-1-[Translation]
Note: This document has been translated from a part of the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original shall prevail.
(Stock Exchange Code 8050)
June 9, 2023
(Start date for electronic provision measures) May 30, 2023
To Shareholders with Voting Rights:
Shuji Takahashi
President
SEIKO GROUP CORPORATION
5-11, Ginza 4-chome, Chuo-ku, TokyoNOTICE OF
THE 162ND ORDINARY GENERAL MEETING OF SHAREHOLDERS
We would like to express our appreciation for your continued support and patronage.
Please be informed that we will hold the 162nd Ordinary General Meeting of Shareholders of SEIKO GROUPCORPORATION (the “Company”). The meeting will be held for the purposes described below.
In convening this Meeting, the Company has adopted measures for the electronic provision of information containedin the Reference Documents for the General Meeting of Shareholders (electronic provision measures) and has posted
such information on the following websites on the Internet. Please access either website to view the documents.

The Company’s website

https://www.seiko.co.jp/en/ir/library/meeting.html
https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=ShowTokyo Stock Exchange Website

Searched by entering “Seiko Group” or “8050” in the issue name (company(Listed Company Search)

name) or stock exchange code field, and selecting “Basic information,” then“Documents for public inspection/PR information.”

Convocation on the Internet

https://s.srdb.jp/8050/
Scheduled to be posted on Thursday, June 8, 2023.

Please review the attached Reference Documents for the General Meeting of Shareholders (pages 5 through 26),
and exercise your voting rights in accordance with the “Notice regarding Exercise of Voting Rights” (pages 4) by 6
p.m. on Wednesday, June 28, 2023, Japan time.

-2-

1. Date and Time:Thursday, June 29, 2023, at 10 a.m. Japan time
(The reception desk will open at 9 a.m. Japan time.)
2. Place:

Toranomon Hills Forum Hall B
Toranomon Hills Mori Tower 4F
23-3, Toranomon 1-chome, Minato-ku, Tokyo, Japan

3. Meeting Agenda:
Matters to be reported: The Business Report, Non-consolidated Financial Statements, Consolidated Financial
Statements and results of audits by the Accounting Auditor and the Board of Corporate
Auditors of the Consolidated Financial Statements, for the Company’s Fiscal Year Ended
on March 31, 2023 (from April 1, 2022 to March 31, 2023)
Proposals to be resolved: Proposal 1: Distribution of Surplus
Proposal 2: Election of Nine (9) Directors
Proposal 3: Election of Two (2) Corporate Auditors
Proposal 4: Revision of Upper Limit of Stock Compensation, etc. for Directors
4. Decisions Concerning Convocation(1) Should you choose to exercise your voting rights via a proxy, you may designate a shareholder other thanyourself, who is entitled to vote with respect to the Company, as your proxy. In such case, please have theproxy submit a power of attorney together with your Voting Rights Exercise Form to the reception desk.
(2) Should you diversely exercise your voting rights, please notify the Company in writing to this effect, together
with the reason thereof, at least three (3) days prior to the date of the General Meeting of Shareholders.
◎Among the matters related to electronic provision measures, the following matters are not included in the paper
copy delivered to shareholders who have requested, but are posted on each of the aforementioned websites on theInternet, pursuant to the provisions of laws and regulations and Article 16, paragraph 2 of the Articles ofIncorporation of the Company.
(i) “Overview of the system to ensure proper operations and the implementation status thereof” for theBusiness Report(ii) “Consolidated Statements of Changes in Equity” and “Notes to Consolidated Financial Statements” forConsolidated Financial Statements(iii)“Non-Consolidated Statements of Changes in Equity” and “Notes to Non-Consolidated Financial Statements”
for Non-Consolidated Financial Statements
The Accounting Auditor and Corporate Auditors have audited each document subject to auditing, including (i) to(iii) above.
◎ Corrections, if any, to the matters related to electronic provision measures, will be posted on each of theaforementioned websites on the Internet, indicating the matters both before and after correction.

-3Notice regarding the distribution of the Business Report video
Prior to the meeting, a video regarding the Business Report will be distributed.
Distribution period (scheduled): Thursday, June 15, 2023 to Friday, September 29, 2023
Distribution URL: https://v.srdb.jp/8050/2023soukai_visual/
Notice of Live Streaming of the General Meeting of Shareholders
The proceedings of the General Meeting of Shareholders will be streamed live via the Internet.
1. Please access the following website designated by the Company.
Distribution
Thursday, June 29, 2023, from 10 a.m. Japan time to the end of the meeting
date and time
* The website can be accessed from 9 a.m. Japan time.
Distribution
https://v.srdb.jp/8050/2023soukai/
URL
2. When the screen for entering your ID and password appears, please enter your ID and password asshown below.
ID

Notified to shareholders on written Notice of the General Meeting of Shareholders

Password

Notified to shareholders on written Notice of the General Meeting of Shareholders

Notes:










Please note that you may not be able to view the live streaming, depending on your computer orother devices, your Internet connection environment, or your connection conditions.
Shareholders will be responsible for communication charges and other costs associated withviewing the live streaming.
Shareholders who view the live streaming will not be able to participate in the resolutions on the
day of the General Meeting of Shareholders. Please exercise your voting rights in advance, using
any of the methods described on pages 4 below, prior to viewing the live streaming.
We will not be able to accept questions or comments from shareholders who are viewing the live
streaming.
In consideration of the privacy of the shareholders who attend the meeting, the live streaming will
be limited to the vicinity of the Chairman’s and officers’ seats. However, please note that there
may be cases where shareholders are unavoidably visible.
The live streaming may be unavoidably interrupted or cancelled due to the Internet environment,
equipment trouble, or other circumstances.
Please refrain from recording, photographing, or saving the live streaming. Please do not disclose
your ID or password to the public.
For inquiries on how to view the live streaming and network on the day of the meeting:
TAKARA PRINTING CO., LTD.
(Live streaming support company)

Contact phone number:
Notified to shareholders on
written Notice of the General
Meeting of Shareholders

Contact time:Thursday, June 29, 2023,
from 9 a.m. to 12 p.m.
Japan time-4Notice regarding Exercise of Voting Rights
Voting rights may be exercised by any of the means described below. Shareholders are requested toreview the Reference Documents for the General Meeting of Shareholders before exercising voting
rights.
Shareholders attending the meeting in person
Date and time of the meeting: Thursday, June 29, 2023, at 10 a.m., Japan time
When attending the meeting, please submit the enclosed Voting Rights Exercise Form at the reception
desk.
Shareholders not attending the meeting in person
Exercise of voting rights in writing
Deadline: Must reach the Company by 6 p.m. on Wednesday, June 28, 2023, Japan time
Please indicate your votes for or against the proposals on the enclosed Voting Rights Exercise Formand return the same so that it is received by the deadline for exercising voting rights.
Any proposals which have not been voted for or against will be construed to have been voted for.
Exercise of voting rights via “Smart Exercise”
Deadline: By 6 p.m. on Wednesday, June 28, 2023, Japan time
1. Scan the “Smart Exercise” QR code on the bottom right of the enclosed Voting Rights Exercise
Form using a smartphone or tablet device.
* An application or function that can scan QR codes is required. (QR code is a registered trademarkof DENSO WAVE INCORPORATED.)
2. Enter your votes for or against the proposals in accordance with the screen instructions.
! If you wish to change your exercise content after exercising your voting rights, you will need toscan the QR code again, and enter your “voting rights exercise code” and “password” displayedon the Voting Rights Exercise Form.
Exercise of voting rights via the Internet
Deadline: By 6 p.m. on Wednesday, June 28, 2023, Japan time
Please access the voting website (https://soukai.mizuho-tb.co.jp/), and exercise your voting rights inaccordance with the screen instructions.
＜Contact information regarding “Smart Exercise” and exercise via the Internet＞
Stock Transfer Agent Department, Mizuho Trust & Banking Co., Ltd.
Phone number: 0120-768-524 (toll free, accessible only in Japan)(Usage time: 9 a.m. to 9 p.m. (excluding the year end and New Year holidays))（For reference）
Institutional investors may use the electronic proxy voting platform operated by ICJ, Inc.
If duplicate votes are exercised* If you exercise a voting right both in writing and via the Internet (including “Smart Exercise”), thevote exercised via the Internet will be taken as the valid vote.
* If you exercise a voting right multiple times via the Internet (including “Smart Exercise”), the votelast exercised will be taken as the valid vote.

-5[Translation]
Reference Documents for the General Meeting of Shareholders
Agenda of the Ordinary General Meeting of Shareholders

Proposal 1: Distribution of surplus
The Company has a policy to provide consistent dividend payments while considering theconsolidated business results for the fiscal year under review and taking into account the enrichmentof internal reserves to strengthen our management foundation. Based on this policy, with regard to
the year-end dividend for the fiscal year under review, we hereby propose to distribute the surplus asdescribed below.
Matters related to the year-end dividend(1) Type of dividend assets
Cash(2) Allotment of dividend property to shareholders and its total amountAmount per common share: 37.5 yen
Total amount of dividends: 1,550,376,638 yen
Note: As the Company has already paid an interim dividend of 37.5 yen per share, the annual
dividend for the 162nd fiscal year will be 75 yen per share.
(3) Effective date of distribution of surplus
June 30, 2023
[For reference]<Cash dividends per share (full year)>
FY2018Cash dividends
per share(full year)

75 yenFY201975 yenFY202037.5 yen

FY202150 yenFY202275 yen-6Proposal 2: Election of Nine (9) Directors
The Company proposes the election of nine (9) Directors, as the terms of office of all nine (9)Directors will expire at the closing of this General Meeting of Shareholders.
The candidates for Director are as follows.
Candidate
No.

Name

1

Reappointed

Shinji
Hattori2

Reappointed

Shuji
Takahashi

GenderPositions and responsibilities
at the Company

Attendanceat the Boardof Directors
meetings

Male

ChairmanGroup CEO, Group CCO(Group Chief Culture
Officer)

13 out of 13
meetings(100.0%)Male

President

13 out of 13
meetings(100.0%)

Director, Senior Executive
Vice President in charge of
Emotional Value Solutions
Domain, Legal andIntellectual Property
Director, Senior Executive
Vice President in charge ofDevices Solutions Domain
Director, Senior Executive
Vice President in charge ofSystems Solutions
Domain, IT Planning and
DX Business Promotion
Executive Vice President,
General Manager ofCorporate Management
Division3

Reappointed

Akio Naito

Male

4

Reappointed

Takahiro
Naito

Male

5

Reappointed

Jun Sekine

Male

6

Newly
Appointed

Taku
Yoneyama

Male

7

Reappointed

YasukoTerauraOutside Director
Independent Director

FemaleOutside Director

8

Reappointed

Noboru
Saito

Outside Director
Independent Director

Male

Outside Director

9

Newly
Appointed

Hideki
Kobori

Outside Director
Independent Director

Male

―

10 out of 10
meetings(100.0%)10 out of 10
meetings(100.0%)13 out of 13
meetings(100.0%)―13 out of 13
meetings(100.0%)10 out of 10
meetings(100.0%)
―

-7-

1.

Shinji Hattori (Date of Birth: January 1, 1953) (Reappointed)(1)

Number of shares of the Company held: 2,279,289(2)Length of service as a Director: 16 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities
April 1975

Joined Mitsubishi Corporation

July 1984

Joined Seikosha Co., Ltd.

January 1996

Director of Seiko Precision Inc.

June 2001

President of Seiko Precision Inc.

June 2003

President & CEO of SEIKO WATCH CORPORATION

June 2007

Director of the Company

June 2009

Executive Vice President of the Company

April 2010

President of the Company

October 2012

Chairman of the Company (to present)

June 2015

President & CEO of SEIKO WATCH CORPORATION

April 2017

Chairman & CEO of SEIKO WATCH CORPORATION

June 2020

Chairman of WAKO Co., Ltd. (to present)

April 2021

Chairman of SEIKO WATCH CORPORATION (to present)<Responsibilities>
Group CEO, Group CCO (Group Chief Culture Officer)(5)

Significant concurrent positions:
Chairman of SEIKO WATCH CORPORATION
Chairman of WAKO Co., Ltd.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Shinji Hattori as a candidate for Director, expecting him
to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
served as President of the Company and its group companies; and (ii) currently being
engaged in strategic planning and management direction for the entire Company Group
from a medium- to long-term, and global perspective as Group CEO of the Company.

(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Mr. Shinji Hattori.

-82.

Shuji Takahashi (Date of Birth: August 29, 1957) (Reappointed)(1)

Number of shares of the Company held: 11,600(2)Length of service as a Director: 10 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities
April 1980
February 2011

Senior Vice President of SEIKO WATCH CORPORATION

June 2012

Director, Senior Vice President of SEIKO WATCHCORPORATION

June 2013

Director of the Company

April 2014

Director, Executive Vice President of SEIKO WATCHCORPORATION

June 2015

Director, Senior Executive Vice President of SEIKO WATCHCORPORATION

June 2016(5)

Joined the Company

April 2017

Executive Director of the Company
Director of the Company

April 2017

President & COO & CMO of SEIKO WATCH CORPORATION

June 2021

President of the Company (to present)

Significant concurrent positions:―(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Shuji Takahashi as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
promoted the Global Brand strategy for the Watches Business as President of SEIKO
WATCH CORPORATION; and (ii) currently being engaged in management direction
for the Company Group as President of the Company.

(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Mr. Shuji
Takahashi.

-93.

Akio Naito (Date of Birth: November 9, 1960) (Reappointed)(1)

Number of shares of the Company held: 9,700(2)Length of service as a Director: 1 year

(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 10 out of 10 meetings (100.0%)(4)Career, positions, and responsibilities
April 1984

Joined the Company

January 2002

Managing Director of SEIKO Australia Pty. Ltd.

April 2006

General Manager, Legal & Intellectual Property Department of theCompany

June 2011

Director of the Company

June 2013

Executive Director of the Company

June 2016

Director of the Company

June 2016

Director, Senior Executive Vice President of SEIKO WATCHCORPORATION

October 2018

Chairman & CEO of Grand Seiko Corporation of America

December 2019

Director, Deputy Chief Operating Officer of SEIKO WATCHCORPORATION

April 2021

President of SEIKO WATCH CORPORATION (to present)

June 2022

Director, Senior Executive Vice President of the Company (topresent)<Responsibilities>
Emotional Value Solutions Domain, Legal and Intellectual Property(5)Significant concurrent positions:
President of SEIKO WATCH CORPORATION(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Akio Naito as a candidate for Director, expecting him to
perform full functions as a Board member in the decision-making to execute importantbusiness and supervise the other Directors’ execution of their duties by utilizing his
wealth of experience and achievement, including the following: (i) having been
engaged mainly in legal affairs, and overseas marketing for the Watches Business as amember of the Company Group since joining the Company; and (ii) currently being
engaged in management direction as President of SEIKO WATCH CORPORATION
and being in charge of the Emotional Value Solutions Domain, legal and intellectual
property as Director and Senior Executive Vice President of the Company.

(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Mr. Akio Naito.

- 10 4.

Takahiro Naito (Date of Birth: September 5, 1955) (Reappointed)(1)

Number of shares of the Company held: 2,100(2)Length of service as a Director: 1 year

(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 10 out of 10 meetings (100.0%)(4)Career, positions, and responsibilities
April 1979

Joined Suwa Seikosha Co., Ltd. (currently Seiko Epson
Corporation)

December 2001

Manager of Hong Kong Branch of Seiko Epson Corporation.

October 2006

General Manager of Audit Office of Seiko Epson Corporation.

October 2010

General Manager of Watch Business of Seiko Epson Corporation.

September 2015

Director of SEIKO WATCH CORPORATION

June 2016

Senior Vice President, Director of SEIKO WATCHCORPORATION

April 2019

Senior Vice President of Seiko Instruments Inc.

April 2019

General Manager, Motion Device Business of Seiko Instruments
Inc.

June 2019

Director of Seiko Instruments Inc.

April 2020

General Manager, Precision Device Business of Seiko Instruments
Inc.

June 2020

Director, Executive Vice President of Seiko Instruments Inc.

April 2021

Director, Senior Executive Vice President of Seiko Instruments
Inc.

April 2022

President of Seiko Instruments Inc. (to present)

June 2022

Director, Senior Executive Vice President of the Company (topresent)<Responsibilities>
Devices Solutions Domain(5)Significant concurrent positions:
President of Seiko Instruments Inc.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Takahiro Naito as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
held key positions at precision device companies; (ii) having been engaged inprecision device business and motion device business since being appointed as SeniorVice President of Seiko Instruments Inc. in April 2019 and having a broad range ofknowledge and experience regarding its businesses; and (iii) currently being engaged
in management direction as President of Seiko Instruments Inc. and being in charge of

- 11 the Devices Solutions Domain as Director and Senior Executive Vice President of theCompany.
(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Mr. Takahiro
Naito.

- 12 5.

Jun Sekine (Date of Birth: October 1, 1959) (Reappointed)(1)

Number of shares of the Company held: 2,000(2)Length of service as a Director: 2 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities
April 1984

Joined IBM Japan, Ltd.

April 1998

Sales Manager, Insurance of IBM Japan, Ltd.

June 2002

General Manager, Insurance of IBM Japan, Ltd.

January 2006

Managing Director of IBM Japan, Ltd.

July 2012
January 2013
July 2015
December 2015

President and Director of ESCCO JAPAN K.K.
Vice President and General Manager, Strategic Business Divisionof SAP Japan Co., Ltd.
Vice President and Chief Customer Officer of SAP Japan Co.,Ltd.
Director and Executive Vice President of SEIKO Solutions Inc.

April 2017

President of SEIKO Solutions Inc. (to present)

June 2021

Director of the Company
Director, Senior Executive Vice President of the Company (topresent)

June 2022<Responsibilities>
Systems Solutions Domain, IT Planning and DX Business Promotion(5)

Significant concurrent positions:
President of SEIKO Solutions Inc.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Jun Sekine as a candidate for Director, expecting him to
perform full functions as a Board member in the decision-making to execute importantbusiness and supervise the other Directors’ execution of their duties by utilizing his
wealth of experience and achievement, including the following: (i) having extensive
knowledge and a wide-ranging network in the IT industry from having served as amanagement member of foreign-affiliated IT corporations; and (ii) currently being
engaged in management direction as President of SEIKO Solutions Inc. and being incharge of the Systems Solutions Domain and IT Planning and DX Business Promotion
as Director and Senior Executive Vice President of the Company.

(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Mr. Jun Sekine.

- 13 6.

Taku Yoneyama (Date of Birth: November 15, 1962) (Newly Appointed)(1)

Number of shares of the Company held: 2,000(2)Length of service as a Director: ―(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: ―(4)

Career, positions, and responsibilities(5)

April 1986

Joined the Company

May 2011

General Manager, Corporate Strategy Planning Department of
the Company

February 2015

Senior Vice President of SEIKO WATCH CORPORATION

June 2015

Director, Senior Vice President of SEIKO WATCHCORPORATION

April 2017

Director, Executive Vice President of SEIKO WATCHCORPORATION

April 2020

Director, Senior Executive Vice President of SEIKO WATCHCORPORATION

April 2023

Executive Vice President, General Manager of Corporate
Management Division of the Company (to present)

Significant concurrent positions:―(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Taku Yoneyama as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
been engaged mainly in corporate strategy planning as a member of the Company
Group since joining the Company; and (ii) having been in charge of business
management in general, including corporate strategy planning, corporate
management, general affairs, and human resources as General Manager of the
Corporate Strategy & Planning Division at SEIKO WATCH CORPORATION.

(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Mr. Taku
Yoneyama.

- 14 7.

Yasuko Teraura (Date of Birth: October 16, 1970)(Reappointed) (Outside Director) (Independent Director)(1)

Number of shares of the Company held: 900(2)

Length of service as a Director: 4 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities(5)

April 2000

Registered as an attorney

October 2006

Certified as a New York State attorney

March 2010

Established Endeavour Law Office, Partner Attorney of
Endeavour Law Office (to present)

June 2019

Outside Director of the Company (to present)

June 2022

Outside Director (Audit and Supervisory Committee Member) of
Ryosan Company, Limited (to present)

Significant concurrent positions:
Partner Attorney of Endeavour Law OfficeOutside Director (Audit and Supervisory Committee Member) of Ryosan Company,
Limited(6)

Reasons for nomination as candidate for Outside Director and the overview of
expected roles:
The Company nominates Ms. Yasuko Teraura as a candidate for Outside Director,
expecting her to contribute to strengthening supervisory functions over the executionof business and provide advice by leveraging her legal expertise based on her
extensive knowledge and experience cultivated over many years as an attorney.
Although Ms. Yasuko Teraura does not have any previous experience of being
involved in corporate management other than through serving as an Outside Officer,
the Company has determined that she is capable of appropriately performing the duties
of an Outside Director based on the aforementioned reasons.

(7)

Special relationship of interest between the Company and the candidate for Outside
Director and the candidate’s independence from the Company:
There is no special relationship of interest between the Company and Ms. Yasuko
Teraura.
Ms. Yasuko Teraura satisfies the requirements of an independent director under therules of the Tokyo Stock Exchange, and has been reported thereto as an independent
director. If her appointment is approved at this Ordinary General Meeting of
Shareholders, she will continue to serve as an independent director.

- 15 8.

Noboru Saito (Date of Birth: August 8, 1961)(Reappointed) (Outside Director) (Independent Director)(1)

Number of shares of the Company held: 0(2)

Length of service as a Director: 1 year

(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 10 out of 10 meetings (100.0%)(4)Career, positions, and responsibilities
April 1986

Joined Burroughs Corporation (currently BIPROGY Inc.)

April 2004

General Manager, Industry & Commerce 2 of Nihon Unisys, Ltd.
(currently BIPROGY Inc.)

April 2009

General Manager, Industry & Commerce of Nihon Unisys, Ltd.
(currently BIPROGY Inc.)

