Creating New Values for Local Communities

2020 Annual Report
Fiscal Year Ended March 31, 2020

Valor Holdings Co.,Ltd.

Our Journey in Creating Corporate Values

We will create new values in response to changing
social needs by making a transition to a more competitive
format and strengthening our connection with customers
leveraging Group management resources.

Enhancing theappeal of products

Aiming for the advancement of business process integration between
manufacturing and retailing, the Valor Group is focusing on developing
strong products that foster the customers’ motivation to visit ourstores. Supermarkets, drugstores and home improvement centers arechanging its product line-ups to showcase the strengths of their own
business formats, while leveraging the Group’s procurement andmanufacturing capabilities in introducing new products.

Humanresourcesdevelopment

VisionTransition to amore competitive
formatAs we aim to transition to competitive formats focusing on the threecore businesses, the supermarket business aims to become a“destination store” that offers attractive products and productcategories that are well worth a visit for customers even from afar.
Through the opening of new stores and renovations, we are steadilyswitching over to a sales floor layout that especially highlights fresh
food departments.

In order to develop human resources necessary for the transition to
new formats, at the Human Resources Development Center launchedin April 2019, we are expanding group training for our employees toacquire product knowledge and processing techniques. In addition totechnical training, we hold management training for managers andexecutive candidates systematically, focusing on developing
employees who can think for themselves.

Valor Holdings Co., Ltd. Annual Report 2020

1

Our Journey in Creating Corporate Values

We will create new values in response to changing social
needs by strengthening our connection with customers
leveraging Group management resources.
The Valor Group has met the diverse needs of local communities by rolling out multi-format retailing which
comprises supermarkets, drugstores and home improvement centers, while maintaining business models that
optimize the entire process from sourcing to retailing. We will achieve medium- & long-term growth by making atransition to a more competitive format and strengthening our connection with customers.
The Valor Group’s value creation reaffirmed under the influence of the novel coronavirus disease (COVID-19)
Due to the COVID-19 pandemic, we reaffirmed our belief that diversified business development, one of the pillars of our businessmodel, would lead to stable business operations. Subsequent to a request from local governments to refrain from opening stores,
the sports club business had to take voluntary measures such as a temporary suspension of operations. However, oursupermarkets, drugstores and home improvement centers took on the mission of supporting people’s lifeline and stayed open to
ensure a stable supply of products. As these three core businesses responded to the needs for infection prevention and stay-athome demands, the impact on business for FY2019 was limited. We believe that consumers who are forced to change their lives
will seek a new lifestyle rather than returning to the pre-COVID-19 life once the pandemic is contained.
The Valor Group will continue to provide products and services that meet the changing needs of consumers, without allowing theeffect of increased demand due to the lifestyle changes temporary, while making the most of the Group’s management resources.

Revenues Growth(Revenues from operations)Supermarket BusinessSports Club Business

Drugstore BusinessDistribution-related operations

Home Improvement Center Business

Others

1958

59

1960

61

62

63

64

65

66

67

68

69 1970

71

1958- Startup of Supermarket andRelated Businesses of Manufacturing,
Wholesale & Logistics
In 1958, we established Shufu-no-Mise Co., Ltd.
(changed the company name to Valor Co., Ltd. in1974) and opened the first supermarket in Ena-shi,
Gifu. We subsequently established Chubu YakuhinCo., Ltd., a drugstore subsidiary, and Chubu Foods
Co., Ltd., a prepared food manufacturing subsidiary, and started a materials wholesale businessthrough Chubu Ryutu Co., Ltd. We entered into thelogistics business through Chubu Kosan Co., Ltd.,a logistics subsidiary, and in 1989, established thefirst distribution center in Tajimi-shi, Gifu.

Changing Objectives of Capital andBusiness Partnerships
In the past, we executed M&As centering on the supermarket businessto expand the size and scope of our business. Since 2015, we haveacquired food manufactures with unique products and have concluded
capital and business partnerships that lead not only to product sourcing
and development improvements, but also to comprehensive approaches.

2

Valor Holdings Co., Ltd. Annual Report 2020

72

73

74

75

76

77

78

79 1980

81

82

83

84

85

86

1995- Rolling out of Multi-format Retailing andEstablishment of Distribution Network

While expanding the scale of our
supermarket business, we solidified
our foundations for multi-format
retailing. We merged with Fujiya Co.,
Ltd., a home improvement centerc o m p a n y, a n d t h e n est ab lished
AXTOS Co., Ltd. and spun off as p o r t s c l u b b u s i n e s s . We a l s oestablished a distribution network in
H o k u r i k u re g i o n i n re s p o n s e t oexpanding business areas.

Pursuit of Economies of Scales 1995

87

88

Foundation…… 1

VisionCONTENTS

Business Models ………………………………… 4
Message from CEO ……………………………… 6
Medium-term Strategic Plans …………………… 10

Financial Information

Sustainability Management ………………………16
Society …………………………………………… 19
The Environment ………………………………… 22
Corporate Governance ………………………… 24
Compliance and Risk Management Systems … 27

11-year Summary of Financial Results ………… 28…………………… 30
FY2019 Financial Review
Consolidated Financial Statements (Summary) … 32
Corporate Data

History

History/Vision

Our Journey in Creating Corporate Values

Corporate Data/Shares Information …………… 36

Results

VisionSegment Overview/Segment Information ……… 12
Segment Financial Review ……………………… 14

FY2019Exceeded600

billion yen(Revenues fromoperation)

FY2016

Exceeded

500

6,000

billion yen

FY2011

Exceeded

400

5,000

billion yen

FY2007

Exceeded

300

4,000

billion yen
3,000

FY2004

Exceeded200

billion yen

FY1999Exceeded

100

2,000

billion yen
1,000

89

1990

91

92

93

94

95

96

97

98

99 2000 01

02

03

04

2005- Expansion of Supermarket Business

and Challenge to Integrate Business
Processes
In the supermarket business, we
expanded our scale through organic
growth and M&As. The major companies
acquired are as follows: Tachiya Co.,
Ltd., Youth Co., Ltd. and Sun-FriendCo., Ltd.(currently Shokusenkan-Taiyo
Co., Ltd.). We also integrated the entire
process from sourcing to retailing via
our manufacturing and wholesale
subsidiaries, and developed production
bases and distribution centers.

05

06

07

08

09

2010 11

12

13

14

15

16

17

18

19

(FY)

2015- Further Optimization of Business

Processes and Next Step for Growth
In October 2015, we made a transition to a holding company to promote
the growth of business companies
and improve corporate governance.
We took the next step for growth byintegrating home center businesses
as of April 1, 2019 through a shareexchange agreement between
Alleanza Holdings Co., Ltd. andHome Center Valor Co., Ltd.

Expansion of Operational Areas 2005
Increase in Market Share 2005
Enhancement of Product Appeal/
Evolution of Business Models

2015

Valor Holdings Co., Ltd. Annual Report 20203

Business Models

The Valor Group Business Models
Corporate
Philosophy

The Valor Group has defined its philosophy, “Creation, Advance & Challenge” in mission statements.
Shared with all the employees since 1958, they have been considered as guiding principles in management.

MissionStatements

All the employees of the Valor Group should be aware of its social responsibilities for advancement oflocal communities and culture. To fulfill them, we perform our duties sincerely; set challenging goals inthe spirit of the philosophy “Creation, Advance & Challenge”; and put together our wisdom and power.
There is only one truth, “Pursuing prosperity is good”.

Social Issues
Imbalance between Food Supply and
DemandIntense competition between formats
Aging and lack of successors in regional agriculture
Possible impact of trade policies on local suppliers

1

Business Process Integration
optimizing supply chains

Changes in Labor Market
Aging and decline in workforce
Changing labor-related policies
Labor shortage and increasing labor costs

Procurement& Production

2
Supermarket

Changing Consumers & Retail Market
Aging and declining population
Impact of IT innovation on shopping behavior
Decreasing local suppliers serving local
communities

Changing Global Environment

Multi-format
Retailing
response to various
needs ofcommunities andenhancementof shareDrugstore
Home Improvement
CenterPet ShopSports Club

Impact of global warming and climatechanges on supply of produces

1

Business Process Integration

In the food distribution industry, the Valor Group has
struggled for lean margins, which were shared by many
intermediates. To achieve “increasing returns” type growth,
we have been striving to secure the margins by optimizing
the entire process from sourcing to retailing. As many of ourstores were located in areas with lower population density,
we also consider it crucial to reduce the break-even point
and pursue operational efficiency through establishing andutilizing infrastructures including manufacturing bases anddistribution centers. As a leading initiative in the fresh meat
4

Valor Holdings Co., Ltd. Annual Report 2020

category, we have secured intermediate margins byproviding stores with packaged meat from our processing
centers, which source raw materials from Chubu Meat Co.,
Ltd., a wholesale subsidiary. Additionally, by transferring
processing operations such as trimming and cutting atstores to the processing centers, manufacturing productswith standardized skills and at a high hygienic level, andallocating existing staff to other departments, we are
reducing capital expenditures per store by eliminating theneed for processing equipment and space.

VisionOur Solutions
Stable Procurement
Collaboration with suppliers to secure astable supply of produces

Human Resource Development & Recruitment

Wholesale

Distribution

Maintenance

Retailing& Services

Creation of Group Synergies

Simplification of operational processes
by utilizing infrastructures
Professional development
Increasing diversity in the workplace

Local Communities

Maintenance of Living Environment
for Local Communities
Format development
Taking over functions performed by local
suppliers

Reduction of Environmental Impacts
Greenhouse gas emissions control
In-house power-generation initiatives
Reduction of food waste
Reduction of waste and recycling
encouragement

2

Multi-format Retailing

The Valor Group has met the demands by rolling out
multi-format retailing; drugstore in 1984, pet shop in
1988, home improvement center in 1990 and sports clubin 1998. Such format development is driven by not only
an economic motive for larger shares, but also a belief
that it is our corporate mission to bring richness topeople’s lifestyles.

In recent years, we have launched new types of services
and formats such as life support services in Home Center
Valor and the delicatessen “Delica Kitchen” in response tochanging lifestyles and diverse social needs.

Valor Holdings Co., Ltd. Annual Report 20205

Message from CEO

Maximizing the appeal of our products:
We will accelerate the improvement of management
efficiency, propelled by changes of lifestyle and society

Masami Tashiro
Chairman & CEO

6

Valor Holdings Co., Ltd. Annual Report 2020

Integrated initiatives for stores,
training, and products

Taking a grand view of the current business climate of

A “destination store” is not just about product appeal

the food distribution industry, the Group’s main

but also a transformation of hardware such as sales

industry of involvement, we continue to be faced withfloor layout and software such as people who work

the problem of low profitability, as the declining birth

there. The effectiveness of sales floor layout

rate and aging population continue to progress whileemphasizing fresh food departments has alreadythe excessive number of stores is compounded bybeen validated in new stores with an average of 1,000

competition against various business formats beyond

tsubo (approx. 3,300 square meter) floor space. On

our own. Supermarkets in particular are having their

the other hand, for stores with 500 tsubo (approx.

share of the market taken away by competitors such

1650 square meter) floor space, which consist theas drugstores and convenience stores with a location

majority of Valor supermarkets, the change of sales

advantage. Standard stores that were effective in an

floor layout remained to be a challenge. However, theage of a growing population are now suffering a loss

store refurbished in February and March 2020 hasof competitive edge. This is why we have been aiming

shown that we can create a store emphasizing freshto create a “destination store” centered on thefood departments even at the size of 500 tsubo, andsupermarket business, consisting of irresistibly uniquetherefore we have decided to focus on refurbishingproducts and product categories that would makemedium-sized stores.

customers feel it is worth a visit even from far.

The behavior we expect of our employees will also

The COVID-19 pandemic ongoing since Januarychange with a “destination store”. With standard

2020 has led to major lifestyle changes. More consumers

stores they were required to work according toare eating meals at home, due to the temporarym a n u a l s , b u t w i t h a “ d e s t i n a t i o n s t o re ” t h eclosure of schools and the restrictions on going

expectation will be to show initiative and constantly

outside, raising the demand for food items sold atalter how the items are displayed according to thesupermarkets. Since March, supermarket operators

ever-changing product delivery status and customer

voluntarily stopped distributing sales flyers to prevent

needs. Up to now our technical training has mainly

over-crowding and ensure a stable supply of

done through everyday operations in stores, but since

products. Those stores that were able to turnopening our Human Resources Development Center

themselves into a “destination store” were recognizedin April 2019 we have changed to group training there.

as safe places to shop and as such patronized by

T h ro u g h i n t e n s i v e l e a r n i n g o n p ro d u c t s a n dmany customers. Purchasing behavior itself has also

processing techniques, our employees can becomechanged, shifting to something more like a western

capable of creating products appropriate for eachstyle of shopping less often yet buying more eachcooking use in a correct procedure, helping also totime. The tendency is growing among consumers to

cut down food waste. Our efforts go beyond justselect stores based on whether the store has what

technical training, to systematically instruct

they want, to ensure they fulfill their shopping needs

management skills for managers and educate

on a single shopping trip. This trend reaffirms the fact

executive candidates, building the foundation tothat stores are being selected for their products, notp ro m o t e t h e t r a n s f o r m a t i o n o f s o f t w a re ( o u r

their sales promotions, underlining our certainty that aemployees).

“destination store” is the only way forward to the
future.

VisionThe significance of aiming
to become a “destination store”

In fall 2020, we will fully renew our private labels.
By providing high-quality products at reasonable
prices, we aim to not only gain the trust of our customers
but also boost our stores and the power of our brand.

