Consolidated Financial Summary for

Baroque Japan Limited

Financial Information for the year ended February 28 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

(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, 2021, due to the effects of the Covid-19 epidemic globally, the Japanese economy remained in a difficult situation with both economic activity stagnating and sluggish personal consumption. Although regarding future economic outlooks, due to the effects of various policies and improvement of various national economies, it is expected that the domestic economy will return to pace, it is necessary to pay close attention to the potential impact of downside risks in domestic and overseas economies due to resurgence of infection. In that sense, uncertainty still remains in the current situation.

Under these circumstances, the spread of the Covid-19 epidemic has had a significant impact on the business performance of the Group's domestic business across the entire fiscal year. While sales showed a recovery trend from the beginning of autumn when the 2nd wave of Covid-19 infections subsided, domestic sales slowed again due to the effect of curtailed business hours and the public refraining from going out due to the reissuing of a State of Emergency from January onwards. Domestic sales were illustrated having decreased year on year. In addition, however, it should be noted that domestic EC sales are growing significantly by both strengthening and promoting EC operations such as through the adaptation of Staff Start, working to improve live commerce capabilities, et cetera. Subsequently, in addition to thorough proper sales and inventory control, we worked vigorously to reduce SG & A expenses such as business consignment expenses, advertising expenses, and through reduction of personnel expenses such as reduction of executive compensation - allowing domestic business to maintain profitability.

As a measure to strengthen customer contact points in line with the new normal situation in Covid-19 epidemic, we are promoting efforts to improve convenience for customers by strengthening EC contacts with various tools such as remote customer service. Furthermore, we will strengthen our efforts and further work on sustainability from three aspects which are environment, society and people by manufacturing that does not overproduce and actively utilize environmentally friendly materials.

Regarding the Chinese Joint Venture with Belle International Holdings Limited (hereon, Belle), our strategic business partner within the Joint Venture, the Chinese market is recovering quickly, and the sales of both retail companies (equity method affiliates) and wholesale companies (consolidated subsidiaries) have been on a recovery trend since May, in line with the return of personal consumption in China. As live commerce in China has become more sophisticated, EC sales in China are increasing. Additionally, in regards to our US business operations, MOUSSY VINTAGE, which was able to capture the growing need for denim within the market, was able to achieve strong sales.

As for the number during the fiscal year ended February 28, 2021, the number of domestic stores was 370 (285 directly managed, 85 through franchise) and the number of overseas stores was 5 (5 directly managed) - for a total of 375 stores. In addition, the number of stores in the Chinese retail business operated through Joint Venture with Belle has reached 299.

As a result of the above, in the fiscal year ended February 28, 2021, consolidated turnover was 50,590 million yen (23.2% decrease from prior year), operating profit was 1,312 million yen (71.5% decrease from prior year), recurring profit was 1,187 million yen (74.1% decrease from prior year), and net income attributable to shareholders of the Parent Company was 375 million yen (86.9% decrease from prior year).

(2) Financial review

Total assets, liabilities and equity as of the year ended February 28, 2021 are as follows:

(Total assets)

Total assets at the end of the current consolidated fiscal year increased by 60 million yen from the end of the previous consolidated fiscal year to 38,343 million yen.

This was mainly due to the decrease in Cash and cash equivalents by 208 million yen, the increase in Notes and trade receivables by 545 million yen and the decrease in Inventories by 245 million yen.

(Liabilities)

Liabilities increased by 641 million yen to 17,431 million yen from the end of the previous fiscal year. This was

―2―

mainly due to the increase in Notes and trade payables by 430 million yen, the increase Interest-bearing borrowings in by 2,017 million yen, and the decrease in Other payables by 922 million yen, and the decrease in Current tax payable by 788 million yen.

(Equity)

Equity decreased by 580 million yen to 20,911 million yen. This was mainly due to the decrease in Retained earnings by 1,374 million yen for the payment of dividends, the increase in Retained earnings by 375 million yen from net profit, the decrease in Treasury stock by 56 million yen, and the increase in Non-controlling interests by 334 million yen.

(3) Cash flows review

Cash and cash equivalents decreased by 208 million yen to 15,924 million 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 142 million yen, mainly due to profit before taxation of 836 million yen, depreciation of 945 million yen, and income taxes paid of 1,212 million yen.

