FAST RETAILING CO., LTD.
迅銷有限公司

Year-end Report 2016/17
2016.9.1–2017.8.31
Stock Code: 6288

Contents
Corporate Information

2

Financial Highlights

3

Corporate Profile

6

Management Discussion and Analysis

14

Capital Expenditure

26

Stock Information and Dividend Policy

30

Board of Directors

77

Corporate Governance Report

83

Financial Information

93

Consolidated statement of financial position

94

Consolidated statement of profit or loss

95

Consolidated statement of comprehensive income

96

Consolidated statement of changes in equity

97

Consolidated statement of cash flows

99

Notes to the consolidated financial statements

101

Balance sheet

151

Statement of income

153

Statement of changes in net assets

154

Notes to the financial statements

156

Supplementary information

159

Main details of assets and liabilities

160

Independent Auditors’ Report (Group)161

Independent Auditors’ Report (Company)

166

Internal Control Report

167

Confirmation Note

167

Corporate Information
Board of Directors
Executive Director

Principal Place of Business in Japan
Midtown Tower 9-7-1
Akasaka Minato-ku
Tokyo 107-6231
Japan

Mr. Tadashi Yanai (Chairman of the Board, President andChief Executive Officer)

Non-Executive Directors
Principal Place of Business in Hong Kong

Mr. Toru Murayama (External Director)

702-706, 7th Floor, Mira Place Tower A,
No. 132 Nathan Road
Tsim Sha Tsui
KowloonHong Kong

Independent Non-Executive Directors
Mr. Toru Hambayashi (External Director)
Mr. Nobumichi Hattori (External Director)
Mr. Masaaki Shintaku (External Director)
Mr. Takashi Nawa (External Director)

HDR Registrar and HDR Transfer Office
Statutory Auditors

Computershare Hong Kong Investor Services Limited
Shops 1712–1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
WanchaiHong Kong

Mr. Akira Tanaka (Kansayaku) (Standing Statutory Auditor)
Mr. Masaaki Shinjo (Kansayaku) (Standing Statutory
Auditor)Mr. Takaharu Yasumoto (Shagai Kansayaku) (External
Statutory Auditor)
Mr. Akira Watanabe (Shagai Kansayaku) (External Statutory
Auditor)Ms. Keiko Kaneko (Shagai Kansayaku) (External Statutory
Auditor)

Stock CodeHong Kong: 6288
Japan: 9983

Joint Company Secretaries

Website Address

Japan: Mr. Mitsuru Ohki
Hong Kong: Ms. Choy Yee Man

http://www.fastretailing.com

Auditors
Ernst & Young ShinNihon LLC

Principal Banks
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
The Hong Kong and Shanghai Banking Corporation Limited

Registered Office and Headquarters
717-1 Sayama
Yamaguchi City
Yamaguchi 754-0894
Japan

—2—

Financial Highlights(1) Consolidated Financial Summary

Term
Accounting Period
Revenue (Millions of yen)International Financial Reporting Standards (“IFRS”)
52nd Year

53rd Year54th Year

55th Year

56th Year

Year ended
Year ended
Year ended
Year ended
Year ended
31 August 2013 31 August 2014 31 August 2015 31 August 2016 31 August 2017
1,142,971

1,382,935

1,681,781

1,786,473

1,861,917

Operating profit (Millions of yen)

134,101

130,402

164,463

127,292

176,414

Profit before income taxes (Millions of yen)

155,732

135,470

180,676

90,237

193,398

Profit attributable to owners of the parent(Millions of yen)

104,595

74,546

110,027

48,052

119,280

Comprehensive income attributable toowners of the parent (Millions of yen)

205,660

75,517

163,871(141,345)

190,566

Equity attributable to ownersof the parent (Millions of yen)

570,428

618,381750,937

574,501

731,770

Total assets (Millions of yen)901,208

992,307

1,163,706

1,238,119

1,388,486

Equity per share attributable to ownersof the parent (Yen)

5,598.12

6,067.40

7,366.07

5,634.35

7,175.35

Basic earnings per share for the year (Yen)

1,026.68

731.51

1,079.42

471.31

1,169.70

Diluted earnings per share for the year
(Yen)

1,025.75

730.81

1,078.08

470.691,168.00

Ratio of equity attributable to ownersof the parent to total assets (%)

63.3

62.3

64.5

46.4

52.7

Ratio of profit to equity attributable toowners of the parent (%)

21.7

12.5

16.1

7.3

18.3

Price earnings ratio (times)

31.1

44.5

45.6

77.1

26.9

Net cash from operating activities(Millions of yen)

99,474

110,595

134,93198,755

212,168

Net cash from/(used in) investing activities(Millions of yen)

(62,584)(56,323)(73,145)(245,939)

122,790

Net cash from/(used in) in financing
activities (Millions of yen)

(24,226)(44,060)(41,784)

201,428(50,836)

Cash and cash equivalents at the endof year (Millions of yen)

296,708

314,049355,212385,431

683,802

Number of employees:(Separate, average number of
temporary employees) (persons)

23,982(23,535)

30,448(25,705)

41,646(27,219)

43,639(26,282)

44,424(31,719)(Notes)

1. Revenue does not include consumption taxes, etc.
2. The Group started to prepare the consolidated financial statements for the year ended 31 August 2014 inaccordance with IFRS.

—3—

Generally Accepted Accounting
Principles in Japan (“JGAAP”)

Term

Accounting period
Net sales (Millions of yen)
Ordinary income (Millions of yen)

52nd Year

53rd Year

Year ended 31
August 2013

Year ended 31
August 2014

1,143,003

1,382,907

148,979

156,828

Net income (Millions of yen)

90,377

78,118Comprehensive income (Millions of yen)

205,329

82,066

Total net assets (Millions of yen)

579,591

626,581

Total assets (Millions of yen)

885,800

977,609

Equity per share (Yen)

5,489.86

5,958.54

Basic net income per share (Yen)887.12766.55

Diluted net income per share (Yen)886.31765.8263.2

62.1

Equity ratio (%)
Earnings on equity (%)

19.1

13.4

Price earnings ratio (times)

36.0

42.5

Net cash from operating activities (Millions of yen)

99,439111,399

Net cash used in investing activities (Millions of yen)

(63,901)(63,574)

Net cash used in financing activities (Millions of yen)

(23,945)(38,014)

Cash and cash equivalents at the end of year (Millions of yen)

295,622

313,746

Number of employees:(Separate, average number of temporary employees) (Persons)

23,982(23,535)

30,448(25,705)(Notes)1. Net sales do not include consumption taxes, etc.
2. The financial figures for the 53rd year prepared in accordance with JGAAP are not audited pursuant to Article 1932-1 of the Financial Instruments and Exchange Act.

—4—

(2) Non-Consolidated Financial Summary
Term
Accounting period

52nd Year

53rd Year54th Year

55th Year

56th Year

Year ended
Year ended
Year ended
Year ended
Year ended
31 August 2013 31 August 2014 31 August 2015 31 August 2016 31 August 2017

Operating revenue (Millions of yen)

91,57077,438

119,071

99,289139,871

Ordinary income (Millions of yen)

76,56946,921

89,245

9,270

115,488

Net income (Millions of yen)

68,77623,33670,227

6,084

64,264

Capital stock (Millions of yen)

10,273

10,273

10,273

10,273

10,273106,073,656

106,073,656

106,073,656

106,073,656

106,073,656

Total net assets (Millions of yen)

335,754332,255

376,007345,773

377,103

Total assets (Millions of yen)

370,110385,113410,009

631,086

670,111Equity per share (Yen)

3,286.26

3,243.97

3,662.28

3,355.83

3,654.97

Dividends per share(Figures in parentheses
indicate interim dividends) (Yen)

290.00(140.00)

300.00(150.00)

350.00(175.00)

350.00(185.00)

350.00(175.00)

Total number of shares issued (shares)

Basic net income per share (Yen)

675.09228.99688.9659.68

630.20

Diluted net income per share (Yen)

674.48228.77688.11

59.60

629.28Equity ratio (%)

90.5

85.9

91.1

54.2

55.6

Earnings on equity (%)

22.2

7.0

20.0

1.7

18.0

Price earnings ratio (times)

47.3

142.1

71.5

608.9

49.9

Dividend ratio (%)

43.0

131.0

50.8

586.5

55.5

Number of employees:(Separate, average number of
temporary employees) (Persons)

924
(103)

1,088
(114)

1,234
(119)

1,131
(126)

1,166
(140)

(Note)

Operating revenue does not include consumption taxes, etc.

—5—Corporate Profile
1.

History
In March 1949, Hitoshi Yanai, the father of our current Chairman, President and CEO Tadashi Yanai, founded Men’s
Shop Ogori Shoji in Ube City, Yamaguchi Prefecture. To solidify the management foundation, the business later became
incorporated in May 1963 under the name Ogori Shoji Co., Ltd.
In June 1984, the Fukuromachi Store, a store specializing in casual clothing, opened its doors in Hiroshima City, Hiroshima
Prefecture as the first UNIQLO.
The Company’s history:
Date

Summary

May 1963

Tadashi Yanai takes over the family business and transforms it into Ogori Shoji Co., Ltd., capitalized at
6 million yen, with headquarters at 63-147 Ogushi Village, Ube City, Yamaguchi Prefecture (now 2-1212 Chuo-cho, Ube City, Yamaguchi Prefecture).

June 1984

UNIQLO’s first location, the Fukuromachi Store, opens in Hiroshima (closed in 1991), marking themove into casual wear retailing with stores named UNIQLO.

September 1991

Ogori Shoji Co., Ltd. changes its name to FAST RETAILING CO., LTD., to embody the guideline ofconduct.

April 1992

The main OS store, selling men’s wear, is converted to the UNIQLO Onda store (closed in 2001). All thestores are completely renovated as a casual wear store matching the UNIQLO brand.

April 1994

The number of UNIQLO stores in Japan rises above 100 (109 directly operated stores, 7 franchises).

July 1994

FAST RETAILING CO., LTD. lists its shares on the Hiroshima Stock Exchange.

April 1997

FAST RETAILING CO., LTD. lists its shares on the second section of the Tokyo Stock Exchange.

February 1998

Construction of the head office is finished (717-1 Sayama, Yamaguchi City, Yamaguchi Prefecture) to
expand the company’s headquarters capacity.

November 1998

The first urban UNIQLO store opens in Shibuya-ku, Tokyo (UNIQLO Harajuku store, closed in 2007).

February 1999

FAST RETAILING CO., LTD. lists its shares on the first section of the Tokyo Stock Exchange.

April 1999

UNIQLO Shanghai office opens to further enhance production management.

April 2000

Tokyo headquarter opens in Shibuya-ku, Tokyo.

June 2000

Ties up with East Japan Railway Company (JR East) and JR East Japan Kiosk to offer UNIQLO products
through shops in JR East stations in Tokyo area, to raise consumer exposure to our products and makeshopping more convenient for our customers.

October 2000

Online store opens for business to open a new sales channel and make shopping easier for ourcustomers.

September 2001

FAST RETAILING (U.K) LTD. opens first four overseas UNIQLO stores in London.

September 2002

Fast Retailing (Jiangsu) Apparel Co., Ltd. opens first two UNIQLO China stores in Shanghai.

August 2003

UNIQLO (U.K.) LIMITED (now UNIQLO EUROPE LIMITED) establishes as successor to FAST RETAILING(U.K) LTD.

January 2004

FAST RETAILING CO., LTD. invests in LINK HOLDINGS CO., LTD. (now LINK THEORY JAPAN CO., LTD.),the developer of Theory brand career apparel.

August 2004

Capital reserves of ¥7 billion integrated into capital, increasing total capital to ¥10.273 billion.

November 2004

Establishment of UNIQLO USA, Inc.

December 2004

Establishment of FRL Korea Co., Ltd., a business venture with South Korea’s Lotte Shopping Co., Ltd.

March 2005

Establishment of UNIQLO HONG KONG, LIMITED.

April 2005

Establishment of FR FRANCE S.A.S. (now FAST RETAILING FRANCE S.A.S.) and GLOBAL RETAILINGFRANCE S.A.S. (now UNIQLO EUROPE LIMITED).

May 2005

Acquires management control of Nelson Finance S.A.S. (now CRÉATIONS NELSON S.A.S.), thedeveloper of the Comptoir des Cotonniers brand, and makes it a subsidiary.

November 2005

Adopts a holding company structure to reinforce the UNIQLO brand and develop new business
opportunities.
—6—

Date

Summary

February 2006

Makes equity investment in, and makes a subsidiary of, PETIT VEHICULE S.A.S. (now PRINCESSE TAM.
TAM S.A.S.), developer of PRINCESSE TAM.TAM, a well-known brand of lingerie in France.

March 2006

Establishes G.U. CO., LTD. to manage a new brand of less-expensive casual clothing to follow UNIQLO.

November 2006UNIQLO Soho New York Store opens as the brand’s first global flagship store, with over 3,300 square
meters of floor space.

March 2007

UNIQLO opens the Kobe Harborland Store (closed in 2012), the first large-format store with over 3,300
square meters of floor space in Japan.

November 2007

UNIQLO 311 Oxford Street Store opens in London as the brand’s first global flagship store in Europe.

December 2007

First UNIQLO France store opens in the Paris suburbs La Defense.

August 2008

UNIQLO establishes a business venture with Wing Tai Retail Pte. Ltd. to expand in Singapore.

March 2009LINK THEORY HOLDINGS CO., LTD. (now LINK THEORY JAPAN CO., LTD.) becomes a subsidiary througha takeover bid.

March 2009UNIQLO signs a design consulting contract for its products with world-renowned fashion designer Jil
Sander.

April 2009First UNIQLO Singapore store opens in the Tampines 1 Mall.

October 2009UNIQLO Paris Opera Store opens in France as a global flagship store.

March 2010

UNIQLO establishes a wholly owned subsidiary in Taiwan.

April 2010

First UNIQLO Russia store, UNIQLO Atrium, opens in Moscow.

May 2010

UNIQLO Shanghai West Nanjing Road Store opens in China as a global flagship store.

October 2010

UNIQLO Shinsaibashi Store in Osaka opens as the first UNIQLO global flagship store in Japan.

October 2010

First GU flagship store opens in Shinsaibashi, Osaka.

October 2010

First UNIQLO Taiwan store opens in Taipei.

November 2010

First UNIQLO Malaysia store opens in Kuala Lumpur.

February 2011

FAST RETAILING CO., LTD. launches a global partnership agreement with the United Nations HighCommissioner for Refugees (UNHCR) to further reinforce ongoing company initiatives such as the AllProduct Recycling Initiative.

March 2011

Donates UNIQLO and GU clothing to sufferers of the Great East Japan Earthquake.

September 2011

First UNIQLO Thailand store opens in Bangkok.

September 2011UNIQLO Mingyao Department Store opens in Taipei, Taiwan as a global flagship store.

October 2011UNIQLO Fifth Avenue Store opens in New York as a global flagship store.

November 2011UNIQLO Myeongdong Central Store opens in Seoul, Korea as a global flagship store.

March 2012UNIQLO Ginza Store opens in Tokyo as a global flagship store.

June 2012

First UNIQLO Philippines store opens in Manila.

September 2012

BICQLO Shinjuku East Exit Store opens in Tokyo as a global hotspot store.

October 2012

First UNIQLO store on the West Coast of the United States opens in San Francisco, Union Square.

December 2012

FAST RETAILING CO., LTD. acquires majority control of J Brand Holdings, LLC, a leading contemporary
fashion brand based in Los Angeles, California.

April 2013

UNIQLO Lee Theatre opens in Hong Kong as a global flagship store.

June 2013

UNIQLO Lotte Shopping Avenue Store opens as the first UNIQLO Store in the Republic of Indonesia.

September 2013

UNIQLO global flagship store opens in Shanghai.

September 2013

First GU overseas store opens in Shanghai.

March 2014

HDRs (Hong Kong Depository Receipts) listed on the Main Board of The Stock Exchange of Hong Kong
Limited.

March 2014

UNIQLO global hotspot store opens in Ikebukuro, Sunshine 60.

April 2014

First UNIQLO Australia store opens in Melbourne.

—7—

Date

Summary

April 2014

First UNIQLO Germany store opens in Berlin, Tauenzienstrasse as a global flagship store.

April 2014

UNIQLO global hotspot store opens in Tokyo, Okachimachi district.

October 2014

UNIQLO global hotspot store opens in Tokyo, Kichijoji.

October 2014

UNIQLO global flagship store, UNIQLO OSAKA, opens.

April 2015

Establishes ON HAND CO., LTD. to promote the next-generation logistics business.

October 2015

First UNIQLO Belgium store opens in Antwerp.

October 2015

UNIQLO USA opens its first Midwest store, the UNIQLO Michigan Avenue Store in Chicago.

December 2015

Fast Retailing issues ¥250 billion in unsecured straight bonds.

March 2016

The newly refurbished 311 Oxford Street global flagship store opens in London.

April 2016

Construction completed on state-of-the-art distribution center in Ariake, Tokyo.

September 2016

UNIQLO Orchard Road Store opens as the first UNIQLO global flagship store in Southeast Asia.

September 2016

The newly refurbished UNIQLO SoHo global flagship store opens in New York.

September 2016

First UNIQLO Canada store opens in Toronto.

February 2017

UNIQLO CITY TOKYO Ariake Office opens. UNIQLO product and commercial functions moved from
Roppongi Office to Ariake Office.

March 2017

Bigger and better UNIQLO Online Store opens in Japan.

March 2017

First GU store opens in Hong Kong.

—8—

2.

Our Business
The Group consists of FAST RETAILING CO., LTD. (the “Company”), 121 consolidated subsidiaries and 2 associates
accounted for using the equity-method.
Details of the Group’s businesses as well as the positioning of the Company and its main affiliates relative to thebusinesses are as follows.
The segment categories in this section of the report are the same as the segment categories in the section headed“FINANCIAL INFORMATION 4. Consolidated Financial Statements: Notes to the Consolidated Financial Statements”.

Category

Company name

Reportable Segment

Holding company

FAST RETAILING CO., LTD.

OthersUNIQLO CO., LTD. (consolidated subsidiary)

UNIQLO Japan

FAST RETAILING (CHINA) TRADING CO., LTD.*(consolidated subsidiary)

UNIQLO International

UNIQLO TRADING CO., LTD.*(consolidated subsidiary)

UNIQLO International

FAST RETAILING (SHANGHAI) TRADING CO., LTD.*(consolidated subsidiary)

UNIQLO International

FRL Korea Co., Ltd. (consolidated subsidiary)

UNIQLO International

FAST RETAILING (SINGAPORE) PTE. LTD.
(consolidated subsidiary)

UNIQLO International

UNIQLO (THAILAND) COMPANY LIMITED(consolidated subsidiary)

UNIQLO International

PT. FAST RETAILING INDONESIA (consolidated subsidiary)

UNIQLO International

UNIQLO AUSTRALIA PTY LTD (consolidated subsidiary)

UNIQLO International

Fast Retailing USA, Inc. (consolidated subsidiary)

UNIQLO International/
Global Brands

UNIQLO EUROPE LIMITED (consolidated subsidiary)

UNIQLO International

G.U. CO., LTD. (consolidated subsidiary)

Global Brands

FAST RETAILING FRANCE S.A.S. (consolidated subsidiary)

Global Brands

Theory LLC (consolidated subsidiary)

Global Brands

J Brand, Inc. (consolidated subsidiary)

Global Brands

Other consolidated subsidiaries (106 companies)

UNIQLO International/
Global Brands/Others

Other associate accounted for using the equity-method(2 companies)

OthersMain consolidated subsidiaries

Associate accounted for using theequity-method*

The English names of all subsidiaries established in the People’s Republic of China (“PRC”) are translated for identification
only.

(Notes)

1.
2.
3.
4.

“UNIQLO” business means the retail business of UNIQLO brand casual apparel in Japan and overseas.
“Global Brands” business means the planning, retail and manufacturing of apparel in Japan and overseas.
“Others” includes real estate leasing businesses.
The Company corresponds to a specified listed company, etc. as stipulated in Article 49-2 of the Cabinet Office
Ordinance on Restrictions on Securities Transactions. As a result, assessment of the minimal standard for material
facts under the insider trading regulations is based on the consolidated numerical data.

—9—

Organizational structure is as follows:Business Structure

UNIQLO CO., LTD.
UNIQLOJapan

UNIQLO
Business

UNIQLO/ŶƚĞƌŶĂƟŽŶĂůFASTRETAILING
CO., LTD.
(holding
company)Group
ManagementKƉĞƌĂƟŽŶ

FAST RETAILING (CHINA) TRADING CO., LTD.*UNIQLO TRADING CO., LTD.*
FAST RETAILING (SHANGHAI) TRADING CO., LTD.*&Z><ŽƌĞĂŽ͕͘>ƚĚ͘
UNIQLO (THAILAND) COMPANY LIMITED
PT. FAST RETAILING INDONESIAUNIQLO AUSTRALIA PTY LTD
UNIQLO EUROPE LIMITED
OthersGroup
ManagementKƉĞƌĂƟŽŶ
Customers'ůŽďĂůƌĂŶĚƐ
Business

OthersBusiness

G.U. CO., LTD.
Theory LLCCOMPTOIR DES COTONNIERS S.A.S.
PRINCESSE TAM.TAM S.A.S.
:ƌĂŶĚ͕/ŶĐ͘
OthersFAST RETAILING (SINGAPORE) PTE. LTD.
FAST RETAILING FRANCE S.A.S.
&ĂƐƚZĞƚĂŝůŝŶŐh^͕/ŶĐ͘
Others* The English names of all subsidiaries established in PRC are translated for identification only.

— 10 —

3.

Subsidiaries and Associates

Name

Location

Relationship

Nominal value of
issued ordinary/registered share capital(Thousands)

Details of main
businesses

Ownership Ratioof Voting Rights

Common directors(Number of
persons)

UNIQLO Japan

100.0%

3—

Capital/operational ties

(Consolidated subsidiaries)
UNIQLO CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

FAST RETAILING (CHINA)TRADING CO., LTD*

Shanghai, PRC

USD20,000

UNIQLO International

100.0%

2—

UNIQLO TRADING CO., LTD.*

Shanghai, PRC

USD30,000

UNIQLO International

100.0%

2—

FAST RETAILING (SHANGHAI)
TRADING CO., LTD.*

Shanghai, PRC

USD35,000

UNIQLO International

100.0%

2—

FRL Korea Co., Ltd.

Seoul Special City,
South Korea

KRW24,000,000

UNIQLO International

51.0%

1

—

FAST RETAILING (SINGAPORE)
PTE. LTD.

Republic of Singapore

SGD86,000

UNIQLO International

100.0%

1—

UNIQLO (THAILAND) COMPANY
LIMITED

Bangkok,
Kingdom of Thailand

THB800,000

UNIQLO International

75.0%(75.0%)——

PT. FAST RETAILING INDONESIA

Jakarta,Republic of Indonesia

IDR115,236,000

UNIQLO International

75.0%(75.0%)——UNIQLO AUSTRALIA PTY LTD

Melbourne, Australia

AUD21,000

UNIQLO International

100.0%(100.0%)—Loans

Fast Retailing USA, Inc.

New York,
United States of America

USD981,621

UNIQLO International/
Global Brands

100.0%

1

Bond guarantees
Loans

UNIQLO EUROPE LIMITED

London,United Kingdom

GBP40,000

UNIQLO International

100.0%

1

Bond guarantees

G.U. CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY10,000

Global brands

100.0%

1—

FAST RETAILING FRANCE S.A.S.

Paris, France

EUR169,525

Global Brands

100.0%—

Loans

Theory LLC

New York,
United States of America

USD116,275

Global brands

100.0%(100.0%)——J Brand, Inc.

California,
United States of America

USD396,340

Global brands

100.0%(100.0%)

1—

Other consolidated subsidiaries(106 companies)

—

—

—

—

—

—

Other associate accounted forusing the equity-method(2 companies)

—

—

—

—

—

—

*

JPY1,000,000

The English names of all subsidiaries established in the PRC are translated for identification only.

(Notes)1. The information given in the “Details of main businesses” column is the name of the business segment.
2. UNIQLO CO., LTD., FAST RETAILING (CHINA) TRADING CO., UNIQLO TRADING CO., LTD., FAST RETAILING(SHANGHAI) TRADING CO., LTD., FRL Korea Co., Ltd., FAST RETAILING (SINGAPORE) PTE. LTD., UNIQLO (THAILAND)COMPANY LIMITED, PT. FAST RETAILING INDONESIA, UNIQLO AUSTRALIA PTY LTD, Fast Retailing USA, Inc., UNIQLOEUROPE LIMITED, FAST RETAILING FRANCE S.A.S., Theory LLC and J Brand, Inc. are specified subsidiaries.
3. Figures in parentheses in the “Ownership Ratio of Voting Rights” column indicate the ratio of voting rights held by
the Group’s subsidiary.

— 11 —

4. Net sales (excluding internal sales between other member companies of consolidated group) of UNIQLO CO., LTD.,
FAST RETAILING (CHINA) TRADING CO., LTD. and G.U. CO., LTD. are greater than 10% of consolidated revenue. Keyelements of profit/loss for the year ended 31 August 2017 are as below.
UNIQLO CO., LTD.
(1)
(2)
(3)
(4)
(5)

Revenue
Profit before income taxes
Net profit
Net assets
Total assets

810,734 million yen
100,754 million yen
71,261 million yen
178,432 million yen
348,866 million yen

FAST RETAILING (CHINA) TRADING CO., LTD
(1)
(2)
(3)
(4)
(5)

Revenue
Profit before income taxes
Net profit
Net assets
Total assets

231,728 million yen
34,976 million yen
26,398 million yen
84,417 million yen
147,363 million yen

G.U. CO., LTD.
(1)
(2)
(3)
(4)
(5)

Revenue
Profit before income taxes
Net profit
Net assets
Total assets

191,444 million yen
14,110 million yen
10,433 million yen
21,628 million yen
72,189 million yen— 12 —

4.
(1)

Employees
The Group
As at 31 August 2017
Name of segment

Number of employees (Persons)

UNIQLO Japan

13,046 (11,949)

UNIQLO International

23,191 (13,388)

Global brands

5,954 (6,175)

Total for reportable segments

42,191 (31,512)

Others

1,067 (67)

All companies (shared)

1,166 (140)
Total(Notes)(2)

44,424 (31,719)

1. The number of employees does not include operating officers, junior employees, part-time workers or temporary
staff seconded from other companies.
2. The number of junior employees and part-time workers is stated as a separate number in parentheses as the average
number of people per year was calculated based on an eight-hour workday per person.
3. The number of employees given as “All companies (shared)” represents administrative employees who could not be
categorized in a specific business segment.
4. Hiring of employees for new stores was the main reason for the increase in the number of employees during the year
ended 31 August 2017.

The Company
As at 31 August 2017

Number of employees (persons)
1,166 (140)(Notes)(3)

Average age (years, months)
37 years and 5 months

Average number of years
with the Company
4 years and 5 months

Average annual wages(thousands of yen)
7,915

1. The number of employees does not include operating officers, junior employees, part-time workers or temporary
staff seconded from other companies.
2. The number of junior employees and part-time workers stated in parentheses represented the number of persons
calculated based on an eight-hour workday per person.
3. Figures for average annual wages include bonuses and other non-standard payments.
4. All of the Company’s employees are categorized as “All companies (shared)”.

Status of labor unions
There are no labor unions at the Company, but unions have been formed at some subsidiary companies. Managementlabor relations have been smooth, and there are no items of note to report.

— 13 —

Management Discussion and Analysis
1.
(1)Business Results
Analysis of Business Results for the year ended 31 August 2017
The Fast Retailing Group generated a record performance in fiscal 2017, the financial year from 1 September 2016 to 31
August 2017. Consolidated revenue totaled ¥1.8619 trillion (+4.2% year-on-year), operating profit reached ¥176.4 billion(+38.6% year-on-year), profit before income taxes rose to ¥193.3 billion (+114.3% year-on-year) and profit attributable toowners of the parent increased to ¥119.2 billion (+148.2% year-on-year). The consolidated gross profit margin improved
0.4 point year-on-year and the selling, general and administrative expense ratio also improved by 0.4 point thanks topersistent Groupwide cost-cutting efforts. Under other income/costs, we accounted a foreign exchange gain of ¥2.1
billion and an impairment loss of ¥9.3 billion. In addition, under finance income, we recorded a foreign exchange gainof ¥13.3 billion after the spot foreign exchange rate at the end of the term closed below the spot rate at the start ofthe business term, increasing the carrying amount of our long-term foreign-currency denominated assets in yen terms.
UNIQLO International generated an especially strong increase in profit, which proved the key driver of overall Group
performance.
The Group’s medium-term vision is to become the world’s number one apparel retailer. In pursuit of this aim, we arefocusing our efforts on expanding UNIQLO International and our low-priced GU casual fashion brand. We continue toincrease UNIQLO store numbers in each country where we operate, and open global flagship stores and large-format
stores in major cities around the world to help consolidate UNIQLO’s position as a key global brand. Within the UNIQLOInternational segment, Southeast Asia in particular is entering a new stage of growth and is set to become the segment’s
second pillar region after Greater China (Mainland China, Hong Kong and Taiwan) and South Korea. In terms of the GU
operation, in addition to opening more GU stores in Japan, we are also planning to expand GU’s international presence by
opening more stores in Mainland China, Hong Kong and Taiwan. In February 2017, we launched the UNIQLO CITY TOKYO
Ariake Office as part of our strategy to pursue a new working style, to revolutionize all supply chain processes fromplanning and design through raw materials procurement, manufacturing, logistics and retail, and to transform ourselves
into a digital consumer retail company. Another area of focus in our business expansion plans is e-commerce. We havebeen working to make our online shopping experience more convenient for customers by marking the March 2017
launch of our new mobile shopping site with a broader range of online sizes, exclusive online items and semi-order-madeproducts, and the option to pick up online purchases at a local convenience store or UNIQLO store.
UNIQLO Japan
UNIQLO Japan reported a rise in revenue but a fall in profit in fiscal 2017, with revenue totaling ¥810.7 billion (+1.4%
year-on-year) and operating profit totaling ¥95.9 billion (-6.4% year-on-year). In the twelve months to 31 August 2017,
same-store sales, including online sales, expanded by 1.1% year-on-year, thanks to an increase in customer visits. Warm
weather during the most vigorous sales month of December resulted in a modest rise in same-store sales in the first halfof only 0.1% year-on-year. However, same-store sales subsequently expanded by 2.4% year-on-year in the second half on
buoyant sales of newsworthy products such as wireless bras, Dry Stretch Kando Pants, easy ankle pants and UT T-shirts.
Meanwhile, e-commerce sales increased 15.6% in fiscal 2017 to constitute 6.0% of total sales. On the profit front, while
the gross profit to net sales margin improved by a modest 0.3 point year-on-year, the selling, general and administrative
expense to net sales ratio increased by 1.3 points year-on-year, resulting in a decline in operating profit. Looking at
selling, general and administrative expenses in more detail, while advertising and promotion expenses were further
reduced across the financial term as part of the overall cost-cutting drive, personnel costs increased over the financial
year, and distribution expenses increased temporarily in relation to the complete transformation of our distribution
system.

— 14 —UNIQLO International
UNIQLO International revenue rose to ¥708.1 billion (+8.1% year-on-year) in fiscal 2017, while operating profit almost
doubled to ¥73.1 billion (+95.4% year-on-year). Several factors contributed to this strong performance, including aconsiderable improvement in the gross profit to net sales margin following the shift towards much tighter discounting
in each individual operation, the positive effects of cost-cutting efforts, and a halving of the operating loss at UNIQLO
USA. UNIQLO Southeast Asia & Oceania generated an especially strong performance. The expanded range of polo shirts,
DRY T-shirts and other core products in that region, and strong sales of products designed specifically to suit the region’s
climate and culture both helped generate a significantly higher gross profit margin. UNIQLO South Korea generated aconsiderable increase in operating profit for the full financial term as the operation’s positive management reforms
helped encourage a recovery in same-store sales in the second half. UNIQLO Greater China reported a significant risein operating profit, with same-store sales in Mainland China continuing their rising trend on the back of successful sales
campaigns timed to draw in customers at the right point of the season and over public holidays. UNIQLO USA reduced
its operating loss by half in fiscal 2017 thanks to efforts to tailor product ranges to suit specific regions, some successful
sales promotions, and continued business reforms. At UNIQLO Europe, operating profit dipped slightly after the openingof 20 new stores mainly in Russia and France resulted in increased costs. In September 2017, Fast Retailing opened its first
UNIQLO store in Spain, Barcelona. The store got off to a strong start.
Global Brands
The Global Brands segment generated increases in both revenue and profit in fiscal 2017, with revenue rising to ¥340.1
billion (+3.5% year-on-year) and operating income expanding to ¥14.0 billion (+47.5% year-on-year). Considerably higher
profits from the Theory fashion label and shrinking impairment losses from the J Brand premium denim label contributed
to the rise in Global Brands operating profit.
GU reported a rise in revenue but a decline in profit in fiscal 2017, with revenue rising to ¥199.1 billion (+6.0% year-onyear) and operating profit contracting to ¥13.5 billion (-39.0% year-on-year). Same-store sales declined 3.0% year-on-year
on lost sales opportunities resulting from shortages in some strong-selling items such as design blouses, big silhouettetops, design bottoms, pajamas and shoes, and the fact that some products did not become the hot-selling items weoriginally expected. The fall in operating profit was caused by a number of factors: the shortfall in sales, which weighed on
the gross profit margin; a rising costs of sales caused by a weaker yen, and; a rising business expense to net sales ratio. Ininternational markets, after the first GU store opened in Hong Kong in March 2017, GU Hong Kong business continues tobe a success.
Looking finally at other labels in the Global Brands segment, Theory generated a significant increase in operating profit
in fiscal 2017 on the back of strong sales from the US Theory brand and improved profitability from Theory’s PLST brandoperation. Revenue from our France-based Comptoir des Cotonniers operation declined but the label’s cost-cutting drive
helped successfully reduce operating losses. The France-based Princesse tam.tam label generated a further operating loss,
while US-based J Brand accounted a ¥3.6 billion impairment loss.
Sustainability
While globalization and development of the economy bring various benefits to the everyday lives of people, the world
today also faces serious challenges including growing environmental concerns, a worsening refugee crisis, and humanrights issues. Society expects companies to behave ethically and Fast Retailing Co., Ltd. is committed to addressing socialand environmental challenges to help create a sustainable society.
In February 2017, we established a set of sustainability policies which cover four priority areas: supply chain, products,
stores and communities, and employees.
In the area of “supply chain,” we will reform our production, logistics and sales processes in efforts to drastically reduce
waste, and we will pay greater attention to human rights and working conditions. Moreover, to enhance transparency,
UNIQLO made public a list of its core partner garment factories in February 2017.
In the area of “products,” our aim is to create products that are simple, high in quality, and can enrich the lives of people,
and we are focusing on the traceability of raw materials to ensure our products are safe and secure. Furthermore, when
our products are no longer worn by customers, we will collect and reuse or recycle them to help those in need and help
protect the environment.
— 15 —

In the area of “stores and communities,” we will step up our efforts to assist refugees through donations of clothing,engage in community activities, and create stores that are more environmentally conscious.
Finally, in the area of “employees,” we will promote diversity, female advancement, more flexible working schemes, andthe hiring of people with disabilities and refugees. We aim to realize a workplace where each and every employee takepride in their work, and support the development of professional skills through training and education.
In the Sustainability Committee, which consists of outside experts, outside auditors, the president and executive officers,
we are currently discussing strategies and goals for these four priority areas to be achieved by the year 2020. In the near
future, we intend to formulate and implement a detailed plan for these areas.

