Integrated Report

2022
Year ended February 28, 2022

Introduction

I n t ro d u c tion

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

C o nte nt s
Introduction
Core Philosophy, Business Vision and Mission........................................01
Contents and Editorial Policy..................................................................02
U.S.M. Holdings at a Glance...................................................................03
Our Path to Value Creation ....................................................................05

Core Philosophy
We:

Value Creation• O ffer customers healthy, valuable choices in foodMessage from the President....................................................................07• C ultivate deep relationships to build prosperous
local communities

Alignment of Our Medium-Term Business Plan with Social Sustainability...... 11• C onstantly pursue innovation and move with the times

Our Value Creation Model......................................................................13

Basic Sustainability Policy........................................................................12
Our Business Resources..........................................................................15
Material Issues.........................................................................................17

Business Vision

Third Medium-Term Business Plan
Review of the Second Medium-Term Business Plan................................21

In our business, we aim to:Third Medium-Term Business Plan..........................................................23• Offer products and services tailored to various lifestyles thatgive customers access to a range of healthy, valuable foods

Financial Strategy....................................................................................27• C reate a corporate culture that supports employee selffulfillment by providing skills training and encouraging
people to achieve their potential• C ontinually develop and grow over time while seeking tomaximize the enterprise value of member companies

Sustainability Strategy• C reate new value by dealing fairly with our business
partners for customer benefit

Social: Food Safety and Security..................................................................33

Environmental: Decarbonization and a Circular Economy.........................29
Sustainable Food Value Chain.........................................................35• Welcome new companies into the Group to help us meetthe needs of local communities and engage in fair,transparent corporate governance while respecting
the management of each member company of
U.S.M. Holdings

Creation of Healthy, Valuable Lives through Our Foods and Services.....36
Pursuit of Diverse Human Resources and Job Satisfaction...........40
Governance: Enhancing Corporate Governance....................................43
Data
7-Year Highlights.....................................................................................53

MissionCompany Data / Stock Information.........................................................55

We will:• C reate new value by mobilizing the collective strengthof the Group across company and business categories,
while respecting the managerial autonomy of ouroperating companies• L ive up to the trust and expectations of our customers
and maximize corporate value by constantly pursuing
improved scale and quality• P ledge to remain an open Group that welcomes newmember companies

Editorial Policy
Integrated Report 2022 has been produced by referencing the value creation process in the International Integrated Reporting Council (IIRC)’s Integrated Reporting
Framework, and the pursuit of corporate sustainability and social sustainability as proposed by the Ministry of Economy, Trade and Industry’s Study Group on
Approaches to Making More Substantial the Dialogues for Creation of Sustainable Corporate Value. It also acts as a communication tool that systematically summarizes
our Basic Sustainability Policy, which sets out our goals of maximizing medium- to long-term corporate value and achieving lasting growth.
We will work to enhance the content of future Integrated Reports to give a wide range of readers, from shareholders and other investors to residents of local
communities, including our employees, a deeper understanding of the U.S.M.H Group.
Reporting Period 	March 1, 2021 to February 28, 2022
Note: Some information is from outside the reporting period.
Scope 	United Supers Markets Holdings Inc. and its operatingcompanies
Figures in this document (such as monetary values) arerounded down to the unit of measurement shown, andpercentages are rounded to one decimal place.

01 U.S.M. Holdings Integrated Report 2022

Forward-Looking Statements
The Company’s current plans, forecasts, strategies and other statements in thisreport include forward-looking statements based on management’s judgment inlight of information available at the time the report was prepared. Various factors
could cause actual results in the future to differ significantly from these forwardlooking statements. Risks and uncertainties that could affect results include, but are
not limited to, the economic conditions in the Company’s business environment,
market competition, foreign exchange rates, and tax and other systems.

U.S.M. Holdings Integrated Report 2022

02

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

U .S .M . Hold ing s at a G lan ce

The Maruetsu, Inc.

We will create and provide new value asa Group by further refining operational
know-how at our three operating companies.

Established in 1945. Operates Maruetsu, which
focuses on providing fresh food and an
enjoyable shopping experience for customers
every day; Maruetsu Petit, an urban-format
supermarket that targets customers in urban
areas; and Lincos, an upscale supermarket
that offers high-quality products andservices.

U.S.M.H’s Business Resources
Over 520 Stores in the Greater
Tokyo Area
The greater Tokyo area market, where
the U.S.M.H Group primarily operates,
is Japan’s most populous region. The
U.S.M.H Group operates over 520 storesin this market.

304
194
31

Maruetsu
V

Established in 1961. Operates BL NDE, a new
type of supermarket where people, food,lifestyles and culture interact through the
products and services offered; Food Square, aspecialty food store that proposes cooking andeating habits; Food Market, a store that offers
fresh products and convenience; and Food Off
Stocker, a store that appeals to customers
with everyday low prices.

Kasumi 
MaxValu Group total:

1

Tochigi
Prefecture
8 stores

4

Gunma
Prefecture
4 stores

SaitamaPrefecture
90 stores

Store Network

Kasumi Co., Ltd.

7

Percentage of Japan’s
population living in thegreater Tokyo area*

34.5%

108

33

3
12

54

2

1

43.4 million people

IbarakiPrefecture
109 stores

125.9 million people* Data taken from the Basic

149

Resident Register as ofJanuary 1, 2022

Tokyo
Metropolitan Area
163 stores
Kanagawa
Prefecture
51 stores

14
2

49

529 stores

Chiba
Prefecture
104 stores

40
50

Note: As of February 28, 2023

MaxValu Kanto Co., Ltd.
Established in 2009. Operates MaxValu, which
offers customers maximum value in terms of
quality, price, selection and service when
shopping for daily groceries, and MaxValu
Express, which is based on the concept ofoffering everyday convenience, competitive
prices and surprising variety for those
shopping for daily necessities.

United Super Markets Holdings Inc. (U.S.M.H)
is a joint holding company for three
supermarkets—Maruetsu, Kasumi and MaxValu—
operating in the greater Tokyo area.
    The “United” in our company name represents the“unity” of our supermarket businesses, our hope for thedevelopment and prosperity of the regions we operate in, and ourcommitment to continue cultivating deep relationships to build
prosperous communities.
    Since U.S.M.H was established in March 2015, the three operatingcompanies have respected each other’s independent and autonomous management
while leveraging their accumulated brand power to provide community-based services.
U.S.M.H has grown by playing a central role in creating new products and services that customers
perceive as having added value.
    During that time, we have seen significant and rapid changes in our operating environment—in society, theeconomy and nature—and combined with progress in digital transformation (DX), the lifestyles of our customers are alsochanging dramatically. In an era where people can live to more than 100, customer expectations for food go beyond the simple
physical need to consume calories, with a shift toward also satisfying holistic needs, including wellbeing. In response to thischange, we will evolve beyond the limits of the conventional supermarket to continue providing food to everyone and remain an
essential presence in each region.

03 U.S.M. Holdings Integrated Report 2022

Number of Employees
Group total

29,527

Maruetsu

16,952

Kasumi

10,613

MaxValu Kanto

1,857

Notes: 1. The number of employees is calculated as of February 28, 2022.
2. Part-time employees are calculated based on an 8-hour work day and the average number of employees during the period.
3. The Group total includes employees of U.S.M. Holdings.

Results for Fiscal 2021 (Year ended February 28, 2022)

Net sales

Operating income

Ordinary income

701,159 million yen

12,155 million yen

12,474 million yen

Profit attributable to owners of parent

Operating income margin

Capital expenditure

5,374 million yen

1.7%

27,784 million yen

U.S.M. Holdings Integrated Report 2022

04

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability StrategyData

O u r Pa t h to Va l u e C rea tio n
Consolidated net sales

Consolidated operating income

718.9
516

649.5

A New Supermarket
Alliance in the Greater
Tokyo Area

On March 2, 2015, United Super Markets
Holdings Inc. (U.S.M.H) was established
as a joint holding company of The
Maruetsu Inc., Kasumi Co., Ltd. and
MaxValu Kanto Co., Ltd., in response tointense competition within and beyond
the supermarket industry. This merger
was achieved when the three companies,
which each aspired to become number
one in the greater Tokyo area, came toan understanding. They formed analliance to provide appropriate products
and services in terms of both quality andquantity and in relation to the size of themarket, and with the aim of combining
the strengths and resources of eachcompany in order to innovate.
    With a store network that covers
all seven prefectures in the Kanto region,industry-leading sales, more than 1.1
million customers per day, each store’sconnection to its local community andmore, U.S.M.H continues to evolve on adaily basis, backed by these multifacetedstrengths and future potential.

05 U.S.M. Holdings Integrated Report 2022

679.2

677.5

670.4

519

14.0

Su p e r m a r ke t

521
701.1
518

Stores are our most important point of

676.3

contact with customers. In our search for a

511

new supermarket format suited to the
19.1

503
14.3

changing times, we gradually implemented
and tested out new initiatives in sync with

14.0

digital developments, starting with the

12.1

11.8

grand reopening of the MaxValu Oyumino

0.93

494

store (Chiba Prefecture) in October 2020.
Following the opening of the Maruetsu
Funabashi Miyama store (Chiba Prefecture)

2015

March 2015

A N ew Ty p e of(Billions of yen)

Number of stores

2016

2017

2018

2019

2020

2021

October 2017

October 2019

June 2022

Rollout of private label brandeatime products

Release of original mobile app
Scan&Go ignica

Start of operations at
our plant factor The Terrabase

As the three companies increased thenumber of jointly planned products and joint
procurement of raw materials and othersupplies, sales of eatime, the U.S.M.H
Group’s first line of private label products,
began at all stores in October 2017. The
concept of eatime is to offer new value tocustomers by seeking out deliciousness,
focusing on the food cultures and local
specialties of various regions, and aiming forhigh quality at reasonable prices.
    In March 2021, we launched the eatime
chef brand of meal kits sold exclusively
online, with the concept “Let’s make today’s
meal a masterpiece.” We will continue tobring a rich assortment of specialty productswith unique value to dining tables.

Scan&Go is an app that enables customers
to scan and pay for products with their own
smartphones, for smooth shopping without
the need to wait in line at checkouts. The
app was developed to capture and analyze
customers’ purchasing behavior and offer
sales promotions, and to give customers a
comfortable, enjoyable shopping
experience. This is also achieved by shifting
employees from the registers into customer
service work with higher added value, anadded benefit in light of labor shortages inthe supermarket industry.
    The number of stores using the app
rapidly increased in the spring of 2020 in
response to the outbreak of COVID-19. By
February 2021, it was in use at more than
500 stores. We are pushing enhancements tothe shopping experience through the app.
We aim to achieve the fusion of internet
shopping and physical stores (Online Merges
with Offline, or OMO), at the same time
implementing services that allow for morevaried shopping experiences, such as our
Online Delivery service.

in February 2021, we aimed for the next
(FY)stage of this new supermarket prototype
V

In an era where people can live tomore than 100, customer lifestyles
and their expectations for food arechanging drastically and more
quickly than anticipated. This is due
to various changes in the operating
environment, including the declining
population, climate change andinternational events, in addition to
the advance of DX. In the midst ofthese changes, U.S.M.H has beenworking to create new value thatmeets the needs of customers now
and in the future.

at the Kasumi BL NDE Tsukuba Namikistore (Ibaraki Prefecture), which opened in
February 2022.

In June 2022, U.S.M.H began full-scale production of
lettuce at plant factory The Terrabase, where preparations
for production had been made in partnership with
PLANTX Corp.
    Strict hygiene management helps ensure a clean
environment for cultivation, and reduces the amount ofwater used. Using the power of technology, we haveachieved food safety, environmental friendliness andhigh nutritional value. In addition, as a food retailer
U.S.M.H is involved in development, production andsales according to the SPF model. This model reduces
the time from harvesting to sale, enabling the deliveryof ultra-fresh lettuce to dining tables.

November 2022

Launch of plant-based meat products
under the Green Growers private label

We signed an exclusive sales agreement for the Japan
market with U.S.-based company Beyond Meat, Inc.,
one of the world’s leading companies in alternative
meat derived from plants (in this case, green peas), andstarted marketing and selling the company’s products.
We sell these products under the Green Growers private
label, a sustainability and wellbeing-conscious brand.
   Green Growers is focused on the wellbeing ofboth humans and the environment.

U.S.M. Holdings Integrated Report 2022

06

Introduction

Me s s a g e f ro m t he Pre s id e nt

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

U.S.M.H’s Journey So Far: The Second Medium-Term Business Plan

With an eye on the future ofsupermarkets, we will pursue
value creation through manygatherings and connections.
Today, as supermarkets in Japan face a major
turning point, what kind of future is the United
Super Markets Holdings (U.S.M.H) Groupseeking, and what is its strategy for realizingthat future? Motohiro Fujita, who leads theGroup, explains the objectives of our new
medium-term business plan and how we

U.S.M.H was formed in 2015 through the merger of threecreate an organizational structure with the promotion ofsupermarket chains: Maruetsu, Kasumi and MaxValu Kanto.

cross-organizational initiatives at its core. Efforts toAfter a period of creating post-merger benefits andintegrate and test these initiatives in stores were

exploring new organizational management solutions, basedon a framework involving the independent management ofeach operating company, the First Medium-Term Business
Plan started in fiscal 2017 with the aim of fostering unityand pursuing synergy at scale among the consolidated
companies. During this period, we faced changes in
consumer behavior and the expansion of e-commerce
fueled by the rapid advancement and spread of digitalization,
and although the business plan generated positive
quantitative and qualitative results, the performance caps
imposed by our existing business model and store formats
became apparent.
    As a result, for our Second Medium-Term Business
Plan, which we launched in fiscal 2020, we set the goal ofusing digital technologies to transform our cost structure,
store formats, working styles and services, and decided tomaterialized in the form of solutions that demonstrateoriginality, including self-checkout registers, smartphone
payment options, online delivery and digital sales
promotions, and with the establishment of an offshoredevelopment system.
    Our earnings results for fiscal 2020 and 2021
exceeded those of the business plan, in part due to theeffects of the pandemic. Fiscal 2022, the final year of theplan, however, turned out to be a very challenging year as
operating income fell 47.5 percentage points to 6.3 billion
yen. This was attributable to much larger-than-expected
price increases for imported resources and raw materials
and in fuel and electricity costs due to various environmental
changes, as well as people adapting their lifestyles to thepost-pandemic “new normal.”will create value.

Motohiro Fujita
President andRepresentative Director

Seeking Further GrowthThree Engines

Fiscal 2023 marked the start of the U.S.M.H Group’s new medium-termbusiness plan. Under the plan, which was crafted by thoroughly
considering what we want to be in the future, we will engage three
growth “engines” to pursue value creation and sustainable businessgrowth beyond the conventional supermarket model.

Supermarkets Are at a Crucial Juncture, and Actions Now Will
Determine How They Evolve in the Future
The effects of Japan’s declining and aging population are
becoming increasingly apparent in our daily lives, while
global supply chain disruptions stemming from the
COVID-19 pandemic and changes in various situations
internationally continue. These trends, coupled with otherfactors including the ongoing destruction of nature andabnormal weather events, have pushed up the prices ofimported resources and raw materials, and led to a
consumer market beset by inflation with no end in sight.
We have arrived at a critical juncture where we must think
about what supermarkets will look like in the future.
    Under these circumstances, the consumer market has
seen moves to create new delivery and takeout markets, startingwith the restaurant industry, which was hit hard by movement
restrictions imposed due to the COVID-19 pandemic.
    We consider the current environment not as a cause

07 U.S.M. Holdings Integrated Report 2022

for pessimism for supermarkets, but as a golden
opportunity to venture into new areas. We believe that
now is the time to return to our Core Philosophy of“offering customers healthy, valuable choices in food” and“cultivating deep relationships to build prosperous
communities,” and to carefully consider how we shouldchange to broaden our outlook and achieve further
evolution and growth.
    The lifestyles and values of customers arediversifying, driven partly by the declining and aging
population and by advances in medical technology. If we
can continue to create new value and build solid
relationships with our customers, while accommodating
their diversity and paying attention to their needs, whichcannot be satisfied simply by purchasing things, our way
forward will become clear.

The Third Medium-Term Business Plan: Beyond Supermarket
For the Third Medium-Term Business Plan, which starts in fiscal
2023, a project (organized by senior management andyounger frontline employees) spent more than a year dealing
with the fundamental question, “What role do we want to playin society?” We have thoroughly considered our vision for asustainable future, taking into account consumer changes andpredicted market trends, as well as discussions with employees
at each operating company. The conclusion we reached isthat, to continue to thrive as a sustainable company with morethan 520 stores in the Kanto region visited by over 380 million
customers annually, we must transform into a business thatgrows together with the region by continuing to create uniquevalue, and one with a strong commitment to the wellbeing of
the region’s residents, culture, industries and communities, aswell as our employees and their families.

