力の源ホールディングス（3561） – Consolidated Financial Report for the The Fiscal Year Ending March 31, 2022

This document is a translation of part of the original Japanese version and provided for reference purpose only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail. Consolidated Financial Report for the The Fiscal Year Ending March 31, 2022 Company: Chikaranomoto Holdings Co., Ltd. Stock Code: 3561 URL http://www.chikaranomoto.com/ Representative: (Title) (Name) Shigemi Kawahara President and Representative Director May 13, 2022 Tokyo Stock Exchange Contact: (Title) Chief Strategy Officer (Name) Tomoyuki Yamane Tel: +81-(0)3-6264-3899 General Meeting of Shareholders: June 29, 2022 Scheduled Date of Dividend Payments: Preparation of Supplementary Explanation Material for Financial Results: Presentation Meeting for Financial Results: – Yes No １.Financial Year Ending March 31, 2022 (April 1, 2021 – March 31, 2022) (Rounded down to the nearest million yen) (1) Results of Consolidated Operations (% indicates variance from the previous fiscal year) Revenue Operating Income Ordinary Income Income Attributable to the Company Million JPY % 19,398 17.3 16,539 -43.2 Million JPY 1,050 -980 – – Million JPY 1,083 -1,010 – – Million JPY 923 -2,392 ％ ％ ％ – – Note: Comprehensive Income FY2021-22 1,125 million JPY (-%) FY2020-21 -2,523 million JPY %) Earnings per share Return on Equity Return on Assets Earnings per share after adjusting for dilution Operating margin JPY 34.91 -100.08 JPY 34.64 – ％ 36.2 -93.5 ％ 7.0 -6.5 ％ 5.4 -5.9 Note: Equity Method Income FY2021-22 23 million JPY FY2020-21 -18 million JPY (2) Consolidated Financial Position Total Assets Net Equity Equity Ratio Net Equity per share million JPY million JPY 15,271 15,673 3,800 1,312 ％ 24.8 8.4 yen 140.69 54.80 Reference: Shareholders’ Equity FY 2021-22 3,791 million yen FY2020-21 1,312 million yen FY2021-22 FY2020-21 FY2021-22 FY2020-21 FY2021-22 FY2020-21 (3) Consolidated Cash Flow Operating Cash Flow Investing Cash Flow Financial Cash Flow Cash and Equivalents (ending balance) million JPY million JPY million JPY million JPY 1,704 -651 -923 -1,249 -167 2,047 5,125 4,347 FY2021-22 FY2020-21 2. Dividends FY2020-21 FY2021-22 Dividends per share (annual) Total Payout Dividend Q1 Q2 Q3 Q4 Total Dividends Ratio over Equity Yen － － Yen 0.00 0.00 – Yen － – － Yen 0.00 0.00 Yen 0.00 0.00 million JPY 0 0 % – – – % – – FY2022-23 (Forecast) – – – Note: As for FY2022-23, due to uncertainty in F&B business, the dividend plan is not decided yet, although we see a positive trend in our performance. 3. Forecast of Consolidated Operating Performance for the FY 2022-23 (April 1, 2022 to March 31, 2023) Revenue Operating Income Ordinary Income (% indicates variance from the previous period or quarter) Income Attributable Earnings per to the Company share Million JPY % Million JPY ％ Million JPY ％ Million JPY ％ Half Year (up to Q2) 11,289 28.9 479 82.5 469 88.0 296 190.9 FY2022-23 23,705 22.2 1,383 31.7 1,355 25.1 950 2.9 Yen 11.29 36.12 Notes (1) Changes in key subsidiaries during the period (Changes regarding specific companies accompanying changes in the scope of consolidation): (2) Changes in accounting policies, accounting estimates, and restatement of error corrections: 1) Changes in accounting policies arising from revision of accounting standards: 2) Changes in accounting policies due to reasons other than 1): 3) Changes in accounting estimates: 4) Restatement of prior period financial statements after error correction: None Yes None None None (3) Total Number of Issued Shares (Common stock) ① Total number of issued shares at the end of period (including treasury shares) ② Total number of treasury shares at the end of period FY2021-22 27,042,400 Shares 24,040,800 Shares As of March 31, FY2021-22 89,601 Shares 89,601 Shares As of March 31, ③ Average number of shares during the FY2021-22 26,459,465 Shares 23,909,963 shares As of March 31, 2021 2021 2021 1 The total number of treasury shares at the end of period includes those treasury shares held under the Employee Stock-ownership Program (ESOP) (at the end of FY2021-22 89,600 shares and at the end of the previous fiscal year 89,600 shares). Also, these treasury shares are excluded from the calculation of the average number of shares during the period (at the end of FY2021-22 89,600 shares and at the end of FY2021-22 89,600 shares). These consolidated financial reports (Tanshin) are exempt from the audit procedures by certified public accountants or period Note: audit firms. Cautionary Statement on the forecast of consolidated financial performance and other notes (Cautions concerning forward-looking statements) Performance forecasts presented herein are based on the information available to Chikaranomoto Holdings Co., Ltd. and its subsidiaries (the “Company”) as of the date of this document. Accordingly, there remains the possibility that the actual performance results may differ from projections. (Supplementary Explanation Material) Supplementary