English Translation of Original JapaneseThis is a translation of the original documents in Japanese. In the event of any discrepancy, the original
documents in Japanese shall prevail.

Items Disclosed on the Internet in relation to the
Convocation Notice of the 95th Annual General Meeting of Shareholders

TABLE OF CONTENTSCONSOLIDATED STATEMENT OF CHANGES IN EQUITYNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSNOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS

1
3
18
19

Above items have been provided to our shareholders by posting them on the Company’s
website in accordance with the provisions of relevant laws and regulations and the Article
15 of the Company’s Articles of Incorporation.

ASAHI GROUP HOLDINGS, LTD.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2018

(million yen)
Equity attributable to owners of parent
Other components of equity

Balance at beginningof current period

Issued capital

Share premium

182,531

119,051

Changes in fairvalue of financial
instruments
RemeasureTreasury sharesmeasured at fair ments of definedvalue throughbenefit plansother comprehensive income

Retainedearnings

713,146(76,747)

71,386–(15,865)(4,380)(15,865)(4,380)(2,505)

4,380

Comprehensive
incomeProfit151,077

Other comprehensive
incomeTotal comprehensive
income––151,077–

Transfer to nonfinancial assets
Transactions withownersDividends(41,229)

Purchase of treasury
shares(250)

Disposal of treasury
shares00Changes throughbusiness
combinations
Changes throughsales of consolidated
subsidiaries
Changes in the scopeof consolidation
Share-based paymenttransaction

76

Transfer from othercomponents ofequity to retained
earnings(1,875)

Other increase(decrease)
Total contributions
by owners anddistribution toowners–76(43,104)(250)(2,505)

4,380

Total changes in theownership interest in
subsidiaries

–

–

–

–

–

–

Total transactions
with owners–

76(43,104)(250)(2,505)

4,380

Balance at end ofcurrent period

182,531

119,128

821,120(76,997)

53,015–Acquisition of noncontrolling interests
without change incontrol1Equity attributable to owners of parent
Other components of equity

Cash flow
hedgesBalance at beginningof current period

(624)

Other
components
NonTotal equity
of equity
Translation
attributable controlling
Total otherrelated todifferences
to owners of interests
components
disposalon foreign
parentof equitygroups held
operations
for sale

Costs ofhedging(1,179)141,010

210,592(3,440)Total
equity1,145,135

7,612

1,152,748

151,077(139)

150,938

Comprehensive
incomeProfit–Other comprehensive
income

(377)

(659)

(90,906)(112,190)

3,440(108,750)

607(108,142)

Total comprehensive
income

(377)

(659)

(90,906)(112,190)

3,440

42,327467

42,795

Transfer to nonfinancial assets

360

360

360

360

Dividends–(41,229)

Purchase of treasury
shares

–

(250)

(250)

Disposal of treasury
shares–00Changes throughbusiness
combinations

–

–

–

Changes throughsales of consolidated
subsidiaries––(1,711)(1,711)

Changes in the scopeof consolidation––(2,703)(2,703)

Share-based paymenttransaction

–

76

76

Transfer from othercomponents of equity
to retained earnings

1,875

–

–

–

–

25

25

(41,403)(4,853)(46,256)

Transactions withownersOther increase(decrease)
Total contributions byowners anddistribution to owners

–

–

–

1,875

Acquisition of noncontrolling interests
without change incontrol

–

–

(463)

(41,692)––

Total changes in theownership interest in
subsidiaries

–

–

–

–

–

–

–

–

Total transactions
with owners

–

–

–

1,875

–

(41,403)(4,853)(46,256)

Balance at end ofcurrent period(641)(1,839)50,103

100,637–

1,146,420

3,227

1,149,647

2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis for Preparation of Consolidated Financial Statements(1) Basis of consolidated financial statements
The Company and subsidiaries of the Company (hereinafter collectively referred to as the“Group”) have prepared their consolidated financial statements in accordance with theInternational Financial Reporting Standards (hereinafter referred to as the “IFRS”), pursuant
to the provisions of Article 120-1 of the Rules of Corporate Accounting. The latter part of the
Article 120-1 prescribes some omissions of disclosure items required under IFRS.
(2) Consolidation
Number of consolidated subsidiaries: 142
Please see Item 1 of the “Business Report” (“Overview of Operations of the Asahi
Group, section (5) Status of Major Establishments and Principal Subsidiaries”), for asummary of the current status of principal consolidated subsidiaries.

PT Asahi Indofood Beverage Makmur, PT Prima Cahaya Indobeverages and PT Tirta
Sukses Perkasa were excluded from the scope of consolidation this fiscal year due to thesale of their shares.
(3) The equity method
Number of companies accounted for using the equity method: 24
Principal affiliates accounted for using the equity method were Asahi Business Solutions
Corp. and Asahi Beer Communications, Ltd.
(4) Significant accounting policies
1) Financial assets(i)

Initial recognition and measurement
The Group recognizes financial assets when it becomes a party to the contract. Financial
assets purchased or sold in a regular way are recognized on the transaction date. Financial
assets are subsequently classified as financial assets measured at amortized cost or
financial assets measured at fair value.
Financial assets measured at fair value through profit or loss are initially recognized atfair value. Financial assets measured at fair value through other comprehensive income
and financial assets measured at amortized cost are initially recognized at fair value plustransaction costs that are directly attributable to the acquisition.
a. Financial assets measured at amortized cost
Financial assets are classified as financial assets measured at amortized cost only
when the requirements that the objective of the Group’s business model is to holdassets in order to collect the contractual cash flows and that the contractual terms of
the financial assets give rise on specific dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding are both met.
b. Financial assets measured at fair value
Financial assets that do not satisfy either of the two requirements above are classified
as financial assets measured at fair value.
With regard to financial assets measured at fair value, the Group decides toirrevocably designate each financial instrument as measured at fair value throughprofit or loss or as measured at fair value through other comprehensive income,
except for equity instruments held for trading, which must be measured at fair value

