Consolidated Financial Results for the six months ended September 30, 2020 (IFRS Financial Information) (English translation of "KESSAN TANSHIN" originally issued in Japanese)
Makita Corporation Stock code: 6586 URL: https://www.makita.co.jp/ Munetoshi Goto, President, Representative Director 1. Summary operating results of the six months ended September 30, 2020 (From April 1, 2020 to September 30, 2020)
1. 2. Amounts of less than one million yen have been rounded. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes, profit, profit attributable to owners of the parent, and comprehensive income against the corresponding period of the previous year.
The forecast for cash dividend announced formerly has not been revised. 1. 2. The projected amount of dividends for the year ending March 31, 2021 has not been determined yet. For further details, refer to "Explanation regarding proper use of business forecast, and other significant matters" on page 2. 1
3. Consolidated Financial Performance Forecast for the year ending March 31, 2021 (From April 1, 2020 to The consolidated financial forecast for the year ending March 31, 2021 has been revised. 1. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes and profit 2. attributable to owners of the parent against the previous year. 4. Other (1) Changes in important subsidiaries during the period (Changes in specified subsidiaries accompanied by changes in scope of consolidation during the quarter): None (2) Changes in accounting policies and accounting estimates: l. Changes in accounting policies required by IFRS: Yes 2. Changes in accounting policies other than 1: None 3. Changes in accounting estimate: None (3)  Number of shares outstanding (common stock) 1. Number of shares issued (including treasury stock): 2. Number of treasury stock: 3. Average number of shares outstanding:
This consolidated financial report is not subject to audit procedures by certified public accountants or an auditing firm. Explanation regarding proper use of business forecasts, and other significant matters The financial forecast given above is based on information as available at the present time, and includes potential l. risks and uncertainties. As a consequence of the factors above and other, actual results may vary from the forecasts provided above. Regarding the assumptions for the forecasts and other matters, refer to "SUPPLEMENT INFORMATION (CONSOLIDATED)", "3. Outlook for the fiscal year ending March 31, 2021" on page 4. Makita's basic policy on the distribution of profits is to maintain a consolidated dividend payout ratio of 30% or greater, 2. with a lower limit on annual cash dividends of 10 yen per share. However, in the event special circumstances arise, computation of the amount of dividends will be based on profit attributable to owners of the parent after certain adjustments. The Board of Directors plans to meet in April 2021 for a report on earnings for the year ending March 31, 2021. At the time, in accordance with the basic policy regarding profit distribution mentioned above, the Board of Directors plans to propose a dividend equivalent to at least 30% of profit attributable to owners of the parent. The Board of Directors will submit this proposal to the General Meeting of Shareholders scheduled for June 2021. The consolidated dividend payout ratio is calculated as annual dividends per share divided by consolidated profit attributable to owners of the parent per share (after adjustments for special circumstances) and multiplied by 100. SUPPLEMENT INFORMATION (CONSOLIDATED) Overview of operating results l. (1) Explanation of Consolidated Operating Results Looking at the international economic situation during the first half, the world economy, which had fallen sharply due to the spread of the new coronavirus infection, is gradually recovering due to easing of the strict restrictions on going out and deregulation of immigration in each country. Although there is a sign of recovery, the situation is still uncertain due to factors such as the second and third waves of the spread of infection and the intensifying conflict between the United States and China. Under these circumstances, in terms of development, we focused on expanding the lineup of lithium-ion battery products, including cordless tools in the "40Vmax lithium-ion battery" series, which has high power, long life, and high durability. On the production side, we promoted the diversification of global production and initiated deplasticization by switching to environmentally friendly materials such as paper by reducing use of materials including plastic bags used for product packaging. On the sales side, we continued to focus on expanding sales of lithium-ion battery products such as cordless outdoor power equipment, and continued to provide steady customer supports and after-sales services amid difficulties in normal sales activities due to COVID-19 outbreak. We have endeavored to further strengthen relationships and building trusts with customers in various regions of the world. Our consolidated financial results for the first half of the current consolidated cumulative period increased 16.3% year-on-year to 283,156 million yen due to strong sales mainly in domestic and developed countries, despite a decrease in overseas sales due to foreign exchange rate. In terms of profits, operating profit increased 17.7% year-on-year to 38,165 million yen (operating profit margin: 13.5%) due to increased sales and a decrease in SG&A rate despite an increase in a cost rate. Profit before income taxes increased 11.0% year-on-year to 38.273 million