Summary of Consolidated Financial Results for the Fiscal Year Ended February 28, 2022
[Japanese GAAP]
April 13, 2022

Company name: Adastria Co., Ltd.
Stock code:
2685
Representative: Michio Fukuda, Chairman of the Board
Itsuo Iwakoshi, Senior Vice President,
Contact:
Head of Corporate Planning Office
Scheduled date of Annual General Meeting of Shareholders:
Scheduled date of payment of dividend:
Scheduled date of filing of Annual Securities Report:
Preparation of supplementary materials for financial results:
Holding of financial results meeting:

Listing: Tokyo Stock Exchange
URL: https://www.adastria.co.jp

Tel: +81-3-5466-2060
May 26, 2022
May 11, 2022
May 27, 2022
Yes
Yes (for investors)

Note: The original disclosure in Japanese was released on April 13, 2022 at 15:30 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2022
(March 1, 2021 – February 28, 2022)(1) Consolidated results of operations(Percentages shown for net sales and incomes represent year-on-year changes)
Net income
Net sales
Operating profit
Ordinary profit
attributable to ownersof the parent

Million yen

Fiscal year ended Feb. 28, 2022
Fiscal year ended Feb. 28, 2021
Note: Comprehensive income%

Million yen%

Million yen%

Million yen

201,582
9.6
6,564
756.1
8,166 173.9
183,870 (17.3)
766 (94.0)
2,981 (76.8)
Fiscal year ended Feb. 28, 2022:
5,280 million yen (-%)
Fiscal year ended Feb. 28, 2021:(888) million yen (-%)
Net income per
Diluted net
Ratio of ordinary
ROE
share
income per shareprofit to total assets
Yen

Fiscal year ended Feb. 28, 2022
Fiscal year ended Feb. 28, 2021

Yen%

108.72(14.88)

-

%

4,917
(693)

-

Ratio of operating
profit to net sales

%

%

9.4
(1.3)

8.4
3.1

3.3
0.4

(2) Consolidated financial position

As of Feb. 28, 2022
As of Feb. 28, 2021
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen97,95754,96355.1
1,192.62
95,44950,70153.1
1,122.71
As of Feb. 28, 2022: 53,963 million yen As of Feb. 28, 2021: 50,701 million yen(3) Consolidated cash flow position
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at end of
the period

Million yen

Million yen

Million yen

Million yen

Fiscal year ended Feb. 28, 2022
Fiscal year ended Feb. 28, 2021

3,504
11,933(7,780)(7,366)(3,251)(6,840)16,86324,082

2. Dividends
Dividend per share
1Q-end2Q-endYen

Fiscal year ended Feb. 28, 2021
Fiscal year ended Feb. 28, 2022
Fiscal year ending Feb. 28, 2023
(forecast)

3Q-end Year-end

Yen

Yen

Total

Dividend
Dividend on
Totalpayout ratio
equitydividends (consolidated) (consolidated)

Yen

Yen

Million yen

-

15.00
25.00

-

25.00
30.00

40.00
55.00

1,856
2,510

-

25.00

-

30.00

55.00

%

%

50.6

3.4
4.8

39.5

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2023 (March 1, 2022 – February 28, 2023)
Net sales
Million yen

Full year

230,000

Operating profit%

14.1

Million yen

10,000%52.3

Ordinary profit
Million yen

10,000(Percentages represent year-on-year changes)
Net income attributable Net income per
to owners of the parent
share

%

22.5

Million yen

6,300

%

28.1

Yen

139.23

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 1 (Zetton, Inc.)

Excluded: 1 (Adastria Korea Co., Ltd.)(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(3) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of Feb. 28, 2022:
48,800,000 shares
As of Feb. 28, 2021:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of Feb. 28, 2022:
3,552,459 shares

As of Feb. 28, 2021:

3,639,505 shares

3) Average number of shares outstanding during the period
Fiscal year ended Feb. 28, 2022:
45,229,961 sharesFiscal year ended Feb. 28, 2021:

46,598,046 shares

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2022
(March 1, 2021 – February 28, 2022)(1) Non-consolidated results of operations
Net sales
Million yen

Fiscal year ended Feb. 28, 2022
Fiscal year ended Feb. 28, 2021

174,065
160,940

Operating profit%

8.2(18.5)

Million yen

%

5,533
1,521

(Percentages represent year-on-year changes)
Ordinary profit
Net income
Million yen

263.6(87.3)

