Consolidated Financial Results for the Fiscal Year
Ended December 31, 2020 [Japanese GAAP]
February 12, 2021
Name of registrant:
Milbon Co., Ltd.
Tokyo Stock Exchange, First Section
Code No.:4919
URL http://www.milbon.co.jp
Representative:
Ryuji Sato, President and CEO
Inquiries:
Masahiro Murai, Managing Director
TEL: +81-3-3517-3915
Scheduled date of annual general meeting of shareholders: March 30, 2021
Scheduled filing date for Securities Report: March 30, 2021
Scheduled starting date of dividend payments: March 31, 2021
Preparation of supplementary materials on the Consolidated Financial Results: Yes
Holding of an explanatory meeting on the Consolidated Financial Results: Yes (For institutional investors and analysts)(Amounts of less than one million yen have been omitted.)
1. Consolidated financial results for the fiscal year ended December 31, 2020 (January 1, 2020 - December 31, 2020)(1) Consolidated operating results
Net salesYear ended December 31, 2020

Year ended December 31, 2020

(Percentages show year-on-year changes.)
Profit attributable to ownersof parent%
Million yen
%
(7.1)
4,204
(6.9)

Ordinary income

Million yen
35,725%(1.5)

Million yen
6,394

%
(5.3)

36,266

7.0

6,751

7.8

Year ended December 31, 2019
(Note) Comprehensive income

Operating income

Year ended December 31, 2020: 3,776 million yen [(17.9)%]

Million yen
5,791
6,231

7.2

4,517

Basic earnings per share Diluted earnings per share Return on equity (ROE) Return on assets (ROA)
Yen
Yen
%
%
129.24
11.6
13.6

Year ended December 31, 2019
(Reference)Equity in earnings (losses) of affiliates

0.5Year ended December 31, 2019: 4,601 million yen [24.7%]

137.99Year ended December 31, 2020: (138) million yen

Operating income ratio
%
17.9

13.1
15.3
Year ended December 31, 2019: (66) million yen

18.6(2) Consolidated financial position
Total assets
Million yen
43,075

As of December 31, 2020
As of December 31, 2019
(Reference)

EquityNet assets
Million yen
36,30841,912Equity ratio

35,882As of December 31, 2020: 36,308 million yen

Net assets per share
%
84.3

Yen
1,117.10

85.6

1,096.02

As of December 31, 2019: 35,882 million yen(3) Consolidated cash flows

Year ended December 31, 2020

Cash flows from operating
activities
Million yen
6,548

Cash flows from investing
activities
Million yen(161)

Cash flows from financing
activities
Million yen(3,416)

Cash and cash equivalents
at end of period
Million yen
12,307

Year ended December 31, 2019

4,486

(2,777)(1,869)

9,376

Total dividends(Annual)Dividend
Dividends on
payout ratio
equity (DOE)(Consolidated) (Consolidated)

2. Payment of dividends
Annual dividends

Year ended December 31, 2019-

End of 2ndquarterYen
27.00

Year ended December 31, 2020

-

27.00

-

Year ending December 31, 2021
(forecast)

-

28.00

-

End of 1st quarter
Yen

End of 3rd
End of fiscal year
quarter
Yen
Yen
29.00

Total
Yen
56.00

Million yen
1,833

%
40.6

%
5.3

29.00

56.00

1,820

43.3

5.0

28.00

56.00

45.0

3. Consolidated operating forecasts for the fiscal year ending December 31, 2021 (January 1, 2021 - December 31, 2021)
Net salesYear ending December 31, 2021

Million yen
38,200Operating income% Million yen
6.9
6,420

Profit attributable to
Basic earnings per shareowners of parent% Million yen
%
Yen
(1.4)
4,050
(3.7)
124.50Ordinary income% Million yen
0.4
5,710

*Notes(1) Significant changes in subsidiaries during the period(changes in specified subsidiaries resulting in the change in the scope of consolidation)
New: 1 company (Company name: Milbon (Zhejiang) Cosmetics Co., Ltd.): Yes
Exclude: 0 companies (Company name:)(2) Changes in accounting policies, changes in accounting estimates and retrospective restatements
1) Changes in accounting policies due to amendment to the accounting standards, etc.
: None2) Changes in accounting policies other than those in 1) above

:

None

3) Changes in accounting estimates

:

None

4) Retrospective restatements

:

None

(3) Number of shares issued (common stock)1) Number of shares issued at the end of the period(including treasury shares)
2) Number of treasury shares at the end of the period
3) Average number of shares during the period

