Valor Holdings Co., Ltd.

9956

JP3778400006

Food Retail & Distribution

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05-14	Valor Holdings Co., Ltd. agreed to acquire 24.99% stake in M-aid Co., Ltd. from Shojinkai Medical Association for ¥310 million	CI
02-09	Valor Holdings Co.,Ltd. Provides Consolidated Earnings Guidance for the Full Year Ending March 31, 2024	CI

Valor : 2020 Annual Report

August 03, 2020 at 05:20 am

Creating New Values for Local Communities

2020 Annual Report

Fiscal Year Ended March 31, 2020

Valor Holdings Co.,Ltd.

Our Journey in Creating Corporate Values

We will create new values in response to changing

social needs by making a transition to a more competitive format and strengthening our connection with customers leveraging Group management resources.

Enhancing the

appeal of products

Aiming for the advancement of business process integration between manufacturing and retailing, the Valor Group is focusing on developing strong products that foster the customers' motivation to visit our stores. Supermarkets, drugstores and home improvement centers are changing its product line-ups to showcase the strengths of their own business formats, while leveraging the Group's procurement and manufacturing capabilities in introducing new products.

Transition to a

more competitive

format

As we aim to transition to competitive formats focusing on the three core businesses, the supermarket business aims to become a "destination store" that offers attractive products and product categories that are well worth a visit for customers even from afar. Through the opening of new stores and renovations, we are steadily switching over to a sales floor layout that especially highlights fresh food departments.

Vision

Human

resources

development

In order to develop human resources necessary for the transition to new formats, at the Human Resources Development Center launched in April 2019, we are expanding group training for our employees to acquire product knowledge and processing techniques. In addition to technical training, we hold management training for managers and executive candidates systematically, focusing on developing employees who can think for themselves.

Valor Holdings Co., Ltd. Annual Report 2020 1

Our Journey in Creating Corporate Values

We will create new values in response to changing social needs by strengthening our connection with customers leveraging Group management resources.

The Valor Group has met the diverse needs of local communities by rolling out multi-format retailing which comprises supermarkets, drugstores and home improvement centers, while maintaining business models that optimize the entire process from sourcing to retailing. We will achieve medium- & long-term growth by making a transition to a more competitive format and strengthening our connection with customers.

The Valor Group's value creation reaffirmed under the influence of the novel coronavirus disease (COVID-19)

Due to the COVID-19 pandemic, we reaffirmed our belief that diversified business development, one of the pillars of our business model, would lead to stable business operations. Subsequent to a request from local governments to refrain from opening stores, the sports club business had to take voluntary measures such as a temporary suspension of operations. However, our supermarkets, drugstores and home improvement centers took on the mission of supporting people's lifeline and stayed open to ensure a stable supply of products. As these three core businesses responded to the needs for infection prevention and stay-at- home demands, the impact on business for FY2019 was limited. We believe that consumers who are forced to change their lives will seek a new lifestyle rather than returning to the pre-COVID-19 life once the pandemic is contained.

The Valor Group will continue to provide products and services that meet the changing needs of consumers, without allowing the effect of increased demand due to the lifestyle changes temporary, while making the most of the Group's management resources.

Revenues Growth

(Revenues from operations)

		Supermarket Business				Sports Club Business

		Drugstore Business					Distribution-related operations

	Home Improvement Center Business					Others

1958	59	1960	61	62	63	64	65	66	67	68	69	1970	71	72	73	74	75	76	77	78	79	1980	81	82	83	84	85	86	87	88

1958- Startup of Supermarket and

Related Businesses of Manufacturing,

Wholesale & Logistics

In 1958, we established Shufu-no-Mise Co., Ltd. (changed the company name to Valor Co., Ltd. in 1974) and opened the first supermarket in Ena-shi, Gifu. We subsequently established Chubu Yakuhin Co., Ltd., a drugstore subsidiary, and Chubu Foods Co., Ltd., a prepared food manufacturing subsidi- ary, and started a materials wholesale business through Chubu Ryutu Co., Ltd. We entered into the logistics business through Chubu Kosan Co., Ltd., a logistics subsidiary, and in 1989, established the first distribution center in Tajimi-shi, Gifu.

1995- Rolling out of Multi-format Retailing and

Establishment of Distribution Network

While expanding the scale of our supermarket business, we solidified our foundations for multi-format retailing. We merged with Fujiya Co., Ltd., a home improvement center company, and then established AXTOS Co., Ltd. and spun off a sports club business . We also established a distribution network in Hokuriku region in response to expanding business areas.

Changing Objectives of Capital and	Pursuit of Economies of Scales 1995
Business Partnerships

In the past, we executed M&As centering on the supermarket business to expand the size and scope of our business. Since 2015, we have acquired food manufactures with unique products and have concluded capital and business partnerships that lead not only to product sourcing and development improvements, but also to comprehensive approaches.

2 Valor Holdings Co., Ltd. Annual Report 2020

CONTENTS

History/Vision	Foundation	Financial Information
Our Journey in Creating Corporate Values …… 1	Sustainability Management………………………16	11-year Summary of Financial Results………… 28
Vision	Society …………………………………………… 19	FY2019 Financial Review …………………… 30
Business Models ………………………………… 4	The Environment………………………………… 22	Consolidated Financial Statements (Summary) … 32
Message from CEO ……………………………… 6	Corporate Governance ………………………… 24	Corporate Data
Medium-term Strategic Plans …………………… 10	Compliance and Risk Management Systems … 27	Corporate Data/Shares Information …………… 36
Results
Segment Overview/Segment Information ……… 12
Segment Financial Review……………………… 14

History

Vision

FY2019

Exceeded 600billion yen

(Revenues from operation)

FY2016

6,000

Exceeded 500billion yen

FY2011		5,000
	400
Exceeded	billion yen

														FY2007																	4,000
																300
														Exceeded	billion yen

										FY2004	200																		3,000
										Exceeded	billion yen

					FY1999																										2,000
							100
					Exceeded	billion yen

																																1,000
89	1990	91	92	93	94	95	96	97	98	99	2000	01	02	03	04	05	06	07	08	09	2010	11	12	13	14	15	16	17	18	19	(FY)

2005- Expansion of Supermarket Business

and Challenge to Integrate Business

Processes

In the supermarket business, we expanded our scale through organic growth and M&As. The major companies acquired are as follows: Tachiya Co., Ltd., Youth Co., Ltd. and Sun-Friend Co., Ltd.(currently Shokusenkan-Taiyo Co., Ltd.). We also integrated the entire process from sourcing to retailing via our manufacturing and wholesale subsidiaries, and developed production bases and distribution centers.

2015- Further Optimization of Business

Processes and Next Step for Growth

In October 2015, we made a transition to a holding company to promote the growth of business companies and improve corporate governance. We took the next step for growth by integrating home center businesses as of April 1, 2019 through a share e x c h a n g e a g re e m e n t b e t w e e n Alleanza Holdings Co., Ltd. and Home Center Valor Co., Ltd.

Expansion of Operational Areas 2005

Increase in Market Share 2005

Enhancement of Product Appeal/	2015
Evolution of Business Models

Valor Holdings Co., Ltd. Annual Report 2020 3

Business Models

The Valor Group Business Models

Corporate	The Valor Group has defined its philosophy, "Creation, Advance & Challenge" in mission statements.
Philosophy	Shared with all the employees since 1958, they have been considered as guiding principles in management.
	All the employees of the Valor Group should be aware of its social responsibilities for advancement of
Mission
Statements	local communities and culture. To fulfill them, we perform our duties sincerely; set challenging goals in
	the spirit of the philosophy "Creation, Advance & Challenge"; and put together our wisdom and power.
	There is only one truth, "Pursuing prosperity is good".

Social Issues

Imbalance between Food Supply and

Demand

Intense competition between formats

Aging and lack of successors in regional agriculture

Possible impact of trade policies on local suppliers

Changes in Labor Market

Aging and decline in workforce

Changing labor-related policies

Labor shortage and increasing labor costs

Changing Consumers & Retail Market

Aging and declining population

Impact of IT innovation on shopping behavior Decreasing local suppliers serving local communities

Changing Global Environment

Impact of global warming and climate changes on supply of produces

1 Business Process Integration

In the food distribution industry, the Valor Group has struggled for lean margins, which were shared by many intermediates. To achieve "increasing returns" type growth, we have been striving to secure the margins by optimizing the entire process from sourcing to retailing. As many of our stores were located in areas with lower population density, we also consider it crucial to reduce the break-even point and pursue operational efficiency through establishing and utilizing infrastructures including manufacturing bases and distribution centers. As a leading initiative in the fresh meat

1	Business Process Integration
optimizing supply chains

Procurement

& Production

2


			Supermarket
	Multi-format

		Drugstore
	Retailing

			Home Improvement
	response to various		Center
	needs of
	communities and

	enhancement		Pet Shop
	of share

			Sports Club

category, we have secured intermediate margins by providing stores with packaged meat from our processing centers, which source raw materials from Chubu Meat Co., Ltd., a wholesale subsidiary. Additionally, by transferring processing operations such as trimming and cutting at stores to the processing centers, manufacturing products with standardized skills and at a high hygienic level, and allocating existing staff to other departments, we are reducing capital expenditures per store by eliminating the need for processing equipment and space.

4 Valor Holdings Co., Ltd. Annual Report 2020

Vision


Wholesale	Distribution	Maintenance	Retailing
			& Services

Creation of Group Synergies

Our Solutions

Stable Procurement

Collaboration with suppliers to secure a stable supply of produces

Human Resource Development & Recruitment

Simplification of operational processes by utilizing infrastructures

Professional development Increasing diversity in the workplace

Local Communities

Maintenance of Living Environment for Local Communities

Format development

Taking over functions performed by local suppliers

Reduction of Environmental Impacts

Greenhouse gas emissions control

In-housepower-generation initiatives

Reduction of food waste Reduction of waste and recycling encouragement

2 Multi-format Retailing

The Valor Group has met the demands by rolling out multi-format retailing; drugstore in 1984, pet shop in 1988, home improvement center in 1990 and sports club in 1998. Such format development is driven by not only an economic motive for larger shares, but also a belief that it is our corporate mission to bring richness to people's lifestyles.

In recent years, we have launched new types of services and formats such as life support services in Home Center Valor and the delicatessen "Delica Kitchen" in response to changing lifestyles and diverse social needs.

Valor Holdings Co., Ltd. Annual Report 2020 5

Message from CEO

Maximizing the appeal of our products:

We will accelerate the improvement of management efficiency, propelled by changes of lifestyle and society

Masami Tashiro

Chairman & CEO

6 Valor Holdings Co., Ltd. Annual Report 2020

The significance of aiming

to become a "destination store"

Taking a grand view of the current business climate of the food distribution industry, the Group's main industry of involvement, we continue to be faced with the problem of low profitability, as the declining birth rate and aging population continue to progress while the excessive number of stores is compounded by competition against various business formats beyond our own. Supermarkets in particular are having their share of the market taken away by competitors such as drugstores and convenience stores with a location advantage. Standard stores that were effective in an age of a growing population are now suffering a loss of competitive edge. This is why we have been aiming to create a "destination store" centered on the supermarket business, consisting of irresistibly unique products and product categories that would make customers feel it is worth a visit even from far.

The COVID-19 pandemic ongoing since January 2020 has led to major lifestyle changes. More consumers are eating meals at home, due to the temporary closure of schools and the restrictions on going outside, raising the demand for food items sold at supermarkets. Since March, supermarket operators voluntarily stopped distributing sales flyers to prevent over-crowding and ensure a stable supply of products. Those stores that were able to turn themselves into a "destination store" were recognized as safe places to shop and as such patronized by many customers. Purchasing behavior itself has also changed, shifting to something more like a western style of shopping less often yet buying more each time. The tendency is growing among consumers to select stores based on whether the store has what they want, to ensure they fulfill their shopping needs on a single shopping trip. This trend reaffirms the fact that stores are being selected for their products, not their sales promotions, underlining our certainty that a "destination store" is the only way forward to the future.

Integrated initiatives for stores, training, and products

A "destination store" is not just about product appeal but also a transformation of hardware such as sales floor layout and software such as people who work there. The effectiveness of sales floor layout emphasizing fresh food departments has already been validated in new stores with an average of 1,000 tsubo (approx. 3,300 square meter) floor space. On the other hand, for stores with 500 tsubo (approx. 1650 square meter) floor space, which consist the majority of Valor supermarkets, the change of sales floor layout remained to be a challenge. However, the store refurbished in February and March 2020 has shown that we can create a store emphasizing fresh food departments even at the size of 500 tsubo, and therefore we have decided to focus on refurbishing medium-sized stores.

The behavior we expect of our employees will also change with a "destination store". With standard stores they were required to work according to manuals, but with a "destination store" the expectation will be to show initiative and constantly alter how the items are displayed according to the ever-changing product delivery status and customer needs. Up to now our technical training has mainly done through everyday operations in stores, but since opening our Human Resources Development Center in April 2019 we have changed to group training there. Through intensive learning on products and processing techniques, our employees can become capable of creating products appropriate for each cooking use in a correct procedure, helping also to cut down food waste. Our efforts go beyond just technical training, to systematically instruct management skills for managers and educate executive candidates, building the foundation to promote the transformation of software (our employees).

In fall 2020, we will fully renew our private labels. By providing high-quality products at reasonable prices, we aim to not only gain the trust of our customers but also boost our stores and the power of our brand.

Vision

Valor Holdings Co., Ltd. Annual Report 2020 7

Message from CEO

As we aim to become a "destination store", our stores, human resources training, and product initiatives are becoming integrated together and gradually producing results. Going forward, we will further speed up this process.

In the final fiscal year

of our medium-term strategic plans

The FY2018-2020 strategic plans with the basic policy of "a paradigm shift from expanding standardized stores to enhancing the appeal of products" is now in its final year. The Valor Group aims not just simply to expand the scale of its businesses but to strengthen the core of each business while improving the management efficiency, resulting in a stronger corporation that will naturally expand in size. When the scale of our business - the denominator - was small, we focused on opening new stores to increase sales and gain efficiency, but now that the existing stores that make up our denominator have reached such a great size, we believe that the improvement of existing stores will directly lead to higher management efficiency. Regarding the organizational structure with a holding company, we will enhance the function of group strategy and improve the management efficiency by adopting a two-headquarters system, with the administration headquarters to handle overall business management while the retail technology headquarters to promote distribution efficiency, such as with IT and logistics.

