Key Coffee : Annual Financial Statements

Consolidated Financial Results

for the Fiscal Year Ended March 31, 2023

[Japanese GAAP]

May 15, 2023

Company name: KEY COFFEE INC

Stock exchange listing: Tokyo Stock Exchange

Code number: 2594

URL: https://www.keycoffee.co.jp/

Representative: Yutaka Shibata, Representative Director and President

Contact: Akihiro Mizutani, General Manager, Finance Department

Phone: [phone]

Scheduled date of general shareholders' meeting: June 22, 2023

Scheduled date of commencing dividend payments: June 23, 2023

Scheduled date of filing securities report: June 23, 2023

Availability of supplementary explanatory materials on annual financial results: Available

Schedule of annual financial results briefing session: Scheduled (for analysts and trade papers)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 - March 31, 2023)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
	Fiscal year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
	March 31, 2023	63,298	13.7	244	(39.6)	349	(65.8)	173	(76.7)
	March 31, 2022	55,680	5.9	405	-	1,022	-	742	-

(Note) Comprehensive income: Fiscal year ended March 31, 2023: ¥274 million [(66.6)%] Fiscal year ended March 31, 2022: ¥822 million [-%]

Basic earnings

Diluted

Return on

Operating profit

earnings per

Return on assets

per share

equity

ratio

share

Fiscal year ended

Yen

Yen

%

%

%

March 31, 2023

8.08

-

0.6

0.7

0.4

March 31, 2022

34.69

-

2.5

2.3

0.7

(Reference) Equity in earnings of affiliated companies:

Fiscal year ended March 31, 2023: ¥(82) million

Fiscal year ended March 31, 2022: ¥108 million

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

As of March 31, 2023

51,768

30,530

58.4

1,412.75

As of March 31, 2022

43,429

30,481

69.5

1,410.70

(Reference) Equity: As of March 31, 2023: ¥30,250 million

As of March 31, 2022: ¥30,204 million

(3) Consolidated Cash Flows

Cash flows from

Cash flows from

Cash flows from

Cash and cash

equivalents

operating activities

investing activities

financing activities

at year-end

Fiscal year ended

Million yen

Million yen

Million yen

Million yen

March 31, 2023

(3,095)

(973)

2,757

4,120

March 31, 2022

861

(727)

(466)

5,443

2. Dividends

		Annual dividends			Total			Ratio of
							Payout ratio		dividends to
	1st	2nd	3rd	Year-			dividends
	quarter-	quarter-	quarter-	Total		(consolidated)		net assets
	end		(annual)
	end	end	end					(consolidated)
	Yen	Yen	Yen	Yen	Yen		Million yen	%	%
Fiscal year ended	-	5.00	-	5.00	10.00	216	28.8	0.7
March 31, 2022
Fiscal year ended	-	5.00	-	5.00	10.00	216	123.7	0.7
March 31, 2023
Fiscal year ending
March 31, 2024	-	5.00	-	5.00	10.00			42.8
(Forecast)

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2024 (April 1, 2023 - March 31, 2024)

(% indicates changes from the previous corresponding period.)

							Profit attributable
	Net sales		Operating profit	Ordinary profit	to owners of	Profit per share
							parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	75,000	18.5	700	186.0	700	100.4	500	188.9	23.35

* Notes:

1. Changes in significant subsidiaries during the fiscal year under review: None (Changes in specified subsidiaries resulting in changes in scope of consolidation) Newly included: - (Company name: -)
   Excluded: - (Company name: -)
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued and outstanding shares at the end of the year (including treasury shares):

March 31, 2023:	22,689,000 shares
March 31, 2022:	22,689,000 shares
2) Total number of treasury shares at the end of the year:
March 31, 2023:	1,276,656 shares
March 31, 2022:	1,277,756 shares
3) Average number of shares during the year:
Year ended March 31, 2023:	21,412,344 shares
Year ended March 31, 2022:	21,410,294 shares

(Note) The total number of treasury shares at the end of the period includes the shares of the Company (267,400 shares on March 31, 2023, 268,500 shares on March 31, 2022) held by Custody Bank of Japan, Ltd. (Trust Account E). In calculation of the average number of shares during the period, the number of treasury shares deducted includes the shares of the Company (267,400 shares on March 31, 2023, 269,450 shares on March 31, 2022) held by Custody Bank of Japan, Ltd. (Trust Account E).

(Reference) Summary of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2021 - March 31, 2023)

(1) Non-consolidated Operating Results					(% indicates changes from the previous corresponding period.)
				Net sales				Operating profit		Ordinary profit		Net profit
	Fiscal year ended		Million yen	%	Million yen	%		Million yen	%		Million yen	%
	March 31, 2023		56,276	14.7		337	(36.3)		268	(21.8)		175	(13.1)
	March 31, 2022		49,063	6.1		529	-		343	-		202	-
			Basic earnings		Diluted earnings
			per share			per share
	Fiscal year ended			Yen					Yen
	March 31, 2023		8.20				-
	March 31, 2022		9.44				-
Notes to Non-consolidated Operating Results
(2) Non-consolidated Financial Position
				Total assets			Net assets	Equity ratio	Net assets per share
				Million yen			Million yen		%			Yen
	As of March 31, 2023			48,757			28,754		59.0		1,342.90
	As of March 31, 2022			40,529			28,711		70.8		1,340.96