Engine 1   To that end, in the Third Medium-Term Business Plan we will
carry out activities with the aim of establishing three “engines”:(1) Redefine and revitalize the existing supermarket businessthrough product and store reforms (Engine 1).
(2) Expand out-of-store revenues with full-scale implementationof OMO1 (Engine 2).
(3) Leverage our accumulated digital intellectual property to
expand our business areas, such as into B2B (Engine 3).
    These initiatives will enable us to go beyond thebusiness model we have followed up to now, while respecting
the history and concept of the traditional supermarket. We
believe these initiatives are an expression of our determination
to continue our journey toward “Beyond Supermarket.”
1. Online Merges with Offline (OMO): the fusion of offline and online commerce

Product and Store Reforms

Engine 1 is an initiative to revitalize our stores, our points ofcontact with customers, by shifting to a ground-breaking
format that focuses on the transformation of stores andthe products in stores. We expect services made possibleby the evolution of digital technology to continue toincrease, and that they will diversify the ways in whichcustomers shop by giving them more options. Using thevarious digital deliverables that we have focused on
developing up to now, we want to create stores that serveas points of contact where customers can adapt their personal
shopping style to fit their circumstances. We also plan toreinvent stores to be differentiated in terms of merchandise.
The products offered in those stores will include many private
label brands with unique value, and a large selection of
products created by designing their entire supply chain (SPF2).
2. SPF (Specialist retailer of Private label Food): A business model that
integrates the production, distribution and sale of food products

U.S.M. Holdings Integrated Report 2022

08

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Message from the President

Material Themes and Material Items

Engine 2

Outside Digital (Expansion of Out-of-Store Revenues)

Engine 2 is in an initiative to seek out-of-store revenues byusing digital mechanisms developed in-house to move
forward with the integration of our store network (which isundergoing revitalization) with our product procurement
capabilities. The sales channels used in this initiative will
include online delivery, unstaffed stores, mobile
supermarkets and collaboration with delivery companies,
which we have continued to test and verify. Our plan is tointegrate and expand these channels in order to implement
OMO from a supermarket-focused perspective. In theEngine 3

online delivery channel, we aim to create comprehensive
online shopping services by adding elements such as
marketplaces and direct shipping from manufacturing sites
to our existing online supermarkets. For unstaffed stores,
we will focus on increasing the number of outlets, as
requested by many factories and offices of othercompanies. For mobile supermarkets, which we operatewith the cooperation of local authorities and communities
in each region, we will promote growth by leveraging our
expertise and knowledge to increase the number of outlets.

Expansion of Business Areas (Acquisition of Revenues
Outside Our Business Areas)

Engine 3 is an initiative to create new revenues by forming
new relationships. We seek partners with whom we canshare the significance and values of both the systems wehave developed and turned into intellectual property(through trial-and-error in stores) and the unique businessmodel we have developed through partnerships withoutside companies. Global inflation continues unabated,
and responses to environmental problems and otherchallenges have become urgent issues for corporate
management. In response, we will return to the concepts ofconnections—our philosophy at the time the Group was
founded—and partnerships in an SDGs-driven society to

break ground in new business areas. The components of
the initial stage of this initiative will consist of the digital
software and devices we have developed under the ignica
brand, product development kick-started by our partnershipwith Beyond Meat, Inc. (a U.S. company that develops andmanufactures plant-based meat), and the creation of a plantfactory network based on our know-how from operating theplant factory The Terrabase in partnership with PLANTX Corp.

Corporate Purpose and Material Issues
To ensure that the various initiatives in our medium-termbusiness plan meet the demands of society and are not

09 U.S.M. Holdings Integrated Report 2022

short-sighted or superficial measures, we also discussed our
corporate purpose and the fundamental ideas and values
regarding the social responsibility we should fulfill, ourawareness of issues and our action guidelines, and ourgoals and plans. The results of those discussions are
summarized in the U.S.M.H Group’s value creation model(see page 13) and form the basis for the material issues that
we should prioritize for value creation. In determining theseelements, in addition to internal discussions, we considered
the evaluation criteria of external evaluation organizations,our current position, the opinions of outside experts andother factors to make comprehensive judgments, andworked to ensure that the general public will understandour direction.
    The material issues we identified are shown in thechart to the right and consist of six themes broken down
into 14 items.

ThemesE (Environmental)

Material Items
1. Carbon neutrality

Decarbonization and a circular economy

2. Waste reduction and promotion of reuse and recycling
3. Food safety complianceFood safety and security

4. Responsible marketing and labeling
5. Safe procurement and supply of foodSustainable food value chain

S (Social)

6. Respect for human rights
7. Proposal of enjoyable, valuable lifestyles

Creation of healthy, valuable lives throughour food and services

8. Contributions to people’s health
9. Coexistence with communities
10. Connections with customers

Pursuit of diverse human resources andjob satisfaction

G (Governance)

Enhancing corporate governance

11. Motivating and rewarding work
12. Diversity and inclusion
13. Corporate governance and risk management
14. Privacy protection and data security

People Are the Source of Our Value Creation
Amid Japan’s declining birthrate and aging population, theconsumer market has undergone major changes in recent
years. The combination of a younger generation driving theconsumer market overall and lifestyle changes resulting
from the COVID-19 pandemic means that consumer
behavior reflects a different and diverse set of values. In
addition, new forces that make full use of digital technology
are entering the market to capture this wave of change, anda rapid transition is underway to a harsh environment inwhich everyone is fighting for market share. Forsupermarkets, which have traditionally grown by expanding
their market share using a large number of stores,
standardized, homogenized products and services andmerchandising that leverages economies of scale, it isimperative to break out of that shell of standardization andhomogenization, and shift to a structure that enables
flexible accommodation of diversifying consumer behavior.
The Group employs roughly 30,000 people, who each have
exceptional capabilities and a wide range of experience. In
order to overcome issues and achieve sustainable growththrough value creation, it is important to make full use of

the qualities and appeal of each employee, to gather
people with a variety of knowledge and experience, and tocreate a business structure that enhances diversity.
    The great abilities and experience of each employee
motivate those around them, and people combining their
wisdom and working together to enhance it encourages
new value creation for customers. That is why, in order tocreate the value we need to reach “Beyond Supermarket,”
it is essential for us to be an organization that brings
together human resources who will be the driving force forcreating dynamism, one where those people can fully
demonstrate their abilities and individuality, and one that
attracts even more people who want to work with us. Bybuilding such an organization, we will fully embrace ourCore Philosophy and evolve into a corporate group where
diverse human resources, customers and local business
partners gather and connect.

Deepening Connections for Further Growth
In the seven years since U.S.M.H was established, we haveshifted from “mergers” to “harmonization,” and thenmoved step-by-step toward “a new business entity.” Now,
however, as we enter an era of high uncertainty and one inwhich the future is difficult to predict, our initiatives totransform our business and cost structures have yet to finda way forward.
    But it is precisely in times like these that we believe it is
so important to work with each of our employees to seek out
various connections, strive for more careful communication,and deepen those connections with all of our stakeholders.

    In the course of these tireless efforts, we will becomea “place” where employees, customers, and business
partners naturally gather and become closer, and will work
toward protection of the global environment, the development
and prosperity of local communities, and the sustainablegrowth of our business. I want to thank all of our
stakeholders for their continued support.

U.S.M. Holdings Integrated Report 2022

10

Introduction

Alignment of Our Medium-TermBusiness Plan with Social Sustainability

Third Medium-Term Business Plan

Sustainability Strategy

Data

Basic Sustainability Policy
Basic ApproachU nt i l N o w
Defenseless against unavoidable environmental events and social sustainability issues
that could potentially prevent us from implementing the plan

• Response to rising electricity prices and energy
conservation issues• Response to plastic waste and plastic reduction issues• The CO2 problem, which calls emissions themselves
into question• Food loss
• Depletion of food resources and decline ofprimary industries• Issue of low food self-sufficiency rate

Value Creation

Drastic measuresrequire sustained
efforts and time

Begins andends with“copingmechanisms”

As a key element of our Core Philosophy, we are committed
to contributing to “healthy, valuable choices in food” and“prosperous local communities.” As a company that“moves with the times,” we strive for both corporate andsocial sustainability through our businesses, with the aimof maximizing medium- to long-term corporate value andachieving lasting growth.

    To that end, we will deepen our connections withall of our stakeholders, including customers, local communities,
employees and business partners, and thoroughly satisfy
their expectations and confidence in us. We will also
contribute to a sustainable, recycling-oriented society, andunify our Group strengths for the creation and innovationof food-related businesses that can offer wellbeing, enjoyment,
health and other new value.

Relationship Between Our Core Philosophy, Vision and Basic Sustainability Policy
Our Purpose and Goals
We:• Offer customers healthy, valuable choices in food
• Cultivate deep relationships to build prosperous
local communities• Constantly pursue innovation and move with the times

Core
Philosophy

From Now On
Relationships based on shared values with all stakeholders are essential to innovation

Customers

Basic
Sustainability Policy

Policy outlining our basic approach to corporate andsocial sustainability, based on our Core Philosophy

Material Issues

Material issues for management, to be specificallyaddressed based on our Core Philosophy

Business Strategy /Medium-Term Business Plan

Specific strategies and measures for implementing
our philosophy and policies, and to addressmaterial issues

Shareholders

An overall representation of our medium- to long-term
corporate value creation, based on our Core Philosophy,
basic policies, material issues and business strategies

Value Creation Model

U.S.M.H
Employees

Investors

Sustainability Promotion System• Establish a Value Creation Task Force under the Management Committee as an executive committee for promoting sustainability (planned)• Promote practical collaboration and initiatives between Group companies and conduct various monitoring activities, led by the task force• Share details of activities with the Management Committee and report important matters to the Board of Directors• Collaborate with departments responsible for sustainability at AEON Co., Ltd. to effectively drive each initiative forward

Board of Directors

Local communities

Business partners

ReportingOversight

Management Committee

Natural environment
Promotion

Growing need to align our thinking on social responsibility with our business relationships

U.S.M.H Value Creation Task ForceCollaboration

AEON

Formulate a Basic Sustainability Policy as the foundation for
fulfilling our Core Philosophy

11 U.S.M. Holdings Integrated Report 2022

U.S.M.H General Administrative Division
Collaboration

Collaboration

Maruetsu
Management Strategy
Department

Kasumi
Local community andgreen energy initiatives

Collaboration

MaxValu Kanto
Corporate Administrative
Department

U.S.M. Holdings Integrated Report 2022

12

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability StrategyData

O u r Va l u e C rea tio n Mo d e lBusiness Resources

The Value We Provide

Growth Strategy   (Business Model)

Human Capital

Customers

Diverse human resources
and an organization andculture where they can flourish

Ensure food safety and security,and enable enjoyable, valuable
lifestyles through foodNew store
formats

Manufactured Capital
Expansion into fertile markets(in the Kanto region)

SPF
supply chain

Intellectual Capital
Product and store
development experience,
intellectual property, etc.

Partner
network

Society as a whole
Region/Communities
Business partners

Individuals

A flexible organization/Diversity/
Human resource development
Openness/Safety/Responsibility

Relationships of trustwith local authorities
and customers

Sustainable growth as   a company

Local Communities
Local development andcommunity connections

Business Partners
A fair, equitable and sustainablesupply chain

Shareholders and Investors

Data-driven
marketing

Our Goal

To achievecommunity
development andprosperity throughhealthy, valuableeating habits(Wellbeing)

Maximization of business value
through highly
transparent management

Ma t er i a l
I ssuesNatural Capital
Reduced environmental
impact of ourbusiness operations

Decarbonization and acircular economy

Creation of healthy, valuable
lives through our foods
and services

Food safety and security

Pursuit of diverse
human resources andjob satisfaction

Sustainable food value chain

Enhancing corporate
governance

Natural Environment
Carbon neutrality and acircular economy

Societal Changes

Changes in consumerawareness and behavior
Generational changes in taking
initiative with products
13 U.S.M. Holdings Integrated Report 2022

U.S.M.H
DX platform

Employees
A motivating workplace
Workplace diversity

Impact on the Company

Social and
Relationship CapitalE x t e r n a l E n v iron me n t

Customercreation

Beyond Supermarket

The financial foundation
to support
proactive investment

Impact on society

Financial Capital

Connect individuals, communities and society

C us tomers

Strengthening
Allocation of
Resources

Declining population andaging society

Intensifying competitionin the retail sector

Technological advancements

Human rights issues

Destabilization of supply
chains due to heightened
geopolitical risks
U.S.M. Holdings Integrated Report 2022

14

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Our Business Resources
We will take on the challenge of creating new value by making the most of
our accumulated business resources.

Human Capital

Financial Capital

Diverse human resources and an organization andculture where they can flourish

The financial foundation to support
proactive investment• Employees (calculated based on an 8-hour work day): 29,527• Operating cash flow: 16.0 billion yen• Ratio of female managers at head office: 11.8 %• Equity ratio: 54.0 %• Collaboration and co-creation: 10 projects across• Total assets: 280.7 billion yen

4 companies

Further Strengthening Our Business Resources
To properly reassess future societal demands and continue to be a trusted presence for our regional customers, we havebeen working to transform the Company and develop the foundations for establishing our role and sustainability as abusiness essential to the infrastructure of regional areas.
    In the Third Medium-Term Business Plan, which starts in fiscal 2023, we will add to our existing business resources
by further strengthening the following resources.

New Format Stores• Keeping close to the customer journey, we will combine the services offered by our employees with store
environments that merge offline with online, and continue to provide value.
• We will aim for a store system that enables work-hours1 to be concentrated on structured, value-added operations.

• Net sales: 701.1 billion yen• W ith the Green Growers label and other SPF2 initiatives, such as product transformation, we will continue
to provide products with freshness that customers can truly feel.

SPF Supply Chain• The Terrabase   • Beyond Meat®
• As part of product transformation, we will raise the proportion of newly developed products, private label
brand products and SPF products to 40%-50% of our offerings.

Manufactured CapitalIntellectual Capital

Expansion into fertile markets(in the Kanto region)

Product and store development experience,
intellectual property, etc.

eatime (cumulative total of 187 SKUs as of February 28, 2023)
eatime chef (meal ingredient kits that feature recipes devisedby chefs and nutritionists)
Digital brand ignica
Main services: Scan&Go, Online Delivery, ignica Signage
Service, ignica POS• Establishment of AKIBA Runway,

an open innovation platform

vegetable salads and meat processing,and a plant factory that produces
Green Growers lettuce

Social and Relationship Capital
Relationships of trust with local
authorities and customers• Total number of customers in FY2021: 380 million• Regional Comprehensive Cooperation Agreements(Kasumi Co., Ltd.): 23 local authorities• Cumulative amount donated to support children’s cafeterias(The Maruetsu, Inc.): 58 million yen

Natural Capital
Reduced environmental impact ofour business operations• Water conservation
Water consumption in FY2021: 5 % reduction comparedwith FY2020• Advancement of in-store collection and recycling ofresources: approx. 4,700 tons
• Use of solar energy
Solar power generation at 33 stores(as of February 28, 2022)• Environmentally friendly raw materials
Introduced a fee for single-use
shopping bags at all stores, andswitched to single-use cutlery madefrom biomass (as of February 28, 2023)

15 U.S.M. Holdings Integrated Report 2022

Data-Driven
Marketing• To make the best use of the internal resources needed to implement our strategies, we are pushing forward
by conducting capability analyses on the human resources required and compiling employee information
including engagement scores.
•W e will promote digital marketing and branding with an emphasis on information visualization anddata-driven marketing.

1. Work-hour: A unit representing working hours, assuming that all of the work in question is done by one employee
2. SPF (Specialty store retailer of Private label Foods): A business model that integrates the production, distribution and sale of food products

Aiming for the Next Generation of Supermarkets
In response to diversifying customer needs and societal demands such as global environmental protection andcorporate governance, and with the aim of continuing to increase our corporate value, we faced the fundamental
question, “What role do we want to play in society?” We have been extensively considering our vision for asustainable future.
Growth Strategy (Business Model)

In going “Beyond Supermarket,” U.S.M.H’s basic
approach is to widen its customer base toencompass all of society through “customer
creation.” In addition to the customers who visit ourstores, we envision further increases in the numberof “out-of-store” customers—for example, those who
shop at our online supermarket and e-commercesites—and B2B transactions with corporate
customers through new business avenues.
    By becoming a hub that connects individuals,
communities and society, we will contribute torealizing a valuable and sustainable society andachieve growth as a company.

Cu st o m e r s
Society as a whole
Region/Communities
Business partners

Individuals

Customercreation

A flexible organization/Diversity/
Human resource development
Openness/Safety/Responsibility

Beyond Supermarket

Product supply:• Multiple manufacturing subsidiaries,
including for delicatessen products,• Expansion of the Group’s original brands

Impact on society

Kanto region• Diverse store formats, ranging in floor area from
330 m2 to 3,300 m2• Diverse store types, including unstaffed stores in offices andmobile supermarkets that visit areas where shopping centers
are inaccessible or impractical• We will continue to create new value with “symbiotic” collaborative research and development overthe long term.

Connect individuals, communities and society

Store network:• Over 520 stores covering all seven prefectures in thePartner Network• To bring in technologies, ideas and other business resources from external teams and departments, we will
promote a partnership model with open innovation team activities.

U.S.M.H
DX platform

Sustainable growth as a company
Impact on the Company

U.S.M. Holdings Integrated Report 2022

16

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Ma te r ia l I s s u e s

Selected Items

Society

1. Carbon neutrality

4.3

4.4

2. Waste reduction and promotion of reuse and recycling

4.6

4.7

3. Preservation of biodiversity

3.5

3.4

   The food retailing industry has a significant Social and Environmental impact.
   Evaluations are based on publicly available information, so in addition to the actual ESG initiatives themselves,
disclosure is essential.

4. Food safety compliance

4.9

4.9

In response to global changes in social awareness, we consider the following items to be highly important interms of our activities.

The assessment of our Company by an ESG evaluation organization was strict, compared with that for theindustry as a whole.