April 2010

General Manager, Industry & Commerce 2 of Nihon Unisys, Ltd.
(currently BIPROGY Inc.)

April 2012

General Manager, Business Services of Nihon Unisys, Ltd.
(currently BIPROGY Inc.)

April 2013

Corporate Officer of Nihon Unisys, Ltd. (currently BIPROGY
Inc.)

April 2016
June 2016
April 2020
June 2022(5)

Senior Corporate Officer of Nihon Unisys, Ltd. (currently
BIPROGY Inc.)
Director, Senior Corporate Officer of Nihon Unisys, Ltd.
(currently BIPROGY Inc.)
Representative Director, Executive Corporate Officer of Nihon
Unisys, Ltd. (currently BIPROGY Inc.) (to present)
Outside Director of the Company (to present)

Significant concurrent positions:Representative Director, Executive Corporate Officer of BIPROGY Inc.

(6)

Reasons for nomination as candidate for Outside Director and the overview of
expected roles:
The Company nominates Mr. Noboru Saito as a candidate for Outside Director,
expecting him to contribute to strengthening supervisory functions over the executionof business and provide advice from a wide-ranging management perspective based on
his extensive experience and high insight cultivated in his career as a management
member of corporations over many years.

(7)

Special relationship of interest between the Company and the candidate for Outside
Director and the candidate’s independence from the Company:
There is no special relationship of interest between the Company and Mr. Noboru
Saito.
Mr. Noboru Saito is currently serving as Representative Director, Executive Corporate
Officer of BIPROGY Inc. The BIPROGY Group and the Company Group havetransactions in the Systems Solutions Business. However, these transactions constitute- 16 less than one percent of BIPROGY Inc. and the Company’s consolidated net sales, andis thus insignificant.
Mr. Noboru Saito satisfies the requirements of an independent director under the rulesof the Tokyo Stock Exchange, and has been reported thereto as an independent
director. If his appointment is approved at this Ordinary General Meeting of
Shareholders, he will continue to serve as an independent director.

- 17 9.

Hideki Kobori (Date of Birth: February 2, 1955)(Newly Appointed) (Outside Director) (Independent Director)(1)

Number of shares of the Company held: 0(2)

Length of service as a Director: －(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: －(4)

Career, positions, and responsibilities
April 1978

Joined Asahi Chemical Industry Co., Ltd. (currently Asahi Kasei
Corp.)

July 2004

General Manager, Corporate Strategy and Planning Departmentof Asahi Kasei EMD Corp.

April 2007

General Manager, Electronics Devices Marketing & Sales Centerof Asahi Kasei EMD Corp.

April 2008

Director and Senior Executive Officer of Asahi Kasei EMD Corp.

April 2009

Director and Primary Executive Officer of Asahi Kasei
Microdevices Corp.

April 2010

President & Representative Director, Presidential Executive
Officer of Asahi Kasei Microdevices Corp.

June 2012

Director and Senior Executive Officer of Asahi Kasei Corp.

April 2014
April 2016

(5)

Representative Director, Primary Executive Officer of Asahi
Kasei Corp.
President & Representative Director, Presidential Executive
Officer of Asahi Kasei Corp.

April 2022

Chairman & Representative Director of Asahi Kasei Corp.

June 2022

Vice Chair of KEIDANREN (Japan Business Federation) (topresent)

April 2023

Chairman & Director of Asahi Kasei Corp. (to present)

Significant concurrent positions:
Chairman & Director of Asahi Kasei Corp.
Vice Chair of KEIDANREN (Japan Business Federation)(6)

Reasons for nomination as candidate for Outside Director and the overview of
expected roles:
The Company nominates Mr. Hideki Kobori as a candidate for Outside Director,
expecting him to contribute to strengthening supervisory functions over the executionof business and provide advice from a wide-ranging management perspective based on
his extensive experience and high insight cultivated in his career as a management
member of corporations over many years.

(7)

Special relationship of interest between the Company and the candidate for Outside
Director and the candidate’s independence from the Company:

- 18 There is no special relationship of interest between the Company and Mr. Hideki
Kobori.
Mr. Hideki Kobori satisfies the requirements of an independent director under therules of the Tokyo Stock Exchange, and will be reported thereto as an independent
director, if his appointment is approved at this Ordinary General Meeting of
Shareholders.

Note 1: The Company entered into an agreement with Ms. Yasuko Teraura and Mr. Noboru
Saito to limit liability for damages set forth in Article 423, paragraph 1 of theCompanies Act, pursuant to Article 427, paragraph 1 thereof. The limit on the liability
for damages under the said agreement will be the minimum limit of liability
prescribed in Article 425, paragraph 1 of the Companies Act. If their appointment isapproved, the Company will continue the aforementioned liability limitationagreement with them. If the appointment of Mr. Hideki Kobori is approved, theCompany plans to enter into a similar agreement with him.
Note 2: The Company has entered into a directors and officers liability insurance (D&O
insurance) policy with an insurance company, with all Directors of the Company as
the insured, as prescribed in Article 430-3, paragraph 1 of the Companies Act. The
details of the insurance policy are as described in the Business Report, “4. Matter
related to officers, (3) Overview of directors and officers liability insurance.” If theappointment of the candidates is approved, each candidate will be included as aninsured under the insurance policy. The Company plans to renew the insurance policy
with the same conditions during the term of office of each candidate.

- 19 Proposal 3: Election of Two (2) Corporate Auditors
The Company proposes the election of two (2) Corporate Auditors, as the terms of office of two(2) Corporate Auditors, Mr. Hideki Amano and Mr. Masatoshi Yano, will expire at the closing of
this General Meeting of Shareholders.
The Company has obtained consent from the Board of Corporate Auditors with regard to this
proposal.
The candidate for Corporate Auditor is as follows.
1.

Hideki Amano (Date of Birth: November 26, 1953)(Reappointed) (Outside Corporate Auditor) (Independent Auditor)(1)

Number of shares of the Company held: 0(2)

Length of service as a Corporate Auditor: 4 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 13 out of 13 meetings (100.0%)
Attendance at the Board of Corporate Auditors meetings during
the fiscal year ended March 31, 2023: 10 out of 10 meetings(100.0%)(4)

Career and positions
April 1976

(5)

Joined Arthur Andersen (currently KPMG AZSA LLC)

September 1980

Registered as a certified public accountant

September 1992

Representative Partner of Inoue Saito Eiwa Audit Corporation(currently KPMG AZSA LLC)

September 2011

Vice President (Audit Division) of KPMG AZSA LLC

July 2015

Executive Senior Partner of KPMG AZSA LLC (retired in June
2016)

March 2017

Outside Audit & Supervisory Board Member of Kao
Corporation (to present)

June 2019

Outside Corporate Auditor of the Company (to present)

June 2022

Outside Auditor of Mizuho Leasing Company, Limited (topresent)

Significant concurrent positions:Certified public accountant
Outside Audit & Supervisory Board Member of Kao Corporation
Outside Auditor of Mizuho Leasing Company, Limited(6)

Reasons for nomination as candidate for Outside Corporate Auditor:
The Company nominates Mr. Hideki Amano as a candidate for Outside Corporate
Auditor, expecting him to perform appropriate audit functions based on extensive
knowledge and experience cultivated in his career as a certified public accountant overmany years.
Although Mr. Hideki Amano does not have any previous experience of being involvedin corporate management other than through serving as an Outside Officer, the- 20 Company has determined that he is capable of appropriately performing the duties ofan Outside Corporate Auditor based on the aforementioned reasons.
(7)

Special relationship of interest between the Company and the candidate for Outside
Corporate Auditor and the candidate’s independence from the Company:
There is no special relationship of interest between the Company and Mr. Hideki
Amano.
Mr. Amano previously worked at KPMG AZSA LLC, the Accounting Auditor of theCompany. However, Mr. Hideki Amano did not directly engage in audit work for theCompany, and has not been involved in operation of the audit firm since he retired as
Executive Senior Partner from the said audit firm in June 2016.
Mr. Hideki Amano satisfies the requirements of an independent auditor under the rulesof the Tokyo Stock Exchange, and has been reported thereto as an independent auditor.
If his appointment is approved at this Ordinary General Meeting of Shareholders, hewill continue to serve as an independent auditor.

- 21 2.

Masatoshi Yano (Date of Birth: August 3, 1956)(Reappointed) (Outside Corporate Auditor) (Independent Auditor)(1)

Number of shares of the Company held: 0(2)

Length of service as a Corporate Auditor: 4 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2023: 13 out of 13 meetings (100.0%)
Attendance at the Board of Corporate Auditors meetings during
the fiscal year ended March 31, 2023: 10 out of 10 meetings(100.0%)(4)

Career and positions(5)

April 1980

Joined The Dai-Ichi Kangyo Bank, Ltd. (currently Mizuho Bank,
Ltd.)

April 2007

Executive Officer, General Manager, Head Office of Mizuho
Bank, Ltd.

April 2009Managing Executive Officer of Mizuho Bank, Ltd.

April 2011

Deputy President of Mizuho Bank, Ltd. (retired in March 2013)

June 2015

President of Chuo Fudosan K.K. (currently Chuo-Nittochi Co.,
Ltd.) (retired in June 2018)

June 2018

President of Seiwa Sogo Tatemono Co., Ltd. (to present)

June 2019

Outside Corporate Auditor of the Company (to present)

Significant concurrent positions:
President of Seiwa Sogo Tatemono Co., Ltd.

(6)

Reasons for nomination as candidate for Outside Corporate Auditor:
The Company nominates Mr. Masatoshi Yano as a candidate for Outside Corporate
Auditor, expecting him to perform appropriate audit functions based on his extensive
experience and high insight cultivated in his career as a management member ofcorporations over many years.

(7)

Special relationship of interest between the Company and the candidate for Outside
Corporate Auditor and the candidate’s independence from the Company:
There is no special relationship of interest between the Company and Mr. Masatoshi
Yano.
Mr. Masatoshi Yano currently serves as President of Seiwa Sogo Tatemono Co., Ltd.
Seiwa Sogo Tatemono Co., Ltd. and the Company Group have transactions related toreal estate management. However, these transactions constitute less than one percentof net sales of Seiwa Sogo Tatemono Co., Ltd. and the Company’s consolidated net
sales, and is thus insignificant. In addition, Mr. Masatoshi Yano previously worked atMizuho Bank, Ltd., a major lender to the Company. However, Mr. Yano has not been
involved in execution of operations at Mizuho Bank, Ltd. since he retired as Deputy
President from the said bank in March 2013.
Mr. Masatoshi Yano satisfies the requirements of an independent auditor under therules of the Tokyo Stock Exchange, and has been reported thereto as an independent

- 22 auditor. If his appointment is approved at this Ordinary General Meeting of
Shareholders, he will continue to serve as an independent auditor.

Note 1: The Company entered into an agreement with Mr. Hideki Amano and Mr. Masatoshi
Yano to limit liability for damages set forth in Article 423, paragraph 1 of theCompanies Act, pursuant to Article 427, paragraph 1 thereof. The limit on the liability
for damages under the said agreement will be the minimum limit of liability
prescribed in Article 425, paragraph 1 of the Companies Act. If their appointment isapproved, the Company will continue the aforementioned liability limitationagreement with them.
Note 2: The Company has entered into a directors and officers liability insurance (D&O
insurance) policy with an insurance company, with all Corporate Auditors of theCompany as the insured, as prescribed in Article 430-3, paragraph 1 of the Companies
Act. The details of the insurance policy are as described in the Business Report, “4.
Matter related to officers, (3) Overview of directors and officers liability insurance.” If
the appointment of the candidates is approved, each candidate will be included as aninsured under the insurance policy. The Company plans to renew the insurance policy
with the same conditions during the term of office of each candidate.

- 23 [For reference]<Decision process of the nomination of the Director and Corporate Auditor candidates>
In order to procure the objectivity and transparency of the process to nominate officer candidates
and to determine compensation for officers, the Company established the Corporate GovernanceCommittee, a majority of the members of which are independent outside officers, as an advisory
body for the Board of Directors.
The nomination of the Director candidates listed in Proposal 2 and the Corporate Auditor candidates
listed in Proposal 3 were determined by the Board of Directors after being deliberated on by thatcommittee.

<Skills of Directors and Corporate Auditors (tentative) after this Ordinary General Meeting of
Shareholders>
Skills and experience

Positions after
this Meeting(tentative)

GenderShinji
Hattori

Chairman &Group CEOGroup CCO

Shuji
Takahashi

President

Name

Akio Naito
Takahiro
Naito
Jun Sekine
Taku
Yoneyama
YasukoTerauraNoboru
Saito
Hideki
KoboriHaruhikoTakagiTakashi
Nishimoto
HidekiAmano
Masatoshi
Yano
Kenji
Sakurai

Corporate
management

Brand
culture

Male

○

○

Male

○

○

○

○

Director, Senior
Executive Vice Male
President
Director, Senior
Executive Vice Male
President
Director, Senior
Executive Vice Male
President
Director,
Executive Vice Male
President
OutsideFemaleDirector
OutsideMale
Director
OutsideMale
DirectorStanding
Corporate
Male
AuditorStanding
Corporate
Male
AuditorOutsideCorporate
Male
AuditorOutsideCorporate
Male
AuditorOutsideCorporate
Male
AuditorMarketing Technology

Finance &Accounting

Legal & Risk
management

○

○

○
○

○
○

○

○

○

○

○

○

○

○
○

○

○

○
○
○

○

○
○

○

○

○
○

○
○

Global

○

○

○

○

○

○

○
○

○

- 24 Proposal 4: Revision of Upper Limit of Stock Compensation, etc. for Directors
1. Reasons for proposal and reasons for appropriateness thereof
The Company received approval for a BBT (Board Benefit Trust), a stock compensation plan (the“Plan”) for the Company’s Executive Directors (excluding Non-Executive Directors and Outside
Directors), at the 155th Ordinary General Meeting of Shareholders held on June 29, 2016.
Subsequently, following the introduction of the system of executive officer (senior vice president) on
June 29, 2022, Executive Officers were added to the persons eligible for the Plan, and the Plan was put
into operation (Executive Directors and Executive Officers eligible for the Plan are hereinafter referred
to as “Directors, Etc.”).
The Plan aims to enhance the awareness of the Directors, Etc. to contribute to improve businessperformance and increase corporate value of the Company in the medium- to long-term, by further
clarifying the link between their compensation and medium- to long-term performance and stock
value, and by the Directors, Etc. sharing interest with our shareholders.
In July 2022, the Company revised its Directors, Etc. compensation plan to further realize the above
objectives, and increased the ratio of stock compensation in the total amount of compensation paid to
Directors, Etc. Accordingly, taking into consideration future fluctuations in the Company’s stock price,
the Company proposes to revise the upper limit of funds to be contributed by the Company for every
three fiscal years (the “Target Period”) and the maximum number of points to be awarded to Directors,
Etc.
In light of the purpose of the Plan and the Company’s “Policy for determining compensation for
Directors and Executive Officers (Senior Vice Presidents)”, the Company believes that the contents ofthis proposal are appropriate.
The Company requests approval of this proposal, separate from the amount of compensation for
Directors approved at the 155th Ordinary General Meeting of Shareholders held on June 29, 2016 (420
million yen or less per year, not including employee salaries).
The Executive Directors eligible for the Plan will be six (6), if Proposal 2: “Election of Nine (9)Directors” is approved and resolved as it is originally proposed.
2. Details of revisions
The Company acquires through a trust (the trust created under the Plan hereinafter being referred to as
the “Trust”) the Company’s shares reasonably expected to be required in order to provide the sharesfor each Target Period. The upper limit of the amount of contribution by the Company will be revised
from 240 million yen to 540 million yen (including 390 million yen for the Company’s Executive
Directors’ portion), and the maximum total number of points to be awarded to Directors, Etc. will berevised to 62,000 points (including 45,000 points for the Company’s Executive Directors’ portion), an
increase from 36,000 points per fiscal year (note: the maximum number of points to be awarded to
Directors was 180,000 points before the reverse stock split implemented on October 1, 2017).
3. Outline of the revised Plan
(1) Outline of the Plan
The Plan is a performance-based stock compensation plan where the Company’s shares are acquired
through the Trust with funds contributed by the Company, and the Company’s shares and cash
equivalent to the market value of the Company’s shares (the “Company Shares, Etc.”) are provided to
the Directors, Etc. through the Trust in accordance with the “Rules for Delivery of Shares to Officers”
stipulated by the Company. The time at which a Director, Etc. receives the Company Shares, Etc.
shall, in principle, be when he or she retires from office.

- 25 (2) Persons eligible for the Plan
The persons eligible for the Plan shall be Executive Directors (excluding Non-Executive Directors andOutside Directors) and Executive Officers of the Company.
(3) Upper limit of the amount of contribution by the Company to the Trust
The Company has contributed cash to the Trust up to a limit of 240 million yen as the funds required
for the Target Period until now. Subject to the approval of this proposal, the Company will make an
additional contribution to the Trust up to a limit of 540 million yen (including 390 million yen for theCompany’s Executive Directors’ portion) for the Target Period from the fiscal year ended March 31,
2023 to the fiscal year ending March 31, 2025 and in each subsequent Target Period. However, inmaking such additional contribution, if there are any shares of the Company (excluding theCompany’s shares corresponding to the number of points awarded to the Directors, Etc. pursuant to(5) below, which have not been delivered to them) and cash remaining in the trust assets on the day
immediately preceding the commencement of the Target Period for which such additional contribution
is to be made (the “Remaining Shares, Etc.”), the Remaining Shares, Etc. shall be allocated to thesource of delivery to be made under the Plan for the Target Period, and the upper limit of amount that
the Company may additionally contribute in the Target Period shall be 540 million yen (including 390
million yen for the Company’s Executive Directors’ portion) less the amount of the Remaining Shares,
Etc. (the value of shares shall be the amount equivalent to the market value as of the day immediately
preceding the commencement of the relevant Target Period).
(4) Method of acquisition of the Company’s shares
The Trust will acquire the Company’s shares through stock markets or by subscribing to treasury
shares of the Company.
(5) Specific details of the Company Shares, Etc. to be delivered to Directors, Etc.
In each fiscal year, the Company will award points to each Director, Etc. in such number to be
determined based on his or her position, the degree of achievement of the medium- and long-term
performance targets, and other factors in accordance with the “Rules for Delivery of Shares to
Officers.”
The total number of points awarded to the Directors, Etc. in each fiscal year will be a maximum of
62,000 points (including 45,000 points for the Company’s Executive Directors’ portion).
Upon the delivery of Company Shares, Etc. under (6) below, one point awarded to a Director, Etc. will
be converted to one common share of the Company (however, if a stock split, allotment of shares
without contribution, or reverse stock split is conducted with respect to the Company’s shares, themaximum number of points and the number of points already awarded or the conversion ratio will be
adjusted in a reasonable manner depending on the ratio or other factors of such conduct).
(6) Timing of delivery to the Directors, Etc.
If a Director, Etc. who has retired from office meets the beneficiary requirements stipulated in the“Rules for Delivery of Shares to Officers,” he or she will be able to receive the Company’s sharesfrom the Trust, in principle, after his or her retirement in proportion to the accumulated number ofpoints awarded until his or her retirement from office, by taking the prescribed procedures todetermine the beneficiary. However, if a Director, Etc. meets the requirements stipulated in the “Rules
for Delivery of Shares to Officers,” the Company may pay him or her cash equivalent to the market
value of a certain percentage of such shares, instead of delivering the Company’s shares.
Please note that the Trust may sell the Company’s shares to carry out a cash delivery. If a Director,
Etc. who has been awarded points is dismissed or commits an act that causes material damage to the- 26 Company or other similar misconduct, the Company may reduce all or part of the shares and money tobe paid to him or her.
[For reference]<Comparison of structure of compensation for Directors, Etc. (before and after revisions to the compensation
plan; *at the time of standard performance)>
Performance-based compensation, etc.

Fixed compensation
Basic compensation

Bonuses

Stock compensation■ Chairman and President
Before revision:
71%

14%

14%

After revision:
20%

20%

60%

■ Executive Directors other than Chairman and President and Executive Officers

Before revision:
77%

11.5% 11.5%

After revision:
70%

15%

15%

<Outline of the revision of the stock compensation plan＞

Eligible persons
Upper limit of the amount ofcontribution by the Company to
the Trust for each three fiscal
years
Maximum total number ofpoints to be awarded to
Directors, Etc. each fiscal year

Upon introduction of
the plan (June 2016)
Executive Directors(Executive Officers
added in July 2022)

After this General Meeting of
Shareholders (planned)
Executive Directors andExecutive Officers

240 million yen

540 million yen(including Executive Directors’
portion of 390 million yen)

36,000 points

62,000 points (*)(including Executive Directors’
portion of 45,000 points)

Note: The percentage of the number of shares corresponding to 62,000 points to the total number ofshares issued (as of March 31, 2023; after deducting treasury shares) is approximately 0.1%.

- 27 -

[Translation][Attached Documents]
Business Report for the Fiscal Year Ended March 2023 (From April 1, 2022 To March 31, 2023)
1.

Matters related to current status of the Corporate Group(1)

Business developments and results

In the world economy during the fiscal year ended March 31, 2023, many markets experienced a distinct
slowdown due to inflationary concerns against the backdrop of factors such as rising prices primarily due to a
concurrent global economic recovery since the previous fiscal year, as well as soaring international commodity
prices due to the impact of the situation in Ukraine, and progress in monetary tightening in various countries. In
China, although there were supply chain disruptions due to the lockdown under the government’s “zero-COVID”
policy, the policy was abolished during the fiscal year, and the economy has been on a recovery trend thereafter.
Meanwhile, the Japanese economy is on a gradual recovery trend, due to a marked recovery in personal
consumption as the impact of the novel coronavirus eased, as well as an expected return of demand from foreign
tourists, despite a sense of stagnation caused by the global economic downturn and rising prices.

