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.

Internet Disclosure Items
for Notice of Convocation of the 15th Annual Shareholders Meeting
Systems to Ensure Properness of Operations <Basic Policy to Build Internal Control System>in the Business Report
Notes to Consolidated Financial Statements
Notes to Non-consolidated Financial Statements(From March 1, 2021 to February 28, 2022)

J. FRONT RETAILING Co., Ltd.

As for Systems to Ensure Properness of Operations <Basic Policy to Build Internal Control System>, Notes
to Consolidated Financial Statements and Notes to Non-consolidated Financial Statements, the Company
provides those to shareholders by means of disclosure through the Internet (on the Company’s website:
https://www.j-front-retailing.com/) in accordance with the laws and regulations and Article 16 of theCompany’s Articles of Incorporation.

Systems to Ensure Properness of Operations <Basic Policy to Build Internal Control System>(revised on June 1, 2021)
This is a basic policy relating to building an internal control system for lawful and appropriate execution of
overall business within the corporate group comprising J. FRONT RETAILING Co., Ltd. (hereinafter the“Company”) and its operating companies (collectively, the “Group”). By specifically promoting this policy,
the Group aims to contribute to increasing corporate value.
 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 company withthree committees (nomination, audit, and remuneration committees) in order to strengthen the oversightfunction 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 corporategroup to build 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(i) Board of Directors
 The Board of Directors shall perform an oversight function by monitoring the Executive Officers’ andDirectors’ execution of business.


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, Medium-term Business Plan, overall policy andplan for the Group management, M&As, the Group financing plans, and other individual importantmatters relating to the Group management. In order to speed up business decisions and execution, thetask of determining matters involving business execution other than the above shall be delegated to
execution, with the exception of matters which have a material impact on the Group management.



For monitoring action, decision making and the like by the Board of Directors, a certain number ormore of highly independent Outside Directors shall be appointed, having no risk of a conflict ofinterest with the Company’s shareholders, and being able to provide judgments independently from top
management and make decisions appropriately.

To ensure effectiveness of objective management oversight, in addition to the Outside Directors,
internally promoted Directors who do not execute business and who are well informed about internal
information shall also be appointed.

To further strengthen oversight function while conducting smooth operation of the Board of Directors,
an Inside Director who does not execute business shall be selected as the Chairperson of Board of
Directors.

(ii) 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 organization responsible for execution shall consist of the Management Strategy Unit, Group
Digital Strategy Unit, Financial Strategy Unit, Human Resources Strategy Unit and Administration
Unit, and Executive Officers shall be appointed as the head of the units, through which the Company
shall achieve swift and efficient business execution.
-1-



The Company clarifies the missions of the President and Representative Executive Officer and eachstrategy 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.



Execution shall formulate the major Group management policies and individual important matters, andoversee business execution of operating companies. The Board of Directors shall discuss and determine(approve) the suitability of major policies and plans that execution has prepared as well as individual
important matters.



It discusses the overall policy, plan, and other matters concerning the Group’s management at theGroup Management Meeting, the Group Policy Meeting, each segment’s Medium-term Business Plan
Progress Meetings, the Affiliated Business Companies Results and Strategy Examination Meeting, etc.
At them, 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 introductionof the Group’s common accounting system in principle and promotion of centralized management of
the Group 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 for overseas investors by improving the international comparability of financial
information.

(iii) System to secure appropriateness of financial reporting With regard to internal controls over financial reporting, the Company shall be in compliance withJapan’s Financial Instruments and Exchange Act and various associated laws and regulations, andconstruct an internal company system to ensure the legality and appropriateness of its financial
reporting. In addition, all operating companies shall also construct the same system.
II. Risk Management System(i) Risk Management Committee
 The Company shall establish the Risk Management Committee as an advisory body to the President
and Representative Executive Officer with regard to risk management. The committee is chaired by the
President and Representative Executive Officer and comprises Executive Officers and others.
An officer shall be put in charge of risk management in order to promote the operation of risk
management.

Each operating company shall put departments and responsible persons in charge of promoting
compliance and risk management, and carry out daily supervision and direction of risk management.



