BUSINESS REPORT Fiscal Year ended March 31, 2016

I. Status of the Group (1) Review of Operations for the Fiscal Year 1) Progress of operations and results During the fiscal year under review, the Japanese economy held to a path of gradual recovery amid a scenario in the first half of the fiscal year where stronger corporate earnings, a more upbeat jobs environment and other such positive developments emerged against a backdrop of firming equities markets, a weakening yen and lower oil prices, and underpinned by various measures being taken by the government and the Bank of Japan. However, the situation remains unpredictable given prevailing uncertainties with respect to the economic outlook which became evident in the latter half amid materializing risk of an economic slowdown in China and emerging nations in conjunction with a drastically appreciating yen and stock price volatility since the beginning of 2016. In the consumer electrical appliance retail industry to which the Company belongs, demand to replace household necessities generated a strong and favorable market for certain products, yet durable consumer goods continued to suffer from a prolonged pullback in spending amid a situation of demand having been eroded by an earlier surge in sales fueled at the time by the Japanese government’s “eco- points” program for electrical appliances and a rush to buy products ahead of Japan’s consumption tax hike. From a product perspective, even though results of television sales were favorable due to a trend of rising single unit prices amid moves toward larger screen sizes and growing demand for 4K televisions, performance for the full year was lackluster given sense that the trend of increasing unit prices ongoing since the beginning of the year has subsided and adverse effects of the consumption tax increase. Meanwhile, refrigerators, washing machines, microwave ovens and other cooking appliances, vacuum cleaners, hair and beauty appliances, and other white goods generated firm results. The sales environment for air conditioning units continued in an unstable manner with substantial fluctuations from season to season, such as a hot spell over the summer months, a warm winter after the third quarter, then heavy snowfalls and drops in temperature in the beginning of the year. Also, market conditions were weak for computers, digital cameras, mobile phones and other home information appliances in general. Against this backdrop in the electrical appliance market, the Group has been implementing various structural reforms over the last several years such as those involving “Implementation of Personnel System Reform” and “Improvement and Reform of Store Efficiency.” In addition, with the aim of providing better customer-oriented service leveraging strengths derived from operating one of Japan’s largest network of stores, we have also been taking active steps to develop into a leading company in the Internet of Things (IoT) era. To that end, we have been promoting services that include: 1. lifestyle support services that provide peace of mind (services that involve keeping a watchful eye on elderly people, New The Anshin comprehensive warranties for home appliances and electronics, long term guarantees, etc.); 2. smart house services (YAMADA SXL HOME CO., LTD. and Yamada Wood House Co., Ltd.); 3. home renovation services (Housetec Inc.); 4. Yamada online shopping mall services (Yamada Mall and YAMADA WEB COM); 5. environmental solutions business (“outlet & reuse” stores, CIC Co., Ltd., Inversenet Co., Ltd., Azuma Metal Co., Ltd.); 6. financing and credit card services (Yamada Financial Co., Ltd., loyalty point program membership services, services for corporate customers, etc.), and; proprietary merchandise development services (the Herb Relax series, Every Pad series, designer home appliances series, etc.). In the area of sales, we eliminated competition among our own stores by forging ahead with store closing on a large scale and made substantial gains in terms of store efficiency results. The latter was achieved by readjusting product mixes through renovations of stores and conversions of store formats, pursuing efforts to optimize inventories, and striving for optimal and maximum sales efficiencies by taking a systematic approach with respect to staffing. We have also been engaging in efforts that involve

developing proprietary IoT business, promoting various structural reforms, shifting from quantity to quality, and enhancing what we offer by going from physical products to intangible services. As a result, despite operating in a market for electrical appliances that has been lackluster partially due to the prolonged pullback in spending resulting from government policies and the consumption tax hike, we have achieved considerable year-on-year improvement in gross profit margin, and we have also attained positive results from our efforts to substantially reduce various selling, general and administrative expenses. Going forward, under a management framework consisting of three representative directors (as of April 1, 2016), the Yamada Denki Group will act as one of Japan’s largest network and services IoT company as it continues to take on challenges that involve working to achieve further positive outcomes by developing and promoting new businesses, enhancing and forging ahead with various structural reforms, and fortifying our existing businesses. The Group aims to increase its social value, and develop together with society. To this end, we engage in ongoing CSR-oriented operations that are genuine, and continue to carry out CSR activities proactively. Details of the Group’s CSR activities are continuously published in its CSR REPORT as well as Monthly CSR Activities, which are posted on the Company website (http://www.yamada- denki.jp/csr/index.html). Please note that some of these documents are published in Japanese only. As of the end of the fiscal year under review, we have 947 consolidated retail stores (comprising 637 stores directly managed by the Company, 161 stores managed by Best Denki Co., Ltd. and 149 stores operated by other consolidated subsidiaries), and a total of 12,087 retail stores overall with the inclusion of those managed by our subsidiaries and franchise stores. As a result of the above, consolidated net sales for the fiscal year under review amounted to ¥1,612,735 million, down 3.1% year on year, operating income totaled ¥58,158 million, up 192.0% year on year, ordinary income was ¥62,734 million, up 76.5% year on year, and profit attributable to owners of parent was ¥30,395 million, up 225.4% year on year. Investors should be aware that our net sales have decreased in comparison with the previous fiscal year due to extraordinary factors. For one, the sales figure for the prior fiscal year includes sales recorded for deliveries made on or after April 1, 2014 for certain orders received before the consumption tax increase surge in demand prevailing up to March 31, 2014. Also, the accounting period of the Company differs from that of its consolidated subsidiaries (on a nonconsolidated basis it is April 1 to the end of March in the following year, while on a consolidated subsidiary basis it is March 1 to the end of February in the following year), which also had a negative impact on year-on-year sales. Also, as a special factor, foreign exchange losses of ¥4,054 million were recorded owing to the sharp yen appreciation that has been occurring since January 2016. For reference, when adjusting ordinary income to exclude this special variable, the adjusted amount is ¥66,789 million, which is roughly the amount forecasted in the earnings forecasts. Sales of the corporate group by item (Millions of yen) Previous Fiscal Year Current Fiscal Year Fiscal Year (April 1, 2014 to March 31, (April 1, 2015 to March 31, Change (Decrease) Items 2015) 2016) Amount % Amount % Amount % Home electrical appliances/ 1,439,142 86.5 1,392,336 86.3 (46,806) (3.3) home information appliances Other products 225,227 13.5 220,399 13.7 (4,828) (2.1) Total 1,664,370 100.0 1,612,735 100.0 (51,635) (3.1)

Note: Consumption tax is not included. 2) Capital investment Capital investment during the fiscal year under review totaled ¥26,901 million and mainly included the following:

¥21,232 million for buildings and structures, and tools, furniture, and fixtures for Tecc Land Ageo and other new stores, etc., ¥455 million for land for business use, etc., and ¥5,213 million for guarantee deposits for Concept LABI TOKYO and others. 3) Capital procurement At a meeting of the Board of Directors held on May 7, 2015, the Company made a resolution to enter into an agreement with SoftBank Corp. (as of July 1, 2015, its corporate name was changed to SoftBank Group Corp.) on a capital and business alliance and to dispose of treasury stock through a private placement to SoftBank Corp., and received a payment of ¥22,760 million on May 25, 2015. 4) Business transfers, absorption-type company split or incorporation-type company split N/A 5) Business transfers from other companies N/A 6) Succession of rights and obligations relating to other entities’ business as a result of absorption- type merger or company split The Company executed an absorption-type merger with its wholly-owned subsidiary Kimuraya Select Co., Ltd. with an effective date of September 1, 2015. 7) Acquisition or disposal of shares, other equities, or subscription rights to shares of other companies N/A (2) Trends in Operating Results and Assets Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015 Net sales 1,701,489 1,893,971 1,664,370 1,612,735 (millions of yen) Ordinary income 47,906 50,187 35,537 62,734 (millions of yen) Profit attributable to owners of parent 22,203 18,666 9,340 30,395 (millions of yen) Basic earnings per share 23.56 20.21 11.73 38.22 (yen) Total assets 1,138,389 1,196,288 1,122,407 1,146,722 (millions of yen) Net assets 555,391 553,354 509,397 557,722 (millions of yen) Note: At the meeting of the Board of Directors held on August 12, 2013, the Company passed a resolution to conduct a ten-for-one stock split effective October 1, 2013. However, the Basic earnings per share amounts shown here were calculated on the assumption that the aforesaid stock split was conducted at the beginning of Fiscal 2012. (3) Important Parent Company and Subsidiaries 1) Relationship with the parent company N/A

2) Major subsidiaries

Ratio of Voting Capital Company Name Rights Principal Business (Millions of yen) (%) Minami-Kyushu Yamada Denki Sale of home electrical appliances and home 100 60.0 Co., Ltd. information appliances, etc. Sale of home electrical appliances and home Okinawa Yamada Denki Co., Ltd. 100 100.0 information appliances, etc. Sale of home electrical appliances and home Cosmos Berry’s Co., Ltd. 100 100.0 information appliances, etc. Sale of home electrical appliances and home Matsuya Denki Co., Ltd. 100 100.0 information appliances, etc. Sale of home electrical appliances and home Seiden Co., Ltd. 100 100.0 information appliances, etc. Yamada Financial Co., Ltd. 50 66.0 Credit card business Sale of home electrical appliances and home Kyushu Tecc Land Co., Ltd. 75 100.0 information appliances, etc. Industrial waste processing consignment CIC Co., Ltd. 81 84.6 business Yamada Eco Solution Co., Ltd 20 70.0 Product delivery and installation business Inversenet Co., Ltd. 122 77.1 Sale of used computers Sale of home electrical appliances and home Project White Co., Ltd. 10 100.0 information appliances, etc. Contracting, design and construction for YAMADA SXL HOME CO., LTD. 9,068 51.9 detached houses, and construction and sale of detached tract houses Housetec Inc. 350 100.0 Manufacture and sale of housing equipment Sale of home electrical appliances and home BEST DENKI CO., LTD. 37,892 52.1 information appliances, etc. Millions of U.S. Yamada Denki (Shenyang) 100.0 Sale of home electrical appliances and home dollars Commercial Co., Ltd. (50.0) information appliances, etc. 66 Millions of U.S. Yamada Denki (China) Investment dollars 100.0 Investment, wholesaling Co., Ltd. 30 Sale of pharmaceuticals and daily necessities, Y’s select Co., Ltd. 10 100.0 etc. Notes: 1. The ratio of voting rights within parentheses represents the ratio of indirectly held voting rights. 2. Y’s select Co., Ltd. was newly established as of July 1, 2015 through an incorporation-type split from Kimuraya Select Co., Ltd. 3. On September 1, 2015, Kimuraya Select Co., Ltd. merged with the Company through an absorption-type merger. (4) Issues the Group will be Addressing Looking ahead to the fiscal year ending March 31, 2017, although we expect a negative effect from financial market fluctuation, which has been observed in stock prices and exchange rates since January 2016, and also increased risk of economic slowdown in the emerging countries, notably China. We also expect a pause to financial market adjustments. Accordingly, the future outlook continues to be unclear. Nevertheless, in Japan, factors such as increased consumer spending, which is a result of personal incomes improving under a more positive employment environment, lower resource prices, and a firm increase in capital expenditure indicate that corporate earnings will continue to improve. In addition, we also expect a lift in markets that benefit from events such as the Rio de Janeiro Olympics that will be held over the summer and a surge in demand ahead of the consumption tax hike in April 2017 is also expected, albeit limited. Therefore, overall, we expect economic activity in Japan to continue on a track of gentle recovery. The consumer electrical appliance retail market, in which the Group belongs, will enjoy underlying support from the aforementioned firm economic activity, and it is expected to perform steadily owing to the increased demand for visual-related products accompanying the Olympics, a firm demand for upgrading white

goods, and a (limited) surge in demand ahead of the price hike in consumption tax. Operating as a consumer electrical appliance retailer under this market environment, we will continue to implement structural reforms and initiatives with medium- to long-term focuses. While working to broaden and deepen our business range, we will work to “shift from quantity to quality” by developing new businesses designed for improved customer satisfaction via the transition “from products to services” through original adoption of IoT utilizing the strengths of Japan’s largest-scale store network and service network; by continuing to promote various structural reforms; and by reinforcing existing businesses. In this way, we will raise profitability by improving the gross profit margin and reducing selling, general and administrative expenses, and, at the same time, boost corporate value. As a leading company in the consumer electrical appliance retail industry, we will aim to develop relationships of trust with a variety of stakeholders. We will also continue to promote CSR-oriented operations in which we leverage Group synergies, increase our social value, and develop together with society. (5) Principal Business (As of March 31, 2016) The Group mainly operates an expansive store network of large-scale home electrical appliance specialty stores that primarily handle home electrical appliances and digital-related products, and has business locations throughout Japan. (6) Principal Offices and Plants (As of March 31, 2016) 1) Yamada Denki Co., Ltd.

Hokkaido 34 Saitama 33 Shizuoka 13 Tottori 5 Saga 7 Aomori 10 Chiba 33 Gifu 10 Shimane 5 Oita 5 Akita 11 Tokyo 39 Aichi 29 Okayama 14 Nagasaki 5 Iwate 10 Kanagawa 34 Shiga 6 Hiroshima 14 Kumamoto 4 Miyagi 18 Niigata 19 Osaka 17 Yamaguchi 13 Miyazaki 13 Yamagata 11 Toyama 13 Kyoto 8 Ehime 8 Kagoshima 4 Fukushima 14 Ishikawa 9 Hyogo 19 Kochi 9 Tochigi 16 Fukui 6 Mie 11 Kagawa 8 Ibaraki 14 Nagano 19 Nara 6 Tokushima 5 Gunma 19 Yamanashi 5 Wakayama 5 Fukuoka 27 Total 637 2) Minami-Kyushu Yamada Denki Co., Ltd.

Kagoshima 4 Total 4 3) Okinawa Yamada Denki Co., Ltd.

