Financial Results
for the Six Months Ended June 30, 2015 — Consolidated(Based on Japanese GAAP)
August 5, 2015

Company name

Sapporo Holdings Limited

Security code
Listings
URL

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

Representative
Contact

Tsutomu Kamijo, President, Representative Director and Group CEO
Toshihiko Umezato, Director of the Corporate Communications Department

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

Filing of quarterly financial reportAugust 13, 2015

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 Six Months Ended June 30, 2015
(January 1 – June 30, 2015)(Amounts in million yen rounded down to the nearest million yen)

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

Six months ended
June 30, 2015
Six months ended
June 30, 2014

Operating income%

Ordinary income
million yen

Net income

million yen%

million yen

245,884

2.5(1,291)-(1,469)

-

1,164

-

239,862

3.7

1,007

114.2

272

(18.8)%(10,928)-

Note: Accumulated other comprehensive income
Six months ended June 30, 2015

5,627 million yen

Six months ended June 30, 2014

(9,946) million yen

Net income per
share

Diluted net income
per share

Yen

Yen

Six months ended
June 30, 2015

2.99

-

Six months ended
June 30, 2014

(28.02)-

1%

million yen%

(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yenJune 30, 2015

621,102

161,92725.1

400.21

December 31, 2014

625,439

160,00425.0

401.17

Note: Shareholders’ equity
June 30, 2015:
December 31, 2014:

155,923 million yen
156,303 million yen

2. Dividends
Dividend per share
Record date or
periodEnd Q1End Q2End Q3Year-end

Full year

Yen

yen

yen

Yen

yen

Year ended
December 31, 2014

—

0.00

Year ending
December 31, 2015

—

0.00

Year ending
December 31, 2015
(forecast)

—

7.00

7.00

—

7.00

7.00

Note: No changes were made to dividend forecasts in the six months ended June 30, 2015.

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2015
(January 1 – December 31, 2015)(Percentage figures represent year-over-year changes)
Net income
Net sales

Operating income

Ordinary income

Net income
per share

Year ending
December 31,
2015

million yen%

million yen%

million yen%

million yen%

545,700

5.2

16,30010.7

15,2004.4

8,000

2,252.8

Note: Changes were made to earnings forecasts in the six months ended June 30, 2015: None

2

yen

20.53

4. Other*For details, see "2. Other Information" on page 11.
(1) Changes in significant subsidiaries during the six months ended June 30, 2015: None
(2) Simplified accounting: Yes*Use of simplified accounting methods and/or accounting methods specific to quarterly consolidated
financial statements(3) Changes in accounting policy, changes in accounting estimates, and retrospective
restatement
1) Changes in accordance with amendments to accounting standards etc.: Yes
2) Changes other than 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
Note: For details, see (2) Changes in accounting policy, changes in accounting estimates,
and retrospective restatement, in section “2. Other Information” on page 11 in theaccompanying material.
(4) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):June 30, 2015:
393,971,493 shares
December 31, 2014: 393,971,493 shares
2) Number of shares held in treasury at end of period:
4,369,421 shares
June 30, 2015:
December 31, 2014:
4,348,456 shares
3) Average number of outstanding shares during the period:
Six months ended June 30, 2015: 389,610,837 shares
Six months ended June 30, 2014: 390,021,090 shares*Quarterly review status
The quarterly financial results are not subject to quarterly reviews pursuant to the Financial
Instruments and Exchange Act. The quarterly review of the quarterly financial results
herein had not been completed as of the date of this document.
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 those expressed or implied by forward-looking statements due to various factors.

