Note: This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

October 12, 2023

Consolidated Financial Results
for the Fiscal Year Ended August 31, 2023
(Under Japanese GAAP)
Company name:
TRANSACTION CO., Ltd.
Listing:
Tokyo Stock Exchange
Securities code:
7818
URL:
http://www.trans-action.co.jp.e.zy.hp.transer.com/
Representative:
Satoshi Ishikawa, Chairman and Representative Director
Inquiries:
Yoshinari Kitayama, Director
Telephone:+81-3-6861-5577
Scheduled date of annual general meeting of shareholders:November 29, 2023
Scheduled date to commence dividend payments:
November 8, 2023
Scheduled date to file annual securities report:
November 29, 2023
Preparation of supplementary material on financial results:
Yes
Holding of financial results briefing:
Yes (for analysts, institutional investors,
and the press)(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the fiscal year ended August 31, 2023 (from September 1, 2022
to August 31, 2023)(1) Consolidated operating results(Percentages indicate year-on-year changes.)

Net sales
Fiscal year ended

Operating profit

Profit attributable toowners of parent

Ordinary profit

Millions of yen%

Millions of yen%

Millions of yen%

August 31, 2023

22,958

25.6

4,658

44.1

4,786

August 31, 2022

18,273

6.6

3,231

14.6

3,304

Note: Comprehensive income

For the fiscal year ended August 31, 2023:
For the fiscal year ended August 31, 2022:

Basic earnings
per share

Diluted earnings
per share

Millions of yen

%

44.9

3,305

50.6

14.9

2,195

6.6

¥3,579 million¥2,677 million

Return on equity[33.7%][25.2%]

Ratio of ordinary
profit to total assets

Ratio of operating
profit to net sales%%

Fiscal year ended

Yen

August 31, 2023

113.50

–

22.3

25.7

20.3

August 31, 2022

75.43

–

17.8

21.3

17.7

Reference:

Yen%

Share of profit (loss) of entities accounted for using equity method
For the fiscal year ended August 31, 2023:¥– million
For the fiscal year ended August 31, 2022:¥– million(2) Consolidated financial position
Total assets
As of

Net assets

Equity-to-asset ratio

Net assets per share

Millions of yen

Millions of yen

August 31, 2023

20,59916,23678.8

557.41

August 31, 2022

16,65013,35480.2

458.84

Reference:

EquityAs of August 31, 2023:
As of August 31, 2022:¥16,236 million¥13,354 million%

Yen(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash and cash
equivalents at end of
periodCash flows fromfinancing activities

Fiscal year ended

Millions of yen

Millions of yen

August 31, 2023

3,767

(1,481)

(555)

6,060

August 31, 2022

239

(213)

(819)

4,351

Millions of yen

Millions of yen

2. Cash dividends
Annual dividends per share
First
SecondThird
quarter-end quarter-end quarter-end
Yen
Fiscal year ended

August 31, 2022
Fiscal year ended

August 31, 2023

Yen

Fiscalyear-end

Yen

Total cash
dividends(Total)

Total

Yen

Ratio of
Payout ratio dividends to(Consolidated) net assets(Consolidated)

Yen Millions of yen

%

%

–

0.00

–

25.00

25.00

727

33.1

5.9

–

0.00

–

35.00

35.00

1,019

30.8

6.9

–

0.00

–

37.00

37.00

Fiscal year ending

August 31, 2024

30.8

(Forecast)

Note:

Revisions to the forecasts of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending August 31, 2024 (from September 1,
2023 to August 31, 2024)
Net sales

Six months ending
February 29, 2024
Fiscal year ending
August 31, 2024

(Percentages indicate year-on-year changes.)
Profit attributable to Basic earnings per
Ordinary profit
owners of parent
share

Operating profit

Millions ofyen%Millions ofyen%Millions ofyen%Millions of
yen

%

Yen

12,278

8.9

2,577

11.0

2,634

11.7

1,732

11.1

59.48

25,160

9.6

5,220

12.1

5,329

11.3

3,501

5.9

120.20* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in thechange in scope of consolidation): None
(2) Changes in accounting policies, changes in accounting estimates, and restatement(i) Changes in accounting policies due to revisions to accounting standards and other regulations:None(ii) Changes in accounting policies due to other reasons: None(iii) Changes in accounting estimates: None(iv) Restatement: None
(3) Number of issued shares (common shares)(i)

Total number of issued shares at the end of the period (including treasury shares)
As of August 31, 2023

29,375,400 shares

As of August 31, 2022

29,375,400 shares(ii) Number of treasury shares at the end of the period
As of August 31, 2023

246,865 shares

As of August 31, 2022

270,865 shares(iii) Average number of shares outstanding during the period
Fiscal year ended August 31, 2023

29,120,776 sharesFiscal year ended August 31, 2022

29,104,535 shares[Reference] Overview of non-consolidated financial results
Non-consolidated financial results for the fiscal year ended August 31, 2023 (from September 1, 2022
to August 31, 2023)(1) Non-consolidated operating results(Percentages indicate year-on-year changes.)

Net sales

Operating profit

Ordinary profit

ProfitFiscal year ended

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

August 31, 2023

1,427

8.5

782

5.9

936

6.5

964

18.0

August 31, 2022

1,315

(6.7)

739

(11.5)

878

3.5

817

(4.1)

Basic earnings
per share

Diluted earnings
per share

Fiscal year ended

Yen

August 31, 2023

33.12

–

August 31, 2022

28.10

–

Yen

(2) Non-consolidated financial position
Total assets
As of

Net assets

Equity-to-asset ratio

Net assets per share

Millions of yen

Millions of yen

August 31, 2023

7,088

5,681

80.2

195.05

August 31, 2022

5,910

5,053

85.5

173.63

Reference:

EquityAs of August 31, 2023:
As of August 31, 2022:¥5,681 million¥5,053 million%

Yen* Financial results reports are exempt from audit conducted by certified public accountants or an audit
corporation.
* Proper use of earnings forecasts, and other special matters
1. The financial forecast and other forward-looking statements in this material are based on information
currently available to the Company and certain preconditions considered to be reasonable. Actual
performance, etc. may vary depending on various factors. For the preconditions on which the earnings
forecast is based and notes, etc. for using the earnings forecast, please refer to “(4) Future outlook” in“1. Summary of operating results, etc.” on page 6 of the Financial Results (attached file).
2. The Company plans to hold a financial results briefing for institutional investors and analysts on
October 20, 2023. The material on financial results used for the briefing will be posted on the
Company’s website by the same day.

[Attached Material]
Index
1. Summary of Operating Results, etc. ......................................................................................................... 2(1) Summary of operating results during period ...................................................................................... 2(2) Summary of financial condition during period................................................................................... 4(3) Summary of cash flows during period................................................................................................ 5(4) Future outlook .................................................................................................................................... 6(5) Basic policy on profit distribution, and dividends for the fiscal year under review and next fiscal year............................................................................................................................................................ 8(6) Business-related risks etc. .................................................................................................................. 9
2. Status of Corporate Groups..................................................................................................................... 12
3. Basic Approach to the Selection of Accounting Standards ..................................................................... 15
4. Consolidated Financial Statements and Major Notes ............................................................................. 16(1) Consolidated Balance Sheet ............................................................................................................. 16(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income .......... 18(Consolidated Statement of Income) ................................................................................................ 18(Consolidated Statement of Comprehensive Income) ...................................................................... 19(3) Consolidated Statement of Changes in Equity ................................................................................. 20(4) Consolidated Statement of Cash Flows ............................................................................................ 22(5) Notes to Consolidated Financial Statements .................................................................................... 23(Notes regarding assumption of a going concern) ............................................................................ 23(Basis for preparation of consolidated financial statements) ............................................................ 23(Consolidated balance sheet) ............................................................................................................ 26(Consolidated statement of income) ................................................................................................. 26(Consolidated statement of comprehensive income) ........................................................................ 29(Consolidated statement of changes in equity) ................................................................................. 30(Consolidated statement of cash flows) ............................................................................................ 32(Segment information) ..................................................................................................................... 33(Per share information) ..................................................................................................................... 34(Subsequent events) .......................................................................................................................... 35-1-

