Financial Results
for the Six Months Ended June 30, 2017 — Consolidated(Based on Japanese GAAP)
August 3, 2017

Company name

Sapporo Holdings Limited

Security code
Listings
URL

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

Representative
Contact

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

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

Filing of quarterly financial reportAugust 10, 2017

Commencement of dividend payments-

Supplementary information to the quarterly earnings results

Available

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

1. Consolidated Financial Results for the Six Months Ended June 30, 2017
(January 1 – June 30, 2017)(Amounts in million yen rounded down to the nearest million yen)

<Note>On July 1, 2016, the Company carried out a share consolidation at a ratio of 1 share for 5 shares of theCompany’s common stock. Accordingly, values for the items noted below have been recalculated on theassumption that the share consolidation took place at the beginning of the previous fiscal year.
・ Profit per share
・ Diluted per share
・ Average number of outstanding shares during the period(1) Operating Results(Percentage figures represent year-over-year changes)
Net sales

Six months ended
June 30, 2017
Six months ended
June 30, 2016

Operating income

Ordinary income

Profitmillion yen%

million yen%

million yen

257,970

3.6

3,018

（1.0）

2,654

1.3

222

(52.3)

248,959

1.3

3,048

-

2,620

-

465

(60.0)

Note: Accumulated other comprehensive income
Six months ended June 30, 2017

2,116 million yen

Six months ended June 30, 2016

(9,728) million yen

1%million yen%

Profit per share

Diluted profit
per share

Yen

Yen

Six months ended
June 30, 2017

2.85

-

Six months ended
June 30, 2016

5.98

-

(2) Financial Position
Total assets

Net assets

Shareholders’equity ratio

million yen

million yen%

June 30, 2017

606,035

165,585

26.5

December 31, 2016

626,351

166,38025.7

Note: Shareholders’ equity
June 30, 2017:
160,316 million yen
December 31, 2016: 160,687 million yen

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

Full year

Yen

yen

yen

Yen

yen

Year ended
December 31, 2016

—

0.00

Year ending
December 31, 2017

—

0.00

Year ending
December 31, 2017
(forecast)

—

37.00

37.00

—

37.00

37.00

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

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2017
(January 1 – December 31, 2017)(Percentage figures represent year-over-year changes)

Net salesYear ending
December 31,
2017

Operating income

Ordinary income

Profit attributable toProfitowners of parent

per share

million yen%

million yen%

million yen%

million yen

563,800

4.1

21,3005.1

20,3005.7

10,700Note: Changes were made to earnings forecasts in the six months ended June 30, 2017: None

2

%

yen

13.0

137.36

4. Other(1) Changes in significant subsidiaries during the six months ended June 30, 2017: None
(2) Simplified accounting: Yes*Use of simplified accounting methods and/or accounting methods specific to quarterly consolidated
financial statements(3) Changes in accounting policy, changes in accounting estimates, and retrospective
restatement
1) Changes in accordance with amendments to accounting standards etc.: None
2) Changes other than 1) above: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None

(4) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):June 30, 2017:
December 31, 2016:

78,794,298 shares
78,794,298 shares

2) Number of shares held in treasury at end of period:
June 30, 2017:
900,470 shares
December 31, 2016: 898,911 shares
3) Average number of outstanding shares during the period:
Six months ended June 30, 2017:

77,894,480 shares

Six months ended June 30, 2016:

77,903,021 shares*Quarterly review status
The quarterly financial results are not subject to quarterly reviews pursuant to the Financial
Instruments and Exchange Act. The quarterly review of the quarterly financial results
herein had not been completed as of the date of this document.
Appropriate Use of Earnings Forecasts and Other Important Information
This document contains projections and other forward-looking statements based on
information available to the Company as of the date of this document. Actual results may
differ from those expressed or implied by forward-looking statements due to various factors.

