Financial Results
for the Year Ended December 31, 2015 — Consolidated(Based on Japanese GAAP)
February 10, 2016

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 30, 2016

Filing of annual financial report

March 31, 2016

Commencement of dividend payments

March 31, 2016

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, 2015
(January 1 – December 31, 2015)(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

533,748

2.9

13,950(5.3)

13,211

(9.3)

6,108

%

-

518,740

1.7

14,728(4.0)

14,565(3.7)

340(96.4)

December 31, 2015
Year ended
December 31, 2014
Note: Accumulated other comprehensive income
Year ended December 31, 2015: 7,579 million yen (4.1)%
Year ended December 31, 2014: 7,283 million yen (70.1)%

1Year ended

Net income
per share

Diluted net
income per
share

Return on
equityOrdinary
income tototal assets

Operatingincome tonet sales

Yen

yen

%

%

%

15.68

-

3.9

2.1

2.6

0.87

-

0.2

2.3

2.8

December 31, 2015
Year ended
December 31, 2014
Note: Equity method investment gains
Year ended December 31, 2015: 17 million yen
Year ended December 31, 2014: 225 million yen(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yen

December 31, 2015

620,388

163,82225.5

405.44

December 31, 2014

625,439

160,00425.0

401.17

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, 2015

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

10,399Year ended
December 31, 2014

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

9,748

Note: Shareholders’ equity
December 31, 2015: 157,928 million yen
December 31, 2014: 156,303 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, 2014

—

0.00

—

7.00

7.00

2,727

802.6

1.8

Year ended
December 31, 2015

—

0.00

—

7.00

7.00

2,726

44.6

1.7

Year ending
December 31, 2016
(forecast)

—

0.00

—

7.00

7.00

26.0

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2016
(January 1 – December 31, 2016)(Percentage figures represent year-over-year changes)
Net sales

Operating income

Ordinary income

Net

incomeattribute

Net income

to owners of the parent

per share

million yen%

million yen%

million yen%

million yen%

Yen

565,400

5.9

21,10051.3

20,20052.9

10,500

71.9

26.96

Year ending
December 31,
2016
Note: Earnings forecasts for the six months ending June 30, 2016, 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(3) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):
December 31, 2015: 393,971,493 shares
December 31, 2014: 393,971,493 shares
2) Number of shares held in treasury at end of period:
December 31, 2015: 4,451,525 shares
December 31, 2014: 4,348,456 shares
3) Average number of outstanding share during the period:
Year ended December 31, 2015: 389,586,096 sharesYear ended December 31, 2014: 389,854,319 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, 2016” on page 14.

4

1. Analysis of Operating Results(a) Review of the fiscal year ended December 31, 2015
① Overview
Millions of yen, except percentages
Net sales

Operating income

Ordinary income

Net income

2015

533,748

13,95013,211

6,108

2014

518,740

14,72814,565

340

2.9

(5.3)

(9.3)

1696.6

Change (%)

In 2015, the Japanese economy remained on a moderate recovery track in the first half but
experienced more ups and downs in the second half, reflecting the impact of economic
slowdowns in China and other countries. Personal consumption picked up along with thebroader economy but overall continued to lack real strength. Conditions in the industries inwhich SAPPORO Group companies operate were as follows.
The domestic alcoholic beverage industry as well as the food and soft drinks industry
were adversely affected by unseasonable summer weather and a warm start to winter. In
the real estate industry, vacancy rates and rents in the Greater Tokyo office leasing market
both stayed on moderate recovery tracks throughout the year. Overseas, the North
American beer market was generally flat, but the Asian market continued the steady
expansion seen in recent years.
In this environment, the SAPPORO Group accelerated the implementation of growthstrategies based on the Sapporo Group Management Plan 2015–2016, as it endeavored todisplay its special characteristics as a “manufacturer of food products” and make progress
toward the financial targets for 2016.
The Japanese Alcoholic Beverage business continued to invest in core brands. We
launched a new version of Sapporo Draft Beer Black Label, one of our core beer brands,
and as a result expanded its presence in the household-use market. In non-beer growthareas, we continued to build a highly diversified product lineup as we started domestic
marketing of one of the world’s leading wine brands.
The International business continued to strengthen its position in North America’s
premium beer market segment, with aggressive marketing campaigns carried out by
SLEEMAN BREWERIES in Canada and by Sapporo USA. Efforts to expand our presence
and sales in the US soft drinks market included the addition of Country Pure Foods, Inc. as aconsolidated subsidiary. In Vietnam, we continued to invest in marketing aimed at firmly
establishing the Sapporo brand in the local market, and in November we released a newversion of bottled and canned products.

5

The Food & Soft Drinks business continued to tackle key management initiatives inJapan—strengthen marketing and lower costs—while concentrating investment on core
brands, especially our lemon-based and soup products, two areas where we have a strong
competitive edge. Overseas, we continued strengthening our beverage business, with afocus on Southeast Asia by establishing a new joint venture to manufacture and sell softdrinks in Indonesia. We also expanded our business scope by entering the soymilk
business.
The Restaurants business strengthened its Japan operations by opening new outlets,with the focus on our two core chains, Ginza Lion and Yebisu Bar. We also continued efforts
to improve profitability by closing or changing the format of a number of unprofitable outlets.
Overseas, we continued expanding our presence in Singapore by opening new stores andchanging formats of existing stores to better suit the local market.
The Real Estate business maintained high occupancy rates at its rental properties. We
continued to raise the value of our core property, Yebisu Garden Place to make the area
more attractive, by renovating the property’s dining floor. We made steady progress with the
Ginza 5-chome Redevelopment Project and are on pace to complete construction and open
the facility, which we have named GINZA PLACE, in summer 2016.
The efforts outlined above and explained in more detail later in this report enabled the
Sapporo Group to achieve the consolidated results presented below.

Net Sales
In 2015, the Sapporo Group posted consolidated net sales of ¥533.7 billion, ¥15.0 billion, or
3%, more than in 2014. The Japanese Alcoholic Beverage business saw shipments of its
beer-type beverages decline year over year. The International business, however, achieveda sizable increase in sales on expanded shipments of beer products in North America andVietnam, with an additional boost coming from newly consolidated Country Pure Foods, Inc.
The Food & Soft Drinks business achieved higher sales volumes for its food and beverage
products in Japan and for its beverages in overseas markets. In addition to volume
increases, sales at the International business and the Food & Soft Drinks business were
further bolstered by the weak yen’s favorable impact on currency translations. The Real
Estate business, however, saw sales decline owing to the sales of its entire equity stake in
Sapporo Sports Plaza and several rental properties at the end of the previous fiscal year.

Operating Income
Consolidated operating income totaled ¥13.9 billion, a year-over-year decline of ¥0.7 billion,
or 5%, owing to lower profits at our core Japanese Alcoholic Beverage business, where a6decline in sales of beer-type products outweighed the positive impact of further cuts to fixed
costs. Results were more positive at our other businesses. The Food & Soft Drinks businessposted higher profits than in the previous year, thanks to increased sales of its food andbeverages products in Japan and its beverages in overseas markets. The Restaurants
business achieved profit growth as it boosted same-store sales and closed unprofitable
outlets. Lastly, the Real Estate business also achieved profit growth, thanks to an increase
in rental income from core properties.

