This document has been translated from a part of the Japanese original for reference purposes only. In the eventof any discrepancy between this translated document and the Japanese original, the original shall prevail. The
Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages
arising from the translation.
Securities Code 3391
July 19, 2022
To Those Shareholders with Voting Rights
Jun Tsuruha
President & Representative Director
Chief Executive Officer
TSURUHA HOLDINGS INC.
Kita 24, Higashi 20-1-21,
Higashi-ku, Sapporo-shi, Hokkaido

NOTICE OF THE 60th ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We hereby notify you that the 60th Ordinary General Meeting of Shareholders of the Company will be held as
described below.
In order to prevent the spread of coronavirus disease (COVID-19) as described in page 3 (translation omitted), in
lieu of attendance at the meeting, you can exercise your voting rights either by indicating your votes for or against
each of the proposals on the Voting Rights Exercise Form and returning it by mail or by accessing the voting website
printed on the Voting Rights Exercise Form and indicating your votes for or against each of the proposals via
electromagnetic means (e.g., via the Internet). Please review the Reference Documents for the General Meeting of
Shareholders and exercise your voting rights by 6:00 p.m., Tuesday, August 9, 2022.
1. Date and Time:

Wednesday, August 10, 2022, at 10:00 a.m. (Reception starts at 9:00 a.m.)

2. Place:

Royton Hall, Third floor, Royton Sapporo
Kita 1-Nishi 11, Chuo-ku, Sapporo-shi, Hokkaido(Please refer to the information map at the end of this notice (translation omitted))

3. Agenda of the Meeting:
Matters to be reported: 1. Business Report, Consolidated Financial Statements for the 60th Fiscal Term(from May 16, 2021, to May 15, 2022) and the Audit Report of the Accounting
Auditor and the Audit and Supervisory Committee of the Consolidated Financial
Statements
2. Non-Consolidated Financial Statements for the 60th Fiscal Term (from May 16,
2021, to May 15, 2022)
Proposals to be resolved:
Proposal No. 1: Partial Amendments to the Articles of Incorporation
Proposal No. 2: Election of Five Directors (Excluding Directors Who Are Audit and Supervisory
Committee Members)
Proposal No. 3: Election of One Director Who Is an Audit and Supervisory Committee Member
Proposal No. 4: Entrusting the Board of Directors of the Company with the Determination of
Subscription Requirements for Stock Acquisition Rights as Stock Options to
Executive Officers and Employees of the Company and Its Subsidiaries

14. Announcement on Exercise of Voting Rights(1) Voting through a proxyIf you are unable to attend the meeting, you may exercise your voting rights through a single proxy who
is a shareholder of the Company with voting rights provided that such proxy will be required to submit a
power of attorney.
(2) Voting by Mail
Please indicate your vote for or against each of the proposals on the enclosed Voting Rights Exercise
Form and return the form by 6:00 p.m., Tuesday, August 9, 2022.
(3) Voting via the Internet
If you exercise your voting rights via the Internet, please refer to the <Guide for Exercise of Voting Rights
via the Internet (translation omitted)> and access https://evote.tr.mufg.jp/. Please exercise your voting
rights by 6:00 p.m. on Tuesday, August 9, 2022, following the instructions on the screen.
5. Disclosure via the Internet(1) The following items have been posted on the Company’s website on the Internet (https://www.tsuruhahd.com) pursuant to the provisions of laws and regulations as well as Article 14 of the Articles ofIncorporation and therefore, are not included in the Appendix attached to this notice.
These items are subject to audits by the Audit and Supervisory Committee and the Accounting Auditor
along with the Appendix attached to this notice.
• “Matters Concerning Subscription Rights to Shares, etc.” and “System to Ensure Proper Business
Execution and its Operational Status” of the Business Report• “Consolidated Statement of Changes in Equity” and “Notes to the Consolidated Financial Statements”
of the Consolidated Financial Statements• “Non-Consolidated Statement of Changes in Equity” and “Notes to the Non-Consolidated Financial
Statements” of the Non-Consolidated Financial Statements(2) If there are amendments to the Reference Documents for the General Meeting of Shareholders, Business
Report, Consolidated Financial Statements or Non-Consolidated Financial Statements, such amendments
will be announced on our Internet website (https://www.tsuruha-hd.com).


As a measure to prevent the spread of COVID-19, no souvenirs will be distributed to attendees at themeeting.
Admission to this meeting is limited to 50 persons in order to prevent the spread of COVID-19. Accordingly,
shareholders who visit the venue on the day of the meeting may be denied entry to the venue. We deeply
appreciate your understanding in advance.
Shareholders who attend the meeting are requested to bring the enclosed Voting Rights Exercise Form andthis NOTICE for saving resources.
Please note that persons who are not shareholders with voting rights, including agents and accompanying
persons, are not allowed to enter into the meeting (except for persons accompanying disabled shareholders).

2

Reference Documents for the General Meeting of Shareholders
Proposals and references
Proposal No. 1: Partial Amendments to the Articles of Incorporation
1. Reasons for the amendment
The “Act Partially Amending the Companies Act” (Act No. 70 of 2019), which establishes a system forelectric provision of materials for general meeting of shareholders (Articles 325-2 and 325-5), will come into
effect on September 1, 2022. In order to prepare for the introduction of the system, the Company proposes
the following amendments to its Articles of Incorporation.
(1) The provisions related to the internet disclosure and deemed provision of the reference documents forthe general meeting of shareholders, etc. (Article 14 of the current Articles of Incorporation) will
become unnecessary and will therefore be deleted.
(2) The proposed Article 14, Paragraph 1 provides that information contained in the reference documents
for the general meeting of shareholders, etc. shall be provided electronically.
(3) The purpose of the proposed Article 14, Paragraph 2 is to establish a provision to limit the scope ofmatters to be included in the paper copy to be sent to shareholders who have requested it.
(4) In line with the above establishment and deletion of the provisions, supplementary provisions
related to the effective date, etc. shall be established.
2. Details of the amendment
The details of the amendment are as follows:
Current Articles of Incorporation
CHAPTER III. GENERAL MEETING OF
SHAREHOLDERS(Internet Disclosure and Deemed Provision ofReference Documents for the General Meeting of
Shareholders)
Article 14. In the convocation of General Meetingof Shareholders, the Company may deem that it
has provided to shareholders information
concerning matters that must be displayed in
the reference documents for General Meetingof Shareholders, business report, nonconsolidated financial statements, andconsolidated financial statements via internet
disclosure in conformity with definitions
provided in the Ordinance of the Ministry ofJustice.
[Newly established]

Article 15. – Article 39.

(Amended parts are underlined.)
Proposed amendments
CHAPTER III. GENERAL MEETING OF
SHAREHOLDERS[Deleted](Measures for electronic provision, etc.)
Article 14. The Company shall, when convening ageneral meeting of shareholders, electronicallyprovide information contained in the reference
documents for the general meeting ofshareholders, etc.
2. Among the matters to be provided
electronically, the Company may choose not toinclude all or part of the matters stipulated in
the Ordinance of the Ministry of Justice in thepaper copy to be sent to shareholders who haverequested it by the record date for voting rights.
[Text omitted]

Article 15. – Article 39.

(SUPPLEMENTARY PROVISIONS)(Transitional Measures Concerning Limitation of[Unchanged](SUPPLEMENTARY PROVISIONS)(Transitional Measures Concerning Limitation of3

Current Articles of Incorporation
Liability of Corporate Auditors)
Concerning acts committed before thecoming into effect of partial amendments tothese Articles of Incorporation which have been
resolved at the 59th Ordinary General Meeting of
Shareholders, pursuant to the provisions ofArticle 426, Paragraph 1 of the Companies Act,
the Company may exempt Corporate Auditors(including former Corporate Auditors) fromliability for damages arising from negligence inthe performance of their duties, to the extent
permitted by laws and regulations, in accordancewith a resolution of the Board of Directors of theCompany.
2.
The contract to limit the liability fordamages under Article 423, Paragraph 1 of
the Companies Act concerning acts
committed by Outside Corporate Auditors(including former Outside Corporate
Auditors) before the conclusion of the 59th
Ordinary General Meeting of Shareholders
shall be governed by the provisions ofArticle 33, Paragraph 2 of the Articles ofIncorporation before amendments to bemade by a resolution of the said Ordinary
General Meeting of Shareholders.
[Newly established]

Proposed amendments
Liability of Corporate Auditors)
Article 1. Concerning acts committed before thecoming into effect of partial amendments tothese Articles of Incorporation which have been
resolved at the 59th Ordinary General Meeting of
Shareholders, pursuant to the provisions ofArticle 426, Paragraph 1 of the Companies Act,
the Company may exempt Corporate Auditors(including former Corporate Auditors) fromliability for damages arising from negligence inthe performance of their duties, to the extent
permitted by laws and regulations, in accordancewith a resolution of the Board of Directors of theCompany.
2. The contract to limit the liability for damages
under Article 423, Paragraph 1 of theCompanies Act concerning acts committed by
Outside Corporate Auditors (including former
Outside Corporate Auditors) before theconclusion of the 59th Ordinary General
Meeting of Shareholders shall be governed by
the provisions of Article 33, Paragraph 2 of the
Articles of Incorporation before amendments to
be made by a resolution of the said Ordinary
General Meeting of Shareholders.
[Transitional Measures Concerning Measures For
Electronic Provision, etc.]
Article 2. The deletion of Article 14 (Internet
disclosure and deemed provision of reference
documents for General Meeting of
Shareholders) of the Articles before thechange of Incorporation and new
establishment of Article 14 (Measures forelectronic provision, etc.) of the Articles after
the change shall take effect from September 1,
2022, as the date of enforcement of therevised stipulations stipulated in the proviso
of Article 1 of the supplementary provisionsof the Act Partially Amending the Companies
Act (Act No. 70 of 2019; the “Enforcement
Date”).
2. Notwithstanding the provisions of theprevious paragraph, Article 14 (Internet
disclosure and deemed provision of reference
documents for General Meeting of
Shareholders) of the Articles before thechange of Incorporation shall remain valid forGeneral Meeting of Shareholders held on a
day that is the end of February 2023.
3. This Article shall be deleted on the day ofMarch 1, 2023 or the day after which threemonths have elapsed since the day of thegeneral meeting of shareholders in theprevious paragraph, whichever is later.

4

Proposal No. 2:

Election of Five Directors (Excluding Directors Who Are Audit and Supervisory
Committee Members)
As the terms of office of all six Directors (excluding Directors who are Audit and Supervisory Committee
Members) will expire at the end of the meeting, election of five Directors (excluding Directors who are Audit andSupervisory Committee Members) is proposed.
The candidates for Directors (excluding Directors who are Audit and Supervisory Committee Members) are as
follows:

No.

Name

Current positions and assignments at
the Company

Attendance atmeetings of theBoard ofDirectors

1

Reelection

Tatsuru Tsuruha

Chairman

13/13(100%)

2

Reelection

Jun Tsuruha

President & Representative Director
President & Chief Executive Officer

13/13(100%)

3

Reelection

Hisaya Ogawa

Director and Executive Officer
Responsible for kusurino FUKUTARO CO.,LTD. and M&A

13/13(100%)

4

Reelection

Shoichi Murakami

Director and Executive Officer
Responsible for Tsuruha Group Drug &Pharmacy Nishinihon Inc.

13/13
(100%)

5

Reelection

Masahiro Yahata

Director and Executive Officer
Responsible for TSURUHA CO., LTD.

13/13
(100%)

5

No.

Name
(Date of birth)

Career summary, positions, assignments andsignificant concurrent positions
June 1976
July 1978
August 1994

1

Tatsuru Tsuruha(February 11, 1942)
Reelection

Joined TSURUHA CO., LTD.
Director of TSURUHA CO., LTD.
Senior Managing Director of TSURUHA CO.,LTD.
August 1996
Senior Managing Director & Representative
Director of TSURUHA CO., LTD.
August 1997
President & Representative Director of
TSURUHA CO., LTD.
August 2003
Director of the Company
August 2005
President & Representative Director of theCompany
August 2008
President & Chief Executive Officer of theCompany
President & Chief Executive Officer of
TSURUHA CO., LTD.
December 2011 Vice Chairman & Director of TSURUHA(Thailand) Co., Ltd.
August 2014
Chairman & Representative Director of theCompany
Chairman & Representative Director of
TSURUHA CO., LTD.
August 2018
Chairman of the Company (current position)
August 2020
Chairman of TSURUHA CO., LTD. (current
position)

Number ofshares of theCompany held

(Significant concurrent position)
Chairman of TSURUHA CO., LTD.
(Reasons for nomination as a candidate for Director)
Mr. Tatsuru Tsuruha demonstrated his excellent administrative
capabilities and built the foundations of the current Tsuruha Group.
He has supervised management that encompasses the entire Group
as Chairman & Representative Director. We have judged that his
abundant knowledge and administrative capabilities cultivated overmany years will greatly contribute to the further growth of theGroup and strengthening our competitiveness and thus haverenominated him as a candidate for Director.

