FAST RETAILING CO., LTD.
迅銷有限公司

Year-end Report 2018/19
2018.9.1–2019.8.31
Stock Code: 6288

Contents
1.

Corporate Information

2

2.

Financial Highlights

33.

Corporate Profile

5

4.

Management Discussion and Analysis

13

5.

Capital Expenditures24

6.

Stock Information and Dividend Policy

27

7.

Corporate Governance Report46

8.

Board of Directors

53

9.

Financial Information

68

10.

(1)

Consolidated statement of financial position

69

(2)

Consolidated statement of profit or loss

70

(3)

Consolidated statement of comprehensive income

71

(4)

Consolidated statement of changes in equity

72

(5)

Consolidated statement of cash flows

74

(6)

Notes to the consolidated financial statements

76

Financial Statements

126

(1)

Balance sheet

126

(2)

Statement of income

128

(3)

Statement of changes in net assets

129

(4)

Notes

131

(5)

Supplementary information

134

(6)

Main details of assets and liabilities

135

(7)

Others135

Independent Auditor’s Report (Group)

136

Independent Auditor’s Report (Company)

141

Internal Control Report143

Confirmation Note144

1. 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

Tadashi Yanai (Chairman of the Board of Directors,
President, and chief executive Officer)

Directors
Principal Place of Business in Hong Kong

Takeshi Okazaki
Kazumi Yanai
Koji Yanai

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

Independent Directors
Toru Hambayashi (External)
Nobumichi Hattori (External)
Masaaki Shintaku (External)
Takashi Nawa (External)
Naotake Ohno (External)

HDR Registrar and HDR Transfer OfficeComputershare Hong Kong Investor Services Limited
Shops 1712–1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
WanchaiHong Kong

Board of Statutory Auditors
Akira Tanaka
Masaaki Shinjo
Masumi Mizusawa
Takaharu Yasumoto (External)
Keiko Kaneko (External)
Takao Kashitani (External)

Stock CodeHong Kong: 6288
Japan: 9983

Company Secretaries

Website Address

Shea Yee Man

http://www.fastretailing.com

Independent Auditor
Deloitte Touche Tohmatsu LLC

Principal Banks
Sumitomo Mitsui Banking Corporation
MUFG Bank, 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—

2. Financial Highlights
A. Consolidated Financial Summary
Term
Accounting Period
Revenue (Millions of yen)International Financial Reporting Standards (“IFRS”)
54th Year

55th Year

56th Year

57th Year

58th Year

Year ended
Year ended
Year ended
Year ended
Year ended
31 August 2015 31 August 2016 31 August 2017 31 August 2018 31 August 2019
1,681,781

1,786,473

1,861,917

2,130,060

2,290,548

Operating profit (Millions of yen)

164,463

127,292

176,414236,212257,636

Profit before income taxes (Millions of yen)

180,676

90,237

193,398

242,678

252,447

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

110,027

48,052

119,280

154,811

162,578

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

163,871(141,345)

190,566

165,378

140,900

Equity attributable to owners of the Parent(Millions of yen)

750,937

574,501

731,770

862,936

938,621

Total assets (Millions of yen)

1,163,706

1,238,119

1,388,486

1,953,466

2,010,558

Equity per share attributable to ownersof the Parent (Yen)7,366.07

5,634.35

7,175.35

8,458.52

9,196.61

Basic earnings per share for the year (Yen)

1,079.42

471.31

1,169.70

1,517.71

1,593.20

Diluted earnings per share for the year (Yen)

1,078.08

470.691,168.00

1,515.23

1,590.55

Ratio of equity attributable to owners of
the Parent to total assets (%)

64.5

46.4

52.7

44.2

46.7

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

16.1

7.3

18.3

19.4

18.0

Price earnings ratio (times)

45.6

77.1

26.9

34.1

39.1

Net cash generated by operating activities(Millions of yen)

134,93198,755

212,168

176,403

300,505

Net cash (used in)/generated byinvesting activities (Millions of yen)

(73,145)(245,939)

122,790(57,180)(78,756)

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

(41,784)

201,428(50,836)

198,217(102,429)

Cash and cash equivalents at end of year
(Millions of yen)355,212385,431

683,802

999,697

1,086,519

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

41,646(27,219)

43,639(26,282)

44,424(31,719)

52,839(71,840)

56,523(80,758)(Notes)

1. Revenue does not include consumption taxes, etc.
2. The Group started to prepare the consolidated financial statements in accordance with IFRS for the year ended
31 August 2014.
3. The number of junior employees and part-time workers is stated as a separate number in parentheses as theaverage number of people per year was calculated based on an eight-hour workday per person until the 56th year,
but from the 57th year, the average number of registered personnel for the year is stated.

—3—

B. Non-Consolidated Financial Summary
Term
Accounting period

54th Year

55th Year

56th Year

57th Year

58th Year

Year ended
Year ended
Year ended
Year ended
Year ended
31 August 2015 31 August 2016 31 August 2017 31 August 2018 31 August 2019

Operating revenue (Millions of yen)

119,071

99,289139,871

193,044

184,910

Ordinary profit (Millions of yen)

89,245

9,270

115,488

139,660

106,000

Net profit (Millions of yen)

70,227

6,084

64,264

122,158

106,113

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

376,007345,773

377,103463,229

521,706

Total number of shares issued (shares)
Total net assets (Millions of yen)
Total assets (Millions of yen)

410,009

631,086

670,111

993,413

1,054,758

Equity per share (Yen)

3,662.28

3,355.83

3,654.97

4,489.50

5,053.07

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

350.00(175.00)

350.00(185.00)

350.00(175.00)

440.00(200.00)

480.00(240.00)

Basic net profit per share (Yen)

688.9659.68

630.201,197.59

1,039.87

Diluted net profit per share (Yen)

688.11

59.60

629.28

1,195.63

1,038.14

Equity ratio (%)

91.1

54.2

55.6

46.1

48.9

Earnings on equity (%)

20.0

1.7

18.0

29.4

21.8

Price earnings ratio (Times)

71.5

608.9

49.9

43.3

59.5

Dividend ratio (%)

50.8

586.5

55.5

36.7

46.2

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

1,234
(119)

1,131
(126)

1,166
(140)

1,345
(267)

1,389
(11)

Total shareholder return (%)(Compared with TOPIX Total Return
Index)

152.4(122.5)113.8(108.2)99.9(134.6)163.7(147.4)

197.3(131.5)Highest share price (Yen)61,97050,70044,37054,51070,230

Lowest share price (Yen)

32,46025,30530,46030,00047,040(Notes)

1. Operating revenue does not include consumption taxes, etc.
2. The number of junior employees and part-time workers is stated as a separate number in parentheses as theaverage number of people per year calculated based on an eight-hour workday per person until the 56th year, butfrom the 57th year, the average number of registered personnel for the year is stated.
3. Up until the 57th year, contract employees and fixed-term employees were included in the average number of
temporary employees, but from the 58th year, they are included in the number of employees.
4. The highest and lowest share prices are from the first section of the Tokyo Stock Exchange.

—4—3. Corporate Profile
A.

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 2-12-12
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 its approach tobusiness.

April 1992

The main Ogori Shoji store, selling menswear, is converted to the UNIQLO Onda store (closed in 2001).
All the stores are completely renovated as casual clothing stores 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 headquarters opens in Shibuya-ku, Tokyo.

October 2000

Online store launches to open a new sales channel and make shopping easier for customers.

September 2001

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

September 2002

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

January 2004

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

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.

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.

—5—

Date

Summary

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

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.

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

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.

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.

December 2012

FAST RETAILING acquires a majority interest in U.S. J Brand Holdings, LLC 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.

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.

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.

—6—

Date
April 2016

Summary
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

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.

September 2017

First UNIQLO Spain store opens in Barcelona

June 2018

Issues ¥250 billion worth of unsecured straight bonds

August 2018

Sweden’s first UNIQLO store opens in Stockholm

September 2018

The Netherlands’ first UNIQLO store opens in Amsterdam

October 2018

UNIQLO Manila Store, UNIQLO’s global flagship store, opens in the Philippines

October 2018

Fast Retailing entered into a logistics-related strategic global partnership with Daifuku Co., Ltd.

April 2019

Denmark’s first UNIQLO store opens in Copenhagen

September 2019

Italy’s first UNIQLO store opens in Milan

September 2019

Office functions of GU and PLST move to Ariake Office

October 2019

India’s first UNIQLO store opens in New Delhi

—7—

B.

Our Business
The Group consists of FAST RETAILING CO., LTD. (the “Company”), 133 consolidated subsidiaries, and 4 associates
accounted for using the equity method.
Details of the Group’s businesses as well as the positioning of the Company and its main associates 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“9.Financial Information (6) Notes to the consolidated financial statements.”

Category

Company name

Reportable Segment

Holding company

FAST RETAILING CO., LTD.

OthersUNIQLO CO., LTD.

UNIQLO Japan

FAST RETAILING (CHINA) TRADING CO., LTD.*UNIQLO International

UNIQLO TRADING CO., LTD.*UNIQLO International

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

FRL Korea Co., Ltd.

UNIQLO International/
GU

FAST RETAILING (SINGAPORE) PTE. LTD.

OthersUNIQLO (THAILAND) COMPANY LIMITEDUNIQLO International

PT. FAST RETAILING INDONESIAUNIQLO International

UNIQLO AUSTRALIA PTY LTD

UNIQLO International

Fast Retailing USA, Inc.

OthersUNIQLO EUROPE LIMITEDUNIQLO International

UNIQLO INDIA PRIVATE LIMITEDUNIQLO International

UNIQLO VIETNAM Co., Ltd

UNIQLO International

G.U. CO., LTD.

GUGU (Shanghai) Trading Co., Ltd.*GUFAST RETAILING FRANCE S.A.S.

Others

Theory LLC

Global Brands

PLST CO., LTD.

Global Brands

COMPTOIR DES COTONNIERS S.A.S.

Global Brands

PRINCESSE TAM.TAM S.A.S.

Global Brands

J Brand, Inc.

Global Brands

Other consolidated subsidiaries (113 companies)

UNIQLO International/
GU/ Global Brands/
Others

Associates accounted for using the equity-method(4 companies)

OthersMain consolidated subsidiaries

Associates 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.
5.

“UNIQLO” business means the retail business of UNIQLO brand casual apparel in Japan and overseas.
“GU” business means the retail business of GU 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.
—8—

The organizational structure is as follows:Business Structure

UNIQLOJapan

UNIQLO
Business

UNIQLOInterna�onal

FAST
RETAILING
CO., LTD.
(holding
company)Group
Management
Opera�on

GU
Business

Global Brands
Business

OthersBusiness

UNIQLO CO., LTD.

FAST RETAILING (CHINA) TRADING CO., LTD.*UNIQLO TRADING CO., LTD.*
FAST RETAILING (SHANGHAI) TRADING CO., LTD.*FRL Korea Co., Ltd.
UNIQLO (THAILAND) COMPANY LIMITED
PT. FAST RETAILING INDONESIAUNIQLO AUSTRALIA PTY LTD
UNIQLO EUROPE LIMITEDUNIQLO INDIA PRIVATE LIMITEDUNIQLO VIETNAM Co., Ltd
OthersG.U. CO., LTD
GU (Shanghai) Trading Co.,Ltd.*
Others

Theory LLC
PLST CO., LTD.
COMPTOIR DES COTONNIERS S.A.S.
PRINCESSE TAM.TAM S.A.S.
J Brand, Inc.
OthersFAST RETAILING (SINGAPORE) PTE. LTD.
FAST RETAILING FRANCE S.A.S.
Fast Retailing USA, Inc.
Others* The English names of all subsidiaries established in PRC are translated for identification only.

—9—

Group
Management
Opera�on

Customers

C.

Subsidiaries and Associates

Name

Location

Nominal value of
issued ordinary/registered share capital(Thousands)(Consolidated subsidiaries) UNIQLO CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

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

Shanghai, PRC

UNIQLO TRADING CO., LTD.*

Shanghai, PRC

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

Shanghai, PRC

FRL Korea Co., Ltd.

Seoul, South Korea

FAST RETAILING (SINGAPORE) PTE. LTD.

Republic of Singapore

SGD86,000

UNIQLO (THAILAND) COMPANY LIMITED

Bangkok,
Kingdom of Thailand

PT. FAST RETAILING INDONESIA

JPY1,000,000

Details of main
businesses

Ownership ratio ofvoting rights

Relationship

UNIQLO Japan

100.0%—USD20,000

UNIQLO International

100.0%—

USD30,000

UNIQLO International

100.0%—USD35,000

UNIQLO International

100.0%—KRW24,000,000

UNIQLO International/
GU

51.0%

—

Others100.0%—

THB1,200,000

UNIQLO International

75.0%(75.0%)—

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%
Loans(100.0%)

Fast Retailing USA, Inc.

New York, United Statesof America

USD981,621

Others100.0%

Loans
Loan guarantees

UNIQLO EUROPE LIMITED

London, United Kingdom

GBP40,000

UNIQLO International

100.0%

Loans
Loan guarantees

UNIQLO INDIA PRIVATE LIMITEDNew Delhi
Republic of India

INR2,000,000

UNIQLO International

100.0%—UNIQLO VIETNAM Co., Ltd

Ho Chi Minh, Vietnam

USD15,800

UNIQLO International

75.0%(75.0%)—

G.U. CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY10,000

GU

100.0%—GU (Shanghai) Trading Co.,Ltd.*

Shanghai, PRC

USD20,000

GU

100.0%

Loans

FAST RETAILING FRANCE S.A.S.

Paris, France

EUR101,715

Others100.0%

Loans
Loan guarantees

Theory LLC

New York, United Statesof America

USD116,275

Global Brands

100.0%(100.0%)—PLST CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY10,000

Global Brands

100.0%COMPTOIR DES COTONNIERS S.A.S.

Paris, France

EUR24,593

Global Brands

100.0%(100.0%)—PRINCESSE TAM.TAM S.A.S.

Paris, France

EUR20,464

Global Brands

100.0%(100.0%)—J Brand, Inc.

California, UnitedStates of America

USD396,340

Global Brands

100.0%(100.0%)—

Other consolidated subsidiaries (112 companies)

—

—

—

—

—

Associates accounted for using the equity method(4 companies)

—

—

—

—

—

Loans

* 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, UNIQLO INDIA PRIVATE LIMITED, UNIQLO VIETNAM Co., Ltd., GU (Shanghai) Trading Co.,Ltd.,FAST RETAILING FRANCE S.A.S., COMPTOIR DES COTONNIERS S.A.S, PRINCESSE TAM.TAM S.A.S. 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 aGroup subsidiary.

— 10 —

4. Net sales (excluding internal sales between other member companies of the consolidated Group) of UNIQLO
CO., LTD., and FAST RETAILING (CHINA) TRADING CO., LTD., are greater than 10% of consolidated revenue. Keyelements of profit/loss and financial position for the year ended 31 August 2019 are as below.
UNIQLO CO., LTD.
(1)
(2)
(3)
(4)
(5)

Revenue
Profit before income taxes
Profit for the year
Total equity
Total assets

872,957 million yen
101,393 million yen
72,578 million yen
188,920 million yen
488,466 million yen

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

Revenue
Profit before income taxes
Profit for the year
Total equity
Total assets

368,008 million yen
67,733 million yen
50,734 million yen
118,933 million yen
229,019 million yen— 11 —

D.
(a)

Employees
The Group
As at 31 August 2019
Name of segment

Number of employees

UNIQLO Japan

13,621 (30,535)

UNIQLO International

31,209 (35,471)

GU

4,977 (13,358)

Global Brands

4,048 (1,152)

Total for reportable segments

53,855 (80,516)

Others1,279 (231)

All companies (shared)

1,389 (11)Total

(Notes)(b)56,523 (80,758)

1. The number of employees does not include operating officers, junior employees, part-time workers, or temporary
staff seconded from other companies.
2. The average number of registered personnel for junior employees and part-time workers for the year are shown inbrackets ( ).
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 2018.

The Company
As at 31 August 2019
Number of employees
1,389 (11)(Notes)(c)

Average number of years
with the Company

Average age
38 years and 4 months

4 years and 7 months

Average annual wages(thousands of yen)
9,004

1. The number of employees does not include operating officers, junior employees, part-time workers or temporary
staff seconded from other companies.
2. The average number of registered personnel for junior employees and part-time workers for the year are shown inbrackets ( ).
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.

— 12 —

4. Management Discussion and Analysis
A.

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 (29 November 2019).

(a)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 aselfmotivated, 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.

(b)Drive Ariake Project forward
We are pressing ahead with our transformative Ariake Project to help us transform into a new digital consumer retailindustry that can instantly translate customer demands into commercial products, and actively transmit relevant
information. That involves accelerating various measures, including developing a system for refining demand forecastingand inventory control, reducing factory lead times, revolutionizing distribution by introducing automated warehousing,
adopting new e-commerce technology, and building a framework to help merge our physical and e-commerce stores.

(c)Develop superior world-class products
Our R&D centers collect a huge variety of information to help develop superior world-class products. UNIQLO seeks tocreate more advanced finished products by pursuing fashion and functionality while staying true to our LifeWear concept
for ultimate everyday clothes. We intend to apply the ability to instantly develop products that customer want and thepower to collect information not only to UNIQLO but to other Group brands as well.

(d)

Further expand UNIQLO International
UNIQLO International is the driver of Group growth, and we intend to further expand this business segment by continuing
to open multiple stores in the Greater China and Southeast Asia & Oceania regions. We aim to move UNIQLO USA into theblack as soon as possible, and expand the geographical reach of our European operation and improve its profitability. We
are also actively building our brand to encourage customers around the world to embrace our UNIQLO LifeWear clothing
concept.

(e)Secure stable growth for UNIQLO Japan
We want to expand UNIQLO Japan’s per-store sales floor area by replacing smaller stores with larger ones through our
scrap and build policy so we can maintain a high level of efficiency. We want to secure consistent stable growth byconsolidating community-rooted local store management that is well positioned to develop product ranges and services
that best suit local needs. We are pursuing active digital, IT and logistics investment in order to expand e-commerce sales,
and turn UNIQLO Japan into a new type of manufacturer and retailer.

(f)Grow our GU operation
GU is great at offering fashion at amazingly low prices, but we want to improve the accuracy of mass fashion trend
product development and production planning by introducing some aggressive Ariake Project reforms. We also plan todevelop more competitive products by transforming GU’s material procurement and manufacturing processes. We willcontinue opening new GU stores in Japan, and opening mores stores in international markets such as Greater China andSouth Korea.

(g)Pursue initiatives to solve sustainability issues
Befitting our position as a leading global apparel brand, Fast Retailing strives to help solve ESG issues in order to realize
a sustainable society. We pursue multiple initiatives to help monitor and regulate the manufacture of clothing, including
improving factory working environments, upholding human rights, protecting the environment, promoting diversity, andstrengthening governance. We also work proactively to achieve concrete targets and commitments defined under our
six specific materialities.

— 13 —

B.

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 decisions and projections made by the Company
based on information available at the time of the publication of this report (29 November 2019).

(1)

Risks specific to management strategy
Risks specific to the management strategy of the Group are as follows:(a)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.

(b)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.

(c)

Risk of dependency on production in specified geographic locations
Most products sold through Group companies are manufactured in China and other Asian countries. For this reason,
if there is a dramatic political, economic, security, or legal change in countries where we produce, or a strike byfactory personnel or dock workers, or an earthquake, flood or other major natural disaster, this could have an
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.

(d)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.

(e)Overseas business risks
As the Group expands its business through M&A, we are steadily enhancing the Group’s presence overseas. As
we open more stores in countries across the world, overseas sales are accounting for a higher proportion of theGroup’s sales. In this business environment, if there are changes in laws or changes in taxation systems that have an
adverse impact, unanticipated political developments, social turmoil due to terrorism, conflict or other disturbance,or significant fluctuations in exchange rates, or if the goods we sell do not match the market needs in thosecountries, or if the hiring and training of well-qualified management personnel and local staff who can smoothly
manage our business in each country do not go according to plan, this could have a negative impact on earnings.

(f)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 stabilize our purchasing costs by entering into forward currency
agreements for about three years ahead to equalize exchange rates. If the dollar rises sharply against the key
currencies of each country going forward, this could have a medium- to long-term negative impact on earnings of
the UNIQLO business.

— 14 —

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

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 Group’s 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.

(b)

Risk of leaks of business secrets or customer’s 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. Furthermore, if the Groupis deemed by an administrative authority to have violated legal regulations restricting the transfer of personal
information between countries and regions such as the EU General Data Protection Regulation (GDPR), this could
lead to a decline in the trust of our customers, and the imposition of a hefty fine could have an adverse effect onearnings.

(c)

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.

(d)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.

(e)

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.

(f)

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.

— 15 —

C.
(1)Management’s Discussion and Analysis of Consolidated Financial Condition, Results of Operations and Cash
Flows
Summary of Business Results(a)Business Results
The Fast Retailing Group achieved record levels of revenue and profit in fiscal 2019, or the twelve months from
1 September 2018 to 31 August 2019. Consolidated revenue totaled 2.2905 trillion yen (+7.5% year-on-year) andoperating profit reached 257.6 billion yen (+9.1% year-on-year). This impressive performance was due largely tostrong results from UNIQLO International, and significant increases in both revenue and profit of our GU casual
fashion brand. The consolidated gross profit margin declined by 0.4 points year-on-year in fiscal 2019, and theselling, general and administrative expense ratio improved by 0.1 points. In addition, a net foreign-exchange lossof 13.1 billion yen was recorded under finance income/costs as the appreciation in the yen currency over thefinancial year reduced the equivalent yen value of our long-term holdings of foreign-currency denominated assets.
As a result, profit before income taxes of fiscal 2019 expanded to 252.4 billion yen (+4.0% year-on-year) and profit
attributable to owners of the Parent increased to 162.5 billion yen (+5.0% year-on-year). Capital expenditure
increased by 15.8 billion yen year-on-year in fiscal 2019 to 85.2 billion yen (including financing leases). Breaking
down the capital expenditure figure: 13.6 billion yen was invested at UNIQLO Japan, 31.6 billion yen at UNIQLOInternational, 9.0 billion yen at GU, 2.7 billion yen at Global Brands, and 28.0 billion yen in systems, etc. In addition
to investing in new UNIQLO International and GU stores, more funding was channeled into IT investment under ourGroupwide transformative Ariake Project, and installing self-checkouts at UNIQLO stores.
The Group’s medium-term vision is to become the world’s number one apparel retailer. In pursuit of this aim, weare focusing our efforts on expanding UNIQLO International, as well as our GU brand and our global e-commerce
operation. We continue to increase UNIQLO store numbers in each market and area in which we operate, andopen global flagship stores and large-format stores in major cities around the world to instill deeper and morewidespread empathy for UNIQLO’s LifeWear concept. Within the UNIQLO International segment, Greater China(Mainland China, Hong Kong and Taiwan) and Southeast Asia are generating growth as the key pillars of our Group’sbusiness. In terms of our GU operation, in addition to expanding the GU store network primarily in Japan, we areworking to establish GU’s position as the brand that offers fun fashion at amazingly low prices. We are also aiming
to further expand our e-commerce operation, after global online sales rose to 258.3 billion yen in fiscal 2019, 11.6%of total sales.
UNIQLO Japan
UNIQLO Japan reported rise in revenue and fall of profit in fiscal 2019, with revenue totaling 872.9 billion yen(+0.9% year-on-year) and operating profit totaling 102.4 billion yen (-13.9% year-on-year). Full-year same-store
sales, including online sales, expanded by 1.0% year-on-year. In the first half of the fiscal year from 1 September
2018 through 28 February 2019, same-store sales contracted by 0.9% year-on-year on the back of sluggish sales ofWinter ranges during the warm winter weather. However, same-store sales picked up by 3.5% year-on-year in thesecond half from 1 March 2019 to 31 August 2019 on the back of strong sales of Summer items such as T-shirts,
UT graphic T-shirts, UV-cut parkas and Kando pants. Full-year online sales increased by 32.0% year-on-year to
83.2 billion yen, and the online sales proportion of total revenue rose from 7.3% to 9.5%. On the profit front, thegross profit margin contracted by 1.7 points year-on-year, adversely affected by the warm winter and an earlyrundown of excess Spring Summer inventories. However, as a result of that early rundown, total inventories was
greatly reduced at the end of August 2019 compared to the previous year. Meanwhile, the full-year selling, generaland administrative expense ratio increased by 0.4 points year-on-year. Breaking that figure down into first andsecond-half performance, increased inventories resulted in a higher distribution cost ratio in the first half. However,
the efficiencies gained through using RFID IC tags helped reduce in-store personnel costs and outsourcing costs inthe second half, resulting in improvement in the second-half selling, general and administrative expense ratio.

