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URL: www.walden.co.jp

Written by Yoshiyuki Muroya

E-mail: yoshiyuki_muroya@walden.co.jp

Phone：+81 3 3553 3769

MORITO (9837)Consolidated Fiscal Year Sales OP RP NP EPS DPS BPS

(Million Yen) (Yen) (Yen) (Yen)

FY11/2013 33,145 1,390 1,699 1,081 37.3 10.0 944.1

FY11/2014 35,862 1,429 1,729 1,270 43.9 12.5 1,017.8

FY11/2015CoE 43,000 2,000 2,100 1,400 48.3 14.0 -

FY11/2014 YoY 8.2% 2.8% 1.8% 17.4% - - -

FY11/2015CoE YoY 19.9% 39.9% 21.4% 10.2% - - -

Consolidated Half Year Sales OP RP NP EPS DPS BPS

(Million Yen) (Yen) (Yen) (Yen)

Q1 to Q2 FY11/2014 17,189 669 687 600 - - -

Q3 to Q4 FY11/2014 18,672 759 1,042 670 - - -

Q1 to Q2 FY11/2015 21,418 874 1,026 516 - - -

Q3 to Q4 FY11/2015CoE 21,581 1,125 1,073 883 - - -

Q1 to Q2 FY11/2015 YoY 24.6% 30.5% 49.4% (14.0%) - - -

Q3 to Q4 FY11/2015CoE YoY 15.6% 48.3% 2.9% 31.8% - - -Source: Company Data, WRJ Calculation

1.0 Executive Summary (24 September 2015)

Three Expansions

MORITO, running operations of wholesaling apparel materials and consumer-products materials as the key

earnings source, is trying to get at long-term sales growth, going forward, combined with improving

profitability, by means of pursuing three expansions, i.e., a) expansion of market shares for accessories on a

global basis, b) expansion of own-brand merchandises and c) expansion of business by mergers &

acquisitions in the current business domains. In November 2013, Mr. Takaki Ichitsubo was appointed as

president, having had taken command in the developments of overseas business, which was followed by

merger with SCOVILL (GSG Fastener, LLC), i.e., manufacturer of apparel materials, based in Georgia,

U.S.A., in October 2014. Going forward, the Company is to keenly pursue synergy, stemming from here,

while looking to new opportunities to do so by means of coming up with new deals like this.

In Q1 to Q2 FY11/2015, sales came in at ¥21,418m (up 24.6％ YoY and/or up ¥4,228m), operating profit

¥874m (up 30.5% and/or up ¥204m) and operating profit margin 4.1% (up 0.2% points). Meanwhile,

SCOVILL has been consolidated in the Company’s consolidated accounts since Q1 FY11/2015, having

generated net add-ons ¥2,786m in sales and ¥98m in operating profit in terms of year-on-year changes in

Q1 to Q2. SCOVILL saw operating profit margin 3.5%, while sales ¥1,904m (68% of total) in Europe &

America and sales ¥882m (32%) in Asia. Thus, the net add-ons on a consolidated basis were meaningful for

sales and earnings for the Company as a whole, but it negatively affected to operating profit margin. Still, in

H2, the Company is going for prospective operating profit margin 6.5% for SCOVILL, suggesting the net

add-ons are to be beneficial also in terms of operating profit margin. Going forward, the Company is looking

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to increasing benefits from synergy to be generated from here in FY11/2016 and onward. Meanwhile,

operating profit margin as a whole for the Company has improved in line with successful management

strategy to beef up profitability in regards to the operations in Japan.

FY11/2015 initial Company forecasts have remained unchanged, going for sales ¥43,000m (up 19.9% YoY

and/or up ¥7,137m), operating profit ¥2,000m (up 39.9% and/or ¥570m) and operating profit margin 4.7%

(up 0.7% points). Meanwhile, Company forecasts assume sales ¥6,000m and operating profit ¥305m for

SCOVILL, which are to be all net add-ons for the Company as a whole, while prospective operating profit

margin 5.1% is suggested for SCOVILL. The deal to have merged with SCOVILL has generated goodwill

¥3,895m to be evenly written off over 20 years, leading to goodwill write-off ¥195m pa. As may be taken for

granted, all those aforementioned figures associated with operating profit of SCOVILL are after the

write-off.

IR Representative: Yuhma Fushino (+81 80 6228 3066 yuhma.fushino@morito.co.jp)

2.0 Company Profile

Wholesaling Apparel Materials & Consumer-Products Materials on A Global Basis

Company Name MORITO CO.,LTD.

Company Website

IR Information

Share Price

Established 17 December 1935

Listing 14 July 1989: Tokyo Stock Exchange 2nd Section (Ticker: 9837)

Capital ¥3,532m (As of the end of May 2015)

No. of Shares 30,800,000 shares, including 1,826,506 treasury shares (As of the end of May 2015)

Main Features Apparel materials and consumer-products materials, evenly sharing sales as a

whole for the Company, roughly speaking

Wholesaling of both is the key earnings pillar, while that of apparel materials

carrying gross profit margin relatively higher

Increasing exposure to manufacturing of materials, through mergers &

acquisitions

Businesses Ⅰ. Apparel Materials Business

Ⅱ. Consumer-Products Materials Business

Top Management President: Takaki Ichitsubo

Shareholders MORITO Prosperity Association 8.55%, Kuraray Co., Ltd. 7.54%, KANE-M Industry

6.18% (As of the end of May 2015)

Headquarters Chuo-ku, Osaka, JAPAN

No. of Employees Consolidated: 1,308, Unconsolidated: 283 (As of the end of May 2015)

Source: Company Data

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3.0 Recent Trading & Prospects

Q1 to Q2 FY11/2015 Results

In Q1 to Q2 FY11/2015, sales came in at ¥21,418m (up 24.6％ YoY), operating profit ¥874m (up 30.5%),

recurring profit ¥1,026m (up 49.4%) and net profit ¥516m (down 14.0%), while operating profit margin 4.1%

(up 0.2% points). Compared with initial Company forecasts, sales were better ¥1,418m (7.1%) in sales, while

operating profit worse ¥26m (2.9%), recurring profit better ¥126m (14.0%) and net profit worse ¥84m

(14.0%).

