ANNUAL REPORT

2023

OSAKI ELECTRIC CO., LTD.

Osaki Electric Co., Ltd. Annual Report 2023

Contents
03

Financial Highlights

04

Message from the Chairman and President

05

Management Policy

07

Business update
08
10
10
11
12

17

Business Performance
Overview of Consolidated Financial Position
Cash Flows
Business Environment and Responses to Business Challenges
Corporate GovernanceConsolidated Financial Statements
18

Consolidated Balance Sheets

20
21
22
24
26
40

Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report44

Companies

45

Stock Information

46

Investor Information

2

Osaki Electric Co., Ltd. Annual Report 2023

Financial Highlights
Osaki Electric Co., Ltd. and Consolidated Subsidiaries
Years ended March 31
Thousands ofMillions of yen

U.S. dollars

2019

2020

2021

2022

82,089 ¥90,069 ¥76,255 ¥76,184

Operating income

4,299

3,691

2,684

Profit attributable to owners of parent

1,806

1,197

Total assets

98,314

Total equity
Number of employees

2023

2023

For the year:
Net sales¥¥

89,253$ 668,412

1,277

2,226

16,677

482

(658)

1,319

9,883

97,962

90,98991,222

93,268698,480

58,881

58,63758,88757,611

58,629439,073

3,383

3,557

3,129

2,961

2,813

At year-end:

Yen

U.S. dollars

Per share of common stock:
Profit¥36.95 ¥

24.47 ¥

9.84

¥ (13.42)

¥

27.86

$

0.20

Cash dividends

20.00

20.00

20.00

20.00

20.00

0.14

Equity974.95956.44950.37936.60981.44

7.34

Notes: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥133.53=U.S.$1
the approximate Tokyo foreign exchange market rate as of March 31, 2023

Business segments Smart meters & solutions in Japan: Smart meters, Instrument VCT, Energy solutions, Distribution panels
Smart meters & solutions overseas: Smart meters, Energy solutions
Real estate: Real estate leasing*With respect to all of our shares in Osaki Engineering Co., Ltd., which had been classified as "Production equipment business" in thereportable segment, as a result of the sale on September 30, 2022, the Company was excluded from the scope of consolidation.

3

Osaki Electric Co., Ltd. Annual Report 2023

Message from the Chairman and President

TO OUR SHAREHOLDERS

Since its founding in 1916, OSAKI has remained committed to the effective application of energy through power
measurement and control. Our core product, the smart meter, commands a top-class position within Japan, andaccelerates global enterprise—an effort marked by bringing the global manufacturer of smart meters EDMI into
our fold in 2012. OSAKI’s business operation now spans over 100 countries across Japan, Oceania, Europe,
ASEAN, Middle East, and Africa.
The OSAKI Group’s corporate vision is to be a Global Energy Solution Leader that takes on social challenges
related to energy, by pursuing new technologies and added value creation. We are committed to the developmentof a sustainable society and environment.
We believe that OSAKI has an exciting future ahead of us, and we ask that you join our journey to realize abetter tomorrow.

Y. Watanabe
Chairman and CEOOSAKI Electric Co., Ltd.

M. Watanabe
President and COO
OSAKI Electric Co., Ltd.

4

Osaki Electric Co., Ltd. Annual Report 2023

The forward-looking statements in this document are based on the best assumptions made by OSAKI (hereafter as“OSAKI” or “the Company”) as of June 29, 2023.

Management Policy

1. Basic Corporate Policy
The OSAKI Group’s corporate vision is to be a Global Energy Solution Leader that takes on social challenges related toenergy. The Group strives to pursue advanced technologies for energy solutions, to create new values which will contributeto a better society.

2. Medium- to Long-Term Management Strategies and Issues to Be Addressed
OSAKI anticipates a stagnant market condition in the Japanese smart meter business and will proceed to concentrate on
expanding products and solutions related to energy management as a short-term strategy in the domestic domain. As forthe overseas business, the Company has set an improvement in profitability as a top priority and will strive to minimize
the impact of electronic shortages.
In the medium-term, the Company will expand green technology solutions business to support customers to accelerate
decarbonization actions. In addition, the Company will reinforce the R&D and manufacturing framework in preparation
for the introduction phase of the next-generation smart meters in Japan.
In the overseas business, the Company continue to focus on improving profitability. Accordingly, the Company will
increase the ratio of solutions business, including smart meters and head-end systems, while streamlining organization
functions such as R&D facilities and reinforcing supply chain management.
Strategies based on management policies
ⅰ. Developing value-added smart meters and expanding energy solutions (Japan)
・Accelerate R&D and reinforce manufacturing framework for next-generation smart meter.
・Expand value-added energy saving solutions business in decarbonization, and develop and provide a packaged
service leveraging green technology.
ⅱ.

Developing new products and services (Japan)
・Collaborate with various partners to accelerate technology development and reinforcing marketing・Leverage management resources and reinforce framework to create and market new products and services that willcontribute toward building a sustainable societyⅲ.

Expanding global business focused on profit
OSAKI Group will execute the following measures in the focus regions including Oceania, Europe with particularfocus on UK, and emerging countries in Asia and the Middle East.
・Expand high-valued solution services suited to various markets
・Streamline organizational functions including R&D locations
・Reinforce supply chain managementⅳ.

Building resilient group operations
・Strengthen the development and utilization of the Group’s human resources
・Strengthen Group risk management
・Strengthen financial structure and optimally allocate management resources
・Promotion of sustainability response5

Osaki Electric Co., Ltd. Annual Report 2023ⅴ.

Shared value
In carrying out the aforementioned strategies, OSAKI acknowledges the importance of shared value to achieve its
mid-term management goals. Therefore, the Company will carry out internal campaigns to clarify importantvalues and take thorough measures to share the OSAKI values once in for all among its employees and related
stakeholders.

3. Mid-term Management Plan
(Millions of yen)
Fiscal Year ending
March 31, 2024
Forecast

Fiscal Year ending
March 31, 2025
Outlook

Fiscal Year ending
March 31, 2026
OutlookNet sales

88,00091,00098,000Operating income

2,800

4,000

5,500

Ordinary Income

2,400

3,700

5,200

Profit attributable toowners of parent

1,000

2,200

3,300

ROE

2.5%

5.0%

7.0%

Fiscal Year ending
March 31, 2028
Target

8.0% or more

4. Dividend Policy
The Company has established a basic policy to carry out the continual distribution of steady dividends to shareholders
while providing additional performance-based dividends.
The basic policy states that, in principle, the amount distributed is higher of either a dividend payout ratio of 30% or 2%
of DOE (dividend on equity).
With the goal of increasing capital efficiency, we continuously evaluate the share buy-back option while taking such factors
as cash on hand, working capital, financial performance and stock price trend, and investment opportunities into
consideration.
As part of our drive to increase our long-term growth in corporate value, we reinvest earnings towards R&D and capital
expenditures that will increase our competitiveness. We also aim to use retained earnings effectively towards M&A andother business opportunities aimed at increasing earnings.
Our articles of incorporation allow for an interim dividend. Consequently, the basic policy establishes semi-annual
dividends from surplus as an interim dividend and year-end dividend. The board of directors authorizes the interim
dividend, and the General Shareholders Meeting authorizes the year-end dividend.
Dividends during the operating year of this report with record dates
Total Dividend
Date of Resolution(Millions of yen)

Dividend per Share(Yen)

Board of directors’ resolution of November 8, 2022

474

10.00

Annual general shareholders meeting resolutionof June 28, 2023

468

10.00

6

Osaki Electric Co., Ltd. Annual Report 2023

Business update
08

Business Performance10

Overview of Consolidated Financial Position

10

Cash Flows11

Business Environment and Responses to Business
Challenges
Corporate Governance

12

7

Osaki Electric Co., Ltd. Annual Report 2023

Business update

1. Business Performance (Fiscal year ended March 31, 2023)(1) Highlight of Operating Results of This Fiscal Year・ Consolidated sales increased by 17.2% year-on-year to 89,253 million yen. Operating income improved by 74.3%
to 2,226 million yen. Net income attributable to owners of parent were 1,319 million yen in contrast to the loss of
658 million yen the previous fiscal year. This was due to the extraordinary income recorded from the sale of ouroverseas and domestic subsidiaries.
・ In Japan, sales of smart meters and solutions increased from the previous fiscal year, resulting in a profit increase.
・ In the overseas, shipments to Oceania showed healthy increase from the previous fiscal year while shipments to UK
decreased due to a shortage of electronic components. On a U.S. dollar basis, overall sales decreased while increased
on a Japanese yen basis factoring in the forex impacts. Overall profits decreased from sales decrease on a U.S. dollar
basis and hikes in material costs.

