2016

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1 216

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3 Contents Management Policies and Strategies 2 Fiscal 216 in Review and Outlook for Fiscal Segment Information 9 Financial Results and Key Indicators (Consolidated) 14 Financial Results and Key Indicators (Nonconsolidated) 18 Consolidated Financial Statements 22 Nonconsolidated Financial Statements 26 Yamazaki Baking Network 29 Stock Information 34 Timeline 36 Company Data 37 Notes: 1. This Investors Guide contains discussions that include management plans, projections, strategies and estimates that are not historical facts. Projections of future performance are based on management extrapolations from current data, but actual future performance may differ materially from projections. 2. Yamazaki Baking Co., Ltd., prepares its accounts in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects from the application and disclosure requirements of International Accounting Standards. 1

4 Management Policies and Strategies President Nobuhiro Iijima What is our mission? What is my mission?

5 Management Policies and Strategies S ince our establishment, we have aspired to deliver excellent quality and outstanding service to consumers as a tangible reflection of a long-standing corporate philosophy that simply states, Provide good quality at a reasonable price. Put the customer fi rst. And we do this through the manufacture and sale of bread, sweet buns, Japanese and Western-style confectionery, biscuits, crackers, sembei (rice crackers), processed bread, prepared rice and processed noodles. To this end, we have always emphasized ambitious technological developments and a solid position from which to provide a stable supply of superb products throughout Japan, striving thereby to contribute to the health of the nation and achieve solid growth. There is a growing awareness of food safety and security among consumers and the public at large. In response, since 2 we have consistently reinforced food safety and hygiene systems, embraced division-specifi c product and marketing strategies, and promoted Nazenaze Kaizen a process of ongoing improvements guided by why-why analysis through subcommittees as business management approaches to build on these food safety and hygiene systems. We have also vigorously pursued developments in division-specifi c products and technologies, and directed concerted efforts into providing products and services that delight our customers. Currently, to address changes in society and the business environment of the 21st century, we are reemphasizing basic management policies (general and specifi c) that define our mission to contribute to social progress and cultural advancement through corporate activities and create an independent and autonomous organization with which we will move steadily toward achieving our stated mission. At the same time, to underpin these policies, we will embrace a Yamazaki-style of management appropriate for the 21st century that hinges on creating new value and new demand and fulfi lling our social mandate to move the business forward. To this end, we will be guided by the Yamazaki spirit, which requires us, from the perspective of good quality, reasonable price and customer fi rst, to prepare and deliver products ordered by suppliers for sale to their customers, even if we are faced with diffi culties or challenges. We will also take a scientifi c, rational and effective approach to business management that builds on evidence-based food safety and hygiene systems to practice, execute and proof division-specifi c product and marketing strategies, wherein all work begins from sowing seeds in accordance with the teaching of the Way to Life, as well as Nazenaze Kaizen through subcommittees. With regard to specifi c approaches to the operation of our businesses, we will adhere to nihon-date-no-5s, which combines the five-question business self-assessment tool created by management expert Peter Drucker and employed by plant management to oversee operations in each department, with 5S activities used by plant employees to target effi cient work spaces and work fl ows. (The S in 5S activities corresponds to five Japanese words starting with s : seiri, seiton, seiso, seiketsu and shitsuke.) We will also link division-specific product and marketing strategies that follow the teaching of the Way to Life with Peter Drucker s fi ve questions, asking not only What is our mission? but also What is my mission?, and promote integrated production and marketing activities. These efforts will reinforce internal management structures and establish an independent framework for cooperation in each division. Going still further, we will strive to practice, execute and proof the effectiveness of daily operations by holding fast to the Yamazaki spirit, which prioritizes quality, through products and services, under the corporate philosophy of providing good quality at a reasonable price and putting the customer fi rst, and by following the teaching of the Way to Life, which guides us to embrace change and create new value and new consumer demand by applying inherent wisdom and knowledge. Sustained adherence to these principles and methodologies is sure to yield steady improvements in our business results. We are committed to allocating earnings based on a comprehensive assessment of our operating results and business development goals and to maintaining the necessary internal reserves to reinforce our operating foundation. At the same time, we believe fi rmly in providing stable returns for shareholders. With this in mind, we will continue to earmark internal reserves to expand production facilities, strengthen our distribution and sales systems, and cultivate new businesses. 3 Management Policies and Strategies

6 Fiscal 216 in Review and Outlook for Fiscal YBC YBC Fiscal 216 in Review The overall economic environment in Japan during fi scal 216, ended December 31, 216, was characterized by the impact of an economic slowdown in China and sustained yen appreciation, with business conditions drawing to a standstill. But after the U.S. presidential election, the yen reversed course and signs of recovery began to appear in some domestic sectors. In the bread and confectionery sectors, sales competition intensified amid a sustained preference among consumers to seek out low prices. Meanwhile, in the convenience store sector, sales competition that crossed business formats created a challenging operating environment. Against this backdrop, the Yamazaki Baking Group resourcefully worked to promote division-specifi c product and marketing strategies integrating sales and production activities. These strategies include enhancing quality and developing new products, expanding sales of mainstay products, particularly Gensen Hyappin (1 fi ne Yamazaki-brand products), and introducing products that present high quality and high added value while still reasonably priced to please customers seeking low prices. In addition, we emphasized greater effi ciency in production and distribution processes, with a focus on top-selling items, to ensure the right number of items for the aim of reducing the cost of production and sales, and unrolled effective marketing campaigns that showcased the quality aspect of Group products. Our goal was, ultimately, to achieve higher sales. In the confectionery business, Yamazaki-Nabisco Co., Ltd., was renamed Yamazaki Biscuits Co., Ltd., effective September 1, 216. The company debuted new products, including Levain and Levain Classical crackers as well as YBC Stand Packs, a sandwich biscuit series, and energetically promoted sales activities. Drawing on the Yamazaki Baking Group s composite strengths, Yamazaki Biscuits worked to establish a fi rm footing and recogniz- 4

7 LLC able presence in the market, and ultimately expand the volume of products under the new YBC brand. In the Daily Yamazaki convenience store business, efforts were made to capitalize on the strengths of the Yamazaki Baking Group to enhance the quality of bread, Japanese-style and Western-style confectionery, rice dishes, sandwiches and noodle dishes, particularly items under the Yamazaki Best Selection label, and to develop new products. An emphasis was also placed on enriching the assortment of products at each store. The Yamazaki Spring Bread Fair and other campaigns were used as opportunities to attract customers, successfully leading to higher in-store sales. In addition, we endeavored to improve store operations and expand the store network by reorganizing regions to have each region covered by one factory, and work as one in order to achieve greater success. On December 1, 216, we marked the grand opening of the Yamazaki Baking Creation Center Central Laboratory, Training Institute, and the Tojuro Iijima (founder) Memorial LLC (Life, Light and Creation) Hall on the grounds of the old Ichikawa Factory, where our operations originally began. We will turn this facility into a hub for R&D that fuels technological innovation within our corporate group. We will utilize it as a portal to pass on technologies to the next generation. The Yamazaki Baking Creation Center will also be a place to cultivate the skills of our human resources. It will be a 21st century outpost an advance base under the Yamazaki banner. Fiscal 216 was another milestone year of higher sales and higher income for the Yamazaki Baking Group. On a consolidated basis, net sales rose 1.4% year on year, to 1,41,943 million, operating income jumped 3.3%, to 35,169 million, ordinary income climbed nearly the same amount 3.4% to 36,95 million, and profi t attributable to owners of parent soared 63.8%, to 18,175 million. 216 in Review and Outlook for Fiscal Fiscal