   Supply chain management   

Nutrition and health initiatives   

Human capital management

Material Issue Selection Process

E(Environmental)

S(Social)G(Governance)

STEP 1

STEP 2

STEP 3

STEP 4

Identified issues fromESG evaluation indicators,
disclosure frameworks,
SDGs and other social issues

Narrowed down topics to
those with a significant
impact on value creation

Surveyed 14 outside experts
and the Company’s threeoutside directors. Requested
their opinions on thematerial issues shortlist andBased on the survey results,
reduced items down tothose with a particularly highimportance rating

Longlisted
all 87 items

Shortlisted
all 15 items

their evaluations of theimportance of each issue.

 elected 14 materialS
items and six themes

Results of Material Issues Survey (Rated on a 5-point scale)Corporate
Value

Importance in terms of society
5.0

4

4.9
4.8
4.7

Material Issues Survey

Identification of Material Issues

9

4.6

2
6

4.5

5. Responsible marketing and labeling

4.1

4.1

6. Safe procurement and supply of food

4.5

4.8

7. Proposal of enjoyable, valuable lifestyles

4.1

4.2

8. Contributions to people’s health

4.3

4.3

9. Coexistence with communities

4.6

4.5

10. Connections with customers

4.0

4.4

11. Motivating and rewarding work

4.4

4.3

12. Diversity and inclusion

4.2

4.1

3.3

13. Respect for human rights

4.2

4.1

3.1

14. Corporate governance and risk management

4.4

4.6

15. Privacy protection and data security

4.4

4.5

11
15 14
8 1

4.4
4.3

12 13
5 7

4.2
4.1

10

4.0
3.9
3.8
3.7
3.6
3.5

3

3.4
3.2
3.0
3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5.0

Importance in terms of corporate value
4 pts. or higher for both
Ascertainment zone

4 pts. or higher for corporate value
Basic initiatives

We surveyed outside experts based on the results of the external evaluation, and issues of high importance in terms ofboth society and our corporate value were designated as material issues for the U.S.M.H Group.
“Preservation of biodiversity” was removed from consideration.

Identification of Material Issues
Opinions and Priority Evaluation from Outside Experts
In STEP 3 of the selection process, we surveyed 14 outside experts and our three outside directors on the material
issues shortlist, and received their opinions.

Summary of Issues Identified by the 14 Outside Experts

Incorporating the external evaluation results and opinions of outside experts, we identified the material issues we must
address in the medium to long term to achieve the value creation needed to aim Beyond Supermarket. (Six themes and 14
items, shown below)

Material Themes and Material Items
ThemesInvestors• Increasing importance of safety and security-related brand management• Expectations for addressing the problem of food loss
• Requests for prompt action on employment and environmental
issues, and disclosure and communication of targets andtheir progress

Other Industries and Specialists• Room for significant improvement in terms of coexistence with
communities• Expectations for creation of a new business model and new markets• The Company should present stakeholders with an easily
understandable vision for the future.
• The Company should explain exactly how it will support regional
employment levels and fulfill its role as part of the food infrastructure.

E(Environment)

Decarbonization and a circular economy

Food safety and security

Academic Experts• Switching from the use of CFC refrigerants, which cause depletionof the ozone layer, is an issue in the food cold chain logistics industry.
• Stores should adopt a governance perspective when buildinga regional closed-loop model that connects consumers
and producers.
•T he Company’s development of multiple stores should not limit
its collaboration with communities to environmental measures; aproactive approach to human rights and diversity is also required.
• Initiatives are needed to increase the effectiveness of promoting
participation by women in the workplace.

Sustainable food value chain

Consumer Groups• The need to proactively access data on local (regional) issues• The need to contribute to promotion of agricultural and marine
products, and for initiatives to ensure the stable production andsupply of food products• Demand for initiatives to further solidify relationships of trust withlocal consumers• Expectations that the Group will take various measures to support
elderly people

S(Social)

17 U.S.M. Holdings Integrated Report 2022

1. Carbon neutrality
2. Waste reduction and promotion of reuse and recycling
3. Food safety compliance
4. Responsible marketing and labeling
5. Safe procurement and supply of food
6. Respect for human rights
7. Proposal of enjoyable, valuable lifestyles

Creation of healthy, valuable lives through our
foods and services

8. Contributions to people’s health
9. Coexistence with communities
10. Connections with customers

Pursuit of diverse human resources and job
satisfaction

Business Partners• Our partners are also working on environmental and sustainability issues, and the solutions to many issues can only be found through collaboration
with retailers.
•P riority issues include impact on the environment, food safety and security, contributing to local communities, human rights considerations andenhancing governance.

Material Items

G(Governance)

Enhancing corporate governance

11. Motivating and rewarding work
12. Diversity and inclusion
13. Corporate governance and risk management
14. Privacy protection and data security

U.S.M. Holdings Integrated Report 2022

18

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Material Issues

Creating Results Based on Material Issues
Carbon Neutrality

Proposal of Enjoyable, Valuable Lifestyles

Waste Reduction and Promotion of Reuse and Recycling

2050

Carbon neutrality

Establish energy-saving operations
Make wider use of energy-saving equipment and implement power-saving measures at stores

Short term (until 2025)

ImpactPromotedecarbonization

Local energy
production andconsumption

New growth engines
as an environmental
business

Purchase green electricity and introduce and increase use of renewable energy equipment (e.g., solar)
Switch from CFC refrigerants and update relevant refrigeration equipment (complete by 2040)
Further promote in-store collection of resources, and develop/expand environmentally friendly products

Prevent global
warming byimplementing
measures toprotect theozone layer

Carbon neutrality

50% reduction in waste
and plastics
Demand forecasting in sales and production
Eliminate plastics in single-use cutlery and shopping bags
Change existing delivery packaging

80% reduction in waste
and plastics

Zero waste
Zero waste

Consider and implement
commercialization ofrecycling for combustible
and non-combustible
materials

Expand food banks and food drives
Increase number of stores implementing food recycling, partner with food recycling businesses, etc.

New breakthroughConsider joint operation ofrecycling centers(in-house recycling rate: 100%)Realize
recyclingoriented local
economies

Contribution to regions
by achieving zeroenvironmental impact

Zero food loss

Consider operation of foodrecycling facility (in-house
recycling rate: 100%)

Gradually increase number of stores implementing a food recycling loop

Proposal of Enjoyable,
Valuable Lifestyles

2040
Promote the adoption ofrenewable energies
Replace all CFC refrigerants withnatural alternatives

Medium term (2030-2035)

Offer exciting products
and services

Physical andeconomic value

Enjoyment ofsocietal value

Develop unique, limited edition, popular, and high-quality SPF and food tech products

Respond to thediversification ofpurchasing channels
and realize thecustomer journey

Deepen our approach to providing meal menus, recipes and more

Ensure peace of mind
while shopping

Establish and update customer behavior surveys and analysis methods
Develop products that excite customers

Diversify touchpoints in relation to shopping methods

Realize a new home delivery service

Assemble a specialist teamfor health supplementrelated products and services

Recruit and train people with food- andhealth-related qualifications

Develop health-related products (e.g. Foods for Specified Health Uses, low calorie foods, low sugar products, diet products and organic foods)
Increase health-related product SKUs and expand health categories
Develop “guilt-free” foods
Increase suppliers
Develop eating habit improvement services

Create clean andcomfortable spaces

Foster physical andmental healththrough eating well

Growth as a company byfulfilling customer needs

Spiritual happinessEmotional
happiness

Contribute topeople’s wellbeing

Physical health(maintenance andimprovement)

Foster the happiness ofeating for all
Contribute to physical and mental sufficiency

Contribute to customers’
health throughour businesses

Societal health

Provide enjoyment andvalue through products
and services

Transform stores into
communication hubs
Contribute to self-medication(preventive care)

Mental healthand fulfillment

Establish our brand as aleading health company

Create new businesses based on commercialization of dietary education and health services

Increase customer numbers and sales

Trust from stakeholders as an environmentally friendly company (increased corporate value)

The U.S.M.H Group has identified two environment-related material issues: “carbon neutrality” and “waste reduction and promotion of reuse andrecycling.” We will reduce CO2 emissions from our use of electricity and CFC refrigerants, which account for the majority of CO2 emissions fromour stores. In addition, we will continue our waste reduction efforts with a focus on the worldwide issue of food loss, and aim for carbon neutrality
and the realization of recycling-oriented local economies in the near future.

Develop products and offer services
that excite customers

Main Initiatives

Contribute to the wellbeing of stakeholders

Increase trust in the Company and in stores

The U.S.M.H Group recognizes that proposing solutions that enable people to live more enjoyable, valuable, longer and healthier lives, based on
the Group companies they shop at, will be essential going forward. As such, we designated “proposal of enjoyable, valuable lifestyles” and“contributions to people’s health” as material issues. By promoting these issues, we will contribute to people’s wellbeing through our products
and services.

Proposal of Enjoyable, Valuable Lifestyles

Carbon Neutrality

Energy saving and renewable energy• Energy-saving operations at stores (e.g., control demand for electricity)• Switch to energy-efficient equipment (high-efficiency HVAC andrefrigerated cases)• Increase solar power generation (energy creation), switch to green energy(renewable energy)

ImpactLong term (until 2050)

Structure our organization to create
new value in our products and services

Collaborate on development of health service facilities with other companies

Increase awareness of
reducing food loss ineach region

Sustainable growth as a company through creation of new value

Formulate store standards for a stress-free customer experience, and create store standards based on ergonomics

Contributions to
People’s Health2030
Switch 50% of electricity supply torenewable energy sources
Switch 30% of CFCs to natural
alternatives

Financial and Non-Financial Capital

Carbon Neutrality

Growth and expansion as a wellbeing-focused company

Establish and continue promoting environmental training system (change mindset and instill in all employees)

Waste Reduction and Promotionof Reuse and Recycling

Financial and Non-Financial Capital

Improved assessment by ESG evaluation organization

Contributions to People’s Health

We are creating new value in our products and services, and taking steps to make bothproducts that can satisfy customer needs and that make new shopping services a reality.
To enable customers to shop comfortably, we will also design stores for a stress-freeexperience and offer various kinds of value and enjoyment.

Elimination of CFCs
• Switch to natural refrigerants, CFC alternatives and CFC-free machineryand equipment
Load reduction through offsetting activities such as resource collection
and food recycling

Our CO2 Reduction Targets toward Carbon Neutrality
2030

2040

2050

Reduce CO2 emissions by 150,000 tons (vs.
2013) by switching the electric power used atstores to renewable energy sources and throughstrengthened initiatives, such as conversion from
CFC refrigerants to natural alternatives

Reduce CO2 emissions by 200,000 tons, byeliminating CO2 emissions from stores andcompleting the switch from CFC refrigerants
to natural alternatives

Toward carbon neutrality

Waste Reduction and Promotion of Reuse and Recycling

Main Initiatives
General waste and plastic reduction initiatives• Stop the use of plastics in single-use cutlery and shopping bags, anddiscourage their use in general• Switch to environmentally friendly containers and packaging• Expand resource collection at stores• Promote recycling of cardboard, polystyrene foam packaging andother materials• Promote initiatives to reduce CO2 emissions throughout the supply chain

Food loss reduction initiatives• Reduce food waste during sales and manufacturing• Increase the number of stores that are certified to implement a food waste
recycling loop
• Expand food bank and food drive initiatives• Review delivery deadlines for processed foods

We believe that working on these material issues will support progress in areas such as decarbonization, protection of the ozone layer,
local production and consumption of energy, and achievement of zero waste. We plan to drive our initiatives forward together with customers.

19 U.S.M. Holdings Integrated Report 2022

Contributions to People’s HealthExpand development of health products
and further deepen dietary educationand health-related services

We will promote product creation and services with a focus on health, and develop andexpand our health-related products. Furthermore, we will deepen the dietary education
activities and the health and diet improvement services we currently operate, to contributeto the maintenance and improvement of people’s health.

We believe that working on these material issues will lead to creation of physical and societal value and spiritual happiness, as well as emotional
happiness, physical and societal health, and a sense of fulfillment. We will further strengthen and expand the initiatives that are connected topeople’s wellbeing.

U.S.M. Holdings Integrated Report 2022

20

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Review of the Second Medium-Term Business Plan (FY2020-FY2022)
In the Second Medium-Term Business Plan, which began in fiscal 2020, we set the goal of using digital transformation (DX)

Measures and Results

to reform our cost structure, store formats, working styles and services. We established a promotional framework withcross-organizational initiatives between our operating companies at the core, and worked to generate results.

Cost structure reform

Enhance soundness of
cost structure

SG&A expenses were below the planned amount, withgrowth and productivity affected by constraints related
to new stores and revitalization efforts

Store format reform (1)Enhance originality andbrand value

Expanded store functionality and increased
royalties through DX

Basic Policy of the Second Medium-Term Business Plan
Promoting structural reform based on DX, we repeat a cycle of cooperation and creation with the aim of“providing food for all” and to lay the foundation for the next generation
Structural reform

Environment

Emergence

Cooperation

Customers and Employees
Wellbeing/HappinessWork style reform

Format reform

Cost reform

Openness/
Relationships

Providing food for all

Scan&Go

Sustainable

Digital reform/New digital foundation

Digital signage

Company-owned plant factory The Terrabase

Store format reform (2)Enable design ofthe customer journey

Potential journeys through ordering, picking
and packing, shipping and receiving have made400 purchasing routes available

Work style reform

Enhance value provided
at touchpoints

Shift to DX for payment at checkouts
Shift to in-store operation of customer
contact points

Open corporate culture/Strategy-oriented leadership

Summary of Business Results
Net Sales

Operating Income(Billions of yen)

(Millions of yen)750

20,00019,124Self-checkout registers

739.1
725

707.8

12,155701.1

10,000

695.2

9,922

We recognized the DX action process as intellectual
property and made plans to accumulate it,
and will prepare for future monetization

Accumulate intellectual
property (IP) assets

Digital platform
development

12,974

10,616

687.5

6,384

Summary of the Second Medium-Term Business Plan

5,000

675

0

0

2020
Actual

Self-checkout area

15,000718.9

700PlannedScan&Go payment system

2021

2022

2020

(FY)

Note: Figures are on a pre-revenue recognition basis.

Planned

2021

2022

Actual(FY)Soundness of cost structure reform
Originality and brand value
Value provided at touchpoints• The number of sales points and customers increased dueto the impact of the COVID-19 pandemic, driving growth
in FY2020.
• We were content with substantial increases in revenue, andthis led to certain products and services becoming obsolete.
• We were unable to break away from the competition with
our existing product selection, and our share of food sales
in each region declined.

21 U.S.M. Holdings Integrated Report 2022

• Results for FY2020 were slightly higher than the plan,
discounting the impact of the COVID-19 pandemic.
• Operating income was boosted by improvementin the gross profit margin.
• The soundness of our sustainable growth based on
structural reform remains a challenge.

Accumulationof IP assets

Challenges
forsustainablegrowthConversion and renovation of
new store formats
Creation of new revenue sources andtransformation of portfolio

Issues in formulation process for the Third Medium-Term Business Plan

(1) Sharing of internal processes and KPIs for value creation(2) New initiatives with U.S.M.H as the hub, solution-based research, consideration of transformation, sharing information and raisingawareness through strong involvement in decision-making(3) Systematization of overall strategy, strict adherence to KPIs, and clarification of responsibilities

U.S.M. Holdings Integrated Report 2022

22

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Third Medium-Term Business Plan (FY2023–FY2025)
For the Third Medium-Term Business Plan, which starts in fiscal 2023, we spent more than a year dealing withthe fundamental question, “What role do we want to play in society?” We have thoroughly considered our vision for

Medium-Term Business Plan: Formulation Policy

a sustainable future, taking into account consumer changes and predicted market trends, as well as discussions witheach operating company. We then decided on concrete initiatives for achieving that vision.
Societal demands

Overall Structure of the Third Medium-Term Business Plan

Product
lineups

Channels
OMO

Functional
services

Brand
partnerships

Internal process reform
Business
processes

Customer service
processes

Innovation
process

Sustainability
process

Human capital reform (working style and diversity)
Digital reform (data, operations and services)
Organizational reform (leadership and retention)(forecast scenarios for regions that are difficult to gain entry to)

Value offering and portfolio transformation(sense of urgency)• Amount of added value • Profitability• Capital efficiency• Operating income margin • Growth potential • Shareholder value

Regional strategy• Labor productivity• Labor share

Future forecast scenario regional strategy

Transformation of our financial base

Changes in generational initiatives

Changes in household consumption(i.e., of products)

Decline/Concentration/
Dispersion/Disparity

Transition to Generation Z/Shift in values
Shift from the general public to the individual

Growth/Stability/Reform

Changes and diversificationin the competition

Changes to product raw materials
and costs

E-commerce/Regions/
Convenience/Connections
The customer journeySupply chain/Value-oriented/
Loss minimization

Sense of urgency

Third Medium-Term Business Plan: Basic Strategy
Market potential in areas we have yet to enter
Changes in market and competitive environments

What role do we want to play in society?

Summary of/Issues fromthe Second Medium-Term Business Plan

Changes in populationand household composition

Operational indicator estimates for 2025

Review the strategy foreach operating company
based on thebasic strategy
Medium-term businessplan for each
operating company
Integration and crossover•U .S.M.H shared evaluation
axis• Clarification of results
and progress

Internal discussion:“What kind of company
do we want to be?”U.S.M.H
Medium-TermBusiness Plan

#Loyalty#Entertainment#Shared SpaceA familiar,
indispensable presence

A place people want to come,to enjoy the unexpected• A place where information circulates freely• Always something new to discover#Sense Of Growth#Network#Wellness

A place for learning, discovery
and personal growth

A place where people andcommunities feel connected#Shared Experiences#Trust And Pride#Local• Pleasant shopping experiences• Experiences other than shopping• A place where everyone can contribute• A place to feel proud of• A place for community cooperation• Local culture and customs#Creative• A place for co-creation and action• A place where emotions are shared

Local residents

Our vision    Under these circumstances, we faced the fundamental

challenging, but we view it as an opportunity precisely
because it forces us to consider matters from a broader
variety of perspectives.
    The kind of customer we envisioned up until now haschanged. More and more customers today are conscious of
ecological issues such as protecting the global
environment, and their concerns also extend to respect forhuman rights and diversity.

question of whether we can continue doing business in thesame way we have always done, and whether we should
maintain the same assumptions about our customers.
    After carefully considering the kind of company wewant to be, and in order to meet environmental and societal
demands, we formulated the Third Medium-Term Business
Plan for the sustainable development of the Group, local
communities and society in general.

