Watts Co., Ltd.

(2735; Tokyo Stock Exchange First Section)

Operating Results for the Six Months of
the Fiscal Year Ending August 2019 andProgress of the Full-Year Plan
April 15, 2019 (Monday)
Fumio Hiraoka, President and CEO

Contents
Financial
Overview

By Business

Operating Results for the Six Months of
the Fiscal Year Ending August 2019

P2 – P7

Situation of Each Business for the
Six Months of the Fiscal Year Ending
August 2019

P9 – P17

Business Forecasts for the Fiscal
Business Plan Year Ending August 2019 andEfforts toward Each Business

Reference

P19 – P25

P27 – P34
1

Financial
Overview

Consolidated Operating Results for the Six Months of
the Fiscal Year Ending August 2019
(Millions of yen)

Financial highlights

FY8/18 2Q

FY8/19 2Q (Current period)

Ratio to sales

Ratio to sales

YoY

Ratio toforecast

23,897－25,648－107.3％

101.0％

Gross profit

9,212

38.5％

9,595

37.4％

104.2％－

Selling, general and administrative
expenses

8,613

36.0％

9,228

36.0％

107.1％－EBITDA

767

3.2％

577

2.3％

75.2％

－

Operating profit

598

2.5％

366

1.4％

61.3％

85.3％

Recurring profit

602

2.5％

337

1.3％

56.0％

78.4％

Net income attributable to owners ofparent

379

1.6％

103

0.4％

27.3％

40.6％

Net income per share (Yen)

28.00

－

－

Sales

7.70

 Sales increased by 7.3% YoY, slightly above the target due to the concentration of 100-Yen shop ➡P3
opening in 1Q, and making “Real Co., Ltd.”, which operates discount shops, a subsidiary in theprevious fiscal year.
 Operating profit was 61.3% YoY due to the opening of relatively large-scale 100-Yen shops anddelays in improving earnings at the Chinese subsidiary and the lifestyle products business.
 Net income attributable to owners of parent was 27.3% YoY, largely below the target, mainly
due to the recording of impairment losses on store facilities of Søstrene Grene, etc.

➡P5
➡P6
2

Financial
Overview

Sales by Business Type(Millions of yen)

Sales by Business Type

100-Yen shops

FY8/19 2Q (Current period)

Ratio to sales

Ratio to sales

YoY

Directly managed

20,223

84.6％

21,10482.3％

104.4％

Wholesale, Other

1,419

5.9％

1,249

4.9％

88.0％

21,642

90.6％

22,35487.2％

103.3％

Directly managed

526

2.2％

377

1.5％

71.7％

Wholesale

771

3.2％

962

3.8％

124.8％

1,298

5.4％

1,340

5.2％

103.2％

956

4.0％

839

3.3％

87.8％

－

－

1,113

4.3％

－

23,897100.0%

25,648100.0％

107.3％

Subtotal

Overseas
Business

FY8/18 2Q

Subtotal
Buona Vita
Lifestyle products
business

Søstrene Grene
AMANO

Real, etc.

Total

 Sales in the domestic 100-Yen shop business increased by 3.3% YoY. However, its ratio to theconsolidated sales decreased by 3.4 percentage points due mainly to a decrease in wholesale sales offranchised shops and a making “Real Co., Ltd.”, which operates discount shops, a subsidiary in April ofthe previous fiscal year.
3

Financial
Overview

Quarterly Changes in Gross MarginSales

11,84912,047Gross profit

12,92538.8%

Gross margin

12,654

12,731

12,916In April 2018, the Company made Real Co., Ltd., which
operates discount shops, a consolidated subsidiary.
Gross margin at these shops is low, leading to adecrease in gross margin from FY8/18 3Q.

38.3%

37.5%
4,850

37.4%
4,735

37.4%

37.4%

4,761

4,833

4,539

4,672

18/8

18/8

18/8

18/8

19/8

19/8

1Q

2Q

3Q

4Q

1Q

2Q
4

Financial
Overview

Factors for Changes in Operating Profit(Millions of yen)Amount ofincrease ingross profit

Increased due to increase in the number ofpart-time employees associated with new shop
openings, and rising hourly wages due toincrease in minimum wage and labor shortage

Amount ofincrease in rent

153

Amount ofincrease inpersonnel
expenses

Increased due to the opening of relatively
large-scale shops in the 100-Yen shop
business and aggressive renovations.

