Onward : Consolidated Financial Results for the Fiscal Year Ended February 28, 2021

[Delayed]Consolidated Financial Results for the Fiscal Year Ended February 28, 2021 [Japanese GAAP]

April 8, 2021

Company name: Onward Holdings Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange, Nagoya Stock Exchange

Securities code: 8016

URL: https://www.onward-hd.co.jp/site/english/

Representative: Michinobu Yasumoto, President and CEO

Contact: Osamu Sato, Director in charge of Finance, Accounting, Investor relations

Phone: [phone]

Scheduled date of Annual General Meeting of Shareholders: May 27, 2021

Scheduled date of commencing dividend payments: May 28, 2021

Scheduled date of filing annual securities report: May 28, 2021

Availability of supplementary materials on financial results: Available

Schedule of financial results briefing session: Scheduled (for institutional investors, securities analysts, and the press)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Performance for the Fiscal Year Ended February 28, 2021 (March 1, 2020 - February 28, 2021)

(1) Consolidated Operating Results			(% indicates changes from the previous corresponding period.)
			Net sales			Operating profit			Recurring profit			Profit attributable to
									owners of parent
	Fiscal year ended		Million yen	%		Million yen	%		Million yen	%		Million yen	%
	February 28, 2021	174,323	(29.8)	(21,230)	-	(20,174)	-	(23,181)	-
	February 29, 2020		248,233	3.2		(3,061)	-		(3,835)	-		(52,135)	-

(Note) Comprehensive income: Fiscal year ended February 28, 2021: (20,032) million yen [-%]

Fiscal year ended February 29, 2020: (58,757) million yen [-%]

Basic earnings

Diluted

Return on

Ratio of

Ratio of

earnings

recurring profit

operating profit

per share

equity

per share

to total assets

to net sales

Fiscal year ended

Yen

Yen

%

%

%

February 28, 2021

(171.18)

-

(31.6)

(9.4)

(12.2)

February 29, 2020

(383.97)

-

(42.0)

(1.5)

(1.2)

(Reference)

Share of profit (loss) of entities accounted for using equity method:

Fiscal year ended February 28, 2021: (70) million yen

Fiscal year ended February 29, 2020: (1,390) million yen

EBITDA (operating profit + depreciation and amortization):

Fiscal year ended February 28, 2021: (15,343) million yen [-%]

Fiscal year ended February 29, 2020: 5,079 million yen [61.7%]

(2) Consolidated Financial Position

Total assets

Net assets

Shareholders'

Net assets per share

equity ratio

Million yen

Million yen

%

Yen

As of February 28, 2021

196,052

59,509

28.9

418.32

As of February 29, 2020

234,316

94,036

38.3

665.17

(Reference)

Shareholders'

equity: As of February

28, 2021: 56,723 million yen

As of February 29, 2020: 89,812 million yen

(3) Consolidated Cash Flows

			Cash flows from		Cash flows from			Cash flows from		Cash and cash
							equivalents
			operating activities		investing activities		financing activities
					at end of period
	Fiscal year ended			Million yen			Million yen			Million yen			Million yen
	February 28, 2021			(19,614)			6,091		5,860		21,270
	February 29, 2020			8,003			(10,758)		(1,595)		28,780
2. Dividends
				Annual dividends per share							Total				Ratio of
			1st	2nd	3rd	Year-							dividends	Payout ratio		dividends to
				Total			(consolidated)		net assets
		quarter-	quarter- quarter-	end				(annual)
			end	end	end												(consolidated)
	Fiscal year ended		Yen	Yen		Yen	Yen				Yen			Million yen		%	%
		-	-		-	24.00			24.00	3,240			-	2.5
	February 29,
2020
	Fiscal year ended		-	-		-	12.00			12.00	1,627			-	2.1
	February 28,
2021
	Fiscal year ending
	February 28,		-	-			-	12.00			12.00						25.8
	2022 (Forecast)

3. Consolidated Performance Forecast for the Fiscal Year Ending February 28, 2022 (March 1, 2021 - February 28, 2022)

(% indicates changes from the previous corresponding period.)

												Profit attributable		Basic earnings
			Net sales			Operating profit		Recurring profit		to owners of
									per share
												parent
			Million yen	%		Million yen	%		Million yen	%		Million yen	%		Yen
	1H (cumulative)	89,300	10.8	(3,000)	-	(3,000)	-	2,200	-	16.25
	Full year		190,500	9.3		3,200	-		3,000	-		6,300	-		46.52

(Reference) EBITDA (operating profit + depreciation and amortization):

Full year ending February 28, 2022 (forecast): 9,300 million yen [-%]

Full year ended February 28, 2021: (15,343) million yen [-%]

* Notes:

1. Changes in significant subsidiaries during the fiscal year under review (changes in specified subsidiaries resulting in changes in scope of consolidation): None

Newly included: - (Company name:)

Excluded:

- (Company name:)

1. Changes in accounting policies, changes in accounting estimates, and restatement
2. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Restatement: None
3. Total number of issued shares (common stock)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

As of February 28, 2021:	157,921,669 shares
As of February 29, 2020:	157,921,669 shares
2) Total number of treasury shares at the end of the period:
As of February 28, 2021:	22,322,123 shares
As of February 29, 2020:	22,901,445 shares

3) Average number of shares outstanding during the period:

Fiscal year ended February 28, 2021:	135,420,529 shares
Fiscal year ended February 29, 2020:	135,778,721 shares

(Reference) Summary of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2021 (March 1, 2020 - February 28, 2021)

(1) Non-consolidated Operating Results						(% indicates changes from the previous corresponding period.)
				Net sales					Operating profit	Recurring profit	Net income
	Fiscal year ended	Million yen	%	Million yen	%			Million yen	%			Million yen	%
	February 28, 2021		10,167	(3.3)		6,101	2.7			(3,170)	-	(22,397)	-
	February 29, 2020		10,519	(2.5)		5,940	(4.7)			4,658	(18.6)			(39,297)	-
		Basic earnings			Diluted earnings
			per share				per share
	Fiscal year ended			Yen						Yen
	February 28, 2021		(165.39)					-
	February 29, 2020		(289.42)					-
(2) Non-consolidated Financial Position
				Total assets			Net assets	Shareholders'	Net assets per share
						equity ratio
				Million yen			Million yen		%			Yen
	As of February 28, 2021			162,749			71,275		43.7		524.61
	As of February 29, 2020			172,806			94,372		54.3		695.36
	(Reference) Shareholders'	equity: As of February	28, 2021: 71,136 million yen
				As of February 29, 2020: 93,888 million yen

• These consolidated financial results are outside the scope of audit by certified public accountants or an audit firm.
• Explanation of the proper use of performance forecast and other notes
  The performance outlook and other forward-looking statements herein are based on information currently available to the Company and certain assumptions that have been deemed reasonable. Actual performance may differ significantly from these forecasts due to a wide range of factors. For conditions used as the assumptions for the performance forecast and notes on the use of performance forecast, please refer to "Overview of Operating Results, etc." on page 2 of the Attachments.

Table of Contents - Attachments
1. Overview of Operating Results, etc. .................................................................................................... 2
(1)	Overview of Operating Results for the Fiscal Year under Review ..................................................	2
(2)	Overview of Financial Position for the Fiscal Year under Review .................................................	3
(3)	Overview of Cash Flows for the Fiscal Year under Review ............................................................	3
(4)	Basic Policy on Shareholder Returns and Dividends for the Fiscal Year under Review and the Next
Fiscal Year............................................................................................................................................	4
(5)	Future Outlook ................................................................................................................................	4
2. Basic Policy on Selection of Accounting Standards ............................................................................	4
3. Consolidated Financial Statements and Principal Notes .....................................................................	5
(1)	Consolidated Balance Sheets ..........................................................................................................	5
(2)	Consolidated Statements of Income and Comprehensive Income ..................................................	7
(3)	Consolidated Statements of Changes in Equity ..............................................................................	9
(4)	Consolidated Statements of Cash Flows .......................................................................................	13
(5)	Notes to Consolidated Financial Statements .................................................................................	15
	(Uncertainties of entity's ability to continue as going concern) ...............................................	15
	(Significant accounting policies for preparation of Consolidated Financial Statements) ........	15
	(Notes when there are significant changes in amounts of shareholders' equity) ...........................	20
	(Changes in accounting policies) ................................................................................................	20
	(Additional information) ............................................................................................................	20
	(Notes to Consolidated Statements of Income) ...........................................................................	20
	(Notes to Consolidated Statements of Comprehensive Income) ..............................................	21
	(Notes to Consolidated Statements of Changes in Equity) ...........................................................	22
	(Notes to Consolidated Statements of Cash Flows) .....................................................................	24
	(Segment information, etc.) ......................................................................................................	24
	(Per share information) .............................................................................................................	28
	(Significant events after reporting period) ...............................................................................	30
	(Omission of disclosure) ..........................................................................................................	37
4. Others ................................................................................................................................................	38
	Changes in officers ...................................................................................................................	38

