Summary of Financial Results for the Fiscal Year Ended August 31, 2018
[Japan GAAP] (Consolidated)
October 11, 2018
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 annual shareholders’ meeting: November 27, 2018
Expected starting date of dividend payment: November 28, 2018
Expected date of filing of annual securities report: November 27, 2018
Preparation of supplementary financial document: Yes
Results briefing: Yes (for institutional investors)（Rounded down to million yen）

１. Consolidated business results for the fiscal year ended August 2018
(September 1, 2017 through August 31, 2018)(1) Consolidated results of operations(% change from the previous corresponding period)

Sales

Operating profit

Million yen %Million yen
Year ended Aug. 2018
49,444
4.1
975
Year ended Aug. 201747,4942.9
1,209(Note) Comprehensive income:Fiscal year ended August 2018: 564 million yen (-30.4%)
Fiscal year ended August 2017: 811 million yen (56.0%)

Recurring profit

%
-19.3
0.3

Net income
per share

Diluted net income
per share
Yen
Yen
Year ended Aug. 2018
46.79
Year ended Aug. 2017
61.96
(Reference) Investment earnings/loss on equity-method:
Fiscal year ended August 2018: 24 million yen
Fiscal year ended August 2017: 31 million yen

Million yen
1,037
1,272

Return on
equity
%
6.2
8.7

%
-18.5
6.6

Net income attributableto owners of parent
Million yen
%
633
-24.5
839
16.8

Ratio of recurring
profit to total assets
%
5.2
6.6

Ratio of operating
profit to sales
%
2.0
2.5

(2) Consolidated financial position
Total assets

Net assets

Million yen
19,94520,084As of Aug. 2018
As of Aug. 2017

Shareholders’ equity
ratio

Million yen
10,234
9,873

Net assets per
share

%
52.2
49.7

Yen
769.05736.23(Reference) Shareholders’ equity:
As of August 2018: 10,418 million yen
As of August 2017: 9,974 million yen(3) Consolidated results of cash flows

Year ended Aug. 2018Year ended Aug. 2017

Cash flows fromoperating activities
Million yen
687
1,157

Cash flows frominvesting activities
Million yen
-615
-525

Cash flows fromfinancing activities
Million yen-658
55

Cash and cash equivalents
at the end of period
Million yen
5,147
5,727

2. Dividends
Annual dividendYear ended Aug. 2017
Year ended Aug. 2018Year ending Aug. 2019
(forecast)End of
1Q
Yen
―
―
―

End of
2Q
Yen
0.00
0.00
0.00

End of
3Q
Yen
―
―
―

Year-end

Annual

Yen
15.00
15.00
15.00

Yen
15.00
15.00
15.00

Total
dividends(Total)Million yen
204
204

Dividend
payout ratio(Consolidated)
%
24.2
32.1
31.3

Rate of total
dividend to net
assets(Consolidated)
%
2.1
2.0

3．Forecast of consolidated business results for the fiscal year ending August 2019
(September 1, 2018 through August 31, 2019)
Sales

For the six months
ending Feb. 2019Year ending Aug. 2019(% change from the previous corresponding period)
Net income
Net income per
Recurring profit
attributable to owners
shareof parent

Operating profit

Million yen%

Million yen%

Million yen%

Million yen%

Yen

25,400

6.3

430

-27.5

430

-28.6

255

-32.8

18.82

52,000

5.2

1,080

10.7

1,110

7.0

650

2.5

47.98

※Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes inthe scope of consolidation): Yes
Newly included: 1 (Real Co., Ltd.)
Excluded: 2 (Ningbo Ximeike Household Products Co., Ltd., Watts Harrisons Sdn. Bhd.)(2) 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(3) Shares outstanding (common stock)① Number of shares outstanding at the end of period (treasury stock included)
As of August 2018
13,958,800 shares
As of August 2017
13,958,800 shares② Treasury stock at the end of period:
As of August 2018
410,874 shares
As of August 2017
410,874 shares③Average number of stock during period
Fiscal year ended August 2018
13,547,926 sharesFiscal year ended August 2017
13,547,926 shares(Note) The number of treasury stock at the end of period includes the Company’s shares held by the share issuancetrust for directors (FY8/18: 60,000 shares, FY8/17: 60,000 shares). In addition, the Company's shares owned by
the share issuance trust for directors are included in treasury stock deducted for calculation of the average
number of shares during period (FY8/18: 60,000 shares, FY8/17: 34,849 shares).

