United Super Markets Holdings Inc.

Integrated Report

2023
Integrated Report for the Year Ended
February 29, 2024

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

DataCore Philosophy,
Business Vision and Mission

Business Vision
In our business, we aim to: ffer products and services tailored to variousO
lifestyles that give customers access to a range ofhealthy, valuable foods
 reate a corporate culture that supports employee
Cself-fulfillment by providing skills training andencouraging people to achieve their potential

Core PhilosophyWe: ffer customers healthy, valuable choices
Oin food ultivate deep relationships to build
C
prosperous local communities ontinually develop and grow over time while seeking
Cto maximize the enterprise value of member companies
 reate new value by dealing fairly with our businessCpartners for customer benefit
 elcome new companies into the Group to help usWmeet the needs of local communities and engage in
fair, transparent corporate governance while
respecting the management of each member
company of U.S.M.Holdings

 onstantly pursue innovation and moveCwith the times

MissionWe will: reate new value by mobilizing the collectiveCstrength of the Group across company andbusiness categories, while respecting themanagerial autonomy of our operating companies
L ive up to the trust and expectations of ourcustomers and maximize corporate value by
constantly pursuing improved scale and quality
 ledge to remain an open Group that welcomesP
new member companies

01

Introduction

Integrated Report

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

2023

CONTENTS

Editorial Policy

Introduction

Sustainability Strategy

Core Philosophy, Business Vision and Mission……… 01
Contents and Editorial Policy…………………………… 02

Basic Sustainability Policy(formulated in April 2023) ������������� 25

U.S.M.Holdings at a Glance…………………………… 03

Material Issues……………………………………………… 26

Our Path to Value Creation……………………………… 04

Environmental

Our Value Creation Story
Message from the President……………………………… 05
Realization of the “Concept of Supermarket with ¥1
Trillion in Sales in Kanto”………………………………… 09
Value Creation Model…………………………………… 10
Source of Value Creation………………………………… 11

Value Creation Strategy“Third Medium-Term Business Plan: Challenge for‘Beyond Supermarket’” and Future Vision…………… 12
Third Medium-Term Business Plan (FY2023–FY2025)…… 13
Strategies for Executing the Value Creation Story
Maruetsu ………………………………………………… 15
K a s u m i …………………………………………………… 17
MaxValu Kanto…………………………………………… 19
Infrastructure Strategy
Product Strategy………………………………………… 21
L o g i s t i c s ………………………………………………… 22
Digital Strategy…………………………………………… 23
Financial Strategy………………………………………… 24

Environmental Management…………………………… 27
Decarbonization and a Circular Economy……………… 28
SocialP ursuit of Diverse Human Resources and Job
Satisfaction ����������������� 30

Integrated Report 2023 has been produced byreferencing the value creation process in the International
Integrated Reporting Council (IIRC)’s Integrated
Reporting Framework, and the pursuit of corporate
sustainability and social sustainability as proposed by
the Ministry of Economy, Trade and Industry’s Study
Group on Approaches to Making More Substantial the
Dialogues for Creation of Sustainable Corporate Value. It
also acts as a communication tool that systematicallysummarizes our Basic Sustainability Policy, which setsout our goals of maximizing medium- to long-term
corporate value and achieving lasting growth.
We will work to enhance the content of future
Integrated Reports to give a wide range of readers,from shareholders and other investors to residents oflocal communities, including our employees, a deeper
understanding of the U.S.M.H Group.

Reporting Period

Food Safety and Security……………………………… 34
Sustainable Food Value Chain………………………… 35

March 1, 2023 to February 29, 2024

C reation of Healthy, Valuable Lives through Our Foods
and Services����������������� 36

Scope

Governance
Enhancing Corporate GovernanceCorporate Governance……………………………… 38
R oundtable Discussion by Independent Outside
Directors������������������ 41
Directors and Corporate Auditors………………… 43
Group Governance / Compliance…………………… 45
Risk Management …………………………………… 46

Data
9-Year Highlights…………………………………………… 47
Company Data / Stock Information……………………… 48
02

Note: Some information is from outside the reporting period.

United Super Markets Holdings Inc. (hereinafter, "theCompany" or "U.S.M.H") and its operating companies(hereinafter, "the Company" or collectively "the Group"or "the U.S.M.H Group") and its operating companies
Figures in this document (such as monetary values) arerounded down to the unit of measurement shown, andpercentages are rounded to one decimal place.

Forward-Looking Statements
The Company’s current plans, forecasts, strategies andother statements in this report include forward-looking
statements based on management’s judgment in lightof information available at the time the report was
prepared. Various factors could cause actual results inthe future to differ significantly from these forward-looking statements. Risks and uncertainties that could
affect results include, but are not limited to, the economic conditions in the Company’s business environment, market competition, foreign exchange rates, andtax and other systems.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

U.S.M.Holdings at a Glance
The U.S.M.H Group will create and provide new value by refining and integrating operational know-how at our three operating companies.
Over 520 Stores in the Greater Tokyo Area
The greater Tokyo area market, where the U.S.M.H Group primarily operates, is Japan’s
most populous region. The U.S.M.H Group operates over 520 stores in this market.

Store Network

Established in 1945. Operates Maruetsu, which focuses
on fresh food; Maruetsu Petit, an urban-format supermarket; and Lincos, a supermarket that offers high-quality products and services, in Tokyo and five prefectures.

Maruetsu
Kasumi

United Super Markets Holdings Inc.

MaxValu Kanto

United Super Markets Holdings Inc. (U.S.M.H) isa joint holding company for three

Group total:

supermarkets—Maruetsu, Kasumi and

The “United” in our company name represents
the “unity” of our supermarket businesses, ourhope for the development and prosperity of7

195

Tochigi
Prefecture
stores4

4529 stores

SaitamaPrefecture 55
storesPercentage of Japan’s population living in
the greater Tokyo area*

commitment to continue cultivating deep

34.7%

relationships to build prosperous
communities.

43.48 million people
125.41million people

108
12
2

2 34

91

the regions we operate in, and our

1

8

Gunma
Prefecture
stores30

Note: As of February 29, 2024

Established in 1946. Operates, a new type ofsupermarket where people, food, lifestyles and cultureinteract through the products and services offered;
Food Square, a specialty food store; Food Market, astore that mainly offers fresh food; and Food Off
Stocker, a store that appeals to customers with low
prices, in Tokyo and five prefectures.

MaxValu—operating in the greater Tokyo area.

304

149

1

IbarakiPrefecture
stores109

14

Tokyo Metropolitan
Area
stores40

163

Kanagawa
Prefecture 49
stores

51

49
2

Chiba
Prefecture
stores103*Data taken from the Basic Resident Register as of January 1, 2023

Established in 2009. Operates MaxValu, which offers
customers maximum value in daily groceries, andMaxValu Express, which is based on the concept ofoffering everyday convenience, competitive prices andsurprising variety, in Tokyo and three prefectures.

Results for Fiscal 2023 (Year ended February 29, 2024) (Consolidated Results of U.S.M.H)
Net sales

Operating income

690.4 billion yen

6.9 billion yen

Total investments

GHG emissions reduction(CO2 equivalent)

24.8 billion yen

Approx.

70,000 tons

Number of Employees

Profit attributable to owners ofparent1.0Group totalbillion yen

Maruetsu 15,572

27,905

Kasumi 10,418

MaxValu Kanto 1,772

Gender proportion of employees
Male

33.7% Female 66.3%

Notes: 1.The number of employees is calculated as of February 29, 2024.
2.Part-time employees are calculated based on an 8-hour work day and the average number of employees during the period.
3.The Group total includes employees of U.S.M.Holdings.

03

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Our Path to Value Creation
In an era where people can live to more than 100, customer lifestyles and their
expectations for food are changing drastically and more quickly than anticipated. This is due toignica_logo_CMYK
various changes in the operating environment, including the declining population, climate change issues and international events, in addition to the advance of DX.
In the midst of changes in business environment, U.S.M.H will work to create new value that meets the needs of customers now and in the future.

U.S.M.H values
connections
A new supermarket alliance in thegreater Tokyo area
On March 2, 2015, United Super Markets Holdings

The vision of U.S.M.H is to achieve

Rollout ofprivate label brandeatime products

Release of original
mobile app Scan&Go
ignicaStart of operations at
our plant factory The
TERRABASE

Launch of plant-based
products
BEYOND BEEF® under
the Green Growers
private label

Inc. (U.S.M.H) was established as a joint holding
company of The Maruetsu Inc., Kasumi Co., Ltd.
intense competition within and beyond thesupermarket industry.

2017/10

2019/102022/62022/11■Number of stores ■Consolidated net sales ●Consolidated operating income(Billions of yen)

494
14.0

2015

503
14.3

2016

679.2

677.5

670.4

649.5

511
14.0

2017

516
11.8

2018

676.3
519

718.9

518
19.1

521

690.4

691.9
529

529

12.1

9.3

2019

701.1

2020
04

2021

(wellbeing). U.S.M.H will continue to further
expand in scale in the future. In order to go“Beyond Supermarket” to fulfill greatersocial responsibilities and achieve thewellbeing of people in local communities, ouremployees, and their families, we willcontinue to deepen our connections with all
stakeholders and evolve into a group that
attracts many people.

and MaxValu Kanto Co., Ltd., in response to

2015/3

community development and prosperity
through healthy, valuable choices in food

6.3

6.9

2022

2023 (FY)Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Message from the President
1

In addition to the
expansion of ourbusiness scale, we will
establish our
supermarkets as apresence that supports
the local community byproviding unique value.

R ecognition of External Environment
and Outlook

The Japanese Economy Has Shiftedfrom Deflation to Inflation, and the Costof Living Continues to Rise.
A Year That Called for the Accelerationof Structural Reforms
To sum up the business environment surrounding the
distribution and retail industries, the progression of thedecline in the birthrate and aging of the population has
become a long-term market trend, as has the diversification of consumer awareness. Under these circumstances, in recent years, following the social changes
brought about by the COVID-19 pandemic, the cost ofliving has increased against a backdrop of soaring raw
materials and energy prices and the depreciation of theyen. Individual companies in the supermarket industry are now being called on to further accelerate theirstructural reforms for the survival of their businesses.
In the U.S.M.H Group, we have addressed thefundamental question of “What role do we want to playin society?” After thoroughly considering our vision fora sustainable future, we formulated and launched theThird Medium-Term Business Plan (FY2023 – FY2025).
The Plan is a three-year initiative for the reform of products, stores, and revenue in order to advance alongside
all our stakeholders. It aims for the wellbeing of local
communities, particularly their residents, and that of
the Group’s employees and their families.
In fiscal 2023, the first year of the Plan, comparedwith the previous fiscal year, when the effects of the
COVID-19 pandemic still lingered, social and economic
activities showed an overall recovery as people started
to move around the community more and spending by
inbound foreign tourists exceeded pre-pandemic levels.
On the other hand, raw materials procurement costs
remained high due to soaring energy prices and the depreciation of the yen, and logistics and personnel costs
continued to rise, resulting in a significant deteriorationin the cost environment during the year. Prices of foodWith the slogan of “Beyond
Supermarket,” the U.S.M.H
Group continues to drive its
engines to pursue sustainablegrowth through the Third
Medium-Term Business Plan. In
the second half of fiscal 2024,
we will realize the “Concept ofSupermarket with ¥1 Trillion
sales in Kanto” through ourbusiness integration with
Inageya. Here, I will present theGroup’s future vision andexplain our future directions.

Motohiro Fujita
President andRepresentative Director

05

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Message from the President
and lifestyle-related products also rose, and there was amarked tendency to economize among consumers.
Under these circumstances, the Group’s consolidated financial results fell significantly short of the projections set out in the Third Medium-Term Business Plan.
I view this as the result of our inability to adequately
withstand the various rises in costs and prices in our
responses to this harsh external environment.
In other words, at a time when the Japanese economy was shifting from deflation to inflation, when we
considered what we should look at and how we should
respond, we needed to gauge what was happening
with customers’ household finances and what customers’ concerns were, and to take a more refined
approach to those concerns. Our inability to do thisthoroughly is a major point of reflection for fiscal 2023.
Looking ahead, we expect this external environment
to continue for the immediate future, and our challenge
will be to ask ourselves what initiatives we need toundertake to pursue the sustainability of our business insuch an environment. Seeking efficiency and profitability
at a level quite different from what we have previously
taken for granted will be of immense importance for theGroup. This will require us to transform our conventional
business models. To reform our existing infrastructure
and change the way our employees work and how they

think about and pursue their work. The need for suchchanges has become clear.
The reforms of products, stores, and revenue that wewill advance through the Third Medium-Term Business
Plan (“Beyond Supermarket”) are based on this recognition of the external environment. I am hopeful that the
progress of these reforms will be steady, that we will
start to achieve concrete results in the second year of
the plan, and that they will lead to the sustainability of
the Group.

2

Review of Fiscal 2023

In a Harsh Cost Environment, Although
Maruetsu and MaxValu Kanto Performed
Strongly, Kasumi Struggled, Recording
Declines in Revenue and Income.
Looking back on the sales situation over the past year,
Maruetsu, which operates mainly in inner-city areas,
worked to revitalize its existing stores, including largescale renovations, while strengthening its delicatessen
and fresh food delicatessen items and its private label
brand, maruetsu365, to offer unique value to customers. At the same time, as part of its “last mile” initiatives
to respond to customer convenience, Maruetsu expanded the number of stores that offer online delivery,
quick commerce, and home delivery services. Meanwhile, it also promoted low-cost operations throughmeasures such as the introduction of full self-checkout
and the use of digital technologies for stock-taking andordering operations. These initiatives achieved results,
with Maruetsu’s operating revenue increasing steadily,and it was able to secure profits well in excess of theprevious fiscal year. Maruetsu today has overcome theharsh business environment of the past two years andis accomplishing company-wide reforms, including its
organizational culture, under the leadership of its new
President, Masaharu Homma
Kasumi, which is based in Ibaraki Prefecture, focused on increasing the number of Scan & Go Cards

06

issued, a loyalty point card with prepaid functionality,
and increasing the rate of their use, with a view to expanding the digital brand ignica, which it has positioned
as a priority. As a result of efforts to expand the card’s
services and increase convenience with initiatives suchas the introduction of a new loyalty points program,special offers, and promotional campaigns, the numberof Scan & Go Cards issued reached 1.2 million as ofthe end of fiscal 2023, and the usage rate, including
the app, reached 55%. However, as it has taken time
for new sales promotion measures to reach through tocustomers, customer numbers fell below the previous
fiscal year’s level. In addition, upfront investments infacilities and the costs associated with those measuresincreased, and the result for fiscal 2023 was a decline
in revenue and income. Kasumi appears to have had
problems identifying customer needs as it aimed toshift into new domains using digital technologies, which
is something that needs to be reflected on. To achieve
an early recovery in business performance, Kasumi willneed to return to the first principles of its business.
MaxValu Kanto launched initiatives to strengthen its
products and services tailored to the lifestyles of the region’s customers and implemented store revitalization
measures that made the best of the voices of each andevery employee working on the ground. While working
to increase the value that it offers as a supermarket that
focuses on the shopping experience, MaxValu Kanto
strived to expand its online delivery service and worked
to further enhance customer convenience. As a result,in fiscal 2023, it was able to achieve favorable results inthe form of increased revenue and income. However, it
will need to further enhance the soundness of the company while envisioning future growth to further expand
the scale of its earnings and increase its profit margins.
As a result of the above, the Group’s consolidated financial results for fiscal 2023 were as follows: operating
revenue of 706.6 billion yen (down 0.3% year on year),
operating income of 6.9 billion yen (up 8.2% year onyear), ordinary income of 6.9 billion yen (up 6.0% year
on year), and profit attributable to owners of parent of
1.0 billion yen (down 24.6% year on year).

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Message from the President
3

Where the U.S.M.H Group Is Today

Driving Three Growth “Engines” toPursue Value Creation and Sustainable
Business Growth Beyond theConventional Supermarket Model
Although the quantitative targets for the first fiscal year
fell behind the performance targets of the Third Medium-Term Business Plan, we have made some progressfrom a qualitative perspective, and I believe that we canmake a comeback in the future.
Under the Plan, with the slogan of “Beyond Supermarket,” we will pursue a strategy that comprises three
growth “engines” to pursue value creation and sustainable business growth that goes beyond the conventional supermarket model. Of these, “Engine 1: Expand
earnings through store and product reforms” is a growthstrategy centered on existing businesses. It aims tostrengthen our business foundation with initiatives suchas differentiation through product development, theprovision of services that leverage digital technologies,
and the development of new store formats.
So far, the progress of Engine 1 has seen Kasumi takethe lead in store reform in particular, with the roll-outof Scan & Go services and the launch of a restaurantdelivery service from its new-format
stores. In
addition, each of our operating companies is expanding
the introduction of self-checkout systems. In terms of
product reforms, each operating company is focusing
efforts on private label brand development, such as
Maruetsu’s maruetsu365 brand, and sales are growing
steadily. A sense of urgency that we will not be able tosurvive unless we change our working styles and cost
perceptions and quickly promote new initiatives is beginning to permeate among each and every employee of
the Group, and I believe that this will be put to good use
in the roll-out of the Plan from the second year onward.
In “Engine 2: Expand out-of-store revenues throughOMO (fusion of offline and online commerce),” we will
integrate and expand channels such as online delivery,

quick commerce, marketplaces, mobile supermarkets,and unstaffed stores, and look for revenue outside ofstores by implementing OMO. In other words, we will
expand the roles expected of local supermarkets andrespond to the needs of more customers.
In fiscal 2023, OMO-related sales amounted toapproximately 7.0 billion yen, compared with our targetof 10.0 billion yen. Although this was a steady increase
from the approximately 5.0 billion yen of the previous
fiscal year, our view is that progress is about six months
behind our original target. With ample expectations ofmarket growth, we anticipate being able to catch up tothat original target level by the final year of the Plan.
“Engine 3: Expansion of business areas” is an initiative to develop new business areas that leverage theGroup’s intellectual property and know-how to generate revenues.
At present, the seeds of our business include theprovision of smartphone payment apps and DX service
tools, the utilization of know-how in plant factory operations, and the development of sales channels for plantbased food. In fiscal 2023, while promoting the launchof a consortium and other initiatives, we attracted
attention from people in other industries, and we haverecently started entering into business talks with them.
With the expectation of needs related to environmental
considerations and responses to social issues, plantfactories and plant-based food offer opportunities for
the Group to make a wide range of proposals, including
exit strategies and business development. We hope toachieve concrete results in fiscal 2024.
In this way, the growth strategy of the Third Medium-Term Business Plan is a challenge to broaden thescope of value provision, from “Engine 1” products andstores to building relationships with local communities
through “Engine 2,” and further to solving social issues
as targeted by “Engine 3.” Although some initiatives
have made more progress than others, we were able to
make a good start overall, and we will strengthen cooperation within the Group to produce results from now on.

07

4

Toward the Realization of the “Concept ofSupermarket with ¥ 1 Trillion Sales in Kanto”

We Will Work Closely with Residents,
Instill an Awareness of Community
Support in Our Expanded Organization,
and Embody It Through the Actions ofEach Individual.
In April 2023, the Company entered into a basic agreement with AEON Co., Ltd. and Inageya Co., Ltd. andbegan moving toward realizing the “Concept of Supermarket with ¥1 Trillion Sales in Kanto.” Based on the
conclusion of a share exchange agreement to makeInageya Co., Ltd. a wholly-owned subsidiary of theCompany and a business integration agreement, theCompany plans to implement a business integrationin which Inageya will become a wholly owned subsidiary by around November 2024 and have Inageya
join the U.S.M.H Group. With this integration, thethree companies will deepen their business allianceand work together to introduce and expand AEON’s
TOPVALU private label brand products, conduct joint
procurement of merchandise, open stores tailored to
local customer segments, revitalize each company’sbusiness formats, reorganize and make use of theirlogistics centers and processing centers, and effectjoint use of each other’s cards.
As the Group aims to build a structure of ¥1 trillion insales and 1,000 stores and become the top supermarket
company in the Kanto region, its efforts to expand corporate value will change significantly. The Third Medium-TermBusiness Plan currently underway will need to be revised,
the details of which will be announced in due course,
based on discussions for the business integration.
We will gradually convey our vision for the future after
the business integration. What I can say at this pointis that each company places importance on its stanceof being close to residents and shares the desire tocontribute to local communities and resolve social
issues. Key to the business integration will be initiatives
to instill this awareness in every corner of the expanded

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Message from the President

Toward the realization of the “Concept of Supermarket with ¥1 Trillion in Sales in Kanto”
The Group currently holds a market share of approximately 4.8% in the Kanto region, and once Inageya Co., Ltd. has joined theGroup, we anticipate total net sales of 1 trillion yen and a market share of 7% in the near future. Furthermore, by welcoming a
new operating company into the Group, further expanding the scale of sales, and assuming the central role among Kanto foodsupermarkets in the AEON Group, we will continue to contribute to local customers, business partners, employees, and stakeholders in local communities through our stores and products.

Share of Sales in Supermarkets in Kanto Region
As of March 2024

706.6 billion yen

After business integration in Nov. 2024

928.3 billion yen
Inageya

MaxValu Kanto

MaxValu Kanto

Kasumi

KasumiMaruetsu

Maruetsu

U.S.M.H Group share:

U.S.M.H Group share:

4.8%

Near future
1 trillion yen

organization and embody it through the actions of eachindividual. There is no doubt that value propositions
from the customer’s perspective will be the foundation
for linking the economies of scale and strengths resulting from business integration to sustainable businessgrowth. It will be even more important to take fulladvantage of human capital, and I hope to realize a free
and open-minded corporate group by creating an openorganization from the employees’ perspective.
The Group’s business integration is not the only
move to ensure survival in the distribution and retailindustries. Other similar moves are being accelerated
throughout these industries. Under these circumstances, companies below a certain size faced not being able
to survive without a unique identity that would set themapart from the rest. However, as more business entities
merge over and over again, even a corporate groupwith sales of 1 trillion yen may face elimination unlessit also has a unique identity. It is not a matter of expansion of scale bringing security; our aim is to become
the kind of supermarket that will establish a footholdin its commercial area as a presence that responds to1-trillion-yen in sales in
Kanto
supermarket

6.6%

U.S.M.H Group share:

7.0%

the different needs of each area through unique value
propositions and that supports the local communities.

