Summary of Consolidated Financial Results
for the Second Quarter of Fiscal Year Ended February 28, 2022
[Japanese GAAP] (Consolidated)
October 5, 2021
Company name:

TSI HOLDINGS CO., LTD.

Stock listing: Tokyo Stock Exchange

Code number:

3608

URL: https://www.tsi-holdings.com/en/

Representative:

Representative Director and President, Tsuyoshi Shimoji

Contact:

Executive Officer, General Manager of Finance & Accounting Dept. Mitsuru Naito
TEL: +81-3-6748-0001

Scheduled date of financial report:

October 8, 2021

Scheduled date to begin dividend payment:―

Preparation of supplementary financial document:

Yes

Briefing session to explain the financial statements:

Yes (For institutional investors and analysts)(Rounded down to the nearest million yen)

1. Consolidated Business Results for the Second quarter of the Fiscal Year Ended February 28, 2022(March 1, 2021 to August 31,
2021)(1) Consolidated results of operations(% change from the previous fiscal year)

Net sales

Second quarter of FY ended
February 28,2022
Second quarter of FY ended
February 28,2021

Operating income

Million yen%

64,751

15.1

56,270(31.2)

Million yen

Profit attributable toowners of parent

Ordinary income%

Million yen%

Million yen

1,134

―

2,002

―

1,890

―

(10,469)―(9,642)―(14,434)―(Notes) Comprehensive income: Second quarter of Fiscal year ended February 28, 2022 ¥1,698 million―%
Second quarter of Fiscal year ended February 29, 2021 ¥(16,038) million―%
Net income
per share
Second quarter of FY ended
February 28,2022
Second quarter of FY ended
February 28,2021

Diluted net
income per share
Yen

Yen

20.94

―

(158.70)―(2) Consolidated financial position

Million yen

Million yen

Shareholders’ equity
ratio%

143,950

99,181

68.6

154,951

97,43062.6

Total assets
Second quarter of FY ended
February 28,2022
FY ended February 28,2021

Net assets(Reference) Shareholders’ equity: Second quarter of FY ended February 28,2022¥98,710 million

FY ended February 2021

¥96,977 million

2. Dividends
Annual dividend
End of
1Q
Yen

End of
2Q
Yen

End of
3Q
Yen

Yen

Yen

FY ended February 2021

―

0.00

―

0.00

0.00

FY ended February 2022

―
0.00

―

5.00

5.00

Year-end

Total

FY ended February 2022
(forecast)(Note) Revisions during this quarter of dividends forecast for fiscal year: None%

3. Forecast of Consolidated Business Results for the Fiscal Year Ending February 28, 2022 (March 1, 2021 to February 28, 2022)(% change from the corresponding period of the previous fiscal year)
Net sales

Full fiscal year

Operating income

Ordinary income

Profit attributable toowners of parent

Million yen%

Million yen%

Million yen%

Million yen

152,400

13.7

1,100

―

1,600

―

1,660

Net income
per share%Yen(57.0)

18.40(Note) Revisions during this quarter of previously disclosed consolidated business results projection for FY 2022: None

＊Notes:(1) Changes in significant subsidiaries during the period: Yes
Changes in specified subsidiaries resulting in a change in the scope of consolidation
Deselection 2 companies(SANEI-INTERNATIONAL CO.,LTD. and TSI GROOVE AND SPORTS CO.,LTD.)(2) Application of particular accounts procedures to the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates, and restatements
a. Changes in accounting policies due to revisions of accounting standards: Noneb. Changes in accounting policies other than above (a): Nonec. Changes of accounting estimates: None
d. Restatements: None
(4) Number of shares issued (common stock)a. Number of shares issued
Q2 of FY ended February
at the end of period2022(treasury stock included)b. Number of treasury
Q2 of FY ended February
stock at the end of period 2022
c. Average number ofshares over the period

