Financial Results
for the Nine Months Ended September 30, 2017 — Consolidated(Based on Japanese GAAP)
November 2, 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

Masaki Oga, President, Representative Director
Toshihiko Umezato, Director of the Corporate Communications Department

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

Filing of quarterly financial report

November 13, 2017

Commencement of dividend payments-

Supplementary information to the quarterly earnings results

Available

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

1. Consolidated Financial Results for the Nine Months Ended September 30, 2017
(January 1 – September 30, 2017)(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 shares of theCompany’s common stock. Accordingly, values for the items noted below have been recalculated on theassumption that the share consolidation took place at the beginning of the previous fiscal year.
・Profit per share・Diluted net income per share
・Average number of outstanding shares during the period(1) Operating Results(Percentage figures represent year-over-year changes)
Profit attributable
Net sales

Operating income

Ordinary income
to owners of parent

Nine months ended
September 30, 2017
Nine months ended
September 30, 2016

million yen%

million yen%

million yen%

million yen%

400,845

2.2

10,732(16.7)

10,258(11.4)

5,424

2.9

392,270

1.1

12,886

115.1

11,580

134.5

5,269

174.8

Note: Accumulated other comprehensive income
Nine months ended September 30, 2017

8,428 million yen

Nine months ended September 30, 2016

(5,386) million yen

1Profit per share

Diluted profit
per share

Yen

Yen

Nine months ended
September 30, 2017

69.64

-

Nine months ended
September 30, 2016

67.65

-

(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

million yen

million yen%

September 30, 2017624,803

171,899

26.7

December 31, 2016

626,351

166,38025.7

Note: Shareholders’ equity
September 30, 2017: 166,784 million yen
December 31, 2016: 160,687 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, 2016

—

0.00

—

Year ending
December 31, 2017

—

0.00

—

Year ending
December 31, 2017
(forecast)

37.00

37.00

37.00

37.00

Note: No changes were made to dividend forecasts in the nine months ended September 30, 2017.

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 income
Net income
Net sales

Operating income

Ordinary income

attributable toper shareowners of the parent

Year ending
December 31,
2017

million yen%

million yen%

million yen%

million yen

563,800

4.1

21,3005.1

20,3005.7

10,700

%

yen

13.0

137.36

Note: Changes were made to earnings forecasts in the nine months ended September 30, 2017: None2

4. Other*For details, see "(4) Notes on the quarterly financial statements “ on page 9.
(1) Changes in significant subsidiaries during the nine months ended September 30, 2017: None
(2) Simplified accounting: Yes*Use of simplified accounting methods and/or accounting methods specific to quarterly consolidated
financial statements(3) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accordance with amendments to accounting standards etc.: None
2) Changes other than 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
Note: For details, see (2) Changes in accounting policy, changes in accounting estimates, andretrospective restatement, in section "(4) Notes on the quarterly financial statements “ on page 9 in
the accompanying material.

(4) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):
September 30, 2017:
78,794,298 shares
December 31, 2016:
78,794,298 shares
2) Number of shares held in treasury at end of period:
September 30, 2017: 899,693 shares
December 31, 2016: 898,911 shares
3) Average number of outstanding shares during the period:
Nine months ended September 30, 2017:

77,894,397 shares

Nine months ended September 30, 2016:

77,901,780 shares*Quarterly review status
The quarterly financial results are not subject to quarterly reviews pursuant to the
Financial Instruments and Exchange Act. The quarterly review of the quarterly financial
results herein had not been completed as of the date of this document.
Appropriate Use of Earnings Forecasts and Other Important Information
This document contains projections and other forward-looking statements based on
information available to the Company as of the date of this document. Actual results may
differ from those expressed or implied by forward-looking statements due to various factors.

