FAST RETAILING CO., LTD.
迅 銷 有 限 公 司
Interim Report 2019/20
2019.9.1-2020.2.29 Stock Code: 6288
Contents
1. | Corporate Profile | 1 |
2. | Financial Highlights | 2 |
3. | Management Discussion and Analysis | 3 |
4. | Information about the Reporting Entity | 8 |
5. | Financial Section | 12 |
1. Interim Condensed Consolidated Financial Statements | 13 | |
(1) Interim Condensed Consolidated Statement of | 13 | |
Financial Position | ||
(2) Interim Condensed Consolidated Statement of | ||
Profit or Loss and Interim Condensed Consolidated | 15 | |
Statement of Comprehensive Income | ||
Interim Condensed Consolidated Statement of Profit or Loss | 15 | |
Interim Condensed Consolidated Statement of | 17 | |
Comprehensive Income | ||
(3) Interim Condensed Consolidated Statement of | 19 | |
Changes in Equity | ||
(4) Interim Condensed Consolidated Statement of Cash Flows | 21 | |
2. Others | 38 | |
Independent Accountant's Review Report | 39 |
1. Corporate Profile
Board of Directors | Principal Place of Business in Japan |
Executive Director | Midtown Tower 9-7-1 |
Tadashi Yanai(Chairman of the Board of Directors, | Akasaka, Minato-ku |
President and Chief Executive Officer) | Tokyo 107-6231 |
Japan | |
Non-executive Directors | |
Takeshi Okazaki | Principal Place of Business in Hong Kong |
Kazumi Yanai | 702-706, 7th Floor, Mira Place Tower A |
Koji Yanai | No. 132 Nathan Road |
Tsim Sha Tsui | |
Independent Non-executive Directors | Kowloon |
Toru Hambayashi (External) | Hong Kong |
Nobumichi Hattori (External) | |
Masaaki Shintaku (External) | HDR Registrar and HDR Transfer Office |
Takashi Nawa (External) | Computershare Hong Kong Investor Services Limited |
Naotake Ohno (External) | Shops 1712-1716, 17th Floor |
Hopewell Centre | |
Board of Statutory Auditors | 183 Queen's Road East |
Akira Tanaka | Wanchai |
Masaaki Shinjo | Hong Kong |
Masumi Mizusawa | |
Takaharu Yasumoto (External) | Stock Code |
Keiko Kaneko (External) | Hong Kong: 6288 |
Takao Kashitani (External) | Japan: 9983 |
Company Secretary | Website Address |
Shea Yee Man | https://www.fastretailing.com |
External Independent Accountants | |
Deloitte Touche Tohmatsu LLC | |
Principal Banks | |
Sumitomo Mitsui Banking Corporation | |
MUFG Bank, Ltd. | |
Mizuho Bank, Ltd. | |
The Hong Kong and Shanghai Banking Corporation Limited | |
Registered Office and Headquarters | |
717-1 Sayama, Yamaguchi City | |
Yamaguchi 754-0894 | |
Japan |
- 1 -
2. Financial Highlights
Consolidated Financial Summary
Half-yearly period | Half-yearly period | ||
Term | of | of | 58th Fiscal |
58th Fiscal | 59th Fiscal | ||
Year | |||
Year | Year | ||
Six months | Six months | Year ended | |
ended | ended | ||
Accounting period | 31 August | ||
28 February | 29 February | ||
2019 | |||
2019 | 2020 | ||
Revenue (Millions of yen) | 1,267,697 | 1,208,512 | 2,290,548 |
Operating profit (Millions of yen) | 172,941 | 136,736 | 257,636 |
Profit before income taxes (Millions of yen) | 174,214 | 150,859 | 252,447 |
Profit for the period attributable to owners | 114,029 | 100,459 | 162,578 |
of the Parent (Millions of yen) | |||
Comprehensive income attributable to owners | 120,920 | 140,153 | 140,900 |
of the Parent (Millions of yen) | |||
Equity attributable to owners of the Parent (Millions of yen) | 961,680 | 1,020,308 | 938,621 |
Total assets (Millions of yen) | 2,015,201 | 2,454,296 | 2,010,558 |
Basic earnings per share (Yen) | 1,117.54 | 984.21 | 1,593.20 |
Diluted earnings per share (Yen) | 1,115.67 | 982.49 | 1,590.55 |
Ratio of equity attributable to owners of the Parent to total assets (%) | 47.7 | 41.6 | 46.7 |
Net cash generated by operating activities (Millions of yen) | 230,899 | 236,680 | 300,505 |
Net cash used in investing activities (Millions of yen) | (59,688) | (58,828) | (78,756) |
Net cash used in financing activities (Millions of yen) | (63,240) | (99,195) | (102,429) |
Cash and cash equivalents at end of the period (Millions of yen) | 1,111,067 | 1,184,303 | 1,086,519 |
Three months | Three months | ||
Accounting period | ended | ended | |
28 February | 29 February | ||
2019 | 2020 | ||
Revenue (Millions of yen) | 623,230 | 585,028 | |
Profit attributable to owners of the Parent (Millions of yen) | 40,552 | 29,552 | |
Basic earnings per share for the period (Yen) | 397.40 | 289.51 |
(Notes) 1. FAST RETAILING CO., LTD. (the "Company", "Parent", or "reporting entity") prepared interim condensed consolidated financial statements and therefore has not included the non-consolidated financial summary of the reporting entity.
- Revenue does not include consumption taxes, etc.
- The financial figures are sourced from the interim condensed consolidated financial statements or consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS").
Business Description
There were no significant changes in the nature of the business engaged in by the Company and its subsidiaries (collectively, the "Group") during the six months ended 29 February 2020.
In addition, there were no significant changes in the organizational structure of the Group, including the major subsidiaries, during the six months ended 29 February 2020.
- 2 -
3. Management Discussion and Analysis
Business Review
-
Business and Operational Risks
For the six-month period ended 29 February 2020 and as of the date of submission of this quarterly report (14 April 2020), the following item should be added to business risks described in the Securities Report for the fiscal year ended 31 August 2019. Due to the global spread of COVID-19, the temporary closure of stores may cause a deterioration in performance and adversely affect the product supply system. - Financial Analysis
- Financial Position and Results of Operations
(ⅰ) Results of Operations
The Fast Retailing Group's revenue and profit declined in the first half of fiscal 2020, or the six months from 1 September 2019 to 29 February 2020. Consolidated revenue totaled 1.2085 trillion yen (−4.7% year-on-year) and operating profit totaled 136.7 billion yen (−20.9% year-on-year). This weaker performance was caused primarily by significant reductions in revenue and profit at UNIQLO International segment (South Korea, Mainland China, Hong Kong and Taiwan), which were adversely impacted by COVID-19 and other factors. We recorded 14.1 billion yen under finance income net of costs after reporting a net 12.1 billion yen foreign-exchange gain on our holdings of foreign-currency denominated assets. As a result, first-half profit before income taxes declined to 150.8 billion yen (−13.4% year-on-year) and profit attributable to owners of the Parent declined to 100.4 billion yen (−11.9% year-on-year).
The Group's medium-term vision is to become the world's number one apparel retailer. In pursuit of this aim, we focus our efforts on expanding UNIQLO International, as well as our GU brand and our global e-commerce operation. We continue to increase UNIQLO store numbers in each markets and areas in which we operate, and open global flagship stores and large-format stores in major cities around the world to instill deeper and more widespread empathy for UNIQLO's LifeWear concept. Within the UNIQLO International segment, Greater China (Mainland China, Hong Kong and Taiwan) and Southeast Asia are serving as the key pillars of our Group's business and growth. In terms of our GU segment, in addition to expanding the GU store network primarily in Japan, we are working to establish GU's position as a brand that offers fun fashion at amazingly low prices.
UNIQLO Japan
UNIQLO Japan segment reported a decrease in revenue but a rise in profit in the first half of fiscal 2020, with revenue declining to 463.5 billion yen (−5.7% year-on-year) and operating profit rising to 71.6 billion yen (+5.7% year-on-year).Same-store sales (including e-commerce sales) declined by 4.6% year-on-year after the warmer winter weather stifled sales of core Winter items. While e-commerce sales totaled 52.5 billion yen (+8.3% year-on-year) over the first-half period, the rate of online sales growth slowed for the same reasons as for our physical stores. UNIQLO Japan's gross profit margin improved by 2.2 points to 47.8% on the back of a continued appreciation in the yen exchange rate for merchandise purchasing. The selling, general and administrative expense ratio increased 0.5 point to 31.9%, while, in monetary terms, selling, general and administrative expenses decreased further than planned and compared to the prior fiscal year. Despite a strong launch of our new Spring ranges, revenue began to decline sharply from the latter half of February brought by the impact of COVID-19 started to adversely affect results.
UNIQLO International
UNIQLO International segment reported a sharp decline in both revenue and profit in the first half of fiscal 2020, with revenue falling to 541.2 billion yen (−6.7% year-on-year) and operating profit declining to 53.2 billion yen (−39.8% year-on-year). This was caused primarily by considerable reductions in revenue and profit at UNIQLO South Korea and UNIQLO Greater China, which were both adversely impacted by the outbreak of COVID-19 and other factors. UNIQLO International's gross profit margin contracted 2.3 points year-on-year following an early rundown of excess stock in each UNIQLO International market. The selling, general and administrative expense ratio increased 2.3 points year-on-year on the back of lower-than-planned revenue.
