Takihyo : Consolidated Financial Results (2nd quarter end)

Consolidated Financial Results

for the Six Months Ended August 31, 2023

[Japanese GAAP]

October 11, 2023

Company name: Takihyo Co., Ltd.

Code number: 9982

URL: https://www.takihyo.co.jp

Stock exchange listing: Tokyo Stock Exchange (Standard Market), Nagoya Stock Exchange (Premier Market)

Representative: Kazuo Taki, Representative Director, CEO

Contact: Yuichiro Inaba, Section Leader, Corporate Planning

Phone: [phone]

Scheduled date of commencing dividend payments: November 8, 2023

Scheduled date for filing of quarterly securities report: October 13, 2023

Availability of supplementary briefing material on quarterly results: None

Schedule of quarterly results briefing session: None

(Figures are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Six Months Ended August 31, 2023 (March 1, 2023 to August 31, 2023)

(1) Consolidated Results of Operations (cumulative)					(% indicates changes from the previous corresponding period)
			Net sales					Operating profit		Ordinary profit		Profit attributable
									to owners of parent
			million yen			%			million yen	%		million yen			%	million yen		%
Six months ended	26,717			(6.3)				169	-	249			-	398		-
August 31, 2023
Six months ended	28,504			11.5				(338)	-	(119)			-	(466)		-
August 31, 2022
(Note) Comprehensive income: Six months ended August 31, 2023: ¥2,070 million [169.5%]
			Six months ended August 31, 2022: ¥768 million [-%]
		Earnings per share		Diluted earnings
					per share
					yen							yen
Six months ended	43.27						43.02
August 31, 2023
Six months ended	(50.76)							-
August 31, 2022
(2) Consolidated Financial Position
			Total assets							Net assets		Equity ratio		Net assets per share
				million yen				million yen	%				yen
As of August 31, 2023		46,338						29,847	64.2		3,226.65
As of February 28, 2023		47,121						27,868	58.9		3,014.62
(Reference) Equity: As of August 31, 2023: ¥29,752 million
	As of February 28, 2023: ¥27,740 million
2. Dividends
											Annual Dividends
	1st quarter end		2nd quarter end		3rd quarter end		Year end			Total
			yen							yen			yen		yen			yen
Fiscal year ended							10.00			-	10.00			20.00
February 28, 2023			-
Fiscal year ending								10.00
February 29, 2024			-
Fiscal year ending
February 29, 2024													-	10.00			20.00
(Forecast)

(Note) Revision of dividends forecast from recently announced figures: None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending February 29, 2024 (March 1, 2023 to February 29, 2024)

(% indicates changes from the previous corresponding period)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Earnings per share
		owners of parent
	million yen		%	million yen	%	million yen	%	million yen		%	yen
Full year	60,000		(2.9)	400	323.5	400	31.7	400		-	43.39
(Note) Revision of forecast results from recently announced figures: None

*Notes

1. Significant changes of subsidiaries during the period under review (affecting specified subsidiaries resulting in changes in 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 restatements
4. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Any changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Restatements: No
5. Total number of issued shares (common stock)
6. 1. Total number of issued shares at the end of the period (including treasury shares):

	August 31, 2023		9,500,000 shares
	February 28, 2023		9,500,000 shares
2) Total number of treasury shares at the end of the period:
	August 31, 2023		279,268 shares
	February 28, 2023		297,868 shares
3) Average number of shares during the period (cumulative):
	Six months ended August 31, 2023		9,218,074 shares
	Six months ended August 31, 2022		9,190,333 shares

• These consolidated quarterly financial results are outside the scope of quarterly review by certified public accountants or audit firms.
• Explanation of the proper use of performance forecast and other notes

(Note on the forward-looking statements)

The earnings projections and other forward-looking statements herein are based on available information and certain assumptions deemed reasonable at the time of the release of this document, and do not constitute a promise by the Company to achieve those projections. In addition, actual results may differ significantly from the projections due to various factors.

