カンロ（2216） – [Delayed] Non-consolidated Financial Results for the Three Months Ended March 31, 2022 [Japanese GAAP]

Non-consolidated Financial Results for the Three Months Ended March 31, 2022 [Japanese GAAP] Company name: Stock exchange listing: Code number: URL: Representative: Contact person: Kanro Inc. Tokyo Stock Exchange 2216 https://www.kanro.co.jp/en/ Kazuyasu Misu, President and CEO Kazuhiro Abe, Director, Managing Executive Officer and CFO, and Division COO, Finance & Accounting Div. April 28, 2022 Phone: Scheduled date of filing quarterly securities report: Scheduled date of commencing dividend payments: Supplementary materials prepared for quarterly financial results: Yes No Schedule of quarterly financial results briefing session: +81-3-3370-8811 May 12, 2022 – 1. Non-consolidated Financial Results for the Three Months Ended March 31, 2022 (January 1, (Amounts are rounded down to the nearest million yen) 2022 to March 31, 2022) (1) Non-consolidated Operating Results Three months ended March 31, 2022 March 31, 2021 (% of change from the previous fiscal year.) Net sales Million yen % Operating income Ordinary income % % Million yen Million yen Net income Million yen % 5,992 4,576 31.0 － 700 609.7 － 98 739 634.3 － 100 499 338.6 － 113 Basic earnings per share Diluted earnings per share Yen 70.80 16.15 Three months ended March 31, 2022 March 31, 2021 (Note) The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. have been applied from the beginning of the three months ended March 31, 2022. Figures for the three months ended March 31, 2021 are the amounts after retrospectively applying the said standard, etc. Accordingly, the percentage changes from the previous corresponding period are not provided for the three months ended March 31, 2021. (2) Non-consolidated Financial Position Yen － － Total assets Net assets Equity ratio Million yen As of March 31, 2022 As of December 31, 2021 (Reference) Equity: As of March 31, 2022: ¥12,089 million 20,630 21,200 As of December 31, 2021: ¥11,750 million Million yen 12,089 11,750 % 58.6 55.4 (Note) The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. have been applied from the beginning of the three months ended March 31, 2022. Figures as of December 31, 2021 are the amounts after retrospectively applying the said standard, etc. 1 2. Cash Dividends Annual cash dividends per share 1st quarter-end Yen － FY2021 － FY2022 FY2022 (Forecast) (Note) Revision to the forecast for dividends announced most recently: Yes 3. Non-consolidated Financial Results Forecast for FY2022 (January 1, 2022 to December 31, 2nd quarter-end 3rd quarter-end Yen － － Yen 25.00 25.00 Yen 15.00 25.00 Year-end Total Yen 40.00 50.00 2022) (% of change from the previous fiscal year.) Net sales Operating income Ordinary income Net income Basic earnings per share Million yen First half Full year (Notes) 1. Revision to the financial results forecast announced most recently: Yes 11,900 21.6 24,200 12.1 900 104.5 1,530 21.9 950 106.0 1,590 23.1 % Million yen % Million yen % Million yen 650 75.5 1,080 22.9 % 2. The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29), etc. is applied from the beginning of the fiscal year ending December 31, 2022. Accordingly, the forecasts stated above are the amounts after the application of the said standard, etc. The percentage changes from the previous corresponding period stated herein are calculated on the assumption that the said standard, etc. were applied in the fiscal year ended December 31, 2021. Yen 92.07 152.98 2 * Notes: (1) Accounting policies adopted specially for the preparation of non-consolidated financial statements: (2) Changes in accounting policies, changes in accounting estimates and retrospective restatement 1) Changes in accounting policies due to the revision of accounting standards: Yes 2) Changes in accounting policies other than 1) above: No 3) Changes in accounting estimates: No 4) Retrospective restatement: No No (3) Total number of issued shares (common shares) 1) Total number of issued shares at the end of the period 7,657,802 shares 7,657,802 shares (including treasury shares) 2) Total number of treasury shares at the end of the period As of March 31, 2022 As of December 31, 2021 597,974 shares January 1, 2022 to March 31, 2022 606,634 shares January 1, 2021 to March 31, 2021 7,054,894 shares 7,051,358 shares 3) Average number of shares during the period * Total number of treasury shares at the end of