TOLI : Financial Announcement for 2nd Quarter of the Year Ending March 2024

Financial Announcement for Second Quarter of the Year Ending March 2024

[Japan standard] (Consolidated)

				November 2, 2023
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	(Position)	General Manager, Accounting and Finance	(Name) Takashi Matsumoto	TEL [phone]
responsible for		Department

inquiries
Scheduled date for submission November 9, 2023	Scheduled date for start of dividend	November 29, 2023
of quarterly reports:	payments:
Preparation of supplementary explanatory materials for the quarterly financial announcement	:	Yes
Holding of a briefing on the quarterly financial announcement		:	None

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

1. Consolidated results for second quarter of the year ending March 2024 (April 1, 2023 to September 30, 2023)

(1) Consolidated results (year to date)		(% shows change for the quarter against 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 2024	46,448		8.6	1,304	-	1,447	-	869	-
Q2 for year ended March 2023	42,754		6.3	(68)	-	17	-	(67)	-

(Note)

Comprehensive income

Q2 for year ending March 2024: 2,063 million yen [―%]

Q2 for year ended March 2023: 23 million yen (-82.4%)

Profit per share

Profit per share - diluted

Yen

Yen

Q2 for year ending March 2024

14.44

-

Q2 for year ended March 2023

(1.13)

-

(2) Consolidated assets

Total assets

Net assets

Capital-to-asset ratio

Million yen

Million yen

%

Q2 for year ending March 2024

83,754

42,351

50.2

Year ended March 2023

84,791

40,894

47.9

(Reference) Equity capital

Q2 for year ending March 2024: 42,055 million yen

For year ended March 2023: 40,613 million yen

2. Dividend payments

Annual dividend

End 1st quarter

End 2nd quarter

End 3rd quarter

End of year

Total

Yen

Yen

Yen

Yen

Yen

Year ended March 2023

-

0.00

-

10.00

10.00

Year ending March 2024

-

3.00

Year ending March 2024

-

8.00

11.00

(forecast)

(Note)

Adjustment from most recently published dividend forecast: None

3. Consolidated forecasts for year ending March 2024 (April 1, 2023 to March 31, 2024)

(% shows change from previous term)

	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	101,000		6.1	4,000	13.3	4,050	11.3	2,750	7.3	45.99

(Note)

Adjustment from most recently published performance projections: None

• Notes

1. Significant changes to subsidiaries during the consolidated first quarter under review (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, representation of amendments

[1]	Changes in accounting policies accompanying revisions to accounting standards	: None
[2]	Changes to 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 end	Q2 for year ending	66,829,249	Year ended March	66,829,249
	of year (including treasury shares)	March 2024	shares	2023	shares
[2]	Number of shares in treasury shares	Q2 for year ending	6,643,464	Year ended March	6,642,988
	at end of year	March 2024	shares	2023	shares
[3]	Average number of shares during the	Q2 for year ending	60,186,042	Q2 for year ended	60,207,572
	term (cumulative from start of fiscal	March 2024	shares	March 2023	shares
	year)

• Quarterly financial announcements are 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)	Consolidated balance sheets ·····································································································	4
	(2)	Consolidated statement of income and consolidated statement of comprehensive income ····························	6
		Consolidated statement of income
		Consolidated second quarter ·································································································	6
		Consolidated statement of comprehensive income
		Consolidated second quarter ·································································································	7
	(3)	Consolidated statements 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 consolidated second quarter under review, the Japanese economy showed a moderate recovery trend due to improvements in the income environment and the normalization of social and economic activities after the transition of COVID- 19 to a Class 5 infectious disease. On the other hand, the future of the business environment remains uncertain, with crude oil prices once again increasing due to factors such as the weak yen and the prolonged situation in Ukraine.

In the construction industry, which is closely related to our Group's business, although corporate capital investment has remained at a high level due to the recovery in demand for stores and accommodation facilities thanks to a recovery in the number of foreign visitors to Japan, the business environment remains unpredictable due to factors such as stagnation in construction investment caused by the soaring prices for various construction materials and the rise in labor costs.

