Fast Retailing Co., Ltd. — Annual Report 2021

Nov 4, 2021

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Items stipulated for internet disclosure in conjunction with the Notice of 2021 General Meeting of Shareholders

• Business report

Number of Stores by Business Segment……	1
Employees…………………………………………	2
Principal Lenders…………………………………	2
Shares……………………………………………	3
Items Relating to External Officers…………	4
Independent Auditors……………………………	6
Share Subscription Rights……………………	8
Ensuring Proper Business Operations (Corporate Governance) ………	13
■Consolidated Statement of
Changes in Equity ……………………	19
■Notes to the Consolidated
Financial Statements ………………………	20
■Statement of Changes in Net Assets …………………………	33
■Notes to Financial Statements ………………	34

These items are available for shareholders to view on our company website (https:// www.fastretailing.com/eng/ir) as stipulated by law and Fast Retailing’s Articles of Incorporation, No.15

FAST RETAILING CO., LTD (the “Company”)

The Company and its consolidated subsidiaries (the “Group”)

Business report

1 Number of Stores by Business Segment

(Unit: Stores)

			(Unit: Stores)	(Unit: Stores)	(Unit: Stores)
		FY2020	FY2021
		End Aug.	Open	Close	End Aug
UNIQLO Japan: Directly operated Franchise		813	41	44	810
		767	38	25	780
		46	3	19	30
UNIQLO International: Greater China China Hong Kong Taiwan South Korea South, Southeast Asia and Oceania Singapore Malaysia Thailand the Philippines Indonesia Australia Vietnam India USA Canada Europe U.K. France Russia Germany Belgium Spain Sweden the Netherlands Denmark Italy		1,439	131	68	1,502
		866	85	19	932
		767	81	16	832
		31	1	1	31
		68	3	2	69
	South Korea	163	2	31	134
	South, Southeast Asia and Oceania Singapore Malaysia Thailand the Philippines Indonesia Australia Vietnam India	248	32	10	270
		25	3	2	26
		50	3	5	48
		51	4	1	54
		60	5	2	63
		32	8	0	40
		23	2	0	25
		4	4	0	8
		3	3	0	6
	USA	50	1	8	43
	Canada	12	2	0	14
	Europe U.K. France Russia Germany Belgium Spain Sweden the Netherlands Denmark Italy	100	9	0	109
		15	0	0	15
		22	1	0	23
		42	3	0	45
		9	1	0	10
		3	1	0	4
		4	1	0	5
		2	1	0	3
		1	1	0	2
		1	0	0	1
		1	0	0	1
GU:		436	21	18	439
Global Brands: Theory PLST COMPTOIR DES COTONNIERS PRINCESSE TAM. TAM J Brand		942	37	203	776
		460	21	50	431
		102	8	12	98
		260	4	111	153
		119	4	29	94
		1	0	1	0
Total		3,630	230	333	3,527

*Including franchise stores

Note: This table does not include mina or Grameen UNIQLO.

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2 Employees (as at 31 August 2021)

（ 1 ） Employees of the Group

Number of employees	Number of employees	Change from Previous Consolidated Fiscal Year
13,472	(29,334)	+213
30,792	(20,707)	-1,838
4,885	(12,193)	-378
3,544	(774)	-219
52,693	(63,008)	-2,222
1,279	(118)	+56
1,617	(10)	+28
55,589	(63,136)	-2,138

(Notes)1. The number of employees does not include operating officers, junior employees, or part-time workers.

1. The average number of registered personnel for junior employees and part-time workers for the year are shown in brackets ( ).

2. The number of employees given as “All companies (shared)” represents administrative employees who could not be categorized in a specific business segment.

（ 2 ） Employees of the Company

Number of Employees	Change from Previous Fiscal Year	Average Age	Average Years of Service
1,617	+28	37 years and 8 months	4 years and 6 months

• (Notes)1. The number of employees does not include operating officers, junior employees, part-time workers or temporary staff seconded from other companies.

• When an employee is transferred from a subsidiary, the average years of service does not include the number of years spent at the subsidiary.

3 Principal Lenders (as at 31 August 2021)

Principal Lenders(as at 31 August 2021)
Lender	Loan Balance
Sumitomo Mitsui Financial Group, Inc.	8,644millionyen
Mitsubishi UFJ Financial Group,Inc.	1,190millionyen
Mizuho Financial Group, Inc.	1,119millionyen
BDO Unibank, Inc.	2,210millionyen

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4 Shares (as at 31 August 2020) )

（ 1 ） Total number of shares authorized for issue 300,000,000 shares （ 2 ） Total number of issued shares 106,073,656 shares （ 3 ） Number of shareholders 11,925 shareholders （ 4 ） Number of shares per trading unit 100 shares

（ 5 ） Major shareholders with the 10 highest ratios of number of shares outstanding

Major Shareholder	Investment i	n the Company
	Number of Shares Held	Percentage of Shares Held
Tadashi Yanai	22,037thousand	21.57%
The Master Trust Bank of Japan, Ltd. (Trust account)	21,262thousand	20.82%
Custody Bank of Japan, Ltd. (Trust account)	13,808thousand	13.52%
TTY Management B.V.	5,310thousand	5.20%
Kazumi Yanai	4,781thousand	4.68%
Koji Yanai	4,781thousand	4.68%
Fight & Step Co., Ltd.	4,750thousand	4.65%
MASTERMIND Co., Ltd.	3,610thousand	3.53%
Teruyo Yanai	2,327thousand	2.28%
JP MORGAN CHASE BANK (Standing proxyMizuho Bank,Ltd.)	2,190thousand	2.14%

(Note) The investment ratio is calculated excluding treasury stock (3,928,985 shares).

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5 Items Relating to External Officers

（ 1 ） Relationship between the Company and companies where External Officers hold significant concurrent offices

As stated on P.42 1 （ 1 ） Directors and Statutory Auditors (as at 31 August 2021) of the Business Report included in the AGM Notice.

（ 2 ） Principal Activities in the Fiscal Year Ended 31 August 2021

Position	Name	Attendance	Activities
Director	Toru Hambayashi	13 out of 13 Board of Directors’ Meetings	We know we will always receive frank and accurate advice and suggestions from an independent standpoint from Toru Hambayashi based on the management expertise cultivated during his time as representative director of one of the world’s leading general trading companies and his deep knowledge of our company acquired through many years of service. During the fiscal period, he provided the said clear advice and recommendations to the Board of Directors, the Human Resources Committee, and the Nomination and Remuneration Advisory Committee.
Director	Nobumichi Hattori	13 out of 13 Board of Directors’ Meetings	We know we will always receive frank and accurate advice and suggestions from an independent standpoint from Nobumichi Hattori based on extensive knowledge and expertise of M&A and other corporate strategies cultivated during the many years he spent working at one of the world’s leading investment banks as well as his deep knowledge of our company acquired through years of service. During the fiscal period, he provided the said clear advice and recommendations to help progress management judgement and decision-making in the Board of Directors.
Director	Masaaki Shintaku	13 out of 13 Board of Directors’ Meetings	We know we will always receive frank and accurate advice and suggestions from an independent standpoint from Masaaki Shintaku based on extensive knowledge and expertise of global corporate management cultivated during his time in management at one of the world’s leading information systems companies as well as his deep knowledge of our company acquired through years of service. During the fiscal period, he provided the said clear advice and recommendations in Board of Directors meetings and the IT Investment Committee.
Director	Takashi Nawa	12 out of 13 Board of Directors’ Meetings	We know we will always receive valuable advice and suggestions from Takashi Nawa based on extensive knowledge and expertise in international corporate strategy and ESG issues cultivated during many years at one of the world’s leading management consulting firms. During the fiscal period, he provided the said clear advice and recommendations not only in Board of Directors meetings, but also in the Human Resources Committee, the Sustainability Committee, the Risk Management Committee, and the Human Rights Committee.
Director	Naotake Ono	13 out of 13 Board of Directors’ Meetings	We know we will always receive valuable advice and suggestions from Naotake Ono based on extensive knowledge of corporate management and management training cultivated during years of management experience at Japan’s largest construction company. During the fiscal period, he provided the said clear advice and recommendations

