This document is a summary translation of the Japanese language original version. In theevent of any discrepancy, errors and/or omissions, the Japanese language version shall prevail.

Securities code: 2579
March 5, 2018

NOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017

Dear Shareholder,
You are cordially invited to attend the Ordinary General Meeting of Shareholders for the fiscal
year ended December 31, 2017 of Coca-Cola Bottlers Japan Holdings Inc. (the “Company”),
which will be held as described hereunder.
If you are unable to attend the meeting, you may exercise your voting rights either by writing or
via the Internet. Please review the attached Reference Materials for General Meeting of
Shareholders and exercise your voting rights by 5:45 p.m., March 26 (Monday), 2018.
Sincerely yours,
Tamio Yoshimatsu
Representative Director & President
Head Office: 7-9-66 Hakozaki, Higashi-ku,
Fukuoka, Japan
Headquarters: 9-7-1 Akasaka, Minato-ku, Tokyo

MEETING AGENDA
1. Date and Time:
2. Venue:
3. Agenda:
Items to be reported:

10:00 a.m., March 27 (Tuesday), 2018 (Reception starts at 9:00 a.m.)
Ho-Oh-No-Ma (2F), Tokyo Prince Hotel
3-3-1 Shibakoen, Minato-ku, Tokyo, Japan
1.

2.

Business report and consolidated financial statements for the fiscal
year ended December 31, 2017 (January 1 to December 31, 2017);
and audit reports of consolidated financial statements by
Accounting Auditors and the Audit and Supervisory Committee
Non-consolidated financial statements for the fiscal year ended
December 31, 2017 (January 1 to December 31, 2017)-1-

Items to be proposed:
Proposal No. 1
Proposal No. 2
Proposal No. 3
Proposal No. 4
Proposal No. 5

Appropriation of surplus
Election of five (5) Directors (excluding Directors Serving on the Audit
and Supervisory Committee)
Election of one (1) Director Serving on the Audit and Supervisory
Committee
Election of Accounting Auditor
Determination of remuneration related to performance-linked stockcompensation for directors with executive authority over operations

4. Matters Related to the Exercise of Voting Rights(1) Exercise of voting rights by writing
Please indicate whether you approve or disapprove of each proposal on the proxy voting
form enclosed herewith and return it to us by 5:45 p.m., March 26 (Monday), 2018.
(2) Exercise of voting rights via the Internet
If you prefer to exercise your voting rights via the Internet, please review the“Procedures for the Exercise of Voting Rights via the Internet” on page 3 and exercise
your voting rights by 5:45 p.m., March 26 (Monday), 2018.
(3) Handling of duplicated voting(i) If you exercise your voting rights twice, both by writing and via the Internet, thevoting via the Internet shall prevail.
(ii) In case of multiple voting via the Internet or both by personal computer and mobile
phone, the last voting shall prevail.

Notes:
1. Attendees are requested to submit the proxy voting form enclosed herewith to the reception desk
when attending this General Meeting of Shareholders.
2. If we need to make any revision to the business report, consolidated financial statements,
non-consolidated financial statements or Reference Materials for General Meeting of Shareholders,we will notify you through the Company’s website (https://www.ccbj-holdings.com/).

-2-

Procedures for the Exercise of Voting Rights via the Internet
If you prefer to exercise your voting rights via the Internet, please accept the following conditions before
exercising your rights.
1. Shareholders exercising their voting rights via the Internet can only do so via the website designated by
the Company (shown below). They can also exercise their voting rights online by mobile phone.
(Website URL for the exercise of voting rights) https://www.web54.net
2. If you are exercising your voting rights via the Internet, please enter the code and the password for the
exercise of voting rights indicated on the proxy voting form enclosed herewith and follow the
instructions on the screen to register whether you approve or disapprove of each proposal.
3. Connection fees payable to the providers and communication expenses payable to telecommunication
carriers (including telephone charges) when accessing the website for the exercise of voting rights will
be borne by the shareholders.
End

System Environment for the Exercise of Voting Rights via the Internet
The following system environment is required for the use of the website to exercise voting rights.
1) Access to the Internet
2) If you are to exercise voting rights using your personal computer, an Internet browsing softwaremust be installed.
3) If you are to exercise voting rights via mobile phone, the device must be capable of 128bit SSL
telecommunications (encrypted communication). (For security reasons, the Company’s designatedwebsite is only configured to support 128bit SSL telecommunications (encrypted communication).
Consequently, certain devices cannot be used. You may also exercise voting rights using thefull-browser function of your mobile phone (including smartphones), although it may not be
possible to access the website depending on the model of your mobile phone).

Inquiries about the Exercise of Voting Rights via the Internet
If you have any questions about the exercise of voting rights via the Internet, please call the following
numbers.
Administrator of Shareholders’ Register:
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Business Planning Department
Direct Line:(Toll free) 0120-652-031(accessible from 9:00 a.m. to 9:00 p.m.; within Japan only)(Inquiries on matters other than the exercise of voting rights): (Toll free) 0120-782-031(accessible from 9:00 a.m. to 5:00 p.m. excluding Saturdays, Sundays
and Japanese national holidays; within Japan only)

Electronic Voting Platform for Institutional Investors
Management and trust banks or other nominee shareholders (including standing proxies) have the choiceof an alternative method for exercising voting rights for the Company’s General Meeting of Shareholders.
This is the Electronic Voting Platform for Institutional Investors that is operated by Investor
Communications Japan, Inc. (ICJ, Inc.), a joint venture instituted by Tokyo Stock Exchange, Inc., etc. In
order to use this method, however, application to ICJ, Inc. to use this Electronic Voting Platform must be
made in advance.

-3-

(Attachment)

Business Report(From January 1 to December 31, 2017)
1. Current Status of the Coca-Cola Bottlers Japan Group(1) Business Progress and Results
The Japanese economy continued to show a modest recovery with continued
improvement of the job market and income situation as well as positive indicators ofconsumer sentiment and consumer spending during the fiscal year ended December 31,
2017.
In the soft drink industry, the market remained almost flat year on year in terms ofsales volume, reflecting poor weather during the summer peak season in eastern Japan,
and continued wet and colder weather across much of the country later in the year.
Continued roll-outs of FOSHU (Food for Specific Health Usage), functional-claim andother value-added products by various industry players have helped to offset thisnegative impact of weather on industry volume performance.
The health food industry continues to grow with an intensified competitiveenvironment, supported by launches of functional-claim food products and a stream ofmarket entrants from other industries driven by demand from health-conscious
consumers. In the cosmetics industry, consumer needs continue to diversify and thedemand from inbound tourism has also contributed to industry growth.
In this operating environment, in order to pursue new business opportunities andrealize sustainable growth, Coca-Cola Bottlers Japan Inc. (currently, Coca-Cola
Bottlers Japan Holdings Inc., the Company) was formed through the businessintegration of Coca-Cola West (CCW) and Coca-Cola East Japan Co., Ltd. (CCEJ)
effective April 1, 2017 through a combination of a share exchange and anabsorption-type company split.
The Company announced its medium-term business plan, the “Growth Roadmap for2020 & Beyond” for the period up to 2020, which sets forth the Company’s strategic
initiatives, namely profitable revenue growth, integration synergies, establishment of anew operating model and a holistic financial framework to create shareholder value
while investing in people capability development and shared value with local
communities. The Company will focus on these initiatives to achieve sustainablegrowth, leverage the synergy effects of the business integration, and continue to leadthe domestic soft drink industry.

-4-

Following the initiatives of the medium-term business plan, in 2017 the Company has
focused on strengthening profitability and establishing a solid foundation for growth in2018 and beyond while integrating with speed. Following are highlights of thedeliverables this fiscal year.
• Net profit attributable to shareholders of parent increased 381.3% year on year
driven by the business integration, and pro forma net income (real income,calculated under the assumption that the integration was in January 2017 and by
estimating the 2016 income on the same basis) grew 61.8% year on year
• Generated first year integration synergies and cost savings in line with relevant plan
• Functionally managed since Day One (First date of the business integration)• Started company-wide implementation and deployment of ERP system (Enterprise
Resource Planning), CokeOne+• Strategic vending project in place and actively working to transform the vending
channel from end-to-end• Integrated Business Systems function was newly established to strengthen the key IT
function• Key Account Management function was newly established to integrate sales
activities for nation-wide customers• Regional sales organizations in place as of January 1, 2018 to tailor sales andmarketing activities to each region based on our community-based and customer
focused operating principles• Re-organized, optimized and simplified the Company group’s legal entity structure
ahead of plan, including integration of Coca-Cola business operating companies, etc.
The number of legal entities decreased from 25 on Day One to 16 on January 1, 2018
The summary of business results for this fiscal year is as follows.
<Net Sales>
Full-year consolidated net revenues of Coca-Cola business increased by 414,491
million yen to 842,885 million yen (up 96.8% year on year), primarily due to thebusiness integration of CCW and CCEJ effective as of April 1, 2017. Consolidated net
revenues of the healthcare & skincare business fell by 2,324 million yen to 29,737
million yen (down 7.2%) year on year mainly due to the delay of launching new
products. As a result, the total consolidated net revenues increased by 412,167 million
yen to 872,623 million yen (up 89.5% year on year).

