Deloitte Touche Tohmatsu LLC
Marunouchi Nijubashi Building
3-2-3 Marunouchi
Chiyoda-ku, Tokyo 100-8360
Japan
Tel: +81 (3) 6213 1000
Fax: +81 (3) 6213 1005
www.deloitte.com/jp/en

INDEPENDENT AUDITOR'S REPORTTo the Board of Directors of Lawson, Inc.:
OpinionWe have audited the consolidated financial statements of Lawson, Inc. and its subsidiaries (the "Group"),which comprise the consolidated statement of financial position as of February 28, 2023, and theconsolidated statement of income, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, andnotes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as of February 28, 2023, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards ("IFRSs").
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Auditof the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled ourother ethical responsibilities as auditors. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of
the consolidated financial statements of the current period. The matter was addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on the matter.

Member of
Deloitte Touche Tohmatsu Limited

How the Key Audit Matter Was
Addressed in the Audit

Key Audit Matter Description
The Group recognized its non-current assets of
1,562,582 million yen or 51% of total assets in theaggregate on the consolidated statement offinancial position as of February 28, 2023, which
included property, plant and equipment andright-of-use assets related to the operation ofDomestic Convenience Store Business segment
for the 14,631 stores in the amount of
146,608 million yen and 1,001,408 million yen,respectively. The Group recognized an impairment
loss of 9,133 million yen on the consolidated
statement of income for the year ended February
28, 2023, as described in Note 17. "IMPAIRMENTLOSSES ON NON-FINANCIAL ASSETS" with
relevant disclosures.
If any indications of impairment are identified forthe store assets, the Group measures therecoverable amount at the higher of an asset's fairvalue less costs of disposal and its value in use
and recognizes an impairment loss when the
carrying amount exceeds the recoverable amount.
The value in use is calculated by discounting theestimated future cash flows to the present value.

Our audit procedures to assess thereasonableness of the estimates of future cash
flows related to the valuation of long-lived assets ofthe stores included the following, among others:i.

Understanding and evaluating of internal
controls
We understood and evaluated the design andoperating effectiveness of internal controls over
the recognition of impairment losses forlong-lived assets of the stores. We havefocused on the internal controls relevant to therevenue forecasts for each store.

ii. Assessment of the reasonableness of theestimates of future cash flows• We have performed the assessment of thereasonableness of the estimates of future
cash flows by making inquiries of division
managers responsible for each store andinspecting evidence supporting
management's assumptions, such aschanges in the population of its commercial
area, fluctuations in the sales per customer
due to the consumer sentiment, and theopening and closing of stores by competitors.

The revenue forecasts for each store used inestimating future cash flows generated from eachstore are subject to uncertainty as they are
significantly affected by changes in the populationof its commercial area, fluctuations in the averagesales per customer due to the consumer
sentiment, and the opening and closing of storesby competitors.

• We have compared the revenue forecasts foreach store to the historical sales trends ofasset groups with similar sizes, locations, andage of stores.

Therefore, we determined the estimates of future
cash flows generated from the stores as a key
audit matter because it is subject to management
judgment and a high degree of estimation
uncertainty.

• We have examined whether there was anindication of possible management bias bycomparing revenue forecasts to actual results
in prior years for each store.

Other Information
Other information comprises the information included in the Group's disclosure documents
accompanying the audited consolidated financial statements, but does not include the consolidated
financial statements and our auditor's report thereon.
We determined that no such information existed and therefore, we did not perform any work thereon.
Responsibilities of Management and Audit & Supervisory Board Members and the Audit &Supervisory Board for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRSs, and for such internal control as management determines isnecessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

-2-

In preparing the consolidated financial statements, management is responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with IFRSs and using the going concern basis of accounting unless management either
intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for overseeing
the Directors' execution of duties relating to the design and operating effectiveness of the controls overthe Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks. The
procedures selected depend on the auditor's judgment. In addition, we obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant tothe audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group's ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor's report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements arein accordance with IFRSs, as well as the overall presentation, structure and content of theconsolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fairpresentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

-3-

We communicate with Audit & Supervisory Board members and the Audit & Supervisory Board
regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board members and the Audit & Supervisory Board with astatement that we have complied with relevant ethical requirements regarding independence, andcommunicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with Audit & Supervisory Board members and the Audit & Supervisory
Board, we determine those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit matters. We describe thesematters in our auditor's report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required
to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Koji Ishikawa
Designated Engagement Partner
Certified Public Accountant

Masumi Nakagawa
Designated Engagement Partner
Certified Public Accountant

Deloitte Touche Tohmatsu LLC
September 22, 2023

-4-

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements(i) Consolidated Statement of Financial Position
Notes

IFRS Transition Date
(As of March 1, 2021)

As of February 28,
2022(Millions of yen)
As of February 28,
2023

Cash and cash equivalents
Trade and other receivables

8
9, 26

403,554207,273

392,996
193,405

399,523
223,648

Finance lease receivables
Other financial assets

16, 2610, 26

16,621
6,601

15,071
8,885

13,710
3,595

11
12

22,53912,70625,066
12,453

28,68910,671

669,298

647,878

679,839

AssetsCurrent assets

Inventories
Other current assets
Total current assets
Non-current assets
Property, plant, and equipment

13, 17

166,829

176,820

186,398

Right-of-use assets
Investment property

16, 1714

1,034,508
36,7371,014,459
41,037

1,069,233
46,734

Goodwill
Intangible assets
Investments accounted for using equity
methodGuarantee deposits

15, 1715, 1739,22456,04449,516
51,25150,15051,416

18

6,592

6,778

6,532

26

93,82994,15592,916

Other financial assets
Deferred tax assets

10, 2619

11,88850,284

5,937
51,261

5,742
48,234

Other non-current assets

12

6,849

5,682

5,223

Total non-current assets

1,502,788

1,496,900

1,562,582

Total assets

2,172,086

2,144,778

2,242,421―1―

NotesIFRS Transition Date
(As of March 1, 2021)

As of February 28,
2022(Millions of yen)
As of February 28,2023

Trade and other payables
Deposits received

21, 26
26

213,398
300,073

213,728
245,485

231,925
274,224

Borrowings
Income taxes payable

20, 26

141,595
4,109

67,372
7,403

92,877
10,800

Other financial liabilities
Provisions

24, 26
23

171,598
2,539

246,847
2,576

273,465
2,480

Other current liabilities

25

Liabilities and equity
Current liabilities

Total current liabilities
Non-current liabilities
Borrowings

20,071

16,68819,505853,385

800,102905,279

20, 26

129,824

159,984

80,000

Lease liabilities
Other financial liabilities

16
24, 26886,605
18,094

869,314
19,808923,588
21,407Retirement benefit liability
Deferred tax liabilities

22
19

16,540485

17,718459

16,797
430

Provisions
Other non-current liabilities

23
25

37,4093,470

38,5573,140

37,642
3,417

Total non-current liabilities

1,092,430

1,108,982

1,083,284

Total liabilities

1,945,816

1,909,085

1,988,563

EquityShare capital
Capital surplus

27
27

58,50646,82858,506
46,89958,506
46,934

Treasury shares
Other components of equity

27

(991)
611

(973)
1,588

(948)
3,799

Retained earnings
Total equity attributable to owners ofparentNon-controlling interests

27

117,679

125,832

141,650

222,635

231,853

249,941

3,634

3,839

3,916

Total equity

226,270

235,693

253,858

Total liabilities and equity

2,172,086

2,144,778

2,242,421―2―

(ii) Consolidated Statement of Income(Millions of yen)
Fiscal year ended
February 28, 2022

Notes
Operating revenues
Cost of sales

943,206
454,889

1,000,385
473,074

488,317527,310435,874

462,998

3,465

3,133

13, 14, 15, 16, 17, 32
16, 26, 33

19,077
4,664

12,985
1,468

16, 26, 33

8,819

9,158

18

432

363

19

33,10910,41847,134
17,461

22,69029,673

22,62565

29,708(34)

22,69029,673

Basic earnings per share (Yen)

226.09296.86

Diluted earnings per share (Yen)

225.89296.60Operating gross profit
Selling, general, and administrative
expenses
Other income
Other expenses
Finance income
Finance costs
Share of profit of investments
accounted for using equity method
Profit before tax
Income tax expense

7, 14, 16, 30
11, 13, 15, 16, 22, 31

Fiscal year ended
February 28, 2023

6,13,14,15,16,22,
29, 31
32

ProfitProfit (loss) attributable to
Owners of parent
Non-controlling interests
Earnings per share

35

―3―

(iii) Consolidated Statement of Comprehensive Income(Millions of yen)
Notes
ProfitItems that will not be reclassified to profit or loss
Net change in fair value of equity instruments
designated as measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income ofinvestments accounted for using equity method
Total of items that will not be reclassified to profit
or loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Share of other comprehensive income ofinvestments accounted for using equity method
Total of items that may be reclassified to profit orloss
Other comprehensive income

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

22,69029,67326, 34(1,245)120

22, 34

(227)

1,125

18, 34(10)

10(1,482)

1,256

34

3,114

2,175

18, 34

29

18

3,144

2,194

Comprehensive income

1,661

3,450

24,352

33,124

24,14033,045

211

79

Comprehensive income attributable to
Owners of parent
Non-controlling interests―4―

(iv) Consolidated Statement of Changes in Equity
Fiscal year ended February 28, 2022
(Millions of yen)
Equity attributable to owners of parent
Other components of equity
Notes

Balance at beginning of period

Financial assets
measured at fair
Exchangevalue throughdifferences on
Total
other
translation ofcomprehensive foreign operations
incomeSharecapitalCapitalsurplusTreasurysharesRemeasurementsof defined benefit
plans

58,50646,828

(991)

–

611

–

611

(227)

(1,255)

2,997

1,515

(227)

(1,255)

2,997

1,515

Profit–Other comprehensive income
Comprehensive income
Purchase of treasury shares

27

(0)

–

Disposal of treasury shares

27

0

–

Dividends of surplus

28–

Change in the parent's ownershipinterest due to transactions with
noncontrolling interests

0

Exercise of share acquisition rights(17)

Share-based payment transactions

88

–
17

–
–

Transfer to retained earnings
Total transactions with owners
Balance at end of period

227

(765)

–

70

17

227

(765)

–

(538)

58,506

46,899(973)–(1,409)

2,997

1,588

Equity attributable toowners of parent

Notes

Balance at beginning of period
ProfitRetainedearnings

222,635

3,634

226,270

22,62522,62565

22,690

1,515

146

1,661

24,140211

24,352

22,625Purchase of treasury shares

27

Disposal of treasury shares

27

Dividends of surplus

28

Total equity

117,679

Other comprehensive income
Comprehensive income

Total

Noncontrollinginterests

(0)

(0)

0
(15,010)0(15,010)(2)(15,012)

Change in the parent's ownershipinterest due to transactions with
noncontrolling interests

0

(3)

(3)

Exercise of share acquisition rights––

Share-based payment transactions

88

88
–

Transfer to retained earnings

538–

Total transactions with owners(14,472)(14,922)(6)(14,928)

Balance at end of period

125,832

231,853

3,839

235,693

―5―

(538)

Fiscal year ended February 28, 2023
(Millions of yen)
Equity attributable to owners of parent
Other components of equity
Notes

Balance at beginning of period

SharecapitalCapitalsurplusTreasuryshares58,506

46,899(973)

Financial assets
measured at fair
Exchange
Remeasurements
value throughdifferences onof defined benefit
Total
other
translation ofplans
comprehensive foreign operations
income–(1,409)2,997

Profit1,588–

Other comprehensive income
Comprehensive income

1,125

130

2,079

3,336

1,125

130

2,079

3,336

Purchase of treasury shares

27

(0)

–

Disposal of treasury shares

27

0

–

Dividends of surplus

28–

Exercise of share acquisition rights(24)

Share-based payment transactions

59

24

–
–

Transfer to retained earnings(1,125)(1,125)

Other–

Total transactions with owners
Balance at end of period

–

34

24

(1,125)–58,506

46,934(948)–(1,278)Equity attributable toowners of parent

Notes

Balance at beginning of period
ProfitRetainedearnings

Total equity

125,832

231,853

3,839

235,693

29,70829,708(34)

29,673

3,336

114

3,450

33,04579

33,124

Other comprehensive income
Comprehensive income

Total

Noncontrollinginterests

29,708Purchase of treasury shares

27

(0)

(0)

Disposal of treasury shares

27

0

0

Dividends of surplus

28(15,011)(15,011)(2)(15,013)

Exercise of share acquisition rights

(0)

(0)

Share-based payment transactions

59

59

Transfer to retained earnings

1,125

–

–

(5)

(5)

(5)

Total transactions with owners(13,890)(14,957)(2)(14,960)

Balance at end of period

141,650

249,941

3,916

253,858

Other

―6―

– (1,125)
5,077

3,799

(v) Consolidated Statement of Cash Flows(Millions of yen)
Notes
Cash flows from operating activities
Profit before tax
Depreciation and amortization
Impairment losses
Interest income
Interest expenses
Loss on retirement of fixed assets
Decrease (increase) in trade and other receivables
Increase (decrease) in trade and other payables
Increase (decrease) in deposits received
Increase (decrease) in retirement benefit liability
Net increase in call money for banking business
Other
SubtotalInterest and dividend income
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property, plant, and equipment; right-of-use
assets; and investment property
Purchase of intangible assets
Purchase of investments
Proceeds from sale and redemption of investments
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Purchase of long-term prepaid expenses
Purchase of investments in subsidiaries resulting inchange in scope of consolidation
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease liabilities
Dividends paid
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

6

36
36
36
28

8

―7―

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

33,109203,864
15,110(1,305)
8,819
1,473
15,933(4,368)(54,372)
1,177
68,000(1,909)285,5311,202(3,541)(7,410)275,781

47,134
211,745
9,623(1,280)8,298
1,438(28,693)
16,801
29,971(923)
15,00014,731
323,849
1,354(4,002)(11,502)309,699(44,782)(42,239)(8,615)(12,730)
18,135(11,124)
11,902(366)(12,427)(4,461)
8,140(11,261)
11,880(210)(9,101)–

498(56,185)(1,146)(51,725)

331,306(375,470)(172,467)(15,010)14(231,626)

196,195(250,836)(182,918)(15,011)21(252,548)

1,472

1,100

(10,557)
403,554
392,996

6,526
392,996
399,523

Notes to Consolidated Financial Statements
1. REPORTING ENTITY
Lawson, Inc. (the “Company”) is a company located in Japan, and the address of the registered head office is Shinagawa-ku, Tokyo.
The Company’s consolidated financial statements, the reporting period of which ends on the last day of February, consist of accountsof the Company and its subsidiaries (the “Group”), as well as interests in associates and joint arrangements.
The parent company of the Group is Mitsubishi Corporation.
The principal businesses of the Group are stated in Note “7. SEGMENT INFORMATION.”
2. BASIS OF PREPARATION(1) Compliance with IFRSThe Group’s consolidated financial statements have been prepared in accordance with IFRS as prescribed in Article 93 of theRegulation on Consolidated Financial Statements as the Group meets the requirements of a “specified company complying withdesignated international accounting standards” set forth in Article 1-2 of said Regulation.
The Group has been applying IFRS from the fiscal year ended February 28, 2023, and made the transition to IFRS on March 1,
2021. The impact that the transition to IFRS had on the Group’s reported financial position, results of operations and cash flows on
the date of transition and the comparative year is stated in Note “41. FIRST-TIME ADOPTION.”The Group’s accounting policies are in compliance with IFRS effective as of February 28, 2023, except for the IFRS standards
that have not been early adopted and the exemptions provided in IFRS 1 First-time Adoption of International Financial ReportingStandards (“IFRS 1”).
(2) Basis of measurement
The Group’s consolidated financial statements have been prepared on a historical cost basis except items measured at fair value
such as certain financial instruments, as stated in Note “3. SIGNIFICANT ACCOUNTING POLICIES.”(3) Functional currency and presentation currency
The Group’s consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency, andamounts less than one million yen are rounded down.
3. SIGNIFICANT ACCOUNTING POLICIES(1) Basis of consolidation(i) Subsidiaries
The Company consolidates entities that it directly or indirectly controls. Therefore, entities in which the Group owns a majorityof voting rights are generally treated as consolidated subsidiaries of the Group. However, even in cases where the Group does not
own the majority of voting rights of an entity, the entity is treated as a consolidated subsidiary if the Group is deemed to effectively
control the decision-making body of the entity.
A subsidiary is consolidated from the date of acquisition, or the date on which the Group obtains control, to the date on which
the Group loses the control.
If any accounting policies applied to a subsidiary differ from those applied to the Group, adjustments are made to the financial
statements of the subsidiary as necessary.
Intragroup transactions and balance of receivables/payables, as well as unrealized gains and losses arising from intragrouptransactions are eliminated when preparing the consolidated financial statements.
Changes in ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The
carrying amount of the parent’s interest and non-controlling interest are adjusted to reflect changes in their relative interest in thesubsidiaries. Any difference between the amount of non-controlling interest and the amount of consideration paid or received isrecognized directly in equity and attributed to the parent.
If control over a subsidiary is lost, gains or losses arising from the loss of control are recognized in profit or loss.

―8―

(ii) Associates
An associate refers to an entity that is not controlled by the Group but for which the Group has significant influence over thedecisions on financial and operating or business policies. If the Group has 20% or more but not more than 50% of the voting rights
of another entity, the Group is presumed to have significant influence over that entity. Entities over which the Group has significant
influence on their financial and operating policy decisions are also included in associates even if it holds less than 20% of thevoting rights. In contrast, the equity method is not applied in cases where the Group is deemed not to have significant influenceeven if it holds 20% or more of the voting rights.
An associate is accounted for using the equity method from the date on which the Group has come to have significant influence
until the date on which the Group loses significant influence.
(iii) Joint arrangement
Joint arrangement is a contractual arrangement of which two or more parties have joint control. The Group classifies its
involvement in joint arrangements into joint operations (where the Group has rights to the assets and obligations for the liabilities,
relating to the arrangement) and joint ventures (where the Group only has rights to the net assets of the arrangement), dependingon the rights and obligations of the parties to the arrangement. For the Group’s joint operations, the assets, liabilities, revenues,
and expenses relating to its interest in the joint operations are recognized, while joint ventures are accounted for using the equity
method.
(iv) Reporting date
The consolidated financial statements include financial statements of subsidiaries whose closing dates are different from that of
the Company and investments in equity-method associates, for which unification of the fiscal year end is impracticable due to the
local legal system or relationship with other shareholders. The fiscal year end of most subsidiaries and equity-method associates
is December 31, and adjustments have been made for the effects of significant transactions or events that occurred between theirclosing dates and that of the consolidated financial statements.
The closing date of Lawson Bank, Inc. is March 31. For the preparation of the consolidated financial statements, the Company
uses financial statements prepared based on the provisional closing of accounts as of the end of the fiscal year.
(2) Business combinations
The Group accounts for business combinations by applying the acquisition method. The consideration transferred in a businesscombination is measured as the sum of the acquisition-date fair values of the assets transferred by the Group, the liabilities incurredby the Group to former owners of the acquiree, and the equity instruments issued by the Group in exchange for control over theacquiree. The non-controlling interests in the acquiree are measured at fair value. The acquisition-related costs incurred arerecognized in profit or loss.
In cases where the sum of the consideration transferred and the amount of any non-controlling interest in the acquiree exceeds
the net of the amounts of the identifiable assets acquired and the liabilities assumed, goodwill is recognized and measured at theexcess amount.
In cases where the sum of the consideration transferred and the amount of any non-controlling interest in the acquiree falls shortof the net of the amounts of the identifiable assets acquired and the liabilities assumed, the difference is recognized in profit or loss.
In cases where a business combination is conducted in stages, the equity interests in the acquiree previously held by the Groupare revalued at the acquisition-date fair value, and any such gain or loss on step acquisition is recognized in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive
income are accounted for under the same method used by the acquirer in disposing of the interest.
If the initial accounting for a business combination has not been completed by the end of the reporting period in which thebusiness combination occurs, the Group accounts for the transaction at provisional amounts. Subsequently, the provisional amounts
are adjusted during the measurement period, which does not exceed one year from the acquisition date.
(3) Foreign currency translation
Items in financial statements denominated in a foreign currency are translated at the exchange rate at the transaction date, and―9―monetary items are retranslated at the exchange rate as at the closing date. Non-monetary items measured at fair value are
retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historicalcost are not retranslated. The difference arising from the retranslation of monetary items is recorded in “Other income” or “Other
expenses” in the consolidated statement of income.

