Financial Results
for the nine months ended September 30, 2018 — Consolidated(Based on IFRS)
November 2, 2018

Company name

Sapporo Holdings Limited

Security code
Listed on
URL

2501
Tokyo Stock Exchange (First Section); Sapporo Securities Exchange
http://www.sapporoholdings.jp/english/

Representative
Contact

Masaki Oga, President and Representative Director
Yuru Kobayashi, Director of the Corporate Communications Department

Telephone
Scheduled dates:+81-3-5423-7407

Filing of quarterly financial report

November 13, 2018

Commencement of dividend payments-

Supplementary information to the quarterly earnings results

Available

Quarterly earnings results briefing heldYes(mainly targeted at institutional
investors and analysts)

1. Consolidated Financial Results for the nine months ended September 30, 2018
(January 1 – September 30, 2018)(Amounts in million yen rounded to the nearest million yen)

(1) Operating Results(Percentage figures represent year-over-year changes)
Revenue

Operating profit

Profit before tax

Profitmillion yen%

million yen%

million yen%

million yen%

Nine months ended
September 30, 2018

381,044

(2.5)

6,837

(29.8)

5,712(34.9)

3,568(25.5)

Nine months ended
September 30, 2017

390,732

_

9,733

_

8,778

_

4,791

_

Profit attribute to

Total comprehensive

owners of parent
million yen%

Nine months ended
September 30, 2018

4,209

Nine months ended
September 30, 2017

5,297

Basic earnings

Diluted earnings

per shareper share

incomemillion yen

%

Yen

yen

(20.5)(1,890)

_

54.04

51.88

_

10,873

_

68.01

68.00

1

(2) Financial Position
Total assets

Total equity

Equity attributableto owners ofparentEquity ratio
attributable toowners of parent

million yen

million yen

million yen%

Nine months ended
September 30, 2018

644,835

170,866

167,91226.0

December 31, 2017664,731

175,710172,055

25.9

2. Dividends
Dividend per share
Record date or

End Q1End Q2End Q3Year-end

Full year

yen

yen

yen

yen

yen

40.00

40.00

40.00

40.00

periodYear ended
December 31, 2017

—

0.00

—

Year ended
December 31, 2018

—

0.00

—

Year ending
December 31, 2018
(forecast)

Note: Changes were made to dividends forecasts in the nine months ended September 30, 2018: None

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2018
(January 1 – December 31, 2018)(Percentage figures represent year-over-year changes)
Revenuemillion yen

Operating profit%

million yen%

Profit before tax

million yen%

Profit attribute to

Basic earnings

owners of parent

per share

million yen%

537,800
0.2
16,10025.7
15,100
30.9
9,200
28.0
Year ending
December 31,
2018
Note: Changes were made to earnings forecasts in the nine months ended September 30, 2018: None2

Yen

118.11

4. Other(1) Changes to scope of consolidation: None
(2) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accounting policies required by IFRS: None
2) Changes other than 1) above: None
3) Changes in accounting estimates: None
(3) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):
September 30, 2018: 78,794,298 shares
December 31, 2017: 78,794,298 shares
2) Number of shares held in treasury at end of period:
September 30, 2018: 904,334 shares
December 31, 2017: 901,792 shares
3) Average number of outstanding share during the period:
Nine months ended September 30, 2018: 77,891,824 shares
Nine months ended September 30, 2017: 77,894,397 shares*Quarterly review status
The quarterly financial results are not subject to quarterly reviews pursuant to the Financial
Instruments and Exchange Act.
Appropriate Use of Earnings Forecasts and Other Important Information
This document contains projections and other forward-looking statements based on information
available to the Company as of the date of this document. Actual results may differ from thoseexpressed or implied by forward-looking statements due to various factors.

3

1. Analysis of Operating Results and Financial Condition
The Sapporo Group has applied the International Financial Reporting Standards (IFRS) to its
consolidated accounts from the first quarter of 2018. For the purpose of comparison, financial data
for fiscal 2017 is also presented on the IFRS basis.
(1) Operating Results
In the first nine months of 2018 (January 1 – September 30, 2018), the Japanese economy
remained in a moderate recovery trend, underscored by firm consumer spending and corporate
capital investment. However, natural disasters such as July’s torrential rain and September’s
Hokkaido Eastern Iburi Earthquake have had a significant impact on Japan’s economy. In addition,
the outlook for the global economy remains clouded by various risk factors, especially the trade
frictions among major economies.
In this environment, the Sapporo Group’s consolidated sales during the first three quarters of2018 were down year on year. The Japanese Alcoholic Beverages business posted strong sales of
its Sapporo Draft Beer Black Label in cans and RTD offerings, and the International Business’
Canadian subsidiary SLEEMAN BREWERIES also put up strong sales figures. However, theJapanese Alcoholic Beverages business saw sales of its happoshu and new-genre beers fall below
the previous year’s levels. In addition, sales of soft drinks in Japan handled by Food & Soft Drinks
business were down year on year.
Operating profit declined, with a decrease in Japanese Alcoholic Beverages sales having asignificant impact.
As a result of the above factors, in the first nine months of 2018 the Sapporo Group posted
consolidated revenue of ¥381.0 billion (down ¥9.7 billion or 2% year on year), operating profit of¥6.8 billion (down ¥2.9 billion or 30%), and profit attributable to owners of parent of ¥4.2 billion(down ¥1.1 billion or 21%).
Results by segment are outlined below. In the consolidated statements for the first threequarters of 2018, the export business of Sapporo International Inc., which was previously includedin the International Business segment, has been transferred to Sapporo Breweries Ltd., which isincluded in the Japanese Alcoholic Beverages Business segment.
To enable year-over-year comparisons in this document, figures for the year-earlier period havebeen adjusted to reflect the new segmentation.
Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer-type beverages in the first nine monthsof 2018 was 3% lower than in the same period of 2017, with the decline mainly reflecting theimpact of the torrential rain that hit western Japan and the earthquake in Hokkaido.
In this operating environment, the Japanese Alcoholic Beverage business continued its efforts torealize management’s vision of “Seek to be No.1 by accumulating one-of-a-kind products” andachieve further growth by constantly providing customers with a unique value proposal and byinvesting aggressively in the beer business in line with the our business policy of “Continuation ofstrengthening of the beer business."Among beer products, sales of Sapporo Draft Beer Black Label, especially the canned version,
were strong throughout the first nine months of 2018. Meanwhile, the happoshu and new-genre
beer categories faced a more difficult market environment, including stiffer competition and a shift
in consumer demand toward RTD*1 products. As a result, overall shipments of our beer and beertype beverages fell 8% from the level seen in the first three quarters of 2017.
In the RTD category, we followed up the April launch of Rirakusu with the release in August of
Sapporo Chuhai 99.99, a “strong”-type high-alcohol beverage. Both new offerings were wellreceived. We also continued to see steady sales growth for core RTD collaboration products, such4