Ordinary Income
Reflecting the drop in consolidated operating income and the increase in foreign exchange
losses resulting from the weaker yen, consolidated ordinary income fell ¥1.3 billion or 9%
year-over-year to ¥13.2 billion.

Net Income
Consolidated net income in 2015 totaled ¥6.1 billion, ¥5.7 billion more than in 2014. The
large gain included a ¥7.4 billion extraordinary gain on sales of property, plant andequipment, which helped to offset an impairment loss of ¥5.9 billion and a ¥1.7 billion loss
on devaluation of investment securities.

Segment information is outlined below.

7

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

Operating income
%

%

2014

2015

change2014

2015

change281,031273,651(2.6)

10,192

8,635(15.3)

49,67270,501

41.9

172

154

(10.8)

133,439

135,670

1.7

121

434

258.5

Restaurants

27,14327,004

(0.5)

303

522

72.2

Real EstateBusiness

21,50920,872

(3.0)

7,695

8,281

7.6

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 1%
year over year in 2015, largely due to the negative impact of unseasonable weather during
the summer, the peak season for beer consumption.
Under such market conditions, the Japanese Alcoholic Beverage business continued its
efforts to realize management’s vision of “Seek to be No.1 by accumulating one-of-a-kindproducts” and achieve further growth by constantly providing customers with a unique value
proposal.
In the beer and beer-type beverages category, the April launch of a new version of canned
Sapporo Draft Beer Black Label fueled strong sales of the product for the rest of year,
leading to the first year-over-year increase in overall shipments of the Black Label brand in
21 years. Our core Yebisu brand also fared well, leading to an overall 1% increase indomestic shipments of beers in 2015.
However, sales volumes for our happoshu and new-genre beer offerings declined fromthe previous year’s level, as new-genre beer Mugi to Hop The Gold and our Goku Zerohapposhu faced increasingly intense competition. As a result, shipments of our beer andbeer-type beverages fell about 5% from the previous year’s level.
Sales in the RTD* category also fell from their 2014 level, despite solid performances by
Sapporo Otoko Ume Sour, a mid-to-upper price range product, and the Nectar Sour series.
In the wine category, sales fell below the previous-year level on weak demand fordomestic mass-produced wines. However, shipments of our flagship Japanese wine**
Grande Polaire expanded sharply, as did sales of fine wines＊＊＊, which were bolstered by
the start of sales of Penfolds from Treasury Wine Estates and champagne from Taittinger.

8Sales of western spirits increased in 2015, on solid sales of Bombay Sapphire, Dewar’s,
Martini and the many major international brands.
Our Japanese liquor business enjoyed continued strong sales of Imo Shochu Kokuimo,
Japan’s No. 1 selling＊＊＊＊ blended imo shochu, but the business’ overall sales declined
from the previous year's level.
Overall, our Japanese Alcoholic Beverage business posted sales of ¥273.6 billion (down¥7.3 billion, or 3%, year over year) in 2015. Segment operating income totaled ¥8.6 billion(down ¥1.5 billion, or 15%).
* RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-like beverages that canbe consumed as is immediately after opening.
** Japanese wines are wines that use only grapes grown and harvested in Japan.
＊＊＊

Fine wines are wines priced in the mid- to high-price range (¥1,500 and higher per bottle).

＊＊＊＊

Based on Intage SRI market research on combined blended imo shochu sales in the supermarket,

convenience store, and direct sales channels from January 2013 to November 2015.

International BusinessWe estimate that total demand in the North American beer market in 2015 was largely about
the same as in 2014, with demand in the United States supported by favorable personal
consumption while demand to the north was somewhat weakened by the negative impact offalling crude oil prices on Canada’s resource-dependent economy. The Asian beer market,
meanwhile, continued its upward march, supported by the region’s growing economies andpopulations.
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, which included a key new
investment in the U.S. soft drinks market.
Our Canadian subsidiary SLEEMAN BREWERIES continued its aggressive spending onmarketing of its core premium brands. As a result, its overall beer sales volume (excluding
Sapporo brand beer) increased about 2% year over year. In the U.S. market, Sapporo USA
continued its effort to expand core target customer market from Japanese Americans to thewider Asian-American and general populations. As a result, it achieved a 2% increase in
shipments of Sapporo brand beers. In the U.S. soft drinks business, Silver Springs Citrus
was adversely affected by the persistently high prices of oranges used to produce its juices,
but the addition of Country Pure Foods, Inc. as a consolidated subsidiary in February
strengthened our position in the U.S. drink market.

9In Southeast Asia, we continued efforts to firmly establish the Sapporo brand in Vietnam,with aggressive marketing efforts including large-scale promotional events and theplacement of product displays at the bars and restaurants. In November, we released a newversion of Sapporo Premium Beer in bottles and cans, helping boost sales volumes inVietnam above the previous year’s level despite increased competition in the country’s
premium beer market. In Singapore, we achieved a strong year-on-year growth in sales
volumes, thanks to cooperative efforts with our local subsidiary to expand sales channels tothat country's household market.
Elsewhere in the region, we sharply increased beer sales volumes in South Korea byleveraging our local partner's sales network to strengthen sales to both the household andcommercial markets. In Oceania, our efforts to strengthen sales via licensing agreementswith local brewing partners produced a solid year-over-year gain in beer sales volumes.
The efforts outlined above enabled the International Business to achieve a 13%
year-over-year increase in shipments of Sapporo brand products in overseas markets.
As a result, the International Business posted sales of ¥70.5 billion, up ¥20.8 billion, or
42%, year over year. Operating income, however, fell 11% year over year to ¥0.1 billion.

Food & Soft Drinks
We estimate that overall demand for soft drinks in Japan in 2015 increased 1% over thelevel seen in 2014. We estimate that total demand for lemon-based products (flavorings)
also increased but that demand for instant soups (including soups in a cup) fell back owing
to the impact of rather warm weather in November and December.
In this environment, the Sapporo Group’s Food & Soft Drinks business began its thirdyear of integrated operations as POKKA SAPPORO Food & Beverage Ltd. The subsidiary isconcentrating investments on core brands, with a focus on its soup and lemon-based
product lineups, as it endeavors to strengthen and nurture its various brands.
POKKA SAPPORO’s domestic soft drinks business sharply increased sales of its
lemon-based products, achieving steady gains in sales of its core Kireto Lemon (in bottles)
and creating new markets with the introduction of its new energy drink, ENERGIE. The
coffee drink category rebounded from a downtrend and achieved a solid sales volume
growth. In other categories, POKKA SAPPORO introduced Nippon Oolong, an oolong tea
made from domestic tea leaves. The new product achieved its annual sales targets in eightmonths and was a recipient of an Excellent Product award in the food industry products
category of the 2015 Food Action Nippon Award contest. Another new product receiving
favorable reviews and recording strong sales in 2015 is Tsubu Tappuri Zeitaku Mikan, apulp-rich juice drink made from Japanese tangerines. The success of these new products,10

