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, 2016
To Our Shareholders

Ryoichi Yamamoto, President
J. FRONT RETAILING Co., Ltd.
10-1, Ginza 6-chome, Chuo-ku, Tokyo

Notice of Convocation of the 9th Annual Shareholders Meeting
You are cordially invited to attend the 9th 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 25, 2016 (JST).

Details
1. Date and time:Thursday, May 26, 2016, 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 9th fiscal year (from March 1, 2015 to February
29, 2016)
2. Audit reports of the Accounting Auditor and the Audit & Supervisory Board
on Consolidated Financial Statements for the 9th fiscal year
Matters to be resolved: Proposal 1: Election of Nine (9) Directors
Proposal 2: Payment of Bonuses to Directors and Audit & Supervisory Board
Members for Fiscal Year 2015
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.)

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



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 Audit & Supervisory Board Members 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/-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 each proposal, andreturn the completed form to us.
Exercise due date: Received by 6:00 p.m. on Wednesday, May 25, 2016 (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 25, 2016 (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: http://www.evote.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 “log-in 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.

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* 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 usage
environment, for example if you use a firewall, etc. or if you have anti-virus software installed.
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 Document for the 9th Annual Shareholders Meeting]Business Report (From March 1, 2015 to February 29, 2016)
1. Current status of the corporate group(1) Business summary and results
With respect to the Japanese economy in the current fiscal year, the pace of recovery slowed
despite positive effects of economic and financial policies implemented by the Japanese government
and the Bank of Japan along with a trend toward more upbeat corporate earnings and employment,
amid an uncertain outlook in the latter half of the fiscal year largely involving concerns of a global
economic slowdown.
In the retail sector, we faced a scenario of rapidly deteriorating consumer sentiment anddiminishing strength in personal spending overall, largely evidenced by intensifying budget-mindedconsumer behavior. This was a result of sluggish growth in real wages and increasingly polarized
consumption patterns, and also reflects the downturn in stock prices beginning in the latter half of the
fiscal year along with a prevailing sense of uncertainty about what lies ahead.
Amid this environment, the J. Front Retailing Group (hereinafter the “Group”), under its “FY 2014
- FY 2016 Medium-term Business Plan,” worked to further strengthen the competitiveness andprofitability of existing businesses while also investing management resources, such as M&A, in
fields of growth in a focused manner, with the aim of developing as a multifaceted retailer operating
multiple businesses with the Department Store Business at their core.
In the Department Store Business, the Group pressed ahead with large-scale refurbishments of the
Matsuzakaya Nagoya store, the Daimaru Sapporo store and other key stores as part of our initiatives
to establish “A new department store business model” geared to creating appealing stores that attract awide range of customers and constructing a highly productive store management structure. We havealso reinforced our efforts to serve the firmly performing affluent customer market and the market offoreign visitors to Japan which continues to grow.
In the PARCO Business, we adopted ICT (information and communications technology) solutions
and forged ahead with store refurbishments. We also extended the floor space in the Main Building of
the Fukuoka PARCO in March 2015, and opened the Nagoya “PARCO midi” facility, with the aim ofboosting profitability by expanding new commercial locations in major urban areas. We also opened
the new Sapporo ZERO GATE in February 2016.
In addition, in April 2015, J. FRONT RETAILING Co., Ltd. (hereinafter the “Company”)
concluded a capital and business alliance agreement with Senshukai Co., Ltd. and converted it into an
equity method associate, with the aim of developing as a multifaceted retailer operating multiple
businesses. We are now pursuing initiatives that involve mutual sales and product development,
drawing on the group assets and expertise of both companies.
With the aim of constructing a business model for growth along with regions in which it operates
with its stores at the core of such growth (strategy of urban market dominance), we have been
pursuing efforts that include the Ginza 6-chome District 10 Urban Redevelopment Project, plans forrebuilding the South Wing of the Matsuzakaya Ueno store, plans for rebuilding the Main Building of
the Daimaru Shinsaibashi store, and the Udagawa-cho 15 Development Project (plans for rebuilding
the Shibuya PARCO).
Our initiatives for promoting omni-channel retailing have entailed efforts with the “Click &Collect,” “Snap Diary” and other services, and creating synergies through collaboration with
Senshukai.
With respect to overseas operations, “Shanghai New World Daimaru Department Store,” to which
the Company has been providing technical support, fully opened for business in May 2015. Also, as
of March 2016, there are a total of nine “PLAZA TOKYO” general merchandise retailing store
locations, operated in Taiwan by JFR PLAZA. Meanwhile, PARCO entered into a business andcapital alliance with Apparel-Web, Inc., with the aims of achieving more widespread market
dominance in the retail store business through use of ICT solutions, and strengthening overseas
business operations centered on e-commerce.
The Group also worked to construct a stronger operating structure and strove to improve
management efficiencies by such means as reviewing all cost structures.
As a result of various measures including those mentioned above, in the current fiscal year, net-5-sales was ¥1,163,564 million, up 1.2% year on year, operating income was ¥48,038 million, up 13.9%,
ordinary income was ¥47,910 million, up 18.4%, and net income was ¥26,313 million, up 31.8%.
The Company has decided to pay a year-end dividend of ¥14 per share. The annual dividend withthe addition of an interim dividend of ¥13 per share is ¥27 per share, as calculated in accordance withthe standard after the consolidation of shares, marking a year-on-year increase of ¥2.
Results by segment are as follows.

Department Store Business
Our initiatives to establish “A new department store business model” involved refurbishing
individual stores. In so doing, we reworked merchandise categories and sales floor configurations in
response to changes in the market, while enhancing the competitive strengths and profitability of
those stores. At the Matsuzakaya Nagoya store, we have forged ahead with efforts under the thirdperiod refurbishment plan since March 2015 with the aim of having a “high-quality, evolutionary
department store that is loved by customers in the area.” We have developed a department store
framework geared to attracting customers of all ages to our stores as a result of efforts that include
bringing in a “Yodobashi Camera” store in October 2015 to operate on the fourth to sixth floors of theSouth Building, and opening a retailer under the name “Matsuzakaya GENTA” in April 2016 tooperate in the North Building on the refurbished men’s floor. At the Daimaru Sapporo store, we beganfeaturing luxury brands on the first floor in October 2015, and progressively refurbished the women’s
accessories section occupying the second floor.
To serve the firmly performing affluent customer market we continued to push ahead with efforts
taken to land new customer accounts for the “Otokuisama Gold Card.” To better serve customers
among the growing number foreign visitors to Japan, we implemented measures at respective storesthat included promoting sales and allocating staff in a manner that accommodates customer traffic
during peak seasons of inbound tourism.
As for our initiatives with Senshukai, we featured Senshukai’s fashion brand “Kcarat” shops for alimited time at the Daimaru Kobe store and the Matsuzakaya Nagoya store, and otherwise took steps
to build a framework for collaboration that will enable us to develop merchandise and create synergies
heading toward next fiscal year. Also, for the first time in six years we updated Daimaru Matsuzakaya
Department Stores’ private “TROJAN” menswear brand.
As of December 30, 2015, the Main Building of the Daimaru Shinsaibashi store is temporarilyclosed for rebuilding. Going forward, we will proceed with construction of the new Main Building ina manner that ensures that the facility helps develop the area. To that end, we will make sure that its
value as a historic building designed by the architect W.M.Vories can be retained while at the sametime improving the building’s safety features.
As a result of the various initiatives mentioned above, net sales in this business was ¥763,222
million, up 0.4% year on year, and operating income was ¥28,786 million, up 24.1% year on year.
PARCO BusinessNet sales in the shopping center business exceeded previous year levels, reflecting the success ofnumerous initiatives. For instance, we increased overall urban store sales floor space in part byincreasing floor space of the Main Building of the Fukuoka PARCO, opening the Nagoya “PARCOmidi” facility, and opening the Sapporo ZERO GATE. We also refurbished stores based on the conceptof targeting a greater range of customers with respect to our existing PARCO stores, and implemented
store measures that call for adopting ICT solutions such as “Kaeru PARCO” and “POCKET PARCO.”
Meanwhile, the bottom line was aided by new store openings and the development of new businessformats in the shopping complex business, along with an increase in construction orders received in
the space engineering & management business. As a result, net sales in this business was ¥281,050
million, up 2.5% year on year, and operating income was ¥12,582 million, up 2.7% year on year.
Wholesale Business
Sales decreased in the area of food products as a result of diminished business in the marine andanimal products, but sales were strong in the fields of electronic devices and automobile parts. As aresult, net sales in this business was ¥57,849 million, down 2.6% year on year, and operating income-6-was ¥1,315 million, up 23.2% , reflecting improvement in the gross profit margin along with positive
outcomes from having reviewed outlays for selling, general and administrative expenses.

Credit Business
A review of the commission rate for transactions adversely affected results in this business, but card
member accounts increased and initiatives were taken to boost earnings, such as by promoting the useof credit cards at external member stores. As a result, net sales in this business was ¥10,455 million,
up 0.7% year on year, but operating income was ¥2,703 million, down 21.1%, due to a temporary
increase in card renewal expenses.
Other Businesses
In Other Businesses, sales decreased in JFR Online direct marketing business and other suchoperations, but J. Front Design & Construction performed well. As a result, net sales in this businesswas ¥104,739 million, up 7.6% year on year, and operating income was ¥2,807 million, up 16.1%
year on year.

Net sales and operating income by business segment of the corporate group(Millions of yen)
9th fiscal year (Current fiscal year)(Fiscal 2015)

8th fiscal year
(Fiscal 2014)
Business segment

Net sales
Results

Operating income

Composition

Net sales

Composition

Results%

Results%

Operating income

Composition

Results%

Composition%

Department StoreBusiness

759,866

66.1

23,19255.0

763,22265.6

28,786

59.9

PARCO Business

274,21223.9

12,25529.1

281,050

24.2

12,58226.2

Wholesale Business

59,371

5.2

1,067

2.5

57,849

5.0

1,315

2.7

Credit Business

10,381

0.9

3,424

8.1

10,455

0.9

2,703

5.6

Other Businesses

97,298

8.4

2,418

5.7

104,739

9.0

2,807

5.8

Adjustments(51,600)

(4.5)

(190)

(0.4)

(53,752)

(4.7)

(156)

(0.2)

Total
(Note)

1,149,529
100.0
42,167100.0 1,163,564
100.0
48,038100.0
The Company has changed its inventory valuation method beginning with the current fiscal year. 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).

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Net sales by product and by company and store of the Department Store Business 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

51,9356.8(2.8)

Ladies’ clothing andhaberdashery

224,833

29.5

(1.1)

Children’s clothing andhaberdashery

16,851

2.2

0.7

Kimono, bedding and otherclothing

12,744

1.7(8.5)

Personal belongings

77,513

10.2

(0.6)

Furniture

7,253

1.0

(13.6)

Home appliances

1,019

0.1

(28.5)

Household goods

25,363

3.3(5.8)

Food products

181,678

23.8

(0.8)

Food halls and cafes

22,7833.0(0.4)

General goods

111,787

14.6

13.8

Services

3,030

0.4

15.6

Other

26,426

3.4

(1.2)

Total

763,222

100.0

0.4

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

91,07211.9

7.8

Osaka Umeda store

65,2128.5

2.1

Tokyo store

73,169

9.6

4.3

Urawa Parco store

3,777

0.5

(6.8)

Kyoto store

70,0009.2(0.5)

Yamashina store

3,970

0.6

(5.0)

Kobe store

85,079

11.1

(1.1)

Suma store

9,537

1.3

(5.1)

Ashiya store

7,132

0.9

(3.2)

Sapporo store

62,7108.2

2.2

Sub total

471,663

61.8

2.1

Nagoya store

124,834

16.4

(0.6)

Ueno store

41,577

5.4(4.0)

Shizuoka store

22,027

2.9(4.0)

Takatsuki store

9,061

1.2

(4.8)

Matsuzakaya

Toyota store

8,346

1.1

(1.3)

Sub total

205,847

27.0

(1.9)

677,51188.8

0.9

The Hakata Daimaru, Inc.

Sub total

56,747

7.4(1.2)

The Shimonoseki Daimaru, Inc.

15,6942.1(6.5)

Kochi Daimaru Co., Ltd.

13,269

1.7

(4.4)

Total
763,222100.0(Notes) 1. The South Wing of the Matsuzakaya Ueno store closed temporarily on March 11, 2014, for rebuilding.

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0.4

2. The Main Building of the Daimaru Shinsaibashi store closed temporarily on December 30, 2015, for rebuilding.

(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 ¥37,110 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 Department Store Business included ¥2,590 million forrefurbishments at respective sales spaces of the Matsuzakaya Nagoya store, the Daimaru Kyoto
store and others, and intensive relocation work involving the North Wing and South Wing of the
Daimaru Shinsaibashi store in line with rebuilding of the Main Building of that store. In addition,
the main investments in the PARCO Business included ¥4,957 million for asset purchases largely
associated with store refurbishment of the Hiroshima 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 both the South Wing of the
Matsuzakaya Ueno store and the Main Building of the Daimaru Shinsaibashi store, and the Ginza
6-chome District 10 Urban Redevelopment Project, and in the PARCO Business this included new
construction of New Wing (provisional name) of the Sendai PARCO.
(iii) Sales, removals and losses of major non-current assets
Mainly, this consisted of retirement of non-current assets associated with rebuilding the Main
Building of the Daimaru Shinsaibashi store.