* Financial summary is not subject to the 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 “(4) future outlook” of “1. Results of operations” on page 4 for the suppositions that form the assumptions
for business forecasts and cautions concerning the use of business forecasts.

・・・・

2

(1) Overview of operating results for the current fiscal year

・・・・

2

(2) Overview of financial position for the current fiscal year

・・・・

3

(3) Overview of cash flows for the current fiscal year

・・・・

4

(4) Future outlook

・・・・

4

2. Basic policy regarding selection of accounting standards

・・・・

5

3. Consolidated Financial Statements

・・・・

6

・・・・
・・・・
・・・・

6
8
8

・・・・

9

(3) Consolidated Statements of Changes in Net Assets

・・・・

10

(4) Consolidated Statements of Cash Flows

・・・・

12

(5) Notes to consolidated financial statements

・・・・

14

(Notes on going concern assumption)

・・・・

14

(Segment information)

・・・・

14

(Per share information)

・・・・

14

(Important subsequent events)

・・・・

14

・・・・

15

・・・・

15

1. Results of Operations(1) Consolidated Balance Sheets(2) Consolidated Statements of Income and Statements of Comprehensive Income(Consolidated Statements of Income)(Consolidated Statements of Comprehensive Income)4. Other
Sales

- 1 -

1. Results of Operations(1) Overview of operating results for the current fiscal year
During the current fiscal year, the Japanese economy continued to enjoy strong corporate earnings particularly amonglarge corporations, supported by relatively firm domestic demand. As the labor shortage remains serious, demand forlabor-saving investment was robust, and capital investment remained firm. Nevertheless, a wait-and-see mood for the
U.S.-China trade war has been enhanced. On the other hand, as for the household finances, although nominal income
increased, the situation continued to be hard to reach the increase in real income, partly due to the rise in energy prices.
In this fiscal year, the retail industry was significantly affected by abnormal weather conditions, such as large-scale
typhoons in last autumn, cold waves and heavy snowfalls after the beginning of the year, and heavy rains in summer, etc.
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 interior goods and life-style goods, as well as overseas business.

