Summary of Consolidated Financial Results
for the Third Quarter of the Fiscal Year Ending February 28, 2015
(Nine Months Ended November 30, 2014)[Japanese GAAP]
December 29, 2014

Listing: TSE 1st section
Company name: Adastria Holdings Co., Ltd.
Stock code:
2685
URL: http://www.adastria.co.jp
Representative: Yoichi Endo, Representative Director, President
Contact:
Ryo Araya, General Manager, Corporate Strategy Department
Tel: +81-3-6895-6000
Scheduled date of filing of Quarterly Report:
January 14, 2015
Scheduled date of payment of dividend:
Preparation of supplementary materials for quarterly financial results:
Yes
Holding of quarterly financial results meeting:
None
Note: The original disclosure in Japanese was released on December 29, 2014 at 15:00 (GMT +9).
(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending February 28, 2015
(March 1, 2014 – November 30, 2014)(1) Consolidated results of operations (cumulative)(Percentages represent year-on-year changes)

Net sales
Million yen

Nine months ended Nov. 30, 2014
Nine months ended Nov. 30, 2013
Note: Comprehensive income%

Operating income

Ordinary income

Million yen

Million yen%

Net income%

Million yen

133,707
27.2
5,618
4.6
5,949
8.3
105,15123.6
5,369 (26.0)
5,494 (25.9)
Nine months ended Nov. 30, 2014:
3,099 million yen (down 20.5%)
Nine months ended Nov. 30, 2013:
3,896 million yen (down 16.3%)
Net income per share

Diluted net income per share

Yen

Yen

Nine months ended Nov. 30, 2014
Nine months ended Nov. 30, 2013
Reference: EBITDA

%

1,210
2,296

(47.3)(45.6)

49.84
49.84
102.21102.19Nine months ended Nov. 30, 2014:
12,487 million yen (up 17.8%)
Nine months ended Nov. 30, 2013:
10,603 million yen

EPS before goodwill amortization

Nine months ended Nov. 30, 2014:
Nine months ended Nov. 30, 2013:139.99 yen (down 11.7%)
158.62 yen(*) For more details regarding definition, computational method and other matters of these indices, please refer to the section“Explanation of Results of Operations” on page 2.
(2) Consolidated financial position

As of Nov. 30, 2014
As of Feb. 28, 2014
Reference: Shareholders’ equity

Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of Nov. 30, 2014:

95,23578,841
46,546 million yen

46,54644,786
As of Feb. 28, 2014:

48.9
56.8
44,780 million yen

2. Dividends
1Q-end2Q-endDividend per share
3Q-endYear-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Feb. 28, 2014
50.00
Fiscal year ending Feb. 28, 2015
30.00
Fiscal year ending Feb. 28, 2015 (forecast)
Note: Revision to the most recently announced dividend forecast: None

-

25.00

75.00

45.00

75.00

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2015 (March 1, 2014 – February 28, 2015)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%

Full year
185,900 21.3
5,100 (11.5)
5,100
Note: Revision to the most recently announced consolidated forecast: None
Reference: EBITDA
EPS before goodwill amortization%(15.4)(Percentages represent year-on-year changes)
Net income
Net income per share
Million yen

700

%

Yen

-

28.83

Fiscal year ending Feb. 28, 2015 (forecast): 14,600 million yen (up 5.3%)
Fiscal year ending Feb. 28, 2015 (forecast):
127.67 yen (down 18.6%)

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: None
(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(4) Number of outstanding shares (common stock)1) Number of shares outstanding at end of period (including treasury shares)
As of Nov. 30, 2014:

24,400,000 shares

As of Feb. 28, 2014:

24,400,000 shares

As of Feb. 28, 2014:

117,588 shares

2) Number of treasury shares at end of period
As of Nov. 30, 2014:

117,548 shares

3) Average number of shares outstanding during the period (cumulative)
Nine months ended Nov. 30, 2014: 24,282,035 shares

Nine months ended Nov. 30, 2013:

22,469,575 shares

Note 1: Indication of quarterly review procedure implementation status
The current quarterly financial statements are exempted from quarterly review procedures based on the Financial Instruments
and Exchange Act. At the time of disclosure, the review procedures for these quarterly financial statements have not been
completed.
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. Actual results may differ significantly from these forecasts for a number of factors. Please refer to the section“Explanation of Consolidated Forecast and Other Forward-looking Statements” on page 3 regarding preconditions or otherrelated matters for the forecast shown above.

