Financial Results
for the Year Ended December 31, 2016 — Consolidated(Based on Japanese GAAP)
February 13, 2017

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, Chairman and Representative Director
Toshihiko Umezato, Director of the Corporate Communications Department

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

Annual general meeting of shareholders

March 30, 2017

Filing of annual financial report

March 31, 2017

Commencement of dividend payments

March 31, 2017

Supplementary information to the year-end earnings results

Available

Year-end earnings results briefing heldYes(mainly targeted at institutional
investors and analysts)

1. Consolidated Financial Results for the Year Ended December 31, 2016
(January 1 – December 31, 2016)(Amounts in million yen rounded down to the nearest million yen)

<Note>On July 1, 2016, the Company carried out a share consolidation at a ratio of 1 share for 5 sharesof the Company’s common stock. Accordingly, values for the items noted below have beenrecalculated on the assumption that the share consolidation took place at the beginning of theprevious fiscal year.
・Profit per share・Diluted profit per share・Dividend per share
・Number of shares issued at end of period (treasury stock included)
・Number of shares held in treasury at end of period

・Average number of outstanding shares during the period1(1) Operating Results(Percentage figures represent year-over-year changes)
Net sales

Operating income

Profitet attribute to

Ordinary income

owners of parent

Year ended

million yen%

million yen%

million yen%

million yen%

541,847

1.5

20,26745.3

19,202

45.3

9,469

55.0

533,748

2.9

13,950(5.3)

13,211

(9.3)

6,108

-

December 31, 2016
Year ended
December 31, 2015
Note: Accumulated other comprehensive income
Year ended December 31, 2016: 5,211 million yen (31.2)%
Year ended December 31, 2015: 7,579 million yen 4.1%

Year ended

ProfitDilutedprofit perper share

share

Return on
equityOrdinary
income tototal assets

Operatingincome tonet sales

Yen

yen

%

%

%

121.56

-

5.9

3.1

3.7

78.40

-

3.9

2.1

2.6

December 31, 2016
Year ended
December 31, 2015
Note: Equity method investment gains
Year ended December 31, 2016: 15 million yen
Year ended December 31, 2015: 17million yen(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

December 31, 2016

626,351

166,38025.7

2,062.86

December 31, 2015

620,388

163,82225.5

2,027.21

Note: Shareholders’ equity
December 31, 2016: 160,687million yen
December 31, 2015: 157,928 million yen

2(3) Cash Flows
Cash flows fromoperatingactivities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at endof period

million yen

million yen

million yen

million yen

Year ended
December 31, 2016

32,570(27,586)(4,827)

10,475

Year ended
December 31, 2015

35,265(9,755)(24,802)

10,3992. Dividends
Dividend per share
End Q1

Record date or

End Q2End Q3Year-end

Full year

periodTotal

PayoutDividends

dividends

ratio

to netpaid(consol.)assets(full year)
yen

yen

yen

yen

yen

million yen(consol.)%%Year ended
December 31, 2015

—

0.00

—

35.00

35.00

2,726

44.6

1.7

Year ended
December 31, 2016

—

0.00

—

37.00

37.00

2,887

30.4

1.8

Year ending
December 31, 2017
(forecast)

—

0.00

—

37.00

37.00

—

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2017
(January 1 – December 31, 2017)(Percentage figures represent year-over-year changes)
Net sales

million yen

Operating income%

million yen%

Ordinary income

million yen%

Profit attribute toProfitowners of parent

per share

million yen%

563,800
4.1
21,3005.1
20,3005.7
10,70013.0Year ending
December 31,
2017
Note: Earnings forecasts for the six months ending June 30, 2017 are omitted because the company
manages performance targets on a yearly basis.

4. Other(1) Changes to scope of consolidation: None
(2) 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: Yes
3) Changes in accounting estimates: Yes
4) Retrospective restatement: None
Note: For details, see “Changes in accounting policy” on page 34 in the accompanying material.

3

Yen

137.36

(3) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):
December 31, 2016: 78,794,298 shares
December 31, 2015: 78,794,298 shares
2) Number of shares held in treasury at end of period:
December 31, 2016: 898,911 shares
December 31, 2015: 890,305 shares
3) Average number of outstanding share during the period:
Year ended December 31, 2016: 77,900,282 sharesYear ended December 31, 2015: 77,917,219 shares
Audit Status

The year-end financial results are not subject to audit pursuant to the Financial Instruments
and Exchange Act. The audit of the year-end 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 thoseexpressed or implied by forward-looking statements due to various factors. For the assumptions
underlying the forecasts herein and other information on the use of earnings forecasts, refer to“Outlook for the fiscal year ending December 31, 2017” on page 14.

4

I. Analysis of Operating Results and Financial Condition
1. Analysis of Operating Results(a) Review of the fiscal year ended December 31, 2016
(1) Overview
Millions of yen, except percentages
Net sales

Operating income

Ordinary income

Profit attribute toowners of parent

2016541,847

20,267

19,202

9,469

2015

533,748

13,95013,211

6,108

1.5

45.3

45.3

55.0

Change (%)

In 2016, major developments in the Japanese economy included the Bank of Japan’s
February introduction of a negative interest rate policy (NIRP), which did not directly affecta recovery in consumer spending, and upward pressures on the yen stemming from suchexternal factors as the situation in the Middle East and the United Kingdom’s decision toexit from the European Union (Brexit). In the latter part of the year, however, the result of
the U.S. presidential election led to weakening of the yen against the U.S. dollar, and theeconomic environment became increasingly severe, volatile, and unpredictable.
Conditions in the industries in which SAPPORO Group companies operate were as
follows.
The domestic alcoholic beverage industry saw demand depressed by unseasonal
summer weather and weakness in the pub/restaurant space owing to a growing costcutting mindset among Japanese consumers. Overseas, the North American beer market
was generally flat, but the Asian market remained on a steady growth trajectory. Demand in
the food and soft drinks industry was adversely affected by weather and natural disasters.
In the real estate industry, vacancy rates and rents in the Greater Tokyo office leasing
market both stayed on moderate recovery tracks throughout the year.
In this environment, the SAPPORO Group accelerated the implementation of growthstrategies based on the Sapporo Group Management Plan 2015–2016, as it endeavored todisplay its special characteristics as a “manufacturer of food products” and make progress
toward the financial targets for 2016.
The Japanese Alcoholic Beverage business designated 2016 as the "first year of a new
period of growth in the beer business" and accordingly focused on strengthening its core
brands. In particular, the launch of an integrated marketing strategy for Sapporo Draft Beer
Black Label, one of our core brand, resulted in a second year of sales growth despite thedecline in overall beer demand. In non-beer growth areas, we continued to build a highly5

diversified product lineup with a focus on high-value-added products in the wine and spirits
categories.
The International Business continued to strengthen its position in North America’s
premium beer market, with aggressive marketing campaigns carried out by SLEEMAN
BREWERIES in Canada and by Sapporo USA. We achieved sales growth in the U.S. softdrinks market, with a new contribution from U.S. subsidiary Country Pure Foods’ acquisitionof a fruit juice sorbet business. In Vietnam, we continued to invest in marketing aimed at
firmly establishing the Sapporo brand in the local market. In April we enhanced the qualityof bottled products and in July we launched new products for the mid-price range market
segment.
The Food & Soft Drinks business continued to focus on two key management initiatives
in Japan—strengthening marketing and lowering costs—while concentrating investment oncore brands, especially our lemon-based and soup products, two areas where we have astrong competitive edge. Overseas, we continued strengthening our beverage business inSoutheast Asia, where we have established a joint venture to manufacture and sell softdrinks in Indonesia and completed construction of a plant in Myanmar for manufacturing of
Sapporo products on a licensed-out basis.
The Restaurants business continued to strengthen its Japan operations by opening newoutlets, with the focus on our Ginza Lion and Yebisu Bar chains. We also continued efforts
to improve profitability by closing or changing the format of unprofitable outlets. In
Singapore, we continued our efforts to spread the reputation of our Ginza Lion brand to theworld.
The Real Estate business enjoyed high occupancy rates at its rental properties
throughout 2016. At Yebisu Garden Place, our core real estate asset, we renovated thedining floor and continued other efforts to raise the property’s value and enhance theappeal of the surrounding area. In September, we opened GINZA PLACE, which wasdeveloped as a “base for information dissemination and exchange.”
The efforts outlined above and explained in more detail later in this report enabled the
Sapporo Group to achieve the consolidated results presented below.