The assets and liabilities of foreign operations, such as overseas subsidiaries and associates are translated into Japanese yen at
the respective exchange rates on the closing date. Revenue and expense items are translated at the average exchange rates for theperiod, unless exchange rates have fluctuated significantly during that period. Exchange differences arising from translation arerecognized in other comprehensive income, net of tax, and under “Other components of equity.”
If control is lost due to the disposal of foreign operations, the cumulative amount of exchange difference is reclassified into profit
or loss. In the case of partial disposal that does not lead to the loss of control of a subsidiary, the ratio of ownership interest in the
cumulative amount of exchange difference is reallocated to non-controlling interests, but no amount is recognized in profit or loss.
In other cases of partial disposal that leads to the loss of significant influence or joint control, the amount proportionate to thedisposal of the cumulative amount of exchange difference is reclassified into profit or loss.
Goodwill and fair value adjustments resulting from the acquisition of foreign operations are retranslated as assets and liabilities
of such foreign operations as at the end of the reporting period, and exchange differences are recognized in “Other components ofequity" and accumulated in equity.
(4) Financial instruments(i) Financial assets
i. Classification
The Group classifies financial assets into those measured at amortized cost and those measured at fair value through othercomprehensive income or profit or loss.
Financial assets measured at amortized cost
Financial assets are classified as those measured at amortized cost if both of the following conditions are met; otherwise,
they are classified as financial assets measured at fair value:• The assets are held for the purpose of collecting contractual cash flows.
• The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets measured at fair value
Of the financial assets other than those measured at amortized cost, debt instruments are classified as financial assets
measured at fair value through other comprehensive income (“FVTOCI financial assets”) if both of the following conditions
are met:• The assets are held for the purpose of both collecting contractual cash flows and selling the assets.
• The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Of the financial assets other than those measured at amortized cost, those not stated above are classified as financial assets
measured at fair value with fair value changes recognized through profit or loss (“FVTPL financial assets”). However, theGroup elects to designate equity instruments not held for trading purposes as equity financial assets measured at fair value withfair value changes recognized through other comprehensive income (“FVTOCI financial assets”). A financial asset is classified
as held for trading if:• It is acquired or incurred principally for the purpose of selling it in the near term.
• On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which―10―there is evidence of a recent actual pattern of short-term profit-taking.
• It is a derivative (except a derivative that is a financial guarantee contract or a designated and effective hedging
instrument).

ii. Initial recognition and subsequent measurement
The Group determines the classification of financial assets at initial recognition. The Group initially recognizes trade andother receivables on the transaction date, and all other financial assets at the transaction date on which the Group became aparty to the contract concerning such financial instruments.
Financial assets measured at amortized cost are recognized initially at fair value, plus transaction costs that are directly
attributable to the acquisition of the financial assets. However, trade receivables are recognized initially at their transaction
price if they do not contain any significant financing component. After initial recognition, financial assets are measured atamortized cost using the effective interest method.
Of the FVTOCI financial assets, changes in the fair value of equity financial assets are not recognized in profit or loss anddirectly transferred from other comprehensive income to retained earnings when the assets are derecognized. Dividend income
from equity financial assets at FVTOCI is recognized in profit or loss as part of finance income at the time when the right toreceive the dividend is established.
Of the FVTOCI financial assets, changes in the fair value of debt financial assets are recognized in profit or loss when theassets are derecognized.
FVTPL financial assets are measured at fair value with changes in the fair value being principally recognized in profit or loss.
iii. Impairment
The Group estimates expected credit losses, and recognizes and measures a loss allowance for financial assets measured atamortized cost and debt instruments classified as FVTOCI financial assets. If credit risk on a financial instrument at a reporting
date has not increased significantly since the initial recognition, a loss allowance for the financial instrument is calculated basedon expected credit losses arising from possible events of default within 12 months from the reporting date. Meanwhile, if credit
risk on a financial instrument at a reporting date has increased significantly since the initial recognition, a loss allowance forthe financial instrument is calculated based on expected credit losses arising from all possible events of default in expected lifeof the financial instrument (lifetime expected credit losses).
Based on past due information and other reasonable and supportable information that is available to the Group, the Groupassesses whether credit risk has significantly increased. If the financial instrument is determined to have low credit risk at theend of the reporting period, the Group assumes that the credit risk on a financial instrument has not increased significantly sinceinitial recognition.
Expected credit loss is measured based on the present value of the difference between all contractual cash flows that are dueto the entity in accordance with the contract and all the cash flows that the entity expects to receive.
Evidence of credit impairment is determined through events, including significant financial difficulty of the issuer or the
debtor, and a breach of contract, such as a default or pastdue event. When one or more of these events have occurred, the Group
individually assesses the financial asset as a credit-impaired financial asset and measures the expected credit loss based
primarily on historical credit loss experience and future recoverable amounts. For financial assets that are not credit impaired,expected credit losses are measured collectively based mainly on historical credit loss experience and provision rates adjusted,
as necessary, for current and future economic conditions.
However, for trade receivables that do not contain any significant financing component, a loss allowance is always calculated
at an amount equal to the lifetime expected credit losses, regardless of whether the credit risk has increased significantly sinceinitial recognition.
When the Group determines that receivables are unlikely to be collected, it directly writes off the amount of expected credit
losses from the receivables to derecognize them.
A provision for loss allowance on financial assets is recognized in profit and loss. If any event that reduces the loss allowancearises, reversal of loss allowance is recognized in profit or loss.

―11―

iv. Derecognition
The Group derecognizes financial assets when and only when the contractual rights to the cash flows from the financial assets
expire, or when substantially all the risks and rewards of ownership have been transferred as a result of the transfer of thefinancial assets. In cases where the Group neither transfers nor retains substantially all the risks and rewards of ownership, but
continues to control the assets transferred, the Group recognizes the retained interest in assets and related liabilities that might
be payable.
(ii) Financial liabilities
i. Classification
The Group classifies financial liabilities as those measured at amortized cost.
ii. Initial recognition and subsequent measurement
The Group initially recognizes financial liabilities on the transaction date when the Group becomes a party to the contract
concerning such financial instruments. Financial liabilities are initially recognized at fair value, net of directly attributabletransaction costs.
After initial recognition, financial liabilities are measured at amortized cost using the effective interest method. The effective
interest rate is the rate that exactly discounts the estimated future cash payments through the expected life of the financial
liability (or a shorter period where appropriate) to the net carrying amount. At the time of initial recognition, there is no financial
liability irrevocably designated as a financial liability measured at fair value through profit or loss.
iii. Derecognition
The Group derecognizes financial liabilities when the obligation specified in the contract is discharged, cancelled, or expires.
(iii) Offsetting financial assets and financial liabilities
If the Group currently has a legally enforceable right to offset the balance and has the intention either to settle on a net basis or
to realize assets and settle liabilities simultaneously, the Group offsets financial assets against financial liabilities and presents the
net amount in the consolidated statement of financial position.
(iv) Equity
i. Common shares
For equity instruments issued by the Company, the proceeds from issuance are recorded in “share capital” and “capitalsurplus,” and costs directly attributable to the issuance (after tax effect) are deducted from “capital surplus.”
ii. Treasury shares
When treasury shares are acquired, the consideration paid, including directly attributable transaction costs net of tax, is
recognized as a deduction from equity.
(5) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits, and short-term investments maturing in three months or lessfrom the date of acquisition that are readily convertible to known amounts of cash and subject to an insignificant risk of changes invalue.
(6) Inventories
The cost of inventories comprises costs of purchase, costs of conversion, and all costs incurred in bringing the inventories to thepresent location and condition.
Inventories are measured at the lower of cost and net realizable value. Net realizable value is presented in the amount of estimatedselling price of inventories, less the estimated costs necessary to make the sale in the ordinary course of business.
The cost of inventories is determined mainly using the retail method or the weighted-average method. For the retail method,―12―

inventory grouping used for the calculation of profit margin is reviewed so that the results approximate cost.
(7) Property, plant, and equipment(i) Recognition and measurement
Property, plant, and equipment are measured using the cost model and presented at cost, net of accumulated depreciation andaccumulated impairment losses. Cost includes the expenses directly attributable to the acquisition of the assets, the costs of
dismantling and removing the items and restoring the site on which they are located, and borrowing costs to be capitalized.
(ii) Depreciation
Depreciation on assets other than land and construction in progress is recognized over their respective estimated useful lives
using the straight-line method. The estimated useful lives of major classes of assets are as follows:
Buildings and structures:

10 to 34 years

Tools, furniture, and fixtures:

5 to 8 years

The estimated useful lives, residual values, and depreciation method are reviewed at the end of each reporting period, and when
any changes are made, those changes are applied prospectively as changes in accounting estimates.
(iii) Derecognition
Property, plant, and equipment are derecognized upon disposal or when future economic benefits are no longer expected fromtheir continued use or disposal. A gain or loss arising from the derecognition of an item of property, plant, and equipment isincluded in profit or loss when the asset item is derecognized.
(8) Investment property
Investment property is property held to earn rentals or capital appreciation or for both. Investment property includes properties
owned by the Group and those held as right-of-use assets.
The Group adopts the cost model to measure investment properties, and presents them at cost, net of accumulated depreciation
and accumulated impairment losses.
Depreciation on assets other than land and right-of-use assets is calculated over their respective estimated useful lives, which are
10 to 34 years, using the straight-line method. Depreciation on right-of-use assets is calculated using the straight-line method overthe shorter of their useful lives or lease terms.
(9) Goodwill and intangible assets(i) Goodwill
Measurement of goodwill at initial recognition is described in “(2) Business combinations.”
After initial recognition, goodwill is presented at cost, less accumulated impairment losses.
Goodwill is not amortized, but is allocated to cash-generating units identified based on the geographic area and type of business
in which they operate, and tested for impairment annually, or whenever there is an indication of impairment. Impairment loss on
goodwill is recognized in profit or loss in the consolidated statement of income, and is not subsequently reversed.
(ii) Intangible assets
Intangible assets are measured using the cost model and presented at cost, less accumulated amortization and accumulated
impairment losses.
Separately acquired intangible assets are measured at cost at initial recognition. Cost of intangible assets acquired in a businesscombination is measured at fair value at the acquisition date. Expenditures on internally generated intangible assets are allrecognized as expenses in the period when incurred, except development costs that qualify for capitalization.
Except for those with indefinite useful lives, intangible assets are amortized over their respective estimated useful life using thestraight-line method. The estimated useful lives of major intangible assets are as follows:•

Software:5 years•

Trademark rights:

Primarily 20 years―13―The estimated useful lives, residual values, and amortization method are reviewed at the end of each reporting period, and if
any changes are made, those changes are applied prospectively as changes in accounting estimates.
(10) Leases(i) As a lessee
The Group recognizes right-of-use asset and lease liability at the commencement date of the lease.
The lease liability is initially measured at the present value of the lease payments that are not paid at that date. The right-of-use
asset is initially measured at the amount of the initial measurement of the lease liability, adjusted for any prepaid lease payments.
For subsequent measurement of right-of-use assets, a cost model is applied. Right-of-use assets are presented at cost, net ofaccumulated depreciation and accumulated impairment losses on the consolidated statement of financial position.
Right-of-use assets are depreciated using the straight-line method over the shorter of their respective useful lives or lease terms.
The lease term is determined as the non-cancellable period of a lease, together with both periods covered by an option to extend
the lease if the lessee is reasonably certain to exercise that option and periods covered by an option to terminate the lease if thelessee is reasonably certain not to exercise that option.
For initial measurement of lease liabilities, they are discounted using the interest rate implicit in the lease, if that rate can bereadily determined. If that rate cannot be readily determined, they are discounted at the incremental borrowing rate.
After the initial recognition, lease liabilities are remeasured to reflect changes in lease payments when estimated useful life ofright-of-use assets or changes in lease payments if lease terms or lease payments are revised. The amount of the remeasurementof lease liabilities is recognized as an adjustment to the carrying amount of the right-of-use asset. Impairment of right-us-use assets
is as described in “(11) Impairment of non-financial assets.”
For short-term leases whose lease terms end within 12 months, exemptions are applied not to recognize right-of-use assets orlease liabilities, but to recognize lease payments related to the leases as expenses over the lease period by the straight-line method.
For components of a contract, the Group has applied, for underlying properties, not to separate non-lease components from lease
components, but to account for each lease component and any associated non-lease components as a single lease component.
(ii) As a lessor
A lease is classified as a finance lease if, under the terms of contract, the Group transfers substantially all the risks and rewards
incidental to ownership of an underlying asset to the lessee. The amount received from the lessee is presented in “Trade and otherreceivables” at an amount equal to the net investment in the lease. The finance income is allocated over the lease term on a rational
basis against the gross investment in the lease.
Leases other than finance leases are classified as operating leases, and lease payments received are recognized evenly over thelease term.
(11) Impairment of non-financial assets(i) Testing for impairment
The Group assesses at each reporting date the carrying amount of its non-financial assets, excluding inventories and deferred
tax assets to determine whether there is any indication that an asset may be impaired. If there are any events or changes incircumstances indicating that the carrying amount may not be recoverable, the recoverable amounts of such assets are estimatedby assuming that there are indications of impairment.
The recoverable amount of goodwill and intangible assets with indefinite useful lives are assessed at the same time every year.
Testing for impairment is conducted by asset, cash-generating unit or group of cash-generating units. If the carrying amount of
the asset, cash-generating unit, or group of cash-generating units exceeds its recoverable amount, an impairment loss is recognized
as loss.
The recoverable amount of the asset, cash-generating unit, or group of cash-generating units is the higher of the value in use or
the fair value less costs to sell. Value in use is calculated by discounting the estimated future cash flows to the present value using
the pretax discount rate reflecting the risks specific to the asset or the cash-generating unit.

―14―

(ii) Cash-generating units
In cases where multiple assets together generate cash inflows, the smallest unit that generates cash inflows that is largely
independent of the cash inflows from other assets or group of assets is referred to as a cash-generating unit.
A cash-generating unit, including goodwill, is set as the smallest unit at which the goodwill is managed for internal reporting
purposes, and that is smaller than an operating segment. If impairment loss is recognized on a cash-generating unit, the carrying
amount of any goodwill allocated to the cash-generating unit is reduced first, and if there is any residual amount, the carrying
amounts of the other assets of the unit are reduced proportionally.
(iii) Reversal of impairment loss
Impairment recognized in the past is reversed up to the recoverable amount if there are indications of reversal of impairment
and changes in the estimates used to determine the asset's recoverable amount. However, no reversal is made for impairment losses
recognized for goodwill. Reversal of impairment loss is recognized up to the carrying amount that would have been determined
had no impairment loss been recognized for the asset in prior years.
(12) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event; it is probablethat the Group will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The
amount recognized as provision is the best estimate calculated by taking into account the risks and uncertainties surrounding theobligation and is discounted when the time value of money is material. An increase in liabilities due to the unwinding of discountover a passage of time is recognized as finance costs.
Asset retirement obligations
An asset retirement obligation is recorded in an estimated cost required to restore the property to its original state mainly withrespect to properly lease contracts for stores. The calculations are based on an estimated useful life of mainly 20 years fromacquisition, and discount rates of mainly 0.5% to 1.4%.
(13) Employee benefits(i) Postemployment benefits
The Group has adopted defined benefit plans and defined contribution plans as postemployment benefit plans for its employees.
i. Defined benefit plans
Obligations related to defined benefit plans are recognized in the amount of benefit obligations under such plans, net of thefair value of the plan assets, in the consolidated statement of financial position. Benefit obligations are calculated at thediscounted present value of the amount of estimated future benefits corresponding to the consideration for services alreadyprovided by employees with respect to each plan. Benefit obligations and plan assets are remeasured in each period, and benefit
obligations are calculated by qualified pension actuaries.
Changes in benefit obligations for employees’ past services due to the revision of the pension plan are recognized in profit orloss.
The Group recognizes changes in obligations due to the remeasurement of benefit obligations and plan assets of defined
benefit plans in other comprehensive income, and immediately reclassifies the amount accumulated in “Other components ofequity” to “Retained earnings.”
ii. Defined contribution plans
Defined contribution plans are postemployment benefit plans in which the employer makes a certain amount of contributions
to fund postemployment benefits and does not bear obligations exceeding the amount contributed. The obligation to makecontributions under defined contribution plans are recognized in profit or loss as expenses in the period during which services
were provided by employees.
(ii) Other employee benefits
Short-term employee benefits are measured on an undiscounted basis and are recognized as expenses when employees render―15―

the related service.
Bonuses are recognized as a liability in the amount estimated to be paid if the Group has a present legal or constructive obligation
to make such payment and the amount can be reliably estimated.
Paid absence accruals are recognized as a liability in the amount estimated to be paid under the plan, if the Group has a legal orconstructive obligation for the accumulating paid absence plan, and the amount can be reliably estimated.
(14) Share-based payments
The Company grants stock options to its directors to allow them to exercise their rights to purchase shares of the Company. Stock
options are calculated based on the fair value at the grant date and expensed on a straight-line basis over the period in which theCompany receives services as consideration, while a corresponding amount is recorded as equity. The fair value of stock options is
calculated based on the Black-Scholes model.
(15) Revenue(i) Revenue recognition
The Group recognizes revenue from contracts with customers by applying the following steps:(Lease payments under IFRS 16 Leases (“IFRS 16”) and interest and dividend income under IFRS 9 Financial Instruments(“IFRS 9”) are excluded.)
Step 1: Identify the contracts with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when or as the entity satisfies a performance obligation.
Since the consideration for transactions is received primarily within one month after the performance obligation is satisfied, thepractical expedient is used, and no adjustment is made for significant financial components.
(ii) Revenue recognition in the Group’s main businesses
The Group primarily operates the Domestic Convenience Store Business, Seijo Ishii Business, Entertainment-related Business,
Financial Services Business, and Overseas Business.
i. Revenue from franchised stores in the Domestic Convenience Store Business, Seijo Ishii Business, and Overseas Business
The Group has contractual obligations to franchisees in the Domestic Convenience Store Business, Seijo Ishii Business, andOverseas Business, to provide store opening preparation services, operational know-how, trademarks and other licenses, offer
services including training and accounting paperwork, and lend store fixtures, signboards, and information systems. As theseclosely interrelated activities cannot be separated and performed as individual services, they are considered to be a single
performance obligation, except for lease transactions. This performance obligation is considered to be satisfied over time andas services are rendered; however, because the transaction price for royalty income is a variable royalty based on the operating
gross profit of the store, revenue is recognized over the contract period as such operating gross profit is generated.
ii. Revenue from the Domestic Convenience Store Business, Seijo Ishii Business, Entertainment-related Business, Financial
Services Business, and Overseas Business
The Group sells consumer goods at its directly managed stores in the Domestic Convenience Business, Seijo Ishii Businessand Overseas Business; and music and video software and concert tickets in the Entertainment-related Business. Revenue
from the sale of these goods is recognized when merchandise is delivered to a customer, at which time control is deemed tohave been transferred.
In addition, certain subsidiaries in the Domestic Convenience Store Business wholesale raw materials or merchandise.
Revenue from the sale of these goods is recognized when merchandise is delivered to and accepted by a customer, at whichtime control is deemed to have been transferred.
In the Entertainment-related Business, which operates multiplex movie theaters, revenue is recognized when the screening―16―

is provided, at which time control is deemed to have been transferred.
The Financial Services Business provides, through ATMs, transactions using cash cards of partner financial institutions anddeposit services for sales proceeds from franchised store owners.
In identifying performance obligations, the Group conducts principal versus agent consideration. If the nature of its promise
is a performance obligation to provide specified goods or services itself, the Group presents revenue as the principal at thegross amount of the consideration; if it is a performance obligation to arrange for those goods or services to be provided by
the other party, the Group presents revenue as agent at the fee or commission amount or net amount of the consideration in the
consolidated statement of income.
To determine that the Group is a principal, the following three indicators are considered.
• The Group is primarily responsible for fulfilling the promise to provide the specified good or service.
• The Group has inventory risk before the specified good or service has been transferred to a customer or after transfer ofcontrol to the customer.
• The Group has discretion in establishing the price for the specified good or service.
Revenue is measured at the transaction price, less consideration paid to the customer, such as discounts, rebates, and refunds.
When the Group grants a customer an option to acquire additional goods or services and provides a material right, thetransaction price is allocated to the option as a separate performance obligation, and revenue is recognized when those future
goods or services are transferred or when the option expires.
(16) Government grants
Government grants are not recognized until there is a reasonable assurance that the conditions attached to the grants are satisfied
and that the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods inwhich the Group recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants that contain main conditions requiring the Group to acquire non-current assets by purchase, construction, orother method are recognized by deducting the costs of the related assets in the consolidated statement of financial position and arereclassified into profit or loss on a systematic and rational basis over their useful lives.
(17) Income taxes
Income taxes consist of current tax and deferred tax. They are recognized in profit or loss, except those related to businesscombinations and items recognized directly in equity or other comprehensive income.
Current tax is measured at the amount of income taxes expected to be payable to or recoverable from the taxation authorities.
Tax amounts are calculated in accordance with the tax rates and tax laws that have been enacted or substantively enacted at the endof reporting period in the countries in which the Group operates and earns taxable profits or losses.
Deferred tax is recognized in respect of temporary difference between the carrying amount of assets and liabilities in the financial
statements and the tax basis of these assets and liabilities.
A deferred tax asset or liability is recorded based on the temporary difference between the carrying amount of the assets andliabilities for financial accounting purposes and the tax basis of these assets and liabilities under the asset and liability method.
Deferred tax assets and liabilities are not recorded for the following temporary differences arising from:•

Temporary differences arising from goodwill•

Temporary differences arising from initial recognition of assets and liabilities from transactions (except businesscombinations) that affect neither accounting profit nor taxable income.

