FAST RETAILING CO., LTD.
迅銷有限公司*Interim Report 2013/14
2013.12.1–2014.2.28
Stock Code: 6288
* For identiﬁcation purpose only

Contents
Corporate Profile

2

Financial Highlights

3Management Discussion and Analysis

5

Information about the Reporting Entity

9

Financial Section

14

Interim Consolidated Balance Sheet

15

Interim Consolidated Statement of Income

17Interim Consolidated Statement of Comprehensive Income

19Interim Consolidated Statement of Cash Flows21

Notes to Interim Consolidated Financial Information

24

Report on Review of Interim Financial Information

30

Summary of Material Diﬀerences between
International Financial Reporting Standards (“IFRS”) and
Generally Accepted Accounting Principles in Japan (“JGAAP”)

31

Corporate Profile
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 (Outside Director)
Mr. Takashi Nawa (Outside Director)

704-705, 7th Floor, Miramar Tower,
No. 132 Nathan Road
Tsim Sha Tsui
KowloonHong Kong

Independent Non-Executive Directors
Mr. Toru Hambayashi (Outside Director)
Mr. Nobumichi Hattori (Outside Director)
Mr. Masaaki Shintaku (Outside 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) (Outside
Statutory Auditor)
Mr. Akira Watanabe (Shagai Kansayaku) (Outside Statutory
Auditor)Ms. Keiko Kaneko (Shagai Kansayaku) (Outside 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
Financial Summary
Six months
Six months
Fiscal year
ended
ended
ended
28 February 2013 28 February 2014 31 August 2013

Accounting period
Net sales (Millions of yen)

614,841

764,349

1,143,003

Ordinary income (Millions of yen)

107,760

107,584

148,979

Net income (Millions of yen)

65,44964,557

90,377

Comprehensive income (Millions of yen)

152,336

72,713205,329

Total net assets (Millions of yen)

540,439

637,494

579,591

Total assets (Millions of yen)

806,479

948,522885,800

Basic net income per share (yen)642.52633.52887.12

Diluted net income per share (yen)641.86632.79886.31

64.6

64.7

63.2

Net cash from operating activities (Millions of yen)

112,089

103,677

99,439Net cash (used in) investing activities (Millions of yen)

(41,741)(25,271)(63,901)

Equity ratio (%)

Net cash (used in) financing activities (Millions of yen)
Cash and cash equivalents at end of period (Millions of yen)

(8,103)(20,656)(23,945)

342,151

358,419295,622

Three months
Three months
ended
ended
28 February 2013 28 February 2014

Accounting period
Net sales (Millions of yen)

296,698375,296

Net income (Millions of yen)

26,97622,708

Basic net income per share (yen)264.81222.84(Notes)1. The Company has prepared interim consolidated financial statements, and therefore has not included information
regarding changes in key management indices for the submitting company.
2. Net sales does not include consumption taxes, etc.

—3—Business Description
There were no significant changes in the nature of business engaged in by the Group (the Company and its subsidiaries) during
the six months ended 28 February 2014.
Important changes concerning subsidiaries are as follows:(UNIQLO International)
Newly consolidated subsidiaries:
UNIQLO Pennsylvania LLC
UNIQLO Massachusetts LLC(Global Brands)
Newly consolidated subsidiaries:
GU (Shanghai) Trading Co., Ltd.*
Comptoir des Cotonniers (Shanghai) Trading Co., Ltd.*PRINCESSE TAM.TAM (SHANGHAI) TRADING CO., LTD.*J BRAND Japan Co., LTD.
J BRAND EUROPE LTD
Excluded from consolidation:
LTH GmbH(Others)
Newly consolidated subsidiaries:
Theory Holdings LLC
FAST RETAILING UK LTD
UNIQLO GLOBAL INNOVATION CENTER INC.
*

The English names of all subsidiaries established in the People’s Republic of China are translated for identification purpose
only.

—4—

Management Discussion and Analysis
Business Review
1. Business and Operational Risks
No new business-related risks have arisen during the six months ended 28 February 2014.
There have been no important changes concerning business-related risks as stated in the securities report for thepreceding consolidated fiscal year.

2.

Significant Contract in Business Operation
None.

3.

Financial Analysis(1) Results of Operations
FAST RETAILING CO. LTD. and its subsidiaries (collectively, “the Group”) reported the following cumulative second-quarter
consolidated results for the period from September 1, 2013 to February 28, 2014: consolidated net sales of ¥764.3 billion(+24.3% year-on-year), operating income ¥103.2 billion (+6.8% year-on-year), ordinary income of ¥107.5 billion (-0.2% year-onyear) and net income of ¥64.5 billion (-1.4% year-on-year). All Group operations reported rising net sales and operating income,with UNIQLO International reporting a particularly strong expansion in both net sales and operating income over the six-month
period. In terms of non-operating income, the Group reported a year-on-year fall in foreign exchange profits of ¥6.4 billion. Thisfactor was largely responsible for the slight year-on-year contractions in the second-quarter consolidated figures for ordinary
income and net income.
The Group’s medium-term vision is to become the world’s number one apparel manufacturer and retailer. In pursuit of thisaim, we are committed to promoting globalization, Group-wide cooperation, and reignited entrepreneurship. We have focusedmuch of our eﬀorts on building up our UNIQLO International operations by accelerating the pace of new store openings outsideof Japan. We have also opened global flagship stores and hotspot stores in major cities around the world in order to boost
awareness and visibility of the UNIQLO brand and to strengthen our global operational base. Within our Global Brands segment,
we have been actively expanding our GU casualwear brand, and our Theory fashion label.
UNIQLO Japan
UNIQLO Japan reported gains in both net sales and operating income during the six months ended February 28, 2014, with
net sales reaching ¥405.5 billion (+4.7% year-on-year) and operating income ¥70.2 billion (+1.8% year-on-year). A 2.2% gain insame-store sales helped boost the second-quarter performance. Sales per store also increased as a direct result of our “scrap
and build” strategy to increase the average size of our sales floors by replacing smaller outlets with large-format stores. The
total number of UNIQLO stores in Japan increased by 3 to 831 stores at the end of February 2014 compared to end February
2013. This figure excludes the operation’s 18 franchise stores. Breaking down the 2.2% gain in same-store sales, customer visits
increased by 0.5% year-on-year, while the average customer spending also increased by 1.7%. On the profit side, the grossprofit margin improved by 0.8% year-on-year in the first half year. Meanwhile, the selling, general and administrative expenses
to net sales ratio increased 1.3% due to a number of factors: higher in-store personnel costs for part-time and temporary
workers, rising advertising and promotion costs, and an increase in distribution and warehousing costs related to the company’s
decision to boost inventory of basic year-round items.
UNIQLO International
UNIQLO International performance outstripped the company’s forecasts to generate significant gains in both net sales andoperating income during the six months ended February 28, 2014. UNIQLO operations outside Japan generated total net salesof ¥232.0 billion (+77.6% year-on-year) and operating income of ¥28.0 billion (+75.1% year-on-year). Furthermore, this strong
performance was not limited to one geographical area. Instead, UNIQLO operations in Greater China (Mainland China, Hong
Kong and Taiwan), South Korea, the United States of America and Europe all reported above-target results for the period.
UNIQLO operations in Southeast Asia also performed favorably and as planned. The total number of UNIQLO International
stores increased by 175 stores year-on-year to 534 stores at the end of February 2014.

