Financial Results
for the Year Ended December 31, 2014 — Consolidated(Based on Japanese GAAP)
February 12, 2015

Company name

Sapporo Holdings Limited

Security code
Listings
URL

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

Representative
Contact

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

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

Annual general meeting of shareholders

March 27, 2015

Filing of annual financial report

March 30, 2015

Commencement of dividend payments

March 30, 2015

Supplementary information to the year-end earnings results

Available

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

1. Consolidated Financial Results for the Year Ended December 31, 2014
(January 1 – December 31, 2014)(Amounts in million yen rounded down to the nearest million yen)

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

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen

518,740

1.7

14,728(4.0)

14,565(3.7)

340(96.4)%

509,834

3.5

15,3446.4

15,130

10.5

9,451

75.2

December 31, 2014
Year ended
December 31, 2013
Note: Accumulated other comprehensive income
Year ended December 31, 2014: 7,283 million yen (70.1)%
Year ended December 31, 2013: 24,339 million yen 119.5%

1

Year ended

Net income
per share

Diluted net
income per
share

Return on
equityOrdinary
income tototal assets

Operatingincome tonet sales

Yen

yen

%

%

%

0.87

-

0.2

2.3

2.8

24.20

-

6.7

2.5

3.0

December 31, 2014
Year ended
December 31, 2013
Note: Equity method investment gains
Year ended December 31, 2014: 225 million yen
Year ended December 31, 2013: 99 million yen(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

December 31, 2014

625,439

160,00425.0

401.17

December 31, 2013

616,752

155,36624.6

388.77

Cash flows fromoperatingactivities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at endof period

million yen

million yen

million yen

million yen

Year ended
December 31, 2014

22,284(17,229)(7,307)

9,748

Year ended
December 31, 2013

32,861(13,268)(19,147)

11,518

Note: Shareholders’ equity
December 31, 2014: 156,303 million yen
December 31, 2013: 151,683 million yen(3) Cash Flows22. Dividends
Dividend per share
End Q1

Record date or

End Q2End Q3Year-end

Full year

periodTotal

PayoutDividends

dividends

ratio

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

yen

yen

yen

yen

million yen(consol.)%%Year ended
December 31, 2013

—

0.00

—

7.00

7.00

2,731

28.9

1.9

Year ended
December 31, 2014

—

0.00

—

7.00

7.00

2,727

802.6

1.8

Year ending
December 31, 2015
(forecast)

—

0.00

—

7.00

7.00

34.1

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

Operating income

Ordinary income

Net income

Net income
per share

million yen%

million yen%

million yen%

million yen%

545,700

5.2

16,30010.7

15,2004.4

8,000

2,252.8

Year ending
December 31,
2015
Note: Earnings forecasts for the six months ending June 30, 2015, are omitted because the company
manages performance targets on a yearly basis.

4. Other(1) Changes to scope of consolidation: None
(2) Changes in accounting policy, changes in accounting estimates, and retrospective restatement
1) Changes in accordance with amendments to accounting standards etc.: Yes
2) Changes other than 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
Note: For details, see “Changes in accounting policy” on page 30 in the accompanying material.

3

Yen

20.53

(3) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):
December 31, 2014: 393,971,493 shares
December 31, 2013: 393,971,493 shares
2) Number of shares held in treasury at end of period:
December 31, 2014: 4,348,456 shares
December 31, 2013: 3,805,058 shares
3) Average number of outstanding share during the period:
Year ended December 31, 2014: 389,854,319 sharesYear ended December 31, 2013: 390,568,806 shares
Audit Status

The year-end financial results are not subject to audit pursuant to the Financial Instruments
and Exchange Act. The audit of the year-end financial results herein had not been completed
as of the date of this document.
Appropriate Use of Earnings Forecasts and Other Important Information
This document contains projections and other forward-looking statements based on information
available to the Company as of the date of this document. Actual results may differ from thoseexpressed or implied by forward-looking statements due to various factors. For the assumptions
underlying the forecasts herein and other information on the use of earnings forecasts, refer to“Outlook for the fiscal year ending December 31, 2015” on page 15.

4

1. Analysis of Operating Results(a) Review of the fiscal year ended December 31, 2014
① Overview
Millions of yen, except percentages
Net sales

Operating income

Ordinary income

Net income

2014

518,740

14,72814,565340

2013

509,834

15,344

15,130

9,451

1.7

(4.0)

(3.7)

(96.4)

Change (%)

In 2014, the Japanese economy generally followed a moderate recovery track, supportedby the government’s economic stimulus measures and the Bank of Japan’s monetaryeasing. However, the trend in personal consumption remained clouded by the impact ofrising prices following the April consumption tax hike and yen depreciation. Conditions in theindustries in which SAPPORO Group companies operate were as follows.
The domestic alcoholic beverage industry as well as the soft drinks and restaurant
industries were adversely affected by unseasonable weather in the summer months of 2014.
The soft drinks and restaurant industries were also affected by slumping personal
consumption following the consumption tax hike, however the overall impact was limited. In
the real estate industry, vacancy rates in the Greater Tokyo office leasing market declined
while rents levels entered a moderate upward trajectory. Overseas, the North American
beer market was generally flat, but the Asian market continued to see steady growth.
Amid this environment, the SAPPORO Group began implementing the Sapporo Group
Medium-Term Management Plan 2014–2016. Under this new three-year plan, we areaccelerating growth strategies to position the Sapporo Group as a “manufacturer of foodproducts” capable of realizing sustainable growth as we aim to achieve the financial targets
for 2016 laid out in the Sapporo Group’s New Management Framework.
In our Japanese Alcoholic Beverage business, we endeavored to expand sales bycontinuing to invest in our three core brands—Yebisu, Sapporo Draft Beer Black Label, andMugi to Hop The Gold. In July, we relaunched Goku Zero as a happoshu, repositioning the
popular beverage originally marketed in 2013 as a new-genre beer. We also expanded sales
in the non-beer growth areas of RTD cocktails, wine, western spirits, and Japanese liquors,
thereby making further progress in establishing a multilayered alcoholic beverages
business.
Our International business bolstered the production network of its North American beer
operations. Moreover, in the soft drinks business, we took an important step toward further
strengthening our fruit juice beverage business by deciding to acquire Country Pure Foods,

5Inc. (CPF), a major foodservice juice manufacturer in the United States. The acquisition will
be carried out by group company Silver Springs Citrus, a joint venture between the Sapporo
International Inc. and Toyota Tsusho Group company Toyota Tsusho America. In our thirdyear in the Vietnam market, we succeeded in expanding sales by stepping up marketing
efforts to establish the Sapporo brand and increase the core drinkership ratio.
The Food & Soft Drinks business endeavored to strengthen marketing and lower costs at
its Japan operations as part of our management initiatives while continuing efforts to nurture
core brands and expand sales in categories where we have competitive edge. Overseas, westarted up production at our new plant in Malaysia in October. We also sold our Hong Kong
restaurant business as part of a strategic decision to concentrate resources to support plans
to strengthen and expand our soft drinks business in Southeast Asia.
The Restaurants business strengthened its Japan operations by opening new stores andrenovating older ones in its two key formats, the Ginza Lion and Yebisu Bar chains. To
further improve profitability, we closed or changed the format of a number of unprofitable
outlets. Overseas, we opened our second Ginza Lion Beer Hall in Singapore in October.
The Real Estate business enhanced the value of its core property, Yebisu Garden Place,while celebrating the property’s 20th anniversary in 2014. We also completed construction of
Ebisu First Square in September. Expected to be a new center of activity in Tokyo’s Ebisu
district, the building has enjoyed full occupancy since its grand opening. We began the
demolition of the Sapporo Ginza Building, the first stage in the redevelopment of this coreproperty at the Ginza 4-chome intersection. Meanwhile, taking advantage of an increasingly
active real estate market, we sold some rental properties and sold our entire equity stake in
Sapporo Sports Plaza Co., Ltd., an operator of fitness clubs, as part of a more strategic
concentration of management resources.
The efforts outlined briefly above are some of the highlights of the SAPPORO Group’s
consolidated results in 2014, which are presented in more detail below.

