Zensho : 42th Annual Securities Report

About this update from Zensho Holdings Co., Ltd.

Annual Securities Report (Report pursuant to Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of Japan) The 42nd Fiscal Year (April 1, 2023, to March 31, 2024) Zensho Holdings Co., Ltd. This document is a translation of part of the Japanese original. The Japanese original has been disclosed in Japan in accordance with Japanese accounting standards and the Financial Instruments and Exchange Act of Japan. This document does not contain or constitute any guarantee and the Company will not compensate any losses and/or damage stemming from actions taken based on this document. In the case that there is any discrepancy between the Japanese original and this document, the Japanese original shall prevail. Contents.   Annual Securities Report (42nd Fiscal Year)   [Cover page] 1 PART I: COMPANY INFORMATION 2 I. OVERVIEW OF COMPANY 2 1. Summary of Business Results 2 2. History 4 3. Description of Business 7 4. Subsidiaries and Associates 8 5. Employees 14 II. BUSINESS OVERVIEW 16 1. Management Policy, Business Environment and Issues to Be Addressed, etc 16 2. Philosophy and Initiatives for Sustainability 18 3. Business Risks, etc 23 4. Management's Analysis on the Company's Financial Condition, Results of Operations and Cash Flow     Conditions 26 5. Material Contracts 32 6. Research and Development 32 III. STATUS OF EQUIPMENT 33 1. Overview of Capital Investments, etc 33 2. Principal Facilities 33 3. Plans for New Additions or Disposals, etc. of Facilities 36 IV. INFORMATION ON THE COMPANY 37 1. Information on the Company's Share, etc 37 2. Acquisitions of Treasury Shares 46 3. Dividend Policy 47 4. Corporate Governance, etc 48 V. FINANCIAL INFORMATION 77 1. Consolidated Financial Statements, etc 78 2. Non-Consolidated Financial Statements, etc 132 VI: STOCK-RELATED ADMINISTRATION FOR THE COMPANY 146 VII. CORPORATE REFERENCE DATA 147 1. Information on the Parent Company, etc 147 2. Other Reference Information 147 PART II: INFORMATION ON CORPORATE GUARANTORS, ETC., FOR THE COMPANY 148 [Cover page] [Document title] Annual Securities Report [Clause of stipulation] Article 24, Paragraph 1 of the Financial Instruments and Exchange Act of   Japan [Place of filing] Director-General, Kanto Local Finance Bureau [Filing date] June 28, 2024 [Fiscal year] The 42nd term (from April 1, 2023, to March 31, 2024) [Company name] Kabushiki Kaisha Zensho Holdings [Company name in English] Zensho Holdings Co., Ltd. [Title and name of representative] Kentaro Ogawa, Representative Director, Chairman, President & CEO [Address of head office] 18-1, Konan 2-chome,Minato-ku, Tokyo, Japan [Telephone number] +81-3-6833-1600 [Name of contact person] Kiyohiko Niwa, Executive Officer, Senior General Manager of Group   Finance and Accounting Division [Nearest place of contact] 18-1, Konan 2-chome,Minato-ku, Tokyo, Japan [Telephone number] +81-3-6833-1600 [Name of contact person] Kiyohiko Niwa, Executive Officer, Senior General Manager of Group   Finance and Accounting Division [Place for public inspection] Tokyo Stock Exchange, Inc.   (2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo, Japan) － 1 － PART I: COMPANY INFORMATION I. OVERVIEW OF COMPANY 1. Summary of Business Results Business results of group (Million yen, unless otherwise stated) Term 38th 39th 40th 41st 42nd             Fiscal year-end March 2020 March 2021 March 2022 March 2023 March 2024             Net sales 630,435 595,048 658,503 779,964 965,778             Ordinary profit 19,903 12,215 23,117 28,081 50,913             Profit attributable to owners of 11,978 2,259 13,869 13,265 30,693 parent           Comprehensive income 8,594 5,324 22,080 18,180 40,807             Net assets 86,793 85,430 104,486 115,837 214,652             Total assets 365,853 396,023 427,172 469,563 748,056             Net assets per share (yen) 563.30 560.87 679.19 761.63 1,171.76             Basic earnings per share (yen) 80.31 14.82 91.17 87.30 195.41             Diluted earnings per share (yen) － － － － －             Shareholders' equity ratio (%) 23.7 21.5 24.2 24.6 28.7             Return on equity (%) 