5

To Our Valued Stakeholders

We Will Deepen Our Connections to Make
Greater Social Contributions and Evolve
into a Group Where Many People Gather.
As I have described here, building relationships with local communities from products and stores through thegrowth strategies of the Third Medium-Term Business
Plan, making value propositions that expand into thesolution of social issues, adopting a corporate attitude
premised on the “Concept of Supermarket with ¥1
Trillion in Sales in Kanto, and implementing initiatives
undertaken from the perspective of customers andemployees are all connected to the themes identified
as the Group’s material issues.
In March 2023, the Group placed a person in chargeof sustainability in the General Administrative Division
08

under the Company’s Board of Directors and Management Committee as its executive structure for the promotion of sustainability and established a cooperationand monitoring structure with the Group companies,
centered on the Company’s General Administrative Division. Under these structures, the practice of sustainability management based on material issues is being
shared throughout the entire group and initiatives arebeing strengthened.
As we transform our business toward the realizationof “Beyond Supermarket” and challenge ourselves tobecome the top supermarket company in the Kanto
region, we will deepen our connections with all our
stakeholders, evolve into a group where many people
gather, and make even greater contributions to society.
I hope our stakeholders will continue to watch andanticipate the progress that the U.S.M.H Group will
make in the years ahead, and I would like to thank themfor their continued support.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Realization of the “Concept of Supermarket with ¥1 Trillion in Sales in Kanto”
On April 25, 2023, U.S.M.H, Inageya Co., Ltd., and AEON, Co., Ltd. entered into a Basic Agreement after reaching the conclusion that, in order to continue to respond to customers’ needs with a sense of speed, tocoexist and grow together with local communities, and to build a sustainable future for local communities in the Kanto region, where competition is expected to intensify further in the future, it would be mostappropriate for AEON and Inageya, which already have an alliance, to further strengthen their relationship, for Inageya to join the AEON Group as a consolidated subsidiary of AEON, and for U.S.M.H and Inageya torealize a business integration, and in so doing, proceed with the realization of the ‘Concept of Supermarket with ¥1 trillion in Sales in Kanto.” With the aim of maximizing corporate value through the strengthening of
capital relationships and business integration by making the most of the various assets of the AEON Group, including digital, products, human resources, and payment infrastructure, and by evolving into a new
business model as a 1 trillion-yen supermarket group in sales, we resolved the “Execution of a Share Exchange Agreement and a Business Integration Agreement with Inageya Co., Ltd.” on April 18, 2024.

A New Business Model Based on Economies of Scale
External environment

Impact on the foodsupermarket industry

Changes in consumerpurchasing behavior (fromeating at home to dining out )Market contraction

Increase in entrants into
food business from otherindustries

Intensifying
competition

Retirement of baby boom
generation, declining birthrate
and aging population

Labor shortages

Inflation due to geopoliticalrisks, etc.

Rising raw material
costs

Rising costs of construction
materials and labor

Rising construction
costs

Rising energy costs

Rising utility costs

Future outlook forthe retail industry

Initiatives of U.S.M.H, Inageya and AEON

AEON

Further shakeout
and industry
restructuring
expected in the
futureWe welcome theparticipation of likeminded supermarkets thatshare our basic philosophyof “offering customers
healthy, valuable choices
in food.”
U.S.M.H

Vision of U.S.M.H, Inageya and AEON

U.S.M.H

U.S.M.H welcomes the participation of like-minded supermarkets
companies in the greater Tokyo area under the basic philosophy of“offering customers healthy and valuable choices in food,” “cultivating
deep relationships to build prosperous local communities, “ and“constantly pursuing innovation and moving with the times.” It aims tobecome the number one SM company in the Tokyo metropolitan area by
establishing 1,000 stores with 1 trillion yen in sales as the core of AEON’s
Kanto supermarket business.

Ina ge y a

Inageya aims to contribute to society as a “helpful local business” bypromoting its corporate philosophy of “sukoyakeku,” which means“contributing to the realization of healthy, rich and warm daily lives, and ahealthier society for customers” and practicing “the way of the merchant,”
which refers to “a group of people who can experience the joy of theircustomers as their own joy.”

A E O NAEON is promoting management based on the foundational ideals of“pursuing peace, respecting humans, and contributing to local communities,
always with customers as our start point” and aims to become a “company
that contributes to the community to the utmost of its ability” by responding
to increasingly diverse environmental changes and by continuing to provide
customers with a better lifestyle and improved convenience as competition
across business lines is expected to intensify against the background ofchanges in consumer lifestyles and purchasing behavior.

InageyaBusiness Integrationin November 2024

Sustained Contribution to the Lifestyles and Healthy and Valuable Choices in Food of Local Customers
The business integration of the Company and Inageya is centered onoffering customers healthy and valuable choices in food, as declaredin the corporate philosophies of both companies.
Amid the increasing diversity of our customers’ lifestyles andawareness, we will help them in terms of “price” through joint purchasing of products and contribute to their time with digital services.
We also believe that, in addition to improving the convenience ofloyalty points programs that are essential for day-to-day grocery
shopping, the ongoing refinement of stores that customers will continue to choose for their shopping represents a sustainable contribution
to local communities that will ultimately contribute to the enhancement of corporate value.

Better value for money

Better use of timeE xpand sales of TOPVALU products
R educe prices of national brandproducts
R oll out products directly imported
from abroadE xpand introduction of self-checkout machinesImprove convenience of Scan & Go
payment system
E volution of online delivery

09

Better ways to earn and use
loyalty points
Credit cards, electronic moneyJ oint use of loyalty points cards

Better shopping utual revitalization of foodMsupermarkets
D evelopment of stores tailored to
local customer bases
Diverse store formats

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Value Creation Model
Business Resources

Growth Strategy

P.11

The Value We Provide(Business Model)
Human Capital

Manufactured Capital

Expansion into fertile
markets (in the
Kanto region)

Strengthening
Allocation of
Resources
New storemodels
Production anddistribution of ourown uniqueproducts

Intellectual Capital

Product and store
development
experience, intellectual
property, etc.

Social and Relationship Capital
Relationships of trust withlocal authorities
and customers

Network ofbusiness partners
in Japan andabroadEnsure food safety and security,and enable enjoyable, valuable
lifestyles through foodCustomers
Region/Communities
Business partners

IndividualsSociety as
a wholeCustomercreation

A flexible organization/Diversity/
Human resource development
Openness/Safety/Responsibility“Beyond Supermarket”

The financial foundation to
support proactive
investment

Impact on society

Financial Capital

Connect individuals, communities and society

Customers

Diverse human resources and anorganization andculture where they
can flourish

U.S.M.H
DX platform

Our Goal
Local Communities
Local development andcommunity connections

Business Partners

Impact on the Company
Shareholders and Investors

Material Issues
Reduced environmental
impact of ourbusiness
operations

A motivating workplace
diversity

A fair, equitable and sustainablesupply chain

Sustainable growth as a company

Marketing basedon various data
analysesNatural Capital

Employees

Maximization of business value
through highly transparent
management

P.26

Decarbonization and a circular
economyCreation of healthy, valuable lives
through our foods and services

Food safety and security

Pursuit of diverse human resources
and job satisfaction

Sustainable food value chain

Enhancing corporate governanceTo achievecommunity
development andprosperity
through healthy,
valuable eating
habits(Wellbeing)

Natural Environment
Carbon neutrality and a circular
economyExternal Environment Societal Changes
Analysis of risks and opportunities we face in light of changes in the external environment

Changes in consumer awareness and behavior
Generational changes in taking initiative with products

Declining population andaging society

Intensifying competition in
the retail sector

10Technological advancements

Human rights issues

Rising import costs

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Sources of Value Creation
We will take on the challenge of creating new value by making the most of our accumulated business resources.
Human Capital

Financial Capital

P.30

Diverse human resources and an organization and culture where they can flourish
Employees (calculated based on an

Proportion of full-time U.S.M.H employees
and part-time employees

8-hour work day): 27,905

Full-time employees: 7,192
Part-time employees: 20,713

Full-time
employees:

Part-time
employees:

25.8%

74.2%

Ratio of female managers: 7.9%

Manufactured Capital

P.24

The financial foundation to support proactive investment
N et sales: 690.4 billion yen

Equity ratio trends (%)

Total assets: 285.5 billion yen

54.0

Operating cash flow: 21.4 billion yen Equity ratio: 52.5%

52.5

For further capital evolution
Gender composition of all Group employees(including part-time employees)

Ratio of female managers—actual and target

2023

Female:

33.7%

66.3%

2023

For further capital evolution

7.9%
Male:

2022

R
 OE target of 6%C ontinued investment in new storesand for revitalizing existing stores

Relationships of trust with local authorities and customers

 Expansion of original brands

 Total number of customers in FY2023: 380 million
 N umber of stores conducting food drive: 94 stores N umber of partner local authorities for Regional

Total number of customers per year
(millions)

382

379

375

Comprehensive Cooperation Agreements: 28

ignica Scan&Go

For further capital evolution
E xpand range of in-houseproduced products
E xpand in-house
knowledge to outsidecompanies
Retort-packaged food products using plant-based meatalternative BEYOND MEAT® (vegetable curry, Bolognese sauce)

markets

 E xpansion and enhancement of GreenGrowers plant factory and processing
center (PC)Natural Capital

P.37

Product and store development experience, intellectual property, etc.

Digital brand ignica

 U nstaffed stores in offices, mobile super-

U.S.M.H plant factoryB uilding a stable distribution network
for in-house production

Social and Relationship Capital

eatime (194 SKUs)
Total SKU count of original brands of operating companies:
approximately 7,000 SKUs (as of February 29, 2024) Stores: More than 520 stores in Tokyo andV italization of sales floors through the
pursuit of product development,
including the use of deli foodprocessing centers

2030
To be raised to

P.23

Expansion into fertile markets (in the Kanto region)

For further capital evolution

30%

Intellectual Capital

P.22

six prefectures in the Kanto region

53.7

2021

P.15

 N umber of partner local authorities for
Disaster Relief Supply Agreements: 58

Food drive activities of Maruetsu

11

Reduced environmental impact of our business operations
Advancement of in-store collection and recyclingof resources:approx. 4,300 tons in FY2023

P ercentage of renewable energy in Groupelectricity: approximately 78 %

Expected reduction of CO2 emissions with the use
2021

2022

For further capital evolutionB oosting recognition throughcooperation with local governments
and organizations
S trengthening cooperation with foodbank organizations and Kodomo
Shokudos (children’s cafeterias)

P.27

2023

of renewable energy in FY2024: 165,000 tons

Installed solar panels at theGroup’s 34 stores

For further capital evolutionE stablishment of stores implementing
energy-saving measures
Expand resource collection at stores
Boost reduction of food loss
MaxValu Kanto
Sale of meat of pigs that were raised on food residue
recycled as feedIntroduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data“Third Medium-Term Business Plan: Challenge for ‘Beyond Supermarket’” and Future Vision
United Super Markets Holdings Inc. was established in 2015. Amid the ongoing decline in the birthrate and aging of the population, the greater Tokyo area is the only fertile
market in Japan. The competitive environment in that market grows more intense every year, with competition with other supermarket operators and food retailers from different
industries. Faced with changes in customers’ lifestyles and increasingly diverse purchasing behavior, our three operating companies have evolved from harmonization to
integration and promoted transformation toward growth. To continue to contribute to the rich and healthy dietary lifestyles of our customers in the region, to preserve the global
environment, and to realize the wellbeing of all our stakeholders, we will continue to deepen our connections and evolve into a group where many people gather in order tomake an even greater social contribution in the future.
Transition of Medium-Term Business Plans(Billions of yen)
FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

FY2024FY2025

2030

2040

2050

Our Goal
Net sales

Number of stores

529

718.9
511

519

516

521

518

670.4

691.9
677.5

Business
Integration
with InageyaCo., Ltd.

701.1

503
494

529

679.2

690.4

676.3

649.5

FY2025 –Fourth Plan

Realization of the“Concept ofSupermarket with
¥1 Trillion-in Sales
in Kanto”
to achieve our
Vision for 2050

To achievecommunity
development
and prosperity
through healthy,
valuableeating habits(Wellbeing)

Business Integration

Fi rstSec on d

Th i r d

Establishment of U.S.M.H

From harmonization to integration

Transformation for growth

To “Beyond Supermarket”

U.S.M.H was establishedthrough the businessintegration that was realized toform a coalition to provide
appropriate products andservices in terms of both quality
and quantity and in relation to
the size of the market and to
pursue innovation by combining
the strengths and resources ofeach company, aiming tobecome the number one
supermarket company in thegreater Tokyo area.

Entering a new stage for growth overthe next 10 years, we aimed to reachour goals through synergies between
the growth strategies envisaged by
the operating companies in theirautonomous management and
U.S.M.H’s growth strategies throughthe demonstration of its functions asa holding company. To this end, we
strived to maximize those synergies
through the sharing of business
infrastructure.

To reboot our existing businessmodel, we worked on transformation
for growth. While promoting reforms
in cost structures, formats,workstyles, and digital technologies
respectively, amid the diversificationof lifestyles, inflation caused by costpressures left us with challenges in
the improvement of profitability andoperational efficiency.

By upholding a strong belief in
wellbeing and continuing tocreate unique value, we willcontribute to our communities
and use all our strengths tobecome a company that willgrow together with thosecommunities.

12

Vision of Value Provided to Customers Based on the Business Integration with Inageya Co., Ltd.
Expansion of private label brand products with reasonable prices and quality, such as TOPVALU
Increase product value through joint procurement of products, including national brand products,
regional products, and imported productsU se of each other’s expertise in the revitalization of food supermarkets to develop stores tailored to
local customer bases and lifestyles
D evelopment of new business formats through the organization and utilization of the functions of
distribution centers, processing centers, etc.
Converting cost savings from joint procurement of materials and integration of back-office operations into services
Joint use of credit cards, electronic money, apps, etc. and return to points
Improve convenience through joint development of and initiatives in online business and e-commerce
Revitalize human capital through the utilization of AEON Group’s training system and personnel exchanges
Improve convenience of shopping through analysis and use of customer information and POS dataIntroduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Third Medium-Term Business Plan (FY2023–FY2025)
In the Third Medium-Term Business Plan, we have addressed the fundamental question, “What role do we want to play in society?” and designed a basic strategy, taking into consideration
factors such as changes in customers’ lifestyles and consumer sentiment and forecasts of market trends. With that basic strategy as a foundation, we considered the strategies for each
operating company and worked on the integration and crossover of the operating companies’ own medium-term business plans and that of U.S.M.H. We then launched the Plan in fiscal 2023.

Background to Formulation of Medium-term Strategy

Priorities of the Third Medium-Term Business Plan

For the Third Medium-Term Business Plan, which started in fiscal 2023, we spent more than a year
dealing with the fundamental question, “What role do we want to play in society?” We thoroughly
considered our vision for a sustainable future, taking into account factors such as changes in customers’ lifestyles and forecasts of market trends, including the skyrocketing of everyday living costs such as
food prices and household utility costs, as well as discussions with each operating company.
In addition, in response to the expansion of ecologically conscious consumer behavior to conserve
the global environment and the growing number of customers who place importance on respect forhuman rights and diversity, we have thoroughly considered what kind of company we want to be torespond to the demands of the global environment and society and formulated the Third Medium-TermBusiness Plan for the sustainable development of the Group, local communities and society in general.

Revenue Reform

Development of Engine 3 and new business areas

Revenue Reform

Outside Digital*

Store Reform

Functional enhancement, renovation, DX

Product Reform

Product lineups, shelf space allocation, private label brands, originality

Obsolescence of products and services
Cooperation with new partners
Implementation of profit structure reform

Challenges

Positioning as essential infrastructure*E ncouragement and development ofinternal human resourcesC reation of originality and contribution tocommunities

Outline of Initiatives for Business Structural ReformRisks

* Essential infrastructure: Foundation that supports life in society

Overall Structure of the Third Medium-Term Business Plan

Channels
OMO*

Functional
services

Brand
partnerships

Internal process reform
Business
processes

Customer
serviceprocesses

Innovation
process

Sustainability
process

Human capital reform(working style and diversity)
Digital reform (data, operations and services)(sense of urgency)

Product
lineupsFuture forecast scenario regional strategy

Value offering and portfolio transformation

Regional strategy

Transformation of our financial base
Labor
Amount of added value Profitability Capital efficiency
GrowthShareholder
productivity Operating income
potential
marginvalue
Labor share(forecast scenarios for regions that are difficult to gain entry to)

Changes in market and competitiveenvironments
Market potential in areas we have yet to enter

What role do we want to play in society?

Third Medium-Term Business Plan: Basic Strategy

Sustainable Development

New
BusinessEngine 3
Expansion of business areas

OMO

Rising energy costs
Rising product raw material prices

Summary of/Issues from the Second
Medium-Term Business Plan

TargetReview the strategy foreach operating company
based on the basic strategy

Product Reform
Product lineups, shelf
space allocation, private
label brands, originality

OpportunitiesM ore than 520 stores in the greater Tokyo
area, a fertile market
D igital technology development and expertise
Food factory and logistics infrastructure*Outside Digital: Out-of-Store digital services

Store Reform (Format)
Functional
enhancement,
renovation, DX

Strengths

New Format

ignicaFor Work
For Store
For Life
For BusinessEngine 2
Expansion of out-of-store revenues/OMO

Engine 1
Product and store reforms

U.S.M.HDX Platform

A flexible organization/Diversity/Human resource development systems
Openness/Safety/Responsibility

Results and Plans for Net Sales, Operating Income and Investment Plan
Starting points for setting
target figures

Medium-term business planfor each operating company

Unexpected exchange
rate fluctuations
Rising energy costs
Rising prices

Integration and crossover• U.S.M.H shared evaluation axis
• Clarification of results and progress* S ales targets for 2025
Total figures for the three
existing companies

U.S.M.H
Medium-TermBusiness Plan

P.24

Net sales

Operating income

Investment plan

750 billion yen

22 billion yen

25 billion yen(FY2025)(FY2025)(Billions of yen)

690.4

(Billions of yen)745.1
(expected) 750.0(yearly average)(Billions of yen)

22.0

32.8
(expected)

25.0

24.8

* Investment results and plansinclude the establishment ofprocessing centers

6.9

8.5
(expected)

Organizational reform (leadership and retention)
2023*OMO: Abbreviation for “Online Merges with Offline” (fusion of offline and online commerce)

13

2024

2025

(FY)

2023

2024

2025

(FY)

2023

2024

2025

(FY)

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Initiatives in Fiscal 2023 in the Third Medium-Term Business PlanAt the U.S.M.H Group, the four reforms for resolving management issues set out in the Third Medium-Term Business Plan and the three execution resources that support those reforms
are linked to each other, and initiatives span a wide range of areas. We have divided the three initiatives in products, stores, and revenues into 20 projects and integrated them into six
units based on the links between each project. More than 200 people from the four companies—United Super Markets Holdings, Maruetsu, Kasumi, and MaxValu Kanto—participated in
the overall project, and we will work to speed up activities, conduct trials at the operating companies, and disseminate the results to each company.

Background of Strategy Execution

Initiatives and Results in Fiscal 2023

Third Mid-term Business Plan Targets

Product Reform (example of initiatives)

Engine 1(Product andStore Reforms)

Engine 2(Expansion of
Out-of-Store
Revenues)

Engine 3(Expansion ofBusiness Areas)

In the greater Tokyo area, where
many of the Company’s
shareholders, customers, andemployees reside, we have morethan 520 stores tailored to eachregion and living area.
We will promote the reform of
products and stores with the aimof ensuring that our stores, which
attract more than 380 million
customers per year, are chosen
and used by all stakeholders
living in each region.

We will work on initiatives in earnest to
integrate the online shopping experience
with shopping in physical stores. We will
promote home delivery after shopping
in-store, online delivery, the roll-out ofmobile supermarkets to areas where accessto shopping is difficult or impractical, andthe expansion of unstaffed stores.

Using the digital services that wehave accumulated to date as
intellectual property, we will work
to expand not only to generalcustomers but also to the B-to-B
business domain.

In addition to the development of delicatessen and meat products described below, we madeefforts to promote the development and introduction of original products and to promote
direct import trading of wine from overseas.
BEYOND MEAT products developed
Delicatessen/Meat: 22 SKUs
Frozen: 5 SKUs
Retort pouches: 3 SKUs
Sales channels developed: 8-10
Meal Kits: 8 SKUs®

Net sales

750 billion yen(FY2025)

Operating income

22 billion yen(FY2025)

Store Reform (example of initiatives)
With a primary focus on improving customer service, we have worked to create a video-viewing environment as a means of employee education that is not limited by time or location.
 ompletion of U.S.M.H common trainingC
content for online delivery
Establishment of the original e-learning
environment
Approx. 38,000 views per year
Production of approx. 850 original videos

Investment plan

25 billion yen(FY2025)

Revenue Reform
We strived to strengthen initiatives at existing stores, including expanding the number ofmembers and frequency of use and increasing the number of items purchased per shop.
Online delivery (OD/Q-commerce)

Up 24% year-on-year

Net sales
Totalbillion yen

E-commerce (ignica / other companies’ e-commerce) Up 22% year-on-year eyond Store (home delivery after shopping in-store /Bmobile stores and unstaffed stores)

6.9

Up 20% year-on-year

Revenue Reform
We organized the respective functions and roles of eachbusiness, including the ignica digital services business,plant factory business model business and BEYOND
MEAT® businesses, developed commercializationplans, formulated plans to identify marketing domains,and started rolling out these businesses.

