Asahi Group Holdings, Ltd.

Integrated Report
For the Year Ended December 31, 2016

2016

01
Cover Story

Striving to be a corporate group trusted
around the world through the Kando of food(deliciousness, happiness and innovation)
The Asahi Group defines Kando as deliciousness, happiness and innovation
surpassing customer expectations in the products and services it provides.
Through efforts to expand Kando from Japan to the rest of the world,
we are striving to be a trusted corporate group.

Integrated Report 2016

01

02

ASAHI GROUP HOLDINGS, LTD.

Cover Story

02

Seek to achieve sustained corporate valueenhancement by pursuing satisfaction
for all stakeholders
Besides pursuing customer satisfaction, we have formulated our vision forstakeholders including business partners, society, employees and shareholders
as a whole. We have also clarified our decision-making criteria for management
strategies. Through these actions, we seek to achieve sustained corporate valueenhancement.

Integrated Report 201603

Letter from the CEO
Further Developing Management
for Corporate Value Enhancement Groundedin the Corporate Philosophy
Issuance of Integrated Report 2016
With Asahi Group Holdings, Ltd. as a pure holding company, the Asahi Groupruns its Alcohol Beverages, Soft Drinks, and Food Businesses—as well as its
Overseas Business in these same domains—while upholding a shared corporate
philosophy. In addition, to help achieve a sustainable society, which is indispensable for the execution of our corporate activities, we have defined three activity
areas and materiality (priority themes). We strive to address social issues in theseareas through our business activities.
Given the changes in the external business environment, we renewed ourLong-Term Vision in 2016, adding our vision for our businesses 10 years into
the future. Our Medium-Term Management Policy for realizing this vision haslaid out three key priorities: i) Strengthening of earning power, ii) asset andcapital efficiency improvement, and iii) reinforcement of ESG initiatives. We haveaimed to further develop the management for corporate value enhancement
under the policy.
Integrated Report 2016 is edited based on the entire Group’s efforts and discussions aimed at enhancing corporate value, centered on the Long-Term Vision
and Medium-Term Management Policy. The compilation process and content of
this report are appropriate.
We will continue to use the Integrated Report as a tool for engagement(constructive dialogue), seeking to deepen our dialogue with all stakeholders
such as shareholders and investors, and aiming at sustained corporate valueenhancement.
We would appreciate it if you take the time to read the report and give us
your frank opinions and impressions.
May 2017
Chairman and Representative Director, CEO
Naoki Izumiya

04

ASAHI GROUP HOLDINGS, LTD.

Corporate Philosophy
The Asahi Group aims to satisfy its customers with the highest levels of
quality and integrity, while contributing to the promotion ofhealthy living and the enrichment of society worldwide.
Activity Areas for Addressing Social Issues and Materiality■ Climate Change■ Responsible Drinking
Foodand
Health■ Food Safety andReliability■ Health and Nutrition

The
Environment■ Recycling-BasedSociety

PeopleandSociety■ Biodiversity■ Human Resource Development
and Diversity■ Healthy and Affluent Society■ Sustainable Water Resources■ Sustainable Supply Chains

Long-Term Vision
Striving to be a corporate group trusted around the world
through the Kando of food (deliciousness, happiness and innovation)[ Future Vision for Our Business ]As a comprehensive beverage and food business group whose core businessis alcohol beverages, we aim to be an industry leader in Japan with high added value
as a key area of 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[ Our Vision for Our Stakeholders ]Customers

Continue to create new value based on strengths nurtured in Japan and achieve the No. 1
ranking for customer satisfaction in Japan and each region of the world.

Business
partners

Develop relationships with our business and alliance partners that support mutual growthand create new value for all parties.

Society

Contribute to the resolution of social problems through the Group’s businesses in areas
such as development of a wholesome food culture.

Employees

Develop an environment in which employees can work vigorously and experience
personal growth together with corporate growth.
Enhance corporate value (stock value) through sustainable profit creation and shareholder

Shareholders returns.

Integrated Report 201605

Editorial
PolicySince 2014, we have issued the Integrated Report combining the conventional Annual Report and CSR
Communication Report into one.
In compiling Integrated Report 2016, we have referred to the Integrated Reporting Framework issued
by the International Integrated Reporting Council. In doing so, we have created a communication tool thatsystematically combines financial and non-financial information as part of our value creation story, aiming tofurther develop management for corporate value enhancement.
We will continue working to enhance the content of the report, in the hope that it will promote deeper
understanding of the Group among a broad range of readers including our shareholders and investors.

CONTENTS
A Value Creation Story Aimed at Further Developing
Management for Corporate Value Enhancement
Cover Story

Our BusinessMedium-Term
Management Policy

Vision for the Asahi Group

Value Creation Process of the Asahi Group

Initiatives on Key Priorities ofthe Medium-Term Management Policy

This section presents an overview of our vision
centered on the Long-Term Vision, which
originates from the Group’s shared corporate
philosophy.

Here we give an overview of our businesses
and history. We also explain our value creation
process based on our cultivated strengths,
combining both financial and non-financial
information.

We provide an explanation of our direction andspecific initiatives regarding the key priorities ofthe policy: i) strengthening of earning power,ii) asset and capital efficiency improvement,
and iii) reinforcement of ESG initiatives, mainly
through the president’s message.

00 Cover Story

08 Asahi Group’s Business Domains

20 Medium-Term Management Policy

04 Letter from the CEO

10 Sources of Corporate Value
Creation (History)

22 Message from the President

12 Value Creation Process
14 2016 Highlights
The Asahi Group’s Activities
Financial Highlights
Non-Financial Highlights

05 Corporate Philosophy/
Long-Term Vision
06 Editorial Policy/Contents

28 Feature:
Acquisition ofEuropean Beer Businesses
32 Message from the CFO

06

ASAHI GROUP HOLDINGS, LTD.

Period Covered:

Scope:

January 1, 2016–December 31, 2016

Asahi Group Holdings, Ltd. and Group companies* Including some information outside this period

Forward-Looking Statements
The current plans, forecasts, strategies and performance presented in this report include forward-looking statements based on assumptions and opinions
arrived at from currently available information. We caution readers that actual future results could differ materially from these forward-looking statements depending on the outcome of certain factors. All such forward-looking statements are subject to certain risks and uncertainties including, but notlimited to, economic conditions, market competition, foreign exchange rates, taxes, and other systems influencing the Company’s business areas.

Review ofOperations

Financial andCorporate Information

Review of Operations by Segment

Financial and Corporate Information

With regard to iii) reinforcement of ESG
initiatives in particular, we provide examplesof specific initiatives based on materiality,
dialogues with the CEO and outside directors,
and other material.

We explain the external operating environmentand risks for each business segment as a basis
for introducing the Medium-Term Management
Policy. We also present our results for 2016 anddirection and topics for 2017.

This section presents a summary of financial
and non-financial data for the past 11 years
and an analysis of our management results for
2016, along with stock information and an
explanation of various information tools.

35 ESG Initiatives of the Asahi Group

60 ALCOHOL BEVERAGES

76 Eleven-Year Financial and
Non-Financial Summary

Positioning of ESG Priorities
CSR of the Asahi Group
Development toward a CSV Strategy
SPECIAL FEATURE: Promoting the Use of
Sustainable Water Resources

42 Enhancing Human Capital
46 Asahi Group’s Management Team
48 Dialogue:
Supporting Management
for Corporate Value Enhancement

64 SOFT DRINKS
68 FOOD
72 OVERSEAS

78 Discussion and Analysis of2016 Business Results
82 Consolidated
Financial Statements
88 Corporate Profile/
Stock Information
89 Explanation of
Various Information Tools

Chairman and Representative Director, CEO

Naoki Izumiya
×Outside Director

Tatsuro Kosaka

52 Asahi Group’s Corporate
Governance System for
Supporting Sustained GrowthIntegrated Report 201607

Our BusinessAsahi Group’s Business Domains

ALCOHOL BEVERAGES

52.4%
Share of revenue
by segment*

Business Domain

Comprehensive alcohol beverages business producing and selling whisky andspirits, shochu, wine and RTD* low-alcohol beverages in addition to beer-type
beverages, including our flagship brand, Asahi Super Dry* RTD: Ready-to-Drink. Beverages that can be consumed immediately upon purchase, such as canned chuhai

Main Categories and Brands

Beer, happoshu, new genre, whisky and spirits, wine, shochu, RTD low-alcohol
beverages, non-alcohol beer-taste beverages, etc.

55.7%

From left Asahi Super Dry / Asahi Style Free / Clear Asahi / Black Nikka Clear / Santa Helena Alpaca / Kanoka / Mogitate / Asahi Dry Zero

SOFT DRINKS
Business Domain

Comprehensive soft drinks business centered on long-standing mainstay
brands including Mitsuya Cider, WONDA, Asahi Juroku-cha, and Calpis
Main Categories and Brands

Carbonated drinks, coffee, tea, mineral water, lactic acid drinks, chilled drinks,
fruit drinks, sport drinks, etc.

26.4%
Share of revenue
by segment*

20.9%

From left Mitsuya Cider / Wilkinson / WONDA / Asahi Juroku-cha / Asahi Oishii Mizu / Calpis / Tea

08

ASAHI GROUP HOLDINGS, LTD.

Value Creation Process of the Asahi Group

FOOD

6.2%
Share of revenue
by segment*

Business Domain

Business focusing on leading brands and businesses within the category,including mint tablets, baby food, and freeze-dried food

Main Categories and Brands

Confectionery, supplements, quasi-drugs, powdered baby milk, baby food,nursing care food, freeze-dried miso soup, etc.

6.4%

From left MINTIA / Dear-Natura / EBIOS / Infant formula Lebens Milk Hai Hai / Goo-Goo Kitchen / Itsumono Omisoshiru

OVERSEAS
Business Domain

Manufacturing and sales of alcohol beverages and soft drinks in Europe,
Oceania, Southeast Asia, and China as main markets
Main Categories and Brands

Beer, RTD low-alcohol beverages, ciders,mineral water, carbonated drinks, coffee, etc.

13.4%
Share of revenue
by segment*

14.5%

From left Asahi Super Dry / Peroni Nastro Azzurro / Pilsner Urquell / Vodka Cruiser / Somersby / Cool Ridge / Schweppes / WONDA Original* Not including revenue from intersegment transactions

Integrated Report 201609

Our Business

Strengths Shaped by Our Ambitions and Growth
Sources of Corporate Value Creation (History)
Since our foundation, we have worked to innovate in every part of our value chain through a long history ofchallenges, as illustrated by the 1987 launch of Asahi Super Dry, a product that dramatically increased our shareof the beer market. Moreover, from the late 1990s when the Japanese market became saturated, we have
expanded our business portfolio by stepping up M&As and so forth, including overseas expansion. Through thisjourney, we have cultivated a corporate culture of taking on challenges for innovation. Going forward, we willrefine our strengths, namely brand strength, cost competitiveness, human resource (organizational) capabilities,
and social collaboration ability. These are the source of our sustainable corporate value creation.

STRENGTHS(Former logo)

Our Founding and
the Birth of Asahi Beer

Establishment of
Asahi Breweries, Ltd.

In 1889, Osaka Beer Brewing
Company, the forerunner ofAsahi Breweries, Ltd., wasfounded with the goal ofdeveloping an authentic Japanesebeer led by a Japanese brewer. In
1900, we launched Japan’s firstbottled draft beer, and received
numerous accolades and awards
at fairs and expositions in Japanand abroad. We have beendeveloping our corporate cultureof taking on the challenge ofinnovation since the founding.

In 1949, Asahi Breweries, Ltd.
was established through a
corporate breakup under postwar economic decentralization
reforms in Japan. Thereafter,
Asahi Breweries expanded its
business fields by entering into
sales agreements for new softdrink brands and acquiringa stake in The Nikka Whisky
Distilling Co., Ltd. In 1958, Asahi
Breweries launched Japan’s firstcanned beer alongside reinforcing
the R&D of draft beers and otherproducts, driving innovation evenfurther.

1889

Osaka Beer Brewing Company
was established.
1892

Asahi Beer was launched.
1900

Japan’s first bottled draft beer was
launched, and Asahi Beer won agold medal at the 1900 Paris Expo.
1907

HIRANO CHAMPAGNE CIDER (nowMitsuya Cider) was launched.
1930

EBIOS (a pure brewer’s yeast
preparation tablet) was launched.

1949

Asahi Breweries, Ltd. wasestablished.
1951

Asahi entered into sales agreements to market overseas softdrink brands in Japan.
Bireley’s Orange and Wilkinson
Tansan1954

Asahi acquired a 60% stake in The
Nikka Whisky Distilling Co., Ltd.
1958

Asahi launched Japan’s firstcanned beer using Asahi Beer.

Start of Reforms
In 1982, we expanded the scaleof the Soft Drinks Business bytaking steps such as establishing
Mitsuya Foods Co., Ltd. (nowAsahi Soft Drinks Co., Ltd.).
Meanwhile, we were facing apersistent decline in our share ofJapan’s beer market. In response,
we boldly renewed our corporate
culture by instituting reforms suchas establishing a management
philosophy and introducing a
corporate identity, laying the
groundwork for the Group’s rapid
growth thereafter.

1982

Mitsuya Foods Co., Ltd. (nowAsahi Soft Drinks Co., Ltd.) wasestablished.
1982

Asahi entered into a collaborative
business agreement with theGerman brewery Löwenbräu.
1983

Asahi acquired the trademark
rights to Wilkinson.
1985

Asahi made a corporate identity
declaration.
1987

Asahi entered into a collaborative
business agreement with Bass
Brewing, Ltd. of the U.K.

10

ASAHI GROUP HOLDINGS, LTD.

Claiming the Top Share ofJapan’s Beer Market
In 1987, we launched Asahi
Super Dry, Japan’s first dry draft
beer. Thereafter, we enhanced
brand value through innovation in
overall supply chain management.
Measures included establishing aquality standard for freshness inbeer and reducing CO2 emissions
through the development of newtechnologies for the boiling stageof the brewing process. In 1998,
we claimed the top share ofJapan’s beer market.

1987

Asahi Super Dry was launched.
1992

Asahi Beer Food, Ltd. (nowAsahi Group Foods, Ltd.) wasestablished.
1993

Asahi formed the Fresh
Management Committee.
1994

Asahi entered the Chinese market.
1998

Asahi gained the top share ofJapan’s beer market*.
* Based on the taxable shipment volumes ofJapan’s five major beer companies

Value Creation Process of the Asahi Group

Shaping Strengths throughOur Ambitions and Growth
Brand Strength· Strong brand assets including Asahi SuperDry and Mitsuya Cider and the ability tofoster those assets· A corporate brand that ensures foodsafety and reliability

Cost Competitiveness· Top-class productivity in overall SCM in theindustry by leveraging manufactured andintellectual capital
Progress onGroup Management

Establishing a New Platform
for Growth

In 2001, we entered thehapposhu market and captured
top shares of Japan’s beerand happoshu markets, alongwith making The Nikka Whisky
Distilling Co., Ltd. a wholly
owned subsidiary. Through theseand other measures, we pushedahead with the development of acomprehensive Alcohol Beverages
Business. Efforts were also madeto expand the Group’s businessplatform through entry into theChinese soft drinks business andvigorous M&A activity in the Soft
Drinks and Food Businesses.

Since 2009, we have significantly
expanded the business platformworldwide. Notably, we haveentered the Oceania andSoutheast Asia markets in earnest
and acquired all the stock of
Calpis Co., Ltd. In 2016, weannounced major deals to acquire
the European beer businesses
that were owned by the former
SABMiller plc. With these andother steps, we have embarked
on a new quest to become a truly
global player.

2001

Asahi captured top shares of thebeer and happoshu markets*.
2001

Asahi made The Nikka Whisky DistillingCo., Ltd. a wholly owned subsidiary.
2004

Asahi established a joint venture
in soft drinks with Tingyi (Cayman
Islands) Holding Corp. of China.
2005

Asahi acquired the stock of LB Co., Ltd.
(Saitama) and LB Co., Ltd. (Nagoya).
2006

Asahi acquired the stock ofJapan’s largest baby food maker,
Wakodo Co., Ltd.
2008

Asahi acquired the stock of
Amano Jitsugyo Co., Ltd., a major
freeze-dried food manufacturer.

· Ability to generate cost synergies globallyby leveraging human capital

Human Resource(Organizational) Capabilities· Human resources, organization andmotivation to maintain a corporate cultureof taking on the challenge of innovation· Obtaining and managing diverse humanresources through M&As and otheractivities
Revenue

2009

Asahi invested in Tsingtao
Brewery Co., Ltd.

2 trillion
yen

2009

Asahi entered the Oceania market
in earnest.

· Efforts to ensure social and business sustainability and communication capabilities

2011

Asahi entered the Southeast
Asian market in earnest.
SOFT DRINKS
FOOD
2012
OVERSEAS
1 trillion yen
Asahi acquired all the stock of
Calpis Co., Ltd.
2016

Social Collaboration Ability· Ability to build good relationships with all
stakeholders

ALCOHOL BEVERAGES

Asahi acquired the Western
Europe business and the Central
and Eastern Europe business ofthe former SABMiller plc.

0

Integrated Report 201611

Our BusinessWe are taking on the challenge ofsustained value creation by evolving thebusiness model based on our strengths
Our Business Model
Cost
Competitiveness

Brand Strength
Alcohol
Beverages

A corporate culture of taking on the challenge of innovation

Soft
DrinksResearchandDevelopment

Procurement

Production
andLogistics

Marketing
and
Sales

Food

Overseas

Human Resource(Organizational)
Capabilities

Environment

Evolving our business model with

the Medium-Term
Management Policy
page 20

12ASAHI GROUP HOLDINGS, LTD.

Social Collaboration
AbilitySociety

Corporate
Governance■S trengthening of earning power by positioning the domestic profit base as
the cornerstone of earnings and the overseas business as a growth engine...... page 28■ Asset and capital efficiency improvementthat takes into consideration capital cost..................................................... page 32■ Reinforcement of ESG initiatives to increase sustainability........................ page 35

Value Creation Process of the Asahi Group

Value Creation Process
The Asahi Group’s business model is to provide products and services that contribute to healthy living andthe enrichment of society in line with our corporate
philosophy. We provide them through a value chain
extending from R&D to sales, based on our corporate
culture and the strengths we have developed over theyears.

Results ofBusiness Activities
Revenue

We have enhanced financial value by expanding
revenues and profits. We have also evolved ouroverall business model in alignment with ourLong-Term Vision and Medium-Term Management
Policy. Through these activities, we are taking on thechallenge of sustained value creation to meet thesatisfaction of all stakeholders.

Value Provided
Healthy living and the enrichment of society

Alcohol Beverages
Other
Overseas

Soft Drinks

Food• The Kando of food (deliciousness, happiness and innovation)(¥ billion)

2,000.0
102.2
250.3

1,500.0

110.8
363.9

1,000.0

500.0

0.0

976.6

IFRS

Japanese Accounting Standards

2012

2013

2014

2015

2016

Core Operating Profit
Alcohol Beverages
Other
Overseas

Soft Drinks

Food• The satisfaction of all stakeholders(¥ billion)

200.0
2.0
12.3
10.2

150.0

32.3

100.0

120.8
50.0

0.0

Japanese Accounting Standards

2012

2013

2014

2015

IFRS
2016

* Excludes adjustment (corporate/elimination), amortizationof acquisition-related intangible assets and corporate
adjustment items (IFRS adjustments)
Review of Operations

page 59

Integrated Report 201613

Our Business2016 Highlights
The Asahi Group’s Activities
Management
Selected for the second straight year in
the Health & Productivity Stock Selection
as a company focused on and carrying out
efforts with regard to its employees’ healthfrom a management perspective

Selected for the second straight year in theCompetitive IT Strategy Company Stock
Selection as a company proactively using IT
for management reform and strengthening ofcompetitivenessAwarded the Minister of Agriculture, Forestry
and Fisheries Award at the 25th Global
Environment Award in recognition of contribution to farming materials developmentusing beer yeast cell walls page 39

Acquired the highest ranking as a company with excellent advanced environmental initiatives under the Development
Bank of Japan Inc.’s Environmentally
Rated Loan Program

Selected as a Nadeshiko Brand forcompanies that have demonstrated
outstanding performance in encouraging the empowerment of womenin the workplace page 44

January

February

March

April

May

Alcohol Beverages

Alcohol Beverages

Significantly revamped the candesign for Clear Asahi Prime Rich
to strengthen its taste and convey
a sense of luxury

Launched Asahi Mogitate made withfruit juice harvested within the previous
24 hours
page 63

Food

Launched limited edition packaging tomark the 20th anniversary of MINTIA
page 71

Soft Drinks

Soft Drinks

Food

Restructured the Soft Drinks andFood Businesses to strengthen
the domestic business base

Operations
14

ASAHI GROUP HOLDINGS, LTD.

Launched Asahi Juroku-cha Gotochi Sozai
Blend, a blend of local ingredients from sevendifferent regions* throughout Japan page 67* The seven regions of Hokkaido, Tohoku, Kanto-Koshinetsu,
Chubu-Hokuriku, Kansai, Chugoku-Shikoku andKyushu-Okinawa

JuneValue Creation Process of the Asahi Group

Brand Strength
Cost Competitiveness
Human Resource(Organizational) Capabilities
Social Collaboration Ability

Selected for the second straightyear in the CDP Climate A List, thehighest evaluation for a company
responding to climate change

Concluded a stock purchase agreement
for the Central and Eastern Europe beerbusiness owned by SABMiller plc throughits owner, Anheuser-Busch InBev SA/NV
pages 28–31

Acquired the Western Europe beerbusiness owned by SABMiller plc
through its owner, Anheuser-BuschInBev SA/NV
pages 28–31

Selected as the only company from the region’s beverage
sector listed on the 2016 Asia-Pacific Index of the Dow
Jones Sustainability Indices (selected for the ninth straight
year)

July

AugustSeptember

OctoberNovember

December

Alcohol Beverages

Overseas

Conducted the Asahi Super Dry Tarunama Kanpai
Campaign, donating ¥1 to the Japan Olympic Committee
and Japan Paralympic Committee for every liter of Asahi
Super Dry sold

Won in the Premium Internationalbeer category for the third straightyear with Asahi Super Dry at theAustralian Liquor Industry Awards.
Asahi Soukai, a beer for exclusive
distribution within Australia, won
the New Product of the Year Award

Alcohol Beverages

Announced the opening of a
joint distribution center and jointdeliveries by railroad container
in the Hokuriku area with Kirin
Brewery Company, Limited
page 63

Food

Revamped infant formula for the first timein eight years ahead of its 100th anniversary
in 2017

Soft Drinks

Launched Asahi Oishii Mizu Plus Calpis no Nyusankincontaining Calpis lactic acidpage 67

Integrated Report 201615

Our Business2016 Highlights

Financial Highlights* The Company’s consolidated financial statements have been prepared based on Japanese accounting standards for years up to the fiscal year ended December 2015 and based on
International Financial Reporting Standards (IFRS) from the year ended December 2016.
* Revenue corresponds to net sales under Japanese accounting standards, while core operating profit corresponds to operating income, profit attributable to owners of parent corresponds
to net income and total equity attributable to owners of parent corresponds to shareholders’ equity.

Revenue/Liquor Tax

1,706.9 billion¥

Core Operating Profit*/Core Operating Profit Margin

148.4 billion¥(Revenue)

Liquor tax

Revenue(Core Operating Profit)

Profit increased due to mix improvements resulting from
efforts to strengthen core brands in each business aswell as enhanced cost competitiveness resulting from thecreation of integration synergies and other factors. The
core operating profit margin also increased steadily.

Revenue in the Alcohol Beverages Business increased due
to growth in new genre and RTD low-alcohol beverages,
along with efforts to strengthen brand strength focused
primarily on core brands in the Soft Drinks Business. The
Group also steadily collected liquor taxes.

