Financial Results for the Year ended March 31, 2021 [IFRS] (Consolidated)

April 28, 2021

Name of the listed company: SEIKO EPSON CORPORATION

Stock Listing: TOKYO

Code: 6724

URL: global.epson.com

Representative: Yasunori Ogawa, President

Inquiries: Tatsuaki Seki, Director, Executive Officer Tel: +81-266-52-3131

Scheduled date of Annual Shareholders Meeting: June 25, 2021

Scheduled starting date of payment for the dividends: June 28, 2021

Scheduled date to file Annual Securities Report: June 28, 2021

Reference materials regarding financial results for the period: Yes

Briefing on financial results: Yes (for analysts)

(Amounts are rounded down to the nearest million yen)

1. Results of the Year ended March 31, 2021From April 1, 2020 to March 31, 2021

  1. Consolidated Operating Results

Profit from

Profit

Profit for

Profit for the period

Revenue

Business profit

operating

attributable to owners

before tax

the period

activities

of the parent company

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Year ended

995,940

4.6

61,642

50.9

47,654

20.7

44,933

13.1

30,995

296.2

30,922

299.9

March 31, 2021

Year ended

1,043,600

4.2

40,861

42.0

39,479

44.7

39,713

44.9

7,823

85.5

7,733

85.6

March 31, 2020

Note: Total comprehensive income for the period: Year ended March 31, 2021 ¥68,818 million (

- %)

Year ended March 31, 2020 (¥3,869) million (

- %)

Business profit is calculated by subtracting Cost of sales and Selling, general and administrative expenses from Revenue.

Basic earnings

Diluted earnings

ROE *1

ROA *2

ROS *3

per share

per share

Yen

Yen

%

%

%

Year ended March 31, 2021

89.38

89.35

5.9

5.6

6.2

Year ended March 31, 2020

22.26

22.25

1.5

3.9

3.9

Reference: Equity gains (losses) of affiliates: Year ended March 31, 2021 ¥99 million

Year ended March 31, 2020 ¥77 million

(2) Consolidated Financial Position

*1 Profit for the period attributable to owners of the parent company / Equity attributable to owners of the parent company (avg. balance)

*2 Business profit / Total assets (avg. balance)

*3 Business profit / Revenue

Equity attributable to

Equity attributable to

Equity attributable to

Total assets

Total equity

owners of the parent

owners of the parent

owners of the parent

company

company ratio

company, per share

Millions of yen

Millions of yen

Millions of yen

%

Yen

As of March 31, 2021

1,161,314

552,949

550,924

47.4

1,592.36

As of March 31, 2020

1,040,910

506,037

503,746

48.4

1,456.20

(3) Consolidated Cash Flows

Net cash from (used in)

Net cash from (used in)

Net cash from (used in)

Cash and cash equivalents

operating activities

investing activities

financing activities

at end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Year ended March 31, 2021

133,222

(57,448)

23,150

304,007

Year ended March 31, 2020

102,324

(76,131)

(283)

196,245

2. Cash Dividends

Cash dividends per share

Total cash

Dividend

Ratio of dividends to equity

attributable to owners of the

1st

2nd

3rd

Year

Year

dividends

payout ratio

Quarter

Quarter

Quarter

End

Total

parent company

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

Year ended March 31, 2020

-

31.00

-

31.00

62.00

21,463

278.5

4.1

Year ended March 31, 2021

-

31.00

-

31.00

62.00

21,463

69.4

4.1

Year ending March 31, 2022

-

31.00

-

31.00

62.00

56.4

Forecast

3. Forecast for the Year ending March 31, 2022 (From April 1, 2021 to March 31, 2022)

(%: Change from the previous year)

Profit from

Profit

Profit for

Profit for the period

Basic earnings

Revenue

Business profit

operating

attributable to owners

activities

before tax

the period

of the parent company

per share

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

For the year ending

1,070,000

7.4

60,000

2.7

57,000

19.6

55,000

22.4

38,000

22.6

38,000

22.9

109.83

March 31, 2022

Notes

  1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting from changes in the scope of consolidation): None
  2. Changes in accounting policies, or changes in accounting estimates
  1. Changes in accounting policies required by IFRS: None
  2. Changes in accounting policies other than the changes above: None
  3. Changes in accounting estimates: None
  1. Number of shares outstanding
    1. Issued shares (including treasury shares):
    2. Treasury shares:
    3. Average number of shares:

(share)

As of March 31, 2021

399,634,778

As of March 31, 2020

399,634,778

As of March 31, 2021

53,655,825

As of March 31, 2020

53,703,521

Year ended

345,968,147

Year ended

347,393,498

March 31, 2021

March 31, 2020

(Reference) Summary of Non-Consolidated Financial Results

1. Results of the Year ended March 31, 2021From April 1, 2020 to March 31, 2021

(1) Non-Consolidated Operating Results

(%: Change from the previous year)

Net sales

Operating profit

Ordinary profit

Profit

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Year ended March 31, 2021

714,821

0.1

(528)

-

(2,422)

-

(1,293)

-

Year ended March 31, 2020

715,768

9.5

(27,434)

-

(8,370)

-

(17,240)

-

Basic earnings

Diluted earnings

per share

per share

Yen

Yen

Year ended March 31, 2021

(3.74)

-

Year ended March 31, 2020

(49.63)

-

(2) Non-consolidated Financial Position

Total assets

Net assets

Equity-to-asset ratio

Net assets per share

Millions of yen

Millions of yen

%

Yen

As of March 31, 2021

733,553

308,904

42.1

892.84

As of March 31, 2020

678,957

331,393

48.8

957.97

(Reference) Shareholders' equity: As of March 31, 2021 ¥308,904 million

As of March 31, 2020 ¥331,393 million

This report is not audited by certified public accountants nor auditors.

