SILVER LIFE Co., Ltd.
Financial Results Briefing for the Fiscal Year Ended July 2020
September 14, 2020

Event Summary[Company Name]SILVER LIFE Co., Ltd.

[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended July 2020

[Fiscal Period]

FY2020 Annual[Date]

September 14, 2020

[Number of Pages]

36[Time]

15:30 – 16:15(Total: 45 minutes, Presentation: 32 minutes, Q&A: 13 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

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1Takahisa Shimizu

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Presentation
Moderator: Thank you very much for attending the briefing session on SILVER LIFE Co., Ltd.'s Financial Results
for the Fiscal Year Ending July 2020, as well as on its Medium-Term Management Plan.
Our President and CEO, Takahisa Shimizu, will explain onwards. Thank you in advance.

Shimizu: Once again, thank you for participating in our financial briefing today.
From here on, I would like to start with an explanation of the financial results for the previous fiscal year. Let
me start with the financial results briefing materials and the results for the previous fiscal year.
First, sales were JPY8.832 million, which is almost the same amount as projected. The gross profit and thenumbers thereafter improved partly due to an increase in direct sales.
Operating income and others fell short of projections due to upfront expenditures resulting from investment
in advertising expenses in conjunction with the start of direct sales. We see a decrease of 5.6%.
Instead, we were able to surpass projections in terms of ordinary profit and profit.
A brief summary at the outset shows that in the previous fiscal year there were unexpected events that led
to a considerable decline in sales, but the recovery in the middle was somewhat successful.

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Now, let me explain the details of each customer.
First, one of our three sales destinations is the sale of foodstuffs to franchise chains. This was despite adepartment-wide price reduction of about 4% since July last year: We have achieved a 13.2% increase in sales
compared to the previous fiscal year. Since the price reduction was about 4%, the amount of foods actually
increased 17%.

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3Second, we have facilities for the elderly.
Sales of chilled food-packs declined, reflecting a decline in service levels from October 2018 and thetermination of single-pack sales for one person. However, the rate of decline was reduced.
In April 2020, we began sales of frozen food-packs as a recovery measure. Immediately after the launch, theemergency situation was declared, and we were unable to conduct aggressive door-to-door sales, thus thecontribution to Company sales is still minimal. However, as I will talk about later, we are now in a situation
where we can expect a lot of sales in the near future.

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4Third, we have OEM & Others.
There were major events in the previous fiscal year. The number of orders from a major OEM client, which
accounted for approximately 80% of the total OEM volume, has declined. Nearly 90% of this Company's sales
were products of SILVER LIFE, so we understand that they would like to increase the amount purchased fromother companies.
However, we did not anticipate the time frame in which this occurred, which was the beginning of the previous
fiscal year, so we have not considered this aspect when fixing our budget. We did our best in the previous
fiscal year to catch up.
As a recovery measure, we began direct sales of frozen bento in the beginning of the previous fiscal year. Thiswas favorable, and overall sales did more than just offset the decline, at a positive 38.4%.
As a result, from the current fiscal year, Direct Sales have become so large that we might change theclassification name to Direct Sales & Others.

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5Page seven shows trends in the number of stores affiliated with our Food Service.
This was an increase of 105 stores compared to the previous fiscal year, resulting in a total of 834 stores. In
particular, since April of this year, when the impact of the coronavirus hit, existing restaurants have given up
on their physical store and started offering food delivery services, which is why we think the number ofaffiliated stores grew.

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The eighth page is an analysis of changes in sales.
Franchisees, OEM & Others, especially Direct Sales, has increased. However, as I mentioned, sales for facilities
have decreased slightly. While OEM declined considerably, we did meet the budget, which was a relief.

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The ninth page is an analysis of changes in ordinary profit.
The sales of foodstuffs are rising, and particularly because direct sales have increased, the fares fortransportation companies such as Yamato and Sagawa are increasing.
A significant point is advertising expenses. As you can see, we spent considerably more on advertising than in
1Q, 2Q, 3Q and last year. Since we were able to secure a certain amount of sales through this, we spent lessin 4Q than in last year.

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The tenth page is our full-year earnings forecast.
Sales increased 7.9%, or JPY9.5 billion. Gross profit decreased significantly, since depreciation and otherrelated expenses associated with the start of operations at the new plant amounted to JPY350 million.
Breaking this down, we expect an increase in depreciation expenses of about JPY150 million and an one-time
expense of JPY200 million associated with the start-up of the factory, which is expected in the budget. As thiswill be included in the cost of sales, there is a considerable decrease after the gross profit.

