Financial Results for the Nine Months Ended September 30, 2012 — Consolidated (Based on Japanese GAAP) November 7, 2012 Company name
Sapporo Holdings Limited
Security code Listings URL Representative 2501 Tokyo Stock Exchange (First Section); Sapporo Securities Exchange http://www.sapporoholdings.jp/english/ Tsutomu Kamijo, President and Representative Director, Group CEO Tatsuya Komatsu, Director of the Corporate Communications Department +81-3-5423-7407 Contact Telephone Scheduled dates: Filing of quarterly financial report Commencement of dividend payments November 13, 2012 Supplementary information to the quarterly earnings results Quarterly earnings results briefing held Available Yes (mainly targeted at institutional investors and analysts) 1. Consolidated Financial Results for the  Nine Months Ended September 30, 2012 (January 1 – September 30, 2012) (Amounts in million yen rounded down to the nearest million yen) (1) Operating Results
Nine months ended September 30, 2012    2,723 million yen

(2) Financial Position

September 30, 2012: 123,513 million yen December 31, 2011:  123,293 million yen
2. Dividends

3. Forecast of Consolidated Earnings for the Year Ending   December 31, 2012
(January 1 – December 31, 2012)

Note: No Changes have beenmade to eamings forecastssince the latest release.
4. Other
*For details, see "2. Other" on page 11. (1) Changes to scope of consolidation: None *Changes affecting the status of significant subsidiaries (scope of consolidation) (2) S implified accounting: Yes *Use of simplified accounting methods and/or accounting methodsspecific 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, and retrospective restatement, in section “2. Other” on page 11 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): September 30, 2012:  393,971,493 shares December 31, 2011:   393,971,493 shares 2) Number of shares held in treasury at end of period: September 30, 2012: 2,413,623 shares 2,400,991 shares December 31, 2011: 3) Average number of outstanding shares during the period: Nine months ended September 30, 2012: 391,562,666 shares Nine months ended September 30, 2011:     391,582,338 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 those expressed or implied by forward-looking statements due to various factors.
1. Analysis of Operating Results
(1)Consolidated Financial Results for the  Nine Months ended September 30, 2012 During the first nine month s of 2012 (January –September), the Japanese economy remained on a moderate recovery trajectory as consumer spending rebounded in line with earthquake-recovery efforts. The outlook for the Japanese economy, however, remains clouded by several lingering concerns, most notably the protracted appreciation of the yen and a global economic slowdown centering on Europe. In this environment, the Sapporo Group increased sales in the first three quarters of the year. Sales in the Japanese Alcoholic Beverages and the  Restaurants businesses were higher than in the first three quarters of 2011, when sales in both businesses were directly negatively affected by the impact of the earthquake and tsunami disaster. The International Business posted higher sales largely owing  to the inclusion in the Group’s consolidated income statement of Silver Springs Citrus, a maker of private -brand chilled drinks in the United States. The Food & Soft Drinks business also posted year  -over-year sales gains as the consolidation of the POKKA  Group from April 2011 boosted sales in the first-quarter of 2012. Group operating income declined year over year. Profits were boosted by gains in the Restaurants business and the inclusion of revenues and earnings from Yebisu Garden Place in the Group’s  consolidated income statement from March, following the Real Estate segment's acquisition of the 15% interest in trust beneficiary rights 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-year increase in marketing expenses by both the Japanese Alcoholic Beverage business and the Food & Soft Drinks business, expenditures by the International Business to open new mar kets in Vietnam, increased goodwill amortization in the Food & Soft Drinks segment, and a first-quarter operating loss at the POKKA Group. As a result of the above factors, the Sapporo Group posted consolidated sales of ¥354.7 billion (up ¥33.9 billion, o r 11%, year over year). Operating income for the first three quarters of the year came to ¥5.5 billion (down ¥6.6   billion, or 54%) while ordinary income amounted to ¥4.4 billion (down ¥6.1 billion, or 58%).  Net income for the first nine months of 2012 came  to ¥0.5 billion, a 4%  increase from the same period a year earlier, when we posted “disaster losses”. 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 and analysis. Segment information is outlined below. On March 30, 2012, 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 for the launch of integrated business operations in January 2013. As of the first quarter of fiscal 2012, the names of reportable business segments have been changed as follows: “International Alcoholic Beverages” is   now “International Business” and the Soft Drinks segment and the POKKA Group have been merged into a single segment called “Food & Soft Drinks”. To enable year -over-year comparisons in this document, figures for the year-earlier period have been adjusted  to reflect the new segmentation.
