Integrated Report 2024

INTRODUCTION

AIN Group's Vision

The Ain Group aims to be a company where each employee recognizes the Group Statement and that people welcome to their communities, which is our vision.

01Vision

Aiming to be a company that people

welcome to their communities

Society is changing drastically, and people's needs and values are becoming increasingly diverse.

In our business environment, there are various ways in which patients and customers can fulfill their wishes of staying healthy and beautiful.

The AIN Group is dedicated to improving the health and happiness of our customers, which is enshrined in the Group Statement, through its business activities that contributes to people's health and beauty. To consistently strive to attain this goal, we will continue to adjust and respond to the needs of our customers and all our other stakeholders as we aim to be a company that people welcome to their communities.

02Group

Statement

We are committed to ensuring our employees are happy and motivated. We want the AIN Group to be a workplace where employees seek out new challenges to grow and develop, dedicating themselves to improving the health and happiness of customers.

Our goal is to be a leading corporate group that constantly embraces change.

Connecting closely with the thoughts and feelings of all the people we encounter. A company that can take pride and joy in this statement is what the AIN Group endeavors to be.

Audrey Hepburn has been the representative symbol of the AIN Group since 2018. Like Audrey Hepburn, who captivated the world as an actress, lived as a mother and an independent woman, and devoted her later years to relief efforts for children living in poverty.

We aspire to be a company where each employee holds a beautiful will, supporting people with love and hope.

First, we must be a company that values its employees. And be a rewarding place to work.

Only when these requirements are met can we do our best for our customers.

Our management philosophy holds that "putting employees first" is the ultimate form of "putting customers first."

This message expresses our strong will to aim and continuously live up to the name and reality of being a leading group for our customers, employees, and all stakeholders.

INTRODUCTION

MESSAGE FROM THE PRESIDENT AIN GROUP'S VALUE CREATION VALUE CREATION STRATEGY BASIC INFORMATION / DATA

INTRODUCTION

AIN Group and Local Communities

We at the AIN Group operate dispensing pharmacy and cosmetic and drug store businesses with the aim of creating a society where people can live healthy, beautiful, and happy lives by connecting closely with the thoughts and feelings of each individual.

Dispensing pharmacy business (Fiscal 2024 / As of April 30, 2024)

INTRODUCTION

Dispensing pharmacy business

Connecting closely with local communities It is to connect closely with the lives of each individual

Led by AIN Pharmacy, we operate dispensing pharmacies throughout Japan spanning from Hokkaido to Okinawa. We are actively involved in supporting the health of local residents by strengthening cooperation with local medical institutions and related facilities.

Cosmetic and drug store business

Being closest to the people who want to be beautiful

We operate AINZ & TULPE cosmetic and drug stores with a focus on the Tokyo metropolitan area and other urban cities. We have a wide range of offerings to help customers enjoy a beautiful and healthy life. In August 2024, Francfranc Corporation, which operates interior furnishing shops, joined the Group.

Number of pharmacies

1,231

We open dispensing pharmacies in locations that are highly convenient for patients, and are also focusing on coordination with medical institutions.

Number of pharmacists

6,478

Number of pharmacies supporting home-based healthcare

1,178

In order to further contribute to local healthcare, we are proactively participating in home-based healthcare.

Number of primary care pharmacists

2,274

Number of health support pharmacies

245

We actively engage in organizing health consultation events and participating in local events with the aim of contributing to the health of local residents.

Annual prescription volume

27,350thousand

MESSAGE FROM THE PRESIDENT AIN GROUP'S VALUE CREATION

In addition to the active recruitment of pharmacists, we provide training programs tailored to various careers to develop human resources with a high level of expertise and communi-

We are working to strengthen our functions as primary care pharmacists and pharmacies in order to support a large number of patients.

We accept prescriptions from medical institutions nationwide, and strive to ensure that patients can continue to receive prescription medication with peace of mind.

VALUE

Dispensing pharmacy business

• 357.5 billion 89.4%

cation skills.

Cosmetic and drug store business (Fiscal 2024 / As of April 30, 2024)

CREATION STRATEGY

Number of cosmetic and drug

stores81

We are working to open stores in highly convenient locations such as the Tokyo metropolitan area and terminal stations near residential areas so that customers can easily drop by.