As ofDecember 31, 2020
As ofDecember 31, 2020
Year ended December
31, 2020

As ofDecember 31, 2019
As of
614,837 shares
December 31, 2019Year ended December
32,529,606 shares
31, 2019
33,117,234 shares

33,117,234 shares
378,250 shares
32,739,355 shares*These financial statements are not subject to the review of the quarterly financial statements by a certified public accountant or an audit corporation.
*Explanation on the appropriate use of operating forecasts and other special instructions
Operating forecasts and other statements regarding the future presented in these materials are based on information currently available and certain
assumptions deemed to be reasonable, and actual performance may differ substantially due to various factors.

○Accompanying Materials – Contents
1. Overview of Operating Results, etc. ......................................................................................................................................
(1) Analysis of operating results ............................................................................................................................................
(2) Analysis of financial position ...........................................................................................................................................
(3) Basic policy on the distribution of profit and dividends for the fiscal year under review and the following fiscal year ...
(4) Business and other risks ...................................................................................................................................................
2. Outline of the Milbon Group .................................................................................................................................................
3. Basic Rationale for Selecting the Accounting Standards .......................................................................................................
4. Consolidated Financial Statements and Main Notes .............................................................................................................
(1) Consolidated Balance Sheets ...........................................................................................................................................
(2) Consolidated Statements of Earnings and Consolidated Statements of Comprehensive Income Consolidated
Statements of Earnings ....................................................................................................................................................
(3) Consolidated Statements of Changes in Shareholders' Equity .........................................................................................
(4) Consolidated Statements of Cash Flows ..........................................................................................................................
(5) Notes regarding consolidated financial statements ..........................................................................................................
Notes regarding going concern assumption ...................................................................................................................
Significant matters that serve as the basis for preparation of consolidated financial statements ..................................
Per share information .....................................................................................................................................................
Significant subsequent events ........................................................................................................................................
5.Other .......................................................................................................................................................................................
(1) Change of officers

1

2
2
3
4
5
6
7
8
8
10
12
14
16
16
16
18
18
18
18

1. Overview of Operating Results, etc.
(1) Analysis of operating results① Operating results for the fiscal year under review
In the fiscal year under review, the economy deteriorated sharply due to the impact of COVID-19. Although there were signs ofa temporary recovery after the termination of the Emergency Declaration in May, the situation remained challenging, with
infections spreading again toward the end of the year. The outlook remains unchanged, but we expect economic activity torecover in the second half of the fiscal year, depending on the future popularization of vaccines.
In the beauty salon industry as well, customers have begun to return to salons but not sufficient enough to salons located in urban
areas, and the situation continues to be unpredictable due to the re-spread of infections that have come here.
Under these circumstances, Milbon Group has continued to engage in market activities closely with salons while giving toppriority to the safety of salons, distributors, and employees. In the second quarter, we were significantly affected by restraints ongoing out due to the declaration of State of Emergency. In the second half of the fiscal year, we secured sales on par with theprevious fiscal year in the domestic market, thaks to our field activities utilizing digital tools such as SNS or video conference
system.. Overseas sales rose year on year in South Korea, where the impact of COVID-19 was relatively small, and in China,
where sales recovered rapidly to a growth trajectory.
As a result, consolidated net sales for the fiscal year under review amounted to 35,725 million yen (down 1.5% year on year).
Operating income was 6,394 million yen (down 5.3% year-on-year), ordinary income was 5,791 million yen (down 7.1% yearon-year), and profit attributable to owners of parent was 4,204 million yen (down 6.9% year-on-year).
Breakdown of net sales by product category and breakdown of net sales into domestic and overseas sales are shown below:[Breakdown of consolidated net sales by product category](Unit: Million yen)Previous fiscal year

Current fiscal year

Product category
AmountRatio (%)

AmountRatio (%)

Increase(decrease)amountYear-on-yearchange (%)

Hair care products

21,32858.8

21,135

59.2

(192)

(0.9)

Hair coloring products

12,99435.8

12,594

35.3

(400)

(3.1)

Permanent wave products

1,515

4.2

1,372

3.8

(142)

(9.4)

Cosmetic products

165

0.5

360

1.0

195

118.3

Other

263

0.7

262

0.7

(0)

(0.3)

36,266100.0

35,725

100.0

(541)

(1.5)

Total

[Breakdown of net sales into domestic and overseas sales](Unit: Million yen)Previous fiscal year
AmountCurrent fiscal year

