Supplementary Explanatory Materials
Concerning the December 23rd Timely Disclosure

December 23, 2020

URL https://www.sapporoholdings.jp/en/

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

1/14

1. Revision to Consolidated Earnings Forecast
2. Impairment Losses on Fixed Assets (Consolidated)
3. Loss on Valuation of Shares of Subsidiaries (Non-consolidated)
4. Outcome of Implementation of Early Retirement Incentive Program

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

2/14

1. Revision to Consolidated Earnings Forecast

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

3/14Revision to Consolidated Earnings Forecast: Revenue
Revenue forecast for Restaurants and Food & Soft Drinks businesses revised downward due to impact of COVID-19 resurgence(billions of yen)

Revenue
Alcoholic
Beverages

2020
Previousforecast

2020
New
forecast

Change(Ref.)
2019
Results

444.5

491.9

286.9

330.2

Japan & Asia

229.4

229.4

0.0

254.7

North America

44.9

44.9

0.0

48.3

11.2

(1.5)

Restaurants

12.7

Food & SoftDrinks

134.0

136.9

Real Estate

23.4

24.7

Other0.2

0.2

0.0

27.3

Factors behind change

Decline due to intensified mood of selfrestraint and cooling of consumer
sentiment due to impact of COVID-19
resurgence
Decline in sales of soft drinks via vending
machines and cafe due to COVID-19
resurgence

0.2
Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

4/14

Revision to Consolidated Earnings Forecast: Core Operating Profit
Despite impact of revenue decline, core operating profit forecast revised upward due to steady progress with cost reductions(billions of yen)Core operatingprofit
Alcoholic
Beverages

2020
Previousforecast

2020
Newforecast

Change(Ref.)
2019
Results

1.0

11.7

(0.4)

8.5Factors behind change

Japan & Asia

4.5

6.0+1.5

8.0

Control of sales promotion expenses andother costs

North America

0.0

0.5

+0.5

0.2

Control of sales promotion expenses andother costs

Restaurants

(4.9)

(5.2)

(0.3)

0.4

Impact of revenue decline

Food & SoftDrinks

(2.7)

(0.5)

Real Estate

10.5

10.7

Other(6.4)

(6.4)

0.0

Impact of cafe revenue decline(7.1)
Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

5/14

Revision to Consolidated Earnings Forecast: Profit Attributable to Owners of Parent
PS* expecting to book impairment loss (see next page); profits, from operating profit down, revised downward significantly*POKKA SAPPORO Food & Beverages Ltd.

2020
Previousforecast

2020
New
forecast

Change(Ref.)
2019
Result

1.0

2.5

+1.5

11.7

Other operating
income

3.0

3.0

0.0

3.5

Other operating
expenses

11.9

23.7

(11.8)

3.0

Operating profit(7.9)(18.2) (10.3)

12.2

Profit before tax(9.4)(21.4) (12.0)

11.6

Income taxes

(2.9)

(5.0)

(2.1)

4.3

Profit(6.5)(16.4)(9.9)

3.8

Profit attributable toowners of parent(6.5)(billions of yen)Core operating
profitFactors behind change

Pokka Sapporo: (1.1) on impairment loss
on fixed assets

Include loss from discontinuedoperations(3.5)

4.4
Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

6/14

2. Impairment Losses on Fixed Assets (Consolidated)

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

7/14

Impairment Loss on Fixed Assets (Consolidated)
Impairment loss on fixed assets held by POKKA SAPPORO Food & Beverages

The company expects to book approx. 11.0 billion yen (estimated) as impairment
loss under other operating expenses (consolidated) in the fourth quarter of 2020.
*Although this will impact consolidated operating profit, it will have no impact
on cash flow

[Background to impairment loss] Losses for 2nd consecutive year & COVID-19 resurgence
While the impact of temporary factors (such as unfavorable weather with the cool summer and mild
winter of 2019, and the COVID-19 pandemic in 2020) has been significant, we deemed it
appropriate to book an impairment loss this year as the COVID-19 outbreak resurged and it became
clear in the second half that the company was set to post losses for a second consecutive year.
[Future growth strategy] Profitability improvement in Soft Drinks business and growth in theFood field
The company is already engaging in deliberation and concrete actions relating to strategies for
future growth covering areas such as focusing on lemon-related products (one of the company’sstrengths*), soup, and plant-based milk products; implementation of the Early Retirement
Incentive Program; and profitability improvements through structural reform of the vending
machine business, etc.