Okinawa 7 Total 7 4) Matsuya Denki Co., Ltd.

Hokkaido 9 Chiba 4 Osaka 20 Kagawa 3 Iwate 1 Tokyo 1 Kyoto 6 Tokushima 3 Yamagata 1 Niigata 1 Hyogo 5 Kochi 1 Fukushima 1 Aichi 15 Nara 2 Kumamoto 4 Saitama 1 Shiga 2 Okayama 5 Kagoshima 1 Total 86 5) Seiden Co., Ltd.

Hyogo 7 Total 7 6) Kyushu Tecc Land Co., Ltd.

Fukuoka 5 Oita 5 Kumamoto 7 Saga 1 Nagasaki 1 Kagoshima 11 Total 30 7) Project White Co., Ltd.

Hokkaido 1 Tokyo 6 Aichi 1 Fukuoka 1 Total 9

8) Y’s Select Co., Ltd.

Tokyo 5 Total 5 9) Best Denki Co., Ltd. (including consolidated subsidiaries)

Hokkaido 6 Kanagawa 5 Okayama 1 Saga 9 Okinawa 9 Iwate 1 Nagano 1 Yamaguchi 4 Oita 10 Singapore 11 Saitama 3 Shizuoka 1 Kagawa 1 Nagasaki 12 Malaysia 7 Chiba 2 Hyogo 1 Tokushima 1 Kumamoto 19 Tokyo 1 Shimane 3 Fukuoka 45 Miyazaki 8 Total 161 10) Yamada Denki (Shenyang) Commercial Co., Ltd.

China 1 Total 1 (7) Employees (As of March 31, 2016) 1) Employees of the corporate group

Number of Employees Change from the Previous Fiscal Year 19,183 (10,219) Decrease of 1,222 (Decrease of 485)

Note: The number of employees represents the number of currently working employees, and the average annual number of part-time and temporary employees is shown separately in parentheses. 2) Employees of the Company

Average Years of Number of Employees Change from the Previous Fiscal Year Average Age Service 10,725 (8,487) Decrease of 170 (Decrease of 448) 35.4 10.0

Note: The number of employees represents the number of currently working employees, and the average annual number of part-time and temporary employees is shown separately in parentheses. (8) Principal Creditor (As of March 31, 2016) Amount of Loan Payable Creditor (Millions of yen) Mizuho Bank, Ltd. 88,137 Sumitomo Mitsui Banking Corporation 49,626 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 45,504 THE TOWA BANK, LTD. 12,670 The Gunma Bank, Ltd. 12,580 THE HACHIJUNI BANK, LTD. 12,530 The Hokuetsu Bank, Ltd. 4,210 THE NISHI-NIPPON CITY BANK, LTD. 4,000 Sumitomo Mitsui Trust Bank, Limited 1,184 (9) Other Significant Matters concerning Current Status of the Corporate Group N/A

II. Status of the Company (1) Status of Shares (As of March 31, 2016) 1) Total number of authorized shares 2,000,000,000 shares 2) Total number of issued shares 966,489,740 shares 3) Number of shareholders 75,936 persons 4) Major shareholders (top 10)

Number of Shares Shareholding Ratio Name of Shareholders (Thousand shares) (%) Tecc Planning Co., Ltd. 65,327 8.14 Goldman Sachs International (Standing proxy: Goldman Sachs Japan Co., Ltd.) 56,087 6.99 Japan Trustee Services Bank, Ltd. (Trust account) 50,287 6.27 SoftBank Group Corp. 48,324 6.02 Royal Bank of Canada Trust Company (Cayman) Limited (Standing proxy: 33,852 4.22 Tachibana Securities Co. Ltd.) BNY GCM CLIENT ACCOUNT JPRD ISG (FE-AC) (Standing proxy: The 30,447 3.79 Bank of Tokyo-Mitsubishi UFJ, Ltd.) The Master Trust Bank of Japan, Ltd. (Trust account) 28,268 3.52 Noboru Yamada 24,516 3.06 The Gunma Bank, Ltd. 17,410 2.17 Japan Trustee Services Bank, Ltd. (Trust account 9) 16,591 2.07

Notes: 1. The Company holds 164,133 thousand shares of treasury stock and is excluded from the above list of major shareholders. 2. Shareholding ratio is calculated excluding treasury stock. (2) Status of Stock Acquisition Rights 1) Stock acquisition rights at the end of the fiscal year

Amount of Type and number of Subscription amount property to be Exercise period Number of stock shares to be issued Name payable for the granted contributed upon of stock acquisition rights upon exercise of stock stock acquisition rights exercise of stock acquisition rights acquisition rights acquisition rights Stock acquisition 478,400 shares of No payment of cash in 100 yen per stock From July 13, rights for Fiscal common stock exchange for stock 4,784 units acquisition right 2013 to July 12, 2013 (issued on (100 shares per stock acquisition rights shall (1 yen per share) 2043 July 12, 2013) acquisition right) be required Stock acquisition 460,700 shares of No payment of cash in 100 yen per stock From July 15, rights for Fiscal common stock exchange for stock 4,607 units acquisition right 2014 to July 14, 2014 (issued on (100 shares per stock acquisition rights shall (1 yen per share) 2044 July 14, 2014) acquisition right) be required Stock acquisition 628,900 shares of No payment of cash in 100 yen per stock From July 14, rights for Fiscal common stock exchange for stock 6,289 units acquisition right 2015 to July 13, 2015 (issued on (100 shares per stock acquisition rights shall (1 yen per share) 2045 July 13, 2015) acquisition right) be required Notes: 1. The conditions for exercise of stock acquisition rights indicated above are as follows: • If the situation arises within the exercise period of stock acquisition rights stated above where the Stock Acquisition Right Holder does not hold any position with the Company or a subsidiary of the Company as a director, audit & supervisory board member, executive officer, or employee, the stock acquisition rights can only be exercised in a lump-sum during a period of 10 days beginning on the day following the day of said loss of position (if the 10th day falls on a holiday, the following business day will be deemed the final valid day). 2. The Stock Acquisition Right Holder shall not be required to pay in money as the remuneration receivable from the Company shall be offset against above amount payable for subscription.

2) Stock acquisition rights granted to as compensation for the duties performed and held by officers of the Company at the end of the fiscal year

Status of Stock Acquisition Rights Held by Officers of the Company Name Director Audit & Supervisory Board External Director (excluding External Director) Member Stock acquisition rights for Number of stock acquisition Number of stock acquisition Number of stock acquisition Fiscal 2013 (issued on July rights 4,430 units rights – rights 286 units 12, 2013) Number of holders 13 Number of holders – Number of holders 2 (Note) Stock acquisition rights for Number of stock acquisition Number of stock acquisition Number of stock acquisition Fiscal 2014 (issued on July rights 4,467 units rights – rights 140 units 14, 2014) Number of holders 14 Number of holders – Number of holders 1 (Note) Stock acquisition rights for Number of stock acquisition Number of stock acquisition Number of stock acquisition Fiscal 2015 (issued on July rights 6,289 units rights – rights – 13, 2015) Number of holders 14 Number of holders – Number of holders –

Note: These stock acquisition rights were issued during their term of office as Directors. 3) Stock acquisition rights granted to employees, etc. as compensation for the duties performed during the fiscal year N/A 4) Other status of stock acquisition rights Stock acquisition rights attached to euro yen zero coupon convertible bonds subject to call due 2019 issued in accordance with a resolution at a meeting of the Board of Directors held on May 27, 2014

Euro yen zero coupon convertible bonds subject to call due 2019 (issued on June 12, 2014) Number of stock acquisition rights (Unit) 10,000 Type of shares to be issued upon exercise Common stock of stock acquisition rights Number of shares to be issued upon The greatest integer obtained by dividing the total principal amount of the bonds exercise of stock acquisition rights corresponding to exercise requests by the conversion price Issue price of stock acquisition rights Without contribution Exercise period of stock acquisition From June 26, 2014 to June 14, 2019 rights Share issue price and additional paid-in capital per share in the event of issuance Issue price: 538 of shares upon exercise of stock Additional paid-in capital per share: 269 acquisition rights (Yen) Until March 28, 2019, the holder of the bond with stock acquisition rights may exercise the rights during the period from the first day of the following fiscal Conditions for exercise of stock quarter to the last day of such fiscal quarter, only when the closing price of the acquisition rights common stock of the Company for any 20 consecutive trading days ending on the last trading day of a fiscal quarter exceeds 130% of the conversion price applicable on such last trading day. Partial exercise of stock acquisition rights is not permitted. Matters regarding transfer of stock As the stock acquisition rights are attached to a convertible bond with stock acquisition rights acquisition rights, they cannot be separately transferred from the bond. Outstanding balance of bond with Stock 100,316 acquisition rights (Millions of yen)

(3) Status of the Officers of the Company 1) Status of Directors and Audit & Supervisory Board Members (As of March 31, 2016)

Position in the Company Responsibilities Name Representative Director, CEO Noboru Yamada President Representative Director, COO Tadao Ichimiya Executive Vice-President Director Managing Executive Officer & General Manager, General Affairs Mitsumasa Kuwano Division Director Senior Managing Executive Officer & General Counsel, New Hiroyasu Iizuka Business Development Office Director Senior Managing Executive Officer & General Counsel, Corporate Jun Okamoto Planning Office, SxL Management Office and CSR Promotion Office Director Managing Executive Officer, General Manager, Service Division & Masaaki Kurihara General Manager, Merchandise Sales Department Director Senior Executive Officer & General Counsel, Legal Office Haruhiko Higuchi Director Senior Executive Officer & General Manager, Corporate Business Tatsuo Kobayashi Department Director Senior Executive Officer & Head of LABI Shinjuku Higashiguchi- Shinichi Samata kan Director Senior Executive Officer Deputy General Manager, Service Division Akira Fukui & General Manager, Operation Department Director Senior Executive Officer & General Manager, Development Shigeaki Yamada Division Director Senior Executive Officer & General Manager, Advertisement Masaru Yamada Promotion Division Director Senior Executive Officer, General Manager, Local Administration Kenichi Koyano and Financial Division & General Counsel, Affiliates Office Director Senior Executive Officer & General Manager, Sales and Marketing Shouji Orita Division Director Tsukasa Tokuhira Director Hiroyuki Fukuyama Audit & Supervisory Board Makoto Igarashi Member (standing) Audit & Supervisory Board Ginji Karasawa Member (standing) Audit & Supervisory Board Yutaka Nakamura Member Audit & Supervisory Board Masamitsu Takahashi Member Notes: 1. Directors Tsukasa Tokuhira and Hiroyuki Fukuyama are External Directors. 2. Audit & Supervisory Board Members Yutaka Nakamura and Masamitsu Takahashi are External Audit & Supervisory Board Members. 3. The Company has submitted notification to the Tokyo Stock Exchange that External Directors and External Audit & Supervisory Board Members have been designated as independent officers as provided for by the aforementioned exchange. 4. Significant concurrent positions held by Directors and Audit & Supervisory Board Members at other entities during the fiscal year under review are as follows: Other Entities at Which Significant Position Name Concurrent Position Remarks Concurrent Positions Are Held Representative Noboru Yamada Tecc Planning Co., Ltd. Representative Director Director Yamada Wood House Co., Ltd. Representative Director Representative Tadao Ichimiya Tecc Planning Co., Ltd. Audit & Supervisory Board Director Member

Other Entities at Which Significant Position Name Concurrent Position Remarks Concurrent Positions Are Held Director Mitsumasa Kuwano CIC Co., Ltd. Director Y-Just Co., Ltd. Director Azuma Metal Co., Ltd. Director Director Hiroyasu Iizuka Minami-Kyushu Yamada Denki Director Co., Ltd. Okinawa Yamada Denki Co., Ltd. Director Inversenet Co., Ltd. Director Housetec Inc. Director Director Jun Okamoto Project White Co., Ltd. Director CIC Co., Ltd. Director Y’s select Co., Ltd. Director Best Denki Co., Ltd. Director Yamada Wood House Co., Ltd. Director Azuma Metal Co., Ltd. Director Yamada Eco Solution Co., Ltd. Director Housetec Inc. Director Director Masaaki Kurihara Project White Co., Ltd. Director Minami-Kyushu Yamada Denki Director Co., Ltd. Yamada Eco Solution Co., Ltd. Director Cosmos Berry’s Co., Ltd. Director CIC Co., Ltd. Director Inversenet Co., Ltd. Director Director Haruhiko Higuchi Tecc Planning Co., Ltd. Director Director Akira Fukui Yamada Eco Solution Co., Ltd. Director TESS Co., Ltd. Director Gunma Sogo-setsubi Co., Ltd. Director Best Denki Co., Ltd. Director Director Shigeaki Yamada Yamada Wood House Co., Ltd. Director Gunma Sogo-setsubi Co., Ltd. Director Tecc Planning Co., Ltd. Director Director Masaru Yamada Puinpul Co., Ltd. Representative Director Tecc Planning Co., Ltd. Representative Director Director Kenichi Koyano Housetec Inc. Director YAMADA SXL HOME CO., LTD. Director Best Denki Co., Ltd. Director CIC Co., Ltd. Director Inversenet Co., Ltd. Director Cosmos Berry’s Co., Ltd. Director TESS Co., Ltd. Director Yamada Wood House Co., Ltd. Director Azuma Metal Co., Ltd. Director Y’s select Co., Ltd. Director Director Shouji Orita Kyushu Tecc Land Co., Ltd. Representative Director Okinawa Yamada Denki Co., Representative Director Ltd. Minami-Kyushu Yamada Denki Representative Director Co., Ltd. Matsuya Denki Co., Ltd. Director Seiden Co., Ltd. Director Best Denki Co., Ltd. Director