3

1. Analysis of Operating Results(1) Consolidated Financial Results for the Six Months ended June 30, 2015
In the first half of 2015 (January 1 – June 30), the Japanese economy remained on amoderate recovery track, supported by the government's economic stimulus measures.
Personal consumption has been rebounding moderately reflecting improvement in the
consumer mindset supported by the uptick in the stock market, low crude oil prices, andimproving employment conditions.
Amid this environment, the SAPPORO Group posted a year-on-year increase in sales,
despite a decline in in shipments of beer and beer-type beverages at the core Japanese
Alcoholic Beverages business. Sales growth during the quarter was driven by the Food &Soft Drinks business, which achieved year-on-year gains for shipments of its food andbeverage products, and the International Business, where revenues increased on a change
in the accounting period of one overseas subsidiary and the inclusion of another in theaccounts for the first time.
Operating income, however, was lower than in the previous fiscal year primarily owing to
the decline in shipments at the Japanese Alcoholic Beverages business and to lower rental
revenues at the Real Estate business as a result of the sale of some real estate property
holdings and a temporary drop in the occupancy rate at others following the exit of a large
tenant at the expiration of the lease contract.
As a result of the above factors, the SAPPORO Group posted consolidated sales of¥245.8 billion (up ¥6.0 billion or 3% year over year), an operating loss of ¥1.2 billion(compared with operating income of ¥1.0 billion a year earlier), and an ordinary loss of ¥1.4
billion (compared with ordinary income of ¥0.2 billion a year earlier).
However, the Group posted net income of ¥1.1 billion in the first half of 2015 (comparedwith a ¥10.9 billion loss a year earlier), owing to the realization of a gain on the sale of trust
beneficiary rights in the Shibuya Sakuragaoka Square office building in February.
Segment information is outlined below. Consolidated subsidiary New Sanko Inc., which was
included in the Japanese Alcoholic Beverages segment last year, has been moved to the
Restaurants segment from the first quarter of 2015.
Seasonal Factors
The Group’s operating results exhibit substantial seasonal variation in demand for the
products and services offered by the Japanese Alcoholic Beverages, International Business,
Food & Soft Drinks, and Restaurants businesses. As a result, sales in the first quarter, which
affect the first-half results, tend to be lower than sales in the other three quarters.

4

Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer-type beverages in the first half of2015 was less than in the same period of the previous year.
Under such market conditions, the Japanese Alcoholic Beverages business continued its
efforts to realize further growth by constantly providing customers with a unique value
proposal. These efforts continued to center on implementing management’s vision of “SeekNo.1 by accumulating one-of-a-kind products” while also adhering to the campaign slogan,“Bringing more cheer to your ‘Cheers’!”.
In the beer and beer-type beverages category, sales of our core Yebisu brand were
stimulated by the release of two popular limited volume versions—Kaori Hanayagu Yebisu in
February and Yebisu Royal Selection in March. In April, we launched a new version of ourcanned Sapporo Draft Beer Black Label and strengthened marketing for the product to thehousehold-use market. As a result, sales of canned beers were higher than in the previous
year. In the happoshu category, in March we launched a new version of our zero purine
bodies and zero carbohydrate Goku Zero, which offers new value as a beverage using zeroartificial sweeteners. In the new-genre category, in February we launched a new version of
the popular Mugi to Hop The Gold, featuring further refinement of the beverage’s
characteristic rich flavor. Despite these efforts, shipments of our beer and beer-type
beverages fell short of the previous year's level amid intense competition in the happoshu
and the new-genre functional beverage market. In the nonalcoholic beer category, in May
we launched SAPPORO+ (plus), our first product in the nonalcoholic beer market to becertified as a food for specified health uses (FOSHU), producing a substantial market buzz.
In the RTD* category, we supplemented the popular Sapporo Otoko Ume Sour lineup by
introducing Cho (Ultra) Otoko Ume Sour in June as a limited-time release and saw favorable
sales of the new product. Overall, however, sales of our RTD beverages declined.
In the wine category, sales fell below the previous-year level on weak demand fordomestic mass-produced wines. However, shipments of our domestic flagship wine Grande
Polaire expanded sharply amid a wave of popularity for Japanese wines. In the imported
wine subcategory, we expanded our offerings in the growing market for mid- and high-pricerange products when we entered into new strategic partnerships with Treasury Wine Estates
and world-renowned champagne maker Taittinger.
The spirits business saw sales fall slightly below its first-half results of 2014 despite
growth in shipments of major brands, such as Dewar’s, Cutty Sark, and Martini. Our
Japanese liquor business, however, posted a sales gain, driven by Imo Shochu Kokuimo,
Japan’s top-selling blended imo shochu**, and Aka Umeshu, an umeshu (Japanese plumwine) with additional functional content.
As a result of the above, the Japanese Alcoholic Beverages business posted first-halfsales of ¥121.6 billion, down ¥5.1 billion or 4% year over year. Despite continued efforts tocontrol costs, the business posted a first-half operating loss of ¥0.6 billion, compared with anoperating income of ¥1.3 billion a year ago.

5

* RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-likebeverages that can be consumed as is immediately after opening.
** Based on Intage SRI market research on combined blended imo shochu sales in the
supermarket, convenience store, and discount liquor store channels from January 2013 to
December 2014.

