Financial Results
for the Six Months Ended June 30, 2012 — Consolidated(Based on Japanese GAAP)
August 7, 2012

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
Tatsuya Komatsu, Director of the Corporate Communications Department

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

Filing of quarterly financial reportAugust 14, 2012

Commencement of dividend payments-

Supplementary information to the quarterly earnings results

AvailableYes(mainly targeted at institutional
investors and analysts)

Quarterly earnings results briefing held

1. Consolidated Financial Results for the Six Months Ended June 30, 2012
(January 1 – June 30, 2012)(Amounts in million yen rounded down to the nearest million yen)

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

Operating income

Ordinary income
million yen%

million yen%

million yen

Six months ended
June 30, 2012

223,043

16.0(1,726)-(2,461)-(2,901)-

Six months ended
June 30, 2011

192,214

8.5

3,005

149.2

2,017

375.1

(2,965)-

Note: Accumulated other comprehensive income
Six months ended June 30, 2012 (558) million yen
Six months ended June 30, 2011 (3,281) million yen

Net income per
share

Diluted net income
per share

Yen

yen

Six months ended
June 30, 2012(7.41)-

Six months ended
June 30, 2011(7.57)-

1%

Net income
million yen%

(2) Financial Position

Total assets

Net assets

Shareholders’equity ratio

Net assets per
sharemillion yen

million yen%

yenJune 30, 2012

591,894

122,872

20.3

306.63

December 31, 2011

550,784

124,775

22.4

314.87

Note: Shareholders’ equity
June 30, 2012:
120,062 million yen
December 31, 2011: 123,293 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, 2011

—

0.00

Year ending
December 31, 2012

—

0.00

Year ending
December 31, 2012
(forecast)

—

7.00

7.00

—

7.00

7.00

Note: No changes were made to dividend forecasts in thesix months ended June 30, 2012.

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2012
(January 1 – December 31, 2012)(Percentage figures represent year-over-year changes)
Net
Net sales

Operating income

Ordinary income

Net income

incomeper share

Year ending
December 31,
2012

million yen%

million yen%

million yen%

million yen%

yen

493,000

9.7

16,000(15.3)

13,000(22.7)

3,600

13.8

9.19

Note: Changes were made to earnings forecasts in the six months endedJune 30, 2012.

4. Other*For details, see "2. Other" on page 12.
(1) Changes to scope of consolidation: None
*Changes affecting the status of significant subsidiaries (scope of consolidation)(2) Simplified accounting: Yes

2

*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.: Yes
2) Changes other than 1) above: Yes
3) Changes in accounting estimates: Yes
4) Retrospective restatement: None
Note: For details, see (2) Changes in accounting policy, changes in accounting estimates, andretrospective restatement, in section “2. Other” on page 12 in the accompanying material.
(4) Number of shares issued and outstanding (common stock)1) Number of shares issued at end of period (treasury stock included):June 30, 2012:
393,971,493 shares
December 31, 2011: 393,971,493 shares
2) Number of shares held in treasury at end of period:
June 30, 2012:
2,411,431 shares
December 31, 2011:
2,400,991 shares
3) Average number of outstanding shares during the period:
Six months ended June 30, 2012:
391,564,686 shares
Six months ended June 30, 2011:
391,585,911 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 hereinhad
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.

3

1. Analysis of Operating Results(1)Consolidated Financial Results for the Six Months ended June 30, 2012
In the first half of 2012 (January 1 –June 30), the Japanese economy remained on amoderate recovery trajectory as consume r spending rebounded in line withearthquake-recovery efforts and improving corporate profits. However, these positives wereaccompanied by renewed yen appreciation and lingering concerns about such issues as theEuropean debt crisis and Japan’s electrici ty supply problems. As a result, the outlook for afull-fledged economic recovery remains clouded with uncertainty.
In this environment, the Sapporo Group achieved solid gains in sales in the first half of theyear. Sales in the Japanese Alcoholic Beverag es and the Restaurants businesses were higher
than in the first half of 2011, when sales in both businesses were directly negatively affectedby the impact of the earthquake and tsunami disaster. International Business posted higher
sales largely owing to the inclusion in the Group’s consolidated income statement of Silver
Springs Citrus, the largest maker of private -brand chilled drinks in the United States from April
2012. The Food & Soft Drinks business also posted year -over-year sales gains as theinclusion in the Group’s consolidated income statement consolidation of the POKKA Group
from April 2011 boosted first-quarter sales and contributed to sales over the entire first half of2012.
Group operating income declined year over year. Profits were booste d by gains in the
Restaurants business and the inclusion of revenues and earnings from Yebisu Garden Placein the Group’s consolidated income statement from March, following the Real Estatesegment’s acquisition of the 15% interest in trust beneficiary rig hts in Yebisu Garden Place
held by the former joint holder in the complex. These positive factors, however, were
outweighed by a number of profit -reducing factors, including an aggressive year -over-yearincrease in marketing expenses by both the Japanese A lcoholic Beverage business and the
Food & Soft Drinks business, expenditures by the International Business to open new markets
in Vietnam, increased goodwill amortization in the Food & Soft Drinks segment, and afirst-quarter operating loss at the POKKA Gr oup.
As a result of the above factors, the Sapporo Group posted consolidated sales of ¥ 223.0
billion (up ¥30.8 billion, or 16%, year over year). Despite higher sales, the Group posted an
operating loss of ¥1. 7 billion (compared with a ¥3.0 billion profit a year earlier) and an ordinary
loss of ¥2. 4 billion (compared with a ¥2.0 billion profit a year earlier). As a result, the Sapporo
Group recorded a first -half net loss of ¥ 2.9 billion (compared with a loss of ¥2.9 billion a year
earlier). We have changed accounting methods from the first quarter ended March 31, 2012
and applied the new methods retroactively to enable period-over-period comparisons andanalysis.

