Summary of Consolidated Financial Results for the Fiscal Year Ended February 28, 2017
[Japanese GAAP]
April 4, 2017

Company name: Adastria Co., Ltd.
Listing: TSE 1st section
Stock code:
2685
URL: http://www.adastria.co.jp
Representative: Michio Fukuda, Representative Director, Chairman & CEO
Contact:
Mika Takano, General Manager of Corporate Planning Department
Tel: +81-3-6895-6000
Scheduled date of Annual General Meeting of Shareholders:
May 25, 2017
Scheduled date of payment of dividend:
May 10, 2017
Scheduled date of filing of Annual Securities Report:
May 26, 2017
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, 2017 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, 2017 (March 1, 2016 – February 28, 2017)(1) Consolidated results of operations(Percentages shown for net sales and incomes represent year-on-year changes)
Net income attributable
Net sales
Operating income
Ordinary income
to owners of the parent
Million yen

Fiscal year ended Feb. 28, 2017
Fiscal year ended Feb. 29, 2016
Note: Comprehensive income%

203,686
200,038

Million yen

1.8
8.4

%

14,916
16,004

Million yen

(6.8)
167.6

15,126
16,185%

Million yen

(6.5)
150.8

%

11,575
9,122

26.9
-

Fiscal year ended Feb. 28, 2017:
Fiscal year ended Feb. 29, 2016:

9,206 million yen
10,530 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, 2017
Fiscal year ended Feb. 29, 2016

Yen

242.49188.31-(down 12.6%)(up 277.8%)

21.2
18.3

16.7
18.6

7.3
8.0

Reference: Equity in earnings of affiliates

Fiscal year ended Feb. 28, 2017:(20) million yen
Fiscal year ended Feb. 29, 2016:
EBITDA
Fiscal year ended Feb. 28, 2017:
23,028 million yen (down 6.4%)
Fiscal year ended Feb. 29, 2016:
24,612 million yen (up 56.4%)
EPS before goodwill amortization
Fiscal year ended Feb. 28, 2017:288.24 yen (up 23.2%)
Fiscal year ended Feb. 29, 2016:
233.99 yen (up 230.2%)(*) For more details regarding definition, computational method and other matters of these indices, please refer to the section“Analysis of Results of Operations” on page 2.
Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Net income per share has been calculated as if this stock
split had taken place at the beginning of FY2/16.

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of Feb. 28, 2017
As of Feb. 29, 2016

90,38990,454

Net assets per share
Yen

56,03553,28262.0
58.9

1,191.16
1,106.45

Reference: Shareholders’ equity
As of Feb. 28, 2017:
56,035 million yen
As of Feb. 29, 2016:
53,282 million yen
Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Net assets per share has been calculated as if this stock split had
taken place at the beginning of FY2/16.

(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, 2017
Fiscal year ended Feb. 29, 2016

11,94722,054(4,323)(4,551)(6,309)(5,683)

20,725
19,452

2. Dividends
Dividend per share
Total

Total
dividends

Yen

Yen

Million yen

90.00
40.00
40.00

130.00
75.00
75.00

3,138
3,608

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

Fiscal year ended Feb. 29, 2016
Fiscal year ended Feb. 28, 2017
Fiscal year ending Feb. 28, 2018 (forecast)

Yen

-

40.00
35.00
35.00

Yen

-

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

%

34.5
30.9
29.6

6.3
6.5

Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Dividends per share for the fiscal year ended February 29,
2016 are the actual amounts before the stock split.

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2018 (March 1, 2017 – February 28, 2018)
Net salesFirst half
Full year

Operating income

Ordinary income
Million yen

Million yen%

Million yen

110,300
233,000

12.9
14.4

5,500
15,000

Reference: EBITDA
EPS before goodwill amortization%(31.7)
0.6

5,500
14,900%(Percentages represent year-on-year changes)
Net income attributable
Net income per
to owners of the parent
shareMillion yen(31.7)(1.5)

Fiscal year ending Feb. 28, 2018 (forecast):
Fiscal year ending Feb. 28, 2018 (forecast):

5,900
11,900

%

21.7
2.8

Yen

125.42252.96

23,600 million yen (up 2.5%)
303.98 yen (up 5.5%)

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scopeof consolidation): Yes
Newly added: -Excluded: 1(ADASTRIA SINGAPORE PTE. LTD.)(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

(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, 2017:
48,800,000 shares
As of Feb. 29, 2016:

48,800,000 shares

2) Number of treasury shares at the end of the period
As of Feb. 28, 2017:
1,757,425 shares

As of Feb. 29, 2016:

3) Average number of shares outstanding during the period
Fiscal year ended Feb. 28, 2017:
47,736,981 sharesFiscal year ended Feb. 29, 2016:

643,396 shares
48,443,869 shares

Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Number of outstanding shares (common stock) has
been calculated as if this stock split had taken place at the beginning of FY2/16.
Note: Numbers of treasury shares include the Company’s stock held by the Stock Compensation Employee Stock Ownership Plan
(ESOP) Trust and the Board Incentive Plan (BIP) Trust (555,900 shares as of Feb. 28, 2017).

Reference: Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2017
(March 1, 2016 – February 28, 2017)(1) Non-consolidated results of operations
Net sales
Million yen

Fiscal year ended Feb. 28, 2017
Fiscal year ended Feb. 29, 2016%

194,611
187,917

3.6-

Operating income(Percentages represent year-on-year changes)
Ordinary income
Net income

Million yen

Million yen%

14,352
15,367(6.6)-

14,537
15,461

Net income per share

Diluted net income per share

Yen

Yen

Fiscal year ended Feb. 28, 2017
Fiscal year ended Feb. 29, 2016

225.87172.19%Million yen

(6.0)
-

%

10,782
8,341

29.3
-

-

Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Net income per share has been calculated as if this stock
split had taken place at the beginning of FY2/16.
Note: The Company conducted an absorption-type merger between consolidated subsidiaries on March 1, 2015.

