Note: This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translation and the Japanese original, the Japanese original shall prevail.
J. FRONT RETAILING Co., Ltd. assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translation.

16th Annual Shareholders Meeting: Other Matters for Which
Information is Provided in Electronic Format (Matters for Which
Document Provision is Omitted)<Basic Policy for Establishment of Internal Control System> in the Business Report
Notes to Consolidated Financial Statements
Notes to Non-consolidated Financial Statements(From March 1, 2022 to February 28, 2023)

J. FRONT RETAILING Co., Ltd.
<Basic Policy for Establishment of Internal Control System>, Notes to Consolidated Financial Statements,
and Notes to Non-consolidated Financial Statements are not provided in the documents delivered toshareholders who requested the delivery of paper-based documents in accordance with relevant laws andregulations and the provisions of Article 16 of the Company’s Articles of Incorporation.
The Company provides <Basic Policy for Establishment of Internal Control System>, Notes to Consolidated
Financial Statements, and Notes to Non-consolidated Financial Statements to shareholders by means of
disclosure through the Internet (on the Company website: https://www.j-front-retailing.com/) and the Annual
Shareholders Meeting informational materials website: https://d.sokai.jp/3086/teiji/, and they are a portionof the documents audited by the Audit Committee and Accounting Auditor when they prepare their audit
reports.

Systems to Ensure the Appropriateness of Operations <Basic Policy to Build Internal Control
System> (revised on May 26, 2022)
This is a basic policy set out by J. FRONT RETAILING Co., Ltd. (hereinafter the “Company”) relating tobuilding an internal control system for lawful and appropriate execution of overall business within theGroup (here and hereinafter referring to the corporate group comprising the Company and its subsidiaries).
By specifically promoting this policy, the Group aims to sustain its own growth and contribute to increasing
corporate value over the medium and long term.
 The Company aims to realize corporate governance that is a structure for transparent, fair, swift andresolute decision-making with due attention to the perspectives of shareholders and also customers,
employees, and local communities in order to ensure the sustainable growth of the Group and increase
corporate value over the medium to long term. The Company has therefore adopted the system of thecompany with three committees (nomination, audit, and remuneration committees) in order to strengthen
the oversight function and decision-making function for business execution of the Board of Directors by
clearly separating management oversight and execution functions.
 In order to achieve our best possible corporate governance structure, it is important that the President
and Representative Executive Officer takes and hedges various risks (uncertainties) within the Group tobuild an internal control system capable of appropriate and efficient business execution.
 The internal control system is a structure that companies should establish to control internal risks(uncertainties) with a view to realizing sustainable, stable growth. Specifically, the system comprises thefollowing Group management system, risk management system, legal compliance system, internal audit
structure, and structure of the audit committee.
I. Group Management System
1) Board of Directors
 The Board of Directors shall perform an oversight function by monitoring the execution of business by
Executive Officers and Directors.


The Board of Directors shall discuss and resolve matters defined in the Companies Act and/or the Articles
of Incorporation, as well as the Group Vision, Sustainability Policy, the Group Medium-term Business
Plan, overall policy and plan for the Group management, M&As, the Group financing plans, and otherindividual important matters relating to the Group management. In order to accelerate business decisions
and execution, the task of determining matters involving business execution other than the above shallbe delegated to execution, with the exception of matters which have a material impact on the Groupmanagement.

Regarding oversight, decision-making, and the like by the Board of Directors, in pursuit of separatingsupervisory and executive functions and ensuring the effectiveness of discussions by the Board of
Directors, independent Outside Directors having no risk of a conflict of interest with the Company’s
shareholders shall comprise a majority of the Board of Directors.

To ensure effectiveness of objective management oversight, internally promoted non-executive Directors
who are well informed about internal information shall also be appointed in addition to the Outside
Directors.

To further strengthen the oversight function while conducting smooth operation of the Board of Directors,
a non-executive Inside Director shall be selected as the Chairperson of Board of Directors.

2) Management execution framework
 The Company shall clearly separate management oversight and execution and strengthen the Board of
Directors’ oversight function while delegating authority for execution to enable swift management
decision-making. Meanwhile, execution shall be controlled by having the following framework.


The Company shall assign the optimal unit for expediting and ensuring the effectiveness of strategy
execution as the organization responsible for execution, and its general manager shall be an Executive
Officer.

- 1 -



The Company clarifies the missions of the President and Representative Executive Officer and each unit.
Each division formulates and executes a concrete plan based on the mission, and the roles and operations
set forth in the Rules for Division of Organizations and Duties.

Management shall formulate the major Group management policies and individual important matters,
and oversee business execution of operating subsidiaries. The Board of Directors shall discuss anddetermine (approve) the suitability of major policies and plans that management has prepared as well as
individual important matters.

Overall policy, plans, and other matters concerning the Group’s management are discussed at the GroupManagement Meeting, the Group Policy Meeting, each segment’s Medium-term Business Plan Progress
Meetings, the Operating Associates Results and Strategy Examination Meeting, etc. At the meetings,
participants confirm the progress of management strategies, share information between management,
and so forth.



The Company shall construct systems to raise overall efficiency of the Group such as the introduction of
the Group’s common accounting system in principle and promotion of centralized management of theGroup funds.

The Company has adopted the International Financial Reporting Standards (IFRS) voluntarily in theinterest of implementing effective management based on appropriate asset evaluation, applying business
management that gives emphasis to the profit of the current period and increasing convenience foroverseas investors by improving the international comparability of financial information.

3) Internal control promotion framework
 Under the direction of President and Representative Executive Officer, the Company shall put adepartment and person in charge of internal control to strengthen internal control over execution. The
person in charge shall develop and manage the operation of the internal controls regarding the Companies
Act and the internal control system regarding the Financial Instruments and Exchange Act at theCompany and operating subsidiaries.


The department in charge of internal control shall coordinate with the Audit Committee, internal audit
departments, and each unit and operating subsidiary to share information and remedy any deficiencies
that occur in the internal controls.

With regard to internal controls over financial reporting, internal systems that ensure the reliability offinancial reporting in line with the Financial Instruments and Exchange Act and various associated laws
and regulations shall be established at the Company and operating subsidiaries.

II. Risk Management System The Company shall establish the Risk Management Committee as an advisory body to the President andRepresentative Executive Officer with regard to risk management. The committee is chaired by the
President and Representative Executive Officer and comprises Executive Officers and others.


The Risk Management Committee incorporates risk management into management decision-making byidentifying and evaluating risks, determining which risks should be reflected in strategies, anddeliberating over other important matters. Notably, the committee shall report the details of thesedeliberations to the Board of Directors in a timely manner.



An officer shall be put in charge of risk management in order to promote the operation of risk
management.
The Company shall also put a department and person in charge of risk management to offer support andguidance in addition to monitoring the risk management of the Company and operating subsidiaries.

Each operating subsidiary shall designate departments and people in charge of risk management, andprovide daily leadership for risk management.

For hazard risks such as large-scale earthquakes, fires and accidents, crisis management shall becontrolled by the “Emergency Response Headquarters” headed by the President and Representative
Executive Officer.

- 2 -III. Legal Compliance System
1) Compliance promotion framework
 The Company shall establish the Compliance Committee as an advisory body to the President andRepresentative Executive Officer regarding the operation of compliance management. The President andRepresentative Executive Officer shall be the chairperson, and the members of the committee shall be a
corporate lawyer, Executive Officers, and others.
An officer shall be put in charge of compliance in order to promote the operation of compliancemanagement.
The Company shall also designate a department and person in charge of compliance to establish,
institutionalize, and supervise the operation of compliance systems at the Company and operating
subsidiaries.

Each operating subsidiary shall designate departments and responsible persons in charge of promotionof compliance, and shall carry out daily supervision and direction of business operations that are inaccordance with laws and regulations and internal company rules.



The Compliance Committee shall strengthen collaboration with departments in charge of compliance inoperating subsidiaries, continuously oversee the development of the foundations of the compliancesystem and the status of implementation, and promote compliance with laws, regulations, and corporate
ethics in addition to drawing up courses of action to take in response to serious compliance-related
violations.
Notably, the committee shall report the details of these deliberations to the Audit Committee in a timely
manner.

2) Whistle-blowing system The Company shall establish the “JFR Group Compliance Hotline” as the whistle-blowing system of theGroup that also extends beyond companies (to a corporate lawyer), which may be used by all persons
working at the Company and operating subsidiaries.


The hotline’s policy shall be to maintain strict confidentiality regarding notifications and reports andshall not disclose the personal information of whistleblowers to a third party without their consent; to becareful to avoid identification of the whistleblower when investigating the facts; and to ensure thatwhistleblowers are not subjected to disadvantageous treatment in terms of personnel affairs or any otheraspect.