—5—UNIQLO Greater China operations outstripped company expectations during the six months ended February 28, 2014,
generating significant gains in both net sales and operating income. UNIQLO opened 46 stores and closed 1 store in this region
over the six-month period, to bring the total number of UNIQLO stores in Greater China to 325 at the end of February 2014.
UNIQLO’s brand image enjoyed a huge boost in China with the opening of the biggest ever UNIQLO global flagship store in
September 2013 in Shanghai. The store boasts an impressive sales floor area spanning 6,600 square meters. UNIQLO South
Korea also generated higher-than-expected gains in net sales and operating income thanks to strong sales of core basic items.
We opened 13 new stores and closed 2 stores in South Korea, bringing the total number of UNIQLO stores in that country to
116 at the end of February 2014. Operating losses at UNIQLO USA contracted dramatically in the first half year, thanks to adouble-digit gain in combined net sales generated by our UNIQLO New York Fifth Avenue and two other prominent New York
stores, and thanks to favorable results from the 10 new UNIQLO stores opened in various shopping malls in fall 2013. UNIQLO
Europe also reported double-digit gains in same-store sales. On the immediate horizon, we plan to enter the German market for
the first time by opening a global flagship store in Berlin on April 11. We also scheduled to open our first store in Australia on
April 16 in Melbourne.
Global Brands
Our Global Brands segment reported rising net sales and operating income during the six months ended February 28, 2014, with
net sales reaching ¥125.3 billion (+31.0% year-on-year) and operating income rising to ¥9.2 billion (+7.7% year-on-year). Our GU
casualwear brand reported a gain in both net sales and operating income, but the result was slightly below our expectations.
This shortfall was caused by heavy discounting on excess stock of outerwear in the second quarter. GU opened 40 new storesand closed 4 stores over the six-month period, bringing the total number of stores to 250 at the end of February. Our Theory
fashion label reported a rise in net sales, but operating income contracted slightly as the lackluster U.S. economy continued todampen department store sales, and both the Japanese and American Theory operations reported increases in advertising andpersonnel expenses.
Our J Brand premium denim label was also adversely aﬀected by poor conditions in the U.S. economy, and reported a lowerthan-expected performance over the six months ended February 28, 2014. Meanwhile, Comptoir des Cotonniers generated
higher-than-expected gains in both net sales and operating income, while Princesse tam.tam performed roughly in line withexpectations.
Corporate Social Responsibility (“CSR”) and Environmental Protection
The basic policy underlying the Group’s CSR activities consists of “Fulfilling our social responsibility”, “Contributing to society”,
and “Solving social issues and creating new value”, and the Group’s activities are rooted both at the global and local levels.
“CSR Report 2014”, a summary of the Group’s CSR activities in the year ended August 2013, was published in January. Activity
reports and improvement initiatives were featured in relation to the four areas identified as our priority issues (Production,
Environment, Community and Human Resources). We also proactively disclose information in store and on our website, etc. topromote accountability to and communication with our diverse stakeholders.
In the Social Business in Bangladesh, which aims to solve social issues such as problems associated with poverty and sanitation,
six Grameen UNIQLO stores were launched between July 2013 (the opening of the first store) and the end of December, against
a backdrop of frequent general strikes associated with the general election. We aim to make a contribution to the local region
by providing employment and oﬀering high-quality products at a price that a large number of people can aﬀord.
In addition, the All-Product Recycling Initiative, in which UNIQLO and GU products are collected from customers and delivered
to people who are in need of clothing, has collected more than 28,970,000 items cumulatively at stores in 10 countries, andhas donated 11,290,000 items to 45 countries (as at 30 September 2013). We are engaged in aid activities around the world,
including the donation of 550,000 articles of clothing to the Zaatari refugee camp in Jordan, Syria in December.

—6—

(2)

Financial Positions
Total assets as at 28 February 2014 were ¥948.5 billion, which was an increase of ¥62.7 billion relative to the end of thepreceding consolidated fiscal year. The principal factor was an increase of ¥70.1 billion in cash and deposits.
Total liabilities as at 28 February 2014 were ¥311.0 billion, which was an increase of ¥4.8 billion relative to the end of thepreceding consolidated fiscal year. The principal factors were an increase of ¥13.4 billion in income taxes payable and adecrease of ¥5.1 billion in notes and accounts payable—trade.
Total net assets as at 28 February 2014 were ¥637.4 billion, which was an increase of ¥57.9 billion relative to the end of
the preceding consolidated fiscal year. The principal factors were an increase of ¥49.2 billion in retained earnings and anincrease of ¥3.5 billion in foreign currency translation adjustments.

(3)

Cash Flows Information
Cash and cash equivalents (hereinafter referred to as “funds”) as at 28 February 2014 had increased by ¥62.7 billion
relative to the end of the preceding consolidated fiscal year, to ¥358.4 billion.
(Operating Cash Flows)
Net cash from operating activities for the six months ended 28 February 2014 was ¥103.6 billion, which was a decrease of¥8.4 billion relative to the six months ended 28 February 2013. The principal factor was income before income taxes andminority interests of ¥108.1 billion.
(Investing Cash Flows)
Net cash used in investing activities for the six months ended 28 February 2014 was ¥25.2 billion, which was a decreaseof ¥16.4 billion relative to the six months ended 28 February 2013. The principal factors were the acquisition of property,
plant and equipment amounted to ¥18.8 billion, purchases of intangible assets amounted to ¥2.9 billion and payment forlease and guarantee deposits amounted to ¥2.8 billion.
(Financing Cash Flows)
Net cash used in financing activities for the six months ended 28 February 2014 was ¥20.6 billion, which was an increaseof ¥12.5 billion relative to the six months ended 28 February 2013. The principal factor was dividends amounted to ¥15.1
billion paid in cash.

(4)

Operational and Financial Assignment
There have been no important changes during the six months ended 28 February 2014 concerning issues that must be
addressed by the Group.

(5)

Research and Development
Not applicable.

