Asahi : FY2022

FINANCIAL REPORT

Asahi Group Holdings, Ltd.

Contents

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6

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65

Consolidated Statement of Financial Position

Consolidated Statement of Profit or Loss Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows

Notes to The Consolidated Financial Statements

Independent Auditor's Report

1	ASAHI GROUP HOLDINGS, LTD.	FINANCIAL REPORT 2022	2

Consolidated Statement of Financial Position

Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

As of December 31, 2021 and December 31, 2022

Millions of yen

	Notes	Previous year	Current year
	(as of December 31, 2021)	(as of December 31, 2022)
Assets
Current assets
Cash and cash equivalents	7	52,743	37,438
Trade and other receivables	8  31	395,974	415,676
Inventories	9	200,828	234,969
Income tax receivables		2,232	7,354
Other financial assets	13	7,119	10,028
Other current assets	14	34,081	32,062
Subtotal		692,980	737,529
Assets held for sale	10	7,196	-
Total current assets		700,176	737,529

Non-current assets
Property, plant and equipment	11	818,398	834,721
Goodwill and intangible assets	12	2,819,634	3,027,929
Investments accounted for using equity method	37	6,640	6,722
Other financial assets	13	126,295	125,780
Deferred tax assets	28	34,549	54,888
Net defined benefit assets	18	23,981	24,004
Other non-current assets	14	18,071	18,767
Total non-current assets		3,847,572	4,092,815
Total assets		4,547,748	4,830,344

See accompanying notes.

Millions of yen

	Notes	Previous year	Current year
	(as of December 31, 2021)	(as of December 31, 2022)
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables	15	531,573	591,869
Bonds and borrowings	16  31  34	423,652	367,267
Income tax payables		36,841	30,906
Provisions	19	13,253	14,103
Other financial liabilities	16	111,585	135,983
Other current liabilities	20	125,985	125,816
Total current liabilities		1,242,891	1,265,946
Non-current liabilities
Bonds and borrowings	16  31  34	1,172,551	1,130,042
Net defined benefit liabilities	18	24,053	20,349
Deferred tax liabilities	28	203,579	213,494
Other financial liabilities	16	139,194	131,792
Other non-current liabilities	19  20	6,330	5,774
Total non-current liabilities		1,545,709	1,501,452
Total liabilities		2,788,600	2,767,399
Equity
Issued capital	21	220,044	220,044
Share premium	21	161,731	161,793
Retained earnings	21	1,064,644	1,165,542
Treasury shares	21	(923)	(1,178)
Other components of equity		311,607	514,532
Total equity attributable to owners of parent		1,757,104	2,060,734
Non-controlling interests		2,043	2,210
Total equity		1,759,148	2,062,945
Total liabilities and equity		4,547,748	4,830,344

See accompanying notes.

3	ASAHI GROUP HOLDINGS, LTD.	FINANCIAL REPORT 2022	4

Consolidated Statement of Profit or Loss

Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

For the years ended December 31, 2021 and 2022

Millions of yen

	Notes	Previous year	Current year
	(ended December 31, 2021)	(ended December 31, 2022)
Revenue	24	2,236,076	2,511,108
Cost of sales		(1,383,195)	(1,589,272)
Gross profit		852,881	921,835
Selling, general and administrative expenses	25	(634,940)	(678,018)
Other operating income	26	46,055	16,850
Other operating expense	12  26	(52,096)	(43,619)
Operating profit		211,900	217,048
Finance income	27	5,754	5,498
Finance costs	27	(18,516)	(17,221)
Share of profit (loss) of investments accounted for using equity method	37	687	667
Profit before tax		199,826	205,992
Income tax expense	28	(46,003)	(54,275)
Profit		153,823	151,717
Profit attributable to:
Owners of parent		153,500	151,555
Non-controlling interests		322	162
Total		153,823	151,717
Basic earnings per share (Yen)	29	302.92	299.10
Diluted earnings per share (Yen)	29	302.89	299.06

See accompanying notes.