•Taxable temporary differences arising from investments in subsidiaries to the extent that the Group is able to control thetiming of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply when the temporary difference isreversed, based on the laws that have been enacted or substantively enacted by the end of consolidated reporting period.

―17―Deferred tax assets are recognized only with respect to tax losses carryforward, tax credits carryforward, and deductible
temporary differences where it is probable to reduce future taxable income. The recoverability of deferred tax assets is reviewed at
the end of each fiscal year, and the carrying amount is reduced to the extent that it is no longer probable that the related tax benefits
will be realized.
For the effect of uncertainty in income taxes, the Group recognizes an asset or liability in a reasonably estimated amount if it isprobable that a tax position will be taken based on an interpretation of the tax laws.
The Company and its wholly owned domestic subsidiaries have adopted the consolidated tax return filing system and file a
consolidated income tax return as a consolidated tax return filing group.
(18) Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable to common shareholders of the parent by the weighted
average number of common shares issued and outstanding during the period, adjusted for the number of treasury shares. Diluted
earnings per share are calculated by adjusting for the impact of all dilutive potential shares.
(19) Non-current assets held for sale and discontinued operations
A non-current asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through asale transaction rather than through continuing use. To be classified as held for sale, it must be available for immediate sale in its
present condition and its sale must be highly probable, and only if the Group’s management is committed to implementing the planof sale and, in principle, the completion of the sale is scheduled within one year. After being classified as held for sale, it is measured
at the lower of its carrying amount and fair value, less costs to sell. The non-current asset or disposal group is not depreciated oramortized.
A discontinued operation consists of a component of an entity that either has been disposed of or is classified as held for sale. It
is recognized if, it represents Group’s separate major line of business or geographical area of operations; and is part of a plan todispose of the separate major line of business or geographical area of operations.
4. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
In preparing the consolidated financial statements, the management is required to make judgments, estimates, and assumptions that
may affect the application of accounting policies and the reported amounts of assets, liabilities, revenues, and expenses. Actual
operating results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Effect of revisions to accounting estimates arerecognized in the period in which the estimate is revised and in future periods that are affected.
Information about judgments made in applying accounting policies that have significant effects on the amounts recognized in the
consolidated financial statements was as follows:•

Determination of cash-generating units related to the impairment of assets. (See Notes “17. IMPAIRMENT LOSSES ON
NON-FINANCIAL ASSETS.”)•

Allocation of goodwill to group of cash-generating units. (See Notes “17. IMPAIRMENT LOSSES ON NON-FINANCIALASSETS.”)

Information about uncertainties of assumptions and estimates on future that have a risk of resulting in a material adjustment in thefollowing fiscal year was as follows:(1) Estimates of useful life and residual value of property, plant, and equipment; investment property; and intangible assets
Useful life of property, plant, and equipment; investment property; and intangible assets is determined based on comprehensive
considerations to expected usage, physical wear and tear, and technical or commercial obsolescence. The residual value is thecurrently estimated amount that would be obtained from disposal of the asset, after deducting the costs of disposal. These may resultin material adjustments to depreciation or amortization amount due to changes in uncertain future economic conditions.

―18―

Details and amounts of property, plant, and equipment; investment property; and intangible assets are disclosed in Note “13.
PROPERTY, PLANT, AND EQUIPMENT,” Note “14. INVESTMENT PROPERTY,” and Note “15. GOODWILL AND
INTANGIBLE ASSETS.”(2) Impairment of non-financial assets including property, plant, and equipment; investment property; right-of-use assets; goodwill;
and intangible assets
Recoverable amount used in the impairment test is calculated based on assumptions using factors, such as the useful life of theasset, future cash flows, discount rate, and long‑term average growth rate. These assumptions are based on the management’s best
estimates and judgments, but may be affected by changes in economic conditions that could materially affect future consolidated
financial statements.
Details and amounts of property, plant, and equipment; investment property; and intangible assets are disclosed in Notes “13.
PROPERTY, PLANT, AND EQUIPMENT;” Note “14. INVESTMENT PROPERTY;” and Note “15. GOODWILL AND
INTANGIBLE ASSETS;” and Note “17. IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS.”(3) Terms of leases of right-of-use assets
The Group determines the lease term as the period that includes the non-cancellable period of the lease, together with both theperiod covered by an option to extend the lease when the lessee is reasonably certain to exercise that option and the period coveredby an option to terminate the lease if the lessee is reasonably certain not to exercise that option. Specifically, the lease term isestimated by taking into account whether or not there is an option to extend or terminate the lease term, the probability of the option
being exercised, and whether or not there are penalties for cancellation. These may result in material adjustments to the amounts ofright-of-use assets and lease liabilities due to changes in uncertain future economic conditions and the result of negotiations upon
contract renewal.
Details of determination of lease terms are described in Note “3. SIGNIFICANT ACCOUNTING POLICIES, (10) Leases,” anddetails and amounts of right-of-use assets and lease liabilities are described in Note “16. LEASES.”(4) Recoverability of deferred tax assets
The calculation of income taxes requires estimates and judgments on various factors, including the interpretation of tax
regulations and the history of past tax audits. Accordingly, the recorded amount of income taxes may differ from the actual amountborne.
While deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences can be utilized, the timing and amount of taxable income may be affected by changes in uncertain
future economic conditions. If the actual timing and amount differ from the estimates, it could result in material changes in theamounts to be recognized in the consolidated financial statements in subsequent fiscal years.
Details and amounts related to income taxes are described in Note “19. INCOME TAXES.”(5) Measurement of provisions
The Group records asset retirement obligations, which are based on the present value measured by discounting the best estimateof expenditures required to settle the obligations, taking into account risks and uncertainties at the balance sheet date, by using the
pre-tax discount rate reflecting the risks specific to the liabilities.
Expenditures necessary for settling the obligations are calculated by comprehensively taking into account possible future results.
However, they may be affected by unexpected events or changes in conditions which may have a material impact on the consolidated
financial statements in subsequent fiscal years, if actual payments differ from the estimates or if there are material changes in the
discount rate used to discount estimated expenditures due to changes in economic conditions.
Details and amounts related to provisions are described in Note “23. PROVISIONS.”(6) Measurement of defined benefit obligations
The present value of defined benefit obligations and related service costs are calculated based on actuarial assumptions. Theseactuarial assumptions require estimates and judgments on variables, such as discount rates and rates of salary increase.

―19―

The Group obtains advice from external pension actuaries with respect to the appropriateness of these actuarial assumptions,
including these variables.
The actuarial assumptions are determined based on the management’s best estimates and judgments, but may be affected by the
results of changes in economic conditions and amendments or promulgation of relevant laws and regulations. Should theseassumptions need to be revised, this could result in a material change in the amounts to be recognized in the consolidated financial
statements for the subsequent fiscal years.
Details and amounts related to defined benefit obligations are described in Note “22. EMPLOYEE BENEFITS.”
5. NEW STANDARDS NOT YET APPLIED
Of the standards and interpretations newly established, or revised, by the date of approval of the Group’s consolidated financial
statements, the following standard was not adopted by the Group as of February 28, 2023. The impact of the application on the Groupis under assessment and cannot be estimated at this time.

Standard

Standard title

Mandatory
applicable from thefiscal year beginningon or after

IAS 12

Income taxes

January 1, 2023

To be applied by
the Group from thefiscal year ending

Outline of establishment and revision

Fiscal year ending
February 29, 2024

Clarify accounting for deferred taxes on assets
and liabilities arising from a single
transaction.

6. BUSINESS COMBINATION
Fiscal year ended February 28, 2022
The business combination that occurred in the fiscal year ended February 28, 2022, was as follows:(1) Outline of business combination(i) Name and line of business of acquirees
Name of acquirees: Chengdu Lawson, Inc. and Shenzhen Lawson, Inc.
Line of business: Convenience store business(ii) Primary reasons for business combination
Chengdu Lawson, Inc.: To expand business into the western China area centering on Chengdu, Sichuan Province
Shenzhen Lawson, Inc.: To expand business into the southern China area centering on Guangdong and Fujian Provinces(iii) Acquisition date
Chengdu Lawson, Inc.:

November 30, 2021

Shenzhen Lawson, Inc.:

January 1, 2022(iv) Percentage of equity shares with voting rights acquired
100%(v) Method for obtaining control of acquirees
Acquisition of shares for cash consideration―20―

(2) Fair value of acquisition consideration, fair value of assets acquired and liabilities assumed, and goodwill at the acquisition
date(i) Chengdu Lawson, Inc.
(Millions of yen)AmountFair value of acquisition consideration

5,418

Fair value of assets acquired and liabilities assumed
AssetsCash and cash equivalents

813

Trade and other receivables

345

Inventories

450

Property, plant, and equipment

148

Right-of-use assets

1,823

Other

530

Liabilities
Trade and other payables

1,130

Lease liabilities

1,823

Other

224

Fair value of assets acquired and liabilities
assumed, net

934

Goodwill (Note)

4,483

Note: Goodwill represents excess earning power expected from future business development and synergies
between the Group and the acquiree.
(ii) Shenzhen Lawson, Inc.
(Millions of yen)AmountFair value of acquisition consideration

5,598

Fair value of assets acquired and liabilities assumed
AssetsCash and cash equivalents

478

Trade and other receivables

52

Inventories

298

Property, plant, and equipment

156

Right-of-use assets

942

Other

80

Liabilities
Trade and other payables

756

Lease liabilities

973

Other

378

Fair value of assets acquired and liabilities
assumed, net(98)

Goodwill (Note)

5,696

Note: Goodwill represents excess earning power expected from future business development and synergies―21―

between the Group and the acquiree.
(3) Acquisition-related costs
The acquisition-related costs of ¥10 million in the business combination are included in selling, general, and administrative
expenses in the consolidated statement of income for the fiscal year ended February 28, 2022.
(4) Impact on the Group’s business performance
Information on earnings after the acquisition date of the business combination and information on earnings based on theassumption that the business combination was conducted at the beginning of the fiscal year are omitted because the impact on
the consolidated statement of income is immaterial.
Fiscal year ended February 28, 2023
Not applicable.

―22―

7. SEGMENT INFORMATION(1) Outline of reportable segments
The Company’s reportable segments are separate components for which discrete financial information is available and which are
subject to regular review by the board of directors in order to determine the allocation of managerial resources and evaluate financial
performance.
The Group is primarily engaged in the Domestic Convenience Store Business, Seijo Ishii Business, Entertainment-Related
Business, Financial Services Business, and Overseas Business, while incorporating related businesses and managing as a group.
Therefore, the Group aggregates its main reportable segments considering the nature of the services provided and economic
characteristics as follows: Domestic Convenience Store Business, Seijo Ishii Business, Entertainment-Related Business, Financial
Services Business, and Overseas Business.
Regarding the Domestic Convenience Store Business, Lawson, Inc. operates a franchise system as well as undertaking the direct
management of stores in Japan as the parent company of LAWSON, NATURAL LAWSON, and LAWSON STORE100. Lawson
Urbanworks, Inc. undertakes the direct management of LAWSON stores mainly in Tokyo and Chiba prefectures. Lawson Store100,
Inc. undertakes the direct management of LAWSON STORE100 stores and provides management support for franchised stores.
SCI, Inc. is a functional subsidiary that comprehensively manages the business process from procurement to sales, improving theefficiency of the entire process.
Regarding the Seijo Ishii Business, SEIJO ISHII CO., LTD. operates SEIJO ISHII supermarkets.
Regarding the Entertainment-Related Business, Lawson Entertainment, Inc. conducts the management and sales of concert tickets
at LAWSON stores and others, music and video software products at HMV stores, and others. In addition, United Cinemas Co.,
Ltd. operates multiplex movie theatres.
Regarding the Financial Services Business, Lawson Bank, Inc. operates a banking business.
Regarding the Overseas Business, the operating company in each region develops LAWSON stores in the People’s Republic ofChina, Thailand, the Philippines, and the United States of America (Hawaii).
(2) Information on reportable segments
The accounting policies for reportable segments are the same as those of the Group as stated in Note “3. SIGNIFICANTACCOUNTING POLICIES.”The Group’s reportable segments were as follows: Segment profit represents operating gross profit, less selling, general, andadministrative expenses. Intersegment revenues and transfers are based on prevailing market prices.
IFRS Transition Date (as of March 1, 2021)(Millions of yen)
Reportable segment
Domestic
Seijo Ishii
Convenience
Business
Store Business
Segment assets
Investments in equity
method associates

Entertainment-Related
Business

Financial
Services
Business

Overseas
Business

Others(Note 1)

Total

Adjustments(Note 2)

Total

1,654,427

79,63867,747451,107

63,423

4,213

2,320,557(148,471)

2,172,086

5,589

–

–

–

136

867

6,592

–

6,592

Note 1. The business segments within the “Others” category that do not fall under the main reportable segments include Consulting
Business, etc.
Note 2. Adjustments to segment assets are due to the elimination of intersegment transactions.

―23―

Fiscal year ended February 28, 2022
(Millions of yen)
Reportable segment
Domestic
Seijo Ishii
Convenience
Business
Store Business
Revenue fromcontracts withcustomers
Income from
franchised stores
Net sale Companyoperated storesEntertainment-Related
Business

Financial
Services
Business

Others(Note 1)

Overseas
Business

Total

Adjustments(Note 2)

Total

242,462

782

–

–

3,318

–

246,564–

246,564

78,947

107,830

49,625–64,161–

300,565–

300,565

312,064

147

9,418

30,526

20,614

1,895

374,667–

374,667

Other revenue

20,880

50

–

–

478

–

21,409–21,409

Revenue fromexternal customers(1) Revenue fromexternalcustomers(2) Intersegment
revenue ortransfer

654,355

108,81159,04430,526

88,572

1,895

943,206–

943,206

7,039

806

1,354

3,077

–

630

12,907(12,907)–

Total

661,394

109,61760,39833,60388,572

2,526

956,113(12,907)943,206

Segment profit

33,167

12,849

2,684

2,951

708

81

52,442–52,442

Segment assets

1,602,731

80,043

66,103

407,441

96,541

4,437

2,257,300(112,521)

2,144,778

172,867

5,993

4,574

7,283

11,19375

201,987–

201,987

12,836

12

1,864

–

397

–

15,110–15,110

5,368

–

–

–

352

1,057

6,778

–

6,778

39,362

3,813

836

1,067

7,390

54

52,524–52,524

Other

Other
Depreciation andamortization
Impairment losses(Note 3)
Investments inequity method
associates
Capital expenditure

Note 1. The business segments within the “Others” category that do not fall under the main reportable segments include Consulting
Business, etc.
Note 2. Adjustments to segment assets are due to the elimination of intersegment transactions.
Note 3. Impairment losses are as stated in Note “17. IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS.”―24―

Fiscal year ended February 28, 2023
(Millions of yen)
Reportable segment
Domestic
Seijo Ishii
Convenience
Business
Store Business
Revenue fromcontracts withcustomers
Income from
franchised stores
Net sale Companyoperated storesEntertainment-related
Business

Financial
Services
Business

Others(Note 1)

Overseas
Business

Total

Adjustments(Note 2)

Total

250,292

860

–

–

1,862

–

253,016–

253,016

77,237

109,134

58,016–

72,918–317,307–317,307337,907123

12,001

31,367

19,554

1,952

402,906–

402,906

Other revenue

26,504

27

–

–

622

–

27,154–

27,154

Revenue fromexternal customers(1) Revenue fromexternalcustomers(2) Intersegment
revenue ortransfer

691,941

110,146

70,01731,367

94,9591,952

1,000,385–

1,000,385

5,939

–

2,149

3,118

–

813

12,021(12,021)–

Total

697,881

110,146

72,16734,486

94,9592,765

1,012,406(12,021)1,000,385

Segment profit (loss)

47,611

12,798

4,858

3,848

(4,999)195

64,311–64,311

1,685,636

78,564

101,509413,733

95,7294,493

2,379,666(137,244)

2,242,421

174,287

6,780

4,881

7,184

16,09372

209,298–

209,298

9,133

3

92

–

393

–

9,623

–

9,623

5,245

–

–

–

382

904

6,532

–

6,532

33,907

4,556

1,774

4,060

10,323

46

54,667–54,667

Other

Segment assets
Other
Depreciation andamortization
Impairment losses(Note 3)
Investments inequity method
associates
Capital expenditure

Note 1. The business segments within the “Others” category that do not fall under the main reportable segments include Consulting
Business, etc.
Note 2. Adjustments to segment assets are due to the elimination of intersegment transactions.
Note 3. Impairment losses are as stated in Note “17. IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS.”―25―

(3) Information on products and services
A description is omitted because the products and services are the same as those of the reportable segments.
(4) Information by geographical area(i) Revenue from external customers(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Japan

854,633

905,425

Overseas (Note)

88,572

94,959943,206

1,000,385

Total(Note) Overseas mainly includes China.

(ii) Non-current assets (excluding financial assets, deferred tax assets, and retirement benefit asset)(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Japan
Overseas (Note)
Total

As of February 28, 2022

As of February 28, 2023

1,315,067

1,289,321

1,353,582

31,71956,225

62,106

1,346,786

1,345,546

1,415,689(Note) Overseas mainly includes China.
(5) Information about major customers
There are no external customers that account for 10% or more of the Group’s operating revenues.

―26―

8. CASH AND CASH EQUIVALENTS
The breakdown of cash and cash equivalents was as follows: The balance of cash and cash equivalents in the consolidated statementof financial position agrees with the balance of cash and cash equivalents in the consolidated statement of cash flows.
(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Cash and deposits

As of February 28, 2022

As of February 28, 2023

403,553

392,996

399,522000403,554

392,996

399,523

Time deposits with maturity of
three months or less
Cash and cash equivalents
9. TRADE AND OTHER RECEIVABLES

The breakdown of trade and other receivables was as follows:(Millions of yen)Classification

IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

370

363

408

Accounts receivable-trade33,22636,64941,509Accounts receivable-due from
franchised stores

21,342

23,04022,660Accounts receivable-other145,257

127,307

156,026

Deposits paid

677

81

70

Advances paid

1,800

1,997

1,670

Other

4,636

4,002

1,331

(39)

(36)

(29)

207,273

193,405

223,648

Notes receivable-trade

Allowance for doubtful accounts
Total

In the Domestic Convenience Store Business, franchisees receive advice and various services related to the operation of convenience
stores from our franchise chain headquarters under the franchise agreement. In consideration of these services, franchisees regularly
pay a certain percentage of each store’s operating income as royalties.
Each franchised store orders merchandise through the information system provided by the headquarters. The headquarters makes a
lump-sum payment to the supplier on behalf of each franchised store and records receivables from the franchised store.
Payments for purchases made on behalf of franchised stores and sales proceeds remitted daily by franchised stores are offset against
each other to represent the amount of net receivables from or payables to the franchised stores. Accounts receivable-due from
franchised stores and accounts payable-due to franchised stores represent the net balance and are included in “Trade and otherreceivables” and “Trade and other payables” in the consolidated statement of financial position, respectively.
Accounts receivable-other primarily include claims to credit card companies and receivables related to advance payments at Lawson
Bank.
The amounts presented in the consolidated statement of financial position are those net of loss allowance.
Credit risk management and changes in loss allowance are stated in Note “26. FINANCIAL INSTRUMENTS (3) Credit risk
management.”―27―

10. OTHER FINANCIAL ASSETS(1) Breakdown of other financial assets
The breakdown of other financial assets was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

78

78

78

1,113

2,846

2,288

160

160

159

Listed shares

7,733

513

483

Unlisted shares

1,717

1,399

1,461

Investments in capital

79

79

481

Other

1

1

1

1,447

18

19

Bad debts

792

862

904

Bonds

61

54

3,062

Loans receivable

584

513

476

Guarantee deposits

42

1,814

533

Advances paid

226

201

203

5,000

7,000

–

48

12

9

(598)

(733)

(826)

18,49014,822

9,338

Current assets

6,601

8,885

3,595

Non-current assets

11,888

5,937

5,742

Total

18,49014,822

9,338

Financial assets at measured at fairvalue through profit or loss
SharesInvestments in capital
Other
Financial assets measured at fairvalue through other comprehensive
incomeFinancial assets measured atamortized cost
Time deposits

Commercial papers
Other
Loss allowance
Total

The amounts presented in the consolidated statement of financial position are those net of loss allowance.

―28―

(2) Equity instruments measured at fair value through other comprehensive income
Major issues and fair values of equity instruments measured at fair value through other comprehensive income were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

108

108

104

6,703

–

–

Oisix ra daichi Inc.

104

–

–

POPLAR CO., LTD.

724

320

301

New Designed by Tokyo Ltd.

169

199

237

Three-F Co., Ltd.
PT Sumber Alfaria Trijaya Tbk.