Strengths

Opportunities• More than 520 stores in the greater
Tokyo area, a fertile market• Digital technology development
and expertise• Food factory and logistics infrastructure• Positioning as essential infrastructure• Encouragement and development ofinternal human resources• Creation of originality and contribution
to communities

Challenges

Risks• Obsolescence of products and services• Cooperation with new partners• Implementation of profit structure reform• Rising energy costs• Rising product raw material prices    The structural reforms made under the Second Medium-Term Business Plan have not yet been effective insupporting our transition to a management structure capable of ensuring sustainable growth.

23 U.S.M. Holdings Integrated Report 2022

Local communities
Employees and their families

Priorities of the Third
Medium-Term Business
Plan in order to achieve
our vision

Beyond Supermarket:
Toward a new businessstructure that surpasses
the conventional
supermarket format

By upholding a strong belief
in wellbeing and continuing
to create unique value, we willcontribute to our communities
and make an all-out effort
to become a company that grows
with those communities.

Revenue Reform

Development of Engine 3 and new business areas

Revenue Reform

Outside Digital

Store Reform

Functional enhancement, renovation, DX

Product Reform

Product lineups, shelf space allocation, private label brands, originality

New Format

TargetSustainable Development

New BusinessEngine 3
Expansion of business areas

ignicaEngine 2
Expansion of out-of-store revenues/OMO

For Stores

OMO
Product Reform
Product lineups, shelf space
allocation, private label
brands, originality

The current business environment continues to be

Local society and industries

Wellbeing

Store Reform (Format)
Functional enhancement,
renovation, DX

Background to Formulation• Comfortable• Ideas for healthy living

For Work
For Life
For BusinessEngine 1
Product and store reforms
U.S.M.H
DX platform
A flexible organization/Diversity/Human resource development
Openness/Safety/Responsibility

U.S.M. Holdings Integrated Report 2022

24

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Third Medium-Term Business Plan (FY2023–FY2025)

Engine 1(Product and Store
Reforms)

Engine 2(Expansion of
Out-of-Store
Revenues)

Engine 3(Expansion ofBusiness Areas)

25 U.S.M. Holdings Integrated Report 2022

Starting points forsetting target figures

Net sales

Operating income

Investment plan•U
 nexpected exchange
rate fluctuations•R ising energy costs•R ising prices

750 billion yen

22 billion yen

25 billion yen(FY2025)(FY2025)(yearly average)• The Group has more than 520 stores in
the greater Tokyo area, Japan’s largest andmost fertile market for future growth. We want
to be an infrastructure in which our approximately
29,000 employees support the enjoyable,valuable lifestyles of our customers
through food.

Product reform• For Engine 1, an important asset, productreform and store reform will both focus on
physical shopfronts as points of contact withcustomers, and we will revitalize stores byintroducing entirely new formats.

Store reform• The COVID-19 pandemic fueled the growth ofdelivery and take-out services, and a newmarket was formed in the space between
eating at home and dining out. In addition,
food e-commerce became valued as a lifeline
industry, and established its presence as
an essential way to shop.

Outside Digital strategy• Given these circumstances, Engine 2 is an
initiative to use our revitalized store networkand product procurement capabilities tocreate an even better shopping experience
with digital services developed in-house.

will pursue evolution from an online supermarket
focused on own-brand products to an online
delivery service with a marketplace that a varietyof companies take part in, including sales of
unusual food items, everyday goods, and more.

• We recognize that global inflation is nota temporary trend, and as such seeking
new revenues and expanding our businessareas are important management tasks fromthe standpoints of supplementing revenue
growth and securing investment capital.

New business development

PLANTX Corp., and Beyond Meat® plant-based

The Terrabase• Engine 3 is an initiative to offer systems
we have developed and turned into
intellectual property (through trial-and-error
in stores), the unique business model createdthrough partnerships with outside companies,
and other products/services to new customers.

foods, in the form of businesses that leverage

Collaboration

Kasumi Co., Ltd., one of our operating companies, opened its
BL NDE Kenkyugakuen store in Tsukuba City, Ibaraki Prefecture

Private label brands

V

Target Setting

Given the uncertainty and unpredictability of the current business environment, rather thanstructuring our targets for the Third Medium-Term Business Plan to rely on growth incustomer numbers and average spend per customer based on operations at existing stores,
we are instead focusing on generating results from initiatives in new areas.

We will group products into three categories—growth,stability and change—and continue reforms by

Valuable
products

SPF

pursuing evolution at our operating companies andexploration at U.S.M.H.

We will implement operational reforms at
our stores using digital technology, andthese reforms will continue to improve theenvironment for OMO* and keep us close
to the customer journey.

The shift to OMO is our greatest management
challenge, as it requires qualitative transformationof our store-based operations (which currently
assume that customers will visit physical stores),and the fusion of online and offline will entailorganizational transformation as a whole. We

We will promote our original services andproducts, such as ignica, a DX service tool
we developed in-house, The Terrabase, a plantTechnology

in February 2022. This is a new type of experimental store
established to be a “Food Specialty Store” that offers new foodexperiences through shopping.

UpgradesAppealing
storesRenovation
DX

Online delivery
Mobile supermarkets and unstaffed stores
Marketplaces, meal kits, etc.

Two of our operating companies are developing unstaffed storesin their respective regions: Kasumi Co., Ltd. with Office Smart
Shop, and The Maruetsu Inc. with smart petit. We are increasing
the number of these stores at city halls, office buildings andother facilities.

Net sales of around 40 billion yen(FY2025)

ignicaDX
service tool• Scan&Go• ignica Signage Service• Online Delivery• ignica POS

factory developed in collaboration with

Expertise in establishment, operation and production
management of plant factories

our facility maintenance and quality
control capabilities.
Beyond Meat
Collaboration

Development of Beyond Meat® products in collaboration witha food manufacturer, and supply of ingredients to foodindustry companies

U.S.M. Holdings Integrated Report 2022

26

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Growth Investment Strategy

Financial Strategy
External Environment
As a supermarket Group based in the Kanto region, we
enjoy a favorable operating environment. However, it is also afiercely competitive environment, one in which we will lose
support from customers and market share if we do not keep
up with the diversification of consumer values and changes
in the market (such as changes in our operating area and thecompetition, including from other industries).

    Given this situation, in order to achieve sustainablegrowth we will continue to strengthen investments in our
growth and enhance the corporate value of Group
companies. At the same time, we will work toward an
optimized capital structure and improve our financial
discipline to control interest-bearing debt.

In the Third Medium-Term Business Plan, which starts
in fiscal 2023, our goal is to create new value propositions
for customers. To that end, we will allocate increased
investment to developing new store formats, to our
supply chain, to DX, and to providing OMO services tocustomers by making full use of product developments
and digital technology. By adapting
to customer needs and values that changed significantly

during the COVID-19 pandemic, we will achieve newcustomer creation.
    In addition, as medium- to long-term strategies,
we will transform our investment portfolio by expanding
our 1) IT and digital investment, 2) new business
investment (including in the supply chain, etc.), and3) green transformation (GX) investment.

Allocation of Operating Cash FlowFirst Medium-Term Business Plan
Results and Distribution

Financial Policy
Since U.S.M.H was established, it has maintained financial
stability based on its ability to firmly maintain an equity
ratio of at least 50%, and by taking a medium- to long-term
perspective in financing our operations. We will continue tostrengthen investments in new fields in addition to organic
investments (in our stores, etc.), while leveraging thestability of our financial base. With this approach,
we will achieve our return on equity (ROE) target of 6% bymaintaining our financial soundness while balancing
investments for growth with shareholder returns.

Second Medium-Term Business Plan
Results and Allocation

Third Medium-Term Business Plan

Key Indicators for the Third Medium-Term Business Plan
3-year average(Millions of yen, %)Second Medium-Term Business Plan

Third Medium-TermBusiness Plan

Planned(3-year average)

Actual(3-year average)

2025 plan

Operating revenue

722,281734,209750,000

Operating income

11,726

12,55522,000Debt/Equity ratio

0.3

0.3

0.3

Payout ratio

54.5

41.2

35.0

ROE

6.0

3.5

6.0

Other
35%

New stores
39%

Other
15-20%New stores
18%

Other
25%

PC/DC*
10%

New business/
GX investment
10-15%

Revitalization
27%

Digitalinvestment
20-25%

Digitalinvestment
20%

Digitalinvestment Revitalization
12%
14%

New stores
20-25%

Revitalization
20-25%* Processing and distribution centers

Shareholder Return Policy

Cash Allocation
We allocate generated operating cash flow to organic
growth (such as in new stores and the renovation ofexisting stores), to the development of a DX platform forbusiness reform and to the creation of new businesses.
Basically, we distribute funds within the scope of ouroperating cash flow, group investments according totheir purpose and set an ideal investment balance

between those groups, and determine the total
investment amount for the Group as a whole.
    In cases where upfront investments over the
medium to long term mean that total capital investment
and new investment exceeds our operating cash flow,
we will work to maintain stable dividends by allocating
funds through borrowing and other methods.

Returning profits to shareholders is one of our key
policies. Taking future business development and ouroperating environment into consideration, we seek tomaintain stable dividends based on a payout ratio of 30%,

at the same time strengthening our financial base byincreasing profitability and enhancing retained earnings.
We will continue working to enhance our corporate
value and strengthen our dividend policy.

Dividend Chart(Millions of yen)(%)

125.4%

3,000

125

Cash Allocation Plan
Dividends

Payout ratio of 30%(stable dividends area basic policy)

Dividends

2,309
2,000

Operatingcash flow(FY2021)25.1 billion
yen

Capitalinvestment

20.0 billion yen
per year

Payout ratio target
30%

2,500

1,500

Capitalinvestment

2,079
1,843

Basic policy

Environmental
investments, etc.
When investments
increaseNew
investment
Borrowings

38.7%

25.1%

38.2%

27.9%

26.1%

40

30

20

500

10

0

0
2015

Dividend amount (left axis)

27 U.S.M. Holdings Integrated Report 2022

2,052

2,052

1,843

34.6%

1,000

New
investment

2,052

2016

2017

2018

2019

2020

2021

(FY)

Payout ratio (right axis)

U.S.M. Holdings Integrated Report 2022

28

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Environmental Performance due to Business Activities (Past Five Years)
Electricity Usage (Total for All Operating Companies)

Gas Usage (Total for All Operating Companies)

(MWh)

(m3)

700,000

4,000

628,784

620,950

612,528600,000

629,476

3,629

620,907
3,000

500,000

2,902

2,866

3,006

2,933

2017

2018

2019

2020

400,000
2,000
300,000

Env i ro n m e n t

200,000

1,000

100,000
0

Decarbonization and a Circular Economy

Material Theme

Basic Approach

0

2017

2018

2019

2020

2021

(FY)

Water Usage (Total for All Operating Companies)

Waste Emissions (Total for All Operating Companies)(m )(Tons)

3

In line with our Basic Environmental Policy, we have identified two environment-related material issues (see below). We
are committed to resolving both issues, with the aim of reducing the environmental impact of our business activities
and leaving a sustainable, recycling-oriented society for the next generation.

2021

(FY)

40,000

3,000

2,612

2,559

2,542

2,597

2,397

30,00029,91730,0602,000

28,757

27,707

26,449

2019

2020

2021

20,000

Basic Environmental Policy

1,000
10,000The U.S.M.H Group recognizes that environmental problems are serious issues on a global scale. Through soundbusiness activities, we will unify our Group strengths and work to protect the global environment, aiming to fostersocial and economic growth and to realize a sustainable, recycling-oriented society in cooperation withlocal communities.
(1) We will actively conserve resources and energy
through our business activities.
(2) We will strive to develop and popularize
environmentally friendly products and materials.
(3) We will promote waste reduction and the 3Rs(reduce, reuse, recycle).
(4) We will contribute to local environmental
conservation activities and strive for harmony
with local communities.

(5) We will work to ensure that every employee isaware of this policy, foster individual interest inenvironmental conservation, and aim for theparticipation of all Group employees.
(6) We will publicize this policy internally andexternally, and work to provide
information proactively.

Material Issues and Long-term Targets
Decarbonization and a circular economy

Theme
Material issue

Our Approach

Carbon neutrality
2030: Switch to renewable energy sources for electricity
used at stores (achievement rate of 50%) andreach the CO2 emissions reduction target of
46% set by the Japanese government
2040: Achieve net zero CO2 emissions from stores

Waste reduction and promotion of reuse and recycling

Goals

29 U.S.M. Holdings Integrated Report 2022

0

2017

2018

2019

2020

2021

2017

(FY)

2018

(FY)

C a r b o n N e u t r a l i t y (Re s p o n s e t o C l i m a t e C h a n g e)
Basic Approach
Our business activities (providing products and services tocustomers) produce 380,000 tons of CO2 emissions per    Taking such circumstances into account, theCompany will match the government’s efforts toward
carbon neutrality by reducing its energy usage andswitching energy sources, further reducing CO2 emissions in
the process. We also recognize that eliminating food loss islinked to achieving carbon neutrality, and see these efforts
as vital to developing and sustaining a business modeland to maintaining and improving our reputation in
local communities.

year (equivalent to the annual emissions from 140,000
ordinary households) due to our use of electricity, gas
and CFC refrigerants.
    In Japan, the government has announced policies toreduce greenhouse gas emissions by 46% (compared with
2013 levels) by 2030 and to reach carbon neutrality by
2050, as a response to climate change. The AEON Group
has also set the target of reducing CO2 emissions fromstores to zero by 2040.
GHG Emissions and Reduction Targets (Scope 1 and Scope 2)• Continue to strengthen
waste reduction, resource
collection and recycling
initiatives

2050: Continue efforts toward achieving zero CO2emissions throughout the supply chain
2030: Achieve a 150,000-ton reduction in CO2emissions from stores, compared with
2013 levels
2050: Carbon neutrality

0

Climate Change Initiatives(Tons)
350,000
300,000
250,000

326,134

320,631319,303

10,268

9,199

9,903

80,476

79,51487,231

334,213
7,783

303,981

12,115

93,13963,346200,000

192,908

7,928

150,000

71,689100,000

2030: Reduce waste and use of plastics by 50%
2050: Realize recycling-oriented local economies

229,000

231,918

228,559

233,291

228,520

63,35950,000113,291

8,618
054,7410

2017
Electricity use

2018
CFCs

2019

2020

2021

2030

2040

Carbonneutral

0
2050

(FY)

(1) Establish energy-saving operations(2) M ake wider use of energy-saving equipment andimplement power-saving measures at stores(3) Promote the adoption of renewable energies(4) P romote natural alternatives to CFC refrigerants
and conversion to CFC-free equipment
AND
Strengthen offset initiatives by collecting PET
bottles and other resources at stores, and throughleftover food recycling activities

Gas and fuel oil

U.S.M. Holdings Integrated Report 2022

30

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Environment

2. Food loss reduction initiatives

Wa s t e Re d u c t i o n a n d P r o m o t i o n o f Re u s e a n d Re c yc l i n g (C i r c u l a r E c o n o my)

Reducing food loss has become a pressing issue for the food retail industry. We recognize food loss initiatives as being
linked to both a circular economy and carbon neutrality. Our employees are united in driving these initiatives forward.

Basic Approach
Our vision of a circular economy is based on: 1) reducing the amount of waste we generate, and 2) recycling any waste
generated (representing the “reduce” and “recycle” aspects of the 3Rs, respectively). Using these two points as thefoundation of our approach, and working together with customers, we will reduce the amount of CO2 produced whenincinerating waste and prevent environmental pollution.

Targets

 Y2030: Increase the food waste recycling rate to 50%
F
FY2050: Achieve a food waste recycling rate of 100%

Main
Initiatives(1) Reduce food waste during sales and manufacturing(2) Increase the number of stores that are certified to implement a food waste recycling loop(3) Expand food bank and food drive initiatives(4) Review delivery deadlines for processed foods

Results

In October 2021, we started a food recycling loop initiative at Kasumi stores in Gunma Prefecture,with the intention of reusing pre-sorted recyclable food resources in a selection of food products
sold in-store. Japan’s Ministry of Agriculture, Forestry and Fisheries and Ministry of the Environment
certified this initiative as a food recycling project under the Food Recycling Law.
    As a special case under this initiative, a transport contractor is allowed to collect and transfer
recyclable food resources from authorized stores to a recycling plant, encouraging the use of more
efficient collection and transportation routes.
    We will continue to promote this food recycling loop initiative in other areas where ourstores operate.

Targets and Initiatives
1. Plastic waste reduction initiatives together with customers
Targets

 Y2030: Reduce waste and the use of plastics by 50%
F
FY2050: Realize recycling-oriented local economies

Main
Initiatives(1) Stop the use of plastics in single-use cutlery and shopping bags,
and discourage their use in general(2) Switch to environmentally friendly containers and packaging(3) Expand resource collection at stores(4) Promote recycling of cardboard, polystyrene foam packaging andother materials(5) Promote initiatives to reduce CO2 emissions throughout the supply chain

Results

 asumi Co., Ltd., one of our operating companies, promotes recycling by collecting used PET bottles,
K
aluminum cans, foam trays and other disposable items that customers bring to stores. These items aretransported to Kasumi’s recycling center to be compressed and bundled, and are then forwarded to a
recycling contractor.
    The recycling center can also handle cardboard, polystyrene foam packaging for fish and otheritems, printer paper and other waste produced by stores. Through these initiatives, our employees andour customers work together as one to reduce waste.