The COVID-19 pandemic has forced us to reassess what we took for granted and actually implement changes we had only vaguely considered until now, propelling us to move forward. Reexamining our sales promotions triggered by the voluntary suspension of sales flyer distribution is one example. Through efforts to become a "destination store" and emphasize the distinctive features of each business format, we will set ourselves apart from a kind of store operation depending on sales promotions alone.

In addition, we must reevaluate the nature of our business in the future as we coexist with COVID-19.

This is not necessary a negative factor for the Valor Group. The challenge is to reassess our existing businesses while coming up with a new type of business different to what we have had before. In addition to providing infection control related products such as face masks and disinfectant products at drugstores and catering to stay-at-home demand at supermarkets and home improvement centers, we need to offer new programs in response to increasing demand for health maintenance and fitness improvement. In the U.S., more stores are offering a product pickup option via drive-through instead of in-store. The Valor Group also has made a product pickup available via drive-through in May 2020, built upon the system of "ainoma," an online supermarket service delivering to offices that we started last fiscal year.

Greater emphasis on business safety under the influence of COVID-19

Operating results for FY2019 saw consolidated revenues from operations exceed the targets while operating income and other income figures fall short, resulting in profit improvement in particular having failed to match the increase in assets. ROA fell from 5.4% last year to 4.9%, while ROE went from 6.7% to 5.1%. These and other factors indicate more challenges to face for improving efficiency. The earnings forecast for FY2020 is ¥690.0 billion in revenue from operations, an increase of 1.8% year on year, and ¥17.2 billion in ordinary income, an increase of 1.9%. Ordinary income has diverged from the quantitative target of ¥21.0 billion in the final year of our medium-term strategic plans. At the same time, we are steadily progressing with the closure of candidate stores identified at the start of the medium-term strategic plans, primarily in the supermarket business. We will work to correct the deviation while continuing to implement these efforts for improving efficiency.

Our policies on creating cash flow, capital expenditure, and financial discipline are set out in the FY2018-2020 strategic plans, but under the influence of the COVID-

8 Valor Holdings Co., Ltd. Annual Report 2020

Vision

19 pandemic we will focus on securing liquidity on hand in particular. With regard to capital expenditure, we will maintain a high level of new store openings in the drugstore business, which plays a key role as a driver of growth. In contrast in the sports club business which were accelerating its expansion, we will limit the opening of new fitness gyms for the time being. While intending to maintain a steady return to shareholders with a dividend payout ratio of 25%, we also believe it is important to maintain business safety by raising our internal reserves.

Responsibility we must fulfill for our stakeholders

The Valor Group considers its ultimate responsibility to be the unceasing quest for growth while prioritizing sound management practices. The growth in the scale of our business has increased the management resources available to us, giving us a wider range of choices and possibilities. By leveraging the diverse management resources the Group has, we will create new businesses in sync with the changing times. Nonetheless, as our business is primarily centered on lifelines such as supermarkets, drugstores, and home

improvement centers, our mission to contribute to local communities through our operations comes first. We will keep on challenging and hope to bring returns to our shareholders as a result.

It is also our duty to society to ensure that our business operations are sustainable. Our participation in the "White Logistics" is part of this belief. While acknowledging social issues such as the declining working population and lack of truck drivers to support the increase in courier deliveries, we are taking action such as adopting a reservation system for product delivery to reduce waiting time for our suppliers, and extending the lead time of delivery orders for processed food to mutually improve productivity with our suppliers. Through these efforts, we are steadily building a sustainable supply chain.

Lastly, we believe the future will place a greater emphasis on the product appeal. As the transition of business format, which is the foundation for the advancement of business process integration we have been working toward, is steadily progressing, we intend to focus on development of products, aiming always for further growth. In closing, I would like to ask our shareholders for their understanding and support for the future as the Group forges ahead with efforts for the medium-to-long term.

Valor Holdings Co., Ltd. Annual Report 2020 9

Medium-term strategic plans

FY2018-2020 Strategic Plans

We have established and executed strategic plans to enhance medium- to long-term corporate values from FY2010 to FY2014, and from FY2015 to FY2017. The FY2010-2014 strategic plans focused on "Expanding scale", in which we accelerated store expansion in supermarkets and drugstores, and enhanced logistics, manufacturing and processing functions to keep up with the business expansion. In the FY2015-2017 plans, we aimed for "Improving efficiency" through reinforcement of existing stores and utilization of infrastructures, and continued vigorous openings of drugstores, placing drugstore business as a key driver of the Group's growth

During the period, the business environment has dramatically changed due to decreasing and aging consumers, labor shortage, changes in consumer behavior and intensifying competitions. As we assume that store expansion through conventional methods will not enhance corporate values, in the FY2018-2020 strategic plans, we will establish a foundation to support next growth, while redesigning values that stores provide and improving systems supporting stores.

As stated in the "Announcement Regarding Update of Quantitative Targets for the FY2018-FY2020 Strategic Plans" issued on May 9, 2019, we updated our quantitative targets in line with the conversion of Alleanza Holdings Co., Ltd. into a consolidated subsidiary, while maintaining strategic goals and major policies in the FY2018-2020 Strategic Plans. However, there has been a divergence between the forecasts for FY2020, including ordinary income of 17.2 billion yen, and the quantitative targets in the final year of the plan as mentioned above. We will work to minimize this deviation by continuing to implement measures for improving managerial efficiency.

Basic Policy

"Undertaking a paradigm shift from expanding standardized stores to enhancing the appeal of products"

Although we maintain growth-oriented corporate culture, setting "creation of a more competitive format with a focus on products" as a medium-tolong-term growth initiative, we intend to improve profitability through enhancing frontline store competitiveness.

Strategic goals

Major policies

Viewpoint on organizational structure

Medium- to long-term initiatives

FY2010-2014 Strategic Plans	FY2015-2017 Strategic Plans	FY2018-2020 Strategic Plans

		Undertaking a paradigm shift from
Expanding scale	Improving efficiency	expanding standardized stores to
		enhancing the appeal of products
Expansion of store network	Establishment of competitive formats	Transition to competitive formats
Advancement of Business Process
(organic growth and M&As)	Increase efficiency of infrastructures
Integration between manufacturing and
Enhancing functions of manufacturing	Expansion of drugstore and home
retailing
and processing	improvement center businesses
Establishment of new axis for growth

		Improvement of asset efficiency
	Transition to a holding company structure	Enhance strategic functions of the
	holding company
Improvement of infrastructures to	(Enhancement of group management
From closed innovation to cooperation
support expanding scale	and governance)
Human resources development and
	increase recruitment of new graduates
	improvement of productivity

	Transition to creation of a
Quantitative expansion of	more competitive format
standardized stores	with a focus on products

10 Valor Holdings Co., Ltd. Annual Report 2020

Results

FY2010-2014 Strategic Plans

Secured a scale of operations and improved	Challenges	Increase efficiency in the supermarket business
infrastructures	Strengthen existing stores and improve efficiency

Improved profitability		of infrastructure utilization
Improved balance sheet		Nurture key drivers for growth
Enhanced corporate values		Improvement of governance in the holding
		company and development of human resources

FY2015-2017 Strategic Plans

Expanded the drugstore business		Improvement of profitability
Revenues increased from 80.4 billion yen to 117.9 billion yen.	Challenges	Improve profitability by enhancing the appeal
Improved utilization and efficiency of infrastructures	of products and frontline competitiveness

enhanced product development and secured manufacturing		Improvement of asset efficiency
profits		Enhance strategic functions of the holding
changed sales floor allocation centered on fresh vegetables		company
& fruits, fresh meat and prepared food		From closed innovation to cooperation
Created group synergies by combining resources		Human resources development and
collaborations in opening new stores		improvement of productivity

Vision

FY2018-2020 Strategic Plans

						(Millions of yen)

	FY2009	FY2014	FY2017		FY2020 (plan)	FY2020 (forecast)

Basic Policy		Expanding scale	Improving effi ciency		Undertaking a paradigm shift from expanding
		standardized stores to enhancing product offerings


Revenues from operations	344,900	470,564	544,020	680,000	690,000
Operating income	9,452	15,000	13,470		-	-
Ordinary income	9,916	16,108	14,937	21,000	17,200
Net income	3,945	9,214	7,570		-	-

CAGR (Revenue from operations)		6.4%	5.0%	7.7%	8.2%

ROA	5.7%	6.7%	5.4%		above 5.6%	-
ROE	7.0%	10.7%	6.9%		above 7.7%	-

D/E ratio	1.2	1.0	0.8	0.8	-
Dividend payout ratio	25.8%	18.4%	30.4%	25%	-

Transition to competitive	Refurbish 30-40 stores of supermarkets and drugstores annually, and conduct relocation and reconstruction
formats	Effectively utilize group competencies for improved asset efficiency, and close/transform underperforming stores


Advancement of Business	Realize product offerings selected by customers, and achieve service quality and cost competitiveness
Process Integration between
available for external sales
manufacturing and retailing



Establishment of a new	Accelerate store expansion of fitness gyms "Will_G", which investment costs are relatively low and
membership fees are competitive
driver for growth
Utilize group competencies and develop new businesses in harmony with real stores

Valor Holdings Co., Ltd. Annual Report 2020 11

Segment Overview

Revenues from operations by segment and their distribution

Supermarket Business

55.0%

Revenues from operations

Operating income

372.7 9.0

billion yen	billion yen

Drugstore Business

20.5%

Revenues from operations

Operating income

139.3 4.3

billion yen	billion yen

Revenues

from operations

678.0

billion yen

(FY2019)

Home Improvement	Sports Club			Distribution-related
Center Business	Business			operations
16.9%			2.0%			1.6%
Revenues from operations	Operating income Revenues from operations Operating income	Revenues from operations	Operating income
11.4	3.4			13.5	0.5		10.6	2.7
billion yen	billion yen	billion yen	billion yen	billion yen		billion yen

Supermarket Business	No. of stores	……………	298	Ave. fl oor space	……………	1,803m	2

									(Valor Co., Ltd.)

Business summary

This business segment includes the operations of supermarket operators Valor Co., Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd., Kohseiya Co., Ltd., Futabaya Co., Ltd., Sanko Co., Ltd. and Terao Store Inc.; food processing subsidiaries Chubu foods Co., Ltd. and Daien Foods Co., Ltd.; and food wholesalers Shufu-no-Mise Shoji Chubu Honsha Co., Ltd., Chubu Meat Co., Ltd., and V-Solution Co., Ltd. These companies aim at creating business models that optimize the entire business process from sourcing to retailing.

Besides opening new stores, the segment has expanded in scale through M&As. The operating companies have shared knowledge and skills in sourcing and selling fresh foods through the conversion of Tachiya Co., Ltd. and others into subsidiaries. As for operating areas, Valor Co., Ltd. operates stores in 13 prefectures, mainly in Gifu and Aichi prefectures; Tachiya Co., Ltd. has stores in Aichi, Gifu and Mie prefectures; Shokusenkan- Taiyo Co., Ltd. operates in Shizuoka prefecture; Kohseiya Co., Ltd. has stores in Yamanashi and Kanagawa prefectures; Futabaya Co., Ltd. operates in Shiga prefecture; Sanko Co., Ltd. has stores in Toyama prefecture; and Terao Store Inc. operates in Chiba prefecture.

12 Valor Holdings Co., Ltd. Annual Report 2020

Drugstore Business	No. of stores	……………	416	Ave. fl oor space	……………	769m	2

Business summary

We started the drugstore business by establishing Chubu Yakuhin Co., Ltd. and selling medicines in February 1984. Expanding its store network under the brand name of "V-drug", Chubu Yakuhin Co., Ltd. reached 100 stores in 2003, 200 stores in 2012, 300 stores in 2016, and 400 stores in 2019. It extends across ten prefectures, primarily in Aichi and Gifu prefectures. The chain has increased convenience by expanding food offerings as well as medicines and cosmetics. As a local medical support provider, it has developed pharmacies and drugstores with pharmaceutical functions, and acquired shares of Hida Pharmaceutical LLC in July 2019.

Results

Home Improvement Center Business

Sports Club Business

No. of stores…………… 148

Business summary

The home improvement center business began its operations in August 1990 after the business transfer from Valor Co., Ltd. The segment grew in scale in October 1995 resulting from a merger with Fujiya Co., Ltd. Home Center Valor Co., Ltd. offers building and agricultural materials for professional needs, mainly at large stores. It also strives to meet customers' lifestyle needs by offering a tire replacement and storage service through "Tire Ichiba". In February 2018, we acquired shares of FIRST Co., Ltd., an online retailer of materials and tools. In April 2019, we integrated the home improvement center business through a share exchange between Home Center Valor Co., Ltd. and Alleanza Holdings Co., Ltd. As for operating areas of the major three operators, Daiyu Eight Co., Ltd. operates in the Tohoku and Kanto regions; Home Center Valor Co., Ltd. has stores in the Tokai region; and Time Co., Ltd. operates in the Chugoku and Shikoku regions.

No. of stores…………… 192

Business summary

The sports club business commenced operations in April 1998 following the transfer of assets from Valor Co., Ltd. AXTOS Co., Ltd., which formerly operated general sports clubs with swimming pools and tennis courts, began operating the low- investment chain of "Sports Club AXTOS Will_G", also accelerating its franchise operations. The network of these sports clubs is not only based in the prefectures of Aichi and Gifu, but is also expanding throughout the country, including regions with higher population densities such as the Kanto and Kansai regions.

Distribution-related operations

Business summary

The principal subsidiaries operating in this segment are the logistics operator Chubu Kosan Co., Ltd.; food, sundries and materials wholesaler Chubu Ryutu Co., Ltd.; and the facilities maintenance services provider Mentex Co., Ltd. Besides helping to increase the operational efficiency of other Group companies, these firms also engage in transactions with external customers.

