199th Fiscal YearTheInterim BusinessReport
April 1, 2018 – September 30, 2018

since 1896

Daitobo Co., Ltd.
Securities code: 3202

Management’s message
Under these circumstances, the Company Group continued to work
diligently on various initiatives based on the “Get Ahead of theFuture” Mid-term Management Policy launched this fiscal year.

<Business results for the first half>

Kazuhiro Yamauchi

President and Representative Director

Please allow me to begin by extending my heartfelt gratitude to ourshareholders for their continued patronage and support.
I would like to make a brief statement on our performance for thefirst half of the 199th fiscal year (from April 1, 2018 to September
30, 2018).

<Introduction>

During the first half of the fiscal year ending March 31, 2019, theJapanese economy continued in a moderate recovery trend, partly
attributable to various policies, as evidenced by improvement in theemployment and income environment in the midst of emerging
concerns over trade friction.

Although net sales increased to ¥2,147 million (up 1.6% year onyear), operating income amounted to ¥188 million (down 17.2% yearon year) and ordinary income was ¥110 million (down 35.0% year onyear) due to the recording of depreciation associated with the 4thstage development in the commercial property business, as well as
the recording of one-time expenses, including registration expenses
pertaining to the execution of a syndicate loan. Meanwhile, tax
expenses improved as the result of a reduction in capital to ¥100
million as of August 31, 2018, and profit attributable to owners ofparent increased to ¥144 million (up 10.5% year on year) due to therecording of income taxes-deferred and taking into account tax
burden such as income tax.
In addition, we revised our forecast for the business results for thefull year based on the business results for the first half of the fiscalyear (please refer to the graphs below). The deficit in retained
earnings as of September 30, 2018 in the consolidated balance
sheet (undisclosed on a non-consolidated basis) improved to ¥462
million (down ¥2,091 million compared with the end of the priorfiscal year) as the result of a reduction in capital to ¥100 million.

<Business results by segment>(Commercial property business)
The 4th stage development at the SUN TO MOON Kakitagawa, oneof the leading commercial facilities in Shizuoka Prefecture, wascommenced on schedule and a separate building was opened inadvance on October 11, 2018. In this environment, net sales in thecommercial property business increased to ¥1,185 million (up 1.2%year on year) due to efforts made to draw in more customers by

Consolidated financial highlights
Net sales

Operating income¥2,147 million

First half

Full year (Millions of yen)

Up 1.6% year on yearDown 1.5% from business results forecast¥188 million

First half

Full year (Millions of yen)

Down 17.2% year on year
Up 45.0% from business results forecast
4,427

4,750
325

360

227
2,113

2,180

188

2,147
130

198th
fiscal year
results

1

199th
fiscal year
forecast

199th
fiscal year
results

198th
fiscal year
results

199th
fiscal year
forecast

198th
fiscal year
results

199th
fiscal year
forecast

199th
fiscal year
results

198th
fiscal year
results

199th
fiscal year
forecaststrengthening summer sales and summer vacation-related projects.
However, operating income amounted to ¥457 million (down 2.0%year on year) due to the recording of depreciation of ¥53 million
associated with the implementation of the 4th stage development.
(Health care business)
Although sales of general summer bedding struggled, net sales in
the health care business increased to ¥361 million (up 3.5% year onyear) and operating loss improved to ¥13 million (compared with anoperating loss of ¥25 million in the same period of the prior fiscalyear) as the result of a focus on the planning, manufacture and salesof health business-related products, for which demand is solid.
(Textile and apparel business)
Net sales in the textile and apparel business increased to ¥599
million (up 1.3% year on year), supported by the China domestic sales
business operated by the Company’s subsidiary in China, despite alack of motivation among consumers to purchase apparel. However,operating loss amounted to ¥14 million (compared with the operating
loss of ¥2 million in the same period of the prior fiscal year) partly
due to the loss recorded on inventory disposal in the apparel section.

<In conclusion>

Business results by segment (Graphs show business results for the first half)Commercial property businessNet sales(Millions of yen)

Operating income
1,185

198th fiscal year

199th fiscal year

Ordinary income

466

457

198th fiscal year

199th fiscal year

Health care businessNet sales

Operating income(Millions of yen)

(Millions of yen)

361

349

(13)

(25)
198th fiscal year

In the first half of this fiscal year, we worked steadily on various
measures based on our Mid-term Management Policy, and also
carried out a capital reduction in accordance with a resolution
approved at the General Meeting of Shareholders in June of thisyear. As a result, our business results, including financial aspects,
have remained steady. Going forward, we are committed to working
to improve mid- to long-term corporate value based on our corporate
philosophy of fostering a spirit of enterprise and of social
contribution by helping others through self-help, also from theperspective of ESG. We would like to ask our shareholders for theircontinued support and guidance.

