ASAHI GROUP HOLDINGS, LTD.
Securities Code: 2502

CONVOCATION NOTICE OF
THE 93 ANNUAL GENERAL MEETING OF SHAREHOLDERSrd

DATE AND TIME
March 28 (Tuesday), 2017at 1:00 p.m. (JST) (Reception start time: 11:30 a.m.)
PLACE
Banquet Room “Tsuru”, Banquet Floor of “The Main” ofHotel New Otani, 4-1, Kioi-cho, Chiyoda-ku, Tokyo
DEADLINE FOR EXERCISING VOTING RIGHTS
VIA POSTAL MAIL AND INTERNET
No later than 5:30 p.m., March 27 (Monday), 2017 (JST)TABLE AND CONTENTS
Convocation Notice
Reference Materials for
General Meeting of Shareholders
Company Proposals
Item 1 Appropriation of Retained Earnings
Item 2 Election of ten (10) Directors
Item 3 Election of one (1) Audit &Supervisory Board Member
Shareholder Proposal
Item 4 Partial amendments to
the Articles of Incorporation(Attached Materials)
Business Report
Consolidated Financial Statements and their Notes
Non-Consolidated Financial Statements and their Notes
Audit Reports

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6
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24

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80
89

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

Dear Shareholders:
You are cordially invited to attend
the 93rd Annual General Meeting of Shareholders
of Asahi Group Holdings, Ltd., which will be held
as described in the following particulars.
Sincerely,

March 6, 2017

Akiyoshi Koji
President and Representative Director

ASAHI GROUP HOLDINGS, LTD.
23-1, Azumabashi 1-chome, Sumida-ku, Tokyo

1

CONVOCATION NOTICE OF
THE 93rd ANNUAL GENERAL MEETING OF SHAREHOLDERS

1. DATE AND TIME
March 28 (Tuesday), 2017, at 1:00 p.m. (JST) (Reception start time: 11:30 a.m.)
2. PLACE
Banquet Room “Tsuru”, Banquet Floor of “The Main” of Hotel New Otani, 4-1, Kioi-cho,
Chiyoda-ku, Tokyo(Please note that if Banquet Room “Tsuru” becomes full, you will be guided to another venue.)
3. PURPOSES
Items to be reported:
Business Report, Consolidated Financial Statements, Non-Consolidated Financial
Statements and Reports of the audit results of the consolidated financial statements by
the Independent Accounting Auditor and the Audit & Supervisory Board for the 93rdterm, from January 1, 2016 to December 31, 2016.
Items to be resolved:
Company Proposals:
Item 1: Appropriation of Retained Earnings
Item 2: Election of ten (10) Directors
Item 3: Election of one (1) Audit & Supervisory Board Member
Shareholder Proposal:
Item 4: Partial amendments to the Articles of Incorporation
Note: If there are any corrections to Reference Materials for General Meeting of Shareholders and their attachments, Business
Report, Consolidated Financial Statements, and Non-Consolidated Financial Statements, they will be posted on the Company’s
website.
http://www.asahigroup-holdings.com/en/2

Please exercise your voting rights, which is the right to participate in the Company’s management.

Guide to Exercising Voting Rights
A voting right at the General Meeting of Shareholders is an important right that entitles shareholders to participate in
the Company’s management. Please refer to the following and exercise your voting rights by either method.

Attending the General Meeting of Shareholders in person
Date and time of the General Meeting of Shareholders:March 28 (Tuesday), 2017, at 1:00 p.m. (JST) (Reception start time: 11:30 a.m.)Please submit the voting form at the reception desk at the venue.
Please also bring this notice with you, to help us preserve resources.
You are advised to arrive at the venue early, as the reception desk is expected to become
extremely crowded immediately before the commencement of the meeting.
Please note that anyone other than a shareholder who is entitled to exercise voting rights (e.g.,
non-shareholding proxy, person accompanying the shareholder) will not be allowed inside thevenue.

Not attending the General Meeting of Shareholders in person
If you are unable to attend the meeting in person, you may exercise your voting rights via either postal mail or Internet. Please
review the attached “REFERENCE MATERIALS FOR GENERAL MEETING OF SHAREHOLDERS”, and exercise your voting
rights no later than 5:30 p.m., March 27 (Monday), 2017 (JST) by following the “Guide to Exercising Voting Rights” on pages 3 - 5.

Deadline for exercising voting rights:
No later than 5:30 p.m., March 27 (Monday), 2017 (JST)(1) Voting via Postal Mail
Please indicate your consent/dissent concerning the items shown on the voting form, and sendback the form so that it will arrive no later than the deadline for exercising voting rights.

<Guide to filling in the voting form for exercising voting rights>
Please indicate your consent/dissent with respect to each item here.
Your “voting code” (議決権行使コード) and“password” (パスワード),
which are necessary forexercising voting right, arestated here.

* If you exercise your voting rights in duplicate (i.e., voting online as well as voting by using
the voting form), only the online vote will be counted.

3

<Items Proposed by the Company>
Items 1 and 3
If you dissent:
Mark a ○in the box marked “否”

If you consent:
Mark a ○in the box marked “賛”Item 2
If you selectively veto certain candidates:
For all candidates
Mark a ○ in the box marked “賛” andIf you consent:
If you dissent:
Mark a ○ in the box Mark a ○ in the box write the number of each candidate you
choose to veto.
marked “賛”marked “否”<Item Proposed by shareholder>
Item 4
If you consent:
Mark a ○in the box marked “賛”If you dissent:
Mark a ○in the box marked “否”

The Board of Directors of the Company is opposed to this shareholder proposal.
* If you submit a voting form without indicating your consent/dissent with respect to each item,
you will be deemed to have voted in favor of the Company’s proposal(s), while against theshareholder’s proposal.

(2) Voting via Internet
Online voting website: http://www.web54.net
Please input your consent/dissent concerning each item no later than the deadline for exercising
voting rights. For details, please refer to following pages.

<Guide to Exercising Voting Rights via the Internet>* The online voting website and Help Desk information are available only in Japanese.
If you intend to exercise your voting rights by online voting, please access the website noted below
from a computer, smartphone or cellular phone and follow the instructions on the screen.

Online voting website: http://www.web54.net
Deadline for exercising voting rights via the Internet:
No later than 5:30 p.m., March 27 (Monday), 2017 (JST)* If your smartphone or cellular phone is equipped with a barcode reader,
you may use the two-dimensional code at left in order to access the online
voting website. For more detailed information on that procedure, pleaserefer to the user manual of your smartphone or cellular phone.

4

Accessing Procedures
The following charts display PC screens.

1. Access the online voting website
http://www.web54.net
Click on“次へすすむ”(“NEXT”).

2. Log inEnter the “ voting code ” ( 議 決 権 行 使 コ ー ド )indicated on the voting form and click on “ログイン”(“Log in”).
* Shareholders who have not specified a “password” forthemselves are required to register a new password.

3. Enter the password
Enter the “password” (パスワード) indicated on thevoting form and click on “次へ”(“NEXT”).
* Please note that shareholders who received theConvocation Notice of the Annual General Meeting of
Shareholders for this fiscal year by e-mail will not findthe “password” on their voting form. Such shareholders
are asked to enter the “password” that they specified
when registering their e-mail addresses.
4. Indicate your consent/dissent concerning each item byfollowing the instructions displayed on the screen.
* If you exercise your voting rights online more than once, only the most recent vote will becounted.

Inquiries for Online Voting
Please contact the following Help Desk for inquiries about online voting.
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Web Support Phone No.
Toll-free (within Japan): 0120-652-031 (9:00 a.m. to 9:00 p.m.) (JST)To Receive the Notices by E-mailShareholders who wish to receive the convocation notices of Annual General Meetings ofShareholders by e-mail beginning with the next meeting may so register on the e-mail address
registration website noted below. Please note that the site cannot be accessed via cellular phone.
E-mail address registration website: http://www.web5106.net

5REFERENCE MATERIALSFOR GENERAL MEETING OF SHAREHOLDERS
Agenda Items and Reference Information
Company Proposals (Items 1 to 3)
Item 1: Appropriation of Retained Earnings
The Company proposes the appropriation of retained earnings in the following manner:
Year-end dividends
Under the “Medium-Term Management Policy” formulated during this fiscal year, Asahi Group
Holdings, Ltd. (the “Company”), as a holding company of the Group (the Company and its
subsidiaries are collectively referred to as the “Group” or the “Asahi Group”), has been working
toward the strengthening of “earnings power” by positioning the domestic profit base as thecornerstone of earnings and the overseas business as a growth engine, and has been actively using
the generated free cash flows for acquiring foundation for growth including domestic and overseas
M&A deals. Meanwhile, in terms of shareholder returns, efforts are being made to achieve a
dividend payout ratio of 30% (International Financial Reporting Standards (IFRS) basis) by theend of the fiscal year 2018.
Based on the aforementioned policy and taking into consideration a variety of factors, including
the Company’s consolidated financial condition and achievement for this fiscal year, the Company
proposes a year-end dividend of ¥28 per share, as follows. Since the Company previously paid out¥26 per share as an interim-period dividend, the annual dividend for this fiscal year will amount to¥54 per share, which is an increase of ¥4 per share from the previous fiscal year.
(1) Type of dividend asset
Cash(2) Allocation of dividend assets to shareholders and total amount of allocation¥28 per share of common stock

Total amount of payout: ¥12,827,705,884(3) Effective date of dividends of Retained Earnings
March 29, 2017
[Reference] Trends in Annual Dividend per Share and Consolidated Dividend Payout Ratio

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Item 2: Election of ten (10) Directors
At the conclusion of this Annual General Meeting of Shareholders, the terms of office of all ten(10) Directors will expire. The Company therefore asks the shareholders to elect ten (10)Directors.
The candidates for the position of Director are as follows.

CandidatenumberName (Age)Position

Responsibilities

Numberof Boardof
Directors
meetings
attended

Naoki Izumiya (68)

Chairman and
Representative
Director
CEO

Overall Group Management

13/13

President andRepresentative
Director
COO

Overall Group Management
Group Alcoholic Beverages Business

13/13

1
Reappointment
Akiyoshi Koji (65)2Reappointment
Katsutoshi Takahashi (62)3Reappointment

Managing Director
and Managing
Corporate Officer

Human Resources Section
Procurement Section
Production Section
Logistics Section

13/13

Group Soft Drinks Business

Managing Director
and Managing
Corporate Officer(CFO)

Audit Section
General & Legal Affairs Management
Section
Secretary Section
Public Relations Section
Investor Relations Section
Finance Section
Information Technology Section

13/13

Director andCorporate Officer

Corporate Social Responsibility Section
Research & Development Section
Intellectual Property Section
Quality Assurance Section

11/11

Yoshihide Okuda (61)4Reappointment

Noboru Kagami (58)5Reappointment

7

Candidate
numberName (Age)Position

Responsibilities

Kenji Hamada (53)6Reappointment

Director andCorporate Officer

Numberof Boardof
Directors
meetings
attended

Corporate Strategy Section
International Business Section
11/11
Group Foods BusinessGroup International Operations

Mariko Bando (70)7Reappointment

Outside Director

—

13/13

Outside Director

—

12/13

Outside Director

—

10/11

—

—

Outside/Independent
Naoki Tanaka (71)8Reappointment
Outside/Independent
Tatsuro Kosaka (64)9Reappointment
Outside/Independent

10

Atsushi Katsuki (57)
New candidate—

Notes:
1.
2.

The age, position and responsibilities are as of this Annual General Meeting of Shareholders.
As Directors Noboru Kagami, Kenji Hamada and Tatsuro Kosaka were newly elected at the 92nd Annual General
Meeting of Shareholders held on March 24, 2016, the above numbers of Board of Directors meetings held that they
could attend are different from other Directors.
Reappointment: candidate for reappointment
New candidate: candidate for new appointment
Outside: candidate for Outside Director
Independent: candidate for independent director/auditor

8Candidate Number

Name

Note to Appointment

1

Naoki Izumiya

Reappointment

Date of Birth (Age)Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)
Attended BOD meetings
Position
Responsibilities

August 9, 1948 (68 years old)
51,800 shares
14 years
13/13

Chairman and Representative Director, CEO
Overall Group Management

Career Summary
Apr. 1972 Entered the Company
Mar. 2000 Corporate Officer, Senior General Manager of Group Management Strategy Headquarters
Oct. 2000 Corporate Officer, Senior General Manager of Strategy Planning Headquarters
Sep. 2001 Corporate Officer, Deputy General Manager of Tokyo Metropolitan Headquarters, General
Manager of Tokyo BranchMar. 2003 Director
Mar. 2004 Managing Director
Mar. 2006 Managing Director, Managing Corporate Officer, Senior General Manager of Sales &Marketing Headquarters for Alcoholic Beverages
Mar. 2009 Senior Managing Director, Senior Managing Corporate Officer
Mar. 2010 President and Representative Director
Mar. 2014 President and Representative Director, CEO
Mar. 2016 Chairman and Representative Director, CEO(to the present)
Reasons for recommending Naoki Izumiya as a candidate for Director
Naoki Izumiya has a track record encompassing his experience in exercising strong leadership geared toachieving objectives of the medium-term management plan, since being appointed as President andRepresentative Director of the Company in March 2010. Since being appointed as the Company’s Chairman
and Representative Director in March 2016, he has led the efforts to enhance the Group’s corporate value as
the CEO, and fulfills his duties as a Director.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote global
management of operations while pursuing sustained increase of corporate value, and thus we recommend his
reappointment as a Director.
Candidate’s special interests in the Company
There are no special interests between Naoki Izumiya and the Company.

9

Candidate Number

Name

Note to Appointment

2

Akiyoshi Koji

Reappointment

Date of Birth (Age)Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)November 8, 1951 (65 years old)
15,400 shares

Attended BOD meetings
Position
Responsibilities

10 years
13/13

President and Representative Director, COO
Overall Group Management, Group Alcoholic Beverages Business

Career Summary
Apr. 1975 Entered the Company
Sep. 2001 Corporate Officer
Mar. 2003 Managing Director, Senior General Manager of Planning Division of Asahi Soft Drinks Co.,
Ltd.
Mar. 2006 Senior Managing Director,
Senior General Manager of Planning Division of Asahi Soft Drinks Co., Ltd.
Mar. 2007 Managing Director, Managing Corporate Officer of the Company
Jul. 2011
Director of the Company
President and Representative Director of Asahi Breweries, Ltd.
Mar. 2016 President and Representative Director, COO of the Company(to the present)
Reasons for recommending Akiyoshi Koji as a candidate for Director
Akiyoshi Koji has a track record encompassing his contributions to strengthening the alcoholic beverages
segment and improving profitability acting as President and Representative Director of the Group’s corecompany Asahi Breweries, Ltd., since being appointed as one of the Company’s Directors. Since being
appointed as the President and Representative Director of the Company in March 2016, he has followed
through with efforts to enhance the Group’s corporate value as the COO, and fulfills his duties as a Director.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote global
management of operations while pursuing sustained increase of corporate value, and thus we recommend
his reappointment as a Director.
Candidate’s special interests in the Company
There are no special interests between Akiyoshi Koji and the Company.

10

Candidate Number

Name

Note to Appointment

3

Katsutoshi Takahashi

Reappointment

Date of Birth (Age)Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)

September 24, 1954 (62 years old)
6,000 shares

Attended BOD meetings
Position
Responsibilities

4 years
13/13

Managing Director and Managing Corporate Officer
Human Resources Section, Procurement Section, Production Section,
Logistics Section
Group Soft Drinks Business

Career Summary
Apr. 1977 Entered Yoshida Kogyo K.K. (current YKK Corporation)
May 1991 Entered the Company
Mar. 2008 Corporate Officer, Senior Deputy General Manager of Production Headquarters, General
Manager of Production Technology Department
Jul. 2011
Corporate Officer, Senior Deputy General Manager of Research & Development-Production
Headquarters, General Manager of Production Strategy Department of Asahi Breweries, Ltd.
Mar. 2012 Corporate Officer, General Manager of the Production Section of the Company
Corporate Officer, Senior Deputy General Manager of Research & Development-Production
Headquarters, General Manager of Production Strategy Department of Asahi Breweries, Ltd.
Sep. 2012 Corporate Officer, General Manager of the Production Section of the Company
Corporate Officer, Senior Deputy General Manager of Research & Development-Production
Headquarters of Asahi Breweries, Ltd.
Mar. 2013 Director, Corporate Officer of the Company
Mar. 2015 Managing Director, Managing Corporate Officer of the Company(to the present)
Significant Concurrent Positions
Director of Asahi Soft Drinks Co., Ltd.
Director of LB Co., Ltd.
Reasons for recommending Katsutoshi Takahashi as a candidate for Director
Katsutoshi Takahashi fulfills his duties as a Director on the basis of a track record encompassing his
experience advancing initiatives to improve quality and maximize the effect of capital investment in theoverall supply chain, which includes overseas expansion in the areas of procurement, production, andlogistics, since being appointed as one of the Company’s Directors.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote global
management of operations while pursuing sustained increase of corporate value, and thus we recommend
his reappointment as a Director.
Candidate’s special interests in the Company
There are no special interests between Katsutoshi Takahashi and the Company.

11

Candidate Number

Name

Note to Appointment

4

Yoshihide Okuda

Reappointment

Date of Birth (Age)Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)January 3, 1956 (61 years old)
5,900 shares

Attended BOD meetings
Position
Responsibilities

4 years
13/13

Managing Director and Managing Corporate Officer (CFO)
Audit Section, General & Legal Affairs Management Section, Secretary Section,
Public Relations Section, Investor Relations Section, Finance Section, Information
Technology Section

Career Summary
Apr. 1978 Entered Konishiroku Photo Industry Co., Ltd. (current Konica Minolta, Inc.)
Sep. 1988 Entered the Company
Mar. 2010 Corporate Officer, General Manager of Finance Department
Mar. 2011 Corporate Officer, General Manager of Finance Department of the Company
Senior Managing Director of Asahi Management Services Co., Ltd. (current Asahi
Professional Management Co., Ltd)
Jul. 2011
Corporate Officer, General Manager of Finance Section of the Company
Senior Managing Director of Asahi Management Services Co., Ltd.
Sep. 2012 Corporate Officer in charge of promoting efficiency (administrative sections overall) of theCompany
Senior Managing Director of Asahi Professional Management Co., Ltd.
Mar. 2013 Director, Corporate Officer of the Company
President and Representative Director of Asahi Professional Management Co., Ltd.
Mar. 2015 Managing Director, Managing Corporate Officer of the Company
President and Representative Director of Asahi Professional Management Co., Ltd.
(to the present)
Significant Concurrent Positions
President and Representative Director of Asahi Professional Management Co., Ltd.
Reasons for recommending Yoshihide Okuda as a candidate for Director
Yoshihide Okuda fulfills his duties as a Director on the basis of a track record encompassing his experience
implementing transformative initiatives involving financial and capital policy acting as CFO, andpromoting initiatives to strengthen corporate governance, since being appointed as one of the Company’s
Directors.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote global
management of operations while pursuing sustained increase of corporate value, and thus we recommend
his reappointment as a Director.
Candidate’s special interests in the Company
There are no special interests between Yoshihide Okuda and the Company.

