FAST RETAILING CO., LTD.
迅銷有限公司

Year-end Report 2013/14
2013.9.1–2014.8.31
Stock Code: 6288

Contents
Corporate Information

2

Financial Highlights

3

Corporate Profile

6

Management Discussion and Analysis

12

Capital Expenditure

26

Stock Information and Dividend Policy

29

Board of Directors

56

Corporate Governance Report

62

Financial Information

70

Consolidated statement of financial position

71

Consolidated statement of profit or loss

72

Consolidated statement of comprehensive income

73

Consolidated statement of changes in equity

74

Consolidated statement of cash flows

76

Notes to the consolidated financial statements

77

Balance sheet

130

Statement of income132

Statement of changes in net assets

133

Notes to the financial statements

135

Associated details

141

Main details of assets and liabilities

143

Independent Auditors’ Report (Group)

145

Independent Auditors’ Report (Company)

146

Internal Control Report

147

Confirmation Note148

Corporate Information
Board of Directors
Executive Director

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

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

Non-Executive Directors
Principal Place of Business in Hong Kong

Mr. Toru Murayama (External Director)
Mr. Takashi Nawa (External Director)

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

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

HDR Registrar and HDR Transfer Office
Statutory Auditors

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

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

Stock CodeHong Kong: 6288
Japan: 9983

Joint Company Secretaries

Website Address

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

http://www.fastretailing.com

Auditors
Ernst & Young ShinNihon LLC

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

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

—2—

Financial Highlights(1) Consolidated Financial Summary
International Financial Reporting Standards (“IFRS”)

Term

Transition Date

52nd Year

53rd Year

1 September 2012

Year ended
31 August 2013

Year ended
31 August 2014

Revenue (Millions of yen)—

1,142,971

1,382,935

Operating profit (Millions of yen)—

134,101

130,402

Profit before income taxes (Millions of yen)—

155,732

135,470

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

104,595

74,546Comprehensive income attributable to ownersof the parent (Millions of yen)—

205,660

75,517

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

391,456

570,428

618,381

Total assets (Millions of yen)604,397

901,208

992,307

Equity per share attributable to owners of the parent (Yen)

Accounting Period

3,843.30

5,598.12

6,067.40

Basic earnings per share for the year (Yen)—

1,026.68

731.51

Diluted earnings per share for the year (Yen)—

1,025.75

730.81

64.8

63.3

62.3

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

—

21.7

12.5

Price earnings ratio (times)

—

31.1

44.5

Net cash from operating activities (Millions of yen)—

99,474

110,595

Net cash used in investing activities (Millions of yen)—

(62,584)(56,323)

Net cash used in financing activities (Millions of yen)—

(24,226)(44,060)

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

266,023

296,708

314,049

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

18,854(19,485)

23,982(23,535)

30,448(25,705)

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

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

—3—

Generally Accepted Accounting Principles in Japan (“JGAAP”)
Term
Accounting period

49th Year

50th Year

51st Year

52nd Year

53rd Year

Year ended
Year ended
Year ended
Year ended
Year ended
31 August 2010 31 August 2011 31 August 2012 31 August 2013 31 August 2014

Net sales (Millions of yen)

814,811820,349928,669

1,143,003

1,382,907

Ordinary income (Millions of yen)

123,755

107,090

125,212

148,979

156,828

Net income (Millions of yen)

61,68154,35471,65490,377

78,118Comprehensive income (Millions of yen)
Total net assets (Millions of yen)—

52,246

96,501

205,329

82,066287,987

319,911394,892

579,591

626,581

Total assets (Millions of yen)

507,287

533,777595,102885,800

977,609

Equity per share (Yen)2,804.34

3,091.17

3,797.04

5,489.86

5,958.54

605.99533.93703.62887.12766.55—533.66703.06886.31765.82Equity ratio (%)

56.3

59.0

65.0

63.2

62.1

Earnings on equity (%)

22.6

18.1

20.4

19.1

13.4

Price earnings ratio (times)

Basic net income per share (Yen)
Diluted net income per share (Yen)

19.1

27.1

26.0

36.0

42.5

Net cash from operating activities(Millions of yen)

88,62357,158

127,643

99,439111,399

Net cash used in investing activities(Millions of yen)

(23,389)(26,643)(35,313)(63,901)(63,574)

Net cash used in financing activities(Millions of yen)

(28,897)(26,156)(29,056)(23,945)(38,014)

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

200,462

202,104

266,020295,622

313,746

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

11,596(18,144)

14,612(18,711)18,854(19,485)

23,982(23,535)

30,448(25,705)(Notes)1. Net sales do not include consumption taxes, etc.
2. Figures for diluted net income per share is not reported for the 49th year because there was no dilution.
3. The financial figures for the 53rd year prepared in accordance with JGAAP are not audited pursuant to Article 1932-1 of the Financial Instruments and Exchange Act.

—4—

(2) Non-Consolidated Financial Summary
Term
Accounting period

49th Year

50th Year

51st Year

52nd Year

53rd Year

Year ended
Year ended
Year ended
Year ended
Year ended
31 August 2010 31 August 2011 31 August 2012 31 August 2013 31 August 2014

Operating revenue (Millions of yen)

81,013

72,68778,454

91,57077,438

Ordinary income (Millions of yen)

58,07749,88954,982

76,56946,921

Net income (Millions of yen)

43,04347,783

55,956

68,77623,336

Capital stock (Millions of yen)

10,273

10,273

10,273

10,273

10,273

Total number of shares issued(shares)

106,073,656

106,073,656

106,073,656

106,073,656

106,073,656

224,808

249,441

284,314335,754332,255

Total net assets (Millions of yen)
Total assets (Millions of yen)

251,698

267,290322,589

370,110385,113Equity per share (Yen)

2,208.66

2,449.92

2,783.97

3,286.26

3,243.97

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

230.00(115.00)

180.00(95.00)260.00(130.00)

290.00(140.00)

300.00(150.00)

Basic net income per share (Yen)422.88469.38549.48675.09228.99—469.15549.04674.48228.77

Equity ratio (%)

89.3

93.1

87.9

90.5

85.9

Earnings on equity (%)

20.0

19.2

21.0

22.2

7.0

Price earnings ratio (times)

27.4

30.8

33.2

47.3

142.1

Dividend ratio (%)

54.3

38.4

47.3

43.0

131.0

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

523
(127)

710
(145)

781
(84)

924
(103)

1,088
(114)

Diluted net income per share (Yen)(Notes)1. Ordinary revenue does not include consumption taxes, etc.
2. Figures for diluted net income per share is not reported for the 49th year because there was no dilution.

—5—

Corporate Profile
1.

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

Summary

May 1963

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

June 1984

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

September 1991

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

April 1992

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

April 1994

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

July 1994

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

April 1997

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

February 1998

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

November 1998

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

February 1999

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

April 1999

UNIQLO Shanghai office opens to further enhance production management.

April 2000

Tokyo headquarter opens in Shibuya-ku, Tokyo

June 2000

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

October 2000

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

September 2001

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

September 2002

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

August 2003

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

January 2004

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

August 2004

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

November 2004

Establishment of UNIQLO USA, Inc.

December 2004

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

March 2005

Establishment of UNIQLO HONG KONG, LIMITED.

April 2005

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

May 2005

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

November 2005

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

February 2006

Makes equity investment in, and makes a subsidiary of, PETIT VEHICULE 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.
—6—

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.

March 2007

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

November 2007

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

December 2007

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

August 2008

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

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

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

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

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

March 2010

UNIQLO establishes a wholly owned subsidiary in Taiwan.

April 2010

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

May 2010

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

October 2010

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

October 2010

First GU flagship store opens in Shinsaibashi, Osaka.

October 2010

First UNIQLO Taiwan store opens in Taipei.

November 2010

First UNIQLO Malaysia store opens in Kuala Lumpur.

February 2011

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

March 2011

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

September 2011

First UNIQLO Thailand store opens in Bangkok.

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

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

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

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

June 2012

First UNIQLO Philippines store opens in Manila.

September 2012

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

October 2012

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

December 2012

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

April 2013

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

June 2013

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

September 2013

UNIQLO global flagship store opens in Shanghai.

September 2013

First GU overseas store opens in Shanghai.

March 2014

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

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.

—7—

2.

Our Business
The Group consists of FAST RETAILING CO., LTD. (the “Company”) and 112 consolidated subsidiaries.
Details of the Group’s businesses as well as the positioning of the Company and its main affiliates relative to thebusinesses are as follows.
The segment categories in this section of the report are the same as the segment categories in the section headed“FINANCIAL INFORMATION 4. Consolidated Financial Statements: Notes to the Consolidated Financial Statements”.

Category

Company name

Reportable Segment

Holding company

FAST RETAILING CO., LTD.

OthersUNIQLO CO., LTD. (consolidated subsidiary)

UNIQLO Japan

UNIQLO EUROPE LIMITED (consolidated subsidiary)

UNIQLO International

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

UNIQLO International

FRL Korea Co., Ltd. (consolidated subsidiary)

UNIQLO International

LLC UNIQLO (RUS) (consolidated subsidiary)

UNIQLO International

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

UNIQLO International

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

UNIQLO International

UNIQLO (THAILAND) COMPANY LIMITED(consolidated subsidiary)

UNIQLO International

PT. FAST RETAILING INDONESIA (consolidated subsidiary)

UNIQLO International

UNIQLO AUSTRALIA PTY LTD (consolidated subsidiary)

UNIQLO International

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

UNIQLO International

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

Global Brands

Fast Retailing USA, Inc. (consolidated subsidiary)

UNIQLO International/
Global Brands

J Brand, Inc. (consolidated subsidiary)

Global Brands

J BRAND Japan Co., LTD. (consolidated subsidiary)

Global Brands

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

Global Brands

LINK THEORY JAPAN CO., LTD. (consolidated subsidiary)

Global Brands

COMPTOIR DES COTONNIERS JAPAN CO., LTD.
(consolidated subsidiary)

Global Brands

Other consolidated subsidiaries (94 companies)

UNIQLO International/
Global Brands/Others

Main consolidated subsidiaries*

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

(Notes)

1.
2.
3.
4.

“UNIQLO” business means the retail business of UNIQLO brand casual apparel in Japan and overseas.
“Global Brands” business means the planning, retail and manufacturing of apparel in Japan and overseas.
“Others” includes real estate leasing businesses.
UNIQLO (U.K.) LIMITED changed its name to UNIQLO EUROPE LIMITED during the year ended 31 August 2014.

—8—

Organizational structure is as follows:Business Structure
UNIQLO Business

Shareholdings

FAST
RETAILING
CO., LTD.
(holding
company)(Consolidated subsidiaries)
UNIQLO CO., LTD.
UNIQLO EUROPE LIMITEDFAST RETAILING (CHINA) TRADING CO., LTD.
FRL Korea Co., Ltd.
LLC UNIQLO (RUS)
UNIQLO TRADING CO., LTD.
FAST RETAILING (SINGAPORE) PTE. LTD.
UNIQLO (THAILAND) COMPANY LIMITED
PT. FAST RETAILING INDONESIAUNIQLO AUSTRALIA PTY LTD
FAST RETAILING (SHANGHAI) TRADING CO., LTD.

Product sales

Customers

Other consolidated subsidiaries (13 companies)
Global Brands business/Others

Shareholdings(Consolidated subsidiaries)
FAST RETAILING FRANCE S.A.S.
Fast Retailing USA, Inc.
J Brand, Inc.
J BRAND Japan Co., LTD.
G.U. CO., LTD.
LINK THEORY JAPAN CO., LTD.
COMPTOIR DES COTONNIERS JAPAN CO., LTD.
Other consolidated subsidiaries (81 companies)—9—

Product sales

3.

Subsidiaries and Associates

Name

Location

Relationship

Nominal value of issued
ordinary/registeredshare capital(Thousands)

Details of main
businesses

Ownership Ratioof Voting Rights

Common directors(Number of
persons)

UNIQLO Japan

100.0%

3—

Capital/operational ties

(Consolidated subsidiaries)
UNIQLO CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

UNIQLO EUROPE LIMITED

London,United Kingdom

GBP40,000

UNIQLO International

100.0%

1—

FAST RETAILING (CHINA)TRADING CO., LTD*

Shanghai, PRC

USD20,000

UNIQLO International

100.0%

2—

FRL Korea Co., Ltd.

Seoul Special City,
South Korea

KRW24,000,000

UNIQLO International

51.0%

1

—

LLC UNIQLO (RUS)

Moscow,
Russian Federation

RUB510,010

UNIQLO International

100.0%—UNIQLO TRADING CO., LTD.*

Shanghai, PRC

USD30,000

UNIQLO International

100.0%

2

FAST RETAILING (SINGAPORE)
PTE. LTD.

Republic of Singapore

SGD80,000

UNIQLO International

100.0%—UNIQLO (THAILAND) COMPANY
LIMITED

Bangkok,
Kingdom of Thailand

THB500,000

UNIQLO International

75.0%(75.0%)——

PT. FAST RETAILING INDONESIA

Jakarta,Republic of Indonesia

IDR115,236,000

UNIQLO International

75.0%(75.0%)

1—

UNIQLO AUSTRALIA PTY LTD

Melbourne, Australia

AUD21,000

UNIQLO International

100.0%(100.0%)—FAST RETAILING (SHANGHAI)
TRADING CO., LTD.*

Shanghai, PRC

USD35,000

UNIQLO International

100.0%

2—

FAST RETAILING FRANCE S.A.S.

Paris, France

EUR161,025

Global Brands

100.0%

1

Bond guarantees
Loans

Fast Retailing USA, Inc.

New York,
United States ofAmerica

USD30,000

UNIQLO International/
Global Brands

100.0%—

Bond guarantees
Loans

J Brand, Inc.

California,
United States ofAmerica

USD394,248

Global brands

100.0%(100.0%)1—

J Brand Japan Co., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY10,000

Global brands

100.0%—

G.U. CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY10,000

Global brands

100.0%

1—

LINK THEORY JAPAN CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY10,000

Global brands

100.0%

2—

COMPTOIR DES COTONNIERS
JAPAN CO., LTD.

Yamaguchi City,
Yamaguchi Prefecture

JPY33,775

Global brands

100.0%(100.0%)——

Other consolidated subsidiaries(94 companies)

—

—

—

—

—

*

JPY1,000,000

—

Loans
—
Loans

Loans

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., UNIQLO EUROPE LIMITED, FAST RETAILING (China) TRADING CO., LTD., FRL Korea Co., Ltd.,LLC UNIQLO (RUS), UNIQLO TRADING CO., LTD., FAST RETAILING (SINGAPORE) PTE. LTD., UNIQLO (THAILAND)COMPANY LIMITED, PT. FAST RETAILING INDONESIA, UNIQLO AUSTRALIA PTY LTD, FAST RETAILING (SHANGHAI)
TRADING CO. LTD., FAST RETAILING FRANCE S.A.S., Fast Retailing USA, Inc., and J Brand, Inc. are specified
subsidiaries.
3. Figures in parentheses in the “Ownership Ratio of Voting Rights” column indicate the ratio of voting rights held by
the Group’s subsidiary.

— 10 —

4. UNIQLO (U.K.) LIMITED changed its name to UNIQLO EUROPE LIMITED during the year ended 31 August 2014.
5. UNIQLO CO., LTD.’s net sales (excluding internal sales between other member companies of consolidated group)
are greater than 10% of consolidated revenue.
Key elements of profit/loss for the year ended 31 August 2014
(1) Net sales
725,717 million yen(2) Ordinary income
114,167 million yen(3) Net profit
68,507 million yen(4) Net assets
212,722 million yen(5) Total assets
421,571 million yen

4.
(1)

Employees
The Group
As at 31 August 2014
Name of segment

Number of employees (Persons)

UNIQLO Japan

4,182 (17,708)

UNIQLO International

20,072 (3,992)

Global brands

4,387 (3,866)

Total for reportable segments

28,641 (25,566)

Others719 (25)All companies (shared)

1,088 (114)
Total(Notes)(2)

30,448 (25,705)

1. The number of employees does not include entrusted operating officers, junior employees, part-time workers or
temporary staff seconded from other companies.
2. The number of junior employees and part-time workers is stated as a separate number in parentheses as the average
number of people per year was calculated based on an eight-hour workday per person.
3. The number of employees given as “All companies (shared)” represents administrative employees who could not be
categorized in a specific business segment.
4. Hiring of employees for new stores was the main reason for the increase in the number of employees during the year
ended 31 August 2014.

The Company
As at 31 August 2014

Number of employees (persons)
1,088 (114)(Notes)(3)

Average age (years, months)
36 years and 6 months

Average number of years
with the Company
5 years and 2 months

Average annual wages(thousands of yen)
7,359

1. The number of employees does not include entrusted operating officers, junior employees, part-time workers or
temporary staff seconded from other companies.
2. The number of junior employees and part-time workers stated in parentheses represented the number of persons
calculated based on an eight-hour workday per person.
3. Figures for average annual wages include bonuses and other non-standard payments.
4. Transferring of employees from subsidiaries was the main reason for the increase in the number of employees during
the year ended 31 August 2014.
5. 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.

— 11 —

Management Discussion and Analysis
1.

Business Results
The Group decided to apply new financial reporting standards starting from the year ended 31 August 2014, changing
from JGAAP to IFRS. Comparative information for the year ended 31 August 2013 have been recalculated using IFRS inorder to facilitate comparative analysis of the Group’s performance and financial conditions.

(1)

Analysis of Business Results for the year ended 31 August 2014
The Group reported the following consolidated results for the full financial year spanning 1 September 2013 to 31 August
2014: consolidated revenue of ¥1.383 trillion (+21.0% year-on-year), consolidated operating profit of ¥130.4 billion (-2.8%
year-on-year), consolidated profit for the year of ¥79.3 billion (-26.2% year-on-year), and profit for the year attributableto owners of the parent of ¥74.5 billion (-28.7% year-on-year). The recent sharp fall in consolidated operating profit wasdue in the main to the recording of a ¥19.3 billion impairment loss in our J Brand premium denim operation, along witha ¥4.6 billion impairment on stores. Profit for the year also contracted considerably on the back of a significant fall in
finance income from ¥22.2 billion in the year ended 31 August 2013 to ¥6.0 billion in the year ended 31 August 2014.
Both the UNIQLO Japan and UNIQLO International business segments reported gains in sales and profit for the fullbusiness year, with performance at UNIQLO International proving particularly strong. However, the Global Brands
segment reported a fall in profits, after recording an impairment loss on the J Brand premium denim label.
The Group’s medium-term vision is to become the world’s number one apparel manufacturer and retailer. In pursuit ofthis aim, we are committed to promoting globalization, strengthening our overall Group management, and reigniting ourentrepreneurial spirit. We have focused much of our efforts on building up our global UNIQLO operations, by accelerating
the pace of new store openings outside of Japan. We have also opened global flagship stores, hotspot stores, and largeformat stores in major cities around the world, in order to boost the awareness and visibility of the UNIQLO brand, andto strengthen our global operational base. Within our Global Brands segment, we have been actively expanding our GU
casualwear brand and our Theory fashion label.
UNIQLO Japan
UNIQLO Japan achieved rising sales and profit in the full business year ended 31 August 2014. Revenue rose to ¥715.6
billion (+4.7% year-on-year), and operating profit expanded to ¥106.3 billion (+11.6% year-on-year). This strong
performance was due in part to a 1.9% rise in sales in existing stores, and in part to a rise in total sales per store. The
latter was achieved through our “scrap and build” strategy of gradually increasing the size of our store stock by replacing
smaller, less efficient stores with large-scale outlets. The number of UNIQLO Japan stores, excluding 21 franchise outlets,
totaled 831 stores at the end of August 2014. The 1.9% rise in sales in existing stores can be broken down into a 2.4%
reduction in customer visits and a 4.5% increase in the average customer spending. The gross profit margin improved
by 2.6%, thanks to strong sales of core spring and summer ranges, and new products. However, the selling, general andadministrative expenses to net sales ratio increased 1.8%. This was due mainly to higher in-store personnel costs for parttime and temporary workers, and higher distribution and warehousing costs related to the Company’s decision to boost
inventory of basic year-round items.
UNIQLO International
UNIQLO International reported significant gains in both sales and profit in the full business year ended 31 August 2014.
Revenue expanded considerably to ¥413.6 billion (+64.7% year-on-year), and operating profit rose to an impressive ¥32.9
billion (+165.1% year-on-year). Various regions within the UNIQLO International framework reported especially strong
gains in sales and profit, including Greater China (Mainland China, Hong Kong, and Taiwan), South Korea, and Europe.
Continued buoyant growth in sales in existing stores underpinned the strong performance reported by each of these
operations. The total number of UNIQLO International stores expanded by 187 to 633 stores at the end of August 2014.
As mentioned above, UNIQLO Greater China achieved strong gains in both sales and profit over the full business year,with the total number of UNIQLO stores in that region expanded to 374 at the end of August. Thanks to strong gains insales in existing stores, the full-year performance from UNIQLO South Korea outstripped the Company’s estimates. By theend of August 2014, UNIQLO South Korea had boosted its store total to 133 stores. UNIQLO Southeast Asia and Oceania
reported increase in sales and profit, and boasted a total network of 80 stores at the end of August. The first UNIQLO
store in Australia opened in Melbourne in April 2014, and it continues to perform well.

— 12 —UNIQLO USA generated a strong performance in the first half of the business year from September 2013 to February
2014. However, the cool summer had an adverse impact on sales in the second half from March to August 2014. Taking
that into account, along with some additional costs incurred in relation to the early opening of a few new stores, theoperating loss for the US operations remained roughly at the same level as previous year. UNIQLO Europe, including theUnited Kingdom, France, Russia, and Germany, reported gains in both sales and profit over the full business year ended
31 August 2014. The global flagship store opened in Berlin in April 2014 was the first UNIQLO outlet to be opened inGermany. It also continues to generate favorable sales.
Global Brands
Revenue in Global Brands in the full business year ended 31 August 2014 expanded 21.8% year-on-year to ¥251.2 billion.
However, Global Brands reported an operating loss of ¥4.1 billion, after continued losses in the J Brand business obliged
the segment to record an impairment loss of ¥19.3 billion.
As for the other labels in the Global Brands segment, our GU fashion casualwear brand reported a rise in sales but acontraction in profit for the full business year ended 31 August 2014. GU was forced to scale up discounts on surplus
inventory, following a sluggish sales period in the second half. Our Theory fashion brand reported rising sales and a slightcontraction in operating profit. Our France-based women’s fashion brand Comptoir des Cotonniers reported rising sales
and profit, while our Princesse tam.tam reported rising sales and a fall in profit for the full business year ended 31 August
2014.
Corporate Social Responsibility (“CSR”) Activities
The basic policy underlying the Group’s CSR activities consists of fulfilling our social responsibility, contributing to society,solving social issues and creating new value, both globally and locally.
To ensure responsible purchasing practices, we carefully monitor working conditions at our partner factories. We employ
third party professionals to inspect partner factories on a regular basis in an ongoing effort to ensure a fair and safe
workplace environment, with no child labor, unpaid wages, or unsafe conditions. The Company has worked hard tostrengthen its ties to production departments to ensure that buildings are safe, and that the risk of fire and other hazards
are minimized.
Through our All-Product Recycling Initiative, in which UNIQLO and GU products are collected from customers anddelivered to people who are in need of clothing, we have collected more than 32,130,000 items cumulatively at stores in
12 countries, and have donated 14,160,000 articles of clothing to 48 countries (as at 31 August 2014). From April to July
2014, the Company conducted a campaign at all UNIQLO stores in Japan encouraging customers to write messages on
cards shaped as a heart, which will be sent together with clothing to refugee camps. The number of cards has exceeded
10,000.
The Power of Clothing Project was created in 2009 as a way to extend the All-Product Recycling Initiative to reach school
children across Japan. FR staff visit schools to introduce The Power of Clothing Project. Thanks to such partnerships andthe enthusiastic response from schools and communities across Japan, more than 16,100 students at 120 schools will
participate in The Power of Clothing Project events from April 2014 to March 2015. We will continue forging close ties
between our stores and surrounding communities as we continue to enhance our social contribution programs.
On July 11, Grameen UNIQLO opened a new store in Jamuna Future Park, a popular shopping mall in Dhaka, Bangladesh,
as a part of our Social Business goals to combat poverty, unemployment and other social issues. As at the end of August
2014, there are nine Grameen UNIQLO stores in Bangladesh.

— 13 —

(2)Cash Flows Information

Cash and cash equivalents (hereinafter referred to as “funds”) as at 31 August 2014 were ¥314.0 billion, which was anincrease of ¥17.3 billion from the end of the preceding consolidated fiscal year.
(Operating Cash Flows)
Net cash from operating activities for the year ended 31 August 2014 was ¥110.5 billion, which was an increase of ¥11.1
billion (+11.2% year-on-year) from the preceding consolidated fiscal year. The principal factors were ¥135.4 billion in profit
before income taxes, ¥30.8 billion in depreciation and amortization, and ¥65.5 billion in income taxes paid.
(Investing Cash Flows)
Net cash used in investing activities for the year ended 31 August 2014 was ¥56.3 billion, which was a decrease of ¥6.2
billion (-10.0% year-on-year) from the preceding consolidated fiscal year. The principal factors were ¥41.4 billion for purchasesof property, plant and equipment, and ¥7.5 billion for purchases of intangible assets.
(Financing Cash Flows)
Net cash used in financing activities for the year ended 31 August 2014 was ¥44.0 billion, which was an increase of ¥19.8
billion (+81.9% year-on-year) from the preceding consolidated fiscal year. The principal factors were ¥30.5 billion for cash
dividends paid and ¥6.0 billion in payments for acquisition of non-controlling interests.

(3)

Condensed Consolidated Financial Statements prepared under Consolidated Financial Statements Rule

The main items in the Condensed Consolidated Financial Statements prepared under the Rules Governing Term, Form,and Preparation of Consolidated Financial Statements (excluding Chapters 7 and 8, hereinafter “JGAAP”) and the Consolidated
Financial Statements prepared under IFRS which differ from equivalent items in the Consolidated Financial Statements for theyear ended 31 August 2014 prepared under JGAAP are as follows.
The Condensed Consolidated Financial Statements prepared under JGAAP have not been audited in accordance with
Article 193-2-1 of the Financial Instruments and Exchange Act.
In the Condensed Consolidated Financial Statements prepared under JGAAP, amounts are rounded down to the nearest
million yen.
1)

Condensed Consolidated Balance Sheet (JGAAP)(Millions of yen)
As at 31 August 2013ASSETS
Current assets

As at 31 August 2014

640,109245,690719,274
258,335

885,800

977,609

253,966
52,243

300,503
50,524306,209351,028

482,495
76,901
1,170
19,024532,01175,275
1,634
17,660Total net assets

579,591

626,581

Total liabilities and net assets

885,800

977,609

Non-current assets
Total assets
LIABILITIESCurrent liabilities
Non-current liabilities
Total liabilities
NET ASSETS
Total shareholders’ equity
Total accumulated other comprehensive income
Share subscription rights
Minority interests— 14 —

2)

Condensed Consolidated Statement of Income and Condensed Consolidated Statement of Comprehensive Income(JGAAP)(Condensed Consolidated Statement of Income)(Millions of yen)
Year ended
31 August 2013
Net salesYear ended
31 August 2014

1,143,003
578,992

1,382,907
681,073564,011
431,091

701,833
553,187

132,920
17,628
1,569

148,646
10,8192,637

148,979
390
7,845

156,828
2,448
19,160141,525
48,268140,115
57,206

Minority interests

93,256
2,879

82,9094,790

Net income

90,377

78,118

Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary gains
Extraordinary losses
Income before income taxes and minority interests
Income taxes
Income before minority interests(Condensed Consolidated Statement of Comprehensive Income)(Millions of yen)
Year ended
31 August 2013
Income before minority interests

Year ended
31 August 2014

Other comprehensive income

93,256
112,072

82,90997

Comprehensive income

205,329

83,006

199,439
5,890

76,491
6,515

Comprehensive income attributable to:Shareholders of the Company
Minority interests— 15 —

3)

Condensed Consolidated Statement of Changes in Net Assets (JGAAP)(Millions of yen)
Year ended
31 August 2013

Total shareholders’ equity
Balance at the beginning of year

Year ended
31 August 2014

Net changes during the year

418,905
63,590482,495
49,516

Balance at the end of year

482,495

532,011

Net changes during the year

(32,160)
109,062

76,901(1,626)

Balance at the end of year

76,901

75,275

Net changes during the year

755
414

1,170
464

Balance at the end of year

1,170

1,634

Net changes during the year

7,392
11,631

19,024(1,363)

Balance at the end of year

19,024

17,660Net changes during the year

394,892
184,698

579,591
46,990

Balance at the end of year

579,591

626,581

Accumulated other comprehensive income
Balance at the beginning of year

Share subscription rights
Balance at the beginning of year

Minority interests
Balance at the beginning of year

Total net assets
Balance at the beginning of year

— 16 —

4)

Condensed Consolidated Statement of Cash Flows (JGAAP)(Millions of yen)
Year ended
31 August 2013

Cash flows from operating activities
Cash flows used in investing activities
Cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents

Year ended
31 August 2014

99,439(63,901)(23,945)
18,007111,399(63,574)(38,014)
7,108

Net increase in cash and cash equivalents

29,60016,919Cash and cash equivalents at beginning of year

266,020295,622

Increase in cash and cash equivalentsfrom newly consolidated subsidiaries

1

1,204

Cash and cash equivalents at end of year

295,622

313,746

5)

Changes in significant matters that serve as the basis for preparation of consolidated financial statements
None

6)

Items concerning differences between the main items in consolidated financial statements prepared under IFRS andconsolidated financial statements prepared under JGAAP

Reclassification
Items stated under non-operating income, non-operating expenses, extraordinary gains, and extraordinary losses under
JGAAP have been reclassified under IFRS; presented as finance income, finance costs, other expenses, other income, or selling,
general and administrative expenses.
Adjustment to amortization of goodwill
Under JGAAP, goodwill was amortized over an estimated amortization period. Under IFRS, this amortization ceased on thetransition date.
As a result, under IFRS, amortization of goodwill (selling, general and administrative expenses) decreased by 5,960 million
yen in the year ended 31 August 2014 and 5,297 million yen in the year ended 31 August 2013, and impairment losses (otherexpenses) increased by 2,711 million yen in the year ended 31 August 2014, compared with those under JGAAP.
Adjustment to exchange differences on monetary financial instruments denominated in foreign currencies
Under JGAAP, foreign exchange translation differences on monetary financial instruments denominated in foreign
currencies are recorded as unrealized gains or losses on available-for-sale securities under net assets. Under IFRS, theseexchange differences are treated as foreign exchange gains or losses.
As a result, under IFRS, foreign exchange translation differences (other income) increased by 2,398 million yen in the year
ended 31 August 2014 and 9,248 million yen in the year ended 31 August 2013, compared with those under JGAAP.
Adjustment to impairment losses of non-current assets
Under JGAAP, when there are indications that asset impairment is required, an assessment is made of the extent of theasset impairment (by comparing book value with the value of future cash flows, before discounting). After that, a measurement
is made of asset-impairment losses (by comparing book value with recoverable value). Under IFRS, when there are indications
that asset impairment is required, the recoverable value of the fixed asset(s) is estimated, and if the estimated recoverable
value is less than the book value, then a measurement is made of the asset impairment loss, either of the asset or the cashgenerating unit group.
It is for this reason that the value of asset impairment losses in the fiscal year under review is 3,793 million yen higher
under IFRS than under JGAAP.