NAHA AIRPORT BUILDING
573
356
371
CO., LTD.
These are designated as financial assets measured at fair value through other comprehensive income because they are intended
to be held for the long term to maintain and strengthen business relationships.
(3) Dividend income
The breakdown of dividend income for financial assets measured at fair value through other comprehensive income was asfollows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Derecognized financial assets

61–

Financial assets held at the end of the fiscal year

95

187

(4) Financial assets measured at fair value through other comprehensive income disposed of during the period
The fair value and accumulated gains and losses (before tax) at the date of sale of financial assets measured at fair value throughother comprehensive income disposed of during the period were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Fair value at the date of sale

6,073

–

Accumulated gains (losses)

1,103

–

Notes 1. These were sold primarily to improve efficiency and promote effective use of assets held.
2. Accumulated gains or losses (net of tax) transferred from other components of equity to retained earnings amounted to¥765 million in the fiscal year ended February 28, 2022.

―29―

11. INVENTORIESThe breakdown of inventories was as follows:(Millions of Yen)IFRS Transition Date
(As of March 1, 2021)
Merchandise and finished goods

As of February 28, 2022

As of February 28, 2023

22,00824,49827,866

530

568

823

22,53925,066

28,689

Other
Total

Notes 1. The amount of inventories recorded in cost of sales was ¥446,599 million and ¥461,337 million for the fiscal years ended
February 28, 2022 and 2023, respectively.
2. No inventories are pledged as collateral for liabilities.

12. OTHER ASSETS
The breakdown of other assets was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Prepaid expenses

8,667

7,464

5,352

Suspense payments

1,654

2,581

2,720

Long-term prepaid expenses

6,811

5,649

5,197

Other

2,421

2,440

2,624

Total

19,55618,135

15,895

Other current assets

12,706

12,453

10,671Other non-current assets

6,849

5,682

5,223

19,55618,135

15,895Total
13. PROPERTY, PLANT, AND EQUIPMENT(1) The acquisition cost, accumulated depreciation, and accumulated impairment losses and carrying amount of property, plant, andequipment were as follows:(Millions of yen)Land
IFRS Transition Date
(As of March 1, 2021)
Acquisition cost
Accumulated depreciation
and accumulated
impairment losses
Carrying amount
As of February 28, 2022
Acquisition cost
Accumulated depreciation
and accumulated
impairment losses
Carrying amount

Buildings and Tools, furniture,
structuresand fixtures

Construction inprogress

Other

Total

9,659

317,457

81,464

2,492

1,876

412,950(1,290)(179,997)(63,433)(1,399)–(246,121)

8,368

137,460

18,030

1,093

1,876

166,8299,700

332,108

92,451

2,594

4,835

441,690(1,280)(193,307)(68,684)(1,598)–(264,870)

8,419

138,801

23,767

995

4,835

176,820

9,428

351,650

99,163

3,684

1,972

465,900(1,247)(205,329)(71,120)(1,804)–(279,502)

8,180

146,32128,043

1,880

1,972

186,398

As of February 28, 2023
Acquisition cost
Accumulated depreciation
and accumulated
impairment losses
Carrying amount―30―

(2) Changes in the carrying amount of property, plant, and equipment were as follows:(Millions of yen)
Carrying amount
IFRS Transition Date
(As of March 1, 2021)
Acquisition
Increase from businesscombinations
Disposal or transfer toassets held for sale
Reclassification
Depreciation
Impairment losses
Foreign currency translationdifferences
Other changes
As of February 28, 2022
Acquisition
Disposal or transfer toassets held for sale
Reclassification
Depreciation
Impairment losses
Foreign currency translationdifferences
Other changes
As of February 28, 2023

Buildings and Tools, furniture,
structuresand fixtures

Land

Construction inprogress

Other

Total

8,368

137,460

18,030

1,093

1,876

166,829183

16,031

10,07093

14,571

40,951

–

48

256

0

–

305

(94)

(847)

(427)

(4)

(18)

(1,391)

–

7,961

597

34

(11,607)(3,014)–(43)(16,889)(5,485)(5,181)
(473)

(152)
(70)

–
–

(22,223)(6,073)

3

439

1,228

0

16

1,689

1

82

(335)

0

(1)

(251)

8,419

138,801

23,767

995

4,835

176,820–

14,052

10,837208

13,76038,859(86)(1,026)

(770)

(2)

–

(1,885)(158)–

13,191(14,985)640(6,514)919(232)(16,633)–(2,040)(21,732)–(3,982)

(450)

(10)

–

(4,442)

5

299

629

1

10

946

–

(30)

(95)

0

(0)

(126)

8,180

146,32128,043

1,880

1,972

186,398

Notes 1. The amount of property, plant, and equipment under construction is included in construction in progress.
2. Reclassification includes transfer to investment property.
3. Depreciation is included in “Cost of sales” and “Selling, general, and administrative expenses” in the consolidated
statement of income.
4. Impairment losses are included in “Other expenses” in the consolidated statement of income.
The carrying amounts in the above table include property, plant, and equipment leased out by the Group in the form of operatingleases, of which store facilities, furniture, and fixtures of franchised stores in the Domestic Convenience Store Business are themain components.
(3) Commitments
Please refer to Note “38. COMMITMENTS” for the commitment to the purchase of property, plant, and equipment.

―31―

14. INVESTMENT PROPERTY(1) Changes
The acquisition cost, changes in accumulated depreciation, and accumulated impairment losses, as well as carrying amount andfair value of investment property were as follows:
Acquisition cost
(Millions of yen)
Own assets

Right-of-use assets

Total

IFRS Transition Date
(As of March 1, 2021)

897

36,36637,264

Acquisition

96

8,228

8,325

(200)

–

(200)

Changes due to remeasurement oflease liabilities

–

1,651

1,651

Changes due to cancellation

–

(291)

(291)

Reclassification (Note 3)

1,005

758

1,763

As of February 28, 2022

1,799

46,71348,512Acquisition

43

4,365

4,409

Sale or disposal

Sale or disposal

(54)

(2)

(57)

Changes due to remeasurement oflease liabilities

–

8,004

8,004

Changes due to cancellation

–

(600)

(600)

Reclassification (Note 3)

(346)

921

575

As of February 28, 2023

1,441

59,402

60,844

Accumulated depreciation and accumulated impairment losses(Millions of yen)
Own assets

Right-of-use assets

Total

IFRS Transition Date
(As of March 1, 2021)

(526)

–

(526)

Depreciation (Note 1)(69)(6,601)(6,670)

Impairment losses (Note 2)

(0)

–

(0)

Sale or disposal

159

–

159

Changes due to cancellation

–

52

52

Reclassification (Note 3)

(490)

–

(490)

As of February 28, 2022

(926)

(6,549)(7,475)

Depreciation (Note 1)(31)(7,092)(7,123)

Sale or disposal

47

2

50

Changes due to cancellation

–

443

443

Reclassification (Note 3)

207

(212)

(4)

As of February 28, 2023

(702)

(13,407)(14,109)

Notes 1. Depreciation of investment property is included in “Selling, general, and administrative expenses” in the consolidated
statement of income.
2. Impairment losses of investment property are included in “Other expenses” in the consolidated statement of income.
3. Reclassification includes transfers to and from property for own use.

―32―

Carrying amount and fair value(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Carrying
Fair value
amountInvestment property

36,73736,896

As of February 28, 2022

As of February 28, 2023

Carrying
amountCarrying
amountFair value

41,037

40,142

Fair value

46,73446,280Among investment properties, the fair value of properties owned by the Group is based on amounts calculated by the Group(including adjustments using indicators, etc.) on the basis of external appraisals or the Real Estate Appraisal Standards. The
valuation is classified as Level 3 of the fair value hierarchy because it is based on transaction prices of similar assets in the market
and the discounted cash flow method, and involves significant unobservable inputs, such as expected return from each property andthe discount rate.
The fair value of the right-of-use assets classified as investment property is measured based on the recorded amount of thecorresponding lease liabilities.
(2) Revenues and expenses from investment property(Millions of yen)
Fiscal year ended
February 28, 2022
Rental income
Direct operating expenses from investment property thatgenerates rental income
Direct operating expenses from investment property that
does not generate rental income

Fiscal year ended
February 28, 2023
6,757

6,467

6,729

7,209

149

138

Rental income from investment property (primarily convenience store property for which the lease agreement has been enteredinto separately from the franchise agreement) is included in “Operating revenues” in the consolidated statement of income.
Direct operating expenses (depreciation, maintenance and repair expenses, insurance expenses, taxes and dues, etc.) incurred inassociation with rental income are included in “Selling, general, and administrative expenses” in the consolidated statement ofincome.

―33―

15. GOODWILL AND INTANGIBLE ASSETS(1) Goodwill
The details of acquisition cost, accumulated impairment losses, and carrying amount of goodwill were as follows:(Millions of Yen)IFRS Transition Date
(As of March 1, 2021)
Acquisition cost

As of February 28, 2022

As of February 28, 2023

39,22449,51650,150–––39,22449,51650,150

Accumulated impairment losses
Carrying amountThe breakdown of changes in goodwill during the fiscal years was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Beginning balance

39,22449,516

Increase (Note)

10,180–

Impairment losses––

Disposal

–

–

Other

111

633

49,51650,150Ending balance
Note: Please refer to Note “6. BUSINESS COMBINATIONS.”(2) Intangible assets

The details of acquisition cost, accumulated amortization, accumulated impairment losses, and carrying amount of intangible
assets were as follows:
There are no significant intangible assets with indefinite useful lives.
(Millions of yen)
Trademarks

Software

Other

Total

IFRS Transition Date
(As of March 1, 2021)
Acquisition cost

12,65966,475

12,974

92,110

Accumulated amortization andaccumulated impairment losses(4,246)(28,709)(3,109)(36,065)

Carrying amount

8,413

37,766

9,865

56,044

Acquisition cost

12,66069,794

13,664

96,119

Accumulated amortization andaccumulated impairment losses(4,876)(36,118)(3,872)(44,868)

Carrying amount

7,783

33,675

9,792

51,251

Acquisition cost

12,683

72,663

13,572

98,919

Accumulated amortization andaccumulated impairment losses(5,510)(37,353)(4,639)(47,502)

Carrying amount

7,172

35,3108,933

51,416

As of February 28, 2022

As of February 28, 2023

―34―

Changes in the carrying amount of intangible assets were as follows:(Millions of yen)
Carrying amount
IFRS Transition Date
(As of March 1, 2021)
Acquisition
Disposal or transfer to assets
held for sale
Amortization
Impairment losses
Foreign currency translationdifferences
Other changes
As of February 28, 2022
Acquisition
Disposal or transfer to assets
held for sale
Amortization
Impairment losses
Foreign currency translationdifferences
Other changes
As of February 28, 2023

Trademarks

Software

Other

Total

8,413

37,766

9,865

56,044

3

7,571

735

8,311

–

(46)

(3)

(50)

(636)

(11,224)(880)(12,741)

–

(64)

–

(64)

2

158

2

163

0

(484)

72

(412)

7,783

33,675

9,792

51,251

13

13,49950

13,563

–

(177)

(135)

(313)

(634)

(11,055)(876)(12,566)

–

(88)

(1)

(90)

3

72

0

76

6

(615)

104

(504)

7,172

35,3108,933

51,416

Notes 1. Amortization is included in “Cost of sales” and “Selling, general, and administrative expenses” in the consolidated
statement of income.
2. Impairment losses for goodwill and intangible assets are included in “Other expenses” in the consolidated statement ofincome. Please refer to Note “17. IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS” for details of impairment
losses.
(3) Commitments
Please refer to Note “38. COMMITMENTS” for the commitment to the purchase of intangible assets.

―35―

16. LEASES(1) Leases as lessee
The Group leases land, buildings, offices, and other real estates, as well as furniture and fixtures for business use, primarily forconvenience store operations. Lease terms range mostly from 15 to 30 years. Certain lease contracts have extension and termination
options. At the commencement of the lease, the Group takes into account economic incentives, such as the enforceability and past
exercise history of the options, as well as the significance of the underlying asset to the business, and reflects them to the initialrecognition amount of “Right-of-use assets” and “Lease liabilities.” However, the carrying amount is reviewed according to theactual exercise results of the options.
Changes in the carrying amount of right-of-use assets were as follows:(Millions of yen)
Carrying amount

Buildings and Machinery and Tools, furniture,
structures
equipment
and fixtures

Land

Other

Total

IFRS Transition Date
(As of March 1, 2021)

354,991

548,829

15,551

113,674

1,461

1,034,508

Acquisition (Note 1)

34,011

63,473

1,441

31,934820

131,680

Depreciation (Note 2)(32,042)(93,895)(4,237)(31,141)(911)(162,228)

Reversal (Note 3)(4,186)(9,171)

(69)

(426)

(1)

(13,854)(4)(3,792)(67)(5,107)–(8,972)

8,381

17,468–111–

25,960

(743)

(15)

–

–

–

(758)

–

2,765

–

–

–

2,765

(0)

2,251

0

22

4

2,278

(0)

3,006

0

13

59

3,079

As of February 28, 2022

360,406

530,920

12,618109,080

1,432

1,014,459

Acquisition (Note 1)

19,544

51,416655

39,5501,128

112,295

Depreciation (Note 2)(32,738)(101,448)(3,971)(31,206)(957)(170,322)

Reversal (Note 3)(4,254)(10,274)

(9)

(38)

(0)

(14,578)(42)(2,392)–(2,655)–(5,089)46,485

90,114–(1,131)–

135,468

(534)

(174)

–

–

–

(708)

2

1,330

0

12

2

1,349

3

(1,781)–(1,862)–(3,640)388,873

557,711

9,294

111,749

1,604

1,069,233

Impairment losses(Note 4)
Changes due toremeasurement of leaseliabilities
Reclassification(Note 5)
Increase from businesscombinations
Foreign currencytranslation differences
Other changes

Impairment losses(Note 4)
Changes due toremeasurement of leaseliabilities
Reclassification(Note 5)
Foreign currencytranslation differences
Other changes
As of February 28, 2023

Notes 1. “Acquisition” includes the recorded amount of “Right-of-use assets” associated with the commencement of new leases.
2. “Depreciation” is included in “Cost of sales” and “Selling, general, and administrative expenses” in the consolidated
statement of income.
3. “Reversal” includes the reversal of “Right-of-use assets” associated with the expiration of the lease term.
4. “Impairment losses” is included in “Other expenses” in the consolidated statement of income.
5. “Reclassification” includes transfer to “Investment property.”―36―

The maturity analysis of future lease payments included in the measurement of “Lease liabilities” was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

136,244

143,713

156,942

136,616

143,350

146,410

121,996

121,143

121,807103,303

100,470

99,36784,04280,26383,451

Due after five years

470,459

502,726

503,339

Total

1,052,663

1,091,666

1,111,318

Due within one year
Due after one year through twoyears
Due after two years through threeyears
Due after three years through fouryears
Due after four years through fiveyears

Profit or loss associated with leases for the fiscal years ended February 28, 2022 and 2023, was as follows:(Millions of yen)Line item in the consolidated
statement of income
Interest expense on lease liabilities
Short-term lease expenses
Expenses for leases of low-value
assetsVariable lease payments (Note)

Finance costs
Selling, general, andadministrative expenses
Selling, general, andadministrative expenses
Selling, general, andadministrative expenses

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

7,971

7,583

9,279

2,716

296

290

5,311

5,800

Revenue from subleasing of rightOperating revenues
6,477
6,164
of-use assets
Note: Variable lease payments represent expenses associated with variable lease payments that are not included in the measurementof lease liabilities.
The total cash outflows associated with leases as lessee for the fiscal years ended February 28, 2022 and 2023, were¥187,354 million and ¥191,725 million, respectively. In the consolidated statement of cash flows, cash outflows that are includedin the measurement of lease liabilities are included in cash flows from financing activities as “Repayments of lease liabilities” andcash flows that are not included in the same measurement are included in cash flows from operating activities.
Please refer to Note “38. COMMITMENTS” for the commitment to the purchase of right-of-use assets.

―37―

(2) Leases as lessor(i) Finance leases as lessor
The Group leases buildings, structures, and other assets in the form of finance leases.
The maturity analysis of lease fee receivables associated with finance leases was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

2,426

2,273

2,020

2,275

2,076

1,829

1,996

1,839

1,572

1,731

1,523

1,313

1,379

1,204

1,140

7,358

6,834

6,297

17,16615,751

14,173Gross investment in the lease

17,16615,751

14,173

Less: Unearned finance income

544

680

463

Present value of leasereceivables

16,621

15,071

13,710–––16,621

15,071

13,710

Undiscounted lease fee receivables
Due within one year
Due after one year through twoyears
Due after two years throughthree years
Due after three years throughfour years
Due after four years through fiveyears
Due after five years
Total
Estimated unguaranteed residual
value

Less: Loss allowance
Net investment in the lease

The primary profit or loss associated with finance leases as lessor was as follows:(Millions of yen)Line item in the consolidated
statement of income
Profit or loss from sales
Finance income

Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Operating revenues––

Finance income––

Finance leases consist primarily of leases to associates, etc. Please refer to Note “30. OPERATING REVENUES” for therevenue.

―38―

(ii) Operating leases as lessor
The Group leases buildings, structures, furniture, and fixtures in the form of operating leases, some of which have termination
options. The lessee has no option to purchase the property at the end of the lease term.
Operating leases consist primarily of leases to franchised stores. Such lease revenue is received together with other service
revenue as a lump-sum charge revenue and is recognized as “Operating revenues” rather than “Lease revenue” in the consolidated
statement of income. Please refer to Note “30. OPERATING REVENUES” for details.
Please refer to Note “13. PROPERTY, PLANT, AND EQUIPMENT” for “Property, plant, and equipment” leased in the formof operating leases as lessor.
Revenue from operating leases and lease revenue for variable lease payments were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Lease revenue
Lease revenue for variable lease payments (Note)Fiscal year ended
February 28, 2023

6,757

6,467

379

313

Note: Lease revenue for variable lease payments represents revenue for variable lease payments that are not linked to any indexes
or rates.
The contractual lease terms of operating leases range mostly from 15 to 18 years. The expected annual lease payments received
were ¥6,147 million for the IFRS Transition Date, ¥6,757 million for the fiscal year ended February 28, 2022, and ¥6,467 million
for the fiscal year ended February 28, 2023.
Such lease payments received do not include variable lease payments that are not determined by an index or rate, such as
variable lease payments included in revenue from franchised stores.

―39―

17. IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS(1) Impairment test on property, plant, and equipment and intangible assets
The Group identifies each store as the smallest cash generating unit, and groups its assets.
The Group recognizes an impairment loss if the carrying amount of the asset or cash-generating unit exceeds its recoverable
amount.
The Group recognized impairment losses of ¥15,110 million for the fiscal year ended February 28, 2022, and ¥9,623 million for
the fiscal year ended February 28, 2023, which are included in “Other expenses” in the consolidated statement of income. Theseare primarily due to reducing the carrying amount to the recoverable amount for assets (buildings and structures, tools, furnitureand fixtures, etc.) of stores whose profitability has significantly declined.
The recoverable amount is measured at fair value, less costs of disposal or value in use. The fair value, less costs of disposal ofland is determined based primarily on the real estate appraisal. The value in use is calculated by discounting the future cash flows
primarily using the pretax weighted-average cost of capital (2.6% for the fiscal year ended February 28, 2022, and 2.9% for the
fiscal year ended February 28, 2023).
The fair value is calculated based on an appraisal by an outside independent real estate appraiser in accordance with the valuation
standards of the country where the property is located and is classified as Level 3 of the fair value hierarchy.
(2) Impairment losses
The breakdown by type of assets for which impairment losses were recognized was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Buildings and structures

Fiscal year ended
February 28, 2023
5,485

3,982

Tools, furniture, and fixtures

473

450

Land

43

–

Other

70

10

6,073

4,442

64

90

64

90

8,972

5,089

15,1109,623

Total property, plant, and equipment
SoftwareTotal intangible assets
Right-of-use assets
Total impairment losses―40―

The breakdown of impairment losses by reportable segment was as follows:
Fiscal year ended February 28, 2022
(Millions of yen)
Business segment
Domestic Convenience StoreBusiness
Seijo Ishii BusinessEntertainment-Related Business
Overseas Business

Major cash-generating unit
Lawson, Inc. stores
SEIJO ISHII CO., LTD.
storesLawson Entertainment, Inc.
storesLawson (China) Holdings,
Inc. and Shanghai Lawson,
Inc. stores

Type
Buildings and structures,right-of-use assets, etc.
Buildings and structures,right-of-use assets, etc.
Buildings and structures,right-of-use assets, etc.

Impairment losses
12,836
12
1,864

Buildings and structures,right-of-use assets, etc.

397

Fiscal year ended February 28, 2023
(Millions of yen)
Business segment
Domestic Convenience StoreBusiness
Seijo Ishii BusinessEntertainment-Related Business
Overseas Business

Major cash-generating unit
Lawson, Inc. stores
SEIJO ISHII CO., LTD.
storesLawson Entertainment, Inc.
storesLawson (China) Holdings,
Inc. and Shanghai Lawson,
Inc. stores

Type
Buildings and structures,right-of-use assets, etc.
Buildings and structures,right-of-use assets, etc.
Buildings and structures,right-of-use assets, etc.
Buildings and structures,right-of-use assets, etc.