Consolidated Financial Results(Millions of yen)
Fiscal Year ended Fiscal Year ended
March 31, 2022 March 31, 2023

YoY Change
AmountInitialForecasts%

76,18489,25313,069+17.2%

Smart meters & solutions in Japan

46,00654,4278,420+18.3%

Smart meters & solutions overseas

30,06834,613

4,545+15.1%

Production equipment

692

761

69

+10.0%

Real estate

553

571

17

+3.2%

Adjustment(1,137)(1,121)

15―

17,96420.1%
15,737
17.6%
2,226
2.5%
3,816

1,589

+9.7%

Smart meters & solutions in Japan

16,37521.5%
15,097
19.8%
1,277
1.7%
1,225

2,590

+211.4%

Smart meters & solutions overseas

58(1,886)(1,944)―

Production equipment

(282)

9

291

―

Real estate

271

295

23

+8.7%

Net sales

Gross profit
Ratio to sales
SG & A expenses
Ratio to sales
Operating income
Ratio to sales

Changes from Initial
Forecasts
Amount%80,0009,253+11.6%+74.3%

1,000

1,226

+122.7%+0.8pt1.3%(1.4)pt
639+4.2%(2.2)pt

949+1.2pt

4

(7)

(12)

―

Ordinary income

1,189

1,885

695

+58.5%

1,100

785+71.4%

Profit attributable to owners of parent

(658)

1,319

1,978

―

1,500

(180)

(12.0)%Net income per share（yen）(13.42)

27.86

41.28

―

ROE

(1.4)%

2.9%―+4.3ptAdjustment

8

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Sales by Region (Excluding intercompany sales)(Millions of yen)
Fiscal Year ended
March 31, 2022

Japan
Overseas
Oceania
EuropeAsia
Others
Total
Average exchange rate

Fiscal Year ended
March 31, 2023

47,04829,135
10,642
11,3516,069
1,071
76,18455,45033,802
15,628
10,1425,969
2,062
89,253¥109.90/USD¥131.62/USD

YoY Change
Amount

%

8,401
4,667
4,986
(1,208)(100)
990
13,069+17.9%+16.0%+46.9%(10.6)%(1.6)%+92.4%+17.2%(2) Outlook for the Fiscal Year ending March 31, 2024
・Sales of Smart meters & solutions in Japan will remain stagnant up until the demand pick up until fiscal 2025 when
the introduction of next-generation smart meters is anticipated. Profits are expected to decrease due to sales decrease
aforementioned, in addition to material costs, which the Company has worked to contain to some degrees, areexpected to raise from yen depreciation.
・As for Smart meters & solutions overseas, a shortage of electronic components is expected to resolve and shipments
to UK will increase accordingly. Oceania is also showing steady growth, leading to overall sales to increase. Profits
are expected to recover due to sales increase from aforementioned factors and a slowdown in material cost hikes, thatwere largely caused by material shortages.
・All in all, consolidated sales for the fiscal year ending March 31, 2024 are expected to decrease by 1.4% to 88,000
million yen. Operating income and ordinary income are expected to increase by 25.7% to 2,800 million yen and27.3% to 2,400 million yen respectively. Profit attributable to owners of parent expected to decrease by 24.2% to1,000 million yen.
・The dividend plan for the fiscal year ending March 31, 2024 is 20 yen per share per annum.

Consolidated Forecast(Millions of yen)
Fiscal Year ended March Fiscal Year ending March
31, 2023 Actual
31, 2024 Forecast

YoY Change
Amount%Net sales

89,25388,000(1,253)(1.4)%

Smart meters & solutions in Japan

54,42750,500(3,927)(7.2)%

Smart meters & solutions overseas

34,61338,000

3,386

+9.8%

Production equipment

761

－

(761)

－

Real estate

571

600

28

+4.9%

Adjustment(1,121)(1,100)21－

Operating income

2,226

2,800

573

+25.7%

Smart meters & solutions in Japan

3,816

1,900

(1,916)(50.2)%

Smart meters & solutions overseas(1,886)

600

2,486

－

9

－

(9)

－

Real estate

295

300

4

+1.6%

Adjustment

(7)

－

7

－

Ordinary income

1,885

2,400

514

+27.3%

Profit attributable to owners of parent

1,319

1,000

(319)

(24.2)%

Production equipment9

Osaki Electric Co., Ltd. Annual Report 2023

2. Overview of Consolidated Financial Position
Total assets at March 31, 2023 were 93,268 million yen, a 2,045 million yen increase from March 31, 2022. This was
mainly due to an increase in notes and accounts receivable-trade and contract assets, and inventory by 3,059 million
yen and 2,967 million yen respectively while cash and cash equivalents decreased by 2,686 million yen.
Total liabilities were 34,638 million yen, a 1,028 million yen increase from March 31, 2022. This was mainly due toan increase in notes and accounts payable-trade and electronically recorded obligations-operating and tax payable by
1,681 million yen and 401 million yen respectively, despite a decrease in short-term and long-term borrowings atoverseas subsidiaries by 1,419 million yen.
Net assets were 58,629 million yen, a 1,017 million yen increase from March 31, 2022. This was mainly due to anincrease in foreign currency translation adjustments, capital surplus and non-controlling interest by 843 million yen,
362 million yen and 363 million yen respectively while treasury shares deducted from equity increased by 767 million
yen.
(Millions of yen)

As of March 31, 2022

As of March 31, 2023

YoY Change

Total assets

91,222

93,2682,045

Total liabilities

33,61034,638

1,028

Total equity

57,611

58,6291,017

Equity ratio

49.6%

49.2%

(0.3)pt

3. Cash Flows
Cash and cash equivalents at the beginning of the period were 12,718 million yen, a 2,616 million yen decrease
from the beginning of the previous fiscal year ended March 31, 2022.
(Millions of yen)

Fiscal Year ended
March 31, 2022

Fiscal Year ended
March 31, 2023

YoY Change

Cash flows from operating activities

4,422

260

(4,161)

Cash flows from investing activities(1,219)

1,349

2,569

Cash flows from financing activities(2,934)(5,072)(2,138)Cash and cash equivalents at end of year

15,335

12,718(2,616)(1) Cash flows from operating activities
Net cash provided by operating activities for the year ended March 31, 2023 was 260 million yen. This was
mainly due to a recording of 3,574 million yen in income before income taxes and minority interests, 2,587
million yen in depreciation and amortization, 1,982 million yen in increase in notes and accounts payable-trade
offset the decrease in cash from an increase in trade receivables by 3,421 million yen, inventory by 2,593 million
yen and a recording of tax payable in the amount of 851 million yen.
(2) Cash flows from investing activities
Net cash provided by investing activities for the year ended March 31, 2023 was 1,349 million yen. This was
mainly due to an income from the sale of the consolidated subsidiaries in the amount of 3,638 million yen offset
the payments for property, plant and equipment in the amount of 1,443 million yen.

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Osaki Electric Co., Ltd. Annual Report 2023

(3) Cash flows from financing activities
Net cash used in financing activities for the year ended March 31, 2023 was 5,072 million yen. This was mainly
due to a decrease in short-term and long-term loans payable overseas by 2,464 million yen, dividends paid to noncontrolling interest in the amount of 1,486 million yen, and payments for treasury stock in the amount of 847
million yen.

4. Business Environment and Responses to Business Challenges(1) Important Accounting Policy and Estimate
OSAKI Group consolidated financial statements are prepared based on accounting principles generally acceptedin Japan. When preparing these consolidated financial statements, we apply various factors deemed reasonable
based on past earnings and current conditions to make estimates and judgments. However, actual results may varyfrom these estimates due to uncertainties specific to estimates.
The significant accounting policies adopted by the Group in its consolidated financial statements are described in“1. Summary of Main Accounting Policies” in “Notes to Consolidated Financial Statements”.
And the significant accounting estimates and assumptions used in the preparation of the consolidated financial
statements are described in “3. Significant Accounting Estimates” in “Notes to Consolidated Financial Statements”.
(2) Earnings Analysis for the Current Fiscal Year
Consolidated sales and operating income in Japan for the fiscal year ended March 31, 2023 exceeded the company
forecasts at the beginning of the fiscal year, due to better-than-expected performance of smart meter and solutions
business.
Consolidated sales overseas for the corresponding fiscal year exceeded the company forecast at the beginning of
the fiscal year, due to steady shipments to Oceania and yen depreciation. Consolidated operating income fell shortof the company forecast given that shipments to UK was strongly impacted by electronic component shortage in
addition to a rise in material costs.
As a result, consolidated net sales and profits are as below.
(Millions of yen)
Fiscal Year ended
March 31, 2023

ActualChanges from
Initial PlanYoY Change
Amount%Amount%Net sales

89,25313,069+17.2％

9,253+11.6％

Operating income

2,226

949

+74.3％

1,226+122.7％

Ordinary income

1,885

695

+58.5％

785+71.4％

Profit attributable to owners of parent

1,319

1,978

―

(180)

(12.0)%(3) Capital Sources and Capital Liquidity
The capital required for Group operating activities is mainly covered by cash inflows from operating activities. At
the same time, we also maintain liquidity by using bank loans to meet obligations when necessary.
Capital resources are invested in increasing the added value of smart meters and solution services, to elevate
corporate value over the next few years.
We engage in Group capital financing to promote the effective use of Group capital and increase capital efficiency.
At the same time, we engage in capital procurement based on comprehensive evaluations of timing, and interest
rate trends in domestic and overseas markets. We also consider the impact on our financial indicators such as ourequity ratio and ROE.
Management resources are used towards investments for sustainable growth of the Group as well as to enhanceshareholder returns.