The Risk Management Committee shall systematically manage and address strategic and other risks asa whole from a company-wide perspective, enabling management decisions from the perspective ofrisk management.



For risks involved in business operations, the Risk Management Committee shall carry out evaluations
and management, and for important risks, the committee shall periodically report on the risk
management status to the Board of Directors.



Risks to be addressed shall be managed by the Management Planning Division by reviewing the JFRGroup Risk List and JFR Group Risk Map, which centrally list all the risks in the Group at any time.

Of the risks involved in business operations that are identified, for particularly serious items, the Risk
Management Committee shall deliberate over and determine a policy in response, and shall respond tothem by having the Company and operating companies execute the policy.

(ii) Execution control
 Under the direction of President and Representative Executive Officer, the Company shall assign full-2-

time staff to the Management Planning Division in the Management Strategy Unit to strengtheninternal control over execution. The person responsible shall develop and manage the control
environment at the Company and the operating companies.


The Management Planning Division shall develop and manage the internal controls under theCompanies Act and the internal control system under the Financial Instruments and Exchange Act at
the Company and the operating companies.



The Management Planning Division shall coordinate with the Audit Committee, the Internal Audit
Division, and each supervisory units and operating companies to share information and remedy any
deficiencies that occur in the internal controls.

(iii) Hazard risk response
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.
III. Legal Compliance System(i) Compliance Committee
 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
and Representative Executive Officer shall be the chairperson and the members of the committee shallbe a corporate lawyer, Executive Officers and others.
An officer shall be put in charge of compliance in order to promote the operation of compliancemanagement.

Each operating company shall put departments and responsible persons in charge of promotion ofcompliance and risk management, and shall carry out daily supervision and direction of business
operations that are in accordance with laws and regulations and internal company rules.



The Compliance Committee shall work to develop the foundations of compliance management such as
internal company rules, operation management manuals and formulation of management systems. In
addition, the committee shall periodically formulate and track progress on compliance penetration
activities such as e-learning, through departments in charge of promotion of compliance at eachcompany.



The Compliance Committee shall periodically request reports from persons in charge of promotion ofcompliance at operating companies regarding the status of compliance management in their respective
areas of responsibility, and take proper rectification measures. In addition, the committee shallformulate guidelines and measures to prevent recurrence to be followed and taken by the Group as awhole, and implement the said guidelines and measures.

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

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; tobe careful 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
other aspect.

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

-3-IV. Internal Audit Structure The Company shall establish an independent Internal Audit Division 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 Division shall audit
the operations of the Company and operating companies or properly report the results of audits ofoperations, examine the properness and effectiveness of the processes for their operations, and provide
guidance, advice and proposals to all departments at the Company and to operating companies.


The persons responsible for the internal audit departments, while providing directions, guidance andassistance to the internal audit divisions of the operating companies, 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 companies.



To further enhance corporate governance by strengthening auditing functions, the Company shallclarify links between the President and Representative Executive Officer, the Audit Committee and theInternal Audit Division. Specifically, the Company shall adopt a system in which reports are submitted
to both the 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.

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.
To aim to maintain and improve the accuracy of audits, a full-time Audit Committee member shall be
appointed from among the Inside Directors who do not execute business as Audit Committee members.



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

Regarding personnel affairs related to the Audit Committee Secretariat organization and staff members,
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 Division 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

Internal audit implementation status and results (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, andrequest explanations from officers and employees of operating companies as necessary.



Operating companies 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 Audit & Supervisory Board
Members of the operating companies to enhance and strengthen the auditing of the entire Group.

-4-



Personnel appointments and transfers for audit & supervisory board members of operating companies
shall require approval from the Audit Committee, and the audit & supervisory board members ofoperating companies 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. Other(i) System for storage and management of information
 For documents relating to the execution of duties by Executive Officers and Directors, in accordancewith the rules on confidential information management, each responsible department shall carry out
document storage and management during the stipulated period and shall develop a system to enable
inspections of such documents at any time.
For minutes and related documents regarding meetings chaired by Executive Officers and Directors,
and other important documents relating to the execution of duties by Executive Officers and Directors,
each responsible department shall carry out document storage and management and shall develop asystem to enable inspections of such documents at any time.

