Summary of Consolidated Financial Results for the Fiscal Year Ended February 29, 2024
[Japanese GAAP]
April 4, 2024

Company name: Adastria Co., Ltd.
Listing: Tokyo Stock Exchange
Stock code:
2685
URL: https://www.adastria.co.jp
Representative: Osamu Kimura, Representative Director and President
Itsuo Iwakoshi, Senior Executive Officer, General Manager ofContact:
Administration Division
Tel: +81-3-5466-2060
Scheduled date of Annual General Meeting of Shareholders:
May 23, 2024
Scheduled date of payment of dividend:
May 8, 2024
Scheduled date of filing of Annual Securities Report:
May 24, 2024
Preparation of supplementary materials for financial results:
Yes
Holding of financial results meeting:Yes (for investors)
Note: The original disclosure in Japanese was released on April 4, 2024 at 15:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended February 29, 2024
(March 1, 2023 – February 29, 2024)(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. 29, 2024
Fiscal year ended Feb. 28, 2023
Note: Comprehensive income%

Million yen%

Million yen%

Million yen

275,59613.6
18,01556.4
18,38952.9242,552
20.3
11,51575.4
12,026
47.3
Fiscal year ended Feb. 29, 2024: 14,186 million yen (up 76.9%)
Fiscal year ended Feb. 28, 2023:
8,019 million yen (up 51.9%)
Net income per
Diluted net
Ratio of ordinary
ROE
share
income per shareprofit to total assets
Yen

Fiscal year ended Feb. 29, 2024
Fiscal year ended Feb. 28, 2023
Reference: Equity in earnings of affiliates

Yen

%

%

13,513
7,540

79.2
53.3

Ratio of operating
profit to net sales%%

297.7520.9
166.37
13.3
Fiscal year ended Feb. 29, 2024: (17) million yen
Fiscal year ended Feb. 28, 2023: (0) million yen

15.4
11.5

6.5
4.7

(2) Consolidated financial position

As of Feb. 29, 2024
As of Feb. 28, 2023
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

127,915
71,58154.8
1,549.13
111,392
60,76253.3
1,309.96
As of Feb. 29, 2024: 70,143 million yen As of Feb. 28, 2023: 59,407 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. 29, 2024
Fiscal year ended Feb. 28, 2023

22,223
13,460(9,920)(9,963)(5,581)(4,398)23,341
16,343

2. Dividends
Dividend per share
1Q-endYen

Fiscal year ended Feb. 28, 2023
Fiscal year ended Feb. 29, 2024
Fiscal year ending Feb. 28, 2025
(forecast)

2Q-end3Q-end Year-end

Yen

Yen

Total

Total
dividends

Yen

Yen

Million yen

-

25.00
35.00

-

35.00
50.00

60.00
85.00

2,739
3,880

-

35.00

-

55.00

90.00

Dividend
Dividend on
payout ratio
equity(consolidated) (consolidated)
%

%

36.1
28.5

4.8
5.9

32.1

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2025 (March 1, 2024 – February 28, 2025)
Net sales
Million yen

Full year

290,000

Operating profit%

5.2

Million yen

19,000%5.5

Ordinary profit(Percentages represent year-on-year changes)
Net income attributable to Net income perowners of the parent
shareMillion yen%

Million yen

19,0003.3

12,700

%

Yen

(6.0)

280.48

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
Newly added: -Excluded: -(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to the section “3. Consolidated Financial Statements and Notes, (5) Notes to Consolidated Financial
Statements, Changes in Accounting Policies” on page 16 for further information.

(3) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of Feb. 29, 2024:
48,800,000 shares
As of Feb. 28, 2023:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of Feb. 29, 2024:
3,520,769 shares

As of Feb. 28, 2023:

3,449,391 shares

3) Average number of shares outstanding during the period
Fiscal year ended Feb. 29, 2024:
45,385,269 sharesFiscal year ended Feb. 28, 2023:

45,322,871 shares

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended February 29, 2024
(March 1, 2023 – February 29, 2024)(1) Non-consolidated results of operations
Net sales

Operating profit

Million yen

Fiscal year ended Feb. 29, 2024
Fiscal year ended Feb. 28, 2023

220,078
196,727

%

11.9
13.0

Million yen%

16,346
10,384(Percentages represent year-on-year changes)
Ordinary profit
Net income
Million yen

57.4
87.7

16,320
10,238Net income per share

Diluted net income per share

Yen

Yen

Fiscal year ended Feb. 29, 2024
Fiscal year ended Feb. 28, 2023

193.03146.20

%

59.4
53.6

Million yen

8,760
6,626

%

32.2
49.1

-

(2) Non-consolidated financial position

As of Feb. 29, 2024
As of Feb. 28, 2023
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

96,832
56,88086,314
51,251
As of Feb. 29, 2024: 56,880 million yen

58.7
1,256.23
59.4
1,130.13
As of Feb. 28, 2023: 51,251 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 7 regarding preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

5(3) Cash Flows

6(4) Outlook

7(5) Basic Policy on Profit Distribution, and Dividend Plans for the Current and Next Fiscal Years

7

2. Basic Approach for the Selection of Accounting Standards

8

3. Consolidated Financial Statements and Notes

9(1) Consolidated Balance Sheet

9(2) Consolidated Statements of Income and Comprehensive Income11(3) Consolidated Statement of Changes in Equity