Core operating profit (Left axis)
Core operating profit margin (Incl. liquor tax) (Right axis)
Core operating profit margin (Excl. liquor tax) (Right axis)(¥ billion)(¥ billion)

2,000

200

1,706.9

(%)

11.6
148.4
8.7

12.0
9.0

1,500

150

1,000

100

6.0

50

3.0

425.7

500
0

2013

2014

0

IFRS

Japanese Accounting Standards

2012

2015

2016

2013

2014

0.0

IFRS

Japanese Accounting Standards

2012

2015

2016

* Core operating profit is the reference index for normalized business performance. Core
operating profit = Revenue – (Cost of sales + Selling, general and administrative expenses)

EPS/Profit Attributable to Owners of Parent

194.75¥

ROE/
Total Equity Attributable to Owners of Parent

11.0%

(EPS)

Profit attributable to owners of parent increased due to anincrease in core operating profit as well as gains on asset
liquidation, such as the sale of investments accounted
for using equity method and idle real estate. EPS also
increased markedly.
EPS (Left axis)
Profit attributable to owners of parent (Right axis)

ROE exceeded the guideline in the Medium-Term
Management Policy due to strengthening of the earning
power of each business and an increase in capitalefficiency, including stable dividend increases.
ROE (Left axis)
Total equity attributable to owners of parent (Right axis)(¥)(¥ billion)

(%)

120

12.0

11.0

1,200

90

9.0

836.3

900

100.00

60

6.0

600

50.00

30

3.0

300

0

0.0

194.75200.0089.2

150.000

IFRS

Japanese Accounting Standards

2012

16

(ROE)

ASAHI GROUP HOLDINGS, LTD.

2013

2014

2015

2016

(¥ billion)

2013

2014

0

IFRS

Japanese Accounting Standards

2012

2015

2016

Value Creation Process of the Asahi Group

Cash FlowsNet Debt/EBITDA*/Interest-Bearing Debt

96.3 billion¥

2.52 times(Free Cash Flow)

Free cash flow increased, reflecting increased cash flow
generation ability in our core businesses, while cash flows
from investing activities increased significantly due toacquisition of the Western Europe business.

(Net Debt/EBITDA)

Net debt/EBITDA increased despite efforts to increase cash
generation ability in our core businesses and liquidate
assets as interest-bearing debt increased following theacquisition of the Western Europe business.

* Free cash flow = Cash flows from operating activities ± Acquisition ofproperty, plant and equipment and intangible fixed assets
Cash flows from operating activities
Cash flows from investing activities

Free cash flow

Net debt/EBITDA (Left axis)(¥ billion)(Times)

200

3.00

154.4
96.3

100

Interest-bearing debt (Right axis)(¥ billion)

2.52
570.3

2.00

900
600

0
1.00

–100
−268.5

–300

2013

2014

0

IFRS

Japanese Accounting Standards

2012

2015

300

2016

2013

2014

0

IFRS

Japanese Accounting Standards

2012

2015

2016

* Under IFRS, EBITDA = Core operating profit + Amortization of intangible assets + Depreciation
Under Japanese accounting standards, EBITDA = Operating income + Amortization of goodwill+ Depreciation

Dividend per Share/Dividend Payout Ratio

27.7%

Capital Investment/
Depreciation and Amortization*

63.4 billion¥(Dividend Payout Ratio)

Dividend per share was increased by ¥4. The dividend
payout ratio dropped below 30% with the introduction of
IFRS, but our policy is to bring it back to 30% by 2018.

Dividend per share (Left axis)

Dividend payout ratio (Right axis)

Capital investments increased as we made investments to increase
production capacity of whisky and spirits and to diversify our
product lines in the beer and beer-type beverages category in the
Alcohol Beverages Business. Additional investments for streamlining
also contributed, such as SCM integration in the Oceania business.
Capital investment

(¥)

(%)

(¥ billion)

60

40.0

80

30.0

60

20.0

40

10.0

20

0.0

0

54

20
0

IFRS

Japanese Accounting Standards

2012

2013

2014

2015

2016

Depreciation and amortization

63.4
27.7

40

(Capital Investment)

51.0

IFRS

Japanese Accounting Standards

2012

2013

2014

2015

2016

* The above capital investment and depreciation and amortization amounts do
not include lease assets or trademarks at the time of acquisition of subsidiaries.

Integrated Report 201617

Our Business2016 Highlights

Non-Financial Highlights

Food and Health

The Environment

Activity Areas for CSR● Activities and Track Record by CSR Key Theme

Activity Areas for CSR● Activities and Track Record by CSR Key Theme

Responsible Drinking

Climate Change

Number of educational tools
for primary school students

CO2 emissions

32,294 copies
Asahi Breweries, Ltd. produces educational tools for primary school
students as a means of helping to prevent underage drinking anddistributes copies of these tools free of charge upon request. By
encouraging the broad use of these tools in schools and other locations, Asahi Breweries provided support so that school children could
take an interest in and learn about the impacts of underage drinking.

907 kilotons
CO2 emissions (Kiloton)
Per basic unit (kg/one million yen (Net sales and revenue))

918

924

907

815

855

499

491

492

488

460

2012

2013

2014

2015

2016

507

Food Safety and Reliability
Number of presentations on food safety
and reliability at academic conferences

15 presentations

We are pushing ahead with our advanced quality assurance system
across the entire Group, including overseas operations, from a technical standpoint. We held presentations at international academic
conferences on themes such as the development of new inspection
methods for microorganisms that impact the quality of beer.

Health and Nutrition
Number of participants in
Wakodo Nutrition Consultations

Approx.

121,000 participants

Asahi Group Foods, Ltd. holds Wakodo Nutrition Consultations,where our certified dieticians provide consultations on weaning
diets and so forth. As in previous years, many people, including theguardians of infants, attended the consultations in 2016 as a resultof these efforts.

* CO2 emissions per basic unit
for 2016 was calculatedusing revenue in accordancewith International Financial
Reporting Standards (IFRS).
For reference, CO2 emissions
per basic unit was 460 underJapanese accounting standards.
* Figures from 2013 onward
include a CO2 reduction
contribution in accordance with
the Asahi Group’s use of green
electricity.

We are stepping up our efforts to reduce CO2 emissions throughbusiness operations, such as by using green electricity. In 2016, wereceived the highest evaluation for the second straight year in asurvey by CDP, an international nonprofit organization.

Recycling-Based Society
Recycling ratio of by-products and waste

100%

We are working on recycling of our by-products and waste with thegoal of building a recycling-based society. In 2016, we maintained
a recycling ratio of 100% at the Asahi Group Head Office andmanufacturing bases in Japan.

Biodiversity
Number of sites, events and participants
involved in forest preservation activities

12 sites, 140 events,and 6,577 participants
We proactively undertake forest preservation activities in the water
source areas of manufacturing bases and in forests close to workplaces. With the participation of employees and their families, as well
as local residents, the Group conducted tree planting, undergrowth
clearing, and other activities.

18

ASAHI GROUP HOLDINGS, LTD.

Value Creation Process of the Asahi Group

People and Society
Activity Areas for CSR● Activities and Track Record by CSR Key Theme

Human Resource
Development and Diversity

¥

15.4%

We undertook social contribution activities with the theme of creating affluent local communities where people have mutual respect fordiverse values. Activities included artistic and cultural activities andsupport for disaster-affected areas. The Group plans to continue its
activities to support the Great East Japan Earthquake reconstruction
effort until 2020.

Ratio of female managers (%)

15.4

6.3

6.5

2012

2013

11.8

2014

2015

Social contribution expenditure

1,390 million

Ratio of female managers

10.6

Healthy and Affluent Society

2016* Figures for 2012–2013 are from the main
operating companies in Japan, and from theentire Group for 2014–2016.

Goals were set for promoting women’s success at each major operating company, and the ratio of female managers improved as a resultof efforts to achieve them. Going forward, we will continue aiming
to ensure that women are included in the decision-making process.

Asahi Beer Oyamazaki Villa Museum of Art

Sustainable Water Resources

Sustainable Supply Chains

Water consumption

Number of companies participating in Asahi
Group Procurement Policy Presentations

23,889 thousand m

3

Water consumption (Thousand m )Per basic unit (m3/one million yen (Net sales and revenue))
3

23,664 23,615 23,933
19,532

23,889
13.3

13.6

13.6

12.7

12.6

12.1

2012

2013

2014

2015

2016

* Water consumption per basic
unit for 2016 was calculatedusing revenue in accordancewith International Financial
Reporting Standards (IFRS). For
reference, water consumption
per basic unit was 12.1
under Japanese accounting
standards.

111 companies

We held presentations on procurement policy and related mattersfor major domestic suppliers, which represent just over 80% of
our transaction value with suppliers. To provide safe and reliable
products and services, we are working to build solid relationships oftrust and long-term cooperative ties with our suppliers.

Efforts are undertaken to reduce water consumption across theentire Group by reducing water use at manufacturing bases andpromoting the reuse of water. Proactive efforts are also being madeto reduce water consumption not only within the Group but also
throughout the entire supply chain.

Integrated Report 201619

Medium-Term
Management
PolicyInitiatives on Key Priorities ofthe Medium-Term Management Policy

Further Development ofManagement for Corporate
Value Enhancement
To achieve the Long-Term Vision, which has beenrenewed in anticipation of changes in the external environment, we set the new Medium-Term Management
Policy in 2016. In the policy, we have shifted from theprevious action plan-style content to a format thatemphasizes management policy, including ESG initiatives.
The Medium-Term Management Policy presents
guidelines for major indicators looking around three
years into the future without setting fixed quantitative
targets. At the same time, the policy sets out three key
priorities and we have aimed to further develop management for corporate value enhancement.

20

ASAHI GROUP HOLDINGS, LTD.

Promote constructive dialogue
by positioning

three key priorities

as an engagement agenda

Strengthening of earning powerby positioning the domestic profit base as the cornerstone ofearnings and the overseas business as a growth engine• Promote innovation and demonstrate leadership in the industry
with high added value and differentiation as key areas of focus• Reform the earnings structure and evolve the business modelthrough business integration and value chain sophistication• Acquire foundations for growth, mainly in overseas markets,by leveraging strengths originating in Japan

Asset and capital efficiency improvementthat takes into consideration capital cost• Improve capital efficiency with an emphasis on the equity spread(ROE – cost of shareholders’ equity)• Restructure business administration and business portfolio utilizing ROIC
(return on invested capital) as a performance indicator

Reinforcement of ESG initiatives
to increase sustainability• Upgrade intangible assets such as natural, social and relationship capital and personnel,
and develop them toward a CSV (creating shared value) strategy• Implement growth-oriented corporate governance that contributes to the practice ofmanagement for corporate value enhancement

Integrated Report 201621

Medium-Term Management Policy

Message fromthe President

Driving Strategies for Growth by Leveraging
Our Strengths based on Opportunities and Risks
Strengths of the Business Portfolio and the External Environment
In our Alcohol Beverages Business, which is the Asahi
Group’s largest business domain, we boast the top
share in the domestic beer-type beverages market.
Market share solely in the beer category is around50%, particularly thanks to our flagship brand, Asahi
Super Dry. In addition, we have category-leading
brands and businesses, such as the clear, carbonateddrink Mitsuya Cider and the lactic acid drink Calpis
in the Soft Drinks Business and breath mint tablets,baby food, and freeze-dried products in the FoodBusiness, and we have been steadily increasing
the profitability of these businesses. Moreover,overseas we have been developing a prominent
global network, including a robust business base in
Oceania, Malaysia, and other regions, as well as theacquisition of European beer businesses.
On the other hand, as the alcohol beverages
and soft drinks markets in Japan mature with

22

ASAHI GROUP HOLDINGS, LTD.

the declining birthrate and aging population, we
anticipate further increases in consumption tax andgraduated revision of liquor taxes. Against thatbackdrop, we assume even greater diversificationin consumption and values. Overseas as well, at atime of increasing uncertainty in the overall global
economy, a wide variety of growth opportunities
and risks are expected to emerge, such as a major
global-scale reorganization.
Under such circumstances as market contraction
and harsh price competition as a result of deflation,
we have achieved record-high earnings for the 16th
straight year and have worked on the developmentof a comprehensive Alcohol Beverages Business,
reinforcement of brand strength and generation of
integration synergies through M&As. In addition,with the upcoming Tokyo 2020 Olympic andParalympic Games and the registration of JapaneseInitiatives on Key Priorities of the Medium-Term Management Policy

Speeding Up the Progress of Management
Reforms to Further Develop Management
for Corporate Value Enhancement
After the transition to a pure holding company in 2011, we steered toward management with anemphasis on corporate value and have steadily delivered results, including an increase in our market
capitalization. Looking ahead over the next few years, amid increasing uncertainty in Japan andoverseas, various further opportunities and risks are likely to emerge.
In this environment, we enhanced the profitability of our three domestic businesses last year andaccelerated our efforts to further develop management for corporate value enhancement, including
the large-scale acquisition of European beer businesses. In this section, we confirm our medium- tolong-term management strategy and discuss our progress based on the external environment.
President and Representative Director, COO
Akiyoshi Koji

improve the Asahi Group’s signature strengths suchas its brand strength and cost competitiveness, whiledriving forward strategies for growth, includingby expanding business investments to capture
opportunities.

cuisine as an Intangible Cultural Heritage by
UNESCO, we anticipate further opportunities for
growth by leveraging our strengths originating inJapan.
Based on this external environment, we will

SWOT Elements of the Business Portfolio
Strengths● JapanSO• Top share in the domestic beer-type beverages market(market share of approx. 50% for beer alone)• Third in share in the domestic soft drinks market• Category-leading food brands and businesses• Powerful networks in Europe, Oceania, and Southeast Asia

• Value variation in consumption behavior due to escapefrom deflation, revision of tax regulations, and other factors• Continuation of high added value, including in healthfunctional products and other categories• Holding of the Tokyo 2020 Olympic and Paralympic Gamesand registration of Japanese cuisine as an Intangible
Cultural Heritage by UNESCO• Growth in the alcohol beverages and soft drinks markets,mainly in emerging countries• Increase in market entry opportunities due to factors
including global restructuring
Opportunities● Overseas
Weaknesses

WT• Maturation of the alcohol beverages and soft drinks
markets due to the declining birthrate and aging of the
population, among other factors• Continuation of fierce competition in a deflationary
environment• 15% sales contribution from the Overseas Business• Increasing oligopolization by large global companies• Greater-than-expected market contraction resulting fromfactors including economic stagnation• Deterioration of competitive environment due to tax
regulation revisions• Economic slowdown in regions in which the Group
operates (Europe, Oceania, and Southeast Asia)• Intensification of competition due to an offensive by large
global companies, among other factors

Threats

Integrated Report 201623

Medium-Term Management Policy

Message from the President

Implementing Speedy Decision-Making
based on the Long-Term Vision andMedium-Term Management Policy

The Long-Term Vision for Our Business
Overseas, we will work towards establishing a
differentiated, unique position as a global player
by leveraging our strengths in high-quality branddevelopment and cost competitiveness, such as thedevelopment of Asahi Super Dry as a global brandin the premium market. These are strengths that
we have honed in Japan under a harsh deflationary
environment.

Based on the external environment I have mentioned
so far, we have cited a future vision for our business
10 years from now in the newly updated Long-Term
Vision. This new vision for the future is As a comprehensive beverage and food business group whose
core business is alcohol beverages, we aim to be anindustry leader in Japan with high added value as a
key area of focus and establish a unique position asa global player that leverages strengths originatingin Japan.
As the overall market in Japan matures, consumption will diversify and demand for added value
will expand. In this environment, we will leverage
our strengths in various top brands and categories
to play a leading role in steering the industry
towards value competition.

(¥ billion)

2,500

2,000

Efforts to become a global player

Overseas

1,500

Food
Soft
Drinks

Revenues by
Business and
Growth Trend

ASAHI GROUP HOLDINGS, LTD.

1,000

Alcohol
Beverages

2005

24

Industry leader in high added value

2010

2015

500

2020

2025

0

Initiatives on Key Priorities of the Medium-Term Management Policy

Three Key Priorities in the Medium-Term Management Policy
The Medium-Term Management Policy for realizing
the Long-Term Vision has laid out three key priorities
aiming to further develop the management forcorporate value enhancement that we have beenpracticing to date.
We are focusing on strengthening earning
power as our top priority. In Japan, we will aim
to demonstrate leadership of the entire industry
through product mix improvements and innovation
centered on high added value. Furthermore, we will
enhance our earning power overseas by expanding
our new foundation for growth that leverages ourstrengths, as seen with the acquisition of European
beer businesses, in addition to implementing thestrategies for growth for our existing businesses.
Acquisition of European Beer Businesses page 28

The second key priority is improvement of ourasset and capital efficiency. We are making efforts
to improve capital efficiency in terms of capital cost,such as the equity spread. With regard to maintaining
and growing ROE, we are not relying solely on capital
policy such as financial leverage, but also engaging
in business management utilizing indicators such as
ROIC and restructuring our business and productportfolios. Message from the CFO page 32
The third key priority is reinforcement of ESG
initiatives. Operating companies will face increased
pressure to emphasize sustained growth andmedium- to long-term corporate value in their
management going forward. Against this backdrop,
we are further strengthening our ESG initiatives,
aiming to increase sustainability as an indispensable
element for developing business activities.
ESG Initiatives of the Asahi Group page 35

Summary of 2016
In 2016, we consolidated the position of our threedomestic businesses as the cornerstone of our profit
base by bolstering the value of our core brands.
At the same time, we continued to develop theOverseas Business as a growth engine. Specifically, in
the Alcohol Beverages Business, revenues from our
new genre brand Clear Asahi and RTD* low-alcohol
beverages Asahi Mogitate expanded dramaticallyabove the industry average. Moreover, in the Soft
Drinks and Food Businesses, we pursued sustained
growth in our core brands such as Wilkinson
carbonated drink and MINTIA breath mint tablets,
and achieved a major boost in profitability from the
expansion and development of high added value
products such as foods with function claims.
Overseas, we made progress in branddevelopment and integration synergy expansion
in growing categories such as Asahi Super Dry,
mainly in Oceania. In October, we acquired leading

premium brands Peroni and Grolsch and businesses
with extensive sales networks in Europe. These
actions extended our growth platform overseas
and strengthened our earning power in Japan andoverseas.
Furthermore, we reviewed our asset holdings,
including the sales of investment accounted for using
equity method in China and cross-shareholdings,
and we are making steady advances with our key
priority of increasing asset and capital efficiency.
Since my appointment as president, I have feltthat our current management needs to speed up
and optimize decision-making. I have requested thisfrom the heads of our Group companies, and havealso implemented it myself. Last year, we intensified
our focus on the core competences of each of ourbusinesses through truly swift decision-making, andI believe we have achieved the necessary management reforms.

* RTD: R eady-to-Drink. Beverages that can be consumed immediately upon purchase, such as canned chuhai

Integrated Report 201625

Medium-Term Management Policy

Message from the President

Steady Progress on Guidelines of the MediumTerm Management Policy for KPIs
2017 Initiatives and Progress on Guidelines
In 2017, we will strengthen and accelerate ourinitiatives to further develop management forcorporate value enhancement.
In the Alcohol Beverages Business, we willfurther bolster our brand strength by stimulating
consumption of intangible aspects centeredon Asahi Super Dry, which will mark the 30th
anniversary of its launch. In the Soft Drinks and FoodBusinesses, we will concentrate on demonstrating
leadership in value competition by increasing thevalue of our core brands and driving innovation in
health functions. Overseas, we will focus on stable
growth of our existing businesses, and reinforce ourfoundation as a global player with growth centeredon the premium market, including the newly consolidated Central and Eastern Europe beer business.

Furthermore, we plan to continue our zero-based
review of all of our assets in Japan and overseas andfurther optimize our business portfolio.
In our performance outlook including these2017 initiatives, we are forecasting steady progresson the guidelines of the Medium-Term Management
Policy. Revenues are expected to show steady
growth discounting the impact of the transition to
International Financial Reporting Standards (IFRS).
Core operating profit is expected to achieve a
compound annual growth rate (CAGR) of 10% ormore with the addition of the consolidation effect of
the Western Europe business.
As a result, EPS, one of our KPIs, is expected toachieve a CAGR of 12%, with ROE rising to 11%,exceeding the guideline target of 10%.

Key Performance Indicator Concept and Guidelines for the Medium-Term Management Policy
2015 Results

Revenue

Guidelines for 2016 to 2018

¥1,857.4 billion· Stable growth from main businesses – Business restructuring + New M&As

¥135.1 billion· Existing businesses (CAGR in the high single digits) + Impact of new M&As

Core Operating Profit
EPS¥166.3ROE

8.8%· CAGR of approx. 10%· Maintain and grow to 10% or higher

Notes: 1. The above indicators take into account the impact of the transition to IFRS at the end of 2016.
2. The calculation basis excludes special factors such as foreign exchange impact and one-off extraordinary items.

Revenue/Core Operating Profit
Revenue (Left axis)

EPS/ROE

Core operating profit (Right axis)(¥ billion)

2,000.0

1,714.2

1,785.4

1,857.4

1,500.0

1,000.0

EPS (Left axis)(¥ billion)

117.4

128.3

135.1

1,706.9

1,820.0

200.0

165.0

150.0

148.4

ROE (Right axis)

(¥)

(%)

250.0
200.0

8.0

150.0
100.0

11.0

11.0

135.738.1
148.928.8

209.55194.75

50.0

0.0

26

ASAHI GROUP HOLDINGS, LTD.

IFRSJapanese Accounting Standards

2013

2014

2015

2016

2017 (Forecast)

0.0

6.0
4.0

50.0
0.0

10.0
8.0

166.25

100.0
500.0

12.0

2.0
IFRS

Japanese Accounting Standards

2013

2014

2015

2016

2017 (Forecast)

0.0Initiatives on Key Priorities of the Medium-Term Management Policy

Striving for True Globalization
through the Acquisition ofEuropean Beer Businesses
Acquisition of European Beer Businesses
In October 2016, we acquired the Western Europe
beer business of SABMiller plc, after it was acquiredby the largest global beer manufacturer, AnheuserBusch InBev SA/NV. Furthermore, in March 2017,
we completed procedures for the acquisition of
SABMiller’s Central and Eastern Europe beer business.
The purpose of this acquisition is to acquire a
growth platform overseas in line with the Long-Term
Vision and Medium-Term Management Policy. I
believe that in seizing this opportunity we haveacquired the capability to compete as a global
player in the beer business, which is our corestrength. With this, we have confirmed our strategy
for growth in the Overseas Business, centered on
growth in the premium market as a brand owner
and using our strong, mainstream business as a cash
generative base.

Looking ahead, we will aim to be a global beer
manufacturer with strong competitiveness centeredon our leading premium brands like Asahi SuperDry and acquired brands such as Peroni, Grolsch,
and Pilsner Urquell. In Europe, our second largest
market after Japan, we will harness synergies withthe strengths we have cultivated in Japan to further
enhance our earning power overseas.
Acquisition of European Beer Businesses page 28

Moving on the Real Global Stage
Guided by our corporate philosophy of contributing
to the promotion of healthy living and the enrichment of society worldwide, we have cultivated a
corporate culture of taking on challenges and striving to innovate. This is demonstrated by the rapid
growth of Asahi Super Dry in Japan. I believe thatthe acquisition in Europe last year, the largest in the
Company’s history, positioned us to demonstrateanew our corporate DNA of taking on challenges torealize our corporate philosophy.
Furthermore, this acquisition has brought the
proportion of non-Japanese Group employees toaround 60%. We will now seek to manage the company in a way that welcomes not only consumers

from around the world, but also employees. Oneof the key priorities under the Medium-Term
Management Policy is reinforcement of ESG initiatives. Promoting our new-found diversity is anotherway that we will seek to become a truly global
company going forward.
Using the large-scale European acquisition as aspringboard, we aim to transform from JapaneseAsahi to global Asahi. We also endeavor to achievesustained growth driven by rebuilding our businessportfolio and position the domestic profit base as
the cornerstone of earnings. I hope all our stakeholders will continue to support us in our efforts.

Integrated Report 201627

Medium-Term Management Policy

Strengthening of earning powerby positioning the domestic profit base as the cornerstone ofearnings and the overseas business as a growth engine
FeatureAcquisition of European Beer Businesses

We saw an opportunity with the acquisition by Anheuser-Busch InBev SA/NV, the largest global beer manufacturer, of SABMiller plc, the second largest brewer, and purchased SABMiller’s beer businesses in western, central
and eastern Europe.
By acquiring these businesses, our overseas revenue is expected to rise to comprise about 30% of overall
revenues and we have obtained global premium brands, as well as the human resources and expertise crucial forour strategy for growth going forward.
This section gives an introduction of the acquired businesses and policies for strengthening earning power
looking ahead.

