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.

[Securities code: 3086]
May 2, 2018
To Our Shareholders

YAMAMOTO Ryoichi,
Director, President and Representative
Executive Officer
J. FRONT RETAILING Co., Ltd.
10-1, Ginza 6-chome, Chuo-ku, Tokyo

Notice of Convocation of the 11th Annual Shareholders Meeting
You are cordially invited to attend the 11th Annual Shareholders Meeting of J. FRONT RETAILING Co.,
Ltd. (hereinafter the “Company”). The meeting will be held as described below.
If you are unable to attend the meeting in person, you may exercise your voting rights in writing or via
the Internet. In each case, you are requested to exercise your voting rights so that your vote is received
by 6:00 p.m. on Wednesday, May 23, 2018 (JST).

Details
1. Date and time:Thursday, May 24, 2018, at 10:00 a.m. (JST) (Reception opens at 9:00 a.m.)
2. Venue:
NEW PIER HALL, 11-1, Kaigan 1-chome, Minato-ku, Tokyo
3. Purpose of the meeting:
Matters to be reported: 1. Business Report, Consolidated Financial Statements, and Non-consolidated
Financial Statements for the 11th fiscal year (from March 1, 2017 to
February 28, 2018)
2. Audit reports of the Accounting Auditor and the Audit Committee on
Consolidated Financial Statements for the 11th fiscal year
Matters to be resolved: Proposal: Election of Thirteen (13) Directors
4. Decisions made for convocation:
Please refer to Guide to the Exercise of Voting Rights on pages 3 to 4.

* If you are attending the meeting in person, please submit the enclosed voting form at the reception of themeeting.

Please note that persons who are not shareholders who can exercise voting rights, such as proxies who
are not shareholders, and accompanying persons, will not be admitted. (The accompanying persons ofshareholders with disabilities are exempt and will be admitted.)

-1-







Of the documents attached to Notice of Convocation of the Annual Shareholders Meeting, Notes toConsolidated Financial Statements and Notes to Non-consolidated Financial Statements are provided
on the Company’s website in accordance with relevant laws and regulations and Article 16 of theCompany’s Articles of Incorporation, hence are not indicated on this Notice of Convocation.
Consolidated Financial Statements and Non-consolidated Financial Statements, which have been
audited by the Audit Committee and the Accounting Auditor, shall include not only the documents
stated in this Notice of Convocation, but also Notes to Consolidated Financial Statements and Notes
to Non-consolidated Financial Statements, which are provided on the Company’s website.
If any amendments to Reference Materials for Shareholders Meeting, Business Report, Consolidated
Financial Statements or Non-consolidated Financial Statements are made, the revised version will be
provided on the Company’s website.
The Company’s website: http://www.j-front-retailing.com/

In consideration of factors such as fairness between shareholders who can attend the Shareholders
Meeting and shareholders who cannot, the Company will cease the distribution of small presents at
the Shareholders Meeting (including the Osaka and Nagoya venues connected via video) starting
this year.
The Company appreciates your understanding.

-2-

Guide to the Exercise of Voting Rights
Attending the Shareholders Meeting in Person
Please submit the enclosed voting form at the reception of the meeting.
*You do not need to exercise your voting rights either by postal mail or via the Internet.
Attending a live relay venue
The live relay venues are not recognized as the venue of the shareholders meeting under the Companies Act.
Please exercise your voting rights either by postal mail or via the Internet before arriving.
If you are unable to attend the meeting in person, please exercise your voting rights by either of thefollowing methods.
Exercising voting rights by postal mailPlease indicate on the enclosed voting form whether you approve or disapprove of the proposal, and returnthe completed form to us.
Exercise due date: Received by 6:00 p.m. on Wednesday, May 23, 2018 (JST)To institutional investors
To exercise voting rights at this meeting, institutional investors can use the electronic voting rights exercise
platform for institutional investors operated by ICJ, Inc.
Exercising voting rights via the Internet
Please read the following items before exercising voting rights via the Internet.
Exercise due date: Received by 6:00 p.m. on Wednesday, May 23, 2018 (JST)(Instructions concerning the exercise of voting rights via the Internet)
1. Access the voting website
Access the voting website and click the “Next” button.
Voting website: https://evote.tr.mufg.jp/
2. Login to the voting website
Enter the “Login ID” and the “Temporary password” shown on the enclosed voting form and click the“Login” button.
>>> With this your login is complete. Next, please follow the guidance on the screen.
To prevent unauthorized access by parties other than shareholders and the alteration of shareholder
votes, shareholders voting via the Internet will be asked to change their “temporary password” on thevoting website.
You will receive a new “Login ID” and a new “temporary password” with each convocation notice fora Shareholders Meeting.
If you exercise your voting rights both in writing and via the Internet, we will only accept the exerciseof your voting rights via the Internet as effective.
If you exercise your voting rights more than once via the Internet, we will only accept the last exerciseof your voting rights as effective. If you exercise your voting rights more than once by using yourpersonal computer, smartphone and mobile phone, we will only accept the last exercise of your voting
rights as effective.

-3-

* Fees for accessing the voting website (Internet access fees, telephone charges, packet communication
fees, etc.) shall be borne by the shareholder.
* Exercising voting rights via the Internet may not be possible depending on your Internet environment, andsettings, including the use of firewall and anti-virus software.
For inquiries about the system, please contact:
Corporate Agency Division (Help Desk)
Mitsubishi UFJ Trust and Banking Corporation(Toll free) 0120-173-027(available 9:00 a.m. – 9:00 p.m., only in Japan)-4-Reference Materials for Shareholders Meeting
Proposal and Reference Information
Proposal: Election of Thirteen (13) Directors
The terms of office of all thirteen (13) Directors will expire at the conclusion of this Annual
Shareholders Meeting.
Accordingly, based on the decision of the Nomination Committee, the Company has made the number of
Director candidates 13, and proposes the election of those candidates. The candidates for the Directors are
as follows.
Furthermore, of the candidates for Director, please refer to “3. Matters relating to corporate officers,” “6.
Operation of the Board of Directors,” and “7. Operations of each Committee” in the Business Report
regarding issues such as the status of activities and status of operations of the Board of Directors and eachcommittee for the four Outside Directors who are proposed for reappointment.

No.

Committee to belong(The “◎” mark indicatesthe candidates of
Chairperson.)

Name

Nomination

*

Audit

○

○

1

KOBAYASHI Yasuyuki

Reappointment

Non-executive

2

DOI Zenichi

Reappointment

Non-executive

3

TSUTSUMI Hiroyuki

Reappointment

Non-executive

4

TACHIBANA
FUKUSHIMA Sakie

Reappointment

Non-executive

OutsideIndependent

5

OTA Yoshikatsu

Reappointment

Non-executive

OutsideIndependent

6

ISHII Yasuo

Reappointment

Non-executive

OutsideIndependent○

7

NISHIKAWA Koichiro

Reappointment

Non-executive

OutsideIndependent○

8

SATO Rieko

OutsideIndependentNew

Non-executive
Executive

9

YAMAMOTO Ryoichi

Reappointment

10

YOSHIMOTO Tatsuya

Reappointment

Executive

11

MAKIYAMA Kozo

Reappointment

Executive

12

WAKABAYASHI Hayato Reappointment

Executive

Remuneration

◎
○
◎

○

○

◎

○
○

○

○
○

New
Executive
13 SAWADA Taro
1. SATO Rieko is recorded under the name of KAMATA Rieko in the family register.

2. The Company plans to elect ten (10) Executive Officers who do not concurrently serve as Directors at a Board of
Directors meeting that is to be held after this Annual Shareholders Meeting.
Reappointment
New
Non-executive
Executive
OutsideIndependent

Candidate for reappointment as Director
Candidate for new Director
Candidate for Director who does not concurrently serve as Executive Officer
Candidate for Director who concurrently serves as Executive Officer
Candidate for Outside Director
Independent officer whose status as such is registered with the stock exchange

-5-

No.

Name
(Date of birth)

April 1973
May 2003
January 2004
September 2007
January 2008

KOBAYASHI
Yasuyuki(March 30, 1951)
Number of theCompany’s shares
owned (shares):35,3001

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:
14/14
Tenure as Director (atthe conclusion of thisMeeting):

March 2010

May 2010
May 2012
April 2013
May 2013
May 2015
May 2016
May 2017

Joined The Daimaru, Inc.
Corporate Officer, General Manager of Sapporo Store
General Manager of Tokyo Store
Corporate Officer of J. Front Retailing Co., Ltd.
Director and Corporate Officer of The Daimaru, Inc.
Deputy Executive General Manager of Department Store Operations
Headquarters and Executive General Manager of Merchandising
Management Unit, Head OfficeDirector and Corporate Officer, Senior Executive General Manager ofSales and Marketing Headquarters and Senior General Manager ofMerchandising Strategy Promotion Unit of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Director and Corporate Executive Officer
Director of Parco Co., Ltd. (present)
Managing Executive Officer and Senior Executive General Manager ofAffiliated Business Unit of J. Front Retailing Co., Ltd.
Director, Managing Executive Officer
Director, Senior Managing Executive Officer
Representative Director
Director, Chairperson of the Board of Directors (present)

approx. 5 years

Reasons for nomination as candidate for Director-KOBAYASHI Yasuyuki has extensive experience and insight related to the Group business overall. This has involved ensuring
the success of the Daimaru Sapporo store opening project in a Department Store Business company, and demonstrating his
ability as a facilitator in promoting merchandising strategy. Furthermore, he served as Senior Executive General Manager ofthe Affiliated Business Unit of the Company from April 2013 and was in charge of the Wholesale Business, Credit Businessand other business areas besides the Department Store Business. Since May 2017, he has strived to further improve corporate
governance as the Chairperson of the Board of Directors. As such, the Company has judged that an Internal Director withthorough knowledge of the roles and expectations of individual businesses with respect to the Group’s strategy serving as the
Chairperson of the Board of Directors and conducting supervisory operations that consider all stakeholders will lead to theimproved corporate value and sustained growth of the Group and has accordingly appointed him as a candidate to continue
serving as Director.
-The Company has entered into an agreement with KOBAYASHI Yasuyuki to limit the liability of damages stipulated in
Paragraph 1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

-6-

No.

Name
(Date of birth)

DOI Zenichi(September 15, 1953)
Number of the Company’s
shares owned (shares):

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
March 1976
May 2002
May 2006
May 2008

35,700Special interests between
the Company and the
Candidate:2

January 2009
March 2010

None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:
14/14
Tenure as Director (at theconclusion of thisMeeting):

March 2012
May 2012
January 2015
May 2015

March 2017

Joined Matsuzakaya Co., Ltd.
Executive General Manager of Corporate Planning Unit of Nagoya
Business Division
Executive Officer, Executive General Manager of Sales Planning UnitManaging Executive Officer, Executive General Manager of General
Planning Unit and Executive General Manager of Sales Reform
Promotion Unit and Executive General Manager of Sales Planning Unit
Director and Executive Officer, Executive General Manager of SalesManagement Unit
Director and Corporate Officer and Senior General Manager of Sales
Planning Unit of Sales and Marketing Headquarters of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Senior General Manager of Out-of-Store Sales Management Division ofSales and Marketing Headquarters
Director and Managing Executive Officer
Senior Executive General Manager of Administration Headquarters andin charge of Compliance and Risk Management
Director (present) and Managing Executive Officer, Senior Executive
General Manager of Administration Unit and in charge of Complianceand Risk Management of J. Front Retailing Co., Ltd.
Outside Director of Hakuyosha Co., Ltd. (present)

approx. 3 years

Reasons for nomination as candidate for Director-DOI Zenichi has broad-based insight gained through his extensive experience in the respective areas of business to which hehas been assigned. This has involved serving on the management team of a Department Store Business company, where he has
demonstrated his ability in core Department Store Business operations that include sales promotion, customer strategy, and outof-store sales strategy. Moreover, after being appointed as Director of the Company in May 2015, he served as Senior
Executive General Manager of the Administration Unit and mainly in charge of compliance and risk management. Since May
2017, he has supervised sound growth and appropriate management of the Group as chairperson of the Audit Committee. As
such, the Company has judged that he is a competent professional who is capable of helping ensure the improved corporate
value and sustained growth of the Group by fulfilling appropriate management supervisory functions, and has accordingly
appointed him as a candidate to continue serving as Director.
-The Company has entered into an agreement with DOI Zenichi to limit the liability of damages stipulated in Paragraph 1,
Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

-7-

No.

Name
(Date of birth)

TSUTSUMI Hiroyuki(February 3, 1958)
Number of the Company’s
shares owned (shares):15,698Special interests between
the Company and the
Candidate:3

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1980
March 1993
March 2001
September 2007
March 2010
May 2013
March 2016

None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:

May 2017

Joined The Daimaru, Inc.
General Manager of Accounting Division of HONG KONGDAIMARU LIMITED
General Manager of Finance Headquarters of The Daimaru, Inc.
General Manager of Finance Division, Administration Headquarters of
J. Front Retailing Co., Ltd.
General Manager of Finance Division, Administration Unit of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Executive Officer, Senior General Manager of Finance Division,
Administration Unit of J. Front Retailing Co., Ltd.
Executive Officer, Senior General Manager of Finance and Accounting,
Financial Strategy Unit
Director of J. Front Retailing Co., Ltd. (present)
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd. (present)

11/11
Tenure as Director (at theconclusion of thisMeeting):
approx. 1 year

Reasons for nomination as candidate for Director-TSUTSUMI Hiroyuki has abundant insight in relation to finance and accounting, having consistently accumulated experiencein the fields of finance and accounting over the period from when he joined The Daimaru, Inc. in 1981 until when he wasappointed Director of the Company in May 2017. He is highly knowledgeable of the business characteristics and financial
positions through the guidance he provided in regard to the consolidated settlement of accounts to each business operating
subsidiary in cooperation with the accounting auditors after his appointment as Senior General Manager of Finance Division in
May 2013. He has also been instrumental in guiding the preparation for the Company’s voluntary adoption of IFRS as Senior
General Manager of Finance and Accounting, Financial Strategy Unit since March 2016. As such, the Company has judgedthat he is a competent professional who is capable of helping ensure the improved corporate value and sustained growth of theGroup by utilizing his abundant experience related to finance and accounting in his supervision as a Director, which is essential
for the Company’s sound operations, and has accordingly appointed him as a candidate to continue serving as Director.
-The Company has entered into an agreement with TSUTSUMI Hiroyuki to limit the liability of damages stipulated in
Paragraph 1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

-8-

No.

Name
(Date of birth)
Outside Director
Independent

TACHIBANA
FUKUSHIMA Sakie(September 10, 1949)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
June 1980
September 1987
August 1991
June 1993
May 1995
September 2000

Number of the Company’s
shares owned (shares):
4,700

4

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:
14/14
Tenure as Outside
Director (at the conclusionof this Meeting):

May 2001

September 2007
May 2009
March 2010
July 2010
August 2010
June 2011
May 2012
June 2013
June 2016

Joined Braxton International
Joined Bain & Company, Inc.
Principal Consultant of Japan Branch Office of Korn/Ferry International
PartnerMember of the Board of Korn/Ferry International (Global
Headquarters)
Regional Managing Director of Korn/Ferry International-Japan
Member of the Board of Korn/Ferry International (Global
Headquarters)
President and Representative Director of Korn/Ferry International-Japan
Member of the Board of Korn/Ferry International (Global
Headquarters)
President and Representative Director of Korn/Ferry International-Japan
Chairman and Representative Director
Outside Director of Bridgestone Corporation
President and Representative Director of G&S Global Advisors Inc.
(present)
Asia Pacific Senior Advisor of Korn/Ferry International
Outside Director of Ajinomoto Co., Inc. (present)
Outside Director of J. Front Retailing Co., Ltd. (present)
Outside Director of Mitsubishi Corporation
Outside Director of USHIO INC. (present)

approx. 6 years

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-TACHIBANA FUKUSHIMA Sakie has broad insight based on her abundant experience in internal and external governance asa director at a U.S. company’s global headquarters and as an outside director at numerous Japanese companies. In addition, she
has gained corporate management experience as the President of a foreign-owned human resource consulting company’s local
Japanese branch, and accordingly possesses in-depth knowledge regarding global human resources. Based on that, she has
contributed to ensuring more effective meetings of the Board of Directors since being appointed as Outside Director of theCompany in May 2012, by adequately providing advice and oversight with respect to the direction of overall management andother such matters, from the independent and objective viewpoint. From May 2017, she has contributed to improving corporate
value and sustained growth from a professional perspective as the chairperson of the Nomination Committee in areas such asadequate selection of management personnel. In light of her track record, the Company has judged that in acting as an Outside
Director she is likely to contribute greatly to management of the Group. As such, she has been appointed as a candidate tocontinue serving as Outside Director.
-TACHIBANA FUKUSHIMA Sakie is an independent officer who has been given the obligation by the Tokyo Stock Exchange
and the Nagoya Stock Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with TACHIBANA FUKUSHIMA Sakie to limit the liability of damages
stipulated in Paragraph 1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

-9-

No.

Name
(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1964
June 1991

Outside Director
IndependentOTA Yoshikatsu

July 1994(December 28, 1941)
Number of the Company’s
shares owned (shares):
6,800

5

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:
14/14

June 1995
June 1999
August 2003
October 2003
April 2006
April 2009
June 2012
April 2013
June 2014
May 2015
June 2017

Joined Minolta Camera Co., Ltd.
Director, General Manager of Copying Machine Business Division andGeneral Manager of Copying Machine Sales Division
Director, Executive General Manager of Information Device Business
Management Unit and Executive General Manager of Information
Device Sales Unit of Minolta Co., Ltd.
Managing Director
President and Representative Director
Director and Vice President, Representative Executive Officer ofKonica Minolta Holdings, Inc.
President and CEO of Konica Minolta Business Technologies, Inc.
Director, President and CEO of Konica Minolta Holdings, Inc.
Director, Chairman of the Board of Directors
Outside Director of YAMAHA CORPORATION
Director, Chairman of the Board of Directors of KONICA MINOLTA,
INC.
Special Advisor
Outside Director of J. Front Retailing Co., Ltd. (present)
Honorary Advisor of KONICA MINOLTA, INC. (present)

Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 3 years

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-OTA Yoshikatsu has abundant insight gained through his extensive experience acting as a manager of a company that is aholding company. In that capacity, he promoted the corporate merger between Minolta Co., Ltd. and Konica Corporation, andhas served as a chairman of the board of directors of a company with committees (currently a company with nominating andother committees). Accordingly, since being appointed as Outside Director of the Company in May 2015, he has contributed toensuring more effective meetings of the Board of Directors by adequately providing advice and oversight with respect topromoting Group management, change in the form of corporate organization of the Company, and other such matters, from theindependent and objective viewpoint. From May 2017, he has contributed to fair and objective operation of the executive
remuneration system, including the stock-based remuneration system, as the chairperson of the Remuneration Committee. In
light of his track record, the Company has judged that in acting as an Outside Director he is likely to contribute greatly to
management of the Group. As such, he has been appointed as a candidate to continue serving as Outside Director.
-OTA Yoshikatsu is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the Nagoya
Stock Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with OTA Yoshikatsu to limit the liability of damages stipulated in Paragraph 1,
Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 10 -

No.