(Millions of yen)

1,172

199th fiscal year

198th fiscal year

199th fiscal year

Textile and apparel businessNet sales

Operating income(Millions of yen)

(Millions of yen)599

592(2)(14)
198th fiscal year

199th fiscal year

198th fiscal year

199th fiscal year

Profit attributable to owners of parent¥110 million

First half

Full year (Millions of yen)

Down 35.0% year on year
Up 120.0% from business results forecast¥144 million

First half

Full year (Millions of yen)

Up 10.5% year on year
Up 220.0% from business results forecast

230

200169

153

144

130
110

103

50

198th
fiscal year
results

199th
fiscal year
forecast

45

199th
fiscal year
results

198th
fiscal year
results

199th
fiscal year
forecast

198th
fiscal year
results199th
fiscal year
forecast

199th
fiscal year
results

198th
fiscal year
results

199th
fiscal year
forecast

Notes: Forecasts shown above are based on the materials available as of the date of publication of this report, and actual results may differ from those forecasts due to various factors.

2

S

pe

c

ial

Kazuhiro Yamauchi
President and Representative Director

As we prepare to celebrate our 123rd anniversary, wehave created a new logo and are accelerating businessdevelopment in accordance with the theme “Get Aheadof the Future.” This time, in keeping with this theme, “Get
Ahead of the Future,” we invited Miwa Oba, aActually, the Company has a deep connection
with climbing. At the SUN TO MOON
Kakitagawa commercial facility (located near Mishima
in Shizuoka Prefecture), which is the Company’s main
business, there is an outdoor specialty store withtraining facilities for climbing that has been there
since we first opened the facility over 21 years ago. I
heard that at the time of opening it had the highest
climbing wall in Japan. We have also built a separatebuilding as part of the 4th stage development of SUNTO MOON Kakitagawa currently in progress, and as
recently as October 11, the outdoor specialty store
SWEN was opened with refurbished climbing
facilities. (See photo)
YamauchiOba

I was surprised that the Daitobo Group has
been involved with climbing since before Iwas born. In the Company’s long history of 123years, you are tackling even larger new investments.
Does this mean that you are always looking to thefuture?
For many years, the Group suffered in the
unprofitable textile business. But I believethat the Company is where it is now as the result ofcontinuing to take on the challenge of going in new
directions, despite failures, based on the belief that
there is always a solution. The 4th stage
development of SUN TO MOON Kakitagawa that weare currently focusing on is a new challenge that will
open the way to the Company’s future. You know, I
think that climbing is a sport that is a constantrepetition of unceasing effort and new challenges
against a wall that is almost impossible to climb.
What is the appeal in this for you?
Yamauchi

Climbing involves falling hundreds of times inorder to succeed once. It requires a person to
constantly repeat the pattern of falling and climbing,and if you embark on it thinking that you’re going tofail, you will never reach that final goal. The feeling ofexhilaration that comes when you discover the pathand climb to the end is difficult to replicate. As wellOba

Outdoor specialty store SWEN
opened on October 11, 2018

3Climbing facilities

interv

ie w

Miwa Oba
Professional climber

professional climber from the world of sport climbing,which has been selected as an additional event for the2020 Tokyo Olympics, to talk to Kazuhiro Yamauchi,President and Representative Director, about the themeof “challenge and adventure.”

Miwa Oba Profile
Oba’s specialty within sport climbing is bouldering, and she has recorded various
achievements both in Japan and abroad since her youth, as well as representing
Japan in 2015 and 2016. Today she is active as a professional climber in her goal
to take on the challenge of natural rockfaces. Oba has appeared in multiple TVas this, there are extremely difficult rockfaces aroundthe world, and the adventure and challenge thatcomes with conquering them is one of my dreams. Ifyou conquer an unknown rockface that no one hasever climbed before, that rockface is named after you
and there are actually rockfaces that have been
named after me.
You continue to challenge the unknown andgo on new adventures through climbing while
experiencing unimaginable difficulties. The Group’s
corporate philosophy of fostering a spirit ofenterprise is about flexibly responding to change andincorporating new things, and that spirit is constantly
present in the “Get Ahead of the Future” Mid-termManagement Policy that we are currently working
on. Going forward, the Group will continue to take onchallenges and maintain sustainable growth at aneven greater level by overcoming the rapidly changing
management environment. I know that you will also
continue the challenge of reaching even greater
heights.
Yamauchiprograms, commercials and events. She was born in Aichi Prefecture in 1998.