Under these circumstances, our Group is pursuing the following five key strategies in the Medium-term Business Plan "SHINKA Plus ONE" covering the period from FY2021 to FY2024 toward the realization of our long-term vision "TOLI VISION 2030": 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 period under review, while working to spread the sales price revisions, our Group worked to further improve our profitability, focusing on establishing a stable supply system and reducing manufacturing costs such as through full-scale operation of the new No. 3 line of Hiroka TOLI Floor, expanding in-house production of raw nylon yarn for carpet tiles, and increasing the recycling rate at carpet tile recycling plants.

As a result, for the consolidated second quarter under review, the Company posted net sales of 46,448 million yen (up 8.6% compared with the same period of the previous year), operating income of 1,304 million yen (operating loss of 68 million yen for the same period of the previous year), ordinary income of 1,447 million yen (up 8,069.0% compared with the same period of the previous year), and profit attributable to owners of parent of 869 million yen (loss attributable to owners of parent of 67 million yen for the same period of the previous year).

Performance for business segments is as follows. This information includes business between segments.

In the Product Business, net sales increased due to the spread of the effect of sales price revisions and improved face-to-face promotional activities. In the area of vinyl flooring materials, we strengthened our spec activities with products such as the "NS800" anti-slip vinyl floor sheet launched in August, and also made progress in the adoption of advanced products such as the "Deodorant NS Toware NW" high-durability vinyl floor sheet for toilets and the "E-CleanNW-EX" vinyl floor tile, which does not require wax maintenance for a long time.

In the area of carpets, net sales were higher than the previous year due to increased adoption of "GA-3600 Sustive Back," which plays a role in promoting TOLI Complete Recycling, reflecting growing environmental needs, and a strong performance in the GX Series of graphic tile carpets.

For wallcovering materials, net sales increased slightly despite a decrease in sales volume due to strong sales of "Real Deco," our proprietary non-combustible decorative wallcovering material, and the spread of sales price revisions for wallcovering materials in general.

In the area of curtains, although demand for made-to-order curtains remained weak, net sales increased year on year due to the focus on sales promotion activities regarding the comprehensive sample book "fuful," which focuses on design and functionality and was released in June under the concept of "Choosing curtains is fun!"

As a result, for the Product Business, net sales were 28,171 million yen (up 8.3% from the previous fiscal year) and segment income came to 1,158 million yen (segment loss of 137 million yen for the same period of the previous year).

In the Interior Wholesaling Business, amid a continued rise in procurement costs for various interior design-related materials, we focused on product proposals that met customer needs while passing these costs onto selling prices. In the Installation Business, we focused on winning orders, including renovation work, by leveraging the Group's construction capabilities, resulting in a significant year-on-year increase in net sales. On the other hand, while the business environment in China was expected to improve accompanying the end of the Zero-COVID policy, net sales of TOLI (SHANGHAI) Corporation for the second quarter (January to June 2023) declined year on year due to the impact of slowing economic growth in China and issues such as the continued turmoil in the real estate industry.

As a result, the Interior Wholesaling and Installation Business reported net sales of 30,301 million yen (up 8.3% compared with the same period of the previous year) and segment income of 530 million yen (up 52.7% compared with the same period of the previous year).

- 2 -

1. Explanation of the financial situation

1. Financial state

Current assets at the end of second quarter of the fiscal year under review were down 3,001 million yen compared with the end of the previous fiscal year to 47,676 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 amounted to 36,078 million yen, up 1,965 million yen from the end of the previous fiscal year. This was mainly due to an increase in investment securities as a result of higher stock prices.

As a result, total assets were down 1,036 million yen compared with the end of the previous fiscal year to 83,754 million yen.

Current liabilities at the end of second quarter of the fiscal year under review were down 3,228 million yen compared with the end of the previous fiscal year to 28,498 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 amounted to 12,905 million yen, up 735 million yen from the end of the previous fiscal year.

As a result, total liabilities were down 2,493 million yen compared with the end of the previous fiscal year to 41,403 million yen.

Total net assets at the end of second quarter of the fiscal year under review were up 1,456 million yen compared with the end of the previous fiscal year to 42,351 million yen. This was mainly due to an increase in valuation difference on available-for-sale securities as a result of higher stock prices.