International Business
In North America, the falling price of crude oil appears to have had a negative impact on the
Canadian economy while stimulating personal consumption in the United States. As for thebeer market, we estimate that total demand in both the U.S. and Canadian markets waslargely even with the levels seen in the first half of 2014. In Asia, meanwhile, the beermarket appears to be continuing its recent steady growth, supported by growing populations
and firm economic growth.
In this environment, our International Business continued aggressive marketing activities
targeting the premium beer markets in North America and Southeast Asia, the two regions
where the business is concentrating its resources and efforts.
In Canada, SLEEMAN BREWERIES's continued aggressive spending on marketing of its
premium brands led to a 3% year-over-year gain in shipments (excluding Sapporo brandbeer). In the US market, Sapporo USA’s expansion of its marketing efforts targeting theJapanese-American market segment to the wider Asian-American and general population
market segments supported a 4% increase in its shipments of Sapporo brand beers. In the
U.S. soft drinks business, Silver Springs Citrus was adversely affected by the persistently
high prices of oranges used to produce its juices, but the addition of Country Pure Foods Inc.
as a consolidated subsidiary in February strengthened our position in the U.S. drink market.
The Vietnam business continued its aggressive marketing efforts to establish the Sapporo
brand in the local market, including large-scale promotional events and placement of
product displays at the entrance to bars and restaurants. However, first-half shipments fell
below the previous-year level owing to intensified competition in the premium beer market.
In South Korea, continued efforts to strengthen sales of beer to both the household andcommercial markets by leveraging our local partner's sales network yielded a significant
year-over-year increase in shipments during the first half of 2015. In Singapore, cooperative
efforts with our local subsidiary are expanding our sales channels to that country's
household market. In Oceania, where our business centers on licensing agreements withlocal brewing partners, continued efforts to strengthen marketing contributed to a solid
year-over-year increase in sales volumes. These efforts of our overseas subsidiaries invarious nations enabled the International Business to achieve a solid 13% year-over-yearincrease in shipments of Sapporo brand products in overseas markets.
In addition, we changed Silver Springs Citrus’s accounting period included in the Group’s
consolidated accounts and started to include Country Pure Foods in the consolidated
accounts from February.
As a result, the International Business posted sales of ¥34.7 billion, up ¥11.0 billion, or6

46%, year over year. The segment's first-half operating loss amounted to ¥0.7 billion,
compared with a loss of ¥0.5 billion a year earlier.

Food & Soft Drinks
We estimate that overall demand for soft drinks in Japan in the first half of 2015 was about
the same as in the first half of 2014. In addition, we estimate that total demand forlemon-based products (flavorings) expanded from the previous year’s level while the market
for instant soups (including soups in a cup) was largely the same as in the first half of 2014.
In this environment, the Sapporo Group’s Food & Soft Drinks business began its third yearof integrated operations as POKKA SAPPORO Food & Beverage Ltd. The subsidiary isconcentrating investments on core brands, with a focus on its soup and lemon-based
product lineups, as it endeavors to strengthen and nurture its various brands.
The segment’s domestic soft drinks business enhanced its lineup of lemon-based
products with the March introduction of an energy drink, ENERGIE, from our core Kireto
Lemon brand. The product is creating a new market for energy drinks targeted at adultwomen and has been strongly received by its target market. Meanwhile, Kireto Lemon (inbottles) and Kireto Lemon Sparkling continued to do well, and the Kireto Lemon brandas whole enjoyed strong sales growth. In the coffee drink category, we reviewed prices
on some products in April, resulted in recovery from a continued downward trend. During
the term, we launched Nippon Oolong, an oolong tea made from domestic tea leaves, andTsubu Tappuri Zeitaku Mikan, a pulp-rich juice drink made from Japanese tangerines.
The new products received favorable reviews as the latest in the line of POKKASAPPORO’s distinctive and unique drink products, contributing to a 3% year-over-yearincrease in domestic shipments of the subsidiary's soft drink products.
Shipments of our lemon-based products (flavorings) expanded 6% year-over-year,
beating the growth in total market demand. Our core Pokka Lemon 100 brand continues to
do well and we enhanced the brand's lineup with the introduction of Pokka Lemon Premium
Sicilian Straight Lemon Juice for various uses and Shio Lemon, a salted preserved
lemon‒based flavoring capable of expanding a cook's repertoire of lemon-flavored dishes.
In the instant soup category, we continued to add new flavors to the Jikkuri Kotokoto
Kongari Pan series with the introduction of Jikkuri Kotokoto Kongari Pan Karamucho Soup
and other new offerings. As a result, sales volume of our instant soups increased 19%.
In the domestic restaurants business, the Café de Crié coffee shop chain overcame risingcosts, including procurement costs and personnel expenses, and achieved a large
year-on-year increase in sales. The result reflects a rebound in comparable-store sales
fueled by detailed seasonal menu revisions.
The segment’s overseas soft drinks business added to its top share in Singapore's tea
drinks market when its POKKA brand became the No.1 selling brand in the non-chilled fruit
juice beverages category.*** Seeking to solidify its position in an Indonesian market
expected to see dynamic growth in the future, POKKA CORPORATION (Singapore) Pte. Ltd.
formed a joint venture with PT DIMA INDONESIA to manufacture and sell soft drinks in the7nation. In June, the new joint venture began construction of a plant, which it plans to start up
in 2016.
One last factor affecting the segment’s first-half results is the sale of its Hong Kong
restaurant business in December 2014.
As a result of above, the Food & Soft Drinks segment recorded first-half sales of ¥63.9
billion, up ¥1.1 billion or 2% year over year. The segment’s operating loss was ¥1.4 billion(compared with a ¥1.8 billion loss a year earlier).
***Market shares are based on data from Nielsen Singapore MarketTrack March 2015
(Copyright 2015, The Nielsen Company)