the latest in the long line of POKKA SAPPORO’s distinctive and unique drink products,
contributed to a 2% year-on-year increase in domestic shipments of POKKA SAPPORO’s
soft drink products.
At POKKA SAPPORO’s domestic food business, the rising price of lemons forced thesubsidiary to raise the price of its core Pokka Lemon 100 brand products in September, but
sales remained solid, contributing to 4% growth in overall shipments of our lemon-based
products (flavorings). In the instant soup category, POKKA SAPPORO’s introduction of arenewed lineup of its Jikkuri Kotokoto series of boxed instant soups spurred sales of thebrand and boosted overall sales of our instant soups 10% year over year.
In addition, with a view to nurturing the growth of new business, POKKA SAPPORO
purchased the soymilk and yogurt business of Toraku Foods Co., Ltd., and began sellingsoymilk in October.
In the domestic restaurants business, the Café de Crié coffee shop chain faced achallenging operating environment, including rising procurement costs and personnel
expenses. In response, the chain continued its aggressive expansion, opening new stores
inside bookstores and hospitals. Comparable-store sales also expanded solidly, contributing
to an increase in chainwide sales in 2015.
POKKA SAPPORO’s overseas soft drinks business maintained its top share in
Singapore's tea drinks market in 2015, and its POKKA brand became the No.1 selling brandin the non-chilled fruit juice beverages category.* Seeking to solidify its position in an
Indonesian market expected to see dynamic growth in the future, Pokka Corporation(Singapore) Pte. Ltd. formed a joint venture with PT DIMA INDONESIA to manufacture andsell soft drinks. The joint venture began construction of a new plant, which it plans to start up
in 2016.
Lastly, segment sales for 2015 reflect the absence of sales from the Hong Kong
restaurant business, which was sold off in December 2014.
As a result of the above, the Food & Soft Drinks segment recorded sales of ¥135.6 billion
in 2015, ¥2.2 billion or 2% higher than in 2014, and segment operating income rebounded
sharply to ¥0.4 billion, a ¥0.3 billion or 258% increase from just one year earlier.
*Market shares are based on data from Nielsen Singapore MarketTrack March 2015 (Copyright 2015,

The Nielsen Company)

Restaurants
Japan’s restaurant industry showed signs of moving into a recovery phase in the second
half of 2015 but continues to face a difficult operating environment, with procurement costs
and labor costs still on an upward trend.

11

In this environment, our Restaurants business continued to pursue the fulfillment of its
philosophy of “Enhancing the Joy of Living” through constant efforts to deliver safe andsound food and service to customers while also striving to create restaurants that “deliver
100% satisfaction to customers.”
In Japan, we opened five new restaurants during 2015, with the focus on our core Ginza
Lion and Yebisu Bar formats. Notable new outlets include a Garden Terrace Lion restaurant
on a university campus, openings of our Yebisu Bar outlets in Hokkaido and the Tokai region,and the December opening in Ginza of GRANDE POLAIRE WINEBAR TOKYO, the firstoutlet of a new wine bar format developed together with core Group company Sapporo
Breweries. All the new outlets are enjoying strong sales. Meanwhile, we continued to reformthe Restaurant business’s profit structure in 2015, closing 20 outlets, including some
unprofitable ones, and renovating five others, a few of which also underwent formatchanges. In 2015, consolidated subsidiary New Sanko Inc. and its eight restaurants werere-segmented from the Japanese Alcoholic Beverage segment to the Restaurants segment.
As a result of this restructuring and net new store openings, the Restaurants business had
178 stores operating in Japan at the end of the fiscal year.
Overseas, the Restaurants business continues to build a chain of locally popular
restaurants in Singapore that are helping spread the reputation of our Ginza Lion brand to
the world. In 2015, we launched a new brand in Singapore, Tonkichi Ginza Shokudo,
opening two outlets, one a renovation of an existing Ginza Lion outlet. We also closed two
unprofitable stores in 2015. As a result, Singapore chain size at year end was 14 stores.
Overall, the Restaurants business posted sales of ¥27.0 billion in 2015, down ¥0.1
billion, or 1%, from the previous year. Segment operating income was ¥0.5 billion, up 72%,
¥0.2 billion year over year.
Real Estate
Japan’s real estate industry in 2015 continued to see a moderate recovery in rent levels in
the Greater Tokyo office leasing market as vacancy rates continued to improve amid a
recovery in corporate earnings that fueled demand for additional office space.
Amid such favorable demand conditions, our real estate leasing business took advantageof the strong demand for office space and stepped up efforts to attract new tenants at its
core Yebisu Garden Place, which saw a temporary drop in occupancy rate following the lossof a large tenant at the expiration of its lease contract in May 2014. As a result, the business
was able to maintain a high occupancy rate at Yebisu Garden Place. It also maintained highoccupancy rates at other properties, enabling it to aggressively seek higher rents fromexisting tenants.

12

At Yebisu Garden Place, which in 2014 celebrated the 20th anniversary of its opening, we
continued to make renovations that enhance the property’s value by raising conveniencelevels and strengthening its brand appeal as we endeavor to provide tenants and visitorswith enjoyable experiences in comfortable and pleasant surroundings. The renovations in
the property’s commercial area included the March 2015 opening of a new-concept movie
theater that presents customers with a new value proposal. In June, we reopened therenovated and remodeled "Glass Square" dining area on the building's B1 floor with the new
design based on the concept of “Quality Daily Life,” as we sought to re-energize andreinvigorate the area. Meanwhile, the new Ebisu First Square, which opened in October
2014, has won high praise from tenants as a highly competitive office building with superior
safety features, comfort levels, and environmental performance. The property made a solid
contribution to segment earnings in its first full-year of operation in 2015.
The real estate development business made steady progress on the Ginza 5-chome
Redevelopment Project, and at the framework completion ceremony in December itannounced the building's name, GINZA PLACE. Redevelopment is progressing on schedule,
and we expect the building to open for business in summer 2016.
Meanwhile, we continue to review and revise our property portfolio from a long-term
perspective. Following the sale of our entire equity stake in Sapporo Sports Plaza along withseveral rental properties in December 2014, we sold our trust beneficiary rights to the
Shibuya Sakuragaoka Square office building in February 2015.
As result of the efforts outlined above, the Real Estate business posted sales of ¥20.8
billion in 2015, down ¥0.6 billion or 3% from the previous year’s result. Segment operating
income came to ¥8.2 billion, up ¥0.5 billion or 8%.

