2018
Annual Review

Coca-Cola Bottlers Japan Holdings Inc.
Securities Code: 2579

TOP MESSAGE

We must "do the right thing"
for the long term,
while getting the day to day right

Representative Director
and President

Calin Dragan

Inaugural Message
I am Calin Dragan, and on March 26, 2019 I assumed
the position of President and Representative Director ofcommunity, every day".

honor to speak to you as a representative of this great

Setting the Foundation for Recovery
and Growthcompany as we embark on a journey of transformation to

Since our launch in April 2017, we can point to many

set a foundation for sustainable growth into the future.

accomplishments in creating a new company from theAfter working in Japan as Vice President of Coca-Colamanagement integration of Coca-Cola West andWest Co., Ltd. and President of Coca-Cola East Japan

Coca-Cola East Japan. This includes the consolidation

Co., Ltd., I most recently led bottling operations for The

and reorganization of multiple subsidiaries andCoca-Cola Company in 15 countries worldwide as

Coca-Cola system-affiliated companies, the generation

President of the Bottling Investment Group (BIG). It isof 12 billion yen in net synergies and savings since “Dayindeed a great pleasure for me to return to Japan, and I

One” of operations and the launch of our new corporate

am looking forward to connecting with all of you throughphilosophy “THE ROUTE”. Although our business

our extensive Coca-Cola business that represents close

results were severely impacted by heavy rain andto 90% of The Coca-Cola Company’s sales volume inflooding in July 2018, we see 2019 as a transition year

Japan.

focused on recovery and building foundation for future

Coca-Cola Bottlers Japan Holdings, Inc. is Asia's largest

growth. Aiming to return growth trajectory in 2020 and

Coca-Cola bottler and ranks among the top Coca-Cola

onward, we understand and are quickly taking action tobottlers worldwide in terms of sales revenue. We operate

address various challenges we face by investing toour business activities with a community-based andrecover and grow product supply capacity to respond to

customer-centric corporate philosophy under one mission,

rapid changes in consumer purchasing behavior, and to

Coca-Cola Bottlers Japan Holdings Inc. (CCBJH) It is an

1“To deliver happy, refreshing moments to everyone in the

Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE
FeatureFinancial and Non-Financial
Highlights
Business Overview

are now outside directors to enhance independence,

In terms of product supply, we are investing to put

and our board reflects diversity in gender, nationality

seven new manufacturing lines in operation by Spring ofand important professional experience from across

2020, including our new Hiroshima plant, which will

industry as well as relevant expertise from the global

replace the damaged Hongo plant. Already in the first

Coca-Cola network. Furthermore, we have actively

quarter of 2019 we have started operation of two new

streamlined our organizational structure by reducing thelines in Kyoto and Kumamoto. We also broke ground on

number of executive officers and reporting layers,

the construction of a new “mega-distribution center” ininitiating a voluntary retirement program and introducing

Saitama as part of the Project Shinsei work underway toarrangements for more flexible working styles.

Corporate Governancesustainable growth. The majority of our board members

facilities.

CSV initiative

replace the flood-damaged Hongo plant and related

optimize our nationwide logistics and distribution

Our Commitment
In order to earn the trust of consumers, customers andannounced the first price increase in 27 years for large

all stakeholders each and every day, we are committed

PET products, and through the creation of a joint

in to grow this business in a sustainable way and tovending business team together with the Coca-Colacreate shared value based on our community-based and(Japan) Company to revitalize our important vending

customer-centric business principles. We will continue

business.

to promote growth-oriented and speedy initiatives,

Toward Best-in-class Governance

Company Information

practice initiatives for profitable sales growth, having

Financial Information

infrastructure. On the sales front, we are putting into

supported by a financial strategy that drives shareholder
value creation. I would like to thank you for yourWe have also renewed our governance system as acontinued understanding and support now and in thefundamental building block of this foundation foryears to come.

2

Feature

Board of Directors

3

Governance & Independence
Executive
Directors

Independent
Directors

Outside directors in
Audit & Supervisory
Committee (ASC)

2

4

4

22%

44%

100%

Outside Director
Independent Director

Outside Director
Independent Director

Director and Chairman

Representative Director, Vice President,
Chief Financial Officer and Head of Finance

Representative Director
and President

Hiroshi Yoshioka

Hiroko Wada

Tamio Yoshimatsu

Bjorn Ulgenes

Calin Dragan

Has management
experience with Sony
Corporation and global
insights. Previously served
as an outside director of
Coca-Cola East Japan.

Has abundant experience inmarketing, management,
and organization and humanresource development in the
consumer goods industry.
Has served as a director of
The Procter & Gamble
Company, representative
director and president of
Dyson and of Toys "R"
Us-Japan, Ltd.

Has worked with Coca-Colabottlers in Japan for about 50
years. Led businessintegration as the first
President of CCBJH.

Has experience with finance in
the Coca-Cola system inEurope, the Middle East,
Africa, and Japan. Most
recently, served as Deputy
Finance Director of The
Coca-Cola Company's Europe,
Africa and Middle East (EMEA)Group.

Has worked with Coca-Colabottlers, including in Japan, forabout 20 years. Most recently,
served as President of The
Coca-Cola Company's Bottling
Investments Group.

Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

Diversity and Professional Skillset
Nationalities

Coca-Cola System
Experience

Finance/Audit

FMCG

IT/Manufacturing

3

6

5

3

6

2

56%

33%

67%

22%

33%

TOP MESSAGE

Women on the
Board

FeatureFigures in circles represent the number of corresponding directors. The ﬁgure for nationality represents the number of nationalities of directors.

Financial and Non-Financial
Highlights
Business Overview
CSV initiative
Corporate Governance

Has a wealth of experience infinance and accounting,including managing her own
finance consulting company aswell as management
experience in Lehman
Brothers Japan Inc.

Nami Hamada

Outside Director (serving on the
Audit & Supervisory Committee)

Outside Director (serving on the
Audit & Supervisory Committee)

Celso Guiotoko

Jennifer Mann

Irial Finan

Has IT and supply chain
experience in multinational
corporations, as well as a
wealth of management andauditing experience at Nissan
Motor Co., Ltd.

Has extensive experience
related to human resourcesand global ventures in the
Coca-Cola system. Currently
serves as Senior Vice
President and President of
Global Ventures at The
Coca-Cola Company.

Has extensive management
experience, with many years of
involvement in the managementof The Coca-Cola Company
and in the Coca-Cola businessas the representative of the
Bottling Investments Groupsupervising Coca-Cola bottlers
worldwide. Currently serves as
Director of Coca-Cola
European Partners.

Company Information

Outside Director (serving on the
Audit & Supervisory Committee)
Independent Director

Financial Information

Outside Director (serving on the
Audit & Supervisory Committee)
Independent Director

4Feature

T o p i c s■ Decision to relocate the Hongo Plant and restart operations in 2020
In July 2018, heavy rains in Western Japan caused damage to our manufacturing and distribution facilities, vending machines and othersales equipment, vehicles, and product inventory. In particular, the Hongo Plant in Mihara, Hiroshima Prefecture and the adjoining
distribution center suffered severe flood damage, forcing the plant to halt operations. We have decided to relocate the Hongo Plant within
the region, and will restart operations in the spring of 2020 as Hiroshima Plant. We have acquired a site for the relocation, and plan to start
two aseptic product production lines in the spring of 2020.

■ Start of operation of new production lines at the Kyoto and Kumamoto Plants
We are working to expand our production capacity to meet growing demand for aseptic products. We are carrying out investments
to launch seven new aseptic product production lines by the spring of 2020, including operation at the new Hiroshima Plant.

Kyoto Plant
In late February 2019, we started operation of a new production line at the Kyoto plant. Production will focus on Ayataka,
Sokenbicha, Georgia Japan Craftsman, and other products for which demand is expected to grow as the peak demand season
approaches, contributing to the establishment of a stable supply system.

■Main products produced at the Kyoto Plant (2019)

Kumamoto Plant
The new production line at the Kumamoto plant began operation in late March 2019. Adopting the latest equipment, the new line willproduce I LOHAS mineral water, flavored water, and more. Water for I LOHAS mineral water produced at the Kumamoto Plant is newly
sourced from the Aso region.

■ Price revisions for large PET bottle products
While our company has made efforts to streamline production and operations and to reduce costs, due to the recent increase in
distribution costs and raw material prices, beginning with product shipped on April 1, 2019 we have revised the wholesale price andsuggested retail price for large-sized PET bottle products. We will continue taking steps to address cost increases and will strive toimprove our service.

■ Acquisition of treasury shares
In April 2018, we acquired 17.08 million shares of treasury shares (8.28% of outstanding shares) by means of a tender offer toimprove ROE and establish an efficient capital structure. In November 2018, the Company announced a second share buyback
program of up to JPY 25 billion/10.80 million shares. By February 22, 2019, the Company had completed acquisition of JPY 25
billion/7.82 million shares (3.79% of outstanding shares) of treasury stock.

5

Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE■ Adopting International Financial Reporting Standards (IFRS)
We have adopted IFRS since reporting our full-year 2018 results. We believe this enhances the comparability of our financial results inglobal capital markets, providing useful financial information for investors and shareholders.
●Improved international comparability of financial information●Provision of useful information to shareholders and investors●Easy comparability with other companies in the industry and other global Coca-Cola bottlers

FeatureMain objectivesof the change

Changes resulting from the introduction of IFRSJGAAPCost of Goods Sold
Gross Profit
Selling, General and Administrative
Expenses
Sales Promotion Expenses,
Part of General Expenses

Operating Income
Non-operating Profit and Loss
Net Financial Income
Equity in Earnings of Associates
and Joint Ventures
Other Non-operating
Income and Loss

Extraordinary Income and LossNet Income before Income Taxes
Total Income Taxes

Gross Profit
Selling, General and
Administrative Expenses
Other Income andExpenses (Recurring)
Equity in Earnings of Associates
and Joint Ventures！ No amortization for goodwill！ Accounting treatment of depreciation
Accounting treatment of retirement！ benefits
income in IFRS includes！ Operating
one-time, or extraordinary income
and expenses that are reported in
non-operational and extraordinary
income and expenses in JGAAP.

Business Income
Other Income andExpenses (Non-recurring)Operating Income
Net Financial Income
and Expenses
Net Income before Income Taxes

Introduction of Business Income！ Introducing "Business Income" as ameasure of our recurring businessperformance under IFRSRevenue - (COGS + SG&A) + Other Income/Expenses (recurring)

Total Income Taxes
Corporate GovernanceNet Income

Cost of Goods Sold

general and administrative expenses
to deduction from revenue

CSV initiative

Recurring Income

Deducting Sales Promotion
Expenses, Part of General
Expenses, etc. from Revenue

Sales promotion expenses and part of！ general
expenses move from selling,

Business Overview

Other Selling and Administrative
Expenses

Revenue

Major Differences from JGAAP

Financial and Non-Financial
Highlights

RevenueIFRS

Net Income

Net Income Attributable toNon-controlling Interests

Net Income Attributable toNon-controlling Interests

Net Income Attributable to
Owners of Parent

Net Income Attributable to
Owners of Parent

Financial Information■ Coca-Cola Bottlers Japan Holdings selected for DJSI Asia Pacific ESG investment index

Company Information

In September 2018, for the first time, Coca-Cola Bottlers Japan
Holdings was selected for the DJSI Asia Pacific index of the Dow
Jones Sustainability Indices (DJSI), a family of worldwide ESG(Environmental, Social, and Governance) investment indices. The
Company continues to position "Creating Shared Value" (CSV) as oneof our most important business imperatives, and will work to resolve
social issues through our business activities.

