Creating New Values for Local Communities

2017 Annual Report
Fiscal Year Ended March 31, 2017

Valor Holdings Co.,Ltd.

Our Journey in Creating Corporate Values

We have been offering new values for local communities
through multi-format retailing and business process integration.
Corporate Philosophy

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

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

Exnion ye0 bill
0
1
d
e
d
e
xce
93

FY19

E

ue
Reven

1995–

th

grow

Rolling out of Multi-format Retailing andEstablishment of Distribution Network

1958–
Startup Supermarket and Subsidiaries of
Manufacturing, Wholesale & Logistics Businesses

In 1958, we established Shufu-no-Mise Co.,Ltd. and opened the firstsupermarket in Ena-shi, Gifu (changed the company name to Valor Co.,Ltd. in1974). We also established Chubu Yakuhin Co.,Ltd., a drugstore subsidiary,
Chubu Foods Co.,Ltd., a prepared food manufacturing subsidiary and started
a materials wholesale business for stores by Chubu Ryutu Co.,Ltd. We enteredinto a logistics business by Chubu Kosan Co., Ltd., a logistics subsidiary and in
1989, established the first distribution center in Tajimi-shi, Gifu.

1958–

1984–

1988–

1990–

While we expanded the scale of supermarket business, we built thebases for multi-format retailing. We merged with Fujiya Co.,Ltd., ahome improvement center company and established AXTOS
Co.,Ltd. and spun off a sports club business. We also established a
distribution network in Hokuriku region in response to expanding
business areas.

1998–

n

ion ye

bill
0
0
2
d
e
ceed
04

FY20

P12—13

P10—11FY2015-2017 Strategic Plans

The “Three Gears” Strategy

History

FY2010-2014 Strategic Plans

Growth & Expansion

Frontline Performance
Development
Business Process
Integration

Creation ofGroup
Synergybillion
0
0
5
eded

16
FY20

Local
Communities

11

FY20

ed
xceed

2007

FY

ded

Excee

300

n

E

400 b

en
llion yyen-term
L o n g re a t i o neC
Va l uExceiyebillion2015–
Further Optimization ofBusiness Processes

2005–
Expansion of Supermarket Businessand Integration of Business Processes

In October 2015, we made a transition to a holding company topromote growth of business companies and improve corporate
governance.

In the supermarket business, we expanded our scale throughorganic growth and M&As. The major companies acquired are as
follows: Tachiya Co.,Ltd., Youth Co., Ltd. and Sun-Friend Co.,Ltd.
(currently Shokusenkan-Taiyo Co.,Ltd.). We also integrated businessprocesses between manufacturing and retailing by establishingsourcing subsidiaries, production bases and distribution centers.

CONTENTS
History

Our Journey in Creating Corporate Values ……………………………… 1
11-year Summary of Financial Results …………………………………… 2
VisionMessage from CEO ………………………………………………………… 4
Business Model ……………………………………………………………… 6
Business Strategies ……………………………………………………… 10
FY2015-2017 Strategic Plans …………………………………………… 12
Results

Segment Financial Review ………………………………………………… 14
Segment Information ……………………………………………………… 16

Foundation

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

FY2016 Financial Review ………………………………………………… 30
Consolidated Financial Statements (Summary) ………………………… 32
Corporate Data

Corporate Data/ Share Information ……………………………………… 36

Valor Holdings Co., Ltd. Annual Report 20171

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

FY2006

FY2007

FY2008FY2009For the year:
288,168

318,026

336,342

344,900

Operating income

9,282

10,491

9,795

9,452

Ordinary income

9,965

10,835

10,186

9,916

Net income

3,915

4,136

3,387

3,945

156,086

164,609170,328

176,440

Revenues from operations

At year-end:
Total assets

50,88953,77455,35458,57850,16453,34154,56057,76057,55761,71069,631

69,107

Cash flows from operating activities

11,422

13,942

11,40816,004

Cash flows from investing activities(20,520)(16,869)(15,929)(10,453)

Free cash flows(9,098)(2,927)(4,520)5,550

Cash flows from financial activities

8,515

3,643

6,150

(5,291)

Cash and cash equivalents at the end of fiscal year

6,655

7,372

9,000

9,259

21,40019,607

16,988

11,537for new store openings

14,615

15,243

13,072

8,267

for refurbishing existing stores

4,530

3,025

2,562

2,663

for others

2,255

1,339

1,354

607

5,956

7,030

8,081

8,399

Net assets per share (BPS) (yen)965.901,027.07

1,071.19

1,134.05

Net income per share (EPS) (yen)

74.97

79.66

65.57

77.46

Net assets
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

15

18

20

20

20.0%

22.6%

30.5%

25.8%

7.0%

6.8%

6.1%

5.7%

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

8.0%

8.0%

6.3%

7.0%

Shareholders’ equity ratio

32.1%

32.4%

32.0%

32.7%

1.1

1.2

1.3

1.2

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

20,000431,218

454,180

497,463
470,564

300,0002

16,68315,852
14,287

15,000

Valor Holdings Co., Ltd. Annual Report 20170

225,000

245,386

255,916

269,488

213,629

150,000

5,000

FY2012 FY2013 FY2014 FY2015 FY2016

235,131

15,43910,000150,0000

300,000

520,530
15,000Net assets

75,000FY2012 FY2013 FY2014 FY2015 FY2016

075,44682,949 90,881

99,027

107,727

FY2012 FY2013 FY2014 FY2015 FY2016

FY2010FY2011FY2012FY2013

FY2014FY2015FY2016379,172410,577

431,218

454,180

470,564

497,463

520,530

12,347

15,23615,852

14,287

15,00016,683

15,43912,817

16,02016,844

15,311

16,10817,586

16,762

4,232

7,149

8,184

9,162

9,214

10,75910,522

190,065

199,774

213,629

235,131245,386

255,916

269,488

61,821

68,13475,46682,94990,881

99,027

107,727

60,99867,24374,887

82,39590,301

98,408107,057

69,746

69,38375,67987,26586,88084,952

87,231

20,32419,19021,13919,19822,25722,991

22,270(14,428)(17,793)(20,961)(23,746)(15,660)(19,045)(21,569)

5,895

1,397

177

(4,547)

6,596

3,945

700

(1,608)(2,283)

2,914

5,983

(3,745)(6,758)(3,168)13,547

12,676

15,764

17,055

19,96017,103

14,65915,245

17,85922,101

25,226

20,22520,041

24,441

8,995

11,23014,414

12,851

12,763

11,62815,144

5,007

4,114

1,788

2,306

2,237

3,650

7,709

1,243

2,515

5,899

10,069

5,225

4,763

1,587

9,017

9,612

10,255

11,09012,168

12,683

13,125

1,197.67

1,320.33

1,454.43

1,600.25

1,751.57

1,925.45

2,093.74

83.10

140.38159.56177.95178.91208.87205.83

22

26

29

31

33

36

40

26.5%

18.5%

18.2%

17.4%

18.4%

17.2%

19.4%

7.0%

8.2%

8.1%

6.8%

6.7%

7.0%

6.4%

7.1%

11.2%

11.5%

11.7%

10.7%

11.4%

10.2%

32.1%

33.7%

35.1%

35.0%

36.8%

38.5%

39.7%

1.1

1.0

1.0

1.1

1.0

0.9

0.8

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

Cash flows from investing activities

Free cash flows

21,13919,198

6,596

3,945

177

40

11.5

30

29

20

18.2

31

33

(23,746)

11.4
10.2

10

8.1
18.4
17.4

(15,660)

10.7

6.8

-10,000-20,000

11.7

36

700

(4,547)-30,000

15

40(20,961)

ROA

22,257 22,991 22,270

10,0000

ROE

Dividend payout ratio

50

30,00020,000

ROE∙ROA (%)

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

History(Millions of yen)

6.7

7.0

6.4

19.4
17.2

5

10

(19,045)(21,569)

FY2012 FY2013 FY2014 FY2015 FY2016

0

FY2012 FY2013 FY2014 FY2015 FY2016

0

FY2012 FY2013 FY2014 FY2015 FY2016

Valor Holdings Co., Ltd. Annual Report 20173

Message from CEO

Strengthening the Frontline: The Challenge of Utilizing
Correcting scale-induced distortions and taking a
step back from standardization
From a long-term perspective, the Valor Group is
implementing the “Three Gears” strategy that comprises
the elements “Growth and Expansion,” “Business Process
Integration from sourcing to retailing,” and “Frontline
Performance Development.” Capitalizing on a holding
company structure to help optimize resource allocation,
we are working to achieve sustained growth andimproved profitability.
We have developed better back-office systems andupgraded supply chain infrastructure to integrate businessprocesses across manufacturing and retailing. Thesemoves have included opening distribution centers tomake procurement and store deliveries more efficient,along with processing centers and production bases for
prepared food to expand and upgrade the production andprocessing functions of the Valor Group. However, thesales aspect of these initiatives has not been realized
sufficiently, frustrating our ambition to capture greater
profit margins as a business process integration retailer.
To address this issue, as part of our three-year businessplans that began in the previous fiscal year, we focusedon strengthening frontline store competitiveness andimprovement of our product offerings, while reinforcing thetraining and HR development activities that underpin
these efforts.
Against this backdrop, in FY2016 we reported
revenues from operations in excess of ¥500 billion for the
first time, achieving the target of ¥520 billion. We added a
net total of 55 stores to the Valor Group retail network.
Including the contribution from Kohseiya Co., Ltd., whichbecame a Group subsidiary in August 2016, we recorded
positive revenue growth across all business segments.
On the profit side, however, our performance declined
year on year across all earnings figures, after two straightyears of growth in profits. Several external factors
impacted performance: difficulties in recruiting part-time
employees pushed up our personnel costs; we faced
higher construction costs associated with opening newstores; purchase prices for many perishable goods
increased; and we also faced fiercer competition fromother retailers and companies in other sectors. Overall,business conditions changed rapidly in FY2016.
Many of these changes were structural rather thantransient in nature, potentially implying the need for
fundamental reform of our operations. However, in terms

4

Valor Holdings Co., Ltd. Annual Report 2017

of the internal factors, we think that any improvements in
profits have been delayed in FY2016 due to issues
stemming from the Group’s increased scale, which has
somewhat diluted policy execution and lowered the speedo f o r g a n i z a t i o n a l re s p o n s e . I n p a r t i c u l a r, i n o u r
supermarket business, our investments in back-officesystems to support large discount store operations andefforts to standardize procedures as part of a more
uniform management approach have struggled toaccommodate the widening disparities within our store
network, leading to inefficiencies.
Going forward, we will focus on correcting such scaleinduced distortions by taking a step back from an overly
standardized approach and instead developing systems
and management methods that take greater account of
store characteristics.