13

(b) Outlook for fiscal year ending December 31, 2016
① Overview
Millions of yen, except percentages
Operating

Ordinary

Net income attribute to

Net sales

incomeincomeowners of the parent

2016 forecast

565,400

21,10020,20010,5002015 results

533,748

13,95013,211

6,108

5.9

51.3

52.9

71.9

Projected increase (%)

In 2016, the final year of SAPPORO Group Management Plan 2015‒2016, the Sapporo Group will redouble
its efforts to further strengthen Group foundations and accelerate investment in our growth strategies aimed
at fully displaying the special characteristics that position the Sapporo Group as “a manufacturer of foodproducts.” Standing on the strong foundation and stable earnings provided by our Japanese Alcoholic
Beverages and Real Estate business, the Sapporo Group will continue investing in the growth of its
International business and the Food & Soft Drinks business, while also planting the seeds for future growththrough continued R&D investment.
Our consolidated forecasts and outlook for the SAPPORO Group in 2016 are as follows.

Net Sales
The Japanese Alcoholic Beverage business has designated 2016 as the “first year of a new period of
growth in the beer business.” We will renew our efforts to further enhance the value of our core Sapporo
Draft Beer Black Label and Yebisu brands as we aim to increase total shipments of our beer and beer-type
beverages. We will also step up efforts to expand sales of the key growth area of non-beer alcoholic
beverages, including RTD, wine, shochu, western spirits, and Japanese liquors, as we build a more diverseand multilayered product lineup.
The International business aims to expand shipments of our beer products overseas by strengthening
brand recognition for our core premium beer brands, starting with Sapporo brands, especially in the key
North American and Southeast Asian markets. In Vietnam, we will endeavor to expand sales of the new andimproved Sapporo Premium Beer introduced in 2015 by carrying out effective and efficient marketing.
The Food & Soft Drinks business will, in the domestic food and beverage market, provide customers withnew value propositions in lemon-based and soup products, two areas where we have distinct competitive
advantages. Overseas, the business plans to strengthen sales of POKKA brand products in Singapore, as
well as in Indonesia and Myanmar.
The Restaurants business targets sales growth driven by the steady expansion of its mainstay Ginza Lionand Yebisu Bar chains via new store openings as well as renovations and format changes for existingoutlets. Overseas, we will firmly establish the Ginza Lion and Tonkichi brands in Singapore and consider ourentry into neighboring countries.
The Real Estate business will endeavor to further strengthen the competitiveness of its core rental
properties, starting with the Yebisu Garden Place, as it seeks to maintain high occupancy rates and achieve

14higher rents. We will also endeavor to keep our real estate development activities on track with plans,
including opening of the GINZA PLACE commercial complex this summer.
We expect the efforts above will produce consolidated net sales of ¥565.4 billion in 2016, representing
growth of ¥31.6 billion, or 6%, over our 2015 result.

Operating Income
We are targeting profit growth at our Japanese Alcoholic Beverage business, as we expect increased salesof beer-type beverages to offset aggressive spending to promote sales of our products. The International
business is also expected to achieve profit growth by beer sales increase and improvement of management
efficiency in soft drink business in North America. The Food and Soft Drinks business plans to increase
profits by increasing sales of its beverages in domestic markets and improvement of products mix while
fixed costs and productions costs will increase. The Restaurant business plans to achieve profit growth byincreasing sales at existing outlets and opening new outlets. The Real Estate business expects profits to
expand in 2016 on an increase in rental revenues from its core properties.
Overall, we forecast 2016 consolidated operating income of ¥21.1 billion, an increase of ¥7.1 billion, or51%, over 2015.

Ordinary Income
We forecast consolidated ordinary income of ¥20.2 billion, an increase of ¥6.9 billion, or 53%, over 2015.

Net income attribute to owners of the parent
We expect to post net income attribute to owners of the parent of 10.5 billion in 2016, an increase of ¥4.3
billion, or 72%, over 2015
The 2016 outlook for each segment is presented below.
② Outlook by Business Segment
Millions of yen, except percentages
Net sales

Operating income

2016
2015

forecast% change

5.2

8,635

11,10028.5

77,800

10.4

154

900

484.4

135,670

143,700

5.9

434

1,700

291.7

Restaurants

27,004

27,100

0.4

522

1,300

149.0

Real EstateBusiness

20,87222,8009.2

8,281

10,000

20.8

Japanese
Alcoholic
Beverages
International
Business
Food &
Soft Drinks

2015

forecast

273,651

288,000

70,5012016% change15

Japanese Alcoholic Beverages
We expect the operating environment for our Japanese Alcoholic Beverages business to remainchallenging owing to shrinking of the drinking population and the need to respond to increasing diversity inconsumer preferences and the venues where our products are sold and consumed.
In this challenging environment, our Japanese Alcoholic Beverages business will aim for further growthby continuing efforts to realize the “seek No. 1 by accumulating one-of-a-kind products” vision anddelivering to customers value available only from Sapporo.
We have designated 2016 as the “first year of a new period of growth in the beer business.” In keepingwith that theme, we will renew our efforts to enhance the value of our core beer and beer-type beverages
brands. With all beer-type products expected to be taxed at the same level in the near future, we will strive
to strengthen our beer business, which we expect to attract greater market attention. For starters, we plan
to build on the momentum created in 2015 for our Sapporo Draft Beer Black Label by making further
modifications to its contents and proposing a variety of events around the Japan, all under the theme of the“perfect draft beer experience.” Aiming to make Yebisu the No. 1 premium beer, we will continue to enhance
its overall quality.
The RTD business will seek to match its success with Sapporo Otoko Ume Sour and develop a growing
lineup of new collaboration RTD cocktails.
Our wine business will continue to strengthen its lineup of fine wines. We will aggressively promote our
premium Japanese wine, Grand Polaire, and last year’s new imported products, Penfolds wine andTaittinger champagne. At the same time, we will continue our efforts to bring consumers wines that can beenjoyed casually by presenting a variety of options, including daily wines* and our barreled Polestar
sparkling wine.
In the western spirits business, we will continue to 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 plan to boost sales of Bacardi by promoting a new Caribbean
high-ball cocktail, called Rum High.
In our Japanese liquor business, we will build upon the success of our blended imo shochu, Kokuimo, byattracting new users with the introduction of liqueurs based on uniquely Japanese ingredients, such plum
wine (umeshu) and Ume Kaku, a plum-wine based cocktail introduced in 2015.
The Japanese Alcoholic Beverages business as a whole will strive to achieve its profit targets in order tofurther enhance brand values by effectively and flexibly controlling marketing expenses while cutting othercosts wherever possible.
* Daily wines are reasonably priced at under ¥1,500/bottle (compared with fine wines priced in the mid-to-upper price range
starting at ¥1,500/bottle).
** According to a survey by 2014 International Wine & Spirits ResearchInternational Business
In North America, improving employment conditions and an increase in household demand in the UnitedStates are expected to support autonomous expansion of the U.S. economy. However, the falling crude oil
prices are expected to weigh on the Canadian economy. We therefore expect overall demand in the North

