(TRANSLATION ONLY)
Securities Code: 2651
April 26, 2019
To All Shareholders with Voting Rights
Sadanobu Takemasu
President, Representative Director
Lawson, Inc.
11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 44th ORDINARY GENERAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 44th Ordinary General Meeting of Shareholders to be held as follows.
If you are unable to attend the meeting, please exercise your voting rights using either of the methods described below
after reading the attached REFERENCE DOCUMENTS FOR THE GENERAL MEETING OF SHAREHOLDERS.
[Voting in Writing (by Mail)]
Please indicate your approval or disapproval of the matters to be resolved on the Voting Rights Exercise Form
enclosed herewith and return it so that it reaches us by 5:45 p.m. on Monday, May 20, 2019.
[Voting by Electronic Means (Internet, etc.)]
Please exercise your voting rights by 5:45 p.m. on Monday, May 20, 2019 after reading the attached document“Exercising Voting Rights via the Internet, etc.”
1. Date and Time: 10:00 a.m., Tuesday, May 21, 2019
2. Venue: Tokyo International Forum, Hall C, 5-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
3. Objectives of the Meeting
Reports:
The Business Report, the Consolidated Financial Statements and the Nonconsolidated Financial Statements for the
44th Fiscal Term (from March 1, 2018 to February 28, 2019), and the Audit Reports Thereof
Matters to Be Resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Eight (8) Directors
Proposal No. 3: Election of Two (2) Audit and Supervisory Board Members••

If you attend in person, please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at the meeting.
You do not need to enter your approval or disapproval in the Voting Rights Exercise Form if you will attend. The reception
desk will open at 9:00 a.m. Please arrive a little early because the reception desk can be congested immediately before themeeting begins.
If you wish to exercise your voting rights by proxy, your proxy is requested to present a document evidencing his/her proxy,such as a power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at the reception desk. (Thequalified proxy is limited to one shareholder having voting rights for this meeting as per the relevant provision in the Articles
of Incorporation.)

1

(TRANSLATION ONLY)

BUSINESS REPORT(March 1, 2018 through February 28, 2019)
I. CURRENT STATUS OF THE CORPORATE GROUP
1. Summary of Operations(1) Business Developments and Results of Operations
During the fiscal year under review, or fiscal 2018 ended February 28, 2019, we have advanced andaccelerated our “1000-Day Action Plan,” which is in its final fiscal year, and focused our business activities onbuilding Lawson’s next-generation convenience store model. Changes in community needs resulting from anaging population and the prevalence of the nuclear family, among others, are serving as a tailwind for theconvenience store industry. Given such a business environment, we implemented a variety of measures in order
to continue fulfilling our customers’ needs in everyday life by serving as an essential part of their communities.
Such measures included evolving our business model as a manufacturing retailer targeting small catchment
areas, raising our store productivity by making maximum use of digital technology, and taking on the challengeof launching a banking business.
In terms of operating results for the fiscal year, while gross operating revenue grew to 700,647 million yen(up 6.6%), operating income and ordinary income decreased to 60,781 million yen (down 7.7%) and 57,700
million yen (down 11.4%), respectively. Profit attributable to owners of parent decreased to 25,585 million yen(down 4.6%).
Furthermore, we also focused on improving our group-wide internal control system and addressing operating
risks based on the 2018 Basic Policy for Improvement of Internal Control Systems. We will continue promotinginternal control going forward.
Operating results by business segment were as follows:(Domestic Convenience Store Business)
In our convenience store business, we offered everyday ready-made dishes including bento lunchboxes, riceballs, deep-fried items, salads and soups at LAWSON stores. In our effort to reinforce our store capacity by
expanding our merchandise assortment offered in the evening and nighttime hours, we restructured our system
across the entire supply chain from June by changing the order placement deadline and truck delivery times. In
addition, with the aim of facilitating cash register operations and achieving higher cash-handling efficiency atstores, we completed the introduction of new point-of-sale (POS) cash registers (for sales information
management) equipped with an automatic change dispenser function at all our stores nationwide.
[Store Operations]
In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, whichemphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic itemswith high demand; and (3) keeping our stores and communities clean. Furthermore, we also actively promoted
our stores by strengthening our product lineup and improving franchise support and operations. Beginning inNovember 2018, we also added a service in which customers can earn and redeem Ponta points when theyuse Apple Pay at any LAWSON store nationwide. Ponta has become Japan’s first multi-partner loyalty card
service to allow points to be saved and redeemed simply by using Apple Pay via iPhone or Apple Watch. This
service eliminates the need for customers to present their Ponta card or launch their app as well as the needfor store staff to scan the barcodes on the Ponta cards presented, leading to improved customer convenienceand store operation productivity. Furthermore, we launched a pilot project on Lawson Smartphone CashRegister, our mobile self-service payment service option based on a dedicated app, which allows customers
to purchase items wherever they are within LAWSON stores.
[Merchandising and Service Strategies]
On the merchandise side, we revamped our basic onigiri rice ball range by improving ingredients andproduction methods including adopting a new variety of rice and a new kind of laver, which was well-received
by customers. In addition, our “Akuma-no-onigiri” (meaning “devil’s rice ball”) line also became a huge hit,pushing up sales. Our “Korega” lunchbox series made with rigorously selected ingredients and production
methods also enjoyed ongoing popularity. Furthermore, sales of our microwavable hot noodle series revampedwith new soup and noodles were also robust.
In the counter fast food range, we strengthened our assortment of ready-made dishes offered during theevening and nighttime hours by expanding our lineup of packed dishes composed mainly of items that can gostraight to the dinner table. In addition, our long-selling “Karaage-kun” chicken nuggets that crossed the 3billion-unit mark in cumulative sales continued to record robust sales.
In the dessert range, we continued offering the “Uchi Café SWEETS X GODIVA” series produced incollaboration with Godiva with well-selected ingredients and a special production method, which remained
popular especially among female customers.

2

(TRANSLATION ONLY)
On our sales promotion side, while strengthening our merchandise assortment offered during the evening
and nighttime hours, we also rolled out a special evening sales campaign, which offered a 20-yen discountwhen two applicable counter food items were purchased on weekday evenings. In addition, effective measures
to attract customers were launched, including a speed lottery capitalizing on our strength in the entertainment
field.
[Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business]
Sales
Percentage of total
Year on Year
Product group(millions of yen)(%)(%)
Processed foods
1,202,619
52.6
105.6
Fast foods

544,530

23.8

106.9

Daily delivered foods

329,545

14.4

104.8

Nonfood products

208,612

9.2

105.5

Total

2,285,308

100.0

105.8

Note: These figures include stores operated by both Lawson, Inc. and Lawson Sanin, Inc.
[Store Development]
In opening new stores, the Group continued to focus on developing profitable stores.
Regarding the entire Lawson Group, the total number of LAWSON, NATURAL LAWSON, and
LAWSON STORE100 stores opened and closed during the current fiscal year stood at 1,067 and 400 stores,
respectively, with the total number of stores reaching 14,659 as of the end of February 2019. *1
With regard to our partnership initiatives with other chain retailers in Japan, as in the previous fiscal year,
we remodeled THREE F stores operated by Three F Co., Ltd. into LAWSON THREE F stores, and SAVE
ON stores operated by Save On Corp. into LAWSON stores.
During the fiscal year under review, we remodeled 67 THREE F stores and 195 SAVE ON stores into
LAWSON THREE F stores and LAWSON stores, respectively, completing the brand transition.
In an effort to establish convenience store models catered to an aging population and rising healthconsciousness, we are building partnerships with dispensing pharmacy and drug store chains to operate
healthcare-oriented LAWSON stores that offer over-the-counter pharmaceuticals and prescription drugs, aswell as a wider assortment of cosmetics and daily necessities than conventional LAWSON stores. The numberof stores offering non-prescription drugs has reached 206 stores (includes 47 pharmacy LAWSON stores
equipped with drug-dispensing pharmacies) as of the end of February 2019. Moreover, the number of stores
offering nursing care consultation services has reached 20 as of the end of February 2019. Furthermore, wehave also been expanding our chain of “in-hospital LAWSON stores,” which feature strengthened focus on
medical, sanitary, nursing and rehabilitation supplies in addition to merchandise and services offered atstandard convenience stores. The number of such stores has reached 307 as of the end of February 2019.
Building on our expertise developed through operation of in-hospital LAWSON stores, we will continue tosupport the lives of all people interacting with hospitals.
With respect to LAWSON STORE100, we will continue to offer 100-yen items (excluding tax) by scaling
down product portions to respond to a diverse range of customer needs.
*1 The numbers of store openings and closings and total number of stores in Japan include storesoperated by Lawson, Inc., subsidiary Lawson Sanin, Inc. and three equity-method affiliates, Lawson
Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc.
[Change in Total Number of Domestic Stores]
Total stores as ofFebruary 28, 2018
LAWSON

Change during fiscal
year

Total stores as ofFebruary 28, 2019

13,044670

13,714

NATURAL LAWSON

143

(4)

139

LAWSON STORE100

805

1

806

13,992667

14,659Total

3

(TRANSLATION ONLY)[Other]As Lawson’s “last-one-mile solution,” we started offering the LAWSON FRESH PICK service(colloquially shortened to “Loppick”) in March 2018. Loppick enables customers to reserve products on a
dedicated smartphone app by 8 a.m. and receive them in the evening on the same day at their designated
LAWSON store. By leveraging our existing store and logistics network, the service offers customers the
freedom of not having to wait at home for delivery and allows them to pick up their purchased items when
they want in the evening. Loppick has become available at around 1,600 stores as of the end of February 2019.
Furthermore, in December 2018, we launched “Fresh Karaage-kun Cooking Machine,” a pilot experiment,
which employs digital technology to deep-fry chicken nuggets in one fifth of the usually required time inorder to offer freshly fried products to customers. We will look into customers’ needs for freshly fried products
and consider introducing this equipment at LAWSON stores.
As a result, Domestic Convenience Store Business posted gross operating revenue of 468,692 million yen(up 5.9% from previous fiscal year) and segment profit of 48,262 million yen (down 10.0% from previous
fiscal year).
(Seijo Ishii Business)
At Seijo Ishii stores, a high-end supermarket chain offering quality foods, we took on new challenges suchas opening stores where freshly prepared hot meals and desserts are served to order. The number of directly
operated Seijo Ishii stores including the new type of store reached 146 as of the end of February 2019. Sales
were solid and its well-selected products have remained popular among customers. By continuing to leverage
the company’s strengths including its product development expertise, know-how acquired as a manufacturingretailer, and retailing techniques, we will endeavor to enhance the brand capacity of Seijo Ishii.
As a result, Seijo Ishii Business posted gross operating revenue of 86,672 million yen (up 5.8% fromprevious fiscal year) and segment profit of 7,413 million yen (up 8.2% from previous fiscal year).
(Entertainment-related Business)
With regard to our Entertainment-related Business, the ticketing business of Lawson Entertainment, Inc.,
which forms the core of the business, continued to secure top-class transaction value in the ticketing industry.
HMV, which distributes music CDs, DVDs and books, also operates the HMV Record Shop specializing inanalog records. As of the end of February 2019, the number of HMV stores totaled 56 including the HMV
Record Shop. In November 2018, United Cinemas Co., Ltd., an operator of cinema complexes, introduced in
Fukuoka Prefecture a cutting-edge attraction theater system known as 4DX, which offers an immersive
viewing experience. In addition, United Cinemas also opened Kyushu’s first cinema theater employing
ScreenX, which provides a three-dimensional movie projection system using not only the front screen but
also the walls on both sides. As of the end of February 2019, United Cinemas operates cinema theaters at 41
sites, offering 367 screens nationwide including those operated on commission.
As a result, Entertainment-related Business posted gross operating revenue of 78,070 million yen (up 3.6%
from previous fiscal year) and segment profit of 4,499 million yen (up 16.8% from previous fiscal year).

4

(TRANSLATION ONLY)(Financial Services Business) *2
With respect to our Financial Services Business, Lawson Bank, Inc. acquired its banking license on August
10, 2018 and started providing banking services to customers on October 15. With the aim of building
awareness of the bank, we have been running TV and online commercials, implementing promotional
campaigns in which ATM users receive discount coupons for “Karaage-kun” fried chicken, “MACHI Café”
and “Uchi Café SWEETS,” and started offering ordinary savings account and fixed deposit account services.
In addition, we issued the LAWSON Ponta Plus credit card, which allows cardholders to collect Ponta points
when using their cards at LAWSON stores and other outlets. In our ATM business, the foundation of ourbanking business, we expanded our network of financial institution partners, while working to install ATMs
at locations other than LAWSON stores, including New Chitose Airport and Tokyo Metro stations. As of theend of February 2019, the number of ATMs installed nationwide reached 13,459 (up 726 from previous fiscal
year), with each ATM used 48.9 times a day on average. The total number of our financial institution partners
increased to 111 nationwide (up 21 from previous fiscal year), including online banks.*3,*4*2 Starting from the third quarter ended November 30, 2018, our Financial Services Business, which had
been included in the Other Business, has been reclassified as a separate reportable segment due to its
increased significance.
*3 JA Bank and JF Marine Bank are classified as separate financial institutions.
*4 Lawson Bank Preparatory Company, Inc. changed its name to Lawson Bank, Inc., effective July 2,
2018. Also, as a result of an absorption-type company split effective June 1, 2018, Lawson Bank, Inc.
absorbed Lawson’s ATM business of Lawson ATM Networks, Inc.
As a result, Financial Services Business posted gross operating revenue of 30,572 million yen (up 11.8%
from previous fiscal year) and segment profit of 2,223 million yen (down 48.0% from previous fiscal year).
(Other Business)
In addition to the aforementioned businesses, the Group is also involved in the Overseas Business.
With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the
People’s Republic of China, Thailand, Indonesia, the Philippines, and the United States of America (Hawaii).
In the People’s Republic of China, after being the first Japanese convenience store operator to advance into
Shanghai, we made inroads into Chongqing, Dalian, Beijing, Wuhan, and Nanjing. The number of LAWSON
stores in the entire country reached 2,007 as of the end of February 2019.
[Distribution of Lawson Brand Stores Overseas by Region]
Country/Region

Number of stores(as of February 28,
2018)
865

Change during
fiscal year
362

Number of stores(as of February 28,
2019)
1,227

China

Shanghai and surrounding area

China

Chongqing

165

33

198

China

Dalian

122

24

146

China

Beijing

73

35

108

China

Wuhan

198

110

308

China

Hefei

－

20

20

Thailand

101

19

120

Indonesia

37

5

42

Philippines

33

6

39

2

－

2

1,596

614

2,210

United States of America

HawaiiTotal

As a result, Other Business posted gross operating revenue of 45,404 million yen (up 19.2% from previous
fiscal year) and segment loss of 1,618 million yen (down 42.4% from previous fiscal year).

5

(TRANSLATION ONLY)(Environmental and Social Contribution Activities)
As part of our initiative to reduce our environmental impact, we will endeavor to save energy and resources
as well as promote waste reduction not only at LAWSON stores but also throughout the entire supply chain.
In particular, we promoted the introduction of a state-of-the-art energy-saving chlorofluorocarbon-free(CO2 refrigerant) refrigerator/freezer system with the aim of reducing electricity consumption at our storesand preventing global warming. As of the end of February 2019, the system had been installed inapproximately 3,400 stores, approximately 700 stores more than a year earlier. Compared to conventional
equipment used in our stores, the new system can reduce electricity consumption per store by around 12%.
By putting into practical use an energy-saving package model centered on this system, the Group will aim toachieve its target of using 20% less electricity per store by fiscal 2020 compared to the fiscal 2010 level.
In our efforts to save natural resources, we are striving to use less plastic by producing and distributing
reusable shopping bags, introducing biomass plastic, promoting recycling, and remodeling product containers.
Our Natural Lawson stores are advancing their initiative to adopt plastic shopping bags produced partly with
polyethylene made from sugarcane. We are also rigorously proceeding with various other measures to reduce
the use of plastic, which is currently a global issue. For example, we are conducting a monitoring survey on
the use of paper straws jointly with Yamanashi Prefecture, as well as an experiment and examination on
replacing plastic cups with paper cups for serving freshly brewed iced coffee at MACHI café.
With regard to reducing waste, we are recycling waste food and cooking oil from stores, which are being
reused as feed and fertilizer, and biodiesel fuel, respectively.
As part of our social contribution activities, we established a scholarship program for children from singleparent families in 2017 to support their education. In fiscal 2018, 400 selected recipients received scholarshipfunds. In addition, money was also raised for victims of the heavy rain disaster in July, Typhoon Jebi, and the
Hokkaido Eastern Iburi Earthquake.
On March 1, 2019, we established the SDGs Committee. As a member of society, we will continue to makegroup-wide unified efforts together with our franchised stores, customers and business partners to addresssocial and environmental issues toward the goal of achieving the SDGs.

6

(TRANSLATION ONLY)(2) Capital Expenditures
Capital expenditures of the Group during the fiscal year totaled 78,998 million yen, of which 53,507 million
yen was primarily for store facility investment in buildings, and 18,195 million yen was for the upgrading of
information systems.

