Creating New Values for Local Communities

2018 Annual Report
Fiscal Year Ended March 31, 2018

Valor Holdings Co.,Ltd.

Our Journey in Creating Corporate Values

We will achieve medium- & long-term growth adapted to thechanging business environment by undertaking a paradigm shift fromexpanding standardized stores to enhancing the appeal of products.
The Valor Group has created group synergies through adapting sourcing, production and logistics functions
derived from the supermarket business to other businesses, and established a store network by combining
formats. Based on our business models consisting of “Business Process Integration” and “Multi-format Retailing”,
we will strive to strengthen corporate structure to respond to the rapidly changing business environment with afocus on enhancing of the appeal of products.
FY2007

Exceeded

Revenue Growth
3,000

Exceeded

Exceeded200

billion yen

03

04

06

07

Number of employees 2,274

FY19992,000

billion yen

Number of employees 3,510

FY2004(Revenues from operation)

300

100

billion yen

98

99

Number of employees 1,367
1,000

97

2000

01

02

05

08

09

Major initiatives until FY2009-expanded the number of supermarkets and regional development through organic growth and M&As

Stores

Products[Major subsidiaries acquired]

Tachiya Co., Ltd.
Youth Co., Ltd. (merged into Valor Co., Ltd.)
Sun-Friend Co., Ltd. (currently Shokusenkan-Taiyo Co., Ltd.)[Number of Stores at theend of FY2009]-developed private labels with fine quality and affordable prices.
-launched “Surprise 50”, which offered 50 food products at overwhelmingly competitive prices,in November 2009

[Sales Composition ofFresh Produce in the
Valor supermarket chain]462

33.0 %

V-Select

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

“V Quality” represents tasty food items made fromcarefully chosen ingredients. We deliver fine quality
at an affordable price.

Tea 500ml

Sesame Dressing

Sliced Ham 160g

Japanese Soy
Beans Tofu

18 yen Croquette (currently
sold at 20 yen), an iconic
product of “Surprise 50”

Employees(Frontline Performance)[Number of employees at the end of FY2009]

Employees ……………………4,041
Part-timers* …………………10,662

Note: *Number of part-timers is culculated by 8-hour conversion and annually averaged.

Segment Financial Review …………………… 13
Segment Information …………………………… 15

VisionSustainability Management ………………………18
Corporate Governance ………………………… 19
Compliance and Risk Management Systems … 23
Society (Human Resources Development) …… 25
The Environment ……………………………… 28

Financial Information

FY2017 Financial Review ……………………… 30
Consolidated Financial Statements (Summary) … 32

Foundation

Message from CEO ……………………………… 6
New Medium-term strategic plans …………… 10
Results

Segment Overview ……………………………… 12

Corporate Data

Corporate Data/ Share Information …………… 36

History

CONTENTS

History

Our Journey in Creating Corporate Values …… 1
11-year Summary of Financial Results ………… 4

FY2016

Exceeded(Revenues from operation)

6,000

billion yen

Number of employees 5,557

FY2011

Exceeded

500

400

5,000

billion yen

Number of employees 4,418
4,000

3,000

FY2018-2020 Strategic Plans
FY2010-2014 Strategic Plans

FY2015-2017 Strategic Plans

Expanding scale

Improving efficiency

10

11

12

13

14

15

Undertaking a paradigm shift
from expanding standardized
stores to enhancing theappeal of products

16

17

2,000

1,000

2018 (FY)

Major initiatives until FY2014

Major initiatives until FY2017

Upcoming initiatives from FY2018-accelerated store expansion of supermarkets and drugstores
to secure necessary scale for business process integration-focused on refurbishment to strengthen existing
stores in the supermarket business, whereas development of drugstores accelerated[Net increase in store openings
within the five years][Net increase in store openings
within the three years]-accelerate the creation of a morecompetitive format in supermarkets through refurbishment ofexisting stores-maintain rapid store expansion in
drugstores and expand networkof fitness gyms, which moved
into a full-swing franchise[Number of Stores at theend of FY2014]

Supermarkets ………+76
Drugstores …………+112

648-integrated operational processes in the fresh
meat category such as cutting and packaging to five processing centers (since 2012)and established a meat sourcing company-launched new brand “V-Premium”, which
manufacturing processes and ingredientswere carefully selected, in June 2014

[Sales Composition ofFresh Produce in the
Valor supermarket chain]

34.9 %[Number of Stores at theend of FY2017]

Supermarkets ………+18
Drugstores …………+90

799-drastically changed sales floor
allocation through refurbishment to increase sales offresh produce-accelerated product development utilizing the Group’s manufacturing and processing sites[Sales Composition ofFresh Produce in the
Valor supermarket chain]-further improve product development and customer services,aiming to become a store chosen for its attractive products

36.0 %

V-Premium“V Premium” refers
to premium foodmade from handpicked and superior ingredients andrecipes. Turn yourmeal into fine dining with this brand!
Black Pork
Dumplings

Processing Center in
Kani-shi, Gifu

expansion of sales floor
for the fresh meat category
through refurbishments

improvement in
manufacturing process ofrice balls-added accessible recruitment offices, which enabled recruitment
staffs to conduct interviews with the candidates more frequently-opened Valor Recruiting Office Meieki, Nagoya in April 2014, andValor Recruiting Satellite Kyoto Shijo-Karasuma in February 2015

-integrated the recruiting office in Nagoya into the Nagoya
Headquarters upon its opening in March 2016, where operating companies conduct interviews with the candidates[Recruiting of new graduates
within the five years][Recruiting of new graduates
within the three years]

1,578[Number of employees at theend of FY2014]

Employees …………4,800
Part-timers* ………10,662

1,422-emphasize on human resources
development as well as recruiting of new graduates[Number of employees at theend of FY2017]

Employees …………5,821
Part-timers* ………16,820

Valor Holdings Co., Ltd. Annual Report 20181

Our Journey in Creating Corporate Values

We have been offering new values for local communities throughCorporate
Philosophy

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

MissionStatements

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

Social Issue
Imbalance between Food
Supply and Demand- Intense competition between formats- Aging and lack of successors in regional agriculture- Possible impact of TPP agreement on local suppliers

Business Models

1

Business Process Integration
optimizing supply chains

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

Wholesale
Distribution

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

Changing Global Environment- Impact of global warming and climatechanges on supply of produces

1

Maintenance

RetailBusiness Process Integration

In the food distribution industry, the Valor Group has struggled for lean margins, which were shared by many intermediates. To achieve “increasing
returns” type growth, we have been striving to secure the margins by optimizing the entire processes from sourcing to retailing. As many of ourstores were located in areas with lower population density, we also consider it crucial to reduce the break-even point and pursue operational
efficiency through establishing and utilizing infrastructure including manufacturing bases and distribution centers. As its leading initiative, in the
fresh meat category, we have integrated processes by providing stores with packaged meat from our processing centers, which source raw
materials from Chubu Meat Co., Ltd., a subsidiary of the Group, enabling us to reserve intermediate margins. Additionally, by transferring andintegrating processing operations (such as trimming and cutting) at stores to the processing centers and by manufacturing products withstandardized skills and at a high hygienic level, we are reducing personnel costs of processing staffs as well as capital expenditure at each store.
Furthermore, supporting functions at processing centers reduce wastes in manufacturing processes by scheduling accurate sales plans andsynchronizing them with manufacturing plans.
In recent years, there are new concerns arising regarding stable and low-cost distribution of fresh produce, caused mainly by aging farmers
and the lack of their successors as well as global climate change. We are working on initiatives for stable procurement, including collaborations
with local suppliers.

2

Multi-format Retailing

The Valor Group has met the demands by rolling out multi-format retailing; drugstore in 1984, pet shop in 1988, home improvement center in 1990
and sports club in 1998. Our motivation for such format development, which reflect the diversifying needs in economic development, was not only
an economic motive for larger share, but also with a belief that it is corporate mission to bring richness to people's lifestyles. We are striving toadapt to changing demands of consumers by combining our competencies as can be seen in drugstores offering prepared foods & fresh bakery.
Meanwhile, the recent decrease in local suppliers supporting local communities forces us to rethink our roles. In order to succeed such functions,
we are starting new initiatives from a medium- to long-term perspective, such as offering life supporting services in the home improvement center
business and receiving increased orders for festivals’ meals at Chubu Foods, Co., Ltd, which produces and sells prepared foods. In April 2018, we
also launched food sales truck business in Mizunami-city, Gifu for customers with difficulties shopping outside.

2

Valor Holdings Co., Ltd. Annual Report 2018

History

multi-format retailing and business process integration.
Our Solutions
Stable Procurement- Collaboration with suppliers to secure astable supply of produces

Creation of Group Synergies

Human Resource Development & Recruitment- Simplification of operational processes
by utilizing infrastructures- Professional development- Increasing diversity in the workplace

Local Communities

Maintenance of Living Environment
for Local Communities

2

Multi-format RetailingSupermarketDrugstore- Format development- Taking over functions performed by local
suppliers

response to various needs ofcommunities and enhancement of shareHome
Improvement
CenterPet ShopSportsClub

Reduction of environmental impacts- Greenhouse gas emissions control- Reduction of food waste- Recycling encouragement

Growth & Expansion

Business Strategies“Three Gears”
Frontline Performance
Development
Business Process
Integration

Creation ofGroup Synergies

The Valor Group has business strategies called the “Three
Gears,” which systematize “Growth & Expansion”,“Business Process Integration between Manufacturing andRetailing” and “Frontline Performance Development”. Bybalancing and meshing the three gears and accelerating
them, we strive to secure the effectiveness of our businessmodel. We believe that a certain scale of operations isrequired to make a qualitative shift in manufacturing andretailing, which is why we seek “Growth & Expansion”.
Also, to realize “Business Process Integration between
Manufacturing and Retailing”, in addition to enhancing theappeal of products, we deem it crucial to nurture sales
capabilities thereby include “Frontline Performance
Development”.

Valor Holdings Co., Ltd. Annual Report 20183

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

FY2007

FY2008FY2009FY2010

Revenues from operations

318,026

336,342

344,900

379,172

Operating income

10,491

9,795

9,452

12,347

Ordinary income

10,835

10,186

9,916

12,817

Net income

4,136

3,387

3,945

4,232

Total assets

164,609170,328

176,440

190,065

Net assets

53,77455,35458,57861,821

53,34154,56057,76060,99861,71069,631

69,107

69,746

Cash flows from operating activities

13,942

11,40816,004

20,324

Cash flows from investing activities(16,869)(15,929)(10,453)(14,428)

Free cash flows(2,927)(4,520)

5,550

5,895

Cash flows from financial activities

3,643

6,150

(5,291)(1,608)Cash and cash equivalents at the end of fiscal year

7,372

9,000

9,259

13,547

19,607

16,988

11,537

15,245for new store openings

15,243

13,072

8,267

8,995

for refurbishing existing stores

3,025

2,562

2,663

5,007

for others

1,339

1,354

607

1,243

7,030

8,081

8,399

9,017

Net assets per share (BPS) (yen)1,027.07

1,071.19

1,134.05

1,197.67

Net income per share (EPS) (yen)

79.66

65.57

77.46

83.10

For the year:

At year-end:

Net assets (excl. subscription rights to shares and non-controlling interests)
Interest-bearing debt
Cash Flows:

Capital Expenditures:
Capital expenditures (based on payment)
Breakdown of expenditures:

Depreciation and amortization (CF)Per Share data:

Cash dividends per share (yen)Dividend payout ratio

18

20

20

22

22.6%

30.5%

25.8%

26.5%

6.8%

6.1%

5.7%

7.0%

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

8.0%

6.3%

7.0%

7.1%

Shareholders’ equity ratio

32.4%

32.0%

32.7%

32.1%

1.2

1.3

1.2

1.1

Debt equity ratio (times)

Revenues from operations (millions of yen)

Operating income (millions of yen)