13(4) Consolidated Statement of Cash Flows

15(5) Notes to Consolidated Financial Statements

16

Going Concern Assumption

16

Changes in the Scope of Consolidation or Application of the Equity Metho d

16

Changes in Accounting Policies

16

Additional Information

16

Consolidated Balance Sheet

16

Segment Information

17

Per Share Information

18

Subsequent Events

19

4. Other Information

20(1) Transition to a Company with an Audit & Supervisory Committee System

20(2) Changes in Directors

20

- 1 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

1. Overview of Results of Operations(1) Results of Operations
Consolidated results(Million yen)
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)

FY2/24(Mar. 1, 2023 – Feb. 29, 2024)

Net sales

242,552

Operating profit

YoY change(%)

275,596

YoY change(Amount)
33,043

11,51518,015

6,499

56.4

Ordinary profit

12,026

18,389

6,362

52.9

Net income attributableto owners of the parent

7,540

13,513

5,973

79.2

13.6

During the fiscal year that ended in February 2024, there was rapid progress with the return to normal economic
and social activity in Japan as demand associated with outings and foreign tourists increased following the end of
the pandemic. Consumer spending continues to recover due to the slow improvement in employment, personal
income and other reasons. Although hot summer and mild winter negatively affected fashion sales, the desire of
consumers to purchase apparel and other fashion products remains strong. The outlook for the economy is still
unclear because of the Ukraine conflict, prolonged turmoil in the Middle East, high prices of resources and energy,
ongoing yen depreciation, rising prices in Japan and other countries, ongoing labor shortages and other reasons.
The Adastria Group has made steady progress with initiatives based on the following strategies for growth in themedium-term management plan.
Growth Strategy Ⅰ

Multi-Brand, Multi-Category

Growth Strategy IⅠ Digital Customer Interactions and Services
Growth Strategy ⅠII Glocal
Growth Strategy ⅠV New BusinessGrouping of brands according to roles for improved
profitability and growth
Accelerate growth of our EC site and create a fun EC
community
Develop models in Mainland China and cultivate
Southeast Asia
Establish a food and beverage business and create new
appealConsolidated net sales increased 13.6% year-on-year to 275,596 million yen, operating profit increased 56.4% to18,015 million yen, ordinary profit increased 52.9% to 18,389 million yen, and net income attributable to ownersof the parent increased 79.2% to 13,513 million yen. Investments continued during the pandemic based on
strategies for growth. Performance also benefited from measures that accurately targeted the rising demand
involving outings and the shift to more casual apparel. Due to the resulting increase in the power of Adastria’s
brands and products, the growth of e-commerce sales and other positive trends, sales and earnings increased to
all-time highs.
In the Apparel and Sundry Goods-related business, sales in Japan were up 11.5% from one year earlier. Sales
increased mainly because of a strong business climate, accurate responses to a hot summer, mild winter and other
weather conditions, the sale of merchandise that reflects current trends, the successful launch of hit products,
revisions in prices due to more added value, and marketing and promotional activities that included TV
commercials and loyalty program points.
There were many initiatives involving our digital strategy. Major activities include “Dot ST Fes” linking the TVcommercials for the Adastria “Dot ST” e-commerce website with physical stores, merchandise using
collaborations with popular artists and characters to attract customers, and more merchandise of other companies
to enlarge the lineup of products. As a result, the number of members of “Dot ST” is now 17. 50 million, 2 million
more than at the end of the previous fiscal year. E-commerce sales increased 10.1% in part because subsidiary
BUZZWIT Co., Ltd., which operates an e-commerce business, acquired and absorbed OPEN AND NATURAL
Inc., a children’s clothing e-commerce company that has been a consolidated subsidiary since the second quarterof the previous fiscal year.

- 2 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal YearSales increased 73.7% in Mainland China, 26.0% in Hong Kong and 46.4% in Taiwan mainly because of thedecline in the impact of the pandemic and the opening of new stores. In Taiwan, existing store sales were strong
and new stores that were added based on the multi-brand strategy made a contribution to sales growth. In the
United States, there was a slowdown of wholesale sales beginning in the second quarter caused by uncertainty
about the economic outlook. However, fiscal year sales were 3.5% higher than one year earlier. As a result, total
overseas sales, which are based on yen conversions of local currency sales, were up 3 0.0%. Operations inThailand started with the opening of the first store in the first quarter of the fiscal year.
In the Other segment, which is the food and beverage business, the business climate remains challenging becauseof the high cost of raw materials and utilities, the labor shortage and other difficulties. Despite these challenges,
sales increased 32.5% as more people are going out following the end of the pandemic, expenditures on food andbeverage services increase, new locations were opened, and sales increased outside Japan. Fiscal year sales andearnings in this segment include an 11-month period of zetton, inc., which accounts for most of the segment’s
sales, due to a change in this company’s fiscal year in the previous fiscal year.
Profitability improved despite the continuing negative effects of the yen’s depreciation and the rising cost of raw
materials. Earnings are benefiting from the control of inventories by supplying merchandise at the right times,
prices and volumes, measures to limit sales of merchandise at discounts, additions of more values to merchandise,revisions of prices to maintain the proper balance with the value of merchandise, and the shift to suppliers in the
ASEAN region to hold down production expenses. Earnings were also supported by the one-time expiration of
loyalty points due to a revision to this program, higher profitability in the overseas business, and the recovery
from the impact on earnings of the unauthorized access to Adastria server in January 2023. As a result, the grossprofit margin in the Apparel and Sundry Goods-related business increased. In the Other segment (the food andbeverage business), the gross profit margin declined mainly because of the high cost of raw materials, but theconsolidated gross profit margin improved 0.6 percentage points from one year earlier to 55.3%.
Selling, general and administrative expenses increased mainly because of an increase in advertising andpromotion expenses resulting from numerous promotional activities, higher employee remuneration and increases
in personnel expenses, store leasing expenses, credit card fees and other items along with sales growth. However,
due to the increase in sales, the SG&A to sales ratio decreased 1.2 percentage points from one year earlier to
48.7% and operating profit increased 56.4%.
Non-operating income includes foreign exchange gains of 235 million yen and there was an extraordinary loss of
1,029 million yen for the impairment of store assets.
Business segment performance was as follows.
1) Apparel and Sundry Goods-related BusinessAs a result of the activities in this business explained earlier, sales were 262,846 million yen and segment profit
was 18,558 million yen.
During the fiscal year, 113 stores were opened (including 31 overseas) and 56 stores were closed (including 4
overseas), resulting in a total of 1,492 stores (including 122 overseas) at the end of the fiscal year.
2) Other (Food and Beverage Business)
Sales were 12,800 million yen and there was a segment loss of 139 million yen.
The number of stores at the end of the fiscal year was 71, the result of opening 11 stores and closing 14 stores.

