Financial Results
for the Six Months Ended June 30, 2011 — Consolidated(Based on Japanese GAAP)
July 29, 2011

Company name

Sapporo Holdings Limited

Security code
2501
Listings
Tokyo Stock Exchange (First Section); Sapporo Securities Exchange
URL
http://www.sapporoholdings.jp/english/
Representative
Tsutomu Kamijo, President and Representative Director, Group CEO
Contact
Tatsuya Komatsu, Director of the Corporate Communication Department
Telephone+81-3-5423-7407
Scheduled dates:
Filing of quarterly financial reportAugust 12, 2011
Commencement of dividend payments
Supplementary information to the quarterly earnings results
Available
Yes
Quarterly earnings results briefing held
(mainly targeted at institutional
investors and analysts)

1. Consolidated Financial Results for the Six Months Ended June 30, 2011
(January 1 – June 30, 2011)(Amounts in million yen rounded down to the nearest million yen)

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

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen

Six months ended
June 30, 2011

194,428

9.8

3,005

149.2

2,017

375.1

(2,965)-Six months ended
June 30, 2010

177,144

(2.9)

1,206

(10.3)

424(18.1)(684)-

Net income per
share

Diluted net income
per share

yen

yen

Six months ended
June 30, 2011(7.57)-

Six months ended
June 30, 2010

(1.75)-

1%

(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yenJune 30, 2011

557,066

120,97621.4

303.77

December 31, 2010

494,798

126,64525.3

319.32

Note: Shareholders’ equity
June 30, 2011:
118,949 million yen
December 31, 2010: 125,047 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, 2010

—

0.00

Year ending
December 31, 2011

—

0.00

—

7.00

7.00

Year ending
—
7.00
7.00
December 31, 2011
(forecast)
Note: No changes have been made to the dividend forecasts since the latest release

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2011
(January 1 – December 31, 2011)(Percentage figures represent year-over-year changes)
Net sales

Full year

Operating income

Ordinary income

Net income

Net income

per share

million yen%

million yen%

million yen%

million yen%

yen

462,000

18.7

18,00016.9

15,5008.2

2,700(74.9)

6.90

Note: No changes have been made to earnings forecasts since the latest release

4. Other(1) Changes to scope of consolidation: None
(2) Use of accounting methods specific to preparation of consolidated quarterly financial
statements: Yes(3) Changes in accounting principles, changes in accounting estimates, and restatements
1) Changes in accord with amendments to accounting standards: Yes
2) Changes other than the above: None2(4) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):June 30, 2011:
393,971,493 shares
December 31, 2010: 393,971,493 shares
2) Number of shares held in treasury at end of period:
June 30, 2011:
2,390,631 shares
December 31, 2010:
2,367,424 shares
3) Average number of outstanding shares during the period:
Six months ended June 30, 2011:
391,585,911 shares
Six months ended June 30, 2010:
391,721,094 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 thoseexpressed or implied by forward-looking statements due to various factors. For the assumptions
underlying the forecasts herein and other notice on the use of earnings forecasts, please refer to"Consolidated Earnings Forecast" in "Analysis of Operating Results" on page ８.

3

1. Analysis of Operating Results（１）Consolidated Financial Results for the Six Months ended June 30, 2011
In the first half of 2011 (January–June), the Japanese economy was showing signs of a moderate
recovery in business conditions in the early part of the year when the Great East Japan Earthquake
and tsunami disaster struck on March 11. The impact of the disaster and subsequent electricity
shortages has had a major impact on the economy, resulting in a sharp slowdown. As of this writing,prospects for a full-fledged recovery remain unclear.
In this economic environment, the Sapporo Group’s Japanese Alcoholic Beverages andRestaurants businesses sales fell as a direct effect of the post-disaster situation. On the other hand,
the Soft Drinks business achieved year-on-year sales growth in the first half thanks to successful
marketing strategies launched at the start of the year. From April 1, the POKKA Group was added toour consolidated statements of income. This buoyed Group sales and contributed to a sharp increasein consolidated sales.
Operating income was boosted by cost reductions in all business segments, the addition of the
POKKA Group, and a solid performance from our Real Estate business.
As a result of the above factors, in the first half of 2011 the Sapporo Group posted consolidated
net sales of ¥194.4 billion (up ¥17.2 billion, or 10%, year over year). Operating income was ¥3.0
billion (up ¥1.7bn, or 149%, year over year), and ordinary income came to ¥2.0 billion (up ¥1.5 billion,
or 375%, year over year). However, we posted a first-half net loss of ¥2.9 billion (compared with ¥0.6
billion in the first half of 2010), owing to a ¥1.0 billion charge stemming from changes in accounting
standards for asset retirement obligations and “disaster losses” of ¥4.6 billion booked in relation to
the earthquake/tsunami disaster.
Segment Information is outlined below. The presentation of segment information has changed
owing to adoption of the management approach from this fiscal year. Changes from the previous
fiscal year are explained in the supplementary materials.
Segment Information
Impact of Seasonal Factors
The Group’s operating results exhibit substantial seasonal variation, with demand for the Alcoholic
Beverages, Soft Drinks, and Restaurants businesses’ products and thus, sales and income, in thefirst quarter (January–March) of the first half of the year lower compared with other fiscal quarters.