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9Page 11 is the sales forecast by each sales category.
Sales of Franchise chains will continue to grow in line with the current extension. Facilities for the elderly, we
expect the decrease in refrigerated packs and the increase in frozen food-packs to almost offset each otherduring the current fiscal year.
Subsequently, sales for the elderly are forecasted to increase 1.6% YoY. In reality, frozen food-packs havehigher profit margins than chilled food-packs, so I think this restructuring process could be quite promising, if
we look at the business as a whole.
For OEM & Others, or Direct Sales & Others, from this fiscal year onwards, we expect a slight decrease in OEM,
while maintaining a certain level of sales in the Direct Sales area. While we have to consider the manufacturing
limitations of factories as well, we have to proceed thoughtfully.

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10Page 12 starts with the topics.
I have just talked about limitations. In fact, the two limitations to manufacturing and storage are coming closer
faster than expected.
The first is the production limit. It took too long for the second factory to open up, and it came to the limit ofproduction at the first factory. We sought out whether the same product could be made at other companies'
factories, but unfortunately we haven’t found such a factory. Even if they could, manufacturing costs would
increase 20%, so we came to the conclusion that is it better to do it on our own.
Secondly, the limitation of storage has come out. The limit value is even higher than that of the manufacturing
limit, so that we have to make a frozen warehouse, which was originally intended to be constructed five years
from now. That's why we have declared it as storage limit. Because of these limitations, direct sales of frozen
bento are difficult to increase by advertising more.

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In fact, the only thing we can do is to increase the operating hours.
The factory finally closes at 3:00 AM to 4:00 AM, but at 4:30 AM the morning staff will already arrive.
Sometimes, there is no time for the factory to stop, and it also happens that the night staff is working until
the early morning and that the day staff starts working when the night staff is still present.
Thus, unfortunately, all advertising was discontinued from July 13.

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In the future, since the market is growing rapidly, we would like to increase sales without discontinuing
advertising. Here is a summary of what is needed to increase that sales.
The first factory will be a factory exclusively for freezing. We would like to retire all of our current refrigerationequipment and deploy our freezing equipment into vacant spaces.
Then, we will establish a new warehouse exclusively for frozen meals in Tatebayashi, which is close to here.
We will be able to store about 1,350,000 meals, which is 13 times more than the capacity of the food storage
distribution center that we completed in 2017, which can hold up to 100,000 meals.
At the same time, we are establishing a second plant on the right. This will be a factory exclusively for chilled.
As we have stated in the past, a warehouse will be included inside the factory. We may be able to start
operations in early 2021.

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The new frozen warehouse will be the first of its kind to be outside, so I will explain it in detail.
At the moment, we are still using an external warehouse so we can increase our manufacturing limit. However,the cost of loading, unloading, loading, and unloading to an external warehouse is considerably high.
Furthermore, there is a limit to the date and time when external warehouses can be used. For example, they
can tell us to unload only from 9:00 AM to 12:00 PM from Monday to Friday. Of course, the warehouse is used
for other businesses as well, so there is a significant time limit. We hope to improve this area by building awarehouse nearby.
Of course, I've been looking for a wide range of rental warehouses throughout the Tokyo metropolitan area.
However, unlike normal-temperature warehouses, frozen and refrigerated warehouses were hard to find.
They are difficult to borrow or buy. So we decided to make one ourselves.

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Page 16 outlines a frozen warehouse in Tatebayashi.
We have already signed a contract on the land. We are considering a total investment of JPY900 million bymaking a new building here and putting the machines into it. While we did not provide a detailed explanationin the written material, the machinery will comprise of sorters as well as three-dimensional containers whichenable the storage of foodstuffs, et cetera. This photograph shows a picture of manual picking by humans,
but we think that in the new warehouse all of it will be automated so that we can reduce costs considerably.