4Segment information is outlined below. On March 30, Pokka Sapporo Food & Beverage Ltd.
was established to oversee the integration of Sapporo Beverage Co., Ltd., and the POKKA
Group. The newly established company is readying a new business strategy in preparation forthe launch of integrated business operations in January 2013.
As of the first quar ter of fiscal 2012, the names of reportable business segments have beenchanged as follows: “International Alcoholic Beverages” is now “International Business” andthe Soft Drinks segment and the POKKA Group have been merged into a single segment,
which we call “Food & Soft Drinks”. To enable year-over-year comparisons in this document,
figures for the year -earlier period have been changed to reflect the new segmentation. The
main changes from the previous fiscal year are summarized in the note on changes i nsegment classification at the end of this document.

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 Restaurant segments. In particular, sales in the first quarter tend to belower than sales in the other three quarters.

Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer -type beverages in the first h alf of2012 increased 1% year over year, a slight recovery from the unstable demand seen a year
earlier in the aftermath of the Great East Japan Earthquake. Beer sales volume increased
while sales of happoshu declined. New-genre beer sales volume growth sl owed but demand
continued to surpass the previous year’s level.
In this market environment, our Japanese Alcoholic Beverages business launched arenewal version of its popular new -genre beer Mugi to Hop in January and then unveiled the
Mugi to Hop Black in March to the support of customers who found its flavor indisti nguishable
from black beer. In addition, in May and June it brought back two seasonal offerings that weresuccessful in 2011 —Hop-batake no Kaori and Ice Lager Seven. As a result, first -half sales ofour beer and beer -type beverages increased 2% year over y ear, boosting our market share.
In the nonalcoholic beer category, we launched a renewed Sapporo Premium Alcohol Freein February and then unveiled the world’s first nonalcoholic black canned beer, Sapporo
Premium Alcohol Free Black in May. The new products helped drive 30% year -over-year
growth in sales volume in this category.
In the low-alcohol or ready -to-drink (RTD) category, our tie-up with South Korea’s No.1
foods maker CJ CheilJedang led to the January l aunch of the jointly developed CJ Oishii

5

Makgeolli Pink Grapefruits. In Apr il, we launched two new beverages jointly developed with
Bacardi, the world’s No.1 seller of rum. Both Bacardi Mojito and Bacardi Cuba Libre were wellreceived by customers in Japan. In March, we launched a renewed version of Sapporo Nectar
Sour Peach Spar kling. We also continued to develop and market a variety of limited -volume
RTD beverages with seasonally flavors, part of Sapporo’s unceasing effort to bring new
products to the market that satisfy customer demand for beverages suitable for a wide rangeof occasions. As a result, we achieved 74% year -over-year growth in unit sales of our RTD
beverages.
In the wine and liquor business, demand for our everyday imported and domestic wines
continued to grow, as did sales of our premium domestic wine Grand Pola ire. As a result, thewine and liquor business enjoyed growth in both sales and profits.

Our western spirits

business saw its sales volume increase thanks to strong contributions from Bacardi products.
The shochu business achieved its sales volume targets and recorded year -over-year gains
in both sales and profits, in part thanks to the good market reception for the March launch of
Imo Shochu Kokuimo, a blended shochu.
Overall, the Japanese Alcoholic Beverages business posted sales of ¥ 122.6 billion (up ¥4.4
billion, or 4%, year over year) in the first half of 2012. The higher sales were accompanied byaggressive spending on marketing as we diversified product offerings. As result, the businessposted an operating loss of ¥2. 6 billion, compared with the breakeven figure achieved in thefirst half of 2011.