16

American beer market to generally be flat. In the Asian beer market, we expect to see continued growth incountries with growing populations and firm economic growth. In some countries, however, economic
slowdowns and stricter regulations on alcoholic sales and consumption are expected to curtail market
growth.
Under such circumstances, our International business will strive to expand sales of its premium beerbrands, beginning with the Sapporo brand, and establish a unique position in North America and Southeast
Asia, the two regions where the business is concentrating its resources and efforts.
In Canada, SLEEMAN BREWERIES plans to focus marketing expenditure on maintaining and enhancing
the value of its core premium brands, centering on the Sleeman and Sapporo brands. At the same time, itaims to achieve its profit goals and expand its share of the overall beer market by introducing value brands
that meet growing demand in that market segment. In the U.S. beer market, Sapporo USA plans to build awider presence for the Sapporo brand by strengthening marketing to the larger Asian-American population.
In the U.S. soft drinks market, we plan to strengthen the business foundations of Silver Springs Citrus andCountry Pure Foods and expand sales and profits at these two subsidiaries by promoting the acquisition of
new sales channels while reducing costs by optimizing their production networks.
Outside of North America, we plan to expand sales of Sapporo brand products, strengthen thefoundations of our International business, and further expand our overseas operations.
In Vietnam, we aim to expand sales and profits through effective and efficient investing on marketing andsales activities with clearly defined targets, while also taking advantage of last year’s renewal of our
Sapporo Premium Beer to increase contact with customers. 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 continues to face a difficult operating environment, with overall demand being
depressed by demographic changes and consumers’ increasing thriftiness, competition increasing as
beverage makers scramble to secure a piece of the shrinking pie, and a weaker yen and rising raw material
prices expected to push up costs.
Under such difficult conditions, our domestic food and soft drinks business plans to deliver new value toits customers in areas where it has distinctive advantages thorough understanding of the user’s
perspective.
The domestic food and soft drinks business will leverage its position as a leader in lemon-juice based
products with its core Kireto Lemon brand by appealing inherent health benefits of lemons and selling new
products which deliver new value to customers. The business will also aggressively market tea drinks, such as
Nippon Oolong, an oolong tea that has received favorable reviews for its use of domestic tea leaves, and the
Gabunomi brand. We also plan to launch a new drink brand that will qualify for inclusion into the health drink
category, which is expected to see strong growth in the years ahead. In the instant soup category, we plan
to strengthen the Jikkuri Kotokoto soup lineup and launch a new brand as we continue our efforts tostimulate demand and expand the soup market. In the commercial-use products category, we will parlay
our group synergies to expand sales in all market segments, from Pokka Lemon and ouralcoholic-beverage mixers to powdered teas and soups. The soymilk business we acquired in 2015 will17

endeavor to increase its sales by developing new products that respond to consumers’ growing preference
for healthy beverages made from natural materials.
At the domestic restaurants business, the Café de Crié chain will carry out marketing at the individualstore level as it endeavors to enhance its brand value and accelerate its expansion.
The overseas soft drinks business expects to see stiffer competition in Southeast Asian markets. In
response, the business plans to expand sales and improve the efficiency of its overall operations bystrengthening its advantages in the tea drinks and juice beverages segments in the core Singapore market.
It will also strengthen tie-ups with other leading brands. Our newly formed joint venture in Indonesia will
start local production and sales in 2016, and our partner in Myanmar plans to begin manufacturing of
Sapporo products on a licensed-out basis. We aim to expand sales channels and increase sales by
proposing products that are best fits for each market.

Restaurants
Japan’s restaurant industry is expected to continue to face a difficult operating environment, with labor costs
and food material costs continuing to rise and competition growing ever more intense as foreign restaurant
chains entering the Japan market add to the strains already being applied by cross-industry competition
from retailers and other non-traditional players.
In this environment, our Restaurants business will emphasize raising the quality of its menus, service,and store atmosphere in a return to basics focused on “delivering 100% satisfaction to customers.” As partof that commitment, our restaurants are taking extra care to ensure the provision of safe and sound food totheir customers.
Our domestic restaurant operations are targeting increased profits in 2016. For starters, the business will
benefit from re-openings of two flagship stores— the Beer Hall LION GINZA 5-Chome outlet and the Beer Hall
Lion Shimbashi outlet—both of which were shut down for an extended period of time due to building
redevelopment projects. New store openings for our core Ginza Lion and Yebisu Bar formats will further
expand both chains’ footprint. Our aggressive store opening plan also includes new formats as well as
remodelings and brushups at stores of existing formats.
Overseas, we will continue efforts to establish the Ginza Lion and Tonkichi brands in Singapore while also
considering our entry into neighboring countries.

Real Estate
In 2016, Japan’s real estate industry expects the strong corporate earnings to support continuation of therecent downtrend in vacancy rates, thus creating an environment conducive to rent hikes in the Greater
Tokyo office leasing market. However, the rise in rents is expected to be moderated by new office building
supply.
In this environment, our Real Estate business will continue its efforts to enhance the competitiveness of
its buildings and related services as it seeks to raise occupancy rates and rent levels at its properties. At ourflagship property, Yebisu Garden Place, we will continue efforts to add value in all of the property's areas,
starting with the commercial-use areas, as we seek to enhance convenience features across the entire
property and further elevate its brand value. We also will continue efforts to enhance safety and security insurrounding areas.

18

The real estate development business plans to open GINZA PLACE, a redeveloped commercial complex
located at the busy Ginza 4-chome intersection, on schedule this summer. Located in the center of Tokyo’s
famous Ginza district, the new facility is expected to become a bustling center of human activity andinteraction from which various information is transmitted around the world. We expect the facility to becomea new landmark that further advances the prosperity of the local area. As such, we will make every effort tocomplete construction and open the facility to the public on schedule.
Going forward, we plan to solidify the earnings base of our Real Estate business and will therefore
continue to regularly review our property portfolio with a view to raising the value of our Real Estatebusiness.

19

（2)Review of Consolidated Financial Condition(a)Consolidated Financial Condition
Consolidated total assets as of December 31, 2015, totaled ¥620.3 billion, ¥5.0 billion
decline from the end of the previous fiscal year (December 31, 2014). Despite the addition ofassets of the newly consolidated Country Pure Foods, Inc. and an increase in theconstruction in progress related to the construction of GINZA PLACE, overall assets
declined owning to a decrease in the land on the balance sheet following the sale of trust
beneficiary rights to the Shibuya Sakuragaoka Square office building.
Consolidated total liabilities totaled ¥456.5 billion, an ¥8.8 billion decrease from

December 31, 2014, primarily owing to decreases in commercial paper and long-term bankloans, which outweighed increases in short-term bank loans and income taxes payable.
Consolidated net assets totaled ¥163.8 billion, up ¥3.8 billion from the end of theprevious fiscal year. The increase reflects an increase in unrealized holding gain on
securities and the posting of net income, partly offset by a decline in the foreign currencytranslation adjustment account and the payment of dividends.