95,783,293 shares
5,510,669 shares

Q2 of FY ended February2022

FY ended February 2021

95,783,293 shares

FY ended February 2021

5,556,309 shares

Q2 of FY ended February
90,242,807 shares

2021

91,774,868 shares*This business results report is not subject to auditing by certified public accountants or audit firms.
*Explanation regarding the appropriate use of business forecasts and other special instructions
The forward-looking statements, including business forecasts, contained in this document are based on information currently
available to the Company and on certain assumptions deemed reasonable by the Company, and are not intended as a promise by
the Company that they will be achieved. Actual results may differ materially due to a variety of factors. Please refer to "(3)Explanation of Consolidated Business Forecast and Other Forward-looking Statements " on page 3 for the assumptions underlying
the forecasts and cautionary statements regarding the use of the forecasts.

Contents of Attached Materials
1. Qualitative Information on results for this quarter of FY ended February 2022 ····································· 2(1) Overview of Business Results ······························································································· 2(2) Overview of Financial Position ···························································································· 3(3) Explanation of Consolidated Business Forecast and Other Forward-looking Statements ··············· 3
2. Quarterly Consolidated Financial Statements and Major Notes ······················································ 4(1) Quarterly Consolidated Balance Sheets ·················································································· 4(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income··············· 6(3) Quarterly Consolidated Statements of Cash Flows ··································································· 8(4) Notes to Quarterly Consolidated Financial Statements ······························································ 10
Going Concern Assumption ··································································································· 10
Notes on Significant Changes in Shareholders’ Equity ······························································ 10
Additional Information ········································································································· 10
Segments of the Company and Related Information ·································································· 15

11.

Qualitative Information on Quarterly Results(1) Overview of Business Results
During Q2 of consolidated cumulative period (March 1, 2021–August 31, 2021) the apparel industry was affected by
the spread of COVID-19 which caused people to refrain from going out and commercial facilities to close or shorten
their hours of operation, which in turn has affected sales. Although there are signs of COVID-19 abating as vaccination
rates rise, a state of emergency was declared in Tokyo on July 12, and in Saitama, Chiba, Kanagawa, and Osaka on
August 2. Nevertheless, the outlook remains uncertain.
Within this business environment, based on the medium-term reform project, TSI Innovation Program 2024 (TIP24),
the Group has focused on withdrawing from unprofitable businesses and stores, reducing labor costs, and cutting
SG&A expenses companywide. Following this, we will move into the next phase of reinforcing our fast-growing EC
business, IT systems, and entering new businesses, and we will aggressively invest in the future to maximize theGroup's earning capacity. Furthermore, we conducted an absorption-type merger in March 2021 as the first step aimed
at unifying our group companies into one company (SANEI bd CO.,LTD. our subsidiary, absorbed eight other apparelsubsidiaries, after which the trade name was changed to TSI Inc.). We aim to further improve decision-making speed
and operational efficiency by name changes.
The spread of COVID-19 is not yet under control and consumer confidence is sluggish due to restraints on public
movement, and the in-store sales of our group companies continue to be dire due to a decrease in the number ofcustomers visiting our stores. Despite this setback, we focused our efforts on measures such as strengthening sales
through EC and curbing excess inventory by reducing product purchases to appropriate levels.
Consequently, net sales were ¥64,751 million (up 15.1% year on year), operating income was ¥1,134 million (a loss of¥10,469 million in the same quarter last year), and ordinary income was ¥2,002 million (a loss of ¥9,642 million in
the same quarter last year). Quarterly profit attributable to owners of the Group’s parent was realized at ¥1,890
million (a loss of ¥14,434 million in the same quarter last year).
An overview of each business segment is outlined below:

Apparel-Related Businesses
With regard to subsidiaries consisting of the Company’s apparel-related business, we have focused on withdrawing
from unprofitable businesses and stores, reducing labor costs, and cutting SG&A expenses companywide based on the
aforementioned medium-term reform project (TIP24). In addition, we have continued to improve profitability byreforming existing brands and increasing operational efficiency, based on the medium-term management strategy.
In the midst of the need to manage brands in existing businesses with high market value that stand out for theirindividuality and are not affected by price competition, we have been aiming to expand profitability by developing
products that make use of our unique features, including a golf brand “MASTER BUNNY EDITION,” the ladies brands“Mystrada” and “JUSGLITTY,” a street brand “HUF,” and “UNDEFEATED,” a business with a focus on sneakers.
However, once again, a state of emergency was declared in many prefectures during the summer. Stores within
department stores and shopping malls remain severely affected.
In the EC business, we have further facilitated measures to strengthen the cooperation between in-store sales andEC and strived to increase the latter by consolidating in-store inventory into EC inventory, expanding in-store online
customer service, and transferring in-store customer to EC.
Through these initiatives, net sales of the apparel-related businesses reached ¥62,607 million (up 14.7% year onyear).

Other Businesses
TSI Holdings’ other businesses include S GROOVE CO.,LTD which engages in sales agents and temporary staffing
businesses; Toska-Bano'k Co., Ltd which trades in the manufacture and sale of synthetic resin products; PLAX Co.,
Ltd, which involves in-store design and management and restaurant business; Laline JANAN CO.,LTD. which
participates in the purchase and sale of cosmetics, perfumes, soaps, etc.; and Urth Cafe JAPAN CO.,LTD. which2operates popular organic cafes in the U.S., California. Net sales decreased 39.6% year on year to ¥2,428 million due tothe continuing impact of the COVID-19 pandemic.

(2) Overview of Financial Position(Million yen)
At the end of FY ended
February 2021
(As of February 28, 2021)

At the end of 2Q FY ended
February 2022
(As of August 31, 2021)

Increase/decrease

Total assets

154,951

143,950(11,000)

Liabilities

57,521

44,768(12,752)

Net assets

97,43099,181

1,751

Shareholders’ equity ratio

62.6%

68.6%

6.0%

¥1,074.81¥1,092.92¥18.11

Net assets per share

Total assets decreased by ¥11,000 million from the end of the previous fiscal year due to a decrease in cash and deposits(down ¥9,430 million) and a decrease in Notes and accounts receivable–trade (down ¥1,155 million).
Liabilities decreased by ¥12,752 million from the end of the previous fiscal year due to a decrease in notes and accounts
payable–trade (down ¥1,335 million) and a decrease in income taxes payable (down ¥1,924 million) and a decrease inother current liabilities (down ¥4,319 million) and a decrease in long-term borrowings (including current portion of
long-term borrowings) (down ¥4,504 million).
Net assets increased by ¥1,751 million from the end of the previous fiscal year, despite an decrease in Valuationdifference on available-for-sale securities (down ¥620 million). This was mainly due to an increase in retained earnings(up ¥1,890 million) and an increase in foreign currency translation adjustment (up ¥401 million).
As a result, net asset per share increased by ¥18.11.

(3) Explanation of Consolidated Business Forecast and Other Forward-looking Statements
No adjustments were made concerning the business results projection for the year ending 28 February,2022 as reported
in the“Forecast of Consolidated Business Results for the Fiscal Year Ending February 28, 2022” released on 12 April
2021.

3

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly Consolidated Balance Sheets
Previous consolidated
fiscal year
(As of February 28, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts(Million yen)
Quarter consolidated
accounting period ofcurrent fiscal year
(As of August 31, 2021)

49,871
10,88817,034
544
821
3,594
(39)

40,4409,733
988
17,409
641
665
3,608
(48)

82,71473,438

8,149

7,889

Goodwill
Other

5,266
7,404

5,054
7,309

Total intangible assets

12,67012,36428,872
4,980
17,670(106)

28,865
4,965
16,554(126)