1

1. Overview of Operating Results, etc.

1. Overview of Operating Results for the Fiscal Year under Review
   During the fiscal year under review, the Japanese economy remained in a situation where its outlook is unclear, due to the impact of events stemming from the global spread of COVID-19, such as the state of emergency in Japan, which has been declared twice, lockdowns in various countries, and negative influence on economic activities due to bans on overseas travel.
   In this harsh management environment, the Company strived to curtail purchasing and reduce fixed expenses, while steadily implementing measures such as withdrawal from the Italy business, which had been an unprofitable business, discontinuation of unprofitable brands, and closing of unprofitable stores in Japan and overseas, as part of the global business reforms that has been conducted since the previous fiscal year.
   E-commerce sales grew significantly, increasing by 26% year-on-year, mainly through Onward Crosset, an online store directly managed by Onward Kashiyama Co., Ltd., which is a core group company, and the Lifestyle Business also trended strongly. However, the consolidated performance was seriously affected by factors such as a significant decrease in sales at physical stores including department stores and shopping centers, which are located mainly in metropolitan areas, and temporary closures due to lockdowns overseas.
   As a result of the above, consolidated net sales amounted to 174,323 million yen (a 29.8% decrease year- on-year), consolidated operating loss amounted to 21,230 million yen (operating loss of 3,061 million yen for the previous fiscal year), consolidated recurring loss amounted to 20,174 million yen (recurring loss of 3,835 million yen for the previous fiscal year), and loss attributable to owners of parent amounted to 23,181 million yen (loss attributable to owners of parent of 52,135 million yen for the previous fiscal year).
   Furthermore, the Group has adopted EBITDA (operating profit + depreciation and amortization) as a management indicator with the purpose of enabling convenient comparisons between companies regardless of differences in accounting standards, amid its efforts to accelerate growth through enhancement and expansion of business foundations that utilize creation of new businesses, M&A, etc.
   EBITDA for the fiscal year under review was (15,343) million yen (5,079 million yen for the previous fiscal year).

Status by segment is as follows.

[Apparel Business]

In the domestic business, profit increased at companies including Onward Trading Co., Ltd., which conducts a B2B uniform business, and Tiaclasse Co., Ltd., whose main sales channel is e-commerce. Despite progress in a shift in sales channels to e-commerce such as Onward Crosset, a directly-managed online store, net sales through physical sales channels decreased due to the impact of COVID-19, causing both sales and profit to decrease at companies including Onward Kashiyama Co., Ltd. As a result, both sales and profit decreased for the domestic business.

In the overseas business, despite cost reduction effects of the global business reforms which have been conducted since the previous fiscal year, the impact of COVID-19 continued in Europe and the U.S., causing both sales and profit to decrease for the overseas business.

As a result, both sales and profit decreased for the Apparel Business as a whole.

[Lifestyle Business]

In the Lifestyle Business, both sales and profit increased at Yamato Co., Ltd., which conducts a gift catalogue business, but sales decreased at companies including Onward Beach Resort Guam, Inc., which conducts a resort business in Guam where a lockdown has continued since the second quarter.

As a result, both sales and profit decreased for the Lifestyle Business, despite securing an operating profit.

(2) Overview of Financial Position for the Fiscal Year under Review

2

Total assets on a consolidated basis as of the end of the fiscal year under review decreased by 38,264 million yen compared with the end of the previous fiscal year to 196,052 million yen. This was primarily due to decreases in cash and deposits of 7,493 million yen, notes and accounts receivable-trade of 7,463 million yen, merchandise and finished goods of 6,823 million yen, buildings and structures of 4,750 million yen, and land of 6,823 million yen.

Liabilities decreased by 3,736 million yen compared with the end of the previous fiscal year to 136,543 million yen. This was primarily due to a decrease in other current liabilities of 11,172 million yen.

Net assets decreased by 34,527 million yen compared with the end of the previous fiscal year to 59,509 million yen. This was primarily due to loss attributable to owners of parent of 23,181 million yen, dividends of surplus of 3,240 million yen, a decrease in retained earnings at the beginning of the period due to changes in the accounting policies of 10,011 million yen, and an increase in valuation difference on available-for-sale securities and other accounts of 1,905 million yen.

As a result, shareholders' equity ratio was 28.9%.

1. Overview of Cash Flows for the Fiscal Year under Review

1. Status of cash flows as of the end of the fiscal year under review
   Cash flows used in operating activities amounted to 19,614 million yen (an inflow of 8,003 million yen for the previous fiscal year) mainly due to a loss before income taxes, an impairment loss, a decrease in trade receivables, and a decrease in trade payables.
   Cash flows provided by investing activities amounted to 6,091 million yen (an outflow of 10,758 million yen for the previous fiscal year) mainly due to proceeds from sales of property, plant and equipment and sales of shares of subsidiaries resulting in change in scope of consolidation.
   Cash flows provided by financing activities amounted to 5,860 million yen (an outflow of 1,595 million yen for the previous fiscal year), which primarily included a net increase (decrease) in borrowings and dividends paid.
   As a result, cash and cash equivalents at the end of the fiscal year under review decreased by 7,509 million yen compared with the end of the previous fiscal year to 21,270 million yen.
2. Indicators related to cash flows

		Fiscal year	Fiscal year	Fiscal year	Fiscal year	Fiscal year
		ended February	ended February	ended February	ended February	ended February
		28, 2017	28, 2018	28, 2019	29, 2020	28, 2021
	Shareholders'	59.8		59.2	55.1	38.3	28.9
	equity ratio (%)
	Shareholders'
	equity ratio	44.6		46.8	30.1	30.1	17.4
	based on fair
	value (%)
	Ratio of
	interest-bearing	662.2		350.6	1,409.8	875.8	(461.1)
	debt to cash
	flow (%)
	Interest	16.0		40.9	12.6	17.4	(46.5)
	coverage ratio
	(times)
	Shareholders' equity	ratio:		Shareholders' equity / Total assets
Shareholders' equity ratio based on fair value:	Total market value of shares / Total assets
Ratio of interest-bearing debt to cash flow:	Interest-bearing debt / Cash flow
Interest coverage ratio:		Cash flow / Interest paid

(Note 1) All indicators were calculated using consolidated financial figures.

3

(Note 2) The total market value of shares was calculated based on the total number of issued shares excluding treasury shares.

(Note 3) Cash flows from operating activities are used.

(Note 4) Interest-bearing debt includes all debt recorded on the Consolidated Balance Sheets for which interest is paid.

1. Basic Policy on Shareholder Returns and Dividends for the Fiscal Year under Review and the Next Fiscal Year
   The Company positions returning profits to its shareholders as one of the most important management measures, with the basic policy to provide stable and appropriate shareholder returns linked to performance.
   With regard to dividends for the fiscal year under review, despite the extremely poor performance, the Company plans to pay out a dividend of 12 yen per share in light of its basic policy regarding dividend policy. The Company will determine whether to conduct a share buyback by taking into account factors such as its needs for funds.
   The Company will flexibly utilize its internal reserve for strategic investments in the establishment of a robust business structure, enhancement of financial constitution, and other efforts while giving consideration to balancing its needs for funds.
2. Future Outlook
   For future outlook, please refer to "FY02/21 Results Presentation Supplement" announced today.

2. Basic Policy on Selection of Accounting Standards

In consideration of comparability between each reporting period of Consolidated Financial Statements and comparability between companies, the Group plans to prepare its Consolidated Financial Statements using the Japanese GAAP for the time being.

The Group plans to appropriately handle the adoption of IFRS (International Financial Reporting Standards) in consideration of various circumstances in Japan and overseas.