Reference: Summary of Non-consolidated Forecast
Non-consolidated Forecast for the Fiscal Year Ending February 28, 2015 (March 1, 2014 – February 28, 2015)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%%(Percentages represent year-on-year changes)
Net income
Net income per share
Million yen%

Full year
3,900 (93.2)
400 (92.4)
700 (87.2)
300
Note: Revision to the most recently announced non-consolidated forecast: None
The Company shifted to a holding company structure through a company split on September 1, 2013.

Yen

12.35

Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

3

2. Matters Related to Summary Information (Notes)

3(1) Changes in Significant Subsidiaries during the Period

3(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

3(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements

3(4) Additional Information

3

3. Quarterly Consolidated Financial Statements

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statements of Income and Comprehensive Income

7(3) Notes to Quarterly Consolidated Financial Statements

9

Going Concern Assumption

9

Significant Changes in Shareholders’ Equity

9

4. Supplementary Information

10(1) Number of Stores

10(2) Sales for Brands and Regions

11(3) Sales for Merchandise Categories

11

- 1 -

Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first nine months (March 1, 2014 to November 30, 2014) of the current fiscal year, the Japanese economy
continued to recover at a moderate pace as corporate earnings and the number of jobs improved due to the benefitsof the Japanese government’s economic measures and monetary policy as well as for other reasons. However,recovery in consumer spending was delayed as the negative effects of the consumption tax hike turned out to bestronger than earlier estimates.
Core brands of Adastria Holdings Co., Ltd. (hereafter “the Company”) and the Company’s Group (hereafter “theGroup”) are in the casual wear category. In this market sector, consumers in Japan have been seeking lower priced
items following the consumption tax hike. In addition, consumers are looking at merchandise much more carefully
before making purchases. This shift in consumer behavior has caused sales to decline across the entire casual wear
category. Furthermore, concerns are growing over the outlook for corporate profit due to rising procurement costs
resulting from the weaker yen.
Consolidated sales increased sharply by 27.2% year-on-year, benefiting from the consolidation of TRINITY ARTS
INC. in September 2013. Sales of the GLOBAL WORK, LEPSIM LOWRYS FARM and STUDIO CLIP brands all
posted solid sales.
Regarding store network, we opened 204 new stores (including 29 overseas), and closed 39 (including 13 overseas),
resulting in a total network of 1,378 stores (including 97 overseas) at the end of the third quarter of the current fiscal
year.
Despite a higher cost of sales ratio caused by the weaker yen and a slump in overseas business, gross profit margin
at 57.8% (a decline of 0.3 percentage point year on year) was largely unchanged. This was due mainly to renewed
focus from autumn onward on maintaining sales prices at reasonable levels.
Selling, general and administrative (SG&A) expenses were largely in line with our original plan despite an
estimated cost related to withdrawal from business in Singapore. SG&A-to-sales ratio rose 0.6 percentage point year
on year to 53.6% and the operating margin declined 0.9 percentage point to 4.2%.
There was an extraordinary loss of 386 million yen for impairment losses at stores, a 373 million yen loss for
impairment of goodwill due to downturn in business at Adastria Asia Co., Ltd. (Hong Kong), and an estimated 53
million yen loss for impairment losses related to withdrawal from business in Singapore.
As a result, consolidated net sales in the first nine months of the current fiscal year increased 27.2% year-on-year to133,707 million yen, operating income increased 4.6% to 5,618 million yen, ordinary income increased 8.3% to
5,949 million yen, and net income decreased 47.3% to 1,210 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 17.8% to 12,487 million yen andearnings per share (EPS), before goodwill amortization, fell 11.7% to 139.99 yen. (*)(*) Amortization of goodwill that mainly resulted from the consolidation of TRINITY ARTS INC. causes large
declines in operating income and all subsequent categories of profits from the previous fiscal year. Since
goodwill amortization is not a cash expense, this amortization created a large gap between changes in cash flows
and changes at all levels of profits starting with operating income. Furthermore, comparisons with foreigncompanies are difficult because of differences in accounting standards of individual countries for recording
goodwill amortization. As a result, we are newly announcing EBITDA and EPS before goodwill amortization as
reference financial indicators.
EBITDA
Operating income + Depreciation + Amortization of goodwill (SG&A expenses)
EPS before goodwill amortization(Net income + Amortization of goodwill (SG&A expenses, and extraordinary loss)+ Impairment losses (goodwill)) / Average number of shares outstanding during the period- 2 -Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year(2) Explanation of Financial Position
Total assets increased 16,394 million yen from as of February 28, 2014 to 95,235 million yen as of November 30,
2014. This was mainly due to increases in notes and accounts receivable-trade of 7,321 million yen, inventories of
5,880 million yen, and lease and guarantee deposits of 2,429 million yen, while there was a decrease of 3,184
million yen in cash and deposits.
Liabilities increased 14,633 million yen to 48,688 million yen. This was mainly due to increases in short-term loans
payable of 8,957 million yen and accounts payable-other of 3,642 million yen.
Net assets increased 1,760 million yen to 46,546 million yen, mainly due to an increase in valuation difference on
available-for-sale securities of 1,398 million yen.
(3) Explanation of Consolidated Forecast and Other Forward-looking Statements
There are no revisions to the consolidated forecast for the current fiscal year that was announced on August 20, 2014.
Reference: Explanation of Non-consolidated Forecast and Other Forward-looking Statements
There are no revisions to the non-consolidated forecast for the current fiscal year that was announced on August 20,
2014.
2. Matters Related to Summary Information (Notes)(1) Changes in Significant Subsidiaries during the Period
Not applicable.
(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements
Not applicable.
(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements
Not applicable.
(4) Additional Information
Transaction under Common Control
On September 17, 2014, the Company’s Board of Directors approved a resolution for its wholly owned subsidiary
POINT INC. to absorb another wholly owned subsidiary TRINITY ARTS INC. on March 1, 2015 and then, on thesame day, for the Company to absorb the post-merger POINT INC.
1) Summary of merger(a) Name and business activities of companies involving merger
Name of companies involving merger:

