Creating New Values for Local Communities

2022 Annual Report
Fiscal Year Ended March 31, 2022

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

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

Valor Holdings Co.,Ltd.
Headquarters

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

For IR-related Inquires
Investor Relations & Public Relations

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

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

Annual Report2022

Creating New Values for Local Communities

CONTENTS

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 foradvancement of local communities and culture. To fulfill them, we perform our duties sincerely;
set challenging 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”.
“Valor” is derived from a Late Latin word meaning ‘a person of courage’.
We believe in courage as essential to fulfill our social responsibilities.

On our way to becoming a destination company*that continues to provide new value to local communities

About valor

Foundation for Value Creation

02 The Path of the Valor Group's Growth

22 Sustainability Management
24 Global Environment

Growth Strategy

26 Local Communities and Global Environment

04 Message from CEO

28 Diversity of Human Resources

08 Message from Acting President and Director

30 Corporate Governance

12 The Valor Group Business Models for Sustainable

33 Compliance and Risk Management Systems

Growth

14 Medium- to long-term management policy
15 FY2021-2023 Strategic Plans
16 Special Feature
The Valor Group Business Model, Advancing Process
Integration between Manufacturing and Retailing

Financial and Corporate Data
34 11-year Summary of Financial Results
36 Consolidated Balance Sheet
37 Consolidated Statement of Income
38 Consolidated Statements of Cash Flows

Results

39 Consolidated Statements of Changes in Net Assets

18 Segment Overview/Segment Information

40 Corporate Data/Shares Information

20 Segment Financial Review*Destination company … a company that is chosen by society.

Valor Holdings Co., Ltd. Annual Report 2022

1About Valor

The Path of the Valor Group's Growth

About valor

We will create new values in response to changing social
needs by strengthening our connection with customers
leveraging Group management resources.

FY2020Exceeded

The Valor Group has met the diverse needs of local communities by rolling out multi-format retailing which
comprises supermarkets, drugstores and home improvement centers, while maintaining business models that
optimize the entire process from sourcing to retailing. We will achieve medium- & long-term growth by making atransition to a more competitive format and strengthening our connection with customers.

700

billion yen(Revenues fromoperation)

7,000

FY2019Exceeded600

billion yen
6,000

FY2016
Exceeded

Clarifying our vision under the influence of the novel coronavirus disease (COVID-19)

500

billion yen
5,000

Under the influence of COVID-19, we were reminded of both our unwavering social mission of providing a stable supply of
products essential to daily life, as well as the necessity to rethink the way we deliver products and services to address new lifestyles and consumption behaviors. This led us to reorganize our thoughts on just how we see the Group’s role in society andhow we will create value.
As a result, we established “Valor Group Vision 2030” and “Sustainability Vision 2030,” our medium- to long-term management policies with an eye to the year 2030, and to bring these to reality, formulated the “Valor Group New FY2021- 2023
Strategic Plans” in FY2021. We will continue to strive toward sustainable growth and the realization of a sustainable society,taking the stance of “Creation, Advance & Challenge,” as set forth in our Corporate Philosophy.

FY2011
Exceeded400

billion yen
4,000

FY2007
Exceeded300

billion yen
3,000

FY2004
Exceeded
FY1999(Revenues from operations)

ExceededSupermarket BusinessSports Club Business

Drugstore BusinessDistribution-related operations

Home Improvement Center Business

Others59 1960

61

62

63

64

65

66

67

68

69 1970

71

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

Changing Objectives of Capital andBusiness Partnerships
In the past, we executed M&As centering on the supermarket businessto expand the size and scope of our business. Since 2015, we haveacquired food manufactures with unique products and have concluded
capital and business partnerships that lead not only to product sourcing
and development improvements, but also to comprehensive approaches.
2billion yen
2,000

Revenues Growth

1958

200

Valor Holdings Co., Ltd. Annual Report 2022

100

billion yen
1,000

72

73

74

75

76

77

78

79 1980

81

82

83

84

85

86

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

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

87

88

89 1990 91

92

93

94

95

96

97

98

99 2000 01

02

03

04

05

2005- Expansion of Supermarket Business

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

06

07

08

09 2010 11

12

13

14

15

16

17

18

19 2020 21 (FY)

2015- Business Process Integration and
Growth Gained from Multi-format
Group Management

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

Pursuit of Economies of Scales 1995
Expansion of Operational Areas 2005
Increase in Market Share 2005
Enhancement of Product Appeal/
Evolution of Business Models

2015

Valor Holdings Co., Ltd. Annual Report 20223

Growth Strategy

Message from CEO

Masami Tashiro

Transformation and challenges under the
new FY2021-2023 strategic plans

Chairperson & CEO

The food distribution industry and surrounding
industries continue to maintain their functions as
lifelines that support people's lives and fulfill theirsocial responsibilities amid the prolonged impact of
the new coronavirus infection and continue torespond to changes in consumer behavior in the
COVID-19 pandemic to survive their businesses.
While the Group has been making efforts to respondto the COVID-19 pandemic in recognition of its
urgency and importance, it has also been taking a
new direction in recent years as a medium- to longterm management issue, from the perspective of how
to perceive customer needs, which have changed
over the past decade, and how to link them to futurebusiness growth.
The pillar of that transformation based on thisdirection is the transition to “destination stores.” Dueto the bolstering sales of food products by
convenience stores and drugstores and the rise of EC
sales, supermarkets have lost the advantage of the“proximity to the market area.” In response to this, wehave navigated management toward a basic policy of“undertaking a paradigm shift from expanding
standardized stores to enhancing the appeal of
products.” In other words, converting existing stores
to a model where the unique product and category
mix itself would be the motivation for customer visits,
we have been renovating and expanding the fresh
food sections at stores and striving to improve
product appeal by renewing private brands to go
beyond market areas to acquire customers thatwould not normally be the targets.
These efforts have enabled us to steadily enhancestore competitiveness and profitability to achieve
steady growth while overcoming the effects of the
COVID-19 pandemic in FY 2019 and onwards.

4

Valor Holdings Co., Ltd. Annual Report 2022

Grow th S trateg y

A future of a "Valor Economic Zone"
realized by a destination company
that is chosen by society
In FY 2021, the Valor Group has clarified its mediumto long-term management policies leading up to 2030
as the “Valor Group Vision 2030” and “Sustainability
Vision 2030,” in rethinking just how we see theGroup’s role in society and in what way we will create
value in the society of tomorrow. In addition, we
commenced our new FY2021-2023 strategic plans.
These plans aim to evolve into a "destinationcompany" by further promoting the transition to"destination stores" and focusing on the future visionin the new strategic plans.

Sales increased for the 27th consecutive year,
driven by the supermarket businessIn the first year of the plans, consolidated operating
results for FY2021 were revenues from operations of¥732,519 million, an increase of 0.3% year on year.
Although affected by the application of the newrevenue recognition standard by approximately¥20,000 million, the growth of the supermarket
business led the way to a new record high, marking
the 27th consecutive year. Compared to the figures
before the application of the new standard, real
growth was up 3.1% year on year. Profit decreased
year on year, affected by mainly an increase in
expenses for renovating and launching new stores.
Operating income decreased 17.3% to ¥21,205
million, ordinary income decreased 15.0% to ¥24,140
million, and profit attributable to owners of parent
decreased 28.4% to ¥9,014 million. Despite thedecrease in profit, operating income and ordinary
income were the second highest ever recorded.
While the effects and restrictions on social andeconomic activities due to the COVID-19 pandemic
continue, in the retail environment, the stockpilingand stay-at-home demand that was predominant lastyear has subsided, and the consumption behavior
toward “living with COVID” has taken root in this year.
As a key strategy in our leading supermarket
business, the Group continued to promote theValor Holdings Co., Ltd. Annual Report 20225

Growth Strategy

Message from CEO

In the supermarket business, as a new focus theme,
we began opening "specialty stores" specializing in
fresh food and delicatessen in urban areas, building a
chain development format that differs from that ofsuburban areas. To perceive the need for fresh foodand delicatessen in urban areas with small stores thatare easy to secure locations, we are creating highly
specialized stores that utilize the supermarket style.
We are also focusing on training employees to hold"Meister" certifications, who demonstrate advanced
product knowledge and sales techniques in in-store
sales.
Meanwhile, in EC business, used increasingly in the
COVID-19 pandemic, net supermarkets, which began
cooperation with Amazon Japan LLC. in June 2021,
grew steadily, contributing to an increase in market
share.
As a result, the supermarket business in this fiscal
year increased revenues from operations due to thesuccessful renovation to become destination stores,
which led to an increase in existing store sales,e s p e c i a l l y i n t h e f re s h f o o d s e c t i o n s , a n d t h econtribution of Yaosen Co., Ltd. and Yamata Co., Ltd,
which became subsidiaries in October 2021. The
drugstore business achieved an increase in revenue,
supported by higher new store sales and strong
performance in dispensing and EC sales, while thehome improvement center business saw a decline inoperating revenue due to a reaction to the special
demand during COVID-19.

The first year of the medium-term strategic plans
with steady progress in the three growth strategies
Two medium- to long-term management policies,“Valor Group Vision 2030” and “Sustainability Vision
2030,” are roadmaps for the Group to endure as an
indispensable company in society. Under the “ValorGroup Vision 2030,” we will build a comprehensive

6

Valor Holdings Co., Ltd. Annual Report 2022

economic zone that transcends the boundaries of ourstores as a destination company that connects
c o m m u n i t i e s t h ro u g h p ro d u c t s , s e r v i c e s , a n d
payments. Under the “Sustainability Vision 2030,” weaim to be a company that contributes to the creationof a sustainable society and develops together with
our stakeholders through the efforts of all employeesof the Group in its business activities.
The new FY2021-2023 strategic plans, currently
underway, are positioned as the first step in thethree-year process of realizing these visions. The
plans aim to achieve operating revenue of ¥780,000
million, operating income of ¥29,000 million, ordinary
income of ¥31,000 million, ROE of 9.3%, ROIC of
6.3%, and D/E ratio of 0.6 times in the final year of
the plan, the fiscal year ending March 31, 2024. We
will continue to pursue three growth strategies:“connections with products,” “connections withcustomers,” and “ties with society.
The “connections with products” initiative focuses on
creating attractive products that are “unique to Valor”
b y l e v e r a g i n g t h e G r o u p ’s p r o c u r e m e n t a n dmanufacturing functions. In the first year of the plans,
the number of Group-manufactured products withannual sales exceeding ¥100 million reached 129
items (up 15 items from the previous year), showing
steady progress. In addition, PB products are noto n l y s o l d i n s t o re s , b u t a l s o s o l d t o e x t e r n a lcustomers, including exports.

systems and a surplus solar power circulation modelat our facilities to reduce our environmental impact.
We are also engaged in resource recycling throughspecialized subsidiaries and cooperate withgovernment agencies to respond to various social
needs.
Through these three growth strategies, the Group willfurther strengthen its business foundation and lay thefoundation for the formation of a Valor economic
zone, evolution into a destination company, andrealization of a sustainable society, which are thegoals of the medium- to long-term management
policies.

A prosperous future shared with
our stakeholders
In the second year of the plans, consolidated resultsfor FY2022 are expected to be increased in revenue
and profit, which are projected to be ¥750,000 million
in operating revenue (up 2.4% year-on-year), ¥22,700
million in operating income (up 7.0%), ¥25,000 million
in ordinary income (up 3.6%), and ¥11,500 million in

profit attributable to owners of parent (up 27.6%).
Based on our profit return policy of maintaining stable
and continuous dividends with a target consolidated
dividend payout ratio of 25%, we plan to pay anannual dividend of ¥58 per share (interim dividend:¥27 per share; year-end dividend: ¥31 per share) for
FY2022, an increase of ¥2 over the previous fiscal
year. To meet the expectations of our shareholders,w e w i l l s t r i v e t o f u r t h e r i m p ro v e o u r b u s i n e s s
performance and increase our corporate value whileraising even higher the level of returns.

Grow th S trateg ytransition to destination stores while striving to
improve product appeal. Specifically, we renovated
28 stores to expand the fresh food sections, and at
the same time, we enhanced product appeal bycreating products that leverage the strength of
specialty stores, strengthening manufacturing andretailing, and incresing private brands (PB), and wesought to enclose customers with our Lu Vit card
application (app), our own electronic money.

We have appointed Mr. Takayuki Koike as Acting
President effective August 10, 2022. As CEO, I will domy utmost to support the members of the Board of
Directors, while at the same time, I am determined toestablish a more solid group management structure
than ever before so that all of our stakeholders canfeel secure in our company.
We hope that all of our stakeholders will continue tolook forward to the prosperous future that we, theValor Group, will create, and we look forward to yourcontinued support.