6

1,411,140

No.

Name
(Date of birth)

Career summary, positions, assignments andsignificant concurrent positions
April 1998
May 2011

2

Jun Tsuruha(May 21, 1974)
Reelection

Joined TSURUHA CO., LTD.
Director and Executive Officer of TSURUHA
CO., LTD.
General Manager of Hokkaido Store Operation of
TSURUHA CO., LTD.
Executive Officer of the Company
December 2011 Director of TSURUHA (Thailand) Co., Ltd.
August 2014
Director and Senior Managing Executive Officerof the Company responsible for Group StoreOperation
President & Representative Director of
TSURUHA CO., LTD.
President & Chief Executive Officer of
TSURUHA CO., LTD.
August 2018
Senior Managing Director & Representative
Director, Senior Managing Executive Officer, andHead of Sales Operations of the Company
responsible for Group Store Operation
July 2019
Vice Chairman & Director of TSURUHA(Thailand) Co., Ltd. (current position)
June 2020
President & Representative Director of theCompany (current position)
President & Chief Executive Officer of theCompany (current position)
August 2020
Vice Chairman & Representative Director of
TSURUHA CO., LTD. (current position)

Number ofshares of theCompany held

(Significant concurrent position)
Vice Chairman & Representative Director of TSURUHA CO., LTD.
(Reasons for nomination as a candidate for Director)
As President & Representative Director of the Company, Mr. Jun
Tsuruha has made appropriate decision-making on importantmanagement matters of the Company and greatly contributed bydemonstrating his leadership and ability to take action, which hehad cultivated through his experience, to expand business scope ofoperating companies in the Group and enhance corporate value. We
have judged that he will further demonstrate management
capabilities as chief executive officer of the Group, and thus haverenominated him as a candidate for Director.

7

120,900

No.

3

Name
(Date of birth)

Career summary, positions, assignments andsignificant concurrent positions
August 1983
Joined kusurino FUKUTARO CO., LTD.
December 1988 President & Representative Director of kusurino
FUKUTARO CO., LTD.
August 2007
Managing Director of the Company
August 2008
Director of the Company
Managing Executive Officer of the Company
responsible for Group Pharmacy Store Operationand kusurino FUKUTARO CO., LTD.
May 2015
Director of kusurino FUKUTARO CO., LTD.
May 2016
President & Representative Director of kusurino
FUKUTARO CO., LTD. (current position)
August 2018
Director of the Company (current position)
Executive Officer of the Company responsible forkusurino FUKUTARO CO., LTD. and M&A(current position)

Hisaya Ogawa(September 21, 1958)(Significant concurrent position)
Reelection
President & Representative Director of kusurino FUKUTARO CO.,LTD.
(Reasons for nomination as a candidate for Director)
As President & Representative Director of kusurino FUKUTARO
CO., LTD., a subsidiary of the Company, Mr. Hisaya Ogawa hasabundant experience and knowledge in drug store management andhe has been utilizing them for management decisions of theCompany. In addition, with a wide range of personal contacts
gained through his experience and his ability to take action, he, as adirector responsible for M&A, has contributed to making thecompanies with future growth potential our subsidiaries. We havejudged that he will continue to exhibit such capabilities, and thus
have renominated him as a candidate for Director.

8

Number ofshares of theCompany held

402,500

No.

4

Name
(Date of birth)

Shoichi Murakami(May 24, 1967)
Reelection

Career summary, positions, assignments andsignificant concurrent positions
November 1992 Joined WELLNESSKOHOKU INC. (currently
Tsuruha Group Drug & Pharmacy Nishinihon Inc.)
April 2002
Director of WELLNESSKOHOKU INC.
(currently Tsuruha Group Drug & Pharmacy
Nishinihon Inc.)
April 2006
Managing Director of WELLNESSKOHOKU
INC. (currently Tsuruha Group Drug & Pharmacy
Nishinihon Inc.)
June 2009
President & Representative Director and President& Chief Executive Officer of
WELLNESSKOHOKU INC. (currently TsuruhaGroup Drug & Pharmacy Nishinihon Inc.)
Executive Officer of the Company responsible for
WELLNESSKOHOKU INC. (currently TsuruhaGroup Drug & Pharmacy Nishinihon Inc.)
August 2015
President & Representative Director and President& Chief Executive Officer of Tsuruha Group Drug& Pharmacy Nishinihon Inc. (current position)
August 2019
Director of the Company (current position)
Executive Officer of the Company responsible for
Tsuruha Group Drug & Pharmacy Nishinihon Inc.
(current position)(Significant concurrent position)
President & Representative Director and President & Chief
Executive Officer of Tsuruha Group Drug & Pharmacy Nishinihon
Inc.
(Reasons for nomination as a candidate for Director)
As President & Representative Director of a subsidiary of theCompany, Tsuruha Group Drug & Pharmacy Nishinihon Inc., Mr.
Shoichi Murakami has greatly contributed to the steady expansionof the subsidiary’s business in the Chugoku and Kyushu regions.
His management capabilities cultivated through such experience are
fully utilized for the management of the Company, thus we haverenominated him as a candidate for Director.

9

Number ofshares of theCompany held

2,500

No.

5

Name
(Date of birth)

Career summary, positions, assignments andsignificant concurrent positions

April 1991
Joined TSURUHA CO., LTD.
December 2008 Deputy Manager of North Tohoku Store Operationof TSURUHA CO., LTD.
August 2009Manager of Tohoku Store Operation I of
TSURUHA CO., LTD.
April 2014
General Manager of Tohoku Store Operation of
TSURUHA CO., LTD.
August 2014
General Manager of Hokkaido Store Operation of
TSURUHA CO., LTD.
May 2018
Executive Officer and General Manager of
Hokkaido Store Operation of TSURUHA CO.,LTD.
August 2020
President & Representative Director of
TSURUHA CO., LTD. (current position)
President & Chief Executive Officer ofMasahiro Yahata
TSURUHA CO., LTD. (current position)(September 12, 1968)
Director of the Company (current position)
Executive Officer of the Company responsible forReelection
TSURUHA CO., LTD. (current position)

Number ofshares of theCompany held

5,000

(Significant concurrent position)
President & Representative Director and President & Chief
Executive Officer of TSURUHA CO., LTD.

Notes:(Reasons for nomination as a candidate for Director)
As the President & Representative Director of TSURUHA CO.,LTD., which is the largest company in the Tsuruha Group, Mr.
Masahiro Yahata is executing high-quality management by utilizing
thorough knowledge about actual stores and experience to greatly
contribute to enhancing the corporate value of the Company. We
have judged that he will demonstrate his capabilities to achieve
management targets, and thus have renominated him as a candidate
for Director.
1. No conflict of interest exists between the Company and each of the candidates for Directors.
2. In accordance with the Articles of Incorporation of the Company, the Company has entered into a liability
limitation contract with Mr. Tatsuru Tsuruha to limit his liability for damages to the amount stipulated bylaws and regulations. If his election is approved, the Company will extend the said contract with him.
3. The Company has entered into a directors and officers liability insurance contract with an insurancecompany and each candidate will be included in insured persons under the said insurance contract. Pleaserefer to page 30 of the Business Report for brief details of the said insurance contract. At the time of next
renewal, the Company plans to renew the contract with same contents.

10Proposal No. 3:

Election of One Director Who Is an Audit and Supervisory Committee Member

The election of one new Director who is an Audit and Supervisory Committee Member is proposed to further
strengthen the corporate governance system of the Company.
The Audit and Supervisory Committee has given its consent to this proposal.
The candidate for Director who is an Audit and Supervisory Committee Member is as follows:Name

New election

Fumiyo Fujii

Current position and assignment at theCompany

Outside Director (Independent)

Attendance atmeetings of theBoard ofDirectors
13/13(100%)* Mr. Fumiyo Fujii, a candidate for Director who is an Audit and Supervisory Committee Member, currently
serves as Director who is not an Audit and Supervisory Committee Member. His attendance at meetings of theBoard of Directors shown above is attendance as a Director who is not an Audit and Supervisory Committee
Member for the fiscal year under review.

Name(Date of birth)

Career summary, positions, assignments andsignificant concurrent positions
April 1979
June 2011
June 2014
August 2015
June 2017
June 2017
June 2018

Fumiyo Fujii(August 20, 1954)
New election

August 2019
June 2021

Joined The Hokkaido Takushoku Bank, Ltd.
Director of Sapporo Hokuyo Holdings, Inc.
Director of North Pacific Bank, Ltd.
Managing Director of North Pacific Bank, Ltd.
Outside Corporate Auditor of the Company
Full-time Audit & Supervisory Board Member ofNorth Pacific Bank, Ltd.
Outside Audit & Supervisory Board Member of
Hokkaido Electric Power Co., Inc.
Part-time Audit & Supervisory Board Member of
Joko Securities Co., Ltd. (Currently North Pacific
Securities Co., Ltd.)
Outside Director of the Company (current
position)Full-time Audit & Supervisory Board Member ofNorth Pacific Securities Co., Ltd. (current
position)

Number ofshares of theCompany held

1,200

(Reasons for nomination as a candidate for Outside Director andexpected roles)
After serving as Outside Corporate Auditor of the Company, Mr.
Fumiyo Fujii, with abundant financial experience and knowledge
cultivated over many years at financial institutions, is currently
providing active opinions and various pieces of advice onmanagement issues at meetings of the Board of Directors as Outside
Director. We have judged that he will utilize his deep insight incorporate management, experience and supervisory capabilities forthe management of the Company, and thus propose his election as
Director who is an Audit and Supervisory Committee Member.
Notes: 1. Mr. Fumiyo Fujii is a new candidate for “Director who is an Audit and Supervisory Committee Member,”although he is a “Director who is not an Audit and Supervisory Committee Member.”
2. Mr. Fumiyo Fujii is a candidate for Outside Director.
3. No conflict of interest exists between the Company and Mr. Fumiyo Fujii.
4. The Company will register Mr. Fumiyo Fujii with Tokyo Stock Exchange, Inc. as an Independent Director11as set forth in the regulations of Tokyo Stock Exchange, Inc.
5. Mr. Fumiyo Fujii is a “Director who is not an Audit and Supervisory Committee Member,” and he will
have been in office as an Outside Director for three years at the end of the meeting.
6. If Mr. Fumiyo Fujii takes office as Outside Director who is an Audit and Supervisory Committee Member,the Company will enter into a contract with him to limit his liability for damages under Article 423,
Paragraph 1 of the Companies Act. The maximum amount of liability for damages pursuant to the contract
will be the amount stipulated by laws and regulations.
7. The Company has entered into a directors and officers liability insurance contract with an insurancecompany. If Mr. Fumiyo Fujii takes office as Outside Director who is an Audit and Supervisory Committee
Member, he will be included in insured persons under the said insurance contract. Please refer to page 30of the Business Report for brief details of the said insurance contract. At the time of next renewal, theCompany plans to renew the contract with same contents.

12[Reference] The composition of the Board of Directors skills matrix subject to approval of Proposal No. 2

○

○

○

○

Jun Tsuruha○○

Hisaya Ogawa○○

Shoichi Murakami○

Masahiro Yahata○

Masahiro Ofune
Directors Who
Are Audit andSupervisory
Committee
Member

○

○

○

○

○

○

○

○

○

○

○

Harumi Sato

○

○

○

○

○

○

○

○
○

Takuya Okazaki
Fumiyo Fujii

ESG

Human Resources,
Personnel Development

Tatsuru Tsuruha

Name

Legal Affairs,
Risk Management

Finance,
Accounting,
M&A

Directors

Business Strategy

Category

Corporate Management

If Proposal No. 2 “Election of Five Directors (Excluding Directors Who Are Audit and Supervisory Committee
Members)” and Proposal No. 3 “Election of One Director Who Is an Audit and Supervisory Committee Member”
are approved and resolved as originally proposed, the composition of the Board of Directors will be as below:
Expertise and Experience

○

○

○

○

○

Notes: 1. Mr. Masahiro Ofune, Ms. Harumi Sato, and Mr. Takuya Okazaki have a remaining term, and theirreappointment is not proposed at this ordinary general meeting of shareholders.
2. The skills matrix above does not indicate all the knowledge and experiences each candidate has.