Surviving company
Dissolving companies

Adastria Holdings Co., Ltd.
POINT INC. and TRINITY ARTS INC.

Business activities:

Manufacture and retail sales of casual apparel, accessories and otherconsumer products(b) Date of merger
March 1, 2015(c) Method of merger
An absorption-type merger between Adastria Holdings Co., Ltd., which will be the surviving company, andPOINT INC. and TRINITY ARTS INC., which will be dissolved.

- 3 -Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year(d) Names of the company after merger
Adastria Inc. (tentative)(e) Item concerning summary of other transactions
In September 2013, the Group conducted a management integration along with a shift to a holding company
structure for the purpose of maximizing corporate value while preserving the corporate culture of each groupcompany. The management integration succeeded at attracting a broader range of customer segments to stores,
mainly by enabling all group companies to offer larger selection of merchandise. However, the integration did
not yield sufficient benefits in terms of earnings due to the time needed to build an optimized value chain,product planning that required greater accuracy and growth in operating expenses. Now that about one year has
passed since the integration, there has been progress involving the integration of operating systems and themutual understanding of group company corporate cultures. We need to improve merchandise planning, speed up
decision making, conduct effective advertising campaigns, optimize store locations, cut back-office expenses,
and further streamline procurement and distribution operations. Consequently, we reached the decision that afurther reorganization is needed to take full advantage of the benefits of the management integration. To
accomplish this, the Company will merge with the two primary business units of the Group, POINT INC. and
TRINITY ARTS INC.
We believe that this merger will create an operating framework that will increase corporate value by improving
efficiency and speeding up decision making.
2) Summary of accounting methods to be applied
Accounting methods to be used for this merger as a transaction under common control are based on “AccountingStandard for Business Combinations” (Accounting Standards Board of Japan (ASBJ) Statement No. 21, issued on
December 26, 2008) and the “Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures” (ASBJ Guidance No. 10, issued on December 26, 2008).