In efforts to “connections with customers, we are
expanding the number of members of the “Lu Vit
Card and app” and strengthening our EC business. In
the first year of the plans, the number of “Lu Vit Cardand app” members totaled 4.29 million (up 590,000
from the previous year), and in the EC business, asmentioned above, the cooperation with Amazon
Japan LLC. was a positive success, while the“ainoma” online supermarket for business officedelivery also performed well.
The PB and EC businesses, together with the BtoB
business that sells products to corporations andmunicipalities, are positioned as “non-store
businesses” and were integrated into V-Solution Co.,
Ltd. in May 2022. Through this consolidation, we aim
to enhance our competitiveness, expand our scale,and develop new markets.
In terms of our connection with society, we arepromoting the introduction of solar power generation

Valor Holdings Co., Ltd. Annual Report 20227

Growth Strategy

Message from Acting President and Director“Double Cropping,” strengthening the core businessand leveraging the Group's resources

Takayuki Koike
Acting President and Director

My name is Takayuki Koike, and I have been appointed
Acting President and Director as of August 10, 2022.
This sudden appointment may have made allconcerned, but I will continue to exercise leadership ast h e p e r s o n i n c h a r g e o f n a v i g a t i n g t h e g ro u p
management. Under the current management structure,
I serve as Chairperson of the Board of Directors andChairperson of the Group Executive Committee.
I have been with the company for 27 years since I joinedin 1995, and I believe that I have grown along with thecompany. I have been in charge of stores, the System
Department, and the Merchandise Department, andthen transferred to a trading company, after which I was
involved in the Logistics Department for a long time. In
addition, in 2005, I became involved in M&A andbusiness development as General Manager of the
President's Office, and in 2018, I became President andRepresentative Director of Chubu Kosan Co., Ltd.,
which is a company among our logistics groupcompanies. Now I have been the Director of theDistribution Technology Department since 2020.
The challenge throughout my career has been "how tocreate synergy by connecting the strengths of eachcompany. To reveal the group’s potential, I will make useof my experience and leverage what I can do in the
management of the company.
I believe that I have three main missions for the future.
The first is to pursue a destination company for the
stakeholders of the Valor Group. In the future, it will be
important not only to achieve sales and profit but also to
be a company that is valuable to society. In addition tocreating stores where customers enjoy shopping, we
aim to be a company where employees find their work
rewarding, a company where business partners canshare in mutual growth, and a company that meets the
expectations of our shareholders.

8

Valor Holdings Co., Ltd. Annual Report 2022

Grow th S trateg y

Provide local communities
with the value that only
the Valor Group can create
The second is to rebuild and redesign the assets andvalues that the Valor Group has built up to date. As
we expand our business, we have nearly 60 groupcompanies, and we feel that we need to consolidate
and integrate their functions with a view to future
growth strategies. We will create an environment inwhich each group company can achieve maximum
cost performance.
Third, we will reform our internal structure in terms ofhuman resource development, with an eye to generationalc h a n g e . T h e e n v i ro n m e n t s u r ro u n d i n g u s h a s
undergone a major transformation in fundamental
elements. The COVID-19 pandemic has accelerated thisprocess. We will use this change in top management
as an opportunity to raise the level of management for
growth.
The two major growth policies to realize the above are“strengthening the core business” and “double croppingby leveraging the resources of the Valor Group.”
The Valor Group has created a model in which thegrowth of its three core businesses (supermarket,
drugstore, and home improvement center) has triggered
the growth of other group companies. At this time, we
aim to improve group earnings by re-focusing on thethree core businesses, especially the supermarket
business. From the second half of the fiscal year, we will
launch six projects: “productivity improvement,” “humanresource development,” “strengthening manufacturing
and retailing,” “leveraging PB,” “establishing a methodof target management that is resistant to change,” and“gaining a competitive edge in sales policy.” In line withthese projects, we will enhance our core business fromboth short- and long-term perspectives.
We also refer to the policy of earning profits through aseparate axis from the store channel by leveraging theresources of the Valor Group as “double cropping”. Thisinitiative is an innovation in profit-earning measures.
Specifically, we will expand our non-store businessthrough EC and BtoB operations, and develop abusiness model that returns value to society throughgovernment cooperation and regional symbiosis.
Valor Holdings Co., Ltd. Annual Report 2022

9

Growth Strategy

Message from Acting President and Director

Progress and future of growth strategies
to connect products, customers and societyFirst, in our “connection with products” initiative, we arecontinuing to develop PB products, aiming to produce
products with group sales of over ¥500 million, while
gradually expanding external sales. Against the
backdrop of National Brand (NB) price hikes, PB isprevailing and even more important. As for fresh foodproducts, we are feeling the benefits of being
destination stores by developing category killer level
merchandising (MD) such as “Sushi, directly made byfisheries sections” and “the roasted pork and offal
processed at our in-house process center.”
As prices continue to rise, customers’ sensitivity to pricevalue and their sense of affordability are changing
dramatically. Our strength as a retailer is that we canquickly identify and respond to these changes. We willleverage this strength to pursue the development of
products and sales floors from the customer's
perspective. At the same time, we will optimize ourmanufacturing and sales cycles using DX and reduce
costs through group-wide supply chain management.
In our efforts to the “connection with customers,” weare pursuing the maximization of connections with ourcustomers through our EC business, improvements to
the Lu Vit app, and direct marketing efforts using digital
signage, all against the backdrop of the COVID-19
pandemic. Under this circumstance, the number ofmembers of the Lu Vit card and app has been steadily
increasing, and the company is now ready to respondto the diversification of payments. In the fan-building
project, we have established analytical methods throughtask teams with our business partners and area c c u m u l a t i n g k n o w l e d g e . I n a d d i t i o n , w e a recooperating with Amazon Japan LLC. to open more
stores. To develop the “double cropping” mentioned
above, we will assess various local needs and expand
our non-store business.
In our “connection with society” initiative, we are

10

Valor Holdings Co., Ltd. Annual Report 2022with government agencies and other corporations.

In executing our plans, we believe that “backcasting” ismore necessary than ever before. The economic
environment surrounding us continues to be
unpredictable due to the recent sharp rise in raw
material prices, weaker yen, and rising indirect costs.
Even if we compare numerical improvements andbusiness performance with that of last year, we cannot
cover unexpected negative factors. We believe that thecondition for survival is to clearly define “what are thenumerical targets and status targets we should aim for,”then formulate strategies and policies and implement
them with management that can respond to changes
more quickly.

The third is DX between customers and the ValorGroup. We will continue to actively promote the use of
the Lu Vit app as well as our EC service, ainoma, andWe believe that DX innovation is necessary to realize
this goal, and in August 2021, we obtained certification
as a “DX certified operator” as defined by the Ministry of
Economy, Trade and Industry.
Regarding the promotion of DX, our priority is to“accelerate communication” in the following three cases.
One is DX between manufacturing and sales. We
replaced our core system in the spring of 2022 with a
network that enables the manufacturing group and thesales group to exchange information. By sharing
necessary information, we will improve the efficiency of
supply chain management and realize the productproduction and sales floors that meet customer needs.
The second is DX between the fields and theheadquarter. Delays of communication are inevitableissues between more than 1,300 stores in the groupand the headquarter, which is in charge of making
policies. By introducing smart devices, we aim to put
the policies into action and efficiently, evaluate them,and correct the course timely if necessary.

the app for Sports Club AXTOS members. We will takea multi-layered approach to the market by working tomaximize the connection with our customers. We canbe more multifaceted and closely connected.
As mentioned above, the retail industry is facing adifficult environment, but we believe that this toughsituation is also an opportunity. We will take thisopportunity to take on the challenge of undertaking
i n i t i a t i v e s u n i q u e t o t h e Va l o r G ro u p t h a t o u rcompetitors cannot imitate. For example, in the logistics
function, we will realize the cost improvement acrosseach business through a large-scale switchover of thematerial handling system. By converting supermarket
stores to drugstores, we will also offset investment
costs related to closing and opening stores. From April
2022, the Valor Group will also increase its joint efforts
in procurement and take on the challenge of more
efficient procurement.

Grow th S trateg y

It has passed one and a half years since wecommenced our new FY2021-2023 strategic plans.
Although there have been significant changes in theexternal environment, we believe that progress to datehas been generally favorable in implementing thestrategic goal of “Connect 2030: Connecting Products,
Customers, and Society.”working to contribute to decarbonization through theuse of renewable energy, including the introduction ofsolar power generation systems and a surplus solar
power circulation model, and the provision of EV
charging services at our stores, as part of our efforts toaddress sustainability issues. In addition, as a groupthat deals with food products in many situations, weplan to continue to promote the provision of foodproducts in cooperation with local children's cafeterias
and food banks as a measure to address food loss andwaste. To support the livestock industry in the face ofrising feed prices and other problems, we are also
working on integrated and cyclical solutions by
c o n v e r t i n g re s i d u e s f ro m o u r f o o d p ro c e s s i n g
operations into animal feed. In recent years, natural
disasters have frequently occurred locally andunexpectedly. We recognize that our role as a corporategroup responsible for lifelines is becoming increasingly
significant. We have concluded agreements with 47
municipalities in 4 prefectures to provide support in theevent of a disaster, and we are actively providing
supplies and other assistance to disaster-stricken areas.
We intend to further promote the conclusion ofcomprehensive partnership agreements with local
governments in the future.

We believe that the Valor Group still has much room for
improvement in terms of synergy. While paying close
attention to the disadvantages of grouping, we willc re a t e t h e n e x t Va l o r m o d e l b y i m p ro v i n g t h e
productivity of all group companies and conducting
more efficient management.
We hope you look forward to the further development of
the Valor Group.

DX innovation and Valor Group's
unique group synergies
We will also move forward to realize our goal of evolving
into a “destination company” as stated in our mediumto long-term management policy for 2030. As in thepast, we will not only continue to create stores with highcustomer value, but also create a system that candeliver value to customers without involving real stores,
and create a regional symbiosis model that can provide
a wide range of value and services through cooperation

Valor Holdings Co., Ltd. Annual Report 202211

Growth Strategy

The Valor Group Business Models for Sustainable Growth

The Valor Group Business Models
Social Issues
Local Communities

Imbalance between Food Supply and
DemandLu VitDrugstore
Home Improvement Center
Pet Shop
Lu Vit Card

Sports Club

Accelerating Change in Consumer &Retail Market

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

Business Process Integration• Aging and declining population• Impact of IT innovation on shopping behavior• Decreasing local suppliers serving local communities

Valor Group’s product appeal
Procurement& Production
Wholesale
Distribution

Creation ofGroup
Synergies

Solutions

Connect 2030
Connecting products, customers,
and society

Information
linkage

Maintenance

Rise in oil prices• Rising energy cost
• Coexisting with COVID• Rising food prices

Sus

Solutions

Valor Group Vision2030
Our aim is to build a “Valor Economic Zone” thatconnects local communities conveniently andprosperously with the Valor Group’s products,
services, and payments and become a “destinationcompany,” that is chosen through the appeal of
products. To realize this goal, we will strengthen ourconnections with customers and evolve our businessmodel as a manufacturing and retailing company.

12• ainoma• Store-based
wholesale business• Other non-store
sales (mobile sales,
others)• Amazon• EC Mall• FIRST, PROsite

Valor Group Lu Vit App

Supermarket

Connections withcustomers

EC

Digital transformation (DX)

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

StoresGrow th S trateg yChanges in Labor Market

Strengthening connections
with customers• Intense competition between formats• Aging and lack of successors in regional agriculture• Possible impact of trade policies on local suppliers

Valor Holdings Co., Ltd. Annual Report 2022

Connections with products

tainability management

Connections with customers

Management that is conscious ofties with society

Valor Group’s product appeal

Strengthening connections with customers

Strengthening Group governanceIn creating a “destination store” that offers seasonal foods and gives
customers a purpose to shop, we will connect with customers throughappealing products that are only available from the Valor Group by utilizing
the Group’s manufacturing capabilities.

Going beyond just our connections with customers that had been
primarily gained through stores, we will work to strengthen new
relationships that address the diversifying lifestyles of people by utilizing
e-commerce (EC) and the Lu Vit Card and app. In regions with lessdeveloped EC infrastructure, we will promote “the Company as adominant force in EC” by using our own management resources, and inlarge areas where EC infrastructure is more mature, we will promote“wide-area collaborative EC” by working with our partners.

We will further promote the Group’s growth potential by ensuringtransparency and strengthening functions of the Board of Directors, aswell as by enhancing the governance of Group management.

Business Process Integration
Together with enhancing the product development and manufacturing
capabilities, and productivity of each manufacturing company that makes
up the Group, we will coordinate
supply chain information throughdigital transformation (DX) and workto accommodate the expansion of
procurement and manufacturingbases as well as inter-company
collaboration.