— 17 —

2.

Summary of Revenue and Purchasing(1)

Revenue, by division
Year ended 31 August 2013
(From 1 September 2012
to 31 August 2013)

Division

Revenue(Millions of yen)

Year ended 31 August 2014
(From 1 September 2013
to 31 August 2014)

Percentage of total(%)

Revenue(Millions of yen)

Percentage of total(%)

Men’s clothing

286,95925.1

292,574

21.2

Women’s clothing

331,91229.0

354,721

25.6

Children’s & Baby’s clothing

34,204

3.0

40,052

2.9

Goods and other items

19,396

1.7

16,7001.2

Total item sales of UNIQLO Japan

672,47358.8

704,049

50.9

Franchise related income &alteration charges

10,841

1.0

11,594

0.8

Total UNIQLO Japan Operations

683,31459.8

715,643

51.7

UNIQLO International Operations

251,19122.0

413,655

29.9

Total UNIQLO Operations

934,50681.8

1,129,299

81.6

206,20218.0

251,225

18.2

2,263

0.2

2,410

0.2

1,142,971

100.0

1,382,935

100.0

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

— 18 —

(2)Revenue by region
Year ended 31 August 2014
(From 1 September 2013 to 31 August 2014)
RegionUNIQLO Japan
store sales of products

Percentage
of total (%)

Number of storesat the end of year
(Stores)

Revenue(Millions of yen)

Year-on-yearchange (%)

Hokkaido

23,286

107.2

1.7

29

Aomori

5,421

101.6

0.4

9

Iwate

4,837

96.9

0.3

8

Miyagi11,360

103.5

0.8

14

Akita

3,830

110.1

0.3

7

Yamagata

4,616

102.0

0.3

8

Fukushima

8,083

101.0

0.6

10

Ibaraki

14,181

101.5

1.0

17

Tochigi

9,786

99.3

0.7

14

Gunma

11,755

102.8

0.9

19

Saitama

37,477

105.6

2.7

47

Chiba

31,824

103.6

2.3

41

Tokyo

111,807

107.2

8.1

110

Kanagawa

55,064

105.8

4.0

63

Niigata

10,504

106.0

0.8

11

Toyama

5,086

99.6

0.4

7

Ishikawa

5,376

100.5

0.4

7

Fukui

3,689

101.0

0.3

5

Yamanashi

4,345

104.5

0.3

5

Nagano

9,655

102.6

0.7

11

Gifu

8,853

104.1

0.6

11

Shizuoka

19,504

103.7

1.4

24

Aichi

38,773

104.7

2.8

48

Mie

8,627

102.5

0.6

10

Shiga

6,209

109.1

0.4

9

Kyoto

16,524

103.9

1.2

20

Osaka

56,466

106.4

4.1

74

Hyogo

32,480

105.9

2.3

38

Nara

6,921

104.4

0.5

9

Wakayama

2,176

105.1

0.2

3

Tottori

3,066

102.8

0.2

3

Shimane

455

97.1

0.0

1

Okayama

8,431

106.6

0.6

10

Hiroshima

14,311

101.7

1.0

18

Yamaguchi

3,455

100.8

0.2

5

Tokushima

3,696

104.6

0.3

5

Kagawa

4,612

105.6

0.3

6

Ehime

5,303

96.2

0.4

7

Kochi

3,617

110.8

0.3

4

Fukuoka

25,600

103.1

1.9

31

Saga

3,499

110.4

0.3

4

Nagasaki

5,453

96.2

0.4

7

Kumamoto

7,491

102.5

0.5

10

— 19 —

Year ended 31 August 2014
(From 1 September 2013 to 31 August 2014)
RegionYear-on-yearchange (%)

Oita

5,701

99.8

0.4

8

Miyazaki

4,188

100.2

0.3

7

Kagoshima

6,832

97.6

0.5

11

Okinawa

4,546

120.1

0.3

6

678,796

104.7

49.1

831

Internet and mail-order sales

25,253

105.0

1.8

—

Products supplied to franchise stores/
management and administrative fees

10,770

107.0

0.8

21

823

105.9

0.1

—

UNIQLO Japan Operations

715,643

104.7

51.7

852

UNIQLO International Operations

413,655

164.7

29.9

633

Total UNIQLO Operations

1,129,299

120.8

81.6

1,485

251,225

121.8

18.2

1,268

2,410

106.5

0.2

—

1,382,935

121.0

100.0

2,753

Total UNIQLO Japan stores

Alteration charges

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

Percentage
of total (%)

Number of storesat the end of year
(Stores)

Revenue(Millions of yen)

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

Sales per unit

Summary

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

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

Year ended
31 August 2014
(From 1 September 2013 to
31 August 2014)

Year-on-year change (%)

1,092,453 million yen

121.4%

1,313,027 m

2

117.4%

832 thousand yen

103.4%

45,677 persons

119.9%

23,916 thousand yen

101.3%

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

— 20 —

(4)Purchases
Year ended 31 August 2014
(From 1 September 2013 to 31 August 2014)

By product category

Purchases(Millions of yen)

Year-on-year change(%)

Percentage of total
(%)

101.9

21.7

Men’s clothing

158,094

Women’s clothing

190,621

97.6

26.2

Children’s & Baby’s clothing

23,760130.3

3.3

Goods and other items

8,178

86.6

1.1

380,656

100.7

52.3

232,679

164.4

32.0

613,335

118.0

84.3

114,285

125.9

15.7

727,620

119.2

100.0

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

— 21 —

3. Business Plani)

Promotion of a “Global One” management system•
Strengthen the functions of each division in Tokyo, New York, Paris, Shanghai and Singapore in order to promote a“Global One” management system for integrating UNIQLO business and all other businesses.

ii)

Accelerate UNIQLO’s global development•
Our goal for the UNIQLO brand is to build the global marketing operation to gain the recognition and support ofcustomers over the world as “high-quality, fashionable basic wear sold at reasonable prices”.
•
Our top priority in the global strategy of the UNIQLO business is to accelerate the pace of new store openings andbecome the unrivaled No. 1 brand in Asia, the market with the most promising growth opportunities, particularly inGreater China (China, Hong Kong, Taiwan).
•In the U.S. market, we hope to quickly build up a chain of 100 stores on both the West Coast and the East Coast.
•
We are actively promoting our presence through our global flagship stores, global hotspot stores and megastores inmajor cities around the world.
•
To further advance the high quality and functionality of UNIQLO products, we are strengthening the full set ofour basic skills as an apparel manufacturer and retailer, from materials purchasing and product development, toproduction and distribution.
•
We have built up our Research & Development Center in New York, and we are strengthening our focus on products
for women, children and babies.
•
We are also building new systems for internet sales, in the interest of our global development.
•
Following the globalization of UNIQLO’s business, we are hiring and training more global personnel.

iii)

Strengthen sales skills at all stores in the UNIQLO Japan business•We are working to further improve our brand image, and we are engaged in a scrap-and-build program which aims
at increasing average sales floor area per store.
•
In the medium-term, it is our goal that half of our store sales personnel be full-time and regular employees, and to
tailor our product offerings and marketing to meet the needs of customers in specific geographical areas.

iv)

Expand the global brand business•
Develop and produce inexpensive apparel, open new stores, and build on expertise in low-cost management for the
GU business.
•
Pursue synergies among Theory, Comptoir des Cotonniers, Princesse tam.tam and J Brand, to build global businessfor each brand.
•
Pursue merger and acquisitions (“M&A”) investment to acquire global brands that can be promoted across theworld.

v)

Promotion of CSR
Our CSR motto is: “Making the world a better place”. It is our goal to enrich society, and the lives of people through ourbusiness activities.
•
Ongoing monitoring of working conditions at contractor factories.
•
Constantly striving to lessen the burden on the environment brought by our business, for example, by monitoring
conditions at factories that supply the materials we use.
•
Taking an active interest to make things better for our employees by promoting diversity, and supporting efforts tomaintain a proper work-life balance.
•Continuing efforts to employ persons with disabilities in Japan and around the world.
•
In countries around the world, supporting recycling of all our products. Accepting returns of products for recycling
purposes, and donating clothing to the needy.
•
Operating social business in Bangladesh.

— 22 —

4.

Risk
Risk factors that investors may regard as potentially having a significant impact on the businesses of the Company and theGroup are stated below. The Company, aware of the possibility that these risks may occur, has planned preventive actions
and thoroughgoing administrative procedures and strives to take appropriate measures when they occur.
The statements with regard to the future are based on management decision and projections made by the Company
based on information available at the time of the publication of this report (25 November 2014).

(1)

Risks specific to management strategy
Risks specific to the management strategy of the Group are as follows:(1)

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.

(2)Management personnel risks
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, this could have a negative impact on the Group’s earnings.

(3)

Competitive risks
In all the Group’s businesses, our customers are ordinary consumers, who are keenly selective when it comes to
products, services and prices. As a result, we are engaged in intense competition with rivals both domesticallyand internationally. If our business competitiveness wanes, in relative terms, this may have a negative effect onearnings.

(4)

Risk of dependency on production in specified geographic locations
Most products sold through the UNIQLO business, which is the Group’s core business, are manufactured in andimported from China and other Asian countries. For this reason, a dramatic political, economic or legal change,
or a major natural disaster, in China or other countries where we produce, could have an impact on supply of our
products.

— 23 —

(2)

5.

(5)

Overseas business risks
As the Group expands its business through M&A, we are steadily expanding our presence overseas. Going forward,
as we open more stores in more countries, it is expected that our overseas business will make up a higher portionof the Group’s total revenues. In that context, we will be dealing with many factors in various countries that could
potentially have a negative impact on the Group’s earnings: uncertainties regarding market needs and producttrends, economic fluctuations, social and political turmoil, changes in law, currency market volatility, and the ability
to hire and train well-qualified management personnel and local staff.

(6)

Currency risks
Most products sold through the UNIQLO business, which is the Group’s core business, are denominated in US
dollars. For products to be imported to Japan, we hedge our currency risks for about three years ahead, using
forward currency agreements to equalize our exchange rate exposure for imported products and stabilize ourpurchasing costs. We are now in a period when the yen has been weakening against the US dollar. If this trend
should continue for an extended period of time, this could have a negative impact on our earnings.

General business risks
In our management of the Group and operation of our businesses, we are cognizant of risks in several categories: (1)manufactured product liability risk, (2) risk of leaks of business secrets, or customer personal information, (3) risk due toweather, (4) risks of disputes and litigation, and (5) risk of change in the business climate and consumer trends.

Major Contracts
Not applicable.

6.

Research and Development
Not applicable.

7.

Financial Review(1)

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

(2)

Analysis of management performance for the year ended 31 August 2014
(1) Revenue and gross profit
Revenue grew to 1,382.9 billion yen, up 239.9 billion yen from the year before. For a detailed breakdownof revenue, see “Business Results (1) Analysis of Business Results for the year ended 31 August 2014” and“2. Summary of Revenue and Purchasing”. The main reason behind the growth in revenue was growth in all
major segments: a 162.4 billion yen increase for UNIQLO International, a 32.3 billion yen increase for UNIQLO
Japan, and a 45.0 billion yen increase for Global Brands. In particular, in UNIQLO International business, active
addition of new stores in Asia added to revenue, and in our global brand business, expansion of G.U. andTheory also added to revenue.
Gross profit grew to 699.7 billion yen, up 134.6 billion yen from the year before. As a percentage of revenue,
gross profit was 50.6%, up 1.2% from the year before. The main reasons for this growth were core productsin the UNIQLO Japan business such as Airism, bra camisoles, Suteteko and Rirako. New products in skirts andblouses also sold well, leading to improvement in gross profit margin.
(2)

Selling, general and administrative expenses, other income, other expenses and operating income
Selling, general and administrative expenses grew to 549.1 billion yen, up 123.0 billion yen from the year
before. As a percentage of revenue, selling, general and administrative expenses were 39.7%, up 2.4% fromthe year before. The main reasons were an increase in the number of part-time workers and other shop
personnel at UNIQLO Japan, and growth in the UNIQLO International business, where there has been an
increase in selling, general and administrative expenses.

— 24 —

As a result, operating income was 130.4 billion yen, down 3.6 billion yen from the year before. The Group
recorded 27.2 billion yen as “other expenses”, including a 19.3 billion yen impairment loss for its J Brand
business.
(3)

Finance income, finance costs and profit before income taxes
Finance income was 6.0 billion yen, down 16.2 billion yen from the year before. The main reason forthis decline was the slower decline in the value of the yen, resulting in a 5.1 billion yen foreign exchange
gains, compared with a 21.6 billion foreign exchange gains the previous year, when the yen dropped more
precipitously.
As a result, profit before income taxes was 135.4 billion yen, down 20.2 billion yen from the year before. As apercentage of revenue, profit before income taxes was 9.8%, down 3.8% from the year before.

(4)

(3)

Profit attributable to owners of the parent
Income taxes were 56.1 billion yen, or 7.8 billion yen higher than the previous consolidated fiscal year. Profit
declined, but the main reason for the increase in taxes was impairment of goodwill for the J Brand business,
which is not covered by tax effects. Profit attributable to owners of the parent was 74.5 billion yen, down 30.0
billion yen from the year before. Net income per share was 731.51 yen, down 295.17 yen.

Sources of funding, and analysis of funds liquidity(1) Total assets
Total assets as at 31 August 2014 were 992.3 billion yen, which was an increase of 91.0 billion yen relative tothe end of the preceding consolidated fiscal year. The principal factors were an increase of 17.3 billion yen in
cash and cash equivalents, an increase of 55.7 billion yen in inventories, and an increase of 23.0 billion yen inproperty, plant and equipment.
(2)

Total liabilities
Total liabilities as at 31 August 2014 were 356.2 billion yen, which was an increase of 44.7 billion yen relative
to the end of the preceding consolidated fiscal year. The principal factors were an increase of 31.7 billion yen
in trade and other payables, an increase of 5.9 billion yen in income taxes payable, and an increase of 6.6
billion yen in provisions.

(3)

Total net assets
Equity as at 31 August 2014 was 636.0 billion yen, which was an increase of 46.3 billion yen relative to the endof the preceding consolidated fiscal year. The principal factor was an increase of 43.9 billion yen in retained
earnings.

(4)

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

— 25 —CAPITAL EXPENDITURE
1. Capital expenditure
UNIQLO Japan opened 51 new stores. UNIQLO International opened 83 stores in the PRC, 31 in South Korea, 9 in Taiwan,
10 in Thailand, 11 in Malaysia, 18 in USA, 6 in Singapore, 5 in Hong Kong, 3 in France, 10 in the Philippines, and 3 inIndonesia. In addition, Global Brands opened 152 new stores.
As a result, the Group’s capital expenditure amounted to 58.8 billion yen during the year ended 31 August 2014. Key
components of this were 41.4 billion yen for buildings, 6.9 billion yen for lease deposits for stores, 2.8 billion yen for
construction assistance funds and 7.5 billion yen for intangible assets.
The above figures do not include consumption tax, etc.

2.

Important Facilities
As at 31 August 2014, the Group’s important facilities were shown as below:(1)

Information about the Reporting Entity
Area (m2)Company name

FAST RETAILING
CO., LTD.

Type of facility

Location

Head office

Yamaguchi City,
Yamaguchi Prefecture

Commercial
establishments

Fukuoka City,
Chuo-ku, etc.

Others(2)

Capital expenditure (Millions of yen)

Number of
Number ofcommercial
employees
establishments(Persons)(Stores)

Buildings

Deposits/
guarantees

Construction
assistance
funds

1,047

681

—

—

100

1,829

23

—

—

—

415

1,358

—

1

1,775

—

4

29,308.87

111

648

3,955

—

131

4,846

1,065

—

Land

Land

95,255.83

Others

Total

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

Type of facility

UNIQLO Japan Store

Location

Land

Capital expenditure (Millions of yen)Land

Buildings

Deposits/
guarantees

Construction
assistance
funds

Others

Total

Number of
Number ofcommercial
employees
establishments(Persons)(Stores)

Hokkaido

—

—

219

505

634

111

1,471

110

29

Aomori

—

—

70

138

166

18

393

29

9

Iwate

—

—

97

108

101

55

363

27

8

Miyagi

—

—

201

356

495

201

1,255

85

14

Akita

—

—

49

98

193

42

383

17

7

Yamagata

—

—

237

155

90

123

606

32

8

Fukushima

—

—

86

164

540

86

877

38

10

Ibaraki

—

—

434

546

373

154

1,508

77

17

Tochigi

—

—

251

205

435

108

1,000

59

14

Gunma

—

—

303

317

358

119

1,098

52

19

Saitama

—

—

1,004

1,234

682

454

3,374

179

47

Chiba

—

—

699

1,013

532

343

2,589

148

41

Tokyo

—

—

3,957

11,903220

1,207

17,290684

110

Kanagawa

—

—

1,089

2,262

342

659

4,353

285

63

Niigata

—

—

157

377

602

139

1,277

54

11

Toyama

—

—

44

95

260

62

462

29

7

Ishikawa

—

—

131

112

342

54

640

24

7

Fukui

—

—

53

65

96

25

241

17

5

Yamanashi

—

—

85

97

226

48

457

21

5

Nagano

—

—

65

139

560

91

856

44

11

Gifu

—

—

298

254

372

172

1,098

38

11

Shizuoka

—

—

565

465

561

115

1,707

87

24

Aichi

—

—

1,043

1,288

877

510

3,719

173

48

Mie

—

—

151

168

377

61

758

40

10

— 26 —

Area (m2)Company name

Type of facility

UNIQLO Japan StoreUNIQLO CO., LTD.

Location

Land

Capital expenditure (Millions of yen)Land

Buildings

Deposits/
guarantees

Construction
assistance
funds

OthersNumber of
Number ofcommercial
employees
establishments(Persons)(Stores)

Total

Shiga

—

—

198

224

146

113

683

44

9

Kyoto

—

—

369

469

139

92

1,071

76

20

Osaka

—

—

958

2,894

633

445

4,933

279

74

Hyogo

—

—

865

1,020

406

334

2,625

157

38

Nara

—

—

73

187

192

57

510

39

9

Wakayama

—

—

14

40

51

5

112

8

3

Tottori

—

—

9

70

58

4

142

15

3

Shimane

—

—

2

10

17

1

31

5

1

Okayama

—

—

92

180

197

88

559

55

10

Hiroshima

—

—

410

431

166

84

1,093

65

18

Yamaguchi

2,591.06

450

133

52

77

41

754

12

5

Tokushima

—

—

130

86

40

49

307

29

5

Kagawa

—

—

89

225

29

15

359

24

6

Ehime

—

—

103

150

100

13

367

20

7

Kochi

—

—

97

85

39

58

280

15

4

Fukuoka

—

—

800

789

594

349

2,533

137

31

Saga

—

—

95

70

119

81

366

12

4

Nagasaki

—

—

54

126

247

20

448

22

7

Kumamoto

—

—

54

286

63

30

435

37

10

Oita

—

—

199

216

59

127

603

35

8

Miyazaki

—

—

37

92

72

28

230

19

7

Kagoshima

—

—

146

185

139

78

549

35

11

Okinawa

—

—

123

84

3

69

281

30

6

UNIQLO Japan Stores

2,591.06450

16,36130,053

13,044

7,161

67,071

3,519

831

UNIQLO Japan, other

19,960.76

353

48

867

366

218

1,854

663

—

Total for UNIQLO Japan

22,551.82

803

16,41030,92013,411

7,380

68,925

4,182

831

—

—

—

—

—

5

5

12

6

J BRAND Japan
Co., LTD.

Stores in Japan, etc.

Yamaguchi City,
Yamaguchi
Prefecture, etc.

G.U. CO., LTD.

Stores in Japan, etc.

Yamaguchi City,
Yamaguchi
Prefecture, etc.

2,962.14

22

5,577

4,996

2,488

3,083

16,169624

275

LINK THEORY JAPANCO., LTD.

Stores in Japan, etc.

Yamaguchi City,
Yamaguchi
Prefecture, etc.

31,676.31

1,389

968

1,195

—

1,234

4,787

1,469

265

Comptoir desCotonniers JapanStores in Japan, etc.

Yamaguchi City,
Yamaguchi
Prefecture, etc.

—

—

31

326

—

111

469

221

29

— 27 —

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

Number of
Number ofcommercial
employees
establishments(Persons)(Stores)

Buildings

Deposits/
guarantees

Construction
assistance
funds

—

5,856

433

—

458

6,748

324

17

—

—

12,424

2,532

—

2,521

17,477

8,585

283

Seoul Special City,
South Korea

—

—

5,038

4,042

—

2,096

11,177

2,694

133

UNIQLOInternational Store

Moscow,
Russian Federation

—

—

216

325

—

100

641

45

4

UNIQLO TRADING
CO., LTD.

UNIQLOInternational Store

Shanghai, PRC

—

—

2,183

304

—

53

2,541

736

22

FAST RETAILING(SINGAPORE) PTE. Ltd.

UNIQLOInternational Store

Republic of Singapore

—

—

1

29

—

7

38

38

18

UNIQLO (THAILAND)COMPANY LIMITEDUNIQLOInternational Store

Bangkok,
Kingdom of Thailand

—

—

110

476

—

2,438

3,025

782

20

PT. Fast RetailingIndonesia

UNIQLOInternational Store

Jakarta, Indonesia

—

—

356

77

—

345

779

537

4

UNIQLO Australia
Pty Ltd.

UNIQLOInternational Store

Melbourne, Australia

—

—

675

4

—

185

866

197

1

FAST RETAILING(Shanghai) TRADING
CO., LTDUNIQLOInternational Store

Shanghai, China

—

—

2,348

221

—

116

2,686

235

1

Fast RetailingFrance S.A.S.

InternationalStores, etc.

Paris, France

—

—

20

161

—

82

264

192

—

Fast Retailing
USA, Inc.

InternationalStores, etc.

New York, U.S.A.

——

11,550

531

—

3,014

15,096

1,740

76

J Brand, Inc.

InternationalStores, etc.

California, U.S.A.

—

—

9

7

—

72

88

242

—

Company name

Type of facility

Location

UNIQLO EUROPE
LIMITEDUNIQLOInternational Store

London,United Kingdom—

FAST RETAILING (CHINA)TRADING CO., LTD

UNIQLOInternational Store

Shanghai, PRC

FRL Korea Co., Ltd.

UNIQLOInternational StoreLLC UNIQLO (RUS)(Notes)

3.

Land

Land

OthersTotal

1. Most items in the “Others” category for the Reporting Entity are located at the Tokyo headquarter (Minato-ku) orat the old head office (Ube City, Yamaguchi Prefecture).
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 entrusted operating officers, junior employees, part-time workers or
temporary staff seconded from other companies.
4. Assets are not expressed as allocated among business segments.

Plans for new facility construction, old facility removal, etc.
The following are the planned important new facility construction and/or facility removal as at 31 August 2014.

(1)

Important New Facilities
Amount of planned investment
Total (Millions ofyen)Amount alreadydisbursed(Millions of yen)

Construction
startConstruction
completion

Planned sales
floor area (m2)Reference

Musashino city,
Tokyo

852

708

September 2012

October 2014

3,190

Lease

Osaka city,
Osaka

1,502

266

December 2012

October 2014

3,967

Lease

Company name

Type of facility

Name of business

Location

UNIQLO CO., LTD.

UNIQLO Japan
storesUNIQLO Kichijoji
store

UNIQLO CO., LTD

UNIQLO Japan
storesUNIQLO OSAKA(Notes)(2)

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 2014.

— 28 —

Stock Information and Dividend Policy
1.
(1)

Stock Information
Number of Shares(i)

Total number of shares
Type

(ii)

Total number of authorized shares (shares)

Common stock

300,000,000

Total

300,000,000

Shares issued

Type

As at 31 August 2014

Common stock

106,073,656

Total

106,073,656

Name of financial
instrument exchangeof listing, or authorized
financial instruments
firms association
First section of theTokyo Stock Exchange and106,073,656
the Main board of The
Stock Exchange of Hong
Kong Limited (Note)
106,073,656―

Numbers of sharesissued as of submission
date (Shares)(25 November 2014)

Details

100 sharesas one unit―

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

(2)

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

(i)

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

As at 31 August 2014

Number of stock options (Shares)

1,292

As at last day ofmonth before
submission date
(31 October 2014)
Same as left

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

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Same as left

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

1,292

Same as left

Amount to be paid upon exerciseof 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.

Same as left

Exercise period of share subscription rights

From 8 November 2013 to 7 November 2020

Same as left

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

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

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 29 —

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

— 30 —

(ii)

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

As at 31 August 2014

Number of stock options (Shares)

16,750

Number of share subscription rights
for treasury stock (Shares)

As at last day ofmonth before
submission date
(31 October 2014)
16,229——Type of shares to be issued upon exercise ofshare subscription rights

Common stock

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

16,750

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

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

Same as left

Exercise period of share subscription rights

From 8 December 2010 to 7 November 2020

Same as left

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

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

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 31 —

Same as left
16,229(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in subparagraphs (a)-(e) of Article 236(1)viii of
the Companies Act of Japan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event,
any Outstanding Share Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue newshare subscription rights; provided, however, that terms and conditions stipulating that the Company Resulting From
Reorganization shall issue share subscription rights that prescribe the matters stated below shall be included in any
absorption merger agreement, new merger agreement, absorption-type company split agreement, incorporation-typecompany split plan, share exchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the earlier of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a 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.