Net Sales
In 2016, the Sapporo Group posted consolidated net sales of ¥541.8 billion, ¥8.0 billion or
2% more than in 2015. At the Japanese Alcoholic Beverage business, shipments of beertype beverages were in line with the previous year but increased shipments of our otherdiversified product offerings led to higher sales revenues. The International business again
expanded shipments of beer products in North America and Vietnam, with a new6

contribution from a fruit juice sorbet business acquired during the year by subsidiary
Country Pure Foods, Inc. However, sector sales declined year on year owing to thenegative impact from currency fluctuations. The Food & Soft Drinks business achieved
higher sales volumes for its food and beverages products in Japan. The Restaurants
business posted a year-on-year increase in sales, with contributions from two newly
consolidated subsidiaries—Marushinkawamura Inc. and Ginrin Suisan Inc.. The Real
Estate business also achieved sales growth in 2016, thanks in part to the opening of
GINZA PLACE in September.

Operating Income
Consolidated operating income totaled ¥20.2 billion, an increase of ¥6.3 billion, or 45%
year on year. The Japanese Alcoholic Beverage business achieved profit growth withsupport from an improved sales mix as beer accounted for a larger share of its beer-type
beverage sales. Lower fixed costs also contributed to profit growth. The International
business achieved profit growth in 2016 on higher sales in North America and a reduction
in costs, including logistics expenses. The Food & Soft Drinks business also posted higher
profits than in the previous year, thanks to higher sales of its food and beverages products
in Japan. The Restaurants business achieved profit growth through structural reforms, andthe Real Estate business enjoyed profit growth buoyed by an increase in rental income
from its core properties.

Ordinary Income
Consolidated ordinary income totaled ¥19.2 billion, an increase of ¥5.9 billion, or 45% year
on year, mainly reflecting the increase in consolidated operating income noted above.
Profit Attributable to Owners of Parent
In 2016, profit attributable to owners of parent totaled ¥9.4 billion, up ¥3.3 billion or
55% year on year, despite the posting ¥1.4 billion in disposal of fixed asset as an
extraordinary losses and a ¥1.0 billion impairment losses.

Segment information is outlined below.

7(2) Results by Business Segment
Millions of yen, except percentages
Net sales

Operating income
%

%
2015

2016

change2015

2016

change273,651

279,476

2.1

8,635

11,74536.0

70,501

65,400

(7.2)

154

906

487.8

135,670

137,918

1.7

434

1,314

202.6

Restaurants

27,004

28,120

4.1

522

663

27.0

Real EstateBusiness

20,872

22,9009.7

8,281

10,328

24.7

Japanese
Alcoholic
Beverages
International
Business
Food &
Soft Drinks

Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer-type beverages during 2016
decreased 2% year on year owing to weak demand from the commercial-use market and to
consumers increasing consumption of RTD*1 beverages.
Amid such market conditions, the Japanese Alcoholic Beverage business continued its
efforts to realize management’s vision of “Seek to be No.1 by accumulating one-of-a-kindproducts" and achieve further growth by constantly providing customers with a unique value
proposal and by investing aggressively in the beer business during 2016, which we
designated as the “first year of a new period of growth in the beer business.”
The Japanese Alcoholic Beverage business achieved year-on-year growth in beer
shipments for the second consecutive year, as strong sales of canned versions of Sapporo
Draft Beer Black Label and Yebisu Beer supported 4% overall growth in sales of Sapporo
brand beers. In the happoshu category, shipments of Goku Zero decreased slightly year on
year, but continued strong sales of Mugi to Hop The Gold bolstered sales of our new-genre
beer beverages. Overall, shipments of our beer and beer-type beverages products slipped
1% year on year, a smaller decline than that seen in the overall market.
In the RTD category, we achieved year-on-year sales growth on strong sales of our highvalue-added collaboration products Sapporo Otoko Ume Sour and Nectar Sour, as well as
Kireto Lemon Sour.
In the wine category, strengthened marketing of domestic and imported fine wines*2 led
to higher sales of Penfolds, an imported wine from Treasury Wine Estates, as well as
Taittinger champagne and our Grande Polaire series of domestic wines.

8Our spirits business achieved year-on-year sales growth, led by strong sales of products
from major overseas brands, such as Bacardi and Dewars.
Our Japanese liquor business continued strong sales of Imo Shochu Kokuimo, Japan’s
No. 1 selling*3 blended imo shochu and the business’ overall sales increased from theprevious year’s level.
Overall, the Japanese Alcoholic Beverages business posted sales of ¥279.4 billion, up¥5.8 billion or 2% year on year, and operating income of ¥11.7 billion, up ¥3.1 billion or
36%.
*1) RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-like beverages thatcan be consumed as is immediately after opening.
*2) Fine wines are wines priced in the mid- to high-price range (¥1,500 and higher 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 2015 to December 2016.

International BusinessWe estimate that total demand in the North American beer market in 2016 was about thesame as in 2015, with overall shipments near previous-year levels in both the United States
and Canada. The Asian beer market, meanwhile, remained on the expansion track as signsof slower growth in China were countered by robust markets in other Asian countries,
supported by growing populations and relatively stable 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 focusing its marketing efforts. In addition, we expanded our sales
channel in the US fruit juice market.
Our Canadian subsidiary SLEEMAN BREWERIES continued its aggressive spending onmarketing of its core premium brands. As a result, its overall beer sales volume (excluding
Sapporo brand beer) increased about 2% year over year. In the U.S. market, Sapporo
USA’s continued efforts to expand its core target customer markets from JapaneseAmericans to the wider Asian-American and general population market segments led to a
1% year-on-year increase in shipments of Sapporo brand beers. Our U.S. soft drinks
business also achieved year-on-year sales growth, supported by solid sales at the fruit
juice sorbet business acquired by Country Pure Foods in May. Silver Springs Citrus also
contributed to the positive result in the United States as its efforts to expand sales channels
boosted its sales over the previous year’s level (after adjustment for the period included in
Sapporo Group results).

9In Southeast Asia, we achieved sales growth in Vietnam thanks to continued strong salesof new versions of Sapporo Premium Beer in bottles and cans introduced in the Vietnam
market in November 2015. Growth in Vietnam sales was also supported by the favorable
market response to the launch of Sapporo Blue Cap in July. In Singapore, we achieved
year-on-year growth in sales volume thanks to cooperative efforts with our local subsidiary
to expand sales channels to that country's household and commercial markets.
Elsewhere in Asia, we increased beer sales volumes in South Korea by leveraging our
local partner's sales network to strengthen sales to both the household and commercial
markets and by increasing the number of sales outlets carrying our Sapporo Premium Beer.
In Oceania, continued efforts to strengthen sales via licensing agreements with local
brewing partners led to a year-on-year gain in beer sales volumes.
The efforts outlined above enabled the International Business to achieve a 6% year-onyear increase in shipments of Sapporo brand products in overseas markets.
However, due to adverse currency-translation effects, International Business posted salesof ¥65.4 billion, down ¥5.1 billion or 7% year on year. Segment operating income rose ¥0.7
billion, or 488% to ¥0.9 billion.

Food & Soft Drinks
We estimate that overall demand for soft drinks in Japan increased 2% year on year in2016.
In this somewhat favorable demand environment, our Food & Soft Drinks business
continued to strengthen and nurture its various brands, focusing its resources on core soup
and lemon-based products.
The domestic soft drinks business endeavored to establish a unique market position bymarketing products that cater to a range of customer preferences. This effort led to thelaunch and strong sales of products made solely from domestic ingredients, such as
Nippon Oolong, made from domestic tea leaves, and Furano Lavender Tea, made fromlavender grown in Furano, Hokkaido. Sales of our Kireto Lemon brand of lemon-based
products expanded sharply in 2016, with solid sales of our core Kireto Lemon (in PET andglass bottles) supported by new markets created through the launch of new products, suchas Kireto Lemon Moisture, which was approved for marketing with a functional food label.
Our domestic food business celebrated the 20th anniversary of the launch of our Jikkuri
Kotokoto brand soups by further strengthening the brand lineup with several new additions,
including Jikkuri Kotokoto Gohobi Dining, packaged in a microwavable pouch. In the lemonbased food category, we achieved rather strong 5% growth in sales value, led by solid
sales of our mainstay Pokka Lemon 100 lineup. During 2016 we made a full-fledged entry

10into the soymilk business based on our acquisition in the previous year of the soymilk andsoymilk-based yogurt business of Toraku Foods Co., Ltd. We strengthened sales of theacquired SOYAFARM brands lineup of soymilk and soymilk-based yogurt products throughefforts to expand brand recognition among consumers.
At the domestic restaurants business, our Café de Crié coffee shop chain continued its
aggressive expansion, opening new stores inside bookstores and hospitals. We also
stepped up efforts to strengthen branding for our Maison de VERRE coffee shops, which
are based on the concept of delivering to customers a “comfortable and relaxed venue inwhich they can feel a connection with nature”. These efforts contributed to sales expansion
at our directly-run shops and a year-on-year increase in sales at the Food & Soft Drinks
segment’s domestic restaurants business.
The overseas soft drinks business maintained its top share* in Singapore's tea drinks
market, including its dominant 70% share of the green tea market. In addition, our POKKA
brand was named the top brand in the non-carbonated drinks category of Singapore’s“Influential Brands Awards 2016”, an annual award program that recognizes companies
that have established good relationships with customers and continue to provide brandvalue.
As a result of the above, the Food & Soft Drinks segment recorded sales of ¥137.9 billion
in 2016, ¥2.2 billion or 2% higher than in 2015. Segment operating income reached ¥1.3
billion, a ¥0.8 billion or 203% improvement over the 2015 result.
* Based on data from Nielsen Singapore MarketTrack March 2016 (Copyright 2016, The
Nielsen Company)

