Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020
(Japanese GAAP)
August 13, 2020
Company name: Nishimoto Co., Ltd.
Listed exchange: Tokyo
Code:
9260
URL: http://www.wismettac.com/
Representative:
Yoshiro Susaki, Chairman & President CEO
Contact:
Yuji Sasa, Director(Phone) 03-6870-2015
Scheduled date of filing of quarterly report:
August 14, 2020
Scheduled date of commencement of dividend payments:—
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results presentation meeting:Yes (For institutional investors and analysts)(Amounts are rounded down to the nearest million yen)

1.

Consolidated financial results for the second quarter of the fiscal year ending December 31, 2020
(from January 1, 2020 to June 30, 2020)(1) Consolidated results of operations (cumulative)
Net sales
Million yen(Percentages denote year-on-year changes)
Operating income%

Million yen%

Second quarter of FY ending
79,816(13.4)(1,226)—
December 31, 2020
Second quarter of FY ended
92,1812.1
2,568(16.0)
December 31, 2019
(Note) Comprehensive income
Second quarter of FY ending December 31, 2020: (1,905) million yen (—%)
Second quarter of FY ended December 31, 2019: 810 million yen (−30.5%)
Diluted net income
Net income per shareper share
Second quarter of FY ending
December 31, 2020
Second quarter of FY ended
December 31, 2019
(2)

Yen

Yen

(65.43)—130.86—

Million yen%

Million yen%(1,510)

—

(939)

—

2,664

(13.2)

1,878(13.8)

Consolidated financial position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

As of June 30, 2020
94,92549,642(FY 2020 2Q)
As of December 31, 2019
96,58752,337(FY 2019)(Reference)
Shareholders' equity
Second quarter of FY ending December 31, 2020: 49,642 million yen
FY ended December 31, 2019:52,337 million yen

2.

Profit attributable toowners of parent

Ordinary income

52.3
54.2

Dividends
Annual dividends
First quarter-end
Yen

Secondquarter-end
Yen

Third quarter-end
Yen

Year-end

Total
Yen

FY ended December 31, 2019
—
40.00
—
55.00
FY ending December 31, 2020—
0.00
FY ending December 31, 2020——
(Forecast)(Note) Revision to the forecast for dividends announced most recently: None
For details, refer to the "Notice on Dividend of Surplus (Interim Dividend)" which will be announced today.

Yen

95.00
—

3.

Consolidated financial results forecast for the fiscal year ending December 31, 2020
(from January 1, 2020 to December 31, 2020)
Net sales
Million yen

Operating income%

Million yen%(Percentages denote year-on-year changes)
Profit attributable to Net income per
Ordinary income
owners of parent
shareMillion yen%

Million yen%

Yen

FY ending December
168,000
(8.0)
(600)
—
(1,000)—(500)—(34.84)31, 2020(Note) 1. Revision to the forecast for financial results announced most recently: Yes
For details, refer to the "Notification on Recording of Valuation Loss on Inventories and Revision of Earnings Forecasts"
which will be announced today.

* Notes(1) Changes in significant subsidiaries during the first six months of the fiscal year:
None(Changes in specified subsidiaries resulting in changes in the scope of consolidation)– companies
New – companies (Company name) / Excluded(Company name)(2) Application of accounting treatment specific to the preparation of quarterly consolidated
financial statements:(3) Changes in accounting policies, changes to accounting estimates, and restatements(i)
Changes in accounting policies due to revisions of accounting standards:

Yes

None

(ii)

Changes in accounting policies other than (i) above:

None

(iii)

Changes in accounting estimates:

None

(iv)

Restatements:

None(4) Number of shares outstanding (common stock)(i)
Number of shares outstanding at the endof the period (including treasury shares)(ii)
Number of treasury shares at the end of
the period(iii) Average number of shares during theperiod (six months ended June 30, 2020)

As of June 30,
2020

14,353,140 shares

December 31,
2019

14,353,140 shares

As of June 30,
2020

112 shares

December 31,
2019

112 shares

As of June 30,
2020

14,353,028 shares

June 30, 201914,353,028 shares* These quarterly financial results are not subject to quarterly review procedures.
* Explanation of the proper use of financial results forecasts and other notes(Cautionary note on forward-looking statements, etc.)
The forward-looking statements such as financial results forecasts contained in this document are based on information currently
available to the Company and certain reasonable assumptions. Thus, these statements are not intended for management to promise theachievement of the forecast. Actual financial results may differ materially due to various factors. For conditions of the assumptions in
the forecast and notes to use of the forecast, please see the section titled "(3) Explanation of future forecasts such as consolidated financial
results forecasts" under the chapter titled "1. Qualitative information on quarterly financial results" on the page 4 of the attachment.
(How to obtain the quarterly financial results supplementary materials)
The quarterly financial results supplementary materials will be disclosed on TDnet on August 13, 2020 and will also be posted on the
Company's website. The Company plans to hold a briefing meeting on the financial results for institutional investors and analysts on
August 18, 2020, based on these materials.