Explanation Material are available via TDnet on the same day. Overview of Business Results 1. (1) Summary of Operating Results As for the overall economic environment during the current consolidated financial period, the world economy was on its way to the pre-pandemic levels with successful vaccination programs. However, with the advent of much more infectious new variant, the concern about resurgence of the pandemic has spread over the world again and made the outlook uncertain again. Furthermore, we are seeing energy and raw material prices hike and exchange rates uncertainty, which are caused by geopolitical risks such as Russia-Ukraine situation and US-China disputes. We need to remain vigilant over the situations. Within the restaurant industry in which the Company operates, domestically, there are upward pressure on the wages and logistic costs due to shortage of labor force, heightened raw materials costs due to the rising demand for meat worldwide. There is a strong need to further enhance our profitability. Until September of 2021, there were various restrictions imposed such as voluntary 20:00 curfew, limitation on number of customers, ban on alcohol sales, etc. Beginning October, as those restrictions were eased in stages, we saw some gradual economic recovery. However, in the face of a surge of the infection by the new variant since late December, restrictions such as the voluntary curfew took effect again and lasted until mid-March of 2022. After the restrictions were lifted, the spread of booster vaccinations among the nation has not kept up with the spike of infection, and the prospects of economic recovery have become uncertain again. In addition, there have been serious concerns about the price hikes of energy and raw materials due to the Russia-Ukraine situation. We need to keep a close eye on it. Internationally, the market of Japanese food including Ramen has been expanding and continuous long-term growth is expected. However, there are global upward pressure on the raw material costs, wages and logistic costs due to shortage of labor, which requires constant efforts to reinforce profitability. Although many countries have experienced repeated lockdowns and their consumer spending also fluctuated, their recoveries after lockdowns tend to be strong. For the present, while there has been a re-expansion of the infection by the new variant in Shanghai, China since late March, in other countries and areas, we are seeing the restrictions being eased further, which has been pushing forward our business activities gradually. On the other hand, there has been a serious concern about energy and raw material price surge due to the Russia-Ukraine situation, and we need to pay close attention to it, which is the same situation with domestic market. With the above in mind, the Company stays true to its principle of “Keep Changing to Remain Unchanged” and opened 7 domestic stores which were based on a new model aimed at higher return on investment, that the Company has worked on since the previous year. In order to capitalize on the potential needs, domestic and overseas existing stores have been promoting Take-Away and Delivery, and promoted digital transformation introducing mobile order system and automated invoicing system. PLANT-BASED SHIROMARU and AKAMARU have been launched domestically, which used plant-derived raw materials only, in line with the diversification of values and perceptions, and consideration to the protection of environment. As for production & merchandise segment, the Company has established a Direct-to-Consumer business model eliminating intermediaries through its own E-Commerce sites, and 4 enhancing B2C segment as well. Furthermore, the dried noodle types of IPPUDO PLANT-BASED RAMEN SHIROMARU&AKAMARU and TONMARU, which is a pork bone broth flavored snack, have been launched. Internationally, the Company has enhanced the sales of FROZEN RAMEN SHIROMARU&AKAMARU in order to gain revenue in addition to the in-store dining business. At the end of the current consolidated financial period, the number of stores including franchisees totaled 277 stores (Japan 143, International 134), a decrease of 6 stores domestically and an increase of 3 stores overseas. As a result, the performance of the current consolidated financial period is as follows: the revenue totaled 19,398 million yen (a 17.3% increase from the previous financial period). The operating income resulted in 1,050 million yen (compared to the operating loss of 980 million yen in the previous year), helped by the addition of new stores and the improved profitability of the existing stores. Ordinary income resulted in 1,083 million yen (compared to the ordinary loss of 1,010 million yen in the previous year). The net profit attributable to the Company was 923 million yen (compared to the net loss of 2,392 million yen in the previous year). “Accounting Standard for Revenue Recognition” (ASBJ Statement No29) has been adopted since the