The challenges of creating category killers anddeveloping new formats
In our supermarket business, one of the structural reforms
we are undertaking to improve profitability is to refurbish
stores to turn them into category killers for fresh producewith an emphasis on everyday low prices. In many
suburban areas with declining population, it is only
possible to achieve sustained profits by establishing a
position as the No.1 store in the locality, rather than being
perceived as merely “average.” Our strategy is to focus
our resources on a geographic region where the ValorGroup enjoys relative dominance, while emphasizing our
superior range of merchandise in particular categories andother features aimed at attracting customers from further
afield.
To overcome fiercer competition from other retailers
and sectors, we continue to develop store formats
designed to cater to evolving customer preferences, while
also differentiating the quality of our retail offering fromthat of rival stores. Specifically, we are looking to open or
remodel stores in new formats that do not necessarily
observe the traditional categories of supermarket,
drugstore or home improvement center.
This approach has been generating good results with
our realization that “it is the customer who determines theformat.” For example, at the Home Center Valor InazawaHeiwa store, we have hosted farmer’s market to enableconsumers to buy fresh vegetables while assisting the
local agricultural community, and this store also begins tooffer fresh meat. Elsewhere, inside two of our drugstores,
V-drug Toyokawa and V-drug Togo-nishi, we offer
customers freshly baked bread and a range of preparedfoods.
For other retailers, new format development often
requires attracting tenants from outside. In the ValorGroup, however, we can develop formats in-house while
exploring and leveraging the synergies that arise fromcombining features from various store formats. We willcontinue to reappraise the value of our in-house resources
as we seek to create new, unique formats.

VisionGroup Resources to Create New Formats

Back to basics to sustain growth as a company that
anticipates change
In October 2016, as an aspect of ongoing efforts to makeGroup operations more efficient while executing our longterm business strategy, we established Core Support Co.,
Ltd. Operating companies in the Valor Group will transfer
management functions to Core Support step by step sothey can focus proportionally more of their resources oncore operations.
In line with earlier guidance, the final dividend for
FY2016 was ¥21 per share. Combined with the interim
dividend of ¥19 per share, this resulted in total annual
dividends for FY2016 of ¥40 per share (a payout ratio of
19.4%), an overall year-on-year increase of ¥4 per share.
For FY2017, we have formulated an earnings plan thatemphasizes strengthening the Group for the next stage of
growth. We expect to maintain the shareholders’ equity
ratio in FY2017 while also lifting total dividends to ¥45 pershare (interim ¥21, year-end of ¥24).
We are targeting sustained growth for the Valor Groupb a s e d o n s t a b l e m a n a g e m e n t . Ye t , s o m e w h a t
paradoxically, innovation and reform are essential torealize this goal. Companies that do not change inevitably
fade away. We will create new value by anticipatingchange, while listening to what our customers say andletting them guide us in our format development.
In closing, I would like to ask all shareholders andinvestors for their continued support of the Valor Group.

Masami Tashiro
Chairman & CEO

Valor Holdings Co., Ltd. Annual Report 20175

Business Model

Business Models as Corporate Value Initiatives
The Valor Group has developed its business strategies and adjusted them to social changes by assuming upcoming
needs and demands at local communities. Our corporate values have been derived from the following initiatives:
business process integration and multi-format retailing.
We have been creating group synergies through combining our competencies as can be seen in drugstores offering
prepared foods & fresh bakery.

1

Business Process Integration

In the food distribution industry, we have struggled for lean margins, which were shared by many intermediates. To achieve“increasing returns” type growth, we have optimized the entire processes from sourcing to retailing. As many of our stores
were located in lower population density, we have also pursued operational efficiency and reduced the bread-even point.
In our business processes, we are also responsible for maintaining sustainable societies through controlling carbon
dioxide emissions, reducing food wastes and encouraging recycling. We take such environmental-friendly initiatives in our
production bases and distribution centers as well as in our stores.

2

Multi-format Retailing

Since the early stage of our history, we have rolled out multi-format retailing. It was closely related to our locations with lower
population densities. Multi-format retailing has been effective for us to bring richness of lives in local communities as well as
gain better brand recognition and market shares through a broad assortment of products and services.
Decreasing local suppliers forces us to rethink our roles in local communities. In response to this, we intend to provide
customers with products and services through our all resources. In the fiscal year 2015, the home improvement centerlaunched life support service and Cubu Foods Co., Ltd. accelerated to receive sales orders for local festivals.
The recent fierce competition between formats and technological advancements have brought changes in shopping
behavior. As we do not persist in the present types of format, we intend to launch new initiative for changing customers by
combining our competencies.

Our perspectives on Chain Store Management Systems and Standardization
Operational simplification and standardization have been supporting the Valor Group business activities. Chain store
management systems have been effective for us to achieve rapid growth and sufficient scale for providing goods atreasonable costs and quality. Under the systems, we have defined operational requirements for headquarters and stores, andthen simplified and standardized operational processes at stores. Supported by production bases and distribution network,
we are able to operate stores by a limited number of staff and reduce operational costs. Under the recent changes such asaging and decline in workforce, simplifying and standardizing operational processes remains crucial for achieving sustainablegrowth.
We have also developed standardized stores, which enabled us to accelerate store development within limited time andcosts. Under the environment of decreasing population and fierce competition, standardized stores without overwhelming
competitiveness could not gain sustainable profits. Although we maintain the chain store management systems, we adapt
processes of store development to the changes.

6

Valor Holdings Co., Ltd. Annual Report 2017

Social Issues
Imbalance between Food
Supply and Demand

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

Changing Consumers &Retail Market

Changing Global
Environment

Vision- Intense competition between formats- Aging and lack of successors in regional agriculture- Possible impact of TPP agreement on local suppliers- Aging and declining population- Impact of IT innovation on shopping behavior- Decreasing local suppliers serving local
communities- Impact of global warming and climatechanges on supply of produces

Business Models
Creation of Group Synergies

Business Process Integration
1 optimizing
supply chains
Production
Wholesale
Distribution
Maintenance2

Multi-format Retailing

Retailresponse to various needs of communities and enhancement of shareSupermarketDrugstore

Home
Improvement
CenterPet ShopSports Club

Local Communities

Our Solutions
Stable Procurement

Human Resource
Development & Recruitment- Collaboration with suppliers to securea stable supply of produces- Simplification of operational processes
by utilizing infrastructures- Professional development- Increasing diversity in the workplace

Maintenance of Living Environment
for Local Communities

Recycling-oriented
Economic System- Format development- Taking over functions performed by local
suppliers- Carbon dioxide emissions control- Reduction of food waste- Recycling encouragement

Valor Holdings Co., Ltd. Annual Report 20177

Business Model

Supermarket BusinessNo. of stores……………

275

Ave. floor space……………

No. of stores……………

337

m2

(Valor Co., Ltd.)This business segment includes the operations of supermarket
operators Valor Co.,Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co.,
Ltd. and Kohseiya 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 business process from sourcing to retailing.
Besides opening new stores, operating companies in this segment
have expanded in scale through M&A. The main companies that havebeen converted into subsidiaries are Tachiya Co., Ltd., Youth Co., Ltd.
(merged into Valor in October 2013), SunFriend Co., Ltd. (currently
Shokusenkan-Taiyo) and Kohseiya Co., Ltd.. Valor Co., Ltd. expands
stores in 13 prefectures, centering in Gifu and Aichi prefectures;
Tachiya Co., Ltd. has stores in Aichi, Gifu and Mie prefectures;
Shokusenkan-Taiyo Co., Ltd. operates in Shizuoka prefecture; andKohseiya Co., Ltd. has stores in Yamanashi prefecture. The Group islooking to increase store density steadily across each of these parts ofJapan.

Drugstore Business

1,731

Revenues from operations
by segment

64.7

%

Ave. floor space……………

Established in February 1984 as a retailer of medicines, Chubu YakuhinCo., 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 eight prefectures, centering in
Aichi and Gifu.