Name(Date of birth)
April 1970
June 2000

Outside Director
Independent

ISHII Yasuo(September 4, 1947)

January 2001
March 2003

Number of the Company’s
shares owned (shares):

June 2003

1,900
Special interests between
the Company and the
Candidate:

6

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company

None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year (including
attendance at 3 meetings
as Audit & Supervisory
Board Member):June 2004
April 2005
June 2008
June 2011
June 2013
May 2015

May 2017

Joined Yamanouchi Pharmaceutical Co., Ltd.
Director of the Board, Director of Ethical Products Marketing
Department of Sales & Marketing Division
Director of the Board and Chairman of Yamanouchi Europe B.V.
Director of the Board of Yamanouchi Pharmaceutical Co., Ltd. andChairman of Yamanouchi U.K. Limited andChairman of Yamanouchi Europe B.V.
Managing Director of the Board of Yamanouchi Pharmaceutical Co.,Ltd.
Senior Corporate Executive
Senior Corporate Executive of Astellas Pharma Inc. andChairman & CEO of Astellas Pharma Europe Ltd.
Executive Vice President and Representative Director of Astellas
Pharma Inc.
Vice Deputy Chairman and Representative Director
Retired from the office of Vice Deputy Chairman and Representative
Director
Outside Audit & Supervisory Board Member of J. Front Retailing Co.,Ltd.
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd. (present)

14/14
Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 1 year

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-ISHII Yasuo has long-standing overseas work experience and possesses insight based on his abundant experience in the field ofglobal corporate management outside the retail industry, such as special familiarity with business development in overseas
countries. Since May 2017, he has served as an Outside Director of the Company and contributed to ensuring more effective
meetings of the Board of Directors by actively and assertively furnishing advice with respect to overall management strategy
such as strengthening the holding company functions aimed at swift decision making for business execution. Furthermore, in
the Audit Committee, he has contributed to maintaining and strengthening the Company’s governance through providing
suitable advice as required based on his abundant experience and in-depth knowledge. In light of his track record and abundantinsight, the Company has judged that in acting as an Outside Director he is likely to contribute greatly to management of theGroup. As such, he has been appointed as a candidate to continue serving as Outside Director.
-ISHII Yasuo is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the Nagoya Stock
Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with ISHII Yasuo to limit the liability of damages stipulated in Paragraph 1,
Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 11 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1970
August 1995
June 2001

Outside Director
Independent

NISHIKAWA
Koichiro

April 2003
June 2003
January 2006

(July 12, 1947)
Number of the Company’s
shares owned (shares):900

7Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year (including
attendance at 3 meetings
as Audit & Supervisory
Board Member):

April 2007
April 2010
April 2012
March 2014
May 2015

May 2017

Joined Hitachi, Ltd.
Vice President of Hitachi America, Ltd.
Managing Officer, General Manager of Global Business Development
Division of Hitachi, Ltd.
Manager of Business Development Division
Executive Officer, Manager of Business Development Division
Vice President and Executive Officer, in charge of Business
Development
Senior Vice President and Executive Officer, in charge of Business
Development
Senior Vice President and Executive Officer of Hitachi Cable, Ltd.
Senior Advisor of Hitachi Research InstituteOutside Director of Kyowa Hakko Kirin Co., Ltd.
Outside Audit & Supervisory Board Member of J. Front Retailing Co.,Ltd.
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Outside Director of J. Front Retailing Co., Ltd. (present)

14/14
Tenure as Outside
Director (at the conclusionof this Meeting):
approx. 1 year

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-NISHIKAWA Koichiro possesses suitably useful insight even with respect to financial matters from his practical experience inbusiness alliances, M&A, business reforms, and his involvement in numerous important international negotiations. Since May
2017, he has served as an Outside Director and contributed to ensuring more effective meetings of the Board of Directors byactively and assertively furnishing advice to the Board of Directors with respect to matters such as taking risks regarding new
business and M&As, advancing progress management and results verification for corporate management strategies, and thesuitability of numerical-target based planning. Furthermore, in the Audit Committee, he has contributed to maintaining andstrengthening the Company’s governance through providing suitable advice as required based on his abundant experience andin-depth knowledge. In light of his track record and abundant insight, the Company has judged that in acting as an Outside
Director he is likely to contribute greatly to management of the Group. As such, he has been appointed as a candidate tocontinue serving as Outside Director.
-NISHIKAWA Koichiro is an independent officer who has been given the obligation by the Tokyo Stock Exchange and the
Nagoya Stock Exchange to protect ordinary shareholders.
-The Company has entered into an agreement with NISHIKAWA Koichiro to limit the liability of damages stipulated in
Paragraph 1, Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 12 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company

New Candidate
Outside Director
Independent

SATO Rieko(November 28, 1956)

8

Number of the Company’s
shares owned (shares):

April 1984
August 1989
July 1998
June 2004
June 2012
June 2015
October 2016

Registered as attorney at law
Shearman & Sterling LLP
Partner of Ishii Law Office (present)
External Audit & Supervisory Board Member of Ajinomoto Co., Inc.
Outside Corporate Audit of NTT DATA CORPORATION (present)
Outside Director of The Dai-ichi Life Insurance Company, Limited
Outside Director of Dai-ichi Life Holdings, Inc. (Audit & Supervisory
Committee Member) (present)

0Special interests between
the Company and the
Candidate:
None

Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-SATO Rieko possesses abundant experience as an outside director and outside audit & supervisory board member at othercompanies, in addition to having made a career in handling many projects with in-depth and specialized knowledge as an
attorney at law specializing in corporate legal affairs. The Company has judged that she will provide active advice andrecommendations mainly regarding corporate legal affairs from an objective perspective to the Board of Directors and eachcommittee of the Company, and that she is capable of exhibiting this experience and insight in her duty to supervise
management and conducting her duties appropriately. As such, she has been appointed as a candidate to serve as a new Outside
Director.
- The Company plans to register SATO Rieko as an independent officer who has been given the obligation by the Tokyo Stock
Exchange and the Nagoya Stock Exchange to protect ordinary shareholders.
-The Company plans to enter into an agreement with SATO Rieko to limit the liability of damages stipulated in Paragraph 1,
Article 423 of the Companies Act pursuant to Paragraph 1, Article 427 of the said Act.

- 13 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1973
May 2003

YAMAMOTO
Ryoichi(March 27, 1951)

September 2007

Number of the Company’s
shares owned (shares):64,700Special interests between
the Company and the
Candidate:

9

None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:

March 2008
March 2010
September 2012
April 2013
May 2017

Joined The Daimaru, Inc.
President and COO and General Manager of Department StoreOperations, Group Headquarters
Director of J. Front Retailing Co., Ltd.
In charge of Sales Reform and Out-of-Store Sales Reform Promotion
Executive General Manager of Department Store Operations
Headquarters and Planning Office for New Umeda Store, Head Officeof The Daimaru, Inc.
Director of Matsuzakaya Co., Ltd.
Executive General Manager of Sales Headquarters, Head Office of The
Daimaru, Inc.
President of Daimaru Matsuzakaya Department Stores Co. Ltd.
President of Daimaru Matsuzakaya Department Stores Co. Ltd. andPresident of Daimaru Matsuzakaya Sales Associates Co. Ltd.
President and Representative Director of J. Front Retailing Co., Ltd.
Director, President and Representative Executive Officer (present)

14/14
Tenure as Director (at theconclusion of thisMeeting):
approx. 10 years and 9monthsReasons for nomination as candidate for Director
YAMAMOTO Ryoichi possesses broad-based insight and a high-level overview gained through his abundant experience
spanning overall retail operations. Since being appointed as President of the Company in 2013, he has been precisely andefficiently managing business of the Group overall. In addition to formulating a new Group Vision that showed the direction ofmanagement strategies that is necessary considering the external environment surrounding the Group and leading its
permeation, he has been demonstrating strong leadership in positioning the corporate governance code at the center of change
and reform of corporate management toward realizing where the overall Group strives to be in 10 years. In light of his trackrecord, the Company has judged that he is a competent professional who is capable of helping ensure the improved corporate
value and sustained growth of the Group by executing business acting as a Director, and has accordingly appointed him as a
candidate to continue serving as Director.

- 14 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1979
March 2000

YOSHIMOTO
Tatsuya(April 13, 1956)
Number of the Company’s
shares owned (shares):

January 2008
May 2008
January 2010

36,50010Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:

March 2010
May 2012
April 2013

May 2013
May 2017

Joined The Daimaru, Inc.
Senior Manager of Preparatory Office for Opening Sapporo Store ofPlanning Office for Sapporo Store, Head Office
General Manager of Tokyo Store
Corporate Officer, General Manager of Tokyo Store
Corporate Officer, General Manager of Sales Planning Promotion
Division and Marketing Planning Promotion Division of Department
Stores Coordination Division of J. Front Retailing Co., Ltd.
Corporate Officer of Daimaru Matsuzakaya Department Stores Co. Ltd.
Senior General Manager of Management Planning Division
Director and Corporate Officer
President and Representative Director of Daimaru Matsuzakaya
Department Stores Co. Ltd. (present) and
President and Representative Director of Daimaru Matsuzakaya Sales
Associates Co. Ltd. (present)
Director of J. Front Retailing Co., Ltd. (present)
Representative Managing Executive Officer (present)

14/14
Tenure as Director (at theconclusion of thisMeeting):
approx. 5 years

Reasons for nomination as candidate for Director
YOSHIMOTO Tatsuya serves as President and Representative Director of Daimaru Matsuzakaya Department Stores Co. Ltd.,and has abundant experience and insight related to the Department Store Business overall, particularly encompassing areas suchas business management, planning and store operations. He has been involved in executing existing high-quality department
store business strategy taking the roles and expectations of the Department Store Business with respect to the Group’s strategy
into account, and formulating a new Department Store Business Strategy in reaction to the massive changes in the external
environment. He has been demonstrating swift and resoundingly effective leadership based on a strong results-oriented
approach aimed at realizing these initiatives. In light of his track record, the Company has judged that he is a competentprofessional who is capable of helping ensure the improved corporate value and sustained growth of the Group in acting as amanager of a major business subsidiary, and has accordingly appointed him as a candidate to continue serving as Director.

- 15 -

No.

Name(Date of birth)

MAKIYAMA Kozo
(August 28, 1958)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1981
March 2004
March 2007

Number of the Company’s
shares owned (shares):

March 2008

14,100Special interests between
the Company and the
Candidate:

11

None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:

May 2008
March 2009
March 2010
March 2011
May 2011
May 2013
May 2017

Joined Parco Co., Ltd.
Executive Officer, Executive General Manager of Store Operation
DivisionManaging Executive Officer, Executive General Manager of StoreManagement Division
Senior Executive Officer, Senior Executive General Manager of StoreOperation Headquarters and Executive General Manager of StoreManagement Division
Director and Senior Executive Officer
Supervisor of Store Operation Division
In charge of Store Management
In charge of Business Management
Director and President and Representative Executive Officer (present)
Director of J. Front Retailing Co., Ltd. (present)
Managing Executive Officer (present)

14/14
Tenure as Director (at theconclusion of thisMeeting):
approx. 5 years

Reasons for nomination as candidate for Director
MAKIYAMA Kozo serves as Representative Executive Officer of PARCO Co., Ltd., and has abundant experience and insight
related to the business management and store operations of PARCO. Drawing on a sufficient understanding of PARCO businessroles and expectations with respect to Group’s strategy, he promotes the management vision leveraging attributes of the PARCO
Business, and while demonstrating resoundingly effective leadership based on his ability to act as a unifying force within theorganization, he proactively continues taking on the challenges of expanding into business fields. In light of his track record, theCompany has judged that he is a competent professional who is capable of helping ensure the improved corporate value andsustained growth of the Group in acting as a manager of a major business subsidiary, and has accordingly appointed him as a
candidate to continue serving as Director.

- 16 -

No.

Name(Date of birth)

WAKABAYASHI
Hayato(August 31, 1961)
Number of the Company’s
shares owned (shares):

12

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1985
April 1998
April 2007
February 2009

1,800

July 2013

Special interests between
the Company and the
Candidate:

May 2015
September 2015

None
Number of attendance at
the Board of Directors
meetings for the 11th
fiscal year:
14/14

March 2016
May 2016
March 2017
May 2017

Joined Matsushita Electric Industrial Co., Ltd. (present Panasonic
Corporation)
President of Panasonic Financial Center Malaysia Co., Ltd.
Director and Chief Executive Officer of Matsushita Electric (China)
Finance Limited
Finance Planning Team Leader (Manager), Headquarters Finance & IR
Group of Panasonic Corporation
General Manager, Finance & IR Group, Corporate Strategy Division
and Finance Planning Team Leader (Director)
Joined J. Front Retailing Co., Ltd.
In charge of Finance Policy, Administration Unit
Executive Officer
In charge of Financial Strategy and Policy, Administration Unit
Senior Executive General Manager of Financial Strategy Unit (present)
and in charge of Finance Policy
Director (present)
In charge of Financing and Finance Policy (present)
Managing Executive Officer (present)

Tenure as Director (at theconclusion of thisMeeting):
approx. 2 years

Reasons for nomination as candidate for Director
WAKABAYASHI Hayato has pursued a career mainly in the financial realm of Panasonic Corporation and its group companies,
and as such has adequate insight and sufficient experience related to financial policy with respect to enhancing financial
standing, improving levels of cash management and other such initiatives. As such, he was invited into the Group in May 2015and has established and promoted a financial strategy encompassing the entire Group. From 2016, he has led the transition to
IFRS with an eye to the future, and began its application during the current Medium-term Business Plan. In addition to suchachievements and in-depth financial insight, he has the commensurate abilities as a management professional in terms of his
strategic and transformation-minded leadership, strong results-oriented approach and other such attributes. As such, theCompany has judged that he is a competent professional who is capable of helping ensure the improved corporate value andsustained growth of the Group by executing business acting as a Director, and has accordingly appointed him as a candidate tocontinue serving as Director.

- 17 -

No.

Name(Date of birth)
April 1983
June 2004

New Candidate

SAWADA Taro

13

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company(January 17, 1960)

March 2010

Number of the Company’s
shares owned (shares):

January 2011
May 2011
May 2012
September 2015

9,800
Special interests between
the Company and the
Candidate:July 2016
March 2017

None

May 2017

Joined The Daimaru, Inc.
Department Manager of Sales Promotion Department, Sales Planning &CS Promotion Division of Kobe Store
Division Manager of Management Planning Division of Daimaru
Matsuzakaya Department Stores Co. Ltd.
Executive Store Manager of Daimaru Kobe
Corporate Officer
Executive Store Manager of Daimaru Osaka Shinsaibashi
Executive Store Manager of Daimaru Osaka Shinsaibashi and Executive
General Manager of Shinsaibashi New Store Planning Office
Executive General Manager of Management Planning Unit (present),
Senior General Manager of Management Planning Division (present)
and Executive General Manager of Future Standard Laboratory
Director (present)
Managing Executive Officer (present)

Reasons for nomination as candidate for Director
SAWADA Taro has served in management in a Department Store Business company, serving as Executive Store Manager of
Daimaru Kobe and Executive Store Manager of Daimaru Osaka Shinsaibashi, and since being appointed as Executive General
Manager of Shinsaibashi New Store Planning Office in September 2015, he has accumulated valuable practical experience as
the person responsible for formulating the master plan for rebuilding the main building of the Shinsaibashi Store and promoting
the action plan, possessing in-depth insight and the ability to lead organizations in planning and proposals. From July 2016, hehas coordinated the Medium-term Business Plan as the Executive General Manager of Management Planning Unit of the
Department Store Business, and has been involved in projects to create business models from a broad perspective with new
ideas. In light of his track record, the Company has judged that he is a competent professional who can lead thecreation/proposal and promotion of plans toward realizing the Group Vision and is capable of helping ensure the improved
corporate value and sustained growth of the Group by executing business acting as a Director, and has accordingly appointed
him as a candidate to serve as a new Director.

(Reference)
The Company’s policy for nominating and appointing Directors and Executive Officers is as follows.
(i) Internal Non-executive Directors
We appoint individuals who are able to fulfill the duty of care of a prudent manager and the duty of loyalty
required by the Companies Act of Japan; who are well informed about internal information based on anabundance of experience in the JFR Group’s respective operations; and who are expected to secure
effectiveness of objective management oversight.
To further strengthen oversight functions while conducting smooth management of the Board of Directors,
the chairperson of the Board of Directors shall be selected from Directors who do not execute business. At
the same time, from the standpoint of achieving a smooth transition from the Audit & Supervisory Board
system to maintain and improve the accuracy of audits, full-time members of the Audit Committee shall bealso selected from Directors who do not execute business. Furthermore, one of the full-time members of the
Audit Committee shall be the chairperson of the Audit Committee for the foreseeable future.
(ii) Outside Directors
We appoint individuals who are expected to furnish advice and perform the oversight function on the Boardof Directors by drawing on points of view and perspectives that vary from those of our Internal Directors.
Accordingly, such individuals must be able to fulfill the duty of care of a prudent manager and the duty ofloyalty required by the Companies Act of Japan; they must offer a sense of pragmatism along with a highlevel overview and sweeping perspective of business based on abundant experience as corporate managers;
and they must have careers outside the retail industry, a global managerial background, or advanced insightin areas such as finance, accounting, and legal affairs.
For the position of Outside Director, we nominate those who meet our “Criteria for Determining
Independence of Outside Directors” separately provided, to thereby avoid the prospect of any conflicts ofinterest arising with the Company’s shareholders.

- 18 -

(iii) Executive Officers
We appoint individuals who are expected to steadily and quickly execute business operations based on
corporate management policies determined by the Board of Directors. Accordingly, such individuals must
be able to fulfill the duty of care of a prudent manager and the duty of loyalty required by the Companies
Act of Japan; they must have an abundance of experience in the JFR Group’s respective operations; andthey must have a profound understanding of the JFR Group’s operating environment (including its
challenges).
Furthermore, the Company defines a small number of Executive Officers with specific titles in addition toRepresentative Executive Officers, positioning these persons as those responsible for basic and final
decision-making for business execution, enabling unification, leadership, and supervision of businessexecution by Executive Officers.
(Reference)
The Company’s criteria for determining independence of Outside Directors are as follows.
In appointing the Company’s Outside Directors, we select individuals who maintain a high degree of
independence and consequently are not susceptible to conflicts of interest involving the Company’s
shareholders. An individual does not meet the criteria for independence if one or more of the items listed
below apply to that individual.
(i)

Person who executes business in the JFR Group(ii)

Major shareholder of the Company (including person who executes business thereof; the same
applies with items (iii) to (vi), below)(iii)

Major business partner of the JFR Group(iv)

Person affiliated with a law office, audit firm, consultancy or other entity that receives payment otherthan executive compensation of more than a certain amount from the JFR Group(v)

Recipient of donations of more than a certain amount contributed by the JFR Group(vi)

Related party in cases where the party is engaged in an arrangement involving a reciprocal officer
appointment with the JFR Group(vii) Person with respect to whom any of items (i) to (vi) has applied at any point over the last five years(viii) Spouse or relative within the second degree of consanguinity of a person with respect to whom anyof the items (i) to (vii) applies
With respect to the above, “person who executes business” refers to an Executive Director, an Executive
Officer, and any other employee; “major shareholder” refers to a shareholder who holds voting rights
accounting for no less than 10% of the Company’s voting rights; “major business partner” refers to abusiness partner whose transactions with the JFR Group account for 2% or more of the Company’s annual
consolidated net sales or the business partner’s annual net sales for any of the fiscal years over the last five
years; “a certain amount” refers to an annual amount of 10 million yen in any of the fiscal years over thelast five years.