(2)

Cash Flows Information

Cash and cash equivalents as at 31 August 2017 were ¥683.8 billion, which was an increase of ¥298.3 billion from the endof the preceding consolidated fiscal year.
(Operating Cash Flows)
Net cash from operating activities for the year ended 31 August 2017 was ¥212.1 billion, which was an increase of ¥113.4
billion (+114.8 % year-on-year) from the year ended 31 August 2016. The principal factors were ¥193.3 billion in profit before
income taxes (an increase of ¥103.1 billion from the year ended 31 August 2016), ¥13.3 billion in foreign exchange gains (anincrease of ¥50.2 billion from the year ended 31 August 2016), ¥5.9 billion in increase in inventories (an increase of ¥28.9 billion
from the year ended 31 August 2016) and ¥47.6 billion in income taxes paid (a decrease of ¥40.8 billion from the year ended 31
August 2016).
(Investing Cash Flows)
Net cash from investing activities for the year ended 31 August 2017 was ¥122.7 billion, which was an increase of ¥368.7
billion from the year ended 31 August 2016. The principal factors were ¥168.3 billion for decrease in bank deposits withmaturity over 3 months (an increase of ¥354.8 billion from the year ended 31 August 2016).
(Financing Cash Flows)
Net cash used in financing activities for the year ended 31 August 2017 was ¥50.8 billion, which was an increase of ¥252.2
billion from the year ended 31 August 2016. The principal factor was the proceeds of ¥249.3 billion arising from issuance ofcorporate bonds during the year ended 31 August 2016.

(3)

Parallel Disclosure

Items concerning differences between the main items in consolidated financial statements prepared under IFRS andconsolidated financial statements prepared under JGAAP.
Reclassification
Items stated under non-operating income, non-operating expenses, extraordinary gains, and extraordinary losses under
JGAAP have been reclassified under IFRS; presented as finance income, finance costs, other expenses, other income, or selling,
general and administrative expenses.
Adjustment to amortization of goodwill
Under JGAAP, goodwill was amortized over an estimated amortization period. Under IFRS, this amortization ceased on thetransition date.
As a result, under IFRS, amortization of goodwill (selling, general and administrative expenses) decreased by 837 million
yen in the year ended 31 August 2017 and 1,899 million yen in the year ended 31 August 2016, and impairment losses (otherexpenses) increased by 1,004 million yen in the year ended 31 August 2017 and 962 million yen in the year ended 31 August
2016, compared with those under JGAAP.

— 16 —

Adjustment to exchange differences on monetary financial instruments denominated in foreign currencies
Under JGAAP, foreign exchange translation differences on monetary financial instruments denominated in foreign
currencies are recorded as unrealized gains or losses on available-for-sale securities under net assets. Under IFRS, theseexchange differences are treated as foreign exchange gains or losses.
As a result, under IFRS, foreign exchange translation differences (other income) increased by 725 million yen in the year
ended 31 August 2017 and 1,678 million yen in the year ended 31 August 2016, compared with those under JGAAP.
Adjustment to impairment losses of non-current assets
Under JGAAP, when there are indications that asset impairment is required, an assessment is made of the extent of theasset impairment (by comparing book value with the value of future cash flows, before discounting). After that, a measurement
is made of asset-impairment losses (by comparing book value with recoverable value). Under IFRS, when there are indications
that asset impairment is required, the recoverable value of the fixed asset(s) is estimated, and if the estimated recoverable
value is less than the book value, then a measurement is made of the asset impairment loss, either of the asset or the cash
generating unit group.
As a result, under IFRS, impairment losses increased by 681 million yen in the year ended 31 August 2017 and 2,394
million yen in the year ended 31 August 2016, compared with those under JGAAP.

2.

Summary of Revenue and Purchasing(1)

Revenue, by division
Year ended 31 August 2016 (From 1
September 2015 to 31 August 2016)

Division

Revenue(Millions of yen)

Percentage of total(%)

Year ended 31 August 2017
(From 1 September 2016 to
31 August 2017)
Revenue(Millions of yen)

Percentage of total(%)

Men’s clothing

319,995

17.9

316,601

17.0

Women’s clothing

379,83721.3

386,075

20.7

Children’s & Baby’s clothing

55,005

3.1

60,497

3.2

Goods and other items

20,935

1.2

21,145

1.2

775,77343.5

784,32042.1

24,044

1.3

26,413

1.4

Total UNIQLO Japan Operations

799,81744.8

810,734

43.5

UNIQLO International Operations

655,406

36.7

708,171

38.0

Total UNIQLO Operations

1,455,224

81.5

1,518,905

81.5

328,557
2,691

18.4
0.1

340,143
2,868

18.3
0.2

1,786,473

100.0

1,861,917

100.0

Total sales of UNIQLO Japan
Franchise related income &alteration charges

Global Brands Operations
Other Operations
Total(Notes)1. “Franchise related income” refers to the proceeds from garment sales to franchise stores and royalty income.
“Alteration charges” refers to income generated from embroidery prints and alterations to pants length.
2. “UNIQLO operations” covers the selling of UNIQLO brand casual clothing.
3. “Global Brands Operations” consists of GU operation (selling of GU brand casual clothing), Theory operation(selling of Theory and PLST brand clothing), Comptoir des Cotonniers operation (selling of Comptoir desCotonniers brand clothing), Princesse tam.tam operation (selling of Princesse tam.tam brand clothing) and J Brand
operation (selling of J BRAND brand clothing).
4. “Other Operations” includes real-estate leasing business, etc.
5. The above amounts do not include consumption taxes, etc.

— 17 —

(2)Revenue by region
Year ended 31 August 2017
(From 1 September 2016 to 31 August 2017)
RegionUNIQLO Japan
store sales of products

Percentage
of total (%)

Number of storesat the end of year
(Stores)

Revenue(Millions of yen)

Year-on-yearchange (%)

Hokkaido

26,204

101.7

1.4

29

Aomori

5,638

98.8

0.3

9

Iwate

4,982

98.9

0.3

8

Miyagi12,506

100.7

0.7

14

Akita

3,922

99.7

0.2

7

Yamagata

4,952

98.4

0.3

8

Fukushima

8,461

98.2

0.5

10

Ibaraki

13,147

89.6

0.7

15

Tochigi

8,981

87.6

0.5

13

Gunma

11,139

99.4

0.6

18

Saitama

39,897

102.2

2.1

43

Chiba

34,373

102.7

1.8

41

Tokyo

124,541

100.0

6.7

96

Kanagawa

61,037

100.6

3.3

56

Niigata

11,696

99.7

0.6

12

Toyama

4,467

97.8

0.2

6

Ishikawa

6,020

100.5

0.3

7

Fukui

4,027

97.5

0.2

5

Yamanashi

4,597

97.9

0.2

5

Nagano10,488

100.3

0.6

12

Gifu

10,070

100.0

0.5

11

Shizuoka

20,832

100.0

1.1

23

Aichi

42,304

101.3

2.3

44

Mie

9,378

101.1

0.5

10

Shiga

7,851

103.3

0.4

9

Kyoto

17,922

101.1

1.0

21

Osaka

65,063

99.6

3.5

72

Hyogo

33,157

99.0

1.8

34

Nara

7,082

100.4

0.4

9

Wakayama

2,179

98.5

0.1

3

Tottori

3,020

100.4

0.2

3

Shimane

506

100.3

0.0

1

Okayama

8,944

101.0

0.5

9

Hiroshima

14,706

101.4

0.8

17

Yamaguchi

3,552

96.9

0.2

5

Tokushima

3,845

100.3

0.2

5

Kagawa

4,957

100.7

0.3

6

Ehime

5,251

102.4

0.3

7

Kochi

3,562

98.8

0.2

4

Fukuoka

29,501

102.6

1.6

31

Saga

3,486

100.1

0.2

4

Nagasaki

5,798

101.4

0.3

8

Kumamoto

8,221

111.0

0.4

9

— 18 —

Year ended 31 August 2017
(From 1 September 2016 to 31 August 2017)
RegionYear-on-yearchange (%)

Oita

6,520

102.6

0.4

8

Miyazaki

3,931

97.8

0.2

6

Kagoshima

7,323

100.8

0.4

10

Okinawa

5,508

104.0

0.3

7

735,567

100.3

39.5

790

Internet and mail-order sales

48,753

115.6

2.6

—

Products supplied to franchise stores/
management and administrative fees

26,007

111.2

1.4

41

405

61.8

0.0

—

Total UNIQLO Japan Operations

810,734

101.4

43.5

831

UNIQLO International Operations

708,171

108.1

38.0

1,089

Total UNIQLO Operations

1,518,905

109.8

81.5

1,920

340,143

103.5

18.3

1,374

2,868

106.6

0.2

—

1,861,917

104.2

100.0

3,294

Total UNIQLO Japan stores

Alteration charges

Global Brands Operations
Other Operations
Total(Notes)(3)

Percentage
of total (%)

Number of storesat the end of year
(Stores)

Revenue(Millions of yen)

1. “Products supplied to franchise stores” refers to sales of products to franchise stores. “Management andadministrative fees” means royalty income from franchise stores. “Alteration charges” refers to income generated
from embroidery prints and alteration to length of pants.
2. “UNIQLO operations” refers to the selling of UNIQLO brand casual clothing.
3. “Global Brands Operations” consists of Comptoir des Cotonniers operation (selling of Comptoir des Cotonniers
brand clothing), Princesse tam.tam operation (selling of Princesse tam.tam brand clothing), GU operation (sellingof GU brand casual clothing), Theory operation (selling of Theory and PLST brand clothing) and J Brand operation(selling of J BRAND brand clothing).
4. “Other Operations” includes real-estate leasing business, etc.
5. The above amounts do not include consumption taxes, etc.

Sales per unit

Summary

Revenue
Sales per m2

Sales per employee(Notes)Sales floor area (average)

Year ended
31 August 2017
(From 1 September 2016 to
31 August 2017)

Year-on-year change (%)

1,443,738 million yen

103.9 %

2

103.0 %

889 thousand yen

100.9 %

61,657 persons

110.8 %

23,415 thousand yen

93.8 %

1,623,407 m

2

Sales per m (yearly)
Number of employees (average)
Sales per employee (yearly)

1. These figures are solely for UNIQLO Japan Operations and UNIQLO International Operations.
2. Sales figures indicate store sales, and do not include internet sales, products supplied to franchise stores,
management and administrative fees or alteration charges.
3. “Sales floor area (average)” is calculated based on the number of months each store is in operation.
4. “Number of employees (average)” includes junior employees, part-time workers, contract workers, or temporary
staff seconded from other companies, but does not include operating officers. Figures for junior employees andpart-time workers are based on a weighted average (eight-hour workday) during the term.
5. The above figures do not include consumption tax, etc.

— 19 —

(4)Purchases
Year ended 31 August 2017
(From 1 September 2016 to 31 August 2017)

By product category

Purchases(Millions of yen)

Year-on-year change(%)

Percentage of total(%)

Men’s clothing

175,342

102.9

18.7

Women’s clothing

219,433

103.4

23.5

Children’s & Baby’s clothing

32,321

116.2

3.5

Goods and other items

12,651111.7

1.3

439,749

104.2

47.0

336,195

99.8

35.9

775,944

102.3

82.9

159,523

103.3

17.1

935,468

102.4

100.0

Total UNIQLO Japan Operations
UNIQLO International Operations
Total UNIQLO Operations
Global Brands Operations
Total(Notes)1. “UNIQLO operations” covers the selling of UNIQLO brand casual clothing.
2. “Global Brands Operations” consists of Comptoir des Cotonniers operation (selling of Comptoir des Cotonniers
brand clothing), Princesse tam.tam operation (selling of Princesse tam.tam brand clothing), GU operation (sellingof GU brand casual clothing), Theory operation (selling of Theory, and PLST brand clothing) and J Brand operation(selling of J BRAND brand clothing).
3. There is business other than the above, mainly real estate leasing, but it does not involve purchasing due to thenature of the activity.
4. The above figures do not include consumption tax, etc.

— 20 —

3.

Business Plan
The statements with regard to the future are based on management decision and projections made by the Company
based on information available at the time of the publication of this report (30 November 2017).

i)

Promote Global One Management Principles
We have been actively promoting Global One and Zen-in Keiei management principles to unify UNIQLO, GU, Theory
and other Group brands worldwide, encouraging employees to use the best available global methods and pursue a selfmotivated, united global approach to any challenge. Our deep-rooted management principles focus on introducing
Groupwide, global business processes, while respecting local culture, values and history. Our FR Management Innovation
Center (FR-MIC) is also working hard to nurture future managers and corporate leaders.

ii)

Accelerate UNIQLO’s Global Development
We are accelerating store openings and expanding operations in Greater China, South Korea, and Southeast Asia &Oceania as pillar regions within the UNIQLO International segment. We have reformed management at UNIQLO USA
to help turn a profit as soon as possible. UNIQLO Europe is gradually expanding its store network across the region,and improving profitability. Strategically positioned global flagship stores are successfully increasing brand awarenessworldwide as beacons for the transmission and collection of important clothing-related information.

iii)

Strengthen Development of Superior World-class Products
Fully operational R&D centers in Tokyo, New York, London, Paris, Shanghai and Los Angeles are tasked with collecting
clothing-relating information from around the world and creating world-class quality products. In its quest for ultimate
everyday clothes, UNIQLO aims to perfect its products and create the perfect LifeWear to further enrich people’s lives.
UNIQLO constantly refreshes and refines itself through collaborative projects with leading global designers and creators.

iv)

Major Supply Chain Reforms
We continue our drive to reform all processes, from materials procurement through planning, design, production,
distribution and retail, and create a new supply chain for the digital era. We are transforming ourselves into a new
digital consumer retail company format that is capable of immediately producing the products that customers want andproactively conveying information to customers. We are reforming all business processes to enable direct links between
production and business partners and stores, and are actively investing in cutting-edge IT, logistics and digital marketing.

v)

Promote Stable Growth at UNIQLO Japan
We continue our “scrap and build” policy designed to increase the average size of UNIQLO Japan store stock and maintainhigh levels of efficiency. We aim to achieve continued stable growth by implemented community-rooted local store
management that can compile product mixes and services to best suit local needs. We are transforming UNIQLO Japan
into a new unique retailing business by fusing our real (stores) and virtual (e-commerce) operations, and providing
exciting services that enable customers to buy UNIQLO products anywhere, anytime, and have them delivered to aconvenient location.

vi)

Grow our Global Brands
We are strengthening business platforms for our low-priced GU casualwear brand by forming a new production
framework to reduce production lead times and improving GU’s product development capability. We will continue toopen mass new GU stores in Japan and to develop the brand’s international presence, focusing initially on Greater China,
and then some other Asian countries further down the line. We are maximizing Group synergies to help grow other labels
within the Global Brands segment, including Theory, Comptoir des Cotonniers, Princesse tam.tam and J Brand.

vii)

Promoting sustainability-focused activities
Fast Retailing remains committed to helping realize a sustainable society through multiple clothing-manufacture related
initiatives, including monitoring factory working environments, upholding human rights, and protecting the environment.
The Company operates a wide range of socially responsible initiatives designed to help make the world a better place,including providing clothing aid to refugees and displaced persons through our All-Product Recycling Initiative, operatinga social business in Bangladesh, supporting employees by promoting diversity, female participation in the workforce and ahealthy work-life balance, and employing people with disabilities.

— 21 —

4.

Risk
Risk factors that investors may regard as potentially having a significant impact on the businesses of the Company and theGroup are stated below. The Company, aware of the possibility that these risks may occur, has planned preventive actions
and thoroughgoing administrative procedures and strives to take appropriate measures when they occur.
The statements with regard to the future are based on management decision and projections made by the Company
based on information available at the time of the publication of this report (30 November 2017).

(1)

Risks specific to management strategy
Risks specific to the management strategy of the Group are as follows:i)Management personnel risk
Our Representative Director, Chairman and CEO Tadashi Yanai and the other members of the Group management
team all play vital roles in the operational areas for which they are responsible. If any of our executives should
become unable to perform his or her duties, or if they should become unable to play these vital roles, this could
have a negative impact on the Group’s earnings.

ii)

Competitive risks
In all the Group’s businesses, our customers are ordinary consumers, who are keenly selective when it comesto products, services and prices, and we are engaged in intense competition with rivals both domesticallyand internationally. If our customers should choose to do business with our competitors, and if our businesscompetitiveness wanes in relative terms, this may have a negative effect on earnings.

iii)

Risk of dependency on production in specified geographic locations
Most products sold through Group companies are manufactured in China, other Asian countries and Turkey. For
this reason, if there is a dramatic political, economic, security, or legal change in countries where we produce, or a
strike by factory personnel or dock workers, or an earthquake, flood or other major natural disaster, this could havean impact on supply of our products. Also, if there is a sharp rise in prices for cotton, cashmere, down or other raw
materials, this could have a negative impact on our earnings.

iv)

Risks of corporate acquisitions
One element of the Group’s management strategy is to expand the business through M&A. Our aim is to maximize
the enterprise value of the Group by pursuing synergies with target companies and businesses, and striving for
optimization of our business portfolio, but there is a possibility of negative impact on results if we are unable toachieve anticipated revenues and effects.

v)

Overseas business risks
As the Group expands its business through M&A, we are steadily expanding our presence overseas. As we open
more stores in more countries, it is expected that our overseas business will make up a higher portion of theGroup’s total revenues. If the goods we sell do not match the market needs and product trends in each country, or
if there are economic fluctuations, social and political turmoil, changes in law, or major currency market volatility,
or other factors that affect our ability to hire and train well-qualified management personnel and local staff who
can smoothly manage our business in each country, this could have a negative impact on earnings.

vi)

Currency risks
Most products sold through the UNIQLO business, which is the Group’s core business, are denominated in US
dollars. For products to be imported to Japan, we hedge our currency risks for about three years ahead, using
forward currency agreements to equalize our exchange rate exposure for imported products and stabilize ourpurchasing costs. If the yen continues to weaken further against the dollar going forward, this could have a negative
impact on earnings at UNIQLO Japan, which is the Group’s core business.

— 22 —

(2)General business risks
In management of the Group and operation of businesses, we are cognizant of risks in several categories:i)

Manufactured product liability risk
The Group’s business is subject to a variety of legal regulations in Japan and abroad such as product liability laws,
pharmaceutical laws, consumer protection laws and labeling laws. The Group endeavors to establish productmanagement systems for planning and production of products in accordance with the Groups own quality control
standards covering the legal regulations of various countries, but if gross quality defects are found in products soldby the Group, such as contamination by hazardous materials or dyes containing toxins, this may require global
product recalls, or compensation for harm to the health of customers, which may have a negative impact onearnings, as well as causing damage to customers’ trust.

ii)

Risk of leaks of business secrets, or customer personal information
In the course of doing business such as mail order sales, the Group gathers information (including personal
information) about customers, and it also handles trade secrets and other confidential information. We are fully
aware of the impact of personal information leaks on the company’s management and trust, and have establishedan Information Security Office to ensure management of confidential information held by the Group by working
with the IT divisions and legal divisions in each country, while creating and strengthening appropriate management
systems for trade secrets and information (particularly personal information) about customers, and periodicallyconducting activities to raise awareness, but in the event confidential information is lost, it may be necessary totake steps to recover the information, apologize to customers, and pay of compensation for damages, which may
have a negative impact on earnings, as well as causing damage to customers’ trust.

iii)

Risk due to weather
Global warming may cause a trend toward warmer winter weather, which may result in being unable to procurematerials such as cotton and cashmere in a timely and appropriate manner, and may also reduce sales of products
sold by the group, which could have a negative impact on earnings.

iv)

Risk due to natural disaster
Earthquakes, volcanic eruptions, fires, floods, explosions, building collapse, or other disasters affecting factories
that produce or stores that sell the Group’s products, or in their immediate vicinity, may have a negative impact on
the Company’s ability to supply or to sell its products.

v)

Risks of disputes and litigation
In the event of disputes or litigation between the group and tenants of its stores or others with whom it transacts,
or customers, resolution of such disputes may cost large sums of money, which could have a negative impact onearnings.

vi)

Risk of change in the business climate and consumer trends
Changes in the business climate or consumer trends in countries where the Group carries out business may havethe effect of reducing product sales or increasing inventories, which could have a negative impact on earnings.

5.

Major Contracts
Not applicable.

6.

Research and Development
Not applicable.

— 23 —

7.

Financial Review(1) Significant accounting policies and estimations
The Group’s consolidated financial statements were prepared in accordance with IFRS. In preparing theconsolidated financial statements, estimates were made on a reasonable basis as necessary.
Please see “FINANCIAL INFORMATION 4. Consolidated Financial Statements: Notes to the Consolidated Financial
Statements” for details.
(2)

Analysis of management performance for the year ended 31 August 2017i)
Revenue and gross profit
Revenue grew to 1.8619 trillion yen, up 75.4 billion yen from the preceding consolidated fiscal year. For adetailed breakdown of revenue, see “1. Business Results (1) Analysis of Business Results for the year ended 31
August 2017” and “2. Summary of Revenue and Purchasing.”
The main reason behind the growth in revenue was significant growth in a 52.7 billion yen increase for
UNIQLO International. UNIQLO Southeast Asia, Oceania and Greater China generated an especially strong
performance, especially Southeast Asia in particular is entering a new stage of growth and is set to become
the segment’s second pillar region after Greater China (Mainland China, Hong Kong and Taiwan) and South
Korea.
Gross profit grew to 909.2 billion yen, up 44.2 billion yen from the preceding consolidated fiscal year. As apercentage of revenue, gross profit was 48.8%, up 0.4 point from 48.4% the year before. One of the main
reasons for this growth was, at UNIQLO International, a considerable improvement in the gross profit to net
sales margin following the shift towards much tighter discounting in each individual operation.
ii)

Selling, general and administrative expenses, other income, other expenses and operating income
Selling, general and administrative expenses grew to 725.2 billion yen, up 22.2 billion yen from the preceding
consolidated fiscal year. As a percentage of revenue, selling, general and administrative expenses was
38.9%, down 0.4% from 39.3% in the preceding consolidated fiscal year. The main reasons were cost-cutting
efforts throughout the group company. Operating income was 176.4 billion yen, up 49.1 billion yen from thepreceding consolidated fiscal year.

iii)

Finance income, finance costs and profit before income taxes
Finance income was 19.9 billion yen, up 17.5 billion yen and Finance expense was 2.9 billion yen, down 36.4
billion yen from the preceding consolidated fiscal year. The main reasons for financial income increased andfinancial expense declined were that, whereas foreign exchange losses were 36.9 billion yen due to the sharp
appreciation of the yen in the previous consolidated fiscal year, foreign exchange gains were 13.3 billion yen
due to the depreciation of the yen in the current consolidated fiscal year.
As a result, profit before income taxes was 193.3 billion yen, up 103.1 billion yen from the preceding
consolidated fiscal year. As a percentage of revenue, profit before income taxes was 10.4%, up 5.3% from
5.1% the year before.

iv)

Profit attributable to owners of the parent
Income taxes were 64.4 billion yen, or 28.3 billion yen higher than the preceding consolidated fiscal year. As
a result, profit attributable to owners of the parent was 119.2 billion yen, which was 71.2 billion yen higher
than the year before. Basic earnings per share for the year was 1,169.70 yen, up 698.39 yen.

— 24 —

(3)Sources of funding, and analysis of funds liquidity
i)
Total assets
Total assets as at 31 August 2017 were 1,388.4 billion yen, which was an increase of 150.3 billion yen relative
to the end of the preceding consolidated fiscal year. The principal factors were an increase of 298.3 billion
yen in cash and cash equivalents, a decrease of 153.8 billion yen in other current financial assets, an increaseof 19.6 billion yen in inventories, and a decrease of 20.1 billion yen in income taxes receivable.
ii)

Total liabilities
Total liabilities as at 31 August 2017 were 626.4 billion yen, which was a decrease of 14.0 billion yen relative
to the end of the preceding consolidated fiscal year. The principal factors were an increase of 14.5 billion yen
in trade and other payables, a decrease of 66.3 billion yen in derivative financial liabilities, an increase of 16.2
billion yen in income taxes payable, an increase of 5.6 billion yen in current provisions and an increase of 6.1
billion yen in deferred tax liabilities.

iii)

Total net assets
Total net assets as at 31 August 2017 were 762.0 billion yen, which was an increase of 164.3 billion yen
relative to the end of the preceding consolidated fiscal year. The principal factor was an increase of 84.6
billion yen in retained earnings and an increase of 71.2 billion yen in other components of equity.

iv)

Status of funds
For a discussion of the status of the Group’s funds, see “Management Discussion and Analysis 1. BusinessResults (2) Cash Flow Information”.

— 25 —CAPITAL EXPENDITURE
1. Capital expenditure
UNIQLO Japan opened 21 new stores. UNIQLO International opened 90 stores in the PRC, 3 in Taiwan, 13 in South Korea,
1 in Singapore, 6 in Malaysia, 2 in Thailand, 8 in the Philippines, 3 in Indonesia, 1 in Australia, 4 in USA, 2 in Canada, 9 inFrance, 9 in Russia and 2 in Germany. In addition, Global Brands opened 81 new stores.
As a result, the Group’s capital expenditure amounted to 59.7 billion yen during the year ended 31 August 2017. Key
components of this were 33.6 billion yen for buildings, 3.2 billion yen for lease deposits for stores, 1.0 billion yen for
construction assistance funds, 12.2 billion yen for intangible assets and 9.6 billion yen for leased assets.
The above figures do not include consumption tax, etc.

2.

Important Facilities
As at 31 August 2017, the Group’s important facilities were shown as below:(1)

Information about the Reporting Entity
Area (m2)Company name

FAST RETAILING CO., LTD.

Type of facility

Location

Head office

Yamaguchi City,
Yamaguchi Prefecture

Commercial
establishments

Fukuoka City,
Chuo-ku, etc.

Others(2)

Capital expenditure (Millions of yen)
Buildings

Deposits/
guarantees

Construction
assistance
funds

Others

Total

Number of
employees(Persons)

Land

Land

95,255.83

1,047

668

—

—

83

1,799

28

—

—

167

1,309

—

0

1,478

—

29,308.87

76

6,401

3,756

—

1,331

11,565

1,138

Total

Number of
employees(Persons)

Subsidiaries in Japan
Area (m2)Company nameUNIQLO CO., LTD.

Type of facility

UNIQLO Japan Store

Location

Land

Capital expenditure (Millions of yen)Land

Buildings

Deposits/
guarantees

Construction
assistance
funds

OthersHokkaido

–

–

420

523

473

268

1,686

415

Aomori

–

–

53

106

151

67

378

122

Iwate

–

–

56

108

48

32

245

119

Miyagi

–

–

121

365

311

62

861

267

Akita

–

–

153

130

139

66

490

71

Yamagata

–

–

120

141

48

43

354

107

Fukushima

–

–

74

130

391

47

642

166

Ibaraki

–

–

183

476

241

80

981

190

Tochigi

–

–

165

194

282

44

687

171

Gunma

–

–

153

312

205

61

733

174

Saitama

–

–

754

1,227

317

298

2,597

694

Chiba

–

–

510

933

461

336

2,242

558

Tokyo

–

–

3,271

11,015182807

15,277

1,565

Kanagawa

–

–

1,536

2,176

377

767

4,858

882

Niigata

–

–

141

302

441

110

995

214

Toyama

–

–

32

55

71

20

179

69

Ishikawa

–

–

49

92

214

33

389

145

Fukui

–

–

6

65

49

10

131

67

Yamanashi

–

–

29

87

151

16

286

65

Nagano

–

–

198

157

538

182

1,077

183

Gifu

–

–

142

224

257

56

682

134

Shizuoka

–

–

372

440

341

141

1,295

348

Aichi

–

–

712

992

569

318

2,592

602

Mie

–

–

45

138

226

30

440

123

— 26 —

Area (m2)Company name

Type of facility

UNIQLO Japan StoreUNIQLO CO., LTD.

Location

Land

Capital expenditure (Millions of yen)Land

Buildings

Deposits/
guarantees

Construction
assistance
funds

OthersNumber of
employees(Persons)

Total

Shiga

–

–

217

217

205

152

793

144

Kyoto

–

–

208

489

215

117

1,031

279

Osaka

–

–

1,176

3,147

314

532

5,171

975

Hyogo

–

–

617

946

460

378

2,403

523

Nara

–

–

99

187

128

64

480

105

Wakayama

–

–

10

40

23

4

78

34

Tottori

–

–

7

60

18

8

94

63

Shimane

–

–

5

10

7

2

24

12

Okayama

–

–

173

186

126

82

569

158

Hiroshima

–

–

215

393

102

61

773

261

Yamaguchi

2,591.06

450

145

40

32

19

686

58

Tokushima

–

–

177

118

0

69

366

71

Kagawa

–

–

43

212

0

14

270

90

Ehime

–

–

104

145

134

54

438

104

Kochi

–

–

44

85

16

15

160

71

Fukuoka

–

–

810

817

343

220

2,192

546

Saga

–

–

47

70

89

23

232

73

Nagasaki

–

–

40

116

203

42

403

121

Kumamoto

–

–

186

294

73

76

631

143

Oita

–

–

213

181

152

140

688

113

Miyazaki

–

–

6

82

29

14

133

82

Kagoshima

–

–

145

185

205

164

701

166

Okinawa

–

–

123

95

–

46

265

106

UNIQLO Japan Stores

2,591.06450

14,13028,524

9,383

6,213

58,702

11,749UNIQLO Japan, other

19,960.76

353

404

2,921

1,615

521

5,816

1,297

Total for UNIQLO Japan
G.U. CO., LTD.

Stores in Japan, etc.

Yamaguchi City, Yamaguchi
Prefecture, etc.

LINK THEORY JAPANCO., LTD.

Stores in Japan, etc.

Yamaguchi City, Yamaguchi
Prefecture, etc.

22,551.82

803

14,534

31,446

10,9996,735

64,51813,046

–

–

9,227

7,264

4,259

5,149

25,901

1,718

–

–

192

1,364

–

1,053

2,611

1,579

— 27 —

(3)Overseas subsidiaries
Area (m2)Capital expenditure (Millions of yen)
Buildings

Deposits/
guarantees

Construction
assistance
funds

Others

Total

Number of
employees(Persons)

–

9,892

510

–

4,117

14,519

1,617

–

–

16,948

3,690

–

3,671

24,311

8,618

Seoul Special City,
South Korea

–

–

5,722

4,963

–

2,094

12,7792,623

UNIQLO International Store

Moscow,
Russian Federation

–

–

1,474

327

–

1,640

3,443

403

UNIQLO TRADING CO., LTD.

UNIQLO International Store

Shanghai, PRC

–

–

1,814

421

–

304

2,540

673

FAST RETAILING(SINGAPORE) PTE. Ltd.

UNIQLO International Store

Republic of Singapore

–

–

5

30

–

1

37

31

UNIQLO (THAILAND)COMPANY LIMITEDUNIQLO International Store

Bangkok,
Kingdom of Thailand

–

–

1,312

746

–

338

2,398

1,029

PT. Fast RetailingIndonesia

UNIQLO International Store

Jakarta, Indonesia

–

–

468

131

23

578

1,201

551

UNIQLO Australia
Pty Ltd.

UNIQLO International Store

Melbourne, Australia

–

–

2,249

8

–

588

2,845

373

FAST RETAILING (Shanghai)
TRADING CO., LTD

UNIQLO International Store

Shanghai, China

–

–

1,633

224

–

62

1,920

134

UNIQLO CANADA INC.

UNIQLO International Store

Toronto, Ontario, Canada

–

–

1,424

6

–

482

1,913

127

Fast RetailingFrance S.A.S.

InternationalStores, etc.

Paris, France

–

–

591

20

–

74

685

506

Fast Retailing
USA, Inc.

InternationalStores, etc.

New York, U.S.A.

–

–

7,945

451

–

4,928

13,326

2,031

J Brand, Inc.

InternationalStores, etc.

California, U.S.A.

–

–

81

11

–

497

590

150

Company name

Type of facility

UNIQLO EUROPE LIMITEDUNIQLO International Store

London,United Kingdom–

FAST RETAILING (CHINA)TRADING CO., LTD

UNIQLO International Store

Shanghai, PRC

FRL Korea Co., Ltd.