—7—

(6)

Important Facilities
The following are the important facilities that were included in the planning as of the end of the preceding consolidated
fiscal year that were newly completed during the six months ended 28 February 2014.
<Subsidiaries in Japan>
Not applicable.
<Overseas Subsidiaries>

Company name

Type of facility

Name of business

Location

Completion date

UNIQLO TAIWAN LTD.*UNIQLOInternational store

UNIQLO Xinzhuang
Zhongzheng Road
Store

Taipei, Taiwan

October 2013

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

UNIQLO Shanghai
Store

Shanghai, China

September 2013

The following is planned new establishment and/or removal of important facilities as at 28 February 2014.
<Subsidiaries in Japan>
Company name

Type of facility

Name of business

Location

Completion date

UNIQLO CO., LTD

UNIQLO JapanStoreUNIQLO Ikebukuro
Sunshine 60 DoriStore

Toshima-ku, Tokyo

March 2014

UNIQLO CO., LTD

UNIQLO JapanStoreUNIQLO
Okachimachi Store

Taito-ku, Tokyo

April 2014

<Overseas Subsidiaries>
Company name*

Type of facility

Name of business

Location

Completion date

Fast Retailing (China) Trading
Co., Ltd.*UNIQLOInternational store

UNIQLO Victoria
Plaza store

Guangzhou, China

March 2014

UNIQLO EUROPE LIMITEDUNIQLOInternational store

UNIQLOTAUENTZIEN

Berlin, Germany

April 2014

UNIQLO FRANCE S.A.S.

UNIQLOInternational store

Francs Bourgeois

Paris, France

April 2014

The English names of all subsidiaries established in the People’s Republic of China and Taiwan are translated for
identification purpose only.

—8—

Information about the Reporting Entity
1. Stock Information(1) Number of Shares(i)

Total number of shares
Type

Total number of authorised shares (shares)

Common stock

300,000,000
Total

300,000,000(Note) There are no provisions for preemptive rights under the Companies Act of Japan, which would oblige the Company tooﬀer new shares on a pro rata basis to existing shareholders.
(ii)

Shares Issued

Type

As at February 28 2014

Number of shares issued
as of submission date
(Shares) (April 14, 2014)

Common stock

106,073,656

106,073,656

Total

106,073,656

106,073,656

Name of financial
instrument exchangeof listing, or authorised
financial instruments
firms association

Details

First section of the Tokyo
Stock Exchange and theMain board of the Stock
Exchange of Hong Kong
Limited (Note)

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)

Subscription Rights to Shares
The Company has instituted a stock option program that grants rights to acquire new shares pursuant to the Companies
Act of Japan. The following are share subscription rights issued during the three months ended 28 February 2014.

(i) 4th Share subscription rights A type
Date of resolution of the board of directors

October 10, 2013

Number of stock options (Shares)

7,564

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

Type of shares upon exercise of share subscription rights

Common stock

Number of shares issued upon exercise of share subscription
rights (Shares)

7,564

Amount to be paid upon exercise of share subscription rights
(Yen)

1

Exercise period of share subscription rights

From December 3, 2016 to December 2, 2023

Fair value on the grant date and amount of paid in capital per Fair value on the grant date: 37,109
share upon exercise of share subscription rights (Yen)
Paid-in capital:
18,555
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 authorising resolution from the Board of Directors.

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights inconjunction with reorganisation(Note)—9—

(Notes) Upon any reorganisation of the Company (collectively referred to as “Reorganisation”) 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 Reorganisation(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 Reorganisation”). In such event,
any Outstanding Share Subscription Rights shall lapse and the Company Resulting From Reorganisation shall issue newshare subscription rights; provided, however, that terms and conditions stipulating that the Company Resulting From
Reorganisation 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 Reorganisation:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganisation underlying the share subscription rights:
Common stock of the Company Resulting From Reorganisation.
3.
Number of shares of the Company Resulting From Reorganisation underlying the share subscription rights:
A proposal stating the conditions for Reorganisation and the like shall include a finalised 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 reorganisation prescribed below by the number of sharesof the Company Resulting From Reorganisation underlying the share subscription rights that have been finalised asstated in No. 3. above. The exercise price after Reorganisation shall be 1 yen per share of the Company Resulting
From Reorganisation 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 earlier 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 Reorganisation 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 authorising resolution from the Board of
Directors of the Company Resulting From Reorganisation.
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.
(ii) 4th Share subscription rights B type
Date of resolution of the board of directors
Number of stock options (Shares)
Number of share subscription rights for treasury stock(Shares)
Type of shares upon exercise of share subscription rights
Number of shares issued upon exercise of share subscription
rights (Shares)
Amount to be paid upon exercise of share subscription rights(Yen)
Exercise period of share subscription rights
Fair value on the grant date and amount of paid in capital per
share upon exercise of share subscription rights (Yen)
Exercise conditions of share subscription rights

Matters pertaining to transfer of share subscription rights
Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription rights inconjunction with reorganisation

October 10, 2013
29,803—
Common stock
29,803
1
From January 3, 2014 to December 2, 2023
Fair value on the grant date: 37,514
Paid-in capital:
18,757
If a holder of share subscription rights waives the rightto acquire shares, the share subscription rights shall be
forfeited and may not be exercised.
Any acquisition of share subscription rights by transfer
shall require an authorising resolution from the Board of
Directors.
—(Note)— 10 —

(Notes) Upon any reorganisation of the Company (collectively referred to as “Reorganisation”) 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 Reorganisation(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 Reorganisation”). In such event,
any Outstanding Share Subscription Rights shall lapse and the Company Resulting From Reorganisation shall issue newshare subscription rights; provided, however, that terms and conditions stipulating that the Company Resulting From
Reorganisation 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 Reorganisation:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganisation underlying the share subscription rights:
Common stock of the Company Resulting From Reorganisation.
3.
Number of shares of the Company Resulting From Reorganisation underlying the share subscription rights:
A proposal stating the conditions for Reorganisation and the like shall include a finalised 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 reorganisation prescribed below by the number of sharesof the Company Resulting From Reorganisation underlying the share subscription rights that have been finalised asstated in No. 3. above. The exercise price after Reorganisation shall be 1 yen per share of the Company Resulting
From Reorganisation 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 earlier 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 Reorganisation 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 authorising resolution from the Board of
Directors of the Company Resulting From Reorganisation.
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.

(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.

Dates

December 1, 2013 to
February 28, 2014

Increase/
Balance of total
Increase/
Increase/decrease of
Balance ofBalance of
number of
decrease of
decrease of
total number ofcapital stock
capital reserve
shares issued
capital stock
capital reserve
shares issued(Millions of yen)
(Millions of yen)
(Shares)(Millions of yen)
(Millions of yen)
(Shares)—

106,073,656—

10,273—

4,578(Note) There was no increase or decrease of the total number of shares issued, capital stock or capital reserve during the threemonths ended 28 February 2014.

— 11 —

(6)Principal Shareholders
As at February 28, 2014
Name or trade nameLocation

Number of shares
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 Hamamatsucho, Minato-ku, Tokyo

11,239

10.60

Japan Trustee Services Bank, Ltd.

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

8,979

8.46

TTY Management B.V.

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

5,310

5.01

Kazumi Yanai

Shibuya-ku, Tokyo

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

Mastermind Co., Ltd.

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

3,610

3.40

BNP Paribas Securities (Japan) Limited

1-9-1 Marunouchi, Chiyoda-ku, Tokyo

3,410

3.22

Trust & Custody Services Bank, Ltd.

