(Unaudited)

July 13, 2020
MORITO CO., LTD.
Financial Statement (Unaudited)
For the Second Quarter of the Fiscal Year ended November 30, 2020
(Translated from the Japanese original)
Corporate Information
Code：9837 Listings in First Section of the Tokyo Stock Exchange(URL : http://www.morito.co.jp/hd_en/ )Representative： Takaki Ichitsubo
Representative Director and President
Contact：
Makoto Tsuji
Managing Director of General Affairs Dept
Telephone: +81-6-6252-3551
Scheduled date of filing of Quarterly Report:

Scheduled date of dividend payment:
Supplementary explanation material for quarterly financial results:
Presentation meeting for quarterly financial results:

July 14, 2020
August 7, 2020
Yes
None

(Amounts rounded down)
1. Consolidated Financial Results for the Second Quarter of the Fiscal Year 2020(December 1, 2019
through May 31, 2020)(1) Consolidated Financial Results(Percentages indicate year-on-year changes)
Net sales
Operating income
Ordinary income
Net income%%%%
Millions of yen
Millions of yen
Millions of yen
Millions of yen
2Q of FY 2020
21,198412 △45.5
401 △47.3
154 △70.5△5.4
2Q of FY 2019
22,402
7.1
757
762
0.4
522
△4.5
△6.9
(Note) Comprehensive income : △261 million yen (-%)(2Q of FY2020) △250 million yen (-％)(2Q of FY2019)

2Q of FY 2020
2Q of FY 2019

Net income
Per share
Yen
5.64
19.05

Fully diluted net
Income per share
Yen－－(2) Consolidated Financial Position
Total assets
Net assets
Equity ratio
Millions of yen
Millions of yen%
2Q of FY 2020
43,822
31,99472.9
FY 2019
47,18532,725
69.2(Reference) Equity capital : 31,941 million yen (2Q of FY2020) 32,667 million yen (FY2019)

2. DividendsFirstquarter-end
Yen

Dividends per share
SecondThird
Fiscalquarter-end
quarter-end
year-end
Yen
Yen
Yen

FY 2019
13.00
－
13.00
FY 2020
13.25
FY 2020－
4.75(Forecast)(Note) Revisions of dividend forecast to the latest announcement: Yes

Annual
Yen

26.00
18.00

3. Consolidated Forecast for FY 2020 (December 1, 2019 through November 30, 2020)(Percentages represent changes from corresponding period of previous year)
Net Sales

Ordinary profit

Operating income1

Net income

Net income
per share

(Unaudited)
Millions ofyen

40,000%△13.0

Millions of
yen

600

Millions of
yen

%

△65.4

600

Full year(Note) Revision of performance forecast to the latest announcement: Yes%

Millions of
yen

△66.3

300

%

△78.6

Yen

10.96

*Notes(1) Changes of important subsidiaries during the period : None (changes of specific subsidiaries in accordancewith changes in the scope of consolidation)
Newly included : None
Excluded : None
(2) Adoption of special accounting treatment for preparing quarterly consolidated financial statements: None
(3) Changes in accounting policies and changes or restatement of accounting estimates(i)
Changes in accounting policies caused by revision of accounting standards:(ii)
Changes in accounting policies other than (i):(iii)
Changes in accounting estimates:(iv)
Restatements:

Yes
None
None
None

(4) Number of outstanding shares (common shares）(i) Number of outstanding shares, including treasury shares at end of period:
30,800,000 shares(as of May 31, 2020)
30,800,000 shares(as of November 30, 2019)(ii) Number of shares of treasury stock at end of period:
3,420,060 shares(as of May 31, 2020)
3,420,060 shares(as of November 30, 2019)(iii) Average outstanding number of shares during the period:
27,379,940 shares(the 2Q of FY2020)
27,452,023 shares(the 2Q of FY2019)* This quarterly financial summary is not subject to quarterly review by certified public accauntants or an audit
firm.
* Disclosure and other special notes regarding performance forecasts.
The forecast in this cumulative quarterly statement is based on information available to Morito Group andcertain premises which are deemed to be rational, and numbers we actually get may greatly differ from those in
the forecasts due to various factors.
As for supporting premises to the performance forecasts or notes to be kept in mind for the usage of thisforecasts, refer to “1. Qualitative Information for the Period under Review (2) Forecasts of Consolidated BusinessResults and other Forward-looking Information” on page 5.
In addition, we have introduced “Stock Granting Trust (J-ESOP)” and “Board Incentive Plan
(BIP)”.Consequently, the shares held by Trust and Custody Service Bank, Ltd. and the Master Trust Bank ofJapan, Ltd are included in the treasury stock.