Explanation of appropriate use of forecast and other special items

(Cautionary statement concerning forward-looking statements)

This report includes forward-looking statements that are based on management's view from the information available at the time of the announcement. These statements are subject to various risks and uncertainties. Actual results may be materially different from those discussed in the forward-looking statements. The factors that may affect Epson include, but are not limited to, general economic conditions, the ability of Epson to continue to timely introduce new products and services in markets, consumption trends, competition, technology trends, and exchange rate fluctuations.

Assumptions for the forecasts and warnings for users of the forecasts are available on "Outlook".

(How to access supplementary explanations and details of briefing on financial results)

The Company is scheduled to hold a briefing for analysts on financial results on Wednesday, April 28, 2021 and to post materials used at the briefing on the Company's website on that day.

U.S. dollar amounts are presented for the convenience of the readers. This translation should not be construed to imply that the yen amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. The exchange rate of ¥110.685 = U.S.$1 at the end of the reporting period has been used for the purpose of presentation.

Operating Performance Highlights and Financial Condition

Operating Results Overview

There is ongoing uncertainty regarding the prospect of an end to the COVID-19 epidemic, but the global economy in the year under review is generally headed toward improvement thanks to economic measures introduced in each country and higher vaccination rates, but the level of recovery varies by country, region, and industry. Moreover, with consumer demand rising as the global economy recovers, supply chain problems have become evident, including shortages of shipping containers, electronic parts, and semiconductors, so Epson will continue to closely watch trends going forward. Emerging economies in some regions such as India, Southeast Asia, and part of Latin America continue to face difficult economic conditions due to ongoing restrictions on economic activity, but economic activity in China continues to gradually recover. Developed countries are expected to rebound from bottom, but some countries and regions are seeing a resurgence in infections, so the situation needs to be closely monitored. The average exchange rates of the yen against the U.S. dollar and of the yen against the euro during the year were ¥106.01 and ¥123.67, respectively. This represents a 3% appreciation of the yen against the dollar and a 2% depreciation of the yen against the euro compared to the same period last year. The yen also rose against the currencies of some emerging countries, in places such as Latin America.

Revenue totaled ¥995.9 billion, a decline of 4.6% year on year. In developed countries and in some emerging countries, the pandemic caused a spike in at-home print demand that resulted in increased revenue in the inkjet printer business. However, revenue was hit hard by decreased demand in emerging markets where economic activity was restricted. Business profit was ¥61.6 billion, up 50.9% year on year. Even though the decrease in revenue had a significant negative impact on business profit, a rise in at-home print demand drove sales of inkjet printers and consumables higher. Profit also rose because Epson immediately began cutting costs across the Epson Group in reaction to the spread of COVID-19. Profit from operating activities was ¥47.6 billion, up 20.7% year on year. Profit before tax was ¥44.9 billion, up 13.1% year on year. And profit for the period attributable to owners of the parent company was ¥30.9 billion, up 299.9% year on year.

A breakdown of the financial results in each reporting segment is provided below.

Printing Solutions Segment

Printer business revenue increased. Office and home inkjet printer demand soared as more people began working and learning from home. High-capacity ink tank printer and ink cartridge printer revenue increased in part due to an increase in selling prices. However, sales were tempered by the pandemic, which resulted in an inability to supply enough product due to shipping delays caused by temporary factory shutdowns and production limitations, a shortage of shipping containers, and port congestion. Consumables revenue increased owing to actions taken to increase production to meet rising at-home print demand. Serial impact dot matrix printer revenue decreased due to negative foreign exchange effects and a decline in sales associated with a market contraction.

Revenue in the professional printing business decreased. Commercial and industrial inkjet printer and consumables sales fell sharply in the first quarter due to a combination of negative foreign exchange effects and restrictions on economic activity around the world due to the pandemic. However, revenue for the year increased owing primarily to strength in the remaining three quarters, resulting from the capture of large orders for photo and proofing printers and strong sales of corporate printers, CAD

1

printers, and dye-sublimation transfer printers. POS system product revenue decreased. This was both a counteraction to the extra demand generated last year by tax reforms in Italy and a result of demand that was weakened by the restrictions on economic activity due to the pandemic.

Other revenue decreased compared to the same period last year, when PC demand rose as users sought to upgrade their operating systems.

Printing solutions segment profit increased despite negative foreign exchange effects because inkjet printer selling prices rose, sales of consumables increased, and we rigorously selected and sharply curtailed spending projects.

As a result of the foregoing factors, revenue in the printing solutions segment was ¥707.7 billion, down 0.1% year on year. Segment profit was ¥108.5 billion, up 43.5% year on year.