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

2,654

2.50

72,504

68.35

Total
(Notes)—1. The number of shares held is rounded down to the nearest unit of thousand shares.
2. 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.
3. According to the report of large shareholdings (report of change of composition) submitted on September 24,
2013 by Nomura Securities Co., Ltd. and the two parties of NOMURA INTERNATIONAL PLC and Nomura AssetManagement Co., Ltd. as joint holders, each party was holding the shares stated below as at September 13, 2013.
However, since the Company has not been able to confirm the number of shares actually held as of the end of theterm, these shareholdings have not been included in the above statement of principal shareholders.
Name or trade nameLocation

Number of shares
held(Thousand shares)

Percentage of
total number ofshares issued (%)

Nomura Securities Co., Ltd.

1-9-1 Nihonbashi, Chuo-ku, Tokyo

289

0.27

NOMURA INTERNATIONAL PLC

1 Angel Lane, London EC4R 3AB, United
Kingdom

599

0.57

Nomura Asset Management Co., Ltd.

1-12-1 Nihonbashi, Chuo-ku, Tokyo

5,618

5.30

4. According to the report of large shareholdings (report of change of composition) submitted on January 10, 2014 by
Nomura Securities Co., Ltd. and the two parties of NOMURA INTERNATIONAL PLC and Nomura Asset Management
Co., Ltd. as joint holders, each party was holding the shares stated below as at December 31, 2013. However, since
the Company has not been able to confirm the number of shares actually held as of the end of the term, theseshareholdings have not been included in the above statement of principal shareholders.
Name or trade nameLocation

Number of shares
held(Thousand shares)

Percentage of
total number ofshares issued (%)

Nomura Securities Co., Ltd.

1-9-1 Nihonbashi, Chuo-ku, Tokyo

961

0.91

NOMURA INTERNATIONAL PLC

1 Angel Lane, London EC4R 3AB, United
Kingdom

750

0.71

Nomura Asset Management Co., Ltd.

1-12-1 Nihonbashi, Chuo-ku, Tokyo

5,880

5.54

5. In addition to the foregoing, 4,162,482 shares of treasury stock are held by the Company (3.92% of the total
number of authorised shares).

— 12 —

(7)Voting Rights(i)

Shares issued
As at February 28, 2014
Number of shares(Shares)Number of voting rights(Number)

Remarks

Non-voting shares

—

—

—

Shares subject to restrictions on voting rights(treasury stock)

—

—

—

Shares subject to restrictions on voting rights(other)———Shares with full voting rights(treasury stock, etc.)(Shares held astreasury stock)
Common stock
4,162,400——

Shares with full voting rights (other)

Common stock
101,864,500

1,018,645(Note) 1—(Notes) 1,2——

1,018,645

—

Class

Common stock

Shares less than one unit

46,756

Total number of shares issued

106,073,656

Total number of voting rights of allshareholders—(Notes)1. The columns for the number of shares of “Shares with full voting rights (other) and “Shares less than one unit”
respective include 2,700 shares and 84 shares held in the name of Japan Securities Depository Center, Inc.
2. Common stock in the “Shares less than one unit” column includes 82 shares of treasury stock held by theCompany.

(ii)

Treasury StockAs at February 28, 2014

Name or trade name ofholderFast Retailing Co., Ltd.
Total

2.

Holder’s address

717-1 Sayama,
Yamaguchi City,
Yamaguchi—

Number ofshares held in
own name(Shares)Number ofshares held inother’s name(Shares)

Total numberof shares held
(Shares)

Percentage of
total number ofshares issued (%)

4,162,400—

4,162,400

3.92

4,162,400—

4,162,400

3.92

Board of Directors
Since submission of the securities report for the preceding consolidated fiscal year, there has been no change in directors
during the six months ended 28 February 2014.

— 13 —

Financial Section
1. Preparation of Interim Consolidated Financial Statements
The interim consolidated financial statements of the Group were presented by reference to the “Rules Governing Term, Formand Preparation of Consolidated Quarterly Financial Statements” (2007 Cabinet Oﬃce Ordinance No. 64, which is hereinafterreferred to as “Consolidated Quarterly Financial Statements Rules”).
2. Review Certification
Pursuant to the first clause of Article 193-2 of the Financial Instruments and Exchange Act, the quarterly and interim
consolidated financial statements of the Group for three months and six months ended 28 February 2014, respectively, arereviewed by Ernst & Young ShinNihon LLC.

— 14 —

(Amounts in millions of Japanese Yen and are rounded down to the nearest million unless otherwise stated)

1. Interim Consolidated Financial Statements(1)

Interim Consolidated Balance Sheet(Millions of yen)Notes

As at 31 August 2013ASSETS
Current assets
Cash and deposits

As at 28 February 2014

Allowance for doubtful accounts

34,187148,215
166,654
4,002
8,980
113,641
17,486(488)

Total current assets

640,109

217,545
33,333
141,141
163,502
4,662
1,365
110,531
18,774(523)
690,332

90,405

104,487

Others31,691
46,423

Total intangible assets

78,11529,35447,344
76,69977,002
258,189
948,522

Notes and accounts receivable – trade
Short-term investment securities
Inventories
Deferred tax assets
Income taxes receivable
Forward currency contracts
Others147,429*1

Non-current assets
Property, plant and equipment
Intangible assets
Goodwill

Investments and other assets

77,170*2

245,690

Total non-current assets

885,800

Total assets
LIABILITIESCurrent liabilities
Notes and accounts payable – trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision
Others121,951
1,862
3,632
26,005
10,08190,432

Total current liabilities

253,966

Non-current liabilities
Long-term loans payable
Provision

21,92675
30,240

Others52,243

Total non-current liabilities

306,209

Total liabilities— 15 —

116,781
1,244
4,335
39,445
7,766
92,170261,743
20,07580
29,12849,283311,027

(Millions of yen)
As at 31 August 2013
NET ASSETSStockholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost

10,273
5,963
482,109(15,851)

Total stockholders’ equity

482,495

Accumulated other comprehensive income
Unrealised gains/(losses) on available-for-salesecurities
Deferred gains/(losses) on hedges
Foreign currency translation adjustments(6,978)71,005
12,875

Total accumulated other comprehensive income

76,901

Subscription rights to shares
Minority interests

1,170
19,024

Total net assets

579,591
885,800

Total liabilities and net assets— 16 —

As at 28 February 2014

10,2736,260
531,382(15,810)532,105(5,044)69,886
16,386
81,2282,028
22,131
637,494
948,522

(2)Interim Consolidated Statements of Income
Six months ended 28 February(Millions of yen)Six months ended
28 February 2013

Note
Net sales

Six months ended
28 February 2014

Cost of sales

614,841
310,876

Gross profit

303,965

Selling, general and administrative expenses

207,306*1

96,658Operating income
Non-operating income
Interest and dividend income
Foreign exchange gains
Others259
11,129364

Total non-operating income

11,754Non-operating expenses
Interest expenses

243
409

Others652

Total non-operating expenses

107,760

Ordinary income

764,349
387,559
376,790
273,586
103,204
327
4,728
582
5,638
494
763
1,257
107,584

