TOLI : Financial Announcement for 2nd Quarter of the Year Ending March 2023

Financial Announcement for 2nd Quarter of the Year Ending March 2023 [Japan standard]

(Consolidated)

				November 2, 2022
Company name: TOLI Corporation	Stock Exchange:	Tokyo Stock Exchange
Code Number:	7971	URL https://www.toli.co.jp
Representative	(Position)	President and Representative Director	(Name) Motohiro Nagashima
Official responsible	(Position)	Managing Executive Officer, Director,	(Name) Yozo Araki	TEL [phone]
for inquiries		Administrative Division and Manager, Accounting
		and Finance Department

Scheduled date for submission of quarterly reports	November 10, 2022
Scheduled date for start of dividend payments	-
Preparation of supplementary explanatory materials for the financial announcement	:	Yes
Holding of a briefing on the quarterly financial announcement	:	None

(Amounts of less than 1 million yen are rounded off)

1. Consolidated results for the 2nd quarter of the year ending March 2023 (April 1, 2022 to September 30, 2022)

(1) Consolidated results (year to date)					(% shows change for the quarter compared with the same quarter of the previous year)
			Net Sales		Operating Income	Ordinary Income	Profit Attributable to Owners of
					Parent
			Million yen	%		Million yen		%	Million yen			%	Million yen	%
Q2 for year ending March		42,754	6.3	(68)		-			17			-	(67)	-
2023
Q2 for year ended March		40,225	4.8	(263)		-			(34)			-	(3)	-
2022
[Note] Comprehensive income for Q2 for year ending March 2023	23 million yen (-82.4%)
			Q2 for year ended March 2022	131 million yen (764.7%)
				Profit per Share				Profit per Share - Diluted
							Yen						Yen
Q2 for year ending March					(1.13)				-
2023
Q2 for year ended March					(0.05)				-
2022
(2)	Consolidated assets
				Total Assets								Net Assets		Capital-to-asset Ratio
						Million yen					Million yen				%
Q2 for year ending March					78,152						37,790				48.0
2023
Year ended March 2022					79,982						38,285				47.5
(Reference) Equity capital:	Q2 for year ending March 2023:			37,527 million yen
			Year ended March 2022:			38,013 million yen
2.	Dividend payments
													Annual Dividends
					End of Q1			End of Q2				End of Q3		End of Year		Total
					Yen					Yen		Yen			Yen		Yen
Year ended March 2022			-						0.00			-				8.00		8.00
Year ending March 2023			-						0.00
Year ending March 2023 (forecast)											-				8.00		8.00

[Note] Adjustment from most recently published dividend forecast: None

3. Consolidated forecasts for the year ending March 2023 (April 1, 2022 to March 31, 2023)

(Percentages represent changes from the previous year)

	Net Sales		Operating Income	Ordinary Income		Profit Attributable to	Profit per
			Owners of Parent	Share
	Million yen		%	Million yen	%	Million yen		%	Million yen	%	Yen
Full term	94,500		6.8	1,850	110.7	2,000		60.7	1,200	66.6	19.93

[Note] Adjustment from most recently published performance projections: None

*Notes

1. Significant changes to subsidiaries during the consolidated cumulative period for this quarter (changes for a specified subsidiary entailing a change in the scope of consolidation): None
2. Application of specific accounting procedure for creation of quarterly consolidated financial statement: None
3. Changes in accounting policies, changes in accounting estimates, and representation of amendments

[1]	Changes in accounting policies accompanying revisions to accounting standards	: None
[2]	Changes in accounting policies other than [1]	: None
[3]	Changes in accounting estimates	: None
[4]	Representation of amendments	: None

(4) Number of outstanding shares (ordinary shares)

1. Number of outstanding shares at the end of year (including treasury shares)
2. Number of treasury shares at end of year
3. Average number of shares during the term (quarterly cumulative)

Q2 for year ending	66,829,249 shares	Year ended March	66,829,249 shares
March 2023	2022
Q2 for year ending	6,642,980 shares	Year ended March	6,494,889 shares
March 2023		2022
Q2 for year ending	60,207,572 shares	Q2 for year ended	61,187,046 shares
March 2023	March 2022

• Quarterly Financial Announcement is out of the scope of quarterly review by a certified public accountant or an audit corporation
• Explanation of the appropriate use of performance projections and other special instructions

The financial forecasts and other descriptions related to future events presented in this document are based on information currently available and certain assumptions judged as reasonable. As such, the financial forecasts and future descriptions are not considered to ensure the fulfillment thereof. Actual financial performance may vary significantly due to various factors. For details, such as assumptions for financial forecasts and cautions when using financial forecasts, please refer to "1. Qualitative information regarding quarterly results - (3) Explanation concerning future predictive information, such as consolidated forecasts" on page 3 of the attachment.