- 19 -

[Reference Document for the 11th Annual Shareholders Meeting]Business Report (From March 1, 2017 to February 28, 2018)
The J. Front Retailing Group (hereinafter the “Group”) has adopted the International Financial
Reporting Standards (IFRS) from the fiscal year under review, replacing the previously used Japanese
GAAP. The Group has adopted IFRS in the interest of implementing effective management based on
appropriate asset evaluation, applying business management that gives emphasis to the profit of thecurrent period and enhancing accountability to domestic and overseas investors by improving theinternational comparability of financial information. Figures for the fiscal year ended February 28,
2017 that were stated in conformance with Japanese GAAP have been reclassified to conform withIFRS.
1. Current status of the corporate group(1) Business summary and results
In the fiscal year under review, despite elements of uncertainty, the Japanese economy continued
on a gradual track of recovery mainly fueled by the robust overseas economy and the various policiesof the Japanese government and the Bank of Japan. The pace of recovery in Japan’s personal spending
has been slow, as although we are seeing continuous upturn in luxury goods consumption by wealthy
consumers mainly backed by the wealth effect due to increases in stock prices, the overall
consumption trend is becoming increasingly polarized with an increase in budget-minded consumer
behavior also present, reflecting general unease toward the future amid an increased burden of social
security.
Amid this environment, the Group drastically steered management to “discontinuous growth,”
which is not an extension of the past, aiming to achieve ROE of 8% or more. We started the “FY
2017–FY 2021 Medium-term Business Plan,” aiming to achieve a new Group Vision of “Create andBring to Life ‘New Happiness,’” which calls for rebuilding our business portfolio. In the fiscal year
under review, which was the first year of the new business plan, the Group sought to develop as a“Multi Service Retailer” operating beyond the retail industry framework by expanding its businessdomains and working to further strengthen the competitiveness and profitability of existing businesses,
while accelerating efforts to identify unprofitable operations.
Under our “Urban Dominant Strategy,” where we aim to build business models for growth alongwith our respective communities centered on stores, we engaged mostly in large-scale development
projects for our Real Estate Business, which is positioned as a new growth business. In April, we
opened GINZA SIX, a revolutionary luxury mall and one of the largest commercial facilities in the
Ginza area with an area of 47,000 m2. Then, in November we opened Ueno Frontier Tower, acommercial complex developed on the site of the former south wing of the Matsuzakaya Ueno store.
In addition, we decided to introduce PARCO as a large-scale core tenant in the north wing of the
Daimaru Shinsaibashi store, which is adjacent to its main building currently being rebuilt.
In our ICT (Internet, Communication, and Technology) strategy, which looks toward the IoT era,
where various devices will be connected to the Internet, we have developed and strengthened ourorganizational structure, establishing the Group Digital Strategy Division in March and appointing an
external member of personnel to take responsibility for ICT strategy promotion. In this way, we took
steps to realize our ICT strategy in terms of both proactive and defensive aspects.
In the Department Store Business and PARCO Business which are core Group businesses, we took
initiatives to innovate existing business by taking steps to increase value provided by stores and toheighten profitability. In the Department Store Business, we conducted sales floor renovations in
response to changes in the market, such as introducing a new arranging sales area, as well as
expanding our customer base in measures to serve more wealthy consumer segments andstrengthening our sales service to progressively incorporate overseas visitors (inbound tourism) using
our stores. In the PARCO Business, we took steps to promote the development of store brands andheighten the appeal of stores by opening new stores and pursuing a scrap and build approach for urban
stores. We also worked to produce multiple commercial real estate assets such as the new Shibuya- 20 -

PARCO.
To expand new business fields, in February we decided to establish JFR Kodomo Mirai Co., Ltd. toenter the infant childcare business. Also, we transferred all shares of Forest Co., Ltd., a consolidated
subsidiary that operates a mail order business, in August. In addition, we decided to agree to futureplans by Senshukai Co., Ltd., an equity method associate, to purchase its own shares.
In efforts to strengthen our foundations of business, we further enhanced the corporate governancesystem. These efforts included transitioning to a company with three committees (nomination, audit
and remuneration committees) in order to strengthen the management oversight function and promote
agile management and reinforcing management personnel, such as promoting Board of Directors
reforms based on an evaluation of the effectiveness of the Board of Directors. In tandem, we worked
to increase management’s shared awareness of profits with shareholders and awareness ofshareholder-focused management by introducing a stock-based remuneration system and took steps tostrengthen management personnel functions with high transparency and objectivity through theactivities of the Nomination Committee and Remuneration Committee. In an effort to enhance asset
efficiency, we conducted operation management based on separate balance sheet budgets for each of
the flagship stores of Daimaru Matsuzakaya Department Stores. Also, we worked to increase free
cash flows by taking steps to boost investment efficiency and improve earnings through business
management based on investment criteria and business withdrawal criteria. In efforts on businessreforms aimed at improving productivity, we overhauled in-house network systems, made progress in
reducing paper usage in offices, and introduced robotic process automation (RPA) to automate officework. In reforming personnel affairs with respect to the Group’s organizations, we appointed external
personnel in specialist fields such as new business development, ICT, legal affairs, and real estate, andtook steps to train and strengthen administration and management personnel. To cope withdiversification of work styles due to diverse work perspectives and changes in life stages, in Daimaru
Matsuzakaya Department Stores and Daimaru Matsuzakaya Sales Associates and other companies,
we introduced the Area Limited Employee System, which allows employees to select the areas where
they work, and the Dedicated Employee System, under which employees on fixed-term contracts who
have completed more than one year of service in the companies are employed indefinitely in principle.
In environmental activities, we continued to work on reducing energy consumption and packaging
materials, among others. Furthermore, in our ECOFF Recycle Campaign held at flagship stores of
Daimaru Matsuzakaya Department Stores, we collected about 460,000 items of disused clothing,shoes and bags from customers to be recycled into bioethanol and the like as part of our continued
efforts to build a recycling-oriented society. In social activities, we continued working to support
women’s health, and to nurture the next generation through donations to scholarship funds to support
children in disaster areas affected by the Great East Japan Earthquake and the Kumamoto Earthquakeand other disasters. We also used our stores to provide sales opportunities to producers in disasteraffected areas, by holding events and so forth. In addition, we established JFR Create Co., Ltd., which
has acquired certification as a special subsidiary company in accordance with the Act on Employment
Promotion etc. of Persons with Disabilities and started operations.
As a result of various measures including those mentioned above, consolidated sales revenue forthe fiscal year under review was ¥469,915 million, up 3.8% year on year, operating profit was¥49,546 million, up 18.7% year on year, profit before tax was ¥48,271 million, up 13.3% year on year,
profit attributable to owners of parent was ¥28,486 million, up 5.3% year on year, andprofit/shareholders’ equity (ROE) was 7.5%, down 0.1 percentage points year on year.
The Company has decided to pay year-end dividends of ¥19 per share, comprising an ordinary
dividend of ¥18 and a commemorative dividend of ¥1 to celebrate the 10th anniversary of theCompany. The annual dividend with the addition of an interim dividend of ¥16 per share (including acommemorative dividend of ¥1) is ¥35 per share, marking a ¥5 increase of ordinary dividend year on
year as well as seven consecutive years of dividend increases.

- 21 -

Net sales, sales revenue, and operating income (operating profit) by business segment of the corporate
group(Millions of yen)
10th fiscal year (Japanese GAAP)(Fiscal 2016)

Business segment

Net sales
Results

Operating income

Composition

Results

Composition%%

Department StoreBusiness

727,99465.7

24,592

55.2

PARCO Business

273,377

24.6

12,52028.1

Wholesale Business

47,291

4.3

1,529

3.4

Credit Business

10,900

1.0

2,844

6.4

Other Businesses

97,575

8.8

2,881

6.4

Adjustments(48,628)

(4.4)

211

0.5

1,108,512

100.0

44,580100.0

Consolidated total

10th fiscal year (IFRS)(Fiscal 2016)
Business segment

Sales revenue
Results

11th fiscal year (Current fiscal year, IFRS)(Fiscal 2017)

Operating profit

Composition

Sales revenue

Composition

Results%

Results%

Operating profit

Composition

Results%

Composition%

Department StoreBusiness

268,233

59.3

22,22453.3

274,308

58.4

26,65953.8

PARCO Business

93,78020.7

13,021

31.2

91,621

19.5

11,752

23.7

Real Estate Business

5,004

1.1

348

0.8

13,427

2.9

4,131

8.4

Credit and FinanceBusiness

9,847

2.2

2,856

6.9

10,176

2.2

2,742

5.5

Subtotal

376,866

83.3

38,45092.2

389,534

83.0

45,285

91.4

Other

114,584

25.3

2,981

7.1

117,845

25.0

4,744

9.6

Adjustments(38,945)

(8.6)

295

0.7

(37,465)

(8.0)

(483)

(1.0)

Consolidated total

452,505

100.0

41,727100.0

469,915100.0

49,546100.0- 22 -

Results by segment are as follows.
<Department Store Business>
To increase the value provided by our stores and heighten their profitability, we conducted sales
area renovations responding to changes in market conditions including introduction of new arranging
sales areas. At the Daimaru Kobe store, we undertook a major renewal of the men’s floor, with aparticular focus on the 6th floor, and the 7th floor living room sales area, for the first time in 20 years.
At the Daimaru Sapporo store, we increased the area of the watch sales area by around 1.5 times andexpanded the range of brands carried. In addition, at the Daimaru Tokyo store on the women’s
clothing floor, we opened Daimaru and Matsuzakaya’s first concept-type select zone with anarrangement of clothing, food, and housing, produced by a popular shop owner. In conjunction with
this, in out-of-store sales, we continued efforts to acquire new customer accounts in response toexpanding consumption among the wealthy class, while taking steps to develop and recommend new
products and services. In the inbound tourism market, we stepped up our response to overseas visitors
to Japan by expanding sales areas able to handle mobile payment and strengthening in-store sales
services.
To mark the milestone of 300th anniversary of founding of Daimaru, we held various
commemorative promotions and events. At the Daimaru Kobe store, we hosted “VOGUE Fashion’sNight Out” as a shopping event for the fashion magazine “Vogue.” At the Daimaru Kyoto store, we
ran a limited time shop “Hermès” in Gion, Kyoto for nine months through to July as a Kyoto Machiya
Project. Then, in August, we opened HUBLOT BOUTIQUE KYOTO. In addition, we established the
Future Standard Laboratory in March. We strengthened links with outside knowledge and collected
information utilizing the Internet, positioning us to create new sales methods and services. The
Daimaru Urawa Parco store ceased operations at the end of July, as it had continued to operate at aloss and we judged that it would be difficult to return it to profitability going forward amid
intensifying competition.
As a result of various measures including those mentioned above, in the fiscal year under review,
sales revenue was ¥274,308 million, up 2.3% year on year, and operating profit was ¥26,659 million,
up 20.0% year on year.
Net sales by product and by company and store of the Department Store Business (JapaneseGAAP) are as follows.
Net sales by product of the Department Store Business
Product
Amount(Millions of yen)
Year-on-year changes

Composition
(%)

(%)

Men’s clothing andhaberdashery

50,9396.9

1.5

Ladies’ clothing andhaberdashery

219,444

29.6

2.4

Children’s clothing andhaberdashery

15,6132.1(2.6)

Kimono, bedding and otherclothing

10,695

1.4(3.9)

Personal belongings

67,932

9.2(3.0)

Furniture

6,125

0.8

1.5
(19.8)

Home appliances

568

0.1

Household goods

23,266

3.1(0.4)

Food products

172,975

23.4

(1.1)

Food halls and cafes

21,9833.0

1.6

General goods

125,582

17.0

15.6

Services

2,853

0.4

(2.3)

Other

22,5183.0(19.8)

Total

740,498

100.0

1.7

- 23 -

Net sales by company and store of the Department Store BusinessCompany / Store
Amount(Millions of yen)
Year-on-year changes

Composition%%

Daimaru Matsuzakaya Department Stores Co. Ltd.
Daimaru
Osaka Shinsaibashi store

83,98711.3

14.0

Osaka Umeda store

65,0558.8

2.5

Tokyo store

79,056

10.7

6.1

Kyoto store

68,755

9.3

2.3
(1.0)

Yamashina store

3,774

0.5

Kobe store

82,45211.1

0.1

Suma store

8,878

1.2

(1.3)

Ashiya store

6,761

0.9

(0.7)

Sapporo store

65,1358.8

5.1

Urawa Parco store

1,295

0.2

(60.3)

465,151

62.8

4.3

Nagoya store

117,646

15.9

(0.3)

Ueno store

39,375

5.3(2.6)

Shizuoka store

21,3482.9(0.1)

Takatsuki store

8,606

1.2

(0.3)

Sub total
Matsuzakaya

Toyota store

7,479

1.0

(6.8)

Sub total

194,456

26.3

(1.0)

659,608

89.1

2.7

Sub total
The Hakata Daimaru, Inc.

54,8487.4

1.8

The Shimonoseki Daimaru, Inc.

13,8451.9(5.2)

Kochi Daimaru Co., Ltd.

12,196

1.6

(2.4)

Total
740,498
100.0
1.7(Notes) 1. Of real estate rental revenues previously included in individual-store revenues, those amounts transferred to theReal Estate Business have been deducted from the above figures.
2. The Daimaru Urawa Parco store closed permanently at the end of July 2017.

<PARCO Business>
To develop PARCO store brands, we opened PARCO_ya in Ueno Frontier Tower on November 4,
our first new store opening in the 23 wards of Tokyo in 44 years since opening of Shibuya PARCO.
After opening, the store enjoyed strong visitor numbers and sales, exceeding our estimates.
At urban stores, we were aware of the effect of information dispersal via social media. At the
Fukuoka PARCO, we introduced new service-oriented tenants in response to experience-focusedconsumption, and at the Nagoya PARCO we conducted restaurant refurbishments aimed at building
up our originality in the market. In the entertainment business, we held “Despicable Me 3 CAFÉ”
events at PARCO stores in Sapporo, Ikebukuro, Nagoya, and Fukuoka. Developing original content
like this helped to increase customer attraction and transaction volume at existing stores. We also
conducted various initiatives such as developing the project in outside facilities. In productions held atcommercial real estate venues in April, we decided to open a store in a station-front commercial
facility in Kinshi-cho, Sumida-ku, which is expected to see increasing development and activation ofcity functions as an urban sub center in east Tokyo. Furthermore, in May we started construction of
new Shibuya PARCO, and in September we decided to open a PARCO store as the core tenant in thenorth wing of Daimaru Shinsaibashi store.
Despite various measures including those mentioned above, sales revenue was ¥91,621 million,
down 2.3% year on year due to the temporary closure of Shibuya PARCO since August 2016 forrebuilding and the permanent closure of Chiba PARCO in November 2016, as well as the additional
closure of Otsu PARCO in August 2017, and operating profit was ¥11,752 million, down 9.7% year
on year.
- 24 -

<Real Estate Business>
On April 20, we opened GINZA SIX, an integrated development of a two-block site including theformer site of the Matsuzakaya Ginza store. The GINZA SIX opened as a commercial facility
different from traditional department stores, integrating a commercial area that has attracted 241
brands including 121 flagship store brands with a cultural facility, creating new excitement for the
local area. Furthermore, on November 4 we opened Ueno Frontier Tower, which had been developedon the site of the former south wing of Matsuzakaya Ueno store, as a commercial complex bringing
together Matsuzakaya Ueno store, PARCO_ya, Toho Cinemas Ueno, and offices. Taking advantage ofthe start of the operation, we gave the peripheral stores owned by Daimaru Matsuzakaya Department
Stores the collective name “Shitamachi Front.” At the same time, we worked to create an attractive
community and encourage new visitors, including through joint events with department stores and
PARCO stores and area promotion initiatives in collaboration with the community and the local
merchants’ association.
As a result of various measures including those mentioned above, in the fiscal year under review,
sales revenue was ¥13,427 million, up 168.3% year on year, and operating profit was ¥4,131 million,
up 1,085.4% year on year.
<Credit and Finance Business>
Despite increases in revenues from annual membership fees due to growth in the number ofcardholders and affiliated store fees and interest income from installment sales, sales revenue in theCredit and Finance Business was ¥10,176 million, up 3.3% year on year, and operating profit was¥2,742 million, down 4.0% mainly due to increases in selling, general and administrative expense
such as costs of security measures.
<Other>Although design and construction business J. Front Design & Construction saw sales decline on apullback after recording an increase in large projects in the previous fiscal year, wholesale business
Daimaru Kogyo saw sales and profits increase year on year due to strong performance in theelectronic devices division. Personnel recruitment business Dimples’ expanded its sales following an
increase in outsourcing contracts from non-Group customers. As a result, sales revenue for Other was¥117,845 million, up 2.8% year on year, and operating profit was ¥4,744 million, up 59.1% year on
year.

(2) Status of capital investment
The basic approach taken regarding the Group’s recurring capital investment is to keep suchinvestment within the scope of the amount of depreciation. In the current fiscal year total capital
investment was ¥27,021 million, which was a result of recurring investment combined with proactive
implementation of strategic investment.
(i) Major facilities completed during the current fiscal year
The main investments in the Real Estate Business included ¥4,328 million for construction
relating to GINZA SIX, and ¥2,645 million for construction relating to Ueno Frontier Tower. In
addition, the main investments in the PARCO Business included ¥5,619 million for asset purchases
associated with the redevelopment project of the Shibuya PARCO.
(ii) New establishments and expansions of major facilities with ongoing construction works during thecurrent fiscal year
Mainly, in the Department Store Business this included rebuilding of the main building of the
Daimaru Shinsaibashi store, and in the PARCO Business this included the construction of a newbuilding associated with the redevelopment project of the Shibuya PARCO.

- 25 -

(iii) Sales, removals and losses of major non-current assets
Mainly, this consisted of sales of Aoyama Goko Building of the Daimaru Matsuzakaya
Department Stores.