The DJSI is a family of stock market indices created jointly by U.S.-based S&P Dow Jones Indices and the Swiss investment consulting firm
RobecoSAM. It meticulously tracks over 3,400 major corporations around the globe in terms of economic, environmental, and societal criteria, toselect companies that demonstrate excellent sustainability. It is a global index for ESG investments, and serves as a benchmark for selecting key
investment targets.

6

Financial and Non-Financial Highlights

Financial and Non-Financial Highlights（2018 results）

Financial highlights▶▶▶See P. 27 for details.

Business Income※Revenue

927.3

23.3

billion yen

Business Income Margin: 2.5%

927.3

837.1

billion yen

40.2(billion)(billion)

23.3

2017

2017

2018

Revenue increased by JPY 90.2 billion from the previous fiscal year
to JPY 927.3 billion due to the effects of the business integration
performed effective April 1, 2017.

Operating Income

14.7

2018

While revenue recorded a net increase, business income declined by JPY
16.9 billion from the previous fiscal year to JPY 23.3 billion due to supply
constraints caused by damage from heavy rains in July 2018 and rapidly
increasing demand for aseptic products in the beverage business.

Net Profit Attributable to Owners of The Parent

10.1

billion yen

Operating Income Margin：1.6％

37.6

billion yen

EPS：JPY 52.68

22.0(billion)

10.1

14.7

2017

(billion)

2018

2017

2018

In addition to a decrease in business income, operating income decreasedby JPY 22.9 billion from the previous fiscal year to JPY 14.7 billion due tolosses from the disposal and retirement of damaged equipment, inventory
in the beverage business, etc.

With the decline in operating income, income attributable to owners

ROE

Segment Information

1.6

of parent declined by JPY 11.9 billion from the previous fiscal year
to JPY 10.1 billion.

〈Revenue〉％

4.6■Beverage Business899.9 billion yen (97.0%)（%）■Healthcare &Skincare Business27.4 billion yen (3.0%)

1.6〈Operating Income〉■Beverage Business

2017

2018

Although equity attributable to owners of the parent decreased dueto the result of share buybacks net profit attributable to owners of
the parent decreased from the previous fiscal year and ROE wasdown to 1.6%.

8.9 billion yen (60.4%)■Healthcare &Skincare Business

5.8 billion yen (39.6%)※We introduce “Business Income” as a measure of our underlying or recurring business performance after the adoption of IFRS. Business Income deducts cost of goods and SG&A from revenue
and includes other income and expenses which we believe are recurring in nature.

7

Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE

Non-Financial Highlights▶▶▶See P. 17 for details.

Number of seminars held on hydration/
Number of participants

44
7,000

11.5

times

FeatureHealthLaunch of Foods for Specified Health Use（FOSHU）and Foods with Function Claims

Aboutmillioncases

Water consumption in manufacturing process

K㎥（−7.3% year-on-year）

0.89

L/L

MJ/L

（−9.2％ year-on-year）

CFC-free vending
machine ratio

99.1

78

％

About

％

Number of participants in company sports clinics,
and rugby and field hockey classes

167,000

plants About

About

4,400

Financial Information

Community

Corporate Governance

Number of participants in plant tours

CSV initiative

Recycling rate ofindustrial waste

6

million MJ

2018 EUR(energy use ratio)
per 1 liter of product（−8.3% year-on-year）

About

3,715

（−8.2% year-on-year）

Water used to manufacture
1L of a product

3.34

Energy consumption in manufacturing process

Business Overview

Environment

13,998Financial and Non-Financial
Highlights

persons

17,100

Women in manager
and leader positions

8％

Company Information

Number of employees

Number of new graduate
hires in fiscal 2019385

8

Business Overview

Beverage Business■ Overview of Coca-Cola Bottlers Japan Inc. (CCBJI)
Sales area

Number of consumers

Tokyo,Kyoto,Osaka andprefectures(population and number of households in areas of coverage)

35

About

(about 51 million households)

Product portfolio

Number of brands

Over
Over

50

Annual sales
volume510 million
cases※2018 results

Number ofvending
machines〜

700K※As of end of 2018

Sales
Centers

About

350

※As of February 2019, including distribution centers

Coca-Cola Bottlers Japan Holdings Inc.

Water
SportsCoffee

800

〜

Other

Sparkling 27 ％Non-Sugar Tea 20 ％Coffee 20 ％Sports 9 ％、Water 9 ％Number of SKUs

9

112 million

NonSugarTea

Sparkling

Production
sites

17 plants※Production suspended at Hongo Plant

Number ofcustomeroutlets〜

240K※As of end of 2018

Number offleet vehicles

About

16,200※As of end of 2018

ANNUAL REVIEW 2018

TOP MESSAGE■ The Role of CCBJI in the Coca-Cola System in JapanThe Coca-Cola system in Japan consists of Coca-Cola (Japan) Company, Ltd., responsible for supplying concentrate, productplanning/development, and marketing activities including advertising, etc., and bottler companies that produce and sell theﬁnished products, as well as other aﬃliated companies. Our company and other bottler entities produce beverages under strict
quality management in the respective plants and deliver Coca-Cola products to the customers through business outlets andFeaturevending machines.

Coca-Cola (Japan) Co., Ltd.
Producing
Products

Product
Distribution

Collectionof Containers

Sales

Recycling ofContainers

Financial and Non-Financial
Highlights

Productionof Syrup
Concentrates

ResearchandDevelopment

Planning

Coca-Cola Bottlers Japan Inc.

Coca-Cola Tokyo Research &Development Co., Ltd.

Business Overview■ History of our Company (Background to major mergers and consolidation)
2017

CCEJ

CCW

2015

2015

(CCWJ)

MikasaMinamikyushu

Shikoku

Tokyo

Tone

Mikuni

CCCJ

SendaiMinamikyushu

Shikoku

Tokyo

Tone

MikuniCoca-Cola
Central Japan

Sendai

2005

Kinki

(CCCJ)

1999

Sanyo

2001

MikasaKinki

Minamikyushu

Shikoku

Tokyo

Tone

Mikuni

Fuji

ChukyoCompany Information

1998
and earlier Kitakyushu

Financial Information

Coca-ColaWest Japan

Corporate Governance

(CCW)

2002

Sendai(CCEJ)

2013

Coca-Cola West2009

Coca-Cola East Japan

Shikoku2013

2010：Q’SAI
becomes subsidiary

2001

2015

CCW

2013

CSV initiative2017

Sendai

10

Business Overview■ The NARTD Market in JapanThe NARTD market in Japan has been growing steadily, with market scale expanding by approximately 20% over the
past 17 years.

■Trends in Market Size (Shipment volume - physical case)
2001

2018
Category

Channel
Water

16％

Other

5％

Other

Vending

Convenience
Store

Sparkling

22％

Juice

Tea

28％

Supermarket

23％

12 ％ Vending
27％
Convenience

12％

9％

Other

Other

9％ 13％

Sports39％

Category

ChannelStore

Coffee23 ％24％

Sparkling

8％ 15％

Water

14％

Juice

8％

Sports6％

CoffeeSupermarket

Tea

29％

38％

20％

Millions of cases

2,000

1,940

1,800

1,610
1,600

1,400

1,200

0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 20172018 Year

Source：Inryou Souken■ CCBJI Sales Volume(2018 results)
Other

Other

1%

6%

Other
Supermarket

Retail & Food
service

23%

23%

Juice

7%

8%

Sparkling27%

Syrup,
PowderSmall-sized
PET

16%

CoffeeChannelConvenience Store

16%

11 Coca-Cola Bottlers Japan Holdings Inc.

20%

Category

PackageCan, Bottle can

13%

Vending

24%

Drugstore &Discounter

Non-sugar tea

Water

9% Sports
9%

20%

19%
Large-sized PET

22%

37%

ANNUAL REVIEW 2018

TOP MESSAGE■ Channel Overview
Chain Stores（Supermarkets, Drugstores & Discounters, and Convenience Stores）
In the supermarket channel, we worked actively to roll out new

Featureproducts and campaigns such as the Coca-Cola Winter campaign
and ribbon bottle, to activate points of sales as well as to more
effectively segment sales activities that identify the right product at
the optimum wholesale price according to the customers'
circumstances and consumer demand. In convenience stores, weFinancial and Non-Financial
Highlights

actively expanded launches of innovative new products as well aschannel and/or customer exclusive products to drive transaction
growth.
Create Sales Floor for Winter Campaign

Vending（Vending Machines）
To boost the appeal of vending machines, we prepared optimal
product lineups for each machine location and developed newBusiness Overview

products and campaigns exclusive to vending machines. In
addition, we carried out exclusive campaigns through our Coke ON
smartphone app, and worked to provide new value to customers
through the launch of initiatives including Coke ON Walk, which lets
people earn drinks just by walking, and Coke ON Pay cashless
settlement.
Coke ON

Georgia Coke ON app exclusive campaign

CSV initiative

Retail & Food Service（Restaurants, Kiosks, etc.）
We made progress in expanding our product lineup by proposing
drinks using our products, such as "Mocktails”, non-alcohol
cocktails in restaurants. In addition, at kiosks and hotels, welaunched regional-design Coca-Cola slim bottles with illustrationsof famous tourist spots and also proposed tailored sales

Corporate Governanceapproaches for individual customers to improve service andconsumer product offerings.
"Mocktail" non-alcohol
cocktails

Development of regional
design slim bottles

Financial Information

Coke ON smartphone app with Coke ON Pay cashless payment feature
Starting in November 2018, we began providing Coke ON
Pay cashless payment as a new feature of Coke ON. After
registering credit card and other information, customers
can connect the smartphones to Coke ON Pay-compatible
vending machines to purchase products directly throughthe app.

Company Information

We have continued to strengthen features and services of
our loyalty program Coke ON since the start of service in2016, like Coke ON Walk, which lets customers earn drinks
just by walking with step count function of smart phone.

12

Business Overview■ Product Overview
As a "Total Beverage Company", we offer products across wide variety of categories such as Sparkling, Non-sugar tea,
Coffee, Water, Sports and more.

Key brands by beverage category:
S park ling

N on - sug ar Te a

C of fe e

Wate rS por t s

Coca-Cola

Sparkling

The Coca-Cola Brand holds the number one
share in the carbonated soft drink market. In
2018, we launched Coca-Cola slim bottles with
exclusive designs illustrating seasons and local
areas, along with seasonal campaigns. During
our winter campaign, we worked to energize
the brand through developments like theCoca-Cola ribbon bottle that lets consumers
win prizes.

Coca-Cola slim bottle NEW YEAR design

Winter campaign

Non-sugar Tea

Ayataka
Made with carefully selected domestic tea
leaves, Ayataka is a tea with the authentic flavorof cloudy, teapot-brewed green tea. In
February of 2018, we launched Ayataka Chabano Amami, a less-bitter and easy-to-drink
green tea; in June, Ayataka Hojicha, a roasted
tea with a solid, lingering taste and fragrance;
and in September, Ayataka Tokusencha, a
cloudy green tea designated a Food forSpecified Health Use (FOSHU).