1. Summary of Operating Results, etc.
(1) Summary of operating results during period
During the fiscal year under review, the Japanese economy showed signs of a gradual recovery due toimprovements in the employment and income environment and the easing of restrictions on activities
due to the COVID-19 pandemic. On the other hand, there was a series of price hikes on daily
necessities and increases in energy costs due to the weak yen, and the outlook remained uncertain as
the yen weakened again in the second half of the fiscal year.
In this environment, the TRANSACTION Group (the “Group”) executed marketing activities tocapture changes in the social environment and demand trends in a timely fashion, and strengthened new
product development based on the five key strategies designated in the 4th medium-term management
plan of “finished goods demand arising from the promotion of SDGs,” “tangible goods consumption
derived from intangible goods consumption,” “demand for revenge spending coming after COVID-19,”“strengthened e-commerce,” and “strengthened domestic in-house manufacturing.”
Eco-products
In Eco-products, under the key strategy of “finished goods demand arising from the promotion ofSDGs,” we strived to expand the product category of environmentally-friendly products. These
products are reusable products made from organic cotton, recycled materials, biomass plastics, andnatural materials. In addition, we drove expanding and offering the lineup of upcycled finished goods
that have been transformed into more valuable goods, by adding value such as ideas and design towasted resources. Since these are Eco-products that contribute to the achievement of the SDGs, they
are also highly regarded by client entities promoting SDGs and there have been increased opportunities
for use as novelties at exhibitions and seminars. Furthermore, overall sales promotions were revitalized
by the normalization of socioeconomic activities, resulting in strong sales of mainstay products such as
eco-bags and tumblers/thermo bottles, as well as stationery and cutlery products, significantly
exceeding those of the previous fiscal year.
Furthermore, we participated in the “Fairtrade Million Action Campaign 2023” again this fiscal year.
Recognition of the ethical brand “MOTTERU” further improved due to expanded color variations
incorporating genderless colors and the expansion of product categories such as cutlery products andumbrellas, as well as the development and launch of products in collaboration with popular charactersand products that combine functionality and design. As a result, our products were selected for the“Let’s choose! 3R Campaign 2022” sponsored by the Ministry of the Environment, as in 2021. In
addition, we participated in various campaign projects and worked on social contribution activities,
such as providing eco bags in support of the “SHIBUYA WANDERING CRAFT 2023 Colorful
Festival: 4 Colorful Days in Shibuya,” a summer holiday craft workshop event.
As a result, overall sales of Eco-products increased by 2,544 million yen, or 33.3% year on year.
Lifestyle products
In Lifestyle products, we set the key strategies of “tangible goods consumption derived from intangible
goods consumption” and “demand for revenge spending coming after COVID-19” and strengthened
sales to the entertainment industry. In particular, in the game and animation industry, which has been amajor driver of Lifestyle products sales, as well as in the VTuber, 2.5D, and sporting events industries,
the holding of major in-person events and other industry-wide revitalization, partly due to a significant
easing of restrictions on the holding of events, resulted in a significant increase in sales over theprevious fiscal year. With the music, stage and other industries gradually regaining momentum, theCompany stepped up its sales activities to meet growing demand in the future. In pet wear and related
finished goods, as a result of increased recognition of the “RAKURUMU WEAR” product, which
received the 2022 Good Design Award, and efforts to expand sales channels by launching new products
in collaboration with outdoor and leisure-related product brands, as well as pet beds and toys themedon snack packages of a famous snack maker, sales were strong. On the other hand, while sales oftravel-related finished goods have not recovered to pre-COVID-19 levels, they more than tripledcompared to the previous fiscal year. During the fiscal year under review, while demand for domestic-2-

travel increased from the Golden Week (one of Japan’s major holiday seasons), demand for overseas
travel, which is linked to sales of travel-related finished goods, showed a strengthening recovery trend,
and we focused on sales activities such as sales channel expansion and new product development to
prepare for future recovery. As a result, overall sales of Lifestyle products increased by 2,452 million
yen, or 28.0% year on year.
Wellness products
In Wellness products, following the shift of COVID-19 to Category 5 under the Infectious Disease
Control Law, we have decided to discontinue handling “infection control products.” As for theremaining inventory, the Company recorded a 38 million yen loss on abandonment of inventories as an
extraordinary loss in the third quarter of the current fiscal year. As a result, sales decreased by 348
million yen, or 21.9% year on year.
 E-commerce businessIn the E-commerce business, in accordance with the key strategy of “strengthened e-commerce,” wereinforced initiatives to achieve the target of accounting for at least 30% of consolidated net sales in thefiscal year ending August 31, 2025. Sales of our main sites “HANSOKU-STYLE” and “MARKLESSSTYLE” grew significantly compared to the previous fiscal year as a result of efforts to promote use of
the sites by expanding the number of registered finished goods and improving their usability. In
particular, sales of “MARKLESS Connect” expanded significantly compared to the previous fiscal year
due to an increase in the number of companies that have introduced it and the remarkable results ofmeasures such as hybrid marketing activities that fuse the in-person sales approach with e-commerce
for partner companies. In the “D2C”* site, sales increased through effective use of social media
activities for our “Original Goods Press” platform site for product sales and OEM, and for the “Calulu
ONLINE STORE” for pet wear and related finished goods. We also renewed the “gowell” website,which handles travel-related finished goods, to deal with the future expansion of demand. As a result,along with the D2C site, the main sites recorded significant sales growth, leading to e-commerce sales
growing 1,619 million yen, or 56.2% from the previous fiscal year, and the sales composition ratio
expanded 3.8 percentage points from the previous fiscal year to 19.6%.
* An abbreviation for “Direct to Consumer,” a business model in which a manufacturer plans and manufactures its own
commodities and sells them directly to end customers without intermediaries such as wholesalers and stores.

On the production side, the Company worked to secure multiple production bases, flexibly switch
between production sites in response to exchange rate fluctuations and surging raw material prices, andoptimize distribution channels in order to achieve a stable and continuous supply and strengthen pricecompetitiveness. However, the Company was compelled to raise product prices from October 2022
onward due to the increased burden caused by the yen’s much higher-than-expected depreciation. At
our in-house factories in Japan, under our key strategy of “strengthening domestic in-housemanufacturing,” we have been striving to improve our in-house production rate and productivity by
expanding capacity and investing in new facilities, but due to higher-than-expected manufacturingcosts, we have raised printing and processing costs from January 2023 onward. In addition, inventory
levels that were built up in the previous fiscal year were maintained, but from the fourth quarter of the
fiscal year under review, the Company has been taking steps to optimize these levels.
As a result, both net sales and profits at each level reached record highs, with net sales for the fiscal
year under review reaching 22,958 million yen (up by 4,685 million yen, or 25.6% year on year).
Despite recording one-time expenses of 76 million yen in year-end bonuses to employees and 23
million yen in office renovations to improve the workplace environment, operating profit was 4,658
million yen (up by 1,426 million yen, or 44.1% year on year) due to securing gross profit from net sales
growth and well-planned expenditure of selling, general and administrative expenses, and ordinary
profit was 4,786 million yen (up by 1,482 million yen or 44.9% year on year). Profit attributable toowners of parent was 3,305 million yen (up by 1,109 million yen, or 50.6% year on year), due in part to-3-

a 41 million yen reduction in the tax burden resulting from the application of a wage increase
promotion tax system, despite recording extraordinary losses of 38 million yen due to discontinuationof handling of infection control products.
Actual sales for the fiscal year under review by sales channel and product classification were as
follows.
<Actual sales by sales channel>(Millions of yen)
Net sales

ChangeCategory
Previous fiscal year

Current fiscal year

Change(Amount)

Change(%)

Targeting end-user companies

8,384

10,686

2,301

27.4

Targeting wholesalers

7,005

7,769

763

10.9

E-commerce

2,882

4,502

1,619

56.2

18,273

22,958

4,685

25.6

Total

<Actual sales by product classification>(Millions of yen)
Net sales

ChangeCategory
Previous fiscal year

Current fiscal year

Change(Amount)

Change(%)

Eco-products

7,645

10,189

2,544

33.3

Lifestyle products

8,752

11,205

2,452

28.0

Wellness products

1,596

1,247

(348)

(21.9)

Design and other

279

316

36

13.2

18,273

22,958

4,685

25.6

Total
Note:

Design and other refers to those not falling under miscellaneous goods, including commissioned graphic,
products and WEB design operations, as well as printing operations.