4

3. Consolidated Financial Statements and Principal Notes

(1) Consolidated Balance Sheets

				(Million yen)
			As of February 29, 2020	As of February 28, 2021
Assets
Current assets
Cash and deposits	28,795	21,301
Notes and accounts receivable-trade	25,715	18,251
Merchandise and finished goods	35,733	28,909
Work in process	2,041	1,010
Raw materials and supplies	5,448	4,435
Other	9,536	6,829
Allowance for doubtful accounts	(488)	(277)
Total current assets			106,782	80,460
Non-current assets
Property, plant and equipment
Buildings and structures	74,626	57,981
Accumulated depreciation		(48,288)	(36,392)
Buildings and structures, net	26,338	21,588
Land			42,082	35,259
Leased assets	9,756	9,969
Accumulated depreciation		(5,084)	(5,618)
Leased assets, net	4,671	4,351
Other			32,400	26,597
Accumulated depreciation	(22,261)	(18,725)
Other, net			10,138	7,871
Total property, plant and equipment	83,231	69,070
Intangible assets
Goodwill	6,127	5,251
Other		6,033	5,416
Total intangible assets	12,160	10,667
Investments and other assets
Investment securities	13,340	14,312
Long-term loans receivable	1,612	1,662
Long-term prepaid expenses	300	440
Retirement benefit asset	2,704	2,814
Deferred tax assets	4,232	7,486
Other	10,256	9,429
Allowance for doubtful accounts	(306)	(292)
Total investments and other assets			32,142	35,854
Total non-current assets	127,534	115,592
Total assets			234,316	196,052

5

			(Million yen)
		As of February 29, 2020	As of February 28, 2021
Liabilities
Current liabilities
Notes and accounts payable-trade	19,206	20,092
Electronically recorded obligations-operating	13,808	1,864
Short-term borrowings	44,907	56,566
Current portion of long-term borrowings	4,452	5,052
Lease obligations	808	2,040
Income taxes payable	527	669
Provision for bonuses	835	589
Provision for bonuses for directors	22	25
Provision for sales returns	228	125
Provision for point card certificates	886	636
Other	23,059	11,887
Total current liabilities		108,743	99,549
Non-current liabilities

Long-term borrowings

Lease obligations

Deferred tax liabilities for land revaluation Retirement benefit liability

Provision for retirement benefits for directors and corporate auditors

17,028	16,430
4,224	11,615
1,755	761
3,723	3,482
233	232

Other	4,570	4,471
Total non-current liabilities			31,536	36,993
Total liabilities	140,279	136,543
Net assets
Shareholders' equity
Share capital	30,079	30,079
Capital surplus	50,043	50,390
Retained earnings	46,338	9,321
Treasury shares	(21,437)	(20,865)
Total shareholders' equity			105,023	68,926
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	(4,581)	(1,939)
Deferred gains or losses on hedges	22	15
Revaluation reserve for land	(9,285)	(7,864)
Foreign currency translation adjustment	(604)	(1,669)
Remeasurements of defined benefit plans		(762)	(744)
Total accumulated other comprehensive income	(15,211)	(12,202)
Share acquisition rights			484	138
Non-controlling interests	3,740	2,646
Total net assets			94,036	59,509
Total liabilities and net assets		234,316	196,052

6

1. Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income

			(Million yen)
		For the fiscal year ended	For the fiscal year ended
		February 29, 2020	February 28, 2021
Net sales	248,233	174,323
Cost of sales		135,550	104,601
Gross profit	112,683	69,721
Selling, general and administrative expenses		115,744	90,952
Operating loss	(3,061)	(21,230)
Non-operating income
Interest income	45	55
Dividend income	241	193
Rental income from land and buildings	1,288	1,434
Subsidy income		－	883
Other	1,235	964
Total non-operating income		2,810	3,530
Non-operating expenses

Interest expenses

Loss on disposal of salesfloor fixtures, etc.

Foreign exchange losses

Share of loss of entities accounted for using equity method

Rental expenses

Other

Total non-operating expenses

Recurring loss

Extraordinary income

Subsidies for employment adjustment, etc.

Gain on sales of non-current assets

Gain on sales of investment securities

Gain on sales of shares of subsidiaries and associates Other

Total extraordinary income

Extraordinary losses

402	595
398	213
1	443
1,390	70
657	519
734	632
3,584	2,474
(3,835)	(20,174)
-	1,696
2,827	8,416
160	8
-	154
-	237
2,988	10,513

Loss on liquidation of business	3,028	953
Extraordinary loss due to closing and other			-	3,893
Loss on disposal of non-current assets	403	281
Impairment loss	27,756	3,299
Loss on valuation of investment securities	1,564	1,685
Extra retirement payments	3,598	-
Loss on sales of shares of subsidiaries and associates			-	5,171
Other	381	614
Total extraordinary losses			36,732	15,899
Loss before income taxes	(37,579)	(25,560)
Income taxes - current			1,653	814
Income taxes - deferred	12,202	(3,706)
Total income taxes			13,855	(2,892)
Loss	(51,435)	(22,668)
Profit attributable to non-controlling interests			700	513
Loss attributable to owners of parent		(52,135)	(23,181)

7

Consolidated Statements of Comprehensive Income

			(Million yen)
		For the fiscal year ended	For the fiscal year ended
		February 29, 2020	February 28, 2021
Loss	(51,435)	(22,668)
Other comprehensive income
Valuation difference on available-for-sale securities	(4,791)	2,642
Deferred gains or losses on hedges	(57)	(7)
Revaluation reserve for land	(106)	1,064
Foreign currency translation adjustment	(1,506)	(1,081)
Remeasurements of defined benefit plans, net of tax	(844)	17
Share of other comprehensive income of entities	(14)	-
accounted for using equity method
Total other comprehensive income	* (7,321)	* 2,635
Comprehensive income		(58,757)	(20,032)
Comprehensive income attributable to:
Owners of parent	(59,454)	(20,529)
Non-controlling interests	697	497

8

(3) Consolidated Statements of Changes in Equity

Fiscal year ended February 29, 2020 (from March 1, 2019 to February 29, 2020)

								(Million yen)
		Shareholders' equity			Accumulated other
				comprehensive income
	Share	Capital	Retained	Treasury	Total	Valuation	Deferred
	difference on	gains or
	shareholders'
	capital	surplus	earnings	shares	equity	available-for-	losses on
						sale securities	hedges
Balance as at	30,079	50,043	107,139		(19,833)	167,429	(1,452)	79
March 1, 2019
Changes during
period
Dividends of			(3,308)			(3,308)
surplus
Loss attributable
to owners of			(52,135)			(52,135)
parent
Purchase of					(1,757)	(1,757)
treasury shares
Disposal of			(78)		154	75
treasury shares
Reversal of			221			221
revaluation
reserve for land
Change in scope			(4,767)			(4,767)
of equity method
Change in scope			(732)			(732)
of consolidation
Net changes in
items other than							(3,128)	(57)
shareholders'
equity
Total changes in	-	-	(60,801)		(1,603)	(62,405)	(3,128)	(57)
items during period
Balance as at	30,079	50,043	46,338		(21,437)	105,023	(4,581)	22
February 29, 2020

9

	Accumulated other comprehensive income
		Foreign	Remeasurements	Total	Share	Non-	Total net
		accumulated
	Revaluation	currency	acquisition	controlling
	of defined	other	assets
	reserve for land	translation	rights	interests
	benefit plans	comprehensive
		adjustment
			income
Balance as at	(8,956)	1,134	81	(9,113)	559	3,336	162,210
March 1, 2019
Changes during
period
Dividends of							(3,308)
surplus
Loss attributable
to owners of							(52,135)
parent
Purchase of							(1,757)
treasury shares
Disposal of							75
treasury shares
Reversal of
revaluation							221
reserve for land
Change in scope							(4,767)
of equity method
Change in scope							(732)
of consolidation
Net changes in
items other than	(328)	(1,738)	(844)	(6,097)	(75)	404	(5,768)
shareholders'
equity
Total changes in	(328)	(1,738)	(844)	(6,097)	(75)	404	(68,173)
items during period
Balance as at	(9,285)	(604)	(762)	(15,211)	484	3,740	94,036
February 29, 2020

10

Fiscal year ended February 28, 2021 (from March 1, 2020 to February 28, 2021)

								(Million yen)
		Shareholders' equity			Accumulated other
				comprehensive income
	Share	Capital	Retained	Treasury	Total	Valuation	Deferred
	difference on	gains or
	shareholders'
	capital	surplus	earnings	shares	equity	available-for-	losses on
						sale securities	hedges
Balance as at	30,079	50,043	46,338		(21,437)	105,023	(4,581)	22
March 1, 2020
Cumulative effects
of changes in			(10,011)			(10,011)
accounting policies
Restated balance	30,079	50,043	36,326		(21,437)	95,012	(4,581)	22
Changes during
period
Dividends of			(3,240)			(3,240)
surplus
Loss attributable			(23,181)			(23,181)
to owners of
parent
Purchase of					(0)	(0)
treasury shares
Disposal of			(225)		571	345
treasury shares
Reversal of
revaluation			(356)			(356)
reserve for land
Change in
ownership interest
of parent due to		347				347
transactions with
non-controlling
interests
Net changes in
items other than							2,642	(7)
shareholders'
equity
Total changes in	－	347	(27,005)		571	(26,085)	2,642	(7)
items during period
Balance as at	30,079	50,390	9,321		(20,865)	68,926	(1,939)	15
February 28, 2021