14

ignica digital
servicesbusiness
Companies using
the service

2

Companies innegotiation

9

Plant factorybusiness modelbusiness

6

Net sales(FY2025)

Around40 billion yen
ignicaTERRABASE
BEYOND MEAT®

Development of
new businessfieldsIntroduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Strategies for Executing the Value Creation Story
With a brand message of “Shiawaseikatsu (Happy Life),” we delivera little happiness to our customers in their everyday lives.
Tochigi
Prefecture

Message from the President

1storeGunma
Prefecture

As a food supermarket company that has been inbusiness for 79 years, Maruetsu enjoys the trust of its
customers backed by employee education, service andMasaharu
quality. Our assets include a location strategy of
Homma
operating 149 stores, including Maruetsu Petit stores,
President andin the fertile market of Tokyo.
Representative
In the formulation of the Medium-term Management
Director,Plan, which began in fiscal 2023, we stated explicitly
The Maruetsu, Inc.
that we are a supermarket that brings a little happinessto customers in their everyday lives, based on the brand message of “Shiawaseikatsu (Happy Life),”and we shared our determination to realize this as our vision within the company.
Fiscal 2023 ended with increases in revenue and income, and customer numbers, which had fallen
below the previous fiscal year for six consecutive years, improved to an increase of 2.9% over fiscal 2022.
Our challenges were our ability to develop products that would win overwhelming support and a
failure to achieve product lineups and shelf space allocation that would appeal to customers. I view thesolutions to these issues as (1) the revitalization of products and stores and (2) productivity reforms.
The main theme of (1) product revitalization is delicatessen products, which could be described as
the ultimate private label brand for a food supermarket. Although customers who eat our delicatessen
items tell us that they taste good, unless those delicatessen items look delicious in the store, thecustomers will not choose them. In fiscal 2024, with the launch of operations of our first delicatessen
center, the Maruetsu Soka Delicatessen Center in Soka, Saitama Prefecture, we will develop productswith Maruetsu-original sauces and seasonings, with our aim to communicate the originality of Maruetsu delicatessen items that customers will want to select for both their appearance and taste. We will
improve profitability by promoting a delicatessen shift, in which all fresh food divisions, namely fruits
and vegetables, meat, fresh fish, and pre-prepared foods, will focus on delicatessen items. At thesame time, in the revitalization of stores, we will decide on an order of priority and work on the revitalization of all stores in principle in a five-year plan, starting in fiscal 2024.
Meanwhile, digital initiatives, which are the main focus of (2) productivity reforms, initiatives
across the entire U.S.M.H, such as self-checkout machines and Scan & Go, are producing results,
and with the ability to conduct inventory management in real-time, we have achieved the expansionof our online delivery product line-up.
We have also continued to position the Handy Bear Home Delivery service that delivers products
you buy in stores to your home, as a core of our OMO strategy going forward. At Maruetsu, ourstores are always the stars of the show. To ensure that our stores remain a place where customers
can come, look with their own eyes, and enjoy shopping through conversations with staff, my own
role, as a management executive with experience as a store manager, will be to provide full support
to store managers. I will strive to create an environment in which the store managers can watch
over the customers and employees and demonstrate their capabilities without stress.
We will also aim for further growth as a driving force of the U.S.M.H Group.

IbarakiPrefecture

SaitamaPrefecture

1store55stores
Tokyo Metropolitan Area

149 stores■Operating revenue ●Number of stores

395.4

Chiba
Prefecture

49 stores

Kanagawa
Prefecture

49 stores

300stores
2020

385.8

302stores
2021

375.6

390.1

(Billions of yen)

405.9

304stores 304stores

2022

2023

2024

(forecast)Strengths and Challenges

Strengths

Approximately 300 stores in Tokyo and three other prefectures withlarge populations, purchase data for 2.6 million customersE ducation system and human resources established over 79 years of businessAbundant infrastructure: Ambient, cold, and fresh food processing
centers, delicatessen center, and personnel dispatch company
Diverse store formats

Challenges

Investment in store revitalization
Active participation by diverse human resources

Vision and Strategies for Fiscal 2025

15Store-opening strategy for Maruetsu
Petit, small, urban-format supermarkets

Provision of new value throughproductivity improvements

To offer a shopping environment suited to urban
areas, we are rolling out a store opening strategy ofarea dominance with an emphasis on convenience.
We aim to differentiate these stores as smallscale supermarkets in urban areas that, despite
their compact size, offer
the strengths of an
extensive range of fresh
produce and delicatessen
products.

We are working to improve the productivityof store operations by expanding the introduction of ordering based on demand-forecasting and electronic shelf labels.
We will respond to customer needs byshifting front-line labor
to value-added services such as expansion of delicatessen
products.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Strategies for Executing the Value Creation Story
Priority Strategy

Store Introduction

Delicatessen Reform

Itabashi-minami store stablishment of Delicatessen Center: Making Maruetsu’s
E
Delicatessen Range the Ultimate Private Label Brand pened in September 2022, Inheriting the Area of Former “Ikebukuro
O
store,” Maruetsu’s First Tokyo StoreStore overview

In the three-year Medium-Term Management Plan, Maruetsu has declared the reform of products,
productivity, and OMO. In terms of product reform, which is the core of these initiatives, we haveplaced the highest priority on further strengthening the appeal of delicatessen products andmaximizing the value they provide, and we have been preparing for the launch of the Maruetsu
Soka Delicatessen Center. With state-of-the-art facilities, the Center is the core of efforts to develop
original products that are on a par with specialty stores and supply them to over 500 stores in the
U.S.M.H Group. These efforts will lead to the improvement of in-store processing productivity.

Address: 21-1 Minamicho, Itabashi-ku, TokyoO pened in September 2022
Opening hours:9:00 a.m. to 11:00 p.m.		
Sales floor area:1,319m2
Parking spaces:226 (shared facilities)
Annual sales target: 2.12 billion yen

Commercial area characteristics
 ustomer base: With many schools, from elementary schools to universities,
C
scattered around the area, the store is frequented by a wide variety of customers,
including many families, students, and commuters on their way home from work,in an area where 64.7% of households are single-person households.

Overview ofthe Maruetsu Soka Delicatessen Center

Concept / vision Operating company: M aruetsu Fresh Foods Co., Ltd. (wholly owned
subsidiary of Maruetsu)
 Address: 1338-11 Takara, Kakinoki-cho, Soka, Saitama Prefecture Building structure: Steel construction, 2 floors
 Total floor area: 12,205 m2
 Products supplied: C ooked rice products and other bento products,
seasonings, processed raw materials, etc.
 Commenced operations: March 2024

In its second year since opening on the site of the former Ikebukuro store (closed in March 2020), which had been
patronized for 45 years, the Itabashi-minami store has inherited the previous store’s ties with the local community
and, by responding to increasingly diverse needs and market environment, continues to increase its sales.
By providing the four values of Freshness, Encounter with products, Stress-free, and Connection, it aims tobring smiles to customers’ faces, contribute to the realization of a sustainable society, and deliver “Shiawaseikatsu (Happy Life).”

Objectives of establishment of Maruetsu
Soka Delicatessen Center

It has an abundant variety of fresh fish delivered directlyfrom Toyosu Market. Pre-prepared side dishes cooked
in store with fresh
ingredients, such as
fresh salt-grilled whole
fish, are also popularwith customers.

1.Development of original products
Develop products in line with customer needs and develop,
manufacture, and supply delicious products that are on a par withspecialty stores, incorporating the knowledge of culinary experts.

2.Reduction of cooking work for store employees andstrengthening of store competitiveness
Reduce in-store tasks by conducting primary processing at the Center.
Provide freshly prepared products by streamlining store operations.

3.Supply of products to Group companies

Events in collaboration with manufacturers are held regularlyin the store’s eat-in space. These events, which include
sandwich-making classes,
candy house-making, andother projects connected tofood and nutrition education,
are highly popular with local
residents.

VOICE

Supply products to just over 500 stores, including all Maruetsu
stores and Kasumi and MaxValu Kanto stores.

Products Developed at Maruetsu Soka Delicatessen Center
New Maruetsu Original Brands, Maigokoro and Umagokoro

HisashiGoto

At the Maruetsu Soka Delicatessen Center, products
developed and manufactured with particularattention to ingredients and cooking methods were
given the name of Maruetsu’s original brands,
Maigokoro (cooked rice products as rice balls andsushi rolls) and Umagokoro (deli items such as
pre-prepared foods). The first product launched fromthe Center was Deep-fried Chicken with Housemade Stock and Three Kinds of Soy Sauce.

Store manager,
Itabashi-minami
store

16

At the Itabashi-minami store, to respond to the characteristics of our commercial area and the diverse needsof our customers, we offer products in a range of sizes, from loose items to volume packs. One conspicuous
trend is that both the average spends per customer and the number of purchased items per customer are
higher than the average for the entire Maruetsu Group.
In our second year, we have had many opportunities to receive orders for school events, so I feel that we are
gradually being accepted by the community. In addition, the facts that many people who used to work at ourformer Ikebukuro store waited for two and a half years before applying again and those customers who used toshop at the former store are coming to the new store give me a sense of how well loved this location has beenfor so many years. I am a local myself, and with the opening of the new store, I applied for the position of store
manager. The 160 or so employees work together as a united team, like a family, to build up the store.
In our second year, we will set higher targets, aiming to make the sales floor more friendly for women andelderly customers by improving the height and visibility of displays, and also place efforts into sales promotions
that appeal to all five senses, particularly the sense of smell, so that we can welcome customers into our
exciting store.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Strategies for Executing the Value Creation Story

With the corporate message of “Where people encounter delicious taste, we at
Kasumi are there,” we will contribute to a happy society centered on food while
adapting to the changes of the times.
Message from the President

Gunma
Prefecture

Tochigi
Prefecture

7stores

4 stores

In its 63 years of business, as a community-based food supermarket company centeredin Ibaraki Prefecture, Kasumi has aimed to
Hideakicontribute to society through food, with
Tsukada, a new type of store that pursues our
President andfood expertise, Food Square, our flagship stores
Representativethat offer an extensive range of products from
Director,
the affordable to premium products, and Food
Kasumi Co., Ltd.
Market stores for everyday shopping that
customers can use in place of their refrigerators.
In fiscal 2023, anticipating the diversification of shopping options and the contractionof the market due to the declining birthrate and aging population, we expanded our new
service offerings, focusing on Scan & Go, and made a dynamic shift in our sales promotion measures. This shift is taking time to penetrate, which has caused a decline in thenumber of items purchased per customer and the number of customer visits. Because
supermarkets are so closely connected to daily life, they have a high level of liquidity, andit has struck me anew that customers’ purchasing behaviors are linked to the prices ofthe products themselves.
These results made me realize that, as the new president, I needed to address a returnto our mission of providing abundance through food and the enhancement of visible,
functional value. To that end, I first conducted a review of prices, which are the mostimportant element of value. As a result of our efforts to offer approximately one-third of
the Company’s merchandise as consistent price range, primarily day-to-day items thatare consumed frequently, as good-buy products. the number of items purchased has
increased, albeit as a short-term achievement. Going forward, in addition to those products, emphasizing the need to roll out products that are unique to Kasumi, we will promote the development of original products, primarily delicatessen items.
Further, given our dominant position in Ibaraki and Chiba Prefectures, which are major
producers of marine products and farm produce, we are close to the producers. For thisreason, our aim is to connect our customers with producers and local restaurants andcontribute to the region from a stance of servant leadership (supporting others). In addition, I hope to work with local communities to develop products in line with changes in
the living environment. In the process of gathering, making, and delivering products,
adding value in the form of safety and peace of mind and delivering not only food products, but food culture, are emotional values that we, as a company dedicated to serving
local communities, cherish. I also see this as the role expected of us within the U.S.M.H
Group. Making the most of the individuality of each store and each employee, we will convey the appeal of our products and the intentions of the producers. At the same time,
as a model, we will lead the challenge of the development of stores andwithservices that create special food and contribute to food abundance.

IbarakiPrefecture

SaitamaPrefecture

108 stores

34 stores
Tokyo Metropolitan Area

2 stores■Operating revenue ●Number of stores

Chiba
Prefecture

40 stores

288.0

282.0

Kanagawa
Prefecture

186stores
2020

189stores
2021

284.5

(Billions of yen)

291.8
269.8

194stores 195stores
2022

2023

2024

(forecast)Strengths and Challenges

Strengths

 he community’s trust, built up over 63 years of doing businessTAbundant human resources and stores, diverse contact points with customers
B rand power in store and product developmentR elationships with suppliers and producersR esponsiveness to changes in the external environment

Challenges

Revitalization of stores, assets, and sales floorsD evelopment of workplaces where employees can demonstrate theirinitiative

Vision and Strategies for Fiscal 2025
Co-creation of value with the community. Sustainable regional contributions
At ourand Food Square stores, collaboration products with restaurants andother businesses operating in Ibaraki Prefecture have been very well received. During the
COVID-19 pandemic, amid the harsh business conditions faced by the restaurant industry, we wanted to deliver a taste that locals are proud of, so we developed products incollaboration with local restaurants and commercialized
them under the MiiL KASUMI brand. These products areavailable as frozen products, as well as in the delicatessen
section. We are expanding initiatives to co-create new value
with local communities by carefully discovering the appealof the region and using methods that are unique to Kasumi,
as a company that contributes to those communities.
17

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Strategies for Executing the Value Creation Story
Priority Strategy

Store Introduction

Branding Strategy

Food Square Kasumi Tsukuba Style Store

Appealing to Diverse Values with the KASUMI Brand as a Touchpoint

New Flagship Store Re-opened After Renovations in October 2023

With our variety of store formats, including, and products, while valuing every
individual store in each area, we believe that, for our stores to become shoppers’ supermarkets of choice, the necessary strategy is to create branding that does not waver fromthe value provided by Kasumi in all aspects. We will continue to pursue the Kasumi brandfrom the three perspectives of products, stores, and inner communication to build ourunique branding and appeal to customers’ diverse lifestyles and values.

Store overview
 A ddress: 5-19 Kenkyugakuen, Tsukuba, Ibaraki Prefecture Opened in October 2008 Renovated and re-opened in October 2023
 Opening hours:9:00 a.m. to 10:00 p.m.
 Sales floor area: 2,790 m2
 Parking spaces: 4,300 (shared facilities)
Annual sales target: Approx. 3.0 billion yen

Commercial area characteristics

Products (MiiL KASUMI)
Based on the theme of “A good everyday lifestyle starts with a good diet,” we have developed three categories of products that emphasize Kasumi’s trademark originality anddiscernment. We cherish our ties with local communities and have rolled out approximately 1,700 SKUs under the MiiL KASUMI brand.
Online, five mascot characters that represent the brand communicate the appeal of
the products in website columns and social media posts, and the number of followers
and page views is growing, primarily in Ibaraki Prefecture. Looking ahead, we plan to rollout the worldview that we have built online to physical stores as well.

 C ustomer base:This region has a high percentage of people who have relocatedthere from other prefectures, particularly those of the child-rearing generation.
 With rich natural surroundings, the region has an abundance offarm produce and products that are unique to the region.

Concept / vision
We are taking on the challenge of horizontally expanding the new product value propositions that we have been
business to our Food Square format stores, and we are working to develop operations
working on in thethat will also be possible at existing Kasumi stores. In terms of product composition, we set out to differentiate
ourselves with MiiL KASUMI, one of Kasumi’s largest products roll-outs. We have also broadened our productlineups of national brands, with a primary focus on commodities. Further, we have introduced a wide range of
products that leverage Group purchasing, such as our private label brand, eatime, and we are rolling out local-brandproducts. All our registers are self-checkouts (27 machines), and we also recommend the use of the Scan & Go app.

Brand Development

Inner communication
In the belief that drawing out ouremployees’ smiles and motivation,
which are directly linked to ourstores’ image, is also part of ourbranding, we are working on innercommunication to deepen
understanding of and increase
empathy with the Kasumi brand.

Cultivating
KASUMI fans

Cooking communication that creates interaction

StoresThis initiative includes cooking demonstrations using seasonal ingredients that are
sold in the store, menu suggestions, and the provision of specialized information toassist shoppers with product selection.
When the store was renovated, this space was moved to a more central location on
the sales floor, making it easier for customers to stop by while shopping. The space
also holds regular events such as food education and lunch classes that parents andchildren can enjoy together, providing a relaxing time. It has proved popular with customers, with comments such as “It’sa great help because I can shop for everything I need here,” and “I always look forward to the events.”

We have defined color schemes
and worldviews for each of ourstore formats and are working on
the formulation of guidelines.
From the development stage of
new and revitalized stores, we willdevelop ambiance designs that
include sounds and scents anddeploy them in a unified manner.

VOICE

VOICE

Jun Mardian
Sugandhi
Executive Officer and CBO,in charge of Corporate
Planning, Management
Strategy Division, U.S.M.H

With store development centered on Ibaraki Prefecture, Kasumi aims to become acompany deeply rooted in the local community through food. Compared with thedays when customers would come without us having to do anything, the competition has become increasingly intense, and unless we promote our appeal not onlyin stores, that is, offline, but online as well, we will not be able to create new pointsof contact. While safeguarding the Kasumi DNA that we have inherited, we
continue to build the online worldview with fresh designs to suit the times, in ourefforts to motivate customers to visit our physical stores. We are also working tostrengthen our total branding so that customers who visit our stores can interact
with our employees and encounter our products, and we can provide service forthese three elements in a consistent manner both online and offline.

Tetsutaro
Kambayashi
Store manager, Food
Square Kasumi
Tsukuba Style Store18

At our store, our many cheerful, energetic, and diverse staff work hard to create
more fans of the store by coming up with products and experiences that can befound nowhere else. When we test out new sales sections, we incorporate
feedback from customers and staff to make them better, and we continue toexpand those successes to other stores. When we renovated the store, we
introduced large numbers of
products, as well as a large variety of
products that are particular to Tsukuba and Ibaraki Prefecture and products that
had not been available before. We also worked on branding in the store’s interiors
to create the kind of Kasumi sales floor that has never been seen before, andcustomers tell us they find it fun to shop here. By continuing with these kinds ofinitiatives, we hope to establish our position as a Food Square flagship store.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Strategies for Executing the Value Creation Story

With a vision of “Creating a shopping experience overflowing with deliciousness andgratitude, “we will deliver a variety of discoveries, surprises, fun, and excitement to
day-to-day shopping.
Message from the President

Tochigi
Prefecture
Gunma
Prefecture

MaxValu Kanto declared the shift to a shopping
experience-oriented supermarket in our previous
Medium-Term Business Plan (2020-2022), and wehave aimed to enhance the value that we provide as
Satoshi
we upscaled and revitalized our stores. We have been
Shimadaable to leverage the economies of scale and expertise
President andin products and services that are available in the U.
Representative Director,
S.M.H Group to the maximum extent possible, and,
MaxValu Kanto Co., Ltd.
with our characteristic nimble footwork, we have also
promoted our own unique initiatives with a sense of speed. As a way to realize our vision, we undertook
significant renovations of the MaxValu Oyumino Store in October 2020, positioning it as our first
shopping experience-oriented store. We are now reflecting the knowledge and expertise obtained fromthat renovation in subsequent revitalization efforts and in the development of sales floors of new stores.
Fiscal 2023 was the first year of the
new Medium-Term Business Plan (2023The four value that shopping experience2025), and it ended with increases inoriented supermarkets aim to provide
both revenue and income. For the
Enjoy time spent in the store
realization of our vision, we worked on
Stimulate customers’ five senses
products, stores, and digital
Supermarket
Customer preferencestransformation, and I feel that those

V
isit
the
store
for
reasonsother
efforts are beginning to produce results.
than shopping
The aspect that we took the mostcare with when formulating the Plan
was the message that our employees are just as important as our customers. With efforts to makethe most of our employees’ individuality and ideas on the shop floor, store revitalization has been
carried out at 12 stores, and results are being seen in all stores.
With regard to product development, in fiscal 2023, we established a dedicated organization for
product development and for expanding into new fresh food production areas in the Merchandise
Division, with the objective of realizing a product range that is characteristic of MaxValu Kanto.
Developing pipelines to production areas all over Japan, we have discovered a variety of new
products, which has allowed us to demonstrate our originality with products offered at the monthly
Local Good Food Fair. In addition, through collaborations with AEON Group companies around
Japan, we are able to roll out merchandise that is more popular with locals, which is making bothcustomers and producers happy. For products that we particularly want to recommend to
customers, we created the Meets Valu original brand in September 2023 (P. 20), and we are
expanding its product lineup and roll-out to stores. Also, as a means of opening up new sales
channels, we collaborated with Chiba City in January 2024 to launch our first-ever mobile
supermarket. While collaborating closely with U.S.M.H companies, including the collaborations
mentioned above, we will aim for further growth through the active participation of our young andenergetic workforce, which is one of our strengths.

IbarakiPrefecture

SaitamaPrefecture

2 stores

Tokyo Metropolitan Area

12 stores■Operating revenue ●Number of stores

46.7

Chiba
Prefecture

14 stores

44.5

Kanagawa
Prefecture2

32storesstores

2020

30stores
2021

45.1

(Billions of yen)

45.5

43.4
31stores2022

30stores
2023

2024

(forecast)Strengths and Challenges

Strengths

 he mobility and speed that only a small organization can achieveTA corporate culture where young employees play an active role
Diverse human resources
supported by veteransU se of the expertise and infrastructure of the AEON and U.S.M.H Group
Location in the promising Kanto area

Challenges

Investment in store revitalization

Acceleration of new store openings

Vision and Strategies for Fiscal 2025
Evolution of the values provided by
shopping experience-oriented
supermarkets

Taking on the challenge of creating
stores that attract customers of allages

By leveraging the expertise we have worked
on to date and continuing to evolve the four
values we offer, we will promote the creationof stores that overflow with products withimproved freshness, appealing pre-preparedfoods, and specialty products. In addition, we
will work to put the ideas of employees on thesales floor to use
and implement DX.

Aiming to become the store of choice foryoung customers, we are developing sales
promotion plans from various angles. In fiscal
2023, we launched the New Trend Project toreflect the ideas of young employees on oursales floors. We hold unique events such as
Heisei Retro and #Oshiiro Friday (fav’s theme
color) to motivate
customers to visit
our stores.

MaxValu Warabi Store,
re-opened after renovations
in February 2024

19

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Strategies for Executing the Value Creation Story
Priority Strategy

Store Introduction

Release of Meets Valu, a Range of Products Carefully Selected by Buyers

MaxValu Oyumino StoreWe Will Take on the Intentions of the Producers and Deliver Them to Customers

Progressing Challenges as the First Shopping Experience-oriented Supermarket
Store overview

In September 2023, the MaxValu Kanto-original brand, Meets Valu, was launched, basedon the concepts of local produce and products, regional specialty products, and MaxValu
original. Our role has always been to provide customers with encounters with new products
and the fun of choosing by making more attractive proposals of products that we havediscovered at local food fairs in various parts of Japan, as well as unique products that wehave uncovered through relationships with companies and producers in the local area of
Chiba. Net sales and gross profit are both progressing as planned, and we have set targetsof 3,500 items in the Meets Valu range, accounting for 7% of sales, in fiscal 2025.
In addition, we also stock the AEON Group’s TOPVALU private label brand on our
shelves, and through merchandise procurement that takes advantage of economies ofscale, we are working to create a product range that offers a wide variety of value.