382

264

Amount ofincrease inequipment cost

51
Operatingprofit598

Sales increased by 7.3% YoY, andgross profit increased by 4.2% YoYAmount ofincrease incommission
paid

39

Increase in expenses for theshareholder benefit program due
to an increase in the number ofshareholders.
Amount ofincrease intransport cost

14

Amount ofincrease inentertainment
expenses

12

Decreased by 231 million yen 61.3％ YoYPrevious
periodIncrease/decre
ase in otherexpenses

77
Operatingprofit366

Current
period5

Financial
Overview

Recording of Impairment Losses

Amount of
impairment losses

million yen was related to store facilities, etc. of
Søstrene Grene.

160(Million yen)

 In October 2016, Søstrene Grene opened its first shop

140

in Omotesando, where is the source of fashion trend, toincrease the brand recognition in Japan. As of the endof February 2019, it operates 5 shops.

120

100

 Among the impairment losses of 135 million yen, 115

Increasedlargely However, in addition to an increase in initial investment

80

135
60

40

costs, sales of Søstrene Grene were significantly below
expectations, and it would take some time to improve
its performance. Therefore, impairment losses wererecorded for these 3 shops: Omotesando Shop,
Divercity Tokyo Plaza Shop, and Marui Kichijoji Shop.

 The Company intends to increase its sales andprofitability by opening multiple shops with low shop
opening costs.

20

11
0

18/8 2Q

19/8 2Q

6

Financial
Overview

Consolidated Balance Sheet andConsolidated Cash Flows（Millions of yen)

Consolidatedbalance sheet

FY8/19 2Q(Current period)

FY8/18Pct. change

Pct. change

Cash and deposits

5,147

Down 10.1％

4,835

Down 6.1%

Merchandise and finished goods

6,811

Up 4.7％

7,088

Up 4.1％Other current assets

2,646

Down 13.0％

2,407

Down 9.0％

Tangible fixed assets

1,759

Up 14.4％

1,836

Up 4.4％

Other fixed assets

3,581

Up 9.5％

3,666

Up 2.4％

Total assets

19,945

Down 0.7％

19,834

Down 0.6％

Liabilities

9,711

Down 4.9％

9,945

Up 2.4％

Net assets

10,234

Up 3.7％

9,888

Down 3.4%（Millions of yen)

Consolidated cash flows

Free cash flows

FY8/18 2Q

Change

344

△244

376

+32

△391

△132

△503

△112

△197

△197

△186

+10

△9

△24

+1

+11

5,473

98

4,835

△638

△47

△376

△127

△79

51.3%, down by 0.9 percentage
points from the end of the previous
period.
Merchandise and finished goods
increased by 277 million yen due to
new shop openings and renovationsof 100-Yen shops. In other fixed
assets, guarantee deposits
increased by 79 million yen.
Net assets decreased by 345 million
yen due mainly to the purchase oftreasury stock of 135 million yen.

 Net cash provided by (used in)

FY8/19 2Q(Current period)

ChangeNet cash provided by (used in)operating activities
Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities
Effect of exchange rate change on cash
and cash equivalents
Cash and cash equivalents at end of
period Shareholders’ equity ratio was

operating activities was same level
as the previous year due to adecrease of 209 million yen inincome taxes paid, despite adecrease of 395 million yen inincome before income taxes.
In net cash provided by (used in)investing activities, payments forlease and guarantee deposits
increased by 71 million yen due to
new shop openings.

7

Contents
Financial
Overview

Operating Results for the Six Months of
the Fiscal Year Ending August 2019
P2 – P7

By Business

Situation of Each Business for the
Six Months of the Fiscal Year Ending
August 2019

P9 – P17

Business Plan

Business Forecasts for the Fiscal
Year Ending August 2019 andEfforts toward Each Business

P19 – P25

Reference

P27 – P34
8

By Business

Topics by Business

Domestic 100-Yen Shop BusinessOpening/closing

Opened 58 shops against the full-year plan of 115 shops and closed 40
shops against 84 shops. The number of shops at the end of the period was
1,179 (net increase of 18 shops)➡P11

Watts brand shops

Increased by 60 shops to 479 shops due to openings and renovations. The
share to total number of 100-Yen shops increased to 40.6%➡P12

Overseas Business
Overseas shops

The number of shops that are selling WATTS products was 77 (up 5 fromthe end of the previous fiscal year), and more than 120 shops including
local partners’ shops.
➡P13,14

Domestic Other Business
Buona Vita

A life-style goods shop offering comfortable life. The number of shops at theend of period was 21. Focused on development of existing shops such as byimproving product lineups.
➡P15

Søstrene Grene

Denmark’s life-style goods shop. Opened 1 shop, and totaled 5 shops.
Raise brand recognition and expand its scale of operation to make thebusiness into profitable.
➡P16

AMANO

Decided to withdraw from this business as there is no prospect for
improvement in profits.