— 32 —

(iii)

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

As at 31 August 2014

Number of stock options (Shares)

13,145

Number of share subscription rights
for treasury stock (Shares)

As at last day ofmonth before
submission date
(31 October 2014)
Same as left——

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Same as left

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

13,145Same as left

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

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

Same as left

Exercise period of share subscription rights

From 15 November 2014 to 14 November 2021

Same as left

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

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

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 33 —

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

— 34 —

(iv)

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

As at 31 August 2014

Number of stock options (Shares)

13,788

Number of share subscription rights
for treasury stock (Shares)

As at last day ofmonth before
submission date
(31 October 2014)
13,388——Type of shares to be issued upon exercise ofshare subscription rights

Common stock

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

13,788Amount to be paid upon exercise ofshare subscription rights (Yen)

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

Same as left

Exercise period of share subscription rights

From 15 December 2011 to 14 November 2021

Same as left

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

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

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 35 —

Same as left
13,388

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

— 36 —

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

As at 31 August 2014

Number of stock options (Shares)

10,001

Number of share subscription rights
for treasury stock (Shares)

As at last day ofmonth before
submission date
(31 October 2014)
Same as left——

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Same as left

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

10,001Same as left

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

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

Same as left

Exercise period of share subscription rights

From 13 November 2015 to 12 November 2022

Same as left

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

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

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 37 —

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

— 38 —

(vi)

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

As at 31 August 2014

Number of stock options (Shares)

13,786

Number of share subscription rights
for treasury stock (Shares)

As at last day ofmonth before
submission date
(31 October 2014)
13,372——Type of shares to be issued upon exercise ofshare subscription rights

Common stock

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

13,786

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

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

Same as left

Exercise period of share subscription rights

From 13 December 2012 to 12 November 2022

Same as left

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

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

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 39 —

Same as left
13,372

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

— 40 —

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

As at 31 August 2014

Number of stock options (Shares)

7,395

As at last day ofmonth before
submission date
(31 October 2014)
Same as left

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

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Same as left

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

7,395

Same as left

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

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

Same as left

Exercise period of share subscription rights

From 3 December 2016 to 2 December 2023

Same as left

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

Issue price: 37,109
Paid-in capital: 18,555

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 41 —

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

— 42 —

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

As at 31 August 2014

Number of stock options (Shares)

19,158As at last day ofmonth before
submission date
(31 October 2014)
18,210

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

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

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

19,158Amount to be paid upon exercise ofshare subscription rights (Yen)

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

Same as left

Exercise period of share subscription rights

From 3 January 2014 to 2 December 2023

Same as left

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

Issue price: 37,514
Paid-in capital: 18,757

Same as left

Exercise conditions of share subscription rights

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

Same as left

Matters pertaining to transfer ofshare subscription rights

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

Same as left——

(Note)

Same as left

Matters pertaining to substitute payments
Matters pertaining to issuing of share subscription
rights in conjunction with reorganization— 43 —

Same as left
18,210(Notes) Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited tocases where the Company becomes extinct thereby), absorption-type company split or incorporation-type company
split (in each event, limited to cases where the Company is the entity resulting from the company split), or exchangeor transfer of shares (in each event, limited to cases where the Company becomes a wholly-owned subsidiary),
parties holding share subscription rights in existence immediately preceding the effective date of such Reorganization(hereinafter referred to as “Outstanding Share Subscription Rights”) shall, in each applicable case, be issued sharesubscription rights for shares of the resulting company as prescribed in subparagraphs (a)-(e) of Article 236(1)viii of
the Companies Act of Japan (hereinafter referred to as the “Company Resulting From Reorganization”). In such event,
any Outstanding Share Subscription Rights shall lapse and the Company Resulting From Reorganization shall issue newshare subscription rights; provided, however, that terms and conditions stipulating that the Company Resulting From
Reorganization shall issue share subscription rights that prescribe the matters stated below shall be included in any
absorption merger agreement, new merger agreement, absorption-type company split agreement, incorporation-typecompany split plan, share exchange agreement or transfer of shares plan.
1.
Number of share subscription rights to be issued by the Company Resulting From Reorganization:
Each holder of Outstanding Share Subscription Rights shall be issued the same number thereof.
2.
Type of shares of the Company Resulting From Reorganization underlying the share subscription rights:
Common stock of the Company Resulting From Reorganization.
3.
Number of shares of the Company Resulting From Reorganization underlying the share subscription rights:
A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type andnumber of shares underlying the above-mentioned share subscription rights.
4.
Value of property to be incorporated upon exercise of the share subscription rights:
The value of property to be incorporated upon exercise of share subscription rights that are issued shall be theamount obtained by multiplying the exercise price after reorganization prescribed below by the number of sharesof the Company Resulting From Reorganization underlying the share subscription rights that have been finalized asstated in No. 3. above. The exercise price after Reorganization shall be 1 yen per share of the Company Resulting
From Reorganization that can be issued upon exercise of each share subscription rights that is issued.
5.
Period during which share subscription rights can be exercised:
The period from the earlier of either the first day of the period during which share subscription rights can be
exercised as prescribed above or the day on which a 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.

(3)

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

(4)

Content of Rights Plan
Not applicable.

— 44 —

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

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

(6)

Status, by Type of Holder
As at 31 August 2014
Shares (One unit = 100 shares)
Government,
Financial
municipal
institutions
entities

Class

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

Total

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

—

68

54

126

530

12

7,033

7,823

―

Number ofshares held
(Trading units)—

246,724

91,01585,181

228,68517408,6221,060,244

49,256Percentage ofshares held (%)

—

23.27

8.58

8.03

21.57

0.00

38.54

100.00―(Notes) 1.
2.

(7)

The 4,155,045 shares of treasury stock include 41,550 units of shares held by individuals and others. Shares lessthan one unit includes 45 units of 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 2014
Name or trade nameLocation

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Tadashi Yanai

Shibuya-ku, Tokyo

22,987

21.67

The Master Trust Bank of Japan, Ltd.

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

11,500

10.84

Japan Trustee Services Bank, Ltd.

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

8,693

8.20

TTY Management B.V.

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

5,310

5.01

Kazumi Yanai

Shibuya-ku, Tokyo

4,781

4.51

Koji Yanai

Shibuya-ku, Tokyo

4,780

4.51

Fight & Step Co., Ltd.

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

4,750

4.48

BNP Paribas Securities (Japan) Limited

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

3,642

3.43

MASTERMIND, LLC

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

3,610

3.40

Trust & Custody Services Bank, Ltd.

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

3,351

3.16

73,407

69.20

Total

―

— 45 —

(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 24 September
2013 by Nomura Securities Co., Ltd. and the two parties of NOMURA INTERNATIONAL PLC and Nomura AssetManagement Co., Ltd. as joint holders, each party was holding the shares stated below as at 13 September 2013.
However, since the Company has not been able to confirm the number of shares actually held as of the end of theterm, these shareholdings have not been included in the above statement of principal shareholders.
Name or trade nameLocation

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Nomura Securities Co., Ltd.

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

289

0.27

NOMURA INTERNATIONAL PLC

1 Angel Lane, London EC4R 3AB, United
Kingdom

599

0.57

Nomura Asset Management Co., Ltd.

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

5,618

5.30

4.

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

Number ofshares held(Thousand shares)

Percentage of
total number ofshares issued (%)

Nomura Securities Co., Ltd.

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

961

0.91

NOMURA INTERNATIONAL PLC

1 Angel Lane, London EC4R 3AB, United
Kingdom

750

0.71

Nomura Asset Management Co., Ltd.

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

5,880

5.54

5.

In addition to the above, 4,155,045 shares of treasury stock are held by the Company (3.92% of the total numberof authorized shares).

(8)

Voting Rights(i)

Shares issued
As at 31 August 2014
Number of shares (shares)

Number of voting rights(number)

Details

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 held astreasury stock)
Common stock――

4,155,000

Shares with full voting rights (others)

Common stock

101,869,400

Shares less than one unit

Common stockClass

Total number of shares issued
Total number of voting rights of allshareholders(Notes) 1.
2.

1,018,694(Note) 1

49,256―(Notes) 1, 2

106,073,656

―

―

―

1,018,694―

The columns for the number of shares of “Shares with full voting rights (others)” and “Shares less than one unit”
include, respectively, 2,700 shares and 84 shares held in the name of Japan Securities Depository Center, Inc.
Common stock in the “Shares less than one unit” column includes 45 shares of treasury stock held by theCompany.

— 46 —

(ii)Treasury StockAs at 31 August 2014

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

Holder’s address

717-1 Sayama,
Yamaguchi-City,
Yamaguchi

Total

(9)

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

Total numberof shares held
(Shares)

Percentage of
total number ofshares issued (%)

4,155,000—

4,155,000

3.92

4,155,000—

4,155,000

3.92

Stock Options Program

The Company has instituted a stock options program that grants rights to acquire new shares pursuant to the Companies Act ofJapan.
1st Share subscription rights A type
Resolution date

8 October 2010

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

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

Same as above

1st Share subscription rights B type
Resolution date

8 October 2010

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

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

Same as above— 47 —

266
413

2nd Share subscription rights A type
Resolution date

12 October 2011

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

14
4

—

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

Same as above

2nd Share subscription rights B type
Resolution date

12 October 2011

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

139
584

—

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

Same as above

3rd Share subscription rights A type
Resolution date

11 October 2012

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

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

Same as above

18
8

3rd Share subscription rights B type
Resolution date

11 October 2012

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

136
615

—

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

Same as above

4th Share subscription rights A type
Resolution date

10 October 2013

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments

19
11

—

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

Same as above

4th Share subscription rights B type
Resolution date

10 October 2013

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

As noted in (2) Share Subscription Rights.

Number of shares (shares)

Same as above

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

Exercise period of share subscription rights

Same as above

Exercise conditions of share subscription rights

Same as above

Matters pertaining to transfer of share subscription rights

Same as above

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 49 —

Same as above

180
706

5th Share subscription rights A type
Resolution date

9 October 2014

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Number of shares (shares)

21,732 shares

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

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

Exercise period of share subscription rights

From 14 November 2017
To 13 November 2024

Exercise conditions of share subscription rights

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

Matters pertaining to transfer of share subscription rights

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

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization— 50 —(Note)

36
16

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

— 51 —

5th Share subscription rights B type
Resolution date

9 October 2014

Class and number of recipients (persons)

Employees of the Company
Employees of the Group subsidiaries

Type of shares to be issued upon exercise ofshare subscription rights

Common stock

Number of shares (shares)

33,062 shares

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

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

Exercise period of share subscription rights

From 14 December 2014
To 13 November 2024

Exercise conditions of share subscription rights

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

Matters pertaining to transfer of share subscription
rightsAny acquisition of share subscription rights by transfer shallrequire an authorizing resolution from the Board of Directors.

Matters pertaining to substitute payments—

Matters pertaining to issuing of share subscription rights
in conjunction with reorganization(Note)— 52 —

223
785

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

— 53 —

2.

Treasury Stock Information
Types of Shares(1)

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

Purchases approved by General Meeting of Shareholders
Not applicable.

(2)

Purchases approved by Board of Directors
Not applicable.

(3)

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

Total paid
(thousand yen)

Treasury stock purchased in the fiscal year ended 31 August 2014

699

25,556

Purchases of Treasury stock in current year——

(Notes) Treasury stock purchased in the current year does not include shares of less than one unit purchased between 1
November 2014 and the submission date of this report.

(4)

Status of treasury stock purchased
Fiscal year ended 31 August 2014
Class

Number of shares(shares)

Total disposal value(thousands of yen)

Current year
Number of shares(shares)

Total disposal value(thousands of yen)

Treasury stock purchases for which
subscribers were solicited

—

—

—

—

Treasury stock canceled after
purchase

—

—

—

—

Treasury stock transferred due
to mergers, share exchange orcompany split

—

—

—

—

22,81886,667

2,272

8,634

4,155,045—

4,152,773—

Other
Number of Treasury shares held

(Notes) The breakdown of figures for the year ended 31 August 2014 reflects the exercise of 22,818 share subscription rights,
a share disposal value of 86,667 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 2014 andthe submission date of this report.

3.

Dividend Policy

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

— 54 —

Based on the policy outlined above and the earnings of the consolidated fiscal year ended 31 August 2014, we plan to pay
a year-end dividend of ¥150 per share. Together with the ¥150 interim dividend per share, this will bring the total annual
dividend for the current fiscal year to ¥300. It is our intention to effectively utilize retained earnings and free cash flow for M&A
investment, financial investment and loans to strengthen the operational base of the Group companies.
The payment of an interim dividend under Article 454-5 of the Companies Act of Japan is stipulated by the Company’s Articles
of Incorporation.
Dividends for the Company’s 53rd fiscal year are as follows:
Total dividends(Millions of yen)

Resolution date

Dividends per share(Yen)

Board of Directors resolution of 10 April 201415,286

150

Board of Directors resolution of 3 November 201415,287

150

4.
(1)

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

49th Year

50th Year

51st Year

52nd Year

53rd Year

Accounting period

Year ended
31 August 2010

Year ended
31 August 2011

Year ended
31 August 2012

Year ended
31 August 2013

Year ended
31 August 2014

High (Yen)

18,03015,08019,15044,40045,350Low (Yen)

10,3408,800

11,95015,81030,350(Notes) High/low share price data are from the first section of the Tokyo Stock Exchange.

(2)

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

March 2014

April

May

June

July

AugustHigh (Yen)38,64538,77034,41035,17034,74034,550Low (Yen)

34,55031,68530,95032,90032,18032,030(Notes) High/low share price data are from the first section of the Tokyo Stock Exchange.

5.

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 Listing Rules
regarding certain requirements for cancellation of HDRs upon a share repurchase. The Company has complied with the relevant
conditions for the year ended 31 August 2014.

— 55 —

Board of Directors
Position

Responsibilities

Name

Date of birth

Brief biography
August 1972
September 1972
August 1973
September 1984
June 2001
November 2002
February 2004

November 2004
March 2005
April 2005

Representative
director, chairman
and president

CEO

Tadashi Yanai

Born 7 February
1949

April 2005
April 2005
June 2005
September 2005
November 2005
November 2005
September 2008
September 2008
June 2009
November 2011

— 56 —

TermofofficeJoined FAST RETAILING CO., LTD.
Director, FAST RETAILING CO., LTD.
Executive Managing Director, FAST RETAILING
CO., LTD.
President & CEO, FAST RETAILING CO., LTD.
External Director, Softbank Corp. (current)
Representative Director and Chairman, FASTRETAILING CO., LTD.
Representative Director and Chairman, LINKHOLDINGS CO., LTD. (currently LINK THEORYJAPAN CO., LTD.)
Chairman, UNIQLO USA, Inc. (currently Fast
Retailing USA, Inc.)
Representative Director and Chairman,
Onezone Corp. (currently G.U. CO., LTD.)
Director and Chairman, LINK THEORYHOLDINGS CO., LTD. (currently LINK THEORYJAPAN CO., LTD.)
Chairman, FR FRANCE S.A.S. (currently FAST
Note 3RETAILING FRANCE S.A.S.)
Chairman, GLOBAL RETAILING FRANCE S.A.S.
(currently UNIQLO EUROPE LIMITED)
External Director, SPARX Asset Management
Co., Ltd. (currently SPARX Group Co., Ltd.)
Chairman, President and CEO, FAST RETAILING
CO., LTD. (current)
Chairman, President and CEO, UNIQLO CO.,LTD. (current)
Chairman, UNIQLO (U.K.) LIMITED (currently
UNIQLO EUROPE LIMITED)
Director and Chairman, GOV RETAILING CO.,LTD. (currently G.U. CO., LTD.)
Chairman & CEO, FR FRANCE S.A.S. (currently
FAST RETAILING FRANCE S.A.S.)
External Director, Nippon Venture Capital Co.,
Ltd. (current)
Director, LINK THEORY JAPAN CO., LTD.
(current)

Number ofshares held
(thousand shares)

22,987

Position

Responsibilities

Name

Date of birth

Brief biography
April 1959
October 2000
April 2003

Director

Toru Hambayashi

Born 7 January
1937

June 2004
November 2005
June 2007
April 2009
June 2011
April 1981
May 1989

June 1989
November 1998

Director

Born 25 December
Nobumichi Hattori
1957

October 2003

June 2005
November 2005
October 2006

April 2009

— 57 —

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. (current)
External Director, FAST RETAILING CO., LTD.
(current)
External Director, MAEDA CORPORATION(current)
Adviser, The Association for the Promotion ofInternational Trade, Japan (current)
External Director, DAIKYO INCORPORATED(current)TermofofficeNumber ofshares held
(thousand shares)

Note 3―Joined NISSAN MOTOR CO.,LTD.
Finished Master’s Degree Program at
Massachusetts Institute of Technology Sloan
School of Management
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,
Note 3
Hitotsubashi University
External Director, Miraca Holdings Inc.
(current)
External Director, FAST RETAILING CO., LTD.
(current)
Visiting Professor, Graduate School ofInternational Corporate Strategy, Hitotsubashi
University (current)
Visiting Professor, Waseda Graduate School ofFinance, Accounting and Law (current)―Position

Responsibilities

Name

Date of birth
April 1980
April 1998
April 2001
April 2003
April 2005
April 2006

Director

Toru Murayama

Born 11 June
1954

June 2006
September 2007
November 2007
April 2008
April 2009
September 2009
April 2010
October 2011
January 2013
April 1978
December 1991
August 1994
August 1996
August 2000
January 2001
April 2008

Director

Masaaki Shintaku

Born 10 September
1954

Term
of
officeNumber ofshares held
(thousand shares)

Joined Arthur Andersen & Co. (currently
Accenture Japan Ltd.)
Part-time Lecturer, Undergraduate School of
Science and Engineering, Waseda University
Guest Professor, Undergraduate School ofCommerce, Meiji University
Representative Director and President,
Accenture Japan Ltd.
Visiting Professor, Undergraduate School of
Science and Engineering, Waseda University
Director and Vice Chairman, Accenture
Japan Ltd.
External Director, SPARX Asset Management Note 3Co., Ltd. (currently SPARX Group Co., Ltd.)
Director and Chairman, Accenture Japan Ltd.
External Director, FAST RETAILING CO., LTD.
(current)
Visiting Professor, Comprehensive Research
Organization, Waseda University
Advisor, Waseda University
Corporate Advisor, Accenture Japan Ltd.
Professor, Faculty of Science and Engineering,
Waseda University (current)
Advisor, Microsoft Japan Co., Ltd. (current)
President, Office Murayama (current)0

Joined IBM Japan, Ltd.
Joined Oracle Corporation Japan
Director, Oracle Corporation Japan
Managing Director, 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
Executive Advisor, Oracle Corporation Japan
Advisor, FAST RETAILING CO., LTD.
Advisory Board Member, NTT DOCOMO,
INC. (current)
External Director, FAST RETAILING CO.,LTD. (current)
External Director, COOKPAD Inc. (current)
Specialized Member, the Central Council
for Education in the Ministry of Education,
Culture, Sports, Science and Technology(current)―

Brief biography

June 2008
August 2008
March 2009
May 2009
November 2009
July 2011
May 2013— 58 —

Note 3

Position

Responsibilities

Name

Date of birth
April 1980
April 1991
June 2010

Director

Takashi Nawa

Born 8 June
1957

June 2010
September 2010
June 2011
September 2012
November 2012
June 2014
April 1966

September 1972
March 1993

April 1997

Standing Statutory
AuditorAkira Tanaka

Born 26 June
1942

Term
of
officeNumber ofshares held
(thousand shares)

Note 3―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’s Co.
(Japan), Ltd. (currently McDonald’s Holdings
Company (Japan), Ltd.)
Note 4Advisor, McDonald’s Co. (Japan), Ltd.
(currently McDonald’s Holdings Company(Japan), Ltd.)
Advisor, FAST RETAILING CO., LTD.
Managing Director, FAST RETAILING CO., LTD.
Senior Vice President, UNIQLO CO., LTD.
Senior Vice President, FAST RETAILING
CO., LTD.
Standing Statutory Auditor, FAST RETAILING
CO., LTD. (current)

3

Brief biography

March 2003

August 2003
November 2003
November 2005
March 2006
November 2006
April 2011

— 59 —

Joined Mitsubishi Corporation
Joined McKinsey & Company
Professor, The Graduate School ofInternational Corporate Strategy (ICS),
Hitotsubashi University (current)
President, Genesys Partners (current)
Senior Advisor, Boston Consulting Group(current)
External Director, NEC Capital Solutions
Limited (current)
President, Next Smart Lean Co., Ltd. (current)
External Director, FAST RETAILING CO., LTD.
(current)
External Director, DENSO CORPORATION(current)

Representative Director of FR Health Insurance
Organization (current)Position

Responsibilities

Name

Date of birth
April 1983
February 1994
September 1998
April 2004

September 2005
September 2006
January 2008
Standing Statutory
AuditorMasaaki Shinjo

Born 28 January
1956

January 2008
March 2009
September 2009
January 2010
March 2011
April 2011
November 2012
November 1978
August 1982
April 1992
November 1993

AuditorTakaharu Yasumoto

Born 10 March
1954

Term
of
officeNumber ofshares held
(thousand shares)

Joined ASAHIPEN CORPORATION
Joined FAST RETAILING CO., LTD.
Entrusted operating officer, manager ofadministration, FAST RETAILING CO., LTD.
General Manager, Legal Department,
LINK THEORY HOLDINGS CO., LTD.
(currently LINK THEORY JAPAN CO., LTD.)
General Manager, Group Auditing, FASTRETAILING CO., LTD.
Entrusted operating officer, manager ofadministration, G.U. CO., LTD.
General Manager, Group Corporate
Transformation, FAST RETAILING CO., LTD.
Director, Onezone Corp (currently G.U. CO.,
Note 5LTD.)
General Manager, Corporate Administration,
FAST RETAILING CO., LTD.
Statutory Auditor, GOV Retailing Co., Ltd.
(currently G.U. CO., LTD.)
General Manager, Sales Support, UNIQLO CO.,LTD.
General Manager, Corporate Planning &Management, FAST RETAILING CO., LTD.
Auditor, FAST RETAILING (CHINA) TRADING
CO., LTD. (current)Standing Statutory Auditor, FAST RETAILING
CO., LTD. (current)―

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, ASKUL Corporation(current)
Note 5
Statutory Auditor, LINK INTERNATIONAL CO.,LTD. (currently LINK THEORY JAPAN CO., LTD.)
External Statutory Auditor, UNIQLO CO., LTD.
(current)
Guest Professor, Chuo Graduate School ofInternational Accounting
External Statutory Auditor, UBIC, Inc. (current)

8

Brief biography

August 2001
June 2003
November 2005
April 2007
June 2010— 60 —

Position

Responsibilities

Name

Date of birth
April 1973

May 1991
June 1995

April 1998
September 2002

AuditorAkira Watanabe

Born 16 February
1947

March 2004
June 2006
November 2006
June 2007
April 2008
April 2010
March 2013
October 2014
April 1991
April 1999
April 1999

AuditorKeiko Kaneko

Born 11 November
1967

January 2007
April 2007
November 2012
November 2012
June 2013

Total(Notes)TermofofficeNumber ofshares held
(thousand shares)

Note 4―

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
Note 5
University Graduate School of Law
External Statutory Auditor, FAST RETAILING
CO., LTD. (current)
External Statutory Auditor, UNIQLO
CO., LTD. (current)
External Statutory Auditor, The Asahi Shimbun
Company (current)―

Brief biography
Registered as a member of Japan Federationof Bar Associations (Dai-Ichi Tokyo Bar
Association)
Chairman, Legislative Council of the Ministryof Justice
Vice Chairman, Committee for revision of thebankruptcy code, Japan Federation of Bar
Associations
Chairman, Yamaichi Securities Co., Ltd. Legal
Responsibility Judging Panel
Corporate reorganization trustee, K.K.
Meguro Gajoen
Corporate reorganization trustee, Togo
Co., Ltd.
Non-Executive Director, JAPAN PILECORPORATION (current)
External Statutory Auditor, FAST RETAILING
CO., LTD. (current)
External Director, MAEDA CORPORATION(current)
Representative, Seiwa Meitetsu Law Office
External Director, MS&AD Insurance Group
Holdings, Inc. (current)
External Director, DUNLOP SPORTS CO. LTD.
(current)
External Statutory Auditor, KADOKAWADWANGO CORPORATION (current)

22,998

1. Directors Toru Hambayashi, Nobumichi Hattori, Toru Murayama, Masaaki Shintaku, and Takashi Nawa are External
Directors.
2. Takaharu Yasumoto, Akira Watanabe, and Keiko Kaneko are External Statutory Auditors.
3. For a one-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on 20
November 2014.
4. For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on 20
November 2014.
5. For a four-year term beginning at the conclusion of the Ordinary General Meeting of Shareholders on 22
November 2012.
— 61 —

Corporate Governance Report
1.
(1)

Corporate Governance Practice
Basic Thinking on Corporate Governance
To become the world’s no. 1 continuously growing apparel retailer, in harmony with society and the times, the Company
strives to raise the level of its corporate governance to strengthen the independence and the function of monitoring of
the Board of Directors while achieving management that is efficient and transparent. As a key element to strengthen of
our corporate governance systems, the Company has instituted a system to entrust operating officers (transferring somemanagement authority away from the Board of Directors), to separate management decision-making from operations
performance functions, with the aim of ensuring management efficiency. In addition, to enhance the independence of theBoard of Directors and strengthen the monitoring function, a majority of the Directors are External Directors.

(2)

Details of company organization and internal control systems(i)

Details of company organization
As the Company’s main decision-making body for the performance of management and operations, the Board of Directors
meets at least once a month to discuss and decide upon important management issues. In addition, the management
committee meetings are held weekly (Monday Meeting) to examine tasks assigned to it by the Board of Directors, for the
purpose of prompt revision of management strategy and planning.
Five of the six members of the Board of Directors are external directors. Three of the five auditors are external statutory
auditors. The function of the Board is to oversee the management and operations of the Company, and to provide astrong level of control.
The Company has a Board of Corporate Auditors, and various committees to complement the work of the Board of
Directors. These committees include the Human Resources Committee, CSR Committee, Disclosure Committee, IT
Investment Committee, Code of Conduct Committee, and Business Ethics Committee. These committees conduct theirdecision-making business swiftly and openly. The Human Resources Committee is made up of external directors. Other
committees include auditors, outside experts, lawyers and advisors, as well as executives.
Below is a diagram of our corporate governance systems.

General Meeting of Shareholders
Elect/dismiss

Board of Auditors

Elect/dismiss(Oversee)(Consult/report)

Human Resources Committee

Board of Directors(Three out of ﬁve are external)

CSR Committee(ﬁve out of six are external)

Accounting Auditors(Elect/dismiss)(Elect/dismiss)Disclosure Committee
IT Investment Committee(Audit)Internal Audit Department(ii)

Entrusted Group Oﬃcers

Code of Conduct Committee

Chief Executive Oﬃcer

Business Ethics Committee(Report)Roles and activities of the committees
Human Resources Committee
The Human Resources Committee, chaired by an External Director, is responsible for the discussion of importantorganizational changes and adjustments to the human resources system of the Fast Retailing Group, offering its views andsuggestions to the Board of Directors.
CSR Committee
The CSR Committee discusses and determines the direction of the Company’s CSR policies covering matters such asenvironmental protection, social contribution, compliance, and diversity, and creates and publishes CSR reports. The
CSR Committee is chaired by the head of the CSR department, and the members include outside experts and external
statutory auditors as well as executives.

— 62 —

Disclosure Committee
The Disclosure Committee, headed by the official in charge of disclosing information to the Tokyo Stock Exchange (TSE),
is responsible for increasing the transparency of the Company’s management, through its aim: “disclosure of informationthat is timely, accurate, fair and easy to understand.” The Committee is responsible for making decisions about the timing
and content of voluntary disclosures to the TSE regarding matters it determines to have potential material impact on theinvestment decisions of shareholders and investors.
IT Investment Committee
The IT Investment Committee’s role is to deliberate and decide IT investment policy at the executive level, for the purposeof optimizing the allocation of resources in information systems and advancing the Company’s business. In addition,
this committee formulates IT investment budgets and reports, and, participates in external specialized organizations,
examines the suitability and investment return of specific undertakings.
Code of Conduct Committee
The Code of Conduct Committee is responsible for deliberating and responding to violations of the Fast Retailing Codeof Conduct (“FR Code of Conduct”), as well as advising on the operation of hotlines, and ensuring that the Company’s
executives and employees are fully aware of the requirements of the FR Code of Conduct. The Committee is chaired by
the head of the general administration/employee satisfaction promotion department, and includes auditors, advisors andattorneys.
Business Ethics Committee
The purpose of this committee is to ensure that the Group does not use its advantageous position to exert undue
pressure on vendor companies (production factories, suppliers, etc.). The committee provides advice and counsel todepartments involved, based on surveys of business conditions and suppliers conducted by external organizations. The
Committee is chaired by the head of the CSR department, and includes auditors, advisors and attorneys.
(iii)
A.

Internal control systems
Framework for Ensuring Execution of Directors’ Duties are in Compliance with Laws, Regulations and Articles ofIncorporation•
The Company’s Directors and executive officers (hereafter referred to collectively as “Directors”) themselves takethe initiative and set good examples in complying with the Group’s management principles, the Fast Retailing
Way (“FR Way”), FR Code of Conduct, other internal company rules and regulations, and promote strict adherence
to corporate ethics and compliance in the Group as a whole. The Directors also ensure the effectiveness of theCompany’s rules and principles by reviewing them regularly and revising them as necessary to reflect changes insociety, changes in the Company’s business activities, and the operation of the FR Code of Conduct.
•

The Company appoints the officer entrusted with the responsibility of the Legal Department or the head of theLegal Department (hereafter referred to collectively the “officers responsible for legal affairs”) as the officer incharge of compliance. These officers responsible for legal affairs work to establish a Company- and Group-wide
compliance framework and to resolve any problems relating to compliance.

•

The Company promotes fairness and transparency in decisions of the Board of Directors by appointing a number
of External Directors to comprise the Board. Statutory Auditors are allowed to attend meetings of the Board of
Directors to express opinions to the Directors in a timely manner. The Directors may also engage the services of
specialists such as external lawyers and certified public accountants as necessary to avoid any potential violation oflaws and to implement preventive measures. If Directors discover that an illegal action has been taken by another
Director, the Directors shall immediately report the matter to the Statutory Auditors, the President, and the officers
responsible for legal affairs.

— 63 —

B.

C.

D.

Framework for Ensuring Execution of Employee Duties are in Compliance with Laws and Regulations and Articles ofIncorporation•
The Directors are responsible for establishing a framework to ensure that all employees comply with the
management principles, the FR Way, the FR Code of Conduct and other internal company rules and also conduct
employee training and raise employee awareness in compliance.
•

The Company has an Internal Audit Department that is completely independent from business operations
departments and a Legal Department that oversees compliance.

•

If one or more Directors discover a violation of law or other issues concerning compliance, they shall immediately
report the matter to the other Directors. Any serious violation of law shall immediately be reported to the Statutory
Auditors, the President and the officers responsible for legal compliance.

•

The Company has set up an internal reporting system (hotline) for reporting illegal actions and other complianceviolations. Information received via the hotline is directly channeled to external lawyers or independent
institutions.