3

1. Analysis of Operating Results(1) Consolidated Financial Results for the Nine Months ended September 30, 2017
In the first nine months of 2017 (January 1 – September 30, 2017), the Japanese economy
stayed on a moderate recovery track, but an unsettling international situation andunseasonable weather conditions weighed on domestic investment and consumption.
In this economic environment, the SAPPORO Group achieved growth of its consolidated
sales. The Japanese Alcoholic Beverages business increased shipments of its beer anddiversified alcoholic beverage products. The International Business achieved volume
growth in its sales of alcoholic beverages contributed to the growth in sales. Operating
income declined owing to investment to strengthen our core brands and the Group’s
management platform as well as to the posting of expenditures related to the acquisition of
Anchor Brewing Company.
As a result of the above factors, in the first nine months of 2017 the SAPPORO Group
posted consolidated sales of ¥400.8 billion (up ¥8.5 billion or 2% year on year), operating
income of ¥10.7 billion (down ¥2.1 billion or 17%), ordinary income of ¥10.2 billion (down¥1.3 billion or 11%), and profit attributable to owners of parent of ¥5.4 billion (up ¥0.1 billion
or 3%).
Segment information is outlined below.
Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer-type beverages in the first ninemonths of 2017 was 2% lower than in the same period of 2016, mainly owing tounseasonable weather conditions in August, the peak month for consumption of beer andbeer-type 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 2017, in line with thebusiness policy of “Beer Revival Declaration."
Among beer products, Sapporo Draft Beer Black Label continued to enjoy strong sales,
especially the canned version. Sales of our Yebisu brand were also increased, supported
by continued customers’ favorable response to the March launch of Yebisu Hana Miyabi.
As a result, total domestic shipments of beers in the first nine months of 2017 increased 2%
year on year. Meanwhile, in the happoshu category, sales of Goku Zero and our new-genre
category offering Mugi to Hop brand fell below previous year levels. Overall, shipments ofour beer and beer-type beverages declined 2% year on year, in line with the overall
domestic demand.
In the RTD*1 category, sales increased over the previous year, boosted by thenationwide expansion of the sales area for Ai no Skal White Sour, one of our high-valueadded collaboration products, and steady growth in sales of other core RTD products,
including Otoko Ume Sour and Kireto Lemon Sour.
We also achieved year-on-year sales growth in the wine category, as we strengthened

4marketing of domestic and imported fine wines*2, including the imported wine Penfolds,
Taittinger champagne, and our domestic Grande Polaire wines.
Our spirits business achieved year-on-year sales growth, on strong sales of products
from major overseas brands, such as Bacardi and Dewars.
Our Japanese liquor business achieved sales growth in the first nine months of the year,
led by continued strong sales of Imo Shochu Kokuimo, Japan’s No.1 selling*3 blended imo
shochu.
Overall, the Japanese Alcoholic Beverages business posted cumulative first threequarter sales of ¥199.7 billion, down ¥0.3 billion or 0% year on year. Operating income
totaled ¥5.9 billion, down ¥0.3 billion or 6%.
*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 the first nine monthsof 2017 was below previous-year levels in both the United States and Canada. Meanwhile,
demand in Asian markets was solid, but growth momentum slowed in line with the widely
divergent pace of growth in national and regional economies.
In this environment, our International Business continued its efforts to strengthen brandrecognition in the premium beer markets in North America and Southeast Asia. In addition,
we expanded our sales channel in the US fruit juice market. Our Canadian subsidiary
SLEEMAN BREWERIES continued to invest in the marketing of its core premium brands.
As a result, its overall beer sales volume (excluding Sapporo brand beer) were in line withthe previous year’s result. In the U.S. beer market, Sapporo USA’s efforts to expand its
customer base among the general population as well as Asian Americans led to a 7% yearon-year increase in shipments of Sapporo brand beers during the first nine months of theyear. In addition, we strengthened our position in the North American premium beer market
with the September acquisition of Anchor Brewing Company, now a 100% consolidated
subsidiary. In the U.S. soft drinks market, group company Silver Springs Citrus saw adecline in its sales volume, but County Pure Foods enjoyed strong demand for its
commercial-use soft drinks and its fruit juice sorbet. The combined sales of the two groupcompanies increased year on year.
In Southeast Asia, our Vietnam business saw its beer shipments decline year on year
owing to an increase in the country’s liquor tax in January and a decrease in the number ofsales outlets stocking our products following a change in our marketing methods. Our
Singapore business, meanwhile, continued to its efforts to expand its sales channels in thehousehold- and commercial-use markets.
Elsewhere in Asia, our Korean business achieved year-on-year growth in beer shipments