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Candidate Number

Name

Note to Appointment

5

Noboru Kagami

Reappointment

Date of Birth (Age)Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)November 29, 1958 (58 years old)
3,998 shares

Attended BOD meetings
Position
Responsibilities

1 year
11/11

Director and Corporate Officer
Corporate Social Responsibility Section, Research & Development Section,
Intellectual Property Section, Quality Assurance Section

Career Summary
Apr. 1982
Entered the Company
Apr. 2009
Senior Officer, General Manager of Fukushima Brewery of the Company
Sep. 2012
Corporate Officer, General Manager of Fukushima Brewery of Asahi Breweries, Ltd.
Jan. 2013
Corporate Officer, General Manager of Hakata Brewery of Asahi Breweries, Ltd.
Mar. 2016
Director and Corporate Officer of the Company(to the present)
Reasons for recommending Noboru Kagami as a candidate for Director
Noboru Kagami primarily engages in operations involving R&D and production, and fulfills his duties asa Director such as implementing group management strategy based on the Medium-Term Management
Policy as the officer in charge of CSR, R&D, intellectual property, and quality assurance, since being
appointed as one of the Company’s Directors in March 2016.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote
global management of operations while pursuing sustained increase of corporate value, and thus werecommend his reappointment as a Director.
Candidate’s special interests in the Company
There are no special interests between Noboru Kagami and the Company.

13

Candidate Number

Name

Note to Appointment

6

Kenji Hamada

Reappointment

Date of Birth (Age)Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)January 7, 1964 (53 years old)
2,450 shares

Attended BOD meetings
Position
Responsibilities

1 year
11/11

Director and Corporate Officer
Corporate Strategy Section, International Business Section
Group Foods Business, Group International Operations

Career Summary
Apr. 1986
Entered the Company
Oct. 2011
Senior Officer, General Manager of Corporate Strategy Section, General Manager ofBusiness Development Section of the Company
Sep. 2012
Senior Officer, General Manager of Corporate Strategy Section of the Company
Mar. 2014
Corporate Officer, General Manager of Corporate Strategy Section of the Company
Mar. 2016
Director and Corporate Officer of the Company(to the present)
Significant Concurrent Positions
Director of Asahi Group Foods, Ltd.
Director of Asahi Holdings (Australia) Pty Ltd
Reasons for recommending Kenji Hamada as a candidate for Director
Kenji Hamada primarily engages in operations involving corporate strategy, and fulfills his duties as a
Director such as implementing group management strategy based on the Medium-Term Management
Policy as the officer in charge of corporate strategy and international business, since being appointed as
one of the Company’s Directors in March 2016.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote
global management of operations while pursuing sustained increase of corporate value, and thus werecommend his reappointment as a Director.
Candidate’s special interests in the Company
There are no special interests between Kenji Hamada and the Company.

14

Candidate Number

Name

7

Mariko Bando

Date of Birth (Age)Note to Appointment
Reappointment
OutsideIndependent

August 17, 1946 (70 years old)

Owned Shares of the Company― shares

Tenure (at the conclusion of this Annual
General Meeting of Shareholders)
Attended BOD meetings
Position

9 years
13/13

Outside Director

Career Summary
Jul. 1969
Joined staff of Prime Minister’s Office
Oct. 1985
Councilor of Cabinet Secretariat
Jul. 1989
Director of Consumer Statistics Division, Statistics Bureau, Management andCoordination Agency
Apr. 1995
Vice-Governor of Saitama Prefecture
Jun. 1998
Consul General of Brisbane, Australia
Jan. 2001
Director General of Gender Equity Bureau, Cabinet Office
Oct. 2003
Director of Educational Corporation Showa Women’s University
Apr. 2007
President of Showa Women’s University
Mar. 2008
Director of the Company(to the present)
Apr. 2014
Chancellor of Educational Corporation Showa Women’s University(to the present)
Jul. 2016
Chairperson of the Board of Showa Women’s University(to the present)
Significant Concurrent Positions
Chancellor of Educational Corporation Showa Women’s University
Chairperson of the Board of Showa Women’s University
Director of The Institute of Women’s Culture, Showa Women’s University
Reasons for recommending Mariko Bando as a candidate for Outside Director
Mariko Bando fulfills her duties as an Outside Director of the Company on the basis of her wide range ofknowledge as an educator in addition to her diverse experience in public administration both in Japan andoverseas. Accordingly, we deem that she possesses capabilities appropriate for the Company’s aims topromote global management of operations while pursuing sustained increase of corporate value, and thus
we recommend her reappointment as an Outside Director.
Although Mariko Bando has not been involved in company management other than as an Outside
Director/Audit & Supervisory Board Member, the Board of Directors has concluded that she will be able
to perform her duties properly as an Outside Director of the Company based on the reasons noted above.
Views on independence
The Group maintains transactional relationships with neither Mariko Bando nor entities where she
concurrently serves, and based on the “Criteria for independence of Outside Directors and Outside Audit& Supervisory Board Members” which have been established by the Company as a means of objectively
assessing independence thereof, the Company has deemed that she maintains sufficient independencewith no potential for conflict of interests with general shareholders. Moreover, as Mariko Bando meets therequirements for independent director/auditor as defined by the Tokyo Stock Exchange, we haveregistered her as an independent director/auditor as stipulated by the said exchange.

15

Candidate’s special interests in the Company
There are no special interests between Mariko Bando and the Company.
Regarding agreements limiting the liability
To enable her to contribute fully in her role as an Outside Director, the Company has entered into anagreement with Mariko Bando that limits her liability for damages as prescribed in Paragraph 1, Article
423 of the Companies Act. Under the terms of this agreement, her liabilities are limited to ¥20 million or
to the minimum limited amount stipulated by applicable laws and regulations, whichever is higher. If herelection is approved, the current agreement will be extended.

16Candidate Number

Name

8

Naoki Tanaka

Date of Birth (Age)

September 1, 1945 (71 years old)

Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)
Attended BOD meetings
Position

Note to Appointment
Reappointment
OutsideIndependent― shares
8 years
12/13

Outside Director

Career Summary
Jan. 1971
Senior Fellow of Kokumin Keizai Research InstituteApr. 1997
President of the 21st Century Public Policy InstituteApr. 2007
President of Center for International Public Policy Studies(to the present)
Mar. 2009
Director of the Company(to the present)
Significant Concurrent Positions
President of Center for International Public Policy Studies
Reasons for recommending Naoki Tanaka as a candidate for Outside Director
Naoki Tanaka fulfills his duties as an Outside Director of the Company on the basis of his abundant
experience as a member of government councils and his broad knowledge as a specialist deeply versed indomestic and international economic policy.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote
global management of operations while pursuing sustained increase of corporate value, and thus werecommend his reappointment as an Outside Director.
Views on independence
The Group maintains transactional relationships with neither Naoki Tanaka nor entities where heconcurrently serves, and based on the “Criteria for independence of Outside Directors and Outside Audit& Supervisory Board Members” which have been established by the Company as a means of objectively
assessing independence thereof, the Company has deemed that he maintains sufficient independence withno potential for conflict of interests with general shareholders. Moreover, as Naoki Tanaka meets therequirements for independent director/auditor as defined by the Tokyo Stock Exchange, we haveregistered him as an independent director/auditor as stipulated by the said Exchange.
Candidate’s special interests in the Company
There are no special interests between Naoki Tanaka and the Company.
Regarding agreements limiting the liability
To enable him to contribute fully in his role as an Outside Director, the Company has entered into anagreement with Naoki Tanaka that limits his liability for damages as prescribed in Paragraph 1, Article
423 of the Companies Act. Under the terms of this agreement, his liabilities are limited to ¥20 million or
to the minimum limited amount stipulated by applicable laws and regulations, whichever is higher. If hiselection is approved, the current agreement will be extended.

17Candidate Number

Name

9

Tatsuro Kosaka

Date of Birth (Age)January 18, 1953 (64 years old)

Owned Shares of the Company
Tenure (at the conclusion of this Annual
General Meeting of Shareholders)
Attended BOD meetings
Position

Note to Appointment
Reappointment
OutsideIndependent― shares
1 year
10/11

Outside Director

Career Summary
Apr. 1976
Entered Chugai Pharmaceutical Co., Ltd.
Oct. 2002
Vice President, General Manager of Corporate Planning Dept. of Chugai PharmaceuticalCo., Ltd.
Oct. 2004
Senior Vice President, General Manager of Corporate Planning Dept. of Chugai
Pharmaceutical Co., Ltd.
Mar. 2005
Senior Vice President, Deputy Managing Director of Sales & Marketing Group of Chugai
Pharmaceutical Co., Ltd.
Jul. 2005
Senior Vice President, Head of Strategic & Marketing Unit of Chugai Pharmaceutical Co.,
Ltd.
Mar. 2008
Senior Vice President, Head of Lifecycle Management & Marketing Unit of Chugai
Pharmaceutical Co., Ltd.
Mar. 2010
Director, Executive Vice President of Chugai Pharmaceutical Co., Ltd.
Mar. 2012
Representative Director, President of Chugai Pharmaceutical Co., Ltd.
(to the present)
Mar. 2016
Director of the Company(to the present)
Significant Concurrent Positions
Representative Director, President of Chugai Pharmaceutical Co., Ltd.
Reasons for recommending Tatsuro Kosaka as a candidate for Outside Director
Tatsuro Kosaka fulfills his duties as an Outside Director of the Company, serving as the Chief Operating
Officer of a global corporation, and having abundant experience and broad knowledge that include
implementing the medium-term management plan and various other business reforms.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote
global management of operations while pursuing sustained increase of corporate value, and thus werecommend his reappointment as an Outside Director.
Views on independence
The Group maintains transactional relationships with neither Tatsuro Kosaka nor entities where heconcurrently serves, and based on the “Criteria for independence of Outside Directors and Outside Audit& Supervisory Board Members” which have been established by the Company as a means of objectively
assessing independence thereof, the Company has deemed that he maintains sufficient independence withno potential for conflict of interests with general shareholders. Moreover, as Tatsuro Kosaka meets therequirements for independent director/auditor as defined by the Tokyo Stock Exchange, we haveregistered him as an independent director/auditor as stipulated by the said Exchange.
Candidate’s special interests in the Company
There are no special interests between Tatsuro Kosaka and the Company.

18

Regarding agreements limiting the liability
To enable him to contribute fully in his role as an Outside Director, the Company has entered into anagreement with Tatsuro Kosaka that limits his liability for damages as prescribed in Paragraph 1, Article
423 of the Companies Act. Under the terms of this agreement, his liabilities are limited to ¥20 million or
to the minimum limited amount stipulated by applicable laws and regulations, whichever is higher. If hiselection is approved, the current agreement will be extended.

19Candidate Number

Name

Note to Appointment

10

Atsushi Katsuki

New candidate

Date of Birth (Age)March 17, 1960 (57 years old)

Owned Shares of the Company

2,598 shares

Career Summary
Apr. 1984
Entered The Nikka Whisky Distilling Co., Ltd
Sep. 2002
Transferred to the Company
Apr. 2011
Senior Officer, Manager of Corporate Strategy Department, Manager of International
Headquarters
Jul. 2011
Senior Officer, General Manager of Business Development Section
Oct. 2011
Managing Director of Asahi Holdings (Australia) Pty Ltd
Apr. 2014
Director, Group CEO of Asahi Holdings (Australia) Pty Ltd
Mar. 2016
Corporate Officer of the Company, Director, Group CEO of Asahi Holdings (Australia)
Pty Ltd(to the present)
Reasons for recommending Atsushi Katsuki as a candidate for Director
Atsushi Katsuki primarily engages in operations involving international business and corporate alliances,and has abundant relevant experience and knowledge that include currently serving as the Group CEO of
Asahi Holdings (Australia) Pty Ltd where he is implementing organizational integration to create synergy
in the Oceania business segment.
Accordingly, we deem that he possesses capabilities appropriate for the Company’s aims to promote
global management of operations while pursuing sustained increase of corporate value, and thus werecommend that he be newly appointed to serve as a Director.
Candidate’s special interests in the Company
There are no special interests between Atsushi Katsuki and the Company.

20

Item 3: Election of one (1) Audit & Supervisory Board Member
At the conclusion of this Annual General Meeting of Shareholders, the term of office of Audit &Supervisory Board Member Tadashi Ishizaki will expire. The Company therefore asks theshareholders to elect one (1) Audit & Supervisory Board Member.
The candidate for the position of Audit & Supervisory Board Member is as follows.
This proposal is submitted with the prior consent of the Audit & Supervisory Board.
Name
Note to Appointment
New candidate
OutsideYutaka Kawakami
Independent
Date of Birth (Age)June 13, 1952 (64 years old)

Owned Shares of the Company― shares

Career Summary
Feb. 1976
Entered Tohmatsu Awoki & Co. (current Deloitte Touche Tohmatsu LLC)
Mar. 1980
Registered as certified public accountant
Jun. 1990
Partner of Tohmatsu & Co.
Jun. 2007
Member of Management Council, General Manager of Human Resources Department of
Deloitte Touche Tohmatsu
Sep. 2016Retired from Deloitte Touche Tohmatsu LLC
Reasons for recommending Yutaka Kawakami as a candidate for Outside Audit & Supervisory Board
MemberYutaka Kawakami has expert knowledge related to accounting as a certified public accountant andabundant auditing experience both in Japan and overseas. Accordingly, we deem that he possesses
capabilities appropriate for the Company’s aims to promote global management of operations whilepursuing sustained increase of corporate value, and thus we recommend that he be newly appointed toserve as an Audit & Supervisory Board Member.
Although Yutaka Kawakami has not been involved in company management other than as an Outside
Director/Audit & Supervisory Board Member, the Board of Directors has concluded that he will be able
to perform his duties properly as an Outside Audit & Supervisory Board Member of the Company basedon the reasons noted above.
Views on independence
The Group does not have transactional relationships with Yutaka Kawakami, and based on the “Criteria
for independence of Outside Directors and Outside Audit & Supervisory Board Members” which havebeen established by the Company as a means of objectively assessing independence thereof, theCompany has deemed that he maintains sufficient independence with no potential for conflict of interests
with general shareholders. Moreover, as Yutaka Kawakami meets the requirements for independent
director/auditor as defined by the Tokyo Stock Exchange, we have registered him as an independent
director/auditor as stipulated by the said Exchange.
Candidate’s special interests in the Company
There are no special interests between Yutaka Kawakami and the Company.
Regarding agreements limiting the liability
If election of Yutaka Kawakami is approved, the Company plans to newly enter into an agreement with
him that limits his liability for damages as prescribed in Paragraph 1, Article 423 of the Companies Act inorder to enable him to contribute fully in his role as an Outside Audit & Supervisory Board Member.
Under the terms of this agreement, such liability will be limited to ¥20 million or to the minimum limited
amount stipulated by applicable laws and regulations, whichever is higher.
Note: The age is as of this Annual General Meeting of Shareholders.

21[Reference] Criteria for independence of Outside Directors and Outside Audit &Supervisory Board Members
The Company has established standards as set forth below for objectively assessing theindependence of its Outside Directors and Outside Audit & Supervisory Board Members(herein this section the “Outside Directors/Audit & Supervisory Board Members”) andaccordingly deems that an Outside Director/Audit & Supervisory Board Member lacks
sufficient independence for the Company if any of the following apply, such that he or she is:
1. A party who serves as an executive*1 of the Company or a subsidiary of the Company(herein this section collectively referred to as the “Group”) or has served as an executive of
the Group in the past;
2. A party for whom the Group is a major business partner*2 (or if the business partner is anincorporated entity, an executive thereof);
3. A party who is a major business partner of the Group*3 (or if the business partner is anincorporated entity, an executive thereof);
4. A consultant, certified public accountant or other accounting professional, or an attorney atlaw or other legal professional who has been paid substantial amounts of money or otherfinancial benefits*4 other than Directors’ and Audit & Supervisory Board Members’
remuneration paid by the Group (or if the party receiving such financial benefits is anincorporated entity, association or other organization, then persons belonging to suchorganization);
5. A certified public accountant who belongs to the auditing firm which serves as the
Accounting Auditor of the Group;
6. A major shareholder*5 of the Group (or if the major shareholder is an incorporated entity,
an executive thereof);
7. An executive of an incorporated entity that is a major shareholder of the Group;
8. An executive of a company which has a relationship involving cross-assumption of officeof Outside Directors/Audit & Supervisory Board Members*6;
9. A party who receives substantial donations*7 from the Group (or if the party receiving such
donations is an incorporated entity, association or other organization, then an executive
thereof);
10. A close relative*9 of a party who falls under any of the above items from 1 to 9 (limited toimportant persons*8, with the exception of item 1);
11. A party who has fallen under any of the above items from 2 to 10 during the past five (5)years;
12. A party who has exceeded the tenure for Outside Directors/Audit & Supervisory Board
Members stipulated by the Company*10; or
13. Notwithstanding the provisions of the respective items above, a party with respect towhom there are special grounds for deeming there to be potential for conflict of interests
with general shareholders.
*1. “Executive” refers to an executive as defined in Item 6, Paragraph 3, Article 2 of the Ordinance for
Enforcement of the Companies Act, and includes both executive directors and employees, but does not include
Audit & Supervisory Board Members.
*2. “Party for whom the Group is a major business partner” refers to a party whose transactions in the most recent
fiscal year amount to 2% or more of the consolidated revenue of the business partner’s group.
*3. “Party who is a major business partner of the Group” refers either to a party whose transactions in the mostrecent fiscal year amount to 2% or more of the Company’s consolidated revenue, or a party who loans to theGroup an amount equivalent to 2% or more of the Company’s consolidated assets as of the end of the mostrecent fiscal year.
*4. “Substantial amounts of money or other financial benefits” refers to money and other financial benefits
amounting to 10 million yen or more annually, excluding Directors’ and Audit & Supervisory Board Members’
remuneration, for the most recent fiscal year (if such financial benefits are obtained by an incorporated entity,
association or other organization, it refers to money or other financial benefits amounting to 2% or more of22

such organization’s total revenues for the most recent fiscal year).
*5. “Major shareholder” refers to a person or incorporated entity that directly or indirectly holds 10% or more of
the Company’s total voting rights.
*6. “Relationship involving cross-assumption of office of Outside Directors/Audit & Supervisory Board Members”
refers to a relationship where an executive of the Group serves as an outside director/audit & supervisory board
member of another company, and an executive of that company serves as an Outside Director/Audit &Supervisory Board Member of the Company.
*7. “Substantial donations” refers to annual donations of 10 million yen or more made during the most recent fiscal
year.
*8. “Important person” refers to directors (excluding outside directors), executive officers, corporate officers, andother executives in positions of general manager or above; certified public accountants belonging to auditing
firms or accounting offices; attorneys at law belonging to law firms; councilors, directors, auditors or otherofficers belonging to incorporated foundations, incorporated associations, educational institutions and otherincorporated entities; and other persons objectively and reasonably deemed to be in positions of similar
importance.
*9. “Close relative” refers to a spouse or persons within the second degree of consanguinity.
*10. “Tenure of Outside Directors/Audit & Supervisory Board Members stipulated by the Company” means ten (10)years with respect to Directors and twelve (12) years with respect to Audit & Supervisory Board Members.

23

Shareholder Proposal (Item 4)
Item 4 is proposed by one shareholder. The total number of voting rights held by theshareholder proposing such item is 364.
The below description of proposal and reason for proposal are stated according to the original
proposal submitted from the shareholder.
Item 4: Partial amendments to the Articles of Incorporation
1. Description of Proposal
To add the following provisions to the clause of the Articles of Incorporation regarding theGeneral Meetings of Shareholders.
(1) When a no-confidence motion is tabled against the chairperson of the general meeting ofshareholders, voting on the motion shall be made after an explanation of the reasons forthe motion is given.
(2) When there is a shareholder proposal at the general meeting of shareholders, theopportunity to explain the reason of the proposal shall be provided after revealing thenames of the proposing shareholders.
2. Reason for Proposal
For the general meeting of shareholders to be conducted with fairness.

