Citizen Watch : Consolidated

C I T I Z E N W A T C H

Consolidated Financial Statements

for the Year Ended March 31, 2021

These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan. All figures in these statements which are less than 1 million yen have been rounded down. (English translation)

	May 13, 2021
CITIZEN WATCH CO., LTD.	Listings: First section of Tokyo Stock Exchange
Code No.: 7762	(URL https://www.citizen.co.jp)
Representative: Toshihiko Sato, President and CEO

Contact: Toshiyuki Furukawa, Director, In charge of Public & Investor Relations Department

Tel: [phone]

Scheduled ordinary general meeting of shareholders: June 25, 2021

Scheduled start of dividend payment: June 28, 2021

Scheduled release of fiscal 2020 Business Report: June 28, 2021

1. Results for the Year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

1. Consolidated operating results

(Millions of yen; Percentages represent changes over the previous fiscal year)

	Net sales	Operating profit	Ordinary profit	Profit attributable to
	owners of parent
March 31, 2021	206,641	(25.8%)	(9,551)	-	(4,143)	-	(25,173)	-
March 31, 2020	278,531	(13.4%)	6,136	(72.6%)	7,531	(71.7%)	(16,667)	-

Note: Comprehensive income:

As of March 31, 2021: ¥ (16,622) million (-%)

As of March 31, 2020: ¥ (26,523) million (-%)

	Earnings per share	Fully diluted		Ratio of Ordinary	Ratio of Operating
	earnings per share	Return on equity
	(Yen)	profit to total assets	profit to net sales
	(Yen)
March 31, 2021	(80.52)	-	(11.8%)	(1.1%)	(4.6%)
March 31, 2020	(53.07)	-	(7.0%)	1.9%	2.2%

Reference: Equity in earnings of unconsolidated subsidiaries and affiliates:

As of March 31, 2021: ¥ 440 million As of March 31, 2020: ¥ 801 million

1. Consolidated financial position

					(Millions of yen)
					Net assets per
		Total assets	Net assets	Equity ratio	share
					(Yen)
March 31, 2021		365,811	212,864	55.8%	652.47
March 31, 2020		369,575	230,791	60.0％	709.21
Reference: Shareholders' Equity:
As of March 31, 2021: ¥	203,986 million	As of March 31, 2020: ¥ 221,725 million

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C I T I Z E N W A T C H

1. Consolidated cash flows

																(Millions of yen)
															Cash and cash
			Cash flows from				Cash flows from	Cash flows from		equivalents at end
		operating activities			investing activities	financing activities			of term
March 31, 2021			7,489				(7,627)		18,336			99,561
March 31, 2020		17,347			(15,498)		(7,049)			77,996
2. Dividends
					Dividends per share(Yen)		Total
						dividends
															Dividends to
												paid	Pay-out ratio
	First			Second	Third			Year-	Full	consolidated
					(annual)	(Consolidated)
												net assets
												(Millions of
	quarter		quarter	quarter		end	year
			yen)
March 31, 2020		-		12.00			-		0.00	12.00	3,751		-	1.6%
March 31, 2021		-		2.50			-		2.50	5.00	1,565		-	0.7%
March 31,2022 (E)		-		7.00			-		7.00	14.00			48.6

Note:

No decision has been made at present with respect to dividends for the fiscal year ending March 31, 2021.

3. Projected Consolidated Results for the Year ending March 31, 2022

								(Millions	of yen)
	(Percentages represent changes over the corresponding period of the previous fiscal year)
									Earnings
	Net sales		Operating profit		Ordinary profit		Net income		per share
									(Yen)
Interim term	122,000	37.1	3,500	-	4,000	-	4,000	-		12.78
Full term	260,000	25.8	10,000	-	11,000	-	9,000	-		28.79

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C I T I Z E N W A T C H

5. Others

(1) Important changes of subsidiaries during the term (change of specified subsidiaries that lead to a change in

the scope of consolidation): None

(2) Adoption of simplified accounting method and special accounting methods: None

(3) Changes in principles, procedures and classifications of accounting standards associated with the

preparation of consolidated financial statements.

(i) Changes associated with revised accounting standards: None

(ii) Changes other than those in (i)above: None

(iii) Changes in accounting estimate: None

(iv) Restatements: None

(4) Number of shares issued and outstanding (common stock)
			shares		shares
(i)	Number of shares issued and
	outstanding at the end of term	March 31, 2021	314,353,809	March 31, 2020	314,353,809
	(including treasury stock)
(ii)	Number of treasury stock at the	March 31, 2021	1,714,879	March 31, 2020	1,714,407
	end of term
(iii) Average number of common	March 31, 2021	312,639,880	March 31, 2020	314,081,534
	stocks
* The consolidated financial statements are not included in the scope of the audit.

* Explanation about the proper use of financial forecasts and other important notes

Statements above relating to financial forecasts are based on information available to the Company and certain assumptions the Company considers reasonable as of the date of the announcement of these statements. Actual results may differ materially from these forecasts, depending on a variety of factors.