5

thanks to the popularity of Sapporo Premium Beer in both the household- and commercialuse markets and to the market launch of Yebisu beer. In Oceania, continued efforts tostrengthen sales via licensing agreements with local brewing partners produced anotheryear-on-year gain in beer sales volumes.
Reflecting the above, our International Business’ shipments of Sapporo brand products inoverseas markets during the first nine months of 2017 increased 11% year on year.
As a result, sales of the International Business for the first three quarters of the year
totaled ¥51.0 billion, up ¥3.0 billion or 6% year on year. Operating income was ¥0.1 billion,¥0.6 billion or 84% less than in the first three quarters of fiscal 2016.
Food & Soft Drinks
We estimate that overall demand for soft drinks in Japan in the first nine months of 2017
was 1% higher than a year earlier.
In this market environment, the Food & Soft Drinks business delivers value unique to the
Sapporo Group by strengthening our shokkan-kei (texture), sozai-kei (ingredient) andGabunomi series of brands in the domestic soft drinks business and bolstering lineup ofcore lemon-based and soup products in the domestic food business. During the first ninemonths of 2017, the domestic soft drinks business launched several new products thatleverage our core strengths, such as Lemon no Genki, a lemon-based drink with afunctional food label made possible by our extensive research into lemons, and Nippon
Mugi-cha, made from 100% domestic-grown six-row barley. Meanwhile, the unique flavors
achieved by new additions to our Gabunomi brand, such as Gabunomi Lemon Cream
Soda, a collaborative product using the Kanto-Tochigi Lemon products of Tochigi Milk Co.,
Ltd., created quite a buzz in the soft drinks market. In addition, we continue to launch new
products in line with market trends. A good example is the recent marketing of Kaga BoHojicha Latte, a hot beverage for the autumn and winter season.
The domestic food business enjoyed steady sales of its cold canned soups and cupbased instant soups. In addition, we launched new soup products expected to stimulate
demand in the autumn and winter seasons. These included renewal of the Jikkuri Kotokoto
Gohobi Dining series of retort-packaged soups that can easily be heated in a microwave
oven and launch of the Jikkuri Kotokoto Kongari Pan PREMIUM, which supplements ourcup soup lineup with a new richly flavored soups. These new additions contributed to a 7%
year-on-year rise in soup sales over the first nine months of 2016. Lemon-based foodproduct sales expanded 9% year on year, led by strong sales of our core Pokka Lemon 100
brand products. During the period under review, we entered into a new partnershipagreement with Hiroshima Prefecture’s Kure City with the aim of promoting the city and its
lemons and contributing to regional revitalization. The new agreement adds to ourpartnership with Hiroshima Prefecture, which includes a similar partnership with the town ofOsaki-Kamijima. We also enhanced our lineup of soymilk and soymilk-based yogurt
products by marking the 20th anniversary of the launch of the SOYAFARM Tōnyū deTsukutta Yogurt series with the series’ first revision in 10 years. These yogurts made fromsoy milk have been certified as food for specified health uses (FOSHU).
At the domestic restaurants business, Pokka Create, the POKKA SAPPORO subsidiary6