Valor Holdings Co., Ltd. Annual Report 2020 13

Segment Financial Review

Store Network

	FY2009	FY2010	FY2011	FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019

Supermarkets	187	202	218	238	251	263	266	275	281	290	298
Valor Co.,Ltd.	131	147	163	179	221	232	235	238	243	240	240
Tachiya Co., Ltd.	10	10	11	11	13	13	13	14	15	16	17
Youth Co., Ltd.*	29	28	29	31	-	-	-	-	-	-	-
Shokusenkan-Taiyo Co.,Ltd.	10	17	15	15	15	17	17	17	17	17	17
Kohseiya Co.,Ltd.	-	-	-	-	-	-	-	5	5	5	6
Futabaya Co.,Ltd.	-	-	-	-	-	-	-	-	-	3	3
Sanko Co.,Ltd.	-	-	-	-	-	-	-	-	-	8	8
Terao Stores Inc.	-	-	-	-	-	-	-	-	-	-	4
VARO Co.,Ltd.	-	-	-	2	2	1	1	1	1	1	3
Other	7	-	-	-	-	-	-	-	-	-	-
Drugstores	159	174	193	214	241	271	301	337	361	379	416
Home Improvement Centers	36	36	34	35	35	36	37	35	36	36	148
Sports Clubs	51	51	51	52	54	58	65	75	95	146	192
Pet Shops	17	16	17	17	17	17	18	19	21	22	107
Others	12	15	15	11	3	3	3	4	5	7	14
Total	462	494	528	567	601	648	690	745	799	880	1,175

Note: *merged into Valor in October, 2013.

Number of Stores by Region and Locations of Infrastructures (FY2019)

Number of Stores by Region

The figures indicate the number of stores; the size of the pie charts corresponds to the number of stores by prefectures.

Nanto-shi

Fukui-shi

Kani-shi

Ogaki-shi

Tajimi-shi

Supermarkets						2

Drugstores					Hokkaido 2
Home Improvement Centers
Sports Clubs
Pet Shops
Others
	2	5		4	16


9	1		19

Ichinomiya-shi

Toyota-shi

57	Kos	ion	89
75	29		Tohoku region

Yokkaichi-shiShimada-shi

Supermarket Business

Distribution	:	for chilled products
Centers		for ambient- temperature products

		for chilled & ambient- temperature products
Processing	:	for fresh meat
Centers		for fresh vegetables & fruits
		for fresh fi sh
Production	:	for prepared food
Bases		for fresh bakery
		for fi sh products

Drugstore Business

Distribution Centers

Distribution Centers (Shared with the Supermarket Business)

Home Improvement Center Business

Distribution Centers

	15 22	okuriku region		108
3	39	8	143
Kinki region			5 5

15	84				anto region
156		42
39	n			39	1
		6	11


			77			3
6	2		36	192
		Overseas 3
Kyushu region	7	6
6	Shikoku region
15	333

Tokai region 655

14 Valor Holdings Co., Ltd. Annual Report 2020

											(Millions of yen)

	FY2009	FY2010	FY2011	FY2012	FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019

Supermarkets
Revenues from	240,138	269,918	293,505	303,521	313,208	321,458	329,266	336,555	345,960	353,311	372,733
operations

Operating income	7,683	9,580	10,783	11,028	8,443	9,760	9,887	9,738	8,518	9,433	9,050
Total assets	105,438	114,693	119,293	127,490	142,260	144,604	153,045	176,384	184,386	195,231	200,720
Capital	7,477	12,012	9,199	12,915	17,931	12,078	10,506	11,887	12,574	13,376	7,462
expenditures

Depreciation and	5,283	5,430	5,978	6,346	6,826	7,381	7,556	7,339	7,490	7,633	8,431
amortization

Drugstores
Revenues from	48,373	50,651	54,850	62,497	73,028	80,470	95,152	107,045	117,949	127,781	139,358
operations

Operating income	1,009	1,357	2,294	1,934	2,449	1,961	2,736	2,692	2,532	3,488	4,317
Total assets	21,493	22,814	26,501	29,065	33,649	38,557	44,602	52,019	58,849	58,725	67,755
Capital	947	1,400	2,547	3,134	3,893	4,333	5,776	8,087	5,359	4,622	6,135
expenditures

Depreciation and	817	860	979	1,183	1,454	1,780	2,114	2,588	2,927	3,104	3,170
amortization

Home Improvement
Centers
Revenues from	36,919	38,928	41,734	43,810	46,559	46,556	48,629	50,373	53,555	55,173	114,301
operations

Operating income	677	1,269	1,677	1,869	2,330	2,011	2,450	2,302	2,149	2,616	3,465
Total assets	17,633	17,479	18,553	19,456	19,068	22,430	22,499	23,942	25,562	31,020	81,239
Capital	166	730	1,943	1,259	464	2,276	1,478	4,777	1,316	645	4,677
expenditures

Depreciation and	983	876	867	899	875	910	945	1,000	1,099	1,083	2,505
amortization

Sports Clubs
Revenues from	8,371	8,514	8,604	8,788	8,955	9,271	9,838	10,459	11,397	13,157	13,597
operations

Operating income	40	77	247	420	419	463	532	639	680	672	556
Total assets	13,023	12,009	11,287	10,760	10,382	10,611	10,634	10,776	13,059	15,175	15,768
Capital	1,755	146	124	319	338	527	791	1,119	3,114	2,565	1,960
expenditures

Depreciation and	747	770	669	666	636	655	711	785	882	1,080	1,295
amortization

Distribution-related
operations
Revenues from	5,282	5,929	6,383	6,699	7,228	7,638	8,590	9,610	9,075	10,265	10,687
operations

Operating income	1,943	2,410	2,761	3,062	2,995	3,395	3,647	3,699	3,725	2,910	2,793
Total assets	11,456	15,339	17,514	18,809	22,351	24,082	23,961	24,894	27,230	28,569	29,733
Capital	28	439	1,659	1,888	2,155	624	478	2,018	3,044	384	1,050
expenditures

Depreciation and	40	381	439	550	784	819	716	721	758	817	846
amortization

Results

Valor Holdings Co., Ltd. Annual Report 2020 15

Sustainability Management

The Valor Group Sustainability Management

To enhance its medium- & long-term corporate values, the Valor Group is engaged in sustainability management via two approaches, namely 1) sustainability of business activities and 2) management of the social and environmental impacts of business activities to realize a sustainable society.

	Business Models and Reinforcement of Management Foundations
	Procurement &	Wholesale	Distribution	Maintenance	Retailing &
	Production	Services

			Response to Consumer Needs
Models					Maintenance of Living
Food Safety & Security			Environment for Local
		Communities

Business			Sustainable Supply Chains

			Compliance and Risk Management
			Reduction of Environmental Impacts
Management Foundations			Human Resources Development
		Corporate Governance Systems

Corporate Governance Systems	P24-26

Faster Decision-making and Strengthened Oversight

Upon the transition to a holding company structure in October 2015, the Company separated its management decision-making and oversight system and business execution system, aiming for faster business execution and strengthened oversight. For faster business execution, we have established the Group Management Executive Committee which is comprised of the Company's Executive Directors, the Standing Audit & Supervisory Committee Member and Representatives of the Group's core companies, where decisions are made on investment projects and management issues of operating companies are discussed.

At the 59th Ordinary General Meeting of Shareholders held on June 30, 2016, a partial amendment to the Articles of Incorporation was approved and the Company transitioned to a company with Audit & Supervisory Committee System. By establishing an Audit & Supervisory Committee with more than half of the members being Outside Directors, the Company aims to enhance the oversight function of the Board of Directors and further strengthen corporate governance.

Human Resources Development	P20-21

Supporting a Diversified Workforce

Based on its corporate philosophy of "Creation, Advance & Challenge", the Company seeks individuals who are ambitions and undertake challenges. We are actively recruiting people with expertise in such area as food production, processing and distribution, in order to improve business models that optimize the entire process from sourcing to retailing, as well as in preparation for expansion of the scope of the supermarket, drugstore and home improvement center business. We also support people who are highly motivated and whose experience and backgrounds are diverse through promoting female workers, hiring of the disabled, post-retirement reemployment program and promotion to full-time employees. Thus we are developing staff members as managerial resources.

16 Valor Holdings Co., Ltd. Annual Report 2020

Response to Consumer Needs

Development of Private Labels

We have developed private labels, which offer fine quality, value for money and better margin than other national brands. They are sold under the brand names of "V-Select", comprising low-priced products, and "V-Quality", comprising value-added products. In June 2014, we launched the new brand, "V-Premium", made from selected ingredients which are only available in certain seasons. We provide these brands to supermarkets, drugstores, home improvement centers and other companies through V-Solution Co., Ltd., a wholesale subsidiary, which manages demand- supply mismatch risks by preparing highly accurate sales plans. We also take measures to reduce costs and improve quality.

V-Select		V-Quality	V-Premium
"V Select" covers basic items which are indis-	"V Quality" represents tasty food items made	"V Premium" refers to premium food made from
pensable to your daily life. Under this brand name,	from carefully chosen ingredients. We deliver fine	handpicked and superior ingredients and recipes.
we offer good-quality products at low prices.	quality at an affordable price.	Turn your meal into fine dining with this brand!

Tea 500ml		Sesame Dressing

Sliced Ham 160g

	Japanese Soy		Black Pork
	Beans Tofu
		Dumplings

Foundation

Response to Consumer Needs

Response to Customer Feedback

We have a Customer Relations Office, which receives customer feedback via our toll-free number or inquiry emails on our website . The Office shares the feedback with related departments to reflect them in product development and sales policies. In FY2019, the Office received 11,850 comments and other forms of feedback including 2,888 comments on products, of which 984 were comments concerning private labels. The COVID-19 pandemic led to the increasing number of inquiries on our store opening status and products since January 2020, receiving 99 comments in three months.

Maintaining Service Levels for Local Communities

Product Pickup via Drive-through

In order to solve a problem of the working generation not having time to go shopping, in July 2019, we started "ainoma," an online supermarket service delivering to offices. Leveraging the system of this business, we started a service called "ainoma pick-up" in May 2020, which enables customers to pick up products via drive-through. We believe

this service will meet the needs of customers who want to pick up their purchases without having to go into a store and shop with peace of mind.

Food Safety and Security

Process Control and Product Labeling

Food safety is one of the risks involved in the business models that optimize the entire process from sourcing to retailing. In developing private labels, we have concluded agreements with manufacturing outsourcing companies with regard to selection of ingredients and manufacturing processes and carried out audits in areas such as hygiene management and manufacturing process management at manufacturing outsourcing plants. As for the information provided on product packaging, we provide easy-to-understand displays using icons for 7 ingredients of specified raw ingredients, which have obligation of labeling as well as 20 ingredients equivalent to specified raw ingredients. Furthermore, we disclose product information on the Valor website, when introducing new products or renewing existing products. In FY2019, we completed changes to all items subject to modification of product packaging to comply with the Food Labeling Act. In response to the new display system of ingredients and origin for processed foods, which will become mandatory in April 2022, we plan to complete the changeover of labelling by September 2021.

Reduction of Environmental Impacts	P22-23

Waste Reduction by Improving Product Packaging of Private Labels

For private label products, we not only work to improve how we manufacture them and what ingredients to use, but we also constantly work to create packaging that

is easier to open, sort and dispose of. Eliminating a plastic inner tray from the packaging of "V-Select Dried Shredded Squid" has resulted in a reduction of about 260 kg of waste per year. As for the plastic bottle of "Hida-no-Inochi Mineral Water", we improved the package to make it easier to peel off and sort for disposal.

Valor Holdings Co., Ltd. Annual Report 2020 17

Sustainability Management

The Valor Group is engaged in sustainability management using two approaches, namely 1) sustainability of business activities and 2) management of the social and environmental impacts of business activities to contribute to realization of a sustainable society, to enhance its corporate value over the medium to long term.

Regarding corporate governance, human resources development and the environment, we have clarified the organizational structure of the Group and key issues concerning the business model. We are cultivating a corporate culture in which continuous improvement is pursued.

		Activities to secure sustainability of
	Key issues	business or activities to manage	The Company's characteristics and improvements	Related page
		impact of business

			Transition to a company with audit &
	1. Management	Organizational design	supervisory committee	P.24-26
	transparency	Repot by the Nomination and Compensation

			Committee
			Framework for decision-making concerning

	2. Faster decision-making		business execution (Group Management Executive	P.24
Governance			Committee)

		Internal control and	Systems for ensuring appropriate business	P.27

	3. Risk management in	compliance systems	operations within the Valor Group

	relation to the business	Risk management systems	Awareness of business risks	P.27
	model
		Development and labeling of private labels	P.17


		Human resources	Enhanced training for acquiring knowledge
		development	and skills
	1. Human resources	Supporting a diversified	Support of female workers, disabled workers and
Society	development to sustain	workforce	others to enable them to maximize their capabilities	P.20-21
growth
(Human
	For better places to work	Introduction of work location selection system
Resources
		Employer-provided child care services
Development)
		Introduction of shop holidays

	2. Sustainable Supply	"White Logistics"	Collaboration for increasing productivity	P.19

	Chains


		Greenhouse gas emission control	Energy-saving delivery and fluorocarbon control
		Development of renewable energy	Installation of solar panels	P.22-23
Environment	Reduction of	Reduction and recycling of	Reduction of food waste and recycling of
environmental impacts	food waste	food waste

		Reduction of waste and	Reduction of waste plastics	P.17
		recycling encouragement

18 Valor Holdings Co., Ltd. Annual Report 2020

Society

Establishing a Sustainable Supply Chain

The Group aspires to maintain business models that optimize the entire process from sourcing to retailing. We strive to improve efficiency of our distribution channels by establishing infrastructures including manufacturing and processing bases and distribution centers, undertaking the intermediary function in distribution by ourselves. To enhance the effectiveness of this business model, we believe that it is essential to establish a sustainable supply chain.

Initiatives for "White Logistics"

Securing stability in logistics has now become a social issue against the backdrop of problems including a lack of truck drivers. Therefore, we have submitted a declaration of voluntary actions in agreement with the objectives of the "White Logistics Movement" in which the Ministry of Land, Infrastructure, Transport and Tourism, the Ministry of Economy, Trade and Industry, and the Ministry of Agriculture, Forestry and Fisheries are calling on to participate.

1. Utilize reservation system for product delivery

There have been problems at our distribution centers where our suppliers (manufacturers, wholesalers, and delivery companies) had to wait upon delivery, while we also had problems such as taking too long to handle delivery, causing issues on both sides. Therefore, since March 2019, we have introduced a reservation system for product delivery at multiple distribution centers. As more suppliers utilize the system, the advance reservation rate exceeded 90% by the end of June, reducing waiting time and improving the efficiency of handling the delivery.