Restaurants
Japan’s restaurant industry remained on the recovery track in 2016 despite grappling with adifficult operating environment complicated by rising labor costs and food material
procurement prices.
In this environment, our Restaurants business continued to pursue the fulfillment of its
philosophy of “Enhancing the Joy of Living” through constant efforts to deliver safe and soundfood and service to customers while also striving to create restaurants that “deliver 100%
satisfaction to customers.”
In Japan, we continued to open new stores, with an emphasis on expanding into newgeographical areas and new store formats. This emphasis led to the opening in 2016 of our
first restaurant inside a zoo—Garden Terrace Lion at Asahiyama Zoo in Asahikawa,
Hokkaido—and our first craft beer pub—CRAFT BEER KOYOEN in Nagoya. At our core
Ginza Lion chain of restaurant pubs, we reopened two flagship outlets that had been closed

11

for a lengthy period owing to redevelopment—one is located in front of the Shimbashi train
station and the other is strategically located in the new GINZA PLACE commercial
complex. Overall, we opened 12 new restaurants in the first nine months of 2016, while
also reopening two completely renovated outlets.
Our Restaurants business was expanded and strengthened by the addition of two new
Sapporo-based consolidated subsidiaries in June 2016—Marushinkawamura Inc., which
operates the Kushiro and Sapporo Ginrin restaurant chains, and Ginrin Suisan Co. Ltd, a
supplier of processed and fresh seafood to local restaurants.
During the year we also closed eight unprofitable outlets. As a result of the changes
outlined above, the total number of restaurants operated by our Restaurants business inJapan as of end-December 2016 was 200.
The Restaurant business also has 14 shops operating in Singapore. In addition tolaunching new brands, such as Tonkichi Ginza Shokudo in November 2015, our Singapore
operation continues to create a chain of locally popular restaurants that are spreading the
reputation of our Ginza Lion brand to the world.
Restaurants business sales in 2016 totaled ¥28.1 billion, up ¥1.1 billion or 4% year on year.
Segment operating income was ¥0.6 billion, up ¥0.1 billion or 27%.

Real Estate
Japan’s real estate industry continued to see a moderate recovery in rent levels in the
Greater Tokyo office leasing market in 2016, as vacancy rates remained low amid solid
demand for office space fueled by strong corporate earnings.
In this environment, our real estate leasing business was able to maintain highoccupancy rates at its properties in the Tokyo Metropolitan area, including Yebisu Garden
Place Tower, the business’ core source of earnings. In addition, the high occupancy rates
provided a solid platform for more assertive efforts to increase rents of existing tenants.
The real estate leasing business continues to enhance the value of our Yebisu Garden
Place commercial complex through its efforts to raise convenience levels and strengthen
the property’s appeal as a landmark of the stylish and sophisticated Ebisu area. In thecomplex’s commercial area, in October we reopened Yebisu Garden Place Tower’s 38th
floor, which underwent a complete renewal based on the theme “Grand & Casual – theluxury of casual enjoyment of the essence”. In addition to the new SKY LOUNGE
observation space, the floor has a number of restaurants where Japanese cuisine can beenjoyed in a modern ambiance. We also completed the revocation of the City Wall area on
the side of the complex along the JR Yamanote Line into the newly opened BRICK END, a
row of smaller eateries and bars designed to be an area for social interaction among adults.

12

These efforts to provide visitors to Yebisu Garden Place with a wide range of scenes inwhich they can meet and enjoy diverse dining experiences with friends, family, andcolleagues have revitalized the area and turned it into an even more bustling center ofactivity. Meanwhile, Ebisu First Square, which opened in October 2014, has won highpraise from tenants as a highly competitive office building with superior safety features,
comfort levels, and environmental performance. The property has maintained fulloccupancy since opening and has contributed to further earnings expansion at our Real
Estate business.
The real estate development business also was busy in 2016. In September we opened
GINZA PLACE, a commercial complex located at the busy Ginza 4-chome intersection. The
site was redeveloped under the concept of creating a “base for information disseminationand exchange.” As a new landmark in Tokyo’s world-famous Ginza district and a facility thatprovides insights into Japanese traditions, culture, advanced technologies and a wide
range of other interesting topics, GINZA PLACE has attracted the attention of visitors fromaround Japan and around the world. With the number of visitors to the site surpassing one
million in December, just two months after its opening, GINZA PLACE is helping to restore
the hustle and bustle to the GINZA district. In 2016, we also began to redevelop our former
Sapporo factory as part of the renovation of the area on the east side of the Sosei River, afocus of the city’s urban redevelopment program. In addition to renovating the commercial
complex Sapporo Factory, we are redeveloping the parking lot adjacent to the factory site
into a new commercial building.
Meanwhile, we continue to review and revise our property portfolio from a long-term
perspective. In December, we acquired the trust beneficiary rights to a commercial buildingin Sakae in Naka Ward, the commercial center of Nagoya, which is the birthplace of theformer Pokka Corporation and an area with which the Sapporo Group has deep ties.
As result of the efforts outlined above, Real Estate business sales in 2016 totaled ¥22.9
billion, up ¥2.0 billion or 10%. Operating income was ¥10.3 billion, up ¥2.0 billion or 25%.

13

(b) Outlook for fiscal year ending December 31, 2017
(1) Overview

Millions of yen, except percentages
Operating

Ordinary

Profit attribute to

Net sales

incomeincomeowners of parent

2017 forecast

563,800

21,30020,30010,7002016 results

541,847

20,267

19,202

9,469

4.1

5.1

5.7

13.0

Projected increase (%)

2017 is the first year of the Sapporo Group Long-Term Management Vision “SPEED150”
and the First Medium-Term Management Plan 2020. In line with the goals of this longer
term vision and the first-stage management plan, we will endeavor to supply distinctive
products and services worldwide in our three core business areas—“Alcoholic beverages”,“Food”, and “Soft drinks”—and expand contact points with customers as we strive toachieve robust growth.
Our consolidated forecasts and outlook for the Sapporo Group in 2017 are as follows.

Net Sales
In line with its "Beer Revival Declaration," the Japanese Alcoholic Beverage business willcontinue its efforts to further enhance the value of our core Sapporo Draft Beer Black Labeland Yebisu brands as it aims to increase total shipments of beer and beer-type beverages.
The business also aims to raise it sales of wine to another level and will continue
strengthening marketing of fine wines to achieve that goal. We will also step up efforts to
expand sales in other growth areas, including RTD, shochu, spirits, and Japanese liquors,
as we build a more diverse and multilayered product lineup.
The International business aims to expand shipments of its beer products overseas bystrengthening brand recognition of its core premium beer brands, starting with Sapporo
brands, especially in the key North American and Southeast Asian markets. Toward that
end, we will execute strategies that match the unique characteristics of the market in eachcountry in which we do business. In Vietnam, for example, we will focus on expanding
sales of Sapporo Premium Beer by carrying out effective and efficient marketing.
The Food & Soft Drinks business plans to strengthen its position in the Japanese foodand beverage markets by providing customers with new value propositions in lemon-based
and soup products, two areas where we have distinct competitive advantages. Overseas, itwill focus on strengthening the POKKA brand in the key Singapore market. Our new
venture into the soymilk business will seek to expand sales of soymilk-based yogurt
products and the entire range of products sold under the SOYAFARM brand.

14

The Restaurants business targets sales growth driven by the steady expansion of its
mainstay Ginza Lion and Yebisu Bar chains via new store openings as well as renovations
and format changes for existing outlets. Overseas, we will continue our efforts to establish
the Ginza Lion and Tonkichi brands in Singapore while also considering expansion of thetwo chains into neighboring countries.
The Real Estate business will endeavor to further strengthen the competitiveness of its
core rental properties, starting with Yebisu Garden Place and GINZA PLACE, as it seeks tomaintain high occupancy rates and achieve higher rents. We also will continue therenovation of the commercial complex Sapporo Factory as part of the redevelopment of thearea on the east side of the Sosei River, a focus of the city’s urban redevelopment
program.
We expect the efforts outlined above will generate consolidated net sales of ¥563.8
billion in 2017, equivalent to year-on-year growth of ¥21.9 billion or 4%.