International Business
In North America, the timing of a full -fledged economic recovery remains unclear, and wetherefore believe that total demand i n the North American beer market was limited to a slightincrease in the first half of 2012. The Asian beer market, meanwhile, continues to growsteadily, supported by fast -growing economies in the region.
In this environment, our International Business se gment continued marketing activities
targeting the premium beer market, where it has core strengths. Canadian subsidiary
SLEEMAN BREWERIES posted a 9% year -over-year increase in unit sales (excluding
outsourced production of Sapporo brand products), extending its growth streak to six years.
Sapporo USA managed to boost sales volumes for its Sapporo brand beers by 1% year overyear. We took an important step toward a strong foothold in the United States’ soft drinks
market when we acquired a 51% equity stake in Silver Springs Citrus, Inc., the United States’
largest maker of private -brand drinks. The new subsidiary’s results since April are included inour consolidated accounts.
In Vietnam, from April we began a full -fledged marketing offensive, including TV
commercials, as we seek to build brand recognition for the Sapporo Premium brand. In Korea,

6

at the end of January we took a 15% equity stake in a company established by our local
partner, Maeil Dairies Co., Ltd., establishing the structure needed to accel erate sales of
Sapporo brand beers to the household and commercial markets in South Korea. In Oceania,
we worked at strengthening sales via a brewing and sales licensing agreement entered into in
October 2011 with Australia’s Coopers Brewery. In Singapore, we continued to work with the
POKKA Group to expand sales channels in the local household market. On the strength of theefforts outlined above, we achieved 58% growth in beer sales volumes in Asia and othermarkets outside North America.
Overall, the I nternational Business segment saw its existing local operations achieve
expansion on local -currency bases. These gains, combined with the addition of Silver Springs
Citrus to the Sapporo Group, helped us overcome the dilutive impact of yen appreciation andpost first-half sales of ¥1 6.0 billion (up ¥3. 5 billion, or 29%, year over year). The segment’s
first-half operating loss, however, expanded to ¥0.3 billion ( from ¥0.2 billion a year earlier),
owing to spending to establish a presence in the Vietnamese ma rket.

Food & Soft Drinks
Sapporo Beverage Co., Ltd.
We estimate that domestic demand for soft drinks increased 4% year over year in the firsthalf of 2012, bolstered by strong sales of some new products and a post -disaster rebound insales of existing br ands.
In this environment, Sapporo Beverage concentrated on growing and strengthening its core
brands. Specific measures included a TV ad campaign since April in cooperation with achildren’s TV program to rais e brand recognition for our Ribbon brand. In addition, we
launched Yubari Melon Soda in June as the latest addition to the Ribbon lineup. We also
conducted a campaign aimed at rejuvenating the Gabunomi brand, expanding sales channels,
and solidifying its market presence. Sales of Gerolsteiner (natura lly carbonated water from
Germany) surpassed the previous year ’s level and our targets, thanks to successful in -store
trial offers and repeat purchase promotions. Sales for the Oishii Tansansui lineup of bottled
soda waters exceeded the level of the previo us year and our sales forecasts despite an overall
10% year-over-year decline in first -half sales for Sapporo Beverage, which is attributable to areversion to the norm after last year’s surge in demand for bottled water in the aftermath of theearthquake and tsunami disaster.
On the cost front, we overcame rising material costs by optimizing our production structure
and carrying out cost -structure reforms throughout the value chain via a rigorous
select-and-focus approach.

7

POKKA GroupOur estimate of domestic demand trends for soft drinks in the first half of 2012 is as stated at
the beginning of the previous section. In addition, we estimate that total demand forlemon-based products (flavorings) increased 1% year over year in the first half while dema ndfor instant soups appears to have declined by 5%.
In this environment, the POKKA Group’s Domestic Beverage & Foods business endeavoredto strengthen and cultivate brand power by focusing investments on core brands and newer
growth brands.
POKKA’s domestic soft drinks business announced a renewal of the Kireto Lemon lineup
and launched a new TV commercial, but sales declined year over year as sales of drinks in
500ml PET bottles slipped in the wake of some major new product offerings by rival drink
makers. POKKA bolstered its Pokka Coffee lineup and came out with promotional canned
drinks. It also began marketing Aromax Kyokugen no Kaori Black, a limited edition productsold only in the Tokai region (centered on Nagoya City). In May, POKKA introduced