(ii) Digital information security
 Senior Executive General Manager of the Group Digital Strategy Unit shall control digital information
management of the Company based on the IT Governance Policy, and shall report periodically andwhenever necessary on the status of digital information management and related matters to the Boardof Directors, the Audit Committee, the Management Meeting and the President 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
20 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.
PARCO CO., LTD., which is a consolidated subsidiary of the Company, transferred all shares of
NEUVE A Co., Ltd. on June 30, 2021. As a result, the Company removed NEUVE A Co., Ltd. from thescope of consolidation.
Daimaru Matsuzakaya Department Stores Co. Ltd., a consolidated subsidiary of the Company, mergedwith and absorbed Daimaru Matsuzakaya Sales Associates Co. Ltd. on September 1, 2021.
The Company removed Dimples’ Co., Ltd. from the scope of consolidation upon transfer of 90% of
its shares on February 28, 2022.
3. Matters concerning the application of the equity method
Equity method associates
8 companies
Major equity method associates include StylingLife Holdings Inc. With regard to equity method
associates whose balance sheet dates are different from the consolidated balance sheet date, necessary
adjustments are made by additionally preparing their financial statements as of the fiscal year end of theCompany 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 balance
sheet date of the Company, because the legal system of the region where the subsidiaries are locateddoes 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
other than 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.
-6-However, when gains or losses on non-monetary items are recorded in other comprehensive income,exchange differences are also recorded in other comprehensive income.
2)

Financial statements of foreign subsidiaries, etc.
Assets and liabilities of foreign subsidiaries, etc., are translated into Japanese yen at theexchange rate prevailing at the end of the reporting period. Income and expenses of foreignsubsidiaries, etc. are translated into Japanese yen at the average exchange rate for the period, unlessthere 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 thetransaction 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 aparty 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
consist of principal and interest paid on specified dates, and the Group holds suchinvestments based on a business model whose objective is to hold the instrument tocollect contractual cash flows, the debt instruments are measured at amortized cost.
Transaction cost directly attributable to acquisition of financial assets measured atamortized cost is included in the amount 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, foreignexchange gains and losses and impairment losses on financial assets measured atamortized 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
consist of principal and interest paid on specified dates, and the Group holds suchinvestments based on a business model whose objective is both to collect contractual
cash flows and to 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, andchanges 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
make an 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.
-7-

(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 offinancial assets at FVTPL is recognized in profit or loss as incurred.
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
at fair value through other comprehensive income based on its evaluation at the end ofeach reporting period whether there is a significant increase in credit risk of financial
assets or groups of financial assets since initial recognition. Specifically, when there isno significant increase in the credit risk since initial recognition, expected credit losses
for 12 months 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 for the remaining life of the financial assets are recognized as allowance for
doubtful accounts. Whether credit risk is significantly increased or not is determinedbased on the changes in default 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
are recognized over their remaining lives from the inception simply based on historicalcredit 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 andrewards incidental to ownership of the financial asset are transferred. Any interests intransferred financial assets that are created or continuously retained by the Group arerecognized as a separate asset or liability.

(ii) Non-derivative financial liabilities
The Group recognizes financial liabilities at the date of transaction when the Group
becomes a 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
the recognized amounts and intends either to settle on a net basis, or to realize the asset andsettle 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 andinterest rate swaps.
At the time of initial designation of the hedge, the Group documents the relationshipbetween the hedging instrument and the hedged item, the risk management objective, thestrategy for implementation of the hedge transaction, the hedging instrument and the hedged
item, the nature of hedged risk, the method for assessing effectiveness of the hedge
relationship and the method of measuring the effective portion and the ineffective portion.
-8-

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.
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
affect recognized assets and liabilities or profit or loss, the effective portion of the hedge
in changes in fair value of the derivative is included in other components of equity as“cash flow hedges.” The balance of cash flow hedges is deducted from othercomprehensive income in the consolidated statement of comprehensive income andtransferred to profit or loss under the same item as the hedged item in the same period as
the period in which cash flows of the hedged item affect profit or loss. The ineffective
portion of the hedge in changes in fair value of the derivative is immediately recognizedin 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 orlosses on hedged items attributable to hedged risk, any changes in the fair value arerecognized in profit or loss.
(v) Cash and cash equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investmentswith maturities of three months or less that are readily convertible to cash and subject toinsignificant 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 anasset 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 the sale 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 lesscost to sell. After property, plant and equipment, intangible assets and investment property
have been classified under “assets held for sale,” depreciation or amortization will not beapplied to these assets.

