雪国まいたけ（1375） – [Delayed] Financial Results for 3rd Quarter of Fiscal Year Ending March 2022

Financial Results for 3rd Quarter of Fiscal Year Ending March 2022February 3, 2022Tokyo Stock Exchange, First Section: 1375AGENDA1. Summary of Consolidated Financial Results for 3Q of 2. Medium-Term Business Plan for FYE March 31, 2022 to FYE March 2022FYE March 31, 20263. Reference Materials(Caution concerning forward-looking statements)The forward-looking statements, such as forecasts of financial results, included in this document are based on information available to the management as of the date of the document and certain assumptions that the management considers reasonable. The Company does not promise that forecasts will be achieved. Actual results may differ significantly due to a range of factors.11Summary of Consolidated Financial Results for 3Q of FYE March 20222Summary of Financial Results for 3rd Quarter of Fiscal Year Ending March 2022In the nine months of the current fiscal year, revenue and operating profit underperformed the same period of the previous year, and underperformed compared to the ForecastExternal EnvironmentOur ResponseSummary of 3rd Quarter• The impact of the • TV commercials aired COVID-19 has cooled consumer sentiment, and consumers continue to be frugalmainly in western Japan, and proposals for sales floors of Maitake linked to the TV commercials• Competitors started operating new plants• The weather was relatively mild in early autumn, which is the peak demand season• Overall mushroom consumption was sluggish since autumn• Crude oil prices remained high• Joint menu proposal for maitake in collaboration with seasoning manufacturers• Button Mushrooms sales promotion activities in conjunction with Christmas and other events• Some bio-centers have switched from heavy oil to LNGvs ForecastBelow our Forecast• RevenueJPY 24.2 billionYoY -JPY 1.7 billion(-6.7%)• Operating ProfitJPY 5.4 billionYoY -JPY 1.6 billion(-23.2%)Below our Forecast3Consolidated Statements of Income (3Q Cumulative)In the nine months of the current fiscal year, both total income and profits decreased compared to the same period of the previous fiscal year and the same period two years agoGains Arising from Changes in Fair ValueMaterial Costs, Labor Costs, etc.Gains Arising from Changes in Fair Value(JPY million)RevenueTotal IncomeCost of SalesGross ProfitSG&A ExpensesOther IncomeOther ExpensesOperating Profitvs Revenuevs Total IncomeProfit before TaxProfit Attributable to Owners of Parent[Reference]Adjusted Operating Profit *Adjusted EBITDA *Adjusted Profit *3Q FYE March 20223Q FYE March 2020Change3Q FYE March 2021ChangeActualActualAmount%ActualAmount%24,22412,23436,45813,70511,25324,95911,4996,02434585,45122.5%15.0%5,1393,3865,4516,9283,48825,47313,25238,72614,05611,82225,87812,8476,2072386256,25324.6%16.1%5,8973,7806,4047,7063,952(1,249)(1,017)(2,267)(1,348)(350)(568)(918)(182)(203)(567)(802)(757)(393)(952)(778)(464)(4.9%)(7.7%)(5.9%)(2.5%)(4.8%)(3.6%)(10.5%)(2.9%)(85.3%)(90.7%)(12.8%)(12.8%)(10.4%)(14.9%)(10.1%)(11.7%)Includes JPY 197 million gain on sales of fixed assets25,95613,75539,71213,42112,84126,26313,4486,191371957,09827.3%17.9%6,5034,2657,3658,8384,703(1,732)(1,521)(3,253)+284(1,588)(1,303)(1,949)(167)(2)(137)(1,646)(1,363)(879)(1,914)(1,910)(1,215)(6.7%)(11.1%)(8.2%)+2.1%(12.4%)(5.0%)(14.5%)(2.7%)(5.8%)(70.3%)(23.2%)(21.0%)(20.6%)(26.0%)(21.6%)(25.8%)Note:Adjusted Operating Profit = Operating Profit + Management Fees1 + Listing-Related Expenses2Adjusted Profit = Profit + Management Fees1 + Listing-Related Expenses2 + Refinance-Related Gains/Losses3 + Tax Adjustments 1 Management Fees are compensation based on the management contract between the Company and Bain Capital Private Equity, LP, and SHINMEI HOLDINGS CO., LTD.2 Listing-Related Expenses are temporary costs including listing preparation advisory costs, costs related to building an organizational structure for listing, costs related to the introduction of IFRS and timely disclosure system for listing, real estate Adjusted EBITDA = Adjusted Operating Profit + Depreciation + Amortizationregistration costs associated with a merger, etc. 3 Refinancing-Related Gains/Losses are advisory expenses that were temporarily incurred in connection with refinancing carried out after the Company was closed to the public. These expenses are offset by temporary gains that were incurred due to the decline in contract interest rates associated with the refinancing and the increase in interest expense during the remaining contract period that occurs in conjunction with the refinancing.4Consolidated Operating Results (Quarterly Trends)Both revenue and operating profit for the 3rd quarter of the current fiscal year decreased compared to the same quarter of the previous year and as the same quarter two years ago16,00012,0008,0004,00016,00012,0008,000(JPY million)FYE March 2020(JPY million)3,5002,32411,0967,0937,2849,0432,00042904371Q2Q3Q4QRevenueOperating Profit(JPY million)FYE March 2021(JPY million)3,8172,37110,9597,4707,5264,00090908,5867241Q2Q3Q4QRevenueOperating Profit4,0003,0001,00004,0003,0002,0001,0000(JPY million)FYE March 2022(JPY million)16,00012,0008,0004,00002,9002,34910,4076,5877,2292011Q2Q3Q4QRevenueOperating Profit4,0003,0002,0001,00005Analysis of Operating Profit (3Q Cumulative Year-on-Year)The main reasons for the decrease in operating profit were lower Revenue in the mushroom business and higher utility and repair expenses(JPY million)(1,646)IncreaseDecreaseTotalMainly due to lower Revenue in the mushroom business(p.8)Mainly due to rise in utility and repair expenses, etc.Mainly due to differences in unit prices and quantities at the time of valuation(p.17)(Previous year)Recording of management fees and listing-related expenses(Current year)Decrease in freight and sales commissions, etc.(Previous year)Recording of registration expenses, etc.6Revision to FYE March 2022 Full-Year Financial Results ForecastDue to the relatively mild weather in early autumn, which is the peak demand season for mushrooms, consumption of mushrooms as a whole has been slow since autumn. In view of this, taking into consideration the impact of new plants operation and product shipment by competitors, soaring oil prices on material and utility costs as well, we have revised our financial results forecast for FYE March 2022.FYEMarch 31, 2021ActualPreviously announced forecast (A)(announced on May 25, 2021)Revised forecast (B)Difference (B-A)Ratio of difference(%)(JPY million)Total IncomeRevenueOperating ProfitRatio of Operating Profitto Total IncomeProfit before TaxProfit Attributable to Owners of ParentBasic Earnings per Share (JPY)[Reference]Adjusted Operating Profit *Adjusted EBITDA *Adjusted Profit *(JPY million)51,38034,5437,82315.2%7,1254,744119.038,09010,0705,21851,55335,3767,43414.4%6,9824,581114.807,4349,3884,749(2,415)46,91132,3285,01810.7%4,5652,94973.895,0186,9823,112(4,642)(3,048)(2,415)(3.7%)(2,417)(1,632)(40.91)(2,415)(2,405)(1,637)(9.0%)(8.6%)(32.5%)-(34.6%)(35.6%)(35.6%)(32.5%)(25.6%)(34.5%)Note:Adjusted Operating Profit = Operating Profit + Management Fees1 + Listing-Related Expenses2Adjusted Profit = Profit + Management Fees1 + Listing-Related Expenses2 + Refinance-Related Gains/Losses3 + Tax Adjustments 1 Management Fees are compensation based on the management contract between the Company and Bain Capital