•

The Code of Conduct Committee, which includes external specialists such as lawyers and certified accountants
among its members, conducts regular reviews of the Company’s framework for maintaining compliance and theoperation of the hotline, and makes improvements as necessary. If the Directors believe a problem exists in regard
to the operation of the hotline, they shall express their views to the Code of Conduct Committee and may request
the formulation of improvement measures.

Framework for Data Storage and Management Relating to Execution of Duties by Directors
According to the Company’s regulations on document management and guidelines for the treatment of confidential
information, the following documents relating to the execution of the duties of the Directors are retained as proof ofthe decision-making processes and the processes for executing business. These documents are stored and managed in
an appropriate manner to storage medium that enables easy retrieval as well as access for inspection during the legallyrequired storage period.
•

Minutes of Ordinary General Meetings of Shareholders and relevant documentation•

Minutes of meetings of the Board of Directors and relevant documentation•

Minutes of important meetings held by Directors and relevant documentation•

Minutes of other important meetings held by other important employees and relevant documentation

Regulations for Managing Risk of Loss and Other Similar Frameworks•
The Company analyses and reviews risks of the Company and the Group companies on a regular basis to identify
any risk that could either directly or indirectly cause financial loss, interruption or cessation in the continuationof business, damage to the brand image, or detriment to the credibility of the Company or Group companies andestablish a management framework for such risks identified.
•If unforeseen circumstances should arise, a task force headed by the President or a Director appointed by the
President shall be established to prevent the expansion of any loss and to keep damages to a minimum. To respondrapidly, the head of the task force may organize an external advisory team including lawyers and certified public
accountants as necessary.

— 64 —

E.

Framework for Ensuring the Efficient Execution of Duties by Directors•
To ensure that the duties of Directors are performed efficiently, the Company holds regular monthly meetings ofthe Board of Directors, which includes a number of External Directors, and holds ad hoc meetings when necessary.
Important matters concerning the Company and the Group management policy and management strategy shallbe discussed beforehand at the weekly management meeting (Monday Meeting) chaired by the President, anddecisions shall then be made following deliberation.
•

F.

To execute business based on decisions of the Board of Directors, the Company shall decide on which persons shallbe in charge, their responsibilities and details of procedures to be followed.

Framework for Ensuring Proper Execution of Business Operations in Corporate Group Consisting of the Company andSubsidiaries•
To ensure appropriate operations in every company within the Group, all Group companies are required to upholdthe management principles, the FR Way and the FR Code of Conduct, which serve as guidelines for conduct acrossthe entire Group. These principles also form the foundation of rules and regulations when establishing entrusted
individual Group companies.
The Company also oversees the business management of affiliated companies by determining their rules of business
management and through a system of reporting to the Company, whereby the Company makes the final decisions.
The Company shall also monitor the affiliates as necessary.
A Director who discovers any violation of law or serious breach of compliance rules at a Group company shall report
the matter to the Statutory Auditors, the President, and the officer responsible for legal affairs.

G.

•

If the Directors of a Group company consider that any part of the Company’s management principles ormanagement guidelines represents a violation of law or poses a problem in relation to the corporate ethics of aparticular country or in terms of compliance, they shall report the issue to the Internal Audit Department or the
Legal Department. The department that receives the report shall then promptly report the matter to the Board ofAuditors, the President of the Company and the officer responsible for legal affairs. The receiving department may
also convey an opinion regarding any appropriate action required.

•

The Company also establishes necessary measures for ensuring the reliability and ongoing monitoring of its financial
reporting including the Group’s consolidated financial statements, and the necessary framework for ensuring
appropriate acquisition, maintenance and disposal of assets held by Group companies. The Company has alsoestablished a Disclosure Committee to ensure timely and appropriate disclosure of information.

Matters Relating to Employees Assisting Duties of Statutory Auditors When Appointment of Those Employees isRequested by Statutory Auditors and Matters Relating to Independence from Directors of Those Employees•
Upon receiving a request from the Board of Statutory Auditors, the Company shall establish rules to determine
which employees are to assist the Statutory Auditors in performing their duties and shall assign appropriate
personnel as assistants to the Statutory Auditors from among the Company’s staff or otherwise employ externallawyers or certified accountants. Independence of the assistants to the Statutory Auditors from the Directors
is ensured by having evaluation of the assistants performed by the Statutory Auditors, but decisions on theirassignment, dismissal, transfer and revision of wages, etc. shall be made by the Board of Directors with the approvalof the Board of Statutory Auditors.
•

The assistants of Statutory Auditors shall not hold a concurrent appointment that involves the execution ofbusiness.

— 65 —

H.

Frameworks for Reporting by Directors and Employees to Statutory Auditors, Framework for Other Types of Reporting to
Statutory Auditors, and Framework for Ensuring Auditing is Implemented Efficiently•
The Company establishes rules regarding matters to be reported by Directors and employees to the Statutory
Auditors and the timing of such reporting. Based on these rules, Directors and employees shall report importantmatters that might have an impact on the Company’s operations or corporate performance to the Statutory
Auditors as they arise. Irrespective of these rules, the Statutory Auditors may request reports from the Directors or
employees as they consider necessary.
•(iv)

To uphold the Group’s management principles, the FR Way and the FR Code of Conduct, the Company ensuresthe existence of an appropriate framework for reporting any legal violation or breach of compliance rules to the
Statutory Auditors. If the Statutory Auditors judge that there is a problem with this framework, they can convey
their opinions to the Directors and the Board of Directors and request appropriate measures for improvement.

Basic Thinking and Measures to Ensure the Group Remains Free from the Influence of Anti-Social Forces
The Company has decided the following points of the FR Code of Conduct to ensure that the Group remains free from theinfluence of anti-social forces by means of thorough adherence by the executives and employees.
To ensure that no relationship is established, anti-social forces should be handled forthrightly. If an illicit approach isreceived from anti-social forces, bribing shall not be a solution.
No one may make use of anti-social forces for their own benefit or that of the Company.

(v)

Internal audits and audits by auditors
The Company has an Internal Audit Department that is completely independent from business operations departments.
6 specialists are employed as of 31 August 2014. A regular review of this internal administrative system is conducted toensure it remains suitable and effective and the audit of operations performance is also conducted.
In addition, Statutory Auditors are members of the Board of Directors, and they also audit the status of management
performance. The Board of Statutory Auditors described above consists of two Full-time Corporate Auditor and threeexternal Statutory Auditors. Its purpose is to receive reports on important matters regarding the Company’s internal audit
department as well as audits by the accounting auditors, discuss these reports, and to cooperate as needed.
Moreover, Auditor Takaharu Yasumoto is a certified public accountant with substantial expertise in the areas of financeand accounting.

(vi)

Accounting audits
Name of audit firm

Ernst & Young ShinNihon LLC

Name of CPA, etc.

Number of years ofcontinuing auditing

Designated limited liability
partner and engagement
partner

Shigeyuki Amimoto—(Note)

Designated limited liability
partner and engagement
partner

Shuji Kaneko—(Note)

Designated limited liability
partner and engagement
partner

Yoshihisa Shibayama—(Note)

Based on the audit plan formulated by Ernst & Young ShinNihon LLC, the group of assistants to the auditors consists of 19
CPAs and 12 others.
(Note) Omitted because the number of years of continuing auditing is not more than 7 years.

— 66 —

(vii) 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.
External director Toru Murayama is the president of Office Murayama. The Company currently has a consulting
subcontract with Office Murayama relating to the training of management personnel.
Aside from the above, there are no distinctive interests between the Company and other external directors or external
statutory auditors.
The external directors and external statutory auditors receive reports at the Board of Directors meeting regarding internal
audits, the operation of internal controls, audits by statutory auditors and the results of accounting audits. In addition,
the external statutory auditors have mutual alliances with Internal Audit Department and Accounting Auditors as detailedin (v) Internal audits and audits by auditors.
With regard to the selection of external directors and external statutory auditors, the Company has no specific standards
on independence from the Company, but it is the Company’s responsibility to reflect their advice and counsel in its
decision-making processes in an objective and independent fashion. For many years now, the Company has chosen many
external directors with rich experience as corporate managers in industry, with broad-ranging expertise and discerningviews. In addition, to incorporate wide range of stakeholders’ view in the audits of our business activities, we value boththe independence and the diversity of our external statutory auditors in various fields.
(viii) Items regarding independent directors
The Board of Directors serves by making important decisions, and by overseeing the representative director and otherexecutives in the performance of their duties. The Board of Directors has six members, of whom five are external
directors, capable of offering objective and highly specialized advice from a wide variety of fields. Among the Company’s
external directors, Toru Hambayashi, Nobumichi Hattori, and Masaaki Shintaku are registered as independent directors
with the TSE.
The role of the statutory auditor is to oversee the directors in the performance of their duties. In addition, statutory
auditors participate as members and as observers in the activities of the Company’s various committees, verifying thesuitability, legality and fairness of the agendas, and providing advice and counsel. The Board of Statutory Auditors
is comprised of five members, of whom three are external statutory auditors. External statutory auditors Takaharu
Yasumoto, Akira Watanabe and Keiko Kaneko are registered as independent directors with the TSE.
(ix)

Outline of External Directors’ limited liability agreement
The Company has concluded agreements with the external directors, external statutory auditors and Ernst & Young
ShinNihon LLC, limiting their liabilities based on provisions in Article 427, Paragraph 1 of the Companies Act, which limits
the liabilities for damages as provided for in Article 423, Paragraph 1 of the Companies Act.
These agreements state that liabilities for damages shall be limited to the higher amount of either 5 million yen or theamount stipulated by law. For Ernst & Young ShinNihon LLC, the limit of liabilities in damages shall be limited to thehighest of the following amounts multiplied by two: the total economic benefits received or to be received from theCompany as remuneration and payment received for performance of duties in each business year during its service as the
Accounting Auditor.

— 67 —

(x)(3)

Limitation of liabilities for directors and statutory auditors
Under the stipulations of the Company’s articles of incorporation, the Company may exempt, by decision of the Boardof Directors, directors (including former directors), and statutory auditors (including former statutory auditors) fromliabilities 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 their duties and pursue their expected roles
to the full extent of their abilities.

Details of executive remuneration
Details of remuneration of the Company’s executives are as follows:
For each category of executive: total amount of executive remuneration, total amount of remuneration by type of
remuneration, and number of executives

Executive category
Directors (excluding external directors)
Statutory Auditors (excluding external
statutory auditors)
External Directors and External
Statutory Auditors
(i)
(ii)
(iii)

Total amount of
remuneration(million yen)240

Total amount of remuneration,by type (million yen)
Basiccompensation
Bonuses240—

Number of
executives(# of persons)
1

35

35

—

2

80

80

—

8

Directors’ remuneration 290 million yen (of which, external directors 50 million yen)
Statutory Auditors’ remuneration 65 million yen (of which, external statutory auditors
30 million yen)
Total consolidated executive remuneration, by executive, but only for those whose total consolidated executive
remuneration is at least 100 million yen
Representative director Tadashi Yanai
240 million yen

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

(4)

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

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

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

(iii)

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

(iv)

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

(v)

Special resolutions of the General Meeting of Shareholders
Regarding extraordinary resolutions of the General Meeting of Shareholders based on the Companies Act, Article 3092, the Company’s articles of incorporation stipulates that these resolutions shall be passed by two-thirds vote of theshareholders, in which at least one-third of the eligible shareholders participate. This easing of the quorum rules for
extraordinary resolutions by the General Meeting of Shareholders is meant to ensure the smooth functioning of theGeneral Meeting of Shareholders.
— 68 —

(5)Status of shareholding(i)

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

Balance sheet total

Four issues(ii)

439 million yen

Investment shares held for purposes other than long-term holding: class, issues, number of shares, balance sheet total
and purpose of investment
Year ended 31 August 2013
Special investment shares
Issue(s)Number of shares

Sojitz Corporation

Balance sheet total

1,342,540

Purpose of investment

236 million yen To maintain business relationshipYear ended 31 August 2014
Special investment shares
Issue(s)Number of shares

Sojitz Corporation

Balance sheet total

1,342,540

230 million yen To maintain business relationship(iii)

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

(2)

Details of accounting auditors’ remuneration(i)

Details of remuneration for CPAs, etc.
Year ended 31 August 2013

Class

Remuneration
for audit andcertification
duties (Millionsof yen)Purpose of investment

Year ended 31 August 2014

Remuneration
for duties otherthan audit (Millionsof yen)Remuneration
for audit andcertification duties(Millionsof yen)Remuneration
for duties otherthan audit (Millionsof yen)Reporting Entity

109

44

150

47

Consolidated subsidiaries

14

—

17

—

Total

123

44

167

47

(ii)

Other important details regarding remuneration
Year ended 31 August 2013 (1 September 2012 — 31 August 2013)
The Company’s consolidated subsidiaries paid 96 million yen as remuneration for audit and certification duties, and otherduties, to member firms of the Ernst & Young global network.
Year ended 31 August 2014 (1 September 2013 — 31 August 2014)
The Company’s consolidated subsidiaries paid 163 million yen as remuneration for audit and certification duties, andother duties, to member firms of the Ernst & Young global network.

(iii)

Non-auditing services provided by the CPA firm to the reporting entity
Year ended 31 August 2013 (1 September 2012 — 31 August 2013)
The Company pays the Accounting Auditors consideration for the provision of advisory and other services concerning
accounting matters.
Year ended 31 August 2014 (1 September 2013 — 31 August 2014)
The Company pays the Accounting Auditors consideration for the provision of advisory and other services concerning
accounting matters.

(iv)

Policies for determination of accounting audit remuneration
The Company’s articles of incorporation stipulates that remuneration to accounting auditors for audit services isdetermined by the representative director, with the consent of the Board of Statutory Auditors.
— 69 —

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

Since the Company meets the criteria of “specific company” defined in item 1 under the first clause of Articles 1-2 of theRules Governing Term, Form and Preparation of Consolidated Financial Statements (Financial Ministerial Order the 28th,1976), the consolidated financial statements of the Group were prepared in accordance with International Financial
Reporting Standards (“IFRS”) pursuant to Article 93 of the Rules Governing Term, Form and Preparation of Consolidated
Financial Statements.

(2)

The financial statements of the Company were prepared in accordance with the Rules Governing Term, Form and
Presentation of Financial Statements (Financial Ministerial Order the 59th, 1963).

(3)

The revisions to the Rules Governing Term, Form and Preparation of Consolidated Financial Statements (Cabinet Office
Ordinance the 73rd (11 December 2009)) paved the way for the preparation of consolidated financial statements basedon IFRS. The year ended 31 August 2014 marks the first time of the Group’s adoption of IFRS to prepare its consolidated
financial statements.

(4)

In this report, sums have been rounded down to the nearest million yen.

2. Audits
Our consolidated financial statements and other financial statements for the fiscal year from 1 September 2013 to 31 August
2014 have been audited by Ernst & Young ShinNihon LLC in accordance with Article 193-2-1 of the Financial Instruments andExchange Act.

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

To establish a framework capable of adapting appropriately to changes in accounting standards, we have put efforts
to build up our 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 groupguidelines for accounting practices based on IFRS, and have been conducting accounting procedures based on theseguidelines. We regularly obtain standards and press releases published by the International Accounting Standards
Board, study the latest standards and their potential impact on our Company, and update our group guidelines foraccounting practices accordingly.

— 70 —

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

As at 1 September
2012

As at 31 August2013

As at 31 August
2014

266,023
22,607
1,672
100,491—
10,628
7,291
408,715

296,708
37,933
2,461
167,521
113,641
8,980
10,291
637,537

314,049
47,4289,119
223,223
99,125
11,951
12,139717,037

70,554
15,992
27,19957,112
22,787
2,036
195,682
604,397

91,38537,016
52,83863,60815,467
3,353
263,670
901,208

114,398
26,71546,96871,293
11,257
4,636
275,270
992,307

89,15822,625
9,405
28,394
9,789
16,219175,594

153,364—
9,450
26,76011,42016,583
217,578

185,119
1,012
12,69632,75016,15425,462
273,196

16,551
4,167
3,985
5,250
29,954
205,548

30,077
5,818
49,752
8,253
93,902
311,481

27,604
7,694
37,387
10,38383,069356,265

10,273
6,296
404,554(16,003)(13,665)

10,273
6,859
481,746(15,851)
87,39910,273
9,803
525,722(15,790)
88,371

391,456
7,392

570,428
19,298618,381
17,660Total equity

398,849

589,726

636,041

Total liabilities and equity

604,397

901,208

992,307

7, 28
8, 28
10, 28
9
28
11

12
13
13
10, 2817
11

Liabilities and equity
LIABILITIESCurrent liabilities
Trade and other payables
18, 28Derivative financial liabilities
28
Other current financial liabilities 10, 15, 28
Income taxes payable
Provisions
19
Others11
Total current liabilities
Non-current liabilities
Non-current financial liabilities 10,15,28
Provisions
19
Deferred tax liabilities
17
Others11
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

20
20
20
20
20

— 71 —

(2) CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated statement of profit or loss
(Millions of yen)
Year ended
31 August 2013

Notes
Revenue21

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

22
23
14, 23

Year ended
31 August 2014

1,142,971(577,826)

1,382,935(683,161)

565,145699,773(426,177)
4,050(8,916)(549,195)
7,025(27,200)
130,402
6,001
(933)

Operating profit
Finance income

24

Finance costs

24

134,101
22,269(638)

17155,732(48,257)

135,470(56,133)

107,474

79,337

Non-controlling interests

104,595
2,879

74,546
4,790

Profit for the year

107,474

79,337

1,026.68
1,025.75

731.51730.81

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

Earnings per share
Basic (Yen)
Diluted (Yen)26
26— 72 —

Consolidated statement of comprehensive income(Millions of yen)
Year ended
31 August 2013

Notes
Profit for the year
Other comprehensive income
Other comprehensive income thatwill not be reclassified to profit or loss

Year ended
31 August 2014

107,474

79,337

—

—

25

207

66

25

19,462
84,405

8,402(5,773)104,075

2,695

211,550

82,033

Non-controlling interests

205,660
5,890

75,517
6,515

Total comprehensive income for the year

211,550

82,033

Other comprehensive income to bereclassified to profit or loss
in subsequent periods
Net gain/(loss) on revaluation ofavailable-for-sale investments
Exchange differences on translationof foreign operations
Cash flow hedges
Other comprehensive income,net of taxes

25

Total comprehensive income for the year
Attributable to:
Owners of the parent— 73 —

(3) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 August 2013
(Millions of yen)
Other components of equity

Equityattributableto owners
Nonof the controlling
Totalparent interests(13,665) 391,456
7,392

Capitalstock
10,273

Capitalsurplus
6,296

Retainedearnings
404,554

Treasurystock,
at cost(16,003)——

104,595

—

—

—

—

—

104,595

2,879

107,474

—

—

—

—

207

16,452

84,405101,065

101,065

3,010

104,075——

104,595—

207

16,452

84,405101,065

205,660

5,890

211,550

20

—

—

—

(9)

—

—

—

—

(9)

—

(9)

20
20
20

—
—
—

421
—
140

—
(27,504)
—

161
—
—

—
—
—

—
—
—

—
—
—

—
—
—

583
(27,504)
140

—
(891)
—

583
(28,396)
140

6

—
—

—
—

—
101

—
—

—
—

—
—

—
—

—
—

—
101

6,666
239

6,666
341

—

562

(27,403)

152

—

—

—

—

(26,688)

6,015(20,672)—
10,273562
6,859

77,191
481,746152(15,851)

207
731

16,452
16,452

84,40570,215101,065
87,399178,972
570,428

11,905
19,298

190,877
589,726

Notes
As at 1 September 2012
Net changes during theyear
Comprehensive income
Profit for the year
Other comprehensive
incomeTotal comprehensive
incomeTransactions with theownersAcquisition oftreasury stock
Disposal of treasury
stock
Dividends
Share-based payments
Acquisition of
a subsidiary
OthersTotal transactions withthe owners
Total net changes
during the year
As at 31 August 2013

Foreign
Available- currency Cash-flow
for-sale translation
hedge
reserve
reserve
reserve524—(14,189)

25— 74 —

Total
equity398,849

For the year ended 31 August 2014
(Millions of yen)
Other components of equity

Notes
As at 1 September 2013
Net changes during theyear
Comprehensive income
Profit for the year
Other comprehensive
income25
Total comprehensive
incomeTransactions with theownersAcquisition oftreasury stock
20
Disposal of treasury
stock
20
Dividends
20
Share-based payments 20
Acquisition of
non-controllinginterests
6, 20
OthersTotal transactions withthe owners
Total net changes
during the year
As at 31 August 2014

Foreign
Treasury Available- currency Cash-flow
stock, for-sale translation
hedge
at cost reserve
reserve
reserve(15,851)
731
16,452
70,215Equityattributable
Nonto owners controlling
Total of the parent interests
87,399570,428
19,298

Capitalstock
10,273

Capitalsurplus
6,859

Retainedearnings
481,746——

74,546

—

—

—

—

—

74,546

4,790

79,337

—

—

—

—

66

6,583

(5,679)

971

971

1,724

2,695

—

—

74,546

—

66

6,583

(5,679)971

75,517

6,515

82,033

—

—

—

(25)

—

—

—

—

(25)

—

(25)

—
—
—

471
—
746

—
(30,571)
—

86
—
—

—
—
—

—
—
—

—
—
—

—
—
—

558
(30,571)
746

—
(633)
—

558
(31,204)
746

—
—

1,726
—

—
—

—
—

—
—

—
—

—
—

—
—

1,726
—

(7,813)
293(6,086)
293

—

2,944

(30,571)

60

—

—

—

—

(27,565)(8,152)(35,718)—
10,273

2,944
9,803

43,975525,72260(15,790)

66
798

6,583
23,035(5,679)64,536971
88,371

47,952
618,381(1,637)
17,66046,314
636,041— 75 —

Total
equity589,726

(4) CONSOLIDATED STATEMENT OF CASH FLOWSProfit before income taxes
Depreciation and amortization
Impairment losses
Increase/(decrease) in allowance for
doubtful accounts
Increase/(decrease) in other provisions
Interest and dividend income
Interest expenses
Foreign exchange losses/(gains)
Losses on retirement of property,
plant and equipment
Decrease/(increase) in trade andother receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade andother payables
Decrease/(increase) in other assets
Increase/(decrease) in other liabilities
Others, net
SubtotalInterest and dividend income received
Interest paid
Income taxes paid
Income taxes refund
Net cash from operating activities
Decrease/(increase) in bank deposits
with maturity over 3 months
Purchases of property,
plant and equipment
Proceeds from sales of property,
plant and equipment
Purchases of intangible assets
Proceeds from sales of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease andguarantee deposits
Increase in construction assistancefund receivables
Decrease in construction assistancefund receivables
Increase in guarantee deposits received
Decrease in guarantee deposits received
Acquisition of a subsidiary,
net of cash acquired
Others, net
Net cash used in investing activities
Net increase/(decrease) in short-termloans payable
Additions to long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Cash dividends paid to
non-controlling interests
Repayments of lease obligations
Acquisition of non-controlling interests
Others, net
Net cash used in financing activities
Effect of exchange rate changes oncash and cash equivalents
Net increase/(decrease) in cash andcash equivalents
Cash and cash equivalents
at beginning of year
Cash and cash equivalents at end of year

Notes

6

20

7
7

— 76 —

Year ended
31 August 2013
155,732
23,607
5,068(Millions of yen)
Year ended
31 August 2014
135,470
30,80823,960

(258)
2,298
(601)
638
(21,667)

(24)
2,703
(897)
933
(5,104)519

391(11,070)(51,426)(7,489)(45,627)

46,911(4,326)
11,395(1,878)
154,940598(642)(65,795)
10,37599,474

10,420(6,552)
25,9581,265
166,216896(938)(65,534)
9,954
110,595—(2,156)(27,668)(41,414)280(4,070)0(5,205)

1,399(7,525)—(6,982)

2,126

841

(2,736)(2,892)

1,706
85
(330)

1,895
180
(295)

(26,771)0(62,584)—626(56,323)(1,722)
16,640(7,474)(27,507)862—(3,826)(30,574)(891)(3,298)—28(24,226)(633)(3,656)(6,026)(205)(44,060)

18,0207,12930,684

17,340266,023
296,708

296,708
314,049

Notes to the Consolidated Financial Statements
1. Reporting Entity
FAST RETAILING CO., LTD. (the “Company”) is a company incorporated in Japan. The locations of the registeredheadquarters and principal offices of the Company are disclosed at the Group’s website (http://www.fastretailing.com/eng/).
The principal activities of the Company and its consolidated subsidiaries (the “Group”) are the UNIQLO business (casual
wear retail business operating under the “UNIQLO” brand in Japan and overseas) and Theory business, GU business (appareldesigning and retail business in Japan and overseas), etc.
2. Basis of Preparation(1) Compliance with IFRS and first-time adoption
The consolidated financial statements of the Group have been prepared in compliance with International Financial
Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).
The Group adopted Article 93 of the Rules Governing Term, Form and Preparation of Consolidated Financial Statements,
because the Group meets the all criteria of a “specified company” defined under Article 1-2 of the said rules.
The Group adopted IFRS issued by IASB for the first time in the year ended 31 August 2014, and the date of the transition
to IFRS (“Transition Date”) is 1 September 2012. The effect of the transition to IFRS on the Group’s financial position, resultsof operations, and cash flows on the Transition Date and in the comparative peiord are presented in “34. First-time adoptionof IFRS”. The Group’s accounting policies conform with IFRS that are effective for year ended 31 August 2014, excluding thestandards which have not been early adopted and exemptions permitted under IFRS 1 “First-time Adoption of International
Financial Reporting Standards” (“IFRS 1”). The exemptions that have been adopted are presented in “3. Significant
Accounting Policies”.
(2) Approval of the Consolidated Financial Statements
The consolidated financial statements were approved on 25 November 2014 by Tadashi Yanai, Chairman, President andCEO, and Takeshi Okazaki, Group Senior Vice President and CFO.
(3) Basis of Measurement
The consolidated financial statements have been prepared on an historical cost basis, except for certain assets, liabilities,
and financial instruments which are measured at fair value as indicated in “3. Significant Accounting Policies”.
(4) Functional Currency and Presentation Currency
The presentation currency for the Group’s consolidated financial statements is the Japanese yen, which is also theCompany’s functional currency. All values are rounded down to the nearest million yen, except when otherwise indicated.

— 77 —

(5) Use of Estimates and Judgments
The preparation of the consolidated financial statements in accordance with IFRS requires management to makejudgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, income and expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. The effects of the review of accounting
estimates are recognized in the accounting period in which the estimates were reviewed and in future accounting periods.
Information about important estimation and judgments that have significant effects on the amounts recognized in the
consolidated financial statements is as follows:
•
•
•
•
•
•
•
•
•

Useful lives of non-current assets (Notes 12,13)
Recoverable amounts from cash-generating units for impairment test (Note 14)
Recoverability of deferred tax assets (Note 17)
Valuation of inventories (Note 9)
Recoverability of trade and other receivables (Notes 8, 28)
Accounting treatment and valuation of provisions (Note 19)
Fair value measurement of financial instruments (Note 28)
Fair value unit price for share-based payments (Note 27)
Probability of outflow of future economic benefits from contingent liabilities (Note 32)

3. Significant Accounting Policies(1) Basis of Consolidation“Subsidiaries” refers to enterprises that are controlled by the Company (including businesses established by theCompany). The Group controls enterprises where it is exposed to variable returns arising from its involvement in thoseenterprises or when the Group has rights to variable returns in those enterprises and is able to have an impact on the saidvariable returns through its power over those enterprises. A subsidiary’s financial statements are incorporated into theCompany’s consolidated financial statements from the date on which control begins until the date control ends.
The subsidiaries adopted consistent accounting policies as the Company in the preparation of their financial statements.
All intra-group balances, transactions within the Group as well as unrealized profit and loss resulting from transactions
within the Group are eliminated at the time of preparation of the consolidated financial statements.
The reporting date for FAST RETAILING (CHINA) TRADING CO., LTD., Theory Shanghai International Trading Co.,
Ltd., UNIQLO TRADING CO., LTD., Fast Retailing (Shanghai) Business Management Consulting Co., Ltd., FAST RETAILING(SHANGHAI) TRADING CO., LTD., GU (Shanghai) Trading Co., Ltd., Comptoir des Cotonniers (Shanghai) Trading Co., Ltd.,PRINCESSE TAM.TAM (SHANGHAI) TRADING CO., LTD. and LLC UNIQLO (RUS) is 31 December. The management accountsof these subsidiaries are used for the Group’s consolidation purpose. The financial statements of other subsidiaries areprepared using the same reporting period as the parent company.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
Any difference between the adjustment to the non-controlling interest and the fair value of the consideration received isrecognized directly in equity as interests attributable to owners of the parent.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to thenon-controlling interests, even if this results in the non-controlling interests having a deficit balance.
The number of consolidated subsidiaries as at 31 August 2014 is 112.