— 16 —UNIQLO International
In fiscal 2019, revenue from the UNIQLO International segment topped 1 trillion yen for the first time, and thesegment reported a consistently high operating profit margin of 13.5%. Overall, UNIQLO International revenue andprofit both increased significantly over the fiscal year, with revenue totaling 1.0260 trillion yen (+14.5% year-onyear) and operating profit increasing to 138.9 billion yen (+16.8% year-on-year).
Breaking down the strong UNIQLO International performance into individual markets, UNIQLO Greater China
reported strong gains in both revenue and profit, with revenue expanding by 14.3% year-on-year to 502.5 billion
yen and operating profit rising by 20.8% year-on-year to 89.0 billion yen. The region’s same-store sales continued
to rise as local support for the UNIQLO LifeWear clothing concept grew, and UNIQLO successfully established its
position as the region’s No.1 apparel brand. The region’s online sales also expanded by a buoyant 30% year-on-year
in fiscal 2019. Both revenue and profit of UNIQLO Southeast Asia & Oceania expanded by approximately
20% year-on-year in fiscal 2019, with revenue reaching the 170 billion yen. However, both revenue and profit
declined at UNIQLO South Korea. Elsewhere, UNIQLO USA managed to significantly reduce its operating loss in fiscal
2019. UNIQLO Europe achieved rising revenue and profit, with sales reaching the 100 billion yen, and the Russian
operation continuing to generate especially strong revenue and profit gains.
In terms of new-store activity, UNIQLO International opened its first store in the Netherlands in Amsterdam in
September 2018, followed by a first store in Denmark in Copenhagen in April 2019, a first store in Italy in Milan in
September 2019, and a first store in India in New Delhi in October 2019. All these new stores got off to a strong
start.
GU
The GU business segment achieved a record performance in fiscal 2019, with revenue climbing to 238.7 billion yen(+12.7% year-on-year) and operating profit more than doubling to 28.1 billion yen (+139.2% year-on-year). Full-yearsame-store sales increased on the back of our decisions to switch the focus of GU’s product mix to mass fashion
trends and to strengthen GU marketing. The label’s trendy oversized sweatshirts, knitwear, and T-shirts proved
standout hit products recording sales of several million units each. GU’s full-year gross profit margin improved
significantly on the back of narrower discounting, and a lower cost of sales resulting from early submission of orders
and aggregate purchasing of raw materials. GU’s operating profit margin also improved by a considerable 6.2 points
year-on-year to 11.8%.
Global Brands
Global Brands revenue declined but profit increased in fiscal 2019. While revenue declined to 149.9 billion yen(-2.9% year-on-year), the segment reported an operating profit of 3.6 billion yen, compared to a 4.1 billion yen
operating loss reported in the previous year following the recording of 9.9 billion yen in impairments losses on
Comptoir des Cotonniers and other labels. The Theory fashion operation reported a rise in both revenue and profit
on the back of stable growth. While our Japan-based PLST brand reported a rise in revenue, operating profit came inflat due to the higher costs of increased new store openings. COMPTIOR DES COTONNIERS, Princesse Tam.Tam andJ Brand reported continued losses for the fiscal year ended 31 August, 2019.

— 17 —

Sustainability
In keeping with our key sustainability message “Unlocking the power of clothing,” Fast Retailing aims to develop
commercial operations that contribute to the sustainable development of the environment and global society
through our core clothing business. Fast Retailing’s sustainability activities seek to promote human rights,
environmental protection, and broader social contributions across six clear material areas. In October 2018, Fast
Retailing signed the United Nations Global Compact outlining the principles that corporations should adhere toin the fields of human rights, working standards, environment, and anti-corruption advocated by the UN. Then,in May 2019, Fast Retailing formed a global partnership with UN Women to help improving the status of women
within the apparel industry.

(b)•

Material Area 1: Create new value through products and services — Fast Retailing Group’s Jean’s Innovation
Center, which is responsible for jeans-related research and development, has developed the technology togreatly reduce the amount of water used in jeans processing. We intend to apply this technology to all jeans
produced and sold under all Group brands by 2020, and to expand our production of jeans.

•

Material Area 2: Respect human rights in our supply chain — Fast Retailing set up a Human Rights Committee
in July 2018 to address human rights issues across our entire supply chain spanning not only Fast Retailing,
but all our production partner bases as well. We seek to resolve any significant issues reported by partner
factory employees via our hotline, such as wage-related problems or sexual harassment, by asking partner
factories to make improvements, working together with local NGOs, or exploring other means of action.

•

Material Area 3: Respect the environment — In February 2019, we publicly committed to establish science-basedtargets (SBT) to help achieve long-term reductions in greenhouse gas emissions based on targets laid out in
the Paris Agreement on climate change. In July 2019, we announced our intention to reduce shopping bags
and product packaging volumes, and to switch to more environment-conscious alternatives. Our current aim isto reduce the amount of single-use plastic used in our shopping bags and product packaging across all Group
companies worldwide by approximately 7,800 tons (85% of the total) in 2020.

•

Material Area 4: Strengthen communities — In October 2018, we distributed approximately 18,000 itemsof clothing aid to victims of the Hokkaido Eastern Iburi earthquake. In November 2018, we donatedapproximately 90,000 items of clothing to refugees and displaced persons from Venezuela in Columbia
through our All-Product Recycling Initiative. In addition, UNIQLO and GU store managers and employees
continue to serve as instructors of our school outreach program that seeks to help children deepen theirunderstanding of international issues, and was presented with the award for excellence at the Career
Education Awards sponsored by Japan’s Ministry of Economy, Trade and Industry.

•

Material Area 5: Support employee fulfillment — We continue to support the active participation of female
employees in the workplace, setting up a diversity promotion team in June 2019, and working to reform
our human resources systems and implement empowering training programs. We have also introduced apartnership system as part of our LGBT support initiatives and broader drive to respect employee diversity
and build a comfortable working environment.

•

Material Area 6: Corporate governance — In December 2018, we disclosed our fundamental policy on tax
affairs along with initiatives to prevent compliance-related corruption on our governance webpage. In August
2019, we established a Nomination and Remuneration Advisory Committee to discuss and advise the Board of
Directors on important items relating to Fast Retailing corporate governance, such as the requirements andpolicy relating to nomination of candidates for director and auditor, requirements relating to the Company’s
chief executive officer, and smooth management succession planning.

Cash Flow Information
Cash and cash equivalents as at 31 August 2019 had increased by ¥86.8 billion from the end of the preceding
consolidated fiscal year, to ¥1.0865 trillion.

— 18 —

(Operating Cash Flows)
Net cash generated by operating activities for the year ended 31 August 2019 was ¥300.5 billion, which was anincrease of ¥124.1 billion (+70.4% year-on-year) from the year ended 31 August 2018.
The principal factors were ¥13.1 billion in net foreign exchange (an increase of ¥15.2 billion from the year ended 31
August 2018), a decrease of ¥38.1 billion in inventories (an increase of ¥217.6 billion from the year ended 31 August2018), a decrease of ¥16.4 billion in trade and other payables (a decrease of ¥26.1 billion from the year ended 31
August 2018), a decrease of ¥2.9 billion in other assets (an increase of ¥15.9 billion from the year ended 31 August2018), an increase of ¥36.8 in other liabilities (a decrease of 109.9 billion from the year ended 31 August 2018) andincome taxes paid ¥74.2 billion (an increase of ¥12.4 billion from the year ended 31 August 2018).
(Investing Cash Flows)
Net cash used in investing activities for the year ended 31 August 2019 was ¥78.7 billion, which was an increase of¥21.5 billion (+37.7% year-on-year) from the year ended 31 August 2018. The principal factors were an increase of¥11.3 billion in bank deposits with original maturity of three months or longer (an increase of ¥7 billion from theyear ended 31 August 2018), payments for property, plant and equipment ¥41.5 billion (an increase of ¥9.6 billion
from the year ended 31 August 2018), payments for intangible assets ¥24.1 billion (an increase of ¥7.6 billion fromthe year ended 31 August 2018).
(Financing Cash Flows)
Net cash used in financing activities for the year ended 31 August 2019 was ¥102.4 billion, which was an increaseof ¥300.6 billion from the year ended 31 August 2018. The principal factors were ¥249.3 billion proceeds fromissuance of corporate bonds in last fiscal year, ¥30 billion in proceeds from repayment of redemption of bonds (anincrease of ¥30 billion from the year ended 31 August 2018), dividends paid to owners of the Parent was ¥48.9
billion (an increase of ¥10.7 billion from the year ended 31 August 2018) and repayments of lease obligations was¥11.3 billion (an increase of ¥5.4 billion from the year ended 31 August 2018).

— 19 —

(2)(a)

Summary of Revenue and Purchasing
Revenue by division
Year ended 31 August 2018
(From 1 September 2017 to
31 August 2018)

Division

Revenue(Millions of yen)

Year ended 31 August 2019
(From 1 September 2018 to
31 August 2019)

Percentage of total(%)

Revenue(Millions of yen)

Percentage of total(%)

Men’s clothing

341,392

16.0

343,243

15.0

Women’s clothing

403,40718.9

409,105

17.9

Children’s & babies’ clothing

67,202

3.2

66,303

2.9

Goods and other items

22,9381.1

22,947

1.0

834,94139.2

841,600

36.7

29,836

1.4

31,357

1.4

Total UNIQLO Japan operations

864,77840.6

872,957

38.1

UNIQLO International operations

896,32142.1

1,026,032

44.8

Total UNIQLO operations

1,761,099

82.7

1,898,990

82.9

GU operations

211,8319.9

238,741

10.4

Global Brands operations
Other operations

154,464
2,664

7.3
0.1

149,939
2,877

6.5
0.1

2,130,060

100.0

2,290,548

100.0

Total sales of UNIQLO Japan
Franchise-related income &alteration charges

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 the length of pants.
2. “UNIQLO operations” covers the selling of UNIQLO brand casual clothing.
3. “GU operations” covers the selling of GU brand casual clothing.
4. “Global Brands operations” consists of Theory operations (selling of the Theory and other brands clothing), PLST
operations (selling of the PLST and other brands clothing), COMPTOIR DES COTONNIERS operations (selling of
the COMPTOIR DES COTONNIERS and other brands clothing), PRINCESSE TAM.TAM operations (selling of the
PRINCESSE TAM.TAM and other brands clothing), and J Brand operations (selling of the J Brand and other brands
clothing).
5. “Other operations” includes the real estate leasing business, etc.
6. E-commerce revenue from UNIQLO Japan
		 Fiscal year ended 31 August 2018: 63,063 million yen;		 Fiscal year ended 31 August 2019: 83,228million yen.
7. The above amounts do not include consumption taxes, etc.

(b)

Sales per unit
Year ended
31 August 2019
(From 1 September 2018 to
31 August 2019)Year-on-year change (%)

1,784,404 million yen

107.0

2,275,204 m

2

104.5

Sales per m (yearly)

784 thousand yen

102.3

Number of employees (average)

105,588 persons

105.2

16,899 thousand yen

101.6

Summary

Revenue
Sales per m2
Sales per employee(Notes)Sales floor area (average)
2

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.

— 20 —

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. The number of junior employees
and part-time workers are stated at the average number of registered personnel.
5. The above figures do not include consumption tax, etc.

(c)

Purchases
Year ended 31 August 2019
(From 1 September 2018 to 31 August 2019)

By product category

Purchases(Millions of yen)

Year-on-year change(%)

Percentage of total(%)

Men’s clothing

189,569

81.7

17.0

Women’s clothing

223,340

79.9

20.0

Children’s & babies’ clothing

34,08074.8

3.1

Goods and other items

12,26078.8

1.1

459,250

80.2

41.1

481,833

99.6

43.1

941,084

89.1

84.3

GU operations

119,052

88.6

10.7

Global Brands operations

56,58990.6

5.1

1,116,725

89.1

100.0

Total UNIQLO Japan operations
UNIQLO International operations
Total UNIQLO operations

Total(Notes)1. “UNIQLO operations” covers the selling of UNIQLO brand casual clothing.
2. “GU operations” covers the selling of GU brand casual clothing.
3. “Global Brands operations” consists of Theory operations (selling of the Theory and other brands clothing), PLST
operations (selling of the PLST and other brands clothing), COMPTOIR DES COTONNIERS operations (selling of
the COMPTOIR DES COTONNIERS and other brands clothing), PRINCESSE TAM.TAM operations (selling of the
PRINCESSE TAM.TAM and other brands clothing), and J Brand operations (selling of the J Brand and other bands
clothing).
4. There are businesses other than the above, mainly real estate leasing, but they do not involve purchasing due tothe nature of the activity.
5. The above figures do not include consumption tax.

(3)
(a)

Consideration of Performance Conditions on Management’s Perspective
Significant accounting policies and estimations
The Group’s consolidated financial statements were prepared in accordance with IFRS. In preparing the consolidated
financial statements, estimates were made on a reasonable basis as necessary.
Please see “9. Financial Information (6) Notes to the consolidated financial statements” for details.

— 21 —

(b)Analysis of management performance for the year ended 31 August 2019(i)

Revenue and gross profit
Revenue grew to 2.2905 trillion yen, up 160.4 billion yen from the preceding consolidated fiscal year. For a detailed
breakdown of revenue, see “C. Management’s Discussion and Analysis of Consolidated Financial Condition, Resultsof Operations and Cash Flows (1) Summary of Business Results (a) Business Results and (2) Summary of Revenue
and Purchasing.”
The main reason behind the growth in revenue was significant growth in a 129.7 billion yen increase for UNIQLOInternational. In particular, Greater China as a whole showed strong performance with a 14.3% year-on-yearincrease in revenue, while sales in existing stores in Southeast Asia and Oceania continued to demonstrate double
digit growth. In addition, the shift to a product structure focused on mass trends resulted in a more than two-digit
increase in earnings in GU business, which contributed significantly to revenue.
Gross profit grew to 1.1195 trillion yen, up 69.6 billion yen from the preceding consolidated fiscal year. As apercentage of revenue, gross profit was 48.9%, decreased 0.4 point from 49.3% the year before. This was primarily
due to a fall in the gross margin in the UNIQLO business in Japan, stemming from the impact of a warm winter andthe early clearance of spring and summer products.

(ii)

Selling, general and administrative expenses, other income, other expenses, and operating income
Selling, general and administrative expenses grew to 854.3 billion yen, up 56.9 billion yen from the preceding
consolidated fiscal year. As a percentage of revenue, selling, general and administrative expenses was 37.3%, down
0.1% from 37.4% in the preceding consolidated fiscal year.
Other income and expenses are minus 7.5 billion yen, which is mainly due to the posting of foreign exchange losses
and impairment losses of UNIQLO stores.
Operating income was 257.6 billion yen, up 21.4billion yen from the preceding consolidated fiscal year.

(iii)

Finance income, finance costs, and profit before income taxes
Finance income was 12.2 billion yen, up 2.6 billion yen and finance expense was 17.4 billion yen, up 14.2 billion yen
from the preceding consolidated fiscal year.
The main reason for the increase in financial expense was that, despite recording foreign exchange gains of
2.1 billion yen in the previous consolidated fiscal year due to stable foreign exchange rates, foreign exchange losses
recorded in the current consolidated fiscal year at 13.1 billion yen due to a sharp appreciation of the yen.
As a result, profit before income taxes was 252.4 billion yen, up 9.7 billion yen from the preceding consolidated fiscal
year. As a percentage of revenue, profit before income taxes was 11.0%, down 0.4% from 11.4% the year before.

(iv)

(c)

Profit attributable to owners of the Parent
Income taxes were 74.4 billion yen, or 1.0 billion yen higher than the preceding consolidated fiscal year. As a result,profit attributable to owners of the Parent was 162.5 billion yen, which was 7.7 billion yen higher than the year
before. Basic earnings per share for the year were 1,593.2 yen, up 75.49 yen.

Sources of funding and analysis of fund liquidity(i)

Total assets
Total assets as at 31 August 2019 were ¥2.0105 trillion, which was an increase of ¥57 billion relative to the endof the preceding consolidated fiscal year. The principal factors were an increase of ¥86.8 billion in cash and cash
equivalents, an increase of ¥9.1 billion in other financial assets, a decrease of ¥54.2 billion in inventories and anincrease of ¥14.1 billion in intangible assets.

— 22 —

(4)(ii)

Total liabilities
Total liabilities as at 31 August 2019 were ¥1.027 trillion, which was a decrease of ¥23.6 billion relative to the endof the preceding consolidated fiscal year. The principal factors were a decrease of ¥22.7 billion in trade and otherpayables, a decrease of ¥12.8 billion in other current financial liabilities, an increase of ¥9.3 billion in other current
liabilities.

(iii)

Total net assets
Total net assets as at 31 August 2019 were ¥983.5 billion, which was an increase of ¥80.7 billion relative to theend of the preceding consolidated fiscal year. The principal factors were an increase of ¥113.6 billion in retained
earnings and a decrease of ¥40.4 billion in other components of equity.

(iv)

Status of funds
For a discussion of the status of the Group’s funds, see “C. Management’s Discussion and Analysis of Consolidated
Financial Condition, Results of Operations and Cash Flows (1) Summary of Business Results (b) Cash Flow
Information”.

Information Concerning Differences in Key Accounting Items in Summaries of Business Performance
Listed below are matters concerning the differences in the key items listed in consolidated financial statements preparedusing IFRS and equivalent items used in consolidated financial statements prepared using the “Regulation on Terminology,
Forms, and Preparation Methods of Consolidated Financial Statements” (excluding Chapter 7 and Chapter 8; hereinafterreferred to as the “JGAAP”).
Reclassification
Items stated under non-operating income, non-operating expenses, extraordinary gains, and extraordinary losses under
JGAAP have been reclassified under IFRS and 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 341 million
yen in the year ended 31 August 2018 and impairment losses (other expenses) increased by 3,776 million yen in the year
ended 31 August 2018. The effect on the consolidated financial statements of the Group is immaterial in the year ended
31 August 2019.
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 loss (finance loss) increased by 473 million yen in the year ended 31 August 2019and foreign exchange gain (finance income) increased by 65 million yen in the year ended 31 August 2018 compared withthose under JGAAP.

D.

Major Contracts
Not applicable.

E.

Research and Development
Not applicable.

— 23 —

5.

Capital Expenditures

A.

Capital Expenditures
UNIQLO Japan opened 30 new stores. UNIQLO International opened 91 stores in the Greater China, 10 in South Korea, 4in Singapore, 2 in Malaysia, 10 in Thailand, 8 in the Philippines, 8 in Indonesia, 5 in Australia, 5 in the USA, 6 in Canada, 2
in England, 2 in France, 7 in Russia, 4 in Germany, 1 in the Netherlands and 1 in Denmark. GU opened 44 new stores. In
addition, Global Brands opened 58 new stores.
As a result, the Group’s capital expenditure increased by 15.8 billion yen year-on-year in fiscal 2019 to 85.2 billion yen(including financing leases). Key components of this were 13.6 billion yen was invested at UNIQLO Japan, 31.6 billion yen
at UNIQLO International, 9.0 billion yen at GU, 2.7 billion yen at Global Brands, and 28.0 billion yen in systems, etc. In
addition to investing in new UNIQLO International and GU stores, more funding was channeled into IT investment under
our Groupwide transformative Ariake Project, and installing self-checkouts at UNIQLO stores.
The above figures do not include consumption tax, etc

B.

Important Facilities
As at 31 August 2019, 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

Land

Land

Buildings

Deposits/
Guarantees

Construction
assistance
funds

Others

Total

Number of
employees

Head office

Yamaguchi City,
Yamaguchi Prefecture

95,255.83

1,047

788

–

–

175

2,011

42

Commercial
establishments

Chuo-ku, Fukuoka City,
etc.

–

–

58

1,437

–

0

1,495

–

29,308.87

76

6,466

6,276

–

5,301

18,121

1,347

Others(2)

Capital expenditure (Millions of yen)

Subsidiaries in Japan
Area (m2)Company name

Type of facility

Stores in Japan, etc.
UNIQLO CO., LTD.

Location

Yamaguchi City,
Yamaguchi Prefecture etc.

Land

Capital expenditure (Millions of yen)Land

2,591.06

450

Buildings

Deposits/
Guarantees

Construction
assistance
funds

Others

Total

Number of
employees

12,10527,671

7,945

12,38360,555

10,300UNIQLO Japan, other

19,960.76

353

1,436

3,251

883

16,56522,491

3,321

Total for UNIQLO Japan

22,551.82

803

13,54230,923

8,828

28,94883,046

13,621

Stores in Japan, etc.

Yamaguchi City,
Yamaguchi Prefecture, etc.

––

10,538

8,408

3,542

4,802

27,291

4,464

LINK THEORY JAPAN CO., LTD. Stores in Japan, etc.

Yamaguchi City,
Yamaguchi Prefecture, etc.

–

–

216

454

2

235

908

967

PLST CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture, etc.

–

–

774

1,077

–

452

2,304

783

G.U. CO., LTD.

Stores in Japan, etc.

— 24 —

(3)Overseas subsidiaries
Area (m2)Company name

Type of facility

Location

FAST RETAILING (CHINA)TRADING CO., LTD

UNIQLO International store

Shanghai, PRC

–

Land

Capital expenditure (Millions of yen)
Buildings

Deposits/
Guarantees

Construction
assistance
funds

Others

Total

Number of
employees–

17,333

3,230

–

4,084

24,648

11,549Land

UNIQLO TRADING CO., LTD.

UNIQLO International store

Shanghai, PRC

–

–

1,249

327

–

194

1,771

780

FAST RETAILING (Shanghai)
TRADING CO., LTD

UNIQLO International store

Shanghai, PRC

–

–

1,320

188

–

162

1,671

265

FRL Korea Co., Ltd.

UNIQLO International store

Seoul, South Korea

–

–

4,276

5,293

–

2,108

11,6792,529

FAST RETAILING(SINGAPORE) PTE. Ltd.

UNIQLO International store

Republic of Singapore

–

–

2

18

–

3

24

22

UNIQLO (THAILAND)COMPANY LIMITEDUNIQLO International store

Bangkok,
Kingdom of Thailand

–

–

1,199

928

–

1,109

3,238

1,361

PT. Fast Retailing Indonesia

UNIQLO International store

Jakarta, Indonesia

–

–

812

236

51

1,611

2,712

1,635

UNIQLO Australia Pty Ltd.

UNIQLO International store

Melbourne, Australia

–

–

2,039

6

–

378

2,424

653

Fast Retailing USA, Inc.

OfficeNew York, U.S.A.

–

–

5,862

399

–

5,125

11,386

2,386

UNIQLO EUROPE LIMITEDUNIQLO International store

London, United Kingdom––

11,069

499

–

3,519

15,0882,315

UNIQLO INDIA PRIVATELIMITEDUNIQLO International store

New Delhi,
Republic of India

–

–

27

140

–

380

548

441

UNIQLO VIETNAM CO., LTD

UNIQLO International store

Ho Chi Minh, Vietnam

–

–

18

56

–

371

445

204

GU (Shanghai) Trading
Co., Ltd.

GU

Shanghai, PRC

–

–

272

110

–

45

428

160

Fast Retailing France S.A.S.

OfficeParis, France

–

–

–

27

–

19

47

331

COMPTOIR DES
COTONNIERS S.A.S.

International store, etc.

Paris, France

–

–

532

379

–

101

1,014

563

PRINCESSE TAM.TAM S.A.S.

International store, etc.

Paris, France

–

–

329

173

–

62

565

271

J Brand, Inc.

International Stores, etc.

California, U.S.A.

–

–

156

1

–

249

408

127

(Notes)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.

— 25 —

C.

Plans for new facility construction, old facility removal
The following are the important new facility construction and/or facility removal projects planned as at 31 August 2018.

(1)

Important new facilities
The capital investment plans (new facility construction, expansion) for each segment in the year ending 31 August 2020
(1 September 2019 – 31 August 2020) are as follows.
Capital investment(Millions of yen)Segment

Details of investment

UNIQLO Japan

7,800

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

UNIQLO International

35,100New store openings, etc. (approx. 168 stores)

GU

7,400

New store openings, etc. (approx. 36 stores)

Global Brand Business

3,500

New store openings, etc. (approx. 39 stores)

Others46,300IT-related investments

Total

100,100(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 facility plans included in the plans described above are as follows.
Amount of planned investment
Company name

Type of facility

Name of business

UNIQLO EUROPE
LIMITEDUNIQLOInternational
store

UNIQLO Piazza
Cordusio

UNIQLO INDIA
PRIVATE LIMITEDUNIQLOInternational
store

UNIQLOUNIQLO New Jersey
International
LLC.
store

(Notes)(2)

Location

Milan
ItaliaTotal(Millions of yen)
810

646

UNIQLONew Delhi
Ambience Mall
India
Vasant Kunj store

774

293

UNIQLO
American Dream
store

583

–

New Jersey
USAConstruction
completion

Planned sales floorarea (m2)November 2018 September 2019

1,784

Lease Hold

October 2019

3,121

Lease Hold

September 2019 November 2019

1,581

Lease Hold

Amount already Construction start
disbursed(Millions of yen)

April 2019

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 2019.

— 26 —

Reference6.

Stock Information and Dividend PolicyA.
(1)

Stock Information
Number of Shares(a)Total number of shares
Type

(b)

Total number of authorized shares (shares)

Common stock

300,000,000

Total

300,000,000

Shares issued

Type

As at 31 August 2019

Number of sharesissued as at submission
date (Shares)(29 November 2019)

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.

— 27 —

(2)Share Subscription Rights(a)

Details of the Stock Option Program
The Company has instituted a stock option program that grants rights to acquire new shares pursuant to the Companies
Act of Japan. Matters stated below are details of the program current as of the final day of the current fiscal year (31August 2019). Details of changes made during the period from the final day of the current fiscal year until the end of theprevious month (31 October 2019) on the submission date are shown in brackets [ ]. Details of the 10th share subscription
rights on the submission date are stated.