Visual Communications Segment

Visual communications revenue decreased despite wins in the education market as schools reopened and despite increased demand in the home segment. The decrease was due to a combination of factors, including restrictions placed on economic activity around the world to slow the spread of COVID-19, the postponement or cancellation of events, the continued shrinkage of the projector market due to the incursion of flat panel displays, and product supply shortages due to shipping delays.

Epson was rigorously selective about spending projects and sharply cut costs. Nevertheless, visual communications segment profit decreased due to lower revenue.

As a result of the foregoing factors, revenue in the visual communications segment was ¥141.4 billion, down 22.8% year on year. Segment profit was ¥1.3 billion, down 90.1% year on year.

Wearable & Industrial Products Segment

Wearable products business revenue fell sharply primarily as a result of the pandemic, which caused dealers and distributors around the world to voluntarily close and limited economic activity. Furthermore, COVID-19 infections in Japan caused year-end demand to slump while demand from travelers to Japan vanished.

Robotics solutions revenue rose sharply on contract wins in China that boosted unit sales. Microdevices business revenue increased amid a recent surge in demand for crystal devices in the PC and healthcare markets and for foundry services in the semiconductor business.

Segment profit in the wearable and industrial products segment was muted by the effects of lower revenue in the wearable products business yet still increased owing to spending controls and spending cuts.

As a result of the foregoing factors, revenue in the wearable and industrial products segment was ¥148.6 billion, down 2.8% year on year. Segment profit was ¥3.2 billion, up 75.0% year on year.

Epson also recorded a ¥7.5 billion impairment loss in the wearable products business due to the decline in profitability and changes in business strategy.

Other

Other revenue amounted to ¥0.8 billion, down 12.2% year on year. Segment loss was ¥0.6 billion, compared to a segment loss of ¥0.5 billion last year.

2

Adjustments

Adjustments to the total profit of reporting segments amounted to negative ¥50.8 billion. (Adjustments in the previous fiscal year were negative ¥49.6 billion.) The main components of the adjustment were basic technology research and development expenses that do not correspond to the reporting segments and expenses associated with things such as new businesses and corporate functions.

Financial Position Overview

Total assets at the end of the fiscal year were ¥1,161.3 billion, an increase of ¥120.4 billion from the previous fiscal year end. Total assets increased chiefly because cash and cash equivalents increased by ¥107.7 billion primarily due to bonds issued, and because of a ¥22.9 billion increase in inventories.

Total liabilities were ¥608.3 billion, up ¥73.4 billion compared to the end of the last fiscal year. Total liabilities increased mainly because of a ¥56.2 billion increase in bonds and borrowings and lease liabilities due to an issue of green bonds and because of an ¥13.1 billion increase in other current liabilities.

The equity attributable to owners of the parent company totaled ¥550.9 billion, a ¥47.1 billion increase compared to the previous fiscal year end. While Epson recorded ¥30.9 billion in profit for the year attributable to owners of the parent company and recorded ¥37.6 billion in other comprehensive income, the primary component of which was the remeasurement of the defined benefit plan, there were ¥21.4 billion in dividend payments.

Cash Flows Overview

Net cash from operating activities during the year totaled ¥133.2 billion. The total for the previous year was ¥102.3 billion. Whereas Epson recorded a ¥30.9 billion profit for the period, there were negative factors such as a ¥12.8 billion increase in inventories. However, net cash was positively affected by the recording of ¥69.8 billion in depreciation and amortization and a ¥13.1 billion increase in trade payables. Net cash used in investing activities totaled ¥57.4 billion (compared to ¥76.1 billion in the previous year), mainly because Epson used ¥55.8 billion in the acquisition of property, plant, equipment and purchase of intangible assets.

Although Epson paid ¥21.4 billion in dividends and repaid ¥14.0 billion in long-term loans payable, net cash from financing activities totaled ¥23.1 billion (compared to ¥0.2 billion last year), chiefly due to a ¥69.6 billion issue of corporate bonds.

As a result, cash and cash equivalents at the end of the fiscal year totaled ¥304.0 billion (compared to ¥196.2 billion at the end of the previous fiscal year).

Outlook

The financial outlook for the 2021 fiscal year ending March 31, 2022 is summarized below. The figures in the outlook are based on assumed exchange rates of 107.00 yen to the U.S. dollar and 127.00 yen to the euro.

3

Consolidated Full-Year Financial Outlook

FY2020

FY2021

Change

Result

Plan

Revenue

¥995.9 billion

¥1,070.0 billion

+¥74.0 billion

(+7.4%)

Business profit

¥61.6 billion

¥60.0 billion

-¥1.6 billion

(-2.7%)

Profit from operating

¥47.6 billion

¥57.0 billion

+¥9.3 billion

(+19.6%)

activities

Profit before tax

¥44.9 billion

¥55.0 billion

+¥10.0 billion

(+22.4%)

Profit for the period

¥30.9 billion

¥38.0 billion

+¥7.0 billion

(+22.6%)

Profit for the year

attributable to owners

¥30.9 billion

¥38.0 billion

+¥7.0 billion

(+22.9%)

of the parent company

1 USD = ¥106.01

1 USD = ¥107.00

Exchange rates

1 EUR = ¥123.67

1 EUR = ¥127.00

4

Consolidated Statement of Financial Position

Years ended March 31, 2020 and 2021:

Millions of yen

Thousands of

U.S. dollars

March 31,

March 31,

March 31,

2020

2021

2021

Assets

Current assets

Cash and cash equivalents

196,262

304,007

2,746,596

Trade and other receivables

157,782

161,332

1,457,577

Inventories

233,434

256,366

2,316,176

Income tax receivables

5,217

3,518

31,783

Other financial assets

3,159

1,156

10,444

Other current assets

13,989

13,160

118,895

Subtotal

609,846

739,540

6,681,483

Assets held for sale

-

457

4,128

Total current assets

609,846

739,997

6,685,612

Non-current assets

Property, plant and equipment

360,517

344,637

3,113,673

Intangible assets

29,052

27,976

252,753

Investment property

1,043

1,246

11,257

Investments accounted for using the equity

1,512

1,718

15,521

method

Net defined benefit assets

33

140

1,264

Other financial assets

16,959

20,213

182,617

Other non-current assets

1,871

1,614

14,581

Deferred tax assets

20,072

23,770

214,753

Total non-current assets

431,064

421,317

3,806,450

Total assets

1,040,910

1,161,314

10,492,063

5

Millions of yen

Thousands of

U.S. dollars

March 31,

March 31,

March 31,

2020

2021

2021

Liabilities and equity

Liabilities

Current liabilities

Trade and other payables

125,069

134,149

1,211,988

Income tax payables

3,286

7,305

65,998

Bonds issued, borrowings and lease liabilities

22,320

28,127

254,117

Other financial liabilities

363

2,361

21,330

Provisions

11,406

11,014

99,507

Other current liabilities

109,827

122,973

1,111,017

Subtotal

272,274

305,931

2,763,978

Liabilities directly associated with assets held for

-

12

108

sale

Total current liabilities

272,274

305,943

2,764,087

Non-current liabilities

Bonds issued, borrowings and lease liabilities

187,362

237,780

2,148,258

Other financial liabilities

1,877

2,730

24,664

Net defined benefit liabilities

52,964

33,087

298,929

Provisions

7,585

7,757

70,081

Other non-current liabilities

11,814

13,483

121,814

Deferred tax liabilities

993

7,582

68,500

Total non-current liabilities

262,598

302,421

2,732,267

Total liabilities

534,873

608,365

5,496,363

Equity

Share capital

53,204

53,204

480,679

Capital surplus

84,434

84,418

762,686

Treasury shares

(40,953)

(40,874)

(369,282)

Other components of equity

37,451

54,869

495,722

Retained earnings

369,609

399,306

3,607,589

Equity attributable to owners of the parent

503,746

550,924

4,977,404

company

Non-controlling interests

2,290

2,025

18,295

Total equity

506,037

552,949

4,995,699

Total liabilities and equity

1,040,910

1,161,314

10,492,063

6

Consolidated Statement of Comprehensive Income

Years ended March 31, 2020 and 2021:

Thousands of

Millions of yen

U.S. dollars

Year ended

Year ended

March 31,

March 31,

2020

2021

2021

Revenue

1,043,600

995,940

8,997,967

Cost of sales

(681,600)

(643,563)

(5,814,365)

Gross profit

362,000

352,377

3,183,602

Selling, general and administrative expenses

(321,138)

(290,735)

(2,626,688)

Other operating income

5,181

3,225

29,136

Other operating expense

(6,563)

(17,213)

(155,513)

Profit from operating activities

39,479

47,654

430,537

Finance income

2,306

1,317

11,898

Finance costs

(2,150)

(4,137)

(37,376)

Share of profit of investments accounted for using the

77

99

894

equity method

Profit before tax

39,713

44,933

405,953

Income taxes

(31,889)

(13,937)

(125,915)

Profit for the period

7,823

30,995

280,028

Profit for the period attributable to:

Owners of the parent company

7,733

30,922

279,369

Non-controlling interests

90

73

659

Profit for the period

7,823

30,995

280,028

7

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss, net of tax

Remeasurement of net defined benefit liabilities (assets) Net gain (loss) on revaluation of financial assets measured at FVTOCI (Note)

Subtotal

Items that may be reclassified subsequently to profit or loss, net of tax

Exchange differences on translation of foreign operations

Net changes in fair value of cash flow hedges

Share of other comprehensive income of investments accounted for using the equity method

Subtotal

Total other comprehensive income, net of tax

Total comprehensive income for the period

Total comprehensive income for the period attributable to:

Owners of the parent company Non-controlling interests

Total comprehensive income for the period

(Note) FVTOCI: Fair Value Through Other Comprehensive Income

Earnings per share for the period:

Basic earnings per share for the period

Diluted earnings per share for the period

Thousands of

Millions of yen

U.S. dollars

Year ended

Year ended

March 31,

March 31,

2020

2021

2021

2,442

20,220

182,680

(1,475)

1,505

13,597

967

21,726

196,286

(13,068)

17,172

155,142

441

(1,130)

(10,209)

(33)

54

487

(12,660)

16,096

145,421

(11,693)

37,822

341,708

(3,869)

68,818

621,746

(3,783)

68,564

619,451

(86)

254

2,294

(3,869)