[2] State of cash flows

During the consolidated second quarter under review, cash and cash equivalents increased 54 million yen compared with the end of the previous fiscal year to finish at 9,642 million yen (9,604 million yen for the previous consolidated second quarter).

(Cash flows from operating activities)

Cash flows from operating activities amounted to 2,865 million yen (1,453 million yen in the previous fiscal year). Revenue increased compared to the same period of the previous fiscal year mainly due to an increase in profit before income taxes and an increase in inventories.

(Cash flows from investing activities)

Cash flows from investing activities totaled payments of 2,031 million yen (1,488 million yen in the previous fiscal year). Expenditures increased compared to the same period of the previous fiscal year, mainly due to an increase in expenditures due to a purchase of property, plant and equipment and a purchase of shares of subsidiaries resulting in change in scope of consolidation.

(Cash flows from financing activities)

Cash flows from financing activities totaled payments of 817 million yen (585 million yen in the previous fiscal year). Expenditures increased compared to the same period of the previous fiscal year, mainly due to an increase in dividends paid.

1. Explanation concerning future predictive information, such as consolidated forecasts
   There have been no changes to the full-year consolidated earnings forecasts announced on October 31, 2023.

If an event affecting our Group's financial results occurs and it becomes necessary to revise the forecast, we will promptly make an announcement.

- 3 -

2.	Quarterly consolidated financial statements and major notes
(1)	Consolidated balance sheets
				(Million yen)
		Previous fiscal year		Q2 of current fiscal year
		(March 31, 2023)		(September 30, 2023)
Assets
Current assets
	Cash and deposits		9,745	9,816
	Notes and accounts receivable - trade	20,287	16,050
	Electronically recorded monetary claims		6,666	6,949
	Merchandise and finished goods	8,978	9,337
	Work in process		1,780	2,152
	Raw materials and supplies	2,284	2,105
	Other		993	1,312
	Allowance for doubtful accounts	(58)	(48)
	Total current assets		50,677	47,676
Non-current assets
	Property, plant and equipment
	Buildings and structures, net	7,077	7,072
	Machinery, equipment and vehicles, net		5,483	5,258
	Tools, furniture and fixtures, net	439	412
	Land		8,343	8,345
	Construction in progress	1,587	2,565
	Other, net		110	97
	Total property, plant and equipment	23,042	23,751
	Intangible assets
	Software	698	521
	Other		113	296
	Total intangible assets	811	818
	Investments and other assets
	Investment securities		5,200	6,768
	Deferred tax assets		792	361
	Other	4,525	4,670
	Allowance for doubtful accounts		(260)	(292)
	Total investments and other assets	10,258	11,509
	Total non-current assets		34,113	36,078
Total assets		84,791	83,754

- 4 -

		(Million yen)
	Previous fiscal year	Q2 of current fiscal year
	(March 31, 2023)	(September 30, 2023)
Liabilities
Current liabilities
Notes and accounts payable - trade	18,232	16,107
Electronically recorded obligations	6,066	6,084
Short-term loans payable	1,020	320
Income taxes payable	1,107	617
Accrued expenses	1,677	1,680
Provision for bonuses	739	786
Provision for bonuses for directors (and other	9	-
officers)
Other	2,874	2,902
Total current liabilities	31,726	28,498
Non-current liabilities
Long-term loans payable	5,680	6,380
Net defined benefit liability	3,762	3,858
Other	2,727	2,666
Total non-current liabilities	12,169	12,905
Total liabilities	43,896	41,403
Net assets
Shareholders' equity
Capital stock	6,855	6,855
Capital surplus	6,426	6,426
Retained earnings	26,311	26,578
Treasury shares	(1,500)	(1,500)
Total shareholders' equity	38,092	38,359
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	2,048	3,137
Foreign currency translation adjustment	336	429
Remeasurements of defined benefit plans	136	129
Total accumulated other comprehensive income	2,521	3,696
Non-controlling interests	281	295
Total net assets	40,894	42,351
Total liabilities and net assets	84,791	83,754

- 5 -

1. Consolidated statement of income and consolidated statement of comprehensive income
   (Consolidated statement of income) (Consolidated second quarter)

