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.

17th Annual Shareholders Meeting: Other Matters for Which
Information is Provided in Electronic Format(Matters for Which Document Provision is Omitted)
Business Report
1. Current status of the corporate group(1) Business summary and results(Reference) Gross sales by company, store and product of the Department StoreBusiness(Reference) Tenant transaction volume (on a gross basis) by PARCO store in
the SC Business(2) Major businesses(3) Major sales offices(4) Status of employees
2. Matters relating to Accounting Auditor
3. System and policies of the Company(1) Systems to ensure properness of operations <Basic Policy to Build Internal
Control System>(2) Operational status of systems to ensure properness of operations <Basic Policy
to Build Internal Control System>(3) Basic policy regarding control of the Company
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Non-consolidated Financial Statements
Non-consolidated Balance Sheet, Non-consolidated Statement of Income, Nonconsolidated Statement of Changes in Equity, Notes to Non-consolidated Financial
Statements
Audit Report
THE AUDIT REPORT OF INDEPENDENT AUDITORS CONCERNING THE
CONSOLIDATED FINANCIAL STATEMENTS (COPY)
THE AUDIT REPORT OF INDEPENDENT AUDITORS CONCERNING THE
NON-CONSOLIDATED FINANCIAL STATEMENTS (COPY)
THE AUDIT REPORT OF AUDIT COMMITTEE MEMBERS (COPY)(From March 1, 2023 to February 29, 2024)

J. Front Retailing Co., Ltd.

The matters listed on this document are not presented in the paper-based documents to be delivered toshareholders who requested the delivery of paper-based documents in accordance with the laws andregulations and the Company’s Articles of Incorporation.

1.

Current status of the corporate group(1) Business summary and results(Reference) Gross sales by company, store and product of the Department Store BusinessNet sales by company and store of the Department StoreBusiness(Millions of yen)
Year-onCompany / Store
Amount Composition
yearchanges%%
Osaka
Shinsaibashi
95,731
12.8
35.2
store

Daimaru
Matsuzakaya

Daimaru Matsuzakaya Department Stores Co. Ltd.

Osaka Umeda
store

55,010

7.4

13.9

Tokyo store

78,341

10.5

22.0

Kyoto store

70,532

9.4

14.6

Kobe store
Suma store

91,849
6,379

12.3
0.9

9.4
1.0

Ashiya store

4,303

0.6

2.4

Sapporo store

75,473

10.1

21.6

Shimonoseki
store

7,816

1.0

(6.5)

Sub total

485,438

64.9

18.5

Nagoya store
Ueno store
Shizuoka store
Takatsuki store

126,852
25,416
17,724
5,441

17.0
3.4
2.4
0.7

7.7
6.0
1.2
(1.1)

Sub total

175,435

23.5

6.5

Corporations, head
office, etc.
Total
The Hakata Daimaru, Inc.
Kochi Daimaru Co., Ltd.
Adjustment
Total

24,5483.3(12.2)

685,42254,0968,359(23)
747,855

91.7
7.2
1.1
0.0
100.0

13.8
14.8
(0.2)
–
13.7

-1-

Net sales by product of the Department StoreBusiness(Millions of yen)
Year-onProductAmount Composition
yearchanges%%
Men’sclothing and
33,7994.5(8.5)
haberdashery
Ladies’clothing and
275,171
36.8
21.2
haberdasheryChildren’s
clothing and
6,930
0.9
6.7
haberdashery
Kimono,bedding and
6,338
0.8
0.3
other clothing
Accessories
54,861
7.3
17.7
Furniture
4,439
0.6(10.1)
Home
179
0.0
4.7
appliancesHousehold
15,173
2.0
11.6
goods
Food products

149,677

20.0

5.7

Food halls andcafes
General goods
Services
Other
Adjustment

18,9042.5

22.6

139,807
2,606
39,998
(23)

18.7
0.3
5.3
0.0

17.8
9.6
5.9
–

Total

747,855

100.0

13.7

(Note) Gross sales are calculated by converting certaintransactions recognized as revenue under IFRS on a
net basis to amounts on a gross basis. Specifically,
we converted sales from purchase recorded at thetime of sale (shoka shiire) to a gross amount.

(Reference)

Tenant transaction volume (on a gross basis) by PARCO store in the SC BusinessStore

AmountComposition%

Year-onyearchanges%

Sapporo PARCO

13,522

4.7

35.5

Sendai PARCO
Urawa PARCO
Ikebukuro PARCO
PARCO_ya Ueno
Kichijoji PARCO
Shibuya PARCO
Kinshicho PARCO
Chofu PARCO
Shizuoka PARCO
Nagoya PARCO
Shinsaibashi
PARCO
Hiroshima PARCO
Fukuoka PARCO

19,90628,44025,5108,432
8,367
35,898
10,42818,851
7,249
30,942

6.9
9.8
8.8
2.9
2.9
12.4
3.6
6.5
2.5
10.7

15.0
10.0
21.5
30.1
22.1
57.3
19.7
8.3
(5.5)
15.0

25,9518.9

46.1

13,22524,371

4.6
8.4

10.9
23.5

Store
Shintokorozawa
PARCO
Hibarigaoka PARCO
Matsumoto PARCO
All store total(Notes)

1.
2.

-2-

Amount(Millions of yen)
Year-onComposition
yearchanges
%
%

7,835

2.7

3.5

7,291
4,039
290,266

2.5
1.4
100.0

7.3
0.5
16.8

The tenant transaction volume represents the total
amount of tenant transactions at PARCO stores.
Shintokorozawa PARCO closed on February 29,2024.

(2) Major businesses
The Department Store Business, the SC Business, the Developer Business, the Payment and FinanceBusiness, and Other including wholesale business, parking, and leasing, etc.
(3) Major sales offices(Department Store Business)
Name
Daimaru Matsuzakaya Department
Stores Co. Ltd.
Head Office
Daimaru Osaka Shinsaibashi store
Osaka Umeda store
Tokyo store
Kyoto store
Kobe store
Suma store
Ashiya store
Sapporo store
Shimonoseki store

Location

Name

Koto-ku, Tokyo
Chuo-ku, Osaka
Kita-ku, Osaka
Chiyoda-ku, Tokyo
Shimogyo-ku, Kyoto
Chuo-ku, Kobe
Suma-ku, Kobe
Ashiya, Hyogo
Chuo-ku, Sapporo
Shimonoseki,
Yamaguchi

Matsuzakaya

Nagoya store
Ueno store
Shizuoka store
Takatsuki store

GINZA SIX
The Hakata Daimaru, Inc.
Kochi Daimaru Co., Ltd.

LocationNaka-ku, Nagoya
Taito-ku, Tokyo
Aoi-ku, Shizuoka
Takatsuki, Osaka
Chuo-ku, Tokyo
Chuo-ku, Fukuoka
Kochi, Kochi(SC Business)
Name
PARCO Co., Ltd.
Headquarters
Shibuya Head Office
Sapporo PARCO
Sendai PARCO
Urawa PARCO
Shintokorozawa PARCO
Ikebukuro PARCO
PARCO_ya Ueno
(Ueno Frontier Tower)
Kinshicho PARCO
Shibuya PARCO
Hibarigaoka PARCO
Kichijoji PARCO

Location

Name

Location

Toshima-ku, Tokyo
Shibuya-ku, Tokyo
Chuo-ku, Sapporo
Aoba-ku, Sendai
Urawa-ku, Saitama
Tokorozawa, Saitama
Toshima-ku, Tokyo
Taito-ku, Tokyo

Chofu PARCO
Matsumoto PARCO
Shizuoka PARCO
Nagoya PARCO
Shinsaibashi PARCO
Hiroshima PARCO
Fukuoka PARCO

Chofu, Tokyo
Matsumoto, Nagano
Aoi-ku, Shizuoka
Naka-ku, Nagoya
Chuo-ku, Osaka
Naka-ku, Hiroshima
Chuo-ku, Fukuoka

Sumida-ku, Tokyo
Shibuya-ku, Tokyo
Nishi-Tokyo, Tokyo
Musashino, Tokyo

Pedi SHIODOME
Cattleya Plaza Isezaki
HAB @ Kumamoto
Parco (Singapore) Pte Ltd

Minato-ku, Tokyo
Naka-ku, Yokohama
Chuo-ku, Kumamoto
Singapore(Developer Business)
Name
J. Front City Development Co., Ltd.
Head Office
Ueno Frontier Tower
CROSS GINZA
Sapporo ZERO GATE
Harajuku ZERO GATE
Kawasaki ZERO GATE
Nagoya ZERO GATE
Kyoto ZERO GATE

Location
Shibuya-ku, Tokyo
Taito-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Sapporo
Shibuya-ku, Tokyo
Kawasaki-ku,
Kawasaki-shi
Naka-ku, Nagoya
Shimogyo-ku, Kyoto

PARCO SPACE SYSTEMS Co., Ltd. Shibuya-ku, Tokyo
J. Front Design & Construction Co.,
Ltd.