RealCommunity-based discount shop. Made as subsidiary in April of the previous
fiscal year. Aim to create synergies with 100-Yen shop business.
➡P17

➡P19

9

By Business

Situation of 100-Yen Shop Business①― Changes in Same-store sales YoY ―FY8/19 (Current period)

FY8/18 (Previous period)

105.0%

101.4%

102.7%
100.7%

100.0%
100.6%
98.8%

100.3% 100.3%
99.8%

99.2%

99.5%

99.0%

100.1%

98.2%

97.5%

98.2%

100.0%

96.5%

95.0%

The number of customers was 102.9% YoY.
Rebound from a drop in the number ofcustomers due to the impact of typhoons andprolonged rain in the previous fiscal year.

90.0%

100.9%

101.1%Sep

Oct

Full-year total

Sales

Nov

Dec

No. ofcustomers

Sales were weak due to the sluggish
sales of winter clothing related to thewarm winter, etc.

Jan
Spending per
customer

YoY

98.9％

98.4％

100.3％

Current period

100.4％

99.6％

100.7％

Feb

Mar

Apr

May

Jun

Jul

Aug

 Spending per customer increased YoY in all months.
 YoY same-store sales for 1H exceeded the full-year targetof 100.0%. Aiming to achieve the target for the full-year
through sales promotion activities using insert flyers andSNS, and shop renovations.
Sales of Watts brand shops reached 102.4% YoY.

*Sales of March 2019: 101.1%
10

Situation of 100-Yen Shop Business②

By Business―Number of Shops (Opening/Closing Plan and Results) ―Opening
Closing
No. of shops at the end of period

1,161 1,179
1,028

Opening/closing plan and results

1,172 1,192

1,087

130

2Q
Opening plan → Opened 58 shops(Full-year progress rate: 50.4%)
63 shops
141
115

102

58
82

71

17/8

18/8

 Breakdown of shop openings: 17 tenant shops, 40
84

67

40
16/8

63

19/8 2Q

2Q→ Closed 40 shops
Closing plan
(Full-year progress rate: 47.6%)
52 shops

52

19/8 2Q

19/8

consignment shops, and 1 FC shop. Total numberof shops was 58.
 Net increase of 18 shops.
 Pace of shop openings was in line with the plan.
The number of shops was 1,179 (up 7 shops to theplan) at the end of 2Q.

(Forecast) (Forecast)

11

By Business

Situation of 100-Yen Shop Business③―New Shop Openings and Renovations of “Watts” Brand Shops―

479
Closing352

Renovation

419

差替え

Opening
No. of shops at theend of period

20

257
11

184

16

20

15

12

 Increased by 60 shops from the end of the

115

78
63

22

57

48

October 2018 Watts Nishiarai Tosca East Bldg. Shop (Tokyo)

58

50

55

20
-2

-1

-1

-3

-7

-10

16/8

16/8

17/8

17/8

18/8

18/8

19/8

2Q

4Q

2Q

4Q

2Q

4Q

2Q

previous fiscal year. The share to total number ofshops (1,179 shops) is 40.6%.
 Watts brand recognition is steadily increasing, as
the Company was able to open some shops at
facilities that attract large numbers of customers
in the current fiscal year.
 To open shops mainly Watts brand; renovations
will be made by reviewing the possibility ofinvestment recovery.
12

Situation of Overseas Business①

By Business―Changes in Sales (Directly-managed and Wholesale)―

200 0

180 0

1,298

1,340

771

962

160 0

140 0

120 0

(Millions of yen)966

Directly-managed sales
Wholesale sales

100 0

800

600

400

200

44

99

226

169

419
270

645

187

149

320

1,083
623

459

526

377

0

FY8/11

FY8/12

FY8/13

FY8/14

FY8/15

FY8/16

FY8/17

FY8/18FY8/19

1H

1H

1H

1H

1H

1H

1H

1H

1H

 Directly-managed shops gain foothold while focusing onwholesale sales to neighbor countries (collaboration withlocal partners).
 Sales at directly-managed shops decreased due to thetransfer of a sales subsidiary in Malaysia to a local
partner and the switch from directly-managed operation tofranchised operation in April of the previous fiscal year.