(2) Non-consolidated financial position

As of Feb. 28, 2017
As of Feb. 29, 2016

Total assets

Net assets

Equity ratio

Million yen

Million yen%

84,90285,29653,04250,725

Net assets per share
Yen

62.5
59.5

1,127.54
1,053.34

Reference: Shareholders’ equity
As of Feb. 28, 2017:
53,042 million yen
As of Feb. 29, 2016:
50,725 million yen
Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. Net assets per share has been calculated as if this stock split
had taken place at the beginning of FY2/16.
Note: The Company conducted an absorption-type merger between consolidated subsidiaries on March 1, 2015.

2. Non-consolidated Forecast for the Fiscal Year Ending February 28, 2018 (March 1, 2017 – February 28, 2018)
There is no non-consolidated forecast because the Company believes this information is not significant for investors.
Note 1: Indication of audit procedure implementation status
The current financial report is exempted from audit procedures based on the Financial Instruments and Exchange Act. At the time of
disclosure, the audit procedures for the 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. 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 “Analysis of Results of Operations” on page 2 regarding
preconditions or other related matters for the forecast shown above.

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

Contents of Attachments

1. Analysis of Results of Operations and Financial Condition

2(1) Analysis of Results of Operations

2(2) Analysis of Financial Condition

6(3) Basic Policy on Profit Distribution, and Dividend Plans for the Current and Next Fiscal Years7

2. Corporate Group7

3. Management Policies

10(1) Basic Management Policy

10(2) Performance Targets

10(3) Medium- to Long-term Business Strategy

10(4) Challenges

11

4. Basic Approach for the Selection of Accounting Standards

12

5. Consolidated Financial Statements

13(1) Consolidated Balance Sheet

13(2) Consolidated Statements of Income and Comprehensive Income15(3) Consolidated Statement of Changes in Equity

17(4) Consolidated Statement of Cash Flows

19(5) Notes to Consolidated Financial Statements

20

Going Concern Assumption

20

Changes in Accounting Policies

20

Additional Information

21

Segment and Other Information

22

Per Share Information

24

Subsequent Events25

6. Other Information

26(1) Changes in Directors

26

- 1 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

1. Analysis of Results of Operations and Financial Condition(1) Analysis of Results of Operations
1) Results of operations for the current fiscal year
During the past fiscal year (March 1, 2016 to February 28, 2017), the moderate recovery of the Japanese economy
continued with the support of government stimulus measures, although the pace of the recovery was slow in some
sectors. Consumer spending remained sluggish due to the lack of an overall improvement in consumer sentiment,
despite benefits from improvements in the employment environment and personal income.
To accomplish our goal of becoming a “global multi-brand fashion SPA (specialty store retailer of private label apparel)
company”, we took actions aimed at growth and improved profitability of the brand business in Japan, expansion of the
e-commerce business, and preparations for launching new businesses and growth outside Japan. Other measures foradvancing to the next stage of growth included building a stronger framework for multi-brand operations andstrengthening corporate branding.
Sales increased 1.8% as existing store sales in Japan were up 2.5% in part because of sales growth in the e-commercebusiness. Among brands, GLOBAL WORK, niko and…, STUDIO CLIP and LEPSIM were the primary contributors tosales growth.
Regarding the store network, we opened 91 stores (including 12 overseas), and closed 64 (including eight overseas),
resulting in a total network of 1,351 stores (including 108 overseas) at the end of February 2017.
Although there were measures to lower the cost of sales, the gross profit margin decreased 0.3 percentage point to56.3% mainly due to the increase in discount sales and the effect of an inventory valuation reserve.
The ratio of selling, general and administrative (SG&A) expenses to sales increased 0.4 percentage point from one year
earlier to 49.0% because of aggressive investments to build a base for growth. Activities included preparations forlaunching new brands and businesses, an upgrade of the main computer system, and the start of activities to build aglobal e-commerce system. As a result, the operating margin decreased 0.7 percentage point to 7.3%.
There was a gain on sales of investment securities of 3,763 million yen as extraordinary income. Extraordinary lossesof 382 million yen for impairment losses on store assets and 87 million yen for damage caused by the April 2016
earthquake in Kumamoto prefecture were also posted.
As a result, consolidated net sales increased 1.8% year-on-year to 203,686 million yen, operating income decreased
6.8% to 14,916 million yen, ordinary income decreased 6.5% to 15,126 million yen, and net income attributable toowners of the parent increased 26.9% to 11,575 million yen.
Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 6.4% to 23,028 million yen andearnings per share (EPS) before goodwill amortization rose 23.2% to 288.24 yen. (*)(*) Amortization of goodwill that mainly resulted from the consolidation of TRINITY ARTS INC. (subsequently
absorbed by the Company) has caused large declines in operating income and all subsequent categories of profits
since the fiscal year that ended on February 28, 2014. Since goodwill amortization is not a cash expense, thisamortization created a large gap between changes in cash flows and changes at all levels of profits starting with
operating income. Furthermore, comparisons with foreign companies are difficult because of differences inaccounting 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 attributable to owners of the parent + Amortization of goodwill (SG&A expenses, and extraordinary
losses) + Impairment losses (goodwill)) / Average number of shares outstanding during the period- 2 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(Number of stores)
Number of stores
Store format / region

As of Feb. 29,
2016

FY2/17
OpenedRebranded

Increase/decrease

ClosedAs of Feb. 28,
2017

GLOBAL WORK

184

12

-

(4)

8

192

niko and...

123

9

-

(3)

6

129

LOWRYS FARM

157

6

(3)

(8)

(5)

152

STUDIO CLIP

171

12

-

(1)

11

182

LEPSIM (Note 3)

130

6

-

(2)

4

134

JEANASIS

83

3

-

(6)

(3)

80

RAGEBLUE

59

3

-

(4)

(1)

58

HEATHER

67

7

9

(8)

8

75

Others

246

21

(6)

(20)

(5)

241

Total (Adastria)

1,220

79

-

(56)

23

1,243

Hong Kong

27

-

-

(2)

(2)

25

China

40

10

-

(5)

5

45

Taiwan

27

2

-

-

2

29

South Korea

10

-

-

(1)

(1)

9

104

12

-

(8)

4

108

27

1,351

Total (Overseas)

Total (Group)
1,324
91
(64)
Notes: 1. The number of stores is categorized by using brand operating divisions and geographic regions.