Valor Holdings Co., Ltd. Annual Report 20207

Message from CEO

As we aim to become a “destination store”, ourThis is not necessary a negative factor for the Valor

stores, human resources training, and productGroup. The challenge is to reassess our existing

initiatives are becoming integrated together andbusinesses while coming up with a new type of

gradually producing results. Going forward, we willbusiness different to what we have had before. In

further speed up this process.

addition to providing infection control related products
such as face masks and disinfectant products at
drugstores and catering to stay-at-home demand at

In the final fiscal yearof our medium-term strategic planssupermarkets and home improvement centers, weneed to offer new programs in response to increasing
demand for health maintenance and fitness

The FY2018-2020 strategic plans with the basic policy

improvement. In the U.S., more stores are offering aof “a paradigm shift from expanding standardized

product pickup option via drive-through instead ofstores to enhancing the appeal of products” is now inin-store. The Valor Group also has made a productits final year. The Valor Group aims not just simply to

pickup available via drive-through in May 2020, built

expand the scale of its businesses but to strengthen

upon the system of “ainoma,” an online supermarket

the core of each business while improving theservice delivering to offices that we started last fiscal

management efficiency, resulting in a strongeryear.

corporation that will naturally expand in size. Whenthe scale of our business - the denominator - wassmall, we focused on opening new stores to increase
sales and gain efficiency, but now that the existing

Greater emphasis on business safety under the
influence of COVID-19

stores that make up our denominator have reachedsuch a great size, we believe that the improvement of

Operating results for FY2019 saw consolidated revenues

existing stores will directly lead to higher managementfrom operations exceed the targets while operating

efficiency. Regarding the organizational structure withincome and other income figures fall short, resulting ina holding company, we will enhance the function of

profit improvement in particular having failed to matchgroup strategy and improve the management

the increase in assets. ROA fell from 5.4% last year toefficiency by adopting a two-headquarters system,

4.9%, while ROE went from 6.7% to 5.1%. These andwith the administration headquarters to handle overall

other factors indicate more challenges to face forbusiness management while the retail technology

improving efficiency. The earnings forecast forheadquarters to promote distribution efficiency, such

FY2020 is ¥690.0 billion in revenue from operations,as with IT and logistics.

an increase of 1.8% year on year, and ¥17.2 billion in

The COVID-19 pandemic has forced us to reassess

ordinary income, an increase of 1.9%. Ordinary

what we took for granted and actually implement

income has diverged from the quantitative targetchanges we had only vaguely considered until now,of ¥21.0 billion in the final year of our medium-term

propelling us to move forward. Reexamining our sales

strategic plans. At the same time, we are steadily

promotions triggered by the voluntary suspension ofprogressing with the closure of candidate stores

sales flyer distribution is one example. Through efforts

identified at the start of the medium-term strategic

to become a “destination store” and emphasize theplans, primarily in the supermarket business. We will

distinctive features of each business format, we will

work to correct the deviation while continuing to

set ourselves apart from a kind of store operation

implement these efforts for improving efficiency.

depending on sales promotions alone.

8

Our policies on creating cash flow, capital expenditure,

In addition, we must reevaluate the nature of ourand financial discipline are set out in the FY2018-2020

business in the future as we coexist with COVID-19.

strategic plans, but under the influence of the COVID-

Valor Holdings Co., Ltd. Annual Report 2020

Vision

19 pandemic we will focus on securing liquidity on

improvement centers, our mission to contribute tohand in particular. With regard to capital expenditure,

local communities through our operations comes first.

we will maintain a high level of new store openings in

We will keep on challenging and hope to bring returns

the drugstore business, which plays a key role as ato our shareholders as a result.

driver of growth. In contrast in the sports club

It is also our duty to society to ensure that ourbusiness which were accelerating its expansion, webusiness operations are sustainable. Our participation

will limit the opening of new fitness gyms for the timein the “White Logistics” is part of this belief. While

being. While intending to maintain a steady return toacknowledging social issues such as the declining

shareholders with a dividend payout ratio of 25%, weworking population and lack of truck drivers toalso believe it is important to maintain business safety

support the increase in courier deliveries, we areby raising our internal reserves.

taking action such as adopting a reservation systemfor product delivery to reduce waiting time for our
suppliers, and extending the lead time of delivery

Responsibility we must fulfill
for our stakeholders

orders for processed food to mutually improve
productivity with our suppliers. Through these efforts,
we are steadily building a sustainable supply chain.

The Valor Group considers its ultimate responsibility toLastly, we believe the future will place a greater

be the unceasing quest for growth while prioritizing

emphasis on the product appeal. As the transition ofsound management practices. The growth in thebusiness format, which is the foundation for the

scale of our business has increased the management

advancement of business process integration we

resources available to us, giving us a wider range of

have been working toward, is steadily progressing, we

choices and possibilities. By leveraging the diverse

intend to focus on development of products, aiming

management resources the Group has, we will create

always for further growth. In closing, I would like to

new businesses in sync with the changing times.

ask our shareholders for their understanding andNonetheless, as our business is primarily centered on

support for the future as the Group forges ahead withlifelines such as supermarkets, drugstores, and home

efforts for the medium-to-long term.

Valor Holdings Co., Ltd. Annual Report 20209

Medium-term strategic plans

FY2018-2020 Strategic Plans
We have established and executed strategic plans to enhance medium- to long-term corporate values from FY2010 to FY2014,
and from FY2015 to FY2017. The FY2010-2014 strategic plans focused on “Expanding scale”, in which we accelerated store
expansion in supermarkets and drugstores, and enhanced logistics, manufacturing and processing functions to keep up withthe business expansion. In the FY2015-2017 plans, we aimed for “Improving efficiency” through reinforcement of existing storesand utilization of infrastructures, and continued vigorous openings of drugstores, placing drugstore business as a key driver of
the Group’s growth
During the period, the business environment has dramatically changed due to decreasing and aging consumers, labor
shortage, changes in consumer behavior and intensifying competitions. As we assume that store expansion throughconventional methods will not enhance corporate values, in the FY2018-2020 strategic plans, we will establish a foundation to
support next growth, while redesigning values that stores provide and improving systems supporting stores.
As stated in the “Announcement Regarding Update of Quantitative Targets for the FY2018-FY2020 Strategic Plans” issued on
May 9, 2019, we updated our quantitative targets in line with the conversion of Alleanza Holdings Co., Ltd. into a consolidated
subsidiary, while maintaining strategic goals and major policies in the FY2018-2020 Strategic Plans. However, there has been adivergence between the forecasts for FY2020, including ordinary income of 17.2 billion yen, and the quantitative targets in the
final year of the plan as mentioned above. We will work to minimize this deviation by continuing to implement measures for
improving managerial efficiency.

Basic Policy“Undertaking a paradigm shift from expanding standardized stores to enhancing the appeal of products”
Although we maintain growth-oriented corporate culture, setting “creation of a more competitive format
with a focus on products” as a medium-to long-term growth initiative, we intend to improve profitability
through enhancing frontline store competitiveness.

FY2010-2014 Strategic Plans

FY2015-2017 Strategic Plans

FY2018-2020 Strategic Plans

Strategic goals

Expanding scale

Improving efficiency

Undertaking a paradigm shift fromexpanding standardized stores toenhancing the appeal of products

Major policies

Expansion of store network(organic growth and M&As)
Enhancing functions of manufacturing
and processing

Establishment of competitive formats
Increase efficiency of infrastructures
Expansion of drugstore and home
improvement center businesses

Transition to competitive formats
Advancement of Business Process
Integration between manufacturing andretailing
Establishment of new axis for growth

Improvement of infrastructures tosupport expanding scale

Transition to a holding company structure(Enhancement of group management
and governance)increase recruitment of new graduates

Viewpoint onorganizational
structure

Medium- tolong-term
initiatives

Quantitative expansion ofstandardized stores

10 Valor Holdings Co., Ltd. Annual Report 2020

Improvement of asset efficiency
Enhance strategic functions of theholding company
From closed innovation to cooperation
Human resources development andimprovement of productivity

Transition to creation of amore competitive format
with a focus on products

Increase efficiency in the supermarket business
Strengthen existing stores and improve efficiency
of infrastructure utilization
Nurture key drivers for growth
Improvement of governance in the holding
company and development of human resources

Challenges

Results

Secured a scale of operations and improved
infrastructures
Improved profitability
Improved balance sheet
Enhanced corporate values

VisionFY2010-2014 Strategic Plans

FY2015-2017 Strategic Plans
Improvement of profitability
Improve profitability by enhancing the appeal
of products and frontline competitivenessImprovement of asset efficiency
Enhance strategic functions of the holding
company
From closed innovation to cooperation
Human resources development andimprovement of productivity

Challenges

Results

Expanded the drugstore business
Revenues increased from 80.4 billion yen to 117.9 billion yen.
Improved utilization and efficiency of infrastructuresenhanced product development and secured manufacturing
profitschanged sales floor allocation centered on fresh vegetables& fruits, fresh meat and prepared food
Created group synergies by combining resources
collaborations in opening new stores

FY2018-2020 Strategic Plans(Millions of yen)

FY2009Basic Policy

FY2014FY2017

Expanding scale

Improving efficiency

FY2020 (plan)

FY2020 (forecast)

Undertaking a paradigm shift from expanding
standardized stores to enhancing product offerings

344,900

470,564544,020680,000

690,000

Operating income

9,452

15,00013,470——Ordinary income

9,916

16,10814,93721,00017,200Net income

3,945

9,214

7,570

—

—

6.4%

5.0%

7.7%

8.2%

Revenues from operations

CAGR (Revenue from operations)
ROA

5.7%

6.7%

5.4%

above 5.6%

—

ROE

7.0%

10.7%

6.9%

above 7.7%

—

1.2

1.0

0.8

0.8

—

25.8%

18.4%

30.4%

25%

—

D/E ratio
Dividend payout ratio

Transition to competitive
formats

Advancement of Business
Process Integration between
manufacturing and retailing

Establishment of a new
driver for growth

Refurbish 30-40 stores of supermarkets and drugstores annually, and conduct relocation and reconstruction
Effectively utilize group competencies for improved asset efficiency, and close/transform underperforming stores

Realize product offerings selected by customers, and achieve service quality and cost competitivenessavailable for external sales

Accelerate store expansion of fitness gyms “Will_G”, which investment costs are relatively low andmembership fees are competitive
Utilize group competencies and develop new businesses in harmony with real stores

Valor Holdings Co., Ltd. Annual Report 202011

Segment Overview

Revenues from operations by segment and their distribution

Supermarket Business

Drugstore Business

55.0%

20.5%

Revenues from operations

Operating income

Revenues from operations

Operating income

billion yen

billion yen

billion yen

billion yen

372.7

9.0

139.3

4.3

Revenues
from operations

678.0
billion yen(FY2019)

Home Improvement
Center BusinessSports Club
Business

16.9%

Distribution-related
operations

2.0%

1.6%

Revenues from operations

Operating income

Revenues from operations

Operating income

Revenues from operations

Operating income

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

11.4

3.4

Supermarket Business

13.5

0.5

No. of stores……………

298

10.6

Ave. floor space……………

2.7

1,803

m2

(Valor Co., Ltd.)Business summary
This business segment includes the operations of supermarket operators Valor Co., Ltd.,
Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd., Kohseiya Co., Ltd., Futabaya Co., Ltd.,Sanko Co., Ltd. and Terao Store Inc.; food processing subsidiaries Chubu foods Co., Ltd.
and Daien Foods Co., Ltd.; and food wholesalers Shufu-no-Mise Shoji Chubu Honsha Co.,
Ltd., Chubu Meat Co., Ltd., and V-Solution Co., Ltd. These companies aim at creating
business models that optimize the entire business process from sourcing to retailing.
Besides opening new stores, the segment has expanded in scale through M&As. The
operating companies have shared knowledge and skills in sourcing and selling fresh foods
through the conversion of Tachiya Co., Ltd. and others into subsidiaries. As for
operating areas, Valor Co., Ltd. operates stores in 13 prefectures, mainly in Gifu and Aichi
prefectures; Tachiya Co., Ltd. has stores in Aichi, Gifu and Mie prefectures; ShokusenkanTaiyo Co., Ltd. operates in Shizuoka prefecture; Kohseiya Co., Ltd. has stores in Yamanashi
and Kanagawa prefectures; Futabaya Co., Ltd. operates in Shiga prefecture; Sanko Co.,
Ltd. has stores in Toyama prefecture; and Terao Store Inc. operates in Chiba prefecture.
12 Valor Holdings Co., Ltd. Annual Report 2020

Drugstore BusinessNo. of stores……………

416

Ave. floor space……………

769

m2

We started the drugstore business by establishing Chubu Yakuhin Co., Ltd. andselling medicines in February 1984. Expanding its store network under the brandname of “V-drug”, Chubu Yakuhin Co., Ltd. reached 100 stores in 2003, 200 stores in
2012, 300 stores in 2016, and 400 stores in 2019. It extends across ten prefectures,primarily in Aichi and Gifu prefectures. The chain has increased convenience by
expanding food offerings as well as medicines and cosmetics. As a local medical
support provider, it has developed pharmacies and drugstores with pharmaceutical
functions, and acquired shares of Hida Pharmaceutical LLC in July 2019.