Operating Income
At our Japanese Alcoholic Beverage business, we expect sales to increase on growth inshipments of our core beer brands, but aggressive investment to further hone our brandappeal is expected to keep operating income at the 2016 level. International businessprofits are expected to expand on growth in sales of beer and soft drinks in North America,and structural reforms at the Vietnam operations. We expect the Food & Soft Drinks
business to achieve profit growth by expanding sales of its food and soft drinks products inJapan, improving the product mix, and reducing production costs. The Restaurants
business plans to increase profits by expanding sales at existing stores while continuing toopen new outlets. The Real Estate business expects solid revenue contributions fromYebisu Garden Place and GINZA PLACE to boost segment operating income in 2017.
Overall, we forecast consolidated operating income will expand to ¥21.3 billion, up ¥1.0
billion, or 5%, year on year.

Ordinary Income
We forecast 2017 consolidated ordinary income will total ¥20.3 billion, an increase of ¥1.0
billion, or 6%, from the 2016 result.
Profit Attributable to Owners of Parent
We project profit attributable to owners of parent will reach ¥10.7 billion in 2017, a ¥1.2
billion or 13% increase over 2016.
The 2017 outlook for each segment is presented below.

15(2) Outlook by Business Segment
Millions of yen, except percentages
Net sales

Operating income

2017
2016

forecast% change

2.3

11,745

11,8000.5

70,300

7.5

906

1,400

54.4

137,918

142,200

3.1

1,314

1,800

37.0

Restaurants

28,12029,600

5.3

663

1,000

50.6

Real EstateBusiness

22,90023,8003.9

10,32811,000

6.5

Japanese
Alcoholic
Beverages
International
Business
Food &
Soft Drinks

2016

forecast

279,476

286,000

65,4002017% change

Japanese Alcoholic Beverages
We expect the operating environment for our Japanese Alcoholic Beverages business toremain challenging owing to a shrinking drinking population and the impact of customers
shift from beer and beer-type beverages products to other alcoholic beverages.
In this challenging environment, our Japanese Alcoholic Beverages business will aim forfurther growth by continuing efforts in line with our vision of “Seek to be No.1 byaccumulating one-of-a-kind products” and by providing customers with value available only
from Sapporo.
Having set forth our “Beer Revival Declaration" as the core direction of our beerbusiness, we will continue efforts to strengthen our beer brands that have been achieving
sales growth amid the decline in overall demand for beer.
Approaching the 40th anniversary of the launch of Sapporo Draft Beer Black Label, we
will accelerate the brand’s already solid sales trend by appealing to its unique sense andfurther expanding the opportunities for consumers to enjoy high-quality drinking
experiences. We will strengthen ties with Yebisu brand fans and expand our contact points
with these customers by, for example, introducing Yebisu Hana Miyabi.
In addition, we will develop and nurture the growth of one-of-a-kind products to better
meet the increasingly diverse needs of our customers.
In the RTD*1 space, under the slogan “Give shape to surprise”, we will add to our
success with Sapporo Otoko Ume Sour by developing a lineup of new collaboration RTD
cocktails that offer consumers unmatched value.

16

In the wine category, we will continue to strengthen our lineup of fine wines*2. We willseek to expand sales of our premium Japanese wine Grande Polaire, as well as ourimported brands, especially Penfors wine and Taittinger champagne. At the same time, wewill expand the customer base for casual everyday wines through information
dissemination and stronger promotional activities.
In the spirits business, we will continue to focus sales efforts on such world-famousbrands as Bacardi, the world’s best-selling rum in both sales volume and value*3, as well as
Bombay Sapphire, Dewar’s, and Martini.
In our Japanese liquor business, we will step up efforts to expand sales of our blended
imo shochu, Kokuimo, while also aggressively proposing new and unique Japaneseliqueurs that complement the success of our plum wine (umeshu) offerings, such as Otoko
Ume no Sake and Ume Kaku series of plum-wine based cocktails.
The Japanese Alcoholic Beverages business will strive to achieve its profit targets byspending effectively and efficiently on marketing that enhances brand values while cutting
other costs wherever possible.
*1) RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-like beverages thatcan 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 priced at less than ¥1,500 per bottle.
*3) Based on a survey by International Wine & Spirits Research17International Business
Our outlook for the beer market in North America takes into account the economic impactof the new administration in Washington D.C. and the change in crude oil prices on the
Canadian economy. Overall, we expect demand for beer in North America to be largely thesame as in 2016. In the Asian beer market, we expect to see continued growth in countries
with expanding populations and firm economic growth. In some countries, however,
economic slowdowns and stricter regulations on alcoholic sales and consumption are
expected to curtail market growth.
Under such circumstances, our International Business will strive to expand sales of its
premium beer brands, beginning with the Sapporo brand, and establish a unique position in
North America and Southeast Asia, the two regions where the business is concentrating its
resources and efforts. Toward that end, we will execute strategies that match the uniquecharacteristics of the market in each country in which we do business.
In Canada, SLEEMAN BREWERIES aims to achieve its profit goals and expand its shareof the overall beer market plans by executing marketing strategies that match the special
characteristics of its brands and by optimizing its production system to lower costs. In the
U.S. beer market, Sapporo USA plans to establish a wider presence for the Sapporo brandby strategically allocating resources in areas and sales channels that are expected to grow.
In the U.S. soft drinks market, we plan to expand sales and profits by acquiring new sales
channels, improving our production network, and establishing a management platform thatwill leverage the strengths of our two subsidiaries, Silver Springs Citrus and Country Pure
Foods.
In Southeast Asia, we aim to expand sales and improve profits at our Vietnam businessby appealing to the brand value of Sapporo Premium Beer at in-store points of contact withcustomers and by conducting effective marketing that stimulates consumers’ purchasing
appetite. In the Singapore market, we are expanding sales channels in the household andcommercial markets in a cooperative effort with our local subsidiary.

Food & Soft Drinks
Japan’s soft drinks industry continues to face a difficult operating environment,characterized by the diversification of consumer preferences, stiff competition among
beverage makers, and cost increases caused by a weaker yen and rising raw material
prices.
Under such difficult conditions, our domestic food and soft drinks business, guided by its
vision for “continually creating new delicious products that enrich and brighten people’s

18everyday lives” and a thorough familiarity with customers’ viewpoints, plans to deliver newvalue to its customers in areas where it has demonstrated advantages.
The domestic soft drinks business will seek to carve out a unique market position bystrengthening its brands. We will strengthen our position as a leader in the lemon-based
drinks market by strengthening marketing of Kireto Lemon brand products and developing
new value-added products.
With consumers enjoying soups at wider variety of times and places, our domestic foodbusiness will endeavor to increase demand for its instant soups by expanding the lineup to
include soups, such as the retort-packaged soup we launched in 2016, that are suitable for
consumption in a more diverse range of situations. In the commercial-use products
category, we will leverage group synergies to expand sales in all market segments, from
Pokka Lemon and our alcoholic-beverage mixers to powdered teas and soups. Our new
soymilk business plans to expand sales of its core soymilk-based yogurt as well as sales of
its existing SOYAFARM brand.
At the domestic restaurants business, the Café de Crié chain will carry out marketing tostimulate business at its existing outlets. It will also accelerate efforts to establish newformats that will enhance brand value.
The overseas soft drinks business expects to see stiffer competition in its Southeast
Asian markets. In response, the business plans to expand sales by strengthening its
advantages in the tea drinks and juice beverages segments in the core Singapore market.
Our joint venture in Indonesia will begin full-fledged production and sales activities,
including licensed-out production in Myanmar. We aim to grow our Southeast Asianbusiness by providing products that meet the needs of consumers in each country.

Restaurants
Japan’s restaurant industry is expected to remain mired in a difficult operating environment
in 2017, with labor costs and food material costs continuing to rise and competition growing
ever more intense as foreign restaurant chains entering the Japan market add to the strains
already being applied by cross-industry competition from retailers and other non-traditional
players.
In this environment, our Restaurants business will emphasize raising the quality of its
menus, service, and store atmosphere in a return to basics focused on “delivering 100%
satisfaction to customers.” As part of that commitment, our restaurants are taking extra careto ensure the provision of safe and sound food to their customers.
New store openings in 2017 will focus on new formats as well as territorial expansion forour two core formats, Ginza Lion and Yebisu Bar. We will also move aggressively on

19renovations and refreshing of existing outlets in order to sustain and enhance their future
earnings power.
Overseas in Singapore, we will continue efforts to establish the Ginza Lion brand while
also remodeling existing Tonkichi outlets to enhance their earnings performance. In
addition, we will give serious consideration to expanding into neighboring countries.