Ratio (%)

AmountRatio (%)

Increase(decrease)amountYear-on-yearchange (%)

Domestic sales

30,40983.8

29,880

83.6

(528)

(1.7)

Overseas sales

5,857

16.2

5,844

16.4

(12)

(0.2)

Total

36,266100.0

35,725

100.0

(541)

(1.5)

2

② Outlook for fiscal 2021
In the economic environment for the next fiscal year, despite rising expectations for the popularization of the COVID-19 vaccine,the outlook for the global economy remains uncertain due to the re-launch of the State of Emergency targeting some regions inJapan and concerns over the impact on the economy.
Under these circumstances, in Fiscal Year 2021, Milbon Group will work on an strategic measures called18-month mission that
had begun in July 2020 and ending in December 2021 in order to translate this into a new growth stage from Fiscal Year 2022.
It is urgent to respond to changes in customer values and structural challenges in the industry that have been accelerated due toemergence of COVID-19. To accelerate the measures, 18-month mission, we have set forth concrete measures for the 4 stagesof "store sales," "education," "products," and "in-house measures," detailed as the 25 mission.
In the following fiscal year, we forecast net sales of 38,200 million yen (up 6.9% from the current fiscal year), operating profitof 6,420 million yen (up 0.4% from the current fiscal year), ordinary profit of 5,710 million yen (down 1.4% from the current
fiscal year), and net profit attributable to owners of parent of 4,050 million yen (down 3.7% from the current fiscal year).

(2) Analysis of financial position① Assets, liabilities and net assets
Total assets at the end of the fiscal year under review increased 1,163 million yen from the end of the previous fiscal year, to
43,075 million yen.
Current assets increased by 1,791 million yen from the end of the previous fiscal year to 22,122 million yen. This was mainly
due to an increase of 1,729 million yen in cash and deposits.
Non-current assets decreased by 628 million yen from the end of the previous fiscal year to 20,953 million yen. Major
contributing factors included an increase of 458 million yen in construction in progress, including partial advance payments forconstruction of a new factory in China, and a decrease of 1,055 million yen in investment securities due to the sale of a portionof investment securities and a decrease in unrealized gains on the market value of listed stocks.
Current liabilities increased by 693 million yen from the end of the previous fiscal year to 6,100 million yen. This was mainly
due to increases of 250 million yen in accounts payable-other and 213 million yen in income taxes payable.
Non-current liabilities increased by 44 million yen from the end of the previous fiscal year to 666 million yen.
Net assets increased by 425 million yen from the end of the previous fiscal year to 36,308 million yen. The main factors for thechange were decreases of 1,545 million yen in purchase of treasury stock, 367 million yen in valuation difference on availablefor-sale securities, and 119 million yen in foreign currency translation adjustment due to the appreciation of the yen, along withan increase of 2,377 million yen in retained earnings.
As a result, the equity ratio changed from 85.6% at the end of the previous fiscal year to 84.3%. Net assets per share based on
the total number of shares issued at the end of the fiscal year were 1,117.10 yen, compared to 1,096.02 yen at the end of theprevious fiscal year.
② Cash flows
Cash and cash equivalents (hereinafter referred to as "funds") at the end of the current fiscal year increased by 2,931 million yen
from the end of the previous fiscal year to 12.307 billion yen.
The status of cash flows during the current fiscal year and the factors responsible are as follows.
(Cash flows from operating activities)
Net cash provided by operating activities amounted to 6,548 million yen. This was mainly due to recording of profit before
income taxes of 5,890 million yen, depreciation of 1,609 million yen, share of loss of entities accounted for using equity methodof 138 million yen, gain on sales of investment securities of 114 million yen, an increase in inventories of 164 million yen, andincome taxes paid of 1,527 million yen.
(Cash flows from investing activities)
Net cash used in investing activities amounted to 161 million yen. This was mainly due to payments for purchase of property,
plant and equipment of 1,388 million yen, payments for purchase of intangible assets of 581 million yen, and proceeds fromwithdrawal of time deposits of 1.2 billion yen.
(Cash flows from financing activities)
Net cash used in financing activities amounted to 3,416 million yen. This was mainly attributable to 1,590 million yen in
payments for purchase of treasury stock and 1,825 million yen in dividends paid to shareholders.