Yasuragi

Kibun no Corn-Cha, a new unsweetened tea offeri ng made from roasted corn.
POKKA’s domestic foods business promoted sales of its POKKA Lemon 100 by proposing
recipes linked to its nutrition education activities and conducting cross -merchandising. It
strengthened the lineups for its Jikkuri Kotokoto soup series and the Kongari Pan series of
instant cups of soup. Seeking to stimulate new demand for its canned soups, POKKA
introduced Tsumetai Potage, a canned cold potato soup. The Kantanbimi Korean soup lineup
was bolstered by the addition of two new flavo rs—Dashi no Moto and Namuru no Moto.
At Pokka’s Domestic Restaurants business, the core Café de Crié coffee shop chain
continued to post favorable results by aggressively introducing new menu items on a finely
defined cyclical basis and by conducting effe ctive store remodeling and new outlet openings.
The coffee shop chain also moved aggressively into new markets, for example by opening astore in April at the Hamamatsu service area of the New Tomei Expressway that allows
customers to bring their pets into the shop.
The Overseas Beverage & Foods business posted solid overall results as its operations in
Singapore are developing ahead of plan. It also made steady progress in improving its COGS
ratio and lowering distribution costs.
POKKA’s Overseas Restaura nts business as a whole generated first -half results similar to
those in 2011. The Hong Kong operations struggled after the lunar new year celebrations
amid a generally tepid market from February onwards. Results were better in Singapore,
however, as the company revised menus to match customer preferences at individual store
locations and increased sales of pastries.
POKKA Group results were added to Sapporo Holdings’ consolidated income statementfrom April 1, 2011. We therefore provide the previous -year data for reference.

8

As a result of the above business activities and the consolidation of the POKKA Group from
April 2011, Food & Soft Drinks segment sales in the first half of 2012 totaled ¥60. 8 billion, a
year-over-year increase of ¥21. 3 billion or 54%. However, the segment posted a first -halfoperating loss of ¥1. 1 billion (compared with a profit of ¥1.2 billion a year earlier), owing toaggressive spending to expand sales , increased goodwill amortization, an d a first-quarter
operating loss at the POKKA Group.

Restaurants
In the first half of 2012, Japan’s restaurant industry enjoyed a mild recovery as thedeterioration in consumer sentiment that took hold following the 2011 disaster began todissipate. That said, consumers continued to cut back on spen ding and bec ame increasingly
more conscious about food safety. Overall, the business environment remained quite severe.
In such an environment, our Restaurants business sought to attract customers back toexisting stores by holding draft beer campaigns and strengthening marketing to corporations
as part of its effort to awaken demand for reserved parties.
The Restaurants business also continued to revitalize existing outlets by switching them toother formats during the first half. It converted two outlets into YEBISU Bar, one into the
Betsukai Pub format, a Japanese -style pub officially recognized by and featuring fare from thetown of Betsukai in Hokkaido, and one more into the Rumoi Marche format, a seafood
restaurant officially recognized by and featurin g fare from the Hokkaido town of Rumoi.
New outlet openings in the first half included YEBISU Bar outlets in Akasaka and the
Kurobei Yokocho dining area in Tokyo Station. We also opened the first outlet of a newrestaurant format specializing in roast bee f—The Kitchen Ginza Lion—in the Lumine
Ikebukuro complex. The opening of a Suruga Maru seafood and tempura rice bowl shop in the
Shizuoka Service Area of the New Tomei Expressway is representative of our efforts

toventure into new types of locations . We also opened an Oshamambe Japanese
pub/restaurant (officially recognized by Hokkaido’s Oshamambe Town) in Ginza and took overmanagement of restaurant operations at a golf club. In total, our Restaurants business opened
11 new outlets during the first half o f 2012 while closing six outlets, bringing the total number ofoutlets operating at the end of the first half to 196.
The Restaurants business also achieved cost reductions and profit structure reforms byusing a distribution system with a single center f or serving the Tokyo metropolitan logistics
network. The center began operations last year.
As a result of the above, the Restaurants business recorded first -half sales of ¥11. 8 billion(up ¥1.2 billion, or 12%, year over year) and posted an operating loss of ¥0.3 billion , cutting inhalf the ¥0.6 billion loss recorded in the first half of 2011.