UNIQLO International StoreLLC UNIQLO (RUS)(Notes)Location

Land

Land

1. Most items in the “Others” category for the Reporting Entity are located at the Ariake head office (Koto-ku,
Tokyo), Roppongi head office (Minato-ku, Tokyo) or at the old head office (Ube City, Yamaguchi).
2. Monetary amounts are given at book value, not including construction in progress accounts. Also, the figures do
not include consumption tax, etc.
3. The number of employees does not include operating officers, junior employees, part-time workers or temporary
staff seconded from other companies.
4. Assets are not expressed as allocated among business segments.

— 28 —

3.

Plans for new facility construction, old facility removal, etc.
The following are the planned important new facility construction and/or facility removal as at 31 August 2017.

(1)

Important New Facilities
The capital investment plans (new facility construction, expansion) for each segment in the year ended 31 August 2018
(1 September 2017 – 31 August 2018) are as follows.
Capital investment(Millions of yen)Segment

Details of investment

UNIQLO Japan

4,500

New store openings, etc. (approx. 30 stores)

UNIQLO International

28,100New store openings, etc. (approx. 177 stores)

Global brand business

11,300New store openings, etc. (approx. 81 stores)

Others35,800IT-related investments

Total

79,700(Notes)1. It is expected that the Group will be able to meet its funding needs from equity capital, corporate bonds,
borrowings, etc.
2. The above figures do not include consumption tax, etc.

Also, the main new facilities plans included in the plans described above are as follows.
Amount of planned investment
Total(Millions of yen)Amount alreadydisbursed(Millions of yen)Barcelona, Spain

930

696

Vancouver,
Canada557

232

Company name

Type of facility

Name of business

Location

UNIQLO EUROPE
LIMITEDUNIQLOInternationalStore

Paseo de Gracia
18

UNIQLO CANADAINC.

UNIQLOInternational
Store

UNIQLO
Metrotown(Notes)(2)

Construction
startConstruction
completion

Planned sales
floor area (m2)October 2016 September 2017

2,135

Lease hold

1,896

Lease hold

June 2017

October 2017

1. It is expected that the Group will be able to meet its funding needs from equity capital.
2. The above figures do not include consumption tax, etc.
3. Assets are not allocated among business segments.

Planned Removals of Important Facilities
There were no planned removals of important facilities as at 31 August 2017.

— 29 —

ReferenceStock Information and Dividend Policy
1.
(1)

Stock Information
Number of Shares(i)

Total number of shares
Type

(ii)

Total number of authorized shares (shares)

Common stock

300,000,000

Total

300,000,000

Shares issued

Type

As at 31 August 2017

Numbers of sharesissued as of submission
date (Shares)(30 November 2017)

Common stock

106,073,656

106,073,656

Total

106,073,656

106,073,656

Name of financial
instrument exchangeof listing, or authorized
financial instruments
firms association
First section of the Tokyo
Stock Exchange andthe Main board of
The Stock Exchange ofHong Kong Limited (Note)―

Details

100 sharesas one unit―

(Note) Hong Kong Depositary Receipts (“HDRs”) are listed on the Main Board of The Stock Exchange of Hong Kong Limited.

(2)

Share Subscription Rights
The Company has instituted a stock option program that grants rights to acquire new shares pursuant to the Companies
Act of Japan.

(i)

1st Share subscription rights A type
Decided by resolution of the board of directors on 8 October 2010.

As at 31 August 2017

Number of stock options (Shares)

1,292

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

1,292

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 8 November 2013 to 7 November 2020

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 10,624
Paid-in capital: 5,312

Same as left

Exercise conditions of share subscription rights

If a holder of share subscription rights waives theright to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Matters pertaining to transfer ofshare subscription rights

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 30 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 31 —

(ii)

1st Share subscription rights B type
Decided by resolution of the board of directors on 8 October 2010.

As at 31 August 2017

Number of stock options (Shares)

11,853

Number of share subscription rights
for treasury stock (Shares)

As at last day ofmonth before thesubmission date
(31 October 2017)
11,734—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

11,853—Same as left
11,734

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 8 December 2010 to 7 November 2020

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 10,925
Paid-in capital: 5,463

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 32 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 33 —

(iii)

2nd Share subscription rights A type
Decided by resolution of the board of directors on 12 October 2011.

As at 31 August 2017

Number of stock options (Shares)

6,495

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

6,495

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 15 November 2014 to 14 November 2021

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 12,499
Paid-in capital: 6,250

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 34 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 35 —

(iv)

2nd Share subscription rights B type
Decided by resolution of the board of directors on 12 October 2011.

As at 31 August 2017

Number of stock options (Shares)

9,748

As at last day ofmonth before thesubmission date
(31 October 2017)
9,599

Number of share subscription rights
for treasury stock (Shares)—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

9,748

—
Same as left
9,599

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 15 December 2011 to 14 November 2021

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 12,742
Paid-in capital: 6,371

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 36 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 37 —

(v)3rd Share subscription rights A type
Decided by resolution of the board of directors on 11 October 2012.

As at 31 August 2017

Number of stock options (Shares)

5,304

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

5,304

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 13 November 2015 to 12 November 2022

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 15,222
Paid-in capital: 7,611

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 38 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 39 —

(vi)

3rd Share subscription rights B type
Decided by resolution of the board of directors on 11 October 2012.

As at 31 August 2017

Number of stock options (Shares)

9,628

As at last day ofmonth before thesubmission date
(31 October 2017)
9,556

Number of share subscription rights
for treasury stock (Shares)—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

9,628

—
Same as left
9,556

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 13 December 2012 to 12 November 2022

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 15,569
Paid-in capital: 7,785

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 40 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 41 —

(vii) 4th Share subscription rights A type
Decided by resolution of the board of directors on 10 October 2013.

As at 31 August 2017

Number of stock options (Shares)

5,367

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

5,367

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 3 December 2016 to 2 December 2023

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 37,110
Paid-in capital: 18,555

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.
Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 42 —

Same as left

Same as left——

(Note)

Same as left

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 43 —

(viii) 4th Share subscription rights B type
Decided by resolution of the board of directors on 10 October 2013.

As at 31 August 2017

Number of stock options (Shares)

10,925As at last day ofmonth before thesubmission date
(31 October 2017)10,818

Number of share subscription rights
for treasury stock (Shares)—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

10,925—Same as left
10,818

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 3 January 2014 to 2 December 2023

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 37,515
Paid-in capital: 18,757

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 44 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 45 —

(ix)

5th Share subscription rights A type
Decided by resolution of the board of directors on 9 October 2014.

As at 31 August 2017

Number of stock options (Shares)

14,323As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

14,323Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 14 November 2017 to 13 November 2024

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 42,377
Paid-in capital: 21,188

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 46 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 47 —

(x)5th Share subscription rights B type
Decided by resolution of the board of directors on 9 October 2014.

As at 31 August 2017

Number of stock options (Shares)

15,995As at last day ofmonth before thesubmission date
(31 October 2017)15,812

Number of share subscription rights
for treasury stock (Shares)—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

15,995—Same as left
15,812

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 14 December 2014 to 13 November 2024

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 42,799
Paid-in capital: 21,399

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 48 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 49 —

(xi)

6th Share subscription rights A type
Decided by resolution of the board of directors on 8 October 2015.

As at 31 August 2017

Number of stock options (Shares)

2,468

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

2,468

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 13 November 2018 to 12 November 2025

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 45,658
Paid-in capital: 22,829

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 50 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 51 —

(xii) 6th Share subscription rights B type
Decided by resolution of the board of directors on 8 October 2015.

As at 31 August 2017

Number of stock options (Shares)

16,029As at last day ofmonth before thesubmission date
(31 October 2017)15,635

Number of share subscription rights
for treasury stock (Shares)—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

16,029—Same as left
15,635

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 13 December 2015 to 12 November 2025

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 46,148
Paid-in capital: 23,074

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 52 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 53 —

(xiii) 6th Share subscription rights C type
Decided by resolution of the board of directors on 8 October 2015.

As at 31 August 2017

Number of stock options (Shares)

5,467

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

5,467

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

13 November 2018

Same as left

Fair value on the grant dte andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 46,841
Paid-in capital: 23,420

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 54 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the day on which share subscription rights can be exercised as prescribedabove or the day on which a Reorganization takes effect.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 55 —

(xiv) 7th Share subscription rights A type
Decided by resolution of the board of directors on 13 October 2016.

As at 31 August 2017

Number of stock options (Shares)

2,752

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

2,752

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 11 November 2019 to 10 November 2026

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 34,684
Paid-in capital: 17,342

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 56 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 57 —

(xv) 7th Share subscription rights B type
Decided by resolution of the board of directors on 13 October 2016.

As at 31 August 2017

Number of stock options (Shares)

23,737As at last day ofmonth before thesubmission date
(31 October 2017)
22,780

Number of share subscription rights
for treasury stock (Shares)—

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Number of shares to be issued upon exerciseof share subscription rights (Shares)

23,737—Same as left
22,780

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

From 11 December 2016 to 10 November 2026

Same as left

Fair value on the grant date andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 35,168
Paid-in capital: 17,584

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 58 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 59 —

(xvi) 7th Share subscription rights C type
Decided by resolution of the board of directors on 13 October 2016.

As at 31 August 2017

Number of stock options (Shares)

5,110

As at last day ofmonth before thesubmission date
(31 October 2017)Same as left

Number of share subscription rights
for treasury stock (Shares)——

Type of shares to be issued upon exerciseof share subscription rights

Common stock

Same as left

Number of shares to be issued upon exerciseof share subscription rights (Shares)

5,110

Same as left

Number of shares allocated times ¥1 exercise
price per share for all shares to be obtained
through exercise of the share subscription rights.

Same as left

Exercise period of share subscription rights

11 November 2019

Same as left

Fair value on the grant dte andamount of paid-in capital per share upon
exercise of share subscription rights (Yen)

Issue price: 35,855
Paid-in capital: 17,928

Same as left

Amount to be paid upon exercise ofshare subscription rights (Yen)

If a holder of share subscription rights waives the
Exercise conditions of share subscription rights

Matters pertaining to transfer ofshare subscription rights

right to acquire shares, the share subscription
rights shall be forfeited and may not be exercised.

Same as left

Any acquisition of share subscription rights bytransfer shall require an authorizing resolution
from the Board of Directors.

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 60 —

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the day on which share subscription rights can be exercised as prescribedabove or the day on which a Reorganization takes effect.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 61 —

(3)Exercise of convertible bonds with conditional permission for adjustment of exercise priceNot applicable.

(4)

Content of Rights Plan
Not applicable.

(5)

Change in Total Number of Shares Issued, Capital Stock, Etc.
Date
31 August 2004

(Note)(6)

Increase/
Balance of total
Increase/
Increase/
Balance ofBalance of
decrease in total
number of
decreasedecrease
capital stock
capital reserve
number of shares shares issued
in capital stockin capital reserve(Millions of yen)
(Millions of yen)issued (Shares)(Shares)(Millions of yen)
(Millions of yen)—
106,073,656
7,000
10,273(7,000)4,578This represents an addition to capital stock from capital reserve approved by resolution of a special meeting of theBoard of Directors on 30 August 2004.

Status by Type of Holder
As at 31 August 2017
Shares (One unit = 100 shares)
Government,
Financial
municipal
institutions
entities

Class

Foreign corporations, etc.
Traders of
Other
Individuals &financialExcl.
corporations
otherIndividuals
products
individuals

Total

Sharesless than
one unit(shares)Number ofshareholders(persons)

—

82

71

189

644

20

10,747

11,753—

Number ofshares held
(Trading units)—335,787

32,16487,713

189,23868

415,150

1,060,120

61,656Percentage ofshares held (%)

—

31.67

3.03

8.27

17.85

0.01

39.16

100.00—(Notes) 1.
2.

(7)

The 4,089,664 shares of treasury stock include 40,896 units of shares held by individuals and others and 64 shares
held by individuals and others of less than one unit.
Figures shown in the columns “Other corporations” and “Shares less than one unit” include 27 units of shares and84 shares, respectively, in the name of Japan Securities Depository Center, Inc.

Major Shareholders
As at 31 August 2017
Name or trade nameLocation

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Tadashi Yanai

Shibuya-ku, Tokyo

22,987

21.67

The Master Trust Bank of Japan, Ltd.

2-11-3 Hamamatsu-cho, Minato-ku, Tokyo

17,940

16.91

Japan Trustee Services Bank, Ltd.

1-8-11 Harumi, Chuo-ku, Tokyo

10,474

9.87

TTY Management B.V.

Hoogoorddreef 15, 1101BA Amsterdam,
The Netherlands

5,310

5.01

Kazumi Yanai

New York, U.S.A.

4,781

4.51

Koji Yanai

Shibuya-ku, Tokyo

4,780

4.51

Fight & Step Co., Ltd.

1-4-3 Mita, Meguro-ku, Tokyo

4,750

4.48

Trust & Custody Services Bank, Ltd.

1-8-12 Harumi, Chuo-ku, Tokyo

4,269

4.02

MASTERMIND, LLC

1-4-3 Mita, Meguro-ku, Tokyo

3,610

3.40

Teruyo Yanai

Shibuya-ku, Tokyo
Total

―

— 62 —

2,327

2.19

81,23176.58

(Notes) 1.
2.
3.

“Number of shares held” is rounded down to the nearest unit of thousand shares.
The shares held by The Master Trust Bank of Japan, Ltd., Japan Trustee Services Bank, Ltd. and Trust & Custody
Services Bank, Ltd. are all held in conjunction with trust business.
According to the report of large shareholdings (report of change of composition) submitted on 5 September
2017 by Nomura Securities Co., Ltd. and the three parties of Nomura International plc, Nomura Securities
International,Inc. and Nomura Asset Management Co., Ltd. as joint holders, each party was holding the shares
stated below as at 29 August 2017. However, since the Company has not been able to confirm the number ofshares actually held as of the end of the term, these shareholdings have not been included in the above statementof principal shareholders.
Name or trade name

Nomura Securities Co., Ltd.
Nomura International plc
Nomura Securities International, Inc.
Nomura Asset Management Co., Ltd.
4.

1-9-1 Nihonbashi, Chuo-ku, Tokyo
1 Angel Lane, London EC4R 3AB,
United Kingdom
Worldwide Plaza 309 West 49th Street
New York, New York 10019-7316
1-12-1 Nihonbashi, Chuo-ku, Tokyo

Number ofPercentage ofshares held
total number of(Thousand shares) shares issued (%)(23)(0.02)
124

0.12

154

0.15

10,4649.87

According to the report of large shareholdings (report of change of composition) submitted on 6 September
2017 by Sumitomo Mitsui Trust Bank, Limited and the two parties of Sumitomo Mitsui Trust Asset Management
Co., Ltd. and Nikko Asset Management Co., Ltd. as joint holders, each party was holding the shares stated below
as at 31 August 2017. However, since the Company has not been able to confirm the number of shares actually
held as of the end of the term, these shareholdings have not been included in the above statement of principal
shareholders.
Name or trade name

Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust AssetManagement Co., Ltd.
Nikko Asset Management Co., Ltd.
5.

Location

Number ofshares held(Thousand shares)
1,104

Percentage of
total number ofshares issued (%)
1.04

3-33-1 Shiba, Minato-ku, Tokyo

178

0.17

9-7-1 Akasaka, Minato-ku, Tokyo

5,860

5.52

Location
1-4-1 Marunouchi, Chiyoda-ku, Tokyo

In addition to the above, 4,089,664 shares of treasury stock are held by the Company (3.86% of the total numberof authorized shares).

(8)

Voting Rights(i)

Shares issued
As at 31 August 2017Class

Non-voting shares
Shares subject to restrictions on voting
rights (treasury stock)
Shares subject to restrictions on voting
rights (others)
Shares with full voting rights(treasury stock, etc.)
Shares with full voting rights (others)
Shares less than one unit
Total number of shares issued
Total number of voting rights of allshareholders(Notes) 1.
2.

Details―

Number of voting rights(number)
―

―

―

―

―

―

―

―

―

Number of shares (shares)(Shares held astreasury stock)
Common stock
Common stock
Common stock

4,089,600
101,922,400
61,656
106,073,656――

1,019,224――(Note) 1(Notes) 1, 2―

1,019,224―

The columns for the number of shares of “Shares with full voting rights (others)” and “Shares less than one unit”
include, respectively, 2,700 shares and 84 shares held in the name of Japan Securities Depository Center, Inc.
Common stock in the “Shares less than one unit” column includes 64 shares of treasury stock held by theCompany.

— 63 —

(ii)Treasury StockAs at 31 August 2017

Name or trade name ofholder(Shares held astreasury stock)
FAST RETAILING
CO., LTD.

Holder’s address

717-1 Sayama,
Yamaguchi-City,
Yamaguchi

Total

(9)

Number of shares Number of shares
held in own name held in other’s(Shares)name (Shares)―

Total numberof shares held
(Shares)

Percentage of
total number ofshares issued (%)

4,089,600—

4,089,600

3.86

4,089,600—

4,089,600

3.86

Stock Options Program
The Company has instituted a stock options program that grants rights to acquire new shares pursuant to the Companies
Act of Japan.

1st Share subscription rights A type
Resolution date

8 October 2010

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

73—Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

1st Share subscription rights B type
Resolution date

8 October 2010

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above— 64 —

266
413

2nd Share subscription rights A type
Resolution date

12 October 2011

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

14
4

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

2nd Share subscription rights B type
Resolution date

12 October 2011

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

139
584

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

3rd Share subscription rights A type
Resolution date

11 October 2012

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 65 —

Same as above

18
8

3rd Share subscription rights B type
Resolution date

11 October 2012

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

136
615

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

4th Share subscription rights A type
Resolution date

10 October 2013

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

19
11

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

4th Share subscription rights B type
Resolution date

10 October 2013

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 66 —

Same as above

180
706

5th Share subscription rights A type
Resolution date

9 October 2014

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

36
16

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

5th Share subscription rights B type
Resolution date

9 October 2014

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

223
785

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

6th Share subscription rights A type
Resolution date

8 October 2015

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 67 —

Same as above15
19

6th Share subscription rights B type
Resolution date

8 October 2015

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

274
921

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

6th Share subscription rights C type
Resolution date

8 October 2015

Class and number of recipients (persons)

Employees of the Company

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

26

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

7th Share subscription rights A type
Resolution date

13 October 2016

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 68 —

Same as above

16
23

7th Share subscription rights B type
Resolution date

13 October 2016

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

339
1,096

—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

7th Share subscription rights C type
Resolution date

13 October 2016

Class and number of recipients (persons)

Employees of the Company

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

30

Number of shares (shares)

Same as above

Amount to be paid upon exercise ofshare subscription rights (Yen)Same as above

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization

Same as above

8th Share subscription rights A type
Resolution date

12 October 2017Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Number of shares (shares)

5,454 shares

Amount to be paid upon exercise ofshare subscription rights (Yen)

Number of shares allocated times ¥1 exercise price per sharefor all shares to be obtained through exercise of the sharesubscription rights.

Exercise period of share subscription rights

From 10 November 2020 to 9 November 2027

Exercise conditions of share subscription rights

If a holder of share subscription rights waives the right toacquire shares, the share subscription rights shall be forfeited
and may not be exercised.

Matters pertaining to transfer of share subscription rights

Any acquisition of share subscription rights by transfer shallrequire an authorizing resolution from the Board of Directors.

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 69 —(Note)

19
27

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 70 —

8th Share subscription rights B type
Resolution date

12 October 2017Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Number of shares (shares)

48,178 shares

Amount to be paid upon exercise ofshare subscription rights (Yen)

Number of shares allocated times ¥1 exercise price per sharefor all shares to be obtained through exercise of the sharesubscription rights.

Exercise period of share subscription rights

From 10 December 2017 to 9 November 2027

Exercise conditions of share subscription rights

If a holder of share subscription rights waives the right toacquire shares, the share subscription rights shall be forfeited
and may not be exercised.

Matters pertaining to transfer of share subscription rights

Any acquisition of share subscription rights by transfer shallrequire an authorizing resolution from the Board of Directors.

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 71 —(Note)

395
1,152

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in Article 236(1)viii of the Companies Act ofJapan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event, any Outstanding Share
Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue new share subscription rights;
provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue
share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement,
new merger agreement, absorption-type company split agreement, incorporation-type company split plan, shareexchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a Reorganization takes effect through the final day of theperiod during which share subscription rights can be exercised as prescribed above.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 72 —

8th Share subscription rights C type
Resolution date

12 October 2017Class and number of recipients (persons)

Employees of the Company

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Number of shares (shares)

5,929 shares

Amount to be paid upon exercise ofshare subscription rights (Yen)

Number of shares allocated times ¥1 exercise price per sharefor all shares to be obtained through exercise of the sharesubscription rights.

Exercise period of share subscription rights

10 November 2020

Exercise conditions of share subscription rights

If a holder of share subscription rights waives the right toacquire shares, the share subscription rights shall be forfeited
and may not be exercised.

Matters pertaining to transfer of share subscription rights

Any acquisition of share subscription rights by transfer shallrequire an authorizing resolution from the Board of Directors.

Matters pertaining to substitute payments

29—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 73 —(Note)

(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in subparagraphs (a)-(e) of Article 236(1)viii of
the Companies Act of Japan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event,
any Outstanding Share Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue newshare subscription rights; provided, however, that terms and conditions stipulating that the Company Resulting From
Reorganization shall issue share subscription rights that prescribe the matters stated below shall be included in any
absorption merger agreement, new merger agreement, absorption-type company split agreement, incorporation-typecompany split plan, share exchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the later of either the day on which share subscription rights can be exercised as prescribedabove or the day on which a Reorganization takes effect.
6.
Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon
exercise of the share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
7.
Restrictions on acquisition of share subscription rights by transfer:Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of
Directors of the Company Resulting From Reorganization.
8.
Terms and conditions for acquisition of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.
9.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 74 —

2.

Treasury Stock Information
Types of Shares(1)

Buybacks of common stock under Companies Act of Japan, Article 155-7

Purchases approved by General Meeting of Shareholders
Not applicable.

(2)

Purchases approved by Board of Directors
Not applicable.

(3)

Details of items not based on General Meeting of Shareholders or Board of Directors’ resolutions
Purchases of shares less than one unit pursuant to Companies Act of Japan, Article 192-1.
Number of shares(shares)Class

Total paid
(thousand yen)

Treasury stock purchased in the fiscal year ended 31 August 2017

155

6,138

Purchases of Treasury stock in current year——

(Note)(4)

Treasury stock purchased in the current year does not include shares of less than one unit purchased between
1 November 2017 and the submission date of this report.

Status of treasury stock purchased
Fiscal year ended 31 August 2017
Class

Treasury stock purchases forwhich subscribers were solicited
Treasury stock cancelled after
purchase
Treasury stock transferred due
to mergers, share exchange orcompany split
Other (Note)
Number of Treasury shares held
(Note)

3.

Number of shares(shares)

Total disposal value(thousands of yen)

Current year
Number of shares(shares)

Total disposal value(thousands of yen)

—

—

—

—

—

—

—

—

—

—

—

—

19,99475,543

1,759

6,694

4,089,664—

4,087,905—

The breakdown of figures for the year ended 31 August 2017 reflects the exercise of 19,994 share subscription rights,
a share disposal value of 75,543 thousand yen. The breakdown of figures for the current year reflects the exercise ofshare subscription rights, and does not include shares of less than one unit purchased between 1 November 2017 andthe submission date of this report.

Dividend Policy

The Company regards the distribution of profits to shareholders as one of its most important considerations. Our basic policy is
to constantly increase earnings and to provide ongoing, appropriate profit distribution based on performance. Our policy is topay dividends that reflect business performance after taking into consideration funds needed to expand business and improve
revenues, and ensure the financial health of the Group.
The basic policy of the Group regarding the payment of dividends from surplus is to pay two dividends annually, an interim
dividend and a year-end dividend. These dividends are decided by the Board of Directors, unless otherwise stipulated by laws
and regulations.

— 75 —

Based on the policy outlined above and the earnings of the consolidated fiscal year ended 31 August 2017, we decided to
pay a year-end dividend of ¥175 per share. Together with the ¥175 interim dividend per share, this will bring the total annual
dividend for the current fiscal year to ¥350 per share. It is our intention to effectively utilize retained earnings and free cash
flow for financial investment and loans to strengthen the operational base of the Group companies.
The payment of an interim dividend under Article 454-5 of the Companies Act of Japan is stipulated by the Company’s Articles
of Incorporation.
Dividends for the Company’s 56th fiscal year are as follows:
Total dividends(Millions of yen)

Resolution date

Dividends per share(Yen)

Board of Directors resolution of 13 April 2017

17,846

175

Board of Directors resolution of 2 November 2017

17,847

175

4.
(1)

Share Price Trends
Share price high/low in past 5 fiscal years
Term

52nd Year

53rd Year54th Year

55th Year

56th Year

Accounting period

Year ended
31 August 2013

Year ended
31 August 2014

Year ended
31 August 2015

Year ended
31 August 2016

Year ended
31 August 2017High (Yen)

44,40045,35061,97050,70044,370Low (Yen)

15,81030,35032,46025,30530,460(Note)(2)

High/low share price data are from the first section of the Tokyo Stock Exchange.

Share price high/low (monthly) in past 6 months
Month

March 2017

April

May

June

July

AugustHigh (Yen)37,54036,94038,82038,71038,23033,750Low (Yen)

34,39034,21035,55036,38032,84030,460(Note)

5.

High/low share price data are from the first section of the Tokyo Stock Exchange.

Waiver from compliance with Rule 19B.21

The Hong Kong Stock Exchange has granted us, subject to certain conditions, a waiver from Rule 19B.21 of the Hong Kong Listing
Rules regarding certain requirements for cancellation of HDRs upon a share repurchase. The Company has complied with therelevant conditions in the year ended 31 August 2017.

— 76 —

Board of Directors
Male: 10 persons Female: 1 person (9.1% of officers are female)
Position

Responsibilities

Name

Date of birth

September 1984
June 2001

CEO

Tadashi Yanai

Born 7 February
on 1949

November 2002
September 2005
November 2005
September 2008
June 2009
November 2011
April 1959
October 2000
April 2003

Director

Toru Hambayashi

Born 7 January
on 1937

Number ofshares held
(thousand shares)

Joined FAST RETAILING CO., LTD.
Director, FAST RETAILING CO., LTD.
Senior Managing Director, FAST RETAILING
CO., LTD.
President & CEO, FAST RETAILING CO., LTD.
External Director, Softbank Corp. (currently
SOFTBANK GROUP CORP.) (current)
Chairman and CEO, FAST RETAILING CO., LTD.
Chairman, President and CEO, FAST
Note 3RETAILING CO., LTD. (current)
Chairman, President and CEO, UNIQLO CO.,LTD. (current)
Director and Chairman, GOV RETAILING CO.,LTD. (currently G.U. CO., LTD.) (current)
External Director, Nippon Venture CapitalCo., Ltd. (current)
Director, LINK THEORY JAPAN CO., LTD.
(current)

22,987

Joined Nichimen Company Limited(currently Sojitz Corporation)
President, Nichimen Corporation(currently Sojitz Corporation)
Chairman and Representative Director,
Sojitz Holdings Corporation(currently Sojitz Corporation)
External Auditor, UNITIKA LTD.
External Director, FAST RETAILING CO., LTD. Note 3(current)
External Director, MAEDA ORPORATION
Advisor, The Association for the Promotion ofInternational Trade, Japan (current)
External Director,
DAIKYO INCORPORATED (current)
External Director, UNITIKA LTD. (current)
Advisor, Maeda Corporation (current)―

Brief biography
August 1972
September 1972
August 1973

Representative
director, chairman
and president

Term ofofficeJune 2004
November 2005
June 2007
April 2009
June 2011
June 2015
June 2017— 77 —

Position

Responsibilities

Name

Date of birth

November 1998

October 2003

Nobumichi Hattori

Born 25 December
on 1957

June 2005
November 2005
October 2006

April 2009
March 2015
June 2015
July 2016

April 1980
April 2003
September 2007
November 2007
Director

Toru Murayama

Born 11 Juneon 1954

Number ofshares held
(thousand shares)

Joined NISSAN MOTOR CO.,LTD.
Joined Goldman Sachs and Company,
Headquarters (New York)Managing Director of Goldman Sachs andCompany, Headquarters (New York), and
M&A Advisory of Goldman Sachs Japan
Co., Ltd.
Visiting Associate Professor, Graduate
School of International Corporate Strategy,
Hitotsubashi University
External Director, Miraca Holdings Inc.
External Director, FAST RETAILING CO., LTD.
(current)
Note 3
Visiting Professor, Graduate Schoolof International Corporate Strategy,
Hitotsubashi University
Visiting Professor, Waseda Graduate Schoolof Finance, Accounting and Law (current)
External Auditor, Frontier Management Inc.
(current)
External Director, Hakuhodo DY Holdings Inc.
(current)
Visiting Professor, Graduate School ofBusiness Administration, Keio University(current)―

Joined Arthur Andersen & Co.
(currently Accenture Japan Ltd.)
Representative Director and President,
Accenture Japan Ltd.
Director and Chairman, Accenture Japan Ltd.
External Director, FAST RETAILING CO., LTD.
(current)
Corporate Advisor, Accenture Japan Ltd.
Visiting Professor, Comprehensive Research
Organization, Waseda University
President, Office Murayama (current)
Visiting Professor, Faculty of Science andEngineering, Waseda University (current)
External Director, Meiji Holdings Co., Ltd.
(current)

0

Brief biography
April 1981
June 1989

Director

Term ofofficeSeptember 2009
April 2010
January 2013
April 2015
June 2016— 78 —

Note 3

Position

Responsibilities

Name

Date of birth

Brief biography
April 1978
December 1991
August 2000
January 2001
April 2008

Director

Masaaki Shintaku

Born 10 September
on 1954

June 2008
May 2009
November 2009
July 2011
December 2015
April 1980
April 1991
June 2010

Director

Takashi Nawa

Born 8 Juneon 1957

June 2010
September 2010
June 2011
November 2012
June 2014
June 2015— 79 —

Joined IBM Japan, Ltd.
Joined Oracle Corporation Japan
President & CEO, Oracle Corporation Japan
Executive Vice President, Oracle Corporation
Vice Chairman, Special Olympics Nippon(currently Special Olympics Nippon
Foundation) (current)
Chairman, Oracle Corporation Japan

Term ofofficeNumber ofshares held
(thousand shares)

Note 3―Note 3―Advisory Board Member, NTT DOCOMO, INC.
External Director, FAST RETAILING CO., LTD.
(current)
External Director, COOKPAD Inc.
External Director, Works Applications CO.,LTD. (current)
Joined Mitsubishi Corporation
Joined McKinsey & Company
Professor, The Graduate School ofInternational Corporate Strategy),
Hitotsubashi University (current)
President, Genesys Partners (current)
Senior Advisor, Boston Consulting Group
External Director, NEC Capital Solutions(current)
External Director, FAST RETAILING CO., LTD.
(current)
External Director, DENSO CORPORATION(current)
External Director, Ajinomoto Co., Inc.
(current)

Position

Responsibilities

Name

Date of birth

September 1972
March 1993

April 1997
Akira Tanaka

Born 26 Juneon 1942
August 2003
November 2003
November 2005
March 2006
November 2006
April 2011
April 1983
February 1994
September 1998
September 2005
January 2008

Standing Statutory
AuditorMasaaki Shinjo

Born 28 January
on 1956

Number ofshares held
(thousand shares)

Joined The Taisei Fire and Marine Insurance
Company Limited (currently Sompo Japan
Nipponkoa Insurance Inc.)
Joined McDonald’s Co. (Japan), Ltd. (currently
McDonald’s Holdings Company (Japan), Ltd.)
Director, McDonald’s Co. (Japan), Ltd.
(currently McDonald’s Holdings Company(Japan), Ltd.)
Deputy President and Director, McDonald’sCo. (Japan), Ltd. (currently McDonald’s
Note 4
Holdings Company (Japan), Ltd.)
Advisor, FAST RETAILING CO., LTD.
Managing Director, FAST RETAILING CO., LTD.
Senior Vice President, UNIQLO CO., LTD.
Senior Vice President, FAST RETAILING CO.
LTD.
Standing Statutory Auditor, FAST RETAILING
CO., LTD. (current)
Representative Director of FR Health
Insurance Organization (current)

3

Joined ASAHIPEN CORPORATION
Joined FAST RETAILING CO., LTD.
Entrusted operating officer, manager ofadministration, FAST RETAILING CO., LTD.
General Manager, Group Auditing, FASTRETAILING CO., LTD.
Director, Onezone Corp (currently G.U. CO.,LTD.)
General Manager, Corporate Administration,
FAST RETAILING CO., LTD.
Statutory Auditor, GOV Retailing Co., Ltd.
(currently G.U. CO., LTD.)
General Manager, Corporate Planning &Management, FAST RETAILING CO., LTD.
Auditor, FAST RETAILING (CHINA) TRADING
CO., LTD. (current)Standing Statutory Auditor, FAST RETAILING
CO., LTD. (current)0

Brief biography
April 1966

Standing Statutory
AuditorTerm ofofficeMarch 2009
September 2009
March 2011
April 2011
November 2012

— 80 —

Note 5

Position

Responsibilities

Name

Date of birth

Brief biography
November 1978
August 1982
April 1992
November 1993
August 2001

AuditorTakaharu Yasumoto

Born 10 Marchon 1954

June 2003

November 2005
April 2007
June 2010
May 1991
April 1998
June 2006
November 2006
June 2007
AuditorAkira Watanabe

Born 16 February
on 1947

April 2010
December 2011
March 2013
October 2014

October 2015

— 81 —

Term ofofficeNumber ofshares held
(thousand shares)

Joined Asahi & Co. (currently KPMG AZSA LLC)
Registered as a member of Japanese Instituteof Certified Public Accountants
President, Yasumoto CPA Office (current)
External Statutory Auditor, FAST RETAILING
CO., LTD. (current)
External Statutory Auditor, ASKULCorporation (current)
Statutory Auditor, LINK INTERNATIONAL CO., Note 5
LTD. (currently LINK THEORY JAPAN CO., LTD.)(current)
External Statutory Auditor, UNIQLO CO., LTD.
(current)
Guest Professor, Chuo Graduate School ofInternational Accounting
External Statutory Auditor, UBIC Inc.
(currently FRONTEO, Inc.) (current)
Chairman, Legislative Council of the Ministryof Justice
Chairman, Yamaichi Securities Co., Ltd. Legal
Responsibility Judging Panel
Non-Executive Director, JAPAN PILECORPORATION
External Statutory Auditor, FAST RETAILING
CO., LTD. (current)
External Director, MAEDA CORPORATION(current)
External Director, MS&AD Insurance Group
Holdings, Inc. (current)
Auditor of Olympus Corp., Chairman of
Liability Investigation Committee
External Director, DUNLOP SPORTS CO. LTD.
(current)
External Statutory Auditor, KADOKAWADWANGO CORPORATION (currently
KADOKAWA CORPORATION) (current)
Non-Executive Director, ASIA PILE HOLDINGCORPORATION (current)

Note 44―

Position

Responsibilities

Name

Date of birth

Brief biography
April 1991
April 1999
April 1999

AuditorKeiko Kaneko

Born 11 November
on 1967

January 2007
April 2007
November 2012
November 2012
June 2013

Total(Notes)

1.
2.
3.
4.
5.