3through profit or loss.
Information on derivatives is provided in 11) Derivatives and hedge accounting.
(ii) Subsequent measurement
Financial assets are subsequently measured based on the classification of the asset as
follows:
a. Financial assets measured at amortized cost
These financial assets are measured at amortized cost using the effective interest
method.
b. Financial assets measured at fair value
These financial assets are measured at fair value at the reporting date.
Changes in fair value of such financial assets are recognized in profit or loss or othercomprehensive income, depending on their classification.
Dividend income arising from equity instruments designated as measured at fairvalue through other comprehensive income is recognized in profit or loss. If the fairvalue decreases significantly or the equity instrument is disposed of, the accumulated
other comprehensive income is transferred to retained earnings.
(iii) Derecognition
Financial assets are derecognied when the contractual rights to receive cash flows fromthe financial assets expire or are transferred in a transaction in which substantially all
the risks and rewards of ownership of the financial assets are transferred to another entity.
(iv) Impairment of financial assets
The Group estimates expected credit losses at the end of each fiscal year forrecoverability of financial assets measured at amortized cost.
For financial instruments of which the credit risk has not increased significantly after
initial recognition, expected credit losses within the next 12 months are recognized as loss
allowance. For financial instruments of which the credit risk has increased significantly
after initial recognition, lifetime expected credit losses are recognized as loss allowance.
However, for trade receivables, loss allowance is always measured based on lifetime
expected credit losses.
Interest income for financial assets whose credit risk has significantly increased and there
is an objective evidence of impairment is measured by applying the effective interest rate
to the net carrying amount of the financial asset less loss allowance
In determining whether any objective evidence of impairment exists, the Group uses thefollowing requirements:● Significant financial difficulties of the issuer or the borrower;● A breach of contract, such as default or past due event in interest or principal
payments;● The lender(s) of the borrower, for economic or contractual reasons relating to theborrower’s financial difficulty, having granted to the borrower a concession(s) thatthe lender(s) would not otherwise consider;● It is becoming probable that the borrower will enter bankruptcy or other financial
reorganization; or● The disappearance of an active market for that financial asset because of financial
difficulties.
The Group directly reduces the gross carrying amount of a financial asset when there is
no reasonable expectations of recovering the financial asset in its entirety or a portion
thereof.

4

If in a subsequent period, the credit risk decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized (such as an
improvement in the credit rating of the borrower), reversal of previously recognizedimpairment loss is recognized in profit or loss.
2) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost is calculated
mainly using the weighted-average method for merchandise, finished goods and semifinished goods, and mainly using the moving-average method for raw materials and supplies.
The cost of merchandise, finished goods and semi-finished goods consists of raw material
costs, direct labor costs, other direct costs and related production overhead costs (based on
the normal production capacity). Net realizable value is determined at the estimated selling
price in the ordinary course of business less the relevant estimated selling expenses.
3) Property, plant and equipment
Buildings and structures, machinery and vehicles, tools, furniture and fixtures, and land
mainly consist of production and processing equipment and facilities for the head office.
Property, plant and equipment are recognized at cost, and carried at cost less accumulated
depreciation and accumulated impairment losses. The cost includes the purchase price, thecosts directly related to acquisition of the asset, costs for asset dismantlement and removal
and site restoration, and borrowing costs that are required to be capitalized. Concerning
expenditure after acquisition, in cases when it is highly probable that future economic
benefit relating to the item will flow to the Group, and the item has a cost that can bemeasured reliably, such costs are recognized either together in the carrying amount of theasset, or when deemed appropriate, as a separate asset. The carrying amounts of parts thatare replaced are derecognized. Other repair and maintenance costs are recognized in profit
or loss in the accounting period in which the cost was incurred.
Land is not depreciated. The amount of depreciation of other assets is calculated byallocating the cost of each asset less the residual value using the straight-line method overthe following major estimated useful lives:
Buildings and structures
3 to 50 years
Machinery and vehicles
2 to 15 years
Tools, furniture and fixtures
2 to 20 years
Residual values, useful lives and depreciation methods of property, plant and equipment are
reviewed at the end of each fiscal year, and revised where necessary.
Gains or losses on disposal are computed by comparing the carrying amount with theproceeds from disposal, and then recognized in profit or loss.
4)

Goodwill and intangible assets(i)

Goodwill
Goodwill is tested for impairment annually, and the carrying amount is the cost lessaccumulated impairment losses. Impairment losses of goodwill are not reversed. Gain orloss on sales of business operations includes carrying amount of goodwill related to thebusiness operation.
Goodwill is allocated to cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination.

(ii) Trademarks
Separately acquired trademarks are recognized at cost. Trademarks acquired throughbusiness combinations are recognized at fair value as of the acquisition date. Trademarks,
for which a certain useful life is determined, except for those with indefinite useful lives,5are recorded at cost less accumulated amortization and accumulated impairment losses.
The amount of amortization is calculated by allocating the cost of trademarks using thestraight-line method mainly over the estimated useful life of 20 to 40 years.
(iii) Software
Software is carried at cost less accumulated amortization and accumulated impairment
losses.
Development costs directly related to design and testing of the Group’s proprietary
software are recognized as intangible assets only when they are reliably measureable,
they are technically feasible, it is highly probable to generate future economic benefits,
and the Group has an intention and adequate resources to complete the development anduse the assets.
Other development costs that do not satisfy these requirements are recognized as
expenses as incurred. Development costs previously recognized as expenses are notrecognized as assets in subsequent fiscal years.
Software is amortized mainly using the straight-line method over the estimated useful lifeof 5 years.
Expenses related to maintenance of software are recognized as expenses as incurred.
(iv) Other intangible assets
Other intangible assets are initially recognized at cost. Other intangible assets, for which a
certain useful life is determined, are carried at the cost less accumulated amortization andaccumulated impairment losses. However, some intangible assets (such as leaseholdinterests in land) are determined to have indefinite useful lives and are not amortized,
because they exist fundamentally as long as the business continues. The amount ofamortization is calculated by allocating the cost of each other intangible asset using thestraight-line method over the estimated useful life.
Residual values, useful lives and amortization methods of intangible assets are reviewed
at the end of each fiscal year, and revised where necessary.
5) Leases
The Group leases certain property, plant and equipment and intangible assets as a lessee.
Leased property, plant and equipment and intangible assets where the Group holds
substantially all the risks and rewards of ownership are classified as finance leases. In
cases of finance leases, leased properties are recognized as assets at the commencement of
the lease term at fair value of the leased property or, if lower, the present value of theminimum lease payments.
Each lease payment is allocated between liabilities and finance costs. The interest element,
which is a finance cost, is expensed in profit or loss over the lease term to produce a
constant periodic rate of interest on the remaining balance of the liability in each fiscal year.
Property, plant and equipment and intangible assets acquired through finance lease aredepreciated or amortized using the straight-line method over the useful life of the asset or, if
shorter, the lease term.
Leases other than finance leases are classified as operating leases. Lease payments inoperating leases, less incentives received from the lessor, are recognized in profit or loss ona straight-line basis over the lease term.
6) Impairment of non-financial assets
Goodwill and intangible assets with indefinite useful lives are not subject to amortization
and are tested for impairment annually. Other non-financial assets are examined for
impairment if there is an indication that the carrying amount may not be recovered due to6