(3) Changes in Operating Results and Financial Position① Changes in Operating Results and Financial Position of the Corporate Group
Fiscal 2015
Fiscal 2016
Fiscal 2017
Category/Fiscal Term
41st Term
42nd Term
43rd Term
Gross operating revenue
583,452
631,288
657,324(millions of yen)
Ordinary income (millions of yen)
69,62273,014
65,141
Profit attributable to owners of parent(millions of yen)
Profit per share (yen)Fiscal 2018
44th Term
700,647
57,70031,381

36,40026,82825,585313.81363.96268.16255.71

Total assets (millions of yen)803,212866,577

900,256

1,342,490

Net assets (millions of yen)

272,997

285,995

281,446

281,982

Net assets per share (yen)2,643.97

2,748.39

2,755.06

2,763.54

Fiscal 2017
43rd Term

Fiscal 2018
44th Term

2,110,454

2,236,125

372,891

385,678

50,50851,443② Changes in Operating Results and Financial Position of the Company
Fiscal 2015
Fiscal 2016
Category/Fiscal Term
41st Term
42nd Term
Net sales of all convenience stores
1,960,266
2,027,504(millions of yen)
Gross operating revenue
333,855
356,186(millions of yen)
Ordinary income (millions of yen)
54,98256,459Profit (millions of yen)

21,802

19,08819,41731,002

Profit per share (yen)218.02190.86

194.09309.85

Total assets (millions of yen)

714,875

767,986

798,603

838,260

Net assets (millions of yen)

243,576

237,409

233,489

240,280

Net assets per share (yen)2,432.73

2,370.59

2,331.65

2,399.24

7

(TRANSLATION ONLY)(4) Priority Issues of the Group① Provide customers with enhanced support in their daily lives
In an effort to become an indispensable part of customers’ lives in local communities, we will strive to further
expand our merchandise assortment to include a wider variety of daily necessities and ready-made dishes
offered in the evening and nighttime hours, in addition to products and services offered by conventional
convenience stores.
② Strengthen our product appeal
By evolving into a manufacturing retailer deeply engaged in activities across the entire value chain, fromprocurement of raw materials and ingredients to manufacturing, logistics and sales, we will strive to achieve
cost reduction and quality improvement in our products to further strengthen our product appeal.
③Address labor shortages
We are working to address shortages of FC store owners and store crew stemming from the declining
birthrate, the aging of the population and the increase in the number of stores. We will be recruiting new FC
store owners and pursuing multi-store operation, as well as making the maximum use of digital technology tosimplify store operation, increase efficiency, make working environments more pleasant, and reduce laborneeds to enable people of all sexes, ages and nationalities to work at our stores.
④ Take on challenges in future growth areas
We will continue to take on challenges to establish new business models in future growth areas not only inour domestic convenience store business, the core business of the Group, but also in various other fields suchas Financial Services Business, Seijo Ishii Business, Entertainment-related Business, Overseas Business. We
will also work hard to make maximum use of each Group company’s distinctive features to generate synergistic
effects.
⑤ Strive to achieve SDGs
To help resolve social issues pertinent to the Sustainable Development Goals (SDGs) adopted by the UN in
2015, the SDGs Committee, which was formed in March 2019, is clarifying the items and issues to be addressedby the Lawson Group, and will be regularly checking on the progress made in this regard to ensure the Group
is striving to resolve issues and help bring about a sustainable society.
⑥ Promote internal control systems and address operating risks
We believe that enhancing internal control across the Group as a whole and dealing with business risks are
absolutely necessary to develop our business on a continual basis. Proactive efforts in corporate governancethat will enable us to meet the expectations of all stakeholders involved with our Group will help improve ourcorporate value. We will continue focusing our efforts on enhancing internal control and addressing businessrisks.
The Company became a consolidated subsidiary of Mitsubishi Corporation in February 2017 and, although
we are publicly listed as a parent/subsidiary pair, we have appointed several independent executives having noconflict of interest with general shareholders. Five of the six directors are independent executives, and a“Nomination and Compensation Advisory Committee” comprising only non-executive directors and non-fulltime outside Audit and Supervisory Board members has been voluntarily established to deliberate on executive
compensation and candidates for representative director/director positions and to advise the Board of Directors,
constituting a system able to ensure the highest levels of management transparency and fairness.
We conduct business activities under our corporate philosophy, “Creating Happiness and Harmony in Our
Communities”. We continue to make companywide efforts to “master the basics”, “respond to changes” and“meet the challenge of further growth.”
We look forward to the continued support and encouragement of our shareholders.

8

(TRANSLATION ONLY)
2. Current Status at the End of February 2019(1) Major Business Segments of the Corporate Group and Principal Offices(Domestic Convenience Store Business)① Lawson, Inc.
Major Business:
Primarily operates the Lawson-brand franchise system and undertakes management ofcompany-operated stores as the head office of LAWSON, NATURAL LAWSON and
LAWSON STORE100 convenience store chains.
Head Office:Shinagawa-ku, Tokyo
Principal Offices:
Hokkaido area office (Kita-ku, Sapporo), Tohoku area office (Aoba-ku, Sendai),
Chubu area office (Naka-ku, Nagoya), Kinki area office (Suita city, Osaka),
Chushikoku area office (Kita-ku, Okayama) and Kyushu area office (Hakata-ku,
Fukuoka)Note: In addition to the above sites, the Company has 108 offices throughout Japan,
including branches.
② Lawson Sanin, Inc.
Major Business:
Operates LAWSON stores in the Sanin area.
Head Office:Yonago city, Tottori③ Lawson urbanworks, Inc.
Major Business:
Operates LAWSON stores mainly in Tokyo and Chiba prefectures.
Head Office:Shinagawa-ku, Tokyo④ Lawson Store100, Inc.
Major Business:
Operates LAWSON STORE100 stores, provides guidance, and engages inmerchandise-related businesses.
Head Office:Shinagawa-ku, Tokyo⑤ SCI, Inc.
Major Business:
Food wholesaler, including processed meats and frozen foods, and wholesaler ofpacking materials.
Head Office:Shinagawa-ku, Tokyo[Stores]Number ofstores670

IbarakiNumber ofstores223

Kyoto

Number ofstores336

Aomori

262

Tokyo

1,748

Shiga

159

Tokushima

138

Akita

190

Kanagawa

1,121

Nara

140

Kochi

140

Iwate

179

Shizuoka

282

Wakayama

152

Fukuoka523

Miyagi

Saga

75

Prefecture
Hokkaido

Prefecture

Prefecture

252

Yamanashi

136

Osaka

Yamagata

112

Nagano175

Hyogo

Fukushima

158

Aichi

730

Okayama

Niigata

230

Gifu

180

Tochigi

201

Mie

Gunma

254

Saitama
Chiba

1,151

Prefecture
Ehime

Number ofstores219

687

Nagasaki

109

202

Oita

188

Hiroshima

234

Kumamoto

157

141

Yamaguchi

117

Miyazaki

107

Ishikawa

102

Tottori

143

Kagoshima

197

702

Toyama194

Shimane148

Okinawa

233

616

Fukui

113

Kagawa133

Total (domestic)

14,659Note: These figures include stores operated by Lawson, Inc., subsidiary Lawson Sanin, Inc. and three equity-method
affiliates, Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc.

9

(TRANSLATION ONLY)(Seijo Ishii Business)
SEIJO ISHII CO., LTD.
Major Business:
Operates a chain of small supermarkets that seeks to develop and manufacturehigh-value-added products.
Head Office:Setagaya-ku, Tokyo(Entertainment-related Business)① Lawson Entertainment, Inc.
Major Business:
Sells tickets for various events and music/video software inside LAWSON stores andothers.
Head Office:Shinagawa-ku, Tokyo
Note: In June, 2018, Lawson HMV Entertainment, Inc. changed its corporate nameto Lawson Entertainment, Inc.
② United Cinemas Co., Ltd.
Major Business:
Manages multiplex movie theaters
Head Office:Shinagawa-ku, Tokyo(Financial Services Business)
Lawson Bank, Inc.
Major Business:
Operates a banking business
Head Office:Shinagawa-ku, Tokyo
Note: In July, 2018, Lawson Bank Preparatory Company, Inc. changed its corporatename to Lawson Bank, Inc.
(Other Business)
・Overseas Business① Lawson (China) Holdings, Inc.
Major Business:
Controls companies that operate overseas business in China.
Head Office:Shanghai, China② Shanghai Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Shanghai, China③ Shanghai Le Song Trading Co., Ltd.
Major Business:
Operates Company-operated convenience stores.
Head Office:Shanghai, China④ Shang Hai Gong Hui Trading Co., Ltd
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Shanghai, China⑤ Zhejiang Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Hangzhou, China⑥ Chongqing Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Chongqing, China⑦ Dalian Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Dalian, China⑧ Beijing Lawson, Inc.
Major Business:
Operates Company-operated convenience stores and franchise stores.
Head Office:Beijing, China⑨ BEIJING LUOSONG Co., Ltd.
Major Business:
Operates Company-operated convenience stores.
Head Office:Beijing, China⑩ Saha Lawson Co., Ltd.
Major Business:
Operates stores under the store brand of LAWSON 108 and 108SHOP.
Head Office:Bangkok, Thailand
・Consulting Business
BestPractice, Inc.
Major Business:
Conducts surveys of convenience stores to give advice and make specific proposals
for the improvement of LAWSON stores.
Head Office:Shinagawa-ku, Tokyo

10

(TRANSLATION ONLY)(2) Employees① Employees of the Corporate Group
Name of Business Segment

Number of Employees

Year-on-Year Change

Domestic Convenience Store Business

5,411

215

Seijo Ishii Business

1,016

15

Entertainment-related Business

1,082

9

Financial Services Business141

8

Other Business

2,745

120

Total

10,395367

Note: Number of employees is full-time employees.
② Employees of the Company

Number of Employees

Year-on-Year Change

4,551

107

Average Age

Average Years of Service
40.2

12.8

Note: Number of employees is full-time employees.
(3) Major Lenders
Lenders

Amount Borrowed (millions of yen)

Mitsubishi Corporation Financial andManagement Services(Japan)Ltd.

209,800

Syndicated loan

180,000

Mizuho Bank, Ltd.

30,000Sumitomo Mitsui Banking Corporation

10,000MUFG Bank, Ltd.

5,000

(4) Parent Company and Significant Subsidiaries and Equity-method Associates① Parent Company
Capital Stock
Shareholding
Parent Company
Major Business(millions of yen)(%)
Global environment and infrastructurebusiness, industrial finance, logistics
Mitsubishi Corporation
204,44650.2
and development, energy business,metals, machinery, chemicals, andliving essentials, etc.
• Relationship with parent company
Mitsubishi Corporation, our parent company, holds 50,150 thousand of our shares (50.2% of voting rights).
Mitsubishi Corporation provides guarantees for loans payable and engages in other transactions with the Lawson
Group.
• Information on transactions with the parent company:
a. Ensuring that engaging in these transactions is not harmful to our interests
We have entered into guarantee entrustment agreements with our parent company, and we have paid ourparent company guarantee fees for some of our loans payable based on these agreements. In conducting thesetransactions, we have established transaction conditions that compare with prevailing market prices, as we dofor general transactions.
b. Board of Directors’ assessment on whether these transactions are harmful to our interests, and grounds for thatassessment
Given the perspective in a. above, we solicit appropriate feedback on our management at Board of Directors’
meetings attended by outside directors and outside Audit and Supervisory Board members, with decisions madeafter multi-faceted discussions, and we have determined that such transactions are not harmful to our interests.
c. Views of outside directors if they differ from the Board of Directors’ assessment
Not applicable.

11

(TRANSLATION ONLY)② Significant Subsidiaries

Company Name

Capital Stock

Shareholding

Major Business
Domestic Convenience StoreBusiness
Domestic Convenience StoreBusiness
Domestic Convenience StoreBusiness
Domestic Convenience StoreBusiness

Lawson Sanin, Inc.

25

million yen

70.0 %

Lawson urbanworks, Inc.

10

million yen

100.0 %

Lawson Store100, Inc.

99

million yen

100.0 %

SCI, Inc.

10

million yen

100.0 %SEIJO ISHII CO., LTD.

100

million yen

100.0 %

Lawson Entertainment, Inc.

100

million yen

100.0 %

Lawson HMV Entertainment United
Cinema Holdings, Inc.

100

million yen

100.0 %

United Entertainment Holdings Co., Ltd.

100

million yen

100.0 %

United Cinemas Co., Ltd.

100

million yen

100.0 %

Lawson Bank, Inc.

11,600

million yen

95.0%

Lawson (China) Holdings, Inc.

2,112 million Chinese yuan

100.0 %

Overseas BusinessShanghai Lawson, Inc.

353 million Chinese yuan

100.0 %

Overseas BusinessShanghai Le Song Trading Co., Ltd.

0.1 million Chinese yuan

100.0 %

Overseas BusinessShang Hai Gong Hui Trading Co., Ltd.

0.3 million Chinese yuan

85.0 %

Overseas Business

Zhejiang Lawson, Inc.

10 million Chinese yuan

100.0 %

Overseas Business

Chongqing Lawson, Inc.

190 million Chinese yuan

100.0 %

Overseas Business

Dalian Lawson, Inc.

66 million Chinese yuan

98.3 %

Overseas Business

Beijing Lawson, Inc.

184 million Chinese yuan

100.0 %

Overseas Business

BEIJING LUOSONG Co., Ltd.

0.1 million Chinese yuan

100.0 %

Overseas Business

Saha Lawson Co., Ltd.

Seijo Ishii BusinessEntertainment-related
Business
Entertainment-related
Business
Entertainment-related
Business
Entertainment-related
Business
Financial Services
Business

1,277

million baht

49.2 %

Overseas Business10

million yen

100.0 %

Consulting Business

BestPractice, Inc.

Notes:
1. Shareholding includes indirectly held shares.
2. Lawson urbanworks, Inc. was included in the scope of consolidated subsidiaries from the fiscal year
under review due to its increased significance as a subsidiary.
3. In June, 2018, Lawson HMV Entertainment, Inc. changed its corporate name to Lawson Entertainment,
Inc.
4. In July, 2018, Lawson Bank Preparatory Company, Inc. changed its corporate name to Lawson Bank, Inc.
5. Lawson ATM Networks, Inc. was excluded from the scope of consolidation since its liquidation wascompleted as of February 25, 2019.
③ Significant Equity-method Associates

Company Name
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.

Capital Stock(millions of yen)
10
100
50

Shareholding
(%)
49.0
49.0
49.0

12

Major Business
Domestic Convenience Store Business
Domestic Convenience Store Business
Domestic Convenience Store Business

(TRANSLATION ONLY)
II. CURRENT STATUS OF THE COMPANY
1. Shares at the End of the Year
(1) Total Number of Shares Authorized to Be Issued:
409,300,000 shares(2) Total Number of Shares Issued and Outstanding:
100,300,000 shares(Including 241,897 shares of treasury shares)(3) Number of Unit (tangen) Shares:
100 shares(4) Number of Shareholders:
33,658(5) Top 10 Major Shareholders:Number of Shares Held(thousand shares)

Shareholding(%)

Mitsubishi Corporation

50,15050.1

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

4,200

4.2

Japan Trustee Services Bank, Ltd. (Trust account)

3,392

3.4

NTT DOCOMO, INC.

2,092

2.1

STATE STREET BANK WEST CLIENT － TREATY 505234

1,739

1.7

JP MORGAN CHASE BANK 380655

1,287

1.3

Japan Trustee Services Bank, Ltd. (Trust account 5)

977

1.0

Japan Securities Finance Co., Ltd.

952

1.0

Japan Trustee Services Bank, Ltd. (Trust account 9)

917

0.9

Japan Trustee Services Bank, Ltd. (Trust account 7)

906

0.9

Shareholder’s Name

Notes:
1. The number of shares held in the above table is based on the register of shareholders.
2. The equity position in the above table is calculated after deducting treasury shares.

13

(TRANSLATION ONLY)
2. Status of Stock Acquisition Rights(1) Stock Acquisition Rights Held by Corporate Officers of the Company as of February 28, 201912th Stock
13th Stock
14th Stock
16th Stock
Acquisition
Acquisition
Acquisition
Acquisition
RightsRightsRightsRightsNumber of option holders and the number of stock acquisition rights (units)
Directors (excluding
0 person1 person
2 persons
2 persons(0 unit)(5 units)(32 units)(43 units)
Outside Directors)
1 person1 person1 person1 person
Outside Directors(5 units)(5 units)(5 units)(5 units)
Class and number ofCommon stock of Common stock of Common stock of Common stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
Lawson, Inc.
acquisition rights
500
1,000
3,700
4,800
Amount of property
contributed upon the
1 yen
1 yen
1 yen
1 yen
exercise of the sharesubscription rights (pershare)
April 12, 2013
April 10, 2014
April 10, 2015
May 2, 2016
Exercise period
through March 26, through March 23, through March 24, through April 12,
2033
2034
2035
2036
Main exercise
Note 1
Note 1
Note 1
Note 1
conditions
17th Stock
19th Stock
Acquisition
Acquisition
RightsRightsNumber of option holders and the number of stock acquisition rights(units)Directors (excluding
3 persons
5 persons(72 units)(101 units)
Outside Directors)
2 persons
2 personsOutside Directors(10 units)(10 units)
Class and number ofCommon stock of Common stock ofshares subject to stock
Lawson, Inc.
Lawson, Inc.
acquisition rights
8,200
11,000
Amount of property
contributed upon the
1 yen
1 yen
exercise of the sharesubscription rights (pershare)
May 1, 2017
June 8, 2018
Exercise period
through April 11,
through May 21,
2037
2038
Main exercise
Note 1
Note 1
conditions

14

(TRANSLATION ONLY)(2) Stock Acquisition Rights Issued during the Fiscal Year to Senior Vice Presidents of the Company as
Compensation for Performing Their Duties
19th Stock
Acquisition
RightsNumber of SVPs andthe number of stock acquisition rights
Senior Vice
9 personsPresidents(36 units)
Class and number ofCommon stock ofshares subject to stock
Lawson, Inc.
acquisition rights
3,600
Amount of property
contributed upon the
1 yen
exercise of the sharesubscription rights (pershare)
June 8, 2018
Exercise period
through May 21,
2038
Main exercise
Note 1
conditions
Notes:
1. A stock acquisition rights holder may exercise his or her rights within the exercise period only fora period of 10 days from the day after losing his or her position as either director and/or executive
officer of the Company.
2. “Senior Vice Presidents” exclude those who concurrently serve as a member of the board.
The total number of shares subject to stock acquisition rights that remain unexercised as of February 28,
2019, is 43,700 shares, accounting for 0.04% of the total number of shares issued and outstanding.