3(Reference) Cash flow-related indicators
Year ended

Year ended

Year ended

Year ended

Year ended

December 20,
2016

December 31,
2017

December 31,
2018

December 31,
2019

December 31,
2020

Equity ratio

85.4

82.6

83.6

85.6

84.3

Equity ratio based on market
value (%)

223.3

329.6

369.2

484.3

495.7

Interest-bearing debt to cash
flows ratio (%)

2.4

1.8

1.2

1.7

1.6

(Notes) Equity ratio: Equity/net assets
Equity ratio based on market value: Total market capitalization/total assets**

Interest-bearing debt to cash flows ratio: Interest-bearing debt/cash flows
All indicators were calculated using consolidated financial statements.
Total market capitalization was calculated by multiplying the closing stock price at the end of the period by the total number ofoutstanding shares at the end of the period (excluding treasury shares). For the fiscal year ended December 31, 2017, total market
capitalization was calculated by the following formula, due to the impact at the end of the period of ex-rights resulting from thestock split:
Closing stock price at the end of the period multiplied by (total number of outstanding shares at the end of the period plus thenumber of additional shares resulting from the stock split)**

Cash flows were shown as an operating cash flow in the consolidated statements of cash flows.
Interest-bearing debt refers to all debt posted in the balance sheets upon which interest is paid. The amount of interest paid in*

the consolidated statements of cash flows was treated as an interest payment in the calculations above.
Interest-coverage ratio is not shown due to the fact that there were no interest payments.

(3) Basic policy on the distribution of profit and dividends for the fiscal year under review and the following fiscal year
The Milbon Group considers the returning of profits to shareholders as an important management issue and makes it a basic policy
to pay dividends in accordance with its operating results, while enhancing its business structure by maintaining internal reserves
to improve its earnings in the future. Moreover, we have set the target dividend payout ratio at 40%. Interim dividends are
determined at the Board of Directors meetings and year-end dividends at the general meeting of shareholders, and it is the Group’s
basic policy to pay dividends twice every fiscal year.
For the current fiscal year, upon comprehensively taking into account factors including our financial position and profit levels, wehave decided to pay a year-end dividend of 29 yen per share. As a result, the total annual dividend per share will amount to 56 yen
per share, which includes the interim dividend of 27 yen per share that has already been paid.
For the following fiscal year, we plan to pay an annual dividend of 56 yen per share.

4(4) Business and other risks
Risks that could potentially affect the operating results, stock price and financial position of the Milbon Group include thefollowing.
The future risks identified in this section are based on assessments made by the Company as of the end of the fiscal year underreview. The Group recognizes the possibility of these risk events actually occurring and has prepared policies to prevent andavert such risks and take appropriate measures to minimize the impact of such risks when they do occur.
①Risks associated with global expansion
The Milbon Group is aggressively expanding its business into the overseas markets. Global expansion entails risks relating tointellectual property rights including counterfeit goods, unforeseeable changes in laws and regulations, and risks of social unrest
due to terrorism, war and other factors. Such risks could have a major impact on the Group's operating results and financial
position.
②Information security
The Milbon Group has taken various measures to protect information assets including customers' personal information andconfidential information. However, unforeseeable events, such as the leakage of information due to unauthorized access, could
have a major impact on the Group's operating results and financial position.
③Risks associated with debt collection
The Milbon Group deliberates records necessary reserves upon regularly reviewing its business partners from both quantitativeand qualitative perspectives in terms of collection status. However, deterioration in the business partner's credit standing or events
such as bankruptcy could have a major impact on the Group's operating results and financial position.
④Risks associated with major accidents
The Milbon Group utilizes company cars in its sales activities. The Group implements safety measures that place maximum
priority on human life, including strict control over driving and the reinforcement of safety training. However, should a major
accident event occur, it could lead to the loss of the customers' and the public's trust in the Group and have a major impact on
the Group's operating results and financial position.
⑤Risks associated with product-related health hazards
Many Milbon Group products come into direct contact with consumers' hair and scalp, and as such the Milbon Group places
top priority on its efforts to ensure product safety and quality. However, should an unforeseeable incident involving a major
health hazard occur, it could lead to the loss of the customers' and the public's trust in the Group and have a major impact on
the Group's operating results and financial position.

5

2. Outline of the Milbon Group
Name

Location

Capital stock or capital
contribution

Main line of business

Share of voting
rightsPercentage (%)

United States
New York StateUSD 2 million

Sale of hair products

100.0

Sells the Company's hairproducts in the U.S.

100.0

Sells the Company's hairproducts in China.
Three executives holdconcurrent posts at theCompany.