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

600,000

450,000

20,000454,180

497,463
470,564

520,530

Net assets

300,000

544,020300,000

16,68315,00014,287

15,000235,131

15,43913,47010,000245,386

255,9160

150,000

45,000

FY2013 FY2014 FY2015 FY2016 FY2017

Valor Holdings Co., Ltd. Annual Report 2018

0285,947

225,000

82,949 90,881
150,000

269,488

99,027

107,727

113,167

75,000FY2013 FY2014 FY2015 FY2016 FY2017

0

FY2013 FY2014 FY2015 FY2016 FY2017

FY2011

FY2012FY2013

FY2014FY2015FY2016FY2017

410,577

431,218

454,180

470,564

497,463

520,530

544,020

15,23615,852

14,287

15,00016,683

15,43913,47016,02016,844

15,311

16,10817,586

16,762

14,937

7,149

8,184

9,162

9,214

10,75910,522

7,570

199,774

213,629

235,131245,386

255,916

269,488285,947

68,13475,46682,94990,881

99,027

107,727

113,167

67,24374,887

82,39590,301

98,408107,057

112,365

69,38375,67987,26586,88084,952

87,231

88,821

19,19021,13919,19822,25722,991

22,27027,790(17,793)(20,961)(23,746)(15,660)(19,045)(21,569)(24,258)

1,397

177

(4,547)

6,596

3,945

700

3,531

(2,283)

2,914

5,983

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

12,676

15,764

17,055

19,96017,103

14,65914,93817,85922,101

25,226

20,22520,041

24,441

27,576

11,23014,414

12,851

12,763

11,62815,144

14,394

4,114

1,788

2,306

2,237

3,650

7,709

9,850

2,515

5,899

10,069

5,225

4,763

1,587

3,332

9,612

10,255

11,09012,168

12,683

13,125

13,952

1,320.33

1,454.43

1,600.25

1,751.57

1,925.45

2,093.74

2,196.89

140.38159.56177.95178.91208.87205.83148.04

26

29

31

33

36

40

45

18.5%

18.2%

17.4%

18.4%

17.2%

19.4%

30.4%

8.2%

8.1%

6.8%

6.7%

7.0%

6.4%

5.4%

11.2%

11.5%

11.7%

10.7%

11.4%

10.2%

6.9%

33.7%

35.1%

35.0%

36.8%

38.5%

39.7%

39.3%

1.0

1.0

1.1

1.0

0.9

0.8

0.8

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

Cash flows from investing activities

Free cash flows

27,79030,00020,00019,198

50

3,945

15

40

3,531

11.7
10.7

36
31

700

33
30.4

30

6.8
20

(4,547)-10,000(15,660)-20,000(23,746)

17.4

18.4

17.2

19.4

11.4
10.2

10

0

-30,000

ROA

45
40

6,596

ROE

Dividend payout ratio

22,257 22,991 22,270

10,000

ROE∙ROA (%)

Cash dividends per share (yen)Dividend payout ratio (%)
Cash dividends per share

History(Millions of yen)

5

6.7

7.0

6.4

6.9

5.4

10

(19,045)(21,569)(24,258)

FY2013 FY2014 FY2015 FY2016 FY2017

0

FY2013 FY2014 FY2015 FY2016 FY2017

0

FY2013 FY2014 FY2015 FY2016 FY2017

Valor Holdings Co., Ltd. Annual Report 20185

Message from CEO

Shifting from expanding standardized stores toenhancing the appeal of products
Launch of FY2018-2020 strategic plans

Masami Tashiro
Chairman & CEO

6

Valor Holdings Co., Ltd. Annual Report 2018

Emergence of risk factors due to change in thebusiness environment

The Valor Group has executed strategic plans forsustainable growth since FY2010 and achieved manyreforms including a transition to a holding company

Over the past few years, the business environment
surrounding the Valor Group has changed enormously
and many risk factors have become evident. Stores

structure.
In the FY2010-2014 strategic plans, the Group set a
strategic goal of “Growth and Expansion.” While

have suffered a fall in profitability due mainly to asignificant shortage of personnel attributable to theshrinking working-age population, increased personnel

accelerating the pace of store openings in the
supermarket and drugstore businesses, we took steps
to expand logistics as well as manufacturing andprocessing functions, so as to create the infrastructurenecessary for business process integration between
manufacturing and retailing.
Based on the results and challenges, we aimed for“Improving Efficiency,” in the FY2015-FY2017 strategicplans, in order to resolve the distortion caused by thescale expansion. Major policies during the three years
focused on the structural reform through efficientutilization of infrastructure and reinforcement of existing
stores in the supermarket business, as well as
accelerated store expansion in the drugstore business,
which is entrusted to lead the Group’s growth.
As a result, revenues from operations exceeded theand recruitment costs, and soaring construction costs.
Meanwhile, consumer purchasing behavior is changing;showing diversification of needs and a clearer emphasis
on quality, therefore homogenized product offerings nolonger fully satisfy the demand.
With the expansion of sales channels by otherformats such as convenience stores, supermarkets,
which used to retain customers through “dominant”
store development as well as operational efficiency bychain-store management, are now losing theiradvantage of “customer proximity” to other formats.
Such changes are behind the deterioration in store
profitability and asset efficiency that lead to the failure tomeet targets of the strategic plans.
To deal with the environmental changes and find a
breakthrough, the Valor Group must not only pursue the¥500.0 billion mark, recording an increase for the 23rdconsecutive year, and achieved an expansion centeredbusiness models that optimize the entire process fromsourcing to retailing, but also redesign the values

on the growth of the drugstore business. However, wefailed to meet any of our initial profit targets. Despitesome success in improving infrastructure utilization, wewere slow to boost operational efficiency, especially inprovided by the frontline in the supermarket business.
We are required to enhance product categories andeach product to attract customers outside ourdoorsteps and expand retail trade areas.

the supermarket business, where earnings declined dueto the increase of costs in personnel, store openings
and refurbishment. Asset efficiency also deteriorated
from pre-plan levels, with return on assets (ROA) stuckat 5.4% and return on equity (ROE) at 6.9% in FY2017.

VisionA look back on strategic plansover the past eightfiscal years

A paradigm shift from expanding standardized
stores to enhancing the appeal of products
In the future business environment, we recognize that
our conventional store expansion will not enhance

Valor Holdings Co., Ltd. Annual Report 20187

Message from CEO

8

corporate values. With this in mind, we have set a basic
policy of “A paradigm shift from expanding standardized

manufacturing and retailing,” we aim to develop
products, service quality and cost competitivenessstores to enhancing the appeal of products” in the
FY2 0 1 8-2 0 2 0 strategic plans. The aim is to boost
profitability, mainly in stores, not by depending on thethat attract customers. Also, as an initiative for“establishment of a new driver for growth,” we will open
at least 200 outlets of the fitness gym “Will_G” over the“quantitative expansion of standardized stores” butthrough a medium- to long-term growth initiative of“transition to a more competitive format with a focus on

three years in the sports club business, expand its
share and structure the brand power.
Through these initiatives, we aim to achieve theproducts.” As major policies to realize this initiative, wewill execute “transition to competitive formats,”“advancement of business process integration between
manufacturing and retailing,” and “establishment of a
new driver for growth.”
In “transition to a more competitive format with afocus on products,” we will further increase merchandise
specialization, enhance product categories, and foster
the sense to visit the stores by products themselves in the
supermarket, drugstore, and home improvement center
businesses. In the supermarket business, we will refurbish
30-40 stores a year, while scaling back the number of new
openings. In the drugstore business, which continues toserve as the primary growth driver, we will conduct
refurbishment, relocation, scrap & build, and pursue store
development centered on health, with addition of

consolidated results of “revenues from operations of¥600.0 billion and ordinary income of ¥18.5 billion” in
FY2020, the final year of the FY2018-2020 strategicplans, and target ROA of 6.0% and ROE of 8.5% withregard to improvement of asset efficiency.

counseling services along with other measures toincrease convenience. In the home improvement center

which 30-40% will be allocated to existing stores. Ourpolicy is to ensure stable and continuous return of profit

business, we will increase merchandise specialization as
well as add products and service functions related to“lifestyle” mainly in the large-scale stores. Given our belief
that developing personnel with high product knowledge

to shareholders, maintaining a payout ratio of 25%.
As for the consolidated results of FY2017, the final
dividend was ¥24 per share in line with the initial plan,
despite ¥2,943 million of impairment loss on noncurrent

and service c a p a b i l i t i e s is the key for frontline
performance development required by each business, we

assets in extraordinary loss and shortfall in our final
earnings targets. Combined with the interim dividend of

are thinking of further emphasizing store staff training andfostering smoother internal communications to extractorganizational capabilities of stores.
Through “business process integration between¥21 per share, total annual dividends were ¥45 pershare (a payout ratio of 30.4%), a year-on-year increaseof ¥5 per share. We expect to maintain the increased
dividend and raise total annual dividends to ¥48 per

Valor Holdings Co., Ltd. Annual Report 2018

First year of the strategic plans: gaining a footholdfor improved profitability
In financial policy of the FY2018-2020 strategic plans,
we aim to focus on generating cash flow, of at least¥73.0 billion over the three years, through improved
p ro f i t a b i l i t y. We w i l l a l s o u p h o l d o u r f i n a n c i a lcommitment to a “debt-equity ratio of 0.8 times,” and a“shareholders’ equity ratio of 40%.”
Tur ning to profit distribution, we plan capital
expenditure of ¥23.0 billion to ¥24.0 billion a year, ofVisionshare (interim ¥22, year-end ¥26) in FY2018.
Forecasts for consolidated results in FY2018 are as
follows: revenues from operations of ¥560.0 billion, a
year-on-year increase of 2.9%; operating income of¥14.8 billion, an increase of 9.9%; ordinary income of¥16.3 billion, an increase of 9.1%; and profit attributableto owners of parent of ¥9.0 billion, an increase of
18.9%. As the first year of the FY2018-2020 strategicplans, we will speedily engage in each policy measureand gain a foothold for improved profitability.
Generate synergies leveraging Groupmanagement resources
On April 1, 2018, the Valor Group completed a revampof its Directors’ responsibilities and personnel changes
in consolidated subsidiaries. Through such changes, we
further promoted delegation of authority within Groupmanagement, and at the same time established asystem for rapid management decision-making andexecution, with the goal of further raising thecompetitiveness of our individual operating companies.
Looking ahead, we will create a system capable ofgenerating synergies, while strengthening mutual
collaborations by breaking down barriers dividing
operating companies and making effective use of Groupmanagement resources.
To overcome drastic changes and adapt to the newage, the Valor Group shall steadily and speedily proceedwith business reconfiguration as outlined above, tofurther secure growth and improve profitability. In thisway, I believe we can become a corporate group that is
indispensable to and cherished by the local communities,
and one that will develop together with the society.
In closing, I would like to ask our shareholders andinvestors to have great expectations for the ValorGroup’s future and for their continued support.

Valor Holdings Co., Ltd. Annual Report 2018

9

New Medium-term strategic plans

FY2018-2020 Strategic Plans
We have established and executed strategic plans to enhance medium- to long-term corporate values from FY2010 to FY2014,
and from FY2015 to FY2017. The FY2010-2014 strategic plans focused on “Expanding scale”, in which we accelerated store
expansion in supermarkets and drugstores, and enhanced logistics, manufacturing and processing functions to keep up withthe business expansion. In the FY2015-2017 plans, we aimed for “Improving efficiency” through reinforcement of existing storesand utilization of infrastructures, and continued vigorous openings of drugstores, placing drugstore business as a key driver of
the Group’s growth
During the period, the business environment has dramatically changed due to decreasing and aging consumers, labor
shortage, changes in consumer behavior and intensifying competitions. As we assume that store expansion throughconventional methods will not enhance corporate values, in the new FY2018-2020 strategic plans, we will establish a foundation
to support next growth, while redesigning values that stores provide and improving systems supporting stores.

