Consolidated Financial Summary for

Baroque Japan Limited

Financial Information for the year ended February 28, 2022

Tokyo Stock Exchange, 3548

English Translation of the original Japanese-Language Report

Contents

1. Management discussion and analysis 2

(1) Summary of the business 2

(2) Financial review 2

(3) Cash flows review 3

(4) Future prospect 3

2. Basic approach for the selection of accounting standards 3

3. Consolidated financial statements 4

(1) Consolidated balance sheet 4

(2) Consolidated income statement and consolidated statement of comprehensive income 6

(3) Consolidated statement of changes in equity 8

(4) Consolidated statement of cash flows 9

(5) Notes to the consolidated financial statements 10

(Note on going concern) 10

(Change in accounting policy) 10

(Additional information) 10

(Segment accounting) 10

(Per share information) 10

(Subsequent events) 11

Note:

If there is any inconsistency or conflict between English and Japanese versions of this information, the

Japanese version shall prevail.

1

1. Management discussion and analysis (1) Summary of the business

During the fiscal year ended February 28, 2022, the Japanese economy has repeatedly downturn and recovered due to the frequent issuance of State of Emergency and Covid-19 quasi-emergency all over the country. In addition to this, the severe business environment continues, with concerns about rise in raw material prices and rising crude oil prices and transportation costs mainly due to the increase of geopolitical risks.

Under these circumstances, the Group's domestic business was affected by refraining from going out until the first half of the year, however in the third quarter of the current fiscal year, the flow of people recovered due to the lift of the State of Emergency, and at the same time, the temperature dropped, and showed a strong performance. Then, in the fourth quarter, despite the impact of the rapid expansion of Omicron variant, domestic sales of the fiscal year ended February 28, 2022, increased year-on-year. Furthermore, EC sales have increased by 110.6% year-on-year due to the successful promotion of OMO measures utilizing SNS. As a result, in the fiscal year ended February 28, 2022, domestic sales and gross profit significantly exceeded the same period of the previous year.

In addition, as the company continues to work on cost reductions, SG&A expenses ratio improved year-on-year, and operating profit and recurring profit significantly exceeded the same period of the previous year.

Regarding the US business in the overseas business, brand recognition for wealthy people in North America has increased, and the demand for the mainstay luxury made-in Japan denim is still strong, and by promoting a business model centered on EC and wholesale (for luxury department stores and select stores), the US business grew significantly. As for the Chinese Joint Venture with Belle International Holdings Limited (hereon, Belle), our strategic business partner within the Joint Venture, in the first half of the year, business performance was strong, however, due to the spread of the Covid-19 epidemic in China from last fall, although it was affected by action restrictions in the second half, EC growth also contributed to a significant increase in sales and profits in the Chinese business compared to the previous year.

As for the number during the fiscal year ended February 28, 2022, the number of domestic stores was 367 (278 directly managed, 89 through franchise) and the number of overseas stores was 6 (4 directly managed) - for a total of 373 stores. In addition, the number of stores in the Chinese retail business operated through Joint Venture with Belle has reached 332.

As a result of the above, in the fiscal year ended February 28, 2022, consolidated turnover was 59,139 million yen (16.9% increase from the prior year), operating profit was 2,752 million yen (109.7% increase from the prior year), recurring profit was 2,846 million yen (139.7% increase from the prior year), and net income attributable to shareholders of the Parent Company was 1,471 million yen (291.6% increase from the prior year).

(2) Financial review

Total assets, liabilities and equity as of the year ended February 28, 2022 are as follows:

(Total assets)

Total assets at the end of the current consolidated fiscal year increased by 288 million yen from the end of the previous consolidated fiscal year to 38,632 million yen.

This was mainly due to the decrease in Cash and cash equivalents by 913 million yen, the increase in Notes and trade receivables by 868 million yen, the increase in Inventories by 631 million yen, and the decrease in Consumables by 126 million yen.

(Liabilities)

Liabilities decreased by 1,236 million yen to 16,194 million yen from the end of the previous fiscal year. This was mainly due to the decrease in Notes and trade payables by 543 million yen, the repayment of Interest-bearing borrowings by 1,125 million yen, and the increase in Other payables by 184 million yen, and the increase in Current tax payable by 259 million yen.