Home Improvement
Center BusinessNo. of stores……………

Results

Business summary

148

Business summary
The home improvement center business began its operations in August 1990 after thebusiness transfer from Valor Co., Ltd. The segment grew in scale in October 1995
resulting from a merger with Fujiya Co., Ltd. Home Center Valor Co., Ltd. offers building
and agricultural materials for professional needs, mainly at large stores. It also strives tomeet customers’ lifestyle needs by offering a tire replacement and storage service
through “Tire Ichiba”. In February 2018, we acquired shares of FIRST Co., Ltd., an online
retailer of materials and tools. In April 2019, we integrated the home improvement center
business through a share exchange between Home Center Valor Co., Ltd. and Alleanza
Holdings Co., Ltd. As for operating areas of the major three operators, Daiyu Eight Co.,
Ltd. operates in the Tohoku and Kanto regions; Home Center Valor Co., Ltd. has stores in
the Tokai region; and Time Co., Ltd. operates in the Chugoku and Shikoku regions.

Sports Club BusinessNo. of stores……………

192

Business summary
The sports club business commenced operations in April 1998 following the transfer
of assets from Valor Co., Ltd. AXTOS Co., Ltd., which formerly operated general
sports clubs with swimming pools and tennis courts, began operating the lowinvestment chain of “Sports Club AXTOS Will_G”, also accelerating its franchise
operations. The network of these sports clubs is not only based in the prefectures of
Aichi and Gifu, but is also expanding throughout the country, including regions withhigher population densities such as the Kanto and Kansai regions.

Distribution-related operations
Business summary
The principal subsidiaries operating in this segment are the logistics operator Chubu
Kosan Co., Ltd.; food, sundries and materials wholesaler Chubu Ryutu Co., Ltd.; andthe facilities maintenance services provider Mentex Co., Ltd. Besides helping toincrease the operational efficiency of other Group companies, these firms also engage
in transactions with external customers.

Valor Holdings Co., Ltd. Annual Report 202013

Segment Financial Review

Store Network

Supermarkets
Valor Co.,Ltd.
Tachiya Co., Ltd.
Youth Co., Ltd.*
Shokusenkan-Taiyo Co.,Ltd.
Kohseiya Co.,Ltd.
Futabaya Co.,Ltd.
Sanko Co.,Ltd.
Terao Stores Inc.
VARO Co.,Ltd.
Other
DrugstoresHome Improvement Centers
Sports Clubs
Pet Shops
OthersTotal

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019

187
131
10
29
10
—
—
—
—
—
7
159
36
51
17
12
462

202
147
10
28
17
—
—
—
—
—
—
174
36
51
16
15
494

218
163
11
29
15
—
—
—
—
—
—
193
34
51
17
15
528

238
179
11
31
15
—
—
—
—
2
—
214
35
52
17
11
567

251
221
13
—
15
—
—
—
—
2
—
241
35
54
17
3
601

263
232
13
—
17
—
—
—
—
1
—
271
36
58
17
3
648

266
235
13
—
17
—
—
—
—
1
—
301
37
65
18
3
690

275
238
14
—
17
5
—
—
—
1
—
337
35
75
19
4
745

281
243
15
—
17
5
—
—
—
1
—
361
36
95
21
5
799

290
240
16
—
17
5
3
8
—
1
—
379
36
146
22
7
880

298
240
17
—
17
6
3
8
4
3
—
416
148
192
107
14
1,175

Note: *merged into Valor in October, 2013.

Number of Stores by Region and Locations of Infrastructures (FY2019)
Number of Stores by Region
The figures indicate the number of stores; the size of the pie charts
corresponds to the number of stores by prefectures.

2

Supermarkets
DrugstoresHome Improvement Centers
Sports Clubs
Pet Shops
OthersNanto-shi

Fukui-shi

Hokkaido

Kani-shi
Ogaki-shi

Ichinomiya-shi
Yokkaichi-shi

75
Shimada-shi

15 22
39 8
3

Supermarket BusinessDistribution :Centers
Processing :Centers
Production :Bases

for chilled products
for ambient- temperature products
for chilled & ambient- temperature products
for fresh meatfor fresh vegetables & fruits
for fresh fishfor prepared foodfor fresh bakery
for fish products

Drugstore BusinessDistribution Centers
Distribution Centers (Shared with the Supermarket Business)
Home Improvement Center BusinessDistribution Centers

14 Valor Holdings Co., Ltd. Annual Report 2020

57

3 16

19

1

9

Toyota-shi

4

5

2

Tajimi-shi

29

Tohoku region

108

Hokuriku region

143

5

84

42

Chugoku region

39

6

11

77
6
Kyushu region

6

89

Koshinetsu region

Kinki region

15 15
6

2
7

192

36
6

Shikoku region

15

2

5
Kanto region

39

91

3
Overseas

333

Tokai region655

3

(Millions of yen)

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019

Revenues fromoperations

240,138

269,918

293,505

303,521313,208

321,458

329,266

336,555

345,960

353,311372,733

Operating income

7,683

9,580

10,783

11,028

8,443

9,760

9,887

9,738

8,518

9,433

9,050

Total assets

105,438

114,693

119,293

127,490

142,260

144,604

153,045

176,384

184,386

195,231200,720

Capitalexpenditures

7,477

12,012

9,199

12,915

17,931

12,07810,506

11,887

12,574

13,376

7,462

Depreciation andamortization

5,283

5,430

5,978

6,346

6,826

7,381

7,556

7,339

7,490

7,633

8,431

Revenues fromoperations

48,37350,651

54,85062,49773,02880,47095,152

107,045

117,949

127,781

139,358

Operating income

1,009

1,357

2,294

1,934

2,449

1,961

2,736

2,692

2,532

3,488

4,317

Total assets

21,493

22,81426,501

29,06533,64938,55744,60252,01958,84958,72567,755

Capitalexpenditures

947

1,400

2,547

3,134

3,893

4,333

5,776

8,087

5,359

4,622

6,135

Depreciation andamortization

817

860

979

1,183

1,454

1,780

2,114

2,588

2,927

3,104

3,170

Revenues fromoperations

36,91938,92841,734

43,81046,55946,556

48,62950,37353,55555,173

114,301

Operating income

677

1,269

1,677

1,869

2,330

2,011

2,450

2,302

2,149

2,616

3,465

Total assets

17,633

17,47918,553

19,456

19,06822,43022,49923,942

25,562

31,02081,239

Capitalexpenditures

166

730

1,943

1,259

464

2,276

1,478

4,777

1,316

645

4,677

Depreciation andamortization

983

876

867

899

875

910

945

1,000

1,099

1,083

2,505

Revenues fromoperations

8,371

8,514

8,604

8,788

8,955

9,271

9,838

10,45911,397

13,157

13,597

Operating income

40

77

247

420

419

463

532

639

680

672

556

Total assets

13,023

12,00911,287

10,76010,382

10,611

10,634

10,776

13,05915,175

15,768

Capitalexpenditures

1,755

146

124

319

338

527

791

1,119

3,114

2,565

1,960

747

770

669

666

636

655

711

785

882

1,080

1,295

Revenues fromoperations

5,282

5,929

6,383

6,699

7,228

7,638

8,590

9,610

9,075

10,265

10,687

Operating income

1,943

2,410

2,761

3,062

2,995

3,395

3,647

3,699

3,725

2,910

2,793

Total assets

11,456

15,33917,51418,80922,351

24,082

23,961

24,894

27,23028,56929,733

Capitalexpenditures

28

439

1,659

1,888

2,155

624

478

2,018

3,044

384

1,050

Depreciation andamortization

40

381

439

550

784

819

716

721

758

817

846

Results

Supermarkets

DrugstoresHome Improvement
Centers

Sports Clubs

Depreciation andamortization
Distribution-related
operations

Valor Holdings Co., Ltd. Annual Report 202015

Sustainability Management

The Valor Group Sustainability Management
To enhance its medium- & long-term corporate values, the Valor Group is engaged in sustainability management
via two approaches, namely 1) sustainability of business activities and 2) management of the social andenvironmental impacts of business activities to realize a sustainable society.

Business Models and Reinforcement of Management Foundations

Procurement &Production

Wholesale

Distribution

Retailing &Services

MaintenanceBusiness Models

Response to Consumer Needs
Maintenance of Living
Environment for Local
Communities

Food Safety & Security

Sustainable Supply Chains
Compliance and Risk Management

Management
Foundations

Reduction of Environmental Impacts

Corporate Governance Systems

Human Resources Development
Corporate Governance Systems

P24-26

Human Resources Development

P20-21

Faster Decision-making and Strengthened Oversight

Supporting a Diversified Workforce

Upon the transition to a holding company structure in October
2015, the Company separated its management decision-making
and oversight system and business execution system, aiming forfaster business execution and strengthened oversight. For fasterbusiness execution, we have established the Group Management
Executive Committee which is comprised of the Company’s
Executive Directors, the Standing Audit & Supervisory Committee
Member and Representatives of the Group’s core companies,
where decisions are made on investment projects andmanagement issues of operating companies are discussed.
At the 59th Ordinary General Meeting of Shareholders held on
June 30, 2016, a partial amendment to the Articles of Incorporation
was approved and the Company transitioned to a company with
Audit & Supervisory Committee System. By establishing an Audit &Supervisory Committee with more than half of the members being
Outside Directors, the Company aims to enhance the oversightfunction of the Board of Directors and further strengthen corporate
governance.

Based on its corporate philosophy of “Creation, Advance &Challenge”, the Company seeks individuals who are ambitions
and undertake challenges. We are actively recruiting people withexpertise in such area as food production, processing anddistribution, in order to improve business models that optimize
the entire process from sourcing to retailing, as well as inpreparation for expansion of the scope of the supermarket,
drugstore and home improvement center business. We also
support people who are highly motivated and whose experienceand backgrounds are diverse through promoting female workers,
hiring of the disabled, post-retirement reemployment programand promotion to full-time employees. Thus we are developing
staff members as managerial resources.

16 Valor Holdings Co., Ltd. Annual Report 2020

Response to Consumer Needs

Development of Private Labels
We have developed private labels, which offer fine quality, value for money and better margin than other national brands. They are sold under thebrand names of “V-Select”, comprising low-priced products, and “V-Quality”, comprising value-added products. In June 2014, we launched the
new brand, “V-Premium”, made from selected ingredients which are only available in certain seasons. We provide these brands to supermarkets,
drugstores, home improvement centers and other companies through V-Solution Co., Ltd., a wholesale subsidiary, which manages demandsupply mismatch risks by preparing highly accurate sales plans. We also take measures to reduce costs and improve quality.
V-Select

V-Quality

V-Premium“V Select” covers basic items which are indispensable to your daily life. Under this brand name,
we offer good-quality products at low prices.

“V Quality” represents tasty food items madefrom carefully chosen ingredients. We deliver finequality at an affordable price.

“V Premium” refers to premium food made from
handpicked and superior ingredients and recipes.
Turn your meal into fine dining with this brand!

Tea 500ml

Sesame Dressing

Sliced Ham 160g

Japanese Soy
Beans Tofu

Response to Consumer Needs

Foundation

Black Pork
Dumplings

Food Safety and Security

Response to Customer Feedback

Process Control and Product Labeling

We have a Customer Relations Office, which receives customer
feedback via our toll-free number or inquiry emails on ourw e b s i t e . T h e O ff i c e s h a re s t h e f e e d b a c k w i t h re l a t e ddepartments to reflect them in product development and sales
policies. In FY2019, the Office received 11,850 comments andother forms of feedback including 2,888 comments on products,of which 984 were comments concerning private labels. The
COVID-19 pandemic led to the increasing number of inquiries on
our store opening status and products since January 2020,
receiving 99 comments in three months.

Food safety is one of the risks involved in the business models
that optimize the entire process from sourcing to retailing. In
developing private labels, we have concluded agreements with
manufacturing outsourcing companies with regard to selection ofingredients and manufacturing processes and carried out audits
in areas such as hygiene management and manufacturing
process management at manufacturing outsourcing plants. As
for the information provided on product packaging, we provide
easy-to-understand displays using icons for 7 ingredients ofspecified raw ingredients, which have obligation of labeling aswell as 20 ingredients equivalent to specified raw ingredients.
Furthermore, we disclose product information on the Valor
website, when introducing new products or renewing existingproducts. In FY2019, we completed changes to all items subject
to modification of product packaging to comply with the Food
Labeling Act. In response to the new display system ofingredients and origin for processed foods, which will become
mandatory in April 2022, we plan to complete the changeover oflabelling by September 2021.

Maintaining Service Levels for Local Communities

Product Pickup via Drive-throughIn order to solve a problem of the working generation not having
time to go shopping, in July 2019, we started “ainoma,” an online
supermarket service delivering to offices. Leveraging the systemof this business, we started a service called “ainoma pick-up” inMay 2020, which enables customers to pick up products via
drive-through. We believe
this service will meet theneeds of customers whowant to pick up their purchases
without having to go into a
store and shop with peaceof mind.

Reduction of Environmental Impacts

P22-23

Waste Reduction by Improving
Product Packaging of Private Labels
For private label products, we not only work to improve how wemanufacture them and what ingredients to use, but we also
constantly work to create packaging thatis easier to open, sort and dispose of.
Eliminating a plastic inner tray from thepackaging of “V-Select Dried Shredded
Squid” has resulted in a reduction of
about 260 kg of waste per year. As for theplastic bottle of “Hida-no-Inochi Mineral
Water”, we improved the package tomake it easier to peel off and sort for
disposal.

Valor Holdings Co., Ltd. Annual Report 202017

Sustainability Management

The Valor Group is engaged in sustainability management using two approaches, namely 1) sustainability of business activities
and 2) management of the social and environmental impacts of business activities to contribute to realization of a sustainable
society, to enhance its corporate value over the medium to long term.
Regarding corporate governance, human resources development and the environment, we have clarified the organizational
structure of the Group and key issues concerning the business model. We are cultivating a corporate culture in which
continuous improvement is pursued.