An example of our in-store initiatives

Store

Transport
contractor

Wholesaler
PET Bottles CollectedFoodrecycling loop

(Tons)
2,500
2,000

1,761

1,928

1,981

2,158

2,045

Factory

1,500

25 tons of foodresources recycled
annually per store

Recycling
contractor

1,000
500
0

2017

2018

2019

2020

2021

(FY)

Poultryfarm

Feedmanufacturer

At our Kasumi Oizumi store (Ora Town, Gunma Prefecture), recyclable food resources are sorted, collected by a transport
contractor and transferred in refrigerated containers to a recycling contractor, to be converted into feed for livestock.
This is then used to feed hens at a poultry farm, and the eggs laid by those hens are collected, boiled, and used inbento boxed meals and other pre-prepared food sold at Kasumi stores.

Recycling activities at Kasumi’s recycling center

31 U.S.M. Holdings Integrated Report 2022

PET bottles collected from our customers are packed into bales at
the recycling center, and are later reborn as packaging for fruits andother items.

U.S.M. Holdings Integrated Report 2022

32

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Toward the Future
System for Providing Safe and Secure Products throughout the Supply Chain
Going forward we aim to solidify our system for providing safe and secure products throughout the supply chain, fromraw materials and product procurement to sales.
Producers andManufacturers

So c ia l
Food Safety and Security

Material Theme• Create regularinspection systems for
producers, production
areas, factories andother facilities(Verification of
traceability)

Basic Approach
U.S.M.H believes that, as a food provider, it has a duty to deliver on product safety and security for customers. Every
employee keeps this mission in mind as they work to provide safe, high-quality products in accordance with laws,
regulations and standards.

Material Issues and Vision

Food safety compliance

Material issue

Approach andVisionStores• Build logistics systems that pursue
quality and freshness• Provide easily
understandablelabeling for customers(e.g., best-by dates,
allergens, food additives)• Expand our own managementof and participation in production
across various industries (agriculture,
fisheries and livestock)

To Customers• Educate employees
on food safety andsecurity• Develop meat alternatives andother products that contribute toa reliable food supply

Re s p o n s i b l e M a r ke t i n g a n d L a b e l i n g
Promotion of Responsible Marketing and Labeling

Food safety and security

Theme

Processing andDistribution Centers

Responsible marketing and labeling(1) Upgrade Groupwide quality management andsafety management systems(1) Build a marketing and labeling management
system(2) Ensure food safety and security throughout the
supply chain(2) Promote the disclosure and communication of
useful information to customers

U.S.M.H is working on two material issues related to food safety and security. The first is “food safety compliance,”
which we will achieve by enhancing our own safety management systems. The second is “responsible marketing andlabeling” as a retailer, which will ensure that we always deliver safe products to customers.

Fo o d S a f e t y C o m p l i a n c e

As a food provider, U.S.M.H believes that the provisionof products and services that consumers can use withconfidence is its highest priority. In our marketing andcommunication efforts, we work to share accurate

information with consumers in accordance with laws andregulations. We also work to provide easily
understandable labeling with factual information that
customers will find useful.

Main Initiatives(1) Establish a marketing and research department(2) Create labeling management standards andtraining systems(5) Expand product offerings for ethnic and minority
groups (e.g., halal and vegan)(6) Share accurate information with partner companies(3) Build on marketing that reflects customer andemployee feedback(4) Develop labeling that is easy for customers tounderstand (e.g., Food for Specified Health Uses,
the benefits of various products and ingredients)

Internal Quality and Safety Management Systems
Our operating companies strive to ensure uncompromising quality management based on our certification ininternational management systems, and to maintain and improve quality and safety management on a daily basis.

Main Food Safety Initiatives
• Acquisition of the ISO 22000 standard
for food safety management systems(The Maruetsu, Inc.)• Acquisition of the ISO 9001 standard
for quality management systems(Kasumi Co., Ltd.)• Disclosure of independent radiation
inspection results
33 U.S.M. Holdings Integrated Report 2022

U.S.M. Holdings Integrated Report 2022

34

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

SocialSustainable Food Value Chain

Material Theme

Material Theme

Creation of Healthy, Valuable Lives through Our Food and Services

Basic Approach

Basic Approach
The impact of geopolitical risks, environmental issues
and other global problems on food is increasing. Forecasts
predict it will become difficult to continually provide astable food supply to consumers in the future. U.S.M.H
believes it is vital to pursue and maintain reliability andefficiency throughout the supply chain, by not only

procuring products from producers and manufacturers
but also by expanding its own production and private
label brands. Alongside these activities, our response tohuman rights issues throughout the supply chain is justas important.

Our aims to “offer customers healthy, valuable choices in food” and “cultivate deep relationships to build prosperous
local communities” are championed in our Core Philosophy. As well as bringing both food and value to customers’
dining tables, we aim for their satisfaction, smiling faces, and even better health through the enjoyment of food.
Our goal is to become an established creator of the wellbeing that is essential to daily life in local communities.

Our Approach to Wellbeing and Material Issues

Material Issues and Vision
Spiritual happiness(Psychological wellbeing)

Sustainable food value chain

Theme
Material issue

Material Issue

Safe procurement and supply of foodRespect for human rights

Physical health(Physical wellbeing)

Wellbeing
Approach andVision(1) Stable supply of products by transitioning into
an SPA* and restructuring our logistics network   U.S.M.H views safe delivery of food to customers and respect for the human rights of everyone involved in the
product supply chain as priorities. Therefore, we have identified “safe procurement and supply of food” and “respectfor human rights” as material issues.
* SPA: Specialty store retailer of Private Label Apparel

Coexistence with communities• In relation to “wellbeing”: “Health is a state of complete physical, mental and social well-being” (Constitution of the World
Health Organization)• To achieve the wellbeing U.S.M.H strives for, it has established “proposal of enjoyable, valuable lifestyles,” “contributions topeople’s health” and “coexistence with communities” as material issues. In addition to promoting these initiatives, we havepositioned “connections with customers” as a material issue, making it our foundation for delivering new value.

(1) Customer satisfaction and repeat customer ratio

Initiatives toward a Safe and Sustainable Food Supply(2) Sales composition ratio of health-related
products and services(1) Collaborate with primary industry(2) Expand new product ranges through our private
label brands(3) Establish new procurement routes(3) Number of customer touchpoints and customer
journey patterns(4) Number of business partnerships with local
authorities

Standpoint on Logistics Innovations(1) Cultivate new partnerships with global raw
material suppliers(3) Expand SPF product ranges

Contributions to people’s health

Targets

S a f e P r o c u r e m e n t a n d S u p p l y o f Fo o dStandpoint on New Procurement Methods

Connections
withcustomers

Connections with others(Social wellbeing)

Respect for human rights through cooperation
between U.S.M.H and the entire supply chain(2) Move forward with procurement and sales ofsustainable products

Proposal of enjoyable,valuable lifestyles(2) Build new supply chains(4) Update freezing and refrigeration technologies

P r o p o s a l o f E n j oy a b l e, Va l u a b l e L i f e s t y l e s
Creating Stores as Places to Enjoy the Shopping Experience

Re s p e c t f o r H u m a n R i g h t s
Our Human Rights Policy and Internal Human Rights Risk Management
We recognize the importance of respecting human rights. We will build a system to deepen each employee’s understanding.

In line with a dramatically changing society, customer needs for shopping are alsochanging. U.S.M.H is driving the transformation of stores and products as vitalconsumer touchpoints, to improve shopping experiences and move toward the
new supermarket it aims to become.

Conventional Supermarkets
A one-stop shopping facility, foreverything from food to daily necessities“Shopping Experience” Stores That Opened in 2022

U.S.M.H abides by human rights and labor laws as well as the
AEON Group Human Rights Policy. We will always respect
the diverse values, character, and privacy of each individual,
and will never discriminate based on race, nationality, ethnic
group, gender, age, birthplace, religion, education, physical ormental disabilities, sexual orientation, gender identity or any
other reason.
In our supply chain, we will strive to engage in commercial
transactions that respect the human rights of every producer
that we do business with.

35 U.S.M. Holdings Integrated Report 2022

An Ideal Future of Respect for Human Rights, as Promoted by U.S.M.H(1) Respect for the values, character, privacy anddiversity of all people

Our Vision for
a New Supermarket(2) Equality and fairness for all people(3) Fair transactions with all business partners(4) Respect for the human rights of employees(5) Business development that respects
human rights

Maruetsu Itabashi Minamicho

V

Basic Approach to Human Rights

BL NDE Kenkyugakuen

MaxValu Express Makuhari

A comfortable space that fosters spiritual
happiness, and where customers candiscover an unexpected shopping
experience

U.S.M. Holdings Integrated Report 2022

36

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

SocialOur Vision of a Supermarket That Fosters Spiritual HappinessC o n t r i b u t i o n s t o Pe o p l e’s H e a l t hV

Basic Approach

BL NDE Initiatives

Japanese society is rapidly aging, and the era in which people can live to 100 or more is said to be upon us. Amid thissocial landscape, the need for health management, prevention of lifestyle diseases, and for addressing other healthissues is growing more pressing. U.S.M.H aims to realize healthy customer and employee lifestyles, as well as a healthybusiness presence in local community life. By providing food as a source of health alongside food-related services, wewill contribute to energetic lifestyles.
Main Initiatives

V

At BL NDE, customers can enjoy
conversations with expert staff members
while tasting different wines andcheeses (which are sold by volume).

We prepare and offer an abundance offresh fish according to customer needs.

(1) Train human resources to be health experts(3) Expand health support services(2) Develop health-related products(4) Collaborate with health-related companies

Maruetsu cooking classes taught by nutritionists

Dietary education at kindergartens and elementary schools

eatime“We want to make meal times more than just about deliciousness, but also ‘good times’
full of discovery and happiness. We want to deliver ‘good times’ through food.” To
express this feeling, we combined eat and time to create the eatime brand. With a focus
on regional food culture and specialty dishes, we deliver new value with high quality.

C o ex i s t e n c e w i t h C o m m u n i t i e s a n d C o n n e c t i o n s w i t h C o n s u m e r s

eatime chef
“Let’s make today’s meal a masterpiece.” eatime chef is a range of 20-minute meal kitsthat enable you to easily prepare a set menu of main and side dishes devised by famous
chefs, culinary experts and nutritionists (online store exclusive meal kits are sold atselected stores).

Green Growers
Green Growers offers ultra-fresh and highly nutritious lettuce grown at a plant factory, as
well as Beyond Beef plant-based meat alternatives from Beyond Meat, Inc.

Basic Approach
As a way to achieve wellbeing, U.S.M.H will contribute to regional revitalization and solving problems faced by local
communities, as a company with roots in those communities. We also believe it is important for us to live up to
expectations by transforming various products and services based on our understanding of our connections withcustomers and their needs. U.S.M.H acts as a mediator to deepen the connections customers have with theircommunity and with society at large. We believe these connections will lead to wellbeing in the lifestyles of customers
and a vibrant, sustainable society.

Contributions to the Happiness of Communities and Society
Main Initiatives

Open Innovation Platform

AKIBA Runway Open Innovation Platform(Launched in March 2022)

A dedicated U.S.M.H team seeks out partnercompanies that possess original and unique
technologies, and builds collaborative relationships
with them with the aim of creating new value
propositions in the retail industry. In the future, we willfurther accelerate this initiative to provide new value
to customers.

37 U.S.M. Holdings Integrated Report 2022

Partnercompanies

AKIBA
RunwayTechnology

Search and Communication

Demonstration
Efficacy Verification

New Value Propositions(1) Build an organization that considers ways to solve
issues in local communities(4) Build recognition as part of the regional
infrastructure(2) Expand food bank and food drive activities(5) Share information about food culture andother traditions(3) Consider the use of local resources (e.g.,abandoned farmland)
U.S.M.H
Asset
resources

Mobile Retail Initiative for Areas Where Access to
Shopping Is Difficult or Impractical
Kasumi Co., Ltd., a U.S.M.H operating company, begana mobile retail initiative in 2013 to deliver products toregions without easily accessible supermarkets. The
service offers roughly 650 items, including fresh andpre-prepared food products and daily necessities,
in cooperation with local authorities and otherthird-party organizations.

U.S.M. Holdings Integrated Report 2022

38

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

SocialFood Bank and Food Drive Initiatives
Kasumi donates products that have passed their sell-by date but still
have a sufficient remaining shelf life to food banks and social welfare
councils. Maruetsu and MaxValu Kanto also engage in similar fooddrive initiatives, collecting food products from customers to donate tofood banks, social welfare councils and other organizations.

Connections with Local Communities
Kasumi’s original sake, Yuikasumi, is made from rice grown at Kurihara Farmin Hitachiota City, Ibaraki Prefecture. The sake is brewed at the Okabe Sake
Brewery, which is also in Hitachiota City. This initiative began in 2018, withthe concepts of creating an “exclusively Ibaraki product” from production tosale, and of “connecting with everyone in the community.”

Pursuit of Diverse Human Resources and Job Satisfaction

Material Theme

Basic Approach to Human CapitalAs the corporate value of U.S.M.H is greatly influenced by the mindset and actions of each individual, we consider ourhuman resources as “capital.” Our basic approach is to respect each employee’s individuality, rather than treating themas one group.
   In this way, we aim to become an organization composed of a group of individuals who work autonomously.

HR Strategies
Local producers

Kasumi’s original
Yuikasumi sake

Participation in Reforestation through Planting Efforts
A total of 40 MaxValu Kanto employees took part in the Kimitsu AEON
Forest Program. Going forward, we will manage a section of the trees
planted by these employees as a “MaxValu Forest,” and contribute toregional environmental conservation.

Impact: Create new customer value
Master and retain
Vision: A motivating, rewarding workplace where diverse human resources can actively participate

Evaluate fairly

Tree planting participants

Autonomous

Information

Organizational

peopleoptimization

activity

Learn and growInitiatives to Deepen Our Connections with Customers

Four Commitments to Support Human Capital Strategies

Main Initiatives(1) Use DX to identify consumer needs(3) Enhance customer service at stores(2) Promote OMO(4) Actively engage with communities

We will build
a work environment
for an era in whichpeople can live to
100 or more

We will build
a training system that
fosters a climate oflearning andencourages growth

We will build
a leadership training
system and use job
rotation to facilitate
working experience

We will move forwardwith creation ofan open organizationthat encompasses
diversity and equality

Digital Brand ignica
ignica is a unique U.S.M.H digital brand, launched with the aim of creating the ideal future
for retail.

Main ignica Services

Implementation Flow

Scan&Go
Scan&Go is a service that speeds up the
shopping process by reducing checkout wait
times at supermarkets and offers a safe,
contactless shopping experience.

Buy Online Pick-up In Store (BOPIS)Our Online Delivery service not only provides
home delivery, but also an unstaffed pick-up
service, so that customers can collect theirorders without having to enter the store (somestores do not offer this service).

Release ignica products in stores

Create a new
shopping
experience forcustomers

Establish amotivating work
environment for
employees

Create new value by promoting
digital transformation

Initiatives to Develop New Human Resources
U.S.M.H Retail Chef Academy

U.S.M.H Business Academy

This original U.S.M.H course to teach culinary skills
helps employees gain sales skills and product knowledge
from a consumer’s perspective.
Course launched in April 2021

This internal training program specializes in training
core management personnel, teaching them thespecialist knowledge required for problem solving
through single subject study and case study presentations.

1. Preparatory study via e-learning
2. Practical training provided by cookery school
instructors and culinary experts
3. Cooking practice to apply the skills that havebeen learned
This is a six-month program that runs in cycles.

1. Business strategy planning
2. Marketing strategy
3. Branding
4. Data marketing
5. Data science
6. Project management
7. Managerial accounting

With the completion of the 4th cycle in February
2023, 64 people have taken the course.

U.S.M.H Selected as a Digital Transformation Certified Company
In July 2021, U.S.M.H was selected as a Digital Transformation Certified Company by
the Ministry of Economy, Trade and Industry (METI). The Group met the criteria for
certification based on its digital transformation measures and its preparation of apromotion system to support development of those measures, and was also praised
by METI for appropriate information disclosure.
Simplification of checkout operations through digitaltransformation makes it possible to shift employees
into customer service and sales roles.

39 U.S.M. Holdings Integrated Report 2022

U.S.M. Holdings Integrated Report 2022

40

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

SocialM o t i v a t i n g a n d Re w a r d i n g Wo r k

D i ve r s i t y a n d I n c l u s i o n

Basic Approach to Health Management and to Motivating and Rewarding Work

Basic Approach to Diversity and Inclusion

An era where people can live to 100 or more brings with ita “multi-stage life,” and people experience many different
transitions between stages. As options in life become
ever more varied, the question is now how we plan ourlives responsibly.
    Our employees, who are also consumers, are thehuman capital that creates our corporate value. To choose
from so many lifestyle options in an era where people live for
100 years or more, it is increasingly important for people tofind a balance between tangible assets (which are often
financial) and intangible assets including their relationships
with family and friends, knowledge, and their health.
Sufficient rest not only alleviates physical fatigue but also has

psychological health benefits, which in turn vitalizes work. By
maintaining and improving the physical and mental health ofeach employee, we believe that they will perform better inthe workplace and help enhance business results andcorporate value.
    For these reasons and more, we are building systems
and work environments that promote flexible working styles
and the physical and mental health of each employee. These
efforts include encouraging employees to take paid leave,balancing work with childcare and nursing care by using therelevant leave allowances, and the use of work interval andflexible working hours systems.

In recent years, there has been greater emphasis on
working to promote a society that embraces diversity, as
one of the elements of the Sustainable Development Goals(SDGs). The “realization of diversity” is not just an issue forgovernment or local authorities, but a material issue that
we, as a company that relies on people as a vitalmanagement resource, must also actively work to resolve.
    We will make use of people’s diverse attributes anddifferences and bring out the full potential of each employee,
to promote diversity, equality and inclusion as a Groupwide,
ongoing priority initiative for management. By incorporating
the promotion of diversity and inclusion in our management
strategy and continuing to implement it, we will enhance
the Group’s corporate value in society.

