Summary of Financial Results for the Second Quarter Ended February 28, 2021
[Japan GAAP] (Consolidated)
April 12, 2021
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 12, 2021
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 2021
(September 1, 2020 through February 28, 2021)(1) Consolidated results of operations(% change from the previous corresponding period)
Sales

Operating profit

Million yen% Million yen%
Six months ended Feb. 2021
25,618
-1.4
1,085
38.0
Six months ended Feb. 2020
25,982
1.3
786
114.5
(Note) Comprehensive income
Six months ended February 2021: 766 million yen (82.1%)
Six months ended February 2020: 421 million yen (-%)
Net income
Diluted net income perper share
share
Yen
Yen
Six months ended Feb. 2021
59.72
Six months ended Feb. 2020
31.39-

Net income attributable toowners of parent

Recurring profit
Million yen
1,066
783

%
36.2
132.4

Million yen
800
420

%
90.2
306.6

(2) Consolidated financial position
Total assets

Net assets

Million yen
As of Feb. 2021
22,785
As of Aug. 2020
21,544(Reference) Shareholders’ equity:
As of February 2021: 11,046 million yen
As of August 2020: 10,481 million yen

Million yen
11,046
10,481

Shareholders’ equity
ratio
%
48.5
48.7

2. Dividends
End of 1Q

End of 2Q
Yen
-

Yen
0.00
0.00

Year ended Aug. 2020
Year ending Aug. 2021
Year ending Aug. 2021 (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 2021
(September 1, 2020 through August 31, 2021)(% change from the previous corresponding period)
Sales
Million yen

Operating profit%

Million yen%

Recurring Profit
Million yen%

Net income attributableto owners of parent
Million yen%

Net income
per share
Yen

Year ending Aug. 2021
-3.5
1,850
4.6
1,780
2.8
1,150
48.5
85.83
50,960(Note) Revisions to business forecast for the current quarter: Yes
For more information on the revisions to the consolidated business forecasts, please refer to the "Notice Concerning Revision to
Business Forecasts" released on April 5, 2021.

*Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes inthe scope of consolidation): None
(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: Yes: None(4) Shares outstanding (common stock)① Number of shares outstanding at the end of period (treasury stock included)
As of February 2021
13,958,800 shares
As of August 2020
13,958,800 shares② Treasury stock at the end of period
As of February 2021
560,874 shares
As of August 2020
560,874 shares③ Average number of stock during period (quarterly cumulative period)
Six months ended February 2021
13,397,926 shares
Six months ended February 2020
13,397,926 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(FY8/21 2Q: 60,000 shares, FY8/20: 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 (FY8/21 2Q:
60,000 shares, FY8/20: 60,000 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 theforecasts due to various factors.
Please refer to “(3) Future forecast information including consolidated business forecasts” of “1. Results of operations” onpage 3 for the suppositions that form the assumptions for business forecasts and cautions concerning the use of business
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(Change in accounting estimate) ………………………………………………………………….…….. 9- 1 -1. Results of Operations(1) Analysis of operating results
During the six months ended February 2021, the Japanese economy experienced positive growth for two consecutive
quarters, with the domestic real GDP growth rate for October-December 2020 (second preliminary report) at an annualized rateof +11.7% compared to the previous quarter. This growth is mainly because consumer spending recovered due to a slowdown
in the expansion of COVID-19 and the government’s GO TO Campaign that began in July. I addition, in the corporate sectors
goods exports were strong due to increased consumption in Japan and abroad, supported by strong increases in demand forsemiconductors and other products, and the capital investment has bottomed out as a result, although inbound tourist demandremains almost disappeared. Meanwhile, consumer spending declined again following the declaration of the second State ofEmergency for Tokyo and 10 prefectures at the beginning of the year. However, unlike the first emergency declaration in April
last year, only restaurants were asked to shorten operating hours, and its negative impact was limited. Other factors include thesolving of the face mask shortage and the establishment of infection control measures when going out among people. Although
it is a bright side that the vaccination started in mid-February, starting with medical personnel, there is a concern that thenegative effects may last long depending on the speed of vaccination to the general public and the spread of the new variant of
COVID-19.
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, the Company has been continuing to promote the introduction of products withprices higher than 100 yen (from 200 yen to 1,000 yen) and actively adding these products to consignment-type shops. In
addition, we are working to strengthen synergies among the Group's businesses by opening 100-Yen shops with a Buona Vita
section. Furthermore, the Company opened the Watts official YouTube channel on February 22, 2021.
As for the new shop openings, the Company opened 74 shops to the full-year plan of 144 shops. There were 21 shop
closings, 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 1,293, which includes 1,268 directly
managed shops (net increase of 53), and 25 franchised/other shops (unchanged). Of these, the number of "Watts" and "Watts
with", the Watts brand shops, was 715 (net increase of 76), accounting for 55.3% 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 19 shops (net decrease of 2). The Company is working on reviewing the product mix according to thecharacteristics of each shop and sales promotion activities via the official LINE account. “Søstrene Grene”, a Denmark’s lifestyle variety shop, was 2 shops (decreased by 2). It was decided to withdraw from this business, and all shops were closed as ofthe end of March. “Value- 100,” the fresh-foods supermarket collaboration, continues with 1 shop (unchanged). "Real", adiscount shop, was 6 shops (unchanged).

