Makita Corporation
Additional Information
for the year ended March 31, 2021
Consolidated Financial Statements(Partial translation of "YUKASHOKEN HOKOKUSHO"
originally issued in Japanese)Consolidated Financial Statements

3

Notes to Consolidated Financial Statements

92

Consolidated Statement of Financial Position
In Millions of Yen

ASSETS
Current Assets
Cash and Cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets

Notes

2020

2021

５
６,21
７
27

143,439
69,599214,560
25,235
7,633

148,640
95,691
267,547
18,227
10,223

460,466

540,328

146,649
8,749
38,551
9,511
6,932
3,706

189,366
9,364
51,011
10,6858,860
3,264

214,098

272,550

674,564

812,878

８

Total current assets
Non-current assets
Property, plant and equipment
Goodwill and Intangible assets
Other financial assets
Employee benefits assets
Deferred tax assets
Other non-current assets

９
10
27
15
24
８

Total non-current assets
Total assets

3

In Millions of Yen

LIABILITIESCurrent liabilities
Trade and other payables
Borrowings
Other financial liabilities
Income tax payables
Provisions
Other current liabilities

Notes

2020

2021

12

34,95959,792

13
27

7,997
2,468
3,757
2,931
27,2642,612
4,080
11,2183,665
40,431

79,376

121,798

3,138
9,894
1,248
4,952
208

3,406
11,764
1,421
10,954209

19,44027,754

98,816

149,552

23,80545,531
540,063

23,80545,559588,644

ሺ11,554)
ሺ26,570)

ሺ11,543)
11,390571,275

657,855

4,473

5,471

575,748

663,326

674,564

812,878

17
14,21

Total current liabilities
Non-current liabilities
Employee benefit obligations
Other financial liabilities
Provisions
Deferred tax liabilities
Other non-current liabilities

15
27
17
24
14

Total non-current liabilities
Total liabilities
EQUITY
Share capital
Capital surplus
Retained earnings
Treasury shares
Other components of equity
Total equity attributable to ownersof the parent
Non-controlling interests

19
19
19
19
19

Total equity
Total liabilities and equity

4

Consolidated Statement of Profit or Loss
In millions of Yen, per share amounts in Yen

Revenue
Cost of sales

Notes

2020

４，21
22

492,617608,331ሺ323,776)

ሺ405,282)

168,841

203,04922

ሺ104,795)

ሺ114,585)

4

64,046

88,464

４，23
４，23

2,558

1,813

ሺ596)

ሺ3,078)Gross profit
Selling and general administrative expenses
Operating profit
Financial income
Financial expenses
Profit before tax

2021

66,00887,199

ሺ17,957)

ሺ24,515)

Profit for current year

48,051

62,684Attributable to:
Owners of the parent
Non-controlling interests

47,731
320

62,018666

175.80228.41

Income tax expense

Earnings per share

４
24

25

Basic earnings per share5Consolidated statements of Comprehensive Income
In millions of Yen
Notes
Profit for current year
Other comprehensive income, net of tax
Items that will not be reclassified to profit orloss
Net gain(loss) on revaluation of financial
assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified to
profit or loss
Items that may be reclassified subsequently
to profit or loss
Exchange difference on translation offoreign operations
Total of items that may be reclassified
subsequently to profit or loss
Other comprehensive income, net ofincome taxes
Total comprehensive income

26

2020

2021

48,051

62,684

ሺ2,509)

9,072

201

953

ሺ2,308)10,025

ሺ30,328)

29,220ሺ30,328)

29,220

ሺ32,636)

39,245

15,415

101,929

15,271

100,931

144

998

Attributable to:
Owners of Makita
Non-controlling interests

6Consolidated Statements of Changes in Equity
In millions of Yen

NonNoteIssuedcapitalCapitalsurplusRetainedearnings

Treasury
stock

Other
componentsof equitycontrolling Total equity

Total

interest
Balance at April 1, 2019
Profit for currency year
Other comprehensive
net of income taxes

23,80545,571

508,622

ሺ11,681)

6,431

47,731income,ሺ32,460)

26

Total comprehensive income―

Dividends―

47,731―

ሺ32,460)

ሺ16,831)20

572,748

4,474

577,22247,731

320

48,051

ሺ32,460)

ሺ176)

ሺ32,636)

15,271

144

15,415

ሺ16,831)

ሺ145)

ሺ16,976)

Purchase of treasury shares

19

ሺ2)

ሺ2)

ሺ2)

Disposal of treasury shares
Share-based
paymenttransactions
Transfer from other components ofequity to retained earnings

19

ሺ13)

61

48

48

16

ሺ27)

68

41

41

ሺ541)

―

―

19

Total transactions with owners
Balance at March 31,2020
Net income
Other comprehensive
net of income taxes

―

ሺ40)

ሺ16,290)

127

ሺ541)

ሺ16,744)

ሺ145)

ሺ16,889)

23,80545,531

540,063

ሺ11,554)

ሺ26,570)

571,275

4,473

575,748

62,018666

62,68438,913332

39,245100,931998

101,929

ሺ14,390)―

ሺ14,390)62,018income,26

Total comprehensive income
20

Purchase of treasury shares
Share-based
paymenttransactions
Transfer from other components ofequity to retained earnings

19

Total transactions with owners

38,913―

Dividends

Balance at March 31, 2021

541―

62,018―38,913

ሺ14,390)

16

28

19

ሺ4)

ሺ4)

ሺ4)

15

43

43

ሺ953)

―

―

953
―

28

ሺ13,437)

11

ሺ953)

ሺ14,351)―

ሺ14,351)

23,80545,559588,644

ሺ11,543)

11,390657,855

5,471

663,326

7

Consolidated Statement of Cash Flows
In millions of Yen

Cash flows from operating activities
Net income
Depreciation and amortization
Income tax expenses
Financial (income) and expenses(Gains) losses on sale and disposal ofproperty, plant and equipment, and intangible
assets(Increase) decrease in trade and otherreceivables(Increase) decrease in inventories
Increase(decrease) in trade and otherpayablesIncrease, decrease in asset and liability ofPensionIncrease in guarantee deposits
OthersSubtotal
Dividends received
Interest received
Interest paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Additions to intangible assets and property,
plant and equipment
Disposal of property, plant and equipment
Purchase of investments
Disposal and redemption of investments
Payments to time deposit
Proceeds from withdrawal of time deposits
OthersCash flows from investing activities
Cash flows from financing activities
Increase(decrease) in short-term borrowings
Purchase and re-issuance of treasury shares
Dividends paid
Lease liabilities paid
OthersCash flows from financing activities
Effect of changes in exchange rates on cash andcash equivalents
Increase(Decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of period

Notes

2020

2021

9,10
24

48,051
14,34917,957
ሺ1,962)

62,684
16,491
24,515
1,265

ሺ808)

817

4,396

ሺ21,481)

ሺ9,148)

ሺ35,990)

ሺ1,499)21,868

586

ሺ152)

741
3,538
76,201
712
1,488
ሺ431)
ሺ20,660)
57,3101,633
8,178
79,828
688
730
ሺ356)
ሺ16,353)
64,537

ሺ44,409)

ሺ49,855)2,574
ሺ4,000)7,641
ሺ33,534)
40,960262

136
ሺ3,740)8,157
ሺ46,829)
48,792426

ሺ30,506)

ሺ42,913)

ሺ3,461)46
ሺ16,831)
ሺ2,537)
ሺ148)
ሺ22,931)

ሺ5,666)
ሺ4)
ሺ14,390)
ሺ2,998)22
ሺ23,036)

ሺ6,946)6,613

ሺ3,073)5,201

5

146,512

143,4395

143,439

148,640

29
20
29

8

The consolidated financial statements of Makita Group for the year ended March 31, 2021, have been prepared according
to the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.
The consolidated financial statements are in line with the provision of Article 93 of the Ordinance on Terminology, Forms, andPreparation methods of consolidated financial statements (Ordinance of the Ministry of Finance of Japan No.28 of 1976), as
they satisfy the requirements for an “IFRS Specified Company” in Article 1-2 of the same ordinance.
The consolidated financial statements have been prepared on the historical cost basis, except for certain assets and liabilities
including financial instruments measured at fair value as presented in Note3 “Significant Accounting Policies”.
The functional and presentation currency is Japanese Yen. Unless stated otherwise, all figures are in millions of Yen.
The consolidated financial statements prepared as of March 31, 2021 were authorized for publication by management onJune 28.
All accounting policies that are relevant to an understanding of financial statements are provided throughout the notes to thefinancial statements.
The group’s consolidated financial statements include estimates and assumptions made by management regarding income
and expenses, measurement of the carrying amounts of assets and liabilities, and disclosure of contingencies and others at
the end of the reporting period. These estimates and assumptions are based on management’s best judgement at the end of
the reporting period, and take into account historical experience and various other factors that can be considered andreasonable. However, due to their nature, actual results may differ from these estimates and assumptions.
The estimates and their underlying assumptions are reviewed by management on an ongoing basis. The effects of revisions toaccounting estimates and assumptions are recognized in the period when the estimates are revised and in future accounting
periods.
Estimates and assumptions that significantly affect the amounts recognized in the Group’s consolidated financial statements
are as follows:

Defined benefit obligation – refer to Note3 Significant accounting policies and Note15 Employee benefits
Makita has adopted defined benefit pension plans and defined contribution plans for post-employment benefits.
The present value of the defined benefit obligations and the related current service cost and past service cost arecalculated by actuarial assumptions. Actuarial assumptions requires estimates and judgement for various factors
including a discount rate. Actuarial assumptions is decided by estimates and judgement made by management, however
it may be affected by the fluctuation of future uncertain financial condition or by amending or promulgating related laws.
In the event that revision is necessary, it may have an adverse impact on Makita’s financial condition and results ofoperations.



Deferred tax asset – refer to Note3 Significant accounting policies and Note24 Income taxes
Deferred tax assets are recognized for deductible temporary differences, the carryforward of unused tax losses and thecarryforwards of unused tax credits to the extent of that it is probable that future taxable income will be available against
such deferred tax assets. Period and amount which occurs taxable income may be affected by the fluctuation of future
uncertain financial condition. In the event when the actual period and amount are different from the assumption for which
the estimation is used, it may have an adverse impact on Makita’s financial condition and results of operations. In the9event when effective tax rate is changed, the balance of deferred tax assets may increase or decrease.
Inventories – refer to Note3 Significant accounting policies and Note7 Inventories
Inventories are measured at the acquisition cost, however if the net realizable value is lower than the acquisition cost,they are measured at the net realizable value and the difference between the acquisition cost is recognized as cost of
sales in principle.
For inventories that stay outside of the business cycle process, the net realizable value is calculated by reflecting future
demand and market trends. If the market environment deteriorates more than expected and the net realizable value falls
significantly, it may have a significant impact on the amount recognized in the consolidated financial statements from thenext consolidated fiscal year.