Relationship with the Company(Consolidated subsidiary)
MILBON USA, INC.
(NOTE)1(Consolidated subsidiary)
Milbon Trading (Shanghai) Co.,
China
Ltd.
Shanghai City(NOTE)1

JPY 430 million

Sale of hair products(Consolidated subsidiary)

Milbon Korea Co., Ltd.
(NOTE)1

South Korea
Seoul City

KRW 3,000 million

Sale of hair products

100.0

Sells the Company's hairproducts in South Korea.
Three executives holdconcurrent posts at theCompany.

THB 450 million

Manufacture and saleof hair products

100.0

Manufactures and sells theCompany's hair products in
Thailand.

1.5 million Malaysia
RinggitSale of hair products

100.0

We sell our hair cosmetics in
Malaysia.

22.594 billion
VND

Sale of hair products

100.0

We sell our hair cosmetics in
Vietnam.

250000Singapore dollar

Sale of hair products

100.0

Sells the Company's hairproducts in the SINGAPORE

Manufacture and saleof hair products

100.0

We manufacture and sell ourhair cosmetics in China.

(Consolidated subsidiary)
MILBON (THAILAND) CO.,
Kingdom of Thailand
LTD.
Rayong(NOTE)1(Consolidated subsidiary)
MILBON MALAYSIA SDN.
Malaysia
BHD.
Kuala Lumpur(Consolidated subsidiary)
MILBON VIETNAM CO., LTD. Vietnam
Ho Chi Minh City
(Consolidated subsidiary)
MILBON SINGAPORE PTE.
Singapore
LTD.
(Consolidated subsidiary)
Milbon (Zhejiang) Cosmetics
China
Co., Ltd.
Zhejiang(NOTE)1

RMB240 million(NOTE) 1. The company falls under the category of "specified subsidiary."
2. In addition to the companies noted above, the Group has 1 equity-method affiliate.

6The following diagram shows the positioning of Milbon Group companies and the Group's businesses.
(Diagram of business activities)(NOTE)

1. Overseas transactions differ in sales channels depending on the country.
2. The main items for store sales are hair-care products.
3. Although Milbon (Zhejiang) Cosmetics Co., Ltd. was newly established in the fiscal year under review, it was not in
operation as of the end of FY 2020 due to the construction of a factory. Therefore, it is not shown in the abovebusiness system diagram

3. Basic Rationale for Selecting the Accounting Standards
The Milbon Group currently prepares the consolidated financial statements according to the generally accepted accounting
standards in Japan (Japanese GAAP), as it makes it possible to compare the consolidated financial statements against previous fiscal
year and against other companies.
With regard to adoption of International Financial Reporting Standards (IFRS), it is the Group's policy to respond to this issue
appropriately based on consideration of various domestic and international circumstances.

74. Consolidated Financial Statements and Main Notes(1)Consolidated Balance Sheets(Thousand yen)Previous fiscal year
(As of December 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

8

Current fiscal year
(As of December 31, 2020)

10,615,390
4,180,186
3,912,361
34,781
1,120,202
470,610(3,185)
20,330,346

12,345,024
4,199,283
3,991,946
46,317
1,177,090
366,288(3,648)22,122,303

12,015,077(4,991,438)
7,023,638
6,638,981(4,631,019)
2,007,962
5,001,021
84,801
2,718,267(2,137,166)
581,100
14,698,524
1,174,902

12,223,211(5,430,925)
6,792,285
7,001,271(5,057,731)
1,943,540
4,995,014
543,159
2,807,331(2,215,534)
591,796
14,865,795
1,318,478

3,991,136
149,125
155,832
204,502
1,266,204(58,381)5,708,420
21,581,847
41,912,194

2,935,650
28,906
207,475
395,087
1,260,203(58,381)4,768,942
20,953,217
43,075,520

(Thousand yen)Previous fiscal year
(As of December 31, 2019)
Liabilities
Current liabilities
Accounts payable - trade
Accounts payable - other
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Net defined benefit liability
Deferred tax liabilities
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

9

Current fiscal year
(As of December 31, 2020)

