Summary of Consolidated Financial Results for the Fiscal Year Ended February 28, 2018
[Japanese GAAP]
April 4, 2018

Company name:
Stock code:
Representative:

Adastria Co., Ltd.
Listing: TSE 1st section
2685
URL: http://www.adastria.co.jp
Michio Fukuda, Representative Director, Chairman & CEO
Kindo Masayuki,
Contact:
Senior Vice President, General Headquarters of Management
Tel: +81-3-5466-2010
Scheduled date of Annual General Meeting of Shareholders:
May 24, 2018
Scheduled date of payment of dividend:
May 9, 2018
Scheduled date of filing of Annual Securities Report:
May 25, 2018
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, 2018 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 28, 2018 (March 1, 2017 – February 28, 2018)(1) Consolidated results of operations(Percentages shown for net sales and incomes represent year-on-year changes)
Net income attributable
Net sales
Operating profit
Ordinary profit
to owners of the parent
Million yen

Fiscal year ended Feb. 28, 2018
Fiscal year ended Feb. 28, 2017%

222,787
203,686

Note: Comprehensive income

Million yen

9.4
1.8

%

5,005
14,916

Million yen(66.4)(6.8)

5,428
15,126%

Million yen(64.1)
(6.5)

%

863
11,575(92.5)
26.9

Fiscal year ended Feb. 28, 2018:
Fiscal year ended Feb. 28, 2017:(1,966) million yen
9,206 million yen

Net income per
Diluted net
share
income per share

ROE

Ratio of ordinary
income to total assets

Ratio of operating
income to net sales

%

%

%

Yen

Fiscal year ended Feb. 28, 2018
Fiscal year ended Feb. 28, 2017

Yen

18.36
242.49-(-%)(down 12.6%)

1.6
21.2

6.0
16.7

2.2
7.3

Reference: Equity in earnings of affiliates

Fiscal year ended Feb. 28, 2018:(66) million yen
Fiscal year ended Feb. 28, 2017:(20) million yen
EBITDA
Fiscal year ended Feb. 28, 2018:15,141 million yen (down 34.2%)
Fiscal year ended Feb. 28, 2017:
23,028 million yen (down 6.4%)
EPS before goodwill amortization
Fiscal year ended Feb. 28, 2018:118.54 yen (down 58.9%)
Fiscal year ended Feb. 28, 2017:288.24 yen (up 23.2%)(*) For more details regarding definition, computational method and other matters of these indices, please refer to the section“Results of Operations” on page 2.

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of Feb. 28, 2018
As of Feb. 28, 2017

91,12390,389Reference: Shareholders’ equity

As of Feb. 28, 2018:

51,03056,03551,030 million yen

Net assets per share
Yen

56.0
62.0

As of Feb. 28, 2017:

1,084.84
1,191.16

56,035 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, 2018
Fiscal year ended Feb. 28, 2017

10,685
11,928(7,404)(4,323)(4,629)(6,309)19,381
20,706

2. Dividends
Dividend per share
Total

Total
dividends

Yen

Yen

Million yen

40.00
15.00
30.00

75.00
50.00
50.00

3,608
2,379

1Q-end 2Q-end 3Q-end Year-end
Yen

Fiscal year ended Feb. 28, 2017
Fiscal year ended Feb. 28, 2018
Fiscal year ending Feb. 28, 2019 (forecast)

Yen

-

35.00
35.00
20.00

Yen

-

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

%

30.9
272.3
53.5

6.5
4.4

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2019 (March 1, 2018 – February 28, 2019)
Net sales
Full year

Operating profit

Million yen%

Million yen

227,000

1.9

8,400

Reference: EBITDA
EPS before goodwill amortization

%

67.8

Ordinary profit
Million yen

8,700

%

(Percentages represent year-on-year changes)
Net income attributable
Net income per
to owners of the parent
shareMillion yen

60.3

Fiscal year ending Feb. 28, 2019 (forecast):
Fiscal year ending Feb. 28, 2019 (forecast):