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

 Attachment: Table of Contents

1. Qualitative information on quarterly financial results .............................................................................................. 2(1) Explanation of operating results ........................................................................................................................ 2(2) Explanation of financial position ....................................................................................................................... 3(3) Explanation of future forecasts such as consolidated financial results forecasts ................................................ 4
2. Quarterly consolidated financial statements and major notes .................................................................................. 5(1) Quarterly consolidated balance sheet ................................................................................................................. 5(2) Quarterly consolidated statements of income and comprehensive income ........................................................ 7(3) Quarterly Consolidated Statement of Cash Flows ............................................................................................. 9(4) Notes to the quarterly consolidated financial statements ................................................................................. 10(Notes to assumption of going concern) .......................................................................................................... 10(Notes on significant changes in shareholders' equity) .................................................................................... 10(Application of an accounting treatment specific to the preparation of the quarterly consolidated
financial statements) ........................................................................................................................................ 10(Additional information) .................................................................................................................................. 10(Segment information) ..................................................................................................................................... 11(Material subsequent events) ........................................................................................................................... 12–1–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

1. Qualitative information on quarterly financial results(1) Explanation of operating results[Outline of the first six months of the fiscal year]
This consolidated cumulative second quarter saw a tough situation where the novel coronavirus infection spread, and where
emergency declarations and lockdowns have been invoked worldwide since March. From May onward, the restrictions on goingout have been gradually eased in a step toward normalized economic activity. However, corporate businesses, especially in the
tourism, restaurant and airline industries, have been significantly impacted by the social distancing, restricted transnational
movement and reinstated restrictions on going out due to the infection spreading again. The pace of recovery in consumer
spending is slow, and the world economy is entering a recessionary phase.
Also, in Japan, the economic activities of both individuals and corporations have been significantly constrained by travel
restrictions to and from overseas countries since March, and by the emergency declaration invoked in April and May. Although
the emergency declaration was lifted in June, consumer spending is cooling because of decreased inbound consumption due tooverseas travel still being restricted, and to concerns about future employment, the spread of infection and so on.
Under these circumstances, the Company Group worked to maintain and expand its operating results by running two main
businesses: the Asian Food Global Business that distributes Asian food products and ingredients such as Japanese food aroundthe world with a focus on North America, as well as in Europe, China, South East Asia, Australia, etc., and the Agricultural &Seafood Products Trading Business that distributes fruits and vegetables, fishery products, etc., in domestic markets, as well as
overseas markets through exports and offshore trading.
As for the Asian Food Global Business, the Company Group has been actively promoting a structural reform to continuously
achieve sustainable and stable incomes from the North American region and an expansion of the business platform in regions
outside of North America as one of our growth strategies. As for the Agricultural & Seafood Products Trading Business, theCompany Group has been working on expanding sales to the wholesale market, which is the main distribution route, massretailers, restaurant chains, home-meal replacement industries, etc. and overseas distribution routes (export of domestic fruits
and vegetables, offshore trading in fruits and vegetables, wholesale business in China, etc.).
As a result, with respect to the financial results for this consolidated cumulative second quarter, the Company had net sales of
79,816 million yen (13.4% decrease year-on-year), operating losses of 1,226 million yen (operating income of 2,568 million yen
in the same period of the previous year), ordinary losses of 1,510 million yen (ordinary income of 2,664 million yen in the same
period of the previous year), and loss attributable to owners of parent of 939 million yen (profit attributable to owners of parentof 1,878 million yen in the same period of the previous year).
Financial results by segment are as follows: It is noted that net sales of segments are net sales to external customers.
[Outline of operating results by segment](i) Asian Food Global BusinessIn the Asian Food Global Business, for this consolidated cumulative second quarter, the Company had net sales of 53,140
million yen (16.4% decrease year-on-year) and operating losses of 1,039 million yen (operating income of 2,407 million
yen in the same period of the previous year).
Since March, sales to the restaurant industry, which is the main customer of the Company Group, have fallen rapidly andsignificantly due to the worldwide lockdowns. As the lockdowns were gradually lifted from May, take-out and delivery
services have increased, and eating in restaurants has slowly recovered. Meanwhile, sales to retailers maintained steady
growth despite slowing as the lockdowns were lifted. As a result, net sales through the second quarter decreased significantly.
Profit fell sharply because of the recording of valuation loss on inventories associated with lowering profitability and theprovision of allowance for doubtful accounts, mainly for the North American region. This was despite our efforts to reduce
SG&A, especially labor costs, by means of personnel arrangements and temporary leave on the assumption of long-term
decreases in sales.
(ii) Agricultural & Seafood Products Trading BusinessIn the Agricultural & Seafood Products Trading Business, for this consolidated cumulative second quarter, the Company
had net sales of 24,822 million yen (7.5% decrease year-on-year) and operating income of 56 million yen (71.3% decreaseyear-on-year).
While sales of citrus fruits and imported vegetables will fall in line with significant decreases in demand in the restaurant
industry due to the restrictions on going out and the invoking of the emergency declaration from March, sales prices haveslumped because of oversupply. As a result, our net sales have decreased. Profit declined significantly due to a decrease inincome, despite our efforts to reduce SG&A.