68,818

621,746

Yen

U.S. dollars

Year ended

Year ended

March 31,

March 31,

2020

2021

2021

22.26

89.38

0.81

22.25

89.35

0.81

8

Consolidated Statement of Changes in Equity

Years ended March 31, 2020 and 2021

Millions of yen

Equity attributable to owners of the parent company

Other components of equity

Net gain (loss) on

Exchange

Share capital

Capital surplus

Treasury shares

Remeasurement of

revaluation of

Net changes in fair

Total other

differences on

net defined benefit

financial assets

value of cash flow

components of

translation of

liabilities (assets)

measured at

hedges

equity

foreign operations

FVTOCI (Note)

Total equity

Non-controlling

Total equity

Retained

attributable to

interests

earnings

owners of the

parent company

As of April 1, 2019

53,204

84,427

(30,788)

2,234

48,069

136

50,440

382,897

540,181

2,565

542,747

Cumulative effects of change in

(847)

(847)

(847)

accounting policy

As of April 1, 2019 (restated)

53,204

84,427

(30,788)

2,234

48,069

136

50,440

382,049

539,333

2,565

541,899

Profit for the period

7,733

7,733

90

7,823

Other comprehensive income

2,442

(1,475)

(12,925)

441

(11,516)

(11,516)

(176)

(11,693)

Total comprehensive income for the period

2,442

(1,475)

(12,925)

441

(11,516)

7,733

(3,783)

(86)

(3,869)

Acquisition of treasury shares

(10,224)

(10,224)

(10,224)

Dividends

(21,646)

(21,646)

(188)

(21,835)

Share-based payment transactions

7

59

66

66

Transfer from other components of equity to

(2,442)

970

(1,472)

1,472

retained earnings

Total transactions with the owners

7

(10,164)

(2,442)

970

(1,472)

(20,173)

(31,803)

(188)

(31,992)

As of March 31, 2020

53,204

84,434

(40,953)

1,729

35,144

577

37,451

369,609

503,746

2,290

506,037

(Note) FVTOCI: Fair Value Through Other Comprehensive Income

9

Millions of yen

Equity attributable to owners of the parent company

Other components of equity

Net gain (loss) on

Share capital

Capital surplus

Treasury shares

Remeasurement of

revaluation of

net defined benefit

financial assets

liabilities (assets)

measured at

FVTOCI (Note)

Exchange differences on translation of foreign operations

Net changes in fair

Total other

value of cash flow

components of

hedges

equity

Total equity

Non-controlling

Retained

attributable to

Total equity

interests

earnings

owners of the

parent company

As of April 1, 2020

53,204

84,434

(40,953)

-

1,729

35,144

577

37,451

369,609

503,746

2,290

506,037

Profit for the period

-

-

-

-

-

-

-

-

30,922

30,922

73

30,995

Other comprehensive income

-

-

-

20,220

1,503

17,047

(1,130)

37,641

-

37,641

181

37,822

Total comprehensive income for the period

-

-

-

20,220

1,503

17,047

(1,130)

37,641

30,922

68,564

254

68,818

Acquisition of treasury shares

-

-

(1)

-

-

-

-

-

-

(1)

-

(1)

Dividends

-

-

-

-

-

-

-

-

(21,449)

(21,449)

(519)

(21,968)

Share-based payment transactions

-

(16)

80

-

-

-

-

-

-

63

-

63

Transfer from other components of equity to

-

-

-

(20,220)

(3)

-

-

(20,224)

20,224

-

-

-

retained earnings

Total transactions with the owners

-

(16)

78

(20,220)

(3)

-

-

(20,224)

(1,225)

(21,386)

(519)

(21,906)

As of March 31, 2021

53,204

84,418

(40,874)

-

3,229

52,192

(552)

54,869

399,306

550,924

2,025

552,949

(Note) FVTOCI: Fair Value Through Other Comprehensive Income

Thousands of U.S. dollars

Equity attributable to owners of the parent company

Other components of equity

Net gain (loss) on

Share capital

Capital surplus

Treasury shares

Remeasurement of

revaluation of

net defined benefit

financial assets

liabilities (assets)

measured at

FVTOCI (Note)

Exchange differences on translation of foreign operations

Net changes in fair

Total other

value of cash flow

components of

hedges

equity

Total equity

Non-controlling

Retained

attributable to

Total equity

interests

earnings

owners of the

parent company

As of April 1, 2020

480,679

762,831

(369,995)

-

15,620

317,513

5,212

338,356

3,339,287

4,551,167

20,689

4,571,866

Profit for the period

-

-

-

-

-

-

-

-

279,369

279,369

659

280,028

Other comprehensive income

-

-

-

182,680

13,579

154,013

(10,209)

340,073

-

340,073

1,635

341,708

Total comprehensive income for the period

-

-

-

182,680

13,579

154,013

(10,209)

340,073

279,369

619,451

2,294

621,746

Acquisition of treasury shares

-

-

(9)

-

-

-

-

-

-

(9)

-

(9)

Dividends

-

-

-

-

-

-

-

-

(193,784)

(193,784)

(4,688)

(198,473)

Share-based payment transactions

-

(144)

722

-

-

-

-

-

-

569

-

569

Transfer from other components of equity to

-

-

-

(182,680)

(27)

-

-

(182,716)