15

(TRANSLATION ONLY)
3. Members of the Board and Corporate Auditors(1) Positions, Names and Assignments (As of February 28, 2019)
Position, Assignments and Important Concurrent Positions
Name
Note: Important concurrent positions of Outside Directors given later in (6) Outside
Directors and Outside Corporate Auditors
Sadanobu Takemasu President and CEO,CHO and Marketing Division Director
Representative Director,
Chairman of the Board
Katsuyuki Imada
Senior Executive Managing
Corporate Strategy and Planning Division Director
Officer, Member of the Board
Satoshi Nakaniwa
Executive Vice President,
CFO and Shared Services Division Director
Member of the Board
Emi OsonoMember of the Board
Yutaka Kyoya
Member of the Board
Executive Vice President, Group CEO, Living
Essentials Group, Mitsubishi Corporation and Memberof the Board, Olam International Limited
Keiko Hayashi
Kazunori Nishio

Member of the Board
Member of the Board

Miki Iwamura
Toshio Takahashi

Member of the Board
Audit and Supervisory Board
Member (full-time)
Audit and Supervisory Board
Member (full-time)
Audit and Supervisory Board
MemberAudit and Supervisory Board
Member

Masakatsu Gonai
Tetsuo Ozawa
Eiko Tsujiyama

Senior Vice President, Division COO, Retail Div.,
Mitsubishi Corporation

Notes:
1. Three Member of the Board (Emi Osono, Keiko Hayashi and Miki Iwamura) are outside directors as
stipulated in Article 2, Item 15, of the Companies Act of Japan (the “Companies Act”).
2. Three auditors (Toshio Takahashi, Audit and Supervisory Board Member (full-time), Tetsuo Ozawa, Audit
and Supervisory Board Member and Eiko Tsujiyama, Audit and Supervisory Board Member) are outside
corporate auditors as stipulated in Article 2, Item 16, of the Companies Act.
3. Toshio Takahashi, Audit and Supervisory Board Member (full-time), has considerable expertise infinance and accounting, serving at city banks engaged in treasury, risk management and internal audits,
as well as serving as a full-time auditor at the Japanese subsidiary of a major foreign IT firm.
Tetsuo Ozawa, Audit and Supervisory Board Member, is a lawyer who has practiced law and advised on
legal matters and risk management mainly in relation to the legal affairs of companies and therefore has
considerable expertise in finance and accounting.
Eiko Tsujiyama, Audit and Supervisory Board Member, has long-term experience as a university professorin accounting and therefore has considerable expertise in finance and accounting.
4. The following personnel changes were approved at the board of corporate auditors’ meeting and the43rd general meeting of shareholders held on May 22, 2018.
Appointment
Member of the Board
Miki Iwamura
Member of the Board
Sakie Akiyama
Resignation

16

(TRANSLATION ONLY)[Reference] Members of the Boards and Senior Vice Presidents(Excluding Non-Executive Directors) (As of March 1, 2019)
Name
Sadanobu Takemasu

Shuichi Imagawa
Yuichi Wada
Motonobu Miyake

President , Representative
Director, Chairman of the
Board
Senior Executive Managing
Officer, Member of the Board
Executive Vice President,
Member of the Board
Senior Executive Managing
Officer
Executive Managing Officer
Executive Managing Officer
Executive Vice President

Akihito Watanabe

Executive Vice President

Tatsushi Sato
Hitoshi Fujii
Kazuhiro Wakui
Yasuhiko Hirokane
Zhang Joshua
Toshihiko Chihiro
Satoshi Kumagai
Hajime Kawamura
Yasuhiro Iseki

Executive Vice President
Executive Vice President
Executive Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President

Naotaka Honda

Senior Vice President

Masayuki Sawada

Senior Vice President

Katsuyuki Imada
Satoshi Nakaniwa
Jun Miyazaki

Position and Major Title
CHO and Marketing Strategy Division Director

Corporate Strategy and Planning Division Director
CFO and Shared Services Division Director
Corporate Communications Division Director, ―Promotion,―Human Resources and Executive Assistant to CHO―Compliance and Risk Management and ―Human Resources
Store Operations Division Director
China Business Division Director and Lawson (China) Holdings,
Inc. General Manager
Lawson Entertainment, Inc., United Cinemas Co., Ltd. and
Lawson Travel, Inc. President and Representative Director
Operations Management and IT Systems Division Director
Dry Foods and Household Goods Division Director
Ready-Made Foods Division Director
Executive Assistant to President
Shanghai Lawson, Inc. General Manager
Corporate Sales and Store Development Division Director
Financial Services and Digital Business Division Director
Franchisee Business Support Division Deputy Director
SEIJO ISHII CO., LTD. Member of the Board, Senior Executive
Vice President (Temporary Transfer)
Operations Management and IT Systems Division Deputy
Director
PG LAWSON COMPANY, INC. Director, COO and Asia
Pacific Business Division Deputy Director

17

(TRANSLATION ONLY)(2) Outline of Liability Limitation Agreements
The Company has entered into agreements with its directors (excluding persons who are executive directors,etc.) and corporate auditors to limit their liability with regard to the damages outlined under Article 423,
Paragraph 1 of the Companies Act, whereby their liability shall be, at a maximum, the total sum of the amounts
set forth in the respective relevant items of Article 425, Paragraph 1 of the Companies Act. The
aforementioned liability limitation is valid only in cases where the said director or corporate auditor has
performed duties which resulted in a cause of such liability in good faith without committing acts of grossnegligence.
(3) Amounts of Remuneration Paid to Directors and Corporate Auditors
Remuneration paid to officers
Total
Total Compensation Paid by Type
Compensation(millions of yen)
CategoryPaid
Basic(millions ofStock Options
Compensationyen)
Directors(Including Outside Directors)(Outside Directors)
Corporate Auditors(Including Outside Corporate
Auditors)(Outside Corporate Auditors)
Total

Number of
Corresponding
Directors andCorporate Auditors

220

166

53

9

34

30

4

4

74

74

－

4

49
294

49
240

－
53

3
13

(4) Policy on Decisions Concerning the Amount of Remuneration Paid to Directors① Basic policy on decisions concerning the amount of remuneration paid to directors
Regarding the amount of remuneration paid to directors, it is the Company’s basic policy to design the
remuneration system in close correlation with shareholder returns while ensuring that it will function
sufficiently as an incentive for the enhancement of corporate value, sustainable growth and improvement ofoperating performance, and reward each director with a sufficient and adequate amount of compensation for
the execution of their duties.
② Decision-making process for the amount of remuneration paid to directors
In order to enhance management transparency, the amount of remuneration paid to directors is determinedat the board of directors meeting based on recommendations by the Company’s Compensation Committee,
which consists exclusively of non-executive directors and audit and supervisory board members (part-time)(five out of six are independent directors).
Members of the Nomination and Compensation Committee:
Outside Director
Emi Osono
Director
Yutaka Kyoya(Vice Committee Chairperson)
Outside Director
Outside Corporate
AuditorKeiko Hayashi
Tetsuo Ozawa(Committee Chairperson)

Outside Director
Outside Corporate
AuditorMiki Iwamura
Eiko Tsujiyama③ Details of remuneration paid to directors

Remuneration paid to the Company’s directors is composed of basic compensation through cash payments
and stock price-linked compensation through the granting of stock options.

18

(TRANSLATION ONLY)[Basic compensation]
Basic compensation of directors is composed of fixed compensation with fixed monthly payments andvariable compensation, which fluctuates in response to the Company’s financial performance for each period.
• Fixed compensation
The amount of fixed compensation commensurate with the position is determined based on standards
stipulated by internal rules.
• Variable compensation
In order to link the remuneration of directors with shareholder returns, the Company has adopted acompensation system that is linked to the Company’s financial performance.
Variable compensation is paid in accordance with earnings indicators such as EPS (consolidated net
income per share). Regarding five non-executive directors, Emi Osono, Yutaka Kyoya, Keiko Hayashi,
Kazunori Nishio and Miki Iwamura, variable compensation is not applicable as they are focused on theirsupervisory and advisory roles as the Company’s representative directors and in the board of directors
meetings.
[Stock price-linked compensation]
Stock options as stock-based compensation
By incorporating stock options as stock-based compensation linked with stock prices as part ofcompensation paid to directors, the Company has a system in which management shares with stockholders
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 stock-based compensation is 1 yen per share and the amount of units
granted is determined in accordance with the position of directors. In addition, stock options as stock-based
compensation can be exercised only during designated periods after retirement from office; directors are notallowed to exercise their stock option rights during their term in office.
④ Limit on the amount of remuneration paid to directors
The limit on the amount of remuneration paid to the Company’s directors is determined at the general meetingof shareholders in accordance with laws and regulations.
• Amount of remuneration paid to directors
Resolutions at the general meeting of shareholders as of May 24, 2001: 400 million yen or less per year
• Amount of stock options granted to directors
Resolutions at the general meeting of shareholders as of May 27, 2014: 300 million yen or less per year
(5) Policy on Decisions Concerning the Amount of Remuneration Paid to Corporate Auditors① Basic policy on decisions concerning the amount of remuneration paid to corporate auditors
Regarding the amount of remuneration paid to corporate auditors, it is the Company’s basic policy to reward
each corporate auditor with a sufficient and adequate amount of compensation for the execution of their duties.
② Decision-making process for the amount of remuneration paid to corporate auditors
The amount of remuneration paid to corporate auditors is determined based on discussions among corporate
auditors and is within the remuneration amount limit resolved at the general meeting of shareholders.
③ Details of remuneration paid to corporate auditors
The Company’s corporate auditors receive basic compensation (fixed compensation) in cash.
The amount of basic compensation is decided based on discussions among corporate auditors, taking into
consideration whether or not they are working on a full-time basis, and segregation of auditing duties. Regarding
retirement benefits, the system itself was abolished.
④ Limit of the amount of remuneration paid to corporate auditors
The limit of the amount of remuneration paid to the Company’s corporate auditors is determined at the general
meeting of shareholders in accordance with laws and regulations.
Amount of remuneration paid to corporate auditors
Resolutions at the general meeting of shareholders as of May 29, 2012: 80 million yen or less per year

19

(TRANSLATION ONLY)(6) Outside Directors and Outside Corporate Auditors① Relationship between Major Positions Concurrently Held and the Company
Position in the
Company

Outside Director(Independent)

Outside Director(Independent)

Outside Director(Independent)

Name

Emi Osono

KeikoHayashiPosition Concurrently Held

Details

Relationship between
the Company andCompany Where
Position Concurrently
Held

Graduate School ofInternational Corporate
Strategy, Hitotsubashi
University

Professor－

President and CEO
President and CEO
President and CEO
President and CEO
President and CEO－

DoCLASSE the Store, Co., Ltd.
DoCLASSE Co., Ltd.
IMA Holdings
fitfit Co., Ltd.
IMA People Co., Ltd.

Miki
IwamuraGoogle Japan LLC

Corporate Auditor
Toshio(Independent)
Takahashi－

Executive Operating
Officer,CMO andManaging Director,
Asia-Pacific Region(Brand and Marketing)－Tokyo Fuji Law OfficeOutside Corporate
Auditor(Independent)

TetsuoOzawa

Outside Corporate
Eiko
AuditorTsujiyama(Independent)

Sekisui Chemical Co., Ltd.

Lawyer (Representative
Partner)
Outside corporate
auditorUnited Urban Investment
Corporation

Corporate auditor

Waseda University

Emeritus Professor

ORIX Corporation

Outside director

NTT DOCOMO, INC.

Outside corporate
auditorShiseido Company, Limited

Outside corporate
auditor－－NTT DOCOMO, INC.,
for which Eiko Tsujiyama
serves as an outside
corporate auditor, is alarge shareholder of theCompany, and has abusiness relationship with
the Company in thetelecommunications fieldunder an extensive
business allianceagreement.

Note: Where nothing is written in the column Relationship between the Company and company Where Position
Concurrently Held, it means that the Company has no important business or other relationship with thatcompany.

20

(TRANSLATION ONLY)② Major Activities during the Year

Position in the
Company

Name

Outside Director(Independent)

Emi Osono

Outside Director(Independent)

Keiko Hayashi

Outside Director(Independent)

Miki Iwamura

Corporate Auditor(Independent)

Toshio Takahashi

OutsideCorporate Auditor(Independent)

Tetsuo Ozawa

OutsideCorporate Auditor(Independent)

Eiko Tsujiyama

Major Activities
Ms. Osono attended 12 of 14 board of directors’ meetings held during
the year, and as an academic, appropriately questioned and/or
remarked based on her abundant knowledge of global corporate
management, corporate strategy and organizational behavior, etc. Ms.
Osono is also a vice chairperson of the Company’s Nomination andCompensation Committee.
Ms. Hayashi attended 12 of 14 board of directors’ meetings held
throughout the year during her term in office and, as a management
executive, appropriately questioned and/or remarked based on her
abundant knowledge. Ms. Hayashi is also a member of the Company’s
Nomination and Compensation Committee.
Ms. Iwamura attended all 12 board of directors’ meetings held
throughout the year during her term in office , and as an executive
operating officer of a global IT company, appropriately questioned
and/or remarked based on a wealth of her experience and knowledge.
Ms. Iwamura is also a member of the Company’s Nomination andCompensation Committee.
As a standing corporate auditor, Mr. Takahashi examined financial
documents and visited relevant establishments and business partners to
examine their business operations and financial situation. Mr.
Takahashi monitored and verified the execution of duties of directors
and other personnel including those relating to the improvement ofinternal control systems. Mr. Takahashi attended all 14 board of
directors’ meetings and all 16 board of corporate auditors’ meetings
held during the year and appropriately questioned and/or remarked
based on his deep knowledge finance and accounting and using his
experience of assuming responsible posts for many years on the boardof audit of Japan.
Mr. Ozawa attended all 14 board of directors’ meetings and all 16
board of corporate auditors’ meetings held during the year andappropriately questioned and/or remarked based on his abundant
experience and knowledge as a lawyer. Mr. Ozawa is also achairperson of the Company’s Nomination and Compensation
Committee.
Ms. Tsujiyama attended all 14 board of directors’ meetings and all 16
board of corporate auditors’ meetings held during the year andappropriately questioned and/or remarked based on her deep
knowledge of accounting as an emeritus professor in this field. Ms.
Tsujiyama is also a member of the Company’s Nomination andCompensation Committee.

21

(TRANSLATION ONLY)
4. Independent Auditor(1) Independent Auditor
Deloitte Touche Tohmatsu LLC(2) Amounts of Remunerations, etc., to be Paid to the Independent Auditor
1) Remuneration to be paid by the Company to the independent auditor

123 million yen
Sum of money and other property benefits to be paid by the Company and its
2)
220 million yen
subsidiaries to the independent auditor
Notes:
1. The audit agreement entered into by the independent auditor and the Company does not clearly
distinguish the amount for the audit under the Companies Act and for the audit under the Financial
Instruments and Exchange Act, and the two amounts cannot be substantially distinguished from eachother. Therefore, the amount in 1) above indicates the total for the two audits.
2. As a result of confirmation and consideration of the content of the audit plan, former audits and actual
remuneration paid in the past, and the basis for calculating remuneration estimates, etc. as well as the
progress of discussions with accounting auditors, etc. in light of the Practical Guidance on
Collaboration with Accounting Auditors issued by the Japan Audit and Supervisory Board Members
Association, the Board of Corporate Auditors gave its consent with regard to the remuneration of
accounting auditors pursuant to Article 399, Paragraph 1 of the Companies Act.
3. Ten of the important subsidiaries of Lawson overseas are subject to audit by an independent auditor
other than Lawson’s independent auditor.
(3) Policy on Decisions Concerning Dismissal or Nonreappointment of the Independent Auditor
If the independent auditor violates or infringes the Companies Act, the Certified Public Accountant Act, orother laws or regulations, or the Company considers it necessary to do so, the board of directors shall, after
obtaining the agreement of the Board of Corporate Auditors, submit a proposal for dismissal or
nonreappointment of the independent auditor to a general meeting of shareholders. In addition, the board ofcorporate auditors can dismiss the independent auditor with a unanimous resolution if it determines that any act
or circumstance of the independent auditor falls under any items of Article 340, Paragraph 1, of the Companies
Act.

22

(TRANSLATION ONLY)
III. SYSTEMS AND POLICIES OF THE COMPANY
1. Determination of Resolution of Systems to Ensure the Propriety of Business Operations
Based on improvements and the operation of the preceding “2017 Basic Policy for Improvement of Internal
Control Systems,” which was approved at the board of directors’ meeting held on February 21, 2018, the Company
passed a resolution called the “2018 Basic Policy for Improvement of Internal Control Systems,” as indicatedbelow.
(1) Systems to Ensure Compliance of the Execution of Duties by Directors and Employees with Laws andRegulations and the Articles of Incorporation① The board of directors shall determine the improvement policies and plans for internal control systems,
including those for compliance with laws, regulations and the like (the “Compliance”), and receive status
reports there of periodically.
② The board of directors shall maintain and improve the supervising function regarding the execution ofduties by the directors by electing outside Directors on an ongoing basis.
③ The corporate auditors shall independently audit the execution of duties by the directors, including thestatus concerning the improvement of the internal control systems.
④ The Internal Audit Department, which is independent from the business-executing bodies, shall audit thestatus concerning the improvement of the internal control systems and recommend improvements thereof,
as required.
⑤ The board of directors shall maintain and raise the awareness of officers and employees regarding
compliance by thoroughly disseminating the Group Code of Conduct and the Lawson Ethical Mission
Statement by such measures as, including, but not limited to, appointing a Chief Compliance Officer,
establishing a department to oversee compliance, assigning personnel in charge of compliance at eachdepartment, streamlining the rules in relation to compliance, and providing periodic training on ethics andawareness surveys on compliance.
⑥ The Legal Affairs Department shall be reinforced to fortify foundations for complying with legal
requirements by identifying the laws and regulations applicable to the Company’s businesses andcommunicating the content thereof to the relevant departments and sections.
⑦ With the aim to strive for the early detection of violations or possible violations of laws, regulations, etc.
across the Group and the entire chain, the Company shall establish and upgrade normal reporting routes forreporting any violations of laws, regulations or internal rules. It shall establish reporting and consulting
systems (internal consulting contact points, group-wide outside consulting contact points and consulting
contact points for employees and business counterparties for Lawson’s franchised stores) that fully protect
those who make such reports. If violations of laws, regulations or internal rules are discovered, corrective
measures shall be taken immediately and policies implemented to prevent recurrences.
⑧ The Company shall never become involved with antisocial forces or bodies that threaten the order andsecurity of society, and shall take a firm stance on, and deal with, improper demands by consulting withlawyers the police and the like.
(2) Systems to Preserve and Manage Information Pertaining to the Execution of Duties by Directors① The Company shall record, preserve and manage information relating to decision making at important
meetings such as those of the board of directors and the management council, and authorizing documents,
including those approved by the president and representative director, as well as financial, clerical and risk
and compliance-related information (including information contained in electromagnetic media). Moreover,
the Company shall put in place a system allowing relevant parties to inspect the above information.
② The Company shall manage and monitor its information systems in a secure manner, in addition tomaintaining the systems, by sufficiently taking into account contingencies.
③ The Company shall establish and maintain rules regarding the management of documents (including
electromagnetic recording media), keep everyone informed about the responsibility and authority for
document management, document storage periods and management methods, and periodically monitor the
status of document storage and management.
④ The Company shall establish and maintain rules regarding the protection of personal information and the
management of trade secrets, and appropriately and safely store and manage personal information andimportant trade secrets.
⑤ The Company shall establish and maintain an information security system for the Group by putting inplace a Chief Information Security Officer and a division that oversees information security with the aim ofpromoting information security in a consolidated and unified manner in view of both risk management andsystem technology security.
⑥ The Company shall establish and maintain rules regarding the disclosure of important Company
information, and upgrade the system for disclosing information that must be disclosed according to therequirements of laws, regulations and stock exchanges, in an appropriate, timely and fair manner.