-5-

<Operating Income and Recurring income>Full-year consolidated operating income of Coca-Cola business increased by 19,053
million yen to 37,422 million yen (up 103.7% year on year), due to an increase in net
revenues led by the business integration described above, a decrease of expenses
brought by synergy and cost-savings initiatives across both CCW and CCEJ and thechange in depreciation method for fixed assets. Consolidated operating income in thehealthcare & skincare business increased by 382 million yen to 3,156 million yen (up13.8%) year on year, due to a diligent focus on cost reductions, which offset thenegative impact of lower sales. As a result, the total consolidated operating income forthe full year increased by 19,435 million yen to 40,579 million yen (up 91.9%) year on
year. Furthermore, consolidated recurring income increased by 19,257 million yen to39,859 million yen (up 93.5%) year on year.
<Net Profit Attributable to Shareholders of Parent>
Net profit attributable to owners of parent for the full year increased by 19,999 million
yen to 25,244 million yen (up 381.3%) year on year, mainly due to an increase inrecurring income as we cycled certain extraordinary expenses in the prior year.
<Reference>
As a reference, the Company also provides pro-forma results, assuming the businessintegration of CCW and CCEJ from January 2017 and estimating 2016 results using
the same standard. Full-year pro-forma net revenue decreased by 21,140 million yen to991,563 million yen (down 2.1% year on year), mainly impacted by a year-on-year
decrease of sales volume partly driven by poor weather and continued softness in thevending channel. Our proactive focus on driving value through smaller package sizes
had a positive impact on volume growth. Full-year pro-forma operating income
increased by 1,704 million yen to 42,104 million yen (up 4.2%) year on year driven bycost reductions in manufacturing as well as generating integration synergies in the softdrink business, etc. Full-year pro-forma net profit attributable to shareholders of parent
was 25,836 million yen, up 9,869 million yen (up 61.8%) year on year.
(2) Status of Capital Investment
Total capital investment undertaken during this consolidated fiscal year amounted to42.5 billion yen, which was mainly undertaken for the following elements, all of whichwere related to the soft drink business:a. Acquisition of vending machines, coolers and other sales equipmentb. Construction for bottled can lines at the Tama Plant-6-

The capital expenditure undertaken for each segment during this fiscal year was 42.1
billion yen for soft drink business and 0.4 billion yen for the healthcare & skincare
business.
(3) Financing
There are no material facts to report.
(4) Business Transfer, Absorption-Type Company Split, or Incorporation-Type Company
Split
With the aim to transform itself to a holding company structure, the Company carriedout an absorption-type company split as of April 1, 2017, by which the Company
transferred all of its rights and obligations arising from all of its businesses other thanthe Company’s Group management business and asset management business to a
successor company, which engages in the preparation of the establishment of new
CCW and is a wholly owned subsidiary of the Company.
On the same day, the corporate name of above-mentioned succeeding company waschanged to Coca-Cola West Co, Ltd.
(5) Acquisition of Shares, Other Equities, or Subscription Rights to Shares of Other
Companies
With the aim of business integration with Coca-Cola East Japan Co., Ltd., theCompany carried out a share exchange as of April 1, 2017, by which the Company has
become the wholly-owning parent company of Coca-Cola East Japan while Coca-Cola
East Japan has become a wholly-owned subsidiary of the Company.
(6) Trend of Assets and Earnings
Item

FY2014FY2015FY2016FY2017

Net sales(MM yen)424,406

440,476

460,455

872,623

Operating income(MM yen)11,00814,262

21,14340,579Recurring income(MM yen)

10,60913,723

20,60239,859(MM yen)

4,482

9,970

5,245

(yen)

41.07

91.35

48.05

144.26

Total assets(MM yen)337,260

378,105

377,468

883,918

Net assets(MM yen)254,150

260,878

261,173

627,485(yen)

2,325.19

2,386.81

2,389.28

3,070.01

Net income attributable toowners of parent
Net income per share

Net assets per share-7-

25,244

Notes:1.

Net income per share is calculated based on the average number of shares issued during the year while net assets
per share are calculated based on the total number of shares issued as of the end of the fiscal year (excluding
treasury shares).

2.

The figures for FY2017 are inclusive of the fluctuations caused by the share exchange with Coca-Cola East
Japan Co., Ltd., which was carried out as of April 1, 2017.

(7) Issues to be addressed
Although the future outlook of the beverage industry is somewhat positive with
consumer spending showing signs of recovery, we expect the market competition tocontinue intensifying due to aging population and further diversification of customer
and consumer needs.
We will mainly focus on three strategic pillars: “Growth”, “Synergies and Efficiency”
and “Operating Structure” to further expand our Coca-Cola business and our healthcare
and skincare businesses.
We will focus on driving the revenue growth of our Coca-Cola business with improved
profitability by strengthening our “community-based”, “customer-centric” sales
activities through segmentation of our business territory into six regions and market
execution carried out exhaustively in each region according to marketing plans tailored
to meet the area-specific needs. In addition, we will build a vending business modelthat enhances our competitive advantage in this line of business by prioritizing on
developments that lead to increased productivity and operational efficiency, while
continuing to transform the current business model from a mid- to long-term
perspective. We will also invest in projects and initiatives that will ensure oursustainable growth by generating synergy through business integration and using it as
the source of our capital expenditure.
The demand for healthcare and skincare products is on the rise, adding momentum tothe expansion of the market size. However, competition is expected to get tougher as
more players from other industries make forays into these markets.
Amid such circumstances, we plan to bolster our business by developing new hit
products that respond effectively to the growing demand resulting from the extensionof healthy life expectancy and other consumer needs. We will also revisit ourmarketing and communication strategies to make our products more visible to a wider
consumer base.

-8-(8) Status of Significant Subsidiaries (as of December 31, 2017)
Names

Paid-in
Capital
Unit: MM yen

Percentage of
Voting Rights

Main Businesses

Unit: %

Manufacture and sales of beverage andfood products
Manufacture and sales of beverage andfood products
Manufacture and sales of beverage andfood products
Operation of vending machines
Sales of beverage products

Coca-Cola East Japan Co., Ltd.

100

100.0

Coca-Cola West Co., Ltd.

100

100.0

Shikoku Coca-Cola Bottling Co., Ltd.

100

100.0

Coca-Cola West Vending Co., Ltd.
FV East Japan Co., Ltd.

80
100

100.0
100.0

Nishinihon Beverage Co., Ltd.

100

100.0

Coca-Cola West Sales Support Co., Ltd.

80

100.0

Coca-Cola West Products Co., Ltd.
Coca-Cola West Sales Equipment Service Co.,
Ltd.

100

100.0

Sales of beverage products
Provision of indoor service for businesslocations
Manufacture of beverage products

22

100.0

Vending machine related business

349

100.0

Manufacture and sales of health food,and cosmetics and their related products

Q’sai Co., Ltd.
Notes:
1.

The percentage of voting rights includes the portion of indirect holdings via subsidiaries.

2.

The Company added Coca-Cola East Japan Co., Ltd., Coca-Cola West Co., Ltd., and FV East Japan Co., Ltd. as
its significant subsidiaries from this fiscal year by making Coca-Cola East Japan, Co., Ltd. its wholly-owned
subsidiary by the share exchange carried out as of April 1, 2017 and by carrying out an absorption-type company
split on the same date by which all the Company’s rights and obligations arising from all of its businesses otherthan the Company’s Group management business and assets management business were transferred to a
succeeding company, which engages in the preparation of the establishment of new CCW and is a wholly owned
subsidiary of the Company, and changing the name of said succeeding company to Coca-Cola West Co., Ltd.

3.

Coca-Cola West Co., Ltd. merged Shikoku Coca-Cola Bottling Co., Ltd., Coca-Cola West Products Co., Ltd. andCoca-Cola West Equipment Service Co., Ltd. as of January 1, 2018.

4.

Coca-Cola East Japan Co., Ltd. merged Coca-Cola West Co., Ltd., and Coca-Cola Business Sourcing Co., Ltd.
and changed its corporate name to Coca-Cola Bottlers Japan Co., Ltd., as of January 1, 2018.

5.

As of January 1, 2018, FV East Japan Co., Ltd. merged with and absorbed Nishinihon Beverage Co., Ltd.,
Shikoku Canteen Co., Ltd., and FV Corporation Co., Ltd. and changed its corporate name to FV Japan Co., Ltd.

6.

Coca-Cola West Vending Co., Ltd. changed its corporate name to Coca-Cola Bottlers Japan Vending Co., Ltd. asof January 1, 2018.

7.

Coca-Cola West Sales Support Co., Ltd. changed its name to Coca-Cola Bottlers Japan Sales Support Co., Ltd.
as of January 1, 2018.

8.

The status of the Specified Wholly Owned Subsidiary of the Company is as follows as of the last day of thisfiscal year:
Name of Specified Wholly Owned Subsidiary

Coca-Cola East Japan Co., Ltd.

Address of Specified Wholly Owned Subsidiary6-1-20, Akasaka, Minato-ku, Tokyo

Book value of shares of Specified Wholly Owned
Subsidiary of the Company or Wholly Owned
Subsidiary thereof

342,460 million yen

Total assets of the Company

475,219 million yen-9-2. Current status of the Company(1) Status of shares (as of December 31, 2017)a. Total Number of Shares of Stocks: 500,000,000
b. Total Number of Issued Shares (excluding 2,015,000 treasury shares): 204,253,000
c. Number of shareholders: 60,437
d. Major shareholders (top 10)
Names of shareholders

Number of shares held

Ratio of shareholding(Unit: thousand)(Unit: %)Coca-Cola (Japan) Co., Ltd.

27,956

13.7

Ricoh Co., Ltd.

17,075

8.4

Japan Trustee Services Bank, Ltd. (Trust Account)

7,376

3.6

6,039

3.0

Toyo Seikan Group Holdings Ltd.

5,604

2.7

The New Technology Development Foundation

5,294

2.6

Satsuma Shuzo Co., Ltd.

4,699

2.3

Senshusha Co., Ltd.

4,088

2.0

Coca-Cola Holdings West Japan Inc.

4,074

2.0

Mitsubishi Heavy Industries Machinery Systems, Ltd.

3,912

1.9

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

Note:
The treasury shares (2,015,000 shares) are excluded from the list above and from the calculation of ratio ofshareholding.

