Consolidated Financial Results for the First Quarter of the Fiscal Year Ending
November 30, 2022 [Japanese GAAP]
April 13, 2022
MORITO CO., LTD
Stock exchange listing:Tokyo Stock Exchange
9837
URL http://www.morito.co.jp/hd_en/
Takaki Ichitsubo, Representative Director, CEO
Kiyomi Akui, Director, Senior Executive Officer, Division Manager of Corporate Administrative Division
and Division Manager of Business Management Division
Phone:+81-6-6252-3551
Scheduled date of filing quarterly
Scheduled date of commencing dividend
April 14, 2022
securities report:
payments:
Availability of supplementary briefing material on quarterly financial results:
Available
Schedule of quarterly financial results briefing session:
None scheduledCompany name:
Code number:
Representative:
Contact:(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending November 30, 2022
(December 1, 2021 to February 28, 2022)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Profit attributable toOperating profit
Ordinary profit
owners of parent

Net sales
Million yen%

Million yen%

Million yen%

Million yen%

1Q of FY 2022
1Q of FY 2021

11,561
10,629

8.8
(4.9)

610
473

28.9
40.6

655
485

35.0
58.6

449
288

55.6
70.8

(Note) Comprehensive income:1Q of FY 2022

¥537million

1Q of FY 2021

¥271million [-%]Diluted earnings per
share

Basic earnings per share

1Q of FY 2022
1Q of FY 2021

[97.8%]

Yen

Yen

16.53
10.54

-

(2) Consolidated Financial Position
Total assets
1Q of FY 2022
FY 2021(Reference) Equity:

1Q of FY2022

Net assets

Equity ratio

Million yen

Million yen%

45,71845,93833,80733,914

73.8
73.7¥33,751

millionFY2021¥33,858

million

2. Dividends
Annual dividends
1st quarter-end 2nd quarter-end 3rd quarter-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

-

9.00

-

17.00

26.00

13.50

-

13.50

FY 2021
FY 2022
FY 2022 (Forecast)(Note) Revisions to the latest announcement of dividend forecast

27.00: None3. Consolidated Financial Results Forecast for the Fiscal Year Ending November 30, 2022
(December 1, 2021 to November 30, 2022)

Net sales
Full year(% indicates changes from the previous corresponding period.)
Profit attributable to Basic earnings per
Ordinary profit
owners of parent
share

Operating profit

Million yen%

Million yen%

Million yen%

Million yen%

Yen

45,000

3.1

1,800

11.1

1,850

0.9

1,450

3.0

53.13

(Note) Revisions to the latest announcement of performance forecast―1―: None* Notes:(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries
resulting in changes in the scope of consolidation): No(2) Adoption of special accounting treatment for preparing quarterly consolidated financial statements: No(3) Changes in accounting policies, changes in accounting estimates, and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: Yes2) Changes in accounting policies other than 1) above: No3) Changes in accounting estimates: No4) Retrospective restatement: No(4) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):February 28, 2022: 30,800,000 shares
November 30, 2021: 30,800,000 shares2) Total number of treasury shares at the end of the period:
February 28, 2022: 3,715,300 shares
November 30, 2021: 3,510,000 shares
3) Average number of shares during the period:
1Q of the fiscal year ending November 30, 2022: 27,184,425 shares
1Q of the fiscal year ended November 30, 2021: 27,380,790 shares*

These quarterly consolidated financial results are outside the scope of audit by certified public accountants or audit
firms.

*

Explanation of the proper use of financial results forecast and other notes
The earnings forecasts and other forward-looking statements herein are based on information currently available and certain
assumptions judged to be reasonable. Actual results may differ significantly from these forecasts due to a wide range of factors.
As for suppositions that form the assumptions for the forecast of financial results and cautionary notes concerning the use thereof,
please refer to “(2) Forecast of Consolidated Business Results and other Forward-looking Information” in “1. Qualitative Information
for the Period under Review” on page 3.
The Company and some of the Morito Group companies have introduced the “Japanese version of the employee stock ownershipplan (J-ESOP)” and the “officer remuneration board incentive plan (BIP) trust.” Consequently, the shares of the Company held by
Custody Bank of Japan, Ltd. (trust account E) and The Master Trust Bank of Japan, Ltd. (officer remuneration BIP trust account),
respectively, are included in treasury shares.

―2―

Table of Contents

1.

Qualitative Information for the Period under Review ····································································· P.2(1)

Overview of Business Results for the Period under Review ··························································· P.2(2)

Forecast of Consolidated Business Results and other Forward-looking Information ··························· P.3

2.