Restaurants
Japan’s restaurant industry continues to face a difficult operating environment, withprocurement costs and labor costs on an upward trend.
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 andsound food and service to customers while also striving to create restaurants that “deliver
100% satisfaction to customers.”
In the first half of 2015, the Restaurants Business endeavored to raise profitability by
aggressively changing store formats. In April, it opened the first Hokkaido outlet of its
popular Yebisu Bar chain, and a branch of its Rumoi Marche chain of seafood restaurants
officially endorsed by the Hokkaido city of Rumoi was opened in Shinagawa East One
Tower.
Also in April, we opened the Garden Terrace Lion at Ritsumeikan University's Ibaraki
campus in Osaka Prefecture’s Ibaraki City. As part of its integrated profit structure reform,
the Restaurants Business closed 12 outlets, including some unprofitable stores, in the firstsix months of 2015. As a result, the number of outlets operating at period-end was 174.
Overseas, we opened two Rive Gauche cake and patisserie shops in Singapore, bringing
the Restaurants Business’ total number of overseas outlets to 16 as of end-June 2015. This
number includes two Ginza Lion Beer Halls, the second opened in October 2014, and weplan to continue creating eating and drinking establishments that will be popular with local
consumers.
Overall, the Restaurants Business’ first-half sales came to ¥12.8 billion, up 1% from thefirst-half of 2014. The segment’s operating loss came to ¥0.2 billion (compared with a ¥0.3
billion loss a year earlier).

Real Estate
Japan’s real estate industry continued to see a moderate recovery in rent levels during thefirst half of 2015, as rebounding corporate profits stimulated demand for office relocations,
helping to drive down vacancy rates in the Greater Tokyo office leasing market.
Amid such favorable demand conditions, our real estate leasing business, which saw a8

temporary drop in the occupancy rate at its core Yebisu Garden Place property following theloss of a large tenant at the expiration of its lease contract in May 2014, stepped up efforts to
attract new tenants to raise the occupancy rate while also raising rents against a backdropof strong office demand. Meanwhile, occupancy rates at other properties remain at highlevels.
At Yebisu Garden Place, which in 2014 celebrated the 20th anniversary of its opening, we
continue to make renovations to enhance the property’s value by raising convenience levels
and strengthening its brand appeal as we endeavor to provide tenants and visitors withenjoyable experiences in comfortable and pleasant surroundings. This June, we reopened
the renovated and remodeled "Glass Square" dining area on the building's B1 floor with theconcept of “Quality Daily Life.” We welcomed six highly specialized and much-talked-about
new restaurant tenants to the floor, including one opening its first store in Japan.
Meanwhile, the new Ebisu First Square, which came on line in October 2014, has wonhigh praise from tenants as a highly competitive office building with superior safety features,
comfort levels, and environmental performance. We look forward to the property’s firstfull-year and full-scale contribution to earnings in 2015.
The real estate development business began construction work in March on a newbuilding as part of its Ginza 5-chome Redevelopment Project. The building is scheduled toopen for business in summer 2016. We aim to develop a property that becomes the talk of
the town and a center of activity suitable for a Ginza landmark.
We are constantly reviewing and revising our property portfolio from a long-term
perspective. In December 2014 we sold our entire equity stake in Sapporo Sports Plaza
along with several lease properties. Then in February 2015 we sold our trust beneficiaryrights in the Shibuya Sakuragaoka Square office building.
As result of the efforts outlined above, the Real Estate business’s first-half sales totaled¥9.8 billion (down ¥1.1 billion or 10%). Operating income was ¥3.7 billion (down ¥0.5 billion
or 13%).

