Watahan & Co., Ltd.
Financial Results Briefing for the Fiscal Year Ended March 2022
June 6, 2022

Event Summary[Company Name]

Watahan & Co., Ltd.

[Company ID]

3199-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Financial Results Briefing for the Fiscal Year Ended March 2022

[Fiscal Period]

FY2021 Annual[Date]

June 6, 2022

[Number of Pages]

37[Time]

17:00 – 17:15(Total: 15 minutes, Presentation: 15 minutes)[Venue]Webcast[Venue Size][Participants][Number of Speakers]

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1Isamu Nohara

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President & CEO

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Presentation

Nohara: I'm Nohara, President and CEO of Watahan & Co., Ltd. I will now explain our financial results for the
fiscal year ended March 31, 2022. Thank you for your attention.
Today's presentation will begin with an overview of the financial results for the previous fiscal year ended
March 31, 2022, followed by the new medium-term management plan starting from this fiscal year, and finally,
the forecast for the current fiscal year ending March 31, 2023 as well as the forecast for each business segment.

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First is a summary of the financial results for the fiscal year ended March 31, 2022.
Since the last fiscal year, we have been operating under the management policy of being close to thecommunity and creating new value together with the community.

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As a result, sales for the previous fiscal year ended March 31, 2022 were JPY114.5 billion, about the same as
the previous year.

Ordinary income decreased by 16.8% to JPY2.93 billion.

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4This is based on sales by segment. The retail business was up about JPY180 million, the construction business
was up JPY1.31 billion, and the trade business was down JPY260 million.

Operating income by segment was negative in all segments due to the reactionary decline from the COVID19 disaster, with a negative JPY510 million in retail, a negative JPY330 million in construction, and a negative
JPY220 million in trade.

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I will now begin to explain the results of the individual segments.
First of all, in retail, our policy for the full year is to continue the promotion of store remodeling and new store
openings. We implemented the improvement of logistics efficiency. We have also been working on thedevelopment of new business categories.

Sales were JPY76.5 billion, almost unchanged from the previous year when compared taking into account the
impact of revenue recognition.

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Segment income was down 22% to JPY1.81 billion due in part to a reactionary drop in COVID-19.

Looking at this within the individual segments of the retail business, the first half of the fiscal year was areaction to the growth in the COVID-19 disaster the year before last, and the store segment was minus JPY840
million. EC and others remained almost at the same level as the year before last.
Whereas the first half total was down 1.8%, the second half saw an additional JPY600 million in stores and
JPY250 million in EC, resulting in a 2.3% increase over the previous year, and as for the full-year total, wereached at JPY76.5 billion from JPY76.3 billion, almost the same as the previous year.
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If you look at the increase and decrease in profit by segment, last year we invested more in store remodeling,etc. in the first half of the year, so profit was negative JPY730 million, but in the second half of the year, stores
made a breakthrough and profit was positive JPY300 million. Whereas the first half of the previous fiscal year
saw a 47.5% decline, the second half saw a 36.3% increase, a state of growth that has been as stable as sales.

The major store remodeling that actually took place in the first half of the year was the conversion of two
home centers in Yamanashi Prefecture, the Fuji-Kawaguchiko and Hatta stores, into super centers.

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In addition, in Nagano Prefecture, three stores in Chikuma, Nakano, and Minowa as well as the Nagasaka store
in Yamanashi Prefecture have introduced pharmaceutical sales areas of Watahan Drug, which joined thegroup the year before last, to their respective stores, creating a new trend of changing the business format.

It is easy to see the monthly changes for the fiscal year ended March 31, 2022.
In April, May, and June in particular, there was a rebound in demand from staying home of the year before
last, followed by a large drop in August due to heavy rains, which gradually returned in the second half of theyear. Unfortunately, the restrictions in November and December were not so different from the year before
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last, so the growth in the second half was also lower than expected. Since January, remodeled stores have
performed well, creating a trend that has exceeded that of the year before last for three consecutive months.

In the last fiscal year, we also improved the efficiency of our logistics and established a system to operateparticularly our fruit and vegetable center in-house, so the profit margin of vegetables and fruits increased by
1.6% from the previous year.

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In the area of fresh fish, which we have been focusing on since before that, we have created a system thatallows us to procure fish not only from Aichi Prefecture but also from Ishikawa, Toyama, and Shizuoka
prefectures.

Along with that, we opened a store called Watahan Fish Ichinomiya Fishing Port in Aichi Prefecture as a new
business format, but it is doing very well.

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11Next, I will explain about the construction business.
Last fiscal year, we mainly reviewed our business structure. One of the highlights was the completion of the
new steel plant, particularly by combining two plants in Iida into one, creating a trend toward greater
manufacturing efficiency. It was actually completed in March.

At the same time, we added the wooden housing field as a fourth pillar and began to focus on this area as
well.

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As a result, net sales increased by 4.3% from JPY30.5 billion to JPY31.8 billion, but unfortunately segment
income decreased by 28.1% to JPY840 million.

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Looking at the breakdown, particularly in the existing businesses other than wooden housing, there was a
shortage of orders in the previous fiscal year due to COVID-19, delays in material deliveries, and the impactof the reorganization of steel factories. Therefore, all divisions were billions lower than the previous year.
This trend also led to a large drop in profits in the three segments, but the wooden housing segmentcompensated for this during the past year.