- 3 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

Supplementary Information(1) Sales for Brands and Regions
Brand / region

FY2/24

YoY change (%)

Sales (million yen)

Composition (%)

GLOBAL WORK

51,673

18.8

13.3

niko and ...

33,56512.2

12.5

LOWRYS FARM

22,401

8.1

4.8

studio CLIP

22,0278.0

8.4

LEPSIM

13,2294.8

6.6

JEANASiS

12,294

4.5

9.7

LAKOLE

10,8073.9

36.2

BAYFLOW

10,7853.9

5.9

Others39,475

14.3

13.4

Total (Adastria)

216,260

78.5

11.7

BUZZWIT Co., Ltd. (Note 3)

11,6304.2

12.2

ELEMENT RULE Co., Ltd.

11,210

4.1

1.3

955

0.3

240.4

240,057

87.1

11.5

Hong Kong

4,248

1.5

26.0

Mainland China

4,351

1.6

73.7

Taiwan

6,493

2.4

46.4

Other consolidated subsidiaries
Total (Japan)

ThailandUSA
Total (Overseas)
Total (Apparel and Sundry Goods-related
Business)zetton, inc. (Note 4)
ADASTRIA eat Creations Co., Ltd.
(Note 5)
Total (Food and Beverage Business)
Total (Group)
Notes:

216

0.1

-

7,477

2.7

3.5

22,7878.3

30.0

262,844

95.4

12.8

12,536

4.5

38.7

215

0.1

(63.5)

12,751

4.6

32.5

275,596

100.0

13.6

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 between consolidated
subsidiaries.
3. Sales of BUZZWIT Co., Ltd. include sales of its consolidated subsidiary OPEN AND NATURAL, Inc. On July 1,
2023, an absorption-type merger was conducted between BUZZWIT Co., Ltd., which is the surviving company,
and OPEN AND NATURAL Inc., which was dissolved.
4. Sales of zetton, inc. include sales of its consolidated subsidiary ZETTON, INC. (USA Business).
5. ADASTRIA eat Creations Co., Ltd. was liquidated on February 2, 2024.

(2) Sales for Merchandise Categories
Category

FY2/24

YoY change (%)

Sales (million yen)

Composition (%)

Men’s apparel (bottoms, tops)

45,293

16.5

Lady’s apparel (bottoms, tops)

165,200

59.9

11.4

Others65,102

23.6

15.6

275,596

100.0

13.6

Total
Notes:

19.5

1. The others category includes contract liabilities and additions to the provision for point card certificates and otheritems.
2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.
- 4 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

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

FY2/24As of Feb. 28,
2023

As of Feb. 29,

OpenedChangedClosedIncrease/decrease
92024

GLOBAL WORK

205

13

-

(4)

niko and ...

141

2

-

(2)

-

141

LOWRYS FARM

129

2

-

(5)

(3)

126

studio CLIP

174

9

-

(4)

5

179

LEPSIM

114

2

-

(1)

1

115

JEANASiS

71

-

-

(3)

(3)

68

LAKOLE

63

15

-

-

15

78

BAYFLOW

61

3

-

(2)

1

62

Others

264

14

-

(19)

(5)

259

Total (Adastria)

1,222

60

-

(40)

20

1,242

BUZZWIT Co., Ltd. (Note 3)

29

5

-

(3)

2

31

ELEMENT RULE Co., Ltd.

81

10

-

(8)

2

83

Other consolidated subsidiaries

8

7

-

(1)

6

14

1,340

82

-

(52)

30

1,370

Hong Kong

21

4

-

(2)

2

23

Mainland China

13

2

-

-

2

15

Taiwan

52

22

-

(2)

20

72

Thailand

-

2

-

-

2

2

Total (Japan)
1

USA
Total (Overseas)
Total (Apparel and Sundry
Goods-related Business)zetton, inc. (Note 4)
ADASTRIA eat Creations Co., Ltd.
(Note 5)
Total (Food and Beverage Business)
Total (Group)
Notes:

214

9

1

-

-

1

10

95

31

-

(4)

27

122

1,435

113

-

(56)

57

1,492

71

11

-

(11)

-

71

3

-

-

(3)

(3)

-

74

11

-

(14)

(3)

71

1,509

124

-

(70)

54

1,563

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 of BUZZWIT Co., Ltd. includes the stores of its consolidated subsidiary OPEN AND
NATURAL Inc. On July 1, 2023, an absorption-type merger was conducted between BUZZWIT Co., Ltd., whichis the surviving company, and OPEN AND NATURAL Inc., which was dissolved.
4. The number of stores of zetton, inc. includes the stores of its consolidated subsidiary ZETTON, INC. (USABusiness).
5. ADASTRIA eat Creations Co., Ltd. was liquidated on February 2, 2024.