Quarterly Consolidated Financial Statements and Primary Notes ··················································· P.4(1)

Quarterly Consolidated Balance Sheets ···················································································· P.4(2)

Quarterly Consolidated Statements of Income and Comprehensive Income ····································· P.6
Quarterly Consolidated Statements of Income ············································································ P.6
Quarterly Consolidated Statements of Comprehensive Income ······················································ P.7(3)

Notes to the Quarterly Consolidated Financial Statements ···························································· P.8(Notes on Going Concern Assumption) ······················································································ P.8(Notes on Significant Changes in the Amount of Shareholders' Equity) ············································ P.8(Changes in Accounting Policies) ····························································································· P.9(Additional Information) ·········································································································· P.10
(Segment Information, etc.) ····································································································· P.11

―3―

1. Qualitative Information for the Period under Review(1) Overview of Business Results for the Period under Review
In the first quarter of the fiscal year ending November 30, 2022 (December 1, 2021 to February 28, 2022), the business environment
showed signs of recovery in a rebounding economy as economic activities mainly in Europe and the United States resumed despite
the lingering effects of COVID-19. However, a combination of various downside risks, such as soaring raw material costs associatedwith rising crude oil prices, accelerating inflation in the U.S., and the worsening situation in Ukraine, has made the outlook for the
future more uncertain than ever.
The Morito Group (the “Group”), which is mainly engaged in apparel-, product-, and transportation-related businesses, faced anumber of hurdles that kept profits low, including soaring prices and difficulties procuring raw materials for its mainstay products,
production cutbacks and stoppages by automakers due to semiconductor shortages, delays in marine transportation, and risingtransportation costs. On the other hand, the business related to medical wear and working wear remained firm. The Group focusedon winning new business contracts as well as the development and sales of high-value-added products, such as accessories andproducts with superior functionality, including yoga, fishing, and other sporting goods, accessories for leisure boats and camping cars,and environmentally friendly accessories and products launched as part of “C.O.R.E.,” the Group’s commitment to the environment.
The Group also made ongoing efforts to cut transportation and other costs, and this substantially improved its profitability.
As a result, for the first quarter of the fiscal year under review, net sales increased 8.8% year on year to ¥11,561 million. Operating
profit was up 28.9% to ¥610 million, ordinary profit grew 35.0% to ¥655 million, and profit attributable to owners of the parent increased
55.6% to ¥449 million.
The Group has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. effective
as of the beginning of the first quarter of the fiscal year under review. This change resulted in a decrease of ¥176 million in net sales,¥45 million in operating profit, and ¥27 million in ordinary profit and profit attributable to owners of the parent respectively for the firstquarter of the fiscal year under review.

Exchange rates used for the conversion of revenue and expenses of the Group’s overseas subsidiaries during the preparation of
consolidated financial statements for the first quarter of the fiscal year under review are as follows.
1Q
USD

113.71(104.51)EUR

130.04(124.58)

CNY

17.78

(15.81)

HKD

14.60

(13.48)TWD

4.09(3.67)

VND

0.0050(0.0045)

THB

3.41

(3.42)

MXN

5.48(5.08)(Note) The exchange rate of the same period in the previous fiscal year is stated in parentheses.

―4―Business results by segment are as follows.
Japan
The apparel division saw increases in sales of accessories for working wear and medical wear sold in Europe and the U.S. as well
as sportswear accessories.
The product division enjoyed increases in sales of products for one-coin shops (like 100-yen stores), construction safety products,
and products related to snowboarding and surfing.
In the transportation division, sales of automotive interior components to Japanese automotive manufacturers increased.
As a result, net sales grew 7.7% year on year to total ¥7,912 million, and segment profit jumped 24.3% year on year to reach ¥478
million.
Due to the adoption of the Accounting Standard for Revenue Recognition, etc., net sales and segment profit fell ¥176 million and ¥45
million respectively.
Asia
In China and Hong Kong apparel operations, sales of working wear accessories for the European and U.S. markets were up.
In the transportation division, sales of automotive interior components to Japanese automotive manufacturers decreased in China.
As a result, net sales increased 6.2% year on year to total ¥2,212 million, and segment profit grew 285.8% year on year to reach¥220 million.
Europe and the U.S.
In the apparel division, sales of accessories related to working wear and casual wear increased.
In the transportation division, sales of automotive interior components to Japanese automotive manufacturers fell.
As a result, net sales increased 19.9% year on year to total ¥1,436 million while segment loss came to ¥18 million (segment profit forthe same period in the previous fiscal year was ¥22 million).