11

	Accumulated other comprehensive income
		Foreign	Remeasurements	Total	Share	Non-	Total net
		accumulated
	Revaluation	currency	acquisition	controlling
	of defined	other	assets
	reserve for land	translation	rights	interests
	benefit plans	comprehensive
		adjustment
			income
Balance as at	(9,285)	(604)	(762)	(15,211)	484	3,740	94,036
March 1, 2020
Cumulative effects
of changes in							(10,011)
accounting policies
Restated balance	(9,285)	(604)	(762)	(15,211)	484	3,740	84,025
Changes during
period
Dividends of							(3,240)
surplus
Loss attributable							(23,181)
to owners of
parent
Purchase of							(0)
treasury shares
Disposal of							345
treasury shares
Reversal of
revaluation							(356)
reserve for land
Change in
ownership interest
of parent due to							347
transactions with
non-controlling
interests
Net changes in
items other than	1,421	(1,065)	17	3,008	(345)	(1,093)	1,569
shareholders'
equity
Total changes in	1,421	(1,065)	17	3,008	(345)	(1,093)	(24,516)
items during period
Balance as at	(7,864)	(1,669)	(744)	(12,202)	138	2,646	59,509
February 28, 2021

12

(4) Consolidated Statements of Cash Flows

				(Million yen)
		For the fiscal year ended		For the fiscal year ended
		February 29, 2020		February 28, 2021
Cash flows from operating activities
Loss before income taxes	(37,579)	(25,560)
Depreciation and amortization	6,392	5,506
Impairment loss	27,756	3,299
Amortization of goodwill	1,748	786
Increase (decrease) in allowance for doubtful accounts	(225)	(56)
Decrease (increase) in retirement benefit asset	214	(109)
Increase (decrease) in retirement benefit liability	(241)	23
Interest and dividend income		(286)		(249)
Interest expenses	402	595
Share of loss (profit) of entities accounted for using equity		1,390		70
method

Loss (gain) on disposal of non-current assets

Loss on disposal of salesfloor fixtures, etc.

Loss (gain) on sales of investment securities

Loss (gain) on valuation of investment securities

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

(2,424)	(8,135)
398	213
(160)	(4)
1,564	1,685
－	5,017

Decrease (increase) in trade receivables	540	8,418
Decrease (increase) in inventories	4,919	6,578
Increase (decrease) in trade payables	(33)	(10,112)
Other, net		3,587	(8,538)
Subtotal	7,963	(20,572)
Interest and dividends received		322	252
Interest paid	(459)	(421)
Income taxes paid	(1,678)	(743)
Income taxes refund	1,854	1,871
Net cash provided by (used in) operating activities		8,003	(19,614)

Cash flows from investing activities

Payments into time deposits

Proceeds from withdrawal of time deposits

Purchase of property, plant and equipment

Proceeds from sales of property, plant and equipment

Purchase of investment securities

Proceeds from sales of investment securities

Purchase of long-term prepaid expenses

Payments of guarantee deposits

Proceeds from refund of guarantee deposits

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

(21)	(91)
52	75
(5,701)	(4,249)
4,056	17,755
(2,276)	(88)
3,654	520
(131)	(48)
(694)	(276)
899	687
(8,304)		－
－	(5,612)

Other, net	(2,291)	(2,581)
Net cash provided by (used in) investing activities			(10,758)	6,091

13

					(Million yen)
			For the fiscal year ended		For the fiscal year ended
			February 29, 2020		February 28, 2021
Cash flows from financing activities
Net increase (decrease) in short-term borrowings	(8,043)	12,122
Proceeds from long-term borrowings	16,300	10,390
Repayments of long-term borrowings	(3,986)	(10,292)
Purchase of treasury shares	(1,757)	(0)
Dividends paid	(3,308)	(3,240)
Dividends paid to non-controlling interests	(103)	(739)
Other, net		(695)	(2,379)
Net cash provided by (used in) financing activities	(1,595)	5,860
Effect of exchange rate change on cash and cash equivalents			(498)	52
Net increase (decrease) in cash and cash equivalents	(4,848)	(7,609)
Cash and cash equivalents at beginning of period			31,237	28,780
Increase (decrease) in cash and cash equivalents resulting			2,391		100
from change in scope of consolidation
Cash and cash equivalents at end of period			* 28,780	* 21,270

14

(5) Notes to Consolidated Financial Statements

(Uncertainties of entity's ability to continue as going concern)

Not applicable.

(Significant accounting policies for preparation of Consolidated Financial Statements)

1. Disclosure of scope of consolidation

1. Number of consolidated subsidiaries and names of major consolidated subsidiaries Number of consolidated subsidiaries: 63
   Names of major consolidated subsidiaries Onward Kashiyama Co., Ltd. Onward Trading Co., Ltd. Chacott Co., Ltd.
   Creative Yoko Co., Ltd. Island Co., Ltd.
   Onward International Fashion Co., Ltd. Yamato Co., Ltd.
   Onward Creative Center Co., Ltd.

Kokobuy Co., Ltd.

Onward Italia S.p.A. Joseph Ltd.

Onward Beach Resort Guam, Inc.

Beginning in the fiscal year under review, Onward Digital Lab Co., Ltd., which had been an unconsolidated subsidiary, has been included in the scope of consolidation due to its increased materiality. La Maison Moreau S.A.S., Maison Moreau Japan Co., Ltd., Onward Luxury Group UK Ltd., Onward Luxury Group S.p.A., Onward Luxury Group S.A.R.L., Onward Luxury Group, Inc., Green Iris Kft., Iris Sud S.R.L., OLG LAB S.R.L., Frassineti s.r.l., and Maglificio Erika S.R.L. have been excluded from the scope of consolidation due to sale of their shares.

Jil Sander Austria GmbH, Onward Kashiyama Korea Co., Ltd., and Innovate Organics, Inc. have been excluded from the scope of consolidation because they were liquidated.

1. Names of major unconsolidated subsidiaries Bien Co., Ltd.

Reasons for exclusion from scope of consolidation

Unconsolidated subsidiaries have been excluded from the scope of consolidation because they are small in scale and the effects of their total assets, net sales, profit or loss (amount attributable to the Company's share), retained earnings (amount attributable to the Company's share), etc. on the Consolidated Financial Statements in the aggregate are not material.

2. Disclosure about application of equity method

1. Number of unconsolidated subsidiaries and associates accounted for using equity method 1

15

Names of major associates accounted for using equity method Mulberry Japan Co., Ltd.

Gailygren Ltd. has been excluded from the scope of application of equity method because its impact has diminished.

1. Names of major unconsolidated subsidiaries and associates not being accounted for using equity method Bien Co., Ltd.

Reasons for not being accounted for using equity method

Companies not accounted for using equity method have been excluded from the application of equity method because their effects on consolidated profit or loss, consolidated retained earnings, etc. are insignificant and immaterial individually or in the aggregate.

1. The fiscal year-end of Mulberry Japan Co., Ltd. is March 31, and its financial statements prepared on a basis similar to that for the year-end closing as of December 31 have been used for consolidation purposes.

3. Disclosure about fiscal years, etc. of consolidated subsidiaries

Among the consolidated subsidiaries, companies whose fiscal year-end is different from the consolidated fiscal year-end are as follows.

1. Companies with fiscal year-end on November 30 Onward Italia S.p.A. Joseph Ltd.
   20 other companies
2. Companies with fiscal year-end on December 31 Onward Beach Resort Guam, Inc. J. Press, Inc.

Onward Fashion Trading (China) Co., Ltd. 14 other companies

4. Disclosure of accounting policies

1. Accounting policy for measuring significant assets 1) Accounting policy for measuring securities
   Available-for-sale securities Those with fair values
   Carried at the fair values prevailing at the fiscal year-end date (unrealized gains or losses are included as a component of net assets, and cost of sales is computed by the moving-average method).
   Those with no fair values
   Stated at cost using the moving-average method.

1. Accounting policy for measuring derivatives Stated at fair value.

16

3) Accounting policy for measuring inventories

Inventories are measured at cost determined principally by the specific identification method (the balance sheet value is calculated using the inventory write-down method based on decreased profitability).

1. Accounting policy for depreciation of significant assets
   1) Property, plant and equipment (excluding leased assets)

The Company and its domestic consolidated subsidiaries principally provide depreciation by the declining-balance method, while overseas consolidated subsidiaries provide depreciation by the straight-line method. Provided, however, that certain buildings (other than facilities attached to buildings) acquired on and after April 1, 1998 and facilities attached to buildings and structures acquired on and after April 1, 2016 are depreciated by the straight-line method.

The useful lives of property, plant and equipment are summarized as follows:

Buildings and structures	3 to 50 years
Other	2 to 20 years

2) Intangible assets (excluding leased assets)

Amortized by the straight-line method. Software costs for internal use are amortized over their expected useful lives (5 to 10 years) by the straight-line method.