Amid these circumstances, the Company launched the five-year Eighth Mid-Term Management Plan, “Seiko
Milestone 145 = SMILE145,” which began in the fiscal year ended March 31, 2023, and proceeded with businessdevelopment centered on the three newly defined strategic domains of “Emotional Value Solutions Business (EVSBusiness),” “Devices Solutions Business (DS Business),” and “Systems Solutions Business (SS Business).”
In the EVS Business, the Watches Business and WAKO Business for the Japanese market recovered significantly
on the back of improved personal consumption. In the Watches Business for overseas markets, net sales also grewin many countries and regions. Although the DS Business continued to increase net sales by steadily capturing
favorable demand in the first half of the fiscal year, market conditions deteriorated sharply from the third quarter
onward, resulting in a sharp slowdown in net sales, especially for devices for consumer products. In the SS
Business, net sales exceeded those of the previous fiscal year, thanks to successful efforts to diversify business andexpand the stock business. As a result, for the fiscal year ended March 31, 2023, the Group reported consolidated
net sales of 260.5 billion yen, a year-on-year increase of 9.7%.
On an overall consolidated basis, domestic net sales came to 132.6 billion yen (a year-on-year increase of 6.6%),
and overseas net sales were 127.8 billion yen (a year-on-year increase of 13.2%). Overseas net sales comprised
49.1% of net sales overall.
Advertising and promotion expenses for the fiscal year ended March 31, 2023 increased by approximately 15%
from the previous fiscal year. Although labor costs and other selling, general and administrative expenses also
increased year on year, operating profit improved by 2.4 billion yen year on year to 11.2 billion yen (a year-onyear increase of 28.1%), as a result of an increase in net sales. Non-operating income and expenses were generally
even, and ordinary profit increased by 1.2 billion yen year on year to 11.1 billion yen (a year-on-year increase of

- 28 -

12.4%). Profit attributable to owners of parent was 5.0 billion yen (a year-on-year decrease of 21.6%), as a resultof posting 0.2 billion yen in gain on sale of non-current assets as extraordinary income, 1.7 billion yen in
extraordinary losses mainly due to loss on sale of investment securities, and a 1.2 billion yen increase in income
taxes - deferred from the previous fiscal year.
The average exchange rates for the current fiscal year were 135.5 yen to 1 US dollar and 141.0 yen to 1 euro.

Results for each segment are as follows.

To realize the Group 10-year vision, the Company has established three strategic domains (the Emotional Value
Solutions domain, the Devices Solutions domain, and the Systems Solutions domain) based on the solutions it
provides, and formulated and implemented strategies for each domain under the Eighth Mid-Term Management
Plan, “SMILE145.” Accordingly, reported segments have been changed from “Watches Business,” “Electronic
Devices Business,” and “Systems Solutions Business” to the three strategic domains, “Emotional Value Solutions
Business,” “Devices Solutions Business,” and “Systems Solutions Business.” The previous Watches Business andsome of the businesses included in the previous Electronic Devices Business, together with the Time Creation
Business and WAKO Business in the Time Creation, WAKO and other Businesses, make up the Emotional Value
Solutions Business. The Devices Solutions Business consists of the businesses previously in the Electronic
Devices Business, other than those that have been changed to the Emotional Value Solutions Business. There are
no changes from the previous business in the Systems Solutions Business.

a. Emotional Value Solutions Business (EVS Business)
Net sales in the EVS Business came to 170.7 billion yen, a year-on-year increase of 19.9 billion yen, or 13.2%.
Net sales of completed watches in Japan grew significantly year on year, especially for Grand Seiko and Seiko
Prospex, due to a recovery in personal consumption. Overseas, net sales in the U.S. also rose significantly, driven
by Global Brands such as Grand Seiko, and in Europe, net sales in the U.K., France, Germany, and other countries
grew significantly due to favorable performance of Grand Seiko in general. Meanwhile, in China, net sales
decreased due to the impact of the lockdown and sluggish personal consumption that followed.
In the watch movements business, net sales increased partly due to the depreciation of the yen.
Net sales in the WAKO Business grew significantly year on year with the recovery of the Japanese market for
high-end products. However, net sales of clocks for the Japanese market and system clocks were sluggish.
Operating profit increased by 3.2 billion yen year on year, resulting in operating profit of 11.5 billion yen (a yearon-year increase of 39.6%) due to the increase in net sales and the depreciation of the yen.

- 29 -

b. Devices Solutions Business (DS Business)
Net sales in the DS Business came to 64.5 billion yen, a year-on-year increase of 5.7%. Operating profit was 5.0
billion yen, a year-on-year decrease of 10.3%.
From the third quarter onward, although a slowdown trend became apparent in orders for devices for use in
consumer and general-purpose products, favorable performance continued for micro batteries for medical
equipment, high-performance metals for semiconductor production equipment, and other products. However,operating profit remained lower while net sales grew due to production adjustments and soaring energy costs.
c. Systems Solutions Business (SS Business)
Net sales in the SS Business came to 36.6 billion yen, a year-on-year increase of 2.2 billion yen, or 6.4%.
Operating profit was 4.3 billion yen, a year-on-year increase of 0.4 billion yen, or 10.7%.
In some industries, such as food service, a trend toward recovery from the coronavirus pandemic was observed. In
addition, businesses supporting digital infrastructure, such as performance management and security-related
business and other businesses, performed steadily throughout the year, and system-related and payment-related
businesses also grew, resulting in continued year-on-year growth in both net sales and operating profit for 28
consecutive quarters.

- 30 -

(2)

Issues that need to be addressed by the Corporate GroupIn 2021, when the Company celebrated the 140th Anniversary of its foundation, the Company has clarified its
purpose: “As a company trusted by society, we will constantly pursue innovation, inspiring people everywhere,
and creating a future full of smiles.” This purpose is the starting point for all of the Company’s activities, which
are based on its corporate philosophy of being “A Company that is Trusted by Society.”
The Company has also defined the following Group 10-year vision leading up to the 150th Anniversary in 2031.
Leveraging analog & digital synergies to offer products and services
that contribute to the creation of sustainable societies,
connecting people, things, and time throughout the world
In order to realize the Group 10-year vision, the Company has formulated the Eighth Mid-Term Management Plan
(Seiko Milestone 145 = SMILE145), which concludes in FY2026, and will promote its businesses.
1.

Positioning of SMILE145
The Eighth Mid-Term Management Plan, SMILE145, is a five-year plan formulated bybackcasting from the Group 10-year vision and aimed at FY2026, the 145th Anniversary of our
founding and the midpoint of the vision, in order to realize the Group 10-year vision, which
represents what we aim to be for the 150th Anniversary.

2.

Ideals of SMILE145
By 2026, we aim to become “A solutions company that offers high-added-value products andservices that create excitement and generate substantial profits.” The basic principle throughwhich we will achieve this is the “MVP Strategy = Moving, Valuable, Profitable,” in which wewill focus on high-added-value, highly profitable products that move people.

3.

Our value creation story for the years leading up to 2031
Based on an analysis of the environment surrounding the Company Group, from the perspectivesof both opportunity and risk, the Company is engaging in business activities that help solve social
issues, with the Group purpose as the starting point, and contributing to the Group’s steady
growth and the development of a sustainable society. As the Group’s growth strategy, theCompany has promoted the Group core strategies (SDGs, human resource, branding, DX, and
R&D). In addition, the Company has established three strategic domains (Emotional Value
Solutions, Devices Solutions, and Systems Solutions), in which the Company Group’s strengths
lie, and will implement strategies in these domains to capture business opportunities in four areas(Emotional Consumption, Society 5.0, Wellness, and Society/Environment). Furthermore, bystriving to generate Group synergies, the Company will aim to create social value and achieve theCompany Group’s growth.

- 31 -To accomplish this, the Company will promote the “MVP Strategy” for achieving what we aim to
be in 2026, which was defined by backcasting from the Group 10-year vision.
4.

Group core strategies
The Company Group has defined five strategies across the Group as Group core strategies, andwill promote its growth strategy.

(i)

SDGs strategy
Starting with its Statement of Purpose, the Seiko Group will strive to use its business activities,
which aim to create WITH, to realize the Group’s steady growth and contribute to thedevelopment of a sustainable society.
(“WITH” = Well-being: A Better Life, Inclusion: For All People, Trust: Certainty and Trust, andHarmony: Harmony with the Earth)(ii)

Human resource strategy
The Company Group will build an organizational culture and systems that turn failure into value,with human-resource development as a pillar of its growth strategy, by improving engagement
and promoting diversity.

(iii)

DX strategy
The Company Group will make full use of digital technology and data to create high-added-value
business that is customer-centric and that places an emphasis on the customer experience.

(iv)

R&D strategy
The Company Group will further evolve its technology and create new value by combining its
long-cultivated technological philosophy of “Craftsmanship, Miniaturization and Efficiency” withdigital technology.

(v)

Branding strategy
Seiko will face social issues with the aim of enriching the hearts of people around the world, andcreate a future full of smiles through its social, technical, and emotional value.

5.

Domain-specific ideals(i)

Emotional Value Solutions (EVS) Domain- Create products and services with high functional, emotional, and social value, with a sense of
beauty and meticulous attention to detail that excite customers- Improve our brand and corporate value by selling products that are partners for life, and can be- 32 -

enjoyed together in times of joy, through a superior customer experience(ii)

Devices Solutions (DS) Domain- Offer the high functionality and quality demanded by society, with devices solutions that are
created through technical innovation- Realize Society 5.0 (resolution of social issues by integrating cyberspace and physical space)(iii)

Systems Solutions (SS) Domain- Achieve sustainable growth by offering social innovation through one-stop ICT solutions- Increase the value of customers, society, and the Group by continuously offering value in linewith customer needs

6.

Financial policy and cash allocation
Under SMILE145, the Company Group will increase its growth investment capabilities byimproving the gross profit margin and make investments to establish sustainability, with the aimof improving the financial constitution based on capital costs and reliably providing returns toshareholders. The investment policy aimed at establishing sustainability will consist of threeelements: active investment based on sales growth potential and an ROIC, the establishment of astable revenue base, and taking on the challenges of new business domains. Led by this policy, theCompany will engage in investments in branding, R&D, manufacturing facilities, M&As, DX,
human resources, etc., in order to achieve the Group’s growth.

7.

Group-wide management targets
SMILE145 focuses on medium- and long-term profitability and growth. Its objective is to ensure
the ongoing sustainability of the Company Group. Financial targets for FY2026 are consolidated
operating profit of 18.0 to 20.0 billion yen, an increase in consolidated gross profit margin of 5.0
percentage points (compared to FY2021), and a consolidated ROIC of over 6.5%. Regarding ESG
indicators, the Company aims to reduce CO2 emissions under SCOPE 1 and 2 by 25% (comparedto FY2020) in FY2026. In addition, the Company uses employee engagement surveys that are
carried out from FY2022 to clearly prioritize issues, and strives to improve engagement scores byworking to address these issues.

8.

The environment surrounding our business and initiatives for solving issues(i)Group core strategies
In our SDGs strategy, the Company Group has implemented decarbonization and climate change
response initiatives, including reducing CO2 emissions through the use of renewable energy at

- 33 -

business sites in Japan, understanding the Company Group’s SCOPE 3 emissions, and making
TCFD (Task Force on Climate-related Financial Disclosures) disclosures. We will continue toreduce CO2 emissions and enrich our TCFD disclosures while applying for SBT (Science Based
Targets) certification. We will also carry out initiatives aimed at evaluating and reducing humanrights risks, and formulate and implement responsible procurement rules.
In our human resources strategy, we have conducted DX training for Group employees in Japanand proceeded with our efforts on DX human resources development. We will also develop
entrepreneurial personnel who apply managerial perspectives. During the fiscal year underreview, we conducted an engagement survey for the first time. Based on the results of this survey,
we will clarify the prioritization of the issues that we will address, and we will implement various
initiatives to increase engagement scores and enrich our human capital. In addition, we will makereforms to our systems and carry out awareness-raising activities to promote the use of childcare
leave by male employees, and we also promote diversity.
In our DX strategy, we worked to improve our customer experience and transition to a data-driven
business model through measures such as promoting CRM. We will further deepen our digitalsales and marketing as we create new businesses such as e-commerce in the metaverse.
In our R&D strategy, we have increased the value added by our MVP products and services, andadvanced and streamlined our manufacturing, contributing to greater profitability in foundation
domains such as emotional consumption and Society 5.0. We will continue to accelerate ourtechnology development in the future. In the expansion domains of wellness andsociety/environment, we are carrying out R&D aimed at business creation.
In our branding strategy, we have conducted PR and branding initiatives that promote our social,technical, and emotional value. We have also worked to increase integration with B-to-B businessand to evolve our branding into one that provides moving experiences.
(ii)

Strategic domains
Many aspects of the economic environment have had a positive impact on the Company Group’sbusiness, such as the depreciation of the yen, the post-coronavirus pandemic economic recovery
in Japan, and the return of demand from foreign tourists. Meanwhile, with respect to devices, thevigorous demand of the first half of the fiscal year slowed down sharply in the second half, andthe market environment changed suddenly. Amidst this environment, in the EVS Domain, we
steadily increased the sales composition ratio of MVP products in the Watches Business, where
sales of Global Brands increased in both the domestic and overseas markets, and in the WAKO
Business, where demand for high-end products was strong. As a result of these efforts, the grossprofit margin in the EVS Domain also improved by roughly 2 percentage points year on year. We
will continue to develop high-added-value products and implement other measures to improve

- 34 -

our MVP ratios. In the DS Domain, there were sudden changes in the market environment that
had a profound impact on the business assumptions of SMILE145. Although sales of MVP
products struggled, the sales composition ratio of MVP products rose as expected, and we wereable to maintain roughly the same level of the gross profit margin as the previous fiscal year. In
the DS Domain, in order to respond to these changes in the business environment, we havereexamined our business strategies and quickly revised our strategies in some businesses. In
addition, we will strive to improve our business revenue by developing MVP products that would
not be affected by these changes in the environment. In the SS Domain, we have expanded thestock business and promoted diversification. As a result, our MVP ratio has steadily increased,
and the gross profit margin has improved by roughly 2 percentage points. In the future, we willcontinue to expand the stock business and promote diversification, while also considering
potential M&As, to gain stable revenue. Overall, businesses in which MVP ratios rose have also
seen growth in the gross profit margin. As a result, the gross profit margin has improved in linewith targets on a consolidated basis, and we see the fiscal year under review, the first year of the
Mid-Term Management Plan, as having been one in which we have succeeded at strengthening
the Group’s overall business.
We consider FY2023, the second year of SMILE145, as being an extremely important fiscal year
for achieving SMILE145. We will thoroughly revise and accelerate our strategies based on thefirst year results, aiming to achieve a consolidated total of 12.0 billion yen in operating profit. Our
targets for individual domains are 13.0 billion yen for the EVS Domain, 4.8 billion yen for the DS
Domain, 4.8 billion yen for the SS Domain, and -10.6 billion yen for others and adjustments. We
also aim to improve our consolidated gross profit margin by 1 percentage point or more.
The progress we have made for our main KPI under SMILE145 is indicated below.
Consolidated Management Indicators (KPI)
FY2021Results
Consolidated
operating profit
Consolidated grossprofit margin(Billions of yen)
FY2022
Results

FY2023
Forecasts

8.7

11.2

12.0

18.0 to 20.0

41.8%

42.9%

43.9%

46.8%

Management Indicators by Domain (KPI)
FY2021Results
Operating profit
EVS
DS
SS

FY2026
SMILE145(Billions of yen)
FY2022
Results

FY2023
Forecasts

FY2026
SMILE145

8.2

11.5

13.0

14.5 to 15.0

5.6
3.9

5.0
4.3

4.8
4.8

7.5 to 8.0
6.5 to 7.0

- 35 -

(3)

Financing
There are no matters of special note.

(4)

Capital expenditures
The Company invested 3,682 million yen in the Emotional Value Solutions Business and 2,641 million
yen in the Devices Solutions Business primarily to reinforce and renew manufacturing and other facilities,
and 964 million yen in the Systems Solutions Business primarily to acquire software for marketing
purposes, respectively.

- 36 -

(5)

Trends in assets and profit/loss
The operating results and assets in the fiscal year ended March 31, 2023 and the past three years are as
follows.
(i) Consolidated
Item(Millions of yen)
FY2019FY2020

FY2021

FY2022

Net sales

239,150

202,671

237,382

260,504

Ordinary income

7,004

633

9,939

11,167

3,394

3,475

6,415

5,028

82

84

156

122

Total assets

299,990319,671327,533

355,915

Net assets

104,273

113,082

121,624

131,748

Net assets per
share
(Yen)

2,500

2,709

2,911

3,145

Net income
attributable toowners of parent
Net income per
share
(Yen)

(ii) Non-consolidated
Item
Operatingrevenue
Ordinary
income(Millions of yen)
FY2019FY2020

FY2021

FY2022

12,031

11,301

12,043

15,312

3,027

809

-473

1,560

Net income

3,124

1,560

3,257

2,562

Net income per
share
(Yen)

76

38

79

62

Total assets

176,961

192,853

187,644

201,299

Net assets

50,68155,495

57,12057,534

Net assets per
share
(Yen)

1,229

1,345

1,384

1,393

Note 1 Net income per share is calculated on the basis of the average number of shares during the fiscal
year.
Note 2 Treasury shares are indicated as a deduction item on net assets, and the values of net income pershare and of net assets are calculated by deducting the number of treasury shares from theaverage number of shares during the fiscal year and the total number of issued shares,
respectively.

- 37 -

Note 3 The Company has applied “Accounting Standard for Revenue Recognition” (AccountingStandards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and relevant guidancefrom the beginning of FY2021.

(6)

Status of major parent companies and subsidiaries(i) Relationship with parent companies
Not applicable.

- 38 -

(ii) Status of major subsidiaries
Company NameSEIKO WATCHCORPORATIONCRONOS INC.
Morioka Seiko Instruments
Inc.
Grand Seiko Corporation ofAmerica
Seiko Watch of America
LLC
SEIKO Hong Kong Ltd.
SEIKO Manufacturing(H.K.) Ltd.
SEIKO Manufacturing(Singapore) Pte. Ltd.

Paid-in Capital

CapitalDetails of Major BusinessContribution Ratio

Activities

5,000 million yen

100.0%

200 million yen

100.0%(*)

2,000 million yen

100.0%(*)

Manufacturing watches

US$2,000

100.0%(*)

Sales of watches

US$112,000

100.0%(*)

Sales of watches

HK$129,300,000

100.0%(*)

HK$128,700,000

100.0%(*)

S$32,288,000

100.0%(*)

Sales of watches
Sales of watches and otherproducts

Sales of watches and otherproducts
Manufacturing and sales ofwatches
Manufacturing watches
Manufacturing and sales of

SEIKO Time Creation Inc.

500 million yen

100.0%

clocks, systems clocks andother products
Sales of high-end jewelry,

WAKO Co., Ltd.

2,500 million yen

100.0%

apparel, and fashion
accessories
Manufacturing and sales of

Seiko Instruments Inc.

9,756 million yen

100.0%

electronic devices and otherproducts

Seiko Future Creation Inc.

100 million yen

100.0%(*)

Group research anddevelopment, etc.
Development, sales, etc. of

SEIKO Solutions Inc.

500 million yen

100.0%

information andtelecommunication systems,

etc.
Note: Asterisked ratios in the “Capital Contribution Ratio” column include indirect holdings.

- 39 -

(7)

Major business segments of the Corporate GroupThe Company is a holding company. The details of business activities, main merchandise and finishedgoods of each business are as follows:Business Segment
Emotional Value Solutions
Business

Details of Business Activities

Main merchandise and products
Watches, watch movements, clocks,

Manufacturing and sales

high-end jewelry, apparel, fashion
accessories, systems clocks
Micro batteries and materials, quartz

Devices Solutions Business

Manufacturing and sales

crystals, precision turned parts, printers,
quartz oscillator ICs
Digital trust solutions, network solutions,
IT management solutions, IoT solutions,

Systems Solutions Business

Development and sales

wireless network solutions, customer
experience (CX) solutions, cashlesssolutions

Others(8)―

Shared services, real estate leasing,othersMajor business locations of the Corporate GroupThe Company has its headquarters in Chuo-ku, Tokyo, and the major location of each business is asfollows:
Business Segment(9)

Location

Emotional Value Solutions Business

Chuo-ku, Tokyo

Devices Solutions Business

Mihama-ku, Chiba-shi, Chiba

Systems Solutions Business

Mihama-ku, Chiba-shi, Chiba

OthersChuo-ku, Tokyo

Status of employees of the Corporate GroupThe number of employees of the Company and its consolidated subsidiaries is 11,843 (a decrease of 141
from the previous fiscal year-end).

(10)

Major lenders and amounts borrowed
Lenders

Outstanding Balance of Loans(Millions of yen)Mizuho Bank, Ltd.

44,748

Sumitomo Mitsui Banking Corporation

23,240Aozora Bank, Ltd.

13,773

- 40 -

2.

Matters related to the Company shares(1)

Total number of shares authorized to be issued

149,200,000 shares(2)

Total number of shares issued and outstanding

41,404,261 shares(including 60,884 treasury shares)(3)

Number of shareholders at the end of the fiscal year ended March 31, 2023

(4)

Major shareholders (top 10)
Name

12,627

Number of shares

Percentage ofheldshares held
shares%Sanko Kigyo K.K.

4,436,500

10.7

The Master Trust Bank of Japan, Ltd. (Trust Account)

4,302,800

10.4

Etsuko Hattori

3,613,908

8.7

Custody Bank of Japan, Ltd. (Trust Account)

2,480,700

6.0

Shinji Hattori

2,279,289

5.5

The Dai-ichi Life Insurance Company, Limited

1,800,000

4.4

Hideo Hattori

1,622,455

3.9

SHIMIZU CORPORATION

744,200

1.8

FUJI BUILDING Co., Ltd.