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to the Board of Directors and the Nomination and Remuneration Advisory Committee.

			to the Board of Directors and the Nomination and Remuneration Advisory Committee.
Statutory Auditor	Keiko Kaneko	13 out of 13 Board of Directors’ Meetings 12 out of 12 Board of Statutory Auditors’ Meetings	We expect Keiko Kaneko to use her specialist knowledge and rich expertise as a lawyer involved in international corporate legal affairs to conduct audits from a broad and advanced perspective and to offer advice and suggestions to ensure fair and appropriate decision-making by the Board of Directors. During the fiscal period, she conducted appropriate audits from the above-mentioned perspectives and provided accurate advice and suggestions to the Board of Directors, the Human Resources Committee, the Code of Conduct Committee, and the Human Rights Committee.
Statutory Auditor	Takao Kashitani	12 out of 13 Board of Directors’ Meetings 11 out of 12 Board of Statutory Auditors’ Meetings	We expect Takao Kashitani to use his specialist knowledge and rich expertise as a certified public accountant to conduct audits from a broad and advanced perspective and to offer advice and suggestions to ensure fair and appropriate decision- making by the Board of Directors. During the fiscal period, he conducted appropriate audits from the above-mentioned perspectives and provided accurate advice and suggestions to the Board of Directors, the Business Ethics Committee, and the Nomination and R e m u n e r a t i o n A d v i s o r y C o m m i t t e e .
Statutory Auditor	Masakatsu Mori	10 out of 10 Board of Directors’ Meetings 10 out of 10 Board of Statutory Auditors’ Meetings	We expect Masakatsu Mori to draw on his specialist knowledge in finance and accounting as a certified public accountant and his experience in senior management at an international consulting firm to conduct audits from a broad and advanced perspective and to offer advice and suggestions to ensure fair and appropriate decision-making by the Board of Directors. During the fiscal period, he conducted appropriate audits from the above- mentioned perspectives and provided accurate advice and suggestions to the Board of Directors and the Business Ethics Committee.

*Number of meetings since being appointed

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6 Independent Auditors

（ 1 ） Name of Independent Auditors

Deloitte Touche Tohmatsu LLC

（ 2 ） Remuneration for the Independent Auditors for the Fiscal Year ended 31 August 2021

① Amount of remuneration, etc. for the Independent Auditors to be paid by 209 million yen the Company ② Total amount of cash and other economic benefits to be paid by the 249 million yen Company and consolidated subsidiaries

Notes . The audit agreement between the Company and the Independent Auditors makes no distinction between the amount of remuneration for auditing under the Companies Act and the amount of remuneration for auditing under the Financial Instruments and Exchange Act. Since no real distinction can be made in practice, the amount of remuneration in (2) above to be paid for the fiscal year represents the total amount.

（ 3 ） Board of Statutory Auditors Agree Independent Auditors Remuneration

The Board of Statutory Auditors agreed to the remuneration of the independent auditors as stipulated in Article 399, Item 1 of the Companies Act, after checking auditing estimates versus actual performance in previous business years, including itemized auditing hours and remuneration, and investigating whether the estimates for the year ended 31 August 2021 were reasonable, based on the practical guidelines relating to independent auditors published by the Japan Audit & Supervisory Board Members Association.

（ 4 ） Non-auditing Services

Fast Retailing doesn’t entrust its accounting auditors with any business other than the audit certification stipulated in Article 2, Paragraph 1 of the Certified Public Accountants Act.

（ 5 ） Policy and reasons for selecting audit corporation

Based on the “Practical Guidelines for Auditors, etc. Concerning the Formulation of Evaluation and Selection Standards for Accounting Auditors” (Japan Audit & Supervisory Board Members Association; 10 November, 2015), the Board of Statutory Auditors selected Deloitte Touche Tohmatsu LLC to be the independent auditor after comprehensively examining the like in accordance with the prescribed selection standards and evaluation standards for accounting auditors. Regarding the policy for determining the dismissal or nonreappointment of an independent auditor, in the event that it is acknowledged that an item prescribed in an item under Article 340-1 of the Companies Act is applicable, the Board of Statutory Auditors will pass a resolution to the effect that the Board of Statutory Auditors will dismiss the independent auditor based on the consent of all statutory auditors, and in the event that it is acknowledged that it is difficult for the independent auditor to perform an appropriate audit due to an event arising that otherwise impairs the accounting auditor’s competence or independence, the Board of Statutory Auditors will pass a resolution to the effect that the Board of Statutory Auditors will make a proposal to the General Meeting of Shareholders to dismiss or not reappoint the accounting auditor.

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（ 6 ） Outline of Agreement for Limitation of Liability

The Company has entered into an agreement with Deloitte Touche Tohmatsu LLC based on provisions of Article 427, Paragraph 1 of the Companies Act, which limits its liabilities for damages provided for in Article 423, Paragraph 1 of the same act. Under this agreement, the limit of liabilities in damages shall be limited to the highest of the following amounts multiplied by two: the total economic benefit received or to be received from the Company as remuneration and payment received for performance of duties in each business year during its service as the Independent Auditors.

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7 Share Subscription Rights (as at 31 August 2020)

（ 1 ） Delivery of share subscription rights as consideration for the execution of duties and held by the Company officers

Share subscription rights resolved by the Board of Directors on 11 October 2012

	Directors (ExcludingExternal Directors)
Number of holders	1
Number of share subscription rights	601 shares
Type and number of shares to be issued upon exercise of share subscription rights	Common stock: 601 shares
Amount to be paid upon exercise of share subscription rights (Yen)	The total amount to be paid upon exercise of one share subscription rights shall be determined by multiplying the price to be paid per share that can be granted due to the exercise of share subscription rights, which shall be ¥1, bythe number of sharesgranted
Exercise period of share subscription rights	From 13 November 2015 to 12 November 2022
Exercise conditions of share subscription rights	If a holder of share subscription rights waives the right to acquire shares, the share subscription rights shall be forfeited and may not be exercised.

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Share subscription rights resolved by the Board of Directors on 9 October 2014

	Directors (ExcludingExternal Directors)
Number of holders	2
Number of share subscription rights	1,304 shares
Type and number of shares to be issued upon exercise of share subscription rights	Common stock: 1,304 shares
Amount to be paid upon exercise of share subscription rights (Yen)	The total amount to be paid upon exercise of one share subscription rights shall be determined by multiplying the price to be paid per share that can be granted due to the exercise of share subscription rights, which shall be ¥1, bythe number of sharesgranted
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 to acquire shares, the share subscription rights shall be forfeited and may not be exercised.

Share subscription rights resolved by the Board of Directors on 11 October 2018

	Directors (ExcludingExternal Directors)
Number of holders	2
Number of share subscription rights	264 shares

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Type and number of shares to be issued upon exercise of share subscription rights	Common stock: 264 shares
Amount to be paid upon exercise of share subscription rights (Yen)	The total amount to be paid upon exercise of one share subscription rights shall be determined by multiplying the price to be paid per share that can be granted due to the exercise of share subscription rights, which shall be ¥1, bythe number of sharesgranted
Exercise period of share subscription rights	9 November 2021
Exercise conditions of share subscription rights	If a holder of share subscription rights waives the right to acquire shares, the share subscription rights shall be forfeited and may not be exercised.