As for the domestic 100-Yen shop business, the Company has been striving to achieve both greater customer satisfaction
and higher earnings at shop by developing and selling ranges of private brand items under the “WATTS SELECT” brandconsisting of reasonably priced, best value-for-money products, mostly daily-use household items, and carrying out lowcost opening and closing of shops and low-cost shop operations. At the same time, in order to create new brand value tomeet diversifying customer needs, the Company is making further improvements based on the “business model
restructuring”.
As specific measures, the Company is currently undertaking sales promotional campaign that each store displays andfeatures specific items along with a theme for each month to revitalize its sales floors. During the current fiscal year, theCompany promoted some promotional concepts such as "Warmth of Woods", which focuses on dishes made from popular
Acacia wood, and "Total Coordinate for New Life," which promotes lavatory-related and kitchen-related products intrendy black-and-white taste to meet the new life needs. The Company will strive to further strengthen its sales promotion
led by the headquarters. In addition, the Company is also proceeding with the optimization of product lineups on the basisof sales data acquired by POS systems. The Company has also introduced a reordering support system, for the purpose of
preventing the unnecessary opportunity losses in sales caused by stock out, to improve the accuracy of its targeting in thisregard.
As for the new shop openings, the Company opened 141 shops, far exceeding the full-year plan of 108 shops, although
there were many relatively small sized shops. There were 67 shop closings (including 10 franchised shops), including
certain unprofitable shops and unpredictable closing of shops where the Company’s shops were located in. As a result, thetotal number of 100-Yen shops at the end of the current fiscal year was 1,161, which includes 1,129 directly managed
shops (net increase of 84), and 32 franchised/other shops (net decrease of 10). Of these, the number of "Watts" and "Watts
with", the Watts brand shops, increased by 162 to 419, accounting for more than 30% 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 21 shops (net decrease of 4). Buona Vita did not open any new shops during the current fiscal year,
but the Company will focus on improving the profitability of existing shops. ‘Value-100,’ the fresh-foods supermarket
collaboration, continues with 1 shop. In addition, “Søstrene Grene”, a Denmark’s life-style variety shop, opened “PRIMETREE AKAIKE” shop as the first opening in Tokai region, totaling 4 shops. The Company continued to strive to raise its
brand recognition by actively posting shop information via SNS. Through these efforts, the followers on Instagram andFacebook each exceeded 23,000, although the number of shops is still small. In addition, as of April 2, 2018, the- 2 -Company made "Real Co., Ltd.", which operates 4 discount shops named "Real", into a subsidiary. To improve theproduct line-ups, the Company will utilize its strength in procurement capability cultivated with the 100-Yen shop
business.
Regarding the overseas operation, the Company operates “KOMONOYA”, a fixed-price shop mainly in Southeast Asia.
At the end of the current fiscal year, “KOMONOYA” operates 37 shops in Thailand (net increase of 6), 9 shops in
Malaysia (net increase of 4), 11 shops in Vietnam (net decrease of 3), and 13 shops in Peru (net increase of 6). In China, a
fixed price shop “小物家园” (KOMONOKAEN) closed 7 shops (2 Chinese style franchised shops) and resulted in 2
shops. The total number of own-brand shops “KOMONOYA” and “小物家园” (KOMONOKAEN) was 72 (net increaseof 6). The numbers of local shops with sales floors consisting of the Company’s products are gradually increasing andexpanding particularly in Myanmar, Mongolia, and Mexico. The total number of shops, in addition to our group shops,
exceeds 110 shops. The Company added new product supply locations such as the Philippines and Singapore, which are
expected to achieve medium-to-long-term economic growth, the share of overseas sales in consolidated sales increased by
0.7 percentage points YoY to 5.5%.

As a result, for the fiscal year ended August 2018, sales were 49,444 million yen (up 4.1% YoY, 99.7% to the plan).
Regarding the profit, as the same-store sales were weak affected by the abnormal weather, the Company was unable tocover the increase in SG&A expenses following the increase in the number of shops. Therefore, operating profit was 975
million yen (down 19.3% YoY, 67.3% to the plan), and recurring profit was 1,037 million yen (down 18.5% YoY, 68.2%
to the plan). Net income attributable to owners of parent was 633 million yen (down 24.5% YoY, 68.5% to the plan).
(*Year on year: comparison with the results for the previous fiscal year. Ratio to plan: ratio to the business forecasts forthe fiscal year ended August 2018 which were announced in the Summary of Financial Results on October 12, 2017.)
Since the Group operates under a single segment consisting of the operation of 100-Yen shops associated business,segment information is omitted.

(2) Overview of financial position for the current fiscal year
(Assets)
As of the end of the current fiscal year ended August 2018, current assets stood at 14,873 million yen, a decrease of 403
million yen compared with the end of the previous fiscal year. This is mainly because cash and deposits decreased by 580
million yen, and consumption taxes receivable decreased by 84 million yen. While merchandise and finished goods increasedby 305 million yen.
Fixed assets stood at 5,072 million yen, an increase of 264 million yen compared with the end of the previous fiscal year.
This is mainly because tools, furniture and fixtures increased by 113 million yen, buildings and structures increased by 88
million yen, and deferred tax assets increased by 32 million yen.
As a result, total assets stood at 19,945 million yen, a decrease of 138 million yen compared with the end of the previous
fiscal year.