3) Long-term prepaid expenses

Amortized by the straight-line method.

4) Leased assets

Leased assets pertaining to finance lease transactions without transfer of ownership Depreciated by the straight-line method with the leasing period as the useful life and without residual value.

(3) Accounting policy for significant provisions

1) Allowance for doubtful accounts

In order to prepare for probable future losses on collection, estimated amount uncollectible is provided for in accordance with the historical average charge-off ratio in the case of ordinary receivables. In the case of certain accounts designated as highly doubtful accounts, a specific allowance is provided for based on individual detailed credit analysis.

2) Provision for bonuses

Provision for bonuses is recognized for the estimated amount to provide for payment of bonuses to employees.

3) Provision for bonuses for directors

The Company and certain of its domestic consolidated subsidiaries recognize provision for bonuses for directors in an estimated amount to provide for payment of bonuses to their directors.

4) Provision for sales returns

The Companies provide for estimated losses based on the actual percentage of sales return in prior years and gross profit margin.

5) Provision for point card certificates

17

The provision for point card certificates is provided for future costs arising from the utilization of points that customers of certain domestic consolidated subsidiaries have earned under the point service program, which is for sales promotions. Certain domestic consolidated subsidiaries have reserved an amount considered appropriate to cover possible future utilization of the points as of the end of the fiscal year under review.

6) Provision for retirement benefits for directors and corporate auditors

Certain domestic consolidated subsidiaries recognize provision for retirement benefits for directors and corporate auditors in an amount payable as of the end of the fiscal year based on internal regulations, to provide for payment of retirement benefits for Directors and Audit & Supervisory Board Member.

1. Accounting policy for retirement benefits
   1) Method of allocating estimated retirement benefits to each reporting period

In calculating retirement benefit liability, the method of allocating estimated retirement benefits to each reporting period up to the end of the fiscal year under review is based on the benefit formula basis.

2) Accounting policy for actuarial differences and prior service costs

Prior service costs are accounted for as expenses over a certain number of years within the average remaining years of service of the employees at the time of occurrence (5 to 10 years) using the straight-line method.

Actuarial differences are accounted for as expenses over a certain number of years within the average remaining years of service of the employees at the time of occurrence during each fiscal year (5 to 10 years) using the straight-line method, commencing with the fiscal year following the one in which they were incurred.

1. Accounting policy for hedging
   1) Accounting policy for hedging

Deferred hedging is applied. However, appropriation procedures are applied to trade payables and trade receivables denominated in foreign currencies with forward exchange contracts.

2) Hedging instruments and hedge items

The derivatives designated as hedging instruments are principally forward exchange contracts. The related hedged items are trade payables and trade receivables denominated in foreign currencies and scheduled transactions.

3) Hedging policy

For the purpose of fixing cash flows denominated in Japanese yen from payables and receivables denominated in foreign currencies by avoiding the risk of future foreign currency exchange rate fluctuation in relation to export and import transactions denominated in foreign currencies, the Company enters into forward exchange contracts based on settlement dates in response to orders received from and sent to business partners.

4) Evaluation of hedge effectiveness

By setting up forward exchange contracts denominated in the same currencies with the same amounts and the same due dates to the amounts of orders received and sent denominated in foreign currencies, the Company ensures that the correlation from fluctuations in foreign currency exchange rates after entering into forward exchange contracts is maintained.

18

(6) Accounting policy for goodwill

Goodwill is evaluated on an individual basis and amortized on a straight-line basis over a reasonable number of years within 20 years.

(7) Scope of cash and cash equivalents in Consolidated Statement of Cash Flows

Funds (cash and cash equivalents) in the Consolidated Statement of Cash Flows are composed of cash on hand, bank deposits that can be withdrawn on demand, and short-term investments, which are highly liquid and readily convertible into cash, with an original maturity of three months or less and insignificant risk of changes in value.

(8) Other significant information for preparation of consolidated financial statements

1) Accounting for Japanese consumption taxes

Consumption taxes are accounted for by the tax exclusion method.

2) Application of consolidated taxation system

The Company and certain of its domestic consolidated subsidiaries apply the consolidated taxation system.

19

(Notes when there are significant changes in amounts of shareholders' equity)

Subsidiaries that have adopted the International Financial Reporting Standards began applying International Financial Reporting Standard 16 "Leases" ("IFRS 16") from the fiscal year under review. The impact of the application is as stated in "(Changes in accounting policies)."

(Changes in accounting policies) (Application of IFRS 16 "Leases")

Subsidiaries that have adopted the International Financial Reporting Standards began applying IFRS 16 from the fiscal year under review. Accordingly, lessees of leases now recognize all leases as assets and liabilities in their Balance Sheets in principle. The application of IFRS 16 has been conducted in accordance with its transitional treatment, under which the cumulative effects of changes in accounting policies have been recognized in retained earnings at the beginning of the fiscal year under review.

As a result, for the fiscal year under review, "Other" in property, plant and equipment increased by 77 million yen, and "Lease obligations" in current liabilities and "Lease obligations" in non-current liabilities increased by 1,193 million yen and 7,624 million yen, respectively. The impact of these changes on the profit or loss for the fiscal year under review is insignificant.

In addition, the balance of retained earnings at the beginning of the period has decreased by 10,011 million

yen.

(Additional information)

(Treatment of tax effect accounting for the transition from the consolidated taxation system to the group tax sharing system)

Regarding the transition into the group tax sharing system established by "the Act for Partial Amendment of the Income Tax Act, etc." (Act No. 8 of 2020) and the items for which the single-entity taxation system has been revised in conjunction with the transition into the group tax sharing system, the Company and certain consolidated subsidiaries have not applied the provisions of paragraph 44 of "Implementation Guidance on Tax Effect Accounting" (ASBJ Guidance No. 28, February 16, 2018), in accordance with the solution in paragraph 3 of "Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System" (PITF No.39, March 31, 2020). The amounts of deferred tax assets and deferred tax liabilities are based on the provisions of the tax laws prior to the amendment.

(Notes to Consolidated Statements of Income)

In response to the requests from governments and municipalities in relation to COVID-19, many of the stores located in retail facilities, directly-managed stores, resort facilities, and other locations were temporarily closed in regions including Japan, North America, and Europe. Fixed expenses (including personnel expenses, depreciation, and rent expenses) on stores and resort facilities incurred during the periods of closure were recognized as "Extraordinary loss due to closing and other" in "Extraordinary losses."

20

(Notes to Consolidated Statements of Comprehensive Income)

*Notes regarding reclassification adjustments and tax effects relating to other comprehensive income

			(Million yen)
		For the fiscal year	For the fiscal year
		ended February 29, 2020	ended February 28, 2021
Valuation difference on available-for-sale
securities:
Amount arising during period	(6,467)	1,120
Reclassification adjustment for gain and loss	1,601	1,652
Amount before income tax effect	(4,866)	2,773
Income tax effect	74	(131)
Valuation difference on available-for-sale	(4,791)	2,642
securities
Deferred gains or losses on hedges:
Amount arising during period	32	22
Reclassification adjustment for gain and loss	(102)	(32)
Amount before income tax effect	(70)	(9)
Income tax effect	13	2
Deferred gains or losses on hedges	(57)	(7)
Revaluation reserve for land:
Income tax effect	(106)	1,064
Revaluation reserve for land	(106)	1,064
Foreign currency translation adjustment:
Amount arising during period	(1,507)	(1,008)
Reclassification adjustment for gain and loss	0	(72)
Foreign currency translation adjustment	(1,506)	(1,081)
Remeasurements of defined benefit plans, net of
tax:
Amount arising during period	(1,177)	(66)
Reclassification adjustment for gain and loss	(112)	98
Amount before income tax effect	(1,290)	31
Income tax effect	445	(13)
Remeasurements of defined benefit plans,	(844)	17
net of tax
Share of other comprehensive income of entities
accounted for using equity method:
Amount arising during period	(14)	－
Reclassification adjustment for gain and loss	－	－
Share of other comprehensive income of
entities accounted for using equity	(14)	－
method
Total other comprehensive income		(7,321)	2,635

21

(Notes to Consolidated Statements of Changes in Equity) For the fiscal year ended February 29, 2020

1. Notes regarding issued shares

Class of shares	Number of shares at	Increase	Decrease	Number of shares at
beginning of period	end of period
Ordinary shares (Shares)	157,921,669	－	－	157,921,669
2. Notes regarding treasury shares
Class of shares	Number of shares at	Increase	Decrease	Number of shares at
beginning of period	end of period
Ordinary shares (Shares)	20,052,156	3,001,709	152,420	22,901,445

(Outline of reasons for changes)

Major components of the increase are as follows.

1. Increase due to the acquisition of treasury shares by the resolution of the Board of Directors on April 5, 2019: 3,000,000 shares
2. Increase due to the purchase of shares less than one unit: 1,709 shares

Major components of the decrease are as follows.