Growth Engine
Western Europe Business
Operations Overview
In addition to forming a stable earnings base in Italy
and the Netherlands, the Western Europe businessis becoming steadily more profitable in conjunction
with rising margins as Peroni and Grolsch drive
growth and expansion as global brands in the U.K.
and other third countries.
In Italy, Peroni has a history of 150 years andhas the No. 1 share in its home market. Grolsch
has a history of 400 years and occupies the No. 2
position in its home market of the Netherlands.

28

ASAHI GROUP HOLDINGS, LTD.

In the U.K., Peroni Nastro Azzurro is the No. 1 brandin the super premium market, and together with
Meantime, a pioneer modern craft beer, is rising inpresence in the growing category. In regard to third
country developments, rigorous, globally unified
marketing has firmly established the positions ofour premium brands, and the human resources andexpertise that succeeded with this strategy are asignificant strength in the Western Europe business.

Initiatives on Key Priorities of the Medium-Term Management Policy

U.K.

Ratio of Revenue

Summary of Results(Rate at time of acquisition ¥115.5/euro)

Peroni
NastroAzzurroSuper premium
No. 1 brand
Brand share
(3%)

2016
(ended March 2016)

Third
countries

19

%

27

%

32

%

21

%

(€ million)(¥ billion)

747
170

86.3
19.6

128

14.8

Revenue
EBITDA
Core operating
profitSales volume730,000 kiloliters

No. 10

Meantime
A pioneer ofmodern craft beer

Italy

PeroniNo. 1 Italian brandcultivated over a historyof 150 years

Netherlands

Brand share
(13%)

No. 1

GrolschSwing-top bottled beerwith 400 years of history
Brand share
(12%)

No. 2
* Source: Canadean (Brand share is on a volume basis)

Future Direction
Since closing the deal in October 2016, the medium-term strategy has been rebuilt mainly by theBusiness Integration Team set up at Asahi Europe
Ltd, the Western Europe headquarters.
The new Asahi Europe Ltd will leverage its
strengths and past success models so far, take onchallenges and become a global premium beer
powerhouse. As guidelines for envisioned businessperformance over the next three years or so, we aim
to have an average annual growth in the high single
digits for revenue and an average annual growth ofabout 10% for core operating profit.

Using “Growth Engines & Rockets” as a strategic
key phrase, we will work toward sustainable growthby using Italy, the Netherlands and the U.K. as stable
growth engines and further developing premium
brands in third countries as expansion rockets.
In addition to these standalone plans, our vision
is to broaden our strategic options by geographically
expanding our global premium brands, including
Asahi Super Dry, and creating synergies thatleverage strengths originating from Japan such ascost competitiveness and innovation.

Integrated Report 201629

Medium-Term Management Policy

Growth Engine

Central and Eastern Europe Business
Operations Overview

Future Direction

Similarly to the Western Europe business, closing
the deal to acquire the Central and Eastern Europe
business in March 2017 secured manufacturing,sales and marketing companies formerly owned by
SABMiller plc for five central and eastern European
countries (Czech Republic, Slovakia, Poland,
Hungary and Romania) and global brands including
the original pilsner beer, Pilsner Urquell distributedin over 50 geographies globally.
Market shares of the acquisitions are the top
in each country, except for Slovakia where we area close No. 2, including a 44% share in the Czech
Republic, which has the highest per capita beer consumption. Total sales volume is 250 million cases,
about 1.5 times the size of the Japanese market.
With the background of a strong operations base,the Central and Eastern Europe business is highly
profitable with an EBITDA margin of 30%.
The Czech Republic, Slovakia and Poland
account for 73% of revenue. Overall growth has
been affected by changing competitive dynamics
predominantly in Poland. This has resulted inflat growth over the last 3 years, however recent
performance shows indications of a reversed trend.

As with the Western Europe business, the objectiveof acquiring the Central and Eastern Europe business was to gain an overseas foundation for growth
based on the Long-Term Vision and Medium-Term
Management Policy. This case, in particular, will
enable construction of a network for firm growthacross all of Europe and shows strong compatibility
in terms of brand development and management
at scale, with the Western Europe business having
been under the same SABMiller umbrella.
While volume growth going forward may belimited given high per capita consumption andchanging consumer and trade dynamics, there isopportunity in managing promotions, brand andchannel mix and as well as further portfolio premiumization providing healthy top and bottom line
expectations going forward. The Central and Eastern
Europe business is strongly cash generative andpresent across all segments of their markets witha consolidated position in mainstream and further
growth opportunities in premium and above.
Asahi Breweries Europe Ltd, the Central andEastern Europe headquarters, will, as with theWestern Europe business, prioritize stable growth on astandalone basis before fusing with the Asahi Group’s
strengths to create synergies to further enhance value.

Letters from CEOs

Asahi Europe Ltd(Western Europe Business)

Asahi Europe Ltd’s vision is to become a global premium beer powerhouse. We have the brands, expertise and talent
to achieve this. Asahi Group Holdings is supportive of our efforts to be at the vanguard of premium brand-building inEurope in order to succeed in this region. All share this ambition and I am confident
that we are strongly positioned to achieve it.
On 11 October, 2016 we celebrated the creation of Asahi Europe Ltd by giving
our associates a clear vision of our future as part of Asahi Group Holdings andcreating a sense of connection. Our integration with Asahi is almost complete. We
are now turning our attention towards realising potential synergies between ourorganisations. Another area of focus will be Asahi Super Dry’s success in Europe as apremium brand. We are well-prepared for and excited about the challenge.
The relationship between our management and the Head Office is extremely positive and constructive. I am confident that the recent incorporation of Asahi Breweries
Asahi Europe Ltd CEO
Europe Ltd will generate substantially greater opportunities for the Group.
Hector Gorosabel

30

ASAHI GROUP HOLDINGS, LTD.

Initiatives on Key Priorities of the Medium-Term Management Policy

Ratio of Revenue

PolandExports

6

%

15

34

%

Market Share of
Acquired Businesses

35

%

39

%

Summary of Results

5(Rate at time of acquisition ¥120/euro)%2016(ended March 2016)

Revenue
EBITDA
Core operating
profit(€ million)(¥ billion)

1,641
494

197.0
59.3

355

42.6

3,170,000 kiloliters

Sales volume%

Czech RepublicMarket Share of
Acquired Businesses

44%

Hungary

Slovakia

Market Share of
Acquired Businesses

30%

Romania

Market Share of
Acquired Businesses

28%

Market Share of
Acquired Businesses

34%* Source: Canadean (Market share is on a volume basis)

Asahi Breweries Europe Ltd(Central and Eastern Europe Business)

We are excited and delighted to be part of the Asahi Group and grateful for the warm welcome that we have received.
We see many opportunities to share, learn and grow, as we start this new chapter of our history “powered by Asahi.”
We will ensure that our traditional beer brands maintain the uniqueness andhigh quality that has made them so popular at home and abroad, while continuing
to bring new flavours, low and no-alcohol beers and other specialities to market to
excite consumers and expand the beer category. We especially welcome the opportunities for our beers in Asia and for brands such as Asahi Super Dry in Europe.
We have always relied on the professionalism and passion of our people for ourbrands and businesses and we now look forward to embracing new concepts like
Kando, which will allow us to share that passion with our new colleagues across the
Asahi Group.
This is the start of a new journey; here’s to a successful future together.
Asahi Breweries Europe Ltd CEO

Paolo Lanzarotti

Integrated Report 201631

Medium-Term Management Policy

Aiming at Sustained Corporate Value
Enhancement through Asset andCapital Efficiency Improvement

Asset and capital efficiency improvementthat takes into consideration capital costDirector and Corporate Officer, CFO
Kenji Hamada

Message from the CFO

Adoption of International Financial Reporting Standards (IFRS)We voluntarily adopted the International Financial
Reporting Standards (IFRS) from the year-end
financial report for 2016. We decided to adopt IFRS
in order to provide our shareholders, investors andother stakeholders with more useful information
by enhancing the comparability of our financial
information with other companies worldwide, andby enriching the content of our financial disclosure.
We also intend to enhance corporate value by
bolstering management with an emphasis on asset
and capital efficiency.
The main impact from our adoption of IFRS
in the financial report for the previous fiscal year
was a ¥183.4 billion decline in revenue comparedwith the Japanese accounting standards, reflecting

the deduction of rebates directly linked to sales.
Moreover, we have presented core operating profit
as the profit remaining after deducting cost of sales
and selling, general and administrative expenses
from revenue. However, as core operating profit
does not reflect amortization of goodwill, it reflects
an increase of ¥7.7 billion compared to operating
income under the Japanese accounting standards.
Furthermore, core operating profit is not defined
under IFRS, but we have decided to present it asa central reference index for the results of eachbusiness going forward because we believe it will be
helpful for shareholders and investors as a reference
index for normalized business performance.

Impact of IFRS Adoption (2016 Results)

RevenueCore operating profit*1(Billions of yen)
IFRS

Japanese
accounting
standards

Difference
due toIFRS adoption

1,706.9

1,890.3–183.4

148.4

140.7

7.7

* Deduction of sales incentives from sales*1 The reference profit index for normalized business performance results.
Core operating profit = Revenue – (Cost of sales + Selling, general and administrative expenses)

Breakdown of impact of IFRS adoption on core operating profit (+¥7.7 billion)
Total impact of IFRS adoption

–9.4

–17.1

7.7

Amortization of goodwill

–6.2

–17.1

10.8

* Non-amortization of goodwill

Corporate adjustment items

–3.1

–

–3.1

* Adjustments arising in conjunction with IFRS adoption

Retirement benefit expenses
adjustment

–2.6

–

–2.6

Adjustment for depreciation
and amortization, other

–0.5

–

–0.5
Further details of the effect of the transition to IFRS page 78

32

ASAHI GROUP HOLDINGS, LTD.

Initiatives on Key Priorities of the Medium-Term Management Policy

Asset and Capital Efficiency Improvement That Takes
into Consideration Capital Cost
Improvement of asset and capital efficiency is a
key priority under the Medium-Term Management
Policy. We are striving to expand the equity spread,which is the difference between the cost ofshareholders’ equity and ROE, as this is a source ofcorporate value.
Specifically, we have broken down ROE into
ROIC and financial leverage, using them as reference
points to define the respective activities of Asahi
Group Holdings and its operating companies. This
enables us to align the direction of activities for theentire Group. First, the operating companies primarily focus on strengthening earning power, one of theMedium-Term Management Policy’s key priorities.
Meanwhile, they are leveraging the sophisticationof their business models through product portfolio
selection and concentration and setting KPIs suchas revenue structure reforms and reductions inoperating capital. The holding company conducts
M&As focused on returns and business portfolio
restructuring. It also executes financial strategies inconsideration of an appropriate capital structure,including balancing investments for growth andshareholder returns. In 2016, our efforts steadily

produced results. We made a significant investment
in our European beer businesses, and worked swiftly
to review our asset holdings, including the sale ofinvestment accounted for using equity method in
China and idle real estate.
Meanwhile, to reduce the cost of shareholders’equity, I believe it is most important to build trust
relationships with our shareholders and investors.
Our policy is to work to reduce the capital costby continuing to provide appropriate information
disclosure and conduct constructive dialogue.

Capital efficiency improvement with an emphasis on the equity spread(ROE – cost of shareholders’ equity = creation of corporate value)
Maintain andgrow ROE
Improve ROIC
Profit margin
on revenues

CapitalturnoverFinancial leverage

Reduce the cost ofshareholders’ equity

Asahi Group Holdings

Operating companies· Promote investments for growth focused on
returns· Streamline SCM across the Group· Improve human productivity through effective
posting and other means· Bolster brands through high added value anddifferentiation· Revise business and product portfolios· Reform profit structures such as internal business integration (positive impact of ¥20.0 to¥30.0 billion from streamlining over three years)· Focus on core competences in the businessportfolio· Improve efficiency and business management
leveraging the adoption of IFRS
· Review and reduce investment assets· Reduce working capital (shorten the cash
conversion cycle and reduce inventories)· Enhance the capacity utilization rate throughbusiness integration and other means· Reduce non-core, non-utilized assets· Utilize financial liabilities, considering the
optimal capital structure· Enhance shareholder returns through stabledividend increases and other means—· Conduct fair and appropriate disclosure of information, including non-financial information
about medium- to long-term management strategies, resource allocation and other matters· Build relationships of trust through constructive dialogue with shareholders and investors basedon appropriate disclosure of information

Integrated Report 201633

Medium-Term Management Policy

Message from the CFO
Financial and Cash Flow Guidelines and Progress
As a guideline in the Medium-Term Management
Policy, we are targeting cumulative cash flows
generated over the three years of ¥470.0 billion or
above from cash flows from operating activities andreview of assets. We are also planning to achieve
free cash flow of at least ¥250.0 billion after deducting capital expenditures. We plan to utilize free cash
flow, considering the balance between investments
for growth and shareholder returns.
Investments for growth will amount to approximately ¥1.2 trillion in total, including the acquisitionof the Western Europe beer business in 2016 andthe acquisition of the Central and Eastern Europe
beer business in 2017. To fund these investments,
we plan to use our own capital and financial
liabilities rather than equity finance, which has a highcapital cost. We expect this to bring our D/E ratio
to around 1.5, exceeding initial guidelines, and ournet debt/EBITDA ratio to around 5.0. However, we
expect the increase in cash flow generation from theacquisitions combined with further asset streamlining
effects to reduce the D/E ratio to around 1.0 and thenet debt/EBITDA ratio to around 3.0 by 2020. Ourpolicy is to continue to maintain a certain degree ofsoundness while executing financial strategies thatwill contribute to enhancing corporate value.

With regard to shareholder returns, our dividend
per share in 2016 increased by ¥4 year on year to¥54, and in 2017, we plan to increase it by ¥6.
The dividend payout ratio for 2016 was 27.7%,
partly reflecting the transition to IFRS. We plan tosuccessively increase dividends targeting a dividend
payout ratio of 30% on an IFRS basis by 2018.
Looking ahead, taking into account the opportunities and risks in the external environment, we willseek to attain sustained increase in corporate value
by investing to expand the Group’s foundations for
growth and enhancing shareholder returns.

Dividend per Share/Dividend Payout Ratio
Dividend per share (Left axis)

Dividend payout ratio (Right axis)

(¥)

(%)

60
45

43

50

54

60

50.0
40.0

40

28.6

20.0

20

10.0
0

2013

2014

2015

2016 2017 (Forecast)Financial and Cash Flow Guidelines under the Medium-Term Management Policy
Cumulative Guidelines for 2016–2018

Cash Flows• Generate cash flows of ¥470.0 billion or more
(Cash flows from operating activities + Maximization measures + Asset review)• Capital expenditures of ¥180.0 to ¥220.0 billion

Investments for Growth

Shareholder Returns

34

ASAHI GROUP HOLDINGS, LTD.

30.0

• Active investment in M&As and alliances to acquire foundations for growth(Maximum D/E ratio of approx. 1.0 acceptable if major capital demands arise)• Stable dividend increases targeting a dividend payout ratio of 30% (IFRS basis)by 2018• Flexible share buybacks taking into account an appropriate balancewith investments for growth

0.0Reinforcement of ESG Initiatives
to increase sustainability

ESG Initiatives of the Asahi GroupOne of the three key priorities in the Asahi Group’s Medium-Term Management Policy is reinforcement of ESG
initiatives. To address this priority, we renewed our materiality structure in 2016 in conjunction with launching
initiatives based on specific targets for each individual materiality theme.
Under the Medium-Term Management Policy, we also seek to achieve development toward a CSV (creating
shared value) strategy as part of the reinforcement of ESG initiatives. We will work closely with stakeholders
to drive development toward initiatives that balance the creation of both value for society and value for us, inconjunction with tackling the challenge of CSV initiatives unique to us.

■ Positioning of ESG Priorities
Positioning within the Medium-Term Management PolicyE
Environment

S

Upgrading of intangible assets and theirdevelopment toward a CSV (creating
shared value) strategy• Aim to upgrade intangible assets including natural, socialand relationship capital by expanding environmental
initiatives and collaboration with stakeholders.

Governance

Food
and
Health• Aim to develop the above initiatives into the CSV strategy
utilizing the Group’s strengths in addition to addressing
them for CSR.

■ Responsible Drinking■ Food Safety and Reliability■ Health and Nutrition■ Climate Change

The
Environment• Strengthen upgrading of human capital essential for sustained growth through development of talent, promotionof diversity, and other means.
PeopleandSociety■ Recycling-Based Society■ Biodiversity■ Human Resource Development andDiversity■ Healthy and Affluent Society■ Sustainable Water Resources■ Sustainable Supply Chains

SocialG

CSR Key Themes
Constituting the CSR Materiality Structure

Promotion of growth-oriented
corporate governance• Implement further reforms based on the Corporate
Governance Guidelines and Corporate Governance Code• Strengthen Group governance to strengthen strategic
functions and build medium- to long-term growth drivers

Refer to Corporate GovernanceSee page 48

WEB http://www.asahigroup-holdings.com/en/whoweare/governance.html

Integrated Report 201635

Medium-Term Management Policy■ CSR of the Asahi Group
Basic Philosophy
In this report, we set social collaboration ability as one of the Asahi
Group’s four strengths. We see this concept specifically as initiatives aimed
at a sustainable society and enhancing overall communication with society.
By harnessing our social collaboration ability for CSR activities, we aim topursue stakeholder satisfaction as laid out in the Long-Term Vision.
Moreover, the Medium-Term Management Policy also touches
on development toward a CSV strategy. In keeping with thisapproach, we will foster cooperation with various stakeholders
through our social collaboration ability, with the aim of contributing to the solution of social issues.
Through all of these initiatives, we will endeavor to createshared value between society and the Group, thereby enhancing
our corporate value.

CSR Implementation Structure
To ensure that CSR activities extend beyond the efforts of individual companies and effectively increase thecorporate value of the entire Group, we have adopted a structure for promoting CSR across the Group.
Specifically, we regularly hold the Group CSR Promotion Council and the Group Environmental Council todecide on specific policies and review progress. We consult with the Asahi Group Holdings, Ltd. Corporate
Strategy Board before making decisions and we emphasize commitment with the Board of Directors.

Asahi GroupCSR Implementation Structure

President and Representative Director
Corporate Strategy Board in Asahi Group Holdings, Ltd.
•Determining measure initiatives•Reviewing the progress ofmeasures/providing feedback

The Group CSR Promotion Council•Putting measures into effect/
formulating direction•Accelerating the implementation of
specific measures/tracking progress•Spreading awareness of CSR
within the Group

Chairperson of Group CSR Promotion Council(Director in charge of CSR, Asahi Group Holdings, Ltd.)CSR Promotion Secretariat(Corporate Social Responsibility Section,
Asahi Group Holdings, Ltd.)

Asahi Group Holdings, Ltd.
Functional Sections(Corporate Strategy Section, Public Relations Section,
Human Resources Section, General & Legal Affairs
Management Section, Research & Development Section,
Production Section, Procurement Section,and Logistics Section)

36

ASAHI GROUP HOLDINGS, LTD.

Asahi
Breweries,
Ltd.

Asahi
Soft Drinks
Co., Ltd.

LB Co., Ltd.

Asahi Group
Foods, Ltd.

Asahi Logistics
Co., Ltd.

Asahi
Calpis Wellness
Co., Ltd.

Working Groups

The Group Environmental Council•Implementing measures•Implementing environmental measures

Initiatives on Key Priorities of the Medium-Term Management Policy

Materiality Renewal Process
We renewed our materiality structure in 2016. Looking at the background to this process, in terms of society,a global direction for the future has emerged as a result of developments including the adoption of the United
Nations Sustainable Development Goals (SDGs) and the Paris Agreement on climate change. In terms of the
Asahi Group, a key factor is the roll-out of the Medium-Term Management Policy that establishes reinforcement of ESG initiatives as one of its key priorities.
Against this backdrop, we renewed our CSR Key Themes following the process below. Currently, we areformulating specific initiatives aimed at attaining these themes and are promoting activities on a Group-widebasis, along with regularly reviewing initiatives in the Group CSR Promotion Council and other forums.

STEP

1
STEP

2
STEP

3

Identifying Issues

Using the G4 Sustainability Reporting Guidelines issued by GRI and other materials as areference, we identified issues and examined them thoroughly against our previous key
themes. There was also a discussion of the scope in which these issues have an impact.

Discussion from
Stakeholders’ Perspective

We had a stakeholder dialogue between five directors of Asahi Group Holdings, Ltd.
and two outside experts. The participants looked into the issues examined from Step 1
and discussed the approach we should take toward these issues.

Deciding on Materiality
and the Direction ofSpecific Measures

We decided on materiality, taking into account the dialogue with stakeholders, andstipulated the direction of specific measures reflecting the items discussed during the
dialogue.

Implementation of Measures and Ongoing Review

CSR Key Themes and KPIs
In conjunction with renewing our materiality structure, we set key performance indicators (KPIs) for each CSR
Key Theme, and are implementing related measures. We aim to steadily push ahead with these measures byimplementing PDCA cycles through the Group CSR Promotion Council spanning the entire Group.
Activity Areas for CSR

CSR Key Themes

Responsible
Drinking
Food
andHealthFood Safety andReliability
Health and Nutrition

KPIs

Distribute over 35,000 copies of educational tools for primary school students
throughout 2017 to contribute to the prevention of underage drinking.
Achieve an average score of 90 points or higher (out of a total of 100 points)
on 2017 customer questionnaires. (This questionnaire is for certain customers
who have submitted comments on the products of Asahi Breweries, Ltd.)Engage in dialogue with over 100,000 participants in 2017 through
Wakodo Nutrition Consultations.

Climate Change
The
Environment

Recycling-BasedSociety

Establish medium- to long-term environmental targets consistent
with scientific knowledge within 2017.

Biodiversity

PeopleandSociety

Human Resource
Development andDiversity

Achieve the targets for ratio of female managers set at each major company
within the Group.

Healthy andAffluent Society

In keeping with the policy of the 1% Club established by KEIDANREN(Japan Business Federation), pledge to spend around 1% of core operating profit
on social contribution activities.

Sustainable Water
Resources

Establish medium- to long-term environmental targets consistent
with scientific knowledge within 2017.

Sustainable Supply
ChainsEngage in direct dialogue with 13 suppliers within 2017,
based on the findings of the Supplier CSR Survey undertaken in 2015.

Integrated Report 201637

Medium-Term Management Policy■ Development toward a CSV Strategy
Under the Medium-Term Management Policy, we aim fordevelopment toward a CSV strategy as part of our reinforcementof ESG initiatives. Our operating companies possess an expansive
range of resources and knowledge that has been amassed since
the founding of each company. By maximizing these assets
unique to the Asahi Group, we will contribute to the solution ofsocial issues through our businesses. Combined with the creationof shared value with society, these efforts will help to increase the
Asahi Group’s corporate value.

The Asahi Group’s Basic Philosophy on CSV
The Asahi Group CSR Policy categorizes CSR activities into the three elements of “our foundation as a company,”“response to social expectations” and “creation of social values.” Of these, we consider activities related to “response
to social expectations” and “creation of social values” to be CSV. Here, we actively promote activities leveraging the
Asahi Group’s strengths.

CSR Key Themes

The Asahi GroupCSR Policy
Responsible
Drinking

Food Safety
and Reliability

Health andNutrition

ClimateChangeRecyclingBased Society

Biodiversity

Human
Resource
Development
and Diversity

Healthy andAffluent
Society

Sustainable
Water
Resources

Sustainable
Supply Chains

Develop Agricultural
Materials Using Beer Yeast

Creation ofSocial Values

Develop Products
That Deliver
Health Value
See page 39

See page 39

Reduce CO2 emissions
through the adoption of
new technologies

Barley-ofHope Project

CSV
Creating
sharedvalue

See page 39

Promote environmentally andsocially friendly products

Response
to Social
Expectations

Propose healthy dietsto consumers

Use and treat sustainable
water resources
Reduce greenhouse gases andwater use (per basic unit)

Strengthen initiatives
for alcohol-related problems
and food education

Reduce waste andpromote recycling

Acquire comprehensive ISO 14001
certification for domestic Group
companies

Our Foundation
as a Company

38

ASAHI GROUP HOLDINGS, LTD.