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

FY2010-2014 Strategic Plans

FY2015-2017 Strategic Plans

FY2018-2020 Strategic Plans

Businessstrategies

The “Three Gears” strategies

Business models

1. Multi-format Retailing2. Business Process Integration

Strategic goals

Expanding scale

Improving efficiency

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

Major policies· Expansion of store network(organic growth and M&As)· Enhancing functions of manufacturing
and processing· Establishment of competitive formats· Increase efficiency of infrastructures· Expansion of drugstore and home
improvement center businesses· Transition to competitive formats· Advancement of Business Process
Integration between manufacturing andretailing· Establishment of new axis for growth

Viewpoint onorganizational
structure· Improvement of infrastructures tosupport expanding scale

Medium- tolong-term
initiatives

Quantitative expansion ofstandardized stores

10 Valor Holdings Co., Ltd. Annual Report 2018

Create synergies through combining group competencies· Transition to a holding company structure(Enhancement of group management
and governance)· increase recruitment of new graduates· Improvement of asset efficiency
Enhance strategic functions of theholding company
From closed innovation to cooperation· Human resources development andimprovement of productivity

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

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

Challenges

Results

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

VisionFY2010-2014 Strategic Plans

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

Challenges

Results

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

FY2018-2020 Strategic Plans(Millions of yen)

FY2009FY2014FY2017

FY2020 (plan)

The “Three Gears” strategy

Business strategies

Expanding scale

Improving efficiency

Undertaking a paradigm shift fromexpanding standardized stores toenhancing product offerings

344,900

470,564544,020600,000

Operating income

9,452

15,00013,470—Ordinary income

9,916

16,10814,93718,500Net income

3,945

9,214

7,570

—

6.4%

5.0%

3.3%

Basic policy
Revenues from operations

CAGR (Revenue from operations)
ROA

5.7%

6.7%

5.4%

6.0%

ROE

7.0%

10.7%

6.9%

above 8.5%

1.2

1.0

0.8

0.8

25.8%

18.4%

30.4%

25%

D/E ratio
Dividend payout ratio

Transition to competitive
formats

Advancement of Business
Process Integration between
manufacturing and retailing

Establishment of a new
driver for growth

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

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

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

Valor Holdings Co., Ltd. Annual Report 201811

Segment Overview

Revenues from operations by segment and their distribution

Supermarket Business

Drugstore Business

63.6%
Revenues from operations

21.7%
Revenues from operations

This business segment includes
sourcing, manufacturing andother food companies as wellas supermarket operators Valor
Co., Ltd., Tachiya Co., Ltd.,
Shokusenkan-Taiyo Co., Ltd.
and Kohseiya Co., Ltd.

345.9

billion yen

Operating income

8.5This business segment includes
Chubu Yakuhin Co., Ltd., which
operates a drugstore chain
brand “V-drug”.

117.9

billion yen

Operating income

2.5

billion yen

billion yen

Revenues
from operations

544.0
billion yen(FY2017)

Home Improvement
Center Business

9.8%

Sports Club
Business

Distribution-related
operations

2.1%

1.7%

Revenues from operations

Operating income

Revenues from operations

Operating income

Revenues from operations

Operating income

billion yen

billion yen

billion yen

billion yen

billion yen

billion yen

53.5

2.1

This business segment includes a wholesalerof agricultural materials, an online distributorof materials and tools, and Home Center
Valor Co., Ltd.

12 Valor Holdings Co., Ltd. Annual Report 2018

11.3

0.6

This business segment includes AXTOS Co.,
Ltd., which operates sports clubs brand“AXTOS”.

9

3.7

This business segment includes wholesalersof supplies, a logistics operator, and facility
maintenance providers.

Segment Financial Review(Millions of yen)

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017

Revenues fromoperations

240,138

269,918

293,505

303,521313,208

321,458

329,266

336,555

345,960

Operating income

7,683

9,580

10,783

11,028

8,443

9,760

9,887

9,738

8,518

Total assets

105,438

114,693

119,293

127,490

142,260

144,604

153,045

176,384

184,386

Capitalexpenditures

7,477

12,012

9,199

12,915

17,931

12,07810,506

11,887

12,574

Depreciation andamortization

5,283

5,430

5,978

6,346

6,826

7,381

7,556

7,339

7,490

Revenues fromoperations

48,37350,651

54,85062,49773,02880,47095,152

107,045

117,949

Operating income

1,009

1,357

2,294

1,934

2,449

1,961

2,736

2,692

2,532

Total assets

21,493

22,81426,501

29,06533,64938,55744,60252,01958,849

Capitalexpenditures

947

1,400

2,547

3,134

3,893

4,333

5,776

8,087

5,359

Depreciation andamortization

817

860

979

1,183

1,454

1,780

2,114

2,588

2,927

Revenues fromoperations

36,91938,92841,734

43,81046,55946,556

48,62950,37353,555

Operating income

677

1,269

1,677

1,869

2,330

2,011

2,450

2,302

2,149

Total assets

17,633

17,47918,553

19,456

19,06822,43022,49923,942

25,562

Capitalexpenditures

166

730

1,943

1,259

464

2,276

1,478

4,777

1,316

Depreciation andamortization

983

876

867

899

875

910

945

1,000

1,099

Revenues fromoperations

8,371

8,514

8,604

8,788

8,955

9,271

9,838

10,45911,397

Operating income

40

77

247

420

419

463

532

639

680

Total assets

13,023

12,00911,287

10,76010,382

10,611

10,634

10,776

13,059

Capitalexpenditures

1,755

146

124

319

338

527

791

1,119

3,114

747

770

669

666

636

655

711

785

882

Revenues fromoperations

5,282

5,929

6,383

6,699

7,228

7,638

8,590

9,610

9,075

Operating income

1,943

2,410

2,761

3,062

2,995

3,395

3,647

3,699

3,725

Total assets

11,456

15,33917,51418,80922,351

24,082

23,961

24,894

27,230Capitalexpenditures

28

439

1,659

1,888

2,155

624

478

2,018

3,044

Depreciation andamortization

40

381

439

550

784

819

716

721

758

Results

Supermarkets

DrugstoresHome Improvement
Centers

Sports Clubs

Depreciation andamortization
Distribution-related
operations

Valor Holdings Co., Ltd. Annual Report 201813

Segment Financial Review

Store Network
FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017

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

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

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

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

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

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

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

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

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

Supermarkets
Valor
Tachiya
Youth*
Shokusenkan-Taiyo
Kohseiya
Varo Mart
Other
DrugstoresHome Improvement Centers
Sports Clubs
Pet Shops
OthersTotal

Note: *merged into Valor in October, 2013.

Store Network and Locations of infrastructures for the Supermarket,
Drugstore and Home Improvement Center businesses (FY2017)

The figures indicate the number of stores; the size of the pie charts
corresponds to the number of stores by prefectures.

2

3

Niigata

5

3
14
33

1

1
17

Toyama14

Nanto-shiIshikawa

32

12

2

50

2

Fukui

75
128

41

Gifu

Kyoto

1

2
4

4

Shiga
1

Osaka

14

6
1

Mie

34

4

1

12

7

Tokyo

2

13

4
9

40

Kanagawa
Shizuoka

5
8

1

58

13

67

Shimada-shi

Supermarkets
DrugstoresHome Improvement Centers
Sports Clubs
Pet Shops
Others

138

Aichi

238

Supermarket Businessfor chilled products
for ambient- temperature products
Distribution Centers :for chilled & ambient- temperature products
for fresh meatfor fresh vegetables & fruits
for fresh fish
Processing Centers :for prepared foodfor fresh bakery
for fish products
Production Bases :14 Valor Holdings Co., Ltd. Annual Report 2018

2

23

8 10
4
12

1

Nara

8

saitama

Yamanashi

Toyota-shi
Ichinomiya-shi

Yokkaichi-shi

5

10

1

7

Tajimi-shi

20

22

1

242
Kani-shi

Ogaki-shi
1
2

Other locationsin Japan

923

Fukui-shiOverseas

1

Nagano
25

21

1

1
15

1

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

Supermarket BusinessNo. of stores……………

281

Ave. floor space……………

1,754

m2

(Valor Co., Ltd.)

Revenues from operations (millions of yen)

Operating income (millions of yen)

400,000

15,000336,555 345,960
313,208 321,458 329,266

300,000

10,000

8,443

9,760

9,887

9,738

8,518

200,000
5,000

0FY2013 FY2014 FY2015 FY2016 FY2017

0

FY2013 FY2014 FY2015 FY2016 FY2017

Business summary
This business segment includes the operations of supermarket operators Valor Co.Ltd. Tachiya Co., Ltd., Shokusenkan-Taiyo Co.,Ltd. andKohseiya Co., Ltd.; food processing subsidiaries Chubu Foods Co., Ltd. and Daien Foods Co., Ltd.; and food wholesalers Shufu-no-Mise Shoji
Chubu Honsha Co., Ltd., Chubu Meat Co., Ltd. and V-Solution Co., Ltd. The target business model is one that optimizes the entire businessprocess from sourcing to retailing.
Besides opening new stores, operating companies in this segment have expanded in scale through M&A. The main companies that have been
converted into subsidiaries are Tachiya Co., Ltd., Youth Co., Ltd. (merged into Valor in October 2013), SunFriend Co., Ltd. (currently ShokusenkanTaiyo) and Kohseiya Co., Ltd.. Valor Co., Ltd. expands stores in 13 prefectures, centering in Gifu and Aichi prefectures; Tachiya Co., Ltd. hasstores in Aichi, Gifu and Mie prefectures; Shokusenkan-Taiyo Co., Ltd. operates in Shizuoka prefecture; and Kohseiya Co., Ltd. has stores in
Yamanashi prefecture. The Group is looking to increase store density steadily across each of these parts of Japan.

Results

100,000

FY2017 Results
We refurbished 28 stores of the Valor supermarket stores and proceeded with store development that enabled us to draw customers from broad
retail trade areas as a “category killer.” The refurbished stores introduced product offerings, pricing, and initiatives for better freshness and taste,
which were tested in new stores. We opened a total of eight stores, including the Valor Kitaterashima supermarket (Naka-ku, Hamamatsu,
Shizuoka Prefecture) that was relocated and reopened in April 2017, and closed two stores, leaving the Group with a total of 281 supermarket
stores as of the end of FY2017. Although same-store sales of Valor supermarket decreased 1.6% year on year, revenues from operations for theGroup as a whole increased owing to the contributions by the stores opened in FY2016 and FY2017 and Kohseiya Co., Ltd., which became theCompany’s subsidiary in FY2016, as well as expansion of the production and sales business of prepared foods.
Despite ongoing improvements to infrastructure efficiency, earnings in the overall business dropped, due to the increase of costs in personnel,
store openings and refurbishment.

Valor Holdings Co., Ltd. Annual Report 201815

Segment Information

Drugstore BusinessNo. of stores……………

361

Revenues from operations (millions of yen)
120,000

95,15290,00073,028107,045

117,949

80,470Ave. floor space……………

4,000
3,000
2,000

30,0001,000

FY2013 FY2014 FY2015 FY2016 FY2017

m2

Operating income (millions of yen)

60,000

0

792

0

2,736

2,449

2,692

2,532

1,961

FY2013 FY2014 FY2015 FY2016 FY2017

Business summary
Established in February 1984 as a retailer of medicines, Chubu Yakuhin Co., Ltd. has since steadily expanded its network of drugstores.
Surpassing 100 stores in 2003, 200 stores in 2012, and 300 stores in 2016, the chain now extends across nine prefectures, centering in Aichi andGifu.

FY2017 Results
In the drugstore business, along with improvement of convenience and merchandise specialization, we opened 27 new outlets centering on Gifu
and Aichi prefectures and closed three, resulting with 361 drugstores at the end of FY2017. At the V-drug Takayama Chuo Pharmacy (Takayama,Gifu Prefecture), which was relocated and reopened in October 2017, we allocated a space to prepared foods, installed a health check corner, andreinforced cosmetics. Aiming for further growth of the existing stores, we reconsidered the pricing policy in the third quarter, which brought strong
growth of dispensing, cosmetics and food categories, resulting with a 4.6% year-on-year increase in same-store sales of Chubu Yakuhin Co., Ltd.
Despite stores opened in FY2016 and FY2017 also contributed to the rise in revenue, we could not absorb increased personnel and store opening
costs.