9

Real Estate businessConditions in Japan’s real estate industry remain challenging, with a large increase of new
office supply in the Tokyo rental office market contributing to high vacancy rates. On a morepositive note, however, office rents have beg un to bottom out.
In this environment, our Real Estate business has managed to maintain high occupancy
rates at its multipurpose Yebisu Garden Place complex and other properties concentrated in
the Tokyo Metropolitan area.
In January we changed the name of our consolidated real estate subsidiary Yebisu Garden
Place Co., Ltd., to Sapporo Real Estate Co., Ltd., as part of our plan to raise the Sapporo
brand value and strengthen Group synergies while continuing efforts to raise occupancy rates
and rent levels at Group properties.
The Real Estate business got a solid profit contribution from Yebisu Garden Place, for which
we reacquired 100% ownership in March when we bought trust beneficiary rights amounting to
a 15% interest in the property. We now are able to accelerate efforts to enhance the value ofthe property, including by raising the convenience of offices in the multipurpose complex.
Our real estate development business is focusing on developments in the Ebisu area. As
such, we started the redevelop ment of the Seiwa Yebisu Building, with completion scheduled
for 2014.
Overall, Real Estate segment sales in the first half of 2012 totaled ¥ 11.2 billion, up ¥0.2
billion or 2% year over year, as the increased revenue contribution from the acquisition of the
15% in trust beneficiary rights to Yebisu Garden Place was offset by a decline in property sales.
Operating income totaled ¥4.4 billion (up ¥0.1 billion or 4%).

(2) Review of Consolidated Financial Condition
Consolidated financial condition
Consolidat ed assets as of the end of the first half of fiscal 2012 on June 30, 2012, totaled¥591.8 billion, a ¥41. 1 billion increase from the end of the previous fiscal year on December 31,
2011. The increase is attributable to an increase in land holdings accompan ying theacquisition of an additional 15% equity interest in the Yebisu Garden Place complex, whichmore than offset a decrease in notes and accounts receivable.
Consolidated liabilities totaled ¥46 9.0 billion, a ¥43.0 billion increase from December 31, 2 011,
reflecting increases in bank loans and other financial liabilities, which were partially offset bydecreases in liquor taxes payable and income taxes payable.
Consolidated net assets totaled ¥122.8 billion, a ¥1.9 billion decline from December 31, 20 11.
The decline is largely attributable to the distribution of year -end dividends for the previous
fiscal year and the booking of a net loss for the first half of the current fiscal year. These

10

asset-reducing factors were partially offset by increases in u nrealized gains on securities andin the foreign currency translation adjustment account.

Consolidated Cash Flows
Consolidated cash flows for the six months ended June 30, 2012 were as follows.
Operating activities provided net cash of ¥10.7 billion. The major sources of operating cash
were depreciation and amortization of ¥12.7 billion, a decrease in notes and accounts
receivable (¥6.3 billion), and an increase in notes and accounts payable (¥2.7 billion). Cashinflows from these sources were offset by a net loss before income taxes and minority
interests (¥3.9 billion), an increase in inventories (¥5.4 billion), and a decrease in liquor taxes
payable (¥2.2 billion).
Investing activities used net cash of ¥50.6 billion. The major investment outflows incl udedpurchases of property, plant and equipment (¥45.6 billion), purchases of subsidiaries’ shares
resulting in changes in the scope of consolidation (¥1.6 billion), and purchases of intangible
assets (¥1.2 billion).
Financing activities provided net cash of ¥38.5 billion. The major financing inflows were fromproceeds from long -term bank loans (¥20.9 billion), net increase of commercial paper (¥15.0
billion), issuance of corporate bonds (¥9.9 billion) and a net increase in short -term bank loans(¥6.1 billion). The major outflows included repayment of long -term bank loans (¥8.8 billion),cash dividends paid (¥2.7 billion), and repayment of finance lease obligation s (¥1.9 billion).
As a result of the above cash flows, cash and cash equivalents totaled ¥7.8 billion as of June30, 2012.

(3) Consolidated Earnings Forecast
The Japanese economy remains on a moderate recovery trajectory as consumer spending
rebounds in line with earthquake-recovery efforts and improving corporate profits. On theother hand, ling ering concerns about yen appreciation, the European debt crisis , and Japan’s
electricity supply problems continue to cloud the outlook for a full -fledged economic recovery.
The Sapporo Group continues to face a challenging operating environment but is ste adily
implementing various measures in each business segment targeted at securing Group profits.
Our consolidated earnings forecast for the full fiscal year to December 31, 2012, have beenrevised as shown below from the forecast announced by the Company on February 10, 2012.