3)

Property, plant and equipment
Property, plant, and equipment is measured using the cost model and is carried at cost less-9-

accumulated 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 becapitalized.
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

3 to 50 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,
and if 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 thestraight-line method over respective estimated useful lives, except for intangible assets withindefinite 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 achange 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- 10 -

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.
The lease payments used in the measurement of lease liabilities include the lease payments ofthe extended 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,
the amount 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 (For the depreciation method and useful lives,
please refer to “3) Property, plant and equipment”).
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, therecoverable 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
with a cash-generating unit is first allocated to reduce the carrying amount of goodwill allocated tothis unit, 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, forpreviously recognized impairment losses, the Group assesses whether there is any indication thatthe 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.
- 11 -

(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 tosettle 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 thatreflects the time value of money and the risks specific to the liability. Unwinding of the discount overtime are recognized 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
performance obligation is satisfied at the time of delivery of goods when customers gain control ofsuch goods, the Group mainly recognizes revenue at the time of delivery of such goods. Furthermore,
revenue is measured 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,
food products 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 ofdelivery 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 isrecognized 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 is- 12 -

recognized at the time of delivery of such goods. Payments for goods are received at the time ofdelivery of 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.
(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 theperformance obligation. If the outcome of a work contract cannot be estimated reliably, revenue isrecognized 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 inmost cases 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
are complied 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 theexpenses are incurred. Grants related to acquisition of an asset are recorded as other operating income- 13 -

on a systematic basis over the useful life of the asset, and unearned government grants are recorded inliabilities as deferred income.
(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 recognizeddirectly in 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
the deferred 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 thedate when 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- 14 -

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.
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 when the contributions are made.
(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 accordancewith the officers’ level of achievement of the Medium-term Business Plan, etc. The value of theservice received is measured by the fair value of the Company’s shares on the grant date. This value isexpensed over the vesting period from the grant date, and a corresponding amount is recognized as anincrease in equity.
(9) Earnings per share
Basic earnings per share are calculated by dividing profit (loss) attributable to ordinary equity
holders of parent entity by the weighted average number of shares outstanding during the period,
adjusting treasury 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 readyfor 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) Other important matters forming the basis of preparation of consolidated financial statements
Consumption tax and local consumption tax are accounted for under the tax exclusion method.
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,right-of-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. For the value in use, the Groupestimates the discounted present value of future cash flows generated from the use of the asset and thediscounted present value of future cash flows generated by its final disposal.
The forecasting period for future cash flows is estimated by considering the remaining useful life of
the relevant asset.

- 15 -

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, the impact of the novel coronavirus disease (COVID-19), and the rate of sales growth after thebusiness plan.
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
the sales 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 on international shipping forecasts and tourism demand forecasts by external organizations, andforecasts the demand recovery within the scope of that scenario.
For the impact of COVID-19, it is difficult to predict future trends and the time when the pandemic
will come to an end; however, at this point in time the Group expects the impact of COVID-19 on its
earnings to be apparent until fiscal 2023.
The growth rate from the time of the business plan onwards is determined by making reference tolong-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¥113 million¥237,310 million¥85,641 million¥4,247 million¥113,343 million¥234 million¥240,894 million¥59,784 million¥1,569 million¥1,314 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.
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, and the judgment of therecoverability is made on the basis of an estimate of taxable profit, etc. for each future fiscal year
determined based on the Group’s business plan.
The major assumptions in the Group’s business plan are forecast trends for personal spending in Japanand projected recovery in inbound tourism demand, and the impact of COVID-19, as well as the forecast
for operating profit taking into consideration sales revenue factoring in the effects of the business planand the effects of cost reductions achieved through business structure reforms.
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¥8,209 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 basedon 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- 16 -