182,716

-

-

-

retained earnings

Total transactions with the owners

-

(144)

704

(182,680)

(27)

-

-

(182,716)

(11,067)

(193,214)

(4,688)

(197,912)

As of March 31, 2021

480,679

762,686

(369,282)

-

29,172

471,536

(4,987)

495,722

3,607,589

4,977,404

18,295

4,995,699

(Note) FVTOCI: Fair Value Through Other Comprehensive Income

10

Consolidated Statement of Cash Flows

Years ended March 31, 2020 and 2021:

Millions of yen

Thousands of

U.S. dollars

Year ended

Year ended

March 31,

March 31,

2020

2021

2021

Cash flows from operating activities

Profit (loss) for the period

7,823

30,995

280,028

Depreciation and amortisation

68,416

69,852

631,088

Impairment loss (reversal of impairment loss)

581

7,823

70,678

Finance (income) costs

(156)

2,820

25,477

Share of (profit) loss of investments accounted for using the equity

(77)

(99)

(894)

method

Loss (gain) on sale and disposal of property, plant and equipment,

672

316

2,854

intangible assets and investment property

Income taxes

31,889

13,937

125,915

Decrease (increase) in trade receivables

12,407

(1,004)

(9,070)

Decrease (increase) in inventories

9,224

(12,865)

(116,230)

Increase (decrease) in trade payables

(11,420)

13,151

118,814

Increase (decrease) in net defined benefit liabilities

1,863

2,888

26,092

Other

(10,136)

14,779

133,523

Subtotal

111,088

142,595

1,288,295

Interest and dividends income received

2,084

1,365

12,332

Interest expenses paid

(1,181)

(1,111)

(10,037)

Proceeds from insurance income

2,614

339

3,062

Income taxes paid

(12,281)

(9,966)

(90,039)

Net cash from (used in) operating activities

102,324

133,222

1,203,613

Cash flows from investing activities

Purchase of investment securities

(1,041)

(297)

(2,683)

Proceeds from sales of investment securities

25

26

234

Purchase of property, plant and equipment

(65,250)

(47,504)

(429,181)

Proceeds from sale of property, plant and equipment

840

467

4,219

Purchase of intangible assets

(10,457)

(8,371)

(75,629)

Proceeds from sale of intangible assets

14

21

189

Proceeds from sale of investment property

16

-

-

Other

(280)

(1,790)

(16,172)

Net cash from (used in) investing activities

(76,131)

(57,448)

(519,022)

Cash flows from financing activities

Net increase (decrease) in current borrowings

(9,816)

(889)

(8,031)

Proceeds from non-current borrowings

29,948

-

-

Repayment of non-current borrowings

-

(14,000)

(126,485)

Proceeds from issuance of bonds issued

29,846

69,676

629,498

Redemption of bonds issued

(10,000)

-

-

Payment of lease liabilities

(8,203)

(9,667)

(87,337)

Dividends paid

(21,646)

(21,449)

(193,784)

Dividends paid to non-controlling interests

(188)

(519)

(4,688)

Purchase of treasury shares

(10,224)

(1)

(9)

Net cash from (used in) financing activities

(283)

23,150

209,152

Effect of exchange rate changes on cash and cash equivalents

(4,901)

8,837

79,839

Net increase (decrease) in cash and cash equivalents

21,007

107,761

973,582

Cash and cash equivalents at beginning of period

175,238

196,245

1,773,004

Cash and cash equivalents at end of period

196,245

304,007

2,746,596

11

Notes to Consolidated Financial Statements

1. Note for Going Concern Assumption

Not applicable.

2. Segment Information

(1) Outline of Reportable Segments

The reportable segments of Epson are determined based on the operating segments that are components of Epson for which discrete financial information is available and whose operating results are regularly reviewed by the Board of Directors in deciding how to allocate resources and in assessing performance.

The reportable segments of Epson are composed of three segments: "Printing Solutions", "Visual Communications" and "Wearable & Industrial Products". They are determined by types of products, nature of products, and markets.

Epson conducts development, manufacturing and sales within its reportable segments as follows:

Reportable segments

Main products

Office/ Home inkjet printers, serial impact dot matrix printers, page printers, color

Printing Solutions

image scanners, dry process office papermaking systems, commercial and industrial

inkjet printers, printers for use in POS systems, inkjet printheads, printer consumables,

personal computers and others.

Visual Communications

3LCD projectors, smart glasses and others.

Wearable & Industrial

Wristwatches, watch movements, industrial robots, IC handlers, quartz crystal

Products

devices, semiconductors, metal powders, surface finishing and others.

12

(2) Revenues and Performances of Reportable Segments

Revenues and performances of reportable segments were as follows. Transfer prices between the segments were based on prevailing market prices.