2. The number of stores includes e-commerce websites of other companies and e-commerce websites of Adastria.
3. The brand name of LEPSIM LOWRYS FARM has changed to LEPSIM in FY2/17.

(Sales for brands and regions)
Brand / region

FY2/17
Sales (million yen)

YoY change (%)

Composition (%)

GLOBAL WORK

38,28618.8

5.9

niko and...

24,712

12.1

8.3

LOWRYS FARM

24,698

12.1

(6.4)

STUDIO CLIP

22,240

10.9

8.3

LEPSIM (Note 3)

15,7297.7

4.3

JEANASIS

12,754

6.3

1.6

RAGEBLUE

9,349

4.6

(0.9)

HEATHER

7,751

3.8

(2.7)

Others37,434

18.4

3.1

Total (Adastria)

192,958

94.7

3.1

Hong Kong

6,576

3.2

(14.9)

China

1,844

0.9

(7.3)

Taiwan

1,555

0.8

(2.2)

751

0.4

(13.6)

10,7285.3(13.3)South Korea
Total (Overseas)
Total (Group)

203,686
100.0
Notes: 1. The number of stores is categorized by using brand operating divisions and geographic regions.
2. The above figures are sales to external customers and do not include internal sales between consolidated subsidiaries.
3. The brand name of LEPSIM LOWRYS FARM has changed to LEPSIM in FY2/17.

- 3 -

1.8

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(Sales for merchandise categories)
Category

FY2/17
Sales (million yen)

YoY change (%)

Composition (%)

Men’s apparel (bottoms, tops)

30,57815.0

6.8

Lady’s apparel (bottoms, tops)

131,099

64.4

0.1

Others

42,008

20.6

3.7

Total
203,686
100.0
Notes: 1. The others category includes additions to the provision for point card certificates and other items.

1.8

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

2) Outlook for the fiscal year ending on February 28, 2018
The outlook for the business climate seems to be generally positive. Earnings at Japanese companies are expected toremain firm and economics in the United States, emerging countries and other countries are improving. However, there
are concerns about the U.S. shift toward trade protectionism. An increasingly defensive stance among consumers inJapan will probably continue to weigh on consumer spending. The impact of the higher cost of national healthinsurance on disposable income is offsetting the positive effect on consumer sentiment of the improvement in Japan’s
employment environment. As a result, we expect that the operating environment will remain challenging.
We will continue to take actions based on the basic strategies of our three-year plan. There will be more measures toreinforce current brands, chiefly the core GLOBAL WORK and niko and… brands. For production operations, theprimary goals are improving quality, cutting costs and filling orders faster. Adastria is also focusing on developing new
businesses as a part of its strategy to move to the next stage of development. This includes the opening of the first store
for the new lifestyle brand, LAKOLE, in March and the start of participation in the management of ALICIA CO., LTD.,a new member of the Adastria Group, and Velvet, LLC, a U.S. based subsidiary.
For the fiscal year ending on February 28, 2018, we forecast a 14.4% increase in consolidated net sales to 233 billion
yen, a 16.0% increase in gross profit to 133 billion yen, a 0.6% increase in operating income to 15 billion yen, a 1.5%
decrease in ordinary income to 14.9 billion yen and a 2.8% increase in net income attributable to owners of the parent
to 11.9 billion yen.
This forecast assumes that existing store sales will increase 3.3% and there will be a net increase of 64 stores (including
14 overseas), the result of 121 new stores (including 21 overseas) and 57 store closings (including 7 overseas). In
addition, the outlook includes 115 more stores resulting from taking over the operations of ALICIA CO., LTD. and ninestores at newly acquired U.S. subsidiary Velvet, LLC. Furthermore, the earnings forecasts include expected gains of 3.7
billion yen on sales of investment securities.

- 4 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

The planned number of stores for major brands and regions of the Adastria Group is as follows.
Number of stores at end of period

Brand / region

FY2/17

FY2/18 (Plan)

GLOBAL WORK

192

206

niko and...

129

132

LOWRYS FARM

152

157

STUDIO CLIP

182

192

LEPSIM (Note 3)

134

139

JEANASIS

80

75

RAGEBLUE

58

60

HEATHER

75

74

Others

241

268

1,243

1,303

-

105

1,243

1,408

Hong Kong

25

26

China

45

52

Taiwan29

30

South Korea

9

12

USA

-

11

Total (Overseas)

108

131

Total (Group)

1,351

1,539

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

Notes: 1. The number of stores is categorized by using brand operating divisions and geographic regions.
2. The number of stores includes e-commerce websites of other companies and e-commerce websites of Adastria.
3. The brand name of LEPSIM LOWRYS FARM has changed to LEPSIM in FY2/17.