11

・Consolidated Forecasts(millions of yen）
Revised Forecast forYear ending
December 31, 2012

Japanese Alcoholic Beverages
International Business
Food & Soft Drinks
Restaurants
Real Estate
Other
Net sales
Japanese Alcoholic Beverages
International Business
Food & Soft Drinks
Restaurants
Real Estate
Other
General corporate andintercompany eliminations
Operating income
Ordinary income
Net income

Previous Forecast
for Year ending
December 31, 2012

277,500
37,300128,100
24,90024,400800
493,000
9,000
0
200
600
9,300
(400)

288,000
37,300134,600
24,90024,400800
510,000
10,500
0
3,000
600
9,300
(400)

ChangeChange (%)

Year ended
December 31, 2011(3.6)%(4.8)%(3.4)%(14.3)%(93.3)%-

268,189
25,888108,060
24,091
22,468755
449,452
9,304
378
3,690
219
8,552
(643)

(10,500)(6,500)(17,000)(1,500)(2,800)-Change9,310
11,411
20,039808
1,931
44
43,547(304)(378)(3,490)
380
747
243

(2,700)(3,000)300-(2,618)(81)

16,00013,0003,600

20,00017,000
6,300(4,000)(4,000)(2,700)(20.0)%(23.5)%(42.9)%

18,883
16,8073,164(2,883)(3,807)435

2. Other(1)Use of accounting methods specific to 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 and minority interests for the fiscal year,
which encompasses the six months ended June 30, 2012, and then multiplying income (loss)
before taxes and minority interests by this estimated effective tax rate.

(2) Changes in accounting policy, changes in accounting estimates, and retrospective restatement(Changes in accordance with amendments to accounting standards, etc.)(Method of accounting for sales)
Sapporo Beverage Co., Ltd., and Pokka Corporation, both subsidiaries of the Company, are to bemerged on January 1, 2013.
In line with this merger, the reportable segments for Soft Drinks and POKKA Group presented in
the consolidated accounts for the fiscal year ending December 31, 2011, have been integrated intoa single segment called “Food & Soft Drinks” from the first quarter of the fiscal year ending
December 31, 2012. In addition, a portion of the sales incentives paid to business partners(wholesalers and retail outlets) on the sales price of flavored-water drinks and food products, whichto date have been accounted for under selling, general and administrative expenses, are excluded
from reported sales from the first quarter of the fiscal year ending December 31, 2012.
These changes to accounting methods are applied retroactively to the Company’s financial

12

Change (%)

3.5%
44.1%
18.5%
3.4%
8.6%
5.9%
9.7%
(3.3)%−(94.6)%
173.8%
8.7%−−(15.3)%(22.7)%
13.8%

Statements for the first-half of the fiscal year ending December 31, 2011, and the consolidated
financial statements for the full year ending on the same date.
As a result, sales, gross profit, and selling, general and administrative expenses on the revised
financial statements for the first-half of the fiscal year ending on December 31, 2011, have eachbeen reduced by ¥2,213 million from the amounts reported before the retroactive application of the
new accounting method. Operating income is unaffected by the change.

(Changes in accounting principles hard to distinguish from changes in accounting estimates )In response to Japan's recent corporate tax law amendments and effective from the second
quarter of the fiscal year ending December 31, 2012, the method which some Group domestic
consolidated subsidiaries use for depreciation of property, plant, and equipment acquired on
or after April 1, 2012 will be adjusted to reflect the revised corporate tax code. The impact of
this change on the Group’s first -half consolidated operating loss, ordinary loss, and the loss
before income taxes is negligible.

(3) Additional information(Application of accounting standard for accounting changes and error corrections)
The Company has adopted the Accounting Standard for Accounting Changes and Error
Corrections (ASBJ Statement No.24, December 4, 2009) and its associated Guidance on
Accounting Changes and Error Corrections (ASBJ Guidance No. 24, December 4, 2009) in regards
to accounting changes and the revision of errors on past accounts being carried out from the startof the first quarter of the fiscal year ending December 31, 2012.

13

3. 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 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

14

December 31, 2011

June 30, 2012

AmountAmount9,204
79,34017,113
10,948
12,798(386)
129,018

7,956
73,722
24,11011,35915,313(311)
132,151

376,200(201,765)
174,435
203,307(163,080)
40,226
83,8262,058
39,300(25,467)
13,832
314,379

387,823(205,645)
182,178
208,807(168,847)
39,960115,278
2,795
39,282(25,501)
13,781
353,994

40,147
8,844
48,992

39,131
8,087
47,21931,208
10,142
18,454(1,411)
58,394

33,1009,875
16,975(1,422)58,528421,766

459,742

550,784

591,894

Liabilities
I Current liabilities
1 Notes and accounts payable - trade
2 Short-term bank loans
3 Current portion of long-term debt
4 Liquor taxes payable
5 Income taxes payable
6 Accrued bonuses
7 Deposits received
8 Other
Total current liabilities
II Long-term liabilities
1 Bonds
2 Long-term bank loans
3 Employees' retirement benefits
4 Directors’ and corporate auditors’ severance benefits
5 Dealers' deposits for guarantees
6 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 (losses)
3 Foreign currency translation adjustments
Total accumulated other comprehensive income
III Minority Interests
Total net assets
Total liabilities and net assets