―41―

Impairment losses
9,133
3
92
393

(3) Impairment test on goodwill and intangible assets with indefinite useful lives(i) Impairment test
The Group tests goodwill and intangible assets with indefinite useful lives for impairment each period or whenever there are
any indicators of impairment. The recoverable amount for an impairment test is calculated based on the value in use.
Domestic Convenience Store BusinessIn principle, the value in use is calculated by discounting the estimated cash flows based on the business plan approved bymanagement for the next five fiscal years to present value using the pretax weighted-average cost of capital of the cash-generating
unit (5.8% for the fiscal year ended February 28, 2022, and 6.4% for the fiscal year ended February 28, 2023). The growth rateused for cash flow predictions beyond the period covered by the business plan is determined by considering the long-term average
growth rate in the market or country to which the cash-generating unit belongs, but not exceeding this rate (0%). The key
assumptions used in the impairment test may be affected by future uncertainties. In addition, if the assumed conditions change,
the recoverable amount may fall short of the carrying amount. However, the Group has not recognized such indications.
Seijo Ishii BusinessIn principle, the value in use is calculated by discounting the estimated cash flows based on the business plan approved bymanagement for the next five fiscal years to present value using the pretax weighted-average cost of capital of the cash-generating
unit (6.7% for the fiscal year ended February 28, 2022, and 6.4% for the fiscal year ended February 28, 2023). The growth rateused for cash flow predictions beyond the period covered by the business plan is determined by considering the long-term average
growth rate in the market or country to which the cash-generating unit belongs, but not exceeding this rate (0%). The key
assumptions used in the impairment test may be affected by future uncertainties. In addition, if the assumed conditions change,
the recoverable amount may fall short of the carrying amount. However, the Group has not recognized such indications.
Entertainment-Related BusinessIn principle, the value in use is calculated by discounting the estimated cash flows based on the business plan approved bymanagement for the next five fiscal years to present value using the pretax weighted-average cost of capital of the cash-generating
unit (13.3% for the fiscal year ended February 28, 2022, and 13.0% for the fiscal year ended February 28, 2023). The growth rateused for cash flow predictions beyond the period covered by the business plan is determined by considering the long-term average
growth rate in the market or country to which the cash-generating unit belongs, but not exceeding this rate (0%). The key
assumptions used in the impairment test may be affected by future uncertainties. In addition, if the assumed conditions change,
the recoverable amount may fall short of the carrying amount. However, the Group has not recognized such indications.
Overseas BusinessIn principle, the value in use is calculated by discounting the estimated cash flows based on the business plan approved bymanagement for the next five fiscal years to present value using the pretax weighted-average cost of capital of the cash-generating
unit (12.3% to 16.1% for the fiscal year ended February 28, 2022, and 14.0% to 16.1% for the fiscal year ended February 28,2023). The growth rate used for cash flow predictions beyond the period covered by the business plan is determined byconsidering the long-term average growth rate in the market or country to which the cash-generating unit belongs, but notexceeding this rate (0% to 2.8%). The key assumptions used in the impairment test may be affected by future uncertainties. In
addition, if the assumed conditions change, the recoverable amount may fall short of the carrying amount. However, the Group
has not recognized such indications.

―42―

(ii) Goodwill
The carrying amount of goodwill was as follows:(Millions of yen)Cash-generating unit

IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

SEIJO ISHII CO., LTD.

19,521

19,521

19,521

United Cinemas Co., Ltd.

6,455

6,455

6,455

Shenzhen Lawson, Inc.

–

5,696

5,996

Chengdu Lawson, Inc.

–

4,483

4,719

LTF Co., Ltd.

3,849

3,849

3,849

Lawson Store100, Inc.

2,505

2,505

2,505

CVS Bay Area Inc.

2,097

2,097

2,097

Lawson Kochi, Inc.

2,042

2,042

2,042

Other

2,751

2,863

2,961

39,22449,51650,150Total(iii) Intangible assets with indefinite useful lives

There are no significant intangible assets with indefinite useful lives.

―43―

18. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD(1) Investments in associates
The carrying amount of investments in individually immaterial associates was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Total carrying amount

4,175

As of February 28, 2022

As of February 28, 2023

4,498

4,544

The aggregate amounts of the Group’s share of comprehensive income of individually immaterial associates were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Share of profit

287

157

Share of other comprehensive
income19

28

Share of comprehensive income

306

185

(2) Investments in joint ventures
The carrying amount of investments in individually immaterial joint ventures was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Total carrying amount

2,417

As of February 28, 2022

As of February 28, 2023

2,280

1,987

The aggregate amounts of the Group’s share of comprehensive income of individually immaterial joint ventures were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Share of profit

Fiscal year ended
February 28, 2023
145

206

Share of other comprehensive
income––Share of comprehensive income

145

206

―44―

19. INCOME TAXES(1) Deferred tax
The details of deferred tax assets and liabilities by major cause and changes were as follows:
Fiscal year ended February 28, 2022
(Millions of yen)
Recognized throughother comprehensive As of February 28, 2022
income–310

IFRS Transition Date
(As of March 1, 2021)

Recognized throughprofit or loss

207

102

1,480

74

–

1,554

Provisions

3,190

(0)

–

3,189

Retirement benefit liability

6,818

280

108

7,207

36,5591,803–

38,362(1,388)

(150)

293

(1,244)2,930(1,509)–1,421

49,798601

402

50,801Inventories
Accounts payable-otherand accrued expenses

Property, plant andequipment, investment
property, and intangible
assetsFinancial assets measured
at fair value through othercomprehensive income
Other
Net deferred tax assets
and liabilities
Fiscal year ended February 28, 2023

As of March 1, 2022
Inventories

Recognized throughprofit or loss

(Millions of yen)
Recognized throughother comprehensive As of February 28, 2023
income

310

(256)

–

54

Accounts payable-otherand accrued expenses

1,554

371

–

1,926

Provisions

3,189

105

–

3,294

Retirement benefit liability

7,207

136

(481)

6,862

38,362(3,735)–34,626(1,244)

627

87

(529)

1,421

147

–

1,569

50,801(2,604)(393)

47,803

Property, plant andequipment, investment
property, and intangible
assetsFinancial assets measured
at fair value through othercomprehensive income
Other
Net deferred tax assets
and liabilities

Deferred tax assets and liabilities in the consolidated statement of financial position were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Deferred tax assets

50,28451,261

48,234

Deferred tax liabilities

485

459

430

49,79850,80147,803Net deferred tax assets and liabilities―45―

In recognizing deferred tax assets, the Group assesses the recoverability of such assets, taking into consideration expected futuretaxable income and tax planning.
Deferred tax assets are not recognized for certain deductible temporary differences and tax losses carryforward as a result of theassessment of recoverability.
Deductible temporary differences and tax losses carryforward for which deferred tax assets are not recognized were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Deductible temporary differences

11,357

12,552

39,145

Tax losses carryforward

24,553

21,74022,78035,91034,292

61,925Total

The amounts by expiration date of tax losses carryforward for which deferred tax assets are not recognized were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

1st year

5,738

3,990

1,914

2nd year

3,269

3,331

2,633

3rd year

2,179

5,809

4,963

4th year

5,522

3,002

3,328

5th year

3,423

3,340

7,576

After 5th year

4,420

2,265

2,363

24,553

21,74022,780Total(2) Income taxes(Millions of yen)
Fiscal year ended
February 28, 2022
Current tax expense
Total

Fiscal year ended
February 28, 2023
10,675

14,866

10,675

14,866

(256)

2,594

(256)

2,594

Deferred tax
Origination and reversal of temporary
differences
Total

The Group is primarily subject to corporate income tax, inhabitant tax, and enterprise tax, which is deductible for tax purposes.
The applicable tax rate calculated based on these taxes is 30.6% (30.6% for the fiscal year ended February 28, 2022). However,overseas subsidiaries are subject to income taxes in their respective countries of domicile.

―46―

The breakdown of items that caused major differences between the effective statutory tax rate and the actual tax rate after theapplication of tax effect accounting was as follows:(%)
Fiscal year ended
February 28, 2022
Effective statutory tax rate

Fiscal year ended
February 28, 2023
30.6

30.6

Permanently non-deductible and non-taxable items

0.1

0.1

Per-capita inhabitant tax

1.2

0.7

Impact of assessment of recoverability of deferred tax
assets

(2.7)

4.0

Difference in tax rates of consolidated subsidiaries

2.1

2.5

Other

0.2

(0.9)

31.5

37.0

(Reconciliations)Average actual tax rate
20. BORROWINGS
The breakdown of borrowings was as follows:(Millions of yen)
IFRS Transition Date
As of February 28, 2022 As of February 28, 2023
(As of March 1, 2021)

Due date

Financial liabilities measured atamortized cost
Short-term borrowings

41,62047,372

12,830–Long-term borrowings(including current portion)

229,799

179,984

160,047

September 2023 –October 2024

Total

271,419

227,357

172,877–

Current liabilities

141,595

67,372

92,877–

Non-current liabilities

129,824

159,984

80,000–271,419

227,357

172,877–

Total

Please refer to Note “26. FINANCIAL INSTRUMENTS” for related information, such as credit facilities, financial covenants, andbreakdown by due date.
The weighted-average rates of interest paid during the fiscal year ended February 28, 2023, were as follows:(%)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Short-term borrowings

–

0.13

0.14

Long-term borrowings (including
current portion)

–

0.23

0.21

―47―

21. TRADE AND OTHER PAYABLES
The breakdown of trade and other payables was as follows:(Millions of yen)Classification

IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Accounts payable-trade148,086

149,224

161,969

Accounts payable-other

63,19061,802

66,985

Accounts payable-due tofranchised stores

1,705

2,356

2,549

415

343

419

213,398

213,728

231,925

Other
Total

―48―

22. EMPLOYEE BENEFITSThe Company and its domestic subsidiaries have funded and unfunded defined benefit plans to provide retirement benefits toemployees, almost all of whom are covered. The Company has a lump-sum retirement benefit plan. In addition, certain overseas
subsidiaries have defined benefit plans.
Under the domestic lump-sum retirement benefit plans, lump-sum payments are provided as retirement benefits based on salary andlength of service.
Lump-sum retirement benefit plans are unfunded plans, but some of them are funded plans as a result of the establishment of aretirement benefit trust.
The plan assets are managed under the policy of sound management, but nevertheless are exposed to investment risks associatedwith financial instruments. In addition, defined benefit obligations are measured based on various pension actuarial assumptions, suchas discount rates and is, therefore, exposed to the risk of changes in those assumptions.
The Company and certain domestic subsidiaries also have defined contribution plans. The defined contribution plans arepostemployment benefit plans under which the employer contributes certain amounts to other independent entities and does not assume
any legal or constructive obligations to payments in excess of the contributed amount.
(1) Defined benefit plans(i) Changes in the present value of defined benefit obligations and fair value of plan assets(Millions of yen)
Fiscal year ended
February 28, 2022
Beginning balance of present value of defined
benefit obligations

Fiscal year ended
February 28, 2023
22,35323,538

1,952

1,937

Past service cost––

Interest cost

93

102

2,045

2,040

(17)

(19)

(61)

(1,553)

374

(74)

295

(1,647)(1,149)(1,298)(6)

3(1,156)(1,295)23,53822,635

Recognized as profit or loss
Current service cost

Total
Recognized through other comprehensive
incomeRemeasurements
Actuarial gains and losses arising fromchanges in demographic assumptions
Actuarial gains and losses arising fromchanges in financial assumptions
Actuarial gains and losses arising fromrevision of actual results
Total
Other
Benefits paid
Other
Total
Ending balance of present value of defined
benefit obligations―49―

The weighted-average duration of the defined benefit obligations was 11 years in the fiscal year ended February 28, 2022,
and 10.5 years in the fiscal year ended February 28, 2023.
(Millions of yen)
Fiscal year ended
February 28, 2022
Beginning balance of fair value of plan assets

Fiscal year ended
February 28, 2023
5,812

5,819

Interest income

41

41

Remeasurements―return on plan assets

(39)

(40)

Benefits paid

(13)

(3)

Contributions to plan assets

19

19

Other

(0)

–

5,819

5,837

–

–

Ending balance of fair value of plan assets
Impact of asset ceiling(ii) Reconciliation of defined benefit obligations and plan assets(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

19,562

20,517

19,569

2,790

3,020

3,065

22,35323,53822,635

Less: Fair value of plan assets

5,812

5,819

5,837

Retirement benefit liability

16,54017,718

16,797

Present value of defined benefit
obligations for funded plans
Present value of defined benefit
obligations for unfunded plans
Total(iii) Main components of plan assets
The breakdown of plan assets was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Assets with no active market value:
Cash and cash equivalents (Note 1)

5,576

5,574

5,573

Life insurance company generalaccount (Note 2)

236

244

263

5,812

5,819

5,837

Total

Notes: 1. Cash and cash equivalents consist of a retirement benefit trust established for a lump-sum retirement benefit plan.
2. Life insurance company general account is a jointly managed investment portfolio by life insurance companies with aguaranteed minimum yield.
(iv) Major actuarial assumptions
IFRS Transition Date
(As of March 1, 2021)
Discount rate

Mainly 0.7%

―50―

As of February 28, 2022

As of February 28, 2023

Mainly 0.7%

Mainly 1.4%

(v) Sensitivity analysis of key actuarial assumptions
If the discount rate had decreased by 0.5% at the end of the fiscal year ended February 28, 2022, and at the end of the fiscal
year ended February 28, 2023, the present value of the defined benefit obligations would have increased by ¥1,260 million and¥1,212 million, respectively. If the discount rate had increased by 0.5%, the present value of the defined benefit obligations would
have decreased by ¥1,193 million and ¥1,054 million, respectively.
There were no changes in the methods or assumptions used in the sensitivity analysis used in past years.
(vi) Impact on future cash flows
The amount of planned contribution for the next fiscal year is ¥19 million. If the defined benefit plan becomes underfunded interms of plan assets, the Company’s policy is to contribute the amount required under its regulations.
(2) Defined contribution plans
The Group’s required contribution to the defined contribution plan was ¥592 million in the fiscal year ended February 28, 2022,
and ¥594 million in the fiscal year ended February 28, 2023.
(3) Employee benefit expenses
Total employee benefit expenses included in “Cost of sales” and “Selling, general, and administrative expenses” in the
consolidated statement of income for the fiscal years ended February 28, 2022 and 2023, amounted to ¥89,636 million and ¥95,318
million, respectively.

―51―

23. PROVISIONSThe breakdown of changes in provisions for the fiscal year ended February 28, 2023, was as follows:(Millions of yen)
Asset retirement obligations
IFRS Transition Date
(As of March 1, 2021)
Increase during period

Others (Note)

Total

37,4352,512

39,948

1,057

2,573

3,631

Adjustment for the passage oftime
Decrease during period(intended use)
Decrease during period(reversal)

507

–

507

(742)

(2,512)(3,255)

(187)

–

(187)

Change in discount rate

490

–

490

Other changes

(0)

–

(0)

As of February 28, 2022

38,5602,573

41,134

Increase during period

1,535

2,480

4,016

141

–

141

(657)

(2,573)(3,231)–––(1,938)–(1,938)0–037,642

2,480

40,122

26

2,512

2,539

37,409–37,40937,4352,512

39,948

2

2,573

2,576

38,557–38,55738,5602,573

41,134

–

2,480

2,480

37,642–37,64237,642

2,480

40,122Adjustment for the passage oftime
Decrease during period(intended use)
Decrease during period(reversal)
Change in discount rate
Other changes
As of February 28, 2023
Current liabilities(March 1, 2021)
Non-current liabilities(March 1, 2021)
Total
Current liabilities(February 28, 2022)
Non-current liabilities(February 28, 2022)
Total
Current liabilities(February 28, 2023)
Non-current liabilities(February 28, 2023)
Total

Note: Others include provision for property tax and other levies.
Asset retirement obligations
Asset retirement obligations are mainly for restoring properties to their original condition in accordance with real estate lease
contracts for stores and other facilities operated by the Group. These costs are expected to be paid primarily more than one year
after the end of the fiscal year, but the timing of these payments will be affected by future business plans and other factors.

―52―24. OTHER FINANCIAL LIABILITIESThe breakdown of other financial liabilities was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Financial liabilities measured atamortized cost
Call money

40,000108,000

123,000

Guarantee deposits received

15,671

17,392

18,998

Other

2,430

2,425

2,424

131,591

138,837

150,450

189,693

266,655

294,873

Current liabilities

171,598

246,847

273,465

Non-current liabilities

18,09419,80821,407

189,693

266,655

294,873

Lease liabilities
Total

Total
25. OTHER LIABILITIESThe breakdown of other liabilities was as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

Contract liabilities

2,928

3,103

4,130

Advances received

784

514

398

Accrued bonuses

4,855

4,888

5,002

Unearned revenue

371

349

321

Accrued expenses

5,562

5,635

6,461

Accrued consumption taxes

6,002

2,416

3,286

Other

3,036

2,922

3,322

23,542

19,82922,922Other current liabilities

20,071

16,68819,505

Other non-current liabilities

3,470

3,140

3,417

23,542

19,82922,922

Total

Total

―53―

26. FINANCIAL INSTRUMENTS(1) Capital management
The Group’s basic capital policy is to achieve sustainable growth and maximize corporate value by strengthening its earnings
base, while taking into consideration the capital efficiency and financial soundness. The Group uses return on equity attributable toowners of parent (ROE) as an indicator for capital management.
The ROEs for the fiscal years ended February 28, 2022 and 2023, are 10.0% and 12.4%, respectively.
The Group has a subsidiary required to maintain the capital adequacy ratio above a certain level under the capital adequacy
regulations under the Banking Act, and the capital adequacy ratio of this subsidiary complies with these regulations.
(2) Financial risk management
The Group is exposed to various financial risks (credit, liquidity, foreign exchange, interest rate, and stock price fluctuation) in
the course of performing business activities, requiring the Group to manage risks to mitigate these financial risks.
(3) Credit risk management
Credit risk is the risk that a counterparty will default on its contractual obligations, which may result in financial loss to the Group.
The Group’s maximum amount of the credit risk is the sum of trade and other receivables (see Note “9. TRADE AND OTHERRECEIVABLES”), guarantee deposits and other financial assets (see Note “10. OTHER FINANCIAL ASSETS”), excluding equity
instruments, and finance lease receivables (see Note “16. LEASES”).
For trade receivables, such as accounts receivable-due from franchised stores and accounts receivable-other, it manages due dates
and balances for each business partner, while working to early identify and mitigate any collection concerns arising fromdeterioration in their financial position and standing. In addition, collateral and other security arrangements are made with some of
the counterparties. Receivables due from closed franchised stores are treated as credit-impaired financial assets in objective
circumstances where the Group faces difficulty in collecting receivables, such as substantial delinquencies or bankruptcy of thecounterparty.
For loans receivable from associates, the Group strives to early identify and mitigate collection concerns by exercising voting
rights at their general meetings of shareholders and providing management control and guidance through the dispatch of officers,
or by gathering and assessing information about their financial position and standing.
With regard to guarantee deposits, the Group makes efforts to early identify collection concerns and mitigate credit risk bygathering and assessing information on the financial position and standing of the counterparty.
The Group has no exposure to credit risks that are over-concentrated in a single counterparty or a group to which the counterparty
belongs.

―54―

The amount of credit risk exposure (before deduction of loss allowance) and status of delinquencies of trade and other receivables,
guarantee deposits, and other financial assets, as well as finance lease receivables, were as follows:(Millions of yen)
Loss allowance Loss allowance measured at an amount equal tomeasured at an
lifetime expected credit losses
amount equal toNon-credit12-monthCredit-impaired
Trade
impaired
expected credit
financial assets receivables, etc.
financial assets
lossesIFRS Transition Date
(As of March 1, 2021)
No overdue
Overdue
Total

Total

201,896––

123,277

325,173

6

345

447

74

873

201,902345

447

123,351

326,047

As of February 28, 2022
No overdue
Overdue
Total

182,665––

129,225

311,890

235

340

521

245

1,342

182,900

340

521

129,470

313,233

190,875––

143,613334,488

2

246

658

226

1,133

190,877

246

658

143,839

335,621

As of February 28, 2023
No overdue
Overdue
Total

The changes in loss allowance for trade and other receivables, guarantee deposits, and other financial assets, and finance leasereceivables were as follows:(Millions of yen)
Loss allowance Loss allowance measured at an amount equal tomeasured at an
lifetime expected credit losses
amount equal toNon-credit12-monthCredit-impaired
Trade
impaired
expected credit
financial assets receivables, etc.
financialassetslossesIFRS Transition Date
(As of March 1, 2021)
Increase due to provision during theperiodDecrease due to intended use

Total

(80)

(150)

(447)

(39)

(717)

(87)

(154)

(217)

(36)

(495)

–

–

46

–

46

Decrease due to reversal

80

92

97

39

309

Other

–

–

–

–

–

(87)

(212)

(521)

(36)

(857)

(108)

(25)

(234)

(29)

(397)

As of February 28, 2022
Increase due to provision during theperiodDecrease due to intended use

–

–

32

–

32

Decrease due to reversal

87

70

65

36

259

Other

–

–

–

–

–

(108)

(167)

(658)

(29)

(963)

As of February 28, 2023

For the fiscal years ended February 28, 2022 and 2023, there were no significant changes in the aggregate carrying amount that
affected changes in the loss allowance.