Name

Location

Shinsaibashi ZERO GATE
Sannomiya ZERO GATE
Hiroshima ZERO GATEBINO OKACHIMACHI
BINO GINZA

Chuo-ku, Osaka
Chuo-ku, KobeNaka-ku, Hiroshima
Taito-ku, Tokyo
Chuo-ku, Tokyo

BINO SAKAE

Naka-ku, Nagoya

BINO HIGASHINOTOIN
Nakagyo-ku, Kyoto
and others
PARCO Digital Marketing Co.,
Shibuya-ku, Tokyo
Ltd.

Chuo-ku, Osaka(Payment and Finance Business)Name
JFR Card Co., Ltd.

Location
Head Office: Takatsuki, Osaka
Sales Office: Tokyo 3, Osaka 2, Kyoto 1, Kobe 1, Sapporo 1, Nagoya 1, Shizuoka 1(Other subsidiaries)
Head Office: Osaka 5, Nagoya 1, Tokyo 1, Shanghai 1, Thailand 1-3-

(4) Status of employees
1) Employees of the corporate group
Category

Number of employees

J. FRONT RETAILING Co., Ltd.

185

Department Store Business

2,945

SC Business

496

Developer Business

855

Payment and Finance Business

256

Other

540

Total
5,277
(Note) Other than the employees above, the number of dedicated employees is 1,170
and the number of fixed-term employees is 922.

2)

Employees of the Company
Number of employees

Average age

185
47.9
(Note) Other than the employees above, the number of dedicated employees is 4 andthe number of fixed-term employees is 12.

3)

Employees of major subsidiaries
Name

Daimaru Matsuzakaya Department
Stores Co. Ltd.
PARCO Co., Ltd.

Number of employees

Average age

2,763

49.2

622

43.4

-4-

2.

Matters relating to Accounting Auditor(1) Name of Accounting Auditor
Ernst & Young ShinNihon LLC(2) Amount of remuneration, etc. of Accounting Auditor
1) Amount of remuneration, etc. to be paid by the Company¥139 million

2) Total cash and other financial profits to be paid by the Company and its subsidiaries¥387 million(Note) The audit agreement entered into by the Accounting Auditor and the Company does not clearly distinguish theamount being derived from the audit under the Companies Act and that being derived from the audit under the
Financial Instruments and Exchange Act, and the two amounts cannot be practically distinguished from each other.
Therefore, the amount in 1) above indicates the total of these two kinds of amounts.

(3) Content of non-audit service
No items to report(4) Rationale for Audit Committee’s agreement on remuneration of the Accounting Auditor
The Audit Committee furnished its agreement with respect to the amount of remuneration, etc. provided to
the Accounting Auditor, which has been deemed appropriate upon conducting a review regarding audit
appropriateness with respect to the Accounting Auditor’s audit plan, its execution of duties, the basis used
for calculating remuneration estimates and other factors.
(5) Policy for determining dismissal or non-reappointment of Accounting Auditor
The Audit Committee is to take necessary measures that include dismissing the Accounting Auditor upon
gaining consent of all Audit Committee members, or otherwise making decisions on proposals to dismiss or
not reappoint the Accounting Auditor submitted to the Shareholders Meeting, in the event that the Audit
Committee deems it appropriate to dismiss or otherwise not reappoint the Accounting Auditor, either if
there are grounds for dismissal as provided for in Paragraph 1, Article 340 of the Companies Act of Japan,
or if a situation arises whereby the audit of the Company has been significantly impeded such as would be
the case if the supervisory authorities were to issue an order requiring suspension of auditing activities.
(6) Rationale for Audit Committee’s decision on reappointment of Accounting Auditor
The Audit Committee decided to reappoint Ernst & Young ShinNihon LLC, as a result of comprehensive
considerations, following the evaluation of the appropriateness and validness of audit activities by the
Accounting Auditor based on the Accounting Auditor Evaluation Standards established by the Audit
Committee.

-5-

3.

System and policies of the Company(1) Systems to ensure properness of operations <Basic Policy to Build Internal Control System>(revised on May 25, 2023)
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
system, and audit committee system.
I. Group Management System
1) 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, 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, 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.

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.

-6-



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.



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 execution 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
Meeting, 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.

-7-



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
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” that sets contact points both within
and outside of the companies (corporate lawyer) as the whistle-blowing system of the Group, 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-8-

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.
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 appointment and reassignment of secretariat staff members, and performance evaluationsof 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

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 circular approval memos, andrequest 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 request 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-9-

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.
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.

- 10 -

(2) Operational status of systems to ensure properness of operations <Basic Policy to Build Internal
Control System> (FY2023)
The Company endeavors to maintain its internal control system and properly operate such system on thebasis of its “Basic Policy to Build Internal Control System.” Details regarding the overall status of suchoperations during the current fiscal year are as follows.
I. Group Management System
1) Board of Directors
1) To separate supervisory and executive functions and ensure the effectiveness of discussions at theBoard of Directors, the Board of Directors is comprised of a majority of independent Outside
Directors who have no risk of a conflict of interest with the Company’s shareholders.
2) The Board of Directors deliberates on material issues related to the Group management. As for thefindings of and issues raised by the Board of Directors, there are demands for additional reports on
execution, and efforts are made to run through the PDCA cycle, including additional debate by the
Board of Directors. Briefings are also provided to Outside Directors prior to the Board of Directors
meetings for fuller discussions at such meetings. The effectiveness of the Board of Directors is being
improved through these initiatives.
3) The Board of Directors met 15 times in the current fiscal year. Their discussions included monitoringof the Medium-term Business Plan that ended in fiscal 2023, deliberation of the new Medium-term
Business Plan that started in fiscal 2024 and the sales of the shares of StylingLife Holdings Inc. aswell as matters defined in the Companies Act and/or the Articles of Incorporation. In addition, theBoard of Directors evaluates the state of creating and operating the various items stipulated in the“Basic Policy to Build Internal Control System” and confirms there are no major problems.
4) Evaluations of the effectiveness of the Board of Directors are performed by a third-party organizationeach fiscal year to continuously and further improve the effectiveness of the Board of Directors by
resolving any identified issues.
2) Management execution framework
1) As an executive organization, the Company has established optimal strategy units for effective, fasterstrategy execution. Following on the mission of the President and Representative Executive Officer,
the Executive Officer, who is the Senior Executive General Manager, prepares missions for eachstrategy unit in order to realize the Medium-term Business Plan and the Annual Execution Plan.
These units execute business and support the operations and management of operating subsidiaries
in line with its duties and mission.
2) The roles and responsibilities of the Company as a holding company include planning, formulating
and spreading the Group Vision, the Group Medium-term Business Plan and the Group Management
Policy for the fiscal year; managing the progress and performance of these activities; establishingbusiness portfolio management (optimal allocation of management resources), human resourcesmanagement, shareholder management and corporate governance group-wide. With regard tomatters related to business execution at operating subsidiaries, in order to promote speedy
management decisions and clarify management responsibilities; standards have been established fordelegating authority to operating companies, which exclude items that have an important impact on
the Group management; and things are operated in accordance with these standards.
3) The Company has established various meetings to execute items, the roles of which are clearly
indicated. The Group Management Meeting focuses on discussions of important issues to besubmitted to the Board of Directors, such as overall policy and plans for the Group’s management.
The matters discussed are reviewed at the Group Policy Meeting, each segment’s Medium-term
Business Plan Progress Meeting, and the Operating Associates Results and Strategy Examination
Meeting to help facilitate prompt management decisions.
4) As a rule, the common Group accounting system is introduced; and efforts are made to promote more
efficient operations and integrated and more efficient fund procurement by the Group through a cash
management system.