— 78 —

(2) Business combination
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as theaggregation of the fair value at the acquisition date of the assets transferred, liabilities assumed and equity instruments
issued by the Company 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 income 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 if the acquisitions took place during a period (measurement period) when it is believed that, had facts andcircumstances that existed at the acquisition 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.
The Group has elected to adopt the exemption in IFRS 1 and has not retrospectively applied IFRS 3 “Business
Combinations” to business combinations that occurred before 1 September 2012. In other words, the carrying amount of
goodwill as of the Transition Date, in accordance with the previous accounting standards (JGAAP), is stated as the carrying
amount of goodwill in the opening IFRS consolidated statement of financial position.
(3) Foreign Currencies(i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates at
each reporting date. Differences arising on 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 the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translatedusing the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of theitem (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or
profit or loss are also recognized in other comprehensive income or profit or loss, respectively).
(ii) Foreign Operations
On consolidation, the assets and liabilities of foreign operations are translated into Japanese yen at the rate of exchange
prevailing at each reporting date and their income statements are translated at average exchange rates during the period.
The exchange differences arising on translation for consolidation are recognized in other comprehensive income. On disposalof a foreign operation, the component of other comprehensive income relating to that particular foreign operation isrecognized in profit or loss. The Group has adopted the exemption in IFRS 1 and has reclassified the cumulative translationdifferences in existence as of the Transition Date to retained earnings.

— 79 —

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

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(ii) Financial assets at fair value through profit or loss
Financial assets are classified as “financial assets at fair value through profit or loss” if they are held for trading or if they
are designated as financial assets at fair value through profit or loss.
Financial assets other than financial assets held for trading may be designated as “financial assets at fair value throughprofit or loss” at initial recognition if any of the following applies:(a) If such designation eliminates or significantly reduces a measurement or recognition inconsistency (“accounting
mismatch”) is likely to arise;(b) If the financial assets are part of a “group of financial assets or financial liabilities (or both)”, which are managed andhave their performance evaluated on a fair value basis, in accordance with the Group’s documented risk management orinvestment strategy, and information about the grouping is provided internally on a fair value basis; or(c) If the contract contains at least one embedded derivative (IAS 39 allows the entire hybrid (combined) contract (assets
or liabilities) to be designated as a “financial assets at fair value through profit or loss”), unless they are designated as aneffective hedging instrument.
Financial assets at fair value through profit or loss are carried out in the consolidated statement of financial position atfair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income(positive net changes in fair value) in the consolidated statement of profit or loss. Recognized profits or losses, including theabove, are recognized in the consolidated statement of profit or loss as dividend income, interest income or gain or loss onchanges in fair value. Fair value is determined using the method described in “28. Financial Instruments”.
(iii) Loans and receivables
Trade receivables, loans, and other receivables that are not quoted in an active market are classified as “loans andreceivables”. After initial measurement, such financial assets are subsequently measured at amortized cost using theeffective interest rate (“EIR”) method, less impairment. The EIR amortization is included in finance income in the statementof profit or loss.
(iv) Available-for-sale financial assets
Any non-derivative financial assets classified as “available-for-sale financial assets” are those that are neither classified as“financial assets at fair value through profit or loss”, nor “loans and receivables”, or those that are designated as “availablefor-sale financial assets”.
Available-for-sale listed equity securities that are traded on a market are measured using quoted market prices. Unlisted
equity securities are measured at fair value using reasonable methods. Fair value is determined using the method describedin “28. Financial Instruments”. Profits or losses arising from changes in fair value are recognized as other comprehensive
income. Impairment losses or foreign currency gains or losses associated with monetary assets are treated as exceptions andrecognized in profit or loss.
When available-for-sale financial assets are derecognized, or when an impairment loss is recognized, the cumulative
profits or losses that have been recognized as other comprehensive income up to that time are reclassified to the profit orloss for the period.
Dividends associated with available-for-sale financial assets are recognized in profit or loss when the Group’s right toreceive dividends is established. The fair value of available-for-sale financial assets denominated in foreign currencies isdetermined in that foreign currency and translated at the exchange rate prevailing at each reporting date. The effects ofchanges in exchange rates on foreign currencies denominated monetary assets is recognized in foreign exchange gains orlosses, while the effect of changes in exchange rates on other foreign currencies denominated available-for-sale financial
assets is recognized in other comprehensive income.

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

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(iii) Financial liabilities at fair value through profit or loss
Financial liabilities are classified as “financial liabilities at fair value through profit or loss” if they are held for trading or ifthey are designated as financial liabilities at fair value through profit or loss.
A financial liability is classified as being held for trading purposes if any of the following applies:(a) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;(b) On initial recognition, it is part of a portfolio of identified financial instruments that are managed together and forwhich there is evidence of a recent actual pattern of short-term profit-taking; or(c) It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument).
Financial liabilities other than financial liabilities held for trading may be designated as “financial liabilities at fair value
through profit or loss” at initial recognition if any of the following applies:(a) If such designation eliminates or significantly reduces a measurement or recognition inconsistency (“accounting
mismatch”) is likely to arise;(b) If the financial liabilities are part of a “group of financial assets or financial liabilities (or both)” which are managed
and have their performance evaluated on a fair value basis, in accordance with the Group’s documented risk management orinvestment strategy, and information about the grouping is provided internally on a fair value basis; or(c) If the contract contains at least one embedded derivative (IAS 39 allows the entire hybrid (combined) contract (assets
and liabilities) to be designated as “financial liabilities at fair value through profit or loss”).
Financial liabilities designated as “financial liabilities at fair value through profit or loss” are measured at fair value,with any changes recognized in profit or loss. Recognized profits and losses, including the above, are recognized in the
consolidated statement of profit or loss as interest expenses or gain or loss on change in fair value. Fair value is determinedusing the method described in “28. Financial Instruments”.
(iv) Other financial liabilities
Other financial liabilities, including loans payable, are initially measured at fair value, net of directly attributabletransaction costs. Subsequent to initial recognition, other financial liabilities are measured at amortized cost using the EIR
method, and interest expenses are recognized using the EIR method.
(v) Derecognition of financial liabilities
The Group derecognizes a financial liability when it is extinguished, that is, when the obligation specified in the contract iseither discharged, cancelled or expires.
(vi) Fair value of financial instruments
The fair value of financial instruments that are traded on an active financial market at each reporting date are based onquoted market prices and dealer prices.
The fair value of financial instruments for which there is no active market are calculated using appropriate valuation
techniques.
(vii) Offsetting financial Instruments
Financial assets and financial liabilities are only offset when there is an enforceable legal right to offset the recognizedamounts and when there is an intention to either settle on a net basis, or realize the asset and settle the liability
simultaneously; and the net amount is reported on the consolidated statement of financial position.

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

3-50 years
5 years

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

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

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

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

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The CGU (or group of CGUs) for goodwill is determined based on the unit by which the goodwill is monitored for internalmanagement purposes and must not be larger than an operating segment before aggregation.
Because the corporate assets do not generate independent cash inflows, if there is an indication that corporate assets
may be impaired, the recoverable amount is determined for the CGU to which the corporate assets belong.
If the carrying amount of an asset or a CGU exceeds the recoverable amount, an impairment loss is recognized in profit
or loss for the period. Impairment losses recognized in relation to a CGU are first allocated to reduce the carrying amount ofany goodwill allocated to the CGU and then allocated to the other assets of the CGU pro rata on the basis of their carrying
amounts.
An impairment loss related to goodwill cannot be reversed in future periods. Previously recognized impairment losses onother assets are reviewed at each reporting date to determine whether there is any indication that a loss has decreased or
no longer exists. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used
to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so thatthe carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would havebeen determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
(11) Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. Provisions are recognized as the best estimate of the expenditure
required to settle the present obligation (future cash flows), taking into account the risks and uncertainties surrounding theobligation at each reporting date.
If the time value of money is material, provisions are measured as the estimated future cash flows discounted to thepresent value using a pre-tax rate that reflects, when appropriate, the time value of money and the risks specific to theliability. When discounting is used, the increase due to the passage of time is recognized as a finance cost.
Each provision is described below:(i) Allowance for bonuses
The amount expected to be borne as bonuses in the current reporting period is recorded as a provision for the paymentof bonuses to employees of the Group.
(ii) Asset retirement obligations
The obligations to restore property to its original state under real estate leasing agreements for offices, such as corporate
headquarters and stores, are estimated and recorded as a provision. The expected length of use is estimated as the timefrom acquisition to the end of the useful life and 0.37–0.99% is generally used as the discount rate in calculations.
(12) Share-based payments
The Group grants share-based payments in the form of share subscription rights (stock options) to employees of theCompany and its subsidiaries. In doing so, the Group aims to heighten morale and motivate employees to improve theGroup’s business performance, thereby increasing shareholder value by reinforcing business development that is focused on
the interests of the shareholders. These share-based payments do this by rewarding contributions to the Group’s profit andby connecting the benefits received by these individuals to the Company’s stock price.
Stock options are measured at fair value based on the price of the Company’s shares on the grant date. Fair value of stock
options is further disclosed in “27. Share-based Payments”.
The fair value of the stock options determined at the grant date is expensed, together with a corresponding increase incapital surplus in equity, over the vesting period on a straight-line basis, taking into consideration the Group’s best estimatesof number of stock options that will ultimately vest.

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(13) Revenue recognition
Revenue is measured at the fair value of consideration received or receivable by the Group, less returns, trade discounts
and rebates. If a single transaction has multiple identifiable elements, the transaction is apportioned among the elements
and revenue is recognized for each element. When two or more transactions make commercial sense only when considered
together as a single entity, revenue is recognized for the transactions together. The recognition standards and method ofpresentation for revenue are described below.
(i) Revenue recognition standards
Revenue from the sale of goods is recognized when all the following conditions have been satisfied:• The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;• The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;• The amount of revenue can be measured reliably;• It is probable that the economic benefits associated with the transaction will flow to the Group; and• The costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii) Method of presentation for revenue
If the Group is acting as a principal in a transaction, revenue is stated as the total amount of consideration received fromthe customer.
(14) Income taxes
Income taxes comprise current and deferred taxes. These are recognized in profit or loss, except for the taxes arising fromitems that are recognized as other comprehensive income.
Current taxes are measured at the amount expected to be paid to (or recovered from) taxation authorities on taxable
income or loss for the current year, using the rates that have been enacted or substantively enacted by each reporting datein the countries where the Group operates and generate 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.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when temporary
difference is realized or settled, based on tax laws that have been enacted or substantively enacted by each reporting 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 the assets and settle theliabilities simultaneously.

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Deferred tax assets are recognized for unused tax losses, tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets arereviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefits will be
realized.
(15) Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable to common shareholders of the parent by theweighted average number of common stocks outstanding during the period, adjusted for treasury stock. Diluted earnings per
share is calculated by adjusting for all dilutive potential ordinary shares having a dilutive effect.
4. Issued but not yet effective IFRSAt the date of authorization of these consolidated financial statements, certain new standards, amendments andinterpretations to existing standards were issued but not yet effective and have not been early adopted by the Group.
The Company is in the process of assessing the impact of the adoption of these standards and interpretations, but is
not yet in a position to state whether these new and revised IFRS would have a significant impact on the Group’s results ofoperation and financial position.

IFRS

Title

Mandatory
adoption date(year beginning on)

The Group’s
adoption date

Summary

IAS 32 (Amendments)

Amendments to IAS 32
Financial Instruments:
Presentation

1 January 2014

Year ending
31 August 2015

Offsetting financial assets and financial liabilities.

IAS 36 (Amendments)

Amendments to IAS 36
Impairment of Assets

1 January 2014

Year ending
31 August 2015

Recoverable amount disclosures for non-financial assets.

IAS 39 (Amendments)

Amendments to IAS 39
Financial Instruments:
Recognition andMeasurement

1 January 2014

Year ending
31 August 2015

Novation of derivatives and continuation of hedge
accounting.
Clarifies the timing of recognition of liability for a levy
when the activity that triggers payment, as identified by
the relevant legislation, occurs.

IFRIC 21

Levies

1 January 2014

Year ending
31 August 2015

IFRS 10 (Amendments)

Amendments to IFRS 10 —Consolidated Financial
Statements

1 January 2014

Year ending
31 August 2015

Defines investment entity and provide an exception to
the consolidation requirement for entities that meet thedefinition of investment entity.

IFRS 12 (Amendments)

Amendments to IFRS 12 —Disclosures of interests
in other entities

1 January 2014

Year ending
31 August 2015

Sets out the disclosure requirements for investment
entities.

IFRS 15

Revenue from Contracts
with Customers

1 January 2017

Year ending
31 August 2018

Provides a single revenue recognition model based on thetransfer of control of a good or service to a customer.

1 January 2018Year ending
31 August 2019

Replaces IAS39 Financial Instruments: Recognition andMeasurement, and addresses the classification andmeasurement of financial assets and financial liabilities,
and hedge accounting requirements.

IFRS 9 (2014)

Financial Instruments— 88 —

5. Segment Information(1) Description of reportable segments
The Group’s reportable segments are components for which discrete financial information is available and is reviewed
regularly by the Board to make decisions about the allocation of resources and to assess performance.
The Group’s main retail clothing business is divided into three reportable operating segments: UNIQLO Japan, UNIQLOInternational and Global Brands, each of which is used to frame and form the Group’s strategy.
The main businesses covered by each reportable segment are as follows:
UNIQLO Japan: UNIQLO clothing business within Japan
UNIQLO International: UNIQLO clothing business outside of Japan
Global Brands: Theory, Comptoir des Cotonniers, Princesse tam.tam, GU and J Brand clothing operations(2) Method of calculating segment revenue and results
The methods of accounting for the reportable segments are the same as those stated in “3. Significant Accounting
Policies”.
The Group does not allocate assets and liabilities to individual reportable segments.
(3) Segment information
Year ended 31 August 2013
(Millions of yen)
Reportable segments
UNIQLOUNIQLO
GlobalJapan
International
Brands

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

Total

OthersConsolidated
Adjustments Statement ofProfit or Loss

683,314
95,217251,191
12,433

206,202
16,6931,140,708
124,344

2,263
115

—
9,640

1,142,971
134,101

97,902

12,394

16,340126,636115

28,979155,732

7,344
805

7,751
4,212

3,394
50

18,490
5,068

176
—

4,940
—

23,607
5,068

Note: “Others” include real estate leasing business, etc.
Year ended 31 August 2014
(Millions of yen)
Reportable segments
UNIQLOUNIQLO
GlobalJapan
International
Brands

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

Total

Others715,643
106,304

413,655
32,956251,225 1,380,524(4,195)135,064

106,650

32,552(3,661)

135,54182(152)

135,470

8,712
3,258

11,442849

5,519
19,852

25,67523,960

350
—

4,782
—

30,80823,960Note: “Others” include real estate leasing business, etc.

— 89 —

2,410
83

Consolidated
Adjustments Statement ofProfit or Loss

— 1,382,935(4,745)130,402(4) Geographic Information
Year ended 31 August 2013
1. External Revenue(Millions of yen)Japan

Overseas

Total

810,040

332,930

1,142,971

2. Non-current assets(Millions of yen)
Breakdown

Japan

Overseas

Total

Total

122,730

140,940

263,670

Of which, long-term financial assets, deferred tax assets

63,42815,64879,076

Difference

59,301

125,291

184,594

Year ended 31 August 2014
1. External Revenue(Millions of yen)Japan

Overseas

Total

868,657

514,278

1,382,935

2. Non-current assets(Millions of yen)
Breakdown

Japan

Overseas

Total

Total

128,910

146,359

275,270

Of which, long-term financial assets, deferred tax assets

66,69015,86082,551

Difference

62,219130,499

192,719

6. Business Combination
Year ended 31 August 2013
1. Names and line of business of companies acquired, purpose of acquisition, date of acquisition, legal form of acquisition,names of companies after acquisition, acquired voting rights, and reasons for determining the acquiring companies(1) Names and lines of business of companies acquired
Name: J Brand Holdings, LLC
Line of business: Manufacture and distribution of clothing(2) Purpose of acquisition• To expand the brand portfolio among the affordable luxury apparel category• To strengthen the Group’s capability to develop denim products by leveraging J Brand’s outstanding know-how in thearea of premium denim• To reinforce the presence of the Group by acquiring a Los Angeles-based apparel brand in the crucial U.S. market(3) Date of acquisition
20 December 2012
(4) Form of acquisition
Share acquisition in the form of cash

— 90 —

(5) Name of company after acquisition
J Brand Holdings, LLC(6) Percentage of voting rights acquired
80.76%(7) Determination of acquiring company
A subsidiary of the Group acquired the shares in the form of cash consideration and became the acquiring company.
2. Price and details of acquisition
Millions of yen
Cash consideration

26,834The Group reported costs associated with this acquisition amounting to 759 million yen as “Other expenses”.
3. Fair value of assets and liabilities acquired in connection with this acquisition
Millions of yen
Current assets
Non-current assets
Current liabilities

4,459
19,984(1,423)(8,255)

Non-current liabilities

14,764
4. Fair value of non-controlling interests in connection with this acquisition
Millions of yen
6,666
Fair value of non-controlling interests is calculated as the prorated fair value of the distinguishable net assets of the acquiredcompany.
5. Goodwill from acquisition
Millions of yen
Cash consideration
Non-controlling interests

26,834
6,666(14,764)

Total identifiable net assets at fair value

18,737
6. Net cash flow generated due to acquisition of subsidiaries
Millions of yen
Cash consideration(26,834)
62

Cash and cash equivalents of J Brand Holdings, LLC(26,771)
7. Amount of goodwill recognized, reasons for recognizing goodwill(1) Amount of goodwill recognized
18,737 million yen(2) Reasons for recognizing goodwill
The above amount is based on a reasonable estimate of future excess earning power that can be expected of futurebusiness development.
Year ended 31 August 2014
With regard to the additional share acquisition of J Brand Holdings, LLC, the carrying amount of non-controlling interests
decreased by 7,813 million yen. Capital surplus increased by 1,726 million yen as a result of this acquisition, which is equal tothe difference between the price of acquisition and the carrying amount.
— 91 —

7. Cash and cash equivalents
The breakdown of cash and cash equivalents as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012
Cash and bank balances
Money market funds (MMF), cash funds,
negotiable certificates of deposits
Total

As at
31 August 2013

As at
31 August 2014

132,235

148,492

172,364

133,788

148,215

141,684

266,023

296,708

314,049

8. Trade and other receivables
The breakdown of trade and other receivables as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012

As at
31 August 2013

As at
31 August 2014

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

19,858
62
2,954
(268)

34,103
84
4,234
(488)

42,960
69
4,909
(511)

Total

22,60737,93347,428

See note “28. Financial Instruments” for credit risk management and the fair value of trade and other receivables.
9. Inventories
The breakdown of inventories as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012
Products
Supplies
Total

As at
31 August 2013

As at
31 August 2014

98,253
2,237

163,939
3,581

219,492
3,730

100,491

167,521

223,223

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 2013
Write-down of inventories to net realizable value

Year ended
31 August 2014
2,169

— 92 —

1,976

10. Other financial assets and other financial liabilities
The breakdown of other financial assets and other financial liabilities as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012
Other financial assets:
Available-for-sale financial assets
Loans and receivables
Loans and receivables
Allowance for doubtful accounts

As at
31 August 2013

As at
31 August 2014

354

467

450

59,267(837)

65,681(78)

80,039(76)

Total loans and receivables

58,42965,602

79,962

Total

58,784

66,06980,413

1,672
57,112

2,461
63,6089,119
71,293

Other current financial assets total
Other non-current financial assets total(Millions of yen)
As at
1 September 2012
Other financial liabilities:
Financial liabilities measured at amortized cost
Interest-bearing bank and other borrowings
Deposits
Deposits/guarantees received
Others
Total
Other current financial liabilities total
Other non-current financial liabilities total

As at
31 August 2013

As at
31 August 2014

23,434509
2,005
737,259
510
1,730
27

37,561
1,135
1,603
—

25,95739,52840,3009,405
16,5519,450
30,077

12,696
27,604

11. Other assets and other liabilities
The breakdown of other assets and other liabilities as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012
Other assets:
Prepayments
Long-term prepayments
Others
Total
Current
Non-current— 93 —As at
31 August 2013

As at
31 August 2014

6,532
2,018
777

8,025
3,356
2,262

9,192
4,743
2,839

9,328

13,644

16,775

7,291
2,036

10,291
3,353

12,1394,636

(Millions of yen)
As at
1 September 2012
Other liabilities:
Accruals
Employee benefits accruals
Others
Total
Current
Non-current

As at
31 August 2013

As at
31 August 2014

11,361
2,507
7,601

14,7903,068
6,977

19,606
3,534
12,704

21,47024,83635,845

16,2195,250

16,583
8,253

25,462
10,383

12. 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 andvehiclesAt 1 September 2012

100,91125,070

4,194

1,947

132,125

Additions
Business combination
Disposals
Transfers
Exchange realignment

17,539104(2,205)
3,946
10,894

10,71770(2,660)
—
4,034

—
—
—
—
—

5,626
46
—
(3,946)586

33,884221(4,865)—
15,516

At 31 August 2013

131,192

37,233

4,194

4,260

176,881

Additions
Business combination
Disposals
Transfers
Exchange realignment

20,907—(5,209)13,036
5,203

14,019—(3,150)
—
1,193

—
—
(504)
—
—

13,273——(13,036)
1,523

48,201—(8,864)—7,920

At 31 August 2014

165,130

49,297

3,689

6,021

224,139

Acquisition costs— 94 —

Constructionin progress

Land

Total

(Millions of yen)
Accumulated depreciationand impairment
At 1 September 2012
Depreciation provided
during the year
Impairment
Disposals
Exchange realignment
At 31 August 2013
Depreciation provided
during the year
Impairment
Disposals
Exchange realignment
At 31 August 2014

Buildings
and structures

Furniture,equipment andvehicles(48,938)(12,316)(315)—(61,570)(12,589)(5,965)——(18,555)(4,551)
1,822(2,868)

(517)
2,507
(1,762)

—
—
—

—
—
—

(5,068)
4,329(4,630)(67,125)(18,054)(315)—(85,495)(16,776)(7,833)——(24,609)(3,550)
3,349
(895)

(1,086)
2,942
(394)

—
—
—

—
—
—

(4,636)
6,291(1,290)(84,998)(24,427)(315)—(109,741)

Constructionin progress

Land

Total

(Millions of yen)
Net carrying amount

Furniture,equipment andvehiclesBuildings andstructures

ConstructionLandin progress

Total

At 1 September 2012

51,97312,754

3,879

1,947

70,554

At 31 August 2013

64,066

19,178

3,879

4,260

91,385

At 31 August 2014

80,131

24,869

3,374

6,021

114,398

Net carrying amounts of finance-leased assets are as follows:(Millions of yen)
Furniture,equipment andvehiclesBuildings andstructures

OthersTotal

At 1 September 2012

1,059

6,007

—

7,066

At 31 August 2013

917

8,123

—

9,040

At 31 August 2014

831

9,437

—

10,269There are no restrictions on ownership rights and no pledges on the Group’s property, plant and equipment.

— 95 —

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

Goodwill

SoftwareTrademarks

Otherintangible
assetsIntangible
assets total

Total

At 1 September 2012

15,992

23,411

6,569

7,748

37,72953,721

External purchases
Business combination
Disposals
Exchange realignment—
18,737
—
2,286

4,313
75
(668)
334

17
9,473
—
3,180

376
10,105
(210)
3,784

4,706
19,653
(878)
7,299

4,706
38,390(878)
9,587

At 31 August 2013

37,016

27,466

19,23921,80568,511

105,527

External purchases
Bussiness combination
Disposals
Exchange realignment

—
—
—
1,393

6,690
—
(498)
30

—
—
—
918

164
—
(231)
1,023

6,854
—
(730)
1,972

6,854
—
(730)
3,366

At 31 August 2014

38,41033,68820,15822,76276,608115,018(Millions of yen)
Intangible assets other than goodwill
Accumulated amortization andimpairment

Goodwill

SoftwareTrademarks

Otherintangible
assetsIntangible
assets total

Total

At 1 September 2012—

(8,631)(711)(1,186)(10,529)(10,529)

Amortization provided during the year
Impairment
Disposals
Exchange realignment

—
—
—
—

(3,586)
—
613
(260)

(1)
—
—
(195)

(1,464)—10(259)(5,052)
—
624
(715)

(5,052)
—
624
(715)

—

(11,865)(908)(2,898)(15,673)(15,673)

Amortization provided during the year
Impairment
Disposals
Exchange realignment

At 31 August 2013—
(11,154)—(540)(4,498)
—
455
(33)

—
(4,376)—(30)(1,872)(3,793)173
9(6,371)(8,170)628(54)(6,371)(19,324)
628(594)

At 31 August 2014

(11,694)(15,941)(5,315)(8,382)(29,640)(41,334)(Note)

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

Goodwill

SoftwareTrademarks

Otherintangible
assets

Total

Intangible
assets total

At 1 September 2012

15,992

14,779

5,857

6,562

27,19943,191

At 31 August 2013

37,016

15,60018,33018,906

52,83889,854

At 31 August 2014

26,715

17,746

14,842

14,37946,96873,684— 96 —

(2) Significant goodwill and intangible assets
Goodwill and intangible assets recorded in the consolidated statement of financial position are mainly for goodwill andtrademarks related to J Brand.
Some of the trademarks will continue to be used as long as the business remains viable; therefore, management considers
the useful lives of these as indefinite.
The carrying amount of the goodwill and intangible assets with indefinite useful lives by cash-generating unit (“CGU”) is asfollows:(Millions of yen)
Intangible assets with indefinite
useful lives

Goodwill
Net carrying amount

UNIQLOJapan

UNIQLOInternational

At 1 September 2012——

At 31 August 2013——

At 31 August 2014——

GlobalBrandsUNIQLOJapan

UNIQLOInternational

GlobalBrands15,992——

10,49837,016——

24,70926,715——

21,695

14. Impairment losses
During the year ended 31 August 2014, the Group recognized impairment losses on some store assets, and goodwill andintangible assets owned by J Brand business, mainly due to a decline in their profitability.
A breakdown of impairment losses by asset type is as follows:(Millions of yen)
Year ended
31 August 2013
Buildings and structures
Furniture and equipment
Subtotal impairment losses on property,
plant and equipment
Goodwill
Trademark
Other intangible assets
Subtotal impairment losses on intangible assets
Total impairment losses

Year ended
31 August 2014
4,551
517

3,550
1,086

5,068

4,636

—
—
—

11,154
4,376
3,793

—

19,324

5,068

23,960

The Group’s impairment losses during the year ended 31 August 2014 amounted to 23,960 million yen, compared with 5,068
million yen during the year ended 31 August 2013, and are included in “other expenses” on the consolidated statement of profit
or loss.
Year ended 31 August 2013
(1) Property, plant and equipment
The grouping is based on the smallest cash-generating unit that independently generates cash inflow. In principle, each store
is considered a cash-generating unit and recoverable amounts of cash-generating units are calculated based on value in use.
Impairment losses represented write down of the carrying amount of the store assets to the recoverable amount, mainly due
to a reduction in profitability of certain stores.
Value in use is calculated based on estimates and growth rates compiled by management, with discount rates of 8.9% to13.7% applied to the estimated future cash flows. In principle, estimates are up to five years, and no growth rates exceeding
market long-term average growth rates are used. The discount rates (pre-tax) are calculated using the weighted average cost ofcapital in the country where the cash-generating unit conducts business.
— 97 —

The main cash-generating units of which impairment losses were recorded are as follows:
Operating segments

Cash-generating unit

Type

UNIQLO International

UNIQLO USA LLC stores

Buildings and structures

UNIQLO Japan

UNIQLO CO., LTD. stores

Buildings and structures

UNIQLO International

UNIQLO (U.K.) LIMITED stores

Buildings and structures

Global brands

G.U. CO., LTD. stores

Buildings and structures(2) Goodwill and intangible assets
Not applicable.
Year ended 31 August 2014
(1) Property, plant and equipment
The grouping is based on the smallest cash-generating unit that independently generates cash inflow. In principle, each store
is considered a cash-generating unit and recoverable amounts of cash-generating units are calculated based on value in use.
Impairment losses represented write down of the carrying amount of the store assets to the recoverable amount, mainly due
to a reduction in profitability of certain stores.
The value in use is calculated based on estimates and growth rates complied by management. Since the future cash flow isestimated to be negative, the value in use is deemed to be zero.
The main cash-generating units for which impairment losses were recorded are as follows:
Operating segments

Cash-generating unit

Type

UNIQLO Japan

UNIQLO CO., LTD. stores

Buildings and structures

UNIQLO International

Fast Retailing (China) Trading
Co. Ltd. stores

Buildings and structures

UNIQLO International

UNIQLO TRADING CO., LTD. stores

Buildings and structures

UNIQLO International

UNIQLO TAIWAN LTD. stores

Buildings and structures

Global brands

G.U. CO., LTD. stores

Buildings and structures(2) Goodwill and intangible assets
23,960 million yen in impairment losses is mainly comprised of impairment losses for trademarks, customer relationships
and goodwill owned by the J Brand business. The carrying amounts of cash-generating units related to J Brand business after
recognition of impairment losses are 10,604 million yen of goodwill, 7,009 million yen of trademarks and 6,154 million yen ofcustomer relationships.
The recoverable amounts of trademarks, customer relationships and goodwill related to the J Brand business are calculated
based on fair value less costs of disposal.
Fair value less costs of disposal is determined by taking into account the following two approaches:(i) The terminal value of the business added to the 10-year discounted cash flow based on plans projected and approvedby management. The discount rate (pre-tax) is calculated at 18.8% based on the weighted average cost of capital of the cashgenerating units (Income approach).
(ii) Calculation based on the market value of similar assets (Market approach).
This measurement of fair value is classified as level 3 in the fair value hierarchy based on significant inputs in used valuation
techniques.
Adverse changes in key assumptions — lower estimated future cash flow or higher discount rate (pre-tax), would cause
further impairment loss to be recognized.
— 98 —

15. Finance lease obligations
A breakdown of finance lease obligations is as follows:(Millions of yen)
Future minimum
lease payments

Present value of
future minimum lease payments

As at 1As at 1As at 31
As at 31
As at 31
As at 31
September
SeptemberAugust 2013 August 2014
August 2013 August 2014
2012
2012
Finance lease obligations
Due within one year
Due after one year through five years
Due after five years
Total

3,070
5,511
—

3,514
6,523
—

3,997
7,811
—

2,973
5,415
—

3,417
6,420
—

3,894
7,705
—

8,581

10,03811,809

8,389

9,837

11,599Deductions – future finance costs

(192)

(200)

(209)

—

—

—

Total net finance lease payables

8,389

9,837

11,599

8,389

9,837

11,599Current portion

—

—

—

2,973

3,417

3,894

Non-current portion

—

—

—

5,415

6,420

7,705

The Group has no sublease contracts, accrued variable lease fees or escalation clauses (clauses providing for increases inleasing fees), and no limitations imposed by lease contracts (limitations regarding dividends, additional borrowing, or additional
leases, etc.).
16. Operating lease arrangements(1) As Lessee
The Group’s total future minimum lease payments on non-cancellable operating leases as at each reporting date are as
follows:(Millions of yen)
As at
1 September 2012
Due within one year
Due after one year through five years
Due after five years
Total

As at
31 August 2013

As at
31 August 201412,14239,29630,512

16,672
64,84636,34828,662
79,871
69,296

81,951

117,867

177,830

The total minimum lease payments and contingent rents for operating lease contracts recognized as expenses in eachreporting period are as follows:(Millions of yen)
Year ended
31 August 2013

Year ended
31 August 2014

Total minimum lease payments
Contingent rents

60,39346,07391,38347,269Total

106,466

138,652

Contingent rents, renewal options, and escalation clauses (clauses providing for increases in leasing fees) are included in theoperating lease agreements.