Looking at individual regions, UNIQLO Greater China revenue dipped, while operating profit declined sharply. Our Mainland China operation continued to generate strong results through most of January 2020, but revenue then fell sharply in the wake of the spread of COVID-19 at the end of January. In February, we temporarily closed a maximum of 395 stores resulting in a sharp fall in that month's revenue and an overall decline in both revenue and profit for the first-half as a whole. Revenue has started to recover in Mainland China from March onwards as the majority of stores reopened for business. At UNIQLO South Korea, the adverse impact of ongoing Korea-Japan tensions since July 2019 followed by the impact of COVID-19 from February 2020 resulted in a sharp decline in same-stores sales and recorded of a wider operating loss for the first half of fiscal 2020. UNIQLO South, Southeast Asia & Oceania, which includes Southeast Asian nations, Australia and India, generated double-digit growth in
- 3 -
first-half revenue and profit. UNIQLO operations in Indonesia, the Philippines and Thailand continued to expand favorably by reporting double-digit increases in both revenue and profit. Our new Indian operation generated strong first-half sales following our entry into the market in October 2019 and the opening of our third store in new Delhi in February 2020. Following the opening of its first store in December 2019, our Vietnam operation has achieved a higher-than-expected performance thanks to the popularity of UV-cut mesh parkas, DRY-EX polo shirts, and other clothing that is well suited to the local climate. UNIQLO USA reported a first-half operating loss as warmer winter weather stifled the sales of Winter ranges. Meanwhile, UNIQLO Europe reported double-digit increases in both revenue and profit in the first half of fiscal 2020, thanks to especially strong sales in Italy and Spain and a double-digit increase in same-store sales in Russia.
GU
GU segment reported significant increases in both revenue and profit in the first half of fiscal 2020, with revenue climbing to
132.2 billion yen (+12.9% year-on-year) and operating profit expanding to 15.8 billion yen (+12.0% year-on-year).Same-store sales increased thanks to strong sales of on-target mass fashion trend items such as knitted cardigans and matching knitwear top and bottom sets along with lightweight outerwear hit products that adapted successfully to the warm winter weather. On the profit front, GU's gross profit margin improved by 0.4 point in the first half and operating profit increased significantly thanks to a decline in the cost of sales generated by further aggregate purchasing of core materials and early submission of production orders.
Global Brands
Global Brands segment revenue and profit both declined in the first half of fiscal 2020. Revenue totaled 70.1 billion yen (−9.8% year-on-year) and operating profit stood at 0.7 billion yen (−76.3% year-on-year). Our Theory fashion label reported a decline in both revenue and profit after sales of Winter items struggled during the warmer winter weather. Revenue from our Japan-based PLST brand came in flat year-on-year as warmer winter weather dampened sales of Winter-season clothing, while operating profit dipped on a more determined rundown of excess inventories during the period. Finally, our France-based Comptoir des Cotonniers brand reported a first-half operating loss of similar magnitude to the preceding fiscal year.
Sustainability
Under our slogan "The power of clothing is the power of society", we have been promoting sustainability initiatives through the clothing business by focusing on six priority areas ("materialities"). The six materialities are: (1) Creating new value through products and sales, (2) Respecting human rights and the work environment in our supply chain, (3) Respecting the environment,
-
Strengthening communities, (5) Supporting employee fulfillment, and (6) Implementing good corporate governance. Details of our main activities during the six months ended February 2020 are as follows.
■ Creating new value through products and sales: In January 2020, we began selling our "Dry-EX"high-performance quick- drying wear that uses recycled polyester derived from PET bottles. By turning recovered PET bottles into valuable resources, we reduce the use of petroleum resources. We will continue to create new value through clothing by actively applying new technologies to promote recycling of resources.
■ Respecting the environment: By the end of 2020, we aim to reduce greenhouse gas emissions at UNIQLO stores in Japan by 10% per unit of floor area (compared to 2013 emissions). As of the end of 2019, we already achieved a reduction of about 31.6%. As our next goal on environmental protection, we are currently formulating SBT (science-based targets), which are targets for reducing greenhouse gas emissions based on the Paris Agreement. In January 2020, we signed the Fashion Industry Charter for Climate Action, promoted by the secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), which prescribes initiatives to be implemented in cooperation with the fashion industry as a whole.
■ Strengthening communities: In November 2019, we contributed a total of US$1 million in cash for initiatives for refugees conducted by the United Nations High Commissioner for Refugees (UNHCR) in Mali and South Sudan. In February 2020, as part of our "All Product Recycling Initiative" for collecting clothing no longer needed by customers at stores and donating them to refugees and displaced persons, UNIQLO and GU headquarters and store employees together with the UNHCR visited refugee camps in the Republic of Malawi where they distributed part of the approximately 250,000 items of clothing donated to that country.
- 4 -
(ⅱ) Financial Position
Total assets as at 29 February 2020 were 2,454.2 billion yen, which was an increase of 443.7 billion yen relative to the end of the preceding fiscal year. The principal factors were an increase of 390.2 billion yen in right-of-use assets, an increase of 97.7 billion yen in cash and cash equivalents and a decrease of 56.6 billion yen in inventories.
Total liabilities as at 29 February 2020 were 1,389.5 billion yen, which was an increase of 362.4 billion yen relative to the end of the preceding fiscal year. The principal factors were an increase of 444.3 billion yen in lease liabilities, an increase of 110.6 billion yen in other financial liabilities, a decrease of 129.2 billion yen in non-current financial liabilities and a decrease of 30.9 billion yen in trade and other payables.
Furthermore, the increases of right-of-use assets and lease liabilities are due to the application of IFRS 16 Leases as mentioned in "Notes to the Interim Condensed Consolidated Financial Statements 3. Significant Accounting Policies".
Total net assets as at 29 February 2020 were 1,064.7 billion yen, which was an increase of 81.2 billion yen relative to the end of the preceding fiscal year. The principal factors were an increase of 45.5 billion yen in retained earnings and an increase of 33.3 billion yen in other components of equity.
-
Cash Flow Information
Cash and cash equivalents as at 29 February 2020 had increased by 97.7 billion yen from the end of the preceding fiscal year, to 1,184.3 billion yen.
(Operating Cash Flows)
Net cash generated by operating activities for the six months ended 29 February 2020 was 236.6 billion yen, which was an increase of 5.7 billion yen (+2.5% year-on-year) from the six months ended 28 February 2019. The principal factors were 150.8 billion yen in profit before income taxes (a decrease of 23.3 billion yen from the six months ended 28 February 2019), 87.8 billion yen in depreciation and amortization (an increase of 63.7 billion yen from the six months ended 28 February 2019), a decrease of 64.1 billion yen in inventories (a decrease of 23.1 billion yen from the six months ended 28 February 2019), a decrease of 1.2 billion yen in other liabilities (a decrease of 20.9 billion yen from the six months ended 28 February 2019), a decrease of 32.9 billion yen in trade and other payables (an increase of 19.5 billion yen from the six months ended 28 February 2019), 12.1 billion yen in foreign exchange gains (a decrease of 13.9 billion yen from the six months ended 28 February 2019),
39.5 billion yen in income taxes paid (a decrease of 8.2 billion yen from the six months ended 28 February 2019), 5.4 billion yen in impairment losses (an increase of 3.9 billion yen from the six months ended 28 February 2019) and a decrease of 0.2 billion yen in trade and other receivables (an increase of 3.7 billion yen from the six months ended 28 February 2019).
(Investing Cash Flows)
Net cash used in investing activities for the six months ended 29 February 2020 was 58.8 billion yen, which was a decrease of
- billion yen(-1.4%year-on-year) from the six months ended 28 February 2019. The principal factors were a net increase of
- billion yen in bank deposits with original maturity over three months (a decrease of 4.0 billion yen from the six months ended 28 February 2019), 23.8 billion yen in payments for property, plant and equipment (an increase of 2.7 billion yen from the six months ended 28 February 2019), 3.4 billion yen in proceeds from collection of lease and guarantee deposits (an increase of
- billion yen from the six months ended 28 February 2019) and 1.7 billion yen in payments forright-of-use assets (an increase of 1.7 billion yen from the six months ended 28 February 2019).
(Financing Cash Flows)
Net cash used in financing activities for the six months ended 29 February 2020 was 99.1 billion yen, which was an increase of
35.9 billion yen (+56.9% year-on-year) from the six months ended 28 February 2019. The principal factors were 68.2 billion yen in repayments of lease liabilities (an increase of 63.8 billion yen from the six months ended 28 February 2019) and 30.0 billion yen in repayment of redemption of bonds for the six months ended 28 February 2019 (a decrease of 30.0 billion yen from the six months ended 28 February 2019).
-
Operational and Financial Challenges
There have been no significant challenges during the six months ended 29 February 2020 that resulted in issues that must be addressed by the Group.
- 5 -
(4) Research and Development
Not applicable.
- 6 -
-
Significant Facilities
The following are the significant facilities that were newly completed during the six months ended 29 February 2020.
Not applicable.
Company name | Type of facility | Name of business | Location | Completion date |
UNIQLO EUROPE LIMITED | UNIQLO | UNIQLO Piazza | Milan, | September 2019 |
International Store | Cordusio | Italy | ||
UNIQLO INDIA PRIVATE | UNIQLO | UNIQLO Ambience | New Delhi, | |
Mall Vasant Kunj | October 2019 | |||
LIMITED | International Store | India | ||
store | ||||
The following are the significant facilities that were newly planned during the six months ended 29 February 2020.
Amount of planned | |||||||||
investment | |||||||||
Construction | Construction Planned sales | ||||||||
Type of | Name of | Amount | |||||||
Company name | Location | commencement | completion | floor area | Reference | ||||
facility | business | Total | already | ||||||
date | date | (m2) | |||||||
(Millions of | disbursed | ||||||||
yen) | (Millions of | ||||||||
yen) | |||||||||
UNIQLO | |||||||||
UNIQLO CO., LTD. | UNIQLO | PARK | Yokohama, | 548 | 0 | May 2019 | April 2020 | 2,118 | Leasehold |
Japan srores | Yokohama | Kanagawa | |||||||
Bayside | |||||||||
GU UNIQLO | |||||||||
G.U. CO., LTD. | GU Japan | PARK | Yokohama, | 517 | 76 | May 2019 | April 2020 | 1,541 | Leasehold |
stores | Yokohama | Kanagawa | |||||||
Bayside | |||||||||
UNIQLO CO., LTD. | UNIQLO | UNIQLO | Shibuya-ku, | 624 | 380 | November | April 2020 | 2,039 | Leasehold |
Japan stores | Harajuku | Tokyo | 2018 | ||||||
UNIQLO CO., LTD. | UNIQLO | UNIQLO | Chuo-ku, | 2,085 | 1,201 | October 2019 | May 2020 | 4,415 | Leasehold |
Japan stores | TOKYO | Tokyo | |||||||
(Notes) 1. It is expected that the Group will be able to meet its funding needs from equity capital. 2. The above figures do not include consumption taxes, etc.