- 10 -

(2) Status of the Company’s Officers
a. Status of Directors (as of December 31, 2017)
Position
Representative
Director

Names
Tamio Yoshimatsu

Representative
Director

Vikas Tiku

Director
Director

Yasunori Koga
Costin Mandrea

Director
Director

Hiroshi Yoshioka
Tadanori Taguchi

Area of responsibility and important concurrent positions
President
Representative Director & President, Coca-Cola East Japan Co., Ltd.
Representative Director & President, Coca-Cola West Co., Ltd.
Outside Director, Nishi-Nippon Railroad Co., Ltd.
Vice President, Chief Financial Officer, Head of Transformation
Director, Coca-Cola East Japan Co., Ltd.
Director, Coca-Cola West Co., Ltd.
Senior Executive Officer, Head of Administrations
Senior Executive Officer, Head of Commercial and Head of Marketing
Vice President, Coca-Cola East Japan Co., Ltd.

(Audit & Supervisory
Committee Member[full-time])

Director

Zenji Miura

Special advisor, Ricoh Co., Ltd.

Irial Finan

Senior Vice President, The Coca-Cola Company(President, Bottling Investment Group)

John Murphy

President, Coca-Cola Asia Pacific Group, The Coca-Cola Company(Audit & Supervisory
Committee member)

Director(Audit & Supervisory
Committee member)

Director(Audit & Supervisory
Committee member)

Notes:
1.

Changes of Directors during this fiscal year are as follows:(1) Vikas Tiku, Costin Mandrea and Hiroshi Yoshioka were newly elected as Directors at the FY2016 Ordinary
General Meeting of Shareholders held on March 22, 2017, and took office as of April 1, 2017.
(2) Zenji Miura, Irial Finan and John Murphy were newly elected as Directors (Audit and Supervisory
Committee members) at the FY2017 Ordinary General Meeting of Shareholders held on March 22, 2017,
and took office as of April 1, 2017.

- 11 -

(3) Seven Directors, including Nobuo Shibata, Hideharu Takemori, Toshio Fukami, Shigeki Okamoto, Yoshiki
Fujiwara, Shunichiro Hombo and Zenji Miura, retired from their positions of Director upon expiration of
their terms of the office on March 31, 2017 and 4 Directors (Audit and Supervisory Committee members),
including Hiroyoshi Miyaki, Gotaro Ichiki, Seiji Isoyama and Tomoko Ogami, retired from their positionsof Directors due to resignation (Audit and Supervisory Committee members) on the same day. The
positions and responsibility of these Directors at the time of their retirement were as follows:

Names
Nobuo Shibata

Titles at the time ofresignation
Representative
Director

Hideharu Takemori

Director

Toshio Fukami

Director

Shigeki Okamoto

Director

Yoshiki Fujiwara

Director

Shunichiro Hombo

Director

Zenji Miura

Outside Director

Hiroyoshi Miyaki

Area of responsibility and important concurrent
positions at the time of retirement
Executive Vice President
Representative Director, Specified Nonprofit Corporation
Ichimura Kyushu School of Nature
Outside Director, Kyushu Leasing Service Co., Ltd.
Group Senior Corporate Officer
Representative Director & President, Coca-Cola West
Equipment Service Co., Ltd.
Group Senior Corporate Officer
Representative Director & President, Coca-Cola West Sales
Support Co., Ltd.
Senior Corporate Officer, Senior General Manager of CSV
Division
Senior Corporate Officer, General Manager of Commercial
Headquarters
General Manager of Kyushu Sales Division Commercial
Headquarters
Representative Director, President and Chief Executive
Officer, Ricoh Co., Ltd.

Director(Standing Audit &Supervisory Committee
Member [full-time])

Gotaro Ichiki

Seiji Isoyama

Tomoko Ogami

Outside Director(Audit & Supervisory
Committee Member)
Outside Director(Audit & Supervisory
Committee Member)

Outside Director(Audit & Supervisory
Committee Member)

Lawyer, Kowa Law Office
Head of TOKYO district office, Japan Legal Support Center
Outside Director, Nippon Denko Co., Ltd.
Representative Director & Deputy President, Nishi-Nippon
Financial Holdings, Inc.
Representative Director & Deputy President, Nishi-Nippon
City Bank, Ltd.
Outside Director, Plenus Company Limited (Member ofAudit and Supervisory Committee)
Chairman, Fukuoka Chamber of Commerce and Industry
Lawyer, Kunitake General Law Firm

2. Hiroshi Yoshioka, Director, as well as Zenji Miura, Irial Finan and John Murphy, Directors (Audit andSupervisory Committee members), are Outside Directors.
3.

The Company has submitted notices to Tokyo Stock Exchange, Inc. and Fukuoka Stock Exchange, on which theCompany is listed, that Hiroshi Yoshioka, Director, and Zenji Miura, Director (Audit and Supervisory
Committee member) are “Independent Officers”.

4.

Tadanori Taguchi, Director (Audit and Supervisory Committee member), has considerable knowledge in bothfinance and accounting through his track record in Finance and Management Planning Divisions of theCompany.

- 12 -

5.

In order to strengthen the audit and supervisory functions of the Audit and Supervisory Committee, theCompany appoints regular Audit and Supervisory Committee members, who will collect information from
Directors (excluding those who is not an Audit and Supervisory Committee members), share information atimportant internal company meetings, and the sufficient coordination between the Internal Audit Division and
the Audit and Supervisory Committee.

6. The Company changed the responsibility of Directors as follows as of January 1, 2018:
Titles at the Company

Names

Responsibility

Representative
Director

Tamio Yoshimatsu

Representative
Director

Vikas Tiku

Director

Yasunori Koga

Director

Costin Mandrea

President
Representative Director & President, Coca-Cola Bottlers Japan Inc.
Vice President and CFO
Representative Director & Vice President, Coca-Cola Bottlers Japan Inc.
CFO and General Manager of Transformation
Senior Executive Officer, Coca-Cola Bottlers Japan Inc.
Head of Administrations
Representative Director & President, Coca-Cola Bottlers Japan Benefit Inc.
Senior Executive Officer, Coca-Cola Bottlers Japan Inc.
Head of Commercial and Head of Marketingb. Outline of Limited Liability Agreements
In its Articles of Incorporation, the Company has established provisions concerning limited
liability agreements with Directors (excluding those who is not an Executive Director, etc.)
in order to ensure that Directors (excluding those who is not an Executive Director, etc.)
can demonstrate the roles expected of them and the Company can invite and selectcompetent persons as Directors (including, not limited to, Outside Directors).
The Company has entered into limited liability agreements with Directors, Hiroshi
Yoshioka, Tadanori Taguchi, Zenji Miura, Irial Finan and John Murphy, as well as 3
persons, including Gotaro Ichiki, Seiji Isoyama and Tomoko Ogami, who retired from theirposts due to resignation on March 31, 2017, to limit their liability for damages in the eventthat he/she fails to perform his/her duties stipulated in Article 427, Paragraph 1 of theCompanies Act. The limit of liability in the Agreement shall be equal to the minimum
liability limit stipulated by laws and ordinances.

c. Total Amount of Remuneration to Directors and Audit & Supervisory Board
Members for this fiscal year
Positions

Number of
persons
remunerated

Types of remuneration
Basic
remuneration

BonusesTotal
remuneration

Remarks

Directors(of which Outside Directors)

12(2)

362 million yen(11 million yen)

114 million
476 million yen
yen(11 million yen)(–)

(Note)1, 2

Directors (Audit &Supervisory Committee
Member)(of which Outside Directors)

8(6)

81 million yen(42 million yen)–
81 million yen(–) (42 million yen)

(Note)1, 2

Total(of which Outside Officers)

19(7)

443 million yen(54 million yen)

114 million
557 million yen
yen(54 million yen)(–)

- 13 -(Note)2

Notes:1.

According to the resolution that was adopted at the FY2016 Ordinary General Meeting of Shareholders, theupper limit of the remuneration payable to Directors (excluding those who is not an Audit and Supervisory
Committee members) is 750 million yen per year (of which 50 million yen per year is the upper limit for Outside
Directors). According to the resolution that was adopted at the FY2015 Ordinary General Meeting of
Shareholders, the upper limit of the remuneration payable to Directors Serving on the Audit and Supervisory
Committee is 100 million yen per year.

2.

The above-mentioned figures are inclusive of the remuneration paid to seven (7) Directors (including one (1)Outside Director) and four (4) Directors (Serving on the Audit and Supervisory Committee) (including three (3)Outside Directors) who resigned from their position on March 31, 2017. The total number of persons who
received remuneration as mentioned above is exclusive of a person who assumes the positions of both Director
and Directors Serving on the Audit and Supervisory Committee.

d. Outside Officers(a) Concurrent positions as executive officers and outside officers for othercorporations, etc. served by Outside Directors and Outside Officers (as of December
31, 2017)
Position

Name

Significant Concurrent Positions

Outside Director

Hiroshi Yoshioka

Outside Director

Zenji Miura

Special advisor, Ricoh Co., Ltd.

Irial Finan

Senior Vice President, The Coca-Cola Company(President, Bottling Investment Group)

John Murphy

President, Coca-Cola Asia Pacific Group, The Coca-Cola Company(Audit & Supervisory
Committee Member)

Outside Director(Audit & Supervisory
Committee Member)

Outside Director(Audit & Supervisory
Committee Member)

Notes:
1.

The relationship with said other entities of which our Outside Officers assume concurrent positions is as follows:(1) There are no noteworthy relationships between the Company and Ricoh Co., Ltd.
(2) THE COCA-COLA COMPANY falls under our “Other Affiliated Companies” and has entered into
contracts for manufacturing and sales of Coca-Cola and other products and use of trademarks, etc. as wellas capital and business alliance agreement with the Company.

- 14 -

2.