For hotline reports concerning management personnel, the Company shall build a structure whereby thereports are submitted directly to the Audit Committee and subjected to directions from the Audit
Committee so as to secure an independent reporting route.

IV. Internal Audit Structure The Company shall establish an independent internal audit department under the direction of the
President and Representative Executive Officer. In accordance with internal audit rules and under the
direction of the President and Representative Executive Officer, the internal audit department shall audit
the operations of the Company and operating subsidiaries or have them properly report the results ofaudits of operations, examine the properness and effectiveness of the processes for their operations, andprovide guidance, advice and proposals to all departments at the Company and to operating subsidiaries.


The persons responsible for the internal audit departments, while providing directions, guidance andassistance to the internal audit departments of the operating subsidiaries, provide a report to the President
and Representative Executive Officer of the status of internal control functions through a third-party
evaluation of the audit plans and audit results of the operating subsidiaries.



To further enhance corporate governance by strengthening auditing functions, the Company shall clarify
links between the President and Representative Executive Officer, the Audit Committee and the internal
audit department. Specifically, the Company shall adopt a system in which reports are submitted to boththe President and Representative Executive Officer and the Audit Committee. When the reports are made,the audit report and the improvement report shall be made together to realize swift measures.

- 3 -



Appointments and transfers of persons responsible for the internal audit departments shall be subject toadvance approval by the Audit Committee, and when such persons are evaluated, the Audit Committee
states an opinion to the execution of such evaluation.

V. Structure of the Audit Committee
 The Audit Committee shall audit the legality and suitability of the execution of duties by the Executive
Officers and Directors.


The committee shall comprise independent Outside Directors and full-time non-executive directors, andin pursuit of transparency and objectivity, the Chairperson shall be selected from among the independent
Outside Directors.



The Audit Committee Secretariat has been established as an organization in charge of assistance for the
Audit Committee’s duties.

Regarding the organization of the Audit Committee Secretariat, the appointment and reassignment ofsecretariat staff members, and performance evaluations of the manager of the secretariat, the Audit
Committee’s advance approval is required to ensure independence.



The Audit Committee shall have periodic meetings with the President and Representative Executive
Officer to share information.
Moreover, the Company’s Executive Officers and Directors may be asked to attend Audit Committee
meetings to provide reports and opinions as necessary.



The Audit Committee shall regularly coordinate with the internal audit department to share information.
Moreover, the Accounting Auditor, outside experts and others may be asked to attend Audit Committee
meetings to provide reports and opinions as necessary.



The Audit Committee members shall report to the Audit Committee on the status of audits of thefollowing matters:Matters resolved by or reported to the Board of Directors

Matters identified by the Audit Committee as issues

Status and results of internal audits conducted (audit report, improvement report, etc.)



The Audit Committee members shall attend the Group Management Meeting and other meetings, inspect
important documents associated with the execution of duties, such as approval circulars, and request
explanations from officers and employees of operating subsidiaries as necessary.



Operating subsidiaries shall submit the necessary audit reports and perform other duties if requested to
do so by the Audit Committee.



The Audit Committee shall have periodic meetings and the like with the audit & supervisory board
members of operating subsidiaries to enhance and strengthen the auditing of the entire Group.

Personnel appointments and transfers for audit & supervisory board members of operating subsidiaries
shall require approval from the Audit Committee, and the audit & supervisory board members ofoperating subsidiaries concurrently serve as members in the Audit Committee Secretariat.



The Audit Committee may claim expenses deemed necessary for performing the duties from theCompany, and the Company shall bear them.

VI. System for Storage and Management of Information
1) Confidential information management Regarding documents relating to the execution of duties by Executive Officers and Directors and minutes
and related documents (including electromagnetic records, in both cases) regarding meetings chaired by
Executive Officers and Directors, in accordance with laws, regulations, and the rules on confidential
information management, each responsible department shall carry out document storage andmanagement during the stipulated period and shall develop a system to enable inspections of such
documents at any time.

- 4 -2) Information security management
 The Senior Executive General Manager of the Systems Department shall control information security
management of the Company based on the Information Security Policy and IT Governance Policy, andshall report periodically and whenever necessary on the status of information system management andrelated matters to the Board of Directors, the Audit Committee, the Management Meeting and thePresident and Representative Executive Officer.

- 5 -Notes to Consolidated Financial Statements
Notes on important matters forming the basis of preparation of consolidated financial statements, etc.
1. Reporting standards for the preparation of consolidated financial statements
The Group has been preparing its consolidated financial statements in accordance with the“International Financial Reporting Standards (IFRS),” based on the provisions of Article 120, Paragraph
1 of the Regulation on Accounting of Companies.
Certain items of the consolidated financial statements that are required to be disclosed by the IFRS areomitted based on the latter provisions of the same Paragraph.
2. Matters concerning the scope of consolidation
Consolidated subsidiaries
22 companies
Major consolidated subsidiaries are listed in “1. Current status of the corporate group, (8) Status ofsignificant parent company and subsidiaries” in the Business Report.
The Company established the corporate venture fund JFR MIRAI CREATORS Fund on September 12,2022; it is included in the scope of consolidation. Additionally, the Company acquired 50.8% of the sharesof XENOZ CO., Ltd. on December 1, 2022; they are included in the scope of consolidation.

3. Matters concerning the application of the equity method
Equity method associates
9 companies
Major equity method associates include StylingLife Holdings Inc. On December 26, 2022, the Company
established Shinsaibashi Kaihatsu Tokutei Mokuteki Kaisha through a joint investment; it is included in
the scope of the equity method.
With regard to equity method associates whose balance sheet dates are different from the consolidatedbalance sheet date, necessary adjustments are made by additionally preparing their financial statements asof the fiscal year end of the Company or other means.
4. Matters concerning the fiscal year of consolidated subsidiaries
With regard to subsidiaries whose balance sheet dates are not the end of February, which is the balance
sheet date of the Company, because the legal system of the region where the subsidiaries are located does
not allow them to have the same balance sheet date as that of the Company, or for other reasons,adjustments are made by additionally preparing their financial statements as of the fiscal year end of theCompany or other means.
5. Matters concerning accounting policies(1) Foreign currency transactions
1) Foreign currency transactions
Each entity of the Group has set its own functional currency as the currency of the primaryeconomic environment in which the entity operates. Transactions of each entity are measured at thefunctional currency.
When each entity prepares non-consolidated financial statements, transactions in currencies otherthan its functional currencies are translated using the exchange rate prevailing at the dates oftransactions.
Foreign currency monetary assets and liabilities at the end of the reporting period are translatedusing exchange rates at the end of the reporting period.
Exchange differences arising from translation or settlement are recognized as profit or loss.
However, when gains or losses on non-monetary items are recorded in other comprehensive income,exchange differences are also recorded in other comprehensive income.

- 6 -

2)

Financial statements of foreign subsidiaries, etc.
Assets and liabilities of foreign subsidiaries, etc., are translated into Japanese yen at the exchange
rate prevailing at the end of the reporting period. Income and expenses of foreign subsidiaries, etc.
are translated into Japanese yen at the average exchange rate for the period, unless there is significant
change in the exchange rate during the period. When there is significant change in the exchange rate,
the income and expenses are translated using the exchange rate at the transaction date.
Exchange differences arising from translation of the financial statements of foreign subsidiaries,
etc. are recognized in other comprehensive income. Exchange differences for foreign subsidiaries,
etc. are recognized as profit or loss in the period during which the foreign subsidiaries, etc. aredisposed of.

(2) Basis and method of valuation of significant assets and accounting method for deferred assets
1) Financial instruments(i) Non-derivative financial assets
Trade and other receivables are initially recognized on the date when they are incurred. Allother financial assets are initially recognized on the trade date when the Group becomes a party
to the contractual provisions of the financial instruments.
An overview of classification and measurement model of non-derivative financial assets is
as follows.
(a)Financial assets measured at amortized cost
With regard to investments in debt instruments, when the contractual cash flows consistof principal and interest paid on specified dates, and the Group holds such investments
based on a business model whose objective is to hold the instrument to collect contractual
cash flows, the debt instruments are measured at amortized cost. Transaction cost directly
attributable to acquisition of financial assets measured at amortized cost is included in theamount of initial measurement. After the initial recognition, amortization cost is measured
using the effective interest method, and impairment losses are deducted where necessary.
Interest revenue, foreign exchange gains and losses and impairment losses on financial
assets measured at amortized cost are recognized in profit or loss.