Undertake initiatives to promote
food safety and reliability
through products and businesses

Preserve and nurture
the Asahi Forest

Work on environmental,social and ethical issues
in the supply chain
Promote diversity ofhuman resources toenhance performance

Undertake social
contribution andartistic and culturalactivities

CSR
Corporate social
responsibility

Initiatives on Key Priorities of the Medium-Term Management Policy

Food
and
HealthDevelop Products That Deliver Health Value

Strengthening the Development of Products
That Deliver Health Value

We are strengthening the development of products that deliver innovative
health value to customers.
We are incorporating materials and technologies we have developed internally into our product development, beginning with the lactic acid research andapplied microbiology technologies we have pursued over many years. Besides
foods for specified health uses (FOSHU) and foods with function claims backed
by solid evidence, we will strengthen the health value of our various brands andendeavor to make new proposals leveraging the knowledge we have developed
to date.
Going forward, we aim to continue playing a vital role in helping toenhance the health of our customers.

Develop Agricultural Materials Using Beer Yeast
The
Environment

Contributing to Environmentally Friendly
Agricultural Production through Beer Yeast Cell Walls
We are developing an agricultural material (fertilizer) containing beer yeast cell
walls, a by-product of the brewing process. We established a new company,
Asahi Bio Cycle, in March 2017, in an effort to strengthen this business further.
This agricultural material is effective in increasing agricultural yields andimproving the quality of agricultural produce by harnessing the ability of beer
yeast cell walls to boost the immunity of plants. The use of the agricultural
material will enable us to contribute in such ways as realizing environmentallyfriendly agriculture and reducing greenhouse gases.
Looking ahead, we will expand this business across a broad spectrum of
agriculture with the aim of helping to address issues such as converted former
rice paddies and abandoned farm land, which have become social concerns,
thereby contributing to a sustainable society.

PeopleandSociety

Barley-of-Hope Project

Aiming to Spur the Development of Local Industries
in Disaster-Hit Areas by Harnessing the Knowledge of Barley

As part of our Great East Japan Earthquake recovery support activities, we areconducting the Barley-of-Hope Project to create new industries and interaction
in disaster-hit areas. The project involves growing barley in disaster-hit areas,
processing the harvested barley into products, and selling the products in collaboration with the Higashimatsushima Organization of Progress and Economy,
Education, Energy.
In 2015, the harvested barley was processed into craft beer and snacks,
and these products were sold primarily in the city of Higashimatsushima.
Furthermore, the range of products made from the harvested barley has been
expanding. Notably, in November 2016, we brewed Barley-of-Hope Ale at ourcraft beer brewery, Sumida River Brewing, and sold it through our restaurant
operations.
We will continue the project activities to ensure that they take root as local
industries.

Integrated Report 201639

Medium-Term Management Policy

SPECIALFEATUREESG Initiatives of the Asahi Group

Sustainable Water Resources

Promoting the Use of
Sustainable Water Resources

We use the abundant bounty of nature to conduct business activities. Water, in particular, is used in many
essential ways, such as growing raw materials and cleaning manufacturing equipment. We recognize water as anatural resource that is essential to business continuity and difficult to replace.
With this in mind, we endeavor to implement appropriate measures and management to minimize theenvironmental impact of water intake and drainage, in addition to constantly improving water usage efficiency
at all sites that use water. Moreover, efforts are made to manage water resources not just within the scope of
our own operations, but also across the entire supply chain through its business activities. In these and otherways, the Group is proactively working to preserve sustainable water resources.

Activities to Preserve
Water Source Areas
In 2004, Asahi Breweries, Ltd.’s Shikoku Brewerycommenced forest preservation activities in water sourceareas. Since then, these activities have been expanded toother manufacturing bases of the Asahi Group and are
currently undertaken at 12 manufacturing bases in Japan.
Group employees working at each manufacturingbase and their family members participate in these
activities. Working together with local NPOs, forestry
cooperatives, government bodies and other partners,
the participants conduct activities such as tree planting
and weeding, as well as pruning and forest thinning. In
addition, they develop and maintain the woodland paths
needed to carry out these activities. In the course of these
activities, the circle of participants has grown beyond
people involved withthe company to include
local communities bytaking steps such as
inviting local residents
to participate.

The Asahi Group’s
Water Resource Cycle

Water source areas
Water

FarmlandRawmaterials

Consumer AwarenessIn addition to conveying the importance of water
resources, we also provide environmental education to
encourage consumers to consider what they can do intheir daily lives to preserve water resources. We believethat it is vital to communicate our activities to pave
the way for activities to be undertaken by society as
a whole. In parallel, we believe it is crucial to develop
human resources
capable of considering
the needs of theenvironment and taking
appropriate action.

40

ASAHI GROUP HOLDINGS, LTD.

Water
intakeAsahi Group(production sites)
Drainage

Consumers

Initiatives on Key Priorities of the Medium-Term Management Policy

Water Risk Surveys
Outline•Purpose: To analyze water risk in our raw materials procurement process and evaluate theeconomic impact on our business•Analysis target: Major raw materials procured from overseas that are used in bulk anddifficult to replace in the manufacturing of our products•Analysis scope: Survey of water scarcity in supplier areas, survey of the water footprint of
raw materials in each region, evaluation of the cost of natural capital andcomparison with market prices

ResultResponse

The surveys clearly identified those suppliers for which risk
measures should be implemented on a priority basis fromamong the Group’s raw materials suppliers in 59 countries
around the world.

Water Consumption Reduction

Water-related items were added as checklist items to the
supplier quality audit to grasp any changes in conditions.
Through this process, we will work to deepen our
understanding of measures to address water risk together
with suppliers.

Water Reuse

We are reducing water consumption by adjusting theshapes of nozzles that release water and the speed ofwater discharges, in tandem with ensuring proper cleaningand disinfection of tanks and pipes in production sites andcontainers such as cans and PET bottles.

Water used to disinfect and clean cans, PET bottles andother containers is collected and treated using industrial
water treatment facilities. After this process, the water isreused for other purposes, such as cleaning machinery,equipment, and bottle cases.

Cleaning facilities for containers, such as beer bottles, spray a
mixture of water and air at the containers in order to reduce water
consumption and enhance cleaning power at the same time.

Water treatment facilities installed at a brewery ofAsahi Breweries, Ltd. Water reused within the brewery
is treated using these facilities.

Data Management
To appropriately use and manage water resources, we
ascertain the status of water use at all business sites, notjust manufacturing bases, and use this information to
manage water resources more effectively throughout theGroup.

Wastewater Management
Before releasing wastewater generated in the production
process into the environment, we undertake wastewater
treatment using anaerobic water treatment equipment
and other facilities installed at production sites. Moreover,at certain production sites, we show consideration for theenvironment in such ways as putting wastewater throughozone treatment and activated carbon treatment, in
addition to conventional treatment.

Integrated Report 201641

Medium-Term Management Policy

Enhancing Human Capital
The Long-Term Vision set out our future vision for the Asahi Group as an industry leader in Japan with highadded value as a key area of focus that has also established a unique position as a global player that leverages
strengths originating in Japan. To realize this vision, we consider it vital to increase our human resource (organizational) capabilities—one of our four strengths—and have been promoting various initiatives to enhance ourhuman capital.

Logic Tree forEnhancing Human Capital

Key Initiatives

Maximize the capabilities
of individuals and1organizations

Strengthen
human resource(organizational)
capabilities■(succession planning, executive training programs)■■

Accelerateenhancement
through mutualinteraction

Spur growth in multifaceted abilities(Global Leadership Development Program, Cross-Industrial Exchange Training Program)■Enhancehuman
capitalPromote diversity(women’s success, appoint foreign national employees, employ people
with disabilities, employ people who are LGBT, etc.)

Encourage diversity(the source of enhancing
human capital)

Career support(career seminars by age group, career interviews, career advisors)■2

Assign people with the right capabilities to the right posts

Develop workplace
3 environments andoptimize work styles(super-flex-time, telecommuting, and various leave and holiday systems)■

Build healthy workplace environments(health promotion system, stress checks, organizational behavior diagnosis
model)■

4

Promote work-life balance, work style reforms

Management communication(management reports, corporate intranet pages, worksite visits)

Share values■

Monitor inclusion and penetration of various systems(performance review criteria, 360° review, organizational behavior diagnosis
model)

Reshape corporate
culture(support for enhancing
human capital)

Pursue organizational
capabilities and promotesynergies between sections

the corporate
4 Makeculture visible

The logic tree above forms the basis for implementation of plans and proposals for human capitalenhancement measures made within the Asahi Group.
The primary driver for this enhancement of
human capital lies in strengthening our humanresource (organizational) capability itself. While
promoting the growth of employees and ourorganization, we also aim to further enhance thecapabilities of employees by providing an environment to enable diverse human resources to fully
utilize their individual capabilities and support them

42

ASAHI GROUP HOLDINGS, LTD.

■

Share best practices internally(publish examples on the corporate intranet, diversity communications,
Research Activities for Business Reform)■■

Implement organizational behavior diagnosis model
Promote PDCA cycles

in living active lives.
We also consider it important to make acontinuous effort to improve our corporate culture,
which is the fundamental support for strengthening
our human resource (organizational) capabilities.
With numerous operating companies joining the
Asahi Group as we expand our business scale, wewill bolster our initiatives for creating a corporate
culture, such as sharing our values, and establish
a foundation for individual employees to continue
striving for personal growth.

Initiatives on Key Priorities of the Medium-Term Management Policy

1

Maximize the Capabilities of Individuals and Organizations
Career Support
We support human resource development throughGroup-wide programs and individual education
programs tailored to rank and field of specialization.
Looking at the future vision for the Asahi Groupdescribed in the Long-Term Vision, our managerial
personnel need to take a bird’s-eye view over theentire Group and acquire a wide range of necessary

management skills. We are therefore implementing
Group-wide education programs for them.
On the other hand, to ensure the growth ofindividual businesses, we aim to maximize employee
capabilities by implementing specialized education
programs for each rank and field of specialization tostrengthen them.

Executive Training Programs
The changes in the management environment
enveloping us are accelerating with each passing
year. In our global operations, the share of overseas
revenues will increase dramatically following the
expansion of our Western Europe business andCentral and Eastern Europe business. In suchan environment, it is now vital that we develop

managerial personnel with the capabilities to realize
sustainable growth both in and outside of Japan.
We are implementing programs aiming todevelop next-generation management candidates
who can respond rapidly to these changes in ourmanagement environment. These programs are:■ Asahi Executive Leader Program
The presidents and executives of Asahi Group Holdings hand-pick the participants for this program,which is aimed to develop corporate manager candidates for the next generation. This program is
implemented with the objective of nurturing the participants’ ability to develop strategies, lead andattain targets. Participants are also assigned to roles where they can put these skills into practice toensure effective education.

■ Asahi Next Leader Program
Under this program, we select personnel who strongly
aspire to become future corporate managers from among
managers (aged 35 to 45) at operating companies andprovide corporate management education from a mediumto long-term perspective. We have created opportunities
for the participants to expand their horizons by gaining
practical experience through job rotations after completingthe program.

■ Global Leadership Development ProgramThis program is for general manager-level employees at overseas operating companies. The
program aims to better participants’ understanding of the history, corporate philosophy, and otheraspects of the Asahi Group, and give them a global perspective and outlook. It is also intended tohelp them understand and build networks with employees in different regions.

Education Programs Tailored to Rank and Field of Specialization
We implement education programs designed tohelp develop the expert skills needed for individual
operating companies and divisions, and capabilities
for specific ranks such as new recruits or managerial
personnel. Going forward, we also plan to create

an environment that makes it easy for people toupgrade their skills, including the introduction ofa quick-learning system that enables individuals tolearn anytime, anywhere through their smartphones.

Integrated Report 201643

Medium-Term Management Policy

2

Encourage Diversity
Promote Diversity

Basic Philosophy
We see the individual growth of employees withdiverse characteristics utilizing their own capabilities
and aptitudes as something that assists the growthof the entire Company. We therefore work to
educate human resources and create a corporate

culture where employee diversity is respected, andemployees of all nationalities, genders, ages, andlevels of ability can participate. We are creating aGroup-wide promotion framework to encourage
diversity throughout the entire Group.

Asahi Group Holdings, Ltd.
Executive officer in charge of human resources
Asahi Group Holdings, Ltd.
Human Resources Section
Diversity Promotion Group

Asahi Breweries, Ltd.
Person responsiblefor diversity promotion

Asahi Soft Drinks Co., Ltd.
Person responsiblefor diversity promotion

Asahi Group Foods, Ltd.
Person responsiblefor diversity promotion

LB Co., Ltd.
Person responsiblefor diversity promotion

Asahi Calpis Wellness Co., Ltd.
Person responsiblefor diversity promotion

Asahi Logistics Co., Ltd.
Person responsiblefor diversity promotion

Promoting Women’s Success
We have been promoting women’s success basedon the three policies outlined as follows. We havemade a concerted effort to develop female leaders,for example by encouraging female employees toparticipate in various human resource development
programs within the Group. As a result, the numberof female managers and female executives hasgrown steadily over the past few years, and in 2017,
two female presidents have been appointed within
the Group.
In recognition of these activities, Asahi Group
Holdings, Ltd. has been selected as a Nadeshiko
Brand for two years running in 2016 and 2017.

Policies

44

ASAHI GROUP HOLDINGS, LTD.

The Nadeshiko Brand designation is a joint effort by
the Ministry of Economy, Trade and Industry (METI)
and the Tokyo Stock Exchange to select companies
that have demonstrated superior performance inencouraging women’s success in the workplace.
Looking ahead, we will continue to promote a wide
range of activities to become a company where
women can succeed.

· Enable greater participation by women in decision-making meetings(Corporate Strategy Board, etc.)· Propose and pursue action plans tailored to each company’s circumstances· Set numerical targets and implement measures to attain those targets

Initiatives on Key Priorities of the Medium-Term Management Policy

3

Develop Workplace Environments and Optimize Work Styles
Work Style Reforms
The Asahi Group aims to maximize the value thatcan be generated from the work of individual
employees by promoting work style reforms in termsof work processes and workplace environments. We
aim to create a beneficial cycle where enhancing
operational productivity and creating time helps
to improve employees’ work-life balance, healthmanagement, and self-development, in turn helping
individual employees to achieve their full potential.
Each Group company proposes its own specificinitiatives.
Asahi Group Holdings, Ltd. encourages employees to use super-flex-time once a week and thetelecommuting system once a month. We have set
targets for each division and are actively promoting
the use of the systems. We are also expanding
efforts to encourage telework using external shared4

offices. In 2017, we will strive to promote use of paid
leave by setting paid leave usage targets for eachdivision. We have come up with ideas to encourageuse of paid leave, such as Happy Fridays, which
recommends taking leave on Fridays, and “plus-one
holidays” where employees can enjoy extended
holidays by combining holidays with paid leave.
Asahi Breweries, Ltd. has expanded theavailability period of days in lieu for employees who
work on holidays from two months to six months,
allowing employees to utilize them flexibly to suit
their lifestyles.
The Asahi Group will promote work stylereform perpetually as a theme for management andcontinue to promote its initiatives.

Share Values and Make the Corporate Culture Visible
Organization Health Checks through Awareness Surveys
Every year, we conduct an awareness survey for
approximately 9,000 employees at our main Group
companies in Japan. The goal of the survey is toascertain the status of such matters as employee
career awareness, diversity promotion, and workplace environments, and to implement an appropriate PDCA cycle. Specifically, we employ the modelof organizational health checks and seek to assess

employees’ awareness regarding their careers andwork-life balance, as well as the penetration of theGroup vision, management policy, and so forth. We
use the survey to identify issues to be addressed ateach worksite throughout our entire Company andto formulate concrete countermeasures to enhanceand strengthen our organization and human capital.

Integrated Report 201645

Medium-Term Management Policy

Asahi Group’s Management Team(As of April 1, 2017)

Katsutoshi Takahashi
Senior Managing Director andSenior Managing Corporate Officer
From March 2017

Noboru Kagami
Director and Corporate Officer
From March 2016

Atsushi Katsuki

Naoki Izumiya

Director and Corporate Officer

Chairman and Representative Director, CEO

From March 2017

From March 2016

Akira Muto

Mariko Bando

Standing Audit & Supervisory
Board Member

Outside Director
From March 2008
· Chancellor, Educational Corporation,
Showa Women’s University· Chairperson of the Board,
Showa Women’s University· Director, Institute of Women’s Culture,
Showa Women’s University

From March 2015

Tatsuro Kosaka
Outside Director
From March 2016
· President and Representative Director,
Chugai Pharmaceutical Co., Ltd.

Naoki Tanaka
Outside Director
From March 2009
· President, Center for International
Public Policy Studies

46

ASAHI GROUP HOLDINGS, LTD.

Initiatives on Key Priorities of the Medium-Term Management Policy

Yumiko Waseda
Outside Audit & Supervisory
Board Member
From March 2015
· Partner, Tokyo Roppongi Law & Patent Offices· Attorney at Law

Katsutoshi Saito
Outside Audit & Supervisory Board Member

Other important concurrent position· Outside Audit & Supervisory Board Member,
Kao Corporation

From March 2014
· Advisor, The Dai-Ichi Life Insurance Company, Limited· Vice Chairman, KEIDANREN (Japan Business Federation)
Other important concurrent positions· Outside Director, Imperial Hotel, Ltd.
· Outside Corporate Auditor, Tokyu Corporation

Yutaka Kawakami
Outside Audit & Supervisory
Board Member
From March 2017
· Certified Public Accountant
Other important concurrent position· Supervisory Director, Nippon Building Fund Inc.

Yoshihide Okuda
Senior Managing Director andSenior Managing Corporate Officer
From March 2017

Kenji Hamada
Director and Corporate Officer, CFO
From March 2017

Tetsuo Tsunoda

Akiyoshi Koji

Standing Audit & Supervisory
Board Member

President and Representative Director, COO
From March 2016

From March 2016

Shiro Ikeda

Yasutaka Sugiura

Yukitaka Fukuda

Tomomasa Kanda

Yutaka Henmi

Senior Managing Corporate Officer

Managing Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Ryoichi Kitagawa

Taemin Park

Manabu Sami

Keizo TanimuraManaging Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Integrated Report 201647

Medium-Term Management Policy
Dialogue

Corporate GovernanceSupporting Management for Corporate Value Enhancement

Naoki
Izumiya

TatsuroKosakaAs part of the reinforcement of ESG
initiatives under the Medium-Term
Management Policy, we have set
forth to implement growth-oriented
corporate governance that contributes to the practice of management
to enhance corporate value as one ofits specific measures.
In this dialogue, Chairman,
Representative Director and CEO
Naoki Izumiya, who serves as
Chairman of the Board of Directors,
and Outside Director Tatsuro Kosaka
were asked about the Asahi Group’s
priorities and future direction
regarding pushing ahead with thiskey governance measure.

Naoki Izumiya
Chairman and Representative Director, CEO

48

ASAHI GROUP HOLDINGS, LTD.

Seeking to Realize a Transparent
Board of Directors— Could you please describe the features of the
Asahi Group in terms of the functions of the Boardof Directors and the roles of the Outside Directors?
In regard to the Asahi Group’s governance,
management aims to realize a Transparent
Board of Directors by practicing speedy
decision-making and sound risk-taking, in conjunction
with ensuring both transparency and fairness.
To this end, it is vital to promote sharing of management information with the Outside Directors. Other
priorities include enhancing the disclosure of decisions
made by the Board of Directors, along with reflecting the
IzumiyaInitiatives on Key Priorities of the Medium-Term Management Policy

views of shareholders and other members of the public inmanagement. By executing these priorities, I would liketo make the notion of a Transparent Board of Directors ahallmark of the Asahi Group.
It has been one year since I was appointed
as an Outside Director. Considering that the
Asahi Group has voluntarily established theCompensation Committee and Nomination Committee,
along with appointing a sufficient number of independent
Outside Directors, I believe that its governance system
ensures adequate transparency and fairness. Moreover, theAsahi Group has a highly diverse range of individuals serving as Outside Directors and Outside Audit & Supervisory
Board Members. This ensures that the Board of Directors
functions effectively through a lively exchange of various
opinions. Based on these factors, I believe that the Asahi
Group has an appropriate governance system that fits therealities of modern Japan.
Additionally, Mr. Izumiya sees the enhancement of corporate governance as a top management priority. I believe
this is extremely crucial to enhancing the effectiveness of
the Board of Directors.
KosakaAbsolutely. To make this happen, we need totake proper steps to assess the effectivenessof the Board of Directors, along with working
as one with the Outside Directors to discuss governancereforms. I’m confident that this will ultimately lead toa more trusted governance system in the eyes of ourshareholders and other investors.
IzumiyaStrengthening Governance from a
Global Perspective following theAcquisition of European Beer Businesses— What kinds of discussions did management holdin regard to the acquisition of European beerbusinesses?
First, we discussed how we will structure thebusiness portfolio to achieve sustainable growthand increase medium- and long-term corporate
value, along with our future global strategies, policies on
business resource allocation and other matters. We primarily
acquired businesses in eight European countries. All of thesebusinesses are conducted in their respective local markets.
And each country has a different market and competitiveenvironment. For this reason, we gathered information frommany different angles on matters including geopoliticalissues and economic conditions. We shared this informationand discussed in meetings of the Board of Directors.
IzumiyaIn addition to the discussion on strategies thatjust came up, there was an explanation of risks
and opportunities and an analysis of appropriate corporate valuation based on due diligence. We also
held discussions based on a variety of information, including governance after the completion of the acquisition andthe prospects for generating synergies to boost value. As
a result, the Board of Directors unanimously approved theacquisition.
KosakaPresident and Representative Director,
Chugai Pharmaceutical Co., Ltd.

Tatsuro Kosaka
Outside Director

Integrated Report 201649

Medium-Term Management Policy

governance and authorization standards, and to share
responsibility and authority between Head Office and local
management. Furthermore, in the course of steering theentire Group, I believe it is important for the Head Office
to retain decision-making authority over medium-term
management plans and single-year business performance,
particularly core operating profits.
As you suggest, from the perspective of local
personnel, we are the business owner. Unless
we articulate a clear vision and medium-term
strategic direction, and issues specific instructions, it willappear unreliable to local management. For this reason,
since the completion of the acquisition, we have been
taking steps to build even stronger relationships of mutual
trust, such as holding several direct meetings with local
management and conducting monthly reporting sessions.
Izumiya

Next on our list of priorities is to generate synergies. Our activities must consider how we will
enhance the brand value of one another on thesales front, and how we will achieve efficient managementon the cost front. Also, I believe that we can hone ourcompetiveness by sharing each other’s technologies andexpertise in manufacturing and R&D.
Another priority will be to address global compliancerequirements. The Asahi Group must pay close attention
to European laws and related regulations, without relying
solely on its knowledge of laws and regulations in Japan.
In the course of improving how it addresses thesepriorities, the Asahi Group may need to consider the optionof setting up an Advisory Board, as a means of obtaining
advice from people well-versed in the European political andeconomic environment, the beer industry, and related fields.
KosakaThat’s right. Restrictions prohibit us fromobtaining all the information we need before
an acquisition. However, in order to minimize
the post-acquisition risk as much as possible, we took theapproach of executing “pre-merger integration” ahead of“post-merger integration.” Even if somewhat higher costs
were incurred, we put emphasis on gathering as muchinformation as possible before the acquisition and sharing
information on risks after the acquisition and other mattersin meetings of the Board of Directors.
Izumiya

The market environment surrounding the Alcohol
Beverages Business in Japan, the Group’s main
source of earnings, is under increasing pressure.
In this environment, I commend the recent investment
because it will help to transform the Overseas Business into
an engine behind the Asahi Group’s growth.
Meanwhile, it is also true that the operation of theEuropean beer businesses for success will become one ofits most important management priorities over the next
three years or so. In the Board of Directors, I conveyed
what I felt to be the key points to consider in regard to
global management based on my own experience.
First of all, my basic approach is that management of
the acquired operating companies should be up to local
personnel. With this in mind, I believe the key points are
to recruit and retain trusted local management personnel
with leadership talent and to build relationships thatenable close communication with the local management
personnel, thereby avoiding any surprises on both sides.
Moreover, I believe it will be increasingly crucial to clarify
Kosaka50

ASAHI GROUP HOLDINGS, LTD.