–2–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020(iii) Other businesses
In other businesses, for this consolidated cumulative second quarter, the Company had net sales of 1,853 million yen (1.8%
increase year-on-year) and operating income of 73 million yen (16.7% increase year-on year).
Despite growing sales of health-related products, net sales remained at the same level as in the same period of the previous
year due to sluggish growth in event goods sales. This resulted from department stores and other retailers refraining frombusiness due to the restrictions on going out and the invoking of the emergency declaration from March. Our profit increased
as we exerted efforts to reduce SG&A.

(2) Explanation of financial position
1. Assets, liabilities and net assets(Assets)
Total assets as of June 30, 2020 stood at 94,925 million yen, a decrease of 1,662 million yen compared to December 31,
2019, and was mainly attributable to the following.
Total current assets as of June 30, 2020 amounted to 83,946 million yen, a decrease of 4,014 million yen compared to
December 31, 2019. The decrease in total current assets, despite an increase of 3,172 million yen in cash and deposits, wasdue to a decrease of 4,326 million yen in notes and accounts receivable—trade, a decrease of 2,037 million yen in inventories
and an increase of 919 million yen in the allowance for doubtful accounts.
Total non-current assets as of June 30, 2020, came to 10,979 million yen, an increase of 2,352 million yen compared to
December 31, 2019. The increase in total non-current assets is due to an increase of 2,782 million yen in goodwill and anincrease of 302 million yen in software in progress, despite a decrease of 368 million yen in investments and other assets,
including long-term loans receivable, and a decrease of 330 million yen in customer-related assets.
(Liabilities)
Total liabilities as of June 30, 2020 stood at 45,282 million yen, an increase of 1,032 million yen compared to December 31,
2019, and was mainly attributable to the following.
Total current liabilities as of June 30, 2020, amounted to 15,175 million yen, a decrease of 3,882 million yen compared to
December 31, 2019. The decrease in total current liabilities is due to a decrease of 3,276 million yen in notes and accounts
payable—trade and a decrease of 335 million yen in short-term loans payable.
Total non-current liabilities as of June 30, 2020 was 30,106 million yen (an increase of 4,915 million yen compared to
December 31, 2019). The increase in total non-current liabilities is due to an increase of 4,385 million yen in long-termloans payable and an increase of 425 million yen in non-current liabilities, including derivative debts.
(Net assets)
Total net assets as of June 30, 2020 amounted to 49,642 million yen, a decrease of 2,694 million yen compared to December
31, 2019. The decrease in total net assets is mainly due to decreases of 1,728 million yen in retained earnings and 959
million yen in foreign currency translation adjustment.

2. Cash flows
Cash and cash equivalents (hereinafter referred to as "Funds") for the first six months of the current consolidated fiscal year
stood at 42,024 million yen, an increase of 3,179 million yen compared to December 31, 2019.
Cash flows for the first six months of the current consolidated fiscal year and the main factors affecting them are as follows.