671,400

1.6

Hirohisa Hattori

595,175

1.4

Note: Percentages of shares held have been calculated with treasury shares excluded and rounded to
one decimal place.
(5)

Shares issued to the Company’s officers during the fiscal year under review as compensation for the
execution of their duties
Type and number of shares
Directors (excluding
Outside Directors)

3.

Number of share recipients

The Company’s common shares
18,700 shares

Matters related to stock acquisition rights issued by the Company
Not applicable.

3

- 41 -

4.

Matters related to officers(1)

Name, etc. of Directors and Corporate Auditors (as of March 31, 2023)
Name

Position and responsibility
at the Company
ChairmanShinji HattoriGroup CEO, Group CCO(Group Chief Culture Officer)

Shuji Takahashi

Significant concurrent positions at other entities
Chairman of SEIKO WATCH CORPORATION
Chairman of WAKO Co., Ltd.

President
Director, Senior Executive

President of SEIKO WATCH CORPORATION

Vice President in charge of
Akio Naito

Emotional Value Solutions
Domain, Legal and Intellectual
Property
Director, Senior Executive

Takahiro Naito

President of Seiko Instruments Inc.

Vice President in charge ofDevices Solutions Domain
Director, Senior Executive

President of SEIKO Solutions Inc.

Vice President in charge of
Jun Sekine

Systems Solutions Domain, IT
Planning and DX Business
Promotion
Director, Executive Vice
President in charge of Financial

ShimesuTakizawa

Management and Real EstateManagement
General Manager of the
Financial Management
Department
Chairman of the Board of Tokio Marine Holdings, Inc.

Tsuyoshi
NaganoOutside Director of Central Japan Railway Company
Outside Director

Outside Director of FUJIFILM Holdings Corporation
Vice Chair of KEIDANREN (Japan Business
Federation)
Partner Attorney of Endeavour Law Office

Yasuko Teraura

Outside Director

Outside Director (Audit and Supervisory Committee
Member) of Ryosan Company, Limited

- 42 -

Noboru Saito

Outside Director

Haruhiko TakagiStanding Corporate Auditor

Takashi

Representative Director, Executive Corporate Officerof BIPROGY Inc.
Outside Corporate Auditor of OHARA INC.

Standing Corporate Auditor

Nishimoto

Certified public accountant
Hideki Amano

Outside Corporate Auditor

Outside Audit & Supervisory Board Member of Kao
Corporation
Outside Auditor of Mizuho Leasing Company, Limited

Masatoshi Yano

Outside Corporate Auditor

Kenji Sakurai

Outside Corporate Auditor

President of Seiwa Sogo Tatemono Co., Ltd.
Representative Director, President of THE DAI-ICHI
BUILDING CO., LTD.

Note 1: The Company has reported to the Tokyo Stock Exchange Mr. Tsuyoshi Nagano, Ms. Yasuko
Teraura, and Mr. Noboru Saito, Outside Directors, and Mr. Hideki Amano, Mr. Masatoshi Yano,and Mr. Kenji Sakurai, Outside Corporate Auditors, as independent directors/auditors.
Note 2: Mr. Haruhiko Takagi and Mr. Takashi Nishimoto, Standing Corporate Auditors, have experiencein accounting and have reasonable-degrees of knowledge about finance and accounting. Mr.
Hideki Amano, Outside Corporate Auditor, is a certified public accountant, and has reasonabledegree of knowledge about finance and accounting.
Note 3: Changes in Directors and Corporate Auditors of the Company during this fiscal year are as
follows:(1)
Mr. Akio Naito and Mr. Takahiro Naito were newly appointed as Directors, Mr. Noboru
Saito was newly appointed as Outside Director, and Mr. Kenji Sakurai was newly
appointed as Outside Corporate Auditor and assumed office at the 161st Ordinary
General Meeting of Shareholders held on June 29, 2022.
(2)

Mr. Yoshinobu Nakamura, Vice Chairman; Ms. Kiyoko Niwasaki, Executive Director;
Mr. Kazuhiko Sakamoto, Mr. Makoto Ichimura, and Mr. Tetsu Kobayashi, Directors,
retired from office due to the expiry of their terms of office, and Mr. Tomoyasu Asano,Outside Corporate Auditor, retired from office by resignation at the close of the 161st
Ordinary General Meeting of Shareholders held on June 29, 2022.

Note 4: In conjunction with the introduction of the system of executive officer (senior vice president) on
June 29, 2022, the positions of Directors changed as follows on the same date.
Name
After changes
Before changes
Akio Naito

Director, Senior Executive Vice President―

Takahiro Naito

Director, Senior Executive Vice President―

Jun Sekine

Director, Senior Executive Vice President

Director

Shimesu Takizawa

Director, Executive Vice President

Executive Director

Note 5: Changes in significant concurrent positions at other entities of Directors and Corporate Auditorsof the Company during and after this fiscal year are as follows:- 43 -

(1)

Mr. Shimesu Takizawa, Director, Executive Vice President, assumed office of Presidentof SEIKO Time Creation Inc. as of April 1, 2023. Mr. Takizawa retired from office ofOutside Director of Jedat Inc. as of June 15, 2022.

(2)

Mr. Tsuyoshi Nagano, Outside Director, assumed office of Vice Chair of KEIDANREN(Japan Business Federation) as of June 1, 2022, Outside Director of Central Japan
Railway Company as of June 23, 2022, and Outside Director of FUJIFILM Holdings
Corporation as of June 29, 2022.

(3)

Ms. Yasuko Teraura, Outside Director, assumed office of Outside Director (Audit andSupervisory Committee Member) of Ryosan Company, Limited as of June 24, 2022.
Ms. Teraura retired from office of Outside Director of Neturen Co., Ltd. as of June 28,
2022.

(4)

Mr. Hideki Amano, Outside Corporate Auditor, assumed office of Outside Auditor ofMizuho Leasing Company, Limited as of June 24, 2022. Mr. Amano retired from officeof Outside Director of Ajinomoto Co., Inc. as of June 23, 2022.

Note 6: The BIPROGY Group, at which Mr. Noboru Saito, Outside Director, has a concurrent position,and the Company Group have transactions in the Systems Solutions Business. However, thesetransactions constitute less than one percent of BIPROGY Inc. and the Company’s consolidated
net sales, and are thus insignificant.
Note 7: Seiwa Sogo Tatemono Co., Ltd., at which Mr. Masatoshi Yano, Outside Corporate Auditor, has aconcurrent position, and the Company Group have transactions related to real estate management.
However, these transactions constitute less than one percent of net sales of Seiwa Sogo Tatemono
Co., Ltd. and the Company’s consolidated net sales, and are thus insignificant.
Note 8: THE DAI-ICHI BUILDING CO., LTD., at which Mr. Kenji Sakurai, Outside Corporate Auditor,
has a concurrent position, and the Company Group have real estate leasing transactions. However,these transactions constitute less than one percent of net sales of THE DAI-ICHI BUILDING CO.,LTD. and the Company’s consolidated net sales, and are thus insignificant.
Note 9: There is no other special relationship of interest between the Company and the entities at which
Outside Directors or Outside Corporate Auditors hold concurrent positions.
Note 10: Responsibilities of Directors changed as follows after the end of the fiscal year under review.
Position
Name
Responsibility
Date of changes
In charge of Accounting
April 1, 2023
General Manager of the
Director, Executive
Shimesu Takizawa Accounting Department
Vice President
May 11, 2023
In charge of Accounting

- 44 -

Note 11: As of April 1, 2023, the Executive Officers (Senior Vice Presidents) without concurrent positions
as Directors are as follows.
Position
Name
Responsibility
Executive Vice
In charge of Corporate Branding, Public
Kiyoko Niwasaki
President
Relations, and ESG・SDGs Promoting
In charge of Secretaries, Strategy Planning, andExecutive Vice
Makoto Ichimura
Shareholder Relations
President
General Manager of the Secretaries Office
Executive Vice
General Manager of Corporate Management
Taku Yoneyama
President
Division
Deputy General Manager of Corporate
Senior Vice
Management Division
Naoki Tajima
President
In charge of Human Resources, Group HR
Strategy Planning, and General Affairs
Deputy General Manager of Corporate
Management Division
Senior Vice
In charge of Financial Planning and Corporate
Hiromi Nakagawa
President
Strategy Planning
General Manager of the Financial Planning
Department(2)

Overview of agreements limiting liability

The Company entered into an agreement with each of Mr. Tsuyoshi Nagano, Ms. Yasuko Teraura, and Mr. Noboru
Saito, Outside Directors, and Mr. Hideki Amano, Mr. Masatoshi Yano, and Mr. Kenji Sakurai, Outside Corporate
Auditors, to limit liability for damages set forth in Article 423, paragraph 1 of the Companies Act, pursuant to
Article 427, paragraph 1 thereof. The upper limit of liability for damages under the agreement shall be theminimum limit of liability prescribed in Article 425, paragraph 1 of the Companies Act. The limitation on
liability is permitted only when such Outside Directors or Outside Corporate Auditors have acted in good faith andwithout gross negligence in performing their duties that caused the liability.
(3)

Overview of directors and officers liability insurance

The Company has entered into a directors and officers liability insurance (D&O insurance) policy stipulated in
Article 430-3, paragraph 1 of the Companies Act with an insurance company. The insured parties under the
insurance policy are the Company, its subsidiary Seiko Instruments Inc., its Directors, Corporate Auditors, SeniorVice Presidents, managerial personnel, and officers dispatched outside the Company. The Company and Seiko
Instruments Inc. bear the insurance premium. The insurance policy covers the insured against claims for damages
and costs of litigation arising out of the execution of business by the insured. However, we have taken measures toensure that the appropriateness of the execution of duties by directors and officers is not compromised by
excluding from coverage damage caused by criminal or intentionally illegal acts.

- 45 -

(4)Aggregate amount of compensation, etc. for Directors and Corporate Auditors
Aggregate amount by type of compensation, etc.
(Millions of yen)
Aggregate amount
Officerof compensation,

classification

etc.

Fixed

Performance-based

compensationcompensation, etc.

(Millions of yen)Stockof eligible

Bonusescompensation

officers(Monetary(Non-monetarycompensation)compensation,

Basiccompensation

Numberetc.)
Director(excluding

404

225

71

107

11

Outside Directors

31

31

-

-

3

Total

436

257

71

107

14

37

37

-

-

2

34

34

-

-

4

71

71

-

-

6

Outside Directors)

Corporate Auditor(excluding
Outside Corporate
Auditors)
Outside Corporate
Auditors
Total

Note 1: The forgoing includes five Directors and one Corporate Auditor who retired from office at theclose of the 161st Ordinary General Meeting of Shareholders held on June 29, 2022.
Note 2: “Bonuses” and “stock compensation” are paid to Executive Directors as performance-based
compensation, etc. The number of eligible recipients for the current fiscal year is 8. The amountof performance-based compensation, etc. shown in the above table is the amount of expense
recognized and the amount paid for the current fiscal year.
Note 3: Target values and actual results of indicators related to performance-based compensation, etc. forthe current fiscal year are as follows:(Bonuses)
Consolidated

Consolidated grossoperating profit

profit margin

Target values

10.0 billion yen

42.8%

Actual results

11.2 billion yen

42.9%

112.00%100.23%

Performanceachievement ratios

- 46 -

(Stock compensation)
Consolidated

Consolidated gross

Consolidated

Non-financial

operating profit

profit margin

ROIC(ESG) evaluation

Target values

10.0 billion yen

42.8%

4.1%

-8.4%

Actual results

11.2 billion yen

42.9%

3.6%

-8.4%

112.00%100.23%87.80%

100.00%

Performanceachievement ratios

Note 1: The percentages shown in the above consolidated ROIC and non-financial (ESG) evaluation
represent estimated figures as of May 9, 2023.
(5)

Matters related to the resolution of the General Meeting of Shareholders regarding compensation, etc. for
Directors and Corporate Auditors
Aggregate amounts of basic compensation and bonuses for Directors were resolved to be up to 420
million yen annually at the 155th Ordinary General Meeting of Shareholders held on June 29, 2016. At theclose of this Ordinary General Meeting of Shareholders, the number of Directors eligible to receive basic
compensation is 13 (including 2 Outside Directors), and the number of Executive Directors eligible toreceive bonuses is 6.
Basic compensation for Corporate Auditors was resolved to be up to 8 million yen monthly at the 155th
Ordinary General Meeting of Shareholders held on June 29, 2016. At the close of this Ordinary General
Meeting of Shareholders, the number of Corporate Auditors eligible to receive basic compensation is 5.
Stock compensation was resolved at the 155th Ordinary General Meeting of Shareholders held on June29, 2016 that for every three fiscal years consistent with the Mid-Term Management Plan, money paid by
the Company is up to 240 million yen and the aggregate number of shares delivered to eligible Executive
Directors is up to 540,000 shares (180,000 shares per fiscal year). At the close of this Ordinary General
Meeting of Shareholders, the number of Executive Directors eligible to receive stock compensation is 6.
The Company conducted a share consolidation by which five common shares have been consolidated into
one share as of October 1, 2017. The number of shares after the share consolidation is up to 108,000
shares (36,000 shares per fiscal year).

(6)

Policy for determining the content of compensation, etc. for Directors and Corporate Auditors[Policy for determining compensation for Directors and Executive Officers (Senior Vice Presidents)]
The Company resolved at the Board of Directors on a policy for determining the content of compensation,etc. for individual Directors and Executive Officers (Senior Vice Presidents), as a) to f) below. After being
deliberated on by the Corporate Governance Committee, a majority of the members of which are
independent outside officers, as an advisory body for the Board of Directors, the said policy wasdetermined at the Board of Directors based on the deliberations.

- 47 -a) Basic policy for compensation for Directors and Executive Officers (Senior Vice Presidents)
In determining compensation for Directors and Corporate Auditors of the Company, the basic policy is
as follows:- The Company shall secure the transparency and objectivity of the compensation and maintain theappropriated level of compensation corresponding to their roles and responsibilities.
- Aiming for sustainable growth and mid- to long-term enhancement of the corporate value of theCompany and the Company Group, the Company shall promote the execution of duties in line withthe corporate philosophy and management strategy, and motivate them to achieve corporate targets.
The level of compensation shall be determined based on results of surveys on compensation for
Directors and Corporate Auditors conducted by a third party that target peer companies similar interms of business activity and scale.
b) Compensation system for Directors and Executive Officers (Senior Vice Presidents)
Compensation for Executive Directors and Executive Officers (Senior Vice Presidents) comprises of“basic compensation” as fixed compensation, “bonuses” that are linked to performance (short-term
incentive compensation), and “stock compensation” (mid- to long-term incentive compensation).
Compensation for non-executive Directors such as Outside Directors comprises only of “basic
compensation.”c) Policy for determining the amount of compensation, etc. for individual Directors regarding basic
compensation (monetary compensation) (including the policy for the timing to provide compensation,etc. or the determination of conditions)
Basic compensation for Directors and Executive Officers (Senior Vice Presidents) of the Company
shall be monthly fixed compensation. The amount shall be determined by taking into accountcomprehensive factors, while considering the level of peer companies and the length of service, etc.,
according to their roles and responsibilities.
d) Policy for determining performance-based compensation, etc. and the content and amount of nonmonetary compensation, etc., or the calculation method for the number (including the policy for thetiming to provide compensation or the determination of conditions)
Performance-based compensation, etc. shall comprise of “bonuses” as monetary compensation and“stock compensation” as non-monetary compensation, etc.
(Bonuses)
For bonuses, a standard payment shall be the amount obtained by multiplying the basic compensation
by a coefficient determined for each position. The individual payments for Chairman and President
shall be determined by multiplying the standard payment by the payment ratio according to theperformance achievement ratio. The individual payments for Executive Directors other than Chairman
and President and Executive Officers (Senior Vice Presidents) shall be determined by adding the- 48 -

amounts obtained by multiplying the standard payments by the payment ratio according to theperformance achievement ratio, to the amounts obtained by multiplying the standard payments by thepayment ratio based on qualitative evaluations. Bonuses shall fluctuate in the range of 0 to 200%
depending on the degree of achievement of the target values.
(Stock compensation)
For stock compensation, points obtained by converting the individual benefits into the number ofshares shall be granted each fiscal year. The individual benefits shall be the amounts determined byadding the standard benefits (fixed portion) obtained by multiplying the basic compensation by acoefficient determined for each position, to the amount obtained by multiplying the standard benefits
by the payment ratio based on financial and non-financial (ESG) evaluations (performance-based
portion). The performance-based portion of the stock compensation shall fluctuate in the range of 0 to
200% depending on the degree of achievement of the target values. The guideline for the ratio of the
fixed portion and the performance-based portion shall be 50%, respectively (when the performanceachievement ratio is 100%).
Performance indicators related to the above performance-based compensation shall consist of thesignificant management indicators set forth in the Eighth Mid-Term Management Plan (SMILE145)
for the five years from FY2022 to FY2026.
Bonuses(i) Consolidated operating
Performanceindicators

profitStock compensation(i) Consolidated operating profit(ii) Consolidated gross profit margin(ii) Consolidated gross profit
margin(iii) Consolidated ROIC
(iv) ESG evaluation: CO2 emissions reduction(iii) Personal evaluations(i) and (ii) Earnings forecast

rate (SCOPE 1 and 2), etc.
(i) to (iii)

values announced at- Externally published values for the first andthe beginning of thelast fiscal years of the Eighth Mid-Termfiscal year

Management Plan
- Second through fourth fiscal years of the Plan:

Target values“Previous fiscal year’s results” + “Difference(ratio) between the current fiscal year’s planvalues and the previous fiscal year’s planvalues”(iv) CO2 emissions reduction rate (SCOPE 1
and 2)-4.2% annual reduction (vs. FY2020)

- 49 -

(Exceptions)
If an unpredictable situation (an event that significantly affects consolidated
business results or corporate value) occurs during the evaluation period, the target
value shall be revised within a reasonable range by resolution of the Board of
Directors after consulting with the Corporate Governance Committee.
The points for the current fiscal year shall be
Timing of

The portion for the current fiscal

granted at the end of June in the following year.

payment andyear shall be paid at the end of

At the time of retirement, one point shall beJune in the following year.

converted to one stock, and the Company’s

deliverystocks shall be delivered.
If Executive Director or
Executive Officer (Senior Vice
President) is dismissed or if

If the prospective recipient is dismissed or if the

Executive Director or Executive

prospective recipient commits an act that causes

Officer (Senior Vice President)

serious damage to the Company or the

Clauses forcommits an act that causes

Company Group or any other non-conformity

return ofserious damage to the Company

similar to such act before his/her retirement, allor any other non-conformity

or part of the stocks to be delivered and money

similar to such act before his/herto be paid may be reduced by resolution of theretirement, all or part of theBoard of Directors of the Company or thebonus to be paid may be reduced

Company Group.

compensation

by resolution of the Board of
Directors.

e) Policy for determining the ratio of the amount of monetary compensation, the amount of performancebased compensation, etc., or the amount of non-monetary compensation, etc. to the amount ofcompensation, etc. for individual Directors and Executive Officers (Senior Vice Presidents)
With regard to the compensation ratio of each type for Executive Directors and Executive Officers(Senior Vice Presidents), the level of peer companies shall be considered so that it will be an
appropriate ratio as an incentive to contribute to the enhancement of the corporate value of theCompany. After being deliberated on by the Corporate Governance Committee, a majority of themembers of which are independent outside officers, as an advisory body for the Board of Directors, thesaid policy shall be determined at the Board of Directors based on the deliberations. The guideline forthe compensation ratio of each type shall be as follows (when the performance achievement ratio andthe payment ratio based on qualitative evaluations are 100%):

- 50 -

Fixed compensation

Performance-based compensation, etc.

Basic compensation

Bonuses

Stock compensation

Chairman and President

1.0
(60%)

0.33
(20%)

0.33
(20%)

Executive Directors otherthan Chairman andPresident and Executive
Officers (Senior Vice
Presidents)

1.0
(70%)

0.21
(15%)

0.21
(15%)

f) Matters for determining the content of compensation, etc. for individual Directors and Executive
Officers (Senior Vice Presidents)
With regard to part of compensation for individuals, Chairman and President shall be delegated thespecific contents based on the resolution of the Board of Directors. The content of such authority shallbe the amount of basic compensation for each Director and Executive Officer (Senior Vice President)
and the qualitative evaluations of bonuses for each Executive Director and Executive Officer (SeniorVice President).
The Corporate Governance Committee shall deliberate annually on the level of compensation for eachposition of Directors and Executive Officers (Senior Vice Presidents), so that the authority may beproperly exercised by Chairman and President. Chairman and President who have received the saiddelegation shall be required to make decisions based on the content of the deliberations.
Performance-based compensation, etc. of individual Executive Directors and Executive Officers(Senior Vice Presidents) (excluding the above-mentioned delegation) shall be determined inaccordance with the rules (the rules which stipulate the calculating method of performance-based
compensation, etc. and non-monetary compensation, etc. in accordance with the policy d) above)
established by resolution of the Board of Directors.
After being deliberated on by the Corporate Governance Committee, a majority of the members ofwhich are independent outside officers, as an advisory body for the Board of Directors, the said
contents of the compensation, etc. shall be determined by the Board of Directors based on the
deliberations.
[Policy for determining compensation for Corporate Auditors]
Basic compensation for Corporate Auditors shall be determined by deliberations of Corporate
Auditors, in the range of aggregate amount of compensation for Corporate Auditors approved at theGeneral Meeting of Shareholders.

- 51 -

(7)

Matters related to delegation of determining compensation, etc. for individual Directors and Executive
Officers (Senior Vice Presidents)
With regard to part of compensation for individual Directors and Executive Officers (Senior Vice
Presidents), the Board of Directors delegates Mr. Shinji Hattori, Chairman and Mr. Shuji Takahashi,
President to determine the specific contents. The position and responsibility at the Company on the daythat such details were determined are the same as “Name, etc. of Directors and Corporate Auditors” under“Matters related to officers.” The delegated authority and the measures to ensure that the authority isproperly exercised are stated in (6), f) above.
The reason that the authority is delegated to Chairman and President is that the Board of Directors judgedthat Chairman and President are the most suitable for evaluating the duties of each Director and Executive
Officer (Senior Vice President) while taking a bird’s-eye view of the entire Company’s business results,
etc.