Ayataka
Chaba noAmami

Ayataka
HojichaAyataka
Tokusencha

I LOHAS
Mineral Water

I LOHAS
HakutoI LOHAS
20th Century
Nashi

Georgia

CoffeeGeorgia remains beloved by a wide range ofconsumers as the top brand of coffee. The
brand delivers distinctive and varied tastes
through its commitment to coffee beans andmanufacturing processes. We launched anumber of new products, including Georgia
Grand Bito, a low-sweetness canned coffee withsolid coffee flavor for a whole new drink
sensation, and Georgia Japan Craftsman, which
offers cold-brew deliciousness in a PET bottle.

I LOHAS

Water

I LOHAS is a beloved brand of water thatvalues both taste and the environment. We
launched a variety of new products in theflavored water series, including I LOHASHakuto (White Peach) and I LOHAS 20th
Century Nashi.

Please refer to the link below for details on label permissions and notifications regarding FOSHU beverages (in Japanese only).
https://www.cocacola.co.jp/inryoguide/lineup

13 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018》
Coca-Cola Peach

Renewedon January
7, 2019

Renewedon March
4, 2019

Orange tea, Peach tea
This tea drink offers a new concept: 100%pure fruit juice added to black tea. It is madewith the choicest ingredients and acommitment to quality in every process.
Enjoy a fruity flavor and refreshing sweetness
made with honey, 100% fruit juice, anddouble＊1 the normal amount of 100%
hand-picked Ceylon tea leaves.

》
Georgia Japan Craftsman
This product uses cold-brewed coffee
craftsmanship.＊2 Careful and slow extraction
from low-temperature water reduces
bitterness and acidity in this coffee, for arefreshing and light taste that is popular inJapan.

Financial and Non-Financial
Highlights》
Kochakaden Craftea

This carbonated water has no calories,
sugar, or caffeine. We have expanded
the products lineup in four different flavors,
by launching The Tansan Strong and The
Tansan Lemon in March, The Tansan Apple
Mint in May, and The Tansan Lime in August.

Renewedon March
11, 2019

FeatureThe world's first Coca-Cola with a peach
flavor, this refreshing drink perfectly matches
the fragrance of peach to the deliciously
stimulating sparkle of Coca-Cola. In January
2019, the drink made its reappearance withthe addition of white peach juice for an evenricher taste.

》
Canada Dry The Tansan

TOP MESSAGE■ Major new products launched in 2018

Renewedon April
22, 2019

Business Overview＊2 Contains 5% cold-brewed coffee＊1 Compared to Kochakaden Royal Lemon Tea

In 2018, we released a number of Coca-Cola slim bottle
regional designs, illustrated with famed regional tourism spots.

CSV initiative

Coca-Cola slim bottle
regional designs

We launched Sendai, Chiba, Nagoya, Koshien, and Hiroshima
designs in June; Nara, Aizu, Shibuya, Tokyo, Mount Fuji
(Yamanashi), and Mount Fuji (Shizuoka) designs in August; andNiigata, Shonan, Hida Takayama, Osaka, and Hakata designs in
October. We also launched a Tokugawa design / Meiji

Corporate Governance

Restoration design to commemorate the 150th year since the
Meiji Restoration. These have been a hit with customers,
especially tourists.

Studying the choicest lemon sours served in bars
throughout Japan, we adopted the preparation method in
Financial Information

Coca-Cola’s first alcoholic drink“Lemondo” launched in Kyushu

which whole, grated lemon is soaked in alcohol ahead ofserving. Adding to a

Alcohol content

Alcohol content

Alcohol content

Alcohol content

9％

7％

5％

3％

Lemon juice

Lemon juice

Lemon juice

Lemon juice

17％

7％

10％

7％

lineup of three products
varied by alcohol
content andpercentage of fruit
juice, we launchedCompany Information

Lemondo Oni Lemon in
February 2019.
Oni Lemon(Strong Lemon)

Salted Lemon

Teiban (Regular)
Lemon

Honey Lemon

14

Business Overview

Healthcare & Skincare Business
The operation of our healthcare and skincare business is centered on Q'SAI Co., Ltd., our wholly-owned subsidiary.

■ Market Sizes for Health Food and Cosmetics Products in Japan
Driven by consumers' increased consciousness toward health and beauty, the market sizes for health food and cosmetics
products in Japan have seen continued growth every year.

■Trends in Market Size of Health Food

■Trends in Market Size of Cosmetics

Unit: 100 million yen

Unit: 100 million yen

8,000

27,000

7,435

7,548

7,619

26,1007,674
25,45025,0007,208

24,71524,0107,000
23,0006,000

21,000

0

0
2014

2015

2016

2017
2018 Year（Estimation）（Projection）

23,305

2014

2015

2016

2017

2018 Year（Projection）

Source: Yano Research Institute Ltd., as of October 2018

■ Channel Overview
Home Shopping
The home shopping channel accounts for about 90% of revenue, and we made efforts to enhance consumer attraction throughtelevision infomercials and official shopping sites. Call centers receive orders and provide guidance as a point of contact to provide
sales support, spreading awareness of new products as well as proposing products that match consumer characteristics and needs.
We also strengthened sales promotion activities to existing consumers, including value campaigns in our membership newsletter.

Official shopping site

Infomercial program

15 Coca-Cola Bottlers Japan Holdings Inc.

At a call centerANNUAL REVIEW 2018

Other

3%

Skincare46%

TOP MESSAGE■ Product Overview
2018 Results

Revenue
Composition
by
Product

Healthcare

51%

FeatureHealthcare Products
Made with 100% domestic kale grown without agricultural chemicals
and chemical fertilizers, this product is rich in beta-carotene, calcium,
potassium, vitamin C, dietaryfiber, and other nutrients often
lacking in diets. In 2017, the35th year since the product's
launch, Q'SAI Kale Aojiru was
ranked as the No.1＊1 kaleaojiru product for the 11th
consecutive year.

This product is Japan's first Food with Function Claims in the knee
joint category. Containing the functional substance collagen peptide,
Hiza Support Collagen displays effectivenessin helping knee joints bend and stretch. In the
11th year of its sales, the product took the No.1＊2
spot in mail order sales of all collagen healthfood products in 2018. Many customers withknee joint-related concerns have experienced
the efficacy of the product.

＊1 Survey by Yano Research Institute Ltd., calculating totals for productseries on the basis of shipment value by manufacturers in the fiscal
2007-2017 kale powder market（as of November 2018）

Business Overview》
Hiza Support Collagen Foods with Function Claims

Financial and Non-Financial
Highlights》
Kale Aojiru＊2 Survey by Yano Research Institute Ltd., calculating totals for productseries on the basis of shipment value by manufacturers in the fiscal
2007-2017 collagen health food mail order sales market（as of November
2018）（supplement types only）（including conventional products）

Skincare Products
CSV initiative》Cola-rich Series
The "Cola-rich" series is a skin care series developed under the strict standard fosteredin the health food field. We are enriching the line-up with beauty products such as BB
Cream and the all-in-one Cola-rich beauty gel cream that brings together the functions oflotion, milky lotion, serum, moisturising serum and cream.

Corporate Governance■ 2018 New products》
Cola-rich Series All-in-One Gel:

Big Size
In response to requests from consumers, wereleased larger sizes of Cola-rich EX and

About 2.1 times
the normal
volume》Shionagasu, a salt-absorbing supplement for"washing away," not reducing, salt intake

Launched
December
1

Seaweed-derived alginate, the main ingredient inShionagasu, absorbs the salt from meals. The
Financial Information

Cola-rich EX Super Moist II. We also set more

LaunchedJuly
1

product lets people practice easy health habitsappealing prices than the regular size price, towhen they want to enjoy meals without concern

actively engage consumers in reducing

over salt, or when salt intake is otherwise difficult

volumes of resources such as product boxes,

to control for dining out, etc.

packaging, and shipping boxes.

》
Introducing a kale aojiru for on-premise use "Qsai Aojiru No Aru Shokutaku"

Company Information

Launched
December
1

We are working in a variety of ways to bring enjoyment of Kale Aojiru to even more
people. As a part of this, we are expanding into sales channels other than home
shopping sales, through initiatives such as collaboration with hotels to sell sweets andbreads made with products from our Kale Aojiru Series. In December 2018, welaunched "Qsai Aojiru No Aru Shokutaku", a Kale Aojiru exclusive for on-premise use.

For details on the submitted claims of Foods for Specified Health Use, please visit https://corporate.kyusai.co.jp/development/claims.php (in Japanese only)

16

CSV initiative■ Initiatives Aimed at Creating Shared Value（CSV）with Society■ Our CSV Policy
With Creating Shared Value（CSV）at the core of our management, and taking the respective importance of society and ourbusiness into account, our Group identifies three key themes : contribution to people's health, evolution to an environmentallyleading company, and strengthening collaboration with communities.

HealthCustomersatisfaction

Qualityassurance

Environment
Ethics andcompliance

Community
Risk
management

Respect forhuman rights
and employee
motivation■ Contribution to the Achievement of SDGs
In September 2015, "Transforming our world: the 2030 Agenda for Sustainable Development" was adopted as a position
document at the "United Nations Sustainable Development Summit", with over 150 participating member nations. At the centerof the agenda are the Sustainable Development Goals (SDGs), consisting of 17 goals and 169 targets.
Taking on the SDGs is vital for us as we aim to achieve CSV. Under this recognition, we look to the SDGs as resource for
identifying and evaluating our CSV program.

Sustainable development
goals for 2030, agreed
upon by the world

17 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

Contributing toPeople's Health

TOP MESSAGE■ Priorities for Achieving CSV
Examplesofinitiatives● Rigorous quality control● Support of customers' needs withdiverse products● Awareness, education and nutrition
labeling
FeatureBasic principles concerning healthAs a company closely tied to people's everyday lives, weFinancial and Non-Financial
Highlights

provide valuable products and services matched to the needs
and preferences of a range of generations, always focusing
on quality and health first. In addition, through education onproper dietary habits and opportunities to enjoy sports, wewill work to maintain and promote people's health as we
advocate active and healthy lifestyles.

Examplesofinitiatives● Water resource management and replenishment● Reduction of greenhouse gas emissions● Promotion of recycling

Business Overview

Evolution to an
Environmentally
Leading Company● Adoption of low environmental impact containers

Basic principles concerning the environment

Examplesofinitiatives

Corporate Governance● Sports clinics led by the Coca-Cola Red Sparks● Summer Schools● Environmental clean-up activities● Let's learn from the forest and otherprograms

Financial Information

Strengtheningof Collaboration
with Communities

CSV initiative

We view the effective use of natural resources, including thewater that is indispensable to our business activities, and theprotection of the environment for the next generation as ourvital mission. By engaging in environmental conservation
through innovation that balances the reduction ofenvironmental burdens with business growth, as well as
environmental protection and awareness-building activities inlocal communities, we will achieve Creating Shared Values(CSV) together with those communities.

Basic principles concerning the community
We will continue to deepen the ties to local communities that
we have nurtured over the years, and will grow together withsociety toward a sustainable future. As a company loved byCompany Information

all, we will continue to address issues in society and local
regions while reinvigorating those regions, and will achieve
Creating Shared Value（CSV）with communities and ourGroup.

Ichimura Shizenjuku Kyushu

18

CSV initiative■ Launch of Foods for Specified Health Useand Foods with Function Claims（FOSHU）■

HealthAs a company closely tied to our customers' varied
lifestyle scenarios, we deliver refreshing moments together
with a full lineup of delicious beverages that meet theneeds of the times. In response to customers' growing
health orientation, we are expanding our lineup of Foods
for Specified Health Use (FOSHU) and Foods with
Function Claims. In line with this, in 2018 we launched■ Holding of Seminars on Hydration
In order to promote proper hydration in a variety of
scenarios in everyday life and sports, we hold seminars
on hydration for schools, groups, and companies. In
2018, we held 44 seminars with about 7,000
participants. Comments from seminar attendees include"I realized the importance of a well-regulated life once
again" "I learned the importance of minerals," and "I
understood the importance of timing in hydration."