		(Million yen)
	Previous consolidated second	Current consolidated second
	quarter	quarter
	(April 1, 2022 - September 30,	(April 1, 2023 - September 30,
	2022)	2023)
Net sales	42,754	46,448
Cost of sales	31,112	32,960
Gross profit	11,641	13,488
Selling, general and administrative expenses	11,710	12,183
Operating income or loss (-)	(68)	1,304
Non-operating income
Interest income	0	1
Dividend income	93	91
Purchase discounts	37	39
Dividend income of insurance	43	46
Other	121	117
Total non-operating income	297	296
Non-operating expenses
Interest expenses	31	32
Share of loss of entities accounted for using equity	162	103
method
Other	17	18
Total non-operating expenses	211	153
Ordinary income	17	1,447
Extraordinary income
Gain on sales of non-current assets	-	3
Gain on sales of investment securities	15	2
Total extraordinary income	15	5
Extraordinary losses
Loss on retirement of non-current assets	10	35
Total extraordinary losses	10	35
Profit before income taxes	23	1,417
Income taxes - current	158	576
Income taxes - deferred	(60)	(47)
Total income taxes	98	529
Profit (loss)	(74)	888
Profit attributable to non-controlling interests or Loss	(6)	19
attributable to non-controlling interests (-)
Profit attributable to owners of parent or Loss attributable	(67)	869
to owners of parent (-)

- 6 -

(Consolidated statement of comprehensive income) (Consolidated second quarter)

		(Million yen)
	Previous consolidated second	Current consolidated second
	quarter	quarter
	(April 1, 2022 - September 30,	(April 1, 2023 - September 30,
	2022)	2023)
Profit (loss)	(74)	888
Other comprehensive income
Valuation difference on available-for-sale securities	(197)	1,088
Foreign currency translation adjustment	300	92
Remeasurements of defined benefit plans, net of tax	(5)	(6)
Total other comprehensive income	97	1,175
Comprehensive income	23	2,063
Comprehensive income attributable to
owners of parent	29	2,044
non-controlling interests	(6)	19

- 7 -

(3) Consolidated statements of cash flows

		(Million yen)
	Previous consolidated second	Current consolidated second
	quarter	quarter
	(April 1, 2022 - September 30,	(April 1, 2023 - September 30,
	2022)	2023)
Cash flows from operating activities
Profit before income taxes	23	1,417
Depreciation	1,083	1,236
Loss on retirement of non-current assets	10	35
Loss (gain) on sales of non-current assets	-	(3)
Loss (gain) on sales of investment securities	(15)	(2)
Increase (decrease) in allowance for doubtful accounts	28	22
Increase (decrease) in net defined benefit liability	69	87
Interest and dividend income	(94)	(93)
Subsidy income	(11)	(1)
Interest expenses	31	32
Decrease (increase) in notes and accounts receivable -	3,635	4,004
trade
Decrease (increase) in inventories	(2,175)	(504)
Increase (decrease) in notes and accounts payable -	(1,077)	(2,155)
trade
Other	153	(291)
Subtotal	1,660	3,783
Interest and dividend income received	94	93
Subsidy received	11	1
Interest expenses paid	(32)	(32)
Income taxes paid	(280)	(980)
Cash flows from operating activities	1,453	2,865
Cash flows from investing activities
Purchase of property, plant and equipment	(1,315)	(1,606)
Proceeds from sale of property, plant and equipment	-	5
Purchase of intangible assets	(195)	(56)
Purchase of investment securities	(4)	(4)
Proceeds from sale of investment securities	21	4
Payments of loans receivable	(6)	(2)
Collection of loans receivable	9	4
Purchase of shares of subsidiaries resulting in change	-	(321)
in scope of consolidation
Other	2	(54)
Cash flows from investing activities	(1,488)	(2,031)
Cash flows from financing activities
Proceeds from long-term loans payable	800	900
Repayments of long-term loans payable	(800)	(900)
Cash dividends paid	(482)	(601)
Other	(103)	(215)
Cash flows from financing activities	(585)	(817)
Effect of exchange rate change on cash and cash	35	38
equivalents
Net increase (decrease) in cash and cash equivalents	(585)	54
Cash and cash equivalents at beginning of year	10,189	9,587
Cash and cash equivalents at end of quarter	9,604	9,642

- 8 -