15.1 2.6 14.7 12.1 18.6             Price-earnings ratio (times) 25.7 191.1 31.4 45.0 33.0             Cash flows from operating 33,575 29,686 45,430 53,078 85,985 activities           Cash flows from investing (35,188) (23,519) (31,550) (35,200) (125,387) activities           Cash flows from financing (25,753) 1,753 (11,986) 1,844 54,633 activities           Ending balance of cash and cash 28,928 37,643 42,414 64,690 82,171 equivalents           Number of employees 14,402 16,253 15,929 17,324 16,806 [average number of part-time [50,148] [51,125] [51,118] [56,313] [66,418] employees] (persons)           Notes: 1. Diluted earnings per share are not stated, as there is no potential share with dilutive effects.   The Group has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the 40th term. Figures for the summary of business results from the 40th term onwards are presented after applying these accounting standards, etc. The Company introduced Board Benefit Trust (BBT) in the 41st term. From the 41st term onwards, in the calculation of net assets per share, the Company shares held as trust assets for the BBT are included in the number of treasury shares deducted from the number of issued shares at the fiscal year-end, while in the calculation of basic earnings per share, those are included in the number of treasury shares deducted from the average number of shares outstanding during the period. The Group has applied the "Accounting Standard for Current Income Taxes." (ASBJ Statement No. 27, October 28, 2022) and the transitional treatment as provided for in the proviso to section 20-3 from the beginning of the 42nd term. Figures for the summary of business results for the 42nd term are presented after applying these accounting standards, etc. － 2 － (2) Business results of reporting company (Million yen, unless otherwise stated) Term 38th 39th 40th 41st 42nd             Fiscal year-end March2020 March2021 March2022 March2023 March 2024             Net sales 254,937 238,248 216,433 256,344 294,751             Ordinary profit 10,276 4,699 5,571 13,436 7,782             Profit 7,159 2,622 5,415 11,961 7,530             Share capital 26,996 26,996 26,996 26,996 47,497             Total number of issued shares 154,862,825 154,862,825 154,862,825 154,862,825 160,733,225 (shares)           Net assets 79,891 75,884 78,095 86,248 150,921             Total assets 350,250 360,602 373,293 400,507 535,482             Net assets per share (yen) 519.58 498.83 513.38 568.08 766.67             Dividends per share (yen) 20.00 20.00 22.00 24.00 50.00 [Interim dividend per share] (10.00) (10.00) (11.00) (12.00) (25.00) Basic earnings per share (yen) 48.00 17.20 35.60 78.72 43.93             Diluted earnings per share (yen) － － － － －             Shareholders' equity ratio (%) 22.8 21.0 20.9 21.5 28.2             Return on equity (%) 10.6 3.4 7.0 14.6 6.3             Price-earnings ratio (times) 42.9 164.6 80.4 49.9 146.6             Payout ratio (%) 41.7 116.3 61.8 30.5 113.8             Number of employees 600 627 655 684 790 [average number of part-time [129] [146] [144] [109] [115] employees] (persons)           Total shareholder return (%) 81.2 112.0 114.0 156.4 256.5 [Benchmark: TOPIX Net Total (90.5) (128.6) (131.2) (138.8) (196.2) Return Index]           Highest share price (yen) 2,608 3,125 3,005 4,150 9,274             Lowest share price (yen) 1,677 1,731 2,528 2,835 3,910 Notes: 1. Diluted earnings per share are not stated, as there is no potential share with dilutive effects. 2.The highest and lowest share prices are those of the First Section of the Tokyo Stock Exchange before April 3, 2022, and of the Prime Market of the Tokyo Stock Exchange after April 4, 2022. 