51,41650,25872,23770,511

154,951

143,950

11,607
152
8,915
2,196
1,336
426
126

10,272
202
7,835
272
1,134
453
131

Provision for sales returns
Asset retirement obligations
Other

289
12
10,906

242
64
6,586

Total current liabilities

35,96927,195Retirement benefit liability
Asset retirement obligations
Other

16,082
42
1,040
2,344
2,042

12,657
37
1,023
2,214
1,641

Total non-current liabilities

21,551

17,57357,521

44,768

Total current assets
Non-current assets
Property, plant and equipment
Intangible asset

Investments and other assets
Investment securities
Investment property
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable–trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Provision for point card certificates
Provision for shareholder benefit program

Non-current liabilities
Long-term borrowings
Provision for retirement benefits for directors

Total liabilities

4Previous consolidated
fiscal year
(As of February 28, 2021)
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income

Non-controlling interests
Total net assets
Total liabilities and net assets

5(Million yen)
Quarter consolidated
accounting period ofcurrent fiscal year
(As of August 31, 2021)

15,00029,25552,213(3,747)

15,00029,255
54,104(3,704)92,72094,655

4,812

4,192

(469)
(86)

(67)
(69)

4,256

4,055

452

471

97,43099,181

154,951

143,950

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income
Quarterly consolidated statements of income
Consolidated cumulative Second quarter

Net sales
Cost of sales(Million yen)
Consolidated cumulative
Consolidated cumulative
Second quarter ofSecond quarter ofprevious fiscal year
current fiscal year
(March 1,2020 to August 31, (March 1,2021 to August 31,
2020)
2021)
56,27064,751
32,101
29,456Gross profit

24,16935,294

Selling, general and administrative expenses

34,63934,160Operating income (loss)(10,469)

1,134Interest income
Dividend income
Real estate income
Foreign exchange income
Other

15
696
697
256

19
410
131
133
433

Total non-operating income

1,665

1,127

109
78
10
335
305

68
0
96
93

839

258

(9,642)

2,002

110
308

384
809
12

Non-operating income

Non-operating expenses
Interest expenses
Foreign exchange losses
Loss on valuation of investment securities
Rental expenses on real estate
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of non-current assets
Gain on sale of investment securities
Subsidies for employment adjustment
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Loss on sale of investment securities
Loss on valuation of investment securities
Loss due to temporary closing
Other

-

237

418

1,443

42
1,404
9
36
2,414

19
25
1,000

107

22

Total extraordinary losses

4,014

1,067

Income(loss) before income taxes(13,237)2,378

Income taxes―current
Income taxes―deferred

179
1,072

262
247

Total income taxes

1,252

510

Net income（loss）(14,490)

1,867

(56)

(22)

(14,434)

1,890

Net loss attributable to non-controlling interest
Net income attributable to owners of parent

6

Quarterly Consolidated statements of comprehensive income
Consolidated cumulative Second quarter

Net income(loss)
Other comprehensive income(Million yen)
Consolidated cumulative
Consolidated cumulative
Second quarter ofSecond quarter ofprevious fiscal year
current fiscal year
(March 1,2020 to August 31, (March 1,2021 to August 31,
2020)
2021)
(14,490)
1,867

Valuation difference on available-for-sale securities

Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income ofaffiliates accounted for using equity method
Total other comprehensive income(1,453)
(111)
18

(620)
422
17

(1)

11

(1,547)(169)

Comprehensive income(16,038)

1,698

Total comprehensive income attributable to:
Owners of parent
Non-controlling interests(15,972)
(65)

1,689
9

7

(3) Quarterly Consolidated Statement of Cash Flows(Million yen)
Consolidated cumulative
Consolidated cumulative
Second quarter ofSecond quarter ofprevious fiscal year
current fiscal year
(March 1,2020 to August 31, (March 1,2021 to August 31,
2020)
2021)
Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of goodwill(13,237)
1,958
389
82
8
(55)

2,378
1,571
389
27
9
(4)

(44)
(11)
(9)
35

(170)
(49)
31
4

(711)

(429)

Other

109
42
1,404
2,414
(100)
(308)
1,555
213
(2,571)(737)(29)(1,766)