as Otoko Ume Sour, Ai no Skal White Sour, and Kireto Lemon Sour. As a result, the RTD category
achieved year-on-year sales growth during the first three quarters of 2018.
In the wine category, we continued to strengthen marketing of domestic and imported finewines*2, including the imported wine Penfolds, Taittinger champagne, and our domestic Grande
Polaire wines. However, weak sales of our everyday wines*2 led to a year-on-year decline in sales
for the wine category as a whole.
Our spirits business achieved year-on-year sales growth, led by strong sales of products frommajor overseas brands, such as Bacardi and Dewar’s.
The Japanese liquor business continued to enjoy strong sales of Imo Shochu Kokuimo, Japan’s
No.1 selling*3 blended imo shochu. Overall category sales, however, were lower than in the first
three quarters of 2017.
Overall, the Japanese Alcoholic Beverages business’ revenue in the first three quarters of 2018
totaled ¥179.8 billion, down ¥7.8 billion or 4% year on year. Operating profit was ¥1.8 billion, down
¥3.0 billion or 62%.
*1) RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-likebeverages that can be consumed as is immediately after opening.
*2) Fine wines are wines priced in the mid- to high-price range of ¥1,500 or more per bottle, while
everyday wines are those than ¥1,500 per bottle.
*3) Based on Intage SRI market research on combined blended imo shochu sales in the
supermarket, convenience store, and direct sales channels from January 2017 to August 2018.
International BusinessWe estimate that total demand in the North American beer market in the first nine months of 2018
was below the previous-year level in the United States but up slightly year-on-year in Canada. In
Asian countries, demand is being affected by slower economic growth and a pronounced increasein moves by governments’ new taxes on consumer goods.
In this environment, our International Business continued its efforts to strengthen brandrecognition, especially in the premium beer markets in North America and Southeast Asia.
Our Canadian subsidiary SLEEMAN BREWERIES continued to invest in the marketing of its
core premium brands, which enabled it to achieve a year-on-year increase in overall beer sales
volume (excluding Sapporo brand beer). In the U.S. beer market, Sapporo USA’s shipments of
Sapporo brand beers declined year on year despite the subsidiary’s continued efforts to expand its
customer base among the general population as well as to Asian Americans. Since the acquisitionof Anchor Brewing Company in September 2017, Sapporo USA has been working to strengthen
sales synergies with the new group company, especially on the U.S. west coast.
In the U.S. soft drinks market, an increasingly difficult business environment led to a year-onyear decrease in the combined revenue of County Pure Foods and Silver Springs Citrus. During
the second quarter of 2018, these two U.S. subsidiaries were merged with a view to improving
their combined performance.
In Southeast Asia, Sapporo Vietnam managed to increase its beer shipments over the previous
year's level despite the January hike in the country’s liquor tax. We continue to make structuralreforms at the Vietnam business.
Thanks to the efforts of our Group companies around the world, the International Business’
shipments of Sapporo brand beers in overseas markets during the first nine months of 2018
increased 2% year on year.
As a result, the International Business posted revenue of ¥59.1 billion, up ¥1.2 billion or 2% year
on year and operating profit of ¥0.4 billion, down ¥0.6 billion or 58%.
Food & Soft Drinks
We estimate that overall demand for soft drinks in Japan increased 2% year on year in the firstnine months of 2018.
In this environment, the Food & Soft Drinks business continued to strengthen its brand lineups
5and provide customers with value unique to the Sapporo Group.
At the domestic soft drinks business, new product launches during the period under review
included the latest addition to our core Kireto Lemon brand, Kireto Lemon Calcium, which has
been officially designated as a “beverage with a nutritional function” and which is creating new
demand. We also added to our popular JELEETS dessert drink series with the launch of a new
flavor, JELEETS Purin Shake. Core lemon-based drinks, sugar-free teas made from domestic tea
leaves, and beverages with a food-like texture all enjoyed steady sales. However, overall
shipments of soft drinks in Japan fell below the previous year’s level owing to lower sales of coffee
drinks in a weak market for canned coffees as well as disruption of distribution channels caused by
the disastrous heavy rains that hit western Japan.
At the domestic food business, sales of cold canned soups expanded steadily as the businessstrengthened sales promotions for spring and summer season products. We also have prepared arich variety of autumn and winter season products, centering on our Jikkuri Kotokoto soups.
Shipments of lemon-based food products expanded a sharp 18% year on year, with growth
driven by strong sales of our core Pokka Lemon 100 and a completely reformulated Lemon kajū ohakkō sasete tsukutta lemon no su, a lemon vinegar made from fermented lemon juice. The soybeans and chilled products business will add a new soymilk yogurt production line at its Gunma
plant as it plans to create new demand in Japan and aggressively expand its business scale. It
also launched new flavors of its Almond Breeze, the world’s leading almond milk brand.
At the domestic restaurants business, Pokka Create, the POKKA SAPPORO subsidiary that
operates the Café de Crié coffee shop chain, continued its efforts to boost sales by introducing
new menus with seasonal and trendy dishes, but existing-store sales were below the previous
year’s level.
Our overseas soft drinks business was negatively affected by the new tax systems introduced insome countries, which depressed consumer spending and slightly reduced the business’ exports toother countries in the region from its base in Singapore. Nonetheless, it maintained its top share*in Singapore’s tea drinks market, including its dominant 70% share of the green tea market.
As a result of above, the Food & Soft Drinks segment posted sales of ¥94.2 billion in the first
three quarters of 2018, ¥3.0 billion or 3% less than the year-earlier result. Segment operating profit
came to ¥1.3 billion, down ¥0.1 billion or 5% from a year earlier.
* Based on data from Nielsen Singapore MarketTrack December 2017 (copyright 2017, The
Nielsen Company)
Restaurants
Japan’s restaurant industry continued to enjoy year-on-year growth in revenues in the first ninemonths of 2018, but the industry also remains faced with a severe operating environment
characterized by labor shortages and by increases in labor costs and food material procurement
prices.
In this environment, the Restaurants business continued to pursue the fulfillment of its
philosophy of “Enhancing the Joy of Living” through constant efforts to deliver safe and sound foodand service to customers while also striving to create restaurants that “deliver 100% satisfaction tocustomers.”
Our domestic restaurant business has faced a particularly difficult operating environment thus far
in 2018, as Japan has suffered through several natural disasters caused by a series of typhoons,extended periods of rain, and a major earthquake in Hokkaido. Nonetheless, the businesspersevered and stayed on track with new store openings. Following the March opening inFukuoka's Hakata district of our first Yebisu Bar outlet in Kyushu and the May opening of a Ginza
Lion Beer Garden in Chiba Prefecture’s Kashiwa City, we opened two of our mainstay Ginza Lionpub format branches—one in Kawasaki in August and one in Hiroshima in September. Also, in April
we reopened the fully renovated Ginza Lion outlet in Tokyo’s Aoyama district and opened the firstoutlet of our new Sobaemon Japanese restaurant format, located in Tokyo’s Osaki area. All ofthese recently opened outlets have won rave reviews from local customers and are putting up solid
6numbers. Meanwhile, we have closed four outlets thus far in 2018, including unprofitable stores. In
addition, affiliated company Marushinkawamura Inc. opened two new outlets in Sapporo—Taishu
Tempura Manekiya, a new format tempura restaurant, in August, and Taishu Izakaya Manekiya, aJapanese-style pub, in September. Reflecting the above openings and closings, the domestic
restaurant business had 197 outlets open for business at the end of September. Going forward, weplan to continue aggressive expansion of our restaurant chains, opening new stores, remodelingexisting stores, and changing formats when and where desirable.
Meanwhile, the restaurant business in Singapore has seen a wave of new entrants that hascreated an extremely competitive market environment. In response, we have transferred certain
businesses, including the Japanese restaurant business, to a local food and beverage company.
As a result, we now have only one Ginza Lion store operating in Singapore. Going forward, theoverseas restaurant business will concentrate its resources in the beer hall format and continue topromote the spread of beer hall culture.
Reflecting the above, the Restaurants business’ results for the first three quarters of 2018
included sales of ¥20.9 billion (down ¥0.9 billion, or 4%) and an operating loss of ¥0.1 billion(compared with a profit of ¥0.1 billion a year earlier).
Real Estate
Japan’s real estate industry remains concerned about a sharp increase in supply of new officespace deteriorating conditions in the Greater Tokyo office leasing market, but for now vacancy
rates remain low as strong corporate earnings support demand for office space. As a result, rents
remain on a moderate upward trend.
In this environment, our real estate leasing business is maintaining high occupancy rates at its
properties in the Greater Tokyo Area, including Yebisu Garden Place Tower, the business’ coresource of earnings. In addition, the high occupancy rates provide a solid platform for more
assertive efforts to increase rents of existing tenants.
Meanwhile we continue to enhance the asset value of our Yebisu Garden Place commercial
complex—a landmark in the stylish and sophisticated Ebisu district of Tokyo—through constantefforts to provide tenants and visitors with enjoyable experiences in comfortable and pleasantsurroundings that raise convenience levels and strengthen the property’s brand appeal.
At our GINZA PLACE commercial complex, we continue to enhance the facility’s information
dissemination capability in line with its original concept as a “base for information disseminationand exchange.” In addition to enhancing the property’s brand value, this effort is increasing theproperty’s drawing power and making the Ginza district an even more dynamic and bustling urban
center.
The real estate development business continues to contribute to Sapporo City’s urban
redevelopment program focused on the area to the east of the Sosei River with the renovation of
the Sapporo Factory commercial complex. Part of the 3-Jo Kan facility will be opened in November
as the first phase of the program. We will continue our efforts to make the Sapporo Factory complex
an attractive urban space.
To further enhance the value of our real estate business, we are carrying out a strategic
restructuring of our property portfolio from a long-term perspective. As part of this initiative, we areconsidering acquiring properties in Ebisu that will contribute to the development of our urban
development business.
As a result of the efforts outlined above, the Real Estate business posted revenue of ¥18.3
billion in the first three quarters of 2018 (up ¥0.5 billion or 3% year on year) and operating profit of¥8.2 billion (up ¥0.7 billion or 9%).