(b) Consolidated Cash Flows
Cash and cash equivalents (collectively, “cash”) totaled ¥10.3 billion as of December 31,
2015, a ¥0.6 billion or 7% increase from December 31, 2014.
Following is an explanation of consolidated cash flows by category in 2015 and the factorsthat affected cash flows in each category.
Cash flows from operating activities
Operating activities provided net cash of ¥35.2 billion, a ¥12.9 billion or 58% increase over2014. Major sources of operating cash flow included ¥11.6 billion from income before
income taxes and minority interests, ¥24.2 billion from depreciation and amortization and¥5.9 billion from loss on impairment of property, plant and equipment. These are partially
offset by a ¥7.4 billion of gain on sales of property, plant and equipment.
Cash flows from investing activities
Investing activities used net cash of ¥9.7 billion, a reduction of ¥7.4 billion, or 43%,
compared with 2014. Major investment outflows included purchases of property, plant andequipment of ¥18.2 billion, purchase of subsidiaries' shares resulting in change in scope of
consolidation of ¥3.9 billion and purchase of affiliates securities of ¥3.2 billion, the sum ofwhich outweighed inflows from the sales of property, plant and equipment of ¥19.5 billion.

20

Cash flows from financing activities
Financing activities used net cash of ¥24.8 billion, ¥17.4 billion, or 239% more than the net
cash used in the previous fiscal year. Major inflows included ¥14.3 billion from long-termbank loans and ¥9.9 billion from the issuance of corporate bonds. These inflows were morethan offset by outflows, which included a ¥13.0 billion net decrease in commercial paper,¥16.6 billion for the repayment of long-term bank loans, and ¥12.0 billion in bondredemptions.

Cash Flow Indicators
As of December 31,

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

2011

2012

2013

2014

2015

22.4

22.1

24.6

25.0

25.5

20.7

18.3

28.0

31.9

33.4

11.8

10.2

8.8

13.0

7.8

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

6.2
8.4
11.9
8.9
14.8
(%)
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.

21

２.Management Policy(1) Fundamental Management Policy
The Sapporo Group’s management philosophy is "As an intrinsic part of people's lives, Sapporo
will contribute to the evolution of creative, enriching and rewarding lifestyles." and we strive toincrease stakeholder satisfaction by maintaining integrity in corporate conduct that reinforces
stakeholder trust and by aiming to achieve continuous growth in corporate value. This is ourfundamental management policy.

(2) Issues to be Addressed
In October 2007, we formulated the Sapporo Group New Management Framework (hereafter,
the New Management Framework) as a basic policy for implementing our growth strategies andachieving the goals set for 2016, the 140th year since the founding of the Sapporo Group. Also, in
2015, we formulated the Sapporo Group Management Plan 2015–2016 (hereafter, theManagement Plan 2015–2016).
Fiscal 2016 is the final year for the Management Plan 2015–2016 as well as the longer-term
the New Management Framework. Consequently, the entire Sapporo Group will endeavor todisplay its special characteristics as a “manufacturer of food products” by redoubling efforts tostrengthen its foundation and accelerating investment in our growth strategies for sustainablegrowth in the years ahead.
In addition, we will begin drafting our next long-term management framework, targeting 2026,
our 150th anniversary. We will earnestly work on these new plans in line with the following
concepts.
●Target of the Group:
The SAPPORO Group shall become a group of companies that is essential for customers toenjoy rich lives throughout the world by continuing the creation and supply of new products andservices, in its efforts to become No. 1 in the market.
●Guidelines for corporate behavior:(1) We seek continued innovation and provide customers with valuable No. 1 products andservices to contribute to their attainment of a richer life.
(2) We endeavor to create products and services that will engage customers.
(3) We strive to ensure efficient business operations by addressing changes in the businessenvironment.

(3)Corporate governance structure
To ensure the Sapporo Group’s management philosophy and fundamental policy are realized as
we aim to achieve continuous growth in corporate value, we have identified strengthening and22enhancing corporate governance as one of management’s top priorities. Toward that end, we areworking to clarify supervisory, business execution and auditing functions throughout the Group
under the holding company framework. We are also working to strengthen management
supervisory functions to increase management transparency and achieve management goals. In
December 2015, we established the Sapporo Group’s Basic Policy on Corporate Governanceand posted it on the Sapporo Holdings website.
(4) Initiatives to be undertaken in each business segment
Please refer to the presentation for each business segment in (b) Outlook for fiscal year
ending December 31, 2016 on page 14 .
(5)R&D strategies

We will promote further enhancement of our research and development structure as ameasure to strengthen the technological capabilities that support continued growth whileadvancing our abilities in four core competencies: (1) knowledge of customers and markets,(2) the pursuit of deliciousness, (3) the creation of delicious products, and (4) the guaranteeof excellent taste.



In addition to promoting the development of new products that fully embody the values of
their ingredients, such as lemons, we are conducting research into sensitivity science tobetter enable us to conduct scientific analysis of customers’ sense and needs as well as
research on food processing techniques that will enable us to expand the applications offood products. We believe these efforts will enable us to propose new values for food in the
future.

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

23

5. 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, 2014

December 31, 2015

AmountAmount9,781
89,24522,431
14,1085,000
15,971(165)
156,372

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

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

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

29,966
6,025
35,991

30,235
10,74340,97859,9689,150
1,090
13,572(1,305)61,8489,016
1,009
15,362(1,234)82,47786,002

469,066
625,439

464,023
620,388

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

25

December 31, 2014
AmountDecember 31, 2015
Amount35,534
31,44630,00012,0003,067
33,602
724
2,115
9,650
53,629211,771

36,77265,822
17,00010,0002,932
33,903
6,114
2,219
8,824
50,054
233,643

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

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

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

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

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

23,926(11)(1,255)
1,874
24,533
5,894
163,822620,388(2) Consolidated Statements of Income(millions of yen)
Year ended
Year ended
December 31, 2014 December 31, 2015
AmountAmount518,740
533,748
336,388352,808
182,352
180,940I Net sales
II Cost of sales
Gross profit
III Selling, general and administrative expenses
1 Sales incentives and commissions
2 Advertising and promotion expenses
3 Salaries
4 Provision for bonuses
5 Retirement benefit expenses
6 Other
Total selling, general and administrative expenses
Operating income
IV Non-operating income
1 Interest income
2 Dividend income
3 Equity in income of affiliates
4 Foreign exchange gains
5 Gain on valuation of derivatives
6 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Foreign exchange losses
3 Other
Total non-operating expenses
Ordinary income
VI Extraordinary gains
1 Gain on sales of property, plant and equipment
2 Gain on sales of investment securities
3 Gain on sales of consolidated subsidiaries
4 Subsidy income
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on sales of property, plant and equipment
3 Loss on impairment of property, plant and equipment
4 Loss on devaluation of investment securities
5 Loss on sales of investment securities
6 Additional liquor tax paid and other
7 Compensation 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
Income before minority interests
Other comprehensive income
Unrealized holding gain on securities
Deferred hedge gains (losses)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

26

33,546
22,69132,1871,451
2,968
74,777
167,623
14,72835,841
21,982
31,954
1,218
2,690
73,303
166,990
13,950