Opinion of the Board of Directors
The Board of Directors objects to this proposal.
At the General Meetings of Shareholders of the Company, the chairperson of the meetingalready provides lawful and appropriate conduct befitting the circumstances in accordancewith laws and regulations such as Article 314 (Accountability of Directors, etc.) and Article
315 (Authority of Chairperson) of the Companies Act. Accordingly, the Board of Directors
does not consider it necessary to establish such provision in the Articles of Incorporation of
the Company.
End

24

(Attached Materials)
BUSINESS REPORT
From January 1, 2016 to December 31, 2016

1. Overview of Operations of the Asahi Group
Adoption of International Financial Reporting Standards (IFRS)The Asahi Group adopts the IFRS starting from this fiscal year with the objective of providing
more useful information for stakeholders including its shareholders and investors and enhancing theconvenience by enhancing the global comparability of financial information and the quality of
disclosed contents.
The figures for the previous fiscal year are also reclassified on the IFRS basis for comparative
analysis purposes.

25(1) Business Progress and Results
During this fiscal year, sustained recovery in the US economy contributed to an overall mild
recovery in the global economy, despite growing uncertainty in the wake of the economic slowdown
in China and other emerging countries and the issue of the UK’s withdrawal from the EU (“Brexit”).
The Japanese economy was on a modest recovery track with an uptick in consumer spending on
the back of the improved employment/income environment, although some sluggishness was seen inexport and production.
Under these circumstances, the Asahi Group worked toward the further development of ongoing
efforts for the “Management for Corporate Value Enhancement” under the newly-developed“Medium-Term Management Policy” by setting three key priorities: strengthening of earnings power,
improvement of asset and capital efficiency, and reinforcement of ESG initiatives.
Particularly for strengthening of earnings power, the Group worked in Japan to position a profit
base as the cornerstone of earnings with high value addition and differentiation as key areas of focus,
while in overseas markets promoting the growth strategy centered on the enhancement and fosteringof existing business brands, as well as acquiring new foundations for growth where strengths
originating in Japan can be leveraged.
As a result, the Asahi Group posted revenue of ¥1,706,901 million, a year-on-year increase of
1.0%. Core operating profit* increased by 5.5% year-on-year to ¥148,486 million, and operating
profit rose by 41.7% to ¥136,889 million. Profit attributable to owners of parent totaled ¥89,221
million, an increase of 17.8% year-on-year compared with the previous year.
* Core operating profit is the Company’s original indicator of profit, which measures the ordinary business earnings
calculated by deducting cost of sales and selling, general and administrative expenses from revenue.

■ Business performance of the Asahi Group26

Overview by Business Segment for 93rd Term
■ Asahi Group Revenue by Segment
92nd term
FY2015(million yen)

93rd term
FY2016(current year)(million yen)

Change inamount(million yen)

Change inpercentage(%)

Alcoholic Beverages

970,958

976,649

5,690

0.6

Soft Drinks

350,283

363,905

13,622

3.9

Foods

111,306

110,824

(482)

(0.4)

International Operations

250,452

250,316

(135)

(0.1)

Other Businesses

97,267102,279

5,012

5.2

Adjustment*(90,741)(97,073)(6,332)–

1,689,527

1,706,901

17,374

1.0

Segment

Total* The adjustment is the elimination amount of intersegment revenue and revenue of the corporate portion not
attributable to any segment.

27

Alcoholic Beverages Segment

Main products: Beer, happoshu (low-malt beer), new genre (malt-type), whisky and other spirits,wine, RTD*1, shochu, beer-taste beverages

In the alcoholic beverages segment, the Group made efforts to enhance the valuse of existing
brands and, to create new value and new demand through innovation, under the slogan of “aiming tobecome an industry leader with proposals on a variety of alcoholic beverages through the creationand fostering of No. 1 brands”.
In the beer-type beverages sector, we worked on boosting the brand value of “Asahi Super Dry”
mainly by conducting sales campaigns appropriate for seasons or events. For the “Clear Asahi”
brand, we renewed existing products such as “Clear Asahi Prime Rich” and launched limited-timeonly products in an effort to enhance our presence in the market. We also renewed the “Asahi Off”
brand by adding “artificial sweetener-free” feature in addition to “purine bodies-free” *2 and“carbohydrate-free” *3 features.
In the sectors of alcoholic beverages other than beer-type beverages, the Group launched “Asahi
Mogitate” for RTD, which is made with “juice extracted from fresh fruit picked within the preceding
24 hours” and by an original technique to keep its fresh juiciness, in an effort to provide new value.
For whisky and other spirits, we had active marketing campaigns for “Black Nikka”, whose 60th
anniversary was commemorated and “Jack Daniel’s”, whose distillery celebrated its 150th
anniversary. For wines, marketing activities were intensified for the imported wines, primarily for“SANTA HELENA Alpaca”.
In the alcohol-taste beverages sector, we renewed “Asahi Dry Zero” by enhancing the flavor
relative to substantial volume and launched a new Food for Specified Health Uses, “Asahi Healthy
Style”, in an effort to invigorate the market.
As a result of these efforts, revenue from the alcoholic beverages segment increased by 0.6%
from the previous year to ¥976,649 million due to an increase in sales volume of beer-type
beverages, stronger-than-previous-year sales of alcoholic beverages other than beer-type beverages
and of alcohol-taste beverages, and addition of the full-year earnings of ENOTECA CO., LTD,
which became a new consolidated subsidiary in 2015.
Despite an increase in advertising and sales promotion expenses, core operating profit increased
by 0.9% year-on-year to ¥120,823 million as a result of increased sales and the efforts of reducing
manufacturing costs such as trimming the weight of can lids. (Operating profit stood at ¥111,192
million, representing a year-on-year increase of 5.1%.)*1. RTD stands for “Ready To Drink”, which refers to a type of beverage sold in a prepared form and ready for
consumption, such as canned chuhai.
*2. “Purine bodies-free” is labeled when contained purine bodies are less than 0.5mg per 100ml.
*3. In compliance with the nutrition labeling standards, “carbohydrate-free” is labeled when contained carbohydrates
are less than 0.5mg per 100ml.

28

Soft Drinks Segment

Main products: Carbonated drinks, coffee, tea, milk-based beverages, lactic acid beverages,
mineral water, fruit drinks

In the soft drinks segment, the Group concentrated marketing investments in key brands anddeveloped products with a focus on health, and worked toward the restructuring of logistics
infrastructure, and the optimal production efficiency and improvement in capacity utilization atfactories, with the aim of fostering solid brands and establishing a solid earnings structure.
For the mainstay brands, the Group launched “MITSUYA Sumikiru Cider” including clear fruit
juice *, a canned coffee supervised by a well-established café, “WONDA Kiwami”, and a sugar-freecarbonated water with cola aroma, “WILKINSON Tansan Dry Cola” in an effort to enhance thebrand value. We also proposed new value leveraging brand assets by the release of a natural waterwith lactic acid of “Calpis”, named “Asahi Oishii Mizu Plus <Calpis> no Nyusankin”.
In the sector of Foods for Specified Health Uses, the Group also made efforts to enhance its
presence in the field of health functional food with the release of “MITSUYA Cider W” and therenewal of “Asahi Shokujito Isshoni Juroku-Cha W”.
For chilled soft drinks, the Group renewed “Ajiwai Calpis”, released “Uruou Kajitsu”, which
provides consumers with an opportunity to enjoy the authentic fruitiness of various fruits, and also
expanded the distribution channels for small-capacity products in response to market needs.
Accordingly, revenue from the soft drinks segment increased by 3.9% from the previous fiscal
year to ¥363,905 million due to stronger-than-previous-year sales volume of carbonated drinks andcoffee drinks.
Core operating profit increased by 28.0% year-on-year to ¥32,335 million as a result of
increased sales and the efforts of improving the component ratio of product categories and size/typeof containers and of establishing optimal production and logistics systems. (Operating profit stood at¥32,775 million, representing a year-on-year increase of 92.2%.)* Clear fruit juice is a fruit juice without pulp, which is made by resolving and filtrating extracted fruit juice withpulp (turbid fruit juice).

29

Foods Segment

Main products: Confectionery, nutritional snacks, supplements, quasi-drugs, baby foods, infant
formula, freeze-dried foods

In the foods segment, the Group integrated three companies into Asahi Group Foods, Ltd. in aneffort to “centralize the business and its brands which have strengths” and create integrated synergies.
For the tablet-type confectionary “MINTIA”, we pursued enhanced brand value by releasing the20th anniversary version with limited-time-only package design, introducing consumer campaigns,
and expanding the product lineup of the large-size tablet “MINTIA Breeze”.
In the baby foods sector, the Group worked to expand sales by such means as release of a new
product of powder type “Tezukuri O’en”. In the infant formula sector, the Group worked tostrengthen brand power by such means as renewal of “Wakodo Lebens Milk HAIHAI” and“Wakodo Follow-Up Milk GUNGUN”.
In the freeze-dried foods sector, the Group strived to expand sales by increasing the number ofmass retailers selling “Itsumono Omisoshiru” and by expanding the product lineup of the five-pack“Uchi-no-Omisoshiru”.
In the category of dietary supplements, the Group strengthened the expansion of Food with
Functional Claims by promoting aggressive sales activities for “Dear-Natura Gold”, and bylaunching “Schwabe Ginkgo Ichoha Ekisu”, etc.
As a result of the above, the Foods Segment posted revenue of ¥110,824 million, on par withthe previous fiscal year, reflecting strong performances in the core brands, despite negative impacts
from revisions to the business portfolio.
Core operating profit increased by 21.4% year-on-year to ¥10,256 million as a result ofstronger-than-previous-year sales of the mainstay brands and the efforts of reducing manufacturingcosts primarily for raw materials. (Operating profit stood at ¥11,377 million, representing a year-onyear increase of 63.9%.)30

International Operations Segment

Main products: Beer, low-alcohol beverages, carbonated drinks, mineral water, sport drinks, tea,condensed milk

In the international operations segment, the Group pursued the enhancement and expansion of
the growth portfolios of each segment and the maximization of integrated synergies, as well as the
expansion of platforms for business growth in China and Southeast Asia.
In the Oceania business segment, the Group put efforts into enhancing the power of brands forthe mainstay carbonated drinks category in the soft drinks sector. In addition, the Group bolsteredsales efforts for “Cool Ridge” and “Frantelle” in the mineral water category, whose market is
growing. In the alcoholic beverages sector, active sales campaigns were conducted for beers such as“Asahi Super Dry”, and the growing category of cider (sparkling apple wine) as well as for themainstay low-alcohol beverages, and business structures for stable growth were established.
In the Southeast Asia business segment, the Group extended sales campaigns primarily for themainstay brands in each country, such as “WONDA” in Malaysia and “ICHI OCHA” in Indonesia.
The Group also introduced “Calpis” in Malaysia and launched “Caféla eXpresso” in Indonesia in aneffort to enhance its presence in the market of its own brand products.
In the China business segment, the Group worked toward increased sales volume of “Asahi
Super Dry” by attracting new customers–restaurants serving draft beer in kegs–as well as
strengthening proposal-based sales activities for mass retailers such as supermarkets.
In October 2016, the Group acquired “Peroni”, “Grolsch”, and “Meantime” brands * and theirrespective production and sales companies from Anheuser-Busch InBev SA/NV in Europe, which
had bought the previous owner of these brands, SABMiller plc. For the further expansion of businessplatforms through the growth of these brands and “Asahi Super Dry” in Europe, we worked on thecreation of synergies in a wide range of areas such as production, sales, and marketing.
As a result of the above, the International Operations Segment posted revenue of ¥250,316
million, on par with that of the previous fiscal year as the business in each region remained solid andthe Europe beer businesses were included for the first time, despite the effects of yen appreciation.
Core operating profit decreased by 11.5% year-on-year to ¥12,348 million as a result of weakcurrencies such as AUD and one-off expenses incurred for the acquisition of Europe beer businesses,
which erased solid performance by each region and the effects of efforts to reduce manufacturingcosts. (Operating loss was ¥8 million, an improvement of ¥16,054 million compared with theprevious fiscal year.)* Excludes the intellectual property rights relating to the “Peroni” and “Grolsch” brands in the United States andPuerto Rico.

31

Other Businesses Segment

Main businesses:

Cargo transportation, production and distribution of health foods andfeedstuffs

In the other businesses segment, revenue increased by 5.2% year-on-year to ¥102,279 million
mainly due to the efforts of reinforcing sales campaigns for health foods.
Core operating profit was 18.3% down from the previous fiscal year to ¥2.0 billion due toincreased fixed costs for building additional bases for the cargo transportation business. (Operating
profit decreased 10.5% year on year to ¥1,983 million.)32

(2) Financial and Profit/Loss Indicators
90th term
FY201391st term
FY201493rd term
FY2016

92nd term
FY2015

Japanese GAAP

(current year)

IFRS(million yen)

Net sales/ Revenue

1,714,237

1,785,478

1,857,418

1,689,527

1,706,901–––

140,691

148,486

117,467

128,305

135,119

96,626

136,889

Ordinary income
Profit/ Profit attributable toowners of parent
Operating margin/ Operating
profit ratio

123,612133,168

145,946–(million yen)Core operating profit*1
Operating income/ Operating
profit(million yen)(million yen)–(million yen)

61,74969,11876,42775,77089,221

6.9

7.2

7.3

5.7

8.0

EBITDA*2
Earnings per share/ Basicearnings per share*3

183,695

192,308

197,993

197,287

205,803135.73148.92

166.25164.82194.75

Total assets/ Total assets

1,791,555

1,936,609

1,901,554

1,804,673

2,086,381

827,481896,510

891,829803,682

846,105(%)(million yen)
(yen)(million yen)(million yen)

Net assets/ Total equity
Net assets per share/ Equity
attributable to owners of parent
per share*4
ROE(Return On Equity/ Profit ratio toequity attributable to owners ofparent)(yen)

1,772.47

1,904.64

1,916.69

1,723.97

1,825.57
(%)

8.0

8.1

8.8

9.7

11.0

Note: Items with “/” indicate “Japanese GAAP / IFRS”.
*1

Core operating profit is the Company’s original indicator of profit, which measures the ordinary businessearnings calculated by deducting cost of sales and selling, general and administrative expenses from revenue.

*2

EBITDA is equal to the sum of operating income before amortization of goodwill, etc., and depreciation under*3

Earnings per share/ Basic earnings per share is calculated based on the average total number of shares

Japanese GAAP and the sum of core operating profit and amortization and depreciation on the IFRS basis.
outstanding during the term. The total number of shares outstanding is exclusive of treasury shares.
*4

Net assets per share/Equity attributable to owners of parent per share is calculated based on the total number ofshares outstanding at the end of the fiscal year. The total number of shares outstanding is exclusive of treasury
shares.

33

34

(3) Status of Capital Expenditures
Consolidated capital expenditures in this year totaled ¥71,743 million, the segment breakdownof which is as follows. A large portion of the capital expenditures represented investments made forthe purpose of enhancing efficiency and production capacity.
Amount of capital expenditure(million yen)

Business segment
Alcoholic Beverages

29,936

Soft Drinks

15,206

Foods

3,660

International Operations

17,940

Other Businesses

430

Company-wide (common)

4,568
Total

71,743(4) Financing Activities
The Company financed the capital expenditures detailed in item (3) above and capitalrequirements including those for acquiring beer businesses in Europe through loans from financial
institutions and the issuance of commercial papers.
Funds required for companies’ businesses of the Asahi Group are primarily sourced by theCompany.

(5) Status of Principal Lenders(As of December 31, 2016)

Outstanding balance(million yen)

LenderSumitomo Mitsui Banking Corporation

212,335

Mizuho Bank, Ltd.

34,429Sumitomo Mitsui Trust Bank, Limited

27,709The Norinchukin Bank

27,500

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

20,75235

(6) Principal Subsidiaries
Company name
Asahi Breweries, Ltd.
Asahi Soft Drinks Co., Ltd.
LB Co., Ltd.
Asahi Group Foods, Ltd.
Asahi Holdings (Australia) Pty Ltd

Issued capital(million yen)
20,000Shareholdings

11,081487
5,000
132,697

100.0
100.0
100.0
100.0

(%)
100.0

(AUD 1,806,901 thousand)Asahi Beer (China) Investment Co.,Ltd.
Asahi Europe Ltd

9,996

100.0

(CNY 737,487 thousand)

304,517

100.0(EUR 2,544,546 thousand)Main operations
Production and marketing of alcoholic
beverages
Production and marketing of soft drinks
Production and marketing of soft drinks
Production and marketing of foods
Overseeing soft drinks and alcoholic
beverages operations in Oceania
Overseeing alcoholic beverages
operations, and marketing of alcoholic
beverages in China
Overseeing alcoholic beverages
operations in Western Europe
Contracting of clerical work

Asahi Professional Management50
100.0Co., Ltd.
Notes:
1.
There were 137 consolidated subsidiaries of the Company as of the end of this year, including those listed
above. There were 138 entities accounted for using equity method, including Tsingtao Brewery Co., Ltd. andTingyi-Asahi Beverages Holding Co., Ltd.
2.
As of the end of this year, there was the following wholly owned specified subsidiary:
Name of the wholly owned specified subsidiary:
Asahi Europe Ltd
Address of the wholly owned specified subsidiary:
One Forge End, Woking, Surrey, GU21
6DB, the United Kingdom
Carrying amount of shares of the wholly owned specified subsidiary: ¥304,517 million
Total assets of the Company:¥1,109,207 million(7) Significant Developments such as Corporate Reorganization
The Company acquired the shares of Birra Peroni S.r.l. and four other companies on October 11,
2016 through the intermediary of Asahi Europe Ltd.

(8) Principal Offices and Factories(As of December 31, 2016)

1) Asahi Group Holdings, Ltd.
(Head office)23-1, Azumabashi 1-chome, Sumida-ku, Tokyo(Laboratory)
Research & Development Center (Moriya City, Ibaraki)
2)

Subsidiaries

Businesssegment

Alcoholic
Beverages

Company name

Asahi Breweries,
Ltd.

Major establishments
Head office
Regional sales
offices
Production
facilities
Laboratories

23-1, Azumabashi 1-chome, Sumida-ku, Tokyo
Tokyo Metropolitan Headquarters (Chuo-ku,
Tokyo), etc.
Ibaraki Brewery (Moriya City, Ibaraki), etc.
Development Laboratories for Alcoholic
Beverages (Moriya City, Ibaraki), etc.

36

Businesssegment

Company name

Asahi Soft Drinks
Co., Ltd.

Soft Drinks

Head office
Regional sales
offices
Production
facilities
Laboratories
Head office

LB Co., Ltd.

Foods

Major establishments

Asahi Group
Foods, Ltd.

Regional sales
offices
Production
facilities
Laboratories
Head office
Regional sales
offices
Production
facilities*
Laboratories

Asahi Holdings
Head office(Australia) Pty Ltd
International
Asahi Beer (China) Head office
Operations
Investment Co., Ltd.
Asahi Europe Ltd
Head office23-1, Azumabashi 1-chome, Sumida-ku, Tokyo
Tokyo Metropolitan Headquarters (Chuo-ku,
Tokyo), etc.
Akashi Plant (Akashi City, Hyogo), etc.
Products Research & Development Laboratory(Moriya City, Ibaraki), etc.
3469-1, Aza Sakuragaoka, Ooaza Kurohama,
Hasuda City, Saitama
CVS Marketing Department (Taito-ku, Tokyo),etc.
Hasuda Plant (Hasuda City, Saitama), etc.
Marketing Department (Hasuda City, Saitama)
4-1, Ebisuminami 2-chome, Shibuya-ku, Tokyo
Food & Confectionaries Branch for National Retail
Chains I (Shibuya-ku, Tokyo), etc.
Osaka Plant (Suita City, Osaka), etc.
Asahi Development Laboratory (Chuo-ku, Tokyo),etc.
Victoria, Australia
Shanghai, China
Surrey, the United Kingdom* The production facility of a subsidiary of Asahi Group Foods, Ltd. is listed.