Gotaro Ichiki, Seiji Isoyama and Tomoko Ogami retired as Directors due to resignation as of March 31, 2017.
Their concurrent positions including executive directors or outside officers at other entities during their terms ofoffice at the Company are as follows:
Names
Gotaro Ichiki

Significant Concurrent Positions

Lawyer, Kowa Law Office
Head of TOKYO district office, Japan
Legal Support CenterO

Seiji Isoyama

TomokoOgami

Representative Director & Deputy
President, Nishi-Nippon Financial
Holdings, Inc.
Representative Director & Deputy
President, Nishi-Nippon City Bank, Ltd.
Outside Director, Plenus Company
Limited (Member of Audit andSupervisory Committee)
Chairman,
Lawyer, Kunitake General Law Firm

- 15 -

Other entities’ relationship with theCompany

There are no noteworthy relationships with theCompany.
There are no noteworthy relationships with theCompany.
There are no noteworthy relationships with theCompany.
There are no noteworthy relationships with theCompany.
The Company has business relations regarding
deposit of funds, etc.
The Company has business relations regarding
sales of beverages, etc.
The Company disburses membership fees andpersonnel costs for loaned employees, etc.
There are no noteworthy relationships with theCompany.

(b) Major activities during this fiscal year
Positions

Names

Major activities

Outside Director

Hiroshi Yoshioka

Outside Director

Zenji Miura

During this fiscal year, he attended all the Board Meetings that were
held after he took office and made comments as necessary at themeetings based on his broad experience and good judgment mainly inbusiness management.
He attended all the Board Meetings and Audit and Supervisory
Committee Meetings that were held during this fiscal year and madecomments as necessary at the meetings based on his broad experienceand good judgment mainly in business management (financial strategy).
He attended all the Board Meetings and Audit and Supervisory
Committee Meetings that were held during this fiscal year after he took
office and made comments as necessary at the meetings based on his
broad experience and good judgment mainly in business management.
He attended all the Board Meetings and Audit and Supervisory
Committee Meetings that were held during this fiscal year after he took
office and made comments as necessary at the meetings based on his
broad experience and good judgment mainly in business management.

(Audit & Supervisory
Committee Member)

Outside Director

Irial Finan(Audit & Supervisory
Committee Member)

Outside Director

John Murphy(Audit & Supervisory
Committee Member)

Note:
Gotaro Ichiki, Seiji Isoyama and Tomoko Ogami retired as Directors due to resignation as of March 31, 2017. Theirmajor activities during their terms of office were as follows:
Names

Major activities

Gotaro Ichiki

He attended all Board Meetings and Audit and Supervisory Committee
Meetings that were held during this fiscal year (three Board Meetings
and four Audit and Supervisory Committee Meetings) and madecomments as necessary mainly from the professional viewpoint of alawyer.
He attended all the Board Meetings and Audit and Supervisory
Committee Meetings that were held during this fiscal year (three Board
Meetings and four Audit and Supervisory Committee Meetings) andmade comments as necessary based on his broad experience and good
judgment mainly gained at financial institutions.
She attended all the Board Meetings and Audit and Supervisory
Committee Meetings that were held during this fiscal year (three Board
Meetings and four Audit and Supervisory Committee Meetings) andmade comments as necessary mainly from the professional viewpoint ofa lawyer.

Seiji Isoyama

Tomoko Ogami- 16 -

(3) Accounting Auditor
a. Name
KPMG AZSA LLC
b. Amount of Remuneration
Categories

Amount paid

Remuneration for services stipulated in Article 2, Paragraph 1 of
the Certified Public Accountants Act

102 million yen

Remarks(Notes)– million yen
Remuneration by the Company and/or its subsidiaries to the
Accounting Auditor

164 million yen

Notes:
1. The audit contract between the Company and the accounting auditor does not distinguish between remuneration
paid for the audit conducted in accordance with the Companies Act and remuneration paid for the audit
conducted in accordance with Financial Instruments and Exchange Act. Accordingly, the amount above is theaggregate amount.
2. The Audit and Supervisory Committee confirmed and reviewed the appropriateness and adequacy of the audit
plans, audit hours, implementation status and grounds for the estimate of the remuneration as submitted by theaccounting auditor before granting approval to the remuneration payable to the accounting auditor.

c. Contents of Non-Audit Services
The Company’s subsidiary pays to the accounting auditor the remuneration for theservices other than practices stipulated in Article 2, Paragraph 1 of the Certified Public
Accountants Act (non-audit services), pursuant to the Act on Special Measures
Concerning Procurement of Electricity from Renewable Energy Sources by Electricity
Utilities.
d. Audit by subsidiaries
The Company's subsidiaries Coca-Cola East Japan Co., Ltd., Coca-Cola Business
Sourcing Co., Ltd. and Coca-Cola Integrated Business Systems Co., Ltd. are auditedby auditing firms other than the Company's accounting auditor.
e. Policy on Decisions on Dismissal or Non-Reappointment of Accounting Auditor
In the case that it is reasonably judged that the accounting auditor falls under any ofthe dismissal events listed in the items of Article 340, Paragraph 1 of the Companies
Act, the Audit and Supervisory Committee will remove the accounting auditor with theconsents of all members. In this case, a Committee member selected by the Audit andSupervisory Committee will disclose the removal and its reason at the Meeting of
Shareholders convened for the first time after the removal.
Additionally, concerning dismissal or non-reappointment of the accounting auditor, theAudit and Supervisory Committee shall decide contents of a proposed resolution theysubmit to the General Meeting of Shareholders, in the event they judge it necessary to- 17 -

do so in cases such as where the accounting auditor is recognized to have difficulty inproperly fulfilling its auditing duties.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(Note: Amounts and number of shares in the business report are rounded down to the nearest unit, and ratios
are rounded off.

- 18 -

Significant Events Relating to Company Circumstances Occurring
Subsequent to Preparation of Business Report
Acquisition of Treasury Stock by Means of Tender Offer to Repurchase Own Shares
The Company resolved at its Board of Directors meeting held on February 21, 2018 to carry out an
acquisition of treasury stock pursuant to the provisions of Article 156, Paragraph 1 of the Companies Act(Act No. 86 of 2005, as amended; hereinafter the same), as applied by replacing the terms pursuant to
Article 165, Paragraph 3 of the Companies Act, and to the provisions of the Company’s Articles ofIncorporation, and to implement a tender offer to repurchase its own shares as the specific means of doingso.
(1) Purpose for tender offer, etc.
The Company received notification from major shareholder Ricoh Co., Ltd. (hereinafter“Ricoh”) of its wish to consider the sale of all of the shares of common stock of the Company
owned by Ricoh to the Company. This notification arose as a result of the Company soundingout such consideration to sell all of the owned shares of common stock of the Company to theCompany from the perspective that, in accordance with its Capital Policy Guidelines of theCompany, by repurchasing its own shares on a controlled scale over a comparatively short periodof time, the Company can expect improvement of capital efficiency as measured by such
indicators as earnings per share (EPS) and return on equity (ROE), and return of profits to theshareholders.
Directly following this, the Company considered the specific means of repurchasing these sharesto make them treasury stock, and deemed that the method of a tender offer was the appropriate
method from the perspectives of shareholder equality and transactional transparency.
(2) Details of resolutioni) Type of shares to be purchasedii) Total number of shares to be purchasediii) Total value of purchaseiv) Period of purchase

Common stock
19,000,100 shares (upper limit)
70,000,000,000 yen (upper limit)
From February 22, 2018 through April 30, 2018(3) Overview of tender offer, etc.
i) Period of tender offer, etc.

From February 22, 2018 through March 22, 2018(20 business days)ii) Price of tender offer, etc.
3,275 yen per share of common stockiii) Number of listed share certificates, etc. intended to be purchased
19,000,000 sharesiv) Date of public notice of commencement of the tender offer bid
February 22, 2018v) Date of commencement of settlement
April 13, 2018- 19 -

Consolidated Balance Sheet
As of December 31, 2017

Millions of yen
ASSETS
Current Assets:
Cash and deposits
Trade notes and accounts receivable
Marketable securities
Merchandise and finished goods
Work in progress
Raw materials and supplies
Deferred tax assets
Other current assets
Allowance for doubtful accounts
Total Current Assets

101,858
69,26617,00054,357
267
7,323
3,777
32,499(376)
285,974

Fixed Assets:
Property, plant and equipment:
Buildings and structures
Machinery, equipment and vehicles
Sales equipment
Land
Construction in progress
Other property, plant and equipment
Total property, plant and equipment

73,14567,382
111,800
151,375591
5,897
410,192

Intangible assets:
Goodwill
Franchise intangible
Other intangible assets
Total intangible assets

76,55750,09814,437141,092

Investments and other assets:
Investment securities
Deferred tax assets
Net defined benefit asset
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total Fixed Assets

31,792
2,448
257
13,119(958)
46,659597,944

Total Assets

883,918

Note: Amounts less than one million yen are omitted.

- 20 -

Consolidated Balance Sheet
As of December 31, 2017

Millions of yen
LIABILITIESCurrent Liabilities:
Trade notes and accounts payable
Current portion of long-term loans payable
Accrued income taxes
Other accounts payable
Provision for sales promotion expenses
Provision for bonuses
Provision for directors’ bonuses
Other current liabilities
Total Current Liabilities

40,4961,817
8,356
55,410
427
2,521
134
17,193
126,357

Long-term Liabilities:
Bonds payable
Long-term loans payable
Deferred tax liabilities
Net defined benefit liability
Allowance for directors’ retirement benefits
Provision for environmental measures
Other long-term liabilities
Total Long-term Liabilities

66,00012,031
26,19820,35830
90
5,365
130,075

Total Liabilities

256,432

NET ASSETS
Shareholders’ equity:
Common stock
Additional paid-in capital
Retained earnings
Treasury stock (at cost)
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other marketable securities
Deferred gains (loss) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests

15,231
450,568
155,535(4,692)
616,642
6,886
590
12
2,926
10,416426

Total Net Assets

627,485

Total Liabilities and Net Assets

883,918

Note: Amounts less than one million yen are omitted.