(i)

Share subscription rights A type
1st

2nd

3rd

Resolution date

8 October 201012 October 2011

11 October 2012

Class and number of recipients

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

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

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

Number of stock options (Shares)

1,292 [888]6,495 [3,138]

5,304 [4,959]

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

1,292 [888]6,495 [3,138]

5,304 [4,959]

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of share subscription
rightsFrom 8 November 2013
to 7 November 2020

From 15 November 2014
to 14 November 2021

From 13 November 2015
to 12 November 2022

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

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

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

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

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

Same as left

Same as left

Matters pertaining to transfer of sharesubscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments
Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization——(Note)

Same as left

— 28 ——

Same as left

4th

5th

6th

Resolution date

10 October 20139 October 20148 October 2015

Class and number of recipients

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

Employees of the Company: 36
Employees of the Groupsubsidiaries:16

Employees of the Company: 15
Employees of the Groupsubsidiaries:19

Number of stock options (Shares)

3,306 [2,975]

12,213 [8,807]

2,299 [1,468]

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

3,306 [2,975]

12,213 [8,807]

2,299 [1,468]

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of sharesubscription rights

From 3 December 2016
to 2 December 2023

From 14 November 2017
to 13 November 2024

From 13 November 2018
to 12 November 2025

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

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

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

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

Exercise conditions of sharesubscription rights

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

Same as left

Same as left

Matters pertaining to transferof share subscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments—

Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization—(Note)

Same as left

— 29 ——
Same as left

7th

8th

9th

Resolution date

13 October 201612 October 201711 October 2018

Class and number of recipients

Employees of the Company: 16
Employees of the Groupsubsidiaries:
23

Employees of the Company: 19
Employees of the Groupsubsidiaries:
27

Employees of the Company: 17
Employees of the Groupsubsidiaries:
32

Number of stock options (Shares)

2,549 [2,348]

5,101 [4,720]

4,057 [3,875]

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

2,549 [2,348]

5,101 [4,720]

4,057 [3,875]

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of sharesubscription rights

From 11 November 2019
to 10 November 2026

From 10 November 2020
to 9 November 2027

From 9 November 2021
to 8 November 2028

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

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

Issue price: 37,648
Paid-in capital: 18,824

Issue price: 58,276
Paid-in capital: 29,138

Exercise conditions of sharesubscription rights

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

Same as left

Same as left

Matters pertaining to transferof share subscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments—

Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization—(Note)

Same as left

— 30 ——

Same as left

10th
Resolution date

10 October 2019

Class and number of recipients

Employees of the Company:
Employees of the Group subsidiaries:

Number of stock options (Shares)

3,548

Type of shares to be issued upon exercise of share subscription rights

Common stock

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

3,548

Amount to be paid upon exercise of share 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.

Exercise period of share subscription rights

From 8 November 2022
to 7 November 2029

Fair value on the grant date and amount of paid-in capital per shareupon exercise of share subscription rights (Yen)

Issue price: 66,059
Paid-in capital: 33,030

Exercise conditions of share subscription rights

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

Matters pertaining to transfer of share subscription rights

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— 31 —(Note)

11
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.
2.
3.

4.

5.

6.

7.

8.
9.

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.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights: Common
stock of the Company Resulting From Reorganization.
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.
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 right that is issued.
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.
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.
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.
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.
Conditions for exercise of share subscription rights:
To be determined in order to align with the conditions applicable to the subject share subscription rights.

— 32 —

(ii)Share subscription rights B type
1st

2nd

3rd

Resolution date

8 October 201012 October 2011

11 October 2012

Class and number of recipients

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

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

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

Number of stock options (Shares)

10,225 [7,387]

8,364 [7,044]

8,447 [7,261]

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

10,225 [7,387]

8,364 [7,044]

8,447 [7,261]

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of sharesubscription rights

From 8 December 2010
to 7 November 2020

From 15 December 2011
to 14 November 2021

From 13 December 2012
to 12 November 2022

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

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

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

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

Exercise conditions of sharesubscription rights

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

Same as left

Same as left

Matters pertaining to transfer of sharesubscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments
Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization——(Note)

Same as left

— 33 ——

Same as left

4th

5th

6th

Resolution date

10 October 20139 October 20148 October 2015

Class and number of recipients

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

Employees of the Company:223
Employees of the Groupsubsidiaries:
785

Employees of the Company:274
Employees of the Groupsubsidiaries:
921

Number of stock options (Shares)

8,838 [7,361]

13,458 [11,364]

13,172 [11,020]

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

8,838 [7,361]

13,458 [11,364]

13,172 [11,020]

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of sharesubscription rights

From 3 January 2014
to 2 December 2023

From 14 December 2014
to 13 November 2024

From 13 December 2015
to 12 November 2025

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

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

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

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

Exercise conditions of sharesubscription rights

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

Same as left

Same as left

Matters pertaining to transfer of sharesubscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments
Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization——(Note)

Same as left

— 34 ——

Same as left

7th

8th

9th

Resolution date

13 October 201612 October 201711 October 2018

Class and number of recipients

Employees of the Company:339
Employees of the Groupsubsidiaries:
1,096

Employees of the Company:395
Employees of the Groupsubsidiaries:
1,152

Employees of the Company:419
Employees of the Groupsubsidiaries:
1,267

Number of stock options (Shares)

18,287 [15,387]

33,082 [26,991]

36,275 [25,070]

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

18,287 [15,387]

33,082 [26,991]

36,275 [25,070]

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of sharesubscription rights

From 11 December 2016
to 10 November 2026

From 10 December 2017
to 9 November 2027

From 9 December 2018
to 8 November 2028

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

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

Issue price: 38,133
Paid-in capital: 19,066

Issue price: 58,892
Paid-in capital: 29,446

Exercise conditions of sharesubscription rights

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

Same as left

Same as left

Matters pertaining to transfer of sharesubscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments
Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization——(Note)

Same as left

— 35 ——

Same as left

10th
Resolution date

10 October 2019

Class and number of recipients

Employees of the Company:
Employees of the Group subsidiaries:

Number of stock options (Shares)

37,424

Type of shares to be issued upon exercise of share subscription rights

Common stock

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

37,424

Amount to be paid upon exercise of share 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.

Exercise period of share subscription rights

From 8 December 2019
to 7 November 2029

Fair value on the grant date and amount of paid-in capital per shareupon exercise of share subscription rights (Yen)

Issue price: 66,733
Paid-in capital: 33,367

Exercise conditions of share subscription rights

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

Matters pertaining to transfer of share subscription rights

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— 36 —(Note)

528
1,389

(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 right 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 —

(iii)

Share subscription rights C type
7th

8th

9th

Resolution date

13 October 201612 October 201711 October 2018

Class and number of recipients

Employees of the Company: 30

Employees of the Company: 29

Employees of the Company: 40

Number of stock options (Shares)

5,110

5,929

4,733

Type of shares to be issued upon
exercise of share subscription rights

Common stock

Same as left

Same as left

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

5,110

5,929

4,733

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

Number of shares allocatedtimes ¥1 exercise price pershare for all shares to beobtained through exercise of
the share subscription rights.

Same as left

Same as left

Exercise period of share subscription
rights11 November 201910 November 2020

9 November 2021

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

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

Issue price: 38,823
Paid-in capital: 19,411

Issue price: 59,764
Paid-in capital: 29,882

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

Same as left

Same as left

Matters pertaining to transfer ofshare subscription rights

Any acquisition of sharesubscription rights by transfer
shall require an authorizing
resolution from the Board of
Directors.

Same as left

Same as left

Matters pertaining to substitute
payments—

Matters pertaining to issuing of sharesubscription rights in conjunction withreorganization—(Note)

Same as left

— 38 ——

Same as left

10th
Resolution date

10 October 2019

Class and number of recipients

Employees of the Company:

Number of stock options (Shares)

3,666

Type of shares to be issued upon exercise of sharesubscription rights

Common stock

Number of shares to be issued upon exercise of sharesubscription rights (Shares)

3,666

Amount to be paid upon exercise of share 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.

Exercise period of share subscription rights

8 November 2022

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

Issue price: 67,685
Paid-in capital: 33,843

Exercise conditions of share subscription rights

If a holder of share subscription rights waives
the right to acquire 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 bytransfer shall require an authorizing resolution
from the Board of Directors.

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights inconjunction with reorganization— 39 —(Note)

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 right 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.

(b)

Content of Rights Plan
Not applicable.

(c)

Other Share Subscription Rights
Not applicable.

— 40 —

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

(4)

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

(Note)(5)

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 reservein capital stock(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 at a special meeting of theBoard of Directors on 30 August 2004.

Status by Type of Holder
As at 31 August 2019
Shares (One unit = 100 shares)
Government,
Financial
municipal
institutions
entities

Class

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

Number ofshareholders(persons)

—

61

30

92

797

5

Number ofshares held
(Trading units)—368,666

24,58584,742

191,674

6

Percentage ofshares held (%)

—

34.77

2.32

7.99

18.08

0.00

(Notes) 1.
2.

(6)

3,841

Total

Sharesless than
one unit(shares)

4,826—

390,480 1,060,153

58,35636.83

100.00—The 4,011,921 shares of treasury stock include 40,119 units of shares held by individuals and others and 21 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 2019
Name or trade name

Address

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Tadashi Yanai

Shibuya-ku, Tokyo

22,037

21.59

The Master Trust Bank of Japan, Ltd.

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

21,012

20.59

Japan Trustee Services Bank, Ltd.

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

11,43011.20

TTY Management B.V.

Hoogoorddreef 15, 1101BA Amsterdam,
The Netherlands

5,310

5.20

Kazumi Yanai

New York, U.S.A.

4,781

4.69

Koji Yanai

Shibuya-ku, Tokyo

4,780

4.68

Fight & Step Co., Ltd.

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

4,750

4.65

Trust & Custody Services Bank, Ltd.

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

3,800

3.72

MASTERMIND, LLC

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

3,610

3.54

Teruyo Yanai

Shibuya-ku, Tokyo

2,327

2.28

83,841

82.15

Total

―

— 41 —

(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 20 December 2018 by
Sumitomo Mitsui Trust Bank, Limited and Sumitomo Mitsui Trust Asset Management Co., Ltd., which are all as joint
holders, and Nikko Asset Management Co.,Ltd., each party was holding the shares stated below as at 24 December
2018. However, since the Company has not been able to confirm the number of shares actually held as at 31 August
2019, of the end of the term, these shareholdings have not been included in the statement of principal shareholders
above.
Name or trade name

Address

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Sumitomo Mitsui Trust AssetManagement Co., Ltd.

1-1-1 Shibakoen, Minato-ku, Tokyo

1,240

1.17

Nikko Asset management Co., Ltd.

Midtown Tower 9-7-1 Akasaka, Minato-ku.
Tokyo

5,938

5.60

4.

According to the report of large shareholdings (report of change of composition) submitted on 6 March 2019by Daiwa Asset Management Co. Ltd. and Daiwa Securities Co. Ltd., which are all as joint holders, each party
was holding the shares stated below as at 28 February 2019. However, since the Company has not been able toconfirm the number of shares actually held as at 31 August 2019, of the end of the term, these shareholdings havenot been included in the statement of principal shareholders above.
Name or trade nameDaiwa Asset Management Co. Ltd.
Daiwa Securities Co. Ltd.
5.

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

Percentage of
total number ofshares issued (%)

5,222

4.92

118

0.11

According to the report of large shareholdings (report of change of composition) submitted on 5 April 2019 byMizuho Securities Co., Ltd. and Asset Management One Co., Ltd., which are all as joint holders, each party washolding the shares stated below as at 29 March 2019. However, since the Company has not been able to confirm
the number of shares actually held as at 31 August 2019, of the end of the term, these shareholdings have notbeen included in the above statement of principal shareholders.
Name or trade name

Address

Mizuho Securities Co., Ltd.

1-5-1 Otemachi, Chiyoda-ku, Tokyo

Asset Management One Co., Ltd.

1-8-2 Marunouchi, Chiyoda-ku, Tokyo

6.

Number ofshares held(Thousand shares)

Number ofshares held(Thousand shares)
2,401

Percentage of
total number ofshares issued (%)

2,896

2.73

2.26

According to the report of large shareholdings (report of change of composition) submitted on 19 April 2019 by
Sumitomo Mitsui Trust Asset Management Co., Ltd. and Nikko Asset Management Co., Ltd., which are all as joint
holders, each party was holding the shares stated below as at 15 April 2019. However, since the Company has
not been able to confirm the number of shares actually held as at 31 August 2019, of the end of the term, theseshareholdings have not been included in the above statement of principal shareholders.
Name or trade name

Address

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Sumitomo Mitsui Trust AssetManagement Co., Ltd.

1-1-1 Shibakoen, Minato-ku, Tokyo

1,161

1.09

Nikko Asset management Co., Ltd.

Midtown Tower 9-7-1 Akasaka, Minato-ku.
Tokyo

6,214

5.86

7.

According to the report of large shareholdings (report of change of composition) submitted on 20 May 2019by Mitsubishi UFJ Financial Group, Inc. and Mitsubishi UFJ Trust and Banking Corporation, which are all as joint
holders, Mitsubishi UFJ Kokusai Asset Management Co., Ltd. and Mitsubishi UFJ Securities Co., Ltd., each party washolding the shares stated below as at 13 May 2019. However, since the Company has not been able to confirm thenumber of shares actually held as at 31 August 2019, of the end of the term, these shareholdings have not been
included in the above statement of principal shareholders.

— 42 —Name or trade name
Mitsubishi UFJ Trust and Banking
Corporation
Mitsubishi UFJ Kokusai AssetManagement Co., Ltd.
Mitsubishi UFJ Securities Co., Ltd.
8.

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

1-4-5 Marunouchi Chiyoda-ku Tokyo

845

0.80

1-12-1 Yurakucho, Chiyoda-ku, Tokyo

3,174

2.99

2-5-2 Marunouchi, Chiyoda-ku, Tokyo

181

0.17

Address

According to the report of large shareholdings (report of change of composition) submitted on 7 August 2019 byNomura Securities Co., Ltd., and Nomura Asset Management Co., Ltd., which are all as joint holders, each party
was holding the shares stated below as at 31 July 2019. However, since the Company has not been able to confirm
the number of shares actually held as at 31 August 2019, of the end of the term, these shareholdings have notbeen included in the above statement of principal shareholders.
Name or trade name

Address

Nomura Securities Co., Ltd.

1‐9‐1 Nihonbashi, Chuo‐ku, Tokyo

Nomura Asset Management Co., Ltd.

1‐12‐1 Nihonbashi, Chuo‐ku, Tokyo

9.

Number ofshares held(Thousand shares)
438

Percentage of
total number ofshares issued (%)

11,603

10.94

0.41

In addition to the above, 4,011,921 shares of treasury stock are held by the Company (3.78% of the total numberof authorized shares).

(7)

Voting Rights(a)Shares issued
As at 31 August 2019Class

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.

―

Number of voting rights(Number)
―

―

―

―

―

―

―

―

―

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

4,011,900
102,003,400
58,356
106,073,656―

Details―

1,020,034――(Note) 1(Notes) 1, 2―

1,020,034―

The columns for the number of shares of “Shares with full voting rights (others)” and “Shares less than one unit”
include, 2,700 shares and 84 shares, respectively, held in the name of Japan Securities Depository Center, Inc.
Common stock in the “Shares less than one unit” column includes 21 shares of treasury stock held by theCompany.

— 43 —

(b)Treasury StockAs at 31 August 2019

Name or trade name ofholderFAST RETAILING
CO., LTD.

717-1 Sayama,
Yamaguchi-City,
Yamaguchi

Total

B.

―

Total numberof shares held
(Shares)

Percentage of
total number ofshares issued (%)

4,011,900―

4,011,900

3.78

4,011,900―

4,011,900

3.78

Treasury Stock Information
Type of Shares:(1)

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

Holder’s address

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 2019

40

2,292

Purchases of Treasury stock in the year ending 31 August 2019

80

5,217

(Note)(4)

Treasury stock purchased in the current year does not include shares of less than one unit purchased between
1 November 2019 and the submission date of this report.

Status of treasury stock purchased
Fiscal year ended 31 August 2019
Class

Number of shares(Shares)

Total disposal value(Thousands of yen)

Year ending 31 August 2019
Number of shares(Shares)

Total disposal value(Thousands of yen)

Treasury stock purchases for which
subscribers were solicited

—

—

—

—

Treasury stock cancelled after
purchase

—

—

—

—

Treasury stock transferred due
to mergers, share exchange, orcompany split

—

—

—

—

41,991

159,834

2,113

8,045

4,011,921—

4,009,888—

Other (Note)
Number of Treasury shares held
(Note)The breakdown of figures for the year ended 31 August 2019 reflects the exercise of 41,991 share subscription rights,
a share disposal value of 159,834 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 2019 andthe submission date of this report.

— 44 —

C.

Dividend Policy

The Company regards the distribution of profits to all shareholders as one of its most important management issues, and ourbasic policy is to constantly improve performance and to continually distribute profits in an appropriate manner based on
performance. Our policy is to pay high dividends based on performance after taking into consideration (i) demand for funds
needed to expand business and improve revenues of the Group and (ii) the financial health of the Group. Our basic policy for
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.
We decided to pay a year-end dividend for the current fiscal year of ¥240 per share, and together with the ¥240 interim
dividend per share, this brings the total annual dividend for the current fiscal year to ¥480, which is an increase of ¥40 year on
year. We intend to effectively utilize internal reserves and free cash flow for financial investment and loans to strengthen theoperational base of the Group companies, and we will endeavor to achieve continual and stable growth.
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 current fiscal year are as follows:
Total dividends(Millions of yen)

Resolution date

Dividends per share(Yen)

Board of Directors resolution made at the meeting held on 11 April 201924,492

240

Board of Directors resolution made at the meeting held on 5 November 201924,494240

D.

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 2019.

— 45 —

7. Corporate Governance ReportA.

Basic Thinking on Corporate Governance
The Company’s corporate philosophy is “Changing clothes. Changing conventional wisdom. Change the world.”, and we
aim to achieve a transparent management structure that can handle requests from all stakeholders in a prompt manner,
including customers, trading partners, and all shareholders. We plan to do this by expanding our business in a bid to
become “The world’s no.1 apparel company in IT, production and retail” alongside activities to promote sustainability inthe clothing business.

B.

Details of Company organization and internal control systems(1)

Details of company organization
The Company has built a corporate governance system consisting of a Board of Directors, a Board of Statutory 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.
Five of the nine members of the Board of Directors are External Directors, with the CEO acting as chairman of the Boardof Directors. The External Directors have an abundance of knowledge and experience in corporate management. As theCompany’s main decision-making body for the performance of management and operations, the Board of Directors meetsat least once a month to discuss and decide upon important management issues. The External Directors all participate
actively in Board of Directors discussions, and offer their opinions without reservations.
As of November 28, 2019, the Board of Statutory Auditors consists of six auditors, including three external auditors, with afull-time corporate auditor acting as chairman. The Standing Statutory Auditor presides. The External Statutory Auditors are
fully independent, and they have ample knowledge and experience as attorneys and certified public accountants. Throughtheir participation in the Board of Directors, the Staturoty Auditors are fully aware of the decision-making process of theBoard of Directors, and able to fulfill their supervisory obligations. They also supervise the Directors’ performance of their
executive duties through regular conversations with the Directors, other executive officers, other employees, and auditorsof subsidiary corporations. The Board of Statutory 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 independent auditors.
The various committees complement the work of the Board of Directors. The External Directors and External Statutory
Auditors also serve as members of these committees. The name, purpose, authority, details of activities, and status ofactivities of each 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 of Directors.
The committee held 4 meetings during fiscal 2019.
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, Statutory
Auditors, and Group officers. The committee held 4 meetings during fiscal 2019.
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, fair,and 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 15 meetings during fiscal 2019.

— 46 —

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 fiscal 2019.
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 head of the Legal
Department, and committee members include Statutory Auditors (including External Statutory Auditors) and executive
officers. The committee held 11 meetings during fiscal 2019.
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 Statutory Auditors (including External Statutory Auditors) and executive officers. The
committee held 12 meetings during fiscal 2019.
Risk Management Committee
To identify risks latent in business activities on a regular basis and to strengthen systems for detecting and managing
material risks, this committee analyzes and assesses the extent of impact and frequency of risks on business, anddiscusses countermeasures for business areas high in risk to contain risk before it occurs. The committee is chaired by theGroup CFO, and committee members include outside directors and executive officers. The committee held 9 meetings
during fiscal 2019.
Nomination and Remuneration Advisory Committee
With the aim of strengthening Fast Retailing governance, the committee discusses and advises the Board of Directors
on important items relating to Fast Retailing corporate governance, such as the requirements and nomination policy
regarding candidates for director and auditor positions, the policy for determining director remuneration, requirements
relating to the company’s chief executive officer, and smooth management succession planning. The committee is chairedby a director nominated by the Board of Directors, and the majority of committee members are independent external
executives (both external directors and external statutory auditors). The committee held one meeting during fiscal 2019.
Human Rights Committee
Chaired by an outside expert, this committee deliberates and advises on the execution of human rights due diligence. The
committee also provides counselling and conducts education and awareness-raising activities for departments involved in
the execution of business to ensure that we fulfil our obligations to respect human rights under the Fast Retailing Group
Human Rights Policy established in 2018, and conduct business operations appropriately. In addition, the committee is
responsible for providing recommendations and supervision as well as conducting investigations and taking remedial
measures when a human rights violation occurs. The committee held 8 meetings during fiscal 2019.
Below is a diagram of our corporate governance system.
(As at 29 November 2019)

General Mee�ng of Shareholders
Elect/dismiss
Board of Statutory Auditors(Three out of ﬁve
are external)

Elect/dismiss
Audit/
ReportBoard of Directors(Five out of nineare external)

ReportConsult
Elect/
dismiss

ReportIndependent
Auditors

Report/coopera�on
Audit/
Internal Audit Report
Division

Human Resources Commi�ee
Sustainability Commi�ee
Disclosure Commi�ee
IT Investment Commi�ee
Code of Conduct Commi�ee
Business Ethics Commi�ee
Risk Management Commi�ee
Nomina�on and Remunera�on Advisory Commi�eeElect, dismiss, nominate,
remove, supervise
Report/Chief Execu�ve Oﬃcers
supervise
Human Rights Commi�eeGroup Oﬃcers— 47 —

The members and chairs of the Board of Directors, Board of Statutory Auditors and other committees are as follows:
Board of
Statutory
Auditors

Human
Code of
Sustainability Disclosure IT Investment
Resources
Conduct
Committee Committee Committee
Committee
Committee

Name

Board ofDirectors

Tadashi Yanai

Chairman

○

○

○

Chair

TakeshiOkazaki

○

△

○

Chair

○

Kazumi Yanai○

Koji Yanai○

Toru
Hambayashi○

Nobumichi
Hattori○

MasaakiShintaku○

Takashi Nawa○

Naotake Ohno○

Akira Tanaka

△

Chair

Statutory Masaaki Shinjo
Auditors
Masumi
Mizusawa

△

○

△

○

Takaharu
Yasumoto△○

Keiko Kaneko

△

○

Takao
Kashitani

△

○

Title

Directors

External
Directors

External
Statutory
Auditors

John C Jay

SeniorExecutive
Directors

Noriaki
Koyama

△

Chair
Chair

Chair

○

○

△
○

○

○

○
○

○

○

○

○

○

△

○

○

△
△

○

△
○

○

○

○
○

△

○

○

○

ShuichiNakajima○

Takahiro
Wakabayashi

○

○
○

○

○

○

○

○

Takuya Jimbo○

Maki Akaida○○

Hidetsugu
Asada

○

○

MakotoHoketsu
Yukihiro Nitta
Executive
Directors

Nomination
Business
Risk
and
Human Rights
EthicsManagement Remuneration
Committee
Committee Committee
Advisory
Committee

○
Chair

○
○

Shimpei Otani○

Takahiro
Tambara○Dai Tanaka○

Yasuyuki
Terashi

Chair

○

○

XiaozhouWang○— 48 —○

TitleName

Board ofDirectors

Board of
Statutory
Auditors

Human
Code of
Sustainability Disclosure IT Investment
Resources
Conduct
Committee Committee Committee
Committee
Committee

Toshiharu
Subsidiary
Auditors○

Ura
Kiyomi○

IwamuraLegal Dept.
Manager

Nomination
Business
Risk
and
Human Rights
EthicsManagement Remuneration
Committee
Committee Committee
Advisory
Committee

Daisuke
Watanabe○

GeneralManagerof Public
Relations
Division○

Chair

GeneralChairpersons Manager ofof Internal Production
Committee
Division

○

○

○

△

GeneralManager of
President’s△

OfficeIR Leader
Kenji
Shiratsuchi
External
Experts○△Toru
Murayama△

Yoshinori
Tomita(Note)(2)

Chair○: Member △: Non-member attendee (including observers)

Outline of External Director’s limited liability agreements
The Company has concluded agreements with the External Directors, External Statutory Auditors, and Independent
Auditor, limiting their liabilities based on provisions in Article 427, Paragraph 1 of the Companies Act, which limits theliabilities 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
the amount stipulated by law. For Deloitte Touche Tohmatsu LLC, the limit of liabilities for damages shall be limited tothe highest 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
Independent Auditor.

(3)

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 covers 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 Codeof 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, andpromote 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 them when necessary
to reflect changes in society and Company business activities, and the operation of the FR Code of Conduct.

— 49 —

(b)

(c)

(d)

2.

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

3.

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 of Directors meetings of companies they audit and express timely opinions. Company or Groupsubsidiary Directors may engage external lawyers, certified public accountants, etc. to avoid potential violation oflaws and implement 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 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.

(e)

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.

Ensuring Efficient Execution of Director Duties
1.
To ensure that the duties of the 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.
— 50 —

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 made after due deliberation.

3.

The execution of decisions made by the Board of Directors shall be conducted efficiently and appropriately by theoperating officers 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)Employee Assistants Requested by Statutory Auditors and Ensuring the Independence and Effectiveness of Statutory
Auditors’ Instructions to 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.

(i)

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.

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

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 Code of
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 and the 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 Independent Auditor, the Internal Audit Department, andStatutory Auditors at Group companies through regular meetings and information exchange.

— 51 —

(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)

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 stance 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.

(4)
(a)

Other stipulations in the Company’s articles of incorporation
Number of directors
The Company’s articles of incorporation stipulate that the number of directors shall be at least three but not morethan ten.

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

(c)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 stipulate that dividends are decided by a resolution of the Board of Directors, and not by a resolution of theGeneral Meeting of Shareholders, unless otherwise stipulated by law. The authority to decide payments of dividends fromsurplus is granted to the Board of Directors to give flexibility in the return of cash to shareholders.

(d)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.

(e)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.

(f)Special resolutions of the General Meeting of Shareholders
Regarding extraordinary resolutions of the General Meeting of Shareholders based on the Companies Act, Article 309-2, theCompany’s articles of incorporation stipulate that these resolutions shall be passed by two-thirds vote of the shareholders,
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 the General Meetingof Shareholders.