8 Fiscal 216 in Review and Outlook for Fiscal Outlook for Fiscal 217 Looking ahead, the domestic economy is likely to maintain a gradual recovery tone, buoyed by positive employment news and an improvement in personal income, which should lead to a rally in consumer spending. But existing concerns, such as political and economic uncertainty overseas, make it impossible to accurately predict the direction that business conditions will take. In the bread and confectionery sectors, sales competition is sure to intensify due to the ongoing preference among consumers for low prices. In the convenience store sector, the big chains appear committed to continuing their aggressive store-opening strategies, which will lead to heightened competition among stores and a more challenging operating environment. Given these conditions, the Yamazaki Baking Group remains actively committed to improving quality and developing new products while expanding sales of mainstay products, especially Gensen Hyappin (1 fi ne Yamazakibrand products). We will continue to spotlight divisionspecific product and marketing strategies integrating sales and production activities along with subcommitteedriven Nazenaze Kaizen (an ongoing process of improvements guided by why why analysis), with an emphasis on measures that deal with polarization of consumption by developing high-quality, high-value-added products as well as launching products that are considered to be reasonably priced by consumers. In addition, the companies under the Group umbrella will strive with singular purpose to reinforce internal controls and enhance the effi ciency of operations, while always pushing forward to achieve the Group mission to create new value and new demand. Division-specifi c product and marketing strategies for fi scal 217 are described below. In the bread business, we will strive to expand sales by encouraging stores to set up special corners to showcase these items, especially our three main brands Royal Bread, Cho-Hojun and Double Soft and by highlight- 6

9 1 2 ing the quality aspect of these products. We will reinforce Royal Bread with the debut of Royal Bread Premium, an upgraded version made with higher grade flour. We will raise the profi le of our high-quality, high-value-added Yamazaki Gold Series, which saw the addition of Choco Gold at the end of 216 to complement the existing Raisin Gold and Cheese Gold varieties, while promoting development of bread for health-conscious customers, to achieve further growth in sales. In the sweet buns business, we will endeavor to enhance the quality of existing products through the introduction of new technologies while promoting product development geared to market trends. We will strengthen efforts to boost the handling volume of best-selling items, especially Gensen Hyappin (1 fine Yamazaki-brand products), and emphasize the development of highquality, high-value-added products and products that are considered to be reasonably priced by consumers in an effort to effectively deal with the polarization of consumption and thereby expand sales results. We are also committed to applying technology unique to the Yamazaki Baking Group and a levain starter in developing items, such as high-quality hard rolls and artisan bread, to elicit new demand. In the Japanese-style confectionery business, we will strive to kindle greater interest for our mainstay kushidango (skewered rice dumplings), daifuku (rice cakes with sweet bean fi lling) and manju (steamed cakes with fi lling) while reviewing the quality and standards applied to the Yamazaki Kinsei series of carefully prepared treats using excellent ingredients and introducing new products to enrich the lineup. These efforts will cement Yamazaki as a Japanese-style confectionery brand. In addition, we will enrich the selection of items in reasonably priced economy-sized packages, develop seasonal items, and encourage stores to enhance the presentation of products on the sales fl oor. These efforts should lead to higher sales. In the Western-style confectionery business, we will work to expand sales of our mainstay products, such 7Fiscal 216 in Review and Outlook for Fiscal 217

10 Fiscal 216 in Review and Outlook for Fiscal YBC 3 3 AIB as the Marugoto Banana series, which features a whole banana wrapped in a thin, round slice of sponge cake, and two-serving package of cakes. We will also strive to increase the handling volume of mainstay Premium Sweets products and introduce new products to expand our lineup. These efforts should contribute to higher sales. In addition, we will strengthen efforts to develop products specifi cally for convenience stores to widen transaction volume. In the processed bread, prepared rice and processed noodles business, we will energetically roll out new products, capitalizing on greater stability in the quality of rice dishes, thanks to the installation of the newest equipment at Sun-Delica Co., Ltd., and higher quality sandwich bread. In addition, we will reinforce marketing capabilities with an emphasis on suggestions for seasonal products and efforts to raise products to best-selling status. Our objective is to expand the volume of transactions with convenience store chains. In the biscuits, crackers, sembei (rice crackers) and other merchandise business, we will promote categoryspecifi c brand strategies drawing on the featured product lines of each Group company. At the same time, we will capitalize on the composite strengths of the Group to grow the YBC brand, establish a fi rm footing and recognizable presence in the market, and ultimately increase sales. In the Daily Yamazaki convenience store business, the objective is to maximize the composite strengths of the Group to achieve a higher level of quality and to develop new items, with an emphasis on the Yamazaki Best Selection, and thereby provide the kind of products that delight customers. Another objective is for stores to hone a sharper competitive edge, mainly by utilizing Daily Bakery capabilities to enrich the selection of straight-outof-the-oven bread and by remodeling store interiors. A priority will also be placed on store development that concentrates on key areas by integrating each factory with its surrounding region. This approach should help expand the store network. Construction of the Kobe Factory at the Seishin Industrial Park, in Nishi-ku, Kobe, is moving forward, with operations scheduled to start in March 218. The factory will be equipped with the latest in baking equipment and facilities, under design standards conforming to the American Institute of Baking (AIB) International for food hygiene and food safety, and will supply bread and sweet buns as a hub factory in the Kansai region. The Kobe Factory will be a key component of an effi cient production and distribution structure for the future. Given the plans outlined above, we expect to post the following consolidated results in fi scal 217: net sales of 1,51 billion, operating income of 37 billion, ordinary income of 38 billion, and profi t attributable to owners of parent of 19.7 billion.

11 Segment Information Percentage of Net Sales by Segment Net Sales by Segment Retail business 6.% Other businesses 1.% Food business 1,2, Retail business Other businesses (Millions of yen) 9, Food business Other businesses 45, 3, 15, 15, 212 Food business 93.% Operating Income by Segment Retail business Elimination and corporate (Millions of yen) Net Sales by Segment 6, 3, Food business 3, 24, 18, 12, 6, Retail business Other businesses (No. of employees) (Millions of yen) Years Ended December Food business 875,64 896, ,85 953,61 969,941 Retail business 67,436 63,265 63,598 63,918 61,944 Other businesses 8,425 8,71 9,562 9,671 1,57 Net sales 951,52 968,28 995,11 1,27,199 1,41,943 Operating Income by Segment (Millions of yen) Years Ended December Food business 23,455 16,2 21,297 26,847 34,22 Retail business (691) (1,117) (2,33) (1,395) (852) Other businesses 1,332 1,155 1,326 1,165 1,43 Elimination and corporate Operating income 24,754 16,577 2,876 27,1 35,169 Number of Employees by Segment Number of Employees by Segment (No. of employees) Years Ended December Food business 23,417 23,917 24,274 24,733 25,593 Retail business Other businesses Total number of employees 24,827 25,356 25,693 26,222 27,18 Segment Information Segment 9 9