- 5 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(2) Analysis of Financial Condition
1) Balance sheet position
AssetsCurrent assets increased 2,713 million yen from as of February 29, 2016 to 48,178 million yen as of February 28, 2017.
This was mainly due to increases in cash and deposits of 1,273 million yen and inventories of 1,275 million yen.
Non-current assets decreased 2,778 million yen to 42,210 million yen. This was mainly due to decreases in goodwill of
2,184 million yen and investment securities of 2,553 million yen, while there were increases in lease and guarantee
deposits of 614 million yen and deferred tax assets of 1,314 million yen.
Liabilities
Current liabilities decreased 2,761 million yen to 33,665 million yen. This was mainly due to decreases in notes andaccounts payable-trade of 407 million yen, electronically recorded obligations-operating of 981 million yen, andaccounts payable-other of 1,390 million yen.
Non-current liabilities decreased 56 million yen to 688 million yen. This was mainly due to a decrease in other(long-term accounts payable-other, etc.) of 229 million yen, while there was an increase in other provision of 146
million yen.
Net assets
Net assets increased 2,752 million yen to 56,035 million yen. This was mainly due to an increase of 7,703 million yen
in retained earnings, while there was an increase of 2,821 million yen in treasury shares (decrease in total assets) and adecrease of 2,255 million yen in valuation difference on available-for-sale securities.
2) Cash flow position
Cash and cash equivalents (hereinafter “net cash”) as of February 28, 2017 amounted to 20,725 million yen, or 1,272
million yen more than as of February 29, 2016.
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 11,947 million yen (a decrease of 10,106 million yen, compared withthe previous fiscal year). The main positive factors include net income before income taxes of 18,487 million yen, anddepreciation of 6,109 million yen. Main negative factors include an increase in inventories of 1,337 million yen, adecrease in notes and accounts payable-trade of 1,363 million yen, and income taxes paid of 7,054 million yen.
Cash flows from investing activities
Net cash used in investing activities totaled 4,323 million yen (a decrease of 228 million yen). This was mainly due tothe payments of 5,133 million yen for the purchase of property, plant and equipment, 1,018 million yen for thepurchase of intangible assets, and 1,831 million yen for lease and guarantee deposits, while there was proceeds of 4,473
million yen from sales of investment securities.
Cash flows from financing activities
Net cash used in financing activities totaled 6,309 million yen (an increase of 625 million yen). This was mainly due tocash dividends paid of 3,871 million yen and purchase of treasury shares of 2,581 million yen.

- 6 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

Reference: Cash flow indicators
FY2/15

FY2/16

FY2/17

Shareholders’ equity ratio (%)

55.2

58.9

62.0

Shareholders’ equity ratio based on market prices (%)

85.3

155.9

151.4

Interest-bearing debt to cash flow ratio

0.3

0.1

0.2

216.3

553.4

1,034.7

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 of shares
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 arecalculated using the figures for interest expenses paid in the consolidated statement of cash flows.

(3) 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 the businesses that are needed to create highly
appealing brands and supply merchandise that can further increase corporate value (shareholder value), which will leadto the satisfaction of both customers and shareholders. For profit distributions to shareholders, we use a consolidated
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 and other factors.
Although earnings in the fiscal year that ended in February 2017 were somewhat lower than the forecast as discountsales increased, we plan to pay a year-end dividend of 40 yen as forecast. This will result in a fiscal year dividend of 75
yen. Based on consolidated net income after eliminating gains on sales of investment securities and goodwill
amortization, the dividend payout ratio will be consistent with our basic guideline of 30%.
For the next fiscal year ending on February 28, 2018, we plan to pay 75 yen for an annual dividend, the same as thedividend for the current fiscal year.
Note: The Company conducted a 2-for-1 common stock split on March 1, 2016.
2. Corporate GroupThe Group (the Company and its subsidiary companies) consists of Adastria Co., Ltd. and 9 consolidated subsidiaries:,
Adastria Logistics Co., Ltd., Adastria Asia Co., Ltd. (Hong Kong), POINT (Shanghai) Co., Ltd. (China), POINT TW
INC. (Taiwan), Adastria Korea Co., Ltd. (South Korea) and four other companies. There is also one equity-method
affiliate. The sale of merchandise is the primary business activity of the Adastria Group.
In Japan, the sale of merchandise is conducted by Adastria Co., Ltd. Merchandise uses casual clothing brands such as
GLOBAL WORK, LOWRYS FARM, LEPSIM, JEANASIS, RAGEBLUE and HEATHER as well as the lifestyle-proposing
brands niko and… and STUDIO CLIP.
The overseas merchandise sales business is conducted mainly by Adastria Asia Co., Ltd., as well as POINT (Shanghai)Co., Ltd., POINT TW INC., and Adastria Korea Co., Ltd. These companies handle GLOBAL WORK, LOWRYS FARM,
niko and…, and other brands.
Adastria Logistics Co., Ltd. performs logistics operations for the products of group companies (receipt, checking,storage, and shipment of products).
ALICIA CO., LTD. was established on November 21, 2016 and Adastria USA, Inc. was established on February 1,
2017. Both companies are consolidated subsidiaries. In addition, Adastria and Cafe Company Inc. jointly establishedpeoples inc., an equity-method affiliate, on November 1, 2016.
- 7 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal YearThe following table lists the major brands of the Adastria Group.
Brand

Concept

GLOBAL WORK

A mixture of basic tastes with new ideas and seasonal trends,
GLOBAL WORK offers a line of fashionable apparel withquality and prices that can please everyone.

niko and…

By nature, something is missing. The niko and… brandbrightens people’s lives by creating originality through an
infusion of its own style.

LOWRYS FARM

Centered on the themes of quality and relaxation, LOWRYSFARM features refreshing styling consisting of timeless basic
items and seasonal trendy items for women with standard
values about their life styles.

STUDIO CLIP

Let’s make this day unforgettable. I don’t want to overlook
even small things in my life even though it’s not a specialday. STUDIO CLIP is a source of new ideas for life styles
that match each individuals and are based on the concept of“my house.”

LEPSIM

Styled on simplicity yet with a sense of freshness, LEPSIM
proposes a casual and unassuming style that blends naturally
into the daily activities of women.

JEANASISJEANASIS is a fashion brand that makes culture more fun.
The sharp black and refined white create an image that is foryou and not bound by whims. A strong-willed femininity
emerges in masculine and cool fashion.

RAGEBLUE

Blending American casual taste and European traditional
taste, RAGEBLUE focuses on materials and details, andproposes a daily standard style incorporating elements of
popular trends.

HEATHER

Designed for positive girls who have an everlasting playful
mind, HEATHER proposes perfect styling with elements thatare girlish and edgy as well as trendy.

- 8 -Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal YearAn organizational chart of the Group is as follows.
Consolidated subsidiaries ALICIA CO., LTD. and Adastria USA, Inc. are not included in the following diagram
because they had no business activities as of February 28, 2017.