2

(Unaudited)Index
1. Qualitative Information for the Period under Review ......................................................................................4(1) Overview of Business Performance .............................................................................................................4(2) Forecast of Consolidated Business Results and other Forward-looking Informantion ........................5
2. Quarterly Consolidated Financial Statements .................................................................................................6(1) Quarterly Consolidated Balance Sheets......................................................................................................6(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive
Income...................................................................................................................................................................8(3) Consolidated Cash Flows............................................................................................................................10(4) Notes regarding Quarterly Consolidated Financial Statements ............................................................. 11[Notes on assumption of going concern] ............................................................................................................. 11[Notes on a Significant Change in Shareholders’ Equity] .................................................................................... 11[Changes in accounting principal] ........................................................................................................................ 11[Additional Information] ........................................................................................................................................ 11[Segment Information] .........................................................................................................................................123

(Unaudited)

1. Qualitative Information for the Period under Review(1) Overview of Business Performance
In the first half of the consolidated cumulative second quarter (From December 1, 2019 through May 31, 2020),
the Japanese economy showed a gradual recovery with steady increases in the employment rate and the income
environment. However, in the second half of the period, the Japanese economy was in the difficult situation with arapid recession by the global pandemic of the novel coronavirus. At the same time, the global economy has
gotten worse and extremely uncertain in the future.
In such circumstances, Morito Group who deals with apparel materials and consumer products has beenpushing forward with the 8th mid-term management plan and aiming for continuous business growth by creating
values new value for the Morito Group beyond the value-added our items, under the corporate vision of 『Create
Morito’s existence value, Realize“New Morito Group”』. However, in the consolidated cumulative second quarter,
our business was in the difficult situation. Firstly, it was because that the business of apparel materials wasaffected by the warm winter last year and self-restraint of department stores and mass retailers to prevent the
spread of the novel coronavirus. Secondly, it was because that the business of consumer products was affectedby the suspension of automobile-related factories in Japan and overseas for a certain period time.
As a result, in the current quarterly performance reaches net sales ¥21,198 million (decreased by 5.4% from ayear earlier), operating income ¥412 million (decreased by 45.5% from a year earlier), ordinary income ¥401
million (decreased by 47.3 % from a year earlier), net income ¥154 million (decreased by 70.5 % from a year
earlier).
The exchange rate used for the oversea subsidiaries’ consolidated financial statement of the current quarterend as below:
1Q

2Q

USD

108.76 （112.91）

108.87 （110.23）

EUR

120.32 （128.82）

120.09 （125.16）

RMB

15.44 （16.32）

15.59 （16.33）

HKD

13.90 （14.42）

14.01 （14.05）

TWD

3.57 （3.66）

3.62 （3.58）

VND

0.0047 （0.0048）

0.0047 （0.0047）

THB

3.59 （3.44）

3.48 （3.49）

MXN

5.65 （5.70）

5.49 （5.74）(Notes)1. ( ) is the exchange rate of the quarter of FY2019.

Segment information as below[Japan]As for the apparel division, sales of accessories for bags increased, but sales of accessories for casual wear,
working wear and men’s heavy clothing decreased.
In the consumer product division, sales of safety-related accessories for construction site and rental, sales
and cleaning business of kitchen equipment increased, but sales of products related to shoes and automobileinterior components decreased.
As a result, net sales reached 14,964 million yen (decreased by 8.9% from a year earlier).
[Asia]
As for the apparel division, sales of accessories to Japanese apparel manufacturers in Shanghai and EU and
US/European manufacturers in Hong Kong decreased.
In the consumer product division, sales of accessories for video equipment in Thailand decreased, but salesof automobile interior components bound for Japanese manufactures increased in Shanghai. As a result, net
sales reached 3,598 million yen (increased by 16.5% from the previous year).
4

(Unaudited)[Europe and the U.S.]
As for the apparel division, sales of accessories to apparel manufacturers in Europe/US decreased.
In the consumer product division, sales of automobile interior components to Japanese auto manufacturers
increased.
As a result, net sales reached 2,635 million yen (decreased by 8.7% from the previous year).
(2) Forecast of Consolidated Business Results and other Forward-looking Informantion
The consolidated financial forecast for the fiscal year ending November 31, 2020 is expected to fall below theinitial forecast due to the spread of new coronavirus infections. For details, please refer to “Notice Concerning
Revision of Consolidated Financial Results Forecast and Fiscal Year Ending Dividend Forecast for November
2020” released today (July 13, 2020).