Japanese Alcoholic Beverages
We estimate that total domestic demand for beer and beer  -type beverages in the first nine months of 2012 declined almost 1% year over year, adversely affected by unseasonable weather in the first half of July, a peak demand season. Beer and happoshu sales volumes declined slightly, while volume sales of new-genre beer slowed but continued to show year-over-year growth. In this market environment, our Japanese Alcoholic Beverages business lau nched a renewal version of its popular new-genre beer Mugi to Hop in January and in March began year-round sales of Mugi to Hop Black. Both launches were enthusiastically received by customers in Japan.    In July we launched Hokkaido Premium, made from Hokk aido malt and Furano hops. The new addition helped to boost our new-genre beer lineup, providing customers with a refreshingly flavored beverage in contrast to the more robust flavored Mugi to Hop. As a result, sales of our beer and beer -flavored beverages increased year over year in the first three quarters of 2012, boosting our market share. In the nonalcoholic beer category, we launched a renewed Sapporo Premium Alcohol Free in February, and in May we unveiled the world's first completely nonalcoholic  black canned beer, Sapporo Premium Alcohol Free Black. The new products supported 11% 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 CheilJeda ng led to the January Iaunch of the jointly developed CJ Oishii Makgeolli Pink Grapefruits. In April, we launched two beverages jointly developed with Bacardi Japan Ltd.; Bacardi Mojito and Bacardi Cuba Libre both were well received by customers in Japan. In March, we launched a renewed version of Sapporo Nectar Sour Peach Sparkling. We also continued to develop and market a variety of limited -volume RTD beverages with seasonal flavors, part of Sapporo’s unceasing effort to bring new products to the market   that satisfy customer demand for beverages suitable for a wide range of occasions. As a result, our RTD beverages achieved 56% year -over-year growth in unit sales over the first three quarters of 2012. In the wine and liquor business, demand for our every day imported and domestic wines continued to grow, as did sales of our premium domestic wine Grand Polaire. As a result, the wine and liquor business posted year -over-year growth in sales over the first three quarters of the year. Meanwhile, our western sp irits business saw its sales volume increase thanks to strong contributions from Bacardi products. The shochu business posted a 23% year-over-year gain in sales during the first three quarters of the year. Sales were supported by the favorable market rec eption for two new offerings: Imo Shochu Kokuimo, a blended shochu introduced in March, and  Mugi Shochu Koimugi, a barley-based shochu launched in September. Overall, the Japanese Alcoholic Beverages business posted sales of ¥195.5 billion (up ¥4.0 billion, or 2%, year over year) in the first three quarters of 2012. Aggressive spending on marketing during the period, however, held the business’ operating  income to ¥0.8 billion (down ¥4.1 billion, or 83%). Denotes Ready to drink, a term used to refer to bw-alcohol beverages which can be consumed immediately after opening
International Business
In North America, where the timing of a full -fledged economic recovery remains unclear, we believe that total demand in the beer market increased only slightly in   the first nine months of 2012. The Asian beer market, meanwhile, continues to grow steadily, supported by   the region’s fast-growing economies. In this environment, our International Business segment continued marketing activities targeting the premium beer market, where it has core strengths. Canadian subsidiary SLEEMAN BREWERIES posted a 7% year -over-year increase in unit sales (excluding outsourced production of Sapporo brand products) during the first three quarters of the year, keeping its six-year growth streak intact.  Sapporo USA boosted sales volumes for its Sapporo brand beers by 3% year over year. At the end of January, we strengthened our 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 in our 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, 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 accelerate sales of Sapporo brand beers to the household and commercial markets in South Korea. In Oceania, we worked to strengthen 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 th e POKKA Group to expand sales channels in the local household market. The efforts outlined above helped us to achieve 70% growth in beer sales volumes in Asia and other markets in outside North America over the first three quarters of 2012. Overall, the International 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 a  nd post sales of ¥26.3 billion (up ¥6.9 billion, or 36%, year over year) in the first three quarters of the year. Segment operating  income for the same period was ¥0.1 billion (down about ¥0.4 billion, or 75%) , partially owing to our investments to establi sh a presence in Vietnam.