1.	Qualitative Information on Financial Results for the Period under Review	2
	(1)	Qualitative Information on Results of Operations	2
	(2)	Qualitative Information on Financial Position	2
	(3)	Explanation of Consolidated Forecast and Other Forward-looking Statements	2
2.	Consolidated Financial Statements and Primary Notes	3
	(1)	Consolidated Balance Sheets	3
	(2)	Consolidated Statements of Income and Comprehensive Income	5
	(3)	Notes to Quarterly Consolidated Financial Statements	7
		(Notes on Going Concern Assumption)	7
		(Notes in Case of Significant Changes in Shareholders' Equity)	7
3.	Others	7
	(Significant Events on Going Concern Assumption)	7

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1. Qualitative Information on Financial Results for the Period under Review

(1) Qualitative Information on Results of Operations

For the six months ended August 31, 2023, customer interest in buying clothing remained stagnant despite positive signs, such as the lifting of COVID-19pandemic-related restrictions, an increase in personal income resulting from wage increase, ongoing monetary policy easing, and a resurgence in inbound tourism.

The Company has been working on the "Revitalization Plan (Plan to Run a Chronic Surplus Again)" as a three-year plan for the fiscal years from 2022 to 2024. As for the recovery of earning power for our wholesale business, our biggest challenge, we have been focusing on improving the gross profit margin by taking a thorough sales stance to secure appropriate profits while curbing unprofitable orders and increasing added value. At the same time, we have also been working on expanding the proportion of production in Southeast Asia, given the continuous increase in production costs due to the rising energy prices and the persistently weak yen trend.

As a result, for the six months ended August 31, 2023, net sales, operating profit, ordinary profit, and profit attributable to owners of parent were ¥26,717 million (a 6.3% decrease from the previous corresponding period), ¥169 million (an operating loss of ¥338 million in the previous corresponding period), ¥249 million (an ordinary loss of ¥119 million in the previous corresponding period), and ¥398 million yen (a loss of ¥466 million in the previous corresponding period), respectively.

1. Qualitative Information on Financial Position

1. Assets

Current assets decreased by ¥1,220 million compared with the end of the previous fiscal year, to ¥21,691 million, due primarily to a decrease of ¥2,221 million in notes and accounts receivable - trade, despite an increase of ¥1,263 million in derivatives.

Non-current assets increased by ¥437 million compared with the end of the previous fiscal year, to ¥24,646 million, due primarily to an increase of ¥439 million in investment securities.

As a result, total assets decreased by ¥782 million compared with the end of the previous fiscal year, to ¥46,338 million.

2) Liabilities

Liabilities decreased by ¥2,761 million compared with the end of the previous fiscal year, to ¥16,490 million, due primarily to decreases of ¥813 million in notes and accounts payable - trade and ¥2,150 million in borrowings.

3) Net assets

Net assets increased by ¥1,978 million compared with the end of the previous fiscal year, to ¥29,847 million, due primarily to increases of ¥305 million in retained earnings, ¥304 million in valuation difference on available-for-sale securities, and ¥1,346 million in deferred gains or losses on hedges.

(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

The financial results forecast has not changed since its earlier announcement on April 14, 2023.

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2. Consolidated Financial Statements and Primary Notes

(1) Consolidated Balance Sheets

			(Millions of yen)
		As of February 28, 2023	As of August 31, 2023
Assets
Current assets
Cash and deposits	3,333	3,539
Notes and accounts receivable - trade	12,366	10,145
Inventories	6,267	6,020
Other	949	1,988
Allowance for doubtful accounts		(5)	(2)
Total current assets		22,912	21,691
Non-current assets
Property, plant and equipment
Land	16,660	16,660
Other, net		3,350	3,239
Total property, plant and equipment		20,010	19,899
Intangible assets		59	170
Investments and other assets
Investment securities	3,000	3,439
Retirement benefit asset	112	88
Other	1,065	1,090
Allowance for doubtful accounts		(39)	(41)
Total investments and other assets		4,138	4,577
Total non-current assets		24,208	24,646
Total assets		47,121	46,338