(2) Financial Position
AssetsCurrent assets increased 12,958 million yen from as of February 28, 2023 to 68,731 million yen as of February
29, 2024. This was mainly due to increases of 6,991 million yen in cash and deposits, 3,644 million yen in notes
and accounts receivable-trade and 2,159 million yen in inventories.
Non-current assets increased 3,565 million yen to 59,184 million yen. This was mainly due to increases of 778
million yen in store interior equipment, net, 863 million yen in right-of-use assets, net, 1,229 million yen insoftware and 1,373 million yen in deferred tax assets.

- 5 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

Liabilities
Current liabilities increased 4,502 million yen to 48,491 million yen. This was mainly due to increases of 733
million yen in notes and accounts payable-trade, 1,660 million yen in electronically recorded
obligations-operating, 2,030 million yen in accounts payable-other and 697 million yen in income taxes payable,
while there was a decrease of 625 million yen in contract liabilities.
Non-current liabilities increased 1,203 million yen to 7,842 million yen. This was mainly due to increases of 678
million yen in lease liabilities and 403 million yen in other under non-current liabilities.
Net assets
Net assets increased 10,818 million yen to 71,581 million yen. This was mainly due to increases of 10,317 million
yen in retained earnings, 354 million yen in deferred gains or losses on hedges and 354 million yen in foreign
currency translation adjustment.
(3) Cash Flows
Cash and cash equivalents (hereinafter “net cash”) as of February 29, 2024 amounted to 23,341 million yen, or
6,998 million yen more than as of February 28, 2023.
A summary of cash flows from each activity during the fiscal year is as follows:
Cash flows from operating activities
Net cash provided by operating activities totaled 22,223 million yen (an increase of 8,762 million yen, comparedwith the previous fiscal year). The main positive factors include net income before income taxes of 1 7,116
million yen, depreciation of 10,073 million yen and an increase in trade payables of 2,292 million yen. Main
negative factors include an increase in trade receivables of 3,547 million yen and income taxes paid of 4,496
million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 9,920 million yen (a decrease of 42 million yen). The main positive
factors include proceeds from refund of leasehold and guarantee deposits of 671 million yen. Main negative
factors include the payments of 5,670 million yen for the purchase o f property, plant and equipment, 3,318
million yen for the purchase of intangible assets and 1,475 million yen for leasehold and guarantee deposits.
Cash flows from financing activities
Net cash used in financing activities totaled 5,581 million yen (an increase of 1,182 million yen). This was
mainly due to cash dividends paid of 3,194 million yen and repayments of lease liabilities of 1,408 million yen.
Reference: Cash flow indicators
FY2/22

FY2/23

FY2/24

Shareholders’ equity ratio (%)

55.1

53.3

54.8

Shareholders’ equity ratio based on market prices (%)

78.4

88.2

120.7

Interest-bearing debt to cash flow ratio

1.4

0.6

0.4

23.6
Interest coverage ratio (times)
69.4
89.5
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 consolidat ed statement of cash flows.

- 6 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(4) Outlook
The Japanese economy is healthy because of the return to normal economic and social activities following the endof the pandemic. There is still uncertainty about the business climate because of the rising cost of raw materials
and energy, high inflation and interest rates, rising personnel expenses, the labor shortage, foreign exchange rate
movements, and geopolitical risk. In Japan’s apparel sector, according to a Japanese government household
budget survey, spending on clothing during calendar 2023 was less than 90% of the level before the pandemic.
This indicates that there is still potential for the recovery of apparel spending to continue. Furthermore, nominal
wages are continuing to increase because of the labor shortage, which is a positive sign concerning theexpenditures of young people, who are the main customers of the Adastria Group. Permanent changes are taking
place in the life styles and preferences of customers. As a result, our activities must be based on the premise that
consumer behavior will not return to the characteristics of prior years. At the same time, the rising d emand forhousehold products, ongoing shift to casual apparel at work, growth of the market for lower priced merchandise,
expansion of the e-commerce market and other trends are creating opportunities. We are adapting to these trends
with flexibility while using many actions for targeting new categories of demand.
From a medium to long-term perspective, the apparel market in Japan is certain to structurally shrink slowly as
the population ages and the number of children falls. In other countries, the growth of apparel markets is likely tocontinue as populations increase and personal income in emerging countries climbs.
To achieve growth and higher earnings in this business climate, we are currently implementing a medium -term
management plan that will end with the fiscal year ending in February 2026.
(1) In the apparel business in Japan, we will divide our multi-brand portfolio, which has a large number ofinnovative brands, into three categories: independent brands, growth brands, and profit brands. Our objectiveis growth of the scale of operations and of our earnings by making strategic investments and implementing
business strategies that match the current stage of each category of brands.
(2) For our digital strategy, as the e-commerce market continues to expand, we will make investments to raise theawareness 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 number 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 business models
that span different business formats.
By taking actions based on these strategies, we forecast a 5.2% increase in consolidated net sales to 290 billion
yen, a 6.5% increase in gross profit to 162.3 billion yen, a 5.5% increase in operating profit to 19 billion yen, a
3.3% increase in ordinary profit to 19 billion yen and a 6.0% decrease in net income attributable to owners of theparent to 12.7 billion yen in the fiscal year ending on February 28, 2025.
We are determined to reach the following targets for the fiscal year ending in February 2026: sales of 310 billion
yen, operating profit of 22.4 billion yen and an ROE of at least 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) and strengthen the foundation for ourbusinesses by making investments needed to create highly appealing brands, increase the use of digitaltechnologies and achieve business growth on a global scale. For the distribution of earnings to shareholders, we- 7 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Yearuse a consolidated payout ratio of 30% as the basic policy.
In addition, we plan to return to shareholders in a timely manner surplus funds accumulated over many years after
making investments for growth and these profit distributions. 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.
Based on considerations concerning dividend stability and the balance between investments and shareholder
distributions, we originally planned to pay a dividend per share of 65 yen for the fiscal year that ended in
February 2024. On September 29, 2023, we increased our net income forecast for the fiscal year and raised theforecast for the first half dividend from 30 yen to 35 yen and the year-end dividend forecast from 35 yen to 45
yen. As a result, the revised plan was to pay a fiscal year dividend of 80 yen per share. We have now madeanother revision by increasing the year-end dividend forecast by 5 yen to 50 yen. This raises the fiscal year
dividend to 85 yen, which is 25 yen more than the dividend for the previous fiscal year.
For the fiscal year ending in February 2025, we plan to pay a fiscal year dividend of 90 yen per share. A dividendof 65 yen is designated as the minimum dividend in the medium-term plan that will end with the fiscal year
ending in February 2026. Our goal is to pay an even higher dividend by using the medium-term plan’s initiatives
for the growth of sales and earnings.
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 Internat ional Financial Reporting Standards (IFRS)
by taking into account associated factors in Japan and other countries.