13

Proposal No. 4:
Entrusting the Board of Directors of the Company with the Determination of
Subscription Requirements for Stock Acquisition Rights as Stock Options to Executive Officers andEmployees of the Company and Its Subsidiaries
Shareholders are asked to give approval for entrusting the Board of Directors of the Company withdetermining the subscription requirements for stock acquisition rights, which will be issued without consideration,
as stock options to Executive Officers and employees of the Company and its subsidiaries in accordance with theprovisions of Articles 236, 238 and 239 of the Companies Act, as follows.
I.

Reason for the need to invite subscribers to stock acquisition rights under especially favorable
conditions
The Company intends to issue stock acquisition rights as stock options to Executive Officers and employees of theCompany and its subsidiaries, without consideration, as a way of motivating them and raising theirmorale to improve the Company’s business performance on a consolidated basis.
II.
The maximum number and the necessity of money payment therefor of the stock acquisition rights forwhich the subscription requirements can be determined based on the matters determined by this Annual
General Meeting of Shareholders are as follows.
1. The maximum number of the stock acquisition rights for which the subscription requirements canbe determined based on the entrustment
The maximum number of the stock acquisition rights, which are described in III. below, shall be
6,000 units.
The maximum number of shares that may be allotted through the exercise of the stock acquisitionrights shall be 600,000 common shares of the Company. If the number of shares allotted(hereinafter defined) is adjusted as determined in III. 1. below, the maximum limit shall be thenumber of shares allotted after adjustment multiplied by the maximum number of the stockacquisition rights above.
2. No payment of money shall be required with regard to the stock acquisition rights for which thesubscription requirements can be determined based on the entrustment.
III.
The nature of the stock acquisition rights for which the subscription requirements can be determinedbased on the matters determined by this Annual General Meeting of Shareholders is as follows.
1. Type and number of shares to be issued upon exercise of the stock acquisition rights
The type of shares to be issued upon exercise of the stock acquisition rights shall be the Company’scommon shares, and the number of shares per unit of stock options to be issued upon exercise of
the stock acquisition rights (hereinafter, the “Number of Shares Allotted”) shall be 100.
Provided, however, that if a stock split (including a gratis allotment of the Company’s shares;
hereinafter, the same regarding the description of a stock split) or a stock consolidation is
performed by the Company after the conclusion of the meeting, the Number of Shares Allottedshall be adjusted according to the following formula, and any fractional shares arising as a result of
the said adjustment shall be truncated.
Number of Shares
Allotted after
adjustment=

Number of Shares
Allotted before
adjustment

×

Stock split orconsolidation ratio

With regard to days to which the said Number of Shares Allotted after adjustment is applied,
provisions of 3. (2) 1) shall be applied mutatis mutandis.
Furthermore, in addition to the above, in a case the Company is to engage in a merger or a company
split or in cases corresponding to the case where any adjustment of the Number of Shares Allotted isrequired, the Company may adjust the Number of Shares Allotted to the extent reasonable.
When the Number of Shares Allotted is to be adjusted, the Company shall notify those who holdstock acquisition rights and are recorded in the registry of stock acquisition rights (hereinafter, the“Holder of Stock Acquisition Rights) of necessary matters or publicly announce such matters by theprevious day of the day on which the Number of Shares Allotted after adjustment will be applied.
Provided, however, that in a case where a notice cannot be given or public announcement cannot bemade by the previous day of the day of the said application, the necessary matters shall be quickly
notified or publicly announced afterwards.
2.

The value of assets to be contributed upon exercise of the stock acquisition rights
The value of assets to be contributed upon exercise of each stock acquisition right shall be
14determined by multiplying the amount to be paid for one share to be delivered upon exercise of thesaid stock acquisition rights (hereinafter, the “Exercise Price”) by the Number of Shares Allotted.
The Exercise Price shall be equal to 1.05 times the average of closing prices of the Company’scommon shares (hereinafter, the “Closing Price”) on the Tokyo Stock Exchange in regular tradingon each day (excluding days on which no trading takes place) of the month preceding the month inwhich the day on which the stock acquisition rights are allotted (hereinafter, the “Allotment Date”)
falls (with fractional amounts less than one yen being rounded up to the nearest yen), or the
Closing Price on the Allotment Date (if no such Closing Price exists on that day, then the Closing
Price on the most recent day on which trading took place), whichever is higher. Provided, however,that the Exercise Price shall be subject to the adjustments specified in the following 3.
3.

Adjustment of the Exercise Price(1) If the Company performs the following 1) or 2) for the Company’s common shares after the
Allotment Date, the Exercise Price shall be adjusted in accordance with the formula,respectively specified below, (hereinafter, the “Exercise Price Adjustment Formula”); andfractional amounts less than one yen resulting from the adjustment shall be rounded up to thenearest yen.
1) In the event of a stock split or consolidation by the Company

Post-adjustment
Exercise Price=

Pre-adjustment Exercise Price×

1
Stock split or consolidation ratio2) In the event of any new share issuance or treasury stock disposal below the market priceby the Company (excluding cases such as the sales of treasury stock under Article 194 of
the Companies Act (that is, demand for sale of shares less than one unit by shareholders
who hold shares in a number less than one unit); the conversion of securities orconvertible securities that may be converted into the Company’s common shares; or the
exercise of stock acquisition rights (inclusive of those attached to the convertible bonds)
with which issuance of the Company’s common shares can be requested)
Post-adjustment
Exercise Price

i)

ii)

iii)

=

Pre-adjustment
Exercise Price×

Number of sharesalready issued +Number of newly issued shares ×
Amount be paid per share
Market price
Number of shares already issued +Number of newly issued shares

average of Closing Price (including indicative price display; hereinafter, the same)on 30 trading days (excluding days on which no Closing Price exists), which
commence on the 45th trading day preceding the “day on which the Post-adjustment
Exercise Price is applied” (hereinafter, the “Applicable Date”), which is specified in(2) below. The “average” shall be rounded off to the first decimal place in yen.
In the Exercise Price Adjustment Formula, “Number of shares already issued” shallbe equal to the total number of the Company’s issued shares on the day if there is arecord date and on the day one month before the Applicable Date in other cases, lessthe number of shares of treasury stock owned by the Company.
In the case of the disposal of treasury stock, “Number of newly issued shares” shallbe read as “Number of shares of treasury stock to be disposed.”(2) The day on which the Post-adjustment Exercise Price is applied shall be as described below.
1) In the case where adjustment is made in accordance with (1) 1), the Post-adjustment
Exercise Price shall be applied on and after the following day of the record date (theeffective date in the case where the record date is not specified) of the said stock split in
the event of a stock split; and on and after the effective date in the event of a stock
consideration. Provided, however, that in the case of a stock split whose implementation is
subject to approval of a proposal for increasing capital stock or legal capital surplus bydecreasing the amount of surplus at the general meeting of shareholders of the Company,
and if the record date for the stock split is set on any day before the day on which the said
general meeting of shareholders ends, the Post-adjustment Exercise Price shall be applied
retroactively on the following day of the said record date on and after the following day of
15

the day on which the said general meeting of shareholders ends.
Provided, however, that in the case of a stock split whose implementation is subject toapproval of a proposal for increasing capital stock or legal capital surplus by decreasing
the amount of surplus at the general meeting of shareholders of the Company, and if therecord date for the stock split is set on any day before the day on which the said general
meeting of shareholders ends, the Post-adjustment Exercise Price shall be applied
retroactively on the following day of the said record date on and after the following day ofthe day on which the said general meeting of shareholders ends.
In the case specified by the above proviso, for the Holders of Stock Acquisition Rights
who exercised their Stock Acquisition Rights between the following day of the record date
for a stock split and the day on which the said general meeting of shareholders ended(hereinafter, the number of shares that can be allotted upon the exercise of such Stock
Acquisition Rights shall be called the “Number of Shares Issued upon Exercise before
Stock Split”), the number of common shares of the Company to be allotted shall be
adjusted by the following formula, and any fractional shares arising as a result of the said
adjustment shall be truncated.
Number of newly
issued shares=(Pre-adjustment Exercise Price Post-adjustment Exercise Price)

Number of Shares
Issued upon Exercise
before Stock Split
xercise Price)
Post-adjustment Exercise Price

×2) In the case where adjustment is made in accordance with (1) 2), the Post-adjustment
Exercise Price shall be applied on and after the following day of the payment date (if apayment period is set, the final day of the said payment period) for the said issuance ordisposal (if a record date is set, on and after the said record date).

4.
5.

6.
7.

(3) In addition to the cases described in (1) 1) and 2) above, in the event in which the Exercise
Price needs to be adjusted such as in cases where the Company conducts a gratis allotment ofother class shares to common shareholders or a distribution of dividends to commonshareholders who hold shares of any other company after the Allotment Date, the Company
may adjust the Exercise Price within reasonable boundaries by taking into account conditions
such as those for the said allocation or dividends.
(4) When the Exercise Price is to be adjusted, the Company shall notify the Holders of Stock
Acquisition Rights of necessary matters or publicly announce such matters by the previous
day of the Applicable Date. Provided, however, that in a case where a notice cannot be given
or public announcement cannot be made by the previous day of the said Applicable Date, thenecessary matters shall be quickly notified or publicly announced afterwards.
Exercise period of the stock acquisition rights
Within two years commencing two years after the Allotment Date
Matters concerning capital stock and legal capital surplus to be increased in the event of issuanceof shares upon exercise of the stock acquisition rights(1) The amount of capital stock to be increased when shares are issued upon exercise of the stockacquisition rights shall be one half of the maximum amount of capital stock, etc., to be
increased, calculated in accordance with Article 17, Paragraph 1 of the Corporate Accounting
Regulations of Japan, and a fraction of less than one yen arising as a result of the calculation
shall be rounded up to the nearest one yen.
(2) The amount of legal capital surplus to be increased when shares are issued upon exercise of
the stock acquisition rights shall be calculated by subtracting the amount of increase in capitalstock stipulated in (1) above from the maximum amount of capital stock, etc., to be increased,
as stated in (1) above.
Restriction on acquisition of the stock acquisition rights through transfer
Acquisition of the stock acquisition rights through transfer shall be subject to approval byresolution of the Board of Directors of the Company.
Terms and conditions of acquisition of the stock acquisition rights
If any of the proposals (1) through (5) below is approved at a general meeting of shareholders of
the Company (or if resolved by the Board of Directors of the Company if a resolution at a general
meeting of shareholders is not required), the Company may acquire the Stock Acquisition Rights
without consideration on the day separately determined by the Board of Directors.
168.