(2) Summary of financial condition during period
Status of assets, liabilities, and net assets(Current assets)
Current assets at the end of the fiscal year under review amounted to 15,190 million yen, an increase of
2,379 million yen compared to the end of the previous fiscal year. This was due mainly to an increasein cash and deposits by 1,671 million yen, an increase in securities by 567 million yen, an increase infinished goods by 303 million yen, and a decrease in other current assets by 214 million yen.
(Non-current assets)
Non-current assets at the end of the fiscal year under review amounted to 5,408 million yen, an increaseof 1,569 million yen compared to the end of the previous fiscal year. This was due mainly to anincrease in investments and other assets by 1,484 million yen, an increase in property, plant andequipment by 46 million yen, and an increase in intangible assets by 38 million yen.

-4-

(Current liabilities)
Current liabilities at the end of the fiscal year under review amounted to 3,425 million yen, an increaseof 772 million yen compared to the end of the previous fiscal year. This was due mainly to an increase
in income taxes payable by 440 million yen, an increase in other current liabilities by 409 million yen,
and a decrease in accounts payable - trade by 76 million yen.
(Non-current liabilities)
Non-current liabilities at the end of the fiscal year under review amounted to 936 million yen, an
increase of 294 million yen compared to the end of the previous fiscal year. This was due mainly to anincrease in long-term borrowings by 196 million yen and an increase in deferred tax liabilities by 98
million yen.
(Net assets)
Net assets at the end of the fiscal year under review amounted to 16,236 million yen, an increase of
2,882 million yen compared to the end of the previous fiscal year. This was due mainly to an increase
in retained earnings by 2,577 million yen and an increase in valuation difference on available-for-salesecurities by 360 million yen.
(3) Summary of cash flows during period
Cash and cash equivalents at the end of the fiscal year under review amounted to 6,060 million yen (anincrease of 1,708 million yen, or 39.3% year on year). Interest-bearing liabilities at the end of the fiscal
year under review amounted to 763 million yen.
(Cash flows from operating activities)
Net cash provided by operating activities in the fiscal year under review amounted to 3,767 million yen(compared with 239 million yen provided by operating activities in the previous fiscal year). This wasdue mainly to an increase in cash due to profit before income taxes of 4,800 million yen and income
taxes refund of 96 million yen, and a decrease in cash due to income taxes paid of 1,289 million yen.
(Cash flows from investing activities)
Net cash used in investing activities in the fiscal year under review amounted to 1,481 million yen(compared with 213 million yen used in investing activities in the previous fiscal year). This was due
mainly to a decrease in cash due to purchase of investment securities of 1,487 million yen.
(Cash flows from financing activities)
Net cash used in financing activities in the fiscal year under review amounted to 555 million yen(compared with 819 million yen used in financing activities in the previous fiscal year). This was due
mainly to a decrease in cash due to dividends paid of 727 million yen and repayments of long-termborrowings of 458 million yen, and an increase in cash due to proceeds from long-term borrowings of
600 million yen.

-5-

(Reference) Changes in cash flow-related indicators
Fiscal year
ended Aug.
2019

Fiscal year
ended Aug.
2020

Fiscal year
ended Aug.
2021

Fiscal year
ended Aug.
2022

Fiscal year
ended Aug.
2023

Equity-to-asset ratio (%)

74.1

73.9

78.5

80.2

78.8

Equity-to-asset ratio on a market
value basis (%)

262.1

249.8

218.9

186.3

276.7

0.6

0.6

0.3

2.6

0.2

338.1

571.0

782.6

97.5

1,606.0

Ratio of interest-bearing liabilities tocash flow (Years)
Interest coverage ratio (Times)

Equity-to-asset ratio: Equity capital/Total assets
Equity-to-asset ratio on a market value basis: Market capitalization of equity/Total assets
Ratio of interest-bearing liabilities to cash flow: Interest-bearing liabilities/Cash flow
Interest coverage ratio: Cash flow/Interest payment
Note 1: The above figures are calculated based on figures on a consolidated basis.
Note 2: The market capitalization of equity was obtained by multiplying the closing price at the stock exchange on the
final day of the period under review (or the final operating day of the market if the final day was a holiday) by
the number of outstanding shares at year end excluding the number of treasury shares.
Note 3: Cash flow refers to cash flows from operating activities.
Note 4: Interest-bearing liabilities refer to all debt on the consolidated balance sheet for which the Company pays
interest. Interest payment is based on the amount of interest paid on the consolidated statement of cash flows.

(4) Future outlook
For the fiscal year ending August 31, 2024, the Japanese economy is expected to continue its gradual
recovery as socioeconomic activities normalize and the employment and income environment andcorporate earnings improve due to the diminished impact of the COVID-19 pandemic, but conditions
are expected to remain challenging due to price hikes of daily necessities and rising energy costs
caused by the weak yen.
In these circumstances, the Group will continue to promote the introduction of new products, thedevelopment of client entities, and the strengthening of relationships by capturing changes in the social
environment and consumption trends in a timely and appropriate manner without fail, in Eco-products,
Lifestyle products, and Wellness products, with key strategies as “product demand generated by SDGs
promotion,” “tangible goods consumption derived from intangible goods consumption,” “demandarising from reopening*,” “strengthened e-commerce,” and “strengthened domestic in-housemanufacturing.”* The strategy for “demand for revenge spending coming after COVID-19” remains unchanged, but the name will bechanged to “demand arising from reopening” beginning from the fiscal year ending August 31, 2024.

 Unique business model
The Group’s unique business model is based on the ability to plan and propose products in a shortperiod of time based on unprecedented ideas, such as “things that are convenient to have,” “things that
anticipate trends,” and “necessary things that are not in the market (or are lacking),” the ability to
produce and procure products in bulk at low cost and in plain form through overseas suppliers and holdthem in Japan, and the ability to add high-quality added-value to these plain products through printing
and processing, and offer them at low prices and with short delivery times. In addition, by visualizing
the entire process through e-commerce, we differentiate ourselves from our competitors and develop
our business.
In our unique business model, we provide the “MARKLESS Connect”* system, which was developed
aiming to strengthen the e-commerce business, to client companies in order to effectively increase theperformance of both the Group and its client companies by eliminating waste and improving theefficiency of their order receiving and placing operations.

-6-* This is a system that allows us to complete all transactions with client entities, such as checking the inventory statusof our products (stock quantity, out-of-stock items, and next delivery date), order receipt and placement, designsubmission, and payment, through e-commerce, thereby improving efficiency without human intervention.

 E-commerce businessIn the E-commerce business, the Group has adopted the key strategy of “strengthened e-commerce,”
and aims to increase sales of B2B and D2C* sites operated by the Group by stepping up investments to
expand e-commerce systems, with the goal of achieving the target of accounting for at least 30% ofconsolidated net sales in the fiscal year ending August 31, 2025.
Regarding the main B2B site “MARKLESS STYLE,” “MARKLESS Connect,” which contributed tothe expansion of business results in the fiscal year under review, is now on track, and the Company haschanged from a system in which sales staff handled everything from order receipt to delivery andestablished a system that enables hybrid marketing activities that fuse the in-person sales approach with
e-commerce by efficiently using both sales staff and the e-commerce site “MARKLESS STYLE”
according to the size of the project. This will enable us to conduct sales activities more efficiently andeffectively than before, and we expect that this will lead to sales expansion in response to future growthin demand.
In addition to our B2B site, we are striving to increase the number of members and promote usage ofour main site for end-user companies, “HANSOKU STYLE,’’ through measures such as expanding thenumber of registered finished goods and improving the usability of the site. In addition to our own
platform site “Original Goods Press’’ for product sales and OEM, and “Original Goods.com,” which
produces original corporate goods for sale and commemorative gifts, we are working to increase thenumber of members and improve the repeat rate through effective use of social media on our original
brand sites, such as the “Calulu ONLINE STORE,” which handles pet wear and related finished goods,
and the “gowell” site, which handles travel-related finished goods. By expanding and enhancing theseD2C sites, we are strengthening our approach to customer segments that we have not been able toaddress in the past. In the next fiscal year, we plan to expand sales and profits by further promoting
these initiatives and thereby expanding the scale of our business.
* An abbreviation for “Direct to Consumer,” a business model in which a manufacturer plans and manufactures its own
commodities and sells them directly to end customers without intermediaries such as wholesalers and stores.