Private Equity, LP, and SHINMEI HOLDINGS CO., LTD.2 Listing-Related Expenses are temporary costs including listing preparation advisory costs, costs related to building an organizational structure for listing, costs related to the introduction of IFRS and timely disclosure system for listing, real estate Adjusted EBITDA = Adjusted Operating Profit + Depreciation + Amortizationregistration costs associated with a merger, etc. 3 Refinancing-Related Gains/Losses are advisory expenses that were temporarily incurred in connection with refinancing carried out after the Company was closed to the public. These expenses are offset by temporary gains that were incurred due to the decline in contract interest rates associated with the refinancing and the increase in interest expense during the remaining contract period that occurs in conjunction with the refinancing.7IncreaseDecreaseTotalRevenue by Business Segment (3Q Cumulative)While revenue of Maitake, Eringi, and Buna-Shimeji decreased, revenue of button mushrooms were strong3Q FYE March 20213Q FYE March 2022Increase (Decrease)(JPY million)ActualComposition RatioActualComposition RatioAmountChange YoYTotal Revenue25,956100.0%24,224100.0%(1,732)(6.7%)25,56498.5%23,89298.6%(1,671)(6.5%)15,02057.9%13,90557.4%(1,114)(7.4%)2,63010.1%2,41810.0%(211)(8.0%)Buna-Shimeji5,02719.4%4,61219.0%(415)(8.3%)2,88611.1%2,95612.2%3921.5%3311.4%+69(60)+2.4%(15.4%)1 Hon-Shimeji, Hatake-Shimeji, Button-Mushroom, Mushroom sets, purchased mushrooms, etc.8MushroomBusinessMaitakeEringiOtherMushrooms1OtherRevenue Trends by Business Segment (Quarterly Trends)Revenue of all mushrooms including maitake have been on an upward trend toward the 3rd Quarter(JPY million)12,00010,0008,0006,0004,00007,470 123 819 1,604 869 7,526 132 864 1,355 825 2,0004,054 4,348 10,959 136 1,202 2,067 935 6,617 8,586 155 905 1,790 789 4,946 (551)6,587 120 852 1,402 778 3,433 10,407 95 (40)1,243 +40TotalOtherOtherMushrooms 11,931 (136)Buna-Shimeji836 (99)Eringi6,300 (316)Maitake7,229 115 860 1,277 804 4,170 1Q2Q3Q4Q1Q2Q3Q1 Hon-Shimeji, Hatake-Shimeji, Button-Mushroom, Mushroom sets, purchased mushrooms, etc.FYE March 2021FYE March 20229Status of Mushroom Business (3Q Cumulative FYE Mar 2022)Sales volume and unit price of Maitake were both negative compared to the same period of the previous year, while unit price and volume were slightly below the forecastSales volume and unit price of Eringi were both negative compared to the same period of the previous year, while sales volume was slightly below, but unit price was achieved the forecastSales volume and unit price of Buna-Shimeji were positive and negative, respectively, compared to the same period of the previous year, while sales volume was achieved, but unit price was slightly below the forecastMaitakeEringiSales Volume Comparison 1Unit Price Comparison 1(%)Mar 2020Mar 2021vs ForecastMar 2020Mar 2021vs Forecastvs 3Q FYEvs 3Q FYEvs 3Q FYEvs 3Q FYE106.1%99.8%95.4%89.0%92.1%95.8%94.8%95.4%93.8%100.5%96.6%101.2%Buna-Shimeji97.4%101.7%100.7%97.9%90.2%97.0%Other Mushrooms2－99.2%93.9%－109.0%102.0%1 Comparison excluding processed products2 Comparison by the total of Hon-Shimeji, Hatake-Shimeji and button mushrooms10Consolidated Statements of Financial PositionCapital enrichment due to accumulation of quarterly profitsAs of Mar 31, 2021ActualAs of Dec 31, 2021ActualIncrease (Decrease)AmountChange YoY(JPY million)Current AssetsCash and Cash EquivalentsTrade and Other ReceivablesInventoriesBiological AssetsNon-current AssetsProperty, Plant and EquipmentGoodwill and Intangible AssetTotal AssetsCurrent LiabilitiesTrade and Other PayablesAccrued Income TaxesNon-current LiabilitiesBorrowingsLease LiabilitiesTotal LiabilitiesTotal EquityCurrent Portion of Long-Term BorrowingsTotal Equity Attributable to Owners of ParentTotal Liabilities and Equity10,2023,7772,0211,3902,90425,44118,0315,30435,6447,6141,9701,7841,13218,79818,35136026,4139,2309,23335,64411,7512,7933,4561,4433,96226,02518,9485,29737,7769,2654,1201,4501,32117,57217,23925026,83810,93810,94037,776+1,548(984)+1,434+52+1,057+583+916(6)+2,132+1,650+2,149(333)+188(1,225)(1,111)(110)+424+1,708+1,707+2,132+15.2%(26.1%)+71.0%+3.8%+36.4%+2.3%+5.1%(0.1%)+6.0%+21.7%+109.0%(18.7%)+16.6%(6.5%)(6.1%)(30.7%)+1.6%+18.5%+18.5%+6.0%11Consolidated Cash Flow Analysis (3Q Cumulative)Cash flow from operating activities was JPY 3,586 million, as Profit before Tax exceeded Corporate Income Taxes Paid, and etc.Cash and cash equivalents decreased by JPY 984 million due to Repayment of Long-Term Borrowings and Dividends Paid(JPY million)CF from Operating Activities+3,586CF from Investing Activities(1,572)CF from Financing Activities(2,998)(984)Cash-InCash-OutTotal12Consolidated Statements of Cash Flows (3Q Cumulative Year-on-Year)Decrease in profit before tax and increase in cash outflows such as dividends paid, compared to the same period of the previous fiscal year3Q FYE March 20213Q FYE March 2022Increase(Decrease)(JPY million)Cash Flows from Operating ActivitiesProfit before TaxDepreciation and AmortizationDecrease (Increase) in Trade and Other ReceivablesDecrease (Increase) in InventoriesIncrease (Decrease) in Trade and Other PayablesIncrease (Decrease) in Employee Benefit LiabilitiesIncome Taxes PaidCash Flows from Investing ActivitiesPurchase of Property, Plant and EquipmentProceeds from Sale of Property, Plant and EquipmentCash Flows from Financing ActivitiesRepayments of Long-Term BorrowingsDividends PaidNet Increase (Decrease) in Cash and Cash EquivalentsCash and Cash Equivalents at the Beginning of PeriodCash and Cash Equivalents at the End of the Period5,8446,5031,472(1,391)(92)1,43150(2,347)(2,981)(2,972)3(5,175)(4,462)(549)(2,312)4,4612,1483,5865,1391,476(1,425)(52)1,529(248)(2,097)(1,572)(1,555)0(2,998)(1,156)(1,671)(984)3,7772,793(2,257)(1,363)+4(33)+40+98(299)+250+1,408+1,416(3)+2,177+3,306(1,122)+1,328(683)+64413Key Financial IndicatorsNet D/E ratio improved slightly due to a decrease in debt as a result of contractual repayments and an increase in equity as a result of profitsEBITDA decreased compared with the same period of the previous fiscal year, and net D/EBITDA ratio was slightly upChanges of Financial Indicator Regarding GoodwillChanges in Financial Indicator Regarding Net DebtGoodwill to Net Assets Ratio 1Net Debt to Equity Ratio 11.1×0.6xFYE March 2020FYE March 20210.5x3Q FYE March 20223.9×1.7xFYE March 2020FYE March 20211.4x3Q FYE March 2022 Regardless of the sign of impairment, implement an impairment test once a year Check signs of impairment quarterly and implement an impairment test if there are any signs of impairmentNet Debt to EBITDA Ratio 22.2×1.6xFYEMarch 2020FYE March 20211.9x33Q FYE March 20221 IFRS based consolidated financial figures2 EBITDA are adjusted by excluding one-time expenses. Adjusted EBITDA = Adjusted Operating Profit + Depreciation + Amortization3 Estimated by last 12 months (LTM) cumulative adjusted EBITDA14Key Performance Indicators (3Q Cumulative)In the nine months of the current fiscal year, both revenue and profits decreased compared with the same period of the previous fiscal year, resulting in a slight deterioration in business indicators3Q FYE March 20213Q FYE March 2022Operating MarginAdjusted EBITDA MarginAdjusted Profit MarginBasic Earnings per Share 1Adjusted Basic Earnings per Share 1ROE (Return on Equity Attributable to Owners