3

1. Analysis of Operating Results(1) Consolidated Financial Results for the Six Months ended June 30, 2017
In the first half of 2017 (January 1 – June 30, 2017), the Japanese economy remained in a moderate
recovery trend, with support from rebounding exports and an improved employment and income
environment. The outlook for the rest of the fiscal year, however, remains unclear, with consumer prices inJapan still weak and the overseas economic outlook clouded by concerns about US government policies andrising geopolitical risks emanating from North Korea.
In this economic environment, the SAPPORO Group achieved growth of its consolidated sales. The
Japanese Alcoholic Beverages business increased shipments of its beer and diversified alcoholic beverage
products. The International Business achieved volume growth in its sales of alcoholic beverages in North
America.
First-half operating income were largely in line with the first half of the previous year, as rising distribution
costs and an increase in fixed costs as we aggressively invested to further enhance brand strength offset
increased sales in all business segments.
As a result of the above factors, in the first half of 2017 the SAPPORO Group posted consolidated sales of¥257.9 billion (up ¥9.0 billion or 4% year on year), operating income of ¥3.0 billion (1% less than a year
earlier), ordinary income of ¥2.6 billion (1% more than a year earlier), and net profit attributable to owners ofparent of ¥0.2 billion (¥0.2 billion or 52% less than a year earlier).
Seasonal Factors
The Group’s operating results exhibit substantial seasonal variation in demand for the products and services
offered by the Japanese Alcoholic Beverages, International Business, Food & Soft Drinks, and Restaurants
businesses. As a result, sales in the first quarter, which affect the first-half results, tend to be lower than sales
in the other three quarters.
Segment information is outlined below.

Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer-type beverages in the first half of 2017 fell 1%
from the level seen in the first half of 2016.
Amid such market conditions, the Japanese Alcoholic Beverage business continued its efforts to realize
management’s vision of “Seek to be No.1 by accumulating one-of-a-kind products” and achieve further
growth by constantly providing customers with a unique value proposal and by investing aggressively in thebeer business during 2017, in line with the business policy of “Beer Revival Declaration.”
Among beer products, Sapporo Draft Beer Black Label continued to enjoy strong demand, with sales of
the canned version particularly strong. Sales of the Yebisu brand also increased, supported by customers’4

favorable response to the March launch of Yebisu Hana Miyabi. As a result, total domestic shipments ofbeers in the first half of 2017 increased 5% year on year. In the happoshu category, sales of Goku Zero andour new-genre category offering Mugi to Hop brand fell below previous year levels. Overall, first-halfshipments of our beer and beer-type beverages products slipped 1%, in line with the overall domestic
demand trend.
In the RTD*1 category, Ai no Skal White Sour, the latest addition to our high-value-added collaboration
products, was sold only in western Japan and favorably received by customers. Sales of other core RTD
products, including Otoko Ume Sour and Kireto Lemon Sour, also were solid, and the category achieved
year-on-year sales growth.
We also achieved year-on-year sales growth in the wine category, as we strengthened marketing of finewines*2, including an imported wine Penfolds, Taittinger champagne, and our domestic wine Grande Polaire.
Our spirits business also achieved year-on-year sales growth, on strong sales of products from major
overseas brands, such as Bacardi and Dewars.
The Japanese liquor business turned in a solid first half, with continued strong sales of Imo Shochu
Kokuimo, Japan’s No. 1 selling*3 blended imo shochu, helping drive up sales over the previous year’s level.
Overall, the Japanese Alcoholic Beverages business posted first-half sales of ¥127.5 billion, up ¥1.7 billion
or 1% year on year. First-half operating income came to ¥1.4 billion, a slight 1% decline.
*1) RTD, or ready-to-drink, beverages are already-mixed, low-alcohol content cocktail-like beverages that can be consumed as
is immediately after opening.
*2) Fine wines are wines priced in the mid- to high-price range (¥1,500 and higher per bottle).
*3) Based on Intage SRI market research on combined blended imo shochu sales in the supermarket, convenience store, anddirect sales channels from January 2015 to December 2016.