（ 2 ） Delivery of share subscription rights to employees as consideration for the execution of duties during the year ended 31 August 2021

	11th Share subscription rights A type	11th Share subscription rights B type	11th Share subscription rights C type
Date of resolution of the Board of Directors	15 October 2020	15 October 2020	15 October 2020
Type and number of shares to be issued upon exercise of share subscription rights	Common stock: 2,175 shares	Common stock: 22,306 shares	Common stock: 3,777 shares

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Amount to be paid upon exercise of share subscription rights (Yen)	The total amount to be paid upon exercise of one share subscription rights shall be determined by multiplying the price to be paid per share that can be granted due to the exercise of share subscription rights, which shall be ¥1, by the number of shares granted	The total amount to be paid upon exercise of one share subscription rights shall be determined by multiplying the price to be paid per share that can be granted due to the exercise of share subscription rights, which shall be ¥1, by the number of shares granted	The total amount to be paid upon exercise of one share subscription rights shall be determined by multiplying the price to be paid per share that can be granted due to the exercise of share subscription rights, which shall be ¥1, by the number of shares granted
Exercise period of share subscription rights	From 13 November 2023 to 12 November 2030	From 13 December 2020 to 12 November 2030	13 November 2023
Exercise conditions of share subscription rights	If a holder of share subscription rights waives the right to acquire shares, the share subscription rights shall be forfeited and may not be exercised.	If a holder of share subscription rights waives the right to acquire shares, the share subscription rights shall be forfeited and may not be exercised.	If a holder of share subscription rights waives the right to acquire shares, the share subscription rights shall be forfeited and may not be exercised.

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	11th Share subscription rights A type	11th Share subscription rights A type	11th Share subscription rights B type	11th Share subscription rights B type	11th Share subscription rights C type	11th Share subscription rights C type
Status of share subscription rights issued to employees	Employees of the Company	Number of share subscription rights 604 Number of underlying shares 604 Number of holders 18	Employee s of the Company	Number of share subscription rights 7,183 Number of underlying shares 7,183 Number of holders 694	Employee s of the Company	Number of share subscription rights 3,777 Number of underlying shares 3,777 Number of holders 41
	Employees of subsid- iaries	Number of share subscription rights 1,571 Number of underlying shares 1,571 Number of holders 47	Employee s of subsid- iaries	Number of share subscription rights 15,123 Number of underlying shares 15,123 Number of holders 1,435
Assignment of share subscription rights	The acquisition of share subscription rights by assignment shall be subject to the approval of the Board of Directors.		The acquisition of share subscription rights by assignment shall be subject to the approval of the Board of Directors.		The acquisition of share subscription rights by assignment shall be subject to the approval of the Board of Directors.
Items relating to payment in lieu	—		—		—
Matters pertaining to issuing of share subscription rights in conjunction with reorganization	(Notes)		(Notes)		(Notes)

(Notes)

Upon any reorganization of the Company (collectively referred to as “Reorganization”) consisting of merger (limited to cases 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 exchange or 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 share subscription rights for shares of the resulting company as prescribed in 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 new share subscription rights; provided, however, that terms and conditions stipulating that the Company Resulting From Reorganization shall issue share subscription rights that prescribe the matters stated below shall be included in any absorption merger agreement, new merger agreement, absorption-type company split agreement, incorporation-type company split plan, 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:

4. A proposal stating the conditions for Reorganization and the like shall include a finalized statement of the type and number of shares underlying the above-mentioned share subscription rights.

5. Value of property to be incorporated upon exercise of the share subscription rights:

6. The value of property to be incorporated upon exercise of share subscription rights that are issued shall be the amount obtained by multiplying the exercise price after reorganization prescribed below by the number of shares of the Company Resulting From Reorganization underlying the share subscription rights that have been finalized as stated 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.

7. Period during which share subscription rights can be exercised:

8. For A type and B type, the period from the later of either the first day of the period during which share subscription rights can be exercised as prescribed above or the day on which a Reorganization takes effect through the final day of the period during which share subscription rights can be exercised as prescribed above.

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For C type, the period from the later of either the day on which share subscription rights can be exercised as prescribed above or the day on which a Reorganization takes effect.

1. Matters pertaining to the increase of capital and capital reserve resulting from the issuance of shares upon exercise of the share subscription rights:

2. To be determined in order to align with the conditions applicable to the subject share subscription rights.

3. Restrictions on acquisition of share subscription rights by transfer:

4. Any acquisition of share subscription rights by transfer shall require an authorizing resolution from the Board of Directors of the Company Resulting From Reorganization.

5. Terms and conditions for acquisition of share subscription rights:

6. To be determined in order to align with the conditions applicable to the subject share subscription rights.

7. Conditions for exercise of share subscription rights:

To be determined in order to align with the conditions applicable to the subject share subscription rights.

8 Ensuring Proper Business Operations (Corporate Governance)

（ 1 ） Our Approach to Corporate Governance

Fast Retailing aims to expand its business operations according to the principles expressed in our corporate statement: "Changing clothes. Changing conventional wisdom. Change the world" and the Group's aim to become the world's No.1 digital consumer retailing company. At the same time, we seek to help solve social and environmental issues and forge a better society by building sustainable operations not only within our own company but across our entire supply chain.

（ 2 ） Establishing Strong Internal Control Systems

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

A. Ensuring FR Group Directors’ Duties Comply with Laws, Regulations and Articles of Incorporation

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

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

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

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B. Ensuring FR Group Employees’ Duties Comply with Laws, Regulations and Articles of Incorporation

1. Company and Group subsidiary Directors are responsible for establishing a framework to ensure that all Group employees comply with the management principles, the FR Way, the FR Code of Conduct and other internal company rules. They are also responsible for training employees in compliance awareness.

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

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

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

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

C. Data Storage and Management Relating to Execution of FR Group Directors’ Duties

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

• Shareholders meeting minutes and relevant documentation

• Board meeting minutes and relevant documentation

• Minutes of important meetings held by Directors and relevant documentation

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

D. Managing Risk of Losses to FR Group

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

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

E. Ensuring Efficient Execution of Directors’ Duties

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

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

3. The execution of decisions made by the Board of Directors shall be conducted efficiently and appropriately by the Group officers designated by the Board.

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F. Ensuring Reliable FR Group Financial Reports

Systems have been established to ensure reliable financial reporting of Company and FR Group subsidiary activities, and the appropriate acquisition, holding and disposal of assets. These activities are closely monitored. The Company has also established a Disclosure Committee to ensure the Company and Group subsidiaries disclose information in a timely and appropriate manner.

G. Ensuring Proper Execution of Corporate Groups Formed by Company and FR Group Subsidiaries

1. To ensure appropriate operations of FR Group companies, all Group companies are required to uphold the management principles, the FR Way and the FR Code of Conduct. These principles also underpin the rules and regulations used when establishing entrusted individual Group companies. While respecting their autonomy, the Company oversees associated companies by determining their rules of business and requiring them to refer important items to the Company for consultation or final determination. The Company monitors associates if necessary. If Directors of Group subsidiaries discover any legal violations or serious compliance breaches, they should report them to the Statutory Auditors, the President and compliance officer.

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

H. Employee Assistants Requested by Statutory Auditors, and ensuring Their Independence and

Effectiveness of Statutory Auditors’ Instruction Towards Employee Assistants

1. Upon receiving a request from the Board of Statutory Auditors, the Company shall establish rules to determine which employees assist the Statutory Auditors with their duties, and assign appropriate internal personnel to the Statutory Auditors or employ external lawyers or certified public accountants. To ensure assistants are independent of the Directors, their performance will be evaluated by Statutory Auditors, and the Board of Statutory Auditors will approve decisions made by the Board of Directors on their assignment, dismissal, transfer and wages, etc.

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

I. Director and Employee Reporting to Statutory Auditors, and Other Reports

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

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

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

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

J. Policy on Prepayment or Reimbursement of Expenses for Statutory Auditors

• If Statutory Auditors submit requests for prepayment or reimbursement of expenses incurred during the course of their duties, the Company shall pay invoices or settle debts swiftly, unless it proves the requested expenses or debt were not necessary to the performance of the Statutory Auditor’s duties.