3.The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the 40th term. Figures for the summary of business results from the 40th term onwards are presented after applying these accounting standards, etc. The Company introduced Board Benefit Trust (BBT) in the 41st term. From the 41st term onwards, in the calculation of net assets per share, the Company shares held as trust assets for the BBT are included in the number of treasury shares deducted from the number of issued shares at the fiscal year-end, while in the calculation of basic earnings per share, those are included in the number of treasury shares deducted from the average number of shares outstanding during the period. The Company has applied the "Accounting Standard for Current Income Taxes." (ASBJ Statement No. 27, October 28, 2022) and the transitional treatment as provided for in the proviso to section 20-3 from the beginning of the 42nd term. Figures for the summary of business results for the 42nd term are presented after applying these accounting standards, etc. － 3 － 2. History Date Event Jun. 1982 Zensho Co., Ltd. (currently Zensho Holdings Co., Ltd.) was established, and located its head office     annexed to Yokohama factory in Tsurumi-ku, Yokohama in Kanagawa Prefecture, Japan. Jul. 1982 Opened its first lunchbox shop (Namamugi shop) in Tsurumi-ku, Yokohama, Kanagawa Prefecture, Japan. Nov. 1982 Opened its first "inside a building" Sukiya (Gyudon) restaurant (Namamugi Ekimae restaurant) in     Tsurumi-ku, Yokohama, Kanagawa Prefecture, Japan. Jul. 1987 Opened its first freestanding type restaurant (Mito restaurant) in Mito, Ibaraki Prefecture, Japan. Aug. 1997 Shares listed on the Japan Securities Dealers Association over-the counter market. Sep. 1999 Shares listed on the Second Section of the Tokyo Stock Exchange. Jul. 2000 Acquired Coco's Japan Co., Ltd. to enter the domestic restaurant business. Oct. 2000 Established Techno Support Co., Ltd. (currently Techno Construction Co., Ltd.) to streamline furnishing     and maintenance. Nov. 2000 Established Global Foods Co., Ltd. (currently Zensho Tradings Co., Ltd.) to streamline raw material     procurement. Sep. 2001 Share listed on the First Section of the Tokyo Stock Exchange. Jun. 2002 Established Global Table Supply Co., Ltd. to streamline procurement of consumables, equipment. Oct. 2002 Established Hamasushi Co., Ltd., to operate sushi restaurant business. Dec. 2002 Acquired Big Boy Japan, Inc. to expand domestic restaurant business. Feb. 2004 Consolidated the headquarter functions and moved the head office to the current place (18-1, Konan 2-     chome, Minato-ku, Tokyo, Japan). Jan. 2005 Established Coco's Shanghai Co., Ltd. (currently Zensho Restaurant (Shanghai) Co., Ltd.) to operate     Sukiya in China. Mar. 2005 Acquired Nakau Co., Ltd. to expand the fast-food business. Sep. 2005 Established Food Safety Pursuing Department (currently Group Food Safety Assurance Division) to     enhance the approach to food safety. Apl. 2006 UD Foods Co., Ltd. (currently Sanbishi Co., Ltd.) acquired soy sauce manufacturing business from     Sanbishi Co., Ltd. May. 2006 Established Central Analysis Center to enhance the food safety initiatives. Jun. 2006 Established Global Pizza System Co., Ltd. (currently Tolona Japan Co., Ltd.) in the manufacturing and     sales business to sell frozen foods for home use, etc. Aug. 2006 Established Global Fresh Supply Co., Ltd. to streamline logistics. Feb. 2007 Acquired United Veggies Co., Ltd., to enter the fruit and vegetable sales business. Mar. 2007 Acquired Sunday's Sun Inc. (currently Jolly-Pasta Co., Ltd.) to expand domestic restaurant business.     Launched fair trade initiatives in Democratic Republic of Timor-Leste. Jul. 2007 Opened Sukiya (Gyudon) restaurant in Okinawa Prefecture and established the presence in all prefectures     in Japan. Aug. 2007 Acquired Inter-Vision Consortium Inc. (currently Human Logic Laboratory Co., Ltd.) to expand personnel     strategy. Jan. 2008 Established Zenshoen Co., Ltd. to enter the livestock business. Jun. 2008 Established Global IT Service Co., Ltd. to streamline business through information technologies. Aug. 2008 Established ZENSHO DO BRASIL COMERCIO DE ALIMENTOS LTDA to operate Sukiya in Brasil. Oct. 2008 Acquired Hanaya Yohei Co., Ltd. to expand domestic restaurant business. Dec. 2010 Established Zensho Best Crew Co., Ltd. to streamline the recruiting operation. Feb. 2011 Established ZENSHO (THAILAND) CO., LTD. to operate Sukiya in Thailand. May. 2011 Established Zensho Spin-Off Preparation Co., Ltd. (currently Sukiya Co., Ltd.). Oct. 2011 Shifted to a holding company structure to start global business development and changed the corporate     name from Zensho Co., Ltd. to Zensho Holdings Co., Ltd.     