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 48 shops in Thailand (net decrease of 2), 2 shops in Malaysia(unchanged), 4 shops in Vietnam (net decrease of 1), and 20 shops in Peru (unchanged).
In China, a fixed price shop “小物家园”(KOMONOKAEN) was 6 shops (unchanged). The total number of own-brandshops “KOMONOYA” and “小物家园”(KOMONOKAEN) was 80 (decreased by 3).
Due to the transfer of the Chinese subsidiary in the previous fiscal year and the impact of the spread of COVID-19, sales in
the overseas business and Buona Vita declined.
In addition, the domestic 100-Yen shop business performed well, but its sales figure remained at the same level as theprevious fiscal year due to the reaction to the increase in demand for hygiene products in February of the previous fiscal year.
As a result, for the six months ended February 2021, sales were 25,618 million yen (down 1.4% YoY, 101.0% to the plan).
On the other hand, operating profit was 1,085 million yen (up 38.0% YoY and 141.0% to the plan) and recurring profit was
1,066 million yen (up 36.2% YoY and 142.3% to the plan), owing to progress in withdrawal from unprofitable businesses andreduction of expenses for new shop openings and renovations.
Net income attributable to owners of parent was 800 million yen (up 90.2% YoY and 129.1% to the plan) as Hilmer Japan
Co., Ltd., a consolidated subsidiary of the Company, recorded a dept exemption gain due to the exemption of loans from a joint
venture company upon its withdrawal from the business. (*Year on year: comparison with the results for the same period of theprevious fiscal year. Ratio to plan: ratio to the business forecasts for the six months ended February 2021 which were announced
in the “Notice Concerning Revision to Consolidated Business Forecasts for the First Half” on January 12, 2021.)
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 current second quarter of the fiscal year, current assets stood at 17,439 million yen, increased by
1,023 million yen from the end of the previous fiscal year. This was mainly due to increases of 995 million yen in cash anddeposits and 203 million yen in merchandise and finished goods despite a decrease of 129 million yen in notes and accounts
receivable- trade.
Fixed assets stood at 5,345 million yen, increased by 217 million yen from the end of the previous fiscal year. This was
mainly due to an increase of 287 million yen in software in progress included in other intangible assets following the coresystem renewal, while deferred tax assets decreased by 51 million yen.
As a result, total assets stood at 22,785 million yen, increased by 1,241 million yen from the end of the previous fiscal year.
(Liabilities)
As of the end of the current second quarter of the fiscal year, current liabilities stood at 10,384 million yen, increased by
722 million yen from the end of the previous fiscal year. This was mainly due to increases of 577 million yen inelectronically recorded obligations and 467 million yen in notes and accounts payable-trade, and a decrease of 265 million
yen in accrued consumption taxes.
Fixed liabilities stood at 1,354 million yen, a decrease of 46 million yen compared with the end of the previous fiscal
year. This was mainly due to an increase of 207 million yen in asset retirement obligations, and a decrease of 268 million
yen in long-term loans payable.
As a result, total liabilities stood at 11,738 million yen, increased by 675 million yen from the end of the previous fiscal
year.
(Net assets)
As of the end of the current second quarter of the fiscal year, net assets stood at 11,046 million yen, increased by 565
million yen compared with the end of the previous fiscal year. This was mainly because retained earnings increased by 598
million yen. As a result, shareholders’ equity ratio stood at 48.5% (48.7% 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 7,586 million yen, increased by 995 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 1,802 million yen (842 million yen was provided in the same period of theprevious fiscal year). Cash was provided mainly by income before income taxes and minority interests of 1,223 million yen
and an increase in notes and accounts payable-trade of 1,045 million yen. Cash was used mainly for gain on debt exemptionof 291 million yen.
(Cash flows from investing activities)
Net cash used in investing activities was 409 million yen (317 million yen was used in the previous fiscal year). This was
mainly due to purchase of intangible fixed assets of 289 million and purchase of property, plant and equipment of 133 million
yen for new shop openings.
(Cash flows from financing activities)
Net cash used for financing activities was 392 million yen (36 million yen was used in the previous fiscal year). Thiswas mainly due to repayments of long-term loans payable of 255 million yen and dividends paid of 201 million yen.
(3) Future forecast information including business forecasts
In view of recent trends in business results, the Company revised its full-year business results, which were announced in theSummary of Financial Results on October 13, 2020.
For details, please refer to the "Notice Concerning Revision to Business Forecasts" announced on April 5, 2021.

