House Foods : Integrated Report2022

INTEGRATED REPORT 2022

House Foods Group Inc.

Group Philosophy and Message

Through food, we aim to be good corporate citizen, connecting and

collaborating with people to create smiles in their lives.

Food may vary by country and time. But the power of food never varies. Good food is tasty and healthy.

It has the power to sustain life, to bring people together… to bring joy to the world.

In every facet of our activities, House Foods Group is always creating new value. Through food,

we at House Foods Group help nurture relationships-our own and others.

Together with all our stakeholders we treasure the warmth of family and friendship

		Foundations for
Value Creation Story	Explanation of Strategies	Value Creation	Data

Philosophy concept of House Foods Group

House Foods Group philosophy is based on two key aspects of the Company. One: Our Group philosophy

Defines the role of the Company-Our contribution and raison d'être-

encompasses the Our Motto and mission statement of each company in House Foods Group. Two: The "House Ideals (Spirit)"

Our corporate DNA-the values shared by all who work with us.

In addition, our Founding Philosophy is an everlasting symbol expressing the ideas behind how we see the House brand in the world.

Founding Philosophy

In every happy home throughout Japan you will find the warm

flavor of home cooking, House.

as we seek to bring more happiness into people's lives.

At the dining table and when dining out. In our homeland and around the world.

On every occasion that involves food, we strive to serve as a good partner- putting smiles on the faces of our customers, our employees and their families.

So that all the world may be a happier place.

Group Philosophy

Through food, we aim to

be a good corporate citizen, connecting and collaborating with people to create smiles in their lives.

House Ideals (Spirit)

Our Motto

Sincerity, Originality and Enthusiasm

The 10 House Values

• Know yourself
• Be humble in your self-confidence and pride
• Creative work brings dignity
• The advancement of House depends on the personal development of each individual
• House's strength is the strength of all of us combined
• A salary is compensation for doing useful things for society
• Being useful to society as employees and as a company
• A useful employee is a strong partner for achieving business goals
• Profits are necessary for a company to be useful to society
• The dedicated passion each one of us feels for the company is the secret to success for House

01 Value Creation Story

1. Group Philosophy and Message

1. Three Responsibilities

1. History of House Foods Group

1. At a Glance

1. President's Message

1. Value Creation Process

1. Source of Value Creation

17 Explanation of Strategies

17 Progress of the Medium-term Business Plan

19 Outline of the Seventh Medium-term Business Plan

21 Progress of the Seventh Medium-term Business Plan from the Perspective of the Three Responsibilities

1. Explanation of Financial Strategies

1. Overview of Business Segments

1. Strategies by Business Segment Spice/Seasoning/Processed Food Business Health Food Business
   International Food Business Restaurant Business

33 Foundations for Value Creation

1. Environmental Efforts
2. Human Resource Strategy
3. R&D
4. Quality Assurance
5. Executives

39 Corporate Governance

1. Message from Outside Directors
2. Risk Management
3. Compliance

47	Data	Positioning of the Integrated Report
47	11-Year Selected Financial Data		Financial Information	Non-financial Information
	Integrated Report
49	Non-financial Highlights
50	Group Companies
	Annual Securities Report		Corporate Governance Report
52	Corporate Information
			(available in Japanese only)
			Financial Data		ESG Data Book
					CSR Website
			IR Information Website
				https://housefoods-group.com/csr/
			https://housefoods-group.com/en/ir/		(available in Japanese only)