- 8 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Million yen)
FY2/24(As of Feb. 29, 2024)

FY2/23(As of Feb. 28, 2023)
AssetsCurrent assets
Cash and deposits

16,38023,371

Notes and accounts receivable-trade12,171

15,815Inventories

24,67926,839

Other

2,622

2,788

Allowance for doubtful accounts

(81)

(83)

55,772

68,731

8,986

9,571

Accumulated depreciation(4,185)(4,590)

Buildings and structures, net

4,801

4,980

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

Store interior equipment

37,70540,316

Accumulated depreciation(31,705)(33,537)

Store interior equipment, net

6,000

6,778

Land

2,366

2,366

Right-of-use assets

10,94914,059

Accumulated depreciation(4,584)(6,831)

Right-of-use assets, net

6,364

7,227

292

299

Construction in progress
Other

5,109

5,618

(2,870)(3,370)

2,239

2,248

22,06523,901

Software

6,870

8,100

Goodwill

1,331

1,109

Other

3,706

3,166

Total intangible assets

11,90812,376

Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets

Investments and other assets
Investment securities

1,108

768

Leasehold and guarantee deposits

13,545

13,719Deferred tax assets

7,124

8,497

Other

165

235

Allowance for doubtful accounts

(298)

(314)

Total investments and other assets

21,64522,90655,61959,184111,392

127,915

Total non-current assets
Total assets- 9 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(Million yen)
FY2/24(As of Feb. 29, 2024)

FY2/23(As of Feb. 28, 2023)
Liabilities
Current liabilities
Notes and accounts payable-trade

13,28014,013

Electronically recorded obligations-operating

6,990

8,651

197

-

Short-term borrowings
Current portion of long-term borrowings

375

401

Lease liabilities

1,695

2,007

Accounts payable-other

12,11414,144

Income taxes payable

2,970

3,667

Contract liabilities

2,535

1,910

Provision for bonuses

2,112

2,460

Provision for point card certificates

160

175

Other provisions

779

477

Other

777

582

43,98948,491

554

504

5,359

6,037

-

172

725

1,128

Total current liabilities
Non-current liabilities
Long-term borrowings
Lease liabilities
Provisions
Other
Total non-current liabilities
Total liabilities

6,639

7,842

50,62956,334

2,660

2,660

Net assets
Shareholders’ equity
Share capital
Capital surplus

7,213

7,213

Retained earnings

55,96866,286

Treasury shares(7,286)(7,516)

Total shareholders’ equity

58,55568,642

95

34

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

(120)

234

Foreign currency translation adjustment

877

1,231

852

1,500

Non-controlling interests

Total accumulated other comprehensive income

1,355

1,437

Total net assets

60,762

71,581

111,392

127,915

Total liabilities and net assets- 10 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)(Million yen)
FY2/24(Mar. 1, 2023 – Feb. 29, 2024)

Net sales

242,552

275,596

Cost of sales

109,887

123,242

Gross profit

132,664

152,354

Advertising expenses

8,037

8,712

Provision of allowance for doubtful accounts

(42)

18

Remuneration for directors (and other officers)

682

654

Salaries and bonuses

34,60938,826

Provision for bonuses

2,113

2,395

Selling, general and administrative expenses

Welfare expenses

5,671

6,456

Rents

34,96737,534

Lease payments

656

725

Depreciation

8,185

9,525

Amortization of goodwill

263

223

Other

26,00329,266

Total selling, general and administrative expenses

121,149

134,339

11,51518,015

16

25

Operating profit
Non-operating income
Interest income
Dividend income22Foreign exchange gains

291

235

Income from contribution to facilities

43

19

Insurance claim income

0102

Subsidy income

231

52

Revenue from electric power sales

29

21

Subsidies for employment adjustment

37

-

Other

230

279

Total non-operating income

883

739

Interest expenses

193

248

Loss on valuation of derivatives

106-

Commitment fee

44

18

Other

27

97

Total non-operating expenses

372

364

12,026

18,389Impairment loss

492

1,029

Loss on valuation of investment securities

100

243

Non-operating expenses

Ordinary profit
Extraordinary losses

Total extraordinary losses

592

1,273

Net income before income taxes

11,433

17,116

Income taxes-current

4,028

5,146

Income taxes-deferred(373)(1,568)