(Liabilities)
As of the end of the current fiscal year ended August 2018, current liabilities stood at 8,415 million yen, a decrease of 409
million yen compared with the end of the previous fiscal year. This is mainly because income taxes payable decreased by
219 million yen, accrued consumption taxes decreased by 186 million yen. As a result of the introduction of electronic billtransactions, electronically recorded obligations increased by 2,544 million yen while notes and accounts payable-trade- 3 -decreased by 2,328 million yen.
Fixed liabilities stood at 1,296 million yen, a decrease of 90 million yen compared with the end of the previous fiscal year.
As a result, total liabilities stood at 9,711 million yen, a decrease of 499 million yen compared with the end of the previous
fiscal year.

(Net assets)
As of the end of the current fiscal year ended August 2018, net assets stood at 10,234 million yen, an increase of 360
million yen compared with the end of the previous fiscal year. This is mainly because retained earnings increased by 429
million yen. As a result, shareholders’ equity ratio stood at 52.2% (49.7% at the end of the previous fiscal year).

(3) Overview of cash flows for the current fiscal year
Cash and cash equivalents (hereinafter referred to as “cash”) at the end of the current fiscal year ended August 2018 amounted
to 5,147 million yen, a decrease of 580 million yen compared with the previous fiscal year.
Details and breakdown of each cash flow in the current fiscal year are as follows.

(Cash flows from operating activities)
Net cash provided by operating activities was 687 million yen (1,157 million yen was provided in the previous fiscal year).
Cash was provided mainly by income before income taxes of 920 million yen, depreciation and amortization of 383 million
yen, impairment loss of 73 million yen. Cash was used mainly for income taxes paid of 568 million yen and a decrease inaccrued consumption taxes of 110 million yen.

(Cash flows from investing activities)
Net cash used in investing activities was 615 million yen (525 million yen was used in the previous fiscal year). As for the
breakdown, there were payments for for property, plant and equipment of 657 million yen for opening of new shops,
payments for lease and guarantee deposits of 146 million yen, and proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation of 143 million yen.
(Cash flows from financing activities)
Net cash used for financing activities was 658 million yen (55 million yen was provided in the previous fiscal year). As forthe breakdown, there was repayment of long-term loans payable of 822 million yen.

(4) Future outlook
Despite concerns over the spread of protectionist policies triggered by the United States, GDP is expected to continue to show
positive growth with a gradual pace, and a moderate recovery in the domestic economy is expected, led by capital investment
and personal consumption demand.

Given this situation, the Group continues to make every effort to offer value-for-money products by investing accumulated
earnings in product development, through low-cost opening and closing of shops and low-cost shop operations. Furthermore,
to meet the diversified consumer needs, the Group will continue to aim for being the 100-Yen shop where customers can finda value of more than ¥100.
Furthermore, with the aim of building a new revenue source to complement the 100-Yen shop business, the Group is actively
working on developing lines like “Buona Vita” and “Søstrene Grene”, to provide the new driving force for further growth in
the future.
As for the overseas business that is expected to grow greatly in the future, the Company will strive to expand existing business- 4 -and develop new markets, in order to further expand the sales share within the Group and to earn profits.
Based on the above, the Company expects the following consolidated operating results in the next fiscal year: sales of 52,000
million yen (up 5.2% year on year), operating profit of 1,080 million yen (up 10.7% year on year), recurring profit of 1,110
million yen (up 7.0% year on year) and net income attributable to owners of parent of 650 million yen (up 2.5% year on year).