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3) Internal control promotion framework
1) Under the direction of President and Representative Executive Officer, the Company has establisheda department and person responsible for internal control. This department and person develop andmanage the internal controls regarding the Companies Act and the internal control system regarding
the Financial Instruments and Exchange Act at the Company and operating subsidiaries.
2) With regard to internal controls over financial reporting, the Company and operating subsidiaries
maintain and operate internal systems to ensure the reliability of financial reporting in line with the
Financial Instruments and Exchange Act and various associated laws and regulations.
3) During the current fiscal year, no material deficiencies that should be disclosed were found, and thiswas reported to the Audit Committee and the Board of Directors.
II. Risk Management System
1) The Company has established 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 of theCompany, presidents of operating subsidiaries, and others.
2) The Risk Management Committee regularly discusses, identifies, and evaluates risks (uncertainties),
prioritizes them and reflects them in strategies, monitors related countermeasures, and submits
related reports to the Board of Directors.
3) The Risk Management Committee met four times in the current fiscal year to discuss current risksof the Group based on an analysis of the macro environment and a risk survey. In addition, to start
the new Medium-term Business Plan in fiscal 2024, regarding risk management, which is the starting
point of the strategies, it deliberated and determined how to extract risks and the important risks(important risks for the Group) to be addressed during the plan’s period.
4) For hazard risks such as large-scale earthquakes, fires, and accidents, the Company has establisheda system in which crisis management is controlled by the “Emergency Response Headquarters”
headed by the President and Representative Executive Officer.
During the current fiscal year, the Company, based on its “Crisis Management Rules” and “BusinessContinuity Manual” to be followed in case of a large-scale natural disaster, continued to make efforts
to improve its ability to respond to a wide range of crisis events by conducting BCP drills several
times, including at our operating companies. Regarding infectious diseases, with the safety andsecurity of our customers and employees as our top priority, we have implemented hygiene
management practices to help prevent outbreaks and other measures to help prevent the spread of
disease based on our “New Infectious Disease Response Manual” in line with the Crisis Management
Rules.
Ⅲ. Legal Compliance System
1) Compliance promotion framework
1) The Company has established the Compliance Committee as an advisory body to the President andRepresentative Executive Officer regarding the compliance operation. The President andRepresentative Executive Officer shall be the chairperson and the members of the committee shallbe a corporate lawyer, Executive Officers and others.
2) Departments and persons responsible for compliance are also put at operating subsidiaries, and carryout daily supervision and direction of business operations that are in accordance with laws andregulations and internal company rules.
3) The Compliance Committee met four times during the current fiscal year to discuss issues in theGroup’s internal organizational culture and initiatives aimed at reform. The committee also discussed
the response to the aggregated reports to the whistle-blowing system.
4) In order to spread efforts to ensure compliance, those responsible for compliance at each groupcompany meet four times a year to increase compliance awareness and implement activities within- 12 -

the entire group. We also conducted trainings on the theme of compliance and corporate culture for
JFR’s officers and newly assigned managers of each Group company.
2) Whistle-blowing system
1) The Company has established the “JFR Group Compliance Hotline” for reporting issues to theCompany or an independent party (corporate lawyer), which may be used by all persons working at
the Company and operating companies.
2) For hotline reports concerning management personnel, the Company has built a structure whereby
the reports are directly submitted through the hotline desk to the Audit Committee and subjected todirections from the Audit Committee.
3) During the current fiscal year, efforts were made to increase recognition and promote understandingof the system among the Group company employees through measures such as posting analysis of
issues reported and the status of responses to them on our in-house portal site. As a result, 61 cases
related to labor-management relations and other issues were reported, and are being dealt mainly by
the secretariat.
IV. Internal Audit Structure1) The Company has established an independent Internal Audit Division under the President andRepresentative Executive Officer. The Internal Audit Division verifies and evaluates the legality andeffectiveness of systems of corporate governance, risk management and compliance management,in addition to performing audits on business operations of the Company and each operating company.
2) There is a system in which reports are submitted to both the President and Representative Executive
Officer and the Audit Committee, and audit results and improvement measures related to audit
findings are regularly reported. As for orders related to improvement measures from management,
issues are promptly handled in collaboration with the audited departments.
3) We have established remote audit structure, which is used to conduct audits along with onsite audits.
During the current fiscal year, we conducted operational audits on the status of legal compliancewith the Labor Measures Comprehensive Promotion Act, the Antimonopoly Act, and other statutes,
as well as the status of development of operational rules and regulations and their compliance. We
also conducted audits based on themes such as the status of promoting structure reforms andexecuting DX strategy.
V. Structure of the Audit Committee
1) The Audit Committee, which is chaired by an Outside Director, is composed of five members
including Directors who do not execute business and are Inside Directors.
2) In accordance with the overall policy and plan determined by the Board of Directors, the Audit
Committee audits the execution of business by Executive Officers and Directors, important matterssubmitted to the Board of Directors, and other individual matters the Audit Committee considers
necessary, as well as the status of establishing and implementing internal controls, and then prepares
audit reports.
3) The Audit Committee receives explanations on the audit policy and plan prior to the audit from the
Accounting Auditor, and receives explanations and reports on the audit results and expresses its
opinions including requests on audit items, and in addition, exchanges of opinions with the
Accounting Auditor is carried out on a regular basis. It receives regular audit reports from the Internal
Audit Division on the status of improvements regarding issues identified through internal audits.
Moreover, the Audit Committee works closely with the Audit & Supervisory Board Members of theGroup companies through regular meetings to share recognition of auditing issues and exchange
opinions.
4) To grasp important decision-making processes and the status of the execution of duties, full-timemembers of the Audit Committee not only attend important committees and other meetings, such as
the Group Management Meeting, but also peruse important documents relating to the execution ofbusiness such as approval circulars.
- 13 -

5) During the current fiscal year, the Audit Committee met 24 times. Apart from the Committee, we
carried out audits on execution of duties of all of the Executive Officers of the Company at Audit
Committee Meeting. Through these, we monitored the progress of the plans based on the Group’s
policies such as business portfolio transformation, the status to maintain and improve sound andsustainable company structure, etc.
VI. System for Storage and Management of Information
1) Confidential information management
The Company ensures that the documents associated with the execution of duties by the Executive
Officers and Directors, as well as the minutes and relevant materials (including electronic records) of themeetings held by Executive Officers and Directors are appropriately stored and managed by each of the
responsible departments based on laws and regulation as well as internal rules.
2) Information security management
The Company has formulated information security policies and IT governance policies and distributes
them within the Group, and based on these policies, the individual departments in charge conduct
information security management. Reports on the status of management of information systems andrelated matters are made at the Board of Directors, the Audit Committee, and the Group Management
Meeting regularly and when necessary.
To minimize potential IT related risks and increase corporate value, the Company controls activities
ranging from the development of IT strategy to its implementation with the Regular IT Governance
Meeting and the System Development Meeting based on the Company’s IT governance policy,
regulations, and rules. We also promote efforts to ensure compliance with our information security policy
through ongoing training related to targeted e-mail attacks and incident response.