Real Estate
Japan’s real estate industry expects to see little new office supply in the Greater Tokyo
office leasing market during 2017, which should keep vacancy rates down and sustain the
recent moderate uptrend in office rents. However, with a large volume of new supply
expected to hit the market during 2018–2020, currently favorable market conditions could
be headed for a peak at the end of the year.
In this environment, our Real Estate business will continue its efforts to enhance thecompetitiveness of its buildings and related services as it seeks to raise occupancy rates
and rent levels at its properties.
Our flagship property, Yebisu Garden Place, is making preparations for the opening of achild-care facility in April 2017. The new facility will help promote a better work-life balance
for child-rearing employees of tenant enterprises at Yebisu Garden Place Tower. We willcontinue to enhance facilities in all other areas of the complex, beginning with thecommercial areas, as we aim to increase the entire property's brand value by providing new
added-value. At GINZA PLACE, our new commercial complex that opened in September
2016, we plan to boost the facility’s information dissemination capability in line with its
original concept as a “base for information dissemination and exchange.” In addition toenhancing the property’s brand value, this initiative will increase the property’s drawing
power and make the Ginza district an even more dynamic and bustling urban center.
The real estate development business is proceeding with redevelopment of Sapporo Factoryas part of the renovation of the area on the east side of the Sosei River, a focus of the city’surban redevelopment program. In addition to renovating commercial complex Sapporo Factory,
we will steadily advance plans to redevelop the adjacent parking lot into a new commercial
building.
During 2017, we will conduct a review and revision of our property portfolio in order toenhance the overall value of our Real Estate business. We also will be constructing a new
business domain centered on urban development projects.

20(2) Review of Consolidated Financial Condition(a) Consolidated Financial Condition
Consolidated total assets as of December 31, 2016, totaled ¥626.3 billion, ¥5.9 billion morethan at the end of the previous fiscal year (December 31, 2015). The asset growth reflects
increases in notes and accounts receivable, land holdings and certain other assets, which
offset declines related to goodwill amortization and investment securities.
Consolidated total liabilities totaled ¥459.9 billion, a ¥3.4 billion increase from December
31, 2015, primarily owing to increases in commercial paper and long-term bank loans,which outweighed decreases in short-term bank loans and some other liability categories.
Consolidated net assets totaled ¥166.3 billion, up ¥2.5 billion from the end of theprevious fiscal year. The increase primarily reflects the posting of profit, partly offset by adecline related to the remeasurements of defined benefit plans and by the payment ofyear-end dividends.

(b) Consolidated Cash Flows
Cash and cash equivalents (collectively, “cash”) totaled ¥10.4 billion as of December 31,
2016, a ¥0 billion or 1% increase from December 31, 2015.
Following is an explanation of consolidated cash flows by category in 2016 and thefactors that affected cash flows in each category.

Cash flows from operating activities
Operating activities provided net cash of ¥32.5 billion, ¥2.6 billion or 8% less than in 2015.
The major sources of operating cash flow included ¥22.3 billion from depreciation andamortization and ¥16.4 billion from profit before income taxes. The largest cash outflow
was the ¥10.9 billion in income taxes paid.

Cash flows from investing activities
Investing activities in 2016 used net cash of ¥27.5 billion, a ¥17.8 billion or 183% increaseover 2015. Major investment outflows included ¥19.7 billion from purchases of property,
plant and equipment and ¥2.0 billion from purchases of intangibles.

Cash flows from financing activities
Financing activities in 2016 used net cash of ¥4.8 billion, a ¥19.9 billion or 81% decline
from 2015. The main inflows from financing activities were ¥32.7 billion from long-termbank loans and ¥16.0 billion from a net increase in commercial paper. These inflows,21however, were outweighed by outflows, including ¥46.5 billion for the repayment of longterm bank loans and ¥10.0 billion for redemption of bonds.

Cash Flow Indicators
As of December 31,

Equity ratio (%)
Equity ratio based onmarket capitalization (%)
Cash flow to interestbearing debt (years)

2012

2013

2014

2015

2016

22.1

24.6

25.0

25.5

25.7

18.3

28.0

31.9

33.4

37.4

10.2

8.8

13.0

7.8

8.6

Interest coverage ratio

8.4
11.9
8.9
14.8
14.9
(%)
Equity ratio: Total net assets / Total assets
Equity ratio based on market capitalization: Market capitalization / Total assets
Cash flow to interest-bearing debt: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest expense
Notes:
1. All of the above indicators are calculated based on consolidated financial
statement data.
2. Market capitalization is calculated based on the number of shares issued andoutstanding, excluding treasury stock.
3. “Cash flow” is operating cash flow.
4. Of the debt carried on the consolidated balance sheet, interest-bearing debt istotal debt on which interest is currently payable.

Dividend Policy
The Company considers the appropriate return of profits to its shareholders as afundamental aspect of management policy and has adopted a basic policy to undertake
stable dividend payments taking into consideration the Company’s performance andfinancial condition. Meanwhile, pursuant to the Sapporo Group/ Long-Term Management
Vision “SPEED 150”, which was announced in November 2016, the Company, starting thisyear, is working under the First Medium-Term Management Plan 2020, which calls for adividend payout ratio of 30%(*) as a target for return of profits to its shareholders.

22Given the foregoing situation and taking into consideration the operating results for thecurrent term and the management environment etc. going forward, the Company has
decided to pay a dividend from surplus of 37 yen per share for 2016. As for a dividend fromsurplus for 2017, the company plans to pay 37 yen per share.
(*) If net profit for the current term accruing to the parent company shareholder changes
significantly because of an extraordinary profit or loss stemming from special factor, theimpact from this may be taken in consideration when deciding a dividend amount.

On July 1, 2016, the Company carried out a share consolidation at a ratio of 1 share for 5
shares of the Company’s common stock.

23

2. Management Policy(1) Fundamental Management Policy
The Sapporo Group’s management philosophy is "As an intrinsic part of people's lives, Sapporo
will contribute to the evolution of creative, enriching and rewarding lifestyles." and we strive toincrease stakeholder satisfaction by maintaining integrity in corporate conduct that reinforces
stakeholder trust and by aiming to achieve continuous growth in corporate value. This is ourfundamental management policy.
(2) Mid to long- term management strategy and management indicator
In November 2016, the Company formulated the Sapporo Group Long-Term Management Vision“SPEED150”and the First Medium-Term Management Plan 2020. The “SPEED150”vision sets
forth the overall direction the Company should pursue over the next 10 years through 2026, theyear marking the Group’s 150th anniversary of founding. The First Medium-Term Management
Plan 2020 lays out the basic strategies the Company will implement over the next four years
through 2020.
● Sapporo Group Long-Term Management Vision “SPEED150”:
The Company formulated the 2026 Group Vision and the Action Guidelines, both of which will
be achieved by pursuing management reforms and business growth with speed while
continuing to adhere to the Management Philosophy and Fundamental Management Policy.
Recognizing once again that the source of the Group’s growth lies in the brand assets cultivatedover the Group’s 140-year history since it was founded, the Company has positioned “Alcoholic
Beverages”, “Food” and “Soft Drinks” as the Group’s three core business fields, and will workto nurture and strengthen the Group’s brands along with the real estate business. The Company
stands out among the numerous food companies in Japan for conducting business in all threefields of “Alcoholic Beverages”, “Food” and “Soft Drinks”. Leveraging this unique strength, theCompany will work to supply distinctive products and services worldwide in conjunction withexpanding its contact points with customers, with the aim of driving robust growth.
●The 2026 group vision:
The Sapporo Group will be a company with highly unique brands in the fields of "Alcoholic
Beverages", "Food", and "Soft Drinks" around the world.
●Action Guidelines：
1. Make customers lifestyle around world more fulfill by creating new value through the pursuitof innovation and quality.
2. Strive to provide products and services and to nurture brands that foster communication
among customers.
3. Practice efficient management in tandem with addressing changes in the environment.