(3) Status of procurement
The Group’s basic policy is to source funds needed for business activities using internallygenerated funding. Moreover, when the need arises for business investment or other expenditures,such funds are procured mainly by issuing bonds and borrowing from financial institutions, withconsideration placed on maintaining financial soundness.
As a general rule, Group subsidiaries do not procure funds from financial institutions, but instead
we promote centralized and streamlined means of procuring funds by means of intra-Group financing
using a cash management system.
For the current fiscal year, taking our cue from current financial market trends, we have procured¥35.0 billion from an issue of unsecured straight bonds and ¥16.5 billion via long-term borrowings
from financial institutions, as funding for, among other things, repayment of a first tranche of
unsecured straight bonds and for capital investments at subsidiaries.

(4) Issues to be addressed
The business environment facing the Company continues to change at a remarkable pace, given thedwindling birthrate, the growing proportion of elderly people and shrinking overall population, therapid evolution of digital technologies and the accompanying changes in consumption behavior andlifestyles. We also expect change in the business environment from financial market trends, inaddition to the impact of unclear prospects and policy-making in the global economy. Under suchcircumstances, we aim to shift course to a “discontinuous growth” trajectory in our business
operations, a situation never before faced by the Group. In this connection, we launched the “FY
2017–FY 2021 Medium-term Business Plan” aimed at realizing the new Group Vision phrased as“Create and Bring to Life ‘New Happiness,’” in measures to achieve a ROE of 8% or more andreconfigure our business portfolio.
In fiscal 2018, the second year of the Plan, we will take steady measures to promote our Urban
Dominant Strategy, aiming to construct a business model for growth in partnership with the regions
based on flagship stores, to further reconfiguration of our business portfolio. We plan also to takesteps to expand the real estate leasing business, while accelerating measures to strengthen engagementwith the customer by expansion of business domains beyond the retail format and through meticulous
execution of ICT (the Internet, Communication, and Technology) strategies. We will likewise
steadfastly promote innovations in our existing businesses, such as the Department Store Business and
PARCO Business, which are core Group businesses.
In addition, we will step up our commitment to risk management in the current fiscal year. Change
in the business environment is a source of uncertainty that a company cannot avoid. But that
uncertainty has positive aspects, as risk means opportunity, as well as the negative aspect of threat. In
the future, ability to deal with such risk will, we believe, create a wide gap between companies interms of performance. For this reason, the Group has identified risks it faces, and specified 15 areas as
special corporate risk priorities for the JFR Group. In addressing this risk, we will tackle strategic
issues raised in the Medium-Term Management Plan in terms not only of conventional risk-hedging,but also of risk-taking for growth. We plan to enable sustainable growth and medium-term corporate
value enhancement for the Group through resolution of strategic issues through the above riskmanagement approach, in addition to resolute implementation of strategy under a corporate
governance system characterized by stronger supervision functions and flexible management.

- 26 -

a. Multi Service Retailer Strategy
1) Expansion involving new fields of business toward making the Group Vision a reality- We will make steady preparations ahead of our entry into the infant-care business, aiming to open
our first kindergarten in April 2019. At the same time, we will take ongoing measures to deliver
new services that cater to “increasing diversity of lifestyles” and “increasing diversity in means ofseeking enjoyment.”
2) Expansion in fields of business where managerial efficiency is high- In the Credit and Finance Business, we will take measures to strengthen established businesses andto expand business opportunities based on diversification of settlement methods and technologicalevolution, as well as expand our business domains by leveraging our customer base.
- In the personnel services business, we will strengthen measures in the promising metropolitan
Tokyo area. Likewise, in the design & construction business, we will take measures to strengthen
and expand established businesses, and also boost profitability through entry into new businessdomains including design business.
b. Urban Dominant Strategy- We will move toward forging a business model for growth along with regions, with the stores at its
core in each area in which our major stores are located.
1) Promoting urban development centered on flagship stores- On the basis of our area strategies in Ueno, Shinsaibashi, Nagoya, Kobe, and Kyoto, we will
deepen development of areas around individual stores to create more attractive streets, and socontribute to urban revitalization, by holding events in collaboration with local communities andproviding services.
2) Expansion involving the real estate leasing business- We will promote development of new commercial facilities through the real estate divisions of
Daimaru Matsuzakaya Department Stores and PARCO’s real estate development units. We alsoplan to improve asset efficiency and expand businesses by further leveraging property held by theCompany in areas abutting individual stores.
c. ICT strategy looking toward the IoT era of ubiquitous Internet connectivity- We will take measures to clarify the positioning of online businesses within the Group, and,through ICT, strengthen our engagement with customers. We will promote reform in the way jobs
are done and other areas.
1) Overhaul of online business domains at department stores- We will work to concentrate and strengthen our online business domains through categories basedon the special characteristics and strengths of department stores, and take measures to provide newcustomer experiences.
2) Reform in the way jobs are done, using ICT- We aim to improve productivity by reviewing the way jobs are done, including more flexible
working approaches and a shift to high-value-added operations through the creation and expansion
of ICT environments, the result of the introduction of robotic process automation (RPA).
d. Innovating existing businesses- We will engage in innovations in our existing businesses, such as the Department Store Businessand PARCO Business, which account for a majority of the Group’s operating profit.
1) Department Store Business- Positioning strengthening our power to attract customers and expanding our customer base as key
objectives for store strategies, we will promote efforts geared to increasing value provided by ourstores and heightening their profitability, through anticipating increasingly diverse customer needs.
- To help realize a new model of business for commercial facilities, we will press on with
development projects currently underway such as the main building and north wing of the Daimaru
Shinsaibashi store.
- Led by the Future Standard Laboratory, by collecting and sharing information through partnerships
with external experts, we will work continuously to deliver new marketing and service paradigms,
and reconfigure individual store brands.
2) PARCO Business- We aim to strengthen earnings potential through concentrated investment in flagship stores, tobetter position us to respond to changing trends in the Department Store Business, and enable
greater originality and profitability in our operations. We will also take steps to strengthen the- 27 -

PARCO store brand by deepening collaboration of the Department Store Business with individual
PARCO Group businesses such as the entertainment business.
- We will continue with development projects currently underway such as the Harajuku ZEROGATE, Sannomiya ZERO GATE (tentative name), the new Shibuya PARCO, the station-front
commercial facility in Kinshi-cho, Sumida-ku, the Okinawa Urasoe West Coast Project, and thenorth wing of Daimaru Shinsaibashi store, in moves to realize a new model for commercial
facilities.
- By responding to technological evolution and by improving customer convenience with apps at theforefront and strengthening dialogue with customers, we aim to bring about advances in customer
relationship management (CRM).
3) Related businesses- Three highly efficiently managed businesses shall be designated as priorities for strengthening theCredit and Finance Business, personnel services business, and design & construction business. We
aim to foster new growth through measures such as hiring talent from outside the Group andstrengthening business execution systems.
- Measures will be taken to create a risk management system by strengthening governance, to lay
the groundwork for the sustainable growth of individual Group companies.
e. Reconfiguring CSR frameworks from an ESG perspective- We will realign our CSR initiatives with an ESG perspective, including designation of priority
areas that a corporation should address, and resolutely promote measures that contribute toimproved corporate value. Measures will also be taken to broaden disclosure of non-financial
information, and to improve the practical effectiveness of CSR activities.
*ESG: Environmental, social and governance (criteria for corporate governance), considered adriving force for corporate sustainable growth and medium- to long-term corporate valueenhancement through appropriate measures taken in individual business areas, as well asa set of criteria for evaluation of investment in terms of its usefulness in promoting asustainable community.
d. Strengthening foundations of business that lend support to the growth strategy<Innovating the Group’s administrative systems>- With the aim of improving management efficiency, we are promoting automation of our business
operations through expansion of the field of application of RPA. In tandem, we plan measures tostrengthen information security and put in place system infrastructure.
<Group financial strategy>- To improve corporate value, we will take steps to establish a corporate structure capable ofachieving a steady ROE of 8% or more. In combination with this, we will take measures to ensure
continuous returns on investments and improvement of profitability, with the aim of strengthening
our ability to generate free cash flow.
<Strategy of personnel affairs with respect to the Group’s organizations>- We will continue to take steps that include employee development geared to ensuring that
employees are able to produce high added value and revitalizing the organization and its people.
We will support measures for a better work-life balance and will take steps to secure a diverse
range of human resources that respect diversity and show a high degree of specialization, as weseek to create new model for workplace practice that transcends constraints of place and time.
<Implementation and strengthening of compliance management>- We are committed to preventing incidence of violation of laws and regulations and other abuses,
through establishment of a Groupwide compliance framework, and strengthening of operationaloversight. We will also take measures to identify compliance issues via an internal reporting
system, and take due steps to resolve issues that arise.

- 28 -

(5) Status of assets and profit or loss(i) Changes in assets and profit or loss of the corporate group

Category(Millions of yen, unless otherwise stated)
9th fiscal year
10th fiscal year
(Fiscal 2015)(Fiscal 2016)

8th fiscal year
(Fiscal 2014)

Japanese GAAPNet sales

1,149,529

1,163,564

1,108,512

Operating income

42,16748,03844,580Ordinary income

40,48047,91044,425

Profit attributable to owners ofparent19,96726,313

26,950

Basic earnings per share (Yen)

75.66

100.42103.04

Total assets

1,018,495

1,019,146

1,050,109

Net assets

430,260

440,594

465,839

5.4%

6.9%

6.8%

Return on equity (ROE)

Category

10th fiscal year
(Fiscal 2016)

11th fiscal year
(Current fiscal year)(Fiscal 2017)
IFRS

Sales revenue

452,505

469,915

Operating profit

41,72749,546

Profit before tax

42,60848,271

Profit attributable to owners ofparent27,052

28,486

Basic earnings per share (Yen)103.43108.92

Total assets

1,005,069

1,022,348

Total equity

421,444

450,887

Profit/shareholders’ equity (ROE)
7.6%
7.5%
(Notes) 1. The Company has conducted a consolidation of common shares at a rate of one share for every two shares withthe effective date of September 1, 2014. Basic earnings per share has been calculated as if this consolidation ofshares was conducted at the beginning of the 8th fiscal year (fiscal 2014).
2. The Company has changed its inventory valuation method beginning with the 9th fiscal year (fiscal 2015).
Respective financial figures have been revised based on the assumption of the change being implemented at the
beginning of the 8th fiscal year (fiscal 2014).
3. The Company has adopted the Accounting Standard for Retirement Benefits, etc., beginning with the 9th fiscal
year (fiscal 2015). As such, respective financial figures for the beginning of the 9th fiscal period (fiscal 2015)
have been revised in line with transitional measures provided in Paragraph 37 of the Accounting Standard for
Retirement Benefits.

(ii) Changes in assets and profit or loss of the Company

Category

8th fiscal year
(Fiscal 2014)

9th fiscal year
(Fiscal 2015)(Millions of yen, unless otherwise stated)
11th fiscal year
10th fiscal year
(Current fiscal year)(Fiscal 2016)(Fiscal 2017)

Japanese GAAP
Operating revenue

11,147

12,213

13,646

14,776

Operating income

8,391

9,194

10,433

10,622

Ordinary income

8,460

9,201

9,750

9,892

Profit

8,388

6,872

8,702

8,579

Basic earnings per share (Yen)

31.77

26.22

33.27

32.80

429,226

428,175

434,921421,361

Total assets

Net assets
308,681
303,737
305,105
305,802(Note)The Company has conducted a consolidation of common shares at a rate of one share for every two shares withthe effective date of September 1, 2014. Basic earnings per share has been calculated as if this consolidation ofshares was conducted at the beginning of the 8th fiscal year (fiscal 2014).

- 29 -

(6) Status of significant parent company and subsidiaries(i) Relationship with the parent company
No items to report.
(ii) Status of major subsidiaries
Capital(Millions of yen
unless otherwise
stated)Name

Ratio of ownershipby the Company(%)

Major business

Daimaru Matsuzakaya Department Stores
Co. Ltd.

10,000

The Hakata Daimaru, Inc.

3,037

69.9

Department Store Business

480

100.0

Department Store Business

The Shimonoseki Daimaru, Inc.
Kochi Daimaru Co., Ltd.
PARCO Co., Ltd.
Parco (Singapore) Pte Ltd

100.0

Department Store Business

300

100.0

Department Store Business

34,367

64.9

PARCO Business
PARCO Business

S$4 million

64.9

NEUVE A Co., Ltd.

490

64.9

PARCO Business

PARCO SPACE SYSTEMS Co., Ltd.

490

64.9

PARCO Business

PARCO Digital Marketing Co., Ltd.

10

64.9

PARCO BusinessJAPAN RETAIL ADVISORS Co., Ltd.

10

64.9

PARCO Business

JFR Card Co., Ltd.

100

100.0

Credit and Finance Business

Daimaru Kogyo, Ltd.

1,800

100.0

Wholesale Business

Daimaru Kogyo International Trading(Shanghai) Co., Ltd.

US$2 million

100.0

Wholesale Business

Daimaru Kogyo (Thailand) Co., Ltd.

THB202 million

99.9

Wholesale BusinessTaiwan Daimaru Kogyo, Ltd.

NT$60 million

100.0

Wholesale Business

100

100.0

Design and construction
contracting and manufactureand sale of furniture

J. Front Design & Construction Co., Ltd.
Dimples’ Co., Ltd.

90

100.0

Staffing service

J. Front Foods Co., Ltd.

100

100.0

Restaurant

Consumer Product End-Use ResearchInstitute Co., Ltd.

450

100.0

Merchandise test and quality
controlAngel Park Co., Ltd.

400

50.2

Parking

JFR Service Co. Ltd.

100

100.0

Commissioned back-officeservice, leasing and parking
management

JFR Information Center Co., Ltd.

10

100.0

Information service

Daimaru Matsuzakaya Sales Associates Co.
Ltd.

90

100.0

Commissioned sales and store
management operations

Daimaru Matsuzakaya Tomonokai Co.,
Ltd.

100

100.0

Specified prepaid transaction
serviceJFR Online Co. Ltd.
100
100.0
Direct marketing(Notes) 1. All business operations of JFR Online Co. Ltd. were transferred to Feel Life Inc., a wholly owned subsidiary of
Senshukai Co., Ltd. on March 1, 2017.
2. The Company transferred all shares of Forest Co., Ltd. on August 31, 2017.
3. JFR PLAZA Inc. completed liquidation on December 31, 2017.

(iii) Matters relating to specified wholly-owned subsidiaries(Millions of yen)
Name
Daimaru Matsuzakaya
Department Stores Co. Ltd.

Address
18-11 Kiba 2-chome, Koto-ku, Tokyo- 30 -

Total book value

Total assets of theCompany

222,130

421,361(7) Major businesses
The Department Store Business, the PARCO Business, the Real Estate Business, the Credit and
Finance Business, and Other including wholesale business, design and construction contracting,manufacture and sale of furniture, parking, and leasing.
(8) Major sales offices(Department Store Business)
Name

Location

Name

Location

Daimaru Matsuzakaya
Department Stores Co. Ltd.
Head Office
Daimaru Osaka Shinsaibashi store
Osaka Umeda store

Koto-ku, Tokyo
Chuo-ku, Osaka
Kita-ku, Osaka

Tokyo store

Chiyoda-ku, Tokyo

Kyoto store
Yamashina store

Shimogyo-ku, Kyoto
Yamashina-ku, Kyoto

The Hakata Daimaru, Inc.

Chuo-ku, Fukuoka

Kobe store

Chuo-ku, Kobe

The Shimonoseki Daimaru, Inc.

Suma store

Suma-ku, Kobe

Shimonoseki,
Yamaguchi

Ashiya store
Sapporo store

Ashiya, Hyogo
Chuo-ku, Sapporo

Kochi Daimaru Co., Ltd.

Kochi, Kochi

Matsuzakaya

Nagoya store
Ueno store
Shizuoka store
Takatsuki store
Toyota store

Naka-ku, Nagoya
Taito-ku, Tokyo
Aoi-ku, Shizuoka
Takatsuki, Osaka
Toyota, Aichi(PARCO Business)
Name

Location

Name

PARCO Co., Ltd.
Headquarters
Shibuya Head Office
Sapporo PARCO
Sendai PARCO
Utsunomiya PARCO
Urawa PARCO
Shintokorozawa PARCO
Ikebukuro PARCO
PARCO_ya Ueno
Shibuya PARCO
Hibarigaoka PARCO
Kichijoji PARCO
Chofu PARCO
Tsudanuma PARCO

Toshima-ku, Tokyo
Shibuya-ku, Tokyo
Chuo-ku, Sapporo
Aoba-ku, Sendai
Utsunomiya, Tochigi
Urawa-ku, Saitama
Tokorozawa, Saitama
Toshima-ku, Tokyo
Taito-ku, Tokyo
Shibuya-ku, Tokyo
Nishi-Tokyo, Tokyo
Musashino, Tokyo
Chofu, Tokyo
Funabashi, Chiba

NEUVE A Co., Ltd.

Shibuya-ku, Tokyo

Location

Matsumoto PARCO
Shizuoka PARCO
Nagoya PARCO
Hiroshima PARCO
Fukuoka PARCO
Kumamoto PARCO
Sapporo ZERO GATE
Nagoya ZERO GATE
Kyoto ZERO GATE
Shinsaibashi ZERO GATE
Dotonbori ZERO GATE
Hiroshima ZERO GATE
PediSHIODOMEPARCO SPACE SYSTEMS Co.,Ltd.

Matsumoto, Nagano
Aoi-ku, Shizuoka
Naka-ku, Nagoya
Naka-ku, Hiroshima
Chuo-ku, Fukuoka
Chuo-ku, Kumamoto
Chuo-ku, Sapporo
Naka-ku, Nagoya
Shimogyo-ku, Kyoto
Chuo-ku, Osaka
Chuo-ku, Osaka
Naka-ku, Hiroshima
Minato-ku, Tokyo
Shibuya-ku, Tokyo

PARCO Digital Marketing Co., Ltd. Shibuya-ku, Tokyo
Parco (Singapore) Pte Ltd
Singapore(Note)The Shibuya PARCO was closed temporarily for rebuilding. We plan to reopen it in 2019.

(Real Estate Business)
Name

Location

Daimaru Matsuzakaya Department Stores Co. Ltd.
GINZA SIX
Ueno Frontier Tower

Chuo-ku, Tokyo
Taito-ku, Tokyoand others- 31 -(Credit and Finance Business)
Name

Location

JFR Card Co., Ltd.

Head Office: Takatsuki, Osaka
Office:Tokyo 2, Osaka 2, Kyoto 1, Kobe 1, Sapporo 1, Nagoya 1,
Shizuoka 1(Other subsidiaries)
Head Office: Osaka 9, Nagoya 1, Shanghai 1, Thailand 1, Taiwan 1(9) Status of employees(i) Employees of the corporate group
Category

Number of employees

J. FRONT RETAILING Co., Ltd.

99

Department Store Business

2,469

PARCO Business

1,508Real Estate Business

45

Credit and Finance Business

119

Other
(Note)

2,483
Total
6,723
Other than the employees above, a period average of 1,573 dedicated employees were shifted to non-fixed
term contracts starting June 1, 2017, and the total of fixed-term employees was 2,133.