Connections with local communities as a particular
to be strengthened
We will use the Group’s management resources to strengthen ties withlocal communities while striving to resolve local issues.

Promoting activities of all Group employees
By promoting activities of all Group employees, we consider the “global
environment,” “local communities,” and “diversity of human resources” tobe key initiatives, to which we will
endeavor to find solutions whilestrengthening ties to the local
Energy and Water Food Loss
Recycling
community. We will implement“Globalenvironment,”“Localcommunities,”andproblem-solving programs in six“Diversity of human resources”
subcommittees, namely, Energy
and Water, Food Loss, Recycling,
Local Communities, Shopping
Local
Shopping
Human Resource
Communities
IssuesActivities
Issues, and Human Resource
Activities.

Valor Holdings Co., Ltd. Annual Report 202213

Growth Strategy

Medium- to long-term management policy

FY2021-2023 Strategic Plans

Valor Group Vision2030

FY2021-2023 Strategic Plans

Aiming “Destination Company” with product strength throughout the region, and the “Valor Economic Zone” in the dominant-form region.

Quantitative targets (FY ending March 31, 2024)
Scale

Revenues from operations

Management efficiency

ROE

9.3 %

ROIC

¥780.0 billion operating income ¥29.0 billion

6.3 %D/E ratio

Evolving our business model“Destination Company” concept

Connect local communities conveniently and prosperouslywith the Valor Group’s product, services, and payments.

To be a company chosen throughappeal of products

Challenges
Advancement of Business
Process integration
between manufacturing
and retailing

Connect 2030

Vision for 2030

Valor Economic Zone” concept

Connecting products, customers, and society

Today we have a sales network of more than 1,200 stores, including supermarkets, drugstores, home improvement centers, and others,
which gives us the advantage of being in close proximity to our customers. In the future, though, we will strengthen connections with ourcustomers not only through our stores, but also through e-commerce (EC) and our own electronic money, Lu Vit. In addition to making ourmanufacturing capabilities more robust, the transition to a destination company will require the establishment of an efficient supply chainthat can accommodate the expansion of procurement and manufacturing bases and collaboration with partners. For this reason, we will
work to evolve our business model by linking information through digital transformation (DX).

Major Policies

Enhancing appeal of
products continuously.

The dominant-form region

Challenges

Throughout the region

Maintenance

Strengthen points ofcontact with customers.

Procurement and Production

Move from store centric
to customer centric withresponding to lifestyles
and consumer behavior.

Data synchronization of
supply chain throughData-HubSupply chain needs informationsynchronization for responding
to bases and inter-company
collaboration and to efficiently
supply products.

Wholesale
Distribution
Retailing(FY2021-2029)

FY2020

Final year of previous medium-term
strategic plans

FY2026

Reference¥730.1 billion¥25.6 billion¥28.3 billion· Revenues from operations· Operating income· Ordinary income

ROIC*¥780.0 billion¥29.0 billion¥31.0 billion

6.0% (>WACC)

6.3% (>WACC)

Operating margin 3.5%

Operating margin 3.7%

Operating margin after tax

Gross profit ratio 26.4%
Selling, general and25.3%
administrative expenses ratio

Return on invested capital

2.7 times

Gross profit ratio
Selling, general andadministrative expenses ratio

8% (>WACC)
Gross profit ratio
Selling, general andadministrative expenses ratio

2.7 times• Promoting EC strategy• Leveraging Lu Vit Card and app data

Make manufacturing capabilities
more robust

Promote EC strategy

FY2029Strengthening Group governance• Improving Board of Directors’ effectiveness• Strengthening supervision of Group companies

Realizing a de-carbonized society
Reducing food waste• 10% reduction in CO2 emissions at Company sites (compared to FY2019)• 35% reduction in food waste generation (compared to FY2016)• Review of product development process for Group manufacturing capabilities• Improve quality and productivity through the replacement of equipment• Introduction of data HUB and improved accuracy of registered information• Company as dominant force in EC/ wide-area collaborative EC

9% (>WACC)

Formation of foundation for
low-cost management
Improve asset efficiency• Promotion of digital sales promotions, testing, and marketing using purchase history information (ID-POS data) linked to membership information• Respond to reservation sales, business format links, and diversification of payment methods by enhancing app functionality• Maintain a smart device environment in stores• Business automation and simplification with RPA and AI utilization• Effective use of store assets, integration of functions among Group companies

Operating margin 4.8%

Gross profit ratio
Selling, general andadministrative expenses ratio

3.1 times

Note: Effective from the beginning of the fiscal year ending March 31, 2022, the Company will apply “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29).
In the summer of 2021, launch of a new service in collaboration with Amazon Japan G.K.
*Calculated as follows: Operating income after tax (using the income tax burden ratio after the application of tax effect accounting) / (interest-bearing debt + shareholders’ equity +non-controlling interests)

Promoting EC strategy
Use Company resources in regions with less developed EC infrastructure, and in large areas where EC infrastructure is moremature, promote wide-area collaboration.
Company development

Priority area Company as dominant force in EC

Business model KPI

FY2020

Final year of the previous three-year
medium-term strategic plans

Product appeal (Valor Co., Ltd.)FY2022 result

114 items· Products manufactured by the Group withannual sales of over \100 million

Store turnover rate (Valor Co., Ltd.)129 items¥1.24 billion¥1.27 billion

3.38 million
320 thousand¥5.1 billion

3.76 million
530 thousand¥7.3 billion· Sales per store

Connections with customers· Number of LuVit Card holders· Number of registered app members· EC sales volume*

FY2023

Final year of the three-year mediumterm strategic plans¥1.3 billion

1 million¥10.0 billion

FY2026

Reference• Formation of foundation for low-cost management• Improving asset efficiency

Valor Group Vision 2030

Over ¥1 trillion
Over ¥48.0 billion
Over ¥50.0 billion
Operating margin

Strengthening connections withcustomers• Approximately 30 existing stores in the supermarket business renovated annually• Expand product knowledge and sales training programs• Operation of the Meister system for the training and treatment of experts

Promote transition to a“destination store”

Leverage LuVit Card and app data

Scale

Efficiency

FY2023

Final year of medium-term
strategic plans• Promoting the transition to a “destination store”• Making our manufacturing capabilities more robust• Linking information in the supply chain

Details of major policies

Link information in the supply chain

Medium- to long-term
quantitative targets¥31.0 billion

0.6 times

Enhancing the appeal of products

Improving productivity

Sustainability
Management

ordinary income

Grow th S trateg y

Under the previous three-year medium-term strategic plan, along with promoting our transformation into a “destination store” withattractive products and categories that motivate customers to visit our stores, as well as advancing partnerships on comprehensive
initiatives, we are beginning to see results in areas such as product procurement, although we believe that it is necessary to make full use
of our diverse management resources in order to achieve further improvements in management efficiency. Our aim is to realize asustainable society and achieve corporate growth through the evolution of our business model, while utilizing our management resources.

ainoma online supermarket service delivering to offices (B-to-B-to-C)
ainoma pickup (B-to-C)

FY2029Valor Group Vision 2030

No. 1 in sales of prepared foods
manufactured by the Group“Ginger flavored! Deep fried chicken”

300 items¥1.4 billion¥1.5 billion
6 million
3 million¥50.0 billion

Degree of EC
infrastructuredevelopment

Store-based wholesale business (B-to-B)

Low

Other non-store sales businesses
Mobile sales (B-to-C)

Training area Specialized contents EC
Company site (B-to-C)
Degree of EC
infrastructuredevelopment

Connections with customers

High

Priority area Wide-area collaborative EC
Net-based supermarket for Amazon Prime members (B-to-C)
ainoma open patent business (B-to-B)
Entry into EC mall (B-to-C)

Note: *EC sales (drugstore and home improvement center businesses), ainoma online supermarket service delivering to offices, drive-through, and other non-store sales businesses.
In the summer of 2021, launch of a new service in collaboration with Amazon Japan G.K.

14

Valor Holdings Co., Ltd. Annual Report 2022

Valor Holdings Co., Ltd. Annual Report 202215

Growth Strategy

The Valor Group Business Model, Advancing Process

Special Feature

Integration between Manufacturing and Retailingmanagement resources.
Toward ¥1 trillion in revenues from operations, we will develop and expand our
infrastructure, including procurement and manufacturing functions, logistics and processing
functions, to accommodate the growing scale of the retail and service sectors.

The Valor Group develops a diverse range of businesses, including supermarkets,
drugstores, and home improvement centers, and builds business models oriented toward
manufacturing and retailing, which encompasses every step along the way, frommanufacturing to distribution and sales, creating synergies while integrating the Group’s

Logistics / Processing

Retail / Services

This corporate group is responsible for procurement and manufacturing functions tolaunch attractive products by building and establishing a product development
process based on customer information. Through the development of value-added
products, we will strengthen vertical integration and promote sales outside the group.

Since 1989, we have expanded our distribution
area while designing and developing ourown logistics centers to meet various
logistical needs. We have comprehensively
built an original logistics system,
including establishing a cold chain
system in food logistics, where freshness
is essential, the know-how to meet theneeds of supermarkets, home improvement
centers, drugstores, and other types ofbusinesses, and every detail from thedesigns of our logistics centers to thoseof computer operation screens.

The Group operates a total of more than 1,300 stores in multiple business categories, including
supermarkets, drugstores, home improvement centers, pet shops, sports clubs, ande-commerce, as a regional logistical business. We continue to provide new values to local
communities. Under the basic management policy of "shifting the paradigm from the number ofstores to the strength of products," we are promoting the transformation into a "destination
store”. By transforming ourselves into destination stores, whose unique products and categories
motivate customers to visit our stores, in our supermarket business, we are improving productappeal through renewal of our private brands, while renovating stores to expand the fresh fooddepartment to attract customers beyond our trade area.

Grow th S trateg y

Procurement / Manufacturing

Supermarkets
othersDrugstores
Agricultural products

Food planning

Chubu Agri Co., Ltd.

Food & Partners Co., Ltd.

Agricultural business

Product Planning & Sales

Shiroishikandumekouzyou Co., Ltd.
Manufacturing canned root vegetables in water

Agri Trade Co., Ltd.

Manufacturing & sales of rice seeds

Home Improvement CentersothersFisheries

Food & Daily necessities

Daien Foods Co., Ltd.

others

V-Solution Co., Ltd.

Fisheries processing

PB development & sales

Honda Suisan Co., Ltd.

Supermarkets
Logistics centersFisheries processing

Ishinomaki Foods Co., Ltd.
Fisheries processing

Livestock

Chubu Ryutu Co., Ltd.

Livestock business

Wholesale imports of materials and equipment

Daily delivery

Agurirun Co., Ltd.

Manufacturing Japanese pickled vegetables

VARO Co., Ltd.

Manufacturing kimchi (Korea)

Wholesale of agricultural materials, Collecting farm-fresh
vegetableseothers

Delicatessen

HC items

Chubu Foods Co., Ltd.

Delicatessen, cut vegetables, manufacturing Japanese sweets

Furuya Sangyo Co., Ltd.

Alleanza Japan Co., Ltd.
Imports of HC merchandise

Manufacturing Japanese sweets

Keirinkaku Co., Ltd.

Manufacturing Chinese delicatessen

othersAgricultural materials

Fukui Chuo Tsukemono Co., Ltd.

Pet Shops

Gifu, Aichi, Shizuoka, etc.

Materials

Chubu Meat Co., Ltd.

othersFood processing centers
Gifu, Shizuoka, Fukui, etc.

Sport clubs

Delicatessen factory
Chubu Foods Co., Ltd.
Gifu, Shizuoka, etc.

othersDrugstores
Logistics centers

Stores On Wheels / Business Office Delivery / Online supermarket

Gifu, Aichi, Shizuoka, etc.
othersHome improvement centers
Logistics centers

Seasonings
Daitoh Shokken Co., Ltd.

Gifu, Kanagawa

Manufacturing seasoning

Back Office
System development

16

Customers

Valor Holdings Co., Ltd. Annual Report 2022

Cleaning

Seiso Co., Ltd.

General building maintenance
MENTEX Co., Ltd.

Recy

Japan Clean

Functioncling

Services LLC

Developers

Valor Max Co., Ltd.

Credit cards

Valor Financial Service Co., Ltd.

