Asahi : Non-consolidated Financial Results for the Fiscal Year Ended February 20, 2022

Disclaimer: This document is an English translation of the original document in Japanese and has been prepared solely for reference purposes. In the event of any discrepancy between this English translation and the original in Japanese, the original shall prevail in all respects.

Non-consolidated Financial Results for the Fiscal Year Ended February 20, 2022

[Japanese GAAP]

April 4, 2022

Company name: ASAHI CO., LTD.

Stock exchange listing: Tokyo Stock Exchange Code number: 3333

URL:https://www.cb-asahi.co.jp/

Representative: Yoshifumi Shimoda, President and Representative Director Contact: Shigeru Mori, Director

Phone: [phone]

Scheduled date of general shareholders' meeting: May 14, 2022 Scheduled date of commencing dividend payments: May 16, 2022 Scheduled date of filing securities report: May 16, 2022

Availability of supplementary explanatory materials on annual financial results: Available

Schedule of annual financial results briefing session: Scheduled (for analysts and institutional investors)

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

1. Non-consolidated Financial Results for the Fiscal Year Ended February 20, 2022 (February 21, 2021 -

February 20, 2022)

(1) Non-consolidated Operating Results (% indicates changes from the previous corresponding period.)

Net sales	Operating profit	Ordinary profit	Profit
Fiscal year ended February 20, 2022 February 20, 2021	Million yen % 71,398 2.8 69,456 16.0	Million yen % 5,221 (23.9) 6,863 71.3	Million yen % 5,512 (24.8) 7,326 72.5	Million yen % 3,541 (24.9) 4,717 84.4

Basic earnings per share	Diluted earnings per share	Return on equity	Ratio of ordinary income to total assets	Ratio of operating profit to net sales
Fiscal year ended February 20, 2022 February 20, 2021	Yen 135.68 180.91	Yen - -	% 10.4 15.5	% 12.0 17.6	% 7.3 9.9

(Reference) Equity in earnings of affiliated companies:

Fiscal year ended February 20, 2022: ¥ - million Fiscal year ended February 20, 2021: ¥ - million

(2) Non-consolidated Financial Position

Total assets	Net assets	Equity ratio	Net assets per share
As of February 20, 2022 As of February 20, 2021	Million yen 46,473 45,287	Million yen 35,346 32,496	% 76.1 71.8	Yen 1,353.52 1,246.10

(Reference) Equity: As of February 20, 2022: ¥35,346 million

As of February 20, 2021: ¥32,496 million

(3) Non-consolidated Cash Flows

Cash flows from operating activities	Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents at year-end
Fiscal year ended February 20, 2022 February 20, 2021	Million yen 1,585 7,295	Million yen (2,414) (1,870)	Million yen (733) (660)	Million yen 6,135 7,697

2. Dividends

Annual dividends	Total dividends (annual)	Payout ratio (non-consolidated)	Ratio of dividends to net assets (non-consolidated)
1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total
Fiscal year ended February 20, 2021 Fiscal year ended February 20, 2022	Yen - -	Yen 0.00 0.00	Yen - -	Yen 28.0 28.0	Yen 28.0 28.0	Million yen 734 734	% 15.5 20.6	% 2.3 2.1
Fiscal year ending February 20, 2023 (Forecast)	-	0.00	-	28.0	28.0	19.6

3. Non-consolidated Financial Results Forecast for the Fiscal Year Ending February 20, 2023 (February 21, 2022 - February 20, 2023)

(% indicates changes from the previous corresponding period.)

Net sales	Operating profit	Ordinary profit	Profit	Basic earnings per share
First fiscal half Full year	Million yen % 45,000 12.3 78,000 9.2	Million yen % 5,600 12.4 5,600 7.3	Million yen % 5,650 9.9 5,700 3.4	Million yen % 3,700 6.7 3,700 4.5	Yen 141.75 141.75

* Notes:

• (1) Changes in accounting policies, changes in accounting estimates and retrospective restatement

  • 1) Changes in accounting policies due to the revision of accounting standards: None

  • 2) Changes in accounting policies other than 1) above: None

  • 3) Changes in accounting estimates: None

  • 4) Retrospective restatement: None

• (2) Total number of issued shares (common shares)

  1) Total number of issued shares at the end of the year (including treasury shares):

February 20, 2022:

February 20, 2021:

26,240,800 shares 26,240,800 shares

• 2) Total number of treasury shares at the end of the year:

  February 20, 2022:

  February 20, 2021:

  126,456 shares 161,976 shares

• 3) Average number of shares outstanding during the year:Year ended February 20, 2022:

Year ended February 20, 2021:

26,103,153 shares 26,078,857 shares

(Note) The Company has adopted the Executive Remuneration BIP Trust since June 19, 2014.

The number of treasury shares at the end of the year includes the Company's shares held by the trust (126,070 shares as of February 20, 2022 and 161,590 shares as of February 20, 2021). In addition, the Company's shares held by the trust are included in the treasury shares to be deducted in the calculation of the average number of shares outstanding during the year (137,261 shares as of February 20, 2022, and 161,590 shares as of February 20, 2021).

* These non-consolidated financial results are outside the scope of audit by certified public accountants or an audit firm.

* Explanation of the proper use of financial results forecast and other notes

(Cautions regarding forward-looking statements, etc.)

The financial results forecast and other forward-looking statements contained in this document are based on information currently available to the Company and certain assumptions that are deemed reasonable, and do not constitute a promise that the Company will achieve them. Actual results may differ materially from these statements due to various factors. For the assumptions on which the financial results forecast is based, cautions on the use of the forecast, and other information, please refer to 1. Overview of Operating Results, etc., (4) Future Outlook on page 4 of Attachment.