	Editorial policy	Target period	Notes to forward-looking statements
	House Foods Group Integrated Report 2022 comprehensively describes the overall picture of the Group, its strategies for creating corporate value, and its	While the target period is mainly FY2021 (April	Result forecasts and forward-looking statements in this Integrated Report are derived from the
	governance systems such that shareholders, investors, and all other stakeholders deepen their understanding of the Group's medium- to long-term value creation.	1, 2021 to March 31, 2022), this report provides	judgment of the Company based on currently available information, and include latent risks,
	The IFRS Foundation's "International Framework" and the Ministry of Economy, Trade and Industry's "Guidance for Integrated Corporate Disclosure	the latest information at the time of publication	uncertainties and other factors. Therefore, actual results or developments may differ from such
	and Company-Investor Dialogues for Collaborative Value Creation" were used as references in the production of this report.	where possible.	forecasts or forward-looking statements due to changes in various factors.
1	INTEGRATED REPORT 2022		INTEGRATED REPORT 2022	2

Three Responsibilities

Three Responsibilities

The "Three Responsibilities" represent our desire to be a "good partner" to our various stakeholders, rather than simply striving to maximize profits as a company.

In order for House Foods Group to continue to be a company that is useful to society throughout the ages, these Three Responsibilities form the basis of all of our activities.

		Foundations for
Value Creation Story	Explanation of Strategies	Value Creation	Data

These Three Responsibilities have been integrated into the Group's CSR Policy and our Medium- term Business Plan as the cornerstone of our daily activities to realize the Group philosophy.

House Foods Group's CSR Policy

Through our core businesses, we fulfill three main responsibilities in our efforts to contribute to a healthy society and better lives for all.

For Society

As the phrase "corporate citizen" shows, a company has a role it must play as part of society. Just focusing on law- abiding business activities and fulfilling tax obligations is not sufficient to have the company accepted as something necessary for society.

Fulfilling responsibility for

society means to contribute

to the resolution of various For Society social issues by leveraging the

For Our

Customers

For Our Customers

We believe that fulfilling "responsibility for our customers" means being of service to customers through the business as a company playing a role in economic activities.

To this end, it is important that we keep growing as a business company and continue offering our unique value to society.

For Our Customers

For Our Employees and Their Families

For Society

• We contribute to the rich and healthy lives of our customers in both body and mind by always providing products and services that are safe and secure, and also provide value.
• We are a job creator who respects the basic human rights and diversity of our employees.
• We also encourage personal growth in an effort to better the lives of our employees and their families.
• Through our sound management and business activity, we work hard to increase the value of House Foods Group, and thereby contribute to social progress.
• As a responsible member of society, all our actions comply with laws and regulations, as well with social morals and ethics.
• Our business activity is eco-friendly and contributes to the sustainability of the global environment.

company's unique strengths, and in doing so, a company may finally be able to become something that is required by society.

Seventh Medium-term Business Plan

Striving to become a high quality company that provides "Healthy Life through Foods"

[Chapter 2] Striving for Four Value Chains

Key Themes for Three Responsibilities

For Our Employees and

Their Families

For Our Employees and Their Families

"People create the business of a company and people create the value of the company." Individual employees play roles in all sorts of corporate activities and a company would not function without these employees' active participation.

The growth of employees directly affects the growth of a company, and we believe it is imperative that we fulfill our responsibility for the employees themselves as well as for their family members who support the employees' active participation.

For Our Customers	For Our Employees		For Society
and Their Families
● Achievement of growth driven by	● Implementation of job satisfaction		● Establishment of a recycling-
four value chains	transformation		oriented model
● Realization of three GOT (Japanese	● Support for demonstrating		● Achievement of a society of healthy
abbreviation, meaning the	individuality and achieving		longevity
Groupwide Initiatives) themes	integration
● Creation of new value through			➡ See pages 19 through 24 for details
collaborative creation

Three Responsibilities and the SDGs

House Foods Group philosophy aligns with the promise "Leave no one behind" of the agenda for the Sustainable Development Goals (SDGs). The Group positions the three responsibilities as the fundamental elements of all of

its activities.

The Group believes that earnestly working on the themes for the Three Responsibilities will help create a sustainable society, which the SDGs are aimed at.