Other Entities at Which Significant Position Name Concurrent Position Remarks Concurrent Positions Are Held Director Tsukasa Tokuhira Cross Co., Ltd. Representative Director Fic Limited Representative Director Director Hiroyuki Fukuyama Hiroyuki Fukuyama Professional Representative Engineer Office Audit & Makoto Igarashi Okinawa Yamada Denki Co., Ltd. Audit & Supervisory Board Supervisory Member Board Member Minami-Kyushu Yamada Denki Co., Ltd. Audit & Supervisory Board Member CIC Co., Ltd. Audit & Supervisory Board Member Yamada Eco Solution Co., Ltd. Audit & Supervisory Board Member Inversenet Co., Ltd. Audit & Supervisory Board Member Cosmos Berry’s Co., Ltd. Audit & Supervisory Board Member Matsuya Denki Co., Ltd. Audit & Supervisory Board Member Seiden Co., Ltd. Audit & Supervisory Board Member Yamada Financial Co., Ltd. Audit & Supervisory Board Member Kyushu Tecc Land Co., Ltd. Audit & Supervisory Board Member Y-Just Co., Ltd. Audit & Supervisory Board Member TESS Co., Ltd. Audit & Supervisory Board Member Gunma Sogo-setsubi Co., Ltd. Audit & Supervisory Board Member Y’s select Co., Ltd. Audit & Supervisory Board Member Project White Co., Ltd. Audit & Supervisory Board Member Housetec Inc. Audit & Supervisory Board Member Yamada Wood House Co., Ltd. Audit & Supervisory Board Member YAMADA SXL HOME CO., LTD. Audit & Supervisory Board Member Best Denki Co., Ltd. Audit & Supervisory Board Member Azuma Metal Co., Ltd. Audit & Supervisory Board Member Tecc Planning Co., Ltd. Audit & Supervisory Board Member

Other Entities at Which Significant Position Name Concurrent Position Remarks Concurrent Positions Are Held Audit & Ginji Karasawa Okinawa Yamada Denki Co., Ltd. Audit & Supervisory Board Supervisory Member Board Member Minami-Kyushu Yamada Denki Co., Ltd. Audit & Supervisory Board Member CIC Co., Ltd. Audit & Supervisory Board Member Yamada Eco Solution Co., Ltd. Audit & Supervisory Board Member Inversenet Co., Ltd. Audit & Supervisory Board Member Cosmos Berry’s Co., Ltd. Audit & Supervisory Board Member Matsuya Denki Co., Ltd. Audit & Supervisory Board Member Seiden Co., Ltd. Audit & Supervisory Board Member Yamada Financial Co., Ltd. Audit & Supervisory Board Member Kyushu Tecc Land Co., Ltd. Audit & Supervisory Board Member Y-Just Co., Ltd. Audit & Supervisory Board Member TESS Co., Ltd. Audit & Supervisory Board Member Y’s select Co., Ltd. Audit & Supervisory Board Member Project White Co., Ltd. Audit & Supervisory Board Member Housetec Inc. Audit & Supervisory Board Member Yamada Wood House Co., Ltd. Audit & Supervisory Board Member Azuma Metal Co., Ltd. Audit & Supervisory Board Member Audit & Yutaka Nakamura JIN CO., LTD. Director Supervisory Board Member Audit & Masamitsu Takahashi Hikari Certified Public Tax Accountants Representative Partner Supervisory Corporation Board Member Takahashi Tax & Management Co., Ltd. Representative Director

5. External Audit & Supervisory Board Member Masamitsu Takahashi has a qualifications of the certified public accountant and small and medium enterprise management consultant, and has a considerable degree of knowledge on finance and accounting. 2) Directors retired during the fiscal year under review

Reason for Positions and Responsibilities in the Company and Significant Name Date of Retirement Retirement Concurrent Positions at the Time of Retirement Ginji Karasawa June 26, 2015 Resignation Director

3) Total amount of remuneration to Directors and Audit & Supervisory Board Members

Amount of Remuneration, Etc. Category Number of Recipients (Millions of yen) Director 17 791 (External Director) (2) (8) Audit & Supervisory Board Member 4 46 (External Audit & Supervisory Board Member) (2) (10) Total 21 837

Notes: 1. The table above includes 1 Director who retired at the conclusion of the 38th Ordinary General Meeting of Shareholders held on June 26, 2015. 2. The amount of remuneration, etc. of Directors does not include employee salaries paid to persons who are concurrently Directors and employees. 3. At the 31st Ordinary General Meeting of Shareholders held on June 27, 2008, shareholders passed a resolution to set the maximum amount of Directors’ remuneration at ¥750 million or less per annum (providing that this amount does not include salary paid to a Director for his service in a concurrent employee role). In addition, at the 36th Ordinary General Meeting of Shareholders held on June 27, 2013, shareholders passed a resolution to set the amount of stock option remuneration at ¥300 million per annum in a separate framework. 4. At the 29th Ordinary General Meeting of Shareholders held on June 29, 2006, shareholders passed a resolution to set the maximum amount of Audit & Supervisory Board Members’ remuneration at ¥68 million or less per annum. 5. The above amounts of remuneration include the following: • Provision for directors’ bonuses of ¥112 million for the fiscal year under review (14 Directors) • Remuneration relating to stock compensation-type stock options of ¥224 million for the fiscal year under review (15 Directors) 4) External officers a. Significant concurrent positions at other entities and relationships between the Company and such other entities • Director Tsukasa Tokuhira serves as Representative Director of Cross Co., Ltd. and Representative Director of Fic Limited. The Company has a trading relationship with Cross Co., Ltd. that includes the provision of outsourced operations. However, because the scale of this relationship is insubstantial and accounts for less than 0.001% of the Company’s consolidated net sales, the Company believes that it is not significant enough to cause a conflict of interests. There is no special relationship between the Company and Fic Limited. • Director Hiroyuki Fukuyama is Representative of Hiroyuki Fukuyama Professional Engineer Office. There is no special relationship between the Company and the entity at which he holds the significant concurrent position. • Audit & Supervisory Board Member Yutaka Nakamura serves as Director of JIN CO., LTD. and the Company has a trading relationship with JIN CO., LTD. that includes the product purchasing. However, because the scale of this relationship is insubstantial and accounts for less than 0.04% of the Company’s consolidated net sales, the Company believes that it is not significant enough to cause a conflict of interests. • Audit & Supervisory Board Member Masamitsu Takahashi is Representative Partner of Hikari Certified Public Tax Accountants Corporation and Representative Director of Takahashi Tax & Management Co., Ltd. There is no special relationship between the Company and the entities at which he holds the significant concurrent positions.

b. Major activities during the fiscal year under review • Attendance at the meetings of the Board of Directors and the Audit & Supervisory Board

Meetings of the Audit & Meetings of the Board of Supervisory Board Directors (Held 21 times) (Held 13 times) Number of Attendance Number of Attendance Attendance Rate Attendance Rate Tsukasa Tokuhira, Director 95% –% Hiroyuki Fukuyama, Director 94% –% Yutaka Nakamura, Audit & Supervisory Board Member 95% 100% Masamitsu Takahashi, Audit & Supervisory Board Member 95% 100%

Note: As Director Hiroyuki Fukuyama has been appointed from the 38th Ordinary General Meeting of Shareholders held on June 26, 2015, the total number of attendance is 16. • Expressions of opinions at meetings of the Board of Directors and the Audit & Supervisory Board 1. Director Tsukasa Tokuhira provides valuable opinions and suggestions to management of the Company based on his abundant experience as a long-standing leader in the distribution industry. 2. Director Hiroyuki Fukuyama has a wealth of experience and wide knowledge as a company executive. He provides valuable opinions and suggestions to management of the Company from a perspective of CSR, such as environmental responses centered on manufacturing and regional contribution measures. 3. Audit & Supervisory Board Member Yutaka Nakamura comments mainly from a perspective of a company executive with wealth of experience. 4. Audit & Supervisory Board Member Masamitsu Takahashi provides advice and suggestions to ensure adequacy and appropriateness of decision-making by the Board of Directors, primarily by giving opinions from a perspective as a tax accountant. He also provides necessary comments whenever appropriate with regard to the accounting system and internal audit of the Company. c. Summary of details of limited responsibility contract N/A (4) Independent Accountants 1) Name KPMG AZSA LLC 2) Amount of remuneration, etc. (Millions of yen) Amount of payment Amount of remuneration for services stipulated in Article 2, Paragraph 1 of the Certified Public 67 Accountants Act to be paid by the Company to the independent accountants Total amount of cash and other economic benefits to be paid by the Company and its 130 subsidiaries to the independent accountants

Notes: 1. In the audit contract between the Company and its independent accountants, remuneration paid for audits under the Companies Act and audits under the Financial Instruments and Exchange Act are not clearly distinguished and cannot be practically separated. Accordingly, the amount in 2) above is the aggregate amount. 2. After having performed the necessary verification as to the appropriateness of matters such as the content of the independent accountants’ audit plan, the status of performance of financial audit, and the basis for the calculation of the estimated remuneration, the Audit & Supervisory Board has decided to consent to the amount of remuneration, etc. to be paid to the independent accountants. 3. Some of consolidated subsidiaries of the Company are audited by independent accountants firms other than the independent accountants of the Company.

3) Details of non-audit services N/A 4) Policy on dismissal or non-reappointment of independent accountants If the Audit & Supervisory Board judges that action is necessary, such as in cases where the independent accountants’ execution of its duties is impeded, the Audit & Supervisory Board will determine the contents of a proposal to be submitted to the General Meeting of Shareholders regarding the dismissal or non-reappointment of the independent accountants. In addition, if the items stipulated in the matters set forth in items of Article 340, Paragraph 1 of the Companies Act are deemed applicable to the independent accountants, the independent accountants will be dismissed based on the agreement of all Audit & Supervisory Board Members. If this occurs, an Audit & Supervisory Board Member selected by the Audit & Supervisory Board will report the fact of the independent accountants’ dismissal and the reason for the dismissal at the first General Meeting of Shareholders held after the dismissal. 5) Outline of limited liability agreement N/A

(5) System for Ensuring the Properness of Business Operations and Implementation of That System The following is a summary of the systems to ensure that the directors perform their duties in compliance with the applicable laws and the Company’s Articles of Incorporation and to ensure that all other operations by the Company are carried out in a proper manner.

System for ensuring the properness of business operations 1. System for ensuring that directors and employees perform their duties in compliance with the applicable laws and regulations and the Articles of Incorporation a. Compliance Committee Directors in charge of compliance shall organize the Compliance Committee, which is involved in formulating corporate ethics policies and basic policy and standards on compliance with laws and regulations (compliance provisions), and establish codes of conduct on that basis requiring that directors and employees act in accordance with laws and regulations, the Articles of Incorporation and the Company’s employment rules and other internal rules. Education to directors and employees shall be provided to ensure thorough implementation in this regard led by the Compliance Committee. These initiatives are reported on a regular basis to the Board of Directors and the Audit & Supervisory Board. b. Establishment of the CSR Committee and consultation meetings with outside experts on CSR- focused management The Company shall establish the CSR Committee, in full recognition of the significance of corporate social responsibility, as a means of putting CSR-focused management into practice as part of the management policy. The CSR Committee shall pursue initiatives based on the Code of CSR Ethics in areas that include compliance, labor, customer satisfaction, local communities, and environmental issues. In order to draw on opinions from outside sources, the Company shall also establish consultation meetings with outside experts on CSR-focused management. The meeting shall act as a forum for regular reporting on the progress of initiatives and opinion exchange. c Whistle-blowing system Upon becoming aware of incidents involving the performance of duties by the Company’s directors and employees that are questionable in terms of laws and regulations, individuals regardless of their position shall report such matters directly to the organizational contact set up to receive internal reports, pursuant to the Regulations on Operation of Whistle-Blowing System. The Compliance Committee shall endeavor to make the existence of the whistle-blowing system known. d Internal Audit Office The Internal Audit Office shall operate independently of the Company’s operating divisions. It shall perform internal audits on legal compliance of individual sectors and audits encompassing areas such as, information security management systems (ISMS), information systems, information security and personal information protection. It shall also audit work processes and other operations of individual sectors, and take steps to uncover and prevent improprieties and to improve processes.

2. System for storage and control of information concerning the directors’ performance of their duties a. Manager in charge of information storage and management With respect to the storage and management of information pertaining to the directors’ performance of duties, the Company shall store the documents set forth below (including electro and magnetic records thereof) along with related materials under the responsibility of the director in charge of general affairs and in accordance with the Company’s Regulations on Document Management and Handling. i. Minutes of General Meetings of Shareholders ii. Minutes of meetings of the Board of Directors iii. Financial statements iv. Internal circulars for managerial decision (ringi-sho) v. Minutes of meetings of respective committees vi. Documents otherwise designated in the Company’s Regulations on Document Management and Handling b Amendments to document handling regulations Approval of the Board of Directors shall be obtained when amending the Regulations on Document Management and Handling. c The Company shall develop regulations related to protection of personal information and management of trade secrets, and store and manage personal information and important trade

secrets in an appropriate and safe manner. 3. Regulations on risk of loss and other systems a. Risk Management Regulations The director in charge of risk management shall organize the Risk Management Committee and formulate the Risk Management Regulations. Accordingly, the committee shall categorize risks in the regulations and establish specific risk management systems. b. Crisis management system in the event of disaster The director in charge of risk management shall prepare a disaster response manual and develop crisis management system in accordance with the manual. The director in charge of risk management shall endeavor to make details of the manual known and provide education regarding disaster response.

4. System to ensure that directors perform their duties efficiently When making decisions on allocating duties of directors and conferring segregations of duties and authority of individual sectors, the Board of Directors (or the representative directors) shall be careful not to make decisions that would result in bloated back-office operations, overlapping administrative sectors, intertwined areas of authority or would otherwise significantly impede efficiency.