7

(2) Consolidated Financial Position
Consolidated assets as of September 30, 2018 totaled ¥644.8 billion, ¥19.9 billion less than at theend of the previous fiscal year (December 31, 2017). The decline is attributable mainly to adecrease in trade and other receivables, which more than offset an increase in other current
assets.
Consolidated total liabilities totaled ¥474.0 billion, ¥15.1 billion less than on December 31, 2017,
primarily owing to the decrease in other current liabilities, which helped to offset an increase inbonds and borrowings (non-current).
Consolidated total equity totaled ¥170.9 billion, down ¥4.8 billion from the end of the previous
fiscal year, primarily reflecting the payment of year-end dividends.
(3) Consolidated Earnings Forecast
The consolidated earnings forecast for the full fiscal year ending December 31, 2018, isunchanged from the forecast announced by the Company on August 3, 2018.

8

2. Consolidated Financial Statements(1) Consolidated Statement of Financial Position(millions of yen)Transition date
January 1, 2017
AmountDecember 31, 2017

September 30, 2018

AmountAmountAssetsI Current assets
1 Cash and cash equivalents
2 Trade and other receivables
3 Inventories
4 Other financial assets
5 Other current assets
subtotal
6 Assets held for sale
Total current assets

10,476
96,574
37,6199,967
7,386
162,022359
162,381

12,537
98,32537,873
9,107
6,914
164,755
164,755

10,75180,80439,903
4,437
10,233
146,127
146,127

II Non-current assets
1 Property, plant and equipment
2 Investment property
3 Goodwill
4 Intangible assets
5 Investments accounted for using equity method
6 Other financial assets
7 Other non-current assets
8 Deferred tax assets
Total non-current assets
Total assets

151,602223,595
21,483
10,305372
79,2788,921
2,176
497,733
660,114151,334
219,658
24,942
13,339391
78,6779,309
2,326
499,976
664,731

152,618
218,108
24,945
13,219405
78,7128,090
2,610
498,707644,835

December 31, 2017

September 30, 2018

AmountAmountTransition date
January 1, 2017
AmountLiabilities and equity
Liabilities
I Current liabilities
1 Trade and other payables
2 Bonds and borrowings
3 Lease liabilities
4 Income tax payable
5 Other financial liabilities
6 Other current liabilities
Total current liabilities

38,46075,5806,609
1,570
33,10866,424
221,750

36,48880,716
6,533
5,207
33,277
66,590228,80936,31375,3786,710
738
30,57960,751
210,468

II Non-current liabilities
1 Bonds and borrowings
2 Lease liabilities
3 Other financial liabilities
4 Net defined benefit liabilities
5 Other non-current liabilities
6 Deferred tax liabilities
Total non-current liabilities
Total liabilities

165,235
24,623
48,125
8,996
2,689
26,455276,122497,872

153,184
24,29545,9566,283
2,621
27,872
260,212
489,021

157,008
24,97345,556
7,659
2,788
25,517
263,501
473,969

Equity1 Share capital
2 Capital surplus
3 Treasury shares
4 Retained earnings
5 Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity

53,88740,706(1,796)36,31528,515
157,628
4,613
162,241
660,11453,88740,825(1,807)44,491
34,659172,055
3,655
175,710
664,73153,88741,007(1,813)44,74830,083
167,912
2,954
170,866
644,8359

(2) Consolidated Statement of Profit and Comprehensive Income
Consolidated Income statements(millions of yen)
Nine months ended
September 30, 2017
Amount390,732
270,480
120,252

Nine months ended
September 30, 2018
Amount381,044
264,128
116,916

109,741
730
1,508
9,733

110,103
1,493
1,469
6,837

Financial income
Financial expense
Share of profit of investments accounted for using equity method
Profit before tax

931
1,901
14
8,778

750
1,889
14
5,712

Income tax expense
ProfitProfit attributable to
Owners of parent
Non-controlling interests
Total

3,987
4,791

2,144
3,568

5,297
(506)
4,791

4,209
(641)
3,568

Basic earnings per share (JPY)
Diluted earnings per share(JPY)

68.01
68.00

54.04
51.88

Nine months ended
September 30, 2017
Amount4,791

Nine months ended
September 30, 2018
Amount3,568

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Other operating income
Other operating expense
Operating profit

Consolidated Statement of Comprehensive Income

ProfitOther comprehensive income
Items that will not be reclassified to profit
Financial assets measured at fair value through other comprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified to profit
Items that might be reclassified to profit
Exchange differences on translation of foreign operations
Effective portion of gains and losses on fair value of cash flow hedges
Total of items that might be reclassified to profit
Other comprehensive income, net of taxes
Comprehensive income