Key issues

1. Managementtransparency

Activities to secure sustainability ofbusiness or activities to manage
impact of business

Organizational design

Governance

Related page

P.24-26

P.24

Internal control andcompliance systems

Systems for ensuring appropriate business
operations within the Valor Group

P.27

Risk management systems

Awareness of business risks
Development and labeling of private labels

P.27
P.17

Human resources
development

Enhanced training for acquiring knowledge
and skills

Supporting a diversified
workforce

Support of female workers, disabled workers andothers to enable them to maximize their capabilities

For better places to work

Introduction of work location selection system
Employer-provided child care services
Introduction of shop holidays

2. Sustainable Supply
Chains“White Logistics”

Collaboration for increasing productivity

Reduction ofenvironmental impacts

Greenhouse gas emission control
Development of renewable energy
Reduction and recycling offood waste
Reduction of waste andrecycling encouragement

Energy-saving delivery and fluorocarbon control
Installation of solar panels
Reduction of food waste and recycling offood waste
Reduction of waste plastics

3. Risk management inrelation to the business
model

Environment

Transition to a company with audit &supervisory committee
Repot by the Nomination and Compensation
Committee
Framework for decision-making concerningbusiness execution (Group Management Executive
Committee)

2. Faster decision-making

Society(HumanResources
Development)

The Company’s characteristics and improvements

1. Human resources
development to sustain
growth

18 Valor Holdings Co., Ltd. Annual Report 2020

P.20-21

P.19

P.22-23

P.17

Society

Establishing a Sustainable Supply Chain
The Group aspires to maintain business models that optimize the entire process from sourcing to retailing. We strive to improve efficiencyof our distribution channels by establishing infrastructures including manufacturing and processing bases and distribution centers,
undertaking the intermediary function in distribution by ourselves. To enhance the effectiveness of this business model, we believe that it isessential to establish a sustainable supply chain.

Initiatives for “White Logistics”
Securing stability in logistics has now become a social issue against the backdrop of problems including a lack of truck drivers.
Therefore, we have submitted a declaration of voluntary actions in agreement with the objectives of the “White Logistics
Movement” in which the Ministry of Land, Infrastructure, Transport and Tourism, the Ministry of Economy, Trade and Industry, andthe Ministry of Agriculture, Forestry and Fisheries are calling on to participate.

There have been problems at our distribution centers where our suppliers (manufacturers, wholesalers, and delivery companies) had to wait
upon delivery, while we also had problems such as taking too long to handle delivery, causing issues on both sides. Therefore, since March
2019, we have introduced a reservation system for product delivery at multiple distribution centers. As more suppliers utilize the system, theadvance reservation rate exceeded 90% by the end of June, reducing waiting time and improving the efficiency of handling the delivery.

Foundation

1. Utilize reservation system for product delivery

2. Extend lead time for delivery orders of processed food
Regarding delivery to distribution centers for ambient-temperature products, our suppliers (manufacturers and wholesalers) used toreceive the order data from Valor Co., Ltd. one day prior to the product delivery date to stores. Our suppliers had to secure thenecessary trucks in a short period of time between receipt of data and shipment to the distribution center, which placed a burden
on the shipping process, while distribution centers also had to deal with problems such as different delivery time by each supplier.
Therefore, we have extended the lead time to receive the order data to two days before the product delivery to stores. As a result,
our suppliers have sufficient time to arrange shipments, and we are now able to flexibly schedule deliveries from the distribution
centers to stores, which has helped us to level the workload.
3. Review the “one-third rule” for acceptable rate of storage period
Valor Co., Ltd. has been making a full-scale effort to reduce food waste. As part of this initiative, we took steps to ease the limit on
acceptable number of days for storage, targeting products delivered to the distribution center for ambient-temperature products in Kani-shi,starting in July 2019. By reducing the number of returned products to suppliers (manufacturers and wholesalers), we hope to contribute to
the reduction of food waste generated during the process from manufacture to delivery to the distribution centers.

Supporting regional suppliers
Impacted by the temporary closure of all schools in
Gifu prefecture due to the COVID-19 pandemic, local
milk producers who supply milk for school lunches
were looking for alternative buyers. Meanwhile,
producers of Hida beef in Gifu prefecture, which hadstrong demand from the tourism, lodging andrestaurant industries, have been affected by the
prolonged stay-at-home trend of refraining from nonessential and non-urgent outing, and the decline indemands resulted in lower wholesale prices. To
support these affected local producers, Valor Co.,
Ltd. held special sales of milk and Hida beef at its
stores within Gifu prefecture.

Valor Holdings Co., Ltd. Annual Report 202019

Society

Human resources development fuels medium- to long-term growthBased on its Corporate Philosophy of “Creation, Advance & Challenge,” Valor seeks individuals who are ambitious and eager to take up
challenges. We are actively recruiting people with expertise in such areas as food production, processing and distribution, in order toestablish business models that optimize the entire process from sourcing to retailing, as well as in preparation for expansion of the scope ofthe supermarket, drugstore, and home improvement center businesses.
Amid drastic changes in the business environment, the Company set a basic policy of a paradigm shift from expanding standardized
stores to enhancing the appeal of products in the FY2018-2020 strategic plans. Given our aims of strengthening existing stores centeredon the supermarket stores, and of establishing business models that optimize the entire process from sourcing to retailing, there is anincreasing demand for product appeal and sales capabilities. We also regard Frontline Performance Development as a priority issue andwill focus on personnel development to support medium- to long-term growth.

Human resources development
We aim to strengthen our organizational competencies andimprove corporate value by improving frontline performancecapabilities through offering on-the-job training and fostering selfmotivating leaders who can identify problems and execute
solutions. The Company’s human resources development
programs are based on Group-wide training programs plus
training on the techniques and expertise needed at eachbusiness operation. The Group-wide position-based programs
focusing on Corporate Philosophy (DNA) education are mainly
designed for those who have just joined the Company or those
who have passed the Group qualification screening and beenpromoted. Attendees are helped to link philosophy to practice by
cultivating an understanding of the Corporate Philosophy
advocated by Valor’s founder Yoshimi Ito, and listening to lecturesby the current management. The Valor Historical Museum andthe Company Founder Yoshimi Ito Memorial Gallery, which arehoused in the Human Resources Development Center, serve as
venues for experience to understand the Corporate Philosophy.
In addition, we have incorporated human rights related themes
into position-based programs since FY2018 in which participantslearn how employee satisfaction leads to customer satisfaction
by appropriately responding to various human rights issues in theworkplace and in business activities.
In FY2019, we especially expanded product knowledge andtechnical training programs. The supermarket business offeredpractical training on fresh fish, vegetables & fruits and bakeries,
while the drugstore business provided training for pharmacists
and dietitians, and the home improvement center businessconducted training for obtaining qualifications, as well as study
sessions for acquiring division-specific knowledge. We are also
increasing the number of training sessions for younger employees
in their second and third years to develop their frontline
performance capabilities and create a culture of learning.

Total number of training participants andnumber of training sessions per employee
Number of training sessions per employee
Total number ofLeadership training
Position-based training
training participants

Technical training
New employee/young employee training

15,309(Persons)(Times)4.0

15,0006,247
3.0
10,000

1.87
5,585

5,926

5,000

3,972

1.0

0.85

2,624
1,006

0.45
1,442
0

176

FY2017

2.0

2,509
1,361

252

FY2018627

FY20190Note*: The number of technical training, which used to be included inposition-based training, new employee training and young employee
training, has been separately counted since FY2019.

Creating better places to work
In FY2019, Valor Co., Ltd. introduced store holidays to close all its stores four days per year. This applies not just to Valor Co., Ltd., butalso to all Group companies involved in manufacturing, distribution, and other functions, creating an environment that makes it easier for
employees to have a day off. In the supermarket business, in addition to Tachiya Co., Ltd., which already have regular store holidays,
Shokusenkan-Taiyo Co., Ltd. and Kohseiya Co., Ltd., have introduced store holidays to close all stores.

20 Valor Holdings Co., Ltd. Annual Report 2020

Supporting a diversified workforce in HR system
We support people who are highly motivated and whose experience and backgrounds are diverse. The principal HR systems are as
described below.
StatusHiring ofthe disabled

Aside from offering all our employees opportunities todisplay their personalities and their capabilities, we
also aim to enhance the workplace environment
where female workers can flourish in their careers.
The key initiatives are as follows:
1. Expansion of coaching and trainings for promoting
the appointment of women- For better understanding of managers supervisingfemale staff and creation of a better workplaceenvironment
2. Development of potential candidates for
managerial positions
3. Improvement of the workplace environment
corresponding to the phase of the individual’s lifeand career- Rising awareness about maternity leave, childcare leave and family care leave- Creation of workplace environment that facilitateseasy return to work

Ratio of female managerial
personnel to all managerial
personnel (managers or higher)

We are actively recruiting people with disabilities whowish to work for regular companies and be independent. The Gifu Prefectural Government established aregistration system in November 2011 to enable
companies to support the employment of people withdisabilities in cooperation with schools for learners
with special needs. Valor registered in February 2012.
In order to facilitate employment of people withdisabilities also in other regions and support them sothat they can work at Valor for a long time, we intend
to promote education and training of our store staff
and while facilitating collaborations with regionalre c r u i t m e n t c e n t e r s a n d t h e s o c i a l w e l f a redepartments of municipalities.

(The number of female
managerial personnel/The
number of all managerial
personnel)

FY20185.3%(23people/433people)

5.3%(23people/437people)

FY20195.6%(43people/774people)

Number of female workers
who took maternity leave or
child care leave

135

169

224

Maternity leave(Employees/Part-timers)

people(56people/79people)

Child care leave(Employees/Part-timers)

people(63people/77people)

people(71people/108people)

people(68people/137people)

The rate of hiring people*
with disabilities

2.30 %

2.20 %

2.40 %

140

people(66people/103people)

179

people(92people/132people)

205

Contracted by Gifu
Prefecture
Adviser for people withdisabilities seeking jobs

from FY2013 to present

Adviser for employment ofpeople with disabilities

from FY2015 to present

Member of Gifu Prefecturetaskforce for abolition of
discrimination against
people with disabilities

from FY2015 to present

Post-retirement
reemployment
programAgainst the backdrop of population aging, Valor has
introduced a post-retirement reemployment program
whereby Valor reemploys all the employees who arewilling to work after retirement, in principle. Eligible
employees may be reemployed after they retire until
they reach 65 years old if they wish to do so.

Usage rate of postretirement reemployment
program

90.0 %

87.2 %

95.7 %

Promotion to
full-time
employees

16 key operating companies of the Group have programs
to promote part-time workers to full-time employees.
Part-time workers have periodic opportunities forpromotion to full-time employees. Part-time workers
who satisfy the criteria can apply for promotion and,after screening, successful applicants are promoted
to full-time employees. In addition, heads ofdepartments can recommend part-time workers ascandidates for promotion to full-time employees.

Number of part-timeworkers promoted tofull-time employees

102 people

122 people

205 people

Number of
Employees

Following the transition of important issue in humanresources development to “Frontline performancedevelopment”, the Company will further promote
initiatives to establish an environment for better
places to work including programs for humanresources development and supporting diverse
human resources.
Through such policies, we aim to retain talented
human resources in addition to improving productivity
and organizational capabilities through developing
individual abilities and skills.

Foundation

Promotingfemaleworkers

FY2017

Number of employees(Average length of service)

5,821people 6,501people 8,168 people(9.1years)(9.0years)(9.0years)

Female workers(Average length of service)

1,428 people 1,739 people 2,299 people

Male workers(Average length of service)

4,393 people 4,762 people 5,869 people(5.8years)(10.2years)(5.6years)(10.2years)(5.9years)(10.2years)

Note: The above figures are based on the following 17 companies accounting for 89.1% of the Group’s total employees: Valor Holdings Co., Ltd., Valor Co., Ltd., Tachiya Co., Ltd.,
Shokusenkan-Taiyo Co., Ltd., Kohseiya Co., Ltd., Futabaya Co., Ltd., Sanko Co., Ltd., Chubu Foods Co., Ltd., Chubu Yakuhin Co., Ltd., Daiyu Eight Co., Ltd., Home Center Valor
Co., Ltd., Time Co., Ltd., Amigo Co., Ltd., AXTOS Co., Ltd., Chubu Ryutu Co., Ltd., Chubu Kosan Co., Ltd. and Core Support Co., Ltd.
*In FY2016, we started group reporting of the rate of hiring people with disabilities for operating companies, of which voting rights are directly held by the Company.

Valor Holdings Co., Ltd. Annual Report 2020

21

The Environment

Environmental Policy

Issues to be tackled

We recognize that reducing the environmental impacts of ourbusiness activities is an important task. And for us to achieve
reductions, we identified issues that need to be addressed
and tackle them in cooperation with local communities.