5 System for ensuring the properness of business operations of the Group consisting of the Company, its parent company and its subsidiaries a The Company shall establish an office of affiliate management, and accordingly create a system for overseeing the management and performance of subsidiaries and ensuring the properness of such business operations. b The Company’s subsidiaries shall execute their business operations in accordance with basic affiliation agreements and internal regulations of the respective companies, and such agreements and regulations shall be reviewed as needed. c To achieve optimal performance and budget management of its subsidiaries, the Company shall hold monthly Group company review committee meetings for managing subsidiaries’ overall performance and budgets on the basis of medium-term business plans and annual budgets, and furthermore hold weekly Group company meetings with its principal subsidiaries. d When deemed necessary, the Internal Audit Office may conduct internal audits related to business operations of subsidiaries.

6．System for reporting to the Company on matters pertaining to performance of duties by subsidiaries’ directors, etc. a The Company shall stipulate the procedures and content of reporting to the Company from subsidiaries in basic affiliation agreements and provide appropriate guidance and advice on matters reported, while respecting the autonomy of subsidiary management. b The Company shall hold monthly Group company briefing sessions where it receives reports on the status of subsidiary management and financial position to ensure the properness of subsidiary business operations.

7．Regulations on management of risk of loss of subsidiaries and other systems a The Company shall make its basic risk management guidelines thoroughly known to its subsidiaries in accordance with the basic affiliation agreements. b The Company shall receive weekly risk management status reports from all of its subsidiaries, by receiving checklists for monitoring compliance. c The Company’s principal subsidiaries shall establish basic policies on risk management. d In the event that the office of affiliate management receives a report on risk of loss from a subsidiary, it shall investigate the relevant facts in the case and report the matter to the Board of Directors and the Audit & Supervisory Board.

8．System for ensuring that subsidiaries’ directors, etc. perform their duties efficiently a The Company’s Board of Directors shall formulate medium-term business plans, medium- to long- term management strategies and other such documents in which subsidiaries are involved, and coordinate with subsidiaries in establishing key management goals based on such plans and strategies, and making progress in that regard. b The Company shall stipulate procedures in its basic affiliation agreements with respect to individual matters for approval involving its subsidiaries, and take steps to streamline decision-making in that

regard. 9．System for ensuring that subsidiaries’ directors, etc. and employees perform their duties in compliance with the applicable laws and regulations and the Articles of Incorporation a The Company shall verify the status of subsidiaries’ operations using weekly checklists for monitoring compliance, and report such outcomes to the Compliance Committee as necessary. b The Company’s whistle-blowing system shall also be used by its subsidiaries to prevent violations of laws and regulations and the Articles of Incorporation. The Company shall receive reports regarding the status of any disciplinary action taken on the basis of violations of laws and regulations or the Articles of Incorporation. c The Company may assign its directors, Audit & Supervisory Board members and employees to concurrently serve as audit & supervisory board members of a subsidiary, thereby coordinating with audit & supervisory board members of the subsidiary in performing legal compliance audits of duties performed by the subsidiary’s directors and employees.

10．System regarding employees to assist duties of Audit & Supervisory Board members when the Audit & Supervisory Board members request to assign such employees, and matters regarding the independence of such employees from the directors a Assigning an employee to act as an audit assistant When an Audit & Supervisory Board member requests directors that an employee be assigned as an audit assistant to assist in his or her duties, the directors shall make the necessary organizational changes and personnel rotations upon consulting with the Audit & Supervisory Board member. b Duties of an audit assistant Audit assistants shall be formally posted as assistant to Audit & Supervisory Board member and assist with duties of Audit & Supervisory Board members and Audit & Supervisory Board operations as instructed and ordered. c Independence of an audit assistant i. An audit assistant shall work under the instructions and orders of an Audit & Supervisory Board member, and as such is not subject to the instructions or orders of directors or any person positioned as his or her superior or the like in the organization unit to which the audit assistant belongs. ii. In performing their tasks, audit assistants may gather all information necessary for the audit. iii. Consent of the relevant Audit & Supervisory Board member must be obtained for matters involving personnel changes (this includes consent for the transfer destination in case of personnel transfer), personnel evaluation and disciplinary action of an audit assistant.

11．Matters regarding ensuring effectiveness of Audit & Supervisory Board members’ instructions to employees to assist them in their duties a Supervisory authority Audit & Supervisory Board members may instruct employees as necessary for conducting audit work so that the employees will assist their duties. b Cooperative framework When such an employee concurrently serves as an employee of another department, priority must be given to the employee’s duties pertaining to the Audit & Supervisory Board member. Moreover, superiors of the other department with which the employee concurrently serves, and directors, must provide support as necessary upon request with respect to performance of such duties.

12．System for directors and employees to report to Audit & Supervisory Board members and the system concerning other reports to Audit & Supervisory Board members a Directors’ obligation to report A director must promptly report to an Audit & Supervisory Board member with respect to any discovery of an incident where work performed by another director or an employee is in violation of laws and regulations, or threatens to cause significant damage to the Company. b Employees’ right to report An employee may report to an Audit & Supervisory Board member with respect to any discovery of an incident where work performed by a director or another employee is in violation of laws and regulations, or threatens to cause significant damage to the Company. c Methods of reporting Methods of reporting shall be determined through mutual consultation between directors and the Audit & Supervisory Board.

d Internal reporting The organizational contact set up to receive internal reports shall report matters involving the status of internal reporting to an Audit & Supervisory Board member, pursuant to the Regulations on Operation of Whistle-Blowing System.

13．System for reporting to Audit & Supervisory Board members by the following in subsidiaries: directors, accounting advisors, audit & supervisory board members, executive officers, executive members, persons executing duties set forth in Article 598, Paragraph 1 of the Companies Act, persons equivalent to such persons, and employees, or persons who receive reports from the foregoing persons a Directors and employees of a subsidiary shall immediately report the Company’s office of affiliate management if they discover an incident that significantly damages the subsidiary or threatens to do so, or otherwise if they discover a material incident involving violation of laws and regulations, the articles of incorporation or internal regulations within the subsidiary. b With respect to matters involving reports received from directors of subsidiaries, any matters that the Company’s office of affiliate management is to report to Audit & Supervisory Board members of the Company shall be those determined through mutual consultation between the Company’s officers in charge of subsidiaries and Audit & Supervisory Board members.

14．System for ensuring that persons who have reported matters are not treated disadvantageously on the grounds of their reporting (Whistleblower protection) Persons who have reported matters to an Audit & Supervisory Board member shall not be treated disadvantageously in any way on the grounds of their reporting as set forth in the preceding paragraphs.

15．Matters regarding policies pertaining to procedures for prepayment or reimbursement of expenses arising with respect to performance of an Audit & Supervisory Board member’s duties, or otherwise processing of expenses or debt obligations arising with respect to performance of such duties a Presentation of budget The Audit & Supervisory Board shall present a preliminary budget to the Company with respect to expenses deemed necessary in performing duties. b Claims for expenses, etc. Directors may not reject the hereinafter listed claims made by an Audit & Supervisory Board member, etc. with respect to performance of his or her duties, unless it has been demonstrated that an expense or debt obligation pertaining to the claim is unnecessary with respect to performance of the Audit & Supervisory Board member’s duties. i. Claim for prepayment of expenses ii. Claim for reimbursement of expenses already paid and interest on such amounts accrued after the date of payment iii. Claim for making repayment to a person to whom a debt obligation is owed (or provision of reasonable guarantee of such amount in cases where the repayment due date of the obligation has not yet arrived).

16．System for ensuring that Audit & Supervisory Board members perform audits effectively Audit & Supervisory Board members are provided preliminary explanations with respect to annual plans to be implemented by the Internal Audit Office, and may ask for revisions to such plans and make other such requests. Moreover, Audit & Supervisory Board members may be appropriately provided reports regarding the status of internal audit implementation, and may call for performance of additional audits, improvement of business operations and other such requests, when deemed necessary.

[Overview of implementation of system for ensuring the properness of business operations] 1. Compliance initiatives Compliance Committee meetings were held on a weekly basis, and training based on monthly themes was regularly implemented for officers and employees to help raise awareness of compliance issues.

2. Risk management initiatives Directors attended monthly Risk Management Committee meetings where they endeavored to identify and control risk. Moreover, efforts to heighten disaster awareness included Company-wide emergency preparedness training simulating large-scale disasters held twice during the year.

3. Initiatives to ensure properness and efficiency in performance of duties Senior management attended weekly Management meetings where they endeavored to make swift decisions and execute business operations efficiently.

4. Performance of Audit & Supervisory Board members’ duties A system was established to ensure appropriate implementation of audits, with two standing Audit & Supervisory Board members assigned to serve in that position. The standing Audit & Supervisory Board members attended Management meetings and other important internal meetings where they appropriately provided their opinions, and otherwise endeavored to ensure effectiveness of audits by gaining an understanding of important Company information and sharing such information in coordination with the Internal Audit Office and other relevant departments.

5. Initiatives to ensure appropriate compliance and risk management in the Company's subsidiaries, and properness and efficiency in performance of duties Objectives and policies formulated on the basis of medium-term management agreements and medium- to long-term business strategy were shared with the Company’s subsidiaries, and the Office of Affiliate Management regularly held meetings to ascertain progress made with respect to business performance and budget management as appropriate to the inherent characteristics of respective subsidiaries. The Office of Affiliate Management received compliance reports from respective subsidiaries and regularly reported such content to the Compliance Committee. Basic policies on risk management were established in respective subsidiaries, and such matters were reported to the Office of Affiliate Management. The Company’s Audit & Supervisory Board members concurrently serving as Audit & Supervisory Board members of its subsidiaries regularly received reports from the Office of Affiliate Management and compiled details on the status of management and other necessary information.

Note: The systems stated above are those as of the end of the fiscal year. Following the enforcement of the “Act on Partial Amendment of the Companies Act” (Act No. 90 of 2014) and the “Ministerial Ordinance for Partial Amendment of the Ordinance for Enforcement of the Companies Act, etc.” (Ordinance of the Ministry of Justice No. 6 of 2015) on May 1, 2015, the Company partially amended content based on a resolution at the meeting of the Board of Directors held on May 18, 2015.

CONSOLIDATED BALANCE SHEETS As of March 31, 2016 (Millions of yen) ASSETS Current assets: Cash and time deposits 31,604 Notes and accounts receivable 59,249 Merchandise and finished goods 356,075 Work in process 2,303 Raw materials and supplies 3,103 Deferred tax assets 12,274 Other current assets 43,049 Allowance for doubtful accounts (7,393) Total current assets 500,266

Noncurrent assets: Property and equipment: Buildings and structures, net 224,663 Land 184,484 Lease assets, net 10,660 Construction in progress 7,379 Other, net 11,417 Total property and equipment, net 438,606

Intangible assets 35,476

Investments and other assets: Investment securities 4,042 Long-term loans receivable 9,499 Net defined benefit asset 1,755 Deferred tax assets 13,643 Guarantee deposits 113,333 Other assets 35,967 Allowance for doubtful accounts (5,868) Total investments and other assets 172,373 Total noncurrent assets 646,455 Total assets 1,146,722

CONSOLIDATED BALANCE SHEETS As of March 31, 2016 (Millions of yen) LIABILITIES AND NET ASSETS LIABILITIES: Current liabilities: Notes and accounts payable 79,950 Short-term loans payable 67,695 Current portion of long-term loans payable 59,212 Lease obligations 2,512 Income taxes payable 14,629 Provision for bonuses 8,064 Provision for directors’ bonuses 114 Provision for point card certificates 17,073 Provision for warranties for completed construction 192 Provision for loss on liquidation of subsidiaries 320 Other current liabilities 46,796 Total current liabilities 296,561

Long-term liabilities: Bonds 100,316 Long-term loans payable 105,155 Lease obligations 11,428 Provision for directors’ retirement benefits 536 Provision for product warranties 12,522 Provision for loss on interest repayments 245 Provision for gift certificates, etc. 287 Net defined benefit liability 23,700 Asset retirement obligations 24,306 Other long-term liabilities 13,938 Total long-term liabilities 292,438 Total liabilities 589,000

NET ASSETS: Shareholders’ equity: Common stock 71,058 Capital surplus 73,001 Retained earnings 458,107 Treasury stock, at cost (68,231) Total shareholders’ equity 533,936 Accumulated other comprehensive income: Valuation difference on available-for-sale securities, net of taxes 934 Foreign currency translation adjustments (1,966) Remeasurements of defined benefit plans 1,488 Total accumulated other comprehensive income 456 Subscription rights to shares 521 Non-controlling interests 22,807 Total net assets 557,722 Total liabilities and net assets 1,146,722

(Millions of yen with fractional amounts discarded, unless otherwise noted)

CONSOLIDATED STATEMENTS OF INCOME Fiscal year ended March 31, 2016 (Millions of yen) Net sales 1,612,735 Cost of sales 1,153,234 Gross profit 459,501 Selling, general and administrative expenses 401,342 Operating income 58,158

Non-operating income: Interest income 1,168 Purchase discounts 6,961 Rent income 2,963 Income on sales of electric power 1,807 Other 4,448 17,349 Non-operating expenses: Interest expenses 1,742 Foreign exchange losses 4,054 Rent expenses 2,317 Rental expenses 2,330 Expenses on sales of electric power 828 Other 1,498 12,772 Ordinary income 62,734

Extraordinary income: Gain on sales of noncurrent assets 103 Gain on sales of stocks of subsidiaries 741 Gain on sales of investment securities 549 Insurance income 353 Other 96 1,843 Extraordinary loss: Loss on disposal of noncurrent assets 358 Impairment loss 7,781 Loss on closing of stores 4,389 Other 979 13,508 Income before income taxes 51,070 Income taxes-current 18,810 Income taxes-deferred 327 Profit 31,932 Profit attributable to non-controlling interests 1,536 Profit attributable to owners of parent 30,395

(Millions of yen with fractional amounts discarded, unless otherwise noted)

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS Fiscal year ended March 31, 2016