12 Segment Information 9, % Food Business Net sales: 969,941 million, up 1.7% from fiscal Bread (Net sales: 94,1 million, up 2.2% from fiscal 215) In the bread category, our focus was on expanding sales of mainstay products, particularly the three main brands Royal Bread, Cho-Hojun and Double Soft by highlighting the quality aspect. We used higher grade fl our to improve the quality of Double Soft and were rewarded with higher sales for this brand, while receiving strong contributions from new high-quality, high-value-added products Raisin Gold and Cheese Gold. As a result, segment sales showed a favorable increase year on year. 3, Sweet Buns (Net sales: 356,341 million, up 1.3% from fiscal 215) In the sweet buns category, demand for mainstay products slowed as we entered the second half of fi scal 216, but measures to reinvigorate demand, such as efforts to improve the quality of bread used in Lunch Pack and make better dough for the Usukawa Mini Pan series of thin-walled buns with lots of filling, paid off, and sales trended upward from October. We marked growth in sales of pastries, such as White Danish Chocola (soft, bun-shaped pastries with chocolate inside), and recorded a solid contribution from a new series of table rolls called Hokkaido-san Komugi no Butter Roll (butter rolls made with flour from Hokkaido-grown wheat) as well, underpinning higher segment sales. 1

13 9, Net sales in the Food Business segment rose 1.7% from fiscal 215, to 969,941 million, and operating income increased 27.4%, to 34,22 million , Japanese-Style Confectionery (Net sales: 71,217 million, up 1.9% from fiscal 215) In the Japanese-style confectionery category, sales of our mainstay kushidango (skewered rice dumplings), daifuku (rice cakes with sweet bean filling) and manju (steamed cakes with fi lling) moved in a favorable direction, accompanied by the upgraded Hotcake (pancakes). Sales of our mainstay Gu Tappuri series of steamed buns full of fi lling were solid, as were sales of a new product, Tokusen Nikuman, a steamed bun with top-quality meat filling. Sales of chukaman (Chinese-style buns served warm) rebounded, helping to lift segment sales. Western-Style Confectionery (Net sales: 133,993 million, up.1% from fiscal 215) In the Western-style confectionery category, the Marugoto Banana series, featuring a whole banana wrapped in a thin, round slice of sponge cake, and two-serving package of cakes attracted favorable demand. Snack cakes, particularly Yawaraka Tamago no Chiffon Cake (soft and fluffy, egg-based cake), also sold well, and Premium Sweets, which features mainstay items, posted signifi cant growth. Segment Information Segment 11

14 Segment Information 1, Processed Bread, Prepared Rice and Processed Noodles (Net sales: 148,311 million, up 4.9% from fiscal 215) In the processed bread, prepared rice and processed noodles category, efforts were again directed toward the installation of the latest rice-cooking equipment at Sun- Delica Co., Ltd., boosting the quality of prepared rice dishes. We recorded a larger volume of transactions with convenience stores, which underpinned a commendable increase in sales. 1, Biscuits, Crackers, Sembei and Other Merchandise (Net sales: 165,976 million, up.8% from fiscal 215) 9YBC In the biscuits, crackers, sembei (rice crackers), and other merchandise business, sales were favorable, reflecting a vigorous approach to product launches under core brands, including Country Ma am soft cookies from Fujiya Co., Ltd. Yamazaki Biscuits Co., Ltd., worked to expand sales of snacks, such as Chip Star potato chips, and from September 216 focused on establishing a deeper presence in the market with new products, notably Levain and YBC Stand Packs. 12

15 % Retail Business Net sales: 61,944 million, down 3.1% from fiscal , , % In Daily Yamazaki convenience store operations, we stressed efforts to boost quality and develop new products, with an emphasis on the Yamazaki Best Selection label. Efforts focused on raising the quality of rice dishes, sandwiches and noodle dishes and on enriching the assortment of products on display, including freshly baked bread such as Shio Butter Pan (salty butter roll). Refl ecting vigorous efforts to open new stores, the number of stores reversed upward from July, with the network reaching 1,571 stores a net increase of 1 stores as of December 31, 216. Breaking down the total number by store type, Daily Yamazaki accounted for 1,232 stores, down 51; New Yamazaki Daily Stores accounted for 3, up 7; and Yamazaki Daily Stores accounted for 39, down nine. Based on these results, the retail business generated net sales of 61,944 million, down 3.1% year on year, largely due to a drop in the number of directly operated stores. However, thanks to successful costcutting measures by the head offi ce and more directly operated stores brought under priority control, we saw improvement in earnings. The operating loss decreased, settling at 852 million, compared with 1,395 million a year earlier. Other Businesses Net sales: 1,57 million, up 4.% from fiscal 215 Net sales from other business reached 1,57 million, up 4.% from fi scal 215, and operating income increased 22.7%, to 1,43 million. Segment Information Segment 13

16 Financial Results and Key Indicators (Consolidated) Sales & Profits Net sales Gross profit Operating income Ordinary income Profit attributable to owners of parent 1,2, (Millions of yen) 45, (Millions of yen) 9, 3, 6, 3, 15, Depreciation and amortization & Capital investment Depreciation and amortization Capital investment Total stockholders equity & Liability Total stockholders equity Total liabilities Interest-bearing debt 6, (Millions of yen) 45, (Millions of yen) 4, 3, 2, 15, (Millions of yen) Years Ended December Net sales 951,52 968,28 995,11 1,27,199 1,41,943 Gross profi t 345, , , ,561 38,174 Operating income 24,754 16,577 2,876 27,1 35,169 Ordinary income 26,19 18,713 22,77 28,33 36,95 Profi t attributable to owners of parent 1,79 11,335 12,48 11,95 18,175 Depreciation and amortization 4,98 4,136 38,482 36,968 36,698 Capital investment 39,936 38,663 38,62 38,55 45,253 Total stockholders equity 241, ,38 245,87 272, ,776 Total liabilities 392, ,32 433,73 45,382 4,963 Interest-bearing debt 14,92 129, , ,556 1,26 14

17 Number of Employees & Profits per Employee Number of employees Operating income per employee Profitability Gross profit margin Operating margin Ordinary income margin Net income margin (No. of employees) 3, (Ten thousands of yen) ( ) 36 2, , Profitability Return on equity (ROE) Return on assets (ROA) ( ) Ratio of cost of sales to net sales Ratio of selling, general and administrative expenses to net sales (No. of employees, Yen, %) Years Ended December Number of employees 24,827 25,356 25,693 26,222 27,18 Operating income per employee (Yen) 997,7 66, ,524 1,29,718 1,293,958 % Gross profi t margin (%) 36.35% 35.8% 35.79% 35.88% 36.49% % Operating margin (%) % Ordinary income margin (%) % Net income margin (%) % Return on equity (ROE) (1) (%) % Return on assets (ROA) (2) (%) % Ratio of cost of sales to net sales (%) % Ratio of selling, general and administrative expenses to net sales (%) 1 ROE 1 2 ROA (1) ROE = Profit attributable to owners of parent (Average net assets Average non-controlling interests) 1 (2) ROA = Profit attributable to owners of parent Average total assets 1 ( ) 15 1 Financial Results and Key Indicators (Consolidated)