Net Sales
In 2014, the Sapporo Group posted consolidated net sales of ¥518.7 billion in 2014, ¥8.9
billion, or 2%, more than in 2013. Our Japanese Alcoholic Beverage business achieved
year-over-year increases in sales volumes in all categories, including beer-type beverages,
RTD cocktails, wine, western spirits, and Japanese liquors. Our International businessincreased beer volume sales in Vietnam, and the Food & Soft Drinks business achieved
sales volume gains in its overseas soft drinks business. The stronger sales volumes
combined with the benefit of a weaker yen contributed to produce a sharp gain in sales
value. On the other hand, the Restaurants business saw sales decline as a major store had

6to close temporarily for building renovations. Meanwhile, the Real Estate business saw its
rental revenues decrease owing to properties being off-line during redevelopment projects
and a temporary drop in the occupancy rate at Yebisu Garden Place following the exit of alarge tenant at the expiration of its lease contract. Despite some weakness in these twobusinesses, groupwide sales increased in 2014. The results include Shinseien Co., Ltd., forthe first time, following the company’s consolidation within the Japanese Alcoholic Beveragebusiness from January 2014.

Operating Income
Consolidated operating income totaled ¥14.7 billion, a year-over-year decline of ¥0.6
billion, or 4%. The Japanese Alcoholic Beverage business achieved profit growth as higher
marketing costs were partly offset by reductions in other fixed costs. The International
business, however, saw its annual profits decline as it was unable to overcome higher costsof raw materials and higher marketing expenses at its North American operations and higher
marketing expenses at its Vietnam operations. The Food & Soft Drinks business achieved
profit growth thanks to efficiency improvement-driven cost reductions at its domestic softdrinks business and sales growth at overseas operations. The Real Estate business saw
profit decline owing to lower rental income.

Ordinary Income
Reflecting the drop in consolidated operating income, consolidated ordinary income
totaled ¥14.5 billion, a ¥0.5 billion or 4% year-over-year decline.

Net Income
Consolidated net income in 2014 totaled ¥0.3 billion, a year-over-year decline of ¥9.1
billion or 96%. A ¥3.5 billion gain on sales of property, plant and equipment under
extraordinary gains supported net income but was offset by extraordinary losses, including¥2.3 billion in demolition and removal costs related to redevelopment of the Sapporo Ginza
Building and an ¥11.6 billion increase in our liquor tax burden (including overdue tax) owing
to the Japanese Alcoholic Beverage business’ voluntary decision to file a revised liquor tax
return owing to inclusion of Goku Zero in a different tax rate category.

Segment information is outlined below.

7

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

Operating income
%

%

2013

2014

change2013

2014change274,909281,819

2.5

9,901

10,206

3.1

48,21549,672

3.0

1,208

172

(85.7)

130,671

133,439

2.1(1,483)

121-

Restaurants

26,827

26,355

(1.8)

415

292

(29.7)

Real EstateBusiness

22,76721,509

(5.5)

8,685

7,695

(11.4)

Japanese
Alcoholic
Beverages
International
Business
Food &
Soft Drinks

Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer-type beverages fell about 2%
year over year in 2014, largely due to the negative impact of unseasonable weather
nationwide in August.
Under such market conditions, our Japanese Alcoholic Beverage business continued its
efforts to realize further growth by constantly providing customers with a unique value
proposal. These efforts centered on implementing a new vision of “Seek No.1 byaccumulating one-of-a-kind products” while also adhering to the campaign slogan, “Bringing
more cheer to your ‘Cheers’!”.
In the beer and beer-type beverages category, we continued to strengthen our core
Yebisu brand with the release of several limited editions, including Kaori Hanayagu Yebisu
in January, Yebisu Royal Selection in May, Yebisu Natsu no Koku in summer gift packs only,
and the amber-colored Kohaku Yebisu in September. The popularity of these limited
editions contributed to a year-over-year increase in overall shipments of the Yebisu brand.
Sales of our happoshu and new-genre beer offerings were supported by continued strong
customer support for Mugi to Hop The Gold, a richer flavored version of our popular Mugi to
Hop brand that was released in February. Meanwhile, we discontinued the new-genre beer
Goku Zero, the world’s first beer-type beverage with zero purine bodies, following theshipment of May output. After some revisions to the brewing process, we relaunched Goku
Zero in July as a happoshu (beer-type beverage with malt content less than 25%). The new
Goku Zero has matched the success of its predecessor, with sales supported by the manycustomers demanding more functionality from beer-type beverages. As a result, sales
volume of our happoshu and new-genre beer offerings increased 3% year over year.

8

Supported by strong sales of the core products noted above, overall sales volume of ourbeer and beer-type beverages in 2014 was 1% higher than in the previous year, and we
expanded share in the beer and beer-type beverages market for the third straight year.
In the RTD* category, Sapporo Otoko Ume Sour, launched in 2013, continued to post
solid sales. In April 2014, we added to our RTD offerings with the nationwide launch of
Sapporo Kireto Lemon Sour, the first collaboration RTD cocktail using the Food & Soft
Drinks business’ long-time core Kireto Lemon brand. The new products contributed to a
49% increase in annual RTD product shipments in 2014.
At our wine and liquor business, Grande Polaire, our core premium brand made from
100% domestic grapes, enjoyed a significant increase in sales volume thanks to continued
strong support from customers. We strengthened our lineup of domestic wines with the
March launch of Polaire Sangria Rico, a new line of Sangria beverages that are enjoying
increasing popularity, especially with young women. As a result, sales of our domestic wineofferings posted a year-over-year increase. Our imported wine business, including suchcore brands as Yellow Tail and Santa Rita, also continued to do well, with annual shipments
increasing 3%. Combined shipments of our domestic and overseas wine offerings rose 2%
in 2014.
Our western spirits business achieved 6% growth in sales volume for its various Bacardi
brand products, which include a Mojito RTS** cocktail made from the world’s No.1 selling
Bacardi rum as well as a number of other Bacardi-owned global power brands, such as
Bombay Sapphire, Martini, Dewar’s and Cutty Sark.
Our Japanese liquor business enjoyed continued strong sales of its shochu offerings, led
by Imo Shochu Kokuimo, the No. 1 selling blended imo shochu. Among our umeshu (plumwine) offerings, we saw a considerable increase in sales of San-shu no Zeitaku Porifenōru
Aka Umeshu—literally, a red plum wine loaded with three types of polyphenols that results
in an umeshu with added functionality. Thanks to the sales of these products, total sales
volume for our Japanese liquor business expanded 9% in 2014.
Overall, our Japanese Alcoholic Beverage business posted sales of ¥281.8 billion (up¥6.9 billion, or 3%, year over year) in 2014. Segment operating income totaled to ¥10.2
billion (up ¥0.3 billion, or 3%, year over year).
* RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-likebeverages that can be consumed as is immediately after opening.
** RTS refers to ready-to-serve liquors used to make cocktails by mixing with soda and othermixers.