(1) a proposal for the approval of a merger agreement, under which the Company will cease toexist;(2) a proposal for the approval of a company split agreement or an incorporation-type company
split plan, under which the Company will become a split company;(3) a proposal for the approval of a share exchange agreement or a share transfer plan, underwhich the Company will become a wholly owned subsidiary;(4) a proposal for approval of an amendment to the Articles of Incorporation to add a provision to
the effect that, as a feature of all shares the Company issues, the approval of the Company forthe acquisition of the said shares through a transfer is required; or(5) a proposal for approval of an amendment to the Articles of Incorporation to add a provision to
the effect that, as a feature of shares to be issued upon exercise of the Stock Acquisition
Rights, the approval of the Company for acquisition of the said shares through a transfer isrequired, or the Company shall acquire all of the said class shares by resolution at a general
meeting of shareholders.
Policy on determining the nature of stock acquisition rights issued by the restructured company uponorganizational restructuring
If the Company is to engage in a merger (limited to cases where the Company is to be dissolved asa result of the merger), an absorption-type company split or an incorporation-type company split(both limited to cases where the Company is to be a split company), or a share exchange or a sharetransfer (both limited to cases where the Company is to become a wholly owned subsidiary) (all ofwhich are collectively referred to as a “Restructuring Transaction”), the stock acquisition rights inthe entity specified under Article 236, Paragraph 1, Item 8 (a) through (e) of the Companies Act(such entity shall be called hereinafter the “Restructured Company”) shall be issued to holders of thestock acquisition rights who hold the stock acquisition rights remaining in effect immediately prior
to the effective date of the Restructuring Transaction (hereinafter respectively referring to theeffective date of the absorption-type merger in case of an absorption-type merger, the date offormation of a new company incorporated by the merger in case of a consolidation-type merger, theeffective date of the absorption-type company split in case of an absorption-type company split, thedate of formation of a new company in case of an incorporation-type company split, the effective
date of the share exchange in case of a share exchange and the date of the formation of a wholly
owning parent company in case of a share transfer) (such rights shall be called hereinafter the“Remaining Stock Acquisition Rights”). Provided, however, that the granting of such rights shall be
subject to provisions of issuing the stock acquisition rights of the Restructured Company in anabsorption-type merger agreement, a consolidation-type merger agreement, an absorption-typecompany split agreement, an incorporation-type company split plan, a share exchange agreement ora share transfer plan in accordance with the respective following conditions.
(1) The number of the stock acquisition rights of the Restructured Company to be issued
The same number of the stock acquisition rights as the number of the Remaining Stock
Acquisition Rights held by respective holders of the stock acquisition rights shall be issued.
(2) The class of shares of the Restructured Company to be issued upon exercise of the stockacquisition rights
The class of shares of the Restructured Company to be issued upon exercise of the stockacquisition rights shall be the common shares of the Restructured Company.
(3) The number of shares of the Restructured Company to be issued upon exercise of the stockacquisition rights
The number of shares of the Restructured Company to be issued upon exercise of the stockacquisition rights shall be determined in accordance with the provisions in 1. above, taking into
account the conditions and other factors concerning the Restructuring Transaction.
(4) The value of assets to be contributed upon exercise of the stock acquisition rights
The value of assets to be contributed upon exercise of each stock acquisition right to be issued
shall be the amount obtained by multiplying the Exercise Price after restructuring, which is
obtained through adjustment of the Exercise Price as determined in 2. above taking into accountthe conditions for the Restructuring Transaction, by the number of shares of the Restructured
Company to be issued upon exercise of the said stock acquisition rights, which is determined inaccordance with (3) above.
(5) Exercise period of the stock acquisition rights
The exercise period of the stock acquisition rights shall begin on the date of commencement of
the exercise period stipulated in 4. above or the effective date of the Restructuring Transaction,
whichever is later, and end on the closing date of the exercise of the said stock acquisition rights17

as determined in accordance with 4. above.
(6) Matters concerning capital stock and legal capital surplus to be increased in the event of theissuance of shares upon exercise of the stock acquisition rights
They shall be determined in accordance with 5. above.
(7) Restriction on acquisition of the stock acquisition rights through transfer
Acquisition of the stock acquisition rights through transfer shall be subject to approval byresolution of the Board of Directors of the Restructured Company.
(8) Terms and conditions of acquisition of the stock acquisition rights They shall be determined inaccordance with 7. above.
(9) Other conditions for the exercise of the stock acquisition rights They shall be determined inaccordance with 10. below.
9. Treatment of fractional shares arising upon exercise of the stock acquisition rights
A fractional portion of less than one share in the number of shares delivered to the holders of thestock acquisition rights shall be truncated upon exercise of the stock acquisition rights.
10. Other conditions for the exercise of the stock acquisition rights
Should any holder of the stock acquisition rights forfeit his/her stock acquisition rights, the said
stock acquisition rights cannot be exercised.

18

(Appendix)

Business Report(May 16, 2021 - May 15, 2022)

1. Overview of the Company Group(1)

Business Progress and Results

1)

Overview of businessIn the fiscal year under review (May 16, 2021 to May 15, 2022), the Japanese economy saw consumer
sentiment remain sluggish due to a decrease in personal income and an increase in commodity prices amid
the persistent impact of COVID-19.
In the drugstore sector, the importance of medium- to long-term growth strategy was increasing as there iscompetition to open new stores while corporate consolidation and realignment were conducted, andcompanies strove to capture customer needs and escape from homogenization.
Against this backdrop, TSURUHA Group (the “Group”) worked on improving customer service taking
customer feedback into account, as well as strengthening the incorporation of stay-at-home consumption
needs and improving convenience such as the introduction of meat and fresh produce, 100-yen stores, andpromotion of dispensing pharmacies which are attached to drugstores.
In addition, as part of its DX strategy, the Group strove to expand registered users of its smartphone apps
and utilizing customer data for promotion. As for private brands, the Group expand the private brand businessby launching two new brands – Kurashi Rhythm and Kurashi Rhythm Medical.
In store openings, the Group opened 159 new stores and closed 57 stores since the beginning of the fiscal
year under review by targeting regional stores based on our dominant strategy and implementing scrap-andbuild of existing stores. This resulted in a total of 2,522 directly managed stores as of the end of the fiscal
year under review. In Thailand, the Group opened one new store and closed six stores, resulting in a total of
17 stores in Thailand as of May 15, 2022.
Store openings and closures of the Group are as follows:(Number of stores)
End of previous
fiscal year

Openings

Closures

Net change

End of current
fiscal year

Hokkaido

414

16

8

8

422

Of whichdispensing
pharmacies
111

Tohoku

533

40

3

37

570

117

Kanto,
Koshinetsu

493

37

10

27

520

198

Chubu, Kansai

237

18

8

10

247

135

Chugoku

315

20

9

11

326

109

Shikoku

212

14

6

8

220

63

Kyushu,Okinawa

216

14

13

1

217

29

Total for Japan

2,420

159

57

102

2,522

762

(Others: 17 overseas stores and 5 franchise stores)

As a result of the above, for the fiscal year under review, TSURUHA Holdings reported net sales of¥915,700 million (down 0.4% year on year), operating income of ¥40,568 million (down 16.1%), ordinary
income of ¥40,052 million (down 16.0%), and net income attributable to owners of the parent of ¥21,388
million (down 18.6%). One of the main reasons for this is the lower level of net sales of existing stores andnumber of visiting customers due to the reactionary decline of stay-at-home demand in the previous fiscal
year and weak sales of seasonal products. In addition, implementation of the review of inventory valuation
for goods designed to prevent COVID-19 such as disinfectants, increasing utilities costs due to the increasein oil price, and increasing payment fees due to increasing cashless payments are also the main reasons.

19

Status by product category is as follows:
Pharmaceuticals
Net sales were ¥201,259 million, up 3.9% year on year due mainly to the growth of dispensing
remuneration resulting from the new opening of 94 dispensing pharmacies despite weak sales of
OTC drugs associated with the deteriorating market of cold medicines and other seasonal products.
Cosmetics
Net sales were ¥130,328 million, down 2.3% year on year due mainly to the persistent impact of the
spread of COVID-19 toward advice-based sales of cosmetics.
Misc. daily necessities
Net sales were ¥249,129 million, down 4.3% year on year mainly because there was a pause in theincrease in demand which was due to the spread of COVID-19 since the previous fiscal year.
Foods
Net sales were ¥220,346 million, up 3.5% year on year due mainly to continuation of stay-at-homedemand caused by the prolonged spread of COVID-19, in addition to increasing the lineup of foodproducts including meat and fresh produce through renovations of existing stores.
Other
Net sales were ¥110,526 million, down 4.1% year on year due mainly to a reactionary decline of stayat-home demand for medical supplies including masks, which had increased in the previous fiscal year.

20Results of net sales by products
Item

Year ended May 15, 2022
(May 16, 2021 - May 15, 2022)
Amount (Millions of yen)
Share (%)
Year-on-year (%)

Pharmaceuticals

201,259

22.0

103.9

Cosmetics

130,328

14.2

97.7

Products Misc. daily necessities

249,129

27.2

95.7

Foods

220,346

24.1

103.5

Other

110,526

12.1

95.9

Subtotal

911,590

99.6

99.6

Real estate rent

1,184

0.1

117.7

Commission income, etc.

2,925

0.3

102.8

915,700

100.0

99.6

Total

Note: The Group mainly engages in over-the-counter sales to general consumers and therefore does not engage
in production and sales on orders.

21

2)

Capital expenditure
The total amount of capital expenditure was ¥31,818 million for the fiscal year under review, mainly
consisting of investment in store facilities such as guarantee deposits associated with openings of 159 newstores and renovations.

(New openings)
Hokkaido
Aomori
Iwate
Miyagi
Akita
Yamagata
Fukushima
IbarakiTochigi
Chiba
Tokyo
Kanagawa
Niigata
Yamanashi
NaganoShizuoka

Number of opened stores by prefecture
16 stores
Aichi
2 storesKyoto
10 stores
Osaka
9 storesHyogo
5 stores
Wakayama
5 storesTottori
9 stores
Shimane1 storeHiroshima
7 stores
Yamaguchi
4 stores
Tokushima
7 storesEhime
4 storesKochi
8 storesFukuoka
2 stores
Kagoshima
4 storesOkinawa
5 storesTotal

5 stores1 store3 stores1 store3 stores5 stores2 stores7 stores6 stores1 store9 stores4 stores12 stores
1 store1 store159 stores

Number of closed stores by prefecture
8 stores
Okayama
1 storeHiroshima
2 stores
Yamaguchi
4 storesEhime
5 storesKochi
1 storeFukuoka
3 stores
Kumamoto
3 storesOita
2 stores
Kagoshima
2 storesOkinawa
Total

1 store5 stores1 store2 stores4 stores7 stores3 stores1 store1 store1 store57 stores(Closures)
Hokkaido
Iwate
Miyagi
Chiba
Tokyo
NaganoAichi
Osaka
Wakayama
Tottori22

3)

Financing
The Group borrowed money from banks to raise funds in the fiscal year under review. The details of theborrowings are stated on page 27, (8) Major Lenders.

4)Transfer, absorption-type demerger, or incorporation-type demerger of businessNot applicable.

5)

Transfer of the business of other companies
Not applicable.

6)

Succession to rights and obligations concerning business of other corporations, etc. through absorption-typemerger or absorption-type demerger
Not applicable.

7)

Acquisition or disposal of shares or other equity or subscription rights to shares in other companies
Not applicable.

(2)

Trends in assets and income

Category

Net sales

The 57th fiscal term

The 58th fiscal term

The 59th fiscal term

(Year ended May 15,
2019)(Year ended May 15,
2020)(Year ended May 15,
2021)¥782,447 million¥841,036 million¥919,303 million

The 60th fiscal term
(fiscal year underreview)(Year ended May
15, 2022)¥ 915,700 million

Ordinary income
Net income attributable toowners of the parent
Net income per share¥43,313 million¥46,298 million¥47,688 million¥ 40,052 million¥24,824 million¥27,899 million¥26,283 million¥ 21,388 million¥513.84¥576.85¥542.04¥440.59

Total assets¥372,293 million¥414,002 million¥537,027 million¥ 562,363 million

Net assets¥220,214 million¥250,934 million¥276,528 million¥ 284,046 million¥4,238.15¥4,821.26¥5,210.88¥5,314.48

Net assets per share

Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020) and other standards since the fiscal year under review. The figures of assets and income
above are those after the application of those accounting standards.

23

(3)

Status of Significant Parent Companies and Subsidiaries

1)

Relationship with parent company
The Company has no applicable parent company.