Sales

0

2,000

4,000

6,000

8,000

Q1

FY

11/2

013

Q2

FY

11/2

013

Q3

FY

11/2

013

Q4

FY

11/2

013

Q1

FY

11/2

014

Q2

FY

11/2

014

Q3

FY

11/2

014

Q4

FY

11/2

014

Q1

FY

11/2

015

Q2

FY

11/2

015

Q3

FY

11/2

015

Q4

FY

11/2

015

Japan Asia Europe & America(Million Yen)

Segment Profit

(100)

0

100

200

300

400

500

600

Q1

FY

11/2

013

Q2

FY

11/2

013

Q3

FY

11/2

013

Q4

FY

11/2

013

Q1

FY

11/2

014

Q2

FY

11/2

014

Q3

FY

11/2

014

Q4

FY

11/2

014

Q1

FY

11/2

015

Q2

FY

11/2

015

Q3

FY

11/2

015

Q4

FY

11/2

015

Japan Asia Europe & America(Million Yen)

Source: Company Data, WRJ Calculation

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In Q1 to Q2, yen got depreciated, but operating profit of the Company was roughly immune to this, in that

the Company is exposed to changes of forex rates in terms of both sales and expenses, having generating

limited impacts to operating profit, according to the Company. Still, it is also the case that the changes of

forex rates generate forex profit/loss at the non-operating level, as foreign-currency-denominated claims and

debts are evaluated in line with the changes.

Above-mentioned results suggest that the Company saw net balance better ¥152m at the non-operating

level, when compared with Company forecasts. On top of forex profit ¥66m, the Company saw some plural

unexpected positive factors at the non-operating level. On the other hand, net profit fell short of expectations,

due mainly to affiliate liquidation loss ¥301m to have been booked as extraordinary loss. This stemmed from

a transfer of operations to manufacture auto interior products in China, in which it was too difficult for the

Company to make money, even going forward.

Meanwhile, the Company, running operations of wholesaling apparel materials and consumer-products

materials as the key earnings source, discloses its sales and earnings region-wise on a quarterly basis in

segmented information, while the contents in Q1 to Q2 were as follows:

In Japan, sales came in at ¥14,021m (up 4.8% and/or up ¥642m), segment profit ¥689m (up 25.3% and/or up

¥139m) and segment profit margin 4.9% (up 0.8% points), having accounted for 65.5% of sales and 64.7% of

segment profit out of the Company as a whole. Thus, the Company’s earnings reasonably hinge on those of

Japan at the moment. Meanwhile, improving segment profit margin in here was the key driver for

improving operating profit margin for the Company as a whole. In terms of sales by merchandise, strengths

were seen in accessories for major apparel volume retailers, accessories for sports apparel manufacturers,

accessories and products for stationaries & teaching materials and camera accessories.

The other thing, in regards to Japan, is that sales are meaningfully influenced by seasonal factors on a

quarterly basis and thus more in terms of earnings. In Q1 (December to February) over Q4 (September to

November), sales are adjusted, in that demand associated with cold protection and/or heat insulation during

winter is not to reappear, e.g., that of merchandises such as shoe insoles in distribution & retail business.

Then, in Q2 (March to May) over Q1 (December to February), sales are to rise in line with increasing

shipments of accessories adopted in apparel for autumn / winter season. When compared with apparel for

summer season, represented by T-shirts, etc., that of autumn / winter season, including down jackets, etc.,

incorporates accessories far more, generating major impacts. Then, in Q3 (June to August), this is not to

reappear.

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The Company reveals its long-term management strategy “Aiming at Becoming a Global Growth Company”,

basically because the Company does not find favorable long-term growth potentials in the market for Japan,

going forward. On top of this, the Company has already cultivated the market for Japan to a large extent

and thus it will not be very easy to further pursue sales in Japan. At the end of the day, the Company is

trying to get at profitability improvements, as strategy, rather than further pursuing sales in Japan, while

the Company has just started to benefit from this. For example, given the fact that the Company was seeing

low profitability on the consumer-products materials side, particularly in auto-related domain, it has begun

cutting back exposure to unprofitable merchandises in this business domain, while revising selling prices,

on a full-fledged basis, since Q4 FY11/2014.

Elsewhere in Japan, the Company has merged with MATEX INC., based in Kobe, which manufactures

subsidiary apparel materials, while being involved with commercial printing and design at the same time,

looking to synergy to be generated. Subsidiary apparel materials represent price list of clothes, washing

indication, label of the product country of origin, etc., while the bulk of them has high affinity with apparel

materials, dealt in by the Company. Thus, the Company should be able to beef up “Combined Sales” that it

advocates, implying improving sales to domestic apparel manufacturers in the foreseeable future.

In November 2013, Mr. Takaki Ichitsubo was appointed as president, having had taken command in the

developments of overseas business, which was followed by merger with SCOVILL (GSG Fastener, LLC), i.e.,

manufacturer of apparel materials, based in Georgia, U.S.A., in October 2014. The Company, taking

advantage of SCOVILL’s sales network, has started up sales to new customers based in Europe & America

for accessories, while promoting sales of “SCOVILL” brand accessories, highly appreciated mainly in the

jeans industry, in regards to own operations in Japan. On top of this, SCOVILL adopts high quality

materials made and provided by the Company based on own manufacturing knowhow, replacing some parts

of materials that used to be externally procured, implying benefits of cost reductions to stem from here. In

the result meeting, held on 15 July 2015, president Ichitsubo suggested that the merger with SCOVILL

should make synergy equating to ¥1,000m to ¥2,000m pa in sales, going forward.

Having been consolidated since Q1 FY11/2015, SCOVILL saw sales ¥2,768m, operating profit ¥98m and

operating profit margin 3.5% in Q1 to Q2, while sales ¥1,904m in Europe & America (68% of total) and

¥882m (32%) in Asia. Thus, the Company saw net add-ons as much as this for the Company as a whole. The

deal to merge with SCOVILL has generated goodwill ¥3,895m to be equally written off over 20 years,

suggesting goodwill write-off ¥195m pa and ¥97m per half year. Meanwhile, we have referred to

above-mentioned results after this.

In Asia, sales came in at ¥4,036m (up 55.3% and/or up ¥1,437m) in Q1 to Q2, segment profit ¥196m (up

23.8%) and segment profit margin 4.9% (down 1.2% points). Sales were driven by accessories for baby

clothes manufacturers based in Europe & America, auto interior parts in Thailand and Shanghai, etc., on

top major impacts of net add-ons ¥882m due to SCOVILL newly consolidated. Meanwhile, it appears that

the latter worked negatively to segment profit margin in here, in that SCOVILL saw operating profit margin

3.5%, lower than the segment profit margin 4.9%.

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The Company’s operations in Asia have a high exposure to own bases in Hong Kong and Shanghai,

collectively accounting for some 70% of sales in here, while exposed no less than 70% to 80% to apparel

materials, which is a distinguished feature. Over the past 5 years, the Company has successfully cultivated

new customers, while persistently increasing local market shares. However, it is suggest that this trend is

rather slowing down, most recently, according to the Company.