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K. Other Matters Ensuring Efficient Audits by Statutory Auditors

1. Statutory Auditors attend Board of Directors meetings and other important meetings to observe the reporting and discussion of significant issues. They may voice opinions if necessary.

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

L. Eliminating Anti-social Forces

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

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

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

（ 3 ） Fast Retailing’s Fundamental Policies in Action

As the key decision-making body on management and business execution, the Board of Directors meets at least once a month to discuss and determine key issues. In addition, management strategies or business plans mandated by the Board can be swiftly revised at the weekly management meeting (Monday Meeting) chaired by the President. Five External Directors and three External Statutory Auditors voice frank, timely views at Board meetings, and carefully supervise company management and business. The Company has established several committees, which include External Directors and Statutory Auditors, to complement the functions of the Board of Directors. These committees meet regularly, and encourage open discussion and swift decision-making.

Below is a diagram of our corporate governance systems.

==> picture [540 x 229] intentionally omitted <==

Roles and activities of the committees are as follows.

◼ Human Resources Committee

The Human Resources Committee, chaired by external director, discusses important organizational changes and adjustments to human resource systems across the Group, and offers views and suggestions to the Board. The committee met twice during FY2021.

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◼ Sustainability Committee

The Sustainability Committee discusses and determines Fast Retailing’s overall sustainability strategy, environmental protection, social responsibility, response to human rights issues, diversity, and other considerations. The head of the Sustainability Department chairs the committee and committee members are made up of outside experts, statutory auditors, and executive officers. The committee met 3 times during FY2021.

◼ Disclosure Committee

The Disclosure Committee, chaired by the Company official in charge of disclosing information to the Tokyo Stock Exchange (TSE), is tasked with boosting management transparency by “disclosing information that is timely accurate, fair and easy to understand.” The Committee is responsible for both timely and voluntary disclosures to the TSE and the Stock Exchange of Hong Kong regarding matters that may materially impact investor and shareholder investment decisions. The committee met 12 times during FY2021.

◼ IT Investment Committee

This Committee debates and advises on the IT investments that will best achieve our targets for sweeping changes to our information systems and business operations. That means deliberating the efficacy of each individual investment, and checking whether IT investment budgets submitted by external specialist organizations are reasonable and appropriate. The committee is chaired by the Company president. External experts, external directors and corporate officers participate as committee members or observers. The committee met 6 times during FY2021.

◼ Code of Conduct Committee

The Code of Conduct Committee considers how best to resolve any violations of the Fast Retailing Group Code of Conduct (CoC), and when to make improvements to it. It offers guidance on educating executives and employees about the requirements of the CoC, and on operating the confidential hotline. The committee is chaired by the head of the Legal Department. Statutory auditors (including external statutory auditors), corporate officers and others participate as committee members. The committee met 13 times during FY2021.

◼ Business Ethics Committee

This committee ensures the Group does not use an advantageous position to exert undue pressure on business counterparts such as partner factories and suppliers. The committee provides advice and counsel to departments based on external field inspections and partner company surveys. The committee is chaired by the head of the Sustainability Department. Statutory auditors (including external statutory auditors), corporate officers and others participate as committee members. The committee met 11 times during FY2021.

◼ Risk Management Committee

In order to identify latent risks in business activities on a regular basis and to strengthen systems for detecting and managing material risks, this committee analyzes and assesses the impact and frequency of risks on business, and discusses countermeasures for high-risk business areas to contain any risk before it occurs or ensure a swift response if a risk does materialize. The committee is chaired by the Group CFO and committee members include outside directors and executive officers. The committee held 4 meetings during FY2021.

◼ Nomination and Remuneration Advisory Committee

With the aim of strengthening Fast Retailing governance, the committee discusses and advises the Board of Directors on important items relating to Fast Retailing corporate governance, such as the requirements and nomination policy regarding candidates for director and auditor positions, the policy for determining director remuneration, requirements relating to the Company's chief executive officer, and smooth management succession planning. The committee is chaired by a director nominated by the Board, and

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the majority of committee members are independent external executives (both external directors and external statutory auditors). The committee held 2 meetings during FY 2021.

◼ Human Rights Committee

The Human Rights Committee is chaired by an external expert, and is tasked with discussing and offering advice on implementing human rights due diligence. The committee is responsible for ensuring human rights are upheld according to the 2018 Fast Retailing Group Human Rights Policy. It also advises those in charge of business execution to ensure business is conducted appropriately and fairly, and conducts various educational activities. As the body responsible for reporting and monitoring, the committee will also investigate any human rights violations and take remedial measures. The committee met 5 times in FY2021.

Please refer to page 35 of the reference materials for the 2021 General Meeting of Shareholders about Diagram of composition of directors and statutory auditors for each committee.

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Consolidated Statement of Changes in Equity (Year ended 31 August 2021)

					(Millions ofyen)	(Millions ofyen)
	Capital stock	Capital surplus	Retained earnings	Treasury stock, at cost	Other components of equity
					Financial assets measured at fair value through other comprehensive income/(loss)	Foreign currency translation reserve
As at 1 September 2020	10,273	23,365	933,303	(15,129)	385	(8,489)
Net changes during the year Profit for the year Other comprehensive income/(loss)	- -	- -	169,847 -	- -	- 541	- 18,345
Total comprehensive income Acquisition of treasury stock Disposal of treasury stock Dividends Share-based payments Transfer to non-financial assets Transfer to retained earnings Others Total transactions with the owners of the Parent	- - - - - - - - -	- - 1,836 - 159 - - - 1,995	169,847 - - (49,015) - - 655 - (48,359)	- (12) 168 - - - - - 155	541 - - - - - (655) - (655)	18,345 - - - - - - - -
Total net changes duringtheyear	-	1,995	121,487	155	(113)	18,345
As at 31 August 2021	10,273	25,360	1,054,791	(14,973)	271	9,855

	Other components of	Other components of	equity	Equity attributable to owners of the parent	Non- controlling interests	Total equity
	Cash-flow hedge reserve	Share of other comprehensive income of associates	Total
As at 1 September 2020 Net changes during the year Profit for the year Other comprehensive income/(loss)	12,905 - 26,509	(51) - 65	4,749 - 45,461	956,562 169,847 45,461	39,516 5,836 1,745	996,079 175,684 47,207
Total comprehensive Income Acquisition of treasury stock Disposal of treasury stock Dividends Share-based Payments Transfer to non-financial assets Transfer to retained earnings Others	26,509 - - - - (8,523) - -	65 - - - - - - -	45,461 - - - - (8,523) (655) -	215,309 (12) 2,005 (49,015) 159 (8,523) - -	7,582 - - (1,867) - 67 - 514	222,891 (12) 2,005 (50,882) 159 (8,456) - 514
Total transactions with the owners of the Parent	(8,523)	-	(9,179)	(55,387)	(1,285)	(56,673)
Total net changes during the year	17,985	65	36,282	159,921	6,296	166,218
As at 31 August 2021	30,890	13	41,031	1,116,484	45,813	1,162,298

(Note) Amounts are rounded down to the nearest million Japanese Yen.

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Notes to the Consolidated Financial Statements

1 Significant Accounting Policies

（ 1 ） Basis of preparation of the consolidated financial statements

The consolidated financial statements of the Company and its consolidated subsidiaries are prepared in accordance with International Financial Reporting Standards (“IFRS”) pursuant to the provisions of the second sentence of the first paragraph of Article 120 of the Ordinance on Company Accounting which allows companies to prepare consolidated financial statements with the omission of a part of the disclosures required under IFRS.