of Parent) 2ROIC (Return on Invested Capital) 317.9%22.3%11.8%JPY 107.04JPY 118.0374.2%17.2%1 Effective July 30, 2020, the Company split the shares of its common stock on a 100-for-1 basis. Basic Earnings per Share and Adjusted Basic Earnings per Share have been restated, as appropriate, on the assumption that the stock split was conducted at the beginning of the previous consolidated fiscal year2 Cumulative actual of the last 12 months (LTM) ROE = Profit Attributable to Owners of Parent / Total Equity Attributable to Owners of Parent during the Period3 Cumulative actual of the last 12 months (LTM) ROIC = (Operating Profit x (1- Effective Tax Rate)/ (Average shareholders’ Equity + Average interest-bearing Liabilities)15.0%19.0%9.6%JPY 84.85JPY 87.4039.5%14.1%15Overview of Accounting Treatment — IAS 41 “Agriculture”While profit is recognized at the point of sales under JGAAP, profit is recognized in advance during the period between the start of cultivation and the point of harvest under IFRSStart of cultivationPoint of harvestPoint of salesProfit recognition timingSales price:100Profit: 30Material costs, labor costs, etc.：70Cost of sales：70Profit：30Sales price：100Material costs, labor costs, etc.：70Actual Cost of sales: 70+Cancellation of profit recognized at harvest: 30JGAAPIFRSStart of cultivationPoint of harvestPoint of salesProfit recognition timing16Net Impact of Applying Accounting Treatment — IAS 41 “Agriculture” (3Q Cumulative)Net income impact of + JPY 980 million due to the adoption of agricultural accounting, mainly due to the impact of higher inventory levels of work-in-progress of Maitake(JPY million)Gains Arising from Changes in Fair Value (Income)BreakdownGains in Work-in-Progress (Beg. Bal.)Gains in Work-in-Progress (End. Bal.)Harvest for the Current PeriodOtherTotalOtherTotalTotal Net Impact3Q FYE March 2022(1,330)2,18011,18020312,234(402)500(11,180)(170)(11,253)+980Gains Arising from Changes in Fair Value (Cost of Sales)Gains in Finished/Semi-finished Goods (Beg. Bal.)Gains in Finished/Semi-finished Goods (End. Bal.)Harvest for the Current PeriodGains included in finished and semi-finished goods had a positive impact of JPY 97 million due to higher inventory levels compared to the beginning of the periodGains included in work-in-progress had a positive impact of JPY 850 million due to higher inventory levels compared to the beginning of the period17Net Impact of Applying Accounting Treatment — IAS 41 “Agriculture” (Quarterly Trends)The net impact of gains arising from changes in fair value fluctuates significantly from quarter to quarter, but the net impact for the full-year is minor(JPY million)1Q2Q3Q4QTotalGains in Work-in-Progress (Beg. Bal.)(1,330)(1,027)(2,393)Gains in Work-in-Progress (End. Bal.)1,0272,393Gains in Finished/Semi-finished Goods (Beg. Bal.)(402)(406)Gains in Finished/Semi-finished Goods (End. Bal.)Harvest for the Current Period2,180(567)500±0(4)406±027567±09(271)+1,537(285)IncomeCost of SalesFYE March 2022OtherTotal Net Impact(JPY million)Gains in Work-in-Progress (Beg. Bal.)(1,478)(1,086)(2,177)(2,314)(7,056)1Q2Q3Q4QTotalIncomeCost of SalesGains in Work-in-Progress (End. Bal.)Gains in Finished/Semi-finished Goods (Beg. Bal.)Gains in Finished/Semi-finished Goods (End. Bal.)FYEMarch 2021Harvest for the Current PeriodOtherTotal Net Impact1,086(436)352±0252,177(352)513±0112,314(513)481±0(3)1,330(481)402±0(36)6,908(1,784)1,750±0(3)(451)+1,263+102(1,099)(186)18Comparison of Sales, Sales Volume, and Growth Rate of Eastern Japan and Western JapanCompared to eastern Japan, consumption of maitake in western Japan is still low, and there is great potential for future growthStrengthen demand development in the Kyushu region through Fukuoka Sales OfficeEast Japan Sales DepartmentFukuoka Sales Office★West Japan Sales DepartmentSales Amount(Indexed with each sales amount in the fiscal year ended March 2017 as 100)Eastern JapanWestern JapanFYE Mar2017FYE Mar2018FYE Mar2019FYE Mar2020FYE Mar2021Sales Volume(Indexed with each sales volume in the fiscal year ended March 2017 as 100)Eastern JapanWestern Japan2001801601401201008018016014012010080Compound Annual Growth Rate(CAGR)WEST 15.5%10.0%EASTCompound Annual Growth Rate(CAGR)WEST 12.4%EAST6.8%FYE Mar2017FYE Mar2018FYE Mar2019FYE Mar2020FYE Mar202119Initiatives to Reduce Environmental ImpactReduce CO₂ and plastic waste by continuously reviewing packaging materials and raw materials to reduce environmental impactReduction effect of plastic wasteApprox. 177t/ yearCO₂ reduction effect ※Approx.451tCO₂/ yearCalculated based on Forecast of Unit Sales for the Fiscal Year Ending March 2022Review the material and thickness of the tray.Effect• Changed the material and thickness of the following trays, which are used in large quantities(Target：The right size pack, M sized pack, Shimeji Megumi W” )“The right sized pack”“M sized pack”“Shimeji Megumi W”Reduce CO₂ emissions and plastic wasteReduce environmental impactReduce logistics CO₂ by short-distance procurementImprove CO₂ absorption rate through forestationReduce use of petroleum resourcesProcure local saw dust.Use biomass ink• Full-scale procurement of local cedar saw dust• 28.5% of total procurement (FYE Mar 2022 1H actual)• Promote the procurement of hardwood sawdust in the neighborhood.• Use biomass ink 1 for packaging materials(Items to be marked as completed: Some Maitake Pillow products, Eringi products)1 Biomass ink: Inks that use plant-derived ingredients (trees, rice bran, etc.) as part of the raw material.Note: Calculated Reduction of CO₂ Emissions based on Industrial Waste Plastics 2.55tCO₂/t , which is CO ₂ emission factor generated in waste incineration published in Guidelines for Promoting Global Warming in Regions(3rd edition) by Environment Agency20Our Sustainability InitiativesOngoing activities to develop a forest park where people and forests can coexist in harmony by clearing trees and planting broadleaf trees to create a healthy forestSeptember 2020Started “Yukiguni Maitake Forest Creation Activities”Signed an agreement with the representatives of Minamiuonuma City, Minamiuonuma Forestry Association, and the Minamiuonuma Regional Promotion Bureau of Niigata Prefectural Government to develop a forest park October 2020Opening ceremony of “Yukiguni Maitake Forest Creation Activities”Forest maintenance by concerned parties and employeesActivities••••Ongoing maintenance through clearing and thinningImplementation of CO2 absorption calculationWood from forest thinning is used as saw dust for mushroom cultivationPlanting broadleaf trees (cherry trees), picking up twigsBeforeAfter ０Continue to work toward a forest park where people and forests can coexist in harmony21COVID-19: Impact on Business Performance and Initiatives to Prevent Spread of InfectionAt present, the stricter anti-coronavirus measures have been applied, due to the spread of mutated strains of coronavirusesImpact on business performanceThe environment surrounding the Company’s business remains severe due to the prolonged effects of the COVID-19 disaster, which have led to the cooling of consumer sentiment, the refraining from in going out, the growing desire to save money, and the continued slump in food service industryThoroughly measure body temperatures and wear masksEnforce hand washing and disinfection / regular ventilationProhibit meetings in a closed space in principleInitiatives to prevent the spread of infectionShift lunch time, record time and seats, and refrain from conversation• During meals, set one meter interval between seats and refrain from face-to-face seating• Recommend use of contact tracing apps• Curb cross-state travel•••••Company-wideInitiativesInitiatives at sales offices, etc.