Financial Results
for the Six Months Ended June 30, 2010 — Consolidated(Based on Japanese GAAP)
July 30, 2010

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

Takao Murakami, President and Representative Director, Group CEO
Yoichi Kato, Director and General Manager of the Corporate Planning
Department+81-3-5423-7407

Telephone
Scheduled dates:
Filing of quarterly financial reports
Commencement of dividend payments

August 12, 2010—

Supplementary information to the quarterly earnings results
Quarterly earnings results briefing

Available
Available(mainly targeted at institutional
investors and analysts)

1. Consolidated Financial Results for the Six Months Ended June 30, 2010
(January 1 – June 30, 2010)(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

million yen%

million yen%

million yen

Six months ended
June 30, 2010

177,144

(2.9)

1,206

(10.3)

Six months ended
June 30, 2009

182,413

-

1,344

-

Net income per
share

Diluted net income
per share

yen

yen

Six months ended
June 30, 2010

(1.75)-

Six months ended
June 30, 2009(1.88)-

1

Net income%

million yen%

424(18.1)

(684)

-

518

-

(738)

-

(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yenJune 30, 2010

509,554

115,61522.4

291.52

December 31, 2009

506,874

118,59023.4

302.16

Note: Shareholders’ equity
June 30, 2010:

114,191 million yen

December 31, 2009:

118,371 million yen

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

Full year

yen

Yen

yen

yen

yen

Year ended
December 31, 2009

-

0.00

-

7.00

7.00

Year ending
December 31, 2010

-

0.00
-

7.00

7.00

periodYear ending
December 31, 2010
(forecast)

Note: No changes were made to dividend forecasts in the six months ended June 30, 2010.

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2010
(January 1 – December 31, 2010)(Percentage figures represent year-over-year changes)
Net
Net sales

Operating income

Ordinary income

Net income

incomeper share

Full year

million yen%

million yen%

million yen%

million yen%

yen

391,000

0.9

13,500

4.7

11,000

2.6

4,800

5.8

12.25

Note: Changes were made to earnings forecasts in the six months ended June 30, 2010.

2

4. Other*For details, see “4. Other” on page 8.
(1) Changes to scope of consolidation: None
*Changes affecting the status of significant subsidiaries (scope of consolidation)(2) Simplified accounting: Yes*Use of simplified accounting methods and/or accounting methods specific to quarterly consolidated
financial statements(3) Changes in accounting principles, procedures, and methods of presentation
1) Changes in accord with amendments to accounting standards: Yes
2) Changes other than the above: None
*Changes in accounting principles, procedures, and methods of presentation used to prepare thequarterly financial statements(3) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):June 30, 2010:
393,971,493 shares
December 31, 2009: 393,971,493 shares
2) Number of shares held in treasury at end of period:
June 30, 2010:
2,261,824 shares
December 31, 2009:
2,218,784 shares
3) Average number of outstanding shares during the period:
Six months ended June 30, 2010:
391,721,094 shares
Six months ended June 30, 2009:
391,904,506 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 information on the use of earnings forecasts, refer to"Earnings Forecasts" on page 8 .

3

1. Analysis of Operating Results
Consolidated financial results for the six months ended June 30, 2010
(January 1 – June 30, 2010)
Our International Alcoholic Beverages business achieved a further increase insales volume in the first half of 2010 (January–June) while our Japanese
Alcoholic Beverages business recorded a year-over-year increase in the
April–June quarter, but a difficult operating climate meant that our first-halfconsolidated net sales fell 3% (¥5.2 billion) from January–June 2009 to¥177.1 billion, reflecting both a first-quarter (January–March) decrease insales volume and a further increase low-priced new genre beers’ share ofoverall sales.
We booked operating income of ¥1.2 billion (down ¥0.1 billion, or 10%, fromthe year-earlier first half), ordinary income of ¥0.4 billion (essentiallyunchanged from a year earlier), and a net loss of ¥0.6 billion (down from ¥0.7
billion) for January–June 2010, reflecting the success of efforts to reduce
manufacturing costs and make more efficient use of our sales promotion
budget by focusing on core product lines within our Japanese Alcoholic
Beverages business.
Segment Information
Impact of seasonal factors
The Group’s operating results exhibit substantial seasonal variation because
demand for its Alcoholic Beverages, Soft Drinks, and Restaurant businesses’
products tends to be disproportionately concentrated in the summer months.
First-half (January–June) sales and income therefore tend to be lower than in
the second half of the year.
Alcoholic Beverages
Alcoholic Beverages (Japan)
Total demand in the Japanese beer and beer-type beverages appears to havecontracted by around 4% from the first half of 2009, reflecting adverse
weather and continued reluctance of consumers to loosen their purse strings.
Unit sales of our core Sapporo Draft Beer Black Label brand were down
7.9% from a year earlier as a growing preference for lower-priced products
and a commercial market demand slump reduced total demand forconventional beer products by an estimated 6%. However, total unit sales for
our Yebisu brand—which this year marks its 120th anniversary—rose 0.5%
from a year earlier on the back of solid demand for our recently relaunched
Yebisu Silk line, thereby limiting the decline in our overall conventional beersales to 5.9%, or slightly less than the 6% decline in aggregate demand.
Unit sales of new genre products were up 7.3% from a year earlier,reflecting a 24.3% surge for Mugi to Hop now marketed under the slogan “Sotasty you’ll think it’s real beer” (translated from the Japanese) as well as asolid contribution from our summer-only Sapporo Ice Lager brand (launched
in June).