229
831
225
576
948
2,811

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

2,399
573
2,973
14,565

2,279
537
842
3,659
13,211

3,528
230
966
4,724

7,453
46
72
322
7,895

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

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

94

6,112

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

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

7,248
34

7,506
73

(3) Statements of Changes in Shareholders' Equity(millions of yen)
Year ended December 31,
2014
AmountShareholders’ Equity
Common stock
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Balance at end of period
Capital surplus
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Disposition of treasury stock
Total changes during period
Balance at end of period
Retained earnings
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Cash dividends
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
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Purchase of treasury stock
Disposition of treasury stock
Total changes during period
Balance at end of period
Total shareholders' equity
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Cash dividends
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
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

27

Year ended December 31,
2015
Amount53,88653,88653,88653,88653,88653,88645,91145,91145,91245,9121
145,9121
145,91337,40937,40934,913(3,105)31,808(2,731)340(2,727)
6,108

(104)

-

(2,495)34,913

3,381
35,189(1,311)(1,311)(1,544)(1,544)

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

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

135,896
135,896

133,168(3,105)130,062(2,731)
340
(239)
6

(2,727)
6,108
(54)
4

(104)

-

(2,728)133,168

3,331
133,394

15,467
15,467

20,112
20,112

4,645
4,645
20,112

3,813
3,813
23,926

Deferred hedge gains (losses)
Balance at beginning of year

4

Cumulative effect of changes in accounting policies--

Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period

4

(0)

(4)
(4)
(0)

(11)
(11)
(11)

314
314

2,582
2,582

2,267
2,267
2,582

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

-

440
440

440
440
440

1,434
1,434
1,874

15,786
15,78623,135
23,135

7,349
7,349
23,135

1,397
1,397
24,533

3,683
3,683

3,700
3,700

17
17
3,700

2,193
2,193
5,894

155,366
155,366

160,004(3,105)
156,899(2,731)
340
(239)
6

(2,727)
6,108
(54)
4

(104)

-

7,366
4,638
160,004

3,591
6,922
163,822

Foreign currency translation adjustments
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Remeasurements of defined benefit plans
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total accumulated other comprehensive income
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Minority interests
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Net change in items other than shareholders' equity during period
Total changes during period
Balance at end of period
Total net assets
Balance at beginning of year
Cumulative effect of changes in accounting policies
Restated balance of the beginning of the current period
Changes during period
Cash dividends
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

(0)

(4) Consolidated Statements of Cash Flows

I 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 Goodwill amortization
5 Increase (decrease) in net defined benefit liability
6 Increase (decrease) in allowance for doubtful receivables
7 Interest and dividend income
8 Interest expense
9 (Gain) loss on sales of fixed assets
10 (Gain) loss on sales and disposal of fixed assets
11 (Gain) loss on sales of investment securities
12 (Gain) loss on revaluation of investment securities
13 (Increase) decrease in notes and accounts receivable - trade
14 (Increase) decrease in inventories
15 Increase (decrease) in notes and accounts payable - trade
16 Increase (decrease) in accrued consumption taxes
17 Increase (decrease) in liquor taxes payable
18 Increase (decrease) in deposits received
19 Increase (decrease) in other current liabilities
20 Other
Sub total
21 Interest and dividends received
22 Interest paid
23 Income taxes paid
24 Income taxes refundable
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Purchases of property, plant and equipment
2 Proceeds from sales of property, plant and equipment
3 Purchases of intangibles
4 Payments for purchases of investment securities
5 Proceeds from sale and redemption of investment securities
6 Purchase of affiliates securities
7 Proceeds from sales of affiliates securities
8 Purchase of subsidiaries' shares
resulting in change in scope of consolidation
9 Payments for sales of subsidiaries' shares resulting in change in scope of
consolidation
10 Collection of sales of subsidiaries' share for prior periods
11 Increase in long-term loans receivable
12 Collection of long-term loans receivable
13 OtherNet cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Increase (decrease) in commercial paper
3 Proceeds from long-term bank loans
4 Repayment of long-term bank loans
5 Proceeds from issuance of bonds
6 Redemption of bonds
7 Cash dividends paid
8 Cash dividends paid to minority shareholders
9 Repayment of finance lease obligations
10 Purchase of treasury stock
11 Proceeds from sale of treasury stock
12 Proceeds from minority shareholders
Net cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of period
Ⅶ 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

Year ended
December 31, 2014
Amount(millions of yen)
Year ended
December 31, 2015
Amount2,694
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)(7,769)79
22,284

11,69024,224
5,956
4,153
446
(137)
(1,376)2,279(7,453)
1,559
(46)
1,758
(2,779)(1,211)(202)(3,057)
457
(729)
376
48
35,9571,380(2,384)(2,944)
3,257
35,265(17,312)
6,383(1,820)(1,397)392(91)-(18,298)
19,563(2,041)(875)
511(3,260)1,794-(3,989)

(25)
(137)
227
(3,447)(17,229)

3,198
(304)
417
(6,471)(9,755)(3,337)5,000
25,630(38,401)
9,960(2,734)(14)(3,321)(94)
6(7,307)426(1,826)
11,518(3,366)(13,000)
14,319(16,625)
9,960(12,000)(2,730)(28)(3,039)
(56)
4
1,760
(24,802)
(56)
651
9,748

9

-

46

-

9,748

10,399(5) Notes on the Going-concern Assumption
Not applicable(6) Changes in Accounting Policy(Application of Accounting Standard for Retirement Benefits, etc.)“Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan - ASBJ - Statement No. 26 of May 17, 2012) and“Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25 of May 17, 2012) have been applied, effective from thefiscal year ended December 31, 2015, in accordance with the provisions of Article 35 of the Accounting Standard for Retirement Benefits andArticle 67 of the Guidance on Accounting Standard for Retirement Benefits. As a result, the method for calculating retirement benefit
obligations and service costs has been revised, and the method for attributing projected benefits to periods has been changed from thestraight-line basis to the benefit formula basis. As to the discount rate, it used to be calculated based on the periods, comparable toemployees’ average remaining years of service. Under the new accounting standard, however, the method of determining the discount rate
has now been changed to use a single weighted-average discount rate that reflects the periods until the expected payment of retirement
benefits and the amount of projected benefits for every such period.
In applying these retirement benefit-related accounting standards, etc. and in accordance with the transitional treatment provided in Article 37of the Accounting Standard for Retirement Benefits, the effect of the change in calculation method for retirement benefit obligations andservice costs has been recognized by adjusting retained earnings at the beginning of the fiscal year ended December 31, 2015.
Consequently, as at the beginning of the fiscal year ended December 31, 2015, net defined benefit liability increased by 4,799 million yen,while retained earnings decreased by 3,105 million yen. Furthermore, during the fiscal year ended December 31, 2015, operating
income,ordinary income and income taxes before minority interests grew each by 168 million yen respectively.
(Changes in Presentation Methods)●Consolidated Cash flows
Effective from the fiscal year ended December 31, 2015, “income tax refundable,” which was previously included in “income tax paid” under“cash flows from operating activities,” is individually presented because of its increased importance in monetary terms. Accordingly, theconsolidated statements of cash flows for the year ended December 31, 2014 have been retroactively adjusted to reflect the change.
As a result, (7,689) million yen included in “income tax paid ” under “cash flows from operating activities” in the consolidated cash flows for theyear ended December 31, 2014 was presented as “income tax paid” of (7,769) million yen and “income tax refundable” of 79 million yen.