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

36

Ave. floor space……………

5,907

m2

Revenues from operations (millions of yen)

Operating income (millions of yen)

60,0004,000

50,37346,559 46,556 48,629

53,55545,0003,000

30,0002,000

15,0001,000

0FY2013 FY2014 FY2015 FY2016 FY2017

0

2,330

2,011

2,450

2,302

2,149

FY2013 FY2014 FY2015 FY2016 FY2017

Business summary
The home improvement center business began operations in August 1990 after the transfer of assets from the other Group companies. It grew inscale in October 1995 resulting from a merger with Fujiya. Located mainly in Gifu Prefecture, the chain is also expanding in Aichi, Mie and Shizuoka
prefectures.

FY2017 Results
In the home improvement center business, we enhanced categories supporting “lifestyle” such as our car-tire change service and pet products, toincrease merchandise specialization and achieve the position as the No. 1 store in the locality. To further step up specialization, in February 2018,
we changed an existing store to PROsite Kakamigahara Interchange Store (Kakamigahara, Gifu Prefecture), a specialist format for constructionindustry professionals (craftsmen). Prior to opening the store, we acquired shares of FIRST Co., Ltd. (head office: Miyagino-ku, Sendai, Miyagi
Prefecture), an online distributor of materials and tools, converting it into a subsidiary, with an aim to supplement our lineups of tools and otherhardware and increase the efficiency of online marketing. In the business, same-store sales of Home Center Valor increased 2.8% year on year, on
the back of a strong performance from strengthened areas such as car-tire change services and pet products, as well as from construction andagricultural materials and gardening equipment. Stores opened in FY2016 and FY2017 also contributed, but profit decreased despite the rise inrevenues, as we could not absorb increased personnel and refurbishment costs.

16 Valor Holdings Co., Ltd. Annual Report 2018

Sports Club BusinessNo. of stores……………

9,000

8,955

9,271

9,838 10,459

11,397

Operating income (millions of yen)
800

6,000

400

3,000

200

0

639

600

FY2013 FY2014 FY2015 FY2016 FY2017

0

419

463

680

532

FY2013 FY2014 FY2015 FY2016 FY2017

Business summary
The sports club business commenced operations in April 1998 following the transfer of assets from Valor. Its clubs feature a combination of training
gyms, swimming pools, tennis courts and other facilities. It also began operating the low-investment chain of “Will_G” fitness gyms in September
2013, which offers memberships on a relatively low monthly subscription basis. The network of clubs is mainly based in the prefectures of Aichi
and Gifu, but is also expanding into other regions with higher population densities such as the Kanto and Kansai regions.

Results

Revenues from operations (millions of yen)
12,00095

FY2017 Results
In the sports club business, we accelerated openings of the fitness gym “Will_G,” for which investment is minimized and monthly membership fees
are set low, and also moved into its full-swing franchise operation. We newly opened 22 outlets including AXTOS Will_G KARIBU Umejima (Adachiku, Tokyo) (including four franchise operations), closed two outlets, and converted one outlet to franchise operation, resulting with 95 sports clubs(including seven franchise operation) as of the end of FY2017. We are seeking further streamlining of front operations including introduction of
cashless payment at seven newly opened outlets. The sports club business achieved higher revenues and higher profit owing to the increase in themembership and higher revenues from fee-based programs, such as stretching supported by staff.

Distribution-related operations
Revenues from operations (millions of yen)

Operating income (millions of yen)

12,000

4,000

9,000

7,228

7,638

8,590

9,610

9,075

3,000

6,000

2,000

3,000

1,000

0

FY2013 FY2014 FY2015 FY2016 FY2017

0

2,995

3,395

3,647

3,699

3,725

FY2013 FY2014 FY2015 FY2016 FY2017

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

FY2017 ResultsGroup companies involved in distribution-related operations, such as logistics, wholesale of materials and facility maintenance, promoted
introduction of facilities that will lead to cost reduction and lower environmental impacts, and strove to improve infrastructure and the service levelin order to keep up with the business expansion. Regarding the logistics business, Ichinomiya Distribution Center (Ichinomiya, Aichi Prefecture) has
previously handled logistics operations in the western part of Aichi Prefecture as well as supermarkets and drugstores in the neighboring areas. To
support the medium- to long-term growth of the drugstore business, the Chubu Yakuhin Kisogawa Distribution Center (Ichinomiya, Aichi
Prefecture) was newly established in November 2017, and distribution operations were transferred to the new center.

Valor Holdings Co., Ltd. Annual Report 201817

Sustainability Management

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

Key issues

1. Managementtransparency

Activities to secure sustainabilityof business or activities to manage
impact of business· Organizational design

2. Faster decision-making
Governance3. Risk management inrelation to the business
model

Human
resourcesdevelopment

Environment

Human resources
development to sustain
growthReduction ofenvironmental impacts

The Company’s characteristics and improvements

Related page· Transition to a company with audit &supervisory committee· Change of the composition of the Board of
Directors and change of the quorum of
Outside Directors

P.20-21· Framework for decision-making concerningbusiness execution

P.20-21· Internal control andcompliance systems· Relations with organs· Expansion of the scope of application to
include operating companies

P.23· Risk management systems· Integrated information management· Expansion of the scope of application to
include operating companies· Development and labeling of private labels

P.24· Recruitment and educationof human resources· Human resources
development· Supporting diversified
workforce· For better places to work

· Increase in the number of sites for recruiting
offices· Support recruitment of part-time employees

P.25· Greenhouse gas emissions
control· Reduction of food waste· Recycling encouragement

P.26
P.27

· Support of female workers, disabled workers andothers to enable them to maximize their capabilities· Introduction of work location selection system· Employer-provided child care services· Energy-saving driving and fluorocarbon control· Reduction of food waste and recycling offood waste· Promotion of recycling of containers and packaging

P.26

P.28-29

Constructive Dialogues with Shareholders
The IR Office represents the Company in its constructive dialogues with shareholders. It actively engages in dialogues with shareholders
and provides feedback to management. In pursuit of appropriate disclosure in a timely manner, the IR Office has published the disclosure
policy at the Company’s corporate website, and discloses not only financial information but also non-financial information including
corporate philosophy, business strategies and mid-term business plan. For effective IR activities, the IR Office has identified thecomposition of the Company’s shareholders and endeavors to reflect it in the dialogues.

Dialogues with shareholders in FY2017
60th Ordinary General
Meeting of Shareholders(Held June 29, 2017)758 shareholders attended

Dialogues with institutional
investors

Direct dialogues: 120 times(In addition to business results presentations and small meetings attended by top management, includes
individual meetings, facility tours, teleconferences, etc.)

18 Valor Holdings Co., Ltd. Annual Report 2018

Corporate GovernanceFoundation

Directors (as of June 28, 2018)

9

10 14

13

8
7

Name

Title

11

12
5

3

1

2

4

6

Significant concurrent positions at major subsidiaries

1

Masami Tashiro

Chairman & CEO

2

Satoru Yokoyama

Executive vice-president

3

Akira ShinohanaManaging Director
Human Resources Management & General Affairs

4

Yukihiko Shizu

Director
Finance & Information System

5

Katsuyuki Mori

Director

6

Satoru Yoneyama

Director
General Planning & Policies

7

Masami Shidara

Director

Director, Sourcing & Merchandise, Valor Co.,Ltd.
CEO, Kohseiya Co.,Ltd.

8

Morisaku Wagato

Director

CEO
Home Center Valor Co., Ltd.

9

Takao Yamashita

Director
Non-store Retailing

10Motohiko Takasu

Director

11

Osamu Takasaki

Director
Audit & Supervisory Committee Member (full-time)

12

Mutsuo Masuda

Outside Director
Audit & Supervisory Committee Member

13

Hirofumi Hata

Outside Director
Audit & Supervisory Committee Member

14

Tokimitsu Ito

Outside Director
Audit & Supervisory Committee Member

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

Chairman, Tachiya Co., Ltd.
Managing Director, Valor Co.,Ltd.

CEO
Chubu Yakuhin Co.,Ltd.

Valor Holdings Co., Ltd. Annual Report 201819

Corporate Governance

Basic Policy
The fundamental objectives of the Company’s corporate governance are to achieve efficient management and faster decision-making andenhance corporate value continuously, while ensuring management transparency and fairness, thorough risk management as well as timely
and appropriate disclosure from the viewpoints of shareholders, customers and all other stakeholders. Having established the basic policy
on corporate governance consisting of five points, namely 1. Upholding shareholders’ rights and equality, 2. Appropriate collaboration with
non-shareholding stakeholders, 3. Appropriate disclosure and securing of transparency, 4. Responsibility of the Board of Directors etc.,
and 5. Dialogues with shareholders, we are working to strengthen our corporate governance.

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

Corporate Governance Initiatives
Initiatives

Basic Policy on Corporate Governance*
1

April 2015

Establishment of the IR Office

June 2015

Appointment of two Outside Directors

2

3

4

Transition to a holding company structure
October 2015
Relaunch of the Company’s website
Establishment of Basic Policy on Corporate Governance anda policy on constructive dialogues with shareholders
December 2015

January-February
2016

Establishment of the Nomination and Compensation Committee (voluntary
advisory organ consisting of two Outside Directors and two Executive
Directors)
Performance evaluation of the Board of Directors
Discussion at the Board of Directors meeting based on the results ofanalysis and evaluation

June 2016

Transition to a company with audit & supervisory committee
Change of the composition of the Board of Directors (total of 14 Directors
consisting of 1 0 Executive Directors and four Directors who are Audit &Supervisory Committee Members)

August 2016

Issuance of the annual report (Japanese and English) *issue on an annual basis since 2016

January-February
2017

Performance evaluation of the Board of Directors
Discussion & analysis of effectiveness of the Board at the meeting of theBoard of Directors

June 2017

Abolition of retirement benefits for Directors
Introduction of Share-based Compensation Plan for Directors

January-February
2018

Performance evaluation of the Board of Directors
Discussion & analysis of effectiveness of the Board at the meeting of theBoard of Directors*1. Upholding shareholders’ rights and equality, 2. Appropriate collaboration with stakeholders other than shareholders, 3. Appropriate disclosure and securing of transparency,
4. Responsibility of the Board of Directors etc., and 5. Dialogues with shareholders.

20 Valor Holdings Co., Ltd. Annual Report 20185

Overview of Valor’s Corporate Governance Structure

ReportAppointment /Dismissal

Legal Counsel, Tax Accountant, and Other Specialists
Management Advisory

Business Execution

Appointment /Dismissal

Audit report

Appointment /Dismissal

Board of Directors
Consult

Executive Directors
AdviseAudit /
Supervision(10 Directors)

Appointment /Dismissal

ReportInternal Control & Risk Management

Audit report

Audit & Supervisory Committee(

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

ReportAccounting audit

Group Management
Executive Committee

Instructions /Collaboration· Executive Directors (10)· Representatives of Group’s core companies (5)· Audit & Supervisory Committee Member (1)Instructions

Executive Directors
Operating Companies

Accounting Auditor
Ernst & Young ShinNihon
LLC

Audit /
Supervision

Representative
Director

Refer matters fordiscussion / Report)

Collaboration
Audit report

Collaboration

Foundation

Nomination and Compensation Committee

Management, Oversight and Audit

General Meeting of Shareholders

Instructions

Collaboration

Group Manager
Conference

Instructions and supervision

Audit

Audit Office

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

Risk Management Committee

Compliance Committee
Helpline

Performance evaluation on the Board of Directors
Since 2015, the Company has been considering whether or not the Board of Directors is functioning effectively. Based on the
results of this consideration, the Company intends to improve the Board of Directors as a whole through a continuous process oftaking appropriate actions to rectify weaknesses and build up strengths.
To improve the Board of Directors, all of the Directors have been conducting self-evaluation questionnaires on the effectivenessof the Board once a year, and the Board has comprehensively reviewed the results. The questionnaires are designed to evaluate theeffectiveness of Structure of the Board of Directors, Discussion & Consideration, Monitoring etc. by five scores. Average scores arecalculated, while some of them are compared with the previous year. The results are compiled as reports and used as evaluationmaterials. In addition to scores, comments written at the questionnaires are also disclosed.
On February 6, 2018, the Board of Directors analyzed and discussed the results of the questionnaires. Average scores for eachsegment were above 3.0, which gives the Board of Directors an evaluation of generally effective.