1. Greenhouse gas emissions control
2. Development of renewable energy
3. Reduction and recycling of food waste
4. Reduction of waste and recycling encouragement

Reduction of greenhouse gas emissions
The Group has positioned the reduction of greenhouse gas (GHG) emissions as an important issue, and is working on the calculation andthe reduction of the emission amount. The amount of emissions is calculated based on the GHG Protocol, which is recommended as aninternational standard, and we work to reduce GHG emissions throughout the entire supply chain. Valor Co., Ltd., which is included in thescope of the calculation of GHG emissions, is significantly influenced by energy derived from electricity. Thus, in FY2019, the Company
endeavored to reduce electricity usage mainly at stores through initiatives such as the use of energy management systems (EMS).
Greenhouse gas (GHG) emissions in FY2019

Scope 1

Direct emissions frombusiness operators themselves

Scope 2Emissions associated with fuelcombustion*

7,456t-CO2

Emissions due to leakage of CFCs**

34,313t-CO2

Indirect emissions from the use of electricity, heat,or steam supplied by other companies***

144,669t-CO2
186,438t-CO2

Total
Note: Calculation covers 252 business sites, including stores and processing bases of Valor Co., Ltd.
*Usage of city gas and LP gas at each site (including tenant usage), gasoline usage by company-owned vehicles, etc.
**Converted to CO2 equivalent by multiplying a global warming potential.
***Power usage at each site (including tenant usage)

Reduction of food waste
The Group mainly belongs to the food distribution industry, and we view the reduction offood waste as a particularly important issue. Each operating company involved in food
distribution works to reduce food waste by manufacturing, producing, and selling
products based on a plan.
Since FY2017, Valor Co., Ltd. has expanded product categories available for the
automatic ordering system in order to improve order accuracy while reviewing productlineup and optimizing inventory in line with its sales policies aimed for improving
freshness and selling out. In FY2019, we achieved a 16% reduction in food wastecompared to the previous year, especially at the processing center for fresh vegetables& fruits in Kani-shi. In addition, the Company has concluded agreements with Tajimi-shi
and Ena-shi in Gifu prefecture, and has been providing food products such as rice,
noodles and seasonings in support for Kodomo-Shokudo (children’s cafeteria) sinceJune 2019. We will strive to further reduce food waste while combining support activities
for local communities with the reduction efforts in our business activities.

Changes in the rate of food waste
generated for every 1 million yen of
net sales (kg/million yen)*Supermarket Business*

Valor Co., Ltd.

80

62.5
60

59.0
50.1
48.8

40

47.2
46.6

20

0

FY2016FY2017FY2018FY2019Note*: Calculation covers Valor Co., Ltd., Tachiya Co.,
Ltd., Shokusenkan-Taiyo Co., Ltd., and Kohseiya
Co., Ltd. In FY2019, Futabaya Co., Ltd. andSanko Co., Ltd. were added for calculation.

22 Valor Holdings Co., Ltd. Annual Report 2020

Activity Highlights
Results of the major management items for the year under review will be the basis for performance indicators for the next year andsubsequent years.
We pursue initiatives in order to contribute to the environment, society and our customers.

Reduction and recycling of foodwaste

Development of
renewable energy

Management items

Specific initiatives

FY2018 results

FY2019 results

Development of power
consumption

Demand management
Management of airconditioning temperature
Turning off of unnecessary lighting
Introduction of highly efficientfacilities and equipment

1.08[kWh/million yen]*

1.04[kWh/million yen]*

Achieved a 4% reduction comparedto the previous year. We will continue
to make efforts to improve the efficiency of our energy use by utilizing
energy management systems.

Energy-saving
deliveriesStore deliveries
Encouragement of idlingstop practiceInstructions and educationfor energy-saving driving

Compared with the previous
year
Driving distance:
105%
Amount of fuel used: 101%
Fuel economy improved: 104%

Compared with the previous
year
Driving distance:
99%
Amount of fuel used:98%
Fuel economy improved: 101%

Driving distance and amount of fuelused decreased by reviewing thenumber of deliveries and routes, andfuel economy also improved. We willcontinue to aim to improve delivery
efficiency.

Reduction of specified
CFCs emissions

Replacement of refrigerators
and air-conditioners
Regular facility inspections

Stores covered: 14

Stores covered: 37

We will continue replacement andregular facility inspections.

Development of energy

Installation of solar panels

Total wattage generated:
3,352kWBusiness premises covered:
19

Total wattage generated:
9,100kWBusiness premises covered:60

We will continue to examine where to
install solar panels, and will also workon the trial introduction of solar power generation systems equipped with
BCP functions.

Reduction offood waste

Implementation of plannedordering and production
Store shelf management
Review of product lineups
in evenings and volume
adjustment

48.8[kg/million yen]**46.6[kg/million yen]**

We worked on planned manufacturing and sales at stores and processing bases, and were able to continuously reduce the amount of foodwaste.

Recycling encouragementof food waste

Reduction of disposing
products
Expansion of stores to
conduct recycling

Recycling rate:

46.3%

Recycling rate:

Evaluation

42.0%

Causes and Effects

Foundation

Reduction of greenhouse gas emis

Environmental Performance

Although the number of stores to
conduct recycling increased, the recycling volume decreased. We will
strive to improve the recycling rate.

Note: Calculation for power consumption, food waste generation, and food waste recycling rate covers Valor Co., Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd.,and Kohseiya Co., Ltd. In FY2019, Futabaya Co., Ltd. and Sanko Co., Ltd. were added for calculation.
*Rate of electricity usage for every 1 million yen of net sales (Units), **Rate of food waste generated for every 1 million yen of net sales (Units)

Development of renewable energy
The Group is working to create renewable energy to reduce theenvironmental impacts from business operations. In addition to companies
that already have installed solar panels, in FY2019, AXTOS Co., Ltd. andChubu Kosan Co., Ltd. newly installed solar panels. In addition to reducing
greenhouse gas emissions, the Company is encouraging energygenerating activities.

Amount of power generated by renewable energy sources
FY2018 results

FY2019 results

FY2020 targets

Installation of solar panels: 75 sites*
Cumulative power generation capacity: 4,515kW*

Installation of solar panels: 135 sites*
Cumulative power generation capacity: 13,615kW*

Cumulative power generation capacity
by renewable energy sources: 15,000kW*

Note: Solar panels were installed at Valor Holdings Co., Ltd., Valor Co., Ltd., Chubu Yakuhin Co., Ltd., Home Center Valor Co., Ltd., AXTOS Co., Ltd. and Chubu Kosan Co., Ltd.
*Cumulative figures from FY2017

Valor Holdings Co., Ltd. Annual Report 202023

Corporate Governance

Basic Policy
The fundamental objectives of the Company’s corporate governance are to achieve efficient management and faster decision-making andenhance corporate value continuously, while ensuring management transparency and fairness, thorough risk management as well as timely
and appropriate disclosure from the viewpoints of shareholders, customers and all other stakeholders.

Corporate Governance Systems
Upon the transition to a holding company structure in October 2015, the Company separated its management decision-making andoversight system and business execution system, aiming for faster business execution and strengthened oversight. For faster businessexecution, we have established the Group Management Executive Committee which is comprised of the Company’s Executive Directors,
the Standing Audit & Supervisory Committee Member and Representatives of the Group’s core companies, where decisions are made on
investment projects and management issues of operating companies are discussed.
At the 59th Ordinary General Meeting of Shareholders held on June 30, 2016, a partial amendment to the Articles of Incorporation wasapproved and the Company transitioned to a company with Audit & Supervisory Committee System. By establishing an Audit &Supervisory Committee with more than half of the members being Outside Directors, the Company aims to enhance the oversight functionof the Board of Directors and further strengthen corporate governance.

Overview of Valor’s Corporate Governance StructureInternal Control & Risk
Management

Nomination andCompensation Committee
Management
Advisory

Business Execution

Legal Counsel, Tax Accountant,and Other Specialists

Management,
Oversight and Audit

General Meeting of Shareholders
Appointment /Dismissal

ReportAppointment /Dismissal

Audit report

Board of Directors

Consult

Executive Directors

Audit / Supervision(11 Directors)
AdviseAppointment /Dismissal

ReportAudit & Supervisory Committee()

5 Audit & Supervisory Committee Members
Of whom 3 are Outside Directors

Audit report
Collaboration
Audit report

Appointment /Dismissal

Accounting Auditor
Ernst & Young ShinNihon LLC

Audit /
Supervision
ReportAccounting audit

Representative Director
Group Management Executive Committee

Collaboration· Executive Directors (10)· Representatives of Group’s core companies (7)· Audit & Supervisory Committee Member (2)Refer matters fordiscussion / Report

Instructions

Executive Directors
Operating Companies

Instructions /Collaboration

Instructions

Collaboration

Group Manager
Conference
Instructions and supervision

Audit

Audit Office

Activities of the Audit Office, the Risk Management Committee, and the Compliance Committee cover the Group companies.

Risk Management Committee

Compliance Committee
Helpline

Performance evaluation on the Board of Directors
Since 2015, the Company has been considering whether or not the Board of Directors is functioning effectively. Based on the
results of this consideration, the Company intends to improve the Board of Directors as a whole through a continuous process oftaking appropriate actions to rectify weaknesses and build up strengths.
To improve the Board of Directors, all of the Directors have been conducting self-evaluation questionnaires, which are designed
to evaluate the effectiveness of the structure of the Board of Directors and its discussion & consideration, monitoring etc. on ascale of one to five. In FY2019, the Board of Directors scored 3.7 on average, down 0.1 points from FY2018, but the result
indicates that the Board of Directors is generally deemed to be effective. However, as the number of matters to be resolved andreported have increased, there have been requests for more active discussions on business strategies.

24 Valor Holdings Co., Ltd. Annual Report 2020

Policy and procedures for appointment and removal of management executives by the Board of Directors, andreasons for nomination of candidates for Director
Reasons for appointment, removal and nomination· The dismissal of a Director shall be deliberated at the Board of Directors meetings in the event that the Director is in violation of laws
and regulations or the Articles of Incorporation, other circumstances occur that prevent the Director from properly performing his or her
duties, or the Company’s corporate value is significantly damaged by the Director due to negligence of his or her duties, etc.
(2) Procedures· Regarding Directors who are not Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors
after consideration by the Nomination and Compensation Committee chaired by Representative Director Masami Tashiro consisting of
two Executive Directors and two Outside Directors.
· Regarding Directors who are Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors after
consideration by the Nomination and Compensation Committee and subsequent consent of the Audit & Supervisory Committee.
· The dismissal of a Director shall be determined by the Board of Directors after hearing opinions of the Audit & Supervisory Committee,
in addition to reports from the Nomination and Compensation Committee.
(3) Explanation about appointment, removal and nomination· Reasons for election of each candidate for Director are disclosed in the reference document for the General Meeting of Shareholders.
· Reasons for election of each candidate for Outside Director are disclosed in [Directors] “Relations with Valor Holdings Co., Ltd. (2)” of “IIManagement Organization and Other Corporate Governance Systems Concerning Management Decision-Making, Execution andSupervision” in the Corporate Governance Report.
· Explanation of the dismissal of Directors (excluding non-reappointment) shall be disclosed in the reference documents for the General
Meeting of Shareholders.

Foundation(1) Policy· Regarding Directors who are not Audit & Supervisory Committee Members, people with specialized knowledge and excellent management& decision-making capabilities or people who execute important businesses or are responsible for key operating companies are nominatedas candidates. For Outside Directors, people with abundant experience in their respective fields, excellent character, and high level of
insight as well as the capability of providing objective and multifaceted suggestions about management, are nominated as candidates.
· Regarding Directors who are Audit & Supervisory Committee Members, people with knowledge of finance and accounting,understanding of the Group’s business and diverse viewpoints about corporate management are nominated as candidates to ensure
accurate auditing of compliance and appropriateness of business execution.

Independence criteria
Our criteria for selecting Outside Directors are that they satisfy the requirements for independent officers pursuant to the Companies Act
and as specified by the stock exchanges where the Company’s shares are listed; that they are unlikely to have conflicts of interest withgeneral shareholders; that they are not affiliated with a supplier or a customer of the Company with which transactions exceed an amountequal to 2% of the Company’s consolidated net sales or exceed 10 million yen in direct individual transactions; and they have specialized
knowledge about finance, accounting, law, management, etc. or experience in corporate management etc.

Policy for determining the amount of compensation and the calculation method(1) Basic policy
1 For Directors who are not Audit & Supervisory Committee Members· Compensation consists of basic compensation, bonuses and share-based compensation.
· Compensation shall be, in principle, provided in an amount that is adequate for securing (recruiting) excellent people as executives and shall be determinedbased on comprehensive evaluation of the Company’s financial performance, each Director’s performance of duties, achievements and degree of contribution.
· Regarding Directors who are also employees, the salary as an employee is paid in accordance with the Rules for Wages for Employees.
· The amount of bonuses shall be determined within the maximum amount of compensation approved at the General Meeting of
Shareholders in consideration of the previous amount of bonuses paid and the company’s financial results for the current year.
· Regarding share-based compensation, points are granted to Directors within the maximum amount approved at the General Meeting of Shareholders. At
the time of resignation or retirement of a Director, the Company’s shares are delivered to the Director in accordance with the number of points granted.
· The Company has a stock option program for the Company’s Executive Directors and employees, as well as the directors andemployees of the Company’s subsidiaries, in order to enhance their motivation for achieving better performance of the Group.
2 For Directors who are Audit & Supervisory Committee Members· Compensation consists only of basic compensation, in view of their roles and independence.
(2) Procedures· The amount of compensation for Directors who are not Audit & Supervisory Committee Members and for Directors who are Audit &Supervisory Committee Members shall be determined within the maximum amount approved at the General Meeting of Shareholders.
· Regarding the amount of compensation for Directors who are not Audit & Supervisory Committee Members, in order to increasetransparency and objectiveness, the Nomination and Compensation Committee, which is an advisory organ for the Board of Directors
consisting of two Executive Directors and two Outside Directors, shall examine and review the details, after which, the amount shall be
determined by resolution of the Board of Directors; then the decision is redirected to the discretion of Representative Director Masami
Tashiro, on the condition that the report of the Nomination and Compensation Committee is emphasized.
· The amount of compensation for Directors who are Audit & Supervisory Committee Members shall be determined by resolution of the
Audit & Supervisory Committee.