The judgments made by management in the process of applying accounting policies that have a significant impact on
consolidated financial statements are as follows:

Revenue – refer to Note3 Significant accounting policies and Note15 Revenue

None of the standards and interpretation guidelines that have been newly established or revised by the approval date of theconsolidated financial statements have a significant impact.

Basis of consolidation
The consolidated financial statements present the operations of Makita Japan and all its subsidiaries.
Subsidiaries refer to all business entities controlled by the company. Financial statements of subsidiaries are included in the
consolidated statements from the date the company gains the control of the subsidiary till the date the company loss the controlof the subsidiaries. A change in the company’s ownership interest without loss of control will be accounted for as equity
transaction. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of theconsideration paid or received is recognized directly in equity attribution to the owner of Makita.
All intergroup balances, transactions, income and expenses, unrealized gains and losses arising from intergroup transactions
are eliminated when prepare the consolidated statements.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration of an acquisition is measured as theaggregate of the acquisition-date fair value of the assets transferred, liabilities assumed and equity securities issued by theCompany to the former owners of the acquire in exchange for control of the acquire.
Any excess of the consideration over the net fair value of identifiable assets acquired and liabilities assumed at the acquisition
date is recognized as goodwill in the consolidated statement of financial position. Conversely, any deficit is immediately
recognized as income in the consolidated statement of income.
Costs associated with business combinations are expensed as incurred.
Foreign currency translation(1) Foreign Currency Transactions
Foreign currency transactions are conducted by translating into a functional currency of each company of Makita at theexchange rate as of the tansaction date.
Monetary assets and liabilities denominated in foreign currencies as of the reporting date are translated into functional
currencies at the exchange rate as of the reporting date.
As for non-monetary assets and liabilities denominated in foreign currencies, those measured at the acquisition cost10

are translated by using the exchange rate as of the transaction date, and those measured at fair value are translated
by using the exchange rate as of the date of calculation of the fair value. The exchange differences arising from thetranslation or the settlement are recognized in profit or loss. However, the differences arising from the translation ofequity instruments measured at fair value through other comprehensive income are recognized in other comprehensive
income.
(2) Foreign operations
Assets and liabilities of a foreign operation are translated into Japanese yen at the exchange rate as of the reporting
date, and its revenue and expenses are translted at the average exchange rate for the period except the case that theexchage rate changes significantly. The exchange differences as a result of this are recognized in other comprehensive
income. The exchange differences of a foreign operation are recognized in profit or loss during the period in which theforeign operation is disposed.
Financial instruments
Non-derivative financial assets(i) Initial recognition and measurement
At initial recognition, Makita classifies financial assets as financial assets measured at amortized cost, financial
assets measured at fair value through other comprehensive income, or financial assets measured at fair value
through profit or loss. We initially recognize trade receivables and other receivables on the effective date, and otherfinancial assets on the transaction date in which we become a party to the contract of the financial instrument.
All of the financial assets, except financial assets measured at fair value through profit or loss, are initially measured
at the amount of fair value added to the transaction cost directly attributable to the financial asset. However, tradereceivables without a significant financial component are initially measured at the transaction price.
(a) Financial assets measured at amortized cost
We classify financial assets that both of the following conditions are met as financial assets measured atamortized cost:
・The financial asset is held within a business model whose objective is to hold financial assets in order tocollect contractual cash flows, and・

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.

(b) Financial assets measured at fair value through other comprehensive income
At initial recognition, Makita make an irrevocable election to present in other comprehensive income subsequentchanges in the fair value of a particular investment in an equity instrument not held for trading that would
otherwise be measured at fair value and not classified as financial assets measured at amortized cost. If thegroup derecognized an investment, or if the fair value of the investment declines significantly, the cumulative
gains or loss recognized in other comprehensive income is reclassified from other component of equity to retained
earnings.
(c) Financial assets measured at fair value through profit or loss
Financial assets, other than financial assets measured at amortized cost or at fair value through othercomprehensive income, are classified as financial assets measured at fair value through profit or loss.
(ii) Subsequent measurement(a) Financial assets measured at amortized cost
Financial assets measured at amortized cost are, after initial recognition, measured at amortized cost based on
the effective interest method. Interest revenue calculated by using the effective interest method is recognized in
profit or loss.
(b) Financial assets measured at fair value through other comprehensive income
Equity instruments measured at fair value through other comprehensive income are, after initial recognition,measured at fair value, and its subsequent changes are recognized in other comprehensive income. The

11cumulative amount that is recognized in other comprehensive income is transferred to retained earnings, when
the amount is derecognized or when the fair value decreases significantly. In addition, dividends from equity
instruments measured at fair value through other comprehensive income are recognized in profit or loss.
(c) Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or losses are, after initial recognition, measured at fairvalue. Gain or loss of valuation arising from changes in fair value, dividends, and interest revenue are recognizedin profit or loss.
(iii) Derecognition
Financial assets are derecognized, when the contractual rights to the cash flows from the financial asset expire, or
when the contractual rights to receive the cash flows of the financial asset along with almost all of the risks related
to the contract and its economic value transferred.
Impairment of financial assets
Makita recognizes allowance for doubtful receivables for expected credit losses related to financial assets measured
at amortized cost. Expected credit losses are measured based on discounted present value of the difference between
contractual cash flows to be received based on the contract and cash flows to be expected to be received.
If the credit risks related to the financial asset increase significantly after initial recognition, lifetime expected credit
losses are recognized in allowance for doubtful receivables. If the risk does not increase significantly after initialrecognition, 12-month expected credit losses are recognized in allowance for doubtful receivables. In addition, tradereceivables without a significant financial component are classified in accordance with the credit risk of the other party
based on the past due information or the internal credit rating, and their allowance for doubtful receivables arenecessarily measured at an amount equal to lifetime expected credit losses, with the ratio of past credit losses
calculated by the classification multiplied the provision ratio in consideration of expected future economic conditions.
We assess whether credit risks related to financial assets increase significantly after initial recognition or not bycomparing the risk of default at initial recognition and the risk of default at each reporting date, taking into consideration
the reasonable information with evidence as well as the past due information. If entire or part of a financial asset isjudged to be impossible or incredibly difficult to be collected, it is considered to be in default and treated as creditimpaired financial assets.
We directly reduce the gross carrying amount of a financial asset when there is no reasonable expectation ofrecovering the financial asset in its entirety or a portion thereof.
Allowance for doubtful receivables and reversal of allowance for doubtful receivables of financial assets are recognizedin profit or loss.
Non-derivative financial liabilities(i) Initial recognition and measurement
At initial recognition, Makita classifies financial liabilities as financial liabilities measured at amortized cost or liabilities
measured at fair value through profit or loss. A financial liability is initially recognized on the transaction date in which
we become a party to the contract of the financial liability.
All of the financial liabilities are measured at fair value at initial recognition. However, financial liabilities measured
at amortized cost are measured at the amount after deduction of the transaction cost directly attributable to thefinancial liabilities from the fair value.
(ii) Subsequent measurement(a) Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost are, after initial recognition, measured at amortized cost basedon the effective interest method.
(b) Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or losses are, after initial recognition, measured at fair12

value. Gain or losses of valuation arising from changes in fair value are recognized in profit or loss.
(iii) Derecognition
A financial liability is derecognized, when it is extinguished, namely, when the obligation specified in the contract isdischarged, chancelled or expired.
Derivatives
Makita uses derivatives including forward exchange contracts and currency swap transactions in order to hedge theforeign currency risk. Derivatives are initially recognized at fair value and remeasured at fair value after initialrecongnition. Changes in fair value of derivatives are recognized in profit or loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash, demand deposits and short-term that are highly liquid and readily convertible
to known amounts of cash subject to an insignificantly risk of changes in value, and that mature or become due within
3 months from the date of acquisition.

Inventories
Inventories are measured at the lower of the acquisition cost and the net realizable value. Acquisition costs include allcosts of purchases, conversion and other costs incurred in bringing the inventories to their present location and condition.
Acquisition costs are calculated by using the weighted average cost formula. Costs of conversion include production
overheads based on the normal capacity of production. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and the estimated cost necessary to make the sale.

Property, plant and equipment
Property, plant and equipment are measured using the cost model and carried at cost less any accumulated
depreciation and any accumulated impairment losses.
The cost of an item of property, plant and equipment comprises any cost directly attributable to acquisition of the asset
and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Regarding subsequent expenditures for the repairs and improvement of the item of property, plant and equipment, if
they satisfy the requirements that it is probable that value of the property, plant and equipment will be improved andfuture economic benefits associated with the item will flow to the entity and it is clear that production capacity will besignificantly increased, these repairs and improvement shall be recognized as part of the acquisition cost.
Property, plant and equipment other than land and construction in progress are depreciated by using the straight-line
method, for its depreciable amount that is its acquisition cost less the residual value, over its estimated useful life
beginning from the point when the assets are available for use. The estimated useful lives of the major assets are as
follows.

Buildings and improvements:

3 to 60 years

Machinery and equipment:

3 to 20 years

Depreciation method, residual value and estimated useful lives are reviewed every year and revised if necessary.

13

Goodwill and Intangible Assets
1)

Goodwill
Goodwill arising from a business combination is not amortized, and is carried at cost, determined at the acquisitiondate, less any accumulated impairment losses.
In addition, goodwill is allocated to the cash generating unit or group of cash-generating units that is expected tobenefit from the synergies of the business combination, and is tested for impairment at least once a year by eachfiscal year end or if there are indications of impairment. Impairment loss on goodwill is recognized in profit or loss
and is not reversed in subsequent periods.