24

● First Medium-Term Management Plan 2020：
1. Fundamental Policy
The Company aims to transition to a growth stage as early as possible based on the theme of“Transformation with Unprecedented Speed.”(1) Business Activities
The Company will enhance its cash generation capabilities by achieving continuous growth andproducing results based on the identification of competitive fields in each business.
1. Achieve continuous growth in existing businesses
Achieve steady growth based on identification of competitive fields in the existing fivebusinesses
2. Produce results in the investment business
Enhance profitability in the Vietnam business, North American beverage business and the food& soft drinks business3. Capture growth opportunities
Capture growth opportunities by allocating resources to growth in the “Food” field and global
business expansion(2) Group Management
The Company will take the lead in strengthening its platform through the strategic shift ofresources, and business structure reforms and promotion of segment management.
1. Implement a Group structure that fits the actual state of growth and optimization of Head
Office functions
2. Strengthen platform functions-R&D
Bolster resources (human resources and research & development expenses) to drive growth
In the ”Food” field-Personnel and human resources
Shift human resources to growth fields and implement health promotion measures-Finance
Strengthen the financial base by enhancing asset efficiency and bolstering monitoring25

2. Management Targets(1) Quantitative Targets for 2020
Net sales: Maintain sales growth that has continued since 2010
Operating income: Deliver the Group’s highest-ever earnings during the First Medium-Term
Management Plan period＜Quantitative Targets by Business Segment＞（Billions of yen）（※operating income is before goodwill amortization）

Consolidated Total
Japanese Alcoholic Beverages
International
Food & Soft Drinks
Restaurants
Real Estate
New Business and Others
Corporate

2016 Forecast
Net sales
Operating income
541.8
24.1
279.4
11.8
65.4
2.5
137.9
3.4
28.1
0.6
22.9
10.3
8.0
(0.0)
(4.5)

2020 Target
Net sales
Operating income
640.0
34.0
31.5
14.0
79.0
5.0
162.0
6.5
32.0
1.6
25.0
12.0
27.0
0.9
(6.0)

Percentage change
Net sales
Operating income
18.1%
40.6%
12.7%
18.6%
20.8%
94.0%
17.5%
87.1%
13.8%
129.1%
9.2%
16.2%
236.2%-(2) Financial Indicators
The Company has set the following indicators to build a financial base able to promptly addresschanges in the environment and investment opportunities in the growth stage.
＜Financial indicators to be achieved during the four years from 2017 to 2020＞
Generate cash flows by strengthening platform functions, achieving continuous growth in existing
businesses, and producing results in investment businesses

Cash flows from operating activities\180.0 billion

Cash flows from investing activities
Interest-bearing liabilities\130.0 billion Proactively allocate cash to the “Alcoholic Beverages”, “Food” and “Soft Drinks” fields
Targeting a debt-to-equity (D/E) ratio of around 1.0

Shareholder returns

Targeting a dividend payout ratio of 30%(3) Issues to be addressed
1) Corporate governance structure
To ensure the Sapporo Group’s management philosophy and fundamental policy are realized as
we aim to achieve continuous growth in corporate value, we have identified strengthening andenhancing corporate governance as one of management’s top priorities. Toward that end, we areworking to clarify supervisory, business execution and auditing functions throughout the Group
under the holding company framework. We are also working to strengthen management
supervisory functions to increase management transparency and achieve management goals. In
December 2015, we established the Sapporo Group’s Basic Policy on Corporate Governanceand posted it on the Sapporo Holdings website.

2) Initiatives to be undertaken in each business segment
Please refer to the presentation for each business segment in (b) Outlook for fiscal year
ending December 31, 2017 on page 14 .

26

3. Basic Approach to Selecting Accounting Standards
The Sapporo Group is making preparations for the adoption of International Financial ReportingStandards (IFRS) with the aim of facilitating international comparisons of our financial informationin the capital markets. We will decide on the most appropriate timing for the adoption of IFRS
after due consideration of various conditions in Japan and overseas.

27

4. 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 Merchandise and finished products
4 Raw materials and supplies
5 Deferred tax assets
6 Other
7 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) Lease assets
Accumulated depreciation
Lease assets, net(5) Construction in progress(6) 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) Deferred tax assets(4) Other(5) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

28

December 31, 2015

December 31, 2016

AmountAmount10,43092,33524,912
13,722
4,457
10,570(64)
156,364

10,58996,85024,657
13,315
3,639
15,213(82)
164,183

383,087(213,567)
169,519
227,534(183,165)
44,368105,121
15,498(7,739)7,758
6,637
18,487(14,850)
3,636
337,042

393,022(220,233)
172,788
231,559(187,660)
43,898111,636
16,970(7,694)
9,276
3,694
17,731(13,529)4,201
345,495

30,235
10,74340,97827,43910,511
37,95061,8489,016
1,009
15,362(1,234)59,296
4,789
1,070
14,760(1,195)86,00278,721

464,023
620,388462,168
626,351

Liabilities
I Current liabilities
1 Notes and accounts payable - trade
2 Short-term bank loans
3 Commercial Paper
4 Current portion of bonds
5 Lease Obligations
6 Liquor taxes payable
7 Income taxes payable
8 Accrued bonuses
9 Deposits received
10 Other
Total current liabilities
II Long-term liabilities
1 Bonds
2 Long-term bank loans
3 Lease obligations
4 Deferred tax liabilities
5 Net defined benefit liability
6 Dealers' deposits for guarantees
7 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 Non-controlling Interests
Total net assets
Total liabilities and net assets

29

December 31, 2015
AmountDecember 31, 2016
Amount36,77265,822
17,00010,0002,932
33,903
6,114
2,219
8,824
50,054
233,643

38,50330,33733,00010,083
3,024
34,228
1,680
2,980
8,214
50,071
212,123

50,00091,9195,353
21,216
7,636
32,833
13,963
222,921456,565

50,128
114,593
6,968
18,804
8,995
33,241
15,115
247,847
459,971

53,88645,91335,189(1,595)
133,394

53,88646,08941,932(1,795)140,11223,926(11)(1,255)
1,874
24,533
5,894
163,822620,388

22,51741(1,943)(41)
20,574
5,693
166,380
626,351

(2) Consolidated Statements of Income(millions of yen)
Year ended
Year ended
December 31, 2015 December 31, 2016
AmountAmount533,748541,847
352,808
352,420
180,940
189,426

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
IV Non-operating income
1 Interest income
2 Dividend income
3 Equity in income of affiliates
4 Gain on valuation of derivatives
5 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Foreign exchange losses
3 Loss on valuation of derivatives
4 Other
Total non-operating expenses
Ordinary income
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 Compensation expenses
Total extraordinary losses
Profit before income taxes
Income taxes： current
Income taxes： deferred
Total Income taxes
ProfitProfit (loss) attributable to non-controllinginterests Profit attributable to owners of parent
ProfitOther 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 parent
Comprehensive income attributable to non-controlling interests30

35,841
21,982
31,954
1,218
2,690
73,303
166,990
13,95038,75020,42032,0391,726
784
75,438169,159
20,267

252
1,123
17
468
1,059
2,921

231
1,111
15
958
2,316

2,279
537
842
3,659
13,211

2,142
217
252
769
3,381
19,202

7,453
46
72
322
7,895

45
13
59

1,534
24
5,956
1,758
142
9,415
11,6907,409(1,830)
5,578
6,112
3
6,108

1,413
26
1,018
22
376
2,858
16,403
6,185
838
7,023
9,380
(89)
9,469

6,112

9,380

3,819
(17)
(3,767)
1,434
1,467
7,579

(1,408)52(896)(1,915)(4,168)
5,211

7,506
73

5,509
(298)

(3) Statements of Changes in Shareholders' Equity(millions of yen)
Year ended December 31,
2015
AmountShareholders’ Equity
Common stock
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Balance at end of period
Capital surplus
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Disposition of treasury stock
Total changes during period
Balance at end of period
Retained earnings
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Cash dividends
Profit attributable to owners of parent
Total changes during period
Balance at end of period
Treasury stock
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Purchase of treasury stock
Disposition of treasury stock
Total changes during period
Balance at end of period
Total shareholders' equity
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Total changes during period
Balance at end of period
Accumulated other comprehensive income
Unrealized holding gain on securities
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

31

Year ended December 31,
2016
Amount53,88653,88653,88653,88653,88653,88645,91245,91245,91345,9131
145,913175
175
46,08934,913(3,105)31,80835,189(2,727)6,108
3,381
35,189(2,726)9,469
6,742
41,932(1,544)(1,544)(1,595)(1,595)

(54)
3
(51)
(1,595)

(471)
271
(199)
(1,795)133,168(3,105)130,062

133,394
133,394(2,727)
6,108
(54)
4
3,331
133,394(2,726)
9,469
(471)
447
6,718
140,112

20,112
20,112

23,92623,926

3,813
3,813
23,926(1,408)(1,408)22,51735,189Deferred hedge gains (losses)
Balance at beginning of year

(0)

Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Foreign currency translation adjustments
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Remeasurements of defined benefit plans
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total accumulated other comprehensive income
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Non-controlling interests
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total net assets
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Cash dividends
Profit attributable to owners of parent
Purchase of treasury stock
Disposition of treasury stock
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

32

(11)

-

-

(0)

(11)

(11)
(11)
(11)

52
52
41

2,582
2,582

(1,255)(1,255)(3,838)(3,838)(1,255)

(687)
(687)
(1,943)

440
440

1,874
1,874

1,434
1,434
1,874

(1,915)(1,915)(41)

23,135
23,13524,53324,533

1,397
1,397
24,533(3,959)(3,959)20,574

3,700
3,700

5,894
5,894

2,193
2,193
5,894

(200)
(200)
5,693

160,004(3,105)
156,899

163,822
163,822(2,727)
6,108
(54)
4
3,591
6,922
163,822(2,726)
9,469
(471)
447
(4,160)2,558
166,380