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Page 17 is a review of the fiscal year which ended in July 2020.
There were a variety of movements each quarter.
As a result of the start of direct sales in 1Q, we achieved monthly surpluses from the fourth or fifth monthonwards, and eliminated the cumulative losses in the ninth month. So despite the emergency start, we wereable to launch a textbook-like new business.
In 2Q, the Company changed its listing to the First Section of the Tokyo Stock Exchange. Through this, we
expect benefits such as attracting human resources in the future. We have been preparing for this for quite
some time, but it just happened at this time of year. Therefore, we had to pay a fee of JPY12 million to change
listings, which was also not expected from a budgeting perspective, and it was difficult for us to catch up with
the numbers.
From 3Q, we expect recovery for seasonal frozen foodstuffs and kodawari-chef. In fact, sales have risen
considerably recently. However, as you can see, since April we have the declaration of an emergency situation,
the start of the project has slowed down a little. In September, as an improvement measure, we are currently
in implementing drastic changes in our system, so that orders can be completed online, instead of sales people
visiting.

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In terms of 4Q, we recently acquired the FSSC 22000 certification.
Please think of this as a standard that combines HACCP with ISO. We have acquired this FSSC 22000 because
we believe it is more credible internationally and can be used when exporting.

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Page 19 is about the impact of the coronavirus.
There is no particular change in sales to franchise chains. In other words, the number of franchised stores is
steadily increasing, but in our case, since sales at stores immediately after the opening start at zero and growgradually, the contribution of sales in the near term is still small.
Sales to facilities were slightly impacted. As I said now, we are making changes to the system in a way thatwill enable orders via the Internet.
In terms of cost, we have almost entirely solved the problem of purchasing ingredients. We are also able totake measures. There have been some price increases for consumables, masks, and sanitizers, but this canstill be offset by the increase in sales.
The most problematic issue is the restriction on the entry of foreign trainees. In fact, this is related to thelimitations of production, since depending on the time, it will be difficult to find people who can work.
As a countermeasure, we have started to accept and recruit a large number of part-time and temporary
Japanese workers, changing the hourly wage of the factory from JPY900 per hour in January of this year to
JPY1,100 in April. Temporary staff are also accepted.
However, we do not receive many applications. Many people are losing their jobs at their current company
due to the influence of the coronavirus. For example, many people who work at automobile factories near
Gunma Prefecture only work two or three days a week now. However, these people are still receiving financial

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aid from the national government, and their employment is still maintained at the other company, so ourfactories have not been able to hire them as much as we had expected.
As for this, I think we need to continue our hiring activities with a focus on the future, given the recruitment
process is facing delays.
The explanation of the financial results is provided above.

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Next, let me explain the medium-term management plan again.
The period from the fiscal year ending July 2021 to the fiscal year ending July 2025 will be subject to themedium-term management plan.
The background to the formulation of this plan is that we believe that we will need to further strengthen our
production system in preparation for the future increase in sales, which has been growing up to now, andfurther increases in demand until 2025 and beyond.
Originally, our plan was to gradually step up in the next 5 years to 10 years by establishing new refrigerating
and freezing warehouses. However, due to the increase in sales and the OEM budget being met, as well as
the difficulty hiring people, we believe that capital investment should be given priority.
We hope that we will make the necessary capital investment here in order to continue to grow our businessactivities in the next 50 years to 100 years.

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I will explain the background.
Trends in sales and profits. Sales have been growing. Profits are also growing.
Although not shown here, sales grew from 2012 to 2013, but there was a period in which profits grew little.
The start-up of the first plant and the associated depreciation and initial one-time costs resulted in little
growth in profits. However, I think that we were able to increase sales and profits at a later stage because webuilt this first plant.

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The fourth page is our store network and distribution network.
As you can see, there are now 834 stores nationwide.

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23This is the external environment.
As you all know, the population of the late-stage elderly will increase in the future. Especially in 2025 andbeyond, the slope will rise even higher than now. I think that it is necessary to have a manufacturing capacitythat can respond to all demands without being restricted by the limitations of manufacturing as we are now.

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24Personally, I think it will grow at the same pace after 2030 for about five years.
As you can see, the elderly population itself will settle down from 2030 to 2035, but by then, as shown on
page six, I think that the care provided by the country is probably no longer viable.
Specifically, I believe that around that time, helpers who usually come five times a week to bring warm food,will get their shifts cut down to twice a week, since the government does not have enough funds to provide
public healthcare. From this point of time onwards, things will become serious.
In that age, we believe that only businesses such as food delivery services for the elderly, which are viablewithout relying on nursing care insurance, can support the lives of the elderly.
Especially due to the coronavirus, the country lost money, and now funds will be entirely used up faster thaninitially expected.