4

Japanese Alcoholic Beverages
Domestic demand for beer and beer-type beverages was trending in line with the previous year up
through the end of February, but demand in March was 87% of the corresponding level a year earlier
in the aftermath of the Great East Japan Earthquake. As a result, total demand for beer and beertype beverages appears to have been at around 94–95% of the year-earlier level.
From the start of 2011, the Japanese Alcoholic Beverages business focused its marketing activities
on core brands, namely YEBISU, Sapporo Draft Beer Black Label, and Mugi to Hop. However, theearthquake caused some damage to buildings, equipment, and distribution facilities at the Group’s
Sendai Brewery (Natori City, Miyagi Prefecture) and Chiba Brewery (Funabashi City, Chiba
Prefecture). Some product losses were also sustained. These damages forced the shutdown of thetwo breweries and the halt of product shipments. Packaging line operations were resumed at the
Chiba Brewery on March 28 and at the Sendai Brewery on May 2, but supply shortages forced theJapanese Alcoholic Beverage business to limit production to certain core brands and to delay thelaunch of new products. Marketing activities, including advertising and in-store promotions, were also
greatly affected. As a result, total unit sales of Sapporo beer products fell 9% year over year in thefirst half.
In the low-alcohol category, in February we launched the limited-quantity Sapporo Nectar Creamy
Peach cocktail-style drink and in April we began selling a new and improved version of Sapporo
Nectar Sour Sparkling Peach, a year-round offering. Both products met favorable market reactions.
In the nonalcoholic beer category, we introduced Sapporo Premium Alcohol Free on March 16, andsales have beat original targets despite the launch coming soon after the earthquake. In June, we
doubled our original unit sales target for 2011 to 1.2 million cases.
The wine and liquor business saw demand for domestic and imported wines increase in areas westof the Tokai region, which centers on Nagoya and was unscathed by the earthquake/tsunami disasterin northeast Japan. As a result, unit sales were above previous year figures, contributing to yearover-year gains in sales and income for the business as a whole.
In the shochu business, we finally launched the Triangle Ginger Highball canned cocktail in May,
delayed from the originally-scheduled March launch because of the earthquake’s impact. Despite thenew offering’s late contributions to sales, the shochu business’s first-half sales fell slightly short of theprevious-year figure, but the business still managed to post a profit.
As for operations at our quake-damaged breweries, the Chiba Brewery resumed full operation on
April 25 and the Sendai Brewery was fully operational as of May 19.
Overall, the Japanese Alcoholic Beverages business posted first-half sales of ¥118.2 billion (down¥7.7 billion, or 6%, year over year). Despite this downturn, the business reduced costs and managed
to reach breakeven at the operating income level (compared with a ¥0.1 billion loss a year earlier).