68
(384)
19
25
1,000
(809)
(12)
1,089
(957)
(1,299)(1,157)(710)

Subtotal(11,372)

631

711

429

(109)
(357)
747
(2,185)(68)(2,268)85(937)

Increase (decrease) in allowance for doubtful accounts

Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for retirement
benefits for directors
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for sales returns
Increase (decrease) in provision for point card certificates

Increase (decrease) in provision for shareholder
benefit program
Interest and dividend income
Interest expenses
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Loss due to temporary closing
Loss (gain) on sales of investment securities
Subsidies for employment adjustment
Decrease (increase) in accounts receivables–trade
Decrease (increase) in inventories
Increase (decrease) in accounts payables–trade
Increase (decrease) in accrued consumption taxes
Increase (decrease) in long-term accounts payable–other

Interest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Payment for loss due to temporary closing
Payment for Voluntary retirement-related expenses

-

(947)

Net cash provided by (used in) operating activities(12,564)(3,075)8

(Million yen)
FY2020(March 1, 2020 toAugust 31, 2020)
Cash flows from investing activities
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

FY2021(March 1, 2021 toAugust 31, 2021)(1)(1,866)0(2,906)
2,952
(311)
(271)
460
(44)
(2)
(656)

(611)
(620)
5
(5,257)
3,479
(378)
380
(117)
623
(38)
-

-

(91)

-

25

1,671

20
(75)

(974)

(2,658)Dividends paid
Other

20,612400(4,488)(780)(1,635)(8)

41(4,518)(0)43(9)

Net cash provided by (used in) financing activities

14,100(4,443)

Effect of exchange rate change on cash and cash equivalents

(5)

134

Purchase of investment securities
Proceeds from sales of investment securities
Purchase of intangible assets
Proceeds from sales of intangible assets
Payments of leasehold and guarantee deposits
Proceeds from collection of leasehold and guarantee deposits
Payments for acquisition of long-term prepaid expenses

Purchase of investment property
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Payments for sales of shares of subsidiaries resulting
in change in scope of consolidation
Proceeds from sales of shares of subsidiaries resulting
in change in scope of consolidation
Proceeds from sales of Business transfer
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Proceeds from sales of treasury shares

555(10,042)

Cash and cash equivalents at beginning of period

30,232

49,761

Cash and cash equivalents at end of period

30,78839,718Net increase (decrease) in cash and cash equivalents9(4) Notes to Quarterly Consolidated Financial Statements

Going Concern Assumption
Not applicable

Notes on Significant Changes in Shareholders’ Equity
Not applicable

Change of accounting estimate
In the first quarter of the current consolidated cumulative period, there is no prospect of convergence in preventing
the spread of new coronavirus infections.
We have changed the estimate for the allowance for bonuses recorded in the previous consolidated fiscal year.
As a result of this change, operating income, ordinary income, and income before income taxes for the first quarterof the current consolidated cumulative period will be increased.
It has increased by 587 million yen.

Valuation Criteria for Inventories
The Company has adopted a valuation criteria for inventories based on a certain devaluation rate determined inaccordance with the period since production or purchase. The Company’s balance sheet amount is based on thedevalued book value. While we were affected by the expansion of COVID-19, we’ve changed the sales policy and holded
down purchase and sales cost and along with that, we tried to improve the portion of the proper sales.
Consequently, the existing write-down rate deviates from that which would have been applied if the latest sales
results had been reflected. We therefore decided to reflect the latest sales results in the write-down rate that evaluates
the book value effective for the six-month period under review. The change in the estimation method was made toreflect decline in inventory-related profitability more appropriately in the Company’s financial position and operating
results.
As a result of this change, the cost of sales decreased by ¥970 million in the second half of the current fiscal year.
Consequently, operating income, ordinary income, and income before income taxes increased by the same amount,respectively.