In Europe and America, sales came in at ¥3,359m (up 177.4% and/or up ¥2,148m), segment profit ¥180m

(up 67.1%) and segment profit margin 5.4% (down 3.5% points). Sales were driven by net add-ons ¥1,904m

stemming from SCOVILL newly consolidated and by increasing trading of accessories for medical

applications, those of working wears, auto interior parts for auto manufacturers based in Japan and Europe

& America, etc. As mentioned earlier, operating profit margin came in at 3.5% in SCOVILL, suggesting that

SCOVILL, newly consolidated, generated negative impacts to segment profit margin in Europe & America.

Still, it should be spotted that segment profit margin came in at 7.0% in Q2 in this segment, having risen

from 3.6% in Q1. The Company argues that SCOVILL suffered from initial costs in Q1 when the

consolidation started up and this did not reappear in Q2.

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Income Statement (Cumulative, Quarterly)

Income Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 YoY

(Million Yen) 11/2014 11/2014 11/2014 11/2014 11/2015 11/2015 11/2015 11/2015 Net Chg.

Sales 8,346 17,189 25,889 35,862 10,287 21,418 - - +4,228

Cost of Sales 6,191 12,780 19,201 26,603 7,642 15,945 - - +3,164

Gross Profit 2,155 4,409 6,688 9,258 2,645 5,473 - - +1,064

SG&A 1,908 3,739 5,768 7,829 2,285 4,598 - - +859

Operating Profit 247 669 919 1,429 360 874 - - +204

Non Operating Balance 39 17 109 300 70 152 - - +135

Recurring Profit 286 687 1,028 1,729 430 1,026 - - +339

Extraordinary Balance 113 329 456 182 178 (75) - - (405)

Pretax Profit 400 1,016 1,485 1,912 609 951 - - (65)

Tax Charges, etc. 131 416 445 642 258 434 - - +18

Net Profit 268 600 1,040 1,270 350 516 - - (83)

Sales YoY +16.1% +10.8% +9.8% +8.2% +23.3% +24.6% - - -

Operating Profit YoY +48.0% +11.7% +11.3% +2.8% +45.7% +30.5% - - -

Recurring Profit YoY (5.9%) (17.3%) (8.3%) +1.8% +50.3% +49.4% - - -

Net Profit YoY +41.8% +19.0% +51.2% +17.4% +30.6% (14.0%) - - -

(Costs of Sales / Sales) 74.2% 74.4% 74.2% 74.2% 74.3% 74.4% - - +0.1%

Gross Profit Margin 25.8% 25.6% 25.8% 25.8% 25.7% 25.6% - - (0.1%)

(SG&A / Sales) 22.9% 21.8% 22.3% 21.8% 22.2% 21.5% - - (0.3%)

Operating Profit Margin 3.0% 3.9% 3.6% 4.0% 3.5% 4.1% - - +0.2%

Recurring Profit Margin 3.4% 4.0% 4.0% 4.8% 4.2% 4.8% - - +0.8%

Net Profit Margin 3.2% 3.5% 4.0% 3.5% 3.4% 2.4% - - (1.1%)

Tax Charges, etc. / Pretax Profit 33.0% 40.9% 30.0% 33.6% 42.5% 45.7% - - +4.7%

Income Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 YoY

(Million Yen) 11/2014 11/2014 11/2014 11/2014 11/2015 11/2015 11/2015 11/2015 Net Chg.

Sales 8,346 8,842 8,699 9,973 10,287 11,130 - - +2,287

Cost of Sales 6,191 6,589 6,420 7,402 7,642 8,302 - - +1,713

Gross Profit 2,155 2,253 2,279 2,570 2,645 2,827 - - +573

SG&A 1,908 1,830 2,029 2,060 2,285 2,313 - - +482

Operating Profit 247 422 249 509 360 514 - - +91

Non Operating Balance 39 (22) 91 191 70 82 - - +104

Recurring Profit 286 400 341 700 430 596 - - +195

Extraordinary Balance 113 215 127 (273) 178 (254) - - (470)

Pretax Profit 400 616 468 427 609 341 - - (274)

Tax Charges, etc. 131 284 29 197 258 175 - - (108)

Net Profit 268 332 439 230 350 166 - - (165)

Sales YoY +16.1% +6.2% +7.7% +4.3% +23.3% +25.9% - - -

Operating Profit YoY +48.0% (2.3%) +10.3% (9.7%) +45.7% +21.6% - - -

Recurring Profit YoY (5.9%) (23.9%) +17.3% +21.5% +50.3% +48.8% - - -

Net Profit YoY +41.8% +5.3% +139.9% (41.6%) +30.6% (49.9%) - - -

(Costs of Sales / Sales) 74.2% 74.5% 73.8% 74.2% 74.3% 74.6% - - +0.1%

Gross Profit Margin 25.8% 25.5% 26.2% 25.8% 25.7% 25.4% - - (0.1%)

(SG&A / Sales) 22.9% 20.7% 23.3% 20.7% 22.2% 20.8% - - +0.1%

Operating Profit Margin 3.0% 4.8% 2.9% 5.1% 3.5% 4.6% - - (0.2%)

Recurring Profit Margin 3.4% 4.5% 3.9% 7.0% 4.2% 5.4% - - +0.8%

Net Profit Margin 3.2% 3.8% 5.1% 2.3% 3.4% 1.5% - - (2.3%)

Tax Charges, etc. / Pretax Profit 33.0% 46.1% 6.2% 46.1% 42.5% 51.4% - - +5.2%

Source: Company Data, WRJ Calculation

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Segmented Information (Cumulative, Quarterly)

Segmented Information Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 YoY

(Million Yen) 11/2014 11/2014 11/2014 11/2014 11/2015 11/2015 11/2015 11/2015 Net Chg.

Japan 6,336 13,378 20,057 27,427 6,713 14,021 - - +642

Asia 1,432 2,599 4,045 5,919 1,969 4,036 - - +1,437

Europe & America 578 1,211 1,786 2,515 1,605 3,359 - - +2,148

Sales 8,346 17,189 25,889 35,862 10,287 21,418 - - +4,228

Japan +11.3% +7.8% +8.0% +6.6% +5.9% +4.8% - - -

Asia +29.8% +15.0% +10.0% +7.8% +37.5% +55.3% - - -

Europe & America +48.3% +43.5% +33.5% +29.9% +177.6% +177.4% - - -

Sales (YoY) +16.1% +10.8% +9.8% +8.2% +23.3% +24.6% - - -

Japan 75.9% 77.8% 77.5% 76.5% 65.3% 65.5% - - -

Asia 17.2% 15.1% 15.6% 16.5% 19.1% 18.8% - - -

Europe & America 6.9% 7.0% 6.9% 7.0% 15.6% 15.7% - - -

Sales (Composition Ratio) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - - -

Japan 196 550 687 1,194 304 689 - - +139

Asia 118 158 260 373 114 196 - - +37

Europe & America 35 108 161 186 58 180 - - +72

Segment Profit 350 816 1,109 1,754 478 1,066 - - +249

Adjustments (103) (146) (189) (325) (118) (192) - - (45)