2)

Intangible Assets
Intangible assets are measured using the cost model and carried at cost less any accumulated amortization and any
accumulated impairment losses.
The costs of separately acquired intangible assets comprise any costs directly attributable to acquisition of the assets.
An intangible asset acquired in a business combination is recognized as an intangible asset and measured at fairvalue at the acquisition date.
Development expenditures are capitalized only if they can be measured reliably, future economic benefits areprobable and the Group intends to, and has sufficient resources to complete development and to use or sell the asset.
If it is probable that internally used software enables an entity to obtain future economic benefits and cut the cost, thedevelopment cost can be recognized as an intangible asset.
Intangible assets with definite useful lives are amortized by using the straight-line method over each estimated usefullife. The estimated useful lives of the major intagible assets are as follows:

Intangible asset arising from development

5 years

phase
Software

2-10 years

Trademarks

4-17 years

Amortization method, residual value and estimated useful lives are reviewed every year and revised if necessary.
Lease
Makita determines whether contracts are, or contain a lease based on the substance of the contract, even if it is notlegally a form of lease. Makita recognizes a right-of-use asset and a lease liability at inception date of the lease.
Right-of-use assets are initially measured at cost. This cost includes the initial measurement amount of the leaseliability, the lease payments made at or before the commencement date, an estimate of costs to be incurred by thelessee in dismantling and removing the underlying asset, restoring the underlying asset to the condition required by
the terms and conditions of the lease, and borrowing costs that meet the capitalization requirements. Depreciationis amortized by using the straight-line method over the useful life of the underlying asset if the ownership of theunderlying asset is transferred by the end of the lease term, or if it is reasonably certain to exercise the purchase
option after initial recognition, in other cases, using the straight-line method over the useful life or the lease period,
whichever is shorter. Right-of-use assets are measured at cost by deducting accumulated depreciation andaccumulated impairment losses and adjusting any remeasurement of the lease liability. Right-of-use assets areincluded in property, plant and equipment in the consolidated statement of financial position. The lease term isdetermined by adding to the non-cancellable term of the lease the term of the extension option reasonably certain to
be exercised or the term of the cancellation option reasonably sure not to be exercised. Lease liabilities are measured
at present value by discounting the total remaining lease payments at the lease commencement date using thelessee's incremental borrowing rate as of that date. After initial recognition, lease liability measured by increasing thecarrying amount to reflect interest on lease liability, reducing the carrying amount to reflect lease payments made andremeasuring the carrying amount to reflect any reassement or lease modification. Lease expenses are allocated to14

financial charges and the part of repayment of the lease liability. After the commencement date of the lease, the leaseliability is remeasured as necessary due to changes in the lease terms and conditions. Lease liabilities are included
in other financial liabilities in the consolidated statement of financial position. Interest expenses are shown as financial
charges separately from depreciation of right-of-use assets in the consolidated statement of profit or loss. Makita
has adopted not to recognize right-of-use assets and lease liabilities by applying the exemption provision of IFRS 16
for short-term leases with a lease term of 12 months or less and low-value leases. Makita recognizes lease payments
related to these leases as expenses using the straight-line method over the lease term.
In the previous consolidated fiscal year, the Group accounted for in accordance with the following policies.
The group classifies a lease that transfers substantially all the risks and rewards incidental to ownership of an asset
as a financial lease and a lease other than a finance lease as an operating lease.
Determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement, in
accordance with IFRIC Interpretation 4 “Determining Whether an Arrangement Contains a Lease.”
In finance lease transactions, lease assets and lease obligations are initially recognized at the lower of the fair valueof leased property and the present value of the minimum lease payments, each determined at the inception of thelease.
Lease assets are depreciated by using the straight-line method over the fewer years of the estimated useful life andthe lease term.
Lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term.
Impariment of Non-financial Assets
We judge at the reporting date whether there are any indications that Makita’s non-financial assets except inventories
and deferred income taxes may be impaired.
If any of those indications is present, we conduct impairment tests to estimate recoverable amount of the assets.
Goodwill, intangible assets with no definite useful life, and intangible assets that are not yet available for use are notamortized, and the impairment tests are conducted every year and every time when indications of impairment arepresent.
Makita’s corporate assets do not generate independent cash inflow, therefore, if there is any indication that thecorporate assets may be impaired, the recoverable amount of cash-generating unit to which the corporate assets is
attributable is estimated.
A recoverable amount is the higher amount of the fair value less the cost of disposal and the value in use. In culculating
value in use, an estimate of the future cash flows is discounted to the present value by using the discount rate before
tax that reflects the time value of money and the risk inherent in the asset.
If the carrying amount of each asset or cash-generating unit exceeds the recoverable amount, the impaiement loss isrecognized in profit or loss, and the carrying amount of the asset is reduced to a recoverable amount. Any impairment
loss recognized related to cash-generating units or groups of cash-generating units is allocated to reduce the carrying
amount of goodwill allocated to the unit, and then the carrying amount of other assets in the unit is reduced
proportionally.
Impairment losses of goodwill are not reversed. As for impairment losses of non-financial assets other than goodwill,
the recorvarable amount of the asset is estimated if there is no impairment losses or any indication of possibility thatthe impairment loss is reduced, and the impairment loss is reversed if the recoverable amount exceeds the carrying
amount after impairment. In addition, reversal of impairment losses are recognized in profit or loss, within the range
not exceeding the carrying amount when there was no impairment loss recognized in the asset in the past.

15

Post-emplyment Benefits
Makita has adopted defined benefit pension plans and defined contribution plans for post-employment benefits.
(i) Defined benefit pension plans
The present value of the defined benefit obligations and the related current service cost and past service cost arecalculated by using the projected unit credit method.
A discount rate is calculated based on the market yields of high quality corporate bonds at the reporting datecorresponding to a discount period which is determined based on the period until the expected date of future benefit
payment in each fiscal year.
Assets and liabilities related to defined benefit pension plans are calculated by the amount of the present value of
defined benefit obligations less the fair value of the plan assets. The current service cost and net interest on the net
defined benefit liability are recognized in profit or loss. Past service costs are recognized as expense during theperiod in which they occur.
Remeasurements of the net defined benefit liability or asset are entirely recognized in other comprehensive incomein the period in which they occur, and immediately transferred to retained earnings.
(ii) Defined contribution plans
The contribution payable to defined contribution plans is recognized as expense during the period in which
employees render the related service.
Share-based payments
The group enacted stock option plan to its members of the board of directors, excluding outside directors. The plan isdesigned as equity-settled. Fair value is measured at grant date and is expensed over the vesting period.

Provisions
Provisions are recognized when Makita has a present legal obligation or constructive obligation as a result of a past
event, and when it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation and a reliable estimate can be made of the amount of the obligation.
When the effect of the time value of money is material, the provision is measured at the present value of theexpenditures that are expected to be required to settle the obligation. Present value is culculated by using the discountrate before tax that reflects the time value of money and the risks inherent in the liability. Rebate of the discounted
amount arising from the passage of time is recognized as financial cost.
Warranty provisions are provided to prepare for the expense of after-sales service for the products based on the pastactual cost, taking into consideration the defective rate of current products, the malfunction of specific products never
manufactured before, the effects of the costs of materials and shipping related to repair of defective products. Warranty
provisions are provided as provisions and cost of sales, when the revenue is recognized.
Makita generally guarantees the performance of products delivered and of services rendered for a certain period or
term. Estimates for product warranty cost are made based on historical warranty claim experience.
Product warranty provisions are recorded as provisions and cost of sales when revenue is recognized.

Equity and other capital
1) Ordinary shares
Ordinary shares are recognized in share capital and capital surplus at their issue price. Share issuance costs are
deducted from the issue price.
2) Treasury shares
Treasury shares are recognized at cost and deducted from equity. No gain or loss is recognized on the purchase,sale or retirement of the company’s treasury shares. Any difference between the carrying amount and consideration
received on the sale of treasury shares is recognized directly in equity.

16

Revenue Recognition
Makita recognizes revenue by applying the following five steps.
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
Makita is engaged mainly in production and sales of electric power tools and gardening equipment, etc. Regardingthese product, we have determined that a performance obligation is satisfied when a product is transferred to acustomer as the customer has control of the product. Therefore, revenue of these products is recognized at the pointof transferring these products. In addition, the revenue is measured at the amount of the promised consideration in acontract with a customer less the amount of a reduction, rebate and returned products.
Financial income and expenses
Financial income consists of interest income, dividend income, foreign exchange gains, derivative income, etc. Interest
income is recognized as incurred using the effective interest rate method. Dividend income is recognized when theGroup's right to receive payment is established. Financial expenses consist of interest expense, foreign exchange loss,
derivative loss, etc. Interest expense is recognized as incurred using the effective interest rate method.
Income taxes
Income taxes consist of current income taxes and deferred income taxes. Income taxes are recognized as income or
expenses and included in profit or loss, except for taxes related to business combinations and taxes related to items
that are recognized directly in equity or in other comprehensive income.
Current income taxes are recognized in the amount of the expected taxes payable to or receivable from the taxation
authorities. Calculation of the amount of tax is based on the tax rates and tax laws enacted or substantively enacted by
the end of the reporting period in countries where the Group conducts business and earns taxable income.
Deferred income assets and liabilities are recognized for temporary differences between the carrying amounts of assets
or liabilities at the end of the reporting period and its tax base, and for tax loss carryforwards. Deferred tax assets arerecognized for deductible temporary differences, the carryforward of unused tax losses and the carryforwards of unused
tax credits to the extent of that it is probable that future taxable income will be available against such deferred tax assets.
Deferred tax liabilities are recognized, in principle, for all taxable temporary differences.
Deferred tax assets and liabilities are not recognized for the following temporary differences:

Taxable temporary differences arising from initial recognition of goodwill



Deductible temporary differences on investments in subsidiaries and associates, when it is probable that thetemporary differences will not reverse in the foreseeable future

Taxable temporary differences on investments in subsidiaries and associates, when the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will not reverse in
the foreseeable future

Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to set off current tax assets
against current tax liabilities and income taxes are levied by the same taxation authority on the same taxable entity.
Earnings Per share
Basic earnings per share are calculated by dividing net income attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the period, adjusted for treasury shares held. Diluted earnings
per share are calculated by adjusting the effects of all dilutive potential ordinary shares.

17Government Grant
Government grants will be recognised if it is assurance that the grant will be received and the conditions attaching tothem will be complied.
Government grant related to income will be included in “Other income”.
Government grant related to asset will be recognized as deferred income that is recognized in profit or loss on asystematic basis over the useful life of the asset.

The group’s reportable segment are the components of the Group for which discrete financial information is available and which
are regularly reviewed by the Board of Directors in deciding how to allocate resources and in assessing their performance.
Makita group has an single business with core activities in the field of production and sales of electric power tools, pneumatic
tools and gardening equipment. Local subsidiaries in Japan, Europe, North America, Asia and other regions work in cooperation
with each other to achieve our aims.
Accordingly, the group’s reportable segement is organized by the region of Japan, Europe, North-american and Asia.
Reportable Segment

Major Countries

Japan

Japan

EuropeGermany、England、Russia、France、Finland

North-America

America、Canada

Asia

China、Thailand

Reportable segment information
The accounting treatment in each reportable segment is the same as in Notes3 “Significant Accounting policies and criticalaccounting estimates”.