790

m2

Revenues from operations
by segment

20.6

%

No. of stores……………
Home Improvement
35 Ave. floor space…………… 5,822m
Center Business The home improvement center business began operations in August

1990 after the transfer of assets from the other Group companies. It
grew in scale in October 1995 resulting from a merger with Fujiya.
Located mainly in Gifu Prefecture, the chain is also expanding in Aichi
and Mie prefectures.

Revenues from operations
by segment

9.7

Sports Club BusinessNo. of stores……………

75

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 otherfacilities. It also began operating the low-investment chain of “Will_G”
fitness gyms in September 2013, which offers memberships on arelatively low monthly subscription basis. The network of clubs ismainly 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.

8

Valor Holdings Co., Ltd. Annual Report 2017%

Revenues from operations
by segment

2.0

%

2

Distribution-related operations
Revenues from operations
by segment

1.8

VisionThe 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 maintenanceservices provider Mentex Co., Ltd. Besides helping to increase theoperational efficiency of other Group companies, these firms also
engage in transactions with external customers.

%

Locations of infrastructures for the Supermarket, Drugstore and Home Improvement Center businesses

Nanto-shi

Fukui-shiTokyo

Kani-shi

Ogaki-shi

Tajimi-shi
Ichinomiya-shi
NagoyaToyota-shi

Yokkaichi-shi

Shimada-shi

Osaka

Supermarket BusinessDistribution Centers :for chilled products
for ambient- temperature products
for chilled & ambient- temperature products
Processing Centers :for fresh meatfor fresh vegetables & fruits
for fresh fishfor prepared foodfor fresh bakery
for fish products
Production Bases :Drugstore BusinessDistribution Centers

Distribution Centers (Shared with the Supermarket Business)

Home Improvement Center BusinessDistribution Centers

Valor Holdings Co., Ltd. Annual Report 20179

Business Strategies

Business Strategies“Three Gears”

Growth & Expansion

Offering New Values for Local Communities
through anticipating changes
The Valor Group has created its unique business model that optimizes
the entire process from sourcing to retailing. It is sustained by businessstrategies called the “Three Gears”:
1. Growth & Expansion
2. Business Process Integration between manufacturing and retailing
3. Frontline Performance Development
We make the gears mesh properly to obtain sustainable growth andincrease corporate values.
Our business model requires a sufficient scale of operations toprovide value-added products at reasonable costs. We have expanded
our store network around distribution centers, while raising density ofcoverage. It allows us to capture an overwhelming market share andincrease operational efficiency.

Business Process Integration between
Manufacturing and Retailing

Business Process Integration between
manufacturing and retailingControlling the entire process enables us to share demand forecast & production plan and eliminate waste in supply chains .We havedesigned effective distribution channels by coordinating our own sourcing companies, production bases and distribution centers.
We have developed private labels, which offer value for money and better margin than national brands. They are sold under thebrand names of “V-Select”, low-priced and “V-Quality”, value-added. In June 2014, we launched new brand, “V-Premium”. It contains
ingredients, which are selected and available at limited seasons. We provide the brands for supermarkets, drugstores, home
improvement centers and other companies through V-Solution Co., Ltd., a subsidiary. We manage the risk of demand-supply
mismatches by highly accurate sales plans and outstanding sales capabilities.
In the fresh meat category, we provide stores with packaged meat from our five processing centers, which source raw materials
from Chubu Meat Co., Ltd., a subsidiary. It brings us to reserve intermediate margins within the Valor Group. We also reduce costs atstores by eliminating operating processes such as trimming and cutting meat and decreasing spaces for processing.
The recent changes in fresh produce distribution forced us to secure stable procurement as well. They are mainly caused by aging& lack of successors in regional agriculture and climate changes connected with global warming. We intend to collaborate with local
suppliers and develop value-added products together.

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

“V Quality” represents tasty fooditems made from carefully chosen
ingredients. We deliver fine quality
at an affordable price.

Tea 500ml“V Premium” refers to premium
food made from handpicked andsuperior ingredients and recipes.
Turn your meal into fine dining withthis brand!

Sesame Dressing

Coarsely Ground White Sausage

Sliced Ham 160g
Black Pork Dumplings

Japanese Soy
Beans Tofu

10 Valor Holdings Co., Ltd. Annual Report 2017

Growth & Expansion
In addition to the supermarket
business, we also consider

Frontline Performance
Development

Visionour drugstore and home
improvement center
businesses as key drivers for
growth. “V-drug”, a drugstore
chain has also focused on
establishing store network to
g a i n s h a re s a n d a c h i e v eeconomies of scale.
V-drug collaborates withlocal nursing homes to support their health care,while it meets customers’ needs for conveniencethrough a broad range of food.
“Home Center Valor”, a home improvement
center chain has developed relatively large storesover 10,000 square meters, which carry aprofessional assortment of building and farming
materials for business customers.

Supermarkets

DrugstoresHome Improvement Centers

Sports Clubs

Frontline Performance Development
To gain benefit from expanding scale of operations, we must
upgrade skills of frontline employees and improve productivity atstores. The skills combine a thorough knowledge of store
operations with abilities to implement sales plan and provide
outstanding customer services.

Valor Holdings Co., Ltd. Annual Report 201711

FY2015-2017 Strategic Plan

FY2015-2017 Strategic Plans
Improving Efficiency and establishing a Solid Foundation for Growth
The FY2015-2017 strategic plans focus on improving efficiency through reforming the supermarket segment, our core business.
It could bring us to next long-term targets, which are projected to accelerate growth with profitability. Thoroughly executing the
FY2015-2017 plans, we intend to build a strong relationship with stakeholders such as customers, business partners andshareholders.
The FY2015-2017 strategic plans consist of three major sections. Firstly, we improve profitability by strengthening existingsupermarkets through refurbishing stores and improving assortment. We also increase quality of products and productivity
through utilizing infrastructures. Secondly, we identify drugstore and home improvement center as key drivers for growth.
Thirdly, we sustain growth of each business unit and strengthen corporate governance by reforming organizational structures.

Positioning of FY2015-2017 Strategic Plans
Before the beginning of FY2017, due to slow progress on profitability
improvement for the last two fiscal years, we changed profit targets
as below, while maintaining the initial target of revenues fromoperations. We will strengthen structure for the next growth.

FY2015-2017 Strategic Plans

Accelerating
growthFY2010-2014 Strategic Plans

Improving
efficiency

Expanding scale(Millions of yen)

FY2009FY2014FY2017 target(initial plan)

FY2017 target(revised plan)

The “Three Gears” strategy

Business strategies
Strategic goals

Expanding scale

Improving efficiency

Accelerating growth

Revenues fromoperations

344,900

470,564

550,000

550,000

Operating income

9,452

15,00021,00017,300Ordinary income

9,916

16,10822,00018,700Net income

3,945

9,214

13,00011,500

6.4%

5.3%

5.3%

CAGR (Revenues fromoperations)
ROA

5.7%

6.7%

8.0%

ROE

7.0%

10.7%

above 11.0%

1.2

1.0

below 0.9

25.8%

18.4%

D/E ratio
Dividend payout ratio

12 Valor Holdings Co., Ltd. Annual Report 2017

Long-term target

1,000,000

7-8%Over 25%(medium & long-term target)

Strategic Plan Progress Report (FY2016)
Structural reforms

The refurbishment of 18 stores in the Valor supermarket chain was
aimed at creating a more competitive format by strengthening the fresh
produce section and emphasizing the breadth and depth of themerchandise on display. The “everyday low prices” (EDLP) policy, underwhich we emphasize changes in the fresh produce section to attract
customers and do not as a rule use promotional flyers, was extended
from six stores in FY2015 to four more in FY2016. Two stores adopted
the EDLP sales policy after refurbishment, and the two others were
new Valor supermarkets in Neyagawa (Osaka Prefecture) and
Chagasaki (Otsu, Shiga Prefecture). We also focused on using our
supply infrastructure to develop products. Chubu Foods, which
produces and sells prepared foods, conducted a periodic renewal of its
in-house-developed product range to improve the texture and flavor ofbasic items, notably its Japanese-style prepared dishes.

2

EDLP policy extended to total of 10 stores

Development of key growth drivers

In the drugstore business, we expanded the store network, mainly inthe prefectures of Aichi and Gifu. Strong same-store sales and the
addition of 40 new outlets helped revenues surpass ¥100 billion. The
high number of new stores was complemented by a refurbishment
program. The V-drug stores at Toyokawa and Togo-nishi (both in Aichi
P re f e c t u re ) w e re u p g r a d e d t o f e a t u re i m p ro v e d r a n g e s o fpharmaceuticals and cosmetics, and new integrated food counterswere added selling prepared foods and fresh bakery produced in-store
by Chubu Foods.
In the home improvement center business, we opened Home
Center Valor Kani-Sakado (Gifu Prefecture) on an extensive site ofaround 11,300m2. This store offers a specialized lineup of building
supplies, along with a “Tire Ichiba(Market)” outlet that supplies car tires
and an off-season tire storage service.

3

TOPICS
Vision1

TOPICS

Chubu Yakuhin achieves revenues of over ¥100 billion

Organizational reforms

In October 2016, we established Core Support Co., Ltd. to help
improve the efficiency of operations management at Valor Holdings andValor Group companies, and to develop personnel with specialized
knowledge. Group companies will progressively transfer payroll,account settlement and other functions to Core Support as part ofefforts to achieve efficiency gains from the consolidation ofmanagement functions, which was one of the aims of adopting aholding company structure.
In February 2017, we began issuing the “Lu Vit Card” in a businessinitiative aimed at taking advantage of the Valor Group’s store network.
A prepaid source of electronic money, these cards also give consumers
access to a point-based loyalty scheme. We introduced them first at
the Home Center Valor chain. Going forward, we plan to promote theiruse among other Valor Group stores. The cards will help us better
gauge customer purchase trends and supply products and services
likely to be more popular among customers.