 Address: 5 -37-1 Oyuminominami, Midori-ku, Chiba, Chiba Prefecture(inside AEON Town Oyumino) Opened in May 2008. Renovated and re-opened in October 2020
 Opening hours: 8:00 a.m. to midnight Sales floor area: 3,006 m2
 Parking spaces: 1,549 (shared facilities) Annual sales target: 4.0 billion yen

Commercial area characteristics
 Customer base: On weekdays, the store attracts young families andmiddle-aged people in their 50s and 60s from neighboring areas.
On weekends, the store is lively with a wide range of customers,
many of whom drive long distances to visit.

Concept / vision

Concept / vision

Despite our location in an area packed with competing stores, we continue to grow our sales byadhering to the value we offer as a shopping experience-oriented supermarket. Our aim is to create
a store that is the much-loved choice of the local community.

We place unique point-of-purchase displayson the sales floor and clearly promote theMeets Valu concept through innovations ineach store, such as by region and by category. The Oden (Japanese fishcake stew)
Corner set up at the Oyumino Store featured
regional oden items gathered from all overJapan. This initiative was extremely popularwith shoppers, with comments such as “Thismade me happy because I’ve only evereaten Kanto-style oden until now” and “Ibought some to try, and they were delicious.” In spring and summer, we will set up
a regional cool and refreshing flavors corner.

We emphasize face-to-face sales in the fruit and vegetables
and fresh fish sections in our efforts to communicate actively
with customers. The fresh fish section regularly holds events
such as tuna butchery shows. The fruit and vegetables
section uses face-to-facesales to point customers
toward freshly harvested
vegetables that havearrived that day by
Shinkansen (bullet train).

VOICE

Ryo Kagota
Staple Merchandise
Development GroupManager in chargeof Meets Valu
Development,
Merchandise
Division

The eat-in space, Café & Dine, is used as acommunity space where local customers gather
naturally. Events are also held there regularly,
making it a lively part of the store. At the cafécorner, original lattes
featuring generous
portions of seasonal
fruits are popular withcustomers.

VOICE

Previously, we had featured products that focused on ingredients, production
methods, and producers exclusively as fair products, but we sensed a challenge inproposing products that could only be encountered here in more appealing ways. For
this reason, we redefined what we truly wanted to recommend in terms of productvalue and came up with the brand name Meets Valu to embody that value. In addition,
as a result of the organizational changes that were made at the same time, buyers dedicated to product development were deployed, creating a structure that enabled us tostrengthen our ability to discover new products with a focus on local produce andproducts and regional specialty products. Our third focus, the development of MaxValu
original products, is our challenge for fiscal 2024, and the development of multiple
products is currently underway.
From their introduction until now, the response from customers has been even better
than we expected, and we feel that customers are sensing value that exceeds the price.
We will continue to roll out appealing products and grow Meets Valu into a trusted brand,
one that customers will know that, if they see that POP display, they cannot go wrong.

Norikiyo
Ishii
Store manager,
MaxValu Oyumino
Store

20

Our store attracts customers who live nearby on weekdays and customers who come fromfurther away by car on weekends. For this reason, on weekdays, we offer everyday goods
at reasonable prices, and on weekends, we offer slightly more extravagant products andspecial fairs, in an effort to create a sales floor that customers can enjoy anytime they visit.
We enhanced product freshness when we re-opened after renovations in 2020, but in asurvey conducted when we undertook refurbishments in 2023, we received feedback that
staff wanted to deliver fresher products to customers, so we introduced face-to-face sales
in our fresh fish and fruit and vegetables sections. We recommend products to customers
with the intention of selling out on the day that they are delivered. As freshness has
improved, our products have become the favorite choice for social events.
The store’s employees take pride in their own work and enjoy selling to customers. Our
staff loves our customers, the community, and the store, and those feelings are conveyed
to customers, creating a wonderful cycle. We will continue to listen to the voices of ourcustomers and employees, and when things do not go well, we will stop and make
improvements, aiming to achieve our annual sales target of ¥4.0 billion.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Infrastructure Strategy
Product Strategy: Roll Out Original Brands That Appeal to Diverse Needs
The Group’s Vision and Approach

List of Original Brands Handled by U.S.M.H

To address social issues such as the diversification of customers’ lifestyles and preferences, the high cost of living, and product shortages, the Group has developed a number oforiginal products in a wide range of prices tailored to quality and preferences.

Strengths and Challenges
Leveraging our strengths as the AEON Group company, we are rolling out AEON’s original
brand, TOPVALU, and other products at all of our stores. Going forward, we will strive toincrease the ratio of original brands that further reflect customer feedback and enhance
the communication of those brands to gain customer recognition.

New Value Offering Aimed at by Expanding Original Label Brands
The Group will continue to further promote the creation of original brands that are accessible to customers by insisting on products that are of high quality, delicious, made withlocal ingredients, and environmentally friendly.

A brand pursuingease of use atreasonable prices

eatimeA private label brand of U.S.M.H that offers new value, aiming
for high quality and affordable prices

eatime chef

Meal kit series under eatime brand. Convenient kits that containall the necessary ingredients and a recipe

Green Growers

U.S.M.H’s sustainable private label brand of sustainability-conscious products

GREEN GROWERS Meal

Green Growers meal products. Three varieties of retort-pouchfood products made with BEYOND MEAT®

INNER COLOR DELI

Frozen deli items jointly developed with ORBIS Inc., a marketer
of beauty brands focusing on skin caremaruetsu365

Maruetsu’s original brand that features a wide range of products
recommended by Maruetsu with confidence

MiiL KASUMI

Kasumi’s original brand that features products in Original, Special, and Community Connection categories

Meets Valu

MaxValu Kanto’s original brand with the concept of local produce andproducts, regional specialty products, and MaxValu original

TOPVALU

A private label brand of AEON Group

BESTPRICE

A private label brand of AEON Group, TOPVALU’s price-appealing brandCordon Vert

Imported wines from a specialized trading company jointly
owned by AEON and liquor retailer, Yamaya

TOPVALU

eatimemaruetsu365

Price

Original Brands Over Time
Brands that focus
on high quality,
good taste, health,local ingredients,and environmental
consciousness

Net Sales of Original Brands

Share of Net Sales from Original Brands(Billions of yen)

(%)

65.6

57.0

2022

Quality and Discernment
21

9.5
8.2

2023

(FY)

2022

2023

(FY)

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Infrastructure Strategy

Logistics
U.S.M.H’s Approach

Example of labor-saving and automation at Yachiyo Grocery CenterTo address issues such as labor shortages and rising costs at logistics sites, we will
promote streamlining of operations, including on-site work and joint deliveries to stores.
We will also undertake initiatives to build a sustainable logistics system across the entire
U.S.M.H Group.

We are promoting the establishment of sustainable operational systems with the active use oflabor-saving and automation tools, which have made it possible to address labor shortages.

See P.35: Sustainable Food Value Chain

U.S.M.H’s Initiatives
By establishing a joint delivery system
within the Group, we will work to makeefficient use of the logistics fleet. We will
promote the optimization of on-site work,
deliveries to stores, and store operations
and the visualization of operational processes in our efforts to advance the analysis oflogistics information and initiatives forlogistics DX.

Automated guided forklift

Overview of U.S.M.H Yachiyo Grocery Center

In September 2023, U.S.M.H Yachiyo Grocery Center, the pioneer of
U.S.M.H’s approach and initiatives, commenced operations.

2
4
9
10
8

11

5
6 13 3
7

12
U.S.M.H
Yachiyo Grocery Center

Automatic sorting and transportation

Name: U.S.M.H Yachiyo Grocery Center
Address: 3F Prologis Park Yachiyo 1, 1809-1 Hoshina, Yachiyo, Chiba Prefecture
Leased area: 20,397 m2
Center operation: KOKUBU SHUTOKEN CORP.
Handled goods (stock distribution): 8,500 SKUs (planned), mainly processed foods, confectionery,
beverages, and alcoholic beverages
Handled goods (cross-docking): Rice, daily necessities, clothing, office supplies, etc.
Operation commencement dates: September 7, 2023 (Maruetsu), September 21, 2023 (Kasumi)
Operating hours: 24 hours
Number of stores covered: 74 (36 Maruetsu, 38 Kasumi) * As of September 2023

Response to the So-called 2024 Problem
To address various problems arising from the imposition of upper limits on logistics
drivers’ working hours from 2024, U.S.M.H is promoting initiatives from various angles,
including the responses to be taken by the individual operating companies.

U.S.M.H’s logistics network,
including Yachiyo Grocery Center

1

Product picking by robotic depalletizing system

1

Kasumi Iwase Distribution Center

2

Kasumi Chuo Distribution Center

3

Kasumi Sakura Distribution Center

4

AEON Saitama XD

5

AEON Kita-Kanto RDC

6

AEON Food Supply Minami-Kanto Center

7

AEON Kanto RDC Center

8

Maruetsu Yashio Ambient Temperature Distribution Center

Review of standard ordering times for processed food products

9

Maruetsu Misato Combined Center

Securing lead times for ordering and delivery of special-sale products and new products

10 Maruetsu Misato Small Store Distribution Center

Easing of delivery deadlines (adoption and standardization of the 1/2 Rule)Collaboration with other companies on logistics issues
In an effort to resolve logistics issues, the retail industry launched the Greater Tokyo Area Supermarket Distribution Study Group and isconducting research to improve the efficiency of logistics. It is also working to establish sustainable logistics for food products in collaboration
with government authorities, related bodies, manufacturers, and wholesalers. U.S.M.H’s contributions to these efforts include participationby Maruetsu and Kasumi in Study Group workshops and engagement in problem-solving alongside other companies in the retail industry.
Specific issues to be addressed

11 Maruetsu Yokohama Ambient Temperature Distribution Center

Operational efficiency improvement, etc. through distribution BMS

12 Maruetsu Kawasaki Combined Center*Distribution BMS: Abbreviation for Business Message Standards in Distribution, a new standard forelectronic data exchange promoted by the Ministry of Economy, Trade and Industry

13 U.S.M.H Yachiyo Grocery Center

22

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Infrastructure Strategy

Digital Strategy
Using Technology to Make Customers and Employees Smile Through Food

Customers

In our aim to be a supermarket group that provides food for all and is indispensable to the
local community, we are working to create unique value based on digital technology.
Centered on ignica, the digital brand that we developed ourselves, we will build
services that offer value to all stakeholders, including new services that allow customers
to enjoy their shopping, productivity that enables employees to sense their growth, anddata-driven* services that enable business partners to take their next leap forward. In
doing so, as well as proposing diverse options, we will pursue the further potential of“Beyond Supermarket.”ignica-store_logo_CMYKScan & Go, the payment service that turns your smartphone into your own personal
checkout machine, Online Delivery and ignica Store, for shopping whenever you want
Since the launch of the Scan & Go service in 2019, we have progressively
expanded the user environment, and we continue to take on various challenges
aimed at creating new shopping experiences. Today, Scan & Go has been
introduced in 525 stores across the three companies, and Online Delivery isavailable at 137 stores across the three companies. Twenty specialty stores
have opened stores in the ignica Store, offering a wide variety of merchandise.

*Marketing based on the analysis of various data

Creating new value through digital technologies

ignica Signage, an advertising streaming service
that uses AI digital signage in stores

External (customers, stakeholders, society)

Since its launch in 2020, we have expanded the number ofstores where we have installed the signage and currently,
there are more than 2,500 ignica Signage displays installedat 319 stores across the three companies. In addition to thepromotion of the store’s own company products, these signs
stream advertising content submitted by advertisers and use
AI to provide reports on sophisticated analysis of viewing
effectiveness.

ignica Signage(Retail MediaBusiness)

Mobile supermarkets
Unstaffed stores
ignica_logo_CMYK

Number of Stores Using ignica Signage

302

316

2022

2023

214

2021

Business Partners, Stores, and Employees
Deepening of existing businesses

Automatic ordering basedon demand-forecastingElectronic shelf labels
Productivity improvement withintroduction of self-checkout machines

Exploration of new businesses

We will achieve labor savings in product replenishment and respond to logistics issues byenhancing supply chain management
We will improve employee satisfaction through automation and labor-saving and cultivate aworkplace environment full of smiles

Promote process
reforms at a high levelof product management
through company-wide
introduction of
open-source coresystems

In stores, which are the first point of contact with customers, we are promoting the creation of stores thatare overflowing with smiles by establishing environments where employees can converse with customers.
In the digital shift in our stores, which will help to increase employee productivity, we will work on theautomation and optimization of product replenishment with real-time inventory management across theentire company. In addition to demand-forecasting in stores, we will promote a system covering the processfrom order placement to delivery that aims to optimize the entire logistics network through collaboration
between manufacturing, wholesale, and retail. This will include the relocation of distribution centers.
In pursuit of usability from the user’s perspective, ignica POS has a simple, intuitive design that is easy
for anyone to use and that supports multiple languages. We have installed this system at 424 stores of theGroup, and we are continuing with the development of convenient, no-wait checkout systems that are also
worker-friendly. We will realize sales floors that are convenient and easy to shop in by conducting
promotions and making product recommendations tailored to individual customers based on customer
purchase data obtained with ignica .

Internal (in-house)

Business alliance with Vietnam-based offshore development company, VTI
In December 2023, we entered into a business alliance agreement with VTIJOINT STOCK COMPANY (headquarters: Hanoi, Vietnam), whose business focuses on IT
services. The aim of this alliance is to realize the provision of speedy and stable digital services,
including ignica , for the enhancement of customer value and the expansion of the RaaS (retail-asa-service) business.
23

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Financial Strategy
External Environment

Growth Investment Strategy

As a supermarket group based in the Kanto region, we enjoy a favorable operating environment. However, it
is also a fiercely competitive environment, one in which we will lose support from customers and market
share if we do not keep up with the diversification of consumer values and changes in the market (such aschanges in our operating area and the competition, including from other industries).
Given this situation, in order to achieve sustainable growth as a supermarket group, we will continue tostrengthen investments in our growth and enhance the corporate value of Group companies. At the sametime, we will work toward an optimized capital structure to realize these goals.

In the Third Medium-Term Business Plan, which starts in fiscal 2023, our goal is to create new value
propositions for customers. To that end, we will allocate increased investment to developing new store
formats, to our supply chain, to DX, and to providing OMO services to customers by making full use of
product developments and digital technology. By adapting to customer needs and values that changed
significantly during the COVID-19 pandemic, we will achieve new customer creation.
In addition, as medium- to long-term strategies, we will transform our investment portfolio by expanding
our 1) IT and digital investment, 2) new business investment (including in the supply chain, etc.), and 3)
green transformation (GX) investment.

Financial Policy
Since U.S.M.H was established, it has
maintained financial stability based on its
ability to firmly maintain an equity ratio of atleast 50%, and by taking a medium- to longterm perspective in financing ouroperations. We will continue to strengthen
investments in new fields in addition toorganic investments (in our stores, etc.),
while taking into consideration the safety of
our financial base. With this approach, wewill achieve our return on equity (ROE)target of 6% by maintaining our financial
soundness while balancing investments for
growth with shareholder returns.

Allocation of Operating Cash Flow

Key Indicators for the Third Medium-Term Business Plan
3-year average(Millions of yen, %)SecondMedium-TermBusiness Plan

Third Medium-Term Business Plan (planned)

Third Medium-Term Business Plan

Results

Initial plan

Results + Plans*

Operating revenue

714,079

729,114

724,455

Operating income

12,554

17,24915,397

Debt/Equity ratio

0.3

0.3

0.3

Payout ratio

79.1

37.2

89.8

ROE

3.5

6.0

3.2

Other
15–20%

New business/
GX investment
10–15%Cash Allocation Plan
Dividends(Yen)

Dividends

New stores
20–25%

Revitalization
19–25%
Digitalinvestment
21–25%

New business/
GX investment
8–15%

Dividend per share (left axis)

Payout ratio (right axis)

2010

20.0–25.0 billion
Capitalinvestment yen per year

Revitalization
20–25%

Other
20–25%

Dividend Chart

15

Operatingcash flow

PC/DC
8–15%

Returning profits to shareholders is one of our key policies. Taking future business development and ouroperating environment into consideration, we seek to maintain stable dividends based on a payout ratio of
30%, at the same time strengthening our financial base by increasing profitability and enhancing retained
earnings.
We will continue working to enhance our corporate value and strengthen our dividend policy.

*Results for FY2023 + Plans for FY2024 and 2025

Dividend payout
ratio of 30%(stable dividends
are a basic policy)

New stores
20–25%

Shareholder Return Policy

Cash Allocation
We allocate generated operating cash flow
to investment for growth such as in new
stores and the revitalization of existing
stores, which are our business domains, aswell as to shareholder returns. As we alsoneed to make upfront investments in thedevelopment of the DX platform for businessreform and new businesses, if the amountfor such investments exceeds our operating
cash flows, we appropriate the shortfall
through borrowing and other means.
Going forward, while making investments
funded from operating cash flows in
principle, we will consider the balance
between growth investments andshareholder returns in our efforts toward
cash allocation for investments for theenhancement of corporate value.

Digitalinvestment
20–25%

Third Medium-Term Business Plan (Results + Plans)

14
34.6

14
25.1

16

16

16

18

16

18

(%)

203.8

210

16

160

172.9
27.9

38.7

125.4

26.1

110

38.2

60

5

Capitalinvestment

0

10

2015

2016

2017

2018

2019

2020

2021

2022

2023

-40
(FY)

Policy for Dialogue with Investors and Shareholders
New
Environmental
investment investments, etc.
Basic policy*Wheninvestments
increase

We place importance on dialogue with shareholders and investors and seek it out through regular initiatives.
This includes dialogue with shareholders at the General Meeting of Shareholders, semi-annual financial
results briefings, informal gatherings for shareholders, etc.
We will continue to strengthen these initiatives and increase opportunities for such dialogue withshareholders and investors. In this way, we will build a framework to ensure that feedback received will be
put to use in management.

New
investment+ Borrowings

24

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Basic Sustainability Policy (Established in April 2023)
The Group recognizes the need to innovate the concept of supermarkets and their business models, and believes that it is tasked to pursue sustainability both forbusiness and society. In order to maximize long-term corporate value and achieve lasting growth, we have formulated the Basic Sustainability Policy, which organizes thebasic views as the first step to responding to global environmental issues and regional issues, developing relationships with stakeholders, and creating new value.

Basic Approach

Sustainability Promotion System

As a key element of our Core Philosophy, we are committed to contributing to “healthy,
valuable choices in food” and “prosperous local communities.” As a company that moves
with the times, we strive for both corporate and social sustainability through ourbusinesses, with the aim of maximizing medium- to long-term corporate value andachieving lasting growth.
To that end, we will deepen our connections with all of our stakeholders, including
customers, local communities, employees and business partners, and thoroughly satisfy
their expectations and confidence in us. We will also contribute to a sustainable, recyclingoriented society, and unify our Group strengths for the creation and innovation of foodrelated businesses that can offer wellbeing, enjoyment, health and other new value.

In order to manage the progress of sustainability promotion, a person in charge of sustainability
has been assigned within the General Administrative Division. The person in charge ofsustainability collaborates with Group companies to promote initiatives and conduct
monitoring activities. Details of the activities are shared with the Management Committee andimportant matters are reported to the Board of Directors. We will collaborate with departments
responsible for sustainability at AEON Co., Ltd. to effectively drive each initiative forward.
Board of Directors

Relationship Between Our Core Philosophy, Vision and Basic Sustainability Policy

ReportingOversight

Our Purpose and Goals

Core
Philosophy

We: O ffer customers healthy, valuable choices in food
Cultivate deep relationships to build prosperous local communities
Constantly pursue innovation and move with the times

Basic
Sustainability
PolicyManagement Committee

Policy outlining our basic approach to corporate
and social sustainability, based on our Core
Philosophy

Material Issues

Promotion

Material issues for management, to be
specifically addressed based on our Core
Philosophy

U.S.M.H General Administrative Division Sustainability
Collaboration

Business Strategy /Medium-Term Business Plan

Specific strategies and measures
for implementing our philosophy
and policies, and to addressmaterial issues

AEON
Collaboration

Maruetsu
Management
Strategy Department

Value Creation ModelAn overall representation of our medium- to long-term
corporate value creation, based on our Core Philosophy,
basic policies, material issues and business strategies
25

Collaboration

Kasumi Local
community
initiatives

Collaboration

MaxValu Kanto
Corporate
Administrative
Department

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Material Issues
Material Issues for the U.S.M.H GroupThe Company believes that resolving material issues is the most important aspect ofMaterial Issue Selection Process

its goal of achieving wellbeing.

Positioning of Material Issues
We position material issues as the issues directly connected to management and theinitiatives for creating new value. They form the foundation for our value creation model.
We have selected material issues in six themes and 14 items, which form the basis for the
initiatives to be carried out for the present and will be updated to reflect changes incircumstances and to meet societal demands.
Our Material Issues and Progress Made
Theme

E
(Environment)

Decarbonization and acircular economy

STEP 1

STEP 2

STEP 3

STEP 4

Identified issues from ESG
evaluation indicators,
disclosure frameworks,
SDGs and other social issues

Narrowed down
topics to those with asignificant impact onvalue creation

Based on the survey results,
reduced items down to thosewith a particularly highimportance rating

Longlisted all 87 items

Shortlisted all 15 items

Surveyed 14 outside
experts and theCompany’s three outside
directors. Requested theiropinions on the material
issues shortlist andtheir evaluations of theimportance of each issue.