Lu Vit card / Apps

othersValor Holdings Co., Ltd. Annual Report 2022

17

Results

Segment Overview/Segment Information
Drugstore Business

Revenues from operations by segment and their distribution

No. of stores……………

478

Ave. floor space……………

759

m2

Business summary

Distribution-related
operations

Sports Club Business

1.4%

1.3%

Operating income

Revenues from operations

Operating income

billion yen

billion yen

billion yen

billion yen

10.4

3.2

billion yen

Operating income

5.0

732.5
billion yen(FY2021)

Drugstore BusinessSupermarket Business

20.8%

55.4%

Operating income

Revenues from operations

Operating income

billion yen

billion yen

billion yen

billion yen

2.9

405.5

No. of stores……………

312

Sports Club Business

1,817

m2

In the Supermarket business, the Group now has a total of 312 stores, including
13 stores operated by Yaosen Co., Ltd. and Yamata Co., Ltd., which became
subsidiaries in October 2021. Chubu Foods Co., Ltd., which has continued
strong sales at supermarkets and delicatessen specialty stores, as well as Daid
Shokuhaken Co., Ltd., which became a subsidiary in the previous FY, andYaosen Co. Ltd. and Yamata Co. Ltd. contributed to the expansion of operating
revenue. Operating income was affected by the renovation costs and the higher
personnel expenses at Valor Co., Ltd., the lower gross profit and the higher
opening costs at Tachiya Co., Ltd..

Valor Holdings Co., Ltd. Annual Report 2022

Distribution-related operations(Valor Co., Ltd.)Business summary

18

193

The sports club business commenced operations in April 1998 following thetransfer of assets from Valor Co., Ltd. AXTOS Co., Ltd., which formerly operated
general sports clubs with swimming pools and tennis courts, began operating the
low investment chain of “Sports Club AXTOS Will_G,” also establishing its
franchise operations. These sports clubs are not only growing in the prefecturesof Aichi and Gifu, but are also expanding throughout the country, including regionswith higher population densities such as Kanto and Kansai. Although some storesin areas declared to be under a state of emergency had to be closed temporarily
or operate on a shortened schedule, others operated normally, implementing
infection control measures, and made efforts to maintain existing members, andpromote the return of members who had used the leave of absence system.

14.9

Ave. floor space……………

No. of stores……………

Business summary

Revenues from operations

Supermarket Business

158

Daiyu Eight Co.,Ltd. opened three new stores and closed one store, Home
Center Valor Co. Ltd. opened two new stores, including the first store
specializing in camping gears, named CAMP LINK Gifu (Gifu City, Gifu
Prefecture), and Time Co. Ltd. opened two new stores. As of the end of this FY,
the Group has a total of 158 stores. In this business, sales of building materials
were strong, but existing stores sales (excluding the effect of the application of
accounting standards for revenue recognition) decreased 3.0% year-on-year at
the three companies: DAI-YU-EIGHT Co., Ltd., Home Center Valor Co. Ltd.,and Time Co. Ltd.

billion yen

152.4

No. of stores……………

Business summary

Revenues
from operations

16.8%
122.9

5

Home Improvement
Center Business

Home Improvement
Center Business

Revenues from operations

9.8

R esu l ts

Revenues from operations

In the drugstore business, 38 new stores were opened and 9 stores wereclosed, bringing the total number of stores in the group to 478 (including 136
dispensing stores) as of the end of the current FY. The Group continued toactively provide health-related information using the LuVit app, post recipes
created by nutritionists, and distribute app-only coupons, while EC sales also
increased. Existing stores sales (excluding the impact of the application of theaccounting standard for revenue recognition) decreased 1.9% year-on-year due
to a reactionary decline in sales of masks and hygiene products, but thedispensing division performed well and there were signs of a recovery in salesof cosmetics.

Business summary
The principal subsidiaries operating in this segment are the logistics operator
Chubu Kosan Co., Ltd.; food, sundries and materials wholesaler Chubu Ryutu
Co., Ltd.; and the facilities maintenance services provider Mentex Co., Ltd.
Group companies involved in distribution-related businesses above, installed
fixtures for new store constructions and renovations, and proceeded to replaceequipment with the one that would reduce costs and environmental impact.

Valor Holdings Co., Ltd. Annual Report 2022

19

Results

Segment Financial Review(Millions of yen)Store Network
FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

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

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

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

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

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

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

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

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

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

297
239
17
—
16
6
3
8
4
1
—
—
3
—
449
152
190
110
28
1,226

312
239
19
—
16
6
3
8
4
1
6
7
3
—
478
158
193
115
38
1,294

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 prefectures.

2
Supermarkets
Delicatessen Specialty Stores
DrugstoresHome Improvement Centers
Sports Clubs
Pet Shops
OthersHokkaido

Ichinomiya-shi
Yokkaichi-shi

9Toyota-shi

80
17 34

Shimada-shi

3
17 17
8

Supermarket BusinessDistribution :Centers
Processing :Centers
Production :Bases

Valor Holdings Co., Ltd. Annual Report 2022

Koshinetsu region

58

118

Hokuriku region

150

5 5

102

16

Tohoku region

25

41

45

8

FY2016FY2017FY2018FY2019FY2020

FY2021

Revenues fromoperations

293,505

303,521313,208

321,458

329,266

336,555

345,960

353,311372,733

396,248405,537

Operating income

10,783

11,028

8,443

9,760

9,887

9,738

8,518

9,433

9,050

16,103

14,908

Total assets

119,293

127,490

142,260

144,604

153,045

176,384

184,386

195,231200,720

207,938214,395

Capitalexpenditures

9,199

12,915

17,931

12,07810,506

11,887

12,574

13,376

7,462

13,562

12,798Depreciation andamortization

5,978

6,346

6,826

7,381

7,556

7,339

7,490

7,633

8,431

8,363

9,510

Revenues fromoperations

54,85062,49773,02880,47095,152

107,045

117,949

127,781

139,358

150,575

152,474

Operating income

2,294

1,934

2,449

1,961

2,736

2,692

2,532

3,488

4,317

3,978

2,950

Total assets

26,501

29,06533,64938,55744,60252,01958,84958,72567,75575,51178,702

Capitalexpenditures

2,547

3,134

3,893

4,333

5,776

8,087

5,359

4,622

6,135

7,123

7,274

979

1,183

1,454

1,780

2,114

2,588

2,927

3,104

3,170

3,533

3,962

Revenues fromoperations

41,734

43,81046,55946,556

48,62950,37353,55555,173

114,301

130,177

122,947

Operating income

1,677

1,869

2,330

2,011

2,450

2,302

2,149

2,616

3,465

7,327

5,061

Total assets

18,553

19,456

19,06822,43022,49923,942

25,562

31,02081,23981,60282,404

Capitalexpenditures

1,943

1,259

464

2,276

1,478

4,777

1,316

645

4,677

3,595

4,374

867

899

875

910

945

1,000

1,099

1,083

2,505

2,440

2,622

Revenues fromoperations

8,604

8,788

8,955

9,271

9,838

10,45911,397

13,157

13,597

9,146

9,847

Operating income

247

420

419

463

532

639

680

672

556

(1,933)(559)

Total assets

11,287

10,76010,382

10,611

10,634

10,776

13,05915,175

15,76815,331

12,260Capitalexpenditures

124

319

338

527

791

1,119

3,114

2,565

1,960

140

435

Depreciation andamortization

669

666

636

655

711

785

882

1,080

1,295

1,236

1,144

Revenues fromoperations

6,383

6,699

7,228

7,638

8,590

9,610

9,075

10,265

10,687

11,26910,451

Operating income

2,761

3,062

2,995

3,395

3,647

3,699

3,725

2,910

2,793

3,210

3,206

Total assets

17,51418,80922,351

24,082

23,961

24,894

27,23028,56929,73332,51929,535

Capitalexpenditures

1,659

1,888

2,155

624

478

2,018

3,044

384

1,050

965

785

439

550

784

819

716

721

758

817

846

976

1,014

Supermarkets

Drugstores

Sports Clubs

93

Kinki region

Chugoku region
for chilled products
for ambient- temperature products
for chilled & ambient- temperature products
for fresh meatfor fresh vegetables & fruits
for fresh fish
3
8
for prepared food
8 5
for fresh bakery
Kyushu region
Shikoku region
for fish products

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

20

38 13

2

7 18

4
4
1 16

3

Tajimi-shi

FY2015

Depreciation andamortization

Kani-shi
Ogaki-shi

FY2014Home Improvement
Centers

Number of Stores by Region

Fukui-shi

FY2013

Depreciation andamortization

Number of Stores by Region and Locations of Infrastructures (FY2021)

Nanto-shi

FY2012R esu l ts

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

FY2011

Kanto region

39

90

Distribution-related
operations

7 2
39

73
196
33
385

Tokai region735

3Overseas3

Depreciation andamortization

Valor Holdings Co., Ltd. Annual Report 2022

21

Foundation for Value Creation

Sustainability Management

The Valor Group Sustainability Management

Setting goals for key issues

The Valor Group has established its Valor Group Vision 2030, its vision of itself for 2030, and aims to build “Valor Economic Zone” thatconnects local communities conveniently and prosperously with the Valor Group’s products, services, and payments. It also seeks to become
a “destination company” that is chosen through the appeal of products while realizing a sustainable society through its Sustainability Vision
2030. As one basic policy under its FY2021-2023 strategic plans, the Company has the goal of management that is conscious of ties withsociety, and it endeavors to strengthen Group governance that underpins its business model while forging ahead on the three priority areas of“global environment,” “local communities,” and “diversity of human resources” that support sustainable business growth.

Establishing goals for key issues to be prioritized under the FY2021-2023 strategic plans
Objectives

Climate change
countermeasures

Sustainability Vision 2030

Three-year targets (2021-2023)

2030 challenge targets

2050 challenge targets

Initiatives

10% reduction of emissionsof CO2 from Company sites*Compared to FY2019

40% reduction ofgreenhouse gas emissions
in the supply chain*Compared to FY2019

Greenhouse gas emissions
in the supply chain grossvolume of zero*Compared to FY2020

Promoting EMS utilization, energy
conservation activities
Promoting introduction of renewableenergyCollaboration with suppliers
Environmental training for all employees

35% reduction*Compared to FY2016

45% reduction*Compared to FY2016

55% reduction*Compared to FY2016

Improvement of store operations,infrastructure maintenance,collaboration with suppliers
Environmental training for all employees“The Valor Group will contribute to the development of local communities and the advancement of social life and culture basedon the efforts of all its employees, and through its business activities that lead to the realization of a sustainable society.”
Food waste

The Valor Group has established six subcommittees, namely, Food Loss, Recycling, Energy and Water, Local Communities, Shopping Issues,and Human Resource Activities, for the three priority areas of the “global environment,” “local communities,” and “diversity of humanresources,” through the activities of all employees, with the promotion manager of each Group company taking the lead to carry out efforts.

*Tackling the challenge of meeting

numerical targets with the goal of
Globaldelivering the connection of aenvironment sustainable global environment toSociety and local
communities

Diversity ofhuman resources

the next generation

CO2 emissions

Food loss

差し替え予定Globalenvironment
Water resources

Shopping issues

Health orientation

Society and local
communities
Producer support

Local production for
local consumption

Senior citizens

Diversity of humanresources
People withdisabilities

For the Valor Group to support in realizing a sustainable society, we
held study sessions and moved forward on the distribution of action
declaration cards with the aim of enabling each and every employee of
the Group to think about social issues and take action to address
them. Considering what each of us can do and taking action will allow
us to expand our circle of activities.

Established Sustainability Promotion Office(March 2022)
We created our Instagram account to share oursustainability promotion activities.
ID : valor_sustainability

Recycling

Active roles
for women

Foundation for Value Creation

Initiatives for all Valor Group employees

Platform (shared platform) upon which actions are taken in FY2021

Initiatives taken fromorder of high priority
throughout the ValorGroup

Human Resources
Development

To live prosperously even a century
from now SDG initiatives, taken
together with customers
The Valor Holdings exhibited a Food Drive booth and the Ethical Market booth,which promotes people shop ethically, in the “Totteokino-Ongakusai” event in
Nagoya, and in Gifu. Many people supported us and bought things. The“Totteokino-Ongakusai” means the street concert where people with andwithout disabilities come together to enjoy music.

Subcommittee activities
In addition to the retail business, which includes supermarkets, drugstores, and home improvement centers, in each of the operatingcompanies involved in the sports business, manufacturing and processing business, distribution business, wholesale business, cleaning
business, security business, and others, we have been working on how to ensure the sustainability of business activities and how to manage
their impact on the environment and society. Based on this, we promote subcommittee activities to identify key issues and define targets foraddressing these issues, and to strengthen cooperation and information sharing within the Group on matters that are strongly related toachieving the goals of each operating company and the Group. A total of 70 members that comprise the six subcommittees gather at thesubcommittee meetings, which are held seven times a year (both online and offline), to promote the exchange of information that transcends
business segments and responsibilities. This works to expand food bank initiatives, to accelerate the installation of solar panels, and also thedevelopment of new ways to utilize food waste and other efforts that promote activity throughout the Group. The progress of subcommittee
activities is reported to the Group Management Executive Committee.
22

Valor Holdings Co., Ltd. Annual Report 2022

2021 store SDGs educational poster

Valor Holdings Co., Ltd. Annual Report 2022

23

Foundation for Value Creation

Global Environment

Reduction of greenhouse gas emissions

Response to TCFD

At Valor Holdings Co., Ltd., we are working to calculate and reduce greenhouse gas (GHG) emissions at Group companies and to create
renewable energy sources.