5

(Unaudited)

2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets
FY 2019(As of November 30, 2019)
Thousands of yen

FY 2020(As of May 31, 2020)
Thousands of yen

AssetsCurrent assets
Cash and deposits

9,716,355

9,273,794

Notes and accounts receivable
Inventory
Other current assets

11,773,061
5,083,679
1,115,458

9,859,271
5,460,001
596,641

Allowance for doubtful accounts
Total current assets△30,645
27,657,908△28,201
25,161,508

Fixed assets
Tangible fixed assets
Land

4,074,904

4,075,383

Other tangible fixed assets
Total tangible fixed assets
Intangible fixed assets

5,735,985
9,810,890

5,850,444
9,925,827

Goodwill
Other Intangible fixed assets

2,839,168
1,154,248

2,736,975
1,118,506

Total intangible fixed assets
Investments and other fixed assets
Investment securities

3,993,417

3,855,481

4,396,289

3,638,748

268,300
1,120,508

265,578
1,038,790△67,253
5,717,844
19,522,152△67,269
4,875,848
18,657,158

5,601
47,185,662

3,501
43,822,168

Net defined benefit asset
Other fixed assets
Allowance for doubtful accountTotal investments and other fixed assets
Total fixed assets
Deferred assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable

4,859,108

3,857,065

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

50,000400,000
506,666

50,000400,000
553,334

Accrued tax payable
Reserve for bonuses

441,253
229,983

241,917
168,188

71,5952,333,488
8,892,095

25,306
1,540,270
6,836,081

Reserve for director’s bonuses
Other current liabilities
Total current liabilities
Fixed liabilities
Bonds payable
Long-term debt
Provision for retirement benefit by stock
Provision for director’s retirement benefit
Provision for director's retirement benefit by stock
Provision for environmental measures
Net defined benefit liability
Other fixed liabilities
Total fixed liabilities
Total liabilities

6200,000－

2,674,590
31,82457,2492,362,922
38,94864,17456,42819,360892,694

65,013
19,516882,202

1,635,921
5,568,069

1,558,969
4,991,746

14,460,164

11,827,828

(Unaudited)
FY 2019(As of November 30, 2019)
Thousands of yen
Net Assets
Shareholders' equity
CapitalCapital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Difference in revaluation of land
Foreign currency translation adjustment
Remeasurement of defined benefit plans
Total other comprehensive income
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

7

FY 2020(As of May 31, 2020)
Thousands of yen

3,532,492
3,503,243
26,072,687△2,222,696
30,885,726

3,532,492
3,507,603
25,760,288△2,227,056
30,573,326

1,185,435
946
451,115
170,300△25,723
1,782,074
57,697－32,725,498
47,185,662

689,964
1,731
451,115
246,176△20,977
1,368,010
57,277△4,274
31,994,340
43,822,168

(Unaudited)(2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income
The Second Quarter accounting period
FY 2019(December 1, 2018 throughMay 31, 2019)
Thousands of yen

FY 2020(December 1, 2019 throughMay 31, 2020)
Thousands of yen

Net sales

22,402,663

21,198,721

Cost of sales

16,326,564

15,701,304

Gross profit

6,076,098

5,497,416

Total selling, general and administrative expense
Operating Income

5,318,329
757,768

5,084,570
412,846

12,86232,431

8,081
37,314

Rent on real estate
Equity in earnings of affiliates

24,267
33,11334,007
24,792Other non-operating income
Total non-operating income

29,817
132,493

35,885140,082

Non-operating income
Interest received
Dividends received

Non-operating expenses
Interest paid

4,090

7,485

Cash discount on sales
Foreign Exchange Loss

41,04329,67037,55250,851Others non-operating expense
Total non-operating expense

53,157
127,961

55,483
151,372

762,300

401,556

Ordinary Income
Extra ordinary income
Gains on sales of fixed assets

29

408

81,849210－
420

82,089828

Loss on disposal of fixed assets
Loss on sales of investment securities

3,867
415

2,246
－

Loss on sales of golf club memberships

－

1,080

Loss on valuation of investment securities－

10,663－

5,374

Gains on sales of investment securities
Gain on reversal of subscription rights to shares
Total extra ordinary income
Extra ordinary loss