beginning of the current consolidated financial year, which increased the revenue, operating income, ordinary income, and profit before income taxes of the current consolidated financial year by 10 million yen respectively. Segment results The Company has reclassified the segments as per the re-positioning of its brands since the beginning of the current consolidated financial year. As a result, the segment of Others went extinct as it was integrated into Domestic Store Operations and Production and Merchandise. On this occasion, the name of the segment Domestic Production and Merchandise was changed to Production and Merchandise. The following comparisons with the previous year have already reflected the reclassification. (Domestic Store Operations) The Company opened 8 new stores under IPPUDO brand, 1 under INABA UDON in this segment, while there were 5 closures under IPPUDO, 1 closure under INABA UDON, 1 closure under ICHIKA BACHIKA, and 8 divestments under PANDA EXPRESS. The total number of stores at the end of current consolidated financial period was 143 (a net decrease of 6 stores compared to the end of the previous fiscal year). Please note that 6 stores under RAMEN EXPRESS were converted to IPPUDO. Until September, the Company operated according to the requirements from the Government or local governments such as voluntary 20:00 closure or ban on alcohol sales. Beginning October, since the state of emergency was lifted, the Company’s revenue recovered steadily. However, since late December with infections by the new variant rising back rapidly, the restrictions such as voluntary curfew and so on were imposed again and it lasted until mid-March. As a result, there were only 3 months throughout the year when we were free from restrictions. Under the above circumstances, the Company opened 7 stores based on the new investment model, 5 which has been tried since the previous year, while strategically closed 7 underperforming stores, improved productivity through introduction of mobile order system and self-order kiosk machines, and enhanced the Take-Away and Delivery to capitalize on the potential needs at the existing stores. And also the Company resumed selling PLANT-BASED SHIROMARU and AKAMARU, which were launched as a limited edition in February of 2021. This merchandise is one of our solutions to the trend of diversification of diet, heightened health consciousness and products with less carbon footprint. Furthermore, the Company organized ramen-giveaway events by dispatching our own kitchen cars, which was labeled “IPPUDO at Your Town”, in an attempt to attract families with small children who dine out less often due to the recent pandemic with the support from partner companies. As a result, the Revenue totaled 10,387 million yen (a 12.9% increase from the previous financial period). The segment profit resulted in 492 million yen (compared to the segment loss 524 million yen at the previous year), thanks to streamlining both store and support operations, disposing of underperforming stores, and executing various cost-reductions. (International Store Operations) Under the IPPUDO brand, there were 2 openings in Taiwan, 2 in Malaysia, 1 in Thailand, 1 in the Philippines, 1 in Singapore, and 1 in Hong Kong, while there were 1 closure in the USA, 1 in Taiwan, 1 in China, and 2 in Hong Kong, and at the end of the current consolidated financial period, the total number of stores under the segment resulted in 134 (a net increase of 3). Although many countries had repeated lockdowns over the period, there have been some normalization of economic activities, especially in Europe and the United States, where after the lockdown the number of customers have recovered to a certain extent quickly (the number of customers of December 2021 was a 7.0% increase from the previous December in this segment). As a result, the segment revenue made a steady recovery. However, in the face of global inflation trend, various measures have been required against cost upward pressures such as soaring raw material prices, wages, and logistic and energy costs. In such a situation, the Company have re-examined drastically the store operation systems in each country and region such as the menu line ups, deployment of labor, how to serve customers and take orders, taking advantage of digital transformation tools, in order to withstand the pressure of rising costs. And also it enhanced the Take Away and Delivery, and developed and launched frozen ramen for take-away as a new trial. As a result, the revenue totaled 6,796 million yen (a 25.4% increase from the previous financial period), and segment profit recorded 611 million yen (compared to the segment loss 386 million yen at the previous year), helped by the above Company-owned stores’ revenue increase, license fee increase from franchisees, and various cutbacks of overhead costs. (Production and Merchandise) This segment has vigorously worked on to enhance the sales of IPPUDO branded goods, enriching the merchandise line-ups, introducing new products. It also promoted B2C business taking advantage of its 6 own E-Commerce sites, and pushed forward with the sales to retailers. As for Soba and the related goods, it enhanced the sales of Toshikoshi Soba for the end of the year. It also worked on to improve the profitability cutting back on spending of January to March, which is the slack season for business. As a result, the revenue totaled 2,214 million yen (a 15.1% increase from the previous financial period), and segment profit recorded 269 million yen (a 4.9% increase). 