We have decided to express our support for the TCFD recommendations and have identified and assessed the risks and opportunities thatclimate change poses to our group's business in line with the TCFD final recommendations. We will enhance our disclosures and work
toward achieving our goals by more quantitatively assessing potential impacts based on climate-related risks and opportunities using
climate scenario analysis, in line with the disclosure framework recommended by the TCFD.

Calculating greenhouse gas in the supply chain

Note: TCFD: Abbreviation for the Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board at the request of the G20.

Concerning the calculation of greenhouse gas emissions, following the calculation of its own emissions in FY2019, Valor Co., Ltd. has
expanded the scope of its calculation to the entire supply chain since FY2020, and calculated its emissions in accordance with the GHG
Protocol, a recommended international standard. Going forward, we will continue to calculate the emissions of our Group companies andwork to accomplish reductions.

FY2021*1 Greenhouse gas (GHG) emissions*2
Category

Calculation target

Direct emissions frombusiness operators themselves

Scope 1In March 2022, we established the Social Contribution andSustainability Committee under the Board of Directors to build asystem to address climate change issues and strengthen ourefforts.

Board of Directors
reportSupervise instruction /reportEmissions associated with fuel combustion*3

7,735

Emissions due to leakage of CFCs*4

36,582

Representative
Director, CEOGroup Executive
Committee

instruction / reportIndirect emissions from the use of electricity, heat,or steam supplied by other companies*5

118,878

Scope 3

Indirect emissions other than Scope 1, 2

1,083,897

Ratio

Scope/Category

Emission volume (t-CO2)

Supply chain emissions volume1,247,092

100.0%

Scope1

44,317

3.6%

Scope2

118,878

9.5%

Scope3

Scope1,2,3

Category 1

Purchased goods

997,577

92.0%

80.0%

Category 2

Capital goods

20,543

1.9%

1.6%

Category 3

Fuel- and energyrelated activities

22,581

2.1%

1.8%

Category 4

Upstream transportation and distribution

9,708

0.9%

0.8%

Category 5

Waste generated in operations

25,5982.4%

2.1%

Category 6

Business travel

350

0.0%

0.0%

Category 7

Employee commuting

3,916

0.4%

0.3%

Category 8

Upstream leased assets

—

—

—

reportcooperation

Risk Management
Committee

instruction / reportSocial Contribution SDGs subcommittees
Business companies
instruction /reportStrategy
We recognize climate change as a management issue, and we arecommitted to long-term and continuous efforts to address it interms of both a business risk and an opportunity. In FY2021,
based on the TCFD recommendations, we assessed climaterelated risks and opportunities that could affect our major
businesses using multiple scenarios.
Risks and opportunities identified are reflected in the mediumterm management plan and incorporated into activities to reducerisks or capture profit-earning opportunities, thereby strengthening
the resilience of the strategy.

Food Loss

Energy /water

Recycling

Shopping Issues

Contribution to
Local Communities

Human Resource
Activities

Possible scenarios
Anticipated Worldview
A world in which
average temperature inScenario crease by 2 1 0 0
below is limited to lessthan 2°C than
2°C
that before theIndustrial Revolution

Changes related to the transition to a decarbonizedsociety will affect businesses (transition risk)

A world in which
the averagetemperature inScenario crease by 2 1 0 0
is 4°C higher
4°C
than that before
the Industrial
Revolution

Physical damages by climate change will affectbusinesses (physical risk)

Regulations on climate change will be strengthened
and carbon tax and other laws and regulations will be
introduced.
Progress in low-carbon technologies and othertechnological innovations
Society as a whole is moving toward decarbonizationand companies are appreciated for their efforts toachieve it

Regulations on climate change introduced but limited
Increasingly severe extreme weather events andfrequent natural disasters
Temperature rise and water shortage cause changes
in crop growth conditions and water withdrawal
restrictions, etc.

Risk Management

Category 9

Downstream transportation and distribution

—

—

—

Category 10

Processing of sold products

—

—

—

Category 11

Use of sold products

—

—

—

Category 12

End-of-life treatment of sold products

3,625

0.3%

0.3%

Category 13

Downstream leased assets

—

—

—

Category 14

Franchises

—

—

—

We have established Risk Management Committee to comprehensively identify company-wide risks, including climate change-related risks, inaccordance with the "Risk Management Basic Regulations," and to assess the importance of potential risks within the Group in terms of theirimpact and probability of occurrence. The Risk Management
Committee Office shall be the Risk Management Department, which is
Climate Change Risk Management Systemchaired by an executive director and meets on a regular basis. Risks
Board of Directors
identified by the Risk Management Committee are managed byworking groups (subcommittees), and a system for risk management
reportreportduring normal times and crisis management during emergencies has
Social Contribution Sustainability
cooperation
Risk Management Committee
Committee
been established. In addition, we assess vulnerability to natural(Company-wide risk management)(Risk Management of Environmental Issues)disasters and other risks and prepare for BCPs. We recognize theinstruction / report
impact related to climate change as a risk to the Group, and incooperation with the Risk Management Committee, we will implement
Energy / Water Subcommittee
measures to address the issues identified and examined mainly by the(Subject to risks related to Energy/Water)
Energy and Water Subcommittee and the Social Contribution andSustainability Committee. These efforts are management issues andare reported regularly to the Board of Directors.

Indicators and Targets

Category 15

Investments

Scope3———

1,083,897

100.0%

86.9%*1 April 2021 to March 2022
*2 Among consolidated business operators, all locations (239 supermarkets, as well as distribution centers, chilled centers, processing centers, produce centers, etc.) of Valor Co., Ltd.
*3 Usage of city gas and LP gas at each site (including tenant usage), gasoline usage by Company-owned vehicles, usage of autogas for forklifts, etc.
*4 Leakage of HFCs due to the use of freezing and refrigeration, as well as air conditioning equipment at each site. Converted to CO2 equivalent by multiplying a global warming potential.
*5 Power usage at each site (including tenant usage)*6 In this fiscal year, only the scope of specific shipper reporting

Valor Holdings Co., Ltd. Annual Report 2022

Foundation for Value Creation

Scope 2reportSocial Contribution
Sustainability Committee

Emission volume (t-CO2)

Scope 3 emissions

24

Climate change-related governance structure

Governance

We have set "Global Environment" as one of the priority areas inour "Sustainability Vision 2030" and have been working to reducegreenhouse gas (GHG) emissions as a measure against climatechange by setting long-term GHG emission reduction targets inour supply chain.

2030 Target

40% reduction in GHG emissions
FY2019 ratio
in the supply chain

2050 Target

Zero GHG emissions in the
supply chain

FY2020 ratio

Valor Holdings Co., Ltd. Annual Report 2022

25

Foundation for Value Creation

Local Communities and Global Environment

Under the four policies of regional cooperation utilizing the comprehensive strengths of the Valor Group, we will strive to strengthen
cooperation with local communities on the themes of food and nutrition education, healthy society, SDGs, and contingency support.

1
Food andNutrition
Education

Expanding the support that we,a local company, can provide.

4
Contingency
SupportCooperation through Foods andProducts as a regional distributor.
Product Development

We distribute boxed lunches, supply andtransport necessities for those diagnosed
with new coronavirus infection.
We have agreements with the following
cities, towns, and villages to provide
support in times of disaster.

We develop private products (local brands) incooperation with local companies. This leads to thecreation of local employment and contributes toutilizing local assets.

Supplies : 32 cities, towns and villages
Shelters : 3 cities, towns and villages / 5 stores

Home-based Care Kit

Food Supply
We participate in the food service business (utilizationof facilities and assets, service improvement) andsponsor food drives and various events.

Conducted a food drive at a store

New Initiatives of the Valor Group2
HealthySociety

Leveraging the Group's management
resources to solve health andmedical issues.

Logistics & fruits andvegetable center

storesFoundation for Value Creation

Efforts to convert pineapple residue into animal feed
Pineapple residue

producing

HealthWe utilize the facilities of our sports club (AXTOS),
collaborate with them and dispatch instructors andcoaches (support for school club activities).

Crushing &dehydration

Food Recycling Loop
Milking barns

Medical Care

Feed for dairy cattle

We are developing next-generation dispensing
systems such as opening dispensing pharmacies(Chubu Yakuhin Co., Ltd.) in hospitals (industry
collaboration), cooperating medical care with stores
on wheels, and online medical care + medicinedelivery. We are building a system that can respondto changes in the healthcare system.

Ship it fresh,not making it silage

Patented for “Product Delivery System” for business offices

Order & Pick-up on the Same Day

We will deliver your order on the same day!

V-drug Gifu University Hospital Pharmacy

3
SDGs

Cooperation on social issues
as a private company
Food Bank
Support for Children's Cafeterias
The areas where we have provided food for theChildren's Cafeterias were mainly Aichi, Gifu, and Mie
prefectures, but will be expanded to Nagano prefecturein December. We will continue to gradually expand our
support areas for those who need food due to theprolonged the coronavirus pandemic and high prices.

Support for disadvantaged shoppers(stores on wheels)
26

Valor Holdings Co., Ltd. Annual Report 2022

Providing food for the supply
centers of school meals

Stores on wheels

OK

The flow from order to pick-up
01

02

03

04

05

Order

Sorting

Shipping

Arrival of items

Pick-upEasy ordering fromyour phone in yourspare time!

You can buy grocery
and daily necessities
together.

Items are delivered ina special temperaturecontrolled box.

Items are delivered todesignated racks
located at each office.

You pick up your items
and go straight home!

The "Product Delivery System" for business offices that we have recently conceived focuses on the fact that many commuters drive
their own cars to work in less densely populated areas, and realizes that "if you order products using your smartphone during yourlunch break, the products will be packed and delivered to your workplace at an appropriate temperature-controlled level by thetime you leave off work in the evening.” The sales stores can deliver products purchased by multiple users to a single location at
once, greatly improving delivery efficiency. Users can also reduce the time they spend stopping by a store on their way home fromwork and the time they spend waiting for delivery at home. (Registration date: January 5, 2021)

Valor Holdings Co., Ltd. Annual Report 2022

27

Foundation for Value Creation

Diversity of Human Resources

Supporting a diversified workforce in HR system

Valor Group’s New Education System

We support people who are highly motivated and whose experience and backgrounds are diverse. The principal HR systems are as
described below.

Based on our corporate philosophy of "Creation, Advance & Challenge," we are seeking
personnel who are growth-minded and willing to take on new challenges. In addition topreparing for the expansion of our supermarket, drugstore, home improvement center, andother businesses, through the diversification of our human resource development program,
we are also striving to secure personnel with expertise and skills in food manufacturing andprocessing, logistics, and other fields so that we will build a business model as amanufacturing and retailing company.
To achieve the "Valor Group Vision 2030" and "Sustainability Vision 2030," which are themedium- to long-term management policies of the Valor Group, it is important to develop"leaders who can connect products, customers, and society,” which forms the basis of thesepolicies from a human resource perspective.
For the purpose of this, we have launched a Valor Group’s new education system.

StatusPromotingfemaleworkers

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.

Diverseworkstyles
We a re w o r k i n g t o i m p ro v e t h e w o r k p l a c eenvironment corresponding to the phase of theindividual’s life and career, including raisingawareness of maternity leave, childcare leave, andfamily care leave, and creation of a workplace thatfacilitates easy return to work.

FY2019Ratio of female managerial
personnel to all managerial
personnel (managers or higher)(The number of female
managerial personnel/The
number of all managerial
personnel)

FY20205.6%(43people/774people)

5.8%(48people/826people)

FY20216.0%(46people/766people)

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

224

people(92people/132people)

Child care leave(Employees/Part-timers)

people(68people/137people)

205

165

260

peoplepeople(62people/103people) (104people/156people)

201

224

peoplepeople(75people/126people) (85people/139people)

Educational Policy
To achieve the "Valor Group Vision 2030" and "Sustainability Vision 2030", our policy is to develop "leaders who can connect products,
customers, and society", which forms the basis of those visions.
Foundation for Value Creation

Maternity leave(Employees/Part-timers)

Human Resource Development Center

Educational Policy
Hiring ofthe disabled

Post-retirement
reemployment
program

Promotion to
full-time
employees

Number of
Employees

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

The rate of hiring people*
with disabilities

2.40 %

2.61 %

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

Against the backdrop of population aging, Valor
has introduced a post-retirement reemploymentp r o g r a m w h e r e b y Va l o r r e e m p l o y s a l l t h eemployees who are willing to work after retirement,
in principle. Eligible employees may be reemployed
after they retire until they reach 65 years old if theywish to do so.