Previous consolidated fiscal year (2019.4.1~2020.3.31)
In millions of Yen

OthersReconciliation
to Consolidated
Consolidated
Financial
Statements

Japan

EuropeNorthAmerica

118,797

217,11374,13924,912434,961

57,656―492,617

176,567

7,323

3,896

188,012375,798587

ሺ376,385)―

Total revenue

295,364

224,436

78,035

212,924

810,759

58,243

ሺ376,385)

492,617

Operating Income

22,726

13,252

ሺ201)

17,87753,654

1,327

9,065

64,046

Financial income

―

―

―

―

―

―

―

2,558

Financial expenses

―

―

―

―

―

―

―

ሺ596)

Income before income tax

―

―

―

―

―

―

―

66,008Asia

Subtotal

Revenue
External Revenue
Inter-segment revenue

18

Other items
Depreciation
Amortization

1.

and

4,833

3,201

917

4,711

13,662815

ሺ128)

14,349Segment Assets

446,963

219,398

65,625

141,333

873,319

56,568

ሺ255,323)

674,564

Capital expenditures

19,420

9,000

5,966

9,121

43,507

1,028

ሺ126)

44,409Internal sales revenue or transfer amount between segments is based on the selling price decided through consultation inconsideration of market conditions.

2.

“Other” mainly consists of the regions of Australia, Brazil and the United Arab Emirates.

3.

Reconciliation to Consolidated Financial Statements is as follows.

①

The adjustment of operating income of 9,065 million includes the elimination of intersegment transactions.

②

Depreciation and amortization adjustment of ሺ128) million is the effect of consolidation adjustment between segments.

③

The adjustment amount of ሺ255,323) million yen for segment assets includes inter-segment transaction elimination
amount.
The adjustment of capital expenditure of ሺ126) million yen is the effect of consolidated adjustment between segments.

④

Current consolidated fiscal year (2020.4.1~2021.3.31)
In millions of yen

OthersReconciliation toConsolidated
Consolidated
Financial
Statements

Japan

EuropeNorthAmerica

External Revenue

131,329

284,419

92,812

25,238533,798

74,533―608,331

Inter-segment revenue

247,385

12,597

4,220

265,547

529,749568

ሺ 530,317)―

Total revenue

378,714

297,016

97,032

290,785 1,063,547

75,101

ሺ 530,317)

608,331

Operating Income

31,102

29,837

3,681

20,722

85,342

4,358

ሺ1,236)

88,464

Financial income

―

―

―

―

―

―

―

1,813

Financial Cost

―

―

―

―

―

―

―

ሺ3,078)

―

―

―

―

―

―

―

87,199

5,632

3,895

1,235

5,103

15,865808

ሺ182)

16,491

Segment Assets

517,110

291,81381,723177,055 1,067,701

75,034

ሺ329,857)

812,878

Capital expenditures

24,01913,712

2,741

943

ሺ247)

49,855Asia

Subtotal

Revenue

Income before income tax
Other items
Depreciation
Amortization

and

8,687

49,1591.

Internal sales revenue or transfer amount between segments is based on the selling price decided through consultation in

2.

“Other” mainly consists of the regions of Australia, Brazil and the United Arab Emirates.

3.

Reconciliation to Consolidated Financial Statements is as follows.

consideration of market conditions.

①②

The adjustment of operating income of ሺ1,236) million includes the elimination of intersegment transactions.
Depreciation and amortization adjustment of ሺ182) million is the effect of consolidation adjustment between
segments.

③

The adjustment amount of ሺ329,857) million yen for segment assets includes inter-segment transaction elimination

19

amount.
④

The adjustment of capital expenditure of ሺ247) million yen is the effect of consolidated adjustment between segments.

Products and Service Information
In millions of Yen
Previous consolidated fiscal year
(2019.4.1~2020.3.31)

Current consolidated fiscal year
(2020.4.1~2021.3.31)

electric power tools

292,497356,232

pneumatic tools and gardening equipment

112,678

147,937

Parts, accessories and maintenance

87,442

104,162492,617608,331

Total

Information about Geographical Areas
The breakdown of sales revenue and non-current assets by region is as follows.
External revenue
In millions of Yen

Previous consolidated fiscal year
(2019.4.1~2020.3.31)

Current consolidated fiscal year
(2020.4.1~2021.3.31)

Japan

100,697

113,048

Europe216,230

282,725

North-America
America

72,304(63,179)

90,945(80,387)

Asia

38,99839,331Others64,38882,282492,617608,331

Total

Non-current assets (excluding financial assets, deferred tax assets and retirement benefits assets)

Previous consolidated fiscal year
(2020.3.31)
Japan

In millions of Yen
Current consolidated fiscal year
(2021.3.31)

69,68689,522Europe（Romania）

36,624（15,359)

50,738（19,864)

North-America

10,83012,711Asia（China）

32,436(23,938)

38,912(30,049)

9,528

10,111

159,104

201,994

OthersTotal

Excludes financial instruments, deferred tax assets, and retirement benefit assets(5) Information about major customers

20

It is omitted because there are no customers who account for 10% or more of the sales income in the consolidated profit
and loss statement among the sales income to external customers.

Cash and Cash equivalents comprise the following:
The balance of “cash and cash equivalents” in the consolidated statement of financial position and the balance of “cashand cash equivalents” in the consolidated statement of cash flows for the previous consolidated fiscal year and the current
consolidated fiscal year are the same.
In millions of Yen
Previous consolidated fiscal year
(2020.3.31)

Current consolidated fiscal year
(2021.3.31)

Cash and deposit

87,030121,393

Deposit within 3 months

56,40927,247

143,439

148,640

Total

Cash and cash equivalents are classified as financial assets measured at amortized cost.

Trade receivables and other receivables comprise the following:
In millions of Yen
Previous consolidated fiscal year
(2020.3.31)

Current consolidated fiscal year
(2021.3.31)

Notes receivables andAccounts receivables

70,781

97,246

Allowance of bad debt

(1,182)

ሺ1,555)

Total

69,59995,691

Trade and other receivables are classified as financial assets measured at amortized cost.

Inventories comprise the following:
Previous consolidated fiscal year
(2020.3.31)
Finished goods and goods for
sale

Current consolidated fiscal year
(2021.3.31)

175,510215,015Work in progress

3,402

4,633

Raw materials and supplies

35,64847,899214,560

267,547

Total






The Cost of sales includes inventories recognized as expense amounted to 320,523 million and 401,175 respectively, in fiscal year
2020 and 2021
Write-downs to net realizable value amounted to 2,940 and 2,211 million, respectively, in fiscal year 2020 and 2021
The amount of inventories recorded in the consolidated financial statements for the previous consolidated fiscal year and the current
consolidated fiscal year was 214,560 million yen and 267,547 million yen, and the devaluation of book value due to the decline in net
realizable value was 19,566 million yen.It is recorded after deducting yen and 20,972 million yen.
There are no inventories pledged for debt.
There was no reversal of significant devaluation during the previous and current consolidated fiscal years

21Other assets comprise the following:
Previous consolidated fiscal year
(2020.3.31)

Current consolidated fiscal year
(2021.3.31)

Tax receivable

1.588

670

Accrued expenses

1,949

1,983

Others

7,802

10,834

11,33913,487

Thereof Current

7,633

10,223

Thereof Non-Current

3,706

3,264

11,33913,487

Total

Total

22

The following tables present changes in acquisition costs, accumulated depreciation and accumulated impairment losses,
and carrying amounts of property, plant and equipment.
Acquisition cost

March 31, 2019

Buildings and Machinery andstructures
vehicles
102,374
103,861

In millions of Yen
Construction in Right-of-use
Total
asset
progress

Land
25,701

13,279―245,215

―

ሺ244)

―

―

10,546

10,302

102,374

103,61725,701

13,27910,546

255,517

860

9,577

3,997

27,857

4,154

46,445

ሺ312)
7,523

ሺ5,350)2,830

ሺ1,357)665

ሺ2,208)
ሺ11,018)

ሺ102)―

ሺ9,329)―

ሺ2,964)

ሺ4,239)

ሺ571)

ሺ686)

ሺ875)

ሺ9,335)

107,481

106,435

28,43527,224

13,723

283,298

5,820

10,1781,454

30,5584,147

52,157

Sales and Disposals

ሺ538)

ሺ5,968)

ሺ11)

ሺ1,457)

ሺ728)

ሺ8,702)

Reclassification

18,8203,921

610

ሺ23,351)

―

―

4,466

5,058

1,038

1,238

1,010

12,810136,049

119,624

31,52634,212

18,152

339,563

Changes in accounting rule
April 1, 2019
Additions
Sales and Disposals
Reclassification
Exchange differences on translationof foreign operations
March 31, 2020
AdditionsExchangedifferencesontranslation of foreign operations
March 31, 2021

Accumulated depreciation and accumulated impairment
In millions of Yen

March 31, 2019

Buildings andstructures

Machinery andvehiclesሺ56,453)

ሺ75,939)

Land
ሺ382)

Construction in Right-of-use
Total
asset
progress―― ሺ132,774)

―

104

―

―

ሺ104)

―

April 1, 2019

ሺ56,453)

ሺ75,835)

ሺ382)

―

ሺ104)

ሺ132,774)

Depreciation
Sales and Disposals
Exchange differences on translationof foreign operations
March 31, 2020

ሺ2,765)158

ሺ7,533)
4,283

―
382

―
―

ሺ2,292)24

ሺ12,590)
4,847

1,184

2,559

―

―

125

3,868

ሺ57,876)

ሺ76,526)――

ሺ2,247)

ሺ136,649)

ሺ3,306)

ሺ8,498)――

ሺ2,610)

ሺ14,414)

520

4,971

―

―

669

6,160

ሺ1,670)

ሺ3,195)

―

―

ሺ429)

ሺ5,294)

ሺ62,332)

ሺ83,248)――

ሺ4,617)(150,197)

Changes in accounting rule

Depreciation
Sales and Disposals
Exchangedifferencesontranslation of foreign operations
March 31, 2021

23

Carrying Amount
In millions of Yen
Buildings andstructures

Machinery andvehiclesLand

Construction in Right-of-use asset
progress

Total

March 31,2020

49,60529,90928,43527,224

11,476146,649

March 31,2021

73,71736,376

31,52634,212

13,535

189,366

1.

Depreciation of property, plant and equipment is included in cost of sales, selling, general and administrative expenses and otheroperating expenses in the consolidated statement of profit or loss.

2.

The amount of property, plant and equipment under construction is shown as construction in progress.

3.

There is no borrowing cost included in the acquisition cost of property, plant and equipment.

4.

There are no tangible fixed assets with mortgages as collateral for tangible fixed assets and liabilities with restrictions on ownership5.