Eco-products
To achieve the Sustainable Development Goals (SDGs) by 2030, proactive investment by nations andcompanies is essential. In addition, companies and individuals can achieve their goals by selecting ecofriendly products and taking actions to reduce their environmental impact, a trend that is expected toaccelerate even more.
The eco-products handled by the original brand “MARKLESS STYLE” include reusable products
made from organic cotton, recycled materials, biomass plastics, and natural materials, as well as
upcycled finished goods that have been transformed into more valuable goods, by adding value such asideas and design to wasted resources. As these products contribute to achieving the SDGs, amid
normalization of socioeconomic activities, they are increasingly being highly regarded and supported
by environmentally conscious client entities for uses as novelties for sales promotions andmerchandising items at events, etc. In addition, the ethical brand “MOTTERU,” which is being
developed for the retail market based on the brand concept of “non-use of disposable items” and“reusable items,” received the Good Design Award for the fourth time in 2023, further increasing its
name recognition.
In the next fiscal year, we plan to increase sales and profits through social contribution initiatives andnew product development to achieve the SDGs goals of “Responsible Consumption and Production”
and “Life Below Water.”-7-

Lifestyle products
In recent years, people’s lifestyles have changed significantly. However, even as lifestyles change,
there will be no change in the form of “tangible goods consumption derived from intangible goods
consumption,” and demand will increase as much as the number of interests and preferences. In
addition, with the dawn of the post-pandemic era, “demand arising from reopening” is expected toincrease demand through sales promotions by client entities.
In the game and animation industry, which is driving Lifestyle products, as well as in the VTuber, 2.5D
and sporting events industries, it is expected that major in-person events will be held and thatmerchandise sales items at event venues will be diversified and will demand high quality. In addition,
during the fiscal year under review, some companies were unable to effectively implement sales
promotions due to price hikes and other factors. However, going forward, we expect overall sales
promotions, such as campaign projects, to become more active. In order to respond these demands, wehave introduced new printing equipment at our factories in Japan from the current fiscal year, as well as
developing a production system to meet the increased demand. This will enable us to offer products in
new categories and products with clear full-color printing.
In pet wear and related finished goods, we expect continued strong performance by expanding sales
channels and strengthening development of new products. In travel-related finished goods, we had
expected a rapid expansion in overseas as well as domestic travel demand, which represents “intangible
goods consumption,” during the fiscal year under review, but a full-fledged recovery has not been
observed. However, in the next fiscal year, overseas travel demand is expected to increase from theyear-end and New Year holidays, and will likely be in full swing from the Golden Week holiday period
through the summer vacation period. In response to this demand, we will strive to provide finishedgoods developed with the concept of “travel goods that are sure to be useful all over the world!” under
the travel-related finished goods brand “gowell” which has expanded its sales channels and developed
new products under the brand theme of “safer, more comfortable, and more fulfilling” as a key word.
Wellness products
In the fiscal year under review, we discontinued the handling of infection control products that had
been urgently needed due to the COVID-19 pandemic. Looking ahead, although there will be a certain
level of demand for sanitary products such as masks and disinfectant sprays, we do not anticipate sales
growth.
On the production side, the Company will work to secure multiple production bases, flexibly switch
between production sites in response to exchange rate fluctuations and surging raw material prices, andoptimize distribution channels in order to achieve a stable and continuous supply and strengthen pricecompetitiveness. We will also increase the frequency of visits to overseas suppliers’ factories toimprove product quality and reduce product loss rates. In addition, by developing new overseas anddomestic suppliers, we will strive to further strengthen our price competitiveness and improve profit
margins. With regard to responding to the increasing demand for printing and processing at our own
factories in Japan, we plan to complete construction of our second factory in March 2024, and haveplans to further expand capacity and invest in new printing equipment. As a result, we expect the inhouse production ratio and productivity to improve from the latter half of the fourth quarter.
As a result, the consolidated financial forecast for the fiscal year ending August 31, 2024 is net sales of
25,160 million yen, operating profit of 5,220 million yen, ordinary profit of 5,329 million yen, andprofit attributable to owners of parent of 3,501 million yen.
(5) Basic policy on profit distribution, and dividends for the fiscal year under review and next fiscal
year
The Company’s basic policy is to continue providing returns to shareholders commensurate withconstant performance improvement and continuous profit distribution in accordance with earnings.
-8-

With this policy in mind, we set a policy to strengthen the business infrastructure and improve thedividend payout ratio, taking into consideration capital requirements and financial soundness to pursue
business expansion and profit improvement in the future.
The year-end dividend for the fiscal year ended August 31, 2023 will be 35 yen per share, an increaseof 10 yen from the previous fiscal year, as announced in “Notice Concerning Revisions to the Annual
Earnings Forecast and Upward Revision to Dividend Forecast for the Fiscal Year Ended August 31,
2023” disclosed on October 6, 2023.
The year-end dividend for the next fiscal year ending August 31, 2024 will be 37 yen per share, basedon the above dividend policy. This will mark the 13th consecutive fiscal year of dividend increases
since the Company’s listing.
(6) Business-related risks etc.
There are risks and fluctuation factors that may affect the Group’s business performance and financial
status, etc., as described below. With the presence of these risks in mind, we will continue making
efforts to avoid an adverse effect resulting from the occurrence of relevant risks.
- Business opportunity risk
Risk related to acquisition and reduction of business opportunities, and business closure, etc.
- Operational risk
Risk related to the inappropriateness of an internal process, personnel, and systems- External environmental risk
Risk related to external factors that cannot be controlled by the Group<Business opportunity risk>(i) Risk that adversely affects the business due to market and economic developments
The Group sells miscellaneous goods to companies for their sales promotion purposes. Therefore, if acustomer company reduces advertisement and sales promotion expenses or postpones the timing ofmarketing depending on the trends in the market to which it belongs, or economic trends, the Group’sbusiness performance may be adversely affected. The Group also sells miscellaneous goods towholesale and retail companies. The business performance of these companies, and a decrease ingeneral consumer purchases due to an economic slowdown that triggers a fall in consumer confidence,
may adversely affect the Group’s performance and financial condition.
(ii) Risk arising from defects or supply disruption of products
A product or service provided by the Group may become defective for any reason. A product or service
that is found to be defective may be subject to discount, reproduction, re-examination, withdrawal, etc.
We pay due attention to quality control and production management, etc. to prevent product failure.
However, if a product is found to be defective in a deal in which a large order is received, the Group’sbusiness performance may be adversely affected.
We subscribe to product liability insurance in preparation for a product defect. However, if
compensation is ordered pursuant to the Product Liability Act because of a product defect, and the final
amount of compensation is not adequately covered by the insurance, the Group’s business performance
may be adversely affected.
In addition, the Group handles products of characters and various brands by utilizing manufacturingknowhow of miscellaneous products. We have entered into a license agreement for commercialization
with the copyright holders of these products, and believe that we have a good relationship with them.
However, if the renewal of the agreement is rejected because the terms and conditions are changed at
the time of renewal and the conditions are not met, or the license agreement is cancelled and terminated-9-due to the bankruptcy of the copyright holder or discontinuance of the brand, etc., the Group’s businessperformance may be adversely affected.
<Operational risk>(i) Risk arising from leakage and loss of personal information and customer information
We pay due attention to prevent the leakage of personal information and customer information held by
the Group. Specifically, in line with the Personal Information Management Rules and the Information
System Management Rules, etc., we raise employee awareness about information management
internally, while entering into a confidentiality agreement with outside business contractors who handle
data. However, if confidential information and personal information is leaked due to computer hacking
by an unknown party, or negligence by an interested person, etc., resulting in a loss of confidence in theGroup, the Company’s business performance may be adversely affected.
(ii) Risk arising from the inadequacy of legal compliance
The Group conducts business in compliance with the Product Liability Act, the Act against
Unjustifiable Premiums and Misleading Representations, the Food Sanitation Act, and the Act on
Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices(former Pharmaceutical Affairs Act), among others. We conduct business by paying due attention inorder to not violate these laws. However, if a violation occurs, the Group’s business performance may
be adversely affected.
In addition, depending on the details of a proposed plan, the products and services provided by theGroup may infringe a third party’s intellectual property right (or constitute an act of unfair
competition). When making proposals or commencing production, we confirm the presence ofintellectual property rights, except in the case of general-purpose goods. Basically, we have a patent
attorney confirm this. However, if a dispute occurs unexpectedly after the provision of products andservices, the Group’s business performance may be adversely affected.
(iii) Risk related to CSR procurement
The Group strictly requests suppliers to whom production is contracted out in China and othercountries in Asia to provide workers with a fair and safe working environment in compliance with the
Fair Labor Standards Act of the United States and other laws. However, if a supplier’s plant is inviolation of laws, the Group’s business performance may be adversely affected.
<External environmental risk>(i) Risk concerning the occurrence of a factor that may prevent proper production of products
The Group is a “moving model fabless”(*) company and contracts out production to suppliers in China
and other countries in Asia. Therefore, the bankruptcy, etc. of a production contractor may result in adelivery delay or require reproduction, etc., which may affect the Group’s performance. In addition, if
the country of residence of a supplier to whom production is contracted out experiences political orsocial unrest, natural disasters, terrorism, conflict, diseases, currency upvaluation, a failure of
infrastructure, etc., resulting in trouble caused in material procurement, production and distribution, theCompany’s business performance may be adversely affected.
The Group also handles many needlework products, including eco bags, and molded products,
including design miscellaneous goods, etc. A sharp rise in the prices of raw materials, including cottonand petrochemical products, may affect procurement prices. Taking full advantage of our “moving
model fabless” company, we choose affordable production sites in China and other countries in Asia,and implement countermeasures, including review of product prices. However, if the prices of raw
materials rise unexpectedly sharply, the Group’s business performance may be adversely affected.
* Contracting out production enables us to always choose an optimum production country and sites inorder to reduce manufacturing cost.