Valor Holdings Co., Ltd. Annual Report 202025

Corporate Governance

Number of meetings of the Board of Directors and the Audit & Supervisory Board held and attendance status (FY 2019)
Meetings of the Board of Directors

Meetings of the Audit & Supervisory Board*

11

12

100%

97%

Number of meetings
Attendance of Outside Directors

Note: The figures are based on the number of meetings held from April 1, 2019 to March 31, 2020.

Dialogues with shareholders in FY2019
62th Ordinary General
Meeting of Shareholders(Held June 27, 2019)521 shareholders attended

Directors (as of June 26, 2020)
Name

Title

Significant concurrent positions at major subsidiaries

Masami Tashiro

Chairman & CEO

Satoru Yokoyama

Executive vice-president

Chairman, AXTOS Co.,Ltd.
Executive vice-president, Valor Co.,Ltd.

Akira ShinohanaManaging Director

CEO, Chubu Agri Co.,Ltd.

Katsuyuki Mori

Director

Takayuki Koike

Director

Chairman, Tachiya Co., Ltd.
Senior Managing Director, Valor Co., Ltd.
Retail Technology
CEO, Chubu Kosan Co., Ltd.

Satoshi Yoneyama

Director

Organizational Transformation and Luvit Cards

Masami Shidara

DirectorMorisaku Wagato

Director

Motohiko Takasu

Director

Deputy General Manager of Business Administrator
Valor Co.,Ltd.
Executive vice-president, Alleanza Holdings Co.,Ltd.
CEO, Home Center Valor Co., Ltd.
CEO
Chubu Yakuhin Co.,Ltd.

Hirokazu Tamai

Director

M&A Strategies

Shunichi Asakura

Director

Chairman, Alleanza Holdings Co.,Ltd.

Yukihiko Shizu

Director

Audit & Supervisory Committee Member (full-time)

Takashi Takayama

Director

Audit & Supervisory Committee Member (full-time)

Mutsuo Masuda

Outside Director

Audit & Supervisory Committee Member

Hirofumi Hata

Outside Director

Audit & Supervisory Committee Member

Tokimitsu Ito

Outside Director

Audit & Supervisory Committee Member

Internal control and compliance system
The Company considers ensuring compliance to be an important management issue and has articulated the Corporate Philosophy, thebasic management policy, and the Action Guidelines for Corporate Ethics. Efforts are made to ensure that all officers and employees
comply with them as well as the Compliance Rules. As for ensuring compliance, the Company has improved, maintained and developed
the compliance system. It has also established the rules for whistleblowing and adopted a whistleblowing system as part of internal control
systems concerning violations of the law and other compliance issues.

Risk management system
The Company has established the basic rules for risk management and manages Company-wide risk of losses in a comprehensive,
integrated manner under a clearly defined risk management system. The Audit Office audits risk management statuses when deemednecessary and reports the audit results to the Board of Directors and the Audit & Supervisory Committee.

26 Valor Holdings Co., Ltd. Annual Report 2020

Compliance and Risk Management Systems

System to ensure the appropriateness of business operations of subsidiaries
The Action Guidelines for Corporate Ethics has been applied to all Group companies to foster the legal compliance awareness of all theGroup’s directors and employees. In addition, the Company has established the Rules for Management of Group Companies and Affiliates
and the Rules of Authority of Group Companies and Affiliates, which require Group companies to report to the Company on certain mattersbased on these rules. Matters that meet certain criteria are submitted to the Company’s Board of Directors or the Group Management
Executive Committee as matters to be discussed. The Audit Office, which reports directly to the Representative Director, audits theoperations of each Group company based on the internal audit plan, and reports the results of its audits to the Board of Directors, theAudit & Supervisory Committee, the Accounting Auditor and other relevant departments to ensure sound business operations.

Risk awareness
The Company considers that the following matters may have a significant impact on investors’ decisions concerning the Company’s
statuses of operations and accounting.

(1) External environment of the retail business (economic trends, competition, taxation on consumption, climate change, etc.)(2) Store opening policies (difficulty in securing land or premises satisfying the store opening criteria, regulatory restrictions, etc.)(3) Food safety (quality incidents such as food poisoning and contamination, erroneous food labeling, etc.)(4) Natural disasters, etc. (in case that natural disasters such as earthquakes and typhoons occur and infectious diseases spread)(5) Entry to new businesses (in the event that anticipated results cannot be achieved because of changes in the external
environment, etc.)(6) Interest rate fluctuations(7) Securing of human resources (difficulty in recruiting human resources and developing them as planned)(8) Security measures for information systems (in case of troubles beyond the Company’s expectation)

Foundation

1. Factors that may have an impact on the Group’s financial performance

2. Regulatory restrictions concerning the Group(1) Act on the Measures by Large-Scale Retail Stores for Preservation of Living Environment (in the event that it is not possible
to open new stores or increase the floor space of existing stores as planned)(2) Leakage of personal information(3) Other regulatory restrictions
3. Accounting standard for impairment of fixed assets

Impact of COVID-19
The Group established the Business Continuity Planning(BCP) Task Force in January 2020 and developed a simplified
manual on infection control to educate employees on healthmanagement. The BCP Task Force also outlined action
guidelines for business trips, meetings, and training, as wellas actions to be taken when infection is suspected, in aneffort to prevent infection.
In each business segment, we put the highest priority on
the safety of our customers and employees, and implemented
measures to prevent respiratory droplets from transmitting
viruses in our stores and facilities, while striving to ensure astable supply of products to meet sudden changes in demand.
In the sports club business, from late February to mid-March,
the Company took preventive measures such as cancellation ofscheduled events and voluntary suspension of operations in all
locations. For the consolidated financial results for FY2019, theCompany recorded an extraordinary loss for fixed costs
incurred during the voluntary suspension and expenses related
to the preparation and cancellation of events.

After April 2020, in response to the expansion of the areas
subject to the declaration of a state of emergency to nationwide,
we distributed work locations among offices mainly engaged inadministrations, product purchasing and sales management andalso introduced telework. While creating an environment toensure the business continuity, we also reinforced measures toreduce the number of customers in stores of each business inorder to prevent infections by contact. The sports club businessvoluntarily suspended its operation at a maximum of 181 branches
in response to requests from local governments.
Subsequently, with the declaration of a state of emergency
being lifted, the offices that distributed work locations andintroduced telework have returned to normal working
conditions. The sports club business, which had been
refraining from opening its business, has gradually resumed
operations in the areas where a request for the voluntarysuspension was lifted, and all locations reopened by the
beginning of June, but the impact on the business is
expected to continue throughout FY2020.

Valor Holdings Co., Ltd. Annual Report 202027

11-year Summary of Financial Results
Valor Holdings Co.,Ltd. and its consolidated subsidiaries for the financial year ended March 31.

FY2009FY2010FY2011FY2012For the year:
344,900

379,172410,577

431,218

Operating income

9,452

12,347

15,23615,852

Ordinary income

9,916

12,817

16,02016,844

Net income

3,945

4,232

7,149

8,184

Total assets

176,440

190,065

199,774

213,629

Net assets

58,57861,821

68,13475,46657,76060,99867,24374,887

69,107

69,746

69,38375,679Cash flows from operating activities

16,004

20,32419,19021,139Cash flows from investing activities

Revenues from operations

At year-end:

Net assets (excl. subscription rights to shares and non-controlling interests)
Interest-bearing debt
Cash Flows:(10,453)(14,428)(17,793)(20,961)

Free cash flows

5,550

5,895

1,397

177

Cash flows from financial activities(5,291)(1,608)(2,283)

2,914

Cash and cash equivalents at the end of fiscal year

9,259

13,547

12,676

15,764

11,537

15,245

17,85922,101for new store openings

8,267

8,995

11,23014,414for refurbishing existing stores

2,663

5,007

4,114

1,788

607

1,243

2,515

5,899

8,399

9,017

9,612

10,255

Net assets per share (BPS) (yen)1,134.05

1,197.67

1,320.33

1,454.43

Net income per share (EPS) (yen)

77.46

83.10

140.38159.56

Capital Expenditures:
Capital expenditures (based on payment)
Breakdown of expenditures:for others
Depreciation and amortization (CF)Per Share data:

Cash dividends per share (yen)Dividend payout ratio

20

22

26

29

25.8%

26.5%

18.5%

18.2%

5.7%

7.0%

8.2%

8.1%

Financial indicators:
Return on total assets (ROA)
Return on equity (ROE)

7.0%

7.1%

11.2%

11.5%

Shareholders’ equity ratio

32.7%

32.1%

33.7%

35.1%

1.2

1.1

1.0

1.0

Debt equity ratio (times)

Revenues from operations (millions of yen)

Operating income (millions of yen)

Total assets / Net assets (millions of yen)
Total assets

800,000

20,000678,096

500,000

16,683
15,515

15,439600,000

497,463

520,530

544,020565,931

Net assets

15,00013,470383,919400,000

14,210300,000

400,000

255,916

10,000269,488311,813285,905

200,000

200,000

5,000
100,000

0

FY2015 FY2016 FY2017 FY2018 FY2019

28 Valor Holdings Co., Ltd. Annual Report 2020

0

FY2015 FY2016 FY2017 FY2018 FY2019

0

125,395
99,027 107,727 113,167

140,645

FY2015 FY2016 FY2017 FY2018 FY2019

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019454,180

470,564

497,463

520,530

544,020565,931

678,096

14,287

15,00016,683

15,43913,47014,21015,515

15,311

16,10817,586

16,762

14,937

16,091

16,878

9,162

9,214

10,75910,522

7,570

7,910

6,477

235,131245,386

255,916

269,488285,905

311,813

383,919

82,94990,881

99,027

107,727

113,167

125,395

140,645

82,39590,301

98,408107,057

112,365

124,599

130,748

87,26586,88084,952

87,231

88,821

96,717

124,872

19,19822,25722,991

22,27027,79027,36930,871(23,746)(15,660)(19,045)(21,569)(24,258)(31,621)(26,615)(4,547)

6,596

3,945

700

3,531

(4,252)

4,256

5,983

(3,745)(6,758)(3,168)(3,223)

7,302

(551)

17,055

19,96017,103

14,65914,93817,93824,15925,226

20,22520,041

24,441

27,576

26,87832,13812,851

12,763

11,62815,144

14,394

14,903

20,457

2,306

2,237

3,650

7,709

9,850

9,451

8,498

10,069

5,225

4,763

1,587

3,332

2,524

3,183

11,09012,168

12,683

13,125

13,952

15,163

17,6651,600.25

1,751.57

1,925.45

2,093.74

2,196.89

2,320.53

2,435.06

177.95178.91208.87205.83148.04153.06

120.63

31

33

36

40

45

48

52

17.4%

18.4%

17.2%

19.4%

30.4%

31.4%

43.1%

6.8%

6.7%

7.0%

6.4%

5.4%

5.4%

4.9%

11.7%

10.7%

11.4%

10.2%

6.9%

6.7%

5.1%

35.0%

36.8%

38.5%

39.7%

39.3%

40.0%

34.1%

1.1

1.0

0.9

0.8

0.8

0.8

0.9

Cash Flows (millions of yen)
Cash flows from operating activities

Cash flows from investing activities

Free cash flows

40,00030,00022,991 22,270

27,790 27,369

52
50

40

3,945

700

3,531

45

48

11.4

40

10

36

4,256

10.2

43.1

30.4

31.4

7.0

30

6.4

6.9

6.7

5.4

5.4

(4,252)-10,000-30,000

ROA

15

60

0

-20,000

ROE

Dividend payout ratio

30,871

20,00010,000

ROE∙ROA (%)

Cash dividends per share (yen)Dividend payout ratio (%)
Cash dividends per share20(19,045)(21,569)(24,258)(26,615)

Financial Information(Millions of yen)