Total income taxes

3,654

3,577

Net income

7,778

13,538

238

24

7,540

13,513

Net income attributable to non-controlling interests
Net income attributable to owners of the parent- 11 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

Consolidated Statement of Comprehensive Income
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)(Million yen)
FY2/24(Mar. 1, 2023 – Feb. 29, 2024)

7,778

13,538Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

87

(60)

(165)

354

Foreign currency translation adjustment

319

354

Total other comprehensive income

240

648

8,019

14,186

7,663

14,112355

74

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests- 12 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(3) Consolidated Statement of Changes in Equity
FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)

Balance at beginning of period
Cumulative effects of changes
in accounting policies
Restated balance(Million yen)
Shareholders’ equity
Retained
Total shareholders’Share capital
Capital surplus
Treasury sharesearnings
equity2,660
7,213
51,114(7,636)53,351
(175)
2,660

7,213

(175)

50,939(7,636)53,176

Changes during period
Dividends of surplus
Net income attributable toowners of the parent
Purchase of treasury shares
Purchase of treasury shares bystock ownership plan trust
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period(2,510)(2,510)

7,540

7,540
(1)

(1)

(92)

(92)

443

443
-

-

-

5,029

349

5,379

2,660

7,213

55,968(7,286)58,555(Million yen)

Balance at beginning of period
Cumulative effects of changes
in accounting policies
Restated balance

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
8
45
558
611
1,000
8

45

558

611

Total net
assets54,963
(175)

1,000

54,787

Changes during period
Dividends of surplus
Net income attributable toowners of the parent
Purchase of treasury shares
Purchase of treasury shares bystock ownership plan trust
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period-(2,510)

-

7,540

-

(1)

-

(92)

-

443

87

(165)

319

240

87

(165)

319

240

355

5,974

95

(120)

877

852

1,355

60,762- 13 -

355

595

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

FY2/24 (Mar. 1, 2023 – Feb. 29, 2024)

Balance at beginning of period(Million yen)
Shareholders’ equity
Retained
Total shareholders’Share capital
Capital surplus
Treasury sharesearnings
equity2,660
7,213
55,968(7,286)58,555

Changes during period
Dividends of surplus
Net income attributable toowners of the parent
Purchase of treasury shares
Purchase of treasury shares bystock ownership plan trust
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period(3,195)(3,195)

13,513

13,513
(1)

(1)

(755)

(755)

527

527
-

-

-

10,317(230)

10,087

2,660

7,213

66,286(7,516)

68,642(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
95
(120)
877
852
1,355

Total net
assets60,762

Changes during period
Dividends of surplus
Net income attributable toowners of the parent
Purchase of treasury shares
Purchase of treasury shares bystock ownership plan trust
Disposal of treasury shares bystock ownership plan trust
Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period-(3,195)-

13,513

-

(1)

-

(755)

-

527

(60)

354

354

648

82

730

(60)

354

354

648

82

10,818

34

234

1,231

1,500

1,437

71,581- 14 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(4) Consolidated Statement of Cash Flows
FY2/23(Mar. 1, 2022 – Feb. 28, 2023)(Million yen)
FY2/24(Mar. 1, 2023 – Feb. 29, 2024)

Cash flows from operating activities
Net income before income taxes

11,433

17,116

Depreciation

8,796

10,073

Impairment loss

492

1,029

Amortization of goodwill

263

223

Interest and dividend income

(19)

(27)

Interest expenses

193

248

Increase (decrease) in allowance for doubtful accounts

(42)

18

Increase (decrease) in provision for bonuses

(72)

338

Increase (decrease) in provision for point card certificates

(98)

15

Loss (gain) on valuation of investment securities

100

243

Decrease (increase) in trade receivables(2,019)(3,547)

Decrease (increase) in inventories(4,939)(1,980)

Increase (decrease) in trade payables

2,130

2,292

Increase (decrease) in accounts payable-other

1,728

123

Increase (decrease) in accrued consumption taxes

232

745

Other, net

(182)

14

Subtotal

17,99526,92626

42

Interest and dividends received
Interest paid

(193)

(248)

Income taxes paid

(4,367)(4,496)

Net cash provided by (used in) operating activities

13,46022,223Purchase of property, plant and equipment(6,988)(5,670)Purchase of intangible assets(3,520)(3,318)Cash flows from investing activities

Purchase of investment securities

(88)

(10)

(1,000)(1,475)

2,555

671

(839)

-

(82)

(117)

(9,963)(9,920)

Increase (decrease) in short-term borrowings

(64)

(203)

Proceeds from long-term borrowings

200

380

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

Repayments of long-term borrowings
Dividends paid
Purchase of treasury shares
Repayments of lease liabilities
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

(692)

(405)

(2,510)(3,194)

(93)

(757)

(1,188)(1,408)(49)

8(4,398)(5,581)

381

276

Net increase (decrease) in cash and cash equivalents

(519)