TOPICSGroup synergies targeted with launch of new card

“Lu Vit Card”

Valor Holdings Co., Ltd. Annual Report 201713

Segment Financial Review

Number of stores

Number of stores by format

800

600

745

567

601

648

Supermarkets
Sports Clubs

Drugstores
Pet Shops

Home Improvement Centers
OthersSupermarkets
Sports Clubs

Drugstores
Pet Shops

Home Improvement Centers
Others

690

19
35

4

75

1

275

400

337

200

0

New store openings by format

2

10

12*

40

745 stores in total

FY2012 FY2013 FY2014 FY2015 FY2016

1

66 stores in total

Note: including five stores of Kohseiya Co., Ltd.
acquired in August, 2016.

(Millions of yen)

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016240,138

269,918

293,505

303,521313,208

321,458

329,266

336,555

7,683

9,580

10,783

11,028

8,443

9,760

9,887

9,738

105,438

114,693

119,293

127,490

142,260

144,604

153,045

176,384

Capital expenditures

7,477

12,012

9,199

12,915

17,931

12,07810,506

11,887

Depreciation and amortization

5,283

5,430

5,978

6,346

6,826

7,381

7,556

7,339

Revenues from operations

48,37350,651

54,85062,49773,02880,47095,152

107,045

Operating income

1,009

1,357

2,294

1,934

2,449

1,961

2,736

2,692

Total assets

21,493

22,81426,501

29,06533,64938,55744,60252,019

Capital expenditures

947

1,400

2,547

3,134

3,893

4,333

5,776

8,087

Depreciation and amortization

817

860

979

1,183

1,454

1,780

2,114

2,588

36,91938,92841,734

43,81046,55946,556

48,62950,373

677

1,269

1,677

1,869

2,330

2,011

2,450

2,302

17,633

17,47918,553

19,456

19,06822,43022,49923,942

Supermarkets
Revenues from operations
Operating income
Total assets

DrugstoresHome Improvement Centers
Revenues from operations
Operating income
Total assets
Capital expenditures

166

730

1,943

1,259

464

2,276

1,478

4,777

Depreciation and amortization

983

876

867

899

875

910

945

1,000

8,371

8,514

8,604

8,788

8,955

9,271

9,838

10,459

40

77

247

420

419

463

532

639

Total assets

13,023

12,00911,287

10,76010,382

10,611

10,634

10,776

Capital expenditures

1,755

146

124

319

338

527

791

1,119

747

770

669

666

636

655

711

785

Revenues from operations

5,282

5,929

6,383

6,699

7,228

7,638

8,590

9,610

Operating income

1,943

2,410

2,761

3,062

2,995

3,395

3,647

3,699

Total assets

11,456

15,33917,51418,80922,351

24,082

23,961

24,894

Capital expenditures

28

439

1,659

1,888

2,155

624

478

2,018

Depreciation and amortization

40

381

439

550

784

819

716

721

Sports Clubs
Revenues from operations
Operating income

Depreciation and amortization
Distribution-related operations

14 Valor Holdings Co., Ltd. Annual Report 2017

FY2009

FY2010FY2011FY2012FY2013

FY2014FY2015FY2016

187

202

218

238

251

263

263

275

Valor

131

147

163

179

221

232

232

238

Tachiya

10

10

11

11

13

13

13

14

Supermarkets

Youth*

29

28

29

31

—

—

—

—

Shokusenkan-Taiyo

10

17

15

15

15

17

17

17

Kohseiya

—

—

—

—

—

—

—

5

Varo Mart

—

—

—

2

2

1

1

1

Other

7

—

—

—

—

—

—

—

Drugstores

159

174

193

214

241

271

271

337

Home Improvement Centers

36

36

34

35

35

36

36

35

Sports Clubs

51

51

51

52

54

58

58

75

Pet Shops

17

16

17

17

17

17

17

19

Others

12

15

15

11

3

3

3

4

Total

462

494

528

567

601

648

690

745

Results

Store Network

Note: *merged into Valor in October, 2013.
The figures indicate the number of stores;
the size of the pie charts corresponds to the number of stores by prefecture.

Stores by format and by prefecture (FY2016)

2

2

3

Niigata

5

14
33
1

Ishikawa

Toyama

15

17

33

Fukui

1

Kyoto

3

2

25

2

Nagano

23

41

11

4

Osaka

Other locationsin Japan

17
7

117
6

Gifu

Yamanashi

228
8

19

20
65

Nagoya

8 10
4 10

Mie

32

6

Tokyo

10 Tokyo
2
8

1
14

3

1

Kanagawa

10

11
37

1

Osaka

Overseas

3

130
3

15

73

4

Shiga

1

1

10
11

1
2

2

1

1
15

49

Aichi

224

Shizuoka

52

Supermarkets
DrugstoresHome Improvement Centers
Sports Clubs
Pet Shops
OthersValor Holdings Co., Ltd. Annual Report 201715

Segment Information

Supermarket Business
Revenues from operations/operating income
Revenues from operations …

¥336,555¥9,738Operating income …………

millionmillionRevenues from operations (millions of yen)

Operating income (millions of yen)

400,000

15,000300,000

329,266 336,555
303,521 313,208 321,458

11,02810,000

8,443

9,760

9,887

9,738

200,000
5,000

100,000
0

FY2012 FY2013 FY2014 FY2015 FY2016

0

FY2012 FY2013 FY2014 FY2015 FY2016

FY2016 Results
In the Supermarket Business, following the completion of the improvement of the supply chain infrastructure in FY2015, we focused onstrengthening of frontline store competitiveness and improvement of our product offerings. Stores opened in FY2016 were five Valor supermarket
stores, one Tachiya store, and one Shokusenkan-Taiyo store. In August 2016, Kohseiya Co., Ltd. that operates five supermarket stores in eastern
Yamanashi Prefecture became the Company’s subsidiary. Two Valor supermarket stores and one Shokusenkan-Taiyo store were closed. As aresult, the number of supermarket stores of the Valor Group was 275 as of March 31, 2017. Although Valor supermarket chain's same store sales
decreased 1.3% year on year, growth of Kohseiya Co., Ltd. and Tachiya Co., Ltd., which were added to the scope of consolidation, contributed
and the segment revenues increased. Profit decreased because of the impact of intensifying competition on profitability of stores despite continued
progress with the improvement of infrastructure efficiency.

Drugstore Business
Revenues from operations/operating income
Revenues from operations …

¥107,045¥2,692

Operating income …………

millionmillionRevenues from operations (millions of yen)

Operating income (millions of yen)

120,000

4,000

95,15290,00060,00062,49773,028107,045

80,470

2,000

2,736

2,449
1,934

2,692

1,961

1,000

30,00003,000

FY2012 FY2013 FY2014 FY2015 FY2016

0

FY2012 FY2013 FY2014 FY2015 FY2016

FY2016 Results
In the Drugstore Business, we expanded our drugstore chain centering on Aichi Prefecture and Gifu Prefecture. We opened 40 new outlets andclosed four stores. As a result, the number of drugstores was 337 as of March 31, 2017. In addition to the vigorous new store openings, we
refurbished a total of 21 stores including three stores whose floor areas were increased by relocation or by scrap & built, in order to further
strengthen competitiveness. Regarding Chubu Yakuhin Co., Ltd., the food operation continued its strong performance. Same-store sales
increased 4.6% year on year and stores opened in FY2015 and FY2016 also contributed. While the adverse impact of reductions in drug prices inline with the revision to the NHI medical fees and the change in the fee system continued, the gross profit ratio improved owing to robust sales ofpharmaceuticals and cosmetics. However, increased store opening costs led to lower profit despite higher revenues.

16 Valor Holdings Co., Ltd. Annual Report 2017

Home Improvement Center Business
Revenues from operations/operating income
Revenues from operations ……

¥50,373¥2,302

Operating income …………

Revenues from operations (millions of yen)

Operating income (millions of yen)

60,0004,000

48,629 50,373
43,810 46,559 46,556

million45,000

million30,0002,000

15,0001,000

0FY2012 FY2013 FY2014 FY2015 FY2016

3,000

0

1,869

2,330

2,011

2,450

2,302

FY2012 FY2013 FY2014 FY2015 FY2016

In the home improvement business, sales of horticultural and agricultural supplies were robust. In addition, the pet products section grew and we
expanded the “Tire Ichiba (Market)” business. These have been positioned as priority categories since FY2015. As a result, Home Center Valor’s
same-store sales increased 1.9% year on year. In February 2017, we introduced the “Lu Vit Card,” prepaid electronic money with a point-based
loyalty scheme, at Home Center Valor stores as a pilot project. Lu Vit Card membership increased centering on good customers, resulting in higher
sales per customer. New stores opened in FY2015 and FY2016 also contributed to higher revenues. However, profit decreased owing to the costof refurbishment of the flagship store and the bearing of the labor cost concerning new stores scheduled to open in FY2017.