December 2018 Central World Shop (Thailand)Overseasbusiness

FY8/18 1H

FY8/19 1H

YoY

Sales

1,298 million yen

1,340 million yen

103.2％

13

By Business

Situation of Overseas Business②― Number of Shops (Opening/Closing Plan and Results) ―Opening

Opening

Closing66

No. of shops at the end of period

77

72

78

59

No. of shops
at the end of
period(FY8/19 2Q)

Closing

Thailand

5

1

41

China

－

－

2

Malaysia－

18

Vietnam

－

2

9

Peru

4

－

17

Total

9

4

77

 In Thailand, both existing and new shops are
performing well. The Company commenced toopen Watts brand shops. Opened 5 shops, andclosed 1 shop, totaled 41 shops.

28
9

18
12

12

4

5

FY8/16

FY8/17 There are about 50 fixed-price shops with sales

FY8/1894

FY8/19 2Q(Result)

3

floors consisting of the Company’s products
which include 15 shops in Myanmar, 12 shops inMongolia , 11 shops in Mexico and othercountries.

 Opened 4 shops in Peru, and totaled 17 shops.
FY8/19(Forecast)

Wholesaling to Mexico and Brazil via Peru.
14

By Business Situation of “Buona Vita”

Opening
Closing
No. of shops at the end of period

25
21

24
21

21

November 2018 Buona Vita Machinoma Omori Shop (Tokyo)

6 Carefully select locations for new shop openings,

4
4

5

3
1

1
1

FY8/16

FY8/17

mainly in front of the station. During 2Q, opened 1
shop, and closed 1 shop, totaled 21 shops.
 Despite efforts to developing existing shops, such as
introducing new gift items, same-store sales remained
at 94.5% YoY.

FY8/18 FY8/19 2Q FY8/19(Result) (Forecast)

15

By Business

Situation of "Søstrene Grene"

Opening
Closing
No. of shops at the end of period

6

Established a joint venture
Hilmer Japan in May 2016,
with 55% equity stake5
November 2017 Søstrene Grene PRIMETREE AKAIKE Shop (Aichi)

4
 Opened the first flagship shop in Omotesando on October 28,

32
3
1
FY8/16

FY8/17

FY8/181
FY8/19 2Q FY8/19(Result) (Forecast)2016. Operate 5 shops as of the end of February 2019.
 Same-store sales have not yet reached the target, and profits
have deteriorated due to the recording of impairment losses
for store facilities, etc. in the current fiscal year.
 Improve brand recognition by introducing products that meetthe domestic market and strengthening branding using SNS
and also promote multi-store expansion, with the aim ofmaking the business profitable early.

16

By Business

Situation of “Real"On April 2, 2018, the Company acquired all shares of Real Co., Ltd., which
operates small-scale discount shops, and made it a consolidated subsidiary.

 Offer a wide range of value-for-money products with utilizing their strength in procurement capability.
 Implement cost-cutting measures through the integration of headquarters functions, etc.
 Trial opening of collaborative shops with the Company’s 100-Yen shops to create synergies with 100Yen shop business.
 Operate 5 shops as of the end of February 2019. Plan to open Kayashima Shop (Neyagawa City,
Osaka) in April.
17

Contents
Financial
Overview

By Business

Operating Results for the Six Months of
P2 – P7
the Fiscal Year Ending August 2019

Situation of Each Business for the
Six Months of the Fiscal Year Ending
August 2019

Business Forecasts for the Fiscal
Business Plan Year Ending August 2019 andEfforts toward Each Business

Reference

P9 – P17

P19 – P25

P27 – P34
18

Business Plan

Revisions to Business Forecasts for FY8/19(Million yen)

Business
forecasts

FY8/19(Previous Forecasts)

FY8/18 (Results)
Ratio tosales

FY8/19 (Revised)

Ratio tosales

Ratio tosales

Changeratio

ChangeSales

49,480-52,000-52,000---Operating profit

1,000

2.0%

1,080

2.1%

920

1.8%

△160

△14.8%

Ordinary profit

1,037

2.1%

1,110

2.1%

880

1.7%

△230

△20.7%

633

1.3%

650

1.3%

270

0.5%

△380

△58.5%Net income attributable toowners of parent
Net income
Net Income per Share (Yen)

46.79

47.98

20.15

-

100-Yen shop business Same-store sales were 100.4% in 1H, versus the full-year plan at 100.0% YoY. The pace of new shop
openings was went according to the plan, and is expected to be generally in line with the plan for the
full-year.