Beauty product sales composition 89.2%

Unlike general drug stores, we offer mainly beauty products such as skincare and makeup, as well as other items related to beauty and well-being.

Number of official app users

1,590thousand

In addition to providing product information that ensures high customer satisfaction and keeps up with trends, the app also offers convenient features and benefits such as loyalty points and coupons.

BASIC INFORMATION / DATA

INTRODUCTION

Information disclosure system

To respond to expectations and requests from all stakeholders, including shareholders and investors, the AIN Group conducts timely disclosures of information on our website and engages in an active dialogue at IR and SR meetings, as well as other meet- ings. The details of disclosure materials are available on our website.

Integrated Report 2024

We explain our vision, growth strategies, and activities for improving corporate value

over the medium- to long-term

Website

General Meeting of Shareholders

Dialogue

Individual meetings with domestic and overseas institutional investors

Editorial policy

The AIN Group implements a variety of initiatives aimed at generating sustainable growth and creating social, environmental, and economic value. Since the fiscal year ended April 30, 2010, we have published an Annual Report in English to strengthen communication with shareholders, investors and other stakeholders through deeper understanding of the Group's specific initiatives and ideas. From the fiscal year ended April 30, 2022, we are publishing an Integrated Report in Japanese and English, which includes expanded information on the Group's materiality, human resources strategy, digital transformation strategy and other initiatives aimed at increasing corporate value over the medium and long term.

In editing this report, we referenced the International Integrated Reporting Framework published by the International Integrated Reporting Council (IIRC)* and the Guidance for Collaborative Value Creation 2.0 formulated by the Ministry of Economy, Trade and Industry (METI).

• In June 2021, IIRC merged with the Sustainability Accounting Standards Board (SASB) to form the Value Reporting Foundation (VRF). VRF subsequently merged by the International Sustainability Standards Board (ISSB) together with Climate Disclosure Standards Board (CDSB) in June 2022.

Forward-looking Statements

This integrated report contains forecasts and projections concerning the plans, strategies and performance of the Group.

These forecasts and projections constitute forward-looking statements that are not historical facts, but are based on assumptions and beliefs in accordance with information currently available to management.

These forward-looking statements are subject to a number of risks and uncertainties that include, but are not limited to, economic conditions, intense competition in the healthcare industry, etc., demand, tax systems, and laws and regulations. As such, the Group wishes to caution readers that actual results may differ materially from those projected.

CONTENTS

01 INTRODUCTION

01 AIN Group's Vision

03 AIN Group and Local Communities

05 Information Disclosure System / Editorial Policy / Forward-looking Statements

06 Contents

07 MESSAGE FROM THE PRESIDENT

07 Message from the President

11 AIN GROUP'S VALUE CREATION

1. Value Creation History

1. Value Creation Story

1. Materiality

19 VALUE CREATION STRATEGY

19 Creating Shared Value through Our Business (CSV) 19 Dispensing pharmacy business

23 Cosmetic and drug store business

27 Strengthening Management Capital that Supports Value

27 Digital transformation strategy

29 Human resources strategy and respect for human rights

1. Financial strategy 39 Sustainability Initiatives

1. Initiatives to Tackle Environmental Issues

1. Initiatives to Tackle Social Issues 45 Corporate Governance

45 Special FeatureRoundtable Discussion by Outside Directors

51 Corporate Governance

1. Board of Directors and Corporate Auditors 61 Compliance

1. Initiatives based on recommendations on measures to prevent reoccurrence

65 Risk Management

67 BASIC INFORMATION / DATA

1. Characteristics of Japan's Pharmacy Sector

1. 11-yearFinancial and Non-financial Summary

1. ESG Data

1. Basic Information

About the Cover

The AIN Group's vision is to be a company that people welcome to their communities.

The cover conveys our aspiration to provide services tailored to the unique characteristics of each community through AIN Pharmacy and AINZ & TULPE, and to contribute to the health and beauty of local residents.