— 52 —

8. Board of Directors
A.

Board of Directors

Male: 13 persons Female: 2 persons (13.3% of officers are female)
Position

Responsibilities

Name

Date of birth

September 1984
June 2001

CEO

Tadashi Yanai

7 February 1949

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

Director

Toru Hambayashi

7 January 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 4RETAILING 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 Capital Co.,
Ltd. (current)
Director, LINK THEORY JAPAN CO., LTD.
(current)

22,037

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 4(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— 53 —

Position

Responsibilities

Name

Date of birth

November 1998

October 2003

June 2005
November 2005
Nobumichi Hattori 25 December 1957
October 2006

April 2009
March 2015
June 2015
July 2016

April 1978
December 1991
August 2000
January 2001
April 2008

Director

Masaaki Shintaku 10 September 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 4
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 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
Note 4Advisory Board Member, NTT DOCOMO, INC.
External Director, FAST RETAILING CO., LTD.
(current)
External Director, COOKPAD Inc.
External Director, Works Applications CO.,LTD. (current)Counselor, Special Olympics Nippon
Foundation (current)―

Brief biography
April 1981
June 1989

Director

Term ofofficeJune 2008
May 2009
November 2009
July 2011
December 2015
March 2019

— 54 —

Position

Responsibilities

Name

Term ofofficeNumber ofshares held(Thousand shares)

Joined Mitsubishi Corporation
Joined McKinsey & Company
Professor, The Graduate School ofInternational Corporate Strategy, Hitotsubashi
University (currently Hitotsubashi University
Business School)
President, Genesys Partners (current)
Senior Advisor, Boston Consulting Group
External Director, NEC Capital Solutions
Note 4(current)
External Director, FAST RETAILING CO., LTD.
(current)
External Director, DENSO CORPORATION(current)
External Director, Ajinomoto Co., Inc.
(current)
Visiting Professor, Hitotsubashi University
Business School (current)―

Joined Daiwa House Industry Co., Ltd.
Director, Daiwa House Industry Co., Ltd .
Senior Managing Director, Deputy Director,
Sales Division, Daiwa House Industry Co., Ltd.
Representative Director and Vice President,
Director, Sales Division, Daiwa House Industry
Co., Ltd.
Note 4
Representative Director and President, Daiwa
House Industry Co., Ltd.
Special Consultant, FAST RETAILING Co., Ltd.
(current)
External Director, FAST RETAILING CO., LTD.
(current)―

0

November 2018

Joined Long Term Credit Bank of Japan,
LimitedJoined McKinsey & Company
Partner, McKinsey & Company
Joined FAST RETAILING Co., Ltd.
Note 4
Group Executive Officer & CFO, Group Senior
Executive Officer, FAST RETAILING Co., Ltd.
(current)
Director, FAST RETAILING CO., LTD. (current)

September 1997

Joined Goldman Sachs and Company

Date of birth

Brief biography
April 1980
April 1991
June 2010

Director

Takashi Nawa

8 June 1957

June 2010
September 2010
June 2011
November 2012
June 2014
June 2015
April 2019
April 1971
June 2000
April 2004
April 2007

Director

Naotake Ohno

28 October 1948

April 2011
November 2017
November 2018
April 1988

Director

CFO

Takeshi Okazaki

9 July 1965

July 1998
January 2005
August 2011
August 2011
September 2012

July 2004

Director

Kazumi Yanai

23 April 1974

September 2009
January 2012
November 2012
November 2013
November 2015
July 2017
November 2018
— 55 —

Joined Link Theory Holdings (US) Inc.
(currently Theory LLC), Headquarters(New York)
Joined FAST RETAILING Co., Ltd.
Chairman, Theory LLC (current)Group Executive Director, FAST RETAILING
Co., Ltd. (current)
UNIQLO USA LLC COO
Chairman, UNIQLO USA LLC (current)
CEO, Chairman and President,
J BRAND HOLDINGS, LLC (current)
Director, FAST RETAILING CO., LTD (current)

Note 4

4,781

Position

Responsibilities

Name

Date of birth

September 2012
Koji Yanai

19 May 1977

May 2013
September 2013
November 2018
April 1966

September 1972
March 1993

April 1997
Standing Statutory
AuditorAkira Tanaka

26 June 1942

August 2003
November 2003
November 2005
March 2006
November 2006
April 2011
October 2011
April 1983
February 1994
September 1998
September 2005
January 2008

Standing Statutory
AuditorMasaaki Shinjo

28 January 1956

Number ofshares held(Thousand shares)

Joined Mitsubishi Corporation
Seconded to Princes Limited (food businesssubsidiary in Great Britain)
Joined FAST RETAILING Co., Ltd., responsiblefor UNIQLO Sports Marketing
Note 4
Director, UNIQLO Global MarketingGroup Executive Officer, FAST RETAILING Co.,
Ltd. (current)
Director, FAST RETAILING CO., LTD (current)

4,780

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
Holdings Company (Japan), Ltd.)
Note 5Advisor, FAST RETAILING CO., LTD.
Managing Director, FAST RETAILING CO., LTD.
Senior Vice President, UNIQLO CO., LTD.
Senior Vice President, FAST RETAILING CO.,LTD.
Statutory Auditor, FAST RETAILING CO., LTD.
(current)
Representative Director of FR Health
Insurance Organization (current)
Council member, Special Olympics Japan(current)

3

Brief biography
April 2001
April 2009

Director

Term ofofficeMarch 2009
September 2009
March 2011
April 2011
November 2012

— 56 —

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)
Statutory Auditor, FAST RETAILING CO., LTD.
(current)

Note 6―

Position

Responsibilities

Name

Date of birth

March 1988

Masumi Mizusawa

22 July 1959

October 2001
February 2004

November 2019
November 1978
August 1982
April 1992
November 1993
August 2001
Statutory Auditor

Takaharu Yasumoto

10 March 1954

Number ofshares held(Thousand shares)

Joined the International Department of
Yamaichi Securities Co., Ltd.
Joined the Research Department of Kleinwort
Benson Securities (the Tokyo branch ofDresdner Kleinwort Wasserstein (Japan) Ltd.)
Joined the Investor Relations Department ofNote 7
FAST RETAILING CO., LTD.
General Manager, Global Corporate
Management and Control Investor Relations
Division, FAST RETAILING CO., LTD. (current)
Statutory Auditor, FAST RETAILING CO., LTD.
(current)0

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 6
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)

4

Brief biography
November 1981

Standing Statutory
AuditorTerm ofofficeJune 2003

November 2005
April 2007
June 2010— 57 —

Position

Responsibilities

Name

Date of birth

April 1999
January 2007
April 2007
Keiko Kaneko

11 November 1967

November 2012
November 2012
June 2013
June 2019
February 1975
January 1986
April 1986
March 1989
April 2002

Statutory Auditor

Takao Kashitani

7 November 1948
June 2012

June 2012
November 2018
Total
(Notes)

1.
2.
3.
4.
5.
6.
7.

Number ofshares held(Thousand shares)

Joined 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
University Graduate School of Law
Note 6External Statutory Auditor, FAST RETAILING
CO., LTD. (current)
External Statutory Auditor, UNIQLO CO., LTD.
(current)
External Statutory Auditor, The Asahi
Shimbun Company (current)
External Director, Daifuku Co., Ltd. (current)―

Kashitani Public Accountant Office (current)
Representative, CENTURY Audit Corporation(currently Ernst & Young ShinNihon LLC)
Representative Director & CEO, Brain Core
Co., Ltd. (current)
Representative Director & CEO, F P Brain Co.,
Ltd. (current)
Specially appointed professor, Chuo
University Graduate School of International
Note 5
Accounting Department of Research(professional graduate school)
External Director, Tokyo Electric Power
Company (currently Tokyo Electric Power
Company Holdings)
External Director, Japan Freight Railway
Company (current)
External Statutory Auditor, FAST RETAILING
CO., LTD. (current)―

Brief biography
April 1991
April 1999

Statutory Auditor

Term ofoffice31,607

Directors Toru Hambayashi, Nobumichi Hattori, Masaaki Shintaku, Takashi Nawa and Naotake Ohno are External
Directors as provided for in Article 2, Paragraph 15 of the Companies Act.
Directors Kazumi Yanai and Koji Yanai are relatives in the second degree of Tadashi Yanai, Representative
Director, Chairman and President.
Auditors Takaharu Yasumoto, Keiko Kaneko and Takao Kashitani are External Statutory Auditors as provided forin 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 28 November
2019.
For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on 29 November
2018.
For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on 24 November
2016.
For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on 28 November
2019.

— 58 —

B.
(1)

External Statutory Auditors
Functions, roles and selection of External Directors and External Statutory Auditors
The Company has five External Directors and three 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.
Director Naotake Ohno serves as a special consultant to Daiwa House Industry Co., Ltd., and we are currently engaged inbusiness negotiations concerning an office lease agreement with that company.
Statutory Auditor Keiko Kaneko serves as an external director of Daifuku Co., Ltd., a company with which Fast Retailingand its group subsidiaries engage in business in regard to warehouse automation equipment.
Shares of the Company held by External Statutory Auditors are stated in the “Number of shares held” column under thesection “Board of Directors.”
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 the Internal Audit Department and Independent
Auditors, as detailed in (iii) Internal audits and audits by Statutory 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’ views in the audits of our business activities, we value boththe independence and the diversity of our External Statutory Auditors in various fields.

(2)

Independent Directors
Five of the nine members of the Fast Retailing Board are external directors, and all 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 officers, including External Directors:
A person shall not qualify as an Independent Director of Fast Retailing, if:(a)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;(b)

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 Group during the most recent business year constituted 2% or more of the Business Partner’s
consolidated revenue;(c)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 for a director or an auditor; or— 59 —

(d)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*2“Business Partner” includes law firms, auditing firms, tax accounting firms, consultants, and any other organizations.
“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.

(3)	Supervision or auditing by External Directors or External Statutory Auditors; mutual cooperation between
internal auditing, Statutory Auditor auditing, and accounting audits; and relationship with the Internal Control
Department
At meetings of the Board of Directors, the Board of Statutory Auditors, and various committees, etc., external directors
and External Statutory Auditor receive reports about the operating status of internal auditing and internal control
systems, the results of Statutory Auditors audit and accounting audits, and other important matters, and they offer
remarks and suggestions based on their respective areas of expertise, experience, and knowledge.
At meetings of the Board of Directors, the Board of Statutory Auditors, various committees, etc., Statutory Auditors
cooperate with external directors and External Statutory Auditors in a timely manner and exchange opinions as well asshare information necessary for the supervision and auditing of management.
For details regarding mutual cooperation between the External Statutory Auditors, the Internal Audit Department, andthe accounting auditors and the relationship with the Internal Control Department, please refer to (1) Status of Auditor’s
Audit under C. Status of Auditing.

C.
(1)

Status of Auditing
Status of Statutory Auditor’s Audit
Statutory Auditors always attend Board of Directors meetings and audit the status of the execution of management. The
Board of Statutory Auditors consists of three internal full-time Statutory Auditors and three external Statutory Auditors,
and after receiving reports about important matters related to auditing on a regular and on-demand basis from theInternal Audit Department and accounting auditors, the Board of Statutory Auditors discusses those important mattersand always maintains a state of cooperation. Both Statutory Auditor Takaharu Yasumoto and Statutory Auditor Takao
Kashitani hold the qualification of certified public accountant and have substantial knowledge related to finance andaccounting.

(2)

Status of internal auditing
The Company has an Internal Audit Department that is independent from the executive departments, and, as of 31 August
2019, six dedicated staff members regularly verify the appropriateness and effectiveness of internal control systems andaudit the status of the execution of business.

(3)

Accounting audits(a)Name of audit firm
Deloitte Touche Tohmatsu LLC(b)Name of Certified Public Accountants
Koichi Okubo, Hirofumi Otani, Yohei Masuda(c)Group of assistants to the independent auditors
Based on the audit plan formulated by Deloitte Touche Tohmatsu LLC, the group of assistants to the independent
auditors consists of 12 CPAs, 4 successful Certified Public Accountant applicants and 26 others.

(d)Policy and reasons for selecting audit corporation
Based on the “Practical Guidelines for Auditors, etc. Concerning the Formulation of Evaluation and Selection
Standards for Accounting Auditors” (Japan Audit & Supervisory Board Members Association; 13 November,— 60 —

2015), the Board of Statutory Auditors selected Deloitte Touche Tohmatsu LLC to be the accounting auditor after
comprehensively examining their quality control systems, audit team independence, communication systems,group audit systems, handling of fraud risks, and the like in accordance with the prescribed selection standards
and evaluation standards for accounting auditors. Regarding the policy for determining the dismissal or nonreappointment of an accounting auditor, in the event that it is acknowledged that an item prescribed in an item
under Article 340-1 of the Companies Act is applicable, the Board of Statutory Auditors will pass a resolution
to the effect that the Board of Statutory Auditors will dismiss the accounting auditor based on the consent of
all Statutory Auditors, and in the event that it is acknowledged that it is difficult for the accounting auditor toperform an appropriate audit due to an event arising that otherwise impairs the accounting auditor’s competence
or independence, the Board of Statutory Auditors will pass a resolution to the effect that the Board of Statutory
Auditors will make a proposal to the General Meeting of Shareholders to dismiss or not reappoint the accounting
auditor.
(e)

Evaluation of the accounting auditor by Statutory Auditors and the Board of Statutory Auditors
In addition to auditing and examining the independence, quality-control status, suitability of the system for
performing duties, and status of implementing accounting audits in the current fiscal year of the accounting auditor,
the Board of Statutory Auditors conducts evaluations by receiving reports from the accounting auditor on the statusof performing its duties and requesting explanations when necessary.

(f)Changes in independent auditor
The Company’s Independent Auditor has changed as follows:
The consolidated fiscal year before last and the business year before last: ShinNihon LLC (now Ernst & Young
ShinNihon LLC)
The previous accounting year and previous business year: Deloitte Touche Tohmatsu LLC
The matters stated in the OVERSEAS REGULATORY ANNOUNCEMENT are as follows.
Overview of incoming and outgoing independent auditors
Incoming independent auditor: Deloitte Touche Tohmatsu LLC
Outgoing independent auditor: Ernst & Young ShinNihon LLC
Expected date of change
30 November 2017
Date of most recent appointment of outgoing independent auditor
8 December 2016
Opinions included in the past three years of Independent auditor’s reports and other documents created by theoutgoing independent auditor
Not applicable matter.
Background and reasons behind the decision to change independent auditors
The appointment term of the Company’s current independent auditor, Ernst & Young ShinNihon LLC, was set
to mature at the conclusion of the FY2017 Annual General Meeting of Shareholders of the Company held on
November 30 2017. The Board of Statutory Auditors decided to take the opportunity to comprehensively assess theappointment based on the Company’s standards for selecting and evaluating independent auditors. As a result, theBoard of Statutory Auditors decided to appoint Deloitte Touche Tohmatsu LLC as its new independent auditor.
Opinions of the outgoing independent auditor regarding the background and reasons for the decision listed in above
and relating to entries in Independent auditor’s reports and other documents
The Company received communication from Ernst & Young ShinNihon LLC that the firm had no specific opinions to
express in relation to the above items.

— 61 —

D.

Details of Independent Auditors’ remuneration
Transitional measures are being applied to the provisions of Note (56) d (f) i through iii stated in Form No. 2 of the
Cabinet Office Ordinance on the Disclosure of Corporate Affairs, etc., after its amendment in accordance with the Cabinet
Office Ordinance for Partial Amendment of Cabinet Office Ordinance on the Disclosure of Corporate Affairs, etc. (Cabinet
Office Ordinance No. 3, 31 January 2019).
(1)

Details of remuneration for Independent Auditor

Class

Year ended 31 August 2018Year ended 31 August 2019
Remuneration
Remuneration
Remuneration
Remuneration
for duties otherfor audit andfor duties otherfor audit andthan audit
certification duties than auditing duties certification duties(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)

Reporting Entity

219

36

248

7

Consolidated subsidiaries

40

—

56

—

Total

259

36

305

7

The non-assurance services provided by the Independent Auditor are advisory concerning the application of IFRS,
and others.
(2)

Other important details regarding remuneration
Year ended 31 August 2018 (1 September 2017 — 31 August 2018)
The Company and its consolidated subsidiaries paid 352 million yen as remuneration for assurance andnon-assurance services, to member firms of the Deloitte global network.
Year ended 31 August 2019 (1 September 2018 — 31 August 2019)
The Company and its consolidated subsidiaries paid 727 million yen as remuneration for assurance andnon-assurance services, to member firms of the Deloitte global network.

(3)

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

(4)

Board of Statutory Auditors Agree Independent Auditors Remuneration
The Board of Statutory Auditors agreed to the remuneration of the independent auditors as stipulated in Article 399,
Item 1 of the Companies Act, after checking auditing estimates versus actual performance in previous businessyears, including itemized auditing hours and remuneration, and investigating whether the estimates for theyear ended 31 August 2018 were reasonable, based on the practical guidelines relating to independent auditors
published by the Japan Audit & Supervisory Board Members Association.

— 62 —

E.
(1)

Directors’ Remuneration
Policies and process for determination of directors’ remuneration
With respect to directors’ remuneration and the like, at the 58th Ordinary General Meeting of Shareholders, which
was held on 28 November 2019 resolution was passed to set the upper limit for directors at 2 billion yen per year (themaximum number of directors stipulated in the Company’s Articles of Incorporation is 10); and, at the 42nd Ordinary
General Meeting of Shareholders, which was held on 26 November, 2003, a resolution was passed to set the upper
limit for Statutory Auditors at 100 million yen per annum (the maximum number of Statutory Auditors stipulated in the
Company’s Articles of Incorporation was 7).
Remuneration for internal directors (this refers to a director who is not an external director; the same applies below)
consists of basic remuneration and performance-linked remuneration, as stated below.
Basic remuneration is calculated based on each person’s stipulated grade in accordance with various factors, including
each internal director’s duties, responsibilities, track record and degree of contribution to the Company, in line with theprescribed Remuneration Table. Internal directors’ grades are determined by Representative Director Tadashi Yanai basedon discussions held by the Nomination and Remuneration Advisory Committee, whose members predominantly consist of
external directors and External Statutory Auditors.
Performance-linked remuneration is calculated within the total remuneration limit approved at the general meetingof shareholders, based on an evaluation of each internal director’s performance. Based on discussions held by the
Nomination and Remuneration Advisory Committee, the evaluations are determined by Representative Director Tadashi
Yanai, who is entrusted with determining individual remuneration amounts for directors by the Board of Directors.
The remuneration for External Directors is fixed at 10 million yen per year. This fixed amount is determined byRepresentative Director Tadashi Yanai, who is entrusted with determining individual remuneration amounts for directors
by the Board of Directors.
The remuneration for Statutory Auditors is determined through discussions by the Board of Statutory Auditors .
The above-mentioned Nomination and Remuneration Advisory Committee was established in July 2019. On 1 August
2019, the first committee meeting was held with all committee members in attendance and discussions were held on theoverall vision for the director-evaluation method that would form the basis of remuneration amounts, as well as the ideal
system for long-term performance-linked remuneration and other director remuneration.

(2)

Details of remuneration of the Company’s executives are as follows:

Executive category

Total amount of remuneration, by type
Total
(Millions of yen)amount of
Short-termLong-term
Entity category remuneration
Basic
performanceperformance(Millions ofCompensation
linkedlinkedyen)
remuneration remuneration

Number of
executives(Persons)

Directors (excluding the Company
external directors) the subsidiaries

541

334

207

—

126

93

33

—

External directors

the Company

51

51

—

—

6

Statutory Auditors(excluding External the Company
Statutory Auditors)

35

35

—

—

2

the Company

31

31

—

—

the subsidiaries

6

6

—

—

External Statutory
Auditors(a)4

4“Short-term performance-linked remuneration” and “long-term performance-linked remuneration” are recorded
as amounts expensed for reserves before taking into account performance evaluations for the fiscal period ended
August 2019. The actual amount paid is determined by calculations based on the performance evaluation, etc., of
the individual director.
— 63 —

(b)Total amount of consolidated remuneration, etc., for each officer: note that this is to be no more than 100 million
yen

Total amount of
remuneration(Millions of yen)

Executive Director
Tadashi Yanai
DirectorTakeshi Okazaki

Name

(3)

Total amount of remuneration, by type (Millions of yen)
Basic Compensation

Short-term
performance-linked
remuneration

Long-term
performance-linked
remuneration

400

240

160

—

135

90

45

—

Salaries for key personnel serving concurrently as an employee and an officer
Not applicable.

(4)

Details of policies related to determining the amount of an officer’s remuneration, etc.
(a)

The amount of remuneration, etc., for corporate auditors is calculated within the limit approved at the General
Meeting of Shareholders as mentioned above, and it is determined through discussions by the Board of Statutory
Auditors.

(b)

The amount of remuneration, etc., for external directors is calculated within the limit approved at the General
Meeting of Shareholders as mentioned above , and it is calculated as a fixed value for a one-year period.

(c)Remuneration for internal directors is composed of three elements (basic remuneration; short-term performancelinked remuneration; and long-term performance-linked remuneration), and the details and calculation method foreach are as stated below. Each element is determined within the limit for director remuneration, etc., approved at
the General Meeting of Shareholders as mentioned above.

<Basic remuneration>
This is calculated based on the grade of each internal director, in line with the prescribed Remuneration Table.

<Short-term performance-linked remuneration>
	The target amount for short-term performance-linked remuneration is stipulated in accordance with the table showing
short-term performance-linked remuneration for each grade. A target-management system sets performance targets,group targets, and individual targets at the start of the fiscal year. Based on this system, performance for the year isassessed using five grades, and the actual amount paid is calculated based on the Payment Criteria Table shown below.
Grade

Definition

Percentage of Target Achieved

A

Targets greatly surpassed and many superb courses of action are evident

200%

AB

Targets achieved and superb courses of action are evident

150%

B

Targets achieved, or superb courses of action adequate for achieving target
are evident

100%

Targets not achieved, but it is acknowledged that efforts have been made that
may lead to future developments

75%

Targets not achieved and the anticipated course of action was lacking

50%

BC
C

<Long-term performance-linked remuneration>
	The target amount for long-term performance-linked remuneration is stipulated in accordance with the table showing
long-term performance-linked remuneration for each grade.

— 64 —A)	A portion equivalent to 1/3 of the long-term performance-linked remuneration amount is granted as phantom stockin order to provide a link with the corporate value of the Fast Retailing Group. The phantom stock is cash-settled
remuneration that is linked to the Company’s share value, and it is exercised automatically three years after the dateon which it was granted, when a corresponding cash amount based on the Company’s share value on the exercise dateis paid. Incidentally, neither dividends nor an amount equivalent to dividends is paid.
B)	A portion equivalent to 2/3 of the long-term performance-linked remuneration amount is paid in cash in order toimprove the strategy and performances of the business unit(s) managed by the officer in question. This portion is paid
based on a performance evaluation of the business operations managed by the officer in the three-year period after
the target is set.
B-1) 50% of the cash-allowance portion is determined based on quantitative targets. An evaluation is carried out
based on the rate at which operating income budget targets are met and on operating margins for the brands
and countries managed by the officer over the three year (cumulative) period, and the amount paid is calculated
based on the prescribed Criteria Table.
B-2) The remaining 50% of the cash-allowance portion is determined based on qualitative targets. An evaluation iscarried out of the degree to which medium-term (three year) budget targets have been met; targets that are
set in the year in which the long-term performance-linked remuneration is assigned. The amount paid is thencalculated based on the Payment Criteria Table shown below.
Grade

Definition

Percentage of Target Achieved

A

Target greatly surpassed and many superb courses of action are evident

200%

AB

Target achieved and superb courses of action are evident

150%

B

Target achieved, or superb courses of action adequate for achieving target
are evident

100%

Target not achieved, but it is acknowledged that efforts have been made that
may lead to future developments

75%

Target not achieved and the anticipated course of action was lacking

50%

BC
C

— 65 —

F.
(1)

Status of share holdings
Criteria and approach to “investment share” categories
The Company categorizes share holdings that are deemed to contribute to improving medium-to-long-term corporate
value as “investment shares with a purpose other than net investment” and other shares as “investment shares for the
purpose of net investment.”(2)

Investment shares for which the investment purpose is a purpose other than net investment(a)

In principle, the Group has a policy of not having any cross-holdings; however, on occasion these holdings may
occur — but only in the minimum number of shares required. Each year, the Board of Directors verifies the economic
rationality, etc., for any cross-holdings; this is done for each individual stock and includes any medium-to-long term
trading relationships. The Board then makes a comprehensive judgment on the significance of the holdings. The
specific contents of the verifications are not disclosed due to the trading relationships with the corporation(s) inwhich shares are held.

(b)

Number of stocks and amounts included in the balance sheet
Amounts included in
the balance sheet(Millions of yen)

Number of stocks
Unlisted shares

3

173

Shares other than unlisted shares

2

1,471

(Stock for which the number of shares increased in the current business year)
No applicable matters(Stocks for which the number of shares decreased in the current business year)
No applicable matters— 66 —

(c)Information on the number of shares and balance sheet difficulties for “specified investment shares” and “deemedshares” — by individual stockSpecified Investment Shares:

Stock

Current
business year

Previousbusiness year

Number ofsharesNumber ofsharesBalance sheet
Balance sheet
amountamount(Millions of yen) (Millions of yen)

286,500

Matsuoka Corporation

587

20,815,000

Crystal International
Group Ltd.

884

Holding theCompany’s
shares

These shares are held to try to strengthenties in the medium-term , as a strategic
partner. Moreover, each year the Board
286,500
of Directors verifies the economic
rationality, etc., for each individual stock,which includes any medium-to-long term
trading relationships; and the Board
then makes a comprehensive judgmenton the significance of the holding. The
specific contents of the verification is not
1,052
disclosed due to the trading relationships
with the corporation in which sharesare held.