In the previous consolidated fiscal year and the current consolidated fiscal year, the amount of significant commitments regarding theacquisition of property, plant and equipment was 33,129 and 36,898 million.

Right-of-use assets
The carrying amount of Right-of-use assets (finance leases in last fiscal year) included in property, plant and equipment are as
following:
In millions of Yen
Buildings andstructures

Machinery and vehicles

Land

Total

March 31,2020

9,627

779

1,070

11,476

March 31,2021

11,619764

1,152

13,53524

(1)Change table
The following tables present changes in acquisition costs, accumulated depreciation and accumulated impairment losses, andcarrying amounts of Goodwill and Intangible assets.
Acquisition cost
In millions of Yen
Intangible Assets
Goodwill

Development
Expenses

SoftwareTrademark

Total

OthersApril 1,2019

862

6,638

5,771

2,868

1,764

17,903Acquisition

―

―

748

―

300

1,048

Internal development

―

1,636

―

―

―

1,636

Sales and disposals

―

―

ሺ423)

ሺ19)

ሺ50)

ሺ492)

Exchange differences ontranslation of foreign
operations

―

―

ሺ217)

―

ሺ36)

ሺ253)

March 31,2020

862

8,274

5,879

2,849

1,978

19,842Acquisition

―

―

668

93

270

1,031

Internal development

―

1,721

―

―

―

1,721

Sales and disposals

―

―

ሺ387)

―

ሺ18)

ሺ405)

Exchange differences ontranslation of foreign
operations

―

―

348

―

52

400

862

9,995

6,508

2,942

2,282

22,589March 31,2021

Accumulated amortization and Accumulated impairment losses
In millions of Yen
Intangible Assets
Goodwill

Development
Expenses

SoftwareTrademark

Total

Others―ሺ3,308)

ሺ4,055)(1,917)

ሺ584)

ሺ9,864)depreciation

―

ሺ833)

ሺ671)

ሺ210)

ሺ45)

ሺ1,759)Impairment loss

―

ሺ123)

―

―

―

ሺ123)

Sales and disposals

―

―

416

19

48

483

Exchange differences ontranslation of foreign
operations

―

―

150

―

20

170

―

ሺ4,264)

ሺ4,160)

ሺ2,108)

ሺ561)

ሺ11,093)

ሺ1,013)

ሺ804)

ሺ217)

ሺ43)

ሺ2,077)

ሺ141)

―

―

―

―

ሺ141)

Sales and disposals

―

―

379

―

17

396

Exchange differences ontranslation of foreign
operations

―

―

ሺ265)

―

ሺ45)

ሺ310)

ሺ141)

ሺ5,277)

ሺ4,850ሻ

ሺ2,325)

ሺ632)

ሺ13,225)

April 1, 2019

March 31, 2020
depreciation
Impairment loss

March 31, 2021

25

Carrying amount
In millions of Yen
Goodwill
March31,2020

862

Intangible Assets
Research

Software

4,010

1,719

Trademark

Others

741

1,417

Total
8,749

March31,2021
721
4,718
1,658
617
1,650
9,364
1. Amortization of intangible assets is included in cost of sales, selling, general and administration of the consolidated
statement of Profit or Loss.
2. There are no intangible assets with mortgages as collateral for intangible assets and liabilities with restrictions onownership.
3. No significant commitment to acquire intangible assets.
4. There are no significant intangible assets with indefinite useful lives.

(2) Impairment loss
In the last consolidated fiscal year, an impairment loss of 123 million yen was recorded in the Japan segment, which is included
in "Sales and general administrative expenses" in the consolidated statement of Profit or Loss. Assets for which an impairment
loss was recognized are development costs and are due to the suspension of development during the current consolidated
fiscal year. The valuation value is set to “0”, because no cash flow will occur in the future.
In the current consolidated fiscal year, an impairment loss of 141 million yen was recorded in the Japan segment, which isincluded in "Sales and general administrative expenses" in the consolidated statement of Profit or Loss. Assets for which an
impairment loss was recognized are goodwill. As a result of considering future collectability, the valuation amount is set to “0”.
(3) R&D expenses
Research expenses and development expenses that do not meet the asset recognition standard are recognized as expenses
when incurred. R&D expenses recognized as expenses in selling, general and administration of the consolidated statementof Profit or Loss in the fiscal year 2020 and 2021 amounted to 10,768 and 11,770 respectively.

26

The group, as a lessee, leases land, buildings and structures, machinery and vehicles.
Although some lease contracts have renewal options and purchase options, option lease payments that are not included in
the lease term are immaterial to the lease payments. In addition, sublease agreements, variable lease payments andescalation clauses (clauses that raise the lease contract amount) and restrictions imposed by the lease agreements(dividends, additional borrowings, restrictions on additional leases, etc.) are not significant.
(1) Income and expenses relating to lease consists of the followings.
In millions of Yen
2020

2021

Recognition Exemption－Short-term lease expenses

801

578

Recognition Exemption－Low-valued lease expenses（exclude short-term lease）

161

96

Buildings and structures

1,941

2,190

Machinery and vehicles

312

344

Land

39

76

Total of depreciation

2,292

2,610

249

288

Depreciation of Right-of-use assets

Interest expenses on lease liabilities（2）The total cashout flow of leases including low-value lease and short-term lease.

In millions of Yen
Total cashout flow

3,499

3,672

Note 9 Property, plant and equipment presents additions and classification of right-of-use assets
Note 27 Financial Instrument presents maturity analysis of lease liability

Trade payables and other payables comprise the following:
In millions of Yen
2020

2021

Trade payables

25,87049,826

Non-trade payables

9,089

9,966

34,95959,792Total

In millions of Yen

Short-term borrowings
Total

2020

2021

7,997

2,612

7,997

2,612

The average interest rate for loans from banks in fiscal year 2020 and 2021 were 0.45％ and 0.22％ respectively.

27

Other liabilities comprise the following:
In millions of Yen
2020

2021

Accrued expenses

10,76418,022

Accrued payroll and bonus

10,433

13,337

Others

6,275

9,281

27,47240,64027,26440,431208

209

27,47240,640

Total
Thereof Current
Thereof Non-current
Total

28

(１) Post-employment Benefits①

defined benefit plan

The Company and most of its consolidated subsidiaries have defined benefit plans, defined contribution plans and other plans
for their post-employment benefits. Under these plans, employees are entitled to lump-sum payments or retirement benefits
as pensions.
The Company's domestic retirement benefit plan covers all employees of the Company. Contribution to the defined benefit planis determined by various factors such as the employee’s salary level, service years, funded status of plan assets, actuarial
calculation, etc. According to the provisions of defined benefit corporate pension law, the contributions to the fund will be
reviewed every 5 years.
The defined benefit plan is legally separated from the parent company, and is responsible for the management and operationof the plan assets. Benefits payment is determined using the cumulative points granted each month and the position of theemployees at the time of retirement, service year etc.
The objective of managing pension assets is to earn returns to the greatest extent possible and ensure stable benefits andpayments for plan participants. In order to meet this objective, Makita determines an optimal asset mix from a three-to-fiveyear’s medium and long-term standpoint. To avoid a sharp decline in the asset value in the future, Makita updates the asset
mix as necessary by monitoring risks and assessing the magnitude of the risks. Makita has an acceptable divergence indicator
for the asset mix, and the proportion of the temporary asset allocations will be updated promptly when the divergence occurs.
Makita determined the mix of equity securities and debt securities after taking into consideration of the expected long-term rateof return on pension assets. To decide whether changes in the basic portfolio are necessary, Makita examines the divergence
between the expected long-term income and the actual income from the portfolio on an annual basis. Makita and somesubsidiaries revise the portfolio when it is deemed necessary to reach the expected long-term yield.
② Defined benefit plan(a) Defined benefit assets recognized in the consolidated statement of financial position
In millions of Yen
2020

2021

Present value of defined benefit
obligation(39,612)(40,507)

Present value of Plan asset

45,98547,786

6,373

7,279

Retirement benefit assets

9,511

10,685Retirement benefit liabilities(3,138)(3,406)

Total
Amount recognized inconsolidated statement offinancial position29

(b) Defined benefit obligations
Changes in the present value of defined obligations are as follows:
In millions of Yen
2020

2021

Defined benefit obligations at beginning of year

39,58339,612Service cost

1,727

1,668

224

243

92

268

54

(90)

22

103

―

―

(1,902)(1,686)

(188)

389

39,61240,507

Interest expenses
Premeasurement
Actuarial(gains)losses arisingdemographic assumptions
Actuarial(gains)losses arisingfinancial assumptions

fromchangesinfromchangesinActuarial(gains)losses arising from others
Past service cost
Benefits paid
Exchange differences
operationsontranslationofforeignDefined benefit obligations at ending of year

The weighted average duration of the defined benefit obligations was 12.4 years at March 31, 2020 and 12.8 years at
March 31, 2021.

(c) Plan asset
Changes in the present value of plan asset are as follows:
In millions of Yen

The fair value of plan assets at beginning ofyearInterest income
Contribution by employees
Measurements-Return on Plan asset
Benefits paid
Exchange differences on translation offoreign operations
The fair value of plan assets at end of year

2020

2021

45,89345,985

239

262

1,179

1,212

444

1,661

(1,730)ሺ1,471)(40)

13745,98547,786

The group plans to contribute 1,217 Million in the year ending March 31, 2022.

30

The details of plan asset are as followings:
In millions of Yen
2020

2021

Market price in an active market

Market price in an active market

quotedquotedquotedquoted

7,660

―

7,392

―

717

―

666

―

Joint investment trust(domestic)

―

594

―

1,541

Joint investment trust(overseas)

―

1,090

―

2,786

Joint investment trust(domestic)―

11,881―

8,486

Joint investment trust(overseas)

―

5,542

―

6,362

Life Insurance general account

―

8,615

―

9,322

Alternative investment

―

9,886

―

11,231

Total

8,377

37,608

8,058

39,728Cash and cash equivalents
Equity financial products
Equity stock

Debt financial instruments

Virtually all equity securities have quoted prices in active markets. Makita group Conducted sufficient research and analysis on
the management content and growth potential of the investment target company and appropriately diversifies investments by
the type of industry.
Debt securities mainly composed of domestic and foreign government bonds and municipal bonds.Makita conducts a good
research and analysis on issuance conditions, such as rating, coupon, maturity date, and issuer. Regarding investments inforeign equity and bonds, Makita has investigated the political and economic stability of the markets to be invested in, themarket characteristics such as settlement systems and the taxation systems. On that basis, Makita selected countries andcurrencies appropriate for investment. For commingled funds, Makita selected those that have defined operating assets andmanagement style. Makita also has alternative investments in J-REIT, G-REIT, commodities, and hedge-funds (market neutral
strategy for Japanese equity and relative value strategy for bonds).