Loss on valuation of golf club membership
Loss of business restructuring

2,948

－

Loss of the novel coronavirus－

26,144

7,231
837,158

45,508356,876

Total extra ordinary loss
Net income before taxes and other adjustment
Corporate, inhabitant and business taxes

368,248

265,141

Adjustments to corporate and other taxes△54,013△60,899

Total income taxes
Net income

314,234
522,923

204,241
152,635

Profit(Loss) attributable to non-controlling interests
Profit(Loss) attributable to owners of parent

8－△1,789522,923

154,424

(Unaudited)

Quarterly Consolidated Statements of Comprehensive Income
The Second Quarter accounting period
FY 2019
FY 2020(December 1, 2018 through (December 1, 2019 throughMay 31, 2019)
May 31, 2020)
Thousands of yen
Thousands of yen
Net Income
Other comprehensive income
Unrealized gain(loss) on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Adjustments to retirement benefit
Share of other comprehensive income of associates accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attribute to the parent
Comprehensive income attribute to the minority shareholders

9522,923

152,635△539,108△193△246,924
12,647△495,470
781
75,8764,745

1△773,578△250,654

2△414,064△261,428△250,654－△259,639△1,789(Unaudited)(3) Consolidated Cash FlowsFY 2019
FY 2020(December 1, 2018 through (December 1, 2019 throughMay 31, 2019)
May 31, 2020)
Thousands of yen
Thousands of yen
Cash flows from operating activities
Income (loss) before income taxes
Depreciation of amortization
Depreciation of goodwill
Change in provision for bonus
Changes in net defined benefit asset
Changes net defined benefit liability
Change in reverse for retirement benefits for officers
Changes in reverse for employee stock ownership plan
Changes in board incentive plan
Change in allowance for doubtful accounts
Interest income and dividends income
Interest paid
Equity in net income of affiliates
Gain on reversal of subscription rights to shares
Gains from sale of fixed assets
Gains from sale of investment securities
Loss on sales of golf club memberships
Loss on valuation of investment securities
Loss on retirement of noncurrent assets
Loss of business restructuring
Loss of the novel coronavirus
Change in notes and accounts
Change in inventory
Change in account payable
OthersSubtotal
Proceed from interest and dividends income
Payment of interest
Payment of corporate tax
Net cash(used in)provided by operating activities
Cash flows from investing activities
Decrease in time deposit
Increase in time deposit
Purchase of investment securities
Increase of sale for investment securities
Purchase of tangible fixed assets
Proceeds from sale for tangible fixed assets
Purchase of intangible assets
Payments of loans receivable
Proceeds from loans receivable
OthersNet cash provided by (used in) investing activities
Cash flows from financing avtivities
Changes in short-term debt
Repayments of lease obligations
Repayments of lease liability
Repayment of long-term loans
Redemption of bonds
Payments to acquire treasury stock
Proceeds from exercise of stock option
Payments of dividends
Net cash used in financing activities
Effects of exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at fiscal year-end

10

837,158
415,195
121,327△56,857
14,128△3,9904,216
8,154△25,507750△45,294
4,090△33,113△210△29△81,434
－
－
3,867
2,948
－
600,306△307,784
196,371
107,160
1,761,455
47,047△4,300△42,844
1,761,358

356,876
492,086
119,499△62,728
3,177△4,107
6,925
7,123
8,584
△2,667△45,396
7,485△24,792
△420
△408
－
1,080
10,663
2,246－
26,144
1,933,278△357,055△1,014,064△439,068
1,024,463
45,395△7,379△478,066
584,413△22,558
4,798△14,135
106,888△637,249
1,013△184,699△3,00013,192△7,480△743,230－
215,497△17,185－△127,730
3,570△36,543
－
3,600
△174
41,033△100,000△30,080－△851,951△200,000△151,148
12368△350,753△1,671,564△49,298△702,735
8,525,759
32,021
7,855,044－△26,355△73,585△265,000△200,000－－△362,594△927,535
28,774△273,314
9,442,330
32,7799,201,794