6,667
2,775

Net income per share

Diluted net income per share

Yen

Yen

Fiscal year ended Feb. 28, 2022
Fiscal year ended Feb. 28, 2021

98.25
(11.32)%140.2(74.2)

Million yen

%

4,443
(527)

-

-

(2) Non-consolidated financial position

As of Feb. 28, 2022
As of Feb. 28, 2021
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

78,983
46,973
81,34044,511
As of Feb. 28, 2022: 46,973 million yen

59.5
54.7
As of Feb. 28, 2021:

1,038.14
985.6344,511 million yen

Note 1: The current financial report is not subject to audit by certified public accountants or auditing firms.
Note 2: Cautionary statement with respect to forward-looking statements
Forward-looking statements in this report are based on currently available information and certain assumptions judged to bereasonable. These statements are not promises by Adastria regarding future performance. Actual results may differ
significantly from these forecasts for a number of factors. Please refer to the section “1. Overview of Results of Operations(4) Outlook” on page 5 regarding preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

4(3) Cash Flows

5(4) Outlook

5(5) Basic Policy on Profit Distribution, and Dividend Plans for the Current and Next Fiscal Years6

2. Basic Approach for the Selection of Accounting Standards

6

3. Consolidated Financial Statements and Notes

7(1) Consolidated Balance Sheet

7(2) Consolidated Statements of Income and Comprehensive Income

9(3) Consolidated Statement of Changes in Equity

11(4) Consolidated Statement of Cash Flows

13(5) Notes to Consolidated Financial Statements

14

Going Concern Assumption

14

Business Combinations

14

Segment Information

15

Per Share Information

15

Subsequent Events

16

- 1 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

1. Overview of Results of Operations(1) Results of Operations
Consolidated results(Million yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)

FY2/22(Mar. 1, 2021 – Feb. 28, 2022)

183,870

Operating profit

YoY change(%)

201,582

YoY change(Amount)
17,711

766

6,564

5,797

756.1

Ordinary profit

2,981

8,166

5,184

173.9

Net income attributableto owners of the parent

(693)

4,917

5,610

-

Net sales

9.6

Consolidated net sales increased 9.6% year-on-year to 201,582 million yen, operating profit increased 756.1% to6,564 million yen, ordinary profit increased 173.9% to 8,166 million yen, and net income attributable to ownersof the parent was 4,917 million yen (net loss of 693 million yen in the previous fiscal year).
Sales in Japan increased 8.9% year-on-year to 188,655 million yen. There were states of emergency and otherpandemic safety measures in Japan during almost the entire first half of the fiscal year. In the second half, thenumber of customers at stores fell sharply for a while because of an upturn in the pandemic caused by a newvariant. As a result, the business climate was uncertain with big swings in consumer sentiment during the fiscal
year. Despite this challenging environment, store operations were better than in the previous fiscal year and there
was a recovery in demand associated with outings during the second half.
E-commerce sales in Japan continued to grow, increasing 6.8%. As the e-commerce market grew during the
pandemic, numerous activities to attract customers were strengthened, including the use of TV commercials for
the Adastria e-commerce “.st” website. In addition, sales were higher at BUZZWIT, a subsidiary that handles
brands exclusively for the e-commerce market.
Overseas sales increased 20.7% to 12,926 million yen. Sales increased 87.8% in Mainland China due to the
opening of the second niko and … store in Shanghai. Furthermore, sales increased in Hong Kong, Taiwan, theUnited States and other regions as economies recovered worldwide. As a result, there was a fiscal year profit in
the overseas business.
We opened 97 stores (including 10 overseas) and closed 69 stores (including 5 overseas), resulting in a total of
1,428 stores (including 73 overseas) at the end of the fiscal year. The number of stores does not include the storesof Zetton, Inc. , which became a consolidated subsidiary in February 2022.
Earnings were negatively affected by the need to reduce inventories during states of emergency, the yen ’s
depreciation and the higher cost of raw materials. Despite these difficulties, the gross profit margin increased 0.6
percentage point to 55.1% because discount sales were held down by supplying the right products at the rightprices and at the right times.
Selling, general and administrative expenses increased 5,089 million yen. One reason was higher personnel
expenses and store leasing expenses because of a decline in store operating hour reductions and suspensions ofstore operations from the previous fiscal year. Higher advertising expenditures to increase public awareness of
the Adastria e-commerce “.st” website was another reason. However, there was an operating profit as the ratio of
selling, general and administrative expenses to sales improved by 2.2 percentage points to 51.8% because ofsales growth. The operating margin rose 2.9 percentage points to 3.3%. In addition, non-operating income
includes employment adjustment subsidies of 549 million yen associated with temporary store closings and a
subsidy of 676 million yen related to shortened operating hours caused by the pandemic and foreign exchange
gains of 310 million yen.
There was extraordinary income of 264 million yen for the reversal of the allowance for doubtful accounts
resulting from the conversion of a loan to Lovebonito Holdings Pte. Ltd., a Singapore company using the “Love
Bonito” omnichannel fashion brand, to equity to become an equity partner of this company and 81 million yen
due to a gain on the liquidation of the Korean subsidiary. Ther e was an extraordinary loss of 600 million yen for- 2 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Yearthe impairment of store assets.
Supplementary Information(1) Sales for Brands and Regions
Brand / region