Term ofofficeJoined Mitsubishi Corporation
Registered as a member of Japan Federationof Bar Associations
Joined Anderson, Mori & Tomotsune (AM&T)
law firm
Partner, AM&T (current)
Guest associate professor, Tokyo
Note 5
University Graduate School of Law

Number ofshares held
(thousand shares)―

External Statutory Auditor, FAST RETAILING
CO., LTD. (current)
External Statutory Auditor, UNIQLO CO., LTD.
(current)
External Statutory Auditor, The Asahi
Shimbun Company (current)
22,994

Directors Toru Hambayashi, Nobumichi Hattori, Toru Murayama, Masaaki Shintaku and Takashi Nawa areExternal Directors as provided for in Article 2, Paragraph 15 of the Companies Act.
Takaharu Yasumoto, Akira Watanabe and Keiko Kaneko are External Statutory Auditors as provided for in Article
2, Paragraph 16 of the Companies Act.
For a one-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on
30 November 2017.
For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on
20 November 2014.
For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on
24 November 2016.

— 82 —

Corporate Governance Report
1.
(1)

Corporate Governance Practice
Basic Thinking on Corporate Governance
To become the world’s No.1 Digital Retailer, in harmony with society and the times, the Company strives to raise the levelof its corporate governance to strengthen the independence and the degree of monitoring of the Board of Directors whileachieving management that is efficient and transparent.

(2)

Details of company organization and internal control systems(i)

Details of company organization
The Company has built a corporate governance system consisting of a Board of Directors, a Board of Corporate Auditors,
and various committees. As a key element to strengthen our corporate governance systems, the Company has instituteda system to entrust operating officers (transferring some management authority away from the Board of Directors), to
separate management decision-making from operations performance functions. In addition, the management committee(Monday meeting) meets weekly, to examine tasks assigned to it by the Board of Directors, for the speedy revision ofmanagement strategy and planning.
Also, to enhance the independence of the Board of Directors and strengthen the monitoring function, five of the six
Directors are External Directors, with the CEO acting as chairman of the Board of Directors. The external directors have anabundance of knowledge and experience in corporate management. As the Company’s main decision-making body for the
performance of management and operations, the Board of Directors meets at least once a month to discuss and decideupon important management issues. The external directors all participate actively in Board of Directors discussions, andoffer their opinions without reservations.
Three of the five members of the Board of Corporate Auditors are external statutory auditors. The Standing Statutory
Auditor presides. The external auditors are fully independent, and they have ample knowledge and experience as
attorneys and certified public accountants. Through their participation in the Board of Directors, the external auditors andother auditors are fully aware of the decision-making process of the Board of Directors, and able to fulfill their supervisoryobligations. They also supervise the Directors’ performance of their executive duties through regular conversations with
the Directors, other executive officers, other employees, and auditors of subsidiary corporations. The board of auditors
meets at least once a month to make decisions about audit policies and planning. It meets quarterly to receive briefings
and reports from the accounting auditors.
The various committees complement the work of the Board of Directors. The external directors and external auditors also
serve as members of these committees. The roles and activities of the committees are shown below.
Human Resources Committee
The Human Resources Committee, chaired by external director, discusses important organizational changes andadjustments to human resource systems across the Group, and offers views and suggestions to the Board. The committee
held 3 meetings during the 56th fiscal year.
Sustainability Committee
The Sustainability Committee discusses and directs Fast Retailing’s overall sustainability strategy, from compiling andpublishing the annual sustainability report to promoting environmental protection, social responsibility, compliance anddiversity. The head of the Sustainability Department chairs the committee. Members include outside experts, external
statutory auditors and Group officers. The committee held 2 meetings during the 56th fiscal year.
Disclosure Committee
The Disclosure committee, chaired by the company official in charge of disclosing information to the Tokyo Stock
Exchange (TSE), is tasked with boosting management transparency by “disclosing information that is timely, accurate, fairand easy to understand.” The Committee is responsible for both timely and voluntary disclosures to the TSE and the Stock
Exchange of Hong Kong regarding matters that may materially impact investor and shareholder investment decisions. The
committee held 13 meetings during the 56th fiscal year.

— 83 —

IT Investment Committee
The IT Investment Committee debates and advises on the IT investments that will best achieve our targets for sweepingchanges to our information systems and business operations. That means deliberating the efficacy of each individual
investment, and checking whether IT investment budgets submitted by external specialist organizations are reasonable
and appropriate. The IT Investment Committee is chaired by the President, and the members and observers include
outside experts, external directors and executives. The committee held 10 meetings during the 56th fiscal year.
Code of Conduct Committee
The Code of Conduct Committee considers how best to resolve any violations of the Fast Retailing Group Code of Conduct(CoC), and when to make improvements to it. It offers guidance on educating executives and employees about therequirements of the CoC, and on operating the confidential hotline. The committee is chaired by the Legal Department,
and includes auditors (including external auditors), advisors and attorneys. The committee held 10 meetings during the56th fiscal year.
Business Ethics Committee
This committee ensures the Group does not use an advantageous position to exert undue pressure on businesscounterparts such as partner factories and suppliers. The committee provides advice and counsel to departments basedon external field inspections and partner company surveys. The committee is chaired by the head of the Sustainability
Department, and includes auditors (including external auditors), advisors and attorneys. The committee held 12 meetings
during the 56th fiscal year.
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(ii)

Establishing Internal Control Systems
The Company seeks to ensure its business operations are legitimate, fair and efficient by establishing a system of internal
controls that cover the entire Fast Retailing Group (FR Group) and which adheres strictly to the Group’s policies andrules, including the Group’s management principles, the Fast Retailing Way (FR Way) and the Fast Retailing Group Code of
Conduct (FR Code of Conduct).

A.

Ensuring FR Group Directors’ Duties Comply with Laws, Regulations and Articles of Incorporation
1.
Directors and Group officers (collectively, Directors) of all FR Group companies comply faithfully with the Group’s
management principles, the FR Way, the FR Code of Conduct, and other internal company rules and regulations,and promote strict adherence to corporate ethics and compliance across the Group as a whole. The Directors also
ensure the effectiveness of the Company’s rules and principles by reviewing them regularly and revising themwhen necessary to reflect changes in society and company business activities, and the operation of the FR Code of
Conduct.
2.

The Company appoints either the Group officer overseeing the Legal Department or the head of the Legal
Department as compliance officer, tasked with establishing Company and Group-wide compliance frameworks andresolving compliance-related issues.

— 84 —

3.

B.

C.

D.

The Company promotes fairness and transparency in senior management decision-making by appointing two or
more External Directors to the Board of Directors. Statutory Auditors for the Company or Group subsidiaries may
attend the Board meetings of companies they audit and express timely opinions. Company or Group subsidiary
Directors may engage external lawyers, certified public accountants, etc. to avoid potential violation of laws andimplement preventive measures. If Company or Group subsidiary Directors discover another Director has acted
illegally, they must report immediately to the Statutory Auditors, the President, and the compliance officer.

Ensuring FR Group Employees’ Duties Comply with Laws, Regulations and Articles of Incorporation
1.
Company and Group subsidiary Directors are responsible for establishing a framework to ensure that all Group
employees comply with the management principles, the FR Way, the FR Code of Conduct and other internal
company rules. They are also responsible for training employees in compliance awareness.
2.

The Company has an Internal Audit Department that supervises the FR Group’s internal control systems, and a Legal
Department that oversees compliance.

3.

If Directors of the Company or Group subsidiaries discover a legal or compliance violation, they should report thematter immediately to other Directors. Any serious legal violation should be reported immediately to the Statutory
Auditors, the President and the compliance officer.

4.

The Company has set up an internal reporting system (hotline) for Directors and employees of the Company orGroup subsidiaries to report illegal actions or compliance violations.

5.

The Code of Conduct Committee, which includes external specialists such as lawyers and certified public
accountants, conducts regular reviews of compliance maintenance and the hotline operation, and makes necessary
improvements. If Directors of the Company or Group subsidiaries detect a problem with the hotline operation, theyshould apply to the Code of Conduct Committee and request improvements.

Data Storage and Management Relating to Execution of FR Group Directors’ Duties
The documents listed below relating to Company and Group subsidiary Directors’ duties are retained as proof of decisionmaking and business-execution processes, as stipulated by law, Articles of Incorporation, and Board of Directors andCompany regulations and guidelines on document management and confidential information. These documents are
stored and managed appropriately and can be easily retrieved for reference or inspection during the legally required
storage period.
•

Shareholders meeting minutes and relevant documentation•

Board meeting minutes and relevant documentation•

Minutes of important meetings held by Directors and relevant documentation•

Minutes of meetings held by other important employees and relevant documentation

Managing Risk of Losses to FR Group1.
The Company regularly analyzes risks relating to the Company and Group subsidiaries to identify risks that could,
directly or indirectly, cause financial loss, interrupt or stop business, damage brand images or the credibility of theCompany or FR Group, and manages any risks accordingly.
2.

If unforeseen circumstances should arise, a task force headed by the President or a Director appointed by the
President shall be established to prevent increased losses and minimize damage. For a faster response, the task
force may organize an external advisory team including lawyers and certified public accountants.

— 85 —

E.

Ensuring Efficient Execution of Director Duties
1.
To ensure that the duties of Company and Group subsidiary Directors are performed efficiently, the Company
holds regular monthly meetings of the Board of Directors, which includes a number of External Directors, and holds
ad hoc meetings when necessary. Group subsidiaries which have their own Board of Directors also hold Board
meetings as stipulated by law.
2.

Important matters concerning Company and Group management policy and management strategy shall be
discussed beforehand at the weekly management meeting (Monday Meeting) chaired by the President, anddecisions taken after due deliberation.

3.

The execution of decisions made by the Board of Directors shall be conducted efficiently and appropriately by theoperating offers designated by the Board.

F.

Ensuring Reliable FR Group Financial Reports
Systems have been established to ensure reliable financial reporting of Company and FR Group subsidiary activities, andthe appropriate acquisition, holding and disposal of assets. These activities are closely monitored. The Company has alsoestablished a Disclosure Committee to ensure the Company and Group subsidiaries disclose information in a timely andappropriate fashion.

G.

Ensuring Proper Execution of Corporate Groups Formed by Company and FR Group Subsidiaries
1.
To ensure appropriate operations of FR Group companies, all Group companies are required to uphold the
management principles, the FR Way and the FR Code of Conduct. These principles also underpin the rules andregulations used when establishing entrusted individual Group companies. While respecting their autonomy,
the Company oversees affiliated companies by determining their rules of business and requiring them to refer
important items to the Company for consultation or final determination. The Company monitors affiliates ifnecessary. If Directors of Group subsidiaries discover any legal violations or serious compliance breaches, theyshould report them to the Statutory Auditors, the President and compliance officer.
2.

H.

If Directors of Group subsidiaries consider the Company’s management principles or guidelines violate the law,undermine corporate ethics in a specific country, or create a compliance problem, they shall report to the Internal
Audit Department or the Legal Department. Those departments shall report swiftly to the Board of Statutory
Auditors, the President and the compliance officer, and request appropriate improvements.

Employee Assistants Requested by Statutory Auditors, and ensuring Their Independence and Effectiveness of Statutory
Auditors’ Instruction Towards Employee Assistants
1.
Upon receiving a request from the Board of Statutory Auditors, the Company shall establish rules to determine
which employees assist the Statutory Auditors with their duties, and assign appropriate internal personnel to the
Statutory Auditors or employ external lawyers or certified public accountants. To ensure assistants are independentof the Directors, their performance will be evaluated by Statutory Auditors, and the Board of Statutory Auditors willapprove decisions made by the Board of Directors on their assignment, dismissal, transfer and wages, etc.
2.

Assistants shall report directly to the Statutory Auditors and may not hold concurrent positions that involve theexecution of Company business.

— 86 —

I.

Director and Employee Reporting to Statutory Auditors, and Other Reports
1.
Directors and employees of the Company and Group subsidiaries shall report any important matters that might
impact the Company’s operations or corporate performance to the Statutory Auditors. Irrespective of these rules,
the Statutory Auditors may request reports from Directors or employees of the Company, or Directors, employees
and Statutory Auditors of Group subsidiaries if necessary.
2.

The Company and Group subsidiaries shall uphold the Group’s management principles, the FR Way and the FR Codeof Conduct, and maintain frameworks for reporting legal violations or breaches of compliance rules to the Statutory
Auditors. If the Statutory Auditors judge there is a problem with this framework, they can inform the Directors andthe Board of Directors and request improvements.

3.

The Company has made it widely known to Directors and employees across the entire FR Group that using reports
submitted to Statutory Auditors to penalize the submitter is forbidden. Submitted reports are protected by strict
information management systems.

4.

Statutory Auditors communicate closely with the accounting auditor, the Internal Audit Department, and Statutory
Auditors at Group companies through regular meetings and information exchange.

J.

Policy on Prepayment or Reimbursement of Expenses for Statutory Auditors
If Statutory Auditors submit requests for prepayment or reimbursement of expenses incurred during the course of theirduties, the Company shall pay invoices or settle debts swiftly, unless it proves the requested expenses or debt were notnecessary to the performance of the Statutory Auditor’s duties.

K.

Other Matters Ensuring Efficient Audits by Statutory Auditors
1.
Statutory Auditors attend Board of Directors meetings and other important meetings to observe the reporting anddiscussion of significant issues. They may voice opinions if necessary.
2.

L.

(iii)

The President meets regularly with Statutory Auditors to consult on pressing issues, ensure appropriate auditing
environments, and exchange views on significant issues highlighted in the auditing process.

Eliminating Anti-social Forces
The Company works to extinguish anti-social forces by incorporating the following content in the FR Code of Conduct, andinforming all executives and employees of its uncompromising stance:
1.

The Company adopts a firm stand against and refuses to engage with anti-social forces. The Company forbids theuse of financial payments to resolve unreasonable claims from anti-social forces.

2.

The Company forbids the use of anti-social forces for Company or individual gain.

Internal audits and audits by auditors
The Company has an Internal Audit Department that is completely independent from business operations departments.
6 specialists are employed as of 31 August 2017. A regular review of this internal administrative system is conducted toensure it remains suitable and effective and the audit of operations performance is also conducted.
In addition, Statutory Auditors are members of the Board of Directors, and they also audit the status of management
performance. The Board of Statutory Auditors described above consists of 2 Full-time Corporate Auditor and 3 external
Statutory Auditors. Its purpose is to receive reports on important matters regarding the Company’s internal audit
department as well as audits by the accounting auditors, discuss these reports, and to cooperate as needed.
Moreover, Auditor Takaharu Yasumoto is a certified public accountant with substantial expertise in the areas of financeand accounting.

— 87 —

(iv)Accounting audits
Name of audit firm

Ernst & Young ShinNihon LLC

Number of years ofcontinuing auditing

Name of CPA, etc.
Designated limited liability
partner and engagement
partner

Masayuki Miyairi—(Note)

Designated limited liability
partner and engagement
partnerTomo Ito—(Note)

Based on the audit plan formulated by Ernst & Young ShinNihon LLC, the group of assistants to the auditors consists of 23
CPAs and 25 others.
(Note) Omitted because the number of years of continuing auditing is less than 7 years.
(v)

Functions, roles and selection of external directors and external statutory auditors
The Company has 5 external directors and 3 external statutory auditors.
It is the Company’s expectation that the external directors will keep an eye on the management monitoring function.
From a business perspective, the advice of these individuals, with their abundance of experience and expertise, makes amajor contribution to enhance the value of our enterprise.
It is also expected that external statutory auditors will monitor the performance of the Board of Directors. The Company
receives valuable advice based on their rich experience in a wide variety of fields.
External director Toru Murayama is the president of Office Murayama. The Company currently has a consulting
subcontract with Office Murayama relating to the training of management personnel.
Aside from the above, there are no distinctive interests between the Company and other external directors or external
statutory auditors.
The external directors and external statutory auditors receive reports at the Board of Directors meeting regarding internal
audits, the operation of internal controls, audits by statutory auditors and the results of accounting audits. In addition,
the external statutory auditors have mutual alliances with Internal Audit Department and Accounting Auditors as detailedin (iii) Internal audits and audits by auditors.
With regard to the selection of external directors and external statutory auditors, the Company has no specific standards
on independence from the Company, but it is the Company’s responsibility to reflect their advice and counsel in its
decision-making processes in an objective and independent fashion. For many years now, the Company has chosen many
external directors with rich experience as corporate managers in industry, with broad-ranging expertise and discerningviews. In addition, to incorporate wide range of stakeholders’ view in the audits of our business activities, we value boththe independence and the diversity of our external statutory auditors in various fields.

— 88 —

(vi)Items regarding independent directors
Five of the six members of the Fast Retailing Board are external directors, and four of those five are recognized as
independent directors in accordance with the rules of the Tokyo Stock Exchange. The majority of the directors on the
Board are external in order to heighten the Board’s independence and strengthen its supervisory function.
In addition to the independence criteria set by the Tokyo Stock Exchange, Fast Retailing has set the following
independence standards and qualifications for external directors and auditors:
A person shall not qualify as an independent director or auditor of Fast Retailing, if:(1)he/she is, or has been within the past three years, a Business Partner*1 or an Executive Officer*2 of a Business
Partner*2 of the Fast Retailing Group, whose annual business dealings with Fast Retailing Group during the mostrecent business year constituted 2% or more of the Fast Retailing Group’s consolidated revenue;(2)

he/she is, or has been within the past three years, a Business Partner*1 of the Fast Retailing Group or an Executive
Officer of a Business Partner*2 of Fast Retailing, whose annual business dealings with the Fast Retailing Groupduring the most recent business year constituted 2% or more of the Business Partner’s consolidated revenue;(3)

he/she is a consultant, an accountant or an attorney who receives, or has received over the past three years, any
monies or property equivalent to 10 million yen or more from the Fast Retailing Group, except for remuneration fora director or an auditor; or(4)

he/she is, or has been over the past three years, a partner, an associate or an employee of an accounting auditor of
Fast Retailing or its subsidiaries.

*1 “Business Partner” includes law firms, auditing firms, tax accounting firms, consultants and any other organizations.
*2 “Executive Officer” means (i) for corporations, Executive Directors (as defined in the Companies Act of Japan),
Executive Officers (shikko-yaku, as defined in the Companies Act of Japan), corporate officers and employees, and(ii) for non-corporate entities (including general incorporated associations (shadan-hojin), general incorporated
foundations (zaidan-hojin), and partnerships), directors with executive functions, officers, partners, associates, staff
and other employees.
(vii) Outline of External Directors’ limited liability agreement
The Company has concluded agreements with the external directors, external statutory auditors and Ernst & Young
ShinNihon LLC, limiting their liabilities based on provisions in Article 427, Paragraph 1 of the Companies Act, which limits
the liabilities for damages as provided for in Article 423, Paragraph 1 of the Companies Act.
These agreements state that liabilities for damages shall be limited to the higher amount of either 5 million yen or theamount stipulated by law. For Ernst & Young ShinNihon LLC, the limit of liabilities in damages shall be limited to thehighest of the following amounts multiplied by two: the total economic benefits received or to be received from theCompany as remuneration and payment received for performance of duties in each business year during its service as the
Accounting Auditor.
(viii) Limitation of liabilities for directors and statutory auditors
Under the stipulations of the Company’s articles of incorporation (Article 426-1 of the Companies Act), the Company may
exempt, by decision of the Board of Directors, directors (including former directors), and statutory auditors (including
former statutory auditors) from liabilities for actions described in Article 423-1 of the Companies Act, to the extent
allowed by law. The purpose of this is to create an environment where directors and statutory auditors can perform theirduties and pursue their expected roles to the full extent of their abilities.

— 89 —

(3)Details of executive remuneration
Details of remuneration of the Company’s executives are as follows:

Executive category

Total amount of
remuneration(million yen)

Total amount of remuneration,by type (million yen)
Basic
Compensation
BonusesNumber of
executives(# of persons)

Directors (excluding external directors)

240

240

―

1

Statutory Auditors (excluding external
statutory auditors)

35

35

―

2

External Directors and External
Statutory Auditors

80

80

―

8

(i)
(ii)
(iii)

Directors’ remuneration 290 million yen (of which, external directors 50 million yen)
Statutory Auditors’ remuneration 65 million yen (of which, external statutory auditors 29 million yen)
Total consolidated executive remuneration, by executive, but only for those whose total consolidated executive
remuneration is at least 1 million yen
Representative director Tadashi Yanai
240 million yen

Policies for determining executive compensation
Directors’ compensation is calculated based on various factors including areas of responsibility, liability, earnings
performance. Directors’ compensation has to be approved by the Board of Directors, in accordance with the guidelines
for executive compensation set by the General Meeting of Shareholders. Regarding compensation for statutory auditors,
this is fixed in consultation with the statutory auditors, following the guidelines for statutory auditor compensation set by
the General Meeting of Shareholders.

(4)

Other stipulation in the Company’s articles of incorporation(i)

Number of directors
The Company’s articles of incorporation stipulate that the number of directors shall be at least 3 but not more than 10.

(ii)Election criteria for directors
The Company’s articles of incorporation stipulates that the election of directors shall not be based on cumulative voting.
Also, the articles of incorporation stipulates that elections shall be based on a majority vote by shareholders, with at least
one-third of eligible shareholders participating.

(iii)

Procedure for deciding dividends from surplus
Regarding the payment of dividends from surplus pursuant to the Companies Act, Article 459-1, the Company’s articles ofincorporation stipulates that dividends are decided by a resolution of the Board of Directors, and not by a resolution of
the General Meeting of Shareholders, unless otherwise stipulated by law. The authority to decide payments of dividends
from surplus is granted to the Board of Directors to give flexibility in the return of cash to shareholders.

(iv)

Interim dividend
As part of the Company’s efforts to be flexible in the return of cash to shareholders, and pursuant to the stipulations ofCompanies Act Article 454-5, and under the Company’s articles of incorporation, an interim dividend may be paid at theend of February every year by a resolution of the Board of Directors.

(v)

Special resolutions of the General Meeting of Shareholders
Regarding extraordinary resolutions of the General Meeting of Shareholders based on the Companies Act, Article 3092, the Company’s articles of incorporation stipulates that these resolutions shall be passed by two-thirds vote of theshareholders, in which at least one-third of the eligible shareholders participate. This easing of the quorum rules for
extraordinary resolutions by the General Meeting of Shareholders is meant to ensure the smooth functioning of theGeneral Meeting of Shareholders.

— 90 —

(5)Status of shareholding
The information about shareholding for the Company, which has held the largest investment shares in the Group, is asfollows:(i)

Investment shares held for purposes other than long-term holding: issues, number of issues and balance sheet total
Number of issues

Balance sheet total

4 issues(ii)

284 million yen

Investment shares held for purposes other than long-term holding: class, issues, number of shares, balance sheet total
and purpose of investment
Year ended 31 August 2016
Special investment shares
Issue(s)Number of shares

Balance sheet total

Purpose of investment

Sojitz Corporation

1,342,540

332 million yen To maintain business relationshipNameson Holdings Ltd

57,970,000

1,079 million yen To maintain business relationshipYear ended 31 August 2017
Special investment shares
Not applicable.
(iii)

Investment shares held for purpose of long-term holding
Not applicable.

(2)
(i)

Details of accounting auditors’ remuneration
Details of remuneration for CPAs, etc.
Year ended 31 August 2016

Class

Remuneration
for audit andcertification
duties(Millions of yen)

Year ended 31 August 2017

Remuneration
for duties otherthan audit(Millions of yen)

Remuneration
for audit andcertification duties(Millions of yen)

Remuneration
for duties otherthan audit(Millions of yen))

Reporting Entity

147

4

161

57

Consolidated subsidiaries

17

—

30

—

Total

165

4

191

57

(ii)

Other important details regarding remuneration
Year ended 31 August 2016 (1 September 2015 – 31 August 2016)
The Company’s consolidated subsidiaries paid 325 million yen as remuneration for audit and certification duties, andother duties, to member firms of the Ernst & Young global network.
Year ended 31 August 2017 (1 September 2016 – 31 August 2017)
The Company’s consolidated subsidiaries paid 322 million yen as remuneration for audit and certification duties, andother duties, to member firms of the Ernst & Young global network.

— 91 —

(iii)

Non-auditing services provided by the CPA firm to the reporting entity
Year ended 31 August 2016 (1 September 2015 – 31 August 2016)
The Company pays the Accounting Auditors consideration for the provision of advisory and other services concerning
accounting matters.
Year ended 31 August 2017 (1 September 2016 – 31 August 2017)
The Company pays the Accounting Auditors consideration for the provision of advisory and other services concerning
accounting matters.

(iv)

Policies for determination of accounting audit remuneration
The Company’s articles of incorporation stipulates that remuneration to accounting auditors for audit services isdetermined by the representative director, with the consent of the Board of Statutory Auditors.

— 92 —

FINANCIAL INFORMATION
1. Preparation of consolidated financial statements(1)

Since the Company meets all criteria of a “specific company” defined in Articles 1-2 of the Rules Governing Term, Formand Preparation of Consolidated Financial Statements (Financial Ministerial Order the 28th, 1976) (hereinafter referred
to as the “Rules on Consolidated Financial Statements”), the consolidated financial statements of the Group wereprepared in accordance with International Financial Reporting Standards (“IFRS”) pursuant to Article 93 of the Rules
Governing Term, Form and Preparation of Consolidated Financial Statements.

(2)

The financial statements of the Company were prepared in accordance with the Rules Governing Term, Form and
Presentation of non-consolidated Financial Statements (Financial Ministerial Order the 59th, 1963) (hereinafter referred
to as the “Rules on non-consolidated Financial Statements”).
The non-consolidated financial statements are prepared in accordance with the provisions set out in Article 127 of theRules on Non-Consolidated Financial Statements, etc., as the Company is categorized as a company that may be allowed
to prepare its financial statements according to special provisions.

(3)

In this report, amounts are rounded down to the nearest million Japanese yen.

2. Audits
The Company’s consolidated and non-consolidated financial statements for the fiscal year from 1 September 2016 – 31
August 2017 have been audited by Ernst & Young ShinNihon LLC in accordance with auditing standards generally accepted inJapan pursuant to Article 193-2-1 of the Financial Instruments and Exchange Act. Ernst & Young ShinNihon LLC also conducted
the audit of consolidated financial statements of the Company in accordance with International Standards on Auditing (ISAs).

3. Special measures for ensuring the accuracy of our consolidated financial statements and a framework forensuring consolidated financial statements are appropriately prepared in accordance with IFRSThe Company has taken special measures to ensure the appropriateness of our consolidated financial statements and has
established a framework to ensure our consolidated financial statements are appropriately prepared in accordance with IFRS.
Details of these are given below.
(1)

To establish a framework capable of adapting appropriately to changes in accounting standards, the Company has
put efforts to build up our specialist knowledge by appointing employees who are well versed in IFRS, joining the
Accounting Standards Board of Japan and similar organizations, and participating in training programs.

(2)

To ensure that we appropriately prepared consolidated financial statements in accordance with IFRS, we drafted groupguidelines for accounting practices based on IFRS, and have been conducting accounting procedures based on theseguidelines. We regularly obtain standards and press releases published by the International Accounting Standards
Board, study the latest standards and their potential impact on our Company, and update our group guidelines foraccounting practices accordingly.

— 93 —

4. Consolidated Financial Statements(1) CONSOLIDATED STATEMENT OF FINANCIAL POSITION(Millions of yen)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current financial assets
Inventories
Derivative financial assets
Income taxes receivable
OthersTotal current assets
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Non-current financial assets
Investments in associates
Deferred tax assets
OthersNotes

As at 31 August 2016

As at 31 August 2017

8,30
9,30
11,30
10
30

385,43145,178184,239
270,004569
21,626
17,534

683,80248,59830,426289,675
6,269
1,518
17,307924,583

1,077,598

121,853
17,90834,20577,553
13,132
44,428
4,453

136,979
15,88536,89577,60813,47325,303
4,742

313,535

310,888

1,238,119

1,388,486

189,501
72,388
12,581
9,602
22,284
31,689204,008
6,083
11,84425,86427,88935,731

338,046

311,421274,090
10,645
3,809
13,865

273,467
15,40910,00016,144

302,411315,022

640,458

626,443

10,273
13,070613,974(15,633)(47,183)

10,273
14,373
698,584(15,563)
24,102574,501
23,159731,770
30,272

12

13
14
14
11,30
16
19
12

Total non-current assets
Total assets
Liabilities and equity
LIABILITIESCurrent liabilities
Trade and other payables
Derivative financial liabilities
Other current financial liabilities
Income taxes payable
Provisions
OthersTotal current liabilities
Non-current liabilities
Non-current financial liabilities
Provisions
Deferred tax liabilities
Others20,30
30
11,17,30
21
12

11,17,30
21
19
12

Total non-current liabilities
Total liabilities
EQUITY
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Other components of equity
Equity attributable to ownersof the parent

22
22
22
22
22

Non-controlling interests
Total equity
Total liabilities and equity— 94 —

597,661

762,043

1,238,119

1,388,486

(2) CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated statement of profit or loss
(Millions of yen)
Year ended
31 August 2016

Notes
Revenue

23

Cost of sales
Gross profit
Selling, general andadministrative expenses
Other income

24
15,16,25

Other expenses

15,25

Year ended
31 August 2017

1,786,473(921,475)

1,861,917(952,667)

864,998

909,249(702,956)
2,363(37,112)(725,215)
6,947(14,567)
176,414
19,917(2,932)

Operating profit
Finance income

26

Finance costs

26

127,292
2,364(39,420)

19

90,237(36,162)

193,398(64,488)

54,074

128,910Non-controlling interests

48,052
6,021

119,280
9,630

Profit for the year

54,074

128,910471.31
470.691,169.70
1,168.00

Profit before income taxes
Income taxes
Profit for the year
Attributable to:
Owners of the parent

Earnings per share
Basic (Yen)
Diluted (Yen)28
28— 95 —

Consolidated statement of comprehensive income(Millions of yen)
Year ended
31 August 2016

Notes
Profit for the year
Other comprehensive income
Other comprehensive income not to bereclassified to profit or loss insubsequent periods
Other comprehensive income to bereclassified to profit or loss insubsequent periods
Net gain/(loss) on revaluation ofavailable-for-sale investments
Exchange differences on translationof foreign operations
Cash flow hedges
Other comprehensive (loss)/income,net of taxes
Total comprehensive (loss)/income
for the year

Year ended
31 August 2017
54,074

128,910

―

―

27

105

(245)

27

(43,312)(150,239)

26,285
47,109(193,447)

73,148(139,372)

202,059(141,345)
1,972

190,566
11,493(139,372)

202,059

27

Attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive (loss)/income
for the year

— 96 —

(3) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 August 2016
(Millions of yen)
Other components of equity

Equityattributableto owners
Nonof the controlling
Totalparent interests
142,214750,937
23,867

Capitalstock
10,273

Capitalsurplus11,524Retainedearnings
602,623

Treasurystock, atcost(15,699)——

48,052

—

—

—

—

—

48,052

6,021

54,074

—

—

—

—

105

(40,663)(148,839)(189,397)(189,397)(4,049)(193,447)——

48,052—

105(40,663)(148,839)(189,397)(141,345)

1,972(139,372)

22

—

—

—

(6)

—

—

—

—

(6)

—

(6)

22
22
22

—
—
—
—

546
—
945
53

—
(36,702)
—
—

72
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

619
(36,702)945
53—(3,268)—587

619(39,970)
945
641

—

1,546

(36,702)

66

—

—

—

—

(35,090)(2,680)(37,770)—
10,273

1,546
13,07011,350613,97466(15,633)105
248(40,663)(2,811)(148,839)(44,619)(189,397)(47,183)(176,435)
574,501(708)
23,159(177,143)
597,661

Notes
As at 1 September 2015
Net changes during theyear
Comprehensive income
Profit for the year
Other comprehensive(loss)/income
Total comprehensive(loss)/income
Transactions with theownersAcquisition of treasury
stock
Disposal of treasury
stock
Dividends
Share-based payments
OthersTotal transactions
with the owners
Total net changes
during the year
As at 31 August 2016

Foreign
Available- currency Cash-flow
for-sale translation
hedge
reserve
reserve
reserve
143
37,851
104,21927— 97 —

Total
equity774,804

For the year ended 31 August 2017
(Millions of yen)
Other components of equity

Equityattributableto owners
Nonof the controlling
Totalparent interests(47,183) 574,501
23,159

Capitalstock
10,273

Capitalsurplus13,070Retainedearnings
613,974

Treasurystock, atcost(15,633)——

119,280

—

—

—

—

—

119,280

9,630

128,910

—

—

—

—

(245)