9International BusinessIn the North American beer market, we estimate that total demand in Canada fell about
1% year over year in 2014 while demand in the United States was largely flat, despite somepositive macro developments, including improving employment conditions. The Asian beermarket, however, continued to expand steadily, supported by the region’s fast-growing
economies.
In this environment, our International Business continued aggressive marketing activities
targeting the premium beer markets in North America and Southeast Asia, the two regions
where the business is concentrating its resources and efforts. Our Canadian subsidiary
SLEEMAN BREWERIES achieved a sharp year-over-year increase in its sales of premium
brands. However, its overall sales volume (excluding Sapporo brand beer) slipped 1%
owing to intensifying price competition in the value-brand market segment. In the UnitedStates, a bitter winter cold wave delayed shipments early in the year, but shipments
rebounded after the weather thawed out in April, and Sapporo USA managed to achieve an
increase in shipments of Sapporo brands over the entire year. At Silver Springs Citrus,
earnings were negatively affected by the rising prices of oranges used in its products.
In Vietnam, one of our focus markets in Southeast Asia, we continued efforts to establish
the Sapporo brand. An aggressive brand exposure, including a TV ad campaign andoutdoor events, helped us make steady progress in raising brand awareness among
consumers in the Ho Chi Minh area. Combined with active sales promotions at local
restaurants and supermarket chains, these efforts led to a large increase in sales in Vietnam.
In South Korea, we steadily expanded sales volumes in both the household and commercial
markets by making good use of the sales channels of our local partners. In Oceania, we
continued efforts to bolster sales primarily through our brewing licensing agreements, and in
Singapore we worked with our local subsidiary to expand sales channels in the local
household market.
The efforts outlined above enabled the International Business to achieve an overall
increase in shipments of Sapporo brand products, including North America, in 2014.
As a result, the International Business posted sales of ¥49.6 billion (up ¥1.4 billion, or 3%,
year over year). Operating income totaled ¥0.1 billion (down ¥1.0 billion, or 86%, year overyear).

10

Food & Soft Drinks
We estimate that domestic demand for soft drinks in 2014 slipped 2% year over year,
owing in part to the negative impact of unseasonable weather. Overall demand forlemon-based products (flavorings) was the same as in 2013 (*1) while that for instant soup(including soups in a cup) increased 4% year over year (*2).
In this environment, the SAPPORO Group’s Food & Soft Drinks business started its
second year of integrated operations as POKKA SAPPORO Food & Beverage Ltd. The
subsidiary is concentrating investments on core brands as it endeavors to strengthen its
brand recognition.
The domestic food and soft drinks business faced a difficult operating environment, withchallenges provided by the consumption tax hike and by convenience-store chains' launchof over-the-counter sales of fresh-brewed coffee. The latter adversely affected vending
machine sales of our canned coffee drinks and, as a result, sales volume in the coffee
category was lower than in 2013. Amid a slump in overall market demand, in April welaunched Green Shower, a nonsweetened carbonated water drink with the aroma of hops.
The favorable response received from customers has helped establish the product as a new
brand in our soft drinks lineup. In November, we launched Fruit Vinegar Sparkling Apple
Vinegar & Lemon Vinegar. One of the new drink’s key ingredients is lemon vinegar that was
brewed using our patented technology. The new drink is the latest in our lineup of soft drinksthat appeal to the value of lemons. Meanwhile, we expanded the number of stores carrying
our hot lemon drink Pokka Poka Lemon, which contributed to an increase in overall sales in
the lemon & natural foods category. We launched a new and improved version of Kireto
Lemon in the autumn, and the product continues to generate strong sales. We will continue
developing the brand, which is the core brand in this category. We also boosted sales
volumes for our Pokka Lemon 100 brand in 2014 compared with the previous year by using
marketing activities with seasonal themes. In our overseas brand category, we continued
our efforts to stimulate the market for hard drinking waters in Japan through marketing ofGerolsteiner naturally carbonated water from Germany as well as Contrex and Vittel bottled
natural mineral waters from France. In particular, we carried out a number of promotions
designed to raise customer knowledge of these products’ value. In the soup and related
foods category, sales of the Jikkuri Kotokoto and Jikkuri Kotokoto Kongari Pan series bothexceeded previous year levels. The commercial-use products category also continued topost solid sales increases, led by our lemon-based food and alcoholic-beverage mixers.
In the segment’s domestic restaurants business, we marked the 20th year of the foundingof our Café de Crié coffee shop chain in November by opening shops in previously untappedareas and strengthening and expanding customer support through various efforts, including11

offering appealing new menu items. Our efforts resulted in continued strong sales for the
chain.
The segment’s overseas soft drinks business won larger market shares for core products
in its home base in Singapore while also steadily expanding exports. We also started
production in October at a plant in Malaysia for products that have received Halalcertification.
Meanwhile, in a strategic move designed to concentrate overseas management
resources on expanding our core soft drinks business, we sold our entire equity interest inrestaurant operator Pokka Corporation (HK) Limited.
As a result of the above, the Food & Soft Drinks segment recorded sales of ¥133.4 billion
in 2014 (up ¥2.7 billion, or 2%, year over year). The segment posted an operating income of¥0.1 billion (compared with a ¥1.4 billion loss in 2013).
(*1)(*2) data sources: Year-over-year comparisons of cumulative sales values for
January–December 2014 for the lemon foods market (Sapporo definition) and the instantsoup market based on Intage SRI research on the supermarket and convenience store
industries.

Restaurants
Japan’s restaurant industry faced a challenging operating environment in 2014, withcustomer traffic slowed by the decline in personal consumption and unfavorable weather
conditions, the weak yen pushing up the prices of food ingredients, and labor costs also
rising.
In this environment, our Restaurants business pursued the fulfillment of its corporate
philosophy of “Enhancing the Joy of Living” by continuing its efforts to deliver safe andsound food and service to its customers while endeavoring to create restaurants that“deliver 100% satisfaction to customers.”
During the year, we opened 15 new outlets, with the focus on our core Ginza Lion andYebisu Bar formats, including those on a contract basis. With a view to expanding ourcustomer base, we opened the first outlet in our new Bier Keller Tokyo chain of casual beerhalls in Shimbashi. We also converted a shop in Tokyo’s Osaki area to the new Wine House
Picnic Club format. During the year, we closed 20 restaurants, including a large core chain
restaurant that was closed due to a building reconstruction. As a result, the total number ofrestaurants operating in Japan at the end of the year was 185.
Overseas, we opened our second Ginza Lion Beer Hall in Singapore in October, bringing
to 14 the total number of restaurants we have operating overseas as of the end of 2014.

12

Thus, we have sought to steadily build a strong following for our Ginza Lion brand in
Singapore.
Overall, the Restaurants business posted sales of ¥26.3 billion in 2014 (down ¥0.4 billion
or 2% from the previous year). Segment operating income was ¥0.2 billion (down ¥0.1 billion,
or 30%, year over year).