• Contents of the supplementary materials

1.	Qualitative information regarding quarterly results ················································································	2
	(1)	Explanation of the management performance ·················································································	2
	(2)	Explanation of the financial situation···························································································	3
	(3)	Explanation concerning future predictive information, such as consolidated forecasts ·································	3
2.	Quarterly consolidated financial statements and major notes ·····································································	4
	(1)	Quarterly consolidated balance sheet···························································································	4
	(2)	Quarterly consolidated statement of income and consolidated statement of comprehensive income ·················	6
		Quarterly consolidated statement of income	6
		First six months ·················································································································
		Quarterly consolidated statement of comprehensive income	7
		First six months ·················································································································
	(3)	Quarterly consolidated statement of cash flows···············································································	8
	(4)	Notes on consolidated financial statements····················································································	9
		(Notes on the assumption of the company as a going concern) ··························································	9
		(Notes when there are significant changes in amounts of shareholders' equity) ·······································	9
		(Segment information, etc.) ···································································································	9

- 1 -

1. Qualitative information regarding quarterly results

1. Explanation of the management performance

During the first half of the consolidated fiscal year under review, the outlook for the Japanese economy became increasingly uncertain. This was because concerns over inflation increased due to supply chain disruptions caused by heightened geopolitical risks and the rapid depreciation of the yen, despite a pickup in personal consumption amid gradual normalization of daily life.

The construction industry, which is closely related to our Group's business, continues to experience a recovery in non- residential investment, but the business environment remains unstable as concerns over the supply of various building materials increase due to the deterioration of the environment for raw material procurement.

In the Medium-term Business Plan "SHINKA Plus ONE" to realize our long-term vision "TOLI VISION 2030", despite such circumstances, our Group promotes five key strategies: A. Reinforcement of core businesses, B. Expanding the growth of promising business, C. Creation of a fifth business, D. Enhancement of capabilities across the Group, and E. Building a business base that supports growth. In the fiscal year under review, to cope with the several rounds of rising raw material costs since last year, we focused on reducing manufacturing costs by having in-house production of raw nylon yarn for carpet tiles and improving the ratio of recycled raw materials used. We also worked to improve earnings by announcing the second and third sales price revisions in May and September (*the first sales price revision was implemented last fall).

As a result, for the first half of the consolidated period under review, the Company posted net sales of 42,754 million yen (up 6.3% compared with the same period of the previous year), operating loss of 68 million yen (operating loss of 263 million yen for the same period of the previous year), ordinary income of 17 million yen (ordinary loss of 34 million yen for the same period of the previous year), and loss attributable to owners of parent of 67 million yen (loss attributable to owners of parent of 3 million yen for the same period of the previous year).

Performance by segment is as follows. This information includes business between segments.

In the Product Business, net sales grew as a result of focused sales promotion activities centered on new merchandise launched between April and July, as well as the penetration of sales price revisions. In terms of profit, despite various efforts to reduce manufacturing costs, raw material prices still continued to rise, and the improvement in earnings through a subsequent cost pass-through was limited to a certain extent.

In vinyl flooring materials, the Company launched the "Tile Collection" in July, which proposed new value through the rebranding of vinyl floor tiles. In addition, we focused on sales promotion activities for the "Luxury Calcium carbonate Tile (LCT)" and "Vinyl Composition Tile (VCT)" series of single-layer vinyl floor tiles, which utilize our proprietary technologies. Furthermore, sales of vinyl flooring materials were strong, with "ToughtecTile," a new third flooring material that combines the advantages of vinyl floor tiles and ceramic tiles, winning the Good Design Award in FY2022.