that operates the Café de Crié coffee shop chain, achieved year-on-year sales growth,reflecting the success of its efforts to boost sales by introducing new menus with seasonal
and trendy dishes.
Although our overseas beverage business maintained its top share* in Singapore's tea
drinks market with its dominant 70% share of the green tea market, exports were slowed a
bit by new tax regulations in some countries. In Indonesia, PT. POKKA DIMA
INTERNATIONAL started up commercial production at its new plant from April and beganshipping the plant’s main output, including a 450ml PET bottle of Jasmine Green Tea and350ml PET bottle of Lemon Black Tea.
Overall, the Food & Soft Drinks segment recorded sales of ¥101.4 billion, a small yearon-year decline of ¥0.1 billion or 0%. The segment posted an operating loss of ¥0.1 billion,
compared with an income of ¥0.6 billion a year earlier.
* Based on data from Nielsen Singapore MarketTrack May 2017 (Copyright 2017, The Nielsen
Company)

Restaurants
Japan’s restaurant industry has remained on the recovery track during the first nine monthsof 2017, while grappling with a severe operating environment characterized by labor
shortages and the resulting increase in labor costs as well as the upward trend in foodmaterial procurement prices.
In this environment, the Restaurants business continued to pursue the fulfillment of its
philosophy of “Enhancing the Joy of Living” through constant efforts to deliver safe andsound food and service to customers while also striving to create restaurants that “deliver
100% satisfaction to customers.”
New store openings in Japan included the February opening of a Yebisu Bar outlet in
Hiroshima, the chain's first outlet in the Chugoku–Shikoku region, the March opening ofanother Yebisu Bar outlet in Shin Yokohama, and the May opening of a Ginza Lion Beer
Garden in Omiya, a suburb of Tokyo in Saitama Prefecture.
We also renovated the Beer Hall LION GINZA 7-Chome outlet, one of that chain’s
flagship stores, and completely renovated the Ginza Lion Haneda Airport outlet.
Meanwhile, we closed five unprofitable outlets. As a result, we had 198 outlets open forbusiness in Japan as of end-September 2017.
Overseas, we continued to expand our operations in Singapore, where we are building a
chain of restaurants popular with the local people. Thus far in 2017, we have renovatedthree Tonkichi outlets in the center of the city-state and in April opened a RIVE GAUCHE
cake shop in the CityLink Mall. We also opened a Hokkaido-themed takeout SAPPORO
LION shop in Resorts World Sentosa. As a result, we now have 15 outlets open in
Singapore (as of end-September 2017).
As a result of the above initiatives, the Restaurants segment sales in the first ninemonths of 2017 totaled ¥22.1 billion, up ¥1.0 billion or 5% year on year. Operating income
was ¥0.2 billion, down ¥0.2 billion or 48% from the first nine months of 2016.

7

Real Estate
Japan’s real estate industry continues to enjoy solid demand in the Greater Tokyo officeleasing market, keeping vacancy rates low and supporting a moderate recovery in rent
levels.
In this environment, our real estate business was able to maintain high occupancy rates
at its properties in Greater Tokyo, including Yebisu Garden Place Tower, the business’ coresource of earnings. In addition, the high occupancy rates provided a solid platform for more
assertive efforts to increase rents of existing tenants. We are constantly striving to bringnew added-value to our core Yebisu Garden Place commercial complex and enhance theproperty’s brand value. Thus far in 2017, those efforts included the establishment of aconsortium-type child day care center that can be used by employees of the many
companies with offices in the complex as well as Shibuya Ward residents. The new facility
opened its doors in April. In August, we celebrated the grand opening of the Yebisu Garden
Place Tower’s completely renovated panorama-view restaurant rows on the building’s 38th
and 39th floors. The renovation was based on the concept of “Grand & Casual - the luxuryof casual enjoyment of the essence.” With a “Think the World” theme, the 39th floor now
offers a wide variety of select restaurants offering cuisine from around world. The 38th floor
meanwhile features restaurants offering a wide variety of Japanese cuisine.
GINZA PLACE, the commercial complex we opened in September 2016, is making asolid contribution to earnings in 2017, its first full-year of operation. We continue to enhance
the facility’s information dissemination capability in line with its original concept as a “basefor information dissemination and exchange.” In addition to enhancing the property’s brandvalue, these efforts are increasing the property’s drawing power and helping make the
Ginza district an even more dynamic and bustling urban center.
Meanwhile, our real estate development business is making steady progress on therenovation of the Sapporo Factory commercial complex built on the former site of a
Sapporo brewery located on the east side of the Sosei River, an area which is a focus of
Sapporo City’s urban redevelopment program. In May we completed the redevelopment of
the adjacent parking lot into a three-story, 6,900m2 commercial complex, and in July ahousing-related company opened a showroom in the new complex. We will continue ourefforts to make this complex an attractive urban space that delivers enhanced convenience
to Sapporo residents and visitors.
As a result of the efforts outlined above, our Real Estate segment posted cumulative
three-quarter sales of ¥17.9 billion, up ¥1.2 billion or 7% year on year. Operating income
totaled ¥8.8 billion, an increase of ¥0.7 billion or 10%.