members, are estimated. 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
promulgation of relevant laws and regulations.
Retirement benefit liability in the consolidated financial statements is as follows:
Retirement benefit liability¥19,416 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
is reasonable certainty considering changes in rent expenses resulting from extension or shortening of
the lease period, the existence of cancellation penalties, and the payback period for investments insignificant 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 effecton the amounts to be recognized in the consolidated financial statements in the next fiscal year andbeyond.
Lease liabilities in the consolidated financial statements are as follows:
Lease liabilities¥184,394 million

Additional information
Accounting treatment following adoption of the consolidated taxation system
The Company decided in October 2021 to apply the consolidated taxation system effective from thefiscal year ending February 28, 2023, and the Company filed the application form with the relevant
authorities in November 2021. Accordingly, from the current fiscal year, the Company has applied tax
effect accounting assuming the introduction of the consolidated taxation system with the Company has
the consolidated taxation parent company.
Notes on consolidated statement of financial position
1. Allowance for doubtful accounts directly deducted from assets(1) Trade and other receivables¥240 million(2) Other financial assets¥3,913 million
2. Total amount of accumulated depreciation(1) Property, plant and equipment(2) Right-of-use assets(3) Investment property¥323,623 million¥116,718 million¥30,366 million

3. Assets pledged as collateral and secured liabilities(1) Assets pledged as collateral
Other financial assets
Other
Total

¥160 million¥81 million¥242 million- 17 -

(2) Secured liabilities
Trade and other payables
Total¥177 million¥177 million

4. Contingent liabilities
Guarantee of financing for employee housing andothersTotal¥1 million¥1 million

Notes on consolidated statement of profit or loss
1. Other operating income
Gain on sales of shares of subsidiaries (Note 1)
Gain on sales of non-current assets (Note 2)
Subsidies for employment adjustment (Note 3)
Other subsidies
Other
Total

¥3,951 million¥2,666 million¥399 million¥1,012 million¥3,038 million¥11,068 million(Note 1) Gain on sales of shares of subsidiaries for the current fiscal year is a gain on the transfer of 90% of the sharesof Dimples’ Co., Ltd. to WORLD HOLDINGS CO., LTD.
(Note 2) Gain on sales of non-current assets for the current fiscal year is mainly a gain on sales due to the sale of realestate holdings in the Developer Business.
(Note 3) Due to the impact of COVID-19, the Company was subject to special measures such as subsidies for
employment adjustment.

2. Other operating expenses
Loss on sales of shares of subsidiaries (Note 1)
Loss on disposals of non-current assets
Impairment losses (Note 2)
Costs associated with suspension of store
operations (Note 3)
Structural reform costs (Note 4)
Other
Total

¥1,818 million¥1,726 million¥1,136 million¥3,146 million¥3,802 million¥1,775 million¥13,406 million(Note 1) Loss on sales of shares of subsidiaries for the current fiscal year was a loss on sale related to the transfer of allshares of NEUVE A Co., Ltd. to Libra Invesco Co., Ltd.
(Note 2) Impairment losses of ¥1,136 million for the current fiscal year mainly comprised ¥113 million in the
Department Store Business, ¥234 million in the SC Business, and ¥776 million in the Developer Business.
In the Department Store Business, the main item is an impairment loss of ¥103 million recognized for an
expected decrease in revenue due to tenant withdrawals and write-down of the carrying amount of buildings
and structures to the recoverable amount in relation to the formulation of a rebuilding and redevelopment planfor the Ginza Core building, in which Daimaru Matsuzakaya Department Stores Co. Ltd. participates as a
joint building business. The recoverable amount of the cash-generating unit is measured as the fair value lesscost of disposal.
In the SC Business, the main item is an impairment loss of ¥231 million recognized for a write-down of thecarrying amount of right-of-use assets to the recoverable amount due to a decrease in the profitability of
PARCO CO., Ltd.’s Tsudanuma 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 3.9%, which
was based on the WACC at the time of measurement, taking into account the future profitability and otherfactors.
In the Developer Business, the main item is an impairment loss of ¥593 million recognized for a write-off ofthe entire amount of the carrying amount of investment real estate due to a decision to terminate the PARCO
CO., Ltd.’s Dotonbori ZERO GATE project. The recoverable amount was based on the value-in-use, which
was zero.