（ 2 ） Scope of consolidation

Status of consolidated subsidiaries Number of consolidated subsidiaries

130

Names of main consolidated subsidiaries

UNIQLO CO., LTD. FAST RETAILING (CHINA) TRADING CO., LTD. * UNIQLO TRADING CO., LTD. * FAST RETAILING (SHANGHAI) TRADING CO., LTD. * FRL Korea Co., Ltd. FAST RETAILING (SINGAPORE) PTE. LTD. UNIQLO (THAILAND) COMPANY LIMITED PT. FAST RETAILING INDONESIA UNIQLO AUSTRALIA PTY LTD. Fast Retailing USA, Inc. UNIQLO EUROPE LTD UNIQLO VIETNAM Co., Ltd UNIQLO INDIA PRIVATE LIMITED G.U. CO., LTD. GU (Shanghai) Trading Co.,Ltd. FAST RETAILING FRANCE S.A.S. Theory LLC PLST CO., LTD. COMPTOIR DES COTONNIERS S.A.S. PRINCESSE TAM TAM S.A.S. Other consolidated subsidiaries (110 companies)

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

J Brand, Inc. was excluded from the scope of consolidation due to the completion of liquidation as at 5 August 2021

（ 3 ） Scope of investments in associates

Status of associates Number of associates

3

（ 4 ） Consolidated subsidiaries

The statutory fiscal year end dates for FAST RETAILING (CHINA) TRADING CO., LTD., UNIQLO TRADING CO., LTD., FAST RETAILING (SHANGHAI) TRADING CO., LTD., GU (Shanghai) Co., Ltd. and eleven other companies vary between 31 December, 31 March and 30 June.

The management prepares the financial statements of these subsidiaries as at the Group’s year-end solely for the Group’s consolidation purpose.

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（ 5 ） Accounting Policies

A. Evaluation basis and method of financial assets and financial liabilities

(1) Non-derivative financial assets

1. Initial recognition and measurement

The Group classifies financial assets as “financial assets measured at fair value through Profit/Loss”; “financial assets measured at fair value through Other Comprehensive Income” or “financial assets measured at amortized cost”; and that classification is determined at the time of initial recognition.

The Group carries out initial recognition on the date of the transaction, when it becomes party to the contract related to the financial asset(s).

All financial assets are measured by adding transaction costs directly attributable to fair value, except those in the category classified as “measured at fair value through Profit/Loss”.

Financial assets are classified as “financial assets measured at amortized cost”, if both of the following conditions are met:

・ the financial assets are held within a business model whose objective is to hold financial assets in order

to collect contractual cash flows and

・ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets other than “financial assets measured at amortized cost” are classified as “financial assets measured at fair value.”

Apart from equity instruments held for trading purposes, which must be measured at "fair value through Profit / Loss", other equity instruments measured at fair value are designated as either being "measured at fair value through Profit / Loss" or alternatively "measured at fair value through Other Comprehensive Income"; this is done for each individual equity instrument and the designation is continuously applied to the instrument thereafter.

2. Subsequent measurement

Measurement after the initial recognition of financial assets is carried out as below in accordance with the classification.

(a) Financial assets measured at amortized cost

“Financial assets measured at amortized cost” are measured at amortized cost using the effective interest method.

(b) Financial assets measured at fair value

The fluctuation in the fair value of “financial assets measured at fair value” is recognized as Profit/Loss. However, any fluctuation in the fair value of equity financial instruments designated as instruments to be “measured at fair value through Other Comprehensive Income”, is recognized as Other Comprehensive Income; and if recognition is suspended or if the fair value significantly drops, then it will be transferred to Retained Earnings. Note that dividends from the financial assets are recognized as Profit/Loss as part of finance income.

3. Impairment of financial assets

For "financial assets measured at amortized cost", expected credit losses pertaining to the financial assets are recognized as Allowances for Doubtful Accounts.

On each reporting date, the credit risk pertaining to each financial asset is evaluated to see if it has increased significantly since initial recognition and, if it has, then the expected credit losses for the entire period will be recognized as an Allowance for Doubtful Accounts; whereas if it has not, then the expected credit losses for a 12-month period will be recognized as an Allowance for Doubtful Accounts.

At the time of an evaluation, if the contractual payment due date has passed then, in principle, it will be assumed that the credit risk has significantly increased; however, when the evaluation takes place, other

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information that can be reasonably used and used as support will be taken into account. However, trade receivables, etc., that do not include any major financial elements are always recognized as being an amount equivalent to expected credit loss for the entire period.

If the issuer or debtor is in serious financial difficulties or is subject to a legal or formal business failure, then it will be judged that there has been a default on obligations. And if it is judged that there has been a default on obligations, then the assets will be treated as credit-impaired financial assets.

Irrespective of the above, if it is reasonably judged that all or part of financial assets cannot be collected due to our legal rights of claim being terminated or similar, then the book value of the financial assets will be directly amortized.

4. 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 transferred financial asset, it recognizes the asset and associated liabilities to the extent of its continuing involvement.

(2) Non-derivative financial liabilities

1. Initial recognition and measurement

Corporate bonds and loans, etc., are initially recognized by the Group on their effective date; and other financial liabilities are initially recognized on their transaction date. Financial liabilities are either classified as “financial liabilities measured at fair value through Profit/Loss” or “financial liabilities measured at amortized cost”, and this classification is determined at the time of initial recognition. All financial liabilities are initially measured at fair value, but “financial liabilities measured at amortized cost” are measured using the amount obtained after deducting directly attributable transaction costs.

2. Subsequent measurements

For measurements made after the initial recognition of a financial liability, any "financial liabilities measured at fair value through Profit/Loss" include financial liabilities held for trading purposes and financial liabilities specified at the time of initial recognition as "measured at fair value through Profit/Loss"; and when these liabilities are measured at fair value after initial recognition, any changes are recognized as Profit/Loss for the current period. Any "financial liabilities measured at amortized cost" are measured after initial recognition at amortized cost using the effective interest method. Any gains or losses made in the event of amortization using the effective interest method and the de-recognition of a liability are recognized as profit/loss for the current period as part of finance expenses.

3. Derecognition of financial liabilities

The Group derecognizes a financial liability when it is extinguished, that is, when the obligation specified in the contract is either discharged, cancelled, or expired.

B. Evaluation basis and method of derivatives

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 is entered into and are subsequently remeasured at fair value.

C. 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.

D. Depreciation method of important depreciable assets

1. Property, Plant and Equipment

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 costs of bringing the asset to its working condition and location for its intended use,

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the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Assets other than land and construction in progress, are depreciated primarily using the straight-line method over the estimated useful lives shown below:

Buildings and structures 3-30 years Machinery and equipment 10 years Furniture, fixtures and vehicles 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.

2. Intangible assets

Intangible assets are measured at cost, with any accumulated amortization and accumulated impairment losses deducted from 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 in which 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, and any 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 ("CGU") level.

3. Right-of-use assets

Right-of-use assets are initially measured at cost at the commencement date of their lease. The cost includes the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, less any lease incentives received, and any initial direct costs incurred.

After the initial measurement, right-of-use assets are depreciated over the lease term using the straight-line method. The lease term is determined as the non-cancellable period together with periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. The right-of-use assets are measured at cost less accumulated depreciation and any accumulated impairment losses.

E. Impairment

The carrying amounts of the Group’s non-financial assets, excluding inventories and deferred tax assets, are reviewed to determine 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 CGU is the higher of value-in-use and fair value less costs of disposal. The fair value less costs of disposal calculation is based on current market transactions. However, if the observable market transactions are not available, appropriate valuation model is used. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the time value of money and the risks specific to the asset.

A CGU is the smallest identifiable group of assets which generates cash inflows from continuing use which are largely independent of the cash inflows from other assets or groups of assets.

The CGU (or group of CGUs) for goodwill is determined based on the unit by which the goodwill is monitored for internal management purposes and must not be larger than an operating segment before aggregation.

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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 of any goodwill allocated to the CGU and then allocated to the other assets of the CGU pro rata on the basis of their carrying amounts.