Not applicable.3. Significant Contracts in Business Operation None.
- 7 -
4. Information about the Reporting Entity
1. Stock Information
- Number of Shares
(i) Total number of shares
Type | Total number of authorized shares | ||||
Common stock | 300,000,000 | ||||
Total | 300,000,000 | ||||
(ii) Shares Issued | |||||
Name of financial | |||||
Number of shares issued | Number of shares issued | instrument exchange | |||
Type | as at submission date | of listing, or authorized | Remarks | ||
as at 29 February 2020 | |||||
(As at 14 April 2020) | financial instruments | ||||
firms association | |||||
First section of the Tokyo | |||||
Stock Exchange and | 100 shares | ||||
Common stock | 106,073,656 | 106,073,656 | the Main Board of | ||
as one unit | |||||
The Stock Exchange of | |||||
Hong Kong Limited (Note) | |||||
Total | 106,073,656 | 106,073,656 | - | - |
(Note) Hong Kong Depositary Receipts are listed on the Main Board of The Stock Exchange of Hong Kong Limited.
- Share Subscription Rights
- Details of the Stock Option Program Not applicable.
- Other Share Subscription Rights Not applicable.
- Exercise of convertible bonds with conditional permission for adjustment of exercise price Not applicable.
- Change in total number of Shares Issued, Capital Stock, Etc.
Increase/ | Balance of total | Increase/ | Balance of | Increase/ | Balance of | |
(decrease) of | (decrease) of | (decrease) of | ||||
Date | number of | capital stock | capital reserve | |||
total number of | capital stock | capital reserve | ||||
shares issued | (Millions of yen) | (Millions of yen) | ||||
shares issued | (Millions of yen) | (Millions of yen) | ||||
1 December 2019 to | - | 106,073,656 | - | 10,273 | - | 4,578 |
29 February 2020 | ||||||
(Note) There was no change in the total number of shares issued, capital stock or capital reserve during the three months ended 29 February 2020.
- 8 -
(5) Major Shareholders
As at 29 February 2020 | |||
Number of | As a percentage | ||
over total | |||
shares held | |||
Name or trade name | Location | number of | |
(in thousands | |||
shares (excluding | |||
of shares) | |||
treasury stock) | |||
Tadashi Yanai | Shibuya-ku, Tokyo | 22,037 | 21.59 |
The Master Trust Bank of Japan, Ltd. | 2-11-3Hamamatsu-cho,Minato-ku, Tokyo | 20,096 | 19.69 |
Japan Trustee Services Bank, Ltd. | 1-8-11 Harumi, Chuo-ku, Tokyo | 10,854 | 10.63 |
TTY Management B.V. | De Entree 99, 1101HE Amsterdam, | 5,310 | 5.20 |
The Netherlands | |||
Kazumi Yanai | New York, U.S.A. | 4,781 | 4.68 |
Koji Yanai | Shibuya-ku, Tokyo | 4,780 | 4.68 |
Fight & Step Co., Ltd. | 1-4-3 Mita, Meguro-ku, Tokyo | 4,750 | 4.65 |
MASTERMIND, LLC | 1-4-3 Mita, Meguro-ku, Tokyo | 3,610 | 3.54 |
Trust & Custody Services Bank, Ltd. | 1-8-12 Harumi, Chuo-ku, Tokyo | 3,347 | 3.28 |
Teruyo Yanai | Shibuya-ku, Tokyo | 2,327 | 2.28 |
Total | - | 81,896 | 80.23 |
(Notes) 1. "Number of shares held" is rounded down to the nearest unit of thousand shares.
- The shares held by The Master Trust Bank of Japan, Ltd., Japan Trustee Services Bank, Ltd. and Trust & Custody Services Bank, Ltd. are all held in conjunction with trust businesses.
- According to the report of large shareholdings (Report of Change of Composition) submitted on 21 October 2019 by Mitsubishi UFJ Financial Group, Inc. and the three parties of Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Kokusai Asset Management Co., Ltd. and Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., which are all joint shareholders, each party held the shares stated below as at 14 October 2019. However, since the Company has not been able to confirm the number of shares actually held as at 29 February 2020, these shareholdings have not been included in the above table of major shareholders.
Number of | Percentage of | ||
shares held | |||
Name or trade name | Location | total number of | |
(in thousands of | |||
shares issued | |||
shares) | |||
Mitsubishi UFJ Trust and Banking | 1-4-5 Marunouchi, Chiyoda-ku, Tokyo | 820 | 0.77 |
Corporation | |||
Mitsubishi UFJ Kokusai Asset Management | 1-12-1 Yurakucho, Chiyoda-ku, Tokyo | 3,018 | 2.85 |
Co., Ltd. | |||
Mitsubishi UFJ Morgan Stanley Securities | 2-5-2 Marunouchi, Chiyoda-ku, Tokyo | 1,428 | 1.35 |
Co., Ltd. | |||
- 9 -
4. According to the report of large shareholdings (Report of Change of Composition) submitted on 4 December 2019 by Nomura Securities Co., Ltd. and the two parties of Nomura International PLC and Nomura Asset Management Co., Ltd., which are all joint shareholders, each party held the shares stated below as at 27 November 2019. However, since the Company has not been able to confirm the number of shares actually held as at 29 February 2020, these shareholdings have not been included in the above table of major shareholders.
Number of | Percentage of | ||
shares held | |||
Name or trade name | Location | total number of | |
(in thousands of | |||
shares issued | |||
shares) | |||
Nomura Securities Co., Ltd. | 1-9-1 Nihonbashi, Chuo-ku, Tokyo | 16 | 0.02 |
Nomura International PLC | 1 Angel Lane, London EC4R 3AB, United | 54 | 0.05 |
Kingdom | |||
Nomura Asset Management Co., Ltd. | 1-12-1 Nihonbashi, Chuo-ku, Tokyo | 10,885 | 10.26 |
5. According to the report of large shareholdings (Report of Change of Composition) submitted on 21 January 2020 by Sumitomo Mitsui Trust Bank, Limited and the two parties of Sumitomo Mitsui Trust Asset Management Co., Ltd. and Nikko Asset Management Co., Ltd., which are all joint shareholders, each party held the shares stated below as at 15 January 2020. However, since the Company has not been able to confirm the number of shares actually held as at 29 February 2020, these shareholdings have not been included in the above table of major shareholders.
Number of | Percentage of | ||
shares held | |||
Name or trade name | Location | total number of | |
(in thousands of | |||
shares issued | |||
shares) | |||
Sumitomo Mitsui Trust Asset Management | 1-1-1 Shibakoen, Minato-ku, Tokyo | 1,167 | 1.10 |
Co., Ltd. | |||
Nikko Asset Management Co., Ltd. | 9-7-1 Akasaka, Minato-ku, Tokyo | 5,688 | 5.36 |
6. In addition to the above, 3,991,435 shares of treasury stock are held by the Company (3.76% of the total number of outstanding shares).
- 10 -
- Voting Rights
- Shares issued
Class
Non-voting shares
Shares subject to restrictions on voting rights (e.g., treasury stock)
Shares subject to restrictions on voting rights (e.g., other than treasury stock)
Shares with full voting rights (e.g., treasury stock)
Shares with full voting rights (e.g., other than treasury stock)
Shares less than one unit
Total number of shares issued
Total number of voting rights of all shareholders
As at 29 February 2020 | ||
Number of shares | Number of voting rights | Remarks |
- | - | - |
- | - | - |
- | - | - |
(Shares held as treasury | ||
stock) | - | - |
Common stock | ||
3,991,400 | ||
Common stock | 1,020,165 | (Note) 1 |
102,016,500 | ||
Common stock | - | (Notes) 1, 2 |
65,756 | ||
106,073,656 | - | - |
- | 1,020,165 | - |
(Notes) 1.The columns for the number of shares of "Shares with full voting rights (e.g., other than treasury stock)" and "Shares less than one unit" include 2,700 shares and 84 shares, respectively, held in the name of Japan Securities Depository Center, Inc.
2. Common stock in the "Shares less than one unit" row includes 35 shares of treasury stock held by the Company.
- Treasury Stock
As at 29 February 2020 | |||||
Name or trade name of | Number of | Number of | Total number of | Percentage of | |
Holder's address | shares held in | shares held in | total number of | ||
holder | shares held | ||||
own name | other's name | shares issued (%) | |||
FAST RETAILING | 717-1 Sayama, | ||||
Yamaguchi-shi, | 3,991,400 | - | 3,991,400 | 3.76 | |
CO., LTD. | |||||
Yamaguchi | |||||
Total | - | 3,991,400 | - | 3,991,400 | 3.76 |
2. Directors
Since the submission of the year-end report for the preceding fiscal year, there has been no change of directors during the six months ended 29 February 2020.