2. Extend lead time for delivery orders of processed food

Regarding delivery to distribution centers for ambient-temperature products, our suppliers (manufacturers and wholesalers) used to receive the order data from Valor Co., Ltd. one day prior to the product delivery date to stores. Our suppliers had to secure the necessary trucks in a short period of time between receipt of data and shipment to the distribution center, which placed a burden on the shipping process, while distribution centers also had to deal with problems such as different delivery time by each supplier. Therefore, we have extended the lead time to receive the order data to two days before the product delivery to stores. As a result, our suppliers have sufficient time to arrange shipments, and we are now able to flexibly schedule deliveries from the distribution centers to stores, which has helped us to level the workload.

3. Review the "one-third rule" for acceptable rate of storage period

Valor Co., Ltd. has been making a full-scale effort to reduce food waste. As part of this initiative, we took steps to ease the limit on acceptable number of days for storage, targeting products delivered to the distribution center for ambient-temperature products in Kani-shi, starting in July 2019. By reducing the number of returned products to suppliers (manufacturers and wholesalers), we hope to contribute to the reduction of food waste generated during the process from manufacture to delivery to the distribution centers.

Supporting regional suppliers

Impacted by the temporary closure of all schools in Gifu prefecture due to the COVID-19 pandemic, local milk producers who supply milk for school lunches were looking for alternative buyers. Meanwhile, producers of Hida beef in Gifu prefecture, which had strong demand from the tourism, lodging and restaurant industries, have been affected by the prolonged stay-at-home trend of refraining from non- essential and non-urgent outing, and the decline in demands resulted in lower wholesale prices. To support these affected local producers, Valor Co., Ltd. held special sales of milk and Hida beef at its stores within Gifu prefecture.

Foundation

Valor Holdings Co., Ltd. Annual Report 2020 19

Society

Human resources development fuels medium- to long-term growth

Based on its Corporate Philosophy of "Creation, Advance & Challenge," Valor seeks individuals who are ambitious and eager to take up challenges. We are actively recruiting people with expertise in such areas as food production, processing and distribution, in order to establish business models that optimize the entire process from sourcing to retailing, as well as in preparation for expansion of the scope of the supermarket, drugstore, and home improvement center businesses.

Amid drastic changes in the business environment, the Company set a basic policy of a paradigm shift from expanding standardized stores to enhancing the appeal of products in the FY2018-2020 strategic plans. Given our aims of strengthening existing stores centered on the supermarket stores, and of establishing business models that optimize the entire process from sourcing to retailing, there is an increasing demand for product appeal and sales capabilities. We also regard Frontline Performance Development as a priority issue and will focus on personnel development to support medium- to long-term growth.

Human resources development

We aim to strengthen our organizational competencies and improve corporate value by improving frontline performance capabilities through offering on-the-job training and fostering self- motivating leaders who can identify problems and execute solutions. The Company's human resources development programs are based on Group-wide training programs plus training on the techniques and expertise needed at each business operation. The Group-wideposition-based programs focusing on Corporate Philosophy (DNA) education are mainly designed for those who have just joined the Company or those who have passed the Group qualification screening and been promoted. Attendees are helped to link philosophy to practice by cultivating an understanding of the Corporate Philosophy advocated by Valor's founder Yoshimi Ito, and listening to lectures by the current management. The Valor Historical Museum and the Company Founder Yoshimi Ito Memorial Gallery, which are housed in the Human Resources Development Center, serve as venues for experience to understand the Corporate Philosophy. In addition, we have incorporated human rights related themes into position-based programs since FY2018 in which participants learn how employee satisfaction leads to customer satisfaction by appropriately responding to various human rights issues in the workplace and in business activities.

In FY2019, we especially expanded product knowledge and technical training programs. The supermarket business offered practical training on fresh fish, vegetables & fruits and bakeries, while the drugstore business provided training for pharmacists and dietitians, and the home improvement center business conducted training for obtaining qualifications, as well as study sessions for acquiring division-specific knowledge. We are also increasing the number of training sessions for younger employees in their second and third years to develop their frontline performance capabilities and create a culture of learning.

Total number of training participants and number of training sessions per employee

Number of training sessions per employee
Total number of	Leadership training	Technical training

training participants	Position-based training	New employee/young employee training

(Persons)		15,309	(Times)

15,000			4.0
		6,247
			3.0
10,000
		1.87	2.0

	5,585	5,926
5,000

	3,972		1.0

2,624	0.85
1,006		2,509
0.45
1,361
1,442	627
176	252
0			0
FY2017	FY2018	FY2019

Note*: The number of technical training, which used to be included in position-based training, new employee training and young employee training, has been separately counted since FY2019.

Creating better places to work

In FY2019, Valor Co., Ltd. introduced store holidays to close all its stores four days per year. This applies not just to Valor Co., Ltd., but also to all Group companies involved in manufacturing, distribution, and other functions, creating an environment that makes it easier for employees to have a day off. In the supermarket business, in addition to Tachiya Co., Ltd., which already have regular store holidays, Shokusenkan-Taiyo Co., Ltd. and Kohseiya Co., Ltd., have introduced store holidays to close all stores.

20 Valor Holdings Co., Ltd. Annual Report 2020

Supporting a diversified workforce in HR system

We support people who are highly motivated and whose experience and backgrounds are diverse. The principal HR systems are as described below.

Status		FY2017	FY2018	FY2019

Promoting	Aside from offering all our employees opportunities to	Ratio of female managerial
female	display their personalities and their capabilities, we	personnel to all managerial
workers	also aim to enhance the workplace environment	personnel (managers or higher)	5.3%	5.3%	5.6%
	where female workers can flourish in their careers.
	The key initiatives are as follows:	(The number of female	(23people/433people)	(23people/437people)	(43people/774people)
	1. Expansion of coaching and trainings for promoting	managerial personnel/The
	the appointment of women	number of all managerial
	- For better understanding of managers supervising	personnel)
	female staff and creation of a better workplace
	Number of female workers
	environment
	2. Development of potential candidates for	who took maternity leave or
	managerial positions	child care leave
	3. Improvement of the workplace environment		135people	169people	224people
	corresponding to the phase of the individual's life	Maternity leave
	and career
	(Employees/Part-timers)
	- Rising awareness about maternity leave, child	(56people/79people)	(66people/103people)	(92people/132people)

	care leave and family care leave		140people	179people	205people
	- Creation of workplace environment that facilitates	Child care leave
	easy return to work
	(Employees/Part-timers)
		(63people/77people)	(71people/108people)	(68people/137people)


Hiring of	We are actively recruiting people with disabilities who	The rate of hiring people*	2.30%	2.20%	2.40%
with disabilities
the disabled	wish to work for regular companies and be indepen-
	dent. The Gifu Prefectural Government established a
	Contracted by Gifu
	registration system in November 2011 to enable
	companies to support the employment of people with	Prefecture
	disabilities in cooperation with schools for learners	Adviser for people with
	with special needs. Valor registered in February 2012.	from FY2013 to present
	disabilities seeking jobs
	In order to facilitate employment of people with

	disabilities also in other regions and support them so
	that they can work at Valor for a long time, we intend	Adviser for employment of	from FY2015 to present
	to promote education and training of our store staff	people with disabilities
	and while facilitating collaborations with regional
	recruitment centers and the social welfare	Member of Gifu Prefecture
	departments of municipalities.
		taskforce for abolition of	from FY2015 to present
		discrimination against

		people with disabilities

Post-retirement	Against the backdrop of population aging, Valor has
reemployment	introduced a post-retirement reemployment program	Usage rate of post-
program	whereby Valor reemploys all the employees who are	90.0%	87.2%	95.7%
retirement reemployment
	willing to work after retirement, in principle. Eligible
	employees may be reemployed after they retire until	program
	they reach 65 years old if they wish to do so.

Promotion to	16 key operating companies of the Group have programs
full-time	to promote part-time workers to full-time employees.
employees	Part-time workers have periodic opportunities for
	promotion to full-time employees. Part-time workers	Number of part-time	102people	122people	205people
	who satisfy the criteria can apply for promotion and,	workers promoted to
	after screening, successful applicants are promoted	full-time employees
	to full-time employees. In addition, heads of
	departments can recommend part-time workers as
	candidates for promotion to full-time employees.


Number of	Following the transition of important issue in human	Number of employees	5,821	6,501	8,168
Employees	resources development to "Frontline performance	people
(Average length of service)
	development", the Company will further promote		people		people
		(9.1years)	(9.0years)	(9.0years)
	initiatives to establish an environment for better
	places to work including programs for human		1,428people	1,739		2,299people
	resources development and supporting diverse	Female workers	people
	human resources.	(Average length of service)
	Through such policies, we aim to retain talented		(5.8years)	(5.6years)	(5.9years)

	human resources in addition to improving productivity		4,393people	4,762people	5,869people
	and organizational capabilities through developing	Male workers
	individual abilities and skills.
		(Average length of service)	(10.2years)	(10.2years)	(10.2years)

Note: The above figures are based on the following 17 companies accounting for 89.1% of the Group's total employees: Valor Holdings Co., Ltd., Valor Co., Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd., Kohseiya Co., Ltd., Futabaya Co., Ltd., Sanko Co., Ltd., Chubu Foods Co., Ltd., Chubu Yakuhin Co., Ltd., Daiyu Eight Co., Ltd., Home Center Valor Co., Ltd., Time Co., Ltd., Amigo Co., Ltd., AXTOS Co., Ltd., Chubu Ryutu Co., Ltd., Chubu Kosan Co., Ltd. and Core Support Co., Ltd.

*In FY2016, we started group reporting of the rate of hiring people with disabilities for operating companies, of which voting rights are directly held by the Company.

Foundation

Valor Holdings Co., Ltd. Annual Report 2020 21

The Environment

Environmental Policy	Issues to be tackled
We recognize that reducing the environmental impacts of our	1.	Greenhouse gas emissions control
business activities is an important task. And for us to achieve	2.	Development of renewable energy
reductions, we identified issues that need to be addressed	3.	Reduction and recycling of food waste
and tackle them in cooperation with local communities.	4.	Reduction of waste and recycling encouragement

Reduction of greenhouse gas emissions

The Group has positioned the reduction of greenhouse gas (GHG) emissions as an important issue, and is working on the calculation and the reduction of the emission amount. The amount of emissions is calculated based on the GHG Protocol, which is recommended as an international standard, and we work to reduce GHG emissions throughout the entire supply chain. Valor Co., Ltd., which is included in the scope of the calculation of GHG emissions, is significantly influenced by energy derived from electricity. Thus, in FY2019, the Company endeavored to reduce electricity usage mainly at stores through initiatives such as the use of energy management systems (EMS).

Greenhouse gas (GHG) emissions in FY2019

		Emissions associated with fuel	7,456t-CO2
	Direct emissions from	combustion*
Scope 1
business operators themselves	Emissions due to leakage of CFCs**	34,313t-CO2



Scope 2	Indirect emissions from the use of electricity, heat,	144,669t-CO2
or steam supplied by other companies***


Total			186,438t-CO2

Note: Calculation covers 252 business sites, including stores and processing bases of Valor Co., Ltd.

*Usage of city gas and LP gas at each site (including tenant usage), gasoline usage by company-owned vehicles, etc. **Converted to CO2 equivalent by multiplying a global warming potential.

***Power usage at each site (including tenant usage)

Reduction of food waste

The Group mainly belongs to the food distribution industry, and we view the reduction of food waste as a particularly important issue. Each operating company involved in food distribution works to reduce food waste by manufacturing, producing, and selling products based on a plan.

Since FY2017, Valor Co., Ltd. has expanded product categories available for the automatic ordering system in order to improve order accuracy while reviewing product lineup and optimizing inventory in line with its sales policies aimed for improving freshness and selling out. In FY2019, we achieved a 16% reduction in food waste compared to the previous year, especially at the processing center for fresh vegetables

fruits in Kani-shi. In addition, the Company has concluded agreements with Tajimi-shi and Ena-shi in Gifu prefecture, and has been providing food products such as rice, noodles and seasonings in support for Kodomo-Shokudo (children's cafeteria) since June 2019. We will strive to further reduce food waste while combining support activities for local communities with the reduction efforts in our business activities.

Changes in the rate of food waste generated for every 1 million yen of

net sales (kg/million yen)* Supermarket Business* Valor Co., Ltd.

	62.5
60	59.0

	50.1	47.2

	48.8	46.6
40

FY2016 FY2017 FY2018 FY2019

Note*: Calculation covers Valor Co., Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd., and Kohseiya Co., Ltd. In FY2019, Futabaya Co., Ltd. and Sanko Co., Ltd. were added for calculation.

22 Valor Holdings Co., Ltd. Annual Report 2020

Activity Highlights

Results of the major management items for the year under review will be the basis for performance indicators for the next year and subsequent years.

We pursue initiatives in order to contribute to the environment, society and our customers.

Environmental Performance

	Management items	Specifi c initiatives	FY2018 results		FY2019 results		Evaluation	Causes and Effects

		Demand management						Achieved a 4% reduction compared
		Management of air-
emis							to the previous year. We will continue
Development of power	conditioning temperature	1.08		1.04
			to make efforts to improve the effi-
	consumption	Turning off of unnecessary lighting	[kWh/million yen]*	[kWh/million yen]*
gas		ciency of our energy use by utilizing
	Introduction of highly efficient
						energy management systems.
greenhouse		facilities and equipment

	Store deliveries	Compared with the previous	Compared with the previous		Driving distance and amount of fuel
			used decreased by reviewing the
		Encouragement of idling	year		year
	Energy-saving				number of deliveries and routes, and
	stop practice	Driving distance:	105%	Driving distance:	99%
of	deliveries		fuel economy also improved. We will
Instructions and education	Amount of fuel used:	101%	Amount of fuel used:	98%
		continue to aim to improve delivery
Reduction
Reduction of specified	for energy-saving driving	Fuel economy improved:	104%	Fuel economy improved:	101%
	We will continue replacement and
								efficiency.
		Replacement of refrigerators
	CFCs emissions	and air-conditioners	Stores covered: 14	Stores covered: 37		regular facility inspections.
	Regular facility inspections


Developmentof renewableenergy			Total wattage generated:	Total wattage generated:		We will continue to examine where to
			install solar panels, and will also work
		3,352kW	9,100kW
	Development of energy	Installation of solar panels		on the trial introduction of solar pow-
	Business premises covered:	Business premises covered:
				er generation systems equipped with
				19		60
						BCP functions.


of food		Implementation of planned						We worked on planned manufactur-
	ordering and production
						ing and sales at stores and process-
Reduction of	Store shelf management	48.8		46.6
			ing bases, and were able to continu-
recyclingand waste	food waste	Review of product lineups	[kg/million yen]**	[kg/million yen]**		ously reduce the amount of food
	in evenings and volume
						waste.

		adjustment


Reduction		Reduction of disposing						Although the number of stores to
Recycling encouragement	products	Recycling rate:	46.3%	Recycling rate:	42.0%		conduct recycling increased, the re-

	of food waste	Expansion of stores to		cycling volume decreased. We will

		conduct recycling						strive to improve the recycling rate.