4,400

%

Yen

409.4

16,000 million yen (up 5.7%)
121.17 yen (up 2.2%)

93.54

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes i nscope of consolidation): Yes
Newly added: 1 (Velvet, LLC)

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 17 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. 28, 2018:
48,800,000 shares
As of Feb. 28, 2017:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of Feb. 28, 2018:
1,759,875 shares

As of Feb. 28, 2017:

1,757,425 shares

3) Average number of shares outstanding during the period
Fiscal year ended Feb. 28, 2018:
47,041,347 sharesFiscal year ended Feb. 28, 2017:

47,736,981 shares

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2018
(March 1, 2017 – February 28, 2018)(1) Non-consolidated results of operations
Net sales

Operating profit

Million yen

Fiscal year ended Feb. 28, 2018
Fiscal year ended Feb. 28, 2017%

200,206
194,611

2.9
3.6

Million yen

%

6,432
14,352(Percentages represent year-on-year changes)
Ordinary profit
Net income
Million yen(55.2)(6.6)

6,176
14,537

Net income per share

Diluted net income per share

Yen

Yen

Fiscal year ended Feb. 28, 2018
Fiscal year ended Feb. 28, 201714.20
225.87%(57.5)(6.0)

Million yen

668
10,782%(93.8)
29.3-(2) Non-consolidated financial position

As of Feb. 28, 2018
As of Feb. 28, 2017
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Million yen

Million yen%

80,96984,902As of Feb. 28, 2018:

47,66053,042
47,660 million yen

Net assets per share
Yen

58.9
62.5

1,013.19
1,127.54

As of Feb. 28, 2017:

53,042 million yen

Note 1: The current financial report is not subject to audit procedures.
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 the Company 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 6 regarding preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

Contents of Attachments

1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

5(3) Cash Flows

5(4) Outlook

6(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

7

3. Consolidated Financial Statements and Notes

8(1) Consolidated Balance Sheet

8(2) Consolidated Statements of Income and Comprehensive Income

10(3) Consolidated Statement of Changes in Equity

13(4) Consolidated Statement of Cash Flows

15(5) Notes to Consolidated Financial Statements

17

Going Concern Assumption

17

Changes in Accounting Policies

17

Segment Information

17

Per Share Information

17

Subsequent Events18

4. Other Information

18(1) Changes in Directors

18

- 1 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

1. Overview of Results of Operations(1) Results of Operations
Consolidated results(Million yen)
FY2/17
FY2/18(Mar. 1, 2016 – Feb. 28, 2017) (Mar. 1, 2017 – Feb. 28, 2018)

YoY change(Amount)
19,101

YoY change(%)
9.4

Net sales

203,686

222,787

Operating profit

14,916

5,005(9,911)(66.4)

Ordinary profit

15,126

5,428(9,697)(64.1)Net income attributableto owners of the parent

11,575863(10,711)(92.5)EBITDA

23,02815,141(7,886)(34.2)EPS before goodwill
amortization (Yen)

288.24118.54(169.69)(58.9)