- 21 -

Consolidated Statement of Income

For the fiscal year ended December 31, 2017
Millions of yen
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit

872,623
422,373450,249
409,669
40,579Non-operating income:Interest and dividend received
Equity in earnings of affiliates
Other non-operating income
Total non-operating income

470
61
943
1,475

Non-operating expenses:
Interest expenses
Other expenses
Total non-operating expenses
Recurring profit

539
1,655
2,195
39,859Extraordinary income:
Gains on sale of fixed assets
Gains on sale of investment securities
Gain on step acquisitions
Total extraordinary income

489
368
53
910

Extraordinary losses:
Business integration-related expenses
Impairment loss
Loss on valuation of golf club membership
Total extraordinary losses
Profit before income taxes
Income taxes
Income taxes deferred
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

903
598
28
1,530
39,24012,985
1,051
25,203(40)
25,244

Note: Amounts less than one million yen are omitted.

- 22 -

Consolidated Statement of Changes in Shareholders’ Equity
For the fiscal year ended December 31, 2017
(Millions of yen)
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings

Treasury
stock

Total
shareholders’equity15,231109,072

137,404(4,593)

257,114

Dividends of surplus--(7,113)-(7,113)

Profit attributable toowners of parent--

25,244-25,244

Acquisition of treasury
stock

-

-

-

(111)

(111)

Disposal of treasury stock

-

5

-

11

17

Change in treasury sharesof parent arising fromtransactions with
non-controllingshareholders

-

(72)

-

-

(72)

Increase by shareexchanges-

341,562--

341,562(Net) Changes in items
other than shareholders’equity during this term

-

-

-

-

-

-

341,496

18,131(99)359,527

15,231

450,568

155,535(4,692)

616,642

Balance as of Jan. 1, 2017
Changes during this term

Total changes during thisterm
Balance as of Dec. 31, 2017

Accumulated other comprehensive incomeNet
unrealized
gains onothermarketablesecurities

Deferred
gains (loss)
on hedges

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

4,092

77

(3)

(522)

Dividends of surplus

-

-

-

-

-

-

(7,113)

Profit attributable toowners of parent

-

-

-

-

-

-

25,244

Acquisition of treasury
stock

-

-

-

-

-

-

(111)

Disposal of treasury stock

-

-

-

-

-

-

17

Change in treasury sharesof parent arising fromtransactions with
non-controllingshareholders

-

-

-

-

-

-

(72)

Increase by shareexchanges

-

-

-

-

-

-

341,562(Net) Changes in items
other than shareholders’equity during this term

2,794

512

15

3,449

6,772

12

6,785

Total changes during this
term

2,794

512

15

3,449

6,772

12

366,312

Balance as of Dec. 31, 2017

6,886

590

12

2,926

10,416426

627,485

Balance as of Jan. 1, 2017

Total
accumulated
othercomprehensive
income3,643

Noncontrollinginterests

Total net
assets414

261,173

Changes during this term

Note: Amounts less than one million yen are omitted.

- 23 -

Non-consolidated Balance Sheet
As of December 31, 2017

Millions of yen
ASSETS
Current Assets:
Cash and deposits
Trade accounts receivable
Prepaid expenses
Deferred tax assets
Short-term loans to subsidiaries and affiliates
Accrued income
Other current assets
Total Current Assets

5,062
943
97
155
11,89960
465
18,685

Fixed Assets:
Property, plant and equipment:
Buildings
Structures
Tools, instruments and fixtures
Land
Total property, plant and equipment

22,7601,705
32
52,36476,863

Intangible assets:
Leasehold right
SoftwareTotal intangible assets

27
5
32

Investments and other assets:
Investment securities
Long-term prepaid expenses
Other assets
Total investments and other assets
Total Fixed Assets

379,08028
530
379,639456,534

Total Assets

475,219

Note: Amounts less than one million yen are omitted.

- 24 -

Non-consolidated Balance Sheet
As of December 31, 2017

Millions of yen
LIABILITIESCurrent Liabilities:
Trade accounts payable
Other accounts payable
Accrued expenses
Accrued income taxes
Money entrusted
Allowance for bonuses
Allowance for officers’ bonuses
Other current liabilities
Total Current Liabilities

1,963
1
463
18
139
114
55
2,757

Long-term Liabilities:
Bonds payable
Deferred tax liabilities
Assets retirement obligation
Other long-term liabilities
Total Long-term Liabilities

66,00044918
257
67,220Total Liabilities

69,977NET ASSETS
Shareholders’ equity:
Common stock
Additional paid-in capital:
Capital reserve
Other additional paid-in capital
Total additional paid-in capital
Retained earnings:
Legal reserve
Other retained earnings:
Reserve for advanced depreciation
General reserve
Retained earnings to be carried forward
Total other retained earnings
Total retained earnings
Treasury stock (at cost)
Total shareholders’ equity

15,231
108,166
158,784
266,951
3,316
789
110,388
13,256
124,434
127,751(4,692)405,241

Total Net Assets

405,241

Total Liabilities and Net Assets

475,219

Note: Amounts less than one million yen are omitted.

- 25 -

Non-consolidated Statement of Income

For the fiscal year ended December 31, 2017
Millions of yen
Net sales
Net revenues
Net sales and net revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating expenses
Selling, general and administrative expenses and operating expenses
Operating income

82,13911,56593,70544,08638,05337,234
9,507
46,7412,877

Non-operating income:Interest and dividend received
Other non-operating income
Total non-operating income

3,885
81
3,967

Non-operating expenses:
Interest expenses
Other expenses
Total non-operating expenses
Recurring profit

459
299
758
6,086

Extraordinary income:
Gains on sale of fixed assets
Gains on sale of investment securities
Total extraordinary income

407
11
418

Extraordinary losses:
Losses on business integration
Impairment loss
Total extraordinary losses
Profit before income taxes
Income taxes
Income taxes deferred
Profit

708
70
779
5,726
926
(191)
4,990

Note: Amounts less than one million yen are omitted.

- 26 -

Non-consolidated Statement of Changes in Shareholders’ Equity
For the fiscal year ended December 31, 2017
Shareholders’ equity

Commonstock

Balance as of Jan. 1, 2017

Additional paid-in capital

Retained earnings

Other
additional
paid-in
capitalTotal
additional
paid-in
capitalLegal reserve

Other
retainedearnings(Note 1)

Total retained
earnings

Capitalreserve

Treasurystock

Valuationandtranslation
adjustments
Net
Total
shareholders’ unrealized
gains
equityon othermarketablesecurities

Total net
assets

15,231

108,166－

108,166

3,316

126,557

129,874(4,593)248,679

4,070

252,750

－

－

－

－

－

(7,113)(7,113)－(7,113)－(7,113)

－

－

－

－

－

4,990

4,990

－

4,990

－

4,990

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

Changes during this term
Dividends of surplus
Net income
Reversal of reserves
Savings of provisions
Reversal of provisions

－

－

－

－

－

－

－

－

－

－

－

Acquisition of treasury
stock

－

－

－

－

－

－

－

(111)

(111)

－

(111)

Disposal of treasury
stock

－

－

5

5

－

－

－

11

17

－

17

Increase due to shareexchanges－－

341,562

341,562

－

－

－

－

341,562－

341,562

Decrease due tocorporate division－－(182,784)(182,784)

－

－

－

－

(182,784)－(182,784)(Net) Changes in items
other than shareholders’equity during this term

－

－

－

－

－

－

－

－

－

(4,070)(4,070)Total changes during this
term

－

－

158,784

158,784－(2,122)(2,122)(99)

156,562(4,070)152,491

15,231

108,166

158,784

266,951

3,316

124,434

127,751(4,692)405,241－405,241

Balance as of Dec. 31,
2017- 27 -

Note 1: Breakdown of other retained earnings(Millions of yen)
Other retained earnings
Retainedearnings to
be carriedforward

Total otherretainedearnings

110,388

14,756

126,557－－(7,113)(7,113)

－

－

－

4,990

4,990

(0)

－

－

－

0

－

Savings of provisions

－

－

－

－

－

－

Reversal of provisions

－

(26)

(561)

－

588

－

Acquisition of treasury
stock

－

－

－

－

－

－

Disposal of treasury stock

－

－

－

－

－

－

Increase due to shareexchanges

－

－

－

－

－

－

Decreasedue
corporate division

(1)

(33)

－

－

34

－

(Net) Changes in items
other than shareholders’equity during this term

－

－

－

－

－

－

Total changes during this
term

(1)

(59)

(561)

－

(1,499)(2,122)

Balance as of Dec. 31, 2016

－

789

－

110,388

13,256

124,434

Reserve for
specialdepreciation

Reserve foradvanceddepreciation

Reserve forcommunity
contributions

1

849

561

Dividends of surplus－－

Net income－

Reversal of reserves

Balance as of Jan. 1, 2016

Generalreserve

Changes during this termtoNote 2: Amounts less than one million yen are omitted.

- 28 -

Independent Auditor’s ReportFebruary 13, 2018
The Board of Directors
Coca-Cola Bottlers Japan Holdings, Inc.
KPMG AZSA LLC
Tetsuzo Hamajima (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Takashi Kondo (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Katsunori Tsukahara (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 Coca-Cola Bottlers Japan Holdings, Inc. as at December 31, 2017 andfor the year from January 1, 2017 to December 31, 2017 in accordance with Article 444-4 of theCompanies 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, andfor such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.

- 29 -

Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our
audit as independent auditor. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures 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, weconsider internal control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in thecircumstances, 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 thereasonableness 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 abasis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position and the results of operations of Coca-Cola Bottlers
Japan Holdings, Inc. and its consolidated subsidiaries for the period, for which the consolidated
financial statements were prepared, in accordance with accounting principles generally acceptedin Japan.

- 30 -

Emphasis of matter
Without qualifying our report, we draw attention to the note of change in accounting policy tothe consolidated financial statements. Coca-Cola Bottlers Japan Holdings, Inc. and its
subsidiaries changed their depreciation method for Property, Plant and Equipment, excluding
vending machine and leased assets, from declining method to straight-line method from thefiscal year ended December 31, 2017.
Coca-Cola Bottlers Japan Holdings, Inc. and its subsidiaries also changed its estimated usefullife for machinery and equipment from 10 years to 7 to 20 years. Along with these change,
Coca-Cola Bottlers Japan Holdings, Inc. and its subsidiaries reduced the remaining value to 1
yen for each of the Property, Plant and Equipment of which actual usage period has exceeded its
estimated useful life.
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.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’sReport as required by the Companies Act.