(9) Employees(As of December 31, 2016)

Number of
employees
5,906
3,532
1,290
10,213
2,088
590
23,619Business segment
Alcoholic Beverages
Soft Drinks
Foods
International Operations
Other Businesses
Company-wide (common)
Total

37

Increase (decrease) fromthe end of the previous term
240
(466)
(78)
1,476
173
80
1,425

(10) Management Perspectives
Corporate Philosophy of the Asahi GroupThe Asahi Group aims to satisfy its customers with the highest levels of quality and integrity,
while contributing to the promotion of healthy living and the enrichment of society worldwide.
Long-Term Vision
Striving to be a corporate group trusted around the world through the Kando of food(deliciousness, happiness and innovation)
As a comprehensive beverage and food business group whose core business is alcohol
beverages, aim to be an industry leader in Japan with high value addition as a key areaof focus and establish a unique position as a global player that leverages strengths
originating in Japan.
Seek “sustained corporate value enhancement” by pursuing satisfaction for all stakeholders
Vision for Stakeholders
Customers
Business
partners
Society
Employees
Shareholders

Continue to create new value based on strengths nurtured in Japan and achieve theNo. 1 ranking for customer satisfaction in Japan and each region of the world.
Develop relationships with our business connections and alliance partners thatenable mutual growth through new value creation.
Contribute to the resolution of social problems through the Group’s businesses inareas such as development of a wholesome food culture.
Develop an environment in which employees experience both personal andcorporate growth and can work vigorously.
Enhance corporate value (equity value) through sustained profit creation andshareholder returns.

Medium-Term Management Policy
Further development of management to enhance corporate value in order to achieve sustainable growth
Key Performance Indicator (KPI) Guidelines
Guidelines for FY2016 to FY2018
Revenue Stable growth from main businesses – Business restructuring + New M&A

Core operating profit Existing businesses (Average annual growth rate in the high single digits) + Impact of new
M&A

EPS

 Average annual growth of approx. 10%

ROE Maintenance and increase to 10% or higher

Note: The calculation basis excludes special factors such as foreign exchange impact and one-off extraordinary items.

Financial and Cash Flow Guidelines
FY2016 to FY2018 cumulative guidelines
Cash flow (CF)

Growth investment

Shareholder returns

 Generated cash flow: ¥470.0 billion or more (Operating cash flow +Maximization measures + Assets review)
 Capital expenditures: ¥180.0 to ¥220.0 billion
 Active investment in M&As and alliances to acquire foundations for growth(Maximum D/E ratio* of approx. 1.0 time acceptable if major capitaldemands arise) Stable dividend increases with the aim of a dividend payout ratio of 30%
by FY2018
 Flexible acquisition of treasury shares taking into account an appropriatebalance with growth investment* D/E ratio (debt equity ratio) = interest-bearing debt / equity

38

1)

Management Basic Policy
Under the group-wide corporate philosophy of “The Asahi Group aims to satisfy its customers
with the highest levels of quality and integrity, while contributing to the promotion of healthyliving and the enrichment of society worldwide”, the Group conducts business activities in the“Alcoholic Beverages”, “Soft Drinks” and “Foods” segments and the “International Operations” ofsuch segments, under the command of Asahi Group Holdings, Ltd., a pure holding company.
In addition, the Group makes efforts to resolve social issues through our business activities inthe three business activity domains of “Food and Health”, “The Environment” and “People andSociety”, and set out the respective material issues (priority themes) in each domain, toward therealization of a “sustainable society”, which is essential for developing our corporate activities.
2)

Long-Term Vision
Japan’s breakaway from deflation is now facing a crucial moment, while a sense of
uncertainty is growing over the economy in some parts of the world. Under these circumstances,many different risks as well as opportunities, including further diversification of consumption, areexpected to emerge in the coming business environment. Besides, in response to the formulation of
Corporate Governance Code, the management style of Japanese companies and the perspective of
stakeholders including our shareholders are likely to shift toward the more sustainable growth andthe increase of corporate value over the medium- to long-term.
In light of the foregoing, the Asahi Group sets out the updated version of the Long-Term
Vision in 2016 of “striving to be a corporate group trusted around the world through the Kando offood (deliciousness, happiness, and innovation)”. Meanwhile, setting the future image of businessin the next ten years or so, the Group, as a comprehensive beverage and food business group whose
core business is alcoholic beverages, aims to be an industry leader in Japan with high value
addition as a key area of focus and to establish a unique position as a global player that leverages
strengths originating in Japan. Furthermore, in the Long-Term Vision, the Group has defined “To
seek ‘sustained corporate value enhancement’ by pursuing satisfaction for all stakeholders” as its
vision set forth for all its stakeholders.
3)

Medium-Term Management Policy
While providing Key Performance Indicator guidelines for the coming three years or so, theMedium-Term Management Policy for the realization of the Long-Term Vision sets the following
three key priorities. Under this policy, the Group works toward the further development of theongoing “Management for Corporate Value Enhancement”.
A Strengthening of earnings power by positioning the domestic profit base as the cornerstoneof earnings and the overseas business as a growth engine
B Asset and capital efficiency improvement that takes into consideration capital cost
C Reinforcement of ESG (environmental, social and governance) initiatives to increasesustainability
Going forward, the Company will deepen dialogue with our shareholders, investors and otherstakeholders and aim to become a corporate group trusted not only in Japan but also around theworld by positioning the Long-Term Vision and the Medium-Term Management Policy as a
stakeholder engagement agenda.
Policy for 94th Term (FY 2017)
Uncertainty over the economy is expected to grow further in the fiscal year 2017 domesticallyand globally. The Asahi Group, nonetheless, will work further toward the positioning of thedomestic profit base as the cornerstone of earnings with the enhancement of the value of mainstay
brands as key areas of focus, in line with the Medium-Term Management Policy. For global
operations, the Group will strengthen earnings power in Japan and elsewhere by creating synergies
leveraging the top premium brands and wide distribution channels of beer businesses in Western
Europe acquired in 2016 in Italy, the Netherlands, and the UK; and those of beer businesses in4)

39

Central and Eastern Europe that the Group plans to acquire in the Czech Republic, Slovakia,
Poland, Hungary, and Romania. In addition, the Group will promote the optimization of businessportfolios, with the objective of improving asset/capital efficiency.
With these efforts, the Group projects revenue to be ¥1,820,000 million, core operating profit
to be ¥165,000 million, operating profit to be ¥146,000 million, and profit attributable to owners ofparent to be ¥96,000 million, for the 94th fiscal year.
The Group cordially requests shareholders’ continuing encouragement and support.

40

(Reference) Acquisition of beer businesses in Europe
In October 2016, the Asahi Group acquired “Peroni”, “Grolsch”, and “Meantime” brands(excluding intellectual property rights relating to the “Peroni” and “Grolsch” brand in the UnitedStates and Puerto Rico) and their respective production and sales companies from Anheuser-BuschInBev SA/NV (“AB InBev”) in Europe, which had bought the previous owner of these brands,
SABMiller plc (“SABMiller”).
In December 2016, the Group also signed a share purchase agreement (“Agreement”) with AB
InBev to acquire its businesses and relevant assets (“Businesses”) in the Czech Republic, Slovakia,
Poland, Hungary, and Romania (collectively, “five Central-Eastern European countries”). The
Agreement covers the entities and global brands such as “Pilsner Urquell” that SABMiller had
owned in the five Central-Eastern European countries before its integration with AB InBev. With aleading market share in the Czech Republic, the world’s top-ranked country on per capita beer
consumption, and in Poland, Hungary and Romania, the Group obtains high profitability backed bystrong business platforms.
The Asahi Group will aim for a unique position as a global player that grows with leading
premium brands, including “Asahi Super Dry”, “Peroni”, and “Grolsch”, as its core forces.
In addition, the Group will enhance the power of generating cash flows by creating synergies
within Europe, which is next to Japan in terms of business scale, as well as enhance the earnings
power overseas by integrating strengths such as the power of brands and cost competitivenessnurtured in Japan.

41

2. Corporate Governance System(1) Basic Concept
With the belief that “growth-oriented governance” by which to make transparent, fair, swift andbold decisions is indispensable for striving to achieve sustainable growth and increase a corporate
value over the medium- to long-term, the Company has established its Corporate Governance
Guidelines, and makes efforts primarily in the following areas:
1) Ensuring rights of and equality among shareholders
Recognizing that “a shareholder is equal in accordance with his/her equity interest”, theCompany strives to ensure substantial equality of shareholders and conduct appropriate
information disclosure by posting various information for shareholders and/or individual
investors with updates, as needed, on its website. Information disclosure is also ensured foroverseas investors using the English website, as well as the issuance of the English-version
Convocation Notice of the General Meeting of Shareholders in view of the convenience of
exercising of shareholders’ rights by foreign shareholders. Furthermore, the Company has
streamlined a system that allows for employees assigned to assist the Audit & Supervisory Board,
who are not subject to directives or orders from Directors or employees, under the control of the
Audit & Supervisory Board, so that Audit & Supervisory Board Members can handle claims
from any minority shareholders against the Company or any Director and Audit & Supervisory
Board Member, independently from management to substantially ensure the rights of minority
shareholders.
2) Appropriate Collaboration with Stakeholders
The Company has identified corporate value not only as financial value, but also as asummation of financial value and social value that is closely related to each other, and has set its
vision vis-à-vis its customers, business partners, society, employees, and shareholders as
stakeholders, as described below, to practice appropriately in collaboration with them.
Customers:
Continue to create new value based on strengths nurtured in Japan andachieve the No. 1 ranking for customer satisfaction in Japan and each regionof the world.
Business partners: Develop relationships with our business partners and alliance partners thatenable mutual growth through new value creation.
Society:
Contribute to the resolution of social problems through the Group’sbusinesses in areas such as development of a wholesome food culture.
Employees:
Develop an environment in which employees experience both personal andcorporate growth and can work vigorously.
Shareholders:
Enhance corporate value (equity value) through sustained profit creation andshareholder returns.
3) Ensuring Proper Information Disclosure and Transparency Thereof
The Company formulated the “Disclosure Policy” and proactively addresses the voluntary
disclosure of information. The Company strives to provide well-balanced information disclosure
between financial information, such as accounting, and non-financial information, such as
management strategies, risks and governance, by publicizing the Integrated Report, in addition to
the statutory disclosure, timely disclosure and other information disclosures on the website.
4) Responsibilities of the Board of Directors
The Company’s Board of Directors appropriately fulfills their roles and responsibilities toensure the sustainable growth and the increase of corporate value over the medium- to long-termof the Company, as well as to promote the improvement of earning capacity and capitalefficiency by taking into account their fiduciary responsibility and accountability to shareholders.
Such initiatives include determining the Long-Term Vision and Medium-Term Management
Policies and promoting their execution, while also properly supporting management’s risk taking
by streamlining the internal control system and risk management system.
The Board of Directors, in deliberating management strategies etc., mainly prepared bymanagement, takes care to plan the meetings as a venue for constructive discussion by avoiding
ritual discussion with measures such as sharing information with Outside Directors and a42

preliminary explanation of agenda items thereto in the review process or receiving reports on the
results of discussion from the Audit & Supervisory Board, thereby aiming for the sustainablegrowth and the increase of corporate value over the medium- to long-term of the Company.
5) Dialogues with Shareholders
For promoting constructive dialogues with shareholders, the Company shall appoint an officer
as a responsible executive in charge of dialogues with shareholders and ensure well-organizedcollaboration among the auxiliary departments by providing the information for the dialogues. In
addition, the Company shall endeavor to understand the shareholder structure and conductvarious explanatory meetings by Representative Directors of the Company, visits todomestic/overseas investors and/or factory tours for shareholders.
(2) Characteristics of Current Systems
As a company with an Audit & Supervisory Board, the Company audits the execution of duties by
the Directors utilizing the Audit & Supervisory Board, of which a majority of the board members are
independent Outside Audit & Supervisory Board Members, while taking advantage of the audit &supervisory board members system with its independence, and in which the power of final decision
making is given to each person and which has Standing Audit & Supervisory Board Members. In
addition, the Nomination Committee and the Compensation Committee have been established to act
as advisory bodies to the Board of Directors, of which half the members of each committee are
independent Outside Directors. Under the system of these discretional bodies, the Company has
created a structure that allows independent Outside Directors/Audit & Supervisory Board Members
to monitor the management of the Company with high effectiveness.
(3) Structure of the Board of Directors
The Company has three or more Outside Directors who have been elected from among corporate
managers and/or experts in view of their experience, insight and professional background to ensure
the balance and diversity in terms of knowledge, experience and ability of the entire board. As forinternal Directors, the Board of Directors comprehensively evaluates and judges the candidates’
experience, insight, professional background, etc. with reference to the requirements for Directors,
which are determined based on the management strategies of the Company, the “Corporate
Philosophy of the Asahi Group” and the “Asahi Group’s Corporate Action Guidelines”.
(4) Evaluation of Effectiveness of the Board of Directors
To contribute to the creation of corporate value over the medium- to long-term, the Board of
Directors analyzes and evaluates the effectiveness of the Board of Directors on an annual basis, anddiscloses the summary of the evaluation results.
The English-version summary of the evaluation is posted on the following Company website:
http://www.asahigroup-holdings.com/en/whoweare/governance.html(5) Requirements for Directors and Audit & Supervisory Board Members
The Board of Directors appoints candidates who have a wealth of experience, excellent insightand expertise, which are appropriate for such positions of the Company for the purpose of realizing
effective corporate governance.
Also, in the interests of higher fairness and transparency in determining the personnel affairs ofofficers, the Company has established the Nomination Committee to act as an advisory body to theBoard of Directors, of which half the committee members are Outside Directors, and the Board of
Directors shall consult with the Nomination Committee concerning the candidates for Directors andAudit & Supervisory Board Members and receive reports on the findings and views of theNomination Committee concerning this.

43

(6) Succession Plan and Training
Pursuant to the requirements demanded of its Directors, the Company has identified the matters ofsuccession (cultivation of successors) and pipeline (personal resources of successors) of its Directors
and Corporate Officers as the highest priorities, and has developed a succession plan for the CEO,etc. The Board of Directors properly supervises the succession plan.
For the Directors and Audit & Supervisory Board Members, the Company provides training
required for their roles and responsibilities on a regular basis and sets the requirements for each ofthem according to his/her executive stage, and conducts training that contributes to enhancement intheir overall performance in accordance with such requirements. On the occasions of their
appointments, the Company provides Outside Directors/Audit & Supervisory Board Members withinformation relating to the overview of the Asahi Group including its businesses, financial affairs
and organizations, and implements measures, such as office visits, to facilitate their understanding of
the Group as needed.
(7) Criteria for judgment of independence of Outside Directors/Audit & Supervisory Board
Members
The criteria for judgment of independence of Outside Directors/Audit & Supervisory Board
Members are as described on pages 22 and 23.
(8) System chart
The corporate governance system of the Company is shown in the chart below.

44(9) Roles and compositions of the advisory bodies
The roles and compositions of the advisory committees and deliberative bodies are as described
below:
1) Nomination Committee
The Nomination Committee provides reports on its findings and views about candidates, etc.
for Directors, Audit & Supervisory Board Members and Corporate Officers in response to theinquiries referred from the Board of Directors. The Committee consists of two Outside Directors
and two internal Directors, and an internal Director is co-operatively appointed as its chairperson.
The Committee held five meetings during fiscal 2016, and provided reports on its findings andviews primarily about personnel affairs of officers, representatives of principal subsidiaries andthe succession plan.
2) Compensation Committee
The Compensation Committee provides reports on its findings and views about the
remuneration system and amount of remuneration for Directors and Corporate Officers in
response to the inquiries referred from the Board of Directors. The Committee consists of two
Outside Directors and two internal Directors, and an Outside Director is co-operatively appointed
as its chairperson. The Committee held a total of five meetings during fiscal 2016, and provided
reports on its findings and views primarily about officers’ bonuses, the revision of the officers’
remuneration plan and the introduction of a new Performance-Linked Stock Compensation Plan.
3) Information Disclosure Committee
The Information Disclosure Committee is responsible for centrally managing and controlling
corporate information disclosure, and provides reports on its findings and views in response to theinquiries referred from the President and Representative Director from the perspective of fair,
expeditious and wide-ranging information disclosure. The Committee consists of internal
Directors and Corporate Officers excluding the Chairman and Representative Director and thePresident and Representative Director, and the Director in charge of public relations serves as its
chairperson. The Committee held a total of eighteen meetings during fiscal 2016, analyzed thecontents of relevant information, and provided reports on its findings and views about the need orotherwise, contents, methods, etc. of information disclosure in light of the Timely Disclosure
Rules, etc. of the Tokyo Stock Exchange.
4) Risk Management Committee
The Risk Management Committee provides reports on its findings and views about policies on
overall risk management activities and the measures against main risks in response to the inquiries
referred from the President and Representative Director. The Risk Management Committee
consists of internal Directors and external attorneys at law and the Director in charge of generaland legal affairs serves as its chairperson. In addition, Standing Audit & Supervisory Board
Members attend this Committee’s meetings and state opinions as necessary. The Committee helda total of four meetings during fiscal 2016, and provided reports on its findings and views about
the findings of periodic risk surveys, the status operation of whistle blowing system.
5) Corporate Strategy Board
The Corporate Strategy Board provides reports on its findings and views about evaluation of
the legality, objectivity and reasonableness and of substantial matters concerning businessexecution in response to the inquiries referred from the Chairman and Representative Director or
the President and Representative Director. The Board consists of internal Directors, Corporate
Officers and Standing Audit & Supervisory Board Members, and the President and Representative
Director serves as its chairperson. The Board held a total of fifty-one meetings during fiscal 2016,
and provided reports on its findings and views primarily about development of corporate
strategies and status of business executions by Group companies.

