Summary of Consolidated Financial Results
for the Second Quarter of Fiscal Year Ended February 28, 2023
[Japanese GAAP] (Consolidated)
October 12, 2022
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
Director, Corporate Dept. Mitsuru Naito
TEL: +81-3-5785-6400

Contact:

Scheduled date of financial report:
Scheduled date to begin dividend payment:

October 12, 2022―

Preparation of supplementary financial document:
Briefing session to explain the financial statements:

Yes
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, 2023(March 1, 2022 to August 31,
2022)(1) Consolidated results of operations(% change from the previous fiscal year)

Net sales

Second quarter of FY ended
February 28,2023
Second quarter of FY ended
February 28,2022

Operating income

Million yen%

72,08711.3

64,751

15.1

Million yen

Profit attributable toowners of parent

Ordinary income%

Million yen%

Million yen%

588(48.1)

1,892

(5.5)

2,249

(19.0)

1,134

―

2,002

―

1,890

―

(Notes) Comprehensive income: Second quarter of Fiscal year ended February 28, 2023 ¥3,578 million 110.7%
Second quarter of Fiscal year ended February 29, 2022 ¥1,698 million―%
Net income
per share
Second quarter of FY ended
February 28,2023
Second quarter of FY ended
February 28,2022

Diluted net
income per share
Yen

Yen

25.41

―

20.94

―

(Note) The "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan (ASBJ)
Statement No. 29 issued on March 31, 2020) and other accounting standards have been applied from the
beginning of the first quarter of the current consolidated fiscal year. The figures for the second quarter ofthe fiscal year ending February 28, 2023 are obtained after the application of the above accounting
standards.
(2) Consolidated financial position

Million yen

Million yen

Shareholders’ equity
ratio%

138,095

99,13871.5

140,440

97,736

69.2

Total assets
Second quarter of FY ended
February 28,2023
FY ended February 28,2022

Net assets(Reference) Shareholders’ equity: Second quarter of FY ended February 28,2023 ¥98,710 million
FY ended February 2022
¥97,212 million(Note) The "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan (ASBJ)
Statement No. 29 issued on March 31, 2020) and other accounting standards have been applied from the
beginning of the first quarter of the current consolidated fiscal year. The figures for the Second quarter ofthe fiscal year ending February 28, 2023 are obtained after the application of the above accounting
standards.

2. Dividends
Annual dividend
End of
1Q
Yen

End of
2Q
Yen

End of3Q
Yen

FY ended February 2022

―

0.00

FY ended February 2023

―

0.00

FY ended February 2023
(forecast)Year-end

Total

Yen

Yen

―

5.00

5.00

―

7.00

7.00

(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, 2023 (March 1, 2022 to February 28, 2023)(% change from the corresponding period of the previous fiscal year)
Net sales

Full fiscal year

Million yen
154,000

Operating income%
9.7

Million yen
1,800%(59.5)

Ordinary income
Million yen
3,300%(43.4)

Profit attributable toowners of parent
Million yen
2,400

Net income
per share

%
134.7

Yen
27.63

(Note) Revisions during this quarter of previously disclosed consolidated business results projection for FY 2023: Yes＊Notes:(1) Changes in significant subsidiaries during the period: None
Changes in specified subsidiaries resulting in a change in the scope of consolidation(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: Yes
b. Changes in accounting policies other than above (a): Nonec. Changes of accounting estimates: None
d. Restatements: None

(Note) For details, please refer to "2. Quarterly Consolidated Financial Statements and Major Notes, and (4) Notes to Quarterly
Consolidated Financial Statements (changes in accounting policies)” on page 10 of attached materials.
(4) Number of shares issued (common stock)a. Number of shares issued
Q2 of FY ended February
at the end of period(treasury stock included) 2023
b. Number of treasury
Q2 of FY ended February
stock at the end of period 2023
c. Average number ofshares over the period

Q2 of FY ended February
2023

95,783,293 shares

FY ended February 2022

95,783,293 shares

8,934,523 shares

FY ended February 2022

5,390,033 shares

88,545,700 shares

Q2 of FY ended February
2022

90,266,135 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 2023 ····································· 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
Change in an Accounting policy ···························································································· 10
Additional Information ········································································································ 11
Segments of the Company and Related Information ·································································1411.