FY2019: Year ended March 31, 2020

Millions of yen

Reportable segments

Other

Adjustments

Printing

Visual

Wearable &

Consolidated

Communi-

Industrial

Subtotal

(Note 2)

(Note 3)

Solutions

cations

Products

Revenue

External revenues

707,816

183,345

145,072

1,036,234

186

7,179

1,043,600

Intersegment revenues

787

0

7,887

8,675

735

(9,411)

-

Total revenue

708,604

183,345

152,959

1,044,910

921

(2,231)

1,043,600

Segment profit (loss)

(Business profit)

75,680

13,558

1,839

91,077

(588)

(49,627)

40,861

(Note 1)

Other operating income (expense)

(1,381)

Profit from operating activities

39,479

Finance income (costs)

156

Share of profit of investments accounted

77

for using the equity method

Profit before tax

39,713

Other items

Reportable segments

Other

Adjustments

Printing

Visual

Wearable &

Consolidated

Communi-

Industrial

Subtotal

(Note 2)

(Note 4)

Solutions

cations

Products

Depreciation and

(37,736)

(11,784)

(10,327)

(59,848)

(18)

(7,956)

(67,822)

amortisation

Impairment losses of

assets other than

(0)

(0)

(195)

(197)

-

(384)

(581)

financial assets

Segment assets

440,822

124,694

147,992

713,510

210

327,190

1,040,910

Capital expenditures

43,575

14,141

14,777

72,493

9

7,587

80,090

(Note 1) Segment profit (loss) (Business profit) is calculated by subtracting Cost of sales and Selling, general and administrative expenses from Revenue.

(Note 2) "Other" consists of the intra-group services.

(Note 3) "Adjustments" to Segment profit (loss) (Business profit) of (¥49,627) million comprised "Eliminations" of ¥674 million and "Corporate expenses" of (¥50,302) million. "Corporate expenses" included expenses relating to research and development for basic technology and expenses relating to new businesses and general corporate functions which are not attributed to reportable segments.

(Note 4) "Adjustments" to Segment assets of ¥327,190 million comprised "Eliminations" of (¥5,579) million and "Corporate assets" of ¥332,769 million.

13

FY2020: Year ended March 31, 2021

Millions of yen

Reportable segments

Other

Adjustments

Printing

Visual

Wearable &

Consolidated

Communi-

Industrial

Subtotal

(Note 2)

(Note 3)

Solutions

cations

Products

Revenue

External revenues

707,563

141,468

140,595

989,626

190

6,123

995,940

Intersegment revenues

192

1

8,101

8,294

618

(8,913)

-

Total revenue

707,755

141,469

148,696

997,921

809

(2,789)

995,940

Segment profit (loss)

(Business profit)

108,587

1,348

3,218

113,154

(619)

(50,893)

61,642

(Note 1)

Other operating income (expense)

(13,988)

Profit from operating activities

47,654

Finance income (costs)

(2,820)

Share of profit of investments accounted

99

for using the equity method

Profit before tax

44,933

Other items

Reportable segments

Other

Adjustments

Printing

Visual

Wearable &

Consolidated

Communi-

Industrial

Subtotal

(Note 2)

(Note 4)

Solutions

cations

Products

Depreciation and

(38,112)

(13,062)

(10,094)

(61,269)

(14)

(8,152)

(69,436)

amortisation

Impairment losses of

(Note5)

assets other than

(0)

(60)

(7,763)

(7,823)

-

(0)

(7,823)

financial assets

Segment assets

455,236

121,029

134,684

710,950

187

450,176

1,161,314

Capital expenditures

27,285

8,078

10,514

45,878

62

6,937

52,878

(Note 1) Segment profit (loss) (Business profit) is calculated by subtracting Cost of sales and Selling, general and administrative expenses from Revenue.

(Note 2) "Other" consists of the intra-group services.

(Note 3) "Adjustments" to Segment profit (loss) (Business profit) of (¥50,893) million comprised "Eliminations" of ¥616 million and "Corporate expenses" of (¥51,509) million. "Corporate expenses" included expenses relating to research and development for basic technology and expenses relating to new businesses and general corporate functions which are not attributed to reportable segments.

(Note 4) "Adjustments" to Segment assets of ¥450,176 million comprised "Eliminations" of (¥15,128) million and "Corporate assets" of ¥465,305 million.

(Note 5) Epson recognised impairment losses of (¥7,516) million in total for the asset that belongs to the wearable products business which is a part of the Wearable & Industrial Products Segment by reviewing its business strategy because of declining profitability of the business at the end of the fiscal year. The amount includes certain amount of impairment losses that Epson has already recognised in the fiscal year.

14

FY2020: Year ended March 31, 2021

Thousands of U.S. dollars

Reportable segments

Printing

Visual

Wearable &

Other

Adjustments

Consolidated

Communi-

Industrial

Subtotal

(Note 2)

(Note 3)

Solutions

cations

Products

Revenue

External revenues

6,392,582

1,278,113

1,270,226

8,940,922

1,716

55,319

8,997,967

Intersegment revenues

1,734

9

73,189

74,933

5,583

(80,525)

-

Total revenue

6,394,317

1,278,122

1,343,416

9,015,864

7,309

(25,197)

8,997,967

Segment profit (loss)

(Business profit)

981,045

12,178

29,073

1,022,306

(5,592)

(459,800)

556,913

(Note 1)

Other operating income (expense)

(126,376)

Profit from operating activities

430,537

Finance income (costs)

(25,477)

Share of profit of investments accounted

894

for using the equity method

Profit before tax

405,953

Other items

Reportable segments

Other

Adjustments

Visual

Wearable &

Consolidated

Printing

Subtotal

(Note 2)

(Note 4)

Solutions

Communi-

Industrial

cations

Products

Depreciation and

(344,328)

(118,010)

(91,195)

(553,543)

(126)

(73,650)

(627,329)

amortisation

Impairment losses of

(Note5)

assets other than

(0)

(542)

(70,135)

(70,678)

-

(0)

(70,678)

financial assets

Segment assets

4,112,896

1,093,454

1,216,822

6,423,182

1,689

4,067,181

10,492,063

Capital expenditures

246,510

72,981

94,990

414,491

560

62,673

477,734

(Note 1) Segment profit (loss) (Business profit) is calculated by subtracting Cost of sales and Selling, general and administrative expenses from Revenue.