6,998

Cash and cash equivalents at beginning of period

16,863

16,343

Cash and cash equivalents at end of period

16,343

23,341- 15 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in the Scope of Consolidation or Application of the Equity Method
Important changes in the scope of consolidation
In the fiscal year that ended in February 2024, OPEN AND NATURAL Inc., which was a consolidated subsidiaryof Adastria, was excluded from the scope of consolidation since this company was ab sorbed by BUZZWIT Co.,
Ltd., which became the surviving company, after which OPEN AND NATURAL was dissolved as of July 1, 2023.
ADASTRIA eat Creations Co., Ltd. was excluded from the scope of consolidation due to the completion of its
liquidation on February 2, 2024.
Changes in Accounting Policies
Application of the Implementation Guidance on Accounting Standard for Fair Value Measurement
The Company has applied the Implementation Guidance on Accounting Standard for Fair Value Measurement(Accounting Standards Board of Japan (ASBJ) Guidance No. 31, June 17, 2021) from the beginning of the current
fiscal year, and has applied the new accounting policies set forth by the Implementation Guidance on AccountingStandard for Fair Value Measurement prospectively in accordance with the transitional treatment in Paragraph27-2 of the Implementation Guidance on Accounting Standard for Fair Value Measu rement. There is no effect of
the application of this guidance on the consolidated financial statements.
Additional Information
Accounting treatment and disclosure method when the group tax sharing system is used
Beginning with the current fiscal year, Adastria and some of its consolidated subsidiaries in Japan have changed
from the single-entity tax system to the group tax sharing system. Due to this change, the accounting treatment
and disclosure of corporate income taxes, local corporate income taxes and tax effect accounting are as prescribedin Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System (Practical Issues
Task Force (PITF) No. 42, August 12, 2021).
Consolidated Balance Sheet
Contingent liabilities
ZETTON, INC., a consolidated subsidiary of Adastria located in the United States, received US$8.2 million in
May 2021 due to the establishment of the Restaurant Revitalization Fund in accordance with the American
Rescue Plan Act of 2021 that became effective in March 2021. Subsequently, the U.S. Small Business
Administration began an investigation to determine if ZETTON was qualified to receive this payment.
The Adastria Group will continue to explain to the Small Business Administration the reasons for the belief that
ZETTON is properly qualified to receive this payment. This investigation may have an effect on the results ofoperations of the Adastria Group depending on upcoming events. At this time, it is difficult to determine an
estimate of the potential effect on results of operations.

- 16 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

Segment Information
1.

Overview of reportable segment

The Adastria Group defines reportable segments as businesses for which financial details can be compiled; theBoard of Directors will review this information on a periodic basis in order to assist with decisions aboutallocating resources and evaluating the performance.
The Adastria Group is engaged primarily in the planning and sales of clothing and related merchandise. The
reportable segment is the Apparel and Sundry Goods-related Business.
2.

Calculation methods for sales, profits/losses, assets and other items for each reportable segment

The accounting treatment methods for reportable segments are generally the same as accounting principles andprocedures used for the preparation of the consolidated financial statements.
Profits for reportable segments are generally ordinary profit figures. Profits on and transfer amounts ofinter-segment transactions within the Group are based on current market prices.
3.

Information related to sales, profits/losses, assets and other items for each reportable segment

FY2/23 (Mar. 1, 2022 – Feb. 28, 2023)(Million yen)
Reportablesegment
Apparel andSundryGoods-related
Business

Other(Note 1)

Amounts shown on
consolidated
financial statements(Note 3)Adjustment(Note 2)Total

Net sales
External sales
Inter-segment sales and transfers

232,9259,626

242,552-

242,552

1

39

40

(40)

-

Total

232,927

9,665

242,593(40)

242,552

Segment profit (loss)

12,289(263)

12,026-

12,026

Segment assets

104,522

8,520

113,043(1,651)

111,392

8,124

671

8,796

-

8,796

Other items
Depreciation

Amortization of goodwill
116
147
263
263
Increase in property, plant and15,256
2,218
17,474
17,474equipment and intangible assets
Notes: 1. “Other” represents the businesses which are not included in the reportable segment and mainly consists of Food andBeverage Business.
2. The above adjustments include the following items.
(1) The amount of adjustment to segment profit (loss) is an adjustment to unrealized profit related to inter-segment
transactions.
(2) The amount of adjustment to segment assets is elimination for inter-segment transactions.
3. The segment profit (loss) is consistent with the ordinary profit of the Consolidated Statement of Income.
4. The segment profit (loss) includes corporate expenses that are allocated to each reportable segment.
5. Depreciation and increase in property, plant and equipment and intangible assets include amortization of long-term
prepaid expenses.

- 17 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

FY2/24 (Mar. 1, 2023 – Feb. 29, 2024)(Million yen)
Reportablesegment
Apparel andSundryGoods-related
Business

Other(Note 1)

Amounts shown on
consolidated
financial statements(Note 3)Adjustment(Note 2)Total

Net sales
External sales
Inter-segment sales and transfers

262,844

12,751

275,596-

275,596

1

48

50

(50)

-

Total

262,846

12,800275,646(50)

275,596

Segment profit (loss)

18,558(139)

18,418(29)

18,389Segment assets

120,559

8,969

129,528(1,612)

127,915

9,358

714

10,073-

10,073

Other items
Depreciation

Amortization of goodwill
74
148
223
223
Increase in property, plant and11,134
1,542
12,676
12,676equipment and intangible assets
Notes: 1. “Other” represents the businesses which are not included in the reportable segment and mainly consists of Food andBeverage Business.
2. The above adjustments include the following items.
(1) The amount of adjustment to segment profit (loss) is an adjustment to unrealized profit related to inter-segment
transactions.
(2) The amount of adjustment to segment assets is elimination for inter-segment transactions.
3. The segment profit (loss) is consistent with the ordinary profit of the Consolidated Statement of Income.
4. The segment profit (loss) includes corporate expenses that are allocated to each reportable segment.
5. Depreciation and increase in property, plant and equipment and intangible assets include amortization of long-term
prepaid expenses.