FY2/22
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

37,762

18.7

11.6

niko and ...

27,227

13.5

4.3

LOWRYS FARM

20,37410.1

4.8

studio CLIP

18,970

9.4

2.2

LEPSIM

11,7905.9

5.9

JEANASIS

10,5265.2

6.0

BAYFLOW

9,122

4.5

4.7

RAGEBLUE

5,801

2.9

6.8

Others29,81514.8

19.3

171,390

85.0

8.4

BUZZWIT Co., Ltd.

6,884

3.4

8.0

ELEMENT RULE Co., Ltd.

9,828

4.9

18.1

551

0.3

71.1

188,655

93.6

8.9

Hong Kong

2,820

1.4

8.9

Mainland China

2,356

1.2

87.8

Taiwan

3,046

1.5

11.0

Total (Adastria)

Other consolidated subsidiaries
Total (Japan)

4,703

2.3

36.7

Total (Overseas)

12,926

6.4

20.7

Total (Group)

201,582

100.0

9.6

USA

Notes:

1. The number of stores is categorized by using brand operating divisions and geographic regions.
2. The above figures are sales to external customers and do not include internal sales be tween consolidated
subsidiaries.

(2) Sales for Merchandise Categories
Category

FY2/22
Sales (million yen)

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

30,831

15.3

16.0

Lady’s apparel (bottoms, tops)

128,570

63.8

10.3

Others42,18020.9

3.5

201,582

100.0

9.6

Total
Notes:

1. The others category includes additions to the provision for point card certificates and other items.
2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.

- 3 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(3) Number of Stores
Number of stores
Brand / region

As of Feb.
28, 2021

FY2/22OpenedClosedChangedIncrease/decrease
(3)

As of
Feb. 28,
2022
206

GLOBAL WORK

209

1

-

(4)

niko and ...

144

2

-

(2)

-

144

LOWRYS FARM

134

4

-

(2)

2

136

studio CLIP

183

3

-

(2)

1

184

LEPSIM

122

1

-

(3)

(2)

120

JEANASIS

72

3

-

(2)

1

73

BAYFLOW

56

4

-

-

4

60

RAGEBLUE

49

1

-

(2)

(1)

48

Others

259

40

-

(25)

15

274

1,228

59

-

(42)

17

1,245

Total (Adastria)
BUZZWIT Co., Ltd.

14

6

-

(2)

4

18

ELEMENT RULE Co., Ltd.

87

15

-

(18)

(3)

84

Other consolidated subsidiaries

3

7

-

(2)

5

8

1,332

87

-

(64)

23

1,355

Hong Kong

Total (Japan)

14

2

-

(2)

-

14

Mainland China

3

3

-

-

3

6

Taiwan

41

4

-

(2)

2

43

USA

10

1

-

(1)

-

10

Total (Overseas)

68

10

-

(5)

5

73

Total (Group)

1,400

97

-

(69)

28

1,428

Notes:

1. The number of stores is categorized by using brand operating divisions and geographic regions.
2. The number of stores includes e-commerce websites of other companies and e-commerce websites of Adastria.
3. The number of stores does not include the stores of Zetton, Inc., which Adastria acquired during the current fiscal
year, because the last day of the fiscal year is used as the acquisition date for accounting purposes.