(Unaudited)(4) Notes regarding Quarterly Consolidated Financial Statements[Notes on assumption of going concern]
Not applicable.
[Notes on a Significant Change in Shareholders’ Equity]
Not applicable[Changes in accounting statements]
Some overseas consolidated subsidiaries have applied IFRS 16 “Leases” from the beginning of the first quarter
consolidated accounting period, and in principle, lessees recognize all leases as assets and liabilities. Regarding
the application of this accounting standard, the method of recognizing the cumulative effect of the application ofthis standard, which is permitted as a transitional measure, on the date of initial application is adopted.
The impact of this change on the quarterly consolidated financial statements for the current second quarter
consolidated cumulative period is immaterial.
[Additional Information](Impact of the Novel Coronavirus on Accounting Estimate)
Due to the global epidemic of the novel coronavirus, the economy is rapidly decelerating and uncertain about
future.
In such circumstances, Morito group who deals with apparel materials and consumer has continued ourbusiness by taking measures to prevent infection and adopt new way to work such as telework at both sales andproduction bases. In this place, we have many uncertain factors about the impact on our business result anddifficulty to reasonably calculate business forecasts. However, in each of Japan, Asia, Europe and the UnitedStates, considering the impact of the sudden economic downturn, we have estimated future cash flows andmade accounting estimates regarding the application of impairment accounting to fixed assets (including
goodwill) for the second quarter of the current consolidated cumulative period, based on the following
assumptions.
In Japan, it is assumed that the difficult situation will continue during this term due to production adjustments by
various manufacturers. And it is assumed that our business in Japan will begin to recover gradually from the endof this term, and will reach the level of the previous year in the middle of the next term.
In Asia, it is assumed the difficult condition as in Japan. However, business of automotive interior parts tends torecover. Therefore it is assumed that our business in Asia will reach the level of the previous year in the middle ofthe next fiscal year.
In Europe/US, the novel coronavirus is still spreading, especially in North America and Latin America, so it isassumed that the difficult situation will continue during this term. And it is assumed that our business in
Europe/US will begin to recover gradually from the middle of next term, and will reach the level of the previous
year later the end of the next term.
We made the above assumptions for each segment, though it was difficult to uniformly forecast the impact of theeconomic downturn and the period as we have various industries of our targets.
At the time of writing the quarterly report, the estimates are based on available information. However, if there is adifference between the assumptions of recovery trend and the actual trend in the future, it may affect Morito
Group's business performance and your financial position.

11

(Unaudited)[Segment Information]
I. The Second Quarter of FY 2019 (December 1, 2018 through May 31, 2019)
1. The information on net sales, income or loss by reportable segment(Thousands of yen)
Reportable Segment

Net Sales
Sales to externalcustomers
Inter segment sales
and transfer
Total
Segment income

Adjustment(Note 1)

Consolidated
Statement
Amount(Note 2)

Japan

Asia

EU and US

Total

16,427,985

3,088,046

2,886,631

22,402,663－

22,402,663

1,226,164

1,515,961

11,741

2,753,866△2,753,866－

17,654,149
709,308

4,604,007
225,300

2,898,372
14,77725,156,530
949,386△2,753,866△191,618

22,402,663
757,768(Notes)1. Adjustment of △191,618 thousand yen includes corporate expenses of △167,751 that are not distributed toeach reportable segment and other△23,867 thousand yen.
2. The amount of segment income is adjusted with operating profits on the consolidated quarterly profit and loss
statements.

II. The Second Quarter of FY2020 (December 1, 2019 through May 31, 2020)
1. The information on net sales, income or loss by reportable segment(Thousands of yen)
Reportable Segment

Net Sales
Sales to externalcustomers
Inter segment sales
and transfer
Total
Segment income

Adjustment(Note 1)

Consolidated
Statement
Amount(Note 2)

Japan

Asia

EU and US

Total

14,964,133

3,598,624

2,635,963

21,198,721－

21,198,721

671,139

1,172,818

29,4681,873,426△1,873,426－

15,635,272
389,481

4,771,443
147,457

2,665,432△30,633

23,072,148
506,305△1,873,426△93,459

21,198,721
412,846(Notes)1. Adjustment of △93,459 thousand yen includes corporate expenses of △103,425 that are not distributed toeach reportable segment and other 9,965 thousand yen.
2. The amount of segment income is adjusted with operating profits on the consolidated quarterly profit and loss
statements.

12