Real Estate
Japan’s real estate industry in 2014 continued to enjoy a moderate recovery in rent levels
as vacancy rates improved in the Greater Tokyo office leasing market.
Amid such market conditions, our real estate leasing business saw a temporary drop in
the occupancy rate at its core property, Yebisu Garden Place, owing to the exit of a large
tenant at the expiration of the lease contract in May. However, the business made steadyprogress with its efforts to find replacement tenants, and as a result we maintained theoccupancy rate as high as those at other properties.
Yebisu Garden Place celebrated the 20th anniversary of its opening during 2014, and wemarked the anniversary by making renovations that enhance the property’s value by raisingconvenience levels and strengthening its brand appeal as we endeavor to provide tenants
and visitors with enjoyable experiences in comfortable and pleasant surroundings. For
example, in April we welcomed a large upscale restaurant as a new tenant on thecommercial-use floor and also undertook a major renovation of public-use floors. We alsodecided to open a new-concept movie theater on the property in March 2015. At thecomplex’s rental housing building, we carried out renovations designed to enhance thebuilding’s comfort level and amenities, including refurbishing the entrance hall, improving
the building’s barrier-free and universal design features, and replacing standard equipmentin each apartment unit. At the complex’s office tower, in March we completed the installationof emergency power-generating systems that will supply electricity to tenant spaces during
disasters or other emergency situations, helping to ensure continuity of tenants’ business
operations. We are continuing work to ensure power supply to public-use areas of thebuilding during a disaster, with completion of this work scheduled for spring 2015.
The real estate development business opened the doors to Ebisu First Square asscheduled on 30 September, overcoming concerns about a possible delay caused by rising
construction costs and labor shortages. Expected to be a new center of activity in Tokyo’s
Ebisu district, the building enjoyed full occupancy since its grand opening, and its tenants
have praised the building’s safety and environmental features as well as the comfort of its
office spaces. In February, we resolved to redevelop the Sapporo Ginza Building property at
the Ginza 4-chome intersection. In April, demolition work on the old building began, and we13are targeting completion of the new building in May 2016. We are now moving forward withproject planning that will keep costs under control while creating a new building with an
exterior design in harmony with the Ginza landscape and befitting a new local landmark.
Meanwhile, in keeping with our management emphasis on a select-and-focus approachwith a long-term vision, we sold our entire equity stake in fitness center operator Sapporo
Sports Plaza. We also conducted a review of our property portfolio with a view to raising thevalue of our Real Estate business.
As result of the efforts outlined above, the Real Estate business’s sales in 2014 totaled¥21.5 billion (down ¥1.2 billion, or 6%, year over year). Operating income totaled ¥7.6 billion(down ¥0.9 billion, or 11%, year over year).

14

(b) Outlook for the fiscal year ending December 31, 2015
①Overview
Millions of yen, except percentages
Net sales

Operating

Ordinary

incomeincomeNet income

2015 forecast

545,700

16,30015,2008,000

2014 results

518,740

14,72814,565

340

5.2

10.7

4.4

2,252.8

Projected increase (%)

In 2015, we plan to accelerate implementation of growth strategies based on our
SAPPORO Group Management Plan 2015‒2016. These strategies are aimed at fully
displaying the special characteristics that position the SAPPORO Group as a “manufacturerof food products" and achieving the Group’s financial targets for 2016. Standing on thestrong foundation and stable earnings provided by our Japanese Alcoholic Beveragebusiness and Real Estate business, the SAPPORO Group will continue investing in thegrowth of its International business and the Food & Soft Drinks business, while also planting
the seeds for future growth through continued R&D investment.
Our consolidated forecasts and outlook for the SAPPORO Group in 2015 are as follows.

Net Sales
The Japanese Alcoholic Beverage business aims to achieve a fourth straight year of
year-over-year growth in shipments of its beer and beer-type beverages by further
enhancing the value of its core brands while also entering into the craft beer market. In
non-beer businesses, we expect to achieve further growth by aggressively expanding the
key growth areas of RTD cocktails, wine, shochu, western spirits and Japanese liquors.
The International business aims to expand sales by gaining wider brand recognition for
the SLEEMAN and Sapporo brands in the premium beer markets in North America andSoutheast Asia, the two regions where the business is concentrating its resources andefforts. It will also continue aggressive marketing to establish the Sapporo brand in Vietnam.
In the U.S. soft drinks market, we plan to expand sales by taking advantage of thestrengthened business platform provided by Country Pure Foods, Inc.
The Food & Soft Drinks business plans to increase sales in Japan by strengthening core
brands, especially for its lemon-based and soup products. Overseas, it will leverage the firstfull-year of operations at its new plant in Malaysia to further establish brand recognition in
Malaysia while also expanding export sales.
The Restaurants business targets higher sales by continuing to renovate existing outlets
and opening new stores with a focus on its mainstay Ginza Lion and Yebisu Bar formats.
The business will continue its efforts to firmly establish the Ginza Lion brand in Singapore asa first step in spreading Japan’s beer hall culture in the region. It also is considering
expanding into neighboring countries.

15

The Real Estate business plans to expand rental revenues on a recovery in theoccupancy rate at Yebisu Garden Place, which saw a temporary decline in its occupancy
rate following the departure of a major tenant upon lease expiration in 2014. The firstfull-year of operations at Ebisu First Square will also contribute to higher rental revenues in2015. The Real Estate business also aims to raise occupancy rates and rent levels at otherexisting properties.
We expect the above plans of our various businesses will produce consolidated net salesof ¥545.7 billion in 2015, for growth of ¥26.9 billion, or 5%, over our 2014 result.

Operating Income
We expect the Japanese Alcoholic Beverage business will see its profit decline despite
growth in sales in 2015. We expect profit to be curtailed by the higher costs of raw
ingredients and materials resulting from a weak yen and by aggressive spending tostrengthen our brands. The International business is expected to achieve profit growth on
the back of higher sales in the North American and Vietnam beer markets as we continue toinvest to strengthen the Sapporo brand in these markets. The Food & Soft Drinks businessis expected to achieve profit growth as it expands sales in overseas markets while reducing
costs at its Japan business. The Restaurants business should also achieve profit growth, as
it continues to implement measures to raise profitability while also endeavoring to expand
sales. Finally, operating income at the Real Estate business should return to a growthtrajectory in 2015 on a recovery in the occupancy rate at Yebisu Garden Place and afull-year of rental income from Ebisu First Square.
Overall, we forecast consolidated operating income in 2015 will reach ¥16.3 billion, an
increase of ¥1.5 billion, or 11%, over 2014.

Ordinary Income
We forecast consolidated ordinary income of ¥15.2 billion, an increase of ¥0.6 billion, or
4%, from the 2014 result.

Net Income
We expect consolidated net income in 2015 of ¥8.0 billion, a strong improvement over the¥0.3 billion net income posted in 2014. This forecast takes into account the net impact of
expected gains on the sale of fixed assets and losses on the disposal of the same.
The 2015 outlook for each segment is outlined below.

16

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

Operating income

2015

2015
2014

forecast% change

3.0

10,206

9,500

(6.9)

67,800

36.5

172

1,000

478.2

133,439

133,700

0.2

121

700

477.7

Restaurants

26,35527,200

3.2

292

900

208.2

Real EstateBusiness

21,50920,800

(3.3)

7,695

7,900

2.7

Japanese
Alcoholic
Beverages
International
Business
Food &
Soft Drinks

2014

forecast

281,819

290,200

49,672% change

Japanese Alcoholic Beverages
We expect the operating environment for our Japanese Alcoholic Beverages business toremain challenging owing to shrinking of the drinking population and the need to respond toincreasing diversity in consumer preferences and the venues where our products are soldand consumed.
The Japanese Alcoholic Beverage business will strive to meet these challenges byimplementing measures to realize the vision of “seek No. 1 by accumulating one-of-a-kindproducts” while also adhering to the campaign slogan “Bringing more cheer to your‘Cheers’!” Through these efforts, the business aims to continue providing customers with thekind of value only Sapporo can offer, which it believes will lead to continued growth in sales
and profits.
The beer and beer-type beverages business will endeavor to further enhance the value ofcore brands as it aims for a fourth straight year of sales volume growth. The business willconcentrate management resources on its core brands—Yebisu, Sapporo Draft Beer Black
Label, Mugi to Hop The Gold, and Goku Zero. It will also enter the growing craft beer market.
With a new goal of “Crafting the beer culture,” we plan to build a new business with a new
business model that will create unprecedented value. We plan to market new products thatwill fully leverage our proprietary brewing technology and commitment to using only thehighest quality raw materials.
The RTD* business will seek to match its success with Sapporo Otoko Ume Sour anddevelop a growing lineup of new collaboration RTD cocktails that offer consumers
unmatched value.
Our wine business will continue its “Pursuit of the highest quality” by adding new products
to its premium Grande Polaire series of wines made entirely from domestic-grown grapes.
The business will also expand its offerings of imported wines with new products that meetcustomer demand in the growing mid- to upper-range of the price scale. At the same time,17