4,349
677
5,026

(3,946)(863)(4,809)

999
57
1,056
6,082
10,873

(785)
136
(649)
(5,458)(1,890)Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income

11,547(674)
10,873(1,197)(693)(1,890)10

(3) Consolidated Statements of Changes in Equity(millions of yen)
Equity attributable to owners of parent
Other components of equity

Balance as of January 1, 2017

Share capital

Capital surplus

53,88740,706

ProfitOther comprehensive income, net of taxes
Total comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Issuance of convertible bonds with stock acquisition rights
Dividends
Transfer from other components of equity to retained earnings
Total transactions with owners
Balance as of September 30, 2017

Treasury shares(1,796)

Retained earnings

Financial assets
Effective portion of
Exchange differences on
measured at fair value
gains and losses on
Remeasurements oftranslation of foreign
through otherfair value of cash
defined benefit planscomprehensive
operations
flow hedges
incomeTotal othercomponents of equity

36,315-(317)

28,832-28,515

60
60

4,366
4,366

677
677

6,249
6,249

5,297
-

2

53,887

(7)
3

1,146
1,146

5,297

2

(4)

(2,888)
1,198(1,690)40,708(1,800)39,923

Total equity
attributable to ownersof parent

Non-controllinginterests

Total equity

157,628

4,613

162,241

5,297
6,249
11,547(7)
5(2,888)(2,890)

(506)
(168)
(674)
(19)
(19)

4,791
6,082
10,873(7)
5(2,907)(2,910)166,285

3,920

170,204

-

(521)
(521)

(677)
(677)

(1,198)(1,198)(257)

32,678-33,567

Financial assets
Effective portion of
Exchange differences on
measured at fair value
gains and losses on
Remeasurements ofthrough othertranslation of foreign
fair value of cash
defined benefit plans
operations
comprehensive
flow hedges
incomeTotal othercomponents of equity

34,659172,055

3,655

175,710(5,406)(5,406)
830
830

4,209
(5,406)(1,197)(11)
5
182(3,122)(2,945)

(641)
(52)
(693)
(9)
(9)

3,568
(5,458)(1,890)(11)
5
182(3,130)(2,954)30,083

167,912

2,954

170,866

1,146

Equity attributable to owners of parent
Other components of equity

Balance as of January 1, 2018

Share capital

Capital surplus

53,88740,825

ProfitOther comprehensive income, net of taxes
Total comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Issuance of convertible bonds with stock acquisition rights
Dividends
Transfer from other components of equity to retained earnings
Total transactions with owners
Balance as of September 30, 2018

Treasury shares(1,807)Retained earnings

1,137

(191)

33,712

-

4,209

(731)
(731)

132
132

(3,945)(3,945)

(863)
(863)

863
863

44,491
4,209

-

0
182

53,887

(11)
5

183

(6)

(3,122)(830)(3,951)

-

-

(33)
(33)

41,007(1,813)44,748407(58)

29,734

11-

Total equity
attributable to ownersof parent

Non-controllinginterests

Total equity

(4)Notes on the Going-concern Assumption
Not applicable(5).Segment Information
1. Overview of reportable segments
The Company’s reportable segments are components of the Sapporo Group about which separate financial information is available. Thesesegments are subject to periodic examinations to enable the Company's board of directors to decide how to allocate resources and assess
performance.
The Group's businesses are segmented mainly based on the products, services, and sales markets of Group companies and their affiliatedcompanies. The Company's five reportable segments are Japanese Alcoholic Beverages, International, Food & Soft Drinks, Restaurants, andReal Estate.
The Japanese Alcoholic Beverages segment produces and sells alcoholic beverages in Japan, while the international segment produces andsells alcoholic beverages and soft drinks overseas.
The Food & Soft Drinks segment produces and sells foods and soft drinks.
The Restaurants segment operates restaurants of various styles.
The Real Estate segment's activities include leasing and development of real estate.

2. Revenue, profit (or loss)(millions of yen)
Nine months ended September 30, 2017
(January 1, 2017 – September 30, 2017)
Japanese
Alcoholic
Beverages
Revenue
To outside customers
Inter-segment revenue
Total
Operating profit

187,6652,540
190,206
4,758International

Food &
Soft Drinks

57,83584
57,9201,060

97,173
206
97,3791,363

Restaurants Real Estate

21,786
1
21,787132

17,783
1,973
19,756
7,481

Nine months ended September 30, 2017
(January 1, 2017 – September 30, 2017)
Other *1
Revenue
To outside customers
Inter-segment revenue
Total
Operating profit

Total

8,489
15,26823,757(236)

390,732
20,073410,805
14,558Adjustment

Consolidated total

390,732(20,073)(20,073)(4,825)

390,732
9,733(millions of yen)
Nine months ended September 30, 2018
(January 1, 2018 – September 30, 2018)
Japanese
Alcoholic
Beverages
Revenue
To outside customers
Inter-segment revenue
Total
Operating profit

179,8422,321
182,163
1,793International

Food &
Soft Drinks

59,056357
59,414447

94,192
190
94,382
1,288

Restaurants Real Estate

20,9181
20,920(137)

18,311
2,091
20,402
8,156

Nine months ended September 30, 2018
(January 1, 2018 – September 30, 2018)
Other *1
Revenue
To outside customers
Inter-segment revenue
Total
Operating profit

8,725
15,482
24,207
(100)

Total

381,044
20,443
401,487
11,447

Adjustment

Consolidated total(20,443)(20,443)(4,610)381,044
381,0446,837(1) "Other" comprises businesses, such as logistics businesses, that are not included in reportable segments.
(2) Segment income and losses are adjusted based on operating income reported on the quarterly
consolidated statements of income for the corresponding period.
(3) The export business of Sapporo International Inc. has been transferred to Sapporo Breweries Ltd. effective January 1, 2018.
Accordingly, the business was previously included in the International business segment,
but has been included in the Japanese Alcoholic Beverages segment.
The consolidated financial statements for fiscal 2017 have been adjusted retroactively to reflect these changes.

12Subsequent Events(Transfer of assets)
At a meeting of the Board of Directors held on October 3, 2018, the Company resolved to transfer
the following fixed assets (trust beneficiary rights) owned by Sapporo Real Estate Co., Ltd., aconsolidated subsidiary of the Company.
1. Reason for the transfer
The transfer is part of a strategic restructuring of the Company’s property portfolio with a view tofurther enhancing earnings.
2. Assets to be transferred
Two rental properties located in Tokyo, one of which is located in Shinjuku Ward.
3. Overview of the transferee
The transferee is a domestic corporation, but its name and other details remain confidential at therequest of the transferee. The Company and the transferee do not have any capital ties or businessand personal relationships that need to be stated. The transferee is not considered to be a party
related to the Company.
4. Date of sales contract agreement
October 17, 2018
5. Date of handoverNovember 30, 2018 (scheduled)
6. Transfer price
JPY 7,250 million (total for two properties)(Acquisition of assets)
At the Board of Directors meeting held on October 3, 2018, it was resolved that the Company’s
consolidated subsidiary Sapporo Real Estate Co., Ltd. would acquire the following fixed assets(including trust beneficiary rights).
1. Reason for the acquisition
The acquisition is part of a plan to further enhance the Company’s earnings through a strategic
restructuring of its business and property portfolio while also contributing to development of theEbisu district by promoting initiatives to enhance the area’s value through urban development.
2. Assets to be acquired
Three rental properties located in Tokyo’s Shibuya Ward
3. Date of sales contract agreement
October 17, 2018
4. Date of handoverNovember 30, 2018 and April 1, 2019 (scheduled)
5. Acquisition priceJPY 6,400 million (total for three properties)

