[Translation]
May 25, 2020
Kakuyasu Co.,Ltd.
Representative Director and President

Junichi Sato（Ticker Code：7686 Tokyo Stock Exchange Second Section）
Inquiry toExecutive Officer and General Manager

Yoshiyuki Maegaichi

of Finance and Accounting Dept

Transition to a Holding Company Structure through Establishing Split Companies,
Execution of an Agreement of Corporate Split, and Change in Trade Name

This is to announce that Kakuyasu Co., Ltd. (the "Company") resolved to execute anincorporation-type split (hereinafter the "Incorporation-Type Split") to create, on October 1,2020, a holding company structure, change its business name to Kakuyasu Group Co., Ltd. on
the same date, and revise its Articles of Incorporation to change the business purpose, at theBoard of Directors meeting held today. The purpose lies to align with the strategic corporategroup management structure that the Company will have. The new structure will have clearly
separate functions for strategic management and business execution. The split and the partial
revision to the Articles of Incorporation are subject to shareowners’ approval at the meeting to
be held on June 26, 2020. Since the Incorporation-Type Split will be executed by a singlecompany, certain disclosures and details have been voluntarily omitted.

1Incorporation-Type Split and change to a holding company structure

I.

Background and purpose

1.

On December 23, 2019, the Company was listed in the 2nd Section of the Tokyo Stock Exchange.
The Company’s management philosophy is centered around its determination andpreparedness to meet any customers’ requests. The Company’s stores are named Anything

Liquor Store Kakuyasu, reflecting the philosophy. When listed, the Company’s growth strategy
was to transform into a delivery platform company by leveraging its existing distribution
infrastructure and to implement the Kakuyasu model in major provincial cities. On May 1,2020, the Company acquired Sannoh Co., Ltd. in Fukuoka as its first step towards expansion
into provincial cities.
The domestic liquor market is on a downward trend and is facing a major turning point due tothe coronavirus pandemic. The Company expects that changes in the business environment
will accelerate.
To achieve sustainable growth in the business environment, the Company believes it needs tocreate a flexible and dynamic management structure that allows the Company to quickly
respond to rapidly changing market environments. The Company has thus decided to establish
a holding company structure.
The new structure will clearly separate the Kakuyasu Group’s strategic management function
and business execution function. As a result, the operating company will have theresponsibility and authority to establish a flexible business structure that enables it to respondto changes. This allows the company to execute business operations efficiently and meetcustomer expectations. The holding company aims to develop management strategies forsustainable growth of the Group, planning to consolidate operations within the Company tostrengthen and streamline the management infrastructure. The holding company structure
will allow the Company to boldly allocate management resources towards growth areas. TheCompany will take advantage of the structure to accelerate business domain expansion. Toachieve this goal, the Company will leverage business and capital alliances and M&A.

２.

Summary of the corporate split(1)

Schedule of the corporate split

・ Record date of Annual Shareowners meeting
・ Board Resolution approving the IncorporationType Split Plan

・ Resolution of Annual Shareowners meeting
・ Effective date of the split

2

March 31, 2020
May 25, 2020
June 26, 2020 (scheduled)
October 1, 2020 (scheduled)(2) Method of the split(i) Form of the split
The Company is planning a spin-off where it will become the parent company, and the spinoff company will take over the Company’s existing businesses. The spin-off company,Kakuyasu Co., Ltd., will be responsible for the businesses that primarily sell liquor andrelated goods that are owned by the Company.
(Note) The Company’s business name will change to Kakuyasu Group Co., Ltd.
(ii) Reason for choosing this form of split
The Company has adopted this form of split to facilitate an efficient change to the newstructure.

(3) Allotment of stock associated with the reorganization
In the Incorporation-Type Split, the new company, Kakuyasu Co., Ltd., will issue 500
common stocks and allot all of them to the Company.

(4) Treatment of share acquisition rights and bonds with stock acquisition rights associatedwith the reorganization
The handling of stock acquisition rights issued by the Company will remain unchanged
post-split. The Company has not issued any bonds with stock acquisition rights.
(5) Change in share capital as a result of the company split
There will be no change in the Company’s capital as a result of the split.
(6) Rights and obligations to be assumed by the succeeding company
The newly formed company will assume ownership of all rights and obligations, including
assets, liabilities, and contracts, belonging to the businesses to be spun off and employment
contracts as of the date of split in the range specified in the incorporation-type split plan.
The Company’s liabilities that are being taken over by the new company will be the joint
and several obligations of the Company and the new company.
(7) Prospect of fulfillment of debt obligations

After the split, both the Company and the newly formed company are expected to havemore assets than liabilities. Furthermore, there are no anticipated situations that could
prevent the Company and the new company from fulfilling their obligations in theirbusiness activities. The Company therefor expects that all obligations will be met.