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(3) Basic policy regarding control of the Company
I. Contents of basic policy
The Company believes it is necessary for the party controlling the Company’s financial and business
policy decisions to be a party who sufficiently understands the financial and business details of the Groupand the sources of the Group’s corporate value, continuously and sustainably ensures that the corporate
value of the Group and, by extension, the common interests of shareholders are served, and enables
further improvement in this area.
As the Company is a listed enterprise, the Company’s policy regarding its shareholders is that, in general,they are determined through free market transactions on the financial instruments market. Furthermore,even in the case of a purchase of shares of the Company above a certain scale by specific shareholders
or specific groups (hereinafter “Large-Scale Purchase”), if this Large-Scale Purchase will contribute to
the corporate value of the Group and, by extension, the common interests of its shareholders, theCompany believes that this should not be rejected outright and that, ultimately, the decision on whether
to accept or reject it should be left to the discretion of the Company’s shareholders.
Nevertheless, a Large-Scale Purchase that involves a serious risk of causing damage to the corporate
value of the Group may be envisaged. This may include a Large-Scale Purchase that, in view of its
purpose and other factors, would demonstrably harm the Group’s corporate value; one with the potential
to involve substantial coercion of shareholders to sell shares of the Company; or one that would notprovide sufficient time and information for the Company’s Board of Directors and shareholders toconsider factors such as the details of the large-scale purchaser’s proposal, or for the Company’s Boardof Directors to make an alternative proposal.
A party attempting this kind of Large-Scale Purchase, which would not contribute to the corporate valueof the Group and, by extension, the common interests of its shareholders (hereinafter, the “Large-Scale
Purchaser”), would not be appropriate as a party controlling the Company’s financial and business policy
decisions. Accordingly, the Company believes that it is the duty of the Company’s Board of Directors,
which is entrusted by the shareholders to manage the Company, to respond to this kind of Large-Scale
Purchase by ensuring that processes such as provision of information by the Large-Scale Purchaser andconsiderations and evaluations by the Company’s Board of Directors are carried out, and securing
sufficient time for the Company’s Board of Directors and shareholders to consider the details of theLarge-Scale Purchaser’s proposal in order to prevent damage to the corporate value of the Group and, byextension, the common interests of its shareholders.
II. Frameworks contributing to realization of basic policy
Since the foundation of Daimaru and Matsuzakaya, the Group has been engaged in businesses of kimono
fabric stores and department stores for many years based on the corporate philosophies and traditional
spirits of these businesses, which are: “Service before profit (those who place service before profit willprosper),” “Abjure all evil and practice all good” and “In doing good to others, we do good to ourselves.”
The Company believes that the sources of the Group’s corporate value are the relationships of trust it hasestablished with customers and with society, which have been refined on the basis of these philosophiesand spirits.
Accordingly, in order to exemplify the principles of “customer-first principle” and “contribution tosociety,” which are in common with these philosophies and spirit, the Company has established thefollowing Basic Mission Statement of the Group: “to aim at providing high quality products and services
that meet the changing times and satisfying customers beyond their expectations” and “to aim atdeveloping the Group by making a broad contribution to society as a fair and trusted business entity.”
Based on this Basic Mission Statement, the Company implements a wide range of measures, aimed atrealizing the Group Vision of “Create and Bring to Life ‘New Happiness,’” in order to make acontribution to securing and enhancing the corporate value of the Group and, by extension, the common
interests of shareholders.

- 15 -

Ⅲ. Framework to prevent parties deemed inappropriate in light of basic policy from controlling thefinancial and business policy decisions of the Company
At present, the Company has not specifically stipulated a concrete framework for a case in which a LargeScale Purchaser appears, commonly known as takeover defense measures.
Nevertheless, the Company believes that, in order to prevent damage to the Group’s corporate value if aLarge-Scale Purchaser appears, it is necessary to carefully examine the impact a Large-Scale Purchasewould have on the Group’s corporate value after ascertaining certain information about the Large-Scale
Purchaser. Such information would include the nature of the Large-Scale Purchaser, the purpose of theLarge-Scale Purchase, the Large-Scale Purchaser’s proposed financial and business policies and theirpolicy for handling shareholders, the Group’s customers, business partners, employees, the communities
that surround the Group, and other stakeholders.
Accordingly, if this occurs, the Company will establish an independent committee composed of Outside
Officers and experts with viewpoints that are independent from the Company’s management personnel
and Inside Directors. If the Company judges that the said Large-Scale Purchaser is inappropriate in lightof the aforementioned basic policy after considering advice and opinions from the committee, theCompany will act to secure the Group’s corporate value and, by extension, the common interests ofshareholders by taking necessary and appropriate countermeasures.
IV. Judgment of the Company’s Board of Directors regarding concrete framework and reasons forsuch judgment
Various measures formulated by the Group are formulated based on the Group’s Basic Mission Statement,
and are intended to further build up the relationships of trust with customers and with society, which are
the sources of the Group’s corporate value. Therefore, the Company believes that these measures are inline with the contents of the basic policy and contribute to securing and enhancing the corporate value of
the Group and, by extension, the common interests of shareholders.
Furthermore, if the Company takes necessary and appropriate countermeasures against a Large-Scale
Purchaser judged to be inappropriate in light of the basic policy, the fairness, neutrality and rationality ofthis judgment will be ensured by making it in consideration of advice and opinions from an independent
committee whose independence from the management personnel and Internal Directors of the Company
is assured. Accordingly, the Company believes that these measures would not damage the corporate valueof the Group or the common interests of shareholders, and that they are not intended to maintain thepositions of the officers of the Company.

- 16 -

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 J. Front Retailing Group (the “Group”) has been preparing its consolidated financial statements inaccordance 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
21 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 removed Taiwan Daimaru Kogyo, Ltd., which is our consolidated subsidiary, from thescope of consolidation upon the completion of liquidation on November 14, 2023.
3. Matters concerning the application of the equity method
Equity method associates
9 companies
Major equity method associates include Ginza 6-chome Kaihatsu Tokutei Mokuteki Kaisha. The
Company removed StylingLife Holdings Inc. from the scope of the equity method upon the transfer of
100% of its shares on September 27, 2023. In addition, the Company established J&D Regional
Development Inc. through a joint investment on February 9, 2024; 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 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.
- 17 -

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 using the effective interest
method.

(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.
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.
(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.
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 for- 18 -

the 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.
Non-derivative financial liabilities include borrowings, bonds, trade payables, other shortterm payables, common gift certificates for department stores nationwide, deposits, etc. These
financial liabilities are initially recognized at fair value and subsequently measured at amortizedcost based on the effective interest method.
The Group derecognizes a financial liability when the financial liability is extinguished, i.e.
when the contractual obligation is discharged, cancelled or expired.
(iii) 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.”
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.

- 19 -

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:4) Buildings and structures

2 to 60 years Machinery and vehicles

2 to 20 years

 Furniture and fixtures

2 to 20 years

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.
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
significant intangible assets with indefinite useful lives.

 Software
6)

5 to 10 years

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 leaseliability, 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.
Right-of-use assets are depreciated using the straight-line method from the commencement date
for mainly two to 73 years.

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.
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.
- 20 -

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 to remeasurement 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 as a net loss.
8)

Investment property
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.)

9)

Impairment of non-financial assets
The Group determines every reporting period whether there is any indication that carrying
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. The cash-generating unit is the smallest group of assets that generates
cash inflows, from continuous use, that are largely independent of the cash inflows from other 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.
An impairment loss is recognized as profit or loss, if the carrying amount of an asset or cashgenerating unit exceeds the recoverable amount. For an impairment loss recognized in the past, when
there is an indication of a reversal of impairment loss and a change in the estimates used to determine
the recoverable amount, the impairment loss is reversed to the recoverable amount. However,
impairment losses related to goodwill are not reversed. An impairment loss is reversed up to thecarrying amount that would have been determined had no impairment loss been recognized, net ofnecessary 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 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 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- 21 -

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. Revenue recognition by business segment is as follows:
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 accessories, 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.
(ⅲ) Developer Business
The Developer Business carries out development, sales, 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.
Revenue from sales of real estate is recognized at the time of delivery.
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.

- 22 -

2)

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.

(5) Income tax
Income tax consists of current taxes and deferred taxes, and is recognized as loss except for the items
that are recognized in other comprehensive income.
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 and unused
tax credits.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply when
temporary differences are reversed based on the laws enacted or substantively enacted by the end of thereporting period.
The recoverability of deferred tax assets is reviewed at the last day of every fiscal year after
recognizing deferred tax assets to the extent that it is probable that taxable profit will be available against
which deductible temporary differences, unused tax losses and unused tax credits can be utilized. A
deferred tax liability is recognized for all taxable temporary differences in principle.
The Company and some consolidated subsidiaries apply the Japanese group relief system.
(6) 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.
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.
Costs for defined contribution benefits are recognized as expenses in the period in which theemployees provide services.
(7) 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.

- 23 -

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 outlook for inbound tourism demand, and therate of sales growth after the business 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 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, the Group creates a scenario based on international
shipping forecasts and tourism demand forecasts by external organizations, and forecasts the demand
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¥1,654 million¥228,220 million¥62,001 million¥3,799 million¥109,518 million¥29 million¥201,597 million¥54,987 million¥871 million¥5,050 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,
the outlook for inbound tourism demand, and the like in the Department Store Business, SC Business, andPayment 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- 24 -

statements for the following fiscal year onward.
Deferred tax assets in the consolidated financial statements are as follows:
Deferred tax assets¥3,636 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:
Retirement benefit liabilities¥15,980 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¥150,450 million

Notes on consolidated statement of financial position
1. Allowance for doubtful accounts directly deducted from assets(1) Trade and other receivables¥111 million(2) Other financial assets¥4,829 million
2. Total amount of accumulated depreciation(1) Property, plant and equipment(2) Right-of-use assets(3) Investment property¥346,212 million¥152,247 million¥37,161 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, ¥2,010 million of land was transferred to inventories.