(2) Financial Position
AssetsCurrent assets decreased 3,400 million yen from as of February 28, 2021 to 48,169 million yen as of February 28,
2022. This was mainly due to a decrease of 7,202 million yen in cash and deposits, while there was an increase of
3,540 million yen in inventories.
Non-current assets increased 5,907 million yen to 49,787 million yen. This was mainly due to increases of 814
million yen in buildings and structures, net, 1,784 million yen in goodwill and 1,330 million yen in other(software, etc.) under intangible assets.
Liabilities
Current liabilities decreased 2,638 million yen to 38,416 million yen. This was mainly due to decreases of 3,590
million yen in accounts payable-other and 903 million yen in income taxes payable, while there was a n increaseof 1,733 million yen in notes and accounts payable-trade.
Non-current liabilities increased 884 million yen to 4,577 million yen. This was mainly due to an increase of 896
million yen in long-term borrowings, while there was a decrease of 207 million yen in lease obligations.
Net assets
Net assets increased 4,261 million yen to 54,963 million yen. This was mainly due to increases of 2,634 million
yen in retained earnings and 1,000 million yen in non-controlling interests.

- 4 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(3) Cash Flows
Cash and cash equivalents (hereinafter “net cash”) as of February 28, 2022 amounted to 16,863 million yen, or
7,219 million yen less than as of February 28, 2021.
A summary of cash flows from each activity during the current fiscal year is as follows:
Cash flows from operating activities
Net cash provided by operating activities totaled 3,504 million yen (a decrease of 8,429 million yen, comparedwith the previous fiscal year). The main positive factors include net income before income taxes of 7,911 million
yen and depreciation of 7,044 million yen. Main negative factors include an increase in inventories of 3,266
million yen, a decrease in accrued consumption taxes of 4,021 million yen and income taxes paid of 3,381
million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 7,780 million yen (an increase of 414 million yen). This was mainly
due to the payments of 3,796 million yen for the purchase of property, plant and equipment, 3,136 million yen forthe purchase of intangible assets and 788 million yen for leasehold and guarantee deposits.
Cash flows from financing activities
Net cash used in financing activities totaled 3,251 million yen (a decrease of 3,588 million yen). This was mainly
due to cash dividends paid of 2,283 million yen and repayments of lease obligations of 967 million yen.
Reference: Cash flow indicators
FY2/20FY2/21

FY2/22

Shareholders’ equity ratio (%)

58.3

53.1

55.1

Shareholders’ equity ratio based on market prices (%)

84.2

94.4

78.4

Interest-bearing debt to cash flow ratio

0.2

0.3

1.4

23.6
Interest coverage ratio (times)
200.8
74.6
Notes: 1. Shareholders’ equity ratio: Shareholders’ equity / Total assets
2. Shareholders’ equity ratio based on market prices: Market capitalization / Total assets
3. Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
4. Interest coverage ratio: Operating cash flows / Interest payments* Market capitalization is calculated by multiplying the closing share price at the end of the period by the number ofshares outstanding at the end of the period, excluding treasury shares.
* Operating cash flows are calculated using the figures for operating cash flows in the consolidated statement of cash
flows. Interest-bearing debt includes all liabilities on the consolidated balance sheet that incur interest. Interest
payments are calculated using the figures for interest expenses paid in the consolidated statement of cash flows.