    As a specific initiative, we are making Groupwide
efforts to offer adaptable work styles suitable for each life
stage. We are promoting activities to reach targets of a
30% ratio of both female managers and female directors by
2030 and a 50% ratio by 2050. Our vision is to become acorporate group that brings together human resources withdiverse experience and skills. As such, we are promoting
diversity by strengthening mid-career recruitment, toincrease the ratio of employees with experience atother companies.

Diversity-related Results

Specific Initiatives

Fiscal year ended
February 28, 2022

1. Prepare work environments• Promote no smoking on business premises• Encourage employees to take consecutive holidays
and annual paid leave• Promote specific health guidance• Promote acquisition of Platinum Kurumin certification• Enhance childcare support and nursing care
support systems• Establish special subsidiary companies to employ people
with disabilities

Total Number of Managers Number of Female Managers

Ratio of Female Managers

Number of Non-Japanese
Employees

Maruetsu

146

13

8.9%

929

Kasumi

86

13

15.1%

308

MaxValu Kanto

26

4

15.3%

68

Group Total

258

30

11.6%

1,305

Promoting Women’s Empowerment
Example of Career Development

Q1. W
 hen did you first start focusing on
developing your career?

2. Heighten health awareness• Provide health support to employees• Hold employee walking rallies• Support people in maintaining or improving theirHealth Age through Rakuten’s Pep Up healthmanagement portal• Internal certification programs related todietary education

Passed the promotional
exam to becomea permanent employee!

I enjoyed learning a lot of things during my time asa contract employee. I think my desire to take on
more (and more varied) challenges initially sparked
my interest in advancing my career.

Passed the promotional
exam to become an Active(regular) employee!

number of women in management?

Women tend to value their personal life as muchas their professional life. I believe that more
women in management could result in a company
with greater respect for work-life balance.

Joined Kasumi in 2007 after finishing school,as a contract employee

Kaori Shimada

Assistant Manager, Food Square
Vivamall Kazo, Kasumi Co., Ltd.

Promotion of Paternal Involvement in Childcare

Year-on-Year Comparisonof Total Working Hours(Existing Stores)

Year-on-Year
Personnel Costs

Net Sales per
Work-Hour

Ratio of Eligible
Employees Taking
Childcare Leave

Ratio of Employees
Undergoing Regular
Health Checks

Maruetsu

-1.2%

+0.7%

13,058 yen

100%

99.8%

Kasumi

-2.5%

+0.5%

14,277 yen

100%

97.8%

MaxValu Kanto

+1.5%

+1.0%

11,750 yen

100%

98.3%

Fiscal year ended
February 28, 2022

41 U.S.M. Holdings Integrated Report 2022

Shared Childcare Provides
Emotional Leeway for Both Parents

Childcare is a Job for Both Parents,
Not Just One

Yusuke Yamada

Takahiro Kawamura

In Charge of Seafoodat Yaita Store, Kasumi Co., Ltd.
(Joined in 2019/26 years old)

Digital Planning, U.S.M.H(Joined in 2014/33 years old)Took
Three Monthsof Childcare
Leave

Kasumi Career
Development Program
Kasumi Career
Development Program

Q2. W
 ould Kasumi change with a higher

Working Style Data

Promoted to Assistant Manager
of a large store in 2020

Took
21 Daysof Childcare
Leave

What do you think about the low ratio ofmen who take childcare leave?

How did your supervisor and colleagues react when
you told them you were taking childcare leave?

I think we need to overcome the unconscious biasof seeing housework and childcare as women’swork. In fact, I learned how hard it is to raisechildren during my leave. Dividing childcare
between both parents, rather than leaving
everything up to one, can provide both parents
with emotional leeway.

I was concerned my supervisor would ask why I
was taking childcare leave now. Instead they
responded positively, asking me if the shortamount of time I'd requested was enough. My
colleagues were also dealing with quite a hecticschedule, but everyone approved of my choice.

Joined Kasumi as a part-time employee while
studying, gained experience as a cashier

Promoting the Employment of People with Disabilities

Maruetsu Special Subsidiary: Marno Co., Ltd.
Established March 1992 (certified as a special
subsidiary company in May 1992)
Work in Stores
At stores, each team (made up offour to six members and one
leader) work together on various
tasks, such as assemblingproduct displays and cleaning
break rooms. (see photo)
There is also the opportunity towork together with many
employees in specificdepartments, including in
product manufacturing andprocessing (departmental work).

U.S.M. Holdings Integrated Report 2022

42

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Corporate Governance Structure
We are structured as a company with a Board of Directors and an Audit and Supervisory Board, and we are working toenhance our corporate governance through each of these bodies.
Composition of the Board of Directors

Comsposition of Human Resources andCompensation Advisory Committee

Outside Directors

Outside Officers
Number ofoutside directors(incl. one woman)

Inside Directors

Governance

6

14

Number ofoutside officers(incl. one woman)

Inside Officers

3

Outside Officers

60 %

5

Inside Officers

Enhancing Corporate Governance
Composition of Board of Directors EffectivenessEvaluation Advisory Committee

Outside Directors

Corporate Governance

43 %Basic Approach

Number ofoutside officers(incl. one woman)

Inside Officers(4) We will ensure the rationality of management’s decisionmaking process, demonstrate a sound entrepreneurial
spirit, and make prompt, bold decisions to enable theCompany to achieve sustainable growth and increase
medium- to long-term corporate value.

 orporate Governance Guidelines (Japanese only)C
https://cdn.usmh.co.jp/wp-content/themes/usmh/
files/20211220/US_governanceguide_20211213.pdf

More details

 orporate Governance Report (Japanese only)C
https://cdn.usmh.co.jp/wp-content/themes/usmh/
files/20220531/US_20220527.pdf

Changes to Strengthen Corporate Governance
Up to Feb. 2015
The Maruetsu, Inc.
Kasumi Co., Ltd.
MaxValu Kanto Co., Ltd.
Company form
Corporate governance structure

Company
nameVoluntary committees

Directors
Of that, outside directors(Of that, women)
Corporate auditors
Of that, outside corporate auditors

Mar. 2015

2016

2018

2019

2020

2021

2022

United Super Markets Holdings Inc.

Inside Directors
Inside Officers

General Meeting of Shareholders
Election/Dismissal

Oversight
Collaboration
Reporting

Audit andSupervisory Board(Corporate auditors)

9
3
(1)
5
3

Selection/
Dismissal

Management
Committee

President andRepresentative
Director

Collaboration

Collaboration

Group Audit andSupervisory Board
Liaison Committee

Investment
Strategy Committee

Internal Audit
Department

Internal
auditing• Internal controls• Auditing

Reporting

Resolution/Approval

Corporate departments
Management guidance

Auditing

Reporting

Review of approach to succession planning
Formulation of basic policy

Corporate Governance Guidelines

Formulation

Revision based on TSE*’s revised Corporate
Governance Code

Revision in response to TSE*
market restructuring

Approval of important matters

Reporting

Subsidiaries

Timely Disclosure System
Decision
Discussion

Collaboration

Basic Corporate Governance Policy

Resolution/
Approval

Development
Committee

ReportingInformation
management supervisor

Board of Directors effectiveness evaluation survey: Jan. 2017 onward
Changes to question design
Revised (expansion of performance-based component):
System introduced (cash and stocks): May 2017
May 2020 onward
onwardRestricted stock unit compensation (3-year
Reduction of restriction period (1-year RSUs)
RSUs)
Increase in the ratio of performance-based
Stock-based compensation: 1 yen stock options
cash compensation
Review of approach to diversity of Board of Directors

Key issues

Oversight/Policy
reinforcement

Accounts auditing

May 2016 onward

Officer compensation

Board of Directors (Directors)

Corporate auditors/
Audit department

SpecialCommittee:
Dec. 2021
onward82—
42

Auditing

Oversight

Joint holding company
Company with an Audit and Supervisory Board
Human Resources and Compensation Advisory Committee(Performance achievement point verification, compensation levels): May 2016 onward
Board of Directors Effectiveness Evaluation Advisory Committee(Verification of effectiveness issues): Jan. 2017 onward

Evaluation mechanism
Enhancementof Boardof Directors
effectiveness

2017

50 %

6

Special Committee(2) We will ensure transparency and fairness in ourdecision-making in order to facilitate appropriate
cooperation with shareholders and other stakeholders.

3

Evaluation
Advisory Committee(3) We will build a structure that enables us to incorporate
the feedback we receive from customers in the course of
their day-to-day shopping and from constructive
dialogue with shareholders and other stakeholders
into our operations.

Accounting auditors/Auditing corporation(1) We respect the independence and autonomy of ouroperating companies, based on each company offering
customers healthy, valuable choices in food andcontributing to the development and prosperity of local
communities, as stated in our Core Philosophy.

Outside Officers

Outside Officers

Human Resources andCompensation Advisory Committee

Material Theme

Internal
departments
Subsidiaries

Approval
Information
aggregation

GeneralAdministrative Division

Monitoring

Board
of Directors
Discussion

Department incharge ofdisclosure(Finance andAccounting
Department)

Information
disclosure

Stockexchanges, etc.

Monitoring

Audit and Supervisory Board (Corporate auditors)* TSE: Tokyo Stock Exchange

43 U.S.M. Holdings Integrated Report 2022

U.S.M. Holdings Integrated Report 2022

44

Introduction

Board of Directors Effectiveness Evaluation

Determinationof questions

Third Medium-Term Business Plan

Surveyconducted

Analysis ofcollected results

Submissionof Corporate
Governance
ReportReport to Boardof Directors

In nominating candidates for the Board of Directors,
we make a comprehensive assessment of their qualities.
This includes whether they have the ability to accurately
grasp issues facing administrative departments andcooperate with other executives to solve problems, andhave the discernment needed for compliance with laws and(2) Evaluation Items and Results
Name

Scores (Past 3 Years)
FY2018

1. Roles and functions of Board of Directors

2.3

2. Composition and size of Board of Directors
3. Operation of Board of Directors

2.8
2.8

2.9

2.8

2.8

2.8

2.7

Discussion ofmanagement-related matters

Proposals submitted between
March 2021 and January 2022
Organization and HR-related

Managementrelated

2.8

2.7

2.7

6. Relationships with shareholders and investors

2.6

2.6

2.7

5. Communication with managers

FY20202.7

2.7

4. Cooperation with auditing organizations

FY20192.5

2.8

Important matters concerning business conduct
Concerning
the General
Meeting of
Shareholders

Matters to
be reported
Generalaffairs-related

FY2021

Average

Deviation From
3-Year Average

2.6

2.5

2.6

2.8

2.7

2.7

2.8

2.7

2.8

2.8

2.8

2.8

+0.2
-0.1
±0
+0.1
±0
±0

Reported matters
Financialaccounts-related

Directors

Data

Concerning
directors
and corporate
auditors

Subsidiaries

Position

Motohiro Fujita

President and Representative Director

Ryota Furuse

Vice President and Representative Director

Shinichiro Yamamoto

Vice President and Representative Director

Satoshi Shimada

Vice President and Director

Masaharu Homma

Director

Motoya Okada

Director and Advisor

Akira Terakawa

Outside Director

Shigekazu Torikai

Independent Outside Director

Naoko Makino

Independent Outside Director

Tadayoshi Yoyogi

Corporate Auditor (Standing)Masami Sakamoto

Corporate Auditor (Standing)

Koichi Ihara

Outside Corporate Auditor

Hirofumi Ishimoto

Outside Corporate Auditor

Shinobu Okamoto

Independent Outside Corporate Auditor

business ethics, in addition to being able to contribute to
the further development of the Group as a whole inaccordance with our Core Philosophy. As part of our efforts
to promote the strong effectiveness of our Board of
Directors, we have listed our highly skilled directors below.

Human
Finances andresources/
accounting/Corporate
Legal/
Business
GlobalConsumermanagement Organizational Investment Governance transformation perspective perspective
development
strategy

Voluntary Committees and Member Composition

Corporate
auditors andaccounting
auditors
StockrelatedConcerning
financialaccounts

Sustainability Strategy

Experience and Skills Matrix(1) Evaluation Process

Discussionof questions

Value Creation

Name

Business conduct

Monthly results

Other important matters

Position

Human Resources andCompensation Advisory
Committee

Board of Directors
Effectiveness Evaluation
Advisory Committee

Special Committee

Shigekazu Torikai

Independent Outside Director

Committee Chair

Committee Chair

Committee Chair

Naoko Makino

Independent Outside Director

Committee Member

Committee Member

Committee Member

Shinobu Okamoto

Independent Outside Corporate Auditor

Committee Member

Committee Member

Committee Member

Officer Nomination and Compensation

Subsidiary-related(3) FY2022 Issues and Future Course of Action
IssuesCourseof Action(Proposals from the Board of Directors Effectiveness Evaluation Advisory Committee)i) Promote diversity on the Board of Directors of the Company and its subsidiariesii) Consider having the Company’s Board of Directors participate in succession planning at operating companies(Report from the Board of Directors Effectiveness Evaluation Advisory Committee)i) Promote diversity on the Board of Directors of the Company and its subsidiaries• Propose bylaws (articles) on the purpose and goals of planning, human resource requirements andappointment of outside directors• Confirm that specific studies of the proposed matters will be initiated, with a focus on operating companiesii) Consider having the Company’s Board of Directors participate in succession planning at operating companies• Propose the purpose and goals of planning, the promotion structure, required experience, the type of humanresources required, establishment of a talent pool and methods for selecting candidates• Confirm that the Board of Directors will regularly monitor the development of operating companies’ plansregarding the proposed matters• Nomination Policies and Procedures for Director andCorporate Auditor Candidates
At present, the Company has not established policies andprocedures for the nomination of director and corporate
auditor candidates in its internal rules and regulations.
However, it makes a comprehensive assessment fromthe viewpoint of whether the candidate can be expected
to contribute to the Company’s Core Philosophy andthe further development of the Group as a whole.
    (For further details, please see “Principle 3-1. Full
Disclosure” in the Corporate Governance Report.) (Japaneseonly)    For dismissal proposals submitted to the General
Meeting of Shareholders, if the person’s behavior violates,or may violate, the law or the Articles of Incorporation,or if the person is deemed unable to perform their duties
for any reason, the Human Resources and Compensation
Advisory Committee deliberates on whether the dismissal
criteria apply, and then reports its findings to theBoard of Directors.
• Policy on Officer Compensation
The Company’s basic policy is to reflect medium- to longterm business performance in compensation and facilitate

45 U.S.M. Holdings Integrated Report 2022

the Company’s sustainable growth and increase corporate
value by having its directors demonstrate a soundentrepreneurial spirit. As such, officer compensation is
structured so that a higher percentage is linked tobusiness performance.
• Process of Determining Officer Compensation
The Company sets compensation amounts according
to role, as shown in the tables on the following page.
The Company maintains a Human Resource andCompensation Advisory Committee, comprised mainlyof independent outside directors, under the Boardof Directors. This committee works with objectivity andtransparency when confirming the previous year’s businessresults for each operating company (in April every year),
and when verifying the appropriateness of compensation levels.
• Calculation of Compensation for Individual Directors
As defined in the table of criteria for compensation byposition, compensation consists of fixed cash compensation,
performance-based cash compensation andperformance-based non-cash stock compensation(restricted stock unit compensation and stock options).

U.S.M. Holdings Integrated Report 2022

46

Introduction• Overview of Compensation System for Directors (Excluding Outside Directors)
Board Member Type

Directors
OutsideDirectors
Corporate
Auditors

Determined by resolution of the Board of Directors, within the compensation limits set by resolution of the General Meeting of
Shareholders, based on reports by the Human Resources and Compensation Advisory Committee.
Consists solely of monthly compensation. The level of compensation is determined by resolution of the Board of Directors,
within the compensation limits set by resolution of the General Meeting of Shareholders, based on reports by the Human
Resources and Compensation Advisory Committee, using compensation levels at other companies in Japan (according toan independent third party) as reference.
Consists solely of monthly compensation. The level of compensation is set through deliberations by the Audit and Supervisory
Board, within the compensation limits approved by the General Meeting of Shareholders, using compensation levels at othercompanies in Japan (according to an independent third party) as reference.

Monthly
compensation

Equitycompensation

Plan

Compensation
Type

Description

Basiccompensation
Per-monthcompensation Position-based
compensation

Cash compensation paid monthly as a fixed amount
set according to the director’s position

Annual performance-based
compensation(updated monthly)

Performance-based compensation with the payment
amount determined by the business performanceachievement rate in the previous fiscal year andevaluation of each individual director

Restricted stock unit
compensation (RSU)

Predetermined stock compensation linked to themedium-term business plan and granted for eachyear of the period covered by the plan

Stock-based compensation
Stock options (SO)Company stock compensation granted according to
the business performance achievement rate in
the previous fiscal year

Compensation By Position

Deliverables

Cash Compensation

Scope Of
Evaluation

Fixed

—
Cash
Short term

Performancebased

Stock(Representative directors)
Chairman and president(Representative director)
Vice president(No right of representation)
Chairman and vice president

45

40

10

5

45

40

10

5

50

35

10

5

Senior managing director

55

30

10

5

Managing director

58

27

10

5

Concurrent director

60

25

10

5

Medium tolong term

47 U.S.M. Holdings Integrated Report 2022

Data

a Nomination Committee in 2003 in order to increase
the transparency of Group governance and the speed ofmanagement. In 2008, AEON transitioned to a pureholding company in order to strengthen management fromthe perspective of the entire Group without being biased
toward any particular business, and has been implementing
management measures to increase synergy acrossthe entire Group.
   Among the Group companies, those that are
expected to achieve sustainable growth throughself-directed management that reflects business andregional characteristics and improve management quality
as a result of the discipline imposed by the capital markets
are made into listed subsidiaries.
   In addition, from the perspective of protecting
minority shareholders of listed subsidiaries, AEON requests
the appointment of independent outside directors andthe establishment of an advisory committee of
independent officers.
    We believe that collaborating and maximizing our
synergy with AEON Group companies will benefit minority
shareholders, as described in the policy above.