18 Financial Results and Key Indicators (Consolidated) Financial Stability Equity ratio Debt-to-equity ratio Interest coverage ratio 8 8 (Times) Cash Flows Net cash provided by operating activities Net cash provided by (used in) financing activities 8, Net cash used in investing activities (Millions of yen) Financial Indicators Price-earnings ratio 6 (Times) 4, , 15 8, (%, Times, Millions of yen) Years Ended December % Equity ratio (%) 36.87% 38.58% 35.1% 38.84% 39.61% % Debt-to-equity ratio (1) (%) Interest coverage ratio (2) (Times) Net cash provided by operating activities 54,995 47,967 64,757 55,416 62,763 Net cash used in investing activities (36,955) (33,32) (31,954) (34,669) (42,793) Net cash provided by (used in) fi nancing activities (9) (26,461) 61 (24,265) (24,224) Price-earnings ratio (Times) (1) Debt-to-equity ratio = Interest-bearing debt Total stockholders equity 1 2 (2) Interest coverage ratio = Net cash provided by operating activities Interest paid 16

19 Financial Indicators Price-book value ratio Net income per share 4 (Times) 1 (Yen) Financial Indicators Net assets per share Cash dividends per share Dividend payout ratio 1,6 1,2 8 4 (Yen) (Yen) (Times, Yen, %) Years Ended December Price-book value ratio (Times) Net income per share (Yen) Net assets per share (Yen) 1, , ,12.1 1, ,27.4 Cash dividends per share (Yen) Divident payout ratio (%) 32.55% 3.98% 29.15% 31.65% 21.73% Financial Results and Key Indicators (Consolidated)

20 Financial Results and Key Indicators (Nonconsolidated) Sales & Profits Net sales Gross profit Operating income Ordinary income Net income 8, (Millions of yen) 3, (Millions of yen) 6, 2, 4, 2, 1, Depreciation and amortization & Capital investment Depreciation and amortization Capital investment Total stockholders equity & Liability Total stockholders equity Total liabilities Interest-bearing debt 4, (Millions of yen) 3, (Millions of yen) 3, 2, 2, 1, 1, (Millions of yen) Years Ended December Net sales 63,89 659, ,538 72,25 735,13 Gross profi t 196,123 21,66 228, , ,413 Operating income 15,396 11,68 12,82 17,672 23,428 Ordinary income 18,247 15,53 16,265 2,548 26,341 Net income 8,139 7,56 7,673 9,239 14,724 Depreciation and amortization 25,763 24,835 27,378 25,153 24,469 Capital investment 25,261 22,827 25,341 21,987 29,722 Total stockholders equity 23,99 237, , , ,87 Total liabilities 229, ,335 28, ,92 25,764 Interest-bearing debt 7,844 77,597 84,369 67,55 52,53 18

21 Number of Employees & Profits per Employee Number of employees Operating income per employee Profitability Gross profit margin Operating margin Ordinary income margin Net income margin (No. of employees) 2, (Ten thousands of yen) ( ) 15, , 8 4 5, Profitability Return on equity (ROE) Return on assets (ROA) 1 ROE 1 2 ROA 1 ( ) Ratio of cost of sales to net sales (1) ROE = Net income Average net assets 1 (2) ROA = Net income Average total assets 1 Ratio of selling, general and administrative expenses to net sales (No. of employees, Yen, %) Years Ended December Number of employees 16,638 17,521 17,654 17,869 18,628 Operating income per employee (Yen) 925, , , ,986 1,257,727 % Gross profi t margin (%) 31.9% 31.85% 32.9% 32.8% 33.38% % Operating margin (%) % Ordinary income margin (%) % Net income margin (%) % Return on equity (ROE) (1) (%) % Return on assets (ROA) (2) (%) % Ratio of cost of sales to net sales (%) % Ratio of selling, general and administrative expenses to net sales (%) ( ) 19 1 Financial Results and Key Indicators (Nonconsolidated)

22 Financial Results and Key Indicators (Nonconsolidated) Financial Stability Current ratio Ratio of total fixed assets to total stockholders equity Equity ratio Debt-to-equity ratio 2 ( ) 6 ( ) Financial Indicators Price-earnings ratio Price-book value ratio 8 (Times) 4 (Times) (%, Times) Years Ended December % Current ratio (%) 94.82% 86.24% 98.68% 98.71% 92.66% % Ratio of total fi xed assets to total stockholders equity (%) % Equity ratio (%) % Debt-to-equity ratio* (%) Price-earnings ratio (Times) Price-book value ratio (Times) Debt-to-equity ratio = Interest-bearing debt Total stockholders equity 1 * 2

23 Financial Indicators Net income per share Net assets per share 8 (Yen) 1,6 (Yen) 6 1, Financial Indicators Cash dividends per share Dividend payout ratio (Yen) (Yen, ) Years Ended December Net income per share (Yen) Net assets per share (Yen) 1, , , , ,252.6 Cash dividends per share (Yen) % Dividend payout ratio (%) 43.16% 46.45% 45.76% 38.% 26.83% 21 2 Financial Results and Key Indicators (Nonconsolidated)

24 Consolidated Financial Statements Consolidated Balance Sheets (Millions of yen) December Assets Current assets: Cash and deposits 92,784 82, , ,173 17,327 Notes and accounts receivable 95,986 98,596 15,471 17,54 16,693 Merchandise and finished goods 1,154 1,668 11,479 1,868 1,928 Work in process Raw materials and supplies 8,91 9,897 9,889 9,72 9,255 Deferred tax assets 3,58 3,541 3,523 3,845 4,27 Other current assets 14,75 13,54 13,116 12,965 12,566 Allowance for doubtful accounts (593) (48) (452) (587) (365) Total current assets 226, ,9 259, , ,45 Fixed assets: Tangible fixed assets: Buildings and structures 33,77 341, , , ,128 Accumulated depreciation (243,12) (252,865) (257,82) (263,58) (267,778) Buildings and structures, net 87,64 88,72 86,375 84,435 94,349 Machinery, equipment and vehicles 426, , ,29 457,41 466,2 Accumulated depreciation (356,63) (368,745) (375,312) (384,352) (392,45) Machinery, equipment and vehicles, net 7,792 71,198 71,977 73,49 73,749 Tools, furniture and fixtures 26,51 26,837 27,192 27,638 29,528 Accumulated depreciation (22,925) (23,465) (23,573) (23,541) (23,88) Tools, furniture and fixtures, net 3,126 3,371 3,619 4,96 5,647 Land 112, , ,68 115, ,43 Lease assets 3,78 32,97 29,819 23,298 19,999 Accumulated depreciation (14,927) (17,673) (17,921) (14,264) (12,571) Lease assets, net 15,852 14,423 11,897 9,33 7,427 Construction in progress 3,75 3,563 5,816 9,982 6,97 Total tangible fixed assets 293, , , ,269 33,72 Intangible fixed assets: Goodwill 17,165 17,471 14,88 13,77 12,436 Other fixed assets 14,117 13,693 12,17 1,535 9,228 Total intangible fixed assets 31,283 31,165 26,988 24,243 21,664 Investments and other assets: Investment securities 44,219 5,952 54,479 7,658 73,757 Long-term loans receivable Net defined benefit asset Deferred tax assets 25,112 25,767 32,59 21,113 24,428 Other investments and other assets 37,232 35,854 34,932 32,831 31,114 Allowance for doubtful accounts (2,814) (2,543) (2,623) (2,719) (2,799) Total investments and other assets 14,331 11, , , ,472 Total fixed assets 429, , , , ,84 Total assets 655,78 656,629 72,49 7,997 73,886 22