[Consolidated subsidiary(Logistics)]

Outsourced

Adastria Logistics Co., Ltd.

operations

logistics<The Company>
Adastria Co., Ltd.

Order

Suppliers(Trading
companies,
etc.)

POINT (Shanghai) Co., Ltd.
(China)POINT TW INC. (Taiwan)
Adastria Korea Co., Ltd.
(South Korea)

Delivery[Equity-method affiliate]

peoples inc.

- 9 -Customers

Delivery / acceptance / storage

Merchandise sale, etc.

[Consolidated subsidiaries(Outside Japan)]
Adastria Asia Co., Ltd. (Hong Kong)

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

3. Management Policies(1) Basic Management Policy Our Belief
Become a person that is essential to others and a company that is essential to others
 Mission
We are dedicated to being a source of the joy of fashion for people worldwide. We will accomplish this mission byusing the multi-brand strategy on a global scale for the constant creation of new answers for the needs of all customers.
 Code of Conduct
Our role is to search constantly for answers from the perspective of customers.
We always take on new challenges with speed and no fear of change.
We respect the individuality of others and aim for results and progress in an atmosphere where people stimulate eachother to do even better.
We are aware of our responsibilities as a member of society and do our jobs with discipline and propriety.
We enjoy the world of fashion, our jobs and our lives.
(2) Performance Targets
The Adastria Group uses EBITDA as the main indicator of the ability to generate operating income and cash flows andROE as the main indicator of the efficient use of equity. To improve these indicators, group companies are aiming forearnings growth by strengthening internal planning and production operations to differentiate products and by
executing a variety of strategies that match the characteristics of each brand.
(3) Medium- to Long-term Business Strategy
In Japan, the apparel market is shrinking and changing as the population declines and the number of seniors increases.
Furthermore, progress with information technology is making activities of all types borderless. Big changes are taking
place in the behavior and values of consumers as a result. No longer is it possible to earn the support of customers byusing conventional business formats and sales methods.
To succeed in this environment, we have made some revisions to the basic strategies that were announced in April 2016
in order to reflect changes that have occurred at Adastria and in the business climate since then. The basic direction ofthese strategies remains the same. To accomplish these goals, we will continue to focus our energy on initiatives aimed
at long-term growth in corporate value and meeting the expectations of shareholders. In addition, we have establishednumerical goals to aim for over the next three years.
 Our vision
Become a global multi-brand fashion SPA company
 Core strategies
1. Make existing brands more powerful
Increase the efficiency of operations to aim for even higher profitability of the existing brand business in Japan.
Move forward with the large-store strategy for the GLOBAL WORK and niko and…and start full-scale growth ofoverseas operations for these brands.
2. Develop new businesses based on changes in customers’ needs and on omni-channel operations
Create and launch new businesses and convert existing businesses to the omni-channel format in order to reflectchanges in customers’ life styles and buying habits.
- 10 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

3. Implement advanced technologies to build a stronger and more efficient business infrastructure
Reinforce the IT system infrastructure for existing businesses and use advanced technologies wherever possible to takeon the challenge of creating a new and highly efficient retail business model.
4. Improve the efficiency of value chain
Aim for efficient multi-brand operations by establishing patterns and systems for the entire value chain process, fromplanning and production to distribution and sales, and by making the entire chain more transparent.
5. Strengthen the corporate brand
Make the public and everyone at the Adastria Group aware of the value that the Adastria brand stands for.
Identify and organize the value of the individual brands that make up the corporate brand with the goal of maximizing
the aggregate value.
 Numerical targets
The Adastria Group has established the following targets for the fiscal year ending in February 2020:
Sales:

260 billion yen
Average annual sales growth of existing businesses in Japan: 5%
Sales of overseas operations and new businesses: 40 billion yen

Operating income:

10% for existing businesses in Japan

ROE: About

15%(4) Challenges
1) Aiming for the same level of sales growth for all brands is difficult because of the effect on the apparel market ofJapan’s aging population and increasingly diversity of preferences. This is why we need clearly defined strategies
that match the characteristics of each brand. Some brands have growth potential in Japan and overseas while otherbrands have the potential to increase profitability in order to generate more cash.
2) There are signs that consumers in Japan are reluctant to spend money on apparel. Since the apparel business in Japanalone cannot drive growth of the Adastria Group, we must seek new growth drivers involving products other thanapparel and services that offer new life-style ideas for customers.
3) Constant technological progress is making existing businesses more efficient and may fundamentally alter the retailbusiness in the future. We must be vigilant concerning the appearance of new technologies and look for ways toincorporate these technologies in our business operations.
4) Our multi-brand strategy makes it possible to meet the expectations of customers with a broad spectrum ofpreferences and needs. However, we have many patterns for work processes extending from planning andproduction to distribution and sales because of the large number of brands. Our operations are complex as a result.
This is why we must build a framework for efficient multi-brand operations.
5) Extensive marketing activities for each brand in the Adastria portfolio have established strong ties with customers
for all 21 of these brands. On the other hand, more work will be required to achieve a sufficient level of recognition
for the corporate brand. There is an urgent need to firmly establish the corporate brand in order to recruit
outstanding people and establish alliances with other companies with greater ease.

- 11 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

4. Basic Approach for the Selection of Accounting Standards
The Company prepares its consolidated financial statements based on the generally accepted accounting principles inJapan to permit comparisons with prior years and with the financial data of other companies.
We will take suitable actions with regard to the application of International Financial Reporting Standards (IFRS) by
taking into account associated factors in Japan and other countries.