5International Alcoholic Beverages
North American beer demand remained sluggish despite signs of a recovery in consumer spending.
Demand throughout the industry appears to have contracted 1–2% compared with demand in thefirst half of 2010. Meanwhile, the Asian beer market continues to grow steadily, supported by fastgrowing economies in the region. In this environment, the International Alcoholic Beverages business
continued aggressive marketing activities targeting its core premium beer segment. Canadiansubsidiary SLEEMAN BREWERIES’ unit sales (excluding outsourced production of Sapporo brandproducts) increased 5% year over year, maintaining its five-year growth streak. Sapporo USA’s
Sapporo brand unit sales increased 9% year over year. Meanwhile, sales outside North America,
which are concentrated mainly in Asia, continued to grow briskly, with unit sales up 79% year overyear.
In Vietnam, brewery construction is proceeding smoothly, and we plan to begin beer production
and sales of locally produced beer during 2011. To that end, we are now establishing a production
system, formulating a marketing strategy, and building a distribution network. In Singapore, we
continue to work with the POKKA Group on expanding sales channels in the local household market.
In South Korea we entered the household and commercial beer markets via an alliance with Maeil
Dairies Co., Ltd.
As a result, improvement in local currency denominations were offset by yen appreciation as ourinternational Alcoholic Beverages business achieved sales of ¥12.4 billion (same as in the first half of2010), and the business posted an operating loss of ¥0.2 billion (compared with a ¥0.1 billion loss ayear earlier), partly due to startup investments totaling ¥0.3 billion in Vietnam.
Soft Drinks
We estimate that domestic demand for soft drinks in the first half of 2011 expanded around 2%
year over year, with shipments increasing amid high temperatures in the latter part of the period.
In this environment, the Soft Drinks business continued to strengthen and cultivate its brands, inparticular by focusing marketing investment and sales-force resources on core brands, while also
strengthening product development operations targeted at creating new value propositions. We alsosustained thorough efforts to achieve appropriate costs throughout the value chain as part of ourprogram to strengthen profitability through a select-and-focus approach (i.e., selectively focusing
resources on key areas).
The Ribbon soft drink brand managed to keep sales at previous-year levels despite self-restraint in
TV advertising following the March disaster. Sales of the Gabunomi series rose by 3% year over year
as we launched a consumer-oriented marketing campaign that helped broaden sales points andsolidify the products’ market presence. Sales of Gerolsteiner naturally carbonated water from
Germany increased 17% year over year, supported by greater product recognition realized throughin-store trial offers and repeat purchase promotions that included passing out samples and otherevents.
In addition to the above, increased demand for mineral water and unsweetened beverages andwarm temperatures helped boost unit sales of such products by 11% year-over-year.
On the cost front, we countered rising materials procurement costs by optimizing our production
structure and reducing losses from waste and spoilage, as we continued to pursue cost-structurereforms throughout the value chain through our rigorous select-and-focus approach. Moreover, we
exercised restraint in our advertising and promotional activities in the wake of the disaster as cost
reductions kept to the plan target.
As a result, the Soft Drinks business achieved sales of ¥17.6 billion (up ¥3.0 billion, or 21%, year
over year) and booked operating income of ¥0.5 billion (up ¥0.1 billion, or 27%, from a year earlier),while also taking a goodwill amortization charge of ¥0.1 billion.

6

POKKA GroupWe estimate that domestic demand for soft drinks in April–June quarter expanded around 2% year
over year, with shipments increasing amid high temperatures.
Total demand in the markets for lemon-based products (flavorings) and instant soups appears to
be in line with the trend in 2010.
In this environment, the POKKA Group’s Domestic Beverage & Foods business endeavored tostrengthen and cultivate core brands via focused investment in its Kireto Lemon drink, Aromax and
POKKA Coffee canned coffee drinks, and the Kantanbimi brand of Korean soups being newly
cultivated by the company.
Sales at POKKA’s domestic beverages business during the period were above previous year
levels even though post-earthquake supply shortages forced the company to cancel or delay somenew product launches and adjust shipments. Sales were supported by a 10th anniversary sales
campaign for Kireto Lemon, the introduction of Kireto Lemon Soukai Sparkling, additions to the
POKKA Coffee lineup, and the usual favorable responses to annual promotional canned drinks.
The domestic foods business saw sales fall slightly on a year-over-year basis. The company’sefforts to market POKKA Lemon 100 as a taking in the morning scene and a TV ad campaign for the
Kantanbimi soup line were not enough to overcome sales drops early in the second quarter causedby soup shipment adjustments and the impact of the disaster.
Overall, POKKA’s Domestic Beverage & Foods business managed to increase its April–Junesales over the previous year’s level. The business also boosted its profits above the previous year’slevel as it reduced fixed costs and stepped up efforts to lower COGS by using a competitive
procurement process to offset rising vending machine costs and raw material costs.
The Overseas Beverage & Foods business made steady progress in improving its COGS ratio
and lowering distribution costs, but intense price competition in Singapore, a decrease in exports to
the Middle East, and other negative factors led to a decline in sales and profits in April–June.
The Overseas Restaurants business benefited from new store openings in Hong Kong, a coremarket, to secure gains in sales and profits in April–June.
The Domestic Restaurants business also achieved sales and profit growth as its core Café deCrie coffee shop chain proceeded with operational improvements and effective remodelings amid a
difficult post-quake market environment for the café industry.
Overall, the POKKA Group posted sales of ¥24.0 billion. Operating income totaled ¥0.7 billion ,even with a ¥0.2 billion charge for goodwill amortization.
POKKA Group Overview
POKKA Group results were added to our income statement from April 1. As such, our first-halfresults include POKKA’s results for the April–June quarter. We therefore provide the previous-year
data for reference.
Ú For reference: POKKA CORPORATION (Including subsidiary companies)
results for April–June 2010 and 2011 (before intersegment eliminations)2010 Sales ¥24.2 billion
Operating income ¥0.6 billion
2011 Sales ¥24.6 billion (up ¥0.4 billion or 2% year over year)
Operating income ¥1.0 billion (up ¥0.3 billion or 54% year over year)
Restaurants
In the first half of 2011, Japan’s restaurant industry suffered a sharp decline. Already dealing with
continued weak consumer spending in the face of an unclear economic outlook and increasingly stiffcompetition, restaurant operators were forced to close many outlets or shorten operating hours in theaftermath of the Great East Japan Earthquake. Sales throughout the industry were also negatively
affected by the self-restraint mood that swept over consumers after the disaster. More recently,
consumer spending has begun to recover but the operating environment remains challenging, withwide discrepancies among the various restaurant formats.
The earthquake/tsunami disaster forced our Restaurants business to close eight locations in7