- 11 -
5. Financial Section
-
Preparation of Interim Condensed Consolidated Financial Statements
The interim condensed consolidated financial statements of the Group, namely, the interim condensed consolidated statement of financial position of the Group as at 29 February 2020, the related interim condensed consolidated statements of profit or loss and interim condensed consolidated statement of comprehensive income for the three-month and six-month periods then ended, and the interim condensed consolidated statements of changes in equity and cash flows for the six-month period then ended (collectively, the "interim condensed consolidated financial statements") were prepared in compliance with International Accounting Standard 34, Interim Financial Reporting("IAS 34"), pursuant to Article 93 of the "Rules Governing Term, Form and Preparation of Consolidated Quarterly Financial Statements" (Cabinet Office Ordinance No. 64 of 2007, hereinafter referred to as "Consolidated Quarterly Financial Statements Rules"). - Review Report
Pursuant to the first clause of Article 193-2 of the Financial Instruments and Exchange Act, the interim condensed consolidated financial statements have been reviewed by Deloitte Touche Tohmatsu LLC.
- 12 -
(Amounts are stated in millions of yen and are rounded down to the nearest million unless otherwise stated)
1. Interim Condensed Consolidated Financial Statements
- Interim Condensed Consolidated Statement of Financial Position
(Millions of yen) | |||
Notes | As at 31 August 2019 | As at 29 February 2020 | |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 1,086,519 | 1,184,303 | |
Trade and other receivables | 60,398 | 56,968 | |
Other financial assets | 15 | 44,473 | 66,424 |
Inventories | 6 | 410,526 | 353,907 |
Derivative financial assets | 15 | 14,787 | 21,117 |
Income taxes receivable | 1,492 | 4,087 | |
Other assets | 19,975 | 15,569 | |
Total current assets | 1,638,174 | 1,702,379 | |
Non-current assets | |||
Property, plant and equipment | 7 | 162,092 | 133,068 |
Right-of-use assets | - | 390,283 | |
Goodwill | 8,092 | 8,092 | |
Intangible assets | 60,117 | 66,054 | |
Financial assets | 15 | 77,026 | 68,497 |
Investments in associates accounted | 14,587 | 14,344 | |
for using the equity method | |||
Deferred tax assets | 33,163 | 36,311 | |
Derivative financial assets | 15 | 9,442 | 27,919 |
Other assets | 7,861 | 7,344 | |
Total non-current assets | 372,384 | 751,916 | |
Total assets | 2,010,558 | 2,454,296 | |
Liabilities and equity | |||
LIABILITIES | |||
Current liabilities | |||
Trade and other payables | 191,769 | 160,836 | |
Other financial liabilities | 8, 15 | 159,006 | 269,688 |
Derivative financial liabilities | 15 | 2,985 | 1,037 |
Lease liabilities | - | 104,361 | |
Current tax liabilities | 27,451 | 39,394 | |
Provisions | 13,340 | 895 | |
Other liabilities | 82,103 | 59,605 | |
Total current liabilities | 476,658 | 635,820 | |
Non-current liabilities | |||
Financial liabilities | 8, 15 | 499,948 | 370,732 |
Lease liabilities | - | 339,951 | |
Provisions | 20,474 | 32,482 | |
Deferred tax liabilities | 8,822 | 7,418 | |
Derivative financial liabilities | 15 | 3,838 | 637 |
Other liabilities | 17,281 | 2,473 | |
Total non-current liabilities | 550,365 | 753,694 | |
Total liabilities | |||
1,027,024 | 1,389,515 |
- 13 -
Notes | As at 31 August 2019 | As at 29 February 2020 |
EQUITY | ||
Capital stock | 10,273 | 10,273 |
Capital surplus | 20,603 | 23,229 |
Retained earnings | 928,748 | 974,342 |
Treasury stock, at cost | (15,271) | (15,198) |
Other components of equity | (5,732) | 27,661 |
Equity attributable to owners of the Parent | 938,621 | 1,020,308 |
Non-controlling interests | 44,913 | 44,471 |
Total equity | 983,534 | 1,064,780 |
Total liabilities and equity | 2,010,558 | 2,454,296 |
- 14 -
- Interim Condensed Consolidated Statement of Profit or Loss and Interim Condensed Consolidated Statement of Comprehensive Income
Interim Condensed Consolidated Statement of Profit or Loss Six months ended 29 February 2020
(Millions of yen) | |||
Notes | Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | ||
Revenue | 10 | 1,267,697 | 1,208,512 |
Cost of sales | (660,923) | (631,722) | |
Gross profit | 606,773 | 576,790 | |
Selling, general and administrative expenses | 11 | (433,463) | (438,798) |
Other income | 12 | 2,106 | 6,002 |
Other expenses | 12 | (2,738) | (7,309) |
Share of profit and loss of associates accounted | 264 | 51 | |
for using the equity method | |||
Operating profit | |||
172,941 | 136,736 | ||
Finance income | 13 | 5,413 | 18,069 |
Finance costs | 13 | (4,140) | (3,946) |
Profit before income taxes | 174,214 | 150,859 | |
Income tax expense | (49,283) | (47,414) | |
Profit for the period | 124,930 | 103,444 | |
Profit for the period attributable to: | |||
Owners of the Parent | 114,029 | 100,459 | |
Non-controlling interests | 10,901 | 2,985 | |
Total | 124,930 | 103,444 | |
Earnings per share | |||
Basic (yen) | 14 | 1,117.54 | 984.21 |
Diluted (yen) | 14 | 1,115.67 | 982.49 |
- 15 -
Three months ended 29 February 2020
(Millions of yen) | |||
Notes | Three months ended | Three months ended | |
28 February 2019 | 29 February 2020 | ||
Revenue | 623,230 | 585,028 | |
Cost of sales | (341,265) | (321,161) | |
Gross profit | 281,964 | 263,867 | |
Selling, general and administrative expenses | (211,948) | (214,699) | |
Other income | 1,688 | 1,918 | |
Other expenses | (3,503) | (5,842) | |
Share of profit and loss of associates accounted | 74 | (197) | |
for using the equity method | |||
Operating profit | |||
68,276 | 45,045 | ||
Finance income | 2,883 | 5,850 | |
Finance costs | (8,031) | (2,051) | |
Profit before income taxes | 63,127 | 48,844 | |
Income tax expense | (18,482) | (17,239) | |
Profit for the period | 44,644 | 31,604 | |
Profit for the period attributable to: | |||
Owners of the Parent | 40,552 | 29,552 | |
Non-controlling interests | 4,092 | 2,052 | |
Total | 44,644 | 31,604 | |
Earnings per share | |||
Basic (yen) | 14 | 397.40 | 289.51 |
Diluted (yen) | 14 | 396.72 | 288.98 |
- 16 -
Interim Condensed Consolidated Statement of Comprehensive Income
Six months ended 29 February 2020
(Millions of yen) | ||
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Profit for the period | 124,930 | 103,444 |
Other comprehensive income, net of income tax | ||
Items that will not be reclassified subsequently to | ||
profit or loss | ||
Financial assets measured at fair value through | (223) | (231) |
other comprehensive income | ||
Total items that will not be reclassified subsequently to | (223) | (231) |
profit or loss | ||
Items that may be reclassified subsequently to | ||
profit or loss | ||
Exchange differences on translating | 3,493 | 14,715 |
foreign operations | ||
Cash flow hedges | 3,731 | 25,556 |
Share of other comprehensive income of associates | 17 | 18 |
Total items that may be reclassified subsequently to | 7,243 | 40,291 |
profit or loss | ||
Other comprehensive income, net of income tax | 7,019 | 40,060 |
Total comprehensive income for the period | 131,950 | 143,505 |
Attributable to: | ||
Owners of the Parent | 120,920 | 140,153 |
Non-controlling interests | 11,029 | 3,352 |
Total comprehensive income for the period | 131,950 | 143,505 |
- 17 -
Three months ended 29 February 2020
(Millions of yen) | ||
Three months ended | Three months ended | |
28 February 2019 | 29 February 2020 | |
Profit for the period | 44,644 | 31,604 |
Other comprehensive income, net of income tax | ||
Items that will not be reclassified subsequently to | ||
profit or loss | ||
Financial assets measured at fair value through | (107) | (249) |
other comprehensive income | ||
Total items that will not be reclassified subsequently to | ||
(107) | (249) | |
profit or loss | ||
Items that may be reclassified subsequently to | ||
profit or loss | ||
Exchange differences on translating | (3,342) | (3,286) |
foreign operations | ||
Cash flow hedges | (13,076) | 5,312 |
Share of other comprehensive income of associates | (1) | (0) |
Total items that may be reclassified subsequently to | (16,419) | 2,024 |
profit or loss | ||
Other comprehensive (loss) / income, net of income tax | (16,526) | 1,775 |
Total comprehensive income for the period | 28,118 | 33,380 |
Attributable to: | ||
Owners of the Parent | 24,848 | 32,524 |
Non-controlling interests | 3,269 | 855 |
Total comprehensive income for the period | 28,118 | 33,380 |
- 18 -
- Interim Condensed Consolidated Statement of Changes in Equity For the six months ended 28 February 2019
(Millions of yen)
Other components of equity
Treasury | Financial assets | ||||||||
Capital | Capital | Retained | measured at fair | Foreign | Cash flow | Share of other | |||
Note | stock | surplus | earnings | stock, | value | currency | comprehensive | Total | |
at cost | through other | translation | hedge | income of | |||||
reserve | |||||||||
comprehensive | reserve | associates | |||||||
income |
Equity | ||
attributable | Non- | Total |
to owners | controlling | |
equity | ||
of the | interests | |
Parent |
As at 1 September 2018 | 10,273 | 18,275 | 815,146 | (15,429) | 37 | 15,429 | 19,202 | - | 34,669 | 862,936 | 39,841 | 902,777 | |
Net changes during the period | |||||||||||||
Comprehensive income | |||||||||||||
Profit for the period | - | - | 114,029 | - | - | - | - | - | - | 114,029 | 10,901 | 124,930 | |
Other comprehensive | - | - | - | - | (223) | 3,489 | 3,608 | 17 | 6,891 | 6,891 | 127 | 7,019 | |
income / (loss) | |||||||||||||