Food & Sof Drinks
Sapporo Beverage Co., Ltd.
We estimate that domestic demand for soft drinks increased  3% year over year in the first nine months of 2012, bolstered by hot summer weather in August and lingering heat through mid-September, as well as sales growth in the carbonated beverage category. 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 a children’s TV program to raise brand recognition for our Ribbon brand.  We began selling our popular Ribbon Citron beverage in a 500ml can , and in August we expanded our Ribbon lineup with the introduction of Ribbon  Junsui Saratto Shiro Budo,  a white grape–flavored juice beverage. For our Gabunomi series, we tied up with a popular animation character to help further expand our sales channels and build an even stronger market presence. Sales of Gerolsteiner (naturally carbonated water from Germany) surpassed the pr  evious year’s level on the success of in -store trial offers and repeat purchase promotions. Sales of the   Oishii Tansansui lineup of bottled soda waters also exceeded the previous  -year level. However, overall sales volumes at Sapporo Beverage in the first t hree quarters of 2012 were down 8% year over year, reflecting a reversion to the norm after last year’s surge in demand for bottled water in the aftermath of the earthquake and tsunami disaster. With regard to costs, 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.
POKKA Group
Our estimate of domestic demand trends for soft drinks in the first nine months of 2012 is as stated at t the beginning of the previous section. In addition, we estimate that total demand for lemon-based products (flavorings) increased 2% year over year while demand for instant soups appears to have declined 5%. In this environment, the POKKA Group’s Domestic  Food & Soft Drinks business endeavored to 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 in support of the product. POKKA bolstered its Pokka Coffee lineup and  developed some promotional canned drinks. In August, POKKA launched a renewed version of its Aromax canned coffee series began and   introduced Aromax Kyokugen no Kaori Black, a limited edition product sold only in the Tokai region (centered on Nagoya City). In May, POKKA introduced  Yasuragi Kibun no  Corn-Cha, a new unsweetened tea offering made from roasted corn. POKKA's domestic foods business continued promoting 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. To stimulate demand for its canned soups during the summer, POKKA introduced  Tsumetai Potage, a canned cold soup. The Kantanbimi Korean soup lineup was bolstered by the addition of two new flavors —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 introducing seasonal menu items that reflected this summer’s trends, such as s alty vanilla ice cream and tomato jelly. The chain also con  tinued to remodel existing stores and open new outlets. In July it opened a new conce pt shop called ""DEN", a new style coffee shop modeled after  a private space for mature people . The Overseas Food & Soft Drinks business posted solid results overall, with  operations in Singapore developing ahead of plan. The business also made steady progress in improving its COGS ratio and lowering distribution costs. POKKA's Overseas Restaurants business saw a slight slowdown at Hong Kong operations from February amid a general tepid market as the number of customers from mainland China declined. Results were more favorable in Singapore, however, as sales were stimulated by revised menus that better suited customer preferences at individual store locations and by increased sales of pastries. The Sapporo Group’s Food & Soft Drinks segment sales in the first three quarters of 2012 totaled ¥95.6 billion, a year -over-year increase of ¥20.8 billion or 28%, stemming from the above business activities and a n increase in sales    in the first quarter of 2012  following the inclusion of sales at t the POKKA Group, which was consolidated in April 2011. However, the segment posted an operating loss of ¥0.1 billion (compared with a profit of ¥2.8 billion a year earlier), owing to aggress ive spending to expand sales, an increase in goodwill amortization, and a first-quarter operating loss at the POKKA Group.