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						(Millions of yen)
				As of February 28, 2023	As of August 31, 2023
	Liabilities
	Current liabilities
	Notes and accounts payable - trade		5,632		4,819
	Short-term borrowings	5,000	2,500
	Current portion of long-term borrowings		1,200		1,400
	Income taxes payable	88	109
	Provisions		89		82
	Other		2,364	2,162
	Total current liabilities			14,375		11,074
	Non-current liabilities
	Long-term borrowings		3,000		3,150
	Retirement benefit liability	52	46
	Provision for retirement benefits for		11		11
	directors (and other officers)
	Asset retirement obligations	205	212
	Other			1,607		1,996
	Total non-current liabilities		4,876	5,416
	Total liabilities			19,252		16,490
	Net assets
	Shareholders' equity
	Share capital	3,622	3,622
	Capital surplus		4,148		4,148
	Retained earnings	19,844	20,149
	Treasury shares			(556)		(521)
	Total shareholders' equity		27,058	27,398
	Accumulated other comprehensive income
	Valuation difference on available-for-sale	1,127	1,432
	securities
	Deferred gains or losses on hedges		(642)		704
	Revaluation reserve for land	0	0
	Foreign currency translation adjustment		125		149
	Remeasurements of defined benefit plans		71	66
	Total accumulated other comprehensive		682		2,353
	income
	Share acquisition rights	127	95
	Total net assets				27,868		29,847
	Total liabilities and net assets		47,121	46,338

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1. Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income

		(Millions of yen)
	For the six months	For the six months
	ended August 31, 2022	ended August 31, 2023
Net sales	28,504	26,717
Cost of sales	23,129	20,792
Gross profit	5,374	5,925
Selling, general and administrative expenses	5,713	5,755
Operating profit (loss)	(338)	169
Non-operating income
Interest income	3	4
Dividend income	52	45
Foreign exchange gains	162	48
Other	34	30
Total non-operating income	252	128
Non-operating expenses
Interest expenses	32	47
Other	1	0
Total non-operating expenses	33	47
Ordinary profit (loss)	(119)	249
Extraordinary income
Gain on sale of investment securities	275	-
Gain on sale of non-current assets	-	203
Other	-	22
Total extraordinary income	275	225
Extraordinary losses
Premium allowance of retirement	491	-
Other	48	0
Total extraordinary losses	539	0
Profit (loss) before income taxes	(383)	475
Income taxes	82	76
Profit (loss)	(466)	398
Profit (loss) attributable to owners of parent	(466)	398

―5―

Consolidated Statements of Comprehensive Income

					(Millions of yen)
		For the six months	For the six months
		ended August 31, 2022	ended August 31, 2023
Profit (loss)		(466)			398
Other comprehensive income
Valuation difference on available-for-sale		(115)			304
securities
Deferred gains or losses on hedges	1,232		1,346
Foreign currency translation adjustment		121			24
Remeasurements of defined benefit plans,	(4)	(4)
net of tax
Total other comprehensive income			1,234			1,671
Comprehensive income		768		2,070
Comprehensive income attributable to
Comprehensive income attributable to	768		2,070
owners of parent

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1. Notes to Quarterly Consolidated Financial Statements (Notes on Going Concern Assumption)
   Not applicable.

(Notes in Case of Significant Changes in Shareholders' Equity) Not applicable.

3. Others

(Significant Events on Going Concern Assumption)

The Group recorded negative operating cash flows for three consecutive terms in the previous fiscal year. In light of the above, the Group recognizes that events or situations that raise significant doubts about the going concern assumption exist.

In order to resolve this situation as soon as possible, the Group has been working on "Revitalization Plan (Plan to Run a Chronic Surplus Again)."

In terms of funds, the Group has cash and deposits of ¥3,539 million as of August 31, 2023. In order to efficiently raise operating funds, we have concluded an overdraft agreement with our bank to secure the necessary funds. In addition, the Group owns investment securities of ¥3,439 million and land that is not pledged of ¥16,660 million. Furthermore, as the Group has a sufficient financial base with a net asset balance of ¥29,847 million, it believes that there is no significant uncertainty regarding a going concern assumption.

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