No

These shares are held to try to strengthenties in the medium-term , as a strategic
partner. Moreover, each year the Board
20,815,000
of Directors verifies the economic
rationality, etc., for each individual stock,which includes any medium-to-long term
trading relationships; and the Board thenmakes a comprehensive judgment on thesignificance of the holding. The specificcontents of the verification are not
1,443
disclosed due to the trading relationships
with the corporation in which sharesare held.

No

Deemed Shares: Not applicable.

(3)

Holding purpose, quantitative holding
effect, and reason for increase in numberof shares

Investment shares held for the purpose
Not applicable.

— 67 —

9. Financial Information
A. 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 28, 1976) (hereinafter referred to as
the “Rules on Consolidated Financial Statements”), the consolidated financial statements of the Group were prepared inaccordance with IFRS pursuant to Article 93 of the Rules on 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 59, 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.

B. Accounting Audits
The Company’s consolidated and non-consolidated financial statements for the fiscal year from 1 September 2018 –31 August 2019 have been audited by Deloitte Touche Tohmatsu LLC in accordance with auditing standards generally acceptedin Japan pursuant to Article 193-2-1 of the Financial Instruments and Exchange Act. Deloitte Touche Tohmatsu LLC also
conducted the audit of consolidated financial statements of the Company in accordance with International Standards on
Auditing (ISA).

C. Special measures for ensuring the accuracy of our consolidated financial statements and a framework forensuring consolidated financial statements are appropriately prepared in accordance with IFRS.
The 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
made efforts to build specialist knowledge by appointing employees who are well versed in IFRS, joining the AccountingStandards 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 Group
guidelines 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(“IASB”), study the latest standards and their potential impact on our Company, and update our Group guidelines foraccounting practices accordingly.

— 68 —

D. Consolidated Financial Statements(1) Consolidated statement of financial position(Millions of yen)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Derivative financial assets
Income taxes receivable
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Financial assets
Investments in associates accounted
for using the equity method
Deferred tax assets
Derivative financial assets
Other assets
Total non-current assets
Total assets
Liabilities and equity
LIABILITIESCurrent liabilities
Trade and other payables
Other financial liabilities
Derivative financial liabilities
Current tax liabilities
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Financial liabilities
Provisions
Deferred tax liabilities
Derivative financial liabilities
Other liabilities
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
Non-controlling interests
Total equity
Total liabilities and equity

Notes

As at 31 August 2018

As at 31 August 2019

8,31
9,31
11,31
10
31

999,697
52,67735,359464,788
35,5191,702
28,353
1,618,097

1,086,519
60,39844,473
410,526
14,787
1,492
19,975
1,638,174

13
14
14
11,31

155,077
8,092
46,002
79,476

162,092
8,092
60,11777,026

16
19
31
12

14,64926,378—
5,691
335,368
1,953,466

14,58733,1639,442
7,861
372,384
2,010,558

20,31
11,17,29,31
31

214,542
171,854
6,917
21,503
11,86872,722
499,410

191,769
159,006
2,985
27,451
13,34082,103476,658

11,17,29,31
21
19
31
12

502,671
18,912
13,003—
16,690551,277
1,050,688

499,948
20,474
8,822
3,838
17,281
550,365
1,027,024

22
22
22
22
22

10,273
18,275815,146(15,429)
34,66910,273
20,603928,748(15,271)(5,732)862,936
39,841
902,777
1,953,466

938,62144,913
983,534
2,010,558

12

21
12

— 69 —

(2) Consolidated statement of profit or loss
(Millions of yen)
Year ended
31 August 2018

Notes
Revenue

23

Cost of sales
Gross profit
Selling, general andadministrative expenses
Other income
Other expenses
Share of profit and loss of associates
accounted for using the equity method

24
25
15,25

Year ended
31 August 2019

2,130,060(1,080,123)

2,290,548(1,170,987)

1,049,936

1,119,561(797,476)
3,385(20,244)(854,394)
4,533(12,626)

16

611

562

Operating profit/(loss)
Finance income

26

Finance costs

26

236,212
9,693(3,228)257,636
12,293(17,481)19

242,678(73,304)

252,447(74,400)

169,373

178,046

154,811
14,562

162,578
15,467

169,373

178,046

1,517.71
1,515.23

1,593.20
1,590.55

Profit/(loss) before income taxes
Income taxes
Profit/(loss) for the year
Profit/(loss) for the year attributable to:
Owners of the Parent
Non-controlling interests
Earnings per share
Basic (Yen)
Diluted (Yen)28
28— 70 —

(3) Consolidated statement of comprehensive income			(Millions of yen)
Year ended
31 August 2018

Notes
Profit/(loss) for the year
Other comprehensive income/(loss),
net of income taxes
Items that will not be reclassified
subsequently to profit or loss
Financial assets measured at fair value
through other comprehensive
income/(loss)
Total items that will not be reclassified
subsequently to profit or loss
Items that may be reclassified
subsequently to profit or loss
Net fair value gain/(loss) on
available-for-sales financial
assets during the period
Exchange differences on translating
foreign operations
Cash flow hedges
Share of other comprehensive
income of associates
Total items that may be reclassified
subsequently to profit or loss
Other comprehensive income/(loss),
net of Income tax
Total comprehensive income/(loss)
for the year

Year ended
31 August 2019

169,373

178,046

―

(734)

―

(734)

27

34

―

27
27

(6,285)
17,735(33,649)
11,398

27

―

(11)

11,484(22,262)

11,484(22,997)

180,858

155,049

165,378
15,480140,900
14,148

180,858

155,049

27

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

— 71 —

(4) Consolidated statement of changes in equity
For the year ended 31 August 2018
(Millions of yen)
Other components of equity

Notes
As at 1 September 2017
Net changes during the year
Comprehensive
income/(loss)
Profit/(loss) for the year
Other comprehensive
income/(loss)
27
Total comprehensive
income/(loss)
Transactions with theowners of the Parent
Acquisition oftreasury stock
22
Disposal oftreasury stock
22
Dividends
22
Share-based payments
22
Incorporation ofa new subsidiary
Changes in ownershipinterests in
subsidiaries without
22
losing control
Total transactions withthe owners of
the Parent
Total net changes during
the year
As at 31 August 2018

Foreign
Share of other
Treasury Available- currency Cash-flow comprehensive
stock, at for-sale translation
hedge
income ofcost reserve
reserve
reserveassociates(15,563)2
21,8062,293―

Equityattributableto owners
Nonof the controlling
Total
Total
Parent interests equity
24,102
731,770
30,272 762,043

Capitalstock
10,273

Capital Retained
surplus earnings
14,373 698,584―― 154,811

―

―

―

―

―

―

154,811

14,562 169,373

―

―

―

―

34

(6,376)

16,909―10,567

10,567917 11,484―― 154,811―

34(6,376)

16,909―10,567

165,378

15,480 180,858

―

―

―

(1)

―

―

―

―

―

(1)

―
―
―

1,169
―
857

―
(38,248)
―

136
―
―

―
―
―

―
―
―

―
―
―

―
―
―

―
―
―

1,306
(38,248)
857

―

―

―

―

―

―

―

―

―

―

173

173

―

1,874

―

―

―

―

―

―

―

1,874

1,754

3,629

―

3,901

(38,248)

134

―

―

―

―

―

(34,212)(5,911) (40,124)

3,901 116,562
18,275 815,146

134(15,429)34
37(6,376)
15,42916,90919,202――

10,567
34,669131,165
862,936

9,568 140,734
39,841 902,777―
10,273— 72 —―(1)― 1,306(7,840) (46,088)―
857

For the year ended 31 August 2019
(Millions of yen)
Other components of equity

Notes
As at 1 September 2018
Net changes during the year
Comprehensive
income/(loss)
Profit/(loss) for the year
Other comprehensive
income/(loss)
Total comprehensive
income/(loss)
Transactions with theowners of the Parent
Acquisition oftreasury stock
Disposal oftreasury stock
Dividends
Share-based payments
Incorporation ofa new subsidiary
Changes in ownershipinterests in
subsidiaries without
losing control
Transfer to non-financial
assetsTotal transactions withthe owners of
the Parent
Total net changes during
the year
As at 31 August 2019

Capitalstock
10,273Financial assets
measured
at fair value
Foreign
Share of other
Treasury through other currency Cash-flow comprehensive
Capital Retained stock, at comprehensive translation
hedge
income ofsurplus earnings
cost income/(loss)
reserve
reserveassociates
18,275 815,146 (15,429)
37
15,42919,202—――

162,578

―

―

―

―

―

―

―

―

(734)

(29,359)――

162,578

―

(734)

22

―

―

―

(2)

22
22
22

―
―
―

1,558
―
769

―
(48,976)
―

―

―

―

27

―

162,578

15,467 178,046

8,427(11) (21,678)(21,678)(1,318) (22,997)(29,359)

8,427(11) (21,678)

140,900

14,148 155,049

―

―

―

―

―

(2)

159
―
―

―
―
―

―
―
―

―
―
―

―
―
―

―
―
―

1,718
(58,195)
769

―

―

―

―

―

―

―

239

239

239

―

―

―

―

―

―

―

―

353

353

353

―

―

―

―

―

―

(18,723)― (18,723)(18,723)(451) (19,175)

―

2,328

(48,976)

157

―

―

(18,723)― (18,723)(65,215)(9,076) (74,292)―
10,273

2,328
20,603

113,602928,748

157(15,271)

(734)
(697)

(29,359)(13,929)(10,296)8,906(11) (40,402)(11) (5,732)

75,685
938,621

5,071 80,757
44,913 983,534— 73 —―

Equityattributableto owners
Nonof the controlling
Total
Total
Parent interests equity
34,669862,936
39,841 902,777―(2)― 1,718(9,218) (58,195)―769

(5) Consolidated statement of cash flows(Millions of yen)
Year ended
31 August 2018

Note
Cash flows generated fromoperating activities
Profit/(loss) before income taxes
Depreciation and amortization
Impairment losses
Interest and dividend income
Interest expenses
Foreign exchange losses/(gains)Share of profit and loss of associates
accounted for using the equity method
Losses on disposal of property, plant andequipment
Decrease/(increase) in trade and otherreceivables
Decrease/(increase) in inventories
Increase/(decrease) in trade and otherpayablesDecrease/(increase) in other assets
Increase/(decrease) in other liabilities

Year ended
31 August 2019242,678
45,055
12,376(7,560)3,169(2,132)

252,447
48,4763,444(12,293)
4,369
13,107

(611)

(562)

1,176

650

(2,852)(179,469)(6,302)
38,145

9,758(13,053)
146,867
1,819(16,426)
2,932
36,881
1,719

Income taxes refunded

257,220
7,409(2,393)(86,725)892

366,589
10,533(3,848)(74,263)
1,493

Net cash generated by operating activities

176,403

300,505(63,490)(103,619)

59,18592,252(31,962)(16,532)(4,773)(41,567)(24,177)(7,490)

Others, net

3,064(2,671)

4,304
1,541

Net cash used in investing activities(57,180)(78,756)

15

Others, net
Cash generated from operations
Interest and dividend income received
Interest paid
Income taxes paid

Cash flows used in investing activities
Amounts deposited into bank deposits
with original maturities ofthree months or longer
Amounts withdrawn from bank deposits
with original maturities ofthree months or longer
Payments for property, plant andequipment
Payments for intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease andguarantee deposits— 74 —

(Millions of yen)
Year ended
31 August 2018

Notes
Cash flows used in financing activities
Proceeds from short-term loans payable
Repayment of short-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of cooperate bonds
Repayment of redemption of bonds
Dividends paid to owners of the Parent
Capital contributions from
non-controlling interests
Dividends paid to non-controlling interests
Repayments of lease obligations

29
29
29
29

1,767
(1,596)(3,308)249,319—(38,244)

17,145(16,789)(4,433)—(30,000)(48,975)

3,803(7,827)(5,918)224

592(8,773)(11,377)
182

198,217(102,429)(1,545)(32,496)

315,894

86,8228

683,802

999,6978

999,697

1,086,519

22

29

Others, net
Net cash generated by / (used in)financing activities
Effect of exchange rate changes on thebalance of cash held in foreign currencies
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the
beginning of year
Cash and cash equivalents at theend of year

Year ended
31 August 2019

— 75 —

(6) Notes to the consolidated financial statements
1. Reporting Entity
FAST RETAILING CO., LTD. is a company incorporated in Japan. The locations of the registered headquarters 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
A. Compliance with IFRSThe consolidated financial statements of the Group have been prepared in compliance with IFRS issued by the 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 accordingly, applies Article 93 of the Rules Governing Term, Form, andPreparation of Consolidated Financial Statements.
B. Approval of the Consolidated Financial Statements
The consolidated financial statements were approved on 28 November 2019 by Tadashi Yanai, Chairman, President, andCEO, and Takeshi Okazaki, Group Senior Vice President and CFO.
C. Basis of Measurement
The consolidated financial statements have been prepared on a historical cost basis, except for certain assets, liabilities,
and financial instruments which are measured at fair value as indicated in “3. Significant Accounting Policies.”
D. 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.
E. 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 estimates and judgments that have significant effects on the amounts recognized in the
consolidated financial statements is as follows:• Valuation of inventories (3. Significant Accounting Policies (6) and Note 10)• Recoverable amounts from cash-generating units for impairment tests (3. Significant Accounting Policies (10) and Note 15)• Useful lives of property, plant and equipment, and intangible assets (3. Significant Accounting Policies (7), (8) andNotes 13, 14)• Recoverability of deferred tax assets (3. Significant Accounting Policies (14) and Note 19)• Recoverability of trade and other receivables (3. Significant Accounting Policies (4) and Note 9, 31)• Accounting treatment and valuation of provisions (3. Significant Accounting Policies (11) and Note 21)• Fair value measurement of financial instruments (3. Significant Accounting Policies (4) and Note 31)• Fair value measurement for unit price for share-based payments (3. Significant Accounting Policies (12) and Note 30)— 76 —

3. Significant Accounting Policies
A. Basis of Consolidation(1) Subsidiaries
A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The Group
controls enterprises when it is exposed, or has rights, to variable returns arising from its involvement in those enterprises
or when the Group has rights to variable returns in those enterprises and is able to have an impact on 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 the 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 fromtransactions within the Group are eliminated at the time of preparation of the consolidated financial statements.
The reporting dates for FAST RETAILING (CHINA) TRADING CO., LTD., UNIQLO TRADING CO., LTD., FAST RETAILING(SHANGHAI) TRADING CO., LTD. , GU (Shanghai) Co., Ltd. and ten other companies are 31 December, 31 March or 30 June.
The management accounts the financial statements of these subsidiaries as of the Group’s year-end that were preparedsolely for the Group’s consolidation purpose.
The financial statements of other subsidiaries are prepared 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 2019 is 133.
(2) Investments in associates
An associate is an entity in which the Group has significant influence over the financial and operating policies.
If the Group holds 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 historical cost at the time of acquisition.
Thereafter the carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of
the associate since acquisition date. The consolidated statement of profit or loss of profit or loss reflects the Group’s share of
the results of operations of the associate. Any change in other comprehensive income of those investees is presented as partof the Group’s other comprehensive income.
Unrealized gains and losses resulting from transactions between the Group and the associate are eliminated to the extent
of the interest in the associate.
The number of associates as at 31 August 2019 is four.

— 77 —

B. 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.
C. Foreign Currencies(1) 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 from settlement or translation of monetary items are recognized in profit
or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using theexchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency aretranslated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value ofthe item (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).
(2) Foreign Operations
Upon consolidation, the assets and liabilities of foreign operations are translated into Japanese yen at the rate ofexchange prevailing at each reporting date and their statements of profit or loss are translated at average exchange rates
during the period. 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
operation is recognized in profit or loss.

— 78 —

D. Financial Instruments(1) Financial assets(a) Initial recognition and measurement
The Group classifies financial assets as “financial assets measured at fair value through net profit or loss”; “financial assets
measured at fair value through other comprehensive income” or “financial assets measured at amortized cost”; and thatclassification is determined at the time of initial recognition.
The Group carries out initial recognition on the date of the transaction, when it becomes party to the contract related to
the financial asset(s).
All financial assets are measured by adding directly linked transaction costs to fair value, except those in the categoryclassified as measured at fair value through net profit or loss.
Financial assets are classified as financial assets measured at amortized cost, if the following requirements are satisfied:• Assets are held based on a business model that requires them to be held to collect contractual cash flow•	Cash flow, made up solely of payment of the principal and interest on the balance of principal, is generated on a
specified day under the contractual terms of the financial asset.
Financial assets other than financial assets measured at amortized cost are classified as financial assets measured at fairvalue. Apart from equity instruments held for trading purposes, which must be measured at fair value through Profit or Loss,other equity instruments measured at fair value are designated as either being measured at fair value through Profit or Loss oralternatively measured at fair value through Other Comprehensive Income; this is done for each individual equity instrument
and the designation is continuously applied to the instrument thereafter.
(b) Subsequent measurement
Measurement after the initial recognition of financial assets is carried out as follows in accordance with the classification.
(i) Financial assets measured at amortized cost
Financial assets measured at amortized cost are measured at amortized cost using the effective interest method.
(ii) Financial assets measured at fair value
The fluctuation in the fair value of financial assets measured at fair value is recognized as net profit or loss.
However, any fluctuation in the fair value of equity financial instruments designated as instruments to be measured
at fair value through other comprehensive income, is recognized as other comprehensive income; and if recognition issuspended or if the fair value significantly drops, then it will be transferred to Retained earnings. Note that dividends
from the financial assets are recognized as net profit or loss as part of financial revenue.
(c) Impairment of financial assets
For financial assets measured at amortized cost, expected credit losses pertaining to the financial assets are recognized asallowances for doubtful accounts.
On each reporting date, the credit risk pertaining to each financial asset is evaluated to see if it has increased significantly
since initial recognition and, if it has, then the expected credit losses for the entire period will be recognized as an allowancefor doubtful accounts; whereas if it has not, then the expected credit losses for a 12-month period will be recognized as anallowance for doubtful accounts.
At the time of an evaluation, if the contractual payment due date has passed then, in principle, it will be assumed that thecredit risk has significantly increased; however, when the evaluation takes place, other information that can be reasonably
used and used as support will be taken into account.

— 79 —

However, trade receivables, etc., that do not include any major financial elements are always recognized as being anamount equivalent to expected credit loss for the entire period. If the issuer or debtor is in serious financial difficulties oris subject to a legal or formal business failure, then it will be judged that there has been a default on obligations. And if it isjudged that there has been a default on obligations, then the assets will be treated as credit-impaired financial assets.
Irrespective of the above, if it is reasonably judged that all or part of financial assets cannot be collected due to our legal
rights of claim being terminated or similar, then the book value of the financial assets will be directly amortized.
(d) 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.
(2) Non-derivative financial liabilities(a) Initial recognition and measurement
Corporate bonds and loans, etc., are initially recognized by the Group on their effective date; and other financial liabilities
are initially recognized on their transaction date. Financial liabilities are either classified as financial liabilities measured atfair value through profit or loss or financial liabilities measured at amortized cost, and this classification is determined at
the time of initial recognition. All financial liabilities are initially measured at fair value, but financial liabilities measured atamortized cost are measured using the amount obtained after deducting directly attributable transaction costs.
(b) Subsequent measurements
For measurements made after the initial recognition of a financial liability, any financial liabilities measured at fair value
through profit or loss include financial liabilities held for trading purposes and financial liabilities specified at the time ofinitial recognition as measured at fair value through profit or loss; and when these liabilities are measured at fair value after
initial recognition, any changes are recognized as profit or loss for the current period. Any financial liabilities measured
at amortized cost are measured after initial recognition at amortized cost using the effective interest method. Any gains
or losses made in the event of amortization using the effective interest method and the de-recognition of a liability arerecognized as profit or loss for the current period as part of finance expenses.
(c) 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.
(3) Presentation of financial assets and financial liabilities
The balance of financial assets and financial liabilities is offset on the consolidated statement of financial position and the
net amount is presented only in cases in which the Group has the right to legally enforce offsetting the balances and also
intends to settle the net amount, or realize assets and settle liabilities, at the same time.
(4) 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.

— 80 —

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 nature of
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
For gains and losses on hedges, effective portions are recognized as other comprehensive income on the consolidated
statement of comprehensive income, and non-effective portions are immediately recognized as net profit or loss on theConsolidated Statement of Income.
Amounts pertaining to hedges that are included as other comprehensive income are transferred to net profit or loss atthe point in time when the hedged trades have an impact on net profit or loss. If a transaction is planned that will generate
recognition of hedged assets or liabilities of a non-financial nature, then the amount that is recognized as other comprehensive
income is processed as a correction of the initial book value for 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.
E. 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.
F. 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 sell.
G. Property, plant and equipment (other than leased assets)(1) 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.
(2) 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

3–30 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.

— 81 —

H. Goodwill and intangible assets (other than leased assets)(1) 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 periods.
(2) 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 to 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.
I. 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.

— 82 —

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.
J. 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.
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 orloss for the period. Impairment losses recognized in relation to a CGU are first allocated to reduce the carrying amount of any
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 on
assets other than goodwill 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 theassumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal
is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amountthat would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
K. 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.
Provision is described below:
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 the time fromacquisition to the end of the useful life, and discount rates ranging between 0.00–1.00% are generally used in calculations.
— 83 —

L. Employee benefits(1) Defined contribution system
We have adopted a defined contribution pension plan for employees of the Company and certain subsidiaries.
The defined contribution pension plan is a post-retirement benefit plan in which the employer contributes a certain
amount of contributions to other independent companies and is not subject to legal or presumptive obligation on payment
beyond those contributions.
Contributions to the defined contribution pension plan are charged to expense during the period in which employees
provide services.
(2) Short-term employee benefits
For short-term employee benefits, no discount calculation is made and expenses are recorded when employees provide
related services.
For bonuses and paid leave expenses, we have legal or presumptive obligations to pay them and recognize as liabilities
the amount estimated to be paid based on those plans if reliable estimates are possible.
(3) 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 “30. 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 the number of stock options that will ultimately vest.
M. Revenue recognition
The Group recognizes revenue in accordance with IFRS 15 by applying the following five-step approach:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The Group, as a global clothing retailer, recognizes revenue when it satisfies its performance obligation by transferring thepromised goods to the customer. An asset is transferred when the customer obtains control of that asset. In addition, theGroup recognizes revenue at the amount of the promised consideration that the customer would pay in accordance with acontract, less the sum of discounts, rebates and refunds or credits.

— 84 —

N. Income taxes
Income taxes comprise current and deferred taxes and these are recognized in profit or loss, except 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.
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.
O. 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.

— 85 —

4. Newly applied standards and interpretation guidelines
The Group shall apply the written standards below, with effect from the current consolidated accounting year.
IFRS

Title

Summary

IFRS 9Financial Instruments

For the matters below, IFRS 9 has replaced IAS 39:
Classification, measurement, and impairment of financial assets
Classification and measurement of financial liabilities
Hedge accounting

IFRS 15

Revenue from Contracts with Customers

Revisions to accounting and disclosure of revenue recognition applied
to contracts with customers

In applying these standards, we have adopted the method of recognizing on the application start date the cumulative
impact of applying the standards that are acknowledged as interim measures. Application of the standards has no material
impact on items in the consolidated financial statements.
5. Issued but Not Yet Effective IFRS Not-yet-applied new standards and interpretation guidelines
New written standards and new interpretation to existing standards guidelines that were either newly established orrevised by the date the consolidated financial statements were approved, the main standards that the Company has notapplied, as of 31 August 2019, are stated below.

IFRS

Title

IFRS 16

LeasesIFRIC 23

Uncertainty over Income
Tax Treatments

Mandatory
adoption date(year beginning on)

The Group’s
adoption date

1 January 2019

Fiscal year
ending 31
August 2020

Amendments to accounting treatment for leave
arrangement

1 January 2019

Fiscal year
ending 31
August 2020

Clarifies the accounting for uncertainties in income tax.

Summary

IFRS 16 “Leases” replaces the former IAS 17 “Uncertainty over Income Tax Treatment” and the like. Applying this standard
requires that, in principle, a “right-of-use asset” representing the right to use the underlying asset over the term of thelease and a “lease liability” representing the obligation to pay lease charges are recognized in the consolidated statementof financial position for all leases, under a single accounting model; rather than the borrower’s leases being categorized as“finance leases” and “operating leases. Then, once right-of-use assets and lease liabilities have been recognized depreciation
expenses for the right-of-use assets and interest pertaining to lease liabilities are recognized in the consolidated statementof income.
On the date of adoption, the Group will recognize the cumulative impact of applying the standard as an adjustment to the
opening balance for retained earnings on 1 September 2019.
The main impact of applying this standard on the Group’s consolidated financial statements will be as follows: We
estimate that at the start of the fiscal year ending August 2020, the consolidated statement of financial position will see anincrease of approximately 310 billion yen in total assets; an increase of approximately 360 billion yen in total liabilities; and adecrease of approximately 50 billion yen in retained earnings. It should be noted that the amount of the impact is currently
being evaluated, so the actual amount might change.
The application of IFRIC 23 (Uncertainty over Income Tax Treatments) is expected to have no significant impact on the
Company.

— 86 —

6. Segment Information
A. Description of reportable segments
The Group’s reportable segments are components for which discrete financial information is available and 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 four reportable operating segments: UNIQLO Japan, UNIQLOInternational, GU 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 International:
GU:
Global Brands:

UNIQLO clothing business within Japan
UNIQLO clothing business outside of JapanGU brand clothing business in Japan and overseas
Theory, PLST,COMPTOIR DES COTONNIERS, PRINCESSE TAM.TAM, and J Brand clothing operations

B. Method of accounting for 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.
C. Segment information
Year ended 31 August 2018
(Millions of yen)
Reportable segments

Revenue
Operating profit/(losses)
Segment income/(losses)(i.e. profit before income taxes)
Other disclosure:
Depreciation and amortization
Impairment losses (Note 3)

Total

Others(Note1)

Consolidated
Adjustments
Statement of(Note2)
Profit or Loss

UNIQLOUNIQLOJapan
International
864,778
896,321
119,040
118,897

GU
211,831
11,774GlobalBrands154,464(4,115)

2,127,395
245,596

2,664
240

—
(9,624)2,130,060
236,212

119,685

119,172

11,572(4,248)

246,182

250(3,755)

242,678

9,448
415

18,693
944

5,463
268

3,137
9,962

36,744
11,590

12
—

8,298
785

45,055
12,376(Note 1) “Others” includes the real estate leasing business, etc.
(Note 2) “Adjustments” primarily includes revenue and corporate expenses which are not allocated to individual reportablesegments.
(Note 3) Details on the impairment losses are stated in note “15. Impairment losses”.