8

(2) Review of Consolidated Financial Condition
Consolidated Financial Condition
Consolidated assets as of September 30, 2017, totaled ¥624.8 billion, ¥1.5 billion less than at the endof the previous fiscal year (December 31, 2016). The decline is mainly attributable to decreases in tradenotes and accounts receivable and in long-term loans receivable, which offset increases inmerchandise and finished products, goodwill, and investment securities.
Consolidated liabilities totaled ¥452.9 billion, a ¥7.0 billion decline from December 31, 2016,reflecting decreases in liquor taxes payable and long-term bank loans, which outweighed increases inshort-term bank loans and commercial paper.
Consolidated net assets totaled ¥171.8 billion, ¥5.5 billion more than on December 31, 2016. The
gain primarily reflects the posting of profit attributable to owners of parent and an increase in unrealized
holding gain on securities.

(3) Consolidated Earnings Forecast
The consolidated earnings forecast for the full fiscal year ending December 31, 2017, is unchanged fromthe forecast announced by Sapporo Holdings on February 13, 2017.

(4) Notes on the quarterly financial statements(Notes on the Going-concern Assumption)
Not applicable(Notes on significant changes in the amount of shareholders’ equity)
Not applicable(Application of accounting methods specific to the preparation of quarterly consolidated financial
statements)■Calculation of tax liabilities
The Company calculates tax liabilities by producing a reasonable estimate of the effective tax rate
after applying tax-effect accounting to income before taxes for the fiscal year, which encompasses thenine months ended September 30, 2017, and then multiplying profit before income taxes by thisestimated effective tax rate.
(Changes in accounting policies, changes in accounting estimates, and retrospective restatements)
Not applicable(Additional information)■Implementation Guidance on Recoverability of Deferred Tax Assets
Sapporo Holdings has applied the revised Implementation Guidance on Recoverability of Deferred Tax
Assets (Accounting Standards Board of Japan [ASBJ] Guidance No. 26 of March 28, 2016) to its
consolidated accounts from the first quarter of the year ending December 31, 2017.

9

2. 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 Other
6 Allowance for doubtful receivables
Total current assets
II Fixed assets
1 Property, plant and equipment(1) Buildings and structures
Accumulated depreciation
Buildings and structures, net(2) Machinery and vehicles
Accumulated depreciation
Machinery and vehicles, net(3) Land(4) Construction in progress(5) Other
Accumulated depreciation
Other, net
Total property, plant and equipment
2 Intangible assets(1) Goodwill(2) Other
Total intangible assets
3 Investments and other assets(1) Investment securities(2) Long-term loans receivable(3) Other(4) Allowance for doubtful receivables
Total investments and other assets
Total fixed assets
Total assets