- 25 -

4. Assets pledged as collateral and secured liabilities(1) Assets pledged as collateral
Other financial assets
Other
Total
(2) Secured liabilities¥220 million¥148 million¥369 million

Trade and other payables
Total¥356 million¥356 million

Notes on consolidated statement of profit or loss
1. Other operating income
Gain on sales of non-current assets (Note 1)
Gain on sale of shares of subsidiaries andassociates (Note 2)
Other subsidies
Other
Total

¥757 million¥760 million¥150 million¥2,005 million¥3,673 million(Note 1) A gain on sales due to the sale of real estate holdings in the SC Business, wholesale business, Developer
Business, etc.
(Note 2) A gain on sales due to the transfer of 100% of the shares of StylingLife Holdings Inc.

2. Other operating expense
Loss on disposals of non-current assets
Impairment losses (Note)
Other
Total
(Note)¥1,302 million¥2,310 million¥1,342 million¥4,955 million

As a breakdown of the ¥2,310 million in impairment losses in the current fiscal year, ¥1,654 million wasrecorded for the Department Store Business, ¥446 million was recorded for Other, and ¥179 million wasrecorded for the Developer Business.
With regard to the Department Store Business, because of decreased profitability of Daimaru Matsuzakaya
Department Stores Co. Ltd.’s Daimaru Shimonoseki store, the carrying amount of buildings and structures andland, etc. were reduced to the recoverable amount and the reduction of ¥980 million was recognized as an
impairment loss. The recoverable amount of the cash-generating unit is measured as the fair value less cost of
disposal. In addition, because of decreased profitability of Kochi Daimaru Co., Ltd., the carrying amount ofbuildings and structures, right-of-use assets etc. were reduced to the recoverable amount and the reduction of¥674 million was recognized as an impairment loss. The recoverable amount of the cash-generating unit wasmeasured at value in use, and was calculated by discounting future cash flows by a pre-tax discount rate of
5.1%, which was based on the WACC at the time of measurement, taking into account the future profitability
and other factors.
With regard to Other, mainly because of decreased profitability of XENOZ Co., Ltd., the carrying amount of
goodwill was reduced to the recoverable amount and the reduction of ¥435 million was recognized as an
impairment loss. 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 16.6%, which was based on the WACC
at the time of measurement, taking into account the future profitability and other factors.
For the Developer Business, since it was decided to close Hiroshima ZERO GATE of J. Front City Development
Co., Ltd., the carrying amount of investment property was reduced to the recoverable amount and the reductionof ¥179 million was recognized as an impairment loss. The recoverable amount of the cash-generating unit wasmeasured at value in use, and was calculated by discounting future cash flows by a pre-tax discount rate of
4.0%, which was based on the WACC at the time of measurement, taking into account the future profitability
and other factors.

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- 26 -

2. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount ofdividends(Millions of yen)

Board of Directors
meeting held on
April 11, 2023

Common shares

4,228

Dividends per
share
(Yen)

Record date

16.00 February 28, 2023

Effective date

May 2, 2023

Board of Directors
November 13,
meeting held on
Common shares
4,228
16.00 August 31, 2023
2023
October 10, 2023
(Note 1) Total amount of dividends resolved at the Board of Directors meeting held on April 11, 2023 includes ¥36 million ofdividends 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 10, 2023 includes ¥34 millionof dividends paid to the Company’s shares held by an 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 29,
meeting held on
5,285
20.00
May 7, 2024
sharesearnings
2024
April 15, 2024
(Note) Total amount of dividends resolved at the Board of Directors meeting held on April 15, 2024 includes ¥42 million ofdividends paid to the Company’s shares held by an 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- 27 -

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.
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.

- 28 -

2. Matters concerning fair values of financial instruments
Carrying amount, fair values as of February 29, 2024, 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

71,342
143,32125
83,44871,342
143,32125
83,847–––399

Liabilities(5) Trade and other payables[151,230][151,230]–(6) Other financial liabilities[63,161][63,161]–(7) Borrowings[134,080][133,000](1,079)(8) Bonds payable[79,868][79,257](611)(*) The items recorded in liabilities on the consolidated balance sheet are shown in square 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 similar
to the carrying amount, as they are mostly settled in a short time.
(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.
(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
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. 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.
- 29 -

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
Derivative financial assets

–

25

–

25

Other financial assets

–

127

464

592

2,181

63

17,12319,3682,181

217

17,58819,986

–

–

–

–

–

–

–

–

Financial assets measured at fair value through othercomprehensive income
Other financial assets
Total
Liabilities:
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
–

3,252

49,22052,473–

3,252

49,22052,473

Borrowings–

133,000−

133,000

Bonds payable–

79,257−

79,257

Other financial liabilities (non-current)–−

34,79834,798–212,257

34,798247,055

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

- 30 -

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

181,985
289,151(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.

- 31 -

(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

21,13019,067
27,236
20,57537,144
8,439
54,715(496)
238,629

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

57,87271(1,080)56,864
19,47822,63135,902405(11,559)
66,859Developer Business
Payment and Finance Business
Removal of revenue from between
segments
Payment and FinanceBusiness

13,115(6,967)
6,148

Other
Removal of revenue from between
segments

51,925(13,420)
38,505

Other
Total

407,006

Revenue from contracts withcustomers
Revenue from other sources(Note)

32,76818,047

341,462
65,543

Revenue
407,006
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 category,“Other,” 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.”- 32 -

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

94,12998,071

Contract assets

6,832

6,821

Contract liabilities

39,98838,784(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, ¥18,793 million was recognized as revenue in thecurrent fiscal year.
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
39,886(Millions of yen)
Balance at the end of the current
fiscal year
37,499

1–2 years

11,37618,301More than 2 years

7,666

7,470

58,92963,271

Within one year

Total

- 33 -

Notes on per share information
1. Equity attributable to owners of parent per share:
2. Basic earnings per share(Note)¥1,453.71¥114.06

The 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.

Significant subsequent events
At the meeting of the Board of Directors held on April 15, 2024, a resolution was passed concerning
matters related to the purchase of own shares in accordance with Paragraph 1, Article 459 of the Companies
Act and Article 39 of the Company’s Articles of Incorporation.
1. Reason for the purchase of own shares
As announced on April 15, 2024 in the FY2024-FY2026 Medium-term Business Plan, the Company
has committed to working on the “Realization of growth with profitability” and “Optimization of equity
amount and enhancement of shareholder returns” in order to enhance medium- to long-term return on
capital. This purchase will be carried out based on this policy.
2. Details of matters related to the purchase(1) Class of shares to be purchased
Common shares(2) Total number of shares to be purchased
8,000,000 shares (upper limit)(3.03% of total number of issued shares (excluding treasury shares))(3) Total value of shares to be purchased¥10,000 million (upper limit)(4) Purchase period
From May 1, 2024 to July 31, 2024
(5) Purchase method
Market purchase on the Tokyo Stock Exchange (Discretionary trading by a securities company)- 34 -

Non-consolidated Financial Statements
Non-consolidated Balance Sheet (As of February 29, 2024)
J. Front Retailing Co., Ltd.
Item
AssetsCurrent assets
Cash and deposits
Short-term loans receivable fromsubsidiaries and associates
Accounts receivable - other
Other
Allowance for doubtful accounts

Non-current assets
Property, plant and equipment
Buildings and structures
Other

Intangible assets
SoftwareInvestments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates
Deferred tax assets
Other
Allowance for doubtful accounts
Deferred assets
Bond issuance cost

(Note)

AmountItem
Liabilities
180,959 Current liabilities
62,904
Short-term borrowings
Bonds payable
113,565
Accounts payable - other
4,804
Income taxes payable
184
Accrued expenses
Deposits received from subsidiaries(500)
and associates
Deposits received
Provision for bonuses
Provision for bonuses for directors
and other officers
Provision for officer remuneration
BIP trust
458,372
189
160
28

2,221
2,221

455,962
2,067
367,906
85,500
346
642
(500)
131
131

(Millions of yen)Amount135,118
34,33020,000450
132899
78,408
390
236
104
168

Non-current liabilities
Bonds payable
Long-term borrowings
Asset retirement obligations
Long-term deposits received for
officer shares trust
Provision for officer remuneration
BIP trust

159,169
60,00096,75076

Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
Retained earnings brought
forwardTreasury shares

294,288

Valuation and translation adjustments
Valuation difference on available-for-salesecurities

Total net assets
Total assets
639,463
Total liabilities and net assets
Amounts have been rounded down to the nearest one million yen.