(b) Financial assets measured at fair value through other comprehensive income (financial
assets at FVTOCI)With regard to investments in debt instruments, when the contractual cash flows consistof principal and interest paid on specified dates, and the Group holds such investments
based on a business model whose objective is both to collect contractual cash flows andto sell the financial assets, the debt instruments are measured at fair value. In this case,interest revenue, foreign exchange gains and losses and impairment losses measured using
the effective interest method are recognized in profit or loss, and changes in the fair value
excluding them are recognized in other comprehensive income (may be reclassified to
profit or loss).
For investments in equity instruments that are not held for trading, the Group may makean election (irrevocable) at the initial recognition to measure them at fair value andrecognize any changes in the fair value in other comprehensive income. In this case,changes in the fair value are recognized in other comprehensive income (not reclassified
to profit or loss). The cumulative amount recognized as other comprehensive income istransferred to retained earnings when the financial asset is derecognized. Dividends arerecognized in profit or loss unless they obviously represent a partial recovery of the costof the investment.
Transaction cost directly attributable to acquisition of financial assets at FVTOCI is
included in the amount of initial measurement.
(c)Financial assets measured at fair value through profit or loss (financial assets at FVTPL)
Financial assets other than above are measured at fair value with changes in fair value
recognized in profit or loss. Transaction cost directly attributable to acquisition of financial
assets at FVTPL is recognized in profit or loss as incurred.
- 7 -The Group does not designate any debt instrument as measured at fair value throughprofit or loss to remove or significantly reduce an accounting mismatch.
(d) Impairment of financial assets
The Group recognizes impairment of debt instruments measured at amortized cost or atfair value through other comprehensive income based on its evaluation at the end of eachreporting period whether there is a significant increase in credit risk of financial assets orgroups of financial assets since initial recognition. Specifically, when there is no
significant increase in the credit risk since initial recognition, expected credit losses for 12months are recognized as allowance for doubtful accounts. On the other hand, when there
is a significant increase in credit risk since initial recognition, expected credit losses forthe remaining life of the financial assets are recognized as allowance for doubtful accounts.
Whether credit risk is significantly increased or not is determined based on the changes indefault risk.
For trade receivables arising from the ordinary course of business of the Group, since
the period up to the collection is short, expected credit losses of such trade receivables arerecognized over their remaining lives from the inception simply based on historical credit
loss experience.
(e)

Derecognition of financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows
from the financial asset expire, or the contractual rights to receive cash flows from thefinancial asset are transferred in a transaction where substantially all the risks and rewards
incidental to ownership of the financial asset are transferred. Any interests in transferredfinancial assets that are created or continuously retained by the Group are recognized as aseparate asset or liability.

(ii) Non-derivative financial liabilities
The Group recognizes financial liabilities at the date of transaction when the Group becomesa party to the contract for the financial instrument.
The Group derecognizes a financial liability when the financial liability is extinguished, i.e.
when the contractual obligation is discharged, cancelled or expired.
The Group principally has borrowings, bonds, trade payables, other short-term payables,
common gift certificates for department stores nationwide, deposits, etc. as non-derivative
financial liabilities. These financial liabilities are initially recognized at fair value andsubsequently measured at amortized cost based on the effective interest method.
(iii) Presentation of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is presented in the consolidated
statement of financial position only when the Group has a legally enforceable right to offset therecognized amounts and intends either to settle on a net basis, or to realize the asset and settle
the liability simultaneously.
(iv) Derivatives and hedge accounting
The Group uses derivatives to hedge interest rate fluctuation risk and foreign exchange
fluctuation risk. Derivatives used by the Group include forward exchange contracts and interest
rate swaps.
At the time of initial designation of the hedge, the Group documents the relationship between
the hedging instrument and the hedged item, the risk management objective, the strategy for
implementation of the hedge transaction, the hedging instrument and the hedged item, thenature of hedged risk, the method for assessing effectiveness of the hedge relationship and themethod of measuring the effective portion and the ineffective portion.
The Group assesses whether the hedging instrument is expected to be highly effective inachieving offsetting changes in fair values or cash flows of the hedged item attributable to thehedged risk throughout the period for which the hedge is designated, at the inception of thehedge and on an ongoing basis.

- 8 -To apply cash flow hedges to forecast transactions, the possibility that the forecast
transaction occurs must be very high.
Derivatives are initially recognized at fair value and the transaction costs are recognized in
profit or loss when they are incurred. After the initial recognition, derivatives are measured atfair value, and any changes in the fair value are accounted for as follows.
(a)Cash flow hedges
When a derivative is designated as a hedging instrument to hedge changes in cash flows
attributable to certain risks related to highly likely forecast transactions that could affectrecognized assets and liabilities or profit or loss, the effective portion of the hedge inchanges in fair value of the derivative is included in other components of equity as “cashflow hedges.” The balance of cash flow hedges is deducted from other comprehensive
income in the consolidated statement of comprehensive income and transferred to profit
or loss under the same item as the hedged item in the same period as the period in whichcash flows of the hedged item affect profit or loss. The ineffective portion of the hedge inchanges in fair value of the derivative is immediately recognized in profit or loss.

(b) Fair value hedges
Changes in fair value of derivatives that are hedging instruments are recognized in profit
or loss. Carrying amounts of hedged items are measured at fair value. For gains or losses
on hedged items attributable to hedged risk, any changes in the fair value are recognizedin profit or loss.
(v) Cash and cash equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments withmaturities of three months or less that are readily convertible to cash and subject to insignificant
risk of change in value.
2)

Basis and method of valuation of non-financial instruments(i) Inventories
Inventories are measured at the lower of acquisition cost and net realizable value. Net
realizable value is the estimated selling price in the ordinary course of business less theestimated costs necessary to make the sale. The acquisition cost is calculated mainly using theidentified cost method, and includes all costs of purchase and other costs incurred in bringing
the inventories to their present location and condition.
(ii) Assets held for saleIf the carrying amounts of non-current assets are recovered principally through a saletransaction rather than through continuing use, these assets (or disposal groups) are classified
as “assets held for sale.”
The condition for classifying an asset under “assets held for sale” can only be met by an asset
whose sale is highly probable, and which is available for immediate sale in its present condition.
The management must have committed to the execution of a sales plan for that asset, and thesale of the asset must be scheduled to be completed within one year from the day it is classified
as an asset held for sale.
An asset held for sale is measured at the lower of its carrying amount and fair value less costto sell.
After property, plant and equipment, intangible assets and investment property have beenclassified under “assets held for sale,” depreciation or amortization will not be applied to theseassets.

3)

Property, plant and equipment
Property, plant, and equipment is measured using the cost model and is carried at cost lessaccumulated depreciation and accumulated impairment losses.
The acquisition cost includes costs directly attributable to the acquisition of the asset, costs related
to disassembly, retirement and site restoration, and borrowing costs that should be capitalized.

- 9 -Depreciation of assets other than land and construction in progress is calculated on the straightline method over the estimated useful lives of the assets. The estimated useful lives of major
components of property, plant and equipment are as follows: Buildings and structures

2 to 60 years Machinery and vehicles

2 to 20 years

 Furniture and fixtures

2 to 20 years

The estimated useful lives and depreciation methods are reviewed at the end of the fiscal year, andif there are any changes made, those changes are applied prospectively as a change in an accounting
estimate.
4)

Goodwill
The Group measures goodwill at the amount calculated by deducting the net recognized amount(usually, fair value) of identifiable assets acquired and liabilities assumed at the date of acquisition
from fair value of consideration for the transfer including the recognized amount of non-controllinginterests in the acquiree, which is measured at the date of acquisition.
Goodwill is not amortized. Instead, it is tested for impairment annually, or whenever there areindications of potential impairment.
Impairment losses of goodwill are recognized in the consolidated statement of profit or loss, andnot reversed subsequently.
In addition, goodwill is carried at cost less accumulated impairment losses on consolidated
statement of financial position.

5)

Intangible assets
Intangible assets are measured using the cost model and stated at cost less accumulated
amortization and accumulated impairment losses.
Intangible assets acquired separately are measured at cost at initial recognition.
After the initial recognition, intangible assets other than goodwill are amortized using the straightline method over respective estimated useful lives, except for intangible assets with indefinite useful
lives. Estimated useful lives of major intangible assets are as follows. In addition, the Group has no
intangible assets with indefinite useful lives.

 Software

5 years

The estimated useful lives, residual values and amortization methods are reviewed at the end of
the fiscal year, and if there are any changes made, those changes are applied prospectively as a change
in an accounting estimate.
6)

Right-of-use assets
The Group confirms a right-of-use asset on the lease commencement date and initially measures
it at its acquisition cost. The aforementioned acquisition cost consists of the amount of the leaseliabilities, the amount of lease payments made before the lease commencement date adjusted to
exclude any received lease incentives, and the initial direct cost that was incurred.
After the initial measurement, right-of-use assets are depreciated using the straight-line method
over the lease term. The lease term is determined based on the non-cancellable term of the lease,taking into consideration any term for which there is reasonable certainty of extension and any term
for which there is reasonable certainty of non-cancellation. In cases where a right-of-use asset isimpaired, the impairment loss is deducted from the carrying amount of the right-of-use asset.