Qualitative Information on results for this quarter of FY ended February 2023

(1) Overview of Business Results
During Q2 of consolidated cumulative period (March 1, 2022–August 31, 2022), in the apparel industry, while the
COVID-19 has showed signs of subsiding and the easing of behavioral restrictions is expected to lead to a gradual
recovery in demand for outings and growth in personal consumption, the outlook remains uncertain due to the impactof the global surge in resource prices in the Russian and Ukrainian situation.
In such a business environment, based on the new medium-term management plan called the "TSI Innovation
Program 2025 (TIP25)" announced in April 2022, the Group will continue to respond to changes in the social
environment and customer lifestyles associated with the progress of digital transformation (DX) and facilitate
fundamental reforms to create original value to be offered. To create a form of fashion entertainment, we focus on
investment in growth business areas, primarily e-commerce (EC) expansion, and shift from the phase that involves
withdrawal from unprofitable stores to the phase that involves opening new large-scale stores and reopening stores inprime locations to improve our profit structure by developing attractive stores.
Furthermore, we implemented an absorption-type merger (with the subsidiary TSI Inc. as the surviving company
and the subsidiary Ueno Shokai Co., Ltd. as the absorbed company) in March 2022 in the second step of our efforts tointegrate the group companies into one company. Through the absorption-type merger, we have reduced the overlap offunctions of the two companies and streamlined the organizational structure to lower the break-even point, strengthen
the governance of the Group as a whole, and to steadily strengthen profitability while leveraging the individuality ofthe brands we have built to date.
In addition, through the relocation of the head office on September 20, 2022 and the associated consolidation of
offices for each business, we aim to improve the efficiency of the entire business, including group companies.
The Group has been working to secure over-the-counter sales and strengthen sales through e-commerce, as well as
to curb excess inventory and cost of goods sold by strictly monitoring product purchases and reducing them toappropriate levels. However, the situation remained harsh, as the company was unable to drastically curb SG&A
expenses.
Consequently, the net sales were 72,087 million yen (up 11.3% in the same quarter last year), the operating income
was 588 million yen (down 48.5% in the same quarter last year), and the ordinary income reached 1,892 million yen(down 5.5% in the same quarter last year).
Furthermore, the quarterly profit attributable to owners of the Group’s parent was 2,249 million yen (up 19.0% in thesame quarter last).
Net sales by reportable segment were as follows.

Apparel-Related Businesses
With regard to each of the subsidiaries that comprise our apparel-related business, we focus on strengthening
profitability by investing in growth business areas, reforming real stores, and shifting to EC sales channels based on
the TIP25.
As for the existing businesses, the golf brands "PEARLY GATES" and "new balance golf" and "PING," the street
brand "HUF," and the women’s brands "human woman" and "CADUNÉ" have aimed to increase profitability by
developing products that make the most of their special characteristics. Consequently, the net sales in apparel-related
businesses increased by 12.9% in the same quarter last to 69,510 million yen.

Other Businesses
Companies within TSI Holdings’ other businesses include S-Groove Co., Ltd., which in addition to fulfilling a sales
function for Group operating companies engages in paid employment placement and worker dispatching activities,
Toska-Bano’k Co., Ltd., active in the manufacture and sale of synthetic resin related products, Plax Co., Ltd., which
engages in store design and supervision as well as restaurant operations, Laline JAPAN Co., Ltd., which procures andsells a variety of products including cosmetics, perfumes, and soaps, and Urth Caffe JAPAN Co., Ltd., which operates
in Japan a popular organic café in the U.S., California. Net sales in this segment increased 19.1% compared with the2previous fiscal year, to 2,905million yen owing mainly to the continued impact of COVID-19.
(2) Overview of Financial Position(Million yen)
At the end of FY ended
February 2022
(As of February 28, 2022)

At the end of Q2 FY ended
February 2023
(As of August 31, 2022)

Increase/decrease

Total assets

140,440

138,095(2,344)

Liabilities

42,70438,957(3,747)