Consolidated net sales increased 9.4% year-on-year to 222,787 million yen, operating profit decreased 66.4% to5,005 million yen, ordinary profit decreased 64.1% to 5,428 million yen, and net income attributable to owners of
the parent decreased 92.5% to 863 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 34.2% to 15,141 million yen
and earnings per share (EPS) before goodwill amortization fell 58.9% to 118.54 yen. (*)
One reason for the 9.4% increase in sales was the steady increase in Adastria sales in Japan, which was 3.0%
higher than one year earlier. The transfer in the first quarter of PAGEBOY and other apparel brand operations toconsolidated subsidiary ALICIA Co., Ltd. and inclusion of the sales of U.S.-based Velvet, LLC from the second
quarter (this company was acquired in the first quarter) also contributed to the sales growth. In Japan, the brands
niko and …, STUDIO CLIP and BAYFLOW performed well. (Please refer to the section “Supplementary
Information, (1) Sales for Brands and Regions” for further information.)
The number of stores in Japan increased by 113 because of the inclusion of the operations of ALICIA. Overseas,
the acquisition of Velvet, LLC added nine stores. In addition, we opened 129 stores (including 24 overseas) andclosed 101 stores (including 15 overseas), resulting in a total network of 1,501 stores (including 126 overseas) at
the end of February 2018. (Please refer to the section “Supplementary Information, (3) Number of Stores” forfurther information.)
The gross profit margin decreased 2.1 percentage points from one year earlier to 54.2% mainly because of salesof merchandise at discounted prices and merchandise disposals associated with products that did not accurately
meet the needs of customers.
The ratio of selling, general and administrative (SG&A) expenses to sales increased 3.0 percentage points to
52.0%. This was attributable mainly to increased advertising expenditures for major brands, expenses forrelocating the Tokyo head office and IT system investments and removal for future growth. As a result, theoperating margin decreased 5.1 percentage points to 2.2%.
Extraordinary income includes a gain on sales of investment securities of 4,373 million yen. There wereextraordinary losses of 2,799 million yen for asset impair ment (including 2,096 million yen for goodwill
amortization and other items at U.S.-based Velvet, LLC and ALICIA Co., Ltd. due to declining earnings and 703
million yen for the impairment of store assets), a 1,141 million yen for an addition to the provision for loss on
business liquidation for the cost of reorganizing operations in Hong Kong and China, and a valuation loss of 652
million yen on investment securities.
(*) Since the fiscal year that ended in February 2014, the amortization of goodwill, which is not a cash expense,
has created a large gap between changes in cash flows and changes in operating profit and all subsequent- 2 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Yearlevels of earnings. Furthermore, comparisons with foreign companies are difficult because of differences inaccounting standards of individual countries for recording goodwill amortization. As a result, we disclose
EBITDA and EPS before goodwill amortization as reference financial indicators.

EBITDA
Operating profit + Depreciation + Amortization of goodwill (SG&A expenses)
EPS before goodwill amortization(Net income attributable to owners of the parent + Amortization of goodwill (SG&A expenses andextraordinary losses) + Impairment losses (goodwill)) / Average number of shares outstanding during theperiodSupplementary Information(1) Sales for Brands and Regions
Brand / region

FY2/18
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

39,302

17.6

0.4

niko and ...

28,413

12.8

15.0

STUDIO CLIP

24,31810.9

9.3

LOWRYS FARM

23,518

10.6

(8.4)

LEPSIM

15,3086.9(2.7)

JEANASIS

12,366

5.5(3.0)

RAGEBLUE

8,861

4.0

(5.7)

BAYFLOW

7,907

3.5

36.7

OthersTotal (Adastria)
ALICIA CO., LTD.
Total (Japan)

38,677

17.4

3.1

198,675

89.2

3.0

9,526

4.3

-

208,201

93.5

7.9

Hong Kong

6,255

2.8

(4.9)

China

1,992

0.9

8.0

Taiwan

1,885

0.8

21.2

South Korea

956

0.4

27.3

USA (Note 3)

3,496

1.6

-

14,586

6.5

36.0

Total (Overseas)
Total (Group)

Notes:

222,787
100.0
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. The USA figures include the nine-month sales (from the second quarter) of Velvet, LLC, a consolidated
subsidiary acquired at the end of the first quarter.

- 3 -

9.4

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(2) Sales for Merchandise Categories
Category

FY2/18
Sales (million yen)

YoY change (%)

Composition (%)

Men’s apparel (bottoms, tops)

31,326

14.1

2.4

Lady’s apparel (bottoms, tops)

145,956

65.5

11.3

Others45,504

20.4

8.3

Total
222,787
100.0
1. The others category includes additions to the provision for point card certificates and other items.

Notes:

9.4

2. The above figures are sales to external customers and do not include internal sales between consolidated
subsidiaries.