International BusinessWe estimate that total demand in the North American beer market in the first half of 2017 was below previousyear levels in both the United States and Canada. Meanwhile, demand in Asian markets was solid but growth
momentum slowed in line with the widely divergent pace of growth in national and regional economies.
In this environment, our International Business continued its efforts to strengthen brand recognition in thepremium beer markets in North America and Southeast Asia. In addition, we expanded our sales channel in
the US fruit juice market.
Our Canadian subsidiary SLEEMAN BREWERIES continued to invest in the marketing of its core premium
brands. As a result, its overall beer sales volume (excluding Sapporo brand beer) increased about 1% year on
year. In the U.S. beer market, Sapporo USA’s efforts to expand its customer base among the general
population as well as Asian Americans led to a 10% year-on-year increase in shipments of Sapporo brandbeers in the first half of the year. Our U.S. soft drinks business also achieved year-on-year sales growth,
supported by solid sales of commercial-use soft drinks and fruit juice sorbet at Country Pure Foods.

5

In Southeast Asia, our Vietnam business saw its first-half beer shipments decline year on year owing to anincrease in the country’s liquor tax in January and a decrease in the number of sales outlets stocking our
products following a change in our marketing methods. Our Singapore business, meanwhile, continued to its
efforts to expand its sales channels in the household- and commercial-use markets.
Elsewhere in Asia, the Korean business’ efforts to expand the number of sales outlets carrying our Sapporo
Premium Beer led to an increase in beer shipments to both the household- and commercial-use markets. In
Oceania, continued efforts to strengthen sales via licensing agreements with local brewing partners produced
another year-on-year gain in beer sales volumes.
Reflecting the above, our International Business’ shipments of Sapporo brand products in overseas markets
during the first half of 2017 increased 8% year on year.
As a result, the International Business posted first-half sales of ¥33.7 billion, up ¥2.0 billion, or 7%, and an
operating profit of ¥0.1 billion, representing a rebound from a ¥0.3 billion loss a year earlier.

Food & Soft Drinks
We estimate that overall demand for soft drinks in Japan in the first half of 2017 was 1% higher than a year
earlier.
In this market environment, the Food & Soft Drinks business continued its efforts to strengthen its brandlineup and deliver value propositions unique to the Sapporo brand.
During the first half, the business utilized its core strength to launch new products including Lemon no Genki,
a lemon-based drink with a functional food label that was developed using our extensive research into lemons,and Nippon Mugi-cha, made from 100% domestic-grown six-row barley. Ahead of the peak demand season
for beverages, we also launched Gabunomi Shiro Kuma Tropical Fruits Soda, developed through collaboration
with Marunaga Confectionery Co., Ltd.
The domestic food business achieved 8% overall growth in sales of its soup products, driven by particularly
strong sales of cold canned soups and cup-based instant soups. Lemon-based food product sales increased
5% year on year, on strong sales of our core Pokka Lemon 100 brand products. During the period, we enteredinto a new partnership agreement with Hiroshima Prefecture’s Kure City with the aim of promoting its lemonsand contributing to regional revitalization. The new agreement adds to our partnership with Hiroshima
Prefecture, which includes a similar agreement with the town of Osaki-Kamijima. We also enhanced our lineup
of soymilk and soymilk-based yogurt products by marking the 20th anniversary of the launch of the
SOYAFARM Tōnyū de Tsukutta Yogurt series, our yogurts made from soy milk designated for specified healthuse, with the first revision to the series in 10 years.
At the domestic restaurants business, Pokka Create, the POKKA SAPPORO subsidiary that operates the
Café de Crié coffee shop chain, achieved year-on-year sales growth, including solid sales at directly-run outlets,
reflecting the success of its efforts to boost sales by introducing new menus with seasonal and trendy dishes.
Meanwhile, our overseas soft drinks business maintained its top share* in Singapore’s tea drinks market,

6including its dominant 70% share of the green tea market, while also expanding exports to Malaysia and othercountries in the region. In Indonesia, PT. POKKA DIMA INTERNATIONAL started up commercial production
at its new local plant and began shipping the plant’s core PET bottle products, including a 450ml bottle ofjasmine green tea and 350ml bottle of lemon black tea.
Overall, the Food & Soft Drinks segment recorded first-half sales of ¥65.4 billion, up ¥0.5 billion or 1% year
on year. However, the segment posted an operating loss of ¥1.1 billion, compared with a loss of ¥0.8 billion ayear earlier.
* Based on data from Nielsen Singapore MarketTrack May 2017 (Copyright 2017, The Nielsen Company)