(4) Outlook
The Japanese economy and the global economy are expected to slowl y return to normal because vaccinations andother measures are making economic and social activity possible while living with COVID -19. However, there
are increasing concerns about the business climate because of the rising cost of raw materials and energy, upturns
in inflation and interest rates, the yen’s depreciation, and geopolitical risk. Even if a recovery in consumer
spending happens as economic activity returns to normal, lifestyle changes caused by the pandemic such as
teleworking and different consumer preferences will not be reversed. The outlook for market conditions must be
based on the premise that the behavior of consumers, including spending by foreign tourists in Japan, will not goback to the situation prior to the pandemic. At the same time, there are numerous positive trends for the AdastriaGroup. One example is increasing demand for one-mile wear and household products as people spend more time
at home. Other beneficial shifts in consumer preferences are the increasing popularity of outd oor activities, theincreasing use of casual apparel for business activities, and the growth of the e -commerce market. We are taking
many actions to target these new categories of demand.
From a medium to long-term perspective, the apparel market in Japan is certain to structurally shrink slowly as- 5 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Yearthe population ages, the number of children falls and disposable income decreases. In other countries, the growthof apparel markets is likely to continue as populations increase and personal income in emerging countries
climbs.
To continue growing in this business climate, we have updated our growth strategies for 2025 and established a
medium-term management plan. This plan has the following four key elements.
(1) In the apparel business in Japan, we will divide our multi-brand portfolio, which has a large number ofinnovative brands, into three categories. First is independent brands, where will use our own initiatives fordeveloping these into major brands. Second is growth brands, where our goal is rapid growth by focusing on
new markets and new customers. Third is profit brands, where our goal is higher efficiency while building
even stronger ties with customers. Our objective is growth of the scale of operations and of our earnings bymaking strategic investments and implementing business strategies that match the current stage of eachcategory of brands.
(2) For our digital strategy, as the e-commerce market continues to expand, we will make investments to raise
the awareness of our e-commerce operations and the capabilities of these operations. In addition, we will add
more merchandise categories to our e-commerce operations and strengthen relationships between our store
personnel and customers. Our objectives to increase the number of active customers and the numb er ofpurchases these customers make.
(3) Our overseas strategy is centered on a “glocal” approach that reflects the characteristics of each region where
we have operations. We plan to continue growing in China while starting operations in Southeast Asia andother areas where we are not yet active. Expanding e-commerce outside Japan is another goal.
(4) For new businesses, we plan to enlarge our lineup of businesses and sources of earnings, such as by adding a
restaurant business, in order to reflect the diversification of our customers’ life styles and changes in
consumption patterns. Launching and expanding B-to-B businesses is another goal for new businesses. The
B-to-B sector will allow us to target new opportunities in the fashion industry and build new busines s models
that span different business formats.
By taking actions based on these strategies, we are determined to reach the following targets for the fiscal year
ending in February 2026: sales of 280 billion yen, operating margin of 8% and an ROE of at leas t 15%.
(5) Basic Policy on Profit Distribution, and Dividend Plans for the Current and Next Fiscal Years
Our goal is to maximize the overall satisfaction of our customers, shareholders, business partners and employees
as we achieve the long-term growth of corporate value (shareholder value) by making investments needed tocreate highly appealing brands, increase the use of digital technologies and achieve business growth on a global
scale. For the distribution of earnings to shareholders, we use a consolid ated payout ratio before goodwill
amortization of 30% as the basic policy. Repurchases will be determined in an appropriate and timely manner
while taking into account changes in our stock price, our financial position and other factors.
The forecast for the year-end dividend for the fiscal year that ended in February 2022 was determined by taking
into account the stability of dividends and the need for proper balance between investments and shareholder
distributions. On March 18, 2022, we increased our net income forecast for the fiscal year that ended in February
2022 and raised the year-end dividend forecast from 25 yen to 30 yen. As a result, the fiscal year dividend
forecast is 55 yen, 5 yen higher than the forecast announced on April 7, 2021.
For the fiscal year ending in February 2023, we plan to pay an annual dividend of 55 yen.
2. Basic Approach for the Selection of Accounting Standards
Adastria prepares its consolidated financial statements based on the generally accepted accounting principles inJapan to permit comparisons with prior years and with the financial data of other companies.
We will take suitable actions with regard to the application of International Financial Reporting Standards (IFRS)
by taking into account associated factors in Japan and other countries.

- 6 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Million yen)
FY2/22(As of Feb. 28, 2022)

FY2/21(As of Feb. 28, 2021)
AssetsCurrent assets
Cash and deposits

24,17916,976

Notes and accounts receivable-trade

9,751

9,878

Inventories

15,71819,259

Other

1,995

2,126

Allowance for doubtful accounts

(74)

(71)

51,56948,169

6,010

8,374

Accumulated depreciation(2,318)(3,868)

Buildings and structures, net

3,691

4,506

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

Store interior equipment

32,90135,223

Accumulated depreciation(28,678)(30,818)

Store interior equipment, net

4,222

4,404

2,366

2,366

38

402

Land
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment

7,042

9,291

(2,785)(4,965)

4,257

4,325

14,577

16,005

4,751

6,417

Intangible assets
Software
Goodwill

113

1,897

Other

2,428

2,092

Total intangible assets

7,292

10,406260

1,003

Leasehold and guarantee deposits

15,162

15,426

Deferred tax assets

6,463

7,090

Investments and other assets
Investment securities

Other

1,308

205

Allowance for doubtful accounts(1,184)(351)

Total investments and other assets

22,01023,37543,88049,787

95,44997,957

Total non-current assets
Total assets- 7 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(Million yen)
FY2/22(As of Feb. 28, 2022)

FY2/21(As of Feb. 28, 2021)
Liabilities
Current liabilities
Notes and accounts payable-trade