Valor Holdings Co., Ltd. Annual Report 201821

Corporate Governance

Policy and procedures for election of management executives by the Board of Directors and for nomination ofcandidates for Director, and explanation of reasons for election and nomination(1) Policy· Regarding Directors who are not Audit & Supervisory Committee Members, people with specialized knowledge and excellent management& decision-making capabilities or people who execute important businesses or are responsible for key operating companies are nominatedas candidates. For Outside Directors, people with abundant experience in their respective fields, excellent character, and high level of
insight as well as the capability of providing objective and multifaceted suggestions about management, are nominated as candidates.
· Regarding Directors who are Audit & Supervisory Committee Members, people with knowledge of finance and accounting,understanding of the Group’s business and diverse viewpoints about corporate management are nominated as candidates to ensure
accurate auditing of compliance and appropriateness of business execution.
(2) Procedures· Regarding Directors who are not Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors
after consideration by the Nomination and Compensation Committee consisting of two Executive Directors and two Outside Directors.
· Regarding Directors who are Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors after
consideration by the Nomination and Compensation Committee and subsequent consent of the Audit & Supervisory Committee.
(3) Explanation about election and nomination· Reasons for election of each candidate for Director are disclosed in the reference document for the General Meeting of Shareholders.
· Reasons for election of each candidate for Audit & Supervisory Committee Member are disclosed in [Directors] “Relations with Valor
Holdings Co., Ltd.(1)” and “Relations with Valor Holdings Co., Ltd.(2)” of ”II Management Organization and Other Corporate
Governance Systems Concerning Management Decision-Making, Execution and Supervision” in the Corporate Governance Report.

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

Policy for determining the amount of compensation and the calculation method(1) Basic policy
1 For Directors who are not Audit & Supervisory Committee Members· Compensation consists of basic compensation, bonuses and share-based compensation.
· Compensation shall be, in principle, provided in an amount that is adequate for securing (recruiting) excellent people as executives andshall be determined based on comprehensive evaluation of the Company’s financial performance, each Director’s performance of
duties, achievements and degree of contribution.
· Regarding Directors who are also employees, the salary as an employee is paid in accordance with the Rules for Wages for Employees.
· The amount of bonuses shall be determined within the maximum amount of compensation approved at the General Meeting of
Shareholders in consideration of the previous amount of bonuses paid and the company’s financial results for the current year.
· The Company has a stock option program for the Company’s Executive Directors and employees, as well as the directors andemployees of the Company’s subsidiaries, in order to enhance their motivation for achieving better performance of the Group.
· The Share-based Compensation Plan for Directors (the Plan), which was implemented by a resolution of the 60th General Meeting of Shareholders,aims to enhance Directors’ motivation for contributing to mid-term and long-term improvement of financial results and corporate value. A trustee will
acquire shares of Valor Holdings Co., Ltd. in the stock market using the money contributed in establishment of the trust and deliver the shares to
Directors at their retirement based on the Company’s rules for the issue of shares. Points assigned to each rank will be awarded to Directors. The
number of shares to be delivered to each Director shall be determined by multiplying the number of the points assigned by 1.0. The initial period of thetrust shall be 5 years, and as funds necessary for the acquisition of stocks to be delivered to Directors during the trust period under the Plan, theCompany will contribute a maximum of 300 million yen during the target period (covering the 5 years from the fiscal year ending March 31, 2018 to
the fiscal year ending March 31, 2022), and the trustee will use these funds to acquire shares in bulk. The maximum points assigned to the Directors
are 50,000 points for one fiscal year.
2 For Directors who are Audit & Supervisory Committee Members· Compensation consists only of basic compensation, in view of their roles and independence.
(2) Procedures· The amount of compensation for Directors shall be an agenda item of the General Meeting of Shareholders and shall be determinedwithin the maximum amount approved at the General Meeting of Shareholders.
· Regarding the amount of compensation for Directors, in order to increase transparency and objectiveness, the Nomination andCompensation Committee, which is an advisory organ for the Board of Directors consisting of two Executive Directors and two Outside
Directors, shall examine and review the details, after which the amount of compensation for Directors who are not Audit & Supervisory
Committee Members shall be determined by the Board of Directors; the amount of compensation for Directors who are Audit &Supervisory Committee Members shall be determined by the Audit & Supervisory Committee Members.

22 Valor Holdings Co., Ltd. Annual Report 2018

Compliance and Risk Management Systems

Number of meetings of the Board of Directors and the Audit & Supervisory Board held and attendance status (FY 2017)
Meetings of the Board of Directors

Meetings of the Audit & Supervisory Board*

10

11

100%

100%

Number of meetings
Attendance of Outside Directors

Internal control and compliance system
The Company considers ensuring compliance to be an important management issue and has articulated the Corporate Philosophy, thebasic management policy, and the Action Guidelines for Corporate Ethics. Efforts are made to ensure that all officers and employees
comply with them as well as the Compliance Rules. The Compliance Committee is convened when deemed necessary to improve,
maintain, and develop the compliance system.

Foundation

Note: The figures are based on the number of meetings held from April 1, 2017 to March 31, 2018.

Relationship between the Company’s organs and the internal control system
The Audit Office conducts operational audits based on an audit plan. Audit results are reported to Directors and the relevant departments
to ensure sound business operation. The main role of Audit & Supervisory Committee Members is to oversee performance of duties by the
Board of Directors and investigate operations and the financial positions of the Company and of the operating companies. They attend
meetings of the Board of Directors and monitor details surrounding management.
The Audit & Supervisory Committee Members, the Audit Office, and the Accounting Auditor meet periodically and exchange informationand views on matters including reporting and explanation of their respective audit plans, progress, and results. The Audit & Supervisory
Committee Members, the Audit Office, and the Accounting Auditor receive reports from Directors and departments in charge of internal
control, and discuss and consider appropriateness of the design of the internal control system.

Reinforcement of whistleblowing system
The Company has established the rules for whistleblowing and adopted a whistleblowing system as part of internal control systems
concerning violations of the law and other compliance issues. Following the transition to the holding company structure in October 2015,
the Audit Office has thoroughly notified all operating companies of the whistleblowing system and extended its operation.
To ensure operational appropriateness of all the operating companies, manufacturing and processing sites established in recent years
are also subject to operational audits, in addition to the headquarters and stores. In accordance with expansion of the store network, theAudit Office has increased the number of stores that were subject to operational audits, and to ascertain whether or not daily operations
are being conducted appropriately, the audits are occasionally conducted without prior notice.

Status of Whistleblowing System and Operational Audit
FY2014FY2015FY2016FY2017

Number of reports through thewhistleblowing system

155

212

237

226

Number of operational audits

268

258

277

346

For the headquarters

24

24

26

26

For stores

239

228

244

313

5

6

7

7

For manufacturing and processing sites

Valor Holdings Co., Ltd. Annual Report 201823

Compliance and Risk Management Systems

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

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

1. Factors that may have an impact on the Group’s financial performance(1) External environment of the retail business (economic trends, competition, taxation on consumption, climate change, etc.)(2) Store opening policies (difficulty in securing land or premises satisfying the store opening criteria, regulatory restrictions, etc.)(3) Food safety (quality incidents such as food poisoning and contamination, erroneous food labeling, etc.)(4) Entry to new businesses (in the event that anticipated results cannot be achieved because of changes in the external
environment, etc.)(5) Natural disasters, etc.
2. Regulatory restrictions concerning the Group(1) Act on the Measures by Large-Scale Retail Stores for Preservation of Living Environment (in the event that it is not possible
to open new stores or increase the floor space of existing stores as planned)(2) Leakage of personal information(3) Other regulatory restrictions
3. Accounting standard for impairment of fixed assets

Development and display of private labels
Food safety is one of the risks involved in the businessmodels that optimize the entire process from sourcing toretailing. In developing private labels, we have concluded
agreements with manufacturing outsourcing companies
with regard to selection of ingredients and manufacturing
processes and have carried out audits in areas such as
hygiene management and manufacturing process
management at manufacturing outsourcing plants. As for
information on private labels, we indicate nutritional
component on product packaging, and also provide easyto-understand displays using icons for 7 ingredients ofspecified raw ingredients, which have obligation of labeling,
as well as 20 ingredients equivalent to specified raw ingredients.
Furthermore, we also disclose product information on the
Valor website (http://valor.jp/pb), when introducing new
products or improving existing products. In FY2017, we

24 Valor Holdings Co., Ltd. Annual Report 2018

completed changes to 196 items subject to modification of
product packaging to comply with the Food Labeling Act,
which has an interim measures period up to March 2020.
We will also take steady measures to comply with the newdisplay system of ingredients and origin for processed
foods, which was applied in September 2017.
Customer Relations Office, which receives customers’comments via our free-dial number or inquiry emails on our
website, has shared them with related departments toreflect such feedback in product development. In FY2017,
the Customer Relations Office received 11,066 comments
and other forms of feedback including 2,780 comments on
our products, of which 1,479 were comments concerning
private labels.

Society (Human Resources Development)

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

Basic principle on human resources development

Growing through undertaking “challenges” for ambitious targets
Until FY2017

Business process integration and multi-format retailingStore development strategy

Quantitative expansion of standardized storesTransition to a more competitive format with a focus on products

Key issues concerning humanresources development

Recruitment of human resources

Frontline performance development

Foundation

Business models

From FY2018

Promoting diversified human resources

Recruitment of human resources
Against a backdrop of aging and decline in workforce, finding ways to secure human resources to respond to the expansion of businessscope and diversification of the operational expertise and skills has become an issue. To deal with this issue, although our recruiting
interviews were previously conducted in Tajimi, Gifu Prefecture, we added recruitment offices that enabled recruitment staff to conduct
interviews more frequently. In April 2014, we opened the relatively accessible Valor Recruiting Office Meieki in Nagoya, Aichi Prefecture. In
February 2015, in line with the expansion of our geographical coverage, we opened the Valor Recruiting Satellite Kyoto Shijo-Karasuma in
Nakagyo-ku, Kyoto. Additionally, with the opening of the Company’s Nagoya Headquarters in March 2016, we took the opportunity ofintegrating the recruiting office in Nagoya into the Nagoya Headquarters, where operating companies of the Group also conduct interviews
with the candidates, and such measures promote recruiting in sectors other than retail.
We are increasingly facing difficulties in recruiting not only fresh graduates but also part-timers. In the past, hiring of part-timers was led
by individual stores. However, for stores in Aichi and Gifu prefectures that require large numbers of part-time employees, we changed therecruiting process by assigning specialist staff of the Company to provide support for selecting advertising media, arrange interview
schedule with candidates, coordinate employment terms and stores’ demands, and prepare documents for entry. As a result, there weresuccessful outcomes such as rise of the employment contract rate; therefore we are now developing similar support in other regions.

Young working population and recruiting of fresh graduates(people)1,000

Recruiting of fresh graduates
Number of female hires
Young working population

RetailSports club

Food production and processing

Distribution-related(10 thousand people)
1,800

1,757
1,732
1,707

750

1,719

1,712
1,700

500

1,600
250

0

1,500

FY2013

FY2014FY2015FY2016FY2017

Compiled based on the “Labour Force Survey 2017” (Statistics Bureau, Ministry of Internal Affairs and Communications) http://www.stat.go.jp/data/roudou/sokuhou/nen/ft/pdf/index1.pdf (in Japanese).