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

FY2/18

As of Feb.
28, 2017

As of Feb.
28, 2018

GLOBAL WORK

192

Increase(Note 3)-

niko and ...

129

-

9

-

(6)

3

132

STUDIO CLIP

182

-

15

-

(2)

13

195

LOWRYS FARM

152

-

7

-

(10)

(3)

149

LEPSIM

134

-

11

-

(7)

4

138

JEANASIS

80

-

4

-

(8)

(4)

76

RAGEBLUE

58

-

3

1

(5)

(1)

57

BAYFLOW

32

-

8

-

(1)

7

39

Others

284

-

31

(13)

(23)

(5)

279

1,243

-

99

-

(67)

32

1,275

Total (Adastria)
ALICIA CO., LTD.

OpenedChangedClosedIncrease/decrease

11

12

(5)

18

210

-

113

6

-

(19)

100

100

1,243

113

105

-

(86)

132

1,375

Hong Kong

25

-

2

(2)

(1)

(1)

24

China

45

-

15

-

(11)

4

49

Taiwan

29

-

2

-

-

2

31

South Korea

9

-

3

(1)

-

2

11

Total (Japan)

-

9

2

-

-

11

11

Total (Overseas)

108

9

24

(3)

(12)

18

126

Total (Group)

1,351

122

129

(3)

(98)

150

1,501

USA

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. “Increase” represents the increase in the number of stores resulting from the transfer of the operations of ALICIA
and the consolidation of Velvet, LLC in the United States.

- 4 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(2) Financial Position
AssetsCurrent assets increased 1,606 million yen from as of February 28, 2017 to 49,785 million yen as of February 28,
2018. This was mainly due to increases in notes and accounts receivable-trade of 950 million yen, inventories of
1,722 million yen and other (accounts receivable-other, etc.) of 348 million yen, while there was a decrease in
cash and deposits of 1,288 million yen.
Non-current assets decreased 872 million yen to 41,338 million yen. This was mainly due to decreases ingoodwill of 1,350 million yen and investment securities of 6,576 million yen, while there were increases in store
interior equipment, net of 809 million yen, other (software in progress, etc.) under intangible assets of 2,012
million yen, lease and guarantee deposits of 1,026 million yen and deferred tax assets of 2,189 million yen.
Liabilities
Current liabilities increased 4,781 million yen to 38,446 million yen. This was mainly due to increases in notes
and accounts payable-trade of 3,865 million yen, provision for loss on business liquidation of 1,141 million yen.
Non-current liabilities increased 956 million yen to 1,645 million yen. This was mainly due to an increase inother (long-term accounts payable-other, etc.) of 841 million yen.

Net assets
Net assets decreased 5,004 million yen to 51,030 million yen. This was mainly due to decreases in retained
earnings of 2,167 million yen and valuation difference on available-for-sale securities of 2,954 million yen.

(3) Cash Flows
Cash and cash equivalents (hereinafter “net cash”) as of February 28, 2018 amounted to 19,381 million yen, or
1,325 million yen less than as of February 28, 2017.
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 10,685 million yen (a decrease of 1,242 million yen, comparedwith the previous fiscal year). The main positive factors include net income before income taxes of 5,104 million
yen, depreciation of 7,744 million yen, impairment loss of 2,799 million yen, amortization of goodwill of 2,648
million yen and increase in notes and accounts payable-trade of 2,760 million yen. Main negative factors include
gain on sales of investment securities of 4,373 million yen and income taxes paid of 7,895 million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 7,404 million yen (an increase of 3,081 million yen). This was
mainly due to the payments of 7,797 million yen for the purchase of property, plant and equipment, 2,965 million
yen for the purchase of intangible assets and 3,713 million yen for the purchase of shares of subsidiaries resulting
in change in scope of consolidation, while there was proceeds of 5,082 million yen from sales of investment
securities.
Cash flows from financing activities
Net cash used in financing activities totaled 4,629 million yen (a decrease of 1,680 million yen). This was mainly
due to repayments of long-term loans payable of 725 million yen and cash dividends paid of 3,568 million yen.