24,61846,91371,28571,285

1,862

73,148——119,280—(245)

24,61846,91371,285

190,566

11,493202,059

22

—

—

—

(6)

—

—

—

—

(6)

—

(6)

22
22
22

—
—
—
—

642
—
754
(94)

—
(34,670)
—
—

75
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

718
(34,670)
754
(94)

—
(3,994)
—
(385)

718
(38,664)
754
(480)

—

1,303

(34,670)

69

—

—

—

—

(33,297)(4,379)(37,677)—
10,273

1,303
14,37384,610698,58469(15,563)(245)
2

24,61821,806

46,9132,293

71,285
24,102

157,268
731,770

7,113
30,272

164,381762,043

Notes
As at 1 September 2016
Net changes during theyear
Comprehensive income
Profit for the year
Other comprehensive(loss)/income
Total comprehensive(loss)/income
Transactions with theownersAcquisition oftreasury stock
Disposal of treasury
stock
Dividends
Share-based payments
OthersTotal transactions withthe owners
Total net changes
during the year
As at 31 August 2017

Foreign
Available- currency Cash-flow
for-sale translation
hedge
reserve
reserve
reserve248(2,811) (44,619)

27— 98 —

Total
equity597,661(4) CONSOLIDATED STATEMENT OF CASH FLOWS(Millions of yen)
Year ended
31 August 2016
Profit before income taxes
Depreciation and amortization
Impairment losses
Increase/(decrease) in allowance for
doubtful accounts
Increase/(decrease) in other provisions
Interest and dividend income
Interest expenses
Foreign exchange losses/(gains)Share of losses/(profits) of associates
Losses on retirement of property, plant andequipment
Decrease/(increase) in trade andother receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade andother payables
Decrease/(increase) in other assets
Increase/(decrease) in other liabilities
Others, net
SubtotalInterest and dividend income received
Interest paid
Income taxes paid
Income taxes refund
Net cash from operating activities
Decrease/(increase) in bank deposits withmaturity over 3 months
Purchases of property, plant andequipment
Proceeds from sales of property, plant andequipment
Purchases of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease andguarantee deposits
Investments in associates
Increase in construction assistance fundreceivables
Decrease in construction assistance fundreceivables
Others, net
Net cash from/(used in) investing activities— 99 —

Year ended
31 August 2017
90,23736,79722,397

193,398
39,688
9,324

46
328
(2,364)
2,402
36,955
(132)

(19)
1,674
(6,124)
2,932(13,318)
(625)

1,052

1,915

(2,364)(34,908)(1,422)(5,955)

18,5981,868(1,356)
(476)

9,949
(290)
6,417
(1,682)

169,079
2,364(2,163)(88,512)
17,987

235,861
6,124(2,966)(47,691)
20,84098,755

212,168(186,536)

168,337(34,158)(33,600)

1,137(9,470)(7,434)36(12,266)(3,211)

3,983(13,000)

1,789
(196)

(1,323)(1,045)

1,909

1,713

(1,045)

1,232(245,939)

122,790

(Millions of yen)
Year ended
31 August 2016

Notes
Net increase/(decrease) in short-termloans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Cash dividends paid
Cash dividends paid to non-controllinginterests
Repayments of lease obligations(243)(4,937)249,369(36,700)(3,223)(2,915)—(34,671)(3,076)(4,313)
1,330(3,965)(6,052)(8)

201,428(50,836)(24,025)

14,24830,218298,3718355,212385,4318

385,431

683,802

22

Others, net
Net cash from/(used in) financing activities
Effect of exchange rate changes on cash
and cash equivalents
Net increase/(decrease) in cash andcash equivalents
Cash and cash equivalents
at the beginning of year
CASH AND CASH EQUIVALENTS
AT THE END OF YEAR

Year ended
31 August 2017

— 100 —

Notes to the Consolidated Financial Statements
1. Reporting Entity
FAST RETAILING CO., LTD. (the “Company”) is a company incorporated in Japan. The locations of the registeredheadquarters and principal offices of the Company are disclosed at the Group’s website (http://www.fastretailing.com/eng/).
The principal activities of the Company and its consolidated subsidiaries (the “Group”) are the UNIQLO business (casual
wear retail business operating under the “UNIQLO” brand in Japan and overseas), GU business and Theory business (appareldesigning and retail business in Japan and overseas), etc.
2. Basis of Preparation(1) Compliance with IFRSThe consolidated financial statements of the Group have been prepared in compliance with International Financial
Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).
The Group meets all criteria of a “specified company” defined under Article 1-2 of the Rules Governing Term, Form, andPreparation of Consolidated Financial Statements, and accordingly applies Article 93 of the Rules Governing Term, Form, andPreparation of Consolidated Financial Statements.
(2) Approval of the Consolidated Financial Statements
The consolidated financial statements were approved on 30 November 2017 by Tadashi Yanai, Chairman, President andCEO, and Takeshi Okazaki, Group Senior Vice President and CFO.
(3) Basis of Measurement
The consolidated financial statements have been prepared on an historical cost basis, except for certain assets, liabilities,
and financial instruments which are measured at fair value as indicated in “3. Significant Accounting Policies”.
(4) Functional Currency and Presentation Currency
The presentation currency for the Group’s consolidated financial statements is the Japanese yen (in units of millions ofyen), which is also the Company’s functional currency. All values are rounded down to the nearest million yen, except whenotherwise indicated.
(5) Use of Estimates and Judgments
The preparation of the consolidated financial statements in accordance with IFRS requires management to makejudgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, income and expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. The effects of the review of accounting
estimates are recognized in the accounting period in which the estimates were reviewed and in future accounting periods.
Information about important estimation and judgments that have significant effects on the amounts recognized in the
consolidated financial statements is as follows:
•
•
•
•
•
•
•
•
•

Useful lives of property, plant and equipment, and intangible assets (Notes 13, 14)
Recoverable amounts from cash-generating units for impairment test (Note 15)
Recoverability of deferred tax assets (Note 19)
Valuation of inventories (Note 10)
Recoverability of trade and other receivables (Notes 9, 30)
Accounting treatment and valuation of provisions (Note 21)
Fair value measurement of financial instruments (Note 30)
Fair value unit price for share-based payments (Note 29)
Probability of outflow of future economic benefits from contingent liabilities (Note 34)— 101 —

3. Significant Accounting Policies(1) Basis of Consolidation(i) Subsidiaries
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The Group
controls enterprises where it is exposed, or has rights, to variable returns arising from its involvement in those enterprises orwhen the Group has rights to variable returns in those enterprises and is able to have an impact on the said variable returns
through its power over those enterprises. A subsidiary’s financial statements are incorporated into the Group’s consolidated
financial statements from the date on which the Group obtains control until the date that control ceases.
The subsidiaries adopted consistent accounting policies as the Company in the preparation of their financial statements.
All intra-group balances, transactions within the Group as well as unrealized profit and loss resulting from transactions
within the Group are eliminated at the time of preparation of the consolidated financial statements.
The reporting date for FAST RETAILING (CHINA) TRADING CO., LTD., Theory Shanghai International Trading Co.,
Ltd., UNIQLO TRADING CO., LTD., Fast Retailing (Shanghai) Business Management Consulting Co., Ltd., FAST RETAILING(SHANGHAI) TRADING CO., LTD., GU (Shanghai) Trading Co., Ltd., Comptoir des Cotonniers (Shanghai) Trading Co., Ltd.,PRINCESSE TAM.TAM (SHANGHAI) TRADING CO., LTD. and LLC UNIQLO (RUS) is 31 December. The management accountsof these subsidiaries are used for the Group’s consolidation purpose. The financial statements of other subsidiaries areprepared using the same reporting period as the parent company.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
Any difference between the adjustment to the non-controlling interest and the fair value of the consideration received isrecognized directly in equity as interests attributable to owners of the parent.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to thenon-controlling interests, even if this results in the non-controlling interests having a deficit balance.
The number of consolidated subsidiaries as at 31 August 2017 is 121.
(ii) Investments in associates
An associate is an entity which the Group has significant influence over the financial and operating policies. If the Groupholds 20% or more of the voting rights of another enterprise, it is presumed that the Group has a significant influence over
the other enterprise. Investments in associates are accounted by applying the equity method, and measured at historicalcost at the time of acquisition.
Thereafter the carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets ofassociates since acquisition date.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate. Any change in othercomprehensive income of those investees is presented as part of the Group’s other comprehensive income. Unrealised gains
and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in
the associate.
The numbers of associates as at 31 August 2017 are 2.

— 102 —

(2) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured at theaggregation of the acquisition date fair values of assets transferred, liabilities assumed and equity interests issued by theCompany in exchange for control of the acquired company.
If the cost of an acquisition exceeds the fair value of the identifiable assets and liabilities, it is recorded as goodwill on
the consolidated statement of financial position. If it is below the fair value, this is immediately recorded as gains on the
consolidated statement of profit or loss.
Acquisition-related costs are expensed as incurred. Additional acquisitions of non-controlling interests are accounted foras equity transactions, and no goodwill is recognized.
Contingent liabilities of acquired companies are recognized in a business combination only if they are present obligations,were incurred as a result of a past event, and their fair value can be reliably measured.
For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fairvalue or at the proportionate share of the acquiree’s identifiable net assets.
If the initial accounting for a business combination is incomplete by the reporting date of the fiscal year in which thebusiness combination occurs, the items for which the acquisition accounting is incomplete are reported using provisionalamounts. Those amounts provisionally recognized on the acquisition date are retrospectively adjusted to reflect new
information as if the acquisitions took place during the measurement period, had facts and circumstances that existed at theacquisition date been known at that time, they would have affected the amounts recognized on that date. Additional assets
and liabilities are recognized if new information results in the recognition of additional assets or liabilities. The measurement
period should be within one year.
(3) Foreign Currencies(i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of
exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognized in profit orloss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translatedusing the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of theitem (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or
profit or loss are also recognized in other comprehensive income or profit or loss, respectively).
(ii) Foreign Operations
On consolidation, the assets and liabilities of foreign operations are translated into Japanese yen at the rate of exchange
prevailing at each reporting date and their statements of profit or loss are translated at average exchange rates during theperiod. The exchange differences arising on translation for consolidation are recognized in other comprehensive income. On
disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operationis recognized in profit or loss.

— 103 —

(4) Financial Instruments
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments, such as forward currency contracts, to hedge its foreign currency risks.
Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract isentered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value ispositive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for theeffective portion of cash flow hedges, which is recognized in other comprehensive income and later reclassified to profit orloss when the hedge item affects profit or loss.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which
the Group wishes to apply hedge accounting and the risk management objectives and strategy for undertaking the hedge.
The documentation includes identification of the specific hedging instrument, the hedged item or transaction, the natureof the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure tochanges in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine thatthey actually have been highly effective throughout the financial reporting periods for which they were designated.
The Group has designated forward currency contracts as cash flow hedges and are accounted for as described below:
Cash flow hedges
When derivatives are designated as a hedging instrument to hedge the exposure to variability in cash flows that are
attributable to a particular risk associated with recognized assets or liabilities or highly probable forecast transactions
which could affect profit or loss, the effective portion of changes in the fair value of the derivatives is recognized in othercomprehensive income and included in “Cash flow hedges” in other components of equity. The balances of cash flow hedges
are subtracted from “other comprehensive income” on the consolidated statement of comprehensive income for the same
period when the hedged cash flows would affect profit or loss, and reclassified as profit or loss in the same line items as
the hedging instruments. The gain or loss relating to the ineffective portion of changes in the fair value of the derivatives isrecognized immediately in profit or loss. When a hedged item gives rise to the recognition of a non-financial asset or nonfinancial liability, the amount recognized as other comprehensive income is treated as an adjustment to the initial carrying
amount of the non-financial asset or liability.
If the forecast transaction or firm commitment is no longer expected to occur, cumulative profit or loss amounts
previously recognized in equity through other comprehensive income are reclassified as profits or losses. If the hedging
instrument expires or is sold, is terminated or exercised without replacement or rollover, or if its designation as a hedge isrevoked, the amounts previously recognized in equity through other comprehensive income are recorded as equity until theforecast transaction occurs or firm commitment is met.
Non-derivative financial instruments(i) Initial recognition and measurement
All purchases and sales of financial assets that take place through ordinary methods (purchase or sale of a financial asset
requiring delivery within the time frame established by market regulation or convention) are recognized or derecognized,
and measured at the initial fair value plus transaction costs, on the trade date.
Financial assets are classified, at initial recognition, into the following three categories:• Financial assets at fair value through profit or loss
• Loans and receivables• Available-for-sale financial assets
The classification depends on the nature and purpose of the financial assets and is determined at the time of initialrecognition.

— 104 —

(ii) Financial assets at fair value through profit or loss
Financial assets are classified as “financial assets at fair value through profit or loss” if they are held for trading or if they
are designated as financial assets at fair value through profit or loss.
Financial assets other than financial assets held for trading may be designated as “financial assets at fair value throughprofit or loss” at initial recognition if any of the following applies:(a) If such designation eliminates or significantly reduces a measurement or recognition inconsistency (“accounting
mismatch”) is likely to arise;(b) If the financial assets are part of a “group of financial assets or financial liabilities (or both)”, which are managed andhave their performance evaluated on a fair value basis, in accordance with the Group’s documented risk management orinvestment strategy, and information about the grouping is provided internally on a fair value basis; or(c) If the contract contains at least one embedded derivative (IAS 39 allows the entire hybrid (combined) contract (assets
or liabilities) to be designated as a “financial assets at fair value through profit or loss”), unless they are designated as aneffective hedging instrument.
Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position atfair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income(positive net changes in fair value) in the consolidated statement of profit or loss. Recognized profits or losses, including theabove, are recognized in the consolidated statement of profit or loss as dividend income, interest income or gain or loss onchanges in fair value. Fair value is determined using the method described in “30. Financial Instruments”.
(iii) Loans and receivables
Trade receivables, loans, and other receivables that are not quoted in an active market are classified as “loans andreceivables”. After initial measurement, such financial assets are subsequently measured at amortized cost using theeffective interest rate (“EIR”) method, less impairment. The EIR amortization is included in finance income in the statementof profit or loss.
(iv) Available-for-sale financial assets
Any non-derivative financial assets classified as “available-for-sale financial assets” are those that are neither classified as“financial assets at fair value through profit or loss”, nor “loans and receivables”, or those that are designated as “availablefor-sale financial assets”.
Available-for-sale listed equity securities that are traded on a market are measured using quoted market prices. Unlisted
equity securities are measured at fair value using reasonable methods. Fair value is determined using the method describedin “30. Financial Instruments”. Profits or losses arising from changes in fair value are recognized as other comprehensive
income. Impairment losses or foreign currency gains or losses associated with monetary assets are treated as exceptions andrecognized in profit or loss.
When available-for-sale financial assets are derecognized, or when an impairment loss is recognized, the cumulative
profits or losses that have been recognized as other comprehensive income up to that time are reclassified to the profit orloss for the period.
Dividends associated with available-for-sale financial assets are recognized in profit or loss when the Group’s right toreceive dividends is established. The fair value of available-for-sale financial assets denominated in foreign currencies isdetermined in that foreign currency and translated at the exchange rate prevailing at each reporting date. The effects ofchanges in exchange rates on foreign currencies denominated monetary assets is recognized in foreign exchange gains orlosses, while the effect of changes in exchange rates on other foreign currencies denominated available-for-sale financial
assets is recognized in other comprehensive income.

— 105 —

(v) Impairment of financial assets
Those financial assets other than “Financial assets at fair value through profit or loss”, pursuant to IAS 39, are evaluatedat each reporting date to determine whether there is objective evidence of impairment. If there is objective evidence that
one or more events having a negative impact on the estimated future cash flows has occurred subsequent to the initialrecognition of the financial asset, an impairment loss is recognized.
For listed and unlisted equity securities classified as “available-for-sale financial assets”, a significant or prolonged decline
in the fair value of the investment below its historical cost is considered to be objective evidence of impairment. For all otherfinancial assets, including redeemable securities and finance lease receivables classified as available-for-sale financial assets,
objective evidence of impairment may include the following:(a) Significant deterioration in the financial condition of the issuer or counterparty;(b) Default or delinquency in interest or principal payments; or(c) Probability that the issuer will enter bankruptcy or financial reorganization.
Certain categories of financial assets, such as trade receivables, are assessed for impairment on a collective basis even if
they are not impaired individually. Objective evidence of impairment for a portfolio of receivables could include changes innational or local economic conditions that correlate with default on receivables or an increase in the number of delinquent
payments in the portfolio past the average credit period.
For financial assets carried at amortized cost, the amount of the impairment loss is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original EIR.
An asset’s carrying amount is reduced directly by the impairment loss amount, with the exception of trade receivables
where the impairment loss is posted by using the allowance for doubtful accounts. An allowance for doubtful accounts isestablished when it is determined that receivables are uncollectable, including receivables for which the due date has beenchanged, and the allowance for doubtful accounts is reduced if the receivables are subsequently abandoned or collected.
Changes in the allowance for doubtful accounts are recognized in profit or loss except for decreases due to use. Except
for available-for-sale financial assets, if, in a subsequent period, the amount of the impairment loss decreases and thedecrease can be related objectively to an event occurring after the impairment was recognized, the previously recognizedimpairment loss is reversed through profit or loss to the extent that the carrying amount of the investment after reversing
the impairment loss does not exceed what the amortized cost would have been had the impairment not been recognized.
For available-for-sale financial assets, impairment losses previously recognized in profit or loss cannot be reversed
through profit or loss. Any change in fair values after an impairment loss is recognized through other comprehensive income
as long as this does not give rise to an additional impairment loss.
(vi) Derecognition of financial assets
The Group derecognizes a financial asset only if the contractual rights to the cash flows from the financial asset expire
or if the Group has transferred almost all risks and rewards of ownership. If the Group maintains control of the transferredfinancial asset, it recognizes the asset and associated liabilities to the extent of its continuing involvement.
Non-derivative equity instruments and financial liabilities(i) Equity instruments (stocks)
An equity instrument is a contract that evidences ownership of a residual interest in the assets of a company after
deducting all of its liabilities.
(ii) Financial liabilities
Financial liabilities are classified as either “financial liabilities at fair value through profit or loss” or “other financial
liabilities”.

— 106 —

(iii) Financial liabilities at fair value through profit or loss
Financial liabilities are classified as “financial liabilities at fair value through profit or loss” if they are held for trading or ifthey are designated as financial liabilities at fair value through profit or loss.
A financial liability is classified as being held for trading purposes if any of the following applies:(a) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;(b) On initial recognition, it is part of a portfolio of identified financial instruments that are managed together and forwhich there is evidence of a recent actual pattern of short-term profit-taking; or(c) It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument).
Financial liabilities other than financial liabilities held for trading may be designated as “financial liabilities at fair value
through profit or loss” at initial recognition if any of the following applies:(a) If such designation eliminates or significantly reduces a measurement or recognition inconsistency (“accounting
mismatch”) is likely to arise;(b) If the financial liabilities are part of a “group of financial assets or financial liabilities (or both)” which are managed
and have their performance evaluated on a fair value basis, in accordance with the Group’s documented risk management orinvestment strategy, and information about the grouping is provided internally on a fair value basis; or(c) If the contract contains at least one embedded derivative (IAS 39 allows the entire hybrid (combined) contract (assets
and liabilities) to be designated as “financial liabilities at fair value through profit or loss”).
Financial liabilities designated as “financial liabilities at fair value through profit or loss” are measured at fair value,with any changes recognized in profit or loss. Recognized profits and losses, including the above, are recognized in the
consolidated statement of profit or loss as interest expenses or gain or loss on change in fair value. Fair value is determinedusing the method described in “30. Financial Instruments”.
(iv) Other financial liabilities
Other financial liabilities, including loans payable, are initially measured at fair value, net of directly attributabletransaction costs. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the EIR
method, and interest expenses are recognized using the EIR method.
(v) Derecognition of financial liabilities
The Group derecognizes a financial liability when it is extinguished, that is, when the obligation specified in the contract iseither discharged, cancelled or expires.
(vi) Fair value of financial instruments
The fair value of financial instruments that are traded on an active financial market at each reporting date are based onquoted market prices and dealer prices.
The fair value of financial instruments for which there is no active market are calculated using appropriate valuation
techniques.
(vii) Offsetting financial Instruments
Financial assets and financial liabilities are only offset when there is an enforceable legal right to offset the recognizedamounts and when there is an intention to either settle on a net basis, or realize the asset and settle the liability
simultaneously; and the net amount is reported on the consolidated statement of financial position.

— 107 —

(5) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, bank deposits available for withdrawal on demand, and short-term,
highly liquid investments due with a maturity of three months of the acquisition date or less that are readily convertible tocash and which are subject to an insignificant risk of changes in value.
(6) Inventories
Inventories are valued at the lower of cost and net realizable value; the weighted average method is principally used
to determine cost. Net realizable value is based on the estimated selling price in the ordinary course of business less any
estimated costs to be incurred to sell the goods.
(7) Property, plant and equipment (other than leased assets)(i) Recognition and measurement
Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment
losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costsof bringing the asset to its working condition and location for its intended use, the initial estimate of the costs of dismantling
and removing the item and restoring the site on which it is located.
(ii) Depreciation
Assets other than land and construction in progress, are depreciated using the straight-line method over the estimateduseful lives shown below:
Buildings and structures
Furniture, equipment and vehicles

3–50 years
5 years

The useful lives, residual values, and depreciation methods are reviewed at each reporting date, with the effect of any
changes in estimates being accounted for on a prospective basis.
(8) Goodwill and intangible assets (other than leased assets)(i) Goodwill
Goodwill is stated at the carrying amount, which is the acquisition cost after deducting accumulated impairment losses.
Goodwill represents the excess amount of the historical cost of an interest acquired by the Group over the net amount of thefair value of the identifiable assets acquired and liabilities assumed.
Goodwill is not amortized but is allocated to identifiable cash-generating units based on the geographical region wherebusiness takes place and the type of business conducted, and then tested for impairment each year or when there is anindication that it may be impaired. Impairment losses on goodwill are recognized in the consolidated statement of profit orloss and cannot be subsequently reversed in future period.
(ii) Intangible assets
Intangible assets are measured at cost, with any accumulated amortization and accumulated impairment losses deductedfrom the historical cost to arrive at the stated carrying amount.
Intangible assets acquired separately are measured at cost at initial recognition, and the cost of intangible assets acquired
in a business combination is measured as fair value at the acquisition date.
For internally generated intangible assets, the entire amount of the expenditure is recorded as an expense in the period inwhich it arises, except for development expenses that meet the requirements for capitalization.
Intangible assets with finite useful lives are amortized over their respective estimated useful lives using the straight-line
method, and they are tested for impairment when there is an indication that they may be impaired. The estimated useful life
and amortization method for an intangible asset with a finite useful life is reviewed at the end of each reporting period, andany changes are applied prospectively as a change in accounting estimate.
The estimated useful lives of the main intangible assets with finite useful lives are as follows:• Software for internal use

Length of time it is usable internally (3-5 years)

Intangible assets with indefinite useful lives and intangible assets that are not yet available for use are not amortized.
They are tested for impairment annually or when there is an indication that they may be impaired, either individually or at
the cash-generating unit level.

— 108 —

(9) Leases
The determination of whether an arrangement is, or contains, a lease is made based on the substance of the arrangementon the inception date of the lease, or in other words, whether the fulfillment of the arrangement depends on the use of a
specific asset or group of assets and whether the arrangement conveys the right to such asset (whether explicitly stated in
the contract or not).
If the lease agreement substantially conveys the risks and rewards of the ownership of the asset to the lessee, the lease isclassified as a finance lease. Leases other than finance leases are classified as operating leases.
Finance leases are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, atthe present value of the minimum lease payments. Lease payments are apportioned between finance charges and reductionof the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges arerecognized in finance costs in the consolidated statement of profit or loss.
A leased asset is depreciated over the shorter of the estimated useful life of the asset and the lease term on a straight-line
basis.
Operating lease payments as lessee are recognized as an operating expense in the consolidated statement of profit or loss
on a straight-line basis over the lease term.
Operating lease income as lessor is recognized as an operating revenue in the consolidated statement of profit or loss ona straight-line basis over the lease term.
(10) Impairment
The carrying amounts of the Group’s non-financial assets, excluding inventories and deferred tax assets, are reviewed todetermine whether there is any indication of impairment at each reporting date. If there is any indication of impairment,
the recoverable amount for the asset is estimated. For goodwill, intangible assets with indefinite useful lives, and intangible
assets that are not yet available for use, the recoverable amount is estimated each year at the same time.
The recoverable amount for an asset or cash-generating unit (“CGU”) is the higher of value-in-use and fair value lesscosts of disposal. The fair value less costs of disposal calculation is based on available data from binding sales transactions,conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. In
assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount ratethat reflects the time value of money and the risks specific to the asset.
A CGU is the smallest group of assets which generates cash inflows from continuing use, which are largely independent of
the cash inflows from other assets or groups of assets.

— 109 —

The CGU (or group of CGUs) for goodwill is determined based on the unit by which the goodwill is monitored for internalmanagement purposes and must not be larger than an operating segment before aggregation.
Because the corporate assets do not generate independent cash inflows, if there is an indication that corporate assets
may be impaired, the recoverable amount is determined for the CGU to which the corporate assets belong.
If the carrying amount of an asset or a CGU exceeds the recoverable amount, an impairment loss is recognized in profit
or loss for the period. Impairment losses recognized in relation to a CGU are first allocated to reduce the carrying amount ofany goodwill allocated to the CGU and then allocated to the other assets of the CGU pro rata on the basis of their carrying
amounts.
An impairment loss related to goodwill cannot be reversed in future periods. Previously recognized impairment losses onother assets are reviewed at each reporting date to determine whether there is any indication that a loss has decreased or
no longer exists. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used
to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so thatthe carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would havebeen determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
(11) Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. Provisions are recognized as the best estimate of the expenditure
required to settle the present obligation (future cash flows), taking into account the risks and uncertainties surrounding theobligation at each reporting date.
If the time value of money is material, provisions are measured as the estimated future cash flows discounted to thepresent value using a pre-tax rate that reflects, when appropriate, the time value of money and the risks specific to theliability. When discounting is used, the increase due to the passage of time is recognized as a finance cost.
Each provision is described below:(i) Allowance for bonuses
The amount expected to be borne as bonuses in the current reporting period is recorded as a provision for the paymentof bonuses to employees of the Group.
(ii) Asset retirement obligations
The obligations to restore property to its original state under real estate leasing agreements for offices, such as corporate
headquarters and stores, are estimated and recorded as a provision. The expected length of use is estimated as thetime from acquisition to the end of the useful life and discount rates ranging between 0.00–0.99% are generally used in
calculations.
(12) Share-based payments
The Group grants share-based payments in the form of share subscription rights (stock options) to employees of theCompany and its subsidiaries. In doing so, the Group aims to heighten morale and motivate employees to improve theGroup’s business performance, thereby increasing shareholder value by reinforcing business development that is focused on
the interests of the shareholders. These share-based payments do this by rewarding contributions to the Group’s profit andby connecting the benefits received by these individuals to the Company’s stock price.
Stock options are measured at fair value based on the price of the Company’s shares on the grant date. Fair value of stock
options is further disclosed in “29. Share-based Payments”.
The fair value of the stock options determined at the grant date is expensed, together with a corresponding increase incapital surplus in equity, over the vesting period on a straight-line basis, taking into consideration the Group’s best estimatesof number of stock options that will ultimately vest.

— 110 —

(13) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable by the Group, less returns, trade
discounts and rebates. If a single transaction has multiple identifiable elements, the transaction is apportioned among theelements and revenue is recognized for each element. When two or more transactions make commercial sense only when
considered together as a single entity, revenue is recognized for the transactions together. The recognition standards andmethod of presentation for revenue are described below.
(i) Revenue recognition standards
Revenue from the sale of goods is recognized when all the following conditions have been satisfied:• The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;• The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;• The amount of revenue can be measured reliably;• It is probable that the economic benefits associated with the transaction will flow to the Group; and• The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii) Method of presentation for revenue
If the Group is acting as a principal in a transaction, revenue is measured at the fair value of the consideration received or
receivable from the customer.
(14) Income taxes
Income taxes comprise current and deferred taxes. These are recognized in profit or loss, except for the taxes arising fromitems that are recognized as other comprehensive income.
Current taxes are measured at the amount expected to be paid to (or recovered from) taxation authorities on taxable
income or loss for the current year, using the rates that have been enacted or substantively enacted by each reporting datein the countries where the Group operates and generates taxable income, with adjustments to tax payments in past periods.
Through the use of an asset and liability approach, deferred tax assets and liabilities are recorded for the temporary
differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts of assets andliabilities for tax purposes. Deferred tax assets and liabilities are not recognized for temporary differences under any of thefollowing circumstances:• Temporary differences arising from goodwill;• Temporary differences arising from the initial recognition of an asset/liability which, at the time of the transaction,
does not affect either the accounting profit or the taxable income (other than in a business combination); or• Temporary differences associated with investments in subsidiaries, but only to the extent that it is possible to control
the timing of the reversal of the differences and it is probable that the reversal will not occur in the foreseeable future.
The consolidated taxation system is applied for the Company and 100% owned subsidiaries in Japan.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when thetemporary difference is realized or settled, based on tax laws that have been enacted or substantively enacted by eachreporting date. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when income taxes are levied by the same taxation authority on either the same taxable entity or
on different taxable entities which intend either to settle current tax assets and liabilities on a net basis, or to realize theassets and settle the liabilities simultaneously.

— 111 —

Deferred tax assets are recognized for unused tax losses, tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets arereviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefits will be
realized.
(15) Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable to common shareholders of the parent by theweighted average number of common stocks outstanding during the period, adjusted for treasury stock. Diluted earnings per
share is calculated by adjusting for all dilutive potential ordinary shares having a dilutive effect.
4. Application of new and amended standards and interpretations
The Group adopted the following standards and amendments from the beginning of the current fiscal year.
IFRS

Title

Summary

IAS 1 (Amendments)

Presentation of Financial Statements

Clarification of methods of presentation of financial statements and disclosures

IAS16 (Amendments)

Property, Plant and Equipment

Clarification of Acceptable Methods of Depreciation

IAS 28 (Amendments)

Investments in Associates and Joint Ventures

Clarification of items requested regarding accounting treatment of investment
entities

IAS 34 (Amendments)

Interim Financial Reporting

Clarifying the handling of information required by IAS 34, when given in the“Other” section of the financial reports for the term.

IAS 38 (Amendments)

Intangible Assets

Clarification of Acceptable Methods of Amortization

IFRS 5 (Amendments)

Non-current Assets Held for Sale andDiscontinued Operations

Clarification of accounting treatment of non-current assets, when the
categorization requirements regarding “holding for purpose of allocation toowner” are no longer met, or when the category is changed from “holding for
purpose of sale” to “holding for purpose of allocation to owner.”

IFRS 7 (Amendments)

Financial Instruments: Disclosures

Clarification of standards for determination of continuing involvement infinancial assets to be transferred.
Clarification of scope of applicable range for offsetting financial assets andfinancial liabilities in financial reports.

IFRS 10 (Amendments)

Consolidated Financial Statements

Clarification of items requested regarding accounting treatment of investment
entities

IFRS 12 (Amendments)

Disclosures of Interests in Other Entities

Sets out the disclosure requirements for investment entities.

The effect of adopting the above standards and amendments on the consolidated financial statements of the Group isimmaterial.
5. Issued but not yet effective IFRSAt the date of authorization of these consolidated financial statements, certain new standards, amendments andinterpretations to existing standards were issued but not yet effective and have not been early adopted by the Group.
The Company is in the process of assessing the impact of the adoption of these standards and interpretations, but is
not yet in a position to state whether these new and revised IFRS would have a significant impact on the Group’s results ofoperation and financial position.

IFRS

IFRS 16 (Amendments)

Title

LeasesMandatory
adoption date(year beginning on)

The Group’s
adoption date

1 January 2019Year ending
31 August 2020

Summary
Amendments to accounting treatment for leasearrangements

IFRS 16 does not require that a lessee classifies the leases into financial lease or operating lease, and introduces a single
lessee accounting model. A lessee recognizes, for all leases, a right-of-use asset representing its right of use the underlying
leased asset and a lease liability representing its obligation to make lease payments. However a lessee may elect not to apply
the above requirement to short term (12 months or less) and low value lease. After the initial recognition of a right-of-use
asset and a lease liability, an entity recognizes depreciation cost of the right-of-use asset and interest expense of the leaseliability.
Apart from the aforementioned IFRS 16, the standards, interpretations and amendments that are issued but not yet
effective are as follows:— 112 —

There are the new standards, amendments and interpretations other than the above, it is as follows:

IFRS

Title

Mandatory
adoption date(year beginning on)

The Group’s
adoption date

Summary

IAS 7 (Amendments)

Statement of Cash Flows

1 January 2017

Year ending
31 August 2018

Request for disclosure of changes in liabilities related tofinancing activities

IAS12 (Amendments)

Income Taxes

1 January 2017

Year ending
31 August 2018

Recognition of deferred tax assets for unrealized losses

IFRS 2 (Amendments)

Share-based Payment

1 January 2018Year ending
31 August 2019

Classification and measurement of share-based paymenttransactions

IFRS 9 (2014)

Financial Instruments

1 January 2018Year ending
31 August 2019

Replaces IAS39 Financial Instruments: Recognition
and Measurement, and all previous versions of IFRS 9.
Amendments for the classification and measurementof financial instruments, adoption of expected credit
loss impairment model for financial assets and hedge
accounting

IFRS 15 (Amendments)

Revenue from Contracts
with Customers

1 January 2018Year ending
31 August 2019

Revised accounting standard for revenue recognition anddisclosures

IFRIC 22

Foreign Currency
Transaction and Advance
Consideration

1 January 2018Year ending
31 August 2019

Clarifies the accounting for transactions that include thereceipt or payment of advance consideration in a foreign
currency.