Driving Globalization through Human
Resource Development and Diversity— What are your priorities for pursuing further
globalization?
The Asahi Group will take a giant leap forward
in terms of globalization as a result of theacquisition of European beer businesses. One
urgent priority for pursuing further globalization will be todevelop global human resources to lead the organization.
Europe is a region with a complex tapestry of cultures andhistory. It will be extremely vital for personnel to understand and adapt to different cultures, and to demonstrateleadership skills, in addition to acquiring the language skills
needed to communicate effectively with local personnel asa matter of course.
KosakaInitiatives on Key Priorities of the Medium-Term Management Policy

Exactly. At present, we are developing global
human resources internally in conjunction withrecruiting talent from outside the Company,
including non-Japanese nationals and women. We will
work to ensure that these efforts lead to stronger diversity
and transform the Asahi Group into a more ambitious
enterprise that is determined to scale new heights.
Through these efforts, we aim to take our global humanresource development to a higher level.
Izumiya

I believe that the ultimate goal of diversity is
to foster a diverse workforce that will spark
innovation and contribute to the enhancementof corporate value. To make this happen, I think the Asahi
Group should pursue a little more diversity in terms of thenationalities of its workforce. There is an old Japanese proverb that says “improve yourself through new experiences.”
By embracing diversity, it is vital to create an environment
where different people are able to sharpen their skills throughhealthy competition with one another. For example, I believethat companies should proactively invest in human resource
development, through such means as stationing middle-tierand younger employees overseas for at least three to five
years, and creating opportunities for them to work together
with local employees through on-the-job training programs.
KosakaAiming to Further Enhance
Corporate Value through GrowthOriented Governance

Bear in mind, however, that the Outside
Directors do not have prior experience working
for the Asahi Group, and there are time constraints on the Board of Directors meetings. The current
reality is that it would be difficult for the Outside Directors
to understand the Asahi Group in depth, including its
history and the underlying historical background.
For example, in addition to holding individual meetings
with Directors, it might be a good idea to encourage theOutside Directors to understand the deeper aspects of
the Asahi Group by creating more opportunities for themto speak directly with front-line employees at factories,
offices, and other sites. I would personally welcome these
sorts of opportunities.
KosakaThat is certainly an important observation. Goingforward, as we pursue further globalization, we
will need to enhance the quality of the entire
process leading up to decision-making if we are to tackle
the challenges of achieving new growth while assuming acertain degree of risk through the decision-making process.
To do so, it will be increasingly crucial to hold discussions from many more different perspectives than before
and to obtain direct front-line information from objective
third parties. Looking ahead, we will advance further
changes, such as enhancing daily activities to deepen theunderstanding of the Asahi Group among the Outside
Directors, as suggested by Mr. Kosaka. By doing so, wemust aim to achieve the enhancement of corporate value,
which lies in the shared interest of both management andour shareholders and other investors.
Izumiya— Could you please discuss the Asahi Group’s
targeted direction for governance?
Going forward, requirements for governance fromthe capital markets and society will only continue
to increase. We must structure a unique governance system that can adapt to or surpass those requirements.
I believe that the ultimate goal of the Board of
Directors is to ensure sustained growth and enhancemedium- to long-term corporate value.
To reach this goal, we must practice growth-oriented
corporate governance as an approach for proactively taking risks and accelerating the enhancement of corporate
value. We must also practice defensive corporate governance alongside growth-oriented governance, in order toensure effective oversight of management functions.
To do so, we will need to strengthen our system toenable the Asahi Group to grow proactively and with transparency by putting the experience and knowledge of Outside
Directors to even better use in management than before.
Through this endeavor, I would like to aim for a progressive
governance system that is one step ahead of the pack.
IzumiyaIntegrated Report 201651

Medium-Term Management Policy

Asahi Group’s Corporate Governance
System for Supporting Sustained Growth
Basic Policy
We consider that strengthening the corporate
governance of the Asahi Group is the utmost managerial
priority in order to realize corporate activities that
aim to satisfy all stakeholders, including shareholders
and investors. Based on this concept, we endeavor toproactively strengthen Group management, enhance thetrust relationship with society, and improve the sociality
and transparency of the Group companies.
Moreover, under this concept, growth-oriented
governance for transparent, fair, timely and decisivedecision-making is indispensable for reinforcing
management for corporate value enhancement.
In light of the introduction of the Corporate
Governance Code targeting companies listed onJapanese stock exchanges, we practice the code appropriately and agree with the idea that ensuring sustained
growth and improving corporate value for the medium
to long term will contribute to the stakeholders and,eventually, the development of the overall economy. On
this basis, we will endeavor to implement measures tofurther enhance our corporate governance.

Measures toward Enhancement of
Our Corporate Governance•Corporate Officer System was introduced.
2000•Corporate Strategy Board was established.

2007

2011

•The Company transitioned to a pure holding company
structure.

2013•Takeover defense measures were abolished.

2015•Corporate Governance Guidelines were formulated.

WEB Corporate Governance Guidelines

ASAHI GROUP HOLDINGS, LTD.

•In order to respond swiftly to the changes in thebusiness environment, we reduced the term of officefor our directors to one year.
•The retirement bonus system for Directors and Audit &Supervisory Board Members was abolished.

http://www.asahigroup-holdings.com/en/csr/gov/internal/pdf/170328_guidelines_en.pdf

52•Nomination Committee and Compensation Committee
were established.

Initiatives on Key Priorities of the Medium-Term Management Policy

Characteristic Features of Our Corporate Governance Systemits findings and views about evaluation of the legality,
objectivity, and reasonableness of substantial mattersconcerning business execution in response to theinquiries referred from the Chairman and Representative
Director or the President and Representative Director.
It consists of internal Directors, Corporate Officers andStanding Audit & Supervisory Board Members.

As a company with an Audit & Supervisory Board, we
audit the execution of duties by the Directors utilizing
the Audit & Supervisory Board, of which a majority ofthe board members are independent Outside Audit &Supervisory Board Members, while taking advantageof the characteristics of the Audit & Supervisory Board
Member 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 theCompensation Committee have been establishedvoluntarily to act as advisory bodies to the Boardof Directors, of which half the members of eachcommittee are independent Outside Directors. Under
the system of these discretional bodies, we have createda structure that allows independent outside directors
and Audit & Supervisory Board Members to monitor the
management of the Company with high effectiveness.
Other steps to build a corporate governance system
for realizing corporate activities that meet the expectations of our stakeholders include the establishment of
the Corporate Strategy Board, which provides reports on

Details of the Corporate Governance System(as of March 28, 2017)

Structure of organizational design

Company with a Boardof Directors and Audit& Supervisory Board

Number of Directors

10

Number of Independent Outside
Directors included

3

Number of women

1

Directors term of office

1 yearNumber of Audit & Supervisory
Board Members

5

Number of Independent Outside Audit
3& Supervisory Board Members included
Number of women1

Independent accounting auditor

KPMG AZSA LLC

Corporate Governance System Chart
General Meeting of Shareholders
Electing/
Electing/
Dismissing Dismissing

ReportElecting/Dismissing

Auditing
Cooperation

Audit & Supervisory
Board

ReportIndependent Accounting Auditor

Auditing

Proposal/Report
Inquiry/
ReportBoard of Directors
Appointment/Dismissal/
Supervision

Deliberation/Report

Representative Directors

Cooperation

Inquiry/
ReportNomination Committee
Compensation Committee

Inquiry/
Report of important matters

ReportCorporate Strategy Board
Auditing
ReportDelegation of authority/
Supervision

Deliberation/Report

Corporate Officers
Auditing

Cooperation

Audit Section

Internal
Auditing

Committees
Information Disclosure
Risk Management

Alcohol
Beverages

Soft
DrinksFoodOverseas

Internal Regulations

Integrated Report 201653

Medium-Term Management Policy

Corporate GovernanceDirectors and the Board of Directors
The Board of Directors consists of ten directors, including three outside directors who meet the requirements
of independent directors/Audit & Supervisory Board
Members as defined by the Company.
The Board of Directors appropriately fulfills its roles
and responsibilities to achieve the sustained growthand corporate value enhancement of the Company
over the medium to long term, as well as to improveearning capacity and capital efficiency, taking into
account its fiduciary responsibility and accountability toshareholders. These roles and responsibilities include
determining and executing important corporate
strategies, such as the Long-Term Vision and MediumTerm Management Policy. The board also appropriately

supports management’s risk-taking by maintaining theinternal control system and risk management system.
The Outside Directors are elected from amongcorporate managers and experts in consideration of
their experience, insight and professional background.
Their presence ensures the balance of knowledge,
experience, and ability, and the diversity of the entire
board. The internal Directors are appointed after being
comprehensively evaluated and judged based on theirexperience, insight and professional background withreference to the requirements for Directors, which are
determined based on the corporate philosophy, action
guidelines and management strategies of the Company.

Audit & Supervisory Board Members and the Audit & Supervisory Board
The Audit & Supervisory Board of the Company consistsof five Audit & Supervisory Board Members, of whomthree are Outside Audit & Supervisory Board Members
who meet the requirements of independent Directors/
Audit & Supervisory Board Members as defined by theCompany.
The Standing Audit & Supervisory Board Members
attend important meetings such as the Corporate
Strategy Board, examine important documents forapproval, and collect information from the Directors,
the sections in charge of internal audits, and so forth.
They report the collected information to the Audit &Supervisory Board, discuss with the Outside Audit &Supervisory Board Members, and conduct appropriate
audits on the management of the Company.
The Outside Audit & Supervisory Board Members
shall be elected from among corporate managers,
lawyers and accounting experts who have a wealth ofexperience and broad insight.
By combining the information held by the Standing
Audit & Supervisory Board Members and the high-level
expertise of the Outside Audit & Supervisory Board
Members, the system enables them to exercise theirauthority actively and assertively, making appropriate
judgments and taking action from an independent andobjective standpoint.

Nomination Committee and Compensation Committee
To ensure complete fairness and transparency indecision-making regarding the appointment andremuneration of Directors, Audit & Supervisory Board
Members, and corporate officers, we have establishedthe Nomination Committee and the Compensation
Committee as advisory bodies to the Board of Directors.
The two committees are made up of Directors, including Outside Directors.
The Nomination Committee consists of two Outside
Directors and two internal Directors, and an internal
Director is cooperatively appointed as its chairperson.
The committee held five meetings during 2016, andprovided reports on its findings and views primarily
about personnel affairs of officers, representativesof principal subsidiaries and the succession plan. The
attendance rate of committee members was 100%.
The Compensation Committee consists of two
Outside Directors and two internal Directors, andan Outside Director is cooperatively appointed as its
chairperson. The committee held five meetings during
2016, and provided reports on its findings and views

54

ASAHI GROUP HOLDINGS, LTD.

primarily about officers’ bonuses, the revision of theofficers’ remuneration plans and the introduction of a
new Performance-Linked Stock Compensation Plan. The
attendance rate of committee members was 100%.

List of Committee Members
Category

Name

Directors★
★
★
Audit &
Supervisory★
Board
Members ★
★

Naoki Izumiya
Akiyoshi Koji
Katsutoshi Takahashi
Yoshihide Okuda
Noboru Kagami
Kenji Hamada
Atsushi Katsuki
Mariko Bando
Naoki Tanaka
Tatsuro Kosaka
Akira Muto
Tetsuo Tsunoda
Katsutoshi Saito
Yumiko Waseda
Yutaka Kawakami

Nomination
Committee

◎
○

○
○

Compensation
Committee

○
○

○
◎

Note: ★ denotes Outside Directors/Audit & Supervisory Board Members◎ denotes committee chairpersons ○ denotes committee members

Initiatives on Key Priorities of the Medium-Term Management Policy

Reasons for the Election of Independent Directors andAudit & Supervisory Board Members
and the general shareholders. Moreover, as they meetthe requirements for independent Directors/Audit &Supervisory Board Members as defined by the Tokyo
Stock Exchange, the Company has reported themas independent Directors/Audit & Supervisory Board
Members to the said exchange.

According to the Company’s Criteria for Independenceof Outside Directors and Outside Audit & Supervisory
Board Members, the Company deems that its Outside
Directors and Outside Audit & Supervisory Board
Members maintain sufficient independence with nopotential conflicts of interest occurring between them

Reasons for the Election of Outside Directors and Audit & Supervisory Board Members
Name

Mariko Bando

Naoki Tanaka

Tatsuro Kosaka

Katsutoshi Saito

Yumiko Waseda

Yutaka Kawakami

Reasons

Mariko Bando has a wide range of knowledge as an educator in addition to her diverse experience in public
administration both in Japan and overseas. Accordingly, the Board of Directors deems that she possesses capabilities
appropriate for an independent Outside Director.
Naoki Tanaka has abundant experience as a member of government councils and his broad knowledge as a
specialist deeply versed in domestic and international economic policy. Accordingly, the Board of Directors deems
that he possesses capabilities appropriate for an independent Outside Director.
Tatsuro Kosaka serves as the chief operating officer of a global corporation and has abundant experience and broad
knowledge that include implementing medium-term management plans and various other business reforms. Accordingly,
the Board of Directors deems that he possesses capabilities appropriate for an independent Outside Director.
Katsutoshi Saito has long served as an operating officer of global corporations and has abundant experience andbroad knowledge. Accordingly, the Board of Directors deems that he possesses capabilities appropriate for an
independent Outside Audit & Supervisory Board Member.
Yumiko Waseda has long served as an attorney at law and has abundant experience and expert knowledge related
to corporate legal affairs. Accordingly, the Board of Directors deems that she possesses capabilities appropriate for
an independent Outside Audit & Supervisory Board Member.
Yutaka Kawakami has served as a certified public accountant and has expert knowledge related to accounting
and abundant auditing experience both in Japan and overseas. Accordingly, the Board of Directors deems that hepossesses capabilities appropriate for an independent Outside Audit & Supervisory Board Member.

Number ofmeetings attendedAudit &
Board ofSupervisory
Directors
Board
13/13

—

12/13

—

10/11

—

13/13

7/7

13/13

7/7

—

—

Notes: 1. The number of meetings attended for Board of Directors and Audit & Supervisory Board is for 2016.
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 from other Directors.
3. Audit & Supervisory Board Member Yutaka Kawakami was newly elected at the 93rd Annual General Meeting of Shareholders held on March 28, 2017.

Criteria for Independence of Outside Directors and Outside Audit & Supervisory Board Members
The Company has established standards as set forth below for objectively assessing the independence of its
Outside Directors and Outside Audit & Supervisory Board Members (herein this section the “Outside Directors/
Audit & Supervisory Board Members”) and accordingly 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 an incorporated entity, an executive thereof);
3. A party who is a major business partner of the Group*3 (or if the business partner is an incorporated entity, an executive thereof);
4. A consultant, certified public accountant or other accounting professional, or an attorney at law or other legal professional who has been
paid substantial amounts of money or other financial benefits*4 other than Directors’ and Audit & Supervisory Board Members’ remuneration
paid by the Group (or if the party receiving such financial benefits is an incorporated entity, association or other organization, then persons belonging to such organization);
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 office of 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 to important 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 to whom 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 theOrdinance for Enforcement of the Companies Act, and includes both executive directors andemployees, but does not include Audit & Supervisory Board Members.
*2. “Party for whom the Group is a major business partner” refers to a party whose transactionsin the most recent 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 whosetransactions in the most recent year amount to 2% or more of the Company’s consolidated
revenue, or a party who loans to the Group an amount equivalent to 2% or more of theCompany’s consolidated assets as of the end of the most recent year.
*4. “Substantial amounts of money or other financial benefits” refers to money and otherfinancial benefits amounting to 10 million yen or more annually, excluding Directors’ andAudit & Supervisory Board Members’ remuneration, for the most recent 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 of such organization’s total
revenues for the most recent 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 thatcompany 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 year.
*8. “Important person” refers to directors (excluding outside directors), executive officers,
corporate officers, and other 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 other officers belonging toincorporated foundations, incorporated associations, educational institutions and otherincorporated entities; and other persons objectively and reasonably deemed to be inpositions 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 theCompany” means ten (10) years with respect to Directors and twelve (12) years with respect
to Audit & Supervisory Board Members.

Integrated Report 201655

Medium-Term Management Policy

Corporate Governance
Remuneration for Directors, Audit & Supervisory Board
Members, and the Independent Accounting Auditor● Basic Policy
We have determined remuneration for Directors andAudit & Supervisory Board Members by a resolutionof the Board of Directors based on the following Basic
Policy on Remuneration for Directors and Audit &Supervisory Board Members, after discussion by theCompensation Committee.
• Remuneration is conducive to acquiring superior humanresources• Remuneration is suitable for the magnitude of their roles andthe scope of their responsibilities for each executive position• Remuneration is motivational for the Company’s corporate
value enhancement and sustainable growth• Transparency and objectivity will be assured with respect tothe remuneration-setting procedures

Remuneration for directors consists of basic
remuneration (monthly and fixed), bonuses (annual andshort-term performance-linked), and performancelinked stock compensation (long-term performancelinked), forming a scheme giving consideration to
motivation for sustained enhancement of corporate
performance and value. The level of each item is set

according to each director’s responsibilities and theirstatus as internal or outside and by drawing on outside
expert organization’s survey data.
Basic remuneration is determined at the beginningof the term on the basis of one’s position andmagnitude of the role, and bonuses are determinedusing consolidated profit as a benchmark in proportion
to the level of achievement of targets, which are set
at the beginning of each year. For performance-linked
stock compensation, points are granted according to
the level of achievement of targets in terms of earnings
per share (EPS), one of the performance benchmarks set
in the Medium-Term Management Policy, and Company
shares in the number equivalent to the cumulative
number of these points will be delivered at the time of
their retirement.
The bonuses and performance-linked stock compensation shall only be paid to internal Directors.
Remuneration for Audit & Supervisory Board
Members consists only of basic remuneration following
the abolition of the bonus system in April 2009.
The retirement benefit system and stock option
system were abolished in 2007.

Remuneration for Directors and Audit & Supervisory Board Members (2016)
Basic remuneration
Category

Bonus

Total amount(Millions of yen)

Number of persons
remunerated

Total amount paid
(Millions of yen)

Number of persons
remunerated

Total amount paid
(Millions of yen)

Directors

13

334.1

10

131.1

465.2

[of which, Outside Directors](4)(44.4)(1)(1.2)(45.6)

Audit & Supervisory Board Members

6

99.3

—

—

99.3

[of which, Outside Audit & Supervisory Board Members](3)(33.7)(—)—(33.7)

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

● Independent Accounting Auditor Remuneration
In 2016, audit fees and other remuneration payable
and so forth by the Company to the independentaccounting auditor amounted to ¥229 million for an

attestation agreement and the total amount of remuneration payable and so forth by the Company andits subsidiaries to the independent accounting auditor
amounted to ¥711 million.

Succession Plan
Given that rapid and unprecedented changes areforeseen in the business environment surrounding corporations, we consider the succession of management
and the reinforcement of its talent pipeline as the mostimportant priorities in ensuring its sustained growth.
Accordingly, we have formulated a succession plan forthe chief executive officer (CEO) and other leading persons. It has a framework that takes into consideration
not only individual capability requirements and selection
criteria but also transparent and fair governance, and

56

ASAHI GROUP HOLDINGS, LTD.

the building of a talent pipeline enhanced in terms ofboth quality and quantity. The plan has been formulated with advice from the Nomination Committee withreference to the requirements for the corporate officers,which are determined based on the management philosophy, action guidelines and management strategiesof the Company. The Board of Directors appropriately
oversees the succession plan for the CEO and otherleading persons, receiving reports from management
as necessary.

Initiatives on Key Priorities of the Medium-Term Management Policy

Evaluation of the Board of Directors
The Directors and Audit & Supervisory Board Members conducted an evaluation in 2017, on the basis of a selfevaluation questionnaire prepared by the Company’s Board of Directors with reference to the opinions given by
third-party external advisors. They then engaged in discussions based on the evaluation results during two meetingsof the Board of Directors held in March 2017, and confirmed the content of the evaluations. An overview of theresults and initiatives going forward are as follows. Please refer to the following website for details on the methodsof analysis and evaluation and evaluation items.
WEB http://www.asahigroup-holdings.com/en/whoweare/governance.html

Overview of Results of Analysis and Evaluation
The response “performed without incident” accounted
for a high proportion of the answers to a vast majorityof questions on the self-evaluation questionnaire ofindividual Directors and Audit & Supervisory Board
Members regarding the effectiveness of the Board of
Directors.
Meanwhile, we aim to generate sustainable growthand increase its corporate value over the medium tolong term, and have accordingly been further developing our management for corporate value enhancement
initiatives, which are based on the Medium-Term
Management Policy. Moreover, the Company’s
Directors and Audit & Supervisory Board Members areaware that in order to promote such initiatives further
improvements must be made with respect to the Boardof Directors. To this end, each Director and Audit &Supervisory Board Member has furnished numerous
suggestions for improving the Board of Directors.
Moreover, in “conducting succession planningoversight,” which was designated as an issue to beaddressed in the evaluation for 2015, we have substantially improved evaluation results due to efforts thathave included formulating the succession plan throughdiscussions among members of the Nomination
Committee and ensuring that the Board of Directors

received a report. There were also opinions from each
Director in the evaluation for 2015 concerning “providing more opportunities and information to promote a
better understanding among the independent Outside
Directors with respect to the Company’s businessenvironment” and “taking measures to ensure advice
from independent Outside Directors is more strongly
reflected in the management.” As a result of efforts
to provide extensive and concrete explanations of therelated key proposals beginning with the review phase,many Directors are now of the mind that there are
no problems in regard to those issues. We also noted
improvement with respect to evaluations in regard to“taking steps to create a stronger balance and diversityof knowledge, experience and capabilities among
respective Directors,” “involving internal Directors in
the management of the entire Group from a high pointof view not limited to the jurisdiction they are in chargeof,” and “engaging in further discussion at the Boardof Directors meetings on the matters concerning thereinforcement of ESG initiatives.”
After having engaged in discussions regarding theabove results, the Company’s Board of Directors concluded that the effectiveness of the Board of Directors
in 2016 was “effective overall” as in the previous year.

Initiatives Going Forward
Having discussed matters based on results of the evaluation described above, the Company’s Board of Directors
will work to improve Board of Directors’ effectiveness, premised on awareness of the three points listed below, assuggested by each Director and Audit & Supervisory Board Member.
i) Devising means of improving discussions of the Board of Directors
Initiatives will be taken that include adequately providing information on matters for deliberation by the Board of
Directors and establishing a forum for free discussion and debate outside of the Board of Directors.
ii) Promoting an approach to governance that addresses the matter of rapid globalization of
the Company’s businessInitiatives will be taken that include promoting further development of internal control systems and risk management systems such that address the matter of increasingly global operations, and making further improvements
regarding the approach of the Board of Directors in addressing the matter of increasingly global operations.
iii) Promoting initiatives for enhancing corporate social value and ESG initiatives
Initiatives will be taken that include promoting further discussion regarding the Company’s social value withrespect to addressing changes in the management environment.

Integrated Report 201657

Medium-Term Management Policy

Corporate Governance
Promotion of Engagement through IR Activities
We are pursuing the fair and broad disclosure offinancial information, including operating results andnon-financial information such as management strategies, business challenges and information related torisk and governance. At the same time, we have been
actively engaged in dialogue with shareholders andinvestors as well as implementing management reforms
to reflect their voices.

Looking ahead, we will promote IR activities witha medium- to long-term perspective based on key
priorities laid out under the Medium-Term Management
Policy as our Engagement Agenda (agenda for constructive dialogues), and continue striving to raise sustainablecorporate value.