―55―

Details of collateral and other credit enhancements
The Group primarily holds guarantee deposits received as collateral for certain accounts receivable-due from franchised stores.
The balances of guarantee deposits received, which are included in other financial liabilities, were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Guarantee deposits received

As of February 28, 2022

As of February 28, 2023

17,392

18,99815,671(4) Liquidity risk management
Liquidity risk is the risk that payments cannot be executed on the due dates when the Group performs repayment obligations formaturing financial liabilities.
The Group is exposed to liquidity risk because it utilizes borrowings and leases to finance its working capital, banking business
operations, and mergers and acquisitions, and to fund its capital expenditures, as well.
The Group manages liquidity risk by having each Group company prepare and update financing agreements in a timely mannerand by maintaining sufficient liquidity on hand. In addition, line of credit agreements have been concluded with partner financial
institutions to reduce liquidity risks.
(i) Breakdown of financial liabilities by due date
The breakdown of financial liabilities (except for lease liabilities) by due date was as follows:
For breakdown of lease liabilities by due date, please see Note “16. LEASES.”IFRS Transition Date (As of March 1, 2021)

Trade and other payables(Millions of yen)
Due after Due after Due after Due afterContractual Due within one year two years three years four years Due after
cash flows one year through two throughthroughthrough five years
years
three years four years five years
213,398
213,398–––––

Deposits received

300,073300,073

–

–

–

–

–

Borrowings

271,620

141,620

20,00080,00030,000––

Other financial liabilities

58,25140,006

2,320

1,288

1,330

1,095

12,210

Total

843,343

695,098

22,32081,28831,330

1,095

12,210

As of February 28, 2022

Trade and other payables(Millions of yen)
Due after Due after Due after Due afterContractual Due within one year two years three years four years Due after
cash flows one year through two throughthroughthrough five years
years
three years four years five years
213,728
213,728–––––

Deposits received

245,485

245,485

–

–

–

–

–

Borrowings

227,464

67,46480,00080,000–––

Other financial liabilities

127,903108,009

1,431

1,477

1,211

2,090

13,682

Total

814,582

634,688

81,431

81,477

1,211

2,090

13,682―56―

As of February 28, 2023

Trade and other payables(Millions of yen)
Due after Due after Due after Due afterContractual Due within one year two years three years four years Due after
cash flows one year through two throughthroughthrough five years
years
three years four years five years
231,925
231,925–––––

Deposits received

274,224

274,224

–

–

–

–

–

Borrowings

172,917

92,91780,000––––

Other financial liabilities

144,505

123,022

1,678

1,627

2,483

1,670

14,022

Total

823,572

722,089

81,678

1,627

2,483

1,670

14,022

Note: Deposits received mainly consist of utility bills and other payments to public utility companies collected by stores through billsettlement services.
(ii) Overdraft and loan commitment agreements
The Group has entered into overdraft and loan commitment agreements to ensure efficient funding of working capital.
The unutilized balances of loans under these overdraft and loan commitment agreements as of the end of the fiscal years wereas follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)
Total overdraft limit and loan
commitment
Amount utilized
Unutilized balance

As of February 28, 2022

As of February 28, 2023

220,000

320,000

380,204

14,07022,062

41,900205,930

297,938

338,304(5) Foreign exchange fluctuation risk
Foreign exchange fluctuation risk arises from transactions conducted by the Group companies in currencies other than thefunctional currency.
A sensitivity analysis has not been performed as the exposure to foreign exchange fluctuation risk in the fiscal year ended
February 28, 2023, is minimal, and the impact on the Group is considered immaterial.
(6) Interest rate fluctuation risk
Interest rate fluctuation risk is defined as the risk that the fair value of, or future cash flows from, financial instruments willfluctuate because of changes in market interest rates.
The Group’s interest rate risk arises primarily from long-term borrowings. With floating-rate borrowings, the Group is exposedto the risk of fluctuations in future cash flows. With all other conditions being the same, a 0.1% rise in interest rates would have
reduced after-tax profit by ¥133 million in the fiscal year ended February 28, 2022, and by ¥112 million in the fiscal year ended
February 28, 2023.
(7) Stock price fluctuation risk
Stock price fluctuation risk arises primarily from the Group’s holdings of equity financial assets (e.g., stocks) of entities withwhich the Group has business relationships.
To manage the stock price fluctuation risk, the Group regularly monitors the fair values and financial conditions of the issuers
and reviews the status of holdings on an ongoing basis in light of the relationship with the entities.
A 10% decline in the stock price of listed shares held by the Group would have impacted other comprehensive income (before
tax effect adjustments) by ¥51 million and ¥48 million for the fiscal years ended February 28, 2022 and 2023, respectively.
In the analysis, all other variables are assumed to be constant.

―57―

(8) Fair value of financial instruments(i) Categorization by level of fair value hierarchy
Financial instruments measured at fair value on a recurring basis after initial recognition are classified into three levels of thefair value hierarchy, according to the observability and materiality of the inputs used for the measurements.
In this categorization, the fair value hierarchy is defined as follows, in the descending order of the levels:
Level 1: Fair value measured at quoted price (unadjusted) in an active market for identical asset or liability
Level 2: Fair value measured using directly or indirectly observable inputs other than Level 1 inputs
Level 3: Fair value measured using unobservable inputs
When multiple inputs are used for the fair value measurement, the level of fair value is determined based on the lowest-level
input that is significant to the entire measurement of fair value.
Transfers of financial instruments between levels are recognized on each reporting date.
(ii) Financial instruments measured at fair value on a recurring basis
The breakdown of assets measured at fair value on a recurring basis at the end of the period was as follows:
IFRS Transition Date (As of March 1, 2021)(Millions of yen)
Level 1

Level 2

Level 3

Total

AssetsOther financial assets
FVTPL financial assets

–

–

1,351

1,351

FVTOCI financial assets

7,733

–

1,799

9,533

7,733

–

3,151

10,885

Total assets
As of February 28, 2022

(Millions of yen)
Level 1

Level 2

Level 3

Total

AssetsOther financial assets
FVTPL financial assets

–

–

3,084

3,084

FVTOCI financial assets

513

–

1,481

1,994

513

–

4,566

5,079

Total assets

For assets and liabilities held at the end of the period, there were no transfers between Level 1 and Level 2.
As of February 28, 2023
(Millions of yen)
Level 1

Level 2

Level 3

Total

AssetsOther financial assets
FVTPL financial assets

–

–

2,526

2,526

FVTOCI financial assets

483

–

1,944

2,428

483

–

4,471

4,955

Total assets

For assets and liabilities held at the end of the period, there were no transfers between Level 1 and Level 2.

―58―

Changes in financial instruments classified in Level 3
For financial assets measured within Level 3 on a recurring basis, the changes from the beginning balances to the ending balanceswere as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Beginning balance

Fiscal year ended
February 28, 2023
3,151

4,566

Profit or loss (Note 1)

3,206

(859)

Other comprehensive income (Note 2)

(391)

62

745

705

(1,991)(0)

Total gains and losses

Purchase
Sale and redemption
Other

(153)

(3)

Transfer to Level 3––

Transfer from Level 3

–

–

4,566

4,471

Ending balance

Notes: 1. Profit or loss included in total gains and losses is related to financial assets measured at fair value through profit or loss.
These profits and losses are included in “Finance income” and “Finance costs.”
2. Other comprehensive income included in total gains and losses is related to financial assets measured at fair value throughother comprehensive income. These profits and losses are included in “Net change in fair value of equity instruments
designated as measured at fair value through other comprehensive income.”(iii) Fair value of financial instruments measured at amortized cost
Carrying amounts and fair values of financial instruments measured at amortized cost were as follows:
The table below does not include financial assets and liabilities whose fair values are equal or approximate to their carrying
amounts, such as financial instruments that are settled in a short period of time from the end of the reporting period.
(Millions of yen)Classification

IFRS Transition Date
(As of March 1, 2021)
Carrying
Fair value
amountAs of February 28, 2022

As of February 28, 2023

Carrying
amountFair value

Carrying
amountFair value

AssetsOther financial assets
Loans receivable

533

506

513

495

476

458

Advances paid

226

227

201

201

203

203

61

61

54

54

47

47

Guarantee deposits

Other

93,90997,312

94,241

97,14893,02392,726

Finance lease receivables

16,621

15,725

15,071

14,13013,71012,173229,799

230,002179,984

180,093160,047

160,047

Guarantee deposits received

15,671

15,694

17,392

17,297

18,99818,514

Other

2,423

2,423

2,416

2,416

2,409

2,409

Liabilities
Borrowings
Other financial liabilities(iv) Method of fair value measurement
Cash and cash equivalents
Cash and cash equivalents, except for time deposits, are measured at carrying amount as their fair values approximate thecarrying amounts. Time deposits are also measured at carrying amount as their fair values approximate the carrying amounts dueto the short maturities of those held by the Company. Accordingly, they are all classified as Level 1.

―59―

Trade and other receivables
Trade and other receivables with relatively short maturities are classified as Level 1, as their carrying amounts approximate
their fair values, and thus measured at their carrying amounts.
Long-term loans receivable
Fair values of long-term loans receivable are measured by discounting the sum of the principal and interest at the interest rate
assumed for similar loans, and are classified as Level 2.
Guarantee deposits
Fair values of guarantee deposits are measured by discounting the future cash flows related to the collection by the yield ofgovernment bond corresponding to the remaining period, and are classified as Level 2.
Finance lease receivables
Fair values of finance lease receivables are measured by discounting the future cash flows by the yield of government bondcorresponding to the remaining period and are classified as Level 2.
Other financial assets
Fair values of listed shares are measured using quoted prices in active markets at the end of the period and are classified as
Level 1. Fair values of unlisted shares are measured using appropriate valuation techniques, such as comparable multiple
valuation method, and are classified as Level 3. Fair values of advances paid and bonds are measured by discounting their future
cash flows by the yield of government bonds corresponding to the period to maturity, and are classified as Level 2. For otherfinancial assets other than the above, such as those settled in a short period of time, the carrying amounts are used as fair values
because the fair values approximate the carrying amounts.
Trade and other payables
Trade and other payables with relatively short maturities are classified as Level 1, as their carrying amounts approximate theirfair values and thus measured at their carrying amounts.
Long-term borrowings (including current portion)
Those with fixed rate are measured by discounting the sum of the principal and interest at the interest rate assumed for similarborrowings. For those with floating rate, the carrying amounts are used as the fair values, and are classified as Level 2 because
the market interest rate is reflected within a short period of time.
Guarantee deposits received
Fair values of guarantee deposits received are measured by discounting the future cash flows by the yield of government bondcorresponding to the remaining period, and are classified as Level 2.
For other financial liabilities other than the above, such as those settled in a short period of time, the carrying amounts are usedas fair values because the fair values approximate the carrying amounts.
(v) Valuation process
Fair values of Level 3 financial instruments are measured in accordance with the relevant accounting policies, etc., of theGroup.
The fair value is measured using valuation techniques and inputs that appropriately reflect the nature, characteristics, and riskof the financial instruments to be measured. The results of the fair value measurements are reviewed by senior managers.

―60―

(9) Offsetting financial assets and financial liabilities
The Group offsets financial assets and financial liabilities, presenting the net amount in the consolidated statement of financial
position, as it meets offsetting criteria: it currently holds a legally enforceable right to offset the recognized amounts of part offinancial assets and financial liabilities, and intends either to settle them on a net basis or to realize the asset and settle the liability
simultaneously.
Of the financial assets and financial liabilities recognized, the following presents a breakdown of the amounts offset and amounts
not offset in the consolidated statements of financial position by type of financial instruments at the IFRS Transition Date, and in
the fiscal years ended February 28, 2022 and 2023.
Financial assets and financial liabilities other than the below do not include those subject to enforceable master netting agreements
or similar agreements.
IFRS Transition Date (As of March 1, 2021)(Millions of yen)Classification

Gross amountrecognized

Amount offset Carrying amountAmount notmeeting
offsetting criteria

Net amountFinancial assets:
Trade and other receivables

139,903(24,408)

115,495(2,946)

112,548

–

–

–

–

–

Trade and other payables

132,774(24,337)

108,437–

108,437

Deposits received

87,255(172)

87,082–87,082Other financial liabilities

14,720–14,720(2,946)

11,773

Other financial assets
Financial liabilities:

As of February 28, 2022
(Millions of yen)Classification

Gross amountrecognized

Amount not
Amount offset Carrying amountmeeting
offsetting criteria

Net amountFinancial assets:
Trade and other receivables

129,407(23,459)

105,948(2,914)

103,034

–

–

–

–

–

Trade and other payables

121,812(23,279)

98,532–

98,532

Deposits received

95,477(179)

95,297–

95,297

Other financial liabilities

14,139–14,139(2,914)

11,225

Other financial assets
Financial liabilities:

As of February 28, 2023
(Millions of yen)Classification

Gross amountrecognized

Amount not
Amount offset Carrying amountmeeting
offsetting criteria

Net amountFinancial assets:
Trade and other receivables

136,163(10,631)

125,531(3,275)

122,256

333

(46)

286

–

286

Trade and other payables

116,619(10,353)

106,266–

106,266

Deposits received

107,424(209)

107,214–107,214

Other financial liabilities

13,933(115)

13,817(3,275)

10,542Other financial assets
Financial liabilities:

The amounts not meeting offsetting criteria presented in the table above are financial assets or financial liabilities subject to―61―

enforceable master netting agreements or similar agreements that are not intended to be settled on a net basis, and for which theright to offset is enforceable only in the event of default or other prescribed circumstances not expected to occur in the ordinary
course of business.

―62―27. SHARE CAPITAL AND OTHER EQUITY ITEMS(1) The number of shares authorized, shares issued, and treasury shares
Changes in the numbers of shared authorized, shares issued, and treasury shares are as follows:(Shares)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

409,300,000

409,300,000

409,300,000

Beginning balance–

100,300,000

100,300,000

Changes during the period

–

–

–

100,300,000

100,300,000

100,300,000

Beginning balance–

232,954

228,807

Changes during the period(Note 2)–

(4,147)(5,845)232,954

228,807

222,962

Number of shares authorized to beissuedCommon stock
Total number of shares issued(Note 1)Ending balance
Number of treasury sharesEnding balance

Notes: 1. All the shares the Company issues are no-par value common stock with no restrictions of rights, and all the shares issued
are fully paid up.
2. The changes are primarily due to the exercise of stock options.
(2) Capital surplus
The Companies Act of Japan (the “Companies Act”) provides that at least 50% of the payment or contribution for share issue beappropriated as share capital and the remainder be appropriated as legal capital surplus included in capital surplus. The Companies
Act permits, upon resolution of a general meeting of shareholders, the transfer of amounts from legal capital surplus to share capital.
(3) Retained earnings
The Companies Act provides that 10% of the amount of surplus that is reduced by the distribution of surplus be appropriated aslegal capital surplus or as legal retained earnings until the aggregate amount of legal capital surplus and legal retained earnings
equals 25% of share capital.
Accumulated legal retained earnings may be used to eliminate or reduce a deficit, or be reversed upon resolution of a general
meeting of shareholders.
The distributable amount of the Company under the Companies Act is determined based on the amount of retained earnings in
its book of account prepared in accordance with the generally accepted accounting principles in Japan.
Furthermore, the Companies Act sets certain restrictions for the calculation of the distributable amount, and the Company
distributes retained earnings within these restrictions.

―63―28. DIVIDENDS(1) Dividends paid
Dividends paid were as follows:

Resolution
May 25, 2021
Ordinary General
Meeting of
Shareholders
October 7, 2021
Board of Directors
May 25, 2022
Ordinary General
Meeting of
Shareholders
October 6, 2022
Board of Directors

Class of shares

Total amount ofdividends(millions of yen)Amount ofdividends per share(yen)

Common stock

7,505

Common stock

Record date

Effective date

75.00

February 28, 2021

May 26, 2021

7,505

75.00

August 31, 2021

November 10, 2021

Common stock

7,505

75.00

February 28, 2022

May 26, 2022

Common stock

7,505

75.00

August 31, 2022

November 10, 2022

(2) Dividends for which the record date is in the fiscal year ended February 28, 2023, and the effective date is in the following fiscal
year
Dividends for which the record date is in the fiscal year ended February 28, 2023, and the effective date is in the following fiscal
year were as follows:

Resolution

Class of shares

Source ofdividends

May 24, 2023
Ordinary General
Meeting of
Shareholders

Common stock

Retainedearnings

Total amount of
Amount ofdividends
dividends per(millions ofshare (yen)
yen)
7,505

Record date

75.00 February 28, 2023

Effective date

May 25, 2023

29. SHARE-BASED PAYMENTS
Stock options as share-based compensation
By incorporating stock options as share-based compensation as part of stock price-linked compensation paid to directors, theCompany has a system in which management shares with shareholders the benefits from a rise in stock price as well as the risks
associated with a price decline. The Company positions stock options as compensation that is linked to medium- to long-term
improvement of its corporate value.
Exercise price on stock options as share-based compensation is ¥1 per share. The amount of options is increased or decreased
according to the base unit for the position multiplied by the earnings per share achievement rate. Under the plan, the stock option
holders may exercise their rights only during a certain period after the retirement (limited to 10 days from the day after leaving theirposition as both director and executive officer of the Company) and may not be exercised during their term of office.
The plan is accounted for as equity-settled share-based payments.

―64―

The number of stock options and the weighted average exercise price were as follows:
The number of stock options is converted into the number of shares.
Fiscal year ended February 28, 2022

Fiscal year ended February 28, 2023

Number of options

Weighted-average
exercise price (yen)Number of options

Weighted-average
exercise price (yen)Beginning balance

75,0001

86,0001

Granted during the period

24,1001

19,6001

Forfeited during the period

8,900

1

19,000

1

Exercised during the period

4,200

1

5,800

1

–

–

–

–

Ending balance

86,000180,800

1

Exercisable at the end of period

86,000180,800

1

Expired during the period

Unexercised 86,000 options and 80,800 options as of February 28, 2022 and 2023, respectively, were exercisable. As a result of
options exercised during the fiscal years ended February 28, 2022 and 2023, 24,100 shares and 19,600 shares, respectively, of common
stock were granted, at weighted-average exercise price of ¥1 per share. The weighted-average stock prices at the time when stock
options were exercised during the fiscal years ended February 28, 2022 and 2023, were ¥4,976 and ¥4,612, respectively.
Weighted-average residual contract year of stock options outstanding at the end of the period was 17 years.
The date of expiration and exercise price of unexercised options as of the end of reporting periods were as follows:

14th Share Acquisition Rights(Notes 1 and 2)
16th Share Acquisition Rights(Notes 1 and 2)
17th Share Acquisition Rights(Notes 1 and 2)
18th Share Acquisition Rights(Notes 1 and 2)
19th Share Acquisition Rights(Notes 1 and 2)
20th Share Acquisition Rights(Notes 1 and 2)
21st Share Acquisition Rights(Notes 1 and 2)
22nd Share Acquisition Rights(Notes 1 and 2)
23rd Share Acquisition Rights(Notes 1 and 2)

Date of expiration

Exercise price pershare (yen)Outstanding as ofFebruary 28, 2022
(shares)

Outstanding as ofFebruary 28, 2023
(shares)March 24, 2035

1

2,700

2,700

April 12, 2036

1

3,800

3,800

April 11, 2037

1

6,700

6,200

July 4, 2037

1

2,100

1,800

May 21, 2038

1

11,6007,400

May 20, 2039

1

14,7009,200

May 26, 2040

1

20,30013,500

May 24, 2041

1

24,10016,600

May 24, 2042

1–

19,600–86,00080,800Total
Notes: 1. The figures presented are those converted into the number of shares.
2. No vesting requirements are attached.

―65―

Fair value of stock options granted during the period and the method of fair value measurement(1) Valuation technique used: Black-Scholes model(2) Key inputs and estimation method
Fiscal year ended February 28, 2022

Fiscal year ended February 28, 2023

22nd Share Acquisition Rights

23rd Share Acquisition Rights

Stock price at grant date (yen)

3,674

3,023

1

1

22.73%

23.58%

10

10¥150.0 per share¥150.0 per share

0.04%

0.26%

Exercise price (yen)Stock price volatility (Note 1)
Estimated remaining period (Note 2)
Estimated dividend (Note 3)
Risk-free interest rate (Note 4)

Notes: 1. For the 23rd Share Acquisition Rights, the figure is calculated based on the 10-year performance of stock price (from June
9, 2012, to June 10, 2022).
2. As reasonable estimates are difficult to make due to the lack of sufficient data accumulation, estimates are made assumingthat the rights will be exercised at the midpoint of the exercisable period.
3. For the 23rd Share Acquisition Rights, the figure is calculated based on actual interim and year-end dividends for the
fiscal year ended February 28, 2022.
4. Yield on government bonds with a maturity corresponding to the estimated remaining period.
Method for estimating the number of vested stock options
Basically, it is difficult to reasonably estimate the number of options forfeited in the future; therefore, only the actual number of
forfeitures is reflected in the calculation.
Expenses associated with stock options in the fiscal years ended February 28, 2022 and 2023, were ¥88 million and ¥59 million,
respectively. These expenses are recorded in “Selling, general, and administrative expenses” in the consolidated statements of income.
There were no cancellations or changes in conditions of stock options during the fiscal years ended February 28, 2022 and 2023.