INTRODUCTION

MESSAGE FROM THE PRESIDENT AIN GROUP'S VALUE CREATION VALUE CREATION STRATEGY BASIC INFORMATION / DATA

MESSAGE FROM THE PRESIDENT

Human resources are what make the AIN Group a leading company in the industry.

Fulfilling the mission of the pharmacy as the infrastructure of local communities

President and Representative Director

Kiichi Ohtani

cy by promoting digital transformation.

The biggest management issue is "dispensing errors"

Doing our utmost to protect patients

As a member of management, it feels to me that we face an endless sea of management issues. We want to expand our business, so what issues does that involve? Even if we successfully address one of these issues, another rises to take its place.

However, reflecting on our origins as a pharmacy, the answer to "What is our biggest management issue" is a simple one: "dispensing errors." Every year, we handle approximately 30 million prescriptions. I believe that, realistically speaking, it is impossible to make sure not even a single dispensation mistake is made in dealing with that many prescriptions. Of course, we are continuously working to get the number of errors as close to zero as possible, but we must also prepare reliable measures for dealing with these errors if they do occur.

drug store business alone. I believe we saw our efforts bear fruit in the fiscal year ended April 2024.

Our fundamental strategy in the cosmetic and drug store business is to avoid homogenized competitions. Looking at the rising number of companies expanding into the drug store segment, we believed that we needed to create a business that went beyond the conventional boundaries of the segment. Through a process of trial and error in opening and operating AINZ & TULPE stores, we kept on investigating what it meant to do truly non-homogenized business and what positions were free of competition. AINZ & TULPE was finally producing steady profits, but during the COVID-19 pandemic, it was deeply in the red. These temporary brakes placed by the pandemic, however, turned out to be a good op- portunity. We had to suspend sales activities due to the closure of commercial buildings during the pandemic, but we used that time to focus thoroughly on creating a system for achieving a 10% profit margin. Logistics, product mix, personnel structures, store locations-we looked at each and every one of our processes. We also decided to shut down unprofitable locations, thoroughly

INTRODUCTION MESSAGE FROM THE PRESIDENT

Mission to continue contributing to local healthcare

History and prospects of the dispensing pharmacy business

The Group opened its first pharmacy in 1993. The separation of dispensing and prescribing drugs driven by governmental policy since 1994 led to many pharmacies being opened to handle non-hospital prescriptions. Our business environment is constantly changing, and the growth of our dispensing pharmacy business has not been a straightforward one. A major turning point came in 1997, when the financial crisis caused us to reexamine our highly diversified businesses and to decide to focus our management resources on dispensing pharmacy business. Then, in 2002, the dispensing pharmacy business achieved the top net sales in the industry. Throughout this process, we have always asked ourselves what the mission of a pharmacy is, and we have striven to contribute to local healthcare.

We primarily open pharmacies near medical institu- tions, and our pharmacies are used and supported by numerous patients. The number of elderly patients is growing across Japan as a whole, and, needless to say, a major criterion when patients choose pharmacies is their convenience. When it is essential to coordinate with medical institutions, it is also important that pharmacies be located near the doctors who issue prescriptions,

and that the pharmacies communicate closely with the medical institutions. We firmly believe that this contributes to better prescription drug treatment for patients.

At the same time, close proximity to medical institutions also significantly improves the expertise of phar- macists. Local flagship hospitals serve many patients whose treatment requires a high level of specialized knowledge regarding anticancer drugs and the like. They also have many patients with diseases regarding special drug administration care, such as patients with kidney or liver disorders. Our pharmacies are constantly being called on to fill prescriptions that pharmacies in town seldom encounter, and this raises the level of expertise of our pharmacists.

Improving the expertise of pharmacists is vital to enable them to meet the needs of patients. It is also a strength of our company, and we believe that we must continue to enhance this strength.

Furthermore, looking to the future, we are always striving to expand our business and make our management more efficient, never choosing to rest on our laurels. We command only 4% of the pharmacy market share, so we will utilize M&As and other approaches to actively grow our dispensing pharmacy business. We also believe that it will be important to carry out initiatives in line with the changing times according to market environment, such as promoting greater awareness and the use of AIN Pharmacy in the online market space, improving efficien-

For example, we are constantly thinking of what we can do and what we should do, such as developing systems for rapidly discovering that dispensation errors have occurred, systems for contacting patients who have been given incorrect medications before they take those medications, and systems for responding when patients have taken incorrectly dispensed medications.