Extraordinary gains
Gains on sales of non-current assets

66

Total extraordinary gains

66

Extraordinary losses
Loss on retirement of non-current assets
Expenses incurred upon acquisition

170
739
336

Others1,246

Total extraordinary losses
Income before income taxes and minority interests

106,580

Total income taxes

38,827

Income before minority interests

67,753

Minority interests

2,303

Net income

65,449— 17 —

878
878
72
—
257
329
108,133
39,843
68,2893,731
64,557

Quarterly Consolidated Statement of Income
Three months ended 28 February(Millions of yen)Three months ended
28 February 2013
Net sales

Three months ended
28 February 2014

Cost of sales

296,698
154,381

Gross profit

142,317

Selling, general and administrative expenses

102,269

Operating income

40,048Non-operating income
Interest and dividend income
Foreign exchange gains
Others

146
8,034
199

Total non-operating income

8,381

Non-operating expenses
Interest expenses
Foreign exchange losses
Others152—277

Total non-operating expenses

429
48,000Ordinary income

375,296
198,123
177,173
138,001
39,171
206
—
273
479
204
119
416
739
38,911

Extraordinary gains
Gains on sales of non-current assets

41

Total extraordinary gains

41

Extraordinary losses
Loss on retirement of non-current assets
Expenses incurred upon acquisition
Others54
739
189

Total extraordinary losses

982

Income before income taxes and minority interests

47,058

Total income taxes

19,057

Income before minority interests

28,001

Minority interests

1,024

Net income

26,976— 18 —

1
1
43
—
52
96
38,816
14,89623,9201,211
22,708

Interim Consolidated Statement of Comprehensive Income
Six months ended 28 February(Millions of yen)Six months ended
28 February 2013

Six months ended
28 February 2014

67,753

68,289Foreign currency translation adjustments

6,691
65,033
12,858

Total other comprehensive income

84,583

Income before minority interests
Other comprehensive income
Unrealised gains/(losses) on available-for-sale securities
Deferred gains/(losses) on hedges

Comprehensive income

152,336

1,934(1,118)3,609
4,424
72,713Comprehensive income attributable to:Shareholders of FAST RETAILING CO., LTD.
Minority interests

147,457
4,879

68,8833,830— 19 —

Quarterly Consolidated Statement of Comprehensive Income
Three months ended 28 February(Millions of yen)Three months ended
28 February 2013

Three months ended
28 February 2014

28,001

23,920Foreign currency translation adjustments

4,885
45,412
9,624

Total other comprehensive income

59,922

Income before minority interests
Other comprehensive income
Unrealised gains/(losses) on available-for-sale securities
Deferred gains/(losses) on hedges

Comprehensive income

87,923(158)(17,166)(2,387)(19,711)
4,208

Comprehensive income attributable to:Shareholders of FAST RETAILING CO., LTD
Minority interests

85,058
2,864

4,209
(1)

— 20 —

(3)Interim Consolidated Statement of Cash Flows(Millions of yen)Six months ended
28 February 2013

CASH FLOWS FROM OPERATING ACTIVITIESIncome before income taxes and minority interests

Six months ended
28 February 2014

10,3702,322(633)(2,917)0(259)
243(6,446)
170

108,133
13,8893,054(13)(2,544)
4(327)
494(3,972)72(6,247)
1,505

2,153
7,453

Others, net

17,164
(467)
5,849
1,470

Subtotal

128,704

Interest and dividend income received
Interest paid
Income taxes paid
Income taxes refund

259
(246)
(26,666)
10,038Net cash from operating activities

112,089(8,388)
1,840
2,006
(898)
122,957306(499)(28,793)
9,706
103,677(10,783)
126(2,771)(2,234)(18,867)
1,318(2,983)(2,855)864(1,141)
867
30
(142)
(26,771)264(1,468)
850
148
(244)
—

—
214

(744)
(689)
(25,271)

106,580

Depreciation and amortisation
Amortisation of goodwill
Increase/(decrease) in allowance for doubtful accounts
Increase/(decrease) in other provisions
Increase/(decrease) in provision for retirement benefits
Interest and dividend income
Interest expenses
Foreign exchange losses/(gains)
Losses on retirement of non-current assets
Decrease/(increase) in notes andaccounts receivable — trade
Decrease/(increase) in inventories
Increase/(decrease) in notes andaccounts payable—trade
Decrease/(increase) in other assets
Increase/(decrease) in other liabilities

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease andguarantee deposits
Increase in construction assistance fund receivables
Decrease in construction assistance fund receivables
Increase in guarantee deposits received
Decrease in guarantee deposits received
Acquisitions, net of cash acquired
Payments for purchase of shares of
consolidated aﬃliates
Others, net(41,741)

Net cash used in investing activities— 21 —

(Millions of yen)
Note
CASH FLOWS FROM FINANCING ACTIVITIESNet increase/(decrease) in short-term loans payable
Additions to long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Cash dividends paid to minority interests
Repayments of lease obligations

Six months ended
28 February 2013

Six months ended
28 February 2014

(1,360)14,870(6,017)(13,240)(891)(1,665)
201

Others, net(8,103)

Net cash used in financing activities
Eﬀect of exchange rate changes oncash and cash equivalents

13,885

Net increase/(decrease) in cash and cash equivalents

76,129Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents fromnewly consolidated subsidiaries

266,020

CASH AND CASH EQUIVALENTS AT END OF PERIOD

1*1— 22 —

342,151(702)—(2,317)(15,183)(633)(1,697)(123)(20,656)
4,365
62,115
295,622681
358,419

Changes of principal subsidiaries and Application of the Equity Method of Accounting(1) Changes of principal subsidiaries
Since J BRAND Japan Co., Ltd. and Theory Holdings LLC were newly incorporated during the three months ended 30 November
2013, and since GU (Shanghai) Trading Co., Ltd., Comptoir des Cotonniers (Shanghai) Trading Co., Ltd. and PRINCESSE TAM. TAM(SHANGHAI) TRADING CO., LTD. commenced operations during the three months ended 30 November 2013 and have increased
in importance, and therefore they are consolidated during the period. Since LTH GmbH was liquidated during the three months
ended 30 November 2013, it has been excluded from consolidation. Also, since FAST RETAILING UK LTD and J BRAND EUROPE
LTD were newly incorporated during the three months ended 28 February 2014, and since UNIQLO Pennsylvania LLC, UNIQLO
Massachusetts LLC and UNIQLO Design Studio, NewYork, Inc commenced operations during the three months ended 28
February 2014 and have increased in importance, therefore they are consolidated during the period. In January 2014, the nameof UNIQLO Design Studio, NewYork, Inc was changed to UNIQLO GLOBAL INNOVATION CENTER INC..
(2) Number of consolidated subsidiaries:
107(Change in accounting policy)
The Company previously calculated quarterly income tax expenses in the same method as applied for the year-end closing.
However, eﬀective from the three month period ended 28 February 2014, income tax expenses are calculated by reasonably
estimating the eﬀective tax rate based on the expected income before income taxes and minority interests (net of the eﬀects
of deferred taxes) for the fiscal year to which the six-month period pertains, and multiplying income before income taxes andminority interests for the pertaining period by the estimated eﬀective tax rate. Following the secondary listing on the Stock
Exchange of Hong Kong Limited, in the opinion of the directors, this change in the accounting policy enables the Group toprovide useful and timely information for a broad spectrum of users of the financial statements and their needs. This change
has not been applied retrospectively because its eﬀect is minor.
(Specific accounting procedures adopted for preparation of interim consolidated financial statements)
Calculation of tax expenses:
Income tax expenses were calculated by reasonably estimating the eﬀective tax rate based on the expected income before
income taxes and minority interests (net of the eﬀects of deferred taxes) for the fiscal year to which the six-month period
pertains and multiplying income before income taxes and minority interests for the pertaining period by the estimated eﬀective
tax rate.

