Issue of Annual Report 2010

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To Our Stakeholders On March 11, 2011, the Tohoku Pacific Earthquake and the ensuing tsunami wrought a disaster of unprecedented scale centered on the Tohoku region, and affecting the Kanto region as well. We offer our condolences to all those affected, and we report on the status of the Sapporo Group. The Sendai Brewery and Chiba Brewery of Sapporo Breweries Ltd. suffered partial damage to buildings and equipment. At other plants also, operation of some equipment was put on hold and even now that they have restarted, operations continue to be affected by rolling power cuts in Tokyo and other factors. Sapporo Lion Ltd. had to stop operations at some restaurants, particularly in disaster-hit areas, while damage to infrastructure in various areas forced other restaurants to operate on shorter hours, or take other measures. Yebisu Garden Place Co., Ltd. was obliged to limit usage of some of its properties and facilities, but the buildings did not suffer any major damage, and continued to operate. At this time it is difficult to estimate the impact of the earthquake on our forecast for the year ending December 2011. We will disclose the information as soon as it can be estimated. Moreover, the Sapporo Group immediately contributed donations of money, drinking water, and other gifts to areas stricken by the disaster, and employees at our group companies followed up with further fundraising activities. 04 SAPPORO HOLDINGS LIMITED Annual Report 2010
I’d like to take this opportunity to report this year’s increase in sales and income, and to report that we have shifted to a new management framework to ensure the progress of our management plan. Business Climate and Strategies in Fiscal 2010 During 2010 the soft drinks market saw a surge in demand spurred by one of the hottest summers on record. Alcohol and restaurant markets, however, were heavily affected by a slump in consumer spending and demand growth in these sectors was below expectations. In the real estate industry, the occupancy rates in the Tokyo office rental market bottomed out in the latter half of the year, but rents continued to fall throughout the year. Under these conditions the Sapporo Group tackled the key themes of its Sapporo Group Management Plan 2010–2011: We launched growth strategies to pave the way to future growth, and we strengthened our existing businesses by concentrating management resources on our core brands in each business. Specifically, we started construction work on a new plant in Vietnam, where we have entered the beer business, formed a capital and business alliance with Kyodo Milk Industry Co., Ltd., and made a business alliance with South Korean Maeil Dairies Co., Ltd. for a beer business in the South Korea. These steps will be followed by a management integration with POKKA CORPORATION scheduled for April 2011. Vietnam were excluded from Alcoholic Beverages (International). Moreover, with the contribution from gain on the sale of our Osaka Plant site, net income was ¥10.8 billion, up by a hefty ¥6.2 billion, or 138% from the previous year, boosting ROE considerably to 8.9% from 3.9% in the previous year. Policy on Dividends Returning an appropriate level of earnings to our shareholders in view of our operating results and financial position is an important management policy for Sapporo Holdings, and our basic policy is to maintain a stable dividend. We plan to use retained earnings to maximize our corporate value by strategically investing it in growth areas and using it to strengthen our financial base, in line with our management plan. Enhancing Corporate Governance Strengthening and enhancing corporate governance is a key management priority for the Sapporo Group. To improve transparency and strengthen oversight functions for management, we have three outside directors. Outside board members serve as chairpersons for various committees. For more information about these committees, please see the Corporate Governance section of this report starting on page 23. Increased Sales and Income from All Revenue Sources The Alcoholic Beverages (Japan) business saw year-on-year sales volumes increase for the first time in six years. The Alcoholic Beverages (International) business and the Soft Drinks business both recorded significant year-on-year increases in sales, with the Alcoholic Beverages (International) business supported by continued brisk sales in North America. There was good news from the Real Estate business too, where sales were also up. As a result, consolidated net sales were ¥389.2 billion, up ¥1.7 billion, or 0% from the previous year. Operating income was ¥15.4 billion, an increase of ¥2.5 billion, or 19% from the previous year. Operating income increased in all business segments when investment costs of expanding into TAKAO MURAKAMI Chairman and Representative Director SAPPORO HOLDINGS LIMITED Annual Report 2010 05
Page 1 and 2: Our Growth Sapporo Holdings Limited
Page 3 and 4: Sapporo Group Management Plan 2011-
Page 5 and 6: Overseas deployment Vietnam SAPPORO
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Page 11 and 12: Summary of Management Plan 2010-201
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Page 15 and 16: Question 6 Please describe some of
Page 17 and 18: With growth continuing at around 10
Page 19 and 20: In March 2011 Sapporo Holdings acqu
Page 21 and 22: Management Plan 2011-2012 Managemen
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Page 25 and 26: Performance Review and Plan Restaur
Page 27 and 28: Corporate Governance Basic Governan
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Year ended or as of December 31, 20
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Corporate Data (As of December 31,
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