7)

Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments to be paid in the
future over the lease term on and after the lease commencement date. When calculating the present
value, if the interest rate implicit in the lease can be readily determined, that is used, and if it cannot,
the lessee’s incremental borrowing rate is used.

- 10 -

The lease payments used in the measurement of lease liabilities include the lease payments of theextended term if the lease term reflects the exercise of a lease extension option, and include thecancellation fees if the lease term reflects the exercise of a lease cancellation option.
After the initial measurement, lease liabilities are measured at the amortized cost using theeffective interest method. Moreover, if changes in future lease payments arise due to changes inindexes or rates, or if changes in the assessment regarding the potential for execution of an extension
option or a cancellation option arises, the Group remeasures the lease liabilities.
If remeasuring the lease liabilities, the carrying amount of the right-of-use asset is also adjusted
using the remeasured amount of the lease liabilities. However, if the decrease in liabilities due toremeasurement of the lease liabilities is larger than the carrying amount of the right-of-use asset, theamount remaining after impairing the right-of-use asset to zero is recognized in profit or loss.
8)

Investment property
Investment property is property held to earn rentals or for capital gains or both.
Investment property is measured using the cost model and stated at cost less accumulated
depreciation and accumulated impairment losses. (See “3) Property, plant and equipment” for methodof depreciation and useful life.)
When it is difficult to account for investment property and other portions separately, the entire
property is accounted for as investment property only if the owner-occupied portion is insignificant.

9)

Impairment of non-financial assets
The Group determines the end of every reporting period whether there is any indication thatcarrying amounts of the Group’s non-financial assets excluding inventories and deferred tax assets
may be impaired. If any indication exists, the recoverable amount of the asset is estimated. For
goodwill and intangible assets with indefinite useful lives or not yet available for use, the recoverable
amount is estimated at the same time each year.
The recoverable amount of an asset or a cash-generating unit is the larger of its value in use andfair value less cost of disposal. In calculating value in use, the estimated future cash flows are
discounted to their present value using a pretax discount rate that reflects the time value of money
and the risks specific to the asset. The cash-generating unit is the smallest group of assets thatgenerates cash inflows, from continuous use, that are largely independent of the cash inflows fromother assets or groups of assets.
To test goodwill for impairment, cash-generating units to which the goodwill is allocated are
integrated so that impairment is tested reflecting the smallest unit related to the goodwill. Goodwill
acquired in business combination is allocated to cash-generating units that are expected to benefit
from the synergies of the combination.
Since the Group’s corporate assets do not generate independent cash inflows, the recoverable
amount of cash-generating units to which the corporate assets are attributed is determined if there is
any indication of impairment in the corporate assets.
An impairment loss is recognized as profit or loss, if the carrying amount of an asset or cashgenerating unit exceeds the recoverable amount. The impairment loss recognized in association witha cash-generating unit is first allocated to reduce the carrying amount of goodwill allocated to thisunit, and then the carrying amounts of other assets in the cash-generating unit are reduced on a pro
rata basis.
Impairment losses related to goodwill are not reversed. With regard to other assets, for previously
recognized impairment losses, the Group assesses whether there is any indication that the loss has
decreased or been extinguished at the end of each reporting period. An impairment loss is reversed
when there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed up to the carrying amount that would have been determined had no
impairment loss been recognized, net of necessary depreciation and amortization.

(3) Accounting policy for significant provisions
A provision is recognized when the Group has a present legal or constructive obligation as a resultof a past event, when it is highly probable that an outflow of financial resources will be required to- 11 -

settle the obligation and when a reliable estimate can be made of the amount of the obligation. To
determine the amount of a provision, when the effect of the time value of money is material, theestimated future cash flows are discounted to their present value using a pretax discount rate that reflects
the time value of money and the risks specific to the liability. Unwinding of the discount over time arerecognized in finance costs.
Asset retirement obligations
Asset retirement obligations are recorded at the estimated amount of restoration costs for leased
stores, offices, etc. for which the Group has obligations to restore them to original state at the time
when the lease is terminated.
Provision for loss on business liquidation
Legal or constructive obligations are recorded for the cost of store dismantlement, etc. that is
expected to be borne in the future as a result of business liquidation, store closure and store rebuilding.
(4) Revenue recognition
Based on the following five-step approach, revenue is recognized as the amount of consideration towhich the Group expects to be entitled in exchange for the transfer of goods or services promised tocustomers.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Group, under a holding company structure, develops businesses such as the SC Business, theDeveloper Business, and the Payment and Finance Business, with the Department Store Business at its
core. The Department Store Business carries out the sale of clothing, general goods, household goods,
food products and others. With regard to these sales of goods, since it is determined that performanceobligation is satisfied at the time of delivery of goods when customers gain control of such goods, theGroup mainly recognizes revenue at the time of delivery of such goods. Furthermore, revenue ismeasured at the amount of consideration promised in contracts between customers, less any discounts,
rebates and sales returns, etc.
1)

Revenue recognition by business segment(i) Department Store Business
The Department Store Business carries out the sale of clothing, general goods, household goods, foodproducts and others. With regard to these sales of goods, since it is determined that performanceobligation is satisfied at the time when goods are delivered to customers, the Group recognizes revenue
at the time of delivery of such goods. Payments for goods are received mainly at the time of delivery of
the goods, which is the time when performance obligation is satisfied.
(ii) SC Business
The SC Business undertakes development, management, supervision and operation, etc. of shopping
centers as well as sale of personal belongings, general goods and others.
With regard to services, because these services are provided on a continuous basis and thus it isdetermined that performance obligation is satisfied over a certain period of time, revenue is recognized
as the services are rendered.
With regard to the sale of accessories, general goods and others, since it is usually determined that
performance obligation is satisfied at the time when goods are delivered to customers, revenue isrecognized at the time of delivery of such goods. Payments for goods are received at the time of deliveryof the goods, which is the time when performance obligation is satisfied.
Revenue from lease of shopping centers and others is recognized over the lease term, in accordancewith IFRS 16.

- 12 -

(iii) Developer Business
The Developer Business carries out development, supervision, operation, interior decorating work,
etc. of real estate.
Revenue from lease of real estate and others is recognized over the lease term, in accordance withIFRS 16.
With regard to the design and operation of interior decorating work, if the outcome of a work contract
can be estimated reliably, revenue is recognized according to the stage of completion of the performanceobligation. If the outcome of a work contract cannot be estimated reliably, revenue is recognized only
to the extent that it is probable that the contract costs incurred will be recoverable.
(iv) Payment and Finance Business
The Payment and Finance Business undertakes issuance and administration, etc. of credit cards.
In the Payment and Finance Business, annual membership fees from cardholders, and fees fromdepartment stores and external affiliated stores are recognized as revenue. With regard to interest on
installment sales, the Group multiplies the revolving balance and number of installment payments by
their respective set interest rates to calculate interest revenue, and recognizes the interest in the period
to which it is attributable, in accordance with IFRS 9.
(v) Other
Within other, for sales of products and merchandise such as electronic components, automobile
components, industrial supplies, and liquor within the wholesale business, the Group deems that in mostcases the customer acquires control of the products when they are delivered and its performanceobligations are satisfied. Therefore, usually revenue is recognized for the goods upon their delivery.
2)

Interest revenue
Interest revenue is recognized using the effective interest method.

3)

Dividends
Dividend income is recognized when the right to receive dividends is established.

4)

Gross and net presentation of revenue
When the Group conducts transactions as a principal, revenue is presented at the gross amount ofconsideration received from customers. When the Group conducts transactions as an agent for the
benefit of a third party, revenue is presented at the net amount calculated by deducting the amountcollected for the benefit of the third party from the gross amount of consideration received from
customers.
The following indicators are taken into account in the determination of whether the Group
conducts a transaction as a principal or agent:Whether the entity is primarily responsible for fulfilling a contract

Whether the entity has inventory risk before or after the customer order, during shipping or
on returnWhether the entity has discretion in establishing prices(5) Government grants
Government grants are measured and recognized at fair value, if the conditions attaching to them arecomplied with, and there is reasonable assurance that the grants will be received. Grants for expenses
incurred are recorded as income in the same fiscal year as the fiscal year in which the expenses are
incurred. Grants related to acquisition of an asset are recorded as other operating income on a systematic
basis over the useful life of the asset, and unearned government grants are recorded in liabilities asdeferred income.

- 13 -

(6) Income tax
Income tax consists of current taxes and deferred taxes. Income tax is recognized as profit or loss,
except for taxes related to business combinations and taxes related to items that are recognized directlyin equity or in other comprehensive income.
1)

Current taxes
Current taxes are measured in the amount of the expected tax payables to or receivables from thetaxation authorities. Calculation of the amount of tax is based on the tax rates and tax laws enacted
or substantively enacted by the end of the reporting period in countries where the Group conducts
businesses and earns taxable income.