Valor Holdings Co., Ltd. Annual Report 201825

Society (Human Resources Development)

Human resources development
We aim to strengthen our organizational competency and improve corporate value by fostering employees who can improve frontline
capabilities through on-the-job training and self-motivating leaders capable of identifying, analyzing and acting on issues independently. The
Company’s human resources development program is based on Group-wide standard education & training programs plus programs on theexpertise needed at each operating company. Group-wide programs consist of position-based programs and programs for next-generation
managerial positions. The position-based programs are mainly designed for those who have just joined the Company or those who havebeen promoted as a result of passing the Group’s qualification exams. Focused on the Corporate Philosophy (DNA), the programs are
positioned as an opportunity to connect philosophy and practice by cultivating the attitude and mindset concerning work expressed in the
Corporate Philosophy advocated by Valor’s founder Yoshimi Ito and from lectures by the current management. The curriculum of the
programs for next-generational managerial positions is committed to practices on how to achieve the organization’s goals while enhancing
the motivation of co-workers, with the Corporate Philosophy (DNA) as a base. Outcomes from practices at stores are shared with all
employees of the Group at the annual Joint Conference. In FY2018, we began to offer trainings for creation of a better working environment,
targeting all managers supervising female staff, as part of initiatives to promote female participation across the Company.

Human resources development program
Person qualified

Contents

Programs
for nextgeneration
managerial
positions· Training for
managerial
positionsManagerial positions andcandidates for managerial positions· Overall management· “Foundation” training (from theory
to practice)· Industry trends, overseas training

Positionbased
programs· Training for
promoted
employees

Employees who have beenpromoted as a result of passing theGroup’s qualification exams· Corporate philosophy (DNA) training· Training for
new employees

New employees· Basic understanding of store
operation· Corporate philosophy (DNA) training· Various
technical
trainings

New employees or employees hiredin the past 2-3 years
Section chiefs· Understanding of the section· Skills acquisition· Support for qualification acquisition

Technical
programs

Expansion of coaching
and trainings for promoting
the appointment of
women

Expanding trainings at
human resources
development center(planned)

Training for managers to promote the appointment of women

Creating better places to work
The spread of regional development accompanying thedevelopment of the Valor Group’s business operations inrecent years has created more opportunities for personnel
relocation and greater diversity in working conditions.
However, from the results of a questionnaire survey of
employees and the Group’s self-reporting system, it is clearthat certain employees wish to develop their capabilities andimprove skills, while they adopt lifestyles combining workwith family responsibilities, notably childcare and care for theaged. To respond to increasingly diverse values and attitudes
concerning work styles, we introduced a work region
selection system in July 2017. Under the system, which

26 Valor Holdings Co., Ltd. Annual Report 2018

covers non-managerial employees of Valor Holdings Co.,
Ltd., Valor Co., Ltd., Home Center Valor Co., Ltd., and Core
Support Co., Ltd., each worker selects one of the twocategories: National employee, who are willing to work in any
region; and Regional employee, who prefer to be based in aparticular region.
In September 2017, to support employees who wish tocombine work with childcare, we opened an on-site nurseryschool, “Smile Nest Valor Hiromi Nursery School”, on the siteof the Kani Office (Kani-shi, Gifu Prefecture) following therelocation of some headquarters functions. In FY2017, 10 of
18 users were the Group’s employees and part-timers.

HR systems to help diverse people flourish
We support people who are highly motivated and whose experience and backgrounds are diverse. The principal HR systems are as
described below.
StatusHiring ofthe disabled

Aside from offering all our employees opportunities todisplay their personalities and their capabilities, we also
aim to enhance the workplace environment where female
workers can flourish in their careers. The key initiatives
are as follows:
1. Development of potential candidates for managerial
positions (buyers, deputy store managers, managers,etc.)
2. I m p ro v e m e n t o f t h e w o r k p l a c e e n v i ro n m e n tcorresponding to the phase of the individual’s life andcareer- Raising awareness about maternity leave, child careleave, and family care leave- Creation of a workplace environment that facilitateseasy return to work
- Training for managers to promote the appointment of
women

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

We are actively recruiting people with disabilities whowish to work for regular companies and be independent.
The Gifu Prefectural Gover nment established aregistration system in November 2 0 1 1 to enable
companies to support the employment of people withdisabilities in cooperation with schools for learners withspecial needs. Valor registered in February 2012.
In order to facilitate employment of people withdisabilities also in other regions and support them so thatthey can work at Valor for a long time, we intend topromote education and training of our store staff andwhile facilitating collaborations with regional recruitmentc e n t e r s a n d t h e s o c i a l w e l f a re d e p a r t m e n t s o fmunicipalities.

The rate of hiring people
with disabilities

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

Promotion to
full-time
employees

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

Number of
Employees

Following the transition of important issue in humanresources development to “Frontline performancedevelopment”, the Company will further promote
initiatives to establish an environment for better places to
w o r k i n c l u d i n g p ro g r a m s f o r h u m a n re s o u rc e sdevelopment and supporting diverse human resources.
Through such policies, we aim to retain talented
human resources in addition to improving productivity
and organizational capabilities through developing
individual abilities and skills.

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

FY20176.0%

5.3%(23people/383people)(23people/433people)

Number of female workers
who took maternity leave or
child care leave
Maternity leave(Employees/Part-timers)

Child care leave(Employees/Part-timers)

78

people104

people(31people/47people)

135

people140people(56people/79people)(41people/63people)(63people/77people)

2.28%*

2.30%*

Foundation

Promotingfemaleworkers

FY2016

Contracted by Gifu
Prefecture
Adviser for people withdisabilities seeking jobs

from FY2013 to present

Adviser for employment ofpeople with disabilities

from FY2015 to present

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

from FY2015 to present

Usage rate of postretirement reemployment
program

82.1%

90.9%

Number of part-timeworkers promoted tofull-time employees

128

people102peopleNumber of employees

5,517

people5,821

people1,428

people(Average length of service)

Female workers(Average length of service)

Male workers(Average length of service)(9.2years)—(9.1years)(5.8years)— 4,393 people(10.2years)

Note*: The above figures are based on Valor Holdings Co., Ltd. and key operating companies (Valor Co., Ltd., Chubu Yakuhin Co., Ltd., Home Center Valor Co., Ltd., Tachiya Co., Ltd. , Shokusenkan-Taiyo Co.,
Ltd., Kohseiya Co., Ltd., AXTOS Co.,Ltd., Chubu Foods Co., Ltd., Chubu Kosan Co., Ltd., Chubu Ryutsu Co., Ltd. and Core Support Co., Ltd.), which account for over 95% of the Valor Group’s workforce.
*In FY2016, we started group reporting of the rate of hiring people with disabilities for operating companies, of which voting rights are directly held by the Company.

Valor Holdings Co., Ltd. Annual Report 2018

27

The Environment

Environmental Policy

Issues to be tackled

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

1. Greenhouse gas emissions control
2. Reduction of food waste
3. Recycling encouragement

Material FlowINPUTOUTPUT

Head office, offices, related facilities
Electricity and others**

270MWh
13,840t

Electricity consumption ………
Copier paper ……………

131t

CO2 emissions ………………
Head office, offices, etc.

Fuel(from electricity consumption)

Exhaust gas

All company-owned vehicles
Gasoline ………………………

888kl(FY2016 892kl)

CO2 emissions ………

Fuel

2,062t(FY2016 2,069t)

Company-owned vehicles
Exhaust gas
Distribution centers

All delivery vehicles
Light oil …………………

12,994kl

CO2 emissions ……

(FY2016 12,648kl)

34,031t(FY2016 32,632t)

Delivery vehicles
Electricity, water, gas
Electricity consumption ……

Stores361,336MWh(FY2016 353,315MWh)

Water consumption …

CO2 emissions …

1,719,000m³(FY2016 1,733,000m³)

Gas consumption …

2,791,000m³

185,399t(Total electricity and gas consumption)(FY2016 178,099t)

Supermarkets
Home improvement centers(FY2016 2,604,000m³)

TOTAL

221,624t

Note: *Calculation covers Valor Holdings Co., Ltd., Valor Co., Ltd. and Home Center Valor Co., Ltd. For fuel, calculation covers all delivery vehicles including those owned by and charteredby Chubu Kosan Co., Ltd.
**The number of target offices and facilties is changed in FY2017. Input of "Electricity and others" is incomperable with that of FY2016.

Inochi no mori (Forest of life)
Before tree-planting (July 2012)28 Valor Holdings Co., Ltd. Annual Report 2018

Status as of March 2018

In July 2012, under the direction of botanist Mr. Akira Miyawaki,
we planted some 30,000 saplings within the premises of the Kani
logistics center in Kani, Gifu Prefecture, which brought together
some 3,000 local residents, Valor trading partners and Group
employees. This was the Inochi no mori (Forest of life) initiative,
dedicated to the preservation of rare species and revitalization oforiginal forests. It was part of environmental protection andimprovement activities aimed at the securing a better future forchildren and the Earth. Our goals are to nurture a genuine forestthat lives on for another 1,000 years.

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

Promotion of recycling

Reduction of waste

Reduction of food waste

Development of
renewable energy

Reduction of greenhouse gas emission

Management items

Specific initiatives· Demand management· Management of airconditioning temperature
Reduction of· Turning off of unnecessary
power consumplighting
tion· Introduction of highly
efficient facilities andequipment

FY2016 results

502.3[kWh/m2]*

FY2017 targets

FY2017 results

Evaluation

Causes and Effects

FY2018 targets

494.0[kWh/m2]—

495.0[kWh/m2]*

I n t ro d u c e d e n e rgy-management
system at somestores. Continued
appropriate management of air-conditioning and refrigerators at stores.

Compared with theprevious year
· Driving distance:
119%· Amount of fuel used:
124%· Fuel consumption:
100%

Due to store openings, driving distance and fuel consumption increased,
but fuel economy
improved. We continue with trainings
for energy-saving
driving.

Fuel secured
100% YoY

Energy-efficientdriving

Store deliveries· Turning off engines whenvehicles are stationary· Instructions and educationfor energy-efficient driving

Compared with theprevious year
· Driving distance:
119%· Amount of fuel used:
124%· Fuel consumption:
96%

Fuel economy
improved
100% YoY

Reduction of
specified CFCs
emissions· Replacement of refrigerators
and air-conditioners· Regular facility inspections——

Stores covered:2—

Continued replacement and regular facility inspections

Stores covered: 60—· Total wattage generated:289,108kWh(October 2017–
March 2018)· Business premises
covered: 5—

Installed solar panelsfrom October 2017.
We will steadily add
more stores for the
initiative.

· Business premises
covered:
15

Although the target
was unachieved, theamount of foodwaste generated
was held at 9 4% of
the previous-yearlevel. We will continu e t o s t re n g t h e nplanned production,etc. and reduce
waste volume.

58.0[kg/million yen]
99% YoY

We improved therecycling ratio byexpanding the number of recycling
bases and by introducing processing
machinery.

· Recycling rate:
53.8%· Number of stores
conducting recycling:
247(102% YoY)

In-house power-generation
initiatives

Reduction of foodwaste

· Installation of solar panels· Planned production· Early small discounts· Review of product lineups inevenings and volume
adjustment· Reduction of disposing
products
Promotion of· Expansion of stores torecycling of foodconduct recyclingwaste· Expansion of the scope ofrecyclable products—

62.5[kg/million yen]**· Recycling rate:
52.5%· Number of stores
conducting recycling:238(106% YoY)

53.0
[kg/million yen]

59.0
[kg/million yen]

· Number of stores
conducting recycling:240(101% YoY)

· Recycling rate:
53.5%· Number of stores
conducting recycling:242(101% YoY)

· Charging for plastic bags
· Implementation of “My Bag”
campaign· “No Plastic Bag Day”

Proportion ofcustomers avoiding
use of plastic bags:
85.7%(All stores of Valor
Co., Ltd.)

Proportion ofcustomers avoiding
use of plastic bags:
87%(All stores of Valor
Co., Ltd.)

Proportion ofcustomers avoiding
use of plastic bags:
85.3%(All stores of Valor
Co., Ltd.)The number ofstores charging
plastic bag fees increased from
220 to 232.
We will cooperatewith our customers
to reduce the use ofplastic bags.