we will continue our efforts to bring consumers wines that can be enjoyed casually by
expanding sales of the Polaire Sangria Rico series and our barreled Polestar sparkling wine
for the commercial-use market.
The shochu business will endeavor to expand sales of its popular blended shochu, Imo
Shochu Kokuimo, as well as its honkaku (authentic single distillation) shochus Waramugi
and Karari Imo by proposing their consumption with soda. We also plan to create a newseries of plum wines (umeshu) with added functionality, centered on our San-shu no Zeitaku
Porifenōru Aka Umeshu.
In the western spirits business, we will focus sales efforts on such world-famous brands
as Bacardi, the world’s best-selling rum in both sales volume and value, as well as Bombay
Sapphire, Dewar’s, and Martini. In particular, we look forward to further strengthening salesof our popular Bacardi Mojito cocktails.
The Japanese Alcoholic Beverages business as a whole will strive to achieve its profit
targets despite higher costs of raw ingredients and materials caused by yen depreciation byeffectively and flexibly controlling marketing expenses while continuing to enhance brandvalues and by cutting other costs wherever possible.
* RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-likebeverages that can be consumed as is immediately after opening.

International Business
In North America, the US economy has returned to a moderate growth pace amid
improving employment conditions and a buoyant stock market. However, concerns about aninterest rate hike from the Fed and the impact of falling crude oil prices on the Canadian
economy cloud the economic outlook in North America. We therefore look for overall
demand in the North American beer market to remain largely flat in 2015. Meanwhile, we
expect the Asian beer market to remain on a solid growth track, supported by a growing
population and rather stable economic growth.
Under such circumstances, our International business will strive to expand sales of its
premium brands including the Sapporo brand in North America and Southeast Asia, the tworegions where the business is concentrating its resources and efforts, and establish its own
position.
In Canada, SLEEMAN BREWERIES will continue to promote its core premium brands by
aggressively investing in marketing, including the airing of TV commercials and sponsorshipof a variety of outdoor events, as it seeks to maintain and enhance its brand values. The
Canadian subsidiary also plans to increase sales staff in areas where it hopes to increase
sales of value-brand beers. Through such efforts, SLEEMAN aims to achieve growth inoverall sales volume for its premium and value brands that exceeds total demand growth.
In the United States, Sapporo USA also aims for unit sales growth in excess of total
demand growth. While continuing to target the Japanese-American market segment, the US
subsidiary will redouble its efforts to expand sales to the wider Asian-American and general
population segments of the US beer market. In the North American soft drinks market, we

18

aim to expand sales and improve profits by maximizing the synergies of our two local
subsidiaries, Silver Springs Citrus and Country Pure Foods. Country Pure Foods has its
strength in the commercial-use soft drinks market and we will leverage its businessfoundation to bolster our regional business.
Outside of North America, we aim to boost sales by building our business in growthmarkets such as Southeast Asia. We also will be on the lookout for opportunities to moveinto new markets that will help us strengthen the foundations of our International businessand further expand its operations. In Vietnam, we will continue efforts to establish the
Sapporo brand supported by effective and efficient investing on marketing and sales
activities with clearly defined targets. We expect such efforts will help expand sales andimprove the profitability of our local business. In South Korea, we will strive to accelerate thegrowth in sales of beers in the household and commercial markets by taking advantage ofthe sales network of our local partner. In Oceania, we will continue efforts to expand sales
channels for Sapporo brand products with cooperation from local partners with which wehave brewing licensing agreements. Lastly, in the Singapore market, we are expanding
sales channels in the household and commercial markets in a cooperative effort with our
local subsidiary.

Food & Soft Drinks
Japan’s soft drinks industry has shrugged off the impact of the consumption tax hike but
continues to face challenges boosting demand as consumers remain highly price conscious.
In addition, we expect the weak yen and higher prices of major raw materials to push up
costs. Overall, the operating environment is likely to remain severe.
In response, our domestic food and soft drinks business will redouble its efforts tothoroughly carry out low-cost operations as it aims to build a business structure capable ofgenerating stable profits leading to future growth. Guided by a vision for “continually creating
new delicious products that enrich and brighten people’s everyday lives,” the business willdraw up and carry out marketing plans for each product category and brand that thoroughlyreflect the customer viewpoint.
The domestic food and soft drinks business will implement sales promotion measuresappropriate to each of its existing soft drink brands, including Aromax canned coffee, Ribbon,
Gabunomi, and the relatively new Green Shower, a nonsweetened carbonated water drink
introduced in April 2014. In the lemon and natural foods category, we plan to launch apremium version of our mainstay Pokka Lemon 100 as part of our efforts to expand sales of
products used as seasonings and in beverages. We also will aggressively develop new
product concepts. We will leverage customers' appreciation of the value offered by our core
brand Kireto Lemon to develop new soft drink products that further demonstrate our position
as the leader in lemon juice-based products. In the soup and related foods category, which
has been turning in strong performances, we plan to strengthen the Jikkuri Kotokoto soup
lineup and strengthen the Kongari Pan brand by offering new, improved flavors. We will also
continue our aggressive new product development program as we seek to bring new value

19

to the instant soup market. In the commercial-use products category, we will parlay ourgroup synergies to expand sales in all market segments, from Pokka Lemon and ouralcoholic-beverage mixers to powdered teas and soups.
In this segment’s domestic restaurants business, we will redouble our efforts to enhance
the brand value and accelerate expansion of the Café de Crié chain, as we continue to carryout plans drawn up in celebration of the chain’s 20th anniversary in November 2014.
The overseas soft drinks business expects to see stiffer competition in its Southeast Asianmarkets. In response, it plans to maintain its leading share of its core Singapore market for
tea drinks and expand sales in new product categories. It also aims to expand export sales
by prioritizing target markets and proposing products that are best fits for each market.
While raising capacity utilization at our new plant in Malaysia, which started production in2014, we will pursue cost reductions and strengthen supply chain management as we strive
to build a platform for future growth.

Restaurants
Japan’s restaurant industry is expected to continue to face a difficult operating
environment, with increasing external competition from retailers adding to the challenges
presented by rising prices caused by the yen’s weakness and higher labor costs. In thisenvironment, our Restaurants business will emphasize elevating service levels in a return tobasics focused on “delivering 100% satisfaction to customers.” Our restaurants also remaincommitted to practices designed to ensure the provision of safe and sound food tocustomers.
We look forward to winning new loyal customers and increasing customer traffic byexpanding the number of customers holding our new membership reward point card, Club
Lion Card, and by creating restaurants with appealing ambience that adds to customer
satisfaction.
New store openings will focus on our two mainstay formats, Ginza Lion and Yebisu Bar.
We also will seek to improve sales and profitability at existing outlets through appealing
store makeovers.
Overseas, we will continue efforts to establish the Ginza Lion brand in Singapore. We also
will begin planning our entry into neighboring countries.

Real Estate
Japan’s real estate industry expects to see further improvement in its operating
environment in 2015, including lower vacancy rates and higher rent levels in the Greater
Tokyo office leasing market. However, the supply of new office buildings is expected toincrease somewhat, which will likely moderate the increase in rent levels. On the other hand,a reduction to the corporate tax rate and other factors are expected to boost corporate
economic activity and increase demand for office space.