Additional Information
Trust-Type Employee Stock Ownership Plan (ESOP)TSI Holdings resolved at a Board of Directors’ meeting held on April 13, 2020 to reintroduce a trust-type employee
stock ownership plan (ESOP) as an incentive plan and part of its efforts to provide benefits for its employees.
i. Overview of the Plan
The Company has established a trust (the Shareholding Association Trust). The beneficiaries of the Shareholding
Association Trust are members of the TSI Employee Shareholding Association (the Shareholding Association) who
have met certain requirements.
The Shareholding Association Trust acquired in advance a number of TSI Holdings shares projected to be acquiredby the Shareholding Association over a five-year period from April 2020 utilizing funds procured through debt
finance. Thereafter, acquisition of the Company’s shares by the Shareholding Association will be undertaken by the
Shareholding Association Trust. Meanwhile, TSI Holdings will guarantee the debt finance undertaken by the
Shareholding Association Trust.
ii. Shares of the Company Remaining in the Trust
The shares of the Company remaining in the Trust are posted as shares of treasury stock in the net assets section
at their carrying amount in the Trust. The carrying amount and number of shares of treasury stock as of the end of
the previous fiscal year under review were ¥325 million for 696,000 shares. And that as of the end of this fiscal year
under review were ¥289 million for 618,000 shares.

10

iii. Carrying Value of Debt Finance Posted Using the Gross Price Method
As of February 28, 2021: ¥359 million and as of August 31, 2021: ¥334 million,

Board Benefit Trust (BBT)In accordance with a proposal put forward at the Company’s 5th General Meeting of Shareholders held on May
25, 2016, TSI Holdings introduced a performance-linked stock compensation (Board Benefit Trust (BBT)) plan for
its directors and delegated executive officers as well as Group company directors (eligible officers).
i. Outline of the Transaction
Under the plan, the Company’s shares are acquired through a trust using money contributed by the Company asfunds. Eligible officers receive the Company’s shares equivalent to the points granted in accordance with the levelof performance achievement, etc., and money equivalent to the amount of the Company’s shares converted at market
value as of the date of retirement (the Company’s shares, etc.), pursuant to the officer stock delivery regulations.
Meanwhile, the timing of receipt of the benefits of the Company’s shares, etc. by eligible officers shall, in principle,
be upon their retirement from office.
ii. Shares of the Company Remaining in the Trust
The shares of the Company remaining in the Trust are posted as shares of treasury stock in the net assets section
at their carrying amount in the Trust. The carrying amount and number of shares of treasury stock were ¥288
million for 512,000 shares as of the end of the previous fiscal year and ¥280 million for 499,000 shares as of the endof this fiscal year under review.

11Application of tax effect accounting for the transition from the consolidated taxation system to the group tax
sharing system
For the transition to the group tax sharing system established under the “Act for Partial Amendment of the Income
Tax Act, etc. (Law No. 8, 2020) and for items that were reviewed in the non-consolidated taxation system inconjunction with the transition to the group tax sharing system, subject to the treatment of paragraph 3 of the“Application of tax effect accounting for the transition from the consolidated taxation system to group tax sharing
system” (Practical Issues Task Force No. 39, March 31, 2020), the Company and certain domestic consolidated
subsidiaries do not apply the provisions of paragraph 44 of the “Guidance on Accounting Standards for Tax EffectAccounting” (ASBJ Guidance No. 28, February 16, 2018) and calculate the amount of deferred tax assets anddeferred tax liabilities in accordance with the provisions of pre-revision tax laws.)
Non-equity method companies excluded from the scope of application of the equity method because their impact
on the Company's net income/loss (amount corresponding to the Company's equity interest) and retained
earnings (amount corresponding to the Company's equity interest) is not material and their overall importanceis not significant.