(2) Forecast of Consolidated Business Results and other Forward-looking Information
The consolidated financial forecast for the fiscal year ending November 30, 2022 remains unchanged from what was announced on
January 14, 2022. In the event that COVID-19 or the situation in Ukraine is expected to affect the Group’s business performance,
information about such an impact will be disclosed as soon as it becomes evident.

―5―

2.

Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly Consolidated Balance Sheets(Thousand yen)
As of November 30, 2021

As of February 28, 2022

AssetsCurrent assets
Cash and deposits

11,103,207

9,179,260

Notes and accounts receivable - trade

10,649,689

11,080,787

Inventory

4,540,605

5,803,986

Other

707,446852,234

Allowance for doubtful accounts(43,235)(45,710)

26,957,713

26,870,557

Land

4,594,174

4,595,862

Other, net

5,282,796

5,356,313

Total property, plant and equipment

9,876,970

9,952,176

Goodwill

2,432,266

2,423,415

Other

1,037,483

1,055,803

Total intangible assets

3,469,750

3,479,219

4,485,900

4,265,674

Total current assets
Non-current assets
Property, plant and equipment

Intangible assets

Investments and other assets
Investment securities
Retirement benefit asset

241,832

240,970

Other

1,014,733

1,020,926

Allowance for doubtful accounts(108,676)(110,525)

Total investments and other assets
Total non-current assets
Total assets

5,633,790

5,417,046

18,980,511

18,848,441

45,938,224

45,718,999

4,453,854

4,842,135

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings

50,00050,000Current portion of long-term borrowings

394,620

332,122

Income taxes payable

483,951

296,485

Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other

286,425

227,672

86,06536,184

1,752,857

1,773,051

Total current liabilities

7,507,774

7,557,652

1,703,302

1,633,300

32,27430,91332,15834,70891,65089,36320,075

20,626

Non-current liabilities
Long-term borrowings
Provision for share awards
Provision for retirement benefits for directors (andother officers)
Provision for share awards for directors (and otherofficers)
Provision for environmental measures
Retirement benefit liability

911,731

907,316

Other

1,724,387

1,637,701

Total non-current liabilities

4,515,579

4,353,930

12,023,354

11,911,583

Total liabilities―6―

(Thousand yen)
As of November 30, 2021

As of February 28, 2022

Net assets
Shareholders’ equity
Share capital

3,532,492

3,532,492

Capital surplus

3,507,603

3,507,603

Retained earnings

26,726,521

26,674,697

Treasury shares(2,289,615)(2,433,252)

Total shareholders’ equity

31,477,001

31,281,540

1,321,667

1,146,452

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land

4,612

1,125

451,115

451,115

Foreign currency translation adjustment

641,116

904,945

Remeasurements of defined benefit plans(36,922)(33,516)

2,381,589

2,470,121

Share acquisition rights

Total accumulated other comprehensive income

56,28055,755

Non-controlling interests--

33,914,870

33,807,416

45,938,224

45,718,999

Total net assets
Total liabilities and net assets―7―

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income
The First Quarter accounting period(Thousand yen)
December 1, 2020 – February 28, December 1, 2021 – February 28,
2021
2022
Net sales

10,629,541

11,561,273

Cost of sales

7,834,483

8,503,016

Gross profit

2,795,057

3,058,257

Selling, general and administrative expenses

2,321,769

2,448,105

473,288

610,151

2,766

2,244

Dividend income

9,300

10,204

Rental income from real estate
Share of profit of entities accounted for using equity
methodSubsidies for employment adjustment

16,087

18,945

4,158

16,061

24,955

1,054

Operating profit
Non-operating profit
Interest income

Subsidy income-

18,082

Other

8,424

8,754

Total non-operating profit

65,69275,345Interest expenses

2,601

2,224

Sales discounts

14,840-Foreign exchange losses

12,360

4,860

Other

23,42722,800Total non-operating expenses

53,23029,885

485,750

655,612-261

Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on reversal of share acquisition rights

420

525

Insurance claim income-

70,016

Total extraordinary income

420

70,803Extraordinary losses
Loss on sale of non-current assets

29-

Loss on retirement of non-current assets

171

52

200

52

Profit before income taxes

Total extraordinary losses

485,969

726,363

Income taxes - current

189,894258,805

Income taxes - deferred

7,412

18,308

Total income taxes

197,306

277,114

Profit288,663449,249--

288,663449,249

Profit attributable to non-controlling interests
Profit attributable to owners of parent―8―

Quarterly Consolidated Statements of Comprehensive Income
The First Quarter accounting period(Thousand yen)
December 1, 2020 – February 28, December 1, 2021 – February 28,
2021
2022
Profit288,663449,249

88,693(175,215)

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, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(110)(3,483)(111,659)

263,828

6,241

3,406

2

(3)

(16,832)

88,531

271,830

537,781271,830

537,781--Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests―9―(3) Notes to the Quarterly Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.