yen (profit margin before income taxes 13.5%), and profit attributable to owners of the parent increased 8.7% to 27,141 million yen (ratio of profit attributable to owners of the parent: 9.6%). Revenue results by region were as follows: In Japan, sales of both power tools and outdoor power equipment were strong due to demand for highly efficient cordless tools at building and construction sites, as well as support from government such as sustainable subsidies and stay home demand. As a result, sales increased 10.4% year-on-year to 55,761 million yen. In Europe, sales increased 21.7% year-on-year to 130,899 million yen due to demand for tools due to the resumption of building and construction sites in various regions, which had been suspended owning to the COVID-19 outbreak, and stay home demand resulting from voluntarily refraining from outing. In North America, sales to home improvement stores were strong, and the promotion of our mainstay cordless products was successful. As a result, sales increased by 21.1% year-on-year to 41,613 million yen. In Asia, sales were sluggish in many countries except China and Taiwan due to the stagnation of economic activities resulting from COVID-19 outbreak; consequently, sales decreased by 4.4% year-on-year to 18,774 million yen. In Central and South America, sales volumes increased due to stay home demand resulting from COVID-19 and the strong demand for tools due to the resumption of economic activities; however, sales after translation into Japanese yen decreased by 2.0% year-on-year to 12,605 million yen due to the significant depreciation of local currencies. In Oceania, sales increased 34.0% year-on-year to 19,161 million yen due to strong stay home demand in Australia and increased sales in New Zealand, where economic activities resumed. In the Middle East and Africa, despite COVID-19 outbreak and economic stagnation continued in many countries, some countries were preparing for recovery in demand after the settlement of COVID-19, so sales increased 0.2% year-on-year to 4,343 million yen. (2) Explanation of Consolidated Financial Position Total assets as of September 30, 2020 increased by 37,820 million yen to 712,384 million yen compared to the balance as of March 31, 2020. The increase was mainly due to increase in "property, plant and equipment, at cost" and "trade receivables and other receivables." Total liabilities increased by 14,249 million yen to 113,065 million yen compared to the balance as of March 31, 2020. This increase was mainly due to an increase in "trade payables and other payables." Total equity increased by 23,571 million yen to 599,319 million yen compared to the balance as of March 31, 2020. The increase was mainly due to an increase in "retained earnings."
(3) Outlook for the fiscal year ending March 31, 2021
Although there were restrictions on sales activities affected by the COVID-19 and a decrease in overseas sales due to foreign currency exchange rate, sales until the second quarter performed better than initially expected due to stay home demand for tools led by people refraining from going out and also due to the resumption of economic activities. Thereby, we revise our earnings forecast. Revised forecast for consolidated performance of the fiscal year ending March 31, 2021 (From April 1, 2020 to
The above earnings forecast is based on the premise that economic activities will not stagnate again due to restrictions imposed by government following the rebound of the COVID-19 outbreak. The exchange rates assumed for the business forecast are as follows.
[Preconditions]
The above forecast is based on the assumption of exchange rates of 105 yen to the U.S. dollar, 120 yen to the euro and 15.5 yen to the renminbi for the remaining six months period ending March 31, 2021. The above forecast is based on the assumption of exchange rates of 106 yen to the U.S. dollar, 121 yen to the euro and 15.4 yen to the renminbi for the year ending March 31, 2021.
[Reference]
The exchange rates for previously announced forecasts that we announced on July 31, 2020 were 106 yen to the U.S. dollar, 118 yen to the euro and 15.0 yen to the renminbi for the year ending March 31, 2021. Note: The above forecast is based on information as available at the present time, and includes potential risks and uncertainties. As a consequence of the factors such as a settlement of COVID-19, actual results may vary from the forecast provided above. 2.
(2) Consolidated Statements of Profit or Loss and Consolidated Statements of Comprehensive Income
(5) Notes to Consolidated Financial Statements Notes on the assumptions for a going concern: None Changes in accounting policies: The standards and interpretations that the Group has applied since the period are as follows;
The application of above standards and interpretations will not have any material impact on the financial statements.
3.
SUPPORT DOCUMENTATION (CONSOLIDATED)

Please refer to [SUPPLEMENT INFORMATION (CONSOLIDATED)] Section 3 "Outlook for the fiscal year ending March 1. 31, 2021" on page 4. The table above shows the changes in the percentage ratio of revenue, operating profit, profit before income taxes, and profit 2. attributable to owners of the parent compared to the corresponding period of the previous year.
The table above sets forth Makita's consolidated revenue by geographic area based on the customer's location for the 1. periods presented. Accordingly, it differs from "Segment Information" on page 10. 2. The table above shows the changes in the percentage ratio of revenue compared to the corresponding period of the previous year.