Note: Calculation for power consumption, food waste generation, and food waste recycling rate covers Valor Co., Ltd., Tachiya Co., Ltd., Shokusenkan-Taiyo Co., Ltd., and Kohseiya Co., Ltd. In FY2019, Futabaya Co., Ltd. and Sanko Co., Ltd. were added for calculation.

*Rate of electricity usage for every 1 million yen of net sales (Units), **Rate of food waste generated for every 1 million yen of net sales (Units)

Development of renewable energy

The Group is working to create renewable energy to reduce the environmental impacts from business operations. In addition to companies that already have installed solar panels, in FY2019, AXTOS Co., Ltd. and Chubu Kosan Co., Ltd. newly installed solar panels. In addition to reducing greenhouse gas emissions, the Company is encouraging energy- generating activities.

Amount of power generated by renewable energy sources

FY2018 results	FY2019 results	FY2020 targets
Installation of solar panels: 75 sites*	Installation of solar panels: 135 sites*	Cumulative power generation capacity
Cumulative power generation capacity: 4,515kW*	Cumulative power generation capacity: 13,615kW*	by renewable energy sources: 15,000kW*

Note: Solar panels were installed at Valor Holdings Co., Ltd., Valor Co., Ltd., Chubu Yakuhin Co., Ltd., Home Center Valor Co., Ltd., AXTOS Co., Ltd. and Chubu Kosan Co., Ltd. *Cumulative figures from FY2017

Foundation

Valor Holdings Co., Ltd. Annual Report 2020 23

Corporate Governance

Basic Policy

The fundamental objectives of the Company's corporate governance are to achieve efficient management and faster decision-making and enhance corporate value continuously, while ensuring management transparency and fairness, thorough risk management as well as timely and appropriate disclosure from the viewpoints of shareholders, customers and all other stakeholders.

Corporate Governance Systems

Overview of Valor's Corporate Governance Structure

Management, Oversight and Audit		Nomination and Compensation Committee

	Management Legal Counsel, Tax Accountant, Advisoryand Other Specialists


Business Execution



Internal Control & Risk Management

		General Meeting of Shareholders
Report	Appointment /		Audit report	Appointment /		Appointment /
Dismissal		Dismissal		Audit report
		Board of Directors					Dismissal
Consult					Collaboration

			Audit & Supervisory Committee	Accounting Auditor
Executive Directors	Audit / Supervision	Audit report
			(	5 Audit & Supervisory Committee Members
Advise	(11 Directors)		Of whom 3 are Outside Directors )		Ernst & Young ShinNihon LLC

Report

Appointment /

Audit /

Dismissal

Supervision

Report

Accounting audit

Representative Director

Group Management Executive Committee

Collaboration

· Executive Directors (10)

Instructions /

· Representatives of Group's core companies (7)

Collaboration

· Audit & Supervisory Committee Member (2)

Refer matters for

Instructions

discussion / Report

Executive Directors

Group Manager

Operating Companies

Collaboration

Conference

Instructions and supervision

Audit Office

Audit

Activities of the Audit Office, the Risk Management Committee, and the Compliance Committee cover the Group companies.

Risk Management Committee		Compliance Committee

Helpline

Performance evaluation on the Board of Directors

Since 2015, the Company has been considering whether or not the Board of Directors is functioning effectively. Based on the results of this consideration, the Company intends to improve the Board of Directors as a whole through a continuous process of taking appropriate actions to rectify weaknesses and build up strengths.

To improve the Board of Directors, all of the Directors have been conducting self-evaluation questionnaires, which are designed to evaluate the effectiveness of the structure of the Board of Directors and its discussion & consideration, monitoring etc. on a scale of one to five. In FY2019, the Board of Directors scored 3.7 on average, down 0.1 points from FY2018, but the result indicates that the Board of Directors is generally deemed to be effective. However, as the number of matters to be resolved and reported have increased, there have been requests for more active discussions on business strategies.

24 Valor Holdings Co., Ltd. Annual Report 2020

Policy and procedures for appointment and removal of management executives by the Board of Directors, and reasons for nomination of candidates for Director

Reasons for appointment, removal and nomination

Policy

Regarding Directors who are not Audit & Supervisory Committee Members, people with specialized knowledge and excellent management & decision-making capabilities or people who execute important businesses or are responsible for key operating companies are nominated as candidates. For Outside Directors, people with abundant experience in their respective fields, excellent character, and high level of insight as well as the capability of providing objective and multifaceted suggestions about management, are nominated as candidates.
Regarding Directors who are Audit & Supervisory Committee Members, people with knowledge of finance and accounting, understanding of the Group's business and diverse viewpoints about corporate management are nominated as candidates to ensure accurate auditing of compliance and appropriateness of business execution.
The dismissal of a Director shall be deliberated at the Board of Directors meetings in the event that the Director is in violation of laws and regulations or the Articles of Incorporation, other circumstances occur that prevent the Director from properly performing his or her duties, or the Company's corporate value is significantly damaged by the Director due to negligence of his or her duties, etc.

Procedures

Regarding Directors who are not Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors after consideration by the Nomination and Compensation Committee chaired by Representative Director Masami Tashiro consisting of two Executive Directors and two Outside Directors.
Regarding Directors who are Audit & Supervisory Committee Members, candidates shall be determined by the Board of Directors after consideration by the Nomination and Compensation Committee and subsequent consent of the Audit & Supervisory Committee.
The dismissal of a Director shall be determined by the Board of Directors after hearing opinions of the Audit & Supervisory Committee, in addition to reports from the Nomination and Compensation Committee.

Explanation about appointment, removal and nomination

Reasons for election of each candidate for Director are disclosed in the reference document for the General Meeting of Shareholders.
Reasons for election of each candidate for Outside Director are disclosed in [Directors] "Relations with Valor Holdings Co., Ltd. (2)" of "II Management Organization and Other Corporate Governance Systems Concerning Management Decision-Making, Execution and Supervision" in the Corporate Governance Report.
Explanation of the dismissal of Directors (excluding non-reappointment) shall be disclosed in the reference documents for the General Meeting of Shareholders.

Independence criteria

Our criteria for selecting Outside Directors are that they satisfy the requirements for independent officers pursuant to the Companies Act and as specified by the stock exchanges where the Company's shares are listed; that they are unlikely to have conflicts of interest with general shareholders; that they are not affiliated with a supplier or a customer of the Company with which transactions exceed an amount equal to 2% of the Company's consolidated net sales or exceed 10 million yen in direct individual transactions; and they have specialized knowledge about finance, accounting, law, management, etc. or experience in corporate management etc.

Policy for determining the amount of compensation and the calculation method

(1) Basic policy

1 For Directors who are not Audit & Supervisory Committee Members

Compensation consists of basic compensation, bonuses and share-based compensation.
Compensation shall be, in principle, provided in an amount that is adequate for securing (recruiting) excellent people as executives and shall be determined based on comprehensive evaluation of the Company's financial performance, each Director's performance of duties, achievements and degree of contribution.
Regarding Directors who are also employees, the salary as an employee is paid in accordance with the Rules for Wages for Employees.
The amount of bonuses shall be determined within the maximum amount of compensation approved at the General Meeting of Shareholders in consideration of the previous amount of bonuses paid and the company's financial results for the current year.
Regarding share-based compensation, points are granted to Directors within the maximum amount approved at the General Meeting of Shareholders. At the time of resignation or retirement of a Director, the Company's shares are delivered to the Director in accordance with the number of points granted.
The Company has a stock option program for the Company's Executive Directors and employees, as well as the directors and employees of the Company's subsidiaries, in order to enhance their motivation for achieving better performance of the Group.

2 For Directors who are Audit & Supervisory Committee Members

Compensation consists only of basic compensation, in view of their roles and independence.

Procedures

The amount of compensation for Directors who are not Audit & Supervisory Committee Members and for Directors who are Audit & Supervisory Committee Members shall be determined within the maximum amount approved at the General Meeting of Shareholders.
Regarding the amount of compensation for Directors who are not Audit & Supervisory Committee Members, in order to increase transparency and objectiveness, the Nomination and Compensation Committee, which is an advisory organ for the Board of Directors consisting of two Executive Directors and two Outside Directors, shall examine and review the details, after which, the amount shall be determined by resolution of the Board of Directors; then the decision is redirected to the discretion of Representative Director Masami Tashiro, on the condition that the report of the Nomination and Compensation Committee is emphasized.
The amount of compensation for Directors who are Audit & Supervisory Committee Members shall be determined by resolution of the Audit & Supervisory Committee.

Foundation

Valor Holdings Co., Ltd. Annual Report 2020 25

Corporate Governance

Number of meetings of the Board of Directors and the Audit & Supervisory Board held and attendance status (FY 2019)

	Meetings of the Board of Directors	Meetings of the Audit & Supervisory Board*

Number of meetings	11	12

Attendance of Outside Directors	100%	97%

Note: The figures are based on the number of meetings held from April 1, 2019 to March 31, 2020.

Dialogues with shareholders in FY2019

62th Ordinary General
Meeting of Shareholders	521 shareholders attended
(Held June 27, 2019)

Directors (as of June 26, 2020)

NameTitleSignifi cant concurrent positions at major subsidiaries

Masami Tashiro	Chairman & CEO

Satoru Yokoyama	Executive vice-president	Chairman, AXTOS Co.,Ltd.
Executive vice-president, Valor Co.,Ltd.

Akira Shinohana	Managing Director	CEO, Chubu Agri Co.,Ltd.

Katsuyuki Mori	Director	Chairman, Tachiya Co., Ltd.
Senior Managing Director, Valor Co., Ltd.

Takayuki Koike	Director	Retail Technology
CEO, Chubu Kosan Co., Ltd.

Satoshi Yoneyama	Director	Organizational Transformation and Luvit Cards

Masami Shidara	Director	Deputy General Manager of Business Administrator
Valor Co.,Ltd.

Morisaku Wagato	Director	Executive vice-president, Alleanza Holdings Co.,Ltd.
CEO, Home Center Valor Co., Ltd.

Motohiko Takasu	Director	CEO
Chubu Yakuhin Co.,Ltd.

Hirokazu Tamai	Director	M&A Strategies

Shunichi Asakura	Director	Chairman, Alleanza Holdings Co.,Ltd.

Yukihiko Shizu	Director	Audit & Supervisory Committee Member (full-time)

Takashi Takayama	Director	Audit & Supervisory Committee Member (full-time)

Mutsuo Masuda	Outside Director	Audit & Supervisory Committee Member

Hirofumi Hata	Outside Director	Audit & Supervisory Committee Member

Tokimitsu Ito	Outside Director	Audit & Supervisory Committee Member

Internal control and compliance system

The Company considers ensuring compliance to be an important management issue and has articulated the Corporate Philosophy, the basic management policy, and the Action Guidelines for Corporate Ethics. Efforts are made to ensure that all officers and employees comply with them as well as the Compliance Rules. As for ensuring compliance, the Company has improved, maintained and developed the compliance system. It has also established the rules for whistleblowing and adopted a whistleblowing system as part of internal control systems concerning violations of the law and other compliance issues.

Risk management system

The Company has established the basic rules for risk management and manages Company-wide risk of losses in a comprehensive, integrated manner under a clearly defined risk management system. The Audit Office audits risk management statuses when deemed necessary and reports the audit results to the Board of Directors and the Audit & Supervisory Committee.

26 Valor Holdings Co., Ltd. Annual Report 2020

Compliance and Risk Management Systems

System to ensure the appropriateness of business operations of subsidiaries

The Action Guidelines for Corporate Ethics has been applied to all Group companies to foster the legal compliance awareness of all the Group's directors and employees. In addition, the Company has established the Rules for Management of Group Companies and Affiliates and the Rules of Authority of Group Companies and Affiliates, which require Group companies to report to the Company on certain matters based on these rules. Matters that meet certain criteria are submitted to the Company's Board of Directors or the Group Management Executive Committee as matters to be discussed. The Audit Office, which reports directly to the Representative Director, audits the operations of each Group company based on the internal audit plan, and reports the results of its audits to the Board of Directors, the Audit & Supervisory Committee, the Accounting Auditor and other relevant departments to ensure sound business operations.

Risk awareness

The Company considers that the following matters may have a significant impact on investors' decisions concerning the Company's statuses of operations and accounting.

Factors that may have an impact on the Group's financial performance

External environment of the retail business (economic trends, competition, taxation on consumption, climate change, etc.)
Store opening policies (difficulty in securing land or premises satisfying the store opening criteria, regulatory restrictions, etc.)
Food safety (quality incidents such as food poisoning and contamination, erroneous food labeling, etc.)
Natural disasters, etc. (in case that natural disasters such as earthquakes and typhoons occur and infectious diseases spread)
Entry to new businesses (in the event that anticipated results cannot be achieved because of changes in the external environment, etc.)
Interest rate fluctuations
Securing of human resources (difficulty in recruiting human resources and developing them as planned)
Security measures for information systems (in case of troubles beyond the Company's expectation)

Regulatory restrictions concerning the Group

Act on the Measures by Large-Scale Retail Stores for Preservation of Living Environment (in the event that it is not possible to open new stores or increase the floor space of existing stores as planned)
Leakage of personal information
Other regulatory restrictions

Accounting standard for impairment of fixed assets

Foundation

Impact of COVID-19

The Group established the Business Continuity Planning (BCP) Task Force in January 2020 and developed a simplified manual on infection control to educate employees on health management. The BCP Task Force also outlined action guidelines for business trips, meetings, and training, as well as actions to be taken when infection is suspected, in an effort to prevent infection.

In each business segment, we put the highest priority on the safety of our customers and employees, and implemented measures to prevent respiratory droplets from transmitting viruses in our stores and facilities, while striving to ensure a stable supply of products to meet sudden changes in demand. In the sports club business, from late February to mid-March, the Company took preventive measures such as cancellation of scheduled events and voluntary suspension of operations in all locations. For the consolidated financial results for FY2019, the Company recorded an extraordinary loss for fixed costs incurred during the voluntary suspension and expenses related to the preparation and cancellation of events.