Group reorganization (absorption-type merger organized by the Company and 14 consolidated subsidiaries)
At a meeting of its Board of Directors held on December 16, 2020, TSI Holdings resolved to undertake areorganization with the aim of integrating each of its apparel operating companies into a single company over thefollowing three stages, with a scheduled completion date of March 1, 2023.
1. Stage 1: Absorption-type merger between consolidated subsidiaries on March 1, 2021
The Transaction under common control(1) Overview of the Transaction
i. Names and Businesses of the Combining Companies
Name of the Combining Company:

SANEI bd CO., LTD.

Business:

Apparel business

Names of the Combined Companies:

SANEI-INTERNATIONAL CO., LTD.
TSI GROOVE AND SPORTS CO., LTD.
nano universe CO., LTD.
anglobal Ltd.
Rose Bud Co., Ltd.
Isolar Co., Ltd.
TSI EC STRATEGY CO., LTD.
TSI PRODUCTION NETWORK CO., LTD.

Business:

Apparel businessii. Date of Business Combination
March 1, 2021 and March 12,2021
iii. Legal Form of Business Combination
Absorption-type merger with SANEI bd CO., LTD., as the surviving company, and SANEIINTERNATIONAL CO., LTD., TSI GROOVE AND SPORTS CO., LTD., nano universe CO., LTD., anglobalLtd., Rose Bud Co., Ltd., Isolar Co., Ltd., TSI PRODUCTION NETWORK CO., LTD., and TSI EC
STRATEGY CO., LTD., as the companies to be merged.
iv. Name of the Company after Business Combination
SANEI bd CO., LTD. (new corporate name: TSI Inc.)v. Other Matters Related to the Transaction
Nine consolidated subsidiaries underpinned by the same internal information systems, human resources,and other systems were the subject of the absorption-type merger.

12(2) Overview of the Accounting Treatment Applied
Pursuant to the “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan(ASBJ) Statement No. 21 issued on January 16, 2019 and the “Guidance on Accounting Standard for Business
Combination and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10 issued on January
16, 2019), the absorption-type merger was treated as an under common control transaction.
2. Stage 2: Absorption-type merger between consolidated subsidiaries on March 1, 2022
TSI Holdings’ Board of Directors resolved to undertake an absorption-type merger with TSI Inc., as thesurviving company, and consolidated subsidiaries Ueno Shokai Co., Ltd., Jack Clothing Co., Ltd., Arpege Co.,
Ltd., Star Joinus Co., Ltd., and And Wonder Co., Ltd., as the companies to be merged on the scheduled date ofMarch 1, 2022.
(1) Overview of the Transaction
i. Names and Businesses of the Combining Companies
Name of the Combining Company

TSI Inc.

Business:

Apparel business

Names of the Combined Companies:

Ueno Shokai Co., Ltd.
Jack Co., Ltd.
Arpege Co., Ltd.
Star Joinus Co., Ltd.
And Wonder Co., Ltd.

Business:

Apparel businessii. Date of Business Combination
March 1, 2022 (scheduled)iii. Legal Form of Business Combination
Absorption-type merger with TSI Inc., as the surviving company, and consolidated subsidiaries Ueno
Shokai Co., Ltd., Jack Co., Ltd., Arpege Co., Ltd., Star Joinus Co., Ltd., and And Wonder Co., Ltd., as thecompanies to be merged.
iv. Name of the Company after Business Combination
TSI Inc.
v. Other Matters Related to the Transaction
After promoting the sharing of the same internal information systems, human resources, and other systems,
the aforementioned five combining companies will be subject to an absorption-type merger.
(2) Overview of the Accounting Treatment Applied
Pursuant to the “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan(ASBJ) Statement No. 21 issued on January 16, 2019 and the “Guidance on Accounting Standard for Business
Combination and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10 issued on January
16, 2019), plans are in place to treat the absorption-type merger as an under common control transaction.
3. Final stage: Absorption-type merger between TSI Holdings and a consolidated subsidiary on March 1, 2023
TSI Holdings’ Board of Directors resolved to undertake an absorption-type merger with TSI Holdings Co., Ltd.,as the surviving company, and TSI Inc., as the company to be merged on the scheduled date of March 1, 2023.
TSI Holdings Co., Ltd. will then change its corporate name to TSI Inc. (provisional name) in accordance withthe absorption-type merger.