Operating Profit 247 669 919 1,429 360 874 - - +204

Japan +12.6% (20.2%) (22.7%) (11.5%) +54.9% +25.3% - - -

Asia +42.1% +191.7% +70.9% +18.3% (2.7%) +23.8% - - -

Europe & America - - - +518.1% +65.3% +67.1% - - -

Segment Profit （YoY） +45.7% +11.2% +6.6% +3.5% +36.5% +30.5% - - -

Japan 3.1% 4.1% 3.4% 4.4% 4.5% 4.9% - - +0.8%

Asia 8.2% 6.1% 6.4% 6.3% 5.8% 4.9% - - (1.2%)

Europe & America 6.1% 8.9% 9.0% 7.4% 3.6% 5.4% - - (3.5%)

Operating Profit Margin 3.0% 3.9% 3.6% 4.0% 3.5% 4.1% - - +0.2%

Segmented Information Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 YoY

(Million Yen) 11/2014 11/2014 11/2014 11/2014 11/2015 11/2015 11/2015 11/2015 Net Chg.

Japan 6,336 7,042 6,678 7,370 6,713 7,308 - - +265

Asia 1,432 1,167 1,445 1,873 1,969 2,067 - - +900

Europe & America 578 632 575 728 1,605 1,754 - - +1,121

Sales 8,346 8,842 8,699 9,973 10,287 11,130 - - +2,287

Japan +11.3% +4.9% +8.3% +3.1% +5.9% +3.8% - - -

Asia +29.8% +0.8% +2.0% +3.4% +37.5% +77.1% - - -

Europe & America +48.3% +39.4% +16.3% +22.1% +177.6% +177.2% - - -

Sales (YoY) +16.1% +6.2% +7.7% +4.3% +23.3% +25.9% - - -

Japan 75.9% 79.6% 76.8% 73.9% 65.3% 65.7% - - -

Asia 17.2% 13.2% 16.6% 18.8% 19.1% 18.6% - - -

Europe & America 6.9% 7.2% 6.6% 7.3% 15.6% 15.8% - - -

Sales (Composition Ratio) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - - -

Japan 196 353 137 507 304 384 - - +31

Asia 118 40 102 112 114 81 - - +40

Europe & America 35 72 53 25 58 122 - - +49

Segment Profit 350 466 292 645 478 588 - - +121

Adjustments (103) (43) (42) (135) (118) (73) - - (30)

Operating Profit 247 422 249 509 360 514 - - +91

Japan +12.6% (31.3%) (31.4%) +10.2% +54.9% +8.8% - - -

Asia +42.1% - +4.0% (31.0%) (2.7%) +101.1% - - -

Europe & America - +809.7% +526.8% (18.9%) +65.3% +68.0% - - -

Segment Profit （YoY） +45.7% (5.6%) (4.4%) (1.4%) +36.5% +26.0% - - -

Japan 3.1% 5.0% 2.1% 6.9% 4.5% 5.3% - - +0.2%

Asia 8.2% 3.5% 7.1% 6.0% 5.8% 3.9% - - +0.5%

Europe & America 6.1% 11.5% 9.3% 3.5% 3.6% 7.0% - - (4.5%)

Operating Profit Margin 3.0% 4.8% 2.9% 5.1% 3.5% 4.6% - - (0.2%)

Source: Company Data, WRJ Calculation

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Balance Sheet (Quarterly)

Balance Sheet Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 YoY

(Million Yen) 11/2014 11/2014 11/2014 11/2014 11/2015 11/2015 11/2015 11/2015 Net Chg.

Cash & Deposit 6,546 7,934 7,669 7,862 7,580 8,220 - - +286

Accounts Receivables 9,139 9,826 9,666 10,388 10,559 10,653 - - +827

Inventory 4,010 3,791 4,083 4,557 5,172 4,750 - - +959

Other 1,011 1,196 1,229 1,409 1,486 1,221 - - +24

Current Assets 20,708 22,749 22,648 24,218 24,798 24,847 - - +2,097

Tangible Assets 9,566 9,647 9,696 10,111 10,350 10,382 - - +735

Intangible Assets 443 1,229 1,214 4,701 5,020 5,400 - - +4,171

Investments & Other Assets 5,340 5,605 5,404 6,562 7,034 6,984 - - +1,379

Fixed Assets 15,351 16,482 16,316 21,375 22,405 22,767 - - +6,285

Total Assets 36,059 39,231 38,965 45,593 47,203 47,614 - - +8,382

Accounts Payables 3,997 4,200 4,256 4,588 4,879 4,486 - - +286

Short Term Debt 350 1,049 939 5,335 5,395 5,345 - - +4,295

Other 1,190 1,626 1,353 1,959 1,609 2,020 - - +393

Current Liabilities 5,538 6,876 6,549 11,883 11,883 11,852 - - +4,975

Long Term Debt - 1,314 1,193 911 818 724 - - (590)

Other 2,695 2,936 2,963 3,309 3,506 3,557 - - +620

Fixed Liabilities 2,695 4,251 4,156 4,221 4,324 4,281 - - +30

Total Liabilities 8,233 11,127 10,706 16,104 16,208 16,133 - - +5,005

Shareholders' Equity 26,912 27,288 27,455 27,610 27,830 27,996 - - +708

Other 913 815 802 1,877 3,165 3,484 - - +2,669

Net Assets 27,826 28,103 28,258 29,488 30,995 31,480 - - +3,377

Total Liabilities & Net Assets 36,059 39,231 38,965 45,593 47,203 47,614 - - +8,382

Equity Capital 27,826 28,103 28,258 29,488 30,995 31,480 - - +3,377

Interest Bearing Debt 350 2,364 2,132 6,247 6,213 6,069 - - +3,705

Net Debt (6,196) (5,570) (5,536) (1,615) (1,366) (2,151) - - +3,419

Capital Ratio 77.2% 71.6% 72.5% 64.7% 65.7% 66.1% - - -

Net Debt Equity Ratio (23.0%) (20.4%) (20.2%) (5.9%) (4.9%) (7.7%) - - -

ROE (12 months) 4.3% 4.3% 5.2% 4.5% 4.6% 4.0% - - -

ROA (12 months) 4.8% 4.2% 4.3% 4.2% 4.5% 4.8% - - -

Quick Ratio 283% 258% 265% 154% 153% 159% - - -

Current Ratio 374% 331% 346% 204% 209% 210% - - -

Days for Inventory Turnover 59 53 58 56 62 52 - - -

Inventory Turnover 6.2 7.0 6.3 6.5 5.9 7.0 - - -

Source: Company Data, WRJ Calculation

Cash Flow Statement (Cumulative)

Cash Flow Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act

Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 Q1 Q1 to Q2 Q1 to Q3 Q1 to Q4 YoY

(Million Yen) 11/2014 11/2014 11/2014 11/2014 11/2015 11/2015 11/2015 11/2015 Net Chg.

