Summary of Financial Results for the Second Quarter Ended February 28, 2023
[Japan GAAP] (Consolidated)
April 10, 2023
Company
Stock Code
Representative
Contact

Watts Co., Ltd.

Listed on the TSE

2735
URL: https://www.watts-jp.com
Fumio Hiraoka, President and CEO
Hidehito Mori,T E L: +81-6-4792-3280
Executive Managing Director, Head of Corporate Planning Office
Expected date of filing of quarterly report: April 10, 2023
Expected starting date of dividend payment: Preparation of quarterly supplementary financial document: Yes
Quarterly results briefing: Yes (for institutional investors)（Rounded down to million yen）

1. Consolidated business results for the six months ended February 2023
(September 1, 2022 through February 28, 2023)(1) Consolidated results of operations(% change from the previous corresponding period)
Sales

Operating profit

Net income attributable toowners of parent

Recurring profit

Million yen% Million yen%
Six months ended Feb. 2023
29,550
3.7
271
-57.3
Six months ended Feb. 2022
28,506
11.3
637
-41.3
(Note) Comprehensive income
Six months ended February 2023: 277 million yen (-23.2%)
Six months ended February 2022: 361 million yen (-52.9%)
Net income
Diluted net income perper share
share
Yen
Yen
Six months ended Feb. 2023
21.53
Six months ended Feb. 2022
26.89-

Million yen
270
678

%
-60.1
-36.4

Million yen
292
361

%
-19.1
-54.8

(2) Consolidated financial position
Total assets

Net assets

Million yen
As of Feb. 2023
25,401
As of Aug. 2022
25,600(Reference) Shareholders’ equity:
As of February 2023: 12,005 million yen
As of August 2022: 11,927 million yen

Million yen
12,014
11,931

Shareholders’ equity
ratio
%
47.3
46.6

2. Dividends
End of 1Q

End of 2Q
Yen
-

Yen
0.00
0.00

Year ended Aug. 2022
Year ending Aug. 2023
Year ending Aug. 2023 (forecast)(Note) Revisions to dividend forecast for the current quarter: None

Annual dividend
End of 3Q
Yen-

Year-end

-

Total

Yen
15.00

Yen
15.00

15.00

15.00

3．Forecast of consolidated business results for the fiscal year ending August 2023
(September 1, 2022 through August 31, 2023)(% change from the previous corresponding period)
Sales
Million yen

Operating profit%

Million yen%

Year ending Aug. 2023
3.7
920
-7.9
60,500(Note) Revisions to business forecast for the current quarter: None

Recurring Profit
Million yen

850

%

-26.0

Net income attributableto owners of parent
Million yen

530

Net income
per share

%

Yen

-32.2

39.04

*Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes
in the scope of consolidation): Yes
Excluded: 1 (Ontsu F.RETAIL Co., Ltd.)(2) Application of accounting procedures specific to preparation of the consolidated quarterly financial statements:
None(3) Changes in accounting policies, accounting estimates and restatement①Changes in accounting policies associated with revision of accounting standards:②Changes in accounting policies other than ①③Changes in accounting estimates④Restatement: None: None: None: None(4) Shares outstanding (common stock)① Number of shares outstanding at the end of period (treasury stock included)
As of February 2023
13,898,800 shares
As of August 2022
13,898,800 shares② Treasury stock at the end of period
As of February 2023
317,692 shares
As of August 2022
323,487 shares③ Average number of stock during period (quarterly cumulative period)
Six months ended February 2023
13,578,154 shares
Six months ended February 2022
13,439,316 shares(Note) The number of treasury stock at the end of period includes the Company’s shares held by the share issuance trust for
directors (FY8/23 Q2: - shares, FY8/22 Q2: 56,354 shares).

*Quarterly financial summary is not subject to auditing procedures by certified public accountants or auditing firms.
*Explanation regarding appropriate use of business forecasts and other special instructions(Caution concerning forward-looking statements)
The forward-looking statements regarding future performance in this material are based on information currently
available to the company and certain assumptions that the company deems to be reasonable at the time this report was
prepared. Therefore, the company does not make promises about the achievements. Actual results may differ
significantly from the forecasts due to various factors.
Please refer to “(3) Future forecast information including consolidated business forecasts” of “1. Results of operations”
on page 3 for the suppositions that form the assumptions for business forecasts and cautions concerning the use ofbusiness forecasts.

1. Results of Operations…………………………………………………………………………………………………………

2(1) Analysis of operating results………………………………………………………………………………………………

2(2) Analysis of financial position……………………………………………………………………………………………..