Note:Material items

Main Initiatives

denotes items that are on track;

denotes items having difficulty in progress;

Self-evaluation and progress in FY2023

Selected six themes and
14 material items

denotes items to be addressed later on

Initiatives scheduled for FY2024 onward

Carbon neutrality

	Introduction of renewable energy and preventionof CFC refrigerant leakage

Introduced renewable energy (30%) and started replacing
refrigerants

	Consistent implementation of energy-saving operations andpromotion of switching from CFCs to natural alternatives

 aste reduction and promotion of reuseWand recycling

	Reduction of food waste and expansion of
resource collection at stores

Expecting a 2,200-ton reduction in waste	Promotion of reduction of food waste and plastics

Food safety compliance	Establishment of management system

Strengthening of existing management system	Establishment of a new management system

Responsible marketing and labeling	Establishment of management system

Strengthening of existing management system	Establishment of a new management systemSafe procurement and supply of food	Expand SPF product ranges

Launched BEYOND BEEF®

	Further expansion of SPF product ranges

Respect for human rights

	Formulation of basic policy on human rights

Currently discussing the formulation of basic policy onhuman rights

	Formulation of basic policy on human rights and ensuring its
understanding among all employees

Proposal of enjoyable, valuable lifestyles

	Expansion of the range of value-added products
at stores

Turn seafood items, etc. into delicatessen products at some stores	Strengthening of delicatessen and other production departments

Contributions to people’s health	Develop health-related products

Developed 3 retort-packaged food products using plant-based food 	Constant development and sales of health-related products

Coexistence with communities

	Expansion of food drive activities

Expanded the number of stores conducting food drives to 94 	Further expansion of food bank and food drive activities

Connections with customers

	Build recognition as a regional infrastructure hub

Started and expanded the operation of mobile supermarkets 	Expansion of points of contact with customers such as mobileat each operating company
supermarkets and home delivery services

Motivating and rewarding work	Improve workplace environments

Room for improvement in the rate of consecutive leave taken, etc.

	Development of schemes for acquiring new skills andknowledge

Diversity and Inclusion	Improvement in the ratio of female managers

Set a 2030 target for the ratio of female managers

	Active appointment of female managers

C orporate governance and risk
management

	Promotion of diversity on the Board of Directors

Maintaining status quo	Management of governance risks and continuous improvementin effectivenessPrivacy protection and data security

	Strengthening of IT management system

Conducting regular checks at Management Committee
meetings, etc.

	Establishment of the Group’s information security policy

Food safety and security

Sustainable food value
chain

S(Social)Creation of healthy,
valuable lives throughour food and services

Pursuit of diverse humanresources and job
satisfaction

G(Governance)

Enhancing corporate
governance26

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Environment
Environmental Management
Basic Approach

Singing of a Sustainability Linked Loan Agreement

In line with our Basic Environmental Policy, we have identified two environment-relatedmaterial issues. We are committed to resolving both issues, with the aim of reducing theenvironmental impact of our business activities and leaving a sustainable, recyclingoriented society for the next generation.

The Company signed a syndicated loan agreement with the Sumitomo Mitsui Trust Bank,
Limited. We have obtained a third-party opinion from the Japan Credit Rating Agency, Ltd.
on the agreement’s compliance with the Sustainability Linked Loan Principles and therationality of the KPIs and sustainability performance targets (SPTs). We will use the loan
funds for the sustainability of local communities, including activities to reduce CO2
emissions.

Our Six Basic Environmental Policies
Conserve resources and energy

Develop environmentally friendly
products and materials

Promote waste reduction and the
3Rs (reduce, reuse, recycle)

Contribute to local environmental
conservation activities

All employees to participate andengage in environmental activities

Publicize our efforts inenvironmental activities

Outline of the Sustainability Linked Loan

Environmental Management Structure

Borrower
Settingandverificationof targets

U.S.M.H Management Committee
Person in charge of sustainability, U.S.M.H General Administrative Division

Maruetsu General Affairs Department

Kasumi Local community initiatives

https://www.usmh.co.jp/wp-content/uploads/2023/11/us_20231128_153.pdf

For details, please see the News Release (in Japanese only)

U.S.M.H

Third-party opinion

Arranger-cum-agent

LenderJapan Credit
Rating Agency, Ltd.

Sumitomo Mitsui
Trust Bank, Limited

Financial institutionsin Japan

MaxValu Kanto Corporate Administrative Department

Cooperation among relevant departments including Sustainability Promotion, Development, General Affairs
Loan
Initiatives promoted by all employees

Overview of KPIs and SPTs

Cycle of Impacts Created by Solving Our Environmental Material Issues
Fi n an c i al a nd N on - Fi n a n c ia l C a p i ta l

Creation of new business
2030

2040

2050

ImpactAchieve renewableenergy share of 50%,
Carbonpromote the switch
Neutrality
to natural refrigerants
and lower GWP

Completethe switching
to naturalrefrigerants

Carbonneutrality

Promotedecarbonization,
protect
ozone layer

Waste
Reduction andPromotion of
Reuse andRecycling

Achieve 80%
reduction

50% reduction
in waste andplastics

Realize
recycling-oriented
local economies

Zero food loss,
increaseawareness ofwaste reduction

New growthengines as anenvironmental
business

SPT (1): B y FY2025, reduce CO2 emissions from electricity
use by 34% or more from the FY2020 level

SPT (2): B y FY2026, reduce the amount of food waste
disposal by 9% from the FY2019 level(Tons of CO2)

(Tons)

8,630
276,820

Carbonneutrality

182,701

7,850

Compared with 2020
34% reduction

Contribution toregions by achieving
zero environmental
impactTrust from stakeholders

2020

27

Compared with 20199% reduction

2025

(FY)

2019

2026

(FY)

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Environment

Decarbonization and a Circular Economy
Material Issues and Long-term Targets

Carbon Neutrality (Response to Climate Change)

Decarbonization and a circular economy

Theme
Material Issues

Carbon neutrality

Waste reduction and promotion ofreuse and recycling
Continue to strengthen waste reduction,
resource collection and recycling initiatives

Our
Approach

2030: Switch to renewable energy sources for electricity
used at stores (achievement rate of 50%) andreach the CO2 emissions reduction target of 46%
set by the Japanese government
2040: Achieve net zero CO2 emissions from stores
2050: Continue efforts toward achieving zero CO2emissions throughout the supply chain

Goals

2030: Achieve a 150,000-ton reduction in CO2 emissions
from stores, compared with 2013 levels
2050: Carbon neutrality

2030: Reduce waste and use of plastics by 50%
compared with FY2020 levels
2050: Realize recycling-oriented local economies

The Group’s business activities (providing products and services to customers) produce
greenhouse gas emissions of 312,000 tons per year as of 2013, due to its use ofelectricity, gas and CFC refrigerants.
In Japan, the government has announced policies to reduce greenhouse gas emissions
by 46% (compared with 2013 levels) by 2030 and to reach carbon neutrality by 2050, as
a response to climate change. The AEON Group has also set the target of reducing CO 2
emissions from stores to zero by 2040.
Taking such circumstances into account, the Company will match the government’s
efforts toward carbon neutrality by reducing its energy usage and switching energy
sources, further reducing CO2 emissions in the process. In fiscal 2023, Kasumi and
MaxValu Kanto introduced renewable energy in September, followed by Maruetsu in
November, which, together with the effects of energy-saving efforts, resulted in a
reduction in CO2 emissions of approximately 70,000 tons. The Company will continue
working towards carbon neutrality through its efforts to save energy, create energy, andprevent CFC refrigerant leaks.

Environmental Performance due to Business Activities (Past Trends)

GHG Emissions and Reduction Targets (Scope 1 and Scope 2)

Electricity Usage (Total for All Operating Companies)

Actual Emissions up to Fiscal 2023 and Forecasts for 2030 and Beyond

Number of stores(MWh)593,000

620,950 628,784 629,476 620,907 599,397 (Estimate)

516
2018

519

518

2019

2020

521

529

2,866

529
516

2021

2022

Water Usage (Total for All Operating Companies)

2023

(FY)

Number of stores(1,000 m3)

2,559

516

Gas Usage (Total for All Operating Companies)

2018

Number of stores

3,629(1,000 m3)

3,006

2,933

519

518

2019

2020

2,817

521

529

2021

2022

Waste Emissions (Total for All Operating Companies)(Tons of CO2)
from gas and fuel oilfrom CFC and other refrigerants
from electricity use

2,500(Estimate)

529

2023

Approximately 70,000 t year-on-year
reduction of CO2 emissions in fiscal
2023 due to introduction of renewableenergy, energy saving efforts, etc.

Base year
312,324(FY)

227,962

Strengthen offset initiatives bycollecting PET bottles and otherresources at stores, and throughleftover food recycling activities(Estimate)

Number of stores(Tons)

2,612

2,597

519

518

2019

2020

2,397

521

30,060 28,757

2,200

2,261 (Estimate)
529

529
516

27,707 26,449

519

518

2019

2020

21,50023,714 (Estimate)

521

529

529

2021

2022

2023

Climate change initiatives
Establish energy-saving operations
Make wider use of energy-saving
equipment and implement
power-saving measures at stores
Promote the adoption of renewableenergies
Promote natural alternatives to CFC
refrigerants and conversion to
CFC-free equipment

112,150Compared with 2013
Approx. 84,000-ton reduction(Target)63,359(Target)(Target)

2018

2021

2022

2023

(FY)

2018

2013

(FY)

28

2017

2018

2019

2020

2021

2022

2023

2030

2040

2050

(FY)

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Environment
Waste Reduction and Promotion of Reuse and Recycling
Basic Approach

2. Food loss reduction initiatives

Our vision of a circular economy is based on: 1) reducing the amount of waste we generate, and 2)
recycling any waste generated (representing the “reduce” and “recycle” aspects of the 3Rs, respectively).
Using these two points as the foundation of our approach, and working together with customers, we will
reduce the amount of CO2 produced when incinerating waste and prevent environmental pollution.

Reducing food loss has become a pressing issue for the food retail industry. We recognize
food loss initiatives as being linked to both a circular economy and carbon neutrality. Our
employees are united in driving these initiatives forward.

Targets and Initiatives

Targets

Results

FY2030: Increase the food waste recycling rate to 50%

Targets

1. Plastic waste reduction initiatives together with customers

FY2050: Achieve a food waste recycling rate of 100%
Reduce food waste during sales and manufacturing
I ncrease the number of stores that are certified to implement a food waste recycling loop
(system built at Kasumi stores in Gunma Prefecture in fiscal 2021)
E xpand food bank and food drive initiatives

Main
Initiatives

FY2030: Reduce waste and use of plastics by 50% compared with FY2020 levels
FY2050: Realize recycling-oriented local economies
Recycling activities promoted together with customers
Kasumi Co., Ltd., one of our operating companies, promotes recycling by collecting used PET
bottles, aluminum cans, foam trays and other disposable items that customers bring to stores.
These items are transported to Kasumi’s recycling center to be compressed and bundled, and arethen forwarded to a recycling contractor.
The recycling center can also handle cardboard, polystyrene foam packaging for fish and otheritems, printer paper and other waste produced by stores. Through these initiatives, our employees
and our customers work together as one to reduce waste.

Results

Recyclable food resources sorted at MaxValu Express Matsushima store and MaxValu Express
Funabori Ekimae store (Edogawa-ku, Tokyo) are converted into feed for livestock. This is thenused as feed at pig farms and the meat from those pigs raised with the feed is sold at our stores.

An example of our in-store initiatives

Store
Transport
contractor

Wholesaler

PET Bottles Collected

Number of stores with collection points

Factory(Tons)

1,761

1,928 1,981

2,158 2,045

2,025 1,971

395
381
372

368

361
2017

2018

2019

365
2020

362
2021

Food waste recycling
loop 25 tons of foodresources recycled
annually per store

2022

2023 (FY)

Poultryfarm

PET bottles collected from our customers arecompressed and bundled at the recycling
center, and are later reborn as packaging for
fruits and other items. Meanwhile, Maruetsu isintroducing automated PET bottle collection
equipment.

Feedmanufacturer

FY2022: Food waste recycling loop at
Kasumi stores in Gunma Prefecture

Recycling
contractor
FY2023: Food waste recycling loop at
MaxValu Kanto stores in the Tokyo
Metropolitan Area

The food waste recycling loop
initiative that began at Kasumi
Oizumi store has spread to
MaxValu Kanto stores in theTokyo Metropolitan Area.
29

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialPursuit of Diverse Human Resources and Job Satisfaction
Human Capital Strategy
Basic Approach

Fiscal 2023 Initiatives Based on Human Capital Strategy

Human Capital Strategy for Reaching “Beyond Supermarket”
The employees who work for the Group are consumers who are living their daily lives in thecommunity, each of them at a stage of life such as attending school, getting married, giving
birth, raising children, and providing nursing care. We are working to create a motivating andrewarding workplace where members of diverse human resources can actively participate
while balancing their daily lives and work.
The “Beyond Supermarket” that our group is aiming for means becoming beyond a conventional supermarket. Stores that embody the discovery and production of valuable products
from regions and production areas that other companies do not handle, as well as the greetings, interactions and customer services that make us the customers’ favorite choice, will be
our means to realize Beyond Supermarket.
Therefore, we will promote the retention of employees by creating an environment in which
each and every employee can continue to work for a long time, and work to develop people
who master their work and become capable of providing new value.

Master and retain

Organizational
activity

Specific actions

Securing anddeveloping
human capitalD eveloped a definition of human capital for implementing strategies who should lead thestrategies of medium-term plan, and pushed on with projects to build a foundation on which toboost the achievement rate of management strategies and constantly implement strategies.
Formulated a definition of human capital for implementing strategies, compiled a list of
personnel information and a list of qualifications, and promoted the creation of a framework forvisualizing personnel data

Open
organization

Cultivate a
corporate culture
in which diverse
human resources
can all flourish

Regardingour target of achieving a female manager ratio of 30% at theearliest possible time, established an interim target of 20% by FY2025

Createdand shared a roadmap to FY2025 for each operating company,
and built a system to manage its progress across the Group

Workplaceenvironments

Achieve high employee
engagement by being acompany that theirfamilies can be proud of
Reaffirmed
links between human resources investment, management strategy,
capital efficiency, and corporate value, and reaffirmed human resources investment initiatives to date
Havingreaffirmed the importance of improving employee engagement, we plan to
conduct an engagement survey of all Group employees by 2025.

As a basic rule, each operating company autonomously operates its own unique personnel
management system based on human resources and organizational issues, and promotes theresolution of issues through projects within the operating company. On the other hand, forcomplex and essential issues common to the Group, a human capital management system isin place to handle them as Group-wide projects under the leadership of the Company.

Vision: A motivating, rewarding workplace where diverse human resources can actively participate

Information
optimization

Our vision

Create a training environmentthat provides skill
development and experiencesthat lead to the growth andhappiness of each individual

U.S.M.H Group’s Human Capital Management System

Impact: Create new customer value

Autonomous
peopleMotivating and rewarding work

Diversity and inclusion in human capitalAs the corporate value of the Group is greatly influenced by the mindset and actions ofeach individual, we consider our human resources as capital. Our basic approach is torespect each employee’s individuality, rather than treating them as one group.
In this way, we aim to become an organization composed of a group of individuals who
work autonomously.

Evaluate fairly

Our vision
as aCompany

An organization that has an open corporate
culture based on good communication and iscapable of carrying out reforms and challenges

Our vision
as an
Organization

People who understand their roles and cantake on challenges to produce results byconnecting and cooperating with others

Our visionashuman
resources

Kasumi

Learn and grow

Maruetsu
Address

Four Commitments to Support Human Capital Strategies
We will build
a work environment
for an era in whichpeople can live to
100 or more

A company that promotes thewellbeing of local residents
and is worthy of their trust

We will build
a training systemthat fosters a climateof learning andencourages growth

We will build
a leadership training system
and use job rotation
to facilitate working
experience

U.S.M.H

Complexandessential
issuesMV Kanto

We will move
forward with creation ofan open organizationthat encompasses
diversity and equality

30

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialSecuring and Developing Human Resources

PICK UP

Policy on Securing and Developing Human Resources

Human resource development initiatives that lead to the provision of new value to customers

Since its founding, the Group has been managing supermarkets that function as regional
food infrastructure, with Maruetsu and Kasumi at the core. In particular, as a foundation
for constantly supplying products and services to customers, the Group has strength inthat it provides training programs and also support systems to ensure that what is learned
is practiced at facilities and stores, and the Company intends to continue refining such
systems in the future.
On the other hand, in this time when customers’ values and lifestyles are diversifying,
we are required to provide new value (stores, products, services, etc.) in addition to thetraining that have mostly been carried out by operating companies to date. To this end,
the Company has planned and designed skills training programs to implement management strategies, growth business development programs, promotion of project work, etc.
that do not overlap with the human resources development programs of each operatingcompany, and promotes the development of next-generation human resources acrossthe Group.

U.S.M.H Retail Chef Academy
Develop human resources capable of developing products and building sales floors by learning cooking techniques andknowledge from cookery school instructors, culinary experts, and owner-chefs beyond the framework of the retail industry.
Objective

Learning

DAY 1–10: Lessons

DAY 11: Tasting session

Learning cycle
Preparatory study

Practical training

Review

Check thepreparatory
materials on thee-learning
websiteLive, hands-on
experience! Watch
and listen tolectures andpractice by yourself

Check the practicaltraining video, review, andcook! Check your learningwith the textbook at theend of the book.

Presentation

Initiatives to Develop Human Resources for New Value Creation at the Academies

16

Program Manager

Product Reform Unit

<Revenue Reform>
Outside Digital, expansion ofout-of-store retail revenues

Store Reform UnitF rom each company, select young employees with five years or more of practical experience to discover executive
talents necessary to build the pillars of the next growth business and strengthen their management skills.
To nurture executive personnel who perform their assigned missions while demonstrating leadership

Learning<An internal training program specializing in training core management personnel taught by internal instructors>

4 projects

3 projects
Digital Development Unit

2 projects

DAY 4Marketingstrategy

DAY 5

DAY 6

DAY 7

DAY 8

DAY 9 DAY 10

Branding

DatamarketingDatascience

Projectmanagement

Managerial
accounting

Using Harvard Business School case studies,organize the business characteristics, issues
and strengths of major global companies andplan and formulate their future growth strategies.
Work
together in teams of three or four
members to make presentations to the
management team.

New business development, sales development, etc. Ability evaluation, visualization of personnel information, etc. Digital services, productivity improvement, etc.

2 projects

DAY 3

Presentation

Product development, transaction policy, logistics, etc. Store design, customer analysis, services, etc. Online delivery, mobile supermarkets, etc.
Human Resource Strategy Unit

DAY 2

Business strategy
planning

Beyond Store Unit

5 projects

95

Objective

DAY 1<Revenue Reform>
Development of Engine 3,
new business areas

Engine 3 Unit

48

80

U.S.M.H Business Academy

The Company’s 20 projects, which were attended by 200 members from operatingcompanies who took back their knowledge from the project activities to their companies,
are serving to promote innovation activities and providing growth opportunities for theindividuals who participate.
<Store Reform>
Functional enhancement,
renovation, digital services

32

64

1st Intake 2nd Intake 3rd Intake 4th Intake 5th Intake 6th Intake(Mar. 2021–) (Sep. 2021–) (Mar. 2022–) (Sep. 2022–) (Mar. 2023–) (Sep. 2023–)

Initiatives to Develop Next-generation Human Resources through Group-wide Projects<Product Reform>
Product lineups, shelf space allocation,
private label brands, uniqueness in category

Number of participants (cumulative total)

Each participant decides on a theme and creates a menu of staple food, main dish,and side dish, and serves them to external lecturers and the management team.

Under the Second Medium-Term Business Plan, we promoted initiatives based on thepolicy of “promoting structural reform based on DX, we repeat a cycle of cooperation andcreation with the aim of ‘providing food for all’ and to lay the foundation for the next
generation.” In order to capture changes in customers and provide new value, we had tourgently provide new skills training programs and develop new businesses. Therefore, theCompany planned and considered offering a Retail Chef Academy for Acquiring a Cooking Perspective and Techniques, which was launched in 2021 and a Business Academy
as a Place to Develop Entrepreneurial and Executive Human Resources, which waslaunched in 2022, and began full-fledged human resources development to create newvalue.

DAY 12:Presentation

4 projects

31

Number of participants (cumulative total)

27
13
1st Intake 2nd Intake(Jun. 2022–) (Sep. 2023–)

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialCreating an Open Organization in Which Diverse Talents Can Actively Participate

PICK UP

Policy on Diversity, Equity, and Inclusion

Initiatives to Develop Work Environment in Which Diverse Talents Can Actively Participate

We view the promotion of diversity not only as a response to social issues, but also as part of our management strategy.
The Company’s basic approach to personnel affairs is to rule out discrimination based on nationality, gender, age, physicalor mental disabilities, sexual orientation, etc., and to thoroughly implement personnel management based on capabilities
and performance. The Company aims to fully utilize the capabilities of a diverse range of talents, respond to changes in thesocial environment, and become an organization that constantly and flexibly renews itself to meet customer needs.

Initiatives for a workplace that enables women to play more active roles

Initiatives to Ensure Diversity of Human Resources
At each of the operating companies, efforts are being made to develop support systems for employees with childcare or nursing care responsibilities, etc., from the perspective of work-life balance,
and to thoroughly familiarize employees with these systems. In particular, efforts are being made to
develop an environment in which female employees can work cheerfully, and to actively promote
female employees to management positions, with a target of a 30% ratio of female managers.
In addition, at stores and processing centers, in consideration of non-Japanese employees,
efforts are being made to develop a workplace environment that is comfortable for non-Japaneseemployees to work in, including preparing manuals and internal documents in multiple languages.
Gender Composition of Employees on Monthly Wage Schedule

Gender Composition of Employees on Hourly Wage Schedule
Male

Female

24.0%

25.5%

Male

MaxValu
Kanto
61
Maruetsu

Trends in the Ratio of Employees with Disabilities

As of February 29, 2024, the ratio of women among managers was 7.9%, with a totalof 59 female managers playing active rolesat the Group’s three operating companies.

As of June 1, 2023, the ratio of employees withdisabilities at all three operating companies exceeded
the statutory employment rate. A large number ofpeople with disabilities are working at the companies.

Ratio of Female Managers

Ratio of Employees with Disabilities

(%)

7.8

8.0
7.0

7.9

7.4
6.5

6.0
5.0

S tarted hosting trainees in 2018 (Maruetsu, Kasumi)V ietnamese personnel were assigned to thetraining department to work as interpreter, respondto emergencies and assist the traineesW orking in delicatessens, seafood and bakery
departments

2.8%
9.0

5.0

Statutory
employment rate

2.5%

Maruetsu

KasumiEarned an Eruboshi
certification

A label of certification granted by the
Ministry of Health, Labour and Welfare
to companies that provide a high levelof childcare support to their employees

A label of certification granted by
the Ministry of Health, Labour andWelfare based on the Act on the
Promotion of Female Participation

KasumiCo., Ltd.