(Cash flows from operating activities)
Cash flows from operating activities were positive at 3,331 million yen and major factors are as follows. Although the notes
and accounts payable—trade decreased to 3,426 million yen and the loss before income taxes amounted to 1,384 million yen,
the notes and accounts receivable—trade decreased to 4,265 million yen, inventories decreased to 2,362 million yen and theallowance for doubtful accounts increased to 923 million yen.
Funds acquired increased by 2,159 million yen year-on-year (an increase of 184.3% year-on-year in cash inflows), which was
mainly due to an increase of 4,236 million yen in cash inflows from notes and accounts receivable—trade, an increase of 2,967
million yen in cash inflows from inventories and a decrease of 1,698 million yen in cash outflows from income taxes paid,
despite a decrease of 4,049 million yen in profit before income taxes and an increase of 3,172 million yen in cash outflows fromnotes and accounts payable—trade.

–3–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(Cash flows from investing activities)
Cash flows from investing activities were negative at 3,126 million yen, with major factors as follows: a cash outflow of 2,295
million yen from acquiring the shares of subsidiaries resulting in changes in the scope of consolidation, and a cash outflow of
279 million yen from acquiring intangible assets.
Cash outflows increased by 2407 million yen year-on-year (an increase of 335.2% in cash outflows year-on-year), which was
mainly attributable to an increase of 2,295 million yen in cash outflows from acquiring the shares of subsidiaries resulting inchanges in the scope of consolidation and an increase of 238 million yen in payments by loans, despite a decrease of 373 million
yen in cash outflows from acquiring property, plant and equipment.
(Cash flows from financing activities)
Cash flows from financing activities stood at 3,318 million yen in cash inflows. This was mainly attributable to a cash inflow
of 4,533 million yen from income from long-term loans payable, despite a cash outflow of 789 million yen from the cash
dividends paid.
Funds acquired increased by 4,150 million yen year-on-year (cash outflow of 832 million yen in the same period of theprevious year), which was mainly attributable to an increase of 4,533 million yen in cash inflows from long-term loans payable,
despite an increase of 344 million yen in cash inflows from a net decrease in short-term loans payable.

(3) Explanation of future forecasts such as consolidated financial results forecasts
Financial results forecasts for the full fiscal year ending December 31, 2020 largely depend on the impact of the worldwide
spread of the novel coronavirus infection on domestic and international economic activities. The Company Group is preparing
its financial results estimate on the assumption that the economic situation will slowly recover and normalize by the first half of2021, based on the business situation up until June 2020 and the latest economic outlook currently in hand.
It is uncertain when the novel coronavirus infection will cease and, if its impact lasts and the aforesaid assumption no longer
holds, our future financial status and business performance may be affected.
For details, refer to the "Notification on Recording of Valuation Loss on Inventories and Revision of Earnings Forecasts"
which will be announced today.

–4–Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

2. Quarterly consolidated financial statements and major notes(1) Quarterly consolidated balance sheet
FY 2019(As of December 31, 2019)(Millions of yen)
Second quarter of FY 2020
(As of June 30, 2020)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade39,13019,40742,30315,080Inventories
Other

26,672
2,925

24,634
3,022

(175)

(1,094)87,96083,946

2,609

2,373

Machinery, equipment and vehicles, net
Tools, furniture and fixtures, net

438
208

456
255

Leased assets, net
Other, net

467
186

630
183

3,910

3,898

Goodwill
Software

—
417

2,782
371

Software in progress
Customer-related assets

12
330

314
—

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net

Total property, plant and equipment
Intangible assets

Other

62

58

Total intangible assets

823

3,528

Investment securities
Guarantee deposits

1,164
926

1,068
867

Deferred tax assets
Other

1,092
777

1,275
408

Allowance for doubtful accounts

(67)

(66)

Total investments and other assets

3,893

3,553

8,627

10,97996,587

94,925Investments and other assets

Total non-current assets
Total assets–5–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(Millions of yen)
Second quarter of FY 2020
(As of June 30, 2020)

FY 2019(As of December 31, 2019)
Liabilities
Current liabilities
Notes and accounts payable—trade