17.2

5.1
5

19.4

4.9

10

(31,621)-40,000

FY2015 FY2016 FY2017 FY2018 FY2019

0

FY2015 FY2016 FY2017 FY2018 FY2019

0

FY2015 FY2016 FY2017 FY2018 FY2019

Valor Holdings Co., Ltd. Annual Report 2020

29

FY2019 Financial Review

Summary of consolidated results and financial conditions
Consolidated operating results for FY2019 were revenues fromoperations of ¥678,096 million, an increase of 19.8% year on year;
operating income of ¥15,515 million, an increase of 9.2%; ordinary
income of ¥16,878 million, an increase of 4.9%; and profit attributableto owners of parent of ¥6,477 million, a decrease of 18.1%. Revenues
from operations increased for the 25th consecutive year, and operating
income and ordinary income increased for the second consecutive
year. However, profit attributable to owners of parent decreased due
to an increase in extraordinary loss and an increase in profit
attributable to non-controlling interests following the consolidation of
Alleanza Holdings Co., Ltd.
The breakdown of the increase in revenues of major segments(¥112,165 million) was ¥59,127 million for the home improvement
center business, ¥21,176 million for the other businesses, ¥19,421
million for the supermarket business, and ¥11,577 million for the
drugstore business. Revenues in the home improvement center
business and other businesses increased thanks to the contributionof Alleanza Group, and revenues in the supermarket businessincreased due to the contribution of M&As made during FY2018 andFY2019. In the drugstore business, in addition to strong sales atexisting stores, sales of face masks and disinfectant products haveincreased in the fourth quarter due to the COVID-19 pandemic.
The breakdown of the increase in earnings of major segments(¥1,305 million) was ¥849 million for the home improvement center
business benefiting from the business consolidation, ¥698 million forthe other businesses, and ¥829 million for the drugstore businessthat has achieved a lower expense ratio and improved gross profit
ratio, securing stable earnings from the main businesses. On theother hand, in the supermarket business, earnings decreased due
to factors such as a deterioration in earnings of Sanko Co., Ltd.
However, Valor Co., Ltd., one of the core companies, has beensteadily refurbishing its stores aiming to become a “destination
store,” and its operations has been stabilized through expanded

education and review of management methods. As a result, thegross profit ratio has been improved, which we regard as asignificant achievement. The sports club business also saw adecline in earnings with upfront expenses for openings. However,
the impact on operating income was limited since the fixed
costs, which were incurred during the 13-day voluntary businesssuspension at all locations, and expenses related to the preparationand cancellation of scheduled events due to the COVID-19 pandemic,
were recorded as extraordinary loss.
The major breakdown of the extraordinary loss was impairment lossof ¥3,065 million based on the accounting standard for impairment
on noncurrent assets, a loss of ¥365 million due to disasters and aloss of ¥272 million due to the voluntary business suspension. The
impairment loss includes a ¥583 million impairment loss posted
through the third quarter resulting from the decision to close storesor cancel leases for closed properties. This was due to the steady
implementation of the plan to close stores that had been consideredas the candidates, mainly in the supermarket business, when the
FY2018-2020 strategic plans were launched.
The Company’s efficiency went down from the previous year,with ROA falling from 5.4% to 4.9% and ROE falling from 6.7% to
5.1%. The decrease in ROA was mainly due to a decrease in theratio of ordinary income to revenues from operations from 2.8% to
2.5%, and in particular due to an increase in the expense ratio from
25.0% to 26.1%. We believe that overall expense management andexpense reduction efforts were not sufficient while the earnings
structure has changed significantly due to the consolidation of
Alleanza Holdings Co., Ltd. The decrease in ROE was due to adecrease in profit attributable to owners of parent and an increase in
non-controlling interests in net assets. Although revenues fromoperations and operating income increased, earnings growth has
not kept pace with asset growth, leaving issues in improving
efficiency.

Financial position
Total assets increased ¥72,105 million from the end of the previous
year to ¥383,919 million. The main factors were an increase of¥6,193 million in cash and deposits, an increase of ¥15,236 million
in inventories, an increase of ¥32,448 million in property, plant andequipment, an increase of ¥5,959 million in intangible assets, andan increase of ¥4,651 million in guarantee deposits.
Total liabilities increased ¥56,855 million from the end of theprevious year to ¥243,273 million. The main factors were an

increase of ¥9,835 million in notes and accounts payable-trade,an increase of ¥5,766 million in electronically recorded obligations operating, an increase of ¥4,116 million in accounts payableother, and an increase of ¥25,980 million in loans payable. Net
assets increased ¥15,250 million from the end of the previous
year to ¥140,645 million. Net assets excluding non-controllinginterests and subscription rights to shares were ¥130,748 million,
and the shareholders’ equity ratio was 34.1%.

Cash flows
Cash and cash equivalents at March 31, 2020 increased ¥6,220 million from the end of the previous year to ¥24,159 million.
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥30,871 million, having increased ¥3,502 million compared with the previous year.
The main factors were increases of ¥2,501 million in depreciation and amortization, ¥2,789 million in notes and accounts payable-trade,and ¥2,089 million in accounts payable-other and accrued expenses, and decreases of ¥59 million in income before income taxes and¥3,378 million in notes and accounts receivable-trade.
Cash flows from investing activities
Net cash used in investing activities amounted to ¥26,615 million, having decreased ¥5,006 million compared with the previous year. The
main factor was a decrease of ¥6,043 million in purchase of investment securities, despite an increase of ¥1,080 million in payments foracquisition of businesses.
Cash flows from financing activities
Net cash used in financing activities amounted to ¥551 million, having decreased ¥7,854 million compared with the previous year. The main
factors were decreases of ¥3,386 million in proceeds from issuance of shares and ¥3,085 million in proceeds from sales of treasury stock.

30 Valor Holdings Co., Ltd. Annual Report 2020

Policy on Profit Distribution and Dividends for FY2019
The year-end dividend for FY2019 was ¥28 per share. Combinedwith the interim dividend of ¥24 per share, the annual dividendfor FY2019 amounted to ¥52 per share, ¥4 higher than forthe previous year. The payout ratio was 43.1%. Our policies on
creating cash flow, fund employment, and financial discipline
are set out in the FY2018-2020 strategic plans, but under the
influence of the COVID-19 pandemic we will focus on securingliquidity on hand in particular. As for our approach to profit
distribution, with regard to capital expenditure, we will temporarily
limit the investment in opening of new locations for the sports clubbusiness during FY2020. While intending to maintain a steadyreturn to shareholders with a dividend payout ratio of 25%, we
also believe it is important to maintain business safety by raising
our internal reserves.

The food distribution industry, the Group’s main industry of
involvement, has been urged to review its business models inevery business format in response to changes in the social
structure. In the past, supermarkets were pursuing efficient
operations run by a small number of people, with the assumptionof economic and population growth, under the policy ofconcentrating the opening of standardized stores in a certain area.
However, as drugstores and others offering food items increase
their number of stores, the competitive advantage of “close-by,”which was also a reason for people to choose supermarkets, arebeing lost. As a result, an ability to transition to a business format
that can attract customers from wider geographic areas is
becoming crucial.
Under such circumstances, as the final step in the FY20182020 strategic plans in line with the basic policy of “a paradigm
shift from expanding standardized stores to enhancing the appeal
of products,” we will work to improve earnings by transitioning toa more competitive format with further focus on products in our
three main businesses of supermarkets, drugstores and home
improvement centers. In the supermarket business, with an aim tocreate a “destination store” offering strong products and productcategories that attract customers, we will refurbish especiallymedium-sized stores while at the same time focus on enhancing
the appeal of products, which is the core of the transformation. In

the home improvement center business, one year has passed
since the business consolidation, and we will promote theremodeling of private labels, shifting the development standard
from price-oriented to value-oriented. The Group will also takemeasures to improve asset efficiency in addition to creatingsynergies through cross-company collaboration.
With regard to capital expenditure, we plan to refurbish 20 to30 supermarkets and will continue to focus on investing in existing
stores. In terms of new store investment, we plan to open a totalof 73 stores, including five supermarkets, 35 drugstores, and four
home improvement centers (including specialized formats), 20
sports clubs, six pet shops and three other stores, maintaining ahigh level of new store openings in the drugstore business, whichplays a key role as a driver of growth. In the sports club business,
we will limit the opening of new fitness gyms due to the COVID-19
pandemic, shifting from the original plan to accelerate new
openings as set forth in the FY2018-2020 strategic plans.
Based on the above assumptions, forecasts for consolidated
financial performance for FY2020 are as follows: revenues fromoperations of ¥690.0 billion, an increase of 1.8% year on year;
operating income of ¥15.7 billion, an increase of 1.2%; ordinary
income of ¥17.2 billion, an increase of 1.9%; and profit attributableto owners of parent of ¥7.0 billion, an increase of 8.1%.

Financial Information

Forecasts for FY2020

Financial policy in the FY2018-2020 strategic plans
Generation of cash flow

Profit distribution

1) Capital
expenditure

At least ¥90.0 billion in the three years from FY2018 (cumulative)

Target of ¥25.0-26.0 billion a year in capital expenditure (allocate 30-40% for investments inexisting outlets)
Refurbishment: 30-40 supermarkets and drugstores per year
New openings: At least 200 fitness gyms (over the three years, including franchise operation)*In FY2020, we slow the pace of new openings.

2) Dividend

Financial commitment

Stable and continuous returns of profit, with a dividend payout ratio target of 25%

Debt equity ratio of 0.8 times and shareholders’ equity ratio of 40%.

Valor Holdings Co., Ltd. Annual Report 202031

Consolidated Financial Statements (Summary)
Valor Holdings Co.,Ltd. and Subsidiaries
The financial year ended March 31, 2019 and 2020

Consolidated Balance Sheet(Millions of yen)

FY2018(Millions of yen)

FY2019FY2018FY2019Notes and accounts payable-trade41,56451,400

Short-term loans payable

20,547

26,15920

20(Liabilities)(Assets)

Current liabilities

Current assets
Cash and deposits

18,494

24,687

Notes and accounts
receivable-trade

8,453

12,779Current portion of bonds

Merchandise and finished goods

36,14851,28413,013

21,180Raw materials and supplies

790

891

Current portion of long-termloans payable
Lease obligations

1,872

2,529

12,19914,932

Income taxes payable

3,445

3,659

(89)

(10)

Provision for bonuses

2,794

3,143

Other
Allowance for doubtful accounts
Total current assets

75,995

104,565

Noncurrent assets
Property, plant and equipment
Buildings and structures

229,436

277,323

Provision for directors’ bonuses

130

141

Provision for point card certificates

885

1,479

Provision for loss onrecollection of gift certificates

272

275

Asset Retirement Obligations

110

91

Provision for loss on store closing

285

562

Accumulated depreciation(119,257)(144,695)

Buildings and structures, net

110,179

132,628

8,696

10,229Noncurrent liabilities(6,127)(6,966)

Machinery, equipment
and vehicles
Accumulated depreciation
Machinery, equipment
and vehicles, net

2,569

3,263

Other

19,34031,143

Total current liabilities

104,283

141,786

Bonds payable

10,01010,010Long-term loans payable

41,28853,489Lease obligations

9,965

11,483

Deferred tax liabilities

205

219

Provision for directors’
retirement benefits

500

627

Provision for retirement benefits

3,884

4,743

Land

44,382

51,636

Lease assets

17,92622,397(10,284)(13,209)

Lease assets, net

7,641

9,188

Asset retirement obligations

9,396

12,703

Construction in progress

3,755

3,576

Long-term deposits received

6,199

6,906

Other

37,32042,398Other(28,865)(33,259)

Total noncurrent liabilities

8,454

9,139

176,983

209,431

Accumulated depreciation

Accumulated depreciation
Other, net
Total property, plant andequipment
Intangible assets
Goodwill
Lease assets

1,198

1,390

0

144

Other

8,547

14,172

Total intangible assets

9,746

15,706

8,953

7,141

973

Long-term loans receivable

Capital stock

13,60913,609

Capital surplus

15,54320,076

Retained earnings

95,46899,256(Net assets)
Shareholders’ equity

Valuation difference on
available-for-sale securities

421(1,865)

1,052

Deferred gains (loss) on hedges

00Foreign currency translation
adjustment

155

273

Remeasurements of defined
benefits plan

(33)

(34)

Total accumulated othercomprehensive income

544(1,627)

Subscription rights to shares

101

142

Minority interests

693

9,754

125,395

140,645

311,813

383,919

Guarantee deposits

27,451

32,102

Other

3,963

4,660

(227)

(341)

49,08654,215

235,817279,353

311,813

383,919

32 Valor Holdings Co., Ltd. Annual Report 2020

243,273

(566)

9,599

Total assets

186,417

Total liabilities

132,375

7,972

Total noncurrent assets

101,486(566)

Deferred tax assets

Allowance for doubtful
accounts
Total investments andother assets

1,301

82,134

124,054

Investments and other assets
Investment securities

684

Treasury stock
Total shareholders’ equity
Accumulated othercomprehensive income

Total net assets
Total liabilities and assets

Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2019 and 2020)

Consolidated Statement of Income(Millions of yen)

FY2018FY2019Net sales

546,264

655,859

Cost of sales

410,407

485,339
170,519

Gross profit

135,856

Operating revenues

19,66622,237

Operating gross profit

155,523

192,757
8,486

Advertising expenses

6,296

Packaging expenses

112

38

Supplies expenses

768

1,206

932

1,353

3,075

3,352

Distribution expenses
Provision for point card certificates
Provision of allowance for doubtful accounts

2

2

494

972

Salaries and wages

53,69365,435

Bonuses

4,237

5,258

Provision for bonuses

2,166

2,919

Provision for directors’ bonuses

557

136

Retirement benefit expenses

690

908

Provision for directors’ retirement benefits

32

40

8,757

11,141

Directors’ remuneration

Welfare expenses
Utilities expenses

8,742

10,014

Rent expenses

23,522

29,330

Repair and maintenance

2,905

4,110

Depreciation

12,896

15,412

Amortization of goodwill

232

391

Other

11,194

16,728

Total selling, general and administrative expenses

141,313

177,241

14,21015,515Interest income

108

133

Dividend income

97

223

Office work fee

1,034

1,425

Rent income

769

834

Investment gain on equity method

32

39

Other

1,451

1,356

Total non-operating incomes

3,492

4,013

Interest expenses

686

875

Rent cost of real estate

612

696

Other

312

1,078

Operating income

Financial Information

Selling, general and administrative expenses

Non-operating income

Non-operating expenses

Total non-operating expense
Ordinary income

1,611

2,650

16,091

16,878Extraordinary income
Subsidy income

179

283

Other

154

646

Total extraordinary income

334

930

Extraordinary loss
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Impairment loss

5

3

106

218

2,707

3,065

Loss on reduction of noncurrent assets

144

221

Loss on valuation of investment securities

0

90

538

1,345

Other
Total extraordinary loss

3,503

4,944

Income before income taxes

12,922

12,863

Income taxes-current

5,700

6,439

Income taxes-deferred

(744)

(903)

Total income taxes

4,956

5,535

7,966

7,328

Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

56

851

7,910

6,477

Valor Holdings Co., Ltd. Annual Report 202033

Consolidated Financial Statements (Summary)
Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2019 and 2020)