2)

Material subsidiaries
Company name

CapitalInvestment
percentage

Principal business

Wholesale of pharmaceuticals, etc. based on
100.0% pharmacies and store-based distributors andwholesale to franchise stores
Sales of pharmaceuticals, etc. based on
kusurino FUKUTARO CO., LTD.
¥98 million
100.0% pharmacies and store-based distributors in
the Kanto region
Sales of pharmaceuticals, etc. based on
Tsuruha Group Drug & Pharmacy¥287 million
100.0% pharmacies and store-based distributors in
Nishinihon Inc.
the Chugoku and Kyushu regions
Sales of pharmaceuticals, etc. based on
Lady Drug Store Co., Ltd.
¥598 million
51.0% pharmacies and store-based distributors in
the Chugoku and Shikoku regions
Kyorindo Group Holdings Co.,
Guidance and management of business of¥50 million
51.0%
Ltd.
subsidiaries operating drug stores
Sales of pharmaceuticals, etc. based on
Kyorindo Co., Ltd.
¥50 million
51.0% pharmacies and store-based distributors in
Shizuoka Prefecture
Sales of pharmaceuticals, etc. based on
B&D Co., Ltd.
¥30 million
100.0% pharmacies and store-based distributors in
Aichi Prefecture
Sales of pharmaceuticals, etc. based on
Drug Eleven Co., Ltd.
¥100 million
51.0% pharmacies and store-based distributors
mainly in the Kyushu and Okinawa regions
Sales of pharmaceuticals, etc. based on
Hiroshima Chuo Pharmacy Co.,
¥40 million
100.0% pharmacies and store-based distributors in
Ltd.
Hiroshima Prefecture
Purchase of products for the entire Group andplanning, negotiation and purchasing
operations relating to logistics
TSURUHA Group Merchandising¥10 million
100.0% Planning, development and marketing of theCo., Ltd.
Group’s private brand products
Mail order of products handled by the Group
via telephone, the Internet or other means
Insurance agency business and guidance and
TSURUHA Financial Service Inc.
¥10 million
100.0%
management of business
TSURUHA Pharmacy K.K.
¥10 million
100.0% Real estate rental business
TSURUHA Shurui Hanbai Co.,
Mail order of alcohol, etc. via the Internet,¥10 million
100.0%
Ltd.
etc.
Rental of vending machines and sales of
Several Co., Ltd.
¥50 million
100.0%
beverages
Notes: 1. TSURUHA Pharmacy K.K. and TSURUHA Shurui Hanbai Co., Ltd. are wholly-owned subsidiaries of
TSURUHA CO., LTD.
2. Kyorindo Co., Ltd. is a wholly-owned subsidiary of Kyorindo Group Holdings Co., Ltd.
3. Hiroshima Chuo Pharmacy Co., Ltd. is a wholly-owned subsidiary of Tsuruha Group Drug & Pharmacy
Nishinihon Inc.
4. Several Co., Ltd. is a wholly-owned subsidiary of TSURUHA Financial Service Inc.
TSURUHA CO., LTD.

(4)¥4,252 million

Issues to be addressed
The outlook for the future economy is likely to remain uncertain as the consumer lifestyles are significantly
changing due to the spread of COVID-19, and energy prices and all kinds of commodity prices are increasing.
In the drugstore sector, the operating environment is likely to remain challenging due to continuously
24intensifying competition to open stores. Besides, consumer spikes in demand for e-commerce, and oligopolyof industry leaders, etc., will accelerate.
Against this backdrop, customers, guided by its business philosophy of “making life better for ourcustomers,” the Group will work to act as a lifeline that protects consumers’ lives in the local community andhelp to realize health and beauty life, moreover, we will provide opportunities for living, employment, andeconomic activity for them.
Priority policies for fiscal year ending May 15, 2023 are as follows:
1) Store development strategy focused on profitability
Promoting the dominant strategy in the locations where we already operate stores. Also, improving
profitability through achieving profitability as early as possible and strengthening the key performanceindicator (KPI) management in opening new stores in the payback period, etc., and opening stores withhigher quality. At existing stores, aiming to improve profitability through introducing new products andkeep implementing scrap-and-build. At the same time, continuing to expand business to new regions
through M&As and other methods.
2) Promoting new openings of dispensing pharmacies and enhancement
Promoting new openings of mainly dispensing pharmacies attached to existing stores. Improving theenvironment including the system aspect in order to strengthen cooperation with drugstores which
dispensing pharmacies are attached to, and improve therapeutic efficacy and infection prevention throughhealth support.
3) Improving corporate value and strengthening competitive power through private brand productsWorking on joint development with leading manufacturers, accelerating development of private brand foodproducts, and conducting development of health-conscious and value-added goods, in order to develop
superior products leading the TSURUHA Group and improvement of brands by promoting development
and sales of products “Kurashi Rhythm” and “Kurashi Rhythm Medical.”4) Promoting digital strategies and strengthening the information technology (IT) platform
Working on marketing initiatives to increase customer satisfaction and acquire new customers through thecustomer data platform, utilizing the largest store network in the drugstore industry.
Besides, strengthening the IT platform which will become the basis for various business management
including these strategies, and establishing a system which can quickly respond to business environmental
change.
5) Improving business efficiency through the establishment of the performance management system
Strengthening the performance management system by reducing selling and administrative expenses andimproving accuracy of budgeting. Improving business efficiency of the Group through, for example,
controlling expenses in each store such as personnel expenses and utility costs, etc., minimizing increases
in costs accompanying business expansion such as new openings, etc., and developing digital tools thatmake store operations efficient.
6) Promoting sustainability
Providing further contribution to local communities through promotion of the drugstore and dispensing
pharmacy businesses while working to create a sustainable society as upheld in the sustainable development
goals (SDGs) and at the same time, further improving the corporate governance system to enhance longterm corporate value.
The Group plans to achieve 2,603 stores as of the end of the fiscal year ending May 15, 2023, by opening
151 stores and closing 70 stores. Furthermore, in order to achieve “2,750 stores in the fiscal year ending May
15, 2025” and “net sales of ¥1.06 trillion,” as well as to maintain its high growth potential, the Company
intends to focus on maximization of corporate value of the Group while carrying out capital and businessalliances with companies which support the Company’s policy in addition to M&As.

25

(5)

Principal Business (as of May 15, 2022)
The Company manages and provides business guidance for each of the Group companies.
The Group consists of the Company and 14 consolidated subsidiaries and is engaged in business including
sales of pharmaceuticals, cosmetics, misc. daily necessities, foods and other products and business relating to
the management of dispensing pharmacies.

(6)

Principal offices (as of May 15, 2022)
Head office of the Company Kita 24, Higashi 20-1-21, Higashi-ku, Sapporo-shi, Hokkaido
The number of stores of the Group is as follows:
Directly operated stores 2,522 (Others: 17 overseas stores and 5 franchise stores)
Distribution (locations and the number of stores) of stores that are directly operated by the Group is asfollows:
Number of stores by prefecture
Hokkaido
422 stores
Osaka
24 stores
Aomori60 stores
Hyogo
16 stores
Iwate
76 stores
Wakayama
20 stores
Miyagi146 stores
Tottori
39 stores
Akita
78 stores
Shimane52 stores
Yamagata
93 stores
Okayama
11 stores
Fukushima
117 stores
Hiroshima
178 stores
Ibaraki
51 stores
Yamaguchi
46 stores
Tochigi
34 stores
Tokushima
23 stores
Saitama
8 stores
Kagawa50 stores
Chiba
144 stores
Ehime
115 storesTokyo
159 stores
Kochi
32 stores
Kanagawa
42 stores
Fukuoka
95 stores
Niigata
35 stores
Saga
6 stores
Yamanashi
31 stores
Nagasaki
5 stores
Nagano16 stores
Kumamoto
11 stores
Shizuoka
92 storesOita
8 storesAichi
81 stores
Miyazaki
11 stores
Shiga
7 stores
Kagoshima
42 stores
Kyoto
7 storesOkinawa
39 stores
Total
2,522 stores

26

(7)

Employees (as of May 15, 2022)

1)

Status of the Group
Category

Increase fromprevious fiscal
year-end

Number of
employees

Average age

Average lengthof service

37 years and
10 years and6 months
9 months
32 years and7 years andFemale5,653
230
3 months
1 month34 years and8 years andTotal or average
11,179357
10 months
11 months
Note: The number of employees above includes 10 employees seconded from the Company to companies outside
the Company and excludes 522 fixed-term employees as well as part-time employees. The annual average
number of part-time employees is 19,857 (converted based on eight hours a day per person).
Male

2)

5,526

127

Number of
employees

Increase (decrease)from previous fiscal
year-end

Status of the Company
Category

Average age

Average lengthof service

46 years and17 years and
1 month
4 months
44 years and18 years andFemale39(46)
2 months
9 months
45 years and17 years andTotal or average
206(74)
9 months
7 months
Notes: 1. The number of employees above excludes fixed-term employees and part-time employees. The annual
average number of part-time employees is one (converted based on eight hours a day per person) andthat of fixed-term employees is 15.
2. The number of employees above includes 138 employees seconded from the Group.
Male

(8)

(9)

167

(28)

Major Lenders (as of May 15, 2022)
Name of lender

Borrowing amount

Sumitomo Mitsui Banking Corporation¥20,000 million

MUFG Bank, Ltd.

¥18,000 million

Sumitomo Mitsui Trust Bank, Limited¥8,675 million

Other Important Information Concerning the Company GroupNot applicable.

272. Matters Concerning the Status of the Company(1)

Status of Shares
1) Total number of shares authorized to be issued2) Total number of shares issued and outstanding3) Number of shareholders
4) Major shareholders (top 10 shareholders)

152,000,000 shares
49,439,968 shares
27,569 persons

Number of shares(Thousand shares)
6,313

Shareholder nameAEON CO., LTD.

Shareholding ratio
13.00%The Master Trust Bank of Japan, Ltd. (Trust Account)

6,093

12.55%

STATE STREET CLIENT OMNIBUS ACCOUNT OM02

3,066

6.31%

Custody Bank of Japan, Ltd. (Trust Account)

1,556

3.20%

Tatsuru Tsuruha

1,411

2.91%

SMBC Nikko Securities Inc.

1,324

2.73%

1,010

2.08%

977

2.01%

951

1.96%

STATE STREET BANK WEST CLIENT – TREATY
505234
Hiroko Tsuruha
Akiko Tsuruha

765
1.58%
Note: The shareholding ratio is calculated after excluding treasury shares (886,655 shares) held by the Company.

Hajime Tsuruha

5)

Status of shares granted to officers of the Company in consideration of the execution of duties during the
fiscal year under review
Details of stock remuneration granted during the fiscal year under review are as follows:• Total number of shares granted to Directors and other officers by category
Category
Number of shares
Number of eligible officers
Directors (excluding Audit andSupervisory Committee Members and2,900 shares
5 personsOutside Directors)
Outside Directors (excluding Audit and- shares- personsSupervisory Committee Members)
Directors (Audit and Supervisory- shares- personsCommittee Members)
Corporate Auditors- shares- persons

28

(2)

Company Officers

1)

Directorsa) Directors
Position
ChairmanPresident &Representative
Director

Name
Tatsuru Tsuruha
Jun Tsuruha

Director

Hisaya Ogawa

Director

Shoichi Murakami

Director

Masahiro Yahata

Director

Fumiyo Fujii

Assignments and significant concurrent positions
Chairman of TSURUHA CO., LTD.
Vice Chairman & Representative Director of
TSURUHA CO., LTD.
President & Representative Director of kusurino
FUKUTARO CO., LTD.
President & Representative Director of Tsuruha Group
Drug & Pharmacy Nishinihon Inc.
President & Representative Director of TSURUHA
CO., LTD.
Full-time Audit & Supervisory Board Member ofNorth Pacific Securities Co., Ltd.

Director (Standing
Audit and Supervisory
Masahiro Ofune
Corporate Auditor of TSURUHA CO., LTD.
Committee Member)
Director (Audit andDirector of Sapporo Branch, Anchor Licensed Tax
Supervisory
Harumi Sato
Accountant OfficeCommittee Member)
Director (Audit andSupervisory
Takuya Okazaki
Representative of Okazaki Takuya Law Offices
Committee Member)
Notes: 1. Directors Mr. Fumiyo Fujii, Ms. Harumi Sato and Mr. Takuya Okazaki are Outside Directors. The
Company has registered Mr. Fumiyo Fujii, Ms. Harumi Sato and Mr. Takuya Okazaki with Tokyo Stock
Exchange, Inc. as Independent Directors.
2. To gather information from the Directors (excluding Directors who are Audit and Supervisory Committee
Members) and share such information as well as strengthening cooperation with the internal audit division,etc., to improve the effectiveness of audit and supervisory functions, the Company elected Mr. Masahiro
Ofune as a Standing Audit and Supervisory Committee Member.
3. Audit and Supervisory Committee Member Ms. Harumi Sato has certification as a tax accountant andconsiderable knowledge about finance and accounting.