9,993

6,716

Short-term loans payable
Current portion of long-term loans payable

2,890
143

2,554
265

Lease obligations
Accounts payable—other

206
2,592

200
2,632

Income taxes payable
Provision for bonuses

144
641

50
515

Provision for directors' bonuses
Provision for shareholders' benefits

137
7

50
1

Other

2,301

2,189

Total current liabilities

19,05815,175

Non-current liabilities
Long-term loans payable

22,21526,601

Lease obligations
Deferred tax liabilities

265
66

422
11

Provision for bonuses
Provision for directors' bonuses

—
58

34
—

645
1,527

643
1,555

Provision for directors' retirement benefits
Net defined benefit liability
Other

413

839

25,191

30,10644,25045,282

Capital stock
Capital surplus

2,646
6,531

2,646
6,531

Retained earnings
Treasury shares

43,112(0)41,384(0)Total shareholders' equity

52,29050,561

8

2

6
31

5
(927)

Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans

00

Total accumulated other comprehensive income

46

(919)

52,33749,642

96,587

94,925

Total net assets
Total liabilities and net assets–6–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statement of income
First six months ended June 30, 2020

Net sales
Cost of sales

First six months of FY 2019
(January 1, 2019
to June 30, 2019)
92,181
76,359(Millions of yen)First six months of FY 2020
(January 1, 2020
to June 30, 2020)
79,816
67,241Gross profit

15,821

12,574

Selling, general and administrative expenses

13,25313,801

Operating income or loss

2,568

(1,226)

114

47

9

0

0
3

16
3

Other

41

27

Total non-operating income

169

95

60

77

Foreign exchange losses
Other

12
0

293
7

Total non-operating expenses

73

378

2,664

(1,510)

—

324

—

324

—

198

—

198

2,664

(1,384)

791
(5)

(205)
(240)

786

(445)

1,878

(939)

—

—

1,878

(939)

Non-operating income
Interest and dividend income
Share of profit of entities accounted for using equity
methodInsurance benefits received
Reversal of allowance for doubtful accounts

Non-operating expenses
Interest expenses

Ordinary income or loss
Extraordinary income
Marginal gain for gradual acquisition
Total extraordinary income
Extraordinary losses
Impairment loss
Total extraordinary losses
Profit before income taxes orloss before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
Net income or loss
Profit attributable to non-controlling interests orloss attributable to non-controlling interests
Profit attributable to owners of parent orloss attributable to owners of parent–7–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

Quarterly consolidated statement of comprehensive income
First six months ended June 30, 2020

Net income or loss

First six months of FY 2019
(January 1, 2019
to June 30, 2019)
1,878(Millions of yen)First six months of FY 2020
(January 1, 2020
to June 30, 2020)
(939)

(1)

(5)

(11)
(1,013)

(1)
(945)

0

0

(41)

(13)

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(1,068)

(965)

810

(1,905)810(1,905)——(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests–8–

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(3) Quarterly Consolidated Statement of Cash FlowsFirst six months of FY 2019
(January 1, 2019
to June 30, 2019)(Millions of yen)First six months of FY 2020
(January 1, 2020
to June 30, 2020)

Cash flows from operating activities
Profit before income taxes or loss before income taxes

2,664(1,384)

Depreciation and amortization
Marginal (gain) loss for gradual acquisition

592
—

768
(324)

Impairment loss
Increase (decrease) in allowance for doubtful accounts

—
9

198
923

Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using
equity method
Foreign exchange losses (gains)
Decrease (increase) in notes and accounts
receivable—trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable—
trade
Increase (decrease) in accounts payable—other
Increase (decrease) in provision for bonuses

(114)
60

(47)
77

(9)

(0)

(1)

21

29

4,265

(604)

2,362

(253)

(3,426)

294
(194)

5
(88)

119

(160)

(4)

(5)

73
115

25
(62)

2,776

3,148

196
(60)

48
(57)

Income taxes paid
Income taxes reimbursed(1,967)
226

(269)
461

Cash flows from operating activities

1,171

3,331

Cash flows from investing activities
Purchase of property, plant and equipment

(507)

(133)

Purchase of intangible assets
Payments for acquiring shares of subsidiaries resulting
in changes in the scope of consolidation
Payments for acquiring shares of affiliate
Payments by loans

(45)

(279)

—

(2,295)

—
—

(221)
(238)

Net decrease (increase) in time deposits
Other

(125)
(40)

—
42

Cash flows from investing activities(718)(3,126)

128

(216)

Income from long-term loans payable
Repayments of long-term loans payable

—
(79)

4,533
(79)

Repayments of finance lease obligations
Cash dividends paid

(90)
(789)