3(3) Future forecast information including business forecasts…………………………………………………………………

3

2. Quarterly Consolidated Financial Statements…………………………………………………………………………………

4(1) Quarterly Consolidated Balance Sheets…………………………………………………………………………………...

4(2) Consolidated Statements of Income and Statements of Comprehensive Income…………………………………………

6

Quarterly consolidated statements of income
Second quarter……………………………………………………………………………………………………...

6

Consolidated statements of comprehensive income
Second quarter……………………………………………………………………………………………………...

7(3) Quarterly Consolidated Statements of Cash Flows……………………………………………………………………….

8(4) Notes to consolidated financial statements………………………………………………………………………………..

9(Notes on going concern assumption) …………………………………………………………………………………..

9(Notes if there is a significant change in the amount of shareholders' equity) ………………………………………….

9

- 1 -

1. Results of Operations(1) Analysis of operating results
During the six months ended February 2023, the Japanese economy saw a recovery in consumer spending, thanks in part tothe slowing down of the COVID-19 pandemic, the year-end and New Year holidays with no restrictions on activities, and thegovernment's intermittent national travel subsidy program and subsidies for utility bills. However, price rises were announced
every month, especially for food, and consumer confidence has not yet fully recovered. In the corporate sector, the recovery inthe service sector, which benefited from increased tourism demand following the easing of border control measures, slower
semiconductor shortages, and a downward trend in resource prices, had a positive effect on the economy. On the other hand,the environment remained unchanged with concerns about a decline in external demand due to the expected slowdown inoverseas economies and labor shortages due to tight labor supply and demand.
Given this environment, in addition to the 100-Yen shop business in Japan, the Company, which operates the “Watts”,“Watts with”, “meets.”, “silk”, etc., has been working on diversifying its revenue sources by undertaking other domestic
businesses, centering on the sale of life-style goods and discount goods as well as overseas business.
In the domestic 100-Yen shop business, “Watts Online Store” introduced products from “Buona Vita” and “Tokino:ne”, aswell as products exclusive to the online store, and the number of products listed on the store significantly increased to morethan 19,000 items.
In addition, we are introducing self-checkout POS registers for cashless payments to improve in-store productivity through amore efficient purchase process. We are also working to introduce and renew handmade tools and materials sections to further
develop existing shops.
As for new shop openings, the Company opened 104 shops to the full-year plan of 236 shops. There were 53 shop closings(including 2 franchised shops), including certain unprofitable shops and unpredictable closing of shops where the Company’s
shops were located in. As a result, the total number of 100-Yen shops at the end of the second quarter was 1,692, which
includes 1,671 directly managed shops (net increase of 53), and 21 franchised/other shops (net decrease of 2). Of these, thenumber of the Watts brand shops "Watts" and "Watts with" was 1,131 (net increase of 102), accounting for more than 66.8%of the total.
As for the number of the domestic other shops at the end of the fiscal year, “Buona Vita,” a life-style goods shop offering
comfortable life, was 15 shops (net decrease of 8). The decline is due to the fact that Watts Connection, which operates “BuonaVita”, was absorbed into Watts East Japan Sales, a 100-Yen shop operator, effective September 1, 2022, and 6 “Buona Vita”
shops (consignment-type shops in the Company’s 100-Yen shops) was excluded from the figure.
“Tokino:ne”, a household items shop under the theme of “time”, operates 2 directly-managed shops (unchanged). In
addition, “Tokino:ne” began selling its products in 200 of the Company's 100-Yen shops. “Value- 100,” the fresh-foods
supermarket collaboration, continues with 1 shop (unchanged). "Real", a discount shop, was 5 shops (net decrease of 1).
Regarding overseas operation, the Company operates “KOMONOYA”, a fixed-price shop mainly in Southeast Asia. At theend of the fiscal year under review, “KOMONOYA” operates 32 shops in Thailand (net decrease of 5), and 15 shops in Peru
(net increase of 1). In China, there were 4 shops (unchanged) named “小物家园”(KOMONOKAEN), a fixed price shop. The
total number of own-brand shops “KOMONOYA” and “小物家园”(KOMONOKAEN) was 51 (net decrease of 4).
As a result, for the six months ended February 2023, sales increased to 29,550 million yen (up 3.7% YoY, 99.7% to theplan).
Gross margin was lower than expected, mainly due to higher purchase costs and an increase in the proportion of food sales.
In addition, operating profit was 271 million yen (down 57.3% YoY, 71.6% to the plan) and recurring profit was 270 million
yen (down 60.1% YoY, 79.7% to the plan), mainly due to the opening and renovation of relatively large-scale shops, and anincrease in utility expenses.
In addition, net income attributable to owners of the parent was 292 million yen (down 19.1% YoY and 132.9% to the plan),mainly due to the recording of income taxes-deferred (gain) due to the reorganization among its consolidated subsidiaries.
(*Year on year: comparison with the results for the same period of the previous fiscal year. Ratio to plan: ratio to the business
forecasts for the six months ended February 2023 which were announced in the Summary of Financial Results on October 11,
2022.)
Since the Group operates under a single segment consisting of the operation of 100-Yen shops associated business, segment
information is omitted.