• Continue to support telework at sales offices depending on business needs222Medium-Term Business Plan for FYE March 31, 2022 to FYE March 31, 202623Medium- to Long-Term Vision of Yukiguni MaitakeThe company aims to “contribute to the enrichment of people’s lives and the prosperity of food culture” mainly through the production and sale of mushroom productsMedium- to long-term vision: The company continues to grow and expand globally as a comprehensivemanufacturer of premium mushroomsCompany MottoContribution towards society with quality productsA worthwhile workplaceValuesBasic Business Basic Policies &Strategies of the PolicyMedium -termBusiness PlanI. ManagementPhilosophies 1. Contribute towards enrichment of citizens’ livelihood and the prosperity of food culture2. Realize contributions to local communities and shareholders and affluent executives and employees3. Respect for corporate ethicsⅡ. Basic Business PoliciesⅢ-1. BasicPolicies1. Reform the culture of challenge2. Identify customer needs3. Realize employee enrichment4. Respect for corporate ethics5. “Pursuit of value and strength” and “Thorough selection and concentration of businesses” Create further demand in the domestic mushroom market and evolve into a comprehensive manufacturer of premium mushrooms with global operationsA. Domestic mushroom market: New value creationB. Cost reduction through innovative production technology: Improvement of productivity through factory automation of production processes and maximization of energy efficiencyC. Global expansion: Build an in-house foundation for production and sales, and explore business opportunities in mushroom-related fieldsⅢ-2. Basic Strategies1. Establish a foundation as a comprehensive manufacturer of premium mushrooms2. Achieve and maintain the overwhelming No. 1 position in maitake3. Pursuit technological innovation in production and packaging4. Start full-scale overseas expansion24Medium- to Long-Term Corporate Value ExpansionMaintain domestic EBITDA margin through innovation of production technology and cost reduction, and achieve moderate but stable growth of solid domestic business base. Expand the business base through overseas expansion, enhance the growth potential of the entire group, and expand corporate value while returning profits to shareholders through a stable dividend payout ratio.Image of a Medium- to Long-Term Growth RoadmapBasic PoliciesPresentFuturePopulationIncreaseMushroomDemandHealthDemandGlobal ExpansionDemographic ChangeCompetitorsCOVID-19・Domestic GrowthTechnology DevelopmentPromoteFactoryAutomationEnergy OptimizationDemand inWestern JapanDemand from Younger GenerationExpansion of corporate value↗＋Returning profits to shareholders through a stable dividend payout ratioCreate further demand in the domestic mushroom market and evolve into a comprehensive premium mushroom manufacturer with global operationsA◼ Domestic mushroom market: New value creation• The regional and age gaps in the consumption of maitake will be seen as new sales opportunities. And, by actively disseminating information and improving the convenience of cooking, we aim to raise the level of domestic consumption• Strengthen the button-mushroom business, which is a global standard and for which demand is expected to grow further, and move on to a new stage as a comprehensive manufacturer of premium mushroomsBCost reduction through innovative production technology: Improve productivity through factory automation of production processes and maximization of energy efficiency• Improve profitability by evolving into a highly efficient factory using the latest factory automation technology• Strive to maximize energy efficiency and reduce environmental impact.◼ Global expansion: Build an in-house foundation for Cproduction and sales, and explore business opportunities in mushroom-related fields• Expand the consumption of mushrooms, a natural foodstuff, to meet the global health consciousness• Build an in-house production and sales infrastructure overseas.• Search for business opportunities in the area surrounding mushrooms (upstream to downstream)25Quantitative Targets of the Medium-Term Business PlanAim for stable growth of the entire Group through the creation of new value in domestic business and full-scale global expansionFYE Mar 2021 (Actual)FYE Mar 2022 (Forecast)FYE Mar 2026(Plan)1. RevenueJPY 34.5 billionJPY 35.3 billionAround JPY 60.0 billion2. Overseas Revenue Ratio 13. Core EBITDA Margin 24. ROIC1 Overseas Revenue Ratio = Overseas sales revenue / Revenue2 Core EBITDA Margin = Core EBITDA / Revenue－29.7%17.9%Core EBITDA: IFRS operating income excluding the effect of applying IAS 41 “Agriculture”, other income and expenses, and one-time income and expenses, plus depreciation and amortization26.5%Around 20%－－Around 30%Around 10%60.030%Overseas RevenueDomestic Revenue34.534.535.3FYE Mar 2020(Actual)FYE Mar 2021(Actual)FYE Mar 2022(Forecast)Core EBITDA margin26.3%29.7%26.5%FYE Mar 2026(Plan)Around 20%26(JPY billion)6040200Basic Policy A: Domestic Mushroom Market (Maitake Business) 1Engage a wide range of customers, from light users to heavy users, by using “multilayered” and “complex” promotions according to the different characteristics of the target customer base“Multi-Faceted” Sales Promotion StrategyAttentionExperience/ InterestDesireMemory/ ActionAttentionExperience/ InterestDesireMemory/ ActionMass mediaEating out/ TakeawayDigital MediaIn store &items◼Use mass media to spread awareness◼Use of restaurant and takeaway chains◼Provide menu information through digital media◼“One last push” at sales floor and with item strategies➢ TV commercials mainly ➢ Held a maitake in western Japanmushroom fair and offer a menu.➢ TV-linked in-store promotion (Digital Signage)HeavyUsers“Multi-layered” approach according to target customers➢ Outgoing type: “Send out” menus that use maitake on recipe websites.➢ Participatory:Submit own menus for menu campaigns on SNS and recipe sites from customers➢ Disseminate evidence-based information nationwide➢ Maitake products (bread and rice balls) at CVS chains➢ Product packages linked to promotions and commercialsBuild a purchasing process that “combines” multiple media channels.Trial/Light Users27Basic Policy A: Domestic Mushroom Market (Maitake Business) 2Establish the overwhelming No. 1 position for maitake by developing customized marketing for each target customer segment by regionThe growth potential of Western Japan is huge, so we will increase the number of customers from light users to heavy users by raising awareness and increasing opportunities to eatImage 1 of Change in Market Size of Maitake byEast and West AreaWestern Japan■ Cultivate new demand for maitake➢ Main theme:Create demand➢ Key point：Promote the health functionality, as well as provide information on how to eat through a wide range of media such as TV, digital, restaurants and delisAlso promote the cooking method, its convenience, and provide actual eating scenes to raise awareness of the Companyatipac