- 31 -

Independent Auditor’s ReportFebruary 13, 2018
The Board of Directors
Coca-Cola Bottlers Japan Holdings, Inc.
KPMG AZSA LLC
Tetsuzo Hamajima (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Takashi Kondo (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Katsunori Tsukahara (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 ofCoca-Cola Bottlers Japan Holdings, Inc. as at December 31, 2017 and for the year from January
1, 2017 to December 31, 2017 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 inJapan, and for such internal control as management determines is necessary to enable thepreparation of financial statements and the supplementary schedules that are free from material
misstatement, whether due to fraud or error.

- 32 -

Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the supplementaryschedules based on our audit as independent auditor. We conducted our audit in accordancewith auditing standards generally accepted in Japan. Those standards require that we plan andperform 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 anddisclosures in the financial statements and the supplementary schedules. The procedures
selected depend on our judgment, including the assessment of the risks of material misstatementof 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 preparationand fair presentation of the financial statements and the supplementary schedules in order todesign audit procedures that are appropriate in the circumstances, while the objective of thefinancial statement audit is not for the purpose of expressing an opinion on the effectiveness ofthe 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 abasis for our audit opinion.
OpinionIn 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
Coca-Cola Bottlers Japan Holdings, Inc. for the period, for which the financial statements andthe supplementary schedules were prepared, in accordance with accounting principles generally
accepted in Japan.

- 33 -

Emphasis of matter
Without qualifying our report, we draw attention to the note of change in accounting policy to
the financial statements. Coca-Cola Bottlers Japan Holdings, Inc. changed their depreciation
method for Property, Plant and Equipment, excluding vending machine and leased assets, fromdeclining method to straight-line method from the fiscal year ended December 31, 2017.
Coca-Cola Bottlers Japan Holdings, Inc. also changed its estimated useful life for machineryand equipment from 10 years to 7 to 20 years. Along with these change, Coca-Cola Bottlers
Japan Holdings, Inc. reduced the remaining value to 1 yen for each of the Property, Plant andEquipment of which actual usage period has exceeded its estimated useful life.
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.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’sReport as required by the Companies Act.

- 34 -

Audit Report
We, as the Audit & Supervisory Committee (‟A&S Committee”) conducted audits relating to
the execution of duties by directors during FY2017 business year from January 1, 2017 to
December 31, 2017, and hereby report the method of audits and results as follows.
1. Method of audits and the details
A&S Committee received regular reports from directors and employees on the content of
resolutions of the board of directors regarding matters prescribed in Paragraph 1 (i) (b) and (c)of Article 399-13 of the Companies Act and the status of building and operation of the internal
control system which had been developed based on the board resolutions, requested further
explanations as needed, explained its opinions and conducted audits as below:
1) A&S Committee members participated in important meetings in accordance with theaudit policy and audit plans specified by the Committee in cooperation with thecompany’s internal control department. A&S Committee received reports relating to the
execution of duties by directors from directors and employees, requested further
explanations as needed, consulted approval documents of importance, and researched thestatus of business and assets at headquarters and main business offices. A&S Committee
also received reports on the status of subsidiaries’ business as needed by communicatingand exchanging information with directors, auditors, etc. of the subsidiaries.
2) A&S Committee examined the basic policies (specified according to Article 118 (iii)(a)of the Companies Act), the special efforts (specified according to Article 118 (iii)(b) of
the Companies Act), the points to note (specified according to Article 118 (v)(a) of theCompanies Act) and the decisions made and the reasons (specified according to Article
118 (v) (b) of the Companies Act) described in the business reports, in light of the status
of deliberations at the board of directors and other meetings.
3) A&S Committee members conducted audits to ensure that accounting auditors kept
independence and conducted appropriate accounting audits, while receiving reports on
the execution of duties by them and requesting further explanations as needed. In
addition, A&S Committee received notification by accounting auditors that they weredeveloping a “structure to secure appropriate execution of duties by directors” inaccordance with the “quality control standards relating to audits”, etc., and requested
further explanations as needed.
Based on the above outlined method, we examined the business reports and their detailed
statements, the financial statements and their detailed statements, as well as the consolidated
financial statements relating to the business year in question.

- 35 -

2. Audit Results(1) Result of Audit of Business Reports, etc.
1) We acknowledge that the business reports and detailed statements correctly indicate thecompany’s situation in accordance with laws and regulations and the Articles ofIncorporation.
2) We do not acknowledge any improper acts relating to the directors’ execution of duties
or any significant facts that violate laws and regulations or the Articles of Incorporation
3) We acknowledge that the details of resolutions of the board of directors relating to theinternal control system are appropriate. Furthermore, we do not acknowledge that there
are any matters to indicate regarding the details stated in business reports relating to suchinternal control systems and the execution of duties by the directors. We also received
reports from directors and KPMG Azusa LLC that they acknowledged the internal
control relating to financial reporting was valid as of preparation of this Audit Report.
4) We do not acknowledge that there are any matters to indicate regarding the basic policies
relating to control of the company described in the business reports. We acknowledge
that the special effort described in the business reports (specified according to Article
118 (iii) (b) of the Companies Act) is consistent with the basic policies, does not harmthe common interests of shareholders of the company, and is not intended to maintainthe position of officers of the company.
(2) Results of Audit of Financial Statements and Detailed Statements
We acknowledge that the method and results of the audit by KPMG Azusa LLC are
appropriate.
(3) Results of Audit of Consolidated Financial Statements
We acknowledge that the method and results of the audit by KPMG Azusa LLC are
appropriate.
February 19, 2018
Audit & Supervisory Committee, Coca-Cola Bottlers Japan Holdings Inc.
Full-time Audit & Supervisory Committee Member
Tadanori Taguchi
Audit & Supervisory Committee Member
Zenji Miura
Audit & Supervisory Committee Member
Irial Finan
Audit & Supervisory Committee Member
John Murphy(Note) Audit & Supervisory Committee Member Zenji Miura, Audit & Supervisory Committee Member Irial
Finan, and Audit & Supervisory Committee Member John Murphy are External Auditors provided for in
Article 2-15 and Article 331-6 of the Companies Act.

- 36 -

Reference Materials for General Meeting of Shareholders
Proposal No. 1: Appropriation of surplus
Generally taking into account our business results for the fiscal year under review and our futurebusiness environment, we propose the appropriation of surplus as described below.
Year-end dividends① Type of assets to be distributed
Cash② Allotment of assets to be distributed and the total amount
We propose to pay 22 yen per share of the Company’s common stock.
In this case, the dividends will total 4,493,567,342 yen.
As a result, annual dividends will be 44 yen per share, including interim dividends.
③ Effective date of the dividends of surplus
We propose March 28, 2018 as the effective date of the dividends of surplus.

- 37 -

Proposal No. 2: Election of five (5) Directors (excluding Directors Serving on the
Audit and Supervisory Committee)
All five (5) Directors (excluding Directors serving on the Audit and Supervisory Committee)
will complete their terms at the end of this Ordinary General Meeting of Shareholders.
Therefore, we would like to request the election of five (5) Directors (excluding Directors
serving on the Audit and Supervisory Committee).
The candidates for Directors (excluding Directors serving on the Audit and Supervisory
Committee) are as follows:
No.

Name
(Date of Birth)

Brief Personal Profile, Position and Responsibility in the Company,
and Significant Concurrent Positions
March
March
March
March

1

1969
2000
2004
2006

No. ofCompany
Shares Owned

Joined Kinki Coca-Cola Bottling Co., Ltd.
Director, Kinki Coca-Cola Bottling Co., Ltd.
Managing Director, Kinki Coca-Cola Bottling Co., Ltd.
Senior Managing Director, Kinki Coca-Cola BottlingCo., Ltd.
Executive Corporate Officer, Kinki Coca-Cola BottlingCo., Ltd.
July
2006 Director, Coca-Cola West Holdings Co., Ltd.
Executive Corporate Officer, Coca-Cola West Holdings
Co., Ltd.
March
2007 Representative Director, Kinki Coca-Cola Bottling Co.,Ltd.
President, Kinki Coca-Cola Bottling Co., Ltd.
January 2009 Director, Coca-Cola West Co., Ltd.
Tamio Yoshimatsu
Executive Vice President, Coca-Cola West Co., Ltd.
11,196(February 10,
March2009 Representative Director, Coca-Cola West Co., Ltd.
January 2010 President, Coca-Cola West Co., Ltd.
1947)
June
2016 Outside Director, Nishi-Nippon Railroad Co., Ltd.
(incumbent)
April2017 Representative Director, Coca-Cola Bottlers Japan Co.,Ltd.
President, Coca-Cola Bottlers Japan Co., Ltd
Representative Director, Coca-Cola East Japan Co., Ltd.
President, Coca-Cola East Japan Co., Ltd.
January 2018 Representative Director, Coca-Cola Bottlers Japan
Holdings Inc. (incumbent)
President, Coca-Cola Bottlers Japan Holdings Inc.
(incumbent)
Representative Director, Coca-Cola Bottlers Japan Inc.
(incumbent)
President, Coca-Cola Bottlers Japan Inc. (incumbent)[Reason for the election of the candidate]
The Company requests the election of Tamio Yoshimatsu as a Director because of his track record in the Sales,
Distribution and Management Planning Divisions, based on his considerable experience as the President andRepresentative Director of Coca-Cola bottling companies, and because of how he has exercised leadership in his
present position as a Senior General Manager of Business of the Company and Group, to utilize his ability,
experience, etc. in the management of the Group.

- 38 -

No.