(Note 2) "Other" consists of the intra-group services.

(Note 3) "Adjustments" to Segment profit (loss) (Business profit) of ($459,800) thousand comprised "Eliminations" of $5,565 thousand and "Corporate expenses" of ($465,365) thousand. "Corporate expenses" included expenses relating to research and development for basic technology and expenses relating to new businesses and general corporate functions which are not attributed to reportable segments.

(Note 4) "Adjustments" to Segment assets of $4,067,181 thousand comprised "Eliminations" of ($136,676) thousand and "Corporate assets" of $4,203,866 thousand.

(Note 5) Epson recognised impairment losses of ($67,904) thousand in total for the asset that belongs to the wearable products business which is a part of the Wearable & Industrial Products Segment by reviewing its business strategy because of declining profitability of the business at the end of the fiscal year. The amount includes certain amount of impairment losses that Epson has already recognised in the fiscal year.

15

  1. Geographic Information

The regional breakdowns of non-current assets and external revenues as of each fiscal year end were as follows:

Non-current Assets

Millions of yen

Thousands of U.S. dollars

March 31,

March 31,

2020

2021

2021

Japan

239,851

223,430

2,018,611

The Philippines

44,494

42,698

385,761

Indonesia

31,556

29,351

265,175

China

26,221

23,589

213,118

Other

51,874

56,405

509,599

Total

393,998

375,474

3,392,275

(Note) Non-current assets, excluding Investments accounted for using the equity method, Other financial assets, Deferred tax assets and retirement benefits assets, are segmented by the location of the assets.

External Revenue

Millions of yen

Thousands of U.S. dollars

Year ended March 31,

Year ended March 31,

2020

2021

2021

Japan

254,993

221,285

1,999,232

The United States

201,259

209,641

1,894,032

China

132,550

144,821

1,308,406

Other

454,796

420,192

3,796,286

Total

1,043,600

995,940

8,997,967

(Note) Revenues are segmented by country based on the location of the customers.

(4) Information about Major Customers

Epson had no transactions with a single external customer amounting to 10% or more of total external revenues.

16

3. Earnings per Share

(1) Basis of calculating basic earnings per share

Thousands of

Millions of yen

U.S. dollars

Year ended

Year ended

March 31,

March 31,

2020

2021

2021

Profit for the period attributable to owners

7,733

30,922

279,369

of the parent company

Profit for the period not attributable to

-

-

-

owners of the parent company

Profit used for calculation of basic

7,733

30,922

279,369

earnings per share

Weighted-average number of ordinary

347,393

345,968

345,968

shares outstanding (Thousands of Shares)

Basic earnings per share

(Yen)

22.26

(Yen)

89.38

($)

0.81

(2) Basis of calculating diluted earnings per share

Thousands of

Millions of yen

U.S. dollars

Year ended

Year ended

March 31,

March 31,

2020

2021

2021

Profit used for calculation of basic

7,733

30,922

279,369

earnings per share

Adjustments

-

-

-

Profit used for calculation of diluted

7,733

30,922

279,369

earnings per share

Weighted-average number of ordinary

347,393

345,968

345,968

shares outstanding (Thousands of Shares)

Effect of dilutive potential ordinary shares

BIP trust for eligible officers

124

110

110

(Thousands of Shares)

Weighted-average number of ordinary

347,518

346,078

346,078

shares diluted (Thousands of Shares)

Diluted earnings per share

(Yen)

22.25

(Yen)

89.35

($)

0.81

(Note) For the purpose of calculation of basic earnings per share and diluted earnings per share, the shares of the Company held by BIP trust are accounted as treasury shares and the number of those shares are deducted from weighted-average number of ordinary shares outstanding during the period.

17

4. Contingencies

Material litigation

In general, litigation has uncertainties and it is difficult to make a reliable estimate of financial effect of the possibility of an outflow of resources embodying economic benefits.

Provisions are not recognised when either an outflow of resources embodying economic benefits is not probable or an estimate of financial effect is not practicable.

Epson had the following material action.

The civil action on copyright fee of ink-jet printers

In June 2010, Epson Europe B.V. ("EEB"), a consolidated subsidiary of the Company, brought a civil suit against La SCRL Reprobel ("Reprobel"), a Belgium-based group that collects copyright royalties, seeking restitution for copyright royalties for multifunction printers. After that, Reprobel also brought a civil suit against EEB. As a result, these two lawsuits were adjoined. EEB's claims were rejected at the first trial, but EEB, dissatisfied with the decision, intends to appeal.

5. Subsequent Events

No material subsequent events were identified.

18

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Seiko Epson Corporation published this content on 28 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 April 2021 06:20:02 UTC.