Developing our cosmetic and drug store business as a second pillar of business through our strategy of avoiding homogenized competition and through our strengths

The success of our cosmetic and drug store business contributed to the Group's business performance in the fiscal year ended April 2024, resulting in record profits that exceeded our plans.

For over a decade, there have been views in the market that we should pull out of the cosmetic and drug store business and focus exclusively on the dispensing pharmacy business. Admittedly, we have been confident that there was growth potential in the dispensing pharmacy business, and we focused our investment of capital and human resources in the dispensing pharmacy business. However, at the same time, for us to aim for even further growth as a group, we considered it necessary to create a second pillar of business that could stand alongside our core business. This is why we kept taking on the challenge of establishing the cosmetic and drug store business, which went beyond simple

striving to make AINZ & TULPE more resilient. I believe we are starting to see the results of those efforts in our business numbers.

Many focus on product mix as the strength of AINZ & TULPE, but I think it is something else. AINZ & TULPE's real strength is that it is not a chain operation, but instead each sales area is designed and headed up by our people. Each store manager is vested with their own authority, and they analyze data and select and arrange the products from our diverse product selection that are best fit for their store. That is why no two AINZ & TULPE stores are the same.

Furthermore, store opening standards include conditions based on numerical analyses. Our current business structure is one in which stores rapidly achieve profitability after opening.

I believe that the success of AINZ & TULPE stores lies in the fact that they go beyond the bounds of conventional drug stores, that they are positioned in a way unlike conventional chain operations, and that they are based on the results of thorough business format re- search.

Convinced of significant synergies from the consolidation of Francfranc

In August 2024, Francfranc Corporation (hereinafter "Francfranc") became a part of the Group. I did not want just any network of homeware product stores. I had long been attracted to Francfranc, and wanted it to be part

AIN GROUP'S VALUE CREATION VALUE CREATION STRATEGY BASIC INFORMATION / DATA

MESSAGE FROM THE PRESIDENT

of the Group.

What makes Francfranc appealing is, first, that it carries many products that are not available in AINZ & TULPE stores and the demographics of our customers are highly similar, so there is great potential for product and store opening synergy. Second, it is far better known than AIN Pharmacy or AINZ & TULPE. Third, unlike our own stores, it is a specialty store retailer of private label apparel (SPA), and it has its own production division. A collaboration between Francfranc and AINZ

• TULPE, each of which have many strengths of their own, would be extremely effective one. While Francfranc has its own production division, AINZ & TULPE has ex- ceptional store development strengths, so the two com- plement each other perfectly. If the two were to open up shops together, it would result in shops of unprecedent- ed scales. In fact, we have already begun making forays into joint store openings, and I believe that having the two options of AINZ & TULPE and Francfranc will, with- out question, accelerate the pace of our store openings.
  Needless to say, we deliberated carefully regarding the consolidation of Francfranc, and we made the decision because we concluded that, even after taking goodwill into consideration, doing so would contribute to prof- itability. Furthermore, our consolidated net profit has grown to ¥10.0 billion, so we determined that we can easily absorb the goodwill and that the acquisition will have little impact on our balance sheet. Above all, the development and manufacturing of Francfranc home- ware products is something that AINZ & TULPE would not be able to achieve, even over the course of several years. That is why we reached this major decision.
  The synergy from the consolidation of Francfranc will begin to produce results from the fiscal year ending April 2026, and we are confident that it will contribute signifi- cantly to the Group's profitability.

Producing a positive human resource cycle by creating welcoming workplaces for everyone

AINZ & TULPE's strengths include its unique refreshment and shelving of product lineups. At the heart of these strengths lie people, and our people are what have enabled us to improve our business results. Each store manager changes their product shelving arrangements based on data, using their own ingenuity. I believe this keeps stores fresh and appealing, helping us win the support of our customers.