IFRIC 23

Uncertainty over income
Tax Treatments

1 January 2019Year ending
31 August 2020

Clarifies the accounting for uncertainties in income taxes.

IFRS 10 (Amendments)

Consolidated Financial
Statements※―

Sale or contribution of assets between an investor and its
associate or joint venture

IAS 28 (Amendments)

Investments in Associates
and Joint Ventures※―

Sale or contribution of assets between an investor and its
associate or joint venture※ The IASB announced in December 2015 that it will defer the effective date of the amendments until such time as it has
finalized any amendments that result from its research project on the equity method.

— 113 —

6. Segment Information(1) Description of reportable segments
The Group’s reportable segments are components for which discrete financial information is available and is reviewed
regularly by the Board to make decisions about the allocation of resources and to assess performance.
The Group’s main retail clothing business is divided into three reportable operating segments: UNIQLO Japan, UNIQLOInternational and Global Brands, each of which is used to frame and form the Group’s strategy.
The main businesses covered by each reportable segment are as follows: UNIQLO Japan:
UNIQLO clothing business within Japan
UNIQLO International: UNIQLO clothing business outside of Japan
Global Brands: GU, Theory, Comptoir des Cotonniers, Princesse tam.tam and J Brand clothing operations(2) Method of calculating segment revenue and results
The methods of accounting for the reportable segments are the same as those stated in “3. Significant Accounting
Policies”.
The Group does not allocate assets and liabilities to individual reportable segments.
(3) Segment information
Year ended 31 August 2016
(Millions of yen)
Reportable segments
UNIQLOUNIQLO
GlobalJapan
International
Brands

Revenue
Operating profit/(losses)
Segment income/(losses)(profit before income taxes)
Other disclosure:
Depreciation and amortization
Impairment losses

Total

Others(Note1)

Consolidated
Adjustments
Statement of(Note2)
Profit or Loss

— 1,786,473(22,364)
127,292

799,817
102,462

655,406
37,438328,557
9,520

1,783,782
149,4212,691
235

100,456

37,138

9,297

146,892

235(56,890)

90,237

7,190
1,747

17,623
5,833

6,605
14,816

31,41922,397

156
—

5,221
—

36,79722,397(Note 1) “Others” include real estate leasing business, etc.
(Note 2) “Adjustments” mainly include revenue and corporate expenses which are not allocated to individual reportablesegments.
Year ended 31 August 2017
(Millions of yen)
Reportable segments
UNIQLOUNIQLO
GlobalJapan
International
Brands

Total

Others(Note1)

Consolidated
Adjustments
Statement of(Note2)
Profit or Loss

Revenue

810,734

708,171

340,143

1,859,048

2,868

—

1,861,917

Operating profit/(losses)

95,914

73,143

14,043

183,101

285(6,972)

176,414Segment income/(losses)(profit before income taxes)

97,86872,814

13,924

184,608

285

8,504

193,398

Other disclosure:
Depreciation and amortization
Impairment losses

8,966
284

17,214
1,603

6,478
3,854

32,659
5,741

153
—

6,875
3,583

39,6889,324(Note 1) “Others” include real estate leasing business, etc.
(Note 2) “Adjustments” mainly include revenue and corporate expenses which are not allocated to individual reportablesegments. Please refer to “15. Impairment losses” for details of impairment loss on IT system investments, which isallocated to “Adjustments”.

— 114 —

(4) Geographic Information
Year ended 31 August 2016
1. External Revenue(Millions of yen)
Japan

PRC
1,033,058

Overseas (Others)
239,720

Total

513,694

1,786,473

2. Non-current assets (excluding financial assets and deferred tax assets)(Millions of yen)Japan

United States of America(“U.S.A.”)

PRC
63,94522,194

Overseas (Others)

31,044

Total

61,236

178,421

Year ended 31 August 2017
1. External Revenue(Millions of yen)
Japan

PRC
1,053,970

Overseas (Others)
260,039

Total

547,908

1,861,917

2. Non-current assets (excluding financial assets and deferred tax assets)(Millions of yen)
Japan

PRC
73,133(Note)U.S.A.
25,258Overseas (Others)
27,56568,544

Total
194,502

Geographic information on non-current assets in the U.S.A. as at 31 August 2016 and 2017 have been separately
disclosed due to their increased significance, which individually represent a material amount of the Group’s total
non-current assets.

7. Business Combination
Year ended 31 August 2016
Not applicable.
Year ended 31 August 2017
Not applicable.

— 115 —

8. Cash and cash equivalents
The breakdown of cash and cash equivalents as at each year end is as follows:(Millions of yen)
As at
31 August 2016
Cash and bank balances
Money market funds (MMF), cash funds,
negotiable certificates of deposits
Total

As at
31 August 2017

270,051562,656

115,379

121,146

385,431

683,802

9. Trade and other receivables
The breakdown of trade and other receivables as at each year end is as follows:(Millions of yen)
As at
31 August 2016

As at
31 August 2017

Accounts receivable — trade
Notes receivable
Other accounts receivable
Allowance for doubtful accounts

40,509
45
5,290
(667)

43,096
154
6,009
(661)

Total

45,17848,598

See note “30. Financial Instruments” for credit risk management and the fair value of trade and other receivables.

10. Inventories
The breakdown of inventories as at each year end is as follows:(Millions of yen)
As at
31 August 2016
Products
Supplies
Total

As at
31 August 2017

265,831
4,172

286,499
3,176

270,004

289,675

No inventories were pledged as collateral to secure debt.
Write-down of inventories to net realizable value is as follows:(Millions of yen)
Year ended
31 August 2016
Write-down of inventories to net realizable value

Year ended
31 August 2017
3,866

— 116 —

3,433

11. Other financial assets and other financial liabilities
The breakdowns of other financial assets and other financial liabilities as at each year end are as follows:(Millions of yen)
As at
31 August 2016
Other financial assets:
Available-for-sale financial assets
Loans and receivables
Loans and receivables
Allowance for doubtful accounts

As at
31 August 2017
1,636

303

260,373(218)

107,998(267)

Total loans and receivables

260,155

107,731

Total

261,792

108,034

184,239
77,55330,426
77,608Other current financial assets total
Other non-current financial assets total(Millions of yen)
As at
31 August 2016
Other financial liabilities:
Financial liabilities measured at amortized cost
Interest-bearing bank and other borrowings
Deposits
Deposits/guarantees received
Total
Other current financial liabilities total
Other non-current financial liabilities total

As at
31 August 2017

283,465
1,805
1,400

281,512
2,176
1,623

286,672

285,312

12,581
274,090

11,844273,467

12. Other assets and other liabilities
The breakdowns of other assets and other liabilities as at each year end are as follows:(Millions of yen)
As at
31 August 2016
Other assets:
Prepayments
Long-term prepayments
Others
Total
Current
Non-current— 117 —As at
31 August 2017
11,954
4,453
5,580

13,084
4,742
4,223

21,98722,05017,534
4,453

17,3074,742

(Millions of yen)
As at
31 August 2016
Other liabilities:
Accruals
Employee benefits accruals
Others
Total
Current
Non-current

As at
31 August 201724,484
4,494
16,57528,181
5,931
17,76345,55451,87531,68913,86535,731
16,144

13. Property, plant and equipment
Increase/(decrease) in acquisition costs, accumulated depreciation and impairment of property, plant and equipment are as
follows:(Millions of yen)
Acquisition costs

Furniture,
Buildings
equipment andand structures
vehiclesConstruction in
Leased assets
progress

Land

Total

At 1 September 2015

195,764

38,362

3,345

7,284

21,369266,126

Additions
Disposals
Transfers
Exchange realignment

17,646(8,941)
11,092(19,574)

5,342(1,148)—(3,303)—(1,383)——

16,584—(11,092)(1,746)

6,529(3,141)——

46,103(14,614)—(24,624)

At 31 August 2016

195,986

39,253

1,962

11,02924,757

272,990

Additions
Disposals
Transfers
Exchange realignment

13,009(9,718)18,404
13,9295,144(1,391)
—
3,132

—
—
—
—

13,437—(18,404)
761

9,631(2,942)—
941,223(14,051)—
17,832

At 31 August 2017

231,612

46,139

1,962

6,824

31,455317,994(Millions of yen)

Furniture,
Accumulated depreciation Buildings andequipment andand impairment
structures
vehiclesConstruction in
Leased assets
progress

Land

Total

At 1 September 2015

(104,129)(21,537)(702)—(10,416)(136,785)

Depreciation provided
during the year
Impairment losses
Disposals
Exchange realignment(19,953)(6,150)
6,902
9,102

(7,149)(1,387)
769
3,783

—
—
702
—

—
—
—
—

(3,939)
(384)
3,351
—

(31,041)(7,922)
11,726
12,886

At 31 August 2016

(114,226)(25,520)——(11,389)(151,136)(22,766)(1,491)(5,748)
(571)

—
(34)

—
—

(5,143)(55)(33,658)(2,153)695
7,635(4,680)—1,003(1,545)

—
—
—

—
—
—

—
2,824
(1)

695
11,464(6,226)(134,833)(32,381)(34)—(13,765)(181,015)

Depreciation provided
during the year
Impairment losses
Reversal of
impairment losses
Disposals
Exchange realignment
At 31 August 2017

— 118 —

(Millions of yen)
Net carrying amount

Furniture,
Buildings andequipment andstructures
vehiclesLand

Construction in
Leased assets
progress

Total

At 31 August 2016

81,75913,733

1,962

11,02913,368

121,853

At 31 August 2017

96,77813,757

1,927

6,824

17,690136,979(Note)

As at 31 August 2017, the Group had store assets attributable to UNIQLO Japan and UNIQLO International businessamounting to 96,998 million yen.

Net carrying amounts of finance-leased assets are as follows:(Millions of yen)
Net carrying amount

Buildings andstructures

Furniture, equipment
and vehicles

OthersTotal

At 31 August 2016

1,223

12,144—

13,368At 31 August 2017

3,333

14,356—

17,690

There are no restrictions on ownership rights and no pledges on the Group’s property, plant and equipment.

— 119 —

14. Goodwill and intangible assets(1) The increase/(decrease) in acquisition costs, accumulated amortization and impairment of goodwill and intangible assets are
as follows:(Millions of yen)
Intangible assets other than goodwill
Acquisition costs

Goodwill

SoftwareTrademarks

Otherintangible
assetsIntangible
assets total

Total

At 1 September 2015

42,09838,22723,45025,11986,797

128,896

External purchases
Disposals
Exchange realignment——(3,952)

10,164(7,233)(286)

6—(3,398)131(324)(3,851)

10,302(7,558)(7,535)

10,302(7,558)(11,487)

At 31 August 2016

38,14640,871

20,05821,07582,006

120,152

External purchases
Disposals
Exchange realignment

—
—
5,023

11,511
(436)
513

—
—
1,366

924
(535)
884

12,435(972)
2,764

12,435(972)
7,788

At 31 August 2017

43,17052,46021,42522,34896,234

139,404(Millions of yen)
Intangible assets other than goodwill
Accumulated amortizationand impairment

Goodwill

SoftwareTrademarks

Otherintangible
assetsIntangible
assets total

Total

At 1 September 2015

(14,933)(26,005)(7,571)(12,229)(45,806)(60,739)

Amortization provided during the year
Impairment losses
Disposals
Exchange realignment—(7,565)—2,260(4,735)
—
7,213
207

—
(3,902)—984(1,019)(2,995)324
1,928(5,755)(6,897)
7,538
3,120

(5,755)(14,463)
7,538
5,381

At 31 August 2016

(20,237)(23,319)(10,488)(13,992)(47,800)(68,038)

Amortization provided during the year
Impairment losses
Disposals
Exchange realignment—(2,196)—(4,850)(5,899)(2,912)
44
(32)

—
(772)
—
(644)

(130)
(681)
535
(1,044)(6,029)(4,366)579(1,722)(6,029)(6,562)579(6,573)

At 31 August 2017(27,285)(32,118)(11,906)(15,314)(59,339)(86,624)(Note)

Amortization of intangible assets is included in “selling, general and administrative expenses” on the consolidated
statement of profit or loss.
(Millions of yen)
Intangible assets other than goodwill
Net carrying amount

Goodwill

SoftwareTrademarks

Otherintangible
assets

Total

Intangible
assets total

At 31 August 2016

17,90817,552

9,570

7,083

34,205

52,114

At 31 August 201715,885

20,341

9,519

7,034

36,89552,780— 120 —

(2) Significant goodwill and intangible assets
Goodwill and intangible assets recorded in the consolidated statement of financial position are mainly for goodwill andtrademarks related to Theory business.
Certain trademarks will continue to be used as long as the business remains viable; therefore, management estimated theuseful lives as indefinite.
The carrying amount of the goodwill and intangible assets with indefinite useful lives by cash-generating unit (“CGU”) is asfollows:(Millions of yen)
Goodwill
Net carrying amountAt 31 August 2016
At 31 August 2017

UNIQLOUNIQLOJapan
International————

GlobalBrands17,90815,885Intangible assets with indefinite
useful lives
UNIQLOUNIQLO
GlobalJapan
International
Brands——15,244——
15,797

15. Impairment losses
During the year ended 31 August 2017, the Group recognized impairment losses on certain store assets, goodwill andintangible assets owned by J Brand business and software relating to IT system investments, due to reductions in profitability of
the respective cash-generating units, etc.
The breakdown of impairment losses by asset type is as follows:(Millions of yen)
Year ended
31 August 2016
Buildings and structures
Furniture and equipment
Land
Leased assets
Subtotal impairment losses on property,
plant and equipment
Software
Goodwill
Trademark
Other intangible assets
Subtotal impairment losses on intangible assets
Other current assets (short-term prepayments)
Other non-current assets (long-term prepayments)
Total impairment losses(Note)

Year ended
31 August 2017
6,150
1,387
—
384

1,491
571
34
55

7,922

2,153

—
7,565
3,902
2,995
14,463—
11
22,397

2,912
2,196
772
681
6,562
608
—
9,324

Leased assets include furniture and equipment.

The Group’s impairment losses during the year ended 31 August 2017 amounted to 9,324 million yen, compared with 22,397
million yen during the year ended 31 August 2016, and are included in “other expenses” on the consolidated statement of profit
or loss.
Year ended 31 August 2016
(1) Property, plant and equipment
Out of the total impairment losses amounted to 22,397 million yen, 7,934 million yen represented write downs of thecarrying amounts of the store assets to the recoverable amounts, mainly due to a reduction in profitability of certain stores,
including flagship stores.

— 121 —

The grouping of assets is based on the smallest cash-generating unit that independently generates cash inflow. In principle,
each store, including flagship stores, is considered as individual cash-generating unit and recoverable amounts thereof arecalculated based on value in use.
The value in use is calculated based on the cash flow projections with estimates and growth rates compiled by management
at a discount rate of 13.9%. Theoretically, the projected cash flows cover a 5-year period, and do not use a growth rate thatexceeds the long term average market growth rate. The pre-tax discount rate calculation is based on the weighted average costof capital.
The main cash-generating units for which impairment losses were recorded are as follows:
Operating segment

Cash-generating unit

Type

UNIQLO Japan

UNIQLO CO., LTD. stores

Buildings and structures

UNIQLO International

UNIQLO USA LLC etc. stores

Buildings and structures(2) Goodwill and intangible assets, etc.
(i) Impairment losses related to J Brand businessOut of the total impairment losses amounted to 22,397 million yen, 13,861 million yen represented impairment losses forgoodwill, trademarks and customer relationships owned by the J Brand business. The carrying amounts of cash-generating units
related to J Brand business after recognition of impairment losses consisted of 2,018 million yen of goodwill, 1,987 million yenof trademarks and 731 million yen of customer relationships.
The recoverable amounts from trademarks, customer relationships and goodwill related to the J Brand business arecalculated based on fair value less costs of disposal.
Fair value less costs of disposal is determined by taking into account the following two approaches:① The terminal value of the business applied to the 10-year discounted cash flow based on plans projected and approved bymanagement. The fair value measurement is calculated based on post-tax discount rate. The post-tax discount rate is calculated
at 22.0% based on the weighted average cost of capital of the cash-generating units (Income approach).
In addition, deviation from the amount of future cash flows or the predictions about the implementation timing is reflected
mainly in the discount rate.
② Calculation based on the market value of similar assets (Market approach).
This measurement of fair value is classified as level 3 in the fair value hierarchy based on significant inputs used in valuation
techniques. Adverse change in key assumptions — lower estimated future cash flow or higher discount rate (post-tax), would
cause further impairment loss to be recognized.
(ii) Impairment losses on leasehold rights and key money, etc.
Out of the total impairment losses amounted to 22,397 million yen, 601 million yen represented the impairment losses onleasehold rights and key money, etc., which are included in other intangible assets.
The leasehold rights and key money, etc., are intangible assets with indefinite useful lives. The Group assesses, at eachreporting date, whether there is an indication that an asset may be impaired. If any impairment indication exists, or whenannual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount.
The recoverable amount of such store rental agreement related rights is measured at the higher of value in use and fair valueless disposal costs, which is calculated based on the evaluation carried out by accredited independent expert.
Year ended 31 August 2017
(1) Property, plant and equipment
Out of the total impairment losses amounted to 9,324 million yen, 2,153 million yen represented write downs of the carrying
amounts of the store assets to the recoverable amounts, mainly due to a reduction in profitability of certain stores, including
flagship stores.
The grouping of assets is based on the smallest cash-generating unit that independently generates cash inflow. In principle,
each store, including flagship stores, is considered as individual cash-generating unit and recoverable amounts thereof arecalculated based on value in use.
— 122 —

The value in use is calculated based on the cash flow projections with estimates and growth rates compiled by management
at a discount rate of 14.6%. Theoretically, the projected cash flows cover a 5-year period, and do not use a growth rate thatexceeds the long term average market growth rate. The pre-tax discount rate calculation is based on the weighted average costof capital.
The main cash-generating units for which impairment losses were recorded are as follows:
Operating segment

Cash-generating unit

Type

UNIQLO Japan

UNIQLO CO., LTD. stores

Buildings and structures

UNIQLO International

UNIQLO USA LLC etc. stores

Buildings and structures

Global Brands

PRINCESSE TAM. TAM S.A.S. etc. stores

Buildings and structures(2) Goodwill and intangible assets, etc.
(i) Impairment losses related to J Brand businessOut of the total impairment losses amounted to 9,324 million yen, 3,650 million yen represented impairment losses forgoodwill, trademarks and customer relationships owned by the J Brand business. The carrying amounts of cash-generating units
related to J Brand business after recognition of impairment losses consisted of zero yen of goodwill and customer relationships,
and 1,388 million yen of trademarks.
The recoverable amounts from goodwill and intangible assets relating to trademarks and customer relationships, related to
the J Brand business are calculated based on fair value less cost of disposal.
Fair value less costs of disposal is determined by taking into account the following two approaches:① The terminal value of the business added to the 10-year discounted cash flow based on plans projected and approved bymanagement. The fair value measurement is calculated based on post-tax discount rate. The post-tax discount rate is calculated
at 20.5% based on the weighted average cost of capital of the cash-generating units (Income approach).
In addition, deviation from the amount of future cash flows or the predictions about the implementation timing is reflected
mainly in the discount rate. Furthermore, the cash flows beyond the 10-year period are extrapolated using a 3% growth rate bytaking into account the long-term average market growth rate.
② Calculation based on the market value of similar assets (Market approach).
This measurement of fair value is classified as level 3 in the fair value hierarchy based on significant inputs in used valuation
techniques. Adverse change in key assumptions — lower estimated future cash flow or higher discount rate, would cause
further impairment loss to be recognized.
See note “14. Goodwill and intangible assets” for accumulated impairment include of accumulated impairment of J Brand
business.
(ii) Impairment losses related to IT system investment
Out of the total impairment losses amounted to 9,324 million yen, 3,521 million yen is related to IT system investment forluxury brands. 3,521 million yen is comprised of impairment losses for software assets which amounted to 2,912 million yen andimpairment losses for IT system assets which are included in other current assets which amounted to 608 million yen.
These impairment losses represented write downs of the carrying amounts of the aforementioned assets to the recoverable
amounts in order to reflect the decreased profitability that resulted from replacing the system. The Company allocates thesoftware, as corporate assets, to each luxury brands, whereby representing individual cash-generating units.
The recoverable amounts of each cash-generating units, related to the luxury brands, are calculated based on value in use. As
a result, the carrying amounts of software after recognition of impairment losses amounted to zero yen.

— 123 —

(3) Reversal of impairment losses
Since recovery in profitability were identified in certain stores in the UNIQLO Japan business whereof impairment losses wererecorded in the past (mainly buildings and structures), the total reversal of impairment losses amounted to 695 million yen was
included in “Other income” in the consolidated statement of profit or loss. The recoverable amounts are based on value in use.
The calculation basis of value in use is the cash flow projections based on estimates and growth rates compiled bymanagement at discount rates ranging from 16.3% to 19.3%. Theoretically, the projected cash flows are based on the remaining
estimated useful lives of the respective property, plant and equipment, and do not use a growth rate that exceeds the long term
average market growth rate. The pre-tax discount rate calculation is based on the weighted average cost of capital.
16. Investments in associates(1) Information of associates accounted for using the equity-method
The information of associates accounted for using the equity-method is as follows:(Millions of yen)
Year ended
31 August 2016

Year ended
31 August 2017

Share of profits and losses of associates

132

625

Share of other comprehensive income of investments inassociates——

Share of comprehensive income of investments inassociates
Carrying amount of investments in associates

132

625

13,132

13,473(2) Determination regarding significant influence and financial information on important associates
In June 2016, the Company invested in a domestic investment corporation aiming to own a distribution facility. The Company
has significant influence over the financial and operating policy.
The Company’s maximum exposure to losses due to its investments in the associates is limited to the amount of theinvestments by the Company and is included in the consolidated statement of financial position as “Investments in associates”,
which amounted to 13,298 million yen. The Group’s share of profit and comprehensive income of the associates was 646 million
yen and was included in the consolidated statement of profit or loss and consolidated statement of comprehensive income,respectively.
Total assets of the associates amounted to 71,139 million yen, which mainly comprised non-current assets such as
warehouse, etc. The Company invested in the associates at the time of incorporation and no goodwill is recognized.
The Company received dividends amounting to 480 million yen from the associates during the year ended 31 August 2017.
The Group has entered into lease contracts with one of the associates relating to warehouse rental, etc.

— 124 —

17. Finance lease obligations
The breakdown of finance lease obligations is as follows:(Millions of yen)
Future minimum
lease payments
As at 31
August 2016
Finance lease obligations
Due within one year
Due after one year through five years
Due after five years
Total

Present value of
future minimum lease payments

As at 31
August 2017

As at 31
August 2016

As at 31
August 2017

4,954
9,956
1,568

5,820
12,474
1,410

4,821
9,679
1,567

5,596
12,068
1,358

16,47919,706

16,06919,023

Deductions — future finance costs

(410)

(682)

—

—

Total net finance lease payables

16,06919,023

16,06919,023Current portion

—

—

4,821

5,596

Non-current portion——

11,247

13,427

The Group has no sublease contracts, accrued variable lease fees or escalation clauses (clauses enabling upward revisionof rental charges), and no limitations imposed by lease contracts (limitations regarding dividends, additional borrowing, oradditional leases, etc.).

18. Operating lease commitments(1) As Lessee
The Group’s total future minimum lease payments on non-cancellable operating leases as at each year end are as follows:(Millions of yen)
As at
31 August 2016
Due within one year
Due after one year through five years
Due after five years
Total

As at
31 August 201737,956104,234
126,506

47,901
138,904
132,439

268,696319,246

The total minimum lease payments and contingent rents for operating lease contracts recognized as expenses during the year
are as follows:(Millions of yen)
Year ended
31 August 2016

Year ended
31 August 2017

Total minimum lease payments
Contingent rents

90,54480,811

94,25879,776

Total

171,356

174,034

Contingent rents, renewal options, and escalation clauses (clauses enabling upward revision of rental charges) are included in
the operating lease agreements.
There are no limitations imposed by lease contracts (limitations regarding dividends, additional borrowing, or additional
leases, etc.).

— 125 —

(2) As lessor
The Company sub-leases some of the properties it leased through operating leases, and so while it pays rent to the property
owner, it also receives rent from the sub-tenant.
A breakdown of the future minimum rental receivables under non-cancellable leases is as follows:(Millions of yen)
As at
31 August 2016

As at
31 August 2017

Due within one year
Due after one year through five years
Due after five years
Total

3
14
3

3
14
—

21

18

The total of contingent rents recorded as revenue during each reporting period is as follows:(Millions of yen)
Year ended
31 August 2016
Contingent rents

Year ended
31 August 2017
1,136

1,116

19. Deferred taxes and income taxes(1) Deferred taxes
The main factors in the increase/(decrease) of deferred tax assets and deferred tax liabilities are as follows:(Millions of yen)
As at
1 September 2015

Recognizedin profit or loss
(Note)

Recognizedin othercomprehensive
incomeAs at
31 August 2016

Temporary differences
Accrued business tax
Allowance for bonuses
Provision of allowance for doubtful accounts
Impairment losses on non-current assets
Unrealized gains/(losses) on available-for-sale securities
Depreciation
Net gains/(losses) on revaluation of cash flow hedges
Temporary differences on shares of subsidiaries
Accelerated depreciation
Intangible assets
Others

2,378
3,293
199
3,243
(70)
5,886
(52,042)(1,994)(5,256)(3,940)5,515(1,249)
91
(12)
310
—
533
—
101
(240)
3,293
(371)

—
—
—
—
33
—
74,659
—
—
—
—

1,129
3,385
186
3,553
(36)
6,419
22,617(1,893)(5,496)
(647)
5,143

Subtotal(42,788)

2,456

74,69334,361

6,623

(366)

—

6,257

(36,165)

2,090

74,69340,618Tax losses carried forward
Net deferred tax assets/(liabilities)(Note)The difference between the total amount recognized in profit or loss and the amount of deferred tax is due toexchange realignment.

— 126 —

(Millions of yen)
As at
1 September 2016
Temporary differences
Accrued business tax
Allowance for bonuses
Provision of allowance for doubtful accounts
Impairment losses on non-current assets
Unrealized gains/(losses) on
available-for-sale securities
Depreciation
Net gains/(losses) on revaluation of cash flow hedges
Temporary differences on shares of subsidiaries
Accelerated depreciation
Intangible assets
OthersSubtotal

Recognizedin profit or loss
(Note)

Recognized in othercomprehensive
incomeAs at
31 August 2017

1,129
3,385
186
3,553

99
299
(23)
(4)

—
—
—
—

1,228
3,685
163
3,549

(36)

—

35

(1)

6,419
22,617(1,893)(5,496)
(647)
5,143

1,212
—
—
(1,030)647(4,225)—(22,981)
—
—
—
—

7,632
(364)
(1,893)(6,527)—917

34,361(3,024)(22,946)

8,391

Tax losses carried forward

6,257

654

—

6,911

Net deferred tax assets/(liabilities)

40,618(2,369)(22,946)

15,303(Note)The difference between the total amount recognized in profit or loss and the amount of deferred tax is due toexchange realignment.

Tax effects of unrecognized tax losses carried forward and deductible temporary differences for which deferred tax assets
were not recognized is as follows:(Millions of yen)
As at
31 August 2016
Unrecognized tax losses carried forward
Deductible temporary differences
Total

As at
31 August 201715,48814,607

18,844
15,79830,09534,642

Tax effects of unrecognized tax losses carried forward of which no deferred tax asset is recognized in the consolidated
statement of financial position, if unutilized, will expire as follows:(Millions of yen)
As at
31 August 2016
First year
Second year
Third year
Fourth year
Fifth year and thereafter
Total

As at
31 August 2017————15,488————18,844

15,48818,844

Temporary differences on shares of subsidiaries for which deferred tax liabilities were not recognized
The aggregate amounts of temporary differences associated with undistributed retained earnings of subsidiaries for which
deferred tax liabilities have not been recognized as at 31 August 2016 and 31 August 2017 were 284,455 million yen and
296,630 million yen, respectively.
No liability has been recognized with respect to these differences because the Group is in a position to control the timing of
the reversal of the temporary differences and it is probable that such differences will not be reversed in the foreseeable future.
— 127 —

(2) Income taxes(Millions of yen)
Year ended
31 August 2016
Current tax
Deferred tax
Total

Year ended
31 August 2017
40,772(4,609)61,136
3,351

36,16264,488Reconciliations between the statutory income tax rates and the effective tax rates are as follows. The effective tax rate shownis the corporate income tax rate applied to the Group’s profit before income taxes.
For the Company and its Japanese subsidiaries, the timing for the proposed increase of consumption tax rate to 10% was
postponed from 1 April 2017 to 1 October 2019 when the “Act to Partially Amend the Consumption Tax Act to Fundamentally
Reform the Tax System for Securing a Stable Revenue Source for Social Security” (Act No. 85 of 2016) and the “Act to Partially
Amend the Local Tax Act and the Local Allocation Tax Act to Fundamentally Reform the Tax System for Securing a Stable
Revenue Source for Social Security” (Act No. 86 of 2016) were approved by the Diet on 18 November 2016.
Accordingly, the timing of the abolition of local special corporate tax and associated restoration of corporate enterprise tax,
the revision of the local corporate tax rate, and the revision of the corporate inhabitant tax rate are therefore postponed fromthe fiscal year commencing on or after 1 April 2017 until the fiscal year beginning on or after 1 October 2019.
The statutory income tax rates used to calculate deferred tax assets and deferred tax liabilities have not changed, but theamounts of deferred tax assets and deferred tax liabilities have been revised due to the occurrence of reclassification of tax
rates between national tax and local tax.
The impact of these tax rate amendments on the consolidated financial statements is immaterial.
(Millions of yen)
Year ended
31 August 2016

Year ended
31 August 2017

Statutory income tax rate
Unrecognized deferred tax assets
Difference in statutory income tax rates of subsidiaries
Impairment loss of goodwill
Undistributed earnings of foreign subsidiaries
Inhabitant tax on per capita basis
Others

33.0%
8.9%(7.9%)
3.2%
0.4%
1.0%
1.2%

30.8%
2.4%
(3.9%)
0.4%
3.1%
0.1%
0.3%

Effective tax rate

40.0%

33.3%

20. Trade and other payables
The breakdown of trade and other payables as at each year end is as follows:(Millions of yen)
As at
31 August 2016
Trade payables
Other payables
Total— 128 —As at
31 August 2017

130,745
58,756

137,325
66,683

189,501

204,00821. Provisions
The breakdown of provisions as at each year end is as follows:(Millions of yen)
As at
31 August 2016
Allowance for bonuses
Asset retirement obligations

As at
31 August 2017
16,802
16,126

Total
Current liabilities
Non-current liabilities

19,10824,18932,92943,29822,284
10,64527,88915,409The main factors for the increase / (decrease) in provisions are as follows:(Millions of yen)
Allowance forbonuses

Asset retirement
obligations

Total

Balances as at 1 September 2015

17,73515,08332,819Additional provisions
Amounts utilized
Increase in discounted amounts arising frompassage of time
Others21,088(20,759)

1,800
(356)

22,888(21,116)

—

243

243

(1,261)(644)(1,905)

Balances as at 31 August 2016

16,802

16,12632,929Additional provisions
Amounts utilized
Increase in discounted amounts arising frompassage of time
Others24,896(23,222)

8,146
(664)

33,043(23,886)

—

168

168

631

411

1,043

Balances as at 31 August 201719,10824,18943,298

Please refer to “3. Significant Accounting Policies (11) Provisions” for an explanation of respective provisions.
22. Equity and other equity Items(1) Share Capital
Number of
Number of
Number of
authorized sharesissued shares outstanding shares
Capital stock(Common stock(Common stock(Common stock(Millions of yen)with no par-value) with no par-value) with no par-value)(shares)(shares)(shares)
Balances as at 1 September 2015
Increase/(decrease) (Note)
Balances as at 31 August 2016
Increase/(decrease) (Note)
Balances as at 31 August 2017
(Note)

Capital surplus(Millions of yen)

300,000,000

106,073,656

101,945,401

10,273

11,524——18,752—

1,546

300,000,000

106,073,656

101,964,153

10,273

13,070——19,839—1,303

300,000,000

106,073,656

101,983,992

10,273

14,373The main factor for the increase/(decrease) in the number of shares in circulation was the increase/(decrease) in thenumber of treasury stock as indicated below.