- 18 -

In addition, an impairment loss of ¥159 million was recognized for the entire amount of the carrying value ofthe structure portion only of investment real estate due to a decision to dismantle and rebuild PARCO CO.,Ltd.’s Nishiki 3-chome building. The recoverable amount was based on the value-in-use, which was zero.
(Note 3) Costs associated with suspension of store operations are mainly fixed costs (depreciation and amortization,
personnel expenses, etc.) incurred by Daimaru Matsuzakaya Department Stores Co. Ltd. and PARCO Co.,
Ltd. during the suspension of operations of stores, etc. that closed due to the impact of the spread of COVID19.
(Note 4) Structural reform costs are extra retirement payments due to the expanded voluntary early retirement programfor Daimaru Matsuzakaya Department Stores Co. Ltd. and The Hakata Daimaru, Inc.

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
Class of shares

Total amount ofdividends(Millions of yen)

Board of Directors
meeting held on
Common shares
April 13, 2021

4,751

Resolution

Dividends per
share
(Yen)

Record date18.00 February 28, 2021

Effective date

May 7, 2021

Board of Directors
November 11,
meeting held on
Common shares
3,700
14.00 August 31, 2021
2021
October 12, 2021
(Note 1) Total amount of dividends resolved at the Board of Directors meeting held on April 13, 2021 includes ¥39 millionof dividends paid to the Company’s shares held by an officer remuneration BIP trust.
(Note 2) Total amount of dividends resolved at the Board of Directors meeting held on October 12, 2021 includes ¥34
million of dividends paid on the Company’s shares held by the officer remuneration BIP trust.

(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
3,964
15.00
May 6, 2022
sharesearnings
2022
April 12, 2022
(Note) Total amount of dividends resolved at the Board of Directors meeting held on April 12, 2022 includes ¥37 millionof dividends paid on the Company’s shares held by the officer remuneration BIP trust.

Notes on financial instruments
1. Matters concerning conditions of financial instruments
Risk management regarding financial instruments
The Group, in order to avoid or mitigate market risk, credit risk and liquidity risk, manages risks
associated with financial instruments based on the following policies.
1) Market risk management
The Group limits its management of funds to highly stable deposits, bonds and the like. For the
procurement of funds, the Group’s policy is to use bank loans, issuances of commercial papers,
issuances of bonds, securitized receivables and the like. The Group uses derivatives solely to avoid
foreign exchange fluctuation risks on monetary claims and liabilities denominated in foreign
currencies and interest rate fluctuation risks on borrowings and bonds, and does not enter into
derivative transactions for speculative purposes.