9

(2)Consolidated Financial Condition
Consolidated assets as of the end of the second quarter on June 30, 2015, totaled ¥621.1
billion, a ¥4.3 billion decrease from the end of the previous fiscal year (December 31, 2014).
Despite the addition of Country Pure Foods, Inc., to consolidated accounts, overall assets
declined owing to a decrease in notes and accounts receivable – trade. The sale of trust
beneficiary rights in the Shibuya Sakuragaoka Square also contributed to the decrease in assets.
Consolidated liabilities totaled ¥459.1 billion, a ¥6.2 billion decrease from December 31, 2014,
primarily reflecting a decrease in commercial paper and liquor taxes payable, which more thanoffset increases in short-term bank loans and net defined benefit liabilities.
Consolidated net assets totaled ¥161.9 billion, a ¥1.9 billion increase from December 31,
2014. The gain is primarily owing to increases in unrealized holding gain on securities andminority interests, which combined to offset the negative impact on assets from the application ofa revised retirement benefit accounting standard and the decrease in retained earnings due tothe distribution of year-end dividends.

Consolidated Cash Flows
Consolidated cash flows for the six months ended June 30, 2015, were as follows.
Operating activities provided net cash of ¥14.6 billion. This was attributable to positive factors,
such as a ¥16.2 billion decrease in notes and accounts receivable, depreciation and amortizationof ¥11.8 billion and a ¥7.3 billion increase in other current liabilities, and negative factors, suchas a ¥12.1 billion decrease in liquor taxes payable, a ¥7.3 billion gain on sales of fixed assets
and a ¥6.3 billion increase in inventories.
Investing activities provided net cash of ¥1.1 billion. The major inflow was ¥17.0 billion inproceeds from sales of property, plant and equipment. The major outflows were the ¥12.6 billion
used for purchases of property, plant and equipment and ¥3.9 billion used to purchase theshares of subsidiaries due to changes in scope of consolidation.
Financing activities resulted in net cash outflows of ¥14.9 billion. The major inflow was ¥14.2
billion in proceeds from long-term bank loans, but this was offset by a ¥15.0 billion net decreasein commercial paper and ¥14.8 billion outflow for the repayment of long-term bank loans.
As a result of the above cash flows, cash and cash equivalents as of June 30, 2015, totaled¥10.5 billion.
(3) Consolidated Earnings Forecast
The consolidated earnings forecast for the full fiscal year ending December 31, 2015 isunchanged from the forecast announced by the Company on February 12, 2015.

10

2. Other Information(1) Changes in significant subsidiaries during the six months ended June 30, 2015
Not applicable(2) Application of accounting methods specific to the preparation of quarterly
consolidated financial statements(Calculation of tax liabilities)
The Company calculates tax liabilities by producing a reasonable estimate of the effective
tax rate after applying tax-effect accounting to income before taxes and minority interests forthe fiscal year, which encompasses the six months ended June 30, 2015, and thenmultiplying income (loss) before taxes and minority interests by this estimated effective tax
rate.

(3) Changes in Accounting Policy, Changes in Accounting Estimates, andRetrospective Restatement(Changes in Accounting Policy)“Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan ASBJ - Statement No. 26 of May 17, 2012) and “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25 of May 17, 2012) have been applied, effectivefrom the first quarter of the current consolidated financial year ending December 31, 2015, in
accordance with the provisions of Article 35 of the Accounting Standard for Retirement
Benefits and Article 67 of the Guidance on Accounting Standard for Retirement Benefits. As
a result, the method for calculating retirement benefit obligations and service costs has beenrevised, and the method for attributing projected benefits to periods has been changed fromthe straight-line basis to the benefit formula basis. As to the discount rate, it used to be
calculated based on the periods, comparable to employees’ average remaining years ofservice. Under the new accounting standard, however, the method of determining thediscount rate has now been changed to use a single weighted-average discount rate thatreflects the periods until the expected payment of retirement benefits and the amount ofprojected benefits for every such period.
In applying these retirement benefit-related accounting standards, etc. and in accordancewith the transitional treatment provided in Article 37 of the Accounting Standard for
Retirement Benefits, the effect of the change in calculation method for retirement benefit
obligations and service costs has been recognized by adjusting retained earnings at the
beginning of the first quarter of the current financial year ending December 31, 2015.
Consequently, as at the beginning of the first half of the current financial year ending
December 31, 2015, net defined benefit liability increased by ¥4,799 million, while retained
earnings decreased by ¥3,105 million. Furthermore, during the first half of the current
consolidated financial year, operating loss and ordinary loss decreased each by ¥84 million
respectively, and income before income taxes and minority interests grew by ¥84 million.