the period includes the Company’s treasury shares owned by Custody Bank of Japan, Ltd. (Trust Account) (March 31, 2022: 114,900 shares and December 31, 2021: 123,600 shares). * These financial results are outside the scope of the quarterly review by a certified public accountant or audit firm. * Explanation of the proper use of financial results forecast and other notes The earnings forecasts and other forward-looking statements herein are based on currently available information and certain assumptions deemed reasonable. Actual results may differ significantly from these forecasts due to a wide range of factors. Please refer to “(3) Explanation of Non-consolidated Financial Results Forecast and Other Forward-looking Information” on page 3 of the Appendix for assumptions on financial results forecasts and notes on the use of such forecasts. (Method of obtaining supplementary material on financial results) Supplementary material on financial results is disclosed on TDnet on April 28, 2022 as well as on the Company’s website. 3 Table of Contents (Appendix) 1. Qualitative Information on Financial Results for the Period under Review ……………………………….. 2 (1) Explanation of Business Results …………………………………………………………………………………… 2 (2) Explanation of Financial Position …………………………………………………………………………………… 2 (3) Explanation of Non-consolidated Financial Results Forecast and Other Forward-looking Information …………………………………………………………………………………………………………………. 3 2. Non-consolidated Financial Statements and Primary Notes ………………………………………………….. 4 (1) Non-consolidated Balance Sheets…………………………………………………………………………………. 4 (2) Non-consolidated Statements of Income ………………………………………………………………………… 6 (3) Notes to Non-consolidated Financial Statements …………………………………………………………….. 7 (Notes on going concern assumption) ……………………………………………………………………………. 7 (Notes in the case of significant changes in shareholders’ equity) ……………………………………… 7 (Changes in accounting policies) …………………………………………………………………………………… 7 (Revenue recognition) …………………………………………………………………………………………………. 7 1 1. Qualitative Information on Financial Results for the Period under Review “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. have been applied from the beginning of the three months ended March 31, 2022, and comparisons and analysis with the same period of the previous year and the full previous fiscal year are made using figures after retrospective application of that standard, etc. (1) Explanation of Business Results The Japanese economy during the three months ended March 31, 2022 saw a stalled improvement in personal consumption due to the application of priority measures to prevent the spread of COVID-19 infections in a number of regions as a result of the resurgence of infections caused by mutant strains. Although the measures were fully lifted in March, the outlook remains uncertain, mainly due to such risks as rising raw material prices and fluctuations in financial and capital markets resulting from the situation in Ukraine and other factors. As for the candy market, the hard candy category recovered from the drop in consumption of throat drops (のど飴) and other products in the same period of the previous fiscal year, when there had been a decrease in the movement of people and people had become used to wearing face masks in their daily life, and turned to a year-on-year increase. The gummy category, which has returned to a growth trend since May 2021, remains strong, with a significant year-on-year increase. In such a business environment, Kanro has steadily strived to advance the three business strategies of “Value Creation,” “ESG Management,” and “Expansion of our Business Domains,” under our corporate purpose “Sweeten the Future” which was formulated in February of 2022, the first year of Medium-term Corporate Strategy 2024. As a result, net sales during the three months ended March 31, 2022 increased by ¥1,416 million (31.0%) year on year to ¥5,992 million. Sales of hard candy products increased ¥407 million (14.3%) year on year to ¥3,251 million as sales of bag type hard candy products increased mainly in the basic gourmet category and sales of the stick type hard candy products and small bags with zip type products, which had continued to be sluggish, also turned to an increase. By product, sales of Kinno Milk candy (金のミルクキャンデイ), with a new flavor launched September 2021, were solid. Sales of gummy products increased ¥1,032 million (66.4%) year on year to ¥2,587 million, owing to large increases in sales of leading brands Puré Gummy (ピュレグミ) and Candemina Gummy (カンデミーナグミ), and in sales of a new product Marosh (マロッシュ), a marshmallow product launched last year. Sales of healthy snacks decreased ¥23 million (13.3%) year on year to ¥153 million due to further growth in the number of private-label products at convenience stores. In terms of profits, gross profit increased by ¥761 million (44.6%) year on year to ¥2,466 million and operating income increased by ¥602 million (609.7%) year on year to ¥700 million, due to an increase in marginal profit from higher sales. Ordinary income increased by ¥638 million (634.3%) year on year to ¥739 million coupled with income from loss recognized. In addition, net income for the period under review increased ¥385 million (338.6%) year on year to ¥499 million, partly because gain on sales of investment securities was posted in the previous fiscal year but not in the current fiscal year. (2) Explanation of Financial Position Total assets at the end of the first quarter of the fiscal year under review decreased by ¥569 million (2.7%) from the end of the previous fiscal year to ¥20,630 million. The decrease in total assets was mainly attributable to a decrease in accounts receivable – trade by ¥311 million, a decrease in deferred tax assets by ¥225 million, and a decrease in cash and deposits by ¥188 million, despite an increase in merchandise and finished goods by ¥141 million. Liabilities decreased by ¥909 million (9.6%) from the end of the previous fiscal year to ¥8,540 million. 2 million. in cash dividends. Information The decrease in liabilities was mainly attributable to a decrease in income taxes payable by ¥441 million, a decrease in provision for bonuses by ¥318 million, a decrease in accounts payable – other by ¥154 million, and a decrease in accrued expenses of ¥153 million. Net assets increased by ¥339 million (2.9%) from the end of the previous fiscal year to ¥12,089 This was mainly due to the recording of ¥499 million in net income and the payment of ¥179 million (3) Explanation of Non-consolidated Financial Results Forecast and Other Forward-looking Non-consolidated financial results forecast for the six months ending June 30, 2022, and for the fiscal year ending December 31, 2022, are as announced in the “Revisions to Non-Consolidated Financial Results Forecasts for the Six Months Ending June 30, 2022 and for the Fiscal Year Ending December 31, 2022, and Interim and Year-end Dividend Forecasts” released on April 28, 2022. 3 2. Non-consolidated Financial Statements and Primary Notes (1) Non-consolidated Balance Sheets As of December 31, 2021 As of March 31, 2022 Assets Current assets (Thousand yen) 1,971,257 6,538,003 785,505 111,545 306,711 134,989 9,848,013 6,930,998 (3,829,971) 3,101,026 13,053,017 (9,313,364) 3,739,652 1,497,829 2,723,626 (2,053,059) 670,567 111,267 9,120,344 188,205 158,353 881,337 434,006 1,473,697 10,782,247 20,630,260 2,159,716 6,849,168 643,698 42,675 288,581 160,079 10,143,919 6,928,107 (3,767,034) 3,161,072 12,976,990 (9,198,081) 3,778,909 1,497,662 2,739,327 (2,038,428) 700,898 32,366 9,170,910 202,761 148,944 1,106,665 427,051 1,682,661 11,056,333 21,200,252 Cash and deposits Accounts receivable – trade Merchandise and finished goods Work in process Raw materials and supplies Other Total current assets Non-current assets Property, plant and equipment Buildings Accumulated depreciation Buildings, net Machinery and equipment Accumulated depreciation Machinery and equipment, net Land Other Accumulated depreciation Other, net Construction in progress Total property, plant and equipment Intangible assets Investments and other assets Investment securities Deferred tax assets Other Total investments and other assets Total non-current assets Total assets 4 Liabilities Current liabilities As of December 31, 2021 As of March 31, 2022 Accounts payable – trade Short-term loans payable Accounts payable – other Accrued expenses Income taxes payable Provision for bonuses Provision for directors’ bonuses Other Total current liabilities Non-current liabilities Provision for retirement benefits Provision for directors’ share benefits Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’ equity Valuation and translation adjustments Valuation difference on available-for-sale securities Deferred gains or losses on hedges Total valuation and translation adjustments Total net assets