2)

Deferred taxes
Deferred taxes are recognized for temporary differences between the carrying amounts of assets
or liabilities in the statement of financial position and its tax base, and for unused tax losses andunused tax credits.
No deferred tax assets and liabilities are recognized on following temporary differences:

Temporary differences arising from the initial recognition of goodwillTemporary differences arising from initial recognition of assets and liabilities fromtransactions that are not business combinations and affect neither accounting income nor
taxable income

Taxable temporary differences associated with investments in subsidiaries and associates,
where the Group is able to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future

A deferred tax liability is recognized for all taxable temporary differences in principle, and adeferred tax asset is recognized for all deductible temporary differences to the extent that it isprobable that taxable income will be available against which deductible temporary differences canbe utilized.
Carrying amount of deferred tax assets is reassessed each reporting period and reduced to theextent that it is no longer probable that sufficient taxable profit will be available to use all or part ofthe benefit of the deferred tax assets. Unrecognized deferred tax assets are reassessed each period
and are recognized to the extent that it has become probable that future taxable income will allow thedeferred tax assets to be recovered.
Deferred tax assets and liabilities are measured at the tax rates and by the tax laws that are expected
to apply to the period when the assets are realized or the liabilities are settled, based on the statutory
tax rates and tax laws enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to offset
current tax assets against tax liabilities and income taxes are levied by the same taxation authority on
the same taxable entity.
(7) Employee benefits
The Group has established defined benefit plans (such as a corporate pension fund plan and lumpsum retirement benefit plan) as employee retirement benefit plans, and certain consolidated subsidiaries
have adopted defined contribution plans.
The projected unit credit method is used to determine the present value of defined benefit obligation,
related current service cost and past service cost.
The discount rate is determined by reference to market yields at the end of the fiscal year on highquality corporate bonds corresponding to the discount period established based on the period to the datewhen the future benefits for each fiscal year are to be paid.
Net defined benefit liability or asset is determined as the present value of defined benefit obligation
less the fair value of plan assets.
Remeasurements of net defined benefit liability or asset are recognized as other comprehensive
income and immediately transferred from other components of equity to retained earnings.
- 14 -

Remeasurements consist of actuarial gains and losses on defined benefit obligation, return on plan assets(excluding the amount of interest revenue on plan assets) and others.
Past service costs are immediately accounted for as profit or loss.
Costs for defined contribution benefits are recognized as expenses in the period in which theemployees provide services.
(8) Share-based payment
To ensure steady execution of the Medium-term Business Plan for realizing the Group Vision, theCompany has adopted a stock-based remuneration system for officers utilizing a trust (officer
remuneration BIP trust). The officer remuneration BIP trust is a system of granting the Company’s
shares to officers (in this system, in certain cases, the Company’s shares are converted into cash within
the trust and cash in the amount equivalent to their conversion value is paid) in accordance with theofficers’ level of achievement of the Medium-term Business Plan, etc. The value of the service received
is measured by the fair value of the Company’s shares on the grant date. This value is expensed overthe vesting period from the grant date, and a corresponding amount is recognized as an increase inequity.
(9) Earnings per share
Basic earnings per share are calculated by dividing profit (loss) attributable to ordinary equity holdersof parent entity by the weighted average number of shares outstanding during the period, adjustingtreasury shares. Diluted earnings per share are calculated by adjusting for the effects of all dilutive
potential shares.
(10) Treasury shares
Treasury shares are recognized at cost and deducted from equity. No gain or loss is recognized on
the purchase, sale or cancellation of the Company’s treasury shares. Any difference between the
carrying amount and consideration received on the sale of treasury shares is recognized as capitalsurplus.
(11) Borrowing costs
The Group includes borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to get ready for its intended use
or sale, that is, qualifying asset as part of the acquisition cost until the asset is substantially ready for its
intended use or sale.
All borrowing costs other than those above are recognized as profit or loss in the fiscal period during
which they incurred.
(12) Application of the consolidated taxation system
The Company and some consolidated subsidiaries apply the consolidated taxation system.

Notes to accounting estimates
1. Property, plant and equipment, right-of-use assets, intangible assets and investment property
The Group conducts impairment tests if there is an indication that property, plant and equipment, rightof-use assets, intangible assets and investment property may be impaired.
Impairment tests are performed by comparing the carrying amount and the recoverable amount of theasset. If the recoverable amount is less than the carrying amount, an impairment loss is recognized.
The recoverable amount is usually determined by the value in use. Factors for estimating the value in
use include future cash flows generated from the use of the asset, future cash flows generated by its final
disposal, and discount rates.
The forecasting period for future cash flows is estimated by considering the remaining useful life of therelevant asset.
Future cash flows before discounting are estimated based on the business plan. The main assumptions
include forecast trends for personal spending in Japan and projected recovery in inbound tourism demand,and the rate of sales growth after the business plan.
- 15 -

For the forecast trend for personal spending in Japan, the Group refers to forecast trends provided byseveral external specialist organizations, factors in the effect of measures in its business plan, and sets thesales growth rates for each of the relevant primary business segments for the following fiscal year onward.
In addition, in the outlook for inbound tourism demand recovery, the Group creates a scenario based oninternational shipping forecasts and tourism demand forecasts by external organizations, and forecasts thedemand recovery within the scope of that scenario.
Although it is also difficult to forecast changes in consumption and other developments impacted bychanges in social and economic circumstances, some assumptions are incorporated into forecasts ofpersonal spending trend in Japan.
The growth rate after the business plan is determined by referencing long-term growth rates for the
relevant markets. These estimates are based on management’s best estimates, but may differ from actual
results due to effects of changes in uncertain future economic conditions.
Moreover, the amounts of impairment losses in the consolidated financial statements and non-current
assets in the Department Store Business and the SC Business are as follows.
Impairment losses
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment property

Department Store Business

SC Business¥3,887 million¥233,491 million¥69,211 million¥4,308 million¥111,087 million¥2,006 million¥231,961 million¥54,000 million¥1,355 million¥3,120 million

2. Recoverability of deferred tax assets
The Group recognizes deferred tax assets to the extent that it is probable that taxable profit will beavailable against which deductible temporary differences can be utilized as a result of scheduling.
The judgment of the recoverability is made on the basis of an estimate of taxable profit, etc. for eachfuture fiscal year determined based on the Group’s business plan.
The major assumptions in the Group’s business plan are forecast revenue factoring in the effects ofbusiness plans based on market growth rates predicated on forecast trends for personal spending in Japan,
projected recovery in inbound tourism demand, and the like in the Department Store Business, SC
Business, and Payment and Finance Business segments, as well as forecast revenue factoring in new
development projects in the business plans of the Developer Business segment and forecast operating
profit taking into consideration the effects of cost reductions achieved through business structure reforms
in each segment.
These major assumptions are based on management’s best estimates, but may differ from actual results
due to effects of changes in uncertain future economic conditions. If significant revisions become
necessary, it may have a material impact on the amounts to be recognized in the consolidated financial
statements for the following fiscal year onward.
Deferred tax assets in the consolidated financial statements are as follows:
Deferred tax assets¥3,137 million

3. Retirement benefit
The Group has defined benefit and defined contribution post-employment benefit plans for employees
and retirees. Present value of defined benefit obligations, service costs and others are determined based on
various actuarial assumptions. For actuarial assumptions, a variety of factors, such as discount rates, future
payment of salaries, those who withdraw from the plan in the future and life expectancy of members, areestimated. These estimates are made based on management’s best estimates, but may differ from actual
results due to effects of changes in uncertain future economic conditions and amendment or promulgationof relevant laws and regulations.
Retirement benefit liability in the consolidated financial statements is as follows:- 16 -

Retirement benefit liability¥16,754 million

4. Determination and revision of lease periods
The Group determines the lease periods based on the non-cancellable term of the lease, taking into
consideration any term for which there is reasonable certainty of extension and any term for which there
is reasonable certainty of non-cancellation. Specifically, the Group estimates the period for which there isreasonable certainty considering changes in rent expenses resulting from extension or shortening of thelease period, the existence of cancellation penalties, and the payback period for investments in significant
fixtures, facilities, etc. for rental properties.
For real estate leases in which the Group is the lessee in the Department Store Business, there may berevisions to the lease period for the flagship store or properties tied to the flagship store individuallycoinciding with the next large-scale renovation plan or when the next Medium-term Business Plan isdecided. If revisions to the lease periods become necessary, such revisions could have a material effect on
the amounts to be recognized in the consolidated financial statements in the next fiscal year and beyond.
Lease liabilities in the consolidated financial statements are as follows:
Lease liabilities¥164,825 million

Notes on consolidated statement of financial position
1. Allowance for doubtful accounts directly deducted from assets(1) Trade and other receivables¥106 million(2) Other financial assets¥3,600 million
2. Total amount of accumulated depreciation(1) Property, plant and equipment(2) Right-of-use assets(3) Investment property¥333,133 million¥136,806 million¥32,066 million

3. Change in the reason for owning investment property
The reason for owning some investment property in the Developer Business was changed from leasing
to selling; accordingly, ¥1,827 million of land and ¥2,476 million of construction in progress weretransferred to inventories.
4. Assets pledged as collateral and secured liabilities(1) Assets pledged as collateral
Other financial assets
Other
Total
(2) Secured liabilities¥197 million¥146 million¥343 million

Trade and other payables
Total¥215 million¥215 million

5. Contingent liabilities
Guarantee of financing for employee housing andothersTotal- 17 -¥0 million¥0 million

Notes on consolidated statement of profit or loss
1. Other operating income
Gain on sales of non-current assets (Note)
Other subsidies
Other
Total
(Note)¥790 million¥904 million¥2,846 million¥4,540 million

Mainly a gain on sales due to the sale of real estate holdings in the Developer Business.