23

(TRANSLATION ONLY)(3) Rules and Other Systems Regarding Risk Management① The Company shall establish a department to oversee risk management, improve rules related to risk
management, and improve group-wide risk prevention systems during normal operations. Moreover, theCompany shall respond according to the characteristics of risks by identifying risks that might have adverse
effects on the Company’s management in connection with its business purposes in each department,
analyzing the probability of such risk factors materializing and their impact, and evaluating whether
intensive countermeasures should be taken.
② To ensure the effectiveness of risk management, the Company shall establish a specialist committee(“Compliance and Risk Management Committee”) and clarify the authority and responsibility of thecommittee and its chairperson. Furthermore, the Company shall endeavor to increase awareness about risk
management by assigning risk management staff to departments and associated companies and conducting
risk management training.
③ The Company shall develop contingency systems and formulate policy for contingency response bodies inadvance to prepare for the occurrence or possible occurrence of unanticipated situations or events, whichmight have adverse effects on management of the Company, in order to provide a quick response to any
actual occurrence thereof and to take effective measures to prevent a reoccurrence.
④ The Company shall formulate a Business Continuity Plan (BCP) and a Business Continuity Management(BCM) system to minimize the business interruption and maintain the lifeline function of convenience storesin the event of the occurrence of situations or events inflicting substantial damage on the Company such as alarge-scale natural disaster or an epidemic of a new-type influenza. In order to be prepared for major
earthquakes, the Company shall conduct disaster prevention drills three times a year while working to secure
effectiveness of the “Disaster Countermeasure Manuals” and the “BCP” system.
(4) Systems to Ensure the Efficient Execution of Duties by Directors① The Company shall clarify the functional authority and responsibility of corporate officers and employees
for decision making and execution of business affairs. The Company shall also improve rules for thedivision of duties to ensure and encourage more appropriate division of duties and collaboration amongorganizational bodies.
② The Company shall work to raise operational efficiency by simplifying business processes, streamlining theorganization and making appropriate use of IT.
③ In order to promote the proper communication of information and communications between officers andemployees, the Company shall improve systems so that management guidelines and policies are
disseminated to employees by corporate officers and important field information is properly
communicated by employees to corporate officers in a timely manner.
④ The Company shall seek to improve labor productivity by promoting work style reform.
(5) Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group Consistingof the Company, Its Parent Company, and Its Subsidiaries① System for reporting to the Company on matters pertaining to the execution of duties by the subsidiary’s
directors, etc., and system for ensuring that the subsidiary’s directors, etc., carry out their duties efficiently• The Company shall endeavor to maintain and enhance the Lawson brand through close collaboration withsubsidiaries and affiliated companies (“Associated Companies”). However, with regard to affiliatedcompanies, the Company will work to appropriately establish and maintain systems through phased
implementation, taking into account such factors as relations with other leading shareholders differences inlaws, regulations and business customs and the like of foreign countries.
• While respecting the independence of Associated Companies, in view of the purpose of the Company’s
equity participation in Associated Companies, the Company shall establish Group regulations such as
basic policies for the management of Associated Companies and management policies thereof, and keep the
Associated Companies fully informed of the Group Code of Conduct.
② Regulations and other systems for risk management by the subsidiary, and system for ensuring that thesubsidiary’s directors, etc., and employees execute their duties in conformity with laws, ordinances, and thearticles of incorporation• While respecting the independence of Associated Companies, in view of the purpose of the Company’s equity
participation in Associated Companies, the Company shall strive to ensure that the Group Code of Conduct
is widely disseminated among Associated Companies.
• The Company shall appoint designated persons at major Associated Companies to be responsible forpromoting compliance and risk management and promote communications between the Company and major
subsidiaries with a view to ensuring appropriate business operations across the entire Group.
• The Company shall develop a system in which immediate reporting is made by compliance managers of
associated companies in the event that they have identified any facts that may cause material damage totheir companies.
• The Internal Audit Department shall cooperate in auditing the status of establishment of internal control

24

(TRANSLATION ONLY)
systems at Associated Companies and promote improvements based on the results of audits.
③ The Company shall develop a system in which the parent company is immediately notified in the event any
facts that may cause material damage to the Company and its associated companies have been identified.
(6) Necessary Systems to Ensure Proper Financial Reporting by the Company and Its Group ofCompanies① The Company shall enhance systems for preparing financial statements according to laws, regulations, andaccounting standards and disclosing the same after they have been discussed, examined, and confirmed inaccordance with regulations governing information disclosure in order to report financial information in aproper and timely manner.
② The Company shall establish a dedicated internal organization in order to properly implement the internal
control reporting system required by the Financial Instruments and Exchange Act as an internal control for
financial reporting. Furthermore, the Company shall establish a system for self-evaluation and third-party
evaluation and improvement through the identification and recording of business processes at importantbusiness bases and the status of Company-wide internal controls. The results of these evaluations of, andimprovements at, the Company and important subsidiaries shall be regularly reported to the board of
directors.
(7) Matters Concerning Employees Where a Corporate Auditor Requests Employees to Assist with Duties① The Company shall assign appropriate personnel to the auditors’ office (“Corporate Auditors’ Staff”) as
employees exclusively to assist corporate auditors in the execution of their duties.
② Corporate Auditors’ Staff may serve concurrently as corporate auditors of Associated Companies.
③ Corporate Auditors’ Staff shall have the authority to conduct investigations necessary for audits bycorporate auditors following the instructions of corporate auditors.
(8) Independence of Employees from Directors in the Preceding Item
Performance reviews of Corporate Auditors’ Staff shall be conducted by the standing corporate auditors toensure that Corporate Auditors’ Staff carry out their duties appropriately. Personnel changes require the priorconsent of the standing corporate auditors.
(9) Systems for Directors and Employees to Report to Corporate Auditors and Other Reporting Systems
to the Corporate Auditors① Directors and employees of the Company shall report important corporate management and businessadministration matters, as well as the status and results of the execution of their duties, to corporate
auditors so that the corporate auditors can carry out their duties effectively. Such important matters include
compliance- and risk-related issues and other matters relating to internal control.
② If directors become aware of any fact or event that will likely cause the Company to suffer significant
damage or loss, they shall immediately inform the board of corporate auditors.
③ Reports to corporate auditors shall basically be made in good faith without fail, and shall be madepromptly, if required, in addition to periodic reports.
④ The Company shall develop a system in which the contents of consultations sought or reports made to the
Independent Whistleblower Hotline across the Group are reported to corporate auditors on a timely basis.
(10) Other Systems to Ensure Effective Audits by Corporate Auditors① The representative directors and corporate auditors shall have regular meetings to enhance smoothcommunications with each other.
② Directors shall cooperate with the corporate auditors with regards to communications, the collection andexchange of information and so on between the corporate auditors and the corporate directors and the likeof Associated Companies so that the corporate auditors can perform their duties appropriately.
③ Directors shall also cooperate in conducting surveys of significant business partners, which the corporate
auditors deem necessary.
④ Directors shall enable the corporate auditors to collaborate with outside experts such as lawyers andcertified public accountants, if any corporate auditor deems it necessary in executing his/her duties.
⑤ The Legal Affairs, Risk Management, Internal Audit, and Finance and Accounting departments of theCompany shall assist in conducting necessary surveys for audits when requested by any corporate auditor.

25

(TRANSLATION ONLY)
2. Outline of Operational Status of Systems to Ensure the Propriety of Business Operations
The Company operates internal control systems in accordance with the aforementioned basic policy. Their
operational status is as outlined below.
(1) Compliance and Risk Management Systems① The Company strives to be a good corporate citizen able to act according to high ethical standards and withintegrity and thoughtfulness by implementing the PDCA (Plan-Do-Check-Action) cycle while integrating
its code of conduct, education and training, and monitoring activities in an organic manner.
② The Company has established the Lawson Ethical Mission Statement and the Group Code of Conduct as
its code of conduct, published them in the “Lawson Group C and R Handbook,” and distributed thehandbook to all employees in an effort to thoroughly disseminate its content with the aim of ensuring the
propriety of business operations across the Group.
③ The Company has established an educational/training system to enable systematic learning, including
compliance and risk management training for all employees, training provided on joining the Group andupon promotion to a managerial position, and training by job types and training for company management.
The Company is seeking to further improve ethical awareness and the ability to withstand crises bymaintaining these educational/training programs while revising their content in line with changing risk
conditions.In addition, a ―Compliance and Risk Management is appointed as the chief officer in chargeof compliance and risk management, and the position of CRO is established for each head office andregion. CROs attend the Compliance and Risk management meetings organized by the ―Compliance andRisk Management, thoroughly disseminate measures determined at the meetings, and monitor the progressof such measures in an effort to prevent the occurrence of risk events.
④ With respect to whistleblowing reports, there are internal consultation and reporting contact points alongwith the Group Independent Whistleblower Hotline as well as a consultation contact point for theCompany’s business counterparties. The Company shall seek to strengthen self-rectification within theorganization by treating instances of whistleblowing appropriately, reviewing the system to prevent a
recurrence, and introducing specific cases at meetings and training programs.
⑤ In terms of monitoring activities, the Company conducts questionnaire surveys targeting all employees
and business counterparties and reviews its compliance and risk management systems based on the resultsof audits conducted by the Internal Audit Department.
⑥ At major associated companies, compliance and risk management managers are also appointed and thesemanagers attend compliance managers’ meetings for associated companies. Associated companies also
implement code of conducts, conduct training, and carry out questionnaire surveys for employees andbusiness counterparties. In addition, through the operational audits conducted on associated companies by
the Company’s Internal Audit Department and the liaison meetings for the Group’s corporate auditorsorganized by the Company’s corporate auditors, etc., guidance and advice have been offered to improve
compliance and risk management systems for the Group.
(2) Preparations against and Responses to Risks① In normal times, the Compliance and Risk management meetings and four sub-committees are organized
to assess risks and formulate and promote risk prevention measures with the aim of preventing theoccurrence of risk events. In the event of significant risk events, the Emergency Risk Management
Committee is convened in an effort to swiftly solve issues and minimize damage.
② With regard to the information security system, employees regularly check the implementation of
information security rules. When outsourcing the retention, etc. of personal information, the Company
examines the information security system of such contractors in advance and conducts on-site inspections
once a year. In handling the personal information of customers, a system has been established to specify
collection and retention methods, retention period, administration manager, etc. and obtain internal
approval prior to execution. Information on errors that can happen in stores and specific countermeasures
have been disseminated via the store manual. Moreover, the Company carries out checks such as evaluationof the vulnerability of information systems and information security audits by the Internal Audit
Department.
③ Even in the case of significant damage due to a large-scale disaster, etc., the Company aims to avoid adecline in customer satisfaction and corporate value, etc. by avoiding interruption of its key business
operations. In an effort to enhance its ability to respond to crises across the Group, the Company has been
constantly reviewing and improving both “hard” aspects such as office buildings and lifelines and “soft”
aspects such as the BCP and manuals as well as the skills of employees and franchisees. In addition, theCompany has been working to conclude agreements on the procurement of goods and support for stranded
commuters during a large-scale disaster event with the aim of engaging in mutual cooperation withmunicipal governments in disaster stricken areas and fulfilling a lifeline function. We were named adesignated public institution assigned by the Prime Minister pursuant to the Basic Act on Disaster Control
Measures. To fulfill the lifeline functions expected of it as a designated public institution by maintaining

26

(TRANSLATION ONLY)
store operations and providing emergency relief supplies to disaster-hit areas, the Company ordinarily
prepares/revises disaster-prevention business plans, conducts disaster-prevention drills, stockpiles
supplies/materials, and pursues other disaster-prevention approaches, implementing its disaster-response
measures when disasters actually occur.
(3) System to Ensure the Propriety of Business Operations Conducted by the Corporate Group① The Company has established a department that controls the associated company management system,
which reports any risks arising at an associated company to the Company. Thus, information concerning
risk cases at the Company or its associated companies is appropriately reported to the parent company ona timely basis.
② The Company has established a department to support associated companies from the perspective of theorganization that supervises associated companies and from a specialist standpoint in an effort to ensure
appropriateness of operations of associated companies.
(4) Securing Effectiveness of Performance of Corporate Auditors① Corporate Auditors’ Staff are assigned to the auditors’ office to provide exclusive assistance to corporate
auditors in the execution of their duties. Corporate Auditors’ Staff have the authority to conduct
investigations necessary for audits by corporate auditors. In addition, relevant departments assist in
conducting necessary investigations for audits by corporate auditors in accordance with the content of theaudits.
② With regard to reporting to corporate auditors, matters that should be reported to corporate auditors havebeen reported to corporate auditors in a timely and appropriate manner.
The above monetary amounts and the numbers of shares in this Business Report are rounded down to thenearest unit and percentages are rounded to the nearest one decimal place.

27

(TRANSLATION ONLY)

Consolidated Balance Sheet(Millions of yen)
AssetsLiabilities
As of February
28, 2018(for reference)

As ofFebruary 28,
2019

231,860
30,124

623,998354,240

Current liabilities
Accounts payable-trade379,222
118,174598,522
123,408

46,59947,179

Short-term loans payable

36,340126,600

16,426

19,120575

50,00018,913
82,6333,411
33,779(28)
668,395
349,935
197,979
16,355
9,582

20,862120,969
4,394
57,355(124)
718,491
382,300
207,755
16,056
9,052

33,06360,7416,880
109,629
3,767
10,051
239,587
55,469113,6172,616

38,750101,995
6,683
131,804
4,263
15,015461,985
260,000
131,441
711

123,940

146,880

271

300

1,800
277
100,197
41,602
47,947
10,074573
218,262
27,27147,4252,223
331
106,672
49,791
46,836
9,468
576
229,519
31,14044,024

13,781
29,062
24,767
618,809

15,125
31,102
23,303
1,060,507

270,280
58,506
46,689166,124(1,040)270,649
58,506
46,984
166,187(1,028)

Guarantee deposits

100,686

107,034

5,377

5,865

Deferred tax assets

24,406

26,760

2,084

3,349

Other

19,56821,395

(575)

(566)

Allowance for doubtful accounts(1,095)

(835)

4,595

3,930

(726)

(848)

195
5,593
281,446
900,256

215
5,251
281,982
1,342,490

Account item
Current assets
Cash and deposits
Accounts receivable-due from
franchised stores
Lease receivables
Merchandise
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Non-current assets
Property and store equipment
Buildings and structures
Tools, furniture and fixtures
Land
Leased assets
Construction in progress
Other
Intangible assets
Software
Goodwill
Trademark right
Other
Investment and other assets
Investment securities
Long-term loans receivable

Total assets

900,256

1,342,490

28

Account item

Current portion of long-termloans payable
Lease obligations
Accounts payable-other
Income taxes payable
Deposits received
Provision for bonuses
Other
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for retirement
benefits to executive officers
and audits and supervisoryboard members
Net defined benefit liability
Asset retirement obligations
Other
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Revaluation reserve for land
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

As of February
As of28, 2018
February 28,(for reference)
2019

(TRANSLATION ONLY)

Consolidated Statement of Income(Millions of yen)
From March 1, 2017 to
February 28, 2018
(for reference)

Account item

From March 1, 2018 to
February 28, 2019

Operating revenue

289,232
103,357

Income from franchised stores
Other operating revenue
Net sales
Net sales
Gross operating revenue
Cost of sales
Gross profit(264,734)(181,374)(83,360)

302,136

392,589

109,931

412,067

264,734
657,324
181,374(288,579)

288,579(198,040)

700,647
198,040(90,539)502,607475,950
410,129
65,820Operating gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
Compensation income
Other
Non-operating expenses

799
112

714

693

320

897
1,331

382

2,099
1,304
－
1,110

Interest expenses
Loss on cancellation of leases
Loss on disaster
Other
Ordinary income
Extraordinary income－
302

Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates

441,825
60,781

319

3,835

1,720

3,456

2,768
1,655

4,514
65,141

817
1,296

6,538
57,700

738

302

－

738

Extraordinary losses

368
3,115
17,533836

Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Other
Profit before income taxes
Income taxes-current

14,1902,538

Income taxes-deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

29

224
4,141
13,891

21,853
43,590303

18,561
39,87618,32816,72926,861
32
26,828(4,015)

14,31325,562(22)
25,585

(TRANSLATION ONLY)

Consolidated Statement of Changes in Equity(From March 1, 2018 to February 28, 2019)
Shareholders’ equity

Balance at beginning of current
period(Millions of yen)