1. Decrease due to the exercise of stock options: 152,400 shares
2. Decrease due to shareholders' request to buy additional shares to achieve one unit: 20 shares

3. Notes regarding share acquisition rights

			Number of underlying shares (Shares)	Balance at
Company		Class of	end of
Breakdown
underlying					period
name	At			At end of
	shares	Increase	Decrease	(Million
		beginning of
			period	yen)
			period
	Share
Reporting	acquisition
rights as	－	－	－	－	－	484
company
stock
	options
	Total		－	－	－	－	484

4. Notes regarding dividends

(1) Cash dividends paid

		Total cash	Dividend per	Record date	Effective date
Resolution	Class of shares	dividends
share (Yen)
		(Million yen)
May 23, 2019
Annual General	Ordinary	3,308	24.00	February 28, 2019	May 24, 2019
Meeting of	shares
Shareholders

1. Dividends for which the record date falls in the fiscal year under review, but the effective date falls in the following fiscal year

	Class of	Total cash	Source of	Dividend per
Resolution	dividends	Record date	Effective date
shares	dividends	share (Yen)
	(Million yen)
May 28, 2020
Annual General	Ordinary	3,240	Retained	24.00	February 29,	May 29, 2020
Meeting of	shares	earnings	2020
Shareholders

22

For the fiscal year ended February 28, 2021 1. Notes regarding issued shares

Class of shares	Number of shares at	Increase	Decrease	Number of shares at
beginning of period	end of period
Ordinary shares (Shares)	157,921,669	－	－	157,921,669
2. Notes regarding treasury shares
Class of shares	Number of shares at	Increase	Decrease	Number of shares at
beginning of period	end of period
Ordinary shares (Shares)	22,901,445	1,178	580,500	22,322,123

(Outline of reasons for changes)

Major components of the increase are as follows.

1. Increase due to the purchase of shares less than one unit: 1,178 shares Major components of the decrease are as follows.

1. Decrease due to the exercise of stock options: 580,500 shares

3. Notes regarding share acquisition rights

			Number of underlying shares (Shares)	Balance at
Company		Class of	end of
Breakdown
underlying					period
name	At			At end of
	shares			(Million
		beginning of	Increase	Decrease
			period	yen)
			period
	Share
Reporting	acquisition
rights as	－	－	－	－	－	138
company
stock
	options
	Total		－	－	－	－	138

4. Notes regarding dividends

(1) Cash dividends paid

		Total cash	Dividend per	Record date	Effective date
Resolution	Class of shares	dividends
share (Yen)
		(Million yen)
May 28, 2020
Annual General	Ordinary	3,240	24.00	February 29, 2020	May 29, 2020
Meeting of	shares
Shareholders

1. Dividends for which the record date falls in the fiscal year under review, but the effective date falls in the following fiscal year

	Class of	Total cash	Source of	Dividend per
Resolution	dividends	Record date	Effective date
shares	dividend	share (Yen)
	(Million yen)
May 27, 2021
Annual General	Ordinary	1,627	Retained	12.00	February 28,	May 28, 2021
Meeting of	shares	earnings	2021
Shareholders

23

(Notes to Consolidated Statements of Cash Flows)

• Reconciliation of ending balance of cash and cash equivalents with account balances per Consolidated Balance Sheets is as follows.

			(Million yen)
		For the fiscal year	For the fiscal year
		ended February 29, 2020	ended February 28, 2021
Cash and deposits	28,795	21,301
Time deposits with maturities of more	(15)	(31)
than three months
Cash and cash equivalents		28,780	21,270

(Segment information, etc.) [Segment information]

1. Summary of reportable segments

The Group's reportable segments are components for which separate financial information is available and regular evaluation by the Board of Directors is performed to decide how management resources are allocated and to assess performance.

The Group engages in the apparel business (planning, production, and sale of textile products, including men's and women's clothing) and the lifestyle business in Japan and overseas.

The reportable segments of the Group comprise the "Apparel Business," which is divided geographically into two categories, "Domestic" and "Overseas," and the "Lifestyle Business."

The "Apparel Business (Domestic)" operates the apparel business in Japan; the "Apparel Business (Overseas)" operates the apparel business overseas. The "Lifestyle Business" operates businesses including a cosmetic business, a wellness business related to ballet and dance and resorts, a pet supply and other business, and a business related to gifts.

2. Method of calculating net sales, profit or loss, assets, liabilities, and other items by reportable segment Accounting methods for reportable segments are mostly the same as the accounting methods described in "Significant accounting policies for preparation of Consolidated Financial Statements."

Profit by reportable segment refers to operating profit. Intersegment sales and transfers are based on market values.

24

3. Information on net sales, profit or loss, assets, liabilities, and other items by reportable segment

For the fiscal year ended February 29, 2020 (from March 1, 2019 to February 29, 2020)

(Million yen)

	Apparel Business					Amount
					Lifestyle		Adjustments	recorded in
					Total	Consolidated
	(Domestic)	(Overseas)	Total	Business	(Note 1)	Financial
								Statements
								(Note 3)
Net sales
Net sales to outside	158,954	46,310		205,265	42,968	248,233	－	248,233
customers
Intersegment sales or	1,393	2,499		3,892	2,869	6,762	(6,762)	－
transfers
Total	160,347	48,809		209,157	45,838	254,996	(6,762)	248,233
Segment profit (loss)	2,514	(5,940)		(3,425)	1,553	(1,872)	(1,189)	(3,061)
Segment assets	113,016	38,621		151,638	50,006	201,645	32,671	234,316
Other items
Depreciation and	3,675	943		4,618	1,278	5,896	495	6,392
amortization (Note 2)
Investments in equity-	67	17		84	－	84	－	84
method entities
Increases in property, plant		1,643		6,587	1,466	8,053	1,479	9,533
and equipment, and	4,943
intangible assets (Note 2)

(Notes) 1. Adjustments consist of the following:

1. The adjustment amount for segment profit (loss) of (1,189) million yen includes amortization of goodwill of (1,748) million yen, elimination of intersegment transactions of 5,138 million yen, and corporate expenses not allocated to reportable segments of (4,579) million yen. Corporate expenses are mainly general and administrative expenses that are not attributable to reportable segments.
2. The adjustment amount for segment assets of 32,671 million yen includes the unamortized balance of goodwill of 6,127 million yen, elimination of intersegment transactions of (142,557) million yen, and corporate assets not allocated to reportable segments of 169,101 million yen. Corporate assets are mainly assets held by the Company, a pure holding company.

1. Depreciation and amortization, and increases in property, plant and equipment and intangible assets include long-term prepaid expenses (furniture and fixtures).
2. Segment profit (loss) coincides with the amount of operating loss in the Consolidated Statements of Income.

25

For the fiscal year ended February 28, 2021 (from March 1, 2020 to February 28, 2021)

(Million yen)

	Apparel Business					Amount
					Lifestyle		Adjustments	recorded in
					Total	Consolidated
	(Domestic)	(Overseas)	Total	Business	(Note 1)	Financial
								Statements
								(Note 3)
Net sales
Net sales to outside	103,648	35,774		139,422	34,901	174,323	－	174,323
customers
Intersegment sales or	1,407	1,329		2,736	2,013	4,750	(4,750)	－
transfers
Total	105,055	37,103		142,158	36,914	179,073	(4,750)	174,323
Segment profit (loss)	(13,667)	(6,497)		(20,165)	147	(20,017)	(1,213)	(21,230)
Segment assets	94,812	25,761		120,573	44,384	164,958	31,094	196,052
Other items
Depreciation and	3,084	914		3,999	1,009	5,009	497	5,506
amortization (Note 2)
Investments in equity-	12	－	12	－	12	－	12
method entities
Increases in property, plant		1,995		4,799	1,192	5,992	509	6,501
and equipment, and	2,804
intangible assets (Note 2)

(Notes) 1. Adjustments consist of the following:

1. The adjustment amount for segment profit (loss) of (1,213) million yen includes amortization of goodwill of (786) million yen, elimination of intersegment transactions of 3,639 million yen, and corporate expenses not allocated to reportable segments of (4,065) million yen. Corporate expenses are mainly general and administrative expenses that are not attributable to reportable segments.
2. The adjustment amount for segment assets of 31,094 million yen includes the unamortized balance of goodwill of 5,251 million yen, elimination of intersegment transactions of (133,274) million yen, and corporate assets not allocated to reportable segments of 159,117 million yen. Corporate assets are mainly assets held by the Company, a pure holding company.

1. Depreciation and amortization, and increases in property, plant and equipment and intangible assets include long-term prepaid expenses (furniture and fixtures).
2. Segment profit (loss) coincides with the amount of operating loss in the Consolidated Statements of Income.