Usage rate of postretirement reemployment
program

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

Number of part-timeworkers promoted tofull-time employees

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

2.40 %

Number of employees(Average length of service)

Female workers(Average length of service)

Male workers(Average length of service)95.7 %

205 people

79.1 %

238 people

2 Enhancing field capabilities
3
88.7 %

141 people

8,168 people 8,661 people 9,036 people(9.0years)(9.1years)(5.9years)(6.1years)

5,869 people 6,109 people 6,242 people(10.2years)(10.5years)

Strengthening human resources /Searching for the talented(10.9years)

Enhancing educational opportunities / Improving training effectivenessInstructor training
Spreading to Valor Group

Productivity Improvement Training

Executive Training
Next generation Executive Training
Training for the selected young employees

Establishing “Ensou Gakusha” (Corporate university named Ensou)
Under the name of "Ensou Gakusha," which means "a place where things gather and a center of activities," the Valor Group’s joint training
programs are underway with the aim of educating human resources with the collective wisdom of the group.
Based on the "human resources who can sell and do business" required by the Valor Group, we will enhance educational opportunities,
and in strengthening human resources and searching for the talented, we will pursue how much the senior managers (leaders) of eachorganization are involved in education.
In addition to the existing level-specific training, the new training programs are "Management Executive Training" for management-level
employees and "Next Generation Management Executive Training" for middle-level employees.

Management Level

Executive Training(9.4years)

2,299 people 2,552 people 2,794 people(5.9years)

1

Building a foundation ofhuman resources

This program is designed to help participants acquire theskills to be aware that they are in a position to lead Valor
Holdings in the future, to grasp changes in the environment
surrounding the company, and to exercise unwavering
judgment and group power as a management leader.

Middle Level

Next Generation Executive Training

Valor GP joint selection training
Training to learn management and exchange among GP
Six-month training program
Acquisition of basic business skills for management
Marketing
Organizational
Behavior

Management
Strategy
Corporate Accounting

Human Resource
Management
Finance

Note: The above figures are based on the 216 companies accounting for about 88% of the Group’s total employee.
*In FY2016, we started group reporting of the rate of hiring people with disabilities for operating companies, of which voting rights are directly held by the Company.

28

Valor Holdings Co., Ltd. Annual Report 2022

Valor Holdings Co., Ltd. Annual Report 2022

29

Foundation for Value Creation

Corporate Governance

Basic Policy
The fundamental objectives of Valor Holdings’ 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.

Overview of Valor’s Corporate Governance Structure (As of October 24, 2022)
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 strengthening 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. All decisions of the Group Management Executive
Committee are reported to the Board of Directors.
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.
Company with Audit & Supervisory
Committee System

Number of Directors

14 (of whom 5 are Outside Directors)

Chairman & CEO

Number of Audit &Supervisory Committee
Members

4 (of whom 3 are Outside Directors)

Nomination andCompensation Committee
Legal Counsel, Tax Accountant,and Other Specialists
Management
Advisory

Internal Control & Risk
Management, Sustainability

Business
Execution

Management,
Oversight and Audit

ReportConsult

Executive Directors (8)Outside Directors (2)Audit report

Board of Directors
Audit / Supervision

Advise(

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

Audit report
Collaboration
Audit report

Accounting Auditor
Ernst & Young ShinNihon LLC

Collaboration

Group Management Executive Committee· Executive Directors (7)· Audit & Supervisory Committee Member (1)· Representatives of Group’s core companies (6)Instructions /Collaboration

Instructions

Instructions and supervision

Audit Office

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

Risk Management Committee

Compliance Committee

Social Contribution and Sustainability Committee

Helpline

Internal Control Committee

Performance evaluation on the Board of Directors
Since 2015, the Company has been considering whether or not the Board of Directors is functioning effectively. Based on the
results of this consideration, the Company intends to improve the Board of Directors as a whole through a continuous process oftaking appropriate actions to rectify weaknesses and build up strengths.
To improve the Board of Directors, all of the Directors have been conducting self-evaluation questionnaires, which are designed toevaluate the effectiveness of the structure of the Board of Directors and its discussion and consideration, etc. on a scale of one to five.
FY2021, the Board of Directors scored 4.1 on average, up 0.2 points from FY2020, and the result indicates that the Board of Directors
is generally deemed to be effective.

30

Valor Holdings Co., Ltd. Annual Report 2022

· Regarding Directors who are not Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors after
consideration by the Nomination and Compensation Committee chaired by Representative Director Masami Tashiro consisting of two Executive
Directors and three Outside Directors.
· Regarding Directors who are Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors after
consideration by the Nomination and Compensation Committee and subsequent consent of the Audit & Supervisory Committee.
· The dismissal of a Director shall be determined by the Board of Directors after hearing opinions of the Audit & Supervisory Committee, in addition toreports from the Nomination and Compensation Committee.

(3) Explanation about appointment, removal and nomination· Reasons for election of each candidate for Director are disclosed in the reference document for the General Meeting of Shareholders.

· Explanation of the dismissal of Directors (excluding non-reappointment) shall be disclosed in the reference documents for the General Meeting of
Shareholders.

Policy for determining the amount of compensation and the calculation method(1) Basic policy· Basic compensation, paid monthly, shall be, in principle, provided in an amount that is adequate for securing (recruiting) excellent people as
executives and shall 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 shall be paid inaccordance with the Rules for Wages for Employees. For Directors (excluding executive directors) from a consolidated subsidiary, compensation at
the subsidiary shall be paid in accordance with the subsidiary’s rules for directors’ compensation.
· The amount of performance-linked bonuses shall be determined within the maximum amount approved at the General Meeting of Shareholders inconsideration of the previous amount of bonuses paid, the Company’s financial results for the current year and the business performance that the
Director is delegated. In addition, in accordance with the “Determination of Remuneration for Granting Restricted Shares to Directors (excluding
Directors who are Audit and Supervisory Committee Members and Outside Directors)" approved at the 65th Ordinary General Meeting of Shareholders
held on June 30, 2022, the compensation limit for Directors shall be reduced and restricted shares shall be granted as part of Directors’ bonuses.

Executive Directors
Operating Companies
Audit(2) Procedures· Directors’ compensation consists of basic compensation, performance-linked bonuses and share-based compensation, all of which shall be set
separately for inside and outside directors. For Outside Directors and Directors who are Audit & Supervisory Committee members, compensationconsists only of basic compensation, in view of their roles and independence.

Accounting audit

ReportRepresentative Director

Refer matters fordiscussion / Report

Appointment /Dismissal

Audit /
Supervision

Appointment /Dismissal

ReportAppointment /Dismissal

Audit & Supervisory Committee· The dismissal of a Director shall be deliberated at the Board of Directors meetings in the event that the Director is in violation of laws andregulations or the Articles of Incorporation, other circumstances occur that prevent the Director from properly performing his or her duties, or theCompany’s corporate value is significantly damaged by the Director due to negligence of his or her duties, etc.

· Reasons for election of each candidate for Outside Director are disclosed in [Directors] “Relations with Valor Holdings Co., Ltd. (2)” of “IIManagement Organization and Other Corporate Governance Systems Concerning Management Decision-Making, Execution and Supervision” in
the Corporate Governance Report.

General Meeting of Shareholders
Appointment /Dismissal· Regarding Directors who are Audit & Supervisory Committee Members, people with abundant experience in their respective fields, excellent
character, and high level of insight as well as 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.

Foundation for Value Creation

Chairperson of the Board(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 nominated as
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.

Corporate Governance Systems

Organization Form

Policy and procedures for appointment and removal of management executives by the Board of Directors, andreasons for nomination of candidates for Director
Reasons for appointment, removal and nomination· Share-based compensation is an employee stock ownership plan approved at the 60th General Meeting of Shareholders held on June 29, 2017. At
the time of resignation or retirement of a Director, the Company’s shares are delivered to the Director in accordance with the Rules for Delivering
Shares to Directors, which was approved at the Board of Directors meeting held on the same date.

(2) Procedures
The amount of compensation for Directors shall be an agenda item of the General Meeting of Shareholders and shall be determined within the
maximum amount decided at the General Meeting of Shareholders. Regarding the amount of basic compensation and bonuses, in order toincrease transparency and objectiveness, the Nomination and Compensation Committee, which is an advisory organ for the Board of Directors
consisting of two Executive Directors and three Outside Directors, shall examine and review the details, after which the amount shall be determinedby resolution of the Board of Directors; then the decision is redirected to the discretion of Chairman & CEO Masami Tashiro, on the condition thatthe report of the Nomination and Compensation Committee is emphasized.
The amount of compensation for Directors who are Audit & Supervisory Committee Members shall be determined by resolution of the Audit &Supervisory Committee.

Independence criteria and qualifications for Independent Outside Directors
Our criteria for selecting Outside Directors are that they satisfy the requirements for independent officers pursuant to the Companies Act
and as specified by the stock exchanges where the Company’s shares are listed; that they are unlikely to have conflicts of interest withgeneral shareholders; that they are not affiliated with a supplier or a customer of the Company with which transactions exceed an amountequal to 2% of the Company’s consolidated net sales or exceed ¥10 million in direct individual transactions; and they have specialized
knowledge about finance, accounting, law, management, etc. or experience in corporate management, etc.
Valor Holdings Co., Ltd. Annual Report 2022

31

Foundation for Value Creation

Corporate GovernanceCompliance and Risk Management Systems

Number of meetings of the Board of Directors and the Audit & Supervisory Board held and attendance status (FY 2021)

Risk management system

Meetings of the Board of Directors

Meetings of the Audit & Supervisory Board*

15

15

100%

100%

Number of meetings
Attendance of Outside Directors

Note: The figures are based on the number of meetings held from April 1, 2021 to March 31, 2022.

Dialogues with shareholders in FY2021
65th Ordinary General
Meeting of Shareholders(Held June 25, 2022)

133 shareholders attended

Compliance

63 minutes (FY2021: 89 attendees, 65 minutes)

Directors' Skills Matrix (as of October 24, 2022)
Diversity
Name

Positions

Skills that the board of directors should have

Age

Industry
Expertise

Sustainability○

Technology

Finance,
Accounting

Governance, Risk
Management○○

Masami Tashiro

Representative Director,
Chairperson and CEO

Male

75

○

○

Takayuki Koike

Acting President and Director

Male

49

○

○

Katsuyuki Mori

Senior Management Director

Male

61

○

○

○

Akira ShinohanaManagement Director

Male

49

○

○

○

Satoru Yokoyama

Director

Male

49

○

○

Morisaku Wagato

Director

Male

63

○

○

○

○

Motohiko Takasu

Director

Male

48

○

○

○

○

Shunichi Asakura

Director

Male

72

○

○

○

○

Toshiyuki Takahashi

Outside Director

Male

71

○

○

Mihoko Hayashi

Outside Director

Female51○

Toshio Abiko

Director, Audit & Supervisory
Committee Member (full-time)

Male

55

Mutsuo Masuda

Outside Director, Audit &Supervisory Committee Member

Male

77

Hirofumi Hata

Outside Director, Audit &Supervisory Committee Member

Male

Tokimitsu Ito

Outside Director, Audit &Supervisory Committee Member

Male

○

○

○
○

System to ensure the appropriateness of business operations of subsidiaries

○

○

○

○

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

○○○

Risk awareness

○

○

○

○

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

70

○

○

67

○

○

○

○

○

*1 The above table does not indicate all of the skills and areas of expertise possessed by each director.
*2 The age of the directors is as of June 30, 2022.
*3 “Industry" with respect to industry expertise is defined as retail trade, food manufacturing, sports club business, and transportation business.
*4 Although none of the Company's directors has legal expertise (lawyers), the Company receives advice from its legal counsel when necessary for management decisions.

Basic Policy on the internal control system and the status of its development
The Company considers internal control and compliance to be an important management issue and has articulated the Corporate
Philosophy, the basic management policy, and the Action Guidelines for Corporate Ethics in order to gain trust from society and contributeto social development. Efforts are made to ensure that all officers and employees comply by defining and implementing the basic policies
and basic rules.