Accumulated other comprehensive income

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’equityValuationdifference on
available-forsale securities

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares

Noncontrollinginterests

Total net
assets58,506

46,689166,124(1,040)270,280

2,084

(575)

4,595

(726)

5,377

195

5,593

281,446

Changes of items during period
Dividends of surplus(25,514)(25,514)(25,514)

Change of scope of
consolidation

(0)

(0)

(0)

25,58525,58525,585

(1)

(1)

(1)

0

0

0

Profit attributable to ownersof parent
Purchase of treasury shares
Disposal of treasury shares

0

Capital increase of
consolidated subsidiaries

(4)

(4)

(4)

Increase by corporate division

70

70

70

Tax effect adjustment onchange in equity of priorperiod

224

224

224

(8)

(8)

17

17

Reversal of revaluation
reserve for land

(8)

Exercise of subscription
rights to shares(Delivery of treasury shares)

4

13

Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period

1,264

8

(664)

(121)

487

20

(341)

166

－

294

62

12

369

1,264

8

(664)

(121)

487

20

(341)

535

58,506

46,984

166,187(1,028)

270,649

3,349

(566)

3,930

(848)

5,865

215

5,251

281,98230

(TRANSLATION ONLY)(Notes to Consolidated Financial Statements)(Accounting Policies for the Preparation of Consolidated Financial Statements)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 21(Domestic)
Lawson Entertainment, Inc.
BestPractice, Inc.
SCI, Inc.
Lawson Store100, Inc.
Lawson HMV Entertainment United Cinemas Holdings, Inc.
United Entertainment Holdings Co., Ltd.
United Cinemas Co., Ltd.
SEIJO ISHII CO., LTD.
Lawson Sanin, Inc.
Lawson Bank, Inc.
Lawson urbanworks, Inc.
Chongqing Lawson, Inc.
(Foreign)
Shanghai Lawson, Inc.
Dalian Lawson, Inc.
Lawson (China) Holdings, Inc.
Saha Lawson Co., Ltd.
Shanghai Le Song Trading Co., Ltd.
Shang Hai Gong Hui Trading Co., Ltd.
Zhejiang Lawson, Inc.
Beijing Lawson, Inc.
BEIJING LUOSONG Co., Ltd.
Of the above subsidiaries, Lawson urbanworks, Inc. was included in the scope of consolidated
subsidiaries from the fiscal year under review due to its increased significance as a subsidiary.
On June 1, 2018, Lawson HMV Entertainment, Inc. changed its corporate name to Lawson
Entertainment, Inc.
On July 2, 2018, Lawson Bank Preparatory Company, Inc. changed its corporate name to Lawson Bank,Inc.
Lawson ATM Networks, Inc. was excluded from the scope of consolidation since its liquidation wascompleted as of February 25, 2019.
(2) Names of non-consolidated subsidiaries and others
LAWSONWILL, Inc.
(Domestic)
HATS UNLIMITED CO., LTD.
Food Marketing Japan, Inc.
Seikaken, Inc.
Lawson Syuhan, Inc.
TOKYO EUROPE TRADE CO., LTD.
SG Lawson, Inc.
Lawson Travel, Inc.
Lawson Digital Innovation Inc.
(Foreign)
Lawson USA Hawaii, Inc.
Jiangsu Lawson, Inc.
PG Lawson Company, Inc.
(Reasons for exclusion from the scope of consolidation)
The above nonconsolidated subsidiaries have been excluded from the scope of consolidation because
they are all small in scale and their total assets, net sales, profit or loss (corresponding to equity interest)
and retained earnings (corresponding to equity interest) and others have no material influence on the
consolidated financial statements.
2. Application of the equity method(1) Equity-method associates: 3(Domestic)
Lawson Okinawa, Inc.
Lawson Minamikyushu, Inc.
Lawson Kochi, Inc.

31

(TRANSLATION ONLY)(2) Non-consolidated subsidiaries and entities excluded from the scope of the equity-method application
Nonconsolidated subsidiaries excluded from the scope of the equity-method application(LAWSONWILL, Inc., HATS UNLIMITED CO., LTD., Food Marketing Japan, Inc., Seikaken, Inc.,
Lawson Syuhan, Inc., TOKYO EUROPE TRADE CO., LTD., SG Lawson, Inc., Lawson Travel, Inc.,
Lawson Digital Innovation Inc., Lawson USA Hawaii, Inc., Jiangsu Lawson, Inc. and PG Lawson
Company, Inc.) and entities excluded from the scope of the equity-method application (Double Culture
Partners Co., Ltd., Loyalty Marketing, Inc., Lawson Staff, Inc., AUGUSARENA CORPORATION., LTF
Co., Ltd., StageAround TOKYO Production Committee, Jiangyin Hualian Guzhitian Food Co., Ltd.,POPLAR Co.,Ltd., New Designed by Tokyo Ltd., Lawson Farm Chiba and others) were excluded fromthe scope of the equity-method application because their profit or loss (corresponding to equity interest)
and retained earnings (corresponding to equity interest) of these entities are not significant either
individually or in aggregate to the consolidated financial statements.
3.

Fiscal year end of the consolidated subsidiaries
The balance sheet date of Chongqing Lawson, Inc., Shanghai Lawson, Inc., Dalian Lawson, Inc., Lawson(China) Holdings, Inc., Saha Lawson Co., Ltd., Shanghai Le Song Trading Co., Ltd., Shang Hai Gong Hui
Trading Co., Ltd., Zhejiang Lawson, Inc., Beijing Lawson, Inc. and BEIJING LUOSONG Co., Ltd. is
December 31. In order to prepare the consolidated financial statements, the Company used thesecompanies’ financial information prepared as of such balance sheet date and significant transactions which
occur between the balance sheet date and the consolidated balance sheet date are adjusted as required forconsolidation.
The balance sheet date of Lawson Bank, Inc. is March 31. In formulating the consolidated financial
statements, the Company used this subsidiary’s provisional settlement of accounts as of the consolidatedbalance sheet date.
The fiscal year end date for the other consolidated subsidiaries corresponds with the consolidated balance
sheet date.

4. Summary of Significant Accounting Policies(1) Valuation basis and method for significant assets① Securities:
Marketable securities and investments in securities:
Available-for-sale securities:
Securities whose market value is readily determinable:
Recorded at market value with net unrealized gains and losses as a separate component of net
assets. The cost of securities sold is determined based on the moving-average method.
Other:
Stated at cost determined by the moving-average method.
② Inventories:
Merchandise:Stated at cost determined mainly by the retail method (the book value in the balance sheet iswritten down based on the decline in profitability).
(2) Depreciation method of depreciable significant assets① Property and store equipment (except for leased assets):
Mainly computed by the straight-line method.
The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8
years for tools, furniture and fixtures.
② Intangible assets (except for leased assets):
Computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which isthe estimated useful life. Furthermore, for right of trademark, amortization is mainly computed using
the straight-line method over 20 years.

32

(TRANSLATION ONLY)③ Leased assets:

Leased assets related to finance leases that do not transfer ownership of leased property
The Company applies the straight-line method using the lease term as the useful life and aresidual value of zero.
(3) Accounting standard for significant reserves① Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
② Provision for bonuses:
Provision for bonuses is provided for payments of employees’ bonuses based on the estimatedamounts.
③ Provision for retirement benefits to executive officers and audit and supervisory board members:
Provision for retirement benefits to executive officers of the Company and audit and supervisoryboard members of consolidated subsidiaries is recorded under internal regulations.
(4) Accounting method for retirement benefits① Period attributable method of estimated amount of retirement benefits
In calculating retirement benefit obligation, in order to attribute estimated amount of retirement
benefits in the period up to the end of the current fiscal year, it is based on the benefit formula basis.
② Cost treatment method of actuarial difference and prior service cost
Prior service cost is amortized starting the fiscal year incurred mainly on a straight-line basis over acertain period (10 years) within an average remaining service period of employees at the time of theirrecognition.
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis overa certain period (10 years) within an average remaining service period of employees at the time of
their recognition.
Certain consolidated subsidiaries apply the simplified method to estimate the amount required forvoluntary resignations at the end of the fiscal year as the retirement benefit liability in order tocalculate net defined benefit liability and retirement benefit expenses.
(5) Significant foreign currency transactions and foreign currency financial statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies
are translated into Japanese yen at the exchange rates at the consolidated balance sheet date. The
foreign exchange gains and losses from translation are recognized in the consolidated statement ofincome. The consolidated balance sheet accounts as well as revenue and expense accounts of foreignsubsidiaries and affiliated companies are translated into Japanese yen at the current exchange rate asof the consolidated balance sheet date except for shareholders’ equity, which is translated at thehistorical rate. Differences arising from such translation are shown as “foreign currency translation
adjustments” and “non-controlling interests,” a separate component of net assets.
(6) Amortization method and period of goodwill
Goodwill is amortized on a straight-line basis over the relevant years, depending on the reason forthe occurrence of goodwill, with a maximum of 20 years.

(7) Accounting for consumption tax
Consumption tax and local consumption tax are accounted for using the tax exclusion method.
(Changes in Accounting Policies)
The Company’s foreign consolidated subsidiaries have applied International Financial ReportingStandard 15 (IFRS 15) “Revenue from Contracts with Customers” from the first quarter of the fiscal year
ended February 28, 2019.
The impact of the application of IFRS 15 on the Company’s consolidated financial statements isimmaterial.
(Changes in Presentation)
In the “Non-operating income” section, “Dividend income” (112 million yen for the previous fiscal year)
which was included in “Other” in the consolidated statement of income in prior periods, is now separately
presented as “Dividend income” (319 million yen for the current fiscal year) from the current fiscal year
due to an increase in financial materiality.

33

(TRANSLATION ONLY)(Additional Information)(Introduction of Consolidated Taxation System)
The Company and certain consolidated subsidiaries applied for approval for the consolidated taxation
system during the current fiscal year, and they expect to adopt the consolidated taxation system
beginning from the following fiscal year. Therefore, the corresponding accounting for the current
fiscal year assumes such adoption of the consolidated taxation system in accordance with “Practical
Solution on Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System(Part 1)” (ASBJ PITF No. 5; December 28, 2015) and “Practical Solution on Tentative Treatment of
Tax Effect Accounting Under Consolidated Taxation System (Part 2)” (ASBJ PITF No. 7; March 14,2016).

34

(TRANSLATION ONLY)(Notes to Consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:

342,857 million yen

2. Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation of Land
(Law No. 34, March 31, 1998). The resulting revaluation difference has been included in net assets as“Revaluation reserve for land.”
Revaluation method: The value of land is determined based on the notified prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance Implementing the Law Concerning
Revaluation of Land (Government Ordinance No. 119, March 31, 1998) and theassessed value as stipulated in Article 2, Item 5 of the same ordinance.
Date of revaluation: February 28, 2002
The difference between book value and market value of the revalued land as of the consolidated balance
sheet date was 151 million yen.

35

(TRANSLATION ONLY)(Notes to Consolidated Statement of Income)Impairment loss
The Company and its consolidated subsidiaries (collectively, the “Group”) identify each store as the smallest
cash generating unit.
The carrying value of asset groups whose profitability has significantly decreased was written down to therecoverable amount, with the difference recognized as impairment loss under extraordinary losses.
Category by use

Stores

Other

Total

Impairment loss
(millions of yen)

Location

AssetsTokyo

Buildings; Tools, furniture and fixtures; and others

1,590

Osaka

"

1,505

Others"

10,240

―

Land

50

―

Software503―

Goodwill

1――

Category by non-current assets
Buildings and structures
Tools, furniture and fixtures
Land
Leased assets
Software
Goodwill
Other

7,981
587
50
4,693
503
1
74

13,891

million yen
"
"
"
"
"
"

The recoverable amount of the asset groups is the higher of net selling price or value in use. The net selling
price of land was calculated based on the value appraised by a real estate appraiser or contract price, and thevalue in use was calculated by discounting estimated future cash flows mainly using a discount rate of 3.6%.

36

(TRANSLATION ONLY)(Notes to Consolidated Statement of Changes in Equity)
1. Number of outstanding shares and treasury shares
Number of shares
Number of shares
Increase during
Decrease during
at the end of
at the end of thethe period
the periodprevious period
period(thousand shares) (thousand shares)(thousand shares)(thousand shares)
Outstanding shares－

100,300

Common stock－

100,300

Treasury shares
Common stock
244
0
3
241
Notes:
1. The increase in treasury shares of 0 thousand shares resulted from purchases of stock of less than one
share unit.
2. The decrease in treasury shares of 3 thousand shares resulted from decreases of 3 thousand shares dueto the exercise of stock option right and 0 thousand shares due to requests for additional purchases ofstock of less than one share unit.
2. Dividend(1) Dividend payment
Date of resolution

Class ofsharesDividend payment(millions of yen)

Dividend
per share(yen)

Record date

Effective date

General meeting ofshareholders(May 22, 2018)

Commonstock

12,757127.50February 28, 2018

May 23, 2018

Directors’ meeting(October 11, 2018)

Commonstock

12,757127.50August 31, 2018

November 9, 2018

(2) Dividends for which the record date is in the current period and the effective date is after the
year-end consolidated balance sheet date
Dividend
Dividend
Class of Source ofRecordEffective
payment
per share
Date of resolution
sharesdividenddate
date(millions of yen)
(yen)
General meeting ofCommon RetainedMay
Februaryshareholders
12,757127.50stock
earnings
28, 2019
22, 2019(May 21, 2019)
3. Number of stock that can be exercised by outstanding subscription rights to shares (excluding those
not yet in the exercisable period)
43,700 shares

37

(TRANSLATION ONLY)(Notes to Financial Instruments)
1. Matters relating to the status of financial instruments(1) Policy for financial instruments
The Group primarily uses short-term deposits, etc., to manage its funds and raises funds as necessary
through borrowings from financial institutions and leasing according to the financing plan.
(2) Nature, extent of risk, and risk management system for financial instruments
Trade receivables, such as accounts receivable - due from franchised stores, lease receivables andaccounts receivable-other, are exposed to credit risk from business counterparties.
Investment securities are primarily shares of companies with business relationships and listed shares
which are exposed to the risk of market price fluctuations. With regard to this risk, the Company monitors
the financial conditions of business counterparties on a regular basis.
Long-term loans receivable (mainly construction cooperation payments and merchant loan) andguarantee deposits are exposed to credit risks of borrowers and landlords, etc. With regard to this risk, theCompany manages credit on a daily basis at the relevant division and seeks early acknowledgement andminimization of collection concerns due to deterioration in a borrower’s financial situation, etc.
Among trade payables, most of the accounts payable-trade, accounts payable-trade for franchised stores,
accounts payable-other and deposits received held as a result of bill settlement services have payment due
dates within one month, while most deposits received held as a result of ticket sales transactions havepayment due dates within 6 months.
Short-term loans payable are mainly for the purpose of procuring working capital, and are due within 1
year.
Long-term loans payable are mainly for the purpose of funding necessary for M and A, and are due
within 5 years.
The primary purpose of lease obligations related to finance lease transactions is securing the funds
required for capital investments and the maximum redemption period is 15 years after the consolidatedbalance sheet date.
With regard to the liquidity risk associated with fundraising (risk that payments cannot be executed on
the payment due dates), the Company prepares and updates financial plans on a timely basis and manages
liquidity risk by measures including maintaining adequate liquidity on hand.
(3) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is notavailable, other rational valuation techniques are used instead. Since multiple factors are considered in theestimation of fair value, the results of the estimation might differ if other valuation techniques were used.

38

(TRANSLATION ONLY)
2. Matters relating to the fair values of financial instruments
The carrying amount, fair values, and difference as of February 28, 2019, are as follows. (Financial
instruments whose fair value cannot be reliably determined are not included as described in “(Note 2) Financial
instruments whose fair values cannot be reliably determined.”)(Millions of yen)

(1) Accounts receivable-due from franchised stores(2) Lease receivables(3) Accounts receivable-other
Allowance for doubtful accounts (*1)(4) Investment securities
Available-for-sale securities

Carrying
amount47,17919,120120,969(117)
120,852
11,162

Fair value

Difference

47,17918,321－(798)

120,852－

11,162－44,024(5) Long-term loans receivable
Allowance for doubtful accounts (*1)(59)
43,903(61)

Total assets(1) Accounts payable-trade43,964
107,034(365)
106,668
348,948
123,408

106,867
348,286
123,408

198
(661)
－

(2) Short-term loans payable

126,600

126,600－(3) Accounts payable-other(4) Deposits received

101,995
131,804

101,995
131,804－－(5) Long-term loans payable (*2)

310,000

310,000－(6) Guarantee deposits
Allowance for doubtful accounts (*1)

170,192
164,420(5,771)(6) Lease obligations (*2)
964,001
958,230(5,771)
Total liabilities(*1) Allowance for doubtful accounts related to accounts receivable-other, long-term loans receivable andguarantee deposits have been deducted.
(*2) Long-term loans payable and lease obligations include liabilities maturing within one year.
(Note 1) Method of calculating the fair values of financial instruments
Assets(1) Accounts receivable-due from franchised stores and (3) Accounts receivable-other
These instruments are stated at their carrying values, because they are short-term and their carrying
values are approximately the same as their fair values.
(2) Lease receivables
The fair values of lease receivables are calculated by discounting future cash flows using the yield rateof government bonds for the remaining period.
(4) Investment securities
The fair values of investment securities are stated at the quoted market price on the stock exchange forthe equity instruments.
(5) Long-term loans receivable
The fair values of long-term loans receivable are determined based on the present value, derived bydiscounting the total amount of principal and interest at the expected rate of interest to be applied for similarloans.
(6) Guarantee deposits
Guarantee deposits are determined by discounting future cash flows, which reflect the collectability,
using the yield rate of government bonds over the remaining period.
Liabilities(1) Accounts payable-trade, (3) Accounts payable-other and (4) Deposits received
These instruments are stated at their carrying values, because they are short-term and their carrying
values are approximately the same as their fair values.
(2) Short-term loans payable)
These instruments are stated at their carrying values, because they are determined using floating interest
rates that reflect market rates in a short-time and their carrying values are approximately the same as their

39

(TRANSLATION ONLY)
fair values.
(5) Long-term loans payable (including current portion of long-term loans payable)
These instruments are stated at their carrying values, because they are determined using floating interest
rates that reflect market rates in a short-time and their carrying values are approximately the same as theirfair values.
(6) Lease obligations (including current portion of lease obligations)
The fair values of lease obligations are determined by discounting the cash flows related to the
obligations at the expected rate of interest to be applied for similar lease transactions.
(Note 2) Financial instruments whose fair values cannot be reliably determined
Category

Carrying amount (millions of yen)

Unlisted equity securities
Investments in subsidiaries and affiliated companies

945
17,591

1,440
Other
Because financial instruments listed above do not have market prices and their fair values cannot be
reliably determined, they are not included in “(4) Investment securities.”(Notes to Per-Share Data)
1. Net assets per share
2. Profit per share

2,763.54 yen
255.71 yen(Notes to Significant Subsequent Events)
Not applicable.