(3) Status of procurement
The Group’s basic policy is to source funds needed for business activities using funds obtained
from operating activities. Moreover, when the need arises to finance investment or other expenditure,such funds are procured mainly by issuing bonds and borrowing from financial institutions, withconsideration placed on maintaining financial soundness and stability.
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.
In the current fiscal year, the Company issued unsecured straight bonds amounting to a total of¥15,000 million in August 2015. In November 2015, ¥12,000 million of the 2nd series of unsecured
bonds (issued in November 2012) was redeemed upon those bonds having reached maturity. As aresult, the balance of unsecured straight bonds outstanding as of the end of the current fiscal year is¥27,000 million.

(4) Issues to be addressed
We aim to prevail over the competition and make our vision of securing a position as a leading
retail company a reality amid a challenging business environment. To that end, we will work to
generate consolidated operating income of ¥50,000 million in fiscal 2016, which is the final year of
our “FY 2014 - FY 2016 Medium-term Business Plan.” Moreover, throughout the year we will also
work to put ourselves in position to take a substantial leap forward as we embark on our next
Medium-term Business Plan which is set to start in fiscal 2017. In so doing, we will pursue theinitiatives described below.

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Dramatically strengthening competitiveness and profitability as a multifaceted retailer
operating multiple businesses
With the aim of acting as a retail group composed of competitive businesses centered on
department stores, we have extended the breadth of our operations through initiatives that haveincluded acquiring shares of PARCO, StylingLife Holdings and Forest, and making Senshukai an
equity method associate in April 2015. Going forward, we will take steps to innovate each of ourbusinesses, generate Group synergies, and strength the competitiveness and profitability of the entire
Group.

(Department Store Business)
We aim to establish “A new department store business model,” and are forging ahead with efforts
geared to strengthening our capacity to serve markets in a manner aligned with the distinctive
characteristics of the areas in which our individual stores operate, and revamping our management
structure with the aim of boosting profitability. In fiscal 2016, we will work toward making our stores
more appealing by creating sales space that is tailored to changes in the market and wins the backing
of a wide range of customers, primarily by refurbishing our key stores such as the Matsuzakaya
Nagoya store. We are also redoubling efforts to encourage new customers visiting our stores tobecome card members. We will also take steps to build customer loyalty through CRM (customer
relationship management) efforts that will involve enticing customers to repeatedly visit our stores byoffering them timely and appropriate information tailored to their specific preferences, as gleaned
from card data analysis.
With respect to serving the affluent customer market, which is an area of strength in our
Department Store Business, we will continue fortifying our efforts to gain new out-of-store customer
accounts, while also working to upgrade both our product lineup in line with the needs of suchcustomers and customer service. We will also redouble our efforts to serve our customers fromoverseas who are visiting Japan, a segment which is poised for further growth, through initiatives that
include introducing services geared to the prime customer category.

(PARCO Business)
We will compensate for the adverse effects of the Shibuya PARCO’s temporary closure during its
rebuilding beginning in August 2016, and the Chiba PARCO’s closure in November, throughinitiatives that involve promoting store-specific strategies tailored respectively to our “urban” and“community” store formats, communicating information using ICT solutions, and restructuring tenant
merchandising operations including those focused on inbound tourism. At the same time, we will
focus on cultivating business in major urban areas and bringing about greater market dominance of
our stores.
We will open a new building at the Sendai PARCO in early summer 2016, along with a ZEROGATE as our second store in Hiroshima this autumn. Our efforts will also include promoting
development plans geared to achieving growth next fiscal year and beyond. To that end, we will open
stores under the PARCO business format in the new South Wing of the Matsuzakaya Ueno store
which is now under construction and is slated to open for business in autumn 2017, and we will also
open ZERO GATE stores in Kyoto and Sannomiya.
In addition, with respect to operations related to the PARCO Business, we will redouble our efforts
involving new projects and promote initiatives to achieve greater external expansion.

(Business Alliance with Senshukai)
To draw on our strengths as a multifaceted retailer operating multiple businesses, we are taking on
efforts that involve joint planning and mutual development of private brands for Daimaru
Matsuzakaya Department Stores and Senshukai. These efforts will entail opening physical storesfeaturing Senshukai’s “Kcarat” brand in Daimaru Matsuzakaya Department Stores beginning inMarch 2016, and making Daimaru Matsuzakaya Department Stores’ “SOFUOL” brand available
through Senshukai’s e-commerce website. Going forward, we aim to increase sales of the “Kcarat”
brand of original fashion products by venturing beyond offering the brand in our own retail stores and- 10 -

online, through initiatives that involve opening street-level stores and making the brand available
through commercial facilities and e-commerce websites externally. Also, given that Senshukai excels
in the bridal, baby product and maternity segments, we will pursue joint initiatives in that regard andwork to develop synergies with that company.
Promoting omni-channel retailing
We will promote omni-channel retailing drawing on diverse sales channels that include Daimaru
Matsuzakaya Department Stores, PARCO and Senshukai. During fiscal 2016, we will respond todiversifying customer needs and purchasing patterns. This will involve swiftly enhancing ourdepartment store online shopping business platform by drawing on Senshukai’s know-how in thatregard, engaging in joint efforts between Daimaru Matsuzakaya Department Stores and Senshukaiwith respect to marketing, merchandise planning, promotions, customer intelligence, and other suchoperations, and offering products and services in a manner that extends beyond the physical store andonline realms. In addition, we will promote initiatives geared to expanding our range of merchandiseand developing new collaborative brands following on efforts with the “Kcarat” brand.

Constructing a business model for growth along with regions in which it operates with its
stores at the core of such growth (strategy of urban market dominance)
We aim to ensure our survival amid a harsh competitive environment where the geographic areas inwhich Group stores operate are pitted against other localities. To that end, we are pursuing our“strategy of urban market dominance” where we help create vibrant communities, and achieve growthalongside those communities, by promoting urban development in a manner that enlists the support of
Daimaru Matsuzakaya Department Stores, PARCO, Daimaru COM Development and other Group
companies.

(Ginza 6-chome District 10 Urban Redevelopment Project — the Ginza Redevelopment Project)
The Ginza Redevelopment Project involves integrated redevelopment of an approximately 9,080
square-meter, two-block site located in the Ginza district of Chuo-ku, Tokyo, and encompassing theformer site of the Matsuzakaya Ginza store.
Slated to open in April 2017, the complex will be world-class in terms of quality and one of thelargest in the Ginza district. It will consist of commercial facilities with approximately 46,000 square
meters (approximately 13,900 tsubo) of sales floor space, and large offices with single- floor leasable
units of approximately 6,100 square meters (approximately 1,850 tsubo).

(Plan for the rebuilding of the South Wing of the Matsuzakaya Ueno store)
We are in the process of building the new South Wing of the Matsuzakaya Ueno store, which willconsist of a department store, PARCO, TOHO Cinemas, offices and other facilities. Refurbishment of
the Main Building was completed in spring 2014, and the new South Wing is slated for completion inautumn 2017. We are taking on other development projects mainly involving the Company’s
properties in the vicinity of the Matsuzakaya Ueno store, in the Okachimachi district where the store
is located. Going forward, we will work with that community in efforts geared to attracting more
visitors to the area and making it more vibrant.

(Plan for the rebuilding of Main Building of the Daimaru Shinsaibashi store)
To help make the Osaka-Shinsaibashi district more vibrant and to further revitalize the area, at theend of 2015 we temporarily closed the Main Building of the Daimaru Shinsaibashi store, and got
started with construction to rebuild the facility. Slated to open for business in autumn 2019, the new
Main Building will consist of three underground floors and 11 stories above ground, and feature asales floor area of approximately 40,000 square meters. In spring 2021, the Main Building and North
Wing will be connected, which will result in a more unified facility that is easier for people tonavigate. At the same time, we will also continue to help make the area more dynamic by enlisting theentire Group in efforts to develop sites in the vicinity of the store.

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(Udagawa-cho 15 Development Project — plans for rebuilding the Shibuya PARCO)In December 2015, the government decided to proceed with an urban development plan in thespecial urban renaissance district situated on approximately 5,380 square meters of land in the
Udagawa-cho 15 area, which encompasses the Shibuya PARCO Part 1 and Part 3, along with acommercial office complex which is also slated for development in that area. With our store situatedin a pivotal location, we will promote initiatives aimed at making the town easier for people tonavigate and fueling greater vibrancy in the area, while also engaging in efforts to educate and inform
people about fashion and theater arts.

(Sakae district of Nagoya City)In Nagoya City’s Sakae district, location of a Matsuzakaya store and an adjacent PARCO store, wewill pursue expansion such as has been the case with PARCO’s opening of the Nagoya ZERO GATE
store in October 2014 and “PARCO midi” in March 2015. Furthermore, we are moving forward withrefurbishment plans that address changes in the market, with respect to both the Matsuzakaya Nagoya
store and the Nagoya PARCO. Looking ahead, we will engage in development projects with the aimof revitalizing communities and efforts to fortify the competitive strengths of our stores.
Enhancing the financial strategy
We will redouble our efforts to formulate and promote our “Financial Strategy” with the aim ofincreasing our medium- to long-term corporate value. Specifically, this will involve implementing
financial initiatives guided by the aims of generating free cash flows and improving return on equity,and to such ends we will further strengthen business management practices from the perspective of
making profits in terms of net sales and operating income, and from the perspective of ensuring
efficient use of assets and capital in a manner that is cognizant of the balance sheet and costs ofcapital. As a Group, we will optimally allocate our management resources, taking into account theneed for improving our financial standing and monitoring trends in financial and capital markets. In
so doing, we will take a flexible approach to securing funds in order to better pursue our growthstrategy, while at the same time spelling out investment criteria with respect to development projects,
store refurbishment, and merger and acquisition deals, while clarifying criteria for withdrawing from
unprofitable and underperforming businesses.

Strengthening corporate governance
In December 2015, the Company established and disclosed its “Corporate Governance Guidelines,”
with the aim of ensuring sustainable growth of the Group and increasing its corporate value over the
medium to long term by implementing the best possible corporate governance practices. The
Company released its Corporate Governance Report on the same day, in conjunction with the
Corporate Governance Guidelines.
The Corporate Governance Guidelines describe our ideals with respect to the Group’s corporate
governance, such as in terms of practices involving, “Relationships with Shareholders,” “Information
Disclosure,” “Roles and Responsibilities of the Board of Directors, etc.,” and other such content,
including fundamental requirements of disclosure under Japan’s Corporate Governance Code (“Group
Philosophy,” “Basic Ideas on Corporate Governance,” and “Human Resources and Remuneration andOther Matters Involving Directors, Audit & Supervisory Board Members and Executive Officers”).
We also disclosed information on matters including officer selection criteria, policy for determining
officer remuneration, and basic policy regarding cross-shareholdings.
Going forward, we will work to address priority issues that include: 1.) improving the effectivenessof the Board of Directors by further drawing on the knowledge of Outside Directors and Outside
Audit & Supervisory Board Members, while focusing on management strategy discussions involving
proposals and 2.) improving functional capabilities of management personnel by strengthening the
Personnel and Remuneration Committee and enhancing our managerial talent.

- 12 -



Establishing the Group Vision and the next Medium-term Business Plan
With the aim of achieving further Group-wide growth in fiscal 2017 and beyond, we will move
forward in establishing a new Group Vision that illustrates where we would like to see ourselves in
the future and pointing us in that direction, and also establishing our next Medium-term Business Plan.

We appreciate the continued support and encouragement of our shareholders.

(5) Status of assets and profit or loss(i) Changes in assets and profit or loss of the corporate group(Millions of yen, unless otherwise stated)
9th fiscal year
8th fiscal year
(Current fiscal year)(Fiscal 2014)(Fiscal 2015)

6th fiscal year
(Fiscal 2012)

7th fiscal year
(Fiscal 2013)

1,092,756

1,146,319

1,149,529

1,163,564

Operating income

30,857

41,81642,16748,038

Ordinary income

32,20240,502

40,48047,910Net income

12,18331,56819,96726,313Category
Net sales

Net income per share (Yen)
Total assets

23.05

59.77

75.66

100.42

1,009,165

998,730

1,018,495

1,019,146

Net assets
390,667
422,215430,260
440,594(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. Net income 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 current fiscal year. 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 current
fiscal year. As such, respective financial figures for the beginning of the 9th fiscal period (fiscal 2015) have beenrevised 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(Millions of yen, unless otherwise stated)
9th fiscal year
8th fiscal year
(Current fiscal year)(Fiscal 2014)(Fiscal 2015)

6th fiscal year
(Fiscal 2012)

7th fiscal year
(Fiscal 2013)

Net sales

22,744

8,983

11,147

12,213Operating income

20,394

6,280

8,391

9,194

Ordinary income

19,972

6,398

8,460

9,201

Net income

19,93012,405

8,388

6,872

Net income per share (Yen)

37.69

23.48

31.77

26.22

450,201

438,491429,226

428,175

Category

Total assets

Net assets
299,508
306,654308,681
303,737(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. Net income per share has been calculated as if this consolidation ofshares was conducted at the beginning of the 8th fiscal year (fiscal 2014).

- 13 -

(6) Status of significant parent company and subsidiaries(i) Relationship with the parent company
No items to report.
(ii) Status of major subsidiaries
Name

Capital(Millions of yen
unless otherwise
stated)Daimaru Matsuzakaya Department Stores
Co. Ltd.