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Page seven depicts the measures to increase sales against the backdrop of this.
I will briefly tell you in each division.
Franchise chains will increase their stores further. We also intend to launch a third brand if necessary. Afterestablishing the factory, we will be able to create different types of menus on the same day. Therefore, after
the second factory is established, we will be able to launch a third brand.
Next, we have facilities for the elderly. The acquisition of new frozen products is strong here. I think it would
be better for facilities to sell many desired products. As our profit margin is also higher for frozen than chirred
products, we would like to continue and grow in this area as well.
Furthermore, we have OEM. The acquisition of more new OEM customers includes Wellness Dining
Corporation., Yoshikei Development Co., Ltd., Zenkokutsuhan Co., Ltd., and Dinos Cecile Co., Ltd. As we haveannounced today, we are considering letting various companies, starting with Taihei Co., Ltd., use ourfactories. In fact, we were quite restrictive until now, however, if the second plant is completed, we will beable to handle new requests from a variety of companies.
These are direct sales of frozen bento. We have acquired know-how in advertisement. I'm confident that
numbers will increase after launching a campaign. We hope to exceed our manufacturing limits and generate
further increases in sales.
Here we are talking about an extension of the current situation.
We have not yet reached this stage, but we expect to move forward with a broader range of new businesses
once we have eliminated our manufacturing and storage limitations.
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Page eight is the sales forecast. It is divided between forecasts and targets.
This is the extension line of future sales, which I have mentioned in page seven.
We are unable to predict when new businesses and new stories will be available, so we are unable incorporate
them in this figure for sales. We believe that this extension line should be the minimum we have to secure.

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Page nine is the breakthrough of manufacturing limits.
We believe that we will be able to compete for the next 10 years to 15 years with our own factory
manufacturing capacity and warehouse. In other words, we can realize all of the capital investment we hadplanned. This investment will allow us to compete for the next 10 years and 15 years.
Also, since our listing, we have always said that after a certain level of capital investment has been completed
we will properly return profits to shareholders.
We had institutional investors who have made a telephone calls after the settlement of accounts, accusing usof not intending to return profits to shareholders for five years.
Regarding this issue, I would like to say that this is not the case, and I would like to apologize if we weremisleading. Actually, since we have accelerated our capital investment this time, we think we will be able toreturn profits to shareholders even earlier. I would like to share this with you as well.

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The tenth page is for future growth. As I discussed earlier, these things are necessary for growth.

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The 11th page is the earnings forecast and target.
After the price declines temporarily, we intend to return to a V-shaped recovery.
As I stated earlier, the sales and profits are future projections along the current extension line. However, withthe factory now available and the warehouse now available, we can start accepting requests which we havepreviously declined.
Thus, I think that for the next five years, we will aim even higher.

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These numbers lay the foundation for the five-year plan.
As you can see here, these are based on extensions of our current businesses. No stories of new businesses
have been included.

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The 13th page is our investment plan. The respective amounts have been stated.

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Lastly, the 14th page is everything I have said today.
We believe that the next five years will be the most important period to determine our growth in the following
30 years.
Going forward, we intend to complete all of our infrastructure by 2025 to meet the increasing demand, withthe aim of becoming the number one in terms of market share, especially during times of market growth.
Thank you very much for your patience. Let me finish my explanation for now.