29b) Executive Officers
Position
President & Chief
Executive Officer

Name

Assignments*Jun Tsuruha

Responsible for kusurino FUKUTARO CO., LTD. andM&A
Responsible for Tsuruha Group Drug & Pharmacy
Executive Officer*Shoichi Murakami
Nishinihon Inc.
Executive Officer*Masahiro Yahata
Responsible for TSURUHA CO., LTD.
Executive Officer
Kazuto Toyama
Responsible for Group Store Development
Executive Officer
Makoto Murakami
Responsible for Group Administration
Executive Officer
Responsible for Group Management Strategy andYoshihiro Kobashi
Group Information Systems
Executive Officer
Akio Shiraishi
Responsible for Lady Drug Store Co., Ltd.
Executive Officer
Naotaka Kokawaji
Responsible for Kyorindo Co., Ltd.
Executive Officer
Akiko Kamijo
Responsible for B&D Co., Ltd.
Executive Officer
Tsuyoshi Hanzawa
Responsible for Drug Eleven Co., Ltd.
Yasuyuki Arima
Executive Officer
Responsible for Group ProductNotes: 1. Executive Officers marked with an asterisk (*) are concurrently serving as Director.
2. Mr. Noriyuki Eguchi and Mr. Shinji Hatai stepped down as Executive Officer on May 15, 2022.
Executive Officer*Hisaya Ogawa

2)

Summary of the agreement on limitation of liability
In accordance with the provisions of Article 427, Paragraph 1 of the Companies Act, the Company hasentered into a contract with non-executive Directors, to limit their liability for damages under Article 423,
Paragraph 1 of the Companies Act. The maximum amount of liability for damages pursuant to the agreement
shall be the amount stipulated by laws and regulations.

3)

Summary of the directors and officers liability insurance contract
The Company has entered into a directors and officers liability insurance contract with an insurancecompany with Directors, Corporate Auditors and Executive Officers of the Company and its consolidated
subsidiaries as the insured persons, in accordance with Article 430-3, Paragraph 1 of the Companies Act. The
contract shall cover any damages and litigation costs incurred by an insured person due to a claim for damages
arising from an act (including an omission) committed by the insured person in his or her capacity as an
officer of the Company, etc. However, damage, etc. arising from intent or gross negligence shall not becovered so as to ensure the appropriateness of the execution of duties by officers. The insurance premiums of
the insurance contracts are all paid by the Company.

4)

Remuneration, etc. for Directors for the fiscal year under reviewa) Matters concerning the decision policy regarding the content of remuneration, etc. for each Director
The Company decides on matters regarding the content of remuneration, etc. for each Director at meetingsof the Board of Directors.
1. Basic policies
The Company has designed a systematic remuneration system in consideration of each element of thefollowing basic policies, as it regards remuneration for Directors to be important incentives for achieving
the management policy.
(i) It shall promote the corporate philosophy of “making life better for our customers.”(ii) The amount and design shall be at a level that can support participation and activities of talented
management team.
(iii) It shall raise awareness for contribution to mid- to long-term growth of the Company.
(iv) It shall be linked to business results of the Company and have a mechanism that controls
overemphasis on short-term performance.
(v) It shall be designed to have transparency, fairness and reasonability and determined through anappropriate process to ensure such factors from a viewpoint of accountability to stakeholders including
shareholders and employees.
Specifically, remuneration for Directors consists of fixed remuneration, performance-linked bonuses
and restricted share remuneration. The level of remuneration for Directors is verified every year inreference to the levels of officers’ remuneration of companies in the same industry with a similar size(selected in terms of net sales, market capitalization, consolidated operating income and other factors)
30and other companies in different industries based on objective remuneration survey data by externalbodies and other data for promptly responding to changes in external environments and market
environments.
2. Details of Directors’ remuneration and composition, etc.
Remuneration for Directors consists of 1) “fixed remuneration” (monetary remuneration) as basic
remuneration in accordance with their job title (position), 2) “bonuses” (monetary remuneration) basedon business results for each fiscal year and their individual evaluation, etc. and 3) “stock remuneration”(restricted share remuneration) in accordance with their job title. Besides, the compositions of
remuneration for Directors who are Audit and Supervisory Committee Members, Outside Directors, andother Directors are different from other Directors, because such Directors have responsibilities
significantly different from other Directors.
Regarding the composition of remuneration for Directors, except Directors who are Audit andSupervisory Committee Members and Outside Directors, a ratio of basic remuneration, bonuses and stock
remuneration is determined, so that it functions as important incentives to achieve the management policy.
Specifically, the following ratio is applied.
Basic remuneration : Bonuses : Stock remuneration = 30-40% : 50-60% : 5-15%
In this regard, shares of the Company shall be granted as stock remuneration.
Outline of the Composition of remuneration for Directors (excluding Directors who are Audit andSupervisory Committee Members and Outside Directors)
Type ofremuneration

Payment criteria

Payment
methodComposition of
remuneration

Basic
remuneration

Determined for each person based on the standard
amount for each job title

Cash
Once amonth

30-40%

Cash
Once ayear

50-60%

SharesOnce ayear

5-15%

BonusesStockremuneration

The amount is calculated for each person as
monetary remuneration reflecting business results ofa single fiscal year, after determination of whether or
not payment is made and the total amount if paid,
based on consolidated business performanceindicators, etc. of the previous fiscal year.
The number of shares to be granted to each Director
is determined in comprehensive consideration ofvarious factors including the degree of contribution
by each eligible person to the Company and their
responsibilities based on the share price and thestandard for job title.

(Bonuses)
The amount of bonuses as performance-linked remuneration is calculated for each person as monetary
remuneration reflecting business results of a single fiscal year, after determination of whether or not payment
is made and the total amount if paid, based on consolidated business performance indicators, etc. of the previous
fiscal year. “Operating income and net income” of the consolidated results and the degree of achievement ofeach person’s mission are used as indicators for calculating bonuses from the viewpoint of attaching importanceto the degree of achievement in profit growth. The payment is made once a year after the conclusion of General
Meeting of Shareholders, after internal approval is obtained.
(Stock remuneration) *Restricted share remuneration
The number of shares to be granted for restricted share remuneration is determined in comprehensive
consideration of various factors including each eligible person’s responsibilities based on the number of shares
to be granted to each Director set in accordance with the share price and the standard for job title.
Timing of allotment is determined by the Board of Directors at a meeting held in September after theconclusion of General Meeting of Shareholders.
31Restricted shares to be allotted to Directors of the Company are granted in advance.
Meanwhile, for Directors, who are Audit and Supervisory Committee Members, and Outside Directors,
only basic remuneration is provided taking into account their independence from business execution.
Outline of the Composition of remuneration for Directors, who are Audit and Supervisory Committee
Members, and Outside Directors
Composition of
remuneration
Directors
Type of
Payment
Who ArePayment criteria
remuneration
methodAudit andOutsideSupervisory Directors
Committee
Members
Cash
Basic
Determined for each person based on the standard
Once a100%
100%
remuneration amount for each job title
month
The amount is calculated for each person as
monetary remuneration reflecting business results ofa single fiscal year, after determination of whether or
Cash
Bonuses0%0%
not payment is made and the total amount if paid, Once a year
based on consolidated business performanceindicators, etc. of the previous fiscal year.
The number of shares to be granted to each Director
is determined in comprehensive consideration ofStockvarious factors including the degree of contribution Shares
0%0%
remuneration by each eligible person to the Company and their Once a year
responsibilities based on the share price and thestandard for job title.
3. Process for determining remuneration for Directors
Authority for determining the specifics of the remuneration amount for each Director who is not an
Audit and Supervisory Committee Member is delegated to the President & Representative Director, basedon a resolution of the Board of Directors within the limit of remuneration resolved in advance at theGeneral Meeting of Shareholders. Such authority includes determination of the amount of basic
remuneration for each Director and the amount of bonus distribution for each Director based on thepayment criteria. For stock remuneration, the number of shares allotted to each Director is resolved at themeeting of the Board of Directors.
To ensure appropriateness of the level and amount of remuneration and the transparency of thedetermination process, the specific amount of remuneration to be paid is deliberated at the Nomination
and Remuneration Committee which is a consulting body for remuneration of the officers involving
external experts, in consideration of trends among companies in the same industry and companies with asimilar scale and suggestions about necessity for corporate management. Then, the Personnel Divisiondevelops remuneration plans for each Director and the Officer responsible for Administration discusses it
sufficiently with the President.
* Matters to be deliberated at meetings of the Nomination and Remuneration Committee concerning
remuneration are as follows:• Draft proposals to be submitted to the General Meeting of Shareholders concerning remuneration
for Directors• Decision policies regarding remuneration, etc. for each Director (including Executive Officers andmanagement team members of the Group companies)• Draft proposals for remuneration, etc., for each Director (including Executive Officers andmanagement team members of the Group companies)
The remuneration amount for each Director who is an Audit and Supervisory Committee Member isdetermined by discussion of Directors who are Audit and Supervisory Committee Members, based on a
proposal of the Remuneration Committee, within the limit of remuneration which has been resolved at32

the General Meeting of Shareholders.
b)Matters concerning resolutions on remuneration for Directors (excluding Directors who are Audit andSupervisory Committee Members) and Directors who are Audit and Supervisory Committee Members at
the General Meeting of Shareholders
The upper limit of monetary remuneration for Directors consisting of monthly remuneration andbonuses for Directors (excluding Directors who are Audit and Supervisory Committee Members) wasapproved to be within ¥500 million per year (including within ¥50 million for Outside Directors) at the59th Ordinary General Meeting of Shareholders held on August 10, 2021. The number of Directors(excluding Directors who are Audit and Supervisory Committee Members) at the time of conclusion ofsaid Ordinary General Meeting of Shareholders was six (including one Outside Director). Also,
remuneration for subscription rights to shares allotted as stock option was approved to be within ¥30
million (including within ¥10 million for Outside Directors) per year at the 46th Ordinary General Meetingof Shareholders held on August 12, 2008. The number of Directors at the time of conclusion of said
Ordinary General Meeting of Shareholders was eight (including two Outside Directors).
In addition, remuneration for monetary remuneration claims for granting restricted shares for Directors(excluding Directors who are Audit and Supervisory Committee Members and Outside Directors) wasapproved to be within ¥150 million per year at the 59th Ordinary General Meeting of Shareholders heldon August 10, 2021. The number of Directors (excluding Directors who are Audit and Supervisory
Committee Members and Outside Directors) at the time of conclusion of said Ordinary General Meetingof Shareholders was five.
The upper limit of remuneration for Directors who are Audit and Supervisory Committee Members
was approved to be within ¥100 million per year at the 59th Ordinary General Meeting of Shareholders
held on August 10, 2021. The number of Directors who are Audit and Supervisory Committee Members
at the time of the conclusion of said Ordinary General Meeting of Shareholders was three.

c)

Total amount of remuneration, etc. for Directors and Corporate Auditors
Total amount of remuneration, etc. by type
Total amount of
Number of(Millions of yen)remuneration,
Officer category
eligible officers
etc.
Basic
Performance-linked(Persons)
Restricted shares(Millions of yen) remuneration remuneration, etc.
Directors(excluding
Audit andSupervisory
235
98
117
19
6
Committee
(9)
(9)
(0)
(-)
(3)
Members)(of whichOutsideDirectors)
Directors(Audit andSupervisory
Committee
45453Members)
(14)
(14)
(-)
(-)
(2)
(of whichOutsideDirectors)
Corporate
Auditors(of which,883Outside
(4)
(4)
(-)
(-)
(2)
Corporate
Auditors)
Notes: 1. Employee salary is not paid to Directors because there are no Directors concurrently serving as
employee at the Company.
2. The amount of remuneration, etc. for Directors includes the amount paid for two retired Directors.
3. The amount of remuneration, etc. paid by consolidated subsidiaries to three of the six Directors(excluding Directors who are Audit and Supervisory Committee Members) and three retired
33