- 4 -Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(Million yen)
Third quarter of FY2/15(As of Nov. 30, 2014)

FY2/14(As of Feb. 28, 2014)
AssetsCurrent assets
Cash and deposits

8,540

5,355

Notes and accounts receivable-trade

6,016

13,337

Inventories

13,914

19,794

Other

3,088

4,653

Allowance for doubtful accounts
Total current assets

(33)

(92)

31,52543,0498,692

10,051

Non-current assets
Property, plant and equipment
Store interior equipment, net
Other, net

5,402

5,304

Total property, plant and equipment

14,095

15,355

Goodwill

10,606

8,669

Other

1,182

1,423

Total intangible assets

11,78910,092

Lease and guarantee deposits

14,732

17,161

Other

6,909

9,819

Allowance for doubtful accounts

(210)

(244)

Intangible assets

Investments and other assets

Total investments and other assets

21,43026,73647,31552,18578,841

95,235

Notes and accounts payable-trade

14,626

15,510

Short-term loans payable

4,734

13,692

Accounts payable-other

8,056

11,699

Income taxes payable

2,458

3,015

Provision for bonuses

1,594

997

-

122

290

330

Total non-current assets
Total assets
Liabilities
Current liabilities

Provision for directors' bonuses
Other provision
Other
Total current liabilities

713

1,196

32,47446,565

Non-current liabilities
Provision

101

95

Other

1,479

2,027

Total non-current liabilities

1,580

2,123

34,054

48,688

Total liabilities- 5 -Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

(Million yen)
Third quarter of FY2/15(As of Nov. 30, 2014)

FY2/14(As of Feb. 28, 2014)
Net assets
Shareholders' equity
Capital stock

2,660

2,660

Capital surplus

6,986

6,987

Retained earnings

33,48233,357

Treasury shares

(407)

(405)

Total shareholders' equity

42,722

42,599

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

1,720

3,119

Deferred gains or losses on hedges

28

639

Foreign currency translation adjustment

308

188

2,058

3,947

5

-

44,786

46,54678,841

95,235

Total accumulated other comprehensive income
Subscription rights to shares
Total net assets
Total liabilities and net assets- 6 -Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statement of Income(For the Nine-month Period)First nine months of FY2/14(Mar. 1, 2013 – Nov. 30, 2013)(Million yen)First nine months of FY2/15(Mar. 1, 2014 – Nov. 30, 2014)

Net sales

105,151

133,707

Cost of sales

44,05656,398Gross profit

61,09477,308Selling, general and administrative expenses

55,724

71,690Operating income

5,369

5,618

Non-operating income
Dividend income

6075

Foreign exchange gains-

200

Insurance premiums refunded cancellation

73

-

Other

276

245

Total non-operating income

410

520

73

44

Non-operating expenses
Interest expenses
Commitment fee

8-Foreign exchange losses

101-

Commission for purchase of treasury shares

20-

Loss on valuation of derivatives

-

133

Other

82

10

Total non-operating expenses
Ordinary income

285

189

5,494

5,949

Extraordinary income
Gain on step acquisitions
Gain on sales of investment securities
Total extraordinary income

202

-

-

9

202

9

113

814

Extraordinary losses
Impairment loss

113

814

Income before income taxes and minority interests

Total extraordinary losses

5,583

5,144

Income taxes-current

4,031

5,021

Income taxes-deferred(744)(1,086)

Total income taxes

3,286

3,934

Income before minority interests

2,296

1,210

Net income

2,296

1,210

- 7 -

Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)First nine months of FY2/14(Mar. 1, 2013 – Nov. 30, 2013)(Million yen)First nine months of FY2/15(Mar. 1, 2014 – Nov. 30, 2014)

2,296

1,210

1,271

1,398

100

610

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to minority
interests

- 8 -

228

(120)

1,600

1,889

3,896

3,099

3,896

3,099

-

-

Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

(3) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.