13

(First time adoption)
Sapporo Group (the Group) started to disclose the consolidated financial statements based on theInternational Financial Reporting Standards (IFRS) from the first quarter of the fiscal year ending
December 31, 2018. The last consolidated financial statements prepared based on JGAAP is those for the
fiscal year ended December 31, 2017, and the date of transition to IFRS is January 1, 2017.
In principle, IFRS requires that first-time adopters apply IFRS retrospectively. However, IFRS 1 sets out
exceptions under which first-time adopters are optionally exempted or prohibited from the retrospective
application of some of the standards required by IFRS.
The exemptions applied by the Group are as follows:・ Business combination
As IFRS provides exemptions from IFRS 3 "Business Combinations," the Group elected not to apply thestandards retrospectively to business combinations that occurred before the date of transition to IFRS.
Consequently, the amounts of goodwill arising from business combinations that occurred before the dateof transition to IFRS were recognized based on their book value under JGAAP at the transition date. For
reference, at the transition date, an impairment test was implemented for such goodwill with or without
evidence that indicates impairment loss.
・ Deemed cost
With respect to property, plant and equipment items and intangible assets items, IFRS 1 permits the firsttime adopter to use their fair value at the date of transition to IFRS as deemed cost at the date oftransition to IFRS. The Group applied the exemption to certain property, plant and equipment items andused their fair value at the date of transition to IFRS as deemed cost at the date of transition to IFRS.
・ Exchange differences on translation of foreign operations
As is permitted by IFRS 1, the Group elected to deem the cumulative exchange differences on translationof foreign operations to be zero at the date of transition to IFRS.
・ Designation of financial instruments recognized before the transition dateWith respect to the classification described in IFRS 9, IFRS 1 permits an entity to assess financial assets
on the basis of the facts and circumstances that exist at the date of transition to IFRS, instead of thoseexisted at the initial recognition. In addition, based on the facts and circumstances that exist at the date oftransition to IFRS, an entity may designate change in fair value of equity instruments as financial assets
measured at fair value through other comprehensive income. For the classification described in IFRS 9,
the Company assessed financial assets on the basis of the facts and circumstances that exist at the dateof transition to IFRS, and designated certain equity instruments as financial assets measured at fair value
through other comprehensive income.
・ Lease for lessee
With respect to recognition of lease liabilities and right-of-use assets, IFRS 1 permits a first-time adopterthat is a lessee to measure all of its lease liabilities and right-of-use assets at the date of transition to
IFRS. The Group measured lease liabilities at the date of transition to IFRS at the present value of theremaining lease payments discounted using the lessee’s incremental borrowing rate at the date oftransition to IFRS. The Group also measured right-of-use assets at the date of transition to IFRS at an
amount equal to the lease liabilities.
For leases whose period ends within 12 months from the transition date and leases for which theunderlying asset is of low value, the lease payments are expensed over the lease period with the straightline method or another systematic basis.
The reconciliation which IFRS requires a first-time adaptor to disclose are presented below. For reference,"Presentation reclassification" in the following reconciliation tables include items that do not affect retained
earnings and comprehensive income. "Recognition and measurement differences" include items that
affect retained earnings or comprehensive income.

14

Reconciliations of equity as of the IFRS transition date (January 1, 2017)(millions of yen)Accounts under JGAAP

Recognition
Presentation
and
JGAAP
reclassification measurement
differences

IFRS

Notes

AssetsAssetsCurrent assets
Cash and cash
equivalents
Notes and accounts
receivable - trade
Merchandise and finishedproducts
Raw materials andsupplies

Current assets
10,589

ሺ114)－

10,47696,851

ሺ82)

ሺ194)

96,57424,657

ሺ24,657)－－

13,315

ሺ13,315)－－－

38,343

ሺ724)

Trade and otherreceivables

37,619①

Inventories⑥

Other financial assets

－

7,452

2,516

9,967

15,213(7,696)

(131)

7,386

Deferred tax assets

3,640

ሺ3,640)－－Allowance for doubtfulreceivables

ሺ82)

82

－

－

164,184(3,627)－359

164,184

ሺ3,269)Cash and cash equivalents
①

Other

Total current assets

Other current assets

1,466 162,022－

Subtotal

359

Assets held for sale

1,466 162,381

Total current assets

Fixed assets
Property, plant andequipment

Accounts under IFRS

Non-current assets
345,496

ሺ223,544)

29,651 151,602③④

Property, plant andequipment⑤

Goodwill

Intangible assets
Goodwill

27,439－

ሺ5,956)21,483

Other

10,511

ሺ409)

202

10,305－

223,595－ 223,595

59,296

ሺ59,296)

－

－

－

372

－

372

－

68,783

10,49579,278Long-term loans
receivable

4,790

ሺ4,790)

－

－

Other

14,760

ሺ6,265)

426

8,921

Deferred tax assets

1,071

ሺ3,308)

4,414

2,176

Allowance for doubtfulreceivables

ሺ1,195)

1,195

－

－

462,168

ሺ3,666)39,231 497,733

626,352(6,935)40,697

Intangible assets
Investment property

Investments and otherassetsInvestment securities

Total fixed assets
Total assets

15

660,114

Investments accounted forusing equity method⑥

Other financial assets②

Deferred tax assets

Other non-current assets

Total non-current assets
Total assets

(millions of yen)Accounts under JGAAP

Recognition
Presentation
and
JGAAP
reclassification measurement
differences

IFRS

Notes

Accounts under IFRS
Liabilities and equities

Liabilities
Current liabilities
Notes and accounts
payable - trade

Liabilities
Current liabilities
38,503－

ሺ43)

38,460

Short-term bank loans

30,337

ሺ30,337)－－

Commercial Paper

33,000ሺ33,000)－－

Current portion of bonds

10,083

ሺ10,083)－－－

73,421

2,159

75,580⑥

Bonds and borrowings

Lease obligations

3,024

－

3,584

6,609

④

Lease liabilities

Income taxes payable

1,681

－

ሺ111)

1,570

－

32,988120

33,108

Accrued bonuses

2,980

ሺ2,980)－－Liquor taxes payable

34,228

ሺ34,228)－－

Deposits received

8,215

ሺ8,215)

－

－

Other

50,072

12,3384,014

66,424

Total current liabilities

212,123

ሺ96)

Trade and other payables

Income tax payables⑥

Other financial liabilities⑦

Other current liabilities

9,724 221,750

Total current liabilities
Non-current liabilities

Long-term liabilities
Bonds
Long-term bank loans

Net defined benefit
liability
Lease obligations
Dealers’ deposits forguarantees

50,129

ሺ50,129)－－

114,594

ሺ114,594)－－－

164,723512 165,235⑥

Bonds and borrowings－

47,609517

48,125⑥

Other non-current financial
liabilities

8,996

－

－

8,996

6,969

－

17,654

24,62333,242

ሺ33,242)－－

Net defined benefit liability④

Lease liabilities

Other
Deferred tax liabilities

15,115

ሺ14,367)