— 23 —

Notes to Interim Consolidated Financial Information
Notes to Interim Consolidated Balance Sheet* 1 Components of inventories are as follows:

Products
Supplies

As at 31 August 2013

As at 28 February 2014

(Millions of yen)
163,072
3,581(Millions of yen)
159,527
3,975

166,654

163,502

As at 31 August 2013

As at 28 February 2014

(Millions of yen)
78

(Millions of yen)
76

Total
* 2 Allowance for doubtful accounts deducted directly from the carrying amount of assets:

Investments and other assets
Note to Interim Consolidated Statement of Income* 1 Major components of selling, general and administrative expenses are as follows:
Six months ended
28 February 2013
(Millions of yen)
50,08555,271
10,3702,322

Salaries
Rental expenses
Depreciation and amortisation
Amortisation of goodwill

Six months ended
28 February 2014
(Millions of yen)
66,786
71,10813,8893,054

Note to Interim Consolidated Statement of Cash Flows* 1 A reconciliation of cash and cash equivalents as stated in the interim consolidated balance sheet to the balance as stated in
the consolidated statement of cash flows is as follows:
Six months ended
28 February 2013
Cash and deposits
Time deposits with maturities over three months
Cash equivalents included in short-term securities
Cash and cash equivalents— 24 —

Six months ended
28 February 2014

(Millions of yen)
143,724(37)
198,463(Millions of yen)
217,545(266)
141,141

342,151

358,419

Notes to stockholders’ equity
I. For the six months ended 28 February 2013
1. Dividends(1) Dividend paid during the six months ended 28 February 2013:
Resolution
Meeting of theBoard ofDirectors on
5 November
2012Type of shares

Total dividends Dividends per(Millions of yen) share (Yen)Commonstock

13,241

130

Record dateEﬀective date

Source ofdividends

31 August 2012

26 November 2012

Retainedearnings(2) Declaration date for dividend recorded during the six months ended 28 February 2013 with an eﬀective date in a following
period:Resolution
Meeting of theBoard ofDirectors on
11 April 2013

Type of shares

Total dividends Dividends per(Millions of yen) share (Yen)Commonstock

14,263140

Record dateEﬀective date

Source ofdividends

28 February 2013

13 May 2013

Retainedearnings

Record dateEﬀective date

Source ofdividends

31 August 201322 November 2013

Retainedearnings

2. Significant changes in stockholders’ equity
Not applicable.
II. For the six months ended 28 February 2014
1. Dividends(1) Dividend paid during the six months ended 28 February 2014:
Resolution
Meeting of theBoard ofDirectors on
4 November
2013

Type of shares

Total dividends Dividends per(Millions of yen) share (Yen)Commonstock

15,284150(2) Declaration date for dividend recorded during the six months ended 28 February 2014 with an eﬀective date in a following
period:Resolution
Meeting of theBoard ofDirectors on
10 April 2014

Type of shares

Total dividends Dividends per(Millions of yen) share (Yen)Commonstock

15,286150

2. Significant changes in stockholders’ equity
Not applicable.

— 25 —

Record dateEﬀective date

Source ofdividends

28 February 2014

12 May 2014

Retainedearnings

Segment information
I. For the six months ended 28 February 2013
1. Information about net sales, income or loss by reportable segments is as follows:(Millions of yen)
Reportable Segments
UNIQLO
Global Brands
UNIQLO Japan
International(Note 1)

Total

Others(Note 2)

Interim
Consolidated
Adjustments
Statement of(Note 3)
Income(Note 4)

Net sales

387,246

130,663

95,726

613,636

1,205—

614,841

Segment income

68,996

16,022

8,585

93,60452

3,000

96,658(Notes)

1.
2.
3.
4.

J Brand business (distribution of J BRAND’s clothing), which the Group acquired during the six months ended 28
February 2013 is included in the segment of Global Brands.
“Others” include real estate leasing business, etc.
“Adjustments” include amortisation of goodwill amounted to ¥2,322 million, which has not been allocated toindividual reportable segments.
Total segment income is adjusted to reconcile with operating income of the Interim Consolidated Statement of
Income.

2. Information about impairment losses on non-current assets and goodwill by reportable segments(Significant impairment losses on non-current assets)
Not applicable.
(Significant changes in goodwill)
Not applicable.
(Significant gain on negative goodwill)
Not applicable.
II. For the six months ended 28 February 2014
1. Information about net sales, income or loss by reportable segments is as follows:(Millions of yen)
Reportable Segments
UNIQLOUNIQLO Japan
Global Brands
International

Total

Others(Note 1)

Interim
Consolidated
Adjustments
Statement of(Note 2)
Income(Note 3)

Net sales

405,592

232,037

125,367

762,997

1,351—

764,349

Segment income

70,21328,0499,247

107,511

16(4,323)103,204(Notes)1.
2.
3.

“Others” include real estate leasing business, etc.
“Adjustments” include amortisation of goodwill amounted to ¥3,054 million, which has not been allocated to
Individual reportable segments.
Total segment income is adjusted to reconcile with operating income in the Interim Consolidated Statement of
Income.

— 26 —

2. Information about impairment losses on non-current assets and goodwill by reportable segments(Significant impairment losses on non-current assets)
Not applicable.
(Significant changes in goodwill)
Not applicable.
(Significant gain on negative goodwill)
Not applicable.