Major IR Activities in 2016
Frequency

Details

Financial Results Briefing
for Analysts and Institutional Investors

Activities

Four times

Quarterly briefing sessions (Briefing sessions by the President and officers in charge
for Q2 and Q4, and teleconferences by the IR/finance sections for Q1 and Q3)Business Operation Briefing
for Analysts and Institutional Investors

Once

Briefing sessions by General Managers(A briefing on Oceania business was conducted in 2016.)

Facilities Tourfor Analysts and Institutional Investors

Once

Briefing sessions combined with facilities tours(The tour was conducted at Asahi Breweries, Ltd.’s Ibaraki Brewery in 2016.)

IR Interviews
for Analysts and Institutional Investors

Approx.
300 times

IR interviews and teleconferences for analysts and institutional investors

Individual Visits
for Japanese Institutional Investors

Twice

Individual Visits
for Overseas Institutional Investors

Three times

President’s visits to approx. 50 overseas shareholders and investors(North America, Europe and Asia)

Briefing Sessions
for Individual Investors

17 times

Briefing sessions by the President (Contents also made available on the website.)
Briefing sessions by the IR officer also held at beer factories across Japan

President’s visits to approx. 20 shareholders and investors in Japan (Q2 and Q4)

IR Activity-Related Awards
2014

2015

2016

· 2014 Securities Analysts’ Awards
for Excellence in Corporate Disclosure· 2015 WICI Japan Award for
Excellence in Integrated Reporting

The top company
in the foods category

Best Integrated
Reporting Award· 2016 Securities Analysts’ Awards for
Excellence in Corporate Disclosure
to Individual Investors(12 consecutive years between 2003 and 2014)(The Securities Analysts Association of Japan(SAAJ))· 2015 NIKKEI Annual Report Awards

Corporate excellence(The Securities Analysts
Association of Japan (SAAJ))

Award for Excellence· 2014 Annual IR Grand Prix Awards

2014 IR Grand Prix Award(The Japan Investor Relations Association (JIRA))

Inclusion in SRI Indexes

Dow Jones Sustainability Indiceswere jointly developed by Dow
Jones & Company of the U.S. andRobecoSAM AG of Switzerland.

58

ASAHI GROUP HOLDINGS, LTD.

The Asahi Group has been included in several major Socially Responsible Investment(SRI) indexes and funds worldwide. SRI is an investment approach that uses valuation
criteria for investment decisions based on social perspectives, such as environmental
consideration and corporate citizenship, in addition to financial considerations.

The Ethibel Excellence Investment
Register is an investment universe
managed by Forum ETHIBEL, an
NPO headquartered in Belgium.

The FTSE4Good Global Index isa stock index developed by FTSE
International Limited, establishedby The Financial Times Ltd.
and London Stock ExchangeGroup plc.

The Morningstar Socially
Responsible Investment index isJapan’s first socially responsible
share index. Morningstar Japan
K.K. selects for inclusion in
the index 150 publicly listed
Japanese companies that havebeen evaluated as possessing
outstanding social credentials.

Review ofOperations

ALCOHOL BEVERAGESSOFT DRINKS● Asahi Breweries, Ltd.

● Asahi Soft Drinks Co., Ltd.

● The Nikka Whisky Distilling Co., Ltd.

● Calpis Co., Ltd.

● Sainte Neige Wine Co., Ltd.

● LB Co., Ltd. and others● Satsumatsukasa Shuzo Co., Ltd. and others

FOOD● Asahi Group Foods, Ltd.

OVERSEAS
Europe● Asahi Food & Healthcare Co., Ltd.

● Asahi Europe Ltd● Wakodo Co., Ltd.

● Asahi Breweries Europe Ltd● Amano Jitsugyo Co., Ltd. and others

Oceania● Asahi Holdings (Australia) Pty Ltd
Southeast Asia
● Etika Beverages Sdn. Bhd.
China
● Asahi Beer (China) Investment Co., Ltd. and others

Integrated Report 2016

59

Review of Operations

ALCOHOL BEVERAGES

Medium-Term Management Policy (Key Priorities)● Demonstrate leadership in the industry with high added value and increase the profit pool of
the industry as the No. 1 comprehensive alcohol beverages company● Strengthen new value creation proposals through innovation and develop
strong core brands in each category● Reform the earning structure through value chain upgrading and collaboration,and evolve the business model including e-commerce

Revenue and Core Operating Profit Margin(¥ billion)

982.8

1,000.0

Revenue by Category
(%)

2.8

20.0

12.4

5.6
10.0

500.0

(%)

3.8
4.1

15.0

750.0

2.5
3.2

2016
14.6

57.4

5.0

250.0

6.1
0.0

2012

Revenue (Left axis)

2013

2014

0.0

IFRS

Japanese Accounting Standards

2015

2016

2017
(Forecast)Core operating profit margin (Right axis)

Beer

Happoshu

Wine

RTD* low-alcohol beverages

New genre

Alcohol-taste beverages (non-alcohol)

Whisky and spirits
ShochuOther* RTD: R eady-to-Drink. Beverages that can be consumed immediately
upon purchase, such as canned chuhai

60

ASAHI GROUP HOLDINGS, LTD.

Review of Operations by Segment

Business Environment (Opportunities and Risks)
tax rates on all beer-type beverages will be unified
gradually.
In the category of alcohol beverages otherthan beer-type beverages, markets such as whisky
and spirits, wine, and RTD low-alcohol beverages
are growing due to diversification of lifestyles andproposals for new ways to enjoy beverages. In addition, with the upcoming Tokyo 2020 Olympic andParalympic Games and the registration of Japanesecuisine as an Intangible Cultural Heritage by UNESCO,
we anticipate diverse opportunities for growth byleveraging our strengths in Japanese food culture andthrough expanding inbound tourism demand.

Japan’s beer-type beverage industry has continued toshrink from its 1994 peak due to the falling birthrate
and aging population as well as diversification inalcohol consumption. We anticipate a risk thatbeer-type beverage market shipments will continue
to decline by around 1.0% annually. Meanwhile,the diversification of consumption and values has
invigorated the market for premium beer and craft
beer, and the market for functional beverages withfewer carbohydrates and purine bodies has also
grown amid greater health consciousness among
consumers. We expect a gradual return of consumers
to the beer category through 2026 as the liquor

Market Data

Market Share of Premium Beer*, Beer, Happoshu,
and New Genre

Revision of Liquor Tax (Tax per 350 ml)

(%)

100.0

77

Beer

¥77

70

75.0

63.35
¥54.25

50.0

46.99

Happoshu¥46.9937.8

25.0
New genre

¥28

28

0.0
1996

2001

2006

2011

2016

Beer category 50.8%
Premium beer

Beer

Happoshu

New genre

7.3%

43.5%

13.8%

35.4%

2017

October
2020* Composition ratio of premium beer has been estimated by Asahi* Taxed shipment volume of five major Japanese breweries

October
2023

October2026

Source: National Tax Agency

Medium-Term Management Policy (Key Priorities)
Based on these opportunities and risks, as theGroup’s largest cash generative business, the Alcohol
Beverages Business will strive to maintain andimprove its high profitability as its priority mission.
As the No. 1 comprehensive alcohol beverages
company with beer-type beverages and diverse
leading brands and categories, our policy is tocontinue demonstrating leadership in adding value
and improving the profit pool of the industry. Basedon reinforcement of core brands by leveraging ourbrand development capabilities and our corporate

culture of taking on the challenge of innovation, we
will strive to create new values and demand, aiming
for first entry into new markets.
Furthermore, while enhancing our industryleading cost competitiveness (core operating profit
margin of 21% excluding liquor tax) across theentire value chain, we intend to undertake earning
structure reforms through collaboration with ourcompetitors and other measures, and evolve ourbusiness model using e-commerce and so forth.

Integrated Report 2016

61

Review of Operations

2016 Results
In beer-type beverages, we concentrated efforts on
improving Asahi Super Dry brand value, focusing
on sales promotion activities designed for seasonal
events. We greatly enhanced the profile of the Clear
Asahi brand by updating existing products including
Clear Asahi Prime Rich and releasing limited-time
products.
In alcohol beverages other than beer-type
beverages, we bolstered sales promotions for wine,
centered on SANTA HELENA Alpaca, along withthe release of Asahi Mogitate in RTD low-alcohol
beverages. We also made an effort to stir up themarket for alcohol-taste beverages (non-alcohol) by
updating Asahi Dry Zero.

As a result of these endeavors, revenue grew
0.6% to ¥976.6 billion. Although spending on
advertising increased, core operating profit rose
0.9% to ¥120.8 billion, reflecting higher sales andmoves to reduce manufacturing costs, such as byusing lighter can lids.

Clear Asahi
Prime Rich

Special Packaging for
Asahi Super Dry

Asahi Healthy Style2017 Targets
In 2017, we aim to improve cost competitivenessand create new values and demand throughinnovation, rallying around the slogan “Aim to be
the leading company in alcohol beverages in Japanby nurturing No. 1 brands and structural reforms.”
In beer-type beverages, we intend to step up
our new value propositions with the release of Clear
Asahi Zeitaku Zero, which has zero carbohydrates,
as well as special-edition products commemorating
the 30th year since the launch of Asahi Super Dry. In
alcohol beverages other than beer-type beverages,
we plan to renew Asahi Mogitate RTD low-alcohol
beverages and expand the lineup of SANTA HELENA
Alpaca wines in a bid to foster core brands.

Through these initiatives, we are targeting revenue of ¥982.8 billion, up 0.6% year on year, andcore operating profit of ¥122.0 billion, up 1.0%, byrefraining from spending on advertising and cutting
raw material costs.

Market Share by Company in 2016

Revenue by Category and Core Operating Profit
Margin (Excluding Beer-Type Beverages)

0.9

0.9

(%)

11.2

15.7
12.0

(%)

Beer-Type
Beverages

39.0

49.0

24.3

32.4

Company A

Company B

Company C

Others* Taxed shipment volume of five major Japanese breweries

Asahi Mogitate
Marugoto Shibori
Lemon(¥ billion)

29.3

10

ASAHI GROUP HOLDINGS, LTD.

31.8

12.0

27.4

28.3

10.0

37.2

39.5

8.0

27.7
14.4

33.9

40.1

42.0

37.8

44.7

57.9

54.3

52.4

2013

2014

2015

2016 2017 (Forecast)

31.6

40.0

28.8
11.5
29.8

27.4
12.0

Wine

RTD low-alcohol beverages

Alcohol-taste beverages (non-alcohol) and others

Core operating profit margin (Right axis)

62

31.6

28.3

32.7

Whisky and spirits

14

30.7

80.0

(%)

14

25.4

22.4

2012

SANTA HELENA
Alpaca Pinot Noir

28.8

21.1

Shochu

13

12
10

120.0

0.0

Asahi

Clear Asahi
Zeitaku Zero

200.0
160.0

14.5

Beer Only

Asahi Super Dry
Extra Hard

14.0

6.0
4.0
2.0
0.0

Review of Operations by Segment

Topic 1Development of Asahi Mogitate,
an RTD Product That Proposes New ValueIn April 2016, Asahi Breweries, Ltd. introduced Asahi
Mogitate in the RTD market, which has expanded
continuously for the past eight years. First-year salesof this new product were a record-breaking 7.06
million boxes* for the company.
Asahi Mogitate took roughly three years todevelop. To differentiate from competing products,
we concentrated our value creation efforts on the
freshness of squeezed fruit juices, guided by the
results of consumer surveys of about 5,000 people,
a scale not undertaken since we developed Asahi
Super Dry.
To make this fresh taste a reality, we partneredwith suppliers able to deliver fruit juice squeezed
within 24 hours of being harvested. We also
developed production technologies to preserve theoriginal flavor compounds of the fruit. By pasteurizingat colder-thannormal temperatures, wewere able to create a production
method that preserves theoriginal fresh taste of the fruit.
In 2017, we aim to enhancebrand value by further refining
the added value of our product.
Specifically, we will bring out
more of the natural fruit flavors by rebalancing theflavor profile of fruit juices and pulp.

* One box = 24 × 250 ml cans

Topic 2Start of Joint Distribution with Kirin Brewery Company, Limited forGreater Collaboration in the Logistics Field
From 2017, Asahi Breweries, Ltd. began coordinatingtransportation to the Hokuriku area using railway
containers with Kirin Brewery Company, Limited.
Our objective is to reduce environmental impact andaddress the social issue of a shortage of truck drivers
in Japan.
Before this agreement, both companies used
long-haul trucks to deliver products from their breweries in the Chubu and Kansai regions. Now, thetwo companies transport their products on the same
freight train from Kansai to a locally established joint
distribution center, from which trucks travel shortdistances to their destinations. In January, we established a railway transportation route up to Ishikawa
Prefecture, and we plan to extend the delivery area
to Toyama Prefecture this autumn.
We estimate that this joint initiative by bothcompanies will cut CO2 emissions by 56% (2,700 t)

by both companies compared with the previoustransportation method.
We are committed to collaborating with our
rivals in fields where such coordination is feasible inorder to lessen our impact on the environment andtake one step closer to a sustainable society.

Ceremony for the joint use of freight trains by Asahi Breweries andKirin Brewery

Integrated Report 2016

63

Review of Operations

SOFT DRINKS

Medium-Term Management Policy (Key Priorities)● Establish a distinctive, prominent position centered on reinforcement of the brand strength ofcore products● Offer higher added value in response to consumer health consciousness and propose new value
through innovation, including in the chilled beverages business● Reform the earning structure through such means as maximization of integration synergies,
sales channel and container mix improvement, and SKU reduction

Revenue and Core Operating Profit Margin(¥ billion)

Asahi Soft Drinks Co., Ltd.
Cases Sold by Category
(%)

500.0

9.0

400.0

366.3

10.0

(%)

7.4

8.0

300.0

6.0

200.0

4.0

100.0

2.0

22.9

9.3
10.2

2016
17.3

0.0

Revenue (Left axis)

64

ASAHI GROUP HOLDINGS, LTD.

2013

2014

2015

2016

16.6

0.0

IFRS

Japanese Accounting Standards

2012

16.3

2017
(Forecast)Core operating profit margin (Right axis)

Carbonated drinks

Coffee

RTD tea

Mineral water

Fruit drinks

Other soft drinks

Lactic acid drinks

Review of Operations by Segment

Business Environment (Opportunities and Risks)
The Japanese soft drinks market has recorded compound average annual growth of around 1% overthe past five years, and we do not expect significant
growth in sales volume going forward. On theother hand, the sugar-free tea and mineral watermarkets have been expanding against a backdrop ofrising consumer health consciousness and concerns
for food safety and reliability. Furthermore, thesoft drinks markets for foods for specified healthuses (FOSHU) and foods with function claims are
expanding, and opportunities for growth in eachcategory through provision of high added value are
expected to expand.
There is a risk that competition will continue
to intensify in the Japanese soft drinks market
due to the substantial number of large beverage
manufacturers. However, the entire industry moves
toward value competition emphasizing profitability.
On the other hand, as a few top brands continue todraw a larger share of demand in each category, we
also need to seek opportunities for growth by anticipating the restructuring of the beverage industry.

Market Data

Market Share by Company

Japan’s Beverage Market by Category(Millions of cases)

2,000.0

(%)

15.3

466.5
1,500.0

34.5
200.0
279.0

1,000.0

388.0
500.0

27.1
11.1

2016
12.2
20.8

528.0
0.0

2012

2013

2014

2015

13.4

2016

RTD tea

CoffeeCarbonated drinks

Company A

Company B

Asahi

Vegetable and fruit drinks

Lactic acid drinks

Other soft drinks

Company C

Company D

Others

Source: Inryo Soken

Source: Inryo Soken

Medium-Term Management Policy (Key Priorities)
In light of these opportunities and risks, we aim
to realize growth in the profit of the Soft Drinks
Business by establishing a differentiated position.
We will avoid falling into a price competition byfocusing mainly on total market share alone. We
will seek to establish a unique, prominent position
centered on the brand development capabilities wehave cultivated, including our leading clear carbonated drink brand Mitsuya Cider. We will also aim to
demonstrate strengths in health functionality. We

will take on the challenge of offering high added
value in FOSHU and to create further innovation
leveraging lactic acid technology.
Moreover, we will strive to establish a robust
profit structure by maximizing our synergies withthe fully integrated Asahi Soft Drinks Co., Ltd. andCalpis Co., Ltd., in such ways as building optimal
production and logistics systems. Other initiatives
will include improving our sales channels and container mix and reducing stock keeping units (SKUs).

Integrated Report 2016

65

Review of Operations

2016 Results
In our core brands, we proposed new value utilizing
our brand assets by selling Mitsuya Sumikiru Cider
using clear fruit juice*, WONDA Kiwami canned
coffee produced under supervision of a venerable
coffee shop, and Wilkinson Tansan Dry Cola, asugar-free carbonated water with cola aroma, in
addition to launching Asahi Oishii Mizu Plus Calpis
no Nyusankin, which combines natural water withadded lactic acid.
Moreover, we worked hard to enhance our presence in the health function domain through productproposals for FOSHU and foods with function claims.
In chilled beverages, we expanded sales channels forsmall volume products in response to market needs.
As a result, revenue in the Soft Drinks Businesswas ¥363.9 billion, up 3.9% year on year. Core

operating profit was ¥32.3 billion, up 28.0% year
on year due to improvements in the composition of
product categories and types of containers, centeredon increasing small PET bottles, in addition toinitiatives aimed at building an optimal production
and logistics systems.

Mitsuya Sumikiru
Grape Cider

WONDA
Kiwami Black

Wilkinson Tansan
Dry Cola

Asahi
Shokujitoisshoni
Juroku-cha W(Double)* Clear fruit juice contains no solids. Following the juicing of fruits anddispersion of solids, the solids are filtered from the fruits (turbid fruit juice).

2017 Targets
In 2017, we will work toward growth driven byfocusing management assets on core brands andenhancing product competitiveness centered onhealth functionality. We will also promote earning
structure reforms through optimized production
efficiency and enhanced capacity utilization.
In addition to enhancing the product lineup ofcore brands such as Mitsuya Cider, WONDA andCalpis, we will also strengthen our pursuit of healthvalue by expanding FOSHU and foods with function
claims to create strong brands centered on highadded value.
As a result of the above initiatives, we are aiming
for revenue in the Soft Drinks Business of ¥366.3
billion, an increase of 0.7% year on year. We are

Revenue by Core Brand

250.0

74.9

200.0
35.40
150.0

29.07
25.00

100.0

43.50

50.0

66

ASAHI GROUP HOLDINGS, LTD.

18.00
40.00
2012

2013

2014

Mitsuya Shinshibori
Grape

WONDA Kiwami
Hojun Blend

Asahi Oishii Mizu Plus
Calpis no Nyusankin

Karada Calpis

Asahi Soft Drinks Co., Ltd.
Sales by Container Type(Millions of cases)

0.0

targeting core operating profit of ¥32.9 billion, a
1.7% increase year on year, by making improvements in our sales channels and container mix, as
well as building optimal production and logistics
systems.

2015

Juroku-cha

2016 2017 (Forecast)

MitsuyaWilkinson

CalpisComposition of core brands in total sales (Right axis)

WONDA

(%)

(%)

80.0

40

70.0

30

60.0

20

50.0

10

0.0

0

Oishii Mizu

2012

Bottles2013

Small PET bottles

Paper and other materials

2014

2015

2016

Large PET bottles

Cans

Review of Operations by Segment

Topic 1
Using Asahi Soft Drinks and the Calpis Brand for New Value Proposals
In July 2016, we launched Asahi Oishii Mizu Plus
Calpis no Nyusankin as a healthy flavored water
utilizing the Oishii Mizu and Calpis brand assets tocreate new demand.
This new product takes the Oishii Mizu brandconcept of water carefully selected to retain its mostnatural state and adds lactic acid from Calpis, ouroriginal health ingredient. It proposes a new way forcustomers who have a healthy habit of rehydratingwith mineral water to meet their need for naturalingredients.
As a result, sales volume in 2016 was 1.23
million cases, the composition ratio of small PET
bottles in mineral water rose, helping to improve thecontainer mix.
In 2017, we will pursue further health value
through renewal of contents and packaging andenhance the brand value of healthy flavored water.

Topic 2
Locally Produced and Consumed Asahi Juroku-cha Further
Contributes to Regional Revitalization
We launched the limited-volume series Asahi
Juroku-cha Gotochi Sozai Blend, the first line of
Asahi Juroku-cha products limited to a particularregion, utilizing a brand asset to strengthen newvalue proposals.
Asahi Juroku-cha has been used to engage inregional revitalization activities since 2013 such as byusing regional promotional characters on packaging.
In 2016, we utilized the Asahi Juroku-cha productfeature of having 16 ingredients to incorporate local
specialties from seven different regions in Japanto stimulate new consumption in each region andpromote local production and consumption.
Developing blends using local materials also
generated topical interest. In 2016, 240.5 million
cases of Asahi Juroku-cha were sold, the largest

sales volume since the product was launched in
1993.
In 2017, we will enhance brand value andcontribute to revitalizing regions by launching local
blends made using new ingredients and promote
understanding of our rigorous selection of Asahi
Juroku-cha ingredients.

Hokkaido

TohokuKantoChubuKoshinetsu Hokuriku

Kansai

Chugoku- KyushuShikoku Okinawa

Integrated Report 2016

67

Review of Operations

FOOD

Medium-Term Management Policy (Key Priorities)● Enhance brand value and strengthen high added value product proposals
through focus on existing categories where our strength lies
● Create new value and demand through innovation that leverages business integrationin areas such as foods with function claims● Reform the earning structure through focus on core competences, creation of integration synergies,
and value chain optimization

Revenue and Core Operating Profit Margin(¥ billion)

(%)

140.0

12.0
111.0
9.7

120.0
100.0

(%)

12.4

10.0

6.0

60.0

30.2
16.1

2016

4.0

40.0
20.0

2.0

0.0

0.0

IFRS

Japanese Accounting Standards

2012

Revenue (Left axis)

ASAHI GROUP HOLDINGS, LTD.

1.2

8.0

80.0

68

Revenue by Business

2013

2014

2015

2016

2017
(Forecast)Core operating profit margin (Right axis)

16.9

23.2

Food and confectionary business (Breath mint tablets, etc.)
Baby & senior business (Baby food, powdered infant formula, etc.)
Amano business (Freeze-dried foods, etc.)

B2B business

Healthcare business (Supplements, etc.)

Other

Review of Operations by Segment

Business Environment (Opportunities and Risks)
Although the domestic food market as a whole has
been shrinking due to Japan’s falling birthrate andaging population, changes in family structure andlifestyles have given rise to various growing categories. As seen in the alcohol beverages and soft drinks
markets, the high added value category featuringhigh quality and health functionality, in particular,
has also been expanding, reflecting consumers’ multivalued needs and rising consciousness about foodsafety and reliability. In addition, the breath mint
tablet, supplement, baby food, and freeze-dried

food markets, which we focus on, have been stably
growing. Each company works to increase their core
brands’ value and propose new value leveraging
their brand strength.
There are also risks that the deterioratingcompetitive environment could lead to a decline
in profitability amid further fragmentation of thecategory. However, we believe that our competitive
advantages in quality and technological superiority
will open up opportunities for growth.

Market Data

Market Share by Company
Breath Mint Tablet Market

Baby Food Market

(%)

2.7

(%)

6.9

10.2
3.9

8.2

16.9

2016

2016

56.6

25.6

52.0

16.9

Asahi

Company A

Company B

Company C

OthersAsahi

Company A

Company B

Source: INTAGE Food SRI / candy (candy tablet market) / nationwide(excluding Okinawa) / all‐industry, January 2016 to December 2016

Company C

Others

Source: SDI Data, all-industry

Medium-Term Management Policy (Key Priorities)
Considering the aforementioned opportunities andrisks, we will focus on our strengths in the FoodBusiness and leverage the integration of our threefood companies to nurture the Group’s nextgeneration growth base.
We will enhance our brand value and promotehigh added value products by focusing our management resources on existing brands and categories
where we have strengths, such as MINTIA, the No.
1 brand in the breath mint category, as well as baby
food and freeze-dried foods. Moreover, we will aim
to create new values and demand through business

innovation in areas such as foods with function
claims, with a focus on strengthening our R&D
function.
We focus on our core competences ofoperations through the business integration of thethree food companies. We also reinforce the costcompetitiveness of our entire value chain throughthe integration of production and sales and increase
management efficiency through better operational
governance. Through such means, we intend toincrease profitability even further.