(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. Thesesegments 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 infood" and "creation of comfortable surroundings." Under Sapporo Holdings, a pure holding company, each group company formulates
development plans and strategies for its products, services, and sales markets and conducts business accordingly.
The Group's businesses are therefore segmented mainly based on the products, services, and sales markets of Group companies and theiraffiliated companies. 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 andsells alcoholic beverages and soft drinks overseas.
The Food & Soft Drinks segment produces and sells foods and soft drinks.
The Restaurants segment operates restaurants of various styles.
The Real Estate segment's activities include leasing and development of real estate.

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

3. Changes in Reportable Segment, etc.
(Changes in Reportable Segment)
Following the share transfer between the consolidated subsidiaries, the segment classification of New Sanko Inc., which formerly used to beclassified in the “Japanese Alcoholic Beverages” segment, has now been changed to the “Restaurants” segment, effective from the fiscal year
ended December 31, 2015.
The segment information for the fiscal year ended December 31, 2014 have been retroactively adjusted to reflect these changes.
(Application of Accounting Standard for Retirement Benefits, etc.)
In accordance with the revision of the method for calculating retirement benefit obligations and service costs, as per the above Changes in
Accounting Policy, effective from the fiscal year ended December 31, 2015, the calculation method for retirement benefit obligations andservice costs in each business segment has been revised accordingly.
As a result, compared to the old calculation method, a segment income of the “Japanese Alcoholic Beverages” grew by 168 million in the year
ended December 31, 2015. The effect of the said revision on the segment income or loss in other segments than the “Japanese Alcoholic
Beverages is immaterial.
30

3. Sales, income (or loss), assets, and other items(millions of yen)
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)
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

281,0312,562
283,594
10,192
220,31149,672
95
49,767172
57,601

133,439314
133,753
121
102,761

27,143
3
27,147303
12,39821,5092,754
24,264
7,695
214,389

512,796
5,730
518,527
18,486
607,463

8,010

2,103

6,785

672

4,231

21,802

3,702

1,948

7,400

1,282

7,189

21,523

Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)
Total

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

5,944
19,47725,421183
7,135

Depreciation and amortization

75

Increase in property, plant and equipment, andintangible assets

30

Adjustment

518,740
25,208543,949
18,670614,598

21,87821,553

Amounts reported on thestatements of income*2(25,208)(25,208)(3,941)
10,840518,740

2,603

24,481

1,248

22,802518,740
14,728625,439(millions of yen)
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
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

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

27,0045
27,009522
12,271

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

527,700
5,747
533,448
18,028606,464

8,144

3,380

6,185

668

4,202

22,581

4,607

2,558

5,117

844

6,196

19,324

Restaurants Real EstateYear ended December 31, 2015 (January 1, 2015 – December 31, 2015)

Other *1

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

Total

Adjustment

Amounts reported on thestatements of income*2

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

533,748
25,582559,331
18,029613,252(25,582)(25,582)(4,079)7,136

533,748533,748
13,950620,38836
222,617
19,326

1,606
1,256

24,224
20,583(1) "Other" comprises businesses, such as logistics businesses, that are not included in reportable segments.
(2) Segment income and losses are adjusted based on operating income reported on the quarterly consolidated
statements of income for the corresponding period.

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, 2014
December 31, 2015
Segment income (loss)
Total for reportable segments
18,48618,028
Income(loss) from other segments
183
1
Unallocated corporate costs*(3,798)(4,002)(145)(77)
Intra-segment sales
Operating income on the statement
14,728
13,950Note: 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, 2015

December 31, 2014
607,463
7,135(10,932)
21,772

Unallocated corporate assets*

606,463
6,788(12,253)
19,390Total assets on the consolidated financial statements
625,439
620,388
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, 2014 (January 1, 2014 – December 31, 2014)
Information by product and service is omitted here, as the same information is disclosed elsewhere.
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Information by product and service is omitted here, as the same information is disclosed elsewhere.
2. Segment Information by Geographic Area
(1) Net sales(millions of yen)

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

America
46,751

Asia
24,904

Total
518,740

Other
5,606

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

America
67,001

Asia
20,969

Other
6,580

Total
533,748(2) Property, plant and equipment
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.
Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)
Information has been omitted as total fixed assets held in Japan constituted more than 90% of that shown on the balance sheets.
(3) Information by major customer
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

Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)(millions of yen)Company NameNet Sales

KOKUBU & CO.,LTD.

79,177

Segment
Japanese Alcoholic Beverages
Food & Soft Drinks

32

6. Impairment loss on fixed assets or goodwill by reportable segment
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)(millions of yen)
Generalcorporate andintercompany
eliminations

Reportable segments

Impairment loss

Japanese
Alcoholic
Beverages
74

Other
Food &
Soft Drinks

International-

Restaurants

595

Real Estate

223

Total
-

893

-

Total

-

893

Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages
Impairment loss

3,083

Generalcorporate andintercompany
eliminations

Other
International

Food &
Soft Drinks

2,082

Restaurants

610

Real Estate

179

Total
-

5,956

-

Total

-

5,956

7. Amortization for and unamortized balance of goodwill
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

Generalcorporate andintercompany
eliminations

Other
International

Food &
Soft Drinks

Restaurants

Real Estate

Total

Total

Amortization

-

1,256

2,506

1

-

3,764

-

-

3,764

Unamortized
Balance as ofDec. 31, 2014

-

9,999

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

Year ended December 31, 2015 (January 1, 2015 – December 31, 2015)(millions of yen)
Generalcorporate andintercompany
eliminations

Reportable segments
Japanese
Alcoholic
Beverages

Other
International

Food &
Soft Drinks

Restaurants

Real Estate

Total

Total

Amortization

41

1,833

2,278

0

-

4,153

-

-

4,153

Unamortized
Balance as ofDec. 31, 2015

343

12,122

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

8. Gain on negative goodwill by reportable segment
Year ended December 31, 2014 (January 1, 2014 – December 31, 2014)
Not applicableYear ended December 31, 2015 (January 1, 2015 – December 31, 2015)
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, 2014 was ¥6,202 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, 2015 was ¥7,606 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, 2014 and 2015, and the total fair value
appear in the following table.
Year ended December 31,
2014
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,
2015

210,078
ᇞ2,214
207,864
348,237

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, 2014 comprises increase mainly arisingfrom property acquisitions (¥4,572 million) and decrease mainly due to depreciation (¥3,720 million),sales ((¥2,336 million), disposal (¥788 million). The change during the year ended December 31,
2015 comprises increase mainly arising from property acquisitions (¥6,595 million) anddecrease mainly due to depreciation (¥3,804 million), sales (¥12,535 million), disposal (¥328 million).
3. The fair value at December 31 is mainly based on property valuations performed bythird-party real estate appraisers.

34

207,864
ᇞ10,198
197,666
357,395