Ayataka Tokusencha green tea. By providing products that
aid the promotion of health while refreshing mind andbody, we offer support for our customers' lifestyles.

Foods for Specified Health Use

Foods with Function Claims

Please refer to the link below for details on label permissions andnotifications regarding FOSHU beverages (in Japanese only).
https://www.cocacola.co.jp/inryoguide/lineup

to realize a■ Aiming“World Without Waste”

Environment

2030 Packaging Vision
In January 2018, the Coca-Cola system in Japanannounced its 2030 Packaging Vision, based on the
global initiative to realize a “World Without Waste”
announced by The Coca-Cola Company. As a memberof the Coca-Cola system, the CCBJH Group will further
accelerate its initiatives to realize the 2030 Packaging
Vision.

Three core elements ofthe 2030 Packaging Vision

1
2
3

19 Coca-Cola Bottlers Japan Holdings Inc.

of Water Resource■ Promotion
Protection Activities

Whenever possible, avoid using non-renewable,
petroleum-based raw materials for PET bottles. Promote
the use of recycled PET resin or plant-based raw
materials, aiming for, on average, 50% or more of either
in each PET bottle.
Help achieve even further improvements to recycling
rates and PET bottle/aluminum can collection in Japanby collaborating with national and local governments,
the beverage industry, and local communities to build
and maintain a more robust packaging collection andrecycling scheme. Aim to collect and recycle an amountof packaging equivalent to the volume used for
Coca-Cola products sold in Japan.
Help keep communities looking beautiful throughcleanup campaigns and actively participate inawareness activities related to plastic waste in oceans
and rivers.

The Company forms agreements with regional
governments, forestry cooperatives, and otherorganizations and engages in water resource protection
activities for most of the water sources of our manufacturing
facilities. We engage in conservation and regeneration offorests, grasslands, as well as the flooding of paddy fields
with high cultivation capability. We currently have about 6,974
ha (+391 ha vs prior year) under water resource cultivation.
●●

Assess water source vulnerability
Draft and execute water resource
conservation plans
Water used for
manufacturing

Plant

Reduce & Recycle

Water used in products
Water conservation agreementswith local governments in water
resource areas

Replenish

Reducewater used

Water
reuse

Proper water
treatment

Forest preservation, undergrowththinning, tree planting, rice field flooding,and grassland regeneration activities

CO2 absorbed
by forests
Increase groundwater recharge capacity.
cultivate underground reservoirs, andreturn water to nature

Natural water resource area

ANNUAL REVIEW 2018

Through our plant tours, we aim to clearly explain our
we can be a partner trusted by persons of all

CCBJH owns the Coca-Cola Red Sparks men's
rugby team and women's field hockey team.

generations.

To contribute to the sound physical and mental

We position plant tours as an important opportunity fordevelopment of youth while demonstrating active anddirect communication with customers, consumers andhealthy lifestyles to people in our communities, we holdother stakeholders. In 2018, at our plants in Zao (Miyagi

sports clinics and classes for rugby and field hockey byPrefecture), Tama (Tokyo), Tokai (Aichi Prefecture),

the Coca-Cola Red Sparks. We held such events 38

Kyoto, Komatsu (Ehime Prefecture) and Ebino (Miyazaki

times in 2018, with about 4,400 participants.

FeaturePrefecture), about 167,000 visitors enjoyed our plant
tour.
Financial and Non-Financial
Highlights

Community

production processes and food safety initiatives, so that■Sports clinics, rugby andfield hockey classes

TOP MESSAGE■ Plant tour program

Business Overview©日高 仁

Respect for human rights and employee motivation: Promotion of diversity
Introduction of the new"Sawayaka Style" dress code
Our Company has introduced a new dress code to create
workplaces that are work-friendly, starting with comfortable

respect for diversity and raising awareness of human

wear. By welcoming and respecting individuality andrights. We are also strengthening awareness-building

positive thinking, we aim to create an environment in which

We provide career support for women and support forbalancing work and childcare, to promote active
participation of women in all facets of our corporate
activities. As a result of these initiatives, we have been

Corporate GovernanceWe conduct training and e-Leaning for promoting an
understanding of human rights, fostering a culture ofactivities for managers in order to eliminate harassment.

CSV initiative

Human rights awareness activities,
promotion of active participation by womenpeople can work pleasantly together.
In addition to business suits and our company uniforms,
we advocate a casual business style appropriate to thetime, place, and occasion, such as polo shirts and jeans.

Financial Information

selected in 2019 as a "Semi-Nadeshiko Brand," agovernment designation for listed companies that excel inpromoting participation by women.

Company Information

Semi-Nadeshiko Brand
Woman's Leadership Program

Example of Sawayaka Style dress

20

Corporate Governance■ Corporate Governance Basic Policy
The Company's basic policy for corporate governance is to increase management efficiency and transparency, thus raising
shareholder value.
With the aim of further strengthening our governance structure, the Company has put in place an Audit & Supervisory Committee.
The Company's Audit & Supervisory Committee consists of all outside directors including some independent directors. The
management oversight function of the Audit & Supervisory Committee is further enhanced by its members having voting rights at
Board of Directors' meetings and the right to state opinions on matters such as the nomination and remuneration of directors at
General Meetings of Shareholders.
In addition, we have adopted the executive officer system in an effort to separate decision-making and supervisory functions fromthe execution of operations of the corporation. By delegating some of the decisions on important business execution to Directors, theCompany can enrich discussions on matters of special importance at the Board of Directors’ meetings, while further expediting
business judgments on other matters by management under the Representative Director (the management team).

［Chart of Corporate Governance Structure］
General Meeting of Shareholders
Election/Dismissal

Election/Dismissal

Election/Dismissal

Reporting/Stating Opinions

Board of Directors

Reporting

Reporting executionof operation

Representative Directors
Reporting

Audit Office

Supervision/Reporting
Exchange opinions
Coordination

Auditing

Auditing

Auditing

Executive Officers
Group Companies

DivisionsAudit & Supervisory Committee

Selection/Supervision/Delegation of
execution of important operation

Reporting(consisting of directors serving on the Audit &Supervisory Committee, including a majority of outside directors)

Financial/Accounting Auditor

Directors (excluding directors serving on the Audit & Supervisory Committee) Directors serving on the Audit & Supervisory Committee

Auditing/Determining proposals for election or dismissal
Coordination■ Board of Directors
The Board of Directors consists of up to 10 directors（the number specified in the Articles of Incorporation, excluding directors
serving as Audit & Supervisory Committee members）and up to 7 directors serving as Audit & Supervisory Committee members. The
composition reflects an appropriate balance of deep knowledge concerning the business of our Company's Group, along withdiverse knowledge and expertise of company management, financial strategy, risk management, legal compliance, and othermatters. In addition, in light of the important role of outside directors in corporate governance, we have elected several independent
outside directors based on the Company's standards for independence.
In order to determine candidates for director, the Company judges candidates' future potential and degree of contribution inaccordance with the Company's evaluation system for the internal directors. In the nomination of outside directors, the Company
nominates persons who are considered to contribute significantly to increasing the corporate value of the Company.

21 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE［Overview of Board of Directors］
Internal

Outside

6／9
4／9
3／9

Outside directors
Independent directors

Independent directors

Female directors

Female directors
Term ofoffice(Year)

OutsideDirector

Audit & Supervisory
Committee members

Independent
directors

Calin Dragan

Male

March 2019

1

―

―

Bjorn Ulgenes

Male

March 2019

1

―

―

Tamio Yoshimatsu

MaleApril 2017

1―

Hiroshi Yoshioka

MaleApril 2017

1

Hiroko Wada

FemaleMarch 2019

Irial Finan

Male

Jennifer Mann

Attendance in 2018
Board of Directors
meetings (9 times)

Audit & Supervisory
Committee meetings (6 times)

―

―

―

―

―

―

―

―

9

―

○

―

○

9

―

1

○

―

○

―

―

April 2017

2

○

○

―

9

6

FemaleMarch 2019

2

○

○

―

―

―

Celso Guiotoko

Male

March 2019

2

○

○

○

―

―

Nami Hamada

FemaleMarch 2019

2

○

○

○

―

―

Financial and Non-Financial
Highlights

Assumptionof officeFeatureGender《Reference : Directors who retired as of March 26, 2019》
Male

April 2017

1

―

―

―

9

―

Yasunori Koga

Male

April 2017

1

―

―

―

9

―

Costin Mandrea

Male

April 2017

1

―

―

―

9

―

Tadanori Taguchi

Male

April 2017

2

―

○

―

9

6

Zenji Miura

Male

April 2017

2

○

○

○

9

6

John Murphy

MaleApril 2017

2

○

○

―

8

5

Business Overview

Vikas Tiku

■ Audit & Supervisory Committee
The Company has adopted an Audit & Supervisory Committee (ASC) system. The ASC, which is composed of only outside directors

CSV initiative

including some independent directors, discuss and deliberate important issues such as nomination and compensation of executive
management and Directors prior to the discussion and deliberation by the Board of Directors. Then, based on the counsel and advice
by ASC, the Board of Directors, which consists of multiple independent outside directors, resolve the issues. Through this process,we have been strengthening the independence, objectivity and accountability of the Board of Directors. The tenure of ASC members
continue until the conclusion of the annual shareholders meeting for the last business year which ends within two years from the timeof their election, as stipulated in Companies Act in Japan.

Corporate Governance■ Appointment of outside directors
In the nomination of outside directors, the Company nominates persons who are considered to contribute significantly to increasing thecorporate value of the Company. Also, the Company deems that outside directors possess sufficient independence from the Company if
the outside director or candidate does NOT fall under any of the following requirements through investigation by the Company.

■Reasons for appointment of outside directors
Reasons for appointment (Positions etc. are at the time of appointment)

Independent
Director

Outside Director

Appointed to leverage his extensive managerial experience and global insights, cultivatedthrough experience as a Coca-Cola bottler outside director and at Sony Corporation, on
behalf of our Group's management.

○

Appointed to leverage her extensive management experience and global insights,
cultivated as director of The Procter & Gamble Company and representative director of
Dyson and of Toys "R" Us-Japan.

○

Hiroshi Yoshioka
Outside Director

Hiroko Wada
Outside director(Audit & Supervisory
Committee member)

Irial Finan

Jennifer Mann
Outside director(Audit & Supervisory
Committee member)

Celso Guiotoko
Outside director(Audit & Supervisory
Committee member)

Nami Hamada

Currently serves as The Coca-Cola Company Senior Vice President and Global Ventures
President. Appointed for extensive experience and global insights from many years of
involvement in the Coca-Cola business and on the Company's management team.
Appointed for abundant management experience and global insights cultivated at
Nissan Motor Co., Ltd., and auditing experience as a corporate auditor at thatcompany.

○

Appointed for extensive experience in finance and accounting, including managing afinance-related consulting company herself, and for abundant experience and global insights
cultivated on the corporate management team of Lehman Brothers Japan.