31

(d) Significant actuarial assumptions and related sensitivity analysis
Significant actuarial assumptions are as follows:

Discount rate

2020

2021

0.6％

0.6%

(e) Sensitivity analysis on defined benefit obligations
The sensitivity analysis on defined benefit obligation is as follows:
In millions of Yen
2020

2021

0.25％increaseሺ1,149)

ሺ1,226)

0.25％decrease

1,211

1,292

Discount rateDefined contribution plans
Expenses related to the defined contribution plan recognized in profit or loss were 394 million yen and 463 million yen

for the fiscal year ended March 31, 2020 and March 31, 2021.
(２) Other employee benefit expenses
Other employee benefit expenses recognized in cost of sales, selling, general and administrative expenses in the
consolidated statement of income for the fiscal years ended March 31, 2020 and 2021 were 75,411 million yen and 85,649
million yen, respectively.

32

The Company aims to further increase the motivation of its directors to contribute to the rise of stock prices and theimprovement of corporate value and share the merits and risks of stock price fluctuations with shareholders, We haveintroduced a stock compensation system that allocates restricted stock to eligible directors.Based on this plan, the accounting
treatment of equity-settled stock plans is applied. In addition, with the implementation of the restricted stock compensation
plan, the directors abandoned the stock acquisition rights as stock options which have not yet exercised and the stock option
plan will be abolished.
Restricted stock compensation plan
The Company and the eligible Directors have entered into a restricted stock agreement, and the content of the agreement isthat the transfer restriction period is 50 years. During this period, transfer of restricted stocks to a third party, setting ofpledges, setting of security interests, gifts before birth, beneficiary and any other disposition acts are not permitted. With
regard to the transfer restriction, provided that the eligible directors who received the allocation of the transfer-restricted
stocks remained in the position of directors of the Company from the start of the transfer restriction period until the date of thefirst ordinary general meeting of shareholders of the Company, all of the shares will be released when the transfer restriction
period expires. On the other hand, if there are shares whose transfer restrictions have not been released when the transfer
restriction period has expired, the Company will acquire the shares free of charge.

Grant dateJuly 19, 2019

July 20, 2020

Granted shares

12,22010,726

Fair value of grant date

3,435 Yen

3,915 Yen

Fair value measurement

Calculated based on the closing priceof the Company's common stock on
the Tokyo Stock Exchange on thebusiness day immediately preceding
the resolution date of the Board of
Directors

Calculated based on the closing price of theCompany's common stock on the Tokyo
Stock Exchange on the business day
immediately preceding the resolution date of
the Board of Directors

Share-based payment expenses
Share-based payment expenses recognized in selling, general and administration for fiscal year 2020 and 2021 is as following:

March31, 2020

March31, 2021

Expenses on Stock-option plan

10―

Expenses on Restricted stock compensation plan

31

43

Total

41

43

33

Components of and changes in provisions consist of the following:
In millions of Yen
Production warranty

Others

Total

3,450

883

4,333

Additions

2,743

164

2,907

Decrease(provision used)(2,540)(88)(2,628)Decrease(provision reversed)

(62)

(49)

(111)

Exchangedifferencesontranslation of foreign operations

(195)

(127)

(322)

3,396

783

4,179

Additions

3,249

113

3,362

Decrease(provision used)(2,617)(36)(2,653)

Decrease(provision reversed)

(7)

(24)

(31)

Exchangedifferencesontranslation of foreign operations

260

(31)

229

4,281

805

5,086

Balance as of April 1, 2019

Balance as of March 31, 2020

Balance as of March 31, 2021

2020

2021

Thereof Current

2,931

3,665

Thereof Non-current

1,248

1,421

Although the Group is exposed to various legal allegations and litigation arising from its normal business activities, theultimate consequences of these events will not have a significant impact on the Company's consolidated financial position.

34

Capital and treasury shares
The number of authorized shares, the number of issued shares and the number of treasury shares are as follows.
SharesType of Shares

2020

2021

Ordinary Shares

Ordinary Shares

992,000,000

992,000,000

280,017,520

280,017,520――

280,017,520

280,017,520

8,550,463

8,500,530(49,933)(10,134)

8,500,530

8,490,396

Number of authorized shares
Number of issued shares
Beginning
Increase/decrease
EndingTreasury shares
Beginning
Increase/decrease
EndingCapital surplus
Capital surplus consists of capital reserve and other capital surplus.
The Companies Act in Japan (hereinafter referred to as the “Company Act”) stipulates that over half of the capital contributed
from the issue of the shares must be included in share capital by resolution of the General Meeting of Shareholders.

Retained earnings
Retained earnings consist of legal reserve and other retained earnings.
The company Act requires that 10% of dividend payment must be appropriated as capital reserve or legal reserve till theiraggregate amount equals to 25% of the capital shares. Legal reserve can be used for deficit compensation and can be reversedby the resolution of the general meeting of the shareholders.

35(４) Other components of equity
Equity securities measured at fair value through other comprehensive incomesThis is the accumulated difference of changes in the fair value of financial assets. The amount recognized in othercomprehensive income will be reclassified to retained earnings if the financial asset is derecognized or the fair value
declined significantly.
Premeasurement of defined benefit plans
Premeasurement of defined benefit plans include the effect of any variances between actuarial assumptions at the
beginning of the year and actual results, the effects of changes in actuarial assumptions, actual return on plan assets andinterest income on plan assets(excluding amounts included in net interest on the net defined benefit liability (asset).
Premeasurements of defined benefit plans are recognized in other comprehensive income and immediately reclassified toretained earnings from other components of equity in the period when they occur.

Exchange difference on translation of foreign operations
Foreign currency translation differences arise from the translation of financial statements of foreign operations
prepared in foreign currencies. The exchange difference on the transition date is all transferred to retained earnings
because the group adopted the IFRS1 exemptions.

Other components of equity comprise the following:
Exchange
Remeasurmentof defined
benefit plans

equity securities
measured at fairvalue throughothercomprehensive
incomes

differenceontranslation

Totalof foreign
operations

April 1, 2019
Other comprehensive
incomeTransfer to retained
earnings
March 31, 2020
Other comprehensive
incomeTransfer to retained
earnings
March 31, 2021

9,283

―

(2,852)6,431(2,509)201(30,152)(32,460)

(340)

(201)

―

(541)

6,434

―

(33,004)(26,570)

9,072

953

28,88838,913

―

(953)

―

(953)

15,506―(4,116)

11,39036

Payment of dividends

Fiscal year ended on March 31, 2020
Amount of dividendin millions of Yen

Dividend per share(Yen)

Record date

Effective date

14,11652

March 31, 2019

June 27, 2019

2,715

10

September 30,
2019

November 28,
2019Type of stocks

Amount of dividendin millions of Yen

Dividend per share(Yen)

Record date

Effective dateCommon stock

11,67543

Common stock

2,715

10

Date of Resolution

Type of stocks

General meeting of
Shareholders on
June 26, 2019

Common stock

Board of directors on
October 30, 2019

Common stock

Fiscal year ended on March 31, 2021
Date of Resolution
General meeting of
Shareholders on June25, 2020
Board of directors on
October 30, 2020March 31, 2020
September 30,
2020

June 26, 2020
November 26,
2020

Record date is belong to current fiscal year but the effective date belong to the next fiscal year

Fiscal year ended on March 31, 2020
Date of Resolution

Type ofstocks

Source ofdividends

Amount ofdividendin millions ofYen

Dividend per
share
(Yen)

General meeting of
Shareholders on
June 25, 2020

Commonstock

Retainedearnings

11,67543

Record date

Effective date

March 31, 2020

June 26, 2020

Record date

Effective date

March 31, 2021

June 28, 2021

Fiscal year ended on March 31, 2021
Date of Resolution

Type ofstocks

Source ofdividends

Amount ofdividendin millions ofYen

Dividend per
share
(Yen)

General meeting of
Shareholders on
June 25, 2021

Commonstock

Retainedearnings

16,02059

37

Revenues recognized from contracts with customers
A)

Revenue
Makita group has an single business with core activities in the field of production and sales of electric power tools,
pneumatic tools and gardening equipment. An analysis of revenue by segments is shown in Note 4 “Segment
Information”. The revenue is all from contracts with customers and is recognized at the time of delivery of the product.

B)

Contract balance
Assets and liabilities from the contract with customers are as follows:
In millions of Yen

Assets from the contract withcustomers
Contract liabilities

2020

2021

70,781

97,246

246

478

Assets from the contract with customers are included in trade receivables and other receivables on the consolidated
financial statements. Contract liabilities are included in other current liabilities.
(２) Performance obligation
The normal payment deadline after fulfilling the performance obligation is within 2 months from the billing date. In addition, thecontract with customers does not contain any significant financial components.
If the consideration promised in a contract includes a variable amount and the uncertainty related to the variable consideration
is subsequently resolved, the variable consideration should be included in the transaction price only if the magnitude of arevenue reversal won’t occur.
(3) Transaction price allocated to the remaining performance obligation

As there are no transactions with an individual expected contract period exceeding one year, the Group applies practical
expedients and omits information on remaining performance obligations.

(4) Assets recognized from the cost of acquiring or fulfilling a contract with a customer
The Group has no assets recognized from the cost of acquiring or fulfilling a contract with a customer.