rep ekatiam rof dnameD0Eastern JapanEastern JapanWestern JapanCAGR just over +1%FYE Mar 2026Demand per capitaCAGR less than +2%FYE Mar 2022FYE Mar 2026Higher growth is expected in western Japan, where new demand is being developedCAGR Approx. +4%FYE Mar 2022Demand per capitaCAGR+4%～5%FYE Mar 2022FYE Mar 20261 The area of the bubble chart represents the amount of demand (market size)Population■ Further deepen and explore demand for maitake➢ Main theme:Rank up in customer demand➢ Key point：Disseminate health functionality from multiple perspective, with the catchphrase “Maitashi”, the concept of “Maitake is on my menu every day,” Maitake has grown to become a year-round foodstuff rather than a seasonal one28Basic Policy A: Domestic Mushroom Market (Button-Mushroom Business)Strengthening our premium mushroom business will be the key to developing our future growth strategy in Japan and overseas in a three-dimensional mannerHigh growth potential of the domestic market◼ Business environment➢ The most major and standard mushroom in the global mushroom market (Over 40% of the world’s mushroom production)➢ Domestic production is small, at about 7,000 tons, and has high growth potential.➢ In Japan, high entry barriers, and the oligopolistic three major companies.◼ Response and Policy➢ One of the three major domestic companies is our subsidiary. Create demand and expand the market by proposing menus.◼ Business environment➢ The small production volume is due to bottlenecks in the supply chain, including production technology and raw material procurement.◼ Response and Policy➢ Maximize synergies with domestic business by controlling upstream (raw materials) to downstream operations, along with overseas productionSynergy with overseas expansionComplementarity with maitake◼ Business environment➢ It is more compatible with Western food than Japanese food, and its use is different from other Japanese mushrooms, so it does not conflict with our main product, maitake➢ Can be eaten raw, and seasonality is small◼ Response and Policy➢ Multiple mushroom lineups to enhance the brand value of “Yukiguni” as a comprehensive premium mushroom manufacturer➢ Level out the season gap◼ Business environment➢ Cultivate the initially minor maitake into apremium mushroom➢ Significantly expand the market for maitake mushroom by creating demand through the use of a unique model (production and sales)◼ Respond and policymaitake.➢ The current oligopoly environment is very similar to that of ➢ There is room to apply our unique model for maitake to button mushrooms and make them blossom as premium mushrooms.Development of our unique model29Basic Policy B： Cost Reduction through Innovative Production TechnologyProactively work on sustained cost reductions in utility costs, labor costs, and raw material costsMaximize energy efficiency and reduce environmental impact through the use of alternative energy sourcesResponse and PolicyFactory Automation in Production ProcessCapital investment for factory automation of production processes leading to cost reductionImprove productivity through cost reduction and labor saving by further introducing the latest Factory Automation technology in production processes such as inoculation, harvesting, and packaging, and evolve into a highly efficient factoryAim to reduce the number of employees in the target factories (production and packaging processes) by about 30% (over 150 people) as the maximum target for the next five yearsMaximize Energy EfficiencyCapital investment for the introduction of energy conservation measuresFocus on maximizing energy efficiency and reduce environmental impact through the use of alternative energy sourcesImplement energy conservation measures such as LNG conversion, solar power generation, LED lighting, etc.Respond to future energy price hikesReduce CO₂ emissions and realize an environmentally sustainable production system••••••••30Basic Policy C: Global Expansion (Market Size)Global mushroom production is expected to grow steadily at a CAGR of about 4% 1 in the coming years as consumers become more health consciousEurope and North America have the world’s largest markets for Button Mushrooms 2North America4.4%CAGR$ 2,200 mil. Market size, 202013%Market ShareSouth America5.6%CAGR$ 140 mil. Market size, 20201%Market ShareEurope5.3%CAGR$ 3,100 mil. Market size, 202019%Market ShareAsia Pacific3.5%CAGR$ 11,000 mil. Market size, 202066%Market ShareOther Regions4.5%CAGR$ 190 mil. Market size, 20201%Market ShareRelatively short distance from Japan, with high affinity for Japanese food culture and geography1 CAGR on this page is the average annual growth rate from 2020 to 20252 Button Mushrooms account for over 40% of the world’s mushroom productionSources： Data from external research reports and our analysis31Basic Policy C: Global Expansion (Response and Policy)Promote global development based on different strategic policies in ASEAN and Europe, and strengthen the competitiveness of the entire Group by mutually sharing management resources with comparative advantages in each region【Japan ➡ ASEAN】• Our premium mushrooms• Our original model (production and sales)• Know-how and technology for stable production of mushrooms with high production difficulty【Europe ➡ Japan】• Competitive western mushrooms (button mushrooms)• Raw materials• Others (know-how, technology)JAPANTargetEstablish an in-house foundation for production and sales of our productsTargetCapture business opportunities in mushroom cultivation and related fieldsASEAN◼ Basic StrategyNorth AmericaEurope➢ ASEAN is the target region where we have been conducting research.➢ Accelerate the speed of sales channel development with the unique channel modelcultivated in Japan, while also considering alliances.➢ Promote company-wide efforts to establish a related areas (upstream to downstream)production base in the region.Estimated market size 2JPY 580 billion◼ Basic Strategy➢ Target business opportunities in mushroom cultivation and ➢ Acquire business infrastructure and management resources (management personnel, networks)➢ Examine entry strategies for our business and products in the U.S. and European regions➢ Superior technology: Dramatically improve the Group’s competitiveness by expanding quality and cost to Japan and ASEAN in production, R&D, new businesses and products. 32Estimated market size 1JPY 240 billion【Europe and America ➡ ASEAN】• Competitive western mushrooms (button mushrooms)• Raw materials• Others (know-how, technology)1 Data from external research reports and our analysis2 Converted at USD1 = JPY110Utilizing Open InnovationPursue medium- to long-term growth potential through both process and product innovation 1 by flexibly utilizing the superior management resources of other companiesOur Independent ResearchExcavation by VC Funds 2 of LP InvesteeCompanies to Be Acquired (Investment)Identify companies with superior management resources by fully utilizing the Group’s networkCarefully select alliance partners based on our growth strategy, technology needs and terms of useUtilize other companies’ superior management resources (technology, know-how, and products)Product InnovationProcess InnovationA Field of PossibilitiesR&D◼DXBusiness ProcessProductionSalesControl➢ Sophistication of analysis accuracy through the use of big data and AI technology, as well as labor saving and automation◼AgriTech➢ Utilization of unused resources, acquisition of new technologies for culture and cultivation, and breeding technologies, and strengthening of R&D capabilitiesProduct PortfolioTechnologyKnow-How Human Resources Networks1 The effects of open innovation are not included in the planned figures of the new medium-term business plan2 Made an LP investment in SBI Investment’s venture capital fund (September 30, 2021)A Field of Possibilities◼Alternative Materials➢ Alternative protein sources, alternative leather, packaging, architecture, interior design, etc. ◼Processed Foods➢ Confectionery, bakery, beverages, seasonings, etc.