○

Employee and/or executive of the Company
and/or subsidiary within past 10 years● Person and/or executive who have significant
business relationship with the Company withinpast 1 year*1● Employee and/or executive of the company whichhave significant business relationship with theCompany within past 1 year*1● Consultant, certified public accountant,
attorney,etc. receiving significant compensationfrom the Company other than executive
compensation within past 1 year *2● Person. employee and/or executive who receive
significant donation from the Company within past
1 year *2● Close relatives corresponding to the above *3●

Company Information

Outside director(Audit & Supervisory
Committee member)

Appointed for his extensive experience and global insights as a corporate manager, with many years of
involvement in the Coca-Cola business as an outside director of a Coca-Cola bottler in Japan, as part ofmanagement of The Coca-Cola Company, and as representative of the Bottling Investments Groupsupervising Coca-Cola bottlers worldwide, and for auditing experiencing as a Director and Audit &Supervisory Committee member of the Company.

The Company considers the directors havesufficient independence if the directors shall
NOT fall in any of the criteria listed below;

Financial Information

Category/Name*1 Transaction between the Company and the person
and/or the company exceed 2% of the Company's
revenue of the latest fiscal year
*2 Annual compensation exceeds JPY 10 million*3 Within second-degree of relationship22

Corporate Governance■ Evaluation of the effectiveness of the Board of Directors
The Company evaluates the effectiveness of the Board of Directors based on self-evaluation by Directors concerning operation of
the Board of Directors, its support structure, composition, etc. In the 2018 evaluation of effectiveness, the following issues wereidentified.
Securing of time for thorough deliberation on important matters.
Early provision of information to Directors for purpose of thorough deliberation.
● Enhancement of provision of information to outside directors.
● Promotion of diversity in Board of Directors.
● Continuation of investigation into optimal governance models.
●●Based on the results of this evaluation of effectiveness, we will actively and continuously work toward the improvement ofmanagement aspects to enhance and deepen discussions at Board of Directors meetings and toward the securing of diversity inmembers of the Board, as we also work toward further sustainable growth and improvement of medium- to long-term corporate
value.

■ Compensation for Directors
Compensation for Directors is determined by the Representative Director, with the consent of the Board of Directors in accordancewith criteria stipulated by the Board of Directors. To reflect Directors' responsibilities and contributions to the Company's businessperformance, the compensation consists of a fixed based compensation and performance-based compensation.
We implemented a Performance-based stock compensation program for executive directors and executive officers following
approval of the proposal at the General Meeting of Shareholders in March 2018. This program awards compensation in the form ofmoney and shares of the company’s stock in line with the achievement of targets for consolidated ROE and consolidated revenue
growth rate for three consecutive fiscal years. Although the Company does not impose the requirement that Directors hold stock,under the program, executive directors share the risks and benefits of stock price fluctuations with shareholders, for the purpose of
improving medium- to long-term corporate value and further enhancing motivation to contribute to an increased stock price.
Only a fixed compensation shall be paid for part-time directors and outside directors. Compensation for Directors who are Audit &Supervisory Committee members is determined through deliberation by said Directors.

■Directors' Compensation （2018 results）
Category

Total amount by type of compensation, etc. (Million yen)

Total amount ofcompensation, etc.
(Million yen)

Basic compensation

Bonus

Performance-based
stock compensation

Number of eligible
directors

487

375

85

27

5

Of which, paid to outside directors

13

13

−

−

1

Audit & Supervisory(Committee
members)

87

87

−

−

4

Of which, paid to outside directors

50

50

−

−

3

Total

575

463

85

27

9

Of which, paid to outside directors

63

63

−

−

4

Directors

Directors■Executive compensation system
Fixed compensation
Compensation item

Basic compensation

Bonus

Performance-based stockcompensation(Long-term incentives)

Monthly

Annually

After 3 years● Provision 1 time/year as compensation reflecting business performance
every year.
● Varies within range of 0 to 225% of thebasic compensation in accordancewith yearly company businessperformance and individual
evaluation.

● Stock compensation with varying
number of shares receivable, basedon evaluation of 3-year businessperformance.
● Granting of right to receive, as
compensation for execution ofbusiness for 3 years.
● Number of shares received varies
within range of 0 to 150%.

Provision timing

Details

Ratio of fixed tovariable portion(example)23 Coca-Cola Bottlers Japan Holdings Inc.

Variable compensation● Determination of annual amountprovided as fixed compensation
portion.
● Monthly provision of 1/12 of
determined annual amount.

Position

ANNUAL REVIEW 2018

TOP MESSAGE■ Risk management system
In order to earn the trust of society and stakeholders and to enable sound and sustainable management, the Group is working toconstruct and operate an effective risk management system that is integrated with internal controls.
The risk management system of the Company consists of a Risk Management Committee that performs deliberation anddecision-making on company-wide basic risk management policies and risk prevention activities on regular basis; Crisis
Management Committee that performs decision-making and instruction for crisis management response in the event of serious
incidents or accidents; and Disaster Countermeasures Task Force that performs deliberation and decision-making on the invoking of

Featurebusiness continuity plans (BCP) in the event of a large-area, large-scale disaster that has a significant impact on our businessactivities.

Financial and Non-Financial
Highlights

Risk Management Committee
Formation of basic policy and prevention of risk
As year-round risk prevention activities, every Group company and business department shall operate a PDCA cycle consisting of"identify and assess inherent risks," "formulate and execute measures to mitigate risks," "review track record and effects of activities atthe end of the fiscal year," and "formulate and execute improvement measures."

ERM defense lines

Second Defense Line

Third Defense LineBusiness departments

Department in charge of ERM

Internal Audit Department

Group companies and business departments
autonomously control risks as owners of therisks.

The ERM Department which serves as thesecretariat of the committees, monitors risks
company-wide.

The Internal Audit Office, which is independent of
the Board of Directors, provides reasonableassurance for company-wide risk management.

Response to large-area, large-scale disasters

Response to serious incidents or accidents

The company has established a business continuity plan
(BCP) for large-area, large-scale disasters. The Company
checks and improves the plan through regular training, andcontinuously strives to improve its effectiveness.

Through the Coca-Cola system's proprietary Incident Management &Crisis Resolution (IMCR) process, the Company cooperates with relevantbusiness departments within the Company, Coca-Cola (Japan) Co., Ltd.
and other bottler companies to carry out information collection anddeliberation on initial response and solutions. The Company further
executes measures for the restoration of normal business operations, andinvestigates measures to prevent future occurrences.

Temporary
restorationof businessBusiness
restoration

Corporate GovernanceCrisis Management Committee

CSV initiative

Disaster Countermeasures Task Force

Initialresponse

Business Overview

First Defense Line

■List of risks the Company identifies
13. Risks related to alcoholic beverages

2. Risks related to retirement benefit obligations

14. Risks related to tax reform

3. Risks related to increased costs of raw materials, etc.

15. Risks related to product safety and quality

4. Risks related to competition and changes in markets

16. Risks related to business integration

5. Risks related to changes in consumer preferences and

17. Risks related to litigation

health concerns
6. Risks related to economic conditions

18. Risks related to the business of affiliated companies
19. Risks accompanying dependence on The Coca-Cola
Company

8. Risks related to the supply chain

20. Risks related to weather

9. Risks related to changes in the retail environment

21. Risks related to natural disasters

10. Risks related to water resources

22. Risks related to information security

11. Risks related to trademarks and trust in brand

23. Risks related to securing and developing human

12. Risks related to relevant laws and regulations

Company Information

7. Risks related to infrastructure investment

Financial Information

1. Risks related to changes in assets

resources

24

Corporate Governance■ Status of Internal Control System
We have established an internal control system for ensuring the appropriate performance of the Company and Group companies.
● System to ensure that the execution of duties of Directors and employees of the Group conforms to laws and ordinances and to the Articles ofIncorporation- The code of conduct shall be established in order to ensure that all the Directors, Executive Officers, and employees of the Company's group comply
with laws and regulations and the Articles of Incorporation to act in conformity with social norms. The Ethics and Compliance Committee shall be
convened periodically in order to reinforce the compliance system and to prevent non-compliance.
- An internal whistle-blowing system against non-compliance, namely, a reporting and consultation contact separate from the reporting line to immediate
managers, shall be set up.
- The Company shall strengthen the supervisory functions of the Board of Directors by adopting a system with an Audit & Supervisory Committee, whereaudits are conducted by an Audit and Supervisory Committee consisting entirely of outside directors.
- The department in charge of internal auditing shall be established in order to audit whether business activities are conducted appropriately andeffectively in conformity with laws and regulations, the Articles of Incorporation, Company Rules and Regulations, etc.
- The Company clearly identifies the firm stance against anti-social forces and organizations that cause threats to the orders and safety of civil society andthat the Company never ties with such entities. The Company shall never accede to any illegal request and deal with any such request in cooperation
with the police, attorneys, etc.
● Matters related to the preservation and management of information involving the execution of duties by Directors- The Company shall record information regarding minutes of General Shareholders meetings, minutes of Board of Directors meetings, documents andother materials related to important decision-makings and Directors’ performance of their duties in documents or electronic media and retain it inaccordance with the Rules of Documentation Handling and Information Security Policy in a manner similar to that for statutory documents.
- The Company’s Directors may inspect such documents, etc. at any time.
● Regulations and other systems concerning management of the risk of losses to the Group- In accordance with our group policy on responding to material business risks and from the viewpoint of management of other risks, significant items shallbe reported to the Risk Management Committee, and the Risk Management Committee shall determine policies to accommodate the risks as required.
- The Company establishes rules/guidelines and maintains an organization to execute effective response to material risks, and ensure the matters to bepassed down by establishing manuals and implementing training for the entire Group.
- The department in charge of risk management in the Company or its subsidiaries is to monitor the condition of company-wide risks, and take appropriate
measures on a group-wide basis. The Company shall appoint a person responsible for prompt response to newly emerging risks.
● System for ensuring the efficient execution of duties by Directors of the Group- The Board of Directors of the Company shall establish management policy and objectives for the Group to be shared among Directors, executive
officers, and employees of the Group, and shall establish efficient methods for achieving the objectives, including the allocation of authority based on
rules for decision-making in the Group.
- The Company shall organize and deliberate on appropriate meeting structures in its operating companies in addition to the Board of Directors of theCompany to deliberate significant matters affecting the entire Company Group, thereby ensuring that decisions are reached based on considerations ofmulti-dimensional aspects.
● System to ensure the appropriateness of operations in a corporate group consists of the Company and its subsidiaries

The Company will ensure the unification of management through establishment of a corporate philosophy, management policy, code of business conduct
and Chart of Authority shared across the Group, and supervise and manage the performance of the subsidiaries’operations.
● System concerning employees requested by the Audit & Supervisory Committee to assist with its duties, and matters concerning theindependence of said employees from Directors and the ensuring of the effectiveness of instructions to said employees
The Company shall assign employees to assist the Audit & Supervisory Committee. These employees shall assist the execution of duties of the Audit &Supervisory Committee under the direction and command of the Audit & Supervisory Committee, and shall not accept instruction and command from
Directors (excluding members of the Audit & Supervisory Committee).
● System for reporting to the Audit & Supervisory Committee by Directors and employees of the Group, and system for preventing

disadvantageous treatment for reason of having reported- Directors (excluding Directors who are members of the Audit & Supervisory Committee), executive officers, employees, etc. of the Group shall promptly
report to the Audit & Supervisory Committee upon discovering any facts that may cause serious damage to the Group, such as violations of laws andordinances.
- The department in charge of internal audits shall regularly report to the Audit & Supervisory Committee on the findings of internal audits and the status ofother activities in the Group.
- The department in charge of compliance shall regularly report to the Audit & Supervisory Committee on the status of whistleblowing in the Group.
- The Company shall prohibit disadvantageous treatment of persons for reason of having reported to the Audit & Supervisory Committee, and shall makethis prohibition known to Directors, executive officers, employees, etc. of the Group.
● Matters concerning procedures for the prepayment or reimbursement of expenses incurred in the execution of duties of Audit & Supervisory

Committee members, and policies involving the handling of expenses or obligations incurred in the execution of other duties
Every year, the Company shall allocate necessary budget for the execution of duties by Directors who are Audit & Supervisory Committee members.
● Other systems to ensure that the Audit and Supervisory Committee’s audit is conducted effectively- The Representative Director & President and the Audit & Supervisory Committee members shall hold a meeting on a regular basis to exchange opinions
in order to communicate with each other.
- The Representative Director & President shall prepare an environment to enable coordination with attorneys, certified public accountants, and otherexternal experts when recognized as necessary by Audit & Supervisory Committee members for the execution of their duties.
- The Audit & Supervisory Committee shall establish opportunities for the exchange of opinions with the department in charge of internal audits andaccounting auditors periodically.