―66―

30. OPERATING REVENUES(1) Disaggregation of revenue
Operating revenues disaggregated by major customer or type of service is as disclosed in Note “7. SEGMENT INFORMATION.”
Income from franchised stores consists of franchise commissions and royalty income received from franchised stores based on
franchise agreement in the Domestic Convenience Store Business, Seijo Ishii Business, and Overseas Business. The Group has
contractual obligations to franchisees to provide store opening preparation services, operational know-how, trademarks, and otherlicenses; offer services, including training and accounting paperwork; and lend store fixtures, signboards, and information systems.
As these closely interrelated activities cannot be separated and performed as individual services, they are considered to be a single
performance obligation, except for lease transactions. This performance obligation is considered to be satisfied over time and asservices are rendered; however, because the transaction price for royalty income is a variable royalty based on the operating grossprofit of the store, revenue is recognized over the contract period as such operating gross profit is generated. Various incentives andcompensations paid to franchisees are reduced from the transaction prices.
Of the net sale Company-operated stores, sales related to the Domestic Convenience Store Business, Seijo Ishii Business, andOverseas Business consist of net sales from merchandise in the Company-operated stores and sales commissions as agency at stores.
The Group sells consumer goods, such as foods and daily necessities, to customers visiting its stores. Revenue from the sale ofthese goods is recognized when merchandise is delivered to a customer; at which time, control is deemed to have been transferred.
Agency at store includes the handling of bill settlement services and parcel reception services.
Of the net sale Company-operated stores, sales related to the Seijo Ishii Business consist of revenues from sale of general
consumer goods at the Company-operated stores. Revenue from the sale of these goods is recognized when merchandise is delivered
to a customer; at which time, control is deemed to have been transferred.
Income from franchised stores based on franchise agreements includes lease payments made for store facilities, furniture, andfixtures.
Included in the Financial Services Business are the sales from Lawson Bank, which is based on its ATM services. This iscommission income from transactions using cash cards of partner financial institutions through Lawson Bank ATMs installed in
Lawson stores and other locations, as well as from sales proceeds deposit services for franchised store owners.
Other revenue represents revenues other than those defined in IFRS 15 Revenue from Contracts with Customers, such as rental
income and various commissions received from product vendors and other clients. Rental income is recognized as revenue inaccordance with IFRS 16.
Revenue recognized from sources other than contracts with customers is presented as “Operating revenues” in the consolidated
statements of income.
(2) Contract balances
Beginning and ending balances of receivables from contracts with customers and contract liabilities were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

107,301

114,398

130,128

2,928

3,103

4,130

Receivables from contracts with customers
Contract liabilities

In the consolidated statements of financial position, contract liabilities are included in “Other current liabilities.”
There were no significant changes in the contract liability balance during the current reporting period.
Of revenue recognized for the fiscal years ended February 28, 2022 and 2023, amounts included in the beginning balance ofcontract liabilities were ¥2,126 million and ¥2,179 million, respectively.
(3) Transaction price allocated to the remaining performance obligations
As the Group does not enter into a significant transaction whose expected individual contract term exceeds one year, it does notdisclose information of remaining performance obligation with original expected remaining period of one year or less, applying thepractical expedient of IFRS 15, Paragraph 121.
In addition, consideration arising from contracts with customers contains no significant amount that is not included in thetransaction price.

―67―

31. COST OF SALES AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
The breakdown of cost of sales was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

431,121444,308

Raw materials expense

9,436

9,479

Employee benefit expenses

3,482

4,251

168

351

2,390

2,946

8,289

11,736454,889

473,074

Cost of merchandise purchased
Cost of products manufactured

Depreciation
Other
Cost of service provided
Total

Note: For details of depreciation, please refer to Note “13. PROPERTY, PLANT, AND EQUIPMENT,” Note “15. GOODWILL
AND INTANGIBLE ASSETS,” and Note “16. LEASES.”
The breakdown of selling, general, and administrative expenses was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Employee benefit expenses

86,15491,066

Commission and outsourcing expenses

45,654

51,827Advertising expenses

17,65824,619Transportation expenses

12,513

12,739Travel and transportation expenses

1,789

2,012

Utilities expenses

5,522

7,689

Taxes and public dues

6,545

6,826

Depreciation

201,809

208,946

Rent expenses

13,158

8,678

Other

45,067

48,592435,874

462,998

Total

―68―

The breakdown of employee benefit expenses was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Payroll and allowances

58,16360,373

Bonuses

10,195

10,402

Legal welfare expenses

8,965

9,596

Retirement benefit expenses

2,575

2,557

Other

6,254

8,136

86,15491,066Total

Note: Please refer to Note “22. EMPLOYEE BENEFITS” for details of the retirement benefit expenses.
32. OTHER INCOME AND OTHER EXPENSES
The breakdown of other income was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Compensation income

483

553

Penalty income

237

147

Insurance claim income

206

160

1,762

622

776

1,650

3,465

3,133

Employment adjustment subsidy due to novel coronavirus
diseaseOther
Total
The breakdown of other expenses was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Loss on sales of non-current assets

Fiscal year ended
February 28, 2023
70

207

Loss on retirement of non-current assets

1,473

1,438

Impairment losses (Note)

15,110

9,623

Other

2,423

1,715

19,077

12,985Total

Note: Please refer to Note “17. IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS” for details of impairment losses.

―69―33. FINANCE INCOME AND FINANCE COSTS
The breakdown of finance income was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Interest income
Financial assets measured at amortized cost (Note)

1,305

1,280

Financial assets measured at fair value through othercomprehensive income (Note)

157

187

Other

13

0

3,188

–

4,664

1,468

Dividend income

Gain on valuation of securities
FVTPL financial assets (Note)
Total

Note: Please refer to Note “10. OTHER FINANCIAL ASSETS” for details of financial assets.
The breakdown of finance costs was as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Interest expenses
Financial liabilities measured at amortized cost (Note 1)

848

715

7,971

7,583

FVTPL financial assets (Note 3)

–

859

Total

8,819

9,158

Lease liabilities (Note 2)
Loss on valuation of securities

Notes: 1. Please refer to Note “20. BORROWINGS” and Note “24. OTHER FINANCIAL LIABILITIES” for details of financial
liabilities.
2. Please refer to Note “16. LEASES” for details of lease liabilities.
3. Please refer to Note “10. OTHER FINANCIAL ASSETS” for details of financial assets.

―70―

34. OTHER COMPREHENSIVE INCOME
The amount of each comprehensive income item arising during the period, reclassification adjustments to profit or loss, and amountof income taxes included in other comprehensive income for each fiscal year were as follows:
Fiscal year ended February 28, 2022
(Millions of yen)Amount arisingduring period

Reclassification
adjustments

Before income
taxes

Income taxes

After income
taxes(1,539)–(1,539)293(1,245)

(335)

–

(335)

108

(227)

(10)

–

(10)

–

(10)

(1,884)–(1,884)402(1,482)

3,114

–

3,114

–

3,114

29

–

29

–

29

Total

3,144

–

3,144

–

3,144

Total other comprehensive income

1,259

–

1,259

402

1,661

Items that will not be reclassified to
profit or loss
Net change in fair value ofequity instruments designated asmeasured at fair value throughother comprehensive income
Remeasurements of defined
benefit plans
Share of other comprehensive
income of investments
accounted for using equity
methodTotal
Items that may be reclassified to
profit or loss
Exchange differences ontranslation of foreign operations
Share of other comprehensive
income of investments
accounted for using equity
methodFiscal year ended February 28, 2023
(Millions of yen)Amount arisingduring period

Reclassification
adjustments

Before income
taxes

Income taxes

After income
taxes

32

–

32

87

120

1,607

–

1,607

(481)

1,125

10

–

10

–

10

1,650

–

1,650

(393)

1,256

2,175

–

2,175

–

2,175

18

–

18

–

18

Total

2,194

–

2,194

–

2,194

Total other comprehensive income

3,844

–

3,844

(393)

3,450

Items that will not be reclassified
to profit or loss
Net change in fair value ofequity instruments designated asmeasured at fair value throughother comprehensive income
Remeasurements of defined
benefit plans
Share of other comprehensive
income of investments
accounted for using equity
methodTotal
Items that may be reclassified to
profit or loss
Exchange differences ontranslation of foreign operations
Share of other comprehensive
income of investments
accounted for using equity
method―71―

35. EARNINGS PER SHARE(1) Basis for the calculation of basic earnings per share
Basic earnings per share and the basis for calculating basic earnings per share were as follows:
Fiscal year ended
February 28, 2022
Profit attributable to owners of parent (Millions of yen)
Profit not attributable to common shareholders of parent(Millions of yen)
Profit used for calculating basic earnings per share(Millions of yen)
Weighted-average number of shares of common stock(Thousands of shares)
Basic earnings per share (Yen)

Fiscal year ended
February 28, 2023

22,62529,708––22,62529,708100,070

100,076226.09296.86(2) Basis for the calculation of diluted earnings per share
Diluted earnings per share and the basis for calculating diluted earnings per share were as follows:
Fiscal year ended
February 28, 2022
Profit used for calculating basic earnings per share(Millions of yen)
Profit adjustments (Millions of yen)
Profit used for calculating diluted earnings per share(Millions of yen)
Weighted-average number of shares of common stock(Thousands of shares)
Effect of dilutive securities
Share-based payments (Thousands of shares)
Weighted-average number of shares of common stock after
dilution (Thousands of shares)
Diluted earnings per share (Yen)
Potential shares not included in calculation of diluted earnings
per share due to antidilutive effect―72―

Fiscal year ended
February 28, 2023

22,62529,708––22,62529,708100,070

100,07688

86

100,159

100,162225.89296.60––36. CASH FLOW INFORMATION(1) Significant non-cash transactions
The amounts of right-of-use assets acquired through leases were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Acquisition of right-of-use assets throughlease (Note)Fiscal year ended
February 28, 2023
166,347

260,827

Note: The amounts include changes arising from the remeasurement of lease liabilities.
The amounts recorded for significant asset retirement obligations were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022
Amount of significant asset retirement
obligations (Note)Fiscal year ended
February 28, 2023
2,056

(278)

Note: The amounts include changes arising from change in discount rate.
(2) Changes in liabilities arising from financing activities
Changes in liabilities arising from financing activities were as follows:
Fiscal year ended February 28, 2022
(Millions of yen)
Carrying amount
Changes
as of March 1, involving cash
2021
flows
Short-termborrowings
Long-term
borrowings(including
current portion)
Lease liabilities(including
current portion)
Total

Changes not involving cash flows
Foreigncurrencytranslation

New leases
Business(Note)
combinations

Carrying amountas ofFebruary 28,
2022

Other

41,620

5,748

4

–

–

–

47,372229,799(49,912)

4

–

–

92

179,984

1,018,197(172,467)

2,395

166,347

2,797(9,117)

1,008,152

1,289,616(216,630)

2,404

166,347

2,797(9,025)

1,235,509

Note: The amounts include changes arising from the remeasurement of lease liabilities.
Fiscal year ended February 28, 2023
(Millions of yen)
Carrying amount
Changes
as of March 1, involving cash
2022
flows
Short-termborrowings
Long-term
borrowings(including
current portion)
Lease liabilities(including
current portion)
Total

Changes not involving cash flows
Foreigncurrencytranslation

New leases
Business(Note)
combinations

Carrying amountas ofFebruary 28,
2023

Other

47,372(34,621)

79

–

–

–

12,830179,984(20,018)

13

–

–

68

160,047

1,008,152(182,918)

1,343

260,827–(13,365)

1,074,038

1,235,509(237,558)

1,436

260,827–(13,297)

1,246,916

Note: The amounts include changes arising from the remeasurement of lease liabilities.

―73―37. RELATED PARTIES(1) Related party transactions
Material transactions of the Group with its related parties were as follows:
Fiscal year ended February 28, 2022
(Millions of yen)
Category
Parentcompany

Name of the company orindividual

Related-party
relationships

Mitsubishi Corporation

Transactions underthe businessalliance agreement

Mitsubishi Shokuhin Co.,Ltd.

Customer andsupplier ofmerchandise

Companies
having thesame parent
Mitsubishi Corporation
Financial & Management
Services (Japan) Ltd.
Foodlink Corporation
Mitsubishi Corporation
Packaging Ltd.
Gourmet Delica Co., Ltd.

Lender

Supplier ofmerchandise
Supplier ofmerchandise
Supplier ofmerchandise

Amount oftransaction

Outstandingbalance

52,062–

Payment of guarantee fees

40

Purchases for Companyoperated stores

10,01154,552[Purchases for franchised
stores][689,330]–

Sales of processed foods, etc.

294,320

26,522

Purchase of processed foods,
etc.

54,643

4,285

Transportation expenses

56,354

4,789

Transportation expenses
received

56,174

4,332

Repayment of funds

573,250

Borrowing of funds

561,242

Description of transaction
Acceptance of debt guarantees

52,062

Interest on borrowings

105–

Purchase of meat, etc.

15,326

1,123

16,034

2,678

30,085

2,318

Purchase of packaging
materials, etc.
Purchase of home-meal
replacement, etc.

―74―

Fiscal year ended February 28, 2023

Category
Parentcompany

Name of the company orindividual
Mitsubishi Corporation

Mitsubishi Shokuhin Co.,Ltd.

Companies
having thesame parent

Related party
relationships
Transactions underthe businessalliance agreement

Customer andsupplier ofmerchandise

Mitsubishi Corporation
Financial & Management
Services (Japan) Ltd.

LenderKCS Co., Ltd.

Customer andsupplier ofmerchandise

Foodlink Corporation
Mitsubishi Corporation
Packaging Ltd.
Gourmet Delica Co., Ltd.

Supplier ofmerchandise
Supplier ofmerchandise
Supplier ofmerchandise

Description of transaction(Millions of yen)Amount of Outstandingtransaction
balance

Acceptance of debt guarantees

41,900–

Payment of guarantee fees
Purchases for Companyoperated stores[Purchases for franchised
stores]Sales of processed foods, etc.
Purchase of processed foods,
etc.
Transportation expenses
Transportation expenses
received
Repayment of funds
Borrowing of funds

3

0

8,881

59,983[718,717]–

314,811

29,19058,3984,426

55,811

4,758

58,741

4,751

246,223240,561

41,90059–

Interest on borrowings
Purchases for Companyoperated stores[Purchases for franchised
stores]Sales of processed foods, etc.
Purchase of meat, etc.
Purchase of packaging
materials, etc.
Purchase of home-meal
replacement, etc.

―75―

1,818

7,368

[88,604]
45,1193,696

16,522

1,831

17,1193,074

30,9072,714

(Terms and conditions of transactions and their determination policies, etc.)
1. The Company has received a debt guarantee for borrowings from Mitsubishi Corporation Financial & Management Services(Japan) Ltd.
The guarantee fee rates are determined reasonably, considering the market interest rates.
2. Terms and conditions for the purchase of merchandise are determined in the same manner as general terms and conditions oftransactions.
The amounts of purchases for franchised stores in square brackets [ ] are settled by the Company as an agent, and are not directtransactions with the Company.
3. Interest rates on borrowings are determined reasonably, considering the market interest rates.
4. Amount of transaction represents gross transaction amount.
(2) Remunerations for major executives
Remunerations paid to major executives of the Group were as follows:(Millions of yen)
Fiscal year ended
February 28, 2022

Fiscal year ended
February 28, 2023

Remuneration for directors (and other officers)

188

163

Stock options as share-based compensation

69

38

Note: Major executives are directors of the Company.
38. COMMITMENTS
Commitments to expenditures subsequent to the closing date were as follows:(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

As of February 28, 2023

4,724

1,987

23

4

–

–

40,82539,41737,00345,553

41,40437,026

Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of right-of-use assets (Note)
Total

Note: These are contracts for leases that have been committed but not yet commenced.
The contractual amounts primarily arose from lease commitments relating to the land or buildings for the stores in theDomestic Convenience Store Business.
39. SUBSEQUENT EVENTS
Not applicable.
40. INTERESTS IN OTHER ENTITIES(1) Major subsidiaries and associates
Subsidiaries and associates are as disclosed in “I. Overview of the Company, 4. Subsidiaries and Other Affiliated Entities.”(2) Subsidiaries with material non-controlling interests
The Group has no subsidiaries with material non-controlling interests.

―76―41. FIRST-TIME ADOPTION
The Lawson Group has disclosed its consolidated financial statements in compliance with IFRS from the fiscal year ended
February 28, 2023. The consolidated financial statements for the year ended February 28, 2022, were the most recent financial
statements prepared in accordance with Japanese generally accepted accounting principles (“GAAP”), and the date of transition to
IFRS (hereinafter, the “IFRS Transition Date”) is March 1, 2021.
(1) Exemptions under IFRS 1
In principle, IFRS requires that a company adopting IFRS for the first time (hereinafter, “first-time adopter”) applies the standards
required under IFRS retrospectively. However, for some of the standards required under IFRS, IFRS 1 specifies standards for whichapplication of the exemption is required and those for which the application of the exemption is voluntary. The impact due to theapplication of these exemptions is reflected as an adjustment to retained earnings and other components of equity at the IFRSTransition Date. The exemptions that the Group applies in connection with the transition from Japanese GAAP to IFRS were as
follows:(i) Business combinations
A first-time adopter may elect not to apply IFRS 3 Business Combinations (hereinafter, “IFRS 3”) retrospectively to businesscombinations that occurred before the IFRS Transition Date. The Group elected not to apply IFRS 3 retrospectively to businesscombinations that occurred before the IFRS Transition Date. Accordingly, goodwill and equivalent to goodwill in equity method
associates arising from business combinations that occurred before the IFRS Transition Date were recorded at the carrying amountunder Japanese GAAP at the IFRS Transition Date.
However, goodwill was tested for impairment as of the IFRS Transition Date, irrespective of whether there was any indicationof impairment.
(ii) Exchange differences on translation of foreign operations
Under IFRS 1, entities can elect either to deem accumulated exchange differences on translation of foreign operations to be
zero as of the IFRS Transition Date, or to retroactively calculate the exchange differences to the date of the founding or acquisitionof the relevant subsidiary or other entities. The Group elected to deem the cumulative amount of exchange differences ontranslation of foreign operations to be zero as of the IFRS Transition Date.
(iii) Deemed cost
Under IFRS 1, the fair value of property, plant and equipment, investment property and intangible assets at the IFRS Transition
Date can be used as deemed cost. The Group uses the fair value at the IFRS Transition Date as the deemed cost for certain items
of property, plant and equipment (buildings and structures).
(iv) Leases
IFRS 1 allows a first-time adopter to determine whether or not an arrangement contains a lease on the basis of facts andcircumstances existing at the IFRS Transition Date. In addition, IFRS 1 permits a first-time adopter to measure a lease liability
at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the IFRSTransition Date, and to measure a right-of-use asset at an amount equal to the lease liability. Furthermore, IFRS 1 permits afirst-time adopter, to recognize a lease for which the lease term ends within 12 months of the IFRS Transition Date or for which
the underlying asset is of low value as an expense and initial direct costs are excluded from the measurement of right-of-use
assets at IFRS Transition Date.
The Group applies these exemptions to recognize and measure leases.
(v) Designation of financial instruments recognized prior to the IFRS Transition Date
IFRS 1 allows a first-time adopter to designate changes in fair value of equity instruments recognized before the IFRSTransition Date as financial assets measured through other comprehensive income on the basis of facts and circumstances existingat the date of transition. The Group determined the classification based on the facts and circumstances that existed at the IFRS

―77―

Transition Date and designated equity instruments as financial assets measured through other comprehensive income.
(vi) Share-based payment transactions
IFRS 1 encourages, but does not require a first-time adopter to apply IFRS 2 Share-based Payment (hereinafter, “IFRS 2”)
retrospectively to share-based payments vested before the IFRS Transition Date. The Group elected not to apply IFRS 2
retrospectively to share-based payments vested before the IFRS Transition Date.
(2) Mandatory exceptions under IFRS 1IFRS 1 prohibits retrospective application of IFRS standards with respect to “estimates” and “classification and measurement offinancial instruments,” etc.
The Group has applied IFRS standards to these items prospectively from the IFRS Transition Date.