2. Other operating expenses
Loss on disposals of non-current assets
Impairment losses (Note 1)
Loss on liquidation of business (Note 2)
Other
Total

¥2,102 million¥4,905 million¥1,893 million¥1,434 million¥10,336 million(Note 1) As a breakdown of the ¥4,905 million in impairment losses in the current fiscal year, ¥3,887 million wasrecorded for the Department Store Business and ¥1,011 million was recorded for SC Business.
With regard to the Department Store Business, principally because of decreased profitability of Daimaru
Matsuzakaya Department Stores Co. Ltd.’s Daimaru Umeda and Daimaru Shimonoseki stores, the carrying
amount of right-of-use assets, etc. was reduced to the recoverable amount and the reduction of ¥3,840 million
was recognized as an impairment loss. The recoverable amount of the cash-generating unit was measured atvalue in use, and was calculated by discounting future cash flows by a pre-tax discount rate of 4.3% to 4.5%,
which was based on the WACC at the time of measurement, taking into account the future profitability andother factors.
In the SC Business, an impairment loss of ¥1,011 million was recognized for a write-down of the carrying
amount of right-of-use assets to the recoverable amount due to a decrease in the profitability of PARCO CO.,LTD’s Shizuoka PARCO. The recoverable amount of the cash-generating unit was measured at value in use,
and was calculated by discounting future cash flows by a pre-tax discount rate of 3.7%, which was based on
the WACC at the time of measurement, taking into account the future profitability and other factors.
(Note 2) Expenses associated with the closure of Parco CO., LTD’s Matsumoto PARCO scheduled to conclude
operations in end of February 2025.

Notes on consolidated statement of changes in equity
1. Class and total number of shares issued as of the end of the current fiscal year
Common shares
270,565,764 shares
2. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount ofdividends(Millions of yen)

Board of Directors
meeting held on
April 12, 2022

Common shares

3,964

Dividends per
share
(Yen)

Record date

15.00 February 28, 2022

Effective date

May 6, 2022

Board of Directors
meeting held on
Common shares
3,964
15.00 August 31, 2022 November 11, 2022
October 11, 2022
(Note 1) Total amount of dividends resolved at the Board of Directors meeting held on April 12, 2022 includes ¥37 million ofdividends paid on the Company’s shares held by the officer remuneration BIP trust.
(Note 2) Total amount of dividends resolved at the Board of Directors meeting held on October 11, 2022 includes ¥34 millionof dividends paid on the Company’s shares held by the officer remuneration BIP trust.

- 18 -

(2) Dividends with the record date falling within the current fiscal year and with the effective date fallingwithin the following fiscal year
Resolution

Class of shares

Source ofdividends

Total amount ofdividends(Millions of yen)

Dividends per
share
(Yen)

Record date

Effective date

Board of Directors
CommonRetained
February 28,
meeting held on
4,228
16.00
May 2, 2023
sharesearnings
2023
April 11, 2023
(Note) Total amount of dividends resolved at the Board of Directors meeting held on April 11, 2023 includes ¥36 million ofdividends paid on the Company’s shares held by the officer remuneration BIP trust.

Notes on financial instruments
1. Matters concerning conditions of financial instruments
Financial risk management policy
In the process of conducting business activities, the Group is exposed to financial risks (credit risk,
liquidity risk, foreign exchange risk, interest rate risk); the Group conducts risk management to mitigate
these financial risks.
The Group also uses derivative transactions to hedge against foreign exchange and interest rate risks
with a policy of avoiding speculative transactions.

(1) Credit risk management
Credit risk refers to the risk of financial losses to the Group when customers default on theircontractual obligations.
To handle this risk, all Group companies carry out due date management and balance management
by customer and seek early identification and mitigation of collectability concerns.
The Group’s receivables are dispersed across a broad range of industries and customers throughout
the region.
Notably, the Group does not have credit risk that is over concentrated with a single customer or groupto which customers belong.
The maximum exposure associated with the credit risk of financial assets is the carrying amountafter deducting impairment losses shown on consolidated financial statements. This exposure associatedwith credit risk does not include any properties held as collateral or other forms of credit enhancement.
The Group sets out an allowance for doubtful accounts after considering whether the initiallyrecognized credit risk will increase significantly. Specifically, when there is no significant increase in
the credit risk since initial recognition, expected credit losses for 12 months are measured as allowancefor doubtful accounts.
On the other hand, when there is a significant increase in credit risk since initial recognition, expectedcredit losses for the entire life of the financial assets are measured as allowance for doubtful accounts.
Whether credit risk is significantly increased or not is determined based on the changes in default risk.
Regardless of the above, regarding trade receivables, lease receivables, and others that do not include
major financial factors, expected credit losses for the entire life of the financial assets are measured asallowance for doubtful accounts.
In the course of measuring these expected credit losses, reasonable, verifiable information available
as of the end of the period is used with regard to the results of doubtful accounts from past fiscal years,
delays and payments, and the financial circumstances of creditors in addition to past phenomena,present circumstances, and projections of future economic circumstances. Expected credit losses fromfinancial assets for which the credit risk has not increased significantly and trade receivables and otherreceivables that do not include major financial factors have essentially identical credit risk profiles andare thus grouped together for evaluation based on past credit losses.

- 19 -

Expected credit losses from financial assets for which the credit risk has increased significantly andcredit-impaired financial assets are evaluated individually while factoring in past credit losses, expected
recoverable amounts, and the like.
Accounts are considered delinquent when debtors fail to pay within 90 days of the deadline.
When the Group conducts a credit investigation and deems that all or part of a financial asset isunrecoverable and should be written off, the carrying amount of the credit-impaired financial asset isdirectly written off.

(2) Liquidity risk management
Liquidity risk refers to the risk that the Group is unable to fulfill its payment obligations of financial
liabilities when they are due.
The Group manages liquidity risk with methods such as preparing monthly cash flow management
plans at all companies, and secures sufficient liquidity on hand through commitment line contracts andoverdraft contracts with its main financing banks.

(3) Foreign exchange risk management
Although the Group conducts transactions in foreign currency and is exposed to foreign exchange
risk between foreign currencies and Japanese yen, its impact on profit before tax is minor.

(4) Interest rate risk management
The Group is exposed to various forms of interest rate risk in the context of its business activities;
interest rate fluctuations have an especially outsized impact on borrowing costs.
The Group uses interest rate swaps and other means to hedge against interest rate risk.

2. Matters concerning fair values of financial instruments
Carrying amount, fair values as of February 28, 2023, and their differences are as follows.
Carrying amount (*)

Fair value (*)(Millions of yen)
Difference

Assets

(1)
(2)
(3)
(4)

Cash and cash equivalents
Trade and other receivables
Derivatives
Other financial assets

39,874
129,121
6
90,54239,874
129,121
6
91,394–––851

Liabilities(5) Trade and other payables[133,835][133,835]–(6) Other financial liabilities[65,265][65,265]–(7) Borrowings[169,310][168,026](1,283)(8) Bonds payable[79,813][78,812](1,001)(*) The items recorded in liabilities on the consolidated statement of financial position are shown insquare brackets [ ].
(Note) Method for measuring fair values(1) Cash and cash equivalents, (2) trade and other receivables, (4) other financial assets (current),(5) trade and other payables, and (6) other financial liabilities (current)
The carrying amount is used as the fair value of these assets, given that the fair value is almost
the same as the carrying amount, as they are mostly settled in a short time.