(ii) Employees of the Company
Number of employees(Note)

Average age

99
46.0
Other than the employees above, the average number of dedicated employee during the period is 1 and thenumber of fixed-term employees is 14.

(iii) Employees of major subsidiaries
Name
Daimaru Matsuzakaya
Department Stores Co. Ltd.

Number of
employees

Average age

2,000

46.8

466

40.8

PARCO Co., Ltd.

(10) Status of major creditors
Major creditors of the corporate group
Creditor
The Bank of Tokyo-Mitsubishi UFJ,
Ltd.

Amount payable
31,950Creditor(Millions of yen)Amount payable

Mizuho Bank, Ltd.

Sumitomo Mitsui Banking
Sumitomo Mitsui Trust Bank,
14,020
Corporation
Limited(Note)The Bank of Tokyo-Mitsubishi UFJ, Ltd. changed its bank name to MUFG Bank, Ltd. on April 1, 2018.

(11) Other important matters relating to current status of the corporate group
No items to report.

- 32 -

10,9398,526

2. Matters relating to shares of the Company(1) Number of shares authorized:
1,000,000,000 shares(2) Number of shares issued:

270,565,764 shares(3) Number of shareholders:

100,931(4) Major shareholders
Number of shares held(Thousands of shares)

Shareholding ratio(%)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

19,743
14,727
7,862
6,273
5,732
5,624

7.47
5.57
2.97
2.37
2.17
2.13

Trust & Custody Services Bank, Ltd. (Investment Trust Collateral
Account)

5,286

2.00

Japan Trustee Services Bank, Ltd. (Trust Account 9)

4,870
4,494
4,228

1.84
1.70
1.60

Name of shareholders
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Nippon Life Insurance Company
J. Front Retailing Kyoei Supplier Shareholding Association
The Dai-ichi Mutual Life Insurance Company

Japan Trustee Services Bank, Ltd. (Trust Account 5)

STATE STREET BANK WEST CLIENT - TREATY 505234(Note)
Shareholding ratio is calculated by deducting treasury shares (6,581 thousand shares). Treasury shares do notinclude shares of the Company owned by the officer remuneration BIP trust.

- 33 -

3. Matters relating to corporate officers(1) Names, etc. of Directors

Position in the Company

Name

Areas of responsibility in the Company
and important concurrent positions
outside the Company

Attendanceat themeetings ofthe Board of
Directors

Limitedliability
agreements(Note 2)

(Note 1)

Director

KOBAYASHI
Yasuyuki

Chairperson of the Board of Directors
Member of Nomination andRemuneration Committees
Director of PARCO Co., Ltd.

100%
14/14

Yes

Director

DOI Zenichi

Chairperson of Audit Committee
Outside Director of Hakuyosha Co., Ltd.

100%
14/14

Yes

Director

TSUTSUMI
HiroyukiMember of Audit Committee
Audit & Supervisory Board Member of
Daimaru Matsuzakaya Department Stores
Co. Ltd.

100%
11/11

Yes

Director (Outside)

Chairperson of Nomination Committee
and member of Remuneration Committee
President and Representative Director of
TACHIBANA
G&S Global Advisors Inc.
FUKUSHIMA Sakie Outside Director of Bridgestone
Corporation (retired in March 2018)
Outside Director of Ajinomoto Co., Inc.
Outside Director of USHIO INC.

100%
14/14

Yes

Director (Outside)

OTA Yoshikatsu

Chairperson of Remuneration Committee
and member of Nomination Committee
Honorary Advisor of KONICAMINOLTA, INC.

100%
14/14

Yes

Director (Outside)

Member of Nomination, Audit andRemuneration Committees
Attorney at law
TSURUTA Rokurou
Outside Director of TPR Co., Ltd.
Outside Member of the Board of
Directors of KYB Corporation

100%
14/14

Yes

Director (Outside)

ISHII Yasuo

Member of Audit Committee

100%
14/14

Yes

Director (Outside)

NISHIKAWA
Koichiro

Member of Audit Committee
Outside Director of Kyowa Hakko Kirin
Co., Ltd. (retired in March 2018)

100%
14/14

Yes

Director(President andRepresentative Executive
Officer)

YAMAMOTO
RyoichiMember of Nomination andRemuneration Committees

100%
14/14

Director (Representative
Managing Executive
Officer)

YOSHIMOTO
Tatsuya

100%
14/14

Director (Managing
Executive Officer)

MAKIYAMA Kozo

100%
14/14

Director (Managing
Executive Officer)

FUJINO Haruyoshi

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

100%
14/14

Director (Managing
WAKABAYASHI
100%
Executive Officer)
Hayato14/14(Notes) 1. Number of the meetings of the Board of Directors attended / Number of the meetings of the Board of Directors
held during the individual’s tenure this fiscal year (details of attendance at each committee meeting are given in
the following item (2).
2. The Company enters into agreements limiting liability for damages such that are stipulated in Paragraph 1,
Article 423 of the Companies Act, pursuant to Paragraph 1, Article 427 of the said Act, with the relevant
individuals (marked as “Yes” in the “Limited liability agreements” column). These agreements limit the- 34 -

amount of their liability for damages to the higher of either ¥12,000,000 or the minimum amount of liability
such that is stipulated in Paragraph 1, Article 425 of the said Act.
3. Audit Committee member TSUTSUMI Hiroyuki gained across-the-board experience into finance andaccounting and due insight into finance and accounting matters between 1981, his second year since joining
The Daimaru, Inc., and his appointment as Director of the Board in May 2017.
4. Audit Committee member NISHIKAWA Koichiro has due insight into financial matters, having been involved
in areas such as business alliances, M&A and management reform, and also through his experience in multiple
important international negotiations.
5. Chairperson of Audit Committee DOI Zenichi and Audit Committee member TSUTSUMI Hiroyuki are fulltime Audit Committee members. We aim to improve the effectiveness of supervisory roles by having as fulltime Audit Committee members two Directors from in-house who are Directors who do not execute business
and who have specialist knowledge of specific areas of our business based on a thorough understanding of inhouse organizations and business operations. The Chairperson of Audit Committee has been chosen fromamong internally promoted Directors who do not execute business from the standpoint of achieving a smoothtransition from the Audit & Supervisory Board system.

(2) Attendance at the meetings of each committee
Name
KOBAYASHI Yasuyuki

Nomination Committee

Audit Committee

100% (10/10)

Remuneration Committee
100% (9/9)

DOI Zenichi◎100% (12/12)

TSUTSUMI Hiroyuki

100% (12/12)

TACHIBANA FUKUSHIMA Sakie◎100% (10/10)

100% (9/9)

OTA Yoshikatsu

100% (10/10)◎100% (9/9)

TSURUTA Rokurou

90% (9/10)

100% (12/12)

ISHII Yasuo

100% (12/12)

NISHIKAWA Koichiro

100% (12/12)

88% (8/9)

YAMAMOTO Ryoichi
100% (10/10)
100% (9/9)(Note) The “◎” mark indicates Chairperson. (**/**) indicates number of the meetings of each committee attended /number of the meetings of each committee held during the individual’s tenure this fiscal year.

- 35 -

(3) Names, etc. of Executive Officers
Areas of responsibility in the Company and important concurrent
positions outside the Company

Position in the Company

Name

President andRepresentative Executive
Officer

YAMAMOTO
Ryoichi

Representative Managing
Executive Officer

YOSHIMOTO
TatsuyaPresident and Representative Director of Daimaru Matsuzakaya
Department Stores Co. Ltd.
President and Representative Director of Daimaru Matsuzakaya Sales
Associates Co. Ltd.

Managing Executive Officer MAKIYAMA Kozo

Director, President and Representative Executive Officer of PARCO
Co., Ltd.

Managing Executive Officer FUJINO Haruyoshi

Senior Executive General Manager of Management Strategy Unit andin charge of Risk Management

WAKABAYASHI
HayatoSenior Executive General Manager of Financial Strategy Unit and in
charge of Financing and Finance Policy

Managing Executive Officer

Managing Executive Officer ARISAWA Hisashi

Senior Executive General Manager of Affiliated Business UnitManaging Executive Officer MURATA Soichi

Senior Executive General Manager of Administration Unit and in
charge of Compliance

Executive Officer

MAKITA Takayuki

Senior General Manager of Management Planning Division

Executive Officer

NAKAYAMA
TakashiSenior General Manager of Group Digital Strategy Division and New
Business Division, Management Strategy Unit

Executive Officer

IWATA Yoshimi

Senior General Manager of Budget and Management Support,
Financial Strategy Unit

Senior General Manager of Group Human Resources Division and in
charge of Group Human Resources, Human Resource Development
TADATSU
Executive Officer
and Recruitment, Administration Unit
Takehiko
Executive Officer and Senior General Manager of Human Resources
Division of Daimaru Matsuzakaya Department Stores Co. Ltd.
(About executive retirements)
On January 30, 2018, Executive Officer IMAZU Takahiro retired from office andassumed the position of Executive Officer of Daimaru Matsuzakaya Department Stores
Co. Ltd. (Executive Store Manager of Daimaru Osaka Umeda).
(Reference)On March 1, 2018, following three persons were newly appointed to the position of Executive Officer.
Areas of responsibility in the Company and importantName
concurrent positions outside the Company
NINOBE Mamoru

President and Representative Director of JFR Card Co., Ltd.

KONDO Yasuhiko

President and Representative Director of J. Front Design &Construction Co., Ltd.

ONO Keiichi

President and Representative Director of Dimples’ Co., Ltd.

(4) Total amount of remuneration, etc. to Directors, Audit & Supervisory Board Members, andExecutive Officers

Number ofpayeesDirector[of which, Outside Director][

Audit & Supervisory Board
Member[of which, Outside Audit &Supervisory Board Member][

Total amount of
remuneration,
etc.
(Millions of yen)

13

202

5]

[ 68]

5

10
5]

Totals by category of remuneration, etc.
(Millions of yen)
NonPerformance
performanceBasic-linkedBonuses
linked stockremuneration
stock-based
based
remuneration
remuneration
[

-

-

38

56]

-

-

10

-

-

-

5]

-

-

-

[

11]

3]

[

Executive Officer

12

373

151

118

103

-

Total

22

587

326

118

103

38

- 36 -[

164

(Notes)

1. Other than the above, the total amount of remuneration, etc. received by Outside Audit & Supervisory Board
Members from subsidiaries of the Company in the current fiscal year is ¥2 million.
2. The maximum remunerations for Directors and for Audit & Supervisory Board Members before transition to acompany with three committees (nomination, audit and remuneration committees) are set at ¥50 million permonth and ¥7 million per month, respectively. (both owing to resolution of the Annual Shareholders Meeting
held in May 2008).
3. At the 10th Annual Shareholders Meeting held on May 25, 2017, five Audit & Supervisory Board Members
resigned their posts on the same day due to our shift to the company-with-nomination-committee framework.
The totals given in the above chart for payees and in remuneration, etc., are the totals of Audit & Supervisory
Board Members serving between March 1, 2017 and May 25, 2017, and of remuneration for their performanceof duties during the period.
In the above table, the basic remuneration for Directors of ¥164 million includes ¥51 million (including ¥5million for Outside Directors) paid to nine Directors (two of whom are Outside Directors) who held the post
between March 1 and May 25, 2017.
4. Sums of remuneration, etc., for performance of duties paid to Directors who concurrently hold other posts are
given in the Executive Officer row.
5. Beginning in the fiscal year under review, the Company has adopted an officer remuneration BIP (Board
Incentive Plan) trust (a system of granting the Company’s shares to officers (in certain cases, the Company’s
shares are converted into cash within the trust and cash in the amount equivalent to their conversion value ispaid) in accordance with the officers’ rank and level of achievement of the Medium-term Business Plan, etc.)
as a performance-linked, share-based payment to ensure steady execution and progress of the Medium-term
Business Plan. The stock-based remuneration in the above chart is the total recorded as expenses for the period
under review according to Japanese accounting standards. It is divided into performance-linked stock-based
remuneration corresponding to degree of achievement of single fiscal year results and degree of achievement of
the Medium-Term Business Plan targets, as well as non-performance-linked stock-based remuneration for
Directors who do not execute business.
6. At the time of the transition to a company with three committees (nomination, audit and remunerationcommittees), the 22 payees elected as Directors after resigning as Audit & Supervisory Board Members arereported without duplication.

(5) Outline of method for determining policy regarding decisions on amounts of remuneration, etc.
of each corporate officer or calculation method thereof, and contents of such policy(i) Policy on determining remuneration for Directors and Executive Officers
To ensure steady execution of the Medium-term Business Plan for realizing the new Group
Vision, the Company has formulated the new Officer Remuneration Policy including the
introduction of a stock-based remuneration system for officers. The basic policy regarding the
Officer Remuneration Policy are as follows.
• Contribute to the sustainable growth of the JFR Group and increase corporate value over the
medium to long term.
• A highly performance-based remuneration system that provides incentives to Executive
Officers both for accomplishing objectives set under management strategies and businessplans, and for achieving targets with respect to corporate performance.
• Remuneration levels that can secure and retain personnel who have the desirable managerial
talent qualities required by the Company.
• Increase shared awareness of profits with shareholders and awareness of shareholder-focusedmanagement.
• Enhanced transparency and objectivity in the remuneration determining process.
(ii) Procedures for determining remuneration for Directors and Executive Officers
To ensure the appropriateness of the level and amount of remuneration, and the transparencyof decision-making processes, independent Outside Directors account for the majority, anddecisions are made by deliberation and resolution of a Remuneration Committee headed by anindependent Outside Director.
It is planned that the Remuneration Committee shall meet at least four times a year. Futurerevisions of the executive remuneration system will be undertaken based on Medium-TermBusiness Plan periods.

- 37 -

(iii) Composition of remuneration for Executive Officers and Directors who do not execute business<Executive Officer>
Remuneration for Executive Officers shall comprise (i) basic remuneration (monetary
remuneration) in accordance with rank (position), (ii) bonuses (monetary remuneration) basedon individual evaluations conducted each business year, and (iii) performance shares linked tothe consolidated performance achievement rate, etc. provided in the Medium-term Business Plan
as a stock-based remuneration system.
<Director who do not execute business>
Remuneration for Directors who do not execute business shall consist only of fixed
remuneration, which shall be (i) basic remuneration (monetary remuneration) in accordance withrank (position) and (ii) restricted stock, which is not linked to performance, as part of the stockbased remuneration system.

(6) Matters relating to Outside Directors
Important concurrent positions

TACHIBANA
FUKUSHIMA Sakie
independent(Note)

Relationships between the Company
and organizations where importantconcurrent positions are held
Relationship with specified affiliatedbusiness operator
Attendance at the meetings of theBoard of Directors
Attendance at the meetings ofCommittees to which she belongs

President and Representative Director of G&S Global
Advisors Inc.
Outside Director of Bridgestone Corporation (retired in
March 2018)
Outside Director of Ajinomoto Co., Inc.
Outside Director of USHIO INC.
No special relationships exist
No items to report
100% (Attended all 14 meetings held during tenure thisfiscal year)
Nomination
100% (Attended all 10 meetings held
during tenure this fiscal year)
Remuneration 100% (Attended all 9 meetings held
during tenure this fiscal year)[Major activities during current fiscal year]
Tachibana Fukushima Sakie contributes to ensuring more effective meetings of the Board of Directors by drawing on pointsof view and perspectives that vary from those of the Internal Directors in providing advice and oversight. She does so basedon her abundant experience and knowledge in internal and external governance gained as a director at a U.S. company’s
global headquarters and as an outside director at numerous Japanese companies, and using her corporate management
experience and in-depth knowledge regarding global human resources gained as the president of a foreign-owned humanresource consulting company’s local Japanese branch.
Moreover, serving as the Chairperson of Nomination Committee, she strives to enhance functional capabilities ofmanagement personnel through means such as promoting deliberations on succession plans, decision of officer appointment
drafts for the Company and its major subsidiaries, assessment of the talent pool for executive management candidates whowill be forging the future, and consideration of training opportunities to gain necessary knowledge for the fulfillment of theroles and responsibilities of the management team, etc.

- 38 -OTA Yoshikatsu
independent(Note)

Important concurrent positions
Relationships between the Company
and organizations where importantconcurrent positions are held
Relationship with specified affiliatedbusiness operator
Attendance at the meetings of theBoard of Directors
Attendance at the meetings ofCommittees to which he belongs

Honorary Advisor of KONICA MINOLTA, INC.
No special relationships exist
No items to report
100% (Attended all 14 meetings held during tenure thisfiscal year)
Nomination
100% (Attended all 10 meetings held
during tenure this fiscal year)
Remuneration 100% (Attended all 9 meetings held
during tenure this fiscal year)[Major activities during current fiscal year]
Ota Yoshikatsu contributes to ensuring more effective meetings of the Board of Directors by drawing on points of view andperspectives that vary from those of the Internal Directors in providing advice and oversight with respect to promoting
Group management, holding company functions for a company with three committees (nomination, audit and remunerationcommittees) and other such matters. He does so based on his extensive experience and abundant knowledge as a corporate
manager, underpinned by his background which includes promoting the corporate merger between Minolta Co., Ltd. andKonica Corporation, acting as a manager of a company that, like this Company, is a holding company, and serving as achairman of the board of directors of a company with nominating and other committees.
Moreover, serving as the Chairperson of Remuneration Committee, he strives to enhance functional capabilities ofmanagement personnel through means such as promoting establishment of transparent and objective decision processes
concerning remunerations, determination of specific remuneration amounts, review and revision of assessment systems for
directors’ bonuses, etc.
Important concurrent positions
Attorney at law
Outside Director of TPR Co., Ltd.
Outside Member of the Board of Directors of KYB
Corporation
Relationships between the Company
No special relationships exist
and organizations where importantconcurrent positions are held
Relationship with specified affiliatedNo items to report
TSURUTA Rokurou business operator
Attendance at the meetings of the
100% (Attended all 14 meetings held during tenure thisindependent
Board of Directors
fiscal year)(Note)
Attendance at the meetings ofNomination
90% (Attended 9 of the 10 meetings
Committees to which he belongs
held during tenure this fiscal
year)
Remuneration 88% (Attended 8 of the 9 meetings
held during tenure this fiscal
year)
Audit
100% (Attended all 12 meetings held
during tenure this fiscal year)[Major activities during current fiscal year]
Tsuruta Rokurou contributes to ensuring more effective meetings of the Board of Directors by actively and assertively
furnishing advice, recommendations and other feedback to the Board of Directors, with respect to matters such as regulatorycompliance in managing operations such as internal controls and audits, as well as legal risks associated with managing
operations. He does so based on his in-depth understanding of legal affairs as a legal professional. In addition, he serves as amember of the Nomination and Remuneration Committees, and contributes to ensuring transparency and objectivity inregard to enhancing functional capabilities of management personnel such as in the realm of officer elections and thedetermination of individual remunerations.
Moreover, his input in the meetings of the Audit Committee has included exchanging opinions and deliberating on theexecution of business by Directors and Executive Officers and matters submitted to the Board of Directors and otherindividual matters from the perspective of organizational audit while striving to enhance functional capabilities of audits.