Net assets

97,736

99,138

1,402

69.2%
¥1,075.44

71.5%¥1,136.58

2.3%¥61.14

Shareholders’ equity ratio
Net assets per share

Assets decreased by ¥2,344 million, mainly due to a decrease in cash and deposits (down ¥2,188 million from theend of the previous fiscal year), a decrease in “other” in current assets (down ¥1,585 million from the end of theprevious fiscal year), and a decrease in “other” in investments and other assets (down ¥832 million from the end of theprevious fiscal year), despite an increase in inventories (up ¥3,054 million from the end of the previous fiscal year),etc.
Liabilities decreased by 3,747 million yen, mainly due to a decrease in the long-term borrowings (including current
portion of long-term borrowings) (down 3,439 million yen from the end of the previous fiscal year).
Net assets increased by ¥1,402 million due to increases in retained earnings (up ¥1,728 million from the end of theprevious fiscal year) and foreign currency translation adjustments (up ¥805 million from the end of the previous fiscal
year), despite an increase in treasury stock (up ¥1,090 million from the end of the previous fiscal year), which is adeduction item in net assets.
As a result, net asset per share increased by ¥61.14.

(3) Explanation of Consolidated Business Forecast and Other Forward-looking Statements
We adjusted the business results projection for the year ending February 28, 2023, which was released on April 13,2022.
For details, please refer to the “Difference between 1st Half Forecast and Actual Results/Notice Concerning Revisions
to Full-Year Financial Results Forecasts "that was released today (October 12, 2022).

3

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly Consolidated Balance Sheets
Previous consolidated
fiscal year
(As of February 28, 2022)(Million yen)
Quarter consolidated
accounting period ofcurrent fiscal year
(As of August 31, 2022)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable–trade39,258
10,37837,069
11,200

Securities
Merchandise and finished goods

969
17,597

20,378

494
634

761
641

Other
Allowance for doubtful accounts

6,263
(48)

4,678
(68)

Total current assets

75,54774,661

6,544

6,296

Goodwill
Other

2,044
7,220

2,194
7,418

Total intangible assets

9,265

9,612

Investments and other assets
Investment securities

28,397

27,684
4,722
15,220Allowance for doubtful accounts

4,735
16,053(102)

Total investments and other assets

49,08347,52464,89363,434140,440

138,095

Work in process
Raw materials and supplies

Non-current assets
Property, plant and equipment
Intangible asset

Investment property
Other

Total non-current assets
Total assets(102)

Liabilities
Current liabilities
Notes and accounts payable–trade

10,595

11,029

Short-term borrowings
Current portion of long-term borrowings

114
6,212

121
5,262

Income taxes payable
Provision for bonuses

251
1,327

571
1,005

Provision for point card certificates
Provision for shareholder benefit program

453
139

133

Provision for sales returns
Provision for relocation

310
87

87

Asset retirement obligations
Other

650
8,230

671
7,600

Total current liabilities

28,37526,481

Non-current liabilities
Long-term borrowings

9,803

7,313

Retirement benefit liability

37
979

37
1,003

Asset retirement obligations
Other

2,010
1,498

1,994
2,124

Total non-current liabilities

14,32912,47542,70438,957

Provision for retirement benefits for directors

Total liabilities

4Previous consolidated
fiscal year
(As of February 28, 2022)(Million yen)
Quarter consolidated
accounting period ofcurrent fiscal year
(As of August 31, 2022)

Net assets
Shareholders’ equity
Share capital
Capital surplus

15,00029,25515,00028,824Retained earnings
Treasury stock

53,236(3,668)54,965(4,759)Total shareholders’ equity

93,822

94,030

3,058

3,501

457
(126)

1,262
(83)

3,389

4,680

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

523

428

97,736

99,138140,440

138,095

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

Cost of sales

Consolidated cumulative
Second quarter ofprevious fiscal year
(March 1,2021 to August 31,
2021)
64,751
29,456(Million yen)
Consolidated cumulative
Second quarter ofcurrent fiscal year
(March 1,2022 to Augut 31,
2022)
72,08731,352Gross profit

35,29440,735

Selling, general and administrative expenses

34,16040,146

Operating income

1,134

588

Interest income
Dividend income

19
410

13
356

Real estate income
Foreign exchange income

131
133

178
519

Net sales

Non-operating income

Other
Total non-operating income
Non-operating expenses
Interest expenses

433

363

1,127

1,431

68

37

Loss on valuation of investment securities
Rental expenses on real estate

0
96

22

Other

93

67

Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets

258

127

2,002

1,892

384

4

Gain on sale of investment securities
Subsidies for employment adjustment

809
12

778
-

Other

237

91

1,443

873

19
25

6
104

1,000

134
-

22

3

Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Gain on sale of investment securities
Loss due to temporary closing
Other
Total extraordinary losses