797,033
2,479,907
891,258
397,297
841,726
5,407,223

788,9112,730,817
1,104,850
436,811
1,038,850
6,100,241

4,290
670
505,563
111,835
622,359
6,029,582

5,216
2,329
546,954
112,427
666,928
6,767,170

2,000,000
200,742
33,266,155(563,197)
34,903,700

2,000,000
222,490
35,643,295(2,108,947)
35,756,838

773,082
267,184(61,355)
978,91135,882,612
41,912,194

405,396(1,206)
147,775(454)
551,51136,308,349
43,075,520

(2) Consolidated Statements of Earnings and Consolidated Statements of Comprehensive Income Consolidated Statements ofEarnings
Consolidated Statements of Earnings(Thousand yen)Previous fiscal year
(January 1, 2019
From December 31, 2019)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Company house defrayment income
Refund of custom duty
Subsidy income
Other
Total non-operating income
Non-operating expenses
Sales discounts
Share of loss of entities accounted for using equity
methodForeign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to owners of parent

10

Current fiscal year
(On January 1, 2020
To December 31, 2020)

36,266,444
12,554,646
23,711,797
16,959,857
6,751,939

35,725,069
12,339,754
23,385,315
16,990,520
6,394,794

16,38064,034
14,392
21,78444,013
66,863
227,468

28,30649,003
4,683
52,41039,674
100,829
274,907643,133

642,698

66,585

138,963

29,105
9,045
747,869
6,231,538

90,906
5,817
878,386
5,791,315

799
799

114,578
114,578

3,403
11,371
14,7746,217,563
1,614,943
85,004
1,699,947
4,517,615
4,517,615

15,884
15,884
5,890,009
1,740,038(54,167)
1,685,870
4,204,139
4,204,139

Consolidated Statements of Comprehensive Income Consolidated Statements of Earnings(Thousand yen)Previous fiscal year
(January 1, 2019
From December 31, 2019)
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests

11

Current fiscal year
(On January 1, 2020
To December 31, 2020)

4,517,615

4,204,139(86,620)3,159
167,070
83,6104,601,226(367,685)(1,206)(119,408)
60,900(427,400)
3,776,739

4,601,226

3,776,739--

(3)Consolidated Statements of Changes in Shareholders' Equity
Previous fiscal year (January 1, 2019, to December 31, 2019)(Thousand yen)
Shareholders' equity
Capital stock
Changes of items during period

Capital surplus

2,000,000

Retained earnings

200,61330,614,693

Total shareholders'equityTreasury shares(558,811)

32,256,496

Dividends of surplus
Dividends of surplus(1,866,153)(1,866,153)

Profit attributable to ownersof parent

4,517,615

4,517,615

Purchase of treasury shares
Disposal of treasury shares

128(4,439)(4,439)53

182

Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period-

128

2,651,461(4,385)2,647,204

2,000,000

200,742

33,266,155(563,197)

34,903,700

Accumulated other comprehensive income
Available-for-salesecurities
Valuation
Changes of items during period

859,702

Foreign currencytranslation adjustment

Net defined benefit
Plans

Other comprehensive
incomeTotal

264,024(228,425)

895,301

Total net assets

33,151,797

Dividends of surplus
Dividends of surplus(1,866,153)

Profit attributable to ownersof parent

4,517,615

Purchase of treasury shares(4,439)

Disposal of treasury shares

182

Net changes of items otherthan shareholders' equity(86,620)3,159

167,070

83,61083,610Total changes of items during
period(86,620)3,159

167,070

83,6102,730,815

Balance at end of current period

773,082

267,184(61,355)

978,91135,882,612

12

Current fiscal year (from January 1, 2020 to December 31, 2020)(Thousand yen)
Shareholders' equity
Capital stock
Changes of items during period

Capital surplus

2,000,000

Retained earnings

200,742

Treasury shares

33,266,155(563,197)

Total shareholders'equity34,903,700

Dividends of surplus
Dividends of surplus(1,827,000)(1,827,000)

Profit attributable to ownersof parent

4,204,139

4,204,139

Purchase of treasury shares
Disposal of treasury shares

21,748(1,591,235)(1,591,235)

45,485

67,233

Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current period-

21,7482,377,139(1,545,750)

853,1372,000,000

222,490

35,643,295(2,108,947)

35,756,838

Accumulated other comprehensive income

Changes of items during period

Available-for-salesecurities
Valuation

Deferred gains orlosses on hedges

Foreign currencytranslation
adjustment

Net defined benefit
Plans

Other
comprehensive
incomeTotal

773,082-

267,184(61,355)

978,911

Total net assets

35,882,612

Dividends of surplus
Dividends of surplus(1,827,000)

Profit attributable to ownersof parent

4,204,139

Purchase of treasury shares(1,591,235)