occurrence of an event or change in the circumstances. When the carrying amount of anasset exceeds its recoverable amount, an impairment loss is recognized at the excess amount.
The recoverable amount is the higher of its fair value less costs of disposal of the asset andvalue in use. To assess impairment, an asset is grouped at the smallest unit which generates
separately identifiable cash flows (cash-generating unit). Non-financial assets for which
impairment losses are recognized, excluding goodwill, are reassessed at the end of eachfiscal year for the possibility that the impairment losses may be reversed.
7) Provisions
The Group recognizes provisions when it has a present legal or constructive obligation as aresult of past events, it is probable that an outflow of resources will be required to settle theobligation, and the amount can be reliably estimated.
Where there are a number of similar obligations, the probability that an outflow of resources
will be required in settlement is determined taking into account the similar obligations as awhole. Provisions are recognized even if the likelihood of the outflow is low for one item inthe similar obligations.
Provisions are measured as the present value of expenditures expected to be required tosettle the obligation, using the pre-tax discount rate that reflects current market assessmentsof the time value of money and the risks specific to the obligation. An increase in provisions
due to passage of time is recognized as interest expense.
8)

Employee benefits(i)Post-employment benefits
The Group companies have various plans. The Group has adopted defined benefit plans,and certain consolidated subsidiaries have established a retirement benefit trust. In
addition to these plans, certain consolidated subsidiaries have introduced defined
contribution plans and retirement benefit prepayment plans.
Defined benefit plans are post-employment benefit plans other than defined contributionplans. Defined contribution plans are post-employment benefit plans in which theemployer pays fixed contributions to other separate entities and has no legal orconstructive obligations to make further contributions.
In defined benefit plans, the present value of defined benefit obligations is calculated
separately for each plan by estimating the amount of future benefits that employees haveearned in exchange for their service rendered in the prior fiscal years and the current
fiscal year and discounting that amount. The Group recognizes the amount calculated bydeducting fair value of plan assets from the present value of defined benefit obligations as
net defined benefit liability (asset).
Defined benefit obligations are calculated using the projected unit credit method. The
discount rates are determined based on market yields of high quality corporate bonds atthe end of the fiscal year that correspond to the discount period, which is set on the basisof a period up to the estimated date of benefit payment for each future year.
Contributions to the plans are determined based on periodic actuarial calculation and areusually paid to the funds managed by insurance companies and trust companies.
In case that the Group has a surplus in the defined benefit plans as a result of calculation,
the net defined benefit asset is measured to the extent of the present value of economic
benefits available in the form of a future refund from the plan or a reduction in futurecontributions to the plan. In calculating the present value of economic benefits, the Grouptakes into account minimum funding requirements applicable to its plan. Economic
benefits shall be available to the Group, if the economic benefits can be realized during
the life of the plan or at the time when the pension liabilities are settled.
The Group recognizes remeasurements of the net defined benefit liability (asset) arising7

from the defined benefit plans in other comprehensive income and immediately
reclassifies them to retained earnings.
Contributions to the defined contribution plan are recognized as employee benefits
expense in profit or loss in the period during which employees render their service.
(ii) Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and recognized as
expenses when the related service is rendered. Bonuses are recognized as a liability at theamount estimated to be paid under the plans, when the Group has present legal orconstructive obligations to pay as a result of past service rendered by employees, and theamount of obligations can be reliably estimated.
9) Revenue
The Group has adopted IFRS 15 “Revenue from Contracts with Customers” (issued in May
2014) and “Clarifications to IFRS 15” (issued in April 2016) (hereinafter collectively
referred to as “IFRS 15”) effective from this fiscal year.
The Group recognizes revenue based on the following five step approach in accordance withIFRS 15.
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
For sales of goods, as the customer obtains control over the goods upon delivery, theperformance obligation is determined to have been satisfied and revenue is therefore
recognized upon delivery of the goods. Revenue is measured using the net amount after
eliminating goods returned, rebates and discounts.
Because the period from satisfaction of the performance obligation to receipt ofconsideration is usually within one year or less, the Group uses the practical expedient anddoes not adjust the promised amount of consideration for the effects of a significant
financing component for such receivables.
The Group’s view is that acting as a principal if it controls promised goods before
transferring them to a customer and recognizes revenue in the gross amount of consideration
to which it expects to be entitled in exchange for the specified goods to be transferred.
10) Foreign currency translation(i)Functional currency and presentation currency
Items included in financial statements of each company of the Group are measured using
the currency of the primary economic environment in which the company operates(hereinafter referred to as the “functional currency”). The consolidated financial
statements are presented in Japanese Yen, which is the presentation currency of theGroup.