Changed the corporate name from Zensho Spin-Off Preparation Co., Ltd. to Zensho Co., Ltd. (currently     Sukiya Co., Ltd.).     Established ZENSHO FOOD DE MEXICO S.A. DE C.V. to operate Sukiya in Mexico. Dec. 2011 Established GFF CO., LTD. to expand manufacturing function. Mar. 2012 Established ZENSHO FOODS MALAYSIA SDN. BHD. to operate Sukiya in Malaysia. Apr. 2012 Established Zensho Business Service Co., Ltd. to promote employment of challenged persons and to     support their self-reliance. Oct. 2012 Established Zensho Clean Energy Co., Ltd. to conduct power generation business using natural energy     sources and to supply and sell the electricity. Nov. 2012 Acquired Maruya Co., Ltd. (currently JOY MART CO., LTD.) to enter retail business. Jan. 2013 Established Zensho Rice Co., Ltd. in the manufacturing and sales business to sell brown and milled rice. － 4 － Date Event       Apr. 2013 Established Zensho Taiwan Co., Ltd. to operate Sukiya in Taiwan.     Established PT. ZENSHO INDONESIA. to operate Sukiya in Indonesia. May. 2013 Acquired Pocino Foods Company in the U.S. to expand business and manufacturing function. Oct. 2013 Acquired Maruei Co., Ltd. (currently JOY MART CO., LTD.) to expand retail business. Dec. 2013 Established Nihon Retail Holdings, Co., Ltd. to oversee retail business. Jan. 2014 Acquired Kaigo Service Kagayaki Co., Ltd. (currently Kagayaki Co., Ltd.) to enter the nursing care     business. Jun. 2014 Zensho Co., Ltd. (currently Sukiya Co., Ltd.) split off Kita-Nihon Sukiya Co., Ltd., Kanto Sukiya Co.,     Ltd., Tokyo Sukiya Co., Ltd., Chubu Sukiya Co., Ltd., Kansai Sukiya Co., Ltd., Chu-Shikoku Sukiya Co.,     Ltd, and Kyushu Sukiya Co., Ltd. as successor companies, to establish a local community-based restaurant     management structure. Aug. 2014 Acquired Owariya Co., Ltd. (currently JOY MART CO., LTD.) to expand retail business. Oct. 2014 A Dining Co., Ltd. succeeded restaurant business and fast-food business from Zensho Co. Ltd. (currently     Sukiya Co., Ltd.) by absorption-type split, to enable Zensho Co. Ltd. to concentrate, expand and further     develop the Sukiya business. Jan. 2015 Established Zensho USA Corporation to oversee Americas business. Feb. 2015 Established Zensho Factory Holdings Co., Ltd. to oversee production department. Apr. 2015 Established ZENSHO CooCa Co., Ltd. to introduce original e-money. May. 2015 Established Kagayaki Nursery Facilities Co., Ltd. to operate in-house nursery facilities. Jun. 2015 Acquired Mizushita Farm Co., Ltd. to expand livestock business. Jul. 2015 TAG-1 Co., Ltd. succeeded restaurant business by absorption-type split and Zensho Café Co., Ltd.     succeeded fast-food business by business transfer from A Dining Co., Ltd. to expand the business as a     specialty restaurant.     TR Factory Co., Ltd. succeeded manufacturing business of frozen pizza, etc. from Tolona Japan Co., Ltd.     by absorption-type split, to streamline the operation through separation of the sales and manufacturing     functions. Jan. 2016 Established ZENSHO VIETNAM CO., LTD. to operate Sukiya in Vietnam. Apr. 2016 ZENSHO ICHIBAN MALAYSIA SDN. BHD. acquired fast-food business to expand it in Malaysia. Jul. 2016 Established Katsuan Co., Ltd. to expand fast-food business. Sep. 2016 Kyubeiya Co., Ltd. and Setoudon Co., Ltd. succeeded fast-food business from A Dining Co., Ltd. by     absorption-type split to expand the business as a specialty restaurant. Nov. 2016 Acquired Royalhouse Ishioka Co., Ltd. and Senior Support Co., Ltd. to expand the nursing care business.     Established Zensho China Holdings Co., Ltd. to oversee China business.     