Total comprehensive income / | - | - | 114,029 | - | (223) | 3,489 | 3,608 | 17 | 6,891 | 120,920 | 11,029 | 131,950 | |
(loss) | |||||||||||||
Transactions with the owners of | |||||||||||||
the Parent | |||||||||||||
Acquisition of treasury stock | - | - | - | (2) | - | - | - | - | - | (2) | - | (2) | |
Disposal of treasury stock | - | 1,109 | 118 | - | - | - | - | - | 1,228 | - | 1,228 | ||
Dividends | 9 | - | (24,484) | - | - | - | - | - | - | (24,484) | (3,531) | (28,016) | |
Share-based payments | - | 1,081 | - | - | - | - | - | - | - | 1,081 | - | 1,081 | |
Incorporation of a new | - | - | - | - | - | - | - | - | - | - | 239 | 239 | |
subsidiary | |||||||||||||
Changes in ownership | |||||||||||||
interests in subsidiaries | - | - | - | - | - | - | - | - | - | - | 169 | 169 | |
without losing control | |||||||||||||
Total transactions with the | - | 2,191 | (24,484) | 116 | - | - | - | - | - | (22,177) | (3,122) | (25,299) | |
owners of the Parent | |||||||||||||
Total net changes during the period | - | 2,191 | 89,544 | 116 | (223) | 3,489 | 3,608 | 17 | 6,891 | 98,743 | 7,906 | 106,650 | |
As at 28 February 2019 | 10,273 | 20,466 | 904,690 | (15,312) | (186) | 18,919 | 22,810 | 17 | 41,561 | 961,680 | 47,748 | 1,009,428 | |
- 19 -
For the six months ended 29 February 2020
(Millions of yen)
Other components of equity | |||||||||||||
Financial | Equity | ||||||||||||
Capital | Capital | Retained | Treasury | assets | Foreign | Share of other | attributable | Non- | Total | ||||
Note | stock, at | measured | Cash flow | to owners | controlling | ||||||||
stock | surplus | earnings | currency | comprehensive | Total | equity | |||||||
cost | at fair value | translation | hedge | income of | of the | interest | |||||||
through other | reserve | Parent | |||||||||||
comprehensive | reserve | associates | |||||||||||
income | |||||||||||||
As at 1 September 2019 | 10,273 | 20,603 | 928,748 | (15,271) | (697) | (13,929) | 8,906 | (11) | (5,732) | 938,621 | 44,913 | 983,534 | |
Effect of change in accounting | 3 | - | - | (30,370) | - | - | - | - | - | - | (30,370) | (1,429) | (31,800) |
policy | |||||||||||||
Net changes during the period | 10,273 | 20,603 | 898,377 | (15,271) | (697) | (13,929) | 8,906 | (11) | (5,732) | 908,250 | 43,483 | 951,734 | |
Comprehensive income | |||||||||||||
Profit for the period | - | - | 100,459 | - | - | - | - | - | - | 100,459 | 2,985 | 103,444 | |
Other comprehensive | - | - | - | - | (231) | 13,727 | 26,178 | 18 | 39,693 | 39,693 | 366 | 40,060 | |
income / (loss) | |||||||||||||
Total comprehensive income / | - | - | 100,459 | - | (231) | 13,727 | 26,178 | 18 | 39,693 | 140,153 | 3,352 | 143,505 | |
(loss) | |||||||||||||
Transactions with the owners of | |||||||||||||
the Parent | |||||||||||||
Acquisition of treasury stock | - | - | - | (5) | - | - | - | - | - | (5) | - | (5) | |
Disposal of treasury stock | - | 934 | - | 78 | - | - | - | - | - | 1,013 | - | 1,013 | |
Dividends | 9 | - | - | (24,494) | - | - | - | - | - | - | (24,494) | (1,569) | (26,064) |
Share-based payments | - | 1,690 | - | - | - | - | - | - | 1,690 | - | 1,690 | ||
Transfer to non-financial | - | - | - | - | - | - | (6,299) | - | (6,299) | (6,299) | (794) | (7,093) | |
assets | |||||||||||||
Total transactions with the | - | 2,625 | (24,494) | 73 | - | - | (6,299) | - | (6,299) | (28,095) | (2,363) | (30,459) | |
owners of the Parent | |||||||||||||
Total net changes during the period | - | 2,625 | 75,964 | 73 | (231) | 13,727 | 19,878 | 18 | 33,394 | 112,057 | 988 | 113,046 | |
As at 29 February 2020 | 10,273 | 23,229 | 974,342 | (15,198) | (928) | (202) | 28,785 | 7 | 27,661 | 1,020,308 | 44,471 | 1,064,780 |
- 20 -
(4) Interim Condensed Consolidated Statement of Cash Flows
(Millions of yen) | |||
Note | Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | ||
Cash flows from operating activities | |||
Profit before income taxes | 174,214 | 150,859 | |
Depreciation and amortization | 24,090 | 87,871 | |
Impairment losses | 1,512 | 5,443 | |
Interest and dividend income | (5,413) | (5,878) | |
Interest expenses | 2,374 | 3,946 | |
Foreign exchange losses / (gains) | 1,765 | (12,190) | |
Share of profit and loss of associates accounted for using the | (264) | (51) | |
equity method | |||
Losses on disposal of property, plant and equipment | 129 | 355 | |
(Increase) / decrease in trade and other receivables | (3,538) | 207 | |
Decrease in inventories | 87,283 | 64,120 | |
Decrease in trade and other payables | (52,515) | (32,925) | |
Decrease in other assets | 9,016 | 10,648 | |
Increase / (decrease) in other liabilities | 19,757 | (1,227) | |
Others, net | 610 | 2,061 | |
Cash generated from operations | 259,022 | 273,241 | |
Interest and dividends income received | 5,194 | 5,633 | |
Interest paid | (2,070) | (3,483) | |
Income taxes paid | (31,246) | (39,535) | |
Income taxes refunded | - | 825 | |
Net cash generated by operating activities | 230,899 | 236,680 | |
Cash flows from investing activities | |||
Amounts deposited into bank deposits with original maturities | (72,631) | (53,772) | |
of three months or longer | |||
Amounts withdrawn from bank deposits with original | 48,314 | 33,503 | |
maturities of three months or longer | |||
Payments for property, plant and equipment | (21,097) | (23,833) | |
Payments for intangible assets | (11,926) | (10,895) | |
Payments for acquisition of right-of-use assets | - | (1,759) | |
Payments for lease and guarantee deposits | (2,951) | (2,952) | |
Proceeds from collection of lease and guarantee deposits | 1,456 | 3,437 | |
Others, net | (853) | (2,556) | |
Net cash used in investing activities | (59,688) | (58,828) |
- 21 -
(Millions of yen) | |||
Note | Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | ||
Cash flows from financing activities | |||
Proceeds from short-term loans payable | 8,305 | 976 | |
Repayment of short-term loans payable | (7,483) | (847) | |
Repayment of long-term loans payable | (2,237) | (4,343) | |
Repayment of redemption of bonds | 8 | (30,000) | - |
Dividends paid to owners of the Parent | 9 | (24,484) | (24,494) |
Capital contributions from non-controlling interests | 420 | - | |
Dividends paid to non-controlling interests | (3,531) | (2,328) | |
Repayments of financial lease obligations | (4,345) | - | |
Repayments of lease liabilities | - | (68,231) | |
Others, net | 117 | 73 | |
Net cash used in financing activities | (63,240) | (99,195) | |
Effect of exchange rate changes on the balance of cash held in | 3,399 | 19,127 | |
foreign currencies | |||
Net increase in cash and cash equivalents | 111,370 | 97,783 | |
Cash and cash equivalents at the beginning of period | 999,697 | 1,086,519 | |
Cash and cash equivalents at the end of period | 1,111,067 | 1,184,303 | |
- 22 -
Notes to the Interim Condensed Consolidated Financial Statements
-
Reporting Entity
FAST RETAILING CO., LTD. is a company incorporated in Japan. The locations of the registered headquarters and principal offices of the Company are disclosed on the Group's website (http://www.fastretailing.com).
The principal activities of the Company and its consolidated subsidiaries are the operations of the UNIQLO business (i.e., casual clothing retail business operating under the "UNIQLO" brand in Japan and overseas), GU business (i.e., casual clothing retail business operating under the "GU" brand in Japan and overseas), Theory business (i.e., apparel design and retail business in Japan and overseas) and other businesses. - Basis of Preparation
The interim condensed consolidated financial statements have been prepared in compliance with IAS 34. The Group meets all of the criteria of a "specified company" defined under Article 1-2 of the Consolidated Quarterly Financial Statements Rules and accordingly, applies Article 93 of the Consolidated Quarterly Financial Statements Rules. Since the interim condensed consolidated financial statements do not include all the information and disclosures required for consolidated financial statements, they should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 August 2019.
The interim condensed consolidated financial statements were approved on 14 April 2020 by Tadashi Yanai, Chariman, President and CEO and Takeshi Okazaki, Group Executive Vice President and CFO.
- 23 -
3. Significant Accounting Policies
Except for the following standards that have been newly applied, the accounting policies presented in the consolidated financial statements for the year ended 31 August 2019 are applied consistently in the preparation of these interim condensed consolidated financial statements.
The Group adopted the following new and revised standards and interpretations beginning with the preparation of the interim condensed consolidated financial statements.
IFRS | Title | Summary of new standards and amendments | |
IFRS 16 | Leases | Amendments to accounting treatment for lease arrangement |
Uncertainty over Income Tax
IFRIC 23Clarifies the accounting for uncertainties in income tax Treatments
- Application of IFRS 16: Leases
The Group began applying IFRS 16 Leases(announced in January 2016; hereinafter "IFRS 16"), from the first quarter of the current fiscal year. In applying IFRS 16, the Group has adopted the cumulative catch-up approach that recognizes the cumulative effect of initial application of the standard as at the date of initial application (1 September 2019) as a transition method, without restating comparative information.