(Reference) Cash flow indicators
Fiscal year
ended August 31,
2014
Equity ratio (%)
44.4
Market value
68.0
equity ratio (%)
Interest-bearing
debt to cash
0.7
flows ratio(years)Interest coverage
246.2
ratio (times)

Fiscal year
ended August 31,
2015
50.2

Fiscal year
ended August 31,
2016
50.1

Fiscal year
ended August 31,
2017
49.7

Fiscal year
ended August 31,
2018
52.2

74.3

70.3

88.0

64.5

-

1.7

1.3

1.7

-

148.8

284.3

157.87(Notes) Equity ratio: Equity/Total assets
Market value equity ratio: Total market capitalization/Total assets
Interest-bearing debt to cash flows ratio: Interest-bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payment
1. Total market capitalization is calculated by multiplying closing stock price at the end of the period by the total number of sharesissued at the end of the period (excluding treasury stock).
2. Net cash provided by operating activities in the consolidated statements of cash flows is used as ‘Operating cash flow.’
3. Interest-bearing debt includes all debt on which interest is paid reported on the consolidated balance sheet.
4. For interest payment, interest expenses paid in the consolidated statements of cash flows are used.
5.’Interest coverage ratio’ and ‘Interest-bearing debt to cash flows ratio’ for the fiscal year ended August 2015 are not presented, since
the cash flows from operating activities were negative.

2. Basic policy regarding selection of accounting standards
In order to secure comparability with domestic peer companies, the Company applies Japanese accounting standards.

- 5 -3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(August 31, 2017)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Raw materials and supplies
Deferred tax assets
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
Total property, plant and equipment
Intangible assets
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- 6 -Current fiscal year
(August 31, 2018)

5,727,607
2,201,021
6,506,142
28,606
303,936
127,273
404,956-22,621
15,276,922

5,147,120
2,262,537
6,811,518
8,087
268,537
42,588374,125-40,991
14,873,524

1,454,655-771,545
683,109
11,236-4,250
6,985
3,087,382-2,496,759
590,623
257,800－－－
1,538,518

1,658,569-887,262
771,306
18,856-12,969
5,886
3,369,569-2,665,399
704,169
257,800
27,623-7,432
20,191
1,759,354

78,54378,54369,54769,547453,085
119,5612,488,108
131,260-1,4883,190,527
4,807,588
20,084,510

472,690
151,804
2,481,628
140,832-3,8273,243,128
5,072,029
19,945,554

(Thousands of yen)Previous fiscal year
(August 31, 2017)

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
Provision for directors' bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Liabilities relating to retirement benefits
Provision for directors’ retirement benefits
Provision for directors' stock-based 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
Non-controlling interests
Total net assets
Total liabilities and net assets- 7 -Current fiscal year
(August 31, 2018)

6,325,286－
100,000
648,434
349,322
252,300
168,421
11,475
969,451
8,824,690

3,997,054
2,544,768
100,000
539,349
129,943
66,137
177,783－
860,065
8,415,102

771,503
187,594
12,405
16,206
114,621283,836
1,386,168
10,210,858

532,182
264,848
38,78524,464
134,835
300,888
1,296,004
9,711,107

440,297
1,637,636
8,029,585-137,991
9,969,528

440,297
1,637,636
8,459,425-137,991
10,399,368

26,277-21,377
4,900-100,776
9,873,652
20,084,510

20,482-883
19,598-184,519
10,234,447
19,945,554

(2) Consolidated Statements of Income and Statements of Comprehensive Income(Consolidated Statements of Income)(Thousands of yen)

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating revenues
Interest income
Dividends income
Rent income
Equity in earnings of affiliates
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Early-withdrawal penalty
Cost of lease revenue
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Surrender value of insurance
Gain on sales of noncurrent assets
Gain on liquidation of subsidiaries
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on sales of noncurrent assets
Impairment loss
Loss on sales of shares of subsidiaries
Loss on liquidation of businessTotal extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Net loss attributable to non-controlling interests
Net income attributable to owners of parent- 8 -Previous fiscal year
(from September 1, 2016
to August 31, 2017)

Current fiscal year
(from September 1, 2017
to August 31, 2018)

47,494,208
29,499,431
17,994,777
16,785,430
1,209,346

49,444,899
30,665,533
18,779,366
17,803,441
975,9242,247
698
21,91531,40817,555
16,97990,804