10,000

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

Ratio of ownershipby the Company(%)

Major business

100.0

Department Store Business

3,037

69.9

Department Store Business

480

100.0

Department Store Business

300

100.0

Department Store Business

34,367

64.9

PARCO Business

S$4 million

64.9

PARCO Business

NEUVE A Co., Ltd.

490

64.9

PARCO Business

PARCO SPACE SYSTEMS Co., Ltd.

490

64.9

PARCO Business

PARCO-CITY Co., Ltd.

10

64.9

PARCO 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

JFR Card Co., Ltd.

100

100.0

Credit Business

J. Front Design & Construction Co., Ltd.

100

100.0

Design and construction
contracting and manufactureand sale of furniture

JFR Online Co. Ltd.

100

100.0

Direct marketing

Dimples’ Co., Ltd.

90

100.0

Staffing service

J. Front Foods Co., Ltd.

100

100.0

Restaurant

Daimaru COM Development Inc.

50

100.0

Real estate leasing and tenant
service

Consumer Product End-Use ResearchInstitute Co., Ltd.

450

100.0

Merchandise test and quality
control

JFR PLAZA Inc.

NT$185 million

90.0

General merchandise retailing

Forest Co., Ltd.

90

72.9

Direct marketing

Angel Park Co., Ltd.

400

50.2

Parking

JFR Office Support Co., Ltd.

100

100.0

Commissioned back-officeserviceJFR Service Co. Ltd.

100

100.0

Leasing and parking
management

JFR Consulting Co. Ltd.

100

100.0

Consulting

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
service- 14 -

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

Address
18-11 KibaTokyo

2-chome,

Total book value

Total assets of theCompany

222,080

428,175

Koto-ku,(7) Major businesses
The Department Store Business, the PARCO Business, the Wholesale Business, the Credit
Business, and the Other Businesses including design and construction contracting and direct
marketing.

(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
Tokyo store
Urawa Parco store

Koto-ku, Tokyo
Chuo-ku, Osaka
Kita-ku, Osaka
Chiyoda-ku, Tokyo
Urawa-ku, Saitama

Matsuzakaya

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

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
Shibuya PARCO
Hibarigaoka PARCO
Kichijoji PARCO
Chofu PARCO
Tsudanuma PARCO
Chiba PARCO

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

NEUVE A Co., Ltd.

Shibuya-ku, Tokyo

PARCO SPACE SYSTEMS Co.,Ltd.

Shibuya-ku, Tokyo

PARCO-CITY Co., Ltd.

Shibuya-ku, Tokyo

Parco (Singapore) Pte Ltd

Singapore

Matsumoto PARCO
Shizuoka PARCO
Nagoya PARCO
Otsu PARCO
Hiroshima PARCO
Fukuoka PARCO
Kumamoto PARCO
Sapporo ZERO GATE
Nagoya ZERO GATE
Shinsaibashi ZERO GATE
Dotonbori ZERO GATE
Hiroshima ZERO GATE
PediSHIODOME- 15 -

Location
Matsumoto, Nagano
Aoi-ku, Shizuoka
Naka-ku, Nagoya
Otsu, ShigaNaka-ku, Hiroshima
Chuo-ku, Fukuoka
Chuo-ku, Kumamoto
Chuo-ku, Sapporo
Naka-ku, Nagoya
Chuo-ku, Osaka
Chuo-ku, Osaka
Naka-ku, Hiroshima
Minato-ku, Tokyo

(Wholesale Business)
Name

Location

Daimaru Kogyo, Ltd.

Head Office: Chuo-ku, Osaka
Office:Tokyo 1, Nagoya 1, Nagano 1, Oita 1, Overseas 5

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

Head Office: Shanghai, China

Daimaru Kogyo (Thailand) Co., Ltd.

Head Office: Bangkok, Thailand

Taiwan Daimaru Kogyo, Ltd.

Head Office: Taipei, Taiwan(Credit 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: Tokyo 2, Osaka 9, Kobe 1, Nagoya 1, Saitama 1, Taiwan 1(9) Status of employees(i) Employees of the corporate group
Category

Number of employees

J. FRONT RETAILING Co., Ltd.

112

Department Store Business

2,615

PARCO Business

1,496

Wholesale Business

198

Credit Business

114

Other Businesses

2,503(Note)

Total
7,038
Other than the employees shown above, the average number of temporary employees during the period is3,985.

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

Average age

112
45.1
Other than the employees shown above, the average number of temporary employees during the period is
13.

(iii) Employees of major subsidiaries
Name

Number of
employees

Average age

2,029

46.1

PARCO Co., Ltd.

477

41.5

Daimaru Kogyo, Ltd.

164

44.0

Daimaru Matsuzakaya
Department Stores Co. Ltd.

- 16 -

(10) Status of major creditors
Major creditors of the corporate group
Creditor

Amount payable

Creditor(Millions of yen)Amount payable

The Bank of Tokyo-Mitsubishi UFJ,Ltd.

33,909Development Bank of Japan Inc.

12,225

Sumitomo Mitsui Banking
Corporation

15,635

Mizuho Bank, Ltd.

11,675(11) Other important matters relating to current status of the corporate group
No items to report.

- 17 -

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

268,119,164 shares(3) Number of shareholders:

86,095(4) Major shareholders
Number of shares held(Thousands of shares)

Shareholding ratio(%)

Nippon Life Insurance Company

15,914
13,583
9,828

6.08
5.19
3.75

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

7,565

2.89

6,318
6,250
5,732
3,666

2.41
2.38
2.19
1.40

3,348

1.28

Name of shareholders
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)

J. Front Retailing Kyoei Supplier Shareholding Association
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Dai-ichi Mutual Life Insurance Company
Japan Trustee Services Bank, Ltd. (Trust Account 9)
STATE STREET BANK WEST CLIENT - TREATY 505234（Standing
Proxy: Settlement & Clearing Services Division, Mizuho Bank, Ltd.)

Japan Trustee Services Bank, Ltd.
(Sumitomo Mitsui Banking Corporation Retirement Benefit Trust
3,204
Account re-entrusted by Sumitomo Mitsui Trust Bank, Limited)(Note)
Shareholding ratio is calculated by deducting treasury shares (6,575 thousand shares).

- 18 -

1.22

3. Matters relating to subscription rights to shares of the Company(1) Status of subscription rights to shares held by the Company’s Officers, etc. and granted asremuneration for the duties performed at the end of the fiscal year
5th subscription rights to shares of J. Front Retailing Co., Ltd. (*September 3, 2007)* In accordance with a share transfer carried out on September 3, 2007, these were granted in lieu of subscription
rights to shares issued by Matsuzakaya Co., Ltd.

(i)

Persons and number of holders of subscription rights to shares (number of shares to be issued
upon exercise of subscription rights to shares)
Directors
1 (8,500 shares)(ii) Class of shares to be issued upon exercise of subscription rights to shares
Common shares of the Company(iii) Amount to be paid in for subscription rights to shares¥635,000 per each subscription right to shares (¥1,270 per share)(iv) The value of assets to be contributed upon exercise of subscription rights to shares¥500 per each subscription right to shares (¥1 per share)(v) Exercise period of subscription rights to shares
September 3, 2007 to July 14, 2026
(vi) Main conditions for exercise of subscription rights to sharesa. A holder of subscription rights to shares who holds a position of either Director, Audit &Supervisory Board Member or Executive Officer of the Company or any of its subsidiaries
during the period in (v) shall not be able to exercise subscription rights to shares.
b. A holder of subscription rights to shares shall exercise the rights only during a period of ten
days starting on the day immediately following the day on which the holder loses his/her
position of either Director, Audit & Supervisory Board Member or Executive Officer of theCompany or any of its subsidiaries.
c. If a holder of subscription rights to shares is unable to exercise the rights due to holding a
position of either Director, Audit & Supervisory Board Member or Executive Officer of theCompany or any of its subsidiaries until July 14, 2025, the said holder of subscription rights
to shares shall exercise the rights from July 15, 2025 to July 14, 2026.
d. A holder of subscription rights to shares who relinquishes his/her subscription rights to sharesshall not be able to exercise such rights.
(vii) Main provisions for acquisition of subscription rights to shares
Not provided.
(viii) Transfer of subscription rights to shares
Transfer of subscription rights to shares shall be subject to approval by resolution of theCompany’s Board of Directors.
(ix) Particularly advantageous terms
No items to report.

(2) Status of subscription rights to shares granted as remuneration for the duties performed during
the fiscal year
No items to report.

- 19 -

4. Matters relating to corporate officers(1) Names, etc. of Directors and Audit & Supervisory Board Members
Areas of responsibility in the Company and importantconcurrent positions outside the Company

Position in the Company

Name

Chairman(Representative Director)

SAMURA Shunichi

President(Representative Director)

YAMAMOTO Ryoichi

Director

YOSHIMOTO Tatsuya

President of Daimaru Matsuzakaya Department Stores Co. Ltd.
President of Daimaru Matsuzakaya Sales Associates Co. Ltd.

Director

MAKIYAMA Kozo

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

Director and Senior
Managing Executive
Officer

KOBAYASHI
Yasuyuki

Senior Executive General Manager of Affiliated Business Unit
External Director of PARCO Co., Ltd.

Director and Managing
Executive Officer

FUJINO Haruyoshi

Senior Executive General Manager of Management Strategy Unit
External Director of PARCO Co., Ltd.
Outside Director of Hakuseisha Co., Ltd.

Director and Managing
Executive Officer

DOI Zenichi

Senior Executive General Manager of Administration Unit and in chargeof Compliance and Risk Management

Director

TACHIBANA
FUKUSHIMA Sakie

President and Representative Director of G&S Global Advisors Inc.
Outside Director of Bridgestone Corporation
Outside Director of Ajinomoto Co., Inc.
Outside Director of Mitsubishi Corporation

Director

OTA Yoshikatsu

Special Advisor of KONICA MINOLTA, INC.
Outside Director of YAMAHA CORPORATION

Audit & Supervisory
Board Member

TSURUTA Rokurou

Attorney at law
Outside Director of TPR Co., Ltd.
Outside Audit & Supervisory Board Member of Sumitomo Mitsui
Financial Group, Inc.
Outside Member of the Board of Directors of KYB Corporation

Audit & Supervisory
Board Member

ISHII Yasuo

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

Audit & Supervisory
Board Member

NISHIKAWA
Koichiro

Outside Director of Kyowa Hakko Kirin Co., Ltd
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Department Stores Co. Ltd.

Audit & Supervisory
Board Member(full-time)

OCHI Bunshiro

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

Audit & Supervisory
Audit & Supervisory Board Member of Daimaru Matsuzakaya
Board Member
KATO Yoichi
Department Stores Co. Ltd.
(full-time)(Notes) 1. Tachibana Fukushima Sakie and Ota Yoshikatsu are Outside Directors.
2. Tsuruta Rokurou, Ishii Yasuo and Nishikawa Koichiro are Outside Audit & Supervisory Board Members.

- 20 -

(Reference)○ Executive Officers of the Company as of February 29, 2016 are as follows (excluding ones
concurrently serving as Director).
Position in the Company

Name

Areas of responsibility in the Company and importantconcurrent positions outside the Company

Executive Officer

IMAZU Takahiro

Senior General Manager of Management Planning, Management
Strategy Unit

Executive Officer

ENOMOTO Tomohiko

Senior General Manager of Group ICT Strategy Promotion,
Management Strategy Unit

Executive Officer

TADATSU TakehikoGroup Organization and Personnel Policy, Management Strategy Unitand Executive Officer and Senior General Manager of Human
Resources Division of Daimaru Matsuzakaya Department Stores Co.
Ltd.

Executive Officer

KUBOI Satori

Senior General Manager of Affiliated Business, Affiliated Business Unit

Executive Officer

TSUTSUMI Hiroyuki

Senior General Manager of Finance Division, Administration Unit

WAKABAYASHI
Executive Officer
Financial Strategy and Policy, Administration Unit
Hayato(Note) On March 1, 2016, “Areas of responsibility in the Company and important concurrent positions outside theCompany” for an Executive Officer was changed as follows.
Areas of responsibility in the Company and importantName
concurrent positions outside the Company
IMAZU Takahiro

Senior General Manager of Group Management Strategy Promotion,
Management Strategy Unit

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

Senior General Manager of Finance and Accounting, Financial Strategy
Unit
Please note that Enomoto Tomohiko retired from his office on March 1, 2016.

TSUTSUMI Hiroyuki(2) Attendance of Directors and Audit & Supervisory Board Members at meetings of the Board of
Directors(i) Attendance of Directors at meetings of the Board of Directors
Samura Shunichi, Yamamoto Ryoichi, Yoshimoto Tatsuya, Makiyama Kozo, Kobayashi
Yasuyuki, Fujino Haruyoshi and Tachibana Fukushima Sakie attended all 16 meetings of theBoard of Directors held during the current fiscal year.
In addition, Doi Zenichi and Ota Yoshikatsu attended all 12 meetings of the Board of
Directors held during the current fiscal year, subsequent to their appointment as Directors.
(ii) Attendance of Audit & Supervisory Board Members at meetings of the Board of Directors
Tsuruta Rokurou attended 15 of the 16 meetings of the Board of Directors held during thecurrent fiscal year.
In addition, Ishii Yasuo, Nishikawa Koichiro, Ochi Bunshiro and Kato Yoichi attended all 12
meetings of the Board of Directors held during the current fiscal year, subsequent to their
appointment as Audit & Supervisory Board Members.
(3) Total amount of remuneration, etc. to Directors and Audit & Supervisory Board Members
Total amount of remuneration, etc.
(Millions of yen)

Number of payees
Director[of which, Outside Director][

Audit & Supervisory Board Member[of which, Outside Audit &Supervisory Board Member](Notes)

[

11

312

3]

[ 23]

9

42

5]

[ 20]

Total
20
355
1. The total amount of remuneration, etc. includes ¥89 million in bonuses for Directors and Audit & Supervisory
Board Members scheduled for approval at the 9th Annual Shareholders Meeting.