Outside Director(part-time)• Third Medium-Term Business Plan measures    1. Product Reform Unit    2. Store Reform Unit    3. Outside Digital Unit    4. Engine 3 Unit    5. Human Resource Strategy Unit    6. Digital Development Unit

Shigekazu Torikai
100

Akira Terakawa

The Company is aiming to carry out major reforms, with a focus on senior management.
As an example, below is the agenda presented by senior management and discussed at
the Board of Directors meeting earlier this year.

Total

Relationship with the Parent Company
Two directors of AEON Co., Ltd., the parent company of
U.S.M.H, concurrently serve as Company directors.
However, U.S.M.H’s business operations are based on
independent management. In addition, U.S.M.H has acorporate governance system that places importance onsustainable growth, development and improvement ofbusiness performance. U.S.M.H maintains a collaborative
relationship with AEON Co., Ltd. based on mutual respectfor each other’s autonomy, and has secured independence
from AEON Co., Ltd.
   AEON Co., Ltd.’s “Policy on Governance of Listed
Subsidiaries” is as follows.
   Based on its basic principles of “Pursuing peace,respecting humanity, and contributing to local communities,
always with the customer’s point of view as its core,” AEON
believes that the enterprise value of the entire Group canbe enhanced by emphasizing the autonomy and originalityof the management of Group companies and practicing
group management based on a decentralized system,and has practiced this philosophy since its founding.
   Against this backdrop, as a parent company,
AEON was one of the first to transition to a company with

Sustainability Strategy

As an outside director, I have been entrusted by shareholders with the role of increasing
the Company’s management transparency and making the Company better for society,its customers, business partners and employees.
    The Company is facing challenges from an extremely tough external environment,
due not only to the COVID-19 pandemic but also to rising energy prices and the cost ofvarious food ingredients. In conjunction with these business issues, consumption patterns
are changing significantly and at a much faster rate than could be anticipated.
    However, the Company’s essential role as a social lifeline, and its steadfast
commitment to standing in the customer’s shoes in order to enable them to truly feel thevalue and enjoyment of food, has never wavered.
    In discussions at Board of Directors meetings and in dialogue with executives andemployees, I firmly adopt the perspective not just of a manager but also of a consumer,
and believe I can support the Company’s determination to grow as a supermarket businessthat exceeds the expectations of customers and business partners.

StockacquisitionrightsRatio (%)
Performance-Based Compensation
Stock-Based
Restricted Stock Unit
Compensation
Compensation (RSU)
Stock Options (SO)

Fixed Compensation

Third Medium-Term Business Plan

Messages from Outside Directors

Summary

Compensation

Value Creation

Independent Outside Director(part-time)• Report on sustainability promotion activities• Board of Directors effectiveness measures    As this indicates, senior management and other executives are trying to interpretand anticipate the changing times, and are seeking to make major operational reforms.
These actions are reflected in the use of words such as “reform,” “digital,” “human resource
strategy” and “sustainability.”    In fact, some stores that have undergone digital transformation are already up andrunning, and measures to further drive this initiative are in the process of being implemented.
    We, as outside directors, will not hesitate to freely express our opinions in order toensure the effectiveness of these reforms.

As someone close to consumers, a registered dietician and a culinary expert, I bring theperspective of a cooking enthusiast to Board of Directors meetings. In Board meetings,
I talk about what customers need from today’s supermarkets and about food and healthtrends. Outside of these meetings, I am involved in menu development to support
customers’ healthy eating habits, and in training human resources who demonstrateculinary sense through their ideas and suggestions.
    Information from Board of Directors meetings is also provided to independent
outside directors as appropriate. The Company promptly shared details of the Second
Medium-Term Business Plan (particularly in relation to the very challenging conditions
currently faced), while visits to stores and related facilities help us deepen our
understanding of United Super Markets Holdings (U.S.M.H), and pertinent internal
information is also shared with us.
    I look forward to seeing U.S.M.H continue to be a company that provides sustainable
food, leading to wellbeing for all, through the digital technology reforms set out in theSecond Medium-Term Business Plan.

Naoko Makino
Independent Outside Director(part-time)

U.S.M. Holdings Integrated Report 2022

48

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

Directors and Corporate Auditors
Directors

Motohiro Fujita

Ryota Furuse

Shigekazu Torikai

Naoko Makino

President and Representative Director

Vice President and Representative Director

Independent Outside Director

Independent Outside Director

Born July 11, 1955

Born January 3, 1957

Born March 12, 1947

Born January 28, 1968

Term of office: One year
Number of shares owned: 143,000

Term of office: One year
Number of shares owned: 41,000

Term of office: One year
Number of shares owned: —Term of office: One year
Number of shares owned: —Attendance at Board of Directors meetings: 100% (12/12)

Attendance at Board of Directors meetings: 100% (12/12)

Attendance at Board of Directors meetings: 100% (12/12)

Attendance at Board of Directors meetings: 91.7% (11/12)

Mar. 1978: Joined Kasumi Co., Ltd.
May 2000: Director, Kasumi Co., Ltd.
May 2004:	Managing Director, Kasumi Co., Ltd.
Mar. 2005:	Senior Executive Officer; Manager, Business
Services Division; Manager, ComplianceControl Office, Kasumi Co., Ltd.
May 2006:	Manager, Development Division,
Kasumi Co., Ltd.
May 2007: Senior Managing Director, Kasumi Co., Ltd.
Feb. 2009: Manager, Store Development andService Division, Kasumi Co., Ltd.
Sep. 2010: Manager, Sales Managing Division;
Manager, Food Market Managing
Division, Kasumi Co., Ltd.
Sep. 2011: Manager, Sales Control Division;
Manager, Food Market Managing
Division, Kasumi Co., Ltd.
Mar. 2012: President and Representative
Director, Kasumi Co., Ltd.
Mar. 2015: Executive Vice-President,
the Company

Mar. 2017: President and Representative
Director, the Company (to present)
		 Executive Officer responsible for theSupermarket Business, AEON Co., Ltd.
Director, Kasumi Co., Ltd. (to present)
May 2017: Director, MaxValu Kanto Co., Ltd.
(to present)
Mar. 2019: Vice President and Representative
Executive Officer responsible for theSupermarket Business, AEON Co., Ltd.
Mar. 2020: Vice President and Representative
Executive Officer responsible for
the Supermarket Business andMerchandise/Logistics, AEON Co., Ltd.
Mar. 2021: Vice President and Representative
Executive Officer responsible for theSupermarket Business, AEON Co., Ltd.
Mar. 2022: Executive Officer and Vice Chairman
responsible for special missions,
AEON Co., Ltd. (to present)

Mar. 2015: Director, the Company
Apr. 2015: General Manager, Corporate
Planning Division; Supervising
Development, The Maruetsu, Inc.
Mar. 2017: Vice President and Representative
Director responsible for administration,
The Maruetsu, Inc.
Mar. 2019: Vice President and Representative
Director; Supervising Corporate
Planning Division, the Company
Mar. 2019: President and Representative
Director, The Maruetsu, Inc.
(to present)
Mar. 2020: Vice President and Representative
Director, the Company (to present)

Mar. 1980: Joined The Maruetsu, Inc.
May 2006: Director and Executive Officer,
The Maruetsu, Inc.
May 2008: Managing Executive Officer,
The Maruetsu, Inc.
May 2011: Senior Managing Executive Officer,
The Maruetsu, Inc.
Apr. 2013: General Manager, Corporate
Planning Division; Supervising
Finance and Accounting,
The Maruetsu, Inc.
May 2013: Vice President, Executive Officer,
The Maruetsu, Inc.
Mar. 2014: General Manager, Corporate
Planning Division; Supervising
Finance and Accounting; Supervising
Development, The Maruetsu, Inc.

Satoshi Shimada

Vice President and Representative Director

Vice President and Director

Born July 24, 1959
Term of office: One year

Born June 5, 1972
Term of office: One year

Number of shares owned: 24,000
Attendance at Board of Directors meetings: 100% (12/12)

Number of shares owned: —Attendance at Board of Directors meetings: —(Newly appointed)

Mar. 2020: President and Representative
Director, Kasumi Co., Ltd.
(to present)		
General Manager, Digital Division,
the Company
May 2020: Director; General Manager, Digital
Division, the Company
Mar. 2022: Vice President and Representative
Director; General Manager, Digital
Division, the Company (to present)

Apr. 1995: Joined JUSCO Co., Ltd.
(currently AEON Co., Ltd.)
Sep. 2002: Agricultural Merchandise Division,JUSCO Co., Ltd.
Mar. 2011: Strategic Division, AEON Co., Ltd.
Apr. 2015: Assistant to Group COO,
AEON Co., Ltd.
May 2019: President and Representative
Director, AEON LIFE Co., Ltd.

Feb. 2021: Director, MaxValu Kanto Co., Ltd.
Mar. 2021: President and Representative
Director, MaxValu Kanto Co., Ltd.
(to present)
May 2022: Vice President and Director,
the Company (to present)

Masaharu Homma

Motoya Okada

Director

Director and Advisor

Born October 11, 1969
Term of office: One year
Number of shares owned: 11,000
Attendance at Board of Directors meetings: 100% (10/10)

Born June 17, 1951
Term of office: One year
Number of shares owned: —Attendance at Board of Directors meetings: 91.7% (11/12)

Mar. 1992: Joined The Maruetsu, Inc.
Mar. 2010: Manager, Corporate Planning
Department, Corporate Planning
Division, The Maruetsu, Inc.
May 2013: Executive Officer; Manager, Corporate
Planning Department, Corporate
Planning Division, The Maruetsu, Inc.
May 2015: Director, MaxValu Kanto Co., Ltd.
(to present)
Mar. 2017: Executive Officer responsible foradministration; General Manager, Corporate
Planning Division, The Maruetsu, Inc.

Mar. 2019: Executive Officer; General Manager,
Corporate Planning Division,
The Maruetsu, Inc.
May 2019: Managing Executive Officer; General
Manager, Corporate Planning
Division, The Maruetsu, Inc.
May 2020: Director and Managing Executive
Officer, General Manager, Corporate
Planning Division, The Maruetsu, Inc.
(to present)
May 2021: Director, the Company (to present)

Akira Terakawa

Mar. 1979: Joined JUSCO Co., Ltd.
(currently AEON Co., Ltd.)May 1990: Director, JUSCO Co., Ltd.
Feb. 1992: Managing Director, JUSCO Co., Ltd.
May 1995: Senior Managing Director,
JUSCO Co., Ltd.
Jun. 1997: President and Representative
Director, JUSCO Co., Ltd.
May 2002: Director and Advisor,
AEON Mall Co., Ltd. (to present)
May 2003: Director, President andRepresentative Executive Officer,
AEON Co., Ltd.
May 2004: Director and Advisor,
Kasumi Co., Ltd.

Nov. 2005: Outside Director and Advisor,
TSURUHA HOLDINGS Inc.
Mar. 2012: Director, President andRepresentative Executive Officer,
and Group CEO, AEON Co., Ltd.
Aug. 2014: Director,, KUSURI NO AOKIHOLDINGS CO., LTD. (to present)
Nov. 2014: Director, Welcia Holdings Co., Ltd.
(to present)
Mar. 2015: Director and Advisor, the Company(to present)
Mar. 2020: Director, Chairman and
Representative Executive Officer,
AEON Co., Ltd. (to present)

Born February 8, 1958
Term of office: One year
Number of shares owned: —Attendance at Board of Directors meetings: 100% (12/12)

49 U.S.M. Holdings Integrated Report 2022

Jun. 2014: Managing Executive Officer; Member of theBoard, Chief Operating Officer, Corporate
Planning & Strategy Dept.; Chairman ofInternal Control Committee; Vice Chairmanof Investment and Credit Committee,
Marubeni Corporation
Apr. 2015: Managing Executive Officer; Representative
Director and CSO; Senior Operating Officer,
Executive Secretariat; Regional CEO for
East Asia; Chairman of Officers Treatment
Committee; Vice Chairman of Investment andCredit Committee, Marubeni Corporation
Apr. 2016: Managing Executive Officer; Member of theBoard, Chief Executive Officer, Chemical &Forest Products Group, Marubeni Corporation

Apr. 1990: Joined Asako Aramaki Office Co., Ltd.
(currently Diet Communications
Co., Ltd.)
Dec. 1995: Resigned from Asako Aramaki
Office Co., Ltd. (currently Diet
Communications Co., Ltd.)
Jan. 1996: Freelance (Member of Association ofFreelance Dieticians in Nakano Ward)
Mar. 2004: Representative Director, Studio Ku Ltd.
(to present)
May 2007: Councilor and Member of Editorial
Committee, Japanese Societyof Shokuiku

Apr. 2013: Councilor, Japanese Society of
Shokuiku; Member of Editorial
Committee, Japanese Society of
Shokuiku
Jan. 2016: Member of Planning Committee,
Japanese Society of Shokuiku(to present)
May 2016: Independent Outside Director,
the Company (to present)
Jan. 2022: Councilor, Japanese Society of
Shokuiku; Member of Award
Nomination Committee, JapaneseSociety of Shokuiku (to present)

Tadayoshi Yoyogi

Masami Sakamoto

Corporate Auditor (Standing)Corporate Auditor (Standing)Born January 27, 1959
Term of office: Four years

Born February 25, 1958
Term of office: Four years

Number of shares owned: 9,000
Attendance at Audit & Supervisory Board meetings:

Number of shares owned: 21,000
Attendance at Audit & Supervisory Board meetings:

100% (13/13)
Mar. 1981: Joined Kasumi Co., Ltd.
Sep. 2002: Manager, Sales Department No. 10,
Kasumi Co., Ltd.
Mar. 2005: Manager, Food Market Sales Division
No. 3, Kasumi Co., Ltd.
May 2007: Executive Officer, Kasumi Co., Ltd.
Jun. 2007: Deputy Manager, ComplianceControl Office; Manager, Audit
operation, Kasumi Co., Ltd.

100% (13/13)
Mar. 2013: Manager, Compliance Control Office;Manager, Audit operation,
Kasumi Co., Ltd.
May 2014: Full-time Corporate Auditor,
Kasumi Co., Ltd.
May 2019: Corporate Auditor, Kasumi Co., Ltd.
(to present); Standing Corporate
Auditor, the Company (to present)

Mar. 1980: Joined The Maruetsu, Inc.
Mar. 2008: Manager, Corporate Planning
Department, Corporate Planning
Division, The Maruetsu, Inc.
Mar. 2010: General Manager, Finance andAccounting Division, The Maruetsu, Inc.
May 2010: Executive Officer; General Manager,
Finance and Accounting Division,
The Maruetsu, Inc.
May 2012: Executive Officer; General Manager,
Human Performance Reform Division,
The Maruetsu, Inc.
Apr. 2013: Executive Officer, The Maruetsu,
Inc.; President and Representative
Director, Marno Co., Ltd.; President
and Representative Director,
Marno Center Support Co., Ltd.
May 2013: Advisor, The Maruetsu, Inc.;

President and Representative
Director, Marno Co., Ltd.; President
and Representative Director,
Marno Center Support Co., Ltd.
May 2014: President and Representative
Director, Marno Co., Ltd.; President
and Representative Director,
Marno Center Support Co., Ltd.
Mar. 2015: President and Representative
Director, Marno Co., Ltd.
Mar. 2017: President and Representative Director,
Asubiz Support Co., Ltd.
Mar. 2018: Advisor to President,
The Maruetsu, Inc.
May 2018: Full-time Corporate Auditor,
The Maruetsu, Inc.
May 2020: Corporate Auditor, The Maruetsu
Inc. (to present); Standing Corporate
Auditor, the Company (to present)

Koichi Ihara

Hirofumi Ishimoto

Outside Corporate Auditor

Outside Corporate Auditor

Born October 8, 1962
Term of office: Four years
Number of shares owned: —Attendance at Audit & Supervisory Board meetings:
100% (13/13)

Born January 8, 1962
Term of office: Four years
Number of shares owned: —Attendance at Audit & Supervisory Board meetings:
100% (13/13)

Apr. 1986: Joined Marubeni Corporation
Apr. 2013: CFO, Marubeni ASEAN Pte. Ltd.
(Singapore)
Apr. 2015: Senior Manager, Finance Dept.,
Marubeni Corporation
Jan. 2017: Director; General Manager,
Administration Division,
Marubeni Mate Co., Ltd.
Apr. 2018: General Manager, Planning Dept.,
Consumer Products Group,
Marubeni Corporation

Director

Apr. 1981: Joined Marubeni Corporation
Apr. 2010: Executive Officer; General Manager,
Corporate Planning & Strategy Dept.,
Marubeni Corporation
Apr. 2012: Executive Officer; Chief Operating Officer,
Chemicals Division, Marubeni Corporation
Apr. 2013: Managing Executive Officer; Chief
Operating Officer, Chemicals Division,
Marubeni Corporation
Apr. 2014: Managing Executive Officer;
Chief Operating Officer,
Corporate Planning & Strategy Dept.;
Chairman of Internal Control Committee;
Vice Chairman of Investment andCredit Committee, Marubeni Corporation

Jun. 2017: External Member of the Audit& Supervisory Board, Kurita
Water Industries Ltd.
Jun. 2018: Outside Director, Riso Kagaku
Corporation (to present)

Corporate Auditors

Shinichiro Yamamoto

Mar. 2013: Joined Kasumi Co., Ltd. as Advisor
May 2014: Managing Director, Senior Executive Officer;
Manager, Logistics Division, Kasumi Co., Ltd.
Mar. 2017: Senior Managing Director and Senior
Executive Officer, Kasumi Co., Ltd.
Mar. 2018: General Manager, ICT Division,
the Company
Mar. 2019: Senior Managing Director and Senior
Executive Officer; Manager, Business
Reform Office; Manager, Business
Remodeling, Kasumi Co., Ltd.