Name(Date of Birth)

Brief Personal Profile, Position and Responsibility in the Company,
and Significant Concurrent Positions
May
1988
December 1996
January 1998
August2000
January 2005

2

No. ofCompany
Shares Owned

Joined Diageo plc (The Pillsbury Company, USA)
CFO, Diageo plc (The Pillsbury Company, Australia)
CFO, Diageo plc (The Pillsbury Company, Asia-Pacific)
Senior Vice President and COO, Source MDx (USA)Managing Director in charge of Asia Pacific, The
Hershey Company (USA)July
2005 Group Manager, Mergers and Acquisitions,
The Coca-Cola Company (USA)June
2006 CFO, Coca-Cola Africa Group, The Coca-Cola Company
May2009 Executive Vice President and CFO, Coca-Cola (Japan)
Co., Ltd.
June
2009 Representative Director, Executive Vice President and
CFO, Coca-Cola (Japan) Co., Ltd.
March
2011
Outside Director, Coca-Cola West Co., Ltd.
Vikas Tiku
February
2015
CFO, Coca-Cola Asia Pacific Group, The Coca-Cola(July 26, 1965)
Company
November 2016 Vice President and Executive Officer, Coca-Cola East
Japan Co., Ltd.
April
2017 Representative Director, Coca-Cola Bottlers Japan Inc.
Vice President and CFO, Coca-Cola Bottlers Japan Inc.
Director, Coca-Cola East Japan Co., Ltd.
January 2018 Representative Director, Coca-Cola Bottlers Japan
Holdings Inc. (incumbent)
Vice President and CFO, Coca-Cola Bottlers Japan
Holdings Inc. (incumbent)
Representative Director, Coca-Cola Bottlers Japan Inc.
(incumbent)
Vice President and CFO, Head of Transformation,
Coca-Cola Bottlers Japan Inc. (incumbent)[Reason for the election of the candidate]
The Company requests the election of Vikas Tiku as a Director because of his considerable experience as a
Representative Director, Vice President and Executive Officer of Coca-Cola bottling companies and at The
Coca-Cola Company, his global business knowledge of Coca-Cola business operations, and because of how he
has exercised leadership relating to business integration in the Company and Group, to utilize his ability andexperience, etc. in the management of the Group.

- 39 -

No.

Name(Date of Birth)

Brief Personal Profile, Position and Responsibility in the Company,
and Significant Concurrent Positions
April
January
January
March
April

3

4

1985
2010
2012
2014
2017

No. ofCompany
Shares Owned

Joined Kitakyushu Coca-Cola Bottling Co., Ltd.
Corporate Officer, Coca-Cola West Co., Ltd.
Senior Corporate Officer, Coca-Cola West Co., Ltd.
Director, Coca-Cola West Co., Ltd.
Director, Coca-Cola Bottlers Japan Inc.
Senior Executive Officer, Coca-Cola Bottlers Japan Inc.
Yasunori Koga January 2018 Director, Coca-Cola Bottlers Japan Holdings Inc.
3,354
(April 26, 1962)(incumbent)
Senior Executive Officer and Head of Administration,
Coca-Cola Bottlers Japan Inc. (incumbent)
Representative Director, Coca-Cola Bottlers Japan
Benefit Inc. (incumbent)
President, Coca-Cola Bottlers Japan Benefit Inc.
(incumbent)[Reason for the election of the candidate]
The Company requests the election of Yasunori Koga as a Director because of his track record throughout theAdministrative Divisions including the General Affairs, Human Resources, Finance, and Management Planning
Divisions, based on his abundant management experience as a Director of Coca-Cola bottling companies, andbecause of how he has exercised leadership in his present position in the management of the Company andGroup, to utilize his ability, experience, etc. in the management of the Group.
October 1998 Trade Manager (in charge of Romania and Moldova),
Coca-Cola Morino Beverages (Timisoara)
September 2006 Director in charge of Commercial Headquarters, Central
Office (Athens), Coca-Cola Hellenic Bottling Company
January 2010 Key Account Director, Coca-Cola Hellenic BottlingCompany Eurasia (Moscow)
January 2013 Director in charge of RTM, Headquarters, Coca-Cola
Hellenic Bottling Company
Costel Mandrea January 2015 Senior Executive Officer, Coca-Cola East Japan Co., Ltd.
2015 Vice President and Executive Officer, Coca-Cola East
(July 21, 1974) July
Japan Co., Ltd.
March
2016 Director, Coca-Cola East Japan Co., Ltd.
April
2017 Director, Coca-Cola Bottlers Japan Inc.
Senior Executive Officer, Coca-Cola Bottlers Japan Inc.
January 2018 Director, Coca-Cola Bottlers Japan Holdings Inc.
(incumbent)
Senior Executive Officer, Head of Commercial and Headof Marketing, Coca-Cola Bottlers Japan Inc. (incumbent)[Reason for the election of the candidate]
The Company requests the election of Costel Mandrea as a Director because of his considerable experience as a
Director, Vice President and Executive Officer of domestic Coca-Cola bottling companies, as a manager of sales
at several overseas Coca-Cola bottling companies, and his global business knowledge of Coca-Cola business
operations, and because of how he has exercised leadership in his present position, to utilize his ability andexperience, etc. in the management of the Group.

- 40 -

Name(Date of Birth)No.

Brief Personal Profile, Position and Responsibility in the Company,
and Significant Concurrent Positions

No. ofCompany
Shares Owned

April
January
October

51975 Joined Japan Radio Co., Ltd.
1979 Joined Sony Corporation
2001 Representative Director and President, Sony Ericsson
Mobile Communications Corporation
April
2003 ABCVP, Sony Ericsson Mobile Communications
Corporation
Hiroshi Yoshioka
November 2005 Corporate Executive, SVP, Sony Corporation(October 26,
April2008 Corporate Executive, EVP, Sony Corporation
1952)
April
2009 Executive Deputy President Officer, Sony Corporation
July
2013 Outside Director, Coca-Cola East Japan Co., Ltd.
April
2017 Outside Director, Coca-Cola Bottlers Japan Inc.
January 2018 Outside Director, Coca-Cola Bottlers Japan Holdings Inc.
(incumbent)[Reason for the election of the candidate]
The Company requests the election of Hiroshi Yoshioka as a Director (Outside Director) in order for him toutilize, for the management of the Company, the considerable experience and knowledge he has gained thus far
as an External Director at Coca-Cola bottling companies and at Sony Corporation.

Notes:
1.

Company names at each time of occurrences are described within the Brief Personal Profile.

2.

There are no special interest relationships between the Company and the candidate for Directors (excluding
Directors Serving on the Audit and Supervisory Committee).

3.

Hiroshi Yoshioka is a candidate for Outside Director.
(1) The reason why the Company designated him as a candidate for Outside Director is as described in“Reason for the election of the candidate.”(2) He is an incumbent Outside Director of the Company. At the conclusion of this General Meeting of
Shareholders, he has assumed the office as Outside Director for one (1) year.
(3) The Company has submitted notices to Tokyo Stock Exchange, Inc. and Fukuoka Stock Exchange, on
which the Company is listed, that he is an “Independent Director.” The qualification for “Independent
Director” is determined by rules, etc. set by each securities exchange. If his re-election is approved, he isscheduled to be an Independent Director continuously.
(4) Currently, the Company has concluded an agreement for limitation of liability with him, and if his
re-election is approved, said agreement shall remain in effect. The agreement will outline that in cases
where the Directors (excluding directors with executive authority over operations, etc.) have caused
damages to the Company due to non-performance of their duties and yet they are bona fide and there is nogross negligence from them in performing their duties, they shall be liable for the damages to the limit ofminimum liability set forth in Article 425, Paragraph 1 of the Companies Act.
(5) He retired from the office of Executive Deputy President Officer at Sony Corporation on December 31,
2012.

- 41 -

Proposal No. 3: Election of one (1) Director Serving on the Audit and Supervisory
Committee
Tadanori Taguchi, a Director serving on the Audit and Supervisory Committee will complete histerm at the end of this Ordinary General Meeting of Shareholders.
Therefore, we would like to request the election of one (1) Director serving on the Audit andSupervisory Committee.
We have obtained the consent of the Audit and Supervisory Committee in connection with this
proposal.
The candidate for Director serving on the Audit and Supervisory Committee is as follows:
Name(Date of Birth)

Brief Personal Profile, Position and Responsibility in the Company,
and Significant Concurrent Positions
April
April
July
April

No. ofCompany
Shares Owned

1970
2005
2006
2007

Joined Nichibei Coca-Cola Bottling Co., Ltd.
Corporate Officer, Coca-Cola West Japan Co., Ltd.
Corporate Officer, Coca-Cola West Holdings Co., Ltd.
Group Corporate Officer, Coca-Cola West Holdings Co.,Ltd.
January 2009 Group Corporate Officer, Coca-Cola West Co., Ltd.
January 2011 Senior Corporate Officer, Coca-Cola West Co., Ltd.
January 2012 Group Senior Corporate Officer, Coca-Cola West Co.,Ltd.
Corporate Officer, Minami Kyushu Coca-Cola Bottling
Tadanori TaguchiCo., Ltd.
(December 1,
4,345
January
2013
SeniorCorporate Officer, Minami Kyushu Coca-Cola
1951)
Bottling Co., Ltd.
March2013 Audit & Supervisory Board Member, Coca-Cola West
Co., Ltd. (full-time)March2016 Director serving on the Audit and Supervisory
Committee, Coca-Cola West Co., Ltd. (full-time)
April
2017 Director serving on the Audit and Supervisory
Committee, Coca-Cola Bottlers Japan Inc. (full-time)
January 2018 Director serving on the Audit and Supervisory
Committee, Coca-Cola Bottlers Japan Holdings Inc.
(full-time) (incumbent)[Reason for the election of the candidate]
The Company requests the election of Tadanori Taguchi as Director serving on the Audit and Supervisory
Committee because of his track record in Finance and Management Planning Divisions of Coca-Cola bottlingcompanies, he has considerable experience in both Finance and Accounting, and through his auditing experience
as an Audit& Supervisory Board Member at Coca-Cola bottling companies and as a Director serving on the
Audit & Supervisory Committee, he has a broad, deep level of knowledge and insight on the Group’s business,
to utilize his experience, ability, etc. both in the management and auditing of the Group.
Notes:
1.