Integrated Report 2016

69

Review of Operations

2016 Results
We improved the value of the MINTIA brand ofbreath mint tablets by aggressively promoting sales
and adding to the lineup of MINTIA Breeze (a large
tablet type). In dietary supplements, we further
developed foods with function claims by expanding
the Dear-Natura Gold lineup and releasing Schwabe
Ginkgo Ginkgo Biloba Leaf Extract. In addition, we
launched a new line of Tezukuri Ouen powderedbaby food. In freeze-dried foods, we increased
the number of mass retailers that carry Itsumono
Omisoshiru.
As a result, revenue in the Food Businessdeclined 0.4% to ¥110.8 billion, owing to a reviewof the business portfolio, despite favourable salesof core brands. Core operating profit totaled ¥10.2
billion, a year-on-year increase of 21.4% due tobrisk sales of core brands and lower manufacturingcosts, especially raw material costs.

MINTIA Breeze
Crystal Silver

Schwabe Ginkgo
Ginkgo Biloba Leaf
Extract

Tezukuri Ouen

ItsumonoOmisoshiru

2017 Targets
In 2017, we will focus on building a business foundation for sustained growth by nurturing brands inline with customer needs, in addition to generatingsynergies through business integration and by
focusing more on our strengths.
We are planning a marketing push in infant formula to commemorate our 100th anniversary in thisproduct category. We will also expand our productlineup and strengthen the MINTIA brand and othertop brands in baby food and freeze-dried foods. In
the B2B business, we plan to address low-margin
products, while in the direct marketing business, weare transitioning to a business model focused onhigh added value products.

Through these initiatives, we are targeting
revenue of ¥111.0 billion, an increase of 0.2%. Our
target for core operating profit is ¥10.8 billion, a
year-on-year increase of 5.3% driven by improvements in the sales channel and product mix andreductions in manufacturing costs.

Revenue by Core Brand and Category

Revenue and Market Share of MINTIA(¥ billion)

60.0
38.8

39.8

42.3

42.6

44.9

48.5

MINTIA Wild & Cool(%)(¥ billion)

50.0

20.0

52.8

51.1

Dear-Natura
Gold

54.5

Oyako de Gohan

54.0

56.6

Infant formula
Lebens Milk
Hai Hai

58.0

(%)

60.0

40.0

40.0

40.0

30.0
10.0
20.0

20.0

20.0

10.0
0.0

2012

MINTIA2013

Dear-Natura

Freeze-dried miso soup

70

ASAHI GROUP HOLDINGS, LTD.

2014

2015

Baby food2016

2017 (Forecast)

0.0

Powdered infant formula

Composition of total sales (Right axis)

0.0

2012

2013

Revenue (Left axis)

2014

2015

Market share (Right axis)

20162017 (Forecast)0.0

Review of Operations by Segment

Topic 1
Efforts to Improve MINTIA Brand Value
In 2016, we released limited-edition packaging
for the MINTIA brand of breath mints to celebrateits 20th anniversary and promoted the brand in a
consumer campaign. As a result, MINTIA brand sales
grew and achieved a new record high for the 16thyear in a row.
Launched in 1996, MINTIA was the first breath
mint tablet made by a Japanese company. In 2003,
we acquired the brand and have worked to improvethe brand’s strength. We have updated the packaging and flavor, while also expanding the lineup to
include products suited to diverse lifestyles, ranging
from mint to fruit flavors.
We have endeavored to enhance the value of thebrand by improving added value and proposing newvalue while leveraging brand assets, as shown by the2013 release of Calpis × MINTIA, a product jointly

developed with the Calpis brand, and the 2014
release of MINTIA Breeze, a large-sized mint tablet.
Through these efforts, we have steadily
increased our market share, acquiring a top share interms of sales value in 2007, while contributing to
the expansion of the breath mint tablet market.

Topic 2
Fortifying the Food Business through Restructuring
Asahi Group Foods, Ltd. commenced operations inJanuary 2016 after taking over the nonmanufacturing functions of three domestic foods
companies in the Group, including sales, marketing,
R&D, SCM, and management divisions.
Through the business restructuring, we aim
to build a robust business foundation. We plan toexpand distribution channels through the integrated
management of customers at each company, while
investing management resources in core brands
through focusing on core competences. We also aim

to generate cost synergies through optimal production and logistics systems. We will reduce procurement costs through economies of scale and develop
joint deliveries through the integration of logistics
bases, while enhancing in-house production.
In July 2017, we plan to merge the three
production companies into Asahi Group Foods, Ltd.
While reinforcing business governance through the
integration of manufacturing and sales, we aim to
maximize integration synergies.

Integrated Report 2016

71

Review of Operations

OVERSEAS

Medium-Term Management Policy (Key Priorities)● Implement strategies for growth centered on brand reinforcement and development ofexisting businesses in Oceania, Southeast Asia, and other regions● Reform the earning structure through means including expansion of integration synergies andrestructure the business portfolio by region● Acquire new foundations for growth by leveraging strengths originating in Japan,such as brand strength and cost competitiveness

Revenue and Core Operating Profit Margin(¥ billion)

8.9

400.0

Asahi Brand Overseas Net Sales Volume(%)(Millions of cases)

9.0

12.0

354.6

9.85

300.0
6.0
200.0

10.30

8.64

9.0
6.76

7.52

6.0
3.0

100.0

0.0

3.0

Revenue (Left axis)

72

ASAHI GROUP HOLDINGS, LTD.

2013

2014

0.0

IFRS

Japanese Accounting Standards

2012

2015

2016

0.0

2017
(Forecast)Core operating profit margin (Right axis)

Asia

2013

2014

2015

Oceania

China

Europe20162017 (Forecast)

North America

Review of Operations by Segment

Business Environment (Opportunities and Risks)
The world’s alcohol beverages and non-alcohol
beverages markets overall have been expanding,mainly in emerging countries, although there issome regional variation. Depending on the degree of
economic growth in each region, consumption habits
and consumer values have diversified just as in Japan.
We anticipate that demand will continue to shift toproducts in the high added value category such as
premium beer and soft drinks featuring functionality,
mainly among consumers in advanced countries.
In regions where we have operations, theEuropean market has matured overall, but demandhas been growing for premium beer and flavoredbeer. In Oceania, demand has continued to shift
toward mineral water in the soft drinks category
and cider, imported beer, and others in the alcohol
beverages category. On top of slower growth inSoutheast Asia and China, there is a risk that competition will heat up as fewer major global players
come to dominate markets. However, opportunities
to invest for growth have been on the rise amid
industry restructuring.

Market Data

Global Market Scale and Composition (Volume)

Global Market Scale and Composition (Value)(Million cases)(US$ million)

16,0006%700,000

14,00014%600,000

12,00020%

500,000

10,00066%

8,000

400,000
300,000

6,000

59%

200,000

4,000
2,000
0

12%

14%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EconomyMainstream

Premium

Super premium

100,000
0

9%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EconomyMainstream

Premium

Super premium
Source: Canadean

Medium-Term Management Policy (Key Priorities)
Considering the aforementioned opportunities andrisks, our policy in the Overseas Business is to expand
the global foundation for growth that leverages ourstrengths and drive the Group’s sustained growth.
In our existing businesses, we will focus
mainly on Oceania and work to increase profits bystrengthening and nurturing our brands in responseto structural changes in the market and expanding
integration synergies. We will also restructure ourbusiness portfolio by region, including Southeast
Asia and China, and accelerate our strategies for
growth leveraging our strengths.

Moreover, we took advantage of global
reorganization and consolidation to acquire beerbusinesses in western, central and eastern Europe.
With these acquisitions under our belt, we areworking to create synergies by leveraging strengths
cultivated in Japan, such as brand strength andcost competitiveness, and we are rebuilding our
foundation for global growth. We will go on tobuild the Overseas Business into a growth engine byincreasing the profitability of our existing businesses
and expanding new business platforms.

Integrated Report 2016

73

Review of Operations

2016 Results
In the Oceania business, we focused on enhancing
the value of our brands, such as Cool Ridge mineralwater and growing categories including Asahi SuperDry and cider.
In the Southeast Asia business, we strove toexpand our own brands, such as by releasing Calpis
in Malaysia. In the China business, we strengthened
proposal-based marketing and acquired new
accounts that offer draft beer.
In October, we completed the acquisition ofbeer business in western Europe, and undertook
initiatives to generate synergies across a broad rangeof fields with an eye on expanding our businessfoundation in Europe for local global brands and the
Asahi Super Dry brand.
As a result, revenue totaled ¥250.3 billion, largely
unchanged from the previous fiscal year, as brisk

business in each region and better-than-anticipatedperformance in the European beer business offset
the impact of yen appreciation. Core operating profit
declined 11.5% year on year to ¥12.3 billion, owing
to weakening in currencies such as the Australian
dollar and one-off costs incurred for the acquisitionof a beer business in western Europe.

Asahi Super Dry(Australia)

Cool Ridge(Australia)

WONDA Kopi Tarik(Malaysia)

Calpis Grape(Malaysia)

2017 Targets
Through these initiatives, we are targeting
In 2017, we are determined to build a business foungrowth of 41.7% in revenue to ¥354.6 billion anddation with the aim of becoming a global player with
155.9% in core operating profit to ¥31.6 billion
growth centered on the premium market. We willfrom higher sales and the creation of synergies.
therefore strengthen our core brands and improve
profitability in existing businesses through synergies,
as well as integrate our operations in Europe.
Mainly in Oceania and Southeast Asia, we aim tostrengthen our earnings foundation by reinforcing
our brands in growing categories and generatingsynergies in entire supply chain management. In
Europe, including businesses in central and eastern
Europe acquired in March, we will redouble efforts
to create synergies and expand our global brands
Peroni Nastro Azzurro
Pilsner Urquell
Frantelle
WONDA Extra Presso(U.K.)(Czech)(Australia)(Malaysia)
under the direction of the regional headquarters.
* The aforementioned targets do not include earnings from the Central and Eastern Europe business acquired on March 31, 2017.

Western Europe Business: Revenue (Excluding Liquor Tax)and Core Operating Profit Margin(€ million)

1,000
15.5
750

11.7

17.1

18.1

(%)

(A$ million)

(%)

20.0

2,000

10.0

1,500

11.3

500

10.0

250
0

ASAHI GROUP HOLDINGS, LTD.

1,000

6.3

7.0

7.4

7.9

4.7

5.0

500

2013

2014

Revenue (Left axis)

74

Oceania Business: Revenue (Excluding Liquor Tax)and Core Operating Profit Margin

2015

2016

2017 (Forecast)Core operating profit margin (Right axis)

0.0

0

2013

2014

Revenue (Left axis)

2015

2016

2017 (Forecast)Core operating profit margin (Right axis)

0.0Review of Operations by Segment

Topic 1
Australia: Rapid Growth of Asahi Super Dry
In 1992, we introduced Asahi Super Dry in Australia
through a sales licensing deal with the former
Foster’s Group Ltd. Thereafter, we acquired theIndependent Liquor group and began selling on ourown in the country in April 2012.
In the commercial-use market, we have
distributed special beer glasses with the Karakuchi
logo and other items to promote sales at iconic
mid-range and high-end restaurants in eachregion. We have emphasized the product’s uniquecharacteristics, namely its sophisticated style andrefreshing, crisp taste.
At retailers, we have prioritized initiatives tofirmly associate our brand image with premium beerby pursuing strategies that consistently emphasized
brand value, such as retaining premium pricing while
updating the packaging to a more luxurious look.
As a result of these efforts, we have achieved

sharp growth of 30%*1 annually on average since2012, carving out a position as the fourth-ranked
player in the imported premium beer market.
*1 Sales volume basis

Sales Volume and Market Share*2(Boxes (9 L equivalent))

5.7

1,400,000

5.0

1,200,000
1,000,000
800,000

4.0

3.0

3.0

600,000

2.0

400,000

1.0

200,000
0

6.0
5.0

3.7
2.7

(%)

2012

2013

Sales volume (Left axis)

2014

2015

2016

0.0

Market share (Right axis)

Source: Aztec*2 Sales volume and market share of imported premium beer

Topic 2
Malaysia: Expand the Asahi Brand by Combining Strengths
In the Malaysia business, we endeavored to establish
brands as new local growth drivers by leveraging thebrand assets of Asahi Soft Drinks Co., Ltd.
We have promoted the WONDA brand of canned
coffee since 2013 and the Calpis brand of lactic acidbeverages since 2015. While taking advantage ofAsahi Soft Drink Co., Ltd.’s manufacturing technologies, we coordinated from the development stage on
fine-tuning flavor profiles for the Malaysia market,
creating a brand that was the culmination of bothcompanies’ strengths, expertise, and insight.
We have developed the WONDA brand inparticular by expanding the product portfolio andpromoting sales with innovative newspaper and taxi
ads that appeal to the five senses. As a result, it has
grown to occupy the No. 2 position in the coffee
market.

Moreover, sales have steadily increased for
Calpis thanks to differentiation strategies with larger
volume containers and the addition of flavors for
local markets. We aim to improve its brand strength
further by expanding the product portfolio in linewith market needs.

Integrated Report 201675

Financial and Corporate Information

Eleven-Year Financial and Non-Financial Summary
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
Years ended December 31* The Company’s consolidated financial statements have been prepared based on Japanese accounting standards for years up to the fiscal year ended December 2015 and based on
International Financial Reporting Standards (IFRS) from the fiscal year ended December 2016. The line items have been prepared based on International Financial Reporting Standards (IFRS).

Japanese Accounting Standards(Billions of yen)

Operating Results (For the year):

2006

2007

2008

2009

2010

1,446.3
950.1
407.5
88.7
44.7
139.6
36.8
48.7
8.4

1,464.0
961.1
415.9
86.9
44.7
134.6
44.4
45.2
8.6

1,462.7
953.4
414.7
94.5
45.0
145.8
36.1
47.3
9.0

1,472.4
958.4
431.2
82.7
47.6
145.7
32.5
55.9
9.3

1,489.4
943.3
450.7
95.3
53.0
157.6
27.8
54.6
9.3

1,288.5
290.1
509.7

1,324.3
332.4
529.7

1,299.0
302.2
534.6

1,433.6
391.8
577.7

1,405.3
311.4
612.6

105.8
(82.2)(22.2)
23.7   69.5(1,17.8)
36.1
11.7

106.0
(58.2)(46.3)
12.6

106.3(180.6)
78.5
18.0

125.6
(41.7)(90.8)
10.8   94.02
93.85
19.00
1,012.77   94.94
94.74
19.00
1,089.33   96.31
96.14
20.00
1,122.13  102.49
102.4221.00
1,233.25  114.10
114.0023.00
1,315.51

6.1

5.9

6.5

5.6

6.4

9.6
7.2
1.15
37.0
1.96

9.0
6.9
1.12
38.9
2.38

8.7
7.4
1.12
40.2
1.99

8.7
6.6
1.08
40.0
2.55

9.0
7.1
1.05
43.6
1.90

15,28012
321,649400
1,360

15,59911
2
20,974376
1,436

16,35711
2
20,211845
1,428

17,31613
319,828756
2,421

16,71213
219,130740
1,990

Revenue
Cost of sales
Selling, general and administrative expenses
Core operating profit*1
Profit attributable to owners of parent
EBITDA*2
Capital investment
Depreciation and amortization
Research and development expenses

Financial Position (At year-end):
Total assets
Interest-bearing debt
Total equity

Cash Flows:
Cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Cash flows from (used in) financing activities
Cash and cash equivalents at end of period

Per Share Data (In yen):
Profit attributable to owners of parent—basic
Profit attributable to owners of parent—diluted
Dividends
Equity attributable to owners of parent

Financial Ratios:Core operating profit margin (%)
ROE (Ratio of profit to equity attributableto owners of parent) (%)
ROA (Ratio of profit before tax to total assets) (%)
Total assets turnover (times)
Equity attributable to owners of parent ratio (%)
Net debt/EBITDA (times)

ESG:
Number of employees at year-end
Number of directors (total) (at year-end)
Number of directors (outside) (at year-end)
Water consumption (thousand m3)*3
CO2 emissions (kilotons)*3, 4Social contribution expenditure (Millions of yen)*“
 Revenue” corresponds to “net sales” under Japanese accounting standards, while “core operating profit” corresponds to “operating income,”“profit attributable to owners of parent” corresponds to “net income,” and “total equity attributable to owners of parent” corresponds to “shareholders’ equity.”*1 Core operating profit is the reference index for normalized business performance. Core operating profit = Revenue – (Cost of sales + Selling, general and administrative expenses)*2 Under IFRS, EBITDA = Core operating profit + Amortization of intangible assets + Depreciation. Under Japanese accounting standards, EBITDA = Operating income + Amortization of goodwill + Depreciation*3 Companies included in data calculation: Water consumption 2010–2012: 12 companies, 2013: 29 companies, 2014–2015: 30 companies, 2016: 31 companies;
CO2 emissions 2008–2012: 28 companies, 2013: 29 companies, 2014–2015: 30 companies, 2016: 31 companies*4 CO2 emissions data for 2013–2016 includes a CO2 reduction contribution in accordance with Asahi’s Certificate of Green Power.

Trends in revenue

Trends in core operating profit(¥ billion)(¥ billion)

2,000

1,706.9

1,500

148.4

150
100

1,000
50

500
0

IFRS

Japanese Accounting Standards

20062007 2008

2009

2010

2011

2012

2013 2014

11.0

76

ASAHI GROUP HOLDINGS, LTD.

2015

2015

2016

0

IFRS

Japanese Accounting Standards

20062007 2008

2009

2010

2011

2012

2013 2014

11.0

2015

2015

2016

Financial and Corporate Information

IFRS(Billions of yen)(Billions of yen)

2011

2012

2013

2014

2015

2015

2016

(%)
YoY change(2016/2015)

1,462.7
907.2
448.3
107.1
55.0
166.8
30.6
50.7
8.9

1,579.0
974.7
495.9
108.4
57.1
170.9
41.1
48.5
9.6

1,714.2
1,032.8
563.9
117.4
61.7
183.6
48.4
47.7
10.8

1,785.4
1,073.4
583.7
128.3
69.1
192.3
59.8
44.5
10.7

1,857.4
1,100.5
621.7
135.1
76.4
197.9
52.0
46.6
10.3

1,689.5
1,102.8
445.9
140.6
75.7
197.2
53.5
50.8
10.3

1,706.9
1,098.1
460.2
148.4
89.2
205.8
63.4
51.0
9.5

1.0
–0.4
3.2
5.5
17.8
4.3
18.5
0.3
–8.2

1,529.9
390.0
643.7

1,732.1
456.2
726.8

1,791.5
403.7
827.4

1,936.6
434.7
896.5

1,901.5
414.9
891.8

1,804.6
414.4
803.6

2,086.3
570.3
846.1

15.6
37.6
5.3

108.5
(171.2)
67.0
16.1

109.2
(134.3)
43.0
34.3

157.2
(65.7)(84.9)
41.1

146.7(92.1)(35.8)
62.2

112.7(75.5)(73.0)
43.2

116.4(77.0)(75.2)
43.2

154.4(268.5)
119.5
48.4

32.6
–
–
11.9

  118.36
118.2825.00
1,378.19  122.75
122.6728.00
1,553.35  135.73
126.2643.00
1,772.47  148.92
148.8045.00
1,904.64  166.25
166.1850.00
1,916.69  164.82
164.7550.00
1,723.97  194.75
194.7554.00
1,825.57

18.2
18.2
8.0
5.9

7.3

6.9

6.9

7.2

7.3

8.3

8.7

8.8
7.6
1.00
41.9
2.24

8.4
7.0
0.97
41.8
2.47

8.0
7.0
0.97
45.7
1.97

8.1
7.1
0.96
45.5
1.92

8.8
7.6
0.97
46.2
1.85

9.7
6.5
0.93
43.7
1.86

11.0
7.7
0.88
40.1
2.52

16,75911
318,966728
1,998

17,95610
3
19,532815
1,515

18,00111
3
23,664855
1,836

21,1779
323,615918
1,456

22,1949
323,933924
1,210

23,61910
323,889907
1,390

Trends in total assets

Trends in the number of employees at year-end(¥ billion)(Employees)

2,500

2,086.3

2,000

20,0001,500

15,0001,000

10,000

500

5,000

0

IFRS

Japanese Accounting Standards

20062007 2008

2009

2010

2011

2012

2013 2014

11.0

2015

2015

2016

23,61925,000

0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

11.0

Integrated Report 201677

Financial and Corporate Information

Discussion and Analysis of2016 Business Results
Analysis of Business Results
Voluntary Adoption of International Financial Reporting Standards (IFRS)
Effective from 2016, our Group has voluntarily adopted International Financial Reporting Standards (IFRS) to
improve the international comparability of our financial information and enhance the content of our disclosure.
The main changes and impacts due to the adoption of IFRS are as follows:

Main Changes and Impacts due to the Adoption of IFRSJapanese Accounting Standards

IFRS

Revenue
Impact: –¥183.4 billion
Revenue
Net sales

Net sales
Less: Sales incentives(rebates), etc.

· Sales incentives (rebates), etc. linked tosales are deducted from revenue.
· Revenue includes liquor tax.
(Revenues of certain overseas subsidiaries do
not include liquor tax.)

Core operating profit
Cost of sales

Impact: +¥7.7 billion

Gross profit

Gross profit

Sales incentives (rebates), etc.

Selling, general andadministrative expenses· Core operating profit is a uniquereference index adopted by the Company
to measure its normalized businessperformance. Core operating profit= Revenue – (Cost of sales + Selling,
general and administrative expenses)

Cost of sales

Operating profit

78

Selling, general andadministrative expenses

Core operating profit

Operating income

Other operating income(expense)· Operating profit includes extraordinary
income (loss) and other non-operating income(expense) as defined by Japanese accounting
standards. (It does not include finance income(costs) or gain (loss) on sales of investments
accounted for using equity method.)

Share of profit of entities accounted
for using equity method

Extraordinary income (loss)· Goodwill is unamortized. (Trademarks
and intangible assets from acquisitions
are amortized.)

Other operating income(expense)

Operating profit

ASAHI GROUP HOLDINGS, LTD.

Ordinary income

Finance income (costs) /Foreign exchange gains (losses)

Extraordinary income (loss)

Share of profit (loss) of entities
accounted for using equity method

Net income

Profit attributableto owners of parent

Impact: –¥3.9 billion

Ordinary income· Ordinary income is not used as a profit
indicator under IFRS.

Profit attributable toowners of parent
Impact: +¥7.4 billion· Profit attributable to owners of parent
corresponds to net income based onJapanese accounting standards.

Financial and Corporate Information

Overview of Business Results
During 2016, the global economy followed an
overall pattern of gradual recovery, mainly reflecting
the U.S. economy’s continued recovery, counteredby the slowdown in the business conditions ofemerging economies such as China and increasing
uncertainty caused by Brexit and other issues. In theJapanese economy, business conditions remainedon a mild recovery track, primarily as a result of an
upturn in personal consumption against a backdropof improved employment and income environments,
despite signs of sluggish exports and production.
Under these conditions, we continued working
to further develop management for corporate valueenhancement based on the three key priorities laidout in our Medium-Term Management Policy.
Notably, one of the key priorities is thestrengthening of earning power. In Japan, we
have positioned the domestic profit base as thecornerstone of earnings with high added value
and differentiation as key areas of focus. Overseas,
we have been working to acquire foundations
for growth by leveraging strengths originating inJapan, in conjunction with implementing strategies
for growth centered on brand reinforcement anddevelopment of existing businesses.
As a result we posted revenue of ¥1,706.9
billion, up 1.0% year on year. Core operating profit
was ¥148.4 billion, up 5.5%, and operating profit
was ¥136.8 billion, up 41.7%. Profit attributable toowners of parent was ¥89.2 billion, up 17.8%.

