Impairment Loss Incurred by Brasil Kirin and Revision of Consolidated Forecast for the Fiscal Year Ending December 2015

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1 Impairment Loss Incurred by Brasil Kirin and Revision of Consolidated Forecast for the Fiscal Year Ending December 2015 December 21, 2015 Kirin Holdings Company, Limited 1

2 Summary Impairment Loss Incurred by Brasil Kirin Downward revision of full-year forecast of Brasil Kirin s operating income for the year Changes in the environment since the time of acquisition, decrease in sales volume Revision of Consolidated Forecast Copyright KIRIN HOLDINGS COMPANY, LIMITED. All rights reserved 2

3 Downward revision of full-year forecast of Brasil Kirin s operating income An increase in costs is estimated partly because Brasil Kirin has been conducting the pricing strategy and sales activity in response to the trend of consumption and its competitors, and partly because loss reserves were conservatively provided during this fiscal year with regard to accounts receivables owed by a certain wholesaler. As a result, the operating income forecast for the fiscal year has been revised downwards. Exchange rate has been revised to yen, the estimate of the end of this year. Operating Income (Operating loss) Revised forecast Full year forecast at 3Q Change B JPY * M BRL B JPY ** M BRL B JPY M BRL (17.4) (480) (9.8) (273) (7.6) (207) FY2014 result B JPY *** M BRL EBITDA (7.9) (219) * Exchange rate: yen ** Exchange rate: yen *** Exchange rate: yen Factors of the downward revision Further stagnation of consumption The extent of price increases made by competitors was less than expected Allocation of reserves regarding sales receivables owed by a certain wholesaler Copyright KIRIN HOLDINGS COMPANY, LIMITED. All rights reserved 3

4 Brasil Kirin s Impairment Loss Audits are currently ongoing, but impairment losses are expected to be incurred with regard revaluation of assets based on IFRS adopted in Brazil Projected Amount of Impairment Loss Approx. 3,881 M BRL (Approx B JPY) Brazilian economy [Expectation at time of acquisition] GDP growth in high single digits [Reevaluation assumptions] Stagnation will continue for several years Currency Neutral BRL continues to decrease in value Market environment Brasil Kirin s sales volume Market growth in mid-single digits Increase equal to market growth Sluggish growth, fierce competition Continued underperform the market Copyright KIRIN HOLDINGS COMPANY, LIMITED. All rights reserved 4

5 Impact of Brasil Kirin s Impairment Loss on Consolidated Results Impairment Losses of goodwill, and other assets will be incurred, but there will be no impact on cash flows for the year [IFRS] [J GAAP] Kirin Holdings Impairment Loss Approx. 3,881 M BRL (Approx B JPY) Approx B JPY in Impairment Loss reported Accumulated amortization Approx B JPY * On the consolidated balance sheet, the reporting of the impairment loss will result in a decrease in fixed assets relating to Brasil Kirin On the consolidated statement of profit and loss, Kirin Holdings expects to report approximately B JPY in special losses for this fiscal year (since the entire amount of goodwill will be impaired, no goodwill depreciation will be reported next term and later) Copyright KIRIN HOLDINGS COMPANY, LIMITED. All rights reserved 5

6 Revision of Consolidated Forecast for the Fiscal Year Ending December 2015 Reflected the downward revision of the forecast of Brasil Kirin s operating income for the year, etc. No change to ordinary income due to the upward revision of equity in earnings or losses of affiliates Report B yen in special losses as the expected amount of the effect on consolidated results from the Impairment Loss No change to the dividend forecast (Billion yen) FY2015 Full Year Consolidated Forecast Revised Forecast Forecast at 3Q Change Main cause for revision Sales 2, ,200.0 ーー Operating Income (80) Brasil Kirin revision for the year: (7.6) FY2014 Full year result YoY change 2, % % Ordinary Income ー Brasil Kirin revision for the year: (7.6) Equity in earning or loss of affiliates: % Net Income / Net loss (56.0) 58.0 (114.0) Amount of Impairment Loss: (114.0) 32.3 ー * FY2015 saw 22 billion yen reduction in goodwill amortization over FY2014 due to early application of the Revision of the Accounting Standards regarding Business Combinations. Normalized EPS Revised Forecast Forecast at 3Q Change Dividend forecast (No change) 110 yen 110 yen ー 38 yen for the year Copyright KIRIN HOLDINGS COMPANY, LIMITED. All rights reserved 6

7 この資料は投資判断の参考となる情報の提供を目的としたものであり投資勧誘を目的としたものではありません銘柄の選択投資の最終決定はご自身の判断でなさるようにお願いいたします This material is intended for informational purposes only and is not a solicitation or offer to buy or sell securities or related financial instruments. 7

8 Appendix: Full-year Forecast of Brasil Kirin s Financial Results for the Year FY2015 Full year Revised Forecast FY2014 full year result YoY change B JPY M BRL B JPY M BRL B JPY M BRL YoY change (%) Yen basis BRL basis FY2015 Full year forecast at 3Q B JPY M BRL Sales , ,987 (39.7) (133) (22.1) (3.3) ,854 Operating Income Before Goodwill Amortization, etc. Goodwill Amortization Brand Amortization Operating Income (10.6) (293) (20.6) (513) ーー (4.2) (117) (5.3) (118) (2.5) (69) (3.1) (69) 0.6 ー (17.4) (480) (18.9) (512) ーー (3.0) (86) (4.2) (117) (2.5) (69) (9.8) (273) EBITDA (21.6) (472) (95.2) (93.8) Consolidated period: Jan.-Dec. 2015; Currency exchange rate: yen (Jan.-Dec. 2014: yen) Copyright KIRIN HOLDINGS COMPANY, LIMITED. All rights reserved 8

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Company information Company information FASF member mark Document name Document and entity information Aug 2015 第 3 四半期決算短信日本基準 ( 連結 ) Filing date 20150710 Company name TRANSACTION CO., Ltd.