— 129 —

(2) Treasury Stock and Capital Surplus➀

Treasury Stock
Number of shares (shares)

Balances as at 1 September 2015

4,128,255

15,699149(18,901)

6(72)

4,109,503

15,633

155(19,994)

6(75)

4,089,664

15,563Acquisition of treasury stock less than one unit
Exercise of stock options
Balances as at 31 August 2016
Acquisition of treasury stock less than one unit
Exercise of stock options
Balances as at 31 August 2017➁

Amount (Millions of yen)

Capital surplus(Millions of yen)

Balances as at
1 September 2015
Disposal of treasury stock
Share-based payments
OthersBalances as at
31 August 2016
Disposal of treasury stock
Share-based payments
OthersBalances as at
31 August 2017

Capital reserve

Gain/(loss) on
disposalof treasury stock

Stock options

4,578

2,556

2,662

1,726

11,524

—
—
—

546
—
8

—
945
(8)

—
—
53

546
945
53

4,578

3,112

3,599

1,779

13,070

—
—
—

642
—
—

—
754
—

—
—
(94)

642
754
(94)

4,578

3,754

4,354

1,685

14,373

Others

Total

Please refer to “29. Share-based payments” for details of share-based payments (stock options).
(3) Other components of equity
The breakdown of other comprehensive income included in non-controlling interests is as follows:(Millions of yen)
Year ended
31 August 2016

Year ended
31 August 2017

Exchange differences on translation of foreign operations
Cash flow hedges(2,648)(1,400)

1,666
196

Other comprehensive income(4,049)1,862— 130 —

(4) Dividends
The Company’s basic policy is to pay dividends twice a year, an interim dividend and a year-end dividend. These dividends are
decided by resolution of the Board, unless otherwise stipulated by laws and regulations.
The total amount of dividends paid was as follows:Year ended 31 August 2016
Resolutions

Amount of dividends(Millions of yen)

Dividends per share(Yen)

Board of Directors’ meeting held on 4 November 2015

17,840175

Board of Directors’ meeting held on 7 April 2016

18,861

185

Year ended 31 August 2017
Resolutions

Amount of dividends(Millions of yen)

Dividends per share(Yen)

Board of Directors’ meeting held on 4 November 2016

16,824

165

Board of Directors’ meeting held on 13 April 2017

17,846

175

Proposed dividends on common stock are as follows:Year ended 31 August 2016
Total amount of dividends (millions of yen)
Dividends per share (yen)Year ended 31 August 201716,824

17,847165

175

Regarding the proposed dividends per common stock, the Board has approved the proposal subsequent to the year-end date,
and this sum is not recognized as a liability at year end.
23. Revenue
The breakdown of revenue for each year is as follows:(Millions of yen)
Year ended
31 August 2016
Revenue
Sales of goods
Service revenue
Total

Year ended
31 August 2017

1,782,033
4,440

1,857,065
4,852

1,786,473

1,861,917

24. Selling, general and administrative expenses
The breakdown of selling, general and administrative expenses for each year is as follows:(Millions of yen)
Year ended
31 August 2016
Selling, general and administrative expenses
Advertising and promotion
Rental expenses
Depreciation and amortization
Outsourcing
Salaries
Others71,611
171,356
36,79733,602242,033
147,555— 131 —

Year ended
31 August 201770,937174,034
39,68833,244
252,520
154,790

Total702,956

725,215

25. Other income and other expenses
The breakdowns of other income and other expenses for the each year are as follows:(Millions of yen)
Year ended
31 August 2016
Other income
Foreign exchange gains*
Gains on sales of property, plant and equipment
Share of profits and losses of associates
Reversal of impairment losses
Others
Total

Year ended
31 August 2017
—
135
132
—
2,095

2,137
18
625
695
3,469

2,363

6,947
(Millions of yen)

Year ended
31 August 2016

Year ended
31 August 2017

Other expenses
Foreign exchange Iosses*
Losses on retirement of property, plant and equipment
Impairment losses
Others

11,095
1,052
22,397
2,567

—
1,915
9,324
3,327

Total

37,112

14,567* Currency adjustments incurred in the course of operating transactions are included in “other income” or “other expenses”.
26. Finance income and finance costs
The breakdowns of finance income and finance costs for each year are as follows:(Millions of yen)
Year ended
31 August 2016
Finance income
Foreign exchange gains*
Interest income
Dividend income
Others
Total

Year ended
31 August 2017
—
2,349
14
—

13,318
6,110
14
474

2,364

19,917(Millions of yen)

Year ended
31 August 2016
Finance costs
Foreign exchange Iosses*
Interest expenses
Others
Total

Year ended
31 August 2017
36,955
2,402
62

—
2,932
—

39,420

2,932* Currency adjustments incurred in the course of non-operating transactions are included in “finance income” or “finance— 132 —

costs”.
27. Other comprehensive income
The breakdown of amounts recorded during the year, reclassification adjustments and income tax effect generated byindividual comprehensive income items included in “other comprehensive income” for each year are as follows:Year ended 31 August 2016
(Millions of yen)Amount recorded
during the year

Reclassification
adjustment

Amount before
income tax

Incometax effectAmount after
income tax

71

—

71

33

105

Net gain/(loss) on revaluation ofavailable-for-sale investments
Exchange differences ontranslation offoreign operations
Cash flow hedges(43,312)—(43,312)—(43,312)(168,603)(56,295)(224,899)

74,659(150,239)

Total(211,844)(56,295)(268,140)

74,693(193,447)

Year ended 31 August 2017
(Millions of yen)Amount recorded
during the year

Reclassification
adjustment

Amount before
income tax

Incometax effectAmount after
income tax

193

(474)

(280)

35

(245)

Net gain/(loss) on revaluation ofavailable-for-sale investments
Exchange differences ontranslation offoreign operations
Cash flow hedges

26,285—26,285—26,28592,496(22,405)

70,091(22,981)

47,109Total

118,974(22,879)

96,095(22,946)

73,148— 133 —

28. Earnings per share
Year ended 31 August 2016
Equity per share attributable to ownersof the parent (Yen)
Basic earnings per share for the year (Yen)
Diluted earnings per share for the year (Yen)Note:Year ended 31 August 2017
5,634.35
471.31
470.69Equity per share attributable to ownersof the parent (Yen)
Basic earnings per share for the year (Yen)
Diluted earnings per share for the year (Yen)7,175.35
1,169.70
1,168.00

The basis for calculation of basic earnings per share and diluted earnings per share for the year is as follows:Year ended
31 August 2016

Basic earnings per share for the year
Profit for the year attributable to ownersof the parent (Millions of yen)
Profit not attributable to common shareholders(Millions of yen)
Profit attributable to common shareholders(Millions of yen)
Average number of common stock during the year
(Shares)
Diluted earnings per share for the year
Adjustment to profit (Millions of yen)
Increase in number of common stock (Shares)(share subscription rights)

Year ended
31 August 2017

48,052

119,280——

48,052

119,280

101,955,026

101,975,416—
134,476(134,476)—
148,207(148,207)

29. Share-based Payments
The Group has a program for issuing share subscription rights as share-based compensation stock options for employees of
the Company and its subsidiaries as a means of recognizing their contribution to the Group’s profit. By linking the Company’s
stock price to the benefits received by personnel, this program aims to boost staff morale and motivation, improve Group
performance and enhance shareholder value by strengthening business development with a focus on shareholder return.
1. Details, scale and changes in stock options(1) Description of stock options
1st Share subscription rights
A type

1st Share subscription rights
B typeCategory and number of grantee

Employees of the Company: 7
Employees of the Groupsubsidiaries: 3

Employees of the Company: 266
Employees of the Groupsubsidiaries: 413

Number of stock options by type of shares (Note)

Common stock:maximum 3,370 shares

Common stock:maximum 77,542 shares

Grant date

8 November 2010

8 November 2010

Vesting conditions

To serve continuously until thevesting date (7 November2013) after the grant date
(8 November 2010)

To serve continuously until thevesting date (7 December2010) after the grant date
(8 November 2010)

Eligible service period

From 8 November 2010 to
7 November 2013

From 8 November 2010 to
7 December 2010

Exercise period

From 8 November 2013 to
7 November 2020

From 8 December 2010 to
7 November 2020

Settlement

Equity settlement

Equity settlement— 134 —

2nd share subscription rights
A type

2nd share subscription rights
B typeCategory and number of grantee

Employees of the Company: 14
Employees of the Groupsubsidiaries: 4

Employees of the Company: 139
Employees of the Groupsubsidiaries: 584

Number of stock options by type of shares (Note)

Common stock:maximum 13,894 shares

Common stock:maximum 51,422 shares

Grant date

15 November 201115 November 2011

Vesting conditions

To serve continuously until thevesting date (14 November 2014)
after the grant date
(15 November 2011)

To serve continuously until thevesting date (14 December 2011)
after the grant date
(15 November 2011)

Eligible service period

From 15 November 2011 to
14 November 2014

From 15 November 2011 to
14 December 2011

Exercise period

From 15 November 2014 to
14 November 2021

From 15 December 2011 to
14 November 2021

Settlement

Equity settlement

Equity settlement

3rd share subscription rights
A type

3rd share subscription rights
B typeCategory and number of grantee

Employees of the Company: 18
Employees of the Groupsubsidiaries: 8

Employees of the Company: 136
Employees of the Groupsubsidiaries: 615

Number of stock options by type of shares (Note)

Common stock:maximum 10,793 shares

Common stock:maximum 39,673 shares

Grant date

13 November 2012

13 November 2012

Vesting conditions

To serve continuously until thevesting date (12 November 2015)
after the grant date
(13 November 2012)

To serve continuously until thevesting date (12 December 2012)
after the grant date
(13 November 2012)

Eligible service period

From 13 November 2012 to
12 November 2015

From 13 November 2012 to
12 December 2012

Exercise period

From 13 November 2015 to
12 November 2022

From 13 December 2012 to
12 November 2022

Settlement

Equity settlement

Equity settlement

4th share subscription rights
A type

4th share subscription rights
B typeCategory and number of grantee

Employees of the Company: 19
Employees of the Groupsubsidiaries: 11

Employees of the Company: 180
Employees of the Groupsubsidiaries: 706

Number of stock options by type of shares (Note)

Common stock:maximum 7,564 shares

Common stock:maximum 29,803 shares

Grant date

3 December 2013

3 December 2013

Vesting conditions

To serve continuously until thevesting date (2 December 2016)
after the grant date
(3 December 2013)

To serve continuously until thevesting date (2 January 2014)
after the grant date
(3 December 2013)

Eligible service period

From 3 December 2013 to
2 December 2016

From 3 December 2013 to
2 January 2014

Exercise period

From 3 December 2016 to
2 December 2023

From 3 January 2014 to
2 December 2023

Settlement

Equity settlement

Equity settlement— 135 —

5th share subscription rights
A type5th share subscription rights
B typeCategory and number of grantee

Employees of the Company: 36
Employees of the Groupsubsidiaries: 16

Employees of the Company: 223
Employees of the Groupsubsidiaries: 785

Number of stock options by type of shares (Note)

Common stock:maximum 21,732 shares

Common stock:maximum 33,062 shares

Grant date

14 November 2014

14 November 2014

Vesting conditions

To serve continuously until thevesting date (13 November 2017)
after the grant date
(14 November 2014)

To serve continuously until thevesting date (13 December 2014)
after the grant date
(14 November 2014)

Eligible service period

From 14 November 2014 to
13 November 2017

From 14 November 2014 to
13 December 2014

Exercise period

From 14 November 2017 to
13 November 2024

From 14 December 2014 to
13 November 2024

Settlement

Equity settlement

Equity settlement

6th share subscription rights
A type

6th share subscription rights
B typeCategory and number of grantee

Employees of the Company: 15
Employees of the Groupsubsidiaries: 19

Employees of the Company: 274
Employees of the Groupsubsidiaries: 921

Number of stock options by type of shares (Note)

Common stock:maximum 2,847 shares

Common stock:maximum 25,389 shares

Grant date

13 November 2015

13 November 2015

Vesting conditions

To serve continuously until thevesting date (12 November 2018)
after the grant date
(13 November 2015)

To serve continuously until thevesting date (12 December 2015)
after the grant date
(13 November 2015)

Eligible service period

From 13 November 2015 to
12 November 2018

From 13 November 2015 to
12 December 2015

Exercise period

From 13 November 2018 to
12 November 2025

From 13 December 2015 to
12 November 2025

Settlement

Equity settlement

Equity settlement

6th share subscription rights
C type7th share subscription rights
A typeCategory and number of grantee

Employees of the Company: 26

Employees of the Company: 16
Employees of the Groupsubsidiaries: 23

Number of stock options by type of shares (Note)

Common stock:maximum 6,072 shares

Common stock:maximum 2,821 shares

Grant date

13 November 2015

11 November 2016

Vesting conditions

To serve continuously until thevesting date (12 November 2018)
after the grant date
(13 November 2015)

To serve continuously until thevesting date (10 November 2019)
after the grant date
(11 November 2016)

Eligible service period

From 13 November 2015 to
12 November 2018

From 11 November 2016 to
10 November 2019

Exercise period

13 November 2018

From 11 November 2019 to
10 November 2026

Settlement

Equity settlement

Equity settlement— 136 —

7th share subscription rights
B type7th share subscription rights
C typeCategory and number of grantee

Employees of the Company: 339
Employees of the Groupsubsidiaries: 1,096

Employees of the Company: 30

Number of stock options by type of shares (Note)

Common stock:maximum 31,726 shares

Common stock:maximum 5,205 shares

Grant date

11 November 2016

11 November 2016

Vesting conditions

To serve continuously until thevesting date (10 December 2016)
after the grant date
(11 November 2016)

To serve continuously until thevesting date (10 November 2019)
after the grant date
(11 November 2016)

Eligible service period

From 11 November 2016 to
10 December 2016

From 11 November 2016 to
10 November 2019

Exercise period

From 11 December 2016 to
10 November 2026

11 November 2019

Settlement

Equity settlement

Equity settlement

Note:

The number of stock options is equivalent to the number of shares.

Expenses recognized as share-based payments are as follows:(Millions of yen)
Year ended
31 August 2016

Year ended
31 August 2017

Expenses recognized
Share-based payments

1,539

1,425

(2) Scale of stock options program and changes
Outstanding balance of stock options as at 31 August 2017 are converted into equivalent number of shares.
➀ Number and weighted average exercise prices of stock options
Stock options
Year ended
31 August 2016

Year ended
31 August 2017

Number of shares(shares)Number of shares(shares)Non-vested
Non-vested at beginning of the year
GrantedForfeited
Vested34,17234,308(957)(35,089)

32,43439,752(4,275)(37,791)

Non-vested at end of the year

32,43430,120Year ended
31 August 2016

Year ended
31 August 2017

Number of shares(shares)Number of shares(shares)

VestedOutstanding at beginning of the year
VestedExercised
Forfeited

83,14735,089(18,940)(415)

98,88137,791(19,994)(305)

Outstanding at end of the year

98,881

116,373

All stock options are granted with an exercise price of 1 yen per share.
— 137 —

➁

Stock price on exercise date
Stock options exercised during the year ended 31 August 2017 are as follows:Type

Number of shares(shares)

Stock options➂

Weighted average stock priceon exercise date (Yen)

19,99437,648

Expected life of stock options
The weighted average expected life of outstanding stock options as at 31 August 2017 was 6.29 years.
In addition, the weighted average expected life of outstanding stock options as at 31 August 2016 was 6.87 years.

2. Methods of estimating fair value of stock options, etc.
The methods of estimating fair value of 7th share subscription rights A type, B type and C type, granted during the year ended
31 August 2017, were as follows:➀➁

Valuation model: Black-Scholes model
The following table lists the inputs to the model used:
7th share subscription rights
A type7th share subscription rights
B typeFair value

34,683 yen

35,167 yen

Share price

36,890 yen

36,890 yen

1 yen

1 yen

Exercise price
Stock price volatility (Note 1)
Expected life of options (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)

37%

36%

6.5 years

5.04 years

350 yen/share

350 yen/share(0.205%)(0.213%)7th share subscription rights
C typeFair value

35,854 yen

Share price

36,890 yen

Exercise price

1 yen

Stock price volatility (Note 1)

38%

Expected life of options (Note 2)

3.0 years

Expected dividends (Note 3)

350 yen/share

Risk-free interest rate (Note 4)
Notes:

1.

2.
3.
4.

(0.254%)

Stock price volatility is computed based on the actual results of 6.5 years for A type (from May 2010 to October2016) 5.04 years for B type (from November 2011 to October 2016) and 3 years for C type (from November 2013
to October 2016).
Expected life of options is estimated to be the reasonable period from the grant date until the exercise date.
Expected dividends are projected with reference to the historical actual dividends declared in prior years.
Risk-free interest rate refers to the yield of Japanese government bonds corresponding to the expected life of
options.

— 138 —

Also, the method of estimating fair value for the 6th share subscription rights A type, B type and C type granted during theyear ended 31 August 2016 are as follows:➀➁

Valuation model: Black-Scholes model
The following table lists the inputs to the model used:
6th share subscription rights
A type

6th share subscription rights
B typeFair value

45,657 yen

46,147 yen

Share price47,880 yen

47,880 yen

Exercise price

1 yen

1 yen

Stock price volatility (Note 1)

35%

33%

Expected life of options (Note 2)
Expected dividends (Note 3)

6.5 years

5.04 years

350 yen/share

350 yen/share

0.083%

0.044%

Risk-free interest rate (Note 4)

6th share subscription rights
C typeFair value

46,840 yen

Share price47,880 yen

Exercise price

1 yen

Stock price volatility (Note 1)

34%

Expected life of options (Note 2)

3.0 years

Expected dividends (Note 3)

350 yen/share

Risk-free interest rate (Note 4)
Notes:

1.

2.
3.
4.

0.008%

Stock price volatility is computed based on the actual results of 6.5 years for A type (from May 2009 to October2015) 5.04 years for B type (from November 2010 to October 2015) and 3 years for C type (from November 2012
to October 2015).
Expected life of options is estimated to be the reasonable period from the grant date until the exercise date.
Expected dividends are projected with reference to the historical actual dividends declared in prior years
Risk-free interest rate refers to the yield of Japanese government bonds corresponding to the expected life of
options.

3. Estimation method of the number of share subscription rights which have already been vested
Because it is difficult to reasonably estimate the number of options that will expire in the future, the method reflecting actual
numbers of forfeiture is adopted.
30. Financial Instruments(1) Capital risk management
The Group engages in capital management to achieve continuous growth and maximize corporate value.
The ratio of the Group’s net interest-bearing borrowings to equity is as follows:(Millions of yen)
As at
31 August 2016

As at
31 August 2017

Interest-bearing borrowings
Cash and cash equivalents
Net interest-bearing borrowings

283,465
385,431(101,965)

281,512683,802(402,289)

Equity597,661

762,043

To maximize corporate value, the Group engages in cash flow-oriented management. As at 31 August 2016 and 2017, theGroup maintained a position where the carrying amount of cash and cash equivalents exceeded interest-bearing borrowings.
As at 31 August 2017, the Group is not subject to any externally imposed capital requirement.
— 139 —

(2) Significant accounting policies
See Note “3. Significant Accounting Policies” for significant accounting policies regarding standards for recognizing financial
assets, financial liabilities, equity financial instruments, as well as the fundamentals of measurement and recognition of profit orloss.
(3) Categories of financial instruments(Millions of yen)
As at
31 August 2016
Financial assets
Loans and receivables
Trade and other receivables
Other current financial assets
Other non-current financial assets
Available-for-sale investments
Derivatives
Financial assets at fair value through profit or loss(“FVTPL”)
Foreign currency forward contracts designated as
hedging instruments
Financial liabilities
Financial liabilities at amortized cost
Trade and other payables
Other current financial liabilities
Other non-current financial liabilities
Derivatives
Financial liabilities at FVTPL
Foreign currency forward contracts designated as
hedging instruments

As at
31 August 2017

45,178184,239
75,916
1,636

48,59830,42677,304
303

8

0

560

6,269

189,501
12,581
274,090

204,008
11,844273,467

16

86

72,371

5,996

No items in the above categories are included in discontinued operations or disposal group held-for-sale. Also, there are no
financial assets or liabilities valued using the fair value option to measure fair value.
On the consolidated statement of financial position, available-for-sale investments are included under “non-current financial
assets”.
(4) Financial risk management
In relation to the cash management, the Group seeks to ensure effective utilization of group funds through the Group’s
Cash Management Service (“CMS”). The Group obtained credit facilities from financial institutions and issuance of bonds. Any
temporary surplus funds are invested mainly in fixed interest rate-bearing instruments with minimal credit risk.
The Group entered into foreign currency forward contracts to hedge risk arising from fluctuations in foreign currency
exchange rates and did not conduct any speculative trading in derivatives.

— 140 —

(5) Market risk management
The Group conducts its business on a global scale, and is therefore exposed to the price fluctuation risk of currencies andequity financial instruments.
➀ Foreign currency risk
1) Foreign currency risk management
The Group conducts its business on a global scale, and is exposed to foreign currency risk in relation to purchases and sales
transactions and financing denominated in currencies other than the local currencies of those countries in which the Group
operates its business.
In regard to operating obligations denominated in foreign currencies, the Group in principle hedges risk by using foreign
currency forward contracts and other instruments for foreign currency risk assessed on a semi-annual basis.
For imports, the Group endeavors to stabilize purchasing costs by concluding foreign currency forward contracts andstandardizing import exchange rates. If the yen should weaken significantly against the US dollar in the future and this situation
continued for an extended period, it could have a negative impact on the Group’s performance.
The Group identifies concentration of risk in regard to foreign currency forward contracts.
The Group’s notional amount of foreign currency forward contracts was 1,157,018 million yen as at 31 August 2017.
2) Foreign currency sensitivity analysis
Below is an analysis of the impact an 1% increase in the yen against the Euro (“EUR”) and the United States dollar (“$”) would
have on the Group’s profit for the year and other comprehensive income on the respective reporting periods.
These calculations assume no changes in the value of other foreign currencies not included herein.
Year ended
31 August 2016
Average exchange rate (Yen)$EUR
Impact on profit for the year (Millions of yen)$
EUR
Impact on other comprehensive income (Millions of yen)$
EUR

Year ended
31 August 2017115.06127.23110.09120.68(1,098)(50)(1,492)(19)(9,609)—(9,827)—3) Currency derivatives and hedges
The Group uses foreign currency forward contract transactions to hedge against the risk of future fluctuations in exchange
rates in regard to foreign currency transactions and applies hedge accounting to transactions that meet hedge requirements,
and did not conduct any speculative trading in derivatives.
Cash flow hedges
A cash flow hedge is a hedge for avoiding risk of volatility in future cash flows. The Company uses foreign currency forward
contracts to hedge cash flow fluctuations relating to forecast transactions.
Fluctuations in the fair value of derivative transactions designated as cash flow hedges are recognized as othercomprehensive income, and included in other components of equity, and are reclassified to profit or loss at the time net profit
is recognized on the hedged item.
The gain/(loss) on derivative transactions (after tax effects) projected to be reclassified to profit or loss within one year was
4,483 million yen (loss) as at 31 August 2017, and 11,979 million yen (loss) as at 31 August 2016.

— 141 —

1. Derivative transactions of which hedge accounting is not applied
Foreign currencies
Average exchange(Millions ofrespective currency)
31 August
31 August
31 August
31 August
2016
2017
2016
2017
Foreign currency forward contracts
Over 1 year
0.88—
Buy USD (sell EUR)
0
—
(€/$)
(€/$)
Within 1 year
0.88—
Buy USD (sell EUR)
23
—
(€/$)
(€/$)
1,198.33
1,126.35
Buy USD (sell KRW)
00
(KRW/$)(KRW/$)
31.69
30.33
Buy USD (sell TWD)
7
2
(TWD/$)(TWD/$)
1.35
1.34
Buy USD (sell AUD)
13
14
(AUD/$)(AUD/$)
2. Derivative transactions of which hedge accounting is applied
Foreign currencies
Average exchange rates(Millions ofrespective currency)
31 August
31 August
31 August
31 August
2016
2017
2016
2017
Foreign currency forward contracts
Over 1 year
109.31104.91
6,133
5,884
Buy USD (sell JPY)
(¥/$)
(¥/$)
0.87
0.88
Buy USD (sell EUR)
39
63
(€/$)
(€/$)
0.70
0.76
Buy USD (sell GBP)
20
26
(₤/$)
(₤/$)
1,149.36
1,132.55
Buy USD (sell KRW)
302
306
(KRW/$)(KRW/$)
1.37
1.39
Buy USD (sell SGD)
20
88
(SG$/$)(SG$/$)
Within 1 year
104.78109.71
Buy USD (sell JPY)
3,529
3,405
(¥/$)
(¥/$)
0.89
0.89
Buy USD (sell EUR)
115
124
(€/$)
(€/$)
0.70
0.76
Buy USD (sell GBP)
47
56
(₤/$)
(₤/$)
1,169.03
1,147.45
Buy USD (sell KRW)
468
364
(KRW/$)(KRW/$)
32.54
30.64
Buy USD (sell TWD)
114
107
(TWD/$)(TWD/$)
1.38
1.37
Buy USD (sell SGD)
72
99
(SGD/$)(SGD/$)
35.56
34.45
Buy USD (sell THB)71
58
(THB/$)(THB/$)
4.13
4.33
Buy USD (sell MYR)
46
21
(MYR/$)(MYR/$)
1.35
1.34
Buy USD (sell AUD)
36
29
(AUD/$)(AUD/$)
75.3
79.98
Buy USD (sell RUB)
25
39
(RUB/$)(RUB/$)
1.26
1.32
Buy USD (sell CAD)
1130
(CAD/$)(CAD/$)—
13,798.80
Buy USD (sell IDR)—
24
(IDR/$)(IDR/$)
0.001—
Buy KRW (sell USD)
1—($/KRW)($/KRW)— 142 —

Contract principal(Millions of yen)

Fair value(Millions of yen)

31 August2016

31 August2017

31 August2016

31 August
2017

97

—

0

—

2,428

—

8

—

1

3

(0)

0

806

291

0

(1)

1,448

1,678

(17)

(85)

Contract principal(Millions of yen)

Fair value(Millions of yen)

31 August2016

31 August2017

31 August2016

31 August2017

670,443

617,328(59,123)

5,967

3,917

7,323

0

(482)

1,951

2,843

154

0

32,00034,161

(845)

(603)

2,163

10,044

(17)

(126)

369,772

373,567(8,945)(1,265)

11,77914,603

(22)

(906)

4,488

6,073

379

122

50,492

41,115(2,416)(974)

12,10912,077

(345)

(241)

7,581

11,055

(51)

(138)

7,544

6,687

(184)

(246)

4,885

2,421

(57)

(30)

3,798

3,475

(41)

(177)

2,998

5,971

(319)

(401)

1,134

3,531

21

(169)

—

2,760

—

(53)

107

—

4

—

➁ Interest rate risk management
The Group’s interest-bearing borrowings are mainly bonds with fixed interest rates, and the Group maintains positions incash and cash equivalents that exceed the outstanding balance of its interest-bearing borrowings.
At present, the impact of interest payments on the Group is quite small. Consequently, the Group’s current level of interestrate risk is minor, and the Group has not performed any interest rate sensitivity analysis.
➂ Price risk management in equity instruments
The Group is exposed to the risk of price volatility in equity financial instruments. The Group holds no equity financial
instruments for short-term trading purposes.
The Group makes regular periodic checks of the market value of the equity financial instruments it holds, as well as thefinancial health of the issuers.
(6) Credit risk management
When the Group initiates ongoing transactions where receivables will be generated on an ongoing basis, the financedepartment manages the Group’s risk exposure by setting credit limits and credit periods, as needed.
Trade receivables encompass many customers spanning a wide range of industries and geographic regions. The Group
conducts regular credit checks of the companies it does business with, and when necessary takes appropriate protective
measures, such as requiring collateral.
The Group does not have excessively concentrated credit risk exposure to any single company or corporate group.
As for deposits and guarantees, the Group mitigates risk by conducting regular monitoring of the companies with which itdoes business for early detection of any worsening of their financial health.
➀ Financial assets and other credit risk exposure
The carrying amounts after adjustment for impairment shown in the consolidated financial statements represent the Group’s
maximum exposure to credit risk before consideration of collateral assets.
➁ Past-due or impaired financial assets
Below is an aged analysis of financial assets whose due date had not passed as at each reporting date, and financial assetsthat are overdue whereof no asset impairment was recognized.
(Millions of yen)
Total

Within due date

Overdue amounts
Within 90 days

91 days to 1 year

Over 1 year

Balances as at 31 August 2016
Trade and other receivables(total)Allowance for doubtful accounts

45,846

43,595

1,844

121

284

(667)

(431)

(6)

(53)

(176)

Trade and other receivables (net)45,17843,164

1,838

68

107

Other financial assets (total)
Allowance for doubtful accounts

262,010(218)

261,955
(214)

—
—

5
(3)

49
—

Other financial assets (net)261,792

261,740—2

49

49,26046,513

2,179

177

389

Balances as at 31 August 2017
Trade and other receivables(total)Allowance for doubtful accounts

(661)

(381)

(31)

(20)

(228)

Trade and other receivables (net)

48,59846,131

2,148

156

161

Other financial assets (total)
Allowance for doubtful accounts

108,302(267)

108,248
(267)

—
—

6
—

46
—

Other financial assets (net)108,034

107,981—

6

46

The Group does not hold any collateral or other credit enhancements associated with the above financial assets.
— 143 —

When the Group recognizes impairment of a financial asset, it does not subtract the impairment directly from the carrying
amount. Rather, this is recorded as an allowance for doubtful accounts.
The main factors increasing/decreasing the Group’s allowances for doubtful accounts were as follows:(Millions of yen)
Allowance for
doubtful accounts(current)

Allowance for
doubtful accounts(non-current)

Balances as at 1 September 2015

679

265

945

Provision for the year
Decrease (intended purposes)
Others

150
(6)
(155)

49
(32)
(64)

199
(38)
(219)

Balances as at 31 August 2016

667

218

885

Provision for the year
Decrease (intended purposes)
Others

123
(149)
19

212
(176)
12

336
(325)
32

Balances as at 31 August 2017

661

267

929

Total

Where recoverability is uncertain, the Group conducts ongoing monitoring of the credit status of companies with which itdoes business, including receivables whose maturity date has been changed.
Based on the credit facts uncovered by this monitoring, the Group assesses the recoverability of trade receivables, etc., andmakes provisions accordingly, in the form of allowances for doubtful accounts.
In addition, because the Group does business on a world-wide scale and its credit risk is distributed, it is not overly reliant on
any specific counterparty and faces minimal exposure to the impact of chain-reaction credit risk due to the worsening of thecredit conditions of any given counterparty.
Consequently, there is no need to record additional allowances for doubtful accounts based on credit risk concentration.

— 144 —

(7) Liquidity risk management
The Group manages liquidity risk by formulating and revising its funding plans on a timely basis and maintains an appropriate
level of liquidity on hand.
The ultimate responsibility for management of liquidity risk lies with the CFO appointed by the Board of Directors. The
finance department, under the direction of the CFO, performs the day-to-day aspects of liquidity risk management by
maintaining appropriate levels of surplus funds and bank loans, and by monitoring budgets and cash flows.

As at 31 August 2016
Non-derivative financial
liabilities
Trade and other payables
Long-term borrowings(excluding current portion)
Current portion of long-termborrowings
Short-term borrowings
Corporate bonds
Long-term finance leaseobligations
Short-term finance leaseobligations
Derivative financial liabilities
Foreign currency forward
contracts
Total
As at 31 August 2017
Non-derivative financial
liabilities
Trade and other payables
Long-term borrowings(excluding current portion)
Current portion of long-termborrowings
Short-term borrowings
Corporate bonds
Long-term finance leaseobligations
Short-term finance leaseobligations
Derivative financial liabilities
Foreign currency forward
contracts
Total(Note)

1 to 2years

More than
2 years
but within
3 years

More than
3 years
but within
4 years(Millions of yen)More thanOver
4 years
5 years
but within
5 years

Carrying
amountContractual
cash flows

Less than
1 year

189,501

189,501

189,501

—

—

—

—

—

11,955

11,955

—

3,112

4,323

4,323

196

—

2,164

2,164

2,164

—

—

—

—

—

3,788

3,788

—

—

—

249,486

249,486

3,788
—

—

29,959——99,828—
119,698

11,247

11,247

—

4,032

2,904

1,797

945

1,567

4,821

4,821

4,821

—

—

—

—

—

72,388—545,355

472,967

200,276

7,144

37,187

6,121

100,970

121,266

204,008

204,008

204,008

—

—

—

—

—

8,833

8,833

—

4,416

4,416

—

—

—

3,312

3,312

3,312

—

—

—

—

—

758
249,583758
250,000

758——
30,000———100,000———
120,000

13,427

13,427

—

4,481

3,410

2,593

1,583

1,358

5,596

5,596

5,596

—

—

—

—

—

6,083

—

491,604

485,937

213,676

38,898

7,827

102,593

1,583

121,358

Guaranteed obligations are not included in the above, as the probability of having to act on those guarantees isremote.

— 145 —

(8) Fair value of financial instruments(Millions of yen)
As at 31 August 2016
Carrying amounts

As at 31 August 2017

Fair value

Carrying amounts

Fair value

Short-term borrowings
Long-term borrowings (Note 1)
Corporate bonds (Note 2)
Lease obligations (Note 1)

3,788
14,120249,486
16,0693,788
14,298
253,850
16,001758
12,146
249,583
19,023758
12,253
253,504
19,131

Total

283,465

287,939

281,512285,648(Note 1) The above includes the outstanding balance of borrowings due within 1 year.
(Note 2) Information on corporate bonds as at 31 August 2016 and 2017 is as follows:(Millions of yen)Company
nameName of bonds

Date of issuance

As at
As at
Interest
31 August 2016 31 August 2017 rate (%)

FASTRETAILING
CO., LTD.

1st non-collateralized
corporate bonds

18 December
2015

29,95929,9770.110

18 December 2018FAST
RETAILING
CO., LTD.

2nd non-collateralized
corporate bonds

18 December
2015

99,82899,8690.291

18 December 2020FAST
RETAILING
CO., LTD.

3rd non-collateralized
corporate bonds

18 December
2015

49,88349,901

0.491

16 December 2022

FAST
RETAILING
CO., LTD.