After April 2020, in response to the expansion of the areas subject to the declaration of a state of emergency to nationwide, we distributed work locations among offices mainly engaged in administrations, product purchasing and sales management and also introduced telework. While creating an environment to ensure the business continuity, we also reinforced measures to reduce the number of customers in stores of each business in order to prevent infections by contact. The sports club business voluntarily suspended its operation at a maximum of 181 branches in response to requests from local governments.

Subsequently, with the declaration of a state of emergency being lifted, the offices that distributed work locations and introduced telework have returned to normal working conditions. The sports club business, which had been refraining from opening its business, has gradually resumed operations in the areas where a request for the voluntary suspension was lifted, and all locations reopened by the beginning of June, but the impact on the business is expected to continue throughout FY2020.

Valor Holdings Co., Ltd. Annual Report 2020 27

11-year Summary of Financial Results

Valor Holdings Co.,Ltd. and its consolidated subsidiaries for the financial year ended March 31.

	FY2009	FY2010	FY2011	FY2012

For the year:
Revenues from operations	344,900	379,172	410,577	431,218
Operating income	9,452	12,347	15,236	15,852
Ordinary income	9,916	12,817	16,020	16,844
Net income	3,945	4,232	7,149	8,184

At year-end:
Total assets	176,440	190,065	199,774	213,629
Net assets	58,578	61,821	68,134	75,466
Net assets (excl. subscription rights to shares and non-controlling interests)	57,760	60,998	67,243	74,887
Interest-bearing debt	69,107	69,746	69,383	75,679

Cash Flows:
Cash flows from operating activities	16,004	20,324	19,190	21,139
Cash flows from investing activities	(10,453)	(14,428)	(17,793)	(20,961)
Free cash flows	5,550	5,895	1,397	177
Cash flows from financial activities	(5,291)	(1,608)	(2,283)	2,914
Cash and cash equivalents at the end of fiscal year	9,259	13,547	12,676	15,764

Capital Expenditures:
Capital expenditures (based on payment)	11,537	15,245	17,859	22,101
Breakdown of expenditures:
for new store openings	8,267	8,995	11,230	14,414
for refurbishing existing stores	2,663	5,007	4,114	1,788
for others	607	1,243	2,515	5,899
Depreciation and amortization (CF)	8,399	9,017	9,612	10,255

Per Share data:
Net assets per share (BPS) (yen)	1,134.05	1,197.67	1,320.33	1,454.43
Net income per share (EPS) (yen)	77.46	83.10	140.38	159.56
Cash dividends per share (yen)	20	22	26	29
Dividend payout ratio	25.8%	26.5%	18.5%	18.2%

Financial indicators:
Return on total assets (ROA)	5.7%	7.0%	8.2%	8.1%
Return on equity (ROE)	7.0%	7.1%	11.2%	11.5%
Shareholders' equity ratio	32.7%	32.1%	33.7%	35.1%
Debt equity ratio (times)	1.2	1.1	1.0	1.0

Revenues from operations (millions of yen)	Operating income (millions of yen)	Total assets / Net assets (millions of yen)
			Total assets	Net assets

800,000					20,000
				678,096
600,000		544,020	565,931	15,000
	520,530
497,463

400,000					10,000
200,000					5,000
0					0
FY2015	FY2016	FY2017	FY2018	FY2019

					500,000
16,683
	15,439			15,515	400,000
		13,470	14,210
					300,000
					200,000
					100,000
FY2015	FY2016	FY2017	FY2018	FY2019	0

			383,919
		311,813
255,916 269,488 285,905
99,027 107,727 113,167125,395	140,645

FY2015	FY2016	FY2017	FY2018	FY2019

28 Valor Holdings Co., Ltd. Annual Report 2020

(Millions of yen)

FY2013	FY2014	FY2015	FY2016	FY2017	FY2018	FY2019

454,180	470,564	497,463	520,530	544,020
14,287	15,000	16,683	15,439	13,470
15,311	16,108	17,586	16,762	14,937
9,162	9,214	10,759	10,522	7,570

235,131	245,386	255,916	269,488	285,905
82,949	90,881	99,027	107,727	113,167
82,395	90,301	98,408	107,057	112,365
87,265	86,880	84,952	87,231	88,821

19,198	22,257	22,991	22,270	27,790
(23,746)	(15,660)	(19,045)	(21,569)	(24,258)
(4,547)	6,596	3,945	700	3,531
5,983	(3,745)	(6,758)	(3,168)	(3,223)
17,055	19,960	17,103	14,659	14,938

25,226	20,225	20,041	24,441	27,576
12,851	12,763	11,628	15,144	14,394
2,306	2,237	3,650	7,709	9,850
10,069	5,225	4,763	1,587	3,332
11,090	12,168	12,683	13,125	13,952

1,600.25	1,751.57	1,925.45	2,093.74	2,196.89
177.95	178.91	208.87	205.83	148.04
31	33	36	40	45
17.4%	18.4%	17.2%	19.4%	30.4%

6.8%	6.7%	7.0%	6.4%	5.4%
11.7%	10.7%	11.4%	10.2%	6.9%
35.0%	36.8%	38.5%	39.7%	39.3%
1.1	1.0	0.9	0.8	0.8

565,931	678,096
14,210	15,515
16,091	16,878
7,910	6,477

311,813	383,919
125,395	140,645
124,599	130,748
96,717	124,872

27,369	30,871
(31,621)	(26,615)
(4,252)	4,256
7,302	(551)
17,938	24,159

26,878	32,138
14,903	20,457
9,451	8,498
2,524	3,183
15,163	17,665

2,320.532,435.06

153.06120.63

48	52
31.4%	43.1%

5.4%	4.9%
6.7%	5.1%
40.0%	34.1%

0.80.9

Financial Information

Cash Flows (millions of yen)	Cash dividends per share (yen)	ROE∙ROA (%)
	Cash fl ows from operating activities		Cash fl ows from investing activities	Dividend payout ratio (%)	ROE ROA


	Free cash fl ows			Cash dividends per share Dividend payout ratio

40,000
30,000	22,991		27,790	27,369	30,871
	22,270
20,000
10,000	3,945	700		3,531	4,256

0
-10,000				(4,252)

-20,000	(19,045) (21,569)
	(24,258)
-30,000				(26,615)

					(31,621)
-40,000	FY2015	FY2016	FY2017	FY2018	FY2019

60
					52
50			45	48
				43.1
		40
40
36

			30.4	31.4
30
20	17.2	19.4

10
0	FY2015	FY2016	FY2017	FY2018	FY2019

15
11.4
	10.2
10
7.0	6.4	6.9	6.7

				5.1
5		5.4	5.4	4.9

0	FY2016	FY2017 FY2018	FY2019
FY2015

Valor Holdings Co., Ltd. Annual Report 2020 29

FY2019 Financial Review

Summary of consolidated results and financial conditions

Consolidated operating results for FY2019 were revenues from operations of ¥678,096 million, an increase of 19.8% year on year; operating income of ¥15,515 million, an increase of 9.2%; ordinary income of ¥16,878 million, an increase of 4.9%; and profit attributable to owners of parent of ¥6,477 million, a decrease of 18.1%. Revenues from operations increased for the 25th consecutive year, and operating income and ordinary income increased for the second consecutive year. However, profit attributable to owners of parent decreased due to an increase in extraordinary loss and an increase in profit attributable to non-controlling interests following the consolidation of Alleanza Holdings Co., Ltd.

The breakdown of the increase in revenues of major segments (¥112,165 million) was ¥59,127 million for the home improvement center business, ¥21,176 million for the other businesses, ¥19,421 million for the supermarket business, and ¥11,577 million for the drugstore business. Revenues in the home improvement center business and other businesses increased thanks to the contribution of Alleanza Group, and revenues in the supermarket business increased due to the contribution of M&As made during FY2018 and FY2019. In the drugstore business, in addition to strong sales at existing stores, sales of face masks and disinfectant products have increased in the fourth quarter due to the COVID-19 pandemic.

The breakdown of the increase in earnings of major segments (¥1,305 million) was ¥849 million for the home improvement center business benefiting from the business consolidation, ¥698 million for the other businesses, and ¥829 million for the drugstore business that has achieved a lower expense ratio and improved gross profit ratio, securing stable earnings from the main businesses. On the other hand, in the supermarket business, earnings decreased due to factors such as a deterioration in earnings of Sanko Co., Ltd. However, Valor Co., Ltd., one of the core companies, has been steadily refurbishing its stores aiming to become a "destination store," and its operations has been stabilized through expanded

education and review of management methods. As a result, the gross profit ratio has been improved, which we regard as a significant achievement. The sports club business also saw a decline in earnings with upfront expenses for openings. However, the impact on operating income was limited since the fixed costs, which were incurred during the 13-day voluntary business suspension at all locations, and expenses related to the preparation and cancellation of scheduled events due to the COVID-19 pandemic, were recorded as extraordinary loss.

The major breakdown of the extraordinary loss was impairment loss of ¥3,065 million based on the accounting standard for impairment on noncurrent assets, a loss of ¥365 million due to disasters and a loss of ¥272 million due to the voluntary business suspension. The impairment loss includes a ¥583 million impairment loss posted through the third quarter resulting from the decision to close stores or cancel leases for closed properties. This was due to the steady implementation of the plan to close stores that had been considered as the candidates, mainly in the supermarket business, when the FY2018-2020 strategic plans were launched.

The Company's efficiency went down from the previous year, with ROA falling from 5.4% to 4.9% and ROE falling from 6.7% to 5.1%. The decrease in ROA was mainly due to a decrease in the ratio of ordinary income to revenues from operations from 2.8% to 2.5%, and in particular due to an increase in the expense ratio from 25.0% to 26.1%. We believe that overall expense management and expense reduction efforts were not sufficient while the earnings structure has changed significantly due to the consolidation of Alleanza Holdings Co., Ltd. The decrease in ROE was due to a decrease in profit attributable to owners of parent and an increase in non-controlling interests in net assets. Although revenues from operations and operating income increased, earnings growth has not kept pace with asset growth, leaving issues in improving efficiency.

Financial position

Total assets increased ¥72,105 million from the end of the previous year to ¥383,919 million. The main factors were an increase of ¥6,193 million in cash and deposits, an increase of ¥15,236 million in inventories, an increase of ¥32,448 million in property, plant and equipment, an increase of ¥5,959 million in intangible assets, and an increase of ¥4,651 million in guarantee deposits.

Total liabilities increased ¥56,855 million from the end of the previous year to ¥243,273 million. The main factors were an

increase of ¥9,835 million in notes and accounts payable-trade, an increase of ¥5,766 million in electronically recorded obligations- operating, an increase of ¥4,116 million in accounts payable- other, and an increase of ¥25,980 million in loans payable. Net assets increased ¥15,250 million from the end of the previous year to ¥140,645 million. Net assets excluding non-controlling interests and subscription rights to shares were ¥130,748 million, and the shareholders' equity ratio was 34.1%.

Cash flows

Cash and cash equivalents at March 31, 2020 increased ¥6,220 million from the end of the previous year to ¥24,159 million.

Cash flows from operating activities

Net cash provided by operating activities amounted to ¥30,871 million, having increased ¥3,502 million compared with the previous year. The main factors were increases of ¥2,501 million in depreciation and amortization, ¥2,789 million in notes and accounts payable-trade, and ¥2,089 million in accounts payable-other and accrued expenses, and decreases of ¥59 million in income before income taxes and ¥3,378 million in notes and accounts receivable-trade.

Cash flows from investing activities

Net cash used in investing activities amounted to ¥26,615 million, having decreased ¥5,006 million compared with the previous year. The main factor was a decrease of ¥6,043 million in purchase of investment securities, despite an increase of ¥1,080 million in payments for acquisition of businesses.

Cash flows from financing activities

Net cash used in financing activities amounted to ¥551 million, having decreased ¥7,854 million compared with the previous year. The main factors were decreases of ¥3,386 million in proceeds from issuance of shares and ¥3,085 million in proceeds from sales of treasury stock.

30 Valor Holdings Co., Ltd. Annual Report 2020

Policy on Profit Distribution and Dividends for FY2019

The year-end dividend for FY2019 was ¥28 per share. Combined with the interim dividend of ¥24 per share, the annual dividend for FY2019 amounted to ¥52 per share, ¥4 higher than for the previous year. The payout ratio was 43.1%. Our policies on creating cash flow, fund employment, and financial discipline are set out in the FY2018-2020 strategic plans, but under the influence of the COVID-19 pandemic we will focus on securing

liquidity on hand in particular. As for our approach to profit distribution, with regard to capital expenditure, we will temporarily limit the investment in opening of new locations for the sports club business during FY2020. While intending to maintain a steady return to shareholders with a dividend payout ratio of 25%, we also believe it is important to maintain business safety by raising our internal reserves.

Forecasts for FY2020

The food distribution industry, the Group's main industry of involvement, has been urged to review its business models in every business format in response to changes in the social structure. In the past, supermarkets were pursuing efficient operations run by a small number of people, with the assumption of economic and population growth, under the policy of concentrating the opening of standardized stores in a certain area. However, as drugstores and others offering food items increase their number of stores, the competitive advantage of "close-by," which was also a reason for people to choose supermarkets, are being lost. As a result, an ability to transition to a business format that can attract customers from wider geographic areas is becoming crucial.

Under such circumstances, as the final step in the FY2018- 2020 strategic plans in line with the basic policy of "a paradigm shift from expanding standardized stores to enhancing the appeal of products," we will work to improve earnings by transitioning to a more competitive format with further focus on products in our three main businesses of supermarkets, drugstores and home improvement centers. In the supermarket business, with an aim to create a "destination store" offering strong products and product categories that attract customers, we will refurbish especially medium-sized stores while at the same time focus on enhancing the appeal of products, which is the core of the transformation. In

the home improvement center business, one year has passed since the business consolidation, and we will promote the remodeling of private labels, shifting the development standard from price-oriented to value-oriented. The Group will also take measures to improve asset efficiency in addition to creating synergies through cross-company collaboration.

With regard to capital expenditure, we plan to refurbish 20 to

30 supermarkets and will continue to focus on investing in existing stores. In terms of new store investment, we plan to open a total of 73 stores, including five supermarkets, 35 drugstores, and four home improvement centers (including specialized formats), 20 sports clubs, six pet shops and three other stores, maintaining a high level of new store openings in the drugstore business, which plays a key role as a driver of growth. In the sports club business, we will limit the opening of new fitness gyms due to the COVID-19 pandemic, shifting from the original plan to accelerate new openings as set forth in the FY2018-2020 strategic plans.