Restaurants
Japan’s restaurant industry stayed on the recovery track in the first half of 2017, while grappling with a severe
operating environment characterized by labor shortages and the resulting increase in labor costs as well as
the upward trend in food material procurement prices.
In this environment, the Restaurants business continued to pursue the fulfillment of its philosophy of“Enhancing the Joy of Living” through constant efforts to deliver safe and sound food and service to customers
while also striving to create restaurants that “deliver 100% satisfaction to customers.”
New store openings in Japan included the February opening of a Yebisu Bar outlet in Hiroshima, the chain's
first outlet in the Chugoku–Shikoku region, the March opening of another Yebisu Bar outlet in Shin Yokohama,and the May opening of a new Ginza Lion Beer Garden in Omiya, a suburb of Tokyo in Saitama Prefecture.
We also renovated the Beer Hall LION GINZA 7-Chome outlet, one of that chain’s flagship stores. Meanwhile,
we closed four unprofitable outlets. As a result, we had 199 outlets open for business in Japan as of end-June
2017.
Overseas, we continued to expand our operations in Singapore, where we are building a chain of restaurants
popular with the local people. During the first half of 2017, we renovated three Tonkichi outlets in the center ofthe city-state and opened a RIVE GAUCHE cake shop in the CityLink Mall in April. We also opened a Hokkaidothemed takeout SAPPORO LION shop in Resorts World Sentosa. As a result, we had 15 outlets open in
Singapore as of end-June 2017.
As a result of the above initiatives, Restaurants segment’s sales for the first half of 2017 totaled ¥13.8 billion,up ¥1.1 billion or 9% year on year. Segment operating loss, however, was ¥0.2 billion, slightly worse than theslightly under breakeven loss recorded a year earlier.

Real Estate
Japan’s real estate industry continued to enjoy solid demand in the Greater Tokyo office leasing market,
keeping vacancy rates low and supporting a continued moderate recovery in rent levels.
In this environment, our real estate business was able to maintain high occupancy rates at its properties inTokyo Metropolitan area, including Yebisu Garden Place Tower, the business’ core source of earnings. In

7addition, the high occupancy rates provided a solid platform for more assertive efforts to increase rents ofexisting tenants.
We are constantly striving to bring new added-value to our core Yebisu Garden Place commercial complex
and enhance the property’s brand value. Thus far in 2017, those efforts included the establishment of aconsortium-type child day care center that can be used by employees of the many companies with offices in
the complex as well as Shibuya Ward residents. The new facility opened its doors in April. We also continued
with the renovation of the Yebisu Garden Place Tower’s 39th floor panorama-view restaurant row, which isscheduled to be reopened this August.
GINZA PLACE, the commercial complex we opened in September 2016, is expected to make a solid
contribution to earnings in 2017, its first full-year of operation. We continue to enhance the facility’s information
dissemination capability in line with its original concept as a “base for information dissemination and exchange.”
In addition to enhancing the property’s brand value, these efforts are increasing the property’s drawing powerand helping make the Ginza district an even more dynamic and bustling urban center. Meanwhile, our realestate development business is making steady progress on the renovation of the Sapporo Factory commercial
complex built on the former site of a Sapporo brewery located on the east side of the Sosei River, an area
which is a focus of the Sapporo City’s urban redevelopment program. In addition, in May we completed theredevelopment of the adjacent parking lot into a three-story 6,900m2 commercial complex, and in July ahousing-related company opened a showroom on the site. We will continue our efforts to make this complex
an attractive urban space that delivers enhanced convenience to Sapporo residents and visitors.
As result of the efforts outlined above, Real Estate business sales in the first half of 2017 totaled ¥11.8 billion,up ¥0.9 billion or 9% year on year. Operating income was ¥5.8 billion, up ¥0.6 billion or 12%.