Revenuebeverages other than beer-type beverages and ofalcohol-taste beverages (non-alcohol), along withthe addition of revenue from a newly consolidated
subsidiary. Furthermore, in other businesses, we saw
higher sales volumes of carbonated drinks and coffee in the Soft Drinks Business, steady performancein all areas in the Overseas Business, and additional
revenue from European businesses. As a result, consolidated revenue was ¥1,706.9 billion, up 1.0%, or¥17.3 billion, year on year.

Core Operating Profit
In the Overseas Business, profit decreased due tothe impact of the depreciation of currencies such as
the Australian dollar, and the recording of one-off
costs in connection with the acquisition of European
businesses. However, in Japan, profit increased,
mainly owing to improvement in the category
and container mix and the optimization of the
production and logistics structure in the Soft Drinks
Business, as well as reduced manufacturing costs in
the Alcohol Beverages Business and Food Business.
As a result of the above, consolidated core
operating profit increased 5.5%, or ¥7.7 billion, to¥148.4 billion.

Operating Profit
In addition to the increase in core operating profit,
we liquidated assets through the sale of idle realestate and posted a decline in impairment losses.
These and other factors lifted consolidated operating
profit to ¥136.8 billion, up ¥40.2 billion, or 41.7%,
year on year.

In the Alcohol Beverages Business, revenue
increased, mainly due to higher sales volume ofbeer-type beverages and a rise in sales of alcohol* Core operating profit is the reference index for normalized businessperformance. Core operating profit = Revenue – (Cost of sales + Selling,
general and administrative expenses)

Revenue Trend

Core Operating Profit Trend(¥ billion)

2,000.0

83.7

97.2

97.2 102.2
234.7 250.4
192.8
250.3
157.9 108.1 111.9 117.2 250.4
111.3 110.8
103.4
476.5 477.3
375.4 466.2
350.2 363.9
81.5

74.4

1,500.0

1,000.0

500.0

0.0

944.0 948.5 964.6 1,005.8 970.9 976.6

Japanese Accounting Standards

IFRS

Alcohol Beverages(¥ billion)

Alcohol Beverages

Soft Drinks

200.0Soft Drinks

Food
Overseas
Other
Adjustment(corporate/elimination)

150.0

100.0
113.3 113.7 116.9 119.7 119.7 120.8
50.0

0.0

−76.2 −83.2 −86.1 −90.7 −90.7 −97.0−500.0

0.6
6.9
3.9 10.2

0.6
8.3
5.2
20.6

2.0
2.4 2.4
0.2
12.3
13.9
13.9
10.2
12.7
6.4 8.4 8.4
32.3
26.4 25.2 25.2

Japanese Accounting Standards

Food
Overseas
Other
Adjustment(corporate/elimination)
Amortization of
intangible assets
from acquisitions
Corporate adjustments(IFRS adjustments)

IFRS−12.6 −12.7 −14.9 −18.4 −18.4 −19.9−13.9 −18.4 −19.4−16.2 −5.7 −6.2
−4.9 −3.1−50.02012 2013

2014

2015

2016

2012 2013

2014

2015

2016

Integrated Report 201679

Financial and Corporate Information

Profit Attributable to Owners of Parent
Profit attributable to owners of parent was ¥89.2
billion, an increase of 17.8%, or ¥13.4 billion, year
on year. This result marked a record high for the

16th consecutive year. The increase mainly reflected
the recording of a gain on sales of investments
accounted for using equity method. The gain waspartially offset by an increase in income tax expenses.

Analysis of Financial Position
AssetsEquityTotal assets at the end of the fiscal year stood at¥2,086.3 billion, up ¥281.7 billion from the endof the previous fiscal year. The increase reflecteda growth in assets due to the inclusion of newacquisitions overseas in the scope of consolidation.
Meanwhile, there was also a decrease in assets dueto the cash conversion of assets through means
including the sale of investment securities andshares of affiliates.

Total equity at the end of the fiscal year stood at¥846.1 billion, up ¥42.4 billion from the end of theprevious fiscal year. The result primarily reflected anincrease in retained earnings due to the recordingof profit attributable to owners of parent. This waspartially offset by a decrease in retained earnings dueto the payment of dividends. As a result, the equity
attributable to owners of parent ratio was 40.1%.

Liabilities
Total liabilities at the end of the fiscal year stood at¥1,240.2 billion, up ¥239.2 billion from the end of
the previous fiscal year. The increase mainly reflected
an increase in financial debt (the sum of short-termloans payable, current portion of long-term loans
payable, current portion of bonds, commercial
paper, bonds payable, and long-term loans payable).

Net Debt/EBITDA*/Interest-Bearing Debt
Net debt/EBITDA (Left axis)

Interest-bearing debt (Right axis)(Times)(¥ billion)

3.00

900.0

2.52
570.3

2.00
1.00

600.0

300.0

0.00

2013

2014

0.0

IFRS

Japanese Accounting Standards

2012

2015

2016

* Under IFRS,EBITDA = Core operating profit + Amortization of intangible assets + Depreciation
Under Japanese accounting standards,
EBITDA = Operating income + Amortization of goodwill + Depreciation

Analysis of Cash Flows
Cash Flows from Operating Activities
Operating activities provided net cash of ¥154.4 billion, ¥37.9 billion more than the previous year. The
main factors increasing cash were non-cash items
such as depreciation and amortization and impairment losses. Meanwhile, the main factor decreasing
cash was income taxes paid due to fluctuations inoperating funds, such as trade receivables.

Cash Flows from Investing Activities
Investing activities used net cash of ¥268.5 billion,¥191.4 billion more than the previous year. The
main use of cash was for the purchase of European
subsidiaries’ stocks. There were also cash inflows
mainly from the proceeds from sales of financial
assets and investment in an entity accounted forusing equity method.

Cash Flows from Financing Activities
Financing activities provided net cash of ¥119.5

80

ASAHI GROUP HOLDINGS, LTD.

billion, ¥194.8 billion more than the previous year.
The main source of cash was an increase in interest-bearing debt due to proceeds from long-termborrowings.
As a result of the above, cash and cash equivalents
at end of period stood at ¥48.4 billion, up ¥5.1
billion from the end of the previous year.
Cash Flows
Cash flows from operating activities
Cash flows from investing activities

Free cash flow(¥ billion)

200.0

154.4
96.3

100.0
0.0
–100.0−268.5–300.0IFRSJapanese Accounting Standards

2012

2013

2014

2015

2016

* Free cash flow = Cash flows from operating activities ± Acquisition of property,
plant and equipment and intangible fixed assets

Financial and Corporate Information

Liquidity and Capital Resources
We gain our capital resources principally from cash
flows generated by operating activities, loans fromfinancial institutions, and the issuance of Company
bonds. As a management policy, we regard the
reduction of interest-bearing debt as a priority issue.
However, we make flexible use of our financial
liabilities according to the need for capital resources
to invest. Potential investments include capital
expenditure to enhance the management base andincrease efficiency, and strategic investments such as
M&As. When financing needs arise, we respond by

carefully considering procurement methods that will
facilitate the lowest possible interest cost. We meetworking capital needs, in principle, through shortterm loans and the issuance of commercial paper.
With regard to the liquidity of funds, we andour major consolidated subsidiaries have introduceda cash management system that channels excess
funds of each Group company to us, so that we cancentrally manage these funds. This service enables
us to both improve capital efficiency and minimize
financing costs.

Capital Investment
Capital investment during 2016 amounted to¥63.4 billion. In the Alcohol Beverages Business, we
focused on strategic investments to renew existing
facilities and improve profitability. In the Soft Drinks
Business, we made capital investments mainly to
improve the efficiency of logistics and production
systems in conjunction with business integration. In
the Food Business, we made strategic investments to
expand sales by enhancing production systems andto achieve continuous earnings improvement. In theOverseas Business, we made capital investments toincrease efficiency based on a strategy of continuously improving earnings.

Capital Investment Trend by Business
Alcohol Beverages
Soft Drinks
Adjustment (corporate/elimination)

Food

OverseasOther(¥ billion)

70.0

0.2

60.0
50.0
40.0

0.6

20.0

9.9
5.2
7.1

10.0

18.1

30.0

0.0

0.4

0.2 17.0
3.4
0.2 14.6
2.9
19.7
15.1
15.3

19.3

4.2
0.2 0.6
15.7

2013

2014

0.4
17.9
3.6
13.0

5.4
12.3

24.4

19.3
IFRS

Japanese Accounting Standards

2012

0.3

2015

2016

* The above capital investment and depreciation and amortization amounts do
not include lease assets or trademarks at the time of acquisition of subsidiaries.

R&D Expenses
Group-wide R&D expenses for 2016 amounted to¥9.5 billion. Our R&D activities in each business are
aimed at developing innovative and differentiatedproducts as well as the foundation technologies
that underpin them. In addition, we conduct R&D

for the creation of new businesses in support of thenext generation. We are also working to speed up
R&D by utilizing the resources of external research
institutions around the world.

Profit Distribution Policy and Dividends
Regarding the use of free cash flow, we will givepriority to global M&A deals and other initiatives
to acquire foundations for growth based on theMedium-Term Management Policy. Meanwhile,in terms of shareholder returns, we are aiming forstable dividend increases by targeting a dividend
payout ratio of 30% (IFRS basis) by 2018. In
addition, we plan to strive to enhance shareholder

returns by considering flexible share buybacks
taking into account an appropriate balance withinvestments for growth.
For 2016, we paid a full-year ordinary dividendof ¥54 per share, up ¥4 from the previous fiscal year.
In addition, in fiscal 2017, we plan to pay a full-year
dividend of ¥60 per share, up ¥6 from 2016.

Integrated Report 201681

Financial and Corporate Information

Consolidated Statement of Financial Position(Millions of yen)

(Transition date)
As ofJanuary 1, 2015

AssetsCurrent 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 assets
Other non-current assets
Total non-current assets
Total assets

82

ASAHI GROUP HOLDINGS, LTD.

As of
December 31, 2015

As ofDecember 31, 2016

62,236365,239
122,207
10,2795,299
18,992584,254—584,254

43,290372,043
129,494
4,525
6,360
21,832577,547—
577,547

48,459397,340
136,460
14,161
3,428
31,934
631,784
3,241
635,026

541,067
240,046
225,158
173,364
30,184
19,412
12,5901,241,825
1,826,080

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

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

Financial and Corporate Information(Millions of yen)

(Transition date)
As ofJanuary 1, 2015

Liabilities and Equity
Current 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 liabilities
Deferred tax liabilities
Other financial liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityIssued 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

As ofDecember 31, 2015

As ofDecember 31, 2016

274,956
280,856
27,43028,066
147,420758,731—758,731

273,092
249,20923,47627,038
143,770
716,588—716,588332,639
281,870
34,957
26,352
142,828
818,649907
819,556

153,435
24,073
41,16855,753
2,964
277,395
1,036,126

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

288,490
25,78949,302
54,127
3,009
420,719
1,240,276

182,531
120,895
493,129(58,176)
36,154
774,534
15,419789,953
1,826,080

182,531
120,524
549,084(77,377)
14,657789,420
14,261
803,682
1,804,673

182,531
118,668
589,935(76,709)21,927
836,3549,750
846,105
2,086,381

Integrated Report 201683

Financial and Corporate Information

Consolidated Statement of Profit or Loss
(Millions of yen)Previous year
(ended December 31,
2015)

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
Gain on sales of investments accounted for using equity method
Gain on remeasurements relating to business combinations
Profit before tax
Income tax expense
ProfitCurrent year
(ended December 31,
2016)

1,689,527(1,102,839)
586,688(445,996)
3,514(47,580)
96,626
3,011(5,095)
17,627—
5,394
117,563(42,962)
74,6001,706,901(1,098,173)
608,728(460,241)
8,004(19,600)
136,889
3,106(4,066)
1,974
12,163—150,068(62,952)
87,115

Profit attributable to:
Owners of parent
Non-controlling interests
Total

75,770(1,170)74,60089,221(2,105)
87,115

Basic earnings per share (Yen)
Diluted earnings per share (Yen)

164.82164.75194.75194.75

Consolidated Statement of Comprehensive Income(Millions of yen)

Profit84

Previous year
(ended December 31,
2015)

Current year
(ended December 31,
2016)

74,60087,115(1,073)
2,992(3,010)(6,333)(4)

30

Other comprehensive income
Items that will not be reclassified to profit or loss
Changes in fair value of financial instruments measured
at fair value through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted
for using equity method
Items that might be reclassified to profit or loss
Cash flow hedges
Translation difference on foreign operations
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Total comprehensive income(197)(29,759)(7,628)
10,137

6,532(21,509)
53,090(18,683)(25,488)
61,627

Total comprehensive income attributable to:
Owners of parent
Non-controlling interests

55,722(2,631)64,366(2,738)ASAHI GROUP HOLDINGS, LTD.

Financial and Corporate Information

Consolidated Statement of Changes in Equity
Previous year (ended December 31, 2015)(Millions of yen)
Equity attributable to owners of parent
Other components of equity

IssuedcapitalBalance as of January 1, 2015
Comprehensive income
ProfitOther comprehensive income
Total comprehensive income
Transfer to non-financial assets
Transactions with owners
Dividends
Purchase of treasury shares
Disposal of treasury shares
Changes through business combinations
Share-based payment transaction
Transfer from other components ofequity to retained earnings
Other increase (decrease)
Total contributions by owners anddistribution to owners
Acquisition of non-controlling interests
without change in control
Total changes in the ownership interestin subsidiaries
Total transactions with owners
Balance as of December 31, 2015

Sharepremium

182,531

Retainedearnings

120,895

Changes in fair valueof financial instruments
measured at fair
Remeasurements
value through otherof definedcomprehensive income
benefit plans

Treasuryshares493,129(58,176)

36,460    ——(1,074)(1,074)

3,024
3,024

1,210

(3,024)75,770——75,770(21,629)(20,031)
831

(370)

1,813

—

(370)

(19,815)(19,200)

1,210(3,024)——
182,531—(370)
120,524—(19,815)549,084—(19,200)(77,377)—
1,210
36,596—(3,024)    —Total othercomponents ofequityTotal equity
attributable toowners of parent

Non-controllinginterests

Equity attributable to owners of parent
Other components of equity
Translationdifference on
Cash flow hedges foreign operations

Balance as of January 1, 2015
Comprehensive income
ProfitOther comprehensive income
Total comprehensive income
Transfer to non-financial assets
Transactions with owners
Dividends
Purchase of treasury shares
Disposal of treasury shares
Changes through business combinations
Share-based payment transaction
Transfer from other components ofequity to retained earnings
Other increase (decrease)
Total contributions by owners anddistribution to owners
Acquisition of non-controlling interests
without change in control
Total changes in the ownership interestin subsidiaries
Total transactions with owners
Balance as of December 31, 2015

Total equity(305)     —

36,154

774,534

15,419789,953

(197)
(197)
364

(21,800)(21,800)—(20,048)(20,048)364

75,770(20,048)
55,722364(1,170)(1,461)(2,631)

74,600(21,509)
53,090
364

—
—
—
—
—

(21,629)(20,031)
460
—
—

(475)

(22,104)(20,031)
460
1,949
—

(1,813)———(1,813)(41,201)———(1,813)
14,657—(41,201)
789,420

—

—
—
(138)

—

—
—
(21,800)

1,949

—
—
1,474

(39,726)——
1,474
14,261—(39,726)
803,682

Integrated Report 201685

Financial and Corporate Information

Current year (ended December 31, 2016)(Millions of yen)
Equity attributable to owners of parent
Other components of equity

IssuedcapitalBalance as of January 1, 2016
Comprehensive income
ProfitOther comprehensive income
Total comprehensive income
Transfer to non-financial assets
Transactions with owners
Dividends
Purchase of treasury shares
Disposal of treasury shares
Changes through business combinations
Share-based payment transaction
Transfer from other components ofequity to retained earnings
Other increase (decrease)
Total contributions by owners anddistribution to owners
Acquisition of non-controlling interests
without change in control
Total changes in the ownership interestin subsidiaries
Total transactions with owners
Balance as of December 31, 2016

Sharepremium

182,531

Retainedearnings

120,524

Changes in fair valueof financial instruments
measured at fair
Remeasurements
value through otherof definedcomprehensive income
benefit plans

Treasuryshares549,084(77,377)

36,596    ——(2,967)(2,967)(6,301)(6,301)

18,252

6,301

89,221——

89,221(23,817)
(21)
689

(302)
44
(24,553)—(258)(48,370)668

18,252

6,301—(48,370)
589,935—
668(76,709)—18,252
51,881

—
6,301
    —

Total othercomponents ofequityTotal equity
attributable toowners of parent

Non-controllinginterests(1,597)——
182,531(1,597)(1,855)
118,668

Equity attributable to owners of parent
Other components of equity
Translationdifference on
Cash flow hedges foreign operations

Balance as of January 1, 2016
Comprehensive income
ProfitOther comprehensive income
Total comprehensive income
Transfer to non-financial assets
Transactions with owners
Dividends
Purchase of treasury shares
Disposal of treasury shares
Changes through business combinations
Share-based payment transaction
Transfer from other components ofequity to retained earnings
Other increase (decrease)
Total contributions by owners anddistribution to owners
Acquisition of non-controlling interests
without change in control
Total changes in the ownership interestin subsidiaries
Total transactions with owners
Balance as of December 31, 201686

ASAHI GROUP HOLDINGS, LTD.

Total equity  (138)(21,800)

14,657789,420

14,261

803,682(7,652)(7,652)
7,571(7,933)(7,933)—(24,854)(24,854)
7,571

89,221(24,854)
64,366
7,571(2,105)(633)(2,738)87,115(25,488)
61,627
7,571

—
—
—
—
—

(23,817)
(21)
386
—
44

(489)

(24,306)
(21)
386
155
44

24,553
—

—
—

312

—
312

24,553(23,406)(21)(23,428)—(1,597)(1,750)(3,347)—24,55321,927(1,597)(25,004)
836,354(1,750)(1,771)
9,750(3,347)(26,776)
846,105———  (219)———(29,734)

155

Financial and Corporate Information

Consolidated Statement of Cash Flows(Millions of yen)Previous year
(ended December 31,
2015)

Cash flows from (used in) operating activities
Profit before tax
Depreciation and amortization expenses
Impairment losses
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted for using equity method
Gain on sales of investment in an entity accounted
for using equity method
Losses (gains) on sales and disposals of property, plant, and equipment
Gains on remeasurements related to business combinations
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued alcohol tax
Increase (decrease) in net defined benefit assets and liabilities
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of financial assets
Proceeds from sales of investments in an entity accounted
for using equity method
Purchase of shares of subsidiaries and others resulting in change
in scope of consolidation
Other
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities
Increase (decrease) in short-term borrowings
Payments of finance lease liabilities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Dividends paid
Proceeds from share issuance to non-controlling shareholders
Purchase of shares of subsidiaries not resulting in change
in scope of consolidation
Other
Net cash flows from (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 resulted
from change in scope of consolidation
Cash and cash equivalents transferred to assets held for sale
Cash and cash equivalents at end of period

Current year
(ended December 31,
2016)

117,563
70,74527,099(2,698)
3,875(17,627)

150,068
71,131
6,336(2,836)
3,763(1,974)—
3,766(5,394)(13,387)(4,242)(3,032)(173)(2,811)
6,441
180,123
8,801(3,776)(68,677)
116,471(12,163)(1,324)—(9,821)
(607)
6,369
497
(2,096)(2,623)
204,718
5,546(3,658)(52,153)
154,452(47,975)
5,239(10,573)(3,822)
2,279(50,357)
11,923(7,791)(2,286)30,870—36,440(21,257)(975)(77,083)(290,893)
3,587(268,507)(36,328)(11,220)
13,828(14,113)34,815(20,000)(20,031)(21,629)—(10,793)(10,765)
205,310(7,479)—(30,000)(21)(23,817)
312

—
(571)
(75,250)(4,558)(40,422)
62,236(2,773)(418)
119,554642
6,141
43,29021,476—43,290—(972)
48,459Integrated Report 201687

Financial and Corporate Information

Corporate Profile/Stock Information■ Corporate Profile(As of December 31, 2016)■ Major Shareholders

Date of Establishment

September 1, 1949

Paid-In Capital¥182,531 million

Number of Employees

285 (consolidated: 23,619)

Number ofGroup Companies

Consolidated subsidiaries: 137
Equity-method affiliates: 138

Total Number ofIssued Shares

483,585,862

Trading Unit

100 shares

Name of shareholder

Number of Percentage ofshares held
shares held(in hundreds)(%)

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

318,785

7.0

Japan Trustee Services Bank, Ltd.
(Trust Account)

234,654

5.1

The Dai-Ichi Life Insurance Company,
Limited169,200

3.7
3.4

Fukoku Mutual Life Insurance Company

155,000

Stock Exchange Listing

Tokyo Stock Exchange

Asahi Kasei Corporation

137,853

3.0

Securities Code2502

Sumitomo Mitsui Banking Corporation

90,280

2.0

Fiscal Year-End Date

December 31

Sumitomo Mitsui Trust Bank, Limited

81,260

1.8

Number of Shareholders 115,017

Ordinary General
March
Meeting of Shareholders
Administrator of
Shareholder Registry

Sumitomo Mitsui Trust Bank, Limited

Independent Accounting
KPMG AZSA LLC
Auditor

JPMorgan Securities Japan Co., Ltd.

74,399

1.6

STATE STREET BANK WEST CLIENT –TREATY 505234

61,716

1.3

THE BANK OF NEW YORK MELLON
SA/NV 10

61,173

1.3

1,384,320

30.2

Total

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.

■ Breakdown of Shareholdings by Investor TypeBrokerages

Treasury shares

5,000,000 or more

100,000 or more

40.4%

13.8%

0.1%

4.2%

Financial institutions

Other corporations

Less than 100

10,000 or more

0.0%

10.0%

2.8%

5.9%

Government and local public bodies

Individuals, etc.

100 or more

1,000 or more

3.9%

5.3%

■ Breakdown of Shareholdings
by Number of Shares Held

37.2%

17.5%

Foreign corporations, etc.

1,000,000 or more

26.6%

32.3%

■ Stock Price(index)TSR (Total Shareholder Return)250

Holding period
Asahi Group
TOPIX
TOPIX Foods

200

1 year
−0.1%
−0.3%
−2.6%

3 years
2.5%
10.2%
23.8%

Asahi GroupTOPIX

5 years112.8%
82.4%
102.7%TOPIX Foods

Source: Tokyo Stock Exchange

150

100

2012/122013/12

2014/12

Notes: 1. Taking the closing price on December 28, 2012 as 100.
2. The holding period for TSR is based on the closing price on December 31, 2016.

88

ASAHI GROUP HOLDINGS, LTD.

2015/122016/12Financial and Corporate Information

Explanation of Various Information Tools■ Information Site for Shareholders and Investors

http://www.asahigroup-holdings.com/en/ir/index.html

With the purpose of providing appropriate and fair information to shareholders and investors,
we use the website to proactively develop IR activities.

Main contents to be featured
Latest financial results and presentation materials
Timely disclosure and other IR news

Management Information

Financial Information▸ Management Message▸ Long-Term Vision▸ Medium-Term
Management Policy▸ Financial Highlights▸ Segment Information▸ Financial Data

IR Library

Others▸ Financial Results▸ Fact Book
▸ Integrated Report/
Annual Report

OthersIR Events

Stock and Bonds▸ IR Calendar▸ Annual General Meetings
for Shareholders

Other Information▸ Stock Information▸ Stock Ownership▸ Dividend Information▸ Inclusion in SRI Indexes▸ Contact IR
Others■ Others
We also provide non-financial information such as Asahi Group’s CSR andenvironmental activities in a timely and up-to-date manner.

Responsibility
http://www.asahigroup-holdings.com/en/csr/index.html▶ Main contents to be featured
President’s Message
CSR of Asahi Group
Dialogue with the Stakeholders■ Contact

Asahi Group Holdings, Ltd.
http://www.asahigroup-holdings.com/en/
1-23-1 Azumabashi, Sumida-ku,
Tokyo 130-8602, JapanIR Section
TEL: (+81) 3-5608-5126

CSR Section
TEL: (+81) 3-5608-5218

Integrated Report 201689

Printed in Japan