- 20 -

(3) Derivatives (assets)
Derivatives are measured, as financial assets measured at fair value through profit or loss, basedon prices presented by financial institutions.
(4) Other financial assets (non-current), (6) other financial liabilities (non-current)
The fair value of listed stocks is measured based on market prices at the last date of a fiscal year.
The fair value of unlisted stocks is measured by discounted future cash flows, valuation model
based on revenue and net assets, comparable company analysis method or the like.
Other financial assets or other financial liabilities measured at amortized cost mainly consist oflease and guarantee deposits paid or lease and guarantee deposits received, and their fair value
is measured at present value calculated by discounting future cash flows at the current market
interest rates or the like.
(7) Borrowings, (8) bonds payable
For bonds payable, fair value is estimated using the reference trading statistics of Japan
Securities Dealers Association and others. Borrowings are mainly measured by present value
obtained by discounting future cash flows at interest rates that would be charged for a newsimilar borrowing.

3. Matters concerning breakdowns for each level of financial instrument fair value, etc.
(1) Financial instruments measured at fair value
Regarding financial instruments measured at fair value, fair value measurements are classified intolevels 1 through 3 commensurate with the observability and significance of the underlying inputs.
Level 1: Market price of the same assets or liabilities in an active market
Level 2: Fair value (of non-Level-1 financial instruments) calculated by directly or indirectly using
observable prices
Level 3: Fair value calculated from evaluation techniques including unobservable inputs
The fair value of financial instruments measured using fair value is as follows.
Transitions between the levels in the fair value hierarchy are recognized on each reporting date.
Notably, there were no transitions between Levels 1, 2, or 3 in the fair value hierarchy during the current
fiscal year.

Level 1

Level 2

Level 3

Total

Millions ofMillions ofMillions ofMillions of

yen

yen

yen

yen

Assets:Financial assets measured at fair value through profit
or loss
–

6

−

6

2,916

−

22,31425,2312,916

6

22,31425,237

Derivative financial assets
Financial assets measured at fair value through othercomprehensive income
Other financial assets
Total
Liabilities:- 21 -

Financial liabilities measured at fair value throughprofit or loss
Derivative financial liabilities
Total

−

−

−

−

−

−

−

−

(2) Fair value hierarchy for assets and liabilities for which fair value has been disclosed, but were notmeasured at fair value
The fair value of financial instruments measured at the amortization cost is as follows.
Notably, the following table does not include financial instruments measured at fair value or financial
instruments for which the carrying amount and fair value are very similar.
(Millions of yen)
Level 1

Level 2

Level 3

Total

Assets:Financial assets measured at amortized cost
−

4,359

50,97255,332−

4,359

50,97255,332

Borrowings−

168,026−

168,026

Bonds payable−

78,812−78,812Other financial liabilities (non-current)−−

35,29035,290−246,838

35,290282,129

Other financial assets (non-current)
Total
Liabilities:
Financial liabilities measured at amortized cost

Total

Notes on investment property
1. Matters concerning status of investment property
Some of the Company’s subsidiaries own rental buildings, etc. in Tokyo and other regions.

2. Matters concerning fair values of investment property
Consolidated statement of financial position amount(Millions of yen)
Fair value at the end of the current fiscal year

187,247
261,146(Note 1) The consolidated statement of financial position amount is the acquisition cost less accumulated depreciation andaccumulated impairment losses.
(Note 2) For major properties, fair value at the end of the current fiscal year is an amount based on the real estate appraisal
standards of an external real estate appraiser, etc. For other properties, fair value is an amount estimated by
employing the land price index with necessary adjustments applied at the Company.

Notes on revenue recognition
1. Revenue disaggregation information
The Group reports four business segments: the Department Store Business, the SC Business, theDeveloper Business, and the Payment and Finance Business. These reportable segments are subject toregular consideration by the Board of Directors to determine how to allocate management resources andevaluate performance. The relationship between disaggregated revenue and the segments is as follows.

- 22 -

(Millions of yen)Segment

Revenue

Daimaru Osaka Shinsaibashi store
Osaka Umeda store
Tokyo store
Kyoto store
Kobe store
Sapporo store
Matsuzakaya Nagoya store
Ueno store
Other stores
Removal of revenue from between
segments
Department StoreBusiness

18,223
17,14725,33017,65235,382
8,551
53,385(459)
215,295

PARCO
Other
Removal of revenue from between
segments
SC Business
PARCO
PARCO SPACE SYSTEMS
J. Front Design & Construction
Other
Removal of revenue from between
segments
Developer Business

54,29962(1,053)53,308
7,061
18,751
28,142
714(12,372)
42,297

Payment and Finance Business
Removal of revenue from between
segments
Payment and FinanceBusiness

12,889(5,304)
7,585

Other
Removal of revenue from between
segments
Other

55,922(14,728)
41,193

Total

359,679

Revenue from contracts withcustomers
Revenue from other sources(Note)

23,97916,101300,164

59,514
Revenue
359,679
The Department Store Business, the SC Business, and the Developer Business categories include lease revenue inaccordance with IFRS 16. The Payment and Finance Business category includes interest revenue in accordance withIFRS 9. Notably, lease revenue and interest revenue are included in “Revenue from other sources.” The “Other”
category comprises non-reportable business segments such as the wholesale business, the parking business, and theleasing business.

2. Foundational information for understanding revenue
See “5. Matters concerning accounting policies (4) Revenue recognition” under “Notes on importantmatters forming the basis of preparation of consolidated financial statements, etc.”- 23 -

3. Information for understanding revenue amounts in the current and subsequent fiscal years(1) Contract balances
The Group’s contract balances are as follows.
Balance at the beginning of thecurrent fiscal year

(Millions of yen)
Balance at the end of the current
fiscal year

Receivables from contracts withcustomers

85,715

94,129Contract assets

3,193

6,832

Contract liabilities

39,73939,988(Notes) 1

Receivables from contracts with customers
Receivables from contracts with customers mainly comprises receivables generated from the use of credit
cards issued by the Group; the amount includes amounts collected for third parties as agent transactions.
The payback period for these receivables is typically one to two months.

2

Contract assets
Contract assets are assets involving rights over customers that arise when the Group is to receive paymentsfrom customers in line with the series of performance, recognized mainly in relation to outsourcing
agreements. The Group recognizes contract assets for completed work in advance, and transfers them totrade receivables when issuing invoices after customers’ receipt and inspection.
Contract assets are included in trade and other receivables in the consolidated statement of financial
position.

3

Contract liabilities
Contract liabilities are liabilities involving consideration received in advance of performance pursuant tocontracts, and are transferred to revenue when the Group performs work pursuant to contracts.
Contract liabilities are included in other current liabilities in the consolidated statement of financial
position.
Of contract liabilities from the previous fiscal year, ¥17,851 million was recognized as revenue in thecurrent fiscal year.
The increase in contract assets in the current fiscal year is mainly due to the increase in accounts receivable.
Regarding wholly or partially satisfied performance obligations from past years, amounts recognized asrevenue have not occurred in the previous or current fiscal year.

(2) Transaction prices allocated to residual performance obligations
Regarding transaction prices allocated to residual performance obligations, the Group recognizes
revenue commensurate with progress toward the completion of work, actual usage of gift certificates andpoints, and performance of services of annual membership fees. Total transaction prices allocated toresidual performance obligations and expected timing of revenue recognition thereof are as follows.
Balance at the beginning of thecurrent fiscal year
30,103(Millions of yen)
Balance at the end of the current
fiscal year
39,886

1–2 years

11,41911,376More than 2 years

9,207

7,666

50,72958,929Within one year

Total

- 24 -

Notes on per share information
1. Equity attributable to owners of parent per share:
2. Basic earnings per share:(Note)¥1,370.43¥54.32The calculation of per share information excludes the number of Company’s shares owned by the officer
remuneration BIP trust from the number of shares at the end of the period and the average number of shares during
the period because such shares are treated as the Company’s treasury shares.