process, but it would make me very happy to thinkthat people were supporting me in my challenge. I
would also like to actively participate in activities tohelp more people come to know about sport climbing
so that the number of fans will grow.
We will support you so that your dreams
come true. The Group will do its utmost tomake a further leap forward as we commemorate
our 125th anniversary in 2020, the year of the Tokyo
Olympics and the Tokyo Paralympics.
YamauchiYes. I want to keep on challenging the manydifficult rockfaces all around the world. I thinkthat I will encounter many obstacles during thatOba4

Review of Financial Results
Consolidated balance sheetDescription(Thousands of yen)

End of the first halfof this fiscal year

End of the priorfiscal year

(as of September 30, 2018)(as of March 31, 2018)(Assets)
Current assets

2,860,617

2,959,388

Non-current assets

16,157,186

15,929,467

Property, plant andequipment

15,639,222

15,497,544

Intangible assets

6,373

8,181

Investments andother assets

511,590423,741

19,017,804

18,888,855

Total assets(Liabilities)

Description(Thousands of yen)

For the first half of For the first half ofthe prior fiscal year
this fiscal year
(from April 1, 2018 toSeptember 30, 2018)(from April 1, 2017 to
September 30, 2017)

Net sales

2,147,439

2,113,985

Cost of sales

1,564,930

1,494,507

Gross profit

582,509619,478

Selling, general andadministrative expenses

394,068

391,988

Operating income

188,440

227,489

Non-operating income

7,046

3,813

Non-operating expenses

85,46862,089Ordinary income

110,018

169,214

Profit before income
taxes

110,018

169,214

Current liabilities

1,674,943

1,646,688

Income taxes-current

3,562

40,068Non-current liabilities

13,054,077

12,791,231

Income taxes-deferred(37,546)(1,208)

Total liabilities

14,729,020

14,437,919

Profit144,002130,354

Profit attributable toowners of parent

144,002130,354(Net assets)
Shareholders’ equity(372,287)(558,177)

100,000

1,500,000—

503,375

Retained earnings(462,509)(2,554,346)

Treasury shares(9,777)(7,206)

Accumulated othercomprehensive income

4,653,923

5,004,849

Stock acquisition rights

7,146

4,264

Total net assets

4,288,783

4,450,935

Total liabilities and netassets

19,017,804

18,888,855

Capital stock
Capital surplus

5

Consolidated statement of incomeConsolidated statement of cash flows (Thousands of yen)
Description

For the first half of For the first half ofthe prior fiscal year
this fiscal year
(from April 1, 2018 toSeptember 30, 2018)(from April 1, 2017 to
September 30, 2017)

Cash flows from operating activities

23,645

177,917

Cash flows from investing activities(192,040)

9,334

Cash flows from financing activities

189,982(183,447)

(30)

(551)

21,5573,252

1,777,319

1,668,446

1,798,876

1,671,698

Effect of exchange rate change
on cash and cash equivalents
Net increase (decrease) incash and cash equivalents
Cash and cash equivalents atthe beginning of the period
Cash and cash equivalents
at the end of the period

Business fields
Commercial property business
Daitobo’s commercial properties are the go-to place forpleasant lifestyles. We will offer enriched living space
based on our vision of “creating space that delights ourcustomers.”

Shopping malls

Health care businessTextile and apparel businessIn response to the aging population and rising healthconsciousness, the Company supports the healthy andcomfortable life of customers with products drawing on ourproprietary technology. Our strength lies in the hightechnological ability of the Group’s domestic production bases.

Daitobo will satisfy the diverse needs of our customers,from apparel fashion to uniforms, based on its vision of“creating products that delight our customers.”

Health-promoting textile materials-relatedHome-use medical devices
Health-promoting foodstuffs General bed and bedding

Uniforms for both official and civilian users
Production-management type OEM operations
Knitwear planning

Members of the Board of Directors
Directors (excluding Directors serving as Audit and Supervisory Committee Members)

Directors serving as Audit and Supervisory Committee Members
Executive Officers

President and Representative Director
Vice President and Representative Director
Director and Executive Officer
Outside Director

Yamauchi
Mieda

Kazuhiro Yamauchi
Toshiyasu Nomura
Shogo Mieda
Yasunobu Sawada

SawadaNomura

Director (Audit and Supervisory Committee Member)

Yuji Kakuma

Outside Director (Audit and Supervisory Committee Member) Haruki Iinuma
Outside Director (Audit and Supervisory Committee Member) Takashi Kagami
Outside Director (Audit and Supervisory Committee Member) Shusaku Okumura

IinumaOkumuraGeneral Manager, Textile and ApparelBusiness Headquarters
General Manager, Commercial Facility
Business Headquarters, President ofDaitobo Estate Co., Ltd.