1,067

248

2,378

2,517

Income taxes―current
Income taxes―deferred

262
247

672
(360)

Total income taxes

510

311

1,867

2,206

(22)

(43)

1,890

2,249

Income before income taxes

Net income
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
Other comprehensive income(Million yen)
Consolidated cumulative
Consolidated cumulative
Second quarter ofSecond quarter ofprevious fiscal year
current fiscal year
(March 1,2021 to August 31, (March 1,2022 to August 31,
2021)
2022)
1,867
2,206

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

(620)
422

442
913

17

43

11

(27)

(169)

1,371

Comprehensive income

1,698

3,578

Total comprehensive income attributable to:
Owners of parent

1,689

3,540

9

37

Non-controlling interests7(3) Quarterly Consolidated Statement of Cash Flows(Million yen)
Consolidated cumulative
Consolidated cumulative
Second quarter ofSecond quarter ofprevious fiscal year
current fiscal year
(March 1,2021 to August 31, (March 1,2022 to August 31,
2021)
2022)
Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of goodwill
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

2,378
1,571

2,517
2,054

389
27

217
16

9

37

(4)

-

(170)

(321)

(49)

(310)

31

(455)

Increase (decrease) in provision for sales returns
Increase (decrease) in provision for point cardcertificates
Increase (decrease) in provision for shareholder
benefit program
Interest and dividend income

4

(6)

(429)

(369)

Interest expenses
Loss (gain) on sales of non-current assets

68
(384)

37
(4)

Loss on retirement of non-current assets
Impairment loss

19
25

6
104

Loss due to temporary closing
Loss (gain) on sales of investment securities

1,000
(809)

(778)

Subsidies for employment adjustment
Decrease (increase) in accounts receivables–trade

(12)
1,089

(652)

Decrease (increase) in inventories
Increase (decrease) in accounts payables–trade(957)(1,299)(2,717)
339

Increase (decrease) in accrued consumption taxes
Other(1,157)(710)(1,226)
1,209

631
429

(298)
369

SubtotalInterest and dividends received
Interest paid

(68)

(37)

(2,268)
85

(345)
1,200

Payment for loss due to temporary closing
Payment for voluntary retirement-related expenses

(937)
(947)

-

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

888

Income taxes paid
Income taxes refund8

(Million yen)
Consolidated cumulative
Consolidated cumulative
Second quarter ofSecond quarter ofprevious fiscal year
current fiscal year
(March 1,2021 to August 31, (March 1,2022 to August 31,
2021)
2022)
Cash flows from investing activities
Net decrease (increase) in time deposits
Proceeds from sales of securities

(611)
-

16
995

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

(620)
5

(1,097)22(5,257)3,479(2,359)4,455

Purchase of intangible assets
Proceeds from sales of intangible assets

(378)
380

(661)
-

Payments of leasehold and guarantee deposits
Proceeds from collection of leasehold and guarantee
deposits
Acquisition of long-term prepaid expenses
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Proceeds of shares of subsidiaries resulting in change inscope of consolidation
Proceeds of shares of business transfer
Other

(117)

(163)

623

282

(38)

(37)

(91)

-

25

-

20
(75)

290

(2,658)

1,743

Purchase of investment securities
Proceeds from sales of investment securities

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Proceeds from sales of treasury shares
Dividends paid
Payments for sales of shares of subsidiaries withoutchange in scope of consolidation
Other
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
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents due to newconsolidation
Cash and cash equivalents at end of period

9

41

(7)

(4,518)(0)(3,439)(1,131)

43
-

41
(457)

-

(569)

(9)

(6)

(4,443)(5,570)134

572(10,042)(2,366)49,761

38,503-113

39,71836,250(4) Notes to Quarterly Consolidated Financial Statements

Going Concern Assumption
Not applicable

Notes on Significant Changes in Shareholders’ Equity
Not applicable

Change in an Accounting policy
Application of the Accounting Standard for Revenue Recognition
The Company and its subsidiaries have adopted the "Accounting Standard for Revenue Recognition" (ASBJ
Statement No. 29 issued on March 31, 2020, hereinafter referred to as the "Accounting Standard for Revenue
Recognition") from the beginning of the first quarter of the current consolidated fiscal year, and recognized revenue atthe amount expected to be received in exchange for the promised goods or services when the control of the goods orservices is transferred to the customer.
The principal changes resulting from the application of the Accounting Standard for Revenue Recognition are as
follows.