20

In this environment, our Real Estate business will endeavor to strengthen its
competitiveness on all fronts as it continues to seek to raise occupancy rates and rent levels
at its leasing properties.
At our flagship property, Yebisu Garden Place, the occupancy rate is improving after the
temporary decline following the exit of a major tenant at the end of its lease contract in May
2014. We will continue efforts to add value in all of the property's areas, starting with thecommercial-use areas, as we seek to enhance convenience features across the entire
property and further elevate its brand value. In addition, we remain committed to measures,
including disaster-response measures, that are intended to enhance safety and security at
the property. Finally, we look forward to a solid profit contribution from Ebisu First Square,
now in its first full year of operation after opening its doors in September 2014.
The segment’s real estate development business is making steady progress with plans forredevelopment of our Ginza 5-chome property adjacent to the Ginza 4-chome intersection.
The aim is to develop a property that becomes the talk of the town and a center of activity
befitting a Ginza landmark.
We also will continue the practice of regularly reviewing our property portfolio with a viewto raising the value of our Real Estate business.

21

２. Review of Consolidated Financial Condition(a) Consolidated Financial Condition
Consolidated total assets as of December 31, 2014, totaled ¥625.4 billion, a ¥8.6 billion
increase from December 31, 2013. The gain is attributable to increases in machinery andvehicles, and investment securities, partially offset by a decrease in intangible assets owing
to goodwill amortization.
Consolidated total liabilities totaled ¥465.4 billion, a ¥4.0 billion increase from December 31,
2013, primarily owing to an increase in long-term bank loans and current portion of bonds,
which outweighed a decline in short-term bank loans.
Consolidated net assets totaled ¥160.0 billion, up ¥4.6 billion from December 31, 2013.
Asset growth was supported by increases in unrealized holding gain on securities and in theforeign currency translation adjustment account, partly offset by dividend payments.

(b) Consolidated Cash Flows
Cash and cash equivalents (collectively, “cash”) totaled ¥9.7 billion as of December 31,
2014, a ¥1.7 billion or 15% decline from December 31, 2013.
The following is an explanation of consolidated cash flows by category in 2014 and thefactors that affected cash flows in each category.

Cash flows from operating activities
Operating activities provided net cash of ¥22.2 billion, a ¥10.5 billion or 32% decline over2013. Major sources of operating cash flow included ¥24.4 billion from depreciation andamortization, ¥3.7 billion from goodwill amortization, and a ¥4.2 billion increase in accrued
consumption taxes. Major uses included a ¥1.4 billion increase in inventories, ¥2.5 billion ininterest paid, and ¥7.6 billion in corporate income taxes.
Cash flows from investing activities
Investing activities used net cash of ¥17.2 billion, an increase of ¥3.9 billion, or 30%,
compared with 2013. Major investment outflows included purchases of property, plant andequipment of ¥17.3 billion.
Cash flows from financing activities
Financing activities used net cash of ¥7.3 billion, a ¥11.8 billion or 62% decline over 2013.
Major inflows included ¥25.6 billion from long-term bank loans and ¥9.9 billion from theissuance of corporate bonds. These inflows were more than offset by outflows, which
included ¥38.4 billion for the repayment of long-term bank loans, ¥3.3 billion for the
repayment of finance lease obligations, and ¥2.7 billion in cash dividends paid.

22

Cash Flow Indicators
As of December 31,

Equity ratio (%)
Equity ratio based onmarket capitalization (%)

2010

2011

2012

2013

2014

25.3

22.4

22.1

24.6

25.0

29.1

20.7

18.3

28.0

31.9

7.8

11.8

10.2

8.8

13.0

Cash flow tointerest-bearing debt
(years)Interest coverage ratio

7.6
6.2
8.4
11.9
8.9
(%)
Equity ratio: Total net assets / Total assets
Equity ratio based on market capitalization: Market capitalization / Total assets
Cash flow to interest-bearing debt: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest expense
Notes:
1. All of the above indicators are calculated based on consolidated financial
statement data.
2. Market capitalization is calculated based on the number of shares issued andoutstanding, excluding treasury stock.
3. “Cash flow” is operating cash flow.
4. Of the debt carried on the consolidated balance sheet, interest-bearing debt is total
debt on which interest is currently payable.
3. Dividend Policy and Dividends for 2014 and 2015
Providing fair returns to shareholders is a key management policy of the Sapporo Group.
Our basic policy is to pay stable dividends to the extent permitted by our operating
performance and financial condition.
In accordance with the above policy, we plan to pay annual dividends of ¥7 per share for2014, the same dividend we paid in 2013.
In 2015, we plan to maintain the annual dividend at ¥7 per share, as we steadily carry out
our management plan while also making strategic investments and strengthening ourfinancial foundation.

Dividends for 2014 and 2015 (yen per share)
InterimYear-end

Total

2014

0.00

7.0

7.0

2015

0.00

7.0

7.0

23

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

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

24

December 31, 2013

December 31, 2014

AmountAmount11,55287,14820,832
13,552
4,172
10,306(228)
147,336

9,781
89,24522,431
14,1085,000
15,971(165)
156,372

390,326(212,741)
177,585
218,275(176,691)
41,583
115,056
18,242(8,921)
9,320
5,668
19,515(15,847)
3,667
352,882

387,644(211,317)
176,327
224,180(180,302)
43,878115,290
16,826(7,904)
8,922
2,617
19,262(15,701)
3,560
350,597

34,418
7,566
41,98529,966
6,025
35,991

51,221
9,544
931
14,177(1,326)74,548469,416
616,752

59,9689,150
1,090
13,572(1,305)82,477
469,066
625,439

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

25

December 31, 2013

December 31, 2014

AmountAmount35,902
63,64225,0003,384
33,7003,837
2,090
10,82448,925
227,308

35,534
31,44630,00012,0003,067
33,602
724
2,115
9,650
53,629211,771

52,000107,185
6,298
17,805
5,907
32,423
12,457
234,077
461,386

50,000124,110
6,101
22,617
4,510
32,336
13,986
253,662
465,434

53,88645,91137,409(1,311)
135,896

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

15,4674314
15,786
3,683
155,366
616,752

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

(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 accrued 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 Foreign exchange gains
5 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Other
Total non-operating expenses
Ordinary income
VI Extraordinary gains
1 Gain on sales of property, plant and equipment
2 Gain on sales of investment securities
3 Gain on sales of consolidated subsidiaries
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on sales of property, plant and equipment
3 Loss on impairment of property, plant and equipment
4 Loss on devaluation of investment securities
5 Loss on sales of investment securities
6 Additional liquor tax paid and other
7 Compensation expenses
8 Business structure improvement expenses
Total extraordinary losses
Income before income taxes and minority interests
Income taxes: current
Income taxes: deferred
Total income taxes
Income before minority interests
Minority interests
Net income
Net income before minority interests
Other comprehensive income
Unrealized holding gain on securities
Deferred hedge gains (losses)
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

26

Year ended December 31,
2013
Amount509,834
329,605
180,229(millions of yen)
Year ended December 31,
2014
Amount518,740
336,388
182,352

33,067
21,211
31,406
1,088
3,350
74,760164,884
15,34433,546
22,69132,1871,451
2,968
74,777
167,623
14,728

245
797
99
849
1,226
3,218

229
831
225
576
948
2,811

2,704
728
3,432
15,130

2,399
573
2,973
14,565

61
3,491
3,553

3,528
230
966
4,724

1,158
220
425
59
3
253
2,120
16,562
7,677
(534)
7,143
9,419
(32)
9,451

2,142
108
893
11
0
11,685
1,753
16,595
2,694
1,624
975
2,599
94
(245)
340

9,419

94

10,3448
4,567
14,92024,339

4,645
(5)
2,548
7,188
7,283

23,832
507

7,248
34

(3) Statements of Changes in Shareholders' Equity(millions of yen)