— 27 —

Per share information
The basis for calculation of basic net income per share for the period and diluted net income per share for the period is asfollows:(1) Basic net income per share for the period (Yen)Six months ended
28 February 2013

Six months ended
28 February 2014

642.52633.5265,44964,557(Basis of Calculation)
Net income (Millions of yen)
Net income not attributable to common stockholders (Millions of yen)
Net income attributable to common stockholders (Millions of yen)
Average number of common stock during the period (Shares)(2) Diluted net income per share for the period (Yen)——65,44964,557

101,863,996

101,901,611

641.86632.79——104,346

118,553——(Basis of Calculation)
Adjustment to net income (Millions of yen)
Increase in number of common stock (Shares)
Significant changes in potential shares excluded from the computation ofdiluted net income per share for the period, because they do not have dilutive
eﬀects— 28 —

2. Others
Dividends
The Company resolved to pay a dividend from retained earnings at the meeting of the Board of Directors convened on
April 10, 2014.
The total amount of the dividend and amount per share are stated under “Financial section 1. Interim Consolidated
Financial Statements, Notes to stockholders’ equity.”— 29 —

Report on Review of Interim Financial Information
The Directors
FAST RETAILING CO., LTD.
Introduction
We have reviewed the interim financial information included in the financial section, which comprises the interim consolidatedbalance sheet of FAST RETAILING CO., LTD. (the “Company”) and its subsidiaries (collectively, the “Group”) as at 28 February
2014 and the related interim consolidated statements of income and comprehensive income for the three-month and sixmonth period then ended, and interim consolidated statements of cash flows for the six-month period then ended, and otherexplanatory notes (the “Interim Financial Information”).
The directors of the Company are responsible for the preparation and presentation of the Interim Financial Informationin accordance with generally accepted accounting principles for quarterly consolidated financial statements in Japan (the“JGAAP”). Our responsibility is to express a conclusion on the Interim Financial Information based on our review. Our reportis made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do notassume responsibility towards or accept liability to any other person for the contents of this report.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters thatmight be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the Interim Financial Information is notprepared, in all material respects, in accordance with JGAAP.

Ernst & Young ShinNihon LLC
Tokyo, Japan
14 April 2014

— 30 —

SUMMARY OF MATERIAL DIFFERENCES BETWEEN INTERNATIONAL FINANCIAL REPORTING STANDARDS(“IFRS”) AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN JAPAN (“JGAAP”)
The Interim Financial Information of the Group is prepared in accordance with JGAAP which diﬀers in certain aspects from
IFRS. For the purpose of this summary, JGAAP refers to the accounting policies applied by the Group in preparing the Interim
Financial Information in accordance with the prevailing JGAAP for the six months ended 28 February 2014. IFRS refers toInternational Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), International Financial
Reporting Standards Interpretations (“IFRICs”) and Standing Interpretations Committee Interpretations (“SICs”) that areeﬀective for annual financial period beginning on or after 1 September 2013.
This summary provides information about the diﬀerences between the Group’s JGAAP interim consolidated financial statements
and IFRS (net of tax) that, in the opinion of the directors, would have a material eﬀect on total assets, total liabilities, total
equity (total net assets) and net income of the Group. This summary is prepared assuming 1 September 2010 as the dateof transition from JGAAP to IFRS, however, separate disclosure of the eﬀects on the Financial Information of the Groupon transition to IFRS as would have been required under IFRS 1 “First-time Adoption of International Financial ReportingStandards”, is not provided.
Material quantifiable GAAP diﬀerences are summarised as follows:(Amounts in millions of Japanese Yen and are rounded down to the nearest million unless otherwise stated)
Notes

As at 28 February 2014
(Millions of yen)

Total assets under JGAAP
Material quantifiable eﬀects for diﬀerent accounting treatments:
Amortisation of goodwill
Impairment loss of goodwill
Changes of useful lives and method of depreciation of non-current assets
Amortisation of intangible assets
Employee benefits
Onerous contracts
Advertising and promotion expenditure
Consolidation — unconsolidated subsidiaries
Lease incentives

(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(x)
(xi)

20,815
(550)
697
7,379
732
236
(692)
(274)
391

Forward currency contracts

(xii)

3,472

Total assets under IFRS as adjusted for the above material quantifiable eﬀects— 31 —

948,522980,728

NotesTotal liabilities under JGAAPAs at 28 February 2014
(Millions of yen)
311,027

Material quantifiable eﬀects for diﬀerent accounting treatments:
Changes of useful lives and method of depreciation of non-current assets
Employee benefits
Onerous contracts
Advertising and promotion expenditure
Consolidation — unconsolidated subsidiaries
Lease incentives

(iii)
(v)
(vi)
(vii)
(x)
(xi)

(2)
2,432
496
(167)
247
1,868

Forward currency contracts

(xii)

1,330

Total liabilities under IFRS as adjusted for the above material quantifiable eﬀects

317,231

Notes

Total equity (total net assets) under JGAAPAs at 28 February 2014
(Millions of yen)
637,494

Material quantifiable eﬀects for diﬀerent accounting treatments:
Amortisation of goodwill
Impairment loss of goodwill
Changes of useful lives and method of depreciation of non-current assets
Amortisation of intangible assets
Employee benefits
Onerous contracts
Advertising and promotion expenditure
Consolidation — unconsolidated subsidiaries
Lease incentives

(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(x)
(xi)

20,815
(550)
699
7,379
(1,699)
(260)
(525)
(521)
(1,477)

Forward currency contracts

(xii)

2,142

Total equity (total net assets) under IFRS as adjusted
for the above material quantifiable eﬀects

663,497— 32 —

NotesSix months ended
28 February 2014
(Millions of yen)

Net income for the period under JGAAP

64,557

Material quantifiable eﬀects for diﬀerent accounting treatments:
Amortisation of goodwill
Changes of useful lives and method of depreciation of non-current assets
Amortisation of intangible assets
Employee benefits
Onerous contracts
Advertising and promotion expenditure
Foreign currency financial instruments
Net investments in foreign operations
Consolidation — unconsolidated subsidiaries
Lease incentives

(i)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)

Forward currency contracts(xii)

Net income for the period under IFRS as adjusted
for the above material quantifiable eﬀects

3,054
(177)
107
(270)
170
(216)
1,865
(1,418)
(384)
(345)
1,451

68,394

Notes:(i)

Amortisation of goodwill
Under JGAAP, goodwill is amortised using the straight-line method over an appropriate period (within 20 years).
Under IFRS, goodwill is not amortised but is subject to impairment review annually, or more frequently if events orchanges in circumstances indicate that it may be impaired, in accordance with IAS 36 “Impairment of Assets”. Detailed
information about impairment is described in the following note (ii).
Accordingly, the Group reversed the accumulated amortisation of goodwill recognised under JGAAP.

(ii)

Impairment loss of goodwill
Under JGAAP, goodwill is not reviewed for impairment unless there is an indication of impairment. If an indication of
impairment is identified, goodwill is allocated to the asset groups of the combined businesses to which it relates andany impairment is determined using a two-step approach. First, the entity estimates the sum of the undiscounted cash
flows expected to be generated by the asset groups of the multiple businesses to which the goodwill relates (the “Asset
Groups”) and any subsequent disposal value of the assets within that Asset Groups (the “total of the Asset Groups’ cash
flows”). Second, if the total of the Asset Groups’ cash flows on an undiscounted basis is less than the carrying amount of
the Asset Groups, an impairment loss is recognised. The amount of the impairment loss is measured as the excess of thecarrying amount of the Asset Groups over the total of the Asset Groups’ cash flows on a discounted basis. The reversal ofprevious impairments of goodwill is prohibited.
Under IFRS, goodwill is reviewed for impairment at least annually, at the same time each year, or more frequently if
events or changes in circumstances indicate that the carrying amount may be impaired. When the recoverable amount(the higher of fair value less disposal costs and value in use) of the cash-generating unit (“CGU”) (or group of CGUs),
including the goodwill, is less than the carrying amount of that CGU (or group of CGUs), including goodwill, an impairment
loss is recognised to the extent of the diﬀerence of the carrying amount of the CGU (or group of CGUs) over therecoverable amount. The reversal of previous impairments of goodwill is prohibited.