1,941

2,689

18,804

ሺ6,839)14,49026,455

Total long-term liabilities

247,848

ሺ6,839)35,113 276,122

Total non-current liabilities

Total liabilities

459,971

ሺ6,935)44,837 497,872

Total liabilities

Common stock

53,887－－53,887

Capital surplus

46,089－

ሺ5,383)40,706

Treasury stock, at cost

ሺ1,796)－－

ሺ1,796)

Retained earnings

41,932－

ሺ5,617)36,315⑨

Retained earnings

Accumulated othercomprehensive income

20,574－

7,941

28,515⑧

Other components of equity

Other non-current liabilities②

Net assets

Deferred tax liabilities

EquityShare capital⑤

Capital surplus
Treasury shares

157,628

Total equity attributable toowners of parent

4,613

Non-controlling interests

5,694

－

ሺ1,081)

Total net assets

166,381－

ሺ4,140) 162,241

Total equity

Total liabilities and net
assets626,352

ሺ6,935)40,697 660,114

Total liabilities and equity

Non-controlling interests

16

Reconciliations of equity as of the end of the nine months of FY2017 (September 30, 2017)(millions of yen)Accounts under JGAAP

JGAAP

Recognition
Presentation
andreclassification measurement
differences

IFRS

Notes

AssetsAssetsCurrent assets
Cash and cash equivalents
Notes and accounts
receivable - trade
Merchandise and finishedproducts
Raw materials andsupplies

Other
Allowance for doubtfulreceivables

Total current assets

Current assets
Cash and cash
equivalents
Trade and otherreceivables

13,085(170)－

12,914

81,727

(120)

(60)

81,54629,861(29,861)－－

12,973(12,973)－－－

43,321(875)

42,447①

Inventories

－

7,962

859

8,820

⑥

Other financial assets

18,919(11,931)

(108)

6,881

(120)

120

－

－

156,445(3,652)(184)

152,609

－

1,892

－

1,892

Assets held for sale156,445(1,760)(184)

154,501

Total current assets①

Other current assets

Subtotal

Fixed assets
Property, plant andequipment

Accounts under IFRS

Non-current assets
Property, plant andequipment

346,469(223,453)

28,618

151,634③④

Goodwill

27,982－(3,053)24,929⑤

Other

13,653(390)

171

13,434

Intangible assets－

221,951－

221,951

Investment property

64,169(64,169)

－

－

－

386

－

386

－

69,24010,96380,204

470

(470)

－

－

16,379(7,321)

419

9,477

Intangible assets
Goodwill

Investments and otherassetsInvestment securities

Long-term loans
receivable
Other

Investments
accounted for using
equity method⑥

Other financial assets

Other non-current
assets－(2,540)

4,883

2,343

Allowance for doubtfulreceivables(1,191)

1,191

－

－

Total fixed assets

467,932(5,576)42,001

504,357

Total non-current
assets624,377(7,335)41,817

658,858

Total assets

Total assets

17②

Deferred tax assets

(millions of yen)Accounts under JGAAP

JGAAP

Recognition
Presentation
andreclassification measurement
differences

IFRS

Notes

Accounts under IFRS
Liabilities and equities

Liabilities
Current liabilities
Notes and accounts
payable - trade

Liabilities
Current liabilities
37,388－(43)

37,345

Short-term bank loans

44,302(44,302)－－

Commercial paper

34,500(34,500)－－

Current portion of bonds

10,005(10,005)－－－

88,807745

89,552⑥

Bonds and borrowings

－

2,783

4,107

6,890

④

Lease obligations

2,275

－

5

2,281

－

30,104

7

30,111－

Income taxes payable

Trade and other payables

Income tax payables⑥

Other financial liabilities⑦

Other current liabilities

Accrued bonuses

3,934(3,934)－

Liquor taxes payable

31,565(31,565)－－

Deposits received

7,178(7,178)

－

－

Other

50,837

9,697

4,586

65,119Total current liabilities

221,984

(95)

9,408

231,297

Bonds

50,129(50,129)－－

Long-term bank loans

99,609(99,609)－－－

149,738(483)

149,255⑥

Bonds and borrowings⑥

Other financial liabilities

Total current liabilities

Long-term liabilities

Net defined benefit liability

Non-current liabilities－

45,452453

45,905

8,234

－

(387)

7,847

Net defined benefit liability

－

6,216

17,65523,871Dealers’ deposits forguarantees

31,105(31,105)

－

－

Other

41,269(41,076)

1,898

2,092

－

13,272

15,11628,388230,346(7,241)

34,252

257,357

452,330(7,335)43,659488,654

Common stock

53,887－－53,887

Capital surplus

46,091－(5,383)40,708Treasury stock, at cost

(1,800)－－(1,800)Retained earnings
Accumulated othercomprehensive income

44,470－(4,547)39,923⑨

Retained earnings

24,285－

9,282

33,567⑧

Other components of equity

Total long-term liabilities
Total liabilities④

Other non-current liabilities②

Deferred tax liabilities
Total non-current liabilities
Total liabilities

Net assets

Equity⑤

Capital surplus
Treasury shares

Total equity attributable toowners of parent
Non-controlling interests－(1,195)

3,920

Total net assets

172,047－(1,843)

170,204

Total liabilities and net assets

624,377(7,335)41,817

658,858

18

Share capital

166,285
5,114

Non-controlling interests

Lease obligations

Total equity
Total liabilities and equity

Reconciliations of equity as of the end of FY2017 (December 31, 2017)(millions of yen)Accounts under JGAAP

JGAAP

Recognition
Presentation
andreclassification measurement
differences

IFRS

Notes

Assets

Accounts under IFRS
AssetsCurrent assets

Current assets
Cash and cash
equivalents
Trade and otherreceivables

12,718(181)－

12,53798,605

(103)

(176)

98,325

24,681(24,681)－－

13,638(13,638)－－－

38,718(846)

37,873①

Inventories

－

8,216

892

9,107

⑥

Other financial assets

Other

15,413(8,433)

(66)

6,914

Deferred tax assets

3,900(3,878)(22)－

Allowance for doubtfulreceivables

(103)

103

－

－

Total current assets

168,852(3,878)(219)

164,755

Cash and cash equivalents
Notes and accounts
receivable - trade
Merchandise and finishedproducts
Raw materials andsupplies①

Other current assets

Total current assets

Fixed assets
Property, plant andequipment

Non-current assets
343,763(219,266)

26,837

151,334③④⑤

Property, plant andequipment

Intangible assets
Goodwill

26,948－(2,006)24,942

Other

13,575(391)

155

13,339Intangible assets－

219,658－

219,658

Investment property

62,146(62,146)

－

－

－

391

－

391

－

66,904

11,77378,677

428

(428)

－

－

Goodwill

Investments and otherassetsInvestment securities

Long-term loans
receivable
Other

14,828(5,938)

419

9,309

Deferred tax assets

1,306(5,201)

6,220

2,326

Allowance for doubtfulreceivables(1,216)