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Osaki Electric Co., Ltd. Annual Report 2023

5. Corporate Governance(1) Fundamental Approach to Corporate Governance
The OSAKI Group recognizes that the enhancement of corporate governance is essential in terms of achieving
management's goal of enhancing corporate value. We are committed to serving the interest of our stakeholders.
Moreover, the OSAKI Group will further improve management efficiency and transparency, and aim for fairmanagement practices.
(2) Overview of Corporate Governance Organization
OSAKI adopts a corporate auditor system. The Board of Auditors, which includes independent auditors, oversees
management activities of the group. The Board of Auditors consists of four members, of whom two are independent
auditors to maintain objectivity and provide external monitoring functionality over management activities. In
addition, two auditors have vast experience in Accounting Division or worked at financial institutions, contributing
to the Company with their knowledge in finance and accounting.
The Company introduced an executive officer system on June 25, 2020. With the introduction of the system, theBoard of Directors will focus its source to making management decisions and overseeing operations, with aim to
shifting its role to direct group governance. Under Representative Directors’ supervision, the appointed executive
officers execute their business operations with clear authorities and responsibilities. The Company aims to enhancemaneuverability of the operations and further elevates corporate value.
Accordingly, members of the Board have reduced from 15 to 7, 3 of whom are independent directors. The
introduction of an executive officer system to clarify supervisory and executive functions, and the resulting reductionin the number of directors, is a system that enables independent directors to exercise their functions even more
effectively. We believe that this will further strengthen the oversight function of the Board of Directors and contributeto the enhancement of the corporate value of the Group as a whole.
In accordance with the “Statutes Partially Revising the Companies Law” (2014 Statute No. 90), the Company
executed agreements, based on Article 427, Section 1 with the non-executive directors and auditors that limit liability
for compensation of damages provided in Article 423, Section 1 of the Companies Law. Authorization of such
limited liability based on the agreements is restricted to good intentions and no serious negligence in the executionof duties that caused the liability imposed on the director or auditor in subject, and the amount of limited liability forcompensation of damages is set at the statutory figure.
In addition, the Company signed an officer liability insurance policy as set forth in Paragraph 1 of Article 430-3 of
the Companies Act with an insurance company. Going forward, all loss or damages incurred from a claim against
the insured during insurance coverage period will be covered by the insurance. However, there is a set of conditions
where the insurance does not cover the damage, such as act of violations against laws or regulations by the insured
while he or she is fully aware of the act.
Insured persons include, directors, corporate auditors and executive officers of the Company. All expenses related
to the insurance, including premiums, are covered by the Company.
In principle, the Board of Directors holds monthly meetings and convenes further if necessary. Important matters
are discussed at the Management Council prior to the board meetings, in aim to deliver meaningful discussions andclarify decision-making processes. This practice allows the Board to respond dynamically to management
environment changes and service efficient operations.
As the assisting function to the board meeting, management meetings attended by directors (not including
independent directors) are held weekly in principle, to consult and discuss management matters holistically which
may impact the OSAKI group. In addition, a monthly executive officer meeting is held to enhance operations andfunctionalities.
As for group governance, the Company convenes group management meetings monthly in principle, and otherwise
as necessary to monitor business activities of the Company, Enegate and EDMI Limited as group governance.
The Company has established a Nomination and Remuneration Advisory Committee to serve as an advisory bodyto the Board of Directors whose purpose is to improve fairness and transparency.

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Osaki Electric Co., Ltd. Annual Report 2023

Overview of the Nomination and Compensation Advisory Committee
1. Structure(1) Comprised of three or more members who are directors and corporate auditors, the majority of which shall be
appointed from among the independent directors and independent auditors.
(2) The committee chairperson shall be appointed from among the independent directors.
2. RoleOf the following matters, the Committee shall debate on matters presented for advice by the Board of Directors
and issue a response to the Board of Directors(1) Matters concerning the appointment or removal of directors and corporate auditors(2) Standards of independence for outside officers(3) Matters concerning the appointment or removal of the representative director(4) Matters concerning the appointment or removal of directors and executive officers(5) Policy on determining compensation systems for directors and executive officers and amounts(6) Details of individual compensation for directors and executive officers(7) Matters concerning limits on compensation amounts for directors and auditors(8) Other matters deemed necessary by the Board of Directors
Overview of the Compliance Committee
In regard to compliance, the Compliance Committee was established to oversee compliance with all laws andregulations and social norms, and to set forth the code of practice and compliance manual at OSAKI Group
companies to instill the purposes of compliance. The committee also issues the OSAKI Group ComplianceHandbook to promote compliance awareness and maintain compliance organizations. Concerning legal andaccounting matters, moreover, the committee receives appropriate advice from experts such as legal counsel andcertified public accountants to satisfy legal requirements.
Overview of the Sustainability Promotion Committee
In regard to sustainability, the Sustainability Promotion Committee was established to systematically promote theGroup's response to sustainability, contribute to the sustainable development of a society and conserving theenvironment, and aims for sustainable corporate growth through the reduction of the Group's risks and the
expansion of profit opportunities. The Committee, which is chaired by the President and Representative Director,
promotes and evaluates the Group's sustainability initiatives, and the content of the committee's deliberations isreported to the Board of Directors as appropriate.

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Osaki Electric Co., Ltd. Annual Report 2023

Diagram of the Corporate Governance System
General meeting of Shareholders
Appointment and Dismissal

Alignment

Appointment and Dismissal

Appointment and Dismissal

Board of Auditors

Consultation

Auditing

Board of Directors

Internal Auditors
Independent Auditors

Nomination and Remuneration
Advisory Committee

Internal Directors
Independent Directors

Reporting

Alignment
Alignment

Management Council
ReportingAppointment
andSupervision

Alignment

Accounting
AuditorSustainability Promotion Committee
Reporting

Reporting

AlignmentGroup Management meeting
ReportingCompliance committee

Management
Audit OfficeGroup Management Council
ReportingPresident and COO

Auditing

Auditing

Internal
Auditing

Management Meeting
Executive Officers
Executive officer meeting
Corporate Division
Group companies(3) Organization of Internal Control System
Based on the Companies Law and its enacted rules, we have established the following basic policy for structuring
our internal control system, and maintain the system accordingly to secure proper operational duties.
a) Systems that secures conformance to the law and articles of incorporation with respect to the executionof duties by directors and employees of the Company and its subsidiaries* The Company establishes the compliance committee, which sets forth the code of practice and compliance manualat the Osaki Group companies. The company also issues and promotes the Osaki Group Compliance Handbook sothat officers and employees of the Company and its subsidiaries observe the law, the articles of incorporation,internal company rules, and social norms and prevent any form of harassment.
* Based on management rules of the Osaki Group, the Company shall plan and implement various measures toenhance the effectiveness of the internal controls system at each subsidiary and provide guidance and support tothe subsidiaries.
* The Internal Auditing Office conducts internal audits of the Company and those subsidiaries with no internal audit
department in accordance to schedule, audits the appropriateness and efficiency of duties, and makes efforts forreinforcement and improvement of the compliance organization.
* Through appropriate operations of the helpline system, the Osaki Group shall devise early detection and correction
to violations of the law and unlawful conduct by officers and employees, and thus apply efforts to reinforce thecompliance organization.

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Osaki Electric Co., Ltd. Annual Report 2023

* The Osaki Group shall conduct operations based on the basic internal controls policy related to financial reportingand secure the reliability of financial reporting required by the Financial Instruments and Exchange Law.
* As a member of society, Osaki Group, based on its code of practice, shall refrain from holding any relations with
anti-social forces that threaten the order and safety of civil society, and shall respond to any eventuality with aresolute attitude.
b) Organization for storing and managing information related to the execution of duties by directors of theCompany* The Company shall record information and documents related to the execution of duties by directors on paper orelectromagnetic media and appropriately stored and managed in accordance with the board of directors meeting
rules and internal corporate rules.
* Directors and corporate auditors of the Company are entitled to have access to these documents during businesshours.
c) Rules and other organizations related to managing the risk of loss of the Company and its subsidiaries* At the Company, each department, as well as each committee (Compliance, Sustainability, Quality Control,
Product Liability, Export Administration) of the Company, shall identify, analyze, and assess risks according to
the Risk Management Rules and the Basic Policy for Risk Management, and prepare a Risk Map. Any recognizedrisk shall have necessary countermeasures instituted to reduce such a risk. The company shall instruct to all
subsidiaries to induce comparable system and establish an organization that delivers the appropriate information
to the Company in the event of any unforeseen developments.
* The Internal Auditing Office audits the risk management status of the Company and those subsidiaries without its
own internal audit office through an internal audit. The office reports the results periodically at board meetings of
the Company, where improvement measures will be deliberated and decided.
d) Systems to secure efficient execution of duties by directors of the Company and its subsidiaries* The Company establishes goals of the Company and entire Osaki Group shared by directors at the beginning ofeach year and prepares a specific annual operating plan to achieve the goals. Furthermore, the achievement of thegoals is reviewed monthly and quarterly. Feedback of the results to departments of the Company and subsidiaries
secures effectiveness and efficiency of operations.
* The Company convenes the board of directors’ meetings monthly in principle, and otherwise as necessary to
respond efficiently to dynamic changes in the management environment of Osaki Group. The Company hosts a
management council prior to the board of directors’ meetings to have discussions in depth and to clarify decisionmaking process.
* In principle, the Company convenes management meetings weekly to conduct multi-faceted studies anddiscussions over management issues that affect the corporate Osaki Group.
* The Company convenes executive meetings monthly in principle, and otherwise as necessary to share information
by attending executives and to carry out prompt execution.
* The Company convenes group management meetings monthly in principle, and otherwise as necessary to reportbusiness activities of the Company, Enegate and EDMI Limited as group governance.
* Execution of daily duties at the Company and its subsidiaries shall be based in accordance with occupational duty
authority rules and internal approval process rules.