Miyagi Prefecture, as well as the Chiba Beer Garden and the Nasu Mori no Beer En facility. In
addition, planned rolling power outages and other disaster-related complications forced many
restaurants in the Greater Tokyo area to close or reduce hours of operation.
In this environment, we exercised self-restraint in our advertising campaigns and marketing
activities in the weeks immediately after the disaster, but we resumed these activities in the latter halfof April in an effort to bring customers back to our restaurants. While consumer spending trends indisaster-stricken Miyagi Prefecture remain unstable, recovery-related demand is substantial and inJune alone our restaurant sales increased 10% year over year.
We opened five new restaurant locations during the first quarter and seven in the second quarter,
including the May openings of our fourth and fifth YEBISU Bar outlets, the former in the Tokyo DomeCity facility and latter in Kagurazaka, Tokyo. All new outlets are performing as planned. We also
converted an existing outlet in Tokyo’s Kanda district to an Ooi Hokkaido (Hello Hokkaido) Betsukai
Pub, a Japanese-style pub officially recognized by and featuring fare from the town of Betsukai in
Hokkaido.
All but one of the outlets closed after the earthquake have reopened, with the lone exception beinga shop in Miyagi Prefecture that is serving as an evacuation center.
During the first half, we also closed five unprofitable locations with little prospect of an earnings
improvement in the near term. As a result, we had 196 locations operating at the end of June.
As a result of the above activities and circumstances faced in the first half of 2011, the Restaurants
business posted first-half sales of ¥10.5 billion (down ¥1.9 billion, or 15%, year over year), leading toan operating loss of ¥0.6 billion (versus a loss of ¥0.4 billion in the first half of 2010).
Real Estate
The Greater Tokyo office leasing market saw an improvement in vacancy rates in the second
quarter of 2011, but rents continued to fall.
Amid such an environment, our Real Estate business has been endeavoring to maintain or boost
rents and occupancy rates and realize additional cost savings at existing properties. Properties
damaged by the earthquake, including YEBISU Garden Place, have completed repairs and returned
to normal operating conditions. In addition, our properties have adopted an assortment of measures
to reduce electric power consumption in the peak summer months.
Real estate development activities during the second quarter included the completion of a newwing at the Pal Urayasu fitness club in Urayasu, Chiba. The new wing has received praise from theclub’s clientele.
The primary new acquisition in the first half was the Storia Shirokanedai rental apartment buildingin the Meguro area of Tokyo. Acquired in February, this property is already contributing to segment
earnings.
Reflecting the above, the Real Estate business’s first-half sales totaled ¥11.0 billion (¥0.2 billion, or
2%, less than a year earlier), while operating income rose to ¥4.2 billion (up ¥0.7 billion, or 21%, year
over year).