Proportion ofcustomers avoiding
use of plastic bags:
86%(All stores)· Sorting and storage of used
Promotion of
paper at designated places
recycling of used
· More stores to recycle used
paper
paper

· Number of stores recycling
used paper:87(129% YoY)
· Recycling volume:
98,105 kg(187% YoY)

· Number of stores recycling
used paper:
100(114% YoY)
· Recycling volume:
111,800 kg(114% YoY)

· Number of stores recycling
used paper:
121(139% YoY)
· Recycling volume:364,620 kg(371% YoY)

We expanded thenumber stores covered. Looking
ahead, we will ensure rigorous garbage-sorting andexpand the numberof stores covered.

· Number of stores recycling
used paper:
127(104% YoY)
· Recycling volume:
380,000 kg(104% YoY)

Increase in thenumber of stores withinstallation ofrecycling boxes

Number of storeswith installation ofrecycling boxes· Milk cartons: 243· Aluminum/steel cans:
255· Plastic food trays:
238· PET bottles:
222

We strove for expansion of the numberof recycling bases
and garbage-sorting.
We will further increase recycling
bases.

Increase in thenumber of storeswith installation ofrecycling boxes

Increase of the
proportion ofcustomers
avoiding use ofplastic bags

Promotion ofrecycling ofcontainers andpackagingNumber of storeswith installation ofrecycling boxes· Installation of more recycling· Milk cartons: 235
boxes· Aluminum/steel cans:· Expansion of the scope of249
recyclable items· Plastic food trays:
229· PET bottles:
219

Foundation

Environmental Performance

Notes: * Rate of power consumption to sales floor space (Units) ** Rate of food waste generated to net sales of Valor Co., Ltd. (Units)

Valor Holdings Co., Ltd. Annual Report 201829

FY2017 Financial Review

Summary of consolidated results and financial conditions
In FY2017, the final year of the three-year strategic plans, theValor Group focused on three key policies: 1) structural reforms
centering on reinforcement of the existing stores in the
supermarket segment and efficient utilization of infrastructure, 2)development of key growth drivers to expand drugstore and home
improvement center operations, and 3) organizational reforms toachieve growth of operating companies and strengthen
governance.
Consolidated operating results for FY2017 were revenues fromoperations of ¥544,020 million, an increase of 4.5% year on year;
operating income of ¥13,470 million, a decrease of 12.8%; ordinary
income of ¥14,937million, a decrease of 10.9%; and profit attributableto owners of parent of ¥7,570 million, a decrease of 28.1%.
Although revenues from operations increased for the 23rdconsecutive year, operating income and income items below that
decreased for the second consecutive year.
The breakdown of the increase in revenues (¥23,490 million)
was ¥10,904 million for the drugstore business, ¥9,404 million forthe supermarket business, and ¥3,182 million for the home
improvement center business. In the drugstore business, growthrate of existing stores was strong at 4.6% and high standards of
new store openings also contributed. In the supermarket

business, stores opened in FY2016 and FY2017 and Kohseiya
Co., Ltd., which became a subsidiary in August 2016, contributed
to higher revenues throughout the year.
The breakdown of the decrease in earnings (¥1,968 million)
was ¥1,220 million for the supermarket business, ¥160 million forthe drugstore business, and ¥153 million for the home improvement
center business. This indicates that the improvement in profitabilityof stores in three major businesses has been slow. In addition to
the fall in operating and ordinary income, the posting an
impairment loss of ¥2,943 million based on the accounting
standard for impairment on noncurrent assets led to a steep fall in
profit attributable to owners of parent.
Although the gross profit ratio increased 0.1 percentage points
from the previous year, the expense ratio worsened 0.5
percentage points. As a result, the ratio of ordinary income torevenues from operations decreased from 3.2% for the previous
year to 2.7%. As a result, ROA deteriorated from 6.4% for theprevious year to 5.4%. ROE deteriorated from 10.2% to 6.9%
owing to a decrease in profit attributable to owners of the parent.
As a result of promoting the repayment of interest-bearing
debt, the debt equity ratio was held at previous fiscal year level of
0.8 times.

Financial position
Total assets increased ¥16,459 million from the end of theprevious year to ¥285,947 million. The main factors were an
increase of ¥1,517 million in inventories because of new store
openings and an increase of ¥9,924 million in property, plant andequipment mainly due to capital expenditure. Total liabilities
increased ¥11,019 million from the end of the previous year to¥172,780 million, mainly due to an increase of ¥2,773 million in

asset retirement obligations, an increase of ¥1,878 million in notes
and accounts payable-trade, and an increase of ¥1,040 million inloans payable. Net assets excluding non-controlling interests andsubscription rights to shares increased ¥5,307 million from theend of the previous year to ¥112,365 million and the shareholders’equity ratio was 39.3%.

Cash flows
Cash and cash equivalents at March 31, 2018 were ¥14,938 million, an increase of 1.9% year on year. Although free cash flow (cash flowfrom operating activities minus cash flow from investing activities) was positive at ¥3,531 million, cash flow from financing activities was
negative at ¥3,223 million.
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥27,790 million, having increased ¥5,520 million compared with the previous year
(an increase of 24.8% year on year). This increase was mainly attributable to income before income taxes amounting to ¥11,829 million,
depreciation and amortization amounting to ¥13,952 million, and an increase in accounts payable-other and accrued expenses amounting
to ¥4,177 million, despite cash outlays including an increase in inventories amounting to ¥1,273 million and income taxes paid amounting
to ¥5,920 million.
Cash flows from investing activities
Net cash used in investing activities amounted to ¥24,258 million, having increased ¥2,689 million compared with the previous year (anincrease of 12.5% year on year). The main factors were purchase of property, plant and equipment amounting to ¥21,447 million for new
store openings and refurbishment and payments for guarantee deposits amounting to ¥2,092 million, despite proceeds from collection ofguarantee deposits amounting to ¥872 million.
Cash flows from financing activities
Net cash used in financing activities amounted to ¥3,223 million, having decreased ¥55 million compared with the previous year (anincrease of 1.7% year on year). The main factors were repayments of long-term loans payable amounting to ¥19,282 million, repayments offinance lease obligations amounting to ¥1,692 million, and cash dividends paid amounting to ¥2,149 million, despite proceeds from longterm loans payable amounting to ¥19,897 million.

30 Valor Holdings Co., Ltd. Annual Report 2018

Policy on Profit Distribution and Dividends for FY2017
The Company’s basic policy is to ensure stable and continuous
returns of profit to shareholders while increasing the internal
reserves to strengthen its corporate structure in preparation forstable business development over the long term. In accordancewith this policy, our medium- to long-term target is to achieve a
consolidated payout ratio of 25%.

In view of the performance in FY2017, the Company increased
the year-end dividend by ¥3, compared with the previous year to¥24 per share. Combined with the interim dividend of ¥21 pershare, this resulted in total annual dividends for FY2017 of ¥45 pershare, ¥5 higher than for the previous year. The payout ratio was
30.4%.

Forecasts for FY2018
FY2018, in addition to newly opening a total of 81 stores andoutlets—6 supermarkets, 24 drugstores, 50 sports clubs and 1
pet shop—we plan to refurbish 30-40 supermarkets and drugstores,
and carry out other priority investments in existing outlets.
Based on the above assumptions, forecasts for consolidated
financial performance for FY2018 are as follows: revenues fromoperations of ¥560.0 billion, an increase of 2.9% year on year;
operating income of ¥14.8 billion, an increase of 9.9%; ordinary
income of ¥16.3 billion, an increase of 9.1%; and profit attributableto owners of the parent of ¥9.0 billion, an increase of 18.9%.
Financial policy in the FY2 0 1 8-2 0 2 0 strategic plans is asfollows.
Financial Information

The business environment has dramatically changed due todecreasing and aging consumers, labor shortage, changes in
consumer behavior and intensifying competitions. As we assume
that store expansion through conventional methods will notenhance corporate values, in the new FY2018-2020 strategicplans, which cover the three year period starting FY2018, theCompany set a basic policy of a shifting from expanding
standardized stores to enhancing the appeal of products. Under
the plans, we will strive to improve earnings by enhancing
competitiveness, focusing on products in our three corebusinesses of supermarkets, drugstores and home improvement
centers. Although the drugstore business will continue to serve as
growth driver, we will develop the sports club business with fullscale franchising as the next growth axis and accelerate outlet
openings of the “Will_G” fitness gyms. As for capital investment in

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

Profit distribution

At least ¥73.0 billion in the three years from FY2018 (cumulative)

1) Capital
expenditure

Target of ¥23.0-24.0 billion a year in capital expenditure (allocate 30-40% for investments inexisting outlets)
Refurbishment: 30-40 supermarkets and drugstores per year
New openings: At least 200 fitness gyms (over the three years, including franchise operation)2) Dividend

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

Financial commitment

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

Valor Holdings Co., Ltd. Annual Report 201831

Consolidated Financial Statements (Summary)
Valor Holdings Co.,Ltd. and Subsidiaries
The financial year ended March 31, 2017 and 2018

Consolidated Balance Sheet(Millions of yen)

FY2016(Millions of yen)

FY2017FY2016FY2017

Notes and accounts payable-trade

36,71838,596

Short-term loans payable

16,954

17,123Current portion of bonds

40

30

Current portion of long-termloans payable

17,67813,488

Lease obligations

1,500

1,681

Income taxes payable

2,951

2,491

Provision for bonuses(Liabilities)(Assets)

Current liabilities

Current assets
Cash and deposits

14,81815,178Notes and accounts
receivable-trade

7,241

8,333

Merchandise and finished goods

33,91135,216

Raw materials and supplies

507

720

Deferred tax assets

1,832

1,886

Other

10,741

11,099(7)(6)

69,04572,428

Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures

198,516

214,437

Accumulated depreciation(103,031)(109,523)

Buildings and structures, net

95,485

104,914

7,190

8,043

(4,561)(5,376)

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

2,628

2,666

Land

38,55639,429Lease assets

14,674

16,295

Accumulated depreciation(6,223)(8,430)

Lease assets, net

8,451

7,865

Construction in progress

3,242

2,883

Other

30,71533,852(23,382)(25,990)

7,333

7,862

155,697

165,621

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

751

747

11

5

7,639

8,524

8,402

9,278

2,290

2,076

Investments and other assets
Investment securities
Long-term loans receivable

2,531

2,694

Provision for directors’ bonuses

136

126

Provision for point card certificates

647

933

Provision for loss onrecollection of gift certificates

215

235

Asset Retirement Obligations

3

64

Other

15,643

19,613

Total current liabilities

95,02097,079Bonds payable

10,06010,030Long-term loans payable

31,512

36,572

Lease obligations

9,486

9,894

Deferred tax liabilities

140

118

Provision for directors’
retirement benefits

868

440

Provision for retirement benefits

3,049

3,515

Asset retirement obligations

5,625

8,336

Long-term deposits received

5,879

6,143

Noncurrent liabilities

Other

116

647

66,74075,700161,761

172,780

Capital stock

11,916

11,916

Capital surplus

12,722

12,799Retained earnings

84,44289,898

Total noncurrent liabilities
Total liabilities(Net assets)
Shareholders’ equity

Treasury stock(2,558)(2,608)

Total shareholders’ equity

106,522112,005

364

323

—

(2)

139

129

30

(90)

534

359

Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities

794

898

Deferred gains (loss) on hedges

Deferred tax assets

4,231

5,316

Guarantee deposits

25,83027,176

Other

3,415

3,423

Foreign currency translation
adjustment
Remeasurements of defined
benefits plan

Allowance for doubtful
accounts

(219)

(273)

Total investments andother assets

36,34338,619Total noncurrent assets

200,443

213,519

269,488285,947

Total assets

32 Valor Holdings Co., Ltd. Annual Report 2018

Total accumulated othercomprehensive income
Subscription rights to shares

96

113

Minority interests

573

688

107,727

113,167

269,488285,947

Total net assets
Total liabilities and assets

Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2017 and 2018)

Consolidated Statement of Income(Millions of yen)

FY2016FY2017

Net sales

501,627

524,313

Cost of sales

377,610394,399
129,913Gross profit

124,016

Operating revenues

18,903

19,707

Operating gross profit

142,919

149,621

Advertising expenses

6,269

7,055

Packaging expenses

99

112

Supplies expenses

659

942

Distribution expenses

655

416

2,024

2,573

Provision for point card certificates
Provision of allowance for doubtful accounts