- 5 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

Reference: Cash flow indicators
FY2/16

FY2/17

FY2/18

Shareholders’ equity ratio (%)

58.9

62.0

56.0

Shareholders’ equity ratio based on market prices (%)

155.9

151.4

120.1

0.1

0.2

0.2

553.4

1,034.7

421.6

Interest-bearing debt to cash flow ratio
Interest coverage ratio (times)

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 ofcash 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
Earnings at companies in Japan are expected to remain firm as the job market and personal income recover anddemand in Japan and overseas continues to be strong. Demand associated with consumer spending is expected toincrease slowly. However, a structural decline in demand and a severe labor shortage are having a severe impact
on some industries in Japan. As a result, there is still a risk of a downturn in earnings and we expect that theoperating environment will remain challenging.
We will continue to take actions aimed at differentiating brands and making our merchandise even more
appealing, chiefly for the core GLOBAL WORK and niko and … brands. Another goal is reinforcing all aspects ofproduction and sales operations by controlling costs, managing procurement more rigorously and using data
analysis to forecast demand. We are also rebuilding overseas operations with initiativ es that include a major
downsizing of the COLLECT POINT multi-brand shop business in Hong Kong and China. To advance to the nextstage of our growth, we will continue to examine opportunities for launching new businesses while taking steps
to make recently started businesses profitable as quickly as possible.
For the fiscal year ending on February 28, 2019, we forecast a 1.9% increase in consolidated net sales to 227
billion yen, a 3.7% increase in gross profit to 125.3 billion yen, a 67.8% increase in operating profit to 8.4 billion
yen, a 60.3% increase in ordinary profit to 8.7 billion yen and a 409.4% increase in net income attributable toowners of the parent to 4.4 billion yen.
This forecast assumes that domestic existing store sales will increase 1.1% and there will be 64 new stores(including 6 overseas) and 140 store closings (including 52 overseas).
(5) Basic Policy on Profit Distribution, and Dividend Plans for the Current and Next Fiscal Years
With regard to the distribution of profits, we will make investments in businesses needed to create highly
appealing brands and supply merchandise that can further increase corporate value (shareholder value), which
will lead to the satisfaction of both customers and shareholders. For profit distributions to shareho lders, we use aconsolidated payout ratio before goodwill amortization of 30% as the basic policy. In addition, we position the
repurchase of stock as one way to return earnings to shareholders. Repurchases will be determined in an
appropriate and timely manner while taking into account changes in our stock price, our financial position andother factors.
In the fiscal year that ended in February 2018, net income attributable to owners of the parent was well below theforecast because of an additional extraordinary loss of approximately 3.8 billion yen for goodwill amortization,asset impairment and other items. Consequently, we plan to pay a year-end dividend of 15 yen (annual dividend- 6 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Yearof 50 yen), which is less than the year-end dividend of 40 yen (annual dividend of 75 yen) that was announced in
the previous forecast.
For the next fiscal year ending on February 28, 2019, we plan to pay 50 yen for an annual dividend, the same as
the dividend for the current fiscal year.
2. Basic Approach for the Selection of Accounting Standards
The Company prepares its consolidated financial statements based on the generally accepted accounting
principles in Japan 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.

- 7 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Million yen)
FY2/18(As of Feb. 28, 2018)

FY2/17(As of Feb. 28, 2017)
AssetsCurrent assets
Cash and deposits

20,734

19,446

Notes and accounts receivable-trade

7,860

8,810

Inventories

16,351

18,073

Deferred tax assets

2,018

1,955

Other

1,266

1,615

Allowance for doubtful accounts

(53)

(116)

48,17849,785

3,615

3,491

Accumulated depreciation(1,892)(1,673)

Buildings and structures, net

1,723

1,818

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

Store interior equipment

29,08332,293

Accumulated depreciation(22,591)(24,991)