- 12 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

5. Consolidated Financial Statements(1) Consolidated Balance Sheet(Million yen)
FY2/17(As of Feb. 28, 2017)

FY2/16(As of Feb. 29, 2016)
AssetsCurrent assets
Cash and deposits

19,46020,734

Notes and accounts receivable-trade

7,668

7,860

Inventories

15,076

16,351

Deferred tax assets

1,765

2,018

Other

1,548

1,266

Allowance for doubtful accounts

(53)

(53)

45,465

48,178

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

3,524

3,615

Accumulated depreciation(1,567)(1,892)

Buildings and structures, net

1,957

1,723

Store interior equipment

26,79429,083

Accumulated depreciation(19,860)(22,591)

Store interior equipment, net

6,933

6,491

1,732

1,732

80

55

Land
Construction in progress
Other

1,198

1,235

Accumulated depreciation

(685)

(794)

Other, net

512

440

11,215

10,444

Goodwill

5,493

3,309

Other

1,471

2,242

Total intangible assets

6,965

5,552

Investment securities

10,231

7,677

Lease and guarantee deposits

Total property, plant and equipment
Intangible assets

Investments and other assets
16,622

17,237

Deferred tax assets

69

1,384

Other

137

139

Allowance for doubtful accounts

(253)

(225)

Total investments and other assets

26,807

26,21344,98842,21090,454

90,389Total non-current assets
Total assets- 13 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(Million yen)
FY2/17(As of Feb. 28, 2017)

FY2/16(As of Feb. 29, 2016)
Liabilities
Current liabilities
Notes and accounts payable-trade

6,768

6,361

Electronically recorded obligations-operating

9,901

8,919

Short-term loans payable

1,867

2,027

Accounts payable-other

10,331

8,941

Income taxes payable

4,368

4,470

Provision for bonuses

2,212

2,195

Other provision

412

453

Other

563

295

36,426

33,665

Deferred tax liabilities

75

102

Provision for directors’ retirement benefits

94

94

Other provision

-

146

Other

575

345

Total non-current liabilities

745

688

37,17134,353

Capital stock

2,660

2,660

Capital surplus

6,987

7,227

Total current liabilities
Non-current liabilities

Total liabilities
Net assets
Shareholders’ equity

Retained earnings

39,70947,413

Treasury shares(1,824)(4,645)

Total shareholders’ equity

47,53352,654

Valuation difference on available-for-sale securities

5,445

3,190

Deferred gains or losses on hedges

(263)

(19)

Foreign currency translation adjustment

567

209

5,749

3,380

53,28256,03590,454

90,389

Accumulated other comprehensive income

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 14 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2/16(Mar. 1, 2015 – Feb. 29, 2016)(Million yen)
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)

200,038
86,772
113,266

203,686
89,020114,666

5,805
26
207
26,643
2,096
4,239
33,198
437
6,394
2,213
15,99997,261
16,004

6,308
(28)
239
27,0172,151
4,397
33,798
407
5,928
2,184
17,34499,75014,916

6
107
169
132
42
326
786

3
135
40
111
41
181
513

39
427
99
38
605
16,185

11
20
136
93
41
303
15,126

-

3,763
77
3,841

644
173
818
15,367
6,138
105
6,244
9,122
9,122

382
87
10
480
18,487
7,262
(350)
6,911
11,575
11,575Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Advertising expenses
Provision of allowance for doubtful accounts
Directors’ compensations
Salaries and bonuses
Provision for bonuses
Welfare expenses
Rents
Lease payments
Depreciation
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Gain on valuation of derivatives
House rent income
Revenue from electric power sales
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Foreign exchange losses
Loss on valuation of derivatives
Cost of lease revenue
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on liquidation of subsidiaries and associates
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on disaster
Loss on sales of shares of subsidiaries and associates
Loss on liquidation of subsidiaries and associates
Total extraordinary losses
Net income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net income attributable to owners of the parent- 15 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

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

FY2/16(Mar. 1, 2015 – Feb. 29, 2016)
Net income

9,122

11,575

Valuation difference on available-for-sale securities

1,814(2,255)

Deferred gains or losses on hedges

(620)

244

Foreign currency translation adjustment

214

(357)

Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of theparentComprehensive income attributable tonon-controlling interests- 16 -

1,408(2,369)10,5309,206

10,530

9,206

-

-

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(3) Consolidated Statement of Changes in Equity
FY2/16 (Mar. 1, 2015 – Feb. 29, 2016)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodCapital surplus

2,660

Retained earnings Treasury shares

6,987

32,651(406)

Total shareholders’equity41,892

Changes of items during period
Dividends of surplus(2,063)(2,063)

Net income attributable to ownersof parent

9,122

9,122

Purchase of treasury shares(1,417)

Net changes of items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current period(1,417)
-

-

-

7,058

(1,417)

5,640

2,660

6,987

39,709(1,824)47,533(Million yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Deferred gains orlosses on hedges

Foreign currencytranslation
adjustment

Total accumulated
othercomprehensive
income

357

352

4,341

46,233

Dividends of surplus-(2,063)

Net income attributable to ownersof parent

-

9,122

Purchase of treasury shares-(1,417)

Balance at beginning of current
period3,631

Total net assets

Changes of items during period

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

1,814

(620)

214

1,408

1,408

1,814

(620)

214

1,408

7,049

5,445

(263)

567

5,749

53,282- 17 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodCapital surplus

2,660

6,987

Retained earnings Treasury shares
39,709(1,824)

Total shareholders’equity47,533

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

Net income attributable to ownersof 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 to stock
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

Deferred gains orlosses on hedges

Foreign currencytranslation
adjustment

Total accumulated
othercomprehensive
income

(263)

567

5,749

53,282

Dividends of surplus-(3,871)

Net income attributable to ownersof parent-

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

Disposal of treasury shares

-

0

-

(1,817)-

1,817

Balance at beginning of current
period5,445

Total net assets

Changes of items during period

Treasury stock possession ofstock ownership plan trust
Transfer of treasury stock to stock
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- 18 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(4) Consolidated Statement of Cash Flows
FY2/16(Mar. 1, 2015 – Feb. 29, 2016)(Million yen)
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)

Net income before income taxes

15,36718,487

Depreciation

6,578

6,109

Impairment loss

644

382

Amortization of goodwill

2,213

2,184

Interest and dividend income

(114)

(138)

39

11

Increase (decrease) in allowance for doubtful accounts

26

(28)

Increase (decrease) in provision for bonuses

178

(13)