Revenue recognition related to own points
Under the point system operated by certain consolidated subsidiaries, the company previously recorded the amountof expenses expected to arise from the future use of points as a provision for point card certificates and recorded theamount of the provision as selling, general, and administrative expenses. However, it has changed this method to
identify the points granted as a performance obligation and deduct the amount of the provision from net sales. As aresult, the provision for point card certificates, which was presented as a current liability in the consolidated balance
sheet of the previous fiscal year, is now included in "other" under current liabilities as a contract liability from the firstquarter of the current consolidated fiscal year.

Revenue recognition related to principal transactions
In the past, the company recognized revenue in the net amount of consideration received from customers less theamount equivalent to commissions paid to department stores, among others in buying sales transactions withdepartment stores and other business partners. However, it has now changed the method to recognize revenue in the
gross amount.

Revenue recognition related to sales with right of return
In sales with the right of return related to certain consolidated subsidiaries, the company previously recognized the
expected loss from future sales returns as a provision for sales returns and recorded the provision for such loss as thecost of sales. This method was, however, changed to not recognize revenue and cost of sales at the time of sale inaccordance with the provisions regarding variable consideration for goods and products expected to be returned. As aresult, the provision for sales returns, which was presented as a current liability in the consolidated balance sheets ofthe previous fiscal year, is now included in "other" under “current liabilities” as a refund liability for the consideration
for goods and products from the first quarter of the current consolidated fiscal year, and assets recognized as the rightto collect goods and products from customers upon settlement of refund liabilities are included in "other" under“current assets” as returned assets.
In accordance with the transitional treatment stipulated in the proviso of Paragraph 84 of the Accounting Standard
for Revenue Recognition, the cumulative effect of the retrospective application of the new accounting policy prior to
the beginning of the first quarter of the current consolidated fiscal year is added to or deducted from retained earnings
at the beginning of the first quarter of the current consolidated fiscal year, and the new accounting policy is applied
from the balance at the beginning of period. However, the new accounting policy was not applied retrospectively to10contracts for which almost all revenue amounts were recognized based on the previous treatment prior to the beginningof the first quarter of the current consolidated fiscal year, in accordance with the method prescribed in Paragraph 86of the Accounting Standard for Revenue Recognition.
As a consequence, net sales increased by 3,854 million yen; cost of sales decreased by 272 million yen; selling, general,and administrative expenses increased by 3,727 million yen; and operating income, ordinary income, and income before
income taxes each decreased by 145 million yen during the Second quarter of the current consolidated fiscal year. Thebalance of the retained earnings at the beginning of the period decreased by 288 million yen.
In accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue
Recognition, no reclassification was made for the previous consolidated fiscal year using the new presentation method.
Furthermore, in accordance with the transitional treatment stipulated in Paragraph 28-15 of the "AccountingStandard for Quarterly Financial Reporting" (ASBJ Statement No. 12, March 31, 2020), information on disaggregating
revenue from contracts with customers for the Second quarter of the previous consolidated fiscal year is not presented.

Application of Accounting Standard for Fair Value Measurement
The Company has decided to apply the "Accounting Standard for Fair Value Measurement" (ASBJ Statement No.
30, July 4, 2019) ("Accounting Standard for Fair Value Measurement") and other accounting standards from the
beginning of the first quarter of the current consolidated fiscal year. The new accounting policy stipulated by the
Accounting Standard for Fair Value Measurement is to be applied prospectively in accordance with the transitional
treatment stipulated in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 ofthe Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). For bonds and otherdebentures, which were previously regarded as financial instruments whose fair value was extremely difficult todetermine, the acquisition cost was used as the fair value in quarterly consolidated balance sheet amount. As a resultof applying the standard, even if observable inputs were not available, the fair value calculated using unobservable
inputs based on the best available information was used in the quarterly consolidated balance sheet amount.
The effect of this change on consolidated financial statements for the Second quarter is immaterial.