Consolidated Statements of Cash Flows(Millions of yen)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Gain on bargain purchase
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in defined benefit liabilities
Increase (decrease) in provision for directors’ retirement benefits
Increase (decrease) in provision for point card certificatesInterest and dividends income paid
Interest expenses received
Loss on retirement of noncurrent assets
Loss on reduction of noncurrent assets
Disaster losses
Payment for business acquisition
Loss (gain) on valuation of investment securities
Equity in losses (earnings) of affiliates
Subsidy income
Insurance income
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accounts payable-other and accrued expenses
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivable
Proceeds from collection of loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Proceeds from guarantee deposits received
Repayments of guarantee deposits received
Purchase of investments in subsidiaries resulting in change in scope of consolidation
Payment for acquisition of businessSubsidy income
Other
Net cash provided by investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of bonds
Repayments of finance lease obligations
Proceeds from issuance of common stock
Proceeds from payment of non-controlling shareholders
Proceeds from sales of treasury stock
Purchase of treasury stock
Proceeds from sales of investments in subsidiaries resulting in no change in scope of consolidation
Cash dividends paid
Dividends paid to non-controlling shareholders
Other
Net cash provided by financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease)in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and deposits due to share exchange
Cash and cash equivalents at end of period

34 Valor Holdings Co., Ltd. Annual Report 2020

FY2018FY201912,922
15,163
2,218
232
(27)
40
297
(39)
(141)
(205)
686
106
144
—
—
0
(32)
(31)
—
(49)
(626)
2,305
826
(1,100)279
32,971
112(673)(5,041)
27,36912,863
17,665
3,065
391
(40)
(7)
334
28
178
(356)
875
218
221
365
272
90
(39)
(283)
(303)
(3,427)
(917)
5,095
(622)
988
1,486
38,142
255(818)(6,708)30,871(179)
286(22,844)120(762)(6,502)
100
(151)
106
(1,132)
1,152
385
(454)
(1,354)
(101)
31
(322)
(31,621)(283)
676(22,469)
48(1,680)
(459)
115
(136)
22
(1,607)
1,967
333
(651)
(637)
(1,182)
283(953)(26,615)

2,402
17,375(14,637)(30)(1,888)
3,386
12
3,085
(0)
—
(2,356)
(1)
(45)
7,302
(50)
2,999
14,938—17,9382,983
22,348(19,516)(100)(2,821)
—
—
0
(0)
(361)
(2,690)
(393)
0
(551)
(487)
3,217
17,9383,003
24,159

Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2019 and 2020)

Consolidated Statements of Changes in Net Assets
FY2018(Millions of yen)

Shareholders’ equity

Balance, March 31,
2017

Accumulated other comprehensive income

CapitalStock

CapitalSurplusRetainedearnings

Treasury
stock

Total
shareholders’equity11,916

12,79989,898(2,608)112,005

1,693

1,693

Valuation
Deferred gains
difference on(loss) on
available-forhedges
sale securities

323

(2)

Total
Subscription
Foreign
Remeasurements accumulated
rights tocurrencyof defined
othersharestranslation
benefits plan comprehensive
adjustment
income

129

(90)

359

113

Noncontrollinginterests

Total net
assets688

113,167

Issuance ofcommon stock
Dividends fromsurplus
Net income

3,386

3,386

(2,357)(2,357)(2,357)

7,910

7,910

7,910

(0)

(0)

(0)

2,042

3,093

3,093

17

17

Purchase oftreasury stock
Disposal oftreasury stock

1,051

Increase in retained
earnings by decreasing
companies accounted
for using the equity
method17

Net changes of
items during theperiod

97

2

26

57

184

(11)

5

178

Total changes of items
during the period

1,693

2,744

5,569

2,042

12,049

97

2

26

57

184

(11)

5

12,228

Balance, March 31,
201813,60915,543

95,468(566)

124,054

421

0

155

(33)

544

101

693

125,395

FY2019(Millions of yen)

Shareholders’ equity

Balance, March 31,
2018

Financial Information

Changes of items
during the period

Accumulated other comprehensive income

CapitalStock

CapitalSurplusRetainedearnings

Treasury
stock

Total
shareholders’equity13,60915,543

95,468(566)

124,054

Valuation
Deferred gains
difference on(loss) on
available-forhedges
sale securities

421

0

Total
Subscription
Foreign
Remeasurements accumulated
rights tocurrencyof defined
othersharestranslation
benefits plan comprehensive
adjustment
income

155

(33)

544

101

Noncontrollinginterests

693

Total net
assets125,395

Changes of items
during the period
Equity transaction
with noncontrollinginterests

(269)

(269)

(269)

Increase due to ashare exchange

4,802

4,802

4,802

Dividends fromsurplus(2,689)(2,689)(2,689)Net income

6,477

6,477

6,477

Purchase oftreasury stock

(0)

(0)

(0)

Disposal oftreasury stock

0

0

0

Net changes of
items during theperiod(2,287)

(0)

117

(1)

(2,171)

40

9,060

6,929

Total changes of items
during the period

—

4,532

3,788

(0)

8,320

(2,287)

(0)

117

(1)

(2,171)40

9,060

15,250

Balance, March 31,
201913,60920,07699,256(566)

132,375(1,865)

0

273

(34)

(1,627)

142

9,754

140,645

Valor Holdings Co., Ltd. Annual Report 202035

Corporate Data/ Share Information (as of March 31, 2020)

Corporate Data

Share Information
Valor Holdings Co., Ltd.

Number of authorized shares

200,000,000(Changed from Valor Co., Ltd. in 1 October, 2015)

Number of outstanding shares

53,987,499

Registered head office180-1 Oi-cho, Ena-shi, Gifu 509-7201 Japan

Number of shareholders

16,691

Headquarters

661-1 Ohari-cho, Tajimi-shi, Gifu 507-0062 Japan

Stock exchange listings

Tokyo Stock Exchange, first section

Established

July 1958

Representative

Masami Tashiro Chairman & CEO

Paid-in-capital¥13,609 million

Name

Nagoya Stock Exchange, first section

Distribution of shareholders by Type

Major Shareholders

Financial Institutions 53 shareholders
20,065 thousands of shares 37.2%

Other companies 369 shareholders
14,083 thousands of shares 26.1%

Number of Shares Percentage of *Held (Thousands) Shares Held

Shareholder

Securities companies 23 shareholders
269 thousands of shares 0.5%

Foreign entities 202 shareholders
8,865 thousands of shares 16.4%

Individuals, others 16,044 of shareholders
10,703 thousands of shares 19.8%

Japan Trustees Services Bank, Ltd.(Trust Account)

3,407

6.33

Ito Youth Scholarship Foundation

2,910

5.41

Chubu Agent Co.,Ltd.

2,730

5.07

The Norinchukin Bank

2,542

4.72

The Juroku Bank

2,536

4.71

The Master Trust Bank of Japan, Ltd. (Trust Account)

2,521

4.68

Masami Tashiro

1,530

2.84

Japan Trustees Services Bank, Ltd.(Trust Account9)

1,404

2.61

Retail Partners Co.,Ltd.

1,260

2.34

Arcs Group Co.,Ltd.

1,260

2.34

Notes: Shareholders are listed by shareholder number if they hold the same number of shares.
*The percentages of total outstanding shares excluding treasury stock aredisplayed by rounding down after the three decimal points.

Stock price and trading volume
Stock price (closing price after adjustment)
(yen)
4,000

3,000

2,000
1,000

0

Volume(thousands of shares)
8,000

6,000

4,000

2,000

0
(month) 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

2009

2010

36 Valor Holdings Co., Ltd. Annual Report 2020

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Valor Group
Segment

Subsidiaries

Supermarkets

Valor Co.,Ltd.
Tachiya Co., Ltd.
Shokusenkan-Taiyo Co.,Ltd.
Kohseiya Co.,Ltd.
Futabaya Co.,Ltd.
Sanko Co.,Ltd.
Terao Stores Inc.
Chubu Foods Co., Ltd.
Daien Foods Co., Ltd.
Fukui Chuo Tsukemono Co., Ltd.
Honda Suisan Co., Ltd.

Ishinomaki Foods Co.,Ltd.
Furuya Sangyo Co., Ltd.
Keirinkaku Co., Ltd.
Shufu-no-Mise Shoji Chubu Honsha Co.,Ltd.
V-Solution Co., Ltd.
Chubu Meat Co., Ltd.
Hida-Osaka Buna-Shimeji Co., Ltd. *Chubu Agri Co.,Ltd.
Valor Max Co., Ltd.***VARO Co., Ltd.

Drugstores

Chubu Yakuhin Co., Ltd.
Hida Pharmaceutical LLC
Sun Pharmacy LLC

V-drug International Co., Ltd.
V-drug Hong Kong Co., Ltd.

Home Improvement Centers

Daiyu Eight Co.,Ltd.
Home Center Valor Co., Ltd.
Time Co.,Ltd.
Alleanza Japan Co.,Ltd.

Nisshiki Co.,Ltd.
Morosada Agri Co., Ltd.
FIRST Co., Ltd.

Sports ClubsAXTOS Co., Ltd.

Approach Co.,Ltd.

Distribution-related operations

Chubu Ryutu Co., Ltd.
Chubu Kosan Co., Ltd.
MENTEX Co., Ltd.
Seiso Co., Ltd.
VMC Co.,Ltd.

V-Flower Co., Ltd.
Shanghai Valor co., Ltd.
Valor Agency Co., Ltd.
Japan Clean Services LLC

OthersAlleanza Holdings Co.,Ltd.
Home Center Valor Co., Ltd.**
Amigo Co.,Ltd.
Joker Co.,Ltd.
Agri Genki Okayama LLC

Gito Family Department Co., Ltd.
Chubu Hoken Service Co., Ltd.
Core Support Co., Ltd. *Core Support Vietnam Co.,Ltd.
Valor Max Co., Ltd.***Corporate Data

Note: *In April 1 2020,Hida-Osaka Buna-shimeji Co.,Ltd. was merged into Chubu Agent Co.,Ltd. and Core Support Co.,Ltd. was merged into Valor Holdings Co., Ltd.
**Pet Shop Business ***Same company

History
1958

Established Shufu-no-Mise Co., Ltd. in Ena-shi, Gifu and opened the first supermarket.

1969

Established Chubu Kosan Co., Ltd., a logistics subsidiary.

1970

Changed the company name to Shufu-no-Mise Valor Co., Ltd.

1974

Changed the company name to Valor Co., Ltd.

1977

Relocated the headquarters from Ena- shi to Tajimi- shi, Gifu.

1984

Established Chubu Yakuhin Co., Ltd., a drugstore subsidiary.

1985

Established Chubu Foods Co., Ltd., a prepared food manufacturing subsidiary.

1989

Established a distribution center in Tajimi- shi.
Started a material wholesale business for stores by Chubu Ryutu Co., Ltd.

1993

Listed on the Second Section of the Nagoya Stock Exchange.

1995

Merged with Fujiya Co., Ltd., a home improvement center company.

1996

Relocated the headquarters and the distribution center to the current location in Tajimi- shi.

1998

Established AXTOS Co., Ltd. and spun off the sports club business.

1999

Established MENTEX Co., Ltd., a facility maintenance service subsidiary.

2001

Established Hokuriku distribution center in Nanto- shi, Toyama.

2005

Acquired Tachiya Co., Ltd. and Youth Co., Ltd., supermarket subsidiaries.
Assigned to the First Section of Tokyo Stock Exchange and Nagoya Stock Exchange

2007

Acquired Sun Friend Co., Ltd (currently Syokusenkan- Taiyo Co., Ltd.), a supermarket subsidiary.

2012

Established Hokuriku processing center for fresh meat in Nanto- shi, Toyama.
Established Kani distribution center for products stored at ambient temperatures in Kani- shi, Gifu.

2013

Established Shizuoka integrated center in Shimada- shi, Shizuoka.
Established Kani distribution center for chilled products.
Established Ogaki processing center for fresh meat in Ogaki- shi, Gifu and Kani processing center for fresh vegetables and fruits in Kani- shi.

2015

Made a transition to a holding company and changed the company name to Valor Holdings Co.,Ltd.

2016

Established Nagoya Headquarters in Nakamura-ku Nagoya-shi.
Acquired Kohseiya Co., Ltd.,a supermarket subsidiary.

2018

Acquired Futabaya Co.,Ltd., a supermarket subsidiary.
Established capital and business partnership with Arcs Co.,Ltd. and Retail Partners Co.,Ltd.

2019

Acquired Sanko Co.,Ltd., a supermarket subsidiary.
Integrated the home improvement center business by a share exchange between Home Center Valor Co.,Ltd. and Alleanza Holdings Co.,Ltd.

Valor Holdings Co., Ltd. Annual Report 202037

“Valor” is derived from a Late Latin word meaning ‘a person of courage’.
We believe in courage as essential to fulfill our social responsibilities.

Forward Looking Statement
This report’s coverage extends beyond current
information and date for the Valor Group to futureforecasts. These forecasts represent assumptionsand viewpoint based on information available at thetime of publication. The actual results may differ
from the forecasts due to various circumstancesand external environmental factors.

Valor Holdings Co.,Ltd.
Headquarters

661-1 Ohari-cho, Tajimi-shi, Gifu 507-0062 Japan
Phone: +81-572-20-0860

For IR-related Inquires
Investor Relations & Public Relations

1957-2 Kita-tanda, Hiromi, Kani-shi, Gifu 509-0214 Japan
Phone: +81-574-60-0858

URL: https://valorholdings.co.jp/ IR Site URL: https://valorholdings.co.jp/ir/