(ii) Transactions and transaction balances
Foreign currency transactions are translated into functional currencies using the exchange
rate at the date of the transactions. Foreign exchange differences arising from settlementof transactions and those arising from the translation of monetary assets and liabilities
denominated in foreign currencies using the exchange rate at the end of the fiscal year are
recognized in profit or loss. However, exchange differences arising from financial assets
8measured through other comprehensive income, qualifying cash flow hedges and hedgesof net investments in foreign operations are recognized in other comprehensive income.
(iii) Foreign operations
Operating results and financial position of all the foreign operations using a functional
currency that is not the presentation currency are translated into the presentation currency
in the ways described below. Among the foreign operations, there is no company thatuses a currency of a hyperinflationary economy.
a. Assets and liabilities are translated using the closing rate as of the end of the fiscal
year.
b. Income and expenses are translated using the average rate (unless the average rate is
not a reasonable approximation of the cumulative effect of the exchange rates
prevailing on the transaction date, in which case income and expenses are translatedusing the rate on the transaction date).
c. All resulting exchange differences are recognized in other comprehensive income
and accumulated in exchange differences on foreign operations, which is othercomponents of equity.
When a foreign operation is partially disposed of or sold, the exchange differences
recognized in other comprehensive income are recognized in profit or loss as part of again or loss on the sale.
11) Derivatives and hedge accounting
Derivatives are initially recognized at fair value on the date when the derivative contract isconcluded and subsequently remeasured at fair value at the end of each fiscal year. The
method of recognizing gains or losses arising as a result of the remeasurement depends onwhether the derivative is designated as a hedging instrument, and if it was designated as ahedging instrument, on the nature of the hedged item.
The Group designates certain derivatives as hedging instruments of cash flow hedges (hedge
of a particular risk associated with recognized assets or liabilities, or highly probable
forecast transactions) and certain borrowings denominated in foreign currencies as hedging
instruments of net investments in foreign operations.
The Group documents the relationship between the hedging instrument and the hedged item
and the risk management objective and strategy for exercising the hedging transactions at
the inception of the transaction. The Group also documents its assessment, both at the
inception and on an ongoing basis, of whether the derivatives or non-derivative hedging
instruments used in hedging transactions are effective in offsetting changes in cash flows ofhedged items or foreign exchange fluctuations in net investments in foreign operations.
The Group assesses the effectiveness of hedges on an ongoing basis, and determines that ahedge is effective when the requirement that there is an economic relationship between thehedged item and the hedging instrument, the requirement that the effect of credit risk does
not significantly dominate the value changes that result from the economic relationship, andthe requirement that the hedge ratio of the hedging relationship is the same as the ratio
resulting from the quantities of the hedged item actually hedged and the hedging instrument
actually used are all satisfied.
The effective portion of changes in fair value of derivatives that are designated as a hedging
instrument of cash flow hedges and satisfy the requirements as the hedging instrument isrecognized in other comprehensive income. Gains or losses on the ineffective portion are
immediately recognized in profit or loss.
Accumulated gains or losses recognized through other comprehensive income aretransferred to profit or loss in the period during which cash flows arising from the hedged9

item affect profit or loss. However, when a forecast transaction as the hedged item results in
the recognition of non-financial assets (e.g. inventories or property, plant and equipment),
gains or losses previously deferred in other comprehensive income are transferred andincluded in the initial measurement of the cost of the assets. The deferred amount is
eventually recognized as cost of sales for inventories, and as depreciation expense forproperty, plant and equipment.
Application of hedge accounting is discontinued prospectively when the hedge no longer
qualifies for hedge accounting due to expiry, sale of the hedging instrument and otherreasons. When the hedged future cash flows are still expected to occur, accumulated gains
or losses recognized in other comprehensive income remain as accumulated othercomprehensive income. When a forecast transaction is no longer expected to occur and inother cases, accumulated gains or losses recognized in other comprehensive income are
immediately transferred to profit or loss.
With regard to derivatives or non-derivative hedging instruments, including borrowings,
held for hedging foreign exchange fluctuation risk in net investments in foreign operations,the portion of foreign exchange differences deemed effective as a hedge is recognized inother comprehensive income as hedging of net investments in foreign operations. Of
exchange differences for derivatives or non-derivative hedging instruments, the portion
deemed ineffective as a hedge and not subject to the assessment of hedging effectiveness arerecognized in profit or loss.
Accumulated gains or losses recognized in other comprehensive income through net
investment hedges are transferred to profit or loss upon disposal of foreign operations.
12) Accounting for consumption taxes
Consumption taxes that are received from customers and paid to tax authorities are excluded
from revenue, cost of sales, and expense on the consolidated statement of profit or loss.
(5) Changes in accounting policies(Revenue)
The Group has adopted IFRS 15 “Revenue from Contracts with Customers” (issued in May
2014) and “Clarifications to IFRS 15” (issued in April 2016) (hereinafter collectively
referred to as “IFRS 15”) effective from this fiscal year. In applying IFRS 15, the Group has
adopted the method to recognize the cumulative effect of applying this standard at the dateof initial application, which is permitted as a transitional measure.
The Group recognizes revenue based on the following five-step approach in accordancewith IFRS 15.

Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
The impact on the consolidated financial statements is immaterial compared with theapplication of the previous accounting standard.

102. Notes to Consolidated Statement of Financial Position(1) Pledged assets and secured liabilities

The following assets are pledged as collateral for borrowings and other current liabilities of¥3,257 million.
Property, plant and equipment¥2,261 million
Cash and cash equivalents¥345 million(2) Accumulated depreciation on property, plant and equipment(3) Bad debt provisions directly deducted from assets
Trade and other receivables¥872,919 million

Other financial assets¥2,803 million¥906 million(4) Contingent liabilities
Guarantees¥892 million

3. Notes to Consolidated Statement of Changes in Equity(1) Total number of the issued shares as of the end of this fiscal year
Common stock

483,585,862 shares(2) Dividends during this fiscal year
1) It was resolved at the 94th Annual General Meeting of Shareholders of March 27, 2018
as follows:

Dividends on common stock
Total amount of dividends:
Dividend per share:
Record date:
Effective date:2)¥20,615 million¥45
December 31, 2017
March 28, 2018

It was resolved at the Board of Directors Meeting of August 2, 2018, as follows:

Interim dividends on common stock
Total amount of interim dividends:
Interim dividend per share:
Record date:
Effective date:¥20,615 million¥45
June 30, 2018
September 3, 2018

Total amount of interim dividends include dividends of 1 million yen for shares of theCompany held by Japan Trustee Services Bank, Ltd. as the trust assets of a performancelinked stock compensation plan.
(3) Dividends after the end of this fiscal year
The following item has been placed on the agenda for approval at the 95th Annual General
Meeting of Shareholders scheduled for March 26, 2019.