Consolidated Statement of Comprehensive Income

Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

For the years ended December 31, 2021 and 2022

Millions of yen

Notes	Previous year	Current year
(ended December 31, 2021)	(ended December 31, 2022)

Consolidated Statement of Changes in Equity

Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

For the years ended December 31, 2021 and 2022

						Millions of yen
					Equity attributable to owners of parent
							Other components of equity
		Notes				Changes in fair
					value of financial
							instruments
							measured at fair Remeasurements
				Share	Retained	Treasury	value through	of defined	Cash flow
			Issued capital	premium	earnings	shares	OCI	benefit plans	hedges
	Balance as of January 1, 2021	220,044	161,783	967,230	(1,031)	39,605	-	2,526
Comprehensive income
	Profit				153,500
	Other comprehensive income						(8,080)	4,584	5,072
Total comprehensive income		-	-	153,500	-	(8,080)	4,584	5,072
Transfer to non-financial assets								(111)
Transactions with owners	22
	Dividends			(54,220)
	Purchase of treasury shares					(26)
	Disposal of treasury shares			0		134
	Share-based	23
	payment transaction		(52)
	Transfer from other components
	of equity to retained earnings				(1,865)		6,450	(4,584)
	Other increase (decrease)
	Total contributions by owners and
distribution to owners		-	(52)	(56,085)	108	6,450	(4,584)	-
Total transactions with owners		-	(52)	(56,085)	108	6,450	(4,584)	-
Balance as of December 31, 2021	220,044	161,731	1,064,644	(923)	37,975	-	7,486

See accompanying notes.

				Millions of yen
		Equity attributable to owners of parent
		Other components of equity
	Notes	Translation
			differences on	Total other	Total equity
			foreign	components	attributable to	Non-controlling	Total
		Costs of hedging	operations	of equity	owners of parent	interests	equity
Balance as of January 1, 2021	(773)	126,739	168,097	1,516,124	1,691	1,517,816
Comprehensive income
Profit				-	153,500	322	153,823
Other comprehensive income	172	140,006	141,755	141,755	43	141,799
Total comprehensive income	172	140,006	141,755	295,255	366	295,622
Transfer to non-financial assets				(111)	(111)		(111)
Transactions with owners	22
Dividends			-	(54,220)	(13)	(54,233)
Purchase of treasury shares				-	(26)		(26)
Disposal of treasury shares	23			-	135		135
Share-based payment transaction			-	(52)		(52)

Profit

Other comprehensive income

Items that will not be reclassified to profit or loss

Changes in fair value of financial instruments measured at fair value through other comprehensive income

Remeasurements of defined benefit plans

Items that might be reclassified to profit or loss

153,823151,717

30	(8,080)	(991)
18  30	4,607	3,776

	Transfer from other components
	of equity to retained earnings			1,865	-		-
	Other increase (decrease)			-	-		-
	Total contributions by owners and
distribution to owners	-	-	1,865	(54,163)	(13)	(54,177)
Total transactions with owners	-	-	1,865	(54,163)	(13)	(54,177)
Balance as of December 31, 2021	(601)	266,746	311,607	1,757,104	2,043	1,759,148

See accompanying notes.

Cash flow hedges	30  31	5,071	(2,865)
Costs of hedging	30  31	172	122
Translation differences on foreign operations	30	139,707	209,867
Share of other comprehensive income of entities accounted for	30
using equity method	319	155
Total other comprehensive income	30	141,799	210,063
Total comprehensive income		295,622	361,781
Total comprehensive income attributable to:
Owners of parent		295,255	361,604
Non-controlling interests		366	177

See accompanying notes.

5	ASAHI GROUP HOLDINGS, LTD.	FINANCIAL REPORT 2022	6

						Millions of yen
					Equity attributable to owners of parent
							Other components of equity
		Notes				Changes in fair
					value of financial
							instruments
							measured at fair Remeasurements
				Share	Retained	Treasury	value through	of defined	Cash flow
			Issued capital	premium	earnings	shares	OCI	benefit plans	hedges
Balance as of January 1, 2022	220,044	161,731	1,064,644	(923)	37,975	-	7,486
Comprehensive income
	Profit				151,555
	Other comprehensive income						(991)	3,765	(2,866)
Total comprehensive income		-	-	151,555	-	(991)	3,765	(2,866)
Transfer to non-financial assets								(2,042)
Transactions with owners	22
	Dividends			(55,738)
	Purchase of treasury shares					(263)
	Disposal of treasury shares			0		8
	Share-based	23		61
	payment transaction
	Transfer from other components				5,081		(1,316)	(3,765)
	of equity to retained earnings
	Other increase (decrease)
	Total contributions by owners and
distribution to owners		-	62	(50,657)	(255)	(1,316)	(3,765)	-
Total transactions with owners		-	62	(50,657)	(255)	(1,316)	(3,765)	-
Balance as of December 31, 2022	220,044	161,793	1,165,542	(1,178)	35,667	-	2,577

See accompanying notes.