- 35 -

1,150
1,192

345,046
31,974
248,874
9,474
239,400
77,51377,51377,513(13,316)128
128345,175
639,463

Non-consolidated Statement of Income (From March 1, 2023 to February 29, 2024)
J. Front Retailing Co., Ltd.
(Millions of yen)
Item

AmountOperating revenue
Dividend income
Consulting fee income

10,536
5,975

16,512

General and administrative expenses

7,972

Operating profit
Non-operating income
Interest income
Dividend income
Other

8,539
578
939
199

Non-operating expenses
Interest expenses
Commitment fees
Loss on investments in investment
partnerships
Provision of allowance for doubtful accounts
Other

1,717

806
193
311
100
104

Ordinary profit
Extraordinary income
Gain on sale of shares of subsidiaries andassociates

1,515
8,741

8,870

Extraordinary losses
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries
and associates

8,870

656
614

Profit before income taxes
Income taxes - current
Income taxes - deferred

1,271
16,341(1,013)
103

Profit(Note) Amounts have been rounded down to the nearest one million yen.

- 36 -(909)
17,251

Non-consolidated Statement of Changes in Equity (From March 1, 2023 to February 29, 2024)
J. Front Retailing Co., Ltd.
(Millions of yen)
Valuation andtranslation
adjustments

Shareholders’ equity
Retainedearnings

Capital surplus

Share capital

Other retained
earnings
Legal capital Other capitalsurplussurplusRetainedearnings
brought
forwardTreasurysharesTotal shareholders’equity(13,526)

336,043

Valuationdifference on
available-forsale securities

Total net
assetsBalance as of March 1,
2023

31,974

9,474

239,400

Dividends of surplus

–

–

–

(8,457)–(8,457)–(8,457)

Profit–––17,251–

17,251–

17,251

Purchase of treasury
shares

–

–

–

–

(7)

(7)

–

(7)

Disposal of treasury
shares

–

–

(0)

–

217

217

–

217

Net changes in items
other than shareholders’equity

–

–

–

–

–

–

50

50

Total changes during
period

–

–

(0)

8,793

209

9,003

50

9,054

31,974

9,474

239,400

77,513(13,316)

345,046

128

345,175

Balance as of February 29,
2024(Note)

68,719Amounts have been rounded down to the nearest one million yen.

- 37 -

78

336,121

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(For investments in limited liability investment
partnerships (deemed to be securities based on Paragraph
2, Article 2 of the Financial Instruments and ExchangeAct), these are stated by the net amount corresponding to
the Company’s equity share based on the most recent
obtainable financial statements depending on thereporting date established by the partnership agreement.)
Other 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.

- 38 -

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 recognizedat 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.

Notes to changes in presentations
1. Non-consolidated balance sheet“Deposits received from subsidiaries and associates” (¥2,000 million in the previous fiscal year), which
was included in “Deposits received” in the previous fiscal year is recorded separately in the current fiscal
year due to its increased materiality.
2. Non-consolidated statement of income“Loss on investments in investment partnerships” (¥34 million in the previous fiscal year), which was
included in “Non-operating expenses” in the previous fiscal year is recorded separately in the current fiscal
year due to its increased materiality.
Notes to accounting estimates
1. Recoverability of deferred tax assets(1) Amounts recorded in financial statements for the current fiscal year
Deferred tax assets¥346 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.

- 39 -

Notes on non-consolidated balance sheet
1. Short-term monetary liabilities to subsidiaries and associates¥111 million
2. Short-term monetary receivables from subsidiaries and associates¥997 million
3. Accumulated depreciation of property, plant and equipment¥60 million
Notes on non-consolidated statement of income
1. Transaction with subsidiaries and associates
Operating transaction
Operating revenue
General and administrative expenses
Non-operating transactions¥16,512 million¥887 million

Interest income
Interest expenses¥578 million¥5 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
8,420,629 shares- 40 -

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
Loss on valuation of investment securities
Impairment losses on shares of subsidiaries
Provision for officer remuneration BIP trust
Excess of depreciation
Accrued expenses
Loss on impairment of non-current assets
Provision for bonuses
Loss on valuation of shares of subsidiaries andassociates
Accrued enterprise tax
Asset retirement obligations
Revised carrying amount of investment
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¥534 million¥306 million¥200 million¥188 million¥160 million¥142 million¥117 million¥112 million¥72 million¥61 million¥38 million¥23 million¥16 million¥13 million¥98 million¥2,087 million¥(534) million¥(1,121) million¥(1,656) million¥431 million

Deferred tax liabilities
Valuation difference on available-for-salesecurities
Asset retirement obligations
Uncollected income tax refund
Other
Total deferred tax liabilities¥(15) million¥(2) million¥(10) million¥(85) million

Net amount of deferred tax assets¥346 million¥(56) million

2. Accounting treatment for income taxes and local income taxes and related tax effect accounting
The Company shifted from the consolidated taxation system to the Japanese group relief system in thecurrent fiscal year. Accordingly, accounting treatment for and disclosure of income taxes and local income
taxes and tax effect accounting are in accordance with Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System (The Accounting Standards Board of Japan (ASBJ)
Practical Solution No. 42, August 12, 2021. Hereinafter “Practical Solution No. 42”). The Company
considers that there is no effect of the change of the accounting policy that is associated with theapplication of Practical Solution No. 42 based on Paragraph 32 (1) of Practical Solution No. 42.

- 41 -

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

Company name

Daimaru
Matsuzakaya
Department
Stores Co. Ltd.

Ownership
ratio ofRelationshipvoting rights

Holding
Directly
100%

Nature oftransactions

Transaction
amount(Note 6)

Receipt ofconsulting fee
income (Note 1)

4,132

Lending of funds

31,266

Collection offunds

10,000Interlocking
of officers
Business
advisory

Receipt ofinterests (Note 2)

Subsidiary

PARCO Co.,Ltd.

The Hakata
Daimaru, Inc.

Holding
Directly
100%

Interlocking
of officers
Business
advisory–
Short-term
loans
receivable
fromsubsidiaries
and associates
Long-term
loans
receivable
fromsubsidiaries
and associates–

25,00085,500Receipt ofinterests (Note 2)410–

Deposits of funds

9,204

Deposits
received fromsubsidiaries
and associates

9,204

48,41936,812

Collection offunds

Holding
Directly
100%

Lending of funds

48,419

Short-term
loans
receivable
fromsubsidiaries
and associates

Business
advisory

Deposits of funds

36,812

Deposits fromsubsidiaries
and associates

Subsidiary–

Long-term
loans
receivable
fromsubsidiaries
and associates

Interlocking
of officers
Business
advisory

Daimaru
Holding
Matsuzakaya
Indirectly
Tomonokai Co.,
100%
Ltd.

–

15,419Business
advisory

JFR Card Co.,Ltd.

46,26635,419Holding
Indirectly
69.9%

Subsidiary–

Short-term
loans
receivable
fromsubsidiaries
and associates

Lending of funds

Subsidiary

79(Millions of yen)
Balance atthe end ofItem
the fiscalyear- 42 -–

Type

OwnershipCompany nameratio ofRelationshipvoting rights

Subsidiary

J. Front Design& Construction
Co., Ltd.

Holding
Directly
100%

Interlocking
of officers
Business
advisory

Subsidiary

J. Front City
Development
Co., Ltd.

Holding
Directly
100%

Interlocking
of officers
Business
advisory

Subsidiary

Subsidiary

Subsidiary

Holding
JFR Service Co.
Directly
Ltd.
100%

Interlocking
of officers
Business
advisory

Holding
JFR Information
Directly
Center Co., Ltd.
100%

Interlocking
of officers
Business
advisory

Angel Park Co.,Ltd.