Acquired Fujita Cooperation Co., Ltd. (currently JOY MART CO., LTD.) to expand retail business. Apr. 2017 Established Zensho Insurance Service Co., Ltd. to operate non-life insurance agency services. May. 2017 Established Olive Hill Co., Ltd. to expand restaurant business. Jun. 2017 Established Nihon Kaigo Holdings Co., Ltd. to oversee the nursing care business. Jul. 2017 Acquired NYEREG Co., Ltd. to expand the nursing care business. Dec. 2017 Atack Co., Ltd. (currently JOY MART CO., LTD.) succeeded retail business by absorption-type split to     expand it. May. 2018 Established ZENSHO JAPANESE RESTAURANT COMPANY PTE. LTD. to expand fast-food business     in Singapore. Aug. 2018 Established ZENSHO (PHILIPPINES), INC. to operate Sukiya in Philippines. Oct. 2018 Established ZENSHO HONG KONG CO., LTD. to operate Sukiya in Hong Kong. Nov. 2018 Acquired Advanced Fresh Concepts Corp. to enter take-out sushi business in USA.     Acquired I Medicare Co., Ltd. to expand the nursing care business. Jan. 2019 Established Nihon Restaurant Holdings Co., Ltd. (currently Zensho Global Restaurant Holdings Co., Ltd.)     to oversee restaurant business. Feb. 2019 Established ZENSHO SOUTH EAST ASIA HOLDINGS PTE. LTD. to oversee Southeast Asia business.     Established ZENSHO HOLDINGS MALAYSIA SDN. BHD. to oversee Malaysia business. May. 2019 Acquired TCRS Restaurants Sdn. Bhd. to expand fast-food business in Malaysia. Jun. 2019 Established JinZai Co., Ltd. to realize a society where people can co-exist with various international     human resources. Aug. 2019 Converted Jolly-Pasta Co., Ltd. into a wholly owned subsidiary by the share exchange (Delisted). Dec. 2019 Established Zensho Europe Holdings B.V. to oversee Europe business.     Acquired Worldfood To Go, S.L. to enter take-out-sushi business in Spain. Feb. 2020 Converted Coco's Japan Co., Ltd. into a wholly owned subsidiary by the share exchange (Delisted). － 5 － Date Event       Mar. 2020 Sukiya Honbu Co., Ltd., as the surviving company, merged with nine regional Sukiya companies, as the     dissolving companies, to streamline Sukiya management.     Changed the corporate name from Sukiya Honbu Co., Ltd. to Sukiya Co., Ltd. Apr. 2020 Established Zensho Store Support Co., Ltd. to promote employment of challenged persons and to support     their self-reliance. Aug. 2020 Acquired Seiun Sake Brewery Co., Ltd. to enter brewing business. Mar. 2021 Maruya Co., Ltd., as a surviving company, merged with four companies (Maruei Co., Ltd., Owariya Co.,     Ltd., Fresh Corporation, and Atack Co., Ltd.), as the dissolving companies, to further expand the     management of retail business.     Changed the corporate name from Maruya Co., Ltd. to JOY MART CO., LTD. Jun. 2021 Established Global MD Holdings Co., Ltd. to expand domestic and international procurement. Jul. 2021 Acquired Marix Co., Ltd. to enter aquaculture business. Sep. 2021 Established Zensho Fast Holdings Co., Ltd. (currently Zensho Global Fast Holdings Co., Ltd.) to further     enhance Japanese specialty restaurant business. Oct. 2021 Acquired Saito Shoten Co., Ltd. to expand manufacturing and sales business of brown and milled rice. Mar. 2022 Acquired Igarashi Suisan Co., Ltd. to expand aquaculture business. Apr. 2022 Established Shinagawa Design Co., Ltd. to improve UX design quality for all the Group business     categories.     Moved from the First Section to the Prime Market due to the revision of the market classification of the     Tokyo Stock Exchange. Apr. 2023 Acquired Lotteria Co., Ltd. to enter hamburger restaurant business. May. 2023 Acquired Sushi Circle Gastronomie GmbH to enter take-out sushi business in Germany. Sep. 2023 Acquired SnowFox Topco Limited to enter take-out sushi business in UK. － 6 － 3. Description of Business The Group consists of 168 companies, the Company and 167 subsidiaries, and conducts a broad range of business activities in the food business. The Company falls under the category of specified listed companies, etc., and among the standards for determining insignificance of important facts with respect to insider trading regulations, numerical standards defined in comparison with the scale of the listed company will be judged based on the consolidated figures. From the current fiscal year, the Company has changed its reporting segments. As described in "V. FINANCIAL INFORMATION, 1. Consolidated Financial Statements, etc., (1) Consolidated Financial Statements, Notes to the Consolidated Financial Statements, (Segment Information, etc.). Global