					Millions of yen
			Equity attributable to owners of parent
			Other components of equity
		Notes	Translation
				differences on	Total other	Total equity
				foreign	components	attributable to	Non-controlling	Total
			Costs of hedging	operations	of equity	owners of parent	interests	equity
Balance as of January 1, 2022	(601)	266,746	311,607	1,757,104	2,043	1,759,148
Comprehensive income
	Profit				-	151,555	162	151,717
	Other comprehensive income	122	210,019	210,048	210,048	15	210,063
Total comprehensive income	122	210,019	210,048	361,604	177	361,781
Transfer to non-financial assets				(2,042)	(2,042)		(2,042)
Transactions with owners	22
	Dividends			-	(55,738)	(15)	(55,753)
	Purchase of treasury shares				-	(263)		(263)
	Disposal of treasury shares	23			-	8		8
	Share-based payment transaction			-	61		61
	Transfer from other components				(5,081)	-		-
	of equity to retained earnings
	Other increase (decrease)				-	-	4	4
	Total contributions by owners and
distribution to owners		-	-	(5,081)	(55,931)	(10)	(55,941)
Total transactions with owners		-	-	(5,081)	(55,931)	(10)	(55,941)
Balance as of December 31, 2022	(478)	476,765	514,532	2,060,734	2,210	2,062,945

See accompanying notes.

Consolidated Statement of Cash Flows

Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

For the years ended December 31, 2021 and 2022

Millions of yen

	Notes	Previous year	Current year
	(ended December 31, 2021)	(ended December 31, 2022)
Cash flows from (used in) operating activities
Profit before tax		199,826	205,992
Depreciation and amortization expenses	12	134,815	140,419
Impairment losses	13,442	18,490
Interest and dividend income		(2,880)	(2,656)
Interest expenses		12,700	12,306
Share of loss (profit) of investments accounted for using equity method	(687)	(667)
Loss (gain) on sales and disposals of property, plant and equipment		(31,083)	(9,540)
Decrease (increase) in trade receivables		(11,812)	(826)
Decrease (increase) in inventories		(14,566)	(27,957)
Increase (decrease) in trade payables		9,598	25,737
Increase (decrease) in accrued alcohol tax		9,106	(4,062)
Increase (decrease) in net defined benefit assets and liabilities		2,084	1,441
Other		75,992	3,369
Subtotal		396,535	362,049
Interest and dividends received		3,116	3,344
Interest paid		(11,224)	(10,839)
Income taxes paid		(50,615)	(88,562)
Net cash flows from (used in) operating activities		337,812	265,991
Cash flows from (used in) investing activities
Purchase of property, plant and equipment		(80,803)	(83,049)
Proceeds from sales of property, plant and equipment		46,321	25,109
Purchase of intangible assets		(11,832)	(16,796)
Proceeds from sales of intangible assets		18,740	868
Purchase of investment securities		(464)	(552)
Proceeds from sales of investment securities		30,159	8,483
Proceeds from sales of investment in an entity accounted for using
equity method		-	676
Purchase of shares of subsidiaries and others resulting in change in	33
scope of consolidation	(14,762)	(2,661)
Proceeds from sales of shares of subsidiaries resulting in change in	33
scope of consolidation	396	-
Payments for contingent consideration		-	(2,357)
Other		(2,103)	1,091
Net cash flows from (used in) investing activities		(14,348)	(69,186)
Cash flows from (used in) financing activities	34
Increase (decrease) in short-term borrowings	(440,775)	(8,527)
Payments of lease liabilities	34	(25,215)	(23,307)
Proceeds from long-term borrowings	34	191,000	-
Repayments of long-term borrowings	34	(183,688)	(51,460)
Proceeds from issuance of bonds	34	282,048	60,000
Redemption of bonds	34	(88,328)	(140,000)
Purchase of treasury shares	22	(26)	(263)
Dividends paid	(54,220)	(55,738)
Other		(1,119)	(258)
Net cash flows from (used in) financing activities		(320,325)	(219,556)
Effect of exchange rate changes on cash and cash equivalents		1,144	7,447
Net increase (decrease) in cash and cash equivalents		4,283	(15,304)
Cash and cash equivalents at beginning of period	7	48,460	52,743
Cash and cash equivalents at end of period	7	52,743	37,438

See accompanying notes.

7	ASAHI GROUP HOLDINGS, LTD.	FINANCIAL REPORT 2022	8

Notes to the Consolidated Financial Statements

Asahi Group Holdings, Ltd. and Consolidated Subsidiaries

1. Reporting Entity

Asahi Group Holdings, Ltd. ('the Company') is a corporation domiciled in Japan. The Company and its subsidiaries ('the Group') are engaged primarily in manufacturing and marketing of alcohol beverages, soft drinks, and food.