Per Share Information

Net assets per share

FY2/23(Mar. 1, 2022 – Feb. 28, 2023)
1,309.96(Yen)
FY2/24(Mar. 1, 2023 – Feb. 29, 2024)
1,549.13

Net income per share
166.37297.75
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 per share, and is included in treasury shares that is deductedfrom 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 per share, the average numbers of treasury shares outstanding that were deducted
were 329,000 for FY2/23 and 266,000 for FY2/24. For the determination of net assets per share, the numbers oftreasury shares deducted were 301,000 for FY2/23 and 372,000 for FY2/24.
3. The basis of calculating the net income per share is as follows.

Net income attributable to owners of the parent

FY2/23(Mar. 1, 2022 – Feb. 28, 2023)
7,540(Million yen)
FY2/24(Mar. 1, 2023 – Feb. 29, 2024)
13,513

-

-

7,540

13,51345,32245,385

Amount not available to common stockholders
Net income attributable to owners of the parent
applicable to common shares
Average number of common shares outstanding
during the period (Thousand shares)- 18 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

Subsequent Events
Share exchange to make zetton a wholly owned subsidiary
The Board of Directors of Adastria and zetton, inc. (collectively, the “Companies”) approved a resolution on
March 21, 2024 to conduct a share exchange (“Share Exchange”) to make Adastria the wholly owning parent
company and zetton a wholly owned subsidiary of Adastria. The Companies concluded a share exchange
agreement on the same day.
As a result of the Share Exchange, Adastria will become the wholly owning parent company of zetton as of theeffective date of the Share Exchange (scheduled for June 1, 2024). Shares of zetton will be delisted from the Next
Market operated by the Nagoya Stock Exchange, Inc. on May 30, 2024 (last trading date to be May 29, 2024).
1. Outline of the Share Exchange(1) Name and business of wholly owned subsidiary involved in the share exchange
Name: zetton, inc.
Business activities: Restaurant management, development, and consulting(2) Purpose of the Share Exchange
zetton concluded that becoming a wholly owned subsidiary of Adastria will enable zetton to work moreclosely with Adastria and provide zetton with opportunities to expand its business while accelerating furt her
the implementation of policies under the capital and business alliance agreement. Utilizing the productdevelopment, marketing expertise, human resources, financial strength, domestic and overseas networks, andother management resources of the Adastria Group, the Share Exchange will enable the Companies to achieve
their management strategies from a medium- to long-term perspective in a flexible and timely manner, andenhance the corporate value of zetton.
(3) Effective date of Share Exchange
June 1, 2024 (tentative)(4) Method of Share Exchange
The Share Exchange is to be conducted with Adastria as the wholly owning parent company and zetton as thewholly owned subsidiary. The effective date of the Share Exchange is scheduled for June 1, 2024, af ter
obtaining approval at the zetton Ordinary General Meeting of Shareholders to be held on April 25, 2024, andwithout obtaining approval at the Adastria general meeting of shareholders, pursuant to the simplified shareexchange procedure under Article 796-2 of the Companies Act.
2. Outline of accounting procedures
Adastria expects the Share Exchange to meet the requirements of a common control transaction, etc., under the“Accounting Standard for Business Combinations” and “Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures.”3. Share exchange ratio, calculation method and number of shares to be delivered(1) Share exchange ratio
Adastria will allot 0.36 shares of Adastria stock for each share of z etton stock.
(2) Calculation of the share exchange ratio
The Companies requested third-party appraisers independent of both companies to calculate the shareexchange ratio to be used in the Share Exchange. After careful discussions and deliberations based on the
results of calculation, the Companies determined that it is appropriate to conduct the Share Exchange using
the share exchange ratio, as the Share Exchange is appropriate and in the best interest of all s hareholders of
the Companies.

- 19 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2024 Fiscal Year

(3) Number of shares to be delivered
1,137,731 shares

4. Other Information(1) Transition to a Company with an Audit & Supervisory Committee System
Adastria will change to a company with an Audit & Supervisory Committee syste m, subject to the approval ofshareholders at the 74th Ordinary General Meeting of Shareholders scheduled for May 23, 2024. For more
information, see the press release “Notice Concerning Transition to a Company with an Audit and Supervisory
Committee” announced on February 16, 2024.
(2) Changes in Directors
1. Change in representative director
Not applicable.
2. Change of other board members (Date of change: May 23, 2024)(1) Candidates for directors who are members of the Audit & Supervisory Committee
Director (standing member of the Audit & Supervisory Committee): Endo Yoichi
Outside Director (member of the Audit & Supervisory Committee):
Kazuhiko Ebihara (currently Outside Corporate Auditor)
Outside Director (member of the Audit & Supervisory Committee):
Kyoko Mogi (currently Outside Corporate Auditor)(2) Candidate for an alternate member of the Audit & Supervisory Committee
Director (member of the Audit & Supervisory Committee): Takashi Ino
Note: Shareholders are asked to elect an alternate director who is a member of the Audit & Supervisory
Committee in advance in order to have a substitute who can take the place of any one of the current
directors and members of the Audit & Supervisory Committee in the event that the number of membersof this committee falls below the legally required minimum.
(3) Retiring directors
Managing Director: Masayuki Kindo
Outside Director: Satoshi Akutsu
Note: Mr. Masayuki Kindo was appointed representative director and president of consolidated subsidiary
ELEMENT RULE Co., Ltd. on March 1, 2024.
(4) Retiring corporate auditors
Standing Corporate Auditor: Tsuyoshi Matsuda
Outside Corporate Auditor: Ryoko Hayama

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.

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