(Notes on Significant Changes in the Amount of Shareholders' Equity)
Not applicable.

―10―(Changes in Accounting Policies)(Adoption of accounting standards for revenue recognition)
The Group has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. effective
as of the beginning of the first quarter of the fiscal year under review. The Group now recognizes revenue when control of promised
goods or services is transferred to customers in an amount that reflects the consideration to which it expects to be entitled in exchange
for those goods or services
The Group also uses the alternative treatment specified in paragraph 98 of the Implementation Guidance on Accounting Standard
for Revenue Recognition, under which revenue is recognized when goods or products sold in Japan are shipped, as long as theperiod from the time of shipment to the time when control of the goods or products is transferred to customers is a normal period.

Major changes due to the adoption of the Accounting Standard for Revenue Recognition are as follows.
(Principal vs. agent)
For transactions in which the Group acts as an agent in providing goods or services to customers, the Group previously recognizedrevenue in the gross amount of consideration received from the customer, but now recognizes revenue as the net amount of suchgross consideration less amounts paid to suppliers of goods or services.

(Variable consideration for transactions with potential discounts)
For sales that include discounts given to customers at a later date based on past sales, the Group previously reduced revenue
based on historical experience of actual discounts given, but now recognizes revenue by excluding the amount equivalent torevenue from goods and products that are expected to be discounted at the time of sale. The price expected to be reduced isincluded in "other" under "current liabilities" as a refund liability.

(Transactions in which a certain level of returns is expected)
For transactions in which a certain level of returns is expected, the Group previously reduced revenue and cost of sales based on
historical experience of actual customer returns, but now recognizes revenue and cost of sales by excluding the amount equivalent
to revenue and cost of sales of goods and products expected to be returned at the time of sale. The consideration for goods andproducts expected to be returned is included in "other" under "current liabilities" as a refund liability, and the asset recognized as
the right to recover the goods and products from customers upon settling the refund liability is included in "other" under "current
assets" as a return asset.

(Consideration payable to customers)
The Group previously recognized consideration paid to customers, such as EDI commissions and center fees, as selling, generaland administrative expenses, but now treats such consideration as a reduction in the transaction price.

(Transactions involving materials supplied by customers for a fee)
For transactions in which products processed from materials supplied by customers for a fee are sold to those customers, theGroup previously recognized revenue and cost of sales by including the amount equivalent to materials supplied for a fee, but now
recognizes the amount excluding the amount equivalent to materials supplied for a fee as revenue and cost of sales.

(Chargeable subcontracting)
For transactions involving chargeable subcontracting, the Group previously recognized the extinguishment of inventory for the
goods supplied to its subcontractors for a fee. However, when the Group deems that it has an actual obligation to repurchase thesupplied goods, it continues to recognize the inventory and includes the amount equivalent to the ending inventory of the supplied
goods remaining with subcontractors in "other" under "current liabilities" as a liability related to chargeable subcontracting.

―11―

The Group uses the Accounting Standard for Revenue Recognition, etc. in accordance with the transitional treatment set forth in theproviso of paragraph 84 of the standard. The cumulative effect of retrospectively applying the new accounting policy to periods prior
to the beginning of the first quarter of the fiscal year under review is added to or deducted from retained earnings at the beginning of
the first quarter of the fiscal year under review, and the new accounting policy has been applied starting with the said beginningbalance of retained earnings. However, in accordance with the method set forth in paragraph 86 of the Accounting Standard for
Revenue Recognition, the new accounting policy was not applied retrospectively to contracts for which almost all revenue amounts
were recognized using the previous treatment prior to the beginning of the first quarter of the fiscal year under review. In addition, theGroup has applied the method set forth in (1) of the second part of paragraph 86 of the Accounting Standard for Revenue Recognition
to account for contract changes made prior to the beginning of the first quarter of the fiscal year under review based on the contract
terms after reflecting all contract changes. The cumulative effect of such changes has been added to or deducted from retained
earnings at the beginning of the first quarter of the fiscal year under review.
As a result, net sales decreased ¥176,150 thousand, cost of sales by ¥98,334 thousand, selling, general and administrative expensesby ¥31,981 thousand, operating profit by ¥45,835 thousand, ordinary profit and profit before income taxes by ¥27,840 thousand yen
respectively in the first quarter of the fiscal year under review. The beginning balance of retained earnings decreased ¥27,800
thousand.
In accordance with the transitional treatment set forth in paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting(ASBJ Statement No. 12, March 31, 2020), information on disaggregated revenue from contracts with customers for the first quarterof the previous fiscal year is not provided.

