Lion : Quarterly Financial Statements Material

ANNUAL REPORT 2023

Lion Corporation

Fiscal year ended December 31, 2023

This manuscript is for audit.

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Consolidated Statement of Financial Position
Lion Corporation and Consolidated Subsidiaries
December 31, 2023 and 2022
			Thousands of
			U.S. dollars
	Millions of yen		[Note 2(d)]
ASSETS	2023	2022	2023
Current assets:
Cash and cash equivalents [Notes 5, 30]	¥85,526	¥101,078	$603,018
Trade and other receivables [Notes 6, 30]	75,230	71,263	530,427
Inventories [Note 7]	56,090	53,909	395,474
Other financial assets[Notes 8, 30]	12,276	7,977	86,556
Other current assets[Note 9]	3,151	3,462	22,223
Total current assets	232,274	237,691	1,637,697
Non-current assets:
Property, plant and equipment [Note 10]	140,671	130,137	991,828
Goodwill [Note 11]	327	327	2,312
Intangible assets [Note 11]	22,712	23,917	160,142
Right-of-use assets [Note 27]	31,313	31,518	220,784
Investments accounted for using the equity method [Note 12]	17,487	8,939	123,298
Deferred tax assets [Note 13]	4,357	3,912	30,720
Retirement benefit assets [Note 19]	10,826	9,147	76,332
Other financial assets [Notes 8, 30]	25,475	22,856	179,620
Other non-current assets [Note 9]	917	831	6,468
Total non-current assets	254,089	231,587	1,791,504
Total assets	¥486,363	¥469,278	$3,429,201

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 2023 1

			Thousands of
			U.S. dollars
	Millions of yen		[Note 2(d)]
LIABILITIES AND EQUITY	2023	2022	2023
Liabilities
Current liabilities:
Trade and other payables [Notes 14,30]	¥126,158	¥126,024	$889,503
Borrowings [Notes 15,30]	148	1,433	1,047
Income tax payables	2,508	2,182	17,684
Provisions [Note 18]	2,399	1,444	16,920
Lease liabilities [Note 30]	2,043	1,746	14,408
Other financial liabilities [Notes 16,30]	2,363	1,681	16,667
Other current liabilities [Note 17]	7,711	7,061	54,369
Total current liabilities	143,333	141,574	1,010,598
Borrowings [Notes 15,30]	-	141	-
Deferred tax liabilities [Note 13]	5,847	2,701	41,226
Retirement benefit liabilities [Note 19]	4,531	10,431	31,949
Provisions [Note 18]	2,046	2,058	14,430
Lease liabilities [Note 30]	28,150	28,849	198,484
Other financial liabilities [Notes 16,30]	2,452	2,378	17,294
Other non-current liabilities [Note 17]	1,867	1,974	13,165
Total liabilities	188,229	190,110	1,327,146
Share capital [Note 21]	34,433	34,433	242,782
Capital surplus [Note 21]	31,118	31,069	219,410
Treasury stock [Note 21]	(7,868)	(8,056)	(55,480)
Other components of equity	18,377	13,966	129,577
Retained earnings [Note 21]	204,255	192,842	1,440,140
Equity attributable to owners of the parent	280,316	264,255	1,976,429
Non-controlling interests	17,817	14,912	125,627
Total equity	298,134	279,168	2,102,056

Lion Corporation

ANNUAL REPORT 2023 2

Consolidated Statement of Profit or Loss
Lion Corporation and Consolidated Subsidiaries
Years ended December 31, 2023 and 2022
			Thousands of
			U.S. dollars
	Millions of yen	[Note 2(d)]
	2023	2022	2023
Net sales [Notes 4,23]	¥402,767	¥389,869	$2,839,788
Cost of sales [Notes 7,24]	(222,168)	(215,263)	(1,566,442)
Gross profit	180,598	174,605	1,273,346
Selling, general and administrative expenses [Note 24]	(160,465)	(151,046)	(1,131,391)
Other income [Note 25,33]	2,196	6,738	15,486
Other expenses [Note 26]	(1,824)	(1,453)	(12,863)
Operating profit [Note 4]	20,505	28,843	144,577
Finance income [Note 28]	1,106	804	7,798
Finance costs [Note 28]	(843)	(179)	(5,946)
Share of profit (loss) of investments accounted
for using the equity method [Note 12]	1,607	1,824	11,335
Profit before income taxes	22,375	31,292	157,765
Income taxes [Note 13]	(5,687)	(8,182)	(40,104)
Profit for the year	16,687	23,110	117,661
Profit for the year attributable to:
Owners of the parent	14,624	21,939	103,116
Non-controlling interests	2,062	1,170	14,545
Profit for the year	¥16,687	¥23,110	$117,661
			U.S. dollars
		Yen	[Note 2(d)]
Earnings per share:
Basic [Note 29]	¥51.42	¥77.04	$0.36
Diluted [Note 29]	51.35	76.91	0.36

