18.1%

*Intage SRI, based on nationwide monetary value

Market Share by Product Category (Household-use Products)FYE3/2020 FYE3/2021

Butter 49.7% 44.1%

Margarine 53.7% 52.6%

Cheese 27.6% 26.2%

FYE3/2020 FYE3/2021

Milk 5.7% 4.5%

Milk beverages 16.1% 15.0%

Yogurt 12.3% 11.5%

Desserts 13.9% 15.2%

* Intage SRI, based on nationwide monetary volume

34


Make the Future with Milk.

This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Documents

An Introduction to Megmilk Snow Brand Group