（Cash flows from investing activities）

Net cash flows used by investing activities totaled 920 million yen, mainly due to purchase of property, plant and equipment of 548 million yen, and purchase of intangible assets of 411 million yen.

（Cash flows from financing activities）

Net cash flows provided by financing activities totaled 615million yen, mainly due to the new short-term borrowings amounted to 3,000 million yen, long-term borrowings amounted to 3,000 million yen, and repayment of long-term borrowings amounted to 3,982 million yen, and payment for dividend amounted to 1,374million yen.

(4) Future prospect

With the Covid-19 epidemic still continuing to spread, although vaccination has started, restrictions on the economic activities in various countries - such as restrictions on going out as an infection prevention measure - have had a large impact on the economy and it seems that it will still take time for a full-scale recovery of the world economy. Even domestically in Japan, with continuing effects on employment and the income environment, it remains necessary to pay attention to the impact on the market in such an uncertain future.

In regards to our domestic business operations, we aim to improve profitability and brand competitiveness, using a strategic scrap-and-build process towards our stores and promoting efforts to ensure that we do not overproducing across our manufacturing process. In addition to these steps, to improve the foundation that supports our business operations, we aim to actively invest in the growth base of the company, renew core systems with New Retail principles and strategies at its base, and promote the strengthening of our digital marketing activities.

In regards to our overseas business operations, we will continue to position China as a strategically important region through striving to strengthen our business management system to maintain continuous growth of our business operations in China

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 29, 2020

As at February 28, 2021

Assets

Current assets

Cash and cash equivalents

16,133

15,924

Notes and trade receivables

7,455

8,001

Inventories

5,163

4,918

Consumables

61

197

Others

472

348

Provision for doubtful accounts

△0

－

Total current assets

29,285

29,390

Non-current assets

Property, plant and equipment

Building and leasehold improvements

1,544

1,317

(net)

Land

350

350

Construction in progress

7

32

Others (net)

104

74

Total property, plant and equipment

2,005

1,773

Intangible assets

Software

566

701

Others

74

118

Total intangible assets

640

819

Investments and other assets

Investments in and advances to

1,666

1,597

associates

Rental deposits

3,334

3,232

Deferred tax assets

1,219

1,426

Others

130

102

Total investments and other assets

6,351

6,359

Total non-current assets

8,997

8,952

Total assets

38,282

38,343

―4―

(Unit: million yen)

As at February 29, 2020

As at February 28, 2021

Liabilities

Current liabilities

Notes and trade payables

3,442

3,872

Short-terminterest-bearing borrowings

－

3,000

Interest-bearing borrowings

3,982

125

Other payables

1,868

946

Accrued expenses

653

641

Current tax payable

1,338

550

Deposits received

25

10

Provision for bonus

261

297

Provision for reinstatement costs

66

9

Others

211

180

Total current liabilities

11,849

9,632

Non-current liabilities

Interest-bearing borrowings

3,125

6,000

Other payables

111

15

Provision for retirement benefits

18

17

Deposits received

470

459

Provision for reinstatement costs

1,056

1,120

Deferred tax liabilities

64

65

Others

93

121

Total non-current liabilities

4,940

7,798

Total liabilities

16,790

17,431

Equity

Shareholders' equity

Share capital

8,258

8,258

Share premium

8,075

8,059

Retained earnings

4,854

3,855

Treasury stock

△749

△692

Total shareholders' equity

20,439

19,480

Other reserves

Deferred gains or losses on hedges

△0

－

Foreign currency translation reserve

△213

△170

Total other reserves

△213

△170

Non-controlling interests

1,267

1,601

Total equity

21,492

20,911

Total liabilities and equities

38,282

38,343

―5―

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

Consolidated income statement

(Unit: million yen)