(129)
(789)

Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents

(832)

3,318

(431)

(343)

Net increase (decrease) in cash and cash equivalents

(810)

3,179

Cash and cash equivalents at beginning of period

28,516

38,844

Closing balance of cash and cash equivalents

27,70642,024

Increase (decrease) in provision for directors' bonuses
Increase (decrease) in provision for shareholder
privilege program
Increase (decrease) in net defined benefit liability
Other
SubtotalInterest and dividend income received
Interest expenses paid

Cash flows from financing activities
Net increase (decrease) in short-term loans payable–9–Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(4) Notes to the quarterly consolidated financial statements(Notes to assumption of going concern)
No relevant items.
(Notes on significant changes in shareholders' equity)
No relevant items(Application of an accounting treatment specific to the preparation of the quarterly consolidated financial statements)
Calculation of tax expenses
The tax expenses of some of non-Japan consolidated subsidiaries were calculated by multiplying net income before taxes byan effective tax rate, which was estimated as the rate after the application of tax effect accounting to net income before taxes forthe fiscal year including the second quarter of the fiscal year.
(Additional information)(Accounting estimate associated with the novel coronavirus pandemic)
Lockdowns invoked worldwide against the novel coronavirus pandemic have caused rapid and significant falls in sales to therestaurant industry, which is the main customer of the Company Group. As the lockdowns were gradually lifted from May, takeout and delivery services have increased, and eating in restaurants has slowly recovered.
Meanwhile, sales to retailers maintained steady growth despite slowing as the lockdowns were lifted.
Under these circumstances, the Company Group provided an additional 859 million yen as an allowance for doubtful accounts
in this consolidated cumulative second quarter in consideration of the worsening credit status of customers. The amount ofallowance for doubtful accounts is determined according to the recoverability of the debt, taking into account the status of thedebt being collected and circumstances of the major customer.
In consideration of the worsening market environment, in this consolidated cumulative second quarter the Company Group
recorded an additional 889 million yen as a valuation loss on inventories, which is included in the cost of sales. The amount ofvaluation loss on inventories is an estimate of future salability and records those items for which declines in profitability are
expected.
In determining the recoverability of deferred tax assets, we have made an accounting estimate on the assumption that theeconomic situation will slowly recover and normalize by the first half of 2021.
It is uncertain when the novel coronavirus infection will cease and, if its impact lasts and the aforesaid assumption no longer
holds, our future financial status and business performance may be affected.

– 10 –

Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(Segment information)
First six months of the fiscal year (from January 1, 2019 to June 30, 2019)1.

Information related to net sales and profits/losses by reporting segment(Millions of yen)
Adjustment(Note 1)

Amounts recorded in
the quarterly
consolidated
statement of income(Note 2)—
(6,491)(6,491)(99)

92,181—
92,181
2,568

Reporting segment
Agricultural &Asian Food
Seafood Products
Global BusinessTrading Business

Other businessTotal

Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit

63,534
6,467
70,002
2,407

26,82523
26,849
197

1,820
—
1,820
62

92,181
6,491
98,672
2,668(Note) 1. "Adjustment" for segment profit in the amount of (99) million yen includes (1,396) million yen for elimination ofintersegment transactions and 1,297 million yen for company profit/loss not allotted to reporting segments (netcompany profits and net company expenses). Company profits consist mainly of dividend income from reporting
segments, and company expenses mainly comprise general and administrative expenses not attributed to reporting
segments.
2. The segment profit is reconciled with the operating income on the Quarterly Consolidated Statement of Income.
2.

Information related to impairment loss of non-current assets and goodwill by reporting segment
No relevant items.

First six months of the fiscal year (from January 1, 2020 to June 30, 2020)
1.

Information related to net sales and profits/losses by reporting segment(Millions of yen)
Adjustment(Note 1)

Amounts recorded in
the quarterly
consolidated
statement of income(Note 2)—
(4,997)(4,997)(316)

79,816—
79,816(1,226)

Reporting segment
Agricultural &Asian Food
Seafood Products Other business
Global BusinessTrading BusinessTotal

Net sales
Sales to external customers
Intersegment sales or transfers
Total
Segment profit/loss

53,1404,997
58,138(1,039)24,822024,822
56

1,853
—
1,853
73

79,816
4,997
84,814(909)(Note) 1. "Adjustment" for segment profit in the amount of (316) million yen includes (1,403) million yen for elimination ofintersegment transactions and 1,086 million yen for company profit/loss not allotted to reporting segments (netcompany profits and net company expenses). Company profits consist mainly of dividend income from reporting
segments, and company expenses mainly comprise general and administrative expenses not attributed to reporting
segments.
2. The segment profit or loss is reconciled with the operating loss on the Quarterly Consolidated Statement of Income.
2.