(Reference) Equity: As of March 31, 2023: ¥28,754 million As of March 31, 2022: ¥28,711 million

• These consolidated financial results are outside the scope of audit by certified public accountants or an audit firm.
• Explanation of the proper use of financial results forecast and other notes

・Forward-looking statements and other statements about the future that are included in this material are based on information currently available to the Company and certain assumptions deemed reasonable, and the Company does not in any way guarantee the achievement of the projections. Actual results and others may differ significantly due to various factors. For the assumptions for financial results forecast and precautions for using financial results forecasts, please refer to "(4) Future Outlook" under "1. Overview of Operating Results, etc." on page 7 of the attached document.

Table of Contents - Attachments
1. Overview of Operating Results, etc. ........................................................................................................... 2
(1)	Overview of Operating Results for the Fiscal Year under Review	......................................................... 2
(2)	Overview of Financial Position for the Fiscal Year under Review	......................................................... 6
(3)	Overview of Cash Flows for the Fiscal Year under Review	6
(4) Future Outlook	7
(5)	Basic Policy on Profit Distribution and Dividends for the Fiscal Year under Review and the Next Fiscal
	Year	8
2. Basic Policy on Selection of Accounting Standards	8
3. Consolidated Financial Statements and Principal Notes	9
(1)	Consolidated Balance Sheets	9
(2)	Consolidated Statements of Income and Comprehensive Income	........................................................11
(3)	Consolidated Statements of Changes in Equity	14
(4)	Consolidated Statements of Cash Flows	16
(5)	Notes to Consolidated Financial Statements	18
	(Notes on going concern assumption)	18
	(Segment information, etc.)	18
	(Per share information)	21
	(Significant subsequent events)	21

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1. Overview of Operating Results, etc.

1. Overview of Operating Results for the Fiscal Year under Review
   During the consolidated fiscal year under review (April 1, 2022 to March 31, 2023), the Japanese economy showed indications of a gradual recovery due to the substantial easing of various restrictions amid the transition to coexist with the COVID-19 infection and the government's economic measures. However, the outlook remained uncertain due to soaring energy and raw material prices, continued price hikes caused by the weak yen, and concerns about an economic slowdown in Europe and the United States.
   In the coffee market, consumption in the HORECA market increased year on year due to the easing of restrictions on activities imposed due to COVID-19. Meanwhile, consumption in the Household market slightly declined due to slackening stay-at-home consumption, as well as increases in retail prices by manufacturers.
   In addition, although the coffee market price, which heavily influences KEY COFFEE's financial results, had been at a high level since the previous fiscal year, it settled due to a drop in the green beans market price and a reversal of the exchange rate, caused by factors such as receding concern about a decrease in production in Brazil, a recovery of certified inventories in the coffee futures market, and concern about weak demand due to a global economic slowdown. However, the business environment remained severe due to the ongoing depreciation of the yen, rising resource and energy prices, and high coffee production costs, including higher material costs.
   Under these circumstances, the KEY COFFEE Group established the three pillars of "reforming the business structure," "strengthening profitability," and "reinforcing the comprehensive strengths of the Group," based on our long-held"quality-first principle," and engaged in the creation of new demand, developed products which meet the needs of consumers, and promoted solution-oriented business activities that contribute to the financial results of clients, in order to fulfill our corporate philosophy, to "pursue the ultimate in coffee, focus on our customers, and create a coffee culture which enriches the heart."
   With respect to "reforming the business structure," the Group took steps to improve the efficiency and sophistication of sales activities and administrative operations through the promotion of digitalization, the introduction of robotics in manufacturing lines, and the renewal of our core system and production management system.
   Regarding "strengthening profitability," we increased sales volume, improved plant yields, reviewed manufacturing bases for mainstay products, reduced costs by reviewing distribution bases and operations, and revised prices of products delivered to clients and our shipping prices in response to rising prices of raw materials and materials.
   With respect to "reinforcing the comprehensive strengths of the Group," we have been working to expand D2C business, strengthen business management of overseas subsidiaries, establish a new plant in Indonesia, and enhance branding activities.
   In addition, we have established "Coffee and KISSA as a Sustainable Company" as our new message for
   2030 with the aim of keeping the coffee culture alive and realizing sustainable coffee production. As part of this, we promoted sustainability activities by establishing a new specialized department, "Future of Coffee Department," which engages in a wide range of activities, including collaboration with coffee-producing countries and the development of new coffee varieties.
   As a result of these efforts, sales in the mainstay coffee-related businesses and other businesses continued to increase from the previous fiscal year, and overall sales recovered to almost the same level as that before the COVID-19 disaster, but operating profit declined due to factors such as a higher cost of sales ratio and increased sales promotion costs.
   Consequently, net sales for the KEY COFFEE Group in the consolidated fiscal year under review were 63,298 million yen (a 13.7% increase compared with the previous consolidated fiscal year), operating profit was 244 million yen (a 39.6% decrease compared with the previous consolidated fiscal year), and ordinary profit was 349 million yen (a 65.8% decrease compared with the previous consolidated fiscal year). Profit

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