11

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(millions of yen)

AssetsI Current assets
1 Cash and cash equivalents
2 Notes and accounts receivable - trade
3 Merchandize and finished products
4 Raw materials and supplies
5 Other
6 Allowance for doubtful receivables
Total current assets
II Fixed assets
1 Property, plant and equipment(1) Buildings and structures
Accumulated depreciation
Buildings and structures, net(2) Machinery and vehicles
Accumulated depreciation
Machinery and vehicles, net(3) Land(4) Construction in progress(5) Other
Accumulated depreciation
Other, net
Total property, plant and equipment
2 Intangible assets(1) Goodwill(2) Other
Total intangible assets
3 Investments and other assets(1) Investment securities(2) Long-term loans receivable(3) Other(4) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

12

December 31, 2014

June 30, 2015

AmountAmount9,781
89,24522,431
14,10820,971(165)
156,372

10,53974,56930,767
14,015
14,756(83)
144,565

387,644(211,317)
176,327
224,180(180,302)
43,878115,290
2,617
36,088(23,606)
12,482
350,597

387,097(214,121)
172,976
230,337(185,022)
45,315108,005
6,957
35,864(23,527)
12,337345,592

29,966
6,025
35,991

32,777
11,44244,22059,9689,150
14,663(1,305)64,161
9,084
14,743(1,264)82,47786,724

469,066
625,439

476,536
621,102

December 31, 2014
AmountLiabilities
I Current liabilities
1 Notes and accounts payable - trade
2 Short-term bank loans
3 Commercial Paper
4 Current portion of bonds
5 Liquor taxes payable
6 Income taxes payable
7 Accrued bonuses
8 Deposits received
9 Other
Total current liabilities
II Long-term liabilities
1 Bonds
2 Long-term bank loans
3 Net defined benefit liability
4 Dealers' deposits for guarantees
5 Other
Total long-term liabilities
Total liabilities
Net Assets
I Shareholders' equity
1 Common stock
2 Capital surplus
3 Retained earnings
4 Treasury stock, at cost
Total shareholders' equity
II Accumulated other comprehensive income
1 Unrealized holding gain on securities
2 Deferred hedge gains
3 Foreign currency translation adjustments
4 Remeasurements of defined benefit plans
Total accumulated other comprehensive income
III Minority Interests
Total net assets
Total liabilities and net assets

13

June 30, 2015
Amount35,534
31,44630,00012,00033,602
724
2,115
9,650
56,696
211,771

38,952
47,21415,00012,00021,426
3,028
1,697
9,405
55,605204,330

50,000124,110
4,510
32,33642,704
253,662
465,434

50,000119,145
8,891
32,84543,962
254,844459,174

53,88645,912
34,913(1,544)133,168

53,88645,91230,249(1,555)
128,493

20,112
(0)
2,582
440
23,1353,700
160,004
625,439

24,644
(5)
1,779
1,011
27,4296,004
161,927
621,102(2) Consolidated Statements of Income(millions of yen)

I Net sales
II Cost of sales
Gross profit
III Selling, general and administrative expenses
1 Sales incentives and commissions
2 Advertising and promotion expenses
3 Salaries
4 Provision for bonuses
5 Retirement benefit expenses
6 Other
Total selling, general and administrative expenses
Operating income (loss)
IV Non-operating income
1 Interest income
2 Dividend income
3 Equity in income of affiliates
4 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Foreign exchange losses
3 Other
Total non-operating expenses
Ordinary income (loss)
VI Extraordinary gains
1 Gain on sales of property, plant and equipment
2 Gain on sales of investment securities
3 Gain on sales of consolidated subsidiaries
4 Subsidy income
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on sales of property, plant and equipment
3 Loss on impairment of property, plant and equipment
4 Loss on devaluation of investment securities
5 Loss on sales of investment securities
6 Compensation expenses
7 Additional liquor tax paid and otherTotal extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Income (loss) before minority interests
Minority interests
Net Income (loss）
Income (loss） before minority interests
Other comprehensive income
Unrealized holding gain on securities
Deferred hedge gains (losses)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

14

Six months ended
June 30, 2014
Amount239,862
155,293
84,568Six months ended
June 30, 2015
Amount245,884
164,323
81,56016,005
11,846
16,057797
1,548
37,30583,561
1,007