Apr. 1975: Joined a tax accountant office
Apr. 1990: Registered as Attorney
Apr. 1994: Representative, TorikaiManagement and Law Office(currently Torikai Law Office)(to present)
Mar. 2015: Independent Outside Director, theCompany (to present)

Oct. 2018: General Manager, Planning Dept.,
Food Group; General Manager,
Planning Dept., Consumer ProductsGroup, Marubeni Corporation
Nov. 2018: General Manager, Planning Dept.,
Food Group, Marubeni Corporation
Apr. 2019: General Manager, Administration
Dept., Food, Agriculture & Chemicals
Group, Marubeni Corporation
May 2019: Outside Corporate Auditor, theCompany (to present)
Apr. 2022: Administration Dept., Consumer
Products Group, Marubeni
Corporation (to present)

Aug. 1986: Joined JUSCO Co., Ltd.
(currently AEON Co., Ltd.)
Feb. 2002: Manager, Corporate Branding
Division, AEON Co., Ltd.
Mar. 2005: Strategic Division, AEON Co., Ltd.
May 2011: Director; General Manager,
Marketing Division, General
Manager, New Business
Development Division,
AEON Eaheart Co., Ltd.

Mar. 2015: Manager, Corporate Planning
Division, AEON Retail Co., Ltd.
Sep. 2016: Manager, Affiliated Companies
Division, AEON Retail Co., Ltd.
May 2020: Full-time Corporate Auditor, AEONBig Co., Ltd. (to present)
May 2021: Outside Corporate Auditor, theCompany (to present)

Shinobu Okamoto
Independent Outside Corporate Auditor

Jun. 2016: Managing Executive Officer; Chief Executive
Officer, Chemical & Forest Products Group,
Marubeni Corporation
Apr. 2018: Senior Managing Executive Officer; Chief
Executive Officer, Food Group; Regional CEO
for East Asia; Vice Chairman of Investment andCredit Committee, Marubeni Corporation
Apr. 2019: Senior Managing Executive Officer; Chief
Executive Officer, Food, Agriculture & Chemicals
Group; Vice Chairman of Investment and Credit
Committee, Marubeni Corporation
May 2019: Director, the Company (to present)
Apr. 2020: Senior Executive Vice President; Chief Executive
Officer, Food, Agriculture & Chemicals Group; Chief
Operating Officer, Food Div., Marubeni Corporation

Apr. 2021: Senior Executive Vice President; Chief Executive
Officer, Food, Agriculture & Chemicals Group;
Vice Chairman of Investment and Credit
Committee, Marubeni Corporation
Jun. 2021: Representative Director and Senior Executive
Vice President; Chief Executive Officer, Food,
Agriculture & Chemicals Group; Vice Chairmanof Investment and Credit Committee,
Marubeni Corporation
Apr. 2022: Representative Director and Senior Executive
Vice President; Chief Executive Officer,
Consumer Products Group; Vice Chairman of
Investment and Credit Committee,
Marubeni Corporation (to present)

Born June 18, 1954
Term of office: Four years
Number of shares owned: —Attendance at Audit & Supervisory Board meetings:
100% (13/13)
Apr. 1977: Co-ordination Division, Management
and Co-ordination Department,
Tokyo Regional Taxation Bureau
Jul. 2005: Special Officer (Planning and Coordination), First Taxation Department,
Tokyo Regional Taxation Bureau
Jul. 2006: District Director, Kawashima Tax
Office, Takamatsu Regional Taxation
Bureau (Tokushima Prefecture)

Jul. 2007: Chief Examiner, Third Large
Enterprise Examination Department,
Tokyo Regional Taxation Bureau
Jul. 2008: Director, Planning Division,
Management and Co-ordination
Department, Tokyo Regional
Taxation Bureau
Jul. 2009: Director, First Personnel Division,
Management and Coordination Department,
Tokyo Regional Taxation Bureau

Jul. 2012: Chief Internal Inspector,
Commissioner’s Secretariat,
National Tax Agency
Jun. 2013: Assistant Regional Commissioner(Management and Co-ordination),
Nagoya Regional Taxation Bureau
Jul. 2014: Regional Commissioner, Kumamoto
Regional Taxation Bureau
Oct. 2015: Representative, Shinobu Okamoto
Tax Accountant Office (to present)

May 2016: Independent Outside Corporate
Auditor, the Company(to present)
Jun. 2016: Corporate Auditor, RIKENGREEN
Co., Ltd.
Jun. 2019: Outside Audit & Supervisory Board
Member, Yamaichi Electronics Co.,
Ltd. (to present)

U.S.M. Holdings Integrated Report 2022

50

Introduction

Value Creation

Risk Management

Compliance

Risk Management System and Initiatives

Basic Approach to Compliance

The Company defines “risk management” as firstly
identifying and anticipating situations in which certain
events may occur that impact achievement of businessobjectives for all of the Company’s businesses, and thentaking appropriate steps to prevent such situations fromoccurring or spreading.
    In an increasingly complicated operating environment,
we have positioned risk management as a material issue,
and we will protect our business resources by understanding,assessing and considering countermeasures for risks at
the Groupwide level. In the event of a major natural
disaster or other emergency, we will fulfill our social andhumanitarian responsibilities by giving due
consideration to maintaining the safety and health of ourcustomers, employees and their families. We have alsoestablished systems to ensure that our business activities
are not interrupted by natural disasters, accidents orother incidents, and to quickly restore business activities
and minimize the associated risks if an interruption is
unavoidable, and we ensure that all employees are fully
aware of these systems.
    In addition, we familiarize everyone concernedwith the U.S.M.H Code of Conduct, which is a set of
behavioral guidelines for ensuring that the Company’s
directors and employees perform their duties incompliance with laws and the Articles of Incorporation,
and we regularly report the status of internal audits andinternal controls to the Management Committee.

Risk Management System

Principal Risks
Decision to set up/Convened byGeneral Administrative Division Manager

Level 3
Risk Response Headquarters(Group)Information/
CentralManagement

Reporting

Reporting

U.S.M.H Chief
Risk Officer
Participation

U.S.M.H General
Administrative
Division Manager

Decision to set up/
Dispatch of HR and General
Affairs Dept. representative

Level 2
Risk Response Headquarters(operating companies)

Information gatheringof customers and employees our highest priority, and takemeasures to quickly resume business at affected storesand prevent any impact on unaffected stores. We will also
cooperate with local authorities to support people unable
to return home due to mass transit disruptions in thegreater Tokyo area or other issues.

IT Governance and Information Security
In addition to promoting DX at various levels, the Grouphas established IT governance guidelines as a shared
policy with the AEON Group, and is working to strengthen
management systems. In managing our IT investments,
procurement, outsourcing and development projects, we
identify audit items through self-checks, regularly monitor
those items, and continue to confirm and improve themat Management Committee meetings and other meetings.

Data

Our subsidiaries have also established internal helplines
in line with the Group’s structure, and provide
a consultation service for contacting the department
primarily responsible for HR. In addition, as a result of
the revised Whistleblower Protection Act that came into
effect in June 2022, we ensure that users of thesesystems are aware that they will not be treatedunfavorably. Upon receiving a whistleblowing report,
the department in charge examines the details and,if there is a violation, takes the necessary measures
based on internal regulations. That department thenformulates measures to prevent a recurrence, or has
measures formulated and implemented Groupwide.

Specific Initiatives to Prevent Wrongdoing and Misconduct
In accordance with the U.S.M.H Code of Conduct,
all executives and employees of the Group share theposition that they shall not seek to benefit from bribery
or other improper means under any circumstances.
Executives and employees of the Group and its
subsidiaries are fully aware that any misconduct should
be reported to the internal reporting contact point,
which acts as a medium for executives, employees andbusiness partners to report information.
    Compliance training for Group officers enables
them to learn from specific cases of wrongdoing andmisconduct, such as offering benefits with wrongful intent.

Participants investigate the causes of those incidents,
consider measures to prevent recurrence, and pledge tothink, make judgments and act on their own initiative.
    In addition, given the gravity of the impact
financial reports can have on the Company’s credibility,
the General Administrative Division cooperates withoutside experts, including certified public accountants,
to provide annual training for managers at the Company
and its subsidiaries to ensure their awareness of andcompliance with laws and regulations.

Internal Reporting System

Business Continuity Plan to Respond to Disaster Risks
In the event of a major earthquake or other disaster in thegreater Tokyo area, we will implement a business
continuity plan (BCP) for maintaining the functionality of
the Company and each operating company, and formaintaining or quickly restoring store operations at
operating companies. We will cooperate with each
operating company, make ensuring the safety and security

The Company’s Core Philosophy is to offer customers
healthy, valuable choices in food, and to cultivate deep
relationships to build prosperous local communities.
The directors and employees of the Group and its
subsidiaries perform their duties in compliance withlaws, regulations and the Articles of Incorporation,
and we familiarize them with the U.S.M.H Code of
Conduct, which was established as a set of behavioral
guidelines. We continuously educate people in positionsof responsibility through various training programs toenhance awareness of compliance, and share
our Core Philosophy.
    The AEON Code of Conduct “110” Hotline isavailable as an internal reporting contact point.

Sustainability Strategy

Main Risk Items

Food poisoning, mislabeling, expiry date falsification, violationof labeling requirements, product tampering or foreign objects,
expired products
In-store incidents
In-store accidents, robberies, customer falls
Crime by or arrest of an executive/employee,
Human issues
executive/employee wrongdoing, executive/employee
drunk-driving incidents
Sexual harassment, abuse of power, employee suicide,
Labor issues
work-related accidents, death from overwork
Fire, food poisoning, product tampering or foreign objects,
Corporate negligence infectious disease outbreak, discovery of insider trading, leaksof personal information, serious environmental pollution
Misrepresentation, cover-ups, tax evasion, fraudulent
accounting, illegal acts (violation of the Antimonopoly Act,
Corporate crime
fair trade laws, insider trading or waste disposal regulations),
bribery, online accusations
Threats of needle contamination, etc., threats from malicious
claims and complaints, product contamination, robbery/theft,Threats or crimes
blackmail from antisoscial forces, etc., trespassing by suspicious
against the Company
persons, bomb threats, inappropriate use of social media,
ransom demands made through ransomware
Earthquakes, typhoons/floods, tornados, sudden downpours,
river flooding due to heavy rain, water supply outages, delay of
product deliveries due to heavy snow, inability to trade
Natural disasters
merchandise in markets due to typhoons or heavy rain,
power outages due to damaged power lines
Credit uncertainty orbankruptcy ofBankruptcy of developers, business partners or tenantsbusiness partners
Accusations, criminal cases, damage claim cases, shareholder
Litigation or disputes
derivative lawsuits
Product incidents,
defective products

Countermeasures/
Planning/
ActionOperatingcompanies

Risk Classification

Third Medium-Term Business Plan

IT Governance Management System
U.S.M.H Group
Head of internal IT audits(Internal Audit
Dept. Manager)

U.S.M.H
Person responsible for IT(General Manager
of Digital Div.)
U.S.M.H
IT administrator(General Manager of
Digital Development Dept.)

U.S.M.H
IT leader

Operating Companies
Head of internal IT audits

Person responsible for IT

In regard to performing our duties as a company,
we have established Whistleblower Protection
Regulations. These regulations protect whistleblowers
from unfavorable treatment as a result of reporting acts
such as those that violate laws or regulations in any
field, acts that violate corporate ethics including the
U.S.M.H Code of Conduct, acts against fair trade, andacts that infringe on the interests of customers.
    To protect whistleblowers, the Whistleblower
Protection Regulations specifically stipulate theinformation to be protected, the scope of whistleblowers,
details about protection of whistleblowers, the duty ofconfidentiality, and the handling of and response toreported information, and we ensure that executives andemployees are fully aware of these regulations. In
particular, details about protection of whistleblowers
include protection against unfavorable treatment asa result of having made the report, including disciplinary

action such as dismissal or demotion, reassignment ofwork duties that puts the whistleblower at a disadvantage,
and disclosure of personal infsormation that could be
used to identify the whistleblower.
    Internal reporting results are shared semi-annuallywith the Management Committee, which includes thepresidents and representative directors of each
operating company, and the number of reports, mostfrequently reported categories, and the specific detailsof reports and results of responses are confirmed.
In relation to issues that may arise, as identified from
response reports by operating companies, we consider
whether reports of internal rule violations, various typesof harassment, human relationships and other mattersare being effectively resolved through our responses
and our management systems. This information isregularly shared with the Management Committee.

IT administrator

51 U.S.M. Holdings Integrated Report 2022

U.S.M. Holdings Integrated Report 2022

52

Introduction

Value Creation

Third Medium-Term Business Plan

Sustainability Strategy

Data

7-Yea r Hig h lig h t s(Millions of yen)

FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

Profit and Loss
Operating revenue

663,799

684,806

692,248

694,323

691,660

733,850

716,407

Operating income

14,024

14,32014,068

11,811

9,357

19,124

12,155

Ordinary income

13,862

14,185

14,18812,253

9,627

19,433

12,474

Profit attributable to owners of parent

5,329

7,350

7,452

5,308

1,636

8,845

5,374

Net assets

131,664

137,518

139,539

142,326

141,695

148,797

152,238

Total assets

254,006

256,043

262,047

258,315

261,478

285,090

280,741

Total equity ratio (%)

51.6

53.6

53.1

54.9

54.0

52.0

54.0

Interest-bearing debt

30,81432,03633,727

31,163

29,63535,82840,564

Cash flows from operating activities

16,107

16,682

21,06018,30916,29029,91916,016

Cash flows from investing activities(16,897)(20,294)(16,238)(13,153)(18,476)(15,935)(24,324)

Cash flows from financing activities(3,910)(608)(4,270)(4,561)(4,007)

4,137

2,391

Cash and cash equivalents at end of period

29,47025,16925,70826,23820,018

38,11832,498

Basic net income per share (Yen)

40.47

55.82

57.32

41.38

12.76

68.97

41.89

Net assets per share (Yen)996.17

1,041.49

1,084.53

1,105.74

1,100.33

1,155.18

1,180.56

14

14

16

16

16

18

16

Dividend payout ratio (%)

34.6

25.1

27.9

38.7

125.4

26.1

38.2

Price earnings ratio (PER) (Times)

23.6

18.2

19.2

28.7

67.0

15.4

25.3

Closing share price (Yen)

956

1,014

1,100

1,187

855

1,064

1,060

Price book-value ratio (PBR) (Times)

0.96

0.97

1.01

1.07

0.78

0.92

0.90

Return on equity (ROE) (%)

4.1

5.5

5.4

3.8

1.2

6.1

3.6

Return on assets (ROA) (%)

5.5

5.6

5.5

4.7

3.7

7.1

4.4

Return on invested capital (ROIC) (%)

5.61

5.49

5.28

4.43

3.55

6.73

4.10

131,681,356

131,681,356

131,681,356

131,681,356

131,681,356

131,681,356

131,681,356

27,86429,192

29,597

29,23728,90529,18429,527

Number of new stores opened during the period

30

22

15

13

10

9

8

Number of stores at end of period

494

503

511

516

519

518

521

Financial Position

Cash Flows

Share Information

Cash dividends per share (Yen)

Financial Indicators

Other
Total number of shares issued at end of period
Total number of employees

53 U.S.M. Holdings Integrated Report 2022

U.S.M. Holdings Integrated Report 2022

54

C o m p a n y D at a / S t ock Infor ma t i on (As of February 28, 2023)

Corporate Profile
Established:
Capital:Business:
Head office:

Share Information
Number of shares authorized: 500,000,000 shares
Number of shares issued:
131,681,356 shares
Number of shareholders:
101,021

March 2015
10 billion yen
Management of supermarket business
1 Kanda-Aioicho, Chiyoda-ku, Tokyo

Major Shareholders

Share Ownership by Shareholder Type
Number Of
Shares Held(Thousands)

Ratio Of
Shares Held(%)

Aeon Market Investment Inc.

67,15952.32

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

6,751

5.26

U.S.M.H Group Business Partners
Shareholding Association

2,891

2.25

The Kambayashi ScholarshipFoundation

2,300

1.79

AEON Co., Ltd.

1,629

1.26

NIPPON ACCESS, INC.

1,522

1.18

KOKUBU GROUP CORP.

1,099

0.85

Mitsubishi Shokuhin Co., Ltd.

1,088

0.84

Custody Bank of Japan, Ltd.
(Trust Account)

1,049

0.81

Kowa Company, Ltd.

1,010

0.78

Name

Securities companies 0.7%
Treasury shares 2.5%

Foreign institutions
3.2%
Financial
institutions
8.2%

Individuals
and others
22.2%

Other Japanese
corporations
63.2%

Note: Ratio of shares held is calculated excluding treasury shares (3,338,811 shares).

Stock Chart

Total Shareholder Returns (Including Dividends)

(Yen)

(Yen)

(%)

30,000

3,000

150

2,000

100

28,966
26,52722,068 21,385
20,00019,119109.4

21,14316,027

10,00027,446956

1,014 1,100

2015

2016

1,187
855

— Nikkei Average (left axis)

2018

2019

1,064 1,060 1,120

2020— U.S.M.H (right axis)

55 U.S.M. Holdings Integrated Report 2022

102.4

2020

2021

109.5

80.6

0
2017

101.3

2021

2022

1,000

50

0

0

(FY)

2018

2019

2022

(FY)