40

(TRANSLATION ONLY)

Non-consolidated Balance Sheet(Millions of yen)
Assets
Account item
Current assets
Cash and deposits
Accounts receivable-due from
franchised stores

Liabilities
As of February
28, 2018(for reference)

As ofFebruary28, 2019

164,391
8,483

171,740
8,266

44,22946,032413,869
109,034

Short-term loans payable

35,00054,80051,62032,750－50,00029,48821,756
3,817
2,191
91,891
2,704
3,784
216,72250,000104,638
10,91334,391
23,1332,752
2,260
96,943
2,950
4,854
184,110－
121,603
11,794176

201

25,68925,304565,114

27,57822,932597,980

231,785
58,50647,757237,281
58,50647,761

63,224

Legal capital surplus

47,696

47,69638

19,838Other capital surplus

60

64

46,51243,079126,563132,042

13,236

714

727

727

50,00050,00075,83581,315(1,040)(1,028)

1,508

2,782

2,083

3,349

(575)
195
233,489
798,603(566)
215
240,280
838,260

1,460
15,83450,5862,234
17,324－
634,212
312,924
156,067
28,634
11,873
9,529
105,120

16,37992,466

Deferred tax assets

23,094

Other

1,532

Allowance for doubtful accounts(1,092)

Total assets

348,392
106,137

71,720

Merchandise

Construction in progress
Intangible assets
Software
Goodwill
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Investments in capital ofsubsidiaries and associates
Long-term loans receivable
Long-term loans receivable fromsubsidiaries and associates
Long-term prepaid expenses
Guarantee deposits

Current liabilities
Accounts payable-trade

1,699
44,07429,494
14,092487
277,212
13,324

24,237

Leased assets

As ofFebruary28, 2019

Short-term loans payable tosubsidiaries and associates
Current portion of long-term
1,501
loans payable
Lease obligations
16,898
Accounts payable-other
57,662
Income taxes payable
2,687
Accrued expenses
12,043
Deposits received(51)
Provision for bonuses
666,520
Other
341,088
163,750 Non-current liabilities
Long-term loans payable
30,565
Lease obligations
10,087
8,999
Provision for retirement benefits
Provision for retirement benefits
125,580
to executive officers
Asset retirement obligations
2,106
Other
47,784
31,868
Total liabilities
15,431
Net assets
485 Shareholders’ equity
Capital stock
277,646
Capital surplus
12,861

Lease receivables

Prepaid expenses
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Non-current assets
Property and store equipment
Buildings
Structures
Tools, furniture and fixtures
Land

As of February
28, 2018(for reference)

Account item

798,603

26,698Retained earnings
Legal retained earnings

Other retained earnings
General reserve
Retained earnings brought
26,457
forwardTreasury shares
1,197
Valuation and translation(833)
adjustments
Valuation difference on
available-for-sale securities
Revaluation reserve for land
Subscription rights to shares
Total net assets
838,260
Total liabilities and net assets
17,415
93,68941

(TRANSLATION ONLY)

Non-consolidated Statement of Income(Millions of yen)
From March 1, 2017 to
February 28, 2018
(for reference)

Account item

From March 1, 2018 to
February 28, 2019

Operating revenue
282,075

Income from franchised stores

294,483

Other operating revenue
Net sales

39,766

321,842

39,818334,302

Net sales
Gross operating revenue(51,048)

51,048372,891(51,376)

51,376385,678(37,098)

37,098(37,187)

37,187

Cost of sales(13,949)

Gross profit
Operating gross profit(14,188)335,792

348,491

Selling, general and administrative expenses

284,771

302,779

Operating income
Non-operating income

51,02145,711

Interest income

753

618

Dividend income
Other

582
1,930

8,796
1,821

3,266

11,236

Non-operating expenses
Interest expenses

1,629

1,984

Loss on cancellation of leases
Loss on valuation of derivatives

1,235
409

1,626

－
505

Loss on disaster
Other

3,779

－
810
1,084

50,508

Ordinary income
Extraordinary income

51,443Gain on sales of investment securities－

738

Gain on liquidation of subsidiaries and associates
Gain on sales of shares of subsidiaries and associates

－
302

5,756
302

5,505

－

6,494

Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss

366
2,936
16,854

Other
Income before income taxes

1,410

Income taxes – current

9,105

Income taxes – deferred

720

222
3,857
12,981
21,56829,24342

17,36540,572

12,438
9,825
19,417

Profit303(2,868)9,569
31,002

(TRANSLATION ONLY)

Non-consolidated Statement of Changes in Equity(From March 1, 2018 to February 28, 2019)(Millions of yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings
Retained
Generalearnings
reservebrought
forwardTotal
retainedearnings

TreasurysharesTotalshareholders’equity75,835

126,563(1,040)231,785

Dividends of surplus(25,514)(25,514)(25,514)

Profit31,00231,00231,002

Balance at the beginning of current
periodCapital
stock

Legal
retainedearnings

Other
capitalsurplusTotal
capitalsurplusLegalretainedearnings

58,506

47,69660

47,757727

50,000Changes of items during period

Purchase of treasury shares
Disposal of treasury shares

00Reversal of revaluation reserve for
land

(8)

Exercise of subscription rights toshares (Delivery of treasury shares)

4

4

(1)

(1)

0

0

(8)

(8)
13

17

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period

－

－

4

4

－

－

5,479

5,479

12

5,495

58,506

47,69664

47,761727

50,00081,315132,042(1,028)237,28143

(TRANSLATION ONLY)(Millions of yen)
Valuation and translation adjustments
Valuation difference
Total
Revaluation reserveon availablevaluation and translation
for landfor-sale securities
adjustments
Balance at the beginning of current
periodChanges of items during period

2,083

(575)

1,508

Subscription rights toshares
195

Total
net assets
233,489

Dividends of surplus(25,514)

Profit31,002

Purchase of treasury shares(1)

Disposal of treasury shares

0

Reversal of revaluation reserve for
land

(8)

Exercise of subscription rights toshares (Delivery of treasury shares)

17

Net changes of items other thanshareholders' equity

1,265

8

1,274

20

1,294

Total changes of items during period

1,265

8

1,274

20

6,790

Balance at end of current period

3,349

(566)

2,782

215

240,280

44

(TRANSLATION ONLY)(Notes to the Non-consolidated Financial Statements)(Significant Accounting Policies)
1. Valuation basis and method for assets(1) Marketable securities and investments in securities:① Investments in subsidiaries and affiliated companies
Stated at cost determined by the moving-average method.
② Available-for-sale securities
Securities whose market value is readily determinable:
Recorded at market value with net unrealized gains and losses as a separate component of net
assets. The cost of securities sold is determined based on the moving-average method.
Other:
Stated at cost determined by the moving-average method.
(2) Merchandise inventories:
Merchandise:Stated at cost determined mainly by the retail method (the book value in the balance sheet iswritten down based on the decline in profitability).

2.

Depreciation method of depreciable assets(1) Property and store equipment (except for leased assets):
Computed by the straight-line method.
The ranges of useful lives are from 10 to 34 years for buildings and structures and from 5 to 8
years for tools, furniture and fixtures.
(2) Intangible assets (except for leased assets):
Computed by the straight-line method.
Costs of software for internal use are amortized by the straight-line method over 5 years, which isthe estimated useful life.
(3) Leased assets:
Leased assets related to finance leases that do not transfer ownership of leased property
The Company applies the straight-line method using the lease term as the useful life and a residual
value of zero.
(4) Long-term prepaid expenses:
Computed by the straight-line method.

3. Accounting standard for significant reserves(1) Allowance for doubtful accounts:
Allowance for doubtful accounts is provided at the amount of possible losses from uncollectible
receivables based on the actual rate of losses from bad debt for ordinary receivables and on estimatedrecoverability for specific doubtful receivables.
(2) Provision for bonuses:
Accrued employees’ bonuses are provided for payments of employees’ bonuses based on the estimatedamounts.
(3) Provision for retirement benefits:
Provision for retirement benefits is provided at the amount calculated based on the retirement benefit
liability and pension assets at the consolidated balance sheet date.
① Method of attributing the estimated amount of retirement benefits to periods
In calculating the retirement benefit obligation, the benefit formula method is used to attribute theestimated amount of retirement benefits to periods up to the end of the current fiscal year.
② Accounting treatment for actuarial differences and prior service cost
Actuarial differences are mainly amortized from the following fiscal year on a straight-line basis overa certain period (10 years) within an average remaining service period of employees at the time ofrecognition.
Treatment of unrecognized actuarial differences and unrecognized prior services cost in the nonconsolidated balance sheet differs from the consolidated balance sheet.

45

(TRANSLATION ONLY)(4) Provision for retirement benefits to executive officers:
Provision for retirement benefits to executive officers prepared for required payments at the end of
the current fiscal year is recorded under internal regulations.

4.

Accounting for consumption tax
Consumption tax and local consumption tax are accounted for using the tax exclusion method.

(Changes in Presentation)
1. In the “Investments and other assets” section, “Investments in capital of subsidiaries and associates” (38million yen for the previous fiscal year), which was included in “Other” in the non-consolidated balance
sheet in prior periods, is now separately presented as “Investments in capital of subsidiaries and associates”(19,838 million yen for the current fiscal year) from the current fiscal year due to an increase in financial
materiality.
2. In the “Non-operating income” section, “Compensation income” (382 million yen for the previous fiscal
year), which was presented separately in the non-consolidated statement of income in prior periods, is
now included in “Other” from the current fiscal year due to a decline in financial materiality.
(Additional Information)(Introduction of Consolidated Taxation System)
The Company applied for approval for the consolidated taxation system during the current fiscal year, and it
expects to adopt the consolidated taxation system beginning from the following fiscal year. Therefore, thecorresponding accounting for the current fiscal year assumes such adoption of the consolidated taxation system inaccordance with “Practical Solution on Tentative Treatment of Tax Effect Accounting Under Consolidated
Taxation System (Part 1)” (ASBJ PITF No. 5; December 28, 2015) and “Practical Solution on Tentative Treatment
of Tax Effect Accounting Under Consolidated Taxation System (Part 2)” (ASBJ PITF No. 7; March 14, 2016).
(Notes to the Non-consolidated Balance Sheet)
1. Accumulated depreciation of property and store equipment:
2.

Due from/to subsidiaries and affiliated companies
Short-term receivables due from subsidiaries and affiliated companies
Long-term receivables due from subsidiaries and affiliated companies
Short-term payables due to subsidiaries and affiliated companies
Long-term payables due to subsidiaries and affiliated companies

296,344 million yen

36,210
207
5,999
322

million yen
"
"
"

3.

Revaluation of land used for businessLand used for business was revalued on the basis prescribed by the Law Concerning Revaluation of Land
(Law No. 34, March 31, 1998). The resulting revaluation difference has been included in net assets as“Revaluation reserve for land.”
Revaluation method: The value of land is determined based on the notified prices adjusted reasonably as
stipulated in Article 2, Item 4 of the Ordinance Implementing the Law Concerning
Revaluation of Land (Government Ordinance No. 119, March 31, 1998) and theassessed value as stipulated in Article 2, Item 5 of the same Ordinance.
Date of revaluation: February 28, 2002
The difference between book value and market value of the revalued land as of the non-consolidatedbalance sheet date was 151 million yen.

4.

Guarantee obligations
The Company guarantees the accounts payable-trade and deposit liabilities of the following
subsidiaries
Lawson Bank, Inc.
130,000 million yen"
Lawson Entertainment, Inc.
435"
SCI, Inc.
414

46

(TRANSLATION ONLY)(Notes to the Non-consolidated Statement of Income)Transaction amount with affiliated companies
Operating transactions
Operating revenue
Goods purchased
Selling, general and administrative expenses
Transactions other than operating transactions

44,895486
41,591
8,920

million yen"""(Notes to the Non-consolidated Statement of Changes in Equity)
Number of treasury shares

241,897 shares(Notes to Accounting for Income Taxes)
Components of deferred tax assets and liabilities
Enterprise taxes payable
Accrued employees’ bonuses
Loss on write-down of investments in affiliated companies
Excess of depreciation
Excess of amortization of software
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss
Other
Subtotal of deferred tax assets
Less valuation allowances
Total deferred tax assets

657 million yen
903
"
8,397
"
8,506
"
522
"
"
5,320
"
270
"
9,353
"
4,575
38,506 million yen(9,361)"
29,145 million yen
29,145 million yen

Deferred tax assets-net

47

(TRANSLATION ONLY)(Notes to Related-Party Transactions)
Parent Company
Attribute

Parent Company

EquityBusiness line
ownershipCompany nameor profession
percentage

Mitsubishi
Corporation

GeneralTradingCompany

Directholding
50.2%

RelationshipTransaction
EndingDescription
amountbalance
Directors’ofAccount item
Business(millionsposts held transactions (millions ofrelationshipyen)of yen)concurrently
Receipt of
debt
Transactions
－
－
9,800
guarantees
under abusiness
Payment
Nocollaborationof0－
agreement－
guarantee
feesTransaction conditions and the policies for determining those conditions:
1. The Company is provided with debt guarantees for loans payable from Mitsubishi Corporation Financial
and Management Services(Japan)Ltd. by Mitsubishi Corporation. Guarantee fee rates are determinedrationally, taking into account market interest rates.
Subsidiaries and affiliates
Attribute

EquityBusiness line
Company nameownershipor profession
percentage

SCI, Inc.

Domestic
Convenience
Store Business

LawsonEntertainmentRelated
Entertainment,
Business
Inc.

Subsidiary

Affiliate

Lawson (China)
Holdings, Inc.

Overseas
Business

Directholding100.0%

Directholding100.0%

Directholding100.0%

RelationshipTransaction
EndingDescription
amountbalance
Directors’ofAccount item
Business(millionsposts held transactions (millions ofrelationshipyen)of yen)concurrently
Repayment
42,200of funds
Short-term
8,100
Borrowingloans payable
41,100SCM
Yes
of funds
Accrued－interest
Borrowing0
interest
Sale oftickets andsoftware formusic andvideo

Control ofbusiness in
China

Yes

Yes

Repaymentof funds
Borrowingof funds
Borrowinginterest
Collectionof funds
Loaning
interestCapitalincrease

Lawson Bank,Inc.

Financial
Services
Business

Directholding
95.0%

Bankingbusiness

Yes

Guarantee
obligations
Receipt ofguarantee
fees

Lawson ATM
Networks, Inc.

Financial
Services
Business

Directholding
95.0%

Placement ofATMs in the
LAWSON
storesNo

Repaymentof funds
Borrowinginterest

Directholding
49.0%Managementof
LAWSONTHREE F
storesYes

Domestic
LTF Co., Ltd. Convenience
Store Business

Receipt oflease fees

18,500

Short-termloans payable
23,800Accruedinterest
1－

19,838Long-term
loans
receivable
Accruedinterest

130,000－－

Accounts
receivableother3

Short-term
10,400 loans payable

12,605
51

5

－
－

－

1

Accruedinterest

－

1,147

Lease
receivables

9,673

Transaction conditions and the policies for determining those conditions:
1. The Company manages the funds of some subsidiaries centrally and there are lending and borrowing
transactions between the Company and its subsidiaries.
2. The interest rates for loans and borrowings are determined rationally taking into account market interest

48

21,500(TRANSLATION ONLY)
rates.
3. The Company provides debt guarantees for loans payable received from financial institutions by Lawson
Bank, Inc.
Guarantee fee rates are determined rationally, taking into account market interest rates.
4. The liquidation of Lawson ATM Networks, Inc. was completed as of February 25, 2019.

Subsidiaries of an affiliated companies under common control
Attribute

Subsidiaryof the parent
company

RelationshipTransaction
EndingEquityDescription
Company Business line
Account balance
amountDirectors’
ownership Businessof
nameor profession(millions of
item(millionspercentage relationship posts heldtransactions
yen)of yen)concurrently
PurchasesforcompanyAccounts
18,132operatedpayable59,897(735,871)
storestrade(purchases
Mitsubishi
Sales offor
Shokuhin processed
VendorNo－
franchisedCo., Ltd.
foods
stores)Accounts
Shipping
payable4,701
49,993costs
otherReceipt of
Accounts
shipping
50,0704,430
receivablecosts
otherMitsubishi
Corporation
Subsidiary
Financial and Contractedof the parent Management
operations
company Services(Japan)Ltd.

－

Recipient of
loans

No

Repaymentof funds
Borrowingof funds
Borrowinginterest

40,18649,9860

Short-termloanspayableAccruedinterest

Transaction conditions and the principles on the decision thereof:
1. The terms and conditions for goods purchased transactions are determined to be same as those for othergeneral business transactions. Furthermore, regarding purchases for the franchised stores, the Company acts
as an alternative payer but not as a direct party for the purchase.
2. The interest rates for borrowings are determined rationally taking into account market interest rates.
3. The transaction amount does not include consumption taxes. However, the ending balance includes
consumption taxes.

49

9,800
0

(TRANSLATION ONLY)(Notes to Per-Share Data)
1. Net assets per share
2. Profit per share

2,399.24 yen
309.85 yen(Notes to Significant Subsequent Events)
Not applicable.