Results

FY2016 Results

Sports Club Business
Revenues from operations/operating income
Revenues from operations ……

¥10,459¥639

Operating income ………………

Revenues from operations (millions of yen)
12,000

millionmillion

9,000

8,788

8,955

9,271

9,838 10,459

Operating income (millions of yen)
800

6,000

400

3,000

200

0

FY2016 Results

639

600

FY2012 FY2013 FY2014 FY2015 FY2016

0

420

419

463

532

FY2012 FY2013 FY2014 FY2015 FY2016

Revenues from operations in the sports club business amounted to ¥10,459 million, an increase of 6.3% year on year, and operating income rose
20.1% to ¥639 million. We opened 10 outlets of the fitness gym “Will_G” (including one outlet opened based on a franchise contract), for whichinvestment is minimized and monthly membership fees are set low. As a result, the number of sports clubs was 75 as of March 31, 2017. The
sports club business achieved higher revenues and higher profit owing to the increase in the membership and higher revenues from fee-based
programs, such as stretching supported by staff, and the expansion of the healthcare-related business based on contracts with companies andlocal governments.

Distribution-related operations
Revenues from operations/operating income
Revenues from operations……

………………
Operating income¥9,610¥3,699millionmillionRevenues from operations (millions of yen)

Operating income (millions of yen)

12,000

4,000

9,000

7,228

7,638

9,610

3,000

6,000

2,000

3,000

1,000

0

FY2016 Results

6,699

8,590

FY2012 FY2013 FY2014 FY2015 FY2016

0

3,062

2,995

3,395

3,647

3,699

FY2012 FY2013 FY2014 FY2015 FY2016

Revenues from the distribution-related operations increased 11.9% year on year to ¥9,610 million and operating income increased 1.4% to ¥3,699
million. Other Group companies related to the distribution business promoted introduction of facilities that will lead to lower environmental impacts
and strove to improve infrastructure and the service level in order to keep up with the expansion of the distribution business. Regarding thelogistics business, the Hokuriku Distribution Center in Nanto-shi, Toyama Prefecture had been serving the needs of the Valor supermarket storesand drugstores in the Hokuriku region. In order to respond to expansion of the drugstore business, we opened the Chubu Yakuhin Hokuriku
Distribution Center in November 2016, at a site to the south of the Hokuriku Distribution Center.

Valor Holdings Co., Ltd. Annual Report 201717

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

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

Governance· Internal control andcompliance systems· Relations with organs· Expansion of the scope of application to
include operating companies

P.23· Integrated information management· Expansion of the scope of application to
include operating companies

P.24· Risk management systems· Recruitment and educationof human resources· Increase in the number of sites for recruiting
offices· Supporting diversified
workforce· Support recruitment of part-time employees· Support of female workers, disabled workers andothers to enable them to maximize their capabilities

3. Risk management inrelation to the business
model

Human
resourcesdevelopment

Human resources
development to sustain
growth· For better places to work
· Reduction of CO2 emissions
Environment

Reduction ofenvironmental impacts· Waste reduction· Promotion of recycling

P.25-26· Introduction of work location selection system· Employer-provided child care services

P.27· Reduction of power consumption, energysaving operations· Reduction of food waste· Promotion of recycling of food waste

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 FY2016
59th Ordinary General
Meeting of Shareholders(Held June 30, 2016)874 shareholders attended

Dialogues with institutional
investors

Direct dialogues: 135 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 2017

Corporate GovernanceFoundation

Directors (as of June 29, 2017)

9

10

11 14

8
6

Name

Title

13
5

2

1

3

12
4

7

Significant concurrent positions at major subsidiaries

1

Masami Tashiro

Chairman & CEO

2

Akira ShinohanaManaging Director
Human Resources Management & General Affairs

3

Yukihiko Shizu

Director
Finance & Information System

4

Satoshi Yoneyama

Director

Managing Director
Valor Co., Ltd.

5

Masami Shidara

Director

Director, Sourcing and Merchandise
Valor Co., Ltd.

6

Morisaku Wagato

Director

CEO
Home Center Valor Co., Ltd.

7

Takao Yamashita

Director
Store Development & Property Management

8

Satoru Yokoyama

DirectorCEO
AXTOS Co., Ltd.

9

Katsuyuki Mori

Director

CEO
Tachiya Co., Ltd.

10

Motohiko Takasu

Director

Managing Director
Chubu Yakuhin Co., Ltd.

11

Koichiro Kubo

Director
Audit & Supervisory Committee Member (full-time)

12

Mutsuo Masuda

Outside Director
Audit & Supervisory Committee Member

13

Hirofumi Hata

Outside Director
Audit & Supervisory Committee

14

Tokimitsu Ito

Outside Director
Audit & Supervisory Committee

Valor Holdings Co., Ltd. Annual Report 201719

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 10 Executive Directors and four Directors who are Audit &Supervisory Committee Members)

August 2016

Issuance of the annual report (Japanese and English)

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*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 20175

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
The Company has been considering whether or not the Board of Directors is functioning effectively, and based on the results of thisconsideration, the Company intends to improve the Board of Directors as a whole through a continuous process of taking
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 effectiveness of the Board once a year starting from the previous year, and theBoard has comprehensively reviewed the results.
The questionnaires are designed to evaluate the effectiveness of Structure of the Board of Directors, Discussion &Consideration, Monitoring etc. by five scores. Average scores are calculated, while some of them are compared with the previous
year. The results are compiled as reports and used as evaluation materials. In addition to scores, comments written at thequestionnaires are also disclosed.
On February 6, 2016, 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 201721

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 2017

Compliance and Risk Management Systems

Number of meetings of the Board of Directors and the Audit & Supervisory Board held and attendance status (FY 2016)
Meetings of the Board of Directors

Meetings of the Audit & Supervisory Board*

10

7

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 after the 59th Ordinary General Meeting of Shareholders held on June 30, 2016, until March 2017.
**For Outside Director Mr. Tokimitsu Ito, the rate of attendance is calculated based on the number of meetings held after his appointment.

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 Operational Audits
FY2013

FY2014FY2015FY2016

181

268

258

277

For the headquarters

22

24

24

26

For stores

158

239

228

244

1

5

6

7

Number of operational audits

For manufacturing and processing sites

Valor Holdings Co., Ltd. Annual Report 201723

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

Commitment to Food Safety
Risk concerning food safety has a great bearing on thebusiness model that optimizes the entire process fromsourcing to retailing, which is pursued by the Group. The
mainstay supermarket business includes not only thesupermarket outlets but also many other sites that handle
food, such as sites for food production and processing andproduction of agricultural produce. Moreover, the drugstoreand home improvement center businesses also sell food.
Much of the information concerning this risk is gained from
customers and we believe sharing such information
throughout the Group leads to enhancement of the level ofoverall control of the Group.
Taking the opportunity of the transition to a holding
company, the Company established the Risk Management
Department comprising the Quality Control Office, theCustomer Relations Office, and the Legal Affairs Office.

24 Valor Holdings Co., Ltd. Annual Report 2017

M e e t i n g s a re h e l d p e r i o d i c a l l y i n w h i c h t h e R i s k
Management Department, the Audit Office and thepersonnel responsible for quality control and customer
relations at operating companies participate; we are alsoestablishing systems for information sharing andimprovement.
We focused on the following activities in FY2016.
· Operation of VOC (Voice of Customers) system
The system is designed to share customer feedback on
products, services and others with all operatingcompanies. Feedback on food safety is processed asdata with a designated risk level, which is assessed from
1 to 3 by the degree of damage on human health. In
addition, food safety risks are managed consistently fromthe identification of causes through to countermeasuresand prevention.

Society (Human Resources Development)

Human resources development fuels 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 and processing and distribution, in order toestablish a business model that optimizes the entire process from sourcing to retailing, as well as in preparation for expansion of the scopeof the supermarket, drugstore, and home improvement center businesses.

Adding recruiting offices

Foundation

In order to respond to expansion of the scope of the business and diversification of theexpertise required for operations, we are creating an environment that facilitates
recruitment, making it easier for recruitment staff to conduct interviews and enhancing
convenience of the recruitment process for the candidates. In April 2014, we opened therelatively accessible Valor Recruiting Office Meieki in Nagoya, Aichi Prefecture. In
February 2015, in line with the expansion of our geographical coverage, we opened theValor Recruiting Satellite Kyoto Shijo-Karasuma in Nakagyo-ku, Kyoto. Additionally, withthe opening of the Company’s Nagoya Headquarters in March 2015, we took theopportunity of integrating the recruiting office in Nagoya into the Nagoya Headquarters,
where operating companies of the Group also conduct interviews with the candidates.

Recruitment by business type
Retail(people)600

Sports club

Food production and processing

Distribution-related

400

200

0

FY2012FY2013

FY2014FY2015FY2016[Solutions to Labor Shortages] Support for recruiting part-time employees
The process of recruiting part-time employees is normally conducted at each store, which gradually faces difficulties in gathering
candidates by the area it operates or the advertising media it uses. To improve the situation, the headquarters of the Company hascome to provide support for selecting advertising media, arranging the date & time of interviews with the candidates and preparing
documents for entry, instead of stores located in Aichi and Gifu prefectures that require large numbers of part-time employees. As aresult, the Company has obtained outcomes including an increase in contracts concluded, and the headquarters has expanded thenumber of stores for support.

Education & training system
The Group’s education & training system is based on Group-wide standard education & training programs plus programs on the expertiseneeded 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 have been promoted
as a result of passing the Group’s qualification exams. Focused on the Corporate Philosophy (DNA), the programs are positioned as anopportunity 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 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 Group Conference.