38

In millions of Yen
2020

2021

288,959

390,489

Inventories (increase)/decrease

5,378(52,987)

Employee benefits

75,452

85,692Advertising

9,269

9,960

Freight expenses

9,757

12,988

Research and development

10,768

11,770Depreciation and amortization

14,34916,491(808)

817

Others15,44744,647

Total

428,571

519,867

Materials and purchasing

Loss(profit) on disposal of Fixed Assets

39

(１) Financial income comprise the following:
In millions of Yen
2020

2021

Financial assets measured at amortized cost

1,179

702

Financial assets measured through profit or
loss

329

21

712

688

Financial assets measured at amortized cost0―

Financial assets measured through profit or
loss

0

16

―

386

338

―

2,558

1,813

Interest Income

Dividend Income
Financial assets measured at fair value throughother comprehensive income
Gain on sale

Valuation gain
Financial assets measured through profit orloss
Exchange gains or losses(net)
Total(２) Financial expenses
Financial expenses comprise the following
In millions of Yen
2020

2021

Lease liabilities

249

288

Financial liabilities measured at amortized cost

185

67

3

―

0

14

159

―

―

2,709

596

3,078

Interest expenses

Loss on saleFinancial assets measured at amortized cost
Financial assets measured through profit orloss
Loss on valuation of fair value
Financial assets and liabilities measured
through profit or loss
Exchange gains or losses(net)
Total

40

(１) Deferred tax assets and deferred tax liabilities
The allocation of deferred tax assets and liabilities to balance sheet line items at 31 March 2020 is shown in the following
table:In millions of
Yen
Recognized
April 1 2019 through profit orloss

Recognizedthrough equity

Recognized throughother comprehensive March 31,2020
income

1,564

ሺ400)

―

―

1,164

9,065

ሺ2,092)

―

―

6,973

6

2

―

―

8

1,412

ሺ41)

―

―

1,371

194

ሺ19)

―

29

204

1,700

40

―

―

1,740

ሺ7,523)

1,713

―

―

ሺ5,810)

Employee benefit asset

ሺ2,736)

181

―

ሺ104)

ሺ2,659)Financial assets valued onfair valueሺ1,163)

ሺ43)

147

1,085

26

ሺ413)

ሺ624)

―

―

ሺ1,037)2,106

ሺ1,283)

147

1,010

1,980

Deferred tax asset
Property,equipment

plant

and

Inventories
Tax loss carry forward
Accrued expenses
Employee benefit obligation
Accrued Bonuses
Undistributed
earnings

foreign

OthersTotal

The allocation of deferred tax assets and liabilities to balance sheet line items at 31 March 2021 is shown in the following
table:In millions of
Yen
Recognized
Recognized
Recognized throughApril 1,2020 through profit or
through equity
other comprehensive March 31,2021
loss
incomeDeferred tax asset
Property,equipment

plant

and

Inventories
Tax loss carry forward
Accrued expenses
Retirement benefit obligation
Accrued Bonuses
Undistributed
earnings

foreign

Retirement benefit asset
Valuation on debt securities
Others
Total

1,164

ሺ216)

―

―

948

6,973

1,272

―

―

8,245

8

ሺ7)

―

―

1

1,371

472

―

―

1,843

204

7

―

73

284

1,740

197

―

―

1,937

ሺ5,810)ሺ1,498)――

ሺ7,308)

ሺ2,659)

103

―

ሺ500)

ሺ3,056)

26

ሺ144)

0

ሺ3,924)

ሺ4,042)

ሺ1,037)

91

―

―

ሺ946)

1,980

277

0

ሺ4,351)

ሺ2,094)41

Deferred tax assets and deferred tax liabilities on consolidated statement of financial position
In millions of Yen
2020

2021

Deferred tax assets

6,932

8,860

Deferred tax liabilities

ሺ4,952)(10,954)

1,980(2,094)Total

The deductible temporary difference and unused tax loss carryforward for which no deferred tax asset is recognized are as
follows:
In millions of Yen

Deductible
difference

temporaryTax loss carry forward

2020

2021

10,015

9,845

8,968

8,912

42

Unused tax losses for which the deferred tax assets are not recognized will expires as following:
In millions of Yen

2020

2021

No later than 1 year

15

8

Later than 1 year and not later than 2 years

291―

Later than 2 years and not later than 3 years

3―

Later than 3 years and not later than 4 years――

Later than 5 years

938

1,040

7,721

7,864

8,968

8,912

No limited
Total

The aggregate amounts of taxable temporary difference associated with investment in subsidiaries and associates for which
deferred liabilities were not recognized at March 2020 and 2021 were 150,545million yen and 144,398million yen. The group
did not recognize deferred tax liabilities because it was able to control the timing of the temporary difference.
(２) income tax expenses①Taxes on income comprise the following:
In millions of Yen
2020

2021

16,86924,545

1,084

(39)

4

9

Sub-total

1,088

(30)

Total

17,957

24,515Current tax expense
Deferred tax expense
thereof relating to temporary
differences
Thereof Tax rate change

43

Reconciliation of effective rate
The details of difference between the effective statutory tax rate and the Group’s average actual tax rate consist of thefollowing:

2020

2021

30.2％

30.2％

0.5

0.4

0.9

(0.1)

Tax spring

ሺ0.0)

ሺ0.0)

Change in tax rates

ሺ4.8)

ሺ4.4)

0.9

2.8

ሺ0.5)

ሺ0.8)

27.2％

28.1％

Effective statutory tax rate
(Reconciliation)
Items that are not counted as a deduction
permanently such as entertainment expenses
Increase/Decrease of unrecognized deferred
tax assets

Undistributed foreign earnings
Others
Effective tax rate

44

The Basis for calculating basic earnings per share is shown in the following table:

Net profit attributable to the owners of the parent company
Weighted average number of ordinary shares during the period
Basic earnings per share

2020

2021

Yen Million

47,73162,018

Number271,502,528

271,524,393

Yen

175.80228.41Note) Diluted earnings per share for the previous and current consolidated fiscal year is not stated because there are no
dilutive potential shares.

45

Other comprehensive income for the period after tax comprises the following:
In millions of Yen

2020

2021

(3,594)

12,996

1,085(3,924)(2,509)9,072

Before Tax

276

1,380

Deferred Taxes

(75)

(427)

After Tax

201

953

Sub-total(2,308)10,025(30,328)

29,220--After Tax

(30,328)

29,220Sub-total(30,328)

29,220(32,636)

39,245

Items not expected to be reclassified to the income statement in the future
Equity financial instruments measured at fair value through Other comprehensive
incomeBefore Tax
Deferred Taxes
After Tax
Premeasurement of defined benefit plans

Items expected to be reclassified to the income statement in the future
Exchange difference on translation of foreign operations
Before Tax
Deferred Taxes

Total

46

(１)Classification of Financial Instruments
The carrying amount of other financial assets is as follows:
In millions of Yen
2020

2021

Cash and cash equivalents

16,864

14,940Debt securities

3,105

2,304

Deposit

8,744

7,393

274

174

28,987

24,811

26,58739,674

26,58739,674

7,726

4,519

486

234

8,212

4,753

63,786

69,238Thereof Current Assets

25,235

18,227

Thereof Non-current Assets

38,55151,011

63,786

69,238At amortized cost

Loans to third party
Sub-Total
At fair value through othercomprehensive income
Equity securities
Sub-Total
At fair value through Profit orloss
Debt securities
Derivatives
Sub-Total
Total

Total

47

The carrying amount of other financial liabilities is as follows:
In millions of Yen
2020

2021

11,74013,843622

2,001

12,362

15,844

Thereof Current Liabilities

2,468

4,080

Thereof Non-current Liabilities

9,894

11,764

Total

12,362

15,844

Lease liabilities
At fair value through Profit
or loss
Derivatives
Sub-total(２) Financial assets measured at fair value through other comprehensive income
Equity securities held by the company for the purpose of maintaining and strengthening business relationships aredesignated as at fair value through other comprehensive income.
 Names of major equity securities and their fair value are as followings:
Fiscal year March 31, 2020
In millions of Yen
Company name

Fair value

Sharp Corporation

4,068

OMRON Corporation

3,884

Toyota Motor Corporation

3,094

Murata Manufacturing Co., Ltd.

1,832

Sumitomo Real Estate Co., Ltd.

1,207

Mitsubishi UFJ Financial Group, Inc.

1,045

Toho Gas Co., Ltd.

1,031

Fuji Machine Mfg. Co., Ltd.

882

Suzuki Corporation

845

SEINO Holdings Co., Ltd.

840

Others

7,859
Total

26,58748

Fiscal year March 31, 2021
In millions of Yen
Company name

Fair value

Sharp Corporation

6,846

OMRON Corporation

5,961

Toyota Motor Corporation

4,100

Murata Manufacturing Co., Ltd.

2,960

Sumitomo Real Estate Co., Ltd.

1,789

Suzuki Corporation

1,643

Mitsubishi UFJ Financial Group, Inc.

1,534

Fuji Machine Mfg. Co., Ltd.

1,515

Toho Gas Co., Ltd.

1,438

Toyota Tsusho Corporation

1,293

Others

10,595
Total

39,674

 Dividend Income
In millions of Yen
2020

2021

Investments derecognized during the period

150Investments held at the end of the period

697

688

712

688

Total

49



Derecognized Finance assets measured at fair value through other comprehensive income
The fair value of financial assets derecognized and the cumulative gains or losses are as follows:
In millions of Yen
2020

2021

Fair value

851

0

Cumulative gains/losses

524

0

The group transfers the cumulative gains/losses arising from changes in the fair value of financial assets measured at fairvalue through other comprehensive income to retained earnings. The amount recognized in other comprehensive income
will be transferred to retained earnings when the assets derecognized or the fair value decreased significantly. The amounttransferred to retained earnings was 340 million yen in FY2020 and 0 million yen in FY2021.
(３) Risk management on financial instruments
The group manages financial instrument risk based on the following policies to avoid and mitigate market risk, Interest risk,
credit risk and liquidity risk.
 Capital management
The main indicators used by the company in capital management are as follows:

Capital amount in millions of
Yen
Capital adequacy ratio (％)

2020

2021

571,275

657,855

84.7

80.9

50

 Financial risks
The Group is exposed to financial risks, such as foreign exchange risk, market price fluctuation risk, interest rate risk,
credit risk, liquidity risk. The group manages to mitigate the risks as following.
A)

Market risksCurrency risks
As an enterprise with worldwide operations, the Makita Group conducts business in a variety of currencies from whichcurrency risks arise. In order to hedge currency risks, the Group holds derivative financial instruments such as forward
currency exchange.
The group did not apply hedge accounting for these derivative transactions, but determined that these transactions
effectively offset the impact of fluctuations in exchange rate.
Currency exposure
At the end of the reporting period, the currency exposure for the following year was as follows:
2020

2021

U.S. Dollar

7,379(6,661)

Euro

2,544

7,753


Exchange risk sensitivity analysis
The following table illustrated the impact on income and equity in the consolidated statement ofincome from foreign currency-denominated financial instruments held by the Group at the end ofeach fiscal year if the Japanese yen appreciated by 10% against U.S. dollar and the euro.

In millions of Yen
Currency

2020

2021

Profit before tax After tax

Profit before tax After tax

U.S. Dollar

(74)

(52)

67

46

Euro

(25)

(18)

(78)

(54)


Stock price fluctuation risk management
The Group held marketable equity securities and exposed to price fluctuation risk. In order to manage this risk, thegroup regularly reviews market prices and financial conditions of the issuers, and review the holding status appropriately.
The effects of the 1% decline in market prices on other comprehensive income (after tax effects) on listed shares held by
the Group at the transition date, the end of the previous consolidated fiscal year and the end of the current consolidated
fiscal year are as follows:
In millions of Yen

Other comprehensive income(After tax)

51

2020

2021

ሺ177)

ሺ268)

B) Interest risk
The Group's borrowings and lease obligation generally have fixed interest rates.
Therefore, the interest rate risk is not important for the Group and interest rate risk sensitivity analysis has not been
conducted.
There were no outstanding balances of floating interest rate at the transition date, the end of the previous consolidated
fiscal year and the end of the current consolidated fiscal year.