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 ¥255 million for 545,000 shares. And that as of the end of this fiscal year
under review were ¥214 million for 458,000 shares.
iii. Carrying Value of Debt Finance Posted Using the Gross Price Method
As of February 28, 2022: ¥311 million and as of August 31, 2022: ¥282 million,

11

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 ¥279
million for 496,000 shares as of the end of the previous fiscal year and ¥279 million for 496,000 shares as of the endof this fiscal year under review.

12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 theCompany's equity interest) is not material and their overall importance is 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.
The Board of Directors, at its meeting held on January 14, 2022, partially changed the companies to be merged in
an absorption-type merger with an expected completion date of March 1, 2022.
Absorption-type merger between consolidated subsidiaries on March 1, 2022
Transactions under common control, etc.
Group reorganization (absorption-type merger of consolidated subsidiaries as of March 1, 2022).
(1) Overview of Transactions
i. Names and Businesses of the Combining Companies
Name of the Combining Company

TSI Inc.

Business

Apparel business

Name of the Combined Company

Ueno Shokai Co., Ltd.

Business

Apparel businessii. Date of Business Combination
March 1, 2022
iii. Legal Form of Business Combination
Absorption-type merger with TSI Inc. as the surviving company, and Ueno Shokai Co., Ltd. as the company
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 others, thecompany to be merged was subject to an absorption-type merger.
(2) Overview of the Accounting Treatment Applied
Pursuant to the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21 issued on January
16, 2019) and the “Implementation Guidance on Accounting Standard for Business Combination andAccounting Standard for Business Divestitures” (ASBJ Guidance No. 10 issued on January 16, 2019), theabsorption-type merger was treated as a transaction under common control.
The company has partially changed the companies to be merged because Jack Co., Ltd., Arpege Co.,

13

Ltd., Star Joinus Co., Ltd., and And Wander Co., Ltd., which were scheduled to be merged with TSI Inc. on
March 1, 2022, were not merged because of the delay in infrastructure development and commonization.

Segments of the Company and Related Information
1. Consolidated cumulative second quarter of previous 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(Unit: Million yen)

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 yen 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
None

14

1. Consolidated cumulative second quarter of current fiscal year (March 1,2022 to August 31, 2022)(1)Net sales, income or losses, assets and other items by reportable segments
Reportablesegment
Other
Total
(Note
1)
Apparel-related
businesses(Unit: Million yen)

Adjustments(Note 2)

Consolidated
financialstatements
amount(Note 3)

Net sales
Sales to third parties

69,4492,590

72,04047

72,087

60

314

375

(375)

―

69,5102,905

72,415(327)

72,087

1,417

65

1,483

(894)

588

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 (894) million yen is due to company-wide expenses of 1,971 million yen not
attributable to any business segment and elimination of internal transactions among consolidated companies of
1,241 million yen.
3. Segment income (loss) is adjusted to operating income listed in the consolidated financial statements.
(2) Matters concerning changes in reportable segments, etc.
As described in "changes in accounting policies," the Company has applied the Accounting Standard for Revenue
Recognition and other accounting standards from the beginning of the first quarter of the current consolidated fiscal
year, and has changed its accounting method for revenue recognition, and therefore, the method of calculation of profit
or loss by business segment in the same manner.
As a result of this change, compared with the previous method, the net sales and segment wise income in the "apparelrelated businesses" increased by 3,854 million yen and decreased by 145 million yen, respectively, in the second quarterof the current consolidated fiscal year. The impact on "other" is insignificant.
(3) Goodwill or impairment loss in non-current assets by reportable segments(Significant impairment losses on non-current assets)
In the "apparel-related business" segment, the book values of stores that have decided to close, stores with
continuously negative operating income or loss, and stores related to brands that have decided to close were reduced
to their recoverable amounts, and the amount of reduction was recorded as impairment loss under extraordinary losses.
The amount of such impairment loss was 104 million yen for the six-month period from March 1, 2022 to August 31,
2022.
(4) Goodwill or impairment loss in non-current assets by reportable segments

A significant change in the amount of goodwill
None

A significant gain from negative goodwill
None15