25 Liabilities Current liabilities: (Millions of yen) Notes and accounts payable 75,51 73,725 79,378 78,93 78,799 Short-term loans payable 59,759 6,276 61,34 61,424 59,384 Lease obligations 5,55 5,367 4,568 3,77 2,783 1 Current portion of bonds 1,234 1,234 1,374 1, Accrued income tax 5,848 2,67 7,655 7,874 8,188 Accrued expenses 34,145 35,4 37,489 38,291 38,493 Allowance for employees bonuses 3,388 3,421 4,18 4,92 5,93 Reserve for sales promotion expenses ,157 Allowance for loss on store closure Asset retirement obligations Other current liabilities 35,16 35,51 43,721 42,449 45,343 Total current liabilities 22, ,781 24,35 24,5 239,636 Long-term liabilities: Bonds 3,699 2,465 2, Long-term loans payable 53,327 44,129 53,695 39,172 26,121 Lease obligations 11,13 9,692 7,818 5,768 4,837 Allowance for employees retirement benefits 85,999 89,485 Reserve for retirement benefits for directors and corporate auditors Provision for environmental measures Net defined benefit liability Asset retirement obligations Other long-term liabilities Total long-term liabilities Total liabilities Net assets Stockholders equity Stockholders equity: Common stock Capital surplus Earned surplus Treasury stock Total stockholders equity Accumulated other comprehensive income: Net unrealized holding losses on other securities Deferred gains or losses on hedges Revaluation reserve for land Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 3,359 3,915 1, , ,591 11,14 9, ,758 (762) 232,686 9, (396) 9,51 21, , ,78 3,423 4,23 9, , ,32 11,14 9,676 22,19 (88) 239,91 13, (161) 13,47 22, , ,629 3, ,589 4,268 9, ,38 433,73 11,14 9, ,556 (826) 248,42 16, (185) (18,616) (2,613) 22, ,318 72,49 3, ,12 4,19 9,48 165,376 45,382 11,14 9,676 24,481 (87) 26,32 27,767 (7) (15,923) 11,981 23, ,614 7,997 3, ,49 4,384 9,95 161,327 4,963 11,14 9, ,145 (895) 274,93 25, (397) (21,281) 3,845 24,145 32,922 73,886 Consolidated Financial Statements 23

26 Consolidated Financial Statements Consolidated Statements of Income (Millions of yen) Years Ended December Net sales 951,52 968,28 995,11 1,27,199 1,41,943 Cost of sales 65, , , , ,768 Gross profit 345, , , ,561 38,174 Selling, general and administrative expenses 321,112 33,77 335, , ,4 Operating income 24,754 16,577 2,876 27,1 35,169 Nonoperating income 3,639 4,26 3,717 2,973 3,216 Interest income Dividend income Income from lease of fixed assets Foreign exchange gains Equity in earnings of affiliates Other nonoperating income 1,38 1,575 1,423 1,239 1,291 Nonoperating expenses 2,284 2,7 1,822 1,671 1,48 Interest expense 1,787 1,691 1,46 1,288 1,21 Other nonoperating expenses Ordinary income 26,19 18,713 22,77 28,33 36,95 Extraordinary gains 1, , Gain on sales of fixed assets Gain on transfer of benefit obligation relating to employees pension fund 9, Gain on sales of investment securities Reversal of provision for loss on guarantees 1,6 Subsidy income 245 Other 88 1, Extraordinary losses 3,97 2,456 7,966 3,536 5,62 Loss on sales and disposal of fixed assets 1,971 1,73 2,64 1,817 2,162 Earthquake-related expenses 23 Impairment loss ,121 1,322 1,52 Loss on disaster 826 Amortization of goodwill 1,711 Loss on revision of retirement benefit plan 1,293 Loss on closure of stores 214 Loss on revaluation of investment securities 247 Expenses related to change of trade name 661 Laboratory relocation expenses 572 Other extraordinary losses Income before income taxes 24,116 16,447 25,678 25,588 32,634 Income, residential and enterprise taxes 11,573 7,121 1,655 12,271 12,88 Corporate tax adjustment 294 (2,914) 2,231 1, Profit 12,248 12,24 12,791 12,25 19,568 Profit attributable to non-controlling interests 1, ,11 1,393 Profit attributable to owners of parent 1,79 11,335 12,48 11,95 18,175 Consolidated Statements of Comprehensive Income (Millions of yen) Years Ended December Profit 12,248 12,24 12,791 12,25 19,568 Other comprehensive income Valuation difference on available-for-sale securities 2,569 4,176 2,635 11,648 (2,35) Deferred gains or losses on hedges (23) 6 Foreign currency translation adjustment (17) (694) Remeasurements of defined benefit plans 3,49 (5,366) Share of other comprehensive income of associates accounted for using equity method Total other comprehensive income 2,631 4,734 2,88 14,819 (8,38) Comprehensive income 14,88 16,974 15,599 27,25 11,187 Comprehensive income attributable to Owners of the parent 13,296 15,682 14,645 25,69 1,39 Non-controlling interests 1,583 1, ,335 1,148 24