Company names at each time of occurrences are described within the Brief Personal Profile.

2.

There are no special interest relationships between the Company and the candidate for Director serving on the
Audit and Supervisory Committee.

3.

Currently, the Company has concluded an agreement for limitation of liability with Tadanori Taguchi, and if his
re-election is approved, said agreement shall remain in effect. The agreement will outline that in cases where the
Directors (excluding directors with executive authority over operations, etc.) have caused damages to theCompany due to non-performance of their duties and yet they are bona fide and there is no gross negligencefrom them in performing their duties, they shall be liable for the damages to the limit of minimum liability set
forth in Article 425, Paragraph 1 of the Companies Act.

- 42 -

Proposal No. 4: Election of Accounting Auditor
The term of office of KPMG AZSA LLC, the Company’s Accounting Auditor, will expire at theend of this General Meeting of Shareholders.
Therefore, based on determination by the Audit and Supervisory Committee, the Company
requests approval to newly appoint Ernst & Young ShinNihon LLC as the Accounting Auditor.
Additionally, the reason that the Audit and Supervisory Committee has selected Ernst & Young
ShinNihon LLC as a candidate for Accounting Auditor is that in consideration of the number ofyears that the current Accounting Auditor has been performing audits, and in line with theCompany’s selection standards and evaluation standards for Accounting Auditors, after
comprehensive consideration of factors such as the independence, quality management structure,and global audit structure, the Company has determined that it can expect audits from a newperspective.
The candidate for Accounting Auditor is as follows.
Name
Main office
and its
location
History

Ernst & Young ShinNihon LLC
Hibiya Kokusai Building
2-2-3 Uchisaiwai-cho, Chiyoda-ku, Tokyo, Japan
January 1967
December 1969
October 1985
January 1986
April 2000
July 2001
July 2008

Personnel
structure

Number ofaudit clients
CapitalCPAs
Other persons
involved in audits
Other staff
Total
3,967 companies

Tetsuzo Ota & Co. was established
Showa Audit Corporation was establishedThe two corporations above merged to form Showa Ota& Co.
Century Audit Corporation was establishedThe two corporations above merged to form Century Ota
Showa & Co.
Changed trade name to “ShinNihon & Co.”
Transitioned to an LLC and changed trade name to “Ernst& Young ShinNihon LLC”
3,312 persons
842 persons
1,884 persons
6,038 persons¥993 million(as of December 31, 2017)- 43 -

Agenda Item No. 5: Deciding compensation related to the performance-linked
stock-based compensation system for executive directors
With the purpose to further enhance the motivation to contribute to the mid to long term
corporate values and stock price rises in directors (excluding members of the Audit andSupervisory Committee and outside directors, hereinafter called “Executive Directors” ) bysharing the merits and risks of stock price fluctuations with our shareholders, the Company isplanning to introduce a performance-linked stock-based compensation system (hereafter called“LTI”) which pays Executive Directors common shares and cash. During the 2016 Annual
General Meeting of shareholders held on March 22, 2017, the amount of compensation for theCompany’s directors (excluding those who are members of the Audit and Supervisor
Committee) was approved at maximum 750 million yen per year (which includes the maximumof 50 million yen per year for outside directors). Upon comprehensively considering various
matters such as the degree of contribution of Executive Directors to the Company, the Company
hopes to set the total amount of monetary compensation receivables and cash to be paid to
Executive Directors as compensation related to the LTI within the above compensation for our
Company’s directors.
The payment of the compensation under the LTI will be decided by comprehensively taking
into account matters such as degree of contribution by the Executive Directors to the Company,
etc., which should be quite substantial.
Presently, there are five directors (four of whom are Executive Directors) other than the
directors who are members of the Audit and Supervisory Committee, and this will remain thesame even after Agenda Item No. 2 is approved.
Note(1) Outline of the LTI
The LTI will be based on achievement of numerical targets for Company performance asapproved by the Company’s board of directors, (hereafter called “Targets”) for the term of
three consecutive fiscal years (hereafter called the “Applicable Term”), and the initial term
shall be from the fiscal year ending December 31, 2018 to the fiscal year ending December
31, 2020, and the Applicable Term for the years after the one ending December 31, 2018
onwards shall also be three consecutive years. Based on the LTI, the Company’s commonshares and cash will be provided as compensation for each Applicable Term according to theachievement rate of the Targets for such Applicable Term.
Since the Company’s common shares and cash will be provided according to theachievement rate of the Targets, whether the common shares of the Company and cash will
be provided and the number of shares and the amount of cash to be provided will not be
determined at the time the LTI is introduced.

- 44 -

(2) Structure of the LTI(a) Directors covered by the LTI are full-time directors responsible for execution ofoperations.
(b) The threshold amount in accordance with the position of each director covered by the
LTI, as well as such matters as the Targets (set based on ROE, sales, etc.), payment rates
and calculation formulas that are required for specifically calculating the Company’scommon shares and cash to be provided to each director covered by the LTI, will bedecided within 3 months of the commencement of the Applicable Term, at theCompany’s board of directors.
(c) Once the Applicable Term ends, the number of common shares and cash to be provided
to each director covered by the LTI will be determined based on certain variables
corresponding to the achievement rate of the Targets during the Applicable Term.
(d) The Company will provide monetary compensation receivables, the amounts of which
are determined in accordance with the number of common shares to be provided to eachdirector covered by the LTI as determined in the above (c), for each director covered by
the LTI for the purpose of contributing them in kind, and such director covered by the
LTI will receive the allotted common shares by contributing all the concerned monetarycompensation receivables in kind. The paid-in amount for such common shares shall bebased on the closing price of the Company’s common shares on the Tokyo Stock
Exchange, Inc. on the business day before the date of the resolution of the Company’sboard of directors on the issuance of shares or the disposal of treasury stock (iftransaction is not completed on the same day, the closing price of the most recent
trading day before that).
(e) To secure the funds the directors covered by the LTI need for paying tax obligations inconnection with the allotment of the abovementioned Company’s common shares, inaddition to the monetary compensation receivables determined in accordance with theabove (d), the Company will pay the amount of cash decided in accordance with theabove (c).
(3) Calculation methods to determine the number of Company’s common shares and cash
amount to be provided to each director covered by the LTI
The Company will calculate the number of Company’s common shares and cash amountto be provided to each director covered by the LTI using the following formula.
(a) Number of Company’s common shares provided to each director covered by the LTI(Threshold amount (*1)÷Granted stock price (*2)) x Payment rate(*3) x 50%
Fractions less than 100 shares resulting from the calculation will be rounded up to 100
shares.
(b) Cash paid to each director covered by the LTI{(Threshold amount (*1)÷Granted stock price (*2)) x Payment rate (*3) - No. of theCompany’s common shares to be provided} x Stock price at the time of issue (*4)
Fractions less than 1 yen resulting from the calculation will be rounded up to 1 yen.
*1 Threshold amount is decided for each director covered by the LTI based on his/her
position.

- 45 -

*2 The Granted stock price is the average of closing stock prices of the Company’scommon shares in Tokyo Stock Exchange, Inc. over the 1 month period preceding
the AGM, counting from the day before the AGM.
*3 The Payment rate is calculated within the scope of 0% to 150% based on themethod decided by the Company’s board of directors according to the achievement
rates of the targets such as the ROE, sales, etc. during the Applicable Term.
*4 The stock prices at the time of issue shall be the closing price of the Company’scommon shares on the Tokyo Stock Exchange, Inc. on the business day before thedate of the resolution of the Company’s board of directors on issuance and disposalof the shares provided under the LTI (if transaction is not completed on the sameday, the closing price of the most recent trading day before that).
The total amount of the above (2) (d) monetary compensation receivables and above(2) (e) cash shall be within the amount of compensation approved at the 2016 AGM
held on March 22, 2017 (at maximum 750 million yen per year including the maximumof 50 million yen per year for outside directors) for the Company’s directors (excluding
those who are members of the Audit and Supervisory Committee). The maximum total
number of the Company’s common shares allotted to each director covered by the LTI
according to (3) (a) shall be 50,000 shares. However, if the total number of sharesissued by the Company increases/decreases after the date of resolution of this agenda
item due to reverse share split, share split, allocation of shares without contribution etc.,
the total amount of the monetary compensation receivables and cash to be provided tothe directors covered by the LTI and the number of the Company’s common sharesprovided to the directors covered by the LTI will be reasonably adjusted according to
the percentage of such increase or decrease.

(4) Conditions for providing the Company’s common shares to the directors covered by the LTI
Under the LTI, the Company’s common shares and cash will be provided to directors
covered by the LTI if the following conditions are met after the Applicable Term ends.
(a) Continuously served as a director or executive officer of the Company or any of its
subsidiaries throughout the Applicable Term(b) No illegal acts, as defined by the Company’s board of directors, were conducted(c) Other conditions that are determined by the Company’s board of directors as necessary
to achieve the objectives of the LTI are met
The Company’s common shares will be provided to the Directors covered by the LTI
through the issuance of shares or the disposal of treasury stock. The directors who will
receive these common shares and the subscription requirements for such issuance of theshares or disposal of treasury stock will be decided by the Company’s board of directors
after the Applicable Term.

- 46 -

(5) Treatment in the case of resignation
Should a director covered by the LTI lose his/her position as a director or executive
officer of the Company or any of its subsidiaries during the Applicable Term only due to acertain reason which has been determined by the Company’s board of directors in advance,such director will be provided with the Company’s common shares and cash prorated basedon a reasonable method prescribed by the Company’s board of directors for his/her term ofoffice during the Applicable Term up to such resignation.
<Reference>
The Company is planning to introduce an equivalent performance-linked stock-based
incentive compensation system as described in this agenda item for the executive officers of
the Company and its subsidiaries, on the condition that this agenda item will be approved.
END- 47 -