(Millions of yen) Shareholders’ equity Total shareholders’ Common stock Capital surplus Retained earnings Treasury stock, at cost equity Balance at April 1, 71,058 70,977 432,236 (88,320) 485,951 2015 Changes of items

during the period Cash dividends (4,524) (4,524) Profit attributable to owners of 30,395 30,395 parent Purchase of (0) (0) treasury stock Disposal of 2,671 20,088 22,760 treasury stock Increase by 0 0 merger Purchase of shares of consolidated (647) (647) subsidiaries Other changes in

the period, net Total changes of items – 2,024 25,871 20,088 47,984 during the period Balance at March 31, 71,058 73,001 458,107 (68,231) 533,936 2016

Accumulated other comprehensive income Valuation Total Foreign Subscription Non- difference on Remeasurements accumulated Total net currency rights controlling available-for-sale of defined other assets translation to shares interests securities, net of benefit plans comprehensive adjustments taxes income Balance at April 1, 1,598 (2,770) 89 (1,082) 297 24,231 509,397 2015 Changes of items

during the period Cash dividends (4,524) Profit attributable to owners of 30,395 parent Purchase of (0) treasury stock Disposal of 22,760 treasury stock Increase by merger 0 Purchase of shares of consolidated (647) subsidiaries Other changes in (664) 804 1,399 1,539 224 (1,424) 339 the period, net Total changes of items (664) 804 1,399 1,539 224 (1,424) 48,324 during the period Balance at March 31, 934 (1,966) 1,488 456 521 22,807 557,722 2016

(Millions of yen with fractional amounts discarded, unless otherwise noted)

Notes to consolidated financial statements 1. Significant matters forming the basis of preparing consolidated financial statements (1) Scope of consolidation 1) Consolidated subsidiaries • Number of consolidated subsidiaries: 32 • Names of principal consolidated subsidiaries Minami Kyushu Yamada Denki, Co., Ltd. Okinawa Yamada Denki, Co., Ltd. CIC Co., Ltd. Yamada Eco Solution Co., Ltd. Inversenet Co., Ltd. Cosmos Berry’s Co., Ltd. Matsuyadenki Co., Ltd. Seidensha Co., Ltd. Yamada Financial Co., Ltd. Kyushu Tecc Land Co., Ltd. Project White Co., Ltd. Y’s select Co., Ltd. YAMADA SXL HOME CO., LTD. SxL Jyukou Corp. Conglo Engineering Co., Ltd. ACE HOME Co., Ltd. SxL Housing Co., Ltd. Best Denki Co., Ltd. Best Credit Service Co., Ltd. J Staff Co., Ltd. Best Service Co., Ltd. Best Financial Co., Ltd. BPC Co., Ltd. Repair Depot Co., Ltd. Kurokawa Denki Co., Ltd. Housetec Inc. Nikka Maintenance Co., Ltd. Chubu Nikka Service Co., Ltd. Yamada Denki (Shenyang) Co., Ltd. YAMADA DENKI (CHINA) CO., LTD. BEST DENKI MALAYSIA SDN. BHD. BEST DENKI (SINGAPORE) PTE. LTD. 2) Non-consolidated subsidiaries • Names of principal non-consolidated subsidiaries Y-Just Co., Ltd. TESS Co., Ltd. Gunma Sogo Setsubi Co., Ltd. Azuma Metal Co., Ltd. Yamada Wood House Co., Ltd. • Reason for exclusion from scope of consolidation All of the Company’s non-consolidated subsidiaries have been insignificant in terms of the aggregated amount of their assets, net sales, profit and retained earnings and, thus, their impact on the consolidated financial statements has been immaterial. (2) Application of the equity method 1) Non-consolidated subsidiaries and associates accounted for by the equity method • Number of associates accounted for by the equity method: 2

• Names of principal associates accounted for by the equity method Stream Co., Ltd. 2) Non-consolidated subsidiaries and associates not accounted for by the equity method • Names of principal associates not accounted for by the equity method Y-Just Co., Ltd. TESS Co., Ltd. Gunma Sogo Setsubi Co., Ltd. Azuma Metal Co., Ltd. Yamada Wood House Co., Ltd. • Reason for exclusion from scope of the equity method Investments in non-consolidated subsidiaries and the remaining affiliated companies were not accounted for using the equity method, but instead carried at cost, because their impact on the consolidated financial statements has been immaterial. (3) Change in scope of consolidation and scope of application of equity method 1) Changes in scope of consolidation PT. BESTDENKI INDONESIA has been excluded from the scope of consolidation as the Company sold all the shares under the share transfer agreement as of April 23, 2015, but its results of operations until March 31, 2015 are consolidated. Y’s select Co., Ltd., a newly established company as of July 1, 2015 through an incorporation-type split from Kimuraya Select Co., Ltd., has been included in the scope of consolidation from the year ended March 31, 2016. Effective September 1, 2015, the Company merged with its consolidated subsidiary Kimuraya Select Co., Ltd. 2) Changes in scope of application of equity method PT. BESTDENKI DIGICOM INDONESIA has been excluded from the scope of applying the equity method since the Company sold all the shares in PT. BESTDENKI INDONESIA. (4) Fiscal year-ends of consolidated subsidiaries The fiscal year-ends of four foreign consolidated subsidiaries and all domestic consolidated subsidiaries are at the end of December and February, respectively. The financial statements of these subsidiaries as of and for the years ended December 31, 2015 and 2014 or February 29, 2016 and February 28, 2015, as applicable, were used in preparing the consolidated financial statements. All material transactions which occurred during the periods from their respective fiscal year-ends to March 31 have been accounted for in the consolidation process. (5) Accounting policies 1) Valuation bases and methods of significant assets a. Shares of subsidiaries and associates Stated at cost determined by the moving-average method. b. Available-for-sale securities • Available-for-sale securities with fair market value: Stated at fair value based on the market price at the consolidated balance sheet date. Unrealized gains and losses on such securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gain and loss on sale of such securities is computed using the moving-average cost. • Other available-for-sale securities with no fair market values: Stated at cost determined by the moving-average method. The Company records investments in limited liability investment partnerships or similar partnerships (deemed as “securities” under the provisions set forth in Paragraph 2, Article 2 of the Financial Instruments and Exchange Act) using the amount corresponding to the Company’s equity in such partnerships based on the latest financial reports accessible depending on the reporting dates stipulated in the partnership agreement.

c. Derivatives Stated at fair value. d. Valuation bases and methods of inventories The Company and consolidated subsidiaries state primarily at the moving average cost. (The balance sheet amounts of the inventories are calculated at the lowered book values reflecting potential decline in profitability). 2) Depreciation and amortization method for important depreciable and amortizable assets a. Property and equipment (including real estate for rent, except for lease assets) The Company and consolidated subsidiaries state primarily at the declining balance method. Depreciation is mainly computed using the declining-balance method at rates based on the estimated useful lives of the respective assets, except for buildings (excluding building facilities) acquired on or after April 1, 1998, which are depreciated based on the straight-line method. The estimated useful lives of significant assets are as follows. Buildings and structures: two to 47 years b. Intangible assets (except for lease assets) Intangible assets are amortized using the straight-line method. Software for internal use is amortized using the straight-line method over an estimated useful life of five years. c. Lease assets The Company and consolidated subsidiaries use the straight-line method over the terms of its leases with zero residual value for leased assets related to finance leases that do not transfer ownership. Moreover, certain consolidated subsidiaries conduct accounting treatments in conformance with the method of ordinary lease transactions for finance lease transactions where the ownership is not transferred prior to the start of the first year in which the Revised Accounting Standards of Lease Transactions is applied. d. Long-term prepaid expenses Long-term prepaid expenses are amortized using the straight-line method. 3) Standards for significant allowances and provisions a. Allowance for doubtful accounts The Company and consolidated subsidiaries provide an allowance for doubtful accounts at an amount sufficient to cover possible losses on collection. It consists of the estimated uncollectible amount with respect to certain identified doubtful receivables and the amount calculated based on historical loss experience for other doubtful receivables. b. Provision for bonuses The Company and consolidated subsidiaries provide a provision for bonuses at the estimated amount accrued during the current fiscal year to cover future bonus payments to employees. c. Provision for directors’ bonuses The Company and consolidated subsidiaries provide a provision for bonuses to directors and Audit & Supervisory Board members at the estimated amount accrued during the current fiscal year to cover future bonus payments to directors and Audit & Supervisory Board members. d. Provision for point card certificates The Company and its consolidated subsidiaries which conduct similar businesses provide their customers with credit points when they make purchases at their stores. Thus, the Company and some of its consolidated subsidiaries set aside a provision for the estimated future costs of credit points.

e. Provision for warranties for completed construction A certain consolidated subsidiary provides for losses on guarantees and after-service expenses due to defects found after completed construction. The amount of such provision is calculated by multiplying related sales by the historical rate of such expenses. f. Provision for losses on liquidation of subsidiaries A certain consolidated subsidiary provides for losses on liquidation of its subsidiaries at the estimated amount of such losses. g. Provision for directors’ retirement benefits Some of the consolidated subsidiaries each set aside a provision for directors’ and Audit & Supervisory Board members’ retirement benefits based on internal rules. Such provision is calculated at the estimated payable amount if all officers were to retire at the balance sheet date. h. Provision for product warranties The Company and its consolidated subsidiaries which conduct similar businesses each set aside a provision for warranty for future repair expenses at the estimated amount calculated based on historical repair expense. i. Provision for losses on interest repayments A certain consolidated subsidiary provides for losses on interest repayments at the estimated amount of future customer claims for a refund on the portion of the loan interest in excess of the maximum rate prescribed under the Interest Rate Restriction Act. j. Provision for gift certificates, etc. A certain consolidated subsidiary provides for losses on late collection of gift certificates, etc. already having accounted for as a gain after passing a defined period of time, at the estimated amount for future collection calculated based on historical experience. 4) Accounting for retirement benefits To make preparations for the payment of retirement benefits to employees, the Company and consolidated subsidiaries record the amount calculated by deducting plan assets from retirement benefit obligations, based on the anticipated amounts of payments at the balance sheet date. In determining the retirement benefit liability, the benefit formula basis is adopted as the attribution method of the projected retirement benefit. Some consolidated subsidiaries apply a computational shortcut where the amounts of the retirement benefit obligations, in calculating liabilities for retirement benefits and retirement benefit expenses, are deemed to be the amount of benefit payments required for voluntary retirement at the fiscal year- end. Prior service costs are amortized from the fiscal year in which such costs are incurred using the straight-line method over a certain period of time (mainly five years) not exceeding the average remaining service period of the eligible employees. Actuarial gains or losses incurred during the year are amortized from the succeeding fiscal year using the straight-line method over a certain period of time (mainly five years) not exceeding the average remaining service period of the eligible employees. Unrealized actuarial gains and losses and unrealized prior service costs are posted to remeasurements of defined benefit plans under accumulated other comprehensive income in the net assets section after adjusting for tax effects. 5) Significant hedge accounting method a. Hedge accounting method Deferred hedge accounting is applied. However, exceptional treatment is applied to interest rate swaps that satisfy the requirements for the said exceptional treatment.

b. Hedging instruments and hedged items (Hedging instruments) Interest-related transactions: Interest rate swaps (Hedged items) Interest-related transactions: Long-term loans payable c. Hedging policy Interest rate swap transactions are entered to hedge risks associated with assets and liabilities exposed to market interest rate fluctuation risks. d. Assessing hedge effectiveness The cumulative amounts of fluctuations in the rates or in the cash flows of the hedged items are compared with the cumulative amounts of fluctuations in the rates or in the cash flows of the hedging instruments, and hedge effectiveness is assessed based on the ratio between the two amounts. However, the assessment of hedging effectiveness is omitted for interest rate swaps to which special treatment is applied. 6) Basis of recognizing revenues and expenses Basis of recognizing revenues and costs of construction contracts a. Construction contracts under which the portion of construction to be completed by the end of the current fiscal year may be estimated reliably: Percentage-of-completion method (The percentage of completion is measured as the ratio of the cost incurred to the estimated total cost); and, b. Other construction contracts: Completed-contract method. 7) Other significant matters forming the basis of preparing consolidated financial statements a. Accounting treatment for consumption taxes Consumption taxes are accounted for by the tax-exclusion method. b. Application of consolidated tax system A certain consolidated subsidiary applies consolidated taxation system. 2. Change in accounting policies (Application of accounting standard for business combination, etc.) The Group adopted “Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013 (hereinafter, “Statement No. 21”)), “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, September 13, 2013 (hereinafter, “Statement No. 22”)) and “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013 (hereinafter, “Statement No. 7”)) (together, the “Business Combination Accounting Standards”), from the current fiscal year. As a result, the Company changed its accounting policies to recognize in capital surplus the differences arising from the changes in the Company’s ownership interest of subsidiaries over which the Company continues to maintain control and to record acquisition related costs as expenses in the fiscal year in which the costs are incurred. In addition, the Company changed its accounting policy for the reallocation of acquisition costs due to the completion following provisional accounting to reflect such reallocation in the consolidated financial statements for the fiscal year in which the business combination took place. The Company also changed the presentation of net income and the term “non-controlling interests” is used instead of “minority interests.” Certain amounts in the previous fiscal year comparative information were reclassified to conform to such changes in the current year presentation. With regard to the application of the Business Combination Accounting Standards, the Company followed the provisional treatments in article 58-2 (4) of Statement No. 21, article 44-5 (4) of Statement No. 22 and

article 57-4 (4) of Statement No. 7 with application from the beginning of the current fiscal year prospectively. As a result, operating income and ordinary income for the current fiscal year increased by ¥248 million and income before income taxes increased by ¥247 million. Capital surplus as of the end of the current fiscal year decreased by ¥647 million. Capital surplus as of the end of the current fiscal year in the consolidated statements of changes in net assets decreased by ¥647 million. The effects on net assets per share, basic earnings per share and diluted earnings per share for the current fiscal year were immaterial. 3. Changes in accounting estimates (Change in estimates for asset retirement obligations) For the fiscal year under review, accounting estimates have been changed for asset retirement obligations related to restoration obligations under real estate leasehold contracts of the Company and certain consolidated subsidiaries, with respect to restoration costs to be required at leaving, according to information newly obtained at store closures, etc. Increase due to the change in estimates of ¥8,480 million was added to the ending balance just before the change and, as the change was made as of the end of the current fiscal year, this change had no effect on the results of operations for the year. 4. Changes in presentation method (Consolidated balance sheets) Provision for gift certificates, etc., which was presented as part of other in long-term liabilities in the previous fiscal year, is stated separately from the fiscal year under review because of the increased significance. Provision for gift certificates, etc. for the previous fiscal year was ¥78 million. (Consolidated statements of income) (1) Income on sales of electric power, which was presented as part of other in non-operating income in the previous fiscal year, is stated separately from the fiscal year under review because of the increased significance of the amount. Income on sales of electric power for the previous fiscal year was ¥1,714 million. (2) Gain on sales of stocks of subsidiaries and gain on sales of investment securities, which were presented as part of other in extraordinary income in the previous fiscal year, are stated separately from the fiscal year under review because of the increased significance of the amount. Gain on sales of stocks of subsidiaries and gain on sales of investment securities for the previous fiscal year was ¥126 million and ¥60 million, respectively. 5. Consolidated balance sheets (1) Assets pledged as collateral Land ¥118 million Land is pledged as real guarantee for customers’ housing loans of ¥61 million in certain consolidated subsidiaries. (2) Accumulated depreciation on property and equipment ¥275,627 million (3) Reduction entry in total of ¥107 million (buildings: ¥104 million, other property and equipment: ¥3 million) is performed due to receipt of operating expense subsidies for the promotion of establishment of company sites such as in power supply underpopulated areas in the past fiscal years.