Dividends on common stock11

Source of dividends:
Total amount of dividends:
Dividend per share:
Record date:
Effective date:

Retained earnings¥24,738 million¥54
December 31, 2018
March 27, 2019

Total amount of dividends include dividends of 2 million yen for shares of the Company
held by Japan Trustee Services Bank, Ltd. as the trust assets of a performance-linked stockcompensation plan.
4. Notes on Financial Instruments(1) Status of financial instruments
1) Capital management
The Group’s purpose for capital management is to maintain its ability to continue as a going
concern in order to provide returns to shareholders, grant benefits to other stakeholders andmaintain the most appropriate capital structure for reducing capital cost.
In order to maintain or adjust the capital structure, the Group may adjust the amount ofdividends paid to shareholders, redeem the capital to shareholders, issue new shares, or sell
assets to reduce debts.
The Group monitors the capital based on the capital and liabilities ratio. This ratio is
calculated by dividing the amount of net liabilities by the capital. The amount of net
liabilities is calculated by deducting cash and cash equivalents from interest-bearing debts.
The capital shall be the “equity” presented in the consolidated statement of financial
position (equity attributable to owners of parent).
2) Risk management
The Group’s activities are exposed to various financial risks such as market risks (including
foreign exchange risk, price risk and interest rate risk), credit risks and liquidity risks. The
Group’s risk management policy focuses on the unpredictability of financial markets andminimize the potentially adverse impact on the Group’s financial performance. The Group
uses derivative transactions to hedge certain risk exposures.
The Company and its principal consolidated subsidiaries procure necessary funds via loans
from financial institutions and by issuing commercial papers and bonds, while taking into
account the balance between direct and indirect financing or the balance between short- andlong-term debt from the perspective of fund procurement cost and risk diversification in
response to changes in the business environment. To use funds efficiently in the entire
Group, the Company and its principal consolidated subsidiaries have introduced a cash
management system to reduce consolidated interest-bearing debt. If surplus funds are
generated temporarily, the Company invests it only in safe financial instruments.
The Group uses derivative transactions to the extent of balances of foreign currency
denominated assets and liabilities and bonds and borrowings, as means to mitigate foreignexchange risk, price risk of raw materials and others and interest rate risk, as well as toreduce fund procurement cost.
When using derivative transactions, the Company trades with financial institutions only withhigh credit ratings.
At the Company, the Finance Section is in charge of executing and managing derivativetransactions, in accordance with internal rules. Contracts on each derivative transaction are
entered into after approval is received in accordance with the internal authorization criteria.
The Finance Section reviews the status of derivative transactions including the content andbalances, and reports it to the General Manager of the Finance Section and Directors in12charge of finance as needed.
The consolidated subsidiaries also enter into such agreements in accordance with theGroup’s authorization criteria, and the Company reviews their status based on reports
submitted by them on regular basis.
(i)

Market risk
a. Foreign exchange risk
The Group conducts business activities internationally and is exposed to foreignexchange risk mainly related to US dollar, euro and Czech Koruna. Foreignexchange risk arises from forecast transactions such as future purchase, sale,financing and repayment or assets and liabilities that have already been recognized.
The Group uses foreign exchange contracts and currency swaps to mitigate foreignexchange risk. Hedge accounting is applied to the transactions that qualify for hedge
accounting.
When designating hedging instruments, currency basis spreads for currency swap are
excluded as costs of hedging.
Although receivables, payables and others denominated in a foreign currency have arisk of foreign exchange fluctuations, the impact is limited since the risk is offset
with the exchange contracts.
b. Price risk
The Group is exposed to price risk of equity instruments since it holds investments
classified as the category measured at fair value in the consolidated statement offinancial position. To manage price risk arising from investments in equity
instruments, the Group regularly keeps track of fair value, financial conditions ofissuers and others, and also reviews the overall status on an ongoing basis.
The Group has no equity instruments held for short-term trading and does not intend
to actively trade these investments.
Furthermore, the Group is exposed to price risk of raw materials since prices ofmajor raw materials used in its products fluctuate according to weather, natural
disaster and other factors. The Group engages in commodity swap transactions to
mitigate risks of fluctuations in raw materials prices. Although commodity swap
transactions used by the Group have risks of fluctuations in market prices ofcommodities, price risk is limited because these risks are offset with risks offluctuations in market prices of commodities in association with trade payables of
those commodities that the Group has.
c. Interest rate risk
The Group raises funds with variable interest rates and is exposed to interest rate risk.
Interest rate risk mainly arises from non-current borrowings.
The Group uses interest rate swaps, which substantially fix interest rates, to mitigate
interest rate risk. Hedge accounting is applied to the transactions that qualify forhedge accounting.

(ii) Credit risk
The Group is exposed to credit risks for trade receivables (notes and accounts receivabletrade), other receivables (accounts receivable-other) and other financial assets (operatingloans and others).
In accordance with the accounting regulations, the Group regularly monitors the status ofmajor business partners for trade receivables and operating loans and routinely checks the
management status of deadlines and balances for each business partner. The Group also
monitors credit-impaired financial assets and their collection status.
When executing derivative transactions, the Group trades with financial institutions onlywith high credit ratings to mitigate credit risk.
13