- 19 -

(i) Foreign exchange fluctuation risk
The majority of the Group’s notes and accounts payable - trade, which are trade and other payables,
are those with payment dates within one year. Although some of them are denominated in foreign
currencies and are exposed to foreign exchange fluctuation risk, the Group enters into forward
exchange contracts for some of the settlement amounts to avoid this risk.
(ii) Interest rate fluctuation risks
Current borrowings, commercial papers, securitized receivables and the like are mainly to procure
funds for operational transactions, while bonds and long-term borrowings are mainly to procure funds
for capital investment. Although borrowings with floating interest rates are exposed to interest rate
fluctuation risk, for some of the long-term borrowings, derivative transactions (interest rate swaps) for
each individual contract are used as hedging instruments to avoid fluctuation risk on interest to be
paid and to fix the interest to be paid. As a method for assessing hedge effectiveness, the Group
periodically verifies hedging effects for each individual contract.
(iii) Market price fluctuation risk
The Group holds marketable securities, mainly ones of companies with which it has business
relationships. Although such securities are exposed to market price fluctuation risk, the Group not
only periodically monitors their market prices but also continuously reviews its shareholding positions.
Further, as all of these securities are designated as the financial assets which are measured at fairvalue through other comprehensive income, the fluctuation of market price has no impact on profit orloss.
2) Credit risk management
The Group is exposed to credit risk, the risk of suffering financial loss from failure of counterpartyof financial assets held.
(i) Trade and other receivables
Notes and accounts receivable – trade, which are trade receivables, are exposed to customer credit
risk. 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.
(ii) Short-term investments
Cash and cash equivalents and short-term investments which are included in other financial assets
are highly stable and liquid financial instruments such as commercial papers of highly rated
corporations, bond investment trust, money trust.
(iii) Loans receivable
Loans receivables are exposed to the credit risk of borrowers. In order to control such risk, theGroup thoroughly follows internal deliberations and approval processes regarding borrowers’ credit
status for a new loan and requires guarantee deposits and collateral as necessary, while accessing
borrowers’ credit status on a regular basis.
(iv) Derivative transactions
Execution and management of derivative transactions are carried out in accordance with internal
rules that stipulate its objectives, limit amount, scope of transactions, organizational structure andother matters. The use of derivatives is solely for the purpose of avoiding risks based on actual
demand, not for speculation purpose, and limited to contracts with highly creditworthy financial
institutions in order to reduce credit risk.
3) Liquidity risk management
Liquidity risk refers to the risk that the Group is unable to fulfill its repayment obligations offinancial liabilities which is due.
Although trade payables, borrowings and the like are exposed to liquidity risk, the Group manages
this risk with methods such as preparing monthly cash flow management plans at all companies, andsecures sufficient liquidity on hand through commitment line contracts and overdraft contracts with its
main financing banks.

- 20 -

2. Matters concerning fair values of financial instruments
Carrying amount, fair values as of February 28, 2022, 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

93,278112,262
7
91,89993,278112,262
7
94,023

–
–
–
2,123

Liabilities

(5)
(6)
(7)
(8)
(9)
(*)

Trade and other payables[116,107][116,107]–
Other financial liabilities[66,657][66,602](55)
Borrowings[202,960][202,691](268)
Commercial papers[15,002][15,002]–
Bonds[99,752][99,475](277)
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, (6) other financial liabilities (current), and (8) commercial papers
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.
(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 consistof lease and guarantee deposits paid or lease and guarantee deposits received, and their fairvalue is measured at present value calculated by discounting future cash flows at the current
market interest rates or the like.
(7) Borrowings, (9) bonds
For bonds, fair value is estimated using the reference trading statistics of Japan Securities
Dealers Association and others. The fair value of borrowings is mainly measured by present
value obtained by discounting future cash flows at interest rates that would be charged for a
new similar borrowing.
(3) Derivatives (assets)
For derivatives, as financial assets measured at fair value through profit or loss, fair value ismeasured based on prices presented by financial institutions.

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

189,688257,720(Note 1) The consolidated statement of financial position amount is the acquisition cost less accumulated depreciation.
(Note 2) For major properties, fair value at the end of the current fiscal year is an amount based on the real estateappraisal standards of an external real estate appraiser, etc. For other properties, fair value is an amount- 21 -

estimated by employing the land price index with necessary adjustments applied at the Company.

Notes on per share information
1. Equity attributable to owners of parent per share:
2. Basic earnings per share:(Note)¥1,337.29¥16.50The 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.

- 22 -

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 fair market values
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 fair market values
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 theperiod 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. Hedge accounting method
Hedge accounting method
Exceptional treatment is applied to interest rate swaps
that satisfy the requirements for exceptional treatment.

- 23 -

Hedging instruments and hedged items
Hedging instruments
Hedged items
Hedging policy

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.
6. Accounting treatment for consumption taxes
Consumption tax and local consumption tax are
accounted for under the tax exclusion method.
Of consumption tax on assets that are not qualified fortax deductions, deferred consumption taxes stipulated
under tax law are recorded in long-term prepaid
expenses and amortized on a straight-line basis during afive-year period.