(4) Contingency liabilities 1) Claim of accounts receivable of ¥14,950 million from credit loan companies, etc. are assigned. 2) The guarantee obligations for home buyers ¥823 million 3) Other ¥43 million (5) Notes receivable discounted ¥1,428 million (6) Commitment line contracts The Company has concluded commitment line contracts with its seven correspondent financial institutions to finance working capital efficiently. The balance of unexecuted borrowings based on the commitment line contracts at the end of the fiscal year under review is as follows: Lines of credit ¥50,000 million Credit utilized ¥– million Available credit ¥50,000 million 6. Consolidated statements of income (Loss on closing of stores) Loss on closing of stores of ¥4,389 million was recognized in extraordinary loss in the consolidated statements of income for the year under review, at the amount incurred in the fiscal year due to store closing implemented as part of the “Improvement and Reform of Store Efficiency,” one of the management structural reforms. 7. Consolidated statements of changes in net assets (1) Total number of issued shares (Thousands of shares) Number of shares at Increase in shares Decrease in shares Number of shares at Class beginning of fiscal year during fiscal year during fiscal year end of fiscal year Common stock 966,489 – – 966,489 (2) Total number of shares of treasury stock (Thousands of shares) Number of shares at Increase in shares Decrease in shares Number of shares at Class beginning of fiscal year during fiscal year during fiscal year end of fiscal year Common stock 212,458 0 48,324 164,133

Note: The increase in the number of shares of treasury stock of common stock is due to purchase of fractional shares. The decrease is due to disposal of treasury stock by way of third-party allotment. (3) Matters relating to dividends paid 1) Cash dividends paid Matters on dividends by the resolution of the 38th Ordinary General Meeting of Shareholders held on June 26, 2015 • Total amount of dividends: ¥4,524 million • Dividend per share: ¥6 • Record date: March 31, 2015 • Effective date: June 29, 2015 2) Dividends with a record date that falls within the current fiscal year but an effective date in the following year The following proposal will be submitted to the 39th Ordinary General Meeting of Shareholders to be held on June 29, 2016. • Total amount of dividends: ¥9,628 million • Dividend per share: ¥12

• Source of payment: Retained earnings • Record date: March 31, 2016 • Effective date: June 30, 2016 (4) Matters related to subscription rights to shares at the end of the current fiscal year

Company name Yamada Denki Co., Ltd. Yamada Denki Co., Ltd. Euro yen zero coupon convertible bonds Subscription rights to shares as stock Contents subject to call due 2019 compensation-type stock options Class of shares underlying subscription Common stock Common stock rights to shares Number of shares underlying 185,873,605 shares 1,568,000 shares subscription rights to shares Outstanding balances of subscription – ¥521 million rights to shares 8. Financial instruments (1) Status of financial instruments The Group raises necessary funds based on capital budgeting, mainly through loans from banks and issuance of bonds. Temporary surplus funds are invested in highly liquid instruments, and working capital is financed through bank loans. Each operating department of the Company periodically monitors the Company’s counterparties and manages the due dates and balances of trade receivables and long-term loans receivable in order to reduce credit risk by early identification of a possible default due to financial trouble of any counterparty. The Company continuously reviews portfolios of securities by periodically monitoring fair values of each security and the financial condition of the issuer as well as market condition and the relationship with the issuer. The Group utilizes derivative financial instruments only to manage risks and does not enter into such transactions for speculative trading purposes.

(2) Fair value of financial instruments The following is a summary of book values and estimated fair values of financial instruments as of March 31, 2016. Financial instruments whose fair values are virtually impossible to estimate were excluded (see (Notes) 2.). (Millions of yen) Book value Fair value Differences (1) Cash and time deposits 31,604 31,604 – (2) Notes and accounts receivable 59,249 Allowance for doubtful accounts (*1) (3,577) 55,672 55,672 – (3) Investment securities (*2) Available-for-sale securities 3,381 3,889 507 (4) Guarantee deposits (including current 102,254 portion) (*3) Allowance for doubtful accounts (*1) (61) 102,192 107,185 4,992 Total assets 192,851 198,351 5,500 (5) Notes and accounts payable 79,950 79,950 – (6) Short-term loans payable 67,695 67,695 – (7) Bonds 100,316 98,807 (1,508) (8) Long-term loans payable (including 164,368 173,944 9,575 current portion) Total liabilities 412,330 420,397 8,066 (9) Derivative transactions (*4) 1) Derivative transactions to which hedge (86) (86) – accounting is not applied 2) Derivative transactions to which hedge – – – accounting is applied Total derivative transactions (86) (86) –

(*1) An allowance for doubtful accounts estimated and provided with respect to certain identifiable items was deducted from each of notes and accounts receivable and guarantee deposits. (*2) Investment securities include investments in listed associates accounted for using the equity method. Valuation gains (losses) represent gains (losses) on valuation of such investments. (*3) Government bonds pledged by a certain consolidated subsidiary as security deposit were included. (*4) Debt and credit attributed to derivative transactions are indicated as net amounts, and net debt is in parenthesis. (Notes) 1. Details of methodologies and assumptions used to estimate fair value of financial instruments, and securities and derivative transactions Assets (1) Cash and time deposits, (2) Notes and accounts receivable Because these assets are settled in the short term, their fair values approximate their book values. Thus, the amounts indicated in the above table were based on their book values. (3) Investment securities The fair values of equity securities are based on quoted market prices, and the fair values of debt securities are based on quoted market prices or quotes obtained from financial institutions. (4) Guarantee deposits The fair values of guarantee deposits are based on the present value discounted by the rate which reflects the applicable due date and credit risk.

Liabilities (5) Notes and accounts payable, (6) Short-term loans payable Since these liabilities are payable in the short term, their fair values approximate their book values. Thus, the amounts indicated in the above table were based on their book values. (7) Bonds The fair values of bonds are each based on the present value of principal discounted by the rate which reflects the remaining maturity period and credit risk. (8) Long-term loans payable The fair value of long-term loans payable is calculated by a method discounting the total amount of principal and interest by the rate assumed to be applicable if similar new loans are extended. Long-term loans payable with floating interest rates are subject to special treatment of interest rate swap (see (9) below). The fair value of such long-term loans payable is calculated by a method discounting the total amount of principal and interest which is treated with the interest rate swap as one by the rate reasonably estimated to be applicable if similar new loans are extended. (9) Derivative transactions 1) Derivative transactions to which hedge accounting is not applied The Company enters into foreign currency forward contracts. The calculation method for the fair value of such contracts is based on the price quoted by correspondent financial institutions. 2) Derivative transactions to which hedge accounting is applied The fair value of an interest rate swap contract is included in the fair value of the corresponding hedged long- term loans payable since such derivative contract is accounted for as component of the corresponding hedged long-term loans payable (see (8) above). 2. Securities of which fair value is virtually impossible to estimate

Classification Book value (Millions of yen) Investment securities (*1) (1) Equity securities of subsidiaries and associates Equity securities of subsidiaries 337 Equity securities of associates 11 (2) Available-for-sale securities Unlisted equity securities 287 Investments in LPS (*2) 24 Guarantee deposits (*3) 17,363

(*1) Unlisted equity securities were excluded from “(3) Investment securities” because they are not traded in a market and their fair values are virtually impossible to estimate. (*2) Investments in LPS were excluded from disclosures of fair values because the fair value of LPS’s assets, such as unlisted equity securities and the like, are virtually impossible to estimate. (*3) Guarantee deposits whose redemption schedule cannot be reasonably estimated and whose fair values are virtually impossible to estimate were excluded from “(4) Guarantee deposits.” 9. Investment and rental properties Not presented as the aggregate amount is immaterial. 10. Per share information (1) Net assets per share ¥666.03 (2) Basic earnings per share ¥38.22 11. Subsequent events (Damages suffered as a result of the 2016 Kumamoto Earthquake) As a result of the 2016 Kumamoto Earthquake, which occurred in April 2016, damages, including damage and destruction of merchandise and buildings, were suffered at stores belonging to the Company and the Group inside the affected region.

The Company is still investigating the impact of this event on the consolidated financial statements. 12. Other notes (Impairment loss) The impairment losses are recorded for the following assets for the fiscal year under review. Location Purpose Class Buildings and structures, land, lease Hiroshima prefecture, etc. Retail stores, business assets assets, other property and equipment, etc. Buildings and structures, land, lease Ibaraki prefecture, etc. Subleasing stores, lease assets assets, other property and equipment, etc. – Other Goodwill The consolidated Group regards primarily retail store or branch office as a base unit for its minimum cashflow-generating unit, grouping subleasing stores, lease assets and idle assets according to each property unit. For certain consolidated subsidiaries, such grouping is by each company. Other assets such as headquarters and factories are grouped as common assets as they do not generate individual cash flows. Regarding store assets, business assets, subleasing assets, lease assets, and common assets which were determined unlikely to be able to fully recover the book value of noncurrent assets of the relevant asset group with operating activities continuously recognizing losses, and goodwill, whose income expected under the business plan considered at the time of the share acquisition is unlikely to be achieved, the book value of the relevant asset group is written down to the recoverable amount. The written down amount is recorded under extraordinary loss as impairment loss (¥7,781 million). The breakdown is: buildings and structures (¥3,232 million), land (¥22 million), lease assets (¥884 million), other property and equipment (¥1,071 million), intangible assets (¥1,607 million), other investments and other assets (¥962 million). The recoverable amount from such asset groups are primarily measured by the net selling price and assessed based on the value assessed for property tax purposes. The net selling price of lease assets, intangible assets, and other investments and other assets is assessed as zero. Impairment of goodwill is an amortization in accordance with the Paragraph 32 of “Practical Guidelines on Capital Consolidation Procedures in Consolidated Financial Statements” (the Accounting System Committee Report No. 7, issued by the JICPA).

Independent Accountants’ Report on Consolidated Financial Statements

Independent Accountants’ Report

May 10, 2016 The Board of Directors Yamada Denki Co., Ltd. KPMG AZSA LLC Yasuyuki Nagasaki (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Kentaro Mikuriya (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Yukio Miyaichi (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant We have audited the consolidated financial statements, comprising the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets and the related notes of Yamada Denki Co., Ltd. as at March 31, 2016 and for the year from April 1, 2015 to March 31, 2016 in accordance with Article 444-4 of the Companies Act.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audit as independent accountants. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position and the results of operations of Yamada Denki Co., Ltd. and its consolidated subsidiaries for the period, for which the consolidated financial statements were prepared, in accordance with accounting principles generally accepted in Japan.

Other Matter Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified Public Accountants Law of Japan.

Audit Report of the Audit & Supervisory Board on Consolidated Financial Statements

Audit Report on Consolidated Financial Statements

With respect to the consolidated financial statements (consolidated balance sheet, consolidated statement of income, consolidated statement of changes in net assets, and notes to consolidated financial statements) for the 39th term (from April 1, 2015 to March 31, 2016), the Audit & Supervisory Board has prepared this audit report after deliberations based on the audit reports prepared by each Audit & Supervisory Board Member, and hereby reports as follows: 1. Method and Contents of Audit by Audit & Supervisory Board Members and the Audit & Supervisory Board The Audit & Supervisory Board has established the audit policies, assignment of duties, etc., and received a report from each Audit & Supervisory Board Member regarding the status of implementation of their audits and results thereof. In addition, the Audit & Supervisory Board has received reports from the Directors, etc. and the independent accountants regarding the status of performance of their duties, and requested explanations as necessary. In conformity with the audit policies and assignment of duties, etc. established by the Audit & Supervisory Board, each Audit & Supervisory Board Member received reports on consolidated financial statements from the Directors and employees, etc. and requested explanations as necessary. In addition, each Audit & Supervisory Board Member monitored and verified whether the independent accountants maintained their independence and properly conducted their audit, received a report from the independent accountants on the status of their performance of duties, and requested explanations as necessary. Each Audit & Supervisory Board Member was notified by the independent accountants that it had established a “system to ensure that the performance of the duties of the independent auditors was properly conducted” (the matters set forth in the items of Article 131 of the Ordinance on Accounting of Companies) in accordance with the “Quality Control Standards for Audits” (Business Accounting Council, October 28, 2005), and requested explanations as necessary. Based on the above-described methods, each Audit & Supervisory Board Member examined the consolidated financial statements for the business year under consideration. 2. Results of Audit We acknowledge that the methods and results of audit performed by the independent auditor KPMG AZSA LLC are appropriate.