- 9 -Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

4. Supplementary Information(1) Number of Stores
Number of storesFirst nine months of FY2/15

As ofFeb. 28,2014

Opened,etc.

Rebranded

GLOBAL WORK

173

9

-

LOWRYS FARM

159

7

LEPSIM LOWRYS FARM

110

15

JEANASIS82

RAGEBLUE
HEATHER
OthersStore format / region

Total (POINT INC.)

Merged(Note 4)

Increase/decrease

As ofNov. 30,
2014

(3)

-

6

179

(1)

(7)

-

(1)

158

-

-

-

15

125

3

-

(1)

-

2

84

62

3

-

-

-

3

65

76

7

-

(3)

-

4

80

145

31

1

(3)

-

29

174

Closed

807

75

-

(17)

-

58

865

niko and...

100

18

-

(1)

-

17

117

STUDIO CLIP

129

33

-

-

-

33

162

Others

54

42

-

(8)

49

83

137

Total (TRINITY ARTS INC.)

283

93

-

(9)

49

133

416

BABYLONE INC.

42

7

-

-

(49)

(42)

-

Total (Japan)

1,132

175

-

(26)

-

149

1,281

Hong Kong

30

-

-

(6)

-

(6)

24

China

21

17

-

(5)

-

12

33

Taiwan

21

4

-

(2)

-

2

23

Singapore

9

1

-

-

-

1

10

South Korea

0

7

-

-

-

7

7

81

29

-

(13)

-

16

97

Total (Overseas)
Total (Group)

204
(39)
165
1,378
1,213
Notes: 1. The number of stores includes e-commerce websites of other companies and e-commerce websites of the Company.
2. Stores that sell merchandise of two or more brands are categorized as the brand that operates each store.
3. TRINITY ARTS INC. includes figures for its subsidiaries.
4. This table shows the change in the number of stores resulting from the absorption-type merger conducted on April 1,2014 between TRINITY ARTS INC., which is the surviving company, and BABYLONE INC., which was dissolved.

- 10 -

Adastria Holdings Co., Ltd. (2685) Summary of 3Q Financial Results for February 2015 Fiscal Year

(2) Sales for Brands and Regions
Brand / region

First nine months of FY2/15
Sales (million yen)
Composition (%)

YoY change (%)

GLOBAL WORK

22,124

16.5

11.6

LOWRYS FARM

17,739

13.2

(2.8)

LEPSIM LOWRYS FARM

10,5977.9

8.3

JEANASIS

7,316

5.5

(5.1)

RAGEBLUE

5,901

4.4

(14.2)

HEATHER

5,433

4.1

(9.5)

Others17,727

13.3

4.3

Total (POINT INC.)

86,83964.9

1.6

niko and...

14,658

11.0

235.3

STUDIO CLIP

14,442

10.8

317.5

Others

9,688

7.2

534.2

38,789

29.0

314.5

764

0.6

(78.1)

3

0.0-

126,398

94.5

26.7

4,644

3.5

47.2

China

882

0.7

31.9

Taiwan

985

0.7

(4.2)

Singapore

696

0.5

34.8

99

0.1

-

7,308

5.5

36.1

133,707
Notes: 1. TRINITY ARTS INC. includes figures for its subsidiaries.

100.0

27.2

Total (TRINITY ARTS INC.)BABYLONE INC.
OthersTotal (Japan)
Hong Kong

South Korea
Total (Overseas)
Total (Group)

2. TRINITY ARTS INC. became a consolidated subsidiary in the third quarter of the previous fiscal year.
3. An absorption-type merger was conducted on April 1, 2014 between TRINITY ARTS INC., which is the surviving
company, and BABYLONE INC., which was dissolved.

(3) Sales for Merchandise Categories
Category

First nine months of FY2/15
Sales (million yen)

Composition (%)

YoY change (%)

Men’s apparel (bottoms, tops)

18,350

13.7

3.6

Lady’s apparel (bottoms, tops)

89,56967.0

35.9

Others25,78719.3

19.9

133,707

100.0

27.2

Total

Note: The others category includes additions to the provision for point card certificates and other items.

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 the convenience of readers who
prefer an English translation.

- 11 -