Disposal of treasury shares

67,233

Net changes of items otherthan shareholders' equity(367,685)(1,206)(119,408)

60,900(427,400)(427,400)

Total changes of items during
period(367,685)(1,206)(119,408)

60,900(427,400)

425,736

Balance at end of current period

405,396(1,206)

147,775(454)

551,51136,308,349

13

(4) Consolidated Statements of Cash Flows(Thousand yen)Previous fiscal year
(January 1, 2019
From December 31, 2019)
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability
Interest and dividend income
Share of (profit) loss of entities accounted for using
equity method
Foreign exchange losses (gains)
Loss (gain) on sales of investment securities
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable trade
Other
SubtotalInterest and dividend income received
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Payments of loans receivableCollection of loans receivable
Payments into time deposits
Proceeds from withdrawal of time deposits
Proceeds from sales of investment securities
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other
Cash flows from investing activities
Net cash provided by (used in) financing activities
Net decrease (increase) in treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities

14

Current fiscal year
(On January 1, 2020
To December 31, 2020)

6,217,563
1,493,857(43,014)(22,381)
82,538(48,095)(80,414)5,890,009
1,609,008
659
39,915
36,111
1,122(77,309)

66,585

138,963(25,286)
2,603
11,371(22,265)(114,578)
15,884(300,087)(28,189)(278,807)(164,891)(77,902)(4,605)(325,953)
6,672,577
78,297(2,264,011)
4,486,862

677,197
7,997,031
78,114(1,527,029)
6,548,116(1,098,797)
2,901(407,709)(150,840)
4,626(1,000,189)(193,986)
67,444(1,160)(2,777,709)(1,388,061)(581,146)(9,130)3,027
1,200,000
619,587(63,105)
58,877(1,828)(161,779)(4,257)(1,865,017)(1,869,274)(1,590,687)(1,825,436)(3,416,124)

(Thousand yen)Previous fiscal year
(January 1, 2019
From December 31, 2019)
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

15

Current fiscal year
(On January 1, 2020
To December 31, 2020)(5,062)(38,921)(165,183)
9,541,483
9,376,300

2,931,291
9,376,300
12,307,591

(5) Notes regarding consolidated financial statements(Notes regarding going concern assumption)
None(Significant matters that serve as the basis for preparation of consolidated financial statements)
1 The scope of consolidation
Matters regarding Number of consolidated subsidiaries: 8
Names of consolidated subsidiaries
MILBON USA,INC.
Milbon Trading (Shanghai)Co.,Ltd.
Milbon Korea Co.,Ltd.
MILBON (THAILAND)CO., LTD.
MILBON MALAYSIA SDN. BHD.
MILBON VIETNAM CO., LTD.
MILBON SINGAPORE PTE. LTD.
Milbon (Zhejiang) Cosmetics Co., Ltd.
Of the above, Milbon (Zhejiang) Cosmetics Co., Ltd. was newly established in the fiscal year under review and are includedin the scope of consolidation.
2 Matters regarding application of equity method
Number of equity-method affiliates: 1
Names of companies, etc.
KOSÉ Milbon Cosmetics Co., Ltd.
3 Matters regarding the fiscal year, etc. of consolidated subsidiaries
The account closing date of consolidated subsidiaries is the same as the consolidated account closing date.
4 Matters regarding accounting policies(1) Valuation standards and methods for important assets① Securities
1) Held-to-maturity bonds
Stated using the amortized cost method
2) Available-for-sale securities
With market value
Stated at market value based on the market price, etc. of the account closing date (unrealized gains and losses arereported as a separate component of net assets, and cost of sales is calculated by the moving-average method)
Market value not available
Stated at cost using the moving-average method② Inventories
MerchandiseStated primarily at cost using the first-in first-out method (the balance sheet value is calculated using the inventory
write- down method based on decreased profitability)
Finished goods and work in process
Stated primarily at cost using the weighted average method (the balance sheet value is calculated using the inventory
write-down method based on decreased profitability)
Raw materials
Stated primarily at cost using the weighted average method (the balance sheet value is calculated using the inventory
write-down method based on decreased profitability)
Supplies
Stated primarily at cost using the last-purchase-price method (the balance sheet value is calculated using the inventory
write-down method based on decreased profitability)16

(2) Depreciation and amortization methods for important depreciable assets① Property, plant and equipment
They are amortized using the straight-line method.
Useful lives of principal assets are as follows.
Buildings and structures
31 to 50 years
Machinery, equipment and vehicles② Intangible assets