- 39 -

Important concurrent positions
No items to report
Relationships between the Company
No special relationships exist
and organizations where importantconcurrent positions are held
ISHII Yasuo
Relationship with specified affiliatedNo items to report
independent
business operator(Note)
Attendance at the meetings of the
100% (Attended all 14 meetings held during tenure thisBoard of Directors
fiscal year)
Attendance at the meetings of
Audit
100% (Attended all 12 meetings held
Committees to which he belongs
during tenure this fiscal year)[Major activities during current fiscal year]
Ishii Yasuo contributes to ensuring more effective meetings of the Board of Directors by actively and assertively furnishing
advice, recommendations and other feedback to the Board of Directors, with respect to the ideal state of organizations at
headquarters, overall management strategy encompassing matters such as causing the Group Vision to take hold both within
and outside the Company and enhancing functional capabilities of execution. He does so based on his abundant experiencein the field of global management outside the retail industry and suitable knowledge attained through his long career in the
management planning field, along with his longstanding experience working abroad, encompassing expertise in developing
business overseas.
Moreover, his input in the meetings of the Audit Committee has included exchanging opinions and deliberating on theexecution of business by Directors and Executive Officers and matters submitted to the Board of Directors and otherindividual matters from the perspective of organizational audit while striving to enhance functional capabilities of audits.
Important concurrent positions
Outside Director of Kyowa Hakko Kirin Co., Ltd.
(retired in March 2018)
Relationships between the Company
No special relationships exist
and organizations where important
NISHIKAWA
concurrent positions are held
Koichiro
Relationship with specified affiliatedNo items to report
independent
business operator(Note)
Attendance at the meetings of the
100% (Attended all 14 meetings held during tenure thisBoard of Directors
fiscal year)
Attendance at the meetings of
Audit
100% (Attended all 12 meetings held
Committees to which he belongs
during tenure this fiscal year)[Major activities during current fiscal year]
Nishikawa Koichiro contributes to ensuring more effective meetings of the Board of Directors by actively and assertively
furnishing advice, recommendations and other feedback to the Board of Directors, with respect to matters such as
identifying uncertainty factors and considering from a compliance aspect regarding new business and M&As and tracking
progress of management strategies in that regard, as well as upgrading results verification. He has been involved in businessalliances, M&A activities, management reforms and other such endeavors, and also has suitable knowledge from a financial
perspective gained through his experience being involved in important international negotiations on many occasions.
Moreover, his input in the meetings of the Audit Committee has included exchanging opinions and deliberating on theexecution of business by Directors and Executive Officers and matters submitted to the Board of Directors and otherindividual matters from the perspective of organizational audit while striving to enhance functional capabilities of audits.
(Note) The above-mentioned Outside Directors are independent officers, which are required to be put in place by the Tokyo
Stock Exchange, Inc. and Nagoya Stock Exchange, Inc. for the protection of general shareholders.

- 40 -

4. Matters relating to Accounting Auditor(1) Name of Accounting Auditor
Ernst & Young ShinNihon LLC(2) Amount of remuneration, etc. of Accounting Auditor(i) Amount of remuneration, etc. to be paid by the Company¥126 million(ii) Total cash and other financial profits to be paid by the Company and its¥231 million
subsidiaries(Notes) 1. Among the significant subsidiaries of the Company, PARCO Co., Ltd. and its five subsidiaries areaudited by auditing firms other than the Accounting Auditor of the Company. PARCO Co., Ltd. isaudited by KPMG AZSA LLC.
2. The audit agreement entered into by the Accounting Auditor and the Company does not clearly
distinguish the amount 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 bepractically distinguished from each other. Therefore, the amount in (i) above indicates the total of thesetwo kinds of amounts.

(3) Content of non-audit service
Consulting service for the International Financial Reporting Standards (IFRS), etc.
(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 ofduties, 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 a decision on proposals
to dismiss or not reappoint the Accounting Auditor submitted to the Shareholders Meeting, in theevent 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 Article 340, Paragraph
1 of the Companies Act of Japan, or if a situation arises whereby the audit of the Company has beensignificantly 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 ofcomprehensive 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, as well as comparison with other audit firms in terms of its
independence, expertise, capabilities of execution of duties and status of compliance with laws andregulations.
5. Basic ideas on corporate governance(1) Role of corporate governanceWe believe that ensuring sustainable growth of the JFR Group and increasing corporate value overthe medium to long term is paramount to realizing ideals of the Group Philosophy. Accordingly, therole of corporate governance in the JFR Group must be to help enable us to realize the ideals of theGroup Philosophy.
The Company assumes responsibility as a pure holding company for ensuring managerialtransparency, soundness and compliance centered on corporate governance of the JFR Group, with theaim of realizing the ideals of the Group Philosophy.
- 41 -

(2) Relationship with shareholders
Our shareholders are the providers of the Company’s capital and act as the main source of the JFRGroup’s corporate governance. Accordingly, the Company respects shareholder rights to the
maximum extent (including those of minority shareholders and foreign shareholders), andsubstantively ensures their rights.
The Company treats its shareholders equitably and impartially, in accordance with types andnumbers of shares held by shareholders. Moreover, neither the Company nor the JFR Group provides
property benefits to any person, such that relate to the exercise of the rights of specific shareholders.
(3) Information disclosure
We believe that promoting constructive dialogue with our shareholders and investors helps the JFRGroup achieve sustainable growth while increasing corporate value over the medium to long term.
The Company is committed to timely and appropriate disclosure of information premised on
constructive dialogue, and through such initiatives maintains and develops trusting relations with its
stakeholders.
The Company discloses important information of the JFR Group in a timely and appropriatemanner, in accordance with Japan’s Financial Instruments and Exchange Act and other such laws andregulations, as well as in accordance with rules for timely disclosure stipulated by financial
instruments exchanges on which the Company’s shares are listed. Even in cases where such laws,
regulations and the timely disclosure rules do not apply, the Company recognizes information deemeduseful to shareholders, investors and other stakeholders as important with respect to its corporate
activities as called for by society. As such, the Company proactively discloses such information in an
impartial and swift manner using appropriate means, and with the added aim of facilitating more
extensive understanding regarding the JFR Group.
(4) Roles and responsibilities of the Board of Directors, etc.
Directors, who were appointed by the shareholders and were entrusted with management of theCompany, carries out the roles and responsibilities in the Board of Directors as listed below. They doso in accordance with their fiduciary responsibility and accountability to shareholders, and with theaim of realizing the ideals of the Group Vision. Accordingly, these roles and responsibilities include:(i)

Indicating the overall direction that Group management is to take, by engaging in constructive
discussions with respect to the Group Vision, Group Medium-term Business Plan, GroupManagement Policy and other management fundamental policies, and carrying out multifacetedand objective deliberations that include evaluation of risks with respect to the aforementioned;(ii) Appropriately making decisions in terms of overall policy and plans pertaining to Groupmanagement on the basis of the direction noted above and overseeing progress and results of theplans;(iii) Developing an environment conducive to encouraging offense-oriented management geared toachieving discontinuous growth;(iv) Taking steps to build and develop internal control systems of the JFR Group overall, andotherwise overseeing the operational status of such systems;(v) Overseeing conflicts of interest between related parties; and(vi) On the basis of summary reports furnished by the Nomination Committee, overseeing progressof senior management team succession planning, personnel assignment plans pertaining tomanagerial talent and management team training, as delegated to the Nomination Committee.
The Company is currently adopting a company with three committees (nomination, audit andremuneration committees) as organizational structure. The reasons are as follows.
(i)

The Company will strengthen the oversight function for business execution of the Board of
Directors by separating oversight from execution. In addition, the Company aims to promotesophistication of strategy by having the Board of Directors actively include the insights of- 42 -

external persons in order to hold rigorous discourse on important strategic issues relating to theGroup management.
(ii) The Company will enable decisions of business execution to be delegated to Executive Officers,
clarify the authority and responsibility, and carry out speedy management decision making.
(iii) The Company will improve the transparency and objectivity of management by transitioning to acompany with three statutory committees (nomination, audit and remuneration committees). The
majority of the members of each of these committees are outside officers.
(iv) The Company will build a governance structure that is easy to understand from global
perspectives, such as those of overseas investors.
6. Operation of the Board of Directors
Composition of the Board

8 Directors who do not execute business (including 5 Outside Directors) and 5
Directors who concurrently serve as Executive Officer

Major roles

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, Group
Medium-term Business Plan, Group Management Policy, and matters relating to
new business development and M&As.

Operational status

Held at least once every month, in principle. With one-third or more of Directors
being independent Outside Directors, the Board of Directors functions as a venue
for constructive discussions and deliberations, beyond being solely a decisionmaking body for important matters, and is a key to the enhancement of corporate
governance.

Comment from Chairperson of
the Board of Directors

Fiscal 2017 was the first year of the Group Medium-term Business Plan and Group
Vision. In addition to carrying out matters defined in the Companies Act and/or the
Articles of Incorporation, the Board of Directors oversaw business execution
through the confirmation of progress status of individual strategy set forth in theGroup Medium-term Business Plan.
At the meetings of the Board of Directors, we deliberated on “matters to beresolved,” “matters to be reported,” as well as “matters to be discussed,” where wetook time to talk about whether there are delays in initiatives, in response to a
progress report by Executive Officer in charge of the operation, and issues when aprogress report shows a deviation from target amount, etc., striving to enhancefunctional capabilities of oversight by the Board of Directors.
Moreover, by ensuring that matters and issues pointed out at a Board of Directors
meeting will be reported and discussed by responsible Executive Officer at a future
meeting, we realized a consistent PDCA cycle to improve the effectiveness of theBoard of Directors.
We endeavor to continue into this year to fully exert functional capabilities ofmanagement oversight by the Board of Directors, and strive to contribute to theincrease in corporate value through realization of the Group Vision andachievement of the Group Medium-term Business Plan.

Chairperson of the Board of
Directors
Director
KOBAYASHI Yasuyuki(Evaluation of effectiveness of the Board of Directors)
In August 2017, the Company performed the third evaluation of the effectiveness of the Board of
Directors. The evaluation was done by collecting and analyzing results of “individual interviews” and“direct observation of the Board of Directors” conducted by a third party organization, and reportingthem to the Board of Directors meeting in October for discussion about issues. Evaluation items
include contribution of the Board of Directors to the entire Group, composition of the Board of
Directors, content of deliberations at the Board of Directors. In addition, as this year was the firstfiscal year following the transition to a company with three committees (nomination, audit andremuneration committees), progress status of corporate governance structure after the transition, theeffectiveness of functions of each Committee and other items were also evaluated.
As a result of tireless efforts to address issues on the basis of belief that the Board of Directors is a
key to governance, significant improvements were seen in the “contribution of the Board of Directors
to the entire Group,” “selection of appropriate agenda items and carrying out of essential discussion,”and “contribution of each Director to deliberations.” The “enhancement in corporate governance- 43 -

through a change in organizational structure” and “contribution of each Committee to the Board of
Directors” were also highly evaluated.
Meanwhile, as there were opinions asking for improvement in planning and proposal capabilities ofthe management, expecting the Board of Directors to further enhance its effectiveness, we worked toreview deliberation materials, aiming for improvement in planning and proposal precision from theviewpoint of a shareholder. Moreover, in response to voices that it is necessary to strengthen the
management of the Group companies, we addressed the issue by having management personnel ofthree major operating companies concurrently serve as Executive Officers of the Company.
We will strive to continue into this fiscal year to share the issues based on the evaluation of theeffectiveness of the Board of Directors, and ensure the effectiveness of the Board of Directors.
7. Operations of each Committee(1) Nomination Committee
Composition of Committee

4 Directors who do not execute business (including 3 Outside Directors) and 1
Director who concurrently serves as Representative Executive Officer

Major roles

The Nomination Committee determines the contents of proposals on thenomination and dismissal of Directors submitted to shareholders’ meetings, andreports to the Board of Directors upon consultations from the Board of Directors
regarding the nomination and dismissal of management personnel of theCompany and major business subsidiaries, as well as the chairpersons andmembers of individual committees, and other matters.

Number of meetings held /Number of meetings attended

10 / 4 out of 5 members attended all 10 meetings held during tenure this fiscal
year. With regard to the remaining 1 member, the number of absences is only 1,
and the contents of deliberations at the missed meeting have been separately
explained, and information has been shared.

Comment from Chairperson of
the Nomination Committee

The Nomination Committee ensures the objectivity, transparency and rationality
not only for election of Directors including Outside Directors but also for electionof Executive Officers of the Company and Executive Officers of major businesssubsidiaries. This involves utilizing in-house personnel information as well as
assessment data by a third party organization, and obtaining opportunities to get
to know candidate’s personalities and ideas through conducting interviews, etc.,
as necessary.
Moreover, the Nomination Committee has been carrying out a series of
discussions on top management succession plans, examining schemes tosystematically develop the next generation of officer candidates and confirming
the status of achievements by the candidates.
The Nomination Committee will secure personnel necessary for continuous
growth and development of the Company, and strive for the election of the right
person in the right place.

Chairperson of the Nomination
Committee
Director (Outside)
TACHIBANA FUKUSHIMA
Sakie- 44 -

(2) Audit Committee
Composition of Committee

5 Directors who do not execute business (including 3 Outside Directors)

Major roles

In accordance with the overall policy and plan determined by the Board of
Directors, the Audit Committee audits the execution of business by Directors andExecutive Officers, important matters submitted to the Board of Directors, andother individual matters the Audit Committee considers necessary.

Number of meetings held /Number of meetings attended

12 / 5 committee members attended all 12 meetings held during tenure this fiscal
year.

Comment from Chairperson of
the Audit Committee

The Audit Committee, in accordance with the Rules of Audit Committee, Audit
Standards, and Practice Standards for Audit concerning Internal Control System,
etc., formulated an audit plan for the current fiscal year, conducted the audit andreported its contents to the Board of Directors. In particular, the Audit Committee
cooperated closely with the Internal Audit Division, Accounting Auditor andauditors of the Group companies to audit the developmental and operational status
of internal control systems established by the Board of Directors, and the progressstatus of key strategies in the first year of the Group Medium-term Business Plan,
as key audit items of the Audit Committee.
Moreover, the Audit Committee performed assessments on Ernst & Young
ShinNihon LLC, by comparing it with other audit firms’ quality management andexpertise, based on the Accounting Auditor Selection Standards, newly
established by the Audit Committee.

Chairperson of the Audit
Committee
Director
DOI Zenichi(3) Remuneration Committee
Composition of Committee

4 Directors who do not execute business (including 3 Outside Directors) and 1
Director who concurrently serves as Representative Executive Officer

Major roles

The Remuneration Committee determines the policy on deciding the contents ofindividual remuneration to management personnel of the Company and major
business subsidiaries, and these contents themselves.

Number of meetings held /Number of meetings attended

9 / 4 out of 5 members attended all 9 meetings held during tenure this fiscal year.
With regard to the remaining 1 member, the number of absences is only 1, and thecontents of deliberations at the missed meeting have been separately explained,
and information has been shared.

Comment from Chairperson of
the Remuneration Committee

The Remuneration Committee achieved an appropriate allocation between basic
remuneration and performance-based remuneration (bonuses and stock-based
remuneration), and also disclosed performance indexes that will determine the
Chairperson of the Remuneration level of stock-based remuneration in the Officer Remuneration Policy resolved on
Committee
May 25, 2017.
For bonuses, which reflect the status of individual officer’s achievements, theDirector (Outside)
Remuneration Committee formulated a new performance evaluation sheet and has
adopted it from fiscal 2018, after revising evaluation items, performance indexes
OTA Yoshikatsu
and the evaluation rank determination process so that results will be shown withgreater fairness and objectivity.
In addition, as entering into the first year when stock is to be granted asremuneration, the Remuneration Committee has been working on the verificationof the stock-based remuneration system for officers for appropriate operation asplanned.
The Remuneration Committee will continue to strive for the operation of a fairand highly rational remuneration system.

8. IR Policy
Under the basic philosophy that “we aim at developing the Group by making a broad contribution tosociety as a fair and trusted business entity,” the Company promotes IR activities for the purpose ofmaintaining and developing relations of trust with stakeholders including shareholders and investors. By
accurately and plainly disclosing important information about the Company in a fair, timely andappropriate manner, we aim to improve management transparency and help stakeholders better
understand the Company.