For the year ended

For the year ended

February 29, 2020

February 28, 2021

Turnover

65,880

50,590

Cost of goods sold

28,043

22,742

Gross profit

37,837

27,847

Selling, general and administrative expenses

33,232

26,535

Operating profit

4,604

1,312

Non-operating income

Interest income

7

6

Gain on foreign exchange

－

44

Share of profit of associates

24

－

Rent income

29

13

Subsidy income

93

81

Other income

17

24

Total non-operating income

173

170

Non-operating expenses

Interest on bank and other loans

42

34

Finance charges

27

27

Loss on disposals of property, plant and

34

9

equipment

Loss on foreign exchange

52

－

Share of loss of associates

－

177

Other expenses

35

48

Total non-operating expenses

19

296

Recurring profit

4,586

1,187

Extraordinary income

Subsidies for employment adjustment

－

243

Total Extraordinary income

－

243

Extraordinary expenses

Loss due to temporary store closures

－

397

Impairment loss

140

197

Total extraordinary expenses

140

594

Profit before taxation

4,446

836

Corporation tax, inhabitants tax and business

1,119

490

tax

Corporate tax refund

－

△168

Deferred income tax

201

△170

Total income tax

1,321

152

Profit for the year

3,125

683

Profit attributable to non-controlling interests

253

307

Net profit

2,871

375

―6―

Consolidated statement of comprehensive income

(Unit: million yen)

For the year ended

For the year ended

February 29, 2020

February 28, 2021

Profit for the year

3,125

683

Other comprehensive income

Deferred gains or losses on hedges

Foreign currency translation

Share of other comprehensive income of associates

Other comprehensive income

Comprehensive income

Attributable to

1

0

△94

43

△66

24

△159

67

2,965

751

Equity shareholders

2,746

419

Non-controlling interests

219

332

―7―

(3) Consolidated statement of changes in equity

For the year ended February 29, 2020

(Unit: million yen)

Shareholders' equity

Other reserves

Non-

Total

Deferred

Foreign

controlling

Total equity

Share

Share

Retained

Treasury

gains or

currency

Total other

shareholder

capital

premium

earnings

stock

losses on

translation

reserves

interests

s' equity

hedges

reserve

Balance at

beginning of

8,234

8,051

3,374

△258

19,401

△1

△87

△88

1,052

20,365

year

Changes during

year

Issuance of

24

24

48

48

shares

Dividend

△1,391

△1,391

△1,391

Purchase

of

△497

△497

△497

treasury stock

Disposal

of

7

7

7

treasury stock

Net profit

2,871

2,871

2,871

Net changes

other than

1

△126

△125

214

89

shareholders'

equity

Total changes

24

24

1,479

△490

1,038

1

△126

△125

214

1,127

during year

Balance at end

8,258

8,075

4,854

△759

20,439

△0

△213

△213

1,267

21,492

of year

For the year ended February 28, 2021

(単位：百万円)

Shareholders' equity

Other reserves

Non-

Total

Deferred

Foreign

controlling

Total equity

Share

Share

Retained

Treasury

gains or

currency

Total other

shareholder

capital

premium

earnings

stock

losses on

translation

reserves

interests

s' equity

hedges

reserve

Balance at

beginning of

8,258

8,075

4,854

△749

20,439

△0

△213

△213

1,267

21,492

year

Changes during

year

Dividend

△1,374

△1,374

△1,374

Disposal

of

△16

56

39

39

treasury stock

Net profit

375

375

375

Net changes

other than

0

43

43

334

377

shareholders'

equity

Total changes

－

△16

△998

56

△958

0

43

43

334

△580

during year

Balance at end

8,258

8,059

3,855

△692

19,480

－

△170

△170

1,601

20,911

of year

―8―

(4) Consolidated statement of cash flows

(Unit: million yen)

For the year ended

For the year ended

February 29, 2020

February 28, 2021

Cash from operating activities

Profit before taxation

Depreciation

Impairment

Increase (△decrease) in provision for bonus

Interest income

Interest on bank and other loans

Foreign exchange losses (△gain)