The
Maruetsu, Inc.:
Earned Stage 2certification
KasumiCo., Ltd.:
Earned Stage 3
certification

To cope with the shortage of workers, the Grouphas been hosting a large number of technical interntrainees from Vietnam. To remove the anxiety ofworking away from their home country, we havestrengthened the support system to deal with their
daily life, in addition to helping them learn theJapanese language and providing technicaltraining. The fresh and pleasant working attitude oftechnical intern trainees in their early twenties isadding vitality to the stores and processing centers.

Marno Co., Ltd.

Special subsidiary of The Maruetsu, Inc.
Established in March 1992


3.0%

11.0

Earned a Platinum
Kurumin certification

Initiatives in the workplace that make employees with disabilities feel motivated

3.2%

(%)

7.0

2020 2021 2022 2023

Foreign Technical Intern Trainees

1,074

Trends in the Ratio of Female Managers

Total for U.S.M.H’s
three operating companies

Establishment of a support system for female managers
U tilization of short working hour scheme for childcare
and nursing care purposesS upport for female employees to continue working

Initiatives in the workplace that make non-Japanese employees feel rewarded

76.0%

Maruetsu
Kasumi
MaxValu KantoA ctive recruitment of
external human resourcesIncrease in the ratio of
women in regular recruitsP romotion of hourly wage
employees to permanent
statusC andidates for store
managers: Motivation
trainingY oung employees: Career
design training
Introduction of knowledge/
experience mentorshipprogram

Non-Japanese Employees

410

FemaleSupport for Working Styles

Awareness and Motivation

Kasumi

74.5%

Hiring and Retention

MaxValu Kanto

32

KASUMI MIRAI Co., Ltd.

Special subsidiary of Kasumi Co., Ltd.
Established in September 2018

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialCreating a Healthy Work Environment that is Motivating and Rewarding

PICK UP

Basic Approach

Initiatives that Lead to Physical and Mental Health Promotion

We believe that it is important for everyone to be fulfilled in both their work and personal
lives so that each person, regardless of position or employment status, can tell theirfamily that they are proud of their job. In order to create time for them to balance childcare
or nursing care with work, we promote the improvement of work productivity that leads toincreasing their private life time.
For each worker to feel motivated and be keen to grow, they need such experience as
success at work, collaboration with diverse members, and demonstrating team work.
Towards this, we let each and every employee expand their experience.
The Group aims for a work environment where employees can continue to work in good
health for a longer period of time, thereby fostering their mastery of work and retention at
the workplace. To this end, we will continue working to improve work environments bypromoting initiatives to enhance the physical and mental fitness of each and every employee and nurturing a corporate culture of mutual support and cooperation.

Initiatives to improve health habits

Working Style Innovation, Initiatives for Health-oriented Management

Company-wide initiatives for health-oriented management

U.S.M.H, Kasumi Co., Ltd., and MaxValu Kanto Co., Ltd. have adopted the use of Pep
Up, a wellness portal that visualizes users’ health conditions and helps them improvetheir lifestyles. Utilizing the portal’s personal advice tailored according to the regular
health check results of each employee and tools for keeping track of exercise and lifestyle
habits, employees are changing their health habits and improving their health literacy.

14,322 yen(up 803 yen)

14,035 yen(down 242 yen)

12,693 yen(up 615 yen)

Gender Wage Gap(employees on monthly wage schedule)

79.1%

82.2%

81.2%

Utilization rate

7.8%

26.5%

100.0%

Average number ofleave days taken

110.8 days

77.7 days

9.8 days

100.0%

98.7%

98.4%

Net Sales per Work-Hour(Year-on-Year Comparison)

Paternity
Leave

Ratio of Employees Undergoing
Regular Health Checks

Collect points awarded
for your hard work

MaxValu Kanto

Read health-related articles

Kasumi

Health management

Participation in fitness events

100% participation in regular health checks
Improvement in the rate of secondary examination visits those with findingsGrowing
number of participants in fitness eventsInter-departmental
Walking Rallies

<Regular Health Check>Must undergo an Must be examined every year! Make it
annual check up your chance to reflect on your lifestyle!

Be careful even when your values are
Review theresults and make within normal limits. Check if there is a
improvements! value that is close to the abnormal level!

Working Style Data
Maruetsu

Record your daily physical condition

Know your Health Age

Each operating company is making company-wide efforts to achieve a healthy life for its
employees, their family members and local communities by proposing food choices,offering support for their health, and innovating working styles, in cooperation with healthinsurance association, personnel department, as well as departments in charge of dietaryeducation and personnel training, and a labor union.
Specifically, we are promoting initiatives for improving health habits, healthmanagement, participation in fitness events, and education and sharing of information on
health. We are utilizing portal sites and apps for health and fitness and also social media,
which are closely connected to employees’ daily life, so that each and every employee
will be able to grasp and be conscious of his/her own health condition.


Fitness
challenge events

Be sure to go if your result Receive the exam even when you haveis “exam required” orno obvious symptoms! Having accurate“detailed exam required” results leads you to an early treatment!

Inter-store & Inter-departmental Walking Rally, 2023
Entry period

October 10–31

Rally period

November 1–30

Targets

As a team: 6,000 steps per day in average

Team members

Three or more (no upper limit)
Allowed to form teams with members fromdifferent stores or departments

Achievement points

300 points for all members of the team
Chance to win a Fitbit in a lottery

Education and sharing of information on health

The Group promotes health education for employees andtheir families by holding seminars on personal healthmanagement, women-specific health issues, nursing care,and childcare.
In addition, Kasumi, an operating company, invited its
employees to make posts on health-conscious lunches on
an internal Facebook group, which has earned them points
from a health portal site, and carried out other initiatives toshare information.

33

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialFood Safety and Security
Toward the Future

Basic Approach
The Group believes that, as a food provider, it has a duty to deliver on product safety andsecurity for customers. Every employee keeps food safety and security in mind as theywork to provide safe, high-quality products in accordance with laws, regulations andstandards.

System for providing safe and secure products throughout the supply chain
Going forward, the Group aims to solidify our system for providing safe and secure products
throughout the supply chain, from raw materials and product procurement to sales.

Material Issues and Vision
Food safety and security

Theme
Material Issues

ApproachandVisionFood safety compliance

Responsible marketing and labeling(1) Upgrade Groupwide quality management and safety management systems(1) Build a marketing and labeling management system(2) Ensure food safety and security
throughout the supply chain(2) Promote the disclosure and communication of useful information to customers

Producers andManufacturers

Processing andDistribution Centers reate regularCinspection systems
for producers,
production areas,
factories and otherfacilities (Verificationof traceability)B uild logistics systems that pursue quality
and freshnessE xpand our own management of andparticipation in production across various
industries (agriculture, fisheries andlivestock)D evelop meat alternatives and other productsthat contribute to a reliable food supply

Stores rovide easilyP
understandablelabeling for customers(e.g., best-by dates,
allergens, foodadditives)
E ducate employees
on food safety andsecurity

P. 22

The Group is working on two material issues related to food safety and security. The firstis “food safety compliance,” which we will achieve by enhancing our own safety management systems. The second is “responsible marketing and labeling” as a retailer, which will
ensure that we always deliver safe products to customers.

To Customers

Responsible Marketing and Labeling

Food Safety Compliance

Promotion of Responsible Marketing and Labeling
As a food provider, the Group believes that the provision of safe products and services
that consumers can use with confidence is its highest priority. In our marketing andcommunication efforts, we work to share useful information with consumers in an easily
understandable way and in accordance with laws and regulations. We also work toprovide accurate labeling based on factual information.

Internal Quality and Safety Management Systems
Each operating company strives to ensure uncompromising quality management based on
our certification in international management systems, and to maintain and improve quality
and safety management on a daily basis.

Main Food Safety Initiatives

Main initiativesImplementation of the ISO 22000
standard for food safety management systems (The Maruetsu, Inc.)
Implementation of the ISO 9001
standard for quality management
systems (Kasumi Co., Ltd.)D isclosure of independent radiation
inspection results(1) Establish a marketing and research department(2) Create labeling management standards andtraining systems(3) Build on marketing that reflects customer andemployee feedback34(4) Develop labeling that is easy for customers tounderstand (e.g., Food for Specified Health Uses,
the benefits of various products and ingredients)(5) Expand product offerings for ethnic and minority
groups (e.g., halal and vegan)(6) Share accurate information with partner companies

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialSustainable Food Value Chain
Basic Approach
The impact of geopolitical risks, environmental issues and other global problems on foodis increasing. Forecasts predict it will become difficult to continually provide a stable foodsupply to consumers in the future. U.S.M.H believes it is vital to pursue and maintainreliability and efficiency throughout the supply chain, by not only procuring products fromproducers and manufacturers but also by expanding its own production and private label
brands. Alongside these activities, our response to human rights issues throughout the
supply chain is just as important.

U.S.M.H plant factory The TERRABASE

U.S.M.H Yachiyo Grocery Center

Material Issues and Vision

Material Issue

ApproachandVisionRespect for Human Rights

Sustainable food value chain

Theme

Safe procurement and supply of food(1) S table supply of products by transitioning into
an SPA* and restructuring our logistics network(2) M ove forward with procurement and sales ofsustainable products

Respect for human rights

Formulating Our Human Rights Policy and Building an Internal Human Rights Risk Management System

Respect for human rights throughcooperation between U.S.M.H andthe entire supply chain

The Group recognizes the importance of respecting human rights. We will build a system
to deepen each employee’s understanding. The management team of U.S.M.H is also
deepening discussions on human rights by inviting external lecturers to learn abouthuman rights.
Basic approach to human rights

The Group views safe delivery of food to customers and respect for the human rights ofeveryone involved in the product supply chain as priorities. Therefore, we have identified“safe procurement and supply of food” and “respect for human rights” as material issues.
* SPA: Specialty store retailer of Private Label Apparel

Safe Procurement and Supply of Food

The Group abides by human rights and labor laws
as well as the AEON Group Human Rights Policy.
We will always respect the diverse values,
character, and privacy of each individual, and will
never discriminate based on race, nationality,
ethnic group, gender, age, birthplace, religion,
education, physical or mental disabilities, sexual
orientation, gender identity or any other reason. In
our supply chain, we will strive to engage incommercial transactions that respect the humanrights of every producer that we do business with.

P. 21–23

Initiatives toward a Safe and Sustainable Food Supply
Standpoint on new procurement methods(1) C ultivate new partnerships with
global raw material suppliers(2) E xpand new product ranges throughour private label brands(3) E xpand SPF* product ranges

An ideal future of respect for human rights, as promoted by U.S.M.H(1) R espect for the values, character,
privacy and diversity of all people(2) E quality and fairness for all people(3) F air transactions with all business
partners(4) R espect for the human rights of
employees(5) B usiness development that respects
human rights

Standpoint on logistics innovations
In March 2024, MaxValu
Kanto adopted new rules
on personal appearancewith the aim of creating
an environment in which
employees can work
more enthusiastically andbe themselves, filled withsmiles and energy, byrespecting each other’scharacter and diversity.

(1) Collaborate with primary industry(2) Build new supply chains(3) Establish new procurement routes(4) U pdate freezing and refrigeration
technologies* S PF (Specialty store retailer of Private label Foods): A business model that integrates the production,
distribution and sale of food products

35Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialCreation of Healthy, Valuable Lives through Our Food and Services
Basic Approach

Our Vision of a Supermarket That Fosters Spiritual Happiness

The Group’s aims to “offer customers healthy, valuable choices in food” and “cultivate
deep relationships to build prosperous local communities” are championed in our Core
Philosophy. As well as bringing both food and value to customers’ dining tables, we aim
for their satisfaction, smiling faces, and even better health through the enjoyment of food.
Our goal is to become an established creator of the wellbeing that is essential to daily life
in local communities.

Through the development of our original products, the Group will continue proposing newvalue offerings so as to bring value to customers’ dining tables.
eatime chef
“Let’s make today’s meal a masterpiece.” eatime
chef is a range of 20-minute meal kits that enable
you to prepare a set menu of main and side dishes
devised by famous chefs, culinary experts andnutritionists. This product was developed for those
who are busy every day to spend less time preparing
meals and enjoy more spiritual happiness.

Our Approach to Wellbeing and Material Issues
Material Issue

Spiritual happiness

Proposal of enjoyable,valuable lifestyles(Psychological wellbeing)

Wellbeing

Physical health(Physical wellbeing)

Connections
withcustomers

Connections with others(Social wellbeing)

Contributions topeople’s health

INNER COLOR DELIThe Company started the production and sale of
INNER COLOR DELI, a line of frozen deli products
produced by ORBIS Inc. based on the concept of“enriching the interior with color, making it more
fun and easier.” With voluminous products prepared using abundant ingredients, mainly vegetables, we deliver healthy eating habits and delicious
happiness.

Coexistence with
communitiesI n relation to “wellbeing”: “Health is a state of complete physical, mental and social well-being”(Constitution of the World Health Organization)
To achieve the wellbeing the Group strives for, it has established “proposal of enjoyable, valuable lifestyles,” “contributions to people’s health” and “coexistence with communities” as material issues. In addition to promoting these initiatives, we have positioned “connections withcustomers” as a material issue, making it our foundation for delivering new value.

Proposal of Enjoyable, Valuable Lifestyles
AKIBA Runway
Open Innovation Platform

Creating Stores as Places to Enjoy the Shopping Experience(Launched in March 2022)

In line with a dramatically changing society, customer needs for shopping are also changing. The Group is driving the transformation of stores and products as vital consumer
touchpoints, to improve shopping experiences and move toward the new supermarket itaims to become.

Conventional Supermarkets

The Group’s Vision for a New Supermarket

A one-stop shopping facility, foreverything from food to daily
necessities

A comfortable space that fosters spiritual
happiness, and where customers can discover
an unexpected shopping experience

A dedicated U.S.M.H team seeks out
partner companies that possess
original and unique technologies,
and builds collaborative relationships
with them with the aim of creating
new value propositions in the retailindustry. In the future, we will further
accelerate this initiative to provide
new value to customers.

36

Open Innovation Platform

Partnercompanies

AKIBA
RunwayTechnology

Search and Communication

Demonstration
Efficacy Verification

New Value Propositions

U.S.M.H
Asset
resourcesIntroduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

SocialFood bank and food drive initiatives

Contributions to People’s Health

Our operating companies engage in food drive initiatives,
collecting from customers surplus food products that are wellbefore expiry dates to donate to local food banks, social
welfare councils and otherorganizations. As of February 29,
2024, a total of 94 stores wereconducting this program acrossthe Group, and we plan to further
expand the program in the future.

Basic Approach
Japanese society is rapidly aging, and theera in which people can live to 100 or moreis said to be upon us. Amid this social
landscape, the need for health management, prevention of lifestyle diseases, andfor addressing other health issues is
growing more pressing. U.S.M.H aims torealize healthy customer and employee
lifestyles, as well as a healthy businesspresence in local community life. By
providing food as a source of healthalongside food-related services, we willcontribute to energetic lifestyles.

Joint initiatives with local communities

Maruetsu cooking classes taught by registerednutritionists and nutritionists

Developed retort-packaged food products(keema curry, vegetable curry, Bolognese sauce)that use plant-based meat alternatives andcontain only about 200 kcal per serving

Coexistence with Communities and Connections with Consumers

Number of Stores Conducting Food Drive

94
66

2022

2023
Coexistence with communities*A EON Cheers Club is one of the activities under the Healthy Development of Children program of the
AEON1% Club Foundation. The Club members, mainly elementary school children, engage in a rangeof hands-on learning activities on such themes as the environment and social contribution. Throughthe activities that take place in the vicinity of AEON stores and with the support of employees at AEON
stores, members learn and think about the themes in a fun way.
AEON Cheers Club website

Basic Approach
As a way to achieve wellbeing, U.S.M.H will contribute to regional revitalization andsolving problems faced by local communities, as a company with roots in those communities. We also believe it is important for us to live up to expectations by transforming
various products and services based on our understanding of our connections withcustomers and their needs. U.S.M.H acts as a mediator to deepen the connections
customers have with their community and with society at large. We believe these connections will lead to wellbeing in the lifestyles of customers and a vibrant, sustainable society.

Initiatives to improve customer convenience

Connections with customers

Maruetsu’s Handy Bear Home Delivery is a service that delivers products purchased bycustomers at the store to their homes within three hours.
In particular, those who are pregnant, have children up to the age of three, are 70 yearsof age or older, have disabilities, or those in need of nursing care, their families andhelpers are issued a
Daily Life Support
Passport, which entitles
them to an even more
affordable delivery fee.

Contributions to the Happiness of Communities and Society
Main initiatives(1) Build an organization that considers ways
to solve issues in local communities(2) Expand food bank and food drive activities(3) Consider the use of local resources (e.g.,abandoned farmland)

Connections with customers

Kasumi launched the AEON Cheers Clob Kasumi Tsukuba, which provides fun, hands-on
learning opportunities on the environment and social contribution activities. Under thetheme of “Food Cycle,” we have conducted community-based activities for elementary
school students in Tsukuba City. In thefarming experience program, participantslearned how to grow rice through handson experience of planting, harvesting,and threshing rice, with the cooperationof the University of Tsukuba’s T-PIRC
Farm, at a field on the campus. The
harvested rice, Niji no Kirameki, was soldin an original illustrated package at theBL NDE Kenkyugakuen store.

Main initiatives(1) Train human resources to be healthexperts(2) D evelop health-related products(3) E xpand health support services(4) C ollaborate with health-relatedcompanies

Coexistence with communities(4) Build recognition as part of the regional
infrastructure(5) Share information about food culture andother traditions

37

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Governance
Enhancing Corporate GovernanceCorporate Governance
Basic Approach(1) We respect the independence and autonomy of our operating companies, based on each company offering
customers healthy, valuable choices in food and contributing to the development and prosperity of local
communities, as stated in our Core Philosophy.
(2) We will ensure transparency and fairness in our decision-making in order to facilitate appropriate cooperation with shareholders and other stakeholders.
(3) We will build a structure that enables us to incorporate the feedback we receive from customers in thecourse of their day-to-day shopping and from constructive dialogue with shareholders and other stakeholders into our operations.
(4) We will ensure the rationality of management’s decision- making process, demonstrate a sound entrepreneurial spirit, and make prompt, bold decisions to enable the Company to achieve sustainable growth andincrease medium- to long-term corporate value.

Corporate Governance Guidelines (Japanese only)
https://cdn.usmh.co.jp/
wp-content/themes/usmh/files/20211220/
US_governanceguide_20211213.pdf
Corporate Governance Report (Japanese only)More details

https://cdn.usmh.co.jp/
wp-content/themes/usmh/files/20230526/
US_20230526-1.pdf

Corporate Governance Structure
We are structured as a company with a Board of Directors and an Audit and Supervisory Board, and we are working to enhance our corporate governance through each of these bodies.
General Meeting of Shareholders

Human Resources and Compensation Advisory Committee

Board of Directors EffectivenessEvaluation Advisory Committee

Outside: 6

Outside: 3

Outside: 3

Inside: 8

Inside: 2

Inside: 3Motohiro Fujita,
President and Representative Director

Shigekazu Torikai,
Independent Outside Director

Shigekazu Torikai,
Independent Outside Director

The basic policy of the Board of Directors is to increase management
efficiency and transparency, and to
maximize the Company’s sustainablegrowth and medium- to long-term
corporate value. Since the Annual
General Meeting of Shareholders heldin May 2016, the composition of
Outside Directors and Corporate
Auditors has been revised to ensure
the diversity of the Board of Directors
and the effectiveness of corporate
governance.

In order to allow the Board of Directors toappropriately fulfill its required responsibilities, the committee, which is positioned
under the Board of Directors andcomprised mainly of independent outside
directors, considers the election of
Directors and a medium- to long-term
performance-linked compensation system.
In addition, the committee discusses andreports to the Board of Directors on theappropriateness of matters such as theverification of the performanceachievement rate and the compensation
standards for Directors based on theperformance-linked payment rate.

In order to allow the Board of
Directors to appropriately fulfill its
required responsibilities, thecommittee, which is positioned underthe Board of Directors and comprised
mainly of independent outside
directors, discusses ways to enhancethe effectiveness of the Board of
Directors. The committee conducts
questionnaire surveys to evaluate theeffectiveness of the Board of
Directors, identifies issues using
third-party analyses, and reportsback to the Board of Directors tosolve such issues.

Meetings held

12 meetings

7 meetings

3 meetings

Attendance rate

100%

100%

100%

Body

Election/Dismissal(Corporate auditors)

Accounts auditing

Oversight
Selection/ Dismissal

Collaboration
Collaboration

Group Audit and Supervisory
Board Liaison Committee

Reporting on
business execution
Reporting on
management strategies
Reporting onsustainability promotion∙ Internal controls∙ Auditing
Auditing

Corporate auditors/
Audit department

Internal
auditing

Oversight
Policyconfirmation

Management
Committee

President andRepresentative Director
ReportingInternal Audit Department

ReportingBoard of Directors (Directors)

Auditing

Resolution/Approval

Board/
Committee Chair

Special Committee

Audit and Supervisory Board

Human Resources and Compensation Advisory Committee

Oversight
Collaboration
Reporting

Evaluation Advisory Committee

Accounting auditors/Auditing corporation

Male Female

Composition

Management
strategy promotion
Sustainability
promotion
Resolution/Approval

Purpose/Function

Corporate departments

ReportingManagement guidanceApproval of important matters

Reporting

Subsidiaries

38

Board of Directors

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Governance
Board of Directors Effectiveness Evaluation
Evaluation process

Issues concerning the Board of Directors based on the results of FY2022 survey and course of action for FY2023

December 2022

January 2023

February 2023

March to April 2023

May 2023

June 2023

Discussion ofquestions

Determinationof questions

Surveyconducted

Analysis ofcollected results

Issuesidentified

Report to Boardof Directors

Evaluation items and results
Scores (Past 3 Years)

FY2022

Deviation From
3-Year Average

2.6

2.7

0.1

2.6

2.8

2.8

0

2.8

2.7

2.7

2.8

0

2.7

2.8

2.8

2.8

2.7

-0.1

5. Communication with managers

2.9

2.8

2.8

2.8

2.6

-0.1

6. R elationships with shareholders
and investors

2.8

2.7

2.8

2.8

2.6

-0.1

FY2020

FY2021

Average

1. R oles and functions of Board of
Directors

2.5

2.6

2.6

2. C omposition and size of Boardof Directors

2.7

2.8

3. Operation of Board of Directors

2.6

4. C ooperation with auditingorganizations

Managementrelated

Number of Matters To Be Resolved

Number of Matters To Be Reported
Corporate auditors and Financial accounts-related
accounting auditors
Directors

Important Concerning
matters
directors andconcerning
corporatebusiness
auditors
conduct
Concerning
financial accounts

General affairs-related
Subsidiary-related
Other important matters(Proposals from the Board of Directors Effectiveness Evaluation Advisory Committee)(1) Measures to build strong relationships with shareholders(2) Provision of training opportunities to directors and corporate auditors
 ormulation of successor development plans for U.S.M.H and operating companies(3) F(Report from the Board of Directors Effectiveness Evaluation Advisory Committee)(1) Strengthen dialogue and communication with individual shareholders
 ngage in dialogue with individual shareholders who are also customers, and consider∙Eeasily understandable ways to communicate information to individual shareholders∙ Improve convenience of benefit programs for individual shareholders(2) Provide training opportunities to directors and corporate auditors
 onsider providing training opportunities, including lectures by outside∙C
directors to other officers and corporate auditors(3) The Board of Directors to receive reports on and continue following up on
the progress of succession plans

Actions taken in fiscal 2023

Organization and HR-related

Matters to
be reported

Course of
Action(Rated with 3 being the highest score)

FY2019Proposals Submitted Between
March 2022 and February 2023

IssuesMonthly
results

Business
conduct

Stock-relatedConcerning the General Meeting of Shareholders

39

Measures tobuild relationships withshareholders

Hosted a face-to-face social gathering with shareholders
In November 2023, we hosted a face-to-face social gathering for shareholders for the
first time in four years, which was attended by 114 shareholders. At the meeting, weoffered a visual report on the Company’s initiatives and time to socialize with theCompany’s officers while tasting the Company’s private label brand products, throughwhich we were able to receive opinions and comments directly from shareholders.