Overseas business Made slight downward revision to the overseas business due to the delay in improving profitability of
the Chinese subsidiary, while wholesale sales have been steady.
Lifestyle products business As there is no prospect of improving profitability of AMANO Co., Ltd., the Company decided towithdraw from the business. Made downward revision as expenses related to the withdrawal are
expected. Sales at Søstrene Grene shops are also expected to be significantly below the target, due
to lower-than-expected same-store sales and the recording of impairment losses on its store facilities.
19

Business Plan

Growth vision with the trinity of our businessContinue to pursue
Structure to Sell
Better Products at
Lower Prices
 Low-cost opening and closingof shops
 Low-cost operation
 Best value-for-money dailyuse household items

Establish businessmodel for eachcountry Expand directly managed
shops by fully owned local
subsidiaries
 Establish joint venturecompany with local partners
 Develop new shops by
franchisee system

Brush up of Watts brand

100-Yen Shop business

Overseasbusiness

Otherbusinesses

 Shops and product lineups that
add more style to one’s life Establish shop opening model of“Watts” and “Watts with”
 Utilize POS system and improvereordering support system

Expand business andEnlarge source of
earnings
 Grow existing business andsecure profitability
 Capture new opportunities
including M&A

20

Business Plan

Initiatives for the 100-Yen Shop Business①

Watts brand shops Renovate “Watts” and “Watts with” in a systematic manner. Increase Watts brand shops at a pace of
100 shops per year with new shop openings
 Establish shop models to suit the location and customer segments based on sales analysis using
POS data.
 Continue to conduct group interviews, customer visit survey, and online questionnaires to reflect
customer feedback in the creation of sales floors.
Use of POS dataAccurately identify popular and unpopular items. Reduce stagnant products and replace themwith popular and new products to increase the freshness of products of sales floors
Introduce ordering support system to avoid losing sales opportunities due to stock-out
Create sales floors that match seasonal and regional characteristics by sharing accumulated
POS data with all shops, not only at each shop.

21

Business Plan

Initiatives for the 100-Yen Shop Business②

Expansion of “WATT’S new”

Monthly sales promotionImplement monthly headquarter-led sales promotion*The above photos show examples of developmentof monthly sales promotion
 Increase the number of fashionable items, switchingfrom the standard lineup of consumables and generalmerchandises. Also aggressively introduce new
products and seasonal products

Offer higher price products

Set a theme every 3 months anddrastically change displays. Develop
an area that allows customers toimage a scene of life and appeal toyoung females
As of the end of February 2019, 7
shops are displaying “WATT'S new”
space



Increase the number of higher priceproducts (¥200 to ¥1,000) to enhance
the product lineups and revitalize
sales floors. Aiming for the
introduction of 338 items as of theend of February and 600 items as ofthe end of the current fiscal year.

Collaboration shops with a discountshop "Real" will promote to customers
other than 100-Yen shops, leading to
expansion of customer base.

22

Business Plan

Initiatives for the 100-Yen Shop Business②
Future considerations

Moves toward cashless payments

 Cashless payment services currently available:credit cards, electronic money, iD, nanaco, WAON, andRakuten Edy.



Introduction of QR code payment
is under consideration.

Collect information on othertechnologies and determine if they
are applicable to our shops.