In carpets, we focused on sales promotion activities centering on GA-3600 Sustive Back, an environment friendly carpet tile based on the TOLI Complete Recycling, which was launched in June with growing needs for improving the office environment. Although the overall sales volume of carpet tiles remained weak, net sales increased year on year with sales price revisions.

In wall covering materials, sales of "VS," a general-purpose vinyl wallpaper containing antiviral wallpaper launched in July, and "Power 1000," featuring design and functionality, which was revised last year, performed well, and the penetration of the overall sales price revision of wall covering materials increased, resulting in a significant year-on-year increase. In curtains, sales of contract curtains for various facilities such as medical and welfare facilities, which support healthy living, remained strong.

As a result, the Product Business reported net sales of 26,012 million yen (up 8.7% compared with the same period of the previous year) and segment loss of 137 million yen (loss of 19 million yen in the same period of the previous year).

In the Interior Wholesaling and Installation Business, procurement costs for interior-related materials rose, but in addition to passing these costs on to selling prices, efforts to improve attentive, community-based services resulted in steady growth for the overall business. TOLI (Shanghai) Corporation also saw some stagnation in the Chinese domestic economy due to the zero- COVID policy, but the impact on the company's performance for the first half of the year (January-June 2022) was minimal and continued to show signs of recovery.

As a result, the Interior Wholesaling and Installation Business reported net sales of 27,967 million yen (up 4.7% compared with the same period of the previous year) and segment income of 347 million yen (up 113.4% compared with the same period of the previous year).

- 2 -

1. Explanation of the financial position
2. 1. Financial position

Current assets at the end of the second quarter of the current fiscal year were down by 2,261 million yen compared with the end of the previous fiscal year, to 44,578 million yen. This was mainly due to a decrease in notes and accounts receivable-trade resulting from collection of notes and accounts receivable and others. Non-current assets were up 431 million yen compared with the end of the previous fiscal year, to 33,573 million yen. This increase was mainly due to an increase in construction in progress resulting from the capital investment of a manufacturing subsidiary.

As a result, total assets were down by 1,830 million yen compared with the end of the previous fiscal year, to 78,152 million yen.

Current liabilities at the end of the second quarter of the current fiscal year were down by 1,228 million yen compared with the end of the previous fiscal year, to 28,125 million yen. This was mainly due to a decrease in notes and accounts payable- trade resulting from payment of notes and accounts payable and others. Non-current liabilities were down by 107 million yen compared with the end of the previous fiscal year, to 12,236 million yen.

As a result, total liabilities were down by 1,335 million yen compared with the end of the previous fiscal year, to 40,361 million yen.

Net assets at the end of the second quarter of the current fiscal year were down by 494 million yen compared with the end of the previous fiscal year, to 37,790 million yen. This was mainly due to a decrease in retained earnings resulting from dividends paid.

[2] Cash flows

Cash and cash equivalents at the end of the first six months of the current fiscal year decreased 585 million yen compared with the end of the previous fiscal year to finish at 9,604 million yen (11,169 million yen at the end of the first six months of the previous fiscal year).

(Cash flows from operating activities)

Net cash provided by operating activities came to 1,453 million yen (3,050 million yen for the same period of the previous year). Cash inflows decreased compared with the same period of the previous year due to a decline in the changes in notes and accounts receivable and inventory assets.

(Cash flows from investing activities)

Net cash used in investing activities came to 1,488 million yen (1,471 million yen for the same period of the previous year). Compared with the same period last year, purchase of property, plant and equipment, etc. decreased, but purchase of intangible assets, etc. increased, resulting in the same level of expenditures as in the same period last year.

(Cash flows from financing activities)

Net cash used in financing activities came to 585 million yen (692 million yen for the same period of the previous year). The decrease in payments for long-term accounts payable-other included in Other resulted in a decrease in expenditures compared with the same period of the previous fiscal year.

1. Explanation concerning future predictive information, such as consolidated forecasts

No revision has been made to the full-term consolidated performance forecast, which was announced on October 24, 2022. If an event occurs that has an impact on TOLI Group's performance and a revision to forecasts becomes necessary, the

Company will promptly announce to that effect.

- 3 -