9,548

11,282

Electronically recorded obligations-operating

7,360

6,620

-

95

Short-term borrowings
Current portion of long-term borrowings

-

455

672

805

Accounts payable-other

14,04010,449

Income taxes payable

4,151

3,247

Provision for bonuses

2,170

2,179

Provision for point card certificates

1,285

1,728

420

446

Lease obligations

Other provisions
Other

1,405

1,104

Total current liabilities

41,05538,416

Non-current liabilities
Long-term borrowings

-

896

2,966

2,758

Provisions

356

322

Other

370

600

3,692

4,577

44,74742,994

Share capital

2,660

2,660

Capital surplus

7,213

7,213

Lease obligations

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Retained earnings

48,47951,114

Treasury shares(7,917)(7,636)

Total shareholders’ equity

50,43553,351

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

0

8

34

45

Foreign currency translation adjustment

231

558

Total accumulated other comprehensive income

266

611

-

1,000

50,701

54,963

95,44997,957

Non-controlling interests
Total net assets
Total liabilities and net assets- 8 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)(Million yen)
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)

183,870
83,744
100,125

201,582
90,569111,012

7,163
47
457
29,195
2,152
4,956
29,220
482
6,841
157
18,68399,358
766

8,153
41
497
29,6052,129
4,993
30,571580
6,679
58
21,136
104,448
6,564

69
2
75
60
217
36
1,767
333
2,562

11
3
310
71
676
34
549
221
1,880

160
89
25
72
346
2,981

148
59
45
26
278
8,166

-

81
264
346

1,322
874
137
2,335
646
962
377
1,340
(693)
(693)

600
600
7,911
3,124
(129)
2,994
4,917
(0)
4,917

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising expenses
Provision of allowance for doubtful accounts
Remuneration for directors (and other officers)
Salaries and bonuses
Provision for bonuses
Welfare expenses
Rents
Lease payments
Depreciation
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Income from contribution to facilities
Subsidy income
Revenue from electric power sales
Subsidies for employment adjustment
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on valuation of derivatives
Commitment fee
OtherTotal non-operating expenses
Ordinary profit
Extraordinary income
Gain on liquidation of subsidiaries and associates
Reversal of allowance for doubtful accounts
Total extraordinary income
Extraordinary losses
Impairment loss
Provision of allowance for doubtful accounts
Loss on liquidation of businessTotal extraordinary losses
Net income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income (loss)
Net loss attributable to non-controlling interests
Net income (loss) attributable to owners of the parent- 9 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

Consolidated Statement of Comprehensive Income
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)(Million yen)
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)

(693)

4,917

Net income (loss)
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

0

8

27

10

Foreign currency translation adjustment

(222)

343

Total other comprehensive income

(195)

363

(888)

5,280

(888)

5,280

-

(0)

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests- 10 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(3) Consolidated Statement of Changes in Equity
FY2/21 (Mar. 1, 2020 – Feb. 28, 2021)

Balance at beginning of period(Million yen)
Shareholders’ equity
Retained
Total shareholders’Share capital
Capital surplus
Treasury sharesearnings
equity2,660
7,213
51,079(4,372)56,580Changes during period
Dividends of surplus
Net loss attributable to ownersof the parent
Purchase of treasury shares
Disposal of treasury shares
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period(1,906)(1,906)

(693)

(693)
(3,673)(3,673)

0

0

128

128
-

-

-

(2,599)(3,544)(6,144)

2,660

7,213

48,479(7,917)50,435(Million yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period

(0)

Total
Deferred gains Foreign currency accumulated
or losses ontranslation
otherhedgesadjustment
comprehensive
income6454
461

Total net assets

57,041

Changes during period
Dividends of surplus
Net loss attributable to ownersof the parent
Purchase of treasury shares-(1,906)

-

(693)

-

(3,673)

Disposal of treasury shares
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period

-

0

-

128

Balance at end of period

0

27

(222)

(195)

(195)

0

27

(222)

(195)

(6,339)

0

34

231

266

50,701- 11 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

FY2/22 (Mar. 1, 2021 – Feb. 28, 2022)

Balance at beginning of period(Million yen)
Shareholders’ equity
Retained
Total shareholders’Share capital
Capital surplus
Treasury sharesearnings
equity2,660
7,213
48,479(7,917)50,435

Changes during period
Dividends of surplus
Net income attributable toowners of the parent
Purchase of treasury shares
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period(2,282)(2,282)

4,917

4,917
(1)

(1)

282

282
-

-

-

2,634

281

2,915

2,660

7,213

51,114(7,636)53,351(Million yen)