Aiming for sustained growth in the Food & Soft Drinks business and torestore profitability in the business next year to post operating profit*Expecting to achieve record shipments of Pokka Lemon 100 and Kireto Lemon https://www.pokkasapporo-fb.jp/company/news/release/201215_01.html
Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

8/14

３. Loss on Valuation of Shares of Subsidiaries(Non-consolidated)

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

9/14

Loss on Valuation of Shares of Subsidiaries (Non-consolidated)
Impairment loss on fixed assets held by Pokka Sapporo

The company expects to book approx. 11.0 billion yen (estimated) as impairment
loss under other operating expenses (consolidated) in the fourth quarter of 2020.
*Although this will impact consolidated operating profit, it will have no impact
on cash flow
Net assets of Pokka Sapporo will be significantly impaired as a result of the above and the balance of
net assets will fall below 50% of the book value of the shares held by Sapporo Holdings

Loss on valuation of Pokka Sapporo shares held by Sapporo HoldingsIn the fourth quarter of 2020, we expect to book approx. 21.5 billion yen(estimated) in loss on valuation of shares as extraordinary loss (in the nonconsolidated financial statements of Sapporo Holdings)*There will be no impact on consolidated financial results

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

10/14

４. Outcome of Implementation ofEarly Retirement Incentive Program

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

11/14

Outcome of Implementation of Early Retirement Incentive Program
Sapporo Breweries
Application period

Retirement dateNo. of employeesFirst round:
Apr. 1 through Jul. 10, 2020
Second round:Oct. 1 through Dec. 10, 2020
First round:Nov. 20, 2020
Second round:May 20, 2021
First round: 51
Second round: 59

Pokka Sapporo

Sapporo Lion

Nov. 1 through Dec. 10, 2020

Nov. 16 through Dec. 18, 2020Feb. 28, 2021

Jan. 31, 2021

119

126

One-off cost(estimated) Approx. 5.0 billion yen in total for the three companies (estimated)Core operating
profit impact(full year*) Approx. 2.5 to 3.0 billion yen in total for the three companies (estimated)*Full-year impact without considering the timing of retirement.

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

12/14

(Supplement) Questions and Answers
QA-What is value of Pokka Sapporo’s total assets and fixed assets?

Total assets were worth 66.8 billion yen and fixed assets were worth 33.0
billion as of the end of 2019.

-What fixed assets are to be impaired?

Tangible fixed assets and intangible fixed assets. Since the company isconsidered to be a single grouping, we will not impair specific fixed assets.
Rather, we will reduce the book value of the fixed assets of Pokka Sapporo
as a whole.

-Do you have any guidance regarding the concrete efforts being made to
improve profitability in the Food & Soft Drinks business, as well as any
quantitative effects of these efforts?

We will explain the details of next year’s initiatives at the financial results
briefing in February.

-Capital has been impaired significantly. Will you make any changes to your No changes will be made. We will continue to work on securing a level
where we can maintain our current credit ratings.
financial policy?
-Is there any possibility of another major impairment loss next year orbeyond?

We do not foresee any at this point.

-The revision to the revenue of Food & Soft Drinks was substantial. What
did not go as expected?

The main factors were that sales of soft drinks via vending machines andsales of café did not recover because of the resurgence of COVID-19.

-Will the early retirement program have a lasting cost reduction impact?
Do you have no intention of replacing those who are leaving?
-What impact will the impairment have on reduction of depreciation andamortization next year and beyond?
-Sapporo Breweries will be paying special dividends. Have there been any
changes to the Sapporo Holdings shareholder return policy or dividend
policy?

We believe it could have a lasting impact. We are currently increasing theoperational efficiency of both manufacturing and sales to facilitatebusiness operations with a streamlined workforce.
That is still unclear as we are yet to finalize the amount of impairment, butaccording to our preliminary calculations we expect it be approximately 1.0
billion yen per year.
There is no particular change to our policy of paying stable dividends.
There is also no change to our dividend forecast for this year.
Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

13/14

As an intrinsic part of people's lives, Sapporo will contribute to
the evolution of creative, enriching and rewarding lifestyles.

This document was prepared for the purpose of providing information to serve as a reference for investors in making investment
decisions and not for the solicitation of investment or any other similar such actions.
The earnings forecasts and forward-looking statements contained in this document were prepared based on the judgment of theCompany as of the date of this document and include potential risks and uncertainties.
Actual published future results may therefore differ materially from the content of this document.
The Company shall not in any way be responsible or liable for any losses or damages resulting from the use of the information inthis document.

Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved.

14/14