- 10 -

(ii) Risk related to trade conflict between the United States and China
The Group contracts out the production of products to suppliers in China and other countries in Asia.
Taking advantage of our “moving model fabless” company, we continued flexibly supplying products
in response to various situations by, for example, contracting out the production of the same products toseveral suppliers in different regions under the COVID-19 crisis. However, if a problem occurs in the
procurement of products due to, among others, a sharp rise in raw material prices resulting from trade
restrictions caused by the recent trade frictions between the U.S. and China, or an unexpected event
caused by China’s political or legal restrictions, the Group’s business performance may be adversely
affected.
(iii) Risk concerning maritime transportation
The Group imports products from China and other countries in Asia mainly by way of maritime
transportation. Thus, we are exposed to operational risk caused by worsening security and the state ofunrest, etc. resulting from terrorism, regional conflict, deterioration of international relationships, anincrease in transportation cost due to rising oil prices, a delay in transportation due to a shortage ofcontainers, and an increase in transportation cost, among other things. We optimize our logistics
methods by, for example, reviewing the logistics channel from the production site as needed. However,
if an unexpected event occurs, the Group’s business performance may be adversely affected.
(iv) Risk related to financial markets and currency exchanges
As described above, the Group depends heavily on import transactions from China and other countries
in Asia. Since payments for the transactions are made mainly in U.S. dollars, currency fluctuations may
affect purchase prices. To avoid the risks related to currency fluctuations, we take countermeasures,
including entering into forward exchange contracts. However, a significant currency fluctuation may
adversely affect the Group’s business performance and financial condition.
(v) Risk related to disasters
In the event that our business sites are affected by a large-scale natural disaster, etc., the Group’sbusiness activities may be suspended for a long time. Based on a business contingency plan (BCP), theGroup implements measures to minimize the impact in the event of the suspension of activities by, forexample, storing reserve stock at each business site, establishing backup telecommunication andinformation systems, and maintaining supplies by securing appropriate inventory. However, a largescale stagnation of economic activities due to, among others, the occurrence of unexpected disasters, oran accident at a nuclear power plant may adversely affect the Group’s business performance andfinancial condition significantly.
(vi) Risk related to infectious diseases
In the event of a resurgence of COVID-19 infections or an outbreak of a new infectious disease on ascale beyond expectations, the Group’s business performance may be adversely affected by a drop in
demand and loss of sales opportunities due to a reduction, postponement, or cancellation of various
events or stagnation of corporate activities, among others. In addition, in order to prepare forlockdowns in countries and regions where our production bases are located, we have established asystem to realize continuous stable supply and maintain price competitiveness by securing multiple
production bases and optimizing distribution channel in China and other Asian countries. However, if
multiple production sites were locked down at the same time due to the spread of a new type of
infectious disease worldwide, the smooth supply of products and purchase prices could be affected,
which may adversely impact the Group’s business performance. Based on a business contingency plan
(BCP), the Group implements measures to prevent infection and prevent the spread of infections inorder to minimize the impact on the health of employees and the Group’s business activities. However,
if an employee(s) contracted a new infectious disease and there was an overall or partial suspension ofoperation for a certain period of time, the Group’s business performance may be adversely affected.
(vii) Risk related to climate change
In order to remain a company that contributes to the realization of a sustainable society, the Group
places a high priority on sustainability initiatives and is actively working to address climate changerisks. With regard to environmental issues, we are working on product development with themateriality of “contributing to the environment through finished goods” and “promotion of recycling- 11 -

and reduction of CO2 emissions.” In addition, we have set a goal of 100% renewable energy forelectricity used by the Group by 2050, and are working toward achieving 50% by 2025 as an interim
target, and we are continuing to take measures to reduce CO2 emissions by implementing energysaving activities, investing in machinery and equipment that can save electricity, reorganizing
production lines at factories in Japan, and installing solar panels to generate and consume our own
electricity.
Since the Group outsources product production to suppliers in China and other Asian countries, in theevent of an unforeseen natural disaster caused by climate change in those countries or regions, it may
become difficult to maintain a stable product supply due to disruptions in product procurement andlogistics, disruption of energy supply, etc., which may adversely affect the Group’s businessperformance. Additionally, in the event that new laws and regulations are introduced or strengthened asa result of global climate change countermeasures, the Group’s business performance and financial
condition may be adversely affected due to an increase in business costs.
On May 31, 2023, the Group expressed its support for the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD).

2. Status of Corporate Groups
The Group is composed of a pure holding company (the Company) and seven consolidated subsidiaries,
including Trans Co., Ltd. Trade Works Co., Ltd., Kraftwerk Co., Ltd., T3 Design Co., Ltd., Trade Works
Asia Limited, Shanghai Trade Works Co., Ltd., and Vape.Shop USA Corporation, and engages in all stages
from planning and design to production (contracting), product quality control, and sales of Eco-products,
Lifestyle products, and Wellness products. The Group sells custom-made miscellaneous goods directly to
end-user companies in accordance with the needs of customers and markets, and sells the Group’s original
miscellaneous goods to wholesalers. These products are also distributed to end users and wholesalersthrough EC sites, including our proprietary site.
The Group has adopted a fabless approach in order to get various types of products to the market promptly.
This approach allows us to concentrate our business resources on product development, always use themost suitable production plant and respond to a change in market needs. In addition, it constantly
contributes to the mobility of management, resulting in hedging country risk in overseas production. The
Group is a company with a pure holding company, and is composed of a company that mainly engages inbusiness management at the top and seven affiliate companies with different functions. The affiliatecompanies engage separately in different functional areas, including planning and development, design,
production (contracting) and product quality control, assembly/printing/processing, and sales. This
produces synergies for these companies and improves the effectiveness and efficiency of their businesses,
allowing the Group to provide comprehensive services as a fabless manufacturer specializing in
miscellaneous goods. The functions and roles of the Group companies are as follows.

- 12 -

[Functions and roles of the Group companies]
Company name

Function in the Group

Role in the Group

TRANSACTION CO., Ltd.

Pure holding company

Business management of operating subsidiaries

Trans Co., Ltd.