As AINZ & TULPE demonstrates, the greatest source of the Group's growth is our people. I believe that the most important measure we must take to ensure our ongoing growth and to improve our sustainability is to

always value our people.

In April 2024, we launched a new human resource development program as an overall human capital management initiative. Under this, we are striving to further enrich our personnel training, but we have also focused on creating welcoming workplaces. These efforts have been recognized from numerous perspectives, with the Group receiving Platinum Kurumin certification in July 2023, being selected as a 2024 Certified KENKO Investment for Health Outstanding Organization Large Enterprise Category - White 500) in March 2024, and receiving Platinum Eruboshi certification in June 2024. By creating workplaces that are welcoming for every- one, we have kept our employee turnover rate low. The smooth sharing, accrual, and succession of know-how and knowledge in individual workplaces is making major contributions to the stability and strength of the Group's business foundation.

These welcoming workplaces have been highly praised by students seeking employment. In the Ranking of Most Popular Companies among Job-Hunters Graduating in 2025 conducted by the job hunting information website Mynavi in collaboration with Nikkei, the Group came in fourth in popularity among female students of science, following Ajinomoto, Kagome, and Sony Group. This level of popularity surpassed even my own expec- tations, but it's true that in recent years we have been steadily recruiting exceptional new graduates.

Investing in making welcoming workplaces has enabled us to steadily recruit high quality personnel and has enabled employees to continue working with us. The results of these efforts are beginning to show in terms of revenues, and increases in revenues will lead to wage improvements for employees. If this makes the Group a more popular choice for new graduates, it would be fair to say that the Group's human capital management has created a positive cycle.

Placing high importance on monitoring by diverse outside directors to heighten the effectiveness of our governance

With respect to our corporate governance, we refer to the Corporate Governance Code of the Tokyo Stock Exchange and check if there are any aspects of our own systems or structures that require improvement as we work to achieve a level of governance that meets or exceeds expectations.

However, two people, a former director of the Company and a former director of a subsidiary of the Company were arrested on August 31, 2023, and subsequently indicted and convicted in the first instance. On the day of

the arrest, we launched a fact-finding investigation and began working to discover the details of the situation. We formulated and announced measures to prevent reoccurrence, and we are currently implementing these measures.

As part of our efforts to strengthen our corporate gov- ernance, we have reviewed and revised the structure of the Board of Directors and newly appointed legal ex- perts, M&A specialists, and other experts. Through this, we raised the outside director composition ratio of the Board of Directors to 45% and are striving to reinforce our compliance-related supervisory functions. Further- more, given that one of our core growth strategies is the use of M&As, adding an M&A specialist as an outside director has been, I believe, a highly significant move. M&As do not end with the acquisition of shares. That is where the real challenge lies. The true value of M&As lies in the creation of synergy. Receiving well-timed and appropriate information from an outside director when deliberating the acquisition of stocks and through the process of synergy creation will, I believe, serve of great assistance in driving our business growth.

We have also selected new, highly experienced outside corporate auditors who are accredited attorneys and tax accountants. The input being provided by outside directors and outside corporate auditors in the new Board of Directors is sterner than in the past, but through lively discussion, the Board is working to further enhance governance.

Our growth over the past decade and the decade to come

I have been reflecting on our growth over the past decade and I have strong feelings about the decade to come.

Our pharmacies were also affected by the Great East Japan Earthquake of 2011. I myself took the lead in rapidly restoring service, focusing on the two areas of Sapporo and Tokyo, and our many employees worked wholeheartedly to achieve this recovery. Roughly 13 years later, on January 1, 2024, the Noto Peninsula Earthquake occurred, and 29 of our stores were damaged. We promptly created a disaster response headquarters team, and at 9:00 a.m. on the following day we connected four sites online and held a disaster response headquarters meeting. On January 4, we resumed operations at 26 stores, and the pharmacies in Anamizu Town and Nanao City, where the earthquake measured 6-upper on the Japanese seismic intensity scale, resumed operations on January 5. Needless to say, I rushed to the disaster response headquarters, but there was no need for me to issue any instructions. We

conducted our emergency response operations, including dispatching pharmacists to disaster areas, providing support to pharmacists in nearby hospitals, delivering medications to homes and evacuation shelters with pa- tients, and other response operations, by methodically setting up a response structure to handle these activities without the need to wait for instructions.