45

(As of December 31, 2016)

Name

Information
Risk
Nomination Compensation
Disclosure Management
Committee Committee
Committee Committee

Corporate
Strategy
Board

Directors
Naoki Izumiya◎

Akiyoshi Koji

〇

〇

〇

〇

◎

Katsutoshi Takahashi

〇

〇

〇

〇

Yoshihide Okuda

〇

◎

◎

〇

Noboru Kagami

〇

〇

〇

Kenji Hamada

〇

〇

〇

Ryoichi Kitagawa

〇

〇

〇

Akira Muto□〇

Tetsuo Tsunoda□〇*Mariko Bando〇〇*Naoki Tanaka〇◎*Tatsuro Kosaka
Audit & Supervisory
Board Members*Tadashi Ishizaki*Katsutoshi Saito*Yumiko Waseda
Note: * denotes Outside Directors/Audit & Supervisory Board Members◎ denotes committee chairpersons〇 denotes committee members□ denotes monitoring by attendance46

3. Systems to Ensure Appropriate Execution of Directors’ Duties in Conformity
With Laws and Regulations and the Articles of Incorporation, and Other
Systems to Ensure Appropriate Business Operations
Overview of the resolution regarding systems to ensure appropriate business operations
The Board of Directors passed the following resolution with respect to the above-mentioned
systems.
The Company has adopted the following corporate philosophy of the Asahi Group: “The Asahi
Group aims to satisfy its customers with the highest levels of quality and integrity, while
contributing to the promotion of healthy living and enrichment of society worldwide”. To makethese aims a reality, the Company shall: establish, in accordance with the Companies Act and the Enforcement Regulations of theCompanies Act, the following basic policies (the “Basic Policies”) to improve systems designed
to ensure the appropriate execution of Directors’ duties in conformity with laws and regulations
and the Articles of Incorporation of the Company and its subsidiaries (herein this section the“Group Companies”) and ensure the appropriate business operations of the Group Companies(herein this section the “Internal Control System”);
 recognize that it is the Representative Director(s) who shall assume the ultimate responsibility
for the improvement of the Internal Control System in accordance with this resolution anddemand the Representative Director(s) to cause the Directors and Corporate Officers, throughthe respective departments and organizations they are in charge of, to develop and fully enforce
individual internal regulations that will be applied to the Company and the entire Asahi Groupand are required based on the Basic Policies; and take steps to maintain and enhance the effectiveness of the Internal Control System by reviewing
the Basic Policies and relevant internal regulations that will be applied to the Company or theentire Asahi Group in a timely and appropriate manner in accordance with changes in conditions
and circumstances.
(1) System to ensure execution of duties by Directors and employees of the Company and theGroup Companies in conformity with laws and regulations and the Articles ofIncorporation of the Company and the Group Companies
1) In accordance with a statement of “Fair and Transparent Corporate Ethics” as stipulated in“Asahi Group’s Corporate Action Guidelines”, the Company shall establish “Asahi Group
Corporate Ethics Regulation” and “Asahi Group Corporate Ethics Guidelines” and procure
its Directors, Audit & Supervisory Board Members and employees abide by these regulations.
2) In accordance with “Asahi Group Risk Management Regulations”, the Company shallestablish the “Risk Management Committee”, which will oversee the compliance and risk
management of the Asahi Group. One of the committee’s members shall be an external
attorney at law.
3) An officer of the Company in charge shall have authority over compliance and risk
management within the Asahi Group. The sections in charge of general and legal affairs shallhandle day-to-day compliance and risk management tasks.
4) The Company shall assign responsible persons in charge of compliance and risk managementin the Company and the Group Companies. The responsible person shall make efforts toprioritize compliance in all aspects of business activities at each Group Company.
5) The Company shall establish a “Clean Line System” for employees of the Asahi Group,
enabling them to blow the whistle on illicit behavior of others.
6) The Company shall establish “Asahi Group Procurement Regulations” addressing mutual
cooperation for fair and equitable deals and social responsibilities between each Group
Company and suppliers and a system that enables suppliers to blow a whistle on breaches of
the Policy as necessary. The Company shall inform and spell out these measures to its
47

7)

8)

suppliers to enable the Company to develop an Internal Control System in cooperation with
its suppliers.
To ensure antisocial forces do not exert any undue influence on the Group, all relevant
information shall be shared within the Asahi Group and the Company shall establish aninternal system on the measures. The Company shall also cooperate closely with industry
bodies, local communities, the police and other external specialist organizations in this field.
The operational details of the aforementioned agencies and systems shall be spelled out undera separately prepared set of internal regulations that will be applied to the Company or theentire Asahi Group.

(2) System to ensure the preservation and management of information related to executionof duties by Directors
1) Information related to execution of duties by Directors shall be properly preserved andmanaged in accordance with “Document-Management Regulations” and other related
internal regulations that will be applied to the Company or the entire Asahi Group.
2) The aforementioned information shall be preserved and managed in a way accessible byDirectors and Audit & Supervisory Board Members for inspection at any time.
3) Control over the clerical tasks related to preservation and management of the aforementioned
information shall be determined in accordance with internal regulations that will be applied
to the Company or the entire Asahi Group.
(3) Regulations and other organizational structures of the Asahi Group to manage risk ofloss1) The Company shall develop and adopt “Asahi Group Risk Management Regulations” andshall affirm them as the highest standards governing risk management within the Asahi
Group. It shall also establish a manual on the Regulations and disseminate the same among
all over the Group.
2) In addition to having the appropriate sections manage risk in their respective areas, the “RiskManagement Committee” shall perform comprehensive risk management across the entire
Asahi Group. The “Risk Management Committee” shall periodically analyze and evaluate
risks in accordance with the “Asahi Group Risk Management Regulations” and, whennecessary, carry out comprehensive reviews of the risk management system. Utmost attention
shall be paid to the risk of failing to maintain product quality. As a food and drink
manufacturing group, the Asahi Group strongly recognizes their social responsibility toconsumers to ensure the safety and security of their products.
3) In the event of any major accident, disaster or scandal, etc., the Company shall establish
a “Crisis-Response Meeting” chaired by a Representative Director.
(4) System to ensure efficient execution of duties by Directors of the Company and theGroup Companies
1) To ensure efficient performance of duties by Directors, the Board of Directors shall divide
duties in a reasonable way to be delegated to respective Directors and shall appoint
appropriate persons as Corporate Officers in charge of respective sections.
2) The Company shall establish “Regulation of Authority” and “Asahi Group’s Regulation of
Authority” stipulating rules of delegation of power and for a mutual checks-and-balances
mechanism among sections and among Group Companies.
3) The Company shall ensure the effective utilization of the “Corporate Strategy Board”,
consisting of the Company’s internal Directors, Corporate Officers, and Standing Audit &Supervisory Board Members by formulating the Asahi Group’s corporate strategy andimplementing progress management, etc.
4) To maximize operational efficiency, the Company shall utilize indices that provide an
objective and rational way of measuring its management and control of operations; and it
shall employ a unified system of follow-up and evaluation.
48

5)

To use funds efficiently, a cash management system among the Company and the Group
Companies is introduced.

(5) System to ensure appropriate operations of the Asahi Group
1) All systems required for the Internal Control, including those for compliance and risk
management, shall apply comprehensively across the entire Asahi Group. As the holding
company, the Company shall manage the said systems of the Group Companies while
respecting their autonomy, and supporting the development and operation of the Internal
Control System, in accordance with the conditions and circumstances with which individualcompanies are facing.
2) The section in charge of internal auditing in the Company shall get a grasp of and evaluate
the Internal Control System and discipline in day-to-day tasks within the Asahi Group by
directly and indirectly auditing the Group Companies. In addition, regarding the Internal
Control related to financial reporting, the organization in charge of evaluation establishedwithin the Asahi Group shall conduct the evaluation on the Internal Control System of theGroup Companies and submit the relevant reports.
3) Decision-making authority related to business activities of the Group Companies shall be
subject to the document entitled “Asahi Group’s Regulation of Authority”.
4) Each of the Group Companies will provide reports at the “Corporate Strategy Board” one ormore times each quarter on performance of its operations including risk-related information.
(6) Securement of employees in the event that Audit & Supervisory Board Members request
staff to assist in their auditing duties
The “Audit & Supervisory Board” shall appoint staff to serve the Audit & Supervisory Board,
for assistance in the activities of the Audit & Supervisory Board Members.
(7) Independence of employees assigned to assist the Audit & Supervisory Board Members
from the Directors and ensuring the effectiveness of instructions given to relevant staff
1) When a member of the staff who serves the Audit & Supervisory Board, as stipulated in theprevious paragraph, receives an order from an Audit & Supervisory Board Member in
relation to auditing duties, he/she shall not be subject to directives or orders from Directors orother employees regarding that order.
2) Any issuance of orders to, personnel transfers of, merit evaluations of, or reprimands of amember of the staff who serves the Audit & Supervisory Board shall require the priorconcurrence of Audit & Supervisory Board Members.
(8) System for Directors’ and employees’ reporting to Audit & Supervisory Board Members
1) Directors and employees shall report regularly to Audit & Supervisory Board Members on
matters related to the Internal Control System, and shall report on an as-needed basis when asignificant event occurs. When necessary, the Audit & Supervisory Board Members shall beentitled to request reports from the Directors and employees (including from Directors andemployees of the Group Companies).
2) Directors shall ensure that Audit & Supervisory Board Members have every opportunity toparticipate in discussions of important bodies, etc. such as the Board of Directors meetings,
the “Corporate Strategy Board” meetings and the “Risk Management Committee” meetings.
Directors shall provide details of the agenda items of such meetings beforehand for Audit &Supervisory Board Members.
3) Audit & Supervisory Board Members shall at all times have the right to review the minutesof important meetings, documents of approval, etc.

49

(9) System for reporting, by the Group Companies’ Directors, Corporate Auditors,
employees or persons receiving reports, to the Company’s Audit & Supervisory Board
Members
1) The Group Companies’ Directors, Corporate Auditors, employees or persons receiving
reports from them shall report regularly to the Company’s Audit & Supervisory Board
Members on matters related to the Internal Control System and, shall report on an as-neededbasis when a significant event occurs. When necessary, the Audit & Supervisory Board
Members shall be entitled to request reports from the Directors and employees of the Group
Companies.
2) The Company’s or the Group Companies’ sections in charge of internal auditing shall report
the results of the Group Companies’ internal audits to the Audit & Supervisory Board
Member of the Company without delay.
3) The whistle blowing contacts under the Clean Line System shall be the Company’s Audit &Supervisory Board Members, section in charge of general and legal affairs, or external
attorneys at law designated by the Company (“external attorneys at law”), and theinformation reported to the Company’s section in charge of general and legal affairs or theexternal attorneys at law shall be reported to the Company’s Audit & Supervisory Board
Members.
4) The Company prohibits any party from treating the whistle blower prescribed in thepreceding item and this item in any manner disadvantageous to him/her on the ground of thewhistle blow.
(10) Policy on procedures for advance or reimburse expenses incurred in association with
Audit & Supervisory Board Members’ execution of their duties, and treatment of otherexpenses or debts incurred in association with the execution of their duties
To defray expenses incurred in association with the Audit & Supervisory Board Members’
execution of their duties, the Company shall secure a certain specific amount of budget and shall, in
response to the request of the Audit & Supervisory Board or the Standing Audit & Supervisory
Board Members concerned, advance or reimburse expenses or otherwise dispose of debts incurredin association with the Audit & Supervisory Board Members’ execution of their duties.
(11) Other systems ensuring effective auditing by Audit & Supervisory Board Members
To ensure the effectiveness of auditing activities, Directors shall ensure opportunities for Audit& Supervisory Board Members to exchange information and opinions regularly with members of
the section in charge of internal auditing of the Company and with the Independent Accounting
Auditor.
Overview of operation of systems to ensure appropriate business operations(1) Overall Internal Control System
1) In order to develop and operate the Internal Control Systems of the Company and the Group
Companies and effectively achieve the objectives of internal control, the section of theCompany in charge of internal auditing cooperates with the internal auditing organs
established within the Asahi Group in conducting audits to determine whether business
operations are executed properly and efficiently in accordance with annual audit plans.
During fiscal 2016, a total of 24 Group Companies were audited.
2) With respect to internal control over financial reporting, the evaluating organ establishedwithin the Asahi Group performs evaluation of the Group Companies’ internal control
activities pursuant to the “Basic Regulations for the Evaluation and Reporting of Internal
Control for Financial Reporting”.
(2) Compliance System
1) The Company tries hard to keep its newly recruited employees informed about the “Asahi
Group Corporate Ethics Regulation” and the “Asahi Group Corporate Ethics Guidelines” by

50

2)

3)

providing training on compliance.
The Company promotes awareness of compliance by putting managers responsible forcompliance and risk management in place in the Company and the Group Companies andconducting education and training by job class. During fiscal 2016, the principal focus wasplaced on the themes of “harassment” and “moderate drinking”.
The Company conducts multifaceted and multilayered surveys of compliance awareness andbehavior by conducting an anonymous “Compliance Questionnaire” annually to theemployees, etc. of the Company and the Group Companies. In fiscal 2016, the questionnaire
results revealed that: “Some room for improvement was seen in certain items, but overall
compliance awareness remained at a high level”.

(3) Risk Management System
1) The Company conducts cross-sectional risk management for the entire Asahi Group throughthe “Risk Management Committee” as the highest-ranking risk management
deliberation/promotion organ. During fiscal 2016, the Committee met for a total of four times
to conduct cross-sectional analyses and evaluations under the themes of “compliance”,“information”, “quality”, “environment/disaster”, “management/organization/labor affairs”,“crime”, “financial affairs/assets”, etc. on the basis of the findings of periodic risk surveys
conducted by sections concerned.
2) By keeping in place the “Clean Line System”, the Company detects and resolves risk
problems early, and effectively prevents risk problems themselves from occurring.
3) The Company has a system in place to deal with any major accident, disaster, scandal, etc. by
setting up a “Crisis-Response Meeting” chaired by the Representative Director.
(4) Business Management of Group Companies
1) With respect to the Group Companies’ business management, the Company has put in place asystem whereby, pursuant to the “Asahi Group’s Regulation of Authority”, the Group
Companies’ business executions are subject to resolutions of the Company’s Board of
Directors or decisions of an individual Director or the responsible persons of the responsible
sections of the Company, depending on the degree of their importance.
2) Once a month, the “Corporate Strategy Board” receives reports from main Group Companies
on the status of their business executions.
(5) Execution of Directors’ Duties
In order to ascertain the efficiency of Directors’ duties, the Board of Directors conducts rational
assignment sharing of services to be performed by Directors and Corporate Officers, and has each
Director and Corporate Officer report on the status of his/her business execution once every threemonths.
(6) Execution of Audit & Supervisory Board Members’ Duties
1) Audit & Supervisory Board Members attend meetings of the Board of Directors, the“Corporate Strategy Board”, the “Risk Management Committee” and other important organs,
thereby confirming the status of development and operation of the Internal Control System.
2) Audit & Supervisory Board Members enhance the effectiveness of auditing by finding
opportunities regularly or as needed for exchanging information and views with the section in
charge of internal auditing, the Independent Accounting Auditors, etc. During fiscal 2016,
Audit & Supervisory Board Members had opportunities to exchange information and views
with the section in charge of internal auditing for a total of three times, with the Independent
Accounting Auditors for a total of eleven times, and with an organ within the Asahi Group in
charge of evaluations on internal control for financial reporting for a total of four times.
3) The Company ensures that Audit & Supervisory Board Members will be able to smoothly
perform their duties by posting three dedicated employees to the Audit & Supervisory Board.

51

4. Basic Policy Concerning the Persons Who Control Decisions on the Company’s
Financial and Business Policy(1) Basic policy
According to the Company’s view, the persons who control decisions on its financial andbusiness policy must properly grasp various matters concerning its business, including theinitiatives to “create appealing products”, to “care about quality and craftsmanship” and to “convey
the sense of joy to customers”, which form the source of the corporate value of the Asahi Group,and other tangible and intangible management resources thereof, potential effects of forwardlooking measures and other items that constitute the corporate value, and must enable the Company
to maintain and increase the Asahi Group’s corporate value as well as the common interests ofshareholders continuously and sustainably.
Upon facing a proposal of large-scale share purchases, the Company is not always in aposition to automatically object to the purchases even if it is a so-called hostile takeover, which ispursued without approval from the Board of Directors, provided that such takeover contributes tothe increase of the corporate value and the common interests of shareholders of the Company. Also,
the Company recognizes that the final decision as to whether to accept a proposal for an acquisitionof shares in the Company that would lead to a transfer of control of the Company should be madebased on the will of the shareholders as a whole.
It shall be noted, however, that there are not a few cases of large-scale share purchases thatwould not contribute to the increase of the corporate value and the common interests ofshareholders of a company, including ones that would, in light of their purposes, etc., cause
obvious damage to the corporate value and the common interests of shareholders or could
effectively coerce shareholders to sell their shares, ones that the purchaser does not provide
information and/or time reasonably necessary for the target company’s board of directors andshareholders to review and examine details of the proposed purchase or for the target company’sboard of directors to make an alternative proposal, and ones where the target company’s board of
directors would have to conduct negotiation with the purchaser so as to seek more favorable terms
than those initially proposed by the purchaser.
The person who intends to conduct a large-scale purchase of shares in the Company must havean understanding of the source of the Asahi Group’s corporate value and have the capability tomaintain and enhance it in the medium- and long-term; otherwise, the Asahi Group’s corporate
value and the common interests of shareholders would be damaged.
The Company thus believes that it is necessary to protect the Asahi Group’s corporate value,
and in turn, the common interests of shareholders, from such large scale share purchases.
(2) Framework that contributes to realization of the basic policy
1) Special Measures Contributing to Realization of the Basic Policy
In 2016, the Company updated its “Long-Term Vision 2020”, which was formulated in2013 to declare “Striving to be a corporate group trusted around the world through the Kando
of food (deliciousness, happiness, and innovation)”, to the “Long-Term Vision” as the future
image of business in the next ten years or so, by adding “Seek ‘sustained corporate valueenhancement’ by pursuing satisfaction for all stakeholders”. At the same time, the Company
set the “Medium-Term Management Policy” for the realization of this Vision and put groupwide efforts in line with them. The details of the “Long-Term Vision” and the “MediumTerm Management Policy” are as described on page 38.
The Company believes that it will be able to assure the flexibility of its corporate
strategy by setting and carrying out such management policy and will be able to increase its
sustained corporate value and ultimately secure common interests of its shareholders bysetting such a policy as “Engagement Agenda” (agenda for constructive dialogs) and making
dialogs with the stakeholders even more firm, and is striving to further strengthen its
corporate governance. Please refer to pages 38 - 40 for an overview.

52

2)

Efforts to prevent decisions on the Company’s financial and business policy from being
controlled by any person who is inappropriate according to the basic policy
The Company will take appropriate measures against any person who attempts to makea large-scale purchase in accordance with the Financial Instruments and Exchange Act, theCompanies Act and other related laws and regulations such as requesting provision ofnecessary and sufficient information for shareholders to properly determine whether toapprove or disapprove the large-scale purchase, disclosing the opinions, etc. of the Board of
Directors of the Company and endeavoring to secure enough time for shareholders tocontemplate the large-scale purchase.

(3) Judgment of the Company’s Board of Directors regarding the specific measures andreasons therefor
The measures described above in 1) of (2) conform to the basic policy of the Company as
described above (1), are fully compatible with the corporate value and the common interests ofshareholders of the Asahi Group including the Company, and are never implemented for the
purpose of maintaining the status of Directors and Audit & Supervisory Board Members of theCompany.

53

5. Overview of the Company(1) Shares Outstanding (As of December 31, 2016)1)

Total number of authorized shares

2)

Total number of issued shares

3)

Total number of shareholders

4)

Major shareholders

972,305,309(common stock)483,585,862(including 25,453,509 treasury shares)
115,017(Increased by 8,305 from the end of the previous term)

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Dai-ichi Life Insurance Company, Limited
Fukoku Mutual Life Insurance Company
Asahi Kasei Corporation
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
JPMorgan Securities Japan Co., Ltd.
STATE STREET BANK WEST CLIENT – TREATY 505234
THE BANK OF NEW YORK MELLON SA/NV 10

Number ofshares held(in hundreds)
318,785
234,654
169,200
155,000
137,853
90,28081,26074,39961,716
61,173

Total

1,384,320

Name of shareholder

Percentage ofshares held (%)
7.0
5.1
3.7
3.4
3.0
2.0
1.8
1.6
1.3
1.3
30.2

Notes:
1.
The Company holds treasury shares numbering 254,535 hundred shares. However, the Company is excluded
from the above list of major shareholders.
2.
Shareholding percentages are calculated based on the total number of issued shares less the number of treasury
shares.