8(2) Review of Consolidated Financial Condition
Consolidated Financial Condition
Consolidated assets totaled ¥557.0 billion at June 30, 2011, a ¥62.2 billion increase fromthe end of the previous fiscal year (December 31, 2010). The increase was mainly due toan increase in goodwill from purchase of Sapporo Beverage Co.,Ltd shares and making
POKKA CORPORATION a consolidated subsidiary.
Consolidated liabilities totaled ¥436.0 billion, a ¥67.9 billion increase from December 31,
2010, notably due to the newly consolidated subsidiary and issue of commercial papers,
partially offset by decreases in liquor taxes payable and deposits received.
Consolidated net assets totaled ¥120.9 billion, a ¥5.6 billion decrease from December 31,
2010. The decrease is primarily due to a year-end dividend distribution andthe first-half net loss.
Consolidated Cash Flows
Consolidated cash flows for the six months ended June 30, 2011 were as follows.
Operating activities provided net cash of ¥2.9 billion. The major decremental factors
included a loss before income taxes and minority interests (¥5.1 billion) and a decrease inliquor taxes payable (¥13.9 billion). Major incremental factors included depreciation andamortization (¥11.4 billion), a decrease in notes and accounts receivable (¥9.1 billion), anda decrease in other current assets (¥2.2 billion).
Investing activities used net cash of ¥42.4 billion. Major investment outflows included
acquisitions of subsidiaries' shares resulting in changes in scope of consolidation (¥18.6
billion), purchase of investments in subsidiaries (¥15.4 billion) and purchases of property,
plant and equipment (¥6.5 billion).
Financing activities provided net cash of ¥39.0 billion. The major financing inflows were
proceeds from short-term bank loans (¥23.8 billion) and long-term bank loans(¥17.5 billion),
partly offset by repayments of long-term bank loans (¥15.8 billion), redemption of bonds(¥20.0 billion), net increase in commercial papers (¥37.0 billion), cash dividends paid (¥2.7
billion), and repayments of finance lease obligations (¥1.0 billion).
As a result of the above cash flows, cash and cash equivalents totaled ¥12.8 billion as ofJune 30, 2011.
(3)Consolidated Earnings Forecast
With regard to an earnings forecast for the year ending December 31, 2011, the Company
has made no further revision to the consolidated earnings forecast issued on June 30, 2011.

9

2. Other(1) Changes affecting the consolidation status of material subsidiaries (scope of
consolidation)
None(2) Use of simplified accounting methods and/or accounting methods specific to quarterly
consolidated financial statements
Simplified accounting
Calculation of deferred tax assets and deferred tax liabilities
If there have been no material changes in either the business environment or
temporary differences since the end of the previous fiscal year, the Company uses
the same earnings forecasts and tax planning strategies that it used in the previous
fiscal year to assess the likelihood of deferred tax assets being used at a later date.
If there have been material changes in the business environment and/or in
temporary differences since the end of the previous fiscal year, the Company uses
the earnings forecasts and tax planning strategies that it used in the previous fiscal
year but modifies them to allow for the likely impact of these material changes.
Accounting methods specific to quarterly consolidated financial statements
Calculation of tax liabilities
The Company calculates tax liabilities by producing a reasonable estimate of theeffective tax rate after applying tax-effect accounting to income before taxes andminority interests for the fiscal year, which encompasses the six months ended
June 30, 2011, and then multiplying income (loss) before taxes and minority
interests by this estimated effective tax rate. Note that “deferred income taxes” areincluded under “income taxes.”(3) Overview of changes in accounting principles, procedures, and methods of presentation
used to prepare the quarterly financial statements
Changes in accord with amendments to accounting standards
Adoption of accounting standard related to equity method
Effective the first quarter of the fiscal year ending December 31, 2011, the Company
adopted the Revised Accounting Standard for Equity Method of Accounting forInvestments (ASBJ Statement No. 16, revised March 10, 2008) and the Practical
Solution on Unification of Accounting Policies Applied to Associates Accounted for
Using the Equity Method (PITF No.24, March 10, 2008). The impact of this adoption
on ordinary income and net income before income taxes and minority interests was
nil.

10

Adoption of accounting standard related to asset retirement obligations
Effective the first quarter of the fiscal year ending December 31, 2011, the Company
adopted the Accounting Standard for Asset Retirement Obligations (Statement
No.18, March 31, 2008) and its associated Guidance on Accounting Standard for
Asset Retirement Obligations (Guidance No.21, March 31, 2008). Due to thisadoption, operating income and ordinary income for the six months ended June 30,
2011 were each 52 million yen lower, while income before income taxes andminority interests was 1,136 million yen lower. Asset retirement obligations changed
by 602+ million yen due to adoption of the accounting standard and guidance.
Changes in presentation methods
In accord with the adoption of the Cabinet Office Ordinance on Partial Revision of
the Regulations Concerning the Terminology, Forms and Preparation Methods ofFinancial Statements and Other Items (Cabinet Office Ordinance No. 5, March 24,2009) based on the Accounting Standard for Consolidated Financial Statements(ASBJ Statement No.22, December 26, 2008), the Company used the account title“loss before minority interests” for the six months ended June 30, 2011.
Consolidated quarterly statements of cash flows
In the second quarter of the fiscal year ended December 31, 2010, “repayment offinance lease obligations” was included in "other" under cash flows from financing
activities. In the second quarter of the fiscal year ending December 31, 2011,
though, it ceased to be included in “other” and was presented separately becauseof its increased importance.
For reference, “repayment of finance lease obligations” in the fiscal year ended
December 31, 2010 was 80 million yen and included in "other” under cash flows
from financing activities.