15

Osaki Electric Co., Ltd. Annual Report 2023e) Reporting systems to the Company regarding executing duties by board members of subsidiaries of theCompany* Based on operating management rules of the Osaki Group, every subsidiary of the Company bears the obligationof reporting important management matters associated with a said subsidiary to the Company.
* For subsidiaries within Japan, the Company in principle convenes group management council meetings to discussbusiness performance and other necessary matters of such subsidiaries. Major subsidiaries outside Japan
periodically report business performance and other important management issues to the board of directors of theCompany.
f) Items regarding employee status, employee independence from directors, and securing effectiveness of
direction given to the said employee, whenever a corporate auditor of the Company requests placementof an employee for assistance in the auditor’s duties.
* Dedicated employees shall be placed to assist the duties of the auditors.
* Such employees that assist the duties of the auditor shall not hold any co-duties in a post to execute operations of
the Company, shall conduct their duties under the auditor's direction and command, and shall submit to transferswith the consent of the auditor.
g) Reporting system to corporate auditors by director or employee of the Company or by a director, corporate
auditor, or employee of a subsidiary of the Company (including anyone who received a report from theforegoing), the organization to assure no unfavorable treatment as a consequence of such reporting toanyone who provides such reporting* Whenever a director, employee, or subsidiary’s corporate auditor in the Osaki Group learns, in regard to executionof duties, of any facts concerning significant violation of the law or articles of incorporation, facts of unlawfulness,or facts that may impose significant damages to the Osaki Group, the Company shall secure an organization thatreports such matters to the corporate auditors of the Company without delay.
* The Company shall secure an organization where, in addition to items prescribed by law, directors, employees, andsubsidiaries’ corporate auditors in the Osaki Group shall report items that may have a serious effect on the Osaki
Group, the implementation status of internal audits, and notifications regarding the group helpline system and theirdetails to the corporate auditors of the Company without delay.
* The Osaki Group shall refrain from imposing any unfavorable treatment like discharge or anything else to
informants, for reasons of informing through the helpline system.
h) Items concerning policy associated with expenses incurred and liabilities processed in the execution ofduties by corporate auditors of the Company* The directors of the Company shall execute necessary budgetary measures for the expenses associated with auditing,in order to secure smooth audits by the corporate auditors.
i) Systems to otherwise secure effective auditing by corporate auditors of the Company* The board of directors of the Company shall secure the attendance of corporate auditors to board meetings,
management council, management meetings, and other important meetings of the Company in order to secure
appropriateness of operations.
* The representative director of the Company shall secure opportunities to regularly exchange opinions with thecorporate auditors.

16

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Financial Statements

18

Consolidated Balance Sheets

20

Consolidated Statements of Income

21

Consolidated Statements of Comprehensive Income

22

Consolidated Statements of Changes in Equity

24

Consolidated Statements of Cash Flows

26

Notes to Consolidated Financial Statements

40

Independent Auditor’s Report17

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Balance Sheets
March 31, 2022, and 2023
Thousands of
U.S. dollars

Millions of yen
ASSETS

2022

Current assets:
Cash and cash equivalents (Note 4)

¥

2023
¥

2023

Deposits (Note 4)

11,857
3,546

9,171
4,611

$

68,681
34,533

Notes and accounts receivable - trade, and contract assets

17,436

20,495

153,493

Merchandise and finished goods

6,031

7,775

58,233Work in process

3,165

2,673

20,023

Raw materials and supplies

6,911

8,626

64,604

Other current assets

3,234

3.778

28,295

Allowance for doubtful accounts

(530)

(514)

(3,853)

Total current assets

51,65356,618424,011

Buildings and structures

23,25322,160165,958

Less-accumulated depreciation(14,372)(13,820)(103,504)

Total buildings and structures

8,880

8,339

62,453

Non-current assets:
Property, plant and equipment

Machinery, equipment and vehicles

15,344

15,993

119,773

Less-accumulated depreciation(12,346)(13,152)(98,495)

2,998

2,841

21,278

12,83012,09090,543

Total machinery, equipment and vehicles
Land
Leased assets

3,527

3,389

25,381Less-accumulated depreciation(1,681)(1,866)(13,975)

Total leased assets

1,845

1,523

11,406

Construction in progress

526

74

555

Other fixed assets

7,303

7,418

55,554Less-accumulated depreciation(6,613)(6,783)(50,803)

Total other fixed assets

689

634

4,750

27,77025,502

190,987

868

735

5,506

868

735

5,506

Investment securities (Note 6)

5,229

5,660

42,389Defined benefit asset

1,525

1,571

11,768Deferred tax assets

1,372

1,412

10,579Other assets

2,805

1,770

13,260

(3)

(3)

(23)

10,93010,412

77,975

Net property, plant and equipment
Intangible assets
Other intangible assets
Total intangible assets
Investments and other assets

Allowance for doubtful receivables
Total investments and other assets
Total non-current assets
TOTAL

39,568¥91,22236,649¥93,268274,469$

698,480

See notes to consolidated financial statements

18

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Balance Sheets
March 31, 2022, and 2023
Thousands of
U.S. dollars

Millions of yen
LIABILITIES AND EQUITYCurrent liabilities:
Notes and accounts payable - trade

2022
¥

2023

Electronically recorded obligations - operating

7,324
2,965

Short-term loans payable

6,926

2,864

21,455

Accrued income taxes

502

904

6,772

Provision for bonuses

1,656

1,543

11,557

48

39

299

Provision for directors’ bonuses
Provision for loss on liquidation of subsidiaries and associates
Provision for product warranties (Note 3)
Other current liabilities
Total current liabilities

¥

2023

8,172
3,799

$

61,20328,452

-

14

112

473

576

4,316

6,604

7,092

53,11826,50225,008187,288

Non-current liabilities:
Long-term loans payable

-

2,642

1,612

1,516

19,786
216,538
11,359Provision for directors’ retirements benefits

42

47

356

Provision for repairs

21

28

209

Defined benefit liability

2,479

2,404

18,007

Deferred tax liabilities

2,154

2,209

16,549

798

781

5,850

Lease obligation

Other non-current liabilities
Total non-current liabilities

7,108

9,630

72,119Total liabilities

33,61034,638259,407

Common stock (Note 8)

7,965

7,965

59,655

Capital surplus

8,750

8,759

65,597Retained earnings

25,67026,033

194,962

Treasury stock (Note 9)(487)(1,254)(9,398)

Total shareholders’ equity

41,90041,503

310,817

Accumulated other comprehensive income
Unrealized gains on investment securities

1,119

1,423

10,660Foreign currency translation adjustments

1,667

2,510

18,804Remeasurements of defined benefit plans

549

496

3,714

3,336

4,430

33,179509
11,865466
12,228

3,495
91,580Equity:Shareholders’ equity

Total accumulated other comprehensive income
Stock acquisition rights (Note 10)
Non-controlling interests
Total equity
TOTAL
See notes to consolidated financial statements¥

57,611
91,222¥

58,62993,268$439,073
698,480,140

19

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Statements of Income
Years ended March 31, 2022, and 2023
Thousands of
U.S. dollars

Millions of yen
2022

Net sales
Cost of sales
Gross profit¥

Selling, general and administrative expenses (Note 11,12)
Operating income
Non-operating income:Interest income
Dividend income
Gain on sales of investment securities
Subsidy income
OthersNon-operating expenses:
Interest expenses
Foreign exchange loss
OthersOrdinary income
Extraordinary gains:
Gain on sales of property, plant and equipment (Note 13)
Gain on sale of shares of subsidiaries and associates (Note 14)
Extraordinary losses:
Impairment losses
Loss on sales of shares of subsidiaries and associates (Note 15)
Provision for loss on liquidation of subsidiaries and associates (Note 16)
Income before income taxes and non-controlling interests
Income taxes
Current
DeferredProfitProfit attributable to non-controlling interests
Profit (Loss) attributable to owners of parent