Training for
directors andcorporate
auditors
Outside directors’ understanding of business and training for internal directors
Outside directors visited the Yachiyo Grocery Center, a facility that has achieved
significant labor savings, and deepened understanding of our business. Meanwhile, anoutside director gave a lecture on risk management from a stakeholder’s perspectiveat the compliance training for Group officers.

Progress of
successionplans egan essential discussions involving the presidents of U.S.M.H and eachB
company
As a premise for formulating a successor development plan, efforts were made tounderstand the actual situation of human capital and organizations within the Company, and to share issues. In particular, we are continuing discussions on the promotionof women’s active participation and improvement of employee engagement.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Governance
Officer Nomination and Compensation

Overview of Compensation System for Directors (Excluding Outside Directors)

Nomination policies and procedures for Director and Corporate Auditor candidates
At present, the Company has not established policies and procedures for the nominationof director and corporate auditor candidates in its internal rules and regulations. However,it makes a comprehensive assessment from the viewpoint of whether the candidate canbe expected to contribute to the Company’s Core Philosophy and the further developmentof the Group as a whole.
(For further details, please see “Principle 3-1. Full Disclosure” in the Corporate Governance
Report.) (Japanese only)For dismissal proposals submitted to the General Meeting of
Shareholders, if the person’s behavior violates, or may violate, the law or the Articles ofIncorporation, or if the person is deemed unable to perform their duties for any reason, the
Human Resources and Compensation Advisory Committee deliberates on whether the dismissal criteria apply, and then reports its findings to the Board of Directors.

Board
MemberType

Summary

Directors

Determined by resolution of the Board of Directors, within the compensation limits set byresolution of the General Meeting of Shareholders, based on reports by the Human
Resources and Compensation Advisory Committee.

OutsideDirectors

Consists solely of monthly compensation. The level of compensation is determined byresolution of the Board of Directors, within the compensation limits set by resolution of
the General Meeting of Shareholders, based on reports by the Human Resources andCompensation Advisory Committee, using compensation levels at other companies inJapan (according to an independent third party) as reference.

Corporate
Auditors

Consists solely of monthly compensation. The level of compensation is set throughdeliberations by the Audit and Supervisory Board, within the compensation limits approved by the General Meeting of Shareholders, using compensation levels at othercompanies in Japan (according to an independent third party) as reference.

Policy on officer compensation
The Company’s basic policy is to reflect medium- to long-term business performance incompensation and facilitate the Company’s sustainable growth and increase corporate
value by having its directors demonstrate a sound entrepreneurial spirit. As such, officer
compensation is structured so that a higher percentage is linked to business performance.

Compensation

Process of determining officer compensation

Monthly
compensation

Per-monthcompensation

The Company sets compensation amounts according to role, as shown in the tables on
the right. The Company maintains a Human Resource and Compensation Advisory Committee, comprised mainly of independent outside directors and meets constantly, underthe Board of Directors. This committee works with objectivity and transparency when
confirming the previous year’s business results for each operating company (in April everyyear), and when verifying the appropriateness of compensation levels.

Equitycompensation

Calculation of compensation for individual Directors
As defined in the table of criteria for compensation by position, compensation consists offixed cash compensation, performance-based cash compensation and performance-based non-cash stock compensation (restricted stock unit compensation andstock options).

Description

Compensation
Type

Cash compensation paid monthly as
a fixed amount set according to thedirector’s position

Fixed

Plan

Basic compensation
Position-based
compensation

Annualperformance-based
compensation(updated monthly)

Performance-based compensation withthe payment amount determined by thebusiness performance achievement ratein the previous fiscal year and evaluationof each individual director

Restricted stock unit
compensation (RSU)

Predetermined stock compensation
linked to the medium-term businessplan and granted for each year of
the period covered by the plan

Stock-based
compensation Stock
options (SO)Company stock compensation
granted according to the businessperformance achievement rate in
the previous fiscal year

Cash Compensation

Committee Chair: Shigekazu Torikai(Independent Outside Director)
Naoko Makino (Independent Outside
Director)
Shinobu Okamoto (Independent
Outside Corporate Auditor)

Legal advisor

Yodoyabashi & Yamagami LPC

Financial advisor

Mizuho Securities Co., Ltd.

—Cash
Short term

Performancebased

StockMedium tolong term

Stockacquisitionrights—Performance-based Compensation

Compensation by Position

Establishment of Special Committee

Compositionof the Special
Committee

Scope of
Evaluation

Ratio (%)
Fixed Compensation

In preparation for the conclusion of ashare exchange agreement between the
Company and Inageya Co., Ltd., in orderto ensure fairness and appropriateness indeciding the share exchange ratio, asystem was put in place in which eachparty takes measures to ensure fairnessof negotiation by each selecting athird-party financial advisor and a legal
advisor who are independent of theparties.

Deliverables

40

Stock-based
Compensation
Stock Options (SO)

Restricted Stock
Unit Compensation(RSU)(Representative directors)
Chairman and president

45

40

10

5

(Representative director)
Vice president

45

40

10

5

(No right of representation)
Chairman and vice president

50

35

10

5

Senior managing director

55

30

10

5

Managing director

58

27

10

5

Concurrent director

60

25

10

5

Total

100

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

GovernanceRoundtable Discussion by Independent Outside Officers

Shinobu Okamoto,

Naoko Makino,

Shigekazu Torikai,

Independent Outside
Corporate Auditor

Independent Outside
Director

Independent Outside
Director

Management Oversight to Support the Creation of the Group’s Future
The U.S.M.H Group invites the Outside Directors and Outside Corporate Auditors, who have diverse experience andknowledge, to discuss the achievement of sustainable growth and contributions to local communities. Three ofthese officers, who check the Company’s management from external perspectives, expressed their opinions onwhat kinds of reforms and issues the Company should address in the lead-up to the milestone tenth anniversary of
its establishment and in light of the upcoming business integration with Inageya.

U.S.M.H’s Management as Seen from External Perspectives
Torikai: This is my tenth year as an Outside Director,
and when I take a fresh look at the Board of Directors
and Management Committee from an external perspective, my sense is that these meetings are distinctive for
their extremely open exchanges of opinion, and thecontents of those discussions are becoming morein-depth every year. As forums for constructive discussions, an open and flat relationship has been established, with Mr. Okada, Advisor of the Company, offering
frank opinions to the business execution side. Because

the Company’s executive directors are the top executives of the Group’s operating companies, you could saythat these forums are also an excellent opportunity forthe development of management executives.
In those meetings, I hope to be of assistance by using
my insights as a tax lawyer to give advice, particularly on
my own areas of expertise, namely IT operations andbusiness model patents.
Okamoto: When there was a discussion in the Board of
Directors last year about the use of digital signage, youmade some pertinent comments and gave advice about
the registration of intellectual property rights, didn’t you,
Mr. Torikai?
41

I worked for many years in the National Tax Agency
and Regional Taxation Bureaus, where I was involved in
the development of legislation and worked in various
positions, such as Chief Internal Inspector, for theprevention of crimes by public servants in the course of
their duties. I intend to fulfill my role as an Outside
Corporate Auditor based on the knowledge and experience in tax accounting and compliance that I gained inthose positions.
Makino: In Board of Directors meetings, I am asked formy opinion as a national registered dietician and culinary
expert, and I sometimes provide information in the formof presentations. Meanwhile, as I have checked the“Consumer perspective” column on the skills matrix, inmy position, I am expected to give effective advice tomanagement from the perspective of homemakers, who
are the main customers of supermarkets. Through myassociation with various media, such as information
magazines that target women, cookbooks, and cooking
programs, I have gained an understanding of thefood-related needs of various households, and I intend
to leverage that understanding as that “Consumer
Perspective.”
Torikai: In the future, supermarkets will need to come up
with new ideas that focus on topics such as health andwellness, which are your areas of expertise, Ms. Makino,
the kind of ideas that will provide the potential for growth.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

GovernanceOkamoto: In the Board of Directors meetings in fiscal
2023, consideration of the business integration with
Inageya was a major theme of discussion. We were
faced with a decision that would mean an extremely
significant change for the Group. When we considered
the appropriateness of that integration itself, it was in linewith the founding objectives of the Group, namely, tobecome the top supermarket company in the Greater
Tokyo area by building sales of 1 trillion yen and a network of 1,000 stores, so no particular objections arose.
Makino: We, the outside officers, were given ample
briefing, which allowed us to be satisfied with the proposal. The next question is how it will be received bycustomers and what kind of benefits it will create forthem. I will monitor these points closely going forward.

Responses for Strengthening the Effectiveness of the Board of Directors
Okamoto: Regarding the effectiveness of the Board of
Directors, the Company has established an Evaluation
Advisory Committee, which conducts evaluations andidentifies issues through an effectiveness evaluation
survey of all Directors and Corporate Auditors. Upon
receipt of that Committee’s reports, the Board of Directors works to strengthen its effectiveness by the executive side taking action to solve issues. The results of the
fiscal 2022 survey highlighted the exchange of information between outside officers and the senior executivesof the operating companies as one issue for improvement.

Makino: In this regard, we have had several opportunities to exchange information with the senior executivesof the operating companies since fiscal 2023. For ourpart, this has enabled us to give advice after deepening
our understanding of the actual circumstances of theoperating companies and obtaining more detailed
information, so I commend the Company for implementing such a highly effective and useful solution.
Torikai: The open-minded corporate culture that emphasizes communication is a strength, in that it makes
our discussions meaningful and that it seeks to shareawareness within the Group. That openness may also
lead to the strengthening of corporate governance byserving a kind of check-and-balance function. I hope wecan build similarly close relationships with Inageya as
well when it joins the Group.
Okamoto: In terms of the monitoring systems of theholding company in its management of the group, thedevelopment of mechanisms for understanding the actual
conditions of operating companies is critical. We outside
officers have previously conducted on-site inspections offacilities such as the new-format stores, distribution
centers, and the plant factory, and we have gathered
information from sources such as the in-house magazines published by the operating companies. Looking
ahead, I believe that timely coordination for the sharing of
information about business performance will be an issue.

Skills Matrix Demanded of U.S.M.H
Torikai: With respect to nomination and compensation
functions, the Human Resources Advisory Committee
met three times and the Compensation Advisory Committee met four times in fiscal 2023. Prior to consultingwith these two committees, there is an opportunity forus three outside officers and the management side to
exchange opinions and consider what issues will be
addressed by each committee.
Okamoto: Regarding compensation, how to deal withrestricted stock in stock compensation became a major
issue. However, given the harsh situation with businessperformance, we will need to keep deliberating on
design that will provide an effective incentive.
Regarding human resources, based on the effectiveness evaluation that was mentioned earlier, the formula42

tion of successor development plans for U.S.M.H andthe operating companies was raised as an issue. Currently, having received a response from the Human
Resources Advisory Committee, the executive is proceeding with the development of succession plans,
including for the operating companies. However, when
Inageya joins the Group, those plans will probably need
to be reviewed. Further, the selection of candidates for
Director is discussed based on the skills matrix, butwhen executives of the operating companies become
candidates, their skills tend to be concentrated on the“Corporate management” and “Human resources/
Organizational development” columns. At present, thisis balanced out by supplementation with the skills of theOutside Directors. This is an area that will probably
change little by little over time.
Torikai: My personal opinion of the skills matrix is that,given the scale of the Group’s business, the areas of“Finances and accounting/Investment strategy” and“Business transformation” should be strengthened. I
also believe that we will need a structure for executing
management strategies with animal spirits, with anemphasize on the role of the CFO . This is sure to lead tothe generation of new ideas that will open up the futureof the Group.
Makino: For myself as well, while my main role as amember of the Board of Directors is to supplement theBoard’s skills from the “Consumer perspective,” I also
want to expand the range of the skills so that I cancontribute further, and I want to support the Group in thecreation of its future.

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

GovernanceDirectors and Corporate Auditors

Name

Motohiro Fujita

Shinichiro Yamamoto

Masaharu Homma

Satoshi Shimada

Hiroshi Saito

Motoya Okada

Position

President and Representative Director

Vice President and Representative Director

Vice President and Representative Director

Vice President and Director

Director

Director and Advisor

Tomonobu Miki
Outside Director

Mar. 2013 Joined Kasumi Co., Ltd. as Advisor
May 2014	Managing Director, Senior
Executive Officer; Manager,
Logistics Division, Kasumi Co., Ltd.
Mar. 2017	Senior Managing Director and Senior
Executive Officer, Kasumi Co., Ltd.
Mar. 2018	General Manager, ICT Division, theCompany
Mar. 2019	Senior Managing Director andSenior Executive Officer; Manager,
Business Reform Office; Manager,
Business Remodeling, Kasumi Co., Ltd.
Mar. 2020	President and Representative
Director, Kasumi Co., Ltd.
General Manager, Digital Division,
the Company
May 2020 Director; General Manager, Digital
Division, the Company
Mar. 2022 Vice President and Representative
Director; General Manager, Digital
Division, the Company
Mar. 2024 Director, Kasumi Co., Ltd. (topresent)
Mar. 2024 Vice President and Representative
Director; General Manager, Digital
Division; General Manager,
Management Strategy Division,
the Company (to present)

Mar. 1992 Joined The Maruetsu, Inc.
Mar. 2010 Manager, Corporate Planning
Department, Corporate Planning
Division, The Maruetsu, Inc.
May 2013 Executive Officer; Manager, Corporate Planning Department,
Corporate Planning Division, The
Maruetsu, Inc.
May 2015 Director, MaxValu Kanto Co., Ltd.
Mar. 2017 Executive Officer responsible foradministration; General Manager,
Corporate Planning Division, The
Maruetsu, Inc.
Mar. 2019 Executive Officer; General
Manager, Corporate Planning
Division, The Maruetsu, Inc.
May 2019 Managing Executive Officer;
General Manager, Corporate Planning
Division, The Maruetsu, Inc.
May 2020 Director and Managing Executive
Officer, General Manager,
Corporate Planning Division, The
Maruetsu, Inc.
May 2021 Director, the Company
Mar. 2023 President and Representative
Director, The Maruetsu, Inc. (topresent)
May 2023 Vice President and Representative
Director, the Company (to present)

Apr. 1995 Joined JUSCO Co., Ltd. (currently
AEON Co., Ltd.)
Sep. 2002 Agricultural Merchandise Division,JUSCO Co., Ltd.
Mar. 2011 Strategic Division, AEON Co., Ltd.
Apr. 2015 Assistant to Group COO, AEON
Co., Ltd.
May 2019 President and Representative
Director, AEON LIFE Co., Ltd.
Feb. 2021 Director, MaxValu Kanto Co., Ltd.
Mar. 2021 President and Representative
Director, MaxValu Kanto Co., Ltd.
(to present)
May 2022 Vice President and Director, theCompany (to present)

Career summary

Mar. 1978 Joined Kasumi Co., Ltd.
May 2000 Director, Kasumi Co., Ltd.
May 2004	Managing Director, Kasumi Co., Ltd.
Mar. 2005	Senior Executive Officer; Manager, Business
Services Division; Manager, ComplianceControl Office, Kasumi Co., Ltd.
May 2006	Manager, Development Division,
Kasumi Co., Ltd.
May 2007	Senior Managing Director, Kasumi Co., Ltd.
Feb. 2009	Manager, Store Development andService Division, Kasumi Co., Ltd.
Sep. 2010	Manager, Sales Managing Division;
Manager, Food Market Managing
Division, Kasumi Co., Ltd.
Sep. 2011	Manager, Sales Control Division;
Manager, Food Market Managing
Division, Kasumi Co., Ltd.
Mar. 2012	President and Representative
Director, Kasumi Co., Ltd.
Mar. 2015	Executive Vice-President, the Company
Mar. 2017	President and Representative
Director, the Company (to present)
Executive Officer responsible for the	Supermarket Business, AEON Co., Ltd.
Director, Kasumi Co., Ltd.
May 2017	Director, MaxValu Kanto Co., Ltd. (to present)
Mar. 2019	Vice President and Representative
Executive Officer responsible for theSupermarket Business, AEON Co., Ltd.
Mar. 2020	Vice President and Representative
Executive Officer responsible for theSupermarket Business andMerchandise/Logistics, AEON Co., Ltd.
Mar. 2021	Vice President and Representative
Executive Officer responsible for theSupermarket Business, AEON Co., Ltd.
Mar. 2022	Executive Officer and Vice
Chairman, AEON Co., Ltd.
Mar. 2024	Chairman and Director, Kasumi Co., Ltd.

Apr. 1985 Joined The Maruetsu, Inc.
Oct. 2008 General Manager, Western Tokyo Area Department,
Tokyo Sales Division, The Maruetsu, Inc.
Mar. 2009 General Manager, Sales Supervisory
Trainers Department, The Maruetsu, Inc.
Mar. 2010 General Manager, Training Department,
LCO Promotion Division, The Maruetsu, Inc.
Sep. 2011 General Manager, Sales Supervision Small
Shop Business Department, The Maruetsu, Inc.
Sep. 2012 General Manager, Department Responsible for Sales Supervision of Eastern Kanagawa Area, The Maruetsu, Inc.
Apr. 2013 General Manager, Department Supervising
Small Shops and Urban Shops, StoreOperation Division (Treated as Deputy
Division Manager), The Maruetsu, Inc.
Mar. 2015 General Manager, Department SupervisingStandard Shops, Store Operation Division (Treatedas Deputy Division Manager), The Maruetsu, Inc.
May 2016 Executive Officer; General Manager, Department Supervising Large Shops, StoreOperation Division (Treated as Deputy
Division Manager), The Maruetsu, Inc.
Mar. 2017 Executive Officer; General Manager,
Division for Management and Supervisionof Sales Reform, The Maruetsu, Inc.
May 2019 Director; Executive Officer;
General Manager, Store Operation
Division, The Maruetsu, Inc.
Mar. 2022 Director; Executive Officer; General
Manager, Education and Personnel
Affairs Division, The Maruetsu, Inc.
May 2022 Director; Managing Executive Officer;
General Manager, Education and Personnel
Affairs Division, The Maruetsu, Inc.
Mar. 2023 Director; Managing Executive Officer; General
Manager, Education and Personnel Affairs Division;in charge of Business Design and in charge ofCorporate Planning, The Maruetsu, Inc. (to present)
May 2023 Director, the Company (to present)

Mar. 1979 Joined JUSCO Co., Ltd. (currently
AEON Co., Ltd.)May 1990 Director, JUSCO Co., Ltd.
Feb. 1992 Managing Director, JUSCO Co., Ltd.
May 1995 Senior Managing Director, JUSCO
Co., Ltd.
Jun. 1997 President and Representative
Director, JUSCO Co., Ltd.
May 2002 Director and Advisor, AEON Mall
Co., Ltd. (to present)
May 2003 Director, President andRepresentative Executive Officer,
AEON Co., Ltd.
May 2004 Director and Advisor, Kasumi Co., Ltd.
Nov. 2005 Outside Director and Advisor,
TSURUHA HOLDINGS Inc.
Mar. 2012 Director, President andRepresentative Executive Officer,
and Group CEO, AEON Co., Ltd.
Aug. 2014 Director, KUSURI NO AOKIHOLDINGS CO., LTD. (to present)
Nov. 2014 Director, Welcia Holdings Co., Ltd.
(to present)
Mar. 2015 Director and Advisor, the Company(to present)
Mar. 2020 Director, Chairman and
Representative Executive Officer,
AEON Co., Ltd. (to present)

Apr. 1988 Joined Marubeni Corporation
Apr. 2013 General Manager, Marine ProductDepartment, Marubeni
Corporation
Apr. 2016 General Manager, FoodDistribution Department,
Marubeni Corporation
Aug. 2017 Chairman & CEO, Eastern FishCompany LLC (seconded)
Apr. 2020 Deputy Chief Operating Officer,
Food Division, Marubeni
Corporation
Apr. 2021 Chief Operating Officer, Food
Division - I, Marubeni Corporation
Apr. 2022 Executive Officer; Chief Operating
Officer, Food Division - I, Marubeni
Corporation
May 2023 Director, the Company (to present)
Apr. 2024 Director, Marubeni Corporation (topresent)

Term of office

One year

One year

One year

One year

One year

One year

One year

Attendance at Board of Directors meetings

12/12

12/12

12/12

12/12

10/10

12/12

10/10

Committee to which the director/
corporate auditor belongs
Corporate management
Skills matrix

Human resources/ Organizational development
Finances and accounting/ Investment strategy
Legal/ GovernanceBusiness transformation
Global perspective
Consumer perspective* The number of attendances at the Board of Directors meetings for Directors and Corporate Auditors whose election was approved at the General Meeting of Shareholders held in May 2023 was 10.

43Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Governance

Name

Shigekazu Torikai

Naoko Makino

Tadayoshi Yoyogi

Takeshi Nemoto

Chiharu Takeshima

Hirofumi Ishimoto

PositionIndependent Outside Director

Independent Outside Director

Corporate Auditor (Standing)Corporate Auditor (Standing)Outside Corporate Auditor

Outside Corporate Auditor

Independent Outside Corporate Auditor

Apr. 1975 Joined a tax accountant office
Apr. 1990 Registered as Attorney
Apr. 1994 Representative, TorikaiManagement and Law Office(currently Torikai Law Office) (topresent)
Mar. 2015 Independent Outside Director, theCompany (to present)
Jun. 2017 External Member of the Audit &Supervisory Board, Kurita Water
Industries Ltd.
Jun. 2018 Outside Director, Riso Kagaku
Corporation
Jan. 2023 Outside Director, Murakoshi
Holdings (to present)

Apr. 1990 Joined Asako Aramaki Office Co.,Ltd.
Dec. 1995 Resigned from Asako Aramaki
Office Co., Ltd.
Jan. 1996 Freelance (Member of Associationof Freelance Dieticians in Nakano
Ward)Mar. 2004 Representative Director, Studio Ku
Ltd. (to present)
May 2007 Councilor and Member of Editorial
Committee, Japanese Society of
Shokuiku
Apr. 2013 Councilor, Japanese Society of
Shokuiku; Member of Editorial
Committee, Japanese Society of
Shokuiku
Jan. 2016 Member of Planning Committee,
Japanese Society of Shokuiku (topresent)
May 2016 Independent Outside Director, theCompany (to present)
Jan. 2022 Councilor, Japanese Society of
Shokuiku (to present)

Mar. 1981 Joined Kasumi Co., Ltd.
Sep. 2002 Manager, Sales Department No.
10, Kasumi Co., Ltd.
Mar. 2005 Manager, Food Market Sales
Division No. 3, Kasumi Co., Ltd.
May 2007 Executive Officer, Kasumi Co., Ltd.
Jun. 2007 Deputy Manager, ComplianceControl Office; Manager, Audit
operation, Kasumi Co., Ltd.
Mar. 2013 Manager, Compliance Control
Office; Manager, Audit operation,
Kasumi Co., Ltd.
May 2014 Full-time Corporate Auditor,
Kasumi Co., Ltd.
May 2019 Corporate Auditor, Kasumi Co.,
Ltd. (to present); Standing
Corporate Auditor, the Company(to present)

Apr. 1984 Joined The Maruetsu, Inc.
Mar. 2008 General Manager, Eastern Kanagawa Area Department, Kanagawa
Sales Division, The Maruetsu, Inc.
Mar. 2009 General Manager, Urban StoresSupporting Department, Urban
Sales Division, The Maruetsu, Inc.
Mar. 2010 General Manager, Department
Supervising Western Kanagawa
Area, Sales Supervision Division,
The Maruetsu, Inc.
Mar. 2011 General Manager, Sales
Supervision Training Department,
The Maruetsu, Inc.
Apr. 2013 General Manager, Human Resources
Development and Education
Department, Education and Personnel
Affairs Division, The Maruetsu, Inc.
Mar. 2014 Store Profit Improvement Project
Leader, Corporate Planning
Division (Treated as Department
Manager), The Maruetsu, Inc.
Mar. 2015 General Manager, Training
Department, Sales Supporting
Division, The Maruetsu, Inc.
Mar. 2019 General Manager of Training Department,
Low-Cost Operation Promotion Division,
The Maruetsu, Inc.
Mar. 2020 General Manager Assisting
President, The Maruetsu, Inc.
May 2020 Full-time Corporate Auditor, The
Maruetsu, Inc.
May 2023 Standing Corporate Auditor, theCompany (to present)

Apr. 1992 Joined Marubeni Corporation
Apr. 2013 Vice President, Marubeni Thailand
Co., Ltd., and General Manager,
Food Department, Marubeni
Corporation
Apr. 2018 General Manager, Food Products
Materials Department, Marubeni
Corporation
Apr. 2022 General Manager, Food Strategy
Planning Office I and General
Manager, Food Strategy Planning
Office II, Marubeni Corporation
Apr. 2023 Deputy Chief Operating Officer,
Food Division - I; General
Manager, Food Strategy Planning
Office I; and General Manager,
Food Strategy Planning Office II,
Marubeni Corporation (to present)
May 2023 Outside Corporate Auditor, theCompany (to present)
Apr. 2024 Deputy Chief Operating Officer,
Food Division - I; General
Manager, Food-Related Business
Office, Marubeni Corporation (topresent)

Aug. 1986 Joined JUSCO Co., Ltd. (currently
AEON Co., Ltd.)
Feb. 2002 Manager, Corporate Branding Division, AEON Co., Ltd.
Mar. 2005 Strategic Division, AEON Co., Ltd.
May 2011 Director; General Manager,
Marketing Division, General
Manager, New Business
Development Division, AEON
Eaheart Co., Ltd.
Mar. 2015 Manager, Corporate Planning
Division, AEON Retail Co., Ltd.
Sep. 2016 Manager, Affiliated Companies
Division, AEON Retail Co., Ltd.
May 2020 Full-time Corporate Auditor, AEONBig Co., Ltd. (to present)
May 2021 Outside Corporate Auditor, theCompany (to present)

Apr. 1977 Co-ordination Division, Management
and Co-ordination Department, Tokyo
Regional Taxation Bureau
Jul. 2005 Special Officer (Planning and Co- ordination), First Taxation Department,
Tokyo Regional Taxation Bureau
Jul. 2006 District Director, Kawashima Tax
Office, Takamatsu Regional Taxation
Bureau (Tokushima Prefecture)
Jul. 2007 Chief Examiner, Third Large
Enterprise Examination
Department, Tokyo Regional
Taxation Bureau
Jul. 2008 Director, Planning Division,
Management and Co-ordination
Department, Tokyo Regional
Taxation Bureau
Jul. 2009 Director, First Personnel Division,
Management and Coordination Department,
Tokyo Regional Taxation Bureau
Jul. 2012 Chief Internal Inspector, Commissioner’s
Secretariat, National Tax Agency
Jun. 2013 Assistant Regional Commissioner(Management and Co-ordination),
Nagoya Regional Taxation Bureau
Jul. 2014 Regional Commissioner, Kumamoto
Regional Taxation Bureau
Oct. 2015 Representative, Shinobu Okamoto
Tax Accountant Office (to present)
May 2016 Independent Outside Corporate
Auditor, the Company (to present)
Jun. 2016 Corporate Auditor, RIKENGREEN Co., Ltd.
Jun. 2019 Outside Audit & Supervisory Board
Member, Yamaichi Electronics Co., Ltd.
Jun. 2022 Outside Director(Audit andSupervisory Board Member), YamaichiElectronics Co., Ltd. (to present)

Four years

Career summary

Term of office

One year

One year

Four years

Four years

Four years

Four years

Attendance at Board of Directors meetings

12/12

12/12

12/12

10/10

10/10

12/12

Committee to which the director/
corporate auditor belongs

Nomination and Compensation,
Board of Directors’ Advisory, Human
Resources Advisory

Nomination and Compensation,
Board of Directors’ Advisory, Human
Resources Advisory

Shinobu Okamoto

12/12
Nomination and Compensation,
Board of Directors’ Advisory, Human
Resources Advisory

Corporate management
Skills matrix

Human resources/ Organizational development
Finances and accounting/ Investment strategy
Legal/ GovernanceBusiness transformation
Global perspective
Consumer perspective* The number of attendances at the Board of Directors meetings for Directors and Corporate Auditors whose election was approved at the General Meeting of Shareholders held in May 2023 was 10.

44Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

GovernanceGroup GovernanceCompliance

Policy on Group Governance

Basic Approach to ComplianceWith the perspective of maximizing the corporate value of the Group as a whole, theCompany is working to continuously strengthen group governance, and has been applying the Regulations on the Management of Subsidiaries and Affiliates it has established as
the basic guidelines. The aim of the regulations is for the Company to appropriately
manage its subsidiaries and affiliates, which will allow the Company to smoothly provide
guidance and support to the subsidiaries and affiliates, and contribute to the stable
growth of the Group, the efficiency of management, and internal control. Some of theCompany’s directors concurrently serve as officers of major Group companies to ensure
effective governance and smooth collaboration.

The Company’s Core Philosophy is to offer customers healthy, valuable choices in food,and to cultivate deep relationships to build prosperous local communities. The Company isworking to ensure that the U.S.M.H Code of Conduct is fully understood across the Groupand to continuously educate people in positions of responsibility through various training
programs to enhance awareness of compliance, and share our Core Philosophy.
From the perspective of human rights protection, the AEON Compliance Hotline isavailable as an internal reporting contact point. Our subsidiaries have also establishedhelplines in line with the Group’s structure, and provide a consultation service for contacting the department primarily responsible for HR. We ensure that users of these systems
are aware that they will not be treated unfavorably. In the event of a violation, we takenecessary measures based on internal regulations, formulate measures to prevent a
recurrence, or have the department where the violation occurred formulate such measuresby themselves, and implement them Groupwide.

Relationship with the Parent Company
Two directors of AEON Co., Ltd., the parent company of U.S.M.H, concurrently serve as
Company directors. However, U.S.M.H’s business operations are based on independent
management. In addition, U.S.M.H has a corporate governance system that places
importance on sustainable growth, development and improvement ofbusiness performance. U.S.M.H maintains a collaborative relationshipCorporate
with AEON Co., Ltd. based on mutual respect for each other’s autonomy,
Governance ofand has secured independence from AEON Co., Ltd.
AEON Co., Ltd.
With this in mind, we, as one of the AEON Group companies, believethat collaborating and maximizing our synergy with AEON Group companies will benefit minority shareholders.
Please also refer to AEON Co., Ltd.’s “Policy on Governance of Listed
Subsidiaries.”

Internal Reporting System
To let the internal reporting system work effectively, we haveestablished the Whistleblower Protection Regulations. These regulations prohibit any unfavorable treatment of whistleblowers as
a result of reporting acts such as those that violate laws or regulations, acts that violate corporate ethics, or acts that infringe on
the interests of customers. We are also working on a regularbasis, through training and other means, to let the Group’s executives and employees know and understand this system.
Internal reporting results are shared semi-annually with theManagement Committee, which includes the presidents and representative directors of each operating company, and the number ofreports, most frequently reported categories, and the specific detailsof reports and results of responses are confirmed.

Exercise of Group Governance
The Company’s three major Group operating companies, namely, The Maruetsu, Inc.,
Kasumi Co., Ltd., and MaxValu Kanto Co., Ltd., have adopted the following systems andmeasures to ensure autonomy and speed in the execution of management by each Group
company, smooth cooperation as a Group, and the establishment of effective internal
controls and supervisory systems.

Number of Internal Reports

183

178

185

1H 2022

2H 2022

1H 2023

Initiatives to Prevent Wrongdoing and Misconduct
In accordance with the U.S.M.H Code of Conduct, all executives and employees of theGroup share the position that they shall not seek to benefit from bribery or other impropermeans under any circumstances. To this end, we distribute handbooks, have the employees submit consent letters, and provide other opportunities to know and understand thematter on a regular basis.

(1) O wnership ratio: U.S.M.H holds all shares of the three companies, and the holding company
holds all voting rights.
(2) Interlocking officers: Some officers and employees of U.S.M.H. concurrently serve as officers
of operating companies, and monitor and supervise the management of each company. [TheMaruetsu, Inc.: 3 out of 7 persons, 42.8%; Kasumi, Co., Ltd.: 2 out of 6 persons, 33.3%; MaxValu Kanto Co., Ltd.: 2 out of 6 persons, 33.3%](3) M anagement based on subsidiary management regulations: These regulations require theconsolidated subsidiaries and affiliated companies to report to the Company, on a regularbasis, on their business performance, financial position, and other important information.
(4) L oan of funds: U.S.M.H provides loans for the business funds, etc. of the three major Group
companies.

<Examples of activities to inform and educate the executives and employees>
Compliance training for Group officers (fiscal 2023; 61 participants): Using specific cases of wrongdoing
and misconduct, participants investigated the causes of those incidents and considered measures to prevent
recurrence. They learned the importance of thinking, making judgments and acting on their own initiative.
T raining for Group managers (fiscal 2023; 600 participants): Through this training, which was designed by theGeneral Administrative Division and conducted in cooperation with outside experts including certified public
accountants, participants learned about the importance of being aware of and complying with laws and regulations, in light of the gravity of the impact financial reports can have on the Company’s credibility.
45

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

GovernanceRisk Management
Risk Management System and Initiatives

Business Continuity Plan to Respond to Disaster Risks

The Group has positioned risk management as a material issue, and we will protect ourbusiness resources by understanding, assessing and considering countermeasures forrisks. In the event of a natural disaster or other emergency, we will fulfill our social andhumanitarian responsibilities by giving due consideration to maintaining the safety andhealth of our customers, employees and their families.
Risk Management System
We have also establishedsystems to minimize the risk
Decision to set up/Convened
Level 3by General Administrative Division Manager
of business interruption in
Risk Response Headquarters
case of accidents or other(Group)incidents, and we ensure
Information/
Countermeasures/that all employees are fully
CentralPlanning/
aware of these systems. In
Management
Actionaddition, we familiarize
Reporting
Reporting
U.S.M.H
U.S.M.H
everyone concerned withOperating
Chief Risk
General Administrative
Companies
the U.S.M.H Code of ConOfficer
Division Manager
Participation
Participation
duct, and we regularly report
the status of internal audits
Decision to set up/Dispatch of HR andand internal controls to theLevel 2
General Affairs Dept. representative
Risk Response Headquarters
Management Committee.

In the event of the occurrence of a large-scale earthquake or other natural disaster in thegreater Tokyo area, we will act in accordance with the business continuity plan that wehave developed to cooperate with each operating company, ensuring the safety andsecurity of customers and employees our highest priority, and take measures to quickly
resume business at affected stores and prevent any impact on unaffected stores. We will
also cooperate with local authorities to support people unable to return home due tomass transit disruptions in the greater Tokyo area or other issues.

Agreements with Local Authorities for Cooperation Regarding Measures Against Disasters
The Group has signed Comprehensive Cooperation Agreements with local governments
in Tokyo and other prefectures that cover a wide range of fields of cooperation, including
regional revitalization. In addition, the Company has a system in place that enables it tocooperate with local governments in a prompt and appropriate manner in the event of alarge-scale disaster that affects the region’s residents, having concluded agreementswith local governments and other entities to provide food and daily necessities on apriority basis at the request of the authorities in case of such disasters.

(operating companies)

Information gathering

IT Governance and Information Security
Principal Risks
Risk Classification

In addition to promoting DX atvarious levels, the Group has
established IT governanceguidelines as a shared policy
with the AEON Group, and is
working to strengthen management. In managing our IT
investments, procurement,
and other matters, we identify
audit items through selfchecks and regularly monitor
and report on those items to
the Management Committee.

Main Risk Items

Product incidents,
defective products

Food poisoning, mislabeling, expiry date falsification, violation of labeling requirements,
product tampering or foreign objects, expired products

In-store incidents

In-store accidents, robberies, customer falls

Human issues

Crime by or arrest of an executive/employee, executive/employee wrongdoing, executive/
employee drunk-driving incidents

Labor issues

Sexual harassment, abuse of power, employee suicide, work-related accidents, death from overwork

Corporate negligence

Fire, food poisoning, product tampering or foreign objects, discovery of insider trading,leaks of personal information, serious environmental pollution

Corporate crime

Misrepresentation, cover-ups, tax evasion, fraudulent accounting, illegal acts (violation of
the Antimonopoly Act, fair trade laws, insider trading or waste disposal regulations),
bribery, online accusations

Threats or crimes
against the Company

Threats of needle contamination, etc., threats from malicious claims and complaints, productcontamination, robbery/theft, blackmail from antisocial forces, etc., trespassing by suspicious persons,bomb threats, inappropriate use of social media, ransom demands made through ransomware

Natural disasters

Earthquakes, typhoons/floods, tornados, sudden downpours, river flooding due to heavy rain, watersupply outages, delay of product deliveries due to heavy snow, inability to trade merchandise inmarkets due to typhoons or heavy rain, power outages due to damaged power lines

Credit uncertainty or bankruptcy of business partners

Bankruptcy of developers, business partners or tenants

Litigation or disputes

Accusations, criminal cases, damage claim cases, shareholder derivative lawsuits

IT Governance Management System
U.S.M.H Group
Head of internal IT audits(Internal Audit Dept. Manager)

U.S.M.H Person
responsible for IT(General Manager of Digital Div.)

U.S.M.H IT
administrator

Operating Companies
Head of internal IT audits

Person responsible for IT
IT administrator

46

U.S.M.H
IT leaderIntroduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

9-Year Highlights(Millions of yen)

FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

Profit and Loss
Operating revenue

663,799

684,806

692,248

694,323

691,660

733,850

716,407708,690706,657

Operating income

14,024

14,32014,068

11,811

9,357

19,124

12,155

6,384

6,907

Ordinary income

13,862

14,185

14,18812,253

9,627

19,433

12,474

6,536

6,929

Profit attributable to owners of parent

5,329

7,350

7,452

5,308

1,636

8,845

5,374

1,336

1,008

Net assets

131,664

137,518

139,539

142,326

141,695

148,797

152,238

150,022150,250

Total assets

Financial Position
254,006

256,043

262,047

258,315

261,478

285,090

280,741

278,729

285,505

Total equity ratio (%)

51.6

53.6

53.1

54.9

54.0

52.0

54.0

53.7

52.5

Interest-bearing debt

30,81432,03633,727

31,163

29,63535,82840,564

43,24644,876

Cash Flows
Cash flows from operating activities

16,107

16,682

21,06018,30916,29029,91916,016

15,21021,496

Cash flows from investing activities(16,897)(20,294)(16,238)(13,153)(18,476)(15,935)(24,324)(22,805)(25,552)

Cash flows from financing activities(3,910)(608)(4,270)(4,561)(4,007)

4,137

2,391

495

(442)

Cash and cash equivalents at end of period

29,47025,16925,70826,23820,018

38,11832,49825,632

21,134

Basic net income per share (Yen)

40.47

55.82

57.32

41.38

12.76

68.97

41.89

10.41

7.85

Net assets per share (Yen)996.17

1,041.49

1,084.53

1,105.74

1,100.33

1,155.18

1,180.56

1,167.15

1,168.73

14

14

16

16

16

18

16

18

16

Dividend payout ratio (%)

34.6

25.1

27.9

38.7

125.4

26.1

38.2

172.9

203.8

Price earnings ratio (PER) (Times)

23.6

18.2

19.2

28.7

67.0

15.4

25.3

107.6

127.3

Closing share price (Yen)

956

1,014

1,100

1,187

855

1,064

1,060

1,120

999

Price book-value ratio (PBR) (Times)

0.96

0.97

1.01

1.07

0.78

0.92

0.90

0.96

0.85

Return on equity (ROE) (%)

4.1

5.5

5.4

3.8

1.2

6.1

3.6

0.9

0.7

Return on assets (ROA) (%)

5.5

5.6

5.5

4.7

3.7

7.1

4.4

2.3

2.5

Return on invested capital (ROIC) (%)

5.61

5.49

5.28

4.43

3.55

6.73

4.10

2.15

2.30

Total number of shares issued at end of period (thousands)

131,681

131,681

131,681

131,681

131,681

131,681

131,681

131,681

131,681

Total number of employees*

27,86429,192

29,597

29,23728,90529,18429,52728,37527,905

Share Information

Cash dividends per share (Yen)

Financial Indicators

Other

Number of new stores opened during the period

30

22

15

13

10

9

8

15

5

Number of stores at end of period

494

503

511

516

519

518

521

529

529

* Part-time employees are calculated based on an 8-hour work day and the average number of employees during the period.

47

Introduction

Our Value Creation Story

Value Creation Strategy

Sustainability Strategy

Data

Company Data / Stock Information (As of February 29, 2024)

Corporate Profile
Established:

Share Ownership by Shareholder TypeMarch 2015

Capital:10 billion yen

Business:

Management of supermarket business

Head office:1 Kanda-Aioicho, Chiyoda-ku, Tokyo

Stock Chart

Foreign institutions

Securities companies(Yen)

Nikkei Average

2.9%

0.5%

45,000U.S.M.HFinancial institutions

Treasury shares

40,0006.3%

2.5%

35,000

Number of shares authorized:.......... 500,000,000 shares

3,000

39,1662,500

28,96630,00022,06821,38525,000Share Information(Yen)

Individuals
and others

Other Japanese
corporations

19,11920,00016,027

24.7%

63.1%

15,00010,000956 1,014

2,000

27,446

26,5271,500

21,143
1,100 1,187

999
1,064 1,060 1,120

1,000

855
500

Number of shares issued:..................131,681,356 shares

5,000
0

Number of shareholders:......................................119,390

Major Shareholders

02015 2016 2017 2018 2019 2020 2021 2022 2023 (FY)

Total Shareholder Returns (Including Dividends)
Name

Number of Shares Held(Thousands)

Ratio of Shares Held
(%)

（%）
180

Aeon Market Investment Inc.

67,15952.31

160

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

5,673

4.41

140

U.S.M.H Group Business Partners Shareholding Association

2,854

2.22

The Kambayashi Scholarship Foundation

2,300

1.79

120

1,629

1.26

1,528

1.19

80

KOKUBU GROUP CORP.

1,099

0.85

60

Mitsubishi Shokuhin Co., Ltd.

1,091

0.84

40

Kowa Company, Ltd.

1,010

0.78

846

0.65

117.6

125.8
117.1

113.1

20
0

48

113.0

100.5

NIPPON ACCESS, INC.

Note: Ratio of shares held is calculated excluding treasury shares (3,311,059 shares).

134.0

100

AEON Co., Ltd.

Custody Bank of Japan, Ltd. (Trust Account)

156.8

2016

2017

2018

2019

2020

2021

2022

2023 (FY)United Super Markets Holdings Inc.

United Super Markets Holdings Inc.
1 Kanda-Aioicho, Chiyoda-ku, Tokyo, 101-0029, Japan
TEL: (+81)3-3526-4761 (Representative)
https://www.usmh.co.jp/en