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 Marketable securities
4 Merchandize and finished products
5 Raw materials and supplies
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) 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) Deferred tax assets(4) Other(5) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

12

June 30, 2011

December 31, 2010

AmountAmount13,021
66,44950
20,020
10,235
15,489(188)
125,078

13,39061,352
2
12,412
9,756
12,984(161)
109,737

375,105(198,904)
176,201
200,302(160,001)
40,30084,866
5,540
39,915(24,954)
14,960321,870

357,769(185,485)
172,284
180,519(142,521)
37,997
77,583
3,563
20,400(15,201)
5,199
296,629

41,944
9,915
51,86014,128
10,331
24,45930,506
10,163
2,757
16,350(1,520)58,257431,987
557,066

38,027
10,3962,649
14,493(1,594)
63,972
385,061494,798(millions of yen)

Liabilities
I Current liabilities
1 Notes and accounts payable - trade
2 Short-term bank loans
3 Current portion of long-term debt
4 Liquor taxes payable
5 Income taxes payable
6 Accrued bonuses
7 Deposits received
8 Other
Total current liabilities
II Long-term liabilities
1 Bonds
2 Long-term bank loans
3 Deferred tax liabilities
4 Employees' retirement benefits
5 Directors’ and corporate auditors’ severance benefits
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 Valuation and translation adjustments
1 Unrealized holding gain on securities
2 Deferred hedge gains (losses)
3 Foreign currency translation adjustments
Total valuation and translation adjustments
III Minority Interests
Total net assets
Total liabilities and net assets

13

June 30, 2011

December 31, 2010

AmountAmount33,58250,917
20,2891,478
1,769
17,424
88,848214,31124,34828,08920,00034,253
1,818
2,055
19,21837,259167,043

32,000112,409
14,2087,558
33
32,64822,919221,777
436,089

35,843
97,402
13,4557,190
42
31,935
15,239201,109368,152

53,88646,313
22,599(1,196)
121,60253,88646,31528,317(1,190)127,3292,198
2(4,853)(2,652)
2,026
120,976
557,066

2,985(7)(5,258)(2,281)
1,597
126,645494,798

(2) Consolidated Statements of Income

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 Foreign exchange gain
4 Gain (loss) on gift voucher redemptions
5 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Equity in loss of affiliates
3 Foreign exchange loss
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 Reversal of provision for doubtful receivables
4 Reversal of removal costs
5 Gain on change in equity
6 Settlement received
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Impairment loss
3 Loss on devaluation of inventories
4 Loss on sales of investment securities
5 Effect of adoption of new accounting standards for asset
retirement obligations
6 Compensation expenses
7 Loss on phased acquisition
8 Disaster losses
9 Business structure improvement expenses
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Loss before minority interests
Minority interests in gains (losses)
Net loss14

Six months ended June30, 2010
Amount177,144
120,865
56,278(millions of yen)Six months ended June30, 2011
Amount
194,428
124,969
69,458

9,102
9,903
9,580
526
1,429
24,52955,072
1,206

12,467
9,017
12,293984
1,583
30,10666,453
3,005

245
367
310
391
1,315

181
336
104
251
309
1,183

1,815
132
46
101
2,096
424

1,798
223
149
2,171
2,017

0
574
66
569
1,210

17
21
19
353
261
674

593
58
141
-

255
57
1,076
23

650
1,443
191
858
18
(684)

1,084
68
566
4,692
7,823
(5,132)(2,240)(2,891)74(2,965)

(3) Consolidated Statements of Cash Flows(millions of yen)Six months ended June30, 2011
AmountSix months ended June30, 2010
AmountI Cash flows from operating activities
1 Income (loss) before income taxes and minority interests
2 Depreciation and amortization
3 Amortization of goodwill
4 Increase (decrease) in employees’ retirement benefits
5 Increase (decrease) in allowance for doubtful receivables
6 Interest and dividend income
7 Interest expense
8 (Gain) loss on sales and disposal of fixed assets
9 (Gain) loss on revaluation of investment securities
10 Effect of adoption of new accounting standards for asset
retirement obligations
11 (Increase) decrease in notes and accounts receivable - trade
12 (Increase) decrease in inventories
13(Increase) decrease in other current assets
14 Increase (decrease) in notes and accounts payable - trade
15 Increase (decrease) in liquor taxes payable
16 Increase (decrease) in deposits received
17 Other
Sub total
18 Interest and dividends received
19 Interest paid
20 Income taxes paid
21 Income taxes refund
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Purchases of investment securities
2 Purchases of property, plant and equipment
3 Proceeds from sales of property, plant and equipment
4 Purchases of intangibles
5 Purchases of newly consolidated subsidiaries
6 Purchase of subsidiaries' shares
7 Other
Net cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Proceeds from long-term bank loans
3 Repayment of long-term bank loans
4 Redemption of bonds
5 Increase (decrease) in commercial paper
6 Cash dividends paid