An impairment loss related to goodwill cannot be reversed in future periods. Previously recognized impairment losses on assets other than goodwill are reviewed at each reporting date to determine whether there is any indication that a loss has decreased or no longer exists. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

F. Lease liabilities

Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the incremental borrowing rate is used. The lease payments included in the measurement of the lease liability comprise the fixed payments and payments of penalties for terminating the lease, if the lease term reflects the exercising an option to terminate the lease. Subsequent to initial recognition, lease liabilities are measured at amortized cost using the effective interest method. Lease liabilities are remeasured if there is a change in future lease payments resulting from a change in an index or a rate, or a change in the assessment of possibility of exercising a termination option. If a lease liability is remeasured, the amount of the remeasurement of the lease liability is recognized as an adjustment to the right-of-use asset.

G. Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable 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 the obligation at each reporting date.

If the time value of money is material, provisions are measured as the estimated future cash flows discounted to the present value using a pre-tax rate that reflects, when appropriate, the time value of money and the risks specific to the liability. When discounting is used, the increase due to the passage of time is recognized as a finance cost.

Each provision is described below:

Asset retirement obligations

The obligations to restore property to its original state under real estate leasing agreements for offices, such as corporate headquarters and stores, are estimated and recorded as a provision. The expected length of use is estimated as the time from acquisition to the end of the useful life and discount rates ranging between (0.32)–1.00% are generally used in calculations.

H. 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 the fair 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 where business takes place and the type of business conducted, and then tested for impairment each year or when there is an indication that it may be impaired.

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Impairment losses on goodwill are recognized in the consolidated statement of profit or loss and cannot be subsequently reversed in future period.

I. Revenue recognition

The Group recognizes revenue in accordance with IFRS 15 Revenue from Contracts with Customer (IFRS 15) by applying the following five-step approach (other than interest and dividend income based on IFRS 9 Financial Instruments (“IFRS 9”) and lease income based on IFRS 16 Leases (“IFRS 16”): Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

The Group as a global clothing retailer, recognizes revenue when it satisfies its performance obligation by transferring the promised goods to the customer. An asset is transferred when the customer obtains control of that asset. In addition, the Group recognizes revenue at the amount of the promised consideration that the customer would pay in accordance with a contract, less the sum of discounts, rebates and refunds or credits.

J. Foreign Currencies

1. Transactions and Balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at 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 translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss are also recognized in other comprehensive income or profit or loss, respectively).

2. Foreign Operations

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 disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in profit or loss.

K. Main Hedge Accounting Methods

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 is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive 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 the effective portion of cash flow hedges, which is recognized in other comprehensive income and later reclassified to profit or loss 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 nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes 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 that they

25

actually have been highly effective throughout the financial reporting periods for which they were designated. The Group has designated forward currency contracts as cash flow hedges and are accounted for as described below:

Cash flow hedges

For gains and losses on hedges, effective portions are recognized as Other Comprehensive Income on the Consolidated Statement of Comprehensive Income, and non-effective portions are immediately recognized as Net Profit/Loss on the Consolidated Statement of Income.

Amounts pertaining to hedges that are included as Other Comprehensive Income are transferred to Profit/Loss at the point in time when the hedged trades have an impact on profit/loss. If a transaction is planned that will generate recognition of hedged assets or liabilities of a non-financial nature, then the amount that is recognized as Other Comprehensive Income is processed as a correction of the initial book value for the non-financial asset/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 is revoked, the amounts previously recognized in equity through other comprehensive income are recorded as equity until the forecast transaction occurs or firm commitment is met.

L. Accounting treatment of consumption tax

Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

M. Income taxes

Income taxes comprise current and deferred taxes and these are recognized in profit or loss, except taxes arising from items 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 date in the countries where the Group operates and generates taxable income, with adjustments to tax payments in past periods.

Through the use of an asset and liability approach, deferred tax assets and liabilities are recorded for the temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts of assets and liabilities for tax purposes. Deferred tax assets and liabilities are not recognized for temporary differences under any of the following circumstances:

• Temporary differences arising from goodwill;

• Temporary differences arising from the initial recognition of an asset / liability which, at the time of the

transaction, does not affect either the accounting profit or the taxable income (other than in a business combination); or

• Temporary differences associated with investments in subsidiaries, but only to the extent that it is possible

to control the timing of the reversal of the differences and it is probable that the reversal will not occur in the foreseeable future.

The consolidated taxation system is applied for the Company and 100% owned subsidiaries in Japan. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the 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 the liabilities 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 are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefits will be realized.

（ 6 ） Changes of group accounting policy

COVID-19-Related Rent Concessions

In accordance with the amendment to IFRS 16 issued in May 2020, rent concessions arising as a direct result of the COVID-19 pandemic were not being considered as lease modifications, and were accounted for as variable lease payments. In conjunction with the amendment to paragraph 46B(b) of IFRS 16 issued in March 2021, similar rent concessions are continued to be accounted in a same way if all of the following conditions are met.

• ・ The change in lease payments results in revised consideration for the lease that is substantially the same

as, or less than, the consideration for the lease immediately preceding the change

• ・ Any reduction in lease payments affects only payments originally due on or before 30 June 2022.

• ・ There is no substantive change to other terms and conditions of the lease.

Any recognized gains or losses from rent concessions, that are not related to a lease modification, did not have a significant impact on the Group's consolidated financial statements.

2 Changes in Presentation

In accordance with the Ministerial Order “Partial Revision on Regulation on Corporate Accounting” (Ministry of Justice Ordinance No. 45, 12 August, 2020), “Notes to Accounting Estimates” has been disclosed in the notes to the consolidated financial statements from the year ended 31 August 2021.

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3 Notes to Accounting Estimates

The followings are the items for which the amount was recorded in the consolidated financial statements for the current fiscal year based on the accounting estimates, and which may have a significant impact on the consolidated financial statements for the next consolidated fiscal year.

（ 1 ） Valuation of Financial Instrument

A. Amounts recorded in the consolidated financial statements for the current fiscal year

Accounts receivable and other short-term receivables	50,546 million yen
Other short-term financial assets	56,157 million yen
Derivative financial assets	49,655 million yen
Long-term financial assets	67,122 million yen
Derivative financial liabilities	3,536 million yen

B. Information relating to the content of significant accounting estimates for the identified items

The valuation method for financial assets is described in the notes to the consolidated financial statements: 1 (5) Accounting Policies A, B, and K.

As there are uncertainties on the valuation of financial assets, the estimates relating to financial assets may be affected by the unexpected changes in assumptions etc., and it may have a significant impact on the valuation of financial assets in the consolidated financial statements for the next fiscal year.

（ 2 ） Valuation of Inventories

A. Amounts recorded in the consolidated financial statement for the current fiscal year

Inventories 394,868 million yen

B. Information relating to the content of important accounting estimates for the identified items

In the current consolidated fiscal year, the amount of write-down of the inventories to net realizable value was 15,120 million yen. The valuation method for inventories is described in the notes to the consolidated financial statements: 1 (5) Accounting Policies C. As the valuation of inventories may be affected by external environments such as economic conditions, weather or trends of competitors, if these factors may be differed from the estimates, it may have a significant impact on the valuation of financial assets in the consolidated financial statements for the next consolidated fiscal year.

（ 3 ） Valuation of Property, Plant and Equipment and Right-of-use Assets

A. Amounts recorded in the consolidated financial statement for the current fiscal year

Property, plant and equipment	168,177 million yen
Right-of-use assets	390,537 million yen
Impairment losses on above assets	15,723 million yen

B. Information relating to the content of important accounting estimates for the identified items

The valuation method for Property, plant and equipment and Right-of-use assets is described in the notes to the consolidated financial statements: 1 (5) Accounting Policies E.