―78―

(3) Reconciliations
Reconciliations required to be disclosed in the first-time adoption of IFRS were as follows.
In the reconciliations below, “Reclassification” includes items that do not affect retained earnings and comprehensive income,while “Differences in recognition and measurement” include items that affect retained earnings and comprehensive income. As a
“Difference in scope of consolidation,” certain insignificant subsidiaries that were not included in the scope of consolidation andwere classified as non-consolidated subsidiaries under Japanese GAAP, are included in the scope of consolidation under IFRS.
Reconciliation of equity as of the IFRS Transition Date (March 1, 2021)(Millions of yen)Line item
under Japanese GAAP

Japanese
GAAP

Differences
Difference ininReclassification scope ofrecognition
consolidationandmeasurement

IFRS

Notes

Line item under IFRS

AssetsAssetsCurrent assets

Current assets

Cash and deposits

402,584(1,447)

2,417–

403,554(a)Cash and cash
equivalents

Accounts receivabledue from franchised
stores46,385

171,488(250)(10,350)

207,273(b)

Trade and otherreceivables

Lease receivables

16,621–––

16,621

Merchandise
Accounts receivableother

20,657

760

1,374

(252)

22,539(c)

161,062(161,062)

–

–

–

(b)

43,519(36,097)

(820)

–

6,601

Other

–

21,506371(9,171)

12,706

Allowance for
doubtful accounts

(20)

20

–

–

–

Total current assets

690,811(4,832)

3,093(19,774)

669,298

Non-current assets
Property and store
equipment

Finance leasereceivables(a),(b),(c),(d)Total current
assets(145,430)

2,756(58,137)

166,829Ⓐ–

193,257

2,399

838,851

1,034,508

Ⓑ

–

–

–

36,73736,737

Goodwill

38,215

–

1,009

–

39,224

Other intangible
assets48,1919,170

122(1,440)56,044Ⓒ

9,691(3,138)39

6,592

103,030

(626)

303

(8,879)93,82927,624(6,618)(8,900)(216)

11,888(d),(e)40,621(40,621)

–

–

–

(d),Ⓑ

Deferred tax assets

33,484–86

16,71350,284Other

16,474(14,654)

35

4,993

6,849

(d)

(663)

663

–

–

–

(d)

674,618

4,832(5,324)

828,662

1,502,788

1,365,430–(2,231)

808,887

2,172,086

Allowance for
doubtful accounts
Total non-current
assetsTotal assets―79―

Non-current assets
Property, plantand equipment
Right-of-use
assetsInvestment
property
Goodwill
Intangible assets–

Investment
securities
Long-term loans
receivable

Other financial
assetsOther current
assets(b),(d)367,640

Guarantee deposits

Inventories(e)

Investments
accounted forusing equity
methodGuarantee
deposits
Other financial
assetsDeferred tax
assetsOther non-current
assetsTotal non-current
assetsTotal assets

(Millions of yen)Line item
under Japanese GAAP

Japanese
GAAP

Differences
Difference ininReclassification scope ofrecognition
consolidationandmeasurement

IFRS

Notes

Line item under IFRS

Liabilities

Liabilities and equity

Current liabilities
Accounts payabletrade
Accounts payableother
Deposits received
Short-term loans
payableCurrent portion of
long-term loans
payableCurrent liabilities
Trade and otherpayables127,486

92,646997(7,731)

213,398(f)

90,798(90,798)

–

–

–

(f)

246,11056,45623(2,516)300,073(g)

42,320100,000

(700)

(24)

141,595

100,000(100,000)–––

Income taxes payable

4,078

–

31

–

4,109

Lease obligations

44,584(44,584)

–

–

–

(h)

Call money
Deposits received forbanking business

40,000(40,000)

–

–

–

(h)

52,168(52,168)

–

–

–

(g)

–

84,588

747

86,262

171,598

(h)

4,818

(4,818)

–

–

–

(i)

–

71

–

2,467

2,539

Provision for bonuses

Deposits received
Borrowings

Income taxes
payableOther financial
liabilities
Provisions(f),(h),
(i)

Other

15,388

2,892

315

1,475

20,071

Total current
liabilities

767,754

4,284

1,413

79,932

853,385

Other current
liabilities
Total current
liabilities
Non-current
liabilities

130,000

–

–

(175)

129,824

Borrowings

121,491–

1,502

763,611886,605Ⓑ–

15,845–

2,249

18,094(h)

Net defined benefit
liability

16,278

–

148

113

16,540Ⓓ

Deferred tax liabilities

485

–

–

–

485

35,694

–

–

1,714

37,409

277

(277)

–

–

–

20,516(19,852)

56

2,750

3,470

324,743(4,284)

1,707

770,264

1,092,430

1,092,498

–

3,121

850,196

1,945,816

Non-current liabilities
Long-term loans
payableLease obligations

Asset retirement
obligations
Provision for
retirement benefits to
executive officers andaudit and supervisoryboard members
Other
Total non-current
liabilities
Total liabilities

―80―

(i)

(h)

Lease liabilities
Other financial
liabilities
Retirement benefit
liability
Deferred tax
liabilities
Provisions

Other non-current
liabilities
Total non-current
liabilities
Total liabilities

(Millions of yen)Line item
under Japanese GAAPNet assets
Capital stock
Capital surplus
Treasury shares
Accumulated othercomprehensive
incomeSubscription rights tosharesRetained earnings
Non-controllinginterests
Total net assets
Total liabilities and net
assetsJapanese
GAAP

Differences
Difference ininReclassification scope ofrecognition
consolidationandmeasurement

IFRS

Notes

Line item under IFRS(j)

EquityShare capital
Capital surplus

58,50646,494

–
333

–
–

–
–

58,50646,828

(991)

–

–

–

(991)

5,123

–

–

(4,511)

611

Ⓓ,Ⓔ

333

(333)

–

–

–

(j)

158,498–(6,396)(34,422)

117,679

Ⓕ

4,965

–

1,043

(2,374)

3,634

272,931–(5,352)(41,308)

226,270

1,365,430–(2,231)

808,887

2,172,086―81―

Treasury shares
Other componentsof equity

Retained earnings
Non-controllinginterests
Total equity
Total liabilities andequityReconciliation of equity as of February 28, 2022
(Millions of yen)Line item
under Japanese GAAP

Japanese
GAAP

Differences
Difference ininReclassification scope ofrecognition
consolidationandmeasurement

IFRS

Notes

Line item under IFRS

AssetsAssetsCurrent assets

Current assets

Cash and deposits

388,463

(18)

4,519

32

392,996(a)Cash and cash
equivalents

Accounts receivabledue from franchised
stores47,202

156,872(1,402)(9,267)

193,405(b)

Trade and otherreceivables

Lease receivables

15,071–––

15,071

Merchandise
Accounts receivableother

22,128

792

2,399

(254)

25,066(c)

146,443(146,443)

–

–

–

(b)

48,334(38,128)(1,321)

–

8,885

–

22,240876(10,663)

12,453

Allowance for
doubtful accounts

(17)

17

–

–

–

Total current assets

667,627(4,667)

5,071(20,152)

647,878368,768(142,779)

4,137(53,306)

176,820Ⓐ–

187,433

5,944

821,0811,014,459

Ⓑ

–

–

–

41,03741,037

Goodwill

34,459–11,2273,829

49,516

Other intangible
assets43,2869,203

75(1,313)

51,251Other

Non-current assets
Property and store
equipment

Finance leasereceivables(a),(b),(c),(d)Ⓒ(2,936)27

6,778

Guarantee deposits

103,277

(537)

336

(8,920)94,155Investment securities

21,738

4,062(19,769)

(93)

5,937

(d),(e)Long-term loans
receivable

38,044(38,044)

–

–

–

(d),Ⓑ

Deferred tax assets

34,736–122

16,402

51,261

Other

26,066(25,119)

31

4,703

5,682

(d)

(759)

759

–

–

–

(d)

669,618

4,667

(831)

823,445

1,496,900

1,337,245

–

4,240

803,293

2,144,778―82―

Total current
assetsNon-current assets
Property, plant,
and equipment
Right-of-use
assetsInvestment
property
Goodwill
Intangible assets

9,687

Total assets

Other financial
assetsOther current
assets(b),(d)–Allowance for
doubtful accounts
Total non-current
assetsInventories(e)

Investments
accounted forusing equity
methodGuarantee
deposits
Other financial
assetsDeferred tax
assetsOther non-current
assetsTotal non-current
assetsTotal assets

(Millions of yen)Line item
under Japanese GAAP

Japanese
GAAP

Differences
Difference ininReclassification scope ofrecognition
consolidationandmeasurement

IFRS

Notes

Liabilities andequityCurrent liabilities

Liabilities
Current liabilities
Accounts payabletrade
Accounts payableotherLine item under
IFRS

Trade and otherpayables125,681

92,564

2,997(7,514)

213,728(f)

90,412(90,412)

–

–

–

(f)

151,809

94,829202(1,356)245,485(g)

47,07220,000300–

67,37220,000(20,000)–––

Income taxes payable

7,368

–

35

–

7,403

Lease obligations

45,955(45,955)

–

–

–

(h)

Call money
Deposits received forbanking business

108,000(108,000)

–

–

–

(h)

91,420(91,420)

–

–

–

(g)

–

153,955

1,938

90,952

246,847

(h)

4,854

(4,854)

–

–

–

(i)

–

31

–

2,545

2,576

Other

12,117

2,668

414

1,488

16,688 (f),(h),(i)Total current
liabilities

704,691

3,406

5,889

86,114800,102

Other current
liabilities
Total current
liabilities
Non-current
liabilities

160,000

–

92

(107)

159,984

Borrowings

118,445–3,888

746,980

869,314Ⓑ–

17,282490

2,034

19,808(h)17,438

–

140

139

17,718

Ⓓ

449

–

–

9

459

36,622

–

–

1,935

38,557

248

(248)

–

–

–

Other

20,875(20,441)

55

2,649

3,140

Total non-current
liabilities

354,080(3,406)

4,666

753,642

1,108,982

1,058,771–

10,556

839,756

1,909,085

Deposits received
Short-term loans
payableCurrent portion of
long-term loans
payableProvision for bonuses

Borrowings

Income taxes
payableNet defined benefit
liability
Deferred tax
liabilities
Asset retirement
obligations
Provision for
retirement benefits to
executive officers
and audit andsupervisory board
members

Total liabilities―83―

Other financial
liabilities
Provisions

Non-current liabilities
Long-term loans
payableLease obligations

Deposits
received(i)(h)

Lease liabilities
Other financial
liabilities
Retirement
benefit liability
Deferred tax
liabilities
Provisions

Other noncurrent
liabilities
Total noncurrent
liabilities
Total liabilities

(Millions of yen)Line item
under Japanese GAAP

Japanese
GAAP

Differences
Difference ininReclassification scope ofrecognition
consolidationandmeasurement

IFRS

Notes

Net assets

EquityCapital stock

58,506–––58,506

Capital surplus

46,495368–

35

46,899

(973)

–

–

–

(973)

7,563

–

384

(6,359)

1,588

368

(368)

–

–

–

(j)

Retained earnings

161,299–(7,713)(27,753)

125,832Ⓕ

Non-controllinginterests

5,213

–

1,012

(2,386)

3,839

278,473–(6,316)(36,463)

235,693

1,337,245

–

4,240

803,293

2,144,778

Treasury shares
Accumulated othercomprehensive
incomeSubscription rights tosharesTotal net assets
Total liabilities and net
assetsLine item under
IFRS

―84―

Share capital
(j)

Ⓓ and
Ⓔ

Capital surplus
Treasury shares
Other
components ofequityRetainedearnings
Non-controllinginterests
Total equity
Total liabilities
and equity

Reconciliation of income and comprehensive income for the fiscal year ended February 28, 2022
(Millions of yen)Line item
under Japanese GAAP
Gross operating revenue

Differences
Difference ininJapanese
Reclassification scope ofrecognition
GAAP
consolidationandmeasurement
698,371(205)
12,833
232,207

IFRS

Notes

Line item under IFRS

943,206(k)

Operating revenues

Cost of sales

199,738–

6,949

248,201

454,889

Operating gross profit

498,633

(205)

5,883

(15,994)

488,317

Selling, general, andadministrative expenses

451,537

496

6,960

(23,119)(k),(n),435,874 Ⓒ,and
Ⓓ

–

5,021

160

(1,716)

3,465

(l)

Other income–

21,586351(2,860)19,077(l)Other expenses

Non-operating income

6,420(6,420)–––Non-operating expenses

5,944(5,944)–––Extraordinary income

1,103(1,103)–––Extraordinary losses

20,576(20,576)

–

–

–

–

2,449

(186)

2,401

4,664

Finance income

–

4,231

182

4,404

8,819

(l)
(l) and
(n)

–

50

354

27

432

Profit before incometaxes

28,098–(1,283)

6,294

33,109

Income taxes-current

11,226(1,160)137

215

10,418

Income taxes-deferred(1,160)

1,160

–

–

–

Profit18,032–(1,420)6,078

22,690

Profit attributable toowners of parent

17,900–(1,371)

6,096

22,625

131

–

(48)

(17)

65

Profit attributable tonon-controlling interests

―85―

(l)

Cost of sales
Operating grossprofitSelling, general andadministrative
expensesFinance costs
Share of profit (loss)of investments
accounted for using
equity method
Profit before tax(m)Income tax expense

ProfitProfit attributable toowners of parent
Profit attributable tonon-controllinginterests

(Millions of yen)Line item
under Japanese GAAP
ProfitDifferences
Difference ininJapanese
Reclassification scope ofrecognition
GAAP
consolidationandmeasurement
18,032–(1,420)
6,078

IFRS

Notes

22,690

ProfitItems that will not bereclassified to profit
or loss
Net change in fairvalue of equity
instruments
designated asmeasured at fairvalue throughothercomprehensive
incomeRemeasurementsof defined benefit
plans

Other comprehensive
incomeValuation difference
on available-for-salesecurities

(196)

–

–

(1,049)(1,245)Ⓔ

Remeasurements ofdefined benefit plans

(92)

–

–

(134)

(227)

Ⓓ

Revaluation reserve
for land

138

–

–

(138)

–

Foreign currencytranslation adjustment

Total othercomprehensive
incomeComprehensive income

Line item under IFRS

–

–

(10)

–

(10)

2,730

–

342

41

3,114

–

–

–

29

29

2,580

–

332

(1,251)

1,661

20,613–(1,088)

4,827

24,352Ⓔ

Share of othercomprehensive
income ofinvestments
accounted forusing equity
methodItems that may bereclassified to profit
or loss
Exchangedifferences ontranslation offoreign operations
Share of othercomprehensive
income ofinvestments
accounted forusing equity
methodOther
comprehensive
incomeComprehensive
income(4) Note on reclassifications and reconciliations of equity, profit and loss, and comprehensive income(Reclassifications)
In accordance with IFRS, the Group has reclassified certain elements of equity, profit and loss, and comprehensive income. The
main changes were as follows:(a) Cash and deposits
Time deposits with maturities of more than three months, which were included in “Cash and deposits” under Japanese GAAP,
are reclassified to “Other financial assets (current)” under IFRS.
(b) Trade receivables“Accounts receivable-other” and “Accounts receivable-due from franchised stores,” which were separately presented, and“Accounts receivable-trade” and “Deposits paid,” which were included in “Other” in the “Current assets” under Japanese GAAP,
are reclassified and presented as “Trade and other receivables” under IFRS. In addition, “Allowance for doubtful accounts(current)” related to “Trade and other receivables” is also reclassified and is directly deducted from “Trade and other receivables,”―86―which are presented on a net basis.
(c) Inventories“Merchandise,” which was separately presented and supplies, raw materials, and finished goods, which were included in“Other” in the “Current assets” under Japanese GAAP, are presented as “Inventories” under IFRS.
(d) Other financial assets“Investment securities” (except investment in equity-method associates), and “Long-term loans receivable” (except
construction cooperation payments), which were separately presented, short-term loans receivable and advances paid, whichwere included in “Other” in the “Current assets,” and insurance funds, which was included in “Other” in “Investments and otherassets” under Japanese GAAP, are presented as “Other financial assets” under IFRS. In addition, the “Allowance for doubtful
accounts (current)” related to “Other financial assets” and the “Allowance for doubtful accounts (non-current),” which were
presented separately under Japanese GAAP, have been reclassified and are directly deducted from “Other financial assets,” which
are presented on a net basis.
(e) Investments accounted for using equity method“Investments accounted for using equity method,” which were included in “Investment securities” under Japanese GAAP, areseparately presented under IFRS.
(f) Trade payables“Accounts payable-trade” and “Accounts payable-other,” which were separately presented, and Accounts payable-due tofranchised stores, which were included in “Other” in “Current liabilities” under Japanese GAAP, are reclassified as “Trade andother payables” under IFRS.
(g) Deposits received“Deposits received for banking business,” which was separately presented under Japanese GAAP, is reclassified as “Deposits
received” under IFRS.
(h) Other financial liabilities“Lease obligations” and “Call money,” which were separately presented in the “Current liabilities,” and guarantee deposits
received, which were included in “Other” in “Non-current liabilities” under Japanese GAAP, are presented as “Other financial
liabilities” under IFRS.
(i) Provisions“Provision for bonuses,” which was separately presented under Japanese GAAP, is reclassified as “Other current liabilities”
under IFRS. Moreover, “Asset retirement obligations,” which was separately presented under Japanese GAAP, is presented as“Provisions” under IFRS.
(j) Capital surplus“Subscription rights to shares,” which was separately presented under Japanese GAAP, is included in “Capital surplus” underIFRS.
(k) Sales
Compensation to merchants, which was included in “Selling, general and administrative expenses” under Japanese GAAP, isoffset against net sales as consideration paid to customers under IFRS.
(l) Non-operating income (expenses) and extraordinary income (losses)
The items presented as “Non-operating income,” “Non-operating expenses,” “Extraordinary income” and “Extraordinary
losses” under Japanese GAAP are presented as “Finance income” and “Finance costs” under IFRS for financial-related gains andlosses, while other items are presented as operating items in “Other income,” “Other expenses,” and “Share of profit (loss) ofinvestments accounted for using equity method.”(m) Income tax expense“Income taxes-current” and “Income taxes-deferred,” which were separately presented under Japanese GAAP, are presented
collectively as “Income tax expense” under IFRS.
(n) Periodic interest costs for discount calculation
Periodic interest costs on asset retirement obligations etc. incurred over time, which were included in “Selling, general andadministrative expenses” under Japanese GAAP, are included in “Finance costs” under IFRS in accordance with the regulations.

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(Differences in recognition and measurement)Ⓐ Property, plant, and equipment
Upon first-time adoption, the Company elected the exemption provided in IFRS 1 and used the fair value as of the IFRSTransition Date of certain property, plant, and equipment (buildings and structures) as deemed cost under IFRS at that date, andtransferred the difference between the fair value and the Japanese GAAP carrying amount to retained earnings.
The fair value of such property, plant, and equipment as of the IFRS Transition Date was ¥35,909 million, a reduction of¥44,315 million compared with the carrying amount in accordance with Japanese GAAP. Furthermore, fair value is determinedby third-party appraisals and other methods and is classified as Level 3.
Ⓑ Right-of-use assets
Operating leases expensed under Japanese GAAP are recorded as both a right-of-use asset and a lease liability under IFRS.
Furthermore, construction cooperation payments, which were separately classified as “Long-term loans receivable” underJapanese GAAP, are reclassified as “Right-of-use assets” and offset against “Lease liabilities.”Ⓒ Recorded amount of goodwill and goodwill to equity-method associates
Under Japanese GAAP, goodwill is amortized but, under IFRS, goodwill is not amortized, but tested for impairment eachperiod beginning on the IFRS Transition Date.
In addition, goodwill of equity-method associates is amortized under Japanese GAAP but not under IFRS, and thus
amortization ends after the IFRS Transition Date.
Ⓓ Employee benefit
i. Liabilities have been recorded for unused paid vacation and long service compensation, which were not accounted for underJapanese GAAP, and an adjustment has been made to “Selling, general, and administrative expenses.”ii. Unrecognized actuarial gains and losses on defined benefit plans were included in “Accumulated other comprehensive income”
in Japanese GAAP, whereas in IFRS they are recognized in other comprehensive income when incurred and immediatelytransferred to retained earnings.
Ⓔ Other components of equity
i. The Company has elected the exemption provided in IFRS 1 and transferred the balance of all accumulated differences ontranslation of foreign operations to retained earnings as of March 1, 2021, the IFRS Transition Date.
ii. Under Japanese GAAP, unlisted shares were carried at cost and, if necessary, impairment loss was recognized when thefinancial position of the issuing company deteriorated, whereas under IFRS, the Company has elected to measure them at fairvalue through other comprehensive income.
Ⓕ Retained earnings(Millions of yen)
IFRS Transition Date
(As of March 1, 2021)

As of February 28, 2022

Adjustments due to difference in scope of
consolidation(6,396)(7,713)Adjustments for property, plant, and equipment(30,659)(27,611)

Adjustments for right-of-use assets and leaseliabilities(1,400)(3,045)–

3,857

Adjustments for employee benefits(2,035)(2,115)Adjustments for other components of equity

4,923

6,667

Other

(5,251)(5,505)(40,818)(35,466)

Adjustments for goodwill

Total(5) Adjustments for cash flows for the fiscal year ended February 28, 2022
Under Japanese GAAP, lease payments under operating leases are presented in cash flows from operating activities. However,under IFRS, all leases should be recognized as lease liabilities, in principle, and repayments of lease liabilities are presented in cash
flows from financing activities. As a result, “Net cash provided by (used in) financing activities” decreased by ¥123,243 million,
while “Net cash provided by (used in) operating activities” increased by ¥123,243 million.

―88―42. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements were approved by Mr. Masayuki Itonaga, member of the Board, executive managing officer,
chief financial officer on 22 September 2023.

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