- Definition of lease
The application of IFRS 16 requires that a judgment be made at the inception of a contract as to whether a contract is, or contains, a lease. If a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, the contract is, or contains, a lease.
To determine whether or not a contract conveys the right to control the use of an identified asset, the Group examines whether the contract includes the use of the specified asset, whether the Group has the right to obtain substantially all of the economic benefits from use of identified asset throughout the period of use, and whether the Group has the right to direct the use of the identified asset. - Accounting treatment of leases
2.1) Leases in which Fast Retailing Group is the lessee
Separate from short-term leases or leases for which the underlying asset is of low value, the Group accounts for each lease component within the contract as a lease and recognizes a right-of-use asset and a lease liability. On the date of commencement of a lease, the right-of-use asset is measured at cost, and the lease liability is calculated as the present value of lease payments outstanding.
The cost of the right-of-use asset is mainly composed of the initial measurement of the lease liability, initial direct costs and the amount of any prepaid lease payments. Furthermore, the discount rate used to calculate the present value of lease payments is the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee's incremental borrowing rate is used.
The lease term is determined as the non-cancelable period which includes an option to extend the lease (if it is reasonably certain that the Group will exercise that option), or an option to cancel the lease (if it is reasonably certain that the Group will not exercise that option).
After the commencement date, the right-of-use asset is measured at cost less any accumulated depreciation and any accumulated impairment losses. When depreciating right-of-use assets, the Group applies the depreciation requirements in IAS 16 Property, Plant and Equipment. In addition, the Group applies IAS 36, Impairment of Assets, to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.
Depreciation of right-of-use asset is measured from the commencement date to the end of the useful life of the underlying asset if ownership of the underlying asset is to be transferred to the Group by the end of the lease term, or if it is reasonably certain that the lessee purchase options will be exercised; otherwise the straight-line method will be used to calculate depreciation from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
After the commencement date, the carrying amount of the lease liability is increased to reflect the interest rates on the lease liability and reduced to reflect any lease payments made. Furthermore, any reassessment or lease modifications, or to reflect revised in-substance fixed lease payments is remeasured.
The Group uses the straight-line basis to recognize any lease payments associated with short-term leases or leases for which an underlying asset is of low value.
2.2) Leases in which the Group is the lessor
The Group classifies a lease as either a finance lease or an operating lease at the inception of the lease contract. - 24 -
To classify each lease, the Group comprehensively assesses whether all the risks and rewards incidental to ownership of the underlying asset will be substantially transferred or not. If the risks and rewards value are to be transferred, the lease is classified as a finance lease; if not, it is classified as an operating lease.
If the Group is acting as an intermediate lessor, the Group accounts for head leases and subleases separately. A sublease classification is determined by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.
The Group recognizes lease payments from operating leases as lease income on a straight-line basis over the lease term.
Lease payments from finance leases are recognized at the commencement date as assets held under finance leases and presented as receivables at an amount equal to the net investment in the lease.
3) Treatment on transition
In applying IFRS 16, the Group applies the practical expedient in place of the judgments previously used to determine whether or not a contract is a lease. Consequently, the requirements in IFRS 16 is applied only to contracts entered into or changed on or after 1 September 2019.
3.1) Leases in which the Group is the lessee
(Leases previously classified as operating leases applying IAS 17)
Lease liabilities on transition are measured at the present value of the remaining lease payments discounted using the lessee's incremental borrowing rate as at 1 September 2019. In addition, right-of-use assets on transition are measured using one of the following methods.
- Its carrying amount calculated on the assumption that IFRS 16 was applied from the commencement of the lease. Note that the discount rate used is the lessee's incremental borrowing rate on the date of initial application of IFRS 16.
- The amount measured for the lease liability, is adjusted by the amount of any prepaid or accrued lease payments.
Note that the followings apply when IFRS 16 is applied to leases that were previously classified as operating leases IAS 17.
- A single discount rate is applied to a portfolio of leases with reasonably similar characteristics.
- Leases for which the lease term ends within 12 months of the date of initial application of IFRS 16 are accounted for in the same way asshort-term leases.
- Initial direct costs are excluded from the measurement ofright-of-use assets at the date of initial application of IFRS 16.
- The Group uses hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease.
(Leases previously classified as operating leases applying IAS 17)
The Group accounts for the carrying amount of the right-of-use asset and the lease liability at the date of initial application at the amount of the lease asset and lease liability applying IAS 17 immediately prior to the date of initial application of IFRS 16.
3.2) Leases in which the Group is the lessor
Leases in which the Group acts as lessor require no adjustment on transition to IFRS 16, except for subleases. Subleases will be accounted for in accordance with the transition provisions under IFRS 16 as stated below. - In applying IFRS 16, the Group classifies sublease transactions as at the date of initial application as either operating leases or finance leases. This classification is determined based on the remaining contractual terms and conditions of the head lease and sublease at that date.
- Any subleases classified as operating leases applying IAS 17 but finance leases applying IFRS 16 are accounted for as
new finance leases entered into at the date of initial application.
- 25 -
4) Impact on interim condensed consolidated financial statements
With the application of IFRS 16, the Group recognized an additional 368,722 million yen in right-of-use assets, 420,772 million yen in lease liabilities and a decrease of 30,370 million yen in retained earnings in its interim condensed consolidated statement of financial position at the start of the fiscal year.
The weighted average of the lessee's incremental borrowing rate applied to lease liabilities recognized in interim condensed consolidated statement of financial position as at the date of initial application of IFRS 16 is 0.9%.
The major factors for the difference in the commitment amount related to operating leases applying IAS 17 disclosed in interim condensed consolidated statement of financial position as at 31 August 2019 and the lease liabilities recognized in interim condensed consolidated statement of financial position as at the date of initial application of IFRS 16 are as follows.
Minimum future lease payments for non-cancelable operating lease contracts (31 August 2019) Present value of non-cancelable operating lease contracts (31 August 2019)
Finance lease obligations (31 August 2019)
Extension or termination options that are reasonably certain to be exercised
Lease liabilities recognized in interim condensed consolidated statement of financial position as at the date of initial application of IFRS 16
(Unit: Million Yen)
344,888
337,009
38,726
45,036
420,772
(2) Application of IFRIC 23: Uncertainty over income tax treatments
IFRIC 23 interpretations are additional to the requirement of IAS 12 Income Taxes and establish accounting procedures for uncertain tax positions, such as items with no clear tax treatment or items related to matters that are not yet resolved with the tax authorities. If it is determined that the tax treatment used by the Group is not likely to be approved by the tax authorities, the Group's calculation of taxable income will recognize additional taxable income in an amount equivalent to the impact of that uncertainty, using either the most likely amount or expected value.
The application of IFRIC 23 does not have a significant impact on the Group's interim condensed consolidated financial statements.
- 26 -
4. Use of Estimates and Judgments
The preparation of the interim condensed consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. The effects of the review of accounting estimates are recognized in the accounting period in which the estimates were reviewed and in future accounting periods.
In principle, estimates and judgments that have significant effects on the amounts recognized in the interim condensed consolidated financial statements are the same as those in the preceding fiscal year except the impact of applying IFRS16.
- 27 -
5. Segment Information
-
Description of reportable segments
The Group's reportable segments are components for which discrete financial information is available and which are reviewed regularly by the Board of Directors (the "Board") to make decisions about the allocation of resources and to assess performance. The Group's main retail clothing business is divided into four reportable operating segments: UNIQLO Japan, UNIQLO International, GU and Global Brands, each of which is used to frame and form the Group's strategy.
The main businesses covered by each reportable segment are as follows: UNIQLO Japan: UNIQLO clothing business within Japan
UNIQLO International: UNIQLO clothing business outside of Japan
GU: GU clothing business in Japan and overseas
Global Brands: Theory, PLST, COMPTOIR DES COTONNIERS, PRINCESSE TAM.TAM and J Brand clothing operations
(ii) Segment revenue and results
For the six months ended 28 February 2019
(Millions of yen) | ||||||||
Reportable segments | Interim | |||||||
Condensed | ||||||||
Others | Adjustments | |||||||
Total | Consolidated | |||||||
UNIQLO | UNIQLO | Global | (Note 1) | (Note 2) | ||||
GU | Statement of | |||||||
Japan | International | Brands | ||||||
Profit or Loss | ||||||||
Revenue | 491,343 | 580,006 | 117,195 | 77,745 | 1,266,290 | 1,406 | - | 1,267,697 |
Operating profit | 67,741 | 88,486 | 14,122 | 3,125 | 173,475 | 110 | (644) | 172,941 |
Segment income | ||||||||
(i.e., Profit | 67,883 | 87,385 | 14,037 | 3,071 | 172,377 | 110 | 1,725 | 174,214 |
before income taxes) | ||||||||
(Note 1) "Others" includes the real estate leasing business, etc.
(Note 2) "Adjustments" mainly includes revenue and corporate expenses which are not allocated to individual reportable segments.
For the six months ended 29 February 2020
(Millions of yen) | ||||||||
Reportable segments | Interim | |||||||
Condensed | ||||||||
Others | Adjustments | |||||||
Total | Consolidated | |||||||
UNIQLO | UNIQLO | Global | (Note 1) | (Note 2) | ||||
GU | Statement of | |||||||
Japan | International | Brands | ||||||
Profit or Loss | ||||||||
Revenue | 463,568 | 541,248 | 132,293 | 70,100 | 1,207,211 | 1,301 | - | 1,208,512 |
Operating profit / (loss) | 71,626 | 53,267 | 15,823 | 741 | 141,458 | 278 | (5,000) | 136,736 |
Segment income
(i.e., Profit before income 73,470 54,159 15,711 517 143,858 279 6,721 150,859 taxes)
(Note 1) "Others" includes the real estate leasing business, etc.