4

In the low-alcohol category, our May launch of Sapporo Nectar Sour
Sparkling Peach in collaboration with Fujiya proved highly successful, withsales exceeding 50% of our full-year target within just three weeks of release.
In the wine and liquor business, revenues and earnings were both down
year over year, despite efforts to reduce costs.
Overall, our Japanese Alcoholic Beverages business booked sales of¥125.7 billion (down ¥6.9 billion, or 5%, year over year) for January–June
2010, while our operating loss was limited to ¥0.1 billion (whereas we booked
an operating loss of less than ¥0.1 billion a year earlier) as one-time charges
associated with our newly launched sales and logistics system were partially
offset by reductions in manufacturing costs and more efficient use of our sales
promotion budget by, for example, focusing on core products.
Alcoholic Beverages (International)
North American beer demand remained relatively sluggish despite someindications that consumers might be starting to increase their spending on
certain items, with aggregate demand estimated to have contracted by around
2–3% from a year earlier.
Amid such an environment, the International Alcoholic Beverages business
continued to actively focus on sales to the premium market segment, andCanadian subsidiary Sleeman Breweries’ unit sales (excluding outsourced
production of Sapporo brand products) increased 6% year over year. Sapporo
USA’s Sapporo brand unit sales to the North American market were up 20%
from a year earlier, while its overseas sales, mainly concentrated in Asia, rose
17%.
In December 2009, we reached a decision to enter the Vietnam market.
Brewery construction is set to begin in July, and we continue to formulate amarketing strategy and build a distribution network in preparation for locally
producing and selling beer in partnership with the state-owned Vietnam
National Tobacco Corp.
Overall, the International Alcoholic Beverages business incurred an
operating loss of ¥0.1 billion (essentially unchanged from a year earlier) on
sales of ¥12.4 billion (up ¥2.0 billion, or 20%, year over year) for January–
June 2010.
Soft Drinks
Our estimates indicate that the domestic soft drink market contracted byaround 2% relative to January–June 2009 amid continuing adverse market
conditions.
Against such a backdrop, the Soft Drinks business focused its marketingstrategy on cultivating and strengthening existing brands, allocating marketing
expenditures to core brand products while also bolstering its sales force.
Sales campaigns for our recently renewed Gabunomi brand have targeted
high-school students, while in-store campaigns for the Ribbon product linefeaturing our Ribbon-chan promotional character have proved effective in
expanding our retail presence. Unit sales of Gerolsteiner naturally carbonatedwater from Germany surged 21% from a year earlier as we endeavored toreach even more consumers by, for instance, introducing new products for thevending machine channel and running television commercials.
5