— 99 —

The Company has no limitations imposed by lease contracts (limitations regarding dividends, additional borrowing, oradditional leases, etc.).
(2) As lessor
The Company sub-leases some of the properties it leased through operating leases, and so while it pays rent to the property
owner, it also receives rent from the sub-tenant.
A breakdown of the future minimum rental receivables under non-cancellable leases is as follows:(Millions of yen)
As at
1 September 2012
Due within one year
Due after one year through five years
Due after five years
Total

As at
31 August 2013

As at
31 August 2014

124
177
—

58
63
—

58
8
—

301

121

67

The total of contingent rents recorded as revenue during each reporting period is as follows:(Millions of yen)
Year ended
31 August 2013
Contingent rents

Year ended
31 August 2014
1,141

1,139

17. Deferred taxes and income taxes(1) Deferred taxes
The main factors in the increase/(decrease) of deferred tax assets and deferred tax liabilities are as follows:(Millions of yen)
As at
1 September 2012
Temporary differences
Accrued business tax
Allowance for bonuses
Provision of allowancefor doubtful accounts
Impairment losses
Unrealized gains/(losses) on
available-for-sale securities
Depreciation
Net gain/(loss) on revaluation of
cash flow hedges
Temporary differences onshares of subsidiaries
Accelerated depreciation
Intangible assets
OthersSubtotal
Tax losses carried forward
Net deferred tax assets/(liabilities)(Note)

Recognizedin profit or loss
(Note)

Recognizedin othercomprehensive
incomeAcquisitions
throughbusiness
combination

As at
31 August 2013

1,967
2,186

(183)
151

—
—

—
—

1,784
2,338

92

89

—

—

182

—

1,143

—

—

1,143

(2)

—

2

—

—

2,753

2,255

—

—

5,008

8,629

—

(51,096)—(42,467)(2,190)

(12)

—

—

(2,203)(2,576)—
4,609
15,469
3,333

(230)
—
1,033
4,246
1,800

—
—
—
(51,094)——(8,344)303(8,040)—(2,807)(8,344)
5,946(39,418)
5,133

18,802

6,047(51,094)(8,040)(34,284)

The difference between the total amount recognized in profit or loss and the amount of deferred tax is due toexchange realignment.

— 100 —

(Millions of yen)
As at
1 September 2013

Recognizedin profit or loss
(Note)

Recognizedin othercomprehensive
income

1,784
2,338

289
359

—
—

—
—

2,073
2,697

182

(59)

—

—

122

1,143

(144)

—

—

998

—

—

(1)

—

(1)

5,008

515

—

—

5,524

(42,467)

—

6,606

—

(35,861)(2,203)———(2,203)(2,807)(8,344)
5,946

(698)
3,596
(1,353)

—
—
—

—
—
—

(3,505)(4,747)
4,593(39,418)

2,505

6,604

—

(30,308)

Temporary differences
Accrued business tax
Allowance for bonuses
Provision of allowancefor doubtful accounts
Impairment losses
Unrealized gains/(losses) on
available-for-sale securities
Depreciation
Net gain/(loss) on revaluation of
cash flow hedges
Temporary differences onshares of subsidiaries
Accelerated depreciation
Intangible assets
OthersSubtotal
Tax losses carried forward
Net deferred tax assets/(liabilities)(Note)

Acquisitions
throughbusiness
combination

As at
31 August 2014

5,133

(956)

—

—

4,177

(34,284)

1,549

6,604

—

(26,130)

The difference between the total amount recognized in profit or loss and the amount of deferred tax is due toexchange realignment.

Tax effects of unrecognized tax losses carried forward and deductible temporary differences for which deferred tax assets
were not recognized is as follows:(Millions of yen)
As at
1 September 2012
Unrecognized tax losses carried forward
Deductible temporary differences
Total

As at
31 August 2013

As at
31 August 2014

5,962
14,044

3,797
10,812

5,653
12,56820,007

14,60918,222

Tax effects of unrecognized tax losses carried forward for 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
1 September 2012
First year
Second year
Third year
Fourth year
Fifth year and thereafter
Total

As at
31 August 2013

As at
31 August 2014

—
—
—
—
5,962

—
—
—
—
3,797

—
—
—
—
5,653

5,962

3,797

5,653

The Group has the above unrecognized tax losses available offsetting against future taxable profits of the companies in which
the losses arose, whereof no deferred tax assets have been recognized.
During the year ended 31 August 2013, unrecognized tax losses amounted to 2,245 million yen was utilized.
— 101 —

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 1 September 2012, 31 August 2013 and 31 August 2014 were 147,987
million yen, 274,486 million yen, and 332,519 million yen respectively.
No liability has been recognized with respect to these differences because the Group is in a position to control the timing of
the reversal of the temporary differences and it is probable that such differences will not be reversed in the foreseeable future.
(2) Income taxes(Millions of yen)
Year ended
31 August 2013
Current tax
Deferred tax
Total

Year ended
31 August 2014
54,486(6,228)58,207(2,074)

48,25756,133

Reconciliations 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 2013

Year ended
31 August 2014

Statutory income tax rate
Increase/(decrease) in valuation allowance
Difference in statutory income tax rates of subsidiaries
Impairment loss of goodwill
Inhabitant tax on per capita basis
Others38.0%(4.4%)(2.4%)—
0.4%(0.6%)

38.0%
2.8%(4.4%)
3.2%
0.6%
1.2%

Effective tax rate

31.0%

41.4%

18. Trade and other payables
The breakdown of trade and other payables as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012
Trade payables
Other payables
Total

As at
31 August 2013

As at
31 August 2014

71,14218,015

121,960
31,403137,069
48,04989,158

153,364

185,119

19. Provisions
The breakdown of provisions as at each reporting date is as follows:(Millions of yen)
As at
1 September 2012
Allowance for bonuses
Asset retirement obligations
Total
Current liabilities
Non-current liabilities— 102 —As at
31 August 2013

As at
31 August 2014

7,760
6,196

9,056
8,182

12,192
11,656

13,957

17,23823,849

9,789
4,167

11,4205,818

16,154
7,694

The main factors for the increase/(decrease) in provisions are as follows:(Millions of yen)
Allowance forbonuses
Balances as at 1 September 2012
Additional provisions
Amounts utilized
Increase in discounted amounts arising frompassage of time
OthersBalances as at 31 August 2013

Asset retirement
obligations

Total

7,760

6,196

13,957

12,268(11,677)

1,679
(226)

13,947(11,903)

—

87

87

705

444

1,149

9,056

8,182

17,238Additional provisions
Amounts utilized
Increase in discounted amounts arising frompassage of time
Others15,966(13,051)

3,606
(398)

19,573(13,449)

—

91

91

221

173

394

Balances as at 31 August 201412,192

11,656

23,849Please refer to “3. Significant Accounting Policies (11) Provisions” for explanation of respective provisions.
20. Equity and other equity Items(1) Share Capital
Number of
Number of
Number ofoutstanding
authorized sharesissued sharessharesCapital 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 2012

300,000,000

106,073,656

101,854,222

10,273

6,296

—

—

42,270—562

300,000,000

106,073,656

101,896,492

10,273

6,859

—

—

22,119—2,944

300,000,000

106,073,656

101,918,611

10,273

9,803

Increase/(decrease) (Note)
Balances as at 31 August 2013
Increase/(decrease) (Note)
Balances as at 31 August 2014
(Note)

Capital surplus(Millions of yen)

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

(2) Treasury Stock and Capital Surplus➀

Treasury Stock
Number of shares (shares)

Balances as at 1 September 2012
Repurchase of shares less than one unit
Exercise of stock options
Balances as at 31 August 2013
Repurchase of shares less than one unit
Exercise of stock options
Balances as at 31 August 2014

— 103 —

Amount (Millions of yen)

4,219,434

16,003335(42,605)9(161)

4,177,164

15,851

699(22,818)25(86)

4,155,045

15,790➁

Capital surplus(Millions of yen)
Capital reserve

Gain/(loss) on
disposalof treasury stock

Stock options

4,578

962

755

—

6,296

—
—

421
—

—
140

—
—

421
140

4,578

1,384

896

—

6,859

—
—

471
—

—
746

—
—

471
746

—

—

—

1,726

1,726

4,578

1,856

1,642

1,726

9,803

Balances as at
1 September 2012
Disposal of treasury stock
Share-based payments
Balances as at
31 August 2013
Disposal of treasury stock
Share-based payments
Acquisition of non-controllinginterests
Balances as at
31 August 2014

Others

Total

Please refer to “27. Share-based payments” for details of share-based payments (stock options).
(3) Other components of equity
The breakdown of other comprehensive income included in non-controlling interests is as follows:(Millions of yen)
Year ended
31 August 2013

Year ended
31 August 2014

Exchange differences on translation of foreign operations
Cash flow hedges

3,010
—

1,818
(94)

Other comprehensive income

3,010

1,724

(4) Dividends
The Company’s basic policy is to pay two dividends 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 2013
Resolutions

Amount of dividends(Millions of yen)

Dividends per share(Yen)

Board of Directors’ meeting held on 5 November 201213,241

130

Board of Directors’ meeting held on 11 April 201314,263

140

Year ended 31 August 2014
Resolutions

Amount of dividends(Millions of yen)

Dividends per share(Yen)

Board of Directors’ meeting held on 4 November 201315,284

150

Board of Directors’ meeting held on 10 April 201415,286150

Proposed dividends on common stock are as follows:Year ended 31 August 2013
Total amount of dividends (million yen)
Dividends per share (yen)Year ended 31 August 201415,284

15,287150150

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.

— 104 —

21. Revenue
The breakdown of revenue for each reporting period is as follows:(Millions of yen)
Year ended
31 August 2013
Revenue
Sales of goods
Service revenue
Total

Year ended
31 August 2014

1,139,171
3,799

1,379,077
3,857

1,142,971

1,382,935

22. Selling, general and administrative Expenses
The breakdown of selling, general and administrative expenses for each reporting period is as follows:(Millions of yen)
Year ended
31 August 2013
Selling, general and administrative expenses
Advertising and promotion
Rental expenses
Depreciation and amortisation
Outsourcing
Salaries
Others
Total

Year ended
31 August 2014

52,693111,276
23,607
17,185140,11181,30360,941
138,652
30,80822,953
184,864
110,975

426,177

549,195

23. Other income and other expenses
The breakdown of other income and other expenses for each reporting period is as follows:(Millions of yen)
Year ended
31 August 2013
Other income
Foreign exchange gains*
Gains on sales of property, plant and equipment
Others
Total

Year ended
31 August 2014
2,081
390
1,578

3,926
991
2,107

4,050

7,025
(Millions of yen)

Year ended
31 August 2013

Year ended
31 August 2014

Other expenses
Loss on retirement of property, plant and equipment
Impairment losses
Others

519
5,068
3,328

391
23,960
2,847

Total

8,916

27,200* Foreign exchange gains incurred in the course of operating transactions are included in “other income”.

— 105 —

24. Finance income and finance costs
The breakdown of finance income and finance costs for each reporting period is as follows:(Millions of yen)
Year ended
31 August 2013
Finance income
Foreign exchange gains*
Interest income
Dividend income
Total

Year ended
31 August 2014
21,667
573
28

5,104
879
17

22,2696,001(Millions of yen)

Year ended
31 August 2013

Year ended
31 August 2014

Finance costs
Interest expenses
Total

638

933

638

933

* Foreign exchange gains incurred in the course of non-operating transactions are included in “finance income”.
25. 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 reporting period are as follows:Year ended 31 August 2013
(Millions of yen)Amountrecorded during
the year

Reclassification
adjustment

Amount before
income tax

Income tax effectAmount after
income tax

243

—

243

(35)

207
19,462

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

19,372

90

19,462—

157,945(22,443)

135,502(51,097)

84,405

Total

177,561(22,353)

155,208(51,132)

104,075

Year ended 31 August 2014
(Millions of yen)Amountrecorded during
the year

Reclassification
adjustment

Amount before
income tax

Income tax effectAmount after
income tax

66

—

66

—

66

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

8,793

(391)

8,402

—

8,402

42,639(55,022)(12,382)

6,608(5,773)

Total

51,500(55,413)(3,913)

6,608

2,695

— 106 —

26. Earnings per share
Year ended 31 August 2013
Equity per share attributable to ownersof the parent (Yen)
Basic earnings per share for the year (Yen)
Diluted earnings per share for the year (Yen)Note:Year ended 31 August 2014
5,598.12
1,026.68
1,025.75

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)6,067.40
731.51730.81The basis for calculation of basic earnings per share and diluted earnings per share for each reporting period is asfollows:
Year ended
31 August 2013

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 2014

104,595

74,546——

104,595

74,546

101,877,010

101,908,470—
92,803(92,803)—
97,917(97,917)

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

1st Share subscription rights
B typeCategory and number of grantee

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

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

Number of stock options by type of shares (Note)

Common stock:maximum 3,370 shares

Common stock:maximum 77,542 shares

Grant date

8 November 2010

8 November 2010

Vesting conditions

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

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

Eligible service period

From 8 November 2010 to
7 November 2013

From 8 November 2010 to
7 December 2010

Exercise period

From 8 November 2013 to
7 November 2020

From 8 December 2010 to
7 November 2020

Settlement

Equity settlement

Equity settlement— 107 —

Category and number of grantee
Number of stock options by type of shares (Note)
Grant date
Vesting conditions

Eligible service period
Exercise period
Settlement

Category and number of grantee
Number of stock options by type of shares (Note)
Grant date
Vesting conditions

Eligible service period
Exercise period
Settlement

Category and number of grantee
Number of stock options by type of shares (Note)
Grant date
Vesting conditions

Eligible service period
Exercise period
SettlementNote:

2nd share subscription rights
A typeEmployees of the Company: 14
Employees of the Groupsubsidiaries: 4
Common stock:maximum 13,894 shares
15 November 2011
To serve continuously until thevesting date (14 November 2014)
after the grant date
(15 November 2011)
From 15 November 2011 to
14 November 2014
From 15 November 2014 to
14 November 2021
Equity settlement

2nd share subscription rights
B typeEmployees of the Company: 139
Employees of the Groupsubsidiaries: 584
Common stock:maximum 51,422 shares
15 November 2011
To serve continuously until thevesting date (14 December 2011)
after the grant date
(15 November 2011)
From 15 November 2011 to
14 December 2011
From 15 December 2011 to
14 November 2021
Equity settlement

3rd share subscription rights
A typeEmployees of the Company: 18
Employees of the Groupsubsidiaries: 8
Common stock:maximum 10,793 shares
13 November 2012
To serve continuously until thevesting date (12 November 2015)
after the grant date
(13 November 2012)
From 13 November 2012 to
12 November 2015
From 13 November 2015 to
12 November 2022
Equity settlement

3rd share subscription rights
B typeEmployees of the Company: 136
Employees of the Groupsubsidiaries: 615
Common stock:maximum 39,673 shares
13 November 2012
To serve continuously until thevesting date (12 December 2012)
after the grant date
(13 November 2012)
From 13 November 2012 to
12 December 2012
From 13 December 2012 to
12 November 2022
Equity settlement

4th share subscription rights
A typeEmployees of the Company: 19
Employees of the Groupsubsidiaries: 11
Common stock:maximum 7,564 shares
3 December 2013
To serve continuously until thevesting date (2 December 2016)
after the grant date
(3 December 2013)
From 3 December 2013 to
2 December 2016
From 3 December 2016 to
2 December 2023
Equity settlement

4th share subscription rights
B typeEmployees of the Company: 180
Employees of the Groupsubsidiaries: 706
Common stock:maximum 29,803 shares
3 December 2013
To serve continuously until thevesting date (2 January 2014)
after the grant date
(3 December 2013)
From 3 December 2013 to
2 January 2014
From 3 January 2014 to
2 December 2023
Equity settlement

The number of stock options is equivalent to the number of shares.

Expenses recognized for share-based payments are as follows:(Millions of yen)
Year ended
31 August 2014

Year ended
31 August 2013
Expenses recognized
Share-based payments

723— 108 —

1,269

(2) Scale of stock options program and changes
Movement of stock options during the reporting period. The number of stock options is equivalent to the number of shares.
➀ The number and weighted average exercise prices of stock options
Stock options
Year ended
31 August 2013

Year ended
31 August 2014

Number of shares(shares)Number of shares(shares)Non-vested
Non-vested at beginning of the year
GrantedForfeited
Vested16,25450,466(1,351)(39,673)

25,69637,367(525)(32,163)

Non-vested at end of the year

25,69630,375

Year ended
31 August 2013

Year ended
31 August 2014

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

VestedOutstanding at beginning of the year
VestedExercised
Forfeited

58,76939,673(42,605)(28)

55,80932,163(22,818)(380)

Outstanding at end of the year

55,80964,774All stock options are granted with an exercise price of 1 yen per share.
➁

Stock price on exercise date
Stock options exercised during the year ended 31 August 2014 are as follows:Type

Number of shares(shares)

Stock options➂

Weighted average stock priceon exercise date (Yen)22,818

Expected life of stock options
The weighted average expected life of outstanding stock options as at 31 August 2014 was 7.83 years.
In addition, the weighted average expected life of outstanding stock options as at 31 August 2013 was 8.27 years.

— 109 —

36,775

2. Methods of estimating fair value of stock options, etc.
The methods of estimating fair value of 4th share subscription rights, A type and B type, granted during the year ended 31
August 2014, were as follows:➀➁

Valuation model: Black-Scholes model
The following table lists the inputs to the model used:
4th share subscription rights
A type

4th share subscription rights
B type37%

37%

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.

6.5 years

5.04 years

290 yen/share

290 yen/share

0.308%

0.189%

Stock price volatility is computed based on the actual results of 6.5 years for A type (from June 2007 to
December 2013) and 5.04 years for B type (from December 2008 to December 2013).
Expected life of options is estimated to be the reasonable period from the grant date until the exercise date.
Expected dividends are the actual dividends for the year ended 31 August 2013.
Risk-free interest rate refers to the yield of Japanese government bonds corresponding to the expected life of
options.

Also, the method of estimating fair value for the 3rd share subscription rights A type and B type granted during the year
ended 31 August 2013 are as follows:➀➁

Valuation model: Black-Scholes model
The following table lists the inputs to the model used:
3rd share subscription rights
A type

3rd share subscription rights
B type36%

36%

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.

6.5 years

5.04 years

260 yen/share

260 yen/share

0.352%

0.203%

Stock price volatility is computed based on the actual results of 6.5 years for A type (from May 2006 to
November 2012) and 5.04 years for B type (from November 2007 to November 2012).
Expected life of options is estimated to be the reasonable period from the grant date until the exercise date.
Expected dividends are the actual dividends for the year ended 31 August 2012.
Risk-free interest rate refers to the yield of Japanese government bonds corresponding to the expected life of
options.

3. Estimation method of the number of share subscription rights which have already been vested
Because it is difficult to reasonably estimate the number of options that will expire in the future, the method reflecting actual
numbers of forfeiture is adopted.

— 110 —

28. Financial Instruments(1) Capital risk management
The Group engages in capital management to achieve continuous growth and maximize corporate value.
The ratio of the Group’s net interest-bearing borrowings to equity is as follows:(Millions of yen)
As at
1 September 2012

As at
31 August 2013

As at
31 August 2014

Interest-bearing borrowings
Cash and cash equivalents
Net interest-bearing borrowings

23,434
266,023(242,588)

37,259296,708(259,449)

37,561
314,049(276,487)

Equity398,849

589,726

636,041

To maximize corporate value, the Group engages in cash flow-oriented management. As at 1 September 2012, 31 August
2013 and 2014, the Group maintained a position where the value of cash and cash equivalents exceeded interest-bearing
borrowings.
As at 31 August 2014, the Group is not subject to any externally imposed capital requirement.
(2) Significant accounting policies
See Note “3. Significant Accounting Policies” for significant accounting policies regarding standards for recognizing financial
assets, financial liabilities, equity financial instruments, as well as the fundamentals of measurement and recognition of profit orloss.
(3) Categories of financial instruments(Millions of yen)
As at
1 September 2012
Financial assets
Loans and receivables
Trade and other receivables
Other current financial assets
Other non-current financial assets
Available-for-sale investments
Derivatives
Financial assets at fair value through profit or loss(“FVTPL”)
Foreign currency forward contracts designated as
hedging instruments
Financial liabilities
Financial liabilities at amortized cost
Trade and other payables
Other current financial liabilities
Other non-current financial liabilities
Derivatives
Financial liabilities at FVTPL
Foreign currency forward contracts designated as
hedging instruments

As at
31 August 2013

As at
31 August 2014

22,607
1,672
56,757354

37,933
2,461
63,141467

47,428
9,119
70,842
450

—

—

21

—

114,011

99,10389,158
9,405
16,551

153,364
9,450
30,077

185,119
12,696
27,604

144

369

140

22,481—871

No items in the above categories are included in discontinued operations or disposal group held-for-sale. Also, there are no
financial assets or liabilities valued using the fair value option to measure fair value.
On the consolidated statement of financial position, available-for-sale investments are included under “non-current financial
assets”.
— 111 —

(4) Financial risk management
In relation to the cash management, the Group seeks to ensure effective utilization of group funds through the Group’s CashManagement Service (“CMS”). The Group obtained credit facilities from financial institutions. Any temporary surplus funds areinvested 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.
(5) Market risk management
The Group conducts its business on a global scale, and is therefore exposed to the price fluctuation risk of currencies andequity financial instruments.
➀ Foreign currency risk
1) Foreign currency risk management
The Group conducts its business on a global scale, and is exposed to foreign currency risk in relation to purchases and sales
transactions and financing denominated in currencies other than the local currencies of those countries in which the Group
operates its business.
In regard to operating obligations denominated in foreign currencies, the Group in principle hedges risk by using foreign
currency forward contracts and other instruments for foreign currency risk assessed on a semi-annual basis.
For imports, the Group endeavors to stabilize purchasing costs by concluding foreign currency forward contracts andstandardizing import exchange rates. If the yen should weaken significantly against the US dollar in the future and this situation
continued for an extended period, it could have a negative impact on the Group’s performance.
The Group identifies concentration of risk in regard to foreign currency forward contracts.
The Group’s notional amount of foreign currency forward contracts was 855,103 million yen as at 31 August 2014.
2) Foreign currency sensitivity analysis
Below is an analysis of the impact an 1% increase in the yen against the Euro (“EUR”) and the United States dollar (“$”) would
have on the Group’s profit for the year and other comprehensive income on the respective reporting periods.
These calculations assume no changes in the value of other foreign currencies not included herein.
Year ended
31 August 2013
Average exchange rate (Yen)$EUR
Impact on profit for the year (Millions of yen)$
EUR
Impact on other comprehensive income (Millions of yen)$
EUR

— 112 —

Year ended
31 August 2014
89.83

101.54117.30138.20

(430)
(48)

(613)
(42)

(9,820)(8)(8,933)(5)

3) Currency derivatives and hedges
The Group uses foreign currency forward contract transactions to hedge against the risk of future fluctuations in exchange
rates in regard to foreign currency transactions and applies hedge accounting to transactions that meet hedge requirements,
and did not conduct any speculative trading in derivatives.
Cash flow hedges
A cash flow hedge is a hedge for avoiding risk of volatility in future cash flows. The Company uses foreign currency forward
contracts to hedge cash flow fluctuations relating to planned transactions.
Fluctuations in the fair value of derivative transactions designated as cash flow hedges are recognized as othercomprehensive income, and included in other components of equity, and are reclassified to profit or loss at the time net profit
is recognized on the hedged item.
The gain/(loss) on derivative transactions (after tax effects) projected to be reclassified to profit or loss within one year was
54,154 million yen (gain) as at 31 August 2014, and 59,973 million yen (gain) as at 31 August 2013.
1. Derivative transactions of which hedge accounting is not applied
Foreign currencies (Millions of
Average exchange rates
respective currency)
Contract principal (Millions of yen)
Fair value (Millions of yen)
1 September 31 August 31 August 1 September 31 August 31 August 1 September 31 August 31 August 1 September 31 August 31 August
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
Foreign currency forward contracts
Within 1 year
0.78
0.76
0.71
Buy USD (sell EUR)
33
63
5
2,510
6,317
535
(66)
46
20
(€/$)
(€/$)
(€/$)
1.27
—
—
Buy USD (sell SGD)
23
—
—
1,851
—
—
(39)
—
—
(SG$/$)(SG$/$)(SG$/$)
1,145.00
1,135.84
1,056.10
Buy USD (sell KRW)
118
290
3
9,363
29,217
364
(35)
(414)
(6)
(KRW/$)(KRW/$)(KRW/$)
30.01
29.98
30.05
Buy USD (sell TWD)
20
33
34
1,604
3,293
3,634
3
(2)
(10)
(TWD/$)(TWD/$)(TWD/$)
31.80
—
32.99
Buy USD (sell THB)
18
—
45
1,447
—
4,672
(6)
—
(116)
(THB/$)(THB/$)(THB/$)——
1.08
Buy USD (sell AUD)
—
—
8
—
—
879
—
—
1
(AUD/$)(AUD/$)(AUD/$)—— 12,230.00
Buy USD (sell IDR)
—
—
6
—
—
682
—
—
(6)
(IDR/$)(IDR/$)(IDR/$)— 113 —

2. Derivative transactions of which hedge accounting is applied
Foreign currencies (Millions of
Average exchange rates
respective currency)
Contract principal (Millions of yen)
Fair value (Millions of yen)
1 September 31 August 31 August 1 September 31 August 31 August 1 September 31 August 31 August 1 September 31 August 31 August
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
Foreign currency forward contracts
Over 1 year
80.89
89.40
93.59
Buy USD (sell JPY)
4,326
6,139
5,229
349,719548,859
489,422(12,931)54,03844,077
(¥/$)
(¥/$)
(¥/$)
Within 1 year
79.89
81.34
88.08
Buy USD (sell JPY)
3,341
4,139
3,538
269,790336,701
311,645(9,549)59,98254,647
(¥/$)
(¥/$)
(¥/$)
—
—
0.73
Buy USD (sell EUR)
—
—
104
—
—
10,402
—
—
378
(€/$)
(€/$)
(€/$)
—
—
1.26
Buy USD (sell SGD)
—
—
49
—
—
5,129
—
—
(32)
(SG$/$)(SG$/$)(SG$/$)——
1,087.34
Buy USD (sell KRW)
—
—
247
—
—
27,152——(827)(KRW/$)(KRW/$)(KRW/$)—
131.34136.55
Buy EUR (sell JPY)
—
6
4
—
893
587
—
(8)
(12)
(¥/€)
(¥/€)
(¥/€)

➁ Interest rate risk management
The Group’s interest-bearing borrowings are mainly loans with variable interest rates, but the Group maintains positions incash and cash equivalents that exceed the outstanding balance of its interest-bearing borrowings.
At present, the impact of interest payments on the Group is quite small. Consequently, the Group’s current level of interestrate risk is minor, and the Group has not performed any interest rate sensitivity analysis.
➂ Price risk management in equity instruments
The Group is exposed to the risk of price volatility in equity financial instruments. The Group holds no equity financial
instruments for short-term trading purposes.
The Group makes regular periodic checks of the market value of the equity financial instruments it holds, as well as thefinancial health of the issuers.
(6) Credit risk management
When the Group initiates ongoing transactions where receivables will be generated on an ongoing basis, the financedepartment manages the Group’s risk exposure by setting credit limits and credit periods, as needed.
Trade receivables encompass many customers spanning a wide range of industries and geographic regions. The Group
conducts regular credit checks of the companies it does business with, and when necessary takes appropriate protective
measures, such as requiring collateral.
The Group does not have excessively concentrated credit risk exposure to any single company or corporate group.
As for deposits and guarantees, the Group mitigates risk by conducting regular monitoring of the companies with which itdoes business for early detection of any worsening of their financial health.
➀ Financial assets and other credit risk exposure
Except for the items listed below, 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.
(Millions of yen)

Guaranteed liabilities

As at
1 September 201212

Maximum credit risk
As at
31 August 2013
8As at
31 August 20147

The Company holds no properties or other credit enhancement as collateral for exposure to the credit risk described above.