 Accept most of major international credit card brands.
 As of the end of February 2019, cashless payment isavailable at 135 shops among the 480 tenant-type shops.
Aim to introduce at 240 shops by the end of this fiscal year.
 Amid the emerging moves toward cashless payments, theCompany is aggressively introducing cashless payments,
reflecting its importance.
23

Business Plan

Initiatives for Overseas Business
小物家园 “KOMONOKAEN”

KOMONOYA[Expansion of wholesaling]

Currently, countries and regions with shipping records
are China, South Korea, Taiwan, Myanmar, Singapore,
Mongolia, New Zealand, Australia, Mexico, Brunei andPhilippines, etc. The number of retailers including
wholesalers that are selling only WATTS products ismore than “120 shops.” The Company will continue tokeep an eye on entering a promising market[Boost up existing market]


Rebuild support system of the existing market andshops through a new department which wasestablished in the current period. Raise the level ofmanagement of sales floors to expand sales. Regard
particularly Thailand, Vietnam and Myanmar as
significant markets and will actively provide support for
operation【Strengthen product competitiveness】
 Focus on supplying products for overseas as well as existing 100 yen products. Actively procure
products such as Japanese-made products and high quality products that are in high demand
overseas Build a commodity supply system to respond to a timely shipment overseas
24

Business Plan

Initiatives for Other Businesses Plan to open 3 new shops. Carefully select locations to grow as income
generating business.
 Strengthen lineups of popular products, gift-related products, and handmade
products to win repeat customers.
 Headquarter distributes hot topics, merchandising schedules, and productdisplay methods to each store to create high-quality sales floors.
 Plan to open 2 new shops. Focus on product innovation and promotemerchandising that matches the Japanese market. Also focus on stable supplyof regular and popular products.
 Through measures to spread information via SNS and increase media exposure,
aim to build a powerful brand in Japan. In addition, by holding regular workshops
and in-store events, aim to improve customer satisfaction and PR effectiveness.
 Establish a structure that creates operation synergies with 100-Yen shops
 Enhance sale promotion activities using insert flyers, etc.

25

Contents
Financial
Overview

By Business

Operating Results for the Six Months of
the Fiscal Year Ending August 2019

P2 – P7

Situation of Each Business for the
Six Months of the Fiscal Year Ending
August 2019

P9 – P17

Business Forecasts for the Fiscal
Business Plan Year Ending August 2019 andEfforts toward Each Business

Reference

About Watts GroupP19 – P25

P27 – P34
26

Reference

Brands of Watts Group

Domestic 100-Yen shop business

Overseasbusiness

Other domestic
business27

Reference

Overview of Other Businesses“Buona Vita,” a variety store
which proposes a
comfortable life. Operates
21 shops as of the end of
February 2019. The photo is
Sannomiya OPA2 shop
which opened in February
2017

Collaboration shop
between 100-Yen
shop and grocery

Community-based small
discount shop.
Operates 5 shops as ofthe end of February
2019.

“Søstrene Grene”, a joint
venture in a life-style goods
shop offering North European
items. Operates 5 shops as ofthe end of February 2019

Import andwholesale ofEuropean taste
lifestyle goods

28

Reference

Use of SNS

https://twitter.com/watts_100/

https://www.instagram.com/watts_100/

・Watts official twitter

・Watts official Instagram

Providing photos of recommended
products and announcements ofmonthly sales promotion.
Retweeting blogs and articles
containing 100-Yen shop
information.

Like twitter, we will inform you therecommended products of our 100Yen Shops. Providing attractive
information so that more people will
follow.

 Launched our official SNS accounts in the
100-Yen Shop business!
 The number of Instagram followers has
exceeded 40,000 in about six months
since its launch.
 Aiming to acquire new customers as wellas increase the frequency of visits ofexisting customers

LINE@ is also available at several shops, which users
can get information when you become friend.

29

Reference

Company Profile

Establishment
Meaning of the Company’s nameFebruary 22, 1995 (Currently the 25th business term)
Derived from “Wa! tto ikou”(Japanese catch cry to “go forth energetically”)

Market listing

Tokyo Stock Exchange First Section(Securities code: 2735)

Capital stock

440 million yen (as of August 31, 2018)

Head office

Main business

Number of employees
Number of shops

5F,Sumitomo OBP Plaza Building, 4-70,

Shiromi 1-chome, Chuo-ku, Osaka-shi, Osaka Prefecture

Wholesale and retail of daily-use and household items(Mainly operation of 100-Yen shops)
3,375 employees (as of February 28, 2019) *Part-time workers included
1,288 shops (as of February 28, 2019) *Other shops included30Reference

Corporate History 2011 Advanced to Hokkaido（Opened shops in 47 prefecture）

2014
Exceeded 1,000 shops
Listed on TSE1

2009
Started overseas business
Advanced to Thailand 2002 Shares were publicly listed
2007（Current TSE JASDAQ）
Integrated with Ohthree Co., Ltd.