Information related to impairment loss of non-current assets and goodwill by reporting segment(Important impairment loss associated with non-current assets)
Due to decreased profitability under the impact of the novel coronavirus pandemic, the amount recoverable from the businessassets of a U.K. subsidiary in the import and wholesale business of Japanese foods and ingredients in the "Asian Food Global
Business" segment is estimated to be zero and it has been recorded as an impairment loss.
Due to decreased profitability under the impact of the novel coronavirus pandemic, the book value of the business assets of aHong Kong subsidiary in the import and wholesale business for Japanese foods and ingredients has been reduced to the recoverable
amount and is recorded as an impairment loss. The recoverable amount is based on the net selling price.
The amount provided for such impairment loss is 198 million yen in this consolidated cumulative second quarter.

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Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(Material fluctuation in goodwill)In the "Asian Food Global Business" segment, we acquired additional stock of SSP Konsumgüter TRADE & CONSULT GmbH
whereby it became a consolidated subsidiary instead of an equity method affiliate. The increase in goodwill attributable to this event
is 2,782 million yen in this consolidated cumulative second quarter.
The goodwill is an amount calculated provisionally because the acquisition cost is not fully distributed in this consolidated
financial second quarter.
(Material subsequent events)(Business combination by acquisition)
A consolidated subsidiary of the Company, NTC Wismettac Europe B.V. (hereinafter referred to as "NTC EU"), acquired an
additional 70% stake of common shares in COMPTOIRS DES 3 CAPS SAS (hereinafter referred to as "C3C"), an equity method
affiliate, on July 1, 2020. As a result, C3C became a consolidated subsidiary of NTC EU.
(1) Outline of business combination(i) Name of the acquired company and its business lines
Name of the acquired company: COMPTOIRS DES 3 CAPS SAS
Business lines: Importing, processing and wholesaling of tuna and salmon (four of the Group's companies)(ii) Main reasons for the business combination
NTC EU is importing and wholesaling Japanese foods, mainly in the Netherlands. It has decided to acquire an additional
70% of C3C, a French corporation which is an equity method affiliate of our Company and 20% of whose shares are held
by NTC EU. C3C is the holding company for three subsidiaries, so NTC EU will acquire a total of four group companies
as subsidiaries.
One of the Company Group's growth strategies for the Asian Food Global Business is to "expand our business platformin regions outside of North America." As Europe is a market with great growth potential over the medium to long term,
before this transaction NTC EU acquired the equity method affiliate, SSP Konsumgüter TRADE & CONSULT GmbH(based in Germany; hereinafter referred to as "SSP") as a wholly owned subsidiary in February 2020 by additionallyacquiring 80% of its shares.
This acquisition of shares by NTC EU enables us to group business units in three key countries in Europe, these being,
Wismettac Harro Foods Ltd. in the U.K., SSP in Germany and (through this acquisition) C3C in France in order to establish
a business base in Europe for the Asian Food Global Business, with a focus on Japanese foods.
(iii) Date of business combination
July 1, 2020(iv) Legal form of the business combination
Through acquisition of shares for cash consideration(v) Name of the controlling entity after the business combination
The name remains unchanged(vi) Percentage share of voting rights acquired
Percentage share of voting rights owned before the business combination: 20%
Percentage share of voting rights additionally acquired at the date of business combination: 70%
Percentage share of voting rights after the acquisition: 90%(vii) Main reason for deciding to acquire the company
As the Company Group acquired shares of C3C for cash(2) Acquisition cost of the acquired company and breakdownMarket value of equity held before business combination as of the business combination date

1,236 million yen

Cash expended for additional acquisition

4,326 million yen

Acquisition cost

5,562 million yen(3) Difference between the acquisition cost for the acquired company and the total sum of acquisition costs of each transaction for
acquisition
Not yet determined.

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Nishimoto Co., Ltd. - Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending December 31, 2020

(4) Goodwill, reason for recognizing goodwill, amortization method and amortization period
Not yet determined.

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