Directors was ¥185 million from. No Outside Directors received such remuneration.
4. Indicators for the above performance-linked remuneration, etc. are “operating income and net
income” of the consolidated results and results for the relevant fiscal year are stated on page 38“Consolidated Statements of Income.”
5. Regarding remuneration amounts for each person, President & Representative Director Jun Tsuruha,
to whom authority has been delegated based on a resolution of the Board of Directors, determines
the amount of basic remuneration for Directors and the amount of bonus distribution for each
Director based on the payment criteria. The reason for delegation of such authority is that theCompany believes that the Representative Director is suitable to evaluate divisions to which each
Director was assigned while considering the Company’s results.
6. The particulars of remuneration, etc., for each person for the relevant fiscal year were deliberated at
the Nomination and Remuneration Committee and fully discussed between the President, thePersonnel Division, and the Executive Officer responsible for Administration. Therefore, the Boardof Directors has respected their decision and judged that said decision complies with the decision
policy.
5)Matters concerning Outside Officers
The following is a summary of relationships between companies where outside officers hold significant
concurrent positions and the Company, their main activities for the fiscal year under review, and duties
performed relating to their expected roles.
a) Outside Director
Mr. Fumiyo Fujii
He is a Full-time Audit & Supervisory Board Member of North Pacific Securities Co., Ltd. There are no
special relationships between the Company and North Pacific Securities Co., Ltd.
He attended all 13 meetings of the Board of Directors held during the fiscal year under review andprovided useful opinions and advice on the Company’s management based on his abundant experience andwide insight with thorough knowledge of financial operations.
The Company has registered him with Tokyo Stock Exchange, Inc. as an Independent Director as set forthin the regulation of the stock exchange.
b) Outside Director (Audit and Supervisory Committee Member)
Ms. Harumi Sato
She is the Director of the Sapporo Branch of Anchor Licensed Tax Accountant Office. There are no special
relationships between the Company and the Sapporo Branch of Anchor Licensed Tax Accountant Office.
She attended all 13 meetings of the Board of Directors held during the fiscal year under review. With her
considerable knowledge about finance and accounting, she provided useful opinions and advice on the
Company’s management from a professional viewpoint as a tax accountant. As an Audit and Supervisory
Committee Member, she also attended all 10 meetings of the Audit and Supervisory Committee andcontributed to the auditing of the Directors’ performance of their duties.
The Company has registered her with Tokyo Stock Exchange, Inc. as an Independent Director as set forthin the regulation of the stock exchange.
c) Outside Director (Audit and Supervisory Committee Member)
Mr. Takuya Okazaki
He is the Representative of Okazaki Takuya Law Offices. There are no special relationships between the
Company and Okazaki Takuya Law Offices.
He attended all 10 meetings of the Board of Directors after taking office as a Director of the Company
and provided useful opinions and advice on the Company’s management based on his abundant businessexperience as a lawyer and expertise on corporate legal affairs. As an Audit and Supervisory Committee
Member, he also attended all 10 meetings of the Audit and Supervisory Committee and contributed to theauditing of the Directors’ performance of their duties.
The Company has registered him with Tokyo Stock Exchange, Inc. as an Independent Director as set forthin the regulation of the stock exchange.
No outside officers have received any amount of remuneration, etc. from any subsidiaries, etc. of theCompany during the fiscal year under review.

34

(3)

Status of Accounting Auditor

1) Name

KPMG AZSA LLC

2) The amount of remuneration, etc.
Payment amount• Amount of remuneration, etc. for Accounting Auditor for the fiscal¥47.5 million
year under review• Total amount of money and other property interests payable to¥201.5 million
Accounting Auditor by the Company and its subsidiaries
Notes: 1. KPMG AZSA LLC also serves as the accounting auditor of all the Company’s subsidiaries which havean accounting auditor in place.
2. Under the audit agreement between the Company and the Accounting Auditor, the amounts ofremuneration, etc. for audits pursuant to the Companies Act and those for audits pursuant to the Financial
Instruments and Exchange Act are not clearly separated, and they cannot be practically separated either.
Consequently, the amount of remuneration, etc. for the fiscal year under review reflects the total amountof such remunerations.
3. The Audit and Supervisory Committee has reviewed and deliberated details of the audit plans by the
Accounting Auditor, the status of execution of accounting audits and the basis for calculation of
remuneration estimates after receiving necessary information and reports from Directors, internal related
departments and the Accounting Auditor. As a result, it confirmed the appropriateness thereof and gaveconsent to the amount of remuneration for the Accounting Auditor.
3)

Policy regarding determination of termination or non-reappointment of accounting auditor
The Audit and Supervisory Committee shall determine details of proposals for the termination or nonreappointment of the Accounting Auditor, in the event that there is an obstacle to the execution of duties by
the Accounting Auditor or otherwise it is judged to be necessary.
In addition, in the event that the Accounting Auditor is deemed to have met any of the items set forth under
Article 340, Paragraph 1 of the Companies Act, the Audit and Supervisory Committee shall terminate theappointment of the Accounting Auditor subject to the unanimous consent of the Audit and Supervisory
Committee Members. In this case, the Audit and Supervisory Committee Members selected by the Audit andSupervisory Committee shall report on the termination of the Accounting Auditor at the first General Meetingof Shareholders convened after such termination.

4)

Description of non-Audit services
The Company entrusts “support services relating to accounting operations,” etc. as services other than those
set forth in Article 2, Paragraph 1 of the Certified Public Accountants Act (non-audit services) with the
Accounting Auditor.

5)

Summary of the agreement on limitation of liability
In accordance with the provisions of Article 427, Paragraph 1 of the Companies Act, the Company hasentered into a contract with the Accounting Auditor to limit its liability for damages under Article 423,
Paragraph 1 of the said Act. The maximum amount of liability for damages pursuant to the agreement shallbe the amount stipulated by laws and regulations.

35

(4)

Policy for determining dividends of surplus, etc.
The Company’s basic policy is to pay stable dividends by focusing on shareholder returns while taking into
account the need for funds to reinforce the operating base and support future business development. The
Company also plans to distribute profits to shareholders by taking into account the dividend payout ratio.
The Company intends to use retained earnings for investments to boost future corporate value, such as capital
investment to open new stores and expand and refurbish existing stores, and to fund M&A deals and otherinitiatives that support growth.
The Company will continue to make efforts to achieve sustained growth, enhance corporate value andincrease shareholder value from mid- to long-term standpoints.
For the fiscal year under review, the Company has decided to pay a year-end dividend of ¥83.50 per share as
initially planned based on the business results. Together with the interim dividend of ¥83.50 per share alreadypaid on January 7, 2022, the full-year dividend is ¥167 per share.

36

Consolidated Balance Sheets(As of May 15, 2022)(Millions of yen)
AssetsDescription
Current assets
Cash and deposits

Liabilities
Amount127,026

Accounts receivable – trade49,155Merchandise
Raw materials and supplies
Short-term loans receivable
Other

132,314121
119,895

Total current assets

328,514

Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Land

Description
Current liabilities
Accounts payable – trade
Current portion of long-term loans
payableAccounts payable – other
Lease obligations
Income taxes payable
Contract liabilities

Provision for bonuses
Provision for directors’ bonuses
Provision for point card certificates
Other

Amount155,660
7,200
20,347551
5,278
10,418
5,996
680
291
7,188

52,9480
14,702
14,435

Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations

213,61339,475
8,294

Leased assets
Construction in progress
Total property, plant andequipment
Intangible assets
Goodwill

7,098
2,113

Deferred tax liabilities
Net defined benefit liability

5,204
4,119

91,299Asset retirement obligations

3,847

Other

3,763

34,281

Total non-current liabilities

64,704

Software2,494

Total liabilities

278,317

Telephone subscription right

104

Other

1,145

Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets

38,02526,723
9
6,647

Guarantee deposits
Other

65,481
5,723

Allowance for doubtful accounts(62)

Total investments and otherassets104,523

Total non-current assets

233,849

Total assets

Net assets
Description
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares

Amount11,322
29,375
205,714(5,312)

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on
available-for-sale securities
Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income
Subscription rights to shares
Non-controlling interests

241,098

Total net assets

284,046

Total liabilities and net assets

562,363562,36337

16,988(52)
16,936
2,269
23,740Consolidated Statements of Income(May 16, 2021 – May 15, 2022)(Millions of yen)
Description

AmountNet Sales
Cost of sales

915,700
644,217Gross profit
Selling, general and administrative expenses

271,483
230,914

Operating Income
Non-operating income
Interest income
Dividend income
Gain on donation of equipment
Rent income

40,568Compensation income

Insurance income
Other
Non-operating expenses
Interest expenses
Closed store related expenses
Early withdrawal penalty
Other

130
257
765
229
206
98
692

2,380

802
706
1,029
357

2,896

Ordinary Income

40,052Extraordinary income
Gain on sales of non-current assets
Subsidy income
Extraordinary losses
Loss on retirement of non-current assets
Loss on sales of non-current assets
Impairment loss
Loss related to infectious disease
Loss on termination of retirement benefit plan

Income before income taxes
Income taxes – current
Income taxes – deferred

58
68

127

159
28
2,196
35
114

2,534
37,64513,024210

Net income
Net income attributable to non-controllinginterests
Net income attributable to owners of the parent

13,234
24,411
3,022
21,38838

Non-Consolidated Balance Sheets(As of May 15, 2022)(Millions of yen)
AssetsDescription

Liabilities
AmountCurrent assets
Cash and deposits

45,969Accounts receivable – trade

1,337

Supplies
Short-term loans receivable fromsubsidiaries and affiliates
Income taxes receivable

Description
Current liabilities
Current portion of long-term loans
payableAccounts payable – otherAmount

6,000
1,769

4

Accrued expenses

4

207

Income taxes payable

104

2,503

Deposits received

9

Other

470

Provision for bonuses

61

Allowance for doubtful accounts(207)

Provision for directors’ bonuses

199

Other

57

Total current assets

50,284Non-current assets

Total current liabilities

Property, plant and equipment

8,205

Non-current liabilities

Buildings

1

Long-term loans payable

Tools, furniture and fixtures
Total property, plant andequipment

66

Guarantee deposits received

8

68

Other

6

Intangible assets
Telephone subscription right
Software
Software in progress
Total intangible assets

Total non-current liabilities

32,014

Total liabilities

40,2200

Net assets

1,891

Description

321

Shareholders’ equity

2,212

32,000Capital stock

Amount11,322

Capital surplus
Investments and other assets
Shares of subsidiaries and affiliates

117,441

Deferred tax assets

52

Other
Total investments and otherassetsTotal non-current assets

301

Legal capital surplus

44,606

Other capital surplus

2,452

Total capital surplus
Retained earnings

117,794

Legal retained earnings

15

120,075

Other retained earnings

74,787

General reserve

73,926

Total retained earnings

74,802

Total shareholders’ equity
Subscription rights to shares
170,36039

861

Retained earnings brought forward
Treasury shares

Total assets

47,058(5,313)
127,870
2,269

Total net assets

130,140

Total liabilities and net assets

170,360

Non-Consolidated Statements of Income(May 16, 2021 – May 15, 2022)(Millions of yen)
Description

AmountOperating revenue

20,158Operating expenses

6,618

Operating Income

13,539Non-operating income
Interest income

0

Dividend income

1

Other

9

11

Non-operating expenses
Interest expenses

48

Provision of allowance for doubtful accounts

62

Other

73

184

Ordinary Income

13,366

Income before income taxes

13,366

Income taxes – current

294

Income taxes – deferred(5)

Net income

289
13,07740

Accounting Auditor’s Audit Report on the Consolidated Financial Statements

Independent Auditor’s Report
July 4, 2022
To the Board of Directors
TSURUHA HOLDINGS INC.
KPMG AZSA LLC
Sapporo Office
Keisuke Muramatsu, CPA
Designated Limited Liability Partner,
Engagement Partner
Takuo Tanabe, CPA
Designated Limited Liability Partner,
Engagement Partner
OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated balance sheets, the consolidated statements of income, theconsolidated statement of changes in equity and the notes to the consolidated financial statements of TSURUHAHOLDINGS INC. (the “Company”) for the fiscal year from May 16, 2021 through May 15, 2022.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position and results of operations of TSURUHA HOLDINGS INC., which consists of the Company andits consolidated subsidiaries, for the period covered by the consolidated financial statements in conformity withaccounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Consolidated Financial
Statements.” We are independent of the Company and its consolidated subsidiaries in accordance with the provisions
related to professional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor. We believe that
we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.
Other Information
The other information consists of the business report and its supplementary schedules. Management is responsible
for preparing and disclosing the other information. The Audit and Supervisory Committee is responsible formonitoring the execution of duties by Directors related to designing and operation of the financial reporting processof the other information.
The other information does not fall under the scope of our opinion on the consolidated financial statements, andwe express no opinion on the other information.
Our responsibility for the audit of the consolidated financial statements is to read through the otherinformation and, in the course of reading, consider whether there are any material differences between the otherinformation and the consolidated financial statements or the knowledge we obtained in the course of our audit,
and to pay attention to whether there are any other signs of material errors in the other information in addition
to such material differences.
If, based on our audit, we determine that there are material errors in the other information, we are required toreport that fact.
We have nothing to report with respect to the other information.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as management determines is necessary to enable the presentation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
41