Restaurants
Japan's restaurant industry continued on a mild recovery path during the first nine months of 2012, as the negative im pact of the deterioration in consumer sentiment that took hold following the 2011 disaster continued to wear off. The competitive environment remained quite severe, however, as competition with the  take-out food industry  added to already tough price competition among restaurants.  In such an environment, our Restaurants business sought to stimulate demand during the peak summer demand season and increase customer traffic by holding a variety of drink and food fairs, including Sapporo Lion’s Beer Hall Day on   August 4. We also strengthened activities aiming to raise service levels and enhance customer satisfaction. Our Restaurants business opened 12 new outlets during the first nine months of 2012. We opened five stores in the first quarter, including YEBISU B  ar outlets. In the second quarter, we opened six outlets, including a Suruga Maru seafood and tempura rice bowl shop in the Shizuoka Service Area of the New Tomei Expressway, which is representative of our efforts to venture into new types of locations.  In the third quarter,  we opened a Ginza Lion beer hall in the Ueno Saigo Hall. All the new outlets have fared better than   we anticipated.  Meanwhile, we closed nine outlets during the first nine months of the year, bringing the total number of outlets operating at t he end of the period to 194. The Restaurants business also achieved cost reductions and profit structure reforms by using a distribution system with a single center for serving the Tokyo metropolitan logistics network. The center began operations i n 2011. As a result of the above, the Restaurants business recorded sales of ¥19.3 billion over the first three quarters of the year (up ¥1.4 billion, or 8%, year over year). Operating   income came to ¥0.2 billion,  compared with a slight loss in the previous year.
Real Estate
Conditions 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 more positive note, however, office rents have begun to bott om 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 con solidated 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 has been ben ben fiting from 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 no w are able to accelerate efforts to enhance the value of the 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 redevelopment of the Seiwa Yebisu Building. The new building, scheduled for completion in autumn 2014 will have more total floor space than its   forerunner. Overall, Real Estate segment sales in the first nine months of 2012 totaled ¥17.3 billion (up ¥0.7 billion, or 4%, year over year). Segment operating income rose to ¥7.1 billion (up ¥0.7 billion, or 12%, year over year).
(2) Review of Consolidated Financial Condition
Consolidated financial condition Consolidated assets as of September 30, 2012, totale d ¥585.0 billion, a ¥34.2 billion increase from the end of the previous fiscal year on December 31, 2011. The increase is attributable to an increase in land  and property holdings accompanying the acquisition of the additional 15% equity interest in the Ye bisu Garden Place complex. Consolidated Iiabilities totaled ¥458.8 billion, a ¥32.8 billion increase from December 31, 2011, reflecting increases in bank loans and other financial liabilities, which were partially offset by decreases in deposits and liquor taxes payable. Consolidated net assets totaled ¥126.1 billion, a ¥1.3 billion increase from December 31, 2011. Asset growth was supported by increases in unrealized gains on securities and in the foreign currency translation adjustment account, as well  as the cumulative net income achieved over the first three quarters of the fiscal year.
(3) Consolidated Earnings Forecast
The consolidated earnings forecast for the full fiscal year to December 31, 2012, is unchanged from the forecast announced by the  company on August 7, 2012 .

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 nine months ended September 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 be merged 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 into a 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, whi to 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 Statements for the third quarter 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 third quarter of the fiscal year ending on December 31, 2011, have each been reduced by¥3,610 million from the amounts reported before the retroactive application of the new accounting method. Operating income is unaffected by the change.
(Changes in depreciation method)
In response to Japan's recent corporate tax law amendments and effect ive 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 th  e revised corporate tax code. The impact of this change on the Group's third quarter 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 start of the first quarter of the fiscal year ending December 31, 2012.
(3) Notes on the Going-concern Assumption Not applicable (4-1)Segment Information 1. Sales, income, and loss by reportable segment Nine months ended September 30, 2011 (January 1, 2011 – September 30, 2011)
(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 on differences)
3. Impairment loss on fixed assets or goodwill by reportable segment Major impairment losses related to fixed assets In the Japanese Alcoholic Beverage segment, a decline in market prices prompted a lowering of the book value of idle land assets to their estimated recoverable value. Impairment losses related to these assets amounts to ¥309 million in the first three quarters of 2011. Material change to the amount of goodwill Not applicable Material Gain on negative goodwill Not applicable
(4-2)Segment Information
1. Sales, income, and loss by reportable segment
(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 on differences)

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, and renamed 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 nine months ended September 30, 2011 has been adjusted to conform to the current presentation. Net sales from the "Food & Soft Drinks" segment for the nine months ended September 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 applicable (5)Notes on Significant Changes in the Amount of Shareholder's Equity Not applicable (6)Subsequent Events Not applicable