Sukiya segments (share of the Group sales: 27.5%) Sukiya Co., Ltd., and its overseas subsidiaries such as Zensho Restaurant (Shanghai) Co., Ltd. directly operates "Sukiya," a Gyudon restaurants chain across Japan, China, Southeast Asia and Central and South America to provide safe, delicious food at affordable prices to a broad range of customers which are included families. (2) Global Hamasushi segments (share of the Group sales: 20.4%) Hamasushi Co., Ltd. and its overseas subsidiaries such as Zensho Restaurant (Shanghai) Co., Ltd. directly operates "Hamasushi" sushi restaurants chain across mainly in Japan and China. In addition to sushi using fresh seafood, the chain offers a wide range of side dishes such as noodles, desserts and drinks, which are enjoyed by both children and adults. (3) Global Fast Food segments (share of the Group sales: 25.2%) Nakau Co., Ltd. operates both directly-operated and franchised restaurants of "Nakau," oyakodon rice bowl dishes and Kyoto style udon noodle chain. Lotteria Co., Ltd. operates both directly-operated and franchised restaurants of "Lotteria," hamburger chain. A Dining Co., Ltd. directly operates ramen specialty restaurants "Denmaru," etc. mainly in Kanto regions. Katsuan Co., Ltd. directly operates "Katsuan," tonkatsu specialty restaurants mainly in Kanto and Chubu regions. Kyubeiya Co., Ltd. directly operates "Kyubeiya" restaurants, which offer Musashino udon noodle, tempura, and shabushabu, in Kanto region. Setoudon Co., Ltd. directly operates" Setoudon," etc. Sanuki udon noodle specialty self-service restaurants mainly in Kanto region. Zensho Café Co., Ltd. directly operates "Moriba Coffee," etc. a café chain which offers fair trade coffee, mainly in Kanto region. TCRS Restaurants Sdn. Bhd. directly operates "The Chicken Rice Shop," etc. chicken rice specialty chain restaurants, in Malaysia. "AFC" and "Zenshi" of Advanced Fresh Concepts Corp., "sushicircle" of Sushi Circle Gastronomie GmbH, "SNOWFOX"," Bento"," Taiko," "Yo!" and "SNOWFRUIT" of SnowFox Topco Limited operates both directly-operated and franchised take-out sushi stores, etc. (4) Restaurants segments (share of the Group sales: 14.6%) Coco's Japan Co., Ltd. offers both directly-operated and franchised restaurants of "Coco's," a standard restaurant chain across Japan. Big Boy Japan Inc. directly operates hamburger steak and steak restaurant chain. It operates "BigBoy" etc. mainly in Kanto, Kansai and Tohoku regions, and "Victoria Station" restaurants in Hokkaido region. Jolly-Pasta Co., Ltd. directly operates "Jolly Pasta," pasta specialty restaurant chain, mainly in Kanto and Kansai regions. TAG-1 Co., Ltd. directly operates "Jukusei Yakiniku Ichiban", etc., barbeque restaurants mainly in Kanto and Kansai regions. Olive Hill Co., Ltd. directly operates "OLIVENOOKA," specialty Italian restaurant chain in Kanto region. Hanaya Yohei Co., Ltd. directly operates "Hanaya Yohei," Japanese-cuisine restaurants, etc. in Kanto region. Retail segments (share of Group sales: 8.1%) JOY MART CO., LTD. operates supermarkets. United Veggies Co., Ltd. is mainly engaged in the sale of fruits and vegetables. － 7 － Corporate and Support segments (share of Group sales: 0.5%) GFF CO., LTD. is mainly engaged in the production of foods. Zensho Tradings Co., Ltd. is mainly engaged in the procurement and sale of food materials. Global Fresh Supply Co., Ltd. is mainly engaged in the nationwide distribution of food materials. Techno Construction Co., Ltd. is mainly engaged in the construction of restaurant and store facilities and maintenance. Global Table Supply Co., Ltd. is mainly engaged in the sale of equipment and uniforms. Other segments (share of Group sales:3.7%) Tolona Japan Co., Ltd. is mainly engaged in the sale of frozen foods for home use, etc. Sanbishi Co., Ltd. is mainly engaged in the production and sale of soy sauce and other seasonings. Kagayaki Co., Ltd. is mainly engaged in nursing care business. Zensho Rice Co., Ltd. is mainly engaged in the sale of brown and milled rice. The following chart illustrates the business structure of the Group. － 8 －

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