8

(2) Review of Consolidated Financial Condition
Consolidated Financial Condition
Consolidated assets as of June 30, 2017, totaled ¥606.0 billion, ¥20.3 billion less than at the end of theprevious fiscal year (December 31, 2016). The decline is mainly attributable to decreases in trade notes
and accounts receivable and in long-term loans receivable, which more than offset increases inmerchandise and finished products and investment securities.
Consolidated liabilities totaled ¥440.4 billion, a ¥19.5 billion decline from December 31, 2016,reflecting decreases in commercial paper, liquor taxes payable, and long-term bank loans, which
outweighed an increase in short-term bank loans.
Consolidated net assets totaled ¥165.5 billion, ¥0.7 billion less than on December 31, 2016. The
difference primarily reflects the payment of year-end dividends and a decrease in foreign currencytranslation adjustments.
Consolidated Cash Flows
Consolidated cash flows for the six months ended June 30, 2017, were as follows.
Operating activities provided net cash of ¥16.4 billion. The main cash flow positives were a ¥17.8
billion decrease in notes and accounts receivable and depreciation and amortization of ¥11.5 billion.
The main cash flow negatives were an ¥11.2 billion decrease in liquor taxes payable and a ¥4.2 billion
increase in inventories.
Investing activities used net cash of ¥6.0 billion. The main inflow was ¥4.0 billion for collection of
long-term loans receivable. The main outflows were ¥7.5 billion used for purchases of property, plantand equipment and ¥1.1 billion used for purchases of intangibles.
Financing activities used net cash of ¥10.5 billion. The main inflows were ¥9.9 billion from theissuance of bonds and ¥6.5 billion in proceeds from long-term bank loans. Major outflows included¥10.9 billion for the repayment of long-term bank loans, ¥10.0 billion for redemption of bonds, and a¥3.5 billion net decrease in commercial paper.
As a result of the above cash flows, cash and cash equivalents as of June 30, 2017, totaled ¥10.3
billion.

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

9

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

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

10

December 31, 2016

June 30, 2017

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

10,521
78,90929,632
12,385
19,135(58)
150,525

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

395,580(223,085)
172,495
232,181(189,499)
42,681
111,406
2,821
33,747(20,846)
12,901
342,306

27,43910,511
37,95025,343
9,926
35,26959,296
4,789
15,831(1,195)78,721
462,168
626,351

63,719467
14,947(1,201)
77,933455,509606,035

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

11

December 31, 2016

June 30, 2017

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

36,28039,271
29,50010,06623,024
2,339
2,009
8,407
56,672
207,571

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

50,128102,730
8,354
30,93040,733
232,877
440,449

53,88646,08941,932(1,795)140,11253,88646,08939,267(1,800)137,442

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

25,413(15)(2,309)(215)
22,873
5,269
165,585
606,035

(2) Consolidated Statements of Income

I Net sales
II Cost of sales
Gross profit
III Selling, general and administrative expenses
1 Sales incentives and commissions
2 Advertising and promotion expenses
3 Salaries
4 Provision for bonuses
5 Retirement benefit expenses
6 Other
Total selling, general and administrative expenses
Operating income
IV Non-operating income
1 Interest income
2 Dividend income
3 Equity in income of affiliates
4 Gain on valuation of derivatives
5 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Foreign exchange losses
3 Loss on valuation of derivatives
4 Other
Total non-operating expenses
Ordinary income
VI Extraordinary gains
1 Gain on sales of property, plant and equipment
2 Gain on sales of investment securities
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on sales of property, plant and equipment
3 Impairment loss
4 Loss on devaluation of investment securities
5 Compensation expenses
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent
ProfitOther comprehensive income
Unrealized holding gain on securities
Deferred hedge gains (losses)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

12

Six months ended June30, 2016
Amount248,959
163,238
85,721(millions of yen)Six months ended
June 30, 2017
Amount257,970
167,487
90,482

