Baroque Japan : Summary of Financial Result for the Third Quarter 2022

Consolidated Financial Summary for

Baroque Japan Limited

Quarterly Financial Information for the period ended November 30, 2021

Tokyo Stock Exchange First Section, 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
2. Consolidated financial statements and notes	3
(1)	Consolidated balance sheet	3
(2)	Consolidated income statement and consolidated statement of comprehensive income	5
(3)	Notes to the consolidated financial statements	7
	(Note on going-concern)	7
	(Change in shareholders' equity)	7
	(Change in accounting policy)	7
	(Segment accounting)	7
	(Additional information)	7
	(Subsequent events)	7

Note:

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

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1. Management discussion and analysis

(1) Summary of the business

During the consolidated cumulative third quarter, in regards to the Japanese economy, due to the frequent issuance of State of Emergency due to the spread of Covid-19 epidemic, economic activities were restricted and personal consumptions also remains in a severe situation. The economic outlook remains uncertain as the spread of new variant are seen all around the world.

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 established price sales of outerwear and other items were strong. In addition, domestic EC sales also remains strong, growing 112.6% year-on-year. As a result, domestic sales and gross profit for the consolidated cumulative third quarter 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 Chinese Joint Venture with Belle International Holdings Limited (hereon, Belle), our strategic business partner within the Joint Venture, although the spread of Covid-19 epidemic was seen in some areas, the Chinese business was strong due to the growth of EC sales. Additionally, in regards to our US business operations, demand for mainstay high-end made in Japan denim remains strong, resulting in significant increases in sales and profits.

As of November 30, 2021, we have 374 stores in Japan (285 directly operated, 89 through franchise) and 6 overseas stores (5 directly operated) totaling in 380 stores. In addition, our Chinese retail business operations conducted alongside our joint venture partner Belle have grown to include 313 storefronts.

As a result of the above, the third quarter of the current consolidated cumulative period saw a consolidated turnover of 43,104 million yen (19.4% increase from the same term last year), operating profit of 2,432 million yen (105.1% increase from the same term last year), recurring profit of 2,650 million yen (200.1% increase from the same term last year), and net income attributable to shareholders of the parent company was 1,515million yen (579.1% increase from the same term last year).

(2) Financial review

During the 3 months' period ended November 30, 2021, assets increase by 1,534 million yen to 39,877 million yen, mainly due to the decrease in Cash and cash equivalents by 3,993 million yen, the increase in Notes and trade receivables by 2,826 million yen, and the increase in Inventories by 2,682 million yen.

Liabilities increase by 393 million yen to 17,824 million yen, mainly due to the decrease in Short-term interest- bearing borrowings by 1,000 million yen, the decrease in Interest-bearing borrowings by 125 million yen, while the increase in Notes and trade payables by 988 million yen, the increase in Other payables by 193 million yen, and the increase in Current tax payable by 316 million yen.

Equity increase by 1,140million yen to 22,052 million yen, mainly due to the decrease in Retained earnings by 1,158 million yen for the payment of dividends, the increase in Retained earnings by 1,515 million yen from net profit, the increase in Foreign currency translation reserve by 406 million yen, and the increase in Non-controlling interests by 378 million yen.

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2. Consolidated financial statements

(1) Consolidated balance sheet

					(Unit: million yen)
				As at February 28, 2021	As at November 30, 2021
Assets
	Current assets
		Cash and cash equivalents	15,924	11,931
		Notes and trade receivables	8,001	10,827
		Inventories	4,918	7,600
		Consumables	197	85
		Others	348	397
		Total current assets	29,390	30,843
	Non-current assets
		Property, plant and equipment
			Building and leasehold improvements	1,317	1,300
			(net)
			Land	350	350
			Construction in progress	32	7
			Others (net)	74	88
			Total property, plant and equipment	1,773	1,746
		Intangible assets
			Software	701	586
			Others	118	328
			Total intangible assets	819	915
		Investments and other assets
			Investments in and advances to	1,597	1,642
			associates
			Rental deposits	3,232	3,170
			Deferred tax assets	1,426	1,489
			Others	102	68
			Total investments and other assets	6,359	6,371
		Total non-current assets	8,952	9,033
	Total assets	38,343	39,877

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				(Unit: million yen)
			As at February 28, 2021	As at November 30, 2021
Liabilities
	Current liabilities
	Notes and trade payables		3,872	4,861
	Short-terminterest-bearing borrowings	3,000	2,000
	Interest-bearing borrowings		125	3,000
	Other payables	946	1,139
	Accrued expenses		641	503
	Current tax payable	550	866
	Deposits received		10	5
	Provision for bonus	297	295
	Provision for reinstatement costs		9	12
	Others	180	256
	Total current liabilities		9,632	12,939
	Non-current liabilities
	Interest-bearing borrowings		6,000	3,000
	Other payables	15	15
	Deferred tax liabilities		65	71
	Deposits received	459	483
	Provision for retirement benefits		17	19
	Provision for reinstatement costs	1,120	1,123
	Others		121	171
	Total non-current liabilities		7,798	4,884
	Total liabilities		17,431	17,824
Equity
	Shareholders' equity
	Share capital	8,258	8,258
	Share premium		8,059	8,059
	Retained earnings	3,855	4,212
	Treasury stock		△692	△692
	Total shareholders' equity	19,480	19,837
	Other reserves
	Foreign currency translation reserve	△170	235
	Total other reserves		△170	235
	Non-controlling interests		1,601	1,979
	Total equity		20,911	22,052
Total liabilities and equities	38,343	39,877

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