Total liabilities and net assets 1,932,594 500,000 952,293 1,969,919 472,912 713,154 83,500 400,959 7,025,333 2,181,480 165,334 77,588 2,424,403 9,449,737 2,864,249 2,560,876 6,956,494 (663,536) 11,718,084 32,522 (91) 32,431 11,750,515 21,200,252 (Thousand yen) 2,031,895 500,000 797,917 1,816,319 31,175 394,444 25,312 487,797 6,084,861 2,216,739 162,456 76,254 2,455,450 8,540,312 2,864,249 2,560,876 7,276,632 (650,990) 12,050,768 38,908 271 39,180 12,089,948 20,630,260 5 (2) Non-consolidated Statements of Income Three Months Ended March 31 For the three months ended March 31, 2021 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Non-operating income Interest income Income from loss Sold power income Other Total non-operating income Non-operating expenses Interest expenses Sold power expenses Other Total non-operating expenses Ordinary income Extraordinary income Gain on sales of investment securities Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Impairment loss Total extraordinary losses Income before income taxes Income taxes – current Income taxes – deferred Total income taxes Net income 4,576,400 2,870,968 1,705,431 1,606,664 98,766 19 － 1,808 2,712 4,540 1,083 1,351 149 2,584 100,722 83,349 83,349 2,798 17,017 19,815 164,256 6,345 44,028 50,374 113,882 (Thousand yen) For the three months ended March 31, 2022 5,992,883 3,526,222 2,466,661 1,765,750 700,910 28 32,161 1,558 6,724 40,472 335 1,354 58 1,748 739,634 － － 135 11,311 11,447 728,186 6,328 222,352 228,680 499,506 6 (3) Notes to Non-consolidated Financial Statements (Notes on going concern assumption) Not applicable. (Notes in the case of significant changes in shareholders’ equity) Not applicable. (Changes in accounting policies) (Application of accounting standard for revenue recognition, etc.) The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020; hereinafter, “Revenue Recognition Accounting Standard”), etc. from the beginning of the three months ended March 31, 2022, and thereby revenue is recognized when the control of promised goods or services is transferred to a customer at an amount to which the Company expects to be entitled in exchange for transferring the goods or services to the customer. Due to the application of the Revenue Recognition Accounting Standard, etc., the Company has changed its method of accounting for agent fees, etc., which were previously recorded as selling, general and administrative expenses, to methods such as deducting such fees from net sales. The changes in accounting policies are in principle applied retrospectively, and the financial statements for the three months ended March 31, 2021 and for the year ended December 31, 2021 are presented after retrospective application. As a result, compared to before the retrospective application, net sales for the three months ended March 31, 2021 decreased by ¥863,500 thousand, cost of sales increased by ¥5,265 thousand, selling, general and administrative expenses decreased by ¥875,727 thousand, and operating income, ordinary income and income before income taxes each increased by ¥6,961 thousand. In addition, the balance of retained earnings on January 1, 2021 decreased by ¥23,146 thousand due to the amount of cumulative effect reflected in net assets on January 1, 2021. (Application of accounting standard for fair value measurement, etc.) The Company has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019; hereinafter “Fair Value Measurement Accounting Standard”), etc. from the beginning of the three months ended March 31, 2022, and thereby the new accounting policy stipulated in the Fair Value Measurement Accounting Standard, etc. will be applied prospectively in accordance with the transitional treatment stipulated in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). There is no impact on the quarterly non-consolidated financial statements. Information on disaggregation of revenue generated from contracts with customers Kanro operates in the single business category of confectionery and food business, and the following information breaks down the revenue generated from contracts with customers. For the three months ended March 31, 2021 (Thousands of yen) For the three months ended March 31, 2022 (Revenue recognition) Hard candy Gummies Healthy snacks Revenue generated from contracts with customers Sales to external customers 2,843,842 1,555,099 177,458 4,576,400 4,576,400 7 3,251,671 2,587,275 153,936 5,992,883 5,992,883