25 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE■

Basic principles, policies, and code of ethics and conduct,
based on our corporate philosophy

FeatureIn order to engage in business activities based on the corporate philosophy we call THE ROUTE, the Company has createdbasic principles and policies for matters involving operation of the company; has established a code of ethics and conduct as
guidelines for the actions to be taken by group employees in order to realize our principles and policies; and works to ensurethat these are made known to officers and employees.
Moreover, to further foster and instill awareness of ethics and compliance awareness in employees, and to promote a
corporate culture that emphasizes ethics and compliance, we work primarily through the Ethics and Compliance Committee topromote activities including awareness and education activities, the operation of a consultation desk, response to othercompliance cases, and examination and implementation of measures to prevent recurrence.

［Basic principles］
Community

Communication
with customers

Quality assurance

HealthCorporate governance

Ethics and compliance

Diversity and inclusion

Policies

Organizational management

Human resource
management

Code of ethics and conduct

Financial and Non-Financial
Highlights

MissionEnvironment

Corporate
Identity
CultureBasic principles

Business Overview■ Policy regarding cross-shareholdings

CSV initiative

It is the Company’s policy to refrain from cross-shareholdings in principle.
However, the Company does hold shares acquired for the purpose of creating business opportunities and establishing,
maintaining, and strengthening relationships with customers and local communities. We evaluate and report on the cost ofthese major cross-shareholdings and the return on investment, and, based on those evaluations, are working to reduce them.

■ Promotion of information disclosure and constructive dialog through IR activities
Corporate GovernanceWith the goal of timely and appropriate information disclosure and constructive dialog with shareholders and investors, we
engage in a variety of IR activities in which we explain our business strategies, business activities, financial and non-financial
information, and other information through quarterly earnings presentation and IR meetings.
IR team shares opinions and information received through dialog with relevant internal divisions, to reflect daily IR activities
and business execution.

■Main IR activities in 2018
Number of times

Details

Earnings Presentation

4 times

Held quarterly earnings presentation hosted by President and CFO.
The content is available via Webcast on the Company's website.
(https://en.ccbj-holdings.com/ir/library/presentation.php)

IR meetings with analysts
and institutional investors

About 260
companies total

Participation in domestic
and overseas conferences

7 times

Domestic: 4 times; overseas: 3 times.

Presentation for
individual investors

3 times

Held briefings by IR manager.

Other IR briefings

1 timeHeld briefings by top management for analysts and institutional investors.

Financial Information

Activity

Held face-to-face and phone meetings with analysts andinstitutional investors.

Company Information

26

Consolidated Financial Indices■ Historical financial data
Financial data through fiscal 2016 indicates results for Coca-Cola West Co., Ltd. prior to the business integration.
Financial data for fiscal 2017 indicates results for Coca-Cola Bottlers Japan Holdings Inc. from 2Q.

2008

2009

2010

2011

2012

2013

（Millions of yen）

395,556

369,698

375,764

399,717386,637

431,711

（％）

‑ 3.4

‑ 6.5

1.6

6.4

‑ 3.3

11.7

（Millions of yen）

10,521

2,242

12,003

16,46913,463

15,927

（％）

2.7

0.6

3.2

4.1

3.5

3.7

（Millions of yen）

2,402

‑ 10,446

12,982

14,013

12,186

18,730

（％）

0.6

‑ 2.8

3.5

3.5

3.2

4.3

（Millions of yen）

129

‑ 7,594

7,582

6,997

6,031

13,625

（％）

0.0

‑ 2.1

2.0

1.8

1.6

3.2

（Millions of yen）

̶

̶

̶

5,605

7,326

16,332

Net Profit per Share

(Yen)

1.25

‑ 75.96

75.84

69.99

60.33

128.15Return on Equity (ROE)

（％）

0.1

‑ 3.3

3.4

3.1

2.6

5.6

Return on Assets

（％）

3.7

0.7

3.8

4.7

4.1

4.7

Total Assets（Millions of yen）

277,696326,818

346,032

342,560

337,348

374,418

Net Assets（Millions of yen）

234,521

222,816

226,267

227,864

231,056

257,936

Equity Ratio

（％）

84.4

68.2

65.3

66.4

68.4

68.8

Net Assets per Share(Yen)

2,345.03

2,227.96

2,260.03

2,275.55

2,307.44

2,359.82

Price Book Value Ratio (PBR)(Times)

0.8

0.7

0.7

0.6

0.6

0.9

Price Earnings Ratio (PER)(Times)1,549.5‑ 21.6

19.4

19.1

22.1

17.4

Cash Flow fromOperating Activities（Millions of yen）

16,18028,74731,732

39,96026,32440,082

Cash Flow from
Investing Activities（Millions of yen）

2,153

‑ 23,447‑ 49,203‑ 34,050‑ 14,243‑ 16,493

Cash Flow from
Financing Activities（Millions of yen）

‑ 31,486

43,297‑ 16,316‑ 8,780‑ 7,149‑ 8,286

Cash and Cash Equivalents
at End of Fiscal Year

（Millions of yen）

22,412

71,22137,43434,56439,49560,275

Dividend Payout Ratio（％）

3,440.0

̶

52.7

58.6

68.0

32.0

Dividend per Share(Interim Dividend)

(Yen)

43.00
（21.00）42.00（21.00）40.00（20.00）41.00（20.00）41.00（20.00）41.00（20.00）

JGAAP
Revenue
Revenue YoY
Operating Income
Operating Income Margin
Net Profit before
Income Taxes
Profit Before Taxes Margin
Net Profit Attributableto Owners of Parent
Net Profit Margin
Comprehensive Income

Depreciation andAmortization（Millions of yen）

21,741

24,06922,405

21,371

20,64323,758

Capital Expenditure（Millions of yen）

18,032

25,201

16,524

21,201

20,031

20,2428,142（2,334）8,172（2,289）8,331（2,009）8,105（2,073）

7,877（1,890）9,650（2,059）Number of The Employees(Average number of temporary workers
not included in the above)

27 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE

IFRS

424,406

440,476

460,455

872,623

Revenue

837,069

927,307

‑ 1.7

3.8

4.5

89.5

（％）

̶

10.8

11,00814,262

21,14340,579（Millions of yen）

40,177

23,276

2.6

3.2

4.6

4.7

（％）

4.8

2.5

8,409

15,22812,707

39,240Operating Income（Millions of yen）

37,594

14,682

2.0

3.5

2.8

4.5

Operating Margin

（％）

4.5

1.6

4,482

9,970

5,245

25,244（Millions of yen）

21,967

10,117

1.1

2.3

1.1

2.9

（％）

2.6

1.1

6,931

11,217

5,022

31,976

Total Comprehensive
Income（Millions of yen）

30,065

3,197

41.07

91.35

48.05

144.26

Basic Earnings per Share(Yen)

125.53

52.68

1.8

3.9

2.0

5.7

Return on Equity Attributable to
Owners of The Parent (ROE)

（％）

4.6

1.6

3.0

3.8

5.5

6.3

Return on Assets

（％）

5.6

1.6

337,260

378,105

377,468

883,918

Total Assets（Millions of yen）

929,304

877,472

254,150

260,878

261,173

627,485

Total Equity（Millions of yen）

655,038

580,906

75.2

68.9

69.1

70.9

Ratio of Equity Attributable toParent Owners

（％）

70.4

66.2

2,325.19

2,386.81

2,389.28

3,070.01

Equity Attributable to Ownersof The Parent per Share(Yen)

3,204.90

3,163.63

0.7

1.0

1.4

1.3

Price Book Value Ratio (PBR)(Times)

1.3

1.0

40.4

26.9

71.7

28.5

Price Earnings Ratio (PER)(Times)

32.8

62.4

28,62840,422

34,38872,450Cash Flow fromOperating Activities（Millions of yen）

73,014

51,244‑ 9,590‑ 24,994‑ 19,921‑ 41,090

Cash Flow from
Investing Activities（Millions of yen）

‑ 14,299‑ 48,628‑ 37,498

22,416‑ 7,546‑ 26,159

Cash Flow from
Financing Activities（Millions of yen）

‑ 26,717‑ 55,835

41,83079,82886,727

118,741

Cash and Cash Equivalents
at End of Fiscal Year

（Millions of yen）

118,742

65,510

99.8

44.9

95.7

30.5

Dividend Payout Ratio

（％）

35.1

94.9

41.00
（20.00）41.00（20.00）46.00（22.00）44.00（22.00）

Dividend per Share(Interim Dividend)

(Yen)

44.00
（22.00）50.00（25.00）22,94324,04817,49137,352

Depreciation andamortization expense（Millions of yen）

41,38347,531

22,783

16,181

25,72842,539

Capital Expenditure（Millions of yen）

42,80053,136

8,324（1,949）8,837（2,613）

8,616
17,197（2,499） （4,403）

17,197（4,403）

17,100（3,957）

Revenue YoY
Business Income
Business Income Margin

Net Profit Attributable to
Owners of The Company
Net Profit Margin

Number of The Employees(Average number of temporary workers
not included in the above)

Note: As for the amount, Japanese Standards are rounded down, and IFRS is rounded off. In addition, the ratio is rounded off.

Company Information（Millions of yen）

Financial Information2018

Corporate Governance2017

CSV initiative2017

Business Overview

2016

Financial and Non-Financial
Highlights

2015

Feature2014

28

Commentary and analysis of operating results in 2018

■ Analysis of Operating Results
Coca-Cola Bottlers Japan Holdings Inc. (“CCBJH” or the “Company”) announced full-year results for the fiscal year (January 1, 2018 to
December 31, 2018) on February 14, 2019. In this period, total nonalcoholic ready-to-drink (NARTD) beverage industry volume
performance was slightly positive versus prior year, supported by strong demand driven by a record hot summer which helped to offset
the negative impact of various natural disasters, such as earthquakes, heavy rain and flooding. The health food and cosmetics
industries continue to grow, driven by demand from health-conscious consumers and inbound tourism, while the competitiveenvironment has been marked by successive product launches by various industry players.
In 2018, CCBJH remained focused on initiatives linked to our “Growth Roadmap for 2020 and Beyond” strategic plan, representing theprinciples of local presence on a national scale, driving innovation and successfully meeting our synergy and savings commitments.
However, our business was significantly impacted by supply constraints and higher manufacturing and logistics costs related to theextraordinary rain and flooding experienced in Western Japan in July 2018. The Hongo manufacturing plant and adjacent warehouseand distribution center of our subsidiary, Coca-Cola Bottlers Japan Inc., located in Mihara City, Hiroshima Prefecture, experienced
substantial flooding, with damage to equipment and finished goods inventory resulting in a complete shutdown of the Hongo facilities
and disruption to the regional transport infrastructure. We expect the manufacturing and logistics cost outlook to remain elevatedthrough Spring of 2020 as we continue to rely on alternate product supply points and longer shipping distances until new manufacturing
capacity is built, including the relocation of the Hongo plant in Hiroshima. Further, rapidly increasing consumer demand for aseptically
produced beverages in PET packaging put additional pressure on product supply capacity, which also impacted our 2018 results.