Notes on changes in presentation
Adoption of “Accounting Standard for Disclosure of Accounting Estimates”
The Company has adopted the “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ
Statement No. 31, March 31, 2020) for the year-end financial statements for the fiscal year under review,and has presented notes regarding accounting estimates.
Notes to accounting estimates
1. Recoverability of deferred tax assets(1) Amounts recorded in financial statements for the current fiscal year
Deferred tax assets¥1,615 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
to consolidated financial statements.
Additional information
Accounting treatment following adoption of the consolidated taxation system
Since the Company applied for approval for the consolidated taxation system in the current fiscal year
and the consolidated tax payment system is to be applied from the next fiscal year, from the current
fiscal year it has applied accounting treatment assuming the adoption of the consolidated taxation system
in accordance with “Practical Solution on Tentative Treatment of Tax Effect Accounting Under
Consolidated Taxation System (Part 1)” (ASBJ PITF No. 5, January 16, 2015) and “Practical Solution on
Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 2)” (ASBJ
PITF No. 7, January 16, 2015).
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 thetreatment of Paragraph 3 of “Practical Solution on the Treatment of Tax Effect Accounting for theTransition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No.
- 24 -

39, March 31, 2020), the Company has not applied the provision of Paragraph 44 of “Guidance on
Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018), and theamounts of its deferred tax assets and deferred tax liabilities are in accordance with the tax laws prior torevision.
Notes on non-consolidated balance sheet
1. Short-term monetary liabilities to subsidiaries and associates¥1,504 million
2. Accumulated depreciation of property, plant and equipment¥80 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¥15,482 million¥595 million

Interest income
Interest expenses¥697 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
8,756,955 shares- 25 -

Notes on tax effect accounting
1. Deferred tax assets and deferred tax liabilities by major category of cause
Deferred tax assets
Provision for bonuses
Accrued insurance expenses
Accrued enterprise tax
Accrued expenses
Loss on valuation of shares of subsidiaries andassociates
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 investment securities
Revised carrying amount of investment
Unused tax losses
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
Total deferred tax liabilities¥42 million¥6 million¥83 million¥26 million¥61 million¥266 million¥77 million¥112 million¥15 million¥16 million¥1,667 million¥11 million¥2,387 million¥(321) million¥(445) million¥(767) million¥1,620 million¥(3) million¥(1) million¥(4) million

Net amount of deferred tax assets¥1,615 million- 26 -

Notes on transactions with related parties
Subsidiaries, etc.

Type

Subsidiary

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.

JFR Kodomo
Mirai Co., Ltd.

Angel Park Co.,Ltd.

Holding
Directly
100%

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

Business
advisory

Business
advisory

Nature oftransactions

Transaction
amount(Note 6)

Receipt ofconsulting fee
income (Note 1)

2,976

Lending of funds–

Collection of
funds

175

Receipt ofinterests (Note 2)

87

Lending of funds–(Millions of yen)
Balance atthe end of
Account itemthe fiscal
year–
Long-term
loans
receivable––

25,000–

Short-term
loans
receivable

22,000Long-term
loans
receivable

83,500Receipt ofinterests (Note 2)

466–

Lending andcollection offunds (Note 3)

17,923

Short-term
loans
receivable–
11,704

Receipt ofinterests (Note 2)

53

Lending of funds

10,000

Short-term
loans
receivable

15,000

Collection offunds

10,000Long-term
loans
receivable

15,000––Receipt ofinterests (Note 2)

89

–

–

Lending of funds(Note 4)400

Short-term
loans
receivable

370

Collection of
funds

370

Long-term
loans
receivable

500

Deposits

1,500

Deposits of funds

1,500

Repayment ofdeposits

1,000

Payment ofinterests (Note 2)

2

–

–

Holding
Requests for
JFR Information
Business
Directly
computation
554––
Center Co., Ltd.
advisory
100%
services (Note 5)
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.
(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) For the loans to JFR Kodomo Mirai Co., Ltd., the Company recorded an allowance for doubtful accounts of ¥870
million.
Subsidiary- 27 -

(Note 5) The Company will reasonably determine with reference to market prices whether to request this company mainly in
relation to computation services.
(Note 6) Transaction amounts do not include consumption taxes.

Notes on per share information
1. Net assets per share:
2. Basic earnings per share:¥1,280.48¥54.44- 28 -