54

(2) Directors and Audit & Supervisory Board Members of the Company
1)

Directors and Audit & Supervisory Board Members
Name

Naoki Izumiya

Akiyoshi Koji

Katsutoshi Takahashi

Yoshihide Okuda

Position
Chairman and
Representative Director
CEO
President andRepresentative Director
COO
Managing Director
Managing Corporate
OfficerManaging Director
Managing Corporate
Officer(CFO)

Noboru Kagami

Director
Corporate Officer

Kenji Hamada

Director
Corporate Officer(As of December 31, 2016)

Areas of responsibility
and significant concurrent positions
Overall Group Management

Overall Group Management
Group Alcoholic Beverages Business
Human Resources Section, Procurement Section,
Production Section, Logistics Section
Group Soft Drinks BusinessDirector of Asahi Soft Drinks Co., Ltd.
Director of LB Co., Ltd.
Audit Section, General & Legal Affairs
Management Section, Secretary Section, Public
Relations Section, Investor Relations Section,
Finance Section, Information Technology Section
President and Representative Director of
Asahi Professional Management Co., Ltd.
Corporate Social Responsibility Section, Research& Development Section, Intellectual Property
Section, Quality Assurance Section, Research
Department for Consumer & Future BusinessCorporate Strategy Section, International Business
SectionGroup Food Business, Group International
Operations

Ryoichi Kitagawa

Director
Corporate Officer

Mariko Bando

Outside Director

Naoki Tanaka

Outside Director

Tatsuro Kosaka

Outside Director

Akira Muto

Standing Audit &Supervisory Board
MemberDirector of Asahi Group Foods, Ltd.
Director of Asahi Holdings (Australia) Pty Ltd
Business Development Section
Group International Operations (Marge &Acquisition on Alcoholic Beverage, China)
Director of Asahi Europe Ltd
Chancellor of Educational Corporation Showa
Women’s University
Chairperson of the Board of Showa Women’s
University
Director of The Institute of Women’s Culture,
Showa Women’s University
President of Center for International Public Policy
Studies
Representative Director, President of Chugai
Pharmaceutical Co., Ltd.
Corporate Auditor of Asahi Soft Drinks Co., Ltd.
Corporate Auditor of Asahi Group Foods, Ltd.
Corporate Auditor of Asahi Professional
Management Co., Ltd.

55

Tetsuo Tsunoda

Tadashi Ishizaki

Katsutoshi Saito

Yumiko Waseda

Standing Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberCorporate Auditor of Asahi Breweries, Ltd.
Corporate Auditor of LB Co., Ltd.

Outside Audit &Supervisory Board
MemberPartner and Attorney at Law of Tokyo Roppongi
Law & Patent Offices
Outside Audit & Supervisory Board Member of
Kao Corporation

Professor of Faculty of Management and Culture,
Shoin University
Professor Emeritus, Chuo University
Representative Director, Chairman of the Board of
Dai-ichi Life Holdings, Inc.
Chairman and Representative Director of
The Dai-ichi Life Insurance Company, Limited
Outside Director of Imperial Hotel, Ltd.
Outside Corporate Auditor of Tokyu Corporation

Notes:
1. Directors Mariko Bando, Naoki Tanaka and Tatsuro Kosaka are Outside Directors as defined in Item 15, Article
2 of the Companies Act.
2. Audit & Supervisory Board Members Tadashi Ishizaki, Katsutoshi Saito and Yumiko Waseda are Outside Audit& Supervisory Board Members as defined in Item 16, Article 2 of the Companies Act.
3. The Company designated Outside Directors Mariko Bando, Naoki Tanaka and Tatsuro Kosaka and Outside
Audit & Supervisory Board Members Tadashi Ishizaki, Katsutoshi Saito and Yumiko Waseda as Independent
Directors/Auditors as defined by the Tokyo Stock Exchange and reported to the said exchange.
4. Although the Asahi Group has business transactions with the respective groups of Dai-ichi Life Holdings, Inc.,
Imperial Hotel, Ltd., Tokyu Corporation and Kao Corporation, as the transaction value for each is minimal, lessthan 1% of consolidated revenue for the Company and the respective companies, there is no special business
relationship that could have impact on the Company’s management.
5. Audit & Supervisory Board Member Akira Muto was formerly General Manager of Finance Department of theGroup and has considerable expertise in finance and accounting.
6. Audit & Supervisory Board Member Tadashi Ishizaki has carried out research on accounting for many years as auniversity professor; he has considerable expertise in finance and accounting.
7. Directors Katsuyuki Kawatsura, Shiro Ikeda and Ichiro Ito and Audit & Supervisory Board Member Yoshihiro
Tonozuka retired upon the expiry of their terms of office at the conclusion of the 92nd Annual General Meetingof Shareholders held on March 24, 2016. Also, Noboru Kagami, Kenji Hamada, Ryoichi Kitagawa and Tatsuro
Kosaka were newly elected as Directors, Tetsuo Tsunoda was newly elected as an Audit & Supervisory Board
Member, and they all assumed their offices at the same meeting. On the same day, Tetsuo Tsunoda was
appointed as Standing Audit & Supervisory Board Member by a resolution at the Audit & Supervisory Board
meeting and assumed his office.
8. In addition to the above, the retirement from significant concurrent positions by Directors or Audit &Supervisory Board Members during this year are detailed below.

Name
Akiyoshi Koji

Kenji Hamada

Mariko Bando

Position
President andRepresentative
Director
COO
Director
Corporate Officer
Outside Director

Significant concurrent positions
upon retirement
President and Representative
Director of Asahi Breweries, Ltd.

Date of retirement
March 18, 2016

Director of LB Co., Ltd.

May 13, 2016

President of Showa Women’s
University
Outside Director of BroadBand
Tower, Inc.

March 31, 201656

September 16,
2016

2)

Policies concerning the setting of remunerations paid to Directors and Audit &Supervisory Board Members
It is the basic policy for Directors’ and Audit & Supervisory Board Members’ remunerationsof the Company to ensure that its remunerations are conducive to acquiring superior humanresources, suitable for the magnitude of their roles and the scope of their responsibilities for each
executive position, motivational for the Company’s corporate value enhancement and sustainablegrowth; and that transparency and objectivity will be assured with respect to the remunerationsetting procedures.
Based on the foregoing policy, Directors’ remunerations are set in line with a resolution at a
meeting of the Board of Directors, and Audit & Supervisory Board Members’ remunerations are
set by discussion by the Audit & Supervisory Board Members within the total amount of
remunerations resolved in advance at a General Meeting of Shareholders. When remunerationrelated resolutions are being made by the Board of Directors, the Compensation Committee, having
Outside Directors making up half of its membership and Outside Director being appointed as its
chairperson, acts as an advisory body to the Board of Directors, evaluating the content of said
resolutions in the interests of greater transparency and objectivity.
A Directors’ remunerations
Remunerations for a Director consist of basic remuneration (monthly and fixed), bonuses(annual and short-term performance-linked) and performance-linked stock compensation (longterm performance-linked), forming a scheme giving consideration to motivation for sustained
enhancement of corporate performance and value. The level of each item is set according tohis/her job responsibilities and status distinction between internal and outside and by drawing
on outside expert organs’ survey data.
Basic remuneration is determined on the basis of one’s position and magnitude of the role,and bonuses are determined using consolidated profit as a benchmark in proportion to the levelof achievement of targets, which are set at the beginning of each fiscal year. For performancelinked stock compensation, points are granted according to the level of achievement of targets
in terms of “earnings per share for the fiscal year (EPS)”, one of the performance benchmarks
set in the “Medium-Term Management Policy”, and the Company shares in the number
equivalent to the cumulative number of these points will be delivered at the time of theirretirement for the purpose of offering appropriate incentives.
The bonuses and performance-linked stock compensation shall only be paid to internal
Directors.
B Audit & Supervisory Board Members’ remunerations
Remunerations for an Audit & Supervisory Board Member consist only of basic
remuneration (monthly and fixed), and the level of such basic remunerations is set subject to amutual consultation of Audit & Supervisory Board Members according to his/her job
responsibilities and status distinction between internal and outside and by drawing on outside
expert organs’ survey data.
3)

Remunerations paid to Directors and Audit & Supervisory Board Members
Basic remuneration

Bonus

Number of
Number ofCategory
Total amount
Total amountpersons
persons
paid (yen)paid (yen)remunerated
remunerated
Directors
13
334,110,000
10
131,100,000[of which, Outside Directors][4][44,400,000][1][1,200,000]
Audit & Supervisory Board
6
99,390,000––
Member[3][33,750,000][–][–][of which, Outside Audit &Supervisory Board
Members]

Total amount(yen)
465,210,000[45,600,000]
99,390,000[33,750,000]

Notes:
1. The figures above include Directors Katsuyuki Kawatsura, Shiro Ikeda and Ichiro Ito and Audit & Supervisory

57

2.
3.

4.

5.

6.

Board Member Yoshihiro Tonozuka, who retired upon the expiry of their terms of office at the conclusion of the
92nd Annual General Meeting of Shareholders held on March 24, 2016.
The remunerations above include remunerations for Directors who retired before the revision of the directors’
remuneration plan on April 2016.
A resolution authorizing payments associated with the termination of the retirement bonus system to be paid at
the time of retirement was passed at the 83rd Annual General Meeting of Shareholders held on March 27, 2007.
As of the end of this fiscal year, the anticipated total amount of future payments was as follows:¥19,000,000 to one Director¥3,400,000 to one Outside Audit & Supervisory Board Member
The Company will pay ¥3,400,000 to one Outside Audit & Supervisory Board Member, who is subject to thepayments associated with the termination of the retirement bonus system and will retire at the conclusion of the
93rd Annual General Meeting of Shareholders on March 28, 2017.
The total amount of Directors’ remunerations is ¥760 million (including ¥50 million for Outside Directors) per
year according to the resolution passed at the 83rd Annual General Meeting of Shareholders held on March 27,
2007.
The total amount of Audit & Supervisory Board Members’ remunerations is ¥120 million (including ¥40 million
for Outside Audit & Supervisory Board Members) per year according to the resolution passed at the 83rd Annual
General Meeting of Shareholders held on March 27, 2007.
Other than those listed above, in accordance with the resolution passed at the 92nd Annual General Meeting of
Shareholders held on March 24, 2016, the Company will pay performance-linked stock compensation to seven
Directors (excluding Outside Directors) who were elected at the same Annual General Meeting of Shareholders
and took office and for whom the Company contributed up to ¥220,000,000 during the period of the Trust (3years). The Company may grant up to a total of 21,000 shares of the Company per fiscal year to all eligible
Directors.

584) Outside Directors and Outside Audit & Supervisory Board Members
A Major activities of Outside Directors and Outside Audit & Supervisory Board Members

Category

Name

Number of
Board ofDirectors
meetings
attended

OutsideDirectors

Mariko Bando

13/13

Naoki Tanaka

12/13

Tatsuro Kosaka

10/11

TadashiIshizaki

13/13

Katsutoshi
Saito

13/13

YumikoWaseda13/13

OutsideAudit &
Supervisory
Board
Members

Number of
Audit &
Supervisory
Form of participation
Board
meetings
attended–
Mariko Bando participated in discussions asnecessary, primarily from the perspective ofher wealth of experience as an educator anddiversity promotion.
–
Naoki Tanaka participated in discussions asnecessary, primarily from the perspective of
his wealth of experience as an expert ineconomic policy.
–
Tatsuro Kosaka participated in discussions
as necessary, primarily from the perspectiveof his wealth of experience as a manager.
7/7
Tadashi Ishizaki participated in discussions
as necessary, primarily from his expert
perspective as a scholar of accounting.
7/7
Katsutoshi Saito participated in discussions
as necessary, primarily from the perspectiveof his wealth of experience as a manager.
7/7
Yumiko Waseda participated in discussions
as necessary, primarily from her expert
perspective as an attorney at law.

Notes:
1. In addition to the above Board of Directors meetings held during this fiscal year, one deemed resolution inwriting under Article 370 of the Companies Act was adopted.
2. As Director Tatsuro Kosaka was newly elected at the 92nd Annual General Meeting of Shareholders held on
March 24, 2016, the above number of Board of Directors meetings held that he could attend is different fromother Directors.

B

Summary of agreements limiting liability
The Company has entered into an agreement with each of its Outside Directors and Outside
Audit & Supervisory Board Members limiting his/her liability for damages as prescribed in
Paragraph 1, Article 423 of the Companies Act, to either ¥20,000,000 or the minimum amountstipulated by applicable laws and regulations, whichever is higher.

59

(3) Independent Accounting Auditor
1)

Name of the Independent Accounting Auditor
KPMG AZSA LLC

2)Remunerations paid to the Independent Accounting Auditor for this fiscal year

Category
Remunerations paid for this fiscal year
Total of cash and other financial profits payable by the Company and its
subsidiaries to the Independent Accounting Auditor

Amount payable¥229 million¥711 million

Notes:
1. In its agreement with the Independent Accounting Auditor, the Company makes no distinction between the
remunerations that it pays for auditing services governed by the Companies Act and for auditing services
governed by the Financial Instruments and Exchange Act. Consequently, the amount ¥229 million shown above
is a sum of these two amounts.
2. Having performed the necessary verifications on the contents of the Independent Accounting Auditor’s audit
plan, evaluation and analysis of the audits actually conducted during the previous fiscal year, status of executionof accounting audit duties, and reasonableness of the basis for calculation of remuneration, the Audit &Supervisory Board has consented to the amount of remunerations for the Independent Accounting Auditor.

3)

Nature of non-audit professional services provided by the Independent Accounting
Auditor
The Company also assigns professional duties to the Independent Accounting Auditor that are
not statutory auditing duties as stipulated in Paragraph 1, Article 2 of the Certified Public
Accountants Law. These non-audit services include financial/tax due diligence services.
4)

Company Policy regarding dismissal of or decision not to reappoint the Independent
Accounting Auditor
If the Independent Accounting Auditor is found to correspond to any of the items prescribed in
Paragraph 1, Article 340 of the Companies Act, the Audit & Supervisory Board shall be entitled todismiss the Independent Accounting Auditor subject to the consent of all Audit & Supervisory
Board Members, in which case the Audit & Supervisory Board Member appointed by the Audit &Supervisory Board reports on the fact that said Independent Accounting Auditor has been
dismissed and the reason for dismissal, at the first General Meeting of Shareholders held after suchdismissal. When it is reasonably recognized that the Independent Accounting Auditor is no longer
able to execute its duties in an appropriate manner, the Audit & Supervisory Board shall determine
the contents of a proposal for dismissing or not re-appointing said Independent Accounting Auditor
to be submitted to the General Meeting of Shareholders. On the basis of this determination by the
Audit & Supervisory Board, the Board of Directors shall offer to the General Meeting of
Shareholders a resolution to dismiss or not to reappoint the Independent Accounting Auditor.

Note: The stated amounts in the Business Report are the figures after truncating fractions less than the
representative unit, and the stated percentages are the figures after rounding off fractions to therepresentative unit.

60

CONSOLIDATED FINANCIAL STATEMENTS (IFRS)CONSOLIDATED STATEMENT OF FINANCIAL POSITION
million yen

ASSETS
Current assets:
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivables
Other financial assets
Other current assets
Subtotal
Assets held for sale
Total current assets
Non-current assets:
Property, plant and equipment
Goodwill and intangible assets
Investments accounted for using equity method
Other financial assets
Deferred tax assets
Net defined benefit asset
Other non-current assets
Total non-current assets
Total assets

61

As of
December 31, 2016

As ofDecember 31, 2015
(Reference)

48,459397,340
136,460
14,161
3,428
31,934
631,784
3,241

43,290372,043
129,494
4,525
6,360
21,832577,547–

635,026

577,547

570,771
491,538
141,398
198,586
18,825
18,942
11,293
1,451,355
2,086,381

518,576
223,485
190,563
236,110
21,93225,354
11,103
1,227,126
1,804,673

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
million yen

LIABILITIES and EQUITYCurrent liabilities:
Trade and other payables
Bonds and borrowings
Income tax payables
Other financial liabilities
Other current liabilities
Subtotal
Liabilities directly related to assets held for sale
Total current liabilities
Non-current liabilities:
Bonds and borrowings
Net defined benefit liability
Deferred tax liabilities
Other financial liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Issued capital
Share premium
Retained earnings
Treasury shares
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity

62

As of
December 31, 2016

As ofDecember 31, 2015
(Reference)

332,639
281,870
34,957
26,352
142,828
818,649907
819,556

273,092
249,20923,47627,038
143,770
716,588–716,588288,490
25,78949,302
54,127
3,009
420,719
1,240,276

165,231
23,391
37,24555,746
2,787
284,4021,000,991

182,531
118,668
589,935(76,709)21,927
836,3549,750
846,105

182,531
120,524
549,084(77,377)
14,657789,420
14,261
803,682

2,086,381

1,804,673

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
million yen

For the year ended
December 31, 2016
Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Other operating income
Other operating expense
Operating profit
Finance income
Finance costs
Share of profit (loss) of entities accounted for using
equity method
Sales of investments accounted for using equity
methodGains on remeasurments resulting in businesscombinations
Profit before tax
Income tax expense
ProfitProfit, attributable to:
Owners of parent
Non-controlling interests
Total

63

1,706,901
1,098,173
608,728460,241
8,004
19,600136,889
3,106
4,066

For the year ended
December 31, 2015
(Reference)
1,689,527
1,102,839
586,688445,996
3,514
47,58096,626
3,011
5,095

1,974

17,627

12,163

–

–

5,394

150,068
62,952
87,115

117,563
42,96274,60089,221(2,105)
87,11575,770(1,170)74,600CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2016

million yen
Total equity attributable to owners of parent

Issued capital
Balance at beginningof current period

Share premium

Retained earnings

Treasury shares

182,531

120,524

549,084(77,377)––

89,221––

89,221

Comprehensive
incomeProfitOther
comprehensive
incomeTotal comprehensive
income–Transfer to nonfinancial assets
Transactions withownersDividends(23,817)

Purchase of treasury
shares(21)

Disposal of treasury
shares(302)

689

Changes throughbusiness
combinations
Share-based
payment transaction

44

Transfer from othercomponents ofequity to retained
earnings(24,553)

Other increase(decrease)
Total contributions
by owners anddistribution toowners–(258)

Acquisition of noncontrolling interests
without change incontrol(48,370)668(1,597)

Total changes in theownership interest in
subsidiaries–(1,597)––

Total transactions
with owners–(1,855)(48,370)668

Balance at end ofcurrent period

182,531

118,668

589,935(76,709)64

Total equity attributable to owners of parent
Other components of equity to retained earnings
Changes offair value ofinvestment
in financial Remeasureassets
ments ofmeasured at defined
fair value
benefitthroughplans
othercomprehensive income
Balance at beginningof current period

36,596–

Cash flow
hedges

(138)

Total
Exchange
NonTotal other
equitydifferencescomponents attributable controllingonof equity to to owners interests
translation
retainedof parentof foreignearnings
operations(21,800)

Total
equity14,657789,420

14,261

803,682–

89,221(2,105)

87,115Comprehensive
incomeProfitOther
comprehensive
income(2,967)(6,301)(7,652)(7,933)(24,854)(24,854)(633)(25,488)(2,967)(6,301)(7,652)(7,933)(24,854)

64,366(2,738)61,627

7,571

7,571

Dividends–(23,817)

Purchase of treasury
shares

–

(21)

(21)

Disposal of treasury
shares

–

386

386

Changes throughbusiness
combinations––

Share-based
payment transaction

–

44

44

24,553

–

–

–

–

312

312

24,553(23,406)(21)(23,428)–(1,597)(1,750)(3,347)

Total comprehensive
incomeTransfer to nonfinancial assets

7,571

7,571

Transactions withownersTransfer from othercomponents ofequity to retained
earnings

18,252

6,301

Other increase(decrease)
Total contributions
by owners anddistribution toowners

18,252

6,301

–

–

Acquisition of noncontrolling interests
without change incontrol
Total changes in theownership interest in
subsidiaries

(489)

155

(24,306)

155

–

–

–

–

–

(1,597)(1,750)(3,347)

Total transactions
with owners

18,252

6,301

–

–

24,553(25,004)(1,771)(26,776)

Balance at end ofcurrent period

51,881–(219)(29,734)

21,927

836,3549,750

846,10565

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.