Operating Cash Flow - 247 - 1,123 - 799 - - +551

Investing Cash Flow - (643) - (5,865) - (213) - - +429

Operating CF & Investing CF - (395) - (4,741) - 585 - - +981

Financing Cash Flow - 1,350 - 4,981 - (444) - - (1,795)

Source: Company Data, WRJ Calculation

10

FY11/2015 Company Forecasts & Results

Consolidated Fisal Year Date Event Sales OP RP NP

(Million Yen)

FY11/2015CoE 14-Jan-15 Q4 Results 43,000 2,000 2,100 1,400

FY11/2015CoE 10-Apr-15 Q1 Results 43,000 2,000 2,100 1,400

Amount of Gap 0 0 0 0

Rates of Gap 0.0% 0.0% 0.0% 0.0%

FY11/2015CoE 10-Jul-15 Q2 Results 43,000 2,000 2,100 1,400

Amount of Gap 0 0 0 0

Rates of Gap 0.0% 0.0% 0.0% 0.0%

FY11/2015CoE 14-Jan-15 Q4 Results 43,000 2,000 2,100 1,400

FY11/2015CoE 10-Jul-15 Q2 Results 43,000 2,000 2,100 1,400

Amount of Gap 0 0 0 0

Rates of Gap 0.0% 0.0% 0.0% 0.0%

Consolidated Half Year Date Event Sales OP RP NP

(Million Yen)

Q1 to Q2 FY11/2015CoE 14-Jan-15 Q4 Results 20,000 900 900 600

Q1 to Q2 FY11/2015CoE 10-Apr-15 Q1 Results 20,000 900 900 600

Amount of Gap 0 0 0 0

Rates of Gap 0.0% 0.0% 0.0% 0.0%

Q1 to Q2 FY11/2015Act 10-Jul-15 Q2 Results 21,418 874 1,026 516

Amount of Gap 1,418 (26) 126 (84)

Rates of Gap 7.1% (2.9%) 14.0% (14.0%)

Q1 to Q2 FY11/2015CoE 14-Jan-15 Q4 Results 20,000 900 900 600

Q1 to Q2 FY11/2015Act 10-Jul-15 Q2 Results 21,418 874 1,026 516

Amount of Gap 1,418 (26) 126 (84)

Rates of Gap 7.1% (2.9%) 14.0% (14.0%)

Consolidated Half Year Date Event Sales OP RP NP

(Million Yen)

Q3 to Q4 FY11/2015CoE 14-Jan-15 Q4 Results 23,000 1,100 1,200 800

Q3 to Q4 FY11/2015CoE 10-Apr-15 Q1 Results 23,000 1,100 1,200 800

Amount of Gap 0 0 0 0

Rates of Gap 0.0% 0.0% 0.0% 0.0%

Q3 to Q4 FY11/2015CoE 10-Jul-15 Q2 Results 21,582 1,126 1,074 884

Amount of Gap (1,418) 26 (126) 84

Rates of Gap (6.2%) 2.4% (10.5%) 10.5%

Q3 to Q4 FY11/2015CoE 14-Jan-15 Q4 Results 23,000 1,100 1,200 800

Q3 to Q4 FY11/2015CoE 10-Jul-15 Q2 Results 21,582 1,126 1,074 884

Amount of Gap (1,418) 26 (126) 84

Rates of Gap (6.2%) 2.4% (10.5%) 10.5%

Source: Company Data, WRJ Calculation

11

FY11/2015 Company Forecasts

FY11/2015 initial Company forecasts have remained unchanged, going for prospective sales ¥43,000m (up

19.9% YoY), operating profit ¥2,000m (up 39.9%), recurring profit ¥2,100m (up 21.4%) and net profit

¥1,400m (up 10.2%). Meanwhile, prospective dividend per share has also remained unchanged at ¥14.0,

implying payout ratio 29.0%, which is up ¥1.5 from ¥12.5, implying payout ratio 28.5% and DOE 1.2%, in

FY11/2014.

The Company advocates dividend policy, comprising a) materializing sustainability of payout, b)

maintaining DOE more than 1.0% and c) seeing base payout ratio 30%, while the Company is to carry out

the payout in line with this.

Sales & Operating Profit Margin

7,1

87

8,3

23

8,0

76

9,5

58

8,3

46

8,8

42

8,6

99

9,9

73

10,2

87

11,1

30

10,7

90

10,7

90

2.3%5.2%

2.8%

5.9%3.0%

4.8%2.9%

5.1%3.5% 4.6% 5.2% 5.2%

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

0

5,000

10,000

15,000

Q1

FY

11/2

013

Q2

FY

11/2

013

Q3

FY

11/2

013

Q4

FY

11/2

013

Q1

FY

11/2

014

Q2

FY

11/2

014

Q3

FY

11/2

014

Q4

FY

11/2

014

Q1

FY

11/2

015

Q2

FY

11/2

015

Q3

FY

11/2

015

Q4

FY

11/2

015

Sales (Million Yen) Operating Profit Margin (%)

Source: Company Data, WRJ Calculation (Q3 & Q4 FY11/2015 forecasts: half year Company forecasts, pro rata)

Above-mentioned Company forecasts suggest net increases of sales ¥7,137m and ¥570m in operating profit

in FY11/2015 over FY11/2014, versus net add-ons, respectively, ¥6,000m and ¥305m (after goodwill

write-off), stemming from SCOVILL newly consolidated since Q1 FY11/2015. Meanwhile, the Company is

going for prospective sales ¥1,900m and operating loss ¥18m (after goodwill write-off) for MATEX INC.

newly consolidated since Q3 FY11/2014. A simple calculation implies that more than half of net increases of

operating profit for the Company are due to SCOVILL.

In particular, SCOVILL is expected to drive earnings of the Company in H2. Company forecasts are going

for prospective sales ¥3,214m, operating profit ¥208m (after goodwill write-off) and operating profit margin

6.5% in H2 for SCOVILL versus ¥2,786m, ¥98m and 3.5%, respectively, in Q1 to Q2 (H1).

12

Long-Term Prospects

The Company is trying to get at long-term sales growth, going forward, combined with persistently

improving ROE, by means of pursuing three expansions, i.e., a) expansion of market shares for accessories

on a global basis, b) expansion of own-brand merchandises and c) expansion of business by mergers &

acquisitions in the current business domains.