- 21 -

2. 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 ¥10 million.
3. The maximum remuneration for Directors is set at ¥50 million per month by resolution of the Annual
Shareholders Meeting held in May 2008.
4. The maximum remuneration for Audit & Supervisory Board Members is set at ¥7 million per month byresolution of the Annual Shareholders Meeting held in May 2008.

(4) 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 of Directors and Audit & Supervisory Board Members
For the current fiscal year (fiscal 2015), remuneration of the Company’s Directors and Audit& Supervisory Board Members consists of monthly compensation, as well as bonuses for
Directors and Audit & Supervisory Board Members which are tied to results and success inaccordance with each year’s business performance.
With respect to fiscal 2016 remuneration of the Company’s Directors and Audit &Supervisory Board Members, we plan to make the following changes applicable to amounts paid
for June 2016 and thereafter.
Remuneration of Internal Directors• The Company has increased the proportion of bonuses for Directors and Audit & Supervisory
Board Members (performance-based remuneration) in terms of total remuneration, withmonthly compensation at 60% and bonuses for Directors and Audit & Supervisory Board
Members at 40% (standard ranking), in order to provide incentives both for accomplishingobjectives set under management strategies and business plans, and for achieving targets withrespect to corporate performance.
Remuneration of Outside Directors and Audit & Supervisory Board Members (bothinternal and outside)• The Company will discontinue bonuses for Directors and Audit & Supervisory Board
Members and provide monthly compensation only.
In conjunction with that, with the aim of ensuring that the Group achieves sustainable growthand increases corporate value over the medium to long term, the Company aims to introduce
remuneration for Internal Directors linked to their medium- to long-term performance (stockbased remuneration, etc.) beginning in fiscal 2017, and will forge ahead in reviewing such
options.
(ii) Procedures for determining remuneration for Directors and Audit & Supervisory Board
Members
The total monthly remuneration amount for the Company’s Directors and Audit &Supervisory Board Members will be limited to that set upon passage of a resolution of ashareholders meeting, and the total amount of bonuses for Directors and Audit & Supervisory
Board Members for the fiscal year will be that set upon passage of a resolution of an annual
shareholders meeting held every fiscal year. The specific amounts of remuneration paid torespective Directors will be set based on standards for officer remuneration that are determined
beforehand, and will be determined on the basis of respective performance evaluations
conducted each fiscal year. Such amounts will be deliberated on and decided by the Human
Resources and Remuneration Committee, which has a majority membership composed of
Outside Directors and Outside Audit & Supervisory Board Members, and which is also chairedby an Outside Director. The committee will then report such details to the Board of Directors.
The amount of remuneration paid to respective Audit & Supervisory Board Members will also
be deliberated on by the Human Resources and Remuneration Committee, and such details will
be subsequently reported to all Audit & Supervisory Board Members.

- 22 -

(5) Matters relating to Outside Directors and Outside Audit & Supervisory Board Members[Outside Director]
TACHIBANA FUKUSHIMA SakieA.

OTA Yoshikatsu

Important concurrent positions President and Representative Director of
G&S Global Advisors Inc.
Outside Director of Bridgestone Corporation
Outside Director of Ajinomoto Co., Inc.
Outside Director of Mitsubishi Corporation

Special Advisor of KONICA MINOLTA,
INC.
Outside Director of YAMAHACORPORATION

Relationship with theCompany

No special relationships exist

No special relationships exist

B.

Relationship with specified
affiliated business operator

No items to report

No items to reportC.

Major activities during current
fiscal year

Tachibana Fukushima Sakie attended all 16
meetings of the Board of Directors held
during the current fiscal year.
She contributes to ensuring more effective
meetings of the Board of Directors bydrawing on points of view and perspectives
that vary from those of the Internal Directors
in providing advice and oversight withrespect to the direction of overallmanagement and other such matters. She does
so based on her in-depth understanding
regarding globally-minded human resources
and her abundant experience and knowledge
as an international corporate manager.
Moreover, she serves as the chairman of the
Human Resources and Remuneration
Committee which acts as an advisorycommittee to the Board of Directors, andhelps ensure transparency and objectivity inmatters of staffing and remuneration
involving the management team.

Ota Yoshikatsu attended all 12 meetings ofthe Board of Directors held during the fiscal
year, subsequent to his appointment as a
Director.
He contributes to ensuring more effective
meetings of the Board of Directors bydrawing on points of view and perspectives
that vary from those of the Internal Directors
in providing advice and oversight withrespect to promoting Group management andother 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. and Konica
Corporation, acting as a manager of acompany that, like this Company, is a holding
company, and serving as a chairman of theboard of directors of a company with threecommittees (nomination, audit andremuneration committees).
Moreover, he serves as a member of the
Human Resources and Remuneration
Committee which acts as an advisorycommittee to the Board of Directors, andhelps ensure transparency and objectivity inmatters involving the appointment ofexecutives.

(Note)

Outside Directors Tachibana Fukushima Sakie and Ota Yoshikatsu are independent officers, which are required tobe put in place by Tokyo Stock Exchange, Inc. and Nagoya Stock Exchange, Inc. for the protection of generalshareholders.

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[Outside Audit & Supervisory Board Member]
TSURUTA Rokurou

ISHII Yasuo

NISHIKAWA Koichiro

Important concurrent positions Attorney at law
Outside Director of TPR Co.,Ltd.
Outside Audit & Supervisory
Board Member of Sumitomo
Mitsui Financial Group, Inc.
Outside Member of the Boardof Directors of KYB
Corporation

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

Outside Director of Kyowa
Hakko Kirin Co., Ltd
Audit & Supervisory Board
Member of Daimaru
Matsuzakaya Department
Stores Co. Ltd.

Relationship with theCompany

No special relationships exist

No special relationships exist

No special relationships exist

B.

Relationship with specified
affiliated business operator

No items to report

No items to report

No items to reportC.

Major activities during current
fiscal year

Tsuruta Rokurou attended 15of the 16 meetings of theBoard of Directors held
during the current fiscal year.
He contributes to ensuring
more effective meetings ofthe Board of Directors byactively and assertively
furnishing advice,recommendations and otherfeedback to the Board of
Directors, with respect tomatters such as regulatorycompliance in managing
operations such as internal
controls and audits. He does
so based on his in-depth
understanding of legal affairs
as a legal professional.
Moreover, he serves as amember of the Human
Resources and Remuneration
Committee which acts as anadvisory committee to theBoard of Directors, and helps
ensure transparency andobjectivity in matters
involving the appointment ofexecutives.
In addition, he attended 14 of
the 15 meetings of the Audit& Supervisory Board held
during the current fiscal year,
where his input included
exchanging opinions on audit
results and participating indeliberations on important
audit matters.

Ishii Yasuo attended all 12
meetings of the Board of
Directors held during the
fiscal year, subsequent to his
appointment as an Audit &Supervisory Board Member.
He contributes to ensuring
more effective meetings ofthe Board of Directors byactively and assertively
furnishing advice,recommendations and otherfeedback to the Board of
Directors, with respect toconcepts of management
strategy and other suchmatters. He does so based on
his longstanding experience
working abroad, along withhis abundant experience andsuitable knowledge in thefield of global management
outside the retail industry,
encompassing expertise indeveloping business overseas.
Moreover, drawing on his
experience as a director of acompany with an audit &supervisory board, hefurnishes advice onheightening precision withrespect to initiatives of theBoard of Directors and the
Audit & Supervisory Board
operating under the company
with an audit & supervisoryboard.
He attended all 11 meetingsof the Audit & Supervisory
Board held during the fiscal
year subsequent to his
appointment as an Audit &Supervisory Board Member,accordingly exchanging
opinions on audit results andparticipating in deliberations
on important audit matters.

Nishikawa Koichiro attended
all 12 meetings of the Boardof Directors held during the
fiscal year, subsequent to his
appointment as an Audit &Supervisory Board Member.
He contributes to ensuring
more effective meetings ofthe Board of Directors byactively and assertively
furnishing advice,recommendations and otherfeedback to the Board of
Directors, with respect tomatters such as taking risks
regarding new business andM&As. He has been involvedin business alliances, M&A
activities, management
reforms and other suchendeavors, and also hassuitable knowledge from afinancial perspective gained
through his experience being
involved in importantinternational negotiations on
many occasions.
He attended all 11 meetingsof the Audit & Supervisory
Board held during the fiscal
year subsequent to his
appointment as an Audit &Supervisory Board Member,accordingly exchanging
opinions on audit results andparticipating in deliberations
on important audit matters.

A.

(Note)The three above-mentioned Outside Audit & Supervisory Board Members are independent officers, which arerequired to be put in place by Tokyo Stock Exchange, Inc. and Nagoya Stock Exchange, Inc. for the protection ofgeneral shareholders.

- 24 -

(6) Outline of limited liability agreements
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 Outside Directors Tachibana Fukushima Sakie and Ota Yoshikatsu, and with full-time Audit &Supervisory Board Members Ochi Bunshiro and Kato Yoichi, and with Outside Audit & Supervisory
Board Members Tsuruta Rokurou, Ishii Yasuo and Nishikawa Koichiro. These agreements limit theamount of their liability for damages to the higher of either ¥12,000,000 or the minimum amount ofliability such that is stipulated in Paragraph 1, Article 425 of the said Act.

- 25 -

5. 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¥65 million(ii) Total cash and other financial profits to be paid by the Company and its¥167 million
subsidiaries(Notes) 1. Among the significant subsidiaries of the Company, PARCO Co., Ltd. and its 4 subsidiaries are auditedby auditing firms other than the Accounting Auditor of the Company. PARCO Co., Ltd. is audited 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 introduction of International Financial Reporting Standards (IFRS)(4) Rationale for Audit & Supervisory Board’s agreement on remuneration of the Accounting
Auditor
The Audit & Supervisory Board furnished its agreement with respect to the amount of
remuneration, etc. provided to the Accounting Auditor upon conducting a review regarding audit
appropriateness with respect to the Accounting Auditor’s audit plan, its execution of duties, the basis
used for calculating remuneration estimates and other factors.

(5) Policy for determining dismissal or non-reappointment of Accounting Auditor
The Audit & Supervisory Board is to take necessary measures that include dismissing the
Accounting Auditor upon gaining consent of all Audit & Supervisory Board Members, or otherwise
making a decision on proposals to dismiss or not reappoint the Accounting Auditor submitted to the
Shareholders Meeting, in the event that the Audit & Supervisory Board deems it appropriate todismiss or otherwise not reappoint the Accounting Auditor, either if there are grounds for dismissal asprovided for in Article 340, Paragraph 1 of the Companies Act of Japan, or if a situation arises
whereby the audit of the Company has been significantly impeded such as would be the case if thesupervisory authorities were to issue an order requiring suspension of auditing activities.

(6) Business suspension imposed on Accounting Auditor during the current fiscal year
Details regarding disciplinary action announced by Japan’s Financial Services Agency (FSA) on
December 22, 2015, are as follows.

- 26 -

(i)Entity subject to disciplinary action
Ernst & Young ShinNihon LLC(ii) Details of disciplinary action• Three-month suspension of operations related to conclusion of new contracts (January 1, 2016
to March 31, 2016)• Business improvement order(iii) Grounds for disciplinary action
A)With respect to Ernst & Young ShinNihon LLC’s audit of Toshiba Corporation’s financial
statements for the fiscal years ended March 31, 2010, 2012 and 2013, seven certified public
accountants acted in negligence of due care by having attested that those financial statements
contained no material misstatements, even though those statements did in fact containmaterial misstatements.
B) The audit firm’s operations were deemed conspicuously inappropriate.
On January 22, 2016, the FSA made the decision to impose a ¥2,111,000,000 fine.

6. 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.

(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.
- 27 -

(4) Roles and Responsibilities of the Board of Directors, etc.
Directors and Audit & Supervisory Board Members, who are appointed by the shareholders and are
entrusted with management of the Company, are to carry out the roles and responsibilities in the
Board of Directors as listed below. They are to do so in accordance with of their fiduciary
responsibility and accountability to shareholders, and with the aim of realizing the ideals of the Group
Philosophy. 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 vision, management strategies, business plans and otherfundamental management policies, and carrying out multifaceted and objective deliberations that
include evaluation of risks with respect to the aforementioned;(ii) Making swift and resolute decisions regarding important matters of business execution involving
Group management on the basis of the direction noted above, while ensuring that the decisionmaking process is transparent, fair and rational;(iii) Tracking progress of management strategies and business plans, and also determining matters ofstaffing and remuneration involving the management team on the basis of assessing the
aforementioned;(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) Drawing up plans regarding successors (next senior management team) and overseeing progress
made in that regard.
The Company has recently adopted the company with an Audit & Supervisory Board
organizational structure*. Rationale used in adopting this structure is as described below.
(i)

Under the structure, responsible persons who execute business of respective JFR Groupbusinesses ensure that tasks are executed in a cohesive and ongoing manner by taking part inmeetings of the Board of Directors where those involved deliberate and make decisions onimportant matters relating to business of the Group.
(ii) The structure provides a rational means of carrying out audits for the purpose of ensuring legal
compliance of Group management. Accordingly, Audit & Supervisory Board Members whose
independence and autonomy are legally ensured perform highly objective audits, and full-time
Audit & Supervisory Board Members perform extremely precise audits drawing on sophisticatedcapabilities to gather information.
Moreover, under the company with an Audit & Supervisory Board structure, multiple
independent Outside Directors are appointed to supplement functions of the Board of Directors,
particularly with the aim of ensuring the effectiveness of the oversight function. Meanwhile, wetake initiatives to enhance functions of the Board of Directors by establishing the Human
Resources and Remuneration Committee and the Governance Committee to act as advisorycommittees of the Board of Directors.
*) We continually review options for adopting optimal systems with respect to the Company’sorganizational structure (involves selecting a corporate governance structure among options that include thecompany with an Audit & Supervisory Board, company with supervisory committee, and company with threecommittees {nomination, audit and remuneration committees} structures) and with respect to making use ofInternal Directors who do not execute business, in order to further heighten the effectiveness of our corporate
governance, and to help the JFR Group achieve sustainable growth while increasing corporate value over the
medium to long term.