(Adoption of accounting standards for fair value measurement)
The Group has adopted the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019), etc. effective
as of the beginning of the first quarter of the fiscal year under review. In accordance with the transitional treatment set forth inparagraph 19 of the Accounting Standard for Fair Value Measurement and paragraph 44-2 of the Accounting Standard for Financial
Instruments (ASBJ Statement No. 10, July 4, 2019), the Group will apply the new accounting policy stipulated by the AccountingStandard for Fair Value Measurement, etc. prospectively. This has no effect on the consolidated financial statements for the firstquarter of the fiscal year under review.

(Additional Information)(Impact of COVID-19 pandemic on accounting estimates)
The assumptions used in the accounting estimates for the impact of COVID-19 have not changed from those described in the
additional information section of the financial results for the previous fiscal year.

―12―

(Segment Information, etc.)
Segment informationI

For the first quarter of the fiscal year ended November 30, 2021

1. Information on amounts of net sales and profit (loss) by reportable segment(Thousand yen)
Reportable Segment
Europe & the
U.S.

Total

Amount recordedin Consolidated
Adjustment
Financial(Note 1)
Statements(Note 2)

Japan

Asia

Net sales to external customers

7,347,816

2,083,234

1,198,490

10,629,541-

10,629,541

Intersegment sales or transfers

403,514

530,745

9,263

943,522(943,522)

-

Total

7,751,330

2,613,979

1,207,754

11,573,064(943,522)

10,629,541

384,893

57,18022,892464,9658,322

473,288

Net sales

Segment profit(Note) 1

The adjustment of ¥8,322 thousand to segment profit includes corporate expenses of ¥(49,034) thousand not allocated to
the reportable segments, and other in the amount of ¥57,356 thousand.
The amount of segment profit has been adjusted with operating profit in the Quarterly Consolidated Statements of Income.

2

II. For the first quarter of the fiscal year ending November 30, 2022
1. Information on amounts of net sales and profit (loss) by reportable segment and disaggregated revenue(Thousand yen)
Reportable Segment
Europe & the
U.S.

Total

Amount recordedin Consolidated
Adjustment
Financial(Note 1)
Statements(Note 2)

Japan

Asia

Apparel

2,459,489

1,417,126

1,166,113

5,042,730-

5,042,730

Product

4,354,531

186,903

13,833

4,555,268-

4,555,268

Transportation

1,098,026

608,584

256,664

1,963,274-

1,963,274

Revenue from contracts withcustomers

7,912,047

2,212,614

1,436,611

11,561,273-

11,561,273

Net sales to external customers

7,912,047

2,212,614

1,436,611

11,561,273-

11,561,273

Intersegment sales or transfers

376,825

763,000

23,7101,163,536(1,163,536)

-

Total

8,288,872

2,975,614

1,460,322

12,724,809(1,163,536)

11,561,273

Segment profit (loss)

478,574

220,578(18,182)

680,969(70,817)610,151

Net sales(Note)

1
2

The adjustment of ¥(70,817) thousand to segment profit (loss) includes corporate expenses of ¥(52,084) thousand notallocated to the reportable segments, and other in the amount of ¥(18,733) thousand.
The amount of segment profit (loss) has been adjusted with operating profit in the Quarterly Consolidated Statements ofIncome.

2. Change of reportable segments
As described in "Changes in Accounting Policies," the Group has applied the Accounting Standard for Revenue Recognition, etc., fromthe beginning of the first quarter of the fiscal year under review and changed its accounting method for revenue recognition. Accordingly,
the method of calculating profit or loss by geographic segment has also been changed.
As a result of this change, net sales and segment profit for Japan for the first quarter of the fiscal year under review are respectively¥176,150 thousand and ¥45,835 thousand less than what they would be when calculated using the previous method.

―13―