— 114 —

➁ Impaired or past-due financial assets
Below is an age analysis of financial assets whose due date had not passed as at each reporting date, and financial assets thatare overdue whereof no asset impairment was recognized.
(Millions of yen)
Total
Balances as at
1 September 2012
Trade and other receivables(total)Allowance for doubtful accounts
Trade and other receivables (net)Other financial assets (total)
Allowance for doubtful accounts
Other financial assets (net)
Balances as at 31 August 2013
Trade and otherreceivables (total)
Allowance for doubtful accounts
Trade and other receivables (net)Other financial assets (total)
Allowance for doubtful accounts
Other financial assets (net)
Balances as at 31 August 2014
Trade and other receivables(total)Allowance for doubtful accounts
Trade and other receivables(net)Other financial assets (total)
Allowance for doubtful accounts
Other financial assets (net)Within due dateWithin 90 days

Overdue amounts
91 days to 1 year

Over 1 year

22,875

21,760

856

138

120

(268)
22,60759,621(837)
58,784(146)
21,61359,588(824)
58,764

(84)
772
—
—
—

(6)
131
1
—
1

(30)
90
30
(13)
16

38,421

36,463

1,630

73

254

(488)
37,933
66,148(78)
66,069(269)
36,194
66,145(78)
66,066

(28)
1,601
—
—
—

(14)
58
—
—
—

(175)
79
3
—
3

47,94045,688

1,617

230

403

(511)
47,42880,490(76)
80,413(255)
45,43280,410(76)
80,333

(7)
1,610
13
—
13

(17)
213
31
—
31

(231)
172
34
—
34

The Group does not hold any collateral or other credit enhancements on the above financial assets.
When the Group recognizes impairment of a financial asset, it does not subtract the value of the impairment directly fromthe carrying amount. Rather, this is recorded as an allowance for doubtful accounts.
The main factors increasing/decreasing the Group’s allowances for doubtful accounts were as follows:(Millions of yen)
Allowance for
doubtful accounts(current)

Allowance for
doubtful accounts(non-current)

Balances as at 1 September 2012

268

837

1,105

Provision for the year
Decrease (intended purposes)
Others

415
(54)
(141)

78
—
(837)

494
(54)
(978)

Total

Balances as at 31 August 2013

488

78

567

Provision for the year
Decrease (intended purposes)
Others

216
(55)
(137)

76
—
(78)

292
(55)
(215)

Balances as at 31 August 2014

511

76

588

— 115 —

Where recoverability is uncertain, the Group conducts ongoing monitoring of the credit status of companies with which itdoes business, including receivables whose maturity date has been changed.
Based on the credit facts uncovered by this monitoring, the Group assess 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.
(7) Liquidity risk management
The Group manages liquidity risk by formulating and revising its funding plans on a timely basis and maintains an appropriate
level of liquidity on hand.
The ultimate responsibility for management of liquidity risk lies with the CFO appointed by the Board of Directors. The
finance department, under the direction of the CFO, performs the day-to-day aspects of liquidity risk management by
maintaining appropriate levels of surplus funds and bank loans, and by monitoring budgets and cash flows.

As at 1 September 2012
Non-derivative financial
liabilities
Trade and other payables
Long-term borrowings(excluding current portion)
Current portion of
long-term borrowings
Short-term borrowings
Long-term finance leaseobligations
Short-term finance leaseobligations
Derivative financial liabilities
Foreign currency forward
contracts
Total
As at 31 August 2013
Non-derivative financial
liabilities
Trade and other payables
Long-term borrowings(excluding current portion)
Current portion of long-termborrowings
Short-term borrowings
Long-term finance leaseobligations
Short-term finance leaseobligations
Derivative financial liabilities
Foreign currency forward
contracts
Total

More than
3 years
but within
4 years(Millions of yen)More than
4 yearsOver
but within
5 years
5 years

Carrying
amountContractual
cash flows

Less than
1 year

89,15889,15889,158

—

—

—

—

—

9,129

9,129

—

2,796

2,766

2,766

800

—

3,410

3,410

3,410

—

—

—

—

—

2,505

2,505

2,505

—

—

—

—

—

5,415

5,415

—

2,448

1,749

973

244

—

2,973

2,973

2,973

—

—

—

—

—

22,625—

135,219

112,593

98,048

5,245

4,516

3,739

1,044

—

153,364

153,364

153,364

—

—

—

—

—

21,92621,926

—

4,571

4,571

1,967

2,950

7,865

3,632

3,632

3,632

—

—

—

—

—

1,862

1,862

1,862

—

—

—

—

—

6,420

6,420

—

2,735

1,971

1,255

457

—

3,417

3,417

3,417

—

—

—

—

—

—

—

190,624

190,624

162,276

7,307

6,543

3,222

3,408

7,865

— 116 —

1 to 2years

More than
2 years
but within
3 years

(Millions of yen)
1 to 2years

More than
2 years
but within
3 years

More than
3 years
but within
4 years

More than
4 years
but within
5 yearsOver
5 years

Carrying
amountContractual
cash flows

Less than
1 year185,119

185,119

185,119

—

—

—

—

—

18,295

18,295

—

4,809

2,074

3,112

4,149

4,149

4,809

4,809

4,809

—

—

—

—

—

2,857

2,857

2,857

—

—

—

—

—

7,705

7,705

—

3,140

2,429

1,634

500

—

3,894

3,894

3,894

—

—

—

—

—

1,012

—

223,693

222,680

196,680

7,950

4,504

4,746

4,649

4,149

As at 31 August 2014
Non-derivative financial
liabilities
Trade and other payables
Long-term borrowings(excluding current portion)
Current portion of long-termborrowings
Short-term borrowings
Long-term finance leaseobligations
Short-term finance leaseobligations
Derivative financial liabilities
Foreign currency forward
contracts
Total(Note)

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

(8) Fair value of financial instruments(Millions of yen)
As at 1 September 2012

As at 31 August 2013

As at 31 August 2014

Carrying
amounts

Fair value

Carrying
amounts

Fair value

Carrying
amounts

Fair value

Short-term borrowings
Long-term borrowings (Note)
Lease obligations (Note)

2,505
12,5408,389

2,505
12,316
8,191

1,862
25,5599,837

1,862
24,581
9,637

2,857
23,104
11,5992,857
22,065
11,379Total

23,43423,01337,25936,081

37,56136,302(Note)

The above includes the outstanding balance of borrowings due within 1 year.
The fair value of short-term financial assets, short-term financial liabilities, long-term financial assets and long-term
financial liabilities, which are measured by amortized cost, approximates carrying amounts.
The fair value of long-term borrowings and lease obligations are classified by term, and are calculated on the basis of
the current value applying a discount rate that takes into account time remaining to maturity and credit risk.

(9) Fair value hierarchy of financial instruments
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within thefair value hierarchy described as follows, based on the lowest level input that is significant to the fair value measurement as awhole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement isobservable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement isunobservable— 117 —

The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:(Millions of yen)
As at 1 September 2012

Level 1

Available-for-salefinancial assets
Financial liabilities at FVTPL
Foreign currency forward
contracts designated as
hedging instruments
Net amountAs at 31 August 2013

Net amountAs at 31 August 2014

Net amount

Level 3

Total

147

—

207

354

—

(144)

—

(144)

—

(22,481)—(22,481)147(22,625)207(22,270)

Level 1

Available-for-salefinancial assets
Financial liabilities at FVTPL
Foreign currency forward
contracts designated as
hedging instruments

Available-for-salefinancial assets
Financial liabilities at FVTPL
Foreign currency forward
contracts designated as
hedging instruments

Level 2

Level 2

Level 3

Total

247

—

219

467

—

(369)

—

(369)

—

114,011—

114,011247

113,641

219

114,108

Level 1

Level 2

Level 3

Total

243

—

207

450

—

(118)

—

(118)

—

98,231—

98,231

243

98,112

207

98,563— 118 —

For 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 as indicators such as interest rates, yield curves, currency rates andvolatility in comparable instruments.
Non-listed shares are included in level 3. The amount of gains recognized from level 3 items during the year ended 31 August
2013 was 13 million yen and included in “other income” on the consolidated statements of profit or loss. There is no significant
increase or decrease in level 3 items through purchase, disposal or settlement. Also, there is no transfer from level 3 to level 2.
29. 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 2013

Year ended
31 August 2014

Short-term employee benefits

518

364

Total

518

364

Transactions with officers and major shareholders (individuals only), etc. of the reporting entity submitting these consolidated
financial statements
Year ended 31 August 2013 (from 1 September 2012 to 31 August 2013)

Category

Officer

Notes:

1.
2.
		Name ofCompany or
Individual

Toru
Murayama

Location—

CapitalStock orinvestment—

Businessdetails or
profession

Nonexecutive
Director

Percentage
Relationshipof shares
with relatedwith voting
partiesrights (%)

Direct0.00

Details oftransaction

Consulting
and advisory
agreements
Outsourcing
about trainingof management
personnel

Amount oftransaction(millions ofyen)Account

Balance at
31 August2013(millions of
yen)

11

Other
current
liabilities

1

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.

— 119 —

Year ended 31 August 2014 (from 1 September 2013 to 31 August 2014)

Category

Officer

Notes:

1.
2.
		Name ofCompany or
Individual

Toru
Murayama

Location

CapitalStock orinvestment——

Businessdetails or
profession

Nonexecutive
Director

Percentage
Relationshipof shares
with relatedwith voting
partiesrights (%)

Direct0.00

Outsourcing

Details oftransaction

Amount oftransaction(millions ofyen)Account

Balance at
31 August2014(millions ofyen)Consulting
and advisory
agreements
about
training ofmanagement
personnel

18

Other
current
liabilities

1

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.

30. Major subsidiaries
The Group’s major subsidiaries are as listed in “Corporate Profile 3. Subsidiaries and Associates”.
31. Commitments
The Group had the following commitments at each reporting date:(Millions of yen)
As at
1 September 2012
Commitment for the acquisition of property,
plant and equipment
Commitment for acquisition of intangible assets

5,587

Total

As at
31 August 2013

As at
31 August 2014

8,409

5,487

745

1,603

373

6,333

10,013

5,861

32. Contingent Liabilities
Amount of guaranteed obligations
As at each reporting date, the Group has provided the following guarantees on loans payable to financial institutions by
employees’ benefit society.
(Millions of yen)
As at
1 September 2012

As at
31 August 2013

As at
31 August 2014

Employees’ Benefit Society:
Fast Retailing Mutual Aid Society

12

8

7

Total

12

8

7

33. Subsequent Events
Year ended 31 August 2013
The Issue of Stock-based Compensation Stock Options (Share Subscription Rights)
Based on Articles 236, 238 and 240 of the Companies Act and on the decision taken by the Board of Directors at its
meeting held on 10 October 2013, the Company decided to issue share subscription rights as stock-based compensation
stock options for the purpose of rewarding employees of the Company and its subsidiaries for their contribution to theGroup’s profit. By linking the Company’s stock price more closely to the benefits received by highly productive personnel, theshare subscription rights program is designed both to boost staff morale and their motivation to improve group performanceand to boost shareholder value by strengthening business development with a focus on shareholder return.
Please see “Stock Information and Dividend Policy 1. Stock Information (9) Stock Options Program” for details.
— 120 —

Year ended 31 August 2014
The Issue of Stock-based Compensation Stock Options (Share Subscription Rights)
Based on Articles 236, 238 and 240 of the Companies Act and on the decision taken by the Board of Directors at its
meeting held on 9 October 2014, the Company decided to issue share subscription rights as stock-based compensation stock
options for the purpose of rewarding employees of the Company and its subsidiaries for their contribution to the Group’s
profit. By linking the Company’s stock price more closely to the benefits received by highly productive personnel, the sharesubscription rights program is designed both to boost staff morale and their motivation to improve group performance andto boost shareholder value by strengthening business development with a focus on shareholder return.
Please see “Stock Information and Dividend Policy 1. Stock Information (9) Stock Options Program” for details.
34. First-time Adoption of IFRS
(1) IFRS first-time adoption
The consolidated financial statements are the first consolidated financial statements that the Group has preparedin accordance with IFRS. The accounting policies stated in “3. Significant Accounting Policies” have been applied in the
preparation of the consolidated financial statements for the years ended 31 August 2013 and 2014, and the consolidated
statement of financial position as at the Transition Date (1 September 2012).
(2) IFRS 1 Exemptions
Under IFRS, in principle an entity adopting IFRS for the first time (“first-time adopter”) must apply the standards (IFRS)
retrospectively. However, IFRS 1 sets out mandatory exceptions and optional exemptions to certain requirements under
IFRS. Retained earnings and other components of equity as at the IFRS transition date are adjusted for the effects of theapplication of these provisions. The Group has applied the following exemptions in the transition from JGAAP to IFRS:• Business Combinations:
IFRS 3 Business Combinations may be applied either retrospectively or prospectively. If it is applied retrospectively, allbusiness combinations that occurred before the transition date must be adjusted pursuant to IFRS 3. The Group has elected
not to apply IFRS 3 retrospectively to business combinations undertaken before the Transition Date. As a result, the carrying
amount for goodwill arising from business combinations prior to the Transition Date is the unadjusted amount determinedbased on JGAAP.
Furthermore, an impairment test of the goodwill must be conducted on the transition date irrespective of whether or notthere is any indication that the goodwill may be impaired. Results of this test indicated that there was no impairment loss ofthe goodwill was deemed necessary.
• Exchange differences on translation of foreign operations:
Under IFRS 1, a first-time adopter may either deem the cumulative exchange differences on translation of foreign
operations to be zero at the transition date or re-calculate the translation differences retrospectively back to theestablishment or acquisition of the subsidiaries. The Company has elected to deem the cumulative exchange differences ontranslation of foreign operations to be zero at the Transition Date.
(3) IFRS 1 mandatory exceptions
Under IFRS 1, “accounting estimates”, “derecognition of financial assets and financial liabilities”, “hedge accounting”, and“non-controlling interests” may not be applied retrospectively. The Company is applying these items prospectively from theTransition Date.
(4) Explanation of transition to IFRSIn preparing the consolidated financial statements in accordance with IFRS, the Group has adjusted the amounts shownon the consolidated financial statements which were prepared in accordance with JGAAP.
The effects of the transition from JGAAP to IFRS on the Group’s consolidated financial position, results of operations, andcash flow are shown below:— 121 —

(i) Reconciliation of consolidated statement of financial position as at 1 September 2012 (Transition Date)
Presentation
under JGAAP(Millions of yen)
ASSETS
Current assets
Cash and deposits
Notes and accounts
receivable — trade
Short-term investment
securities—
Inventories
Deferred tax assets (Current)
Income taxes receivable
OthersAllowance for doubtful
accounts
Total current assets

Reclassification

Differences inrecognition andmeasurement(Millions of yen)

(Millions of yen)

Presentation
under IFRS(Millions of yen)

132,238

133,7813

266,023

19,9202,686—

22,607

133,788(133,788)

—

—

—

1,672

—

1,672

98,963
16,987
10,62812,256—(16,987)—(4,620)

1,528
—
—
(344)

100,491—
10,628
7,291

(268)

268

—

—

424,516(16,987)

1,186

408,715

Notes
ASSETS
Current assets
Cash andcash equivalents
Trade andother receivables—

1

Other current financial
assetsInventories—
Income taxes receivable
Others—Total current assets

Non-current assets
Property, plant andequipment
Total property, plant andequipment
Intangible assets
Goodwill
Others69,222—

1,331

70,554

15,992
22,224

—
(60)

—
5,035

15,992
27,199Total intangible assets

38,216

(60)

5,035

43,191

Investments and other assets
Investment securities
—

354

(354)

—

—

—

58,222(1,109)57,112

4,057(4,057)

—

—

1

—

—

21,045

1,742

22,787

1

Deferred tax assets

42,883(42,883)——

14,232
2,456(14,232)(1,529)

—
1,109

—
2,036

(837)

837

—

—

—

63,146

17,048

1,741

81,936—

170,586

16,987

8,108

195,682595,102—9,295

604,397

Deferred tax assets(Non-current)—
Lease and guarantee
deposits
Advances to developer
OthersAllowance for doubtful
accounts
Total investments andother assets
Total non-current assets
Total assets

Non-current assets— 122 —

Property, plant andequipment
Goodwill
4

Other intangible assets
Intangible assets—
Non-current financial
assets——OthersTotal non-current assets
Total assets

Differences in
Reclassification recognition andmeasurement

Presentation
under JGAAP

Presentation
under IFRS(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) Notes
LIABILITIESCurrent liabilities
Notes and accounts payable— tradeShort-term loans payable
Current portion of
long-term loans payable
Forward exchange contracts—

LIABILITIESCurrent liabilities
Trade andother payables—

71,14218,015—

89,1582,505(2,505)

—

—

3,410

(3,410)———22,625(22,625)———

22,625—22,625

—

9,158

247

9,405

Income taxes payable
Provisions
Deferred tax liabilities(Current)
Others27,738
8,430

655
1,359

—
—

28,394
9,789

2—
Derivative financial
liabilities
Other current financial
liabilities
Income taxes payable
Provisions

33

(33)

—

—

1

—

37,491(23,273)

2,001

16,2192,7

OthersTotal current liabilities

173,378

(33)

2,249

175,594—

Total current liabilities

Non-current liabilities

Non-current liabilities

Long-term loans payable
—

9,129

(9,129)———16,551—

16,551

Provisions
Deferred tax liabilities(Non-current)
Others

64

4,103

—

4,167

2

—
Non-current financial
liabilities
Provisions (Non-current)

2,553

33

1,398

3,985

1

Deferred tax liabilities

15,084(11,525)

1,691

5,250

2

Others26,831

33

3,089

29,954200,210—

5,338

205,548

Total non-current liabilities
Total liabilities
NET ASSETSStockholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total stockholders’ equity
Accumulated othercomprehensive income
Total accumulated othercomprehensive income—

Total non-current
liabilities
Total liabilities
EQUITY

10,2735,541
419,093(16,003)418,905

—
755
—
—
—

—
—
(14,538)——

10,273
6,296
404,554(16,003)—(32,160)—

18,495(13,665)

386,745

755

3,956

391,456

755
7,392

(755)
—

—
—

—
7,392

Total net assets

394,892—

3,956

398,849

Total equity

Total liabilities and net assets

595,102—9,295

604,397

Total liabilities and equity

Share subscription rights
Minority interests— 123 —

3
8

5,6

3

Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost—

Other componentsof equity
Equity attributable toowners of the parent—
Non-controlling interests

Notes to Reconciliation as at 1 September 2012 (Transition Date)
Reclassifications
Reclassifications have been made in connection with changes in the presentation of the consolidated statement offinancial position, consolidated statement of profit or loss, and consolidated statement of comprehensive income for thetransition to IFRS but these do not affect retained earnings. The reclassifications consist mainly of the following:
1. All deferred tax assets and deferred tax liabilities have been reclassified as non-current assets and non-current
liabilities.
2. Under JGAAP, asset retirement obligations were recorded in “Others”, but because they are treated as provisions
under IFRS, they are included in the provisions for current liabilities and non-current liabilities in accordance with the
one-year rule.
3. Under JGAAP, share-based payments are stated as an item under net assets, but under IFRS they are included within
capital surplus.
Differences in recognition and measurement
4. Adjustment to amortization of trademarks
Under JGAAP, trademarks were amortized over the life of the trademark registration, but under IFRS the amortization
costs recognized since the acquisition date on trademarks with an indefinite useful life are retrospectively reversed, andthis adjustment is reflected in retained earnings.
5. 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,
these exchange differences are treated as foreign exchange gains or losses, and this adjustment is reflected in retained
earnings.
6. Adjustment to other components of equity
The Group has elected to adopt the exemption provided in IFRS 1 and has reclassified the balance of cumulativetranslation differences associated with foreign subsidiaries as retained earnings as of the Transition Date, 1 September
2012.
7. Adjustment for accruals for employees’ unused accumulating paid holiday
Under JGAAP, the Group was not required to account for accruals for employees’ unused accumulating paid holiday;
this is recognized as a liability under IFRS and this adjustment is reflected in retained earnings.
8. Adjustments to retained earnings(Millions of yen)
1 September 2012
4. Adjustment to amortization of trademarks
5. Adjustment to exchange differences on monetary financial instruments denominatedin foreign currencies
6. Adjustment to other components of equity
7. Adjustment for accruals for employees’ unused accumulating paid holiday
OthersAdjustments to retained earnings

5,004(16,958)(1,193)(1,202)(189)(14,538)— 124 —

(ii) Reconciliation of consolidated statement of financial position as at 31 August 2013
Differences in
Reclassification recognition andmeasurement

Presentation
under JGAAP

Presentation
under IFRS(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) Notes
ASSETS
Current assets
Cash and deposits

147,429

148,161

1,117

296,708

34,187

3,793

(47)

37,933

148,215(148,215)

—

—

—

2,461

—

2,461

Inventories
Deferred tax assets (Current)
Forward exchange contracts—

166,654
4,002
113,641—(4,002)(113,641)

866——

167,521———

113,641—

113,641

Income taxes receivable
OthersAllowance for doubtful
accounts
Total current assets

8,980
17,486—(6,689)

—
(506)

8,980
10,291

(488)

488

—

—

640,109(4,002)

1,430

637,537

Notes and accounts
receivable — Trade
Short-term investment
securities—

ASSETS
Current assets
Cash andcash equivalents
Trade andother receivables—

1

Other current financial
assetsInventories——
Derivative financial
assetsIncome taxes receivable
Others—Total current assets

Non-current assets
Property, plant andequipment
Total property, plant andequipment
Intangible fixed assets
Goodwill
Others90,405—980

91,38531,691
46,423

—
(603)

5,324
7,018

37,016
52,838

Total intangible assets

78,115(603)

12,34389,854

Investments and other assets
Investment securities
—

470

(470)

—

—

—

66,151(2,543)63,6089,498(9,498)

—

—

1

—

—

13,5001,966

15,467

1

Deferred tax assets

47,997(47,997)——

15,280
4,002(15,280)(1,878)

—
1,229

—
3,353

(78)

78

—

—

—

77,1704,606

653

82,430—245,690

4,002

13,977

263,670

885,800—

15,407901,208

Deferred tax assets(Non-current)—
Lease and guarantee
deposits
Advances to developer
OthersAllowance for doubtful
accounts
Total investments andother assets
Total non-current assets
Total assets

Non-current assets— 125 —

Property, plant andequipment
5

Goodwill

6

Other intangible assets
Intangible assets—
Non-current financial
assets——OthersTotal non-current assets
Total assets

Differences in
Reclassification recognition andmeasurement

Presentation
under JGAAP

Presentation
under IFRS(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) Notes
LIABILITIESCurrent liabilities
Notes and accounts payable— tradeShort-term loans payable
Current portion of long-termloans payable—

LIABILITIESCurrent liabilities
Trade andother payables—

121,951

31,35953

153,364

1,862(1,862)

—

—

3,632

(3,632)

—

—

—

9,450

—

9,450

Income taxes payable
Provisions
Deferred tax liabilities(Current)
Others

26,005
10,081

755
1,331

—
7

26,76011,4202

Other current financial
liabilities
Income taxes payable
Provisions

38,494(38,494)

—

—

1

—

51,937(37,401)

2,047

16,583

2,10

OthersTotal current liabilities

253,966(38,494)

2,107

217,578

21,926(21,926)———

30,077—30,077

75

5,743

—

5,818

2

—
Non-current financial
liabilities
Provisions (Non-current)

10,371

38,494886

49,752

1

Deferred tax liabilities

19,868(13,894)

2,278

8,253

2

Others52,24338,494

3,164

93,902306,209—

5,271

311,481—

Total current liabilities

Non-current liabilities
Long-term loans payable—
Provisions
Deferred tax liabilities(Non-current)
OthersTotal non-current liabilities
Total liabilities
NET ASSETSStockholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost
Total stockholders’ equity
Accumulated othercomprehensive income
Total accumulated othercomprehensive income—

Non-current liabilities

Total non-current
liabilities
Total liabilities
EQUITY

10,273
5,963
482,109(15,851)
482,495

—
896
—
—
—

—
—
(362)
—
—

10,273
6,859
481,746(15,851)—

76,901—

10,49887,399559,396896

10,135570,428

Share subscription rights
Minority interests

1,170
19,024(1,170)274———
19,298

Total net assets

579,591—

10,135

589,726

Total equity

Total liabilities and net assets

885,800—

15,407901,208

Total liabilities and equity— 126 —

3
11

7,8,9

3

Capital stock
Capital surplus
Retained earnings
Treasury stock, at cost—

Other componentsof equity
Equity attributable toowners of the parent—
Non-controlling interests

(iii) Reconciliation of consolidated comprehensive income for the year ended 31 August 2013
Differences in
Reclassification recognition andmeasurement

Presentation
under JGAAPNet sales
Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating profit
Non-operating income
Total non-operating income
Non-operating expenses
Total non-operating expenses
Extraordinary income
Total extraordinary income
Extraordinary loss
Total extraordinary loss

Income before income taxes
and minority interests
Income taxes — current
Income taxes — deferred
Total income taxes
Income before minority
interests
Minority interests
Net income

Other comprehensive income
Unrealized gains or losses onavailable-for-sale securities

Foreign currency translation
adjustment
Deferred gains or losses onhedgesTotal other comprehensive
incomeTotal comprehensive income
for the year

Presentation
under IFRS(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) Note
1,143,003—(32)
1,142,971
578,992—(1,166)
577,826
564,011—

431,091—

132,920—

17,628

1,133

Cost of sales
Gross profit

565,145(4,913)426,1775,6(17,628)

—

—

4

1,569

(1,569)

—

—

4

390

(390)

—

—

4

7,845
—
—
—
—
—

(7,845)
3,921
8,781(4,861)
14,098
633

—
128
134
6,041
8,171
5

—
4
4,050
4
8,916
4
134,101
4
22,269 4,7,8638
4141,525—

14,207

155,732

54,486(6,218)48,268—(54,486)
6,218—
48,268

—
—
—
(10)

—
—
—
48,257

93,256—

14,217

107,474

2,879(2,879)——90,377
—
—

—
2,879
—

14,217——

104,595
2,879
107,474

Selling, general andadministrative expenses

Other income
Other expenses
Operating profit
Finance income
Finance costs
Profit before income
taxes

Income taxes
Profit for the year
Attributable to:
Owners of the parent
Non-controlling interests
Total

9,455

—

(9,248)207

717,078—2,384

19,462

8

85,538—(1,133)84,405

112,072—(7,997)104,075

205,329—6,221

211,550— 127 —

Revenue

Net gain/(loss) onrevaluation ofavailable-for-saleinvestments
Exchange differences ontranslation of foreign
operations
Cash flow hedges
Other comprehensive
income, net of taxes
Total comprehensive
income for the year

Notes to Reconciliation for the year ended 31 August 2013
Reclassification
The following reclassifications have been made in the presentation of the consolidated statement of financial position,
consolidated statement of profit or loss, and consolidated statement of comprehensive income for the transition to IFRS anddo not affect retained earnings. The reclassifications consist mainly of the following:
1. All deferred tax assets and deferred tax liabilities have been reclassified as non-current assets and non-current
liabilities.
2. Under JGAAP, asset retirement obligations were recorded in “Others”, but because they are treated as provisions
under IFRS, they are included in the provisions for current liabilities and non-current liabilities in accordance with the
one-year rule.
3. Under JGAAP, share-based payments are stated as an item under net assets, but under IFRS they are included within
capital surplus.
4. Items stated under non-operating income, non-operating expenses, extraordinary income, and extraordinary loss
under JGAAP have been reclassified under IFRS; presented as finance income, finance costs, other costs, other income,or selling, general and administrative expenses.
Differences in recognition and measurement
5. Adjustment to amortization of goodwill
Under JGAAP, goodwill was amortized over an estimated amortization period. Under IFRS, this amortization ceased on
the Transition Date and this adjustment is reflected in retained earnings.
6. Adjustment to amortization of trademarks
Under JGAAP, trademarks were amortized over the life of the trademark registration, but under IFRS the amortization
costs recognized since the acquisition date on trademarks with an indefinite useful life are retrospectively reversed, andthis adjustment is reflected in retained earnings.
7. 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,
these exchange differences are treated as foreign exchange gains or losses, and this adjustment is reflected in retained
earnings.
8. Adjustment to net investment in foreign operations
Under JGAAP, exchange differences on loans to foreign subsidiaries and branches that are determined to be an
investment are treated as foreign exchange gains or losses. Under IFRS, these are treated as other components of equity
and this adjustment is reflected in retained earnings.
9. Adjustment to other components of equity
The Group has elected to adopt the exemption provided in IFRS 1 and has reclassified the balance of cumulativetranslation differences associated with foreign subsidiaries as retained earnings as of the Transition Date.
10. Adjustment for accruals for employees’ unused accumulating paid holiday
Under JGAAP, the Group was not required to account for accruals for employees’ unused accumulating paid holiday;
this is recognized as a liability under IFRS and this adjustment is reflected in retained earnings.