6 to 8 years

They are amortized using the straight-line method.
Software for internal use is amortized using the straight-line method over the estimated period of internal use (3 to 5 years).
(3) Accounting standards for major allowances① Allowance for doubtful accounts
The allowance for doubtful receivables is provided at an amount calculated based on the historical write-off ratio forgeneral receivables and on an estimated uncollectible amount determined by reference to the individual collectability ofcertain doubtful receivables.
② Provision for bonuses
To provide for payment of bonuses to employees (including those for employees also serving as officers), the Company andits overseas consolidated subsidiaries record the estimated amount of payment of bonuses.
(4) Accounting method for retirement benefits① Periodic allocation of projected retirement benefits
Method of attributing expected retirement benefits to the period up to the end of the current fiscal year in calculating
retirement benefit obligations
Figures are based on the benefit formula basis.
② Method of amortizing actuarial differences and past service costs
Actuarial gains and losses are determined over a certain number of years (5 years) within the average remaining years ofservice of the eligible employees at the time of occurrence.
Actuarial differences are amortized using the occurrence, starting from the fiscal year following the occurrence.
Prior service cost is determined over a certain number of years (5 years) which are shorter than the average remaining
years of service of the eligible employees at the time of accrual.
Amortized using the straight-line method.
③ Adoption of simplified method in small companies
Certain overseas consolidated subsidiaries need to calculate net defined benefit liability and retirement benefit expenses
voluntarily at the end of the fiscal year.
The simplified method using the method where the amount paid is the retirement benefit obligation is applied.
(5) The standards for recognition of significant revenues and expenses
Companys and overseas consolidated subsidiary have applied the "Accounting Standards for Revenue Recognition"(corporate accounting standard No. 29, March 30, 2018) and the "Guidelines for the Application of Accounting Standards for
Revenue Recognition" (corporate accounting standard No. 30, March 30, 2018), and recognize the amount of revenues
expected to be received for replacement with the goods or services promised upon transfer of control of the goods or services
to the customer.
(6) Standard for translation of significant foreign currency dominated assets and liabilities into yen
Foreign currency denominated monetary claims and liabilities are translated into yen at the spot exchange rate on the
consolidated account closing date, and translation differences are accounted for as profit or loss. The assets and liabilities ofoverseas consolidated subsidiaries are translated into yen at the spot exchange rate on the local account closing dates ofoverseas consolidated subsidiaries, while revenue and expenses are translated into yen at the average exchange rate for theperiod, and translation differences are recorded in foreign currency translation adjustment under net assets.

17

(7) Scope of funds in the consolidated statements of cash flows
Funds (cash and cash equivalents) in the consolidated statements of cash flows comprise cash on hand, deposits available forwithdrawal as needed and short-term investments due for redemption within three months from the date of acquisition, which
are easily cashable and are subject to minimal risk of fluctuation in value.
(8) Other significant matters in the preparation of consolidated financial statements, etc.
Taxes are accounted for by the tax
Consumption tax and other similar taxes are accounted for by the tax-exclusion method.
(Per share information)
Previous fiscal year
(January 1, 2019
From December 31, 2019)
Net assets per share (Yen)
Basic earnings per share (Yen)Current fiscal year
(On January 1, 2020
To December 31, 2020)

1,096.02

1,117.10

137.99129.24(NOTE)1 1 Diluted net income per share is not presented because there are no dilutive shares.
2 The basis for calculating basic earnings per share is as follows.
Previous fiscal year
(January 1, 2019
From December 31, 2019)
Profit attributable to owners of parent (Thousand yen)

4,517,615

4,204,139--

4,517,615

4,204,139

32,739,355

32,529,606

Amount not attributable to common shareholders(Thousand yen)
Profit attributable to owners of parent relating to
Amount (thousand yen)
Average number of outstanding shares of common stockduring the period (shares)

Current fiscal year
(On January 1, 2020
To December 31, 2020)(Significant subsequent events)
None

5.Other(1)Change of officers①Change in representatives
None②Changes in Other Officers (Scheduled for March 30, 2021)
1. Retiring Director
Mitsuru Oshio, Director
2. Retiring Corporate Auditor
Koji Murata, Corporate Auditor
3. Candidate for new Director
Tsuneko Murata, Director (currently Director of Japan Finance Corporation)(currently Director and Audit and Supervisory Committee Member of Fujikura Co., Ltd)
4. Candidate for new Auditor
Mitsuru Oshio, Corporate Auditor

18