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14However, the order environment itself is recovering significantly, with the backlog of orders up 88% over theprevious year. As a result, there were significant delays in construction projects that did not deliver materials,
etc., and these projects has come into this fiscal year, so we see stable growth for the current fiscal year.

Finally, there is the trade business.
The trade business has focused on expanding into the food sector.

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In fact, in the previous fiscal year, net sales fell 4.3% and segment income fell 24.7%, due to a reactionary
decline from the buildup of pharmaceutical inventories in COVID-19 the year before last.

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The following are the consolidated financial statements.
The inclusion of Yume House Co., Ltd. in the group this fiscal year has led to a significant increase in overall
assets. The large growth portion is balanced by an increase in land real estate due to M&A and an increase in
net income.

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17This is followed by a description of the consolidated statement of cash flows.
Operating cash flow was negative JPY1.6 billion. This was due to a JPY3.5 billion decrease from tax payments
due to a delay in the payment of taxes on a large construction project, which resulted in a negative operating
cash flow, but other than that, cash flow from operations remained steady.

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Next, it is about the medium-term management plan.
The medium-term management plan has been summarized into three major new missions for the group:
Goodwill (continuation of trust and confidence), Community (development of local communities), andEnvironment (creation of a recycling-oriented society).

As for goodwill, we will create new types of business and value and provide them to our customers.

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Alternatively, we intend to promote group-wide SPA by developing high-quality, low-cost products.

Also, Watahan is a company that started out in the cotton business in the region, and we are still trying to findways to expand the good products of the region to the rest of the country.

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We will consider how to bring good products from all over the country to the region as a pillar of our enterprise,
and we will also promote research and development with local universities.

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In terms of the environment, we would like to create a sixth industry that encompasses everything from theprocurement of raw materials for trading to the final products sold through our retail business, and we would
also like to enter the energy field through the creation of a recycling-oriented society.

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As a result, our medium-term management plan calls for net sales of JPY135 billion and ordinary income targetof JPY4 billion for the fiscal year ending March 31, 2025. As we have always said, this is more of a strategy tosteadily increase the ordinary income margin, not a strategy to increase sales, so we will take that form andultimately bring the ordinary income margin to 3% in three years in the fiscal year ending March 31, 2025.

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Now, I would like to explain our business forecast for the fiscal year ending March 31, 2023.
For the current fiscal year, we are forecasting a 9.2% increase in net sales to JPY125 billion, a 14.1% increasein ordinary income to JPY3.35 billion, and a stable increase in the ordinary income margin from 2.6% to 2.7%.

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By segment, the retail business added JPY1.4 billion, the construction business added JPY8.2 billion by
ensuring that the backlog of orders was fully absorbed, and the trade business added approximately JPY100
million.

In terms of profit, the retail business added JPY10 million as a result of further investment in new stores, theconstruction business added JPY600 million, and the trade business remained unchanged.

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As for the forecast by segment, the full-year measures for the retail business are the same as last year:
continued promotion of store remodeling and new store openings and expansion of the distribution network.
We also intend to develop new types of businesses.

In the area of continuing to promote store remodeling and new store openings, we will first open the new
Watahan Super Center Ueda Store in July.

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In terms of expanding our distribution network, we are planning to expand our fish sales network from
Shizuoka, Toyama, and Aichi to Hiroshima and Sendai and also to establish a new logistics base in Iida.

As for the development of a new business model, we are planning to open a supercenter in the central city
this year in the form of the Gondo store, which was originally planned to be done last year.

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As a result, as for the retail business forecast, sales are expected to increase by 1.9% to JPY78 billion.

However, segment income is expected to increase by 0.6% to JPY1.82 billion, since we will be making a lot of
investments.

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Next is construction business.
The construction business will further accelerate factory automation in the steel frame field and further
promote the construction of a wood processing and distribution network and the development of products
using wood.

In the steel frame field, we have a new factory, and we have put in a lot of new factory automation equipment
there. We will continue to introduce new equipment to further improve efficiency in the current fiscal year tofurther increase profitability.
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We also plan to secure a distribution network with a view to processing and distributing locally produced
lumber in Nagano Prefecture as well as to develop a new wooden warehouse building in sequence.

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As a result, the construction business is forecasting a 25.9% increase in sales to JPY40 billion and a 71.5%
increase in profits to JPY1.45 billion.

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Finally, there is the trade business. In the trade business, we are planning to expand into the food field as well
as fertilizers and the feed field by using our accumulated know-how.

As for entering the food field, we are importing new fruits from Latin America, where we originally introduced
candelilla wax and other products. What we imported is sold at various retail outlets.

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In addition, we plan to expand our fertilizer and feed business by procuring more natural fertilizers and feeds
than ever before.

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As a result, net sales are expected to increase by 1.7% to JPY5.91 billion, and segment income is expected toincrease by 0.3% to JPY0.7 billion.

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Our new medium-term management plan starts from the fiscal year ending March 31, 2023, and we aredetermined to do our best to achieve the new medium-term plan with sales of JPY135 billion and ordinary
income of JPY4 billion for the fiscal year ending March 31, 2025, and we look forward to your continued
support this term.
This concludes the financial results briefing for the fiscal year ended in March 2022. Thank you for yourattention.
[END]______________
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