— 128 —

11. Adjustments to retained earnings(Millions of yen)
31 August 2013
5. Adjustment to amortization of goodwill
6. Adjustment to amortization of trademarks
7. Adjustment to exchange differences on monetary financial instruments denominatedin foreign currencies
8. Adjustment to net investment in foreign operations
9. Adjustment to other components of equity
10. Adjustment for accruals for employees’ unused accumulating paid holiday
OthersAdjustments to retained earnings

5,297
5,694
(7,710)(1,069)(1,193)(1,301)(80)(362)(iv) Disclosure of significant adjustments to the prior year’s consolidated statement of cash flows
There are no significant differences between the disclosed consolidated statement of cash flows under IFRS and thedisclosed consolidated statement of cash flows under JGAAP.
(2) Others
Quarterly information for the year ended 31 August 2014
(Cumulative)

First quarter

Second quarter

Third quarter

Fiscal year

Revenue (Millions of yen)

389,052

764,349

1,088,004

1,382,907

Quarterly income before
income taxes and minority
interests (Millions of yen)

69,316108,133

141,538

140,115

Quarterly net income(Millions of yen)

41,84864,557

84,836

78,118

Earnings per share(Yen)

410.69633.52

832.50766.55(Accounting period)
Quarterly earnings
per share (Yen)(Notes) 1.
2.

First quarter

Second quarter

410.69222.84

Third quarter
198.98Fourth quarter(65.92)

The quarterly information for the year ended 31 August 2014 was prepared in accordance with JGAAP.
The information for the year ended 31 August 2014 and for the three months ended 31 August 2014 (1 June2014 to 31 August 2014) have not been audited or reviewed pursuant to the provisions of Article 193-2-1 of the
Financial Instruments and Exchange Act.

— 129 —

2. Financial statements(1) Financial statements(1) Balance Sheet(Millions of yen)
As at 31 August 2013ASSETS
Current assets
Cash and deposits
Trade accounts receivable
Short-term investment securities
Short-term loans receivable fromsubsidiaries and affiliates
Income taxes receivable
Accounts receivable from subsidiaries
and affiliates
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools, furniture and equipment
Accumulated depreciation
Tools, furniture and equipment, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Total property, plant and equipment
Intangible assets
Software
Software in progress
OthersTotal intangible assets
Investments and other assets
Investment securities
Investments in subsidiaries and affiliates
Investments in capital of subsidiaries
and affiliates
Long-term loans receivable fromsubsidiaries and affiliates
Leases and guarantee deposits
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

41,589※1 16,448
138,156

46,673※1 12,679
131,622

20,922
8,458

34,275
11,481

9,162
858
(2)
235,594

8,962
1,877
(1)
247,570

5,561(3,437)2,124298※3 (202)95
1,366※3 (1,198)
168
1,158
20
※3 (11)
8
3,555

5,736
(3,990)1,745
298※3 (207)91
1,406※3 (1,290)
116
1,158
20
※3 (15)
4
3,116

12,5492,603
95
15,247

11,8495,403
80
17,333403
85,561

439
74,922

9,992

11,06918,244
3,957
700(3,146)
115,712
134,515370,110

24,034
5,314
1,310
(0)
117,092
137,542
385,113※3— 130 —

As at 31 August 2014

※3

(Millions of yen)
As at 31 August 2013
LIABILITIESCurrent liabilities
Accounts payable
Accruals
Deposits received
Allowance for bonuses

As at 31 August 2014

3,728
882
※1 22,876
827
1,992

3,178
1,173
※1 42,435
1,283
160

30,30848,231Others

1,109
2,440
497

1,127
3,012
486

Total non-current liabilities

4,047

4,625

34,35652,857

10,273

10,273

Other capital surplus

4,578
1,384

4,578
1,856

Total capital surplus

5,963

6,435

818

818

185,100
155,534

185,100
148,299

341,452

334,217

OthersTotal current liabilities
Non-current liabilities
Guarantee deposits received
Deferred tax liabilities

Total liabilities
NET ASSETS
Shareholders’ equity
Capital stock
Capital surplus
Capital reserve

Retained earnings
Legal reserve
Other retained earnings
Special reserve fundRetained earnings carried forward
Total retained earnings
Treasury stock(15,851)(15,790)

Total shareholders’ equity

341,838

335,136(6,980)(4,515)(6,980)(4,515)

896

1,634

335,754332,255

370,110385,113

Valuation and translation adjustments
Unrealized gains/(losses) on
available-for-sale securities
Total valuation and translation
adjustments
Share subscription rights
Total net assets
Total liabilities and net assets— 131 —

(2) Statement of Income(Millions of yen)
Year ended
31 August 2013
Operating revenue
Management income from operatingcompanies
Dividends income from subsidiaries
and affiliates

Year ended
31 August 2014

※1

32,512※1

26,481※1

59,057※1

50,957

91,57077,438Others

2,822
448
827
3,775
4,109
6,420
6,761

3,240
112
1,283
3,881
4,908
10,6209,914

Total operating expenses

25,16533,961

66,40443,477

34

62

Others

148
9,904
151

86
3,508
96

Total non-operating income

10,239

3,753

39
35

14
294

Total operating revenue
Operating expenses
Selling, general and administrative
expenses
Salaries
Bonuses
Allowance for bonuses
Rental expenses
Depreciation
Outsourcing expenses

Operating income
Non-operating income
Interest income
Interest income from investment
securities
Foreign exchange gains

Non-operating expenses
Interest expenses
Others74

308

76,56946,921Gain from discharge of indebtedness—427

Total extraordinary income—

427

Total non-operating expenses
Ordinary income
Extraordinary income

Extraordinary losses
Losses on retirement of non-current
assetsImpairment losses of investments in
subsidiaries and affiliates

※2

58

※2

—

Allowance for doubtful accounts—
857

23,499—Total extraordinary losses

916

23,499

Income before income taxes

75,653

23,849

Income taxes – current
Income taxes – deferred

5,233
1,643

(91)
605

Total income taxes

6,877

513

Net income

68,77623,336— 132 —

(iii) Statement of Changes in Net Assets
Year ended 31 August 2013
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusLegalreserve

Specialreserve
fund

Retainedearnings
carriedforwardTotal
retainedearnings

4,578

962

5,541

818

185,100

114,262

300,180421

421

Dividends(27,504)(27,504)

Net income

68,776

68,776

Balance at the beginning of year

10,273

Changes during the year
Exercise of share subscription
rightsAcquisition of treasury stock
Disposal of treasury stock
Net changes of items otherthan those in shareholders’equityNet changes during the year
Balance at the end of year

—

—

421

421

—

—

41,271

41,271

10,273

4,578

1,384

5,963

818

185,100

155,534

341,452

Valuation and translation
adjustments

Shareholders’ equity

Total
shareholders’equityTreasurystock

Balance at the beginning of year

(16,003)299,992

Unrealized
Total valuation
gains/(losses)
andon availabletranslation
for-saleadjustments
securities(16,433)(16,433)

Share
subscription
rightsTotal
net assets

755

284,314

Changes during the year
Exercise of share subscription rights

421

421

Dividends(27,504)(27,504)

Net income

68,776

68,776

Acquisition of treasury stock

(9)

(9)

(9)

Disposal of treasury stock

161

161

161

Net changes of items other thanthose in shareholders’ equity

9,453

9,453

140

9,594

Net changes during the year152

41,845

9,453

9,453

140

51,439Balance at the end of year

(15,851)

341,838(6,980)(6,980)896

335,754— 133 —

Year ended 31 August 2014
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Capitalreserve

Other
capitalsurplusTotal
capitalsurplusLegalreserve

Specialreserve
fund

Retainedearnings
carriedforwardTotal
retainedearnings

4,578

1,384

5,963

818

185,100

155,534

341,452471

471

Dividends(30,571)(30,571)

Net income

23,33623,336

Balance at the beginning of year

10,273

Changes during the year
Exercise of share subscription
rightsAcquisition of treasury stock
Disposal of treasury stock
Net changes of items otherthan those in shareholders’equityNet changes during the year
Balance at the end of year

—

—

471

471

—

—

(7,234)(7,234)

10,273

4,578

1,856

6,435

818

185,100

148,299334,217

Valuation and translation
adjustments

Shareholders’ equity

Total
shareholders’equityTreasurystock

Balance at the beginning of year

(15,851)

341,838

Unrealized
Total valuation
gains/(losses)
andon availabletranslation
for-saleadjustments
securities(6,980)(6,980)Share
subscription
rightsTotal
net assets

896

335,754

Changes during the year
Exercise of share subscription rights

471

471

Dividends(30,571)(30,571)

Net income

23,33623,336

Acquisition of treasury stock

(25)

(25)

(25)

Disposal of treasury stock

86

86

86

Net changes of items other thanthose in shareholders’ equity
Net changes during the year
Balance at the end of year

2,464

2,464

738

3,203

60

(6,701)

2,464

2,464

738

(3,498)(15,790)

335,136(4,515)(4,515)

1,634

332,255— 134 —

Notes(Significant accounting policies)
1. Valuation methods for securities(a) Investments in subsidiaries and affiliates:
The Company’s investments in subsidiaries and affiliates are stated at cost. The cost of securities sold is determined byaverage method.
(b) Available-for-sale securities:(i) Listed securities:
Listed securities are stated at fair value, with fair value gains and losses, net of applicable taxes, reported as“unrealized gains/(losses) on available-for-sale securities”, a separate component of net assets. The cost of
securities sold is determined based on moving average cost method.
(ii) Unlisted securities:
Unlisted securities are stated at cost, which is determined by average method.
2. Depreciation method for non-current assets(a) Property, plant and equipment (other than leased assets)
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciationof property, plant and equipment is calculated using the straight-line method, to write off the cost of property, plantand equipment to its residual value over its estimated useful lives. The principal ranges of estimated useful lives are
as follows:
Buildings and structures
5–10 years
Tools, furniture and equipment
5 years(b) Intangible assets (other than leased assets)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is the fair value as at the date of acquisition. Intangible assets are subsequently amortizedover the useful economic life and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. Amortization of intangible assets is calculated using the straight-line method. The principal range of
estimated useful life 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. Provision basis for allowances(a) Allowance for doubtful accounts
Provision for potential bad debts, loan loss ratios are recorded for general accounts receivable. Specified doubtful
accounts receivable are reviewed individually to determine their recoverability, and an estimate for the nonrecoverable portion is recorded.
(b) Allowance for bonuses
Bonuses to employees are accrued on the balance sheet date.
4. Other significant matter for the preparation of non-consolidated financial statements
Accounting for consumption tax
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

— 135 —

(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 2013
Trade accounts receivable
Deposits received

As at 31 August 2014

16,371
22,651

12,60042,167

2. Contingent liabilities(1) Guarantees for office and retail store leases(Millions of yen)
As at 31 August 2013
Subsidiaries:
UNIQLO EUROPE LIMITEDAs at 31 August 2014

727
(GBP 4 million)
350(EUR 2 million)
40,501($411 million)

UNIQLO EUROPE LIMITED(formerly UNIQLO FRANCE S.A.S.)
Fast Retailing USA, Inc.

820
(GBP 4 million)
641(EUR 4 million)
64,238($619 million)(2) Guarantees on loans payable to financial institutions(Millions of yen)
As at 31 August 2013
Employees’ benefit society
Fast Retailing Mutual Aid Society
Employees of the Company
FAST RETAILING FRANCE S.A.S.

As at 31 August 2014

8
—
7,813
(EUR 60 million)
17,704($180 million)

Fast Retailing USA, Inc.

7
20
5,469
(EUR 40 million)
17,635($170 million)

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 2013
Ordinary revenue:
Management income from operating companies
Dividends income from subsidiaries and affiliates

Year ended
31 August 2014

30,20559,05724,18950,957

2. Breakdown of losses on retirement of non-current assets are as follows:(Millions of yen)
Year ended
31 August 2013
Buildings
Tools, furniture and equipment
SoftwareYear ended
31 August 20144
0
53

— 136 ————

(Notes to statement of changes in net assets)
Year ended 31 August 2013 (1 September 2012 – 31 August 2013)
Type and number of shares of treasury stock
Types of shares

As at
1 September 2012

Increase

Decrease

As at
31 August 2013

Common stock (shares)

4,219,434

335

42,605

4,177,164

Total

4,219,434

335

42,605

4,177,164(Note) The reasons for increase/decrease in common stock of treasury stock is as follows:
Increase due to purchase of shares less than one unit
335 shares
Decrease due to exercise of stock options
42,605 sharesYear ended 31 August 2014 (1 September 2013 – 31 August 2014)
Type and number of shares of treasury stock
Types of shares

As at
1 September 2013

Increase

Decrease

As at
31 August 2014

Common stock (shares)

4,177,164

699

22,8184,155,045

Total

4,177,164

699

22,8184,155,045(Note) The reasons for increase/decrease in common stock of treasury stock is as follows:
Increase due to purchase of shares less than one unit
699 shares
Decrease due to exercise of stock options
22,818 shares— 137 —

(Lease transactions)Year ended 31 August 2013

Year ended 31 August 2014

1. Finance leases
1. Finance leases
Finance leases that do not involve a transfer of ownership
Finance leases that do not involve a transfer of ownership(i) Details of leased assets(i) Details of leased assets
Property, plant and equipment
Same as left
This is mainly office furniture and equipment.
Intangible assets
This is mainly software such as business support systems.
(ii) Depreciation method for leased assets(ii) Depreciation method for leased assets
See Significant Accounting Policies 2. Depreciation ofSame as left
non-current assets.
Finance leases executed on or before 31 August 2008
that do not involve transfer of ownership are accounted
for in a similar manner as operating leases, as shown
below.
(1) Amounts equivalent to acquisition costs, accumulated (1) Amounts equivalent to acquisition costs, accumulated
depreciation and net carrying amount at the balance sheet
depreciation and net carrying amount at the balance sheet
date
date
Tools, furnitureand equipment
Amounts equivalent to:
Acquisition costs
Accumulated depreciation
Net carrying amountTools, furnitureand equipment— million yen— million yen— million yen(2) Term-end balance of residual leasing fees
Due within one year
Due after one year
Total

Amounts equivalent to:
Acquisition costs
Accumulated depreciation
Term-end balance— million yen— million yen— million yen(2) Term-end balance of residual leasing fees
— million yen— million yen— million yen

Due within one year
Due after one year
Total

— million yen— million yen— million yen(3) Lease payments, amounts equivalent to depreciation and (3) Lease payments, amounts equivalent to depreciation andamounts equivalent to interest expenses
amounts equivalent to interest expenses
Lease payments
Amounts equivalent todepreciation
Amounts equivalent toInterest expenses

1 million yen
1 million yen
0 million yen

Lease payments
Amounts equivalent todepreciation
Amounts equivalent toInterest expenses— million yen— million yen— million yen(4) Calculation method for amounts equivalent to depreciation (4) Calculation method for amounts equivalent to depreciation
and amounts equivalent to interest expenses are as
and amounts equivalent to interest expenses are as
follows:
follows:• Method of calculating depreciation• Method of calculating depreciation
Depreciation of leased assets is calculated using the—straight-line method over the lease terms at zero
residual value.
• Method of calculating interest expenses• Method of calculating interest expenses
The difference between total lease payments and—amounts equivalent to acquisition costs of leased assets
is assumed to be interest expenses and allocated overthe lease terms by the interest method.
2. Future minimum lease payments related to non-cancellable 2. Future minimum lease payments related to non-cancellable
operating lease transactions
operating lease transactions
Due within one year
Due after one year
Total

1,011 million yen
4,272 million yen
5,284 million yen— 138 —

Due within one year
Due after one year
Total

1,011 million yen
3,260 million yen
4,272 million yen

(Marketable securities)
As at 31 August 2013
Fair value of the shares of subsidiaries (85,561 million yen on balance sheet) is not described as they do not have market
price and the fair value is extremely difficult to determine.
As at 31 August 2014
Fair value of the shares of subsidiaries (74,922 million yen on balance sheet) is not described as they do not have market
price and the fair value is extremely difficult to determine.

(Deferred taxes)
1. Breakdown of the causes of deferred tax assets and deferred tax liabilities are as follows:(Millions of yen)
As at
31 August 2013
Deferred tax assets:
Allowance for bonuses
Depreciation
Write-down of shares in subsidiaries and affiliates
Provision of allowance for doubtful accounts
Unrealised gains/(losses) on available-for-sale securities
Unused tax losses carried forward

As at
31 August 2014

508

339
409
16,400
1,122
2,509
—
3,075

338
25,898
0
1,641
1,173
2,827

23,858(23,858)

32,387(32,387)

—

—

(53)
(2,203)(183)(24)(2,203)(784)

Total deferred tax liabilities(2,440)(3,012)

Net deferred tax liabilities(2,440)(3,012)OthersSubtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Asset retirement obligations
Temporary differences on shares of subsidiaries
Others

2. The differences between the effective tax rate after applying tax effect and the statutory income tax rate is as follows:(Millions of yen)
As at
31 August 2013
Statutory income tax rate
(adjustments)
Non-taxable dividend income
Increase/(decrease) in valuation allowance
Non-deductible donation
Foreign withholding tax
Others
Effective tax rates after applying tax effect accounting(Business Combination)
Not applicable.

— 139 —As at
31 August 2014
38.0%

38.0%

(29.5)
(0.5)
0.1
0.4
0.6

(80.7)
39.4
—
2.4
3.0

9.1

2.2

(Asset retirement obligations)
Asset retirement obligations recorded in the balance sheet:
1. Overview of asset retirement obligations
Asset retirement obligations include the obligation to restore assets to their original states, etc. related to real estate leaseagreements of the head office and other office buildings.
2. Method for calculating the total amount of asset retirement obligations
The Company estimates the period of potential use (primarily 5 years) since date of acquisition and uses a discount rate of
0.27% when calculating total asset retirement obligations.
3. Changes in total amount of asset retirement obligations(Millions of yen)
Year ended
31 August 2013
Balance at the beginning of year
Increase due to acquisition of property,
plant and equipment
Accretion adjustment
Decrease due to settlement of asset retirement
obligations
OthersBalance at the end of year

Year ended
31 August 2014
469

471

—
2

—
2

—
—
471

—
—
473

(Per share information)
Year ended
31 August 2013
Net assets per share
Basic net income per share
Diluted net income per share

Year ended
31 August 2014
3,286.26 yen
675.09 yen
674.48 yen

Net assets per share
Basic net income per share
Diluted net income per share

3,243.97 yen
228.99 yen
228.77 yen(Notes) The basis for calculation of basic net income per share for the period and diluted net income per share for the year is asfollows:
Year ended
31 August 2013

Items
Basic net income per share
Net income (Millions of yen)
Net income not attributable to common shareholders(Millions of yen)
Net income attributable to common shareholders(Millions of yen)
Average number of common stock during the period(Shares)
Diluted net income per share
Adjustment to net income (Yen)
Increase in number of common stock (Shares)(of which, shares from exercise of subscription rights)
Significant changes in potential shares excluded fromthe computation of diluted net income per share forthe year, because they do not have dilutive effects— 140 —

Year ended
31 August 2014
68,77623,336——

68,77623,336

101,877,010

101,908,470—
92,803(92,803)—
97,917(97,917)――

(Notes on Significant Subsequent Events)
Year ended 31 August 2014 (1 September 2013–31 August 2014)
The Issue of Stock-based Compensation Stock Options (Share Subscription Rights)
Based on Articles 236, 238 and 240 of the Companies Act and on the decision taken by the Board of Directors at its meeting
held on 9 October 2014, the Company decided to issue share subscription rights as stock-based compensation stock options forthe purpose of rewarding employees of the Company and its subsidiaries for their contribution to the Group’s profit. By linking
the Company’s stock price more closely to the benefits received by highly productive personnel, the share subscription rights
program is designed both to boost staff morale and their motivation to improve group performance and to boost shareholder
value by strengthening business development with a focus on shareholder return.
Please see “Stock Information and Dividend Policy 1. Stock Information (9) Stock Options Program” for details.

(iv) Associated details
Detailed table of marketable securities
SharesIssue(s)Number of shares(Shares)

Carrying amount(Millions of yen)

(Investment securities)
Available-for-sale securities
Sojitz Corporation
Matsuoka Corporation
Nippon Venture Capital Co., Ltd.
Just Co., Ltd.

1,342,540
573
1,400
20,000

230
64
137
6

Total

1,364,513

439

OthersClass and issue

Number of units(millions of units)(Marketable securities)
Available-for-sale securities
Negotiable certificates of deposits
USD denominated money market funds(five issues)
Japanese yen-denominated cash liquidity funds
EUR-denominated money market funds
USD denominated cash funds
EUR denominated cash funds
Total— 141 —

Carrying amount(Millions of yen)—

66,000—18,03400036,492
18,034
7,353
3,367
374

—

131,622

Details of fixed assets
Accumulated
Balances as at depreciation or Depreciation,
Net book
31 Augustamortization amortization value as at
2014
as at 31 August during term 31 August 2014
(Millions2014(Millions(Millionsof yen)(Millionsof yen)of yen)of yen)Balances as at
1 September
2013(Millionsof yen)Increase(Millionsof yen)Decrease(Millionsof yen)

5,561
298
1,366
1,158
20

174
—
40
—
—

—
—
—
—
—

5,736
298
1,406
1,158
20

3,990
207
1,290
—
15

553
4
92
—
3

1,745
91
116
1,158
4

8,405

215

—

8,620

5,503

654

3,116

22,793
2,603
241
64

3,536
6,337
—
—

—
3,536
—
—

26,330
5,403
241
64

14,481
—
220
3

4,237
—
13
0

11,8495,403
20
60

25,701

9,874

3,536

32,03914,705

4,251

17,333Long-term prepaid expenses

805

1,122

—

1,927

618

543

1,309

Deferred assets

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Types of assets

Property, plant and equipment
Buildings
Structures
Tools, furniture and equipment
Land
Leased assets
Total property, plant and equipment
Intangible assets
Software
Software in progress
Leased assets
OthersTotal intangible assets, total

Total deferred assets(Notes) 1. The main factors listed as increase during the year are as follows:
Types of assets

Amount (Millions of yen)Contents

Software3,536

Construction cost for new system

Software in progress

6,337

Construction cost for new system

2. The main factors listed as decrease during the year are as follows:
Types of assets

Amount (Millions of yen)

Software in progress

3,536

Contents
Construction cost for of new systems (transferred tosoftware as the new system was launched)

Details of provisions(Millions of yen)
Categories
Allowance for doubtful accounts
Allowance for bonuses

Balance as at
1 September
2013
3,149
827

Increase
1
1,283

Decrease
Decrease(Intended(Other purposes)
purposes)
3,146
2
827
—

Balance as at
31 August
2014
1
1,283

(Notes) Decrease (Other purposes) in “Allowance for doubtful accounts” is due to reversal of the allowances provided inprevious years.

— 142 —

(2) Main details of assets and liabilities
1. Assets
1) Cash and deposits(Millions of yen)Class

AmountCash

0Types of deposits

Current deposits

16,866

Ordinary deposits

19,336Time deposits

10,425

Separate deposits

44

Subtotal

46,673

Total

46,673

2) Operating income receivable(A) Breakdown by counterparty(Millions of yen)Counterparty

AmountUNIQLO CO., LTD.

8,416

G.U. CO., LTD.

1,007

FRL Korea Co., Ltd.

875

FAST RETAILING (CHINA) TRADING CO., LTD.

563

LINK THEORY JAPAN CO., LTD.

338

UNIQLO EUROPE LIMITED263

Others

1,213

Total

12,679(B) Generation and retention of operating income receivable
At beginningof year(Millions of yen)Amount generated
in current year
(Millions of yen)Amount recoveredin current year
(Millions of yen)

At end of year
(Millions of yen)

Recovery rate(%)

Retention period(Days)(A)+(D)

(A)

(B)

(C)

(C)

(D)

(A)+(B)

2

×100

(B)
365

16,44858,185

61,954

12,67983.0

91.4

3) Short-term loans to affiliated companies(Millions of yen)Counterparty

AmountFAST RETAILING FRANCE S.A.S.

16,109Fast Retailing USA, Inc.

8,760

FAST RETAILING (SINGAPORE) PTE. Ltd.

8,128

LLC UNIQLO (RUS)

1,076

J Brand Japan Co., LTD.

200

Total

34,275— 143 —

4) Shares of affiliated companies(Millions of yen)
Issue(s)Amount(Shares of subsidiaries)
FAST RETAILING FRANCE S.A.S.

22,563

LINK THEORY JAPAN CO., LTD.

20,158

Fast Retailing USA, Inc.

18,343

FAST RETAILING (SINGAPORE) PTE. Ltd.

5,645

UNIQLO EUROPE LIMITED

3,618

UNIQLO CO., LTD.

2,706

FRL Korea Co., Ltd.

1,492

Others392

Total

74,9225) Long-term loans to affiliated companies(Millions of yen)Counterparty

AmountFast Retailing USA, Inc.

17,171

FAST RETAILING FRANCE S.A.S.

5,342

FAST RETAILING (SINGAPORE) PTE. LTD.

1,261

LLC UNIQLO(RUS)

259

Total

24,034

2. Liabilities
1) Deposits(Millions of yen)Counterparty

AmountUNIQLO CO., LTD.

25,759

G.U. CO., LTD.

15,300COMPTOIR DES COTONNIERS JAPAN CO., LTD.

719

LINK THEORY JAPAN CO., LTD.

387

Others268

Total

42,435(3) Others
Not applicable.

— 144 —

Independent Auditors’ Report (Group)
Independent auditors’ report
To the Board of Directors of FAST RETAILING CO., LTD.
We have audited the accompanying consolidated financial statements of FAST RETAILING CO., LTD. (the “Company”) and its
subsidiaries (together, the “Group”), which comprise the consolidated statement of financial position as at 31 August 2014,
and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement ofchanges in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting
policies and other explanatory information.

Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordancewith International Financial Reporting Standards, and for such internal control as management determines is necessary toenable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Our report is madesolely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any otherperson for the contents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of theconsolidated 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 consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Groupas at 31 August 2014, and its financial performance and cash flows for the year then ended in accordance with International
Financial Reporting Standards.
Ernst & Young ShinNihon LLC
25 November 2014

— 145 —

Independent Auditors’ Report (Company)
Independent auditors’ report
To the Board of Directors of FAST RETAILING CO., LTD.
We have audited the accompanying financial statements of FAST RETAILING CO., LTD. (the “Company”), which comprise thebalance sheet as at 31 August 2014, and the statement of income and statement of changes in net assets for the year thenended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with generally
accepted accounting principles in Japan, and for such internal control as management determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Our report is made solely to you,as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for thecontents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at
31 August 2014, and its financial performance for the year then ended in accordance with generally accepted accounting
principles in Japan.
Ernst & Young ShinNihon LLC
25 November 2014

— 146 —

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 and its consolidated subsidiaries(hereinafter, the “Group”). The preparation and management of internal controls in connection with financial reporting areconducted in accordance with the basic framework of internal controls described in the “On the Setting of the Standards andPractice 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 2014, which was the last day of the fiscal year
under review. This evaluation was made using generally accepted internal control evaluation standards for financial reports.
This evaluation was started with an evaluation of internal controls that have a significant influence on our consolidated financial
reports as a whole (company-wide internal controls). The operational processes to be evaluated were selected on the basis of
this evaluation. In the evaluation of these operational processes, the selected operational processes were analyzed, and the
key points of internal controls that might have a significant influence on the credibility of financial reports were categorized.
Then, the status of preparation and operation was evaluated in terms of these key points of internal controls to determine theeffectiveness of the internal controls.
The scope of the evaluation of the internal controls on financial reporting is of great importance, both fiscally and qualitatively,
for the credibility of the Group’s financial reports. The methods and procedures employed are:Based on the principle that the operational procedures for the entire Company’s internal controls, accounts, and financial
reports should best be evaluated from a company-wide perspective, these evaluations are performed for the Group as a whole.
However, because some consolidated subsidiaries are very small, both fiscally and qualitatively, they are not included within thescope of the evaluation.
Regarding operational procedures, based on the results of the company-wide evaluation of internal controls, and as an indicatorof sales (adjusted to exclude intra-group sales) for each of our businesses in the fiscal year under review, those businesses thatmake up roughly two-thirds of consolidated sales in the fiscal year under review are designated “important businesses.” Theselected important businesses are evaluated in terms of broad indicators such as sales, accounts receivable, inventories andother operational procedures. Next, the impact on the Group’s financial reports is calculated. Those operational proceduresthat are of particular importance are added to the evaluation process.

3. Results of evaluation
Based on the evaluation results discussed above, it was determined that the Group’s internal controls on financial reports wereeffective as of the end of the fiscal year under review.

4. Additional items
None

5. Special items
None— 147 —

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 53rd fiscal year (September 1, 2013 — August 31, 2014), and confirm they
are true, based on the Financial Instruments and Exchange Law.
2. Special items
None— 148 —