Long-Term Prospects

30

,82

3

31

,11

6

31

,52

1

33

,14

5

35

,86

2

43

,00

0

3.1%2.3%

3.2%4.1% 4.5% 5.0%

(5.0%)

0.0%

5.0%

10.0%

15.0%

0

50,000

100,000

150,000

FY

11

/201

0

FY

11

/201

1

FY

11

/201

2

FY

11

/201

3

FY

11

/201

4

FY

11

/201

5

FY

11

/201

6

FY

11

/201

7

FY

11

/201

8

FY

11

/201

9

FY

11

/202

0

FY

11

/202

1

FY

11

/202

2

FY

11

/202

3

FY

11

/202

4

FY

11

/202

5

Sales (Million Yen) ROE (%)

Source: Company Data, WRJ Calculation

First, a) expansion of market shares for accessories on a global basis, basically, relates to that of overseas.

For example, the Company has already cultivated the domestic market for apparel materials in Japan to a

large extent and thus further upside appears rather limited, while there remains ample room to cultivate

overseas, going forward. On top of this, it is spotted that the Company should be able to pursue profit

margin higher than Japan in the markets overseas, as business is rarely exposed to intervening traders, etc.

which sees their own profit margin, unlike Japan.

Meanwhile, both a) expansion of market shares for accessories on a global basis and b) expansion of

own-brand merchandises are to be driven by c) expansion of business by mergers & acquisitions in the

current business domains. For example, the Company merged with SCOVILL (GSG Fastener, LLC), i.e.,

manufacturer of apparel materials, based in Georgia, U.S.A., in October 2014. As far as we could gather, this

gave the Company new sales network to sell to apparel manufacturers based in Europe and America, while

new production facilities as well. The former is to encourage a) expansion of market shares for accessories on

a global basis and the latter b) expansion of own-brand merchandises, in our view.

13

4.0 Business Model

Wholesaling Apparel Materials & Consumer-Products Materials on A Global Basis

The Company is running operations of wholesaling apparel materials and consumer-products materials on a

global basis as the key earnings source. The former and the latter almost evenly share sales of the Company

as a whole. Meanwhile, apparel materials carry gross profit margin higher than consumer-products

materials, as far as we could gather.

At the same time, the Company, originally being a trader, is seeing increasing exposure to manufacturing by

means of mergers & acquisitions, currently accounting for some 15% of sales, while remaining 85%

accounted for by those as a pure trader. As far as we could gather, the Company, originally being a trader, is

highly reliant on earnings as a trader at the moment, while profitability on the manufacturing side remains

low. Still, it could be said that the profitability of the manufacturing could improve, going forward, because

of this.

Meanwhile, through FY11/2011 to FY11/2014, the Company has steadily cultivated markets overseas. The

Company saw sales composition ratio 76.5% in FY11/2014 versus 82.4% in FY11/2011 for Japan, while

16.5% versus 12.7% in Asia and 7.0% versus 4.9% in Europe & America. Segment profit margin in Asia has

been above that of Japan, having come in at 6.3% versus 4.4% in Japan in FY11/2014. Meanwhile, segment

profit margin in Europe & America came in at 7.4% in FY11/2014, having exceeded that of Asia, given

substantial improvements in FY11/2014 over FY11/2013.

Apparel Materials Business & Consumer-Products Materials Business

Source: Company Data

14

Basically, the Company has limited opportunities to exceed market growth as far as the domestic market in

Japan is concerned, give that it has already cultivated the market to a large extent, while there remains

ample room to cultivate in the markets overseas, going forward. One of the reasons why the Company sees

segment profit margin higher than Japan in the markets overseas but for Japan is that it is difficult for the

Company to insulate itself from the same old traditional distribution scheme, which is inefficient and

multilayered. In the markets overseas, it is sometimes the case that the Company directly supplies

materials to local sewing plants of apparel manufacturers. In here, there is no room for profit margin

generated by intervening traders, etc. and only that of the Company exists.

In the first place, the Company makes profit margin by efficiently selling diverse materials to delivery

destinations, on behalf of small-sized manufactures with no sales capability. As far as we could gather, more

than half of sales of the Company as a whole are accounted for by materials procured from all those

small-sized manufacturers, while they are often exposed to the Company overwhelmingly in terms of sales

of their own materials and the bulk of them have been persistently doing so for a long period. In terms of

apparel materials, more than half of overseas sales are accounted for by materials procured like this in

Japan.

In the market for wholesaling of apparel materials, consolidation has been made on a global basis, resulting

in three major players evenly sharing the market, roughly speaking, i.e., the Company, YKK

CORPORATION and Prym Group or the establishment based in Germany. Apparel materials as

merchandises that they deal in do not have distinguished features almost in any respects each other, while

delivery destinations require many issues to achieve stable and on-time delivery purely in line with needs.

To date, only the most appropriate players have survived and the Company is one of them.

Sales Composition Ratio by Region & Segment Profit Margin

Sales Composition Ratio Segment Profit Margin

82.4% 82.5% 77.6% 76.5%

12.7% 12.5% 16.6% 16.5%

4.9% 5.0% 5.8% 7.0%

0%

50%

100%

FY11/2011 FY11/2012 FY11/2013 FY11/2014

Europe & America Asia Japan

5.8%4.8% 5.2%

4.4%

9.4%8.6%

5.7%6.3%

3.7%3.1%

1.6%

7.4%

0.0%

5.0%

10.0%

FY11/2011 FY11/2012 FY11/2013 FY11/2014

Japan Asia Europe & America

Source: Company Data, WRJ Calculation

15

Meanwhile, the delivery destinations or apparel manufacturers are inclined to procure specific materials to

be adopted in final products from specific suppliers, rather than procuring them from plural vendors. For

example, a major apparel manufacturer procures 100% from the Company as far as down jacket buttons are

concerned, while 100% for jeans buttons YKK CORPORATION. Thus, it is the case that the demand for

specific final product of specific apparel manufacturer directly drives sales of the Company, rather than

sales trend as a whole for specific apparel manufacturer, as far as we could gather.

16

Apparel Materials Business

Consumer-Products Materials Business

Source: Company Data

17

5.0 Financial Statements

Income Statement

Income Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

FY FY FY FY FY FY YoY

(Million Yen) 11/2010 11/2011 11/2012 11/2013 11/2014 11/2015 Net Chg.