Valor Holdings Co., Ltd. Annual Report 201725

Society (Human Resources Development)

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.
StatusPromotingfemaleworkers

Hiring ofthe disabled

Aside from offering all our employees opportunities
to display 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. D e v e l o p m e n t o f p o t e n t i a l c a n d i d a t e s f o r
managerial positions (buyers, deputy store
managers, managers, etc.)
2. Improvement of the workplace environment
corresponding to the phase of the individual’s lifeand career- Raising awareness about maternity leave, childcare leave, and family care leave- C reation of a workplace environment thatfacilitates easy return to work

We are actively recruiting people with disabilities who wish
to work for regular companies and be independent. The
Gifu Prefectural Government established a registration
system in November 2011 to enable companies tosupport the employment of people with disabilities incooperation with schools for learners with special needs.
Valor registered in February 2012.
In order to facilitate employment of people withdisabilities also in other regions and support them 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.

FY2015

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

FY20167.4%

6.0%(28people/378people)(23people/383people)

Maternity leave

97

people78

peopleChild care leave

118

people104

people—2.28*%(The number of female managerial
personnel/The number of all
managerial personnel)

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

The rate of hiring people
with disabilities
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

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

Usage rate of postretirement reemployment
program

93.1%

82.1%

Promotion to
full-time
employees

Eight of the nine key operating companies of the Group haveprograms to promote part-time workers to full-time
employees. Part-time workers have periodic opportunities forpromotion to full-time employees. Part-time workers who
satisfy the criteria can apply for promotion and, after
screening, successful applicants are promoted to full-time
employees. In addition, heads of departments canrecommend part-time workers as candidates for promotion to
full-time employees.

Number of part-timeworkers promoted tofull-time employees

123

128

peoplepeopleNote*: Valor Holdings Co., Ltd. and key operating companies (Valor Co., Ltd., Home Center Valor Co., Ltd., Chubu Yakuhin Co., Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd.,AXTOS Co., Ltd., Chubu Foods Co., Ltd., Chubu Kosan Co., Ltd., and Chubu Ryutu Co., Ltd.), which account for about 90% of the Valor Group’s workforce.
*In FY2016, we started group reporting of the rate of hiring people with disabilities for 23 operating companies, of which voting rights are directly held by the Company.

26 Valor Holdings Co., Ltd. Annual Report 2017

Creating better places to work

1. Responding to greater diversity in values and attitudes about work styles:
introduction of work region selection system
The spread of regional development accompanying the expansion of the Valor Group’s business operations in recent years hascreated more opportunities for personnel relocation and greater diversity in working conditions. However, from the results of aquestionnaire survey of employees and the Group’s self-reporting system, it is clear that certain employees wish to develop theircapabilities and improve skills, while they adopt lifestyles combining work with family responsibilities, notably childcare and care forthe aged. 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 covers non-managerial employees of Valor Holdings Co., Ltd., Valor Co., Ltd., Home
Center Valor Co., Ltd., and Core Support Co., Ltd., workers select one of the two categories defined below. We will continue
promoting the establishment of systems that will lead to the realization of better places to work.

National employee

Employees willing to work in any region

Regional employee

Employees who prefer to be based in a particular region

Foundation

Work region category

2. Supporting diverse human resources: opening of an on-site nursery school
In September 2017, to support employees who wish
to combine work with childcare, we plan to open an
on-site nursery school, Smile Nest Valor Hiromi
Nursery School, on the site of the Kani Office (Kanishi, Gifu Prefecture) following the relocation of someheadquarters functions. This nursery school will beavailable for the children of both employees and local
residents. Going forward, we plan to continueenhancing workplace conditions throughout the ValorGroup. Smile Nest Valor Hiromi Nursery School iseligible for a Cabinet Office grant for companysponsored childcare projects.

Valor Holdings Co., Ltd. Annual Report 201727

The Environment

Environmental Policy
We recognize that reducing the environmental impacts of our businessactivities 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.

Issues to be tackled
1. Reduction of CO2 emissions mainly through energy saving and resourcesaving
2. Reduction of food waste and other waste
3. Expansion of sales of environmentally friendly products
4. Promotion of green purchasing

Material FlowINPUTOUTPUT

Head office, offices, related facilities
Electricity and others
Electricity consumption ………

33MWh

CO2 emissions …………………

(FY2015 37MWh)

Copier paper …………………

165t(FY2015 179t)

Head office, offices, etc.

(FY2015 18t)

(including Valor Holdings)

Fuel

16t

(from electricity consumption)

Exhaust gas

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

892kl(FY2015 1,042kl)

Fuel

CO2 emissions ………
Company-owned vehicles

Distribution centers

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

12,648kl

2,069t(FY2015 2,419t)

Exhaust gas

CO2 emissions ……

(FY2015 10,179kl)

32,632t(FY2015 26,312t)

Delivery vehicles

Electricity, water, gas
Electricity consumption ……

353,315MWh

Stores(FY2015 347,590kl)

Water consumption …

CO2 emissions …

1,733,000m³

Gas consumption …

2,604,000m³

178,099t(Total electricity and gas consumption)(FY2015 1,607,000m³)

Supermarkets
Home improvement centers(FY2015 179,546t)(FY2015 2,744,000m³)

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.

28 Valor Holdings Co., Ltd. Annual Report 2017

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

Reduction of waste

Management items

Specific initiatives

FY2015 results

FY2016 targets

FY2016 results

Reduction ofpower
consumption· Demand management· Management of air-conditioning
temperature· Turning off of unnecessary lighting· Product display that does notinterrupt the flow of refrigeration· Introduction of highly efficientfacilities and equipment

Rate of power
consumption to sales
floor space:508(excluding DC usage)(3.2% reduction of theconsumption ratecompared with theprevious year)

Rate of power
consumption to sales
floor space:503(excluding DC usage)(1% reduction of theconsumption ratecompared with theprevious year)

Trucks for logistics· Turning off engines whenvehicles are stationary· Instructions and educationfor energy-efficient driving

Compared with theprevious year
· Driving distance:
107%· Amount of fuel used:
110%· Fuel consumption:
103%

1% reduction of fuelconsumption

Energy-efficientdriving

Causes and Effects

FY2017 targets

Rate of power
consumption to sales
floor space:500(excluding DC usage)(0.6% reduction of theconsumption ratecompared with theprevious year)

All lighting of supermarket
stores excluding main
lighting was changed to
LED lighting to enhancethe efficiency of electricity
usage. With a view toinstalling efficientequipment, we willcontinue with efforts to
reduce electricity
consumption.

Rate of power
consumption to sales
floor space:495(excluding DC usage)(1% reduction of theconsumption ratecompared with theprevious year)

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

Because of store
openings at distantlocations, driving
distance and fuelconsumption increased
compared with theprevious year. On theother hand, fueleconomy was improved.

1% reduction of fuelconsumption

Proportion ofcustomers avoiding
use of plastic bags:
87.0% (All stores ofValor Co., Ltd.)· Charging for plastic bags
· Implementation of “My Bag”
campaign· “No Plastic Bag Day”

Proportion ofcustomers avoiding
use of plastic bags:
84.7% (All stores ofValor Co., Ltd.)

Proportion ofcustomers avoiding
use of plastic bags:
87.0% (All stores ofValor Co., Ltd.)

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

Proportion of consumers
avoiding use of plasticbags increased by 1.0%
compared with theprevious year. The numberof stores charging plastic
bag fees increased from2 2 4 t o 2 2 5 . We w i l lcooperate with ourcustomers to reduce theuse of plastic bags.

· Planned production· Early small discounts
Reduction of food
· Review of merchandise mix
waste
for the evening andadjustment of volume

Rate of waste
generated to net
sales:
0.0536(109.7% YoY)

Rate of waste
generated to net
sales:
0.0530(99% YoY)

Rate of waste
generated to net
sales:
0.0625(116.6% YoY)

We will makecontinued efforts to
reduce unsold
products and otherwaste.

Rate of waste
generated to net
sales:
0.0530(85% YoY)

Number of storesrecycling food waste:
238

We will increase thenumber of storesrecycling foodwaste. Further
efforts to reduce thevolume of products
for disposal arenecessary.

Number of storesrecycling food waste:240· Number of stores recycling
used paper:87· Recycling volume:
98,105 kg(187.5% YoY)

Recycling volume
was increased byexpanding storesrecycling usedpaper, which was
generated fromo p e r a t i o n a lactivities. We willrevise the system
for recycling usedpaper.

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

Number of storeswith installation ofrecycling boxes
Increase in the· Milk cartons: 235
number of stores with
· Aluminum/steel cans:installation of238
recycling boxes· Plastic food trays:
229· PET bottles: 222

The next step is toinstall more large
recycling boxes andexpand the numberof recyclable items.

Increase in thenumber of storeswith installation ofrecycling boxes

Increase of the
proportion ofcustomers
avoiding use ofplastic bags

· Reduction of products to bedisposed ofPromotion of· More departments
recycling of foodconducting recyclingwaste· More products to berecycled

Promotion of recycling

Evaluation· Sorting and storage of used
Promotion of
paper at designated places
recycling of used
· More stores to recycle used
paper
paper

Promotion ofrecycling ofcontainers andpackagingNumber of storesrecycling food waste:
223· Number of stores recycling
used paper:
67· Recycling volume:
52,318 kg

Number of storeswith installation of· Installation of more recycling recycling boxes· Milk cartons: 235
boxes· Aluminum/steel cans:· Expansion of the scope ofrecyclable items
226· Review of recycling stations · Plastic food trays:
226· PET bottles:
223

Number of storesrecycling food waste:
230· Number of stores recycling
used paper:80· Recycling volume:
52,500 kg(100% YoY)

Foundation

Reduction of CO2 emissions

Environmental Performance

Note: * Calculation of “Reduction of CO2 emissions” covers Valor Co., Ltd. and Home Center Valor Co., Ltd. Calculation of other items covers Valor Co., Ltd.