3

３．Overview of the Companies involved in the Corporate Split（１）Overview of the Companies
Splitting Company（１）

Corporate Name

Succeeding Company

Kakuyasu Co.,Ltd.
※Kakuyasu Co.,Ltd.

The company name will bechanged to Kakuyasu Group Co.,
Ltd. on October 1, 2020.

（２）

Headquarters

2-3-1 Toshima, Kita-ku, Tokyo

2-3-1 Toshima, Kita-ku, Tokyo（３）

Name and Title ofJunichi SatoJunichi Satothe Representative

Representative Director and President

Representative Director and President（４）

Business

Selling liquor and goods

Selling liquor and goods（５）

Paid-in Capital

JPY 355 million

JPY 10 million（６）

Establishment

June 15, 1982

October 1, 2020 (scheduled)（７）# of Issued shares

7,693,000 shares

500 shares（８）

Fiscal year end

March 31

March 31

（９）

Major Shareowners

SKY Group Holdings Co.,Ltd.

and their ownershipJapan Trustee Services Bank, Ltd.
(trust account)63.93％

Kakuyasu Group Co.,Ltd.

100%

7.62％

Kakuyasu

Employee

Association

4.52％

Shareholding

Shigeki Okamura 1.40％
TAKARA SHUZO CO.,LTD

0.64％

Japan Master Trust Bank, Ltd. (trustaccount) 0.62％
Daiwa Securities Co.,Ltd. 0.35％
Akito Iida 0.30％
Yoshikawa Method Co.,Ltd. 0.29％
Nomura Securities

0.27％（２）Consolidated Financial Conditions and Results of theFiscal year ending

March 31, 2018

March 31. 2019

March 31, 2020

Net Assets

JPY 4,315 million

JPY 4,682 million

JPY 5,162 million

Total Assets

JPY 28,551 million

JPY 28,920 million

JPY 28,472 million

BVPS

JPY 596.09

JPY 646.82

JPY 671.02

Sales

JPY 110,044 million

JPY 108,715 million

JPY 108,562 million

Operating Profit

JPY 927 million

JPY 1,779 million

JPY 1,259 million

Recurring Profit

JPY 1,071 million

JPY 1,806 million

JPY 1,259 million

4Net Profit Attributable to

JPY 434 million

JPY 745 million

JPY 513 million

EPS

JPY 60.04

JPY 103.03

JPY 69.86

BPS

JPY 850.00

JPY 996.00

JPY 49.80

Owners of the Parent company４．Outline of the Splitting Business（１）Details of the Splitting Business
Sale of liquor and goods including foods and wholesale（２）Financial results of businesses to be split or succeeded
Splitting BusinessSucceeding Business

（a）

（ｂ）

Sales

JPY 108,401 million

JPY 108,401 million

100.0％

Gross Profit

JPY 21,436 million

JPY 21,436 million

100.0％（a/b）（３）Assets and liabilities to be split or succeeded and their book value as of March 31, 2020
AssetsLiabilities
Book value

Book value

Current Assets

JPY 13,383 million

Current Liabilities

JPY 14,161million

Non-current Assets

JPY 5,672 million

Non-current Liabilities

JPY 1,030 million

Total Assets

JPY 19,055 million

Total Liabilities

JPY 15,192 million※Assets and liabilities will be confirmed subject to any increase or decrease up to the day before theeffective date.

５．Post-split corporate structure
Splitting company

Newly established company

（１）

Name

Kakuyasu Group Co.,Ltd.

Kakuyasu Co.,Ltd.

（２）

Headquarters

2-3-1 Toshima, Kita-ku, Tokyo

2-3-1 Toshima, Kita-ku, Tokyo（３）

Representative

Junichi Sato

Junichi SatoRepresentative Director and President

Representative Director and President（４）

BusinessPure holding company

Selling liquor and goods（５）

Paid-in Capital

JPY 355 million

JPY 10 million（６）

Fiscal year end

March 31

March 31

６．Future Outlook
This transaction constitutes inter-corporate restructure. As a consequence, the impact
entailing the transaction to the Company will be minor.

5