¥

2023

76,18459,808¥2023

89,25371,288$668,412533,876

16,375

17,964

134,535

15,097

15,737

117,858

1,277

2,226

16,677

21
155

21
229

161
1,718

-

98

739

206

46

345

144

120

901

528

516

3,866

288

147

1,102

191

586

4,394

136

124

928

616

858

6,426

1,189

1,885

14,117

-

327

2,451

-

1,957

14,656-

2,284

17,108

74

-

-

-

580

4,347

-

14

111

74

595

4,459

1,114

3,574

26,765952

1,346

10,080

61

25

193

1,013

1,371

10,274100

2,202

16,491

759

882

6,608

(658)

¥

1,319

$

9,883

See notes to consolidated financial statements

20

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Statements of Comprehensive Income
Years ended March 31, 2022, and 2023
Thousands of
U.S. dollars

Millions of yen

ProfitOther comprehensive income
Unrealized gains on investment securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Comprehensive income
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

2022

2023

2023

¥ 100

¥ 2,202$ 16,491

131
451
34
617
¥ 718
(40)
759

303
843
(52)
1,094
¥ 3,296
2,413
882

2,275
6,315
(396)
8,193
$ 24,685
18,0766,608

21

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Statements of Changes in Equity
Years ended March 31, 2022, and 2023
Millions of yen
Shareholders’ equity
Common stock

Balance at March 31, 2021

¥

7,965

Retainedearnings

Capital surplus
¥

8,750

¥

Treasury stock

27,319Cumulative effects of changes in accounting policies

¥

(140)

Total shareholders’equity¥(7)

Restated balance

7,965

8,750

43,895(7)

27,312(140)

43,888Cash dividends paid

(981)

(981)

Loss attributable to owners of parent

(658)

(658)

Purchase of treasury stock (Note 9)

(406)

(406)

(1)

59

58

25,670(487)

41,900

Disposal of treasury stock (Note 9)
Net changes of items other than shareholders’ equity

Balance at March 31, 2022

7,965

8,750

Cash dividends paid

(957)

(957)

Profit attributable to owners of parent

1,319

1,319

Purchase of treasury stock (Note 9)
Disposal of treasury stock (Note 9)

8

(847)

(847)

80

88

Net changes of items other than shareholders’ equity

Balance at March 31, 2023

¥

7,965

¥

8,759

¥

26,033¥(1,254)¥41,503Thousands of U.S. dollars
Shareholders’ equity

Balance at March 31, 2022

Common stock

Capital surplus

Retainedearnings$$$

59,65565,535

192,248

Cash dividends paid

(7,169)Profit attributable to owners of parent

9,883

Treasury stock$$

313,790(7,169)9,883

Purchase of treasury stock (Note 9)
Disposal of treasury stock (Note 9)(3,648)

Total shareholders’equity62(6,350)(6,350)600

663

Net changes of items other than shareholders’ equity

Balance at March 31, 2023$

59,655$65,597$

194,962$(9,398)$310,81722

Osaki Electric Co., Ltd. Annual Report 2023
Millions of yen
Accumulated other comprehensive income
Unrealized gains on
investment
securities

Balance at March 31, 2021¥

988

Foreign
Currency
Translation
adjustments
¥

1,216

Remeasurements Total accumulatedof defined other comprehensive
benefit plansincome
¥

514

¥

Stock
Acquisitionrights

2,718

¥

509

Noncontrollinginterests¥ 11,764

Cumulative effects of changes in accounting policies

Total
equity¥ 58,887(7)

Restated balance

988

1,216

514

2,718

509

11,76458,880Cash dividends paid

(981)

Loss attributable to owners of parent(658)

Purchase of treasury stock (Note 9)(406)

Disposal of treasury stock (Note 9)58

Net changes of items other than shareholders’ equity

131

451

34

617

-

101

718

Balance at March 31, 2022

1,119

1,667

549

3,336

509

11,86557,611

Cash dividends paid

(957)

Profit attributable to owners of parent

1,319

Purchase of treasury stock (Note 9)(847)

Disposal of treasury stock (Note 9)88

Net changes of items other than shareholders’ equity

Balance at March 31, 2023

303
¥

1,423

843
¥

2,510

(52)
¥

496

1,094
¥

4,430

(42)

363

1,414

466

¥ 12,228¥ 58,629

Stock
Acquisitionrights

Noncontrollinginterests

Total
equity$$ 88,857$ 431,450¥

Thousands of U.S. dollars
Accumulated other comprehensive income

Balance at March 31, 2022

Unrealized gains on
investment
securities

Foreign
Currency
Translation
adjustments$ 8,384$ 12,488

Remeasurements Total accumulatedof defined other comprehensive
benefit plansincome$ 4,111$ 24,985

3,816

Cash dividends paid

(7,169)Profit attributable to owners of parent

9,883

Purchase of treasury stock (Note 9)(6,350)

Disposal of treasury stock (Note 9)663

Net changes of items other than shareholders’ equity

Balance at March 31, 2023

2,275

6,315

(396)

8,193

$ 10,660$ 18,804$ 3,714$ 33,179

$

(320)

2,723

10,596

3,495$ 91,580$ 439,073

23

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Statements of Cash Flows
Years ended March 31, 2022, and 2023
Thousands of
U.S. dollars

Millions of yen
2023

2023

3,574
2,587
(44)
(251)
147
(3,421)(2,593)
1,982
(71)
127
4
(10)
(75)
(122)
7
(311)
28
(1,376)
(98)
924
252
(147)
(851)
260

$ 26,765
19,375(332)(1,879)1,102(25,620)(19,419)
14,849
(536)
951
34
(78)
(563)
(913)
52
(2,335)211(10,308)
(739)
6,920
1,893
(1,102)(6,373)
1,953(2,444)7(256)
2(1,000)2,500-(1,443)
671
(211)
99
(1,396)(10,812)
5,025(1,582)
747(10,458)-

3,638

27,250(28)(1,219)

(7)
1,349

(59)
10,1092022
Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment losses
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses(Increase) decrease in notes and accounts receivable - trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for directors’ retirements benefits
Increase (decrease) in provision for directors’ bonuses
Increase (decrease) in defined benefit liability
Decrease (increase) in defined benefit asset
Increase (decrease) in provision for repairs(Gain) loss on sales of property, plant and equipment
Loss on retirement of non-current assets
Loss (gain) on sale of shares of subsidiaries and associates(Gain) loss on sales of investment securities
Other, net
Interest and dividend received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

¥

1,114
2,536
74
203
31
(177)
288
1,240
353
36
115
315
(6)
22
133
(90)
7
(0)
55
(378)
179
(288)
(1,343)
4,422¥

Cash flows from investing activities:
Payments for property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for intangible assets
Proceeds from sales of investment securities
Proceeds from sales of membership
Payments for long-term deposits
Proceeds from refund of long-term deposits
Payments for derivatives trading
Proceeds from sale of shares of subsidiaries resulting in change in scope of
consolidation
Other, net
Net cash provided by (used in) investing activities

24

Osaki Electric Co., Ltd. Annual Report 2023

Consolidated Statements of Cash Flows
Years ended March 31, 2022, and 2023
Thousands of
U.S. dollars

Millions of yen
2023

2022

2023

Cash flows from financing activities:
Increase (decrease) in short-term loans payable, net
Proceeds from long-term bank loans
Repayments for long-term loans payable
Repayments of lease obligation
Payments for treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Proceeds from share issuance to non-controlling shareholders
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year)Cashand cash equivalents at end of year (Note 4)

¥

(558)
(10)
(319)
(406)
(981)
(658)
(2,934)411
680
14,654
15,335

¥

2,812
2,632
(7,909)
(284)
(847)
(957)
(528)
10
0
(5,072)845(2,616)
15,335
12,71821,06019,713(59,230)(2,127)(6,350)(7,173)(3,958)74
0(37,990)
6,330(19,596)
114,846$ 95,249