- 25 -

Notes to Non-consolidated Financial Statements
Notes on matters concerning important accounting policies
1. Basis and method of valuation of assets(1) Basis and method of valuation of securities
Shares of subsidiaries and associates
Stated at cost using the moving-average method
Available-for-sale securities
Securities with available market prices
Stated at fair value based on the market prices at the fiscal
year-end(Valuation differences are included in net assets; cost of
securities sold is determined by the moving-averagemethod)Securities without available market prices
Stated at cost using the moving-average method(2) Basis and method of valuation of derivatives
Derivatives
Stated at fair value(3) Basis and method of valuation of inventories
Supplies
Stated at cost using the FIFO method (the book value iswritten down based on the decreased profitability)
2. Depreciation method of non-current assets
Property, plant and equipment (excluding leased assets)
Straight-line method
Intangible assets (excluding leased assets)
Straight-line method
Internal use software is amortized using the straight-line
method over the internally expected useful life (5 years).
Leased assets
Leased assets in finance leases that do not transfer ownership
Straight-line method with zero residual value assuming
the lease periods as useful lives
3. Accounting method for deferred assets
Bond issuance cost
Amortized using the straight-line method over the period
until redemption
4. Accounting policy for provisions
Allowance for doubtful accounts
To prepare for losses from bad debt, an estimateduncollectible amount is provided.
Provision for bonuses
To prepare for the payment of bonuses to employees, theamount expected to be paid is provided.
Provision for bonuses for directors and other officers
To prepare for the payment of bonuses tocorporate officers, the amount expected to be paid isprovided.
Provision for officer remuneration BIP trust
To prepare for the granting of the Company’s sharesthrough an officer remuneration BIP trust, the amountequivalent to the value of shares in proportion to thenumber of points awarded to officers in accordance with
the Stock Benefit Rules is provided.
5. Revenue and expense recognition
Revenue from contracts with customers of the Company—a holding company—is mainly dividend
income and consulting fee income from subsidiaries. Revenue from consulting fee income is recognized- 26 -

at the average value over the contract period because the obligation to provide consulting to subsidiaries
on management, planning, and the like is satisfied on a recurring basis. Dividend income is recognized asof the effective date.
6. Hedge accounting method
Hedge accounting method
Hedging instruments and hedged items
Hedging instruments
Hedged items
Hedging policy

Exceptional treatment is applied to interest rate swaps
that satisfy the requirements for exceptional treatment.
Interest rate swaps
Borrowings and interest expenses on borrowings
Based on the risk management policy, hedging isundertaken to hedge interest rate fluctuation risk.

Method for assessing the hedge effectivenessAt the end of each fiscal year, hedge effectiveness withrespect to the hedged items and hedging instruments is
assessed for each hedging transaction. This annual
assessment excludes any transaction where important
terms and conditions such as principal, interest rate, andduration are identical between the assets or liabilities ofhedged items and hedging instruments.
7. Application of the consolidated taxation system
The Company began applying the consolidated taxation system for the current fiscal year.
Moreover, regarding the transition to the group tax sharing system established in the “Act Partially
Amending the Income Tax Act” (Act No. 8 of 2020) and the items revised in the non-consolidated taxation
system in line with the transition to the group tax sharing system, in accordance with the treatment of
Paragraph 3 of “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020),
the Company has not applied the provision of Paragraph 44 of “Guidance on Accounting Standard forTax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018), and the amounts of its deferred tax
assets and deferred tax liabilities are in accordance with the provision of tax laws prior to revision.
Notes to changes in accounting policies
1. Application of the Accounting Standard for Revenue Recognition
The Company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No.
29, March 31, 2020) and the like at the beginning of the current fiscal year and recognizes revenue atamounts expected in exchange for promised goods and services when control of the goods and services
is transferred to customers.
Regarding the application of the Accounting Standard for Revenue Recognition and the like, in
accordance with the transitional handling set out in the proviso to Paragraph 84 of the AccountingStandard for Revenue Recognition, retained earnings at the beginning of the current fiscal year are
adjusted to reflect the amount of the cumulative impact of applying the new accounting policy
retroactively before the start of the current fiscal year, and the new accounting policy is applied to thebalance at the beginning of the current fiscal year.
Notably, there is no impact on non-consolidated financial statements.
2. Application of the Accounting Standard for Fair Value Measurement
The Company began applying the Accounting Standard for Fair Value Measurement (ASBJ Statement
No. 30, July 4, 2019) and the like at the beginning of the current fiscal year, and in accordance with thetransitional handling set out in Paragraph 19 of the Accounting Standard for Fair Value Measurement andParagraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4,2019), the new accounting set out in the Accounting Standard for Fair Value Measurement and the like- 27 -

will continue to be applied into the future. Notably, there is no impact on non-consolidated financial
statements.
Notes on changes in presentation
1. Changes in presentation of accounts receivable
Regarding the presentation of accounts receivable, in the past, accounts receivable were included under“Other” on non-consolidated balance sheets (¥2,152 million in the previous fiscal year); however, as thesignificance of accounts receivable has increased, starting in the current fiscal year, it is presented as its
own line item (¥4,939 million in the current fiscal year).
Notes to accounting estimates
1. Recoverability of deferred tax assets(1) Amounts recorded in financial statements for the current fiscal year
Deferred tax assets¥472 million(2) Other information contributing to understanding the details of accounting estimates
This information is omitted here as it is presented under “Notes to accounting estimates” in the notes toconsolidated financial statements.

Notes on non-consolidated balance sheet
1. Short-term monetary liabilities to subsidiaries and associates¥2,250 million
2. Short-term monetary receivables from subsidiaries and associates¥2,699 million
3. Accumulated depreciation of property, plant and equipment¥29 million
Notes on non-consolidated statement of income
1. Transaction with subsidiaries and associates
Operating transaction
Operating revenue
General and administrative expense
Non-operating transactions¥15,238 million¥889 million

Interest income
Interest expenses¥670 million¥2 million

Notes on non-consolidated statement of changes in equity
1. Class and total number of shares issued as of the end of the current fiscal year
Common shares
270,565,764 shares
2. Class and number of treasury shares as of the end of the current fiscal year
Common shares
8,564,836 shares- 28 -

Notes on tax effect accounting
1. Deferred tax assets and deferred tax liabilities by major category of cause
Deferred tax assets
Unused tax losses
Allowance for doubtful accounts for subsidiaries
and associates
Provision for officer remuneration BIP trust
Loss on impairment of non-current assets
Loss on valuation of shares of subsidiaries andassociates
Provision for bonuses
Accrued enterprise tax
Accrued expenses
Asset retirement obligations
Revised carrying amount of investment
Excess of deferred asset depreciation
Accrued insurance expenses
Other
Sub total deferred tax assets
Valuation allowance for unused tax losses fortaxation
Valuation allowance for total of deductible
temporary differences, etc.
Sub total valuation allowance
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-salesecurities
Asset retirement obligations
Uncollected income tax refund
Other
Total deferred tax liabilities¥707 million¥275 million¥119 million¥112 million¥61 million¥59 million¥35 million¥30 million¥23 million¥16 million¥14 million¥8 million¥10 million¥1,475 million¥(376) million¥(546) million¥(922) million¥552 million¥(34) million¥(20) million¥(14) million¥(10) million¥(80) million

Net amount of deferred tax assets¥472 million- 29 -

Notes on revenue recognition
1. Foundational information for understanding revenue from contracts with customers
Foundational information for understanding revenue is as explained in “5. Revenue and expense
recognition” under “Notes on matters concerning important accounting policies.”
Notes on transactions with related parties
Subsidiaries, etc.

Type

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Company name

Daimaru
Matsuzakaya
Department
Stores Co. Ltd.

PARCO CO.,LTD.

Ownership
ratio ofRelationshipvoting rights

Holding
Directly
100%

Holding
Directly
100%

Holding
JFR Service Co.
DirectlyLtd.
100%

JFR Card Co.,Ltd.

Angel Park Co.,Ltd.

Holding
Directly
100%

Holding
Directly
0.38%
Indirectly
49.88%

Interlocking
of officers
Business
advisory

Interlocking
of officers
Business
advisory

Interlocking
of officers
Business
advisory

Interlocking
of officers
Business
advisory

Interlocking
of officers
Business
advisory(Millions of yen)
Balance atthe end of
Account itemthe fiscal
year

Nature oftransactions

Transaction
amount(Note 5)

Receipt ofconsulting fee
income (Note 1)

3,756

Lending of funds–

Collection of
funds

–

Receipt ofinterests (Note 2)

87

–

7,000

Short-term
loans
receivable

25,000Lending of funds
Collection offunds

Long-term
loans
receivable

65,50022,000Receipt ofinterests (Note 2)

455–

Lending andcollection offunds (Note 3)

26,846

Short-term
loans
receivable

Receipt ofinterests (Note 2)

88

Lending of funds
Collection offunds

Short-term
loans
receivable
Long-term
loans
receivable–
10,00015,000––39,560––10,000

Short-term
loans
receivable–

40,000Long-term
loans
receivable

–

–

–

Receipt ofinterests (Note 2)37

Deposits of funds

2,000

Repayment ofdeposits

1,500

Payment ofinterests (Note 2)–2

Deposits

–

2,000

–

Interlocking
Requests forof officers
Subsidiary
computation
855––
Business
services (Note 4)advisory
Transaction conditions and policy for deciding transaction conditions(Note 1) Consulting fee income is determined by contract terms.
(Note 2) Interest rates on funds lent and funds deposited are determined reasonably with reference to market interest rates.
Holding
JFR Information
Directly
Center Co., Ltd.
100%

- 30 -

(Note 3) As transactions for lending and collection of funds are carried out repetitively, the amount shown in the transaction
amount column is the average balance during the period.
(Note 4) The Company will reasonably determine with reference to market prices whether to request this company mainly in
relation to computation services.
(Note 5) Transaction amounts do not include consumption taxes.

Notes on per share information
1. Net assets per share:
2. Basic earnings per share:¥1,282.90¥32.25- 31 -