[Information associated with reportable segments]

For the fiscal year ended February 29, 2020 (from March 1, 2019 to February 29, 2020)

1. Information for each product or service

Descriptions are omitted as similar information is disclosed in Segment information.

2. Information for each region

(1) Net sales

			(Million yen)
Japan	Europe	Other	Total
198,070	29,983	20,179	248,233

26

(2) Property, plant and equipment

				(Million yen)
Japan	U.S.	Europe	Other	Total
68,088	9,357	4,335	1,448	83,231

3. Information for each of main customers

Information is not stated as there are no parties whose net sales to outside customers comprise 10% or more of net sales in the Consolidated Statements of Income.

For the fiscal year ended February 28, 2021 (from March 1, 2020 to February 28, 2021)

1. Information for each product or service

Descriptions are omitted as similar information is disclosed in Segment information.

2. Information for each region

(1) Net sales

			(Million yen)
Japan	Europe	Other	Total
139,861	23,839	10,622	174,323

(2) Property, plant and equipment

				(Million yen)
Japan	U.S.	Europe	Other	Total
57,834	7,762	1,881	1,592	69,070

3. Information for each of main customers

Information is not stated as there are no parties whose net sales to outside customers comprise 10% or more of net sales in the Consolidated Statements of Income.

(Disclosure of impairment loss on non-current assets for each reportable segment)

For the fiscal year ended February 29, 2020 (from March 1, 2019 to February 29, 2020)

						(Million yen)
		Apparel Business		Lifestyle	Unallocated
				amounts and	Total
	(Domestic)	(Overseas)	Total	Business
	elimination
Impairment loss	3,136	5,260	8,397	8,259	11,099	27,756

For the fiscal year ended February 28, 2021 (from March 1, 2020 to February 28, 2021)

						(Million yen)
		Apparel Business		Lifestyle	Unallocated
				amounts and	Total
	(Domestic)	(Overseas)	Total	Business
	elimination
Impairment loss	1,385	1,003	2,389	910	－	3,299

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(Amortization and unamortized balance of goodwill for each reportable segment) Descriptions are omitted as similar information is disclosed in Segment information.

(Information about gain on bargain purchase for each reportable segment) Not applicable.

(Per share information)

	For the fiscal year	For the fiscal year
	ended February 29, 2020	ended February 28, 2021
Net assets per share (Yen)	665.17	418.32
Basic loss per share (Yen)	(383.97)	(171.18)
Diluted earnings per share (Yen)	－	－

(Notes) 1. Diluted earnings per share are not stated because the Company recorded a basic loss per share, although dilutive shares exist.

2. The basis for the calculation of basic loss per share and diluted earnings per share is as follows:

Item	For the fiscal year	For the fiscal year
ended February 29, 2020	ended February 28, 2021
Basic loss per share
Loss attributable to owners of parent	(52,135)	(23,181)
(Million yen)
Components not pertaining to ordinary	－	－
shareholders (Million yen)
Loss attributable to owners of parent
relating to ordinary shares	(52,135)	(23,181)
(Million yen)
Average number of ordinary shares	135,778	135,420
during the period (Thousand shares)

Diluted earnings per share

Adjustments to profit attributable to	－	－
owners of parent (Million yen)
Increase in number of ordinary shares	－	－
(Thousand shares)
[Of which, share acquisition rights	[－]	[－]
(Thousand shares)]
Outline of residual shares not included in
the calculation of diluted earnings per	－	－
share due to not having a dilutive effect

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3. The basis for the calculation of net assets per share is as follows:

Item	For the fiscal year	For the fiscal year
ended February 29, 2020	ended February 28, 2021
Total net assets (Million yen)	94,036	59,509

Amount deducted from total net assets (Million yen)

[Of which, share acquisition rights (Million yen)]

[Of which, non-controlling interests (Million yen)]

4,2242,785

[484][138]

[3,740][2,646]

Net assets relating to ordinary shares at end	89,812	56,723
of period (Million yen)
Number of ordinary shares at end of period
used for the calculation of net assets per	135,020	135,599
share (Thousand shares)

29

(Significant events after reporting period) (Transfer of non-current assets)

At the Board of Directors' meeting held on March 11, 2021, the Company made a resolution on transferring non- current assets of the Company's consolidated subsidiaries.

1. Reasons for transfer

Seeking to streamline assets and enhance financial constitution

2. Details of assets for transfer

1) Nakamura-ku,Nagoya-shi; land and a building

Name of asset	Address and details of asset	Current state
Nakamura-ku,Nagoya-shi	4-1107 Meiekiminami, Nakamura-ku,Nagoya-shi, Aichi
Area of the land: 3,158.01m2	Office
Land and a building
Total floor area of the building: 16,227.29m2

1. • Projected gain on the transfer is approximately 3.5 billion yen, which is estimated by deducting the carrying amount of 2.8 billion yen and various expenses related to the transfer from the transfer price of 6.5 billion yen.
2. Shibuya-ku;land and buildings

Name of asset

Address and details of asset

Current state

1-34-6 and 1-34-24 Jinnan, Shibuya-ku, Tokyo

Shibuya-ku

Area of the land: 246.65m2Store and office

Land and buildings

Total floor area of the buildings: 1,675.56m2

• The Company refrains from disclosing the transfer price and the carrying amount in accordance with the confidentiality agreement with the transferee. Projected gain on the transfer is approximately 1.3 billion yen, which is estimated by deducting the carrying amount and various expenses related to the transfer.

3. Outline of transferees

1) Nakamura-ku,Nagoya-shi; land and a building

(1)	Name	Sumitomo Realty & Development Co., Ltd.
(2)	Address	Shinjuku NS Building, 2-4-1,Nishi-Shinjuku,Shinjuku-ku, Tokyo
(3)	Title and name of representative	Kojun Nishima, Executive Managing Director and President

2) Shibuya-ku; land and buildings

The Company refrains from disclosing the details in accordance with the confidentiality agreement with the transferee.

• There are no capital relationships, personnel relationships, transactional relationships, or matters of note as related parties between the transferee and the Company.

30

4. Outline of consolidated subsidiaries

1) Nakamura-ku,Nagoya-shi; land and a building

(1)	Name	Onward Kashiyama Co., Ltd.
(2)	Address	3-10-5 Nihonbashi, Chuo-ku, Tokyo
(3)	Title and name of representative	Tsunenori Suzuki, Representative Director and President
(4)	Business description	Planning, production, and sale of menswear, womenswear, children's clothing,
		accessories, etc.
(5)	Share capital	100 million yen

2) Shibuya-ku; land and buildings

(1)	Name	Excel Co., Ltd.
(2)	Address	1-20-8 Jinnan, Shibuya-ku, Tokyo
(3)	Title and name of representative	Koji Watanabe, Representative Director and President
(4)	Business description	Real estate rental business
(5)	Share capital	80 million yen

5. Dates for transfer

		1) Nakamura-ku,Nagoya-shi;	2) Shibuya-ku;
		land and a building	land and buildings
(1) Date of resolution at the Board of Directors' meeting	March 11, 2021	March 11, 2021
(2)	Date of execution of the agreement	March 11, 2021	March 11, 2021
(3)	Date of handover of the property	March 31, 2021	March 11, 2021

6. Impact on performance

Gain on transfer of approximately 4.8 billion yen associated with the transfer of the said non-current assets is planned to be recognized in extraordinary income as "Gain on sales of non-current assets" of the consolidated results for the first quarter of the fiscal year ending February 28, 2022.

31

(Change in a consolidated subsidiary (share transfer))

At the Board of Directors' meeting held on March 5, 2021, the Company made a resolution on transferring all of the shares in Jil Sander S.p.A. held by Onward Italia S.p.A., the Company's consolidated subsidiary.

Due to this share transfer, Jil Sander S.p.A. will be excluded from the Company's consolidated subsidiaries.

1. Reasons for share transfer

The Company, in order to respond to the rapid and significant changes in the management environment, has worked on the selection and concentration of its businesses by withdrawing from unprofitable businesses and reducing the scales thereof, as stated in "Announcement on Implementation of Global Business Reforms," a timely disclosure made as of October 4, 2019.

Recently, the management environment of the overseas business, mainly in Europe, has deteriorated further on account of the impact of the global spread of COVID-19, which in turn has also seriously affected the performance of the Group.

Under such circumstances, after considering a variety of options for the future vision of the European business, the Company determined that withdrawing from the Jil Sander S.p.A. business, which has been unprofitable, and transferring its shares to a third party is the best decision from the perspective of the Group's global business reforms. Accordingly, the Company has decided to transfer all of the shares in Jil Sander S.p.A. held by Onward Italia S.p.A.