15(millions of yen)
December 31, 2011
Amount(millions of yen)
June 30, 2012
Amount32,35457,37010,00032,535
2,985
2,118
15,301
59,923
212,589

35,792
71,53320,00030,251
1,318
1,755
14,24075,179250,070

32,000106,798
7,452
53
32,62334,492
213,418
426,008

32,000112,256
7,414
30
32,90434,343218,950
469,02153,88646,31028,741(1,197)
127,741

53,88646,30923,140(1,199)122,137

1,993(8)(6,432)(4,447)
1,482
124,775
550,784

4,002(6)(6,070)(2,074)
2,809
122,872
591,894

(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(loss)
IV Non-operating income
1 Interest income
2 Dividend income
3 Equity in earnings of affiliates
4 Foreign exchange gain
5 Gain (loss) on gift voucher redemptions
6 Other
Total non-operating income
V Non-operating expenses
1 Interest expense
2 Equity in loss of affiliates
3 Other
Total non-operating expenses
Ordinary income (loss)
VI Extraordinary gains
1 Gain on sales of property, plant and equipment
2 Gain on sales of investment securities
3 Reversal of provision for doubtful receivables
4 Gain on change in equity
5 Settlement received
Total extraordinary gains
VII Extraordinary losses
1 Loss on disposal of property, plant and equipment
2 Loss on impairment property, plant and equipment
3 Loss on devaluation of investment securities
4 Loss on sales of investment securities
5 Effect of adoption of new accounting standards for asset
retirement obligations
6 Compensation expenses
7 Loss on phased acquisition
8 Disaster losses
Total extraordinary losses
Loss before income taxes and minority interests
Income taxes
Loss before minority interests
Minority interests in losses
Net loss

Six months ended June30, 2011
Amount192,214124,969
67,245(millions of yen)Six months ended June30, 2012
Amount223,043
142,395
80,648

10,254
9,017
12,293984
1,583
30,10664,2393,005

15,123
11,78615,173
1,078
1,759
37,45382,375(1,726)

181
336

132
368
58
94
246
520
1,419

104
251
309
1,183

Net income before minority interests
Other comprehensive income
Unrealized holding gain on securities
Deferred hedge gains
Foreign currency translation adjustments
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests

16

1,798
223
149
2,171
2,017

1,733
420
2,154
(2,461)

17
21
19
353
261
674

6
16
23

255
57
1,076
23

272
34
1,180
1

1,084
68
566
4,692
7,823
(5,132)(2,240)(2,891)74(2,965)

1,489(3,927)(880)(3,047)(145)(2,901)(2,891)(3,047)

(755)
10
451

2,009
(1)
462

(95)
(389)
(3,281)

18
2,489
(558)

(3,337)
56

(528)
(29)

(3) Consolidated Statements of Cash Flows(millions of yen)Six months ended June 30, Six months ended June
201130, 2012
AmountAmountI Cash flows from operating activities
1 Loss before income taxes and minority interests
2 Depreciation and amortization
3 Amortization of goodwill
4 Increase (decrease) in employees’ retirement benefits
5 Increase (decrease) in allowance for doubtful receivables
6 Interest and dividend income
7 Interest expense
8 (Gain) loss on sales and disposal of fixed assets
9 (Gain) loss on sales of investment securities(5,132)
11,448
1,194
(82)
(148)
(517)
1,804
237
-

10 (Gain) loss on revaluation of investment securities

1,076

11 Effect of adoption of new accounting standards for asset
retirement obligations
12 (Increase) decrease in notes and accounts receivable - trade
13 (Increase) decrease in inventories
14(Increase) decrease in other current assets
15 Increase (decrease) in notes and accounts payable - trade
16 Increase (decrease) in liquor taxes payable
17 Increase (decrease) in deposits received
18 Other
Sub total
19 Interest and dividends received
20 Interest paid
21 Income taxes paid
Net cash provided by (used in) operating activities
II Cash flows from investing activities
1 Purchases of investment securities
2 Purchases of property, plant and equipment
3 Proceeds from sales of property, plant and equipment
4 Purchases of intangibles

1,084(3,927)
12,798
1,904
(49)
59
(501)
1,749
266
(15)
1,180

9,187
(3,320)2,259(95)(13,977)(2,007)
3,491
6,504
660
(1,864)(2,371)
2,928

6,377
(5,404)442
2,773(2,279)(1,062)808
15,121655(1,763)(3,259)10,755(771)(6,579)
61
(769)

(109)
(45,605)86(1,248)5 Purchases of newly consolidated subsidiaries(18,662)