The grouping of assets is based on the smallest identifiable group of assets that generates largely independent cash inflow. In principle, each store,

including flagship stores, is considered as an individual CGU and recoverable amounts thereon are calculated based on value

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in use.

The value in use is calculated based on the cash flow projections with estimates and growth rates compiled by management at a discount rate of mainly 8.9%. Theoretically, the projected cash flows cover a five-year period, and do not use a growth rate that exceeds the long-term average market growth rate. The pre-tax discount rate calculation is based on the weighted-average cost of capital.

Furthermore, the Group’s business performance has been adversely affected by the temporary closure of stores, etc. in the wake of the global spread of the COVID-19. While the convergence period varies according to the impact and individual circumstances in each region, we assume that the impact in most countries and regions, including Japan, will likely extend through the end of August 2022, and stores in some countries and regions may take longer to recover, and we are making accounting estimates based on these assumptions.

These assumptions are subject to considerable uncertainty and may have a significant impact on the Group’s valuation of property, plant, and equipment and right-of-use assets in the next consolidated fiscal year.

（ 4 ) Provisions

A. Amounts recorded in the consolidated financial statement for the current fiscal year

Provisions (current liabilities)	2,149million yen
Provisions (Non-current liabilities)	39,046million yen

B. Information relating to the content of important accounting estimates for the identified items

The method for calculating provisions is described in the notes to the consolidated financial statements: 1 (5) Item G pertaining to accounting policy.

The estimates of provisions may be affected by uncertain future operating conditions and changes in the external environment, and if expenses related to lease contracts of offices or stores are revised, it may be significantly affected in the consolidated financial statements for the coming consolidated fiscal year.

（ 5 ） Recoverability of Deferred Tax Assets

A. Amount recorded in the consolidated financial statement for the current fiscal year

Deferred tax assets 37,125 million yen

B. Information relating to the content of important accounting estimates for the identified items

The method for calculating deferred tax assets is described in notes to the consolidated financial statements: 1 (5) Item M pertaining to accounting policy.

The calculation results may be affected by uncertain future economic conditions and other factors, and if the forecast of future taxable incomes is revised, the total amount of deferred tax assets may be significantly affected in the consolidated financial statement for the next consolidated fiscal year.

4 Notes to the Consolidated Statements of Financial Position

（ 1 ） Accumulated depreciation of property, plant and equipment

261,068 million yen

Accumulated impairment losses are included in accumulated depreciation.

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（ 2 ） Allowance for doubtful accounts directly deducted from trade and other receivables

664 million yen

（ 3 ） Contingent liabilities

Guarantees on loans payable to financial institutions

324 million yen

5 Notes to the Consolidated Statement of Changes in Equity

（ 1 ） Types and number of shares outstanding

Class of shares	Number of shares at the end of the current consolidated fiscalyear(shares)
Common stock	106,073,656

（ 2 ） Share subscription rights

Type and number of underlying shares for share subscription rights as at the end of the consolidated fiscal year (excluding those that have not reached the first day of their exercise period) Common stock 137,351 shares

（ 3 ） Dividends

A. Dividend paid

1. Dividend approved by Board of Directors’ Meeting held on 4 November 2020:

2. Total dividends

   • 24,504 million yen

3. Dividends per share

4. Dividends per share 240 yen • Record date 31 August 2020 • Effective date 6 November 2020

5. Dividend approved at the Board of Directors’ Meeting held on 8 April 2021:

6. Total dividends

7. Total dividends 24,511 million yen • Dividends per share 240 yen • Record date 28 February 2021 • Effective date 11 May 2021

B. Declaration date for dividend related to the year ended 31 August 2021 with an effective date in the following fiscal year

• Resolution date 2 November 2021 • Total dividends 24,511 million yen • Dividends per share 240 yen • Record date 31 August 2021 • Effective date 5 November 2021

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6 Notes to Financial Instruments

（ 1 ） Matters relating to the management of financial instruments

A. Financial risk management

In relation to the cash management, the Group seeks to ensure effective utilization of group funds through the Group’s Cash Management Service. The Group obtained credit facilities from financial institutions. Any temporary surplus funds are invested mainly in fixed interest rate-bearing instruments with minimal credit risk. The Group entered into foreign currency forward contracts to hedge risk arising from fluctuations in foreign currency exchange rates and did not conduct any speculative trading in derivatives.

B. Market risk management

1. Foreign currency risk

The Group conducts its business on a global scale, and is exposed to foreign currency risk in relation to purchases and sales transactions and financing denominated in currencies other than the local currencies of those countries in which the Group operates its business. In regard to operating obligations denominated in foreign currencies, the Group in principle hedges risk by using foreign currency forward contracts and other instruments for foreign currency risk assessed on a monthly basis.

1. Interest rate risk management

The Group’s interest-bearing borrowings are mainly corporate bonds, but the Group maintains positions in cash 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 interest-rate risk is minor.

1. 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 the financial health of the issuers.

C. Credit risk management

When the Group initiates ongoing transactions where receivables will be generated on an ongoing basis, the finance department manages the Group’s risk exposure by setting credit limits and credit periods, as needed. Accounts receivable encompasses 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 it does business for early detection of any worsening of their financial health.

D. 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.

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（ 2 ） Matters relating to the fair value of financial instruments

The carrying amounts of financial instruments and their fair values as at 31 August 2021 are shown below. Financial instruments measured at fair value on recurring basis are not included in this list, because the fair values of those financial instruments are the same as respective carrying amounts.

because thefairvalues of those financial instrume	nts are the same as respe	ctive carrying amounts.
		(Millions ofyen)
Financial assets	Carryingamount	Fair value
Security deposits / guarantees	64,502	65,358
Total	64,502	65,358
		(Millions ofyen)
Financial liabilities	Carryingamount	Fair value
Corporate bonds	369,471	375,144
Total	369,471	375,144

Notes concerning financial assets and financial liabilities for which book values approximate fair values have been omitted.

The fair value of security deposits / guarantees is measured by the present value of future cash flows and discounted by the current market rate.

The fair value of corporate bonds is calculated with reference to publicly available market prices.

The fair value measurements of deposits and guarantees and corporate bonds are classified as Level 2.

7 Per Share Information

Per Share Information
Equity per share attributable to owners of the parent	10,930.42 yen
Basic earnings per share for the year	1,663.12 yen
Diluted earnings per share for the year	1,660.44 yen

8 Notes to Significant Subsequent Events

Not applicable.

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Statement of Changes in Net Assets (Year ended 31 August 2021)

(Millions of yen)

		Shareholders’ equity	Shareholders’ equity	Shareholders’ equity	Shareholders’ equity	Shareholders’ equity	Shareholders’ equity
	Capital stock	Capital surplus				Retained earnings
		Legal capital surplus	Other capital surplus	Total capital surplus	Legal retained earnings	Other retained earnings		Total retained earnings
						General reserve	Retained earnings brought forward
As at 1 September 2020 Changes during the year Dividends Profit Acquisition of treasury stock Disposal of treasury stock Net changes of items other than those in shareholders’ equity	10,273 － － － － －	4,578 － － － － －	7,786 － － － 1,801 －	12,364 － － － 1,801 －	818 － － － － －	185,100 － － － － －	338,851 (49,015) 175,286 － － －	524,769 (49,015) 175,286 － － －
Net changes during the year	－	－	1,801	1,801	－	－	126,270	126,270
As at 31 August 2021	10,273	4,578	9,587	14,166	818	185,100	465,122	651,040

	Shareholders’ equity	Shareholders’ equity	Valuation and translation adjustments	Valuation and translation adjustments	Share sub- scription rights	Total net assets
	Treasury stock	Total share- holders’ equity	Valuation differences on available-for- sale securities	Total valuation and translation adjustments
As at 1 September 2020 Changes during the year Dividends Profit Acquisition of treasury stock Disposal of treasury stock Net changes of items other than those in shareholders’ equity	(15,129) － － (12) 168 －	532,279 (49,015) 175,286 (12) 1,970 －	(566) － － － － 227	(566) － － － － 227	7,241 － － － － 159	538,954 (49,015) 175,286 (12) 1,970 386
Net changes during the year	155	128,228	227	227	159	128,614
As at 31 August 2021	(14,973)	660,507	(338)	(338)	7,400	667,569

(Note) Amounts are rounded down to the nearest million Japanese Yen.