2

3

459

445

Salaries and wages

49,61552,036

Bonuses

3,783

4,064

Provision for bonuses

2,312

2,516

Provision for directors’ bonuses

146

126

Retirement benefit expenses

593

670

Provision for directors’ retirement benefits

59

43

7,829

8,194

Directors’ remuneration

Welfare expenses
Utilities expenses

7,594

8,326

Rent expenses

21,296

22,695

Repair and maintenance

2,708

2,981

Depreciation

11,774

12,474

Amortization of goodwill

153

181

9,441

10,289127,480

136,150

15,43913,470Interest income

109

114

Office work fee

932

990

Rent income

627

680

Other

1,383

1,226

Total non-operating incomes

3,052

3,010

Other
Total selling, general and administrative expenses
Operating income

Financial Information

Selling, general and administrative expenses

Non-operating income

Non-operating expenses
Interest expenses

714

693

Rent cost of real estate

509

524

Other

505

326

1,729

1,543

16,762

14,937

Total non-operating expense
Ordinary income
Extraordinary income
Subsidy income

228

193

Other

79

308

Total extraordinary income

307

502

Extraordinary loss
00

Loss on retirement of noncurrent assets

Loss on sales of noncurrent assets

106

150

Impairment loss

663

2,943

Loss on reduction of noncurrent assets

228

169

Loss on valuation of investment securities

3

56

Provision of allowance for doubtful accounts

20

60

Other

177

229

Total extraordinary loss

1,199

3,610

Income before income taxes

15,87011,829

Income taxes-current

5,819

5,312

Income taxes-deferred(519)(1,087)

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

5,300

4,225

10,570

7,604

47

33

10,522

7,570

Valor Holdings Co., Ltd. Annual Report 201833

Consolidated Financial Statements (Summary)
Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2017 and 2018)

Consolidated Statements of Cash Flows(Millions of yen)

FY2016FY2017

Income before income taxes

15,87011,829Depreciation and amortization

13,125

13,952

Impairment loss

663

2,943

Amortization of goodwill

153

181

Increase (decrease) in allowance for doubtful accounts

(52)

47

Increase (decrease) in defined benefit liabilities

267

290

Increase (decrease) in provision for directors’ retirement benefits

(15)

(538)

Increase (decrease) in provision for point card certificates

102

285

Interest and dividends income paid

(142)

(134)

Interest expenses received

714

693

Loss on retirement of noncurrent assets

106

150

Loss on reduction of noncurrent assets

Cash flows from operating activities

228

169

Loss (gain) on valuation of investment securities

356

Equity in losses (earnings) of affiliates

46

91

(228)

(193)

Subsidy income
Decrease (increase) in notes and accounts receivable-trade

(878)

(883)

(3,025)(1,273)

Increase (decrease) in notes and accounts payable-trade

873

1,712

Increase (decrease) in accrued consumption taxes

110

(91)

Increase (decrease) in accounts payable-other and accrued expenses

735

4,177

Decrease (increase) in inventories

Other
SubtotalInterest and dividends income received
Interest expenses paid

455

889

29,11534,357

45

34

(704)

(680)

Income taxes paid

(6,186)(5,920)Net cash provided by operating activities

22,27027,790

Payments into time deposits

(89)

(109)

Proceeds from withdrawal of time deposits

166

107

Purchase of property, plant and equipment(19,458)(21,447)

Cash flows from investing activities

Proceeds from sales of property, plant and equipment
Purchase of intangible assets

441

187

(1,224)(1,593)Purchase of investment securities

(1)

(1)

Proceeds from sales of investment securities—

177

Payments of loans receivable

(97)

(112)

Proceeds from collection of loans receivable

5

1(1,597)(2,092)

Proceeds from collection of guarantee deposits

912

872

Proceeds from guarantee deposits received

580

599

Repayments of guarantee deposits received

(264)

(387)

Purchase of stocks of affiliates

(438)

(211)

Subsidy income

228

193

Other

(730)

(443)

(21,569)(24,258)

Payments for guarantee deposits

Net cash provided by investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable

(16)

(76)

Proceeds from long-term loans payable

11,184

19,897

Repayments of long-term loans payable(13,797)(19,282)

Proceeds from issuance of bonds

9,947

—

Redemption of bonds(7,040)(40)

Repayments of finance lease obligations(1,515)(1,692)

Proceeds from payment of non-controlling shareholders—

60

Purchase of treasury stock

(1)

(223)

Proceeds from sales of treasury stock

30

248

Payments from purchase of investments in subsidiaries resulting in no change in scope of consolidation

(17)

—

Proceeds from sales of investments in subsidiaries resulting in no change in scope of consolidation—

34

Cash dividends paid

(1,943)(2,149)Net cash provided by financing activities(3,168)(3,223)23(28)

Net increase (decrease)in cash and cash equivalents(2,444)

278

Cash and cash equivalents at beginning of period

17,103

14,659Cash and cash equivalents at end of period

14,65914,938

Effect of exchange rate change on cash and cash equivalents

34 Valor Holdings Co., Ltd. Annual Report 2018

Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2017 and 2018)

Consolidated Statements of Changes in Net Assets
FY2016(Millions of yen)

Shareholders’ equity

Balance, March 31,
2015

CapitalStock

CapitalSurplusRetainedearnings

Treasury
stock

Total
shareholders’equity11,916

12,71375,841(2,596)

97,875

Cumulative effects
of changes inaccounting policies
Restated balance,
March 31,2016

Accumulated other comprehensive income

20
11,916

12,71375,861

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

368

(23)

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

161

26

533

52

Noncontrollinginterests

Total net
assets565

99,02720(2,596)97,895

20
368

(23)

161

26

533

52

565

99,047

Equity transaction
with noncontrollinginterests

99

9

Dividends fromsurplus(1,942)(1,942)(1,942)

Net income

10,522

10,522

10,522

(1)

(1)

(1)

38

37

37

Purchase oftreasury stock
Disposal oftreasury stock(0)

Net changes of
items during theperiodTotal changes of items
during the period
Balance, March
31,2016

(3)

23

(22)

3

1

44

7

53

—

8

8,580

37

8,627

(3)

23

(22)

3

1

44

7

8,680

11,916

12,72284,442(2,558)106,522

364

—

139

30

534

96

573

107,727

FY2017(Millions of yen)

Shareholders’ equity

Balance, March 31,
2016

Financial Information

Changes of items
during the period

Accumulated other comprehensive income

CapitalStock

CapitalSurplusRetainedearnings

Treasury
stock

Total
shareholders’equity11,916

12,72284,442(2,558)106,522

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

364

—

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

139

30

534

96

Noncontrollinginterests

Total net
assets573

107,727

Changes of items
during the period
Equity transaction
with noncontrollinginterests

11

1

Dividends fromsurplus(2,159)(2,159)(2,159)Net income

7,570

7,570

7,570

(223)

(223)

(223)

173

248

248

45

45

Purchase oftreasury stock
Disposal oftreasury stock75

Increase in retained
earnings by decreasing
companies accounted
for using the equity
method45

Net changes of
items during theperiod

(41)

(2)

(9)

(121)

(175)

16

115

(43)

Total changes of items
during the period

—

77

5,456

(50)

5,482

(41)

(2)

(9)

(121)

(175)

16

115

5,439

Balance, March 31,
201711,916

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

323

(2)

129

(90)

359

113

688

113,167

Valor Holdings Co., Ltd. Annual Report 201835

Corporate Data/ Share Information (as of March 31, 2018)

Corporate Data

Share Information
Valor Holdings Co., Ltd.

Number of authorized shares

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

Number of outstanding shares

52,661,699

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

Number of shareholders

14,015

Headquarters

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

Stock exchange listings

Tokyo Stock Exchange, first section

Established

July 1958

Representative

Masami Tashiro Chairman & CEO

Paid-in-capital¥11,916 million

Name

Nagoya Stock Exchange, first section

Major Shareholders

Distribution of shareholders by Type

Financial Institutions 56 shareholders
18,023 thousands of shares 34.2%

Other companies 375 shareholders
10,991 thousands of shares 20.9%

Number of Shares Percentage ofHeld (Thousands) Shares Held

Shareholder

Securities companies 21 shareholders
408 thousands of shares 0.8%

Foreign entities 212 shareholders
10,838 thousands of shares 20.6%

Individuals, others 13,351 of shareholders
12,399 thousands of shares 23.5%

The Norinchukin Bank

2,542

4.8%

The Juroku Bank

2,536

4.8%

Ito Youth Scholarship Foundation

2,400

4.5%

Japan Trustee Services Bank, Ltd. (Trust Account)

2,280

4.3%

Masami Tashiro

1,571

2.9%

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

1,548

2.9%

Tomoko Ito

1,360

2.5%

Shiunsha Co., Ltd.

1,326

2.5%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.*

1,256

2.3%

Chubu Agent Co., Ltd.

1,103

2.0%

Notes: excludes treasury stock. *Changed to MUFG Bank, Ltd. in April 1. 2018.

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

3,000

2,000
1,000

0

Volume(thousands of shares)
8,000

6,000

4,000

2,000

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

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Note: The Company conducted a 1.2-for-1 stock split on September 27, 2005 and a 2-for-1 stock split on March 28, 2006. The stock prices are retrospectively adjusted to reflect the
aforementioned stock splits.

36 Valor Holdings Co., Ltd. Annual Report 2018

Valor Group
Segment

Subsidiaries

Supermarkets

Valor Co.,Ltd.
Tachiya Co., Ltd.
Shokusenkan-Taiyo Co.,Ltd.
Kohseiya Co.,Ltd.
Chubu Foods Co., Ltd.
Daien Foods Co., Ltd.
Honda Suisan Co., Ltd.
Furuya Sangyo Co., Ltd.
Keirinkaku Co., Ltd.
Shufu-no-Mise Shoji Chubu Honsha Co.,Ltd.
Fukui Chuo Tsukemono Co., Ltd.

V-Solution Co., Ltd.
Chubu Taisei Co., Ltd.*
Chubu Meat Co., Ltd.
Hida-Osaka Buna-Shimeji Co., Ltd.
Gujyo Kinoko Farm Co., Ltd.
Toho Sangyo Co., Ltd.
Kita-Shinshu Kinoko Farm Co., Ltd.
Valor Farm Kaizu Co.,Ltd.
VARO Co., Ltd.
Valor Max Co., Ltd.

Drugstores

Chubu Yakuhin Co., Ltd.
V-drug International Co., Ltd.

V-drug Hong Kong Co., Ltd.

Home Improvement CentersHome Center Valor Co., Ltd.
Morosada Agri Co., Ltd.

FIRST Co., Ltd.

Sports ClubsAXTOS Co., Ltd.

Distribution-related operations

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

VMC (Vending Machine Corporation)
V-Flower Co., Ltd.
Shanghai Valor co., Ltd.

OthersHome Center Valor Co., Ltd.**
Gito Family Department Co., Ltd.
Chubu Hoken Service Co., Ltd.

Core Support Co., Ltd.
Valor Agency Co., Ltd.

Note: *merged into Daien Foods Co., Ltd. in April 1, 2018. **Pet Shop Business

1958

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

1969

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

1970

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

1974

Changed the company name to Valor Co., Ltd.

1977

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

1984

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

1985

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

1989

Established a distribution center in Tajimi- shi.

Corporate Data

History

Started a material wholesale business for stores by Chubu Ryutu Co., Ltd.
1993

Listed on the Second Section of the Nagoya Stock Exchange.

1995

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

1996

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

1998

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

1999

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

2001

Established Hokuriku distribution center in Nanto- shi, Toyama.

2005

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

2007

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

2010

Established Ichinomiya distribution center in Ichinomiya- shi, Aichi.

2012

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

2013

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

2015

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

2016

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

Valor Holdings Co., Ltd. Annual Report 201837

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

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

Valor Holdings Co.,Ltd.
Headquarters

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

For IR-related Inquires
Investor Relations & Public Relations

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

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