Planning, taking orders, production(contracting), and sales

A fabless manufacturer that directly sells(including EC distribution) custom-madeproducts mainly to end users in accordance with
the needs of individual customers

Trade Works Co., Ltd.

Planning, taking orders, production(contracting), and sales

A fabless manufacturer that sells (including EC
distribution) internally-planned make-to-stock
products of original brands mainly to wholesalecompanies, as well as purchases and distributes
related products.

Kraftwerk Co., Ltd.

Printing, processing, packaging,examination (domestic), and productmanagement

Printing (silkscreen printing and on-demandprinting, etc.), processing, examination,assembly and logistics arrangement for theGroup’s internal and external products

T3 Design Co., Ltd.

DesignGraphic, products and WEB design, and productdevelopment for the Group’s internal andexternal products

Trade Works Asia Limited

Sales, product quality control, trade,and purchase of commodities

Overseas sales, product quality control and tradein Asian countries, and purchase and sales of
VAPE and related products

Shanghai Trade Works Co., Ltd.

Product quality control

Product quality control in China

Vape.Shop USA Corporation

Purchase of commodities

Purchase of VAPE and other relevant products in
the North America- 13 -

[Business chart]- 14 -

3. Basic Approach to the Selection of Accounting Standards
The Group has adopted a Japanese accounting standard in order for the Group to perform domestic peer
analysis.

- 15 -

4. Consolidated Financial Statements and Major Notes(1) Consolidated Balance Sheet(Thousands of yen)
As of August 31, 2022
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade, and contract
assetsSecurities
Finished goods
Supplies
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Leasehold and guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

As of August 31, 2023

4,335,232*2- 16 -

2,679,941

6,006,583*2

2,734,278

291,900
4,443,094
21,536
67,262979,930(8,187)
12,810,710

859,361
4,746,607
23,042
62,146765,927(7,562)
15,190,385

600,571(152,091)
448,479
165,416(103,599)
61,817518,259
340,787(301,522)
39,265
1,067,821

632,959(179,612)
453,347
274,127(124,783)
149,343452,259
396,612(337,011)
59,6001,114,551

126,671
126,671

165,194
165,194

1,578,124
188,809
303,400
575,047(380)
2,645,001
3,839,494
16,650,205

2,880,031
294,710311,194
643,625(380)
4,129,182
5,408,927
20,599,312

(Thousands of yen)
As of August 31, 2022
Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Provision for shareholder benefit program
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Retirement benefit liability
Asset retirement obligations
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets*3- 17 -

1,035,921
387,628
647,298
169,848
6,909
406,2092,653,814

As of August 31, 2023

*3

959,141
332,513
1,087,987
223,496
7,337
815,340
3,425,816

234,819
315,035
36,791
55,390642,035
3,295,850

431,138
314,745
37,221
153,735
936,840
4,362,657

93,222
3,294,777
9,567,299(223,253)
12,732,046

93,2223,305,428
12,144,917(203,471)
15,340,096

180,323
239,913160,03142,039622,307
13,354,354
16,650,205

540,891
127,851
189,773
38,041
896,558
16,236,655
20,599,312

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Interest on securities
Subsidy income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Insurance claim income
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Loss on abandonment of inventories
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to owners of parent

Fiscal year ended
August 31, 2022

Fiscal year ended
August 31, 2023

*1
*2

*1
*2

*3, *4*7- 18 -

18,273,354
11,115,818
7,157,535
3,925,636
3,231,899*3, *4

22,958,375
13,914,395
9,043,979
4,385,394
4,658,584

323
27,374
13,52328,177
5,080
74,4781,713
82,0201,050
42,955
2,823
130,563

2,200
64
2,265
3,304,112

2,059
92
2,152
4,786,995–
15,943
15,943*552,367–52,367–693
14,08014,7733,305,282
1,125,951(15,954)
1,109,996
2,195,285
2,195,285

*6
*7

91
51
38,41938,5624,800,800
1,632,560(136,991)
1,495,569
3,305,231
3,305,231

(Consolidated Statement of Comprehensive Income)(Thousands of yen)
Fiscal year ended
August 31, 2022
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 19 -*

Fiscal year ended
August 31, 2023

2,195,285

3,305,231

143,708
172,042
118,657
48,193
482,6022,677,887

360,568(112,062)
29,742(3,997)274,250
3,579,482*

2,677,887

3,579,482––

(3) Consolidated Statement of Changes in Equity
Fiscal year ended August 31, 2022
(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

93,222Retained earnings

3,294,777

Total shareholders’equityTreasury shares

8,020,557(223,253)(8,244)
93,222

3,294,777

11,185,304(8,244)

8,012,313(223,253)

11,177,060

Changes during period
Dividends of surplus(640,299)(640,299)

Profit attributable toowners of parent

2,195,285

2,195,285

Restricted share-based
remuneration–

Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period–––

1,554,985–

1,554,985

93,222

3,294,777

9,567,299(223,253)

12,732,046

Accumulated other comprehensive income
Valuation difference
Deferred gains or
on available-for-salelosses on hedges
securities
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

36,614Foreign currency
Total accumulated
Remeasurements oftranslation
other comprehensive
defined benefit plansadjustment
income67,87041,373(6,153)

139,705

Total net assets

11,325,010(8,244)36,61467,87041,373(6,153)

139,705

11,316,766

Changes during period
Dividends of surplus(640,299)

Profit attributable toowners of parent

2,195,285

Restricted share-based
remuneration
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period–
143,708

172,042

118,657

48,193

482,602482,602

143,708

172,042

118,657

48,193

482,6022,037,588

180,323

239,913160,03142,039622,307

13,354,354- 20 -

Fiscal year ended August 31, 2023
(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

93,222

Capital surplus

Retained earnings

3,294,777

Treasury shares

9,567,299

Total shareholders’equity(223,253)

12,732,046–

93,222

3,294,777

9,567,299(223,253)

12,732,046

Changes during period
Dividends of surplus(727,613)(727,613)

Profit attributable toowners of parent

3,305,231

3,305,231

Restricted share-based
remuneration

10,650Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period

19,78130,432–

93,222

10,6502,577,618

19,781

2,608,050

3,305,428

12,144,917(203,471)

15,340,096

Accumulated other comprehensive income
Valuation difference
Deferred gains or
on available-for-salelosses on hedges
securities
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

180,323

Foreign currency
Total accumulated
Remeasurements oftranslation
other comprehensive
defined benefit plansadjustment
income239,913160,03142,039622,307

Total net assets

13,354,354–

180,323

239,913160,03142,039622,307

13,354,354

Changes during period
Dividends of surplus(727,613)

Profit attributable toowners of parent

3,305,231

Restricted share-based
remuneration

30,432

Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period

360,568(112,062)

29,742(3,997)274,250

274,250

360,568(112,062)

29,742(3,997)274,250

2,882,300

540,891

127,851

189,773

38,041

896,558

16,236,655- 21 -

(4) Consolidated Statement of Cash Flows(Thousands of yen)
Fiscal year ended
August 31, 2022
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for shareholder benefit
programIncrease (decrease) in provision for point cardcertificates
Foreign exchange losses (gains)
Interest and dividend income
Interest expenses
Insurance claim income
Loss (gain) on sale and retirement of non-current assets
Decrease (increase) in trade receivables and contract
assetsDecrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in advance payments to suppliers
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes refund
Income taxes paid
Proceeds from insurance income
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale and redemption of short-term andlong-term investment securities
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Purchase of insurance funds
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from disposal of treasury shares
Dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 22 -*

Fiscal year ended
August 31, 2023

3,305,282
118,294(1,444)
8,115(18,062)

4,800,800
135,183(625)
53,478(4,286)

1,004

428

(6,592)–(107,177)(27,697)
2,200(15,943)
693

11,151(83,733)
2,059–(39,859)(519,048)(53,381)(1,627,017)
222,022(81,520)(98,910)
1,154,198
36,842(2,456)
143,786(1,108,735)
15,943
239,579(302,735)(78,888)(83,374)
539,970
4,896,187
67,241(2,345)96,163(1,289,604)–
3,767,642(49,137)(29,824)(545,416)(185,677)(56,537)(1,487,256)

449,790

206,180–(27,479)

