Key Coffee : 3rd Quarter Financial Statements

Consolidated Financial Results

for the Nine Months Ended December 31, 2022

[Japanese GAAP]

January 30, 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 filing quarterly securities report: February 13, 2023

Scheduled date of commencing dividend payments: -

Availability of supplementary explanatory materials on quarterly financial results: Not available

Schedule of quarterly financial results briefing session: Not scheduled

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

1. Consolidated Financial Results for the Nine Months Ended December 31, 2022 (April 1, 2022 - December 31, 2022)

(1) Consolidated Operating Results (Cumulative)	(% indicates changes from the previous corresponding period.)
		Net sales			Operating profit	Ordinary profit	Profit attributable to
				owners of parent
	Nine months ended	Million yen		%		Million yen	%	Million yen	%	Million yen	%
	December 31, 2022	47,362		11.1		866	(0.3)	998	(28.8)	719	(31.1)
	December 31, 2021	42,621		5.6		869	-	1,401	-	1,044	-

(Note) Comprehensive income: Nine months ended December 31, 2022: ¥873 million [-%]

Nine months ended December 31, 2021: ¥1,071 million [-%]

Basic earnings per

Diluted earnings per

share

share

Nine months ended

Yen

Yen

December 31, 2022

33.62

-

December 31, 2021

48.80

-

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

As of December 31, 2022

50,498

31,140

61.1

As of March 31, 2022

43,429

30,481

69.5

(Reference) Equity: As of December 31, 2022: ¥30,850 million

As of March 31, 2022: ¥30,204 million

2. Dividends

Annual dividends

1st quarter-end

2nd quarter-end

3rd quarter-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended

-

5.00

-

5.00

10.00

March 31, 2022

Fiscal year ending

-

5.00

-

March 31, 2023

Fiscal year ending

March 31, 2023

5.00

10.00

(Forecast)

(Note) Revision to the forecast for dividends announced most recently: None

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

(% 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	64,000		14.9	300	(26.0)	450	(56.0)	300		(59.6)	14.01

(Note) Revision to the financial results forecast announced most recently: Yes

For details, please refer to the "Notice Regarding Revision to Full-year Financial Results Forecast for the Fiscal Year Ending March 31, 2023" disclosed today.

* Notes:

1. Changes in significant subsidiaries during the period under review: None (Changes in specified subsidiaries resulting in changes in scope of consolidation) Newly included: - (Company name: -)
   Excluded: - (Company name: -)
2. Accounting methods adopted particularly for the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates and retrospective restatement
4. 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
5. Total number of issued and outstanding shares (common shares)
6. 1. Total number of issued and outstanding shares at the end of the period (including treasury shares):

December 31, 2022:	22,689,000 shares
March 31, 2022:	22,689,000 shares
2) Total number of treasury shares at the end of the period:
December 31, 2022:	1,276,656 shares
March 31, 2022:	1,277,756 shares

3) Average number of shares during the period (cumulative from the beginning of the fiscal year):

Nine months ended December 31, 2022:	21,412,344 shares
Nine months ended December 31, 2021:	21,409,977 shares

(Note) The total number of treasury shares at the end of the period includes the shares of the Company (267,400 shares on December 31, 2022, 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 December 31, 2022, 269,767 shares on December 31, 2021) held by Custody Bank of Japan, Ltd. (Trust Account E).

• These quarterly consolidated financial results are outside the scope of quarterly review 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 "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" on page 5 of the attached document.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	5
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information	5
2. Quarterly Consolidated Financial Statements and Principal Notes	6
(1)	Quarterly Consolidated Balance Sheets	6
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	8
(3)	Notes to Quarterly Consolidated Financial Statements	11
	(Notes on going concern assumption)	11
	(Notes in the event of significant changes in the amount of shareholders' equity)	11
	(Segment information, etc.)	11
	(Significant subsequent events)	12

1

1. Qualitative Information on Quarterly Financial Results

1. Explanation of Operating Results
   During the nine months ended December 31, 2022 (from April 1, 2022, to December 31, 2022), the Japanese economy showed indications of economic recovery due to factors such as the widespread easing of various restrictions associated with the COVID-19 pandemic and the economic measures implemented by the government. However, resurgence of outbreak triggered by the emergence of variants of the virus, as well as factors such as soaring energy and raw material prices and continued price hikes due to the weak yen, leave the outlook still uncertain.
   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, the coffee market price, which heavily influences KEY COFFEE's financial results, came down from the highs and steadied, due to such factors as the upward revision of forecast for production in Brazil in fiscal year 2023, a rise in the level of certified inventories in the coffee futures market, and the fear of a sluggish demand due to global recession. Meanwhile, the record-breaking depreciation of the yen in the foreign exchange market has hit a lull, but the currency remained weak, resulting in the continuation of a severe business environment.
   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."
   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 have established a new specialized department, "Future of Coffee Department," which engages in a wide range of operations including collaboration with coffee-producing countries and the development of new coffee varieties, and promotes sustainability activities.
   Net sales for the KEY COFFEE Group for the nine months ended December 31, 2022, were 47,362 million yen (an 11.1% increase compared with the same period of the previous fiscal year), operating profit was 866 million yen (a 0.3% decrease compared with the same period of the previous fiscal year), and ordinary profit was 998 million yen (a 28.8% decrease compared with the same period of the previous fiscal year). Profit attributable to owners of parent was 719 million yen (a 31.1% decrease compared with the same period of the previous fiscal year).
   

			(Unit: Millions of yen)
	Nine months	Nine months	Year-on-year	Year-on-year
	ended Dec. 31,	ended Dec. 31,	increase	percent increase
	2021	2022	(decrease)	(decrease)
Net sales	42,621	47,362	4,740	11.1%
Operating profit	869	866	(2)	(0.3%)
Ordinary profit	1,401	998	(403)	(28.8%)
Profit attributable to owners of	1,044	719	(325)	(31.1%)
parent

2