(Equity)

Equity increased by 1,525 million yen to 22,437 million yen. This was mainly due to the decrease in Retained earnings by 1,158 million yen for the payment of dividends, the increase in Retained earnings by 1,471 million yen2

from net profit, the increase in Foreign currency translation reserve by 630 million yen, and the increase in Non-controlling interests by 582 million yen.

  • (3) Cash flows review

    Cash and cash equivalents decreased by 913 million yen to 15,010million yen. A summary of cash flows during the year is as follows:

    Cash flows from operating activities

    Net cash flows provided by operating activities totaled 1,995 million yen, mainly due to profit before taxation of 2,574 million yen, depreciation of 811 million yen, the increase in inventories by 621 million yen, and income taxes paid of 527 million yen.

    Cash flows from investing activities

    Net cash flows used by investing activities totaled 823 million yen, mainly due to purchase of property, plant and equipment of 452 million yen, and purchase of intangible assets of 390 million yen.

    Cash flows from financing activities

    Net cash flows provided by financing activities totaled 2,288 million yen, mainly due to the new short-term borrowings amounted to 2,000 million yen, repayment of short -term borrowings amounted to 3,000 million yen, and payment for dividend amounted to 1,158 million yen.

  • (4) Future prospect

The Covid-19 epidemic has not contained and has been prolonged, and the impact of action restrictions as an infection control measures on the economic activities of each country is large, and it will take more time for the full-scale recovery of the world economy. In addition, rising raw material prices and distribution costs are becoming apparent, and the future remains uncertain.

Under these circumstances, in order to promote narrowing down and strengthening our constitution, we will focus on selection and concentration,improvement of profitability, andimprovement of brand competitiveness as priority strategies for the domestic market. Promote initiatives such as building manufacturing that does not overproduce, improving business efficiency and customer convenience by strengthening OMO, transmitting a new "culture" and improving brand value and recognition by proposing a richer life. Furthermore, as a foundation to support the business, we will proactively make investments that will be the foundation for future growth, such as renewal of core systems, and in addition, we will work on reform of supply chain management and promoting measures to reduce costs.

Regarding overseas business, we will continue to position China as a medium-to long-term priority strategic region, and will strive to strengthen our business management system while maintaining continuous growth of our business in China. In addition, while promoting the strengthening of product planning capabilities for China, we will further strengthen efforts to expand new sales channels such as TikTok for EC. Furthermore, regarding the US business, we will work to further expand sales channels in EC and wholesale.

Regarding new businesses, we will utilize our strengths such as sales power and expansion capabilities in China to create new businesses that contribute to the realization of a sustainable society.

2.Basic approach for the selection of accounting standards

The Group prepares its consolidated financial statements based on the generally accepted accounting principles in Japan to allow comparisons with prior years and other companies.

Regarding the adoption of International Financial Reporting Standards, we shall continue to evaluate both internal and external environments before making a decision.

3

3. Consolidated financial statements (1) Consolidated balance sheet

(Unit: million yen)As at February 28, 2021

As at February 28, 2022

Assets

Current assets

Cash and cash equivalents

15,924

15,010

Notes and trade receivables

8,001

8,869

Inventories

4,918

5,550

Consumables

197

71

Others

348

343

Total current assets

29,390 29,846

Non-current assets

Property, plant and equipment

Building and leasehold improvements (net)

Land

Construction in progress

Others (net)

1,317 1,055

350 350

32 12

74 78

Total property, plant and equipment

1,773

1,496

Intangible assetsSoftware

701 568

Others

118 402

Total intangible assets

819

970

Investments and other assets

Investments in and advances to associates

1,597

1,603

Rental depositsDeferred tax assets

3,232 3,159

1,426 1,503

Others

102 52

Total investments and other assets

6,359

6,318

Total non-current assets

8,952 8,785

Total assets

38,343

38,632

4

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Baroque Japan Ltd. published this content on 14 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2022 06:14:10 UTC.