9,834–(48,999)–(213,754)(48,999)
118,744(1,481,026)

200,000(379,577)–(639,725)(819,302)

600,000(458,796)
30,432(727,333)(555,697)

62,398(22,510)(731,078)
5,083,041
4,351,963

1,708,409
4,351,963
6,060,372*

(5) Notes to Consolidated Financial Statements(Notes regarding assumption of a going concern)
None.
(Basis for preparation of consolidated financial statements)
1. Matters related to the scope of consolidation
All the subsidiaries are included in the scope of consolidation.
The number of consolidated subsidiaries: Seven
Names of consolidated subsidiaries:
Trans Co., Ltd.
Trade Works Co., Ltd.
Kraftwerk Co., Ltd.
T3 Design Co., Ltd.
Trade Works Asia Limited
Shanghai Trade Works Co., Ltd.
Vape.Shop USA Corporation
2. Matters related to the application of the equity method
None.
3. Matters related to the fiscal year of the consolidated subsidiaries
The fiscal year of Shanghai Trade Works Co., Ltd. ends on December 31. The consolidated financial
statements were prepared using the financial statements based on the preliminary financial
settlement on the consolidated balance sheet date.
4. Summary of significant accounting policies(1) Valuation standard and method for major assets(i) Valuation method for securities
Available-for-sale securities
Securities other than stocks, etc. without fair value
Securities other than stocks, etc. without fair value are valued using the fair value method(valuation differences are directly charged or credited to net assets, and the cost of
securities sold is determined by the moving-average method).
Among available-for-sale securities other than stocks, etc. without fair value, when the
difference between the acquisition cost and the amount of debt securities is considered toconstitute an adjustment of interest rates, they are carried at amortized cost.
Securities, etc. without fair value
Securities, etc. without fair value are valued at cost determined by the moving-averagemethod.
(ii) Valuation method for claims and debts arising from derivatives contracts
Claims and debts arising from derivatives contracts are valued at fair value.

- 23 -

(iii) Inventories
Inventories held for normal sales purposes
Inventories are stated at cost with the book value written down to the net realizable value.
Finished goods
The moving-average method
Supplies
The moving-average method(2) Depreciation and amortization(i) Property, plant and equipment
Property, plant and equipment are depreciated using the declining balance method.
However, buildings, facilities attached to buildings, and structures acquired on or after April
1, 2016 are valued using the straight-line method.
The useful lives are as follows.
Buildings and structures

3 to 50 years

Machinery, equipment and vehicles 3 to 10 years(ii) Intangible assets
Internal use software is amortized using the straight-line method over an estimated usefullife, generally 5 years.
(3) Provisions(i) Allowance for doubtful accounts
Allowance for doubtful accounts is provided in an amount sufficient to cover probable losses
on collection. It consists of an amount calculated using the actual historical rate of losses
with respect to general receivables and the estimated uncollectible amount with respect tocertain identified doubtful receivables.
(ii) Provision for bonuses
Provision for bonuses for employees is provided at the amount calculated and provided forbased on the estimated amounts of future payments attributable to the services that have been
rendered by employees up to the date of the balance sheet.
(iii) Provision for shareholder benefit program
Provision for shareholder benefit program is provided at the end of the current fiscal year at
the amount calculated and provided for based on the estimated amounts of future payments
for the shareholder benefit program that are expected to arise in the following fiscal year.
(4) Accounting method for retirement benefits(i) Allocation method of estimated total retirement benefits
When calculating retirement benefit obligations, the benefit formula basis is used to allocate
estimated total retirement benefits to the period up to the fiscal year-end.
(ii) Amortization method of the actuarial difference and past service cost
The amount of actuarial differences is amortized on a straight-line basis over a period of 5
years from the year following the year in which they arise, which is within the averageremaining years of service of the eligible employees.
- 24 -

Past service cost is amortized on a straight-line basis over a period of 10 years within the
average remaining years of service of the eligible employees when incurred.
(5) Basis for recording significant income and expenses
The Group manufactures and sells miscellaneous goods to companies and individuals for theirsales promotion purposes.
For such sales, the performance obligation is considered to be satisfied at the time of delivery,
when control of the product is considered to have been transferred to the customer, andtherefore revenue is recognized at that point in time.
For the point system operated by the Group, the points granted are identified as performanceobligation, and the transaction price is allocated based on standalone sales price calculated bytaking into account such factors as the expected future expiration of the points.
The Group’s obligation to refund customers in the event of returns on sales is identified as aperformance obligation at the time of sale, and the transaction price is allocated based onstandalone sales price calculated by taking into account historical rates and other factors.
The promised consideration arising from these sales is generally collected within approximately
two months from the time the performance obligation is satisfied, and the amount ofconsideration does not include a significant financing component.
(6) Foreign currency translation of significant assets and liabilities adopted for the preparation of
consolidated subsidiaries’ financial statements that constitute the basis for the preparation of
consolidated financial statements
All monetary receivables and payables of the Company and its domestic consolidated
subsidiaries that are denominated in foreign currencies are translated into Japanese yen at theexchange rate in effect as at the consolidated balance sheet date. Translation gains or losses areincluded in the accompanying consolidated statements of income. All assets and liabilities offoreign subsidiaries are translated into Japanese yen at the exchange rate in effect on the
consolidated balance sheet date. All income and expenses are translated at the average exchange
rate for the period. The resulting translation adjustments are included in the accompanying
consolidated balance sheets under “Foreign currency translation adjustment.”(7) Important hedge accounting(i) Hedge accounting
The deferred hedge accounting method is applied. Designation (furiate-shori) is applied toforward exchange contacts that qualify for such designation.
(ii) Hedging instrument and hedged item
The hedging instrument and hedged item to which hedging accounting is applied are as
follows.
(Hedging instrument)(Hedged item)

Forward exchange contracts

Transactions in foreign currency scheduled
to be executed(iii) Hedging policies
The Company uses forward exchange contracts to avoid foreign exchange fluctuation risks
and enters into forward exchange contracts within the necessary scope based on contracts forbusiness transactions denominated in foreign currencies, and does not enter into foreignexchange contracts for speculative trading purposes.
- 25 -

(iv) Assessing hedge effectiveness
The Company enters into forward exchange contracts with the same maturities and sameamounts in foreign currency at the closing of forward exchange contracts, in accordance withthe hedging policy. We believe that the correlation with subsequent changes in the exchange
rates is completely ensured, and therefore, an assessment of hedge effectiveness on thebalance sheet date is omitted.
(8) Cash and cash equivalents on the consolidated statement of cash flows
Cash and cash equivalents in the accompanying consolidated statements of cash flows consist of
cash on hand, demand deposits and short-term investments with maturities of three months orless from the date of acquisition, that are liquid, readily convertible into cash and are subject tominimum risk of price fluctuation.
(Consolidated balance sheet)1.

Overdraft contracts
The Company has entered into overdraft contracts with its four major banks to finance working
capital efficiently.
The unused lines of credit of the overdraft contracts, etc. at the end of the fiscal year are as follows.
(Thousands of yen)
As of August 31, 2022

Credit line of overdrafts

1,300,000

1,300,000––

1,300,000

1,300,000

Borrowing balance of those contracts
Difference

As of August 31, 2023

*2. Among notes and accounts receivable - trade, and contract assets, the amount of receivables
arising from contracts with customers is as follows.
(Thousands of yen)
As of August 31, 2022
Notes receivable - trade
Accounts receivable - trade
Contract assets

As of August 31, 2023

244,299

218,3622,429,430

2,507,693

6,211

8,222

*3. Among other, the amount of contract liabilities is as follows.
(Thousands of yen)
As of August 31, 2022
Contract liabilities

26,982As of August 31, 2023
35,619(Consolidated statement of income)*1. Revenue from contracts with customers
In the presentation of net sales, revenue from contracts with customers is not distinguished fromother revenues. The amount of revenue from contracts with customers is described in “Notes toConsolidated Financial Statements (Segment information).”- 26 -

*2. The book value devaluation of inventories held for normal sales purposes based on a decline inprofitability(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

116,825

149,521

Cost of sales*3. The selling, general and administrative expenses account includes the following major items andamounts.
(Thousands of yen)
Fiscal year ended August 31, 2022
Provision of allowance for doubtful accounts