3

INTEGRATED REPORT 2022

INTEGRATED REPORT 2022

4

History of House Foods Group

Environmental changes that affected Group management

19131960-2003-2014

⚫High economic growth ⚫Market becomes mature

The Japanese market entered a mature phase, and customer needs shifted from quantity to quality.

		Foundations for
Value Creation Story	Explanation of Strategies	Value Creation	Data

In the course of its history, House Foods Group has always taken on challenges of the times and created new food cultures, staying true to its Founding Philosophy: "In every happy home throughout Japan you will find the warm flavor of home cooking, House."

In order to remain a value-creating corporate group in an era of major transformation, House Foods Group will continue to take on challenges by leveraging the diversity and synergy of the Group.

	2015-2022
⚫Great East Japan Earthquake	⚫COVID-19 pandemic
Rapidly growing tendency for people to eat	Changes in lifestyles and values
out or buy food to eat at home, and concerns	Changing attitudes toward corporate
over the sustainability of the existing businesses	responsibility

Trajectory of House Foods Group

centered on home-cooked meals

Accelerated changes in digital technology

⚫From herbal medicines to the world of curry Growth phase ⚫Makes a pitch for richness of dining table along

with Japan's economic growth

⚫1913: Founded as Urakami Shoten, an enterprise dealing in herbal medicines

⚫1926: Started manufacturing and selling curry

⚫1963: Launched Vermont Curry

⚫1969: Introduced a product manager system, a first among food companies

⚫1981: Opened the Los Angeles representative office in the United States

⚫1997: Opened the first restaurant in Shanghai, China

	⚫
	Reviews some
Selection and	and strengthens
concentration	⚫
"Health" and
	of growth

⚫2003: Introduced the Medium-term

⚫2006: Founded House Wellness Foods

⚫2010: Transfer of mineral water

⚫2013: Shifted to a holding company

⚫2013: Made Vox Trading Co., Ltd. a

mature domestic businesses profitability

"Overseas" become pillars

Business Plan

Corporation business system consolidated subsidiary

Striving to become a high	⚫
Becoming a corporate group with a
quality company that provides	global presence by pursuing growth
"Healthy Life through Foods"	from the perspective of the value chains

⚫2015- Expansion of business development areas from upstream to downstream

Made Ichibanya Co., Ltd., Gaban Co., Ltd., and Malony Co., Ltd. consolidated subsidiaries in 2015, 2016, and 2017, respectively

⚫2018: Promoted the GOT (Japanese abbreviation, meaning the Groupwide Initiatives) that turns the Group's diversity into synergy

⚫2021: Toward identifying new growth opportunities from a global perspective

Defined four value chains (spice, functional ingredients, soybean, and value-added vegetables) as domains in which it provides "Healthy Life through Foods"

Expanding value chains

Expansion of business fields where we can demonstrate our strengths

2004	2013
Forms an alliance with	Shifted to a holding
Gaban Co., Ltd.	company system
Pursuit of becoming the
No. 1 spice manufacturer
2006	2013
Founded House Wellness	Made Vox Trading Co., Ltd.
Foods Corporation	a consolidated subsidiary
Strengthening of the	Strengthening of the
health domain	procurement field

2015

Made Ichibanya Co., Ltd. a consolidated subsidiary Strengthening of the restaurant field

2016

Made Gaban Co., Ltd. a consolidated subsidiary Strengthening of BtoB and in procurement

2017	2022
Made Malony Co., Ltd. a	Establishment of House
consolidated subsidiary	Foods Group Asia Pacific
Strengthening of BtoC	Co., Ltd.
	Expansion of business in
	Southeast Asia
2017
Establishment of CVC
Accelerating open innovation

Chains

Expanding markets

Expansion to overseas markets utilizing strengths gained in Japan

Three focus areas (the United States, China, and Southeast Asia) + Restaurant Business

United States	China
Spread of tofu as a	Making curry and rice the
plant-based food (PBF)	people's food in China