This is a testament to how much we have grown over the past decade. My experience with the Great East Japan Earthquake gave me the desire to make AIN Pharmacy the infrastructure of local communities. After the Great East Japan Earthquake, we formulated business continuity plans (BCPs) and conducted business continuity management (BCM) drills. These efforts demonstrated their effectiveness in our response to the Noto Peninsula Earthquake. I believe that our ability to respond to the earthquake so smoothly was not just the product of training, but also the product of the sense of pride of each and every one of our employees and the dedication to their mission of continuing to operate pharmacies as part of infrastructure of local communi- ties. Pharmacies are part of infrastructure of local com- munities, and we protect that local infrastructure - this mentality has permeated our entire Group, becoming an invisible but tremendous asset for us.

Looking at our business, as well, the record high profits we recorded in the fiscal year ended April 2024 shows that our efforts have not been in vain. Now that we have realized the consolidation of Francfranc, the next ten years will be a decade in which we not only continuously grow our core dispensing pharmacy business, but we also accelerate the growth of the cosmetic and drug store business into a second pillar of business by creating synergy between AINZ & TULPE and Francfranc.

The Nomination and Remuneration Committee has engaged in multiple discussions regarding succession plans for our management team, myself included. Since July 2024, the Committee has been newly chaired by an outside director, who is bringing new perspectives while engaging in further deliberations. The findings of the discussions of the Committee are reported to the Board of Directors. Currently, candidates for these positions are building up a wide range of business management experience and being interviewed by outside directors on the Nomination and Remuneration Committee. All of the candidates feel a great deal of pride in our business and dedication to our mission. I am confident that they will lead us to further sustained growth.

In the decade to come, we will continue to provide all stakeholders with encounters, through our dispensing pharmacy and cosmetic and drug store businesses, that will make people welcome us to their communities.

INTRODUCTIONMESSAGE FROM THE PRESIDENT AIN GROUP'S VALUE CREATION VALUE CREATION STRATEGY BASIC INFORMATION / DATA

AIN GROUP'S VALUE CREATION

Value Creation History

As the environment and values surrounding people's health and beauty continue to change with the times, the AIN Group has continued to expand its business by improving the specialist skills of pharmacists and developing pharmacies in highly convenient locations nationwide. We are constantly striving to provide services that listen to the voices of each patient and customer. Today, we operate more than 1,200 pharmacies nationwide, and our business continues to grow steadily.

Fiscal year ended April 2024

INTRODUCTION

Net sales (¥ billion)

400

350

300

250

200

150

100

50

Net sales Ordinary profit

Fiscal year ended April 2003

• The number of part-time employees for the fiscal year ended April 2003 is calculated based on an eight-hour per day equivalent.

Fiscal year ended April 2016

Ordinary prot

399.8 (¥ billion)

MESSAGE FROM THE PRESIDENTAIN GROUP'S

VALUE CREATION

1969-

Went public 14 years after the start of drug store business

Established in 1969 as a company handling contracted clinical testing. In 1980, the Company launched its drug store business, the predecessor of its current business, and went public 14 years later.

1997-

Secured top position in dispensing pharmacy sector by net sales

Against the backdrop of the financial crisis of 1997, the Company began a review all of its businesses. Business restructuring centered on its pharmacies proved successful, and in 2002, the dispensing pharmacy business achieved the top net sales in the industry.

2015-

Transitioned to holding company structure

To strengthen its management base for further growth, the Company transitioned to a holding company structure in 2015 and accelerated the business development including the opening of new pharmacies and M&As under the dispensing pharmacy business, which resulted in the number of pharmacies reaching 1,000.

2018-

Further accelerated digital transformation promotion and went into full swing

The accelerating trend of digitalization across society is also occurring in the healthcare industry. The Group is working to improve convenience for patients and customers as well as operational efficiency through the promotion of digital transformation by actively developing apps.

VALUE CREATION STRATEGY

2015 The Company name changed to AIN HOLDINGS INC., following the transition to a holding company structure

Acquired all shares of AYURA LABORATORIES Inc.