Shareholders’ Equity
Common stock
Balance at beginning of year
Balance at end of period
Capital surplus
Balance at beginning of year
Changes during period
Disposition of treasury stock
Total changes during period
Balance at end of period
Retained earnings
Balance at beginning of year
Changes during period
Cash dividends
Net income
Changes in scope of consolidation /Changes in scope of associates accounted for using equity method
Total changes during period
Balance at end of period
Treasury stock
Balance at beginning of year
Changes during period
Purchase of treasury stock
Disposition of treasury stock
Total changes during period
Balance at end of period
Total shareholders' equity
Balance at beginning of year
Changes during period
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Changes in scope of consolidation /Changes in scope of associates accounted for using equity method
Total changes during period
Balance at end of period
Total accumulated other comprehensive income
Unrealized holding gain on securities
Balance at beginning of year
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

27

Year ended December 31,
2013
AmountYear ended December 31,
2014
Amount53,88653,88653,88653,88646,30845,911(396)(396)
45,9111
145,912

31,39337,409(2,740)9,451(2,731)
340

(695)

(104)

6,015
37,409(2,495)34,913(1,199)(1,311)(1,024)912(111)(1,311)

(239)
5
(233)
(1,544)130,389

135,896(2,740)
9,451
1,024
516

(2,731)
340
(239)
6

(695)

(104)

5,507
135,896(2,728)133,168

5,122

15,467

10,344
10,344
15,467

4,645
4,645
20,112

Deferred hedge gains (losses)
Balance at beginning of year
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Foreign currency translation adjustments
Balance at beginning of year
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Remeasurements of defined benefit plans
Balance at beginning of year
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total accumulated other comprehensive income
Balance at beginning of year
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Minority interests
Balance at beginning of year
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total net assets
Balance at beginning of year
Changes during period
Cash dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Changes in scope of consolidation /Changes in scope of associates accounted for using equity method
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

28

9

4

(4)
(4)
4

(4)
(4)
(0)

(3,725)

314

4,040
4,040
314

2,267
2,267
2,582

-

-

-

440
440
440

1,406

15,786

14,38014,38015,786

7,349
7,349
23,135

3,151

3,683

532
532
3,683

17
17
3,700

134,946

155,366(2,740)9,451(1,024)516(2,731)
340
(239)
6

(695)

(104)

14,912
20,419155,366

7,366
4,638
160,004

(4) Consolidated Statements of Cash Flows(millions of yen)
Year ended December 31,
2014
AmountYear ended December 31,
2013
AmountI Cash flows from operating activities
1 Income before income taxes and minority interests
2 Depreciation and amortization
3 Loss on impairment of property, plant and equipment
4 Amortization of goodwill
5 Increase (decrease) in employees’ retirement benefits
6 Increase (decrease) in net defined benefit liability
7 Increase (decrease) in allowance for doubtful receivables
8 Interest and dividend income
9 Interest expense
10 (Gain) loss on sales of fixed assets
11 (Gain) loss on sales and disposal of fixed assets
12 (Gain) loss on sales of investment securities
13 (Gain) loss on revaluation of investment securities
14 (Increase) decrease in notes and accounts receivable - trade
15 (Increase) decrease in inventories
16 Increase (decrease) in notes and accounts payable - trade
17 Increase (decrease) in accrued consumption taxes
18 Increase (decrease) in liquor taxes payable
19 Increase (decrease) in deposits received
20 Increase (decrease) in other current liabilities
21 Other
Sub total
22 Interest and dividends received
23 Interest paid
24 Income taxes paid
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Purchases of property, plant and equipment
2 Proceeds from sales of property, plant and equipment
3 Purchases of intangibles
4 Payments for purchases of investment securities
5 Proceeds from redemption and sale of investment securities
6 Payments for purchase of affiliates securities
7 Payments for sales of investments in subsidiaries
resulting in change in scope of consolidation
8 Payments for acquisition of associates accounted for using equity method
9 Payments of long-term loans receivable
10 Collection of long-term loans receivable
11 OtherNet cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Increase (decrease) in commercial paper
3 Proceeds from long-term bank loans
4 Repayment of long-term bank loans
5 Proceeds from issuance of bonds
6 Redemption of bonds
7 Cash dividends paid
8 Cash dividends paid to minority shareholders
9 Repayment of finance lease obligations
10 Purchase of treasury stock
11 Proceeds from sale of treasury stock
Net cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of period
Ⅶ Increase( decrease) in cash and cash equivalents from newly consolidated
subsidiaries
Ⅷ Increase in cash and cash equivalents resulting from merger
Ⅸ Cash and cash equivalents at end of period

29

16,562
25,058425
3,985(1,474)(114)(1,043)
2,751
(61)
1,379
(3,487)59(2,314)
108
2,225
335
194
(1,653)2,152(2,594)42,493
1,055(2,772)(7,915)32,861

2,694
24,481
893
3,764
(615)
(87)
(1,060)2,399(3,528)
2,251
(230)
11
(1,193)(1,401)
(929)
4,211
(164)
(1,162)
1,024
52
31,413
1,078(2,517)(7,689)22,284(12,243)
171(1,525)
(346)
4,435
(264)

(17,312)
6,383(1,820)(1,397)
392
(91)

(286)
(232)
440
(3,417)(13,268)

(25)
(137)
227
(3,447)(17,229)(9,362)(22,000)
32,249(21,964)
19,920(10,000)(2,737)(16)(4,217)(1,024)
6(19,147)
607
1,053
9,725

(3,337)5,000
25,630(38,401)
9,960(2,734)(14)(3,321)(94)
6(7,307)426(1,826)
11,518

740

9

-

46

11,5189,748

(5) Notes on the Going-concern Assumption
Not applicable(6) Changes in Accounting Policy
Accounting Standards for Retirement Benefits
The Company adopted the Accounting Standard for Retirement Benefits (ASBJ Statement No.26, May 17, 2012) and the Guidance on
Accounting Standard for Retirement Benefits (ASBJ Guidance No.25, May 17, 2012) from the end of the fiscal year ended December 31, 2014
excluding the main clauses of paragraph 35 of the ASBJ Statement No.26 and the paragraph 67 of the ASBJ Guidance No.25. In accordancewith this, the Company changed the accounting method to recognize the difference between retirement benefit obligations and plan assets as“net defined benefit liability” and recorded unrecognized actuarial gains and losses, unrecognized past service costs, and unrecognized net
retirement benefit obligation at transition in net defined benefit liability.
At the adoption of these accounting standards, the Company followed the transitional treatments stipulated in paragraph 37 of the ASBJ
Statement No.26. The effect from this change was recorded in “remeasurements of defined benefit plans” under accumulated othercomprehensive income at the end of the fiscal year under review.
As a result, at the end of the fiscal year ended December 31, 2014, ¥4,510 million of net defined benefit liability was recorded, andaccumulated other comprehensive income was ¥440 million higher.
Effects on per share information are presented in the relevant sections of this document.

(7).Segment Information
1. Overview of reportable segments

The Company’s reportable segments are components of the Sapporo Group about which separate financial information is available. 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 two business domains, "creation of value in food" and"creation of comfortable surroundings." Under Sapporo Holdings, a pure holding company, each group company formulates development plans andstrategies for its products, services, and sales markets and conducts business accordingly.
The Group's businesses are therefore segmented mainly based on the products, services, and sales markets of Group companies and their affiliatedcompanies. The Company's five reportable segments are Japanese Alcoholic Beverages, International, Food & Soft Drinks, Restaurants, and Real
Estate.
The Japanese Alcoholic Beverages segment produces and sells alcoholic beverages in Japan, while the international segment produces and sells
alcoholic beverages and soft drinks overseas.
The Food & Soft Drinks segment produces and sells foods and soft drinks.
The Restaurants segment operates restaurants of various styles.
The Real Estate segment's activities include leasing and development of real estate.