- 2 -(2) Analysis of financial position① Assets, liabilities and net assets(Assets)
As of the end of the second quarter of the current fiscal year, current assets stood at 18,315 million yen, decreased by 245
million yen from the end of the previous fiscal year. This was mainly due to decreases of 456 million yen in notes andaccounts receivable-trade and 53 million yen in cash and deposits, and an increase of 303 million yen in merchandise andfinished goods.
Fixed assets stood at 7,085 million yen, increased by 46 million yen from the end of the previous fiscal year. This was
mainly due to increases of 155 million yen in deferred tax assets and 56 million yen in tools, furniture and fixtures, anddecreases of 82 million yen in software included in other intangible assets and 65 million yen in goodwill.
As a result, total assets stood at 25,401 million yen, a decrease of 199 million yen from the end of the previous fiscal year.
(Liabilities)
As of the end of the second quarter of the current fiscal year, current liabilities stood at 9,761 million yen, decreased by
171 million yen from the end of the previous fiscal year. This was mainly due to decreases of 382 million yen in notes andaccounts payable-trade, 129 million yen in accounts payable-other included in other current liabilities, and 62 million yen inincome taxes payable, and an increase of 422 million yen in electronically recorded obligations.
Fixed liabilities stood at 3,625 million yen, a decrease of 110 million yen compared with the end of the previous fiscal
year. This was mainly due to a decrease of 127 million yen in long-term loans payable.
As a result, total liabilities stood at 13,387 million yen, a decrease of 282 million yen from the end of the previous fiscal
year.
(Net assets)
As of the end of the second quarter of the current fiscal year, net assets stood at 12,014 million yen, increased by 83
million yen compared with the end of the previous fiscal year. This was mainly due to an increase of 88 million yen inretained earnings.
As a result, shareholders’ equity ratio stood at 47.3% (46.6% at the end of the previous fiscal year).
② Cash flows
Cash and cash equivalents (hereinafter referred to as “cash”) at end of the current second quarter of the fiscal year
amounted to 6,633 million yen, decreased by 53 million yen from the previous fiscal year.
Details and breakdown of each cash flow in the second quarter are as follows.
(Cash flows from operating activities)
Net cash provided by operating activities was 596 million yen (915 million yen was provided in the same period of theprevious fiscal year). Cash was provided mainly by a decrease in notes and accounts receivable-trade of 455 million yen,depreciation and amortization of 297 million yen, and income before income taxes of 182 million yen. Cash was usedmainly for an increase of 309 million yen in inventories.
(Cash flows from investing activities)
Net cash used in investing activities was 425 million yen (570 million yen was used in the same period of the previous
fiscal year). This was mainly due to purchase of property, plant and equipment of 347 million yen and payments for leaseand guarantee deposits of 75 million yen.
(Cash flows from financing activities)
Net cash used for financing activities was 220 million yen (0 million yen was provided in the same period of the previous
fiscal year). This was mainly due to 413 million yen in repayment of long-term loans payable, 203 million yen in cash
dividends paid, 300 million yen in proceeds from long-term loans payable, and 100 million yen in net increase in short-termloans payable.
(3) Future forecast information including business forecasts
The Company made no change to the full-year business forecasts announced in the summary of financial results dated
October 11, 2022.

- 3 -2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(August 31, 2022)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Raw materials and supplies
Consumption taxes receivable
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation and impairment loss
Buildings and structures, net
VehiclesAccumulated depreciation and impairment loss
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation and impairment loss
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation and impairment loss
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Amortization of goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets- 4 -Current second quarter(February 28, 2023)

6,687,848
2,687,168
8,734,082
25,84722,876431,169-27,599
18,561,392

6,633,862
2,230,248
9,037,098
19,427
13,658405,307-23,60918,315,993

4,008,560-2,951,551
1,057,009
32,337-26,989
5,348
4,882,184-4,061,385
820,798
257,800
111,042-101,363
9,678
5,000
2,155,635

4,078,468-3,003,734
1,074,733
33,761-28,394
5,367
5,041,314-4,164,103
877,210
257,800
111,042-103,215
7,826
2,222,938