Sales 30,823 31,116 31,521 33,145 35,862 43,000 +7,137

Cost of Sales 22,643 22,994 23,393 24,655 26,603 - -

Gross Profit 8,180 8,122 8,128 8,489 9,258 - -

SG&A 6,738 6,615 6,738 7,098 7,829 - -

Operating Profit 1,441 1,506 1,389 1,390 1,429 2,000 +570

Non Operating Balance (128) (169) 15 308 300 100 (200)

Recurring Profit 1,313 1,337 1,405 1,699 1,729 2,100 +370

Extraordinary Balance (128) (248) (81) 33 182 - -

Pretax Profit 1,184 1,088 1,323 1,733 1,912 - -

Tax Charges, etc. 453 540 533 651 642 - -

Net Profit 720 542 787 1,081 1,270 1,400 +129

Sales YoY +2.7% +1.0% +1.3% +5.2% +8.2% +19.9% -

Operating Profit YoY +69.7% +4.5% (7.7%) +0.1% +2.8% +39.9% -

Recurring Profit YoY +104.9% +1.8% +5.1% +20.9% +1.8% +21.4% -

Net Profit YoY +273.8% (24.7%) +45.3% +37.3% +17.4% +10.2% -

(Costs of Sales / Sales) 73.5% 73.9% 74.2% 74.4% 74.2% - -

Gross Profit Margin 26.5% 26.1% 25.8% 25.6% 25.8% - -

(SG&A / Sales) 21.9% 21.3% 21.4% 21.4% 21.8% - -

Operating Profit Margin 4.7% 4.8% 4.4% 4.2% 4.0% 4.7% +0.7%

Recurring Profit Margin 4.3% 4.3% 4.5% 5.1% 4.8% 4.9% +0.1%

Net Profit Margin 2.3% 1.7% 2.5% 3.3% 3.5% 3.3% (0.3%)

Tax Charges, etc. / Pretax Profit 38.3% 49.7% 40.3% 37.6% 33.6% - -

Source: Company Data, WRJ Calculation

Per Share Data

Per Share Data Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

(Before Adjustments for Split) FY FY FY FY FY FY YoY

(Yen) 11/2010 11/2011 11/2012 11/2013 11/2014 11/2015 Net Chg.

No. of Shares FY End (-000 Shares) 15,400 15,400 15,400 15,400 30,800 - -

Net Profit / EPS (-000 Shares) 14,724 14,640 14,537 14,486 28,972 - -

Treasury Shares FY End (-000 Shares) 741 843 914 913 1,826 - -

Earnings Per Share 48.9 37.1 54.2 74.7 43.9 48.3 -

Earnings Per Share (Fully Diluted) - - - - - - -

Book Value Per Share 1,618.0 1,638.3 1,718.2 1,888.1 1,017.8 - -

Dividend Per Share 15.5 16.0 17.0 20.0 12.5 14.0 -

Payout ratio 31.7% 43.2% 31.4% 26.8% 28.5% 29.0% -

Per Share Data Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

(After Adjustments for Split) FY FY FY FY FY FY YoY

(Yen) 11/2010 11/2011 11/2012 11/2013 11/2014 11/2015 Net Chg.

Share Split Factor 2 2 2 2 1 - -

Earnings Per Share 24.5 18.5 27.1 37.3 43.9 - -

Book Value Per Share 809.0 819.1 859.1 944.1 1,017.8 - -

Dividend Per Share 7.8 8.0 8.5 10.0 12.5 - -

Source: Company Data, WRJ Calculation

18

Segmented Information

Segmented Information Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

FY FY FY FY FY FY YoY

(Million Yen) 11/2010 11/2011 11/2012 11/2013 11/2014 11/2015 Net Chg.

Japan - 25,651 26,007 25,718 27,427 - -

Asia - 3,949 3,934 5,491 5,919 - -

Europe & America - 1,515 1,579 1,935 2,515 - -

Sales 30,823 31,116 31,521 33,145 35,862 43,000 +7,137

Japan - - +1.4% (1.1%) +6.6% - -

Asia - - (0.4%) +39.6% +7.8% - -

Europe & America - - +4.2% +22.6% +29.9% - -

Sales (YoY) +2.7% +1.0% +1.3% +5.2% +8.2% +19.9% -

Japan - 82.4% 82.5% 77.6% 76.5% - -

Asia - 12.7% 12.5% 16.6% 16.5% - -

Europe & America - 4.9% 5.0% 5.8% 7.0% - -

Sales (Composition Ratio) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% -

Japan - 1,483 1,258 1,349 1,194 - -

Asia - 372 336 315 373 - -

Europe & America - 56 48 30 186 - -

Segment Profit - 1,912 1,643 1,695 1,754 - -

Adjustments - (406) (253) (304) (325) - -

Operating Profit 1,441 1,506 1,389 1,390 1,429 2,000 +570

Japan - - (15.2%) +7.2% (11.5%) - -

Asia - - (9.5%) (6.2%) +18.3% - -

Europe & America - - (14.0%) (37.5%) +518.1% - -

Segment Profit （YoY） - - (14.1%) +3.2% +3.5% - -

Japan - 77.6% 76.6% 79.6% 68.1% - -

Asia - 19.5% 20.5% 18.6% 21.3% - -

Europe & America - 2.9% 2.9% 1.8% 10.6% - -

Segment Profit (Composition Ratio) 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% -

Japan - 5.8% 4.8% 5.2% 4.4% - -

Asia - 9.4% 8.6% 5.7% 6.3% - -

Europe & America - 3.7% 3.1% 1.6% 7.4% - -

Operating Profit Margin 4.7% 4.8% 4.4% 4.2% 4.0% 4.7% +0.7%

Source: Company Data, WRJ Calculation

19

Balance Sheet

Balance Sheet Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

FY FY FY FY FY FY YoY

(Million Yen) 11/2010 11/2011 11/2012 11/2013 11/2014 11/2015 Net Chg.