Credit riskCredit risk management
The Group is exposed to credit risk if the counterparties default on contractual obligations resulting in financial losses to
the group.
Note and accounts receivables are trade receivables that expose the Group to customer credit risk. The Group sets up
credit limits for business partners in accordance with the credit management rules, the sales management department
regularly monitors the status of major business partners, and manages due dates and balances for each business
partner to identify quickly any concerns about collection due to deterioration of financial conditions.
The Group has no overly concentrated credit risk with respect to a single business partner or the group to which thebusiness partner belongs.
The Group's fund management is exposed to the credit risk of the depositors and bond issuers.
Based on the Fund Management Guidelines, cash and cash equivalents and other financial assets the Group holded areissued by high-rated financial institutions, therefore the credit risk the group exposed is limited.
Credit risk exposureCredit risk exposure related to trade receivables and other receivables is present as following by days pastdue:
In millions of Yen
2020

2021

Not due

65,67492,027Less than 30 days

3,843

1,004

Over 30days less than 60days

171

2,301

Over 60days less than 90days

386

460

Over 90days

707

1,454

70,781

97,246

Total

52



Allowances for doubtful receivables
The changes of the allowances for doubtful receivables are as following:
In millions of Yen
2020

2021

1,061

1,182

Increase during the year

355

675

Decrease during the year(purpose use)

(70)

ሺ64)

Decrease during the year (reversal)

(80)

ሺ171)

Exchange difference on translation of foreign
operations

(84)

ሺ67)

1,182

1,555

Beginning balanceEnding balance Liquidity risk
Liquidity risk is the risk that the Group will not be able to fulfill its obligations relating to pay financial liabilities that come due.
The group stipulated its financial plan to understand its liquidity and consistently ensure the availability of sufficient funding to
reduce the liquidity risk.

Financial year ended March 31, 2020

In millions of Yen
Book value

Cash flow oncontract

Within 1year

Over 1 year within
5 years

Over 5 years

Non-derivative financial liabilities
Trade liabilities and other liabilities

34,95934,95934,959

―

―

Loan

7,997

8,042

8,042

―

―

Lease liabilities

11,74012,789

2,695

5,962

4,132

Cash inflow

15,70315,703

10,096

5,607―

Cash outflow

16,325

16,325

10,265

6,060

―

622

622

169

453

―

Derivative financial liabilities
Currency related derivatives

Sub-total

53

Financial year ended March 31, 2021

In millions of Yen
Book value

Cashflow oncontract

Within 1year

Over 1 year within
5 years

Over 5 years

Non-derivative financial liabilities
Trade liabilities and other liabilities

59,792

59,792

59,792

―

―

Loan

2,612

2,616

2,616

―

―

Lease liabilities

13,843

14,588

3,262

6,870

4,456

Cash inflow

71,92971,92966,322

5,607―

Cash outflow

73,93073,93067,635

6,295―

Sub-total

2,001

2,001

1,313

688

―

Derivative financial liabilities
Currency related derivatives(４) Fair value①

Fair value hierarchy
Level 1：Fair value measured with quoted prices in active market for identical assets and liabilities
Level 2：Fair value measured with inputs other than quoted prices categorized within Level 1 that are observable forthe asset or liability, either directly or indirectly
Level 3：Fair value measured with inputs not based on observable market data for the asset or liability②

Measurement of fair value
The fair value of financial assets and liabilities are decided as following:(Cash and Cash equivalent, Trade receivables and other receivables, Trade liabilities and other liabilities)
Carrying amounts approximate fair value because these are settled in the short term.

(Borrowings)
Carrying amounts approximate fair value because all repayments are made within one year
(Other financial assets and financial liabilities)
Regarding the other financial assets, time deposits longer than 3 months, carrying amounts approximate fair value
because they are settled in the short term. Equity securities are designated at fair value measured through othercomprehensive income and are measured using market prices on exchanges.
Debt securities measured at fair value through profit or loss is calculated on the price on the exchange or the pricepresented by the correspondent financial institution.
Derivative instruments measured at fair value through profit or loss is calculated based on observable market
conditions such as exchange rates, interest rates and volatility.

54

Financial instruments measured at amortized cost
The carrying amount and fair value hierarchy of financial asset measured at previous fiscal year ending on March
31,2020 and current fiscal year ending on March 31, 2021 are as following:

March 31, 2020
In millions of Yen
Book value

Debt securities

Fair value

3,105

Level 1

Level 2

Level 3

total

299

2,786

-

3,085

March 31, 2021
In millions of Yen
Book value

Debt securities

Fair value

2,304

55

Level 1

Level 2

Level 3

total

501

1,807

-

2,308



Fair value of the financial assets and liabilities measured at fair value
Fiscal year ending on March 31, 2020
In millions of Yen

Level 1

Level 2

Level 3

Total

Financial Assets
Financial assets measured at
fair
value
throughothercomprehensive income
Stocks25,369―1,216

26,587

―

486

―

486

Debt securities

3,628

4,057

41

7,726

Total

28,997

4,543

1,259

34,799

―

622

―

622

―

622

―

622

Financial assets measured atfair value through profit or loss
Derivative assets

Financial liabilities
Financial liabilities measured
at fair value through profit orloss
Derivative liabilities
Total
Fiscal year ending on March 31, 2021
In millions of Yen

Level 1

Level 2

Level 3

Total

Financial Assets
Financial assets measured at
fair
value
throughothercomprehensive income
Stocks38,375―

1,299

39,674

―

234

―

234

Debt securities

4,511

―

8

4,519

Total

42,886234

1,307

44,427

―

2,001

―

2,001

―

2,001

―

2,001

Financial assets measured atfair value through profit or loss
Derivative assets

Financial liabilities
Financial liabilities measured
at fair value through profit orloss
Derivative liabilities
Total

56

Finance assets classified as level1 is mainly the publicly listed stocks and trade in active market。Publicly listed stocks are
based on quoted prices in active markets where there is sufficient trading volume and frequent trading.
Finance assets classified as level2 are mainly asset management products and derivatives. Asset management products areassessed based on the price that counterparty financial institutions calculate based on observable market data. Derivatives aremainly exchange contracts and are calculated based on the basic conditions observable in the market such as exchange rates.
Finance assets classified as level3 is primarily the unlisted equity securities. In accordance with the Group's accounting policies,
the fair value is measured using the most recently available data.

(１) Transactions with related parties
Fiscal year 2020

In millions of Yen
Company

Supplies and services
performed

Transaction Amount

Outstanding balance

Other related parties

Maruwa Co. Ltd.

Advertising expense

2―

Other related parties

Toa Co. Ltd.

Purchase of materials andproduction equipment

90

3

Fiscal year 2021

In millions of Yen
Company

Supplies and services
performed

Transaction
AmountOutstandingbalance

Other related parties

Maruwa Co. Ltd.

Advertising expense

2―

Other related parties

Toa Co. Ltd.

Purchase of materials andproduction equipment

182

17

(２) Primary executive management compensation
Primary executive management includes the member of the Board of directors and executive officers of the company.
Primary executive management compensation consists of the following:
In millions of Yen
2020

2021

Short-term benefits

317

374

Compensation and bonus

145

146

Share-based payments

41

43

Total

503

563

57

The changes in liabilities related to financing activities are as follows
Fiscal year 2020

In millions of Yen
April 1,2019

Short-term
Borrowings
Lease
obligation
Total

Change withcashflow
fluctuation

Change with cashflow fluctuation
Exchangedifference of
foreign operations

Lease obligation

March 31, 2020

11,799(3,461)

(341)

―

7,997

161

(2,537)(497)

14,613

11,74011,960(5,998)(838)

14,613

19,737

Fiscal year 2021
In millions of Yen
April 1,2020
Short-term
Borrowings
Lease
obligation
Total

Change withcashflow
fluctuation

Change with cashflow fluctuation
Exchangedifference of
foreign operations

Lease obligation

March 31, 2021

7,997

ሺ5,666)

281

―

2,612

11,740

ሺ2,998)

509

4,592

13,843

19,737

ሺ8,664)

790

4,592

16,45558

Principle subsidiaries consist of the followings. Voting rights on March 31, 2021 has no significant change from the former
year.

Company nameCountry

Capital(Thousand)Voting rights
Principle business

Proportion of
Ownership(％)

Makita U.S.A.Inc.

USA
Los Angeles

161,400 Sales of power tools

100.0

Makita Corporation ofAmerica

USA
Atlanta

73,600 Production of power tools

100.0(80.0)

Makita Canada Inc.

CanadaToronto16,000 Sales of power tools

100.0

Makita (U.K.) Ltd.

United Kingdom
London106,217 Sales of power tools

100.0

Makita Manufacturing
Europe Ltd.

United Kingdom
Telford37,600 Production of power tools

100.0(100.0)Makita France SAS

FranceBussy Saint Georges

12,436 Sales of power tools

55.0(55.0)

Makita S.p.A.

Italy
Milan

16,000 Sales of power tools

100.0(100.0)Makita Verkzeik G.m.b.H.
(Germany)

Germany
Ratingen7,669 Sales of power tools

100.0(99.0)

Germany
Hamburg

3,105 Manufacture and sale ofhorticultural equipment

100.0(10.6)

12,173 Sales of power tools

100.0(100.0)17,016 Sales of power tools

100.0(100.0)100 Sales of power tools

100.0(100.0)83,207 Sales of power tools

100.0(100.0)80,000 Manufacture and sale ofpower tools

100.0

25,000 Production of power tools

100.0

Makita Engineering
Germany G.m.b.H.

Makita Verkzeik G. m. B. H. Austria(Austria)
ViennaMakita Sp.zo.o.

PolandBielsko Beer

Makita Oy

FinlandHelsinki

RussiaMoscow
China
Makita (China) Co., Ltd.
Jiangsu Province
Kunshan
China
Makita (Kunshan) Co., Ltd. Jiangsu Province
Kunshan
Makita LLC

Makita Australia Pty. Ltd.

Australia
Sydney13,000 Sales of power tools

100.0

Makita de Brazil Ltda.

BrazilPontagrosa

and sale of717,495 Manufacture
power tools

99.9

Makita Gulf FZE

United Arab Emirates
Dubai

22,391 Sales of power tools

100.0

Other companies 35

59

There were no significant subsequent events.

60