- 3 -2. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(August 31, 2020)
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
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, 2021)

6,591,348
2,340,081
7,114,726
15,33957,652
320,877-23,849
16,416,177

7,586,464
2,211,030
7,317,917
30,882
69,897
246,539-22,932
17,439,798

2,021,501-1,290,640
730,860
19,860-14,252
5,607
3,637,146-3,049,711
587,435
257,800
27,623-19,879
7,744
19,162
1,608,611

2,101,635-1,269,801
831,834
24,514-14,230
10,283
3,667,537-3,118,925
548,611257,800
27,623-22,789
4,833－
1,653,364

227,932
227,932

506,754506,754

436,438
406,098
2,316,365
143,227-10,166
3,291,964
5,128,507
21,544,684

406,946354,9102,300,839
133,338-10,163
3,185,872
5,345,991
22,785,790

(Thousands of yen)

Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations
Current portion of long-term loans payable
Income taxes payable
Accrued consumption taxes
Provision for loss on business liquidation
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-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets- 5 -Previous fiscal year
(August 31, 2020)

Current second quarter(February 28, 2021)

3,479,165
3,686,438
684,324
169,097
399,90375,596
203,687
17,900945,519
9,661,633

3,946,732
4,263,896
480,568
385,706
134,127
49,601
184,782－
938,786
10,384,201

569,688297,928
27,772
65,245
192,735
247,987
1,401,358
11,062,992

301,634
309,153
29,121
82,123399,867
232,874
1,354,776
11,738,977

440,297
1,354,136
8,965,680-273,120
10,486,994

440,297
1,354,136
9,563,943-273,120
11,085,257

15,857

18,840-21,158-5,301
10,481,692
21,544,684-57,285-38,444
11,046,812
22,785,790

(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, 2019
to February 29, 2020)
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
Equity in losses of affiliates
Other
Total non-operating expenses
Recurring profit
Extraordinary income
Surrender value of insurance
Investment securities
Gain on sales of noncurrent assets
Insurance income
Gain on debt exemption
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Impairment loss
Loss on liquidation of business
Loss due to 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, 2020
to February 28, 2021)