13(1) Overview of the Transaction
i. Names and Businesses of the Combining Companies
Name of the Combining Company:

TSI Holdings Co., Ltd.

Business:

Apparel business

Name of the Combined Company:

TSI Inc.

Business

Apparel businessii. Date of Business Combination
March 1, 2023 (scheduled)iii. Legal Form of Business Combination
Absorption-type merger with TSI Holdings Co., Ltd., as the surviving company, and TSI Inc., as thecompany to be merged.
iv. Name of the Company after Business Combination
TSI Holdings Co., Ltd. (new corporate name: TSI Inc. (provisional name))v. Other Matters Related to the Transaction
By implementing these mergers in stages, plans are in place to lower the break-even point by streamlining
the organizational structure by reducing the overlapping functions of each Group company, increase thespeed of business through an organizational structure suitable for the digital age, and reform the mindset
and culture by integrating the structure, functions, and rules through corporate integration.
(2) Overview of the Accounting Treatment Applied
Pursuant to the “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan(ASBJ) Statement No. 21 issued on January 16, 2019) and the “Guidance on Accounting Standard for Business
Combination and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10 issued on January
16, 2019), plans are in place to treat the absorption-type merger as an under common control transaction.

14

Segments of the Company and Related Information
1. Consolidated cumulative second quarter of previous fiscal year (March 1,2020 to August 31, 2020)(1) Net sales, income or losses, assets and other items by reportable segments
Reportablesegment
Other
Total
Note 1
Apparel-related
businesses

Adjustments
Note 2

Consolidated
financialstatements
amount(Note 3)

Net sales
Sales to third parties

54,456

1764

56,22050

56,270Inter-segment sales or transfers

131

2,259

2,391

(2,391)―

Total

54,5884,023

58,612(2,341)

56,270(10,737)(158)(10,896)426(10,469)

Segment income (loss)
Notes:

1. Other, which doesn’t belong to respective reportable segments, includes synthetic resin-related, store design andmanagement and so on.
2. Segment income (loss) adjustment of ¥426 million is transaction offsets among consolidated companies.
3. Segment income (loss) is adjusted to operating income listed in the consolidated financial statements.
(2) Goodwill or impairment loss in non-current assets by reportable segments

Important impairment loss in non-current assets
In segment apparel-related businesses, book value of the stores which are decided to close, and whose operating
income are continuously in red, and whose brands are decided to close, are supposed to be reduced to recoverable
amount. And the decrease is posted as impairment loss in the extraordinary losses section.
As a side note, recorded amount of impairment loss in non-current assets were ¥1,404 million as of the end of thisfiscal year under review.

A significant change in the amount of goodwill
None

A significant gain from negative goodwill
None

15

1. Consolidated cumulative second quarter of current fiscal year (March 1,2021 to August 31, 2021)(1) Net sales, income or losses, assets and other items by reportable segments
Reportablesegment
Other
Total
Note
1
Apparel-related
businesses

Adjustments
Note 2

Consolidated
financialstatements
amount(Note 3)

Net sales
Sales to third parties

62,5572,134

64,69159

64,751

50

293

344

(344)

―

62,6072,428

65,036(285)

64,751

1,022

(10)

1,011

122

1,134

Inter-segment sales or transfers
Total
Segment income (loss)
Notes:

1. Other, which doesn’t belong to respective reportable segments, includes synthetic resin-related, store design andmanagement and so on.
2. Segment income (loss) adjustment of ¥122 million is transaction offsets among consolidated companies.
3. Segment income (loss) is adjusted to operating income listed in the consolidated financial statements.
(2) Goodwill or impairment loss in non-current assets by reportable segments

Important impairment loss in non-current assets
None

A significant change in the amount of goodwill
None

A significant gain from negative goodwill
None16