27 Consolidated Statements of Cash Flows (Millions of yen) Years Ended December Cash flows from operating activities: Income before income taxes 24,116 16,447 25,678 25,588 32,634 Depreciation and amortization 4,98 4,136 38,482 36,968 36,698 Impairment loss ,121 1,322 1,52 Loss on disaster 826 Earthquake-related expenses 23 Expenses related to change of trade name 661 Laboratory relocation expenses 572 Amortization of goodwill 1,224 1,356 3,68 1,266 1,271 (Decrease) increase in allowance for doubtful accounts (917) (383) 3 23 (141) (Decrease) increase in allowance for employees bonuses (52) (Decrease) increase in allowance for employees retirement benefits 3,567 3,189 (Decrease) increase in net defined benefit liability (7,59) 2,58 3,2 (Decrease) increase in reserve for loss on guarantees (1,377) (Decrease) increase in reserve for retirement benefits for directors and corporate auditors Interest and dividend income (798) (9) (1,21) (1,66) (1,36) Interest expense 1,787 1,691 1,46 1,288 1,21 Subsidy income (245) Loss (gain) on sales and valuation of investment securities (768) (322) (443) Equity in (earnings) losses of affiliates (734) (638) (275) (85) (254) Loss (gain) on sales and retirement of noncurrent assets 1,971 1,659 2,25 1,744 2,74 Loss (gain) on valuation of investment securities Loss on valuation of stocks of subsidiaries and affiliates 25 Decrease (increase) in trade receivables (781) 1,739 (5,846) (1,56) 17 Decrease (increase) in inventories (96) (734) (1,422) (Decrease) increase in accounts payable 763 (2,623) 4, (83) (Decrease) increase in accrued consumption tax (355) (417) 7,432 (2,618) (2,99) (Decrease) increase in deposits on rental properties (66) Other 2,35 (2) 726 (77) 979 Total 71,156 6,826 69,861 67,248 76,42 Interest and dividends received ,22 1,68 1,37 Cash and cash equivalents at end of period 89,25 79,25 112,181 18,716 14,344 Interest paid (1,817) (1,71) (1,397) (1,314) (1,35) Income taxes paid (14,943) (12,48) (4,728) (11,586) (13,221) Other (23) (419) Net cash provided by operating activities 54,995 47,967 64,757 55,416 62,763 Cash flows from investing activities: Decrease (increase) in time deposits (289) (8) 1,373 Payments for purchase of tangible fixed assets (33,11) (31,119) (31,141) (33,89) (34,676) Proceeds from sales of tangible fixed assets Payments for purchase of intangible fixed assets (2,761) (3,1) (2,39) (1,772) (2,21) Payments for purchase of investment securities (2,156) (1,531) (1,21) (94) (7,698) Proceeds from sales of investment securities 2, Purchase of shares of subsidiaries resulting in change in scope of consolidation (648) Payments for purchase of shares in subsidiaries due to change in scope of consolidation 84 Purchase of investments in subsidiaries (1,13) (386) Payments for loans (9) (57) (129) (54) (126) Proceeds from collection of loans Other 1,742 2, ,263 (713) Net cash used in investing activities (36,955) (33,32) (31,954) (34,669) (42,793) Cash flows from financing activities: Increase (decrease) in short-term loans payable (787) (4,296) 1, (1,35) Proceeds from long-term loans payable 31,75 1,213 28,77 4,449 6,265 Repayment of long-term loans payable (21,49) (21,215) (2,67) (19,83) (19,941) Proceeds from issue of bonds 1, Payments for redemption of bonds (1,234) (1,234) (1,34) (1,374) (1,371) Repayment of lease obligations (5,368) (6,65) (5,654) (4,71) (3,998) Payments for purchase of treasury stock (42) (47) (18) (43) (25) Proceeds from sales of treasury stock 2 2 Dividends paid (3,291) (3,511) (3,513) (3,514) (3,56) Dividends paid to non-controlling interests (69) (36) (281) (12) (31) Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation (32) Net cash provided by (used in) financing activities (9) (26,461) 61 (24,265) (24,224) Effect of exchange rate changes on cash and cash equivalents (117) Net (decrease) increase in cash and cash equivalents 17,987 (11,313) 32,975 (3,465) (4,371) Cash and cash equivalents at beginning of period 7,943 89,25 79,25 112,181 18,716 Net increase in cash and cash equivalents resulting from merger of a consolidated subsidiary with nonconsolidated subsidiaries 274 Increase in cash and cash equivalents from newly consolidated subsidiary 1,313 Consolidated Financial Statements 25

28 Nonconsolidated Financial Statements Nonconsolidated Balance Sheets (Millions of yen) December Assets Current assets: Cash and deposits 41,566 36,741 63,381 61,111 53,296 Notes receivable trade Accounts receivable trade 68,5 66,167 71,173 71,59 73,57 Merchandise and finished goods 3,178 4,664 5,28 4,924 4,935 Work in progress Raw materials and supplies 4,37 4,636 4,772 4,33 4,27 Prepaid expenses 74 1,88 1,673 1,646 1,586 Deferred tax assets 1,665 1,822 2,323 2,57 2,635 Accrued income 8 12 Short-term loans Short-term loans to affiliated companies Accounts due 2,711 5,1 4,972 4,686 4,796 Other current assets 923 3,692 3,376 3,166 2,931 Allowance for doubtful accounts (48) (165) (161) (148) (91) Total current assets 123, , ,18 154, ,153 Fixed assets: Tangible fixed assets: Buildings 48,667 52,747 51,285 49,827 59,388 Structures 3,177 4,336 4,13 3,662 3,582 Machinery and equipment 47,419 45,771 44,253 42,761 42,497 Vehicles and delivery equipment 2,939 2,932 2,963 3,156 3,55 Tools, furniture and fixtures 2,128 2,257 2,472 2,843 4,359 Land 76,941 77,556 78,467 78,21 78,531 Lease assets 3,562 1,17 7,673 4,935 3,513 Construction in progress 2,726 2,822 5,587 8,752 4,182 Total tangible fixed assets 187, , , , ,56 Intangible fixed assets: Leaseholds Software 9,42 11,529 9,951 7,781 5,741 Lease assets Telephone rights Water supply facility use rights Other intangible fixed assets Total intangible fixed assets 1,39 12,82 11,93 8,799 6, Investments and other assets: Investment securities 29,95 36,465 4,397 55,926 51,394 Investments in affiliated companies 77,898 74,727 75,116 75,863 83,846 Investments in capital Long-term loans receivable 43 4 Long-term loans to affiliated companies 2,322 2,535 2,685 2,43 3,138 Bankruptcy and similar claims Long-term prepaid expenses 768 1,376 1,174 1, Deferred tax assets 17,232 17,425 16,551 8,771 1,461 Fixed lease assets 6,133 6,83 6,59 6,438 6,572 Real estate rental deposits 1,623 11,399 1,836 1,155 9,612 Guarantee deposits 67 5,22 5,546 5,7 4,657 Other investments and other assets 1,836 3,852 3,73 3,512 3,445 Allowance for doubtful accounts (471) (2,257) (2,414) (2,519) (2,749) Total investments and other assets 138,63 157,675 16, , ,38 Total fixed assets 335, ,91 367, , ,481 Total assets 459, , ,16 524,26 525,635

29 Liabilities Current liabilities: (Millions of yen) Notes payable trade 2,762 2,841 2,892 2,749 2,76 Accounts payable trade 44,65 51,835 54,39 54,354 54,965 Short-term loans payable 18,5 17,65 17,65 17,65 17,65 1 Current portion of long-term debt 12,832 14,598 14,24 13,432 12,832 Lease obligations 1,774 4,67 3,2 2,344 1,52 Other payables 3,466 4,74 5,27 4,3 5,376 Accrued income tax 3, ,561 5,43 5,691 Accrued consumption tax 2,161 2,391 7,369 6, 4,22 Accrued expenses 26,591 25,977 27,46 27,648 27,76 Deposits payable 3,61 9,33 9,241 9,155 7,893 Allowance for employees bonuses 2,37 2,39 3,44 3,819 3,957 Asset retirement obligations Employees deposits received 6,22 6,229 6,25 6,212 6,234 Notes payable facilities 2,722 2,65 2,161 3,16 8,132 Other current liabilities ,11 1,4 1,15 Total current liabilities 13,95 145, , , ,897 Long-term liabilities: Long-term loans payable 29,868 28,62 38,596 25,164 12,332 Lease obligations 2,118 6,431 4,692 2,73 1,934 Allowance for employees retirement benefits 61,73 66,237 67,98 63,868 66,458 Reserve for retirement benefits for directors and corporate auditors 2,371 2,524 2,534 2,67 2,819 Environmental expenses Asset retirement obligations 428 3,267 3,277 3,18 3,137 Long-term deposits on rental properties 2,586 2,961 Other long-term liabilities 1,66 4,23 3,982 4,141 Total long-term liabilities 99,13 111,19 121,221 11,528 9,867 Total liabilities 229, ,335 28, ,92 25,764 Net assets Stockholders equity Stockholders equity: Common stock 11,14 11,14 11,14 11,14 11,14 Capital surplus: Capital reserve 9,664 9,664 9,664 9,664 9,664 Other capital surplus Total capital surplus 9,676 9,676 9,676 9,676 9,676 Earned surplus: Legal reserve 2,753 2,753 2,753 2,753 2,753 Other reserves Reserve for dividends Reserve for severance payments Reserve for deduction entries Special reserve 187,78 192,48 196,48 2,68 21,48 Unappropriated retained earnings 9,33 8,382 8,548 14,219 15,622 Total earned surplus 2,673 24,722 28, ,78 229,993 Treasury stock (762) (88) (826) (87) (895) Total stockholders equity 22,61 224,64 228, ,6 249,788 Valuation and translation adjustments and others: Net unrealized holding gains on other securities 9,497 13,389 15,92 27,332 25,82 Total valuation and translation adjustments and others 9,497 13,389 15,92 27,332 25,82 Total net assets 23,99 237, , , ,87 Nonconsolidated Financial Statements 27