- 28 -

7. System and policies of the Company(1) Systems to ensure properness of operations <Basic Policy to Build Internal Control System>(Revised on March 25, 2016)
This policy sets forth basic policy on developing internal control systems with the aim of ensuring
appropriateness of operations performed by the entire corporate group which is composed of theCompany and its subsidiaries (hereinafter, the “Group”). Accordingly, we aim to increase corporate
value through specific initiatives geared toward promoting this policy.
I.

System to ensure that execution of duties by Directors, etc., and employees of all Group companies
complies with laws and regulations and the Articles of Incorporation(Item 6, Paragraph 4, Article 362 of the Companies Act and Item 4 and Item 5 (d), Paragraph 1,
Article 100 of the Ordinance for Enforcement of the Companies Act)
(1) Corporate governance(i) Final decision making on important matters relating to management and supervision of
execution of duties by Directors shall be in compliance with the “Rules of the Board of
Directors” and shall be carried out at meetings of the Board of Directors held at least once
every month.
(ii) For decision making, monitoring action and the like by the Board of Directors, highly
independent Outside Directors able to make judgments with independence from top- 29 -

management and to make appropriate decisions shall be appointed.
(iii) Audit & Supervisory Board Members shall carry out auditing of execution of duties byDirectors and Executive Officers in compliance with the “Rules of the Audit & Supervisory
Board” and the “Audit & Supervisory Board Members’ Audit Standard.”(iv) The Company shall bring in Outside Audit & Supervisory Board Members with knowledge
and experience to monitor the management of the Company from an objective standpoint andshall strengthen its auditing function.
(v) Other than the Board of Directors and the Audit & Supervisory Board, the Company shall
operate the following meeting structures.
Group Management Meeting(This meeting shall be composed of Internal Directors and attendance by Full-time Audit &Supervisory Board Members shall be required. It shall deliberate over and determine
important policies and measures with respect to overall group management.)
Group Strategy Meeting(This meeting shall be composed of Internal Directors. It shall carry out debates onimportant issues with respect to group management and shape approaches to such issues.)
Group Results and Strategy Examination Meeting(This meeting shall be composed of Internal Directors, etc. Its activities shall include
carrying out debates on group results and related important issues and following them up.)
Group Liaison Meeting(This meeting shall be composed of Internal Directors, etc. Its activities shall include
sharing information on important matters among all Group companies.)
Affiliated Business Presidents Meeting, SS Business Presidents Meeting(These meetings shall confirm progress of results, confirm issues and exchange information
at all Group companies excluding department stores.)(vi) The Company shall establish the Management Strategy Unit, the Affiliated Business Unit,
Financial Strategy Unit and the Administration Unit and clarify the roles, responsibilities andauthorities of organizations, and shall introduce an Executive Officer system and work to
separate management decision making from the execution of business.
(2) Compliance and risk management(i) The Company shall ensure that all officers and employees of all Group companies arethoroughly familiarized with the “JFR Group Mission Statement” and the “JFR Group
Compliance and Risk Management Manual.”(ii) The Company shall establish the Compliance and Risk Management Committee. The
President shall be the chairperson and the members of the committee shall be corporate
lawyers and Directors, Audit & Supervisory Board Members and others selected by thechairperson.
(iii) An officer shall be put in charge of compliance and risk management in order to promote theoperation of compliance and risk management.
(iv) At each Group company, departments and responsible persons shall be put in charge ofpromotion of compliance and risk management, and shall carry out daily supervision anddirection of business operations that are in accordance with laws and regulations and internal
company rules.
(v) The Compliance and Risk Management Committee shall work to develop the foundations ofcompliance and risk management such as internal company rules, operation management
manuals and formulation of management systems. In addition, the committee shall strengthen
systems that are in compliance with laws and regulations and internal company rules at all
Group companies by periodically carrying out work rank-tailored compliance and risk
management training through departments in charge of promotion of compliance and risk
management at each company. Internal company rules, manuals and the like shall be made- 30 -

available for inspection and verification by all officers and employees at any time by postingthem on the intranet.
(vi) The Compliance and Risk Management Committee shall periodically request reports frompersons in charge of promotion of compliance and risk management at each Group company
regarding the status of compliance and risk management in their respective areas of
responsibility, and take proper rectification measures. In addition, the committee shallformulate guidelines and measures to prevent recurrence to be followed and taken by theGroup as a whole, and implement the said guidelines and measures.
(vii) 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 all Group companies.
(viii) The Company shall establish the Internal Audit Division, which shall audit the operations of
all Group companies or which shall properly report the results of audits of operations,
examine the properness and effectiveness of the processes for these operations, and provide
guidance and education to all departments at the Company and all Group companies.
Important matters shall be properly reported to the Board of Directors and the Audit &Supervisory Board.
(3) System to secure appropriateness of financial reporting
The Company shall be in compliance with accounting standards and various associated laws andregulations, and shall construct an internal company system to secure the legality andappropriateness of its financial reporting. In addition, all Group companies shall also construct
the same system.
II. Rules concerning management of risk of losses of all Group companies and other systems(Item 2 and Item 5 (b), Paragraph 1, Article 100 of the Ordinance for Enforcement of theCompanies Act)(i) For risks involved in business operations, the Compliance and Risk Management Committee
shall carry out evaluations and management, and for important risks, the committee shallperiodically report on the risk management status to the Board of Directors.
(ii) Of the risks involved in business operations that are identified, for particularly serious items,
the Compliance and Risk Management Committee shall deliberate over and determine apolicy in response, and shall prevent them from occurring by having each of the responsible
departments of all Group companies execute the said policy.
(iii) For crisis events such as large-scale earthquakes, fires and accidents, crisis management shallbe controlled by the “Emergency Response Headquarters” headed by the President.
III. System for storage and management of information regarding execution of duties by Directors(Item 1, Paragraph 1, Article 100 of the Ordinance for Enforcement of the Companies Act)(i) For the below-mentioned documents relating to the execution of duties by Directors, inaccordance with the rules on document management, each responsible department shall carryout document storage and management during the stipulated period and shall develop asystem to enable inspections of such documents at any time.
1) Minutes of shareholders meetings and related documents
2) Minutes of Board of Directors meetings and related documents
3) Circular approval memos, applications, and reports
4) Documents relating to financial reporting(ii) For minutes and related documents regarding meetings chaired by Directors and otherimportant documents relating to the execution of duties by Directors, each responsible
department shall carry out document storage and management and shall develop a system toenable inspections of such documents at any time.

- 31 -

IV. System to ensure efficient execution of duties by Directors, etc. of all Group companies(Item 3 and Item 5 (c), Paragraph 1, Article 100 of the Ordinance for Enforcement of theCompanies Act)(i) The Company shall have the Management Strategy Unit, the Affiliated Business Unit, theFinancial Strategy Unit and the Administration Unit as management bodies of the Company,
and Directors shall be, in principle, appointed as the heads of the units. Under this structure,communication of decision-making matters at the Board of Directors to the Executive
Officers shall be facilitated and business shall be executed expeditiously.
(ii) The President and the unit heads of the Company shall work to achieve management targets
and medium- and long-term plans based on their respective roles, responsibilities andauthorities by thoroughly making them known to all officers and employees of all Group
companies, and giving execution instructions and carrying out monitoring of efficient
execution of business. Regarding progress in achieving targets at each department based on
the management targets and medium- and long-term plans, they shall also demand reports at
the Group Results and Strategy Examination Meeting and the like, and manage such progress
accordingly.
(iii) For deliberation and determination of company-wide important matters, the GroupManagement Meeting, the Group Strategy Meeting and others shall be used effectively tocontribute to decision making by the Board of Directors.
(iv) The Company shall plan and formulate the Group’s business strategies, optimally allocate theGroup’s management resources, and track the progress and results of the Group’s strategies.
Moreover, the Company shall provide to Group companies various types of services, such asnecessary and appropriate guidance and management, etc. for management operations, basedon the contracts with each Group company to increase the business value of the entire Group.
(v) 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 Group funds.
V. System for reporting to the Company on matters involving execution of duties by Directors, etc. of
all Group companies(Item 5 (a), Paragraph 1, Article 100 of the Ordinance for Enforcement of the Companies Act)(i) The President and the unit heads of the Company shall provide guidance to all Group
companies for the development of a proper internal control system regarding operations
deemed necessary.
(ii) The President and the unit heads of the Company shall require all Group companies to makereports on their businesses through bodies such as the Group Results and Strategy
Examination Meeting, the Affiliated Business Presidents Meeting and the SS BusinessPresidents Meeting, and shall supervise the proper execution of business.
(iii) The Internal Audit Division shall carry out internal audits of everyday operations at all Group
companies or which shall properly report the results of audits of operations, examine theproperness and effectiveness of the processes for these operations, and provide guidance andeducation to all departments at the Company and all Group companies. Important mattersshall be properly reported to the Board of Directors and the Audit & Supervisory Board.
(iv) The Compliance and Risk Management Committee shall control the departments and persons
in charge of promotion of compliance and risk management at each Group company andpromote compliance and risk management operations at all Group companies through use of
the meeting bodies.
(v) In cases where the Company’s business management or the contents of its management
guidance is in violation of laws and regulations or other problems in terms of compliance andrisk management are recognized, Group companies shall report the matter to the Audit &Supervisory Board Members and the Compliance and Risk Management Committee of theCompany. If this occurs, the Audit & Supervisory Board Members and the Compliance andRisk Management Committee of the Company may state an opinion to the Board of Directors
and request the formulation of an improvement plan.
(vi) Group companies shall report to the Company with respect to matters involving business- 32 -

operational risk and situations involving any occurrence of a crisis event such as a large-scale
earthquake, fire or accident.
VI. Matters regarding employees who assist Audit & Supervisory Board Members in their duties when
Audit & Supervisory Board Members request assignment of such employees, and the independenceof such employees from Directors, and ensuring that effective instructions are provided to such
employees from Audit & Supervisory Board Members(Items 1, 2 and 3, Paragraph 3, Article 100 of the Ordinance for Enforcement of the Companies
Act)(i) Dedicated staff assigned to Audit & Supervisory Board Members shall be in charge ofassistance for Audit & Supervisory Board Members in their duties.
(ii) Appointments and transfers of staff assigned to Audit & Supervisory Board Members shall be
carried out with the consent of Internal Audit & Supervisory Board Members.
(iii) Personnel evaluations of staff assigned to Audit & Supervisory Board Members shall be
carried out with the consent of Internal Audit & Supervisory Board Members.
(iv) The authority to give directions and commands to staff assigned to Audit & Supervisory
Board Members shall reside with the Audit & Supervisory Board Members.
VII. System for reporting by Directors, etc., and employees of all Group companies to Audit &Supervisory Board Members and other systems to ensure effective execution of audits by Audit &Supervisory Board Members(Item 4 (a), (b) and Item 7, Paragraph 3, Article 100 of the Ordinance for Enforcement of theCompanies Act)(i) If there is an event or risk of event that is significantly damaging to all Group companies, if
unlawful or wrongful conduct by a Director, etc. or an employee of all Group companies is
discovered, or if any other event stipulated by the Audit & Supervisory Board as a matter tobe reported occurs, Directors, and employees of the Company shall report such fact to the
Audit & Supervisory Board. Furthermore, notwithstanding the foregoing, an Audit &Supervisory Board Member may at any time request a report from a Director, etc. or an
employee of all Group companies as necessary.
(ii) In order to enable Audit & Supervisory Board Members to grasp important decision-making
processes and the status of execution of duties, Audit & Supervisory Board Members may
attend important meetings and committees such as meetings of the Board of Directors and theGroup Management Meeting. In addition, they may inspect important documents associatedwith the execution of duties, such as circular approval memos, and request explanations of thesaid documents from officers and employees of all Group companies where necessary.
(iii) Audit & Supervisory Board Members of subsidiaries and the Internal Audit Division and theInternal Audit Departments of all Group companies shall carry out necessary audits,
submissions of audit reports and other duties if requested or demanded to do so by an Audit &Supervisory Board Member.
(iv) The Audit & Supervisory Board shall be in compliance with the “Rules of the Audit &Supervisory Board” and shall have periodic meetings and the like with the Representative
Directors in order to develop the environment for auditing by Audit & Supervisory Board
Members, strengthen the relationship between them and the Representative Directors, andprovide feedback to management based on their auditing.
(iv) The Audit & Supervisory Board shall be in compliance with the “Rules of the Audit &Supervisory Board” and shall have periodic meetings and the like with the Representative
Directors in order to develop the environment for auditing by Audit & Supervisory Board
Members, strengthen the relationship between them and the Representative Directors, andprovide feedback to management based on their auditing.
(v) The head of the secretariat of the Compliance and Risk Management Committee shall swiftly
report to the Compliance and Risk Management Committee and the Audit & Supervisory
Board Members on the details of matters (excluding immaterial matters) reported to the “JFR
Group Compliance Hotline.”(vi) Audit & Supervisory Board Members of subsidiaries and the Internal Audit Division andInternal Audit Departments of all Group companies shall swiftly report to the Audit &- 33 -