See notes to consolidated financial statements

25

Osaki Electric Co., Ltd. Annual Report 2023

Notes to Consolidated Financial Statements

1. Summary of Main Accounting Policies
Osaki Electric Co., Ltd., (“the Company”) and its Japanese subsidiaries maintain financial accounting books according toaccounting principles generally accepted in Japan and prepare financial statements accordingly. Foreign subsidiaries maintainfinancial accounting books according to accounting principles generally accepted in their country of presence and prepare
financial statements accordingly.
(1) Important Matters Forming the Basis for Preparation of Consolidated Financial Statements
Scope of consolidation
The consolidated Financial Statement as of March 31, 2023 include the accounts of the Company and its 28 subsidiaries.
Principal Consolidated Subsidiaries are described in the Companies section. One company increased due to the establishmentof a new domestic subsidiary. Six companies have decreased due to the sale of a domestic subsidiary and overseas subsidiaries.
Disclosure about the application of the equity method
The Company does not account for Tohoku Electric Meter Industry Co., Inc. as an associate even though 20 percent of thevoting right is owned because it is clear that the Company will not be able to exercise significant influence over thedetermination of the company's financial and operating or business policies based on an agreement with the parent companyof the company.
Accounting periods of consolidated subsidiaries
Of the consolidated subsidiaries, the fiscal year-end date of 19 consolidated subsidiaries including Osaki United International
Pte. Ltd. is December 31. In preparing the consolidated financial statements, the Company uses the financial statements asof that date, and makes necessary adjustments for significant transactions which occurred between their fiscal year-end date
and the consolidated fiscal year-end date.
(2) Fundamental Policy of Consolidation and Accounting Treatment of Investment in Affiliates
The consolidated financial statements of the Company include accounts of the Company and subsidiaries for which theCompany owns a simple majority or more of shares. Transactions, loans, and credits between consolidated companies are
entirely eliminated.
(3) Foreign Currency Conversion
Monetary loans and credits in foreign currencies are converted into Japanese currency at the spot exchange rate on the
consolidated financial closing date, and conversion differences are treated as income or loss. The assets and liabilities offoreign subsidiaries are converted into Japanese currency at the spot exchange rate on the financial closing dates of therespective subsidiaries, and revenues and expenses are converted to Japanese currency according to the average rate during
the fiscal period. The conversion differences are included under foreign currency translation adjustments and non-controllinginterests in equity.
(4) Cash and Cash Equivalents
Cash and cash equivalents include amounts converted easily to their stated values with slight fluctuation risks in value
resulting from any variation in interest rate because of the short maturity period, and also high-liquidity investments thatmature within three (3) months of their acquisition date.
(5) Marketable Securities
Securities other than shares that do not have a market value are calculated using the fair value method based on the quoted
market value on the last day of the fiscal period (with the entire amount of valuation differences inserted directly into net
assets, and the cost of sales calculated using the moving average method). Shares that do not have a market value arecalculated using the moving average cost method.
26

Osaki Electric Co., Ltd. Annual Report 2023

(6) Inventories
Finished products and work in process are stated mainly at acquisition cost using the moving average method or total averagemethod (asset values on the balance sheet are calculated by the book value write-down method based on decreased
profitability). Build-to-order products are stated at acquisition cost using the specific identification method (asset values on
the balance sheet are computed by the book value write-down method based on decreased profitability).
Raw materials and supplies are stated mainly at acquisition cost using the moving average method (asset values on the balance
sheet are computed by the book value write-down method based on decreased profitability).
(7) Derivative
Financial derivative transactions are recognized using the market value method.
(8) Property, Plant and Equipment
Property, plant and equipment are stated at acquisition cost. By following the method and the identical standard provided in
the Corporate Tax Law, depreciation expenses are computed mainly using the declining balance method for the Company
and Japanese subsidiaries and the straight-line method for foreign subsidiaries.
(9) Intangible Assets
Intangible assets (excluding lease assets) are amortized using the straight-line method. Software used by the Company
internally is amortized over the usable period (5 years).
(10) Leases Assets
For financed lease transactions without ownership transfer, the accounting treatment refers to ordinary sale and purchasetransactions. The depreciation method of lease assets related to finance lease transactions without ownership transfer is thestraight-line method that sets the lease period as the service life and the residual value as zero. The financial statements ofoverseas consolidated subsidiaries are prepared in accordance with International Financial Reporting Standards (IFRS).
However, from the current consolidated fiscal year, IFRS No. 16 “Leases” (hereinafter IFRS No. 16) has been applied.
Regarding the lease lessee, in principle all leases are recorded as assets and liabilities on the balance sheets, and the straightline method is used for depreciation of the capitalized right-of-use assets.
(11) Allowance for Doubtful Accounts
To reserve against write-off losses for receivables, estimated uncollectable amounts are recorded according to historical writeoff experience for general receivables and collection potential for individual receivables with specific write-off concerns.
(12) Provision for Bonuses
A provision is recorded on the basis of expected disbursement amounts in order to prepare for payment of employee bonuses.
(13) Provision for Directors’ Bonuses
A provision is recorded on the basis of expected disbursement amounts in order to prepare for payment of director bonuses.
(14) Provision for Loss on Liquidation of Subsidiaries and Associates
A provision is recorded on the basis of expected disbursement amounts in order to prepare for future losses to be incurred inconnection with liquidation of business of subsidiaries and associates.
(15) Provision for Product Warranties
A provision is recorded for estimated future payments to be made for compensation expenses related to products and services
sold.
(16) Provision for Directors’ Retirements Benefits
The disbursement required is recorded in accordance with internal rules in order to prepare for retirement benefits disbursed
to directors.
27

Osaki Electric Co., Ltd. Annual Report 2023

(17) Provision for Repairs
A provision is recorded to this consolidated fiscal year in order to prepare for expenses of the scheduled maintenance forowned facilities.
(18) Accounting Method of Retirement Benefits
Method of allocating projected retirement benefit obligation to periods
In calculating retirement benefit obligations, the benefit formula basis is used to attribute expected retirement benefits to theperiods up to the end of this consolidated fiscal year.
Method of recording actuarial gains and losses
Actuarial gains and losses are calculated by the straight-line method based on the number of years (10 years) within the
average remaining service period of employees at the time of occurrence for each consolidated fiscal year from the next
consolidated fiscal year.
Actuarial gains and losses of certain consolidated subsidiaries are fully expensed when it occurs.
Adoption of simplified accounting method by small enterprises, etc.
Certain consolidated subsidiaries apply a simplified accounting method to calculate net defined benefit liability and retirement
benefit expenses, which uses the retirement benefit obligation as the amount that would be required if all employees
voluntarily terminated their employment at the end of the fiscal year.
(19) The standards for recognition of significant revenues and expenses
OSAKI Group recognizes revenue based on the following five-step approach:
Step 1: Identify Contracts with Customers
Step 2: Identify Performance Obligations in the Contracts
Step 3: Calculate the Transaction Price
Step 4: Allocate the Transaction Price to Performance Obligations in the Contract
Step 5: Recognize Revenue when the Company Satisfies Performance Obligations
The Company manufactures and sells watt-hour meters and distribution panels etc., and for such product sales, it isdetermined that the performance obligation will be satisfied because the customer obtains control over the product at the timeof delivery of the product, and we recognize the revenue.
However, for domestic sales of goods or products, revenue is recognized at the time of shipment except for some, because
the period from the time of shipment to the time when control of the goods or products is transferred to the customer is normal.
For construction contracts, revenue is recognized over a period of time as performance obligations are satisfied.
The measurement of progress related to the satisfaction of performance obligations are based on the percentage of
construction costs incurred by the end of each reporting period to total expected construction costs. If the degree of progresscannot be reasonably estimated, revenue is recognized on a cost recovery method only for the portion of costs incurred thatis expected to be recovered.
The Company applies alternative treatment for construction contracts with very short construction period and recognizes
revenue when the Company fully satisfies its performance obligations rather than recognizing revenue over a period of time.
Revenue is recognized for the consideration promised in contracts with customers, net of discounts, rebates and returns.
In addition, for buy-sell transactions, the Company does not recognize revenue on the transfer of the goods to be paid, anddoes not recognize any extinguishment of such assets because the Company is substantially obligation to repurchase thegoods to be paid, and it is recognized as inventory.

28

Osaki Electric Co., Ltd. Annual Report 2023

(20) Translation standard for the significant monetary assets and liabilities denominated in foreign currencies toJapanese yen
Foreign currency-denominated monetary receivables and payables are translated into yen at the spot exchange rate on the
consolidated closing date, and the translation difference is treated as profit or loss.
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the rates of exchange in effect atthe balance sheet date, and the differences arising from translation is recognized as gains and losses. Assets and liabilities ofoverseas subsidiaries are translated into Japanese yen at the spot exchange rate on the balance sheet date of the relevant
subsidiaries and others. Revenues and expenses are translated into Japanese yen at the average exchange rate for the period.
Translation differences are included in foreign currency translation adjustments and non-controlling interests in net assets.
(21) Significant hedge accounting method
Hedge accounting method
For interest rate swaps, if the requirements for special treatment are met, it is adopted. When an interest rate swaps meetcertain conditions, the net interest amount to be paid or received under the contract is recognized as special treatment.
Hedge instruments and hedged items(Hedge instruments) Interest rate swaps(Hedge items) Interest on loan payables
Hedging policy
The Group Companies enter into interest rate swaps to hedge interest rate risk of loan payment and identify hedge items on
a contract-by-contract basis.
Hedge effectiveness assessment method
Assessment of effectiveness is omitted if the criteria for special treatment of interest rate swaps are met.
(22) Scope of funds in consolidated statements of cash flows
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments that are readily convertible
to cash and subject to an insignificant risk of change in value with original maturities of three months or less from the date ofacquisition.

2. U.S. Dollar Amounts
U.S. dollar amounts presented in the financial statements are solely for the reference of the reader. These translations should
not be construed as representations that the yen amounts actually represent or have been or could be converted into U.S.
dollars. As the amounts shown in U.S. dollars are for reference only, the rate of ¥133.53 = U.S.$1, the approximate current
rate on Tokyo Foreign Exchange Market at March 31, 2023, has been used for the purpose of presentation of the U.S. dollar
amounts in the accompanying consolidated financial statements.