The Group classifies receivables based on credit risk profile to calculate loss allowance.
For trade receivables, loss allowance is always recognized at the amount equal to lifetime
expected credit losses. For receivables other than trade receivables, loss allowance isrecognized at the amount equal to 12-month expected credit losses, in principle. However,in cases such as overdue, because the credit risk is considered to have significantly
increased from the initial recognition, loss allowance is recognized at the amount equal tolifetime expected credit losses.
The amount of loss allowance is calculated as follows:● Trade receivables
The simplified approach is applied. The Group categorizes receivables according tocredit risk profile of the counterparty and calculates loss allowance by multiplying
the receivables by the provision rate, which is determined by adding projection of
future economic conditions and others to the historical rate of credit losses calculated
according to the category.
● Receivables other than trade receivables
The general approach is applied. Loss allowance for receivables for which the credit
risk is not considered to have significantly increased is calculated by multiplying thecarrying amount by the provision rate, which is determined by adding projection of
future economic conditions and others to the historical rate of credit losses for
similar assets. For assets for which the credit risk is considered to have significantly
increased and credit-impaired financial assets, loss allowance is calculated as
difference between the amount of the present value, which is computed bydiscounting estimated future cash flows using the original effective interest rate of
the asset, and the carrying amount.
(iii) Liquidity risk
The Group raises funds via loans and by issuing commercial papers and bonds, and is
exposed to liquidity risk, which means there is a possibility the Group fails to makepayment on the due date due to deterioration in the fund procurement environment.
Since the Company and its principal consolidated subsidiaries have introduced the cash
management system, the Company manages liquidity risks of those companies
participating in this system.
Based on reports from each Group company, the Company creates its cash management
plan and updates the plan on a timely basis. The Group monitors an ongoing forecast forfund demand, while always maintaining sufficient margin in the unused portion of thecontractual credit line and ensuring that all loan agreements do not conflict with theborrowing limits or covenants (if applicable). In these forecasts, the Group takes into
account its borrowing and financing plan, compliance with covenants, adherence tointernal targets for the statements of financial position ratio as well as applicable external
regulatory and statutory requirements, such as a regulation of currency, if any.
Surplus that the Company and its principal consolidated subsidiaries hold in excess of thebalance necessary for management of working capital is managed at the Group level
under the cash management system. The Group chooses financial instruments withappropriate maturity and liquidity, and makes investments in current deposits, time
deposits, money market deposits and marketable securities to ensure a sufficient margin
determined in the above forecast.
(2) Fair value of financial instruments
In fair value measurement, the Group uses observable market data whenever available. The
fair value measurement is categorized into any of the following levels based on the level ofthe input:
Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities
14

Level 2: Input consisting of directly or indirectly observable prices other than market
prices used in level 1
Level 3: Input that is not based on observable market data
Reclassification between levels in the fair value hierarchy is recognized on the date of theevent or change in circumstances that caused the reclassification.
Financial instruments measured at amortized cost
Carrying amounts and fair values of financial instruments measured at amortized cost are as
follows:(million yen)

Carrying amount

Fair value

Long-term loans receivable
1,404
1,338
Long-term loans payable
383,686
383,786
Bonds
510,896
510,512
Lease obligations
19,66019,756
The above table includes outstanding balances expected to be reimbursed or recovered within
one year.
Financial instruments for which the carrying amount is reasonably approximate to the fairvalue are not included in the table above.
The fair value of long-term loans receivable is calculated by discounting the expected amountof principal and interest receivable by the interest rate expected if a similar new loan were to
be issued, thereby deriving the present value.
The fair value of long-term loans payable is calculated by discounting the total amount ofprincipal and interest by the interest rate expected if a similar new borrowing were to betaken out, thereby deriving the present value.
The fair value of bonds is set to market prices when market prices are available.
The fair value of lease obligations is calculated by discounting the total amount of principal
and interest by the interest rate expected if a similar new lease transaction were to be
conducted.
In the above fair value measurement, bonds are classified into Level 2, while others areclassified into Level 3. For bonds in Level 2, fair value is estimated using the reference
trading statistics of Japan Securities Dealers Association and others. Fair value of financial
instruments in Level 3 is measured by discounting contractual cash flows using the market
interest rate, and the difference with carrying amount is due to a difference between themarket interest rate and the contractual interest rate.
5. Per Share Information(1) Equity attributable to owners of parent per share(2) Basic earnings per share

15¥2,502.67¥329.80

6. Additional Information
In this fiscal year, the provisional accounting treatment for business combinations were
finalized regarding the acquisition of the beer business in five Central and Eastern European
countries (Czech Republic, Slovak Republic, Poland, Hungary and Romania) and other related
assets. There is no change arising from the finalization of the provisional accounting treatment.
7. Significant Subsequent Events(Acquisition of the beer and cider business of Fuller, Smith & Turner P.L.C.)
Asahi Europe Ltd. (hereinafter referred to as “AEL”), a wholly-owned subsidiary of theCompany, reached an agreement to acquire the premium beer/cider business and other related
assets (hereinafter referred to as the “Target Business”) held by Fuller, Smith & Turner P.L.C.
(hereinafter referred to as “Fuller’s”).
Fuller’s is listed on the London Stock Exchange and operates the pubs/hotels business and thepremium beer/cider business. On January 25, 2019, AEL concluded the Sale and Purchase
Agreement of the stocks with Fuller’s.
(1) Rationale for the Proposed Transaction
The Company has re-established the new group philosophy “Asahi Group Philosophy”(hereinafter referred to as the “AGP”), introduced in January 2019. The AGP articulates our
mission of “Deliver on our great taste promise and bring more fun to life” and our vision of“Be a value creator globally and locally, growing with high-value-added brands.” Under the
AGP, the Company will develop high-value-added brands in Japan and other countries andaims to expand our global platform for further growth as a global player by creating
integration synergies in each area where the Company has entered into.

As part of the strategy, the Company has recently built strong business foundations inWestern, and Central and Eastern Europe by acquiring the alcoholic beverage business whichowns global premium brands such as “Peroni” and “Pilsner Urquell.”
The Target Business includes “London Pride,” a prestigious premium ale brand with strong
brand recognitions mainly in London, “Frontier,” a growing brand in the premium lager
market, and “Cornish Orchards,” a growing brand in the premium cider market.
Through the acquisition of these businesses and brands, the Company aims to establish aunique position as a global player that will grow based on renowned premium brands, inaddition to “Asahi Super Dry,” “Peroni,” and “Pilsner Urquell.”(2) Overview of the Proposed Transaction
Overview of the Sale and Purchase Agreement of the stocks concluded by AEL with regard
to the acquisition of the Target Business is as follows:
1)

Contract parties: Fuller’s (seller), AEL (purchaser)

2)

Target shares and assets: All shares of the company group consisting of the premiumbeer/cider business and other related businesses held by Fuller’s, intellectual property rights
including Fuller’s brands (trademark rights) and other related assets

3)

Scheme for the Proposed Transaction: Fuller’s will establish a new company, The Fuller's
Beer Company Limited (hereinafter referred to as the “FBC”), to which it will transfer thetarget beer business. AEL will then acquire all the shares of FBC and the existing threesubsidiaries

4)

Purchase price: GBP 250 million on a cash free and debt free enterprise value basis

16

5)

Condition precedent to completion: The completion of a corporate reorganization by Fuller’s totransfer the Target Business to FBC, the approvals at Fuller’s Extraordinary General Meeting, andreceipt of the relevant confirmations from the Competition and Markets Authority in the United
Kingdom(3) Overview of the Seller
1) Company name

Fuller, Smith & Turner P.L.C.