2. Calculation methods for sales, income (or loss), assets and other items
Accounting methods applied in reportable segment by business largely correspond to that presented under "The Basis for Preparation ofConsolidated Financial Statements" and "Change in Accounting methods." Reportable segment income is based on operating income. Intersegment
sales or transfers is based on market price. Intra-group sales and transfers are calculated as if the transactions were to third parties based on market
prices.

30

3. Sales, income (or loss), assets, and other items(millions of yen)
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)
Japanese
Food &
International
Restaurants Real Estate
Total
AlcoholicSoft Drinks
Beverages
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Increase in property, plant and equipment, andintangible assets

274,909
2,533
277,442
9,901
212,664

48,21583
48,2981,208
54,815

130,671309
130,981(1,483)
102,752

26,827
026,827415
11,991

22,767
2,667
25,435
8,685
215,874

503,391
5,594
508,986
18,727598,096

8,683

1,855

6,776

643

4,412

22,371

2,123

2,218

8,516

813

4,467

18,139Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)
Total

Other *1
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other

Adjustment

Amounts reported on thestatements of income*2

6,442
19,54525,988231
7,466

509,834
25,140534,975
18,959605,563(25,140)(25,140)(3,614)
11,189509,834
509,834
15,344
616,75285

22,4562,601

25,058156

18,296

1,169

19,465

Depreciation and amortization
Increase in property, plant and equipment, andintangible assets(millions of yen)
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)
Japanese
Alcoholic
Beverages
Net sales(1) Operating revenues(2) Intra-group sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Increase in property, plant and equipment, andintangible assets

International

Food &
Soft Drinks

281,819
2,528
284,348
10,206
220,462

49,672
95
49,767172
57,601

133,439314
133,753
121
102,761

26,355
3
26,359292
12,24721,5092,754
24,264
7,695
214,389

512,796
5,696
518,493
18,488607,463

8,013

2,103

6,785

668

4,231

21,802

3,708

1,948

7,400

1,275

7,189

21,523

Restaurants Real EstateYear ended December 31, 2014 (January 1, 2014 – December 31, 2014)

Other *1

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

Total

Adjustment

Amounts reported on thestatements of income*2

5,944
19,47725,421
183
7,135

518,740
25,174543,914
18,672
614,598

25,174(25,174)(3,943)
10,840518,740
518,740
14,728625,43975
30

21,87821,553

2,603
1,248

24,48122,802(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.
31

Total

4. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement ofincome (information on differences)(millions of yen)
December 31, 2013
December 31, 2014
Segment income (loss)
Total for reportable segments
18,72718,488231
183
Income(loss) from other segments
Unallocated corporate costs*(3,309)(3,798)(305)(145)
Intra-segment sales
Operating income on the statement
15,344
14,728
Note: Unallocated corporate costs consist mainly of SGA that is not attributable to reportable segments.

Segment income (loss)
Total for reportable segments
Assets of other segments(millions of yen)
December 31, 2014

December 31, 2013
598,096
7,466(9,259)20,448

Unallocated corporate assets*

607,463
7,135(10,932)
21,772

Total assets on the consolidated financial statements
616,752
625,439
Note: Unallocated corporate assets do not belong to reportable segments and consist mainly of working funds (cash and cash
equivalents and marketable securities), long-term investments, and assets of general administration divisions.

5. Related Information
1. Information by product and service
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)
Information by product and service is omitted here, as the same information is disclosed elsewhere.
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)
Information by product and service is omitted here, as the same information is disclosed elsewhere.
2. Segment Information by Geographic Area
(1) Net sales(millions of yen)

Year ended December 31, 2013(January 1, 2013 – December 31, 2013)
Japan
437,607

America
45,843

Asia
21,927

Other
4,457

Total
509,834

Year ended December 31, 2014(January 1, 2014 – December 31, 2014)
Japan
441,477

America
46,751

Asia
24,904

Other
5,606

Total
518,740(2) Property, plant and equipment
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)
Information has been omitted as total fixed assets held in Japan constituted more than 90% of that shown on the balance sheets.
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)
Information has been omitted as total fixed assets held in Japan constituted more than 90% of that shown on the balance sheets.
(3) Information by major customer
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)(millions of yen)Company NameNet Sales

KOKUBU & CO.,LTD.

63,858Segment
Japanese Alcoholic Beverages
Food & Soft Drinks

Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)(millions of yen)Company NameNet Sales

KOKUBU & CO.,LTD.

64,788Segment
Japanese Alcoholic Beverages
Food & Soft Drinks

32

6. Impairment loss on fixed assets or goodwill by reportable segment
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)(millions of yen)
Generalcorporate andintercompany
eliminations

Reportable segments

Impairment loss

Japanese
Alcoholic
Beverages
17

Other
Food &
Soft Drinks

International
227

Restaurants

Real Estate

126

16

38

Total
425

-

Total

-

425

Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages
Impairment loss

Generalcorporate andintercompany
eliminations

Other
Food &
Soft Drinks

International

74-

Restaurants

595

Real Estate

223

Total
-

893

-

Total

-

893

7. Amortization for and unamortized balance of goodwill
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

Generalcorporate andintercompany
eliminations

Other
International

Food &
Soft Drinks

Restaurants

Real Estate

Total

Total

Amortization

-

1,239

2,728

-

17

3,985

-

-

3,985

Unamortized
Balance as ofDec. 31, 2013-

11,09823,320--34,418--34,418Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)(millions of yen)
Generalcorporate andintercompany
eliminations

Reportable segments
Japanese
Alcoholic
Beverages

Other
International

Food &
Soft Drinks

Restaurants

Real Estate

Total

Total

Amortization

1

1,256

2,506

-

-

3,764

-

-

3,764

Unamortized
Balance as ofDec. 31, 2014

-

9,999

19,966--29,966--29,966

8. Gain on negative goodwill by reportable segment
Year ended December 31, 2013 (January 1, 2013 – December 31, 2013)
Not applicableYear ended December 31, 2014 (January 1, 2014 – December 31, 2014)
Not applicable33

(8) Property Leasing
The Sapporo Group holds office buildings (including land) for lease in the Tokyo
metropolitan and other areas. Net leasing income on those properties in the year ended
December 31, 2013 was ¥7,087 million (leasing income was mainly recorded as operating
revenues; leasing expenses were mainly recorded as operating expenses). Net leasing
income on those properties in the year ended December 31, 2014 was ¥6,202 million(leasing income was mainly recorded as operating revenues; leasing expenses were mainly
recorded as operating expenses).
The carrying value of those properties on the consolidated balance sheets, change incarrying value during the years ended December 31, 2013 and 2014, and the total fair value
appear in the following table.
Year ended December 31,
2013
Carrying value on consolidated balance sheets
January 1
Change during the period
December 31
Fair value at December 31(millions of yen)
Year ended December 31,
2014

209,924154
210,078
337,771

Notes:
1. Carrying value on the consolidated balance sheets represents acquisition costs net ofaccumulated depreciation and accumulated impairment loss.
2. The change during the year ended December 31, 2013 comprises increase mainly arisingfrom property acquisitions (¥4,098 million) and decrease mainly due to depreciation (¥3,907
million) and disposal (¥34 million). The change during the year ended December 31,
2014 comprises increase mainly arising from property acquisitions (¥4,572 million) anddecrease mainly due to depreciation (¥3,720 million), sales ((¥2,336 million), disposal (¥788 million).
3. The fair value at December 31 is mainly based on property valuations performed bythird-party real estate appraisers.

34

210,078
ᇞ2,214
207,864
348,237