1,216

－

－

461,779(5,201)

43,398499,976

630,631(9,079)43,179664,731

Total fixed assets
Total assets

19

Investments accounted
for using equity method⑥

Other financial assets②

Deferred tax assets

Other non-current assets

Total non-current assets
Total assets

(millions of yen)Accounts under JGAAP

JGAAPPresentation
reclassification

Recognition
andmeasurement
differences

IFRS

Notes

Accounts under IFRS
Liabilities and equities

Liabilities

Liabilities

Current liabilities

Current liabilities

Notes and accounts
payable - trade36,530－(43)

36,488

Short-term bank loans

37,882(37,882)－－

Commercial paper

32,000(32,000)－－

Current portion of bonds

10,068(10,068)－－－

79,950765

80,716⑥

Bonds and borrowings

Lease obligations

2,691

－

3,842

6,533

④

Lease obligations

Income taxes payable

5,202

－

5

5,207

－

33,060216

33,277

Accrued bonuses

3,090(3,090)－－Liquor taxes payable

34,408(34,408)－－

Deposits received

7,817(7,817)

－

－

Other

50,484

12,2553,850

66,590Total current liabilities

220,173

(0)

8,636

228,809

Trade and otherpayablesIncome tax payables⑥

Other financial
liabilities⑦

Other current liabilities
Total current liabilities

Long-term liabilities

Non-current liabilities

Bonds

50,061(50,061)－－Long-term bank loans

103,578(103,578)－－－

153,639(455)

153,184⑥－

45,548408

45,956⑥

Net defined benefit liability

5,493

－

790

6,283

Lease obligations
Dealers’ deposits forguarantees

5,960

－

18,33524,29531,086(31,086)

－

－

Other

15,324(14,462)

1,759

2,621

Deferred tax liabilities

21,292(9,079)15,65827,872

Total long-term liabilities

232,795(9,079)36,496260,212452,968(9,079)45,132

489,021

Total liabilities④②

Lease obligations

Deferred tax liabilities
Total non-current
liabilities
Total liabilities
Equity53,887－－

Capital surplus

46,091－(5,266)40,825

Treasury stock, at cost

(1,807)－－(1,807)Retained earnings

50,023－(5,532)44,491⑨

Accumulated othercomprehensive income

25,274－

9,385

34,659⑧－

53,887⑤

Capital surplus
Treasury shares
Retained earnings

172,055

Non-controlling interests

－

(539)

3,655

Total net assets

177,663－(1,952)

175,710

Total liabilities and net assets

630,631(9,079)43,179664,731

20

Share capital

Other components ofequityTotal equity attributable toowners of parent

4,195

Non-controlling interests

Other financial
liabilities
Net defined benefit
liability

Other non-current
liabilities

Net assets
Common stock

Bonds and borrowings

Total equity
Total liabilities and equity

Notes on reconciliations of equity(1) Presentation reclassification
A. Trade and other receivables
Under JGAAP, “Notes and accounts receivable - trade” and “Allowance for doubtful receivables” were
presented separately, though under IFRS, these line items are included in “Trade and other receivables.”B. Inventories
Under JGAAP, “Merchandise and finished products” and “Raw materials and supplies” were presented
separately, and work in progress was included in “Other,” though under IFRS, these line items are reclassified
as “Inventories.”
C. Other financial assets and other financial liabilities
Based on presentation rules of IFRS, “Other financial assets” and “Other financial liabilities” are presented
separately.
Under JGAAP, “Investment securities” and “Long-term loans receivable” were separately presented andderivative assets were included in “Other” in Fixed assets. Though under IFRS, they are included in “Other
financial assets.”
In addition, under JGAAP, “Deposits received” was separately presented in current liabilities, though under
IFRS, it is included in “Other financial liabilities.”
D. Deferred tax assets and deferred tax liabilities
Under JGAAP, “Deferred tax assets” and “Deferred tax liabilities” were separately presented in current assets
and current liabilities, respectively, though under IFRS, these line items are presented in non-current assets
and non-current liabilities.
E. Assets held for sale
Based on IFRS 5, “Assets held for sale” is presented separately.
F. Investment property
Under JGAAP, fixed assets that meet the definition of investment property was included in “Property, plant andequipment” in fixed assets, though under IFRS, it is presented as “Investment property.”(2) Differences on recognition and measurement
1) Trade and other receivables and inventories
Under JGAAP, revenue was recognized mainly at the point of shipment, though under IFRS, it is recognized
mainly at the point of delivery.
In addition, under JGAAP, goods held mainly for advertisement and promotion were recognized as
inventories, though under IFRS, they are recognized as expenses at the point of purchase.
2) Deferred tax assets and deferred tax liabilities
Amounts of deferred tax assets and deferred tax liabilities have been adjusted for reasons such as temporary
differences arising from transition to IFRS from JGAAP.
3) Property, plant and equipment
In line with adoption of IFRS, the Group revised the depreciation method and other procedures for property,
plant and equipment and reduced their book value. In addition, for certain property, plant and equipment
items, the Group applied the exemption that permits the first-time adopter to use the fair value as of thetransition date as deemed cost. The book value of those property, plant and equipment before the applicationof deemed cost as of the transition date was 39,044 million yen and their total fair value was 71,253 million
yen.
4) Lease obligations
Under JGAAP, lease transactions of lessee were classified into finance lease and operating lease. For
operating lease, lease transactions were accounted for in a similar manner with ordinary rental transactions.
Under IFRS, the Group records all of its lease transactions in both leased assets (right-of-use asset) andlease obligations (lease liabilities), as lease transactions of lessee are not classified into finance lease and21

operating lease.
5) Goodwill
Under JGAAP, goodwill was amortized with the straight-line method over a reasonable period up to 20 years,
though from the date of transition to IFRS, the Group ceased to amortize goodwill and instead started toperform an impairment test every year.
In addition, under JGAAP, changes in ownership interests in subsidiaries that do not result in loss ofcontrol (additional acquisition of ownership interests) were accounted for as external transaction withadjustments of goodwill or income and loss. Under IFRS, such changes are accounted for as equity
transaction, which affects “Capital surplus" without any change in goodwill or income and loss.
6) Other financial assets and other financial liabilities
Under JGAAP, the Group recorded unlisted shares based on their acquisition costs and, if necessary,recognized their impairment when the financial position of an issuer deteriorated, though under IFRS, theGroup has elected to measure them at fair value through other comprehensive income.
In addition, under JGAAP, interest-rate swaps that meet specific requirements were treated with a specificaccounting method. Under IFRS, however, they are treated with principle hedge accounting, where derivative
assets/derivative liabilities are recognized accordingly, and valuation differences are recognized in othercomprehensive income.
7) Other current liabilities
Under JGAAP, unused compensated absences were not required to be accounted for, though under IFRS,
they are recognized as liabilities.
Under JGAAP, levies including real-estate tax were recognized at the time of payment, though under
IFRS, they are recognized on the day when the liability is accrued.
8) Other components of equity
With respect to cumulative exchange differences on translations of foreign operations recognized under
JGAAP, the total amount was transferred to “Retained earnings” as of the transition date.
Under JGAAP, the Group recorded unlisted shares based on their acquisition costs and, if necessary,recognized their impairment when the financial position of an issuer deteriorated. Under IFRS, the Group has
elected to measure them at fair value through other comprehensive income.
Under JGAAP, past service cost was recognized in net assets through other comprehensive income when
they occurred and was expensed using the straight-line method over a certain number of years within the
average remaining service period of the employees. Under IFRS, past service cost is recognized in full as
either profit or loss when it occurs.
9) Retained earnings(millions of yen)
Nine months ended
Transition dateYear ended
September 30,
December 31,2017(January 1, 2017)2017
Trade and other receivables and Inventories (see 1)