10

December 31, 2016

September 30, 2017

AmountAmount10,58996,85024,657
13,31518,852(82)
164,183

13,084
81,727
29,86012,973
18,919(120)
156,444

393,022(220,233)
172,788
231,559(187,660)
43,898111,636
3,694
34,702(21,224)
13,477345,495

397,956(224,603)
173,352
235,206(190,941)
44,265
113,185
3,110
33,407(20,794)
12,612
346,526

27,43910,511
37,95032,277
9,726
42,00359,29664,1694,789

470

15,831(1,195)78,721
462,168
626,351

16,379(1,191)
79,828468,358
624,803

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

11

December 31, 2016

September 30, 2017

AmountAmount38,50330,33733,00010,08334,228
1,680
2,980
8,214
53,095
212,123

37,38744,30234,50010,00531,565
2,275
3,933
7,178
50,794
221,942

50,128
114,593
8,995
33,24140,887
247,847
459,971

50,12899,6098,233
31,104
41,885230,961
452,904

53,88646,08941,932(1,795)140,11253,88646,091
44,469(1,799)142,647

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

25,382
14
(957)
(302)
24,137
5,114
171,899624,803(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 Equity in income of affiliates
4 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
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 Impairment loss
4 Loss on devaluation of marketable securities and investments
5 Compensation expenses
Total extraordinary losses
Income before income taxes
Income taxes
ProfitProfit (loss) attributable to non-controlling interests
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 interests

12

Nine months ended
September 30, 2016
Amount392,270
254,524
137,745(millions of yen)
Nine months ended
September 30, 2017
Amount400,845
259,025
141,819

27,45815,85922,9122,186
601
55,839124,858
12,886

28,67816,48423,9102,460
539
59,014
131,086
10,732

172
743
12
595
1,522

113
807
14
561
1,497

1,620
713
33
462
2,829
11,580

1,436
138
19
376
1,970
10,258

46
9
55

231
741
973

1,155
4
509
22
325
2,017
9,619
4,380
5,238
(31)
5,269

680
11
297
9
292
1,291
9,940
4,907
5,032
(392)
5,424

5,238

5,032

(5,183)33(5,282)(193)(10,625)(5,386)

2,847
(30)
839
(260)
3,395
8,428

(4,529)
(857)

8,987
(559)

3. Segment Information
Ⅰ Nine months ended September 30, 2016 (January 1, 2016 – September 30, 2016)
1. Sales, income, and loss by reportable segment(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

International Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *1

Total

Amounts
reported on
Adjustments thestatements
of income *2

Net sales(1) Operating revenues

200,067

48,026

101,581

21,048

16,775

387,499

4,770

2,108

77

202

0

1,917

4,306

14,761

202,175

48,104

101,783

21,04918,693391,805

19,532

6,337

790

688

527

8,070

16,414(107)(2) Intra-group sales and transfers
Total
Segment income (loss)

392,270
19,067411,338
16,307-392,270(19,067)(19,067)

392,270(3,420)12,886-

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

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

AmountTotal for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating income on the statement ofincome16,414(107)(3,382)(38)
12,886

3. Impairment Loss on Fixed Assets or Goodwill by Reportable Segment(Significant impairment losses on fixed assets)
At the Food & Soft Drinks business, the book value of fixed assets owned by consolidated subsidiary NIHON BEANS CO., LTD., are now estimated to be less thanassumed when forecasting earnings for fiscal 2016. Accordingly, the book value of these assets has been lowered to the expected recoverable amount. As a result,an impairment loss of ¥400 million has been recognized on the accounts for the first nine months of fiscal 2016.
(Significant changes in the amount of goodwill)
Not Applicable(Material Gain on negative goodwill)
Not Applicable13

ⅡNine months ended September 30, 2017 (January 1, 2017 – September 30, 2017)