4,101
863
35,78024,90816,24333,042
114,939

5,537
9,126
10,8602,130
27,655
1,272,495

6,367
26,04010,80010,38353,591
1,037,272

27,514－－27,514－
1,053
15,623
16,6769,952
87
68,785－
3,742
82,5691,217,441
549,020-70,207478,812738,628-100,776
839,405

7,558－
73,536
52,610－133,706
920,242358,655
11,371
370,027
550,215-83,743
633,958

(Consolidated Statements of Comprehensive Income)(Thousands of yen)

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
Comprehensive income attributable to non-controllinginterests- 9 -Previous fiscal year
(from September 1, 2016
to August 31, 2017)

Current fiscal year
(from September 1, 2017
to August 31, 2018)738,628

550,215

20,685
22,950-5,794
17,851

28,8782,641

72,514
811,142

14,698564,914911,919

648,657-100,776-83,743

(3) Consolidated Statements of Changes in Net Assets(Thousands of yen)

Shareholders’ equity
Capital stock
Balance at the beginning of current period
Balance at the end of current period
Capital surplus
Balance at the beginning of current period
Sales of treasury stock
Total changes of items during the period
Balance at the end of current period
Retained earnings
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at the beginning of current period
Changes of items during the period
Sales of treasury stock
Purchase of treasury stock by directors' stock-based
benefits
Total changes of items during the period
Balance at the end of current period
Total shareholders’ equity
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
Sales of treasury stock
Purchase of treasury stock by directors' stock-based
benefits
Total changes of items during the period
Balance at the end of current period- 10 -

Previous fiscal year
(from September 1, 2016
to August 31, 2017)

Current fiscal year
(from September 1, 2017
to August 31, 2018)

440,297
440,297

440,297
440,297

1,583,816
53,82053,8201,637,636

1,637,636

1,637,636

7,393,399

8,029,585-203,218
839,405
636,186
8,029,585-204,118
633,958
429,8398,459,425-84,171-137,991

12,240-66,060-53,820-137,991-137,991

9,333,342

9,969,528-203,218
839,405
66,060-204,118
633,958-66,060
636,186
9,969,528

429,839
10,399,368

(Thousands of yen)

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Foreign currency translation adjustment
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total accumulated other comprehensive income total
Balance at the beginning of current period
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total Non-controlling equity
Balance at the beginning of current period
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income attributable to owners of parent
Sales of treasury stock
Purchase of treasury stock by directors' stock-based
benefits
Net changes of items other than shareholders’ equity
Total changes of items during the period
Balance at the end of current period- 11 -

Previous fiscal year
(from September 1, 2016
to August 31, 2017)

Current fiscal year
(from September 1, 2017
to August 31, 2018)

5,592

26,277

20,685
20,68526,277-5,794-5,794
20,482-73,205-21,377

51,82851,828-21,377

20,493
20,493-67,613

4,900

72,51472,5144,900

14,698
14,69819,598－-100,776-100,776-100,776-100,776-83,743-83,743-184,519

9,265,728

9,873,652-203,218
839,405
66,060-204,118
633,958-883-66,060-28,262
607,923
9,873,652-69,044360,795
10,234,447

(4) Consolidated Statements of Cash Flows(Thousands of yen)Previous fiscal year
(from September 1,
2016 to August 31,
2017)

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 provision for directors' 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 on retirement of noncurrent assets
Loss (gain) on sales of shares of subsidiaries
Loss (gain) on liquidation of subsidiaries
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
Proceeds from sales of property, plant and equipment
Payments for asset retirement obligations
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Purchase of investment securities
Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation
Payments for sales of shares of subsidiaries resulting in change inscope of consolidation
Other
Net cash provided by (used in) investing activities- 12 -

Current fiscal year
(from September 1,
2017 to August 31,
2018)

1,217,441
358,135
68,785－-314
10,308
11,475
17,681-79,093
16,206-2,945
5,537
9,952
－
－
-32,187-392,789
191,619
111,924
109,611
1,621,350
2,965-4,070-462,812－
1,157,431