(4) Consolidated Statements of Cash Flows

I Cash flows from operating activities
1 Profit before income taxes
2 Depreciation and amortization
3 Loss on impairment of property, plant and equipment
4 Goodwill amortization
5 Increase (decrease) in net defined benefit liability
6 Increase (decrease) in allowance for doubtful receivables
7 Interest and dividend income
8 Interest expense
9 (Gain) loss on sales of fixed assets
10 (Gain) loss on sales and disposal of fixed assets
11 (Gain) loss on sales of investment securities
12 (Gain) loss on revaluation of investment securities
13 (Increase) decrease in notes and accounts receivable - trade
14 (Increase) decrease in inventories
15 Increase (decrease) in notes and accounts payable - trade
16 Increase (decrease) in accrued consumption taxes
17 Increase (decrease) in liquor taxes payable
18 Increase (decrease) in deposits received
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 affiliate's securities
8 Purchase of subsidiaries' shares
resulting in change in scope of consolidation
9 Collection of sales of subsidiaries' share for prior periods
10 Payments for transfer of business11 Increase in long-term loans receivable
12 Collection of long-term loans receivable
13 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 Proceeds from issuance of bonds
6 Redemption of bonds
7 Cash dividends paid
8 Cash dividends paid to non-controlling interests
9 Repayment of finance lease obligations
10 Purchase of treasury stock
11 Proceeds from sale of treasury stock
12 Proceeds from non-controlling shareholders
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 Cash and cash equivalents at end of period

33

Year ended
December 31, 2015
Amount(millions of yen)
Year ended
December 31, 2016
Amount11,69024,224
5,956
4,153
446
(137)
(1,376)2,279(7,453)
1,559
(46)
1,758
(2,779)(1,211)(202)(3,057)
457
(729)
376
48
35,9571,380(2,384)(2,944)
3,257
35,265

16,403
22,341
1,018
3,920(1,720)(53)(1,342)
2,142
(45)
1,440
(13)
22
(3,756)
968
1,608
(807)
338
(623)
173
2,349
44,364
1,359(2,190)(10,986)
22
32,570(18,298)
19,563(2,041)(875)
511(3,260)1,794(19,748)428(2,060)
(235)
137
(154)
-

(3,989)
3,198
(304)
417
(6,471)(9,755)(438)
30(1,493)(77)
167(4,142)(27,586)(3,366)(13,000)
14,319(16,625)
9,960(12,000)(2,730)(28)(3,039)
(56)
4
1,760
(24,802)
(56)
651
9,748
10,399(1,248)16,00032,746(46,594)
9,960(10,016)(2,730)(9)(2,910)(471)
447(4,827)(79)
76
10,39910,475(5) Notes on the Going-concern Assumption
Not applicable(6) Changes in accounting policies, changes in accounting estimates, and retrospective
restatements(Changes in accounting policies)
The following changes to accounting policies were applied from the fiscal year 2016: Accounting Standard forBusiness Combinations (Accounting Standards Board of Japan - ASBJ - Statement No. 21 of September
13, 2013); Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22 ofSeptember 13, 2013); and Accounting Standard for Business Divestitures (ASBJ Statement No. 7 ofSeptember 13, 2013). Accordingly, in cases where the parent company continues to have control, differences
arising from changes in the Company’s ownership interests in subsidiaries are now recorded in capital surplus,
and acquisition expenses for business combinations are now treated as expenses in the consolidated financial
statements for the year in which they arise. Regarding business combinations that take place on or after the
beginning of the fiscal 2016, any change to the allocation of the acquisition cost arising from confirmationof the provisional accounting treatment must now be reflected in the consolidated financial statements forthe fiscal year in which the business combination occurred. In addition, the presentation of the profit category
has been revised and minority interests has been changed to non-controlling interests. Consolidated
financial statements for the previous fiscal year have been restated in order to reflect this change inpresentation.
In the consolidated statements of cash flows, cash flows related to the purchase or sales ofsubsidiaries’ shares not resulting in change in scope of consolidation are included in “Cash flows from financing
activities”. Cash flows related to expenses incurred in the purchase of subsidiaries’ shares resulting in change
in scope of consolidation as well as cash flows related to expenses incurred in connection with the purchaseor sales of subsidiaries’ shares not resulting in change in scope of consolidation are included in “Cash flows
from operating activities”.
Application of the newly adopted accounting standards noted at the outset of this section has been
implemented from the start of the fiscal year 2016, in accordance with the transitional provisions in Article58-2(4) of the Accounting Standard for Business Combinations, Article 44-5(4) of the AccountingStandard for Consolidated Financial Statements, and Article 57-4(4) of the Accounting Standard for Business
Divestitures.
These changes in accounting policy had no effect on operating income, ordinary income, and profit before
income taxes reported for the fiscal year 2016.

(Changes to accounting policies difficult to distinguish from changes in accounting estimates)
The SAPPORO Group has in the past applied the declining-balance method for depreciation of property, plant34

and equipment (however, the straight-line method was applied to property, plant and equipment of the
Hokkaido Brewery, rental properties acquired since January 1988, Yebisu Garden Place, Sapporo Factory,buildings (excluding fixtures and equipment) acquired since April 1, 1998, Kyushu Hita Brewery, the Gunma
Brewery’s Japanese liquor manufacturing equipment, and Nasu Brewery). However, from the fiscal year 2016
all property, plant and equipment will be depreciated using the straight-line method.
Group companies Sapporo Breweries Ltd. and POKKA SAPPORO Food & Beverage Ltd. have carried out
aggressive capital investments on the assumption that growth in total demand would deliver early returns on
those investments. However, in recognition of the maturation of our markets and operating environment, weare now prioritizing stable supply from existing facilities. In the current fiscal year, we plan to invest in new
manufacturing facilities and the renewal of existing facilities to secure additional stable supplies of coreproducts. In preparation for the drafting of the next long-term plan to be implemented from January 2017, wehave examined the current state of usage of the Group’s property, plant, and equipment and plans for future
capital investments. This examination indicates that we will be able to maintain stable utilization of suchdomestic property, plant and equipment, which in turn has led to the decision that using the straight-line method
to evenly distribute the acquisition cost of these assets over their useful lives will lead to more appropriate
calculations of profit and loss in each reporting period.
The change from the declining-balance method to the straight-line method of depreciation reduced
depreciation expense by ¥1,750 million, had a ¥1,688 million positive impact on operating income, and added¥1,701 million to ordinary income and to profit before income taxes in the year ended December 31, 2016.

(Changes in Presentation Methods)
Not applicable(7) Additional Information(Board Benefit Trust (BBT) for directors, group operating officers of the Company, and some directors of
the Company’s subsidiaries)
Following the approval of shareholders of a resolution at the 92nd Ordinary General Meeting of Shareholders,the Company on May 31, 2016, introduced a new stock-based compensation system (Board Benefit Trust, or
BBT) (hereinafter referred to as the “System”), for directors, group operating officers of the Company, andsome of the directors of the Company’s subsidiaries (excluding outside directors, hereinafter referred to as the“Group Target Officers”). The new System is designed to increase Group Target Officers’ awareness of theircontributions to improving the performance of the Company over the longer term and to enhancing corporate
value.
1. Overview of System
The Company shall grant points to the Group Target Officers according to their respective positions andperformance achievements. The BBT will then provide the Company’s shares to Group Target Officers

35who meet certain conditions in proportion to the points granted to them. In principle, Group Target Officers
will receive the Company’s shares when they retire. The shares to be awarded to Group Target Officers,
including shares for future allocation, shall be purchased using money contributed by the Company at thetime of the System’s establishment, and shall be managed separately as Trust property.
2. Company shares remaining in the Trust
Upon the introduction of the System during the second quarter of the current fiscal year, Trust & Custody
Services Bank, Ltd. (Trust Account E) acquired shares 754,600 shares of the Company. The book value(excluding incidental costs) of the Company shares now held by the Trust are accounted for as treasury
stock in the net assets section of the Company’s balance sheet. As of December 31, 2016, the book value
and total number of treasury shares held by the Trust are, respectively, ¥445 million and 754,600 shares.
With an effective date of July 1, 2016, the Company implemented a consolidation of shares at a ratioof 1 share for each 5 shares of the Company’s common shares. Following this share consolidation, thenumber of shares held by the Trust totaled 150,920.