Store interior equipment, net

6,491

7,301

1,732

2,358

55

187

1,235

1,483

(794)

(825)

440

658

10,444

12,324

Goodwill

3,309

1,959

Other

2,242

4,255

Total intangible assets

5,552

6,214

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

Investments and other assets
Investment securities

7,677

1,101

Lease and guarantee deposits

17,237

18,263

Deferred tax assets

1,384

3,573

139

138

Other
Allowance for doubtful accounts

(225)

(278)

Total investments and other assets

26,213

22,79942,21041,33890,38991,123

Total non-current assets
Total assets- 8 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(Million yen)
FY2/18(As of Feb. 28, 2018)

FY2/17(As of Feb. 28, 2017)
Liabilities
Current liabilities
Notes and accounts payable-trade

6,361

10,227

Electronically recorded obligations-operating

8,919

9,898

Short-term loans payable

2,027

2,657

Accounts payable-other

8,941

9,418

Income taxes payable

4,470

1,322

Provision for bonuses

2,195

2,413

-

1,141

453

838

Provision for loss on business liquidation
Other provision
Other

295

527

33,66538,446

Deferred tax liabilities

102

112

Provision for directors’ retirement benefits

94

94

Other provision

146

251

Other

345

1,186

Total non-current liabilities

688

1,645

34,35340,092

2,660

2,660

Total current liabilities
Non-current liabilities

Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus

7,227

7,227

Retained earnings

47,41345,245

Treasury shares(4,645)(4,652)

Total shareholders’ equity

52,65450,480

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

3,190

235

(19)

(76)

Foreign currency translation adjustment

209

391

3,380

550

56,03551,03090,38991,123

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 9 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)
203,686(Million yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)
222,787

Cost of sales

89,020101,992

Gross profit

114,666

120,795

Advertising expenses

6,308

7,728

Provision of allowance for doubtful accounts

(28)

21

Directors’ compensations

239

494

Salaries and bonuses

27,01730,198Provision for bonuses

2,151

2,412

Welfare expenses

4,397

5,240

Rents

Net sales

Selling, general and administrative expenses

33,79838,290

Lease payments

407

438

Depreciation

5,928

7,488

Amortization of goodwill

2,184

2,648

Other

17,344

20,828

Total selling, general and administrative expenses

99,750115,790

14,916

5,005

Interest income

3

4

Dividend income

135

56

Foreign exchange gains

40

72

House rent income

111

108

Revenue from electric power sales

41

39

Other

181

390

Total non-operating income

513

671

11

25

Operating profit
Non-operating income

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodLoss on valuation of derivatives

20

66

136

32

Cost of lease revenue

93

93

Other

41

29

Total non-operating expenses
Ordinary profit

303

247

15,126

5,428

-

25

3,763

4,373

Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on liquidation of subsidiaries and associates

77-

Subsidy income

-

169

3,841

4,567

Impairment loss

382

2,799

Loss on disaster

87-

Loss on valuation of investment securities-

652

Loss on sales of shares of subsidiaries and associates-

129

Loss on liquidation of subsidiaries and associates

10-

Provision for loss on business liquidation

-

1,141

Loss on reduction of non-current assets

-

169

480

4,892

Total extraordinary income
Extraordinary losses

Total extraordinary losses- 10 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

FY2/17(Mar. 1, 2016 – Feb. 28, 2017)18,487(Million yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)
5,104

Income taxes-current

7,262

4,527

Income taxes-deferred

(350)

(287)

Total income taxes

6,911

4,240

Net income

11,575863

Net income attributable to owners of the parent

11,575863

Net income before income taxes- 11 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

Consolidated Statement of Comprehensive Income
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)(Million yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)

Net income

11,575863

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges(2,255)(2,954)244(56)

Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of
the parent
Comprehensive income attributable tonon-controlling interests- 12 -(357)

181(2,369)(2,830)9,206(1,966)

9,206(1,966)--

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(3) Consolidated Statement of Changes in Equity
FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)(Million yen)
Shareholders’ equity

Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance

Capital stock

Capital surplus

2,660

6,987

2,660

6,987

Treasury shares

Total shareholders’equity39,709(1,824)47,53339,709(1,824)47,533Retainedearnings

Changes of items during period
Dividends of surplus(3,871)(3,871)

Net income attributable toowners of the parent

11,575

11,575Purchase of treasury shares(2,582)(2,582)

Disposal of treasury shares

00(1,817)(1,817)

1,578

1,817

Treasury stock possession ofstock ownership plan trust
Transfer of treasury stock tostock ownership plan trust
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period

239

-

239

7,703

(2,821)

5,121

2,660

7,227

47,413(4,645)52,654(Million yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of current
periodCumulative effects of changes
in accounting policies

Total
Deferred gains Foreign currency accumulated
or losses ontranslation
otherhedgesadjustment
comprehensive
incomeTotal net assets

5,445

(263)

567

5,749

53,282

5,445

(263)

567

5,749

53,282

Dividends of surplus-(3,871)

Net income attributable toowners of the parent-

11,575Purchase of treasury shares-(2,582)

Disposal of treasury shares

-

0

-

(1,817)-

1,817

Restated balance
Changes of items during period

Treasury stock possession ofstock ownership plan trust
Transfer of treasury stock tostock ownership plan trust
Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(2,255)

244

(357)

(2,369)(2,369)(2,255)

244

(357)

(2,369)

2,752

3,190

(19)

209

3,380

56,035- 13 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

FY2/18 (Mar. 1, 2017 – Feb. 28, 2018)(Million yen)
Shareholders’ equity

Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance

Capital stock

Capital surplus

2,660

7,227

Retainedearnings

Treasury shares

Total shareholders’equity(4,645)52,65447,413
538

2,660

7,227

47,951538(4,645)53,193

Changes of items during period
Dividends of surplus
Net income attributable toowners of the parent(3,569)(3,569)863

863

Purchase of treasury shares(6)

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

(6)
-

-

-

(2,706)(6)(2,712)

2,660

7,227

45,245(4,652)50,480(Million yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of current
periodCumulative effects of changes
in accounting policies
Restated balance

Total
Deferred gains Foreign currency accumulated
or losses ontranslation
otherhedgesadjustment
comprehensive
income

3,190

(19)

209

3,380

Total net assets

56,035
538

3,190

(19)

209

3,380

56,573

Dividends of surplus-(3,569)Net income attributable toowners of the parent-

863

Purchase of treasury shares-(6)

Changes of items during period

Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(2,954)(56)

181(2,830)(2,830)(2,954)(56)

181(2,830)(5,542)

235

(76)

391

550

51,030- 14 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(4) Consolidated Statement of Cash Flows
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)(Million yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)

Net income before income taxes

18,487

5,104

Depreciation

6,109

7,744

Impairment loss

382

2,799

Amortization of goodwill

2,184

2,648

Interest and dividend income

(138)

(60)

11

25

Cash flows from operating activities

Interest expenses
Increase (decrease) in allowance for doubtful accounts

(28)

11

Increase (decrease) in provision for bonuses
Increase (decrease) in provision for loss on businessliquidation
Loss (gain) on sales of non-current assets
Loss (gain) on sales of shares of subsidiaries andassociates
Loss (gain) on sales of investment securities

(13)

127

-

1,141

-

(25)

-

129

(3,763)(4,373)

-

652

(67)

-

20

66

-

(169)

Loss on reduction of non-current assets-

169

Loss on disaster
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories

87

-

(209)

180

(1,337)(113)

Increase (decrease) in notes and accounts payable-trade(1,363)

2,760

280

280

Loss (gain) on valuation of investment securities
Loss (gain) on liquidation of subsidiaries and associates
Share of (profit) loss of entities accounted for using
equity method
Subsidy income

Increase (decrease) in accounts payable-other
Increase (decrease) in accrued consumption taxes(1,475)(421)

Other, net

(310)

(132)