We continued to implement cost-structure reforms throughout the value
chain, tapping into synergies derived from our alliance with Pokka Corporation
to reduce costs associated with production, purchasing, and logistics
operations, in the aim of laying a stable earnings foundation.
We have boosted production capacity for Sapporo Potekaru non-fried potato
chips in line with our March renewal of the brand. From May, we expanded
our target market beyond Greater Tokyo to encompass the Koshinetsu, Tokai,
and Hokuriku regions of Japan. We also launched a consommé-flavored
product into the Tokyo market in June as part of our ongoing efforts to boost
sales by better meeting customer needs.
Overall, the Soft Drinks business achieved sales of ¥14.7 billion (essentiallyunchanged from a year earlier), while its rigorous cost-structure reform
program, primarily focused on reducing cost of sales, ensured that thebusiness booked operating income of less than ¥0.1 billion (whereas isbooked an operating loss of less than ¥0.1 billion a year earlier).
Restaurants
The Japanese restaurant industry has entered a phase of intensifying pricecompetition as increasingly frugal consumers dine out less frequently.
Amid such an environment, our Restaurants business has been working to
attract customers back to its existing locations through differentiation
strategies centering around draught beer campaigns and seasonal menus,
and we have also stepped up our corporate marketing efforts amid signs of arecovery in the corporate events market segment. We closed nine
unprofitable locations as part of ongoing profit-structure reforms.
We opened a second Yebisu Bar location and a Brasserie Ginza Lion beerhall at Kasumigaseki Common Gate in January, and we added the summeronly Yebisu Bar: The Garden to this new Yebisu Bar location in May. We
consequently had a total of 205 locations at end-June.
Our Restaurants business incurred an operating loss of ¥0.4 billion(essentially unchanged from a year earlier) on sales of ¥12.8 billion (down¥0.4 billion, or 4%, from a year earlier).
Real Estate
In the Greater Tokyo office leasing market, vacancy rates continue to rise andrents remain in a downtrend.
Our Real Estate business has been endeavoring to maintain rents andoccupancy rates and realize additional cost savings at existing properties.
Rent levels for our Greater Tokyo properties have been impacted by overallmarket conditions, but occupancy rates have stayed at relatively high levels.
Construction of our Shinjuku Square office building was completed in June,
while an extension to our Pal Urayasu fitness facility in Urayasu, Chiba, iscurrently under way.
We continue to view the Ebisu area as a strategic priority while seeking toacquire new properties in other areas of Central Tokyo. We added the newly
built Shibuya Sakuragaoka Square office building to our property portfolio in
April.

6

The Real Estate business’s earnings have been boosted by a number ofproperties acquired in 2009, including the Rose City Higashi Sapporo rental
housing complex, the Ebisu Square office building, and the MLB café Tokyo,
a commercial property.
Our Real Estate business earned operating income of ¥3.5 billion(essentially unchanged from a year earlier) on sales of ¥11.3 billion (up ¥0.2
billion, or 2%).
2. Review of Consolidated Financial Conditiona) Consolidated Financial Condition
Consolidated assets totaled ¥509.5 billion at June, 2010, a ¥2.6 billion
increase from December 31, 2009. The increase was the net result of several
factors, including an increase in land holdings due to real estate acquisitions,a decrease in trade a decrease in notes and accounts receivable, an increasein other intangible assets, resulting from the launch of a new sales andlogistics system, and the associated decrease in construction in progress.
Consolidated liabilities totaled ¥393.9 billion, a ¥5.6 billion increase from
December 31, 2009. The increase was chiefly attributable to decreases inliquor taxes payable and deposits received, partially offset by growth in shortterm bank loans.
Consolidated net assets totaled ¥115.6 billion, a ¥2.9 billion decrease from
December 31, 2009. The decrease was mainly due to a year-end dividend
distribution and the first-half net loss.
b) Consolidated Cash Flows
Consolidated cash flows were as follows in the first half.
Operating activities provided net cash of ¥5.7 billion. Major sources ofoperating cash flow included depreciation and amortization of ¥11.4 billion, a¥5.3 billion decrease in trade notes and accounts receivable, and a ¥2.8
billion increase in notes and accounts payable. Major uses of operating cash
flow included a ¥12.1 billion decrease in liquor taxes payable and a ¥4.3
billion decrease in deposits received.
Investing activities used net cash of ¥14.2 billion. Major investment outflows
included ¥12.7 billion spent to acquire property, plant and equipment and ¥1.7
billion spent to acquire investment securities.
Financing activities provided net cash of ¥12.8 billion. Major financing
inflows included a ¥10.4 billion increase in short-term bank loans and ¥12.0
billion in proceeds from long-term bank loans. Major outflows included ¥9.6
billion in repayments of long-term bank loans.
As a result of the above cash flows, cash and cash equivalents totaled¥10.5 billion at June, 2010.

7

3. Consolidated Earnings Forecast
In light of our results for the first half of 2010—including a decline in sales
revenue for our Japanese Alcoholic Beverages business—we now forecast
consolidated net sales of ¥391.0 billion for the full year ending December 31,
2010, which would represent an increase of ¥3.4 billion (1%) versus 2009.
Our full-year profit forecasts are unchanged from those announced on
February 12, 2010. On a consolidated basis, we forecast operating income of¥13.5 billion (up ¥0.6 billion, or 5%, from 2009), ordinary income of ¥11.0
billion (up ¥0.2 billion, or 3%), and net income of ¥4.8 billion (up ¥0.2 billion,
or 6%).
4. Other(1) Changes affecting the consolidation status of material subsidiaries (scopeof consolidation)
None(2) Use of simplified accounting methods and/or accounting methods specificto 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 businessenvironment 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, theCompany uses the earnings forecasts and tax planning strategies thatit 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 reasonableestimate of the effective tax rate after applying tax-effect accounting toincome before taxes and minority interests for the fiscal year, which
encompasses the six months ended June 30, 2010, and thenmultiplying income (loss) before taxes and minority interests by thisestimated effective tax rate. Note that “deferred income taxes” areincluded under “income taxes”.