(Note 2) "Adjustments" mainly includes revenue and corporate expenses which are not allocated to individual reportable segments.
- 28 -
For the three months ended 28 February 2019
(Millions of yen) | ||||||||
Reportable segments | Interim | |||||||
Condensed | ||||||||
Others | Adjustments | |||||||
Total | Consolidated | |||||||
UNIQLO | UNIQLO | Global | (Note 1) | (Note 2) | ||||
GU | Statement of | |||||||
Japan | International | Brands | ||||||
Profit or Loss | ||||||||
Revenue | 245,202 | 288,623 | 51,701 | 36,969 | 622,497 | 732 | - | 623,230 |
Operating profit | 29,783 | 35,921 | 5,553 | 396 | 71,654 | 65 | (3,444) | 68,276 |
Segment income (i.e., | ||||||||
Profit before income | 29,568 | 34,769 | 5,500 | 385 | 70,223 | 65 | (7,161) | 63,127 |
taxes) | ||||||||
(Note 1) "Others" includes the real estate leasing business, etc.
(Note 2) "Adjustments" mainly includes revenue and corporate expenses which are not allocated to individual reportable segments.
For the three months ended 29 February 2020
(Millions of yen) | ||||||||
Reportable segments | Interim | |||||||
Condensed | ||||||||
Others | Adjustments | |||||||
Total | Consolidated | |||||||
UNIQLO | UNIQLO | Global | (Note 1) | (Note 2) | ||||
GU | Statement of | |||||||
Japan | International | Brands | ||||||
Profit or Loss | ||||||||
Revenue | 230,536 | 260,499 | 59,344 | 33,987 | 584,368 | 659 | - | 585,028 |
Operating profit | 33,068 | 15,431 | 3,446 | (1,128) | 50,818 | 311 | (6,084) | 45,045 |
Segment income / | ||||||||
(losses) (i.e., Profit / | 34,017 | 17,138 | 3,333 | (1,252) | 53,236 | 312 | (4,705) | 48,844 |
(loss) before income | ||||||||
taxes)
(Note 1) "Others" includes the real estate leasing business, etc.
(Note 2) "Adjustments" mainly includes revenue and corporate expenses which are not allocated to individual reportable segments.
6. Inventories
Write-down of inventories to their net realizable values recognized in expenses is as follows:
(Millions of yen) | ||
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Write-down of inventories to net realizable value | 4,624 | 4,121 |
- 29 -
7. Property, Plant and Equipment
The breakdown of property, plant and equipment at each reporting date is as follows:
(Millions of yen) | |||
As at | As at | ||
31 August 2019 | 29 February 2020 | ||
Buildings and structures | 104,845 | ||
94,659 | |||
Furniture, equipment and vehicles | 17,076 | 18,114 | |
Land | 1,927 | 1,927 | |
Construction in progress | 10,404 | 8,180 | |
Lease assets (Note) | 38,024 | - | |
Total | 162,092 | 133,068 |
(Note) With the application of IFRS 16 as at the first quarter of the current fiscal year, leased assets have been reclassified and are presented under "right-of-use assets".
8. Corporate Bonds
The 1st non-collateralized corporate bonds of 30 billion yen (interest rate: 0.110%; date of maturity: 18 December 2018) was repaid during the 6 months ended 28 February 2019.
- 30 -
9. Dividends
The total amount of dividends paid was as follows: For the six months ended 28 February 2019
Resolution
Meeting of the Board on 2 November 2018
Total dividends | Dividends per share |
(Millions of yen) | (Yen) |
24,484 | 240 |
Dividends were declared on 2 November 2018 and paid on 9 November 2018. The effective date of the dividend was for shareholders as at 31 August 2018.
For the six months ended 29 February 2020 | ||
Resolution | Total dividends | Dividends per share |
(Millions of yen) | (Yen) | |
Meeting of the Board on 5 November 2019 | 24,494 | 240 |
Dividends were declared on 5 November 2019 and paid on 8 November 2019. The effective date of the dividend was for shareholders as at 31 August 2019.
Dividends on common stock declared subsequent to 29 February 2020 are as follows:
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Total dividends (Million yen) | 24,492 | 24,499 |
Dividends per share (yen) | 240 | 240 |
The Board has approved the dividends on common stock subsequent to 29 February 2020, and the amount is not recognized as a liability as at 29 February 2020.
- 31 -
10. Revenue
The Group conducts its global clothing retail operations through both physical stores and e-commerce channels. The following is a breakdown of total revenue by major regional market operation.
Six months ended 28 February 2019 | |||
Revenue | Percent of Total | ||
(Millions of yen) | (%) | ||
Japan | 491,343 | 38.8 | |
Greater China | 282,484 | 22.3 | |
Other parts of Asia & Oceania | 174,275 | 13.7 | |
North America & Europe | 123,246 | 9.7 | |
UNIQLO (Note 1) | 1,071,349 | 84.5 | |
GU (Note 2) | 117,195 | 9.2 | |
Global Brands (Note 3) | 77,745 | 6.1 | |
Others (Note 4) | 1,406 | 0.1 | |
Total | 1,267,697 | 100.0 |
(Note 1) Revenue is classified by nation or region based on customer location. | ||||
The designated countries and regions are classified as follows: | ||||
Greater China: | Mainland China, Hong Kong, Taiwan | |||
Other parts of Asia & Oceania: | South Korea, Singapore, Malaysia, Thailand, the Philippines, | |||
Indonesia, Australia | ||||
North America & Europe: | United States of America, Canada, United Kingdom, France, Russia, | |||
Germany, Belgium, Spain, Sweden, the Netherlands | ||||
(Note 2) Main national and regional market: | Japan | |||
(Note 3) Main national and regional markets: | North America, Europe, Japan | |||
(Note 4) The "Others" category includes real estate leasing operations. | ||||
Six months ended 29 February 2020 | ||||
Revenue | Percent of Total | |||
(Millions of yen) | (%) | |||
Japan | 463,568 | 38.4 | ||
Greater China | 270,334 | 22.4 | ||
Other parts of Asia & Oceania | 135,428 | 11.2 | ||
North America & Europe | 135,485 | 11.2 | ||
UNIQLO (Note 1) | 1,004,816 | 83.1 | ||
GU (Note 2) | 132,293 | 10.9 | ||
Global Brands (Note 3) | 70,100 | 5.8 | ||
Others (Note 4) | 1,301 | 0.1 | ||
Total | 1,208,512 | 100.0 | ||
(Note 1) Revenue is classified by nation or region based on customer location. | ||||
The designated countries and regions are classified as follows: | ||||
Greater China: | Mainland China, Hong Kong, Taiwan | |||
Other parts of Asia & Oceania: | South Korea, Singapore, Malaysia, Thailand, the Philippines, | |||
Indonesia, Australia, Vietnam, India | ||||
North America & Europe: | United States of America, Canada, United Kingdom, France, Russia, | |||
Germany, Belgium, Spain, Sweden, the Netherlands, Denmark, Italy | ||||
- 32 - |
(Note 2) Main national and regional market: | Japan | ||||
(Note 3) Main national and regional markets: | North America, Europe, Japan | ||||
(Note 4) The "Others" category includes real estate leasing operations. | |||||
11. Selling, General and Administrative Expenses | |||||
The breakdown of selling, general and administrative expenses for each reporting period is as follows: | |||||
(Millions of yen) | |||||
Six months ended | Six months ended | ||||
28 February 2019 | 29 February 2020 | ||||
Selling, general and administrative expenses | |||||
Advertising and promotion | 39,722 | 39,712 | |||
Rental expenses (Note) | 104,371 | 38,742 | |||
Depreciation and amortization (Note) | 24,090 | 87,871 | |||
Outsourcing | 22,159 | 25,370 | |||
Salaries | 146,745 | 145,931 | |||
Others | 96,373 | 101,168 | |||
Total | 433,463 | 438,798 | |||
(Note) The decrease of rental expenses and the increase of depreciation and amortization are due to the application of IFRS 16 Leasesas mentioned in "Notes to the Interim Condensed Consolidated Financial Statements 3. Significant Accounting Policies".
- 33 -
12. Other Income and Other Expenses
The breakdown of other income and other expenses for each reporting period is as follows:
(Millions of yen) | ||
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Other income | ||
Foreign exchange gains (Note) | - | 3,551 |
Others | 2,106 | 2,450 |
Total | 2,106 | 6,002 |
(Millions of yen) | ||
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Other expenses | ||
Foreign exchange losses (Note) | 51 | - |
Loss on retirement of property, plant and equipment | 129 | 355 |
Impairment losses | 1,512 | 5,443 |
Others | 1,046 | 1,510 |
Total | 2,738 | 7,309 |
(Note) Currency adjustments incurred in the course of operating transactions are included in "other income" and "other expenses".
13. Finance Income and Finance Costs
The breakdown of finance income and finance costs for each reporting period is as follows:
(Millions of yen) | ||
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Finance income | ||
Foreign exchange gains (Note) | - | 12,190 |
Interest income | 5,365 | 5,867 |
Others | 48 | 11 |
Total | 5,413 | 18,069 |
(Millions of yen) | ||
Six months ended | Six months ended | |
28 February 2019 | 29 February 2020 | |
Finance costs | ||
Foreign exchange losses (Note) | 1,765 | - |
Interest expenses | 2,374 | 3,946 |
Total | 4,140 | 3,946 |
(Note) Currency adjustments incurred in the course of non-operating transactions are included in "finance income" and "finance costs".