Fiscal year ended August 31, 2023

(74)

(606)

1,255,642

1,273,334

Rent expenses on land and buildings

310,498

306,910

Provision for bonuses

138,899

186,667

Retirement benefit expenses

51,83029,643

Provision for shareholder benefit program

6,909

7,337

590,847

709,490

Bonuses and allowances

Freight costs*4. Research and development expenses included in the selling, general and administrative expenses
account are as follows.
(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023
44,89345,236*5. The breakdown of gain on sale of non-current assets is as follows.
(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023–

52,367–52,367Land
Total*6. The breakdown of loss on sale of non-current assets is as follows.
(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

Buildings and structures–

33

Other (tools, furniture and fixtures)

–

58

–

91

Total

- 27 -

*7. The breakdown of loss on retirement of non-current assets is as follows.
(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

Machinery, equipment and vehicles–

0

Other (tools, furniture and fixtures)

0

51

693

–

693

51

Other (software)
Total- 28 -

(Consolidated statement of comprehensive income)* The components of other comprehensive income, including reclassification adjustments and tax
effects(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

326,889

607,021

Reclassification adjustments(107,177)(55,659)

Amount before tax effects

219,712551,362

Tax effects(76,003)(190,793)

Subtotal

143,708

360,568

Amount arising during the fiscal year

432,594

92,531

Adjustments to acquisition cost of assets

Valuation difference on available-for-salesecurities, net of tax:
Amount arising during the fiscal year

Deferred gains or losses on hedges, net of tax:
(169,572)(263,824)

Amount before tax effects

263,021(171,292)

Tax effects(90,979)

59,230Subtotal

172,042(112,062)

118,657

29,742

118,657

29,742––

118,657

29,74273,687

6,794

Reclassification adjustments(1,589)(12,904)

Amount before tax effects

73,687(6,110)Tax effects(25,493)

2,112

Foreign currency translation adjustment:
Amount arising during the fiscal year
Amount before tax effects
Tax effects
Subtotal
Remeasurements of defined benefit plans, netof tax:Amount arising during the fiscal year

Subtotal
Total other comprehensive income- 29 -

48,193(3,997)

482,602274,250(Consolidated statement of changes in equity)
Fiscal year ended August 31, 2022
1. Matters related to outstanding shares
Type

Beginning of the
fiscal year (shares)

Increase (shares)

Decrease (shares)

29,375,400––

Beginning of the
fiscal year (shares)

Increase (shares)

Decrease (shares)

270,865––

270,865

Record date

Effective dateAugust 31, 2021

November 8,
2021

Ordinary shares

End of the fiscal year
(shares)
29,375,400

2. Matters related to treasury sharesType
Ordinary shares

End of the fiscal year
(shares)(Major cause of movement)
None.
3. Matters related to subscription rights to shares
None.
4. Matters related to dividends(1) Dividend payments
Resolution

Board of Directors
meeting held on
October 25, 2021

Type

Ordinary shares

Total amount ofcash dividends(thousand yen)

Dividend pershare (yen)640,29922(2) Dividends whose effective date falls in the fiscal year following the fiscal year of the record
date

Resolution

Board of Directors
meeting held on
October 26, 2022

Type

Funds fordividends

Total amountof cashdividends(thousandyen)

OrdinarysharesRetainedearnings

727,613- 30 -

Dividend pershare (yen)Record date

Effective date25

August 31,
2022

November 9,2022

Fiscal year ended August 31, 2023
1. Matters related to outstanding shares
Type

Beginning of the
fiscal year (shares)

Increase (shares)

Decrease (shares)

29,375,400––

Beginning of the
fiscal year (shares)

Increase (shares)

Decrease (shares)

270,865–

24,000Ordinary shares

End of the fiscal year
(shares)
29,375,400

2. Matters related to treasury sharesType
Ordinary shares

End of the fiscal year
(shares)
246,865(Major cause of movement)
The breakdown of the decrease is as follows.
Disposal of treasury shares

24,000 shares

3. Matters related to subscription rights to shares
None.
4. Matters related to dividends(1) Dividend payments
Resolution

Board of Directors
meeting held on
October 26, 2022

Type

Total amount ofcash dividends(thousand yen)

Dividend pershare (yen)727,613

25

Ordinary shares

Record date

Effective dateAugust 31, 2022

November 9,2022(2) Dividends whose effective date falls in the fiscal year following the fiscal year of the record
date

Resolution

Board of Directors
meeting held on
October 25, 2023

Type

OrdinarysharesFunds fordividends

Retainedearnings

Total amountof cashdividends(thousandyen)

Dividend pershare (yen)Record date

Effective date

1,019,498

35

August 31,
2023

November 8,2023- 31 -

(Consolidated statement of cash flows)* The reconciliation of cash and cash equivalents of the consolidated statements of cash flows andaccount balances of the consolidated balance sheets is as follows.
(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

4,335,232

6,006,583

Cash and deposits
Securities (MMF)
Cash and cash equivalents- 32 -

16,73053,7884,351,963

6,060,372

(Segment information)[Segment information]
Information is omitted as the business of the Company and its consolidated subsidiaries iscomprised of a single reportable segment engaged in the miscellaneous goods business and its
accompanying operations.
[Related information]
Fiscal year ended August 31, 2022
1. Information on products and services(Thousands of yen)
Eco-products
Net sales for externalcustomers

Lifestyleproducts

Wellness
products

8,752,332

1,596,409

7,645,183

Design and other279,429

Total

18,273,354

2. Information by region(1) Net sales
Information is omitted because net sales for external customers in Japan constitute morethan 90% of the net sales on the consolidated statements of income.
(2) Property, plant and equipment
Information is omitted because property, plant and equipment located in Japan constitute
more than 90% of the property, plant and equipment on the consolidated balance sheets.
3. Information about major customers
Information is omitted because there is no customer accounting for 10% or more of the net
sales on the consolidated statements of income.
Fiscal year ended August 31, 2023
1. Information on products and services(Thousands of yen)

Net sales for externalcustomers

Eco-products

Lifestyleproducts

Wellness
products

10,189,472

11,205,156

1,247,502

Design and other316,243

Total

22,958,375

2. Information by region(1) Net sales
Information is omitted because net sales for external customers in Japan constitute morethan 90% of the net sales on the consolidated statements of income.

- 33 -

(2) Property, plant and equipment
Information is omitted because property, plant and equipment located in Japan constitute
more than 90% of the property, plant and equipment on the consolidated balance sheets.
3. Information about major customers
Information is omitted because there is no customer accounting for 10% or more of the net
sales on the consolidated statements of income.
[Information regarding impairment losses on non-current assets by reportable segment]
Fiscal year ended August 31, 2022
None.
Fiscal year ended August 31, 2023
None.
[Information on amortization and outstanding balance of goodwill by reportable segment]
None.
[Information regarding gain on bargain purchase by reportable segment]
None.
(Per share information)(Yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

Net assets per share

458.84557.41

Earnings per share

75.43

113.50Notes: 1. Basis for calculation of diluted earnings per share is omitted because no potentially dilutive shares exist.
2. Basis for calculation of earnings per share is as follows.
(Thousands of yen)
Fiscal year ended August 31, 2022

Fiscal year ended August 31, 2023

2,195,285

3,305,231––

Profit attributable to owners ofordinary shares of parent

2,195,285

3,305,231

Weighted-average number ofordinary shares outstanding for theperiod (shares)

29,104,535

29,120,776

Earnings per share
Profit attributable to owners ofparentAmount not attributable to ownersof ordinary shares- 34 -

3. Basis for calculation of net assets per share is as follows.
(Thousands of yen)
As of August 31, 2022
Total net assets

As of August 31, 2023

13,354,354

16,236,655––

Net assets for ordinary shares at theend of the period

13,354,354

16,236,655

Number of ordinary shares at the endof the period used for calculating theamount of net assets per share(shares)

29,104,535

29,128,535

Amount subtracted from total net
assetsNumber of ordinary shares at the end of the period used for calculating the amount of net assets per share is
calculated by subtracting the number of shares owned in the name of the Company.

(Subsequent events)
None.

- 35 -