Internal control and compliance system
Regarding the internal control system, the Company has articulated the Basic Policy on the Internal Control System (partially revised on
April 19, 2021) and strives to improve and operate the internal control system. The Internal Control Committee meets regularly to confirm
the status of the improvement and operation of the internal control system. The Audit & Supervisory Committee Members may attend
meetings of the Internal Control Committee and state their opinions. The confirmation results of the Internal Control Committee arereported to the Board of Directors once a year. When promptly reportable matters are confirmed, they are also reported as needed to theBoard of Directors.
32

Valor Holdings Co., Ltd. Annual Report 2022

Regarding the establishment of a compliance management system, the Company has articulated the Company-wide Basic Compliance
Rules, and in order to ensure compliance, efforts are made to improve, maintain and develop the internal control system by responding to
new and amended laws. In addition, the Compliance Committee usually meets jointly with the Risk Management Committee twice per year
and reports to the Board of Directors once per year. When a major compliance violation is discovered, an emergency meeting is convened
to discuss the formation and composition of a committee to investigate the matter, and the results of this meeting are escalated to theBoard of Directors. If necessary, the committee chairperson selects members. The full-time Audit & Supervisory Committee Member andthe Head of the Audit Office may attend meetings of the Compliance Committee and state their opinions. As part of internal control
systems concerning violations of the law and other compliance issues, the Compliance Committee also has established rules forwhistleblowing and adopted a whistleblowing system with the Audit Office as the contact point. Whistleblowing matters are reported to theCompliance Committee.

Foundation for Value Creation

Sex

Corporate
Management
and Strategy

Regarding the establishment of a risk management system, the Company has established the Basic Rules for Risk Management andmanages Company-wide risk of losses in a comprehensive, integrated manner under a clearly defined risk management system. The Rules
were revised on April 1, 2021, to consolidate the relevant risks into six categories, establish working groups (subcommittees) to manage
each risk category, clearly specify the department(s) in charge, define the regular risk management promotion system of the Risk
Management Committee and establish an emergency risk management system including BCP.
The secretariat of the Risk Management Committee is the Risk Management Department. Meetings are held twice per year, and reports
are made to the Board of Directors once per year. The full-time Audit & Supervisory Committee Member and the Head of the Audit Office
may attend meetings of the Risk Management Committee and state their opinions.

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

Valor Holdings Co., Ltd. Annual Report 2022

33

Financial and Corporate Data

11-year Summary of Financial Results(Millions of yen)

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021For the year:
Revenues from operations

410,577

431,218

454,180

470,564

497,463

520,530

544,020565,931

678,096

730,168

732,519

Operating income

15,23615,852

14,287

15,00016,683

15,43913,47014,21015,51525,64821,205

Ordinary income

16,02016,844

15,311

16,10817,586

16,762

14,937

16,091

16,87828,397

24,140Net income

7,149

8,184

9,162

9,214

10,75910,522

7,570

7,910

6,477

12,592

9,014

Total assets

199,774

213,629

235,131245,386

255,916

269,488285,905

311,813

383,919

404,458

410,365

Net assets

68,13475,46682,94990,881

99,027

107,727

113,167

125,395

140,645

155,190

162,521

67,24374,887

82,39590,301

98,408107,057

112,365

124,599

132,375

142,095

148,156

69,38375,67987,26586,88084,952

87,231

88,821

96,717

124,872

120,884

125,456

Cash flows from operating activities

19,19021,13919,19822,25722,991

22,27027,79027,36930,871

44,13824,361

Cash flows from investing activities(17,793)(20,961)(23,746)(15,660)(19,045)(21,569)(24,258)(31,621)(26,615)(28,137)(26,729)

1,397

177

(4,547)

6,596

3,945

700

3,531

(4,252)

4,256

16,001(2,367)

At year-end:

Net assets (excl. subscription rights to shares and non-controlling interests)
Interest-bearing debt
Cash Flows:Free cash flows
Cash flows from financial activities(2,283)

2,914

5,983

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

7,302

(551)

(10,472)(4,115)

Cash and cash equivalents at the end of fiscal year

12,676

15,764

17,055

19,96017,103

14,65914,93817,93824,15929,34922,867

17,85922,101

25,226

20,22520,041

24,441

27,57526,87832,13832,83230,947

11,23014,414

12,851

12,763

11,62815,144

14,394

14,903

20,457

9,742

14,484

Capital Expenditures:
Capital expenditures (based on payment)
Breakdown of expenditures:for new store openings

4,114

1,788

2,306

2,237

3,650

7,709

9,850

9,451

8,498

17,14515,158

2,515

5,899

10,069

5,225

4,763

1,587

3,332

2,524

3,183

5,945

1,304

9,612

10,255

11,09012,168

12,683

13,125

13,952

15,163

17,665

18,234

20,228

Net assets per share (BPS) (yen)1,320.33

1,454.43

1,600.25

1,751.57

1,925.45

2,093.74

2,196.89

2,320.53

2,435.06

2,660.56

2,766.89

Net income per share (EPS) (yen)140.38159.56177.95178.91208.87205.83148.04153.06

120.63234.52167.87

Depreciation and amortization (CF)Financial and Corporate Data

for refurbishing existing storesfor others
Per Share data:

Cash dividends per share (yen)Dividend payout ratio

26

29

31

33

36

40

45

48

52

54

56

18.5%

18.2%

17.4%

18.4%

17.2%

19.4%

30.4%

31.4%

43.1%

23.0%

33.4%

8.2%

8.1%

6.8%

6.7%

7.0%

6.4%

5.4%

5.4%

4.9%

7.2%

5.9%

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

11.2%

11.5%

11.7%

10.7%

11.4%

10.2%

6.9%

6.7%

5.1%

9.2%

6.2%

Shareholders’ equity ratio

33.7%

35.1%

35.0%

36.8%

38.5%

39.7%

39.3%

40.0%

34.1%

35.3%

36.2%

1.0

1.0

1.1

1.0

0.9

0.8

0.8

0.8

0.9

0.8

0.8

Debt equity ratio (times)

Revenues from operations (millions of yen)

Operating income (millions of yen)

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

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

Net assets

Cash flows from investing activities

Free cash flows

800,000

730,168 000,000
678,096

500,000

30,000544,020

383,919

404,458 000,000

20,000400,000

13,47014,21027,790 27,369

300,000

311,813285,905

10,00034

Valor Holdings Co., Ltd. Annual Report 2022

0

0

ROE

ROA

15

56

48
43.1
9.2

10

30.4

31.4

33.4
6.9

30

155,190000,000-40,000

FY2017 FY2018 FY2019 FY2020 FY2021

20-60,000(31,621)6.2
5.1-20,000(24,258)

7.2

6.7(4,252)
140,645
113,167125,395

FY2017 FY2018 FY2019 FY2020 FY2021

00,000

45

54

40

4,256

3,531

100,000

FY2017 FY2018 FY2019 FY2020 FY2021

16,0010

200,000

52
50

30,871

20,000200,000

060

40,000

ROE∙ROA (%)

Dividend payout ratio

44,138 00,000

565,931

15,515

Cash dividends per share

60,00025,648 00,000
400,000

600,000

Annual cash dividends per share (yen)Dividend payout ratio (%)

23.0

5

(26,615) (28,137) (00,000)

FY2017 FY2018 FY2019 FY2020 FY2021

5.4

5.4

5.9

4.9

10

0

FY2017 FY2018 FY2019 FY2020 FY2021

0

FY2017 FY2018 FY2019 FY2020 FY2021

Valor Holdings Co., Ltd. Annual Report 2022

35

Financial and Corporate Data

Consolidated Financial Statements (Summary)

Consolidated Balance Sheet

Consolidated Statement of Income

Valor Holdings Co.,Ltd. and Subsidiaries (As of March 31, 2021 and 2022)(Millions of yen)

FY2020

FY2021

59,42357,237

Short-term loans payable

21,962

19,841

Commercial papers

10,00017,00014,905Current portion of bonds

10,010—52,87856,261

Current portion of long-termloans payable

20,495

17,795

Raw materials and supplies

1,149

1,128

Lease obligations

2,574

2,445

Other

14,537

14,670

Income taxes payable

7,848

3,480

(9)

Provision for bonuses

3,634

3,540

Provision for directors’ bonuses

205

198

Provision for point card certificates

1,542

485

Provision for loss onrecollection of gift certificates

291—

Provision for loss on store closing

248

58

Asset Retirement Obligations

30

65

Other

27,21825,895

Total current liabilities

165,484

148,045—

10,000Long-term loans payable

44,52047,511

Lease obligations

11,32010,86229,92423,260Notes and accounts
receivable-tradeNote, accounts receivabletrade, and contract asset

13,717——

Merchandise and finished goods

Allowance for doubtful accounts
Total current assets(7)
112,199

110,217

Noncurrent assets
Property, plant and equipment
Buildings and structures

292,338

305,319

Accumulated depreciation(152,877)(161,166)

Buildings and structures, net

139,460

144,152

Machinery, equipment
and vehicles

13,593

14,241

Noncurrent liabilities

Accumulated depreciation(9,094)(10,009)

Bonds payable

Machinery, equipment
and vehicles, net

4,499

4,231

52,09654,282

Deferred tax liabilities

247

198

Provision for directors’
retirement benefits

673

496

Land
Lease assets

23,681

23,227(14,777)(15,266)

Provision for retirement benefits

5,804

6,297

Lease assets, net

8,903

7,961

Asset retirement obligations

13,342

16,143

Construction in progress

3,669

4,497

Long-term deposits received

6,603

6,821

46,764

Other

1,269

1,468

Total noncurrent liabilities

83,783

99,799249,267

247,844

13,60913,609

Accumulated depreciation

Other
Accumulated depreciation
Other, net
Total property, plant andequipment

43,311(33,767)(36,577)

9,544

10,186

218,173

225,312

Shareholders’ equity
Capital stock

Intangible assets
Goodwill

Total liabilities(Net assets)

1,496

Lease assets

2,323

157

112

Other

14,33915,323

Total intangible assets

15,99317,759Investment securities

9,964

9,787

Long-term loans receivable

1,106

Capital surplus

20,04920,063Retained earnings

108,998

115,030

(561)

(547)

142,095

148,156

Valuation difference on
available-for-sale securities

880

559

1,078

Deferred gains (loss) on hedges

—

5

140

132

Investments and other assets

Treasury stock
Total shareholders’ equity
Accumulated othercomprehensive income

Deferred tax assets

11,0399,900

Foreign currency translation
adjustment

Guarantee deposits

32,35032,578

(254)

(266)

Other

4,023

4,092

Remeasurements of defined
benefits plan

Allowance for doubtful
accounts
Total investments andother assets

(392)

(360)

Total accumulated othercomprehensive income

766

431

58,092

57,077292,259

300,148

404,458

410,365

Total noncurrent assets
Total assets

Valor Holdings Co., Ltd. Annual Report 2022

134

121

Minority interests

12,194

13,811

Total net assets

155,190

162,521404,458

410,365

Subscription rights to shares

Total liabilities and assets

Net sales
Cost of sales
Gross profit
Operating revenues
Operating gross profit
Selling, general and administrative expenses
Advertising expenses
Packaging expenses
Supplies expenses
Distribution expenses
Provision for point card certificates
Provision of allowance for doubtful accounts
Directors’ remuneration
Salaries and wages
Bonuses
Provision for bonuses
Provision for directors’ bonuses
Retirement benefit expenses
Provision for directors’ retirement benefits
Welfare expenses
Utilities expenses
Rent expenses
Repair and maintenance
Depreciation
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Office work fee
Rent income
Investment gain on equity method
Other
Total non-operating incomes
Non-operating expenses
Interest expenses
Rent cost of real estate
Other
Total non-operating expense
Ordinary income
Extraordinary income
Loss on sales of noncurrent assets
Gain on receipt of donated land
Gain on sale of investment securities
Gain on negative goodwill
Penalty income
Subsidy income
Other
Total extraordinary income
Extraordinary loss
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Impairment loss
Loss on reduction of noncurrent assets
Loss on valuation of investment securities
losses of business restraint
Other
Total extraordinary loss
Income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

FY2020

FY2021

706,331519,555
186,775
23,837
210,613708,484
520,255
188,228
24,034
212,263

5,842
141
1,405
1,679
3,601
4
988
69,773
6,120
3,403
203
1,240
61
12,0999,299
30,286
4,758
16,283434
17,336
184,964
25,648

5,080
159
1,512
1,864
1,587
2
989
73,227
6,282
3,226
179
1,067
(16)
12,636
10,226
31,915
4,811
18,071
652
17,579191,057
21,205

133
186
1,576
855
19
1,927
4,698

134
182
1,588
648
85
1,963
4,603

854
680
415
1,950
28,397

764
497
405
1,668
24,140

47
103
42
17
170
467
50
898

84
—
1
0
77
582
95
841

24
287
2,843
197
138
702
557
4,751
24,544
10,877(1,793)
9,083
15,461
2,868
12,592

42
186
3,308
421
6
—
358
4,324
20,657
7,985
1,421
9,407
11,2502,235
9,014

Valor Holdings Co., Ltd. Annual Report 2022

Financial and Corporate Data

Notes and accounts payable-trade

Cash and deposits(Millions of yen)