May 16, 2016 Audit & Supervisory Board of Yamada Denki Co., Ltd. Makoto Igarashi [Seal] Standing Audit & Supervisory Board Member Yutaka Nakamura [Seal] Audit & Supervisory Board Member Masamitsu Takahashi [Seal] Audit & Supervisory Board Member

Notes: 1. Audit & Supervisory Board Members Yutaka Nakamura and Masamitsu Takahashi are External Audit & Supervisory Board Members as specified in Article 2, Paragraph 16, and Article 335, Item 3 of the Companies Act. 2. Standing Audit & Supervisory Board Member Ginji Karasawa has resigned as of April 15, 2016, and thus has not signed and sealed the audit report.

NON-CONSOLIDATED BALANCE SHEETS As of March 31, 2016 (Millions of yen) ASSETS Current assets: Cash and time deposits 17,959 Accounts receivable 43,957 Merchandise 287,674 Supplies 1,402 Short-term loans receivable from subsidiaries and affiliates 24,682 Prepaid expenses 5,842 Deferred tax assets 11,425 Accounts receivable-other 19,390 Current portion of guarantee deposits 5,855 Other current assets 1,310 Allowance for doubtful accounts (2,308) Total current assets 417,193

Noncurrent assets: Property and equipment: Buildings 185,277 Structures 5,150 Machinery and equipment 1,320 Vehicles 4 Tools, furniture and fixtures 7,875 Land 162,262 Lease assets, net 9,010 Construction in progress 7,238 Total property and equipment, net 378,140

Intangible assets: Leasehold right 31,686 Other assets 513 Total intangible assets 32,199

Investments and other assets: Investment securities 957 Stocks of subsidiaries and affiliates 28,421 Long-term loans receivable from subsidiaries and affiliates 53,690 Long-term prepaid expenses 9,354 Deferred tax assets 16,718 Guarantee deposits 98,449 Other assets 17,373 Allowance for doubtful accounts (18,442) Total investments and other assets 206,522 Total noncurrent assets 616,862 Total assets 1,034,055

NON-CONSOLIDATED BALANCE SHEETS As of March 31, 2016 (Millions of yen) LIABILITIES AND NET ASSETS LIABILITIES: Current liabilities: Notes payable 261 Accounts payable 62,521 Short-term loans payable 70,571 Current portion of long-term loans payable 54,773 Lease obligations 1,899 Accounts payable-other 16,367 Accrued expenses 3,250 Income taxes payable 11,830 Advances received 9,548 Provision for bonuses 6,283 Provision for directors’ bonuses 112 Provision for point card certificates 15,919 Other current liabilities 4,281 Total current liabilities 257,618

Long-term liabilities: Bonds 100,316 Long-term loans payable 97,800 Lease obligations 9,561 Provision for retirement benefits 18,773 Provision for product warranties 8,971 Asset retirement obligations 21,000 Other long-term liabilities 6,649 Total long-term liabilities 263,074 Total liabilities 520,693

NET ASSETS: Shareholders’ equity: Common stock 71,058 Capital surplus 73,649 Legal capital surplus 70,977 Other capital surplus 2,671 Retained earnings 435,971 Legal retained earnings 312 Other retained earnings 435,659 General reserve 406,000 Retained earnings brought forward 29,659 Treasury stock, at cost (68,231) Total shareholders’ equity 512,448 Valuation and translation adjustments: 393 Valuation difference on available-for-sale securities, net of taxes 393 Subscription rights to shares 521 Total net assets 513,362 Total liabilities and net assets 1,034,055

(Millions of yen with fractional amounts discarded, unless otherwise noted)

NON-CONSOLIDATED STATEMENTS OF INCOME Fiscal year ended March 31, 2016 (Millions of yen) Net sales 1,420,744 Cost of sales 1,059,803 Gross profit 360,941 Selling, general and administrative expenses 313,597 Operating income 47,344

Non-operating income: Interest income 1,385 Purchase discounts 6,924 Rent income 2,181 Other 6,329 16,820 Non-operating expenses: Interest expenses 1,515 Rent expenses 2,009 Rental expenses 2,214 Foreign exchange losses 3,042 Other 1,734 10,517 Ordinary income 53,648

Extraordinary income: Gain on sales of investment securities 497 Other 3 500 Extraordinary loss: Loss on disposal of noncurrent assets 255 Impairment loss 6,201 Loss on closing of stores 4,381 Loss on valuation of stocks of subsidiaries 5,390 Other 434 16,663 Income before income taxes 37,485 Income taxes-current 14,941 Income taxes-deferred 973 Profit 21,570

(Millions of yen with fractional amounts discarded, unless otherwise noted)

NON-CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS Fiscal year ended March 31, 2016 (Millions of yen) Shareholders’ equity Capital surplus Retained earnings Other retained Total earnings Treasury Common share- Legal Other Total Legal Total stock, at stock Retained holders’ capital capital capital retained retained cost surplus surplus surplus earnings General earnings earnings equity reserve brought forward Balance at April 1, 71,058 70,977 – 70,977 312 400,000 18,613 418,925 (88,320) 472,640 2015 Changes of items

during the period Provision of 6,000 (6,000) – – general reserve Cash dividends (4,524) (4,524) (4,524) Profit 21,570 21,570 21,570 Purchase of (0) (0) treasury stock Disposal of 2,671 2,671 20,088 22,760 treasury stock Other changes in the period, net Total changes of items during the – – 2,671 2,671 – 6,000 11,046 17,046 20,088 39,807 period Balance at March 71,058 70,977 2,671 73,649 312 406,000 29,659 435,971 (68,231) 512,448 31, 2016

Valuation and translation adjustments Valuation difference on Total valuation and Subscription rights to shares Total net assets available-for-sale securities, translation adjustments net of taxes Balance at April 1, 954 954 297 473,893 2015 Changes of items

during the period Provision of – general reserve Cash dividends (4,524) Profit 21,570 Purchase of (0) treasury stock Disposal of 22,760 treasury stock Other changes in the period, (561) (561) 224 (337) net Total changes of items during the (561) (561) 224 39,469 period Balance at March 393 393 521 513,362 31, 2016

(Millions of yen with fractional amounts discarded, unless otherwise noted)

Notes to non-consolidated financial statements 1. Significant accounting policies (1) Valuation bases and methods of assets 1) Shares of subsidiaries and associates Stated at cost determined by the moving-average method. 2) Available-for-sale securities • Available -for-sale securities with fair market value: Stated at fair value based on the market price at the balance sheet date. Unrealized gains and losses on such securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gain and loss on sale of such securities is computed using the moving-average cost. • Other available-for-sale securities with no fair market values: Stated at cost determined by the moving-average method. The Company records investments in limited liability investment partnerships or similar partnerships (deemed as “securities” under the provisions set forth in Paragraph 2, Article 2 of the Financial Instruments and Exchange Act) using the amount corresponding to the Company’s equity in such partnerships based on the latest financial reports accessible depending on the reporting dates stipulated in the partnership agreement. 3) Derivatives Stated at fair value. 4) Valuation bases and methods of inventories The Company states primarily at the moving average cost. (The balance sheet amounts of the inventories are calculated at the lowered book values reflecting potential decline in profitability). (2) Depreciation and amortization methods for noncurrent assets 1) Property and equipment (including real estate for rent, except for lease assets) Stated at the declining balance method. Depreciation is mainly computed using the declining-balance method at rates based on the estimated useful lives of the respective assets, except for buildings (excluding building facilities) acquired on or after April 1, 1998, which are depreciated based on the straight-line method. Assets for which the acquisition cost is at least ¥100,000 and less than ¥200,000 are mainly depreciated evenly over three years. Buildings: three to 47 years 2) Intangible assets • Software for internal use Amortized using the straight-line method over an estimated useful life of five years. • Other intangible assets Amortized using the straight-line method. 3) Lease assets The Company uses the straight-line method over the terms of its leases with zero residual value for leased assets related to finance leases that do not transfer ownership. 4) Long-term prepaid expenses Long-term prepaid expenses are amortized using the straight-line method.

(3) Standards for allowances and provisions 1) Allowance for doubtful accounts The Company provides an allowance for doubtful accounts at an amount sufficient to cover possible losses on collection. It consists of the estimated uncollectible amount with respect to certain identified doubtful receivables and the amount calculated based on historical loss experience for other doubtful receivables. 2) Provision for bonuses The Company provides a provision for bonuses at the estimated amount accrued during the current fiscal year to cover future bonus payments to employees. 3) Provision for directors’ bonuses The Company provides a provision for bonuses to directors and Audit & Supervisory Board members at the estimated amount accrued during the current fiscal year to cover future bonus payments to directors and Audit & Supervisory Board members. 4) Provision for point card certificates The Company provides its customers with credit points when they make purchases at their stores. Thus, the Company sets aside a provision for the estimated future costs of credit points. 5) Provision for retirement benefits To make preparations for the payment of retirement benefits to employees, the Company records the amount calculated by deducting plan assets from retirement benefit obligations, based on the anticipated amounts of payments at the balance sheet date. Prior service costs are amortized from the fiscal year in which such costs are incurred using the straight-line method over a certain period of time (five years) not exceeding the average remaining service period of the eligible employees. Actuarial gains or losses incurred during the year are amortized from the succeeding fiscal year using the straight-line method over a certain period of time (five years) not exceeding the average remaining service period of the eligible employees. 6) Provision for product warranties The Company sets aside a provision for warranty for future repair expenses at the estimated amount calculated based on historical repair expense. (4) Significant hedge accounting method 1) Hedge accounting method The exceptional treatments are applied to interest rate swaps if the requirements for applying the hedge accounting method are met. 2) Hedging instruments and hedged items Hedging instruments – Derivative transactions (interest rate swaps) Hedged items – Long-term loans payable 3) Hedging policy The Company enters into derivative transactions only for the purpose to hedge risks associated with assets and liabilities exposed to market interest rate fluctuation risks. 4) Assessing hedge effectiveness Assessment of hedging effectiveness is omitted for interest rate swaps since special treatment is applied for them.

(5) Other matters for the preparation of the non-consolidated financial statements 1) Accounting for retirement benefits Treatment of unrealized actuarial gains and losses and unrealized prior service costs in the balance sheets of non-consolidated financial statements differ from that of the consolidated financial statements. Retirement benefit obligations after adjusting the unrealized actuarial gains and losses and unrealized prior service costs is recorded under the provision for retirement benefits in the non- consolidated balance sheets. 2) Accounting treatment for consumption taxes Consumption taxes are accounted for by the tax-exclusion method. 2. Change in accounting policies (Application of accounting standard for business combination, etc.) The Company adopted “Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013 (hereinafter, “Statement No. 21”)) and “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013 (hereinafter, “Statement No. 7”)) (together, the “Business Combination Accounting Standards”), from the current fiscal year. As a result, the Company changed its accounting policies to record acquisition related costs as expenses in the fiscal year in which the costs are incurred. In addition, the Company changed its accounting policy for the reallocation of acquisition costs due to the completion following provisional accounting to reflect such reallocation in the non-consolidated financial statements for the fiscal year in which the business combination took place. Certain amounts in the previous fiscal year comparative information were reclassified to conform to such changes in the current year presentation. With regard to the application of the Business Combination Accounting Standards, the Company followed the provisional treatments in article 58-2 (4) of Statement No. 21 and article 57-4 (4) of Statement No. 7 with application from the beginning of the current fiscal year prospectively. This application has no impact on non-consolidated financial statements for the fiscal year. 3. Changes in presentation method (Non-consolidated balance sheets) Software (¥249 million in the current fiscal year) and telephone subscription right (¥264 million in the current fiscal year) under intangible assets, reported separately in the previous fiscal year, are included in other under intangible assets in the current fiscal year because the amount became immaterial. (Non-consolidated statements of income) Rent income, which was presented as part of other in non-operating income in the previous fiscal year, is stated separately from the fiscal year under review because of the increased significance of the amount. Rent income for the previous fiscal year was ¥1,926 million. 4. Changes in accounting estimates (Change in estimates for asset retirement obligations) For the fiscal year under review, accounting estimates have been changed for asset retirement obligations related to restoration obligations under real estate leasehold contracts of the Company, with respect to restoration costs to be required at leaving, according to information newly obtained at store closures, etc. Increase due to the change in estimates of ¥8,335 million was added to the ending balance just before the change and, as the change was made as of the end of the current fiscal year, this change had no effect on the results of operations for the year. 5. Non-consolidated balance sheets (1) Accumulated depreciation on property and equipment ¥183,973 million (2) Reduction entry in total of ¥107 million (buildings: ¥104 million, tools, furniture and fixtures: ¥3 million) is performed due to the receipt of operating expense subsidies for promotion of establishment of company sites such as in power supply underpopulated areas in past fiscal years.

(3) Contingency liabilities 1) Claims of accounts receivable of ¥13,900 million from credit loan companies are assigned. 2) Joint and several guarantees are provided in regard to financial institution and leasing company obligations of the following subsidiaries.