29

Osaki Electric Co., Ltd. Annual Report 2023

3. Significant Accounting Estimates
Provision for product warranties(Amounts Recorded in the Consolidated Financial Statements)
Millions of yen
As of March 31
Provision for product warranties

¥

2022
473

¥

2023
576

Thousands of
U.S. dollars
2023
$
4,316

(Information on the description of significant accounting estimates related to the identified items)
The Group Companies provide an allowance for warranty costs in an amount that is expected to be incurred in the future tocover warranty costs related to products and services sold.
The amount of compensation is calculated based on reasonably expected amounts based on the quantity of the product anddefect handling cost etc.
(Impact on the consolidated financial statements for the next consolidated fiscal year)
The estimates are uncertain and may differ from actual amounts incurred due to changes in circumstances and may require
additional recording or reversal in the next consolidated fiscal year.

4. Cash and Cash Equivalents
Cash and cash equivalents comprise the following:
Millions of yen
As of March 31
Cash and cash equivalents in the balance sheets
Deposits
Total
Time deposits (with maturities of more than three months)
Deposits (with maturities of more than three months)
Cash and cash equivalents in the cash flow statements¥

2022
11,857
3,546
15,404(68)
15,335

¥

2023
9,171
4,611
13,782(63)(1,000)12,718

Thousands of
U.S. dollars
2023$
68,681
34,533103,214(476)(7,488)95,24930

Osaki Electric Co., Ltd. Annual Report 2023

5. Lease
Sublease transaction, and the amount before deduction of interest equivalent amount recorded in the consolidated balance
sheet
Thousands of
U.S. dollars
2023

Millions of yen
As of March 31
Investments in leases
Current assets
Investments and other assets

2022
¥

2023

387
882

¥

399
881

Lease obligation
Current liabilities
Non-current liabilities

2022
¥

2023

386
881

¥

2,989
6,598

Thousands of
U.S. dollars
2023

Millions of yen
As of March 31

$

395
879

$

2,962
6,585

The amounts of future lease payments under non-cancelable operating leases at March 31, 2022 and 2023 were as follows:
Millions of yen
As of March 31
Due within one year
Due after one year
Total

2022
¥

2023
2
0
3

¥

¥

6
0
6

¥

Thousands of
U.S. dollars
2023
$
47
2
$
50

6. Investment Securities
Investments securities comprise the following:
Millions of yen
As of March 31
Available-for-sale securities
Acquisition cost
Fair value
Net unrealized gain

2022
¥

1,985
3,467
1,481

2023
¥

1,985
3,901
1,915

Millions of yen
As of March 31
Investments in non-public companies and others

¥

2022
1,761

¥

2023
1,758

Thousands of
U.S. dollars
2023$

14,871
29,217
14,346

Thousands of
U.S. dollars
2023$
13,17131

Osaki Electric Co., Ltd. Annual Report 2023

7. Accrued Retirement Benefits
General outline of retirement benefit plans
The Company and certain domestic consolidated subsidiaries have defined benefit corporate pension plans and retirement
lump-sum payment plans as defined benefit plans. In addition, we and certain of our domestic consolidated subsidiaries
participate in multi-employer corporate pension fund plans. The plans are accounted for in the same manner as the defined
contribution plans because the amount of plan assets corresponding to the Company's contributions cannot be reasonably
calculated.
The retirement lump-sum payment plans of certain consolidated subsidiaries calculate net defined benefit liability andretirement benefit expenses using the simplified method.
In addition, certain domestic and overseas consolidated subsidiaries have defined contribution plans, and some domestic
consolidated subsidiaries participate in the smaller enterprise retirement allowance mutual aid.
Defined benefit plan except plans applying the simplified method(a)Movements in retirement benefit obligations:
Millions of yen
As of March 31
Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
OthersBalance at end of year

¥

¥

2022
4,958
340
17
(36)
(261)
5
5,023

¥

¥

2023
5,023
337
23
(177)
(346)
7
4,867

Thousands of
U.S. dollars
2023$
37,621
2,524
177(1,328)(2,597)56$
36,454(b)Movements in plan assets:
Millions of yen
As of March 31
Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
OthersBalance at end of year

¥

¥

2022
4,186
16
132
136
(139)
4,333

¥

¥

2023
4,333
21
(32)
132
(140)
4,314

Thousands of
U.S. dollars
2023$
32,450
162
(241)
989
(1,053)$32,307(c)Reconciliation from retirement benefit obligations and plan assets to net defined benefit liabilities (assets) in the
consolidated balance sheet:
Millions of yen
As of March 31
Funded defined benefit obligations
Plan assets
Unfunded defined benefit obligations
Net of liabilities and assets of consolidated balance sheet

¥

¥

2022
2,807
(4,333)(1,525)
2,216
690

¥

¥

2023
2,742
(4,314)(1,571)
2,125
553

Millions of yen
As of March 31
Net defined benefit liabilities
Net defined benefit assets
Net of liabilities and assets of consolidated balance sheet

¥
¥

2022
2,216
(1,525)
690

¥
¥

2023
2,125
(1,571)
553

Thousands of
U.S. dollars
2023$
20,538(32,307)(11,768)
15,915$
4,146
Thousands of
U.S. dollars
2023$
15,915(11,768)
$
4,146

32

Osaki Electric Co., Ltd. Annual Report 2023(d)Breakdown of retirement benefit cost:
Millions of yen
As of March 31
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Total

¥

¥

2022
340
17
(16)
(117)
223

¥

¥

2023
337
23
(21)
(221)
117

Thousands of
U.S. dollars
2023
$
2,524
177
(162)
(1,658)$880(e) Breakdown of remeasurements of defined benefit plans (before tax effect):
Millions of yen
As of March 31
Actuarial gains and losses
Total

¥
¥

2022
(50)
(50)

¥
¥

2023
76
76

Thousands of
U.S. dollars
2023
$
571
$
571

(f) Breakdown of accumulated remeasurements of defined benefit plans (before tax effect):
Millions of yen
As of March 31
Unrecognized actuarial gains and losses
Total

¥
¥

2022
(791)
(791)

¥
¥

2023
(714)
(714)

Thousands of
U.S. dollars
2023$(5,354)$(5,354)(g) Allocation of plan assets as a percentage of total plan assets:①Plan assets comprise
2022
39%
37%
22%
2%
100%

Equity securities
Debt securities
General account
Others
Total

2023
38%
36%
22%
4%
100%

②Long-term expected rate of return
In determining the long-term expected rate of return, the Company takes into consideration present and expected asset
allocation and present and expected long-term rate of return arising from various plan assets.
(h) Actuarial assumption:
2022
0.4%
0.4%

Discount rate
Expected rate of return on plan assets

2023
0.5%
0.5%

Defined benefit plan applying the simplified method(a) Movements in net defined benefit liabilities for plans applying the simplified method:
Millions of yen
As of March 31
Balance at beginning of year
Retirement benefit cost
Payment of benefits
Balance at end of year

¥

¥

2022
190
76
(3)
263

¥

¥

2023
263
22
(7)
279

Thousands of
U.S. dollars
2023
$
1,973
171
(53)
$
2,091

33

Osaki Electric Co., Ltd. Annual Report 2023(b)Reconciliation from retirement benefit obligations and plan assets to net defined benefit liabilities (assets) in the
consolidated balance sheet:

279
279

Thousands of
U.S. dollars
2023
$
2,091
$
2,091

2023
279
279

Thousands of
U.S. dollars
2023
$
2,091
$
2,091

Millions of yen
As of March 31
Funded defined benefit obligations
Plan assets
Unfunded defined benefit obligations
Net of liabilities and assets of consolidated balance sheet

2022
¥

¥

2023

263
263

¥

¥

Millions of yen
As of March 31
Net defined benefit liabilities
Net of liabilities and assets of consolidated balance sheet

¥
¥

2022
263
263

¥
¥

(c) Retirement benefit expenses are calculated using simplified accounting method. The amount recorded in the previous
consolidated fiscal year was 76 million Japanese yen and this consolidated fiscal year was 22 million Japanese yen ($171
thousand).
Defined Contribution Plan
The amounts required to be contributed to the defined contribution plan are 547 million Japanese yen and 579 million
Japanese yen ($4,340 thousand) for the years ended March 31, 2022 and 2023, respectively.