— 33 —

Goodwill was tested for impairment during the six-month period ended 28 February 2014 and no impairment loss wasrecognised.
(iii)

Changes of useful lives and method of depreciation of non-current assets
In the Group’s JGAAP consolidated financial statements for the year beginning 1 September 2010, the prior year eﬀect ofchanges in estimated useful lives of non-current assets were reflected in the balance of accumulated depreciation. In theyear of change, the carrying amount of non-current assets is recalculated based on the revised accounting estimates andthe impact thereof was recognised as non-recurring depreciation, an extraordinary loss in the consolidated statements ofincome. Generally, adjustments are only recognised for the assets whose useful lives are shortened.
Under IFRS, changes in useful lives and expected pattern of consumption of future economic benefits embodied indepreciable assets are accounted for as changes in accounting estimates. The reassessed useful lives are prospectively
applied as the depreciation basis of the corresponding non-current assets. Further, at the transition date, adjustments tothe carrying amount of non-current assets made in accordance with IFRS 1 are recognised in retained earnings.
The Group changed the estimated useful lives and depreciation method of non-current assets during the year ended 31
August 2011 and, as a result, the carrying amount of non-current assets decreased by JPY4,050 million. Under IFRS, aportion of the impact of the change under JGAAP corresponds to the transition date adjustment of non-current assets
to IFRS values and also under IFRS, the revision of useful lives applies to the extension of useful lives rather than justshortening thereof.

(iv)

Amortisation of intangible assets
Under JGAAP, there is no specific concept of intangible assets with indefinite useful lives. In principle, all intangible assets
are amortised over their determined useful lives using the straight-line method.
Under IFRS, intangible assets with indefinite useful lives are not amortised.
In accordance with IFRS, the amortisation of certain trademarks, which in substance are intangible assets with indefinite
useful lives, is reversed accordingly and these assets are tested for impairment on an annual basis. Impairment losses arerecognised as the excess of the carrying amount over the recoverable amount.

(v)

Employee benefits
Under JGAAP, accruals for employees’ unused accumulating paid holiday are not required.
Under IFRS, the accounting treatment for employees’ unused accumulating paid holiday is stipulated in IAS 19 “Employee
Benefits” and an entity shall accrue for the expected cost of employees’ unused accumulating paid holiday.
The Group accrued for employees’ unused accumulating paid holiday in accordance with IFRS.

(vi)

Onerous contracts
Under JGAAP, there are no specific guidelines on the accounting treatment for onerous contracts.
IFRS generally requires recognition of an onerous loss for all contracts if the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be received under it. Unavoidable costs under a contract
are determined by considering the minimum cost to exit the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from the failure to fulfill it.
The Group made relevant assessments and recognised provisions for onerous contracts under IFRS.

— 34 —

(vii) Advertising and promotion expenditure
Under JGAAP, advertising and promotion costs are expensed based on the terms of the advertising contract or the
distribution of catalogues and others.
Under IFRS, advertising and promotion costs are expensed as incurred.
Deferred expenditure on advertising and promotion, which is recognised as an asset under JGAAP, is derecognised andexpensed as incurred under IFRS.
(viii) Foreign currency financial instruments
Under JGAAP, the total changes in fair value of available-for-sale securities including foreign exchange movements, net of
associated tax eﬀects, are recognised in other comprehensive income. As an alternative treatment, the foreign exchange
gains or losses associated with available-for-sale debt securities may be recognised in the consolidated statement ofincome.
Under IFRS, the portion of the change in fair value of monetary available-for-sale securities arising from foreign exchange
movements is recognised as profit or loss in the consolidated statement of income.
The Group recognised the total change in fair value, including foreign exchange movements of available-for-sale debt
securities, in other comprehensive income under JGAAP. The portion of the change arising from foreign exchange
movements is reclassified to profit or loss in the consolidated statement of income under IFRS.
(ix)

Net investments in foreign operations
Under JGAAP, there is no specific accounting standard relating to the treatment of exchange diﬀerences arising on items,
other than shares, which are considered part of an entity’s net investment in a foreign operation. Accordingly, foreignexchange diﬀerences corresponding to such items are recognised in the consolidated statements of income of thereporting entity.
Under IFRS, exchange diﬀerences arising on the translation of an entity’s net investment (including shares and otheritems considered to represent equity) are recognised in other comprehensive income and accumulated as a separate
component of equity. On disposal of the foreign operation, all such exchange diﬀerences relating to that particular foreign
operation are reclassified to the consolidated statements of income.
Accordingly, exchange diﬀerences arising from the net investment in foreign operations under JGAAP are adjusted toother comprehensive income under IFRS.

(x)Consolidation — unconsolidated subsidiaries
Under JGAAP, an entity that is controlled by its parent is, in principle, consolidated in the parent’s consolidated financial
statements. However, unconsolidated subsidiaries with insignificant assets and revenues, for which exclusion from thescope of consolidation does not aﬀect the overall reasonableness of the financial position and operating results of theGroup, may be excluded from the scope of consolidation.
Under IFRS, a subsidiary that is controlled by its parent should be consolidated in the parent’s consolidated financial
statements.
Accordingly, such unconsolidated subsidiaries have been consolidated under IFRS.

— 35 —

(xi)Lease incentives
Under JGAAP, there is no specific guidance on the accounting treatment for lease incentives, such as a rent-free period.
Under IFRS, lease incentives shall be recognised by a lessee as part of the net consideration for the use of the leased asset
and amortised over the lease term on a straight-line basis.
The Group recognised the lease liabilities, net of any incentives received, and amortised these accordingly over the leaseterm on a straight-line basis under IFRS.

(xii) Forward currency contracts
Under JGAAP, the principle treatment of cash flow hedge accounting is the same as IFRS. Under the JGAAP optional
treatment for hedge accounting, foreign currency denominated receivables and payables are translated using the rates in
the related forward currency contracts (the “Assignment method”). The hedging transaction must match the settlement
dates of the foreign currency denominated receivables and payables and no deferred gains or losses are permitted onearly settlement of the hedging instruments.
Under IFRS, the Assignment method for hedge accounting under JGAAP does not exist. The eﬀective portion of thegain or loss arising from changes in the fair value of a hedging instrument that meets the criteria for cash flow hedge
accounting is recognised directly in other comprehensive income. If the forward currency contracts expire, are sold,terminated or exercised, before the settlement dates of the corresponding hedged items, any cumulative gain or loss
previously recognised in other comprehensive income remains in other comprehensive income until the settlement of thecorresponding hedged items.
The Group adopts the Assignment method for entities which meet the criteria of hedge accounting under JGAAP.
Accordingly, the Group made the relevant adjustments.

— 36 —