— 87 —

Year ended 31 August 2019
(Millions of yen)
Reportable segments

Revenue
Operating profit/(losses)
Segment income/(losses)(profit before income taxes)
Other disclosure:
Depreciation and amortization
Impairment losses (Note 3)

Others(Note1)

Total

Consolidated
Adjustments
Statement of(Note2)
Profit or Loss

UNIQLOUNIQLOJapan
International
872,957
1,026,032
102,474
138,904

GU
238,741
28,164GlobalBrands
149,939
3,685

2,287,671
273,228

2,877
122

—
(15,715)

2,290,548
257,636

101,393

139,624

27,9683,570

272,557

123(20,233)

252,447

10,357574

19,861
1,979

5,432
364

2,525
302

38,1773,220

11—10,287223

48,4763,444(Note 1) “Others” includes the real estate leasing business, etc.
(Note 2) “Adjustments” primarily includes revenue and corporate expenses which are not allocated to individual reportablesegments.
(Note 3) Details on the impairment losses are stated in note “15. Impairment losses”.
D. Geographic Information
Year ended 31 August 2018
(1) External Revenue(Millions of yen)
Japan

PRC
1,121,186

Overseas (Others)
346,873

Total

662,000

2,130,060(2) Non-current assets (excluding financial assets, investments in associates accounted for using the equity method anddeferred tax assets)(Millions of yen)Japan

United Statesof America

PRC
99,72026,804

Overseas (Others)

26,868

Total

61,469214,863

Year ended 31 August 2019(1) External revenue(Millions of yen)
Japan

PRC
1,152,661

Overseas (Others)
411,542

Total

726,3442,290,548(2) Non-current assets (excluding financial assets, investments in associates accounted for using the equity method anddeferred tax assets)(Millions of yen)Japan
124,482

United Statesof America

PRC
26,58825,639

7. Business Combination
Not applicable.

— 88 —

Overseas (Others)
61,454

Total
238,164

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 2018
Cash and bank balances
Money market funds (MMF), negotiable certificates ofdeposits
Total

As at
31 August 2019853,380

940,519

146,316

146,000

999,697

1,086,519

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 2018

As at
31 August 2019

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

46,008
—
7,256
(587)

51,064
4
9,863
(533)

Total

52,67760,398

See note “31. Financial Instruments” for credit risk management and the fair value of trade and other receivables.
The above classifications of financial assets are all financial assets measured at amortized cost.
The above Accounts receivable — trade and Notes receivable are mainly recognized as revenue at the time of delivery of
the clothing because the customer is deemed to have gained control of the clothing and the performance of obligations tohave been fulfilled upon delivery. The Group receives payment within a short period of time after fulfilling the performanceof obligations based on separately specified payment conditions. Because the period from fulfillment of the performanceobligations to receipt of consideration is normally within one year, the receivables are not adjusted as material financial
elements using the convention method.
10. Inventories
The breakdown of inventories as at each year end is as follows:(Millions of yen)
As at
31 August 2018
Products
Materials and supplies
Total(Note)As at
31 August 2019

460,751
4,036

404,6215,905

464,788

410,526

As at 31 August 2019, the Group had inventories attributable to UNIQLO Japan, UNIQLO International and GU
business segments amounting to 383,921 million yen, in aggregate.

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 2018
Write-down of inventories to net realizable value(Note)

Year ended
31 August 2019
4,254

7,215

As at 31 August 2019, the Group had write-down of inventories to net realizable value from UNIQLO Japan, UNIQLOInternational and GU business segments amounting to 4,928 million yen, in aggregate.
— 89 —

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 2018
Other financial assets:
Loans and receivables
Security deposits/guarantees
Bank deposits
OthersAllowance for doubtful accounts
Financial assets measured at amortized cost
Security deposits/guarantees
Bank deposits
OthersAllowance for doubtful accounts
Net fair value gain/(loss) on available-for-sales
financial assets during the year
StocksFinancial assets measured at fair value throughother comprehensive income
StocksTotal

As at
31 August 201961,75232,54918,160
(301)

–
–
–
–

–
–
–
–

62,39841,086
16,706
(337)

2,674

–

–

1,645

114,835

121,499

35,35979,47644,47377,026

Other current financial assets total
Other non-current financial assets total(Millions of yen)
As at
31 August 2018
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 2019544,502
128,509
1,513

513,405
144,099
1,450

674,526

658,955

171,854502,671

159,006
499,948

The issues and fair values of financial assets measured at fair value through other comprehensive income are as follows:(Millions of yen)
As at
31 August 2019

Issue(s)Crystal International Group Ltd.
Matsuoka Corporation

884
587

Stocks are principally held to strengthen medium-term relationships with strategic partners, and are therefore designated as
financial assets at fair value through other comprehensive income.
The Group sells off (derecognizes) equity instruments measured at fair value through other comprehensive income basedon the efficient utilization of assets and reviews of business relationships. In the current consolidated fiscal year, the Group
did not sell off any equity instruments measured at fair value through other comprehensive income.

— 90 —

Dividend income recognized in financial assets measured at fair value through other comprehensive income is as follows.
(Millions of yen)
As at
31 August 2019
Derecognized financial assets
Financial assets held at the end of the fiscal year—23

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 2018
Other assets:
Prepayments
Long-term prepayments
Others
Total
Current
Non-current

As at
31 August 201913,503
5,691
14,84916,036
7,149
4,650

34,04527,83628,353
5,691

19,975
7,861(Millions of yen)

As at
31 August 2018
Other liabilities:
Accruals
Employee benefits accruals
Others
Total
Current
Non-current

As at
31 August 2019
64,0896,348
18,97561,486
7,170
30,72889,41399,38572,722
16,69082,103
17,281

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)
Buildings
and structures

Furniture,equipment,
and vehicles

At 31 August 2017

231,612

46,139Additions
Disposals
Transfers
Effect of change inexchange rate

9,316
(4,412)
18,8858,380(6,606)
4,639(2,794)

(787)

—

(438)

(42)

(4,063)

At 31 August 2018

252,606

51,765

1,962

9,550

49,973365,858

Additions
Disposals
Transfers
Effect of change inexchange rate

5,999
(7,319)26,1801,364(1,679)
9,844

—
—
—

40,721(425)(37,637)

12,502(7,226)
1,611

60,587(16,650)—(10,982)(3,783)—(2,478)548(16,696)

At 31 August 2019

266,484

57,512

1,962

9,730

57,409393,099

Acquisition costs

Construction inprogress

Leased assets

1,962

6,824

31,455317,994———

28,242(2)(25,074)

31,922(14,911)
1,549

77,860(25,933)—

Land— 91 —Total

(Millions of yen)
Accumulated depreciationand impairment
At 31 August 2017
Depreciation provided
during the year
Impairment losses
Disposals
Effect of change inexchange rate
At 31 August 2018
Depreciation provided
during the year
Impairment losses
Disposals
Effect of change inexchange rate
At 31 August 2018

Buildings andstructures

Furniture,equipment, andvehicles(134,833)(32,381)(26,231)(2,029)3,029

Construction inprogress

Leased assets

(34)

—

(13,765)(181,015)(6,534)
(205)
878

—
—
—

—
—
—

(5,433)(99)
3,867(38,199)(2,335)
7,775

2,132

621

—

—

239

2,993

(157,933)(37,622)(34)—(15,191)(210,781)(23,919)(2,375)6,207(6,444)
(271)
1,551

—
—
—

—
—
—

(8,416)
(501)
5,760

(38,781)(3,148)13,519

6,842

2,378

—

—

(1,036)

8,099(171,178)(40,408)(34)—(19,385)(231,092)

Land

Total

(Millions of yen)
Net carrying amount

Furniture,
Buildings andequipment, andstructures
vehiclesLand

Construction in
Leased assets
progress

Total

At 31 August 2018

94,67314,143

1,927

9,550

34,782

155,077

At 31 August 201994,65917,076

1,927

10,40438,024

162,092(Note)

As at 31 August 2019, the Group had store assets attributable to UNIQLO Japan, UNIQLO International and GU
business segments amounting to 22,437 million yen, 76,976 million yen and 16,156 million yen, respectively.

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 2018

5,953

28,828—34,782

At 31 August 2019

6,705

30,916403

38,024

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

— 92 —

14. Goodwill and Intangible Assets
A. 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
assetsGoodwillandIntangible
assets total

Total

At 31 August 2017

43,17052,46021,42522,34896,234

139,404

External purchases
Disposals
Effect of change in exchange rate——
(3,429)19,082(1,643)
842

3
(0)
120

166
(310)
(30)

19,252(1,953)932

19,252(1,953)(2,497)

At 31 August 2018

39,74070,741

21,54922,174

114,465

154,206——(985)

24,401
(148)
(416)

0
—
(862)

1,301
(151)
(1,373)25,703(299)(2,652)25,703(299)(3,638)38,754

94,75820,686

21,950137,215

175,970

External purchases
Disposals
Effect of change in exchange rate
At 31 August 2019

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

Goodwill

SoftwareTrademarks

Otherintangible
assetsGoodwillandIntangible
assets total

Total

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

Amortization provided during the year
Impairment losses
Disposals
Effect of change in exchange rate—
(7,792)—(3,429)(6,727)
(174)
355
(387)

—
(1,657)
—
(90)

(129)
(415)
110
(9)

(6,856)(2,246)465(486)(6,856)(10,039)465
2,942

At 31 August 2018(31,647)(39,052)(13,653)(15,757)(68,463)(100,111)

—
—
—
985

(9,483)
(239)
15
109

—
—
—
540

(212)
(55)
117
572

(9,695)
(295)
132
1,222

(9,695)
(295)
132
2,208

(30,661)(48,649)(13,113)(15,335)(77,097)(107,759)

Amortization provided during the year
Impairment losses
Disposals
Effect of change in exchange rate
At 31 August 2019
(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

GoodwillandIntangible
assets total

At 31 August 2018

8,092

31,689

7,896

6,416

46,00254,094

At 31 August 2019

8,092

45,928

7,573

6,615

60,117

68,210— 93 —

B. Goodwill and intangible assets with indefinite useful lives
Goodwill and intangible assets recorded in the consolidated statement of financial position are primarily for goodwill
andtrademarks related to the Theory business.
Trademarks and certain other intangible assets will continue to be used as long as the business remains viable; therefore,
management estimated the useful lives as indefinite.
The carrying amount of the goodwill and intangible assets with indefinite useful lives by CGU is as follows:(Millions of yen)
Goodwill
Net carrying amountAt 31 August 2018
At 31 August 2019UNIQLOUNIQLOJapan International
—
—
—
—

GU
—
—

GlobalBrands8,092
8,092

Intangible assets with indefinite
useful lives
UNIQLOUNIQLO
GlobalGU
Japan International
Brands———13,601———
12,854

15. Impairment Losses
During the year ended 31 August 2019, the Group recognized impairment losses on certain store assets aetc., due toreductions in profitability of the respective CGU.
The breakdown of impairment losses by asset type is as follows:(Millions of yen)
Year ended
31 August 2018
Buildings and structures
Furniture and equipment
Leased assets (Note 1)
Subtotal impairment losses on property,
plant and equipment
Software
Goodwill
Trademark (Note 2)
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

Year ended
31 August 2019
2,029
205
99

2,375
271
501

2,335
174
7,792

3,148
239
—
—
55
295
―
0
3,444

1,657
415
10,0390012,376(Note 1) Leased assets include furniture and equipment.
(Note 2) 1,657 million yen represented impairment losses on the trademark of the Helmut Lang brand
The Group’s impairment losses during the year ended 31 August 2019 amounted to 3,444 million yen, compared with
12,376 million yen during the year ended 31 August 2018, and are included in “other expenses” on the consolidated statementof profit or loss.

— 94 —

Year ended 31 August 2018
(1) Property, plant and equipment
Out of total impairment losses amounting to 12,376 million yen, 1,725 million yen represented write downs of the carrying
amounts of store assets to the recoverable amounts, primarily due to a reduction in profitability of certain stores, including
flagship stores.
The grouping of assets is based on the smallest CGU that independently generates cash inflow. In principle, each store,
including flagship stores, is considered as an individual CGU and recoverable amounts thereon are calculated 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 7.5%. Theoretically, the projected cash flows cover a five-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 CGUs for which impairment losses were recorded are as follows:
Operating segment

CGU

Type

UNIQLO Japan

UNIQLO CO., LTD. stores

Buildings and structures

UNIQLO International

UNIQLO EUROPE LTD. etc., stores

Buildings and structures

GU

G.U. CO., LTD. etc., stores

Buildings and structures

Global Brands

COMPTOIR DES COTONNIERS S.A.S., etc stores

Buildings and structures(2) Goodwill and intangible assets, etc.
Impairment losses related to the COMPTOIR DES COTONNIERS businessOut of the total impairment losses amounting to 12,376 million yen, 7,792 million yen represented impairment losses
on goodwill, of the COMPTOIR DES COTONNIERS business. The carrying amounts of CGUs related to the COMPTOIR DES
COTONNIERS business after recognition of the impairment losses were written down to zero yen of goodwill.
The recoverable amounts from goodwill related to the COMPTOIR DES COTONNIERS business were calculated based on fairvalue less cost of disposal.
Fair value less costs of disposal is determined by taking into account the following two approaches:
The terminal value of the business plus the three year discounted cash flow projections were based on plans approved bymanagement.
The fair value measurement is calculated based on post-tax discount rate. The post-tax discount rate is calculated at 13.6%
based on the weighted-average cost of capital of the CGUs (income approach).
In addition, deviation from the amount of future cash flows or the predictions about the implementation timing is primarilyreflected in the discount rate. Furthermore, the cash flows beyond the 10-year period are extrapolated using a 1% growth ratetaking into account the long-term average market growth rate.
Year ended 31 August 2019(1) Property, plant and equipment
Out of total impairment losses amounting to 3,444 million yen, 3,148 million yen represented write downs of the carrying
amounts of store assets to the recoverable amounts, primarily due to a reduction in profitability of certain stores, including
flagship stores.
The grouping of assets is based on the smallest CGU that independently generates cash inflow. In principle, each store,
including flagship stores, is considered as an individual CGU and recoverable amounts thereon are calculated based on value inuse.

— 95 —

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 15.9%. Theoretically, the projected cash flows cover a five-year period, 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.
The main CGUs 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 EUROPE LTD., etc., stores

Buildings and structures

GU

G.U. CO., LTD., etc., stores

Buildings and structures

Global Brands

COMPTOIR DES COTONNIERS S.A.S, etc., stores

Buildings and structures(2) Goodwill and intangible assets, etc.
Not applicable.
16. Investments in Associates Accounted for Using the Equity Method
A. Information on associates accounted for using the equity method
Information on associates accounted for using the equity method is as follows:(Millions of yen)
Year ended
31 August 2018Year ended
31 August 2019

Share of profit and loss of associates accounted forusing the equity method

611

562

Share of other comprehensive income of investments
in associates accounted for using the equity method

—

(11)

Share of comprehensive income of investments
in associates accounted for using the equity method

611

551

14,64914,587

Carrying amount of investments in associates

B. Determination regarding significant influence and financial information on important associates
In June 2016, the Company invested in a domestic real estate investment trust 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 13,299 million yen. The Group’s share of profit and comprehensive income of the associates was
619 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 70,341 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 613 million yen from the associates during the year ended 31 August 2019.
The Group has entered into lease contracts with one of the associates relating to warehouse rental, etc.

— 96 —

17. Finance Lease Obligations
The breakdown of finance lease obligations is as follows:(Millions of yen)
Future minimum
lease payments
As at 31
August 2018
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 2019

As at 31
August 2018

As at 31
August 2019

8,565
23,5095,442

9,824
25,394
4,847

7,952
22,432
5,258

9,411
24,6984,615

37,51740,06635,64338,726

Deductions — future finance costs(1,873)(1,340)——Total net finance lease payables

35,64338,72635,64338,726

Current portion

—

—

7,952

9,411

Non-current portion——

27,69029,314The 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
A. 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 2018
Due within one year
Due after one year through five years
Due after five years
Total

As at
31 August 201949,129137,288
107,61783,877
155,022
105,988

294,034

344,888

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 2018Year ended
31 August 2019

Total minimum lease payments
Contingent rents

111,980
79,832

119,059
78,780Total

191,813

197,840

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.).

— 97 —

B. 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 2018
Due within one year
Due after one year through five years
Due after five years
Total

As at
31 August 2019
14
14
—

162
739
395

29

1,298

The total of contingent rents recorded as revenue during each reporting period is as follows:(Millions of yen)
Year ended
31 August 2018
Contingent rents

Year ended
31 August 2019
1,088

1,042

19. Deferred Taxes and Income Taxes
A. Deferred taxes
The main factors in the increase/(decrease) of deferred tax assets and deferred tax liabilities are as follows:(Millions of yen)
Recognized
Recognized
As at
in otherin profit or loss
1 September 2017
comprehensive(Note)
incomeTemporary differences
Accrued business tax
Accrued bonuses
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
OthersSubtotal

Recognizeddirectly inequityAs at
31 August 2018

1,228
3,685
163
3,549

713
562
(32)
616

—
—
—
—

—
—
—
—

1,942
4,247
130
4,165

(1)
7,632

—
487

(89)
—

—
—

(91)
8,120

(364)
(1,893)(6,527)
917

—
—
2,320
4,225

(7,485)
—
—
—

—
—
—
—

(7,849)(1,893)(4,206)
5,143

8,391

8,892

(7,574)—

9,708

Tax losses carried forward

6,911(3,245)

—

—

3,666

Net deferred tax assets/(liabilities)

15,303

5,646(7,574)—

13,374(Note)The difference between the total amount recognized in profit or loss and the amount of deferred tax is due to effect ofchange in exchange rate.

— 98 —

(Millions of yen)
Recognized
Recognized
As at
in otherin profit or loss
1 September 2018
comprehensive(Note)
incomeTemporary differences
Accrued business tax
Accrued for bonuses
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
OthersSubtotal

As at
31 August 2019

1,942
4,247
130
4,165

(122)
395
41
(301)

—
—
—
—

—
—
—
—

1,819
4,642
172
3,864

(91)
8,120

—
(717)

277
—

—

186
7,402

(7,849)(1,893)(4,206)
5,143

—
—
125
4,918

(1,877)
—
—
—

7,837
—
—
—

(1,889)(1,893)(4,081)
10,061

9,708

4,338

(1,600)

7,837

20,283

7,837

24,340Tax losses carried forward

3,666

390

—

Net deferred tax assets/(liabilities)

13,374

4,728(1,600)(Note)

Recognizeddirectly inequity4,056

The difference between the total amount recognized in profit or loss and the amount of deferred tax is due to effect ofchange in exchange rate.

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 2018
Unrecognized tax losses carried forward
Deductible temporary differences
Total

As at
31 August 201915,758
11,706

17,486
12,236

27,46529,723Tax 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 2018
First year
Second year
Third year
Fourth year
Fifth year and thereafter
Total

As at
31 August 2019
—
162
273
151
15,172

149
251
139
333
16,612

15,75817,486

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 2018 and 31 August 2019 were 354,468 million yen and
394,127 million yen, respectively.

— 99 —

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.
B. Income taxes(Millions of yen)
Year ended
31 August 2018
Current tax
Deferred tax
Total

Year ended
31 August 201978,234(4,929)80,666(6,265)73,30474,400Reconciliations 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.
(Millions of yen)
Year ended
31 August 2018Year ended
31 August 2019

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
Foreign withholding tax
Inhabitant tax on per capita basis
Others30.8%
1.1%(4.3)%
1.0%
0.6%
1.1%
0.2%
(0.3%)

30.6%
1.2%(4.5)%—(0.2)%
1.9%
0.1%
0.4%

Effective tax rate

30.2%

29.5%

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 2018
Trade payables
Notes payables
Other payables
Total

As at
31 August 2019

161,488—
53,054

127,194
18
64,556

214,542

191,769

21. Provisions
The breakdown of provisions as at each year end is as follows:(Millions of yen)
As at
31 August 2018
Asset retirement obligations
Total
Current liabilities
Non-current liabilities— 100 —As at
31 August 201930,78133,81430,78133,814

11,86818,912

13,34020,474

The primarily factors for the increase/ (decrease) in provision are as follows:(Millions of yen)
Asset retirement obligations
30,781
4,774(1,369)188(558)
33,814

Balances as at 31 August 2018
Additional provisions
Amounts utilized
Increase in discounted amounts arising from passage of time
OthersBalances as at 31 August 2019

Please refer to “3. Significant Accounting Policies (11) Provisions” for an explanation of respective provisions.
22. Equity and Other Equity Items
A. 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 2017
300,000,000
106,073,656
101,983,992
10,273
Increase/(decrease) (Note)——
35,792—
Balances as at 31 August 2018
300,000,000
106,073,656
102,019,784
10,273
Increase/(decrease) (Note)——
41,951—
Balances as at 31 August 2019
300,000,000
106,073,656
102,061,735
10,273(Note)

Capital surplus(Millions of yen)
14,373
3,901
18,2752,328
20,603The primarily factor for the increase/(decrease) in the number of shares in circulation was the increase/(decrease) in
the number of treasury stock as indicated below.

B. Treasury Stock and Capital Surplus(1)

Treasury Stock
Number of shares (Shares)
4,089,664
40(35,832)
4,053,872
40(41,991)
4,011,921

Balances as at 1 September 2017
Acquisition of treasury stock less than one unit
Exercise of stock options
Balances as at 31 August 2018
Acquisition of treasury stock less than one unit
Exercise of stock options
Balances as at 31 August 2019(2)

Amount (Millions of yen)
15,5631(136)
15,4292(159)
15,271

Capital surplus(Millions of yen)

4,578
—
—

Gain/(loss) on
disposalof treasury stock
3,754
1,169
—

—

Capital reserve
Balances as at 1 September 2016
Disposal of treasury stock
Share-based payments
Capital contributions from
non-controlling interests
Balances as at 31 August 2017
Disposal of treasury stock
Share-based payments
Capital contributions from
non-controlling interests
Balances as at 31 August 2018

Stock options

Others

Total

4,354
—
857

1,685
—
—

14,373
1,169
857

—

—

1,874

1,874

4,578
—
—

4,924
1,558
—

5,211
—
769

3,559
—
—

18,275
1,558
769

—

—

—

—

—

4,578

6,483

5,981

3,559

20,603

Please refer to “30. Share-based Payments” for details of share-based payments (stock options).
— 101 —

C. 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 2018Year ended
31 August 2019

Exchange differences on translation of foreign operations
Cash flow hedges

91
826(4,289)2,970

Other comprehensive income

917(1,318)

D. 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 2018
Amount of dividends(Millions of yen)

Resolutions

Dividends per share(Yen)

Board of Directors’ meeting held on 2 November 2017

17,847

175

Board of Directors’ meeting held on 12 April 2018

20,401200

Year ended 31 August 2019
Amount of dividends(Millions of yen)

Resolutions

Dividends per share(Yen)

Board of Directors’ meeting held on 2 November 2018

24,484

240

Board of Directors’ meeting held on 11 April 201824,492

240

Dividend which effective date is after fiscal 2019 is as follow:

Resolutions

Amount of dividends(Millions of yen)

Board of Directors’ meeting held on 5 November 201924,494

Dividends per share
(Yen)
240

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
A. The breakdown of revenue for each year is as follows:
The Group performs global retail clothing operations through both physical stores and e-commerce channels. The following isa breakdown of total revenue by major regional market operation.

— 102 —

Year ended 31 August 2019
Revenue(Millions of yen)
Japan
Greater China
Other parts of Asia & Oceania
North America & Europe

Percent of Total(%)

872,957
502,565
306,510
216,956

38.1
21.9
13.4
9.5

1,898,990

82.9

GU (Note 2)

238,741

10.4

Global Brands (Note 3)

149,939

6.5

UNIQLO (Note 1)

Others (Note 4)
Total

2,877

0.1

2,290,548

100.0(Note 1) Revenue is classified by nation or region based on customer location.
The designated countries and regions are classified as follows:
Greater China:
Mainland China, Hong Kong, Taiwan
Other parts of Asia & Oceania:
South Korea, Singapore, Malaysia, Thailand, the Philippines, Indonesia, Australia
North America & Europe:	United States of America, Canada, United Kingdom, France, Russia, Germany,
Belgium, Spain, Sweden, the Netherlands, Denmark(Note 2) Main national and regional market: Japan(Note 3) Main national and regional markets: North America, Europe, Japan(Note 4) The “Others” category includes real estate leasing operations.
B. Liabilities arising from contracts with customers are as stated below.
(Millions of yen)
Application start date
(1 September 2018)
Contractual liabilities
Advances received from customers
Refund liabilities

End of current consolidated
fiscal year (31 August 2019)

387
1,597

598
1,026

Consideration for anticipated refunds to customers is reasonably estimated and recognized as a refund liability.
In the consolidated statement of financial position, liabilities pertaining to advances received and refunds from customers
are included in “Other current liabilities.”
C. Transaction prices allocated to existing performance obligations
In the Group, there are no significant transactions for which the individual forecast contract period exceeds one year.
Therefore, the practical short-cut method is used, and information related to remaining performance obligations is omitted.
Furthermore, in the consideration arising from contracts with customers, there are no significant monetary amounts that are
not included in the transaction price.
D. Assets recognized from costs for acquiring or performing contracts with customers
In the Group, there are no assets recognized from costs for acquiring or performing contracts with customers.