(Access to supplementary explanatory materials on annual financial results and details of annual financial results briefing session)

The Company plans to hold an annual financial results briefing session for institutional investors and analysts on Tuesday, April 5, 2022.

The explanatory materials on financial results to be used on the day are disclosed on TDnet today and are also available on the Company's website.

Table of Contents - Attachment

1. Overview of Operating Results, etc. .................................................................................................... 2

(1) Overview of Operating Results for the Fiscal Year under Review .................................................. 2

(2) Overview of Financial Position for the Fiscal Year under Review ................................................. 3

(3) Overview of Cash Flows for the Fiscal Year under Review ............................................................ 3

(4) Future Outlook ................................................................................................................................ 4

(5) Basic Policy on the Distribution of Profit and the Dividend Payout for the Current and Next Fiscal

Years ..................................................................................................................................................... 5

2. Basic Policy on Selection of Accounting Standards ............................................................................ 5

3. Non-consolidated Financial Statements and Principal Notes .............................................................. 6

(1) Non-consolidated Balance Sheets ................................................................................................... 6

(2) Non-consolidated Statements of Income ......................................................................................... 9

(3) Non-consolidated Statements of Changes in Equity ..................................................................... 10

(4) Non-consolidated Statements of Cash Flows ................................................................................ 12

(5) Notes to the Non-consolidated Financial Statements .................................................................. 13

(Notes on going concern assumption) ...................................................................................... 13

(Changes in presentation) ......................................................................................................... 13

(Equity in earnings (losses) of affiliates if equity method is applied) ...................................... 13

(Segment information, etc.) ...................................................................................................... 13

(Per share information) ............................................................................................................. 14

(Significant subsequent events) ................................................................................................ 15

4. Others .................................................................................................................................................. 16

(1) Results of Purchases ........................................................................................................................ 16

(2) Results of Sales ............................................................................................................................... 16

(3) Changes in Officers ......................................................................................................................... 16

1. Overview of Operating Results, etc.

(1) Overview of Operating Results for the Fiscal Year under Review

The Japanese economy in the fiscal year under review remained uncertain due to the prolonged impact of COVID-19.

Under the circumstances, the necessity of bicycles has become more widely recognized because of increased opportunities to use bicycles as a means of transportation that avoids close contact with other people in confined spaces in daily life, particularly for commuting to work or school, and growing health consciousness leading to more people riding bicycles to alleviate a lack of exercise. As a result of increased replacement demand for electric assist bicycles, although there was a gradual decrease in the number of units sold in the bicycle market, sales in value terms remained at the same high level as in the previous fiscal year.

With the safety and security of customers and employees as its top priority, the Company implemented COVID-19 transmission prevention measures and, with each person holding a sense of mission that we are a business that supports the infrastructure of daily life in society, the entire company has united as one in its efforts to continue its operation to meet the expectations of customers. In the area of sales, we focused our efforts on securing merchandise for electric assist bicycles, which have become popular with a wide range of generations due to functional advances and expansion of models in recent years. We grew sales particularly from our "Internet Orders with Store Pick-Up" service, resulting in net sales higher than the previous fiscal year. On the other hand, in the sports cycle area, despite a global increase in demand, supply shortages and production shutdowns at parts manufacturers manifested a supply-demand tightness, and it remained difficult to secure a wide range of popular models.

In selling, general and administrative expenses, various expenses were kept down in the previous fiscal year due to an inability to secure sufficient staff with the sharp rise in demand that accompanied the pandemic, as well as the voluntary restraint in corporate activities such as the voluntary temporary closure of stores. In the fiscal year under review, however, to return the situation to normal, we implemented planned staff reinforcements and miscellaneous expenditure also returned to the level of previous years. As a result, selling, general and administrative expenses were slightly higher than the previous fiscal year.

In line with the new medium-term management plan ASAHI VISION 2025, which was launched in the fiscal year ended February 20, 2022, the Company strengthened the three areas of "Attraction of Staff," "Attraction of Merchandise," and "Attraction of Stores" which comprise its Culture Model. We also concentrated our efforts on building three growth foundations in the areas of "digital and IT platforms," "supply chain management," and "brand management," with an eye on the realization and extension of our four key strategies, namely "enhancement of customer relations (CRM)," "activation of existing stores," "development of a new store format," and "expansion of our business domain." As a specific initiative, in response to the large increase in customers on the Cycle Base Asahi app, the Company enhanced its dissemination of information, including coupons, events, and post-purchase bicycle maintenance, as a way of further deepening its relationship with customers. We also commenced rebuilding of systems infrastructure. In addition to the development of existing logistics facilities, the Company started rebuilding its basic logistics concept into the future. With these and other efforts, we have made a smooth start to the new plan toward our goals of enhancing corporate value and achieving sustainable growth.

In store-opening strategy, the Company promoted the development of urban-type stores as well as its conventional suburban-type stores. Although these urban-type stores have a smaller sales floor area, the Company made progress in establishing a new store format that will become "cycle bases" for urban areas. These stores will act as bases for internet orders with store pick-up service and be able to display selected merchandise to suit local demand, while offering the same level of service as conventional-format stores by providing quick maintenance and repairs.

Regarding store opening and closures, the Company opened eight new stores in the Kanto region, five in the Kinki region, two in the Chugoku region, and one in the Kyushu region. The Kanto region lost two stores with one store being amalgamated into another and one store closed. As a result, the total number of stores at the