■Highlights●

Reported net revenue increased 11% versus prior year due to the April 1, 2017 business integration.

●

Reported business income decreased 42% versus prior year driven by higher manufacturing and logistics expenses due to supply●

Continued progress on integration and setting foundation for growth. Created one aligned HR and benefit system including equity

constraints and flooding disruption.
linked long-term incentive plan; Completed deployment of ERP system back-office solution across all territories; Finalized legal
entity consolidation from 25 in December 2017 to 12 in December 2018; Acquired new plant facilities in Hiroshima to replace
flooded Hongo factory.
●

Announced new 25 billion yen share-buyback program in November as part of financial framework for value creation. Also
completed share repurchase worth 55.9 billion yen in April. 2018 annual dividend per share was 50 yen, an increase of 6 yenversus prior year.

●

Announced management change and restructuring. New board of director nominees reflect best-in-class governance, independence
and diversity standards.

(Unit: Billions of yen)

2017

2018

YoY

Net Revenue

837.1

927.3

+11％

Business Income

40.2

23.3

‑ 42％

Net Income Attributable to
Owners of Parent

22.0

10.1

‑ 54％

※2017 results are consolidated results of former CCW in the first quarter, and integrated results of CCBJH from April 1, 2017 to December 31, 2017.
※We introduce “Business Income” as a measure of our underlying or recurring business performance after the adoption of IFRS. Business Income deducts cost of
goods and SG&A from revenue, and includes other income and expenses which we believe are recurring in nature.

Full-year reported consolidated net revenue was JPY 927.3 billion, an increase of 90.2 billion, or 11% compared to the prior-year period, andnet revenue of the beverage business increased JPY 92.7 billion to 899.9 billion (up 11%) year-on-year, primarily due to the businessintegration of CCW and CCEJ effective April 1, 2017. Net revenues of the healthcare & skincare business fell by JPY 2.5 billion to 27.4 billion(down 8%) year-on-year, as growth of newly-launched products was unable to offset weakness of existing product performance due toincreased competition, etc.
Full-year reported business income, an indicator of our recurring business performance, was JPY 23.3 billion, a decrease of 16.9 billion or
42% year-on-year. Business income of the beverage business decreased JPY 17.2 billion, or 49% year-on-year to 17.9 billion, mainly driven by
disruptions to product supply caused by the heavy rain in Western Japan and supply constraints due to rapidly growing demand of
newly-launched aseptic products. In addition, channel and package mix continued to have a negative impact, primarily as a result of
performance in the vending channel. Business income in the healthcare & skincare business was JPY 5.3 billion, an increase of 3 billion or 6%
year-on-year, as we continued a strong focus on operating efficiency in sales promotion, etc.
Reported operating income was JPY 14.7 billion, a decrease of 22.9 billion or 61% year-on-year driven by loss on disposal of damaged
assets and inventories due to disaster in the beverage business. Reported net income attributable to owners of parent was JPY 10.1 billion, adecrease of 11.9 billion, or 54% versus prior year.

29 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE■ Analysis of Financial Position
Our equity ratio at the end of the fiscal year was 66.2%. We believe that we maintain solid financial position.
Assets at the end of the year declined by JPY 51.8 billion from the end of the previous fiscal year to 877.5 billion. This is mainly
attributable to a decrease of cash and equivalents due to share repurchases a total of 68 billion yen completed in 2018. In addition,assets and inventories decreased as a result of write-off/disposal of damaged assets and inventories due to the flooding disaster, etc.
Liabilities increased by JPY 22.3 billion from the end of the previous fiscal year to 296.6 billion, primarily due to an increase of loans, net
defined benefits liabilities, etc. Total equity (net assets) decreased by JPY 74.1 billion from the end of the previous fiscal year to 580.9

Featurebillion, mainly due to an increase of treasury stock due to the completed share repurchases.

■ Analysis of Cash Flows
Financial and Non-Financial
Highlights＜Cash Flows from Operations＞
Net cash generated from operations was JPY 51.2 billion (73.0 billion in previous year term). This results mainly from JPY 14.8
billion from net profit before tax, depreciation expenses, increase of account payable-trade and others, posting loss on
write-off/disposal of fixed assets due to disaster, etc. offset by an increase of accounts receivable-trade and others,
inventories, payment of taxes, etc.

＜Cash Flows from Investment Activities＞
Net cash used for investment activities was JPY 48.6 billion (14.3 billion in previous year term), due to purchases of fixed assets todrive growth and synergy capture, etc.

Business Overview＜Cash Flows from Financing Activities＞
Net cash used for financing activities was JPN JPY 55.8 billion (26.7 billion in previous year term), due to total JPY 68 billion yen
share buy-back in 2018, increase of short-term loan for share buyback and operating capital, payment of dividends, etc.
As a result of these activities, cash and cash equivalents at the end of this year was JPY 65.5 billion, a decrease of 53.2 billion
versus prior year term.

CSV initiative■ Capital Expenditures
Capital expenditures was JPY 53.1 billion mainly for investment in the beverage business, including vending machines and sales
equipment to strengthen sales capabilities as well as manufacturing equipment to improve productivity and to adapt for new
products.

Corporate Governance■ Research and Development
Although the Company is engaged in research and development activities in the healthcare and skincare businesses, theamounts involved are small with no particular items of note.

Financial Information■ Policies for Profit Distribution and Dividends
We periodically review our capital structure and dividend payout ratio to maximize shareholder returns while maintaining flexibility
to pursue expansion opportunities. We may utilize retained earnings for investments for sustainable growth to pursue businessgrowth and further enhancement of corporate value.
CCBJH sets its basic policy regarding dividends, which includes active redistribution of profits while placing the highest priority
on paying dividends in a stable manner, by comprehensively reviewing the Company’s business performance and level of retained
earnings. In addition, the Company has set a payout ratio target of 30% or more for net profit attributable to owners of the parent,

Company Information

starting from full-year 2018 results announcement, after adoption of IFRS. The company pays interim and year-end dividends.
Annual dividends per share for fiscal 2018 were 50 yen, an increased of 6 yen from the previous fiscal year.

30Consolidated financial statements■ Consolidated statement of financial position(As of December 31)(Millions of yen)

2017

2018

Cash and cash equivalents

118,742

65,510Trade and other receivables

88,061

92,402Inventories

61,98968,781Other financial assets

1,691

645

Other current assets

11,688

10,740Total current assets

282,170

238,078

Property, plant and equipment

439,059435,305

Goodwill

88,88088,880Intangible assets

67,38566,539327

298

Other financial assets

40,353

34,796

Defined benefit asset

43

38

Deferred tax assets

5,149

6,264

Other non-current assets

5,938

7,274

Total non-current assets

647,133

639,394

929,304

877,472

AssetsCurrent assets

Non-current assets

Investments accounted for using the equity method

Total assets

31 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE(Millions of yen)

2017

2018

Trade and other payables

100,576

105,701

Bonds and loans payable

1,817

45,512Other financial liabilities

941

993

Income taxes payable

7,666

3,069

57

18

Other current liabilities

20,893

22,230Total current liabilities

131,950

177,524

Bonds and loans payable

77,85456,401Other financial liabilities

1,285

749

Defined benefit liabilities

27,94033,712

Provisions

2,080

2,191

Deferred tax liabilities

29,92723,082Other non-current liabilities

3,229

2,907

Total non-current liabilities

142,315

119,042274,265

296,566

Capital stock

15,232

15,232

Capital surplus

450,498

450,533

Retained earnings

184,317

182,418

Treasury stock

4,693

72,651

Accumulated other comprehensive income

9,258

4,915

Equity attributable to owners of the parent

654,611

580,448427

458

655,038

580,906

929,304

877,472

Liabilities and equity
Liabilities
FeatureCurrent liabilities

Financial and Non-Financial
Highlights

Provisions

CSV initiative

Total liabilities

Business Overview

Non-current liabilities

EquityTotal liabilities and equity

Financial Information

Total equity

Corporate GovernanceNon-controlling interests

Company Information

32

Consolidated financial statements■ Consolidated Statements of Income and Comprehensive Income(January 1 to December 31)

Consolidated statements of profit or loss

(Millions of yen)

2017

2018

Revenue

837,069

927,307

Cost of sales

424,287

475,156

Gross profit

412,782

452,151

Selling general, and administrative expenses

371,007426,195

Other income

1,421

2,116

Other expense

5,614

13,38512

5Operating profit

37,594

14,682Financial income

961

830

Finance expense

641

745

Profit for the year before income tax

37,914

14,767

Income tax expense

16,031

4,605

Net profit for the year

21,883

10,162

21,967

10,117

Share of income (loss) of equity method investees

Net profit for the year attributable to:
Owners of the parent
Non-controlling interests
Basic earnings per share (yen)8345125.53

52.68

2017

2018

21,883

10,162

4,126

2,889

12

4

3,612

3,344

7,726

6,236

16

12

440

716

456

728

Consolidated statements of comprehensive income

Net profit for the year

(Millions of yen)

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit plans
Share of other comprehensive income of equity
method investees
Net changes in financial assets measured at fair value
through other comprehensive income
Subtotal
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences of foreign operations
Cash flow hedges
Subtotal
Total other comprehensive income for the year
Total comprehensive income for the year

8,182

6,965

30,065

3,197

30,149

3,152

83

45

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

33 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE

Business Income

FeatureWe introduce “Business Income” as a measure of our underlying or recurring business performance after the
adoption of IFRS. Business Income deducts cost of goods and SG&A from revenue and includes other income andexpenses which we believe are recurring in nature.
The following table shows a bridge between business and operating income in IFRS.

(Millions of yen)412,782

452,151

371,007426,195

Other income (Recurring)

931

1,635

Other expenses (Recurring)

2,541

4,310

12

5

40,177

23,276

Other income (Non-recurring)

489

481

Other expenses (Non-recurring)

3,073

9,075

37,594

14,682Gross Profit
Selling, General & Administrative Expenses

Investment gain/loss on equity method
Business Income

Operating Income

Business Overview

2018
Financial and Non-Financial
Highlights

2017

CSV initiative(January 1 to December 31)
Corporate Governance■ Segment information＜Reportable segments＞

The Group has established organizational management systems for each of its products and services. Based on the types andnature of its products and the markets in which it sells its products, the Group's operating segment and reportable segment
businesses are "Beverage business" and "Healthcare & Skin Care business".
(Millions of yen)

2017

Revenue

Healthcare &Skincare business

Total

837,069

899,863

27,444927,30737,594

8,864

5,818

14,682

Healthcare &Skincare business

Total

807,165

29,90433,932

3,662

BeverageCompany Information

Segment profit※

businessbusiness

Financial Information

Beverage

2018※Segment profit is operating profit on consolidated statements of income.