191
11,418
550
(146)
(152)
(612)
1,815
592
141

7 Payments received from minority shareholders
8 Repayment of finance lease obligations
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 Cash and cash equivalents at end of period

15(5,132)
11,448
1,194
(82)
(148)
(517)
1,804
237
1,076
1,084

5,383
(2,613)507
2,848(12,158)(4,374)
2,965
6,356
794
(1,804)
(813)
1,183
5,717

9,187
(3,320)2,259(95)(13,977)(2,007)
3,491
6,504
660
(1,864)(2,371)0
2,928(1,741)(12,763)
470
(936)
736
(14,235)(771)(6,579)61(769)(18,662)(15,490)(264)(42,475)

10,401
12,000(9,685)3,000(2,735)23,894
17,580(15,870)(20,000)
37,000(2,728)

-

181

(101)
12,878
(71)
4,289
6,267
10,557(1,017)(8)
39,031
140(375)
13,27012,894

4. Notes on the Going-concern Assumption
Not applicable

5. Segment Informationa. Segment Information by Business(millions of yen)
Alcoholic
Beverages

Six months ended June 30, 2010 (January 1, 2010 – June 30, 2010)
Corporate and
Real
Soft
Total
Restaurants
eliminations
EstateDrinksConsolidated

Net sales(1) Operating revenues

138,220

14,7592,527

128

140,748

14,887(280)

8(2) Intra-group sales and transfers
Total
Operating income (loss)

12,805

11,358177,144

-

1,101

3,758

(3,758)177,144-

12,805

12,460180,902(3,758)177,144

(447)

3,530

2,810

(1,604)

1,206-

Notes:(1) Segment classifications reflect the similarity of constituent businesses and take into account standard industry classifications in Japan.
(2) Main products in each segment
Business segment

Main products

Alcoholic Beverages

Beer, happoshu and new-genre beverages, wine, whiskey, shochu and other products,
distribution, brewing equipment, etc.

Soft Drinks

Soft drinks, other non-alcoholic beverages, and snack foods

Restaurants

Operation of beer halls and restaurants

Real Estate

Real estate leasing, real estate sales, operation of commercial facilities,
utility supplies, and operation of fitness clubs(6) Changes in Accounting Policies
Six months ended June 30, 2010 (January 1, 2010 – June 30, 2010)
Change in accounting standard for recognizing revenues from and costs of completed construction

For recognition of revenues associated with construction work, the Company has adopted the Accounting Standard forConstruction Contracts (ASBJ Statement No. 15, December 27, 2007) and its associated Guidance on the AccountingStandard for Construction Contracts (ASBJ Statement No. 18, December 27, 2007). All construction contracts, including
those in existence at the beginning of the first quarter, for which certain elements were determinable with certainty at end of
the second quarter (June 30, 2010) were accounted for with the percentage-of-completion method. The effect of this change
on segment information was minor.

b. Segment Information by Geographic Area
Six months ended June 30, 2010 (January 1, 2010 – June 30, 2010)
Sales in Japan constituted more than 90% of consolidated sales.
Accordingly, geographical segment information has not been disclosed.

c. Overseas Sales
Six months ended June 30, 2010 (January 1, 2010 – June 30, 2010)
Overseas sales constituted less than 10% of consolidated sales.
Accordingly, overseas sales have not been disclosed.

16Segment Information
1. Overview of reportable segments
Six months ended June 30, 2011 (January 1, 2011 – June 30, 2011)
The Company’s reportable segments are components of the Company about which separate
financial information is available. These segments are subject to periodic examinations to enable
the Company’s board of directors to decide how to allocate resources and assess performance.
The Sapporo Group utilizes the assets of the Group and its traditional areas of strength in the twobusiness domains, "creation of value in food" and "creation of comfortable surroundings." Under
Sapporo Holdings, a pure holding company, each group company formulates development plans
and strategies for its products, services, and sales markets and conducts business accordingly.
The Group’s businesses are therefore segmented mainly based on the products, services, andsales markets of Group companies and their affiliated companies. The Company’s six reportablesegments are Japanese Alcoholic Beverages, International Alcoholic Beverages, Soft Drinks, the
POKKA Group, Restaurants, and Real Estate.
The Japanese Alcoholic Beverages segment produces and sells alcoholic beverages in Japan,
while the International Alcoholic Beverages segment produces andsells alcoholic beverages overseas.
The Soft Drinks segment produces and sells soft drinks and other non-alcoholic beverages.
The POKKA Group segment is a business group led by POKKA CORPORATION.
The Restaurants segment operates restaurants of various styles.
The Real Estate segment's activities include leasing and development of real estate.