Based on the above assumptions, forecasts for consolidated financial performance for FY2020 are as follows: revenues from operations of ¥690.0 billion, an increase of 1.8% year on year; operating income of ¥15.7 billion, an increase of 1.2%; ordinary income of ¥17.2 billion, an increase of 1.9%; and profit attributable to owners of parent of ¥7.0 billion, an increase of 8.1%.

Financial Information

Financial policy in the FY2018-2020 strategic plans

Generation of cash flow	At least ¥90.0 billion in the three years from FY2018 (cumulative)


	Target of ¥25.0-26.0 billion a year in capital expenditure (allocate 30-40% for investments in
1) Capital	existing outlets)
Refurbishment: 30-40 supermarkets and drugstores per year
expenditure
New openings: At least 200 fitness gyms (over the three years, including franchise operation)
Profit distribution
*In FY2020, we slow the pace of new openings.

	Stable and continuous returns of profit, with a dividend payout ratio target of 25%
2) Dividend


Financial commitment	Debt equity ratio of 0.8 times and shareholders' equity ratio of 40%.

Valor Holdings Co., Ltd. Annual Report 2020 31

Consolidated Financial Statements (Summary)

Valor Holdings Co.,Ltd. and Subsidiaries

The financial year ended March 31, 2019 and 2020

Consolidated Balance Sheet

		(Millions of yen)

	FY2018	FY2019

(Assets)
Current assets
Cash and deposits	18,494	24,687
Notes and accounts	8,453	12,779
receivable-trade

Merchandise and finished goods	36,148	51,284
Raw materials and supplies	790	891
Other	12,199	14,932
Allowance for doubtful accounts	(89)	(10)

Total current assets	75,995	104,565

Noncurrent assets
Property, plant and equipment
Buildings and structures	229,436	277,323
Accumulated depreciation	(119,257)	(144,695)

Buildings and structures, net	110,179	132,628
Machinery, equipment
8,696	10,229
and vehicles

Accumulated depreciation	(6,127)	(6,966)
Machinery, equipment
2,569	3,263
and vehicles, net

Land	44,382	51,636
Lease assets	17,926	22,397
Accumulated depreciation	(10,284)	(13,209)

Lease assets, net	7,641	9,188
Construction in progress
3,755	3,576
Other	37,320	42,398
Accumulated depreciation	(28,865)	(33,259)
Other, net
8,454	9,139

Total property, plant and	176,983	209,431
equipment

Intangible assets
Goodwill	1,198	1,390
Lease assets	0	144
Other	8,547	14,172

Total intangible assets	9,746	15,706

Investments and other assets
Investment securities	8,953	7,141
Long-term loans receivable	973	1,052
Deferred tax assets	7,972	9,599
Guarantee deposits	27,451	32,102
Other	3,963	4,660
Allowance for doubtful	(227)	(341)
accounts

Total investments and	49,086	54,215
other assets

Total noncurrent assets	235,817	279,353

Total assets	311,813	383,919

		(Millions of yen)

	FY2018	FY2019

(Liabilities)
Current liabilities
Notes and accounts payable-trade	41,564	51,400
Short-term loans payable	20,547	26,159
Current portion of bonds	20	20
Current portion of long-term	13,013	21,180
loans payable

Lease obligations	1,872	2,529
Income taxes payable	3,445	3,659
Provision for bonuses	2,794	3,143
Provision for directors' bonuses	130	141
Provision for point card certificates	885	1,479
Provision for loss on	272	275
recollection of gift certificates

Asset Retirement Obligations	110	91
Provision for loss on store closing	285	562
Other	19,340	31,143
Total current liabilities	104,283	141,786
Noncurrent liabilities
Bonds payable	10,010	10,010
Long-term loans payable	41,288	53,489
Lease obligations	9,965	11,483
Deferred tax liabilities	205	219
Provision for directors'	500	627
retirement benefits

Provision for retirement benefits	3,884	4,743
Asset retirement obligations	9,396	12,703
Long-term deposits received	6,199	6,906
Other	684	1,301
Total noncurrent liabilities	82,134	101,486
Total liabilities	186,417	243,273
(Net assets)
Shareholders' equity
Capital stock	13,609	13,609
Capital surplus	15,543	20,076
Retained earnings	95,468	99,256
Treasury stock	(566)	(566)
Total shareholders' equity	124,054	132,375
Accumulated other
comprehensive income
Valuation difference on	421	(1,865)
available-for-sale securities

Deferred gains (loss) on hedges	0	0
Foreign currency translation	155	273
adjustment

Remeasurements of defined	(33)	(34)
benefits plan

Total accumulated other	544	(1,627)
comprehensive income

Subscription rights to shares	101	142
Minority interests	693	9,754
Total net assets	125,395	140,645
Total liabilities and assets	311,813	383,919

32 Valor Holdings Co., Ltd. Annual Report 2020

Valor Holdings Co.,Ltd. and Subsidiaries (Fiscal years ended March 31, 2019 and 2020)

Consolidated Statement of Income

		(Millions of yen)

	FY2018	FY2019

Net sales	546,264	655,859
Cost of sales	410,407	485,339
Gross profit	135,856	170,519
Operating revenues	19,666	22,237
Operating gross profit	155,523	192,757
Selling, general and administrative expenses
Advertising expenses	6,296	8,486
Packaging expenses	112	38
Supplies expenses	768	1,206
Distribution expenses	932	1,353
Provision for point card certificates	3,075	3,352
Provision of allowance for doubtful accounts	2	2
Directors' remuneration	494	972
Salaries and wages	53,693	65,435
Bonuses	4,237	5,258
Provision for bonuses	2,166	2,919
Provision for directors' bonuses	557	136
Retirement benefit expenses	690	908
Provision for directors' retirement benefits	32	40
Welfare expenses	8,757	11,141
Utilities expenses	8,742	10,014
Rent expenses	23,522	29,330
Repair and maintenance	2,905	4,110
Depreciation	12,896	15,412
Amortization of goodwill	232	391
Other	11,194	16,728
Total selling, general and administrative expenses	141,313	177,241
Operating income	14,210	15,515
Non-operating income
Interest income	108	133
Dividend income	97	223
Office work fee	1,034	1,425
Rent income	769	834
Investment gain on equity method	32	39
Other	1,451	1,356
Total non-operating incomes	3,492	4,013
Non-operating expenses
Interest expenses	686	875
Rent cost of real estate	612	696
Other	312	1,078
Total non-operating expense	1,611	2,650
Ordinary income	16,091	16,878
Extraordinary income
Subsidy income	179	283
Other	154	646
Total extraordinary income	334	930
Extraordinary loss
Loss on sales of noncurrent assets	5	3
Loss on retirement of noncurrent assets	106	218
Impairment loss	2,707	3,065
Loss on reduction of noncurrent assets	144	221
Loss on valuation of investment securities	0	90
Other	538	1,345
Total extraordinary loss	3,503	4,944
Income before income taxes	12,922	12,863
Income taxes-current	5,700	6,439
Income taxes-deferred	(744)	(903)
Total income taxes	4,956	5,535
Net income	7,966	7,328
Profit (loss) attributable to non-controlling interests	56	851
Profit attributable to owners of parent	7,910	6,477

Financial Information

Valor Holdings Co., Ltd. Annual Report 2020 33

Consolidated Financial Statements (Summary)

Valor Holdings Co.,Ltd. and Subsidiaries (Fiscal years ended March 31, 2019 and 2020)

Consolidated Statements of Cash Flows

		(Millions of yen)

	FY2018	FY2019

Cash flows from operating activities
Income before income taxes	12,922	12,863
Depreciation and amortization	15,163	17,665
Impairment loss	2,218	3,065
Amortization of goodwill	232	391
Gain on bargain purchase	(27)	(40)
Increase (decrease) in allowance for doubtful accounts	40	(7)
Increase (decrease) in defined benefit liabilities	297	334
Increase (decrease) in provision for directors' retirement benefits	(39)	28
Increase (decrease) in provision for point card certificates	(141)	178
Interest and dividends income paid	(205)	(356)
Interest expenses received	686	875
Loss on retirement of noncurrent assets	106	218
Loss on reduction of noncurrent assets	144	221
Disaster losses	-	365
Payment for business acquisition	-	272
Loss (gain) on valuation of investment securities	0	90
Equity in losses (earnings) of affiliates	(32)	(39)
Subsidy income	(31)	(283)
Insurance income	-	(303)
Decrease (increase) in notes and accounts receivable-trade	(49)	(3,427)
Decrease (increase) in inventories	(626)	(917)
Increase (decrease) in notes and accounts payable-trade	2,305	5,095
Increase (decrease) in accrued consumption taxes	826	(622)
Increase (decrease) in accounts payable-other and accrued expenses	(1,100)	988
Other	279	1,486
Subtotal	32,971	38,142
Interest and dividends income received	112	255
Interest expenses paid	(673)	(818)
Income taxes paid	(5,041)	(6,708)
Net cash provided by operating activities	27,369	30,871
Cash flows from investing activities
Payments into time deposits	(179)	(283)
Proceeds from withdrawal of time deposits	286	676
Purchase of property, plant and equipment	(22,844)	(22,469)
Proceeds from sales of property, plant and equipment	120	48
Purchase of intangible assets	(762)	(1,680)
Purchase of investment securities	(6,502)	(459)
Proceeds from sales of investment securities	100	115
Payments of loans receivable	(151)	(136)
Proceeds from collection of loans receivable	106	22
Payments for guarantee deposits	(1,132)	(1,607)
Proceeds from collection of guarantee deposits	1,152	1,967
Proceeds from guarantee deposits received	385	333
Repayments of guarantee deposits received	(454)	(651)
Purchase of investments in subsidiaries resulting in change in scope of consolidation	(1,354)	(637)
Payment for acquisition of business	(101)	(1,182)
Subsidy income	31	283
Other	(322)	(953)
Net cash provided by investing activities	(31,621)	(26,615)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable	2,402	2,983
Proceeds from long-term loans payable	17,375	22,348
Repayments of long-term loans payable	(14,637)	(19,516)
Redemption of bonds	(30)	(100)
Repayments of finance lease obligations	(1,888)	(2,821)
Proceeds from issuance of common stock	3,386	-
Proceeds from payment of non-controlling shareholders	12	-
Proceeds from sales of treasury stock	3,085	0
Purchase of treasury stock	(0)	(0)
Proceeds from sales of investments in subsidiaries resulting in no change in scope of consolidation	-	(361)
Cash dividends paid	(2,356)	(2,690)
Dividends paid to non-controlling shareholders	(1)	(393)
Other	(45)	0
Net cash provided by financing activities	7,302	(551)
Effect of exchange rate change on cash and cash equivalents	(50)	(487)
Net increase (decrease)in cash and cash equivalents	2,999	3,217
Cash and cash equivalents at beginning of period	14,938	17,938
Increase in cash and deposits due to share exchange	-	3,003
Cash and cash equivalents at end of period	17,938	24,159

34 Valor Holdings Co., Ltd. Annual Report 2020

Valor Holdings Co.,Ltd. and Subsidiaries (Fiscal years ended March 31, 2019 and 2020)

Consolidated Statements of Changes in Net Assets

FY2018

													(Millions of yen)

		Shareholders' equity				Accumulated other comprehensive income
					Total	Valuation	Deferred gains	Foreign	Remeasurements	Total	Subscription	Non-	Total net
					accumulated	rights to	controlling
	Capital	Capital	Retained	Treasury	difference on	currency	assets
	shareholders'	(loss) on	of defi ned	other	shares	interests
	Stock	Surplus	earnings	stock	available-for-	translation
	equity	hedges	benefi ts plan	comprehensive
					sale securities	adjustment
								income

Balance, March 31,	11,916	12,799	89,898	(2,608)	112,005	323	(2)	129	(90)	359	113	688	113,167
2017


Changes of items
during the period

Issuance of	1,693	1,693			3,386								3,386
common stock


Dividends from			(2,357)		(2,357)								(2,357)
surplus


Net income			7,910		7,910								7,910

Purchase of				(0)	(0)								(0)
treasury stock


Disposal of		1,051		2,042	3,093								3,093
treasury stock


Increase in retained
earnings by decreasing
companies accounted			17		17								17
for using the equity
method														Information
Net changes of
items during the						97	2	26	57	184	(11)	5	178
period

Total changes of items	1,693	2,744	5,569	2,042	12,049	97	2	26	57	184	(11)	5	12,228	Financial
during the period



Balance, March 31,	13,609	15,543	95,468	(566)	124,054	421	0	155	(33)	544	101	693	125,395
2018

FY2019

													(Millions of yen)

		Shareholders' equity				Accumulated other comprehensive income
					Total	Valuation	Deferred gains	Foreign	Remeasurements	Total	Subscription	Non-	Total net
					accumulated	rights to	controlling
	Capital	Capital	Retained	Treasury	difference on	currency	assets
	shareholders'	(loss) on	of defi ned	other	shares	interests
	Stock	Surplus	earnings	stock	available-for-	translation
	equity	hedges	benefi ts plan	comprehensive
					sale securities	adjustment
								income

Balance, March 31,	13,609	15,543	95,468	(566)	124,054	421	0	155	(33)	544	101	693	125,395
2018


Changes of items
during the period

Equity transaction
with noncontrolling		(269)			(269)								(269)
interests

Increase due to a		4,802			4,802								4,802
share exchange


Dividends from			(2,689)		(2,689)								(2,689)
surplus


Net income			6,477		6,477								6,477

Purchase of				(0)	(0)								(0)
treasury stock


Disposal of				0	0								0
treasury stock


Net changes of
items during the						(2,287)	(0)	117	(1)	(2,171)	40	9,060	6,929
period

Total changes of items	-	4,532	3,788	(0)	8,320	(2,287)	(0)	117	(1)	(2,171)	40	9,060	15,250
during the period


Balance, March 31,	13,609	20,076	99,256	(566)	132,375	(1,865)	0	273	(34)	(1,627)	142	9,754	140,645
2019

Valor Holdings Co., Ltd. Annual Report 2020 35

Corporate Data/ Share Information (as of March 31, 2020)

Corporate Data			Share Information
Name	Valor Holdings Co., Ltd.	Number of authorized shares	200,000,000
	(Changed from Valor Co., Ltd. in 1 October, 2015)	Number of outstanding shares	53,987,499
Registered head office	180-1	Oi-cho,Ena-shi, Gifu 509-7201 Japan	Number of shareholders	16,691
Headquarters	661-1	Ohari-cho,Tajimi-shi, Gifu 507-0062 Japan	Stock exchange listings	Tokyo Stock Exchange, first section
Established	July 1958		Nagoya Stock Exchange, first section
Representative	Masami Tashiro Chairman & CEO
Paid-in-capital	¥13,609 million

Distribution of shareholders by Type

Foreign entities 202 shareholders			Securities companies 23 shareholders
		269 thousands of shares	0.5%
8,865 thousands of shares	16.4%

Other companies 369 shareholders			Financial Institutions 53 shareholders

		20,065 thousands of shares	37.2%
14,083 thousands of shares	26.1%

				Individuals, others 16,044 of shareholders

				10,703 thousands of shares	19.8%

Stock price and trading volume

Stock price (closing price after adjustment)

(yen)

4,000

Major Shareholders

Shareholder	Number of Shares	Percentage of *
Held (Thousands)	Shares Held


Japan Trustees Services Bank, Ltd.(Trust Account)	3,407	6.33
Ito Youth Scholarship Foundation	2,910	5.41
Chubu Agent Co.,Ltd.	2,730	5.07
The Norinchukin Bank	2,542	4.72
The Juroku Bank	2,536	4.71
The Master Trust Bank of Japan, Ltd. (Trust Account)	2,521	4.68
Masami Tashiro	1,530	2.84
Japan Trustees Services Bank, Ltd.(Trust Account9)	1,404	2.61
Retail Partners Co.,Ltd.	1,260	2.34
Arcs Group Co.,Ltd.	1,260	2.34

Notes: Shareholders are listed by shareholder number if they hold the same number of shares. *The percentages of total outstanding shares excluding treasury stock are displayed by rounding down after the three decimal points.