1983- Tofu business

1997- Curry business

Southeast Asia
Thailand	Indonesia / Vietnam
Combining good taste and	Creation of a new food culture
functionality
	2016-	2018-
2012- Functional drink	Halal curry	Non-halal curry
business	business	business

Expansion of CoCoICHI to the world

Main areas of operation and fiscal year of business commencement

1994- United States

2004- China

2005- Taiwan

2008- South Korea,

Thailand

2018- United Kingdom

2020- India

Striving for Four Value

Expanding products	Founded an enterprise dealing		Enriching the dining table, contributing to	Converting years of	Supporting health
in herbal medicines	Developed curry into a national dish	spice research into
Product lineup that leverages	Entered the world of spice		the happiness of families	new value	with ease
our strengths

1913-

1928-

1963-

2006-

2014-

1962-

1966-

1970-

1973-

1977-

2004-

2009-

2006-

2018-

Spice

House Curry

Vermont Curry

50% reduction in

Allergen friendly

Home dessert

Stew

Retort

Packaged

Snack

Ukon No

Mega

Vitamin

Lactic acid

calories and fat

pouched

noodles

foods

Chikara

Shaki

bacteria

products

L-137

5

INTEGRATED REPORT 2022

INTEGRATED REPORT 2022

6

At a Glance

House Foods Group offers a diverse range of foods.

		Foundations for
Value Creation Story	Explanation of Strategies	Value Creation	Data

• FY2021 summary of financial results

Net sales	253.4 billion yen
Operating profit	19.2 billion yen
Ordinary profit	21.1 billion yen
Profit*	14.0 billion yen

* Profit attributable to owners of parent

• Business portfolio

Other Food Related
Business
17.5%		Spice/Seasoning/
	Composition of	Processed Food
Restaurant	Business
net sales by
Business	44.8%
17.3%	segment for
FY2021
International Food		Health Food Business
Business

14.9%5.5%

• Proportion of net sales represents a proportion before the elimination of inter-segment transactions

• Overseas business expansion
• Proportion of net sales by region

Of the 253.4 billion yen in consolidated net sales for FY2021, overseas net sales accounted for 19.9% of total Group net sales.

FY2021 7.0%

East
	United
Asia
	States

FY2021 6.7%

Southeast

• High market share in Japan that forms profit base
• House Foods

Source: Monthly SRI+ data by INTAGE Inc. (April 2021 through March 2022)

FY20215.6%

Asia

Other

FY2021 0.6%

Curry roux

62.3%

• Ichibanya

• Share of sales in curry shops

Source: Fuji Keizai, "Food Service Industry Marketing Handbook 2022," actual results for 2021

Curry House

CoCo Ichibanya

83.1%

• Long-sellingbrands

Stew roux

68.1%

• Number of Ichibanya restaurants (As of June 2022)

Japan: 1,258 Overseas: 201

• Five-yearaverage growth rate of three priority businesses overseas

(Local-currency basis, from FY2017 to FY2021)

Our tofu business in the United States, curry business in China, and functional drink business in ASEAN countries expands businesses that combine the technological expertise we have cultivated in Japan with local food culture.

Tofu business	Curry business	Functional drink business
in the United States	in China	in Thailand
7.6%	15.9%	45.8%

• Numbers of employees and Group companies (As of March 2022)

Number of employees	Group companies
■ Japan: 4,335 (70.3%)	■ Japan: 15
■ Overseas: 1,834 (29.7%)	■ Overseas: 22

					Ukon No	Ichinichi-bun No
Vermont Curry	Stew Mix	Fruiche	Tongari Corn	C1000	Chikara	Vitamin
59 years	56 years	46 years	44 years	32 years	18 years	14 years
(since 1963)	(since 1966)	(since 1976)	(since 1978)	(since 1990)	(since 2004)	(since 2008)

Number of

employees

(consolidated)

6,169

Number of

consolidated

subsidiaries

37

7

INTEGRATED REPORT 2022

INTEGRATED REPORT 2022

8