2. Sales, income, and loss by reportable segment
Six months ended June 30, 2011 (January 1, 2011 – June 30, 2011)(millions of yen)
Reportable segments
AlcoholicAlcoholic
Beverages
Beverages(Internation(Japan)al)
Net sales(1) Operating revenues(2) Intra-group sales and transf
Total
Segment income (loss)

118,219
2,635
120,85574

12,447
7
12,455(217)

Soft
Drinks

POKKA
Group

17,604373
17,977526

24,064572
24,636730

Restaurants

Real
EstateTotal

10,581
10,581(676)

11,078
1,078
12,156
4,266

193,995
4,666
198,662
4,704

Other *1

Total

432 194,428
15
4,682
448
199,111
(312)
4,392

Amounts
reported on
Adjustmentsthe
statements
of income *2- 194,428(4,682)(4,682) 194,428(1,386)
3,005

Notes:(1) "Other" comprises businesses, such as food businesses, that are not included in reportable segments.
(2) Segment income and losses are adjusted based on operating income reported on the quarterly consolidated statements of income for the corresponding period.

3. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement of income (information ondifferences)
Six months ended June 30, 2011 (January 1, 2011 – June 30, 2011)(millions of yen)Segment income (loss)
Amount4,704
Total for reportable segments(312)
Loss from other segments
Unallocated corporate costs*(1,326)
Intra-segment sales(59)
Operating income on the statement
3,005
Note: Unallocated corporate costs consist mainly of SGA that is not attributable to reportablesegments.
4. Impairment loss on fixed assets or goodwill by reportable segment
Material impairment loss on fixed assets
There were no material impairment losses.
Material change in amount of goodwill
Effective April 28, 2011, the Company additionally acquired Sapporo Beverage’s shares for the Soft
Drinks segment. As a result, goodwill increased by 7,691 million yen for the six months ended June 30,
2011.

Material negative goodwill gains
There were no material gains on negative goodwill.
Additional information
Effective the first quarter of the fiscal year ending December 31, 2011, the Company adopted the
Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related
information (ASBJ Statement No.17 (Revised 2009)) and its associated Guidance on the AccountingStandard for Disclosures about Segments of an Enterprise and Related Information (Guidance No. 20,
March 21, 2008).

176. Notes on Significant Changes in the Amount of Shareholders' Equity
Not applicable
7. Subsequent Events
Not applicable
8. Business Combinations
Three months ended June 30, 2011 (April 1, 2011 – June 30, 2011)
Transactions under common control
1. Information related to constituent company in business combination
1) Name and business of constituent company
Name: Sapporo Beverage Co., Ltd.
Business: Beverages and other businesses
2) Date of business combination
April 28, 2011
3) Legal form of business combination
Cash payment in exchange for shares4) Name of company after business combination
Sapporo Beverage Co., Ltd.
5) Purpose and outline of transactions

On April 15, 2011, the Company terminated its business alliance with
Yugen Kaisha Crescent Partners and Goudou Kaisha CRPBH (the"Investor"), a fund operated by Crescent Partners.
Accordingly, on April 28, the Company purchased all shares in Sapporo
Beverage after conversion of all bonds with stock acquisition rights of
Sapporo Beverage Co., Ltd. held by the Investor. As a result, theCompany has ownership of all voting rights in Sapporo Beverage.

2. Outline of accounting methods adopted
The Company accounted for the transaction as a transaction under common control in accord with the
Accounting Standard for Business Combinations (ASBJ Statement No.21, issued December 26, 2008) and its
accompanying Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard
for Business Divestitures (ASBJ Guidance No.10, issued December 26, 2008).

3. Additional acquisition of subsidiary's shares
1) Acquisition cost and breakdown
Cash and cash equivalen10,871 million yen
2) Amount of goodwill, reason for its recognition, amortization method, and amortization period
1) Amount of goodwill: 7,691 million yen
2) Reason for its recognition: Future business activities are expected to generate excess profitability.
3) Amortization method and amortization period: 10 years with the straight-line method18