34

Consolidated financial statements■ Consolidated statements of changes in equity(January 1 to December 31)

2017(Millions of yen)
Equity attributable to owners of the parent
TreasuryStock

Accumulated
other comprehensive
incomeCapitalstock

CapitalsurplusRetainedearnings

Balance as of January 1, 2017
(Before restatement)

15,232109,072

164,436

4,593

7,674

291,821415

292,235

Adjustments resulting from theadoption of IFRS 9, etc.

−

−

577

−

2,503

1,927

−

1,927

Balance as of January 1, 2017
(After restatement)

15,232109,072

165,012− 4,593

5,171

289,894415

290,309

Net profit for the year−−

21,967−−

21,96783

21,883

Other comprehensive income

−

−

−

−

8,182

8,182

−

8,182

Total comprehensive income for the year−−

21,967−8,182

30,14983

30,065

Dividends of surplus

−

−

7,113

−

−

7,113

29

7,142

Purchase of treasury stock

−

−

−

111

−

111

−

111

Disposal of treasury stock

−

6

−

12

−

17

−

17

Changes due to business combinations

−

−

−

−

−

−

398

398

Changes in interest in subsidiaries

−

143

−

−

356

213

273

60

Reclassification from accumulated othercomprehensive income to retained earnings

−

−

4,451

−

4,451

−

−

−

Stock issued in exchange of shares−

341,563−−−341,563−341,563

Total transactions with owners, etc.

−

341,425

2,662

100

4,095

334,56996334,664

Balance as of December 31, 201715,232450,498

184,317

4,693

9,258

654,611427

655,038

Non-controllinginterests

Total

Total

Comprehensive income for the year

Transactions with owners, etc.

2018(Millions of yen)
Equity attributable to owners of the parent
CapitalsurplusRetainedearnings

15,232450,498

184,317

4,693

9,258

654,611427

655,038

Net profit for the year−−

10,117−−

10,11745

10,162Other comprehensive income

−

−

−

−

6,965

6,965

−

6,965

Total comprehensive income for the year−−

10,117

−

6,965

3,152

45

3,197

Dividends of surplus

−

−

9,173

−

−

9,173

− 21

9,194

Purchase of treasury stock

−

25

−

67,961−

67,987−

67,987

Disposal of treasury stock

−

1

−

4

−

4

−

4

Transactions of share-based payment

−

67

−

−

−

67

−

67

Reclassification from accumulated othercomprehensive income to retained earnings

−

−

2,843

−

2,843

−

−

−

Reclassification from accumulated othercomprehensive income to non-financial assets

−

−

−

−

221

221

−

221

Other changes

−

7

−

−

−

7

7

−

Total transactions with owners, etc.

−

36

12,016

67,9582,622

77,316

14

77,329Balance as of December 31, 201815,232450,533

182,418

72,651

4,915

580,448458

580,906

Balance as of January 1, 2018

TreasuryStock

Accumulated
other comprehensive
incomeCapitalstock

Non-controllinginterests

Total

Total

Comprehensive income for the year

Transactions with owners, etc.

35 Coca-Cola Bottlers Japan Holdings Inc.

ANNUAL REVIEW 2018

TOP MESSAGE■ Consolidated statements of cash flows(January 1 to December 31)(Millions of yen)

2017

2018

37,914

14,76741,38347,531

1,603

202

Change in allowance for credit losses

238

255

Interest and dividends income

494

516

Interest expense

611

612

Cash flows from operating activities
Profit for the year before income tax
Adjustments for:

Loss on step acquisitions, net

12

5

538

−

536

215

Loss on disposal and sale of property, plant and equipment

1,494

9,399

Decrease (increase) in trade and other receivables

4,693

4,355

Decrease (increase) in inventories

8,474

6,869

Decrease (increase) in other assets

1,299

393

Increase (decrease) in trade and other payables

5,981

2,234

Gain on sale of property, plant and equipment

759

491

Increase (decrease) in other liabilities

293

1,148

Other
Subtotal

63

501

82,36765,579Interest received

17

3

Dividend received

453

487

Interest paid
Income taxes paid

565

548

10,484

14,553275
51,244

Acquisitions of property, plant and equipment and intangible assets

43,11149,752

Proceeds from sales of property, plant and equipment and intangible assets

1,605

658

Net cash provided by operating activities

CSV initiative

1,226
73,014

Income taxes refund

Business Overview

Increase (decrease) in net defined benefit liabilities

Financial and Non-Financial
Highlights

Share of loss (profit) of equity method investees

FeatureDepreciation and amortisation
Impairment losses

Cash flows from investing activities

130

137

Proceeds from sale of other financial assets

609

273

Proceeds from sale of a subsidiary−

406

Proceeds by business combinations

26,798−70

75

14,29948,628

Increase (decrease) in short-term loans payable

2,000

24,000

Repayments of long-term loans payable

2,070

1,817

Proceeds from long-term loans payable

29

−

Other
Net cash used in investing activities

Corporate Governance

Purchases of other financial assets

Cash flows from financing activities

−

7,113

9,173

Dividends paid to non-controlling interests

29

21

Proceeds from disposal of treasury stock

22

4

Purchases of treasury stock

111

67,998

7−

Dividends paid

Purchases of treasury stock by subsidiaries
Acquisition of shares of subsidiaries from non-controlling interests
Net cash used in financing activities
Net foreign exchange differences on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

−

1,028

830

26,717

55,83516

1232,01453,231

86,728

118,742

118,742

65,510Company Information

Other

409

Financial Information

14,000

Redemption of bonds

36

Company Information■ Company Profile / Stock Information（As of December 31, 2018）

Company Profile

Major Shareholders
Shareholder

Number of Shares Held（Thousands）

Shareholding
Ratio（%）

Coca-Cola（Japan）Co., Ltd.

27,956

15.2

The Master Trust Bankof Japan, Ltd.（Trust Account）

6,772

3.7

Japan Trustee Services
Bank, Ltd.（Trust Account）

6,159

3.4

Toyo Seikan Group Holdings, Ltd.

5,607

3.1

Ichimura Foundation for New Technology

5,295

2.9

Satsuma Shuzo Co., Ltd.

4,699

2.6

Senshusha Co., Ltd.

4,088

2.2

Coca-Cola Holdings West Japan, Inc.

4,075

2.2

Mitsubishi Heavy Industries
Machinery Systems, Ltd.

3,912

2.1

MCA Holdings Co., Ltd.

3,408

1.9

C o m p a n y n a m e ● Coca-Cola Bottlers Japan Holdings Inc.
H e a d q u a r t e r s ● Tokyo Midtown Tower, 9-7-1 Akasaka, Minato-ku, Tokyo, Japan
Registered office ● 7-9-66 Hakozaki, Higashi-ku, Fukuoka, Japan
E s t a b l i s h m e n t ● December 20, 1960※1
Paid-in capital ● JPY 15,232 million
Number of employees ●（ c o n s o l i d a t e d ） 17,100
Securities Code ● 2579
Authorized Shares ● 500,000 thousand shares
Outstanding Shares ● 206,269 thousand shares※2
Number of Shareholders ● 66,260
Number of Shares ●per Trading Unit 100 shares
Stock Exchange ● Tokyo Stock Exchange（First Section）
Listings

Note1： 22,793 thousand shares of treasury stock are not shown in the table above
and are excluded from the calculation of shareholding ratios.
Note2： The Coca-Cola Company holds 18.4% through Coca-Cola（Japan）Co.,
Ltd., Coca-Cola Holdings West Japan, Inc., and other subsidiaries.

Fukuoka Stock Exchange※1※2

As of January 1, 2018, the company name was changed to Coca-Cola Bottlers Japan Holdings Inc.
Issued shares of the Company are common shares only. The Company has
not issued preferred shares or any other types of shares which entail rights
different from those of common shares.

Rating Information
2012

Composition of Shareholders

2013

2014

2015

2016

2017

2018

Japan Credit Rating
Agency, Ltd. (JCR)
long-term issuer rating

AA−

AA−

AA−

AA−

AA−

AA−

AA−

Rating and Investment
Information, Inc. (R&I)
issuer rating

A+

A+

A+

A+

A+

A+

A+

Financial Institutions

Treasury Stock

11.1％
22,79316.9％
34,759thousand shares

Total amountissued(Million yen)

Coupon rate(%)

Maturity dateCoca-Cola West
Co., Ltd. 2ndseries

December 17,
2009

20,0001.483

December 17,
2019

Coca-Cola West
Co., Ltd. 3rdseriesJune 17,2015

30,0000.524

June 17,
2022

0.276

December 14,
2020

16,000

1.5％
3,106

11.7％
24,210Date of issue

December 14,
2015

Securities
Companies

Individuals
and Others

Bond information

Coca-Cola East Japan
Co., Ltd. 2ndseriesthousand shares

thousand shares

thousand shares

Other Domestic
Corporations

Foreign
Corporations

34.3％
70,76424.5％
50,636thousand shares

thousand shares

Stock Price and Stock Trading Volume
Stock Price(Yen)
24,000Stock
Trading
Volume(Thousands)

22,00020,000ー Nikkei Index (Close)

18,000□ ■ CCBJH Stock Price■
CCBJH Stock
Trading Volume

16,000
4,500
4,000
3,500

30,0003,000

25,0002,500

20,000

2,000
1,500

15,0001,000

10,000

500

5,000

0

1

2

3

4

5

6

7

2016

37 Coca-Cola Bottlers Japan Holdings Inc.

8

9

10

11

12

1

2

3

4

5

6

7

2017

8

9

10

11

12

1

2

3

4

5

6

7

2018

8

9

10

11

12

(month)0

ANNUAL REVIEW 2018

TOP MESSAGE■ Communication Tools
Through the timely and appropriate disclosure of information, we seek to be a company that is correctly understood and trusted by
all of our stakeholders. We report financial information primarily using various IR tools, while reporting ESG information (non-financial
information concerning the environment, society, and governance), the target of much attention in recent years, primarily through our
CSV Report. We also report wide-ranging corporate information on our website.

FeatureIR tools

CSV Report

Our IR tools report primarily financial information for ourinvestors.

We communicate information concerning sustainability to ourstakeholders.
Financial and Non-Financial
Highlights
Business Overview

ANNUAL REVIEWTO OUR SHAREHOLDERS(Biannual report to individual shareholders,Japanese version only)

CSV initiative

https://en.ccbj-holdings.com/ir/

Website for shareholders and investors

Our website provides financial information, IR event schedules, IR
materials, and other extensive IR information for shareholders andinvestors. We also provide timely earnings announcements, news releases,
and other notifications to registered users.

IR Event Calendar

Library

Corporate Governance

Investor Relations

Stock, Shareholders
and Bond Information

Earnings Release▶

▶

Earnings Presentation▶

▶

Annual Review▶

Financial Highlights

Corporate
Governance

Financial Information

Shareholders' Meeting
Dividend Information▶Stock Quote and Chart▶Stock and Shareholders
Information▶Credit Rating and
Bond Information▶

Investor Relations
Mail Alert
Company Information

Disclosure Policy
Analyst Coverage
Inclusion in SRI Index

38

Coca-Cola Bottlers Japan Holdings Inc.
Tokyo Midtown Tower, 9-7-1 Akasaka, Minato-ku, Tokyo 107-6211, Japan