2. Basis of Preparation

The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'). The Company is qualified as a "Specified Company" as provided in Article 1-2 of "Ordinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements" (Ordinance of the Ministry of Finance No. 28 of 1976). Article 93 of this ordinance allows Specified Companies to prepare consolidated financial statements under IFRS. The Group's consolidated financial statements for the year ended December 31, 2022 were authorized for issue by Atsushi Katsuki, President and Representative Director, CEO, and Kaoru Sakita, Chief Financial Officer on March 28, 2023.

The Group's consolidated financial statements are prepared on the cost basis, except for the financial instruments and other items as described in "4. Significant Accounting Policies".

The preparation of consolidated financial statements in conformity with IFRS requires accounting estimates on certain critical items. It also requires management to make judgments in applying the Group's accounting policies.

The Group's consolidated financial statements are presented in Japanese yen, which is the functional currency of the Company.

Amounts presented in the consolidated financial statements are rounded down to the nearest million yen.

3. Standards and Interpretations that have been issued but not yet applied

The standard that has been newly issued or amended by the approval date of the consolidated financial statements and will be effective and applied in the future periods is as follows. The impact of the standard to be applied on the Group's consolidated financial statements is under review, and not estimable at this moment.

			The First Application	Description of the New Standard
No.	Title	Mandatory Application	by the Group	or the Amendment
IFRS17	Insurance	Annual periods	The annual period	Formulate consistent accounting model for
	Contracts	beginning on or after	ending December 31,	insurance contracts
		January 1, 2023	2023

4. Significant Accounting Policies

The significant accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has control. The Group assesses that it controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control is lost. Amounts reported by subsidiaries are adjusted to conform to the Group's accounting policies.

Intra-group transactions, balances and any unrealized gains or losses arising from transactions within the Group are eliminated to prepare the consolidated financial statements.

Subsidiaries whose reporting date is different from that of the Group are consolidated based on the provisional closing information as of the Group's reporting date.

(ii) Associates and Joint Ventures

Associates are entities where the Group has significant influence over the financial and operating policies. It is presumed that the Group has significant influence when it holds more than 20 percent of the voting power of the investee. A joint venture is a joint arrangement where the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

Investments in associates and joint ventures are accounted for using the equity method ('equity-accounted investees'). Under the equity method, an investment is initially recognized at cost.

The consolidated financial statements include the Group's share of changes equity-accounted investees from the date that the Group obtained significant influence or joint control until the date on which the Group loses significant influence or joint control.

The Group's investments include goodwill recognized on the acquisition.

Necessary adjustments are made when accounting policies of the associates and joint ventures are different from those of the Group to retain consistency.

(2) Business Combinations

The Group applies the acquisition method to business combinations. The consideration is measured at fair value on the acquisition date which represents the total fair value of the assets transferred, the liabilities assumed and the equity instruments issued by the Group. The Group recognizes goodwill for the excess of total consideration paid, amount of non-controlling interest in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree over the net value of identifiable assets and assumed liabilities as of the date of the combination. Negative goodwill is recognized immediately in profit or loss.

The Group elects to recognize non-controlling interests in the acquiree for each business combination, either at fair value or at the proportionate share of the identifiable net assets at the acquisition date, elected on a transaction-by-transaction basis.

Acquisition-related costs are expensed as incurred. Additional acquisition of non-controlling interest after the control obtained is accounted as equity transactions, and goodwill does not arise from such transactions accordingly.

The Group applies book value accounting to acquisitions under common control, which are business combinations in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combinations, and that control is not transitory.

(3) Foreign Currency Translation

(i) Functional currency and presentation currency

Items included in financial statements of each company of the Group are measured using the currency of the primary economic environment in which the company operates (hereinafter referred to as the "functional currency"). The consolidated financial statements are presented in Japanese Yen, which is the presentation currency of the Group.

(ii) Transactions and Balances

Foreign currency transactions are translated into functional currencies using the exchange rate at the date of the transac- tions. Foreign exchange differences arising from settlement of transactions and those arising from the translation of monetary assets and liabilities denominated in foreign currencies using the exchange rate at the end of the fiscal year are recognized in profit or loss. However, exchange differences arising from financial assets measured through other comprehensive income, qualifying cash flow hedges and hedges of net investments in foreign operations are recognized in other comprehensive income.

(iii) Foreign operation

Operating results and financial position of all the foreign operations using a functional currency that is not the presentation currency are translated into the presentation currency in the ways described below. Among the foreign operations, there is no company that uses a currency of a hyperinflationary economy.