Please refer to the attached "Qualitative data on the consolidated earnings forecasts" on page 7 for assumptions underlying the above forecasts and precautions regarding their use.

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	C I T I Z E N W A T C H
(Attached Documents)
○INDEX
1. ANALYSIS OF OPERATIONG RESULTS/FINANCIAL POSITION ...................................................	5
(1)	Analysis of Operating Results ..................................................................................................................	5
(2)	Analysis of Financial Position...................................................................................................................	8

1. Fundamental Policy Regarding the Distribution of Profits and Dividends for the Fiscal Year Under

Review and the Fiscal Year Ending March 2022.................................................................................................	8
2. FUNDAMENTAL VIEWS ON SELECTING ACCOUNTING STANDARDS ........................................	8
3. CONSOLIDATED FINANCIAL STATEMENTS AND PRIMARY NOTES...........................................	9
(1)	Consolidated Balance Sheet ....................................................................................................................	9
(2)	Consolidated Statement of Income and Consolidated Statements of Comprehensive Income..............	11
Consolidated Statement of Income	11
Consolidated Statements of Comprehensive Income	12
(3)	Consolidated Statements of Changes in Equity .....................................................................................	13
(4)	Consolidated Statement of Cash Flow ...................................................................................................	15
(5)	Notes on the Consolidated Financial Statements...................................................................................	16
(Notes related to of going concern assumptions)	16
(Additional Information)	16
(Segment information)	17
(Per Share Information)	19
(Significant Subsequent Events)	20

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C I T I Z E N W A T C H

1. ANALYSIS OF OPERATIONG RESULTS/FINANCIAL POSITION

1. Analysis of Operating Results

(i) Fiscal Year End Operating Results

	Year ended March 31,
			Year-on-year
Millions of yen	2020	2021	change	%
Net sales	278,531	206,641	(71,890)	(25.8％)
Operating profit or	6,136	(9,551)	(15,687)	-
loss
Ordinary profit or loss	7,531	(4,143)	(11,674)	-
Profit or loss attributable	(16,667)	(25,173)	(8,505)	-
to owners of parent

During the fiscal year ended March 31, 2021, the Japanese economy faced severe conditions, reflecting a fall in demand for inbound tourism and a sustained period of weak consumer activity due to the COVID-19 pandemic. In the United States, the economy recovered moderately, with a resurgence in new COVID-19 cases becoming a burden on the economic recovery. European economies also suffered low levels of economic activity, partly due to a severe limitation on movement re-imposed in many countries. In Asia, while a recovery was taking place in China, other Asian economies lacked momentum.

In this environment, the Citizen Group instituted a range of initiatives according to the Medium-Term Management Plan 2021 which was established in February 2019, such as facilitating the growth of the Watch business and Machine Tools business, promoting sustainable management and strengthening compliance with quality, with a view to raising the level of traditional manufacturing and addressing the challenge of new value creation. The consolidated financial results for the fiscal year under review showed a decline in both sales and profit. Net sales stood at 206.6 billion yen (down 25.8% year on year), and the operating loss was 9.5 billion yen (compared with operating profit of 6.1 billion yen in the previous fiscal year). The ordinary loss was 4.1 billion yen (compared with the ordinary profit of 7.5 billion yen in the previous fiscal year), and a loss attributable to owners of parent came to

25.1 billion yen (loss attributable to owners of parent of 16.6 billion yen in the previous year) due to the posting of an extraordinary loss.

Watches

In the domestic market, sales of Citizen brand watches decreased significantly, reflecting a sharp fall in demand for inbound tourism and a decline in consumer confidence due to voluntary restrictions on travel, despite the launch of a website for direct sales and a rise in sales of certain product lines such as the Cosmic Blue Collection, or the titanium-technology 50th anniversary models, planned and developed on a cross-brand basis as well as other new products.

In overseas markets, sales in the European market remained relatively stable, despite the impact of prolonged lockdowns. Sales declined in the North American market given sluggish sales, particularly at real stores due to restrictions on travel and sales activities, although online distribution, among other areas, began showing signs of recovery during the shopping season. In the Asian market, sales decreased as the overall market continued to struggle despite steady progress made toward recovery in China.

In the multiple brand segment, sales at real stores declined mainly in the North American market, and sales of other brands also decreased, although online sales of Bulova brand watches remained firm.

With respect to movements, despite a decline in sales due to a worldwide fall in consumption, demand for mechanical movements remained firm, particularly in the Chinese market, while demand for analog quartz movements was on an upward trend.

As a result, the watches segment posted a significant decline in sales with net sales of 95.6 billion yen (down 32.5% year on year) due to the global suspension of economic activities, despite accelerated efforts to strengthen online sales. Operating results also deteriorated to a loss of 8.1 billion yen (compared with operating profit of 3.9 billion yen in the previous fiscal year), profoundly affected by lower sales, despite efforts to secure profit primarily by reducing expenses.

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