50

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 4, 2019
To the Board of Directors of
Lawson, Inc.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Shigeo Kawashima
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Kazuaki Furuuchi

Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Masumi Nakagawa

Pursuant to the fourth paragraph of Article 444 of the Companies Act, we have audited the consolidated
financial statements, namely, the consolidated balance sheet as of February 28, 2019 of Lawson, Inc. (the"Company") and its consolidated subsidiaries, and the related consolidated statements of income and changes
in equity for the fiscal year from March 1, 2018 to February 28, 2019, and the related notes.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial statementsthat are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

51

(TRANSLATION ONLY)
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Lawson, Inc. and its consolidated subsidiaries as of February 28, 2019, andthe results of their operations for the year then ended in accordance with accounting principles generally
accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure isrequired under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese
language.

52

(TRANSLATION ONLY)INDEPENDENT AUDITOR'S REPORT
April 4, 2019
To the Board of Directors of
Lawson, Inc.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Shigeo Kawashima
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:Kazuaki Furuuchi
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Masumi Nakagawa

Pursuant to the first item, second paragraph of Article 436 of the Companies Act, we have audited thefinancial statements, namely, the balance sheet as of February 28, 2019 of Lawson, Inc. (the "Company"),
and the related statements of income and changes in equity for the 44th fiscal year from March 1, 2018 to
February 28, 2019, and the related notes and the accompanying supplemental schedules.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements and theaccompanying supplemental schedules in accordance with accounting principles generally accepted inJapan, and for such internal control as management determines is necessary to enable the preparation offinancial statements and the accompanying supplemental schedules that are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements and the accompanying
supplemental schedules based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and the accompanying supplemental schedules are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements and the accompanying supplemental schedules. The procedures selected depend on
the auditor's judgment, including the assessment of the risks of material misstatement of the financial
statements and the accompanying supplemental schedules, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity's preparation and fairpresentation of the financial statements and the accompanying supplemental schedules 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 entity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements and the accompanying supplemental
schedules.
53

(TRANSLATION ONLY)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the financial statements and the accompanying supplemental schedules referred to above present
fairly, in all material respects, the financial position of Lawson, Inc. as of February 28, 2019, and the results of its
operations for the year then ended in accordance with accounting principles generally accepted in Japan.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required
under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese languageand "the accompanying supplemental schedules" referred to in this report are not included in the attached financial
documents.

54

(TRANSLATION ONLY)<Copy of the Audit Report of the Board of Audit and Supervisory Board>
AUDIT REPORTWith respect to the directors’ performance of their duties during the 44th business term from March 1, 2018
to February 28, 2019, we have prepared this Audit Report, through due deliberations based on the audit
reports prepared by each Audit and Supervisory Board Member, and hereby report as follows:
1. Auditing Methods Employed by the Audit and Supervisory Board Members and Audit and Supervisory
Board and Contents of Such Methods(1) We have established audit policies and audit plans for the current term, and received the reports fromeach Audit and Supervisory Board Member regarding their execution of audits and results thereof, as
well as reports from the Directors, other relevant personnel, and the Accounting Auditor regarding theexecution of their duties, and asked for explanations as necessary.
(2) Each Audit and Supervisory Board Member, pursuant to the auditing standards of Audit andSupervisory Board Members established by the Audit and Supervisory Board , has followed the audit
policies and audit plans for the current term, communicated with the Directors, officers, internal audit
department and other relevant employees, endeavored to collect information and develop the audit
environment, and performed the audit using the following methods:(i) We have attended the Board of Directors meetings, the management meetings, Compliance andRisk management committee meetings, Internal Control over Financial Reporting committee
meetings and the like, and other important meetings, received reports from the Directors,
officers, internal audit department and other relevant employees regarding the execution of theirduties, asked for explanations whenever necessary, reviewed important approval documents andthe like, and investigated the status of operations and assets at the head office, area office, andother principal offices and stores. With respect to subsidiaries, we have communicated andexchanged information with the Directors, Audit and Supervisory Board Members and otherrelevant personnel of subsidiaries, requested the subsidiaries to report on their business where
necessary, and investigated their status of operations and assets.
(ii) Pursuant to the audit items and audit methods regarding internal control system established by
the Audit and Supervisory Board , we have monitored and verified the resolution of the Boardof Directors regarding the development of the system as prescribed by item (vi) of paragraph 4,
Article 362 of the Companies Act and paragraph 1 and paragraph 3, Article 100 of theOrdinance for Enforcement of the Companies Act and the status of the development andoperation of the system based on such resolution (Internal Control System), as the system
necessary to ensure that the execution of the duties by the Directors, described in business
report, complies with laws and regulations and the Articles of Incorporation and other system
necessary to ensure the properness of operations of a Stock Company and corporate groupconsisting of its subsidiaries. In connection with internal control over financial reporting, we
received reports from the Directors and other relevant personnel, and Deloitte Touche Tohmatsu
LLC regarding the status of evaluation and audit of such internal control respectively, and asked
for explanations whenever necessary.
(iii) Regarding the transaction with the parent company described in the business report, we haveexamined the details of the matter noted in item (v)-(a) of Article 118 of the Ordinance for
Enforcement of the Companies Act and the judgment and its reason in item (v)-(b) in view ofthe situation of deliberations of the Board of Directors and others.
(iv) We have monitored and verified whether Accounting Auditor maintained its independence andproperly conducted its audit, and we received reports from Accounting Auditor regarding thestatus of the execution of its duties and, whenever necessary, asked for explanations. In
55

(TRANSLATION ONLY)
addition, we have received the notice from the Accounting Auditor that “System for ensuring
proper execution of duties” (matters set forth in each item of Article 131 of the Company
Accounting Regulations) is organized in accordance with the “Quality Control Standards for
Audits” (Business Accounting Council, October 28, 2005) and the like, and, when necessary,
asked for explanations.

Based on the above methods, we have examined the “business report and the supplementary schedules
thereof,” the “consolidated financial statements (consolidated balance sheet, consolidated statement ofincome, consolidated statements of changes in net assets, and notes to consolidated financial statements)” and“financial statements (balance sheet, statement of income, statements of changes in net assets, and notes tofinancial statements) and supplementary schedules thereof” for this term.
2. Result of Audit(1) Result of Audit of Business Report and Other Relevant Documents(i) We have found that business report and the supplementary schedules thereof fairly present thestatus of the Company, in conformity with the applicable laws and regulations and the Articles
of Incorporation.
(ii) Regarding the execution of duties by the Directors, we have found no misconduct or material
matter that violates applicable laws and regulations or the Articles of Incorporation.
(iii) We have found that the content of the resolution of the Board of Directors regarding theInternal Control System is adequate. In addition, we have found no matters on which to give
remarks in regard to the relevant description in the business report and execution of duties by
the Directors concerning Internal Control System.
(iv) Regarding the transaction with the parent company described in the business report, we havefound no matters on which to give remarks in regard to the judgment of the Board of Directors
and its reason on the matter noted to prevent the harming of the interests of the Company uponcarrying out the said transaction and whether the said transaction would harm the interests of
the Company.
(2) Result of Audit of Consolidated Financial Statements
We have found that methods and the result of the audit by the Accounting Auditor, Deloitte
Touche Tohmatsu LLC, are adequate.
(3) Result of Audit of Financial Statements and Supplementary Schedules thereof.
We have found that methods and the result of the audit by the Accounting Auditor, Deloitte
Touche Tohmatsu LLC, are adequate.
April 10, 2019
The Audit and Supervisory Board of Lawson, Inc.
Outside Audit and Supervisory Board Member Toshio Takahashi(full-time)
Audit and Supervisory Board Member
Masakatsu Gonai(full-time)
Outside Audit and Supervisory Board Member Tetsuo Ozawa
Outside Audit and Supervisory Board Member Eiko Tsujiyama

56

(TRANSLATION ONLY)REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and References
Proposal No. 1: Appropriation of Surplus
The Company regards the ROE (consolidated return on equity) as a significant management indicator and has been
conducting business activities. In addition, one of our key measures for shareholder returns has been the continuous
payment of dividends while securing internal reserves necessary for future business development during the course ofsustainable growth of the Lawson Group.
We intend to maintain year-end dividends for the current fiscal term at ¥127.50 per share, the same amount as in theprevious term. Accordingly, full-year dividends, including interim dividends of ¥127.50 per share, will be ¥255 pershare.
We intend to continue to place emphasis on the distribution of profit to shareholders into the future.
We will endeavor to raise the Company’s corporate value by appropriating internal reserves for necessary business
investments such as opening new stores, renovating existing stores and new business development.
Year-end dividends:(1) The assignment of the dividend property to shareholders and total amount thereof:¥127.50 per share of the Company’s common stock to a total of ¥12,757,409,221(2) Effective date of the dividends from surplus:
Wednesday, May 22, 2019

57

(TRANSLATION ONLY)[Reference: Changes in Dividends and Consolidated Dividend Payment Ratio]

Consolidated dividend payment ratio (%)

Consolidated dividend payment ratio (%)

Interim dividend per share (Yen)Dividend per share (Yen)

Year-end dividend per share (Yen)(Plan)(Plan)

39th Term

40th Term

41st Term

42nd Term

43rd Term

44th Term(Year ended
Feb. 2014)(Year ended
Feb. 2015)(Year ended
Feb. 2016)(Year ended
Feb. 2017)(Year ended
Feb. 2018)(Year ended
Feb. 2019)

Interim dividend
per share
Year-end dividend
per share
Annual dividend
per share
Consolidated net
income per share
Consolidated
dividend payment
ratio
ROE

39th Term

40th Term

41st Term

42nd Term

43rd Term

44th Term(Current Period)

¥110

¥120

¥122.50¥125¥127.50¥127.50

¥110

¥120

¥122.50¥125¥127.50(Plan) ¥127.50

¥220

¥240

¥245

¥250

¥255

(Plan) ¥255

¥380.04¥327.08¥313.81¥363.96¥268.16¥255.71

57.9%

73.4%

78.1%

68.7%

95.1%

(Plan) 99.7%

16.1%

13.0%

12.0%

13.5%

9.7%

9.3%

Notes：
1. Consolidated dividend payment ratio is calculated based on annual dividend per share divided by consolidated
net income per share.
2. The Company’s policy for dividend payment in the future is to set the target for consolidated dividend
payment ratio at 50%, with the minimum annual amount of ¥150 per share.

58

(TRANSLATION ONLY)
Proposal No. 2: Election of Eight (8) Directors
The terms of office of all eight (8) Directors expire at the conclusion of this 44th Ordinary General Meeting of
Shareholders. Accordingly, we propose that you elect eight (8) Directors.
If this proposal is approved and passed, there will be eight (8) Directors of the Company after the meeting ofshareholders, of which three (3) will be Outside Directors. All of the Outside Directors are “Independent
Directors/Audit and Supervisory Board Members.”
The candidates for directors are as stated in the following table. Please refer to pages 35 to 42 for the brief personal
histories of the indicated candidates.
Furthermore, please refer to page 45 for the policy and procedures of the Company’s Board of Directors fornominating candidates for Directors.

No.

Name

Position at the Company, etc.

1

Sadanobu Takemasu

2Katsuyuki Imada

3

Satoshi Nakaniwa

4

Emi OsonoMember of the Board

5

Yutaka Kyoya

Member of the Board

6

Keiko Hayashi

Member of the Board

7

Kazunori Nishio

Member of the Board

8

Miki Iwamura

Member of the Board

President,
Representative Director
Member of the Board,
Senior Executive
Managing Officer
Member of the Board,
Executive Managing
Officer

Notes:
1. Ms. Keiko Hayashi’s legal name is Keiko Hama.
2. Ms. Miki Iwamura’s legal name is Miki Oku.
3. Positions at the Company, etc. are as of April 11, 2019.

59

Board ofDirectors’
meeting
attendance
rate

Reappointment

100%

Reappointment

100%

Reappointment

100%

Reappointment, outside,
independent
Reappointment
Reappointment, outside,
independent
Reappointment
Reappointment, outside,
independent

85.7%
85.7%
85.7%
85.7%
100%

(TRANSLATION ONLY)
No.
1

Brief Personal History, Position, Assignment and Important
Concurrent Positions
April 1993

Joined Mitsubishi Corporation

June 2010

Executive Assistant to President and Chief Executive Officer,
Corporate Administration Department and Corporate Strategy
and Planning Department, Mitsubishi Corporation

May 2014

Senior Executive Vice President, Representative Director,
Division Director of Corporate Sales Division ― Lawson
Mart, Lawson, Inc.

March 2016

Senior Executive Vice President, Representative Director― Corporate Staff Divisions; SEIJO ISHII, Natural Lawson
and Lawson Store100 Business; Overseas Business; andEntertainment and Consumer Service Business, andDivision Director of Corporate Sales and Store Development
Division, Lawson, Inc.

June 2016

President and COO, Representative Director, Lawson, Inc.

March 2017

President, Representative Director, and Division Director ofMarketing Division, Lawson, Inc.

September 2017

President and CEO, Representative Director, Chairman of theBoard, CHO, and Division Director of Entertainment
Business Division, Lawson, Inc.

February 2019

President and CEO, Representative Director, Chairman of theBoard, CHO, and Division Director of Marketing Division,Lawson, Inc.

March 2019

President and CEO, Representative Director, Chairman of theBoard, CHO, and Division Director of Marketing Strategy
Division, Lawson, Inc. (Current position)

Sadanobu Takemasu(August 12, 1969)
Reappointment■Number of the Company’s
shares held:

3,200■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Years in office

5 years (as of theconclusion of themeeting ofshareholders)

Reasons for nomination as Director
Mr. Sadanobu Takemasu has been nominated as a candidate for Director of theCompany as he has led the entire Group centered on the domestic convenience store
business, as well as contributed to the improvement of corporate value as President
and CEO, Representative Director, Chairman of the Board of Lawson, Inc. We would
like to continue to benefit from his management and supervision of the Company byleveraging his experience.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

60

(TRANSLATION ONLY)No.
2

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Katsuyuki Imada(January 22, 1963)

April 1985

Joined Mitsubishi Corporation

March 2002

General Manager of Corporate Planning Office, Lawson,
Inc.

March 2004

Senior Vice President and Division Director of Corporate
Strategy and Planning Division, Lawson, Inc.

March 2007

Executive Vice President and Division Director of Corporate
Strategy and Planning Division, Lawson, Inc.

May 2008

Unit Manager, Retail Division, Living Essentials Group,
Mitsubishi Corporation

October 2012

Executive Vice President and Division Director of Corporate
Strategy and Planning Division, Lawson, Inc.

September 2013

Executive Managing Officer, acting CCO, CFO, andDivision Director of Corporate Strategy and Planning
Division, Lawson, Inc.

September 2016

Executive Managing Officer, Division Director of Corporate
Strategy and Planning Division, Division Director of Next
Generation CVS Division, Lawson, Inc.

March 2017

Senior Executive Managing Officer and Division Director of
Corporate Strategy and Planning Division, Lawson, Inc.

May 2017

Member of the Board, Senior Executive Managing Officer
and Division Director of Corporate Strategy and Planning
Division, Lawson, Inc. (Current position)

April 2018

Senior Vice President, Mitsubishi Corporation

Reappointment■Number of the Company’s
shares held:

1,800■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Years in office

2 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Katsuyuki Imada has been nominated as a candidate for Director, as he has
contributed to the promotion of workstyle reforms as Member of the Board andSenior Executive Managing Officer and Division Director of Corporate Strategy andPlanning Division of Lawson, Inc., in charge of overall corporate strategy including
corporate governance and the development of next generation CVS. We would liketo continue to benefit from his management and supervision of the Company byleveraging his experience.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

61

(TRANSLATION ONLY)
Brief Personal History, Position, Assignment and Important
Concurrent Positions

No.
3

Satoshi Nakaniwa

April 1993

Joined Mitsubishi Corporation

March 1994

Investment and Credit Department, Mitsubishi Corporation

May 1999

Living Essentials Group Administration Department,
Mitsubishi Corporation

April 2005

Senior Vice President, Assistant to CFO, Meidi-Ya
Corporation (currently Mitsubishi Shokuhin Co., Ltd.)

December 2008

General Manager, Mitsubishi International Corporation

September 2013

Team Leader, Chemicals Group Administration Department,
Mitsubishi Corporation

October 2015

Deputy General Manager, Chemicals Group Administration
Department, Mitsubishi Corporation

February 2017

General Manager, Finance and Accounting Division,Lawson, Inc.

March 2017

Executive Vice President and CFO, Lawson, Inc.

May 2017

Member of the Board, Executive Vice President, and CFO,
Lawson, Inc.

March 2018

Member of the Board, Executive Vice President, CFO, andDivision Director of Shared Services Division, Lawson, Inc.