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9. System and policies of the Company(1) Systems to ensure properness of operations <Basic Policy to Build Internal Control System>(Revised on August 27, 2017)
This is a basic policy relating to building an internal control system for appropriate execution of
overall business within the corporate group comprising J. FRONT RETAILING Co., Ltd. and its
operating companies. By specifically promoting this policy, the Group aims to contribute to increasing
corporate value.
 J. Front Retailing aims to realize corporate governance that is a structure for transparent, fair,swift and resolute decision-making with due attention to the perspectives of shareholders andalso customers, employees and communities in order to ensure the sustainable growth of the JFRGroup and increase corporate value over the medium to long term. The Company has therefore
adopted the company with three committees (nomination, audit, and remuneration committees)in order to strengthen the oversight function and decision-making function for businessexecution of the Board of Directors by clearly separating management oversight and executionfunctions.
 In order to achieve our best possible corporate governance structure, it is important that the
President and Executive Officer takes and hedges various risks (uncertainties) within thecorporate group to build an internal control system capable of appropriate and efficient businessexecution.
 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 systemcomprises the following Group management system, risk management system, legal compliancesystem, 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’
and Directors’ 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, Group Medium-term Business Plan,
overall policy and plan for Group management, M&As, Group financing plans, and otherindividual important matters relating to Group management. In order to speed up businessdecisions and execution, the task of determining matters involving business execution other than
the above shall be delegated to execution, with the exception of matters which have a material
impact on Group management.
 For monitoring action, decision making and the like by the Board of Directors, a certain number
or more of highly independent Outside Directors shall be appointed, having no risk of a conflictof interest with the Company’s shareholders, and being able to provide judgments independently
from top management and make decisions appropriately.
 To ensure effectiveness of objective management oversight, in addition to the Outside Directors,
internally promoted Directors who do not execute business and who are well informed about
internal information shall also be appointed.
 To further strengthen oversight function while conducting smooth operation of the Board of
Directors, an Internal Director who does not execute business shall be selected as thechairperson of the 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- 46 -

following framework.
 Each corporate division shall have a mission statement that clearly states its mission, and the
responsibilities of execution are clarified, such as the targets, roles, risks, and interdivisional
cooperation.
 Execution shall formulate the major Group management policies and individual importantmatters, and oversee business execution of operating companies. The Board of Directors shalldiscuss and determine (approve) the suitability of major policies and plans that execution has
prepared as well as individual important matters.
 The execution bodies shall be the Management Strategy Unit, Financial Strategy Unit, AffiliatedBusiness Unit and Administration Unit, and Executive Officers with specific titles shall be
appointed as the head of the units, through which the Company shall achieve swift and efficientbusiness execution.
 The Affiliated Business Unit shall provide management support for operating companies andconduct business management of operating companies to increase the Group’s corporate value.
 The Group Management Meeting, the Group Results and Strategy Examination Meeting, theGroup Liaison Meeting, the JFR Liaison Meeting, the JFR Division Managers’ Meeting shalldiscuss the overall policy and plan and other matters for Group management, as well as checking
on the progress of management strategies and sharing information between management, and soforth.
 The Company shall construct systems to raise overall efficiency of the Group such as theintroduction of the Group’s common accounting system in principle and promotion ofcentralized management of the Group funds.
 The Company has adopted the International Financial Reporting Standards (IFRS) voluntarily in
the interest of implementing effective management based on appropriate asset evaluation,
applying business management that gives emphasis to the profit of the current period andincreasing convenience for overseas investors by improving the international comparability offinancial information.
(3) System to secure appropriateness of financial reporting With regard to internal controls over financial reporting, the Company shall be in compliancewith Japan’s Financial Instruments and Exchange Act and various associated laws andregulations, and construct an internal company system to secure the legality and appropriatenessof its financial reporting. In addition, all operating companies shall also construct the same
system.
II. Risk management system(1) Risk Management Committee
 The Company shall establish the Risk Management Committee as an advisory body to the
President and Executive Officer with regard to risk management. The committee is chaired by
the President and Executive Officer and comprises Executive Officers and others.
 An officer shall be put in charge of risk management in order to promote the operation of risk
management.
 Each operating company shall put departments and responsible persons in charge of promoting
compliance and risk management, and carry out daily supervision and direction of risk.
 The Risk Management Committee shall systematically manage and address strategic and otherrisks as a whole from a company-wide perspective, enabling management decisions from theperspective of risk management.
 For risks involved in business operations, the Risk Management Committee shall carry out
evaluations and management, and for important risks, the committee shall periodically report on
the risk management status to the Board of Directors.
 Risks to be addressed shall be managed by the Corporate Governance Promotion Division byreviewing a Risk List and Risk Map, which centrally lists all the risks in the Group at any time.
- 47 -

 Of the risks involved in business operations that are identified, for particularly serious items, theRisk Management Committee shall deliberate over and determine a policy in response, and shall
respond to them by having the Company and operating companies execute the policy.
 The Risk Management Committee shall coordinate with the Revitalization Plan Review
Committee, which shall discuss business revitalization for unprofitable or low-profit businesses,
ascertain the management status of operating companies, and share risk recognition within
execution.
(2) Execution control
 Under the direction of President and Executive Officer, the Company shall put a person in chargeof execution control within the Corporate Governance Promotion Division in the Management
Strategy Unit to strengthen internal control over execution. The person responsible shall develop
and manage the control environment at the Company and operating companies.
 The person in charge of execution control shall develop and manage the internal controls
regarding the Companies Act and the internal control system regarding the Financial Instruments
and Exchange Act at the Company and operating companies.
 The person in charge of execution control shall clarify the mission and risk responsibility in eachdivision and strengthen links between departments by developing and managing the mission
statements for each corporate division.
 The person in charge of execution control shall coordinate with the Audit Committee, the Internal
Audit Division, the corporate divisions and operating companies to share information andremedy any deficiencies that occur in the internal controls.
(3) Crisis risk response
For crisis events such as large-scale earthquakes, fires and accidents, crisis management shall becontrolled by the “Emergency Response Headquarters” headed by the President and Executive
Officer.
III. Legal Compliance System(1) Compliance Committee
 The Company shall establish the Compliance Committee as an advisory body to the President
and Executive Officer regarding the operation of compliance management. The President andExecutive Officer shall be the chairperson and the members of the committee shall be corporate
lawyers, Executive Officers and others.
 An officer shall be put in charge of compliance in order to promote the operation of compliancemanagement.
 At operating companies, departments and responsible persons shall be put in charge of promotionof compliance and risk management, and shall carry out daily supervision and direction ofbusiness operations that are in accordance with laws and regulations and internal company rules.
 The Compliance Committee shall work to develop the foundations of compliance management
such as internal company rules, operation management manuals and formulation of management
systems. In addition, the committee shall periodically formulate and track progress oncompliance penetration activities such as e-learning, through departments in charge ofpromotion of compliance at each company.
 The Compliance Committee shall periodically request reports from persons in charge ofpromotion of compliance at operating companies regarding the status of compliancemanagement in their respective areas of responsibility, and take proper rectification measures. In
addition, the committee shall formulate guidelines and measures to prevent recurrence to befollowed and taken by the Group as a whole, and implement the said guidelines and measures.
(2) Whistle-blowing system The Company shall establish the “JFR Group Compliance Hotline” as the whistle-blowing
system of the JFR Group that also extends beyond companies (to a corporate lawyer), which
may be used by all persons working at the Company and operating companies.

- 48 -

 The hotline’s policy shall be to maintain strict confidentiality regarding notifications and reports
and shall not disclose the personal information of whistleblowers to a third party without theirconsent; to be careful to avoid identification of the whistleblower when investigating the facts;
and to ensure that whistleblowers are not subjected to disadvantageous treatment in terms of
personnel affairs or any other aspect.
 For hotline reports concerning management personnel, the Company shall build a structure
whereby the reports are submitted directly to the Audit Committee and subjected to directions
from the Audit Committee so as to secure an independent reporting route.
IV. Internal Audit Structure The Company shall establish an independent Internal Audit Division under the direction of the
President and Executive Officer. In accordance with internal audit rules and under the directionof the President and Executive Officer, the Internal Audit Division shall audit the operations of
the Company and operating companies or properly report the results of audits of operations,
examine the properness and effectiveness of the processes for their operations, and provide
guidance, advice and proposals to all departments at the Company and to operating companies.
 To further enhance corporate governance by strengthening auditing functions, the Company shallclarify links between the President and Executive Officer, the Audit Committee and the Internal
Audit Division. Specifically, the Company shall adopt a double-reporting system where both the
President and Executive Officer and the Audit Committee shall receive reports. When the reports
are made, the audit report and the improvement report shall be reported together to realize swift
measures.
 Appointments and transfers of persons responsible for the Internal Audit Departments shall be
subject to advance approval by the Audit Committee.
V. Structure of the Audit Committee
 The Audit Committee shall audit the legality and suitability of the execution of duties by the
Executive Officers and Directors.
 To aim to maintain and improve the accuracy of audits, two full-time Audit Committee members
shall be appointed from among the Internal Directors who do not execute business as Audit
Committee members, one of whom shall be the chairperson of the Audit Committee.
 As an organization in charge of assistance for the Audit Committee’s duties, the Audit Committee
Secretariat has been established within the Board of Directors Secretariat.
 Regarding personnel affairs related to the Audit Committee Secretariat organization and staff
members, the Audit Committee’s advance approval is required to ensure independence.
 The Audit Committee shall have periodic meetings with the President and Executive Officer toshare information. Moreover, the Company’s Executive Officers and Directors may be asked toattend Audit Committee meetings to provide reports and opinions as necessary.
 The Audit Committee shall regularly coordinate with the Internal Audit Division to share
information. Moreover, the Accounting Auditor, outside experts and others may be asked toattend 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 approvalmemos, and request explanations from officers and employees of operating companies asnecessary.
 Operating companies shall submit the necessary audit reports and perform other duties if
requested to do so by the Audit Committee.

- 49 -

 The Audit Committee shall have periodic meetings and the like with Audit & Supervisory Board
Members of operating companies to enhance and strengthen the auditing of the entire Group.
 The Audit Committee may request expenses deemed necessary for performing the duties from theCompany, and the Company shall bear them.
VI. Other(1) System for storage and management of information
 For documents relating to the execution of duties by Executive Officers and Directors, inaccordance with the rules on document management, each responsible department shall carry out
document storage and management during the stipulated period and shall develop a system toenable inspections of such documents at any time.
 For minutes and related documents regarding meetings chaired by Executive Officers andDirectors, and other important documents relating to the execution of duties by Executive
Officers and Directors, each responsible department shall carry out document storage andmanagement and shall develop a system to enable inspections of such documents at any time.
(2) Digital information security
 Senior Executive General Manager of the Management Strategy Unit shall control digital
information management of the Company, and shall report periodically and whenever necessaryon the status of digital information management and related matters to the Board of Directors,
the Audit Committee, the Management Meeting and the President and Executive Officer.
(2) Operational status of systems to ensure properness of operations <Basic Policy to Build Internal
Control Systems>
The Company endeavors to maintain its internal control systems and properly operate such systems
on the basis of its “Basic Policy to Build Internal Control Systems.” Details regarding the overall
status of such operations during the current fiscal year are as follows.
I.

Group Management System(1) Board of Directors(i) The Board of Directors is comprised of highly independent Outside Directors who have norisk of a conflict of interest with the Company’s shareholders, Internal Executive Directors
who own deep understandings about the business environment and issues surrounding theGroup, and Directors who do not execute business. It functions to oversee the execution ofduties by Executive Officers and Directors.
(ii) The Board of Directors is comprised to meet that one-third or more of Directors are
independent Outside Directors who are able to provide judgments independently from top
management and make decisions appropriately, and also that the majority of Directors are
independent Outside Directors and/or internally promoted Directors who do not executebusiness and who are well informed about internal information.
(iii) The Board of Directors discusses and resolves matters defined in the Companies Act and/or
the Articles of Incorporation, as well as deliberates important matters concerning the Groupmanagement over multiple meetings, striving to enhance the effectiveness of deliberations.
Moreover, for the issues pointed out at a Board of Directors meeting, the Board of Directors
works to resolve them by confirming at the beginning of the next meeting about the status ofits countermeasures and the timing of implementation.
(iv) The meetings of the Board of Directors were held 14 times in the current fiscal year.
Particularly, the Board of Directors confirms and shares information regarding the progressstatus of the new Medium-term Business Plan implemented in March 2017 based on theschedule planned in advance. In the event of a case that is deviating from targets, the Board of
Directors thoroughly examines its causes and the effect of countermeasures, striving for asteady progress of the Medium-term Business Plan.

- 50 -

(2) Management execution framework(i) The Company has the Management Strategy Unit, Affiliated Business Unit, Financial Strategy
Unit, and Administration Unit as the execution bodies, and Executive Officers with specifictitles are appointed as the head of the units and execute business swiftly. The AffiliatedBusiness Unit provides support for the Group’s operating companies and conduct business
management.
(ii) From the current fiscal year, each division of the Company has a mission statement thatclearly states the responsibilities of execution, such as the targets, roles, risks, andinterdivisional cooperation, striving for the clarification and strengthening of execution’s roles.
(iii) The roles and responsibilities of the Company as a holding company are narrowed down toformulating overall policy and plan for Group management, such as the Group Vision, Group
Medium-term Business Plan, M&As, Group financing plans, along with the management andprogress control of that said plans, and proper allocation of the Group’s management
resources.
With regard to matters related to business execution at operating companies, in order topromote speedy management decisions and the clarification of management responsibilities,
delegation rules have been established, and operated accordingly, aimed at prompt decisionmaking and execution by respective operating companies, except for important mattersconcerning the Group management.
(iv) In the current fiscal year, the Group Management Meeting, the Group Results and Strategy
Examination Meeting, the Group Liaison Meeting, the JFR Liaison Meeting, the JFR Division
Managers’ Meeting were regularly held for discussion on business strategies and information
sharing among divisions.
(v) The Company introduced the Group’s common accounting system in principle and promotes
centralized management of the Group funds and efforts to raise overall efficiency of theGroup.
(vi) The Company has developed a framework that it is making use of to carry out financial
strategy with the aim of heightening profitability of invested capital. Accordingly, for new
investment projects entailing funds beyond a certain amount, the Company has established theInvestment Plan Review Committee which scrutinizes profit and loss targets and performs
verification from a financial perspective encompassing assessment of suitability in terms ofquantitative aspects of investment plans. For all existing businesses, the Company has
established the Revitalization Plan Review Committee which draws up plans for revitalizing
poorly performing businesses and withdrawing from such operations, upon performing
verification of financial aspects from the perspective of investment recovery.
In the current fiscal year, the meetings of the Investment Plan Review Committee were held
six times and the meetings of the Revitalization Plan Review Committee were held threetimes.
(vii) With regard to internal controls over financial reporting, the Company is in compliance withJapan’s Financial Instruments and Exchange Act and various associated laws and regulations.
The Company and operating companies construct and promote internal company systems tosecure the legality and appropriateness of financial reporting.
II. Risk Management(1) Risk Management Committee(i) The Company has established the Risk Management Committee as an advisory body to the
President and Executive Officer with regard to the operation of risk management. The
committee is chaired by the President and Executive Officer and comprises Executive
Officers and others.
We regret that the Company has not so far considered risks adequately. To systematicallymanage and address overall risks including strategic risks as a whole from a company-wide
perspective, the Company has newly established and operates the Risk Management
Committee, a separate organization from the former Compliance and Risk Management
Committee.
(ii) The meetings of the Risk Management Committee were held three times in the current fiscal- 51 -

year. Identifying risks surrounding the Company, the Risk Management Committee
particularly discussed and determined “corporate risks,” which are considered to havesignificant impact on companies. In addition, information was shared and advices were
provided on risks identified by each of operating companies of the Group based on the
Company’s risks, to promote risk management.
(2) Execution control(i) Under the direction of President and Executive Officer, the Company has put a person in
charge of execution control within the Management Strategy Unit. The person develops andmanages the internal controls regarding the Companies Act and the internal control system
regarding the Financial Instruments and Exchange Act at the Company and operatingcompanies.
During the current fiscal year, there were no important weakness found to be disclosed in theinternal controls regarding the Companies Act and the Financial Instruments and ExchangeAct.
(ii) Moreover, from the current fiscal year, the Company has developed and managed the mission
statements for each corporate division, while clarifying the mission in each division andstrengthening links between departments.
(iii) For crisis events such as large-scale earthquakes, fires and accidents, the Company has
established a system in which crisis management is controlled by the “Emergency Response
Headquarters” headed by the President and Executive Officer. There were no occurrences ofsuch risks during the current fiscal year.
III. Legal Compliance System(1) Compliance Committee(i) The Compliance Committee has been established as an advisory body to the President andExecutive Officer regarding the operation of compliance management. The committee ischaired by the President and Executive Officer and comprises corporate lawyers, Executive
Officers and others.
(ii) Departments and responsible persons in charge of promotion of compliance and risk
management are also put at operating companies, and carry out daily supervision anddirection of business operations that are in accordance with laws and regulations and internal
company rules.
(iii) The Compliance Committee of the Company draws up a policy for addressing matters
involving serious compliance-related violations, and continuously oversees development of
the foundations of compliance system and the status of implementation through close
collaboration with departments in charge of promoting compliance in the Group’s operatingcompanies.
Four meetings were held during the current fiscal year, and deliberations were conducted on
topics such as the “role and organizational operation of the Compliance Committee” and the“compliance systems for operating companies.”(iv) In addition to posting the JFR Group Compliance and Risk Management Manual on theintranet, education via reporting lines and e-learning seminars were offered to promote theawareness of compliance.
(v) E-learning was offered twice during the current fiscal year, along with training via reportinglines. The “minimum required compliance for sales activities” and “knowledge about
intellectual property (trademark, design right, copyright, license, etc.) were selected as key
themes.
(2) Whistle-blowing system(i) The Company has established the “JFR Group Compliance Hotline” whistle-blowing systemthat also extends beyond companies (to a corporate lawyer), which may be used by all persons
working at the Company and operating companies.
(ii) For hotline reports concerning management personnel, the Company has built a structure
whereby the reports are submitted directly to the Audit Committee and subjected to directions
from the Audit Committee.

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(iii) 28 reports were received in the current fiscal year. The reports included ones related topersonnel and labor issues.
(3) Cease and desist order and payment order based on the Act on Prohibition of Private
Monopolization and Maintenance of Fair Trade received by operating company
With regard to a case where our operating company Daimaru Matsuzakaya Department Stores
Co. Ltd. received in January 2018 a cease and desist order and a payment order (surcharge of¥1.96 million) based on the Act on Prohibition of Private Monopolization and Maintenance ofFair Trade from the Japan Fair Trade Commission, Daimaru Matsuzakaya Department Stores
Co. Ltd., following on-site inspections by the Japan Fair Trade Commission, has taken
measures to prevent recurrence of similar cases. These measures involved carrying out
education seminars about the Act on Prohibition of Private Monopolization and Maintenanceof Fair Trade for all employees, implementing a monitoring system in relation to the same Act,and introducing rules concerning contact with competitors. The Group will further strengthen
and enhance in-house training about compliance with laws and regulations, including the Act
on Prohibition of Private Monopolization and Maintenance of Fair Trade, as well as improvemonitoring systems, to pursue compliance-focused business management.
IV. Internal Audit Structure(i) The Company has established an independent Internal Audit Division under the President andExecutive Officer. The Internal Audit Division verifies and evaluates the effectiveness of
systems of corporate governance, risk management and compliance management, in addition
to performing audit on business operations of the Company and each of the Group companies.
(ii) The Company adopts a double-reporting system to the President and Executive Officer andthe Audit Committee, and audit results are reported on a regular basis. When the reports are
made, the audit report and the improvement report are reported together to realize swift
measures.
(iii) The Internal Audit Division reported nine times to management in the current fiscal year,
including “Results of audit on business operations of Daimaru Matsuzakaya Department
Stores by store” and “Results of audit on business operations of operating associates.”
V. Structure of the Audit Committee(i) Two full-time Audit Committee members are appointed from among the Internal Directors
who do not execute business, and one of them shall be the chairperson of the Audit
Committee.
(ii) In accordance with the overall policy and plan determined by the Board of Directors, theAudit Committee audits the execution of business by Directors and Executive Officers,
important matters submitted 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.
(iii) The Audit Committee receives explanations on the audit policy and plan prior to the audit
from the Accounting Auditor. Furthermore, regarding audit results, explanations and reports
were received, while opinions including requests on audit items were regularly expressed.
(iv) To grasp important decision-making processes and the status of the execution of duties, fulltime members of the Audit Committee not only attend important committee and othermeetings, such as the Group Strategy Meeting, but also peruse important documents relating
to the execution of business such as approval circulars.
(v) The meetings of the Audit Committee were held 12 times in the current fiscal year.
Discussions were mainly on the Rules of the Audit Committee and the selection of the
Accounting Auditor.
VI. Other(i) Documents relating to the execution of duties by Executive Officers and Directors and theminutes of the important meetings and committees such as the meetings of the Board of
Directors and the Group Management Meeting are being accurately recorded and prepared,
and information is being properly stored and managed.
(ii) The Company reports periodically and whenever necessary on the status of digital
information management and related matters to the Board of Directors, the Audit Committee,- 53 -

the Group Management Meeting and the President and Executive Officer.
(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 andbusiness policy decisions to be a party who sufficiently understands the financial and businessdetails of the Group and 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 ofshareholders 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, ingeneral, 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 byspecific 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, the Company 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 theCompany’s shareholders.
Nevertheless, a Large-Scale Purchase that involves a serious risk of causing damage to thecorporate value of the Group may be envisaged. This may include a Large-Scale Purchase that, inview 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 not provide sufficient time and information for the Company’s Board of Directors
and shareholders to consider factors such as the details of the large-scale purchaser’s proposal, orfor the Company’s Board of Directors to make an alternative proposal.
A party attempting this kind of Large-Scale Purchase, which would not contribute to thecorporate value of the Group and, by extension, the common interests of its shareholders(hereinafter, the “Large-Scale Purchaser”), would not be appropriate as a party controlling theCompany’s financial and business policy decisions. Accordingly, the Company believes that it isthe 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 asprovision of information by the Large-Scale Purchaser and considerations and evaluations by theCompany’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 the Large-Scale Purchaser’s proposal
in order to prevent damage to the corporate value of the Group and, by extension, 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 ofkimono fabric stores and department stores for many years based on the corporate philosophies andtraditional spirits of these businesses, which are: “Service before profit (those who place service
before profit will prosper),” “Abjure all evil; pursue all good” and “In doing good to others, we dogood to ourselves.”
The Company believes that the sources of the Group’s corporate value are the relationships oftrust it has established with customers and with society, which have been refined on the basis ofthese philosophies and spirits.
Accordingly, in order to exemplify the principles of “customer-first principle” and “contribution
to society,” which are in common with these philosophies and spirits, the Company has establishedthe following basic philosophies of the Group: “to aim at providing high quality products andservices that meet the changing times and satisfying customers beyond their expectations” and “toaim at developing the Group by making a broad contribution to society as a fair and trusted
business entity.” Based on these basic philosophies, the Company implements a wide range ofmeasures, under the Group Vision of “Create and Bring to Life ‘New Happiness,’” in order to makea contribution to securing and enhancing the corporate value of the Group and, by extension, thecommon interests of shareholders.