8(3) Changes in accounting principles, procedures, and methods ofpresentation used to prepare the quarterly financial statements
Changes in accord with amendments to accounting standards
Change in accounting standard for recognizing revenues from andcosts of completed construction
Effective the first quarter of the fiscal year ending December 31,
2010, the Company adopted the Accounting Standard for Construction
Contracts (ASBJ Statement No. 15, December 27, 2007) and its
accompanying Guidance on Accounting Standard for Construction
Contracts (ASBJ Guidance No. 18, December 27, 2007) forrecognizing revenues associated with contracted construction. Allconstruction contracts, including those in existence at the beginning of
the first half, for which certain elements were determinable withcertainty at end of the first half (June 30, 2010) were accounted forwith the percentage-of-completion method.
The impact of this change of profit and loss is minor.
The impact on each business segment is stated in the relevant
sections of this document.
(4) Notes on the going-concern assumption
None

9

5.Consolidated Financial Statement
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

10

June 30, 2010

December 31, 2009

AmountAmount10,67754,501
10
15,487
9,860
11,035(165)
101,406

6,387
60,12047
13,258
9,689
12,966(192)
102,277

366,419(188,957)
177,462
182,389(141,547)
40,842
91,343
2,605
20,577(15,320)5,256
317,510361,276(184,898)
176,378
182,373(138,387)
43,98684,384
8,487
19,784(15,182)
4,601
317,838

15,090
11,13026,221

14,926
6,967
21,89436,377
10,507
4,899
14,266(1,637)64,414
408,147
509,554

35,39011,072
4,824
15,339(1,763)64,863
404,596506,874

June 30, 2010
AmountLiabilities
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

11(millions of yen)
December 31, 2009
Amount22,96057,041
30,00023,046855
956
22,70945,756203,326

20,18536,735
10,00035,242843
1,638
27,08437,523
169,252

23,843
98,347
12,046
7,341
42
32,402
16,588
190,612393,938

43,843106,216
12,0977,487
45
32,011
17,330219,032
388,284

53,88646,317
16,859(1,151)
115,91253,88646,31820,286(1,131)
119,360

2,649(16)(4,353)(1,720)1,423
115,615
509,5542,637
0(3,627)(988)
218
118,590
506,874

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
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Impairment loss
3 Business structure improvement expenses
4 Loss on devaluation of investment securities
5 Loss on devaluation of inventories
Total extraordinary losses
Income (Loss) before income taxes and minority interests
Income taxes
Minority interests
Net loss12

Six months ended
June 30, 2009
Amount182,413
127,63154,781(millions of yen)Six months ended
June 30, 2010
Amount177,144
120,865
56,278

8,866
9,814
9,363
502
1,534
23,35653,437
1,344

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

199
368
86
229
248
1,132

245
367
310
391
1,315

1,764
11
182
1,958
518

1,815
132
46
101
2,096
424

19
19

0
574
66
569
1,210

529
87
125
742
(204)
530
2
(738)

593
58
650
141
1,443
191
858
18
(684)

3.Consolidated Statements of Cash Flows(millions of yen)Six months ended
June 30, 2009
(A)
AmountI Cash flows from operating activities
1 Income (loss) before income taxes and minority interests
2 Depreciation and amortization
3 Amortization of goodwill
4 Decrease in employees’ retirement benefits
5 Decrease in allowance for doubtful receivables
6 Interest and dividend income
7 Interest expense
8 (Gain) loss on sales and disposal of property, plant and equipment
9 (Gain) loss on devaluation of investment securities
10 Decrease in notes and accounts receivable - trade
11 Increase in inventories
12 (Increase) decrease in other current assets
13 Increase (decrease) in notes and accounts payable - trade
14 Decrease in liquor taxes payable
15 Decrease in deposits received
16 Other
Sub total
17 Interest and dividends received
18 Interest paid
19 Income taxes paid
20 Income taxes refunded
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 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 Net increase (decrease) in commercial paper
5 Cash dividends paid
6 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

13

Six months ended
June 30, 2010
(B)
Amount(204)
11,311
506
(36)
(71)
(568)
1,764
470
87
9,792
(3,549)7,514(1,884)(12,423)(12,258)
1,887
2,339
730
(1,782)(1,496)
2,792
2,584