◼Mushroom Related➢ Acquire new mushrooms (new fungi) and mushroom-related products, and strengthen R&D capabilities33Product DProduct BProduct FProduct GProduct HProduct IX axisY axisProduct AProduct CProduct EESG Strategy• Sponsorship of local events• Factory tour for local elementary school students• Initiatives for the YukiguniMaitake forest• Participation in the Uonuma Mushroom Hardwood Supply Study Group• FSMS/ ISO22000• ASIAGAP• Establishment of Customer center• Yukiguni Maitake safety system• No use of pesticides or chemical fertilizers• Declaration of Compliance• Code of Conduct for Compliance• Internal Reporting Contact• Risk Management Committee• BCP (Natural disaster countermeasures)As part of our ESG strategy, we will enhance our sustainability and fulfill our social responsibility by addressing the seven core subjects and Sustainable Development Goals (SDGs)ISO26000：Status of Our Implementation of the Seven Core SubjectsCommunity Involvement & DevelopmentHuman RightsConsumerIssuesOrganizationLabor PracticesFair Operating PracticesThe Environment• Evaluation of the effectiveness of the Board of Directors• Nomination and Compensation Committee••Internal Control CommitteeIncrease in number of outside directors• whistleblower System• Avoiding human rights violations in the supply chain• promotion of women’s activities• Employment of the Disabled• Physical examination, Immunization assistance• Promotion for paid vacation, childcare leave• Telework, flexible working, staggered work hours• Dialogue with labor unions and employees• Circle activity support• Switching to LNG• Water usage and conservation• Harvested timber utilization• Tray weight reduction, use of recycled trays• Reduction of CO2 emissions in logistics• Utilization of mediumSources : Prepared by the Company based on the ISO (International Organization for Standardization) framework and the Sustainable Development Goals (SDGs)34Roadmap for ESG StrategyWork toward disclosure of TCFD, sustainability policy, and value creation process by the end of June 2022Received an A rating from MSCI ESG RATINGS in October 2021Schedule for ESG Disclosure (FYE March 2022 – FYE March 2024)Integrated Reporting (IIRC)Climate-Related Disclosures (TCFD)OthersFYE Mar 2022｜FYE Mar 2024Organizing and communicating corporate value• Value Creation Process• Sustainability PolicyIdentify materialityESG disclosure for integrated reporting •• Business model, Value chain•Incorporate the SDGs into management goals• DiversityIntegrated Reporting Disclosure• Compile of integrated reporting• Disclosures that integrate collected non-financial information with financial strategiesData collection for TCFD disclosure• TCFD endorsement• GHG measurement• Set reduction target• Climate-related disclosures in the Corporate Governance ReportExpansion of TCFD disclosure• Expand TCFD disclosure• Risk Management and Strategy• Scenario AnalysisInventory for ESG disclosure• Collect information from each department in charge• Mindset for strengthening ESG disclosureExpansion of ESG disclosure• Verity and collect data based on valuation axes such as FTSE, MSCI, SFDR• ESG rating improvement measuresPromotion of ESG management• Evaluate and verify of the effectiveness of the action planBrush up on TCFD disclosure• Enhance scenario analysisESG Branding• Enhance ESG branding content353Reference Materials36Overview of Yukiguni Maitake GroupYUKIGUNI MAITAKE CO., LTD.Representative Iwao Ashikaga, President and CEOEstablishedJuly 1983Head OfficeMinamiuonuma-shi, Niigata, JapanCode Number1375Stock Exchange ListingNumber of Shares Issued*1)Number of Employees 1Business DescriptionTokyo Stock Exchange, 1st Section39,910,700Full-time: 1,121, Part-time: 1,277(as of December 31, 2021)Mizuho Norin Co., Ltd.Kinoko Center Kin Co., Ltd.Mitsukura Norin Co., Ltd.Production and sales of Maitake, Eringi, and Buna-Shimeji, and manufacture and sales of processed mushroom productsProduction and sales of Hon-Shimeji and Hatake-Shimeji in Kyotamba-cho, Kyoto, JapanProduction and sales of Buna-Shimeji in Kin-cho, Okinawa, JapanProduction and sales of button mushrooms in Ushimado-cho, Okayama, Japan1 The number of employees consists of the number of full-time employees (excluding those seconded from the Company to outside, including those seconded from outside to the Company) and the average number of part-time employees over the previous one year (part-timers, temporary staff from human resources companies, and seasonal workers)37Corporate HistoryJune‒ Established Yukiguni Maitake Co., Ltd. and launched the production and sales of maitakeJune‒ Delisted from the Second Section of the Tokyo Stock Exchange‒ Became a wholly owned subsidiary of Bain Capital 1MarchApril‒ Transferred shares of Yukiguni Maitake (Changchun) Biotechnology Limited, which operates the enokitake business in ChinaSeptember‒ Acquired Mizuho Norin Co., Ltd., a company producing and selling Hon-Shimeji and Hatake-Shimeji in Japan, and Kinoko Center Kin Co., Ltd., a company producing and selling Buna-Shimeji in Japan‒ Shinmei Co., Ltd., the largest Japanese rice wholesaler, acquired a 49% stake (Bain Capital: 51%; Shinmei: 49%)October‒ Acquired Mitsukura Norin Limited 2, a company producing and selling button mushrooms in JapanMarch‒ Acquired Totaku Co., Ltd., and expanded the business into the production and sales of processed foods19831994199820002015March‒ Listed on the Niigata Stock ExchangeMarch‒ Listed on the Second Section of the Tokyo Stock Exchange as the Niigata Stock Exchange merged into the Tokyo Stock Exchange20162017201820192020August‒ Transferred shares of Yukiguni Bio Foods Co., Ltd., which operates the bean sprout businessSeptember‒ Packaging factory of maitake was completed in Shiga Package Center and commenced packaging of maitakeSeptember‒ Listed on the First Section of the Tokyo tock Exchange1 “Bain Capital” mentioned above is the generic term of the fund which Bain Capital Private Equity, LP provides investment advice2 Changed the trade name from Mitsukura Norin Limited to Mitsukura Norin Co., Ltd. on March 2, 202038Our Strengths in the Value Chain (Maitake)Achieve a stable production and supply system for premium mushrooms through repeated improvements in the production process, and establish a high barrier to entry and a stable revenue baseComplex and multifaceted marketing customized for each target customer segment by regionR&GHigh R&D capabilities cultivated over many years to support the entire value chain• Proprietary seeds and cultivation techniques that support stable production on a large scale• High basic research capability to support new product development• Accumulation of academic evidence to support marketingProductionProductMarketingDistribution, SalesDetailed, three-dimensional marketing for different customer segments“Direct sales” network to retail chains• Devise media and messages to meet the needs of different regions and customer segments. Provide eating opportunities by utilizing food service and its routes• Aggressive collaboration and promotion with other major manufacturers with strong brands (seasonings, etc.)