Deposits of funds
Collection offunds
Deposits of funds
Lending andcollection offunds (Note 3)

Interlocking
of officers
Business
advisory

Holding
Directly
0.38%
Indirectly
49.88%Nature oftransactions

Transaction
amount(Note 6)

Item

Balance atthe end of
the fiscal
year

9,927

Deposits
received fromsubsidiaries
and associates

9,927

Deposits
received fromsubsidiaries
and associates

9,920

Deposits fromsubsidiaries
and associates(Note 5)

609

–

140
9,920

25,134

Receipt ofinterests (Note 2)

88–

Deposits of funds

3,000

Repayment ofdeposits

2,000

Deposits
received fromsubsidiaries
and associates

3,000

Payment ofinterests (Note 2)

5

–

–

Requests forcomputation
services (Note 4)

831

–

–

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) The Company will reasonably determine with reference to market prices whether to request this company mainly in
relation to computation services.
(Note 5) Since the supervising company for CMS was changed from JFR Service Co. Ltd. to J. FRONT RETAILING Co., Ltd.
at the end of February 2024, the balance at the end of the fiscal year was transferred from loans receivable to deposits.
(Note 6) Transaction amounts do not include consumption taxes.

Officers and major individual shareholders, etc.

Type

Name

Ownership
ratio ofRelationshipvoting rights

Nature oftransactions

Transaction
amount(Note 2)

(Millions of yen)
Balance atthe end ofItem
the fiscal
year

Payment of
Ex-Managing
appropriate
NAKAYAMA
Executive–
amount of
14––
Takashi
Officer of the
remuneration,
Company
etc. (Note 1)
Transaction conditions and policy for deciding transaction conditions(Note 1) The officer mentioned above resigned from his position on December 8, 2023, midway through his term of office for
personal reasons. Upon his retirement, he was paid an appropriate amount, which was calculated based on his
remuneration, etc. from the time of his resignation to the expiration of his term of office, in accordance with aresolution of the Board of Directors.
(Note 2) Transaction amounts do not include consumption taxes.
Officers
and close
relatives- 43 -

Notes on per share information
1. Net assets per share:
2. Basic earnings per share:¥1,316.73¥65.82Significant subsequent events
Purchase of own shares
Notes are omitted concerning the purchase of own shares as the same information is presented in“Significant subsequent events” in the Notes to Consolidated Financial Statements.

- 44 -

THE AUDIT REPORT OF INDEPENDENT AUDITORS CONCERNING THE CONSOLIDATEDFINANCIAL STATEMENTS (COPY)

Report of Independent Auditors
April 15, 2024
The Board of Directors
J. Front Retailing Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Koji Ojima
Certified Public Accountant
Designated and Engagement Partner
Yoshihisa Shibayama
Certified Public Accountant
Designated and Engagement Partner
Hiroshi Matsuura
Certified Public Accountant
Designated and Engagement Partner
OpinionPursuant to Paragraph 4, Article 444 of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated statement of financial position, the consolidated
statement of profit or loss, the consolidated statement of changes in equity and the notes to the consolidated
financial statements of J. Front Retailing Co., Ltd. (the “Company”) applicable to the fiscal year from March
1, 2023 through February 29, 2024.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and results of operations of the J. Front Retailing Group, which consisted of theCompany and consolidated subsidiaries in conformity with accounting principles with the omission of apart of the disclosure items required under IFRS as allowed by the latter part of Paragraph 1, Article 120 of
the Regulation on Corporate Accounting.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Consolidated Financial Statements section of our report. We are independent of the Company and its
consolidated subsidiaries in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities inaccordance with these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
Other Information
The other information refers to the business report and its supplementary schedules. Management is
responsible for preparing and disclosing the other information. In addition, the Audit Committee is
responsible for overseeing the Executive Officers’ and Directors’ performance of duties within themaintenance and operation of the reporting process for the other information.
The scope of our audit opinion on the consolidated financial statements does not include the content of theother information, and we do not express an opinion regarding the other information.
Our responsibility in auditing the consolidated financial statements is to read through the other information,and in the process of reading it, we examine whether there are material differences between the otherinformation and the consolidated financial statements or the knowledge we have gained in the auditing
process, and we also pay attention as to whether there are any indications in the other information of material
errors besides such material differences.
If we determine there to be material errors in the other information based on the work we have performed,
we are required to report those facts.

- 45 -

There are no matters to report regarding the other information.
Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in conformity with accounting principles with the omission of a part of the disclosure items required under
IFRS as allowed by the latter part of Paragraph 1, Article 120 of the Regulation on Corporate Accounting,and for designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements on the going concern basis, and disclosing, asapplicable, matters related to going concern in accordance with accounting principles with the omission ofa part of the disclosure items required under IFRS as allowed by the latter part of Paragraph 1, Article 120of the Regulation on Corporate Accounting.
The Audit Committee is responsible for overseeing the Executive Officers’ and Directors’ performance of
duties within the maintenance and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion on the consolidated financial statements based on our audit from an
independent point of view. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the decisions of users takenon the basis of the consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement due to fraud or error, and design and perform
audit procedures responsive to those risks. Selecting audit procedures to be applied is at the discretionof the auditor. Obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider, in making those risk assessments, internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the audit of the consolidated
financial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used by management and their method of
application, as well as the reasonableness of accounting estimates by management and related notes
thereto.
・ Conclude on the appropriateness of management’s use of the going concern basis for preparing theconsolidated financial statements and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related notes to the consolidated financial statements or, if
the notes to the consolidated financial statements on material uncertainty are inadequate, to express aqualified opinion with exceptions on the consolidated financial statements. Our conclusions are basedon the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Group to cease to continue as a going concern.
・ Evaluate whether the overall presentation of the consolidated financial statements and the notes thereto
are in accordance with accounting principles with the omission of a part of the disclosure items required
under IFRS as allowed by the latter part of Paragraph 1, Article 120 of the Regulation on Corporate
Accounting, as well as evaluate the overall presentation, structure and content of the consolidated
financial statements, including the related notes thereto, and whether the consolidated financial
statements fairly represent the underlying transactions and accounting events.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company
and its consolidated subsidiaries to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the audit of the consolidated financial
statements. We remain solely responsible for our audit opinion.
- 46 -

We communicate with the Audit Committee regarding the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during
our audit, and other matters required by auditing standards.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
in Japan regarding independence, on matters that may be reasonably thought to bear on our independence,as well as cases where countermeasures have been established to eliminate obstruction factors or cases
where safeguards have been applied to reduce obstruction factors to allowable levels.
Conflicts of Interest
We have no interest in the Company and its consolidated subsidiaries which should be disclosed incompliance with the Certified Public Accountants Act.

- 47 -

THE AUDIT REPORT OF INDEPENDENT AUDITORS CONCERNING THE NONCONSOLIDATED FINANCIAL STATEMENTS (COPY)

Report of Independent Auditors
April 15, 2024
The Board of Directors
J. Front Retailing Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Koji Ojima
Certified Public Accountant
Designated and Engagement Partner
Yoshihisa Shibayama
Certified Public Accountant
Designated and Engagement Partner
Hiroshi Matsuura
Certified Public Accountant
Designated and Engagement Partner
OpinionPursuant to Item 1, Paragraph 2, Article 436 of the Companies Act, we have audited the accompanying nonconsolidated financial statements, which comprise the non-consolidated balance sheet, the non-consolidated
statement of income, the non-consolidated statement of changes in equity, the notes to the non-consolidated
financial statements and the related supplementary schedules of J. FRONT RETAILING Co., Ltd. (the“Company”) (the “non-consolidated financial statements, etc.”) applicable to the 17th fiscal year fromMarch 1, 2023 through February 29, 2024.
In our opinion, the non-consolidated financial statements etc. referred to above present fairly, in all material
respects, the financial position and results of operations of the Company in conformity with accounting
principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Non-consolidated Financial Statements, Etc. section of our report. We are independent of theCompany in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements etc. in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
Other Information
The other information refers to the business report and its supplementary schedules. Management is
responsible for preparing and disclosing the other information. In addition, the Audit Committee is
responsible for overseeing the Executive Officers’ and Directors’ performance of duties within themaintenance and operation of the reporting process for the other information.
The scope of our audit opinion on the non-consolidated financial statements, etc. does not include thecontent of the other information, and we do not express an opinion regarding the other information.
Our responsibility in auditing the non-consolidated financial statements, etc. is to read through the otherinformation, and in the process of reading it, we examine whether there are material differences between
the other information and the non-consolidated financial statements, etc. or the knowledge we have gainedin the auditing process, and we also pay attention as to whether there are any indications in the otherinformation of material errors besides such material differences.
If we determine there to be material errors in the other information based on the work we have performed,
we are required to report those facts.
There are no matters to report regarding the other information.
- 48 -