Cash & Deposit 6,368 5,724 6,566 6,822 7,862 - -

Accounts Receivables 8,814 9,243 8,879 9,445 10,388 - -

Inventory 2,462 2,706 3,153 3,462 4,557 - -

Other 823 760 670 970 1,409 - -

Current Assets 18,467 18,434 19,269 20,700 24,218 - -

Tangible Assets 8,406 8,252 8,456 9,200 10,111 - -

Intangible Assets 69 62 284 383 4,701 - -

Investments & Other Assets 4,281 4,939 4,766 5,528 6,562 - -

Fixed Assets 12,758 13,253 13,507 15,112 21,375 - -

Total Assets 31,225 31,688 32,777 35,813 45,593 - -

Accounts Payables 3,508 3,693 3,548 3,801 4,588 - -

Short Term Debt 400 350 350 350 5,335 - -

Other 1,360 1,374 1,585 1,571 1,959 - -

Current Liabilities 5,269 5,417 5,483 5,722 11,883 - -

Long Term Debt - - - - 911 - -

Other 2,205 2,384 2,404 2,738 3,309 - -

Fixed Liabilities 2,205 2,384 2,404 2,738 4,221 - -

Total Liabilities 7,474 7,802 7,888 8,460 16,104 - -

Shareholders' Equity 25,192 25,446 25,929 26,805 27,610 - -

Other (1,440) (1,559) (1,040) 546 1,877 - -

Net Assets 23,751 23,886 24,889 27,352 29,488 - -

Total Liabilities & Net Assets 31,225 31,688 32,777 35,813 45,593 - -

Equity Capital 23,717 23,848 24,889 27,352 29,488 - -

Interest Bearing Debt 400 350 350 350 6,247 - -

Net Debt (5,968) (5,374) (6,216) (6,472) (1,615) - -

Capital Ratio 76.0% 75.3% 75.9% 76.4% 64.7% - -

Net Debt Equity Ratio (23.7%) (21.1%) (24.0%) (24.1%) (5.9%) - -

ROE (12 months) 3.1% 2.3% 3.2% 4.1% 4.5% - -

ROA (12 months) 4.2% 4.3% 4.4% 5.0% 4.2% - -

Quick Ratio 288% 276% 282% 284% 154% - -

Current Ratio 350% 340% 351% 362% 204% - -

Days for Inventory Turnover 40 43 49 51 63 - -

Inventory Turnover 9.2 8.5 7.4 7.1 5.8 - -

Source: Company Data, WRJ Calculation

Cash Flow Statement

Cash Flow Statement Cons.Act Cons.Act Cons.Act Cons.Act Cons.Act Cons.CoE

FY FY FY FY FY FY YoY

(Million Yen) 11/2010 11/2011 11/2012 11/2013 11/2014 11/2015 Net Chg.

Operating Cash Flow 1,549 604 1,053 683 1,123 - -

Investing Cash Flow (786) (727) (170) (285) (5,865) - -

Operating CF & Investing CF 763 (123) 883 397 (4,741) - -

Financing Cash Flow (1,058) (366) 347 (346) 4,981 - -

Source: Company Data, WRJ Calculation

20

6.0 Other Information

“Design Your Bright Future with Our Various Parts. We Do It!”

The Company was found with philosophy “Active and Steadfast”, in June 1908, by Jyukichi Moritou. Since

then, the Company has been involved with offering of garment accessories (parts), including eyelets, hooks,

MAGICTAPE®, etc. In the early days, the Company used to benefit from changeover to Western from

Japanese in terms of clothing on a full-fledged basis in Japan. The business well expanded and, then, Morito

Shoten Corporation was set up at Karamonomachi, Higashi-ku, Osaka, with capital ¥0.5m, in December

1935. Eventually, this was followed by listing of the shares onto Osaka Stock Exchange 2nd Section, in July

1989.

To date, the Company has been heavily involved also with consumer-products materials, comprising those of

domains, e.g., transportation (automobiles, railways, etc.) and video equipment, on top of apparel materials.

Meanwhile, in order to enrich people’s lives with diverse items on a global basis, the Company has come up

with corporate vision “Aiming at Becoming a Global Growth Company”, while beefing up human resources,

manufacturing and sales on a global basis.

Meanwhile, the Company is trying to get at contributing to society by means of creating new value, in line

with the Company’s measure to view the market in Japan from overseas on top of cultivation in the markets

overseas, i.e., viewing the market overseas from Japan. At the same time, corporate culture to ensure

results by proactively making decision and acting, flexibly coping with changes of the trends, is quite

important to promptly grasp growth opportunities. The Company is to persistently make challenges to

become a corporate, increasingly being trusted on a global basis.

As corporate philosophy, the Company goes for “Design Your Bright Future with Our Various Parts. We Do

It!”. a) We make available a broad array of parts throughout the world, pursing a boundless market that

transcends product genres, b) We give shape to the needs of our customers, exercising authentic

craftsmanship and thereby enriching people’s lives and c) We demonstrate value-creating expertise from a

comprehensive point of view (i.e., in terms of fashion, function, comfort, safety), contributing to the creation

of better tomorrow in one with all our shareholders, according to the Company.

In addition, the Company's values, ways of thinking and action guidelines that have been shared among

employees as tactic knowledge are all defined as “MORIO Value” or stipulated in text for upcoming issues.

This has penetrated domestically and overseas, across the board, in the group, enhancing the unity and

centripetal force as a group.

21

Company History

Date Events

June 1908The Company, founded by Jukichi Moritou, opening a brokerage for eyelets and hooks

in a store in Nishi-ku, Osaka

December 1935 Morito Shoten Corporation (capital ¥0.5m) , established in Karamonomachi, Osaka.

June 1958 Start selling color nylon zipper

May 1960 Start selling MAGICTAPE®

August 1963 Morito Shoten Corporation, renamed MORITO & Co., Ltd.

August 1969COLOR FASTENER INDUSTRIAL CO., LTD., established (currently, consolidated

subsidiary)

November 1976 Morito & Co., Ltd., renamed Morito Co., Ltd.

April 1977Morito Industrial Co., (H.K.) Ltd., established in Hong Kong (currently, consolidated

subsidiary)

June 1983 Kane-M Inc., established in U.S.A. (currently, consolidated subsidiary)

January 1985 Morito (Europe) B.V., established in Netherlands (currently, consolidated subsidiary)

March 1987 Ace Industrial Machinery Co., Ltd., established (currently, consolidated subsidiary)

September 1988 Taiwan Morito Co., Ltd., established in Taiwan (currently, consolidated subsidiary)

July 1989 Stock listed on the second section of the Osaka Securities Exchange

August 2001

Through M&A arrangements and as subsidiaries of Morito Industrial Co., (H.K.) Ltd.

Wah Kin Metal Products Mfg. Co., Ltd., acquired (consolidated subsidiary, China)

Morito (Shenzhen) Co., Ltd., acquired (consolidated subsidiary, China)

August 2003 Kane-M Shanghai Co., Ltd., established (currently, consolidated subsidiary)

September 2003 THREE RUNNERS CO.,LTD., acquired (currently, consolidated subsidieary)

March 2008 ANNU ARE CO., LTD., acquired

March 2008

Business/capital partnership with the Kuraray Group, started, 30% of shares

outstanding in Kuraray Fastening Co., Ltd., acquired (currently, equity-method

affiliate)

January 2010 Morito Vietnam Co., Ltd., established (currently, no consolidated subsidiary)

June 2010Morito Ishihara Auto Parts (Shenzhen) Co., Ltd., established in China (currently, no

consolidated subsidiary)

November 2010KANE-M DANANG Co., Ltd., established in Vietnam (currently, consolidated

subsidiary)

April 2011Kane-M (Thailand) Co., Ltd., established in Thailand (currently consolidated

subsidiary)

July 2013 Transition by market integration to the second section of the Tokyo Stock Exchange

March 2014 MATEX INC., acquired (currently, consolidated subsidiary)

October 2014 GSG FASTENERS,LLC, acquired (currently, consolidated subsidiary)

22

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Information here is a summary of “IR Information” of the Company, compiled by Walden Research Japan,

from a neutral and professional standing point, in the form of a report. “IR Information” of the Company

comprises a) contents of our interview with the Company, b) contents of presentations for institutional

investors, c) contents of timely disclosed information and d) contents of the homepage etc.

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