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Question & Answer

Shimizu: Now, we will enter into a question-and-answer session. If you have any questions, please enter yourquestions in the Q&A at the bottom of the screen. I would also like to answer the questions you have asked
me so far.
First, people are asking about the situation concerning the many franchises that shift their direction fromrestaurants. How will the progress be?
For now, it will stay the same. Many companies, especially izakayas and late-night businesses, are sensing thedanger of the current situation and are asking us if they could deliver bentos instead. We also anticipate moreindividual players, not companies, to emerge in this area, especially when things get worse and companies
start firing their human resources.
The second question: You said that you have stopped advertising for the time being in July. What is your imageof resuming advertising in the future?
We look forward to resume advertisement by the time the second plant will have been in operation and beable to provide a stable supply. Specifically, the plant is scheduled to operate from around 3Q in the current
fiscal year, so we would like to resume advertising as early as 3Q or at the latest during 4Q. Until then, we will
not entirely shut down advertising, but try to maintain a small but constant level of it, in order to keep up thesales.
The next question is: Are there any changes regarding long-term strategy?
There is no change here. Since I’m the owner of the Company, I have a strong idea of expanding the businessof this Company over the long term. Therefore, my approach is to think what can be done now to benefit thelong-term. And I’m convinced that this is probably the best way that will eventually make you happy.
The next question: Do you plan to use the platform to sell supplements and pharmaceuticals?
We are thinking about this. Although we are thinking of it, as regulations for pharmaceuticals have not yet
been relaxed, we are worried about when we should enter the market a little. There are rules which state that
only pharmacists can deliver and responding via remote medical services is difficult as well. When theregulations get relaxed, it is our time to enter the market.
Regarding the supplements, I'm sorry, I have tried two or three times in the past, but it didn't work very well,so I'd like to remove it from my thinking for now.
The next question is: It is clear that profits will fall due to speculation, but can we expect acceleration of sales
from the second half of the year?
There is a possibility. Rather, I myself hope that the plant will get completed at an early stage, and from thatmoment I hope we can fully accelerate.
However, considering the fact that we had a hard time due to very unsuccessful procedures at the time of thefirst plant's launch, I’m afraid if we do not consider the worst-case scenario for the next plant. At the time ofthe start-up of Factory 1, I myself had the experience of sleeping at the factory for two months and doing
everything all over again. I don't want to repeat that experience again and I think that in order to do so, I needa variety of proper preparations and a budget as well.
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Here is the next question: What about securing labor after the start of operations at the new factory?
We are optimistic. As I mentioned earlier, the recruitment of new graduates who will join the Company inApril 2021 has been quite successful. We also expect more mid-career recruits, since we expect many
companies to unfortunately fire their workers in the future.
While the regular routes of foreign trainees from Vietnam have been stopped for a long time, the situation
seems to improve from October onwards. I expect that the situation will be such that even with thecoronavirus will be able to secure a certain amount of manpower with foreign trainees for the time being.
These are the questions you have asked. Is there anyone else who has any other questions?
Then, if you have another question, please contact the person in charge of IR department after this, and wewill reply, so please contact us again then.
One more thing I get asked about is my approach to launching a new production system, i.e. the idea behindthe start-up of a new factory.
My idea is to gradually increase the number. At first, we start with 1,000 meals a day, and then gradually
increase to 3,000 meals a day in the next week, thus constantly raising the upper limit. The ideal way of
thinking is to keep the factory at full capacity in about three months, while an average of about three to six
months would be the ideal value. I would like to do that as soon as possible. I don't know if it really can beswitched smoothly unless we try, but we think we can switch properly by starting with a small number ofmeals at first and starting with a new number of meals again.
Also, when we started the first factory, there was no other option. We had to do it here. When we establishedthe first factory, we told partner factories that we do not need the same amount of purchases anymore. Unlike
the old first factory, which had lost its exit route, the second factory will be set up in-house, i.e. the Company
will have its own factory, and if the situation becomes difficult we will be able to return and take a step back.
We can smoothly switch depending on the situation, since it is all in-house.
The next question: What changes are occurring regarding the ease of obtaining franchises and the churn rate?
This has undergone a favorable change. First, regarding the ease of acquiring franchises, as I mentioned, there
was an increase in the switch from restaurants to food delivery services, particularly through the second halfof the fiscal year.
In fact, the churn rate has been decreasing. There was a 4% cost reduction from July last year, so it would be
odd if it were not decreasing. Therefore, the effects are positive due to two synergies: The acquisition of more
contracts than expected, and the churn rates being below expectations.
This is the next question: Is there any change that your Company feels in terms of final demand?
There is no change in this. As in the past, the situation is that sales are growing as they continue to rise.
Conversely, when it comes to final demand, I think that the most important are bentos from franchisees andfood delivery services for the elderly at home, but for this, it is continuing to grow as it has been. However,
the rate of growth is increasing more than ever.
As for the questions you have asked, I would like to say more.
Once again, I would like to thank you very much for taking part in our briefing session for our financial resultsin your busy schedule today.

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35Moderator: Then, the questions have been completed, so we will conclude The Briefing on the Financial
Results and the Medium-Term Management Plan. If you have any additional questions, please do not hesitate
to contact the IR representative.
Thank you for your participation today.
[END]______________
Document Notes
1.
2.

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