2) Registered head
officeLondon, United Kingdom

3) Representative
4) Business description

Simon Emeny, CEO
Manufacturing, sales and distribution of beer and cider, andoperation of managed and tenanted pubs and hotels5) Capital amountGBP 23 million

6) Established

August 22, 1929

(4) Expected schedule of the Proposed Transaction

The schedule towards the completion of the acquisition is as follows.
1) Execution of the Sale and Purchase Agreement of the stocks January 25, 2019with Fuller’s2) Completion of the Proposed Transaction upon fulfilment of
Estimated in the first halfcondition precedents
of 2019(5) Impact on the Company’s financial performance
Proposed Transaction is not expected to have a material impact on the Company’s financial
performance for the fiscal ending 2019.
8. Other
The stated amounts are the figures after truncating fractions less than the representative unit.

17

NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSFor the year ended December 31, 2018

(million yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Issued capital Legal capital Other capitalsurplussurplus
Balance at beginningof current period

182,531130,292

21,390Total capitalsurpluses

151,683

Generalreserve

Retainedearnings
brought
forward

Total retained
earnings

195,000

106,450

301,450

Changes of items
during period
Dividends(41,231)(41,231)

Profit230,230

230,230

Transfer from legal
capital surplus toother capital surplus(80,000)

80,000–00Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period–(80,000)

80,0000–

188,999

188,999

182,531

50,292

101,390

151,683

195,000

295,449

490,449

Shareholders’ equity

Balance at beginningof current period

Valuation and translation adjustments

Treasury shares

Total
shareholders’equity(76,747)

558,917

Valuation
Total valuationdifference on Deferred gains or
and translation
available-for- losses on hedges
adjustments
sale securities
7,175

(631)

6,543

Total net assets

565,460

Changes of items
during period
Dividends(41,231)(41,231)

Profit230,230

230,230––

Transfer from legal
capital surplus toother capital surplus
Purchase of treasury
shares

(250)

(250)

(250)

Disposal of treasury
shares000

Net changes of items
other thanshareholders’ equity
Total changes of items
during period
Balance at end ofcurrent period(2,673)

1,643(1,029)(1,029)(250)

188,749(2,673)

1,643(1,029)187,719(76,997)

747,666

4,502

1,011

5,513

753,18018

NOTES TO THE NON-CONSOLIDATED FINANCIAL STATEMENTS
1. Notes to Significant Accounting Policies(1) Valuation basis and method for securities
Shares in subsidiaries and affiliates:
Stated at cost based on the moving-average method
Available-for-sale securities
Securities with market value:
Carried at the average market value for the month immediately preceding the balance sheet
date (related valuation differences are directly charged or credited to net assets, and thecost of securities sold is computed by the moving-average method.)
Securities without market value:
Stated at cost based on the moving-average method(2) Valuation basis and method for derivatives
Market price method(3) Depreciation methods for non-current assets
Property, plant and equipment (excluding leased assets):
Property, plant and equipment are depreciated using the straight-line method.
The estimated useful lives of the assets are based on the same standards as thosespecified in the Corporation Tax Act.
Intangible assets (excluding leased assets):
Intangible assets are amortized using the straight-line method.
The estimated useful lives of the assets are based on the same standards as thosespecified in the Corporation Tax Act.
Software for internal use is amortized by the straight-line method over a useful life of 5
years. Trademarks is mainly amortized over 20 years using the straight-line method.
Leased assets:
Finance leases that do not transfer ownership rights are amortized to a residual value ofzero using the straight-line method, with the lease period as the estimated useful life.
(4) Accounting criteria for allowances
Allowance for doubtful accounts:
The allowance for doubtful accounts consists of the individually estimated uncollectible
amounts with respect to certain identified doubtful receivables and the amounts calculatedusing the rate of actual collection losses with respect to the other receivables.
Provision for bonuses:
A provision for bonuses is provided to prepare for the bonus payment to employees at theestimated amount applicable to this fiscal year out of the estimated future bonus payment
amount.
Provision for directors’ bonuses:
A provision for directors’ bonuses is provided to prepare for the bonus payment to officers
at the estimated amount applicable to this fiscal year out of the estimated future bonus
payment amount.

19(5) Hedging accounting method
1) Hedging accounting method
The Company defers gains or losses on its hedges.
For foreign exchange contracts and currency swaps, the Company allocates differences in thevalues of hedging instruments when such hedges meet all requirements for such allocations. Forinterest rate swaps, the Company applies exceptional treatment when the swap in question meetsthe conditions for application of such exceptional treatment.
2) Hedging instruments and hedged items

Hedging instruments:

Foreign exchange contracts, interest rate swaps, currency
swaps and borrowings denominated in foreign currencies

Hedged items:

Forecasted foreign currency transactions, loans receivablein foreign currencies, interest on borrowings, bonds
denominated in foreign currencies and investments inforeign subsidiaries

3)

Hedging policy

Derivatives are used to avoid risks associated with fluctuations in foreign exchange markets andin interest rates and to reduce the costs of financing. It is the Company’s policy not to engage in
speculative transactions that deviate from real demand or in highly leveraged derivatives.
4) Method of evaluating the effectiveness of hedging
The Company assesses the effectiveness of its hedges by comparing changes in the market
values of the hedging instruments and of the hedged items over the entire period of the hedge.
When the Company allocates differences in the values of hedging instruments or when it
accounts for the value of swaps under exceptional treatment, these determinations allow it toforgo evaluation of the effectiveness of hedges in these cases.
(6) Other significant items associated with the preparation of non-consolidated financial
statements
Treatment of consumption taxes

Consumption taxes are excluded from the statement of income, except in the case of nondeductible consumption taxes related to non-current assets that are charged when incurred.
2.