- 34 -
14. Earnings per Share
Six months ended 28 February 2019
Equity per share attributable to owners of the Parent (Yen)
Basic earnings per share (Yen)
Diluted earnings per share (Yen)
Six months ended 29 February 2020 | |||
9,423.53 | Equity per share attributable to owners | 9,994.97 | |
of the Parent (Yen) | |||
1,117.54 | Basic earnings per share (Yen) | 984.21 | |
1,115.67 | Diluted earnings per share (Yen) | 982.49 |
(Note) The basis for calculation of basic earnings per share and diluted earnings per share is as follows: | ||||||||||
Six months ended | Six months ended | |||||||||
28 February 2019 | 29 February 2020 | |||||||||
Basic earnings per share for the period | ||||||||||
Profit for the period attributable to owners of the Parent (Millions of yen) | 114,029 | 100,459 | ||||||||
Profit not attributable to common shareholders (Millions of yen) | - | - | ||||||||
Profit attributable to common shareholders (Millions of yen) | 114,029 | 100,459 | ||||||||
Average number of common stock outstanding during the period (Shares) | 102,035,840 | 102,070,655 | ||||||||
Diluted earnings per share for the period | ||||||||||
Adjustment to profit (Millions of yen) | - | - | ||||||||
Increase in number of common stock (Shares) | 171,262 | 179,046 | ||||||||
Number of share subscription rights included in increase | (171,262) | (179,046) | ||||||||
Three months ended 28 February 2019 | Three months ended 29 February 2020 | |||||||||
Basic earnings per share (Yen) | 397.40 | Basic earnings per share (Yen) | 289.51 | |||||||
Diluted earnings per share (Yen) | 396.72 | Diluted earnings per share (Yen) | 288.98 | |||||||
(Note) The basis for calculation of basic earnings per share and diluted earnings per share is as follows: | ||||||||||
Three months ended | Three months ended | |||||||||
28 February 2019 | 29 February 2020 | |||||||||
Basic earnings per share for the period | ||||||||||
Profit for the period attributable to owners of the Parent (Millions of yen) | 40,552 | 29,552 | ||||||||
Profit not attributable to common shareholders (Millions of yen) | - | - | ||||||||
Profit attributable to common shareholders (Millions of yen) | 40,552 | 29,552 | ||||||||
Average number of common stock outstanding during the period (Shares) | 102,044,080 | 102,076,667 | ||||||||
Diluted earnings per share for the period | ||||||||||
Adjustment to profit (Millions of yen) | - | - | ||||||||
Increase in number of common stock (Shares) | 176,333 | 186,765 | ||||||||
Number of share subscription rights included in increase | (176,333) | (186,765) | ||||||||
- 35 -
15. Fair value of Financial Instruments
Information about the carrying amount and fair value of financial instruments is as follows:
(Millions of yen) | ||||
As at 31 August 2019 | As at 29 February 2020 | |||
Carrying amounts | Fair value | Carrying amounts | Fair value | |
Financial assets: | ||||
Security deposits and guarantees | 62,398 | 63,982 | 62,780 | 63,948 |
Total | 62,398 | 63,982 | 62,780 | 63,948 |
Financial liabilities: | ||||
Long-term borrowings (Note) | 4,258 | 4,258 | - | - |
Corporate bonds (Note) | 469,183 | 478,638 | 469,262 | 475,288 |
Total | 473,442 | 482,896 | 469,262 | 475,288 |
(Note) The amount above include the outstanding balance of borrowings and corporate bonds due within one year.
The fair values of current financial assets, current financial liabilities and non-current financial assets, which are measured by amortized cost, approximate their carrying amounts.
The fair value of security deposits and guarantees is calculated on the basis of the current value, applying the current market interest rate.
The fair value of corporate bonds is calculated with reference to publicly available market prices.
The fair value of long-term borrowings is classified by term, and are calculated on the basis of the present-value, applying a discount rate that takes into account the time remaining to maturity, and credit risk.
The fair value measurements of security deposits and guarantees, corporate bonds and long-term borrowings are classified as Level 2.
The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments. All assets and liabilities for which fair value is measured or disclosed in the interim condensed financial statements are categorized within the fair value hierarchy based on the following characteristics:
Level 1 - based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
When multiple inputs are used to measure fair value, the fair value level is determined based on the input with the lowest level classification in the overall fair value assessment.
- 36 -
The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments:
(Millions of yen)
As at 31 August 2019
Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value
through profit or loss
Financial assets and financial liabilities designated as hedging instruments - Fair value
Total
Level 1 | Level 2 | Level 3 | Total | |||
1,471 | - | 173 | 1,645 | |||
- | - | - | - | |||
- | 17,406 | - | 17,406 | |||
1,471 | 17,406 | 173 | 19,051 |
(Millions of yen)
As at 29 February 2020
Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value
through profit or loss
Financial assets and financial liabilities designated as hedging instruments - Fair value
Total
Level 1 | Level 2 | Level 3 | Total | |||
1,186 | - | 171 | 1,358 | |||
- | 3,416 | - | 3,416 | |||
- | 43,944 | - | 43,944 | |||
1,186 | 47,361 | 171 | 48,719 |
For the valuation of Level 2 derivative financial instruments for which a market value is available, we use a valuation model that uses observable data on the measurement date using inputs such as interest rates, yield curves, currency rates and volatility in comparable instruments.
Financial instruments classified as Level 3 consist mainly of unlisted shares. The fair values of unlisted shares are measured by the division responsible in the Group according to the Group's accounting policy, etc., using the immediately preceding figures available for each quarter.
There were no significant changes due to the purchase, sale, issuance and settlement of Level 3 financial instruments, and no transfers between Levels 1, 2 and 3.
16. Commitments for Expenditures
The Group had the following commitments at each reporting date:
(Millions of yen) | |||
As at | As at | ||
31 August 2019 | 29 February 2020 | ||
Commitment for the acquisition of property, plant and equipment | 13,552 | ||
7,382 | |||
Commitment for the acquisition of intangible assets | 4,340 | 3,184 | |
Total | 11,723 | 16,736 |
17. Subsequent Events
Impact of temporary stores closure after March 2020 due to the Global Spread of COVID-19
UNIQLO International
In response to the global spread of COVID-19, governments of various countries have asked people to exercise voluntary restraint in their daily activities and have imposed various restrictions on going outdoors and general behavior since the middle of March. As a result, we made a decision to temporarily close the following stores: all 28 stores in Singapore from 7 April 2020, all 49 stores in Malaysia from 18 March 2020, up to a maximum of all 50 stores in Thailand from 22 March 2020, all 60 stores in the Philippines from 16 March 2020, all 30 stores in Indonesia from 27 March 2020, all three stores in India from 22 March 2020, both stores in Vietnam from 28 March 2020, and all 22 stores in Australia from 2 April 2020. As at 14 April 2020, operations were resumed at some stores in Indonesia.
In addition, we have temporarily closed all 62 UNIQLO stores in the United States and Canada from 17 March 2020.
- 37 -
In Europe as well, in response to requests from the governments of various countries from mid-March 2020, we have temporarily closed UNIQLO stores (97 out of 98 stores) in all EU countries except Sweden.
Global Brands
For the Theory business, mainly in the United States, we have temporarily closed all its stores from 17 March 2020. And for the COMPTOIR DES COTONNIERS business in Europe, we have also temporarily closed all its stores.
UNIQLO Japan and GU
Following the declaration of a state of emergency by the Government of Japan on 7 April 2020, for both UNIQLO Japan and GU segments, we have temporarily closed stores mainly in large shopping complexes in the relevant areas in Japan, while we continue to operate all other stores in other areas with shorter business hours.
For information on the impact of the spread of COVID-19 on the first six months of the current fiscal year, please refer to "3. Management Discussion and Analysis, 2. Financial Analysis, (1) Financial Position and Results of Operations."
Although a decrease in revenue is expected due to the impact of temporary store closures accompanying the spread of COVID- 19, it is difficult at present to reasonably estimate the impact on the Group's financial position, business performance and cash flows after the six months ended February 29 as the extent of the impact due to the rapid global expansion of COVID-19 is unknown.
2. Others
Dividends
The Company resolved to pay dividends from retained earnings at the meeting of the Board convened on 9 April 2020. The total amount of dividends paid and the amount per share are stated under "Financial Section 1. Interim Condensed Consolidated Financial Statements, Notes to the Interim Condensed Consolidated Financial Statements 9. Dividends."
- 38 -
(TRANSLATION)
Independent accountant's review report
14 April 2020
To the Board of Directors of FAST RETAILING CO., LTD.
Deloitte Touche Tohmatsu LLC
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
Koichi Okubo
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
Hirofumi Otani
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
Yohei Masuda
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have reviewed the interim condensed consolidated financial statements included in the Financial Section, namely, the interim condensed consolidated statement of financial position of FAST RETAILING CO., LTD. (the "Company") and its consolidated subsidiaries (collectively, the "Group") as of 29 February 2020 and the related interim condensed consolidated statements of profit or loss and statement of comprehensive income for the three-month and six-month periods then ended, statement of changes in equity and cash flows for the six-month period then ended, and the related notes.
Management's Responsibility for the Interim Condensed Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these interim condensed consolidated financial statements in conformity with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34"), pursuant to Article 93 of the "Rules Governing Term, Form and Preparation of Consolidated Quarterly Financial Statements", and for such internal control as management determines is necessary to enable the preparation of interim condensed consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Accountant's Responsibility
Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review. We conducted our review in accordance with quarterly review standards generally accepted in Japan. A review consists principally of making inquiries, primarily of management and persons responsible for financial and accounting matters, and applying analytical procedures and other quarterly review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in Japan. We believe that we have obtained the evidence to provide a basis for our conclusion.
Accountant's Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements referred to above do not present fairly, in all material respects, the condensed consolidated financial position of the Company and its consolidated subsidiaries as of 29 February 2020, and the condensed consolidated results of their operations for the three-month and six-month periods then ended, and their cash flows for the six-month period then ended in conformity with IAS 34.
Interest
Our firm and the engagement partners do not have any interest in the Company for which disclosure is required under the provisions of the Certified Public Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese language.
- 39 -
Attachments
- Original document
- Permalink
Disclaimer
Fast Retailing Co. Ltd. published this content on 14 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2020 08:22:06 UTC