(Business combinations)
In the International Business segment, previous financial disclosures included a provisional estimate of
goodwill related to the acquisition of COUNTRY PURE FOODS, INC., on February 24, 2015, because
allocation of the actual acquisition cost had yet to be completed. In the year ended December 31, 2016,
however, allocation of the acquisition cost was completed and the amount of goodwill was adjusted as
described below.
Goodwill (before adjustment) ¥ 4,162 million
Intangible assets¥ 310 million

Deferred tax assets¥ (20) million

Deferred tax liabilities¥ (76) million

Other adjustment¥

Amount of adjustment¥ 264 million

51 million

Goodwill (after adjustment) ¥ 4,426 million●Amount of goodwill arising, reason for its recognition, and amortization method and period①Amount of goodwill：¥4,426 million②Reason for its recognition : Future business activities are expected to generate excess profitability.
③Amortization method and amortization period : 9 years with the straight-line method36

(Property Leasing)
The Sapporo Group holds office buildings (including land) for lease in the Tokyo
metropolitan and other areas. Net leasing income on those properties in the year ended
December 31, 2015 was ¥7,606 million (leasing income was mainly recorded as operating
revenues; leasing expenses were mainly recorded as operating expenses). Net leasing
income on those properties in the year ended December 31, 2016 was ¥9,453 million(leasing income was mainly recorded as operating revenues; leasing expenses were mainly
recorded as operating expenses).
The carrying value of those properties on the consolidated balance sheets, change incarrying value during the years ended December 31, 2015 and 2016, and the total fair value
appear in the following table.
Year ended December 31,
2015
Carrying value on consolidated balance sheets
January 1
Change during the period
December 31
Fair value at December 31(millions of yen)
Year ended December 31,
2016

207,864
ᇞ10,198
197,666
357,395

197,666
4,097
201,763
389,101

Notes:
1. Carrying value on the consolidated balance sheets represents acquisition costs net ofaccumulated depreciation and accumulated impairment loss.
2. The change during the year ended December 31, 2015 comprises increase mainly arisingfrom property acquisitions (¥6,595 million) and decrease mainly due to depreciation (¥3,804 million),sales (¥12,535 million), disposal (¥328 million).
The change during the year ended December 31, 2016 comprises increase mainly arising from property acquisitions (¥10,134 million)
and decrease mainly due to depreciation (¥3,804 million), disposal (¥1,911 million).
3. The fair value at December 31 is mainly based on property valuations performed bythird-party real estate appraisers.

37

(8).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. Calculation methods for sales, income (or loss), assets and other items
Accounting methods applied in reportable segment by business largely correspond to that presented under "The Basis for Preparation ofConsolidated Financial Statements" and "Change in Accounting methods." Reportable segment income is based on operating income.
Intersegment sales or transfers is based on market price. Intra-group sales and transfers are calculated as if the transactions were to third
parties based on market prices.
3. Changes in Reportable Segment, etc.
(Change to depreciation method)
As described in “Changes in accounting policies,” the depreciation method for property, plant and equipment has been changed with effectfrom the fiscal year 2016.
This change increases segment profit of the Japanese Alcoholic Beverages business by¥957 million, Food & Soft Drinks business by ¥374
million, Restaurants business by ¥194 million and the Real Estate business by ¥105 million over the profit that would have been recorded
under the previous method.
The change also has a positive effect on earnings of Others segments, reducing losses by ¥4 million. The change also reduces Adjustmentsby ¥51 million.

38

3. Sales, income (or loss), assets, and other items(millions of yen)
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Japanese
Food &
International
Restaurants Real Estate
Total
AlcoholicSoft Drinks
Beverages
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Increase in property, plant and equipment, andintangible assets

273,651
2,793
276,445
8,635
220,00970,501102
70,604154
67,068135,670297
135,967434
100,463

27,0045
27,009522
12,271

20,872
2,549
23,421
8,281
206,649

527,700
5,747
533,448
18,028606,463

8,144

3,380

6,185

668

4,202

22,581

4,607

2,558

5,117

844

6,196

19,324

Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Other *1
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other

Total

6,048
19,83425,882
1
6,788

Depreciation and amortization

36

Increase in property, plant and equipment, andintangible assets

2

Adjustment

533,748
25,582559,331
18,029613,252

22,617
19,326

Amounts reported on thestatements of income*2(25,582)(25,582)(4,079)7,136

533,748

1,606

24,224

1,256

20,583533,748
13,950620,388(millions of yen)
Year ended December 31, 2016 (January 1, 2016 – December 31, 2016)
Japanese
Alcoholic
Beverages
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Increase in property, plant and equipment, andintangible assets

International

Food &
Soft Drinks

279,476
2,860
282,337
11,745214,326

65,40096
65,497906
66,292

137,918282
138,200
1,314
100,594

28,120028,121
663
13,571

22,9002,569
25,46910,328211,312533,815
5,810
539,625
24,958606,097

7,221

3,042

5,711

521

4,125

20,622

2,691

2,649

8,096

1,143

9,648

24,230

Restaurants Real EstateYear ended December 31, 2016 (January 1, 2016 – December 31, 2016)

Other *1

Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Increase in property, plant and equipment, andNotes:

Total

Adjustment

Amounts reported on thestatements of income*2

8,031
20,15828,190(95)
10,042541,847
25,968567,815
24,862
616,140(25,968)(25,968)(4,595)
10,211

541,847
541,847
20,267626,351

43
58

20,66524,288

1,675
2,384

22,341
26,673(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.
39

Total

4. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement ofincome (information on differences)(millions of yen)
December 31, 2015
December 31, 2016
Segment income (loss)
Total for reportable segments
18,02824,958
Income(loss) from other segments
1(95)
Unallocated corporate costs*(4,002)(4,784)(77)
189
Intra-segment sales
Operating income on the statement
13,95020,267
Note: Unallocated corporate costs consist mainly of SGA that is not attributable to reportable segments.

Segment income (loss)
Total for reportable segments
Assets of other segments(millions of yen)
December 31, 2016

December 31, 2015

606,097
10,042(11,134)
21,345

606,463
6,788(12,253)
19,390

Unallocated corporate assets*

Total assets on the consolidated financial statements
620,388626,351
Note: Unallocated corporate assets do not belong to reportable segments and consist mainly of working funds (cash and cash
equivalents and marketable securities), long-term investments, and assets of general administration divisions.

5. Related Information
1. Information by product and service
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Information by product and service is omitted here, as the same information is disclosed elsewhere.
Year ended December 31, 2016 (January 1, 2016 – December 31, 2016)
Information by product and service is omitted here, as the same information is disclosed elsewhere.
2. Segment Information by Geographic Area
(1) Net sales(millions of yen)

Year ended December 31, 2015(January 1, 2015 – December 31, 2015)
Japan439,197

America
67,001

Asia
20,969

Total
533,748

Other
6,580

Year ended December 31, 2016(January 1, 2016 – December 31, 2016)
Japan455,001

America
61,915

Asia
19,910

Other
5,020

Total
541,847(2) Property, plant and equipment
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Information has been omitted as total fixed assets held in Japan constituted more than 90% of that shown on the balance sheets.
Year ended December 31, 2016 (January 1, 2016 – December 31, 2016)
Information has been omitted as total fixed assets held in Japan constituted more than 90% of that shown on the balance sheets.
(3) Information by major customer
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)(millions of yen)Company NameNet Sales

KOKUBU & CO.,LTD.

79,177

Segment
Japanese Alcoholic Beverages
Food & Soft Drinks

Year ended December 31, 2016 (January 1, 2016 – December 31, 2016)(millions of yen)Company NameNet Sales

KOKUBU & CO.,LTD.

82,686

Segment
Japanese Alcoholic Beverages
Food & Soft Drinks406. Impairment loss on fixed assets or goodwill by reportable segment
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)(millions of yen)
Generalcorporate andintercompany
eliminations

Reportable segments

Impairment loss

Japanese
Alcoholic
Beverages
3,083

Other
Food &
Soft Drinks

International
2,082

Restaurants

610

Real Estate

179

Total
-

5,956

-

Total

-

5,956

Year ended December 31, 2016 (January 1, 2016 – December 31, 2016)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages
Impairment loss

Generalcorporate andintercompany
eliminations

Other
Food &
Soft Drinks

International

55-

Restaurants

819

Real Estate

138

Total
-

1,014

4

Total

-

1,018

7. Amortization for and unamortized balance of goodwill
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

Generalcorporate andintercompany
eliminations

Other
International

Food &
Soft Drinks

Restaurants

Real Estate

Total

Total

Amortization

41

1,833

2,278

0

-

4,153

-

-

4,153

Unamortized
Balance as ofDec. 31, 2015

343

12,122

17,769--30,235--30,235

Year ended December 31, 2016 (January 1, 2016 – December 31, 2016)(millions of yen)
Generalcorporate andintercompany
eliminations

Reportable segments
Japanese
Alcoholic
Beverages

Other
International

Food &
Soft Drinks

Restaurants

Real Estate

Total

Total

Amortization

54

1,670

2,160

34

-

3,920

-

-

3,920

Unamortized
Balance as ofDec. 31, 2016

288

11,214

15,556379-

27,439--27,4398. Gain on negative goodwill by reportable segment
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Not applicableYear ended December 31, 2016 (January 1, 2016 – December 31, 2016)
Not applicable41