Balance at beginning of period

Accumulated other comprehensive income
Total
NonValuation
Foreign
Deferred gains
accumulated controlling
difference on
currency
or losses on
otherinterests
available-fortranslation
hedgescomprehensive
sale securities
adjustment
income
0
34
231
266
-

Total net
assets

50,701

Changes during period
Dividends of surplus
Net income attributable toowners of the parent
Purchase of treasury shares
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period-(2,282)

-

4,917

-

(1)

-

282

8

10

326

345

1,000

1,345

8

10

326

345

1,000

4,261

8

45

558

611

1,000

54,963- 12 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(4) Consolidated Statement of Cash Flows
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)(Million yen)
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)

646

7,911

Depreciation

7,156

7,044

Impairment loss

1,322

600

Amortization of goodwill

157

58

Loss on liquidation of business137-

Cash flows from operating activities
Net income before income taxes

Loss (gain) on liquidation of subsidiaries and associates

-

(81)

Interest and dividend income

(71)

(14)

Interest expenses

160

148

Increase (decrease) in allowance for doubtful accounts

921

(226)

Increase (decrease) in provision for bonuses

(17)

1

Increase (decrease) in provision for point card certificates

(651)

443

Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables

190

72

(771)

(3,266)

3

651

Increase (decrease) in accounts payable-other

(175)

(414)

Increase (decrease) in accrued consumption taxes

2,977(4,021)Other, net

644(1,883)

Subtotal

12,6307,022Interest and dividends received

13

10Interest paid

(160)

(148)

Income taxes paid

(550)

(3,381)

Net cash provided by (used in) operating activities

11,933

3,504

Purchase of property, plant and equipment(3,807)(3,796)

Purchase of intangible assets(2,695)(3,136)

Cash flows from investing activities

Purchase of investment securities

(21)

(202)

(1,091)

-

(663)

(788)

920

723

-

(563)

(7)

(16)

(7,366)(7,780)

Dividends paid

(1,907)(2,283)Purchase of treasury shares(3,677)(1)

Repayments of lease obligations(1,255)(967)

Long-term loan advances
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee deposits
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities

Other, net

0-(6,840)(3,251)(22)309

Net increase (decrease) in cash and cash equivalents(2,294)(7,219)Cash and cash equivalents at beginning of period

26,37724,082

Cash and cash equivalents at end of period

24,082

16,863

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents- 13 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Business Combinations
Business combination through acquisition
Zetton, Inc. became a consolidated subsidiary of Adastria on February 16, 2022. This was the result of the purchaseof newly issued stock of zetton through a third-party allotment, which was completed on December 30, 2021, andthe purchase of zetton stock by using a tender offer in accordance with the Financial Instruments and Exchange
Act (Act No. 25 of 1948, including subsequent amendments) between January 4 and February 16, 2022. Due tothese purchases, Adastria currently owns 51.00% of all stock issued by zetton.
1. Summary of business combination(1) Acquired company and business activities
Acquired company: Zetton, Inc.
Business activities: Restaurant management, development and consulting(2) Reasons for acquisition
Acquiring zetton will allow Adastria to target opportunities in the restaurant business as part of activities foraccomplishing the goal of providing a broad range of life style ideas for consumers. Adastria believes that
this acquisition will increase the earnings of zetton and raise its corporate value.
(3) Acquisition dateFebruary 16, 2022 (stock acquisition date)February 28, 2022 (assumed acquisition date)(4) Legal form of acquisition
Acquisition of shares with cash(5) Company name after acquisition
zetton’s name will not change.
(6) Percentage of voting rights acquireda. Pct. of voting rights acquired through third-party allotment:

25.14%

b. Pct. of voting rights acquired through tender offer:25.86%

c. Percentage of voting rights after acquisition:

51.00%(7) Basis for choosing the company to acquire
Adastria acquired the shares in exchange for consideration in cash.
2. Period of the acquired companies’ performance included in the consolidated financial statements
Results of operations of zetton are not included in the consolidated statement of income for the fiscal y ear that
ended in February 2022 because the acquisition date of zetton is the end of February 2022 for accounting
purposes.
3. Acquisition cost of acquired company and breakdown by type of consideration
Payment for the acquisition:

Cash payment for the third-party allotment

1,292 million yen

Cash payment for the tender offer

1,584 million yen

Acquisition cost:

2,876 million yen- 14 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

4. Details of major acquisition-related costs
Advisory fees, etc.:

85 million yen

5. Goodwill resulting from the acquisition(1) Amount
1,835 million yen
Goodwill is calculated provisionally because the allocation of the acquisition cost was incomplete at the endof the fiscal year.
(2) Source
The source of goodwill is primarily the expectation of excess earnings power emerging from businessdevelopment in the future.
(3) Amortization method and period
Goodwill will be amortized in equal installments over the period during which benefits are expected. The
amortization period will be determined based on the effects of the allo cation of the cost of the acquisition.
Segment Information
The Adastria Group has only a single business segment, which is the planning and sales of clothing and related
merchandise. There is no others segment because the levels of sales and earnings of o ther activities are
insignificant.
Per Share Information

Net assets per share

FY2/21(Mar. 1, 2020 – Feb. 28, 2021)
1,122.71(Yen)
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)
1,192.62

Net income (loss) per share(14.88)108.72
Notes: 1. Diluted net income per share is not presented since Adastria has no outstanding dilutive securities.
2. The Adastria stock held by the trust account recorded as treasury shares under shareholders ’ equity is included intreasury shares deducted from the number of shares that is used to calculate the average number of shares
outstanding during the period for the determination of net income (loss) per share, and is included in treasury sharesthat is deducted from the number of shares outstanding at the end of the period for the determination of net assets per
share.
For the determination of net income (loss) per share, the average numbers of treasury shares outstanding that werededucted were 501,000 for FY2/21 and 423,000 for FY2/22. For the determination of net assets per share, thenumbers of treasury shares deducted were 493,000 for FY2/21 and 405,000 for FY2/22.
3. The basis of calculating the net income (loss) per share is as follows.
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)(Million yen)
FY2/22(Mar. 1, 2021 – Feb. 28, 2022)

(693)

4,917

-

-

(693)

4,917

46,59845,229Net income (loss) attributable to owners of theparentAmount not available to common stockholders
Net income (loss) attributable to owners of theparent applicable to common shares
Average number of common shares outstanding
during the period (Thousand shares)- 15 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2022 Fiscal Year

Subsequent Events
Business combination through acquisition
The Adastria Board of Directors approved a resolution on March 18, 2022 to acquire shares in OPEN AND
NATURAL Inc. through the Company’s consolidated subsidiary BUZZWIT Co., Ltd. and to make it aconsolidated subsidiary (sub-subsidiary). The acquisition has been completed on March 31, 2022.
1. Summary of business combination(1) Acquired company and business activities
Acquired company: OPEN AND NATURAL Inc.
Business activities: Marketing of “PAIRMANON,” an EC brand for children’s clothing(2) Reasons for acquisition
As a part of our growth strategy for 2025, the Group is working to expand its digital customer communication
channels. Starting operations in 2018, BUZZWIT has grown steadily as a company engaged in thedevelopment of a dedicated e-commerce brands for the economically priced market. In this context,
BUZZWIT has sought out M&A opportunities to further expand its business and focused on the children’s
clothing category, which is an area of apparel that is a particularly suitable for e -commerce marketing.
OPEN AND NATURAL, the company being acquired, has been marketing “pairmanon,” an EC-only
children’s clothing brand since its establishment in 2017. The economically priced and high-quality brand ismoderately trend setting in the children’s clothing market. With sales exceeding 2 billion yen in the fiscal
year ended January 2022, it has growing presence in the e-commerce market for children’s clothing and as
well as in the overall children’s clothing market.
The acquisition of the shares will enable BUZZWIT to share its know-how and business structure with OPEN
AND NATURAL and operational capabilities to further expand this business.
(3) Acquisition date
March 31, 2022
(4) Legal form of acquisition
Acquisition of shares with cash(5) Company name after acquisition
OPEN AND NATURAL’s name will not change.
(6) Percentage of voting rights acquired
100.0% (indirect ownership)(7) Basis for choosing the company to acquireBUZZWIT acquired the shares in exchange for consideration in cash.
2. Acquisition cost of acquired companies and breakdown by type of consideration
Not disclosed due to a confidentiality agreement.
3. Goodwill resulting from the acquisition
Not yet determined.
4. Summary of assets acquired and liabilities assumed on the date of business combination
Not yet determined.
This financial report is solely a translation of the Company’s Kessan Tanshin (including attachments) in Japanese, which
has been prepared in accordance with accounting principles and practices generally accepted in Japan, for theconvenience of readers who prefer an English translation.
- 16 -