Hiroshige Aoki
Wataru Iida

KakumaKagami

Iida

Aoki

(Note 1) Messrs. Yasunobu Sawada, Haruki Iinuma, Takashi Kagami and Shusaku Okumura are Outside Directors (independent directors).
(Note 2) The Company has an Audit and Supervisory Committee which is composed of four (4) Audit and Supervisory Committee Members.

6

Corporate Overview/Status of Shares (as of September 30, 2018)
Corporate Overview

Status of Shares

Established
Capital stock
Place of business
Head OfficeTotal number of shares authorized to be issued 96,000,000 shares

February 27, 1896
¥100,000,000

6-1 Nihonbashihoncho 1-chome, Chuo-ku, Tokyo, Japan+81-3-6262-6565
Nagoya Sales Department 17-9 Honmachi 4-chome, Ichinomiya-shi, Aichi, Japan+81-586-23-4811
Osaka Sales Department 3-6 Minamikyuhojimachi 2-chome, Chuo-ku, Osaka, Japan+81-6-6262-8322
Group companies Daitobo Estate Co., Ltd. (Shizuoka)
Niigata Daitobo Co., Ltd. (Niigata)
DAITOBOSHOKU (SHANGHAI) CORPORATION (China)

One yearor morePrincipal Shareholders (Top 10)
Number of shares held Shareholding ratio(Thousand shares)(%)

Shareholder name682

2.27611

2.04

SEED INC.

501

1.67

Developer Sanshin inc.

500

1.67

MIKI SECURITIES CO., LTD.

500

1.67

JAPAN SECURITIES FINANCE CO., LTD.

405

1.35

Japan Trustee Services Bank, Ltd. (Trust account 2)

401

1.34

Matsui Securities Co., Ltd.

339

1.13

The Master Trust Bank of Japan, Ltd. (Trust account)

302

1.00

2,000 shares or more

Kazuhiro Igarashi

300

1.00

Q UO card worth ¥4,000
One benefit discountcoupon for products
available at the Company’s
internet shopping site

Note: Shareholding ratio is calculated excluding treasury stock (68,699 shares).

Detail of the planQ UO card worth ¥3,000
Two benefit discountcoupons for products
available at the Company’s
internet shopping site

10,040Japan Trustee Services Bank, Ltd. (Trust account 5)

Eligible shareholders
The program targets shareholders who own 100 shares or more of theCompany’s shares for six consecutive months or longer and are registered orrecorded in the shareholders’ register as of March 31 of each year.

Two benefit discountcoupons for products
available at theCompany’s internet
shopping site

30,000,000 shares

Total number of shareholders

First Brothers Co., Ltd.

Guide to Shareholder Benefits

Number of shares held
Consecutively
held period 100 shares or more but 1,000 shares or more but
less than 1,000 shares less than 2,000 shares
Six months One benefit discountQUO card worth ¥2,000or more
coupon for products
One benefit discountbut lessavailable at thecoupon for products
than one Company’s internet
available at the Company’syear
shopping site
internet shopping site

Total number of shares issued

Q UO card worth ¥5,000
Two benefit discountcoupons for products
available at the Company’s
internet shopping site

Breakdown of Shares by Type of Shareholder(Shareholding ratio)

National and local governments0.00%
Total numberof shareholders

10,040Information for Shareholders
Fiscal year
From April 1 to March 31 of the following year
Record dates forYear-end dividend March 31
dividend of surplus
Interim dividend September 30
Annual General Meeting of Shareholders June every year
Administrator of shareholders’ register 4-1 Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan(special account management institution) Sumitomo Mitsui Trust Bank, Limited
Mailing address
8-4 Izumi 2-chome, Suginami-ku, Tokyo 168-0063, Japan
Stock Transfer Agency Business Planning Dept.,
Sumitomo Mitsui Trust Bank, Limited.
(For telephone inquiries) 0120-782-031 (toll-free in Japan)
Method of public notice Public notices by the Company shall be done byelectronic means.
However, in the event that accidents or otherunavoidable reasons prevent public notice by electronicmeans, the notice will be posted in The Nikkei.

Financial institutions

9.37%

Securities companies

5.75%

Other domestic corporations9.07%
Foreign shareholders

2.56%

Individuals and others

73.25%IR Information
Please visit the Company’s website with IR information such as summary of financial results andsecurities report, as well as the latest financial information and matters for timely disclosure.

http://www.daitobo.co.jp/ir/

Daitobo Co., Ltd.
http://www.daitobo.co.jp/
For inquiries regarding this report, please contact: Business Management Headquarters TEL: +81-3-6262-6565