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 2023 3

Consolidated Statement of Comprehensive Income
Lion Corporation and Consolidated Subsidiaries
Years ended December 31, 2023 and 2022
			Thousands of
			U.S. dollars
	Millions of yen	[Note 2(d)]
	2023	2022	2023
Profit for the year	¥16,687	¥23,110	$117,661
Other comprehensive income
Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets measured at fair value through	1,803	729	12,716
other comprehensive income [Notes 22,30]
Remeasurements of defined benefit plans [Note 22]	3,853	2,523	27,172
Share of other comprehensive income(loss) of investments accounted for using	(74)	24	(528)
the equity method [Note 22]
Total items that will not be reclassified to profit or loss	5,582	3,277	39,359
Items that may be subsequently reclassified to profit or loss
Net gain (loss) on derivatives designated as cash flow hedges [Note 22]	20	(42)	145
Exchange differences on translation of foreign operations [Note 22]	4,284	5,680	30,212
Total items that may be subsequently reclassified to profit or loss	4,305	5,638	30,357
Total other comprehensive income, net of tax	9,887	8,915	69,716
Comprehensive income for the year	26,575	32,025	187,377
Comprehensive income for the year attributable to:
Owners of the parent	23,353	29,411	164,659
Non-controlling interests	3,222	2,614	22,718
Comprehensive income for the year	¥26,575	¥32,025	$187,377

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 2023 4

Consolidated Statement of Changes in Equity

Lion Corporation and Consolidated Subsidiaries

Fiscal 2023 (January 1 to December 31, 2023)

			Millions of yen
			Equity attributable to owners of the parent
				Other components of equity
					Net gain(loss) on
					revaluation of
	Share capital	Capital surplus	Treasury stock	Subscription	financial assets	Remeasurements
	measured at fair	of defined benefit
				rights to shares
				value through other	plans
					comprehensive
					income
Balance at January 1, 2023	¥34,433	¥31,069	¥(8,056)	¥123	¥8,930	¥-
Profit for the year
Other comprehensive income					1,728	3,811
Total comprehensive income for the year	-	-	-	-	1,728	3,811
Dividends	[Note 21]
Purchase of treasury stock	[Note 21]		(1)
Disposal of treasury stock	[Note 21]		189	(73)
Share-based payments	[Note 20]	49
Changes due to business combination
Transfer from other components of					(432)	(3,811)
equity to retained earnings
Total transactions with owners	-	49	187	(73)	(432)	(3,811)
Balance at December 31, 2023	¥34,433	¥31,118	¥(7,868)	¥50	¥10,227	¥-
				Millions of yen
		Equity attributable to owners of the parent
	Other components of equity
	Net gain (loss) on	Exchange		Retained		Non-controlling	Total equity
	derivatives	differences on		Total	interests
	Total	earnings
	designated as	translation of
	cash flow hedges	foreign operations
Balance at January 1, 2023	¥(42)	¥4,953	¥13,966	¥192,842	¥264,255	¥14,912	¥279,168
Profit for the year			-	14,624	14,624	2,062	16,687
Other comprehensive income	20	3,168	8,728		8,728	1,159	9,887
Total comprehensive income for the year	20	3,168	8,728	14,624	23,353	3,222	26,575
Dividends	[Note 21]		-	(7,393)	(7,393)	(740)	(8,133)
Purchase of treasury stock	[Note 21]		-		(1)		(1)
Disposal of treasury stock	[Note 21]		(73)	(63)	53		53
Share-based payments	[Note 20]		-		49		49
Changes due to business combination			-		-	423	423
Transfer from other components of			(4,243)	4,243	-		-
equity to retained earnings
Total transactions with owners	-	-	(4,316)	(3,212)	(7,291)	(317)	(7,609)
Balance at December 31, 2023	¥(21)	¥8,122	¥18,377	¥204,255	¥280,316	¥17,817	¥298,134

Lion Corporation

ANNUAL REPORT 2023 5

Consolidated Statement of Changes in Equity

Lion Corporation and Consolidated Subsidiaries

Fiscal 2022 (January 1 to December 31, 2022)