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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 whicha Large-Scale 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 a Large-Scale Purchaser appears, it is necessary to carefully examine the impact a LargeScale Purchase would 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 the Large-Scale Purchase, the Large-Scale Purchaser’s proposed financial
and business policies and their policy 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 Directors and experts with viewpoints that are independent from the Company’s Internal
Directors. If the Company judges that the said Large-Scale Purchaser is inappropriate in light of theaforementioned 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 for such
judgment
Various measures formulated by the Group are formulated based on the Group’s basic
philosophy, and are intended to further build up the relationships of trust with customers and withsociety, which are the sources of the Group’s corporate value. Therefore, the Company believes thatthese measures are in line with the contents of the basic policy and contribute to securing andenhancing the corporate value of the Group and, by extension, the common interests ofshareholders.
Furthermore, if the Company takes necessary and appropriate countermeasures against a LargeScale Purchaser judged to be inappropriate in light of the basic policy, the fairness, neutrality andrationality of this judgment will be ensured by making it in consideration of advice and opinionsfrom an independent committee whose independence from the Internal Directors of the Company isassured. Accordingly, the Company believes that these measures would not damage the corporate
value of the Group or the common interests of shareholders, and that they are not intended tomaintain the positions of the officers of the Company.
(4) Basic Capital Policy
The Company believes that any increase in free cash flow and improvement in ROE should help toensure its sustainable growth and increase corporate value over the medium to long term. To suchends, the Company promotes a capital policy that takes a balanced approach to undertaking strategic
investment, enhancing shareholder returns, and expanding net worth being equipped to address risks.
Moreover, in procuring funds through interest-bearing debt we aim to achieve a structure of debt toequity that is optimally geared to changes in the business portfolio in a manner cognizant of ourfunding efficiency and cost of capital, carried out on the basis of having taken into consideration ourcapacity for generating free cash flows and our balance of interest-bearing debt.
A business strategy where higher sales are accompanied by profits and a financial strategy(encompassing the capital policy) that heightens profitability of invested capital are essential elementswith respect to improving free cash flows and ROE. In addition, we believe it is crucial that weachieve sustainable expansion of the profit of the current period through efforts to maximize ouroperating profit and improve our operating profit margin by strengthening our core businesses andconcentrating management resources on initiatives such as business field expansion and active
development of new businesses.

- 55 -

(5) Policy regarding decisions on dividends of surplus, etc.
The Company’s basic policy is to appropriately return profits. Hence, while maintaining andenhancing its sound financial standing, the Company strives to provide stable dividends and target a
consolidated dividend payout ratio of no less than 30%, taking profit levels, future capital investment,
free cash flow trends and other such factors into consideration. The Company also gives consideration
to the option of purchasing its own shares as appropriate, in accordance with aims that include
improving capital efficiency and implementing a flexible capital policy.

- 56 -

Consolidated Financial Statements
Consolidated Statement of Financial Position (As of February 28, 2018)
Item
AssetsAmountCurrent assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other current assets
Assets held for sale

215,164
38,883
125,649
4,067
33,755
6,076
6,732

Non-current assets
Property, plant and equipment
Goodwill
Investment property
Intangible assets
Investments accounted for using
equity method
Other financial assets
Deferred tax assets
Other non-current assets

807,183
458,877523
195,608
3,588
16,425

Item
Liabilities
Current liabilities
Bonds and borrowings
Trade and other payables
Other financial liabilities
Income tax payables
Provisions
Other current liabilities

292,351
46,230141,343
30,8119,202
202
64,561

Non-current liabilities
Bonds and borrowings
Other financial liabilities
Retirement benefit liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities

279,109
137,972
34,24029,9094,595
61,161
11,231

Total liabilities
EquityTotal equity attributable to owners ofparentCapitalShare premium
Treasury shares
Other components of equity
Retained earnings

571,460

100,016
7,286
24,857

Non-controlling interests(Note)(Millions of yen)AmountTotal equity
Total assets
1,022,348
Total liabilities and equity
Amounts have been rounded down to the nearest one million yen.

- 57 -

395,519
31,974
211,864(15,244)
15,772
151,151
55,368450,887
1,022,348

Consolidated Statement of Profit or Loss (From March 1, 2017 to February 28, 2018)(Millions of yen)Amount469,915(256,979)

Item
Sales revenue
Cost of sales
Gross profit
Selling, general and administrative expense
Other operating income
Other operating expense

212,935(166,688)
8,967(5,668)Operating profit
Finance income
Finance costs
Share of profit (loss) of investments accounted for using equity
method49,546
1,090(1,194)

Profit before tax
Income tax expense

48,271(16,415)

Profit31,855

Profit attributable to:
Owners of parent
Non-controlling interests

28,486
3,368

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

- 58 -(1,171)

31,855

Consolidated Statement of Changes in Equity (From March 1, 2017 to February 28, 2018)(Millions of yen)
Equity attributable to owners of parent
Other components of equity

Balance as of March 1,
2017

CapitalSharepremium

TreasurysharesExchange
Financial assets
differences
measured at fair
RemeasurementsonCash flow value throughof definedtranslation
hedgesotherbenefit plansof foreign
comprehensive
operations
incomeTotal

Retainedearnings

Total

30,000209,551(11,281)

(154)

(66)

12,832–

12,610127,690368,571

Profit

–

–

–

–

–

–

–

–

28,48628,486

Other comprehensive
income

–

–

–

92

111

3,471

2,287

5,963

–

5,963

–

–

–

92

111

3,471

2,287

5,963

28,48634,450Total comprehensive
incomeIssuance of new shares

1,974

1,974

–

–

–

–

–

–

–

3,948

Purchase of treasury
shares––(3,963)

–

–

–

–

–

–

(3,963)

Disposal of treasury
shares

–

(0)

0

–

–

–

–

–

–

0

Dividends

–

–

–

–

–

–

–

–

(7,846)(7,846)

Changes in ownershipinterests in
subsidiaries

–

(56)

–

–

–

–

–

–

–

(56)

Share-based paymenttransactions

–

395

–

–

–

–

–

–

–

395

Transfer from othercomponents of equity
to retained earnings

–

–

–

–

(60)

(472)

(2,287)(2,820)

2,820

–

Other

–

–

–

18

–

–

–

18

–

18

Total transactions withowners

1,974

2,313

(3,962)

18

(60)

(472)

(2,287)(2,801)(5,025)(7,502)

Balance as of February
28, 2018

31,974

211,864(15,244)

(43)

(15)

15,831–

15,772

151,151

395,519

Noncontrollinginterests

Total

Balance as of March 1,
201752,872

421,444

Profit3,368

31,855

Other comprehensive
income(7)

5,955

Total comprehensive
income3,360

37,811

Issuance of new shares

–

3,948

Purchase of treasury
shares–(3,963)

Disposal of treasury
shares

–

0

(911)

(8,757)

Changes in ownershipinterests in
subsidiaries

56–

Share-based paymenttransactions–

395

Transfer from othercomponents of equity
to retained earnings––

Dividends

(10)

(8)

Total transactions withowners

Other

(865)

(8,367)

Balance as of February
28, 2018

55,368450,887(Note)

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

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[Reference]

Consolidated Statement of Cash Flows (Summary)(From March 1, 2017 to February 28, 2018)(Millions of yen)AmountItem

Cash flows from operating activities
57,079Cash flows from investing activities(19,030)
Cash flows from financing activities(31,048)
Net increase in cash and cash equivalents
7,000
Cash and cash equivalents at beginning of period
31,867
Effect of exchange rate changes on cash and cash equivalents
15
Cash and cash equivalents at end of period
38,883(Note)
Amounts have been rounded down to the nearest one million yen.

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Non-consolidated Financial Statements
Non-consolidated Balance Sheet (As of February 28, 2018)
Item
AssetsCurrent assets
Cash and deposits
Short-term loans receivable fromsubsidiaries and associates
Other
Allowance for doubtful accounts

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

Intangible assets
SoftwareAmountItem
Liabilities
27,540 Current liabilities
18,802
Short-term loans payable
Commercial papers
7,805
Accrued expenses
2,418
Income taxes payable(1,485)
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on businessliquidation
Provision for officer remuneration BIP
trust
Other

393,633
166
131
34

97
97

Investments and other assets
Investment securities
Shares of subsidiaries and associates

393,369
1,187
319,745

Long-term loans receivable fromsubsidiaries and associates

72,075

Other

Bond issuance cost

(Note)

187

20
96
351
95,13550,00043,095

Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings

115,558

Retained earnings brought
forward361

187

20,422
18,200
1,000
378
135
122
118

Non-current liabilities
Bonds payable
Long-term loans payable
Provision for officer remuneration BIP
trust
Deferred tax liabilities
Other

Treasury shares
Deferred assets(Millions of yen)AmountValuation and translation adjustments
Valuation difference on available-forsale securities

Total net assets
Total assets
421,361
Total liabilities and net assets
Amounts have been rounded down to the nearest one million yen.

- 61 -

182
14
1,843

305,769
31,974
249,075
7,500
241,575
39,19939,19939,199(14,480)33
33

305,802421,361Non-consolidated Statement of Income (From March 1, 2017 to February 28, 2018)(Millions of yen)
Item

AmountOperating revenue
Dividend income
Consulting fee income

10,9793,797

14,776

General and administrative expenses

4,154

Operating income
Non-operating income
Interest income
Dividend income
Reversal of allowance for loan losses
Other

10,622
501
151
135
62

850

Non-operating expenses
Interest expenses
Provision of allowance for doubtful accounts
Loss on retirement of non-current assets
Other

468
975
39
98

1,580

Ordinary income
Extraordinary income
Gain on sales of shares of subsidiaries andassociates
Reversal of provision for loss on businessliquidation

9,892
1,520

Extraordinary losses
Loss on valuation of shares of subsidiaries andassociates
Profit before income taxes
Income taxes - current
Income taxes - deferred

1,021

2,542

3,453

3,453
8,981

4
397

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

- 62 -

401
8,579

Non-consolidated Statement of Changes in Equity (From March 1, 2017 to February 28, 2018)(Millions of yen)
Valuation andtranslation
adjustments

Shareholders’ equity
Retainedearnings

Capital surplus

Capital stock

Balance as of March 1,
201730,000

Other retained
earnings
Legal capital Other capitalsurplussurplus

7,500

TreasurysharesValuation
Total sharedifference on
holders’available-forequity
sale securities(10,517)305,089

Retainedearnings
brought
forward239,601

38,50515

Total net
assets

305,105

Changes of items during
the fiscal year
Issuance of new shares

3,948

3,948

Dividends of surplus

1,974

1,974
(7,885)(7,885)(7,885)

Profit

8,579

8,579

8,579

(3,963)(3,963)(3,963)000Purchase of treasury
shares
Disposal of treasury
shares0

Net changes of items
other than shareholders’equityTotal changes of items
during the fiscal year
Balance as of February 28,
2018(Note)

17

17

1,974

–

1,974

694

(3,962)

680

17

697

31,9747,500

241,575

39,199(14,480)

305,76933

305,802

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

- 63 -

THE AUDIT REPORT OF INDEPENDENT AUDITORSCONCERNING THE CONSOLIDATED FINANCIAL STATEMENTS (COPY)

Report of Independent Auditors
April 6, 2018
The Board of Directors
J. Front Retailing Co., Ltd.
Ernst & Young ShinNihon LLC
Hiroyuki Koichi(seal)
Certified Public Accountant
Designated and Engagement Partner
Yoshihisa Shibayama(seal)
Certified Public Accountant
Designated and Engagement Partner
Hiroshi Matsuura(seal)
Certified Public Accountant
Designated and Engagement Partner
Pursuant 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, theconsolidated statement of profit or loss, the consolidated statement of changes in equity and the notes to theconsolidated financial statements of J. Front Retailing Co., Ltd. (the “Company”) applicable to the 11th
fiscal year from March 1, 2017 through February 28, 2018.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in conformity with the latter part of Paragraph 1, Article 120 of the Company Accounting Regulation
Ordinance that allows companies to prepare consolidated financial statements with the omission of a part ofthe disclosure items required under the designated International Financial Reporting Standards (“IFRS”),
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.
Auditors’ Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, the auditors consider internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn 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
the Company and consolidated subsidiaries, applicable to the 11th fiscal year from March 1, 2017 throughFebruary 28, 2018 in conformity with the latter part of Paragraph 1, Article 120 of the Company
Accounting Regulation Ordinance that allows companies to prepare consolidated financial statements withthe omission of a part of the disclosure items required under IFRS.
- 64 -

Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

- 65 -

THE AUDIT REPORT OF INDEPENDENT AUDITORSCONCERNING THE NON-CONSOLIDATED FINANCIAL STATEMENTS (COPY)

Report of Independent Auditors
April 6, 2018
The Board of Directors
J. Front Retailing Co., Ltd.
Ernst & Young ShinNihon LLC
Hiroyuki Koichi(seal)
Certified Public Accountant
Designated and Engagement Partner
Yoshihisa Shibayama(seal)
Certified Public Accountant
Designated and Engagement Partner

Hiroshi Matsuura(seal)
Certified Public Accountant
Designated and Engagement Partner
Pursuant to Item 1, Paragraph 2, Article 436 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement of changes
in equity, the notes to the financial statements and the related supplementary schedules of J. Front RetailingCo., Ltd. (the “Company”) applicable to the 11th fiscal year from March 1, 2017 through February 28,
2018.
Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and therelated supplementary schedules in accordance with accounting principles generally accepted in Japan, andfor designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the financial statements and the related supplementary schedules thatare free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements and the related supplementaryschedules based on our audit. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and the related supplementary schedules are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the related supplementary schedules. The procedures selected depend on theauditors’ judgment, including the assessment of the risks of material misstatement of the financial
statements and the related supplementary schedules, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentationof the financial statements and the related supplementary schedules in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements and the related supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the financial statements and the related supplementary schedules referred to above present
fairly, in all material respects, the financial position and results of operations of J. Front Retailing Co., Ltd.
applicable to the 11th fiscal year from March 1, 2017 through February 28, 2018 in conformity withaccounting principles generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.
- 66 -

THE AUDIT REPORT OF AUDIT COMMITTEE MEMBERS

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 11th fiscal year from March 1, 2017 to February 28, 2018.
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 through thefollowing 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, received reports from Directors, Executive Officers, and others
regarding the matters related to the performance of their duties, and when necessary, requested explanationsof those reports. Audit Committee members also reviewed key decision documents, and conducted surveysof the operations and assets of the head office and of other principal places of business. Further, regarding
subsidiaries, Audit Committee members worked to communicate with Directors, Executive Officers, Audit& Supervisory Board Members, and other parties at those subsidiaries, and when necessary conducthearings with them regarding their business.
(ii) Additional consideration was given to the basic policy set forth in Item 3 (a), Article 118 of theOrdinance for Enforcement of the Companies Act and activities set forth in Item 3 (b), Article 118 of thesame Ordinance, as noted in the Business Report, based on the status of deliberations at the meeting of theBoard of Directors and other key meetings.
(iii) 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 fromthem regarding the performance of their duties, and when necessary, asked for further explanation
regarding those reports. Audit Committee members also received notice from the Accounting Auditor inaccordance with “the system for ensuring appropriate execution of their duties” (as enumerated in each
Item of Article 131 of the Company Accounting Regulation Ordinance) in compliance with the “Quality
Control Standards Relating to Auditing” (adopted by the Business Accounting Deliberations Council in
October 28, 2005), and, where necessary, Audit Committee members requested further explanation
regarding that notice.
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.

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 tothe applicable laws and regulations, and the Articles of Incorporation, and that they accurately present thesituation of the Company.

- 67 -

(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 systems are fair and adequate, and found no areas that require mention regarding thedescription of the internal control systems in the Business Report and the performance of duties byDirectors and Executive Officers. As stated in the Business Report, the Corporate Sales Division of
Daimaru Matsuzakaya Department Stores Co. Ltd., a subsidiary of the Company, received a cease anddesist order and a payment order in January 2018 from the Japan Fair Trade Commission. The Audit
Committee confirms that the Company and all Group companies will be aiming at improving andstrengthening the business management system for complying with laws and regulations and preventing
any further incidents.
(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 Ordinance 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 to maintain thepositions of Directors or Audit Committee members 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.
(Note)

Effective May 25, 2017, the Company transitioned to a company with three committees(nomination, audit and remuneration committees). During the period from March 1, 2017 to thedate before the date of the transition, the Audit & Supervisory Board executed its duties under theCompanies Act. The Audit Committee has received a transfer of duties from the Audit &Supervisory Board.
April 10, 2018
Audit Committee
J. Front Retailing Co., Ltd.

DOI Zenichi(seal)
Chairperson of Audit Committee (full-time)
TSUTSUMI Hiroyuki(seal)
Audit Committee member (full-time)
TSURUTA Rokurou(seal)
Audit Committee member
ISHII Yasuo(seal)
Audit Committee member
NISHIKAWA Koichiro (seal)
Audit Committee member(Note) Audit Committee members, namely, TSURUTA Rokurou, ISHII Yasuo and NISHIKAWA Koichiro
are Outside Directors as prescribed in Item 15, Article 2 and Paragraph 3, Article 400 of theCompanies Act.

- 68 -