2016 Number of Group pharmacies exceeds 1,000

2018 Carried out first online pharmaceutical guidance in Japan 2019 Released official AINZ & TULPE app

2020 Opened AINZ&TULPE WEBSTORE

2022 Transferred to Prime Market, a new market segment of Tokyo Stock Exchange

Launched the official AIN Pharmacy app, Anytime AIN Pharmacy

Opened first overseas AINZ & TULPE store

2023 Started supporting digital drug prescriptions

2024 Implemented demonstration of partial outside contracting of dispensing operations in the National Strategic Special Zones

Acquired all shares of Francfranc Corporation

BASIC INFORMATION / DATA

AIN GROUP'S VALUE CREATION

Value Creation Story

-Dedicated to improving the health and happiness of our customers-

The AIN Group is dedicated to improving the health and happiness of our customers by supporting their health and beauty through its business activities. The Group has consistently strived to attain this goal, which is enshrined in the Group Statement, by taking a sound and ethical approach in all its corporate activities. Going forward, we will seek to grow in a sustainable way by adjusting and responding to the needs of our customers and all our other stakeholders, while also practicing sustainability management* that creates social, environmental and economic value.

* A management approach based on the idea that contributing to the sustainable development of society also supports the sustainable development of the company

INTRODUCTION

Input

Business activities

Output

Outcome

MESSAGE

Human capital

Diverse, first-class human resources

Create shared value through

business activities

Dispensing pharmacy business

Cosmetic and drug store business

Financial factors

Net sales

¥399.8 billion

Ordinary profit

¥21.3 billion

Profit attributable to owners of parent

¥11.4 billion

Return on assets (ROA)

4.7%

ROE

8.7%

Dividend payout ratio

24.6%

Aim to be a company that people welcome to their communities

Contribute to a sustainable society

Contribute to the achievement

of SDGs

FROM THE PRESIDENTAIN GROUP'S

6

1. Contribute to local healthcare
2. Provide beauty and happiness
3. Safety, peace of mind and trust
4. Protect the environment and reduce environmental impact
5. Ensure sound management base
6. Cooperate with local communities and businesses

Intellectual capital

Accumulation of operational knowledge and methods in two businesses

Natural capital, etc.

Strengthening management capital that

supports value

Digital transformation strategy

Human resources strategy and respect for

human rights

Financial strategy

Non-financial factors

1. Environment

CO2 emissions (GHG) of the Group

*For fiscal 2024 / as of April 30, 2024 Governance data is as of July 31, 2024

Co-creation with stakeholders

Sustainably increase

corporate value

Reinforce earnings capabilities

Expand the business

Strengthen management capital and competitive advantages

Evaluation by and communication with customers, business partners, communities

Improve level of stock market appraisal

VALUE CREATION VALUE CREATION STRATEGY BASIC INFORMATION

Group Statement

Corporate governance / Risk management / Internal control and compliance

Improve level of external appraisal etc.

/ DATA

AIN GROUP'S VALUE CREATION

Materiality

The AIN Group is committed to achieving the sustainable development of society and the company in order to meet the expectations and requests of customers and all its other diverse stakeholders. We have therefore identified and categorized a wide range of CSR, ESG and sustainability issues and assessed them from two perspectives - degree of importance to the Group and degree of impact on stakeholders - to define the Group's materiality.

Process for defining materiality and formulating action plans

Materiality

INTRODUCTION

In December 2020, we used the following process to define and disclose the Group's materiality and the supporting value creation story.

We also established project teams for each area of

materiality. The teams devised initiatives and set KPIs, which were disclosed in May 2021 and we are currently implementing the initiatives to achieve our targets.