191
11,418
550
(146)
(152)
(612)
1,815
592
141
5,383
(2,613)507
2,848(12,158)(4,374)
2,965
6,356
794
(1,804)
(813)
1,183
5,717

(2,091)(7,650)368(1,139)(1,658)(12,171)(1,741)(12,763)
470
(936)
736
(14,235)(7,476)19,000(12,590)(2,736)(17)(3,821)
115(13,292)
22,217
8,924

10,401
12,000(9,685)3,000(2,735)(101)
12,878
(71)
4,289
6,267
10,557

6.Notes on the going-concern assumption
Not applicable

7.Segment Information
1. Segment Information by Business(millions of yen)
Alcoholic
Beverages
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Operating income (loss)

143,137
2,468
145,605(200)

Alcoholic
Beverages
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Operating income (loss)

138,220
2,527
140,748(280)

Six months ended June 30, 2009 (January 1, 2009 – June 30, 2009)
Soft
Real
Corporate andRestaurants
Total
DrinksEstateeliminations
14,854108
14,962(72)

13,282
13,282(443)

11,138
1,105
12,244
3,561

182,4133,681
186,095
2,845(3,681)(3,681)(1,500)Six months ended June 30, 2010 (January 1, 2010 – June 30, 2010)
Soft
Real
Corporate andRestaurants
Total
DrinksEstateeliminations
14,759128
14,8878

12,80512,805(447)

11,358
1,101
12,4603,530

177,1443,758
180,9022,810

Consolidated

182,413
182,413
1,344

Consolidated(3,758)(3,758)(1,604)

177,144
177,144
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(3) Changes in Accounting Policies
Six months ended June 30, 2009 (January 1, 2009 – June 30, 2009)
1) Measurement of Inventories
Effective the first quarter of the fiscal year ending December 31, 2009, the Company adopted the Accounting Standard for the Measurement of
Inventories (ASBJ Statement No. 9) and switched from the conventional cost method of measurement to a cost method that involves reducing
book values to reflect diminished profit potential.
Due to this change, in the six months ended June 30, 2009, operating loss in the Alcoholic Beverages business was ¥372 million higher, and in
the Soft Drinks business, ¥116 million higher, than the amounts that would have resulted with the previous method.

2) Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements
Effective the first quarter of the fiscal year ending December 31, 2009, the Company adopted the Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements (ASBJ Practical Issues Task Force Report No. 18).
Due to this change, operating loss in the Alcoholic Beverages business was ¥181 million higher in the six months ended June 30, 2009, than it
would have been under the previous method.

14

Additional information
Change in Useful Life of Property, Plant and Equipment
The Company and its subsidiaries in Japan have reviewed the useful lives of property, plant and equipment following the 2008 revision ofJapan’s Corporation Tax Act, and effective the fiscal year ending December 31, 2009, began using new useful lives for depreciation ofmachinery assets.
Due to this change, in the six months ended June 30, 2009, compared with what they would have been under the previous accounting method,
operating loss in the Alcoholic Beverages business was ¥685 million lower; in the Soft Drinks business, lower by approximately ¥0 million; andin the Restaurants business, ¥6 million higher. By the same comparison, operating income in the Real Estate business was lower byapproximately ¥0 million.

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
Effective the first quarter of the fiscal year ending December 31, 2010, the Company adopted the Accounting Standard for Construction
Contracts (ASBJ Statement No.15, December 27, 2007) and its accompanying Guidance on Accounting Standard for Construction Contracts(ASBJ Guidance No.18, December 27, 2007) for recognizing revenues associated with contracted construction. All construction contracts,
including those in existence at the beginning of the second quarter, for which certain elements were determinable with certainty at end of thesecond quarter were accounted for with the percentage-of-completion method.
The effect of this change on segment information was negligible.

2. Segment Information by Geographic Area
Six months ended June 30, 2009 (January 1, 2009 – June 30, 2009) andsix 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.

3. Overseas Sales
Six months ended June 30, 2009 (January 1, 2009 – June 30, 2009) andsix 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.

8.Notes on significant changes in the amount of shareholders’ equity
Not applicable
9.Subsequent Events
From July 1, 2010, the Company began issuance of domestic stratight bonds with the following characteristics.
• 24th Unsecured Bond Series
1. Issuer
Sapporo Holdings Ltd.
2. Total issue amount¥12,000 million
3. Issue price¥100 cash per ¥100 of face value
4. Coupon
0.96% per annum
5. Pay-in dateJuly 20, 2010
6. Maturity
July 27, 2015
7. Use of proceeds
Funds to redeem bonds and funds torepay borrowings

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