Responsibilities of Management and the Audit Committee for the Non-consolidated Financial Statements,
Etc.
Management is responsible for the preparation and fair presentation of the non-consolidated financial
statements, etc. in accordance with accounting principles generally accepted in Japan; this includes themaintenance and operation of such internal control as management determines is necessary to enable thepreparation and fair presentation of the non-consolidated financial statements, etc. that are free frommaterial misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements etc., management is responsible for assessing
whether it is appropriate to prepare the non-consolidated financial statements etc. on the going concern basisof accounting and disclosing, as applicable, matters related to going concern in accordance with accounting
principles generally accepted in Japan.
The Audit Committee is responsible for overseeing the Executive Officers’ and Directors’ performance of
duties within the maintenance and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements, Etc.
Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial
statements etc. as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion on the non-consolidated financial statements etc. based on our
audit from an independent point of view. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the decisions ofusers taken on the basis of the non-consolidated financial statements etc.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement due to fraud or error, and design and perform
audit procedures responsive to those risks. Selecting audit procedures to be applied is at the discretionof the auditor. Obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider, in making those risk assessments, internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the audit of the nonconsolidated financial statements etc. is not expressing an opinion on the effectiveness of the Group’s
internal control.
・ Evaluate the appropriateness of accounting policies used by management and their method of
application, as well as the reasonableness of accounting estimates by management and related notes
thereto.
・ Conclude on the appropriateness of management’s use of the going concern basis for preparing the nonconsolidated financial statements etc. and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related notes to the non-consolidated financial statements
etc. or, if the notes to the non-consolidated financial statements etc. on material uncertainty are
inadequate, to express a qualified opinion with exceptions on the non-consolidated financial statements
etc. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate whether the presentation of the non-consolidated financial statements etc. and the notes thereto
are in accordance with accounting standards generally accepted in Japan, as well as evaluate the overall
presentation, structure and content of the non-consolidated financial statements etc., including therelated notes thereto, and whether the non-consolidated financial statements etc. fairly represent theunderlying transactions and accounting events.
We communicate with the Audit Committee regarding the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during
our audit, and other matters required by auditing standards.
We also provide the Audit Committee with a statement that we have complied with the ethical requirements
in Japan regarding independence, on matters that may be reasonably thought to bear on our independence,- 49 -

as well as cases where countermeasures have been established to eliminate obstruction factors or cases
where safeguards have been applied to reduce obstruction factors to allowable levels.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

- 50 -

THE AUDIT REPORT OF AUDIT COMMITTEE MEMBERS (COPY)

Audit Report
The Audit Committee has audited the performance of duties by Directors and Executive Officers of J.
FRONT RETAILING Co., Ltd. (the “Company”) during the 17th fiscal year from March 1, 2023 throughFebruary 29, 2024. We hereby report as follows regarding the method and results of the audit.
1. Method and content of audits
With respect to the resolution of the Board of Directors concerning the matters stipulated in Item 1 (b) and(e), Paragraph 1, Article 416 of the Companies Act, as well as the system (the internal control system)
developed based on such resolution of the Board of Directors, we received regular reports regarding thestatus of establishment and operation of such system from Directors, Executive Officers and employees,
and others, requested explanations as necessary, expressed opinion thereon, and executed audits throughthe following methods.
(i)

In accordance with audit policies stipulated by the Audit Committee and the division of duties, etc.,
Audit Committee Members, in coordination with the departments in the Company related to internal
control, participated in key meetings, including via online methods, received reports from Directors,
Executive Officers, and others regarding the matters related to the performance of their duties, andwhen necessary, requested explanations of those reports. Audit Committee Members also reviewed
key decision documents, and conducted surveys of the operations and assets. Further, regarding
subsidiaries, Audit Committee Members worked to communicate with Directors, Audit & Supervisory
Board Members, Executive Officers, and other parties at those subsidiaries, and when necessary travelto the head office and other places of business and conduct hearings with them regarding their business.

(ii) Additional consideration was given to the basic policy set forth in Item 3 (a), Article 118 of theRegulations for Enforcement of the Companies Act and activities set forth in Item 3 (b), Article 118 of
the same Regulations, as noted in the Business Report, based on the status of deliberations at themeeting of the Board of Directors and other key meetings.
(iii) Regular reports were received regarding the results of audits carried out by the internal audit
departments based on the initial plan, and information was shared.
(iv) Discussions were carried out after receiving an explanation by the Accounting Auditor regarding theaudit plan, and opinions were exchanged after receiving the report on the audit results. Furthermore,while monitoring and reviewing the audit of the Accounting Auditor to ensure they maintained an
independent position and conducted their audits fairly, Audit Committee Members received reports
from them regarding the performance of their duties, and when necessary, asked for further explanation
regarding those reports. Audit Committee Members were also notified that the Accounting Auditor
was arranging the system to ensure the appropriate execution of their duties (as enumerated in each
Item of Article 131 of the Regulation on Corporate Accounting) in compliance with the Quality Control
Standards Relating to Auditing (adopted by the Business Accounting Deliberations Council), etc., and,
where necessary, requested further explanation. Furthermore, Audit Committee Members discussed
major audit considerations with Ernst & Young ShinNihon LLC, received the report on theimplementation status of the audit and asked for an explanation as required.
Based on the above methods, Audit Committee Members proceeded to review the Business Report with the
supplementary schedules, the non-consolidated financial statements (which consist of the non-consolidatedbalance sheet, the non-consolidated statement of income, the non-consolidated statement of changes inequity, and the notes to the non-consolidated financial statements) with the supplementary schedules, andthe consolidated financial statements (which consist of the consolidated statement of financial position, theconsolidated statement of profit or loss, the consolidated statement of changes in equity, and the notes tothe consolidated financial statements) for the current fiscal year.

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2. Audit Results(1) Results of Audit of Business Report, etc.
(i)

The Audit Committee confirms that the Business Report and the supplementary schedules conformed
to the applicable laws and regulations, and the Articles of Incorporation, and that they accurately
present the situation of the Company.

(ii) With respect to the performance of duties by Directors and Executive Officers, the Audit Committee
found no improper acts or important violation of applicable laws and regulations or the Articles ofIncorporation.
(iii) The Audit Committee confirms that decisions by the Board of Directors regarding the Company’s
internal control system are fair and adequate, and found no areas that require mention regarding thedescription of the internal control system in the Business Report and the performance of duties byDirectors and Executive Officers.
(iv) The Audit Committee confirms that the basic policy regarding those who control the determination of
the Company’s financial and operational policies, as noted in the Business Report, is fair and adequate.
The Audit Committee confirms that activities set forth in Item 3 (b), Article 118 of the Regulation for
Enforcement of the Companies Act, as noted in the Business Report, are in line with this basic policy,
are not harmful to the common interest of the Company’s shareholders, and are not intended tomaintain the positions of corporate officers of the Company.
(2) Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules
The Audit Committee confirms that the methods used and results achieved by the Accounting Auditor, Ernst& Young ShinNihon LLC, are fair and adequate.
(3) Results of Audit of Consolidated Financial Statements
The Audit Committee confirms that the methods used and results achieved by the Accounting Auditor, Ernst& Young ShinNihon LLC, are fair and adequate.
April 15, 2024
Audit Committee
J. Front Retailing Co., Ltd.
HAKODA Junya(seal)
Chairperson of Audit Committee
HAMADA Kazuko(seal)
Audit Committee Member (full-time)
SATO Rieko(seal)
Audit Committee Member
SEKI Tadayuki(seal)
Audit Committee Member
KATAYAMA Eiichi(seal)
Audit Committee Member(Note) Audit Committee Members, namely, HAKODA Junya, SATO Rieko, SEKI Tadayuki and
KATAYAMA Eiichi are Outside Directors as prescribed in Item 15, Article 2 and Paragraph 3,
Article 400 of the Companies Act.

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