MESSAGE

Process

Step 1

Explore a wide range of social issues

Refer to ISO 26000, the United Nations Global Compact, SDGs and c r i t e r i a s e t b y E S G assessment bodies to explore a wide range of issues

Step 2

Define materiality

Define the Group's materiality by assessing the importance of issues identified along two lines: importance for the Group and impact for stakeholders

Step 3

Create the Group's value creation story

Organize and finalize the Group's value creation story in line with materiality

Step 4

Take action to achieve the materiality goals

Form project teams for each area of materiality to implement mea- sures, set and work towards KPIs

FROM THE PRESIDENTAIN GROUP'S VALUE

Regularly review and adjust

Sustainability governance

CREATION VALUE CREATION

Sustainability

governanceBoard of Directors structure

Key sustainability issues discussed by the Board of Directors in fiscal 2024

Progress with KPIs and initiatives related to materiality (key issues) (mid-term and full-year report)

Human capital management strategy, setting of KPIs

Employee engagement survey implementation and results

Revision of Compliance Committee Rules, Risk Management Committee Rules, etc.

• CSR procurement: Responsible, socially- and environmentally-friendly procurement initiatives conducted by companies in collaboration with their suppliers (business partners and members of the supply chain)

STRATEGY BASIC INFORMATION / DATA

AIN GROUP'S VALUE CREATION

Materiality

Materiality Initiatives (Progress vs. KPIs)

In May 2021, to promote sustainability management, the AIN Group disclosed key initiatives, KPIs and targets for the fiscal year ending April 30, 2026 in each area of materiality. Officers were also assigned to each project to lead the roll out of measures to achieve the targets.

INTRODUCTION

Formulate human rights policy

Disclose human rights policy

Formulated and disclosed the human rights policy in December 2021

Results for the fiscal year ended

April 2024

Develop human rights awareness checklist*8 and set benchmarks for test rate and correct answer rate

Test rate: 100%

Correct answer rate: 100%

94.8% 92.4%

Number of certified pharmacies*1

Number of health support pharmacies*2

Number of home-based services

Number of primary care pharmacists

Generic drug usage rate

Continually improve BCP and strengthen execution capabilities

All pharmacies to obtain either one of the two certifications

Specialized medical institution coordination pharmacy

Community coordination pharmacy

More than 50% of pharmacies to be certified as health support pharmacies

All pharmacies to conduct at least 24 cases per year

Deploy primary care pharmacists to all pharmacies

Maintain usage rate at 85% or higher at all pharmacies

Achieve 100% response rate for safety verification drills*3

Number of specialized medical institution coordination pharmacies: 37

Community coordination pharmacies: 593

Number of health support pharmacies: 245

Conducted at 85.4% of pharmacies

Deployed primary care pharmacists to 89.9% of pharmacies

Maintained usage rate at 74.7% of pharmacies

99.5% *Conducted in March 2024

Kurumin / Platinum Kurumin certification*9 and Eruboshi / Platinum Eruboshi certification*10

Ratio of female managers*11

Formulate basic policy on LGBT

All items needed to be recognized as a Certified KENKO Investment for Health Outstanding Organization *12

Number of security incidents

Board of Directors evaluation points

Ratio of outside directors

Ratio of female director

Maintain Platinum Kurumin, Platinum Eruboshi certification, etc.

Ratio of female managers: 40%

Disclose basic policy on LGBT

Recognized as a Certified KENKO Investment for Health Outstanding Organization

(Large Enterprise Category - White 500*12)

Major incidents: 0

Board of Directors evaluation points At least 4 or 5 points for all categories

At least two-fifths of board

At least one-third of board

Received Kurumin certification / Platinum Kurumin certification / received Eruboshi certification (third level)

36.8%

Disclosed in December 2021

Recognized as a 2024 Certified KENKO

Investment for Health Outstanding Organization

(Large Enterprise Category - White 500)

0

An average of 4.3 out of 5 points for all categories

1.8/5 of the board (4 out of 11)

1.1/3 of the board (4 out of 11)

Ratio of disaster base hospital pharmacies with emergency stockpiles

Ensure all pharmacies supporting disaster base hospitals have stockpiles

Conducted disaster response headquarters drills Conducted evacuation training in all pharmacies

6. Cooperate with local communities and businesses

2. Provide beauty and happiness

large enterprises for KENKO Investment for Health are included in the White 500.

MESSAGE FROM THE PRESIDENTAIN GROUP'S VALUE CREATION VALUE CREATION STRATEGY BASIC INFORMATION / DATA