• Confirmation of annual sales volume in advance and stabilization of sales volume and price (80% of total sales of maitake)• Ensure sales floor space through product sizing and effective promotions that meet the retail needs of direct customers• “Last mile” in-store promotions are possible.Large-scale, stable production know-how for premium mushroomsHigh-quality premium mushroom lineup• Large-scale and stable production process in bag cultivation• Proprietary strains make it difficult for other companies to imitate(Certain effect as a barrier to entry)• Further improvements in productivity are ongoingProducing “large” maitake plants that are close to natural ones• Natural mushrooms are rare (They dance for joy when they find it.)• The “over 900g” size, which is close to the natural size, cannot be produced stably and on a large scale by other companies• Taste and quality are also close to natural ones.• Maitake “Kiwami” ：A top brand for its umami and texture.• White Maitake“Miyabi” : Only we can produce• Other Premium Mushroom(Button-Mushroom, Hon-shimeji)Flexible size adjustment in response to demand fluctuations• Small, medium, or large size adjustment is possible for our unique large shares• Sizing according to the retail characteristics and intentions of direct customers (Customer base: age group, household composition, region, etc.)• Increase the number of small sizes and packs when demand increases (publicity and seasonal factors)39Main Products and Composition Ratio of Each Product to Sales RevenueThe world’s first successful mass producer of maitake, and the top share producer of “premium mushrooms” that achieved factory based mass production of mushroomsIn addition to mushrooms such as Maitake, develop health foods, processed foods, etc. that utilize our mushroom portfolio• Health Foods• Culture Medium Activator• Products Shop • Button Mushrooms・Hon-Shimeji “Daikoku Hon-Shimeji”• Hatake-Shimeji “Tamba Shimeji”OtherJPY0.5bn.(1.6%)Other MushroomsJPY3.7bn.(11.0%)• EringiEringiJPY3.4bn.(9.9%)Buna-ShimejiJPY6.8bn.(19.7%)• Maitake “Kiwami”TotalRevenueJPY34.5bnFYE Mar 2021MaitakeJPY19.9bn.(57.8%)• Buna-Shimeji “Megumi”• White Maitake “Miyabi”40Product PortfolioA pioneer in artificial cultivation and mass production of maitake, and a leading company engaged in factory based mass production of mushroomsMaitake “Kiwami”, “Miyabi”EringiBuna-Shimeji“Megumi”Mitsukura NorinButton Mushrooms 1*1)Hon-Shimeji 1“Daikoku Hon-Shimeji”*1)Hatake-Shimeji 1“Tamba Shimeji”*1)Processed Foods 2Health Foods 31 Classified as “other mushrooms” business segment2 Each processed food is classified into its original mushroom business segment3 Health foods, etc. are classified into “other” business segment41Mushroom Production Share of Yukiguni Maitake Group (YM)Our mushroom products including maitake have high shares in respective market MaitakeEringiBuna-Shimeji2020 totalproductionvolume:55K tonsYM52%YM26%2020 totalproductionvolume:39K tons当社52%Hon-ShimejiHatake-ShimejiButton Mushrooms2018 totalproductionvolume:300 tonsYM (Mizuho Norin)99%2018 totalproductionvolume:600 tonsYM (Mizuho Norin)87%Note: Market share of each mushroom is calculated using domestic production volume (Our company’s production ÷ Total domestic production)Sources: Forestry Agency “Statistical Survey on Production of Minor Forest Products”, Ministry of Agriculture, Forestry and Fisheries “Local Vegetable Production Survey”42当社16%YM15%2020 totalproductionvolume:123K tons当社YM16%(MitsukuraNorin)34%2018 totalproductionvolume:7K tonsBreakdown of Major Mushroom Markets (by Market Size)The overall market for mushrooms shrank temporarily due to the effects of rumors associated with the Great East Japan Earthquake, but has been expanding since 2013 In 2020, the production volume of Maitake increased by 7.6% year-on-year, but the market size decreased by 2.0% due to a decline in market unit price214 0 20.1 215 1 18.9 218 1 20.8 216 0 21.1 227 1 21.4 224 0 20.7 33.9 31.7 34.8 36.4 45.3 48.2 232 0 20.7 47.3 50.9 50.5 51.1 49.0 49.1 51.8 55.7 51.4 Buna-Shimeji＋7.3%34.0 8.7 34.2 9.7 31.3 27.7 10.5 10.7 30.7 26.7 32.1 10.6 10.4 9.6 62.4 57.5 63.3 66.3 68.4 71.1 70.9 66.2 66.3 66.1 2010 Vs 2020TotalMatsutakeEringi＋6.0%(42.9%)(9.6%)Maitake＋45.1%Enokitake(2.1%)Nameko(5.0%)Row Shiitake(1.9%)(JPY billion)250219 1 22.9 32.6 51.9 32.8 10.1 67.4 200150100500205 0 20.2 29.6 200 0 19.2 29.2 191 0 16.6 27.6 47.6 48.1 32.6 9.0 32.5 8.0 33.0 7.6 Note 1: Note 2:Note 3:Sources:The mushroom market is the total market size of raw Shiitake, Nameko, Enokitake, Buna-Shimeji, Maitake, Eringi, and MatsutakeMarket size is calculated as “annual average wholesale unit price at Tokyo Central Wholesale Market (Jan.-Dec.) x domestic production volume”Average unit price of Buna-Shimeji is calculated using average unit price of ShimejiStatistics Data by Ministry of Agriculture, Forestry and Fisheries, and by Tokyo Central Wholesale Market43Features of Our MaitakeApply package cultivation to be able to grow maitake as large as those grown naturally, and still have rich texture, which issuccessfully achieved in factory based production by large-scale cultivationCultivation SystemProduct Features• Apply package cultivation• High-quality maitake with well-balanced umami and • Our maitake has a large “stem” which has rich and flavormeaty texture• Approximately 900 grams per root• Offer products with large roots in various volumes to meet customer demands・・・・・・“Small pack”Small Volume50g“Gourmet pack”Medium Volume120g150g“LL Pack”Extra large volume350g200g80g100g※approximate weight44Production / Packaging ProcessWorld’s first manufacturer to achieve factory based production of maitake which is difficult to cultivate, and establish a stable production and supply system for maitakeActively pursue AgriTech to improve productivity and reduce manual laborStable production capacity / harvest / qualityCreating Culture MediaInoculationCultivation and GrowingHarvesting / Packaging• Differentiate recipes for blending culture media that use no agricultural chemicals• Inoculate the culture media with fungi originally developed in-house• Automation of inoculation • Sterilize the culture processmedia under high temperature and high pressure• Clean rooms for avoiding germs• Environmental management based on data science at extensive cultivation rooms• Mass production realized by control of lightning, temperature, and humidity• Almost all automation realized in Eringi and Buna-Shimeji production45Health Functionalities of MaitakeFocusing our efforts on the research to reveal the nutrients of Maitake that are expected to have high health functionalitiesA type of polysaccharides “glucans”Beta-GlucansBeta-glucan, one of the major polysaccharides contained in maitake , is being studied and expected for maintaining and improvement of immunity 1-31 He et al. 2017 Int. J. Biol. Macromol. 101: 910-921. 