Supervisory Board Members of the Company on the results of internal audits and whenunlawful or wrongful conducts are discovered.
(vii) The department managing the Group companies, such as the Affiliated Business Unit shallswiftly report to the Audit & Supervisory Board Members of the Company on unlawful orwrongful conduct from each of the Group companies.
(viii) Audit & Supervisory Board Members of the Company shall have periodic meetings and thelike with the Audit & Supervisory Board Members of subsidiaries to enhance and strengthen
the auditing of the entire Group.
VIII. System to ensure that persons who report the matters of VII above do not receive disadvantageous
treatment for making such reporting(Item 5, Paragraph 3, Article 100 of the Ordinance for Enforcement of the Companies Act)(i) No Group company shall subject a person who made a report to disadvantageous treatment
for the reason that the person made the report.
(ii) If it is reported that a person who made a report is receiving disadvantageous treatment, thenthe head of the secretariat of the Compliance and Risk Management Committee shall instruct
the relevant Group company to carry out investigation of the facts.
IX. Matters related to policy on the processing of costs, etc. incurred by Audit & Supervisory Board
Members as part of their execution of duties(Item 6, Paragraph 3, Article 100 of the Ordinance for Enforcement of the Companies Act)(i) Budgets shall be provided for in the annual budget plan for miscellaneous costs relating toaudits.
(ii) When an invoice is received for miscellaneous costs relating to audits, the payment
procedures shall, in principle, be carried out swiftly based on the aforementioned invoice.
(iii) Even when there are miscellaneous costs expended by the Audit & Supervisory Board
Member in extraordinary cases or in times of emergency not included in the budget, thepayment procedures shall, in principle, be carried out swiftly based on the aforementioned
invoice.
(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.

Corporate governance(i) The Company has prepared its “Corporate Governance Guidelines” specifying the role ofcorporate governance within the Group, with the aims of sustainable growth, increasing
corporate value over the medium to long term, and bringing about the best possible corporate
governance practices with respect to the Group.
(ii) In accordance with the Group Philosophy, the Company believes that parties who assume
management of the Group should be equipped with qualities that include a “strategic mindset,”“reform-oriented leadership,” “tenacity for achieving results,” “organization development
strengths,” and “human resource development strengths.” To that end, matters involving
human resources with respect to Directors, Audit & Supervisory Board Members andExecutive Officers of the Company and its major subsidiaries are carried out on the basis of
the policy for nominations and appointments, and such decisions are made in accordance withresults of managerial talent evaluations performed by a third-party organization.
(iii) Over the months June to September 2015, the Company had a third-party organization
perform an evaluation with respect to the Board of Directors. The evaluation itself brought theroles and responsibilities of the Board of Directors into focus, and accordingly involved
performing analyses and evaluation with respect to each evaluation category, which included
the Board of Directors’ composition, its operational status, meeting agenda items, and- 34 -

materials for deliberations. The evaluation was performed using a methodology where theBoard of Directors carried out deliberations on the basis of a report that had been prepared by
the third-party organization, containing summaries and analyses of the results of individualinterviews regarding the views and issue awareness of those interviewed with respect to all
Audit & Supervisory Board Members and the Board of Directors, along with direct
observations of the Board of Directors.
(iv) The Company has been reviewing the composition, operations and rules of the Human
Resources and Remuneration Committee, which acts as an advisory committee to the Boardof Directors, and at the same time has established a new Governance Committee, which has
been holding discussions and exchanging views regarding issues of corporate governance andbusiness management overall (this includes views with respect to the Company’sorganizational structure).
II. Compliance and risk management system and managing risk of loss(i) The Company has posted the “J. Front Retailing Group Mission Statement” and the “J. Front
Retailing Group Compliance and Risk Management Manual” to the corporate intranet, andfurthermore implements educational instruction on the basis of job position and e-learning
instruction to promote awareness of compliance issues. During the current fiscal year, thecentral themes in this regard included measures for ensuring security of personal informationand measures against falsely misrepresenting the advantages or quality of a product or service,with a focus on claims made in advertising.
(ii) The Company has established the Compliance and Risk Management Committee whose
membership includes corporate lawyers for the purpose of addressing issues of JFR Group
compliance management practices and appropriately managing and evaluating risks involvedin business operations. The Compliance and Risk Management Committee draws up policy
for addressing matters involving serious compliance-related violations and matters involving
risk. In addition, the committee also works to develop the foundations of compliance and risk
management systems (such as establishing internal company rules, operation management
manuals and management systems) for departments in charge of promoting compliance andrisk management.
The committee also reports details on deliberations of Compliance and Risk Management
Committee meetings (held four times during the current fiscal year) to the Board of Directors
regularly and in a timely manner.
(iii) The Company has established a whistle-blowing system (JFR Group Compliance Hotline).
Under the whistle-blowing system, the Company has established internal rules of the Group
which rigorously protect the confidentiality of whistle-blowers and prohibit disadvantageous
treatment of such individuals. Moreover, the Company also appropriately addresses issues
that have been reported.
(iv) For crisis events such as large-scale earthquakes, fires and accidents, crisis management shallbe controlled by the “Emergency Response Headquarters” headed by the President. During
the current fiscal year, there were no large-scale earthquakes, fires, accidents or other such
calamities.
III. Execution of duties by Directors(i) The Board of Directors carries out its roles and responsibilities with respect to management
strategies, business plans and other fundamental management policies, by indicating theoverall direction that Group management is to take through constructive discussions in thatregard, and through multifaceted and objective deliberations that included evaluation of risks
in that regard; and the Board of Directors carries out its roles and responsibilities with respect
to important matters of business execution by making swift and resolute decisions.
With respect to meetings of the Board of Directors, the Directors have reviewed meeting
agenda items stipulated in the “Rules of the Board of Directors” in order to better focus
discussions in a strategic direction. On the basis of the “Rules of the Board of Directors,” theBoard of Directors is also engaging in discussions taking into account the opinions of theoutside officers during their meetings (held 16 times during the current fiscal year).
(ii) To support outside officers and coordinate information with them, explanations of the overallbusiness are being provided upon newly assuming their office. Also, proposals to be made at- 35 -

meetings of the Board of Directors are being explained to them before such meetings are held,
including details on proceedings of discussions that have taken place within the Company andthe background to such matters.
(iii) Annual agendas are being scheduled; in terms of making decisions on executing management
strategy and other important matters of business, an effective and efficient management
framework has been established, which involves engaging in a series of discussions beginningin the direction planning phase; minutes of the meetings of the Board of Directors are being
accurately recorded and prepared, and; information is being properly stored and managed.
IV. System to ensure properness of operations at the corporate group(i) Systems are being developed for receiving resolutions of the Company’s Board of Directors
and other approvals involving important matters pertaining to Group management.
(ii) The “Group Management Meeting” and other such forums are receiving reports fromrespective Group companies with respect to the status of business execution.
(iii) With respect to internal controls for financial reporting, the Internal Audit Division isevaluating internal controls of respective Group companies that are subject to evaluation, on
the basis of the “Rules on Internal Controls for Financial Reporting.”
V. System to ensure effective execution of duties and audits by Audit & Supervisory Board Members(i) In attending important meetings that include meetings of the Board of Directors, the GroupManagement Meeting, and the Compliance and Risk Management Committee, the Audit &Supervisory Board Members check details of decisions made on business execution.
(ii) The Audit & Supervisory Board Members conduct on-site audits at respective Group
companies. They also regularly exchange information and opinions with the Representative
Directors, the Internal Audit Division, the Accounting Auditor and others, and they improvethe effectiveness and efficiency of audits.
(iii) The Company has established the Audit & Supervisory Board Secretariat and assigned to it
one person, in order for it to function as a system for enabling Audit & Supervisory Board
Members to smoothly carry out their duties. Moreover, a budget is set to cover anticipatedexpenses required by Audit & Supervisory Board Members in carrying out their duties.
(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- 36 -

(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 with the aim of realizing the Group’s vision, which is to secure a position as a leading
Japanese retail company both in terms of quality and quantity, with the Department Store Businessat its core, in order to make a contribution to securing and enhancing the corporate value of theGroup and, by extension, the common interests of shareholders.
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 ofoutside officers 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.

- 37 -

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 an optimal structureof debt to equity in a manner cognizant of our funding efficiency and cost of capital, carried out on thebasis of having taken into consideration our capacity for generating free cash flows and our balance ofinterest-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 we
maximize our operating income and continually improve our operating margin by strengthening ourcore businesses and concentrating management resources on initiatives such as business field
expansion and active development of new businesses.

(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.

- 38 -

Consolidated Financial Statements
Consolidated Balance Sheet (As of February 29, 2016)
Item
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts

Non-current assets
Property, plant and equipment
Buildings and structures
Land
Construction in progress
Other

Intangible assets
Goodwill
Other
Investments and other assets
Investment securities
Long-term loans receivable
Lease and guarantee deposits
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts

Deferred assets
Bond issuance cost

(Note)

AmountItem
Liabilities
180,890 Current liabilities
30,039Notes and accounts payable - trade
68,049
Short-term loans payable
1,233
Commercial papers
28,205
Income taxes payable
11,671
Advances received
41,865Gift certificates(173)
Provision for bonuses
Provision for directors’ bonuses
Provision for sales returns
Provision for books unsold
Provision for sales promotion
expenses
Reserve for gift certificates
Provision for loss on businessliquidation
Provision for loss on stores rebuilding
Other838,170 Non-current liabilities
Bonds payable
668,651
182,772
Long-term loans payable
360,297
Deferred tax liabilities
120,751
Net defined benefit liability
4,829
Provision for directors’ retirement
benefits
Provision for loss on businessliquidation
Provision for loss on stores rebuilding
Other
41,444568
40,876
Total liabilities
Net assets
128,074 Shareholders’ equity
46,985
Capital stock
1,503
Capital surplus
61,515Retained earnings
5,687
Treasury shares
5,112 Accumulated other comprehensive
9,980 income(2,710)
Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
85
85 Subscription rights to shares
Minority interests

Total net assets
Total assets
1,019,146
Total liabilities and net assets
Amounts have been rounded down to the nearest one million yen.

- 39 -(Millions of yen)Amount302,944
90,76840,21930,798
8,322
19,31838,599
5,709
204
21
121
709
13,913487
1,245
52,504
275,607
27,00082,905
89,15832,70737564
1,191
42,043
578,552
392,236
30,000209,551
163,971(11,286)(8,537)
2,113
223
516
(11,391)
14
56,880440,594
1,019,146

Consolidated Statement of Income (From March 1, 2015 to February 29, 2016)(Millions of yen)
Item

AmountNet sales
Net sales of goods
Rent income of real estate
Cost of sales
Cost of goods soldCost of real estate rent

1,151,469
12,094

1,163,564

910,927
7,104

918,031

Gross profit
Selling, general and administrative expenses

245,532
197,494

Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
Other

48,038
369
365
1,886

Non-operating expenses
Interest expenses
Other
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of shares of subsidiaries andassociates

3,595

6,216

1,419
4,924

6,344
47,910960

Extraordinary losses
Loss on disposal of non-current assets
Impairment loss
Loss on stores rebuilding
Loss on liquidation of business
Other
Income before income taxes and minority
interests
Income taxes - current
Income taxes - deferred

131

1,091

2,629
1,570
7,492
1,719
891

14,303
34,698

14,626(9,791)

Income before minority interests
Minority interests in income

4,834
29,863
3,549

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

- 40 -

26,313

Consolidated Statement of Changes in Equity (From March 1, 2015 to February 29, 2016)(Millions of yen)
Shareholders’ equity

Balance as of March 1,
2015

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotal shareholders’equity30,000209,556

147,760(6,369)380,947

Cumulative effects ofchanges in accounting
policies
Restated balance

Accumulated other comprehensive income(3,270)30,000209,556

144,490

Valuationdifferenceonavailablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated othercomprehensive
income

2,352

(35)

659

(7,832)(4,855)

2,352

(35)

659

(7,832)(4,855)

(238)

258

(143)

(3,558)(3,681)(3,270)(6,369)377,677

Changes of items during
the fiscal year
Dividends of surplus(6,832)(6,832)

Net income

26,313

26,313Purchase of treasury
shares
Disposal of treasury
shares(4)(5,025)(5,025)108

103

Net changes of items
other thanshareholders’ equity
Total changes of items
during the fiscal year–

(4)

19,481(4,917)

14,559

(238)

258

(143)

(3,558)(3,681)

Balance as of February
29, 2016

30,000209,551

163,971(11,286)

392,236

2,113

223

516

(11,391)(8,537)

Subscription
rights tosharesMinority
interests

Total net
assets15

54,357

430,465(114)(3,384)54,243427,080

Balance as of March 1,
2015
Cumulative effects ofchanges in accounting
policies
Restated balance

15

Changes of items during
the fiscal year
Dividends of surplus(6,832)

Net income

26,313Purchase of treasury
shares(5,025)

Disposal of treasury
shares103

Net changes of items
other thanshareholders’ equity

(1)

2,637

(1,045)

Total changes of items
during the fiscal year

(1)

2,637

13,513

Balance as of February
29, 2016

14

56,880440,594(Note)

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

- 41 -

[Reference]

Consolidated Statement of Cash Flows (Summary)(From March 1, 2015 to February 29, 2016)(Millions of yen)AmountItem

Cash flows from operating activities
36,799Cash flows from investing activities(39,741)
Cash flows from financing activities(1,041)
Effect of exchange rate change on cash and cash equivalents(0)
Net increase (decrease) in cash and cash equivalents(3,985)
Cash and cash equivalents at beginning of period
32,132
Cash and cash equivalents at end of period
28,147(Note)
Amounts have been rounded down to the nearest one million yen.