(8)

Reasons that the Board of Directors judged that the content of compensation, etc. for individual Directors
and Executive Officers (Senior Vice Presidents) for the current fiscal year was in line with the policy
In determining the content of compensation, etc. for individual Directors and Executive Officers (SeniorVice Presidents) for the current fiscal year, the Corporate Governance Committee reviewed thecompensation level for each position from various perspectives, including consistency with the policy.
Accordingly, the Board of Directors basically respected the report and judged that it is in line with thepolicy.

- 52 -

(9)

Matters related to outside officers
Main activities of outside officers
Classification

Name

Main activities

Director

Tsuyoshi Nagano

He is expected to provide valuable comments from an objective
perspective based on his experience and knowledge cultivatedthrough managing companies, and to perform appropriate
supervisory functions. He fully demonstrated the supervisory
functions for execution of business, as he attended all of the 13
Board of Directors meetings held during the current fiscal year,
and made necessary remarks on discussion items anddeliberation items, from an objective perspective. In addition, he
attended the Corporate Governance Committee as a member,and actively expressed opinions on the nomination of the
Director and Corporate Auditor candidates and thecompensation, etc. for Directors and Corporate Auditors.

Director

Yasuko Teraura

She is expected to provide valuable comments from an objective
perspective based on her insight as an attorney, and to perform
appropriate supervisory functions. She fully demonstrated thesupervisory functions for execution of business, as she attended
all of the 13 Board of Directors meetings held during the current
fiscal year, and made necessary remarks on discussion items anddeliberation items, from an objective perspective. In addition,
she attended the Corporate Governance Committee as a member,and actively expressed opinions on the nomination of the
Director and Corporate Auditor candidates and thecompensation, etc. for Directors and Corporate Auditors.

Director

Noboru Saito

He is expected to provide valuable comments from an objective
perspective based on his experience and knowledge cultivatedthrough managing companies, and to perform appropriate
supervisory functions. He fully demonstrated the supervisory
functions for execution of business, as he attended all of the 10
Board of Directors meetings held after assuming office of
Director in June 2022, and made necessary remarks on
discussion items and deliberation items, from an objective
perspective. In addition, he attended the Corporate GovernanceCommittee as a member, and actively expressed opinions on thenomination of the Director and Corporate Auditor candidates

- 53 -and the compensation, etc. for Directors and Corporate Auditors.
Corporate Auditor

Hideki Amano

He is expected to perform appropriate audit functions based on
his insight as a certified public accountant. He fully
demonstrated the audit functions, as he attended all of the 13
Board of Directors meetings and all of the 10 Board of Corporate
Auditors meetings held during the current fiscal year, and madenecessary remarks on discussion items and deliberation items,
from an objective perspective. In addition, he attended the
Corporate Governance Committee as a member, and actively
expressed opinions on the nomination of the Director andCorporate Auditor candidates and the compensation, etc. for
Directors and Corporate Auditors.

Corporate Auditor

Masatoshi Yano

He is expected to perform appropriate audit functions based on
his experience and knowledge cultivated through managing
companies. He fully demonstrated the audit functions, as heattended all of the 13 Board of Directors meetings and all of the
10 Board of Corporate Auditors meetings held during the current
fiscal year, and made necessary remarks on discussion items anddeliberation items, from an objective perspective. In addition, he
attended the Corporate Governance Committee as a member,and actively expressed opinions on the nomination of the
Director and Corporate Auditor candidates and thecompensation, etc. for Directors and Corporate Auditors.

Corporate Auditor

Kenji Sakurai

He is expected to perform appropriate audit functions based on
his experience and knowledge cultivated through managing
companies. He fully demonstrated the audit functions, as heattended all of the 10 Board of Directors meetings and 6 of the 7
Board of Corporate Auditors meetings held after assuming officeof Corporate Auditor in June 2022, and made necessary remarks
on discussion items and deliberation items, from an objective
perspective. In addition, he attended the Corporate GovernanceCommittee as a member, and actively expressed opinions on thenomination of the Director and Corporate Auditor candidates
and the compensation, etc. for Directors and Corporate Auditors.

- 54 -

5.

Matters related to the Accounting Auditor(1)

Name of the accounting auditor
KPMG AZSA LLC(2)Amount of compensation, etc. for the accounting auditor for the current fiscal year(i) Total amount of compensation, etc. for the services (auditing and attesting financial documents) set forthin Article 2, paragraph 1 of the “Certified Public Accountants Act (Act No. 103 of 1948)” payable by theCompany and its subsidiaries to the accounting auditor: 219 million yen(ii) Amount of compensation, etc. (out of (i) above) payable by the Company to the accounting auditor:
80 million yen(iii) Total amount of monies and other financial benefits payable by the Company and its subsidiaries to theaccounting auditor:

221 million yen

Note 1: Under the audit contract with the accounting auditor, the amount of compensation, etc. for audits
under the Companies Act and that for audits under the Financial Instruments and Exchange Act
are not clearly separated, and those amounts cannot practically be separated; as such, theaggregate of those amounts is shown as the amount of compensation, etc. for the services.
Note 2: Among the Company’s major subsidiaries listed in “1. Matters related to current status of the
Corporate Group, (6) Status of major parent companies and subsidiaries”, Grand Seiko
Corporation of America, Seiko Watch of America LLC, SEIKO Hong Kong Ltd., SEIKO
Manufacturing (H.K.) Ltd., and SEIKO Manufacturing (Singapore) Pte. Ltd. were audited bycertified public accountants (or audit corporations) other than the Company’s accounting
auditor.
(3)

Reasons for the Board of Corporate Auditors’ agreement to the amount of compensation, etc. for theaccounting auditor
The Board of Corporate Auditors evaluated audit records during the fiscal year ended March 31, 2022,
and confirmed the content of the audit plan, the performance status of the auditing auditor, and rationaleof the estimate compensation during the fiscal year ended March 31, 2023; as a result, the Board of
Corporate Auditors agreed to the amount of compensation, etc. for the accounting auditor as set forth in
Article 399, paragraphs 1 and 2 of the Companies Act.

- 55 -

(4)

Non-audit operations
The Company and its subsidiaries entrusted to the accounting auditor, and paid compensation for, theagreed procedural service that was outside of the services set forth in Article 2, paragraph 1 of theCertified Public Accountants Act.

(5)

Policy for determining dismissal or non-reappointment of the accounting auditor
Pursuant to laws and regulations, if any reasonable event occurs to the accounting auditor, the Board of
Corporate Auditors shall dismiss the accounting auditor with unanimous consent of the Corporate
Auditors; if it is deemed difficult for the accounting auditor to properly perform audits, the Company shallpropose a resolution for dismissal or non-reappointment of the accounting auditor to the General Meetingof Shareholders.

- 56 [Translation]
Consolidated Balance Sheet
As of March 31, 2023
Item
(Assets)
Current assets:
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts receivable - other
Other
Allowance for doubtful accounts

Non-current assets:
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Other
Accumulated depreciation
Land
Construction in progress

Intangible assets
Goodwill
Other
Investments and other assets
Investment securities
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts

Total assets

AmountItem

Millions of yen
Amount(Liabilities)(173,410) Current liabilities:
36,324
Notes and accounts payable - trade
Electronically recorded obligations 3,062
operating
35,187
Short-term borrowings
397
Current portion of bonds payable
49,750Current portion of long-term
18,117borrowings
15,908
Accounts payable - other
6,577
Income taxes payable
9,381
Contract liabilities-1,297
Provision for bonuses
Provision for goods warranties
Provision for loss on lease contracts
Provision for business restructuring
Other provisions
Asset retirement obligations(182,505)
Other(111,149) Non-current liabilities:
79,280Long-term borrowings
86,117
Lease liabilities
39,233
Deferred tax liabilities
Deferred tax liabilities for land
12,699revaluation-163,232
Provision for stock benefits
Provision for long-term goods
54,182
warranties
2,867
Provision for loss on lease contracts
Provision for retirement benefits for
directors (and other officers)
Other provisions(15,522)Retirement benefit liability
6,901
Asset retirement obligations
8,620
Other
Total liabilities(55,833) (Net assets)
45,490 Shareholders' equity:
1,820
Share capital
1,923
Capital surplus
6,752
Retained earnings-153
Treasury shares
Accumulated other comprehensive income:
Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit
plans
Non-controlling interests
Total net assets
355,915 Total liabilities and net assets(162,157)
18,7906,212
72,598300
22,117
11,344
1,793
7,916
4,879
488
348
247
367
9
14,743(62,009)37,525
5,667
4,285
3,614
538
88
87
4
23
6,894
1,079
2,199
224,166(98,517)
10,0007,245
81,520-248(31,275)
11,464-9
8,190
10,638992(1,956)
131,748355,915

- 57 [Translation]
Consolidated Statements of Income
From April 1, 2022
to March 31, 2023
Item
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Other
Non-operating expenses
Interest expenses
Other
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Extraordinary losses
Business restructuring expenses
Loss on sale of investment securities
Loss on cancellation of agency agreement
Loss on the spread of infectious disease
Profit before income taxes
Income taxes - current
Income taxes - deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Millions of yen
Amount260,504
148,706
111,798
100,564
11,233(3,053)
199
771
1,224
858
(3,119)1,139
1,980
11,167(228)
228(1,753)
968
548
147
90
9,642
2,995
1,350
5,295
267
5,028

- 58 [Translation]
Non-Consolidated Balance Sheet
As of March 31, 2023
Item
(Assets)
Current assets:
Cash and deposits
Prepaid expenses
Short-term loans receivable
Accounts receivable - other
Other

Non-current assets:
Property, plant and equipment
Buildings
Tools, furniture and fixtures
Land
Leased assets
Intangible assets
Leasehold right
Trademark right
Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Investments in capital
Long-term loans receivable fromsubsidiaries and associates
Claims provable in bankruptcy,
claims provable inrehabilitation and other
Long-term prepaid expenses
Guarantee deposits
Other
Allowance for doubtful accounts

Total assets

AmountItem

Millions of yen
Amount(Liabilities)
81,119 Current liabilities:
12,796
Short-term borrowings
782
Current portion of long-term
56,676borrowings
10,226
Lease obligations (current)
637
Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
120,179
Unearned revenue
31,902
Provision for bonuses
6,359
Other
1,443 Non-current liabilities:
24,043Long-term borrowings
56
Lease obligations (non-current)
Deferred tax liabilities
2,657
Deferred tax liabilities for land
1,952
revaluation
1
Provision for stock benefits
682
Asset retirement obligations (non20
current)
Guarantee deposits
Other
85,619 Total liabilities
22,968 (Net assets)
Shareholders' equity:
59,956
Share capital
0
Capital surplus
Legal capital surplus
4,822
Other capital surplus
Retained earnings
26
Legal retained earnings
Other retained earnings
35
Retained earnings brought
1,717
forward490
Treasury shares-4,397 Valuation and translation adjustments:
Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Total net assets
201,299 Total liabilities and net assets

94,27861,745
22,117
11
2,611
319
36
6,979
252
195
9
49,48637,525
40
4,398
3,614
548
123
3,180
55
143,765
38,882
10,000
6,625
2,378
4,246
22,478121
22,357-221
18,652
10,467-5
8,190
57,534201,299

- 59 [Translation]
Non-Consolidated Statements of Income
From April 1, 2022
to March 31, 2023
Item
Operating revenue
Dividend from subsidiaries and associates
Management fee income
Royalty income
Operating expenses
Operating profit
Non-operating income
Interest income
Dividend income
Other
Non-operating expenses
Interest expenses
Rental expenses on real estate
Other
Ordinary profit
Extraordinary income
Reversal of allowance for doubtful accounts for subsidiaries andaffiliates
Extraordinary losses
Loss on valuation of shares of subsidiaries and associates
Profit before income taxes
Income taxes - current
Income taxes - deferred
ProfitMillions of yen
Amount15,312
9,563
2,786
2,962
14,117
1,195
1,743
624
745
373
1,378
808
330
239
1,560
155
155
1,067
1,067
648
-2,459546
2,562

- 60 [Translation]
Certified copy of audit report on the consolidated financial statements by the Accounting Auditor

Independent Auditor’s Report

May 8, 2023
KPMG AZSA LLC
Tokyo Office
Akihiro Ohtani
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Toshiyuki Nishida
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Kenji Ueda
Designated Limited Partner
Engagement Partner
Certified Public Accountant
The Board of Directors
SEIKO GROUP CORPORATION

OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statements of income, the consolidated statements of changes in equity and the notes to consolidated
financial statements of SEIKO GROUP CORPORATION (the “Company”) for the fiscal year from
April 1, 2022 through March 31, 2023.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position and results of operations of SEIKO GROUP CORPORATION, which
consists of the Company and its consolidated subsidiaries, for the period covered by the consolidated
financial statements in conformity with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibility under the auditing standards is stated in “Auditor’s Responsibility for the Audit of theConsolidated Financial Statements.” We are independent of the Company and its consolidated
subsidiaries in accordance with the provisions related to professional ethics in Japan, and are fulfillingother ethical responsibilities as an auditor. We believe that we have obtained sufficient and appropriate
audit evidence to provide a basis for our audit opinion.

- 61 Other Statements
Other statements are the business report and the supplementary schedules. Management is responsible
for the preparation and disclosure of other statements. The Corporate Auditors and the Board of
Corporate Auditors are responsible for monitoring the execution of the duties of Directors related todesigning and operating the process of reporting other statements.
Other statements are not included in the scope of our audit opinion regarding the consolidated
financial statements, and we do not express our opinion on the other statements.
Our responsibility with regard to the audit of the consolidated financial statements is to read throughother statements and consider whether there are any material differences between the other statements
and the consolidated financial statements or the knowledge we have obtained through our audit.
Furthermore, it is our responsibility to pay attention to whether or not there are signs of material errors
in other statements, in addition to such material differences.
When we determine that there are material errors in other statements through our audit work, we are
required to report such fact.
We have found no matters to report regarding other statements.
Responsibilities of Management, Corporate Auditors, and the Board of Corporate Auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for designingand operating such internal control as management determines is necessary to enable the presentationand fair presentation of the consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it
is appropriate to prepare the consolidated financial statements in accordance with the premise of agoing concern, and for disclosing matters relating to going concern when it is required to do so inaccordance with accounting principles generally accepted in Japan.
The Corporate Auditors and the Board of Corporate Auditors are responsible for monitoring theexecution of the duties of Directors related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
express an opinion on the consolidated financial statements from an independent standpoint in an audit
report, based on our audit. Misstatements can occur as a result of fraud or error, and are deemedmaterial if they can be reasonably expected to, either individually or collectively, influence thedecisions of users taken on the basis of the consolidated financial statements.
We make professional judgment in the audit process in accordance with auditing standards generally
accepted in Japan, and perform the following while maintaining professional skepticism.
・Identify and assess the risks of material misstatement, whether due to fraud or error. Design andimplement audit procedures to address the risks of material misstatement. The audit procedures
shall be selected and applied as determined by the auditor. In addition, sufficient and appropriate
audit evidence shall be obtained to provide a basis for the audit opinion.
・In making those risk assessments, the auditor considers internal control relevant to the entity’s audit
in order to design audit procedures that are appropriate in the circumstances, although the purposeof the audit of the consolidated financial statements is not to express an opinion on the effectivenessof the entity’s internal control.
・Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and theadequacy of related notes.
・Determine whether it is appropriate for management to prepare the consolidated financial

- 62 statements on the premise of a going concern and, based on the audit evidence obtained, determine
whether there is a significant uncertainty in regard to events or conditions that may cast significant
doubt on the entity’s ability to continue as a going concern. If there is a significant uncertainty
concerning the premise of a going concern, the auditor is required to call attention to the notes to theconsolidated financial statements in the audit report, or if the notes to the consolidated financial
statements pertaining to the significant uncertainty are inappropriate, issue a modified opinion on
the consolidated financial statements. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, anentity may be unable to continue as a going concern.
・Besides assessing whether the presentation of and notes to the consolidated financial statements arein accordance with accounting principles generally accepted in Japan, assess the presentation,
structure, and content of the consolidated financial statements including related notes, and whether
the consolidated financial statements fairly present the transactions and accounting events on which
they are based.
・Obtain sufficient and appropriate audit evidence regarding the financial information of theCompany and its consolidated subsidiaries in order to express an opinion on the consolidated
financial statements. The auditor is responsible for instructing, supervising, and implementing theaudit of the consolidated financial statements, and is solely responsible for the audit opinion.
The auditor reports to the Corporate Auditors and the Board of Corporate Auditors regarding the scope
and timing of implementation of the planned audit, material audit findings including material
weaknesses in internal control identified in the course of the audit, and other matters required under
the auditing standards.
The auditor reports to the Corporate Auditors and the Board of Corporate Auditors regarding theobservance of provisions related to professional ethics in Japan as well as matters that are reasonably
considered to have an impact on the auditor’s independence and any safeguards that are in place toreduce or eliminate obstacles.
Interest
Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries
requiring disclosure under the provisions of the Certified Public Accountants Act of Japan.

- 63 [Translation]
Certified copy of audit report (on the non-consolidated financial statements) by the Accounting
AuditorIndependent Auditor’s Report

May 8, 2023
KPMG AZSA LLC
Tokyo Office
Akihiro Ohtani
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Toshiyuki Nishida
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Kenji Ueda
Designated Limited Partner
Engagement Partner
Certified Public Accountant
The Board of Directors
SEIKO GROUP CORPORATION

OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the non-consolidated balance sheet, the non-consolidated
statements of income, the non-consolidated statements of changes in equity and the related notes, andthe accompanying supplementary schedules of SEIKO GROUP CORPORATION (the “Company”)
for the 162nd fiscal year from April 1, 2022 through March 31, 2023.
In our opinion, the financial statements and the accompanying supplementary schedules referred toabove present fairly, in all material respects, the financial position of the Company as of March 31,
2023, and the results of its operations for the year then ended in conformity with accounting principles
generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibility under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the
Financial Statements and the Accompanying Supplementary Schedules.” We are independent of theCompany in accordance with the provisions related to professional ethics in Japan, and are fulfillingother ethical responsibilities as an auditor. We believe that we have obtained sufficient and appropriate
audit evidence to provide a basis for our audit opinion.

- 64 Other Statements
Other statements are the business report and the supplementary schedules. Management is responsible
for the preparation and disclosure of other statements. The Corporate Auditors and the Board of
Corporate Auditors are responsible for monitoring the execution of the duties of Directors related todesigning and operating the process of reporting other statements.
Other statements are not included in the scope of our audit opinion regarding the financial statements
and the accompanying supplementary schedules, and we do not express our opinion on the otherstatements.
Our responsibility with regard to the audit of the financial statements and the accompanying
supplementary schedules is to read through other statements and consider whether there are any
material differences between the other statements and the financial statements and the accompanying
supplementary schedules or the knowledge we have obtained through our audit. Furthermore, it is our
responsibility to pay attention to whether or not there are signs of material errors in other statements,
in addition to such material differences.
When we determine that there are material errors in other statements through our audit work, we are
required to report such fact.
We have found no matters to report regarding other statements.
Responsibilities of Management, Corporate Auditors, and the Board of Corporate Auditors for the
Financial Statements and the Accompanying Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and theaccompanying supplementary schedules in accordance with accounting principles generally acceptedin Japan, and for designing and operating such internal control as management determines is necessary
to enable the preparation and fair presentation of the financial statements and the accompanying
supplementary schedules that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and the accompanying supplementary schedules, management is
responsible for assessing whether it is appropriate to prepare the financial statements and theaccompanying supplementary schedules in accordance with the premise of a going concern, and fordisclosing matters relating to going concern when it is required to do so in accordance with accounting
principles generally accepted in Japan.
The Corporate Auditors and the Board of Corporate Auditors are responsible for monitoring theexecution of the duties of Directors related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements and the Accompanying
Supplementary Schedules
Our responsibility is to obtain reasonable assurance about whether the financial statements and theaccompanying supplementary schedules as a whole are free from material misstatement, whether due
to fraud or error, and to express an opinion on the financial statements and the accompanying
supplementary schedules from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can bereasonably expected to, either individually or collectively, influence the decisions of users taken on thebasis of the financial statements and the accompanying supplementary schedules.
We make professional judgment in the audit process in accordance with auditing standards generally
accepted in Japan, and perform the following while maintaining professional skepticism.
・Identify and assess the risks of material misstatement, whether due to fraud or error. Design andimplement audit procedures to address the risks of material misstatement. The audit procedures
shall be selected and applied as determined by the auditor. In addition, sufficient and appropriate
audit evidence shall be obtained to provide a basis for the audit opinion.
・In making those risk assessments, the auditor considers internal control relevant to the entity’s audit
in order to design audit procedures that are appropriate in the circumstances, although the purposeof the audit of the financial statements and the accompanying supplementary schedules is not to
express an opinion on the effectiveness of the entity’s internal control.