30 Nonconsolidated Financial Statements Nonconsolidated Statements of Income (Millions of yen) Years Ended December Net sales 63,89 659, ,538 72,25 735,13 Cost of sales 434, ,46 466, , ,69 Gross profit 196,123 21,66 228, , ,413 Selling, general and administrative expenses 18, , ,48 218, ,984 Operating income 15,396 11,68 12,82 17,672 23,428 Nonoperating income 3,943 4,653 4,685 4,69 3,977 Interest income Dividend income 1,95 1,413 1,518 1,45 1,265 Income from lease of fixed assets Foreign exchange gains Other nonoperating income 2,1 2,195 3,52 2,553 2,622 Nonoperating expenses 1,92 1,27 1,222 1,193 1,64 Interest expense Expenses for lease of fixed assets Other nonoperating expenses Ordinary income 18,247 15,53 16,265 2,548 26,341 Extraordinary gains 2, Gain on sales of fixed assets Gain on sales of investment securities Reversal of reserve for loss on liabilities for guarantee 1,92 Subsidy income 136 Other extraordinary gains Extraordinary losses 3,991 6,578 3,132 2,567 3,32 Loss on sales and disposal of fixed assets 942 1,136 1,381 Loss on sales of fixed assets Loss on disposal of fixed assets 1,322 1,57 Gain on extinguishment of tie-in shares 5,37 Impairment loss , Loss on disaster 755 Expenses for postponed capital expenditure plan 429 Support expenses for investment in software 2,5 Earthquake-related expenses 2 Loss on revaluation of investment securities 219 Laboratory relocation expenses 572 Other extraordinary losses Income before income taxes 16,259 8,488 13,83 18,238 23,687 Income, residential and enterprise taxes 7,294 3,41 7,8 8,16 8,89 Corporate tax adjustment 826 (2,482) (922) Net income 8,139 7,56 7,673 9,239 14,724 28

31 Yamazaki Baking Network Food Businesses Company name Location Date of establishment Paid-in capital Principal operations Fujiya Co., Ltd. Bunkyo-ku, Tokyo, Japan June 3, , billion Manufacture and sale of Western-style confectionery, chocolate, candy products and cookies Sun-Delica Co., Ltd. Chiyoda-ku, Tokyo, Japan May 9, billion Manufacture and sale of processed bread and prepared rice and side dishes Yamazaki Biscuits Co., Ltd. Shinjuku-ku, Tokyo, Japan October 3, billion Manufacture and sale of biscuits, snack foods, confectionery and chocolate products Vie de France Co., Ltd. Edogawa-ku, Tokyo, Japan July 1, , 48 million Retail bakery and cafe management Tohato Inc. Toshima-ku, Tokyo, Japan August 24, ,8 2,168 million Manufacture and sale of biscuits and snack food products Ikeda Bakery Co., Ltd. Aira, Kagoshima, Japan September 1, , 1,25 million Manufacture and sale of bread, Japanese- and Western-style confectionery, processed bread and prepared rice and side dishes Daitoku Shokuhin Co., Ltd. Yamatokoriyama, Nara, Japan November 2, million Manufacture and sale of noodles, soup stock and soup VDF Sun-Royal Co., Ltd. Chiyoda-ku, Tokyo, Japan February 3, , million In-store bakery management; manufacture and sale of frozen bread dough Sun-Kimuraya Co., Ltd. Kofu, Yamanashi, Japan October 31, million Manufacture and sale of bread, Japanese- and Western-style confectionery, processed bread and prepared rice and side dishes Three S Foods Co., Ltd. Kuse-gun, Kyoto, Japan May 1, , 48 million Manufacture and sale of bread Kochi Yamazaki Co., Ltd. Kochi, Kochi, Japan March 24, million Manufacture and sale of bread, Japanese- and Western-style confectionery Suehiro Confectionery Co., Ltd. Niigata, Niigata, Japan July 1, million Manufacture and sale of rice-based confectionery, processed bread and prepared rice and side dishes Yamazaki Bak ing Network 29 Yamazaki Baking Network

32 Yamazaki Baking Network Food Businesses Company name Location Date of establishment Paid-in capital Principal operations Morioka Delica Co., Ltd. Shiwa-gun, Iwate, Japan January 12, million Manufacture and sale of processed bread and prepared rice and side dishes Yamazaki Co., Ltd. Ichikawa, Chiba, Japan July 15, million Operation of specialized bread and pastry shops and restaurants Akita Inafuku Confectionery Co., Ltd. Akita, Akita, Japan August 28, , million Manufacture and sale of rice-based confectionery Sapporo Paris Co., Ltd. Sapporo, Hokkaido, Japan June 1, ,5 495 million Manufacture and sale of bread, Japanese- and Westernstyle confectionery, processed bread and prepared rice and side dishes; in-store bakery management Kanazawa German Bakery Co., Ltd. Kanazawa, Ishikawa, Japan January 6, million Retail bakery management Nichiryo Baking Co., Ltd. Sapporo, Hokkaido, Japan May 16, ,197 1,51.9 million Manufacture and sale of confectionery and bread Retail Businesses Company name Location Date of establishment Paid-in capital Principal operations Super Yamazaki Co., Ltd. Fuchu, Tokyo, Japan July 31, million Operation of supermarkets Other Businesses Company name Location Date of establishment Paid-in capital Principal operations Yamazaki Logistics Co., Ltd. Kiyose, Tokyo, Japan February 16, million General truck transport and freight forwarding Sun Logistics Co., Ltd. Tokorozawa, Saitama, Japan February 4, , 38 million General truck transport and freight forwarding Yamazaki Engineering Co., Ltd. Chiyoda-ku, Tokyo, Japan June 16, , 8 million Design of equipment for manufacturing bread and confectionery, installation of production facilities and other services Yamazaki Clean Service Co., Ltd. Fujinomiya, Shizuoka, Japan June 8, 2 8, 8 million Manufacture and sale of cleaning and disinfecting agents for food production equipment Yamazaki Co., Ltd. Chiyoda-ku, Tokyo, Japan July 15, million Insurance services 3