17,646
10,682
15,781
1,040
402
37,12082,672
3,048

19,013
11,221
16,474
1,220
358
39,17587,464
3,018

122
716
8
42
398
1,287

95
755
10
377
1,239

1,059
412
244
1,715
2,620

977
153
174
298
1,603
2,654

22
5
27

153
36
189

564
5
108
22
224
925
1,722
1,266
456
(9)
465

398
4
210
9
291
915
1,928
1,881
46
(175)
222

456

46

(5,634)(4)(4,423)(121)(10,184)(9,728)

2,893
(108)
(541)
(173)
2,069
2,116

(8,971)
(757)

2,521
(404)

(3) Consolidated Statements of Cash FlowsSix months ended
June 30, 2016
AmountI Cash flows from operating activities
1 Profit before income taxes
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 Purchase of subsidiaries' shares
resulting in change in scope of consolidation
8 Increase in long-term loans receivable
9 Collection of long-term loans receivable
10 Payments for transfer of business
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 non-controlling interests
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(millions of yen)Six months ended
June 30, 2017
Amount1,722
10,945
108
1,943
(902)
(32)
(838)
1,060
(22)
569
(5)
22
16,141(4,057)
1,645(3,121)(12,163)
304
8,564
1,071
22,958938(1,069)(8,023)18
14,823

1,928
11,543
210
1,928
(801)
(17)
(851)
977
(153)
403
(36)
9
17,848(4,201)(2,181)(1,720)(11,200)(2,311)
8,427(543)
19,258956(1,026)(3,377)675
16,486(8,766)294(1,279)
(6)
6
(154)

(7,578)302(1,193)
(6)
86
(298)

(660)
(40)
36
(1,558)(1,929)(14,058)

(41)
4,065
(1,352)(6,015)3,882(2,000)13,266(19,617)9,960(2,725)(10)(1,446)
(451)
447
1,305

1,906
(3,500)6,500(10,904)
9,960(10,016)(2,887)(19)(1,538)(4)
0(10,504)

IV Effect of exchange rate changes on cash and cash equivalents

(126)

(123)

V Net increase (decrease) in cash and cash equivalents

1,942

(156)

VI Cash and cash equivalents at beginning of period
Ⅶ Cash and cash equivalents at end of period

10,39912,342

10,475
10,31813

(4). Notes on the quarterly financial statements(Notes on the Going-concern Assumption)
Not applicable(Notes on significant changes in the amount of shareholders’ equity)
Not applicable(Application of accounting methods specific to the preparation of quarterly consolidated financial statements)
Calculation of tax liabilities
The Company calculates tax liabilities by producing a reasonable estimate of the effective tax rate after applying
tax-effect accounting to income before taxes for the fiscal year, which encompasses the six months ended June 30,
2017, and then multiplying profit before income taxes by this estimated effective tax rate.

(Changes in accounting policies, changes in accounting estimates, and retrospective restatements)
Not applicable(Additional information)
Implementation Guidance on Recoverability of Deferred Tax Assets
Sapporo Holdings has applied the revised Implementation Guidance on Recoverability of Deferred Tax Assets(Accounting Standards Board of Japan [ASBJ] Guidance No. 26 of March 28, 2016) to its consolidated accounts fromthe first quarter of the year ending December 31, 2017.

14

(5) Segment InformationⅠ

Six months ended June 30, 2016 (January 1, 2016 – June 30, 2016)

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

International Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *1

Total

Amounts
reported on
Adjustments thestatements
of income *2

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

125,755

31,60864,991

12,65010,905245,911

3,048

1,271

52

129

0

1,248

2,702

9,425

127,027

31,66065,12012,65012,153248,613

12,474

1,474

(390)

(802)

(51)

5,184

5,415

(72)

248,959
12,127
261,087
5,342-

248,959(12,127)(12,127)

248,959(2,293)

3,048-

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

2. Reconciliation and main components of differences between income and loss of reportable segments and figures on the statement of income (information ondifferences)(millions of yen)Segment income (loss)
Total for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating losses on the statement of income