16,29812,041
15,848918
1,366
36,37882,852(1,291)

114
473
82
502
1,172

107
777
35
646
1,567

1,229
296
381
1,907
272

1,153
193
397
1,745
(1,469)

57
20
78

7,377
27
72
322
7,801

1,336
49
9
0
1,618

550
1
1,595
163
140

11,684
14,699(14,348)(3,212)(11,135)(207)(10,928)

2,450
3,880
2,822
1,058
(106)
1,164

(11,135)

1,058

1,885
(16)
(680)
1,189
(9,946)

4,537
(12)
(526)
570
4,568
5,627

(9,818)
(127)

5,458
168

(3) Consolidated Statements of Cash Flows(millions of yen)Six months ended
June 30, 2015
AmountSix months ended
June 30, 2014
AmountI Cash flows from operating activities
1 Income (loss) before income taxes and minority interests
2 Depreciation and amortization
3 Loss on impairment of property, plant and equipment
4 Goodwill amortization
5 Increase (decrease) in employees’ retirement benefits
6 Increase (decrease) in net defined benefit liability
7 Increase (decrease) in allowance for doubtful receivables
8 Interest and dividend income
9 Interest expense
10 (Gain) loss on sales of fixed assets
11 (Gain) loss on sales and disposal of fixed assets
12 (Gain) loss on sales of investment securities
13 (Gain) loss on revaluation of investment securities
14 (Increase) decrease in notes and accounts receivable - trade
15 (Increase) decrease in inventories
16 Increase (decrease) in notes and accounts payable - trade
17 Increase (decrease) in accrued consumption taxes
18 Increase (decrease) in liquor taxes payable
19 Increase (decrease) in other current liabilities
20 Other
Sub total
21 Interest and dividends received
22 Interest paid
23 Income taxes paid
24 Income taxes refundable
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Purchases of property, plant and equipment
2 Proceeds from sales of property, plant and equipment
3 Purchases of intangibles
4 Payments for purchases of investment securities
5 Proceeds from sale and redemption of investment securities
6 Purchase of affiliates securities
7 Proceeds from sales of affiliates securities
8 Purchase of subsidiaries' shares
resulting in change in scope of consolidation
9 Collection of sales of subsidiaries' share for prior periods
10 OtherNet cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Increase (decrease) in commercial paper
3 Proceeds from long-term bank loans
4 Repayment of long-term bank loans
5 Cash dividends paid
6 Cash dividends paid to minority shareholders
7 Repayment of finance lease obligations
8 Proceeds from minority shareholders
9 Other
Net cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of period
Ⅶ Increase( decrease) in Cash and cash equivalents from newly consolidated
subsidiaries
Ⅷ Increase in cash and cash equivalents resulting from merger
Ⅸ Cash and cash equivalents at end of period

15(14,348)
12,064
1,877
(513)
(23)
(587)
1,242
(57)
1,386
(20)
9
17,562(3,414)(1,454)(534)(10,849)
5,450
(597)
7,188
708
(1,266)(4,886)
79
1,823

3,880
11,832
1,595
2,014
411
(95)
(885)
1,153
(7,377)
552
(27)
163
16,200(6,356)
1,335(5,845)(12,136)7,326
33
13,774987(1,209)(2,054)
3,185
14,683(8,624)145(1,145)
(263)
29
(90)
-

(12,621)17,060
(895)
(600)
347
(1,384)
1,794(1,487)(11,435)(3,900)3,232(1,897)
1,136

(904)
18,00010,000(13,615)(2,727)(14)(1,694)
(26)
9,017
(126)
(721)
11,5183,124(15,000)
14,266(14,811)(2,724)(14)(1,532)
1,738(10)(14,963)
(97)
758
9,748

9

-

46

-

10,852

10,506

(4) Notes on the Going-concern Assumption
Not applicable(5) Segment InformationⅠ

Six months ended June 30, 2014 (January 1, 2014 – June 30, 2014)

1. Sales, income, and loss by reportable segment(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

International Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *1

Total

Amounts
reported on
Adjustments thestatements
of income *2

Net sales(1) Operating revenues

126,809

23,73762,757

12,735

10,930236,970

2,891

1,181

47

136

2

1,287

2,654

9,285

127,990

23,78462,893

12,738

12,217

239,624

12,177

1,310

(582)

(1,833)

(332)

4,317

2,879

111

(2) Intra-group sales and transfers
Total
Segment income (loss)

239,862
11,939251,8022,990-

239,862(11,939)(11,939)

239,862(1,983)

1,007-

Notes:(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.

2. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement of income (information ondifferences)(millions of yen)Segment income (loss)

AmountTotal for reportable segments
Total other income
Unallocated corporate costs
Intra-segment sales
Operating income on the statement ofincome2,879
111(1,894)(89)
1,007

3. Impairment loss on fixed assets or goodwill by reportable segment(Significant impairment losses on fixed assets)
Not applicable(Significant changes in the amount of goodwill)
Not applicable(Material Gain on negative goodwill)
Not applicable16

Ⅱ

Six months ended June 30, 2015 (January 1, 2015 – June 30, 2015)

1. Sales, income, and loss by reportable segment(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

International Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *1

Total

Amounts
reported on
Adjustments thestatements
of income *2

Net sales(1) Operating revenues

121,674

34,76363,917

12,831

9,826

243,012

2,871

1,337

54

130

1

1,230

2,754

9,316

123,01234,81764,047

12,832

11,056

245,767

12,187

(602)

(741)

(1,458)

(207)

3,751

742

(0)

(2) Intra-group sales and transfers
Total
Segment income (loss)

245,884
12,070257,955741-

245,884(12,070)(12,070)

245,884(2,033)(1,291)-

Notes:(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.

2. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement of income(information on differences)(millions of yen)Segment income (loss)

AmountTotal for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating income on the statement ofincome742(0)(2,007)(26)(1,291)

3. Changes in Reportable Segment, etc.
(Changes in Reportable Segment)
Following the share transfer between the consolidated subsidiaries, the segment classification of New Sanko Inc., which formerly used to be classified in the“Japanese Alcoholic Beverages” segment, has now been changed to the “Restaurants” segment, effective from the first quarter of the current consolidated financial
year.
The segment information for the second quarter of the previous consolidated financial year has been restated, reflecting this segment change.
(Application of Accounting Standard for Retirement Benefits, etc.)
In accordance with the revision of the method for calculating retirement benefit obligations and service costs, as per the above Changes in Accounting Policy,
effective from the first quarter of the current consolidated financial year, the calculation method for retirement benefit obligations and service costs in each businesssegment has been revised accordingly.
As a result, compared to the old calculation method, a segment loss of the “Japanese Alcoholic Beverages” was reduced by 80 million yen in the second quarter of
2015. The effect of the said revision on the segment income or loss in other segments than the “Japanese Alcoholic Beverages is immaterial.

(Significant impairment losses on fixed assets)
In the “Japanese Alcoholic Beverages” business, the book value of the buildings and land has been revalued and lowered to the expected sales price, following thedecision to sell off some welfare facilities. As a result, an impairment loss of 1,394 million yen has been recognized in the second quarter of the financial year 2015.
In the “Food & Soft Drinks” business, the profitability has declined following the review of the production system and thus the recovery of investment is expected tobe difficult. Consequently, the book value of the buildings and of machinery and equipment has been revalued and lowered to the recoverable amount.
Accordingly, 114 million yen impairment loss has been accounted for in the second quarter of 2015.

(Significant changes in the amount of goodwill)In the “International Business” segment, the shares of Country Pure Foods, Inc. has been acquired as at February 24, 2015, and thereby it has been made as theCompany’s consolidated subsidiary. As a result of the consolidation, the amount of goodwill increased by 5,924 million yen in the first quarter of the current
consolidated financial year.The amount of goodwill was calculated on a tentative basis.
In the second quarter of 2015, a provisional accounting has been made, however, the amount of goodwill has been revised by 3,855 million yen.
(Material Gain on negative goodwill)
Not Applicable17(6)Notes on Significant Changes in the Amount of Shareholder's Equity
Not applicable(7) Notes on Business Combinations[Initial Allocation of Acquisition Cost]
Details of Revision and Restated Amount at the time of a Significant Revision Made in the Initial Allocation of Acquisition Cost
In the first quarter of the consolidated financial year 2015, the acquisition cost allocation of COUNTRY PURE FOODS, INC. was reported based on the provisional
accounting using the then reasonably obtainable information as at the time of completion of the consolidated financial statements.
In the second quarter of 2015, a provisional accounting has also been made, however, the amount of goodwill has been revised as stated below, following therevised acquisition cost and the revised allocation amount:
Revised Amount of Goodwill
Goodwill (prior to the revision) 5,924 million yen
Intangible Assets （3,053） million yen
Deferred Tax Liabilities 1,063 million yen
Other Adjustments in Acquisition Cost (79) million yen
Total Amount Revised (2,069) million yen
Goodwill (post revision) 3,855 million yen(8)Subsequent Events
Not applicable18