Exceeded 700 shops
 1997 Established distribution
center in Shiga Prefecture 1995 Established in Chuo-ku,
Osama , as a successor of
Hisamatsu Co., Ltd.

1998
Exceeded 100 shops
for 4 years
after establishment

1995
Established2005
100-Yen shops exceeded
300 shops

2002¥10b in sales
Went OTC

FY8/18Sales¥49.4bn

No. ofshops

1,263 shops

Consolidated sales
No. of Group shops at the end of period31Reference

Shareholder Composition

Individual and others
Financial institutions

Other companies
Securities companies

37.34%

24.48%

FY8/182Q

Foreign companies and others
Treasury stock

21.50%

1.05%

13.10%
2.51%
0.86%

FY8/192Q

Total number ofshares issued
Number ofshareholders

42.42%

24.55%

15.97%

3.58%
FY8/17 2Q

FY8/18 2Q

13,958,800
shares
5,060

13,958,800
shares7,212

FY8/19 2Q

 Number of shareholders

YoY

13,958,800
shares
11,666－+4,454

Ownership ratio
Individuals and others
Other domestic
companies
Foreign companies
and others
Financial institutions
Securities companies
Treasury stock

12.58%

35.46%
24.37%

37.34%
24.48%

42.42%
24.55%+5.08P+0.07P

22.72%
14.11%
0.83%
2.51%

21.50%
13.10%
1.05%
2.51%

15.97%
12.58%
0.86%
3.58%+5.53P△0.52P△0.19P+1.07P(Note) The figures are rounded to the third decimal place and may not add up to 100% when adding the ratios of each section.

increased by 4,454 fromthe previous fiscal yearend.

 Ownership ratio of
individual shareholders
increased by 5.08
percentage points YoY.

 The increase in treasury
stock is due to theacquisition of 150,000 oftreasury stock during thecurrent fiscal year.
32Reference

Dividend Policy

The Company’s policy is “to maintain a stable dividend payment,”
considering the return of profits to shareholders.
Net income per share

Dividend per share

ROE（Return on Equity）

DOE（Dividend on Equity）

FY8/16

Dividend payout ratio

74.4%

28.3%

7.9％

32.1%
24.2%
8.7％

6.2％

FY8/17

FY8/18FY8/19(Forecast)

Net income per share (Yen)

53.04

61.96

46.79

20.15

Dividend per share (Yen)

15.00

15.00

15.00

15.00

Dividend payout ratio

28.3％

24.2％

32.1％

74.4％

Dividend yield

1.6％

1.1％

1.6％

2.1％

ROE (Return on Equity)

7.9％

8.7％

6.2％

2.6％

DOE (Dividend on Equity)

2.2％

2.1％

2.0％

1.9％

2.6％
2.2%

2.1%

2.0%

1.9%

¥15.00¥15.00¥15.00¥15.00FY8/16

FY8/17

FY8/18FY8/19(Forecast)*Dividend payout ratio for each fiscal year is calculated based on the stock
price of accounting date. (Payout ratio for FY8/19 is calculated based on thestock price as of February 28, 2019)*Figures for FY8/19 (forecast) is calculated based on the revised forecast as ofApril 11, 2019.

33

Reference

Shareholder Benefit Program

Number of shares held andholding period

Description

100 to 999 sharesA

1,000 shares or more/
Holding 3 years or more

A

A

＋

B

B

 Shown above is shareholder benefit products for FY8/18.
 We will plan more attractive benefits with reflecting your opinions and suggestions.
34

The data and future forecasts presented in this material are based on informationthat was available at the time this material was released. Changes in circumstances
can occur due to a range of factors and the Company gives no guarantee regarding
achievement of objectives and forecasts, or future operating results. Information
contained herein may change without forewarning. When using this data and referencematerials, please verify and confirm details against information that you have obtainedby other methods and exercise your discretionary judgment. Watts Co., Ltd. will in noway be held liable for any loss resulting from the use of this material.

Please contact us if you have any inquiry regarding this material.
Inquiries:
Hidehito Mori
(Executive Managing Director, Head of Corporate Planning Office), Watts Co., Ltd.

e-mail： ir@watts-jp.com
TEL ： 06-4792-3280