3,000

2,000

1,000

Volume

(thousands of shares) 8,000

6,000

4,000

2,000


(month) 4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3	4	5	6	7	8	9 10 11 12 1	2	3


				2009					2010						2011						2012						2013						2014						2015						2016						2017						2018						2019	2020

36 Valor Holdings Co., Ltd. Annual Report 2020

Valor Group

Segment		Subsidiaries

Supermarkets	Valor Co.,Ltd.	Ishinomaki Foods Co.,Ltd.
	Tachiya Co., Ltd.	Furuya Sangyo Co., Ltd.
	Shokusenkan-Taiyo Co.,Ltd.	Keirinkaku Co., Ltd.
	Kohseiya Co.,Ltd.	Shufu-no-Mise Shoji Chubu Honsha Co.,Ltd.
	Futabaya Co.,Ltd.	V-Solution Co., Ltd.
	Sanko Co.,Ltd.	Chubu Meat Co., Ltd.
	Terao Stores Inc.	Hida-OsakaBuna-Shimeji Co., Ltd. *
	Chubu Foods Co., Ltd.	Chubu Agri Co.,Ltd.
	Daien Foods Co., Ltd.	Valor Max Co., Ltd.***
	Fukui Chuo Tsukemono Co., Ltd.	VARO Co., Ltd.
	Honda Suisan Co., Ltd.

Drugstores	Chubu Yakuhin Co., Ltd.	V-drug International Co., Ltd.
	Hida Pharmaceutical LLC	V-drug Hong Kong Co., Ltd.
	Sun Pharmacy LLC

Home Improvement Centers	Daiyu Eight Co.,Ltd.	Nisshiki Co.,Ltd.
	Home Center Valor Co., Ltd.	Morosada Agri Co., Ltd.
	Time Co.,Ltd.	FIRST Co., Ltd.
	Alleanza Japan Co.,Ltd.

Sports Clubs	AXTOS Co., Ltd.	Approach Co.,Ltd.

Distribution-related operations	Chubu Ryutu Co., Ltd.	V-Flower Co., Ltd.
	Chubu Kosan Co., Ltd.	Shanghai Valor co., Ltd.
	MENTEX Co., Ltd.	Valor Agency Co., Ltd.
	Seiso Co., Ltd.	Japan Clean Services LLC
	VMC Co.,Ltd.

Others	Alleanza Holdings Co.,Ltd.	Gito Family Department Co., Ltd.
	Home Center Valor Co., Ltd.**	Chubu Hoken Service Co., Ltd.
	Amigo Co.,Ltd.	Core Support Co., Ltd. *
	Joker Co.,Ltd.	Core Support Vietnam Co.,Ltd.
	Agri Genki Okayama LLC	Valor Max Co., Ltd.***

Note: *In April 1 2020,Hida-OsakaBuna-shimeji Co.,Ltd. was merged into Chubu Agent Co.,Ltd. and Core Support Co.,Ltd. was merged into Valor Holdings Co., Ltd. **Pet Shop Business ***Same company

History

1958 Established Shufu-no-Mise Co., Ltd. in Ena-shi, Gifu and opened the first supermarket.

1969 Established Chubu Kosan Co., Ltd., a logistics subsidiary.

1970 Changed the company name to Shufu-no-Mise Valor Co., Ltd.

1974 Changed the company name to Valor Co., Ltd.

1977 Relocated the headquarters from Ena- shi to Tajimi- shi, Gifu.

1984 Established Chubu Yakuhin Co., Ltd., a drugstore subsidiary.

1985 Established Chubu Foods Co., Ltd., a prepared food manufacturing subsidiary.

1989 Established a distribution center in Tajimi- shi.

Started a material wholesale business for stores by Chubu Ryutu Co., Ltd.

1993 Listed on the Second Section of the Nagoya Stock Exchange.

1995 Merged with Fujiya Co., Ltd., a home improvement center company.

1996 Relocated the headquarters and the distribution center to the current location in Tajimi- shi.

1998 Established AXTOS Co., Ltd. and spun off the sports club business.

1999 Established MENTEX Co., Ltd., a facility maintenance service subsidiary.

2001 Established Hokuriku distribution center in Nanto- shi, Toyama.

2005 Acquired Tachiya Co., Ltd. and Youth Co., Ltd., supermarket subsidiaries.

Assigned to the First Section of Tokyo Stock Exchange and Nagoya Stock Exchange

2007 Acquired Sun Friend Co., Ltd (currently Syokusenkan- Taiyo Co., Ltd.), a supermarket subsidiary.

2012 Established Hokuriku processing center for fresh meat in Nanto- shi, Toyama.

Established Kani distribution center for products stored at ambient temperatures in Kani- shi, Gifu.

2013 Established Shizuoka integrated center in Shimada- shi, Shizuoka.

Established Kani distribution center for chilled products.

Established Ogaki processing center for fresh meat in Ogaki- shi, Gifu and Kani processing center for fresh vegetables and fruits in Kani- shi.

2015 Made a transition to a holding company and changed the company name to Valor Holdings Co.,Ltd.

2016 Established Nagoya Headquarters in Nakamura-kuNagoya-shi. Acquired Kohseiya Co., Ltd.,a supermarket subsidiary.

2018 Acquired Futabaya Co.,Ltd., a supermarket subsidiary.

Established capital and business partnership with Arcs Co.,Ltd. and Retail Partners Co.,Ltd.

2019 Acquired Sanko Co.,Ltd., a supermarket subsidiary.

Integrated the home improvement center business by a share exchange between Home Center Valor Co.,Ltd. and Alleanza Holdings Co.,Ltd.

Corporate Data

Valor Holdings Co., Ltd. Annual Report 2020 37

"Valor" is derived from a Late Latin word meaning 'a person of courage'.

We believe in courage as essential to fulfill our social responsibilities.

Forward Looking Statement

This report's coverage extends beyond current information and date for the Valor Group to future forecasts. These forecasts represent assumptions and viewpoint based on information available at the time of publication. The actual results may differ from the forecasts due to various circumstances and external environmental factors.

Valor Holdings Co.,Ltd.

Headquarters	661-1Ohari-cho,Tajimi-shi, Gifu 507-0062 Japan
	Phone: +81-572-20-0860
For IR-related Inquires	1957-2Kita-tanda, Hiromi, Kani-shi, Gifu 509-0214 Japan
Investor Relations & Public Relations	Phone: +81-574-60-0858
URL: https://valorholdings.co.jp/	IR Site URL: https://valorholdings.co.jp/ir/

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VALOR Holdings Co. Ltd. published this content on 03 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2020 09:20:18 UTC

Latest news about Valor Holdings Co., Ltd.

Valor Holdings Co., Ltd. agreed to acquire 24.99% stake in M-aid Co., Ltd. from Shojinkai Medical Association for ¥310 million	05-13	CI
Valor Holdings Co.,Ltd. Provides Consolidated Earnings Guidance for the Full Year Ending March 31, 2024	02-08	CI
Valor Holdings Co., Ltd. Announces Dividend Forecast for the Year Ending March 31, 2024	02-08	CI
VALOR HOLDINGS CO.,LTD Provides Consolidated Earnings Guidance for the Full Year Ending March 31, 2024	11-09	CI
Valor Holdings Co.,Ltd. Declares Dividend for Second Quarter Ended March 31, 2024, Payable on December 5, 2023; Provides Dividend Guidance for the Full Year Ending March 31, 2024	11-09	CI
Valor Holdings Co.,Ltd. Provides Consolidated Earnings Guidance for the Six Months Ending September 30, 2023 and Full Year Ending March 31, 2024	23-08-10	CI
Valor Holdings Co.,Ltd. Provides Dividend Guidance for the Second Quarter and Full Year Ending March 31, 2024	23-08-10	CI
Valor Holdings Co., Ltd. Reports Earnings Results for the Full Year Ended March 31, 2023	23-05-12	CI
Valor Holdings Co.,Ltd. Declares Dividend for the Fiscal Year Ended March 31, 2023, Payable on June 13, 2023	23-05-12	CI
Valor Holdings Co.,Ltd. Provides Consolidated Earnings Guidance for the Six Months Ending September 30, 2023 and Full Year Ending March 31, 2024	23-05-12	CI
Valor Holdings Co.,Ltd. Provides Dividend Guidance for the Second Quarter and Full Year Ending March 31, 2024	23-05-12	CI
Valor Holdings Co.,Ltd. Provides Dividend Guidance for the Fiscal Year Ending March 31, 2023	23-02-09	CI
VALOR HOLDINGS CO.,LTD. Provides Consolidated Earnings Guidance for the Fiscal Year Ending March 31, 2023	23-02-09	CI
Valor Holdings Co., Ltd. Declares Dividend for the Second Quarter Ended September 30, 2022, Payable on December 05, 2022 and Provides Dividend Guidance for the Year Ending March 31, 2023	22-11-10	CI
Valor Holdings Co., Ltd. Provides Consolidated Earnings Guidance for the Year Ending March 31, 2023	22-11-10	CI
Valor Holdings Co., Ltd. Provides Dividend Guidance for the Second Quarter of Fiscal Year Ending March 31, 2023; Provides Dividend Guidance for the Year Ending March 31, 2023	22-08-10	CI
Valor Holdings Co., Ltd. Provides Consolidated Earnings Guidance for the Six Months Ending September 30, 2022; Provides Earnings Guidance for the Year Ending March 31, 2023	22-08-10	CI
Valor Holdings Co., Ltd. Reports Earnings Results for the Full Year Ended March 31, 2022	22-05-12	CI
Valor Holdings Co., Ltd. Provides Consolidated Earnings Guidance for Six Months Ended September 30, 2022 and Full Year Ending March 31, 2023	22-05-12	CI
Valor Holdings Co., Ltd. Provides Dividend Guidance for the Fiscal First Half of 2023 and Full Year Ending March 31, 2023	22-05-12	CI
Valor Holdings Co., Ltd. Provides Consolidated Earnings Guidance for the Year Ending March 31, 2022	22-02-09	CI
Valor Holdings Co., Ltd. Provides Dividend Guidance for the Year Ending March 31, 2022	22-02-09	CI
Valor Holdings Co., Ltd. acquired Aoi Pharmaceutical LLC.	21-12-28	CI
Valor Holdings Co., Ltd. Provides Year End Dividend Forecast for the Fiscal Year Ending March 31, 2022	21-11-10	CI
Valor Holdings Co., Ltd. Provides Financial Guidance for the Fiscal Year Ending March 31, 2022	21-11-10	CI

Chart Valor Holdings Co., Ltd.

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Company Profile

VALOR HOLDINGS CO.,LTD., formerly VALOR CO., LTD., is a Japan-based company engaged in the processing and retail of food and other lifestyle-related goods. The Supermarket segment is mainly engaged in supermarket operation, food processing and wholesale, real estate leasing, warehousing, and mushroom cultivating and wholesale. The Home Center segment is engaged in home center operation. The Drug Store segment is engaged in the operation of drug stores. The Sports Club segment is engaged in the operation of sports clubs. The Logistic Related segment is engaged in the wholesale of food, grocery and commodities, logistics, equipment maintenance, store cleansing and real estate leasing. The Others segment engages in pet shop operation, apparel sale, real estate leasing, insurance agency, spa operations, tourist facilities management, the production and marketing of fruit and horticulture, as well as livestock agriculture. Through its subsidiary, It also engages in fish processing business.

Sector

Food Retail & Distribution

Calendar

2024-08-07 - Q1 2024 Earnings Release (Projected)

More about the company

Income Statement Evolution

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Ratings for Valor Holdings Co., Ltd.

Trading Rating

Investor Rating

ESG Refinitiv

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Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

2,418 JPY

Average target price

2,795 JPY

Spread / Average Target

+15.59%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

Sector Other Food Retail & Distribution

	1st Jan change	Capi.
VALOR HOLDINGS CO., LTD.	-0.94%	831M
WALMART INC.	+24.85%	530B
KROGER CO. (THE)	+13.33%	37.79B
SYSCO CORPORATION	+0.38%	36.26B
AHOLD DELHAIZE N.V.	+10.40%	29.22B
TESCO PLC	+7.44%	27.37B
WOOLWORTHS GROUP LIMITED	-15.32%	25.62B
GEORGE WESTON LIMITED	+18.61%	18.87B
AEON CO., LTD.	+8.31%	18.44B
CP ALL	+2.68%	14.03B

Other Food Retail & Distribution

Valor Holdings Co., Ltd.

Equities

9956

JP3778400006

Food Retail & Distribution

Valor : 2020 Annual Report

EPS Revisions