			Millions of yen
				Other components of equity
	Share capital	Capital surplus	Treasury stock	Subscription	Net gain(loss) on	Remeasurements
				rights to shares	revaluation of	of defined benefit
Balance at January 1, 2022	¥34,433	¥35,189	¥(4,731)	¥135	¥8,541	¥-
Profit for the year
Other comprehensive income					670	2,523
Total comprehensive income for the year	-	-	-	-	670	2,523
Dividends	[Note 21]
Purchase of treasury stock	[Note 21]		(10,001)
Disposal of treasury stock	[Note 21]	1	46	(12)
Retirement of treasury stock	[Note 21]	(4,259)	6,630
Share-based payments	[Note 20]	137
Changes due to business combination
Transfer from other components of					(281)	(2,523)
equity to retained earnings
Total transactions with owners	-	(4,120)	(3,324)	(12)	(281)	(2,523)
Balance at December 31,2022	¥34,433	¥31,069	¥(8,056)	¥123	¥8,930	¥-
				Millions of yen
		Equity attributable to owners of the parent
	Other components of equity
	Net gain (loss) on	Exchange		Retained	Total	Non-controlling	Total equity
	derivatives	differences on		interests
	Total	earnings
	designated as	translation of
	cash flow hedges	foreign operations
Balance at January 1, 2022	¥-	¥634	¥9,311	¥177,370	¥251,572	¥13,442	¥265,014
Profit for the year			-	21,939	21,939	1,170	23,110
Other comprehensive income	(42)	4,319	7,471		7,471	1,443	8,915
Total comprehensive income for the year	(42)	4,319	7,471	21,939	29,411	2,614	32,025
Dividends	[Note 21]		-	(6,899)	(6,899)	(1,169)	(8,069)
Purchase of treasury stock	[Note 21]		-		(10,001)		(10,001)
Disposal of treasury stock	[Note 21]		(12)		35		35
Retirement of treasury stock	[Note 21]		-	(2,371)	-		-
Share-based payments	[Note 20]		-		137		137
Changes due to business combination			-		-	25	25
Transfer from other components of			(2,804)	2,804	-		-
equity to retained earnings
Total transactions with owners	-	-	(2,817)	(6,466)	(16,728)	(1,144)	(17,872)
Balance at December 31,2022	¥(42)	¥4,953	¥13,966	¥192,842	¥264,255	¥14,912	¥279,168

Lion Corporation

ANNUAL REPORT 2023 6

Consolidated Statement of Changes in Equity

Lion Corporation and Consolidated Subsidiaries

Fiscal 2023 (January 1 to December 31, 2023)

			Thousands of U.S. dollars [Note 2(d)]
			Equity attributable to owners of the parent
				Other components of equity
	Share capital	Capital surplus	Treasury stock	Subscription	Net gain(loss) on	Remeasurements
				rights to shares	revaluation of	of defined benefit
Balance at January 1, 2023	$242,782	$219,061	$(56,805)	$870	$62,969	$-
Profit for the year
Other comprehensive income					12,190	26,870
Total comprehensive income for the year	-	-	-	-	12,190	26,870
Dividends	[Note 21]
Purchase of treasury stock	[Note 21]		(13)
Disposal of treasury stock	[Note 21]		1,338	(515)
Share-based payments	[Note 20]	349
Changes due to business combination
Transfer from other components of					(3,051)	(26,870)
equity to retained earnings
Total transactions with owners	-	349	1,325	(515)	(3,051)	(26,870)
Balance at December 31, 2023	$242,782	$219,410	$(55,480)	$355	$72,108	$-

			Thousands of U.S. dollars [Note 2(d)]
		Equity attributable to owners of the parent
	Other components of equity
	Net gain (loss) on	Exchange		Retained		Non-controlling	Total equity
	derivatives	differences on		Total	interests
	Total	earnings
	designated as	translation of
	cash flow hedges	foreign operations
Balance at January 1, 2023	$(296)	$34,928	$98,470	$1,359,675	$1,863,183	$105,146	$1,968,328
Profit for the year			-	103,116	103,116	14,545	117,661
Other comprehensive income	145	22,339	61,544		61,544	8,172	69,716
Total comprehensive income for the year	145	22,339	61,544	103,116	164,659	22,718	187,377
Dividends	[Note 21]		-	(52,126)	(52,126)	(5,220)	(57,346)
Purchase of treasury stock	[Note 21]		-		(13)		(13)
Disposal of treasury stock	[Note 21]		(515)	(446)	377		377
Share-based payments	[Note 20]		-		349		349
Changes due to business combination			-		-	2,983	2,983
Transfer from other components of			(29,921)	29,921	-		-
equity to retained earnings
Total transactions with owners	-	-	(30,436)	(22,650)	(51,413)	(2,237)	(53,650)
Balance at December 31, 2023	$(152)	$57,266	$129,577	$1,440,140	$1,976,429	$125,627	$2,102,056