Valor Holdings Co., Ltd. Annual Report 201729

FY2016 Financial Review

Summary of consolidated results and financial conditions
In FY2016, the second year of the three-year strategic plans, theValor Group worked to improve operational efficiency and focusedon 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) reform of the organizational structure toachieve growth of operating companies and strengthen
governance.
Consolidated operating results for FY2016 were revenues fromoperations of ¥520,530 million, an increase of 4.6% year on year;
operating income of ¥15,439 million, a decrease of 7.5%; ordinary
income of ¥16,762 million, a decrease of 4.7%; and profit
attributable to owners of parent of ¥10,522 million, a decrease of
2.2%. Although revenues from operations increased for the 22ndconsecutive year, operating income and ordinary income
decreased for the first time in three years and net profit decreased
for the first time in eight years.
The breakdown of the increase in revenues (¥23,067 million)
was ¥11,892 million for the drugstore business, ¥7,289 million forthe supermarket business, and ¥1,743 million for the home
improvement center business. In the drugstore business, growthrate of existing stores was strong at 4.6% and new store

openings, the highest for the third consecutive year, also
contributed. In the supermarket business, Kohseiya Co., Ltd.,
which became a subsidiary in August 2016, contributed to higher
revenues. The breakdown of the decrease in earnings (¥1,243
million) was ¥148 million for the supermarket business, ¥147
million for the home improvement center business, and ¥43 million
for the drugstore business. This indicates that the improvement inearnings of major segments has been slow. Additionally, following
the transition to the holding-company system, the Company has
been responsible for management of real estate of Valor Co., Ltd.
and Home Center Valor Co., Ltd. Increase in management ofproperty for these two companies before opening stores and after
closure of stores led to an increase in corporate expenses,
resulting in lower profit.
The gross profit ratio decreased 0.2 percentage points fromthe previous year and the expense ratio worsened 0.3 percentage
points. As a result, the ratio of ordinary income to revenues fromoperations decreased from 3.5% for the previous year to 3.2%. As
a result, ROA deteriorated from 7.0% for the previous year to
6.4%. ROE deteriorated from 11.4% to 10.2% owing to adecrease in profit attributable to owners of the parent.
The debt equity ratio improved from 0.9 to 0.8 as a result of
promoting the repayment of interest-bearing debts.

Financial position
Total assets increased ¥13,572 million from the end of theprevious year to ¥269,488 million. The main factors were an
increase of ¥3,139 million in inventories because of new store
openings and an increase of ¥8,778 million in property, plant andequipment mainly due to capital expenditure. Total liabilities
increased ¥4,871 million from the end of the previous year to¥161,761 million, mainly due to an increase of ¥1,341 million in

30 Valor Holdings Co., Ltd. Annual Report 2017

notes and accounts payable-trade and an increase of ¥3,100
million in bonds payable despite a decrease of ¥2,201 million inloans payable. Net assets excluding subscription rights to sharesand non-controlling interests increased ¥8,648 million from theend of the previous year to ¥107,057 million and the shareholders’equity ratio increased from 38.5% for the previous year to 39.7%.

Cash flows
Cash and cash equivalents at March 31, 2017 were ¥14,659 million, a decrease of 14.3% year on year. Although free cash flow (cash flowfrom operating activities minus cash flow from investing activities) was positive at ¥700 million, cash flow from financing activities was
negative at ¥3,168 million.
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥22,270 million, having decreased ¥721 million compared with the previous year.
This decrease was mainly attributable to income before income taxes amounting to ¥15,870 million, depreciation and amortization
amounting to ¥13,125 million, and an increase in notes and accounts payable-trade amounting to ¥873 million, despite cash outlays
including an increase in inventories amounting to ¥3,025 million and income taxes paid amounting to ¥6,186 million.
Cash flows from investing activities
Net cash used in investing activities amounted to ¥21,569 million, having increased ¥2,524 million compared with the previous year. The
main factors were purchase of property, plant and equipment amounting to ¥19,458 million for new store openings and refurbishment andpayments for guarantee deposits amounting to ¥1,597 million, despite proceeds from collection of guarantee deposits amounting to ¥912
million.
Cash flows from financing activities

Financial Information

Net cash used in financing activities amounted to ¥3,168 million, having increased ¥3,590 million compared with the previous year. The
main factors were repayments of long-term loans payable amounting to ¥13,797 million, redemption of bonds amounting to ¥7,040 million,
and cash dividends paid amounting to ¥1,943 million, despite proceeds from long-term loans payable amounting to ¥11,184 million andproceeds from issuance of bonds amounting to ¥9,947 million.

Policy on Profit Distribution and Dividends for FY2016
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 FY2016, the Company increased
the year-end dividend by ¥2, compared with the previous year to¥21 per share. Combined with the interim dividend of ¥19 per
share, this resulted in total annual dividends for FY2016 of ¥40 per
share, ¥4 higher than for the previous year. The payout ratio was
19.4%.

Forecasts for FY2017
The Valor Group will continue its efforts to achieve the three-year strategicplans with the aim of improving operational efficiency and establishing thefoundations for further growth. In the supermarket business, thedrugstore business, and the home improvement center business, we will
focus on establishing competitive formats; at the same time, we will work
to improve profitability through efficient utilization of infrastructure, which
we have been upgrading in recent years, and through the optimum
allocation of resources via the holding company system. For FY2017, thefinal year of the three-year strategic plans, the initial targets wererevenues from operations of ¥550.0 billion, operating income of ¥21.0
billion, ordinary income of ¥22.0 billion, and profit attributable to ownersof the parent of ¥13.0 billion. Although we will maintain the target forrevenues from operations, we will lower the earnings targets and prioritize
strengthening of the Group’s fundamentals for the next stage of growth.
In FY2017, the plan calls for the opening of 68 stores: 10 supermarket
stores, 35 drugstores, one home improvement center, 20 sports clubs,

and two pet shops. In addition to expansion of the existing stores, we
also intend to expand our operations. The plan calls for capital
expenditure (payment basis) of ¥23.1 billion, consisting of investment in
new stores of ¥16.2 billion, investment in existing stores of ¥4.5 billion,
and other investment of ¥2.4 billion.
Based on the above-mentioned assumptions, forecasts forconsolidated financial performance for FY2017 are as follows: revenues
from operations of ¥550.0 billion, an increase of 5.7% year on year;
operating income of ¥17.3 billion, an increase of 12.0%; ordinary incomeof ¥18.7 billion, an increase of 11.6%; and profit attributable to owners of
the parent of ¥11.5 billion, an increase of 9.3%. For dividends, theCompany intends to pay annual dividends of ¥45 per share, an increaseof ¥5 compared with FY2016, consisting of an interim dividend of ¥21 pershare, an increase of ¥2 compared with FY2016, and a year-end dividendof ¥24 per share, an increase of ¥3.

Valor Holdings Co., Ltd. Annual Report 201731

Consolidated Financial Statements (Summary)
Valor Holdings Co.,Ltd. and Subsidiaries
The financial year ended March 31, 2016 and 2017

Consolidated Balance Sheet(Millions of yen)

FY2015(Millions of yen)

FY2016FY2015FY2016

Notes and accounts payable-trade

35,37636,718

Short-term loans payable

16,97016,954Current portion of bonds

7,000

40

Current portion of long-termloans payable

12,892

17,678

Lease obligations

1,182

1,500

Income taxes payable

3,653

2,951

Provision for bonuses(Liabilities)(Assets)

Current liabilities

Current assets
Cash and deposits

17,247

14,818Notes and accounts
receivable-trade

6,348

7,241

Merchandise and finished goods

30,77433,911

Raw materials and supplies

505

507

Deferred tax assets

1,569

1,832

Other

10,223

10,741(52)(7)

66,61569,045

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

2,357

2,531

Provision for directors’ bonuses

163

136

Provision for point card certificates

484

647

Provision for loss onrecollection of gift certificates

200

215

Asset Retirement Obligations

—

3

Other

15,177

15,643

Total current liabilities

95,45995,020—10,060Long-term loans payable

38,48331,512

Lease obligations

8,423

9,486

Deferred tax liabilities

239

140

Provision for directors’
retirement benefits

853

868

Provision for retirement benefits

2,738

3,049

Asset retirement obligations

5,014

5,625

Long-term deposits received

5,559

5,879

184,277

198,516

Accumulated depreciation(94,822)(103,031)

Buildings and structures, net

89,454

95,485

7,067

7,190

Bonds payable(4,026)(4,561)

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

3,041

2,628

Land

37,41538,556

Lease assets

12,294

14,674

Accumulated depreciation(4,953)(6,223)

Lease assets, net

7,341

8,451

Construction in progress

2,912

3,242

Other

27,90530,715(21,153)(23,382)

6,752

7,333

146,918

155,697

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

173

751

19

11

7,105

7,639

7,298

8,402

2,306

2,290

Investments and other assets
Investment securities
Long-term loans receivableNoncurrent liabilities