As stated in "Announcement on Change in a Consolidated Subsidiary (Share Transfer)," a timely disclosure made as of December 11, 2020, the Company conducted a transfer of shares in Onward Luxury Group S.p.A. In addition to that transfer, by conducting this share transfer, the Company will reorganize businesses that have been unprofitable and further facilitate the concentration of management resources into growing fields, thereby accelerating the enhancement of the Group's corporate value by improving and enhancing its financial constitution through stabilization of earnings base.

32

2. Outline of the subsidiary to be changed

(1)	Name	Jil Sander S.p.A.
(2)	Address	Foro Buonaparte 71, 20121 Milano, Italy
(3)	Title and name of representative	Axel Keller, Representative Director
(4)	Business description	Planning and sale of Jil Sander brand products
(5)	Share capital	24,650 thousand euro
(6)	Date of establishment	October 19, 2018
(7)	Major shareholders and	Onward Italia S.p.A.; 100%
shareholding ratio
(8)	Relationship between the listed	Capital relationship	The said company is the Company's consolidated subsidiary.
company and the said company
Personnel relationship	Three employees of the Company have been appointed
				Directors of the said company.
			Transactional relationship	There are no direct transactional relationships.
				(The Company provides services to Onward Italia S.p.A., the
				parent company of the said operating company, in relation to
				management guidance and administration.)
(9)	Operating results of the said company for the past three years
	Fiscal year ended	February 28, 2018	February 28, 2019	February 29, 2020
	Net sales (Thousand euro)	－	0	48,600
Operating profit (Thousand euro)	－	(3)	(17,824)
Net income (Thousand euro)		－	(3)	(22,748)

33

1. Name of the reportable segment in which the said subsidiary is included in the disclosure of segment information Apparel Business (Overseas)
2. Outline of the counterparty in the share transfer

(1) Name	OTB S.p.A.
(2)	Address	Via Dell'Industria 2, Breganze (Vicenza), Italy
(3)	Title and name of representative	Renzo Rosso, Representative Director
(4)	Business description	A holding company in fashion business
(5)	Share capital	25,000 thousand euro
(6)	Date of establishment	December 7, 1981
(7)	Net assets	884,356 thousand euro
(8)	Total assets	1,833,885 thousand euro
(9)	Relationship between the listed	Capital relationship	There are no capital relationships of note between the Company
company and the said company		and the said company.
		Personnel relationship	There are no personnel relationships of note between the
			Company and the said company.
		Transactional relationship	There are no transactional relationships of note between the
			Company and the said company.

5. Transfer price and status of shares held before and after the transfer

(1)	Shareholding ratio before the transfer	Shareholding ratio: 100%
(2)	Shareholding ratio to be transferred	Shareholding ratio: 100%
(3)	Transfer price for the shares	The Company refrains from disclosing the transfer price on account of the
		confidentiality stipulated in the share transfer agreement.
(4)	Shareholding ratio after the transfer	Shareholding ratio: 0%

6. Schedule

(1)	Date of resolution by the Board of Directors	March 5, 2021
(2)	Date of execution of the agreement	March 5, 2021
(3)	Date of implementation of the share transfer	April 2021 (planned)

7. Impact on performance

The impact of this share transfer is planned to be recognized in the fiscal year ending February 28, 2022.

The impact on the performance for the fiscal year ending February 28, 2022 is currently being examined.

34

(Change in a consolidated subsidiary (share transfer))

At the Board of Directors' meeting held on March 26, 2021, the Company made a resolution on transferring all of the shares in Freeland s.r.l. held by Onward Italia S.p.A., the Company's consolidated subsidiary.

Due to this share transfer, Freeland s.r.l. will be excluded from the Company's consolidated subsidiaries.

1. Reasons for share transfer

The Company, in order to respond to the rapid and significant changes in the management environment, has worked on the selection and concentration of its businesses by withdrawing from unprofitable businesses and reducing the scales thereof, as stated in "Announcement on Implementation of Global Business Reforms," a timely disclosure made as of October 4, 2019.

Recently, the management environment of the overseas business, mainly in Europe, has deteriorated further on account of the impact of the global spread of COVID-19, which in turn has also seriously affected the performance of the Group.

Under such circumstances, after considering a variety of options for the future vision of the European business, the Company determined that withdrawing from the Freeland s.r.l. business and transferring its shares to a third party is the best decision from the perspective of the Group's global business reforms. Accordingly, the Company has decided to transfer all of the shares in Freeland s.r.l. held by Onward Italia S.p.A.

As stated in "Announcement on Change in a Consolidated Subsidiary (Share Transfer)," timely disclosures made as of December 11, 2020 and March 5, 2021, the Company made resolutions on transfers of shares in Onward Luxury Group S.p.A. and Jil Sander S.p.A. In addition to these transfers, by conducting this share transfer, the Company will complete the series of business reforms in Italy.

Through the global business reforms which have been conducted continuously since the previous fiscal year, the Company will reorganize businesses that have been unprofitable and further facilitate the concentration of management resources into growing fields, thereby accelerating the enhancement of the Group's corporate value by improving and enhancing its financial constitution through stabilization of earnings base.

35

2. Outline of the subsidiary to be changed

(1)	Name	Freeland s.r.l.
(2)	Address	Via G da Verrazzano 4/6/8, 50054, Fucecchio Firenze, Italy
(3)	Title and name of representative	Claudio Tiezzi, Representative Director
(4)	Business description	Production and sale of athletic shoes for luxury brands
(5)	Share capital	20,000 thousand euro
(6)	Date of establishment	May 29, 2000
(7)	Major shareholders and	Onward Italia S.p.A.; 60%
shareholding ratio
(8)	Relationship between the listed	Capital relationship	The said company is the Company's consolidated subsidiary.
company and the said company
Personnel relationship	Three employees of the Company have been appointed
				Directors of the said company.
			Transactional relationship	There are no direct transactional relationships.
				(The Company provides services to Onward Italia S.p.A., the
				parent company of the said operating company, in relation to
				management guidance and administration.)
(9)	Operating results of the said company for the past three years
	Fiscal year ended	February 28, 2018	February 28, 2019	February 29, 2020
	Net sales (Thousand euro)	56,741	66,619	52,385
Operating profit (Thousand euro)	10,476	12,040	9,666
Net income (Thousand euro)		6,219	7,849	6,078

3. Name of the reportable segment in which the said subsidiary is included in the disclosure of segment information Apparel Business (Overseas)

36

4. Outline of the counterparty in the share transfer

(1)	Name	FREE S.r.l.
(2)	Address	Via Giovanni da Verrazzano n. 4/6/8, Fucecchio Firenze, Italy
(3)	Title and name of representative	Gabriella Pantani, Representative Director
(4)	Business description	Investing in companies and organizations
(5)	Share capital	1,010 thousand euro
(6)	Date of establishment	February 16, 2020
(7)	Net assets	40,000 thousand euro
(8)	Total assets	53,300 thousand euro
(9)	Relationship between the listed	Capital relationship	There are no capital relationships of note between the Company
company and the said company		and the said company.
		Personnel relationship	There are no personnel relationships of note between the
			Company and the said company.
		Transactional relationship	There are no transactional relationships of note between the
			Company and the said company.

5. Transfer price and status of shares held before and after the transfer

(1)	Shareholding ratio before the transfer	Shareholding ratio: 60%
(2)	Shareholding ratio to be transferred	Shareholding ratio: 60%
(3)	Transfer price for the shares	The Company refrains from disclosing the transfer price on account of the
		confidentiality stipulated in the share transfer agreement.
(4)	Shareholding ratio after the transfer	Shareholding ratio: 0%

6. Schedule

(1)	Date of resolution by the Board of Directors	March 26, 2021
(2)	Date of execution of the agreement	March 26, 2021
(3)	Date of implementation of the share transfer	March 29, 2021

7. Impact on performance

The impact of this share transfer is planned to be recognized in the fiscal year ending February 28, 2022.

The impact on the performance for the fiscal year ending February 28, 2022 is currently being examined.

(Omission of disclosure)

Disclosure of notes regarding leases, transactions with related parties, tax effect accounting, financial instruments, securities, derivatives, retirement benefits, share options, etc., business combinations, asset retirement obligations, and real estate for lease, etc. have been omitted because disclosing the information in the consolidated financial results is considered to have little materiality.

37

4. Others Changes in officers

Other changes in officers (as of May 27, 2021) Candidate for new Director

Name	Position and responsibility
		- Independent Outside Director and Audit & Supervisory
	Current	Committee Member of SHIFT Inc.
		- Outside Director of Ishii Food Co., Ltd.
Kenji Chishiki		- Outside Director of the Company
	New	- Independent Outside Director and Audit & Supervisory
	Committee Member of SHIFT Inc.
		- Outside Director of Ishii Food Co., Ltd.

38