6 Purchase of subsidiaries' shares
7 Other
Net cash provided by (used in) investing activities
III Cash flows from financing activities
1 Net increase (decrease) in short-term bank loans
2 Proceeds from long-term bank loans
3 Repayment of long-term bank loans
4 Issuance of bonds
5 Redemption of bonds
6 Increase (decrease) in commercial paper(15,490)(264)(42,475)(1,611)(0)(2,155)(50,643)

23,894
17,580(15,870)(20,000)
37,0006,157
20,999(8,859)9,960
15,000(2,728)(2,731)181(1,017)(8)
39,031
140(375)
13,27012,894(1,974)(2)
38,54989(1,249)
9,057
7,808

7 Cash dividends paid
8 Payments received from minority shareholders
9 Repayment of finance lease obligations
10 OtherNet cash provided by (used in) financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of period
VII Cash and cash equivalents at end of period17(4) Notes on the Going-concern Assumption
Not applicable(5-1)Segment Information
1. Sales, income, and loss by reportable segment
Six months ended June 30, 2011 (January 1, 2011 – June 30, 2011)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages
Net sales(1) Operating revenues

Real
Estate

Total

Other *1

118,219

12,44739,455

10,581

11,078

191,782

432

2,635

7

211

-

1,078

3,932

15

120,855

12,45539,666

10,581

12,156

195,715

448

74

(217)

1,256

(676)

4,266

4,704

(312)

(2) Intra-group sales and transfers
Total

International Food&
Restaurants
Soft Drinks

Segment income (loss)

Total

192,214
3,948
196,163
4,392

Amounts
reported ontheAdjustments
statements
of income*2-

192,214(3,948)(3,948)

192,214(1,386)

3,005-

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

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

AmountTotal for reportable segments
Total other losses
Unallocated corporate costs
Intra-segment sales
Operating income on the statement ofincome4,704(312)(1,326)(59)
3,005

3. Impairment loss on fixed assets or goodwill by reportable segment
Material impairment loss on fixed assets

There were no material impairment losses.
Material change in amount of goodwill
Effective April 28, 2011, the Company additionally acquired Sapporo Beverage’s shares for the Food &Soft Drinks segment. As a result, goodwill increased by 7,691 million yen for the six months ended June30, 2011.

Material negative goodwill gains
There were no material gains on negative goodwill.

18

(5-2)Segment Information
1. Sales, income, and loss by reportable segment
Six months ended June 30, 2012 (January 1, 2012 – June 30, 2012)(millions of yen)
Reportable segments
Japanese
Alcoholic
Beverages

International*1 Food&
Restaurants
Soft Drinks

Real
Estate

Total

Other *2

Total

Amounts
reported on
Adjustments thestatements
of income *3

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

122,619
2,725

16,01012

60,843242

11,820-11,293
1,186

222,586
4,165

457
20

223,043
4,186

125,344

16,022

61,085

11,82012,479226,752477(2,640)(350)(1,188)

(315)

4,440

(55)

(179)

227,230(234)

Segment income (loss)-

223,043(4,186)(4,186)

223,043(1,492)(1,726)-

Notes:(1) "International Alcoholic Beverages" is renamed "International Business" in fiscal 2012.
(2) "Other" comprises businesses, such as food businesses, that are not included in reportable segments.
(3) 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 loss on the statement of income

Amount(55)(179)(1,505)13(1,726)

3. Change in reportable segments
Sapporo Beverage Co., Ltd. and POKKA Corporation, Pokka Sapporo Food & Beverage Ltd. were established on March 30, 2012 to promote the scheduled integration of the Company’s two
consolidated subsidiaries on January 1, 2013.
In conjunction with this, the Company integrated “Soft Drinks” and “POKKA Group” businesses, each of which were individual reportable segment in the fiscal year ended December 31, 2011, andrenamed the resulting business the “Food & Soft Drinks” segment effective the first quarter of the fiscal year ending December 31, 2012.
Until now, sales incentives paid to business partners (wholesalers and retailers) have been recorded under sales, general and administrative expenses.
Effective the first quarter of the fiscal year ending December 31, 2012, the Company has switched to a new accounting method whereby a certain
amount of these sales incentives, whose value depends on the sales price of soft drinks and other non-alcoholic beverages, is deducted from net sales.
Segment Information for the six months ended June 30, 2011 has been adjusted to conform to the current presentation.
Net sales from the “Food & Soft Drinks” segment for the six months ended June 30, 2011 was also recalculated to reflect the new segmentation.

4. Impairment loss on fixed assets or goodwill by reportable segment
Major impairment losses related to fixed assets
Not applicable
Material change to the amount of goodwill
Not applicable
Material Gain on negative goodwill
Not applicable19

(6)Notes on Significant Changes in the Amount of Shareholder’s Equity
Not applicable(7)Subsequent Events
Not applicable20