- 42 -

Non-consolidated Financial Statements
Non-consolidated Balance Sheet (As of February 29, 2016)
Item
AssetsAmountCurrent assets
Cash and deposits
Short-term loans receivable fromsubsidiaries and associates
Deferred tax assets
Other

28,325

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

386,17855
54
0Intangible assets
Software
Other

Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates
Other

Deferred assets
Bond issuance cost

(Note)

41,911
11,457

129
1,998

23
22
0

386,100
813
324,054
61,090
142

85
85

Item
Liabilities
Current liabilities
Short-term loans payable
Commercial papers
Accrued expenses
Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Other(Millions of yen)Amount51,543
31,10019,398
337
64
169
89
385

Non-current liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities
Other

72,89427,00045,88059Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
Retained earnings brought
forwardTreasury shares

124,438
303,705
30,000247,100
7,500
239,600
37,12637,12637,126(10,521)

Valuation and translation adjustments
Valuation difference on available-forsale securities

17

Subscription rights to shares
Subscription rights to shares

14
14

Total net assets
Total assets
428,175
Total liabilities and net assets
Amounts have been rounded down to the nearest one million yen.

- 43 -

17

303,737
428,175

Non-consolidated Statement of Income (From March 1, 2015 to February 29, 2016)(Millions of yen)
Item

AmountOperating revenue
Dividend income
Consulting fee income

9,172
3,040

12,213General and administrative expenses

3,018

Operating income
Non-operating income
Interest income
Other

9,194
746
100

Non-operating expenses
Interest expenses
Other

701
138

Ordinary income
Extraordinary income
Gain on sales of investment securities

846

839
9,201

50

Extraordinary losses
Loss on valuation of shares of subsidiaries andassociates
Loss on support to subsidiaries and associates

50

1,963
300

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

2,263
6,989

31
84

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

- 44 -

116
6,872

Non-consolidated Statement of Changes in Equity (From March 1, 2015 to February 29, 2016)(Millions of yen)
Valuationandtranslation
adjustments

Shareholders’ equity
Retainedearnings

Capital surplus

Capitalstock

Balance as of March 1,
2015

30,000Legal capital Other capitalsurplussurplus

7,500

239,602

Otherretainedearnings

TreasurysharesValuation
Total share- difference
holders’ on availableequity
for-salesecurities(5,532)308,655

Retainedearnings
brought
forward37,085

9

Subscription
rights toshares15

Total net
assets308,681

Changes of items during
the fiscal year
Dividends of surplus(6,832)(6,832)(6,832)

Net income

6,872

6,872

6,872

(5,023)(5,023)(5,023)

34

33

33

Purchase of treasury
shares
Disposal of treasury
shares(1)

Net changes of items
other thanshareholders’ equity

7

(1)

5

Total changes of items
during the fiscal year

–

–

(1)

40

(4,989)(4,949)7(1)(4,943)

Balance as of February
29, 2016

30,0007,500

239,600

37,126(10,521)

303,70517

14

303,737(Note)

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

- 45 -

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

Report of Independent Auditors
April 5, 2016
The Board of Directors
J. Front Retailing Co., Ltd.
Ernst & Young ShinNihon LLC
Hiroyuki Koichi(seal)
Certified Public Accountant
Designated and Engagement Partner

Hiroki Suzuki(seal)
Certified Public Accountant
Designated and Engagement Partner
Takao Oshitani(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 balance sheet, the consolidated
statement of income, the consolidated statement of changes in equity and the notes to the consolidated
financial statements of J. Front Retailing Co., Ltd. (the “Company”) applicable to the 9th fiscal year fromMarch 1, 2015 through February 29, 2016.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation 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 9th fiscal year from March 1, 2015 throughFebruary 29, 2016 in conformity with accounting 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.

- 46 -

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

Report of Independent Auditors
April 5, 2016
The Board of Directors
J. Front Retailing Co., Ltd.
Ernst & Young ShinNihon LLC
Hiroyuki Koichi(seal)
Certified Public Accountant
Designated and Engagement Partner

Hiroki Suzuki(seal)
Certified Public Accountant
Designated and Engagement Partner
Takao Oshitani(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 9th fiscal year from March 1, 2015 through February 29, 2016.
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 9th fiscal year from March 1, 2015 through February 29, 2016 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.

- 47 -

THE AUDIT REPORT OF AUDIT & SUPERVISORY BOARD MEMBERS

Audit Report
The Audit & Supervisory Board hereby reports as follows regarding the performance of duties by Directorsof J. Front Retailing Co., Ltd. (the “Company”) during the 9th fiscal year from March 1, 2015 to February
29, 2016, based on audit reports prepared by each Audit & Supervisory Board Member and subsequentdeliberations of the Audit & Supervisory Board.
1. Method of the audits by the individual Audit & Supervisory Board Members and the Audit &Supervisory Board; content of audits(1) In addition to receiving reports on the progress in and results of audits by the individual Audit &Supervisory Board Members, based on the Audit & Supervisory Board’s policies for this fiscal year anddivision of duties and the like, the Audit & Supervisory Board also received reports on businessperformance from Directors and the Accounting Auditor, and requested explanations from them asnecessary.
(2) In accordance with the auditing standards, set forth by the Audit & Supervisory Board, policies for thisfiscal year and division of duties and the like, each of Audit & Supervisory Board Members worked tocommunicate with Directors, the Internal Audit Department, and other employees in collecting informationand establishing an appropriate audit environment, and performed the audit in accordance with thefollowing procedures.
(i) Audit & Supervisory Board Members participated in meetings of the Board of Directors and other key
meetings, received reports from Directors, Executive Officers, employees and others regarding theperformance of their duties, and when necessary, requested explanations of those reports. Audit &Supervisory Board Members also reviewed key decision documents, and conducted surveys of theoperations and assets of the head office and of other principal places of business. Further, regarding
subsidiaries, Audit & Supervisory Board Members worked to communicate with Directors, Audit &Supervisory Board Members, and other parties at those subsidiaries, and when necessary conduct hearings
with them regarding their business.
(ii) Audit & Supervisory Board Members regularly received reports from Directors, Executive Officers,
employees and others, requested explanations as necessary, and expressed opinions on the status ofestablishment and operation of matters necessary to ensure compliance by Directors with laws andregulations, and the Articles of Incorporation, and those needed to ensure the fair performance of operationsof the Company as a stock corporation and the corporate group consisting of its subsidiaries as described in
the Business Report, namely decisions by the Board of Directors regarding the establishment of systems as
set forth in Items 1 and 3, Article 100 of the Ordinance for Enforcement of the Companies Act (the internal
control system).
(iii) Additional consideration was given to the basic policy and activities set forth in Items 3 (a) and 3 (b),Article 118 of the Ordinance for Enforcement of the Companies Act, as noted in the Business Report, basedon the status of deliberations at the meeting of the Board of Directors and other key meetings.
(iv) While monitoring and reviewing the audit of the Accounting Auditor to ensure they maintained an
independent position and conducted their audits fairly, Audit & Supervisory Board Members received
reports from them regarding the performance of their duties, and when necessary, asked for further
explanation regarding those reports. Audit & Supervisory Board Members also received notice from the
Accounting Auditor in accordance with “the system for ensuring appropriate execution of their duties” (asenumerated in each Item of Article 131 of the Company Accounting Regulation Ordinance) in compliancewith the “Quality Control Standards Relating to Auditing” (adopted by the Business Accounting
Deliberations Council in October 28, 2005), and, where necessary, Audit & Supervisory Board Members
requested further explanation regarding that notice.
Based on the above methods, Audit & Supervisory Board Members proceeded to review the Business
Report with the supplementary schedules, the non-consolidated financial statements (consist of the nonconsolidated balance sheet, the non-consolidated statement of income, the non-consolidated statement of- 48 -

changes in equity, and the notes to the non-consolidated financial statements) with the supplementaryschedules, and the consolidated financial statements (consist of the consolidated balance sheet, theconsolidated statement of income, the consolidated statement of changes in equity, and the notes to theconsolidated financial statements) for the current fiscal year.

2. Audit Results(1) Results of Audit of Business Report, etc.
(i) The Audit & Supervisory Board confirms that the Business Report and the supplementary schedules
conformed to the applicable laws and regulations, and the Articles of Incorporation, and that they
accurately present the situation of the Company.
(ii) With respect to the performance of duties by Directors, the Audit & Supervisory Board found no
improper acts or important violation of applicable laws and regulations or the Articles of Incorporation.
(iii) The Audit & Supervisory Board confirms that decisions by the Board of Directors and the operational
status regarding the Company’s internal control systems are fair and adequate, and found no areas that
require mention regarding the description of the internal control systems in the Business Report and theperformance of duties by Directors.
(iv) The Audit & Supervisory Board found no items that need to be pointed out regarding the basic policy
regarding those who control the determination of the Company’s financial and operational policies, noted in
the Business Report. The Audit & Supervisory Board 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 linewith this basic policy, are not harmful to the common interest of the Company’s shareholders, and are notintended to maintain the positions of Directors or Audit & Supervisory Board Members of the Company.
(2) Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules
The Audit & Supervisory Board 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 & Supervisory Board confirms that the methods used and results achieved by the Accounting
Auditor, Ernst & Young ShinNihon LLC, are fair and adequate.
April 6, 2016
Audit & Supervisory Board
J. Front Retailing Co., Ltd.

OCHI Bunshiro(seal)
Full-time Audit & Supervisory Board
Member
KATO Yoichi(seal)
Full-time Audit & Supervisory Board
Member
TSURUTA Rokurou(seal)
Outside Audit & Supervisory Board
MemberISHII Yasuo(seal)
Outside Audit & Supervisory Board
MemberNISHIKAWA Koichiro (seal)
Outside Audit & Supervisory Board
Member- 49 -

Reference Materials for Shareholders Meeting
Proposals and Reference Information
Proposal 1: Election of Nine (9) Directors
The terms of office of all nine (9) Directors will expire at the conclusion of this Annual Shareholders
Meeting. Accordingly, the Company proposes to elect nine (9) Directors. The candidates for the Directors
are as follows.

(Reference 1)
The Company’s policy for nominating and appointing Directors is as follows.
(Internal Directors)
We appoint individuals who possess qualities that make them capable of carrying out proper oversight ofbusiness execution, based on a grasp of risks and challenges from a Group perspective that is not limited totheir own realm of responsibility. Accordingly, such individuals must be able to fulfill the duty of care of aprudent manager and the duty of loyalty required by the Companies Act of Japan; they must have anabundance of experience in the JFR Group’s respective operations that is needed to deliberate on importantmatters of JFR Group management and make business decision; and they must have a profoundunderstanding of the JFR Group’s operating environment (including its strengths and challenges).
(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 or have a global managerial background.
For the position of Outside Director, we nominate those who meet our “Criteria for Determining
Independence of Outside Directors and Outside Audit & Supervisory Board Members” separately provided,to thereby avoid the prospect of any conflicts of interest arising with the Company’s shareholders.

(Reference 2)
The Company’s criteria for determining independence of Outside Directors and Outside Audit &Supervisory Board Members are as follows.
In appointing the Company’s Outside Directors and Outside Audit & Supervisory Board Members, weselect individuals who maintain a high degree of independence and consequently are not susceptible toconflicts 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- 50 -

(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, a Corporate
Officer, an Executive Officer, and other employees; “major shareholder” refers to a shareholder who holds
voting rights accounting for no less than 10% to the Company’s voting rights; “major business partner”
refers to a business partner whose transactions with the JFR Group account for 2% or more of theCompany’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 the last five years.

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)

March 2005

Number of the Company’s
shares owned (shares):61,600January 2007
September 2007

Special interests between
the Company and the
Candidate:

1

None

March 2008
Number of attendance at
the Board of Directors
meetings for the 9th fiscal
year:
16/16

March 2010
September 2012
April 2013

Joined The Daimaru, Inc.
President and COO and General Manager of Department StoreOperations, Group Headquarters
General Manager of Metropolitan Area New Business Development
Division, Group Headquarters
Executive General Manager of Planning Office for New Umeda Storeof Department Store Operations Headquarters, 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 of J. Front Retailing Co., Ltd. (present)

Tenure as Director (at theconclusion of thisMeeting):
approx. 8 years and 9months■Reasons for nomination as candidate for Director
YAMAMOTO Ryoichi possesses broad-based insight and an elevated perspective gained through his abundant experience
spanning overall management of retail operations. Since being appointed as President of the Company in 2013, he has been
precisely and efficiently managing business of the Group overall. In addition to his outstanding and abilities and qualities withrespect to pointing the Company in the right direction taking the external environment in which the Group operates into
account, he also causes transformation and reform to take hold across the entire organization and exerts strong leadership thatgenerates results. As such, the Company has judged that he is a competent professional who is capable of helping ensure thesustained growth of its corporate value by executing business acting as a Director, and has accordingly appointed him as a
candidate to continue serving as Director.