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 2023 7

Consolidated Statement of Cash Flows

Lion Corporation and Consolidated Subsidiaries

Years ended December 31, 2023 and 2022
			Thousands of
			U.S. dollars
	Millions of yen	[Note 2(d)]
	2023	2022	2023
Cash flows from operating activities:
Profit before income taxes	¥22,375	¥31,292	$157,765
Depreciation and amortization	20,201	17,665	142,432
Impairment loss	187	501	1,322
Interest and dividend income	(1,003)	(671)	(7,073)
Interest expenses	774	179	5,461
Share of loss (profit) of investments accounted for using the equity method	(1,607)	(1,824)	(11,335)
Loss (gain) on disposal of non-current assets	716	(4,932)	5,049
Decrease (increase) in trade and other receivables	(2,454)	992	(17,305)
Decrease (increase) in inventories	(1,321)	(1,065)	(9,316)
Increase (decrease) in trade and other payables	(3,982)	(870)	(28,081)
Increase in net retirement benefit liabilities	(2,092)	1,070	(14,750)
Other	1,326	3,139	9,353
Subtotal	33,120	45,477	233,521
Interest and dividends received	1,688	1,592	11,903
Interest paid	(18)	(41)	(131)
Income taxes (paid) refund	(4,721)	(5,066)	(33,289)
Net cash flows from operating activities	30,068	41,962	212,005
Cash flows from investing activities:
Net decrease (increase) in time deposits	(3,715)	(1,312)	(26,197)
Purchases of property, plant and equipment	(23,317)	(18,490)	(164,402)
Proceeds from sales of property, plant and equipment	478	5,521	3,372
Purchases of intangible assets	(1,263)	(4,655)	(8,911)
Purchases of right-of-use assets	(406)	-	(2,867)
Purchases of other financial assets	(762)	(331)	(5,374)
Proceeds from sales of other financial assets	854	677	6,024
Purchases of investments in affiliates	(7,087)	-	(49,972)
Proceeds from sales of affiliates	-	35	-
Purchase of shares of subsidiaries resulting in change in scope of consolidation	-	(96)	-
Proceeds from transfer of business [Note 33]	1,005	-	7,088
Other	(575)	(883)	(4,058)
Net cash flows used in investing activities	(34,790)	(19,535)	(245,296)
Cash flows from financing activities:
Repayment of short-term borrowings	(1,150)	-	(8,108)
Repayment of long-term borrowings	(290)	(274)	(2,048)
Cash dividends paid	(7,385)	(6,895)	(52,075)
Cash dividends paid to non-controlling interests	(740)	(1,169)	(5,220)
Repayment of lease liabilities	(2,618)	(1,504)	(18,461)
Purchase of treasury stock	(1)	(10,001)	(13)
Proceeds from share issuance to non-controlling interests	423	-	2,983
Other	1	25	9
Net cash flows used in financing activities	(11,762)	(19,821)	(82,934)
Effect of exchange rate changes on cash and cash equivalents	931	1,222	6,570
Net increase in cash and cash equivalents	(15,552)	3,827	(109,655)
Cash and cash equivalents at beginning of the period [Note 5]	101,078	97,250	712,673
Cash and cash equivalents at end of the period [Note 5]	¥85,526	¥101,078	$603,018

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 2023 8

Notes to Consolidated Financial Statements

Lion Corporation and Consolidated Subsidiaries, December 31, 2023

Note 1: Reporting Entity

Lion Corporation (hereinafter the "Company") is a company, as defined by Japan's Companies Act, and is based in Japan. The consolidated financial statements of the Company and its subsidiaries (hereinafter the "Group") presented herein comprise the results for the year ended December 31, 2023 recorded by the Company, its subsidiaries and the Group's interests in its equity-method affiliates.

Information about the Group's primary business activities can be found in Note 4 "Segment Information."

Note 2: Basis of Preparation

1. Compliance with IFRS
   The Group's consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
   The Group meets the requirements for a "designated international accounting standards specified company" as specified in Article 1-2 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements. As such, the provisions of Article 93 of said ordinance apply.
2. Approval of consolidated financial statements
   The consolidated financial statements have been approved by the board of directors on March 27, 2024.
3. Basis of measurement
   Except for specific financial instruments stated in Note 3 "Material Accounting Policies" that are measured at fair value, the consolidated financial statements have been prepared based on acquisition cost.
4. Functional currency and presentation currency
   The Company and its domestic consolidated subsidiaries maintain their accounting records in Japanese yen, and its foreign consolidated subsidiaries maintain their accounting records in the currencies of their respective countries of domicile. The U.S. dollar amounts included in the accompanying consolidated financial statements, solely for the convenience of the reader, represent the arithmetic results of translating yen amounts into U.S. dollar amounts at ¥141.83= U.S.$1.00, the approximate rate of exchange in effect on December 31, 2023. This translation into U.S. dollars should not be construed as a representation that the yen amounts have been or could be converted into U.S. dollars at the above or any other rate.
   As permitted under the Financial Instruments and Exchange Act of Japan, amounts of less than

Lion Corporation

ANNUAL REPORT 2023 9