920,242
383,72973,536
3,946
20,845
4,082-11,475
21,6642,700
8,257-4,964
6,367
7,558
52,610-15,623-53,295-57,732
71,395-110,735-132,930
1,190,181
4,833-4,355-568,959
65,913
687,612-430,677
1,839-4,415-134,087
129,565-48,745-657,068
1,569-2,055-146,305
117,117－－

143,623－-27,640-39,426-525,947-44,406-615,164

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
Repayments of lease obligations
Cash dividends paid
Net cash provided by (used in) investing 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- 13 -－
1,071,000-812,317－-202,860
55,822
9,408
696,716
5,030,891
5,727,607-29,260
400,000-822,046-3,989-203,505-658,800
5,866-580,486
5,727,607
5,147,120

(5) Notes to consolidated financial statements(Notes on going concern assumption)
No items to report(Segment information)
Since the Group has a single segment consisting of the operation of 100-Yen shops and associated business, thisinformation is omitted.
(Per share information)
Previous fiscal year (fromCurrent fiscal year (fromSeptember 1, 2016 to August 31,
September 1, 2017 to August 31,
2017)
2018)
Net assets per share
736.23 yen
769.05 yen
Net income per share
61.96 yen
46.79 yen
(Notes) 1. No diluted net income per share is presented because dilutive shares do not exist.
2. The Company's shares owned by the share issuance trust for directors are included in the treasury stock deducted in
the calculation of the total number of shares outstanding at the end of period, which is the basis for calculating net
assets per share. (FY8/17: 60,000, FY8/18: 60,000 shares).
3. The Company's shares owned by the share issuance trust for directors are included in the treasury stock deducted in
the calculation of the average number of shares during period, which is the basis for calculating net income pershare. (FY8/17: 34,849, FY8/18: 60,000 shares).
4. The basis for calculating net income per share and diluted net income per share are as follows.

(Thousands of yen)

Net income attributable to owners of parent
Amount that does not belong to commonshareholders
Net income attributable to owners of parent
available to common shareholders
Average number of shares during the period

Previous fiscal year (fromSeptember 1, 2016 to August
31, 2017)
839,405

Current fiscal year (fromSeptember 1, 2017 to August
31, 2018)
633,958--

839,405

633,958

13,547,926 shares

13,547,926 shares(Important subsequent events)(Acquisition of Treasury Stock)Watts Co., Ltd., at the Board of Directors meeting held on October 11, 2018, has resolved to acquire its treasury stock, in
conformity with Article 459-1 of the Companies Act.

1. Reason for acquiring treasury stock
The Company will acquire its treasury stock to improve capital efficiency and to further enhance shareholder returns.

2. Details of acquisition of treasury stock(1) Type of shares to be acquired

Common shares of Watts Co., Ltd.

(2) Total number of shares to beacquired

150,000 shares (maximum)(Ratio to the total number of shares issued (excluding treasury
stock): 1.1%)(3) Total amount of shares to beacquired(4) Acquisition period(5) Acquisition method

150,000,000 yen (maximum)
From October 12, 2018 to February 21, 2019Market purchase through trust method- 14 -

4. Other
Sales
Sales by area and business type are as follows
AmountYear-on-year
Area(Thousands ofchange (%)yen)
Hokkaido area
1,808,172
112.3

Number of shops
As of August
31, 2018
73

Newly opened

Closed12

2

Tohoku area

1,666,435

112.9

62

12

2

Kanto area

12,557,458

100.7

282

30

17

Chubu area

6,403,202

102.6

176

21

7

Kinki area

10,009,440

104.7

222

21

10

Chugoku/Shikoku area

4,619,775

105.0

173

25

10

Kyushu area
100-Yen shop businessDirectly managed
Wholesale

4,178,908

102.9

141

20

9

41,243,395

103.6

1,129

141

57

8,201,504

106.9

134

23

26

Total

49,444,899

104.1

1,263

164

83

- 15 -