- 51 -

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

24,0002

Special interests between
the Company and the
Candidate:

March 2010
May 2012
April 2013

None
Number of attendance at
the Board of Directors
meetings for the 9th fiscal
year:

May 2013

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 of Daimaru Matsuzakaya Department Stores Co. Ltd.
(present) and
President of Daimaru Matsuzakaya Sales Associates Co. Ltd. (present)
Director of J. Front Retailing Co., Ltd. (present)

16/16
Tenure as Director (at theconclusion of thisMeeting):
approx. 3 years■Reasons for nomination as candidate for Director
YOSHIMOTO Tatsuya serves as President of Daimaru Matsuzakaya Department Stores Co. Ltd., and has abundant experienceand insight related to the Department Store Business overall, particularly encompassing areas such as business management,planning and store operations. He has been involved in planning and executing 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 is ahands-on leader capable of engaging in swift and resoundingly effective implementation of initiatives based on a solid resultsoriented approach. As such, the Company has judged that he is a competent professional who is capable of helping ensure thesustained growth of its corporate value in acting as a manager of a major business subsidiary, and has accordingly appointed
him as a candidate to continue serving as Director.

- 52 -

No.

Name(Date of birth)

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

MAKIYAMA Kozo
(August 28, 1958)

April 1981
March 2004
March 2007

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

March 2008

7,800
Special interests between
the Company and the
Candidate:3

None
Number of attendance at
the Board of Directors
meetings for the 9th fiscal
year:

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

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)

16/16
Tenure as Director (at theconclusion of thisMeeting):
approx. 3 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 is capable of engaging in resoundingly effective implementation of initiatives based on his ability to act as aunifying force within the organization. As such, the Company has judged that he is a competent professional who is capable ofhelping ensure the sustained growth of its corporate value in acting as a manager of a major business subsidiary, and has
accordingly appointed him as a candidate to continue serving as Director.

- 53 -

No.

Name(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1973
February 2003
May 2003
January 2004
September 2007
January 2008

KOBAYASHI
Yasuyuki(March 30, 1951)
Number of theCompany’s shares
owned (shares):34,2004

Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 9th
fiscal year:
16/16

March 2010

May 2010
May 2012
April 2013
May 2013
May 2015

Joined The Daimaru, Inc.
Associate Director, General Manager of Sapporo Store
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
External Director of Parco Co., Ltd. (present)
Managing Executive Officer of J. Front Retailing Co., Ltd.,
Senior Executive General Manager of Affiliated Business Unit (present)
Director (present), Managing Executive Officer
Senior Managing Executive Officer (present)

Tenure as Director (atthe conclusion of thisMeeting):
approx. 3 years■Reasons for nomination as candidate for Director
KOBAYASHI Yasuyuki has extensive experience and insight related to Group business overall. This has involved serving in a
Department Store Business company up to this point as a project leader with respect to the Daimaru Sapporo store opening, andfurthermore demonstrating his ability as a facilitator in promoting merchandising strategy. Moreover, since April 2013 he hasserved as Senior Executive General Manager of the Affiliated Business Unit of the Company, and has been in charge of theWholesale Business, Credit Business and other business areas besides the Department Store Business. He is capable of taking
on planning and promotion of business strategies from the perspective of overall management taking the roles and expectationsof individual businesses with respect to the Group’s strategy into account. As such, the Company has judged that he is acompetent professional who is capable of helping ensure the sustained growth of its corporate value by executing businessacting as a Director, and has accordingly appointed him as a candidate to continue serving as Director.

- 54 -

No.

Name(Date of birth)

FUJINO Haruyoshi(March 10, 1961)

Career summary, positions and areas of responsibility in the Company,
and important concurrent positions outside the Company
April 1983
April 2004
September 2008

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

January 2010

7,800
Special interests between
the Company and the
Candidate:5

May 2010

None
Number of attendance at
the Board of Directors
meetings for the 9th
fiscal year:

January 2014

May 2014

16/16
Tenure as Director (atthe conclusion of thisMeeting):

May 2014
June 2014

Joined The Daimaru, Inc.
General Manager of Preparatory Office for New Tokyo Store, Group
Headquarters
General Manager of Marketing Planning Promotion Division,
Department Stores Coordination Division of J. Front Retailing Co., Ltd.
Executive Store Manager of Tokyo Store and General Manager ofPlanning Office for Phase II Expansion of New Tokyo Store of The
Daimaru, Inc.
Corporate Officer, Executive Store Manager of Tokyo Store and Senior
General Manager of Planning Office for Phase II Expansion of New
Daimaru Tokyo Store, Head Office of Daimaru Matsuzakaya
Department Stores Co. Ltd.
Corporate Officer of J. Front Retailing Co., Ltd.
In charge of Group Business Structural Reforms of Management
Strategy Unit
Director (present)
Managing Executive Officer (present)
Senior Executive General Manager of Management Strategy Unit
(present)
External Director of Parco Co., Ltd. (present)
Outside Director of Hakuseisha Co., Ltd. (present)

approx. 2 years■Reasons for nomination as candidate for Director
FUJINO Haruyoshi has extensive experience and insight related to overall business of the Group. This has involved serving in a
Department Store Business company up to this point, thereby engaging in planning and promotion for new businessdevelopment, and furthermore handling store management acting as Executive Store Manager of the Tokyo Store. Moreover,since May 2014 he has served as Senior Executive General Manager of the Management Strategy Unit, and has been in chargeof augmenting operations through overseas expansion and M&A initiatives, as well as drawing up and promoting Groupstrategy. He has outstanding insight and is highly creative in terms of his ability to formulate business plans andcomprehensively manage operations taking the roles and expectations of individual businesses with respect to the Group’s
strategy into account. As such, the Company has judged that he is a competent professional who is capable of helping ensure thesustained growth of its corporate value by executing business acting as a Director, and has accordingly appointed him as a
candidate to continue serving as Director.

- 55 -

No.

Name(Date of birth)

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

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

March 1976
May 2002
May 2006
May 2008

31,000Special interests between
the Company and the
Candidate:

6

January 2009
March 2010

None
Number of attendance at
the Board of Directors
meetings for the 9th fiscal
year:
12/12
Tenure as Director (at theconclusion of thisMeeting):

March 2012
May 2012
January 2015
May 2015

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)
Managing Executive Officer (present)
Senior Executive General Manager of Administration Unit (present)
In charge of Compliance and Risk Management (present)

approx. 1 year

■Reasons for nomination as candidate for Director
DOI Zenichi has extensive experience and insight in the respective areas of business to which he has been assigned. This has
involved serving on the management team of Daimaru Matsuzakaya Department Stores Co. Ltd. up to this point, where he has
demonstrated his ability in core Department Store Business operations that include sales promotion, customer strategy, and outof-store strategy. Moreover, since being appointed as Director of the Company in May 2015, he has mainly been in charge ofcompliance and risk management, acting as Senior Executive General Manager of the Administration Unit. He has outstanding
capabilities for causing initiatives to take hold in the organization, based on his insight related to the retail industry overall andhis ability to take Group strategy into account in establishing compliance and risk management policies and frameworks
essential for ensuring sound and appropriate management of the Group and also building internal control systems in that regard.
As such, the Company has judged that he is a competent professional who is capable of helping ensure the sustained growth of
its corporate value by executing business acting as a Director, and has accordingly appointed him as a candidate to continue
serving as Director.

- 56 -

No.

Name(Date of birth)

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

New Candidate

WAKABAYASHI
HayatoApril 1998
April 2007

(August 31, 1961)
February 2009

7

Number of the Company’s
shares owned (shares):
200
Special interests between
the Company and the
Candidate:July 2013
April 2015
May 2015
September 2015

None

March 2016

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) of Panasonic Corporation
Retired from Panasonic Corporation
Joined J. Front Retailing Co., Ltd.
In charge of Finance Policy, Administration Unit
Executive Officer (present)
In charge of Financial Strategy and Policy, Administration Unit
Senior Executive General Manager of Financial Strategy Unit and in
charge of Finance Policy (present)■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 2015.
He is apt to play a key role in establishing and promoting a financial strategy encompassing the entire Group going forward, andhas the commensurate abilities with respect to what the Company requires of a management professional in terms of his
strategic and transformation-minded leadership, results-oriented approach and other such attributes. As such, the Company has
judged that he is a competent professional who is capable of helping ensure the sustained growth of its corporate value byexecuting business acting as a Director, and has accordingly appointed him as a candidate to serve as a new Director.

- 57 -

No.

Name(Date of birth)

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

Outside Director
Independent

TACHIBANA
FUKUSHIMA Sakie

June 1980
September 1987
August 1991
June 1993
May 1995(September 10, 1949)
September 2000
Number of the Company’s
shares owned (shares):

May 2001

3,200

8Special interests between
the Company and the
Candidate:
None
Number of attendance at
the Board of Directors
meetings for the 9th fiscal
year:
16/16

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

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 (present)
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 (present)

Tenure as Director (at theconclusion of thisMeeting):
approx. 4 years■Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-TACHIBANA FUKUSHIMA Sakie has in-depth understanding regarding globally-minded human resources and abundant
knowledge and experience as an international corporate manager. Based on that, she has contributed to ensuring more effective
meetings of the Board of Directors since being appointed as Outside Director of the Company in 2012, by adequately providing
advice and oversight with respect to the direction of overall management and other such matters, from the independent andobjective viewpoint of a member of a management team that engages in business execution. In light of her track record, theCompany has judged that in acting as an Outside Director she is likely to contribute greatly to management of the Company
from the perspective of enhancing corporate governance. As such, she has been appointed as a candidate to continue 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.

- 58 -

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):
3,700

9

June 1995
June 1999
April 2001
August 2003

Special interests between
October 2003
the Company and the
Candidate:
April 2006
None April 2009
Number of attendance at
the Board of Directors
meetings for the 9th fiscal
year:
12/12

June 2012
April 2013
April 2014
June 2014
May 2015

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
President and Executive Officer, Representative Director
Director and Vice President, Representative Executive Officer ofKonica Minolta Holdings, Inc.
President and CEO of Konica Minolta Technologies, Inc.
Director, President and CEO of Konica Minolta Holdings, Inc.
Director, Chairman of the Board of Directors
Outside Director of YAMAHA CORPORATION (present)
Director, Chairman of the Board of Directors of KONICA MINOLTA,
INC.
Director
Special Advisor (present)
Outside Director of J. Front Retailing Co., Ltd. (present)

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

■Reasons for nomination as candidate for Outside Director and special notes regarding the candidate-OTA Yoshikatsu has extensive experience and abundant insight acting as a manager of a company that, like this Company, 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 and other such matters, from the independent and objective viewpoint of a member of amanagement team that engages in business execution. 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 Company from the perspective of enhancing corporate
governance. 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.

- 59 -

Proposal 2: Payment of Bonuses to Directors and Audit & Supervisory Board Members for Fiscal
Year 2015
After comprehensively considering the operating results of the current fiscal year and other various
circumstances, the Company plans to pay bonuses to Directors and Audit & Supervisory Board Members ofa total amount of 89,000,000 yen or less (of which 6,700,000 yen or less for Outside Directors, and10,000,000 yen or less for Audit & Supervisory Board Members) to the nine (9) Directors (including two(2) Outside Directors) and five (5) Audit & Supervisory Board Members in office at the end of the current
fiscal year. With respect to the specific amounts to be paid to each Director and Audit & Supervisory Board
Member, the amounts will be decided by resolution of the Board of Directors in the case of Directors andby deliberation of the Audit & Supervisory Board in the case of Audit & Supervisory Board Members.
Please kindly give us your understanding and approval.

(Reference 3)“Policy on Determining Remuneration for Directors, Audit & Supervisory Board Members”
The remuneration of the Company’s Directors, Audit & Supervisory Board Members for the current fiscal
year (fiscal 2015) consists of monthly compensation and executive bonuses which is tied to results andsuccess in accordance with each year’s business performance.
With respect to fiscal 2016 remuneration of the Company’s Directors and Audit & Supervisory Board
Members, the Company plans to make the following changes applicable to amounts paid for June 2016 andthereafter.
[Remuneration of Internal Directors]
・ The Company has increased the proportion of executive bonus (performance-based remuneration) interms of total remuneration, with monthly compensation at 60% and executive bonuses at 40%(standard ranking), in order to provide incentives both for accomplishing objectives set undermanagement strategies and business plans, and for achieving targets with respect to corporate
performance.
[Remuneration of Outside Directors and Audit & Supervisory Board Members (both outside and internal)]
・ The Company will discontinue executive bonuses and provide monthly compensation only.
In conjunction with that, with the aim of ensuring that the Group achieves sustainable growth andincreases corporate value over the medium to long term, the Company aims to introduce remuneration
for Outside Directors linked to their medium- to long-term performance (stock-based remuneration,etc.) beginning in fiscal 2017, and will forge ahead in reviewing such options.
End of Document- 60 -