- 65 ・Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and theadequacy of related notes.
・Determine whether it is appropriate for management to prepare the financial statements and theaccompanying supplementary schedules on the premise of a going concern and, based on the audit
evidence obtained, determine whether there is a significant uncertainty in regard to events orconditions that may cast significant doubt on the entity’s ability to continue as a going concern. If
there is a significant uncertainty concerning the premise of a going concern, the auditor is required
to call attention to the notes to the financial statements and the accompanying supplementaryschedules in the audit report, or if the notes to the financial statements and the accompanying
supplementary schedules pertaining to the significant uncertainty are inappropriate, issue a modified
opinion on the financial statements and the accompanying supplementary schedules. While theconclusions of the auditor are based on the audit evidence obtained up to the date of the audit report,
depending on future events or conditions, an entity may be unable to continue as a going concern.
・Besides assessing whether the presentation of and notes to the financial statements and theaccompanying supplementary schedules are in accordance with accounting principles generally
accepted in Japan, assess the presentation, structure, and content of the financial statements and theaccompanying supplementary schedules including related notes, and whether the financial
statements and the accompanying supplementary schedules fairly present the transactions andaccounting events on which they are based.
The auditor reports to the Corporate Auditors and the Board of Corporate Auditors regarding the scope
and timing of implementation of the planned audit, material audit findings including material
weaknesses in internal control identified in the course of the audit, and other matters required under
the auditing standards.
The auditor reports to the Corporate Auditors and the Board of Corporate Auditors regarding theobservance of provisions related to professional ethics in Japan as well as matters that are reasonably
considered to have an impact on the auditor’s independence and any safeguards that are in place toreduce or eliminate obstacles.
Interest
Our firm and engagement partners have no interests in the Company requiring disclosure under theprovisions of the Certified Public Accountants Act of Japan.

- 66 [Translation]
Certified copy of audit report by the Board of Corporate Auditors
Audit Report
The Board of Corporate Auditors has deliberated on, prepared and submitted this Audit Report as
below, based on the audit reports made by the Corporate Auditors concerning the execution of duties
by Directors for the fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023).
1.

Methods and contents of the audit by Corporate Auditors and Board of Corporate Auditors(1)

The Board of Corporate Auditors established the audit policies and division of duties, received
reports regarding the implementation of the audit and results thereof from the respective
Corporate Auditors, as well as reports regarding the execution of duties from Directors,
Executive Officers (Senior Vice Presidents) and the Accounting Auditor, and requested
explanations as necessary.

(2)

In accordance with the audit policies and division of duties determined by the Board of
Corporate Auditors, each Corporate Auditor made efforts to collect information and establish
proper circumstances for the audit by communicating with the Directors, Executive Officers(Senior Vice Presidents), the internal audit department and other employees, and performed an
audit using the following methods:(i)

Attending Board of Directors meetings and other important meetings to receive
reports regarding the execution of duties from Directors, Executive Officers (SeniorVice Presidents) and employees, and requested explanations as necessary. Each
Corporate Auditor also inspected important decision-making documents and othermaterials, and examined the status of operations and the condition of the assets of theCompany. With regard to subsidiaries, the Corporate Auditors communicated andexchanged information with directors, corporate auditors and employees thereof, andreceived reports on business from those subsidiaries as necessary.

(ii)With regard to the resolutions by the Board of Directors, described in the business
report, regarding the establishment of systems to ensure that the Directors’ duties are
performed in conformity of laws, regulations and the Articles of Incorporation of theCompany and those other systems which are provided for in Article 100, Paragraphs 1
and 3 of the Ordinance for Enforcement of the Companies Act of Japan as systems
necessary to ensure proper business operations of a corporate group comprised of astock company and its subsidiaries, as well as the systems (internal control system)
established in accordance with the aforementioned resolutions of the Board of
Directors, the Corporate Auditors also periodically received reports from Directors,
Executive Officers (Senior Vice Presidents) and employees regarding the development
and operation thereof, requested explanations as necessary, and expressed opinions.

(iii)

The Corporate Auditors monitored and examined whether the Accounting Auditor wasmaintaining an independent position and conducting audits appropriately, obtained
reports on the execution of duties from the Accounting Auditor, and requested
explanations as necessary. In addition, the Corporate Auditors were informed by the
Accounting Auditor that a “system to ensure the duties are performed properly” (thematters stipulated in the respective items of Article 131 of Corporate Accounting
Rules) had been implemented in accordance with the “quality management standards
concerning audits” (Business Accounting Deliberation Council, October 28, 2005),
and requested explanations as necessary.

- 67 -In accordance with the aforementioned procedures, the Corporate Auditors reviewed thebusiness report and accompanying schedules thereto, and the financial statements (nonconsolidated balance sheets, non-consolidated statements of income, non-consolidated
statements of changes in shareholders’ equity, and notes to non-consolidated financial
statements) and accompanying schedules thereto, and consolidated financial statements(consolidated balance sheets, consolidated statements of income, consolidated statements ofchanges in shareholders’ equity, and notes to consolidated financial statements) for the fiscal
year ended March 31, 2023.
2.

Results of audits(1)

Results of the audit on business reports and related materials
(i)

(ii)

(iii)

(2)

The business report and accompanying schedules thereto fairly present the conditionof the Company in accordance with the laws, regulations and the Articles ofIncorporation of the Company.
Regarding the execution of duties by Directors, there were no instances of misconduct
or material matters in violation of laws, regulations, or the Articles of Incorporation of
the Company.
The contents of resolutions by the Board of Directors with regard to the internal
control system are reasonable. Additionally, regarding the descriptions of the relevantinternal control system in the business report and the execution of duties by Directors
under the relevant internal control system, there are no matters to be pointed out.

Results of the audit of the non-consolidated financial statements and accompanying schedules
theretoThe methods and results of the audit by KPMG AZSA LLC, Accounting Auditor, are fair andreasonable.

(3)

Results of the audit of the consolidated financial statements
The methods and results of the audit by KPMG AZSA LLC, Accounting Auditor, are fair andreasonable.
May 9, 2023
Board of Corporate Auditors
Seiko Group Corporation
Haruhiko TakagiStanding Corporate Auditor
Takashi Nishimoto
Standing Corporate Auditor
Hideki Amano
Outside Corporate Auditor
Masatoshi Yano
Outside Corporate Auditor
Kenji Sakurai
Outside Corporate Auditor

[Translation]
Start date for electronic provision measures: May 30, 2023

To Shareholders with Voting Rights:

Documents for the 162nd Ordinary
General Meeting of Shareholders
Matters not included in the paper copy delivered upon request, among
paper copy of matters related to electronic provision measures,
pursuant to laws and regulations and the Articles of Incorporation■ Business Report
Overview of the system to ensure proper operations andthe implementation status thereof■ Consolidated Financial Statements
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements■ Non-Consolidated Financial Statements
Non-Consolidated Statements of Changes in Equity
Notes to Non-Consolidated Financial Statements
The 162nd Fiscal Year (April 1, 2022 to March 31, 2023)
SEIKO GROUP CORPORATION

The above-mentioned documents are omitted from the paper copy delivered toshareholders who have requested it (paper copy of matters related to electronic
provision measures) pursuant to laws and regulations and Article 16, paragraph 2 of
the Articles of Incorporation of the Company.

-1-

6.

Systems and policies of the Company

I.

Overview of a resolution to establish systems to ensure the proper operations of the Company(1)

System to ensure that the duties of Directors, Executive Officers (Senior Vice Presidents), and employees
are executed in compliance with laws and regulations and the Articles of Incorporation
In order for Directors, Executive Officers (Senior Vice Presidents), and employees (hereinafter, the“Officer(s) and Employee(s)” or “Officer(s) or Employee(s)”) to comply with corporate ethics, laws andregulations, and internal rules, the Company shall establish the “Basic Principles of Corporate Ethics” andthe “Action Guidelines for Corporate Ethics” to thoroughly ensure their compliance with corporate ethics
and laws and regulations, as follows:
1)

The President shall repeatedly convey the spirit of the “Basic Principles of Corporate Ethics” to
all Officers and Employees to ensure that compliance with corporate ethics and the laws andregulations are the basis for every corporate activity.

2)

The “Corporate Ethics Committee” chaired by the President shall discuss corporate ethical issues
that might significantly affect the Company and its subsidiaries (the “Company Group”) andmatters related to revisions of the system to comply with corporate ethics, and report the results ofdiscussion to the Board of Directors.

3)

The Company shall develop a system where any Officer or Employee who finds any actionsuspected of violating the laws and regulations can promptly report such findings to the“Corporate Ethics Committee”, and establish a “Corporate Ethics Helpline” as a means forreporting information.

4)

The Company shall continuously provide training sessions on corporate ethics to Officers andEmployees to foster and enhance their awareness of compliance with corporate ethics and laws
and regulations.

(2)

System to store and manage information regarding execution of the duties of Directors and Executive
Officers (Senior Vice Presidents)(i)

Pursuant to the “Internal Document Management Rules”, the Company shall record information
regarding execution of the duties of Directors and Executive Officers (Senior Vice Presidents) in adocument or in an electromagnetic medium, and store and manage it properly.

-2-

(ii)

Directors, Executive Officers (Senior Vice Presidents), and Corporate Auditors may inspect such
document or medium at any time pursuant to the “Internal Document Management Rules”.

(3)

Regulations and systems for loss risk management of the Company and its subsidiaries(i)

Pursuant to the “Risk Management Rules”, the Company shall set forth the basic policy for risk
management of the Company Group and develop a risk management system.

(ii)

The Company shall establish the “Risk Management Committee” chaired by the President inorder to build, develop and monitor risk management processes, including understanding businessrisks that might affect the activities of the Company Group, and identifying, analyzing, evaluating
and monitoring risks.

(iii)

The Risk Management Committee shall report the status of each risk to the Board of Directors,
regularly or as necessary, pursuant to the “Risk Management Rules”.

(4)

System to ensure that the duties of Directors and Executive Officers (Senior Vice Presidents) of theCompany and its subsidiaries are efficiently executed(i)

The Company shall develop a Mid-Term Management Plan as the target to be shared by Officers
and Employees of the Company Group. It shall also review the progress of annual budgets
consisting of the said plan on a quarterly basis using the management accounting method, andpromote the efficiency of operation by considering and implementing an remedial measures forthe progress of annual budget.

(ii)

In order to respect autonomous and independent management of its subsidiaries while
contributing to the proper and efficient operation of the Group management, the Company shalldevelop basic management rules therefor. It shall also establish Management Conferencecomprising standing Directors and Executive Officers (Senior Vice Presidents) of the Company
and respective President of major subsidiaries of the Company, in order to share the management
policy and management information of the Company Group, and to discuss medium- to long-termbusiness strategies.

(iii)

The Company shall clarify the assignment of duties of Directors and Executive Officers (SeniorVice Presidents), and the responsibility and authority of each division/department, and secure theefficient execution of the duties of Directors and Executive Officers (Senior Vice Presidents).

-3-

(5)

System to ensure the proper operations of the Corporate Group comprising the Company and its
subsidiaries(i)

The Company shall assist its subsidiaries to develop a system to comply with corporate ethics,
and laws and regulations, and other systems to ensure their proper operations.

(ii)

Each subsidiary of the Company shall share the “Basic Principles of Corporate Ethics” and the“Action Guidelines for Corporate Ethics” established by the Company, and manage its operations
pursuant to them. The Company shall set forth the rules for reporting any violation of laws andregulations by any subsidiary, and assist its subsidiaries to develop their internal reporting
systems.

(iii)

Pursuant to the “Consolidated Business Management Rules”, the Company shall request that eachsubsidiary consult in advance with, and report to, the Company regarding significant
management-related matters, and whenever necessary, shall dispatch its Officers or Employees as
Directors or Corporate Auditors of the subsidiary so as to properly supervise and audit theoperation of subsidiary.

(iv)

Pursuant to the “Consolidated Business Management Rules”, each subsidiary shall report its
business results, financial position and other important matters to the Company, and whenevernecessary, the President of the relevant subsidiary shall report the execution status of theoperations to the Board of Directors of the Company.

(v)

The Company’s Internal Audit Department shall conduct internal audits on each subsidiary
regarding the execution status of the operations, compliance with laws and regulations, theArticles of Incorporation, and risk management.

(6)

Matters related to employees to assist the duties of Corporate Auditors(i)Internal Audit Department shall be responsible for assisting the duties of Corporate Auditors.

(ii)

Employees who are assigned to the Internal Audit Department shall not concurrently hold duties
related to the execution of operations.

(iii)

Regarding any transfer of the General Manager of the Internal Audit Department, the President
shall discuss with the Board of Corporate Auditors in advance, and shall respect the Board of
Corporate Auditors’ opinions.

-4-

(7)

System for reporting to Corporate Auditors(i)Each Officer and Employee of the Company shall regularly report to Corporate Auditors thestatus of finance, compliance with corporate ethics, risk management, and internal audits. If any
Director/employee finds any fact likely to significantly damage the Company or its subsidiaries,
any violation of laws and regulations or internal rules, he/she shall immediately report suchfindings to the Corporate Auditors of the Company.

(ii)

The Company shall develop a reporting system where if any Director, Executive Officer (SeniorVice President), Corporate Auditor or employee of a subsidiary finds any material violation oflaws and regulations or internal rules regarding the execution of operations of the Company or thesubsidiary, or any fact which is likely to significantly damage the Company, he/she or the person
who was reported by him/her shall report it to the Corporate Auditors of the Company.

(iii)

The Company shall develop necessary systems to ensure that the person who makes the report inaccordance with the preceding two (2) paragraphs might not be treated disadvantageously on the
grounds of having made such report.

(iv)

In conducting internal audits, the General Manager of the Internal Audit Department shallcooperate with Standing Corporate Auditors in advance, and make efforts to report importantmatters to Standing Corporate Auditors in a timely manner.

In addition, the General Manager of

the Internal Audit Department shall report the results of internal audits to Standing Corporate
Auditors without delay, and regularly report such results to the Board of Corporate Auditors of theCompany.
(8)

Other systems to ensure that audits by Corporate Auditors are effectively conducted(i)

The Company shall ensure a system where, besides the Internal Audit Department, the department
in charge of general affairs and the department in charge of finance and accounting shall assist
audits by Corporate Auditors from time to time based on respective instructions from Corporate
Auditors.

(ii)

The Company shall ensure that Corporate Auditors attend important meetings and committees
which are established and held by the Board of Directors in a timely manner to ensure proper
operations of the Company.

(iii)

The President shall meet and consult with the Board of Corporate Auditors, as necessary, andexchange opinions regarding important management issues.

-5-

(iv)

If a Corporate Auditor requests that the Company pay expenses incurred in connection withexecuting his/her duties, the Company shall promptly reimburse such expenses unless theCompany proves that such expenses are not necessary for the Corporate Auditor to execute his/herduties.

II.

Overview of the implementation status of the system to ensure proper operations(1)

System for compliance with corporate ethics and laws and regulations(i)

The Company has established a “Corporate Ethics Committee” chaired by the President to discuss
corporate ethical issues and the system for compliance with corporate ethics, including thoserelating to its subsidiaries, and reports the result of discussions to the Board of Directors. The
Committee held five (5) meetings during the fiscal year ended March 31, 2023.

(ii)

The Company has established a “Corporate Ethics Helpline” internally and appointed a law firm
as a reception to receive consultations or reports from employees regarding violations of laws andregulations within the Company. The Company has made sure all employees and retirees arewell informed about how to use these helplines by posting them on its intranet and the Company’s
website.

(iii)

The Company regularly provides training sessions on corporate ethics to enhance awareness ofcompliance with corporate ethics and laws and regulations. During the fiscal year ended March
31, 2023, the Company provided training sessions on “Ensuring Effectiveness of the Internal
Reporting Systems” for standing officers, Executive Officers (Senior Vice Presidents), andemployees.

(2)

Risk management system(i)

The Company has established the “Risk Management Committee” chaired by the President todiscuss the Company Group’s responses to important risk issues and matters relating to foreseeing
and prevention of risks during normal times. The Committee also reports to the Board of
Directors the matters discussed thereat and important risks which require the Company Group to
take comprehensive measure. The Committee held two (2) meetings during the fiscal year
ended March 31, 2023.
Further, the Company has established the “Group Risk Management Committee” consisting ofrespective standing Directors and Executive Officers (Senior Vice Presidents) of the Company
and Presidents of its subsidiaries, and confirms and shares the risks and the counter-measures

-6-

against them experienced by each group company. The Committee held two (2) meetings during
the fiscal year ended March 31, 2023.
(ii)

Regarding responses when risks occur, the “Crisis Management Manual” sets out for theCompany’s basic policy therefor and measures to respond to respective risks, such as natural
disasters.

(3)

System to ensure that the duties of Directors and Executive Officers (Senior Vice Presidents) are
efficiently executed(i)

The Company has determined the assignment of duties for each Director and Executive Officer(Senior Vice President) upon a resolution of the Board of Directors, and the responsibility andauthority of each division/department in accordance with the “Duty Assignment Rules”.

(ii)

The Company has established a council called the “Strategic Conference for Management” where
the President, Executive Directors, and Executive Officers (Senior Vice Presidents) exchange
opinions and share information with other Directors, Executive Officers (Senior Vice Presidents),
Corporate Auditors, or General Managers of divisions/departments when they decide on andexecute important matters relating to execution of their duties. The Strategic Conference forManagement held twenty-three (23) meetings during the fiscal year ended March 31, 2023.

(iii)

The Company has provided the “Consolidated Business Management Rules” for the execution of
the operations of its subsidiaries in order to perform its management and support functions fromthe viewpoint of consolidated management.

(4)

System to ensure the proper operations of the Company Group(i)

Pursuant to the “Consolidated Business Management Rules”, the Company properly discusses
with its subsidiaries in advance regarding their business plan, annual budgets, and measures to
respond to important corporate ethical issues, receives reports on material business matters fromthem, and dispatches its Officers or Employees to subsidiaries, as necessary, to supervise andaudit them.

As of the end of the fiscal year ended March 31, 2023, the Company has dispatchednine (9) Directors and Executive Officers (Senior Vice Presidents) and two (2) Corporate
Auditors.
Furthermore, the President of each subsidiary reports the execution status of its operations to theBoard of Directors of the Company as necessary. During the fiscal year ended March 31, 2023,
seven (7) subsidiaries made such reports.

-7-

(ii)

Each unit of the Company assists its subsidiaries to develop a system to comply with corporate
ethics and laws and regulations, and a system to comply with business operation laws.

Duringthe fiscal year ended March 31, 2023, training sessions and briefings were held for officers andemployees of the Company’s subsidiaries to discuss topics such as “Ensuring Effectiveness of theInternal Reporting Systems”.
(5)

System to ensure that audits by Corporate Auditors are effectively conducted(i)

The Internal Audit Department holds a regular meeting once a month with Standing Corporate
Auditors and reports the performance status of internal audits.

(ii)Standing Corporate Auditors attend important meetings such as the “Strategic Conference forManagement”, “the Risk Management Committee”, and the “Corporate Ethics Committee”, etc.

(iii)

The President attends the Board of Corporate Auditors’ meetings to exchange opinions and gather
information relating to material business issues.

-8[Translation]
Consolidated Statements of Changes in Equity(From April 1, 2022 to March 31, 2023)
Millions of yen
Shareholders' equity
Share capital

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury stock byownership plan trust
Other
Net changes in items other thanshareholders' equity
Total changes during period
Balance at end of period

Retainedearnings

Capital surplus

10,000

7,245

Total
shareholders'equityTreasury shares

79,075-292

96,028-0-2,583
5,028
-0

44

44

-0

-0

44
-248

2,488
98,517-2,583
5,028

10,000

7,245

2,444
81,520Millions of yen
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Balance at beginningof period
Changes during period
Dividends ofsurplusProfit attributableto owners of parent
Purchase oftreasury shares
Disposal oftreasury stock byownership plan
trust
Other
Net changes in
items other thanshareholders' equity
Total changes during
periodBalance at end of
period10,942

Deferred
gains orlosses onhedges-331

Revaluation
reserve for
land

8,190

Foreigncurrencytranslation
adjustment

5,116

Total
NonRemeasurements accumulated
controllingof defined
otherinterests
benefit plans comprehensive
income120

24,038

Total net
assets1,557 121,624-2,583
5,028
-0

44
-0
521

321

-

5,521

871

7,236

398

7,635

521

321

-

5,521

871

7,236

398

10,124

11,464-9

8,190

10,638992

31,275

1,956 131,748(Note) The -0 million yen of “Other” under treasury shares represents changes due to a change in the ratio of
equity interests of the Company’s affiliates accounted for using equity method.

-9[Translation]
Notes to Consolidated Financial Statements
1.

Notes to Important Matters that are the Basis for Preparation of Consolidated Financial
Statements(1)

Matters relating to scope of consolidation
Number of consolidated subsidiaries: 61
SEIKO WATCH CORPORATION, Morioka Seiko Instruments Inc., Seiko Instruments Inc.,SEIKO Solutions Inc., SEIKO Time Creation Inc., WAKO Co., Ltd., Grand Seiko Corporationof America, Seiko Watch of America LLC, SEIKO U.K. Limited, SEIKO Hong Kong Ltd.,SEIKO Manufacturing (H.K.) Ltd., SEIKO Manufacturing (Singapore) Pte. Ltd., Dalian Seiko
Instruments Inc., Seiko Instruments Trading (H.K.) Ltd., Seiko Instruments (Thailand) Ltd.,SEIKO Precision (Thailand) Co., Ltd., and others.
Instruction Co., Ltd., BackStore Co., Ltd., and Prestige Co., Ltd. were included in the scope of
consolidation from the 1st quarterly consolidated accounting period due to the acquisition of
their shares. Grand Seiko Asia-Pacific Pte. Ltd. was included in the scope of consolidationfrom the 2nd quarterly consolidated accounting period due to the new establishment.
The liquidation proceedings of SEIKO Precision Inc. and Chino Watch Co., Ltd. werecompleted in the 2nd quarterly consolidated accounting period, and the liquidation
proceedings of City Service Co., Ltd. were completed in the 3rd quarterly consolidated
accounting period.
Non-consolidated subsidiaries:
AOBA WATCH SERVICE Co. Ltd. and others are of a small scale in terms of net sales, total
assets, profit and loss, and retained earnings, and none of them have any material impact on
the consolidated financial statements. Therefore, they were excluded from the scope of
consolidation.

(2)

Matters relating to the application of the equity method
Number of affiliates accounted for by the equity method:
5
SEIKO OPTICAL PRODUCTS CO., LTD., OHARA INC., and others.
Non-consolidated subsidiaries and affiliates not accounted for by the equity method:
AOBA WATCH SERVICE Co. Ltd. and others have a minimal impact on the consolidated net
income and loss and retained earnings and are of little significance. Therefore, the equity
method has not been applied to these companies.