FY2021

Current liabilities

Current assets

36

FY2020(Liabilities)(Assets)

Valor Holdings Co.,Ltd. and Subsidiaries (Fiscal years ended March 31, 2021 and 2022)(Millions of yen)37

Financial and Corporate Data

Consolidated Financial Statements (Summary)

Consolidated Statements of Cash Flows

Consolidated Statements of Changes in Net Assets

Valor Holdings Co.,Ltd. and Subsidiaries (Fiscal years ended March 31, 2021 and 2022)

Valor Holdings Co.,Ltd. and Subsidiaries (Fiscal years ended March 31, 2021 and 2022)(Millions of yen)

FY202038

Valor Holdings Co., Ltd. Annual Report 2022

FY2020(Millions of yen)

Shareholders’ equity

24,544
18,234
2,843
434
(17)
42
624
21
57
(320)
854
287
197
702
138
(19)
(467)
(256)
(1,552)
1,364
1,306
847
1,952
38,142
255(818)(6,708)30,871

20,657
20,228
3,308
652
(0)
(35)
471
(197)
108
(317)
764
186
421
—
6
(85)
(582)
(987)
(3,206)(2,515)(705)(1,958)1,370
51,822
220(834)(7,069)44,138(427)
532(26,981)
1,023(1,250)
(118)
227
(6)
83
(1,766)
1,868
450
(770)
(193)
102
(76)
467
(1,300)(28,137)(221)
462(24,339)228(2,506)
(355)
7
(29)
676
(2,003)
1,738
653
(341)
(1,570)
—
(92)
582
381
(26,729)(4,241)
10,00012,156(22,218)—(34)(2,802)5(1)(46)(2,848)(441)
0(10,472)
(337)
5,190
24,15929,349(2,121)
7,000
21,800(23,982)
9,950(10,010)(3,221)15(0)—(2,958)(586)
0(4,115)0(6,482)
29,34922,867

Balance, March 31,
2019

Accumulated other comprehensive income

CapitalStock

CapitalSurplusRetainedearnings

Treasury
stock

Total
shareholders’equity13,60920,07699,256(566)

132,375

Cumulative effects
of changes inaccounting
policies
Restated balance

Valuation
Deferred gains
difference on(loss) on
available-forhedges
sale securities(1,865)0Foreign
Total accumulated Subscription
Remeasurements
rights tocurrency
otherof defined
sharestranslation
comprehensive
benefits planadjustment
income273(34)(1,627)142

Noncontrollinginterests

9,754—
13,60920,07699,256(566)

132,375

Total net
assets140,645—(1,865)

0

273

(34)

(1,627)

142

9,754

140,645

Changes of items
during the period
Equity transaction
with noncontrollinginterests

(26)

(26)

(26)

Dividends fromsurplus(2,850)(2,850)(2,850)Net income

12,592

12,592

12,5925

5

Disposal oftreasury stock5

Net changes of
items during theperiod

2,746

(0)

(133)

(219)

2,393

(8)

2,440

4,825

Total changes of items
during the period

—

(26)

9,742

5

9,720

2,746

(0)

(133)

(219)

2,393

(8)

2,440

14,545

Balance, March 31,
2020

13,60920,049108,998(561)

142,095

880

—

140

(254)

766

134

12,194

155,190

FY2021(Millions of yen)

Shareholders’ equity

Balance, March 31,
2020

Accumulated other comprehensive income

CapitalStock

CapitalSurplusRetainedearnings

Treasury
stock

Total
shareholders’equity13,60920,049108,998(561)

142,095

Cumulative effects
of changes inaccounting
policies
Restated balance

Financial and Corporate Data

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Gain on bargain purchase
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in defined benefit liabilities
Increase (decrease) in provision for directors’ retirement benefits
Increase (decrease) in provision for point card certificatesInterest and dividends income paid
Interest expenses received
Loss on retirement of noncurrent assets
Loss on reduction of noncurrent assets
Payment for business acquisition
Loss (gain) on valuation of investment securities
Equity in losses (earnings) of affiliates
Subsidy income
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accounts payable-other and accrued expenses
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivable
Proceeds from collection of loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Proceeds from guarantee deposits received
Repayments of guarantee deposits received
Payment for acquisition of shares in subsidiaries resulting in change in scope of consolidation
Income for acquisition of shares in subsidiaries resulting in change in scope of consolidation
Payment for acquisition of businessSubsidy income
Other
Net cash provided by investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Net increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Repayments of finance lease obligations
Proceeds from sales of treasury stock
Purchase of treasury stock
Purchase of shares of subsidiaries not resulting in change in scope of consolidation
Cash dividends paid
Dividends paid to non-controlling shareholders
Other
Net cash provided by financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease)in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

FY2021(24)
13,60920,049108,973

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

880—

Foreign
Total accumulated Subscription
Remeasurements
rights tocurrency
otherof defined
sharestranslation
comprehensive
benefits planadjustment
income

140

(254)

766

134

(24)
(561)

142,070

880

—

140

(254)

766

134

Noncontrollinginterests

Total net
assets12,194

155,190

(31)

(56)

12,162

155,134

Changes of items
during the period
Equity transaction
with noncontrollinginterests

13

13

13

Dividends fromsurplus(2,958)(2,958)(2,958)Net income

9,014

9,014

9,014

(0)

(0)

(0)

14

15

15

Purchase oftreasury stock
Disposal oftreasury stock0

Net changes of
items during theperiod

(321)

5

(7)

(12)

(335)

(12)

1,649

1,301

Total changes of items
during the period

—

14

6,056

14

6,085

(321)

5

(7)

(12)

(335)

(12)

1,649

7,386

Balance, March 31,
2021

13,60920,063

115,030(547)

148,156

559

5

132

(266)

431

121

13,811

162,521

Valor Holdings Co., Ltd. Annual Report 2022

39

Financial and Corporate Data

Corporate Data/ Share Information(as of March 31, 2022)

Corporate Data

Share Information

Valor Group

Valor Holdings Co., Ltd.

Number of authorized shares

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

Number of outstanding shares

53,987,499

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

Number of shareholders

17,777

Headquarters

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

Stock exchange listings

Tokyo Stock Exchange, first section

Established

July 1958

Representative

Masami Tashiro Chairman & CEO

Paid-in-capital¥13,609 million

Name

Segment

Fukui Chuo Tsukemono Co., Ltd.
Honda Suisan Co., Ltd.
Furuya Sangyo Co., Ltd.
Keirinkaku Co., Ltd.
Shiroishikandumekouzyou Co. Ltd.
Daitoh Shokken Co.,Ltd.
Shufu-no-Mise Shoji Chubu Honsha Co.,Ltd.
V-Solution Co., Ltd.
Chubu Meat Co., Ltd.
Chubu Agri Co.,Ltd.
Valor Max Co., Ltd.***VARO Co., Ltd.

Drugstores

Chubu Yakuhin Co., Ltd.
Hida Pharmaceutical LLC

Nagisa Pharmacy Co., Ltd.

Major Shareholders

Home Improvement CentersHome Center Valor Co., Ltd.
Daiyu Eight Co.,Ltd.
Time Co.,Ltd.
Nisshiki Co.,Ltd.

FIRST Co., Ltd.
Aguriru Co.,Ltd
Alleanza Japan Co.,Ltd.

Sports ClubsAXTOS Co., Ltd.

Financial Institutions 52 shareholders
18,833 thousands of shares 34.9%

Other companies 368 shareholders
14,114 thousands of shares 26.1%

Distribution-related operations

Chubu Ryutu Co., Ltd.
Chubu Kosan Co., Ltd.
SHIGA CHUO PACK Inc.
MENTEX Co., Ltd.
Seiso Co., Ltd.
V-Flower Co., Ltd.

Shanghai Valor co., Ltd.
Valor Vietnam Co., Ltd.
Valor Agency Co., Ltd.
Japan Clean Services LLC
Face Co., Ltd.

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

Gito Family Department Co., Ltd.
Chubu Hoken Service Co., Ltd.
Valor Max Co., Ltd.***Valor Financial Service Co, Ltd.

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

Shareholder

Securities companies 28 shareholders
546 thousands of shares 1.0%

Foreign entities 199 shareholders
9,863 thousands of shares 18.3%

Individuals, others 17,130 of shareholders
10,631 thousands of shares 19.7%

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

5,860

10.89

Ito Youth Scholarship Foundation

2,910

5.41

Shiunsha Co.,Ltd.

2,730

5.07

The Norinchukin Bank

2,542

4.72

The Juroku Bank

2,536

4.71

Custody Bank of Japan, Ltd. (Trust Account)

2,429

4.51

Masami Tashiro

1,439

2.67

Retail Partners Co.,Ltd.

1,260

2.34

Arcs Group Co.,Ltd.

1,260

2.34

MUFG Bank, Ltd.

1,223

2.27

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

Note: **Pet Shop Business ***Same company

History
1958
1969
1970
1974
1977
1984
1985
1989

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

3,000

1993
1995
1996
1998
1999
2001
2005

2,000
1,000

0

2007
2012

Volume2013(thousands of shares)
8,000

2015
2016
6,000

2018
2019

4,000

2020
2021
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

40

2012

2013

Valor Holdings Co., Ltd. Annual Report 2022

2014

2015

2016

2017

2018

2019

2020

2021

2022

Financial and Corporate Data

Valor Co.,Ltd.
Tachiya Co., Ltd.
Shokusenkan-Taiyo Co.,Ltd.
Kohseiya Co.,Ltd.
Futabaya Co.,Ltd.
Sanko Co.,Ltd.
Terao Stores Inc.
Yamato Store LLC.
Yaosen Co., Ltd.
Yamata Co., Ltd.
Chubu Foods Co., Ltd.
Daien Foods Co., Ltd.

Nagoya Stock Exchange, first section

Distribution of shareholders by Type2011

Subsidiaries

Supermarkets

2022

Established Shufu-no-Mise Co., Ltd. in Ena-shi, Gifu and opened the first supermarket.
Established Chubu Kosan Co., Ltd., a logistics subsidiary.
Changed the company name to Shufu-no-Mise Valor Co., Ltd.
Changed the company name to Valor Co., Ltd.
Relocated the headquarters from Ena- shi to Tajimi- shi, Gifu.
Established Chubu Yakuhin Co., Ltd., a drugstore subsidiary.
Established Chubu Foods Co., Ltd., a prepared food manufacturing subsidiary.
Established a distribution center in Tajimi- shi.
Started a material wholesale business for stores by Chubu Ryutu Co., Ltd.
Listed on the Second Section of the Nagoya Stock Exchange.
Merged with Fujiya Co., Ltd., a home improvement center company.
Relocated the headquarters and the distribution center to the current location in Tajimi- shi.
Established AXTOS Co., Ltd. and spun off the sports club business.
Established MENTEX Co., Ltd., a facility maintenance service subsidiary.
Established Hokuriku distribution center in Nanto- shi, Toyama.
Acquired Tachiya Co., Ltd. and Youth Co., Ltd., supermarket subsidiaries.
Assigned to the First Section of Tokyo Stock Exchange and Nagoya Stock Exchange
Acquired Sun Friend Co., Ltd (currently Syokusenkan- Taiyo Co., Ltd.), a supermarket subsidiary.
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.
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.
Made a transition to a holding company and changed the company name to Valor Holdings Co.,Ltd.
Established Nagoya Headquarters in Nakamura-ku Nagoya-shi.
Acquired Kohseiya Co., Ltd.,a supermarket subsidiary.
Acquired Futabaya Co.,Ltd., a supermarket subsidiary.
Established capital and business partnership with Arcs Co.,Ltd. and Retail Partners Co.,Ltd.
Acquired Sanko Co.,Ltd., a supermarket subsidiary.
Integrated the home improvement center business by a share exchange between Home Center Valor Co.,Ltd. and Alleanza Holdings Co.,Ltd.
Acquired Daitoh Shokken Co., Ltd. a food and seasonings manufacturing subsidiary.
Honda Suisan Co., Ltd., one of the Valor Group, merged Ishinomaki Foods Co., Ltd.
Acquired Tsurumaru Co., Ltd., a supermarket subsidiary.
Acquired Faith Co., Ltd., a supermarket subsidiary.
Acquired Yaosen Co., Ltd., a supermarket subsidiary.
Acquired Yamata Co., Ltd., a supermarket subsidiary.
Established Valor Financial Service Co., Ltd., a facility maintenance service subsidiary.
Moved from the 1st Section to the Prime Market due to the revision to the new market classification of the Tokyo Stock Exchange.
Moved from the 1st Section to the Premier Market due to the revision to the new market classification of the Nagoya Stock Exchange.

Valor Holdings Co., Ltd. Annual Report 2022

41