25,982,206
16,081,752
9,900,453
9,114,209
786,243

25,618,481
15,736,583
9,881,897
8,796,513
1,085,384

4,477
12,153
3,144
24,677
5,448
10,15860,060

779
1,346
2,040
1,442
2,117
5,419
13,1462,362
44,578
11,5204,649
63,111
783,192

1,517
1,320
24,252
4,525
31,615
1,066,914

1,260
－
362
25,138－26,761

4,974
3,403
232
8,532
291,302308,446

2,376
89,997
107,007
23,228
222,610587,343
353,314-186,551
166,762
420,580
420,580

1,651
150,464－－
152,115
1,223,245
375,190
47,922
423,112800,132
800,132(Quarterly Consolidated Statements of Comprehensive Income)(Second quarter)(Thousands of yen)Previous second quarter(from September 1, 2019
to February 29, 2020)
Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Share of other comprehensive income ofassociates accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable toowners of parent
Comprehensive income attributable to noncontrolling interests- 7 -Current second quarter(from September 1, 2020
to February 28, 2021)

420,580

800,132-3,5472,983-7,647
11,815-31,403-4,723620
421,200-33,143766,988421,200

766,988－－

(3) Quarterly Consolidated Statements of Cash Flows(Thousands of yen)Previous second quarter(from September 1, 2019
to February 29, 2020)
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 toretirement benefits
Increase (decrease) in provision for directors’
retirement benefits
Increase (decrease) in provision for directors'
stock-based benefits
Increase (decrease) in provision for loss on
business liquidation
Interest and dividends income
Interest expenses
Loss (gain) on sale of investment securities
Loss on retirement of noncurrent assets
Gain on debt exemption
Decrease (increase) in accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payabletrade
Increase (decrease) in accrued consumption taxes
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
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
Purchase of intangible assets
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee
deposits
Payments for asset retirement obligations
Purchase of investment securities
Proceeds from sales of investment securities
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayment of lease obligations
Cash dividends paid
Other
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, 2020
to February 28, 2021)

587,343
205,985
89,9972,860-3,673-12,966
12,124

1,223,245
156,330
150,464
2,860-919-36,804
11,224

1,337

1,349

4,128

16,87874,844-25,994-4,562
2,362
－
2,376
－
101,903-121,934
131,443-784
1,517-3,403
1,651-291,302
128,472-234,227
1,045,024

130,445-132,058
1,071,957
4,340-1,295-232,845
842,156-280,220103,504
1,968,866
1,752-8,971-159,508
1,802,138-242,135
780-57,424-34,233
61,247-133,113
465-289,586-43,277
38,127-45,609-387－
300-317,460-40,992－
8,484
50,300-409,592

400,000-299,289-3,143-134,297－-36,729
15,334－-255,810-3,143-201,472
67,500-392,926-4,503503,299
6,075,315
6,578,615

995,116
6,591,348
7,586,464

(4) Notes to consolidated financial statements(Notes on going concern assumption)
None(Notes if there is a significant change in the amount ofshareholders' equity) None
(Change in accounting estimate)(Changes in estimates of asset retirement obligations)
During the second quarter of the current fiscal year, the Company changed its estimates for asset retirement obligations that
had been recorded as restoration obligations associated with real estate lease agreements, based on new information such as
the most recent actual restoration costs. The increase of 220,100 thousand yen due to this change has been added to the balanceof asset retirement obligations before the change.
Some of the property, plant and equipment recorded due to this change are accounted for as impairment losses. As a resultof this change in estimate, income before income taxes and minority interests for the first half of the current fiscal year
decreased by 68,100 thousand yen.

- 9 -