(3)

Standards and methods for evaluating significant assets(i) Inventories
Basically stated at cost using the movingaverage method (for values stated on the balance
sheet, writing down the book values in response
to decreased profitability)(ii) Securities
Available-for-sale securities
Securities other than shares, etc.
Market value method based on the market pricethat do not have a market priceas of the consolidated closing date (differencesin valuation are included directly in net assets
and the costs of securities sold are calculatedusing the moving-average method)

- 10 Shares, etc. that do not have amarket priceInvestment Limited Partnership(iii) Derivatives(4)

Stated on a net basis equivalent to equity
interests, based on the most recent financial
statements available according to the financial
reporting date stipulated in the partnershipagreement
Market value method

Depreciation methods for significant depreciable assets(i) Property, plant and equipment
As for domestic consolidated companies, basically(excluding leased assets and rightthe straight-line method is used for buildings
of-use assets)(excluding equipment attached to buildings), andthe declining-balance method for those other thanbuildings (except that the straight-line method isused for the equipment attached to buildings, andstructures that were acquired on or after April 1,
2016); as for consolidated subsidiaries outside
Japan, basically the straight-line method is used.
The estimated economic life reflecting the usable
period, the actual period of use, and other factors
for each asset is used for a useful life.
(ii) Intangible assets (excluding
The straight-line method is used. As for software
leased assets)
for in-house use, the straight-line method is usedwith a usable period of 5 years.
(iii) Leased assets
Leased assets relating to finance The same depreciation method as applied to thelease with transfer of ownershipproperty, etc. owned by the Company is used.
Lease assets relating to financelease without transfer of ownership(iv) Right-of-use assets(5)Stated at cost using the moving-average method

The straight-line method is used with a useful lifeof the lease period and with a residue value of zero.
The straight-line method is used with a useful lifeof the lease period and with a residue value of zero.

Accounting standards for significant allowances and provisions(i) Allowance for doubtful accounts In order to prepare for possible losses on
uncollectible receivables held, estimateduncollectible amounts are posted: for general
receivables, according to the historical percentage
of uncollectibles, and for doubtful receivables,
considering the probability of collection.
(ii) Allowance for investment loss of In order to prepare for possible losses oninvestments to subsidiaries and affiliates, an
subsidiaries and affiliates
amount deemed necessary is provided after
considering the financial position of each company
and based on a respective review. The allowance
for investment loss of subsidiaries and affiliates of
4 million yen is directly reduced from the amountof investment securities.
(iii) Provision for bonuses
In order to prepare for payment of bonuses to
employees, a provision is made based on theestimated bonus payments, which are attributable
to the consolidated fiscal year under review.

- 11 (iv) Provision for goods warranties(v) Provision for loss on lease
contracts(vi) Provision for businessrestructuring(vii) Provision for stock benefits(viii) Provision for retirement
benefits for directors (and otherofficers)

To provide for warranties of the goods sold at someof the consolidated subsidiaries outside Japan,
respective estimated amount based on the pastexperience is posted.
To provide for the loss expected to incur during thenon-cancellable periods, an amount equivalent to
the portion of rents for the real estate deemed likely
to be non-performing up to the expiry of leaseagreements is posted.
The Company has posted an estimated amount oflosses expected to be incurred in the future as aresult of business restructuring.
The Company has posted an estimated amount, asof the end of the consolidated fiscal year underreview, for the obligation to deliver shares, as aprovision for the delivery of its shares to the
Executive Directors of the Company and its
subsidiaries, in accordance with the Rules for
Delivery of Shares to Officers.
Some of the domestic consolidated companies
passed a resolution to discontinue their respective
directors’ retirement benefit systems during the
fiscal year ended March 2005 and that ended
March 2014. Accordingly, the amount of
retirement benefits for incumbent officers is posted
corresponding to the terms of office till the end of
the Ordinary General Meeting of Shareholders
during the relevant consolidated fiscal year.

- 12 (6)

Accounting standards for significant income and expenses(i) Emotional Value Solutions
Business

The Company Group manufactures, sells, andprovides repair services for its own products as thewholesale of watches, and provides retail services,
including other companies’ products, as the retailof watches.
With regard to the time of satisfaction of
performance obligations for the wholesale ofwatches, the Company Group applies thealternative treatment prescribed in Paragraph 98 of
the “Implementation Guidance on AccountingStandard for Revenue Recognition” (hereinafter,
the “Revenue Recognition Implementation
Guidance”), and recognizes revenue at the time of
shipment, if the period between the shipment andthe transfer of control of products to customers is
primarily a normal period of time for domestic
sales. For other transactions, including export sales,
revenue is recognized when risks are transferred tocustomers based on terms of contracts with eachcustomer. For the retail of watches, revenue isrecognized when products are delivered tocustomers.
For transactions in which returns are expected at
the time of sale, such amounts are not recognized
as revenue, but are estimated based on historicalexperience and recognized as a liability for returns.
For transactions in which the Company Group acts
as an agent, revenue is recognized at a net amount.
For transactions in which the Company Group acts
as the principal, revenue is recognized at a grossamount.
The Company Group generally receives
consideration for transactions in the Emotional
Value Solutions Business within one to threemonths from the time when performanceobligations are satisfied, and the receivables arisingfrom contracts with such customers are notadjusted for significant financial components.

- 13 (ii) Devices Solutions Business(iii) Systems Solutions Business

The Company Group manufactures and sells
products related to electronic devices, precision
devices, and printing devices.
The Company Group applies the alternative
treatment prescribed in Paragraph 98 of the
Revenue Recognition Implementation Guidance,and recognizes revenue at the time of shipment, if
the period between the shipment and the transfer ofcontrol of products to customers is primarily anormal period of time for domestic sales. For othertransactions, including export sales, revenue isrecognized when risks are transferred to customers
based on terms of contracts with each customer.
The Company Group generally receives
consideration for transactions in the Devices
Solutions Business within one to three months fromthe time when performance obligations are
satisfied, and the receivables arising from contracts
with such customers are not adjusted for significant
financial components.
The Company Group develops and sells products
for businesses related to system, IoT, andsettlement, and provides maintenance services for
products sold and made-to-order software services.
With regard to the time of satisfaction of
performance obligations for the sale of products,
revenue is recognized when products are delivered
to customers or when customers inspect the
products. For maintenance services, revenue isrecognized over the period the services areprovided, as performance obligations are deemed tobe satisfied over time, since the Company Group
provides uniform services over the contract period.
For the provision of made-to-order software
services, revenue is recognized based on the degreeof progress toward satisfying performanceobligations, as performance obligations are deemed
to be satisfied over a certain period of time. The
degree of progress is measured based on thepercentage of costs incurred to the end of eachfiscal year of the total expected costs.
The Company Group generally receives
consideration for transactions in the Systems
Solutions Business within one to six months fromthe time when performance obligations are satisfied(in some cases, advance payments are received
based on contracts), and the receivables arisingfrom contracts with such customers are notadjusted for significant financial components.

- 14 (7)Standards for translation of significant foreign currency-denominated assets or liabilities into
Japanese yen
Foreign currency receivables/payables are translated into yen using the spot foreign exchange
rate on the consolidated closing date, and translation differences are treated as income or loss.
The assets and liabilities of subsidiaries outside Japan are translated into yen using the spot
foreign exchange rate on the consolidated closing date; income and expenses are translated
into yen using an average market rate during the period, and translation differences areincluded in “Foreign currency translation adjustment” and “Non-controlling interests” of the“Net assets”.

(8)Significant hedge accounting methods(i) Hedge accounting method(ii) Means of hedging and hedged
items(iii) Hedging policy(iv) Assessment of hedge effectiveness(9)

Deferred hedge accounting is employed.
However, regarding domestic consolidated
companies, basically deferral hedge accounting(“furiate-shori”) is employed for foreign
currency receivables/payables with forward
exchange contracts or the like, and with regard
to interest-rate swaps that meet the requirements
for exceptional accounting (“tokurei-shori”),
exceptional accounting is employed.
Forward exchange contracts and foreign
currency deposits to hedge foreign exchangerate fluctuation risks regarding foreign currencydenominated trade payables and receivables; andinterest-rate swaps to avoid fluctuation risks
regarding borrowings on floating interest rates.
Forward exchange contracts, foreign currency
deposits and interest-rate swaps are hedged to
avoid exchange- and interest-rate fluctuation
risks present in hedged items in accordance with
the internal rules of the respective companies,
and no speculative transactions are conducted.
For interest-rate swaps, hedge effectiveness is
assessed by analysis of the percentage between
the accumulated cash flow changes of hedged
items and the accumulated cash flow changes bymeans of hedging. However, the assessment ofhedge effectiveness is omitted if the material
conditions of the means of hedging and thehedged items are the same.

Accounting for employees’ retirement benefits
In order to prepare to pay retirement benefits to employees, the net defined benefit liability isposted based on the estimated amount of retirement benefit obligations minus the amount ofplan assets as of the end of the consolidated fiscal year under review. To calculate retirement
benefit obligations, the benefit formula method is adopted as a method to attribute theestimated retirement benefits to the periods up to the end of the consolidated fiscal year underreview. The actuarial differences that resulted are recognized in the following consolidated
fiscal year by the straight-line method over various periods (5 to 10 years) that are not morethan the average remaining service period of employees at the time of the accrual of adifference. Prior service costs are basically recognized by the straight-line method overvarious periods that are not more than the average remaining service period of employees at
the time of the accrual thereof. Unrecognized actuarial differences and unrecognized prior- 15 service costs after tax effect adjustment are posted in “Remeasurements of defined benefit
plans”, “Accumulated other comprehensive income” in “Net assets”.
(10)

Matters relating to application of group tax sharing system
Group tax sharing system is applied.

(11)

Method and period of amortization of goodwill
Goodwill is equally amortized for 5 to 20 years; minor goodwill is entirely amortized upon
accrual.

- 16 2.

Notes to Changes in Accounting Policies
The Company has applied the “Implementation Guidance on Accounting Standard for Fair
Value Measurement” (ASBJ Guidance No. 31, issued on June 17, 2021; hereinafter, the “Fair
Value Measurement Implementation Guidance”), effective from the beginning of the fiscal
year under review. In accordance with the transitional treatment provided for in Paragraph 272 of the Fair Value Measurement Implementation Guidance, the Company will apply the new
accounting policy prescribed by the Fair Value Measurement Implementation Guidance into
the future. However, this application has no impact on the consolidated financial statements
for the fiscal year under review.

3.

Additional Information
The Company and its certain domestic consolidated subsidiaries have made a transition fromthe consolidated taxation system to the group tax sharing system from the fiscal year underreview. In line with this, the Company and its certain domestic consolidated subsidiaries haveapplied the “Practical Solution on the Accounting and Disclosure Under the Group Tax
Sharing System” (PITF No. 42, issued on August 12, 2021; hereinafter, the “PITF No. 42”),for the accounting treatment and disclosure of income taxes, local income taxes, and tax effectaccounting. In addition, the Company regards that there is no impact from the changes inaccounting policies in line with the application of PITF No. 42, in accordance with Paragraph
32 (1) of PITF No. 42.

4.

Notes to Changes in Presentation Methods(Consolidated statements of income)“Foreign exchange gains” under “Non-operating income” that were separately itemized in theprevious fiscal year are included in “Other” under “Non-operating income” in the fiscal year
under review due to its decreased financial significance.
“Foreign exchange gains” in the fiscal year under review are 50 million yen.

5.

Notes to Accounting Estimates(1)

Valuation of inventories(i)Amounts posted in the consolidated financial statements for the fiscal year underreview
Emotional Value Solutions
Business
Devices Solutions Business
Systems Solutions Business
Adjustment
Consolidated total(ii)

57,585 million yen
20,208 million yen
6,474 million yen-492 million yen
83,776 million yen

Information useful for understanding the content of accounting estimates

The Company Group evaluates inventories by writing down book values based on a decreasein profitability.

- 17 For products, etc. of each business company exceeding a given holding period and volume thatare no longer part of the normal operating cycle, a decrease in profitability is reflected througha systematic write-down method, which has been determined mainly based on past sales anddisposal results.
However, products, etc. that are considered to be still in the process of the normal operating
cycle in light of recent sales results and future sales estimates, despite exceeding a given
holding period and volume, are exempted from systematic write-downs, in whole or in part.
The Emotional Value Solutions Business primarily handles products, etc. directly related topersonal consumption. Consequently, the business results and profitability of products, etc. arestrongly affected by economic trends in Japan and overseas, especially personal consumption.
The business results and profitability of products, etc. of the Devices Solutions Business areaffected by trends of demand for electronic devices, etc. in Japan and overseas. Economic
trends and personal consumption may fluctuate considerably due to factors that are out of theCompany Group’s control, and thus are difficult to predict. Accordingly, in determining asystematic write-down method to reflect a decrease in profitability, significant judgments andassumptions are incorporated. Furthermore, determining whether products, etc. that are
exempted from systematic write-downs are no longer in the process of the normal operating
cycle also entails significant judgments.
These estimates entailing judgments and assumptions may be affected by future trends inpersonal consumption and may significantly affect the amount of inventories in the
consolidated financial statements for the following consolidated fiscal year.
(2)

Valuation of deferred tax assets(i)Amount posted in the consolidated financial statements for the fiscal year underreview
Deferred tax assets(ii)

1,923 million yen

Information useful for understanding the content of accounting estimates

Deferred tax assets are posted if they are judged to be recoverable by making reasonableestimates of when future taxable income will occur and its amount based on business plans,
etc. Such estimates may be affected by changes in uncertain economic conditions, etc. in the
future. If the actual timing of when the taxable income occurs and its amount differ from theestimates, it may significantly affect the amount of deferred tax assets in the consolidated
financial statements for the following consolidated fiscal year.

- 18 6.

Notes to Consolidated Balance Sheet(1)

Assets provided as security and secured obligations
Assets provided as security
Cash and deposits
Deposits (Investments andother assets)
Total

34 million yen
380 million yen
414 million yen

Secured obligations
Accounts payable - other
Gift certificates (Contract
liabilities)
Total
(2)

1 million yen
303 million yen
305 million yen

Guarantee obligation
The Company has guaranteed borrowings extended to its employees from financial
institutions, as follows.
Employee (housing fund)1 million yen(3)

Amount of discount on negotiable instruments receivable(4)

Land for business use was revaluated pursuant to the “Act on Revaluation of Land” (Act No.
34 promulgated on March 31, 1998), and valuation differences which correspond to taxes areposted as “Deferred tax liabilities for land revaluation” of “Liabilities” and the balance thereofis posted as “Revaluation reserve for land” of “Net assets”.
(i)

1,050 million yen

Method of revaluation

Land for business use was evaluated based on the main-street land price set forth in Article 2,
item 4 of the “Order for Enforcement of the Act on Revaluation of Land (Cabinet Order No.
119 promulgated on March 31, 1998), and that land without a main-street land price was
evaluated based on the assessed value of fixed assets as set forth in item 3 thereof, withreasonable adjustment.
(ii)

Date of revaluation:

March 31, 2001

(5)

Out of investment securities, 456 million yen is for lending stock.

(6)

Loan commitment agreement
The Company has concluded loan commitment agreements with two banks in order to carryout efficient funding of working capital. The balance of unused line of credit, etc. under theloan commitment agreements at the end of the consolidated fiscal year under review is asfollows.
Total amount of loan commitment
Borrowing balance
Balance

28,500 million yen
13,800 million yen
14,700 million yen

- 19 7.

Notes to Consolidated Statements of Changes in Equity(1)

Matters relating to type and total number of issued shares, and type and number of treasury
shares(Thousands of shares)
Number of
Number ofshares decreased shares at the end
during theof theconsolidated
consolidated
fiscal year under fiscal year underreview
review

Number ofshares at the
beginning of theconsolidated
fiscal year underreview

Number ofshares increased
during theconsolidated
fiscal year underreview

Issued shares
CommonsharesTotal

41,404――

41,404

41,404――

41,404

Treasury shares
Commonshares (Note)
Total

160

0

28

132

160

0

28

132

(Note) The number of common shares held as treasury shares at the end of the consolidated fiscal year
under review includes 50 thousand shares of the Company held in the Board Benefit Trust (BBT).
0 thousand shares of increase in common shares held as treasury shares is due to the purchase of
fractional shares and a change in the ratio of equity interests of affiliates accounted for using equity
method.
28 thousand shares of decrease in common shares held as treasury shares is due to the disposal of the Company
shares through the Board Benefit Trust (BBT).

- 20 (2)Matters relating to dividend(i)Amount of dividend paid

Resolution
Ordinary
GeneralMeeting of
Shareholders on
June 29, 2022
Board ofDirectors
meeting on
November 8,
2022

Type ofsharesTotal dividend(million yen)

Dividend pershare (yen)Common
share

1,033

25.00

March 31,2022

June 30, 2022

Common
share

1,550

37.50

September 30,
2022

December 5,
2022

Record date

Effective date

(Note 1) The total amount of dividend approved by a resolution of the Ordinary General Meeting of
Shareholders on June 29, 2022 includes a dividend of 1 million yen payable for the Company shares
held in the Board Benefit Trust (BBT).
(Note 2) The total amount of dividend approved by a resolution of the Board of Directors meeting on
November 8, 2022 includes a dividend of 1 million yen payable for the Company shares held in the
Board Benefit Trust (BBT).
(ii)

Dividend for which the record date falls in the consolidated fiscal year under review
but the effective date comes after the end of that consolidated fiscal year
Total
SourceDividend
Type ofdividend
Effective
Resolutionforper share
Record dateshares(million
date
dividend(yen)
yen)
Ordinary
GeneralCommonRetained
March 31,
June 30,
Meeting of
1,550
37.50
Share
earnings
2023
2023
Shareholders on
June 29, 2023
(Note) The total amount of dividend proposed for approval by a resolution of the Ordinary General
Meeting of Shareholders on June 29, 2023 includes a dividend of 1 million yen payable for theCompany shares held in the Board Benefit Trust (BBT).
8.

Notes to Financial Instruments(1)

Matters relating to status of financial instruments
The Company Group raises funds (mainly borrowing from banks) necessary in light ofrespective business plans of business companies. Temporary surplus funds are invested in
more safe financial assets.
Notes and accounts receivable - trade (which are operating receivables) are exposed tocustomers’ credit risks; as such, the Company controls each customer’s due date and balance,
and understands major customers’ credit status. Exchange-rate fluctuation risks for foreign
currency operating receivables due to the Company’s global development are almost set off by
the risks resulting from foreign currency operating payables, some of which are hedged using

- 21 forward exchange contracts. Investment securities are mainly shares of customers, andexposed to market price fluctuation risks.
Most of the notes and accounts payable - trade (which are operating payables) are due within
one year. Borrowings and bonds payable are mainly to raise funds for operating transactions,and interest-rate swaps are used to hedge part of exchange-rate fluctuation risks of borrowings.
Derivatives include forward exchange contracts to hedge exchange-rate fluctuation riskspresent in foreign currency receivables/payables, and interest-rate swaps to hedge fluctuation
risks of interest rates payable on borrowings.
(2)

Matters relating to market value, etc. of financial instruments
Amounts posted on the Consolidated Balance Sheet, market values, and the corresponding
differences between the two as of March 31, 2023, are as follows. Shares, etc. that do not havea market price are not included in the table below. Notes to cash are omitted. Deposits, notes
receivable - trade, accounts receivable - trade, accounts receivable - other, notes and accounts
payable - trade, electronically recorded obligations - operating, short-term borrowings, andaccounts payable - other are omitted, as these are settled within a short time frame andtherefore have a market value approximate to their book value.
(Millions of yen)Amounts posted on
the Consolidated
Balance Sheet (*)

Market value(*)

18,96623,396

12,434
23,396-6,531
-

(300)

(300)

0

(3) Current portion of long-termborrowings(22,117)(22,115)-1(4) Long-term borrowings(37,525)(37,523)

-1

(83)

-

(1) Investment securities(i) Shares of subsidiaries andassociates(ii) Available-for-sale securities(2) Current portion of bonds payable(5) Derivatives(*) Items posted as liabilities are enclosed in brackets.

(83)

Difference(Note)
Unlisted shares (posted as 142 million yen on the Consolidated Balance Sheet), shares ofunlisted subsidiaries and associates (posted as 2,646 million yen on the Consolidated Balance
Sheet), and Investment Limited Partnership (posted as 338 million yen on the Consolidated
Balance Sheet) are shares, etc. that do not have a market price. As such, these items are notincluded in (1).
(3)

Matters relating to breakdown, etc. of market values of financial instruments by level
Market values of financial instruments are classified into the following three levels based on
the observability and materiality of inputs used to calculate market values.
Level 1 market value: Market value calculated using (unadjusted) quoted prices in active
markets for identical assets or liabilities

- 22 Level 2 market value: Market value calculated using directly or indirectly observable inputs
other than Level 1 inputs
Level 3 market value: Market value calculated using significant unobservable inputs
When multiple inputs that have a significant impact on the calculation of market value areused, market value is classified into the level with the lowest priority in the calculation ofmarket value among the levels to which those inputs belong.
(i)

Financial assets and financial liabilities that are recognized on the Consolidated
Balance Sheet at market value(Millions of yen)
Market value
Classification
Level 1
Level 2
Level 3Total
(1) Investment securities
Shares23,39623,396(5) Derivatives (*)
(83)
(83)
(*) Items posted as liabilities are enclosed in brackets.
(ii)

Financial assets and financial liabilities that are not recognized on the Consolidated
Balance Sheet at market value(Millions of yen)
Market value
Classification
Level 1
Level 2
Level 3Total
(1) Investment securities
Shares of subsidiaries and12,434
12,434
associates(2) Current portion of bonds
300
300
payable(3) Current portion of long-term
22,115
22,115borrowings(4) Long-term borrowings
37,52337,523(Note) Valuation methods used for the measurement of market value and a description of inputs(1) Investment securities:
Listed shares are valued using quoted prices. Since listed shares are traded in active
markets, their market value is classified as Level 1 market value.
(2) Current portion of bonds:
The market value of bonds payable, which are issued by subsidiaries, is calculated bydiscounting the total amount of principal and interest by an interest rate that takes into
account the remaining term and credit risk of the bonds. It is classified as Level 2 market
value.
(3) Current portion of long-term borrowings and (4) Long-term borrowings:
The market value of long-term borrowings is calculated by taking into account theremaining term of the bonds and discounting the total amount of principal and interest by
the assumed interest rate that would be applied when new borrowings are conducted. It isclassified as Level 2 market value. The market value of long-term borrowings that are
subject to exceptional accounting treatment for interest-rate swaps is calculated by taking
into account the remaining term of the bonds and discounting the total amount of principal
and interest, which is treated as one with the interest-rate swap in question, by a logicallyestimated interest rate that would be applied when similar borrowings are conducted.