— 103 —

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 2018
Selling, general and administrative expenses
Advertising and promotion
Rental expenses
Depreciation and amortization
Outsourcing
Salaries
Others
Total

Year ended
31 August 201970,310191,81345,05541,005285,105
164,186

74,436
197,840
48,47646,197
301,456
185,987

797,476

854,394

25. Other Income and Other Expenses
The breakdowns of other income and other expenses for each year are as follows:(Millions of yen)
Year ended
31 August 2018
Other income
Others
Total

Year ended
31 August 2019
3,385

4,533

3,385

4,533
(Millions of yen)

Year ended
31 August 2018Year ended
31 August 2019

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

1,450
1,176
12,376
5,241

6,020
650
3,444
2,510

Total

20,244

12,626*Currency adjustments incurred in the course of operating transactions are included in “other income” or “other expenses”.

— 104 —

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 2018
Finance income
Foreign exchange gains*
Interest income
Others
Total

Year ended
31 August 2019
2,132
7,545
15
9,693

—
12,202
90
12,293(Millions of yen)

Year ended
31 August 2018
Finance costs
Foreign exchange losses*
Interest expenses
Others
Total

Year ended
31 August 2019
―
3,169
58
3,228

13,1074,369
417,481*Currency adjustments incurred in the course of non-operating transactions are included in “finance income.”
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 2018
(Millions of yen)

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

Amount after
income taxes

Amount recorded
during the year

Reclassification
adjustment

Amount before
income taxes

65

58

124

(89)

34

(6,285)—(6,285)—(6,285)15,155
8,936

10,065
10,12325,221
19,059(7,485)(7,574)

17,735
11,484

Income taxes

Year ended 31 August 2019
(Millions of yen)

Items that will not be reclassified
subsequently to profit or loss
Financial assets measured
at fair value throughother comprehensive
income/(loss)
Total
Net gain/(loss) on revaluation ofavailable-for-sale investments
Exchange differences ontranslation of foreign
operations
Cash flow hedges
Share of other comprehensive
income of associates
Total
Total comprehensive income
for the year

Amount recorded
during the year

Reclassification
adjustment

Amount before
income taxes

Income taxes(1,012)—(1,012)

277

(734)

(1,012)—(1,012)

277

(734)

(33, 649)―(33,649)―(33,649)

15,146―15,146(3,748)

11,398

(11)

―

(11)

―

(11)

(18,513)―(18,513)(3,748)(22,262)(19,525)―(19,525)(3,471)(22,997)— 105 —

Amount after
income taxes

28. Earnings per ShareYear ended 31 August 2018Year ended 31 August 2019

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)

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)

8,458.52
1,517.71
1,515.23

9,196.61
1,593.20
1,590.55

Note: The basis for calculation of basic earnings per share and diluted earnings per share for the year is as follows:Year ended
31 August 2018
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 2019

154,811

162,578——

154,811

162,578

102,002,997

102,045,645—
167,434(167,434)—
169,956(169,956)

29. Cash Flow Information
A. Liabilities of financing activities
Liabilities of financing activities are as follows:Year ended 31 August 2018
(Millions of yen)
Variation without cash flow

Short-term borrowings
Long-term borrowings
Corporate bonds
Lease obligations
Total

Balances as at
1 September 2017

Variation withcash flow

Foreign currencytranslation
reserve758
12,146
249,583
19,023170(3,308)249,319(5,918)

(41)
92
—
14

66
(44)
116
22,524954
8,884
499,020
35,643

281,512240,26265

22,662544,502

OthersBalances as at
31 August 2018Year ended 31 August 2019
(Millions of yen)
Variation without cash flow

Short-term borrowings
Long-term borrowings
Corporate bonds
Lease obligations
Total(Note)

Balances as at
1 September 2018

Variation withcash flow

Foreign currencytranslation
reserve

954
8,884
499,020
35,643355(4,433)(30,000)(11,377)

(73)
(192)
—
(192)

—
—
163
14,653

1,236
4,258
469,183
38,726544,502(45,455)(458)

14,816

513,405

OthersBalances as at
31 August 201930,000 million yen in 1st non-collateralized corporate bonds (interest rate: 0.110%; date of maturity: 18 December2018) have been redeemed.
— 106 —

B. Information on corporate bonds as at 31 August 2018 and 2019 is as follows:(Millions of yen)
As at
31 August
2018

As at
31 August
2019

Name of bonds

Date ofissuance

FAST RETAILING CO., LTD.

1st non-collateralized
corporate bonds

18 December
2015

29,995—0.110

18 December
2018

FAST RETAILING CO., LTD.

2nd non-collateralized
corporate bonds

18 December
2015

99,90999,9490.291

18 December
2020

FAST RETAILING CO., LTD.

3rd non-collateralized
corporate bonds

18 December
2015

49,92049,9390.491

16 December
2022

FAST RETAILING CO., LTD.

4th non-collateralized
corporate bonds

18 December
2015

69,85569,8750.749

18 December
2025

FAST RETAILING CO., LTD.

5th non-collateralized
corporate bonds

6 June 2018

79,84579,8770.110

6 June 2023

FAST RETAILING CO., LTD.

6th non-collateralized
corporate bonds

6 June 2018

29,91929,931

0.220

6 June 2025

FAST RETAILING CO., LTD.

7th non-collateralized
corporate bonds

6 June 2018

99,73199,7580.405

6 June 2028

FAST RETAILING CO., LTD.

8th non-collateralized
corporate bonds

6 June 2018

39,84339,851

0.880

4 June 2038

Total

—

—

499,020

469,183—

Company nameInterest
rate (%)

Date ofmaturity—

30. 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.
A. 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 grantees

Employees of the Company:
Employees of Groupsubsidiaries:

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 November 2013)
after the grant date
(8 November 2010)

To serve continuously until thevesting date (7 December 2010)
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— 107 —

7 Employees of the Company:
Employees of Group
3 subsidiaries
:

266
413

2nd share subscription rights
A typeCategory and number of grantees

Employees of the Company :Employees of Groupsubsidiaries:

2nd share subscription rights
B type14 Employees of the Company :Employees of Group
4 subsidiaries
:

139
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 grantees

Employees of the Company :Employees of Groupsubsidiaries:

Number of stock options by type of shares (Note)

Common stock:maximum 10,793 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 type18 Employees of the Company :Employees of Group
8 subsidiaries
:

136
615

Common stock:maximum 39,673 shares

4th share subscription rights
B typeCategory and number of grantees

Employees of the Company :Employees of Groupsubsidiaries:

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— 108 —

19 Employees of the Company :Employees of Group
11 subsidiaries
:

180
706

5th share subscription rights
A typeCategory and number of grantees

Employees of the Company :Employees of Groupsubsidiaries:

5th share subscription rights
B type36 Employees of the Company:
Employees of Group
16 subsidiaries
:

223
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 grantees

Employees of the Company :Employees of Groupsubsidiaries:

15 Employees of the Company :Employees of Group
19 subsidiaries:

274

Number of stock options by type of shares (Note)

Common stock:maximum 2,847 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

921

Common stock:maximum 25,389 shares

6th share subscription rights
C type7th share subscription rights
A typeEmployees of the Company :26 Employees of Groupsubsidiaries:

16

Category and number of grantees

Employees of the Company :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— 109 —

23

7th share subscription rights
B type7th share subscription rights
C typeCategory and number of grantees

Employees of the Company : 339
Employees of the Group
Employees of the Company: 30
subsidiaries: 1,096

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

8th share subscription rights
A type8th share subscription rights
B typeCategory and number of grantees

Employees of the Company:
Employees of Groupsubsidiaries:

19 Employees of the Company: 395
Employees of Group
27 subsidiaries:
1,152

Number of stock options by type of shares (Note)

Common stock:maximum 5,454 shares

Common stock:maximum 48,178 shares

Grant date

10 November 2017

10 November 2017

Vesting conditions

To serve continuously until thevesting date (9 November 2020)
after the grant date
(10 November 2017)

To serve continuously until thevesting date (9 December 2017)
after the grant date
(10 November 2017)

Eligible service period

From 10 November 2017 to
9 November 2020

From 10 November 2017 to
9 December 2017

Exercise period

From 10 November 2020 to
9 November 2027

From 10 December 2017 to
9 November 2027

Settlement

Equity settlement

Equity settlement

8th share subscription rights
C type9th share subscription rights
A typeEmployees of the Company :29 Employees of Groupsubsidiaries:

17

Category and number of grantees

Employees of the Company :Number of stock options by type of shares (Note)

Common stock:maximum 5,929 shares

Common stock:maximum 4,057 shares

Grant date

10 November 2017

9 November 2018

Vesting conditions

To serve continuously until thevesting date (9 November 2020)
after the grant date
(10 November 2017)

To serve continuously until thevesting date (9 November 2018)
after the grant date
(8 November 2021)

Eligible service period

From 10 November 2017 to
9 November 2020

From 9 November 2018 to
8 November 2021

Exercise period

10 November 2020

From 9 November 2021 to
8 November 2028

Settlement

Equity settlement

Equity settlement— 110 —

32

9th share subscription rights
B type9th share subscription rights
C typeCategory and number of grantees

Employees of the Company : 419
Employees of Group
Employees of the Company :subsidiaries: 1,267

Number of stock options by type of shares (Note)

Common stock:maximum 36,275 shares

Common stock:maximum 4,733 shares

Grant date

9 November 2018

9 November 2018

Vesting conditions

To serve continuously until thevesting date (9 November 2018)
after the grant date
(8 December 2018)

To serve continuously until thevesting date (9 November 2018)
after the grant date
(8 November 2021)

Eligible service period

From 9 November 2018 to
8 December 2018

From 9 November 2018 to
8 November 2021

Exercise period

From 9 December 2018 to
9 November 2028

9 November 2021

Settlement

Equity settlement

Equity settlement40

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 2018Year ended
31 August 2019

Expenses recognized
Share-based payments

2,188

2,504

(2) Scale of stock options program and changes
Outstanding balance of stock options as at 31 August 2019 are converted into equivalent number of shares.
(a) Number and weighted average exercise prices of stock options
Stock options
Year ended
31 August 2018Year ended
31 August 2019

Number of shares(Shares)Number of shares(Shares)Non-vested
Non-vested at beginning of the year
GrantedForfeited
Vested30,12026,45559,561(793)(62,433)

45,065(2,031)(43,971)

Non-vested at end of the year

26,45525,518Year ended
31 August 2018Year ended
31 August 2019

Number of shares(Shares)Number of shares(Shares)

VestedOutstanding at beginning of the year
VestedExercised
Forfeited

116,373

142,483

62,433(35,832)(491)

43,971(41,991)(1,230)

Outstanding at end of the year

142,483

143,233

All stock options are granted with an exercise price of 1 yen per share.
— 111 —

(b) Stock price on exercise date
Stock options exercised during the year ended 31 August 2019 are as follows:
Number of shares(Shares)

Type
Stock options

Weighted-average stock priceon exercise date (Yen)

41,991

57,952(c) Expected life of stock options
The weighted-average expected life of outstanding stock options as at 31 August 2019 was 5.83 years.
In addition, the weighted-average expected life of outstanding stock options as at 31 August 2018 was 5.96 years.
B. Methods of estimating fair value of stock options, etc.
The methods of estimating fair value of 9th share subscription rights A type, B type, and C type granted during the year
ended 31 August 2019, were as follows:(1)(2)

Valuation model: Black-Scholes model
The following table lists the inputs to the model used:
9th share subscription rights
A type9th share subscription rights
B typeFair value

58,275 yen

58,891 yen

Share price

61,070 yen

61,070 yen

Exercise price

1 yen

1 yen

Stock price volatility (Note 1)

34%

34%

Expected life of options (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)

6.5 years

5.04 years

440 yen/share

440 yen/share(0.04%)(0.075%)9th share subscription rights
C typeFair value

59,763 yen

Share price

61,070 yen

Exercise price

1 yen

Stock price volatility (Note 1)

36%

Expected life of options (Note 2)

3 years

Expected dividends (Note 3)

440 yen/share yen/share

Risk-free interest rate (Note 4)
Notes:

1.

2.
3.
4.
5.

(0.11%)

Stock price volatility is computed based on the actual results of 6.5 years for A type (from May 2012 to October
2018), 5.04 years for B type (from November 2013 to October 2018), and 3.0 years for C type (from November
2015 to October 2018).
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.
The variables and assumptions used in computing the fair value of the share options are based on the Group’s
best estimate. The value of an option varies with different variables of certain subjective assumptions.

— 112 —

Also, the method of estimating fair value for the ‘8th share subscription rights A type, B type, and C type granted during theyear ended 31 August 2018 is as follows:(1)(2)

Valuation model: Black-Scholes model
The following table lists the inputs in the model used:

Fair value
Share price
Exercise price
Stock price volatility (Note 1)
Expected life of options (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)

8th share subscription rights
A type37,648 yen
39,860 yen
1 yen
34%
6.5 years
350 yen/share(0.095%)8th share subscription rights
C type38,823 yen
39,860 yen
1 yen
37%
3.0 years
350 yen/share(0.17%)

Fair value
Share price
Exercise price
Stock price volatility (Note 1)
Expected life of options (Note 2)
Expected dividends (Note 3)
Risk-free interest rate (Note 4)
Notes:

1.

2.
3.
4.
5.

8th share subscription rights
B type38,133 yen
39,860 yen
1 yen
36%
5.04 years
350 yen/share(0.14%)

Stock price volatility is computed based on the actual results of 6.5 years for A type (from May 2011 to October
2017), 5.04 years for B type (from November 2012 to October 2017), and 3 years for C type (from November
2014 to October 2017).
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.
The variables and assumptions used in computing the fair value of the share options are based on the Group’s
best estimate. The value of an option varies with different variables of certain subjective assumptions.

C. 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.
31. Financial Instruments
A. 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 2018544,502
999,697(455,194)
902,777

Interest-bearing borrowings
Cash and cash equivalents
Net interest-bearing borrowings
EquityAs at
31 August 2019
513,405
1,086,519(573,114)
983,534

To maximize corporate value, the Group engages in cash flow-oriented management. As at 31 August 2018 and 2019, theGroup maintained a position where the carrying amount of cash and cash equivalents exceeded interest-bearing borrowings.
As at 31 August 2019, the Group is not subject to any externally imposed capital requirement.

— 113 —

B. 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.
C. Categories of financial instruments(Millions of yen)
As at
31 August 2018
Financial assets
Loans and receivables
Trade and other receivables
Other current financial assets
Other non-current financial assets
Available-for-sale investments
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through othercomprehensive income/(loss)
Derivatives
Financial assets measured at fair value through profit or loss
Financial assets 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 measured at fair value throughprofit or loss
Financial liabilities designated as hedging instruments

As at
31 August 201952,67735,35976,801
2,674―

60,39844,47375,380
―
―

―

1,645

141
35,377―
24,230214,542
171,854502,671

191,769
159,006
499,948

4

―

6,913

6,824

No items in the above categories are included in discontinued operations or disposal groups 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.”D. Financial risk management
In relation to cash management, the Group seeks to ensure effective utilization of Group funds through the Group’s CashManagement Service. 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.

— 114 —

E. 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.
(1) Foreign currency risk(a) 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 monthly 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 1,195,845 million yen as at 31 August 2019.
(b) Foreign currency sensitivity analysis
With respect to companies that use Japanese yen as the functional currency in each reporting period, below is an analysis of
the impact an 1% increase in the yen against the Euro (“EUR”) and the United States dollar (“USD”) would have on the Group’s
profit for the year and other comprehensive income.
However, this analysis assumes that over variable factors are constant. Furthermore, this does not include the effect ofconversion of financial instruments denominated the functional currencies, and revenue, expenses, assets, and liabilities ofoverseas sales entities into presentation currency.
Year ended
31 August 2018
Average exchange rate (Yen)
USD
EUR
Impact on profit for the year (Millions of yen)
USD
EUR
Impact on other comprehensive income (Millions of yen)
USD
EUR

Year ended
31 August 2019110.30131.45110.83126.09(4,056)(444)(3,189)(224)(10,399)—(10,862)(96)(c) 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.
The monetary value of ineffective hedges is immaterial.

— 115 —

The details of foreign currency forward contract are as follows:(i) Derivative transactions to which hedge accounting is not applied
Average exchange
31 August
2018
Foreign currency forward contracts
Within 1 year
30.84
Buy USD (sell TWD)
(TWD/$)
1.32
Buy USD (sell AUD)
(AUD/$)

31 August
2019—(TWD/$)—(AUD/$)

Foreign currencies(Millions ofrespective currency)
31 August
31 August
2018
2019

Contract principal(Millions of yen)

Fair value(Millions of yen)

31 August2018

31 August2019

31 August2018

31 August
2019

10

—

1,144

—

50

—

19

—

2,020

—

86

—

(ii) Derivative transactions to which hedge accounting is applied
Average exchange rates
31 August
2018
Foreign currency forward contracts
Over 1 year
101.89
Buy USD (sell JPY)
(\/$)
0.81
Buy USD (sell EUR)
(€/$)
0.81
Buy USD (sell GBP)(£/$)
1,095.27
Buy USD (sell KRW)
(KRW/$)
1.36
Buy USD (sell SGD)
(SGD/$)
32.67
Buy USD (sell THB)
(THB/$)
54.94
Buy USD (sell PHP)
(PHP/$)
63.22
Buy USD (sell RUB)
(RUB/$)
1.34
Buy USD (sell CAD)
(CAD/$)
1.32
Buy USD (sell AUD)
(AUD/$)―
Buy USD (sell HKD)
(HKD/$)

31 August2019
101.88
(\/$)
0.83
(€/$)
0.75
(£/$)
1,106.57(KRW/$)
1.36(SGD/$)
31.39(THB/$)
53.31(PHP/$)―(RUB/$)
1.31(CAD/$)
1.39(AUD/$)
7.80(HKD/$)

Foreign currencies(Millions ofrespective currency)
31 August
31 August
2018
2019

Contract principal(Millions of yen)

Fair value(Millions of yen)

31 August2018

31 August2019

31 August2018

31 August
2019

6,368

6,425

648,881654,561

16,755

1,862

67

233

7,073

22,860

120

1,088

30

70

3,174

6,200

125

501

771

285

84,381

27,788

(387)

2,063

97

18

10,724

1,960

(8)

30

11

9

1,317

980

(15)

(29)

10

14

1,165

1,522

(9)

(8)

0

―

6

―

0

―

2

12

252

1,260

4

16

11

13

1,169

1,325

50

78

―

1

―

105

―

0

— 116 —

Average exchange rates

Within 1 year
Buy USD (sell JPY)
Buy USD (sell EUR)
Buy USD (sell GBP)
Buy USD (sell KRW)
Buy USD (sell TWD)
Buy USD (sell SGD)
Buy USD (sell THB)
Buy USD (sell MYR)
Buy USD (sell AUD)
Buy USD (sell RUB)
Buy USD (sell CAD)
Buy USD (sell IDR)
Buy USD (sell PHP)
Buy USD (sell INR)
Buy USD (sell HKD)
Buy EUR (sell USD)
Buy GBP (sell USD)

31 August2018

31 August2019

106.35
(¥/$)
0.85
(€/$)
0.83
(£/$)
1,085.98(KRW/$)
29.47(TWD/$)
1.36(SGD/$)
32.35(THB/$)
4.04(MYR/$)
1.32(AUD/$)
62.99(RUB/$)
1.27(CAD/$)
14,903.68(IDR/$)
53.09(PHP/$)―(INR/$)―(HKD/$)―($/EUR)―($/GBP)

103.16
(¥/$)
0.84
(€/$)
0.75
(£/$)
1,081.73(KRW/$)
30.47(TWD/$)
1.35(SGD/$)
31.72(THB/$)
4.19(MYR/$)
1.39(AUD/$)
68.12(RUB/$)
1.31(CAD/$)
14,933.81(IDR/$)
54.31(PHP/$)
72($/INR)
7.81(HKD/$)
1.20($/EUR)
1.25($/GBP)

Foreign currencies(Millions ofrespective currency)
31 August
31 August
2018
2019

Contract principal(Millions of yen)

Fair value(Millions of yen)

31 August2018

31 August2019

31 August2018

31 August
2019

3,520

3,097

374,386

319,510

9,989

4,967

159

259

17,44625,584

27

1,943

62

97

6,762

8,547

166

702

45

424

4,928

40,407

65

4,657

71

45

7,627

4,701

280

138

167

77

18,492

8,017

163

184

81

90

8,948

9,993

66

(372)

53

71

5,788

7,603

55

86

29

61

3,147

6,062

135

414

54

63

5,613

6,938

500

(53)

45

56

4,925

5,926

78

98

3

62

339

6,944

(0)

(223)

61

96

6,769

10,714

101

(354)

―

2

―

319

―

4

―

84

―

8,937

―

34

―

44

―

6,269

―

(414)

―

5

―

799

―

(10)

(2) 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.
(3) 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.

— 117 —

F. 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.
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.
Year ended August 31 2018
(1) 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

1,198

318

224

Balances as at 31 August 2018
Trade and other receivables(total)Allowance for doubtful accounts

53,264

51,523

(587)

(388)

(9)

(43)

(145)

Trade and other receivables (net)52,677

51,135

1,189

274

78

Other financial assets (total)
Allowance for doubtful accounts

115,137(301)

115,127
(301)

9
—

—
—

—
—

Other financial assets (net)

114,835

114,825

9——The Group does not hold any collateral or other credit enhancements associated with the above financial assets.
(2) Allowance for doubtful accounts
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.

— 118 —

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 2017

661

267

929

Provision for the year
Decrease (intended purposes)
Others

173
(249)
1

46
(14)
3

220
(264)
4

Balances as at 31 August 2018

587

301

889

Total

Where recoverability is uncertain, the Group conducts ongoing monitoring of the credit status of companies with which itdoes business, including receivables whose maturity dates have 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.
Year ended 31 August 2019(1) Credit risk exposure
Time-frame analysis for trade receivables and other financial assets is as stated below.
(Millions of yen)
Items measured in an amount equivalent to the
expected credit losses for the entire period

Number of days elapsed
after due date

Items recorded
in an amountequivalent to
12 months of
expected credit
losses

Before due date has elapsed

Financial assets
for which theallowance
Financial assets
for doubtful
for which theaccounts iscredit risk has
Credit-impaired
always measured
significantly
financial assets
as an amountincreased sinceequivalent toinitial recognition
expected losses
for the whole
periodTotal

129,596

49,977

77―

179,651

Within 90 days

23

603

―

―

627

Over 90 days but within
one year

11

212

―

―

224

Over one year
Term-end balance

13

275

43

296

619

129,645

51,069121

296

181,123— 119 —

(2) Allowances for Doubtful Accounts
Changes in allowances for doubtful accounts for trade receivables and other financial assets are as stated below.
(Millions of yen)
Items measured in an amount equivalent to the
expected credit losses for the entire period

Changes in allowances for
doubtful accounts

Financial assets
for which theallowance
Items recorded
Financial assets
for doubtful
in an amountfor which theaccounts is
equivalent tocredit risk has
Credit-impaired
always measured
12 months ofsignificantly
financial assets
as an amount
expected credit
increased sinceequivalent tolossesinitial recognition
expected losses
for the whole
periodTotal

Starting balance

64

551

―

273

889

Increase during period

92

148

40

―

281

Decrease during period(intended use)

―

(155)

―

―

(155)

Decrease during period(reversals )

(33)

(25)

―

―

(59)

Other changes
Term-end balance

(4)

(47)

―

(32)

(84)

117

471

40

241

871

The Group continually monitors the credit standing of trading partners if there is a concern about recoverability, including
receivables for which the due date has changed.
Based on the monitoring of the credit standing, the recoverability of accounts receivable, etc., is examined and the allowancefor doubtful accounts is set.
In relation to the Group’s global business expansion, there is little reliance on any specific trading partners and exposure isdispersed, so the impact of any sequential credit risk due to the poor credit standing of any specific trading partner is minimal.
As a result, we have no exposure to excessively-focused credit risk.

— 120 —

G. 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 2018
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
Deposits
Derivative financial liabilities
Foreign currency forward
contracts
Total
As at 31 August 2019Non-derivative financial
liabilities
Trade and other payables
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)(Millions of yen)More than More than More thanOver
2 years but 3 years but 4 years but
within5 years
withinwithin5 years
4 years
3 years

Carrying
amountContractual
cash flows

Less than
1 year1 to 2
years

214,542

214,542

214,542

—

—

—

—

—

4,442

4,442

—

4,442

—

—

—

—

4,442

4,442

4,442

—

—

—

—

—

954
499,020954
500,000

954
30,000———100,000———
130,000—
240,000

27,69027,690

—

7,454

6,455

5,498

3,023

5,258

7,952

7,952

7,952

—

—

—

—

—

128,509

128,509

128,509

—

—

—

—

6,917

6,917

5,104

558

1,254

894,473895,453

391,506

12,455

107,710

191,769

191,769

191,769

—

4,258

4,258

4,258

1,236
469,183

1,236
470,000

29,314

—

—

5,498

133,023

245,258

—

—

—

—

—

—

—

—

—

1,236
—

—
100,000———
130,000———
240,000

29,314

—

8,596

7,703

5,571

2,287

4,615

9,411

9,411

9,411

—

—

—

—

—

144,099

144,099

144,099

—

—

—

—

—

6,824

6,824

2,985

2,127

1,711

—

—

—

856,098

856,915353,762

110,723

9,414

135,571

2,827

244,615

Guaranteed obligations are not included in the above, as the probability of having to act on those guarantees isremote.