Loss (gain) on sales of shares of subsidiaries and associates

Cash flows from operating activities

Interest expenses

173-

Loss (gain) on sales of investment securities-(3,763)

Loss (gain) on liquidation of subsidiaries and associates
Share of (profit) loss of entities accounted for using equity
methodLoss on disaster

-

(67)

-

20

-

87

Decrease (increase) in notes and accounts receivable-trade

(206)

(209)

Decrease (increase) in inventories(694)(1,337)

Increase (decrease) in notes and accounts payable-trade

1,777(1,363)

Increase (decrease) in accounts payable-other

224

280

Increase (decrease) in accrued consumption taxes(142)(1,475)

Other, net

(153)

(291)

Subtotal

25,911

18,875Interest and dividend income received

114

138

Interest expenses paid

(39)

(11)

Income taxes paid

(3,931)(7,054)

Net cash provided by (used in) operating activities

22,054

11,947(3,819)(5,133)(731)(1,018)Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Proceeds from sales of shares of subsidiaries resulting inchange in scope of consolidation
Purchase of shares of subsidiaries and associates

(1)

(672)

-

4,473

(1,153)(1,831)

1,117

953

29

-

-

(1,070)7(25)(4,551)(4,323)

Increase (decrease) in short-term loans payable(1,886)

210

Cash dividends paid

(2,065)(3,871)

Purchase of treasury shares(1,422)(2,581)

(308)

(65)

(5,683)(6,309)

(34)

(42)

11,785

1,272

Cash and cash equivalents at beginning of period

7,667

19,452

Cash and cash equivalents at end of period

19,452

20,725

Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities

Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents- 19 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
Application of the accounting standards for business combinations
The Company has adopted the “Accounting Standard for Business Combinations” (Accounting Standards Board ofJapan (ASBJ) Statement No. 21, issued on September 13, 2013), “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, issued on September 13, 2013), “Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, issued on September 13, 2013), etc. from the current fiscal year. Accordingly, difference
arising from changes in the Company’s ownership interests in subsidiaries in cases where control is retained isrecognized in capital surplus, and the acquisition costs in connection with business combinations are recognized as
expenses in the fiscal year in which they arise. Regarding business combinations that take place on or after the
beginning of the current fiscal year, the Company has revised the method to reflect reviewed allocation of theacquisition costs arising from determination of the provisional accounting treatment on the consolidated financial
statements to which the date of the business combination belongs. In addition, the minority interests item has beenrenamed non-controlling interests. For consistency with these changes, the consolidated financial statements for theprevious fiscal year have been revised.
The Company has adopted these accounting standards, etc. from the beginning of the current fiscal year, in accordancewith the transitional accounting treatments set forth in Article 58-2 (4) of the Accounting Standard for Business
Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated Financial Statements, and Article 57-4 (4)of the Accounting Standard for Business Divestitures.
In the consolidated statement of cash flows for the current fiscal year, cash flows associated with costs arising frompurchase or sales of shares of subsidiary not resulting in changes in the scope of consolidation are included in cash
flows from financing activities. On the other hand, cash flows associated with acquisition-related costs for purchase ofshares of subsidiary resulting in changes in the scope of consolidation or costs arising from purchase or sales of sharesof subsidiary not resulting in changes in the scope of consolidation are included in cash flows from operating activities.
The effect of this change on the consolidated financial statements for the current fiscal year is insignificant.

Change in depreciation method of property, plant and equipment
Following tax law revisions, the Company has adopted the “Practical Solution on a Change in Depreciation Method
due to Tax Reform 2016” (ASBJ Practical Issue Task Force (PITF) No. 32, issued on June 17, 2016) from the current
fiscal year, and changed the depreciation method for facilities attached to buildings and structures acquired on or after
April 1, 2016, from the declining-balance method to the straight-line method.
The effect of this change on the consolidated financial statements for the current fiscal year is insignificant.

- 20 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

Additional Information
Transactions of delivering the Company’s own stock to employees, etc. through trusts
The Company has established a Stock Compensation Employee Stock Ownership Plan (ESOP) Trust as an incentive
plan for the purpose of reinforcing the commitment of executive officers (excluding executive officers who are
directors) and senior management officers to contribute to medium and long-term growth in sales and earnings as wellas corporate value.
(1) Summary of the plan
The Company established this trust by making a payment to the trust for the acquisition of the Company’s stock. The
trust beneficiaries are all eligible executive officers and senior management officers. In accordance with rules for the
distribution of stock, eligible executive officers and senior management officers are awarded certain number of points
based on their positions and individual performance evaluation and the results of operations. These individuals can thenreceive the Company’s stock based on the number of points. The executive officers and senior management officers
make no payments because the Company’s contributions to the trust cover the entire cost of purchasing the Company’s
stock through trust account.
(2) The Company’s stock held by the trust account
The Company’s stock held by the trust account is included in net assets as treasury shares at book value (excluding
associated expenses). The number of shares of the Company’s stock held by the trust account was 412,500 shares witha book value of 1,348 million yen as of February 28, 2017.
Stock compensation plan for directors based on results of operations
The Company has established a Board Incentive Plan (BIP) Trust as the stock compensation plan based on the resultsof company operations for the purpose of reinforcing the commitment of directors (excluding outside directors anddirectors who are not residents of Japan) to contribute to medium and long-term growth in sales and earnings as well as
corporate value.
(1) Summary of the plan
The Company established this trust by making a payment to the trust for the acquisition of the Company’s stock. The
trust beneficiaries are all eligible directors. In accordance with rules for the distribution of stock, eligible directors areawarded points based on their positions and the achievement of performance goals in the fiscal year to be evaluated.
After three years from the beginning of applicable fiscal years, these directors can then receive the Company’s stockand cash from the disposal of the Company’s stock as compensation, based on the number of points.
(2) The Company’s stock held by the trust account
The Company’s stock held by the trust account is included in net assets as treasury shares at book value (excluding
associated expenses). The number of shares of the Company’s stock held by the trust account was 143,400 shares witha book value of 468 million yen as of February 28, 2017.