- 23 -

(5) Derivatives:
The market values of interest-rate swaps and forward exchange contracts are calculatedusing observable inputs such as interest rates and foreign exchange rates. They areclassified as Level 2 market values.
Derivatives conducted through exceptional accounting treatment of interest-rate swaps aretreated as being one with the long-term borrowings under the relevant hedge. As such, themarket value of such transactions is presented as being included in the market value for the
long-term borrowings concerned.
9.

Notes to Leased Property
The Company and some of its consolidated subsidiaries own real property for lease and othersin Tokyo and other regions. Income or expenses from the leased property during the fiscal
year ended March 2023 was 109 million yen (rent income was posted as non-operating income
and expenses are posted as non-operating expenses).
The amount posted on the Consolidated Balance Sheet, major changes during the consolidated
fiscal year under review, market value on the consolidated closing date, and the calculation
method of such market value are as follows:(Millions of yen)Amounts posted on the Consolidated Balance Sheet
Balance at the
beginning of theconsolidated fiscal
year under review
16,272(Note 1)
(Note 2)
(Note 3)

Amount ofincreases/decreases
during theconsolidated fiscal
year under review-84

Balance at the end of
the consolidated
fiscal year underreview

Market value on the
consolidated closing
date

16,18718,751

Amounts posted on the Consolidated Balance Sheet were the acquisition costs
minus accumulated depreciation and accumulated impairment loss.
The change during the consolidated fiscal year under review is mainly due to adecrease from depreciation, the acquisition of rental real estate (76 millionyen), and an increase in the rate of rent (13 million yen).
Calculation method of market value
Basically the amount based on a real-estate appraisal report prepared by a realestate appraiser.

- 24 10.

Notes to Per-Share Information
Net assets per share
Net income per share(Calculation basis) Profit attributable to owners ofparentProfit attributable to owners ofparent, available to common shares
Average number of shares during
the fiscal year under review

3,144.81 yen
121.86 yen
5,028 million yen
5,028 million yen
41,262 thousand
shares(Note) For the purpose of calculating the net income per share, the treasury shares remaining
in trust posted as treasury shares in the “Shareholders' equity” section are included in
the treasury shares deducted in the calculation of the average number of shares during
the fiscal year under review. For the purpose of calculating the net assets per share,
the treasury shares so remaining in trust are included in the treasury shares deductedfrom the total number of shares issued and outstanding at the end of the fiscal year
under review.
For the purpose of calculating the net income per share, the average number oftreasury shares, so deducted, during the fiscal year under review was 60 thousand
shares, and for the purpose of calculating the net assets per share, the number oftreasury shares, so deducted, as at the end of the fiscal year under review was 50
thousand shares.
11.

Notes to Revenue Recognition(1)

Information regarding disaggregated revenue arising from contracts with customers
Information by type of goods or services(Millions of yen)
Reported segments
Emotional
Devices
Systems
Value
Solutions Solutions
Solutions
Business
Business
Business

Others(Note 2)Adjustment

Total

Wholesale of watches(Note 1)

116,641

-

-

-

-

116,641

Retail of watches(Note 1)

27,578----27,578

Electronic devices(Quartz crystals,
micro batteries, etc.)-

22,434---

22,434

Precision devices(Precision turnedparts, etc.)-

14,144---14,144

Printing devices-

17,277---

17,277

System-related(Including IT
performance
management)--

19,425--

19,425

- 25 IoT-related
Settlement-related
Other
Transactions withother segments
Revenue arising fromcontracts withcustomers
Revenues fromexternal customers

26,575

10,674

10,888
6,312
-

1,109

411

10,8886,312
38,770-3,053-6,101-3,071-741--12,968

167,742

58,42833,554367

411

260,504

167,742

58,42833,554367

411

260,504

Information by region(Millions of yen)Japan
The Americas
EuropeAsia and others

Reported segments
Emotional
Devices
Systems
Value
Solutions Solutions
Solutions
Business
Business
Business
81,25917,76833,15524,242
7,143
309
19,9397,611
4342,301
25,90546

Others(Note 2)Adjustment

367
-

57
14
313
25

132,606
31,71027,90868,278

Total

Revenue arising fromcontracts withcustomers

167,742

58,42833,554367

411

260,504

Revenues fromexternal customers

167,742

58,42833,554367

411

260,504(Note 1)
(Note 2)

(2)

The wholesale of watches is classified as manufacturing, sales, and repair
services for the Company’s own products. The retail of watches is classified asretail services including other companies’ products.
Although portions of rental revenues from real estate are included, they areincluded in “Revenue arising from contracts with customers” due to its low
financial significance.

Useful information in understanding revenue
Useful information in understanding revenue is as described in “Notes to Important Mattersthat are the Basis for Preparation of Consolidated Financial Statements, (6) Accounting
standards for significant income and expenses”.

- 26 (3)Information in understanding the amounts of revenues in the fiscal year under review and thefollowing fiscal years(i)Balance, etc. of contract assets and contract liabilities(Millions of yen)
Fiscal year under review
Balance at theBalance at the
beginning of theend of the fiscal
fiscal year
year
Receivables fromcontracts with
38,424
38,250
customers
Contract assets
Contract liabilities

343
6,574

397
7,916

Of the amount of revenue recognized in the fiscal year under review, the amount included in
the balance of contract liabilities at the beginning of the fiscal year was 4,620 million yen.
(ii)

Transaction prices allocated to remaining performance obligations

The Company has applied the practical expedient to notes on transaction prices allocated toremaining performance obligations. Contracts with an initially expected term of one year orless are not included in the notes. The performance obligations primarily relate to the Systems
Solutions Business. The total transaction prices allocated to remaining performanceobligations and the period in which the Company expects to recognize the amounts as revenue
are as follows.

One year or lessOver one year, two years or lessOver two years, three years or lessOver three years
Total
12.

(Millions of yen)
Fiscal year under review
1,019
774
450
545
2,790

Presentation of Amounts
In the Consolidated Balance Sheet, Consolidated Statement of Income, Consolidated
Statements of Changes in Equity, and Notes to Consolidated Financial Statements, any amountless than one million yen is discarded.

- 27 [Translation]
Non-Consolidated Statements of Changes in Equity(From April 1, 2022 to March 31, 2023)
Millions of yen
Shareholders' equity
Capital surplus
Retained earnings

Balance at beginning of
periodChanges during period
Dividends of surplus
ProfitPurchase of treasury
shares
Disposal of treasury
stock by ownershipplan trust
Net changes of items
other than shareholders'equityTotal changes during
periodBalance at end of period

SharecapitalLegalcapitalsurplus

OthercapitalsurplusTotal
capitalsurplus10,000

2,378

4,246

6,625

Other
Total
retained
Treasury sharehol
earnings
Legal
Total
ders'
retained Retained retained shares
equityearnings earnings earnings
brought
forward121

22,37922,500-2,583
2,562-2,5832,562-265

38,860-2,583
2,562

-0

-0

44

44

−

−

−

−

−

-21

-21

44

22

10,000

2,378

4,246

6,625

121

22,35722,478-221

38,882Millions of yen
Valuation and translation adjustments

Balance at beginning of period
Changes during period
Dividends of surplus
ProfitPurchase of treasury shares
Disposal of treasury stock byownership plan trust
Net changes of items otherthan shareholders' equity
Total changes during period
Balance at end of period

Valuation
Deferred gains
Total valuation Total net assets
difference on
Revaluation
or losses on
and translation
available-forreserve for land
hedgesadjustments
sale securities
10,134-64
8,190
18,26057,120-2,583
2,562
-0
44
333

59

−

392

392

333
10,467

59
-5

−
8,190

392
18,652414
57,534

- 28 [Translation]
Notes to Non-Consolidated Financial Statements
1.

Notes to Significant Accounting Policies(1)Standards and methods for evaluating securities(i)

Shares in subsidiaries and affiliates:
Stated at cost using the moving-average method(ii)

Available-for-sale securities:
Securities other than shares, etc. that do not have a market price:
Market value method
Shares, etc. that do not have a market price:
Mainly stated at cost using the moving-average method

(iii)

(2)

Standards and methods for evaluating derivatives
(i)

(3)

(4)

Investment Limited Partnership:
Stated on a net basis equivalent to equity interests, based on the most recent financial
statements available according to the financial reporting date stipulated in thepartnership agreement

Derivatives:
Market value method

Depreciation methods for non-current assets(i)

Property, plant and equipment (excluding leased assets):
The straight-line method is used for buildings (excluding equipment attached tobuildings), and equipment attached to buildings, and structures acquired on or after
April 1, 2016, and the declining-balance method for other property, plant andequipment. For a useful life, the estimated economic life is used, which reflects theusable period, actual period of use, and other factors for each asset.

(ii)

Intangible assets (excluding leased assets)
The straight-line method is used. As for software for in-house use, the straight-line
method is used with a usable period of 5 years.

(iii)

Leased assets
Lease assets relating to finance lease with transfer of ownership:
The same depreciation method as applied to the property, etc. owned by the Company
is used.
Lease assets relating to finance lease without transfer of ownership:
The straight-line method is used with a useful life of the lease period and with aresidue value of zero.

Accounting standards for significant allowances and provisions(i)

Allowance for doubtful accounts:
In order to prepare for possible losses on uncollectible receivables held, estimateduncollectible amounts are posted: for general receivables, according to the historicalpercentage of uncollectibles, and for doubtful receivables, considering the probabilityof collection.

- 29 -

(5)

(ii)

Provision for bonuses:
In order to prepare for payment of bonuses to employees, a provision is made based on
the estimated bonus payments, which are attributable to the fiscal year under review.

(iii)

Allowance for investment loss of subsidiaries and associates:
In order to prepare for possible losses on investments to subsidiaries and associates, anamount deemed necessary is provided after considering the financial position of eachcompany and based on a respective review. The allowance for investment loss of
subsidiaries and associates of 4 million yen is directly reduced from the amount ofshares of subsidiaries and associates.

(iv)

Provision for stock benefits:
The Company has posted an estimated amount, as of the end of the fiscal year underreview, for the obligation to deliver shares, as a provision for the delivery of its sharesto the Executive Directors of the Company and its subsidiaries, in accordance with theRules for Delivery of Shares to Officers.

Accounting standards for income and expenses
The Company’s revenues consist of dividend from subsidiaries and associates, management
fee income, and royalty income. Among these, management fee income represents theCompany’s obligations to perform services related to consolidated management andmanagement of each associate based on contracts with each associate. Royalty income
represents the Company’s obligations to license the use of trademarks based on contracts withassociates.
The performance obligations for such management fee income and royalty income arerecognized as revenue according to the contract period.

(6)

Hedge accounting method(i)

Hedge accounting method
Deferred hedge accounting is employed. However, with regard to forward exchange
contracts and the like that meet the requirements for deferral hedge accounting(“furiate-shori”), deferral hedge accounting is employed; with regard to interest-rate
swaps that meet the requirements for exceptional accounting (“tokurei-shori”),
exceptional accounting is employed.

(ii)

Means of hedging and hedged items:
Forward exchange contracts and foreign currency deposits to hedge foreign exchangerate fluctuation risks regarding foreign currency-denominated trade payables andreceivables and the like; and interest-rate swaps to avoid fluctuation risks regarding
borrowings on floating interest rate.

(iii)

Hedging policy
Forward exchange contracts, foreign currency deposits and interest-rate swaps arehedged to avoid exchange- and interest-rate fluctuation risks present in hedged items
in accordance with the Company’s internal rules, and no speculative transactions are
conducted.

- 30 (iv)

(7)

Assessment of hedge effectivenessHedge effectiveness is assessed by analysis of the percentage between theaccumulated cash flow changes of hedged items and the accumulated cash flowchanges by means of hedging. However, the assessment of hedge effectiveness isomitted if the material conditions of the means of hedging and the hedged items are
the same.

Application of group tax sharing system
Group tax sharing system is applied.

2.

Notes to Changes in Accounting Policies
Application of the Implementation Guidance on Accounting Standard for Fair Value
Measurement
The Company has applied the “Implementation Guidance on Accounting Standard for Fair
Value Measurement” (ASBJ Guidance No. 31, issued on June 17, 2021; hereinafter, the “Fair
Value Measurement Implementation Guidance”), effective from the beginning of the fiscal
year under review. In accordance with the transitional treatment provided for in Paragraph 272 of the Fair Value Measurement Implementation Guidance, the Company will apply the new
accounting policy prescribed by the Fair Value Measurement Implementation Guidance into
the future. However, this application has no impact on the financial statements.

3.

Additional Information
Application of the Practical Solution on the Accounting and Disclosure Under the Group Tax
Sharing System
The Company has made a transition from the consolidated taxation system to the group tax
sharing system from the fiscal year under review. In line with this, the Company has appliedthe “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing
System” (PITF No. 42, issued on August 12, 2021; hereinafter, the “PITF No. 42”), for theaccounting treatment and disclosure of income taxes, local income taxes, and tax effectaccounting. In addition, the Company regards that there is no impact from the changes inaccounting policies in line with the application of PITF No. 42, in accordance with Paragraph
32 (1) of PITF No. 42.

4.

Notes to Accounting Estimates
Evaluation of deferred tax assets(1)

Amount posted in the financial statements for the fiscal year under review
Deferred tax liabilities

4,398 million yen

As stated in “6. Notes to Tax Effect Accounting” of the Notes to Non-Consolidated Financial
Statements, deferred tax assets of 252 million yen and deferred tax liabilities of 4,651 million
yen are presented after offsetting.

- 31 (2)Information useful for understanding the content of accounting estimates
Deferred tax assets are posted if they are judged to be recoverable by making reasonableestimates of when future taxable income will occur and its amount based on business plans,
etc. Such estimates may be affected by changes in uncertain economic conditions, etc. in the
future. If the actual timing of when the taxable income occurs and its amount differ from theestimates, it may significantly affect the amount of deferred tax assets in the financial
statements for the following fiscal year.
As stated in “1. Notes to Significant Accounting Policies (7),” the Company has applied thegroup tax sharing system. Accordingly, estimates for the income tax portion have been madefor the entire tax sharing group.

5.

Notes to Non-Consolidated Balance Sheet, Statements of Income, and Statements of Changes
in Equity(1)

Accumulated depreciation of Property, plant and equipment(2)

Monetary claims, monetary debts and transactions with subsidiaries and associates(i)
Short-term receivables
64,883 million yen(ii)
Short-term payables
8,836 million yen(iii)
Long-term receivables
5,146 million yen(iv)Long-term payables
1,616 million yen(v)
Operating revenue
14,958 million yen(vi)Operating expenses
6,457 million yen(vii) Transactions other than operating transactions
4,970 million yen(3)

Revaluation of land for business use

11,086 million yen

Land for business use was revaluated pursuant to the “Act on Revaluation of Land” (Act No.
34 promulgated on March 31, 1998), and valuation differences which correspond to taxes areposted as “Deferred tax liabilities for land revaluation” of “Liabilities” and the balance thereofis posted as “Revaluation reserve for land” of “Net assets”.

(4)

(i)

Method of revaluation:
Land for business use was evaluated based on the main-street land price set forth in
Article 2, item 4 of the “Order for Enforcement of the Act on Revaluation of Land
(Cabinet Order No. 119 promulgated on March 31, 1998), and that land without amain-street land price was evaluated based on the assessed value of fixed assets as set
forth in item 3 thereof, with reasonable adjustment.

(ii)

Date of revaluation:

March 31, 2001

Notes to lending stock
Out of shares of subsidiaries and associates, 46 million yen is for lending stock.

(5)

Loan commitment agreement
The Company has concluded loan commitment agreements with two banks in order to carryout efficient funding of working capital. The balance of unused line of credit, etc. under theloan commitment agreements at the end of the fiscal year under review is as follows.

- 32 Total amount of loan commitment
Borrowing balance
Balance(6)28,500 million yen
13,800 million yen
14,700 million yen

Notes to Statements of Changes in Equity
Type and number of treasury shares at the end of the fiscal year under review
Common shares
111,284 shares
The number of shares above includes 50,400 shares of the Company held in the Board Benefit
Trust (BBT) as a result of the introduction of the BBT plan.

- 33 6.

Notes to Tax Effect Accounting
Breakdown by major reason for incurring deferred tax assets and deferred tax liabilities
Deferred tax assets
Provision for bonuses
Allowance for doubtful accounts
Loss on valuation of shares insubsidiaries
Allowance for investment loss of
subsidiaries and associates
Impaired loss on non-current assets
Assets for adjustment of profit and loss
due to transfer
Long-term accounts payable - other
Loss carried forward
Other
Deferred tax assets - subtotal
Valuation-related reserves concerning loss
carried forward
Valuation-related reserves concerning thesum of deductible temporary differences
Valuation-related reserves-subtotal
Deferred tax assets - total
Deferred tax liabilities
Assets for adjustment of profit and loss
due to transfer
Valuation difference on available-for-salesecurities
Other
Deferred tax liabilities - total
Net deferred tax assets (liabilities)

59 million yen
1,346 million yen
8,529 million yen
1 million yen
713 million yen
1,192 million yen
6 million yen
3,148 million yen
153 million yen
15,152 million yen-2,967 million yen-11,932 million yen-14,900 million yen
252 million yen
20 million yen
4,619 million yen
11 million yen
4,651 million yen-4,398 million yen

Other than the above items, “deferred tax liabilities” concerning “revaluation reserve for land”
was 3,614 million yen.

- 34 7.

Notes to Transactions with Related Parties(1)

Parent company and major corporate shareholders

Attributes Name of company

Ratio of voting
rights held (%)

Relationshipwith related
partyContent oftransaction(Direct)
Major
10.8
shareholder
Property
Property
Sanko Kigyo K.K. (Closer parties or(company,lease-in, etc. lease-inagreed parties)
etc.)
6.0

(2)

Transaction
amount(million yen)

Item

Term-endbalance(million
yen)

639

−

−

Item

Term-endbalance(millionyen)

Subsidiaries and associates, etc.

Ratio of holding Relationship
Attributes Name of company of voting rights, with related
etc. (%)
party

SEIKO WATCHCORPORATION(direct) 100.0

Interlocking
directorate

Content oftransaction
Royalty
incomeManagement
fee income

WAKO Co., Ltd.

(direct) 100.0

Interlocking
directorate

Property
lease-out

Shirakawa Estate
Subsidiary Co., Ltd.

(direct) 100.0

Interlocking
directorate

Property
lease-in

Seiko Instruments
Inc.
SEIKO Solutions
Inc.
SEIKO TimeCreation Inc.

(direct) 100.0(direct) 100.0(direct) 100.0

Interlocking
directorate
Interlocking
directorate
Interlocking
directorate

Property
lease-in
Property
lease-out
Property
lease-out
Property
lease-out

Transaction
amount(million yen)Accounts
2,188 receivable otherAccounts
1,444 receivable other692

AccruedincomeAccounts
163 payable otherAccounts
489 payable other241

AccruedincomeAccruedincomeAccrued147
income682(Note) Transaction terms and policies to determine them
1)
The terms for property lease-in are determined based on the same standards as forgeneral transaction terms after considering market price. In the Statements ofIncome, the property rents payable are offset with property rents receivable.
2)
Royalty income is determined based on the standards similar to general transaction
terms.
3)
Management fee income is determined by mutual consultation between the Company
and a directly consolidated subsidiary, taking into consideration the nature of its
business.
4)
Regarding property rents receivable, those of owned property leased out for businessuse are determined linked to relevant income, and those leased out as office or the likeare determined based on a professional valuation. In the Statements of Income,property rents receivable are offset with property rents payable.

1,237
166
114
−
74
73
6
0

- 35 8.

Notes to Per-Share Information
Net assets per share
Net income per share(Calculation basis) Profit
Profit available to common shares
Average number of shares during the fiscal
year under review

1,393.32 yen
62.06 yen
2,562 million yen
2,562 million yen
41,283 thousand shares(Note 1) For the purpose of calculating the net income per share, the treasury shares remaining
in trust posted as treasury shares in the “Shareholders' equity” section are included in
the treasury shares deducted in the calculation of the average number of shares during
the fiscal year under review. For the purpose of calculating the net assets per share,
the treasury shares so remaining in trust are included in the treasury shares deductedfrom the total number of shares issued and outstanding at the end of the fiscal year
under review.
For the purpose of calculating the net income per share, the average number oftreasury shares, so deducted, during the fiscal year under review was 60 thousand
shares, and for the purpose of calculating the net assets per share, the number oftreasury shares, so deducted, as at the end of the fiscal year under review was 50
thousand shares.
9.

Notes to Companies subject to Restriction on Consolidated Dividend
The Company will become a company subject to restriction on consolidated dividend fromwhen the last day of the fiscal year under review is the last day of the last fiscal year.

10.

Presentation of Amounts
In the Non-Consolidated Balance Sheet, Non-Consolidated Statements of Income, NonConsolidated Statements of Changes in Equity, and Notes to Non-Consolidated Financial
Statements, any amount less than one million yen is discarded.