Share of loss (△profit) of associates

Loss on disposals of property, plant and equipment

Subsidies for employment adjustment

Decrease (△increase) in trade and other receivables

Decrease (△increase) in inventories

Increase (△decrease) in trade and other payables

Increase (△decrease) in other payables

Increase (△decrease) in provision for retirement benefits

Others

4,446

836

926

945

140

197

0

36

△7

△6

69

61

13

6

△24

177

34

9

－

△243

△283

△474

274

239

△1,366

458

421

△899

△4

△1

17

△348

Subtotal

4,659

993

Interest and dividend income received

7

6

Interest expenses paid

△59

△57

Income taxes paid

△1,014

△1,212

Corporate tax refund

－

168

Subsidies for employment adjustment received

－

243

Net cash from operating activities

Cash from investing activities

Purchase of property, plant and equipment Purchase of intangible assets

Payments for rental deposits

Proceeds from collection of rental deposits Payments for reinstatement

Net cash from investing activities Cash from financing activities

Proceeds from short-term borrowings Proceeds from long-term borrowings

Repayment of long-term borrowings Payments for treasury stock

Payment for dividend

Repayment of fixed assets installment payables

Repayment of lease obligations

3,593

142

△857

△548

△257

△411

△373

△336

577

434

△175

△58

△1,085

△920

－

3,000

－

3,000

△2,901

△3,982

△497

－

△1,391

△1,374

△57

△22

△5

△5

Net cash from financing activities

△4,853

615

Effect of exchange rate change on cash and cash

△25

△46

equivalents

Net increase (△ decrease) in cash and cash

△2,370

△208

equivalents

Cash and cash equivalents at beginning of year

18,504

16,133

Cash and cash equivalents at end of year

16,133

15,924

―9―

(5) Notes to the consolidated financial statements

(Note on going concern)

No significant doubt on the ability to continue as a going concern.

(Change in accounting policy) No such change.

(Additional Information)

(About the uncertainty of accounting estimates)

The impact of Covid-19 epidemic can be seen in consumers refraining from going out and in a decrease of the number of customers visiting stores due to following requests for curtailment of business hours and operation. Given the current situation of the Covid-19 epidemic, we anticipate gradual recovery in business performance throughout regions where economic activity has resumed, but expect the impact of the Covid-19 epidemic on the Group to remain to a certain extent until the end of the next consolidated fiscal year. Under the assumption that business performance will recover by about 90% by year, we shall make accounting estimates for impairment of fixed assets and recoverability of deferred tax assets.

Moreover, it is unclear when Covid-19 pandemic will end and if it takes more time, it may affect business performance and financial situation of our Group.

(Segment accounting)

The Group is operating as one segment with respect to apparel design and selling business.

(Per share information)

For the year ended

For the year ended

February 29, 2020

February 28, 2021

Net assets per share

562.48

Yen

536.18

Yen

Net profit per share

79.22

Yen

10.44

Yen

Diluted net profit per share

79.10

Yen

－ Yen

(Note) 1. The basis of calculating the net assets per share is as follows:

Item

For the year ended

For the year ended

February 29, 2020

February 28, 2021

Net assets (million yen)

21,492

20,911

Deduction from net assets (million yen)

1,267

1,601

(Non-controlling interests) (million yen)

1,267

1,601

Net assets applicable to common stock shareholders

20,225

19,310

(million yen)

Year-end number of shares of common stock used for

35,957,400

36,014,300

calculation of net assets per share

―10―

2. The basis of calculating the net profit and diluted net profit per share is as follows

Item

For the year ended

For the year ended

February 29, 2020

February 28, 2021

Net profit per share

Net profit (million yen)

2,871

375

Amount not applicable to common stock shareholders

－

－

(million yen)

Net profit applicable to common stock shareholders

2,871

375

(million yen)

Average number of shares of common stock

36,248,582

35,990,013

outstanding during the year

Diluted net profit per share

Adjusted net profit (million yen)

－

－

Increase in number of common stock

52,604

－

(from restricted stock units)

(52,604)

－

Potential stock not included in the calculation of diluted

Not applicable

Not applicable

net profit per share since there was no dilutive effect

３．The Company has introduced a performance linked compensation system, Board Benefit Trust or BBT. The treasury stock for that purpose was deducted from the total number of common stock when the net profit per share, diluted net profit per share, and net assets per share were calculated.

４．The diluted net profit per share is not disclosed for the current year because there are no potentially dilutive common shares.

(Subsequent events)

No significant subsequent events.

―11―

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Baroque Japan Ltd. published this content on 14 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2021 06:04:01 UTC.