— 121 —

H. Fair value of financial instruments(Millions of yen)
As at 31 August 2018
Carrying amounts

As at 31 August 2019

Fair value

Carrying amounts

Fair value

Financial assets
Security deposits/guarantees (Note)

61,75262,25362,39863,982

Total

61,75262,25362,39863,982Financial liabilities
Long-term borrowings (Note)
Corporate bonds (Note)
Lease obligations (Note)

8,884
499,020
35,6438,924
500,73136,807

4,258
469,183
38,726

4,258
478,638
38,595

Total

543,548

546,464

512,168

521,492(Note)

The above includes the outstanding balance of borrowings due within one year.

Notes concerning financial assets and financial liabilities for which fair value approximates book value have been omitted.
The fair value of security deposits/guarantees is calculated on the basis of the current value, applying the current market
interest rate.
The fair value of corporate bonds is calculated with reference to publicly available market prices.
The fair value of long-term borrowings and finance lease obligations are classified by term, and are calculated on the basis of
the current value, applying a discount rate that takes into the account time remaining to maturity, and credit risk.
The fair value measurements of Security deposits / guarantees, corporate bonds and long-term borrowings are classified aslevel 2.
I. 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
When multiple inputs are used to measure fair value, the fair value level is determined based on the input with the lowest
level classification in the overall fair value assessment.

— 122 —

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:(Millions of yen)
As at 31 August 2018

Level 1

Available-for-salefinancial assets
Financial assets/(liabilities)at FVTPL
Foreign currency forward
contracts designated as
hedging instruments
Net amountAs at 31 August 2019
Net gain/(loss) on revaluation ofavailable-for-sale investments
Financial assets/(liabilities) at FVTPL
Foreign currency forward
contracts designated as
hedging instruments
Net amount

Level 2

Level 3

Total

2,513

—

—

2,513

—

136

—

136

—

28,464—28,4642,513

28,601—

31,114

Level 1

Level 2

Level 3

Total

1,471

—

173

1,645

—

—

—

—

—

17,406—

17,406

1,471

17,406173

19,051For the valuation of Level 2 derivative financial instruments for which a market value is available, we use a valuation modelthat uses observable data on the measurement date using inputs such as interest rates, yield curves, currency rates, andvolatility in comparable instruments.
Financial instruments classified as Level 3 consist mainly of unlisted shares. The fair values of unlisted shares are measured by
the division responsible in the Group according to the Group’s accounting policy, etc., using the immediately preceding figuresavailable for each quarter.
There were no significant changes due to the purchase, sale, issuance and settlement of Level 3 financial instruments, and notransfers between Levels 1, 2 and 3.
32. 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 2018Year ended
31 August 2019

Short-term employee benefits

450

719

Total

450

719

Transactions with officers and major shareholders (individuals only), etc. of the reporting entity submitting these consolidated
financial statements.

— 123 —

Year ended 31 August 2018 (from 1 September 2017 to 31 August 2018)

Name ofCategory company orindividual

Officer

Notes:

1.
2.
		

Toru
Murayama

Location—

Capitalstock orinvestment(Millions ofyen)

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 August
2018(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.

Current consolidated accounting year (From 1 September 2018, through 31 August 2019)
CapitalPercentage
Stock orof voting Relation with
Business
Transaction
Money
Content or right, etc. AssociatedType
Location
Details
InvestedParty
Occupation held (being(Millions of
held)
yen)
Rent of store
Company
properties
in whichby ourofficers
Assetssubsidiary
5.2% areTTY
and close
Amsterdam,
holdings,
Store renting
directly
71,826
relatives Management
managing,
HollandServesheld
B.V.
hold aetc.
concurrently
majority
as an officerof votingrightsName ofCompany,
etc., orpersonal
nameNotes:

Transaction
Amount(millions of
yen)

Item

Term-end
Balance(millions of
yen)

337

Other
current
assets56

1.
Of the above-mentioned amounts, any trade amounts do not include consumption taxes and the like.
2.	Trading conditions and policy for determining trading conditions, etc.
		
Related party transactions were made on terms equivalent to those that prevail in arm’s length transactions.
3.
Chairman of the Board of Directors and President Tadashi Yanai holds a majority of the voting rights.

— 124 —

33. Major Subsidiaries
The Group’s major subsidiaries are as listed in “3.Corporate Profile 3. Subsidiaries and Associates.”
34. Commitments
The Group had the following commitments at each reporting date:(Millions of yen)
As at
31 August 2018
Commitment for the acquisition of property,
plant and equipment
Commitment for acquisition of intangible assets

As at
31 August 2019
10,046

Total

7,382

1,461

4,340

11,508

11,72335. Contingent Liabilities
Year ended 31 August 2018
Not applicableYear ended 31 August 2019
Not applicable
36. Subsequent Events
Not applicable
E. Others
Quarterly information for the year ended 31 August 2019
(Cumulative)

First quarter

Second quarter

Third quarter

Fiscal year

Revenue (Millions of yen)

644,466

1,267,697

1,822,877

2,290,548

Quarterly income before
income taxes and noncontrollinginterests (Millions of yen)

111,086

174,214247,211

252,447

Quarterly net income(Millions of yen)

73,476

120,920

158,668

162,578

Earnings per share(Yen)

720.16

1,117.54

1,554.94

1,593.20(Accounting period)
Quarterly earnings/(losses)
per share (Yen)First quarter

Second quarter

720.16397.40— 125 —

Third quarter
437.41

Fourth quarter
38.32

10. Financial statements(1) Balance Sheet(Millions of yen)
As at 31 August 2018ASSETS
Current assets
Cash and deposits
Operating accounts receivable
Securities
Short-term loans receivable from subsidiaries andassociates
Accounts receivable from subsidiaries and associates
Others

As at 31 August 2019536,837*1 19,946
146,304

551,376
48,268146,000

Allowance for doubtful accounts

120,886
22,3053,902(32)

103,198
17,271
4,670(0)Total current assets

850,149

870,786

12,583

14,745(6,361)(7,431)

6,221

7,313

Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation*3

Buildings, net
Structures
Accumulated depreciation

*3

*3

118
1,804

(1,455)(1,532)

184

272

1,123
1,281

1,123
1,284

(390)

(632)

890

652

Land
Leased assets
Accumulated depreciation

(249)

127

Tools, furniture and fixtures, net*3Leased assets, net

367

(237)
1,639

Structures, net
Tools, furniture and fixtures
Accumulated depreciation

364

351

4,432

8,899

13,914

Others25,343
3,966
61

29,03913,81460

Total intangible assets

29,37142,914

2,656
70,5799,936

1,633
87,002
10,406

Allowance for doubtful accounts

17,740
6,383
1,980
1,777
(6,061)

17,261
7,714
3,384
792
(1,051)

Total investments and other assets

104,993

127,142

Construction in progress
Total property, plant and equipment
Intangible assets
Software
Software in progress

Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital of subsidiaries and associates
Long-term loans receivable from subsidiaries andassociates
Leases and guarantee deposits
Deferred tax assets
OthersTotal non-current assets
Total assets— 126 —

143,264

183,971993,413

1,054,758

(Millions of yen)
As at 31 August 2018
LIABILITIESCurrent liabilities
Current portion of corporate bonds
Accounts payable
Accrued expenses
Deposits received
Provision for bonuses
Income taxes payable

As at 31 August 2019

Others29,986
10,964
1,297*1 8,162
2,440
749
1,457

—
11,032
1,813
33,581
2,676
5,836
1,973

Total current liabilities

55,05856,914470,013
2,277
330
—
2,503

470,000
2,247
204
422
3,262

Non-current liabilities
Corporate bonds payable
Guarantee deposits received
Provision for loss on guarantees
Provision for loss on business of subsidiaries and associates
Others475,125

476,137

530,184

533,051

10,273

10,273

Other capital surplus

4,578
4,816

4,578
6,335

Total capital surplus

9,395

10,914Retained earnings
Legal retained earnings

818

818

185,100
268,286

185,100
325,423

Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus

Other retained earnings
General reserve
Retained earnings brought forward

454,204

511,341

Treasury stock(15,429)(15,271)

Total shareholders’ equity

458,445517,258

Total retained earnings

Valuation and translation adjustments
Valuation differences on available-for-sale securities(427)(1,533)

Total valuation and translation adjustments(427)(1,533)

Share subscription rights
Total net assets
Total liabilities and net assets— 127 —

5,211

5,981

463,229

521,706

993,413

1,054,758

(2) Statement of Income(Millions of yen)
Year ended
31 August 2018
Operating revenue
Management income from operating companies*1

Dividends income from subsidiaries and affiliates*1

Total operating revenue
Operating expenses
Selling, general and administrative expenses
Salaries
Bonuses
Allowance for bonuses
Rental expenses
Depreciation
Outsourcing expenses
OthersYear ended
31 August 2019

48,709144,334

55,011
129,899

193,044

184,910

6,147
573
1,762
7,698
7,933
20,386
12,022

7,128
1,417
1,834
8,231
10,16523,703
13,32856,52465,808

136,519

119,101

Others

3,451
128
1,557
120

5,233
201
—
562

Total non-operating income

5,258

5,997

Total operating expenses*1

Operating profit
Non-operating income
Interest income
Interest on securities
Foreign exchange gains

Non-operating expenses
Interest expenses

1,318

1,968

—

17,103Foreign exchange losses

799

26

2,118

19,098

139,660

106,000

641

44

7,486

1,341

6,061
—
1,704

583
243
296

15,894

2,507

123,766

103,492

Income taxes — deferred

2,694(1,086)(1,608)(1,013)

Total income taxes

1,608(2,621)

122,158

106,113

OthersTotal non-operating expenses
Ordinary profit
Extraordinary losses
Losses on retirement of non-current assets*2

Loss on valuation of shares of subsidiaries andassociates
Provision of allowance for doubtful accounts for
subsidiaries and associates
Impairment losses
OthersTotal extraordinary losses
Income/(loss) before income taxes
Income taxes — current

Profit— 128 —

(3) Statement of changes in net asset
Year ended 31 August 2018
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Balance at the beginning of year

Capital
stock

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurplusLegalretainedearnings

10,273

4,578

3,666

8,245

—

—

—

—

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

818

185,100

184,377

370,295——(38,248)(38,248)

Changes during the year
Dividends
Net income

—

—

—

—

—

—

122,158

122,158

Acquisition of treasury stock

—

—

—

—

—

—

—

—

Disposal of treasury stock

—

—

1,149

1,149

—

—

—

—

Net changes of items otherthan those in shareholders’equityNet changes during the year
Balance at the end of year

—

—

—

—

—

—

—

—

—

—

1,149

1,149

—

—

83,90983,90910,273

4,578

4,816

9,395

818

185,100

268,286454,204

Valuation and translation
adjustments

Shareholders’ equity

Valuation
Total valuationdifferences on
and translation
available-foradjustments
sale securities

Share
subscription
rightsTotal net assets

Treasury stock

Total
shareholders’equity(15,563)

373,251

(502)

(502)

4,354

377,103

Dividends—(38,248)———(38,248)

Net income—

122,158———

122,158

Acquisition of treasury stock

(1)

(1)

—

—

—

(1)

Disposal of treasury stock

136

1,286

—

—

—

1,286

Net changes of items other thanthose in shareholders’ equity

—

—

74

74

857

931

Balance at the beginning of year
Changes during the year

Net changes during the year

134

85,193

74

74

857

86,125

Balance at the end of year

(15,429)

458,445

(427)

(427)

5,211

463,229— 129 —

Year ended 31 August 2019
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Balance at the beginning of year

Capital
stock

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurplusLegalretainedearnings

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

10,273

4,578

4,816

9,395

818

185,100

268,286454,204

Changes during the year
Dividends

—

—

—

—

—

—

(48,976)(48,976)

Net income

—

—

—

—

—

—

106,113106,113

Acquisition of treasury stock

—

—

—

—

—

—

—

—

Disposal of treasury stock

—

—

1,519

1,519

—

—

—

—

Net changes of items otherthan those in shareholders’equity

—

—

—

—

—

—

—

—

Net changes during the year
Balance at the end of year

—

—

1,519

1,519

—

—

57,136

57,136

10,273

4,578

6,335

10,914818

185,100

325,423

511,341

Valuation and translation
adjustments

Shareholders’ equity

Balance at the beginning of year

Treasury stock

Total
shareholders’equity(15,429)

458,445

Valuation
Total valuationdifferences on
and translation
available-foradjustments
sale securities
(427)

(427)

Share
subscription
rightsTotal
net assets

5,211

463,229

Changes during the year
Dividends—(48,976)———(48,976)

Net income—

106,113———106,113

Acquisition of treasury stock

(2)

(2)

—

—

—

(2)

Disposal of treasury stock

159

1,679

—

—

—

1,679

Net changes of items other thanthose in shareholders’ equity——(1,106)(1,106)

769

(336)

Net changes during the year157

58,813(1,106)(1,106)769

58,476

Balance at the end of year

(15,271)517,258(1,533)(1,533)

5,981

521,706— 130 —

(4) 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 determinedby the average 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 the moving-average cost method.
(ii) Unlisted securities:
Unlisted securities are stated at cost, which is determined by the 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 fixtures
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 thenon-recoverable portion is recorded.
(b) Provisions for bonuses
Bonuses to employees are accrued on the balance sheet date.
(c) Provisions for loss on guarantees
To prepare for losses related to loan guarantees for associated companies, the Company considers the financial
position of the guarantee, and records an anticipated loss figure.
(d) Allowances for Affiliated Company Operating Losses
In order to prepare for losses pertaining to affiliated company operations, we take the financial position of ouraffiliated companies into consideration and list the estimate losses that may be incurred.
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.

(Change of presentation method)
From the start of the current business year, we have been applying the “Partial Amendments to Accounting Standard for Tax
Effect Account” (ASBJ Statement No. 28 of February 16, 2018; hereinafter referred to as the “Partial Amendments to Tax EffectAccounting Standard”) , and the method we use has changed so that deferred tax assets are presented under the category of
Investments & Other Assets, and deferred tax liabilities are presented under the category of Non-current Liabilities. As a result,on the balance sheet of the previous business year, the 1,018 million yen in deferred tax assets under current assets is includedin the 1,980 million yen in deferred tax assets under investments and other assets.
Furthermore, in the notes on tax effect accounting we have added the content described in the comment for “AccountingStandards for Tax Effect Accounting” (Note 8) (1) (excluding total valuation allowance) as stipulated in Paragraph 4 of the Partial
Amendments to Tax Effect Accounting Standard.
— 131 —

Of that content, however, content pertaining to the previous business year is not stated in accordance with the transitional
treatment stipulated in Article 7 of the Partial Amendments to Tax Effect Accounting Standard.

(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 2018
Trade accounts receivable
Deposits received

19,878
7,817

As at 31 August 2019
48,20133,188

2. Contingent liabilities(Millions of yen)
As at 31 August 2018
Guarantees for office and retail store leases
Guarantees on loans payable to financial institutions

62,7889,208

As at 31 August 201950,452
10,472

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 2018
Ordinary revenue:
Management income from operating companies
Dividends income from subsidiaries and affiliates
Ordinary expense:

Year ended
31 August 201946,473
144,334
1,003

52,881
129,899
1,462

2. The breakdown of losses on retirement of non-current assets is as follows:(Millions of yen)
Year ended
31 August 2018
Buildings
Software
OthersYear ended
31 August 2019
228
65
347

4
2
36

(Marketable securities)
As at 31 August 2018
The fair values of the shares of subsidiaries and affiliates (subsidiaries 55,705 million yen and affiliates 14,873 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 2019
The fair values of the shares of subsidiaries and affiliates (subsidiaries 72,707 million yen and affiliates 14,295 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.

— 132 —

(Deferred taxes)
1. The breakdown of causes of deferred tax assets and deferred tax liabilities is as follows:(Millions of yen)
As at
31 August 2018
Deferred tax assets:
Provisions for bonuses
Depreciation
Loss on shares of subsidiaries and associates
Impairment losses
Allowance for doubtful accounts
Valuation differences on available-for-sale securities
Unused tax losses carried forward
Software
OthersSubtotal
Valuation allowance pertaining to tax loss carried forward
Valuation allowance pertaining to total of future deductible
temporary difference
Valuation allowance subtotal

As at
31 August 2019

802
562
48,654
1,009
1,865
449
2,827
1,213
3,316
60,700—812
586
50,736
482
321
765
3,638
2,022
4,905
64,271(3,638)—(56,450)(54,524)(58,163)

Total deferred tax assets
Deferred tax liabilities:
Temporary differences on shares of subsidiaries
OthersTotal deferred tax liabilities

4,250

6,107

(1,893)(376)(2,269)(1,893)(830)(2,723)Net deferred tax liabilities

1,980

3,384

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 2018
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(Business Combination)
Not applicable.
(Notes on Significant Subsequent Events)
Not applicable.

— 133 —As at
31 August 2019

30.8%

30.6%

(34.9)
3.3
2.0
0.1(36.3)
1.6
1.9
(0.3)

1.3

(2.5)

(5) 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
OthersTotal intangible assets

Balances as at
1 September
2018

Increase

Decrease

Accumulated
Depreciation, Balances as at depreciation oramortization
31 Augustamortization
during the year2019
as at 31 August
2019

6,221
127
184
1,123
890
351

2,221
3
170
—
25
4,892

4
—
5
—
16
810

1,124
11
77
—
246
—

7,313
118
272
1,123
652
4,432

7,431
249
1,532
34
632
—

8,899

7,313

837

1,460

13,9149,880

25,3433,966
61

12,67922,527—279
12,679
—

8,703
—
1

29,03913,81460———

29,37135,206

12,958

8,704

42,914—(Notes) 1. The main factors listed as increase during the year are as follows:
Types of assets

Amount (Millions of yen)Contents

Software

12,679 Construction cost for new system

Software in progress

22,527 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)
12,679— 134 —

Contents
Construction cost for new systems (transferred tosoftware as the new system was launched)Details of provisions(Millions of yen)
Categories
Allowance for doubtful accounts (current)

Balance as at
1 September
2017

Balance as at
31 August2018

Decrease
0

32

0

6,061

583

5,593

1,051

2,440

2,676

2,440

2,676

Provision for loss on guarantees

330

—

126

204

Allowances for Affiliated Company Operating
Losses

—

422

—

422

Allowance for doubtful accounts(non-current)
Provision for bonuses(Note1)(Note2)(Note3)32

Increase

The increase in the Allowance for doubtful accounts for the current fiscal year is mainly for affiliated companies.
The decrease in the Allowance for doubtful accounts in the current fiscal year is due to a reversal of the allowancein full.
113 million yen of this period’s reduction in Provision for loss on guarantees is being transferred to Allowances for
Affiliated Company Operating Losses.

(6) Main details of assets and liabilities
Omitted because the consolidated financial statements are prepared.

(7) Others
Not applicable.

— 135 —

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of FAST RETAILING CO., LTD.:

OpinionWe have audited the consolidated financial statements of FAST RETAILING CO., LTD. and its subsidiaries (the “Group”), which
comprise the consolidated statement of financial position as at 31 August 2019, and the consolidated statement of profit
or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary ofsignificant 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 2019, 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 Auditor’s 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 judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters.

— 136 —

Valuation of inventories at the lower of cost or net realizable value
Key audit matter

Audit procedures performed

As disclosed in Note 10 to the consolidated financial
statements, the Group’s total inventories as at 31 August
2019 are comprised of JPY383,921 million related to the
UNIQLO Japan segment, the UNIQLO International segment
and the GU segment, in the aggregate, representing 19.1%of the Group’s total assets. In addition, the amount of writedown of inventories to net realizable value was JPY4,928
million for the segments.

In response to this key audit matter, our audit included,
amongst others, the following procedures:

The sales pattern for inventories is to establish an initial
price, and then subsequently adjust the price based on
the season, weather and customer tastes and demand.
Inventories are valued at the lower of cost or net realizablevalue. Selling price, a component of net realizable value,
is frequently adjusted in response to fast-changing market
conditions, economic conditions of countries where theGroup operates and fashion trends, and adjusted selling
price is reflected and maintained in an IT system.
Given the nature of the Group’s businesses, changes
to inventory, such as adjustments to selling prices, arefrequently made to a large volume of inventories at a Stock
Keeping Units (“SKUs”) level. Inventory management is thus
highly dependent on the IT system. In addition, accuracyof the inventory valuation report is also dependent upon
the IT system given the automated nature. As such, due tothe potential impact it may have on the accounting for thewrite-down of inventories to net realizable value, there are
increased risks around the appropriateness of the system
configurations (e.g., calculation formula, report logic,
parameters, etc.), in addition to the overall maintenance of
the IT system.

•

Evaluation of the techniques for the measurement ofcost and approaches to inventory valuation establishedby management, including compliance with IFRSs.

•

Assessment of the design, implementation andoperating effectiveness of the relevant controls in place
to address the accuracy and completeness of the inputs
for selling price and cost of inventories.

•

Involvement of our IT experts to evaluate the accuracy
and completeness of the inventory valuation reportby testing the system interface controls, the report
logic and parameters input, as well as the general IT
controls over the IT systems, including testing of user
access controls, change management controls and IT
operations controls.

•

We did not identify slow-moving inventories as a key audit
matter in our audit because the amount of inventory loss
resulting from slow-moving inventories has remained at
an immaterial level due to the Group’s strategic sales pricesetting.
We identified valuation of inventories at the lower of costor net realizable value as a key audit matter in our audit
given that the value of inventories is material, the valuationof inventories is highly automated and involvement of our
professionals with expertise in information technology (“ITexperts”) is necessary.

— 137 —

Evaluation of the determination of net realizablevalue and the amount of write-down of inventories
to net realizable value calculated within the inventory
valuation report on a representative sample basis.

Assessment whether any indication that store assets may be impaired based on store performance results
Key audit matter

Audit procedures performed

As disclosed in Note 13 to the consolidated financial
statements, the Group has store assets attributable to
UNIQLO Japan, UNIQLO International and the GU segment
amounting to JPY22,437 million, JPY76,976 million
and JPY16,156 million, respectively, in the aggregate
representing 5.7% of the Group’s total assets as at 31
August 2019. In addition, as disclosed in Notes 15 to theconsolidated financial statements, the Group’s impairment
losses attributable to store assets were JPY3,148 million forthe year ended 31 August 2019.

In response to this key audit matter, our audit included,
amongst others, the following procedures:

Each segment operates as many as 774, 1,379 and421 stores as at 31 August 2019, respectively, and theperformance results of each store are maintained in an
IT system. In principle, each store is considered as anindividual cash-generating unit (“CGU”). Management uses
the performance results of stores (a IT system-generated
report) as a key input when assessing whether there is any
indication that store assets may be impaired (“impairment
indicators”). As such, due to the potential impact it may
have on the assessment of the impairment indicators,
there are increased risks around the appropriateness of thesystem configurations (e.g., report logic, parameters, etc.),
in addition to the overall maintenance of the IT system.

•

Evaluation of the assessment of impairment indicators,
identification of the CGU and allocation method of
relevant headquarter costs to each CGU established bymanagement, including compliance with IFRSs.

•

Involvement of our IT experts to evaluate accuracy
and completeness of the impairment indicators
identification report by testing source data of store
performance results along with the report logic toallocate headquarter costs, report logics used to identify
impairment indicators, and parameters inputs, as wellas the general IT controls over the IT systems, including
testing of user access controls, change management
controls and IT operations controls.

•

Examination of the impairment indicators identification
report for the completeness of stores for proper
inclusion.

We identified this matter as a key audit matter in our audit
given that the value of store assets is material, the creationof information used in assessment of the impairment
indicators is highly automated and that the involvement of
our IT experts is necessary.

Other Information
Management is responsible for the other information. The other information comprises the information included in the annual
report, but does not include the consolidated financial statements and our auditor’s 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.

— 138 —

Responsibilities of Management and Board of Statutory Auditors for the Consolidated Financial Statements
Management is responsible for the preparation of the consolidated financial statements that gives 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, management is responsible for assessing the Group’s ability to continue as agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The board of statutory auditors is responsible for overseeing the Group’s financial reporting process.

Auditor’s 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 arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
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 judgment and maintain professional skepticism 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 sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

•

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 auditor’s 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 auditor’s 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 thedisclosures, and whether the consolidated financial statements represent the underlying transactions and events in amanner 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,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.

— 139 —

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 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 auditor’s 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 auditor’s report are Koichi Okubo, Hirofumi Otani and
Yohei Masuda.

Deloitte Touche Tohmatsu LLC
Tokyo, Japan
29 November 2019

— 140 —

(TRANSLATION)

INDEPENDENT AUDITOR’s REPORT
29 November 2019
To the Board of Directors of
FAST RETAILING CO.,LTD.:
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Koichi Okubo
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Hirofumi Otani
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant:
Yohei Masuda
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited theaccompanying nonconsolidated financial statements, namely, the nonconsolidated balance sheet, and the related
nonconsolidated statements of income and changes in net assets of FAST RETAILING CO., LTD. (the “ Company”) for the 58th
fiscal year from 1 September 2018 to 31 August 2019, and a summary of significant accounting policies and other explanatory
information, and supplementary schedules.

Management’s Responsibility for the Nonconsolidated Financial Statements
Management is responsible for the preparation and fair presentation of these nonconsolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as management determines isnecessary to enable the preparation of nonconsolidated financial statements that are free from material misstatement, whether
due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on these nonconsolidated financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the nonconsolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nonconsolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks
of material misstatement of the nonconsolidated financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of thenonconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the nonconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

— 141 —

Audit Opinion
In our opinion, the nonconsolidated financial statements referred to above present fairly, in all material respects, the financial
position of FAST RETAILING CO., LTD., as at 31 August 2019, and the results of its operations for the year then ended inaccordance with accounting principles generally accepted in Japan.

Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required under theprovisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese language.

— 142 —

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 2018, 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 at the end of the fiscal year under review.

4. Additional items
None

5. Special items
None— 143 —

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 58th fiscal year (September 1, 2018 — August 31, 2019), and confirm
they are true, based on the Financial Instruments and Exchange Law.

2. Special items
None— 144 —