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Notes to Financial Statements

1 Significant Accounting Policies

（ 1 ） Valuation methods for securities

A. Shares of subsidiaries and associates

Cost determined by average method

B. Other securities

Listed securities: Fair value method determined by the market value registered on the balance sheet date (31 August), reported as “unrealized gains/ (losses) on available-for-sale securities”, a separate component of net assets. The cost of securities sold is determined based on the moving average cost method. Unlisted securities: Cost determined by average method

（ 2 ） Depreciation method of non-current assets

A. Property, plant and equipment (other than leased assets)

Property, plant and equipment are depreciated using the straight-line method. The principal ranges of estimated useful lives are as follows:

Buildings & structures 5 to 10 years Furniture, equipment, and vehicles 5 years

B. Intangible assets (other than leased assets)

Intangible assets except for leased assets are amortized using the straight-line method. Software for internal use is amortized using the straight-line method based on an estimated useful life of 5 years.

C. Leased assets

Finance lease transactions that do not relate to transfer of ownership.

The leased assets are amortized using the straight-line method over the lease terms at zero residual value.

（ 3 ） Deferred assets

Issuance expenses of corporate bonds

Issuance expenses of corporate bonds are expensed as incurred.

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（ 4 ） Recognition and Measurement of Significant Provisions and Allowances

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 non-recoverable portion is recorded.

Provisions for bonuses

To prepare for the payment of bonuses to employees, the expected bonus payments are accrued on the balance sheet.

Provisions for loss on guarantees

To prepare for losses related to loan guarantees for associated companies, the Company considers the financial position of the guarantee, and records anticipated losses.

Allowances for Affiliated Company Operating Losses

To prepare for operating losses of affiliates, estimated losses are recorded, taking into account their financial positions.

（ 5 ） Accounting for consumption tax

Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

（ 6 ） Application of the consolidated taxation system

The consolidated taxation system is applied for the Company

2 Changes in Presentation

Balance sheet

“Lease liabilities” that was included in “Others” under non-current liabilities in the previous fiscal year is separately presented from the current fiscal year due to its increased materiality. As a result, “Others” under “Non-current liabilities” amounted 2,502 million yen for previous fiscal year was reclassified to “Lease obligations” amounted 588 Million yen and “Others” amounted 1,913 Million yen on the Balance sheet.

3 Notes to Balance Sheet

（ 1 ） Accumulated depreciation of property, plant and equipment

14,033 million yen

Accumulated impairment losses are included in accumulated depreciation.

（ 2 ） Payables and receivables for subsidiaries and associates

Short-term receivables	42,359million yen
Short-term payables	23,023million yen
Long-term receivables	15,587 million yen
Long-term payables	2,551million yen

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（ 3 ） Contingent liabilities

3）Contingent liabilities
1. Guarantee for office and retail store leases	22,219million yen
2. Guarantee on loans payable to financial institutions	5,089million yen

4 Notes to Statement of Income

Transactions with subsidiaries and associates

nsactions with subsidiaries and associates
Operating transactions Operating revenue Operating expense	276,612million yen 2,161million yen
Non-operating transactions	83million yen

5 Notes to Statement of Changes in Net Assets

Types and number of shares of treasury stock as at 31 August 2021

Class of Shares	Number of shares as at 31 August 2021 (shares)
Common stock	3,928,985

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6 Notes to Deferred Tax

Main breakdown of the causes of deferred tax assets and deferred tax liabilities

Deferred tax assets:

eferred tax assets:
Provisions for bonuses	982 million yen
Depreciation	957 million yen
Loss on shares of subsidiaries and associates	58,668 million yen
Impairment losses	259 million yen
Allowance for doubtful accounts	3,372 million yen
Valuation differences on available-for-sale securities	221 million yen
Unused tax losses carried forward	3,543 million yen
Software	3,632 million yen
Others	5,531 million yen
Subtotal deferred tax assets	77,168 million yen
Valuation allowances for tax loss carryforwards	(3,543) million yen
Valuation allowances pertaining to the sum total of future deductible temporary differences etc.	(66,010) million yen
Subtotal valuation allowance	(69,554) million yen
Total deferred tax assets	7,614 million yen

Deferred tax liabilities: Temporary differences on shares of subsidiaries Others Total deferred tax liabilities Net deferred tax assets	Deferred tax liabilities: Temporary differences on shares of subsidiaries Others Total deferred tax liabilities Net deferred tax assets
	Temporary differences on shares of subsidiaries	1,893million yen
	Others	873 million yen
	Total deferred tax liabilities	2,766million yen
	Net deferred tax assets	4,847million yen

Deferred tax assets and deferred tax liabilities are recorded based on the provisions of the tax law before revision as allowed in the provisions of the “Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, 31 March, 2020).

37

7 Notes to the Related Party Transactions

（ 1 ） Subsidiaries and associates

Type	Company name	Location	Capital stock or investment	Business details	Percent- age of shares	Relationship with related parties	Contents of transactions	Amount of transaction	Account	Balance at 31 August 2021
Subsidiary	UNIQLO CO., LTD.	Yamaguchi City, Yamaguchi	(Millions of yen) 1,000	Clothing- related business	(%) 100.0	Relation of trademark use agree- ment Interlocking directors	Receipt of service fee etc. (Note 1)	(Millions of yen) 36,004	Operating accounts receivables	(Millions of yen) 18,986
							Receipt of lease payments (Note 2)	1,024	Lease receivables	15,587
Subsidiary	Fast Retailing USA,Inc.	New York, USA	174,886	Clothing- related business	100.0	Relation of service rendering Interlocking directors	Collection of funds (Note 3)	24,933
							Loan guarantee (Note 4)	19,996
							Capital increase (Note 5)	24,782
Subsidiary	FAST RETAILNG FRANCE S.A.S.	Paris, France	12,552	Clothing- related business	100.0	Relation of service rendering Interlocking directors	Lending of funds (Note 3)	6,188	Short-term loans receivable from sub- sidiaries and associ- ates	20,610
									Long-term loans receivable from sub- sidiaries and associ- ates	2,557
							Provision of allowance for doubtful accounts for subsidiaries and associates	1,053	Allowance for doubtful accounts	1,053
Subsidiary	G.U. CO., LTD.	Yamaguchi City, Yamaguchi	10	Clothing- related business	100.0	Relation of service rendering Interlocking directors	Paying out funds based on the deposition contract (Note 3)	11,795	Deposits received	6,366

Terms of business and how they are determined Notes:

1. FAST RETAILING CO., LTD. receives payments as service fee for system service, etc. service fee payments are based on a certain percentage of sales. The rate is determined using a reasonable and uniform standard across the entire group.

2. The receipt of lease payments is set at a reasonable lease payments with consideration of the property price etc.

3. The interest rate relating to Lending of funds and Paying out funds based on the deposition contract are reasonably determined by considering the market rate. In addition, the amount or transaction relating to Paying out funds based on the deposition contract is recorded on a net basis of payments and repayments.

4. The Company provides financial guarantees for borrowings and rental payments.

5. Capital increase means making a full additional capital contribution to Fast Retailing USA, Inc.

6. Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.

（ 2 ） Directors and Major Individual Shareholders

Not applicable

8 Per Share Information

Per Share Information
Net assets per share	6,463.08yen
Net income per share for the year	1,716.37yen
Diluted net income per share for the year	1,713.61yen

9 Notes to Significant Subsequent Events

Not applicable

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