Notes to the Non-Consolidated Balance Sheet(1) Accumulated depreciation on property, plant and equipment¥31,252 million(2) Contingent liabilities
1)

Guarantees against bank loans

Guarantees:2)¥12,711 million

Guarantees against derivatives

Guarantees:¥75 million

20(3) Monetary claims and obligations with associates (excluding those classified separately in
the Balance Sheet)3.

Short-term monetary claims on associates:¥227,365 million

Short-term monetary obligations to associates:¥118,112 million

Notes to the Non-Consolidated Statement of Income(1) Gain on sales of shares of subsidiaries and associates
The gain on sales of shares of subsidiaries and associates was mainly due to a gain on sales
relating to the transfer of the shares of Tsingtao Brewery Company Limited, an associate in the
China business.
(2) Transactions with associates

4.

Operating revenue:¥244,028 million

Operating expenses:¥5,168 million

Transactions other than operating transactions:¥1,062 million

Notes to the Non-Consolidated Statement of Changes in Net Assets
Treasury shares(shares)Number of shares
Increase during Decrease during Number of shares
Type of stock
as of Jan. 1, 2018
this fiscal year
this fiscal year as of Dec. 31, 2018
Common stock
25,461,769
44,565
153
25,506,181(The outline of a change reason)
The increase in the number of shares was the result of the following:
Increase resulting from purchases of Less-than-One-Unit Shares from shareholders uponrequest:5,865 shares
Increase resulting from purchase by the trust for the share-based payment plans:
38,700 shares
The decrease in the number of shares was the result of the following:
Decrease resulting from sales of Less-than-One-Unit Shares to shareholders upon request:
153 shares
Treasury shares include 38,700 common shares of the Company held by Japan Trustee
Services Bank, Ltd. as the trust assets of a performance-linked stock compensation plan.

21

5. Notes to tax effect accounting(1) Breakdown of main reasons for deferred tax assets and liabilities(Deferred tax assets)
Shares of subsidiaries and associates due to restructuring:
Allowance for doubtful accounts, in excess of tax-deductible amount:
Loss on valuation of investment in subsidiaries, non-tax deductible:
Loss on valuation of capital contributions for subsidiaries, non-tax
deductible:
Deferred loss on transfer of business between consolidated corporations:
Others:Subtotal deferred tax assets:
Valuation allowance:
Total deferred tax assets(Deferred tax liabilities)
Valuation difference on available-for-sale securities:
Deferred gain on transfer of business between consolidated corporations:Deferred gains or losses on hedges:
Others:Total deferred tax liabilities¥942 million¥1,019 million¥55,443 million¥(37,893) million¥ 17,549 million

Net deferred tax assets¥10,021 million¥16,703 million¥605 million¥31,613 million¥4,558 million¥(1,834) million¥(5,026) million¥(446) million¥(219) million¥(7,527) million(2) Breakdown of main items which caused the difference between the statutory effective tax
rate and the effective tax rate after adoption of tax effect accounting
Statutory effective tax rate:(Adjustments)
Permanent difference (non-deductible), including entertainment expenses:
Valuation allowance:
Permanent difference (non-taxable), including dividend income:
Others:
Effective tax rate after adoption of tax effect accounting:

22

30.9%
0.1%
(0.1)%(26.4)%
0.3%
4.8%

6. Notes to related party transactions
Subsidiaries and affiliates
Type
Subsidiary

Company

Percentage
of votingrights held

Relationship
Description
with relatedof transaction
party

Asahi
Breweries,
Ltd.

100%
directownership

Interlockingof directors/
corporate
auditors

Transaction
amount(million yen)
Balance as
Account
of Dec. 31,
item
2018

Operatingrevenue(Note 1)88,306–

Loaning
funds(Note 2)

(4,829)

Short-term
loans
receivable

Subsidiary

Asahi Soft
DrinksCo., Ltd.

100%
directownership

Interlockingof directors/
corporate
auditors

Operatingrevenue(Note 1)

26,922–

Subsidiary

Asahi Group
Foods, Ltd.

100%
directownership

Interlockingof directors/
corporate
auditors

Loaning
funds(Note 2)

5,023

Short-term
loans
receivable

Subsidiary

AI Beverage
HoldingCo., Ltd.

100%
directownership

Interlockingof directors/
corporate
auditors

Operatingrevenue(Note 1)53,405–

Deposits
received(Note 3)

(54,576)

Deposits
received

Operatingrevenue(Note 1)35,071–

Borrowing offunds(Note 3)

14,430

Short-termloanspayableGuarantees
forliabilities(Note 4)

5,902–

Subsidiary

Asahi
Breweries
Europe Ltd

100%
directownership–

Subsidiary

Asahi
Holdings(Australia)
Pty Ltd100%
directownership

Interlockingof directors/
corporate
auditors

Subsidiary

Asahi
Professional
Management
Co., Ltd.

100%
directownership

Interlockingof directors/
corporate
auditors–

166,916–

24,167–

14,266–

68,601–

Outsourcing
4,508
–
–
indirect
services,
etc.
(Note 5)
Terms and conditions of transaction and policy on determination thereof
Note 1: Operating revenue is determined in accordance with certain reasonable standards in order to provide
supervision and guidance, etc. regarding business management.
Note 2: The interest rate for the loans receivable is reasonably determined, taking the market interest rate into
consideration.
For the transaction amount, the amount of net increase (decrease) in this fiscal year is stated.
Note 3: The interest rates for the deposits received and short-term loans payable are reasonably determined, taking
the market interest rate into consideration.
For the transaction amount, the amount of net increase (decrease) in this fiscal year is stated.
Note 4: The Company guaranteed bank loans in the amount of AUD75 million.
Note 5: The amount of outsourced indirect services, etc. is determined based on certain reasonable standards.

7. Notes to per share information(1) Net assets per share:(2) Earnings per share (Net income per share):¥1,644.21¥502.5923

8. Other
The stated amounts are the figures after truncating fractions less than the representative unit.

24