Other

117

116

61,42966,740156,889

161,761

Capital stock

11,916

11,916

Capital surplus

12,713

12,722Retained earnings

75,841

84,442

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

Treasury stock(2,596)(2,558)

Total shareholders’ equity

97,875

106,522

368

364

(23)

—

161

139

26

30

533

534

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

785

794

Deferred gains (loss) on hedges

Deferred tax assets

3,995

4,231

Guarantee deposits

24,96025,830

Other

3,261

3,415

Foreign currency translation
adjustment
Remeasurements of defined
benefits plan

Allowance for doubtful
accounts

(225)

(219)

Total investments andother assets

35,08436,343

Total noncurrent assets

189,301

200,443

255,916

269,488

Total assets

32 Valor Holdings Co., Ltd. Annual Report 2017

Total accumulated othercomprehensive income
Subscription rights to shares

52

96

Minority interests

565

573

99,027

107,727

255,916

269,488

Total net assets
Total liabilities and assets

Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2016 and 2017)

Consolidated Statement of Income(Millions of yen)

FY2015FY2016

Net sales

479,934

501,627

Cost of sales

360,223

377,610124,016Gross profit

119,711

Operating revenues

17,52918,903Operating gross profit

137,240

142,919
6,269

Advertising expenses

5,946

Packaging expenses

73

99

Supplies expenses

537

659

Distribution expenses
Provision for point card certificates

618

655

1,679

2,024

Provision of allowance for doubtful accounts

60

2

Directors’ remuneration

475

459

Salaries and wages

47,361

49,615

Bonuses

3,614

3,783

Provision for bonuses

2,181

2,312

Provision for directors’ bonuses

163

146

Retirement benefit expenses

598

593

Provision for directors’ retirement benefits

90

59

7,241

7,829

Welfare expenses
Utilities expenses

8,114

7,594

Rent expenses

19,48821,296

Repair and maintenance

2,571

2,708

Depreciation

11,25011,774

Amortization of goodwill

164

153

8,323

9,441

120,556

127,480

16,683

15,439Interest income

113

109

Office work fee

878

932

Rent income

811

627

Other

1,433

1,383

Total non-operating incomes

3,235

3,052

791

714

1,034

509

Other
Total selling, general and administrative expenses
Operating income

Financial Information

Selling, general and administrative expenses

Non-operating income

Non-operating expenses
Interest expenses
Rent cost of real estate
Other

506

505

2,332

1,729

17,586

16,762

Subsidy income

97

228

Other

90

79

Total extraordinary income

188

307

Total non-operating expense
Ordinary income
Extraordinary income

Extraordinary loss
Loss on sales of noncurrent assets

10Loss on retirement of noncurrent assets

35

106

Impairment loss

681

663

Loss on reduction of noncurrent assets

151

228

Loss on valuation of investment securities

1

3

Provision of allowance for doubtful accounts

196

20

Other

263

177

Total extraordinary loss

1,331

1,199

Income before income taxes

16,443

15,870

Income taxes-current

5,655

5,819

Income taxes-deferred

51

(519)

5,706

5,300

10,736

10,570Total income taxes
Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

(23)

47

10,75910,522

Valor Holdings Co., Ltd. Annual Report 201733

Consolidated Financial Statements (Summary)
Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2016 and 2017)

Consolidated Statements of Cash Flows(Millions of yen)

FY2015FY2016

Income before income taxes

16,443

15,870Depreciation and amortization

12,683

13,125

Impairment loss

681

663

Amortization of goodwill

166

153

Increase (decrease) in allowance for doubtful accounts

(229)

(52)

Increase (decrease) in defined benefit liabilities

321

267

Increase (decrease) in provision for directors’ retirement benefits

(83)

(15)

Increase (decrease) in provision for point card certificates

60

102
(142)

Cash flows from operating activities

Interest and dividends income paid

(131)Interest expenses received

791

714

Loss on retirement of noncurrent assets

35

106

Loss on reduction of noncurrent assets

151

228

Loss (gain) on valuation of investment securities

13

Equity in losses (earnings) of affiliates

71

46

Subsidy income

(97)

(228)

Decrease (increase) in notes and accounts receivable-trade

(616)

(878)
(3,025)Decrease (increase) in inventories(2,580)

Increase (decrease) in notes and accounts payable-trade

2,357

873

Increase (decrease) in accrued consumption taxes

(849)

110

Increase (decrease) in accounts payable-other and accrued expenses
Other
SubtotalInterest and dividends income received
Interest expenses paid

90

735

(419)

455

28,847

29,115

27

45

(766)

(704)

Income taxes paid

(5,116)(6,186)

Net cash provided by operating activities

22,991

22,270Cash flows from investing activities
Payments into time deposits

(60)

(89)

Proceeds from withdrawal of time deposits

53

166

Purchase of property, plant and equipment(15,895)(19,458)

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

22

441

(1,191)(1,224)Purchase of investment securities

(41)

(1)

Payments of loans receivable

(110)

(97)

Proceeds from collection of loans receivable

115

(29)

(1,853)(1,597)

Proceeds from collection of guarantee deposits

507

912

Proceeds from guarantee deposits received

282

580

Repayments of guarantee deposits received

(335)

(264)

Purchase of stocks of affiliates

(390)

(438)

Payments for guarantee deposits

Subsidy income
Other
Net cash provided by investing activities

97

228

(245)

(695)

(19,045)(21,569)

Cash flows from financing activities
(700)

(16)

Proceeds from long-term loans payable

Net increase (decrease) in short-term loans payable

10,10011,184

Repayments of long-term loans payable(11,925)(13,797)

Proceeds from issuance of bonds

—

9,947

Redemption of bonds(42)(7,040)

Repayments of finance lease obligations(1,254)(1,515)Purchase of treasury stock(1,253)

(1)

72

30

Proceeds from sales of treasury stock

(2)

(17)

Cash dividends paid

Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation(1,753)(1,943)

Net cash provided by financing activities(6,758)(3,168)(43)

23

Net increase (decrease)in cash and cash equivalents(2,856)(2,444)

Cash and cash equivalents at beginning of period

19,96017,103

Cash and cash equivalents at end of period

17,103

14,659Effect of exchange rate change on cash and cash equivalents

34 Valor Holdings Co., Ltd. Annual Report 2017

Valor Holdings Co.,Ltd. and Subsidiaries(Fiscal years ended March 31, 2016 and 2017)

Consolidated Statements of Changes in Net Assets
FY2015(Millions of yen)

Shareholders’ equity

Balance, March 31,
2015

CapitalStock

CapitalSurplusRetainedearnings

11,916

12,69966,834

Accumulated other comprehensive income
Treasurystock(1,416)

Total
shareholders’equity90,034

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

306

4

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

131

(175)

267

38

Noncontrollinginterests

Total net
assets540

90,881Equity transaction
with noncontrollinginterests

(0)

(0)

(0)

Dividends fromsurplus(1,753)(1,753)(1,753)

Net income

10,75910,75910,759(1,253)(1,253)(1,253)

74

88

88

Purchase oftreasury stock
Disposal oftreasury stock

14

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

61

(27)

29

202

265

13

25

305

—

13

9,006

(1,179)

7,840

61

(27)

29

202

265

13

25

8,146

11,916

12,71375,841(2,596)

97,875

368

(23)

161

26

533

52

565

99,027FY2016(Millions of yen)

Shareholders’ equity

Balance, March 31,
2016

Restated balance,
March 31,2016

Accumulated other comprehensive income

CapitalStock

CapitalSurplusRetainedearnings

Treasurystock

11,916

12,71375,841(2,596)

Cumulative effects
of changes inaccounting policies

20
11,916

12,71375,861

Financial Information

Changes of items
during the period

Valuation
Total
Deferred gains
difference onshareholders’(loss) on
available-forequity
hedgessale securities

97,875

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

Changes of items
during the period
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 theperiod

(3)

23

(22)

3

1

44

7

53

Total changes of items
during the period

—

8

8,580

37

8,627

(3)

23

(22)

3

1

44

7

8,680

Balance, March 31,
201711,916

12,722

84,422(2,558)106,522

364

—

139

30

534

96

573

107,727

Valor Holdings Co., Ltd. Annual Report 201735

Corporate Data/ Share Information (as of March 31, 2017)

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

14,497

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
Securities companies 36 shareholders
456 thousands of shares 0.9%

Foreign entities 203 shareholders
11,243 thousands of shares 21.3%
Other companies 391 shareholders
11,311 thousands of shares 21.5%

Number of Shares Percentage ofHeld (Thousands) Shares Held

Shareholder

The Norinchukin Bank

2,542

4.8%

Financial Institutions 52 shareholders
16,798 thousands of shares 31.9%

The Juroku Bank

2,536

4.8%

Individuals, others 13,815 of shareholders
12,851 thousands of shares 24.4%

Ito Youth Scholarship Foundation

2,400

4.5%

Masami Tashiro

1,571

2.9%

Japan Trustee Services Bank, Ltd. (Trust Account)

1,426

2.7%

Tomoko Ito

1,360

2.5%

Shiunsha Co., Ltd.

1,326

2.5%

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1,256

2.3%

ORBIS SICAV

1,213

2.3%

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

1,172

2.2%

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

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

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 2017

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.
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.

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.

Sports ClubsAXTOS Co., Ltd.

Distribution-related operations

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

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

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

Note*: 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 201737

“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/