Notes to the Basis for Preparation of Consolidated Financial Statements(1) Basis of consolidated financial statements
The Group has prepared its consolidated financial statements in accordance with theInternational Financial Reporting Standards (hereinafter referred to as the “IFRS”) from thisfiscal year, pursuant to the provisions of Article 120-1 of the Ordinance of Companies
Accounting. The latter part of the Article 120-1 prescribes some omissions of disclosure
items required under IFRS. The date of transition to IFRS (hereinafter referred to as the“Transition Date”) is January 1, 2015.
(2) Consolidation
Number of consolidated subsidiaries: 137
Please see Item 1 of the “Business Report” (“Overview of Operations of the Asahi Group,
section (6) Principal Subsidiaries”), for a summary of the current status of principal
consolidated subsidiaries.

Companies added to the scope of consolidation during this fiscal year were Asahi Europe
Ltd due to its incorporation; and Birra Peroni S.r.l, Royal Grolsch N.V., Meantime
Brewing Company Ltd. and Asahi UK Ltd (formerly, Miller Brands (UK) Ltd.) due tothe acquisition of their shares.
(3) The equity method
Number of companies accounted for using the equity method: 138
Principal affiliates accounted for using the equity method are Asahi Business Solutions
Corp., Shenzhen Tsingtao Beer Asahi Co., Ltd., Asahi & Mercuries Co., Ltd., Tsingtao
Brewery Co., Ltd., Tingyi-Asahi Beverages Holding Co., Ltd. and 114 other affiliatedcompanies, PT Indofood Asahi Sukses Beverage, and Asahi Beer Communications, Ltd.
(4) Significant accounting policies
1) Financial assets
The Group has early adopted IFRS 9 “Financial Instruments” (amended in July 2014).

(i)

Initial recognition and measurement
The Group recognizes financial assets when it becomes a party to the contract on thefinancial instruments concerned. Financial assets purchased or sold in a regular way arerecognized on the transaction date. Financial assets are classified as financial assets
subsequently measured at amortized cost or financial assets subsequently measured at fairvalue.
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 requirement that the objective of the Group’s business model is to holdassets in order to collect the contractual cash flows and the requirement that thecontractual terms of the financial assets give rise on specific dates to cash flows thatare solely payments of principal and interest on the principal amount outstanding areboth met.

66

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 irrevocably
designates each financial instrument as measured at fair value through profit 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 through profit or
loss.
Information on derivatives is provided in 11) Derivatives and hedge accounting.
(ii) Subsequent measurement
Subsequent to the initial recognition, financial assets are measured as follows, dependingon the respective classifications.
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 end of the fiscal period.
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
The Group derecognizes a financial asset when the contractual rights to receive cash
flows from the investment expire or when the Group transfers the investment andsubstantially all the risks and rewards of the ownership.
(iv) Impairment of financial assets
The Group estimates expected credit losses at the end of each fiscal period 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 increased significantly after
initial recognition, lifetime expected credit losses are recognized as loss allowance.
However, for trade receivables not containing a significant financing component, loss
allowance is always measured based on lifetime expected credit losses.
If there is any objective evidence of impairment for financial assets of which the credit
risk has increased significantly, interest income is measured at the amount calculated bymultiplying the carrying amount less the loss allowance by the effective interest rate.
In determining whether any objective evidence of impairment exists, the Group uses thefollowing requirements:● Significant financial difficulty of the issuer or borrower;● Breach of contract, such as a default or delinquency in interest or principal
payments;● Concessions granted to the borrower for economic or legal reasons relating to theborrower’s financial difficulty, that the Group would not otherwise consider;● Increased probability that the borrower will enter bankruptcy or other financial

67

reorganization;● Disappearance of an active market for that financial asset because of financial
difficulties.
When the Group has no reasonable expectation that all or a portion of a financial asset
will be recovered, it reduces the amount directly from the carrying amount of thefinancial asset.
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 or net realizable value. The cost is calculated
principally 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 landprincipally consist of production and processing equipment and facilities for the head office.
Property, plant and equipment are recognized at the acquisition cost, and carried at cost lessaccumulated depreciation and accumulated impairment losses. An acquisition cost includes
the purchase price, the costs directly related to acquisition of the asset, costs for asset
dismantlement and removal and site restoration, and borrowing costs that are required to becapitalized. Concerning expenditure after acquisition, in cases when it is highly probablythat future economic benefit relating to the item will flow to the Group, and the item has acost that can be measured reliably, such costs are recognized either together in the carrying
amount of the asset, or when deemed appropriate, as a separate asset. The carrying amountsof parts that are replaced are derecognized. Other repair and maintenance costs arerecognized 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 acquisition cost of each asset less the residual value using the straight-line
method over the following major estimated useful lives:

3 to 50 years
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 the fiscal period, 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.
Buildings and structures
Machinery and vehicles

4)

(i)

Goodwill and intangible assets

Goodwill
Goodwill is tested for impairment in each fiscal period, and the carrying amount is theacquisition cost less accumulated impairment losses. Impairment losses of goodwill are
not reversed. Gain or loss on sales of business operations includes carrying amount of
goodwill related to the business operation.
68

Goodwill is allocated to cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination.
(ii) Trademark right
Individually acquired trademark rights are recognized at the acquisition cost. Trademark
rights acquired through business combinations are recognized at fair value as of theacquisition date. Trademark rights, for which a certain useful life is determined, except
for those with indefinite useful lives, are carried at the acquisition cost less accumulated
amortization and accumulated impairment losses. The amount of amortization is
calculated by allocating the acquisition cost of trademark rights using the straight-line
method principally over the estimated useful life of 20 to 40 years.
(iii) Software
Software is carried at its cost less accumulated amortization and accumulated impairment
losses.
Development expenses 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 expenses that do not satisfy these requirements are recognized as
expenses as incurred. Development expenses previously recognized as expenses are notrecognized as assets in subsequent fiscal periods.
Software is amortized primarily using the straight-line method over the estimated usefullife of 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 thecost less accumulated amortization and accumulated impairment losses. However, someintangible assets (such as leasehold interests in land) are determined to have indefinite
useful lives and are not amortized, because they exist fundamentally as long as thebusiness continues. The amount of amortization is calculated by allocating the acquisition
cost of each other intangible asset using the straight-line method over the estimated usefullife.
Residual values, useful lives and amortization methods of intangible assets are reviewed
at the end of the fiscal period, and revised where necessary.
5) Leased assets
The Group leases certain property, plant and equipment and intangible assets as a lessee.
Leases of property, plant and equipment and intangible assets are classified as finance leases,
when substantially all the risks and rewards of ownership are attributable to the Group. 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
component, 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 eachfiscal period. Property, plant and equipment and intangible assets acquired through financelease are depreciated or amortized using the straight-line method over the useful life of theasset or, if shorter, the lease term.

69

Leases other than finance leases are classified as operating leases.
Lease payments in operating leases (less incentives received from the lessor) are recognizedin profit or loss using the straight-line method 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 in each fiscal period. Other non-financial assets are examined
for impairment if there is an indication that the carrying amount may not be recovered due
to 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 period for the possibility that the impairment losses may be reversed.
7) Recognition criteria for major 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.
If there are many similar obligations, the possibility that an outflow of resources will be
required in settlement is determined taking into account the similar obligations as a whole.
Provisions are recognized even if the possibility of the outflow is low for one item in thesimilar 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 the current market
assessments of the time value of money and the risks specific to the obligation. An increasein provisions due to passage of time is recognized as interest expense.
8)(i)Employee benefits

Post-employment benefits
The Group companies have various plans. The Group has adopted a defined benefit plan,and certain consolidated subsidiaries have established a retirement benefit trust. In
addition to these plans, certain consolidated subsidiaries have introduced a defined
contribution plan and a retirement benefit prepayment plan.
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 will have 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 period that correspond to the discount period, which is set on thebasis of a period up to the estimated date of benefit payment for each future year.
Contributions to the plans are determined based on regular actuarial calculation and70usually paid to insurance companies or funds managed by trust companies.
When it is discovered as a result of the calculation that the Group has a surplus in thedefined benefit plan, net defined benefit asset is measured to the extent of the present
value of economic benefits available in the form of future refunds from the plan or areduction in future contributions to the plan. In calculating the present value of economic
benefits, the Group takes into account minimum funding requirements applicable to its
plan. Economic benefits shall be available to the Group, if the economic benefits can berealized 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) arisingfrom the defined benefit plan in other comprehensive income and immediately transfers
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 relevant service is rendered. Bonuses are recognized as a liability at
the amount 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) Revenues
Revenues consist of fair value of consideration received for sale of goods, rendering ofservices and others in the Group’s ordinary business activities. Revenues are presented on a
net basis after the deduction of sales returns, rebates and discounts.

(i)

Sale of goods● Alcoholic beverages business –Manufacture and sale of beer, happoshu (lowmalt beer), shochu (distilled spirits), whisky andother liquor products, restaurant business,wholesale business, and others● Soft drinks business– Manufacture and sale of soft drinks and others● Foods business– Manufacture and sale of foods and medicines● International Operations– Manufacture and sale of beer and other liquor
products and soft drinks, and others
The Group recognizes revenues when the significant risks and rewards of ownership of
the goods have been transferred to the customer, the collectability of consideration is high,related costs and the possibility of sales returns can be measured reasonably, the Group
does not retain continuing managerial involvement in association with the goods, and theamount of revenues can be measured reliably. Revenues are usually recognized when theGroup delivered the goods to the customer and any incomplete obligation no longer exists.
(ii) Rendering of services
The Group provides real estate business such as building management, logistics businesssuch as warehousing, and other services.
Revenues from the rendering of services are recognized when the service is provided.
(iii) Gross and net presentation of revenues
The Group thinks that it is acting as a principal in a transaction when it has exposure to
the significant risks and rewards associated with the sale of goods or the provision of71

services, and presents the gross amount of the transaction as revenues.
The Group considers that it is acting as an agent in a transaction when it does not have
exposure to the significant risks and rewards associated with the sale of goods or theprovision of services, and presents only the net amount of the transaction after the
deduction of payments made to a third party from the total amount of consideration
earned from the transaction as revenues.
(iv) Interest income
Interest income is recognized using the effective interest method.
(v) Dividend income
Dividend income is recognized when the right to receive dividends is established.
10) Foreign currency translation(i)Functional currency and presentation currency
Items included in financial statements of each company of the Group are recorded in thefunctional 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 period
are recognized in profit or loss. However, exchange differences arising from financial
assets measured through other comprehensive income and qualifying cash flow hedges
are recognized in other comprehensive income.
(iii) Foreign operations
Operating results and financial position of all the Group companies using a functional
currency that is not the presentation currency are translated into the presentation currency
in the ways described below. Among the Group companies, there is no company that uses
a currency of a hyperinflationary economy.
a. Assets and liabilities are translated using the closing rate as of the end of the fiscal
period.
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 of foreign operations, which is acomponent 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.

72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 period. 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).
The Group documents the relationship between the hedging instrument and the hedged item
and the risk management objective and strategy for exercising the hedge transaction at the
inception of the transaction. The Group also documents assessment on whether thederivative used for the hedge transaction is effective in offsetting changes in cash flows of
the hedged item, at the inception of the hedge and on an ongoing basis.
The Group determines that a hedge is effective when the requirement that there is an
economic relationship between the hedged item and the hedging instrument, the requirementthat the effect of credit risk does not significantly dominate the value changes that result
from the economic relationship, and the 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 hedged
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 acquisition cost of the asset. The deferred amount is eventually
recognized as cost of sales for inventories, or as depreciation expense for property, plant andequipment.
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 so on.
When the hedged future cash flows are still expected to occur, accumulated gains or losses
recognized in other comprehensive income remain as accumulated other comprehensive
income. When a forecast transaction is no longer expected to occur and in other cases,
accumulated gains or losses recognized in other comprehensive income are immediatelytransferred to profit or loss.
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 statements of profit or loss.
2.

Notes to Consolidated Statement of Financial Position(1) Pledged assets and secured liabilities
The following assets have been provided as collateral for short-term loans payable of ¥537
million.

Property, plant and equipment¥1,750 million73

(2) Accumulated depreciation on property, plant and equipment(3) Bad debt provisions directly deducted from assets
Trade and other receivables¥815,091 million

Other financial assets¥3,639 million¥3,684 million(4) Contingent liabilities
Guarantees¥2,713 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 92nd Annual General Meeting of Shareholders of March 24, 2016
as follows:

Dividends on common stock
Total amount of dividends:¥11,905 million

Dividend per share:¥26.00Record date:

December 31, 2015

Effective date:2)

March 25, 2016

It was resolved at the Board of Directors Meeting of August 3, 2016, as follows:

Interim dividends on common stock
Total amount of interim dividends:¥11,911 million

Interim dividend per share:¥26.00Record date:June 30, 2016

Effective date:

September 1, 2016

3) Dividends after the end of this fiscal year
The following item has been placed on the agenda for approval at the 93rd Annual General
Meeting of Shareholders scheduled for March 28, 2017.

Dividends on common stock
Source of dividends:

Retained earnings

Total amount of dividends:¥12,827 million

Dividend per share:¥28.00Record date:

December 31, 2016

Effective date:

March 29, 2017

74

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 (the portion 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, interest rate risk and price risk), credit risks and liquidity risks. The
Group’s risk management policy aims to specialize in the unpredictability of financial
markets and minimize 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 changing business environment. In doing so, the Company and its principal
consolidated subsidiaries consider the balance between direct and indirect financing or thebalance between short- and long-term debt based on fund procurement costs and risk
diversification in response to changes in the business environment. Looking to use funds
efficiently, the Group introduced a cash management system among the Company and its
principal consolidated subsidiaries in Japan 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, interest rate risk and price risk of raw materials and others, and to reduce
funding 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. Agreements on individual derivativetransactions are entered into after approval is received in accordance with the internal
authorization criteria. The Finance Section understands the status of derivative transactions
including the content and balances, and reports it to the General Manager of the Finance
Section and Directors in 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 primarily related to US dollar and euro. Foreign exchange risk arises

75

from forecast transactions such as future purchase, sale, financing and repayment orassets and liabilities that have already been recognized.
The Group uses foreign exchange contracts to mitigate foreign exchange risk. Hedge
accounting is applied to the transactions that qualify for hedge accounting.
Although receivables and payables denominated in a foreign currency and foreignexchange contracts have a risk, the impact is limited since the risk is offset with theexchange contracts.
b. Price risk
The Group is exposed to price risk of equity instruments because it holds
investments classified as the category measured at fair value in the consolidated
statement of financial position. To manage price risk arising from investments inequity instruments, the Group regularly keeps track of fair value, financial conditionsof issuers 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 customers’ credit risks for trade receivables (notes and accounts
receivable-trade), other receivables (accounts receivable - other) and other financial assets(operating loans and others).
In accordance with the accounting rules, the Group regularly monitors trade receivables
and long-term loans to major business partners, and routinely checks the management
status of deadlines and balances for each business partner. The Group monitors bad debts
and their collection status.
When executing derivative transactions, the Group follows the internal rule to trade withfinancial institutions only with high credit ratings to minimize credit risk.
The Group classifies receivables and others 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. However, in casessuch as overdue because the credit risk is considered to have significantly increased fromthe initial recognition, loss allowance is recognized at the amount equal to lifetime
expected credit losses.
The amount of loss allowance is calculated as follows:76● 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 principle approach is applied. Loss allowance for receivables for which thecredit risk is not considered to have significantly increased is calculated bymultiplying the carrying amount by the provision rate, which is determined byadding projection of future economic conditions and others to the historical rate ofcredit losses for similar assets. For assets for which the credit risk is considered tohave significantly increased and credit-impaired financial assets, loss allowance iscalculated as difference between the amount of the present value, which is computedby discounting estimated future cash flows using the original effective interest rateof 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 funds 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 the limit
and restrictive provisions (if applicable). In these forecasts, the Group takes into accountits borrowing and financing plan, compliance with restrictive provisions, 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 according to the levelclassification of inputs:
Level 1: Input consisting of quoted unadjusted market prices in active markets for
identical assets and liabilities
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

Transfer between levels in the fair value hierarchy is recognized on the date of the event orchange in circumstances that caused the transfer.

77

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
2,337
2,274
Long-term loans payable
252,736
255,336
Bonds
117,651
118,727
Lease obligations
25,79525,838The above figures include balances of the current portion of those loans receivable andpayable, bonds and lease obligations whose repayments or redemption is scheduled 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 taking the present value of the obligation
concerned – 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. 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 the market 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¥1,825.57¥194.75

6.

Additional Information
On December 13, 2016, the Group concluded a share purchase agreement with AnheuserBusch InBev SA/NV (“AB InBev”) to acquire the Czech Republic, Slovak Republic, Poland,
Hungary and Romania businesses and other related assets (hereinafter referred to as the“Target Business”) previously owned by SABMiller plc, which has been subsequently
acquired by AB InBev. The estimated purchase price is EUR 7,300 million. Furthermore, inregard to the acquisition of the businesses, a financing commitment agreement has beenconcluded to cover the entire acquisition cost.

7.