Amount5,415(72)(2,275)(18)
3,048

3. Impairment Loss on Fixed Assets or Goodwill by Reportable Segment(Significant impairment losses on fixed assets)
At the Japanese Alcoholic Beverages business, the book value of certain machinery and equipment has been lowered to the expected recoverable amountfollowing a revision to the business’ production network that lowered the profitability outlook for the business and made full recovery of related investments unlikely.
As a result, an impairment loss of ¥55 million has been recognized on the accounts for the first half of fiscal 2016. In the Food & Soft Drinks business, profitability
declines at certain restaurants operated by the business make the recovery of investment in those outlets unlikely. Accordingly, the book value of the buildings andrelated equipment has been lowered to the expected recoverable amount. As a result, an impairment loss of ¥52 million has been recognized on the accounts forthe first half of fiscal 2016.
(Significant changes in the amount of goodwill)
Not Applicable(Material Gain on negative goodwill)
Not Applicable15

Ⅱ

Six months ended June 30, 2015 (January 1, 2017 – June 30, 2017)

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

International Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *1

Total

Amounts
reported on
Adjustments thestatements
of income *2

Net sales(1) Operating revenues

127,541

33,70765,497

13,814

11,839252,400

5,570

1,569

35

129

0

1,276

3,010

9,748

129,11033,742

65,626

13,814

13,115

255,410

15,3181,458

107(1,186)

(214)

5,800

5,964

(87)

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

257,970
12,758
270,729
5,876-

257,970(12,758)(12,758)

257,970(2,858)

3,018-

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

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

AmountTotal for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating income on the statement ofincome5,964(87)(3,085)227
3,018

3. Impairment Loss on Fixed Assets or Goodwill by Reportable Segment(Significant impairment losses on fixed assets)
At the Food & Soft Drinks business, the profitability of certain operating equipment has declined, making the recovery of investment in those assets unlikely.
Accordingly, the book value of related leased and other assets has been lowered to the expected recoverable amount. As a result, an impairment loss of ¥138
million has been recognized on the accounts for the first half of fiscal 2017.
In the Other column, the profitability of certain food production facilities has declined, making the recovery of investment in those assets unlikely. Accordingly, thebook value of certain machinery and equipment has been lowered to the expected recoverable amount. As a result, an impairment loss of ¥72 million has beenrecognized on the accounts for the first half of fiscal 2017.

(Significant changes in the amount of goodwill)
Not Applicable(Material Gain on negative goodwill)
Not Applicable16

(Subsequent events)[Business combination by acquisition]
The Company has decided to acquire 100% of the outstanding shares of Anchor Brewing Company, LLC,
with the acquisition to be made through a subsidiary, to be established for the purpose of entering into theagreement.
1. Name and business content of company to be acquired
Name:

Anchor Brewing Company, LLC (and a subsidiary)

Location:

San Francisco, California, USA

Annual sales:

Approx. US $33 million (about ¥3.7 billion)(fiscal year ended December 2016)

Business content:

Beer brewing and sales

2. Purpose of acquisition
In November 2016, the Sapporo Group formulated the new Long-Term Management Vision “SPEED 150”
through 2026, the year marking the Group’s 150th anniversary since its founding. The vision set forth in
Speed 150 is for the Sapporo Group to be a company with highly unique brands in the fields of “Alcoholic
Beverages,” “Food,” and “Soft Drinks” around the world.
Regarding its “Promote Global Business Expansion” policy, a key component of the Group’s growthstrategy, Sapporo Group is promoting a distinctive plan that prioritizes expanding business in North America,
already a core part of the Group’s business foundation, and Southeast Asia, a regional market with highgrowth prospects.
The addition of Anchor’s strong brand power and network to the Sapporo Group’s US beer businessportfolio through the conclusion of this agreement is expected to generate further synergies and accelerate
the growth of the Group’s US business.
3. Transaction counterparty
Anchor Brewers & Distillers, LLC
4. Acquisition dateAugust 31, 2017 (planned)
5. Acquisition cost: US$85 million
The contract purchase price is currently under review by the involved parties. Accordingly, the acquisition costshown here is provisional amount.
6. Share of outstanding stock to be acquired: 100%
7. Acquisition funding method: Own capital, external borrowings, etc.

17