538,691
567,785
1,106,477

472,729
485,133
957,862

350,185
523,698
2,765,694
144,709-7,2383,777,048
7,039,161
25,600,554

321,183
679,3082,770,637
141,401-7,8993,904,630
7,085,431
25,401,425

(Thousands of yen)Previous fiscal year
(August 31, 2022)
Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Retirement benefit liability
Provision for directors’ retirement benefits
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Stock acquisition right
Total net assets
Total liabilities and net assets- 5 -Current second quarter(February 28, 2023)

3,943,822
3,801,090
694,163
124,876
170,774
126,657
1,071,372
9,932,757

3,560,830
4,223,923
100,000
707,510
62,118109,429
150,934
846,330
9,761,077

2,311,910
412,913
34,295646,815
330,8443,736,777
13,669,535

2,184,890
441,173
36,042665,818
298,054
3,625,97813,387,056

440,297
1,348,550
10,214,752-133,386
11,870,213

440,297
1,350,605
10,303,427-130,420
11,963,910

4,962
51,85456,816
3,989
11,931,019
25,600,554

2,800
39,11841,9198,539
12,014,368
25,401,425

(2) Consolidated Statements of Income and Statements of Comprehensive Income(Quarterly consolidated statements of income)(Second quarter)(Thousands of yen)Previous second quarter(from September 1, 2021
to February 28, 2022)
Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating revenues
Interest income
Foreign exchange gains
Royalty income
Compensation income
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Early-withdrawal penalty
Share of loss of entities accounted for using equity method
Compensation expenses
Exchange loss
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Surrender value of insurance
Gain on sale of investment securities
Provision for directors' stock-based benefits
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Impairment loss
Loss on disaster
Total extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net income attributable to owners of parent- 6 -Current second quarter(from September 1, 2022
to February 28, 2023)

28,506,628
17,592,437
10,914,191
10,277,039
637,151

29,550,968
18,381,185
11,169,783
10,897,801
271,981

1,126
32,927
1,414
5,016
15,247
7,587
63,3202,065
2,660
26,944
1,789
6,415
39,875

4,979
5,760
1,275
7,435
2,302
21,753
678,718

5,444
9,143
13,0489,231
4,110
40,978
270,879

6,246
29,77736,023

1,810
1,810

18,62556,992
1,248
76,866
637,875
276,46854
276,523
361,352
361,352

5,546
84,19889,744
182,945
52,978-162,337-109,359
292,304
292,304

(Quarterly consolidated statements of income)(Second quarter)(Thousands of yen)Previous second quarter(from September 1, 2021
to February 28, 2022)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent- 7 -Current second quarter(from September 1, 2022
to February 28, 2023)

361,352

292,304-2,784
4,094-2,161-9,369-1,507-3,365-197
361,154-14,896
277,407361,154

277,407(3) Quarterly Consolidated Statements of Cash Flows(Thousands of yen)Previous second quarter(from September 1, 2021
to February 28, 2022)
Net cash provided by (used in) operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in liabilities relating to retirement benefits
Increase (decrease) in provision for directors’ retirement
benefits
Increase (decrease) in provision for directors' stock-based
benefits
Interest and dividends income
Interest expenses
Loss (gain) on sale of investment securities
Loss on retirement of noncurrent assets
Decrease (increase) in accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accrued consumption taxes
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Payments for retirement of property, plant and equipment
Purchase of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Payments for asset retirement obligations
Proceeds from sale of investment securities
Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayment of lease obligations
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 8 -Current second quarter(from September 1, 2022
to February 28, 2023)

637,875
267,581
56,99254,968-1,4093,989
79,665

182,945
297,398
84,19865,962-3,32924,27628,260

2,091

1,747

-93,938--1,2194,979
18,625435,247-156,019-2,511
48,566-40,986
1,314,498
1,199-4,787-395,619
915,291-2,1585,444-1,8105,546
455,204-309,879
39,766-52,495-177,317
643,758
2,170-4,974-125,162
80,860596,651-195,572-14,520-83,485-495,180
31,618-5,174--347,742-37,819-75,794
50,436-26,500
11,125

191,877-300-570,138300-425,995-200,000
2,900,000-2,393,092-10,192-295,916
798
9,658
355,609
6,169,208
6,524,818

100,000
300,000-413,459-3,675-203,713-220,848-3,795-53,986
6,687,848
6,633,862

(4) Notes to consolidated financial statements(Notes on going concern assumption)
No items to report(Notes if there is a significant change in the amount of shareholders' equity)
No items to report- 9 -