March 2019

Member of the Board, Executive Managing Officer, CFO,
and Division Director of Shared Services Division, Lawson,
Inc. (Current position)(May 20, 1969)
Reappointment■Number of the Company’s
shares held:

100■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Years in office

2 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Satoshi Nakaniwa has been nominated as a candidate for Director, as he has
contributed to the improvement of business efficiency and cost reductions as
Division Director of the Shared Services Division. He is also in charge of overall
finance and accounting as well as business risk management and investor relations as
Member of the Board, Executive Managing Officer, and CFO of Lawson, Inc. We
would like to continue to benefit from his management and supervision of theCompany by leveraging his experience.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

62

(TRANSLATION ONLY)
No.
4

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Emi Osono

April 1988

Joined Sumitomo Bank (currently Sumitomo Mitsui Banking
Corporation)

April 1998

Assistant Professor, Institute of Asia-Pacific Studies, Waseda
University

April 2000

Assistant Professor, Graduate School of International
Corporate Strategy, Hitotsubashi University

October 2002

Associate Professor, Graduate School of International
Corporate Strategy, Hitotsubashi University

April 2010

Professor, Graduate School of International Corporate
Strategy, Hitotsubashi University

May 2012

Outside Director, Lawson, Inc. (Current position)

April 2018

Professor, School of International Corporate Strategy,
Hitotsubashi University Business School (Current position)(August 8, 1965)
Reappointment, outside,
independent■Number of the Company’s
shares held:

800■Attendance at Board of
Directors’ meetings

12 out of 14 (85.7%)■Years in office

7 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Outside Director
Ms. Emi Osono has been nominated as a candidate for Outside Director, as she has awealth of academic knowledge on global corporate management, operational
strategies, and organizational behavior. We have been receiving her proactive
opinions and suggestions regarding the Company’s management at the Board of
Directors’ meetings, and we would like to continue to benefit from her supervision of
the Company’s management by leveraging her experiences.
Ms. Osono serves as Vice Chairperson of the Company’s Nomination andCompensation Advisory Committee, which consists exclusively of non-executive
directors and outside Audit and Supervisory Board members (part-time). She has also
been registered as an Independent Director/Audit and Supervisory Board Member
with the Tokyo Stock Exchange, Inc. pursuant to the rules specified by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

63

(TRANSLATION ONLY)
No.
5

Brief Personal History, Position, Assignment and Important
Concurrent Positions
April 1984

Joined Mitsubishi Corporation

April 2008

General Manager, Grain Unit, Foods (Commodity) Div.,
Mitsubishi Corporation

April 2013

Division COO, Foods (Commodity) Div., Mitsubishi
Corporation

May 2013

Member of the Board, Lawson, Inc. (Current position)

April 2014

Senior Vice President, Division COO, Living Essential
Resources Division, Mitsubishi Corporation

November 2015

Member of the Board, Olam International Limited (Current
position)

Reappointment

April 2016

Executive Vice President, Group CEO, Living Essentials
Group, Mitsubishi Corporation■Number of the Company’s
shares held:

June 2016

Member of the Board, Mitsubishi Shokuhin Co., Ltd.

April 2019

Executive Vice President, Group CEO, Consumer Industry
Group, Mitsubishi Corporation (Current position)

Yutaka Kyoya(January 7, 1962)

0■Attendance at Board of
Directors’ meetings

12 out of 14 (85.7%)■Years in office

6 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Yutaka Kyoya has been nominated as a candidate for Director, as he has awealth of knowledge on the life industry field, mainly in food, through his duties at
Mitsubishi Corporation, the parent company of Lawson, Inc. We have been
receiving his proactive opinions and suggestions regarding the Company’s
management at the Board of Directors’ meetings, and we would like to continue tobenefit from his supervision of the Company’s management by leveraging his
experiences.
Mr. Kyoya serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of non-executive directors andoutside Audit and Supervisory Board members (part-time).

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

64

(TRANSLATION ONLY)No.
6

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Keiko Hayashi

June 1983

Joined SHIMIZU CONSTRUCTION CO., LTD, Los
Angeles, USA

November 1992

Dog Food Trade Strategy, Sales Technology Manager,
Master Foods Japan Ltd.

August 1993

Marketing Director, Member of Management Decision
Committee, Master Foods Japan Ltd.

August 1995

Marketing Director, Member of Management Committee,
Mattel Japan Ltd.

February 1998

Country Manager, VICTORIA’S SECRET Catalog,
LIMITED Group(March 16, 1959)
October 1998

Merchandising Director, Disney Store Japan

Reappointment, outside,
independent

December 1999

President and Representative Director, Lands’ End Japan
KK■Number of the Company’s
shares held:

June 2006

Founded I･M ･ A Co., Ltd. (currently DoCLASSE the Store
Co., Ltd.) and assumed the position of President and CEO(Current position)

September 2007

Founded DoCLASSE Co., Ltd. and assumed the position of
President and CEO (Current position)

February 2011

Founded IMA Holdings and assumed the position of
President and CEO (Current position)

March 2011

Founded fitfit Co., Ltd. and assumed the position of
President and CEO (Current position)

December 2011

Founded IMA People Co., Ltd. and assumed the position of
President and CEO (Current position)

May 2016

Outside Director, Lawson, Inc. (Current position)

900■Attendance at Board of
Directors’ meetings

12 out of 14 (85.7%)■Years in office

3 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Outside Director
Following her career in product development and marketing-related work at anadvertising agency, foreign consulting firm, and Disney Store Japan, among others,
Ms. Keiko Hayashi founded DoCLASSE Co., Ltd., which handles the planning,
manufacturing, sales and delivery of clothes, fashion goods and jewelry. As thepresident of the company, she has extensive experience and expertise in corporate
management. Ms. Hayashi has been nominated as a candidate for Outside Director,
as we have been receiving her proactive opinions and suggestions regarding theCompany’s management at the Board of Directors’ meetings, and we would like tocontinue to benefit from her supervision of the Company’s management byleveraging her experience.
Ms. Hayashi serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of non-executive directors andoutside Audit and Supervisory Board members (part-time). She has also beenregistered as an Independent Director/ Audit and Supervisory Board Member with
the Tokyo Stock Exchange, Inc., pursuant to the rules specified by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
Ms. Keiko Hayashi’s legal name is Keiko Hama.

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(TRANSLATION ONLY)
No.
7

Brief Personal History, Position, Assignment and Important
Concurrent Positions

Kazunori Nishio(July 13, 1961)

April 1984

Joined Mitsubishi Corporation

July 2010

Seconded to CGC Japan Co., Ltd.

May 2011

Senior Managing Director, CGC Japan Co., Ltd.

October 2013

Acting General Manager, Living Essentials Group CEO
Office, Mitsubishi Corporation

April 2014

Division COO, Retail Div., Mitsubishi Corporation

April 2016

Senior Vice President, Division COO, Retail Div.,
Mitsubishi Corporation (Current position)

May 2016

Member of the Board, Lawson, Inc. (Current position)

Reappointment■Number of the Company’s
shares held:

0■Attendance at Board of
Directors’ meetings

12 out of 14 (85.7%)■Years in office

3 years (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Director
Mr. Kazunori Nishio has been nominated as a candidate for Director, as he has awealth of knowledge on the life industry field, mainly in retail, through his duties at
Mitsubishi Corporation, the parent company of Lawson, Inc., as well as at a retailer
to which he has been seconded. We have been receiving his proactive opinions andsuggestions regarding the Company’s management at the Board of Directors’
meetings, and we would like to continue to benefit from his supervision of theCompany’s management by leveraging his experience.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

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(TRANSLATION ONLY)No.
8Brief Personal History, Position, Assignment and Important
Concurrent Positions

Miki Iwamura

April 1988

Joined Dentsu Inc.

October 1995

Joined Booz Allen Hamilton Inc.

October 2001

Associate Professor (Management Strategy, Marketing
Strategy), Nihon University

July 2003

Brand CEO of Mimiso NY, Richemont Japan K.K.

July 2007

Chief Marketing Officer, Google Japan Inc. (currently
Google Japan G.K.)

May 2015

Managing Director, APAC Brand and Marketing, CMO
Japan, Google G.K. (current position)

May 2018

Outside Director, Lawson, Inc. (Current position)(October 24, 1965)
Reappointment, outside,
independent■Number of the Company’s
shares held:

0■Attendance at Board of
Directors’ meetings

12 out of 12 (100%)■Years in office

1 year (as of theconclusion of the meetingof shareholders)

Reasons for nomination as Outside Director
Ms. Miki Iwamura has been nominated as a candidate for Outside Director, as she
has deep insight into management, marketing, and brand reinforcement using digitalbig data through business execution as Managing Director at APAC Brand andMarketing, and CMO Japan, Google G.K. In addition, she has been proactively
making suggestions and disseminating information on workstyle reforms and thepromotion of women’s advancement in the workplace. We have been receiving her
proactive opinions and suggestions regarding the Company’s management at theBoard of Directors’ meetings, and we would like to continue to benefit from hersupervision of the Company’s management by leveraging her experience.
Ms. Iwamura serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of non-executive directors andoutside Audit and Supervisory Board members (part-time). She has also beenregistered as an Independent Director/Audit and Supervisory Board Member with theTokyo Stock Exchange, Inc., pursuant to the rules specified by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.
Ms. Miki Iwamura’s legal name is Miki Oku.

Notes:
1. In accordance with Article 24 of the current Articles of Incorporation, Lawson, Inc. has concluded the following
liability limitation agreements with Ms. Emi Osono, Mr. Yutaka Kyoya, Ms. Keiko Hayashi, Mr. Kazunori Nishio,
and Ms. Miki Iwamura. Under the liability limitation agreement concluded with the Company, Directors (excluding
those who are executive directors, etc.) assume liability for damages specified in Article 423, Paragraph 1 of theCompanies Act within the limit not exceeding the amount stipulated by laws and regulations, provided that they
have performed duties which resulted in a cause of such liability in good faith without committing acts of grossnegligence.
2. The nominees’ Brief Personal History, Position, Assignment and Important Concurrent Positions are as of April 11, 2019.

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(TRANSLATION ONLY)
Proposal No. 3: Election of Two (2) Audit and Supervisory Board Members
The terms of office of Tetsuo Ozawa, Audit and Supervisory Board Member, and Eiko Tsujiyama, Audit andSupervisory Board Member, expire at the conclusion of this 44th Ordinary General Meeting of Shareholders.
Accordingly, we propose that you elect two (2) Audit and Supervisory Board Members.
The consent of the Audit and Supervisory Board has been obtained for this proposal.
The candidates for Audit and Supervisory Board Members are as stated below.
Furthermore, please refer to page 45 for the policy and procedures of the Company’s Board of Directors fornominating candidates for Audit and Supervisory Board Members.
No.
1

Brief Personal History, Position and Important Concurrent
Positions

Eiko Tsujiyama(December 11, 1947)
Reappointment, outside,
independent■Number of the Company’s
shares held:

April 1974

Registered as Certified Public Accountant

August 1980

Assistant Professor, College of Humanities, Ibaraki
University

April 1985

Assistant Professor, Faculty of Economics, Musashi
University

April 1991

Professor, Faculty of Economics, Musashi University

April 2003

Professor, School of Commerce and the Graduate School ofCommerce, Waseda University

June 2008

Outside Audit and Supervisory Board Member, Mitsubishi
Corporation

June 2010

Outside Director, ORIX Corporation (Current position)

May 2011

Outside Audit and Supervisory Board Member, Lawson, Inc.
(Current position)

June 2011

Outside Audit and Supervisory Board Member, NTT
DOCOMO, INC. (Current position)

June 2012

External Audit and Supervisory Board Member, Shiseido
Company, Limited (Current position)

April 2018

Emeritus Professor, Waseda University (Current position)

900■Attendance at Board of
Directors’ meetings

14 out of 14 (100%)■Attendance at Audit andSupervisory Board
meetings

16 out of 16 (100%)■Years in office

8 years (as of theconclusion of themeeting ofshareholders)

Reasons for nomination as Outside Audit and Supervisory Board
Member
Ms. Eiko Tsujiyama has been nominated as a candidate for Outside Audit andSupervisory Board Member, as she has held positions as members of the BusinessAccounting Council of the Financial Services Agency and the National Tax Councilof the National Tax Agency as an academic, as well as having considerable expertisein finance and accounting as emeritus professor (accounting). She has been
appropriately auditing the execution of duties of directors and is expected to continue
to sufficiently fulfill the role of an Audit and Supervisory Board Member.
Ms. Tsujiyama serves as a member of the Company’s Nomination and Compensation
Advisory Committee, which consists exclusively of non-executive directors andoutside Audit and Supervisory Board members (part-time). She has been registered asan Independent Director/Audit and Supervisory Board Member with the Tokyo Stock
Exchange, Inc., pursuant to the rules specified by the exchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

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(TRANSLATION ONLY)No.
2

Brief Personal History, Position and Important Concurrent
Positions

Yuko Gomi

April 1999

Admitted to the Japanese bar, joined T. Kunihiro and Co.
Attorneys-at-Law

January 2012

Partner, T. Kunihiro and Co. Attorneys-at-Law (Current
position)

July 2012

Councilor, The Foundation for the Promotion of Industrial
Science (Current position)

July 2013

Information Security Advisor, Japan Coast Guard (Current
position)

September 2013

Legal Advisor to the Legal Compliance Office, General
Affairs Division, Minister’s Secretariat, Cabinet Office (Parttime, current position)

June 2018

Outside Audit and Supervisory Board Member Nippon Gas
Co., Ltd. (Current position)(March 28, 1972)
New appointment, outside,
independent■Number of the Company’s
shares held:

0

Reasons for nomination as Outside Audit and Supervisory Board
MemberMs. Yuko Gomi has been nominated as a candidate for Outside Audit andSupervisory Board Member, as she has a wealth of business experience related tolaws and regulations and risk management centered on the area of corporate legal
affairs from a legal perspective and broad insight as a lawyer, and is expected to
sufficiently fulfill the roles of an Audit and Supervisory Board Member.
She has been registered as an Independent Director/Audit and Supervisory Board
Member with the Tokyo Stock Exchange, Inc., pursuant to the rules specified by theexchange.

Particular conflicts of interest between the Candidate andLawson, Inc.
There are no particular conflicts of interest between the Candidate and Lawson, Inc.

Notes:
1． In accordance with Article 32 of the current Articles of Incorporation, Lawson, Inc. has concluded the following
liability limitation agreement with Ms. Eiko Tsujiyama. Under the liability limitation agreement concluded with theCompany, Outside Audit and Supervisory Board Members assume liability for damages specified in Article 423,
Paragraph 1 of the Companies Act within a limit not exceeding the amount stipulated by laws and regulations,provided that they have performed duties which resulted in a cause of such liability in good faith withoutcommitting acts of gross negligence. The Company plans to conclude the same contract with Ms. Yuko Gomi.
2． The nominees’ Brief Personal Histories, Position and Important Concurrent Positions are current as of April 11,
2019.

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(TRANSLATION ONLY)[Reference] Policy and procedures of the Company’s Board of Directors for nominating candidates
for Directors and Audit and Supervisory Board members
Lawson, Inc. has established the Director/Audit and Supervisory Board Member Election Standard as the basis fornominating candidates for directors and Audit and Supervisory Board members. Those with different expertise andexperience are nominated as candidates for directors to ensure diversity of the Board of Directors as a whole and tocarry out appropriate decision making and supervision. Furthermore, in addition to the independence standard specified
by the Tokyo Stock Exchange, Inc., we have established our own criteria concerning independence in order to appoint
two or more Independent Directors/Audit and Supervisory Board Members who are unlikely to have a conflict ofinterest with general shareholders in an effort to ensure transparency and fairness of management.
In addition, as an advisory organ that recommends candidates for directors, candidates for representative directors,
and posts to the Board of Directors, we have voluntarily established a Nomination and Compensation Advisory
Committee. All six members of the committee are non-executive directors or Audit and Supervisory Board members(part-time), with five being Independent Directors/Audit and Supervisory Board Members. The committee is designed
to recommend candidates for directors, candidates for representative directors, and posts to the Board of Directors witha high level of independence. In the event that a director or representative director engages in an act that significantly
damages corporate value or ceases to satisfy the Director/Audit and Supervisory Board Member Election Standard after
assuming his/her post, a dismissal or other treatment will be considered after consultation with the Committee.
As for candidates for Audit and Supervisory Board members, those with knowledge and expertise in finance,accounting, risk management and law, which are necessary for auditing operations, are nominated as candidates for
Audit and Supervisory Board members upon obtaining the consent of the Audit and Supervisory Board.

1. Director/Audit and Supervisory Board Member Election Standard(1) A person who can deeply relate to the Lawson Group’s corporate philosophy of “Creating Happiness and Harmony
in Our Communities”(2) A person who has the capability to contribute to the sustainable growth and corporate value improvement of theLawson Group(3) A person who has no hindrance in health, both physically and mentally, in the performance of his/her duties(4) A person who is popular, possesses dignity, impeccable ethics, and a law-abiding spirit(5) A person who has objective decision-making abilities and is gifted with both foresight and insight(6) A person who has a wealth of experience and knowledge on corporate management and an area of expertise(7) A person who is able to secure enough time to do the job(8) A person who does not fall under the criteria for disqualification provided by the Companies Act(9) For Independent Directors/Audit and Supervisory Board Members, a person who does not conflict with the Criteria
concerning Independence as specified by the Company

2. Criteria concerning Independence
Besides the independence standard specified by the Tokyo Stock Exchange, Inc., we have established our own
Criteria concerning Independence. Outside directors or outside Audit and Supervisory Board members who do notconflict with either of them are appointed as Independent Directors/Audit and Supervisory Board Members.
(1) A person for whom the Lawson Group is a key business partner, or an executive officer thereof
A supplier group who provides products or services to the Lawson Group, with the amount of sales to the Lawson
Group in the most recent business year amounting to 2% of the supplier group’s consolidated net sales or more
(2) A key business partner of the Lawson Group, or an executive officer thereof
A client group to whom the Lawson Group provides products or services, with the amount of sales of the Lawson
Group to the client group in the most recent business year amounting to 2% of the Lawson Group’s consolidated net
sales (gross operating revenues) or more
(3) A consultant, accounting expert or legal expert who receives substantial monies or other property from the Lawson
Group other than as director/Audit and Supervisory Board member remuneration.
A consultant, accounting expert such as a certified public accountant, or a legal expert such as a lawyer, who receives
substantial monies or other property from the Lawson Group other than as director/Audit and Supervisory Board
member remuneration, and who has received compensation of 5 million yen per year or more over the past two years(4) A major shareholder of Lawson, Inc. (if the major shareholder is a corporation, an executive officer of thecorporation)(5) (A close relative is) An executive officer of the Lawson Group(6) (A close relative is) A non-executive director or accounting advisor (if the Independent Director/Audit andSupervisory Board Member is an outside Audit and Supervisory Board member) of the Lawson Group(7) A person whose total term of office at the time of re-appointment exceeds eight years for outside director and 12
years for outside Audit and Supervisory Board member
Even if the person falls under any of the above, said person can be elected as a candidate for an independent outside
director/Audit and Supervisory Board member if the Board of Directors deems said person to have substantial
independence. In such case, the reason will be explained and disclosed at the time of his/her election as outside
director/Audit and Supervisory Board member.

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