7 Quarterly Consolidated Financial Statements (1) Consolidated Balance Sheet (Thousands of yen) As of March 31, 2021 As of March 31, 2022 Assets Current assets Cash and deposits Notes and accounts receivable – trade Inventories Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Leased assets Accumulated depreciation Leased assets, net Construction in progress Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Goodwill Leased assets Other Total intangible assets Investments and other assets Investment securities Long-term loans receivable Deferred tax assets Leasehold and guarantee deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 3,974,744 503,780 272,847 1,081,416 △672 5,832,116 10,863,788 △5,037,968 5,825,820 1,048,674 △829,928 218,746 633,495 54,457 △34,637 19,819 52,045 1,531,495 △1,042,758 488,736 7,238,662 145,140 656 60,218 206,015 61,979 14,591 431,634 1,631,492 271,994 △14,978 2,396,713 9,841,391 15,673,508 4,773,304 527,960 304,812 1,045,541 △811 6,650,807 9,881,662 △5,403,814 4,477,848 1,145,886 △905,794 240,091 629,975 60,081 △42,074 18,007 26,927 1,442,877 △1,132,604 310,273 5,703,123 136,511 － 41,195 177,707 51,308 11,300 819,544 1,624,716 254,392 △21,303 2,739,959 8,620,790 15,271,597 8 (Thousands of yen) As of March 31, 2021 As of March 31, 2022 Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Current portion of bonds payable Current portion of long-term borrowings Lease liabilities Accounts payable – other Income taxes payable Provision for share awards Asset retirement obligations Other Total current liabilities Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Provision for share awards Provision for ESOP benefits for non-residents Retirement benefit liability Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Total accumulated other comprehensive income Share acquisition rights Total net assets Total liabilities and net assets 481,121 2,500,000 114,000 1,994,339 7,975 2,518,414 94,555 – 36,697 758,335 8,505,438 23,000 4,494,798 12,455 15,931 1,261 186,348 917,061 204,633 5,855,490 14,360,929 1,308,316 1,220,719 △1,116,644 △99,279 1,313,110 3,000 △3,532 △531 – 1,312,579 15,673,508 536,414 2,500,000 14,000 1,960,987 7,333 997,341 283,381 7,392 107,346 888,877 7,303,074 9,000 2,877,187 12,337 22,916 835 178,513 860,957 206,135 4,167,882 11,470,957 2,139,833 1,974,063 △366,900 △99,279 3,647,716 7,859 136,315 144,175 8,749 3,800,640 15,271,597 9 (2) Consolidated Statement on Profit and Loss and Comprehensive Income Consolidated Statement of Income (Thousands of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit (loss) Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Foreign exchange gains Lease income Other Total non-operating income Non-operating expenses Interest expenses Share of loss of entities accounted for using equity method Rental costs Financial Commission fee Other Total non-operating expenses Ordinary profit (loss) Extraordinary income Gain on sale of non-current assets Subsidy income Compensation for forced relocation Gain on forgiveness of debts Other Total extraordinary income Extraordinary losses Loss on sale of non-current assets Loss on retirement of non-current assets Impairment losses Loss on cancellation of leases Extraordinary loss related to store closure Amortization of goodwill Other Total extraordinary losses Profit (loss) before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit (loss) Profit (loss) attributable to non-controlling interests Profit (loss) attributable to owners of parent 10 16,539,319 5,068,458 11,470,861 12,451,041 △980,180 2,024 1,377 – 20,180 150,859 39,231 213,672 66,138 18,773 135,126 10,502 13,694 244,235 △1,010,743 4,787 936,478 102,314 – 17,275 1,060,856 19,306 17,398 355,824 8,104 1,728,416 27,395 266,755 2,423,201 △2,373,087 103,554 △83,641 19,913 △2,393,000 △31 △2,392,969 19,398,059 5,654,835 13,743,224 12,692,554 1,050,669 2,734 489 23,703 43,467 141,415 44,740 256,550 56,620 － 131,763 9,289 26,205 223,879 1,083,340 2,316 1,752,006 － 511,207 9,892 2,275,423 47 5,769 1,291,118 － 901,049 － 230,430 2,428,416 930,347 290,519 △341,287 △50,768 981,115 57,368 923,747 Consolidated Statement of Comprehensive Income (Thousands of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Profit (loss) Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests △2,393,000 3,424 △134,177 △130,753 △2,523,754 △2,523,723 △31 981,115 4,859 139,847 144,707 1,125,822 1,068,454 57,368 11