2 Wesa et al. 2015 Cancer Immunol Immunother 64: 237-247.3 Masuda et al. 2013 Int. J. Cancer 133: 108-120.Beta-GlucansAlpha-GlucansMineralsVitaminsEssential nutrients for the bodyMineralsMinerals are essential nutrients for the body, but they cannot be produced by the body. Therefore, it should be taken from food. Maitake contains potassium, which works to get excess salt out of the body, and magnesium, which regulates the body.Expected to have various effectsMaitake Dietary FiberDietary fiber is expected to have the effect of suppressing the rise in postprandial blood glucose level. In addition, Maitake has been confirmed to have a “second meal effect” that moderates the rise in blood sugar level after the first meal is eaten2.In addition, dietary fiber is said to have the function of adsorbing lipids and sugars and discharging them to the outside of the body. Dietary fiber contained in maitake increases the amount of stool and shortens the transit time of the digestive tract. 2 The Effects of Maitake on the Elevation of Blood Sugar Levels and the Second Meal Effects of Maitake (2010, 64th Annual Meeting of Japanese Society of Nutrition and Food Science)Low-CalorieDietary Fiber46M&A Success Stories / Mitsukura NorinAfter making mushroom producer Mitsukura Norin a subsidiary, we have achieved large-scale, stable production through thorough production control. Utilizing the experience of successful post-acquisition subsidiary PMI in the future management of new subsidiariesProductionSalesBefore AcquisitionAfter AcquisitionProduction is not stable• Multi-level management of production data in each process makes it difficult to improve production efficiency.• Out-of-specification products occur due to uneven mushroom size, etc.Production stabilization through our know-how• Visualization and quantification of production management based on know-how gained through process improvements in the production of maitake mushrooms, which are difficult to cultivate artificially.• Improved yield and productivity, and changes in item mix have resulted in higher commercialization rates and improved profitability.Basically dependent on fruit and vegetable markets for sales• Difficult to control prices as they are sold in the market• It is difficult to know where the products are sold, and it is impossible to propose sales areas and ways of eating.Increase unit sales price by strengthening direct sales• Implementing auspicious day promotions and eating suggestionson the sales floor on our direct sales route to retailers.• Higher unit prices and increased inquiries from retailers.Domestic Mushroom Market ShareYM(MitsukuraNorin)34%2018 totalproductionvolume:7K tonsOur company accounts for one-third of the domestic mushroom market and is highly profitable.47Changes in Market Transaction Unit PriceFYE Mar 2018FYE Mar 2019FYE Mar 2020FYE Mar 2021FYE Mar 2022Weighted Average Unit Price（JPY）AprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarFYE Mar 2022FYE Mar 2021FYE Mar 2020FYE Mar 2019FYE Mar 2018FYE Mar 2022FYE Mar 2021FYE Mar 2020FYE Mar 2019FYE Mar 2018FYE Mar 2022FYE Mar 2021FYE Mar 2020FYE Mar 2019FYE Mar 2018‒762831873727‒486514475527‒422405388403(JPY/kg)1,2001,000(JPY/kg)700800600400200060050040030002006005004003002000(JPY/kg)700MaitakeEringiBuna-ShimejiAprMayJunJulAugSepOctNovDecJanFebMarSources: The Company created the chart based on the Market Statistics Data from Metropolitan Central Wholesale Market48Changes in Market Sales Volume（ｔ）FYE Mar 2018FYE Mar 2019FYE Mar 2020FYE Mar 2021FYE Mar 2022AprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMar（ｔ）300275250225200175150125100030027525022520017515012510009008007006005004000（ｔ）1,2001,1001,000MaitakeEringiBuna-ShimejiAprMayJunJulAugSepOctNovDecJanFebMarSources: The Company created the chart based on the Market Statistics Data from Metropolitan Central Wholesale Market49Vegetable Market Transaction TrendsFYE Mar 2018FYE Mar 2019FYE Mar 2020FYE Mar 2021FYE Mar 2022(JPY/kg)4003503002502001501000AprMayJunJulAugSepOctNovDecJanFebMarFYE Mar 2022FYE Mar 2021FYE Mar 2020FYE Mar 2019FYE Mar 2018235258242226260251246223231238261265238235258230305243269226242308240290248285249257282240211245217264201215209239224270239211242230314249234242322232216233314238244230259Sources: The Company created the chart based on the Market Statistics Data from Metropolitan Central Wholesale Market50Consolidated Statements of Financial Position (as of March 31, 2021)While liabilities are declining, equity is growing, and the financial stability is maintainedAs of Mar 31, 2020ActualAs of Mar 31, 2021ActualIncrease (Decrease)AmountChange YoY(7.6%)(15.3%)(JPY million)Current AssetsCash and Cash EquivalentsTrade and Other ReceivablesInventoriesBiological AssetsNon-current AssetsProperty, Plant and EquipmentGoodwill and Intangible AssetTotal AssetsCurrent LiabilitiesTrade and Other PayablesAccrued Income TaxesNon-current LiabilitiesBorrowingsLease LiabilitiesTotal LiabilitiesTotal EquityCurrent Portion of Long-Term BorrowingsTotal Equity Attributable to Owners of ParentTotal Liabilities and Equity11,0454,4612,1411,2923,01924,15316,7105,32035,1997,2802,3901,53994223,01722,43848330,2974,9014,89935,19910,2023,7772,0211,3902,90425,44118,0315,30435,6447,6141,9701,7841,13218,79818,35136026,4139,2309,23335,644(842)(683)(119)+98(114)+1,287+1,321(16)+444+334(419)+244+190(4,218)(4,086)(122)(3,884)+4,329+4,333+444(5.6%)+7.6%(3.8%)+5.3%+7.9%(0.3%)+1.3%+4.6%(17.5%)+15.9%+20.2%(18.3%)(18.2%)(25.4%)(12.8%)+88.3%+88.4%+1.3%51Consolidated Statements of Income (Cumulative)Revenue was virtually flat YoY, and Gains Arising from Changes in Fair Value had a negative impact of around JPY 180 million, but Operating Profit increased due to reductions in utility costs and other factorsFYE Mar 2020FYE Mar 2021Increase (Decrease)Change YoYGains Arising from Changes in Fair ValueMaterial Costs, Labor Costs, etc.Gains Arising from Changes in Fair Value(JPY million)RevenueTotal IncomeCost of SalesGross ProfitSG&A ExpensesOther IncomeOther ExpensesOperating ProfitProfit before TaxProfit Attributable to Owners of Parent[Reference]Adjusted Operating Profit *Adjusted EBITDA *Adjusted Profit *34,51716,24250,75919,19616,09635,29315,4668,3692906966,6916,6464,3466,8998,6724,28234,54316,83751,38018,05717,02335,08116,2998,291582437,8237,1254,7448,09010,0705,218(1,139)+25+594+620+927(211)+832(77)(231)(453)+1,131+479+397+1,191+1,398+935Note:Adjusted Operating Profit = Operating Profit + Management Fees1 + Listing-Related Expenses2Adjusted Profit = Profit + Management Fees1 + Listing-Related Expenses2 + Refinance-Related Gains/Losses3 + Tax Adjustments 1 Management Fees are compensation based on the management contract between the Company and Bain Capital Private Equity, LP, and SHINMEI HOLDINGS CO., LTD.2 Listing-Related Expenses are temporary costs including listing preparation advisory costs, costs related to building an organizational structure for listing, costs related to the introduction of IFRS and timely disclosure system for listing, real estate Adjusted EBITDA = Adjusted Operating Profit + Depreciation + Amortizationregistration costs associated with a merger, etc. 3 Refinancing-Related Gains/Losses are advisory expenses that were temporarily incurred in connection with refinancing carried out after the Company was closed to the public. These expenses are offset by temporary gains that were incurred due to the decline in contract interest rates associated wi