(418)

(282)

(510)

(1,610)(3,000)(4,851)

Lease obligations (see 4)

252

226

217

Goodwill (see 5)

－

2,859

3,904

Other financial assets、Other financial liabilities (see 6)

263

261

275

Other current liabilities (see 7)(2,739)(3,172)(2,643)

Other components of equity (see 8)(1,382)(1,376)(1,739)

16

(63)

(185)

(5,617)(4,547)(5,532)

Property, plant and equipment (see 3)

OtherTotal adjustments to retained earnings

22

Reconciliations of profit or loss and comprehensive income for the nine months of FY2017(January 1, 2017 -September 30, 2017)(millions of yen)Accounts under JGAAP

Recognition
Presentation
and
JGAAP
reclassification measurement
differences

IFRS

Notes

Accounts under IFRSNet sales

400,845－(10,113) 390,732①

Revenue

Cost of sales

259,026－

11,454 270,480①②④

Cost of sales

Gross profit

141,819－(21,567) 120,252

131,087－(21,346) 109,741

－

786

－

1,637

Operating income

10,732(852)

Non-operating income

1,497(1,497)－－

Non-operating expenses

1,971(1,971)－－

Extraordinary gains

973

(973)

－

－

Extraordinary losses

1,292(1,292)

－

－

－

1,671

(739)

931

－

1,625

276

1,901

－

14

(0)

14

9,941

－

(1,163)

8,778

4,908

－

(921)

3,987

5,033

－

(242)

4,791

Selling, general andadministrative expenses

Profit before income taxes
Income taxes
Profit(55)

Gross profit①②③④

Selling, general andadministrative expenses

730

Other operating income

(129)

1,508

Other operating expenses

(148)

9,733

Operating profit⑤

Finance income
Finance costs
Share of profit of investments
accounted for using equity
methods
Profit before tax⑤

Other comprehensive
incomeIncome tax expense
ProfitOther comprehensive income
Financial assets measured atfair value through othercomprehensive income
Remeasurements of defined
benefit plans

Unrealized holding gain
on securities

2,848

－

1,501

4,349

⑤

Remeasurements ofdefined benefit plans

(261)

－

938

677

④

Foreign currencytranslation adjustments

987

－

12

999

Exchange differences ontranslation of foreign
operations

Deferred hedge gains(losses)

(31)

－

88

57

Effective portion of gains andlosses on fair value of cash
flow hedges

Comprehensive income

8,576

－

2,297

10,87323

Comprehensive income

Reconciliations of profit or loss and comprehensive income for FY2017(January 1, 2017 - December 31, 2017)(millions of yen)Accounts under JGAAP

Recognition
Presentation
and
JGAAP
reclassification measurement
differences

IFRS

Notes

Accounts under IFRSNet sales

551,549－(14,963) 536,585①

Revenue

Cost of sales

358,573－

14,576 373,148①②④

Cost of sales

Gross profit

192,976－(29,539) 163,437

175,944－(29,952) 145,991

－

2,716

Selling, general andadministrative expenses(1,687)
(144)

5,669

Other operating expenses(1,130)12,806

5,813

17,033(3,097)

Non-operating income

2,093

ሺ2,093)－－Non-operating expenses

2,715

ሺ2,715)－－Extraordinary gains

6,814

ሺ6,814)－－Extraordinary losses

5,423

ሺ5,423)

－

－

－

6,171

(4,833)

1,338

－

2,324

302

2,626

－

19

(0)

19

17,802－(6,264)

11,5388,182－(3,012)

5,170

9,619

－

(3,252)

6,367

ProfitSelling, general andadministrative expenses
Other operating income

Operating income

Income taxes

①②
③④

1,029

－

Profit before income
taxes

Gross profit

Operating profit⑤

Finance income
Finance costs
Share of profit of investments
accounted for using equity
methods
Profit before tax⑤

Income tax expense
ProfitOther comprehensive
incomeOther comprehensive income

Unrealized holding gain
on securities

3,416

－

4,785

8,202

⑤

Remeasurements ofdefined benefit plans

189

－

348

537

④

Foreign currencytranslation adjustments

1,019

－

13

1,032

Deferred hedge gains(losses)

ሺ60)

－

174

114

Comprehensive income

14,184－

2,068

16,25224

Financial assets measured atfair value through othercomprehensive income
Remeasurements of defined
benefit plans
Exchange differences ontranslation of foreign
operations
Effective portion of gains andlosses on fair value of cash
flow hedges
Comprehensive income

Notes on reconciliations of income and comprehensive income(1) Presentation reclassification
A. Other operating income, other operating expenses, finance income, finance costs and share of profit ofinvestments accounted for using equity methods
With respect to line items presented in “Non-operating income,” “Non-operating expenses,” “Extraordinary
gains” and “Extraordinary losses” under JGAAP, the Group has reclassified financial-related items to “Financeincome” or “Finance costs” and other items to “Other operating income,” “Other operating expenses” or“Share of profit of investments accounted for using equity methods” in accordance with IFRS.
(2) Differences on recognition and measurement
1) Revenue, cost of sales and selling, general and administrative expenses
Under JGAAP, some rebates and other related costs were presented in “Selling, general and administrative
expenses,” though under IFRS, these costs are deducted from “Revenue.”
Under JGAAP, revenue was recognized mainly at the point of shipment, though under IFRS, it isrecognized mainly at the point of delivery.
2) Cost of sales and selling, general and administrative expenses
As the Group revised the depreciation method and other procedures for property, plant and equipment in linewith adoption of IFRS, depreciation expense included in cost of sales and selling, general and administrative
expenses have been changed.
In addition, under JGAAP, levies including real-estate tax were recognized at the time of payment, though
under IFRS, they are recognized on the day when the liability is accrued.
3) Selling, general and administrative expenses
Under JGAAP, goodwill was amortized over the period for which its effects are estimated to last, though under
IFRS, goodwill is no longer amortized after the transition date.
4) Cost of sales, selling, general and administrative expenses, and remeasurements of defined benefit plans
Under JGAAP, past service cost was recognized in net assets through other comprehensive income when
they occurred and was expensed using the straight-line method over a certain number of years within the
average remaining service period of the employees. Under IFRS, past service cost is recognized in full as
either profit or loss when it occurs.
5) Income tax expense, financial assets measured at fair value through other comprehensive income
Under JGAAP, the Group recognized gain on sales of investment securities and tax on the gain in“Extraordinary gains” and “Income taxes,” respectively. Under IFRS, which permits to designate certain equity
instruments as financial assets measured at fair value through other comprehensive income, the Group
recognizes the gain on sales of designate equity instruments as “Other comprehensive income.”25