Subtotal

18,856

18,546

Interest and dividend income received

138

60

Interest expenses paid

(11)

(25)

Income taxes paid

(7,054)(7,895)

Net cash provided by (used in) operating activities

11,928

10,685(5,133)(7,797)

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets-

105(1,018)(2,965)Purchase of investment securities

(672)

(58)

Proceeds from sales of investment securities

4,473

5,082

Payments for lease and guarantee deposits(1,831)(2,041)

953

1,963

-

(3,713)(1,070)

-

-

854

-

1,023

-

169

Proceeds from collection of lease and guarantee deposits
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Purchase of shares of subsidiaries and associates
Proceeds from sales of shares of subsidiaries andassociates
Proceeds from acquisition of business
Proceeds from subsidy income
Other, net
Net cash provided by (used in) investing activities- 15 -(25)(26)(4,323)(7,404)

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

FY2/17(Mar. 1, 2016 – Feb. 28, 2017)(Million yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)

210

(139)

-

(725)

Cash dividends paid

(3,871)(3,568)Purchase of treasury shares(2,581)

(6)

(65)

(189)

(6,309)(4,629)(42)

22

Net increase (decrease) in cash and cash equivalents

1,253(1,325)

Cash and cash equivalents at beginning of period

19,452

20,706

Cash and cash equivalents at end of period

20,706

19,381

Cash flows from financing activities
Increase (decrease) in short-term loans payable
Repayments of long-term loans payable

Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents- 16 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
The Company has adopted the “Implementation Guidance on Recoverability of Deferred Tax Assets”(Accounting Standards Board of Japan (ASBJ) Statement No. 26, March 28, 2016) from the current fiscal year
and partially revised its accounting method for determining the recoverability of deferred tax assets.
The Company has applied this implementation guidance in accordance with the transitional accounting
treatments set forth in Paragraph 49 (4) of this implementation guidance. Accordingly, the differen ces between
deferred tax assets and deferred tax liabilities determined by applying the applicable provisions of Paragraph 49(3), Items 1 through 3 of the implementation guidance at the beginning of the current fiscal year and deferred tax
assets and deferred tax liabilities at the end of the previous fiscal year are added to retained earnings at the
beginning of the current fiscal year.
The effect of this matter on the consolidated financial statements at the beginning of the current fiscal year isinsignificant.
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 other activities are
insignificant.
Per Share Information
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)(Yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)

Net assets per share

1,191.16

1,084.84

Net income per share

242.4918.36

Notes: 1. Diluted net income per share is not presented since the Company has no outstanding dilutive securities.
2. The Company’s 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 thatis 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 per share, the average number of treasury shares outstanding that was deducted
were 555,000 for FY2/18. For the determination of net assets per share, the number of treasury shares that was
deducted were 555,000 for FY2/18.
3. The basis of calculating the net income per share is as follows.
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)(Million yen)
FY2/18(Mar. 1, 2017 – Feb. 28, 2018)

Net income attributable to owners of the parent

11,575863

Amount not available to common stockholders--

11,575863

47,73647,041

Net income attributable to owners of the parent
applicable to common shares
Average number of common shares outstanding
during the period (Thousand shares)- 17 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2018 Fiscal Year

Subsequent Events
Not applicable.

4. Other Information(1) Changes in Directors
1. Change in representative director
Not applicable.
2. Change of other board members (Date of change: May 24, 2018)(1) Candidate for director appointment
Director and Senior Vice President, General Headquarters of Management
Kindo Masayuki(Current Senior Vice President, General Headquarters of Management)(2) Retiring director
Director: Masa Matsushita(3) Candidate for corporate auditor
Corporate Auditor: Yoshiko Hayama(Note) Ms. Yoshiko Hayama is a candidate for an outside corporate auditor.
(4) Retiring corporate auditor
Corporate Auditor: Tetsuro Yokoyama(Note) Mr. Tetsuro Yokoyama is an outside corporate auditor.

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.

- 18 -