4th non-collateralized
corporate bonds

18 December
2015

69,81569,8350.749

18 December 2025

Total

—

—

249,486

249,583——

Date of maturity

The fair value of short-term financial assets, short-term financial liabilities, long-term financial assets and long-term
financial liabilities, which are measured by amortized cost, approximate their carrying amounts.
The fair value of corporate bonds is measured at the market price.
The fair value of long-term borrowings and lease obligations are classified by term, and are calculated on the basis of
the present value applying a discount rate that takes into account time remaining to maturity and credit risk.
(9) Fair value hierarchy of financial instruments
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within thefair value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as awhole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement isobservable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement isunobservable— 146 —

➀ The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:(Millions of yen)
As at 31 August 2016

Level 1

Level 2

Level 3

Total

Available-for-sale financial assets
Financial assets/(liabilities)
at FVTPL
Foreign currency forward
contracts designated as
hedging instruments

1,424

—

212

1,636

—

(8)

—

(8)

—

(71,810)—(71,810)

Net amount

1,424(71,818)

212(70,182)

As at 31 August 2017

Level 1

Level 2

Level 3

Total

Available-for-sale financial assets
Financial assets/(liabilities)
at FVTPL
Foreign currency forward
contracts designated as
hedging instruments

16

—

287

303

—

(86)

—

(86)

—

273

—

273

Net amount

16

186

287

489

For the valuation of level 2 derivative financial instruments for which a market value is available, the Group uses a valuation
model that uses observable data on the measurement date as indicators such as interest rates, yield curves, currency rates andvolatility in comparable instruments.
Non-listed shares are included in level 3. There is no significant increase or decrease in level 3 items through purchase,
disposal or settlement. Also, there is no transfer from level 3 to level 2.
➁ Financial instruments measured at amortized cost
The fair value measurements of corporate bonds, long-term borrowings and lease obligations are classified as level 2.
31. Related Party Disclosures
Remuneration of key management personnel
Remuneration of the Group’s key management personnel is as below:(Millions of yen)
Year ended
31 August 2016

Year ended
31 August 2017

Short-term employee benefits

364

362

Total

364

362

Transactions with officers and major shareholders (individuals only), etc. of the reporting entity submitting these consolidated
financial statements— 147 —

Year ended 31 August 2016 (from 1 September 2015 to 31 August 2016)

Name ofCompany or
Category
Individual

Officer

Notes:

1.
2.

Toru
Murayama

Location—

CapitalStock orinvestment—

Businessdetails or
profession

Nonexecutive
Director

Percentage
Relationshipof shares
with relatedwith voting
partiesrights (%)

Direct0.00

Details oftransaction

Consulting
and advisory
agreements
Outsourcing
about trainingof management
personnel

Amount oftransaction(millions ofyen)Account

Balance at
31 August2016(millions of
yen)

18

Trade
and otherpayables1

Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
Terms of transactions and policy for the terms
Transaction amounts were determined based on the negotiation with the related party considering market
prices.

Year ended 31 August 2017 (from 1 September 2016 to 31 August 2017)

Name ofCategory Company or
Individual

Officer

Notes:

1.
2.

Toru
Murayama

Location—

CapitalStock orinvestment—

Businessdetails or
profession

Nonexecutive
Director

Percentage
Relationshipof shares
with relatedwith voting
partiesrights (%)

Direct0.00

Details oftransaction

Consulting
and advisory
agreements
Outsourcing
about trainingof management
personnel

Amount oftransaction(millions ofyen)Account

Balance at
31 August2017(millions of
yen)

18

Trade
and otherpayables1

Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
Terms of transactions and policy for the terms
Transaction amounts were determined based on the negotiation with the related party considering market
prices.

— 148 —

32. Major subsidiaries
The Group’s major subsidiaries are as listed in “Corporate Profile 3. Subsidiaries and Associates”.
33. Commitments
The Group had the following commitments at each reporting date:(Millions of yen)
As at 31 August 2016
Commitment for the acquisition of property,
plant and equipment
Commitment for acquisition of intangible assets
Total

As at 31 August 2017

9,889

17,347399

11,11010,28828,45734. Contingent liabilities
Year ended 31 August 2016
Not applicableYear ended 31 August 2017
Not applicable
35. Subsequent Events
Year ended 31 August 2016
The Issue of Share-based Compensation Stock Options (Share Subscription Rights)
Based on Articles 236, 238 and 240 of the Companies Act and on the decision taken by the Board of Directors at its meeting
held on 13 October 2016, the Company decided to issue share subscription rights as share-based compensation stock options
for the purpose of rewarding employees of the Company and its subsidiaries for their contribution to the Group’s profit. By
linking the Company’s stock price more closely to the benefits received by highly productive personnel, the share subscription
rights program is designed both to boost staff morale and their motivation to improve group performance and to boost
shareholder value by strengthening business development with a focus on shareholder return.
Please see “Stock Information and Dividend Policy 1. Stock Information (9) Stock Options Program” for details.
Year ended 31 August 2017
The Issue of Share-based Compensation Stock Options (Share Subscription Rights)
Based on Articles 236, 238 and 240 of the Companies Act and on the decision taken by the Board of Directors at its meeting
held on 12 October 2017, the Company decided to issue share subscription rights as share-based compensation stock options
for the purpose of rewarding employees of the Company and its subsidiaries for their contribution to the Group’s profit. By
linking the Company’s stock price more closely to the benefits received by highly productive personnel, the share subscription
rights program is designed both to boost staff morale and their motivation to improve group performance and to boost
shareholder value by strengthening business development with a focus on shareholder return.
Please see “Stock Information and Dividend Policy 1. Stock Information (9) Stock Options Program” for details.

— 149 —

(2) Others
Quarterly information for the year ended 31 August 2017
(Cumulative)

First quarter

Second quarter

Third quarter

Fiscal year

Revenue (Millions of yen)

528,847

1,017,508

1,477,958

1,861,917

Quarterly income before
income taxes andnon-controlling interests(Millions of yen)

104,204

147,610

195,477

193,398

Quarterly net income(Millions of yen)

69,695

97,233

120,113

119,280

Earnings per share (Yen)

683.51

953.55

1,177.89

1,169.70(Accounting period)
Quarterly earnings/(losses)
per share (Yen)First quarter

Second quarter

683.51270.05— 150 —

Third quarter
224.35

Fourth quarter(8.17)

2. Financial statements(1) Financial statements(1) Balance Sheet(Millions of yen)
As at 31 August 2016
ASSETS
Current assets
Cash and deposits
Trade accounts receivable
Short-term investment securities
Short-term loans receivable fromsubsidiaries and affiliates
Income taxes receivable
Accounts receivable from subsidiaries and affiliates
Deferred tax assets
Others

As at 31 August 2017

177,827*1 12,232
115,357

256,687*1 13,470
121,134

Allowance for doubtful accounts

51,68920,597
12,156
1,011
2,782
(187)

68,055—
15,211
1,014
2,443
(0)

Total current assets

393,466

478,018

6,231

12,604Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation*3(4,703)*3(5,367)

1,527

Buildings, net
Structures

7,236

298

Accumulated depreciation*3

Accumulated depreciation*3

Tools, furniture and equipment, net
Land
Leased assets
Accumulated depreciation

*3

(225)

81

134

1,512

1,523

Structures, net
Tools, furniture and equipment

359

(217)

(1,399)*3(1,406)

112

117

1,158
52

1,123
1,324

*3

(0)

*3

(169)

52

1,155

Construction in progress

3,677

7

Total property, plant and equipment

6,609

9,774

Others13,6012,583
64

13,533
5,494
60

Total intangible assets

16,24919,087

14,620111,595
10,336284
76,392
10,181Others70,555
5,065
570
2,015

69,092
5,066
—
2,212

Total investments and other assets

214,760

163,231237,619

192,093

631,086

670,111

Leased assets, net

Intangible assets
Software
Software in progress

Investments and other assets
Investment securities
Investments in subsidiaries and affiliates
Investments in capital of subsidiaries and affiliates
Long-term loans receivable fromsubsidiaries and affiliates
Leases and guarantee deposits
Deferred tax assets

Total non-current assets
Total assets— 151 —

(Millions of yen)
As at 31 August 2016
LIABILITIESCurrent liabilities
Accounts payable
Accruals
Deposits received

As at 31 August 2017

8,102
649

5,294
780

Others

22,693
1,620—
428

Total current liabilities

33,494

39,411Others250,000
1,100
—
716

250,000
1,089
5
2,501

Total non-current liabilities*1

Allowance for bonuses
Income taxes payableNon-current liabilities
Corporate bonds
Guarantee deposits received
Deferred tax liabilities*1

20,245
2,026
10,291772

251,817

253,596

Total liabilities

285,312

293,008

NET ASSETS
Shareholders’ equity
Capital stock

10,273

10,273

Other capital surplus

4,578
3,071

4,578
3,666

Total capital surplus

7,650

8,245

818

818

185,100
154,782

185,100
184,377

Capital surplus
Capital reserve

Retained earnings
Legal reserve
Other retained earnings
Special reserve fundRetained earnings carried forward

340,701

370,295

Treasury stock(15,633)(15,563)

Total shareholders’ equity

342,992373,251

Unrealized gains/(losses) on available-for-sale securities

(818)

(502)

Total valuation and translation adjustments

(818)

(502)

Total retained earnings

Valuation and translation adjustments

3,599

4,354

Total net assets

345,773

377,103

Total liabilities and net assets

631,086

670,111

Share subscription rights— 152 —

(2) Statement of Income(Millions of yen)
Year ended
31 August 2016
Operating revenue
Management income from operating companies*1

Dividends income from subsidiaries and affiliates*1Year ended
31 August 2017
30,377
68,911*1*137,683102,187

99,289139,871

Others

4,777
298
1,289
5,045
4,940
15,832
11,467

5,259
365
1,676
5,711
6,239
15,837
10,846

Total operating expenses

43,65145,93655,637

93,934

Others

517
99
—
181

2,736
66
19,546380

Total non-operating income

799

22,730

Others802
45,657
706

1,095
—
80

Total non-operating expenses

47,166

1,175

9,270

115,488

Gains on sales of investment securities—

474

Total extraordinary income—

474

Total operating revenue
Operating expenses
Selling, general and administrative expenses
Salaries
Bonuses
Allowance for bonuses
Rental expenses
Depreciation
Outsourcing expenses

Operating income
Non-operating income
Interest income
Interest income from investment securities
Foreign exchange gains

Non-operating expenses
Interest expenses
Foreign exchange losses

Ordinary income
Extraordinary income

Extraordinary losses
Losses on retirement of non-current assets*2

Impairment losses of investments
in investment securities
Impairment losses

0

*2

24

18,996—489

44,1693,145—

19,48647,338(10,215)

68,624

Income taxes – deferred(15,002)(1,297)3,911
447

Total income taxes(16,300)

4,359

6,084

64,264

OthersTotal extraordinary losses
Income/(loss) before income taxes
Income taxes – current

Net income— 153 —

(3) Statement of Changes in Net Assets
Year ended 31 August 2016
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusLegalreserve

Specialreserve
fund

Retainedearnings
carriedforwardTotal
retainedearnings

4,578

2,550

7,129

818

185,100

185,400

371,318

521

521

Dividends(36,702)(36,702)

Net income

6,084

6,084

Balance at the beginning of year

10,273

Changes during the year
Exercise of share subscription
rightsAcquisition of treasury stock
Disposal of treasury stock
Net changes of items otherthan those in shareholders’equityNet changes during the year
Balance at the end of year

—

—

521

521

—

—

(30,617)(30,617)

10,273

4,578

3,071

7,650

818

185,100

154,782

340,701

Valuation and translation
adjustments

Shareholders’ equity

Total
shareholders’equityTreasurystock

Balance at the beginning of year

(15,699)

373,023

Unrealized
gains/(losses) Total valuation
on available- and translation
for-saleadjustments
securities
329

329

Share
subscription
rightsTotal
net assets

2,654

376,007

Changes during the year
Exercise of share subscription rights

521

521

Dividends(36,702)(36,702)

Net income

6,084

6,084

Acquisition of treasury stock

(6)

(6)

(6)

Disposal of treasury stock

72

72

72

Net changes of items other thanthose in shareholders’ equity
Net changes during the year
Balance at the end of year

(1,148)(1,148)

945

(202)

66

(30,030)(1,148)(1,148)945(30,233)(15,633)

342,992

(818)

(818)

3,599

345,773— 154 —

Year ended 31 August 2017
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusLegalreserve

Specialreserve
fund

Retainedearnings
carriedforwardTotal
retainedearnings

4,578

3,071

7,650

818

185,100

154,782

340,701

594

594

Dividends(34,670)(34,670)

Net income

64,26464,264

Balance at the beginning of year

10,273

Changes during the year
Exercise of share subscription
rightsAcquisition of treasury stock
Disposal of treasury stock
Net changes of items otherthan those in shareholders’equityNet changes during the year
Balance at the end of year

—

—

594

594

—

—

29,59429,594

10,273

4,578

3,666

8,245

818

185,100

184,377

370,295

Valuation and translation
adjustments

Shareholders’ equity

Balance at the beginning of year

Treasury stock

Total
shareholders’equity(15,633)

342,992

Unrealized
gains/(losses) Total valuation
on available- and translation
adjustments
for-salesecurities
(818)

(818)

Share
subscription
rightsTotal
net assets

3,599

345,773

Changes during the year
Exercise of share subscription rights
Dividends
Net income

594

594

(34,670)(34,670)

64,26464,264

Acquisition of treasury stock

(6)

(6)

(6)

Disposal of treasury stock

75

75

75
316

316

754

1,071

69

30,258

316

316

754

31,329(15,563)

373,251

(502)

(502)

4,354

377,103

Net changes of items other thanthose in shareholders’ equity
Net changes during the year
Balance at the end of year

— 155 —

Notes(Significant accounting policies)
1. Valuation methods for securities(a) Investments in subsidiaries and affiliates:
The Company’s investments in subsidiaries and affiliates are stated at cost. The cost of securities sold is determined byaverage method.
(b) Available-for-sale securities:(i) Listed securities:
Listed securities are stated at fair value, with fair value gains and losses, net of applicable taxes, reported as“unrealized gains/(losses) on available-for-sale securities”, a separate component of net assets. The cost of
securities sold is determined based on moving average cost method.
(ii) Unlisted securities:
Unlisted securities are stated at cost, which is determined by average method.
2. Depreciation method for non-current assets(a) Property, plant and equipment (other than leased assets)
Depreciation of property, plant and equipment is calculated using the straight-line method. The principal ranges of
estimated useful lives are as follows:
Buildings and structures
5–10 years
Tools, furniture and equipment
5 years(b) Intangible assets (other than leased assets)
Amortization of intangible assets is calculated using the straight-line method. The principal range of estimated usefullife is as follows:
Software for internal use
5 years(c) Leased assets
Assets held under capitalized finance leases are depreciated using the straight-line method over the lease terms atzero residual value.
3. Accounting for deferred assets
Issuance expenses of corporate bonds
Issuance expenses of corporate bonds are expensed as incurred.
4. Provision basis for allowances(a) Allowance for doubtful accounts
Provision for potential bad debts, loan loss ratios are recorded for general accounts receivable. Specified doubtful
accounts receivable are reviewed individually to determine their recoverability, and an estimate for the nonrecoverable portion is recorded.
(b) Allowance for bonuses
Bonuses to employees are accrued on the balance sheet date.
5. Other significant matters for the preparation basis of non-consolidated financial statements(1) Accounting for consumption tax
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(2) Application of consolidated taxation system
The consolidated taxation system is applied for the Company.

— 156 —

(Notes to balance sheet)
1. Breakdown of assets and liabilities related to subsidiaries and affiliates which were not separately presented are as follows:(Millions of yen)
As at 31 August 2016
Trade accounts receivable
Deposits received

As at 31 August 201712,15922,371

13,38919,911

2. Contingent liabilities(Millions of yen)
As at 31 August 2016
Guarantees for office and retail store leases
Guarantees on loans payable to financial institutions

As at 31 August 2017

83,793
13,62981,80312,366

3. Accumulated depreciation includes accumulated impairment losses.

(Notes to statement of income)1. Transactions related to the subsidiaries and affiliates are as follows:(Millions of yen)
Year ended
31 August 2016
Ordinary revenue:
Management income from operating companies
Dividends income from subsidiaries and affiliates

Year ended
31 August 2017

26,11968,991

34,902102,187

2. Breakdown of losses on retirement of non-current assets are as follows:(Millions of yen)
Year ended
31 August 2016
SoftwareYear ended
31 August 2017024

(Marketable securities)
As at 31 August 2016
The fair value of the shares of subsidiaries and affiliates (subsidiaries 111,595 million yen and affiliates 13,000 million
yen on the balance sheet) are not described as they do not have a market price and the fair value is extremely difficult todetermine.
As at 31 August 2017
The fair values of the shares of subsidiaries and affiliates (subsidiaries 63,196 million yen and affiliates 13,196 million yen
on the balance sheet) are not described as they do not have a market price and the fair value is extremely difficult todetermine.

— 157 —

(Deferred taxes)
1. Breakdown of the causes of deferred tax assets and deferred tax liabilities are as follows:(Millions of yen)
As at
31 August 2016
Deferred tax assets:
Allowance for bonuses
Depreciation
Write-down of investments in subsidiaries and affiliates
Impairment losses
Provision of allowance for doubtful accounts
Unrealized gains/(losses) on available-for-sale securities
Unused tax losses carried forward
OthersSubtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Temporary differences on shares of subsidiaries
OthersTotal deferred tax liabilities
Net deferred tax liabilities

As at
31 August 2017

563
459
32,840
—
57
427
3,544
4,710
42,603(39,088)
3,514

687
478
46,467
970
0
205
3,049
3,642
55,501(52,255)
3,246(1,893)(38)(1,931)
1,582(1,893)(343)(2,237)1,009

2. The differences between the effective tax rate after applying tax effect and the statutory income tax rate are as follows:(Percentage)
As at
31 August 2016
Statutory income tax rate
(adjustments)
Non-taxable dividend income
Increase/(decrease) in valuation allowance
Foreign withholding tax
Others
Effective tax rates after applying tax effect accounting(Note)—%As at
31 August 2017
30.8%

—
—
—
—
—

(44.4)
19.1
1.0
(0.3)
6.3

For the previous fiscal year, details are not disclosed because the Company recognized loss before income taxes.

3. Revision of amount of deferred tax assets and liabilities following amendment of the rate of corporation tax, etc.
For the Company and its Japanese subsidiaries, the timing for the proposed increase of consumption tax rate to 10% was
postponed from 1 April 2017 to 1 October 2019 when the “Act to Partially Amend the Consumption Tax Act to Fundamentally
Reform the Tax System for Securing a Stable Revenue Source for Social Security” (Act No. 85 of 2016) and the “Act to Partially
Amend the Local Tax Act and the Local Allocation Tax Act to Fundamentally Reform the Tax System for Securing a Stable
Revenue Source for Social Security” (Act No. 86 of 2016) were approved by the Diet on 18 November 2016.
Accordingly, the timing of the abolition of local special corporate tax and associated restoration of corporate enterprise tax,
the revision of the local corporate tax rate, and the revision of the corporate inhabitant tax rate are therefore postponed fromthe fiscal year commencing on or after 1 April 2017 until the fiscal year beginning on or after 1 October 2019.
The statutory income tax rates used to calculate deferred tax assets and deferred tax liabilities have not changed, but theamounts of deferred tax assets and deferred tax liabilities have been revised due to the occurrence of reclassification of tax
rates between national tax and local tax.
The impact of these tax rate amendments on the financial statements is immaterial.
— 158 —

(Business Combination)
Not applicable.
(Notes on Significant Subsequent Events)
Year ended 31 August 2017 (1 September 2016–31 August 2017)
The Issue of Stock-based Compensation Stock Options (Share Subscription Rights)
Based on Articles 236, 238 and 240 of the Companies Act and on the decision taken by the Board of Directors at its meeting
held on 12 October 2017, the Company decided to issue share subscription rights as stock-based compensation stock options
for the purpose of rewarding employees of the Company and its subsidiaries for their contribution to the Group’s profit. By
linking the Company’s stock price more closely to the benefits received by highly productive personnel, the share subscription
rights program is designed both to boost staff morale and their motivation to improve group performance and to boost
shareholder value by strengthening business development with a focus on shareholder return.
Please see “Stock Information and Dividend Policy 1. Stock Information (9) Stock Options Program” for details.
(iv) Supplementary information
Details of fixed asset(Millions of yen)

Types of assets

Property, plant and equipment
Buildings
Structures
Tools, furniture and equipment
Land
Leased assets
Construction in progress
Total property, plant andequipment
Intangible assets
Software
Software in progress
Leased assets
OthersTotal intangible assets

Balances as at
1 September
2016

Increase

Decrease

1,527
81
112
1,158

6,372
61
68
—

52
3,677

1,271
1,502

6,609

9,277

13,601

7,327

2,583

11,1585
58——

16,24918,485

2
—
15
34
(34)
—
5,173

Accumulated
Depreciation, Balances as at depreciation oramortization
31 Augustamortization
during the year2017
as at 31 August
2017
661
8
48
—

7,236
134
117
1,123

5,367
225
1,406
34

168
—

1,155
7

169
—

5,225
(34)

886

9,774

7,203

2,046
(1,622)
8,247
(919)
—
—

5,350

13,533

—

—

5,494

—

3
0

1
58

—
—

10,293(2,541)

5,353

19,087—(Notes) 1. The main factors listed as increase during the year are as follows:
Types of assets

Amount (Millions of yen)Contents

Software7,327 Construction cost for new system

Software in progress

11,158 Construction cost for new system

2. The main factors listed as decrease during the year are as follows:
Types of assets
Software in progress

Amount (Millions of yen)
8,247
— 159 —

Contents
Construction cost for new systems (transferred tosoftware as the new system was launched)3. In the “Decrease” column, the figures in parentheses represented impairment losses recognised.

Details of provisions(Millions of yen)
Categories
Allowance for doubtful accounts
Allowance for bonuses

Balance as at
1 September
2016

Decrease(Intendedpurposes)

Increase

Decrease(Otherpurposes)

Balance as at
31 August
2017

187

0

158

29

0

1,620

2,026

1,620

—

2,026

(Notes) Decrease (Other purposes) in “Allowance for doubtful accounts” is due to debt-collection.
(2) Main details of assets and liabilities
Omitted because the consolidated financial statements are prepared.
(3) Others
Not applicable.

— 160 —

Independent auditors’ report (Group)
To the Board of Directors of FAST RETAILING CO., LTD.

OpinionWe have audited the consolidated financial statements of FAST RETAILING CO., LTD. (the “Company”) and its subsidiaries(the “Group”), which comprise the consolidated statement of financial position as at 31 August 2017, and the consolidated
statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 31 August 2017, and of its consolidated financial performance and its consolidated cash flows for theyear then ended in accordance with International Financial Reporting Standards (“IFRSs”).

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under thosestandards are further described in the Auditors’ responsibilities for the audit of the consolidated financial statements sectionof our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’
Code of Ethics for Professional Accountants (“IESBA Code”) together with the ethical requirements that are relevant to our auditof the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of theconsolidated financial statements of the current period. These matters were addressed in the context of the audit of theconsolidated financial statements as a whole, and in forming the auditors’ opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that
context.
We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the consolidated financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the performanceof procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below, provide thebasis for our audit opinion on the accompanying consolidated financial statements.

— 161 —

Independent auditors’ report (Group) (continued)
To the Board of Directors of FAST RETAILING CO., LTD.

Key audit matters (continued)
Key audit matter

How our audit addressed the key audit matter

Impairment assessment of goodwill and intangible assets acquired through business combinations
As at 31 August 2017, the Group reported 15,885 million yenof goodwill and 9,519 million yen of trademarks, together
representing 1.8% of the Group’s total assets, as a result of
business combinations involving Theory, J Brand, Comptoir
des Cotonniers and Princesse tam.tam.
Acquired goodwill and intangible assets with indefinite usefullives
In accordance with IAS 36, management performs
impairment assessments in respect of goodwill and all
intangible assets with indefinite useful lives, including thoseacquired through business combinations, annually or when
there is an impairment indicator at the cash-generating-unit(“CGU”) level.
Acquired intangible assets with finite useful lives
In accordance with IAS 36, management performs
impairment assessments on acquired intangible assets withfinite useful lives when there is an impairment indicator at
the CGU level.
Impairment losses amounting to 3,650 million yen wererecognized for the year ended 31 August 2017 with respect
to goodwill, trademarks and customer relationships ownedby the J Brand business.
We focused on these balances due to the fact that certain
acquired businesses incurred losses in recent years.
Also, management’s assessment was based on complex
impairment tests affected by the assumptions which involve
judgment.
Related disclosures are included in notes 3, 14 and 15 to theconsolidated financial statements.

When recoverable amounts of CGUs are calculated based onfair value less costs of disposal
Our audit procedures included, amongst others, evaluating
the independent valuer’s competence, capabilities
and objectivity. With our internal valuation specialists’assistance, we reviewed the valuation reports prepared byexternal advisors to evaluate the methodology, valuation
techniques and underlying assumptions (including discountrate, attrition rate and royalty rate) used to determine
the fair value. We compared the key assumptions usedin the impairment assessments to historical data of theGroup and external data in the same industry, to assess theassumptions made by management.
When recoverable amounts of CGUs are calculated based onvalue in use
Our audit procedures included, amongst others, evaluating
the independent valuer’s competence, capabilities
and objectivity. With our internal valuation specialists’assistance, we reviewed the discounted cash flows derived
from the respective CGU’s operating income based onassumptions compiled by management, to evaluate
the methodology, valuation techniques and underlying
assumptions (including growth rate and discount rate).
We performed sensitivity analyses for the respective CGUs
to assess the potential impact in the event of any reasonably
possible changes in key assumptions.
In terms of the Group’s disclosures, we focused on thoseassumptions to which the outcome of the impairment test is
most sensitive, that is, those that have the most significant
effect on the determination of the recoverable amount of
the CGU to which goodwill and intangible assets acquired
through business combinations are allocated.

— 162 —

Independent auditors’ report (Group) (continued)
To the Board of Directors of FAST RETAILING CO., LTD.

Key audit matters (continued)
Key audit matter

How our audit addressed the key audit matter

Valuation of inventories at net realizable value
As at 31 August 2017, the Group held inventories amounting
to 289,675 million yen, representing 20.9% of the Group’s
total assets. The balance is mainly comprised of inventories
in Group stores and inventories kept at distribution centers.
Inventories are valued at the lower of cost and net realizablevalue.
In addition to the material balance, significant judgment
and estimation by management are involved in identifying
inventories with net realizable values that are lower thantheir costs, and obsolescence, with reference to fastchanging market conditions, selling prices and saleability of
inventories, and global sales trends.

Our audit procedures included, amongst others,
an understanding of the Group’s inventory costing
methodology and allowance policy on obsolete and slowmoving items. Furthermore, we evaluated management’s
assumptions by comparing the net realizable value of
inventories as at 31 August 2017 and allowance forinventories estimated by management for the year thenended, with reference to the expected future sales levels
projected on a basis considering historical write-downs,
subsequent selling prices and sales pattern, and market
trends.

Related disclosures are included in notes 3 and 10 to theconsolidated financial statements.
Impairment assessment of store assets
As at 31 August 2017, the Group had store assets
attributable to UNIQLO Japan and UNIQLO International
business amounting to 96,998 million yen.
Having considered the continuing loss-making performanceof certain stores, including flagship stores, management
performed impairment testing with respect to the assetsof those loss-making directly operated flagship stores andstores located in the United States of America and recorded
impairment losses totaling 2,153 million yen.
In principle, each store, including flagship stores, isconsidered as an individual CGU and recoverable amounts ofeach CGU are calculated based on value in use.
The assumptions used by the Group, in particular thoseassumptions relating to budgeted growth rates and discountrates, had the most significant effect on the determinationof the recoverable amount of store assets. Changes toassumptions could lead to material changes in the estimatedrecoverable amount, impacting both potential impairment
charges and also potential reversals of impairment taken inprior years.

Our audit procedures included, amongst others, anevaluation of the Group’s policies and management’s
assessment of indicators either triggering potential
impairment of assets related to underperforming stores orreversals of previously recognised impairments, by assessing
management’s review of the financial performance on astore-by-store basis, and in addition, we evaluated theunderlying assumptions of impairment calculations related
to stores where a triggering event was identified andcorroborated them by evaluating the assumptions usedin forecast approved by management. We also comparedhistorical operating results to those budgeted to assess thequality of management’s forecasts. Our valuation experts
assisted us in evaluating the underlying assumptions(including growth rate and discount rate). We performed
sensitivity analyses on assets of underperforming stores,
or those with the potential for reversal of a previously
recognized impairment, to assess the potential impact
in the event of any reasonable possible changes in key
assumptions.

Related disclosures are included in notes 3, 13 and 15 to theconsolidated financial statements.

— 163 —

Independent auditors’ report (Group) (continued)
To the Board of Directors of FAST RETAILING CO., LTD.

Other information included in the Annual ReportManagement is responsible for the other information. The other information comprises the information included in the Annual
Report, other than the consolidated financial statements and our auditors’ report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, weconclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.

Responsibilities of management and those charged with corporate governance for the consolidated financial
statements
Management is responsible for the preparation of the consolidated financial statements that give a true and fair view inaccordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the management either intends to liquidate the Group or to cease operations or have no realistic alternative but to doso.
Those charged with corporate governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Our
report is made solely to you, as a body and for no other purpose. We do not assume responsibility towards or accept liability to
any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,or the override of internal control.

— 164 —

Independent auditors’ report (Group) (continued)
To the Board of Directors of FAST RETAILING CO., LTD.

Auditors’ responsibilities for the audit of the consolidated financial statements (continued)
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also: (continued)•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going
concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervisionand performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the board of statutory auditors regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the board of statutory auditors with a statement that we have complied with relevant ethical requirements
regarding independence and to communicate with them all relationships and other matters that may reasonably be thought tobear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of statutory auditors, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
The engagement partners on the audit resulting in this independent auditors’ report are Masayuki Miyairi and Tomo Ito.

Ernst & Young ShinNihon LLC
Tokyo, Japan
30 November 2017

— 165 —

Independent Auditors’ Report (Company)
Independent auditors’ report
To the Board of Directors of FAST RETAILING CO., LTD.

30 November 2017
Ernst & Young ShinNihon LLC
Designated and Engagement Partner
Certified Public Accountant
Masayuki Miyairi
Designated and Engagement Partner
Certified Public Accountant
Tomo Ito

Pursuant to first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement of changes in net assets,
the notes to the financial statements and the related supplementary schedules of FAST RETAILING CO., LTD. (the “Company”)
applicable to the 56th fiscal year from 1 September 2016 through 31 August 2017.

Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules
Management is responsible for the preparation and fair presentation of these financial statements and the related
supplementary schedules in accordance with accounting principles generally accepted in Japan, and for designing and operatingsuch internal control as management determines is necessary to enable the preparation and fair presentation of the financial
statements and the related supplementary schedules that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements and the related supplementary schedules based on
our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the related
supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements and the related supplementary schedules. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the financial statements and the related supplementary schedules, whether
due to fraud or error. The purpose of an audit of the financial statements is not to express an opinion on the effectivenessof the entity’s internal control, but in making these risk assessments the auditor considers internal controls relevant to theentity’s preparation and fair presentation of the financial statements and the related supplementary schedules in order todesign audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements and the related supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements and the related supplementary schedules referred to above present fairly, in all material
respects, the financial position and results of operations of FAST RETAILING CO., LTD. applicable to the 56th fiscal year ended 31
August 2017 in conformity with accounting principles generally accepted in Japan.

Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.
*1 The above is a digitalization of the text contained in the original copy of the Independent Auditors’ Report, which is in thecustody of the Company*2 XBRL data is excluded from the scope of the audit*3 This is an English translation of the Japanese language Independent Auditors’ Report issued by Ernst & Young ShinNihon
LLC in connection with the audit of the non-consolidated financial statements of the Company prepared in Japanese for theyear ended 31 August 2017. Ernst & Young ShinNihon LLC has not audited the English translation of the non-consolidated
financial statements for the above mentioned period.

— 166 —

Internal Control Report
1. Basic framework of internal control in connection with financial reporting
Chairman, President and CEO Tadashi Yanai and Chief Financial Officer Takeshi Okazaki hold responsibility for the preparationand management of internal controls in connection with financial reporting for the Company, its consolidated subsidiaries
and associates (hereinafter, the “Group”). The preparation and management of internal controls in connection with financial
reporting are conducted in accordance with the basic framework of internal controls described in the “On the Setting of theStandards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting— Council Opinions”, published by the Business Accounting Council.
The basic elements of our internal controls are organically interconnected, and function as a single whole. Our aim is to achieve
their purposes within a reasonable range. For this reason, these internal controls on financial reporting may not completely
prevent or discover all misstatements in the financial reports.

2. Scope of evaluation, book-close dates, and evaluation procedures
The internal control evaluation of our financial reports was made on 31 August 2017, which was the last day of the fiscal year
under review. This evaluation was made using generally accepted internal control evaluation standards for financial reports.
This evaluation was started with an evaluation of internal controls that have a significant influence on our consolidated financial
reports as a whole (company-wide internal controls). The operational processes to be evaluated were selected on the basis of
this evaluation. In the evaluation of these operational processes, the selected operational processes were analyzed, and the
key points of internal controls that might have a significant influence on the credibility of financial reports were categorized.
Then, the status of preparation and operation was evaluated in terms of these key points of internal controls to determine theeffectiveness of the internal controls.
The scope of the evaluation of the internal controls on financial reporting is of great importance, both fiscally and qualitatively,
for the credibility of the Group’s financial reports. The methods and procedures employed are:Based on the principle that the operational procedures for the entire Company’s internal controls, accounts, and financial
reports should best be evaluated from a company-wide perspective, these evaluations are performed for the Group as a whole.
However, because some consolidated subsidiaries are very small, both fiscally and qualitatively, they are not included within thescope of the evaluation.
Regarding operational procedures, based on the results of the company-wide evaluation of internal controls, and as an indicatorof sales (adjusted to exclude intra-group sales) for each of our businesses in the fiscal year under review, those businesses thatmake up roughly two-thirds of consolidated sales in the fiscal year under review are designated “important businesses.” Theselected important businesses are evaluated in terms of broad indicators such as sales, accounts receivable, inventories andother operational procedures. Next, the impact on the Group’s financial reports is calculated. Those operational proceduresthat are of particular importance are added to the evaluation process.

3. Results of evaluation
Based on the evaluation results discussed above, it was determined that the Group’s internal controls on financial reports wereeffective as of the end of the fiscal year under review.

4. Additional items
None

5. Special items
None
Confirmation Note
1. The Company’s Chairman, President and CEO Tadashi Yanai and Chief Financial Officer Takeshi Okazaki have reviewed thecontents of the financial reports for the Company’s 56th fiscal year (September 1, 2016 — August 31, 2017), and confirm they
are true, based on the Financial Instruments and Exchange Law.

2. Special items
None— 167 —