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

International Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *1

Total

Amounts
reported on
Adjustments thestatements
of income *2

Net sales(1) Operating revenues

199,726

51,043

101,453

22,132

17,998392,355

8,489

2,579

84

208

0

1,973

4,846

15,268202,306

51,128

101,662

22,133

19,972397,20223,757

5,945

127

(191)

271

8,841

14,994(117)(2) Intra-group sales and transfers
Total
Segment income (loss)

400,845
20,114420,959
14,876-400,845(20,114)(20,114)400,845(4,144)

10,732-

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

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

AmountTotal for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating income on the statement ofincome14,994(117)(4,237)93
10,732

3. Impairment Loss on Fixed Assets or Goodwill by Reportable Segment(Significant impairment losses on fixed assets)
Not Applicable(Significant changes in the amount of goodwill)
The International Business acquired 100% of the outstanding shares of Anchor Brewing Company, LLC (and one other company) on August 31, 2017, making
Anchor Brewing Company a consolidated subsidiary of Sapporo Holdings. The transaction increased goodwill for the first three quarters of fiscal 2017, by ¥7,827
million. The increased amount of goodwill is based on a provisional calculation as the allocation of the acquisition cost for Anchor Brewing Company has not yet
been completed.
(Material Gain on negative goodwill)
Not Applicable14

[Business combination by acquisition]
The Company acquired 100% of the outstanding shares of Anchor Brewing Company, LLC, with theacquisition to be made through a newly established 100% subsidiary, to be established for the purposeof entering into the agreement.
A)
1. Name and business content of company to be acquired
Name:
Anchor Brewing Company, LLC (and a subsidiary)
Location:
San Francisco, California, USA
Business content:

Beer brewing and sales

2. Purpose of business combination
In November 2016, the Sapporo Group formulated the new Long-Term Management Vision “SPEED150” through 2026, the year marking the Group’s 150th anniversary since its founding. The vision set
forth in Speed 150 is for the Sapporo Group to be a company with highly unique brands in the fieldsof “Alcoholic Beverages,” “Food,” and “Soft Drinks” around the world.
Regarding its “Promote Global Business Expansion” policy, a key component of the Group’s
growth strategy, Sapporo Group is promoting a distinctive plan that prioritizes expanding business inNorth America, already a core part of the Group’s business foundation, and Southeast Asia, aregional market with high growth prospects.
The addition of Anchor’s strong brand power and network to the Sapporo Group’s US beerbusiness portfolio through the conclusion of this agreement is expected to generate further synergies
and accelerate the growth of the Group’s US business.
3. Transaction counterparty
Anchor Brewers & Distillers, LLC
4. Acquisition dateAugust 31, 2017
5. Legal form of business combination
Equity shares were acquired for a cash consideration.
6. Name of acquired company after acquisition
No change
7. Share of outstanding stock acquired:100%
8. Basis for determining the acquiring company
A Group consolidated subsidiary acquired an equity stake through a cash consideration.

15

B)
1. Inclusion of acquired company’s results in consolidated financial statements
As the acquisition was deemed completed on September 30, 2017, the acquired company’s
results were not included in the consolidated statements of income for the nine months ended
on that same date.
2. Acquisition cost and consideration paid, by type, for the acquired company
Acquisition cost (cash): ¥11,517 million
The acquisition cost above is a provisional figure because part of the consideration for theacquisition has yet to be decided.
3. Goodwill generated by acquisition, reason, amortization method and period
1) Goodwill generated by acquisition: ¥7,827 million
Since the acquisition cost is uncertain and the allocation of the acquisition cost has not been
completed, the amount of goodwill is a provisionally calculated amount.
2) Reason for goodwill
Business activities are expected to generate excess profitability in the future.
3) Amortization method and period
Goodwill is amortized using the straight-line method over the period in which the goodwill is
expected to have an effect. The amortization period will be determined in accordance with theresults of the allocation of acquisition cost.

(Subsequent Events)
None16