In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going concern, andfor disclosing matters relating to going concern when it is required to do so in accordance with accounting principles
generally accepted in Japan.
The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties related todesigning and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to express an opinion on the
consolidated financial statements from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably expected
to, either individually or collectively, influence the decisions of users taken on the basis of the consolidated financial
statements.
We make professional judgment in the audit process in accordance with auditing standards generally accepted inJapan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement audit
procedures to address the risks of material misstatement. The audit procedures shall be selected and applied asdetermined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide abasis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in order todesign audit procedures that are appropriate in the circumstances, although the purpose of the audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
・ Determine whether it is appropriate for management to prepare the consolidated financial statements on thepremise of a going concern and, based on the audit evidence obtained, determine whether there is a significant
uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability to continue asa going concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor isrequired to call attention to the notes to the consolidated financial statements in the audit report, or if the notes
to the consolidated financial statements pertaining to the significant uncertainty are inappropriate, issue amodified opinion on the consolidated financial statements. While the conclusions of the auditor are based on theaudit evidence obtained up to the date of the audit report, depending on future events or conditions, an entity
may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the consolidated financial statements are in accordancewith accounting principles generally accepted in Japan, assess the presentation, structure, and content of theconsolidated financial statements including related notes, and whether the consolidated financial statements
fairly present the transactions and accounting events on which they are based.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The auditor is
responsible for instructing, supervising, and implementing the audit of the consolidated financial statements, andis solely responsible for the audit opinion.
The auditor reports to the Audit and Supervisory Committee regarding the scope and timing of implementationof the planned audit, material audit findings including material weaknesses in internal control identified in the courseof the audit, and other matters required under the auditing standards.
The auditor reports to the Audit and Supervisory Committee regarding the observance of provisions related toprofessional ethics in Japan as well as matters that are reasonably considered to have an impact on the auditor’s
independence and any safeguards that are in place to reduce or eliminate obstacles.
Interest
Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries requiring
disclosure under the provisions of the Certified Public Accountants Act of Japan.

42

Accounting Auditor’s Audit Report on the Non-Consolidated Financial Statements

Independent Auditor’s Report
July 4, 2022
To the Board of Directors
TSURUHA HOLDINGS INC.
KPMG AZSA LLC
Sapporo Office
Keisuke Muramatsu, CPA
Designated Limited Liability Partner,
Engagement Partner
Takuo Tanabe, CPA
Designated Limited Liability Partner,
Engagement Partner
OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying nonconsolidated financial statements, which comprise the non-consolidated balance sheets, the non-consolidated
statements of income, the non-consolidated statement of changes in equity and the related notes, and theaccompanying supplementary schedules of TSURUHA HOLDINGS INC. (the “Company”) for the 60th fiscal year
from May 16, 2021 through May 15, 2022.
In our opinion, the non-consolidated financial statements and the accompanying supplementary schedules
referred to above present fairly, in all material respects, the financial position of the Company as of May 15, 2022,
and the results of its operations for the year then ended in conformity with accounting principles generally acceptedin Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Non-Consolidated Financial
Statements and the Accompanying Supplementary Schedules.” We are independent of the Company in accordancewith the provisions related to professional ethics in Japan, and are fulfilling other ethical responsibilities as anauditor. We believe that we have obtained sufficient and appropriate audit evidence to provide a basis for our audit
opinion.
Other Information
The other information consists of the business report and its supplementary schedules. Management is
responsible for preparing and disclosing the other information. The Audit and Supervisory Committee is
responsible for monitoring the execution of duties by Directors related to designing and operation of thefinancial reporting process of the other information.
The other information does not fall under the scope of our opinion on the non-consolidated financial
statements, and we express no opinion on the other information.
Our responsibility for the audit of the non- consolidated financial statements is to read through the otherinformation and, in the course of reading, consider whether there are any material differences between the otherinformation and the non-consolidated financial statements or the knowledge we obtained in the course of ouraudit, and to pay attention to whether there are any other signs of material errors in the other information in
addition to such material differences.
If, based on our audit, we determine that there are material errors in the other information, we are required
to report that fact.
We have nothing to report with respect to the other information.
Responsibilities of Management and the Audit and Supervisory Committee for the Non-Consolidated
Financial Statements and the Accompanying Supplementary Schedules
Management is responsible for the preparation and fair presentation of the non-consolidated financial statements
and the accompanying supplementary schedules in accordance with accounting principles generally accepted in
43

Japan, and for designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the non-consolidated financial statements and the accompanying supplementaryschedules that are free from material misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements and the accompanying supplementary schedules,
management is responsible for assessing whether it is appropriate to prepare the non-consolidated financial
statements and the accompanying supplementary schedules in accordance with the premise of a going concern, andfor disclosing matters relating to going concern when it is required to do so in accordance with accounting principles
generally accepted in Japan.
The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties related todesigning and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Non-Consolidated Financial Statements and the Accompanying
Supplementary Schedules
Our responsibility is to obtain reasonable assurance about whether the non-consolidated financial statements andthe accompanying supplementary schedules as a whole are free from material misstatement, whether due to fraud
or error, and to express an opinion on the non-consolidated financial statements and the accompanying
supplementary schedules from an independent standpoint in an audit report, based on our audit. Misstatements canoccur as a result of fraud or error, and are deemed material if they can be reasonably expected to, either individuallyor collectively, influence the decisions of users taken on the basis of the non-consolidated financial statements andthe accompanying supplementary schedules.
We make professional judgment in the audit process in accordance with auditing standards generally accepted inJapan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement audit
procedures to address the risks of material misstatement. The audit procedures shall be selected and applied asdetermined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide abasis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in order todesign audit procedures that are appropriate in the circumstances, although the purpose of the audit of the nonconsolidated financial statements and the accompanying supplementary schedules is not to express an opinion
on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.
・ Determine whether it is appropriate for management to prepare the non-consolidated financial statements andthe accompanying supplementary schedules on the premise of a going concern and, based on the audit evidence
obtained, determine whether there is a significant uncertainty in regard to events or conditions that may castsignificant doubt on the entity’s ability to continue as a going concern. If there is a significant uncertainty
concerning the premise of a going concern, the auditor is required to call attention to the notes to the nonconsolidated financial statements and the accompanying supplementary schedules in the audit report, or if thenotes to the non-consolidated financial statements and the accompanying supplementary schedules pertaining to
the significant uncertainty are inappropriate, issue a modified opinion on the non-consolidated financial
statements and the accompanying supplementary schedules. While the conclusions of the auditor are based on
the audit evidence obtained up to the date of the audit report, depending on future events or conditions, an entity
may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the non-consolidated financial statements and theaccompanying supplementary schedules are in accordance with accounting principles generally accepted inJapan, assess the presentation, structure, and content of the non-consolidated financial statements and theaccompanying supplementary schedules including related notes, and whether the non-consolidated financial
statements and the accompanying supplementary schedules fairly present the transactions and accounting eventson which they are based.
The auditor reports to the Audit and Supervisory Committee regarding the scope and timing of implementationof the planned audit, material audit findings including material weaknesses in internal control identified in the courseof the audit, and other matters required under the auditing standards.
The auditor reports to the Audit and Supervisory Committee regarding the observance of provisions related toprofessional ethics in Japan as well as matters that are reasonably considered to have an impact on the auditor’s
independence and any safeguards that are in place to reduce or eliminate obstacles.
Interest
Our firm and engagement partners have no interests in the Company requiring disclosure under the provisions of
the Certified Public Accountants Act of Japan.
44

The Audit and Supervisory Committee’s Audit Report

Audit Report
The Audit and Supervisory Committee audited the execution of duties by Directors for the 60th fiscal year fromMay 16, 2021 to May 15, 2022. The committee hereby reports the method and results of the audits as follows.
1. Methods and Descriptions of Audits
The Audit and Supervisory Committee periodically received reports from Directors and employees andother personnel on the contents of resolutions by the Board of Directors regarding the matters set forth in
Article 399-13, Item 1 of Paragraph 1 (b) and (c) of the Companies Act and the status of the establishment
and operation of the systems developed based on the said resolutions (internal control systems). Besides,
the Audit and Supervisory Committee requested explanations as necessary, expressed its opinions andconducted audits by the following methods.
(1) The Audit and Supervisory Committee, in accordance with the auditing policies, allocation of duties, andother matters established by the Audit and Supervisory Committee, in cooperation with the internal audit
division and the internal control division, attended important meetings, received reports from Directors,
employees, and other personnel on the matters regarding execution of their duties, requested explanations
as necessary, reviewed important approval documents and other materials, and studied the status ofoperations and assets at the head office and principal offices. In addition, with regard to subsidiaries, The
Audit and Supervisory Committee worked to communicate and exchange information with Directors,
Corporate Auditors, and other personnel of subsidiaries, and received reports from subsidiaries on theirbusinesses as necessary.
(2) The Audit and Supervisory Committee monitored and verified whether the Accounting Auditor ismaintaining an independent position and conducting proper audits. In addition, the Audit and Supervisory
Committee received reports from the Accounting Auditor on the status of execution of its duties, andrequested explanations as necessary. Furthermore, the Audit and Supervisory Committee was notified by
the Accounting Auditor that it has developed “systems for ensuring that the performance of the duties isbeing carried out correctly” (matters stipulated in each item of Article 131 of the Regulation on Corporate
Accounting) in accordance with the “Quality Control Standard for Audit” (October 28, 2005, BusinessAccounting Council) and other standards, and requested explanations as necessary.
Based on the above methods, the Audit and Supervisory Committee examined the Business Report andits supplementary schedules, the non-consolidated financial statements (non-consolidated balance sheets,
non-consolidated statements of income, non-consolidated statement of changes in equity, and notes to thenon-consolidated financial statements) and their supplementary schedules, and the consolidated financial
statements (consolidated balance sheets, consolidated statements of income, consolidated statement ofchanges in equity, and notes to the consolidated financial statements) for the fiscal year under review.

45

2. Results of Audit(1) Results of Audit of the Business Report and Other Relevant Documents
1)

In our opinion, the Business Report and its supplementary schedules fairly represent the Company’s
condition in accordance with laws and regulations and the Articles of Incorporation.

2)

With regard to the execution of duties by Directors, we have found no evidence of wrongful action
or material facts in violation of laws and regulations or the Articles of Incorporation.

3)

In our opinion, the contents of the resolutions by the Board of Directors related to the internal control
systems are fair and reasonable. In addition, we have found no matters to be noted with regard to thedescriptions in the Business Report or the execution of duties by Directors related to such internal
control systems.

(2) Results of Audit of Non-Consolidated Financial Statements and Supplementary Schedules
In our opinion, the audit methods employed and results rendered by KPMG AZSA LLC, the Accounting
Auditor, are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the audit methods employed and results rendered by KPMG AZSA LLC, the Accounting
Auditor, are fair and reasonable.
July 5, 2022
The Audit and Supervisory Committee, TSURUHA HOLDINGS INC.
Standing Audit and Supervisory Committee Member Masahiro Ofune
Audit and Supervisory Committee Member
Harumi Sato
Audit and Supervisory Committee Member
Takuya Okazaki
Notes: 1. Audit and Supervisory Committee Members Ms. Harumi Sato and Mr. Takuya Okazaki are Outside Directors
set forth in Articles 2-15 and 331-6 of the Companies Act.
2. The Company transitioned to a Company with an Audit and Supervisory Committee from a Company witha Board of Corporate Auditors on August 10, 2021 by the resolution of the 59th Ordinary General Meetingof Shareholders held on the same date, so the status for the period from May 16, 2021 to the conclusion of
the same Ordinary General Meeting of Shareholders was audited based on the record that the Audit andSupervisory Committee had taken over from the defunct Board of Corporate Auditors.
—End of document—

46