Subject subsidiary Guaranteed company Guarantee amount Housetec Inc. Financial institution ¥600 million Azuma Metal Co., Ltd. Leasing company ¥15 million 3) A letter of awareness is issued in regard to financial institution borrowings of the following subsidiaries. Subject subsidiary Subject outstanding balance of liability YAMADA SXL HOME CO., LTD. ¥1,560 million Best Denki Co., Ltd. ¥4,827 million Total ¥6,387 million (4) Commitment line contracts The Company has concluded commitment line contracts with its seven correspondent financial institutions to finance working capital efficiently. The balance of unexecuted borrowings based on the commitment line contracts at the end of the fiscal year under review is as follows: Lines of credit ¥50,000 million Credit utilized ¥– million Available credit ¥50,000 million (5) Monetary claims from and liabilities to subsidiaries and affiliates 1) Short-term monetary claims ¥53,044 million 2) Long-term monetary claims ¥53,778 million 3) Short-term monetary liabilities ¥5,920 million 4) Long-term monetary liabilities ¥107 million 6. Non-consolidated statements of income (1) Transactions with affiliates 1) Sales ¥224,661 million 2) Purchases ¥10,724 million 3) Other ¥4,652 million 4) Transactions other than the Company’s operation ¥1,799 million (2) Loss on closing of stores Loss on closing of stores of ¥4,381 million was recognized in extraordinary loss in the non-consolidated statements of income for the year under review, at the amount incurred in the fiscal year due to store closing implemented as part of the “Improvement and Reform of Store Efficiency,” one of the management structural reforms. 7. Non-consolidated statements of changes in net assets Total number of shares of treasury stock (Thousands of shares) Number of shares at Increase in shares Decrease in shares Number of shares at Class beginning of fiscal year during fiscal year during fiscal year end of fiscal year Common stock 212,458 0 48,324 164,133

Note: The increase in the number of shares of treasury stock of common stock is due to purchase of fractional shares. The decrease is due to disposal of treasury stock by way of third-party allotment.

8. Tax effect accounting (1) Significant components of deferred tax assets and liabilities (Millions of yen) Deferred tax assets Non-deductible amount of loss on valuation of products 1,085 Impairment loss 5,549 Loss on valuation of investment securities 187 Loss on valuation of shares of subsidiaries and associates 4,441 Amount exceeding the deductible limit of allowance for doubtful accounts 6,321 Amount exceeding the deductible limit of provision of bonuses 1,928 Amount exceeding the deductible limit of provision for point card certificates 4,885 Amount exceeding the deductible limit of provision for retirement benefits 5,748 Amount exceeding the deductible limit of provision for product warranties 2,738 Asset retirement obligations 6,396 Unsettled obligations 461 Other 3,383 Subtotal deferred tax assets 43,128 Valuation allowance (6,707) Total deferred tax assets 36,420 Deferred tax liabilities Asset retirement obligations (4,850) Foreign exchange gains (2,630) Valuation difference on assets received from merger (741) Other (54) Total deferred tax liabilities (8,277) Deferred tax assets and liabilities, net 28,143 (2) Revisions to the amounts of deferred tax assets and liabilities as a result of a change in the corporate tax rate Following the enactment in the Diet of the “Act on Partial Revision of the Income Tax Act, etc.” (Act No. 15 of 2016) and the “Act on Partial Revision of the Local Taxation Act, etc.” (Act No. 13 of 2016) on March 29, 2016, the income tax rates are to be lowered from the fiscal year beginning on or after April 1, 2016. Based on the amendments, the statutory income tax rates utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized from April 1, 2016 to March 31, 2018 and on or after April 1, 2018 were changed from 32.8% to 30.7% and 30.5%, respectively, as of March 31, 2016. Due to these changes in statutory income tax rates, net deferred tax assets (after deducting the deferred tax liabilities) decreased by ¥1,372 million as of March 31, 2016, deferred income tax expense recognized for the fiscal year ended March 31, 2016 increased by ¥1,375 million and valuation differences on available-for-sale securities increased by ¥2 million.

9. Related party transactions (1) Subsidiaries and associates

Balance as Transaction Nature of Voting Rights of March Capital or Relation with the Amount Account Type Name Location Business or Holding or Held Transactions 31, 2016 Contribution Party (Millions of Title Occupation (%) (Millions yen) of yen) Letter of awareness Sales of Hakata, issued Sales of Best Denki ¥37,892 home (Holding) Accounts Subsidiaries Fukuoka, products 114,001 14,882 Co., Ltd. million electrical Directly 52.1 Loans to it receivable Fukuoka (Note 1) appliances Interlocking directorate: 5 YAMADA Loans to it Long-term DENKI Beijing, $30,000 Investment, (Holding) Loans to it Subsidiaries – loans 13,142 (CHINA) China thousand wholesale Directly 100.0 Interlocking (Note 2) receivable CO., LTD. directorate: 1 Sales of home Yamada electrical Shenyang, (Holding) Loans to it Long-term Denki $66,000 appliances Loans to it Subsidiaries Liaoning, Directly 50.0 – loans 14,333 (Shenyang) thousand and home Interlocking (Note 2) China receivable Co., Ltd. information Indirectly 50.0 directorate: 1 appliances, etc.

The terms of transaction, the policy for determining the terms of transaction, etc. Notes: 1. Sales of products are determined based on contracts, etc., after mutual consultation with the market price taken into consideration. 2. Loan interest is reasonably determined taking the financial condition of the subsidiary and the market interest rates into consideration. 3. The transaction amounts shown above do not include consumption taxes. (2) Directors, officers and major individual shareholders

Balance as Capital or Transaction Nature of Voting Rights of March Contribution Relation with the Amount Account Type Name Location Business or Holding or Held Transactions 31, 2016 (Millions of Party (Millions of Title Occupation (%) (Millions yen) yen) of yen) (Held) Prepaid Directly 8.14 expenses (Prepaid 86 Company 100% Lease of stores and rent directly owned Rent payment Tecc Real estate dormitories and expenses) Takasaki, by Noboru and guarantee Planning 53 transaction guarantee deposits 957 Guarantee Gunma Yamada, deposits Co., Ltd. business deposits President and Interlocking (Note 1) 146 Representative directorate: 6 due within Company, etc. one year of which the Director of the Company, and Guarantee majority of 2,572 voting rights his relatives deposits are held by a Subsidiary of Tecc Cosmetics Purchase of Director, Puinpul Co., Takasaki, Planning Co., Ltd. Accounts 99 sales None products 122 16 Auditor, and Ltd. Gunma payable his or her close business Interlocking (Note 2) family member directorate: 1 (including a Subsidiary of a subsidiary of company with the company, Director of the etc.) Company, Shouji Subcontracting Sales and Accounts Orita, and his installation 88 7 SHOICHI- repair, etc. payable Kagoshima, relatives directly (Note 3) DENKI 75 of home None Kagoshima holding 100% of CO., LTD. electrical voting rights; appliances installation and delivery business of Subcontracting Accounts electrical freight costs 39 payable - 6 appliances, etc. (Note 3) other The terms of transaction, the policy for determining the terms of transaction, etc. Notes: 1. Rent payments and guarantee deposits are determined taking transactions in the neighborhood into consideration. 2. Products purchased are determined taking the market price of similar products into consideration.

3. Subcontracting installation and subcontracting freight costs are determined taking the market price into consideration. 4. The transaction amounts shown above do not include consumption taxes. 10. Per share information (1) Net assets per share ¥639.16 (2) Basic earnings per share ¥27.12 11. Subsequent events (Damages suffered as a result of the 2016 Kumamoto Earthquake) It is as described in “11. Subsequent events of Notes to consolidated financial statements.” 12. Matters regarding company subject to consolidated dividend regulations N/A 13. Other (Impairment loss) The impairment losses are recorded for the following assets for the fiscal year under review.

Location Purpose Class Buildings, structures, machinery and Hiroshima prefecture, etc. Retail stores equipment, tools, furniture and fixtures, lease assets, etc. Ibaraki prefecture, etc. Subleasing stores, lease assets Buildings, structures, etc. The Company regards primarily stores as a base unit for its minimum cashflow-generating unit, grouping subleasing stores, lease assets and idle assets according to each property unit. Regarding store assets, subleasing assets, and lease assets which were determined unlikely to be able to fully recover the book value of noncurrent assets of the relevant asset group with operating activities continuously recognizing losses, book value of the relevant asset group is written down to the recoverable amount. The written down amount is recorded under extraordinary loss as impairment loss (¥6,201 million). The breakdown is: buildings (¥2,315 million), structures (¥526 million), machinery and equipment (¥208 million), tools, furniture and fixtures (¥860 million), lease assets (¥883 million), leasehold rights (¥455 million), other intangible assets (¥1 million), long-term prepaid expenses (¥179 million), other investments and other assets (¥769 million). The recoverable amounts from such asset groups are mainly based on the net selling price, which in turn is based on the value assessed for property tax purposes. The net selling prices of intangible assets, lease assets and long-term prepaid expenses are set at zero.

Independent Accountants’ Report on Non-consolidated Financial Statements

Independent Accountants’ Report

May 10, 2016 The Board of Directors Yamada Denki Co., Ltd. KPMG AZSA LLC Yasuyuki Nagasaki (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Kentaro Mikuriya (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant Yukio Miyaichi (Seal) Designated Limited Liability Partner Engagement Partner Certified Public Accountant We have audited the financial statements, comprising the balance sheet, the statement of income, the statement of changes in net assets and the related notes, and the supplementary schedules of Yamada Denki Co., Ltd. as at March 31, 2016 and for the year from April 1, 2015 to March 31, 2016 in accordance with Article 436-2-1 of the Companies Act.

Management’s Responsibility for the Financial Statements and Others Management is responsible for the preparation and fair presentation of the financial statements and the supplementary schedules in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of financial statements and the supplementary schedules that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on the financial statements and the supplementary schedules based on our audit as independent accountants. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the supplementary schedules are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the supplementary schedules. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements and the supplementary schedules, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements and the supplementary schedules in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the supplementary schedules.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements and the supplementary schedules referred to above present fairly, in all material respects, the financial position and the results of operations of Yamada Denki Co., Ltd. for the period, for which the financial statements and the supplementary schedules were prepared, in accordance with accounting principles generally accepted in Japan.

Other Matter Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of the Certified Public Accountants Law of Japan.

Audit Report of the Audit & Supervisory Board

Audit Report

With respect to the Directors’ performance of their duties during the 39th term (from April 1, 2015 to March 31, 2016), the Audit & Supervisory Board has prepared this audit report after deliberations based on the audit reports prepared by each Audit & Supervisory Board Member, and hereby reports as follows: 1. Method and Contents of Audit by Audit & Supervisory Board Members and the Audit & Supervisory Board (1) The Audit & Supervisory Board has established the audit policies, assignment of duties, etc., and received a report from each Audit & Supervisory Board Member regarding the status of implementation of their audits and results thereof. In addition, the Audit & Supervisory Board has received reports from the Directors, etc. and the independent accountants regarding the status of performance of their duties, and requested explanations as necessary. (2) In conformity with the Audit & Supervisory Board Member auditing standards established by the Audit & Supervisory Board, and in accordance with the audit policies and assignment of duties, etc., each Audit & Supervisory Board Member endeavored to facilitate mutual understanding with the Directors, the internal audit division and other employees, etc., endeavored to collect information and maintain and improve the audit environment, and conducted audits by the following methods. 1) Each Audit & Supervisory Board Member attended the meetings of the Board of Directors and other important meetings, received reports on the status of performance of duties from the Directors and employees, etc. and requested explanations as necessary, inspected important approval/decision documents, and investigated the status of the corporate affairs and assets at the head office and other principal business locations. With respect to the subsidiaries, each Audit & Supervisory Board Member endeavored to facilitate mutual understanding and information exchange with the directors and audit & supervisory board members, etc. of each subsidiary and received from subsidiaries reports on their respective businesses as necessary. 2) Each Audit & Supervisory Board Member received reports on a regular basis from the Directors and employees, etc., requested explanations as necessary, and provided opinions with respect to matters mentioned in the business report. Such matters consist of the contents of the Board of Directors’ resolutions regarding the development and maintenance of the system to ensure that the Directors’ performance of their duties complied with applicable laws and regulations and the Articles of Incorporation of the Company and other systems that are set forth in Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act of Japan as being necessary for ensuring the appropriateness of the corporate affairs of a corporate group consisting of a joint stock company (kabushiki kaisha) and its subsidiaries, and the systems developed and maintained based on such resolutions (internal control systems). 3) In addition, each Audit & Supervisory Board Member monitored and verified whether the independent accountants maintained their independence and properly conducted their audit, received a report from the independent accountants on the status of their performance of duties, and requested explanations as necessary. Each Audit & Supervisory Board Member was notified by the independent accountants that it had established a “system to ensure that the performance of the duties of the independent auditors was properly conducted” (the matters set forth in the items of Article 131 of the Ordinance on Accounting of Companies) in accordance with the “Quality Control Standards for Audits” (Business Accounting Council, October 28, 2005), and requested explanations as necessary. Based on the above-described methods, each Audit & Supervisory Board Member examined the business report and the annexed detailed statements, non-consolidated financial statements (balance sheet, statement of income, statement of changes in net assets, and notes to non-consolidated financial statements) and the annexed detailed statements thereto for the business year under consideration.

2. Results of Audit (1) Results of audit of business report, etc. 1) We acknowledge that the business report and the annexed detailed statements thereto fairly present the status of the Company in conformity with the applicable laws and regulations and the Articles of Incorporation of the Company. 2) We acknowledge that no misconduct or material fact constituting a violation of any law or regulation or the Articles of Incorporation of the Company was found with respect to the Directors’ performance of their duties. 3) We acknowledge that the Board of Directors’ resolutions with respect to the internal control systems are appropriate. We did not find any matter to be mentioned with respect to the contents in the business report and Directors’ performance of their duties concerning the internal control systems. (2) Results of audit of financial statements and their annexed detailed statements We acknowledge that the methods and results of audit performed by the independent auditor KPMG AZSA LLC are appropriate.

May 16, 2016 Audit & Supervisory Board of Yamada Denki Co., Ltd. Makoto Igarashi [Seal] Standing Audit & Supervisory Board Member Yutaka Nakamura [Seal] Audit & Supervisory Board Member Masamitsu Takahashi [Seal] Audit & Supervisory Board Member

Notes: 1. Audit & Supervisory Board Members Yutaka Nakamura and Masamitsu Takahashi are External Audit & Supervisory Board Members as specified in Article 2, Paragraph 16, and Article 335, Item 3 of the Companies Act. 2. Standing Audit & Supervisory Board Member Ginji Karasawa has resigned as of April 15, 2016, and thus has not signed and sealed the audit report.