33 Other Businesses Company name Location Date of establishment Paid-in capital Principal operations Shokuhin Kyohai System Co., Ltd. Sun-Mix Co., Ltd. Nichinoh Seiken Co., Ltd. Chiyoda-ku, Tokyo, Japan Chiba, Chiba, Japan Soo-gun, Kagoshima, Japan February 2, October 2, August 25,1984 1, 1 million 2 2 million 9,5 95 million Management of cooperative delivery operation Manufacture and sale of prepared mixes for bread, Japanese- and Western-style confectionery, tempura, fried chicken and frozen dough Manufacture and sale of stevia-based and other sweeteners Principal Affiliates of Fujiya Co., Ltd. Company name Location Date of establishment Paid-in capital Principal operations Fujiya Food Service Co., Ltd. Bunkyo-ku, Tokyo, Japan March 1, million Restaurant management Dalloyau Japon S.A. Fujiya Tohoku Co., Ltd. Sweet Garden Co., Ltd. Fujiya Sanyo Co., Ltd. Fujiya Milk Product Co., Ltd. Fujiya (Hangzhou) Food Co., Ltd. Fujiya System Center Co., Ltd. B-R B-R31 Ice Cream Co., Ltd. Nihon Syokuzai K.K. Bunkyo-ku, Tokyo, Japan Yamagata, Yamagata, Japan Kobe, Hyogo, Japan Date, Fukushima, Japan Ichinoseki, Iwate, Japan Zhejiang Province, China Edogawa-ku, Tokyo, Japan Shinagawa-ku, Tokyo, Japan Kumagaya, Saitama, Japan October 1, April 5, July 1, June 2, August 1, February 5, December 2, , 5 million 6, 6 million 5, 5 million 3, 3 million 6, million 928 US$9.28 million 4, 4 million ,528 December 19, million October 31, , million Manufacture and sale of French-style confectionery, side dishes and bread Manufacture and sale of cakes, desserts and other Westernstyle confectionery Manufacture and sale of Japanese and Western-style confectionery, frozen dessert, bread Manufacture and sale of canned beverages and canned fruits Manufacture and sale of dairy products and milk beverages Makes and markets candies and imports Fujiya products for sale locally Outsourced businesses including administrative services Manufacture, import and sale of ice cream and ice creamrelated products, development of ice cream chain stores and of related product supplies and provision of corresponding advisory services OEM OEM-based manufacture of confectionery and operation of economy hotels Yamazaki Bak ing Network 31 Yamazaki Baking Network

34 Yamazaki Baking Network Yamazaki Baking Overseas Group Companies Paris SHANGHAI YAMAZAKI BAKING CO., LTD. YAMAZAKI FRANCE S.A.S. THAI YAMAZAKI CO., LTD. SUNMOULIN YAMAZAKI SDN.BHD. VIETNAM YAMAZAKI CO., LTD. Bangkok Kuala Lumpur Indonesia Shanghai Taipei Hong Kong Ho Chi Minh Singapore SHANGHAI YAMAZAKI FOODS CO., LTD. PT YAMAZAKI INDONESIA SUNMOULIN YAMAZAKI (SINGAPORE) PTE. LTD. FOUR LEAVES PTE. LTD. Overseas Representative Offices Representative office Yamazaki Baking Co., Ltd. U.S. Representative Office Yamazaki Baking Co., Ltd. Paris Representative Office Yamazaki Baking Co., Ltd. Taipei Representative Office Yamazaki Baking Co., Ltd. Shanghai Representative Office Yamazaki Baking Co., Ltd. Jakarta Representative Office Yamazaki Baking Co., Ltd. Ho Chi Minh City Representative Office Address Tel/Fax 335 E 2nd Street Suite 223, Los Angeles, CA 912, U.S.A. Tel: Fax: Avenue Mozart, 7516 Paris, France Tel: Fax: Room B, 5F, No. 148, Song Jiang Road, Taipei, Taiwan, R.O.C. Tel: Fax: Room 316, Shanghai Airport City Terminal Building, 16 Nanjing Road West, Shanghai, 24, China Sampoerna Strategic Square, South Tower 18th Floor Jl. Jend. Sudirman Kav.45-46, Jakarta 1293, Indonesia Room 71, Zen Plaza, Nguyen Trai Street, Ben Thanh Ward, District 1, Ho Chi Minh City, Vietnam Tel: Fax: Tel: Fax: Tel: Fax: Overseas Food Businesses Company name Address Date of establishment Paid-in capital Directly operated stores Plants 32 Vie de France Yamazaki, Inc. BAKEWISE BRANDS, INC. Tom Cat Bakery, Inc. Yamazaki California Inc. 27 Chain Bridge Road, Suite 5, Vienna, VA 22182, U.S.A North Wayneport Rd. Macedon, New York , U.S.A th St. Long Island City, New York , U.S.A. 123 Japanese Village Plaza, Los Angeles, CA 912, U.S.A April 22, July 1, July 1, February 28, US$5. million.1 US.1 1 US 1 15 US$15,

35 Los Angeles BAKEWISE BRANDS, INC. New York Vienna, VA TOM CAT BAKERY, INC. TAIWAN YAMAZAKI CO., LTD. YAMAZAKI CALIFORNIA INC. VIE DE FRANCE YAMAZAKI, INC. HONG KONG YAMAZAKI BAKING CO., LTD. HONG KONG YAMAZAKI BAKING CO., LTD. TAI PO FACTORY VIE DE FRANCE YAMAZAKI, INC. ALEXANDRIA FACTORY Overseas Food Businesses Company name Address Date of establishment Paid-in capital Directly operated stores Plants Yamazaki France S.A.S. Hong Kong Yamazaki Baking Co., Ltd. Thai Yamazaki Co., Ltd. Taiwan Yamazaki Co., Ltd. Sunmoulin Yamazaki Sdn. Bhd. Sunmoulin Yamazaki (Singapore) Pte. Ltd. Four Leaves Pte. Ltd. Shanghai Yamazaki Baking Co., Ltd. Shanghai Yamazaki Foods Co., Ltd. PT YAMAZAKI INDONESIA Vietnam Yamazaki Co., Ltd. 6 Chaussée de la Muette, 7516 Paris, France Room /F, Landmark North, Sheung, Shui, N.T., Hong Kong 1126/2 Vanit Building 2, #153, 154, New Petchaburi Road, Makkasun, Rajchathevi District, Bangkok 14, Thailand Room B, 5F, No. 148, Song Jiang Road, Taipei, Taiwan, R.O.C. Level 18, Tower 3 Petronas, Kuala Lumpur City Centre, 588, Kuala Lumpur, Malaysia 11 Upper Cross Street #9-8, People s Park Centre, Singapore Chin Bee Crescent, Singapore Room 316, Shanghai Airport City Terminal Building, 16 Nanjing Road West, Shanghai, 24, China No.566 Jinbai Road, Jinshan Industrial Zone, Shanghai, 2156, China Kawasan Greenland Batavia Blok BA No. 1. Ds. Sukamahi, Cikarang Pusat, Bekasi, 1753, Indonesia B25, B2, Nam Ky Khoi Nghia Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam June 23, May 8, July 26, April 2, March 12, May 18, January 17, March 3, September 19, February 6, June 1, =C41, 4,55 HK$45.5 million 6,4 B64. million 4, NT$4. million 245 M$2,45, 15 S$1.5 million 125 S$1.25 million 184 US$1.84 million 8 US$8. million 3,8 Rp38. billion 84 US 84, Baking Network Yamazaki 33