- 21 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

Segment and Other Information
Segment information
FY2/16 (Mar. 1, 2015 – Feb. 29, 2016)
Omitted since the Adastria Group has only a single business segment, which is the planning and sales of clothing andrelated merchandise.
FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)
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.
Related information
FY2/16 (Mar. 1, 2015 – Feb. 29, 2016)
1. Information by product or service
Omitted since sales to external customers in the category of a single product or service exceeded 90% of net sales on
the consolidated statement of income.
2. Information by region(1) Net sales
Omitted since sales to external customers in Japan exceeded 90% of net sales on the consolidated statement of income.
(2) Property, plant and equipment
Omitted since property, plant and equipment in Japan exceeded 90% of property, plant and equipment on the
consolidated balance sheet.
3. Information by major client
Omitted since there is no sales to external customers whom accounted for 10% or more of net sales on the consolidated
statement of income.
FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)
1. Information by product or service
Omitted since sales to external customers in the category of a single product or service exceeded 90% of net sales on
the consolidated statement of income.
2. Information by region(1) Net sales
Omitted since sales to external customers in Japan exceeded 90% of net sales on the consolidated statement of income.
(2) Property, plant and equipment
Omitted since property, plant and equipment in Japan exceeded 90% of property, plant and equipment on the
consolidated balance sheet.
3. Information by major client
Omitted since there is no sales to external customers whom accounted for 10% or more of net sales on the consolidated
statement of income.

- 22 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

Information related to impairment losses on non-current assets for each reportable segment
FY2/16 (Mar. 1, 2015 – Feb. 29, 2016)
Omitted since the Adastria Group has only a single business segment, which is the planning and sales of clothing andrelated merchandise.
FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)
Omitted since the Adastria Group has only a single business segment, which is the planning and sales of clothing andrelated merchandise. There is no others segment because the levels of sales and earnings of other activities are
insignificant.
Information related to goodwill amortization and the unamortized balance for each reportable segment
FY2/16 (Mar. 1, 2015 – Feb. 29, 2016)
Omitted since the Adastria Group has only a single business segment, which is the planning and sales of clothing andrelated merchandise.
FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)
Omitted since the Adastria Group has only a single business segment, which is the planning and sales of clothing andrelated merchandise. There is no others segment because the levels of sales and earnings of other activities are
insignificant.
Information related to gain on bargain purchase for each reportable segment
FY2/16 (Mar. 1, 2015 – Feb. 29, 2016)
Not applicable.
FY2/17 (Mar. 1, 2016 – Feb. 28, 2017)
Not applicable.

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Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal YearPer Share Information(Yen)
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)

FY2/16(Mar. 1, 2015 – Feb. 29, 2016)
Net assets per share

1,106.45

1,191.16

Net income per share

188.31

242.49Notes: 1. The Company conducted a 2-for-1 common stock split on March 1, 2016. Net assets per share, net income per share havebeen calculated as if this stock split had taken place at the beginning of FY2/16.
2. Diluted net income per share is not presented since the Company has no outstanding dilutive securities.
3. 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 that is deducted fromthe 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
301,000 for FY2/17. For the determination of net assets per share, the number of treasury shares that was deducted were555,000 for FY2/17.
4. The basis of calculating the net income per share is as follows.
(Million yen)
FY2/17(Mar. 1, 2016 – Feb. 28, 2017)

FY2/16(Mar. 1, 2015 – Feb. 29, 2016)
Net income attributable to owners of the parent

9,122

11,575

Amount not available to common stockholders

-

-

9,122

11,57548,44347,736

Net income attributable to owners of the parent
applicable to common shares
Average number of common shares outstanding
during the period (Thousand shares)- 24 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

Subsequent Events
Acquisition by a consolidated subsidiary
The Adastria Board of Directors approved a resolution on March 22, 2017 to acquire Velvet, LLC, a U.S. company
based on Culver City, California. Velvet will be acquired by Adastria USA, Inc., which is a wholly owned Adastria
subsidiary that was established on February 1, 2017. The purchase agreement was signed on April 1, 2017.
1. Purpose of this Acquisition
Velvet is a contemporary apparel company that had sales of US$39.6 million in 2016. The goal is to use
Adastria’s capital and expertise to achieve more growth at Velvet. In addition, Velvet will give Adastria access to
Velvet’s expertise involving the brand business in the United States. In April 2016, Adastria made a minority
investment on another U.S. company, Marine Layer, Inc. Adastria believes the acquisition of Velvet will also help
strengthen the company’s global brand portfolio.
2. Name of sellers
Velvet Holdings, LLC
JTH, Inc.
Others3. Name, business activities and size of the company to acquire(1) Name:
Velvet, LLC(2) Business activities:
Apparel business(3) Size:
Net assets US$21 million; total assets US$27 million (in 2016)
4. Date of acquisition
April 18, 2017 (tentative)
5. Acquisition cost and equity interest after acquisition(1) Acquisition cost:
US$37 million
Expenses associated with this acquisition are expected in addition to the acquisition cost.
(2) Equity interest after acquisition: 100%
6. Method for procuring funds for payment
Own funds
Sales of Investment Securities
The Adastria Board of Directors approved a resolution on April 4, 2017 to sell part of the investment securities held
by Adastria.
1. Sales of investment securities(1) Stock to be sold:(2) Scheduled period for sales:(3) Expected gain on sales:

One issue of listed securities held by Adastria
April 5, 2017 to August 31, 2017
Approx. 3,700 million yen- 25 -

Adastria Co., Ltd. (2685) Summary of Financial Results for February 2017 Fiscal Year

6. Other Information(1) Changes in Directors
1. Change in representative director (Date of change: March 1, 2017)
Representative Director and Chief Operating Officer (COO)
Masa Matsushita(Former Member of the Board of Directors and Chief Operating Officer (COO))

2. Change of other board members (Date of change: May 25, 2017)
Candidate for director appointment
Director and General Manager of Corporate Planning Department
Taiki Fukuda(Current General Manager of Corporate Planning Department)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.

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