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

78

Reference: CONSOLIDATED STATEMENT OF CASH FLOWS (Summary)million yen

Cash flows from operating activities:
Profit before tax
Depreciation and amortization expense
Proceeds from sales of investments accounted forusing equity method
Gains on remeasurments resulting in businesscombinations
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued alcohol tax payable
Increase (decrease) in defined benefit assets andliabilities
Other
SubtotalInterest and dividends received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of non-current assets
Purchase of financial assets
Proceeds from sales of financial assets
Proceeds from sales of investments accounted forusing equity method
Acquisition of subsidiaries resulting in change inscope of consolidation
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase (decrease) in financial liabilities
Purchase of treasury shares
Cash dividends paid
Acquisition of subsidiaries not resulting in change inscope of consolidation
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents included in assets held
for saleCash and cash equivalents at end of period79

For the year ended
December 31, 2016

For the year ended
December 31, 2015

150,068
71,131

117,563
70,745(12,163)––(5,394)(9,821)
(607)
6,369
497

(13,387)(4,242)(3,032)(173)(2,096)(2,811)

1,340
204,718
5,546(3,658)(52,153)
154,452

20,857
180,123
8,801(3,776)(68,677)
116,471(58,148)(2,286)30,870(58,548)(3,822)
2,279

36,440–(290,893)(21,257)

15,510(268,507)

4,264(77,083)

146,272(21)(23,817)(33,017)(20,031)(21,629)(2,773)–(106)
119,554642
6,141
43,290(571)(75,250)(4,558)(40,422)
62,236–

21,476(972)–

48,45943,290NON-CONSOLIDATED FINANCIAL STATEMENTS (Japanese GAAP)NON-CONSOLIDATED BALANCE SHEETS
million yen

As ofDecember 31, 2016

As ofDecember 31, 2015
(Reference)

20,606
207,890903
832
11,767
11,478(1,866)

22,840292,996
793
242
4,266
7,507
(1,947)

Total current assets
Non-current assets:
Property, plant and equipment:
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress

251,614

326,700

15,393
369
374
0
974
15,037578
106

13,408
279
240
0
816
15,037489
744

Total property, plant and equipment
Intangible assets:
Right of using facilities
Trademark right
SoftwareLeased assets
Other
Total intangible assets
Investments and other assets:
Investment securities
Shares of subsidiaries and associates
Investments in capital of subsidiaries andassociates
Long-term loans receivable from subsidiaries andassociates
Deferred tax assets
Other
Allowance for doubtful accounts

32,83331,01739
11,857
11,498237
823,64140
12,82812,184289
925,35230,100753,723

53,577464,397

5,822

6,226

450

730

9,654
1,590
(223)

6,858
1,477
(215)

801,118
857,593
1,109,207

533,052
589,423
916,123ASSETS
Current assets:
Cash and deposits
Short-term loans receivable
Prepaid expenses
Deferred tax assets
Income tax receivables
Other
Allowance for doubtful accounts

Total investments and other assets
Total non-current assets
Total assets

80NON-CONSOLIDATED BALANCE SHEETS
million yen

LIABILITIESCurrent liabilities:
Short term loans payable
Commercial papers
Current portion of bonds
Lease obligations
Accounts payable - otherAccrued expenses
Deposits received
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities:
Bonds payable
Long term loans payable
Lease obligations
Other
Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity:
Issued capital
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments:
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

81

As of
December 31, 2016

As ofDecember 31, 2015
(Reference)

228,500
10,00018,000
307
1,001
4,148
42,989
119
119
1,003
306,188

129,800
63,00030,000
283
528
3,407
20,806158
98
367
248,451

100,000
173,000
569
1,332
274,902581,090

118,000
30,200547
1,415
150,163
398,615

182,531
151,683
130,292
21,390262,045
262,045
195,000
67,045(76,709)519,550

182,531
151,985
130,292
21,693247,945247,945
195,000
52,945(77,377)
505,085

8,923

12,422(356)
8,566
528,117
1,109,207–
12,422
517,508
916,123

NON-CONSOLIDATED STATEMENT OF INCOME
million yen

For the year ended
December 31, 2016
Operating revenue
Operating income of the Group
Rent income of real estate
Dividends from subsidiaries and associates

56,85133,306
1,469
22,074

For the year ended
December 31, 2015
(Reference)
70,40929,384
1,589
39,435

Operating expenses
Operating income
Non-operating income
Interest and dividend income
Reversal of allowance for doubtful accounts
Other
Non-operating expenses
Interest expenses
Provision of allowance for doubtful accounts
Other
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Extraordinary losses
Loss on sales and disposals of non-current assets
Loss on valuation of investment securities
Loss on sales of investment securities
Loss on valuation of shares of subsidiaries andassociates
Other
Profit before income taxes
Income taxes - current
Income taxes for prior periods
Income taxes - deferred
Profit30,38826,462
1,765
1,637
72
55
1,597
1,334
–
263
26,630
8,825
–
8,825
1,542
470
42
0

29,51940,889
1,976
1,937
–
38
2,976
1,346
481
1,148
39,889
37
0
37
311
310
–
–

1,029

–

0
33,91310(3,186)(828)
37,917

039,616
1,521
–
1,473
36,62182

NON-CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSFor the year ended December 31, 2016

million yen
Shareholders’ equity

Capital surplus

Retained earnings
Other retained earnings
Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

195,000

52,945247,945

Dividends(23,817)(23,817)

Profit37,91737,917

Issued capital Legal capital Other capitalsurplussurplus
Balance at beginningof current period

182,531130,292

21,693

Total capitalsurpluses

151,985

Changes of items
during period

Purchase of treasury
shares
Disposal of treasury
shares

(302)

(302)

Net changes of
items other thanshareholders’ equity
Total changes of
items during period
Balance at end ofcurrent period

–

–

(302)

(302)

–

14,10014,100

182,531130,292

21,390151,683

195,000

67,045

262,045

Shareholders’ equity

Balance at beginningof current period

Valuation and translation adjustments

Treasury shares

Total
shareholders’equityValuationdifference on
available-forsale securities(77,377)

505,085

12,422

Deferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets–

12,422

517,508

Changes of items
during period
Dividends(23,817)(23,817)

Profit37,91737,917Purchase of treasury
shares

(21)

(21)

(21)

Disposal of treasury
shares

689

386

386

Net changes of
items other thanshareholders’ equity(3,499)(356)(3,856)(3,856)

Total changes of
items during period

668

14,465(3,499)(356)(3,856)

10,609Balance at end ofcurrent period(76,709)519,550

8,923

(356)

8,566

528,11783

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
five (5) years. Trademark right is mainly amortized over twenty (20) years using thestraight-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.

84

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

Hedging instruments:
Hedged items:

Foreign exchange contracts and interest rate swaps
Forecasted foreign currency transactions, Loans receivablein foreign currencies and interest on borrowings

3)

Hedging policy

Derivative transactions are used to avoid risks associated with fluctuations in foreign exchange
markets and in 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 leveragedtransactions.
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 statements 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 Sheets(1) Accumulated depreciation on property, plant and equipment(2) Contingent liabilities
1) Guarantees against bank loans
Guarantees:
2)¥30,423 million¥33,979 million

Guarantees against derivatives

Guarantees:¥335 million(3) Monetary claims and obligations with associates (excluding those classified separately in
the Balance Sheets)
Short-term monetary claims on associates:¥219,146 million
Short-term monetary obligations to associates:¥43,455 million
3.

Notes to the Non-Consolidated Statements of Income
Transactions with associates
Operating revenue:¥56,634 million

85

Operating expenses:¥3,811 million

Transactions other than operating transactions:
4.

¥943 million

Notes to the Non-Consolidated Statements of Changes in Net Assets
Treasury shares
Type of stock

Common stock(shares)Number of shares
Increase during Decrease during Number of shares
as of Jan. 1, 2016
this fiscal year
this fiscal year as of Dec. 31, 2016
25,676,299
5,968
228,758
25,453,509(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:5,968 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:
158 shares
Decrease resulting from exercise of stock options:5.

228,600 shares

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:Tax loss carry forwards
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:
Income taxes receivable
Total deferred tax liabilities
Net deferred tax assets:¥16,703 million¥639 million¥20,590 million¥4,558 million¥1,016 million¥2,107 million¥948 million¥46,564 million¥(27,336) million¥19,227 million¥(3,517) million¥(5,026) million¥(196) million¥(8,740) million¥10,487 million86

(2) Breakdown of main items which caused the difference between the statutory tax rate andthe effective tax rate after adoption of tax effect accounting
Statutory effective tax rates:(Adjustments)
Permanent difference (non-deductible), including entertainment expenses:
Valuation allowance:
Permanent difference (non-taxable), including dividend income:Difference due to changes in tax rate:
Income taxes for prior periods:
Tax loss carry forwards:
Others:
Effective tax rates after adoption of tax effect accounting:

33.1%
0.3%
(2.7)%(30.1)%
2.0%(9.4)%(5.0)%
0.1%(11.8)%

6. Notes to related party transactions
Subsidiaries and affiliates
Type

Company

Subsidiary Asahi
Breweries,
Ltd.

Subsidiary Asahi Soft
DrinksCo., Ltd.

(million yen)

Percentage Relationship Descriptionof voting with relatedofrights held
partytransaction
100%
Interlocking Operating
directof directors/ revenue(Note 1)ownership corporate
auditors
Loaning
funds(Note 2)
100%
Interlocking Operating
directof directors/ revenue(Note 1)ownership corporate
auditors
Loaning
funds(Note 2)

Subsidiary AI Beverage 100%
Interlocking Deposits
Holding
directof directors/ received(Note 3)
Co., Ltd.
ownership corporate

Balance asof Dec.
31, 2016–

Transaction
amountAccount
item

40,344–(48,960)

Shortterm
loans
receivable–

168,742

Shortterm
loans
receivable
Deposits
received

4,884

8,918

(25,718)

37,433–

17,634auditors
Subsidiary Asahi
Holdings(Australia)
Pty Ltd

100%
Interlocking Guarantees
directof directors/ forliabilities
ownership corporate(Note 4)auditors

13,792––

Interlocking Outsourcingof directors/ indirect
services,
corporate
etc.
auditors(Note 5)

3,500

–

–

Subsidiary Asahi
100%
Professional direct
Management ownershipCo., Ltd.

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, guidance 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.

87Note 3: The interest rate for the deposits received 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 4: The Company guaranteed bank loans in the amount of AUD163 million.
Note 5: The amount of outsourced indirect and other services is determined based on certain reasonable criteria.

7.

Notes to per share information(1) Net assets per share:(2) Earnings per share (Net income per share):8.

¥1,152.76¥82.77Other

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

88

AUDIT REPORTS
Independent accounting auditor’s report on consolidated financial statements
Independent Auditor’s ReportFebruary 10, 2017
The Board of Directors
ASAHI GROUP HOLDINGS, LTD.
KPMG AZSA LLC
Hiroyuki Takanami (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hirotaka Tanaka (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kei Sakayori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the consolidated financial statements, comprising the consolidated statement offinancial position, the consolidated statement of profit or loss, the consolidated statement of changes
in equity and the related notes of ASAHI GROUP HOLDINGS, LTD. as at December 31, 2016, andfor the year from January 1, 2016 to December 31, 2016 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 the latter part of Article 120-1 of the Ordinance of Companies
Accounting that prescribes some omissions of disclosure items required by International Financial
Reporting Standards, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatements,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our
audit as independent auditor. We conducted our audit in accordance with auditing standards
generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the consolidated financial statements. The procedures selected depend on our judgement,
including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, while theobjective of the financial statement audit is not for the purpose of expressing an opinion on the89

effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position, and the results of operations of ASAHI GROUP HOLDINGS, LTD.
and its consolidated subsidiaries for the period, for which the consolidated financial statements wereprepared, in accordance with the latter part of Article 120-1 of the Ordinance of Companies
Accounting that prescribes some omissions of disclosure items required by International Financial
Reporting Standards.
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.

90

Independent accounting auditor’s report on non-consolidated financial statements
Independent Auditor’s ReportFebruary 10, 2017
The Board of Directors
ASAHI GROUP HOLDINGS, LTD.
KPMG AZSA LLC
Hiroyuki Takanami (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Hirotaka Tanaka (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Kei Sakayori (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the non-consolidated financial statements, comprising the non-consolidated balance
sheet, the non-consolidated statement of income, the non-consolidated statement of changes in net
assets and the related notes, and the supplementary schedules of ASAHI GROUP HOLDINGS, LTD.
as at December 31, 2016 and for the year from January 1, 2016 to December 31, 2016 in accordancewith Article 436-2-1 of the Companies Act.
Management’s Responsibility for the non-consolidated Financial Statements and Others
Management is responsible for the preparation and fair presentation of the non-consolidated
financial statements and the supplementary schedules in accordance with accounting principles
generally accepted in Japan, and for such internal control as management determines is necessary toenable the preparation of non-consolidated financial statements and the supplementary schedules
that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the non-consolidated financial statements and the
supplementary schedules based on our audit as independent auditor. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the non-consolidated
financial statements and the supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the non-consolidated financial statements and the supplementary schedules. The procedures
selected depend on our judgement, including the assessment of the risks of material misstatement of
the non-consolidated financial statements and the supplementary schedules, whether due to fraud or
error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation and fair presentation of the non-consolidated financial statements and the supplementaryschedules in order to design audit procedures that are appropriate in the circumstances, while theobjective of the financial statement audit is not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of91

accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the non-consolidated financial statements and the
supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
OpinionIn our opinion, the non-consolidated financial statements and the supplementary schedules referred
to above present fairly, in all material respects, the non-consolidated financial position and theresults of operations of ASAHI GROUP HOLDINGS, LTD. for the period, for which the nonconsolidated financial statements and the supplementary schedules were prepared, in accordancewith accounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed
pursuant to the provisions of the Certified Public Accountants Law of Japan.
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.

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REPORT OF THE AUDIT & SUPERVISORY BOARD
Audit Report
The Audit & Supervisory Board has prepared the following report based on the audit reports
prepared by individual Audit & Supervisory Board Members related to the Directors’ execution of
their duties during the 93rd fiscal year, the period from January 1, 2016 to December 31, 2016, afterdue discussions and consultations among the Audit & Supervisory Board Members.
1. Methods used in audits by the individual Audit & Supervisory Board Members and by the
Audit & Supervisory Board and content of audits(1) The Audit & Supervisory Board determined the audit policies and division of duties, andreceived reports from each Audit & Supervisory Board Member regarding the status and resultsof the audits, as well as reports from the Directors and Independent Accounting Auditor on theexecution of their duties, and requested explanations of those reports when necessary.
(2) Each Audit & Supervisory Board Member, in accordance with the audit policies, division ofduties, etc. based on the audit standards established by the Audit & Supervisory Board, soughtto achieve mutual understanding with the Directors, the section in charge of internal audit andother employees, strove to collect information and create an audit environment, attended
meetings of the Board of Directors and other important meetings, received reports from
Directors, other employees, etc. regarding the execution of their duties and requested
explanations when necessary, reviewed documents related to important decisions, andinspected the operations and property of the head office and other locations. With respect to“systems to ensure appropriate execution of Directors’ duties in conformity with laws andregulations and the Articles of Incorporation and other systems to ensure appropriate business
operations, which is included in the Business Report (internal control systems)” (Item 6,
Paragraph 4, Article 362 of the Companies Act and Paragraphs 1 and 3, Article 100 of theOrdinance for Enforcement of the Companies Act), the Audit & Supervisory Board received
reports regularly from Directors and other employees regarding the status of the establishment
and implementation of the systems, sought additional explanations as necessary, and expressed
opinions thereon. The Audit & Supervisory Board Members’ “basic policy concerning thepersons who control decisions on the Company’s financial and business policies” (Item 3,
Article 118 of the Ordinance for Enforcement of the Companies Act) included in the Business
Report, based on discussions of the Board of Directors and other parties. With respect tosubsidiaries, the Audit & Supervisory Board Members took steps to facilitate communications
and exchange information with the Directors and Corporate Auditors of subsidiaries and, whennecessary, received reports from subsidiaries on the status of their businesses. Using theforegoing methods, the Audit & Supervisory Board Members reviewed the Business Report
and the supplementary schedules for this fiscal year.
(3) The Audit & Supervisory Board oversaw and verified that the Independent Accounting Auditor
maintained its independence and carried out appropriate audits, moreover, and received reports
from the Independent Accounting Auditor regarding the execution of its duties and requested
explanations when necessary. The Audit & Supervisory Board also received notifications fromthe Independent Accounting Auditor to the effect that “a system for the maintenance ofappropriate execution of duties” (included in Article 131 of the Ordinance of Companies
Accounting) in accordance with the “standards for quality control of audits” (BusinessAccounting Council; October 28, 2005), etc., and requested explanations when necessary.
Based on the above activities, the Audit & Supervisory Board examined the non-consolidated
financial statements (non-consolidated balance sheets, non-consolidated statement of income,non-consolidated statement of changes in net assets, and notes to the non-consolidated financial
statements), the supplementary schedules, and the consolidated financial statements(Consolidated statement of financial position, consolidated statement of profit or loss,
consolidated statement of changes in equity, and notes to the consolidated financial statements)
for this fiscal year.
932. Results of the Audit(1) Results of audit of the Business Report, etc.
 In our opinion, the Business Report and the supplementary schedules present the situationof the Company fairly, in compliance with the provisions of applicable laws andregulations and the Articles of Incorporation.
 In our opinion, there are no wrongful acts or material violations of applicable laws andregulations or the Articles of Incorporation in the execution of their duties by the Directors.
 In our opinion, the content of the resolution by the Board of Directors regarding internal
control systems is appropriate, and, furthermore, content of the Business Report regarding
the internal control systems and the execution by the Directors have been appropriate.
 In our opinion, the Company’s basic policy concerning the persons who control decisions
on the Company’s financial and business policies in the Business Report is appropriate.
We acknowledge that the measures implemented to achieve this basic policy are consistent
with the basic policy, will not harm the common interest of the Company’s shareholders,
and will not serve the purpose of maintaining the positions of the Company’s Directors andAudit & Supervisory Board Members.
(2) Results of the audit of non-consolidated financial statements and the supplementaryschedules
In our opinion, the auditing methods used by KPMG AZSA LLC, the Independent Accounting
Auditor, and the results of its audit are appropriate.
(3) Results of the audit of consolidated financial statements
In our opinion, the auditing methods used by KPMG AZSA LLC, the Independent Accounting
Auditor, and the results of its audit are appropriate.
February 13, 2017
Audit & Supervisory Board
Asahi Group Holdings, Ltd.
Akira Muto (Seal)
Standing Audit & Supervisory Board Member
Tetsuo Tsunoda (Seal)
Standing Audit & Supervisory Board Member
Tadashi Ishizaki (Seal)
Outside Audit & Supervisory Board Member
Katsutoshi Saito (Seal)
Outside Audit & Supervisory Board Member
Yumiko Waseda (Seal)
Outside Audit & Supervisory Board Member

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(Reference) CSR Activities of the Asahi GroupThe Asahi Group aims to be a trustworthy corporate group by proactively making efforts toresolve social issues through our business activities in the three business activity domains of “Foodand Health”, “The Environment” and “People and Society”.

 Food and HealthCalpis Lactic Acid Laboratory for Children
Asahi Soft Drinks Co., Ltd. hosts classes on lactic acid and fermentation for elementary
school students, called “Calpis Lactic Acid Laboratory for Children,” in which employees of thecompany give lessons on “Calpis” from multiple aspects such as shokuiku (dietary education),science, and career education. In 2016, the classes were held at 27 schools for 1,789 students.
In the class, teams of five to six students supported by an employee, “Doctor Lactic Acid,”
participate in learning programs using their five sense such as studying lactic acid and yeast with amicroscope and comparing the taste and smell of ingredients of Calpis―milk and fermented milk,
which is made in the production process―.
We will teach children, who will lead the future, the importance of food and health through“Calpis” and lactic acid.

95 The Environment
Contribution to realization of recycling society through the R & D of “beer yeast cell wall”
The Asahi Group pursues the research and development of materials made with beer yeasts,
by-products from beer production, and applies the fruits of the research to a variety of products.
One of those is “beer yeast cell wall,” which is left after extracting yeast extract from beer yeast.
As a result of over ten years of R&D activities, we have established a method to break it down by
our original technique and to use it as a fertilizer that enhances the growth and immunity of plants.
In recognition of these R&D efforts as contributions to the reduction in the usage of
agrichemicals and chemical fertilizers and the stable production of agricultural crops, the Group
received the Minister of Agriculture, Forestry and Fisheries Award at the 25th Grand Prize for the
Global Environment Award * in 2016.
We will roll out this fertilizer overseas including Southeast Asia as well as in Japan in aneffort to contribute to the realization of a recycling society with sustainability in the field ofagricultural production.
* The Grand Prize for the Global Environment Award is a program hosted by Fujisankei Communications Group torecognize companies and organizations that actively and successfully engage in environmental activities, with theaim of achieving the coexistence of industrial progress and the global environment.

Beer yeast

 People and Society
Engagement in “Barley-of-Hope Project”
The Company has launched the “Barley-of-Hope Project” jointly with Higashimatsushima
Organization for Progress and Economy, Education, Energy with the aim of creating new industries
and employment in one of the areas hit by the Great East Japan Earthquake. A coalitionencompassing business, administration, academic, and civil sectors formed with the City ofHigashimatsushima, Tohoku University, local citizens, and others, grows barley.
The project team started growing barley in October 2015 at a former park site in a coastal area
in Higashimatsushima, Miyagi, and harvested the first crop successfully in June 2016.
In November 2016, some of the crop was brewed by Group companies and sold as a craft beer
“Barley-of-Hope Ale”. A part of its proceeds has been donated to reconstruction support activities.
Through the Barley-of-Hope Project, the Asahi Group will continue to engage in support
activities so that the barley production will take root as a local industry.

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