8. Common Stock
Changes in common stock for the fiscal years ended March 31, 2022, and 2023, are as follows.
Total number of authorized shares:
End of the year
Total number of issued shares:
Beginning of the year
Changes during the year
End of the year

2022

2023

100,000,000

100,000,000

49,267,180
49,267,180

49,267,180
49,267,180

2022

2023

218,762

968,247

842,386

1,657,777(92,901)
968,247(71,300)(89,969)
2,464,755

9. Treasury Stock
Changes in treasury stock as of March 31, 2022, and 2023, are as follows.
Ordinary shares
Beginning of the year
Changes during the year
Purchase of shares less than one unit and acquisition oftreasury shares by resolution of the Board of Directors
Disposal by exercising stock acquisition rights
Grant of transfer-restricted stock compensation
End of the year

10. Stock Acquisition Rights
Stock acquisition rights comprise the following:
Millions of yen
As of March 31
Stock acquisition rights as the stock options

¥

2022
509

¥

2023
466

Thousands of
U.S. dollars
2023
$
3,495
34

Osaki Electric Co., Ltd. Annual Report 2023

11. Selling, general and administrative expenses
Major components of selling, general and administrative expenses comprise the following:

5,096

Thousands of
U.S. dollars
2023$
38,167786

5,893

Millions of yen
As of March 31
Employee salaries and bonuses

2022¥

Provision for bonuses

2023

4,643

¥

895

Provision for directors’ bonuses

62

37

282

Retirement benefit expenses

243

179

1,343

Provision for directors’ retirements benefits

8

4

34

Provision for repairs

6

6

50

Allowance for doubtful accounts

44

0

0

3,043

3,233

24,2152023
3,233

Thousands of
U.S. dollars
2023$
24,215

Research and development expenses

12. Research and Development Expenses
Research and development expenses comprise the following:
Millions of yen
As of March 31
Selling, general and administrative expenses

¥

2022
3,043

¥

13. Gain on sale of property, plant and equipment
Following the sale of all shares of Quantum Automation Pte Ltd. ("QA"), which is wholly owned by EDMI Limited("EDMI"), a consolidated subsidiary of the Company, EDMI sold the building and other real estate used by QA as its
headquarters to QA.
14. Gain on sale of shares of subsidiaries and associates
EDMI Limited, a consolidated subsidiary of the Company, sold its wholly owned shares in Quantum Automation Pte Ltd.
15. Loss on sales of shares of subsidiaries and associates
The company sold shares of our consolidated subsidiary Osaki Engineering Co., Ltd.
16. Provision for loss on liquidation of subsidiaries and associates
To prepare for future losses to be incurred in connection with the liquidation of the business of EDMI Communications Pte
Ltd. which is wholly owned by EDMI Limited, a consolidated subsidiary of the Company, the Company reserves the amountof losses expected to be incurred in the future.

35

Osaki Electric Co., Ltd. Annual Report 2023

17. Income taxes
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities are as follows:
Thousands of
U.S. dollars
2023

Millions of yen
2022
Deferred tax assets:
Loss carried forward*

¥

2023
¥

2,096

$

1,939

14,524

Defined benefit liability

756

733

5,496

Provision for bonuses

390

387

2,901

Accrued expenses

328

339

2,544

Inventories

179

183

1,375

Provision for product warranties

143

175

1,311

Long-term accounts payable

162

158

1,186

Investment securities

152

152

1,138

Stock acquisition rights

156

142

1,070

Impairment losses

251

142

1,065

Membership

104

107

807

Others

642

661

4,952

Subtotal

5,362

5,124

38,373

Valuation allowance on tax losses carried forward*(2,037)(1,780)(13,337)

Valuation allowance on total deductible temporary differences(1,554)(1,365)(10,226)

Subtotal(3,591)(3,146)(23,564)

Total deferred tax assets

1,771

1,977

14,809Deferred tax liabilities:
Land valuation margin(1,608)(1,608)(12,046)

Defined benefit asset

(467)

(481)

(3,603)

Unrealized gains on investment securities

(361)

(492)

(3,686)

Others

(114)

(192)

(1,443)(2,552)

Total deferred tax liabilities¥

Net deferred tax liabilities(2,774)¥(781)(20,779)$(797)(5,970)*Tax losses carried forward and associated deferred tax assets by expiration period:
Millions of yen
2022
Due inOne Yearor Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Valuation allowance

¥ 230
(230)

¥ 129
(129)

¥ 117
(117)

¥ 150
(150)

Deferred tax assets

-

-

-

-

Tax losses carried forward*¥

Due after
Five Years
Total

69
(69)

¥ 1,399(1,339)¥ 2,096(2,037)-59

59*Tax losses carried forward are multiplied by the normal effective statutory tax rate.

36

Osaki Electric Co., Ltd. Annual Report 2023
Millions of yen
2023
Due inOne Yearor Less

Valuation allowance

¥ 117
(117)

Deferred tax assets-

Tax losses carried forward*

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

¥

¥

¥

¥

26
(26)

70
(70)

-

50
(50)

-

Due after
Five Years
Total

67
(67)

-

-

¥ 1,607(1,448)158¥ 1,939(1,780)158*Tax losses carried forward are multiplied by the normal effective statutory tax rate.

Thousands of U.S. dollars
2023
Due inOne Yearor Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years
Total

$ 881

$ 197

$ 526

$ 377

$ 504

$ 12,035$ 14,524

Valuation allowance

(881)

(197)

(526)

(377)

(504)

(10,849)(13,337)

Deferred tax assets

-

-

-

-

-

1,186

1,186

Tax losses carried forward**Tax losses carried forward are multiplied by the normal effective statutory tax rate.

37

Osaki Electric Co., Ltd. Annual Report 2023

18. Business Divestitures
1. Outline of Business Divestiture(1) Name of the successor company in the business divestiture
Hagiwara Electric Holdings Co., Ltd.
(2) Details of the divested business
Production equipment business (Osaki Engineering Co., Ltd.)(3) Main reason for the business divestiture
In 1990, we established Osaki Engineering Co., Ltd. ("Osaki Engineering") as a venture investment business and fine pitchbonding technology. We have been developing our core production equipment business, which includes sensor devices andhigh-performance device-related equipment.
The market for production equipment is expanding, partly due to increased production of semiconductors and theelectrification of cars. However, in order to expand this business in the future, the business is moving forward. Strengthening
management and continuing investment will be extremely important. Osaki Engineering Co., Ltd. accumulated in a situation
where there was little synergy within our group. We sold the shares of Osaki Engineering because, with few synergies within
the Group, Hagiwara Electric Holdings, Co., Ltd. highly values the technological and product strengths Osaki Engineering
has accumulated and believes that operating its business under them is the best way for Osaki Engineering to continue to
grow.
The funds obtained from the transfer of the shares will be effectively utilized for the growth of the smart meters & solution
business, which is the Group's core business.
(4) Date of business divestiture
September 30, 2022
(5) Matters related to the outline of other transactions including legal forms
Transfer of business in which the consideration received is only assets such as cash etc.
2. Accounting Treatment(1) Amount of gain or loss on transfer
Loss on sales of shares of subsidiaries and associates : 580 Millions of yen ($4,347 thousand)(2) Appropriate book value of assets and liabilities related to the transferred business and their main breakdown
Millions of yen
Current assets

Thousands of
U.S. dollars¥ 1,485$ 11,126

Non-current assets

1,299

9,735

Total assets

2,785

20,861454

3,406

Current liabilities
Total Liabilities

¥

454

$

3,406

(3) Accounting treatment
The difference between the carrying amount of the transferred shares on the consolidated basis and the sales price is recorded
in "Loss on sales of shares of subsidiaries and associates" under extraordinary losses.
3. Reportable segments in which the divested business was included
Production equipment business segment38

Osaki Electric Co., Ltd. Annual Report 2023

4. Approximate amount of profit or loss relating to the divested business recorded in the consolidated
statement of income for the current fiscal year
Thousands ofMillions of yen
Sales

¥

U.S. dollars

761

Operating income

$

5,704

9

70

19. Segment Information
The business of the Company and its consolidated subsidiaries is divided into the following four categories.
Smart meters & solutions in Japan:
Smart meters, Energy solutions, Instrument VCT, Distribution panels
Smart meters & solutions overseas:
Smart meters, Energy solutions
Production equipment:
Sensor devices assemble equipment
Real estate: Real estate leasing
With respect to all of our shares in Osaki Engineering Co., Ltd., which had been classified as "Production equipment business"in the reportable segment, as a result of the sale on September 30, 2022, the Company was excluded from the scope of
consolidation.
The “Production Equipment Business” shows results up to the second quarter of the fiscal year.
Millions of yen
2022
Reporting Segments

Year ended March 31
Sales to customers
Intersegment sales
Total sales
Operating income

Smart meters &solutions in Japan

Smart meters& solutions
overseas

Production
equipment

Real estate¥ 45,983
23
46,006
1,225¥ 29,095
972
30,068
58

¥

¥

657
35
692
(282)

448
105
553
271

Total

Adjustment

Consolidated¥ 76,184
1,137
77,321
1,272¥(1,137)(1,137)4¥ 76,184
76,184
1,277

Total

Adjustment

Consolidated¥ 89,253
1,121
90,374
2,234¥(1,121)(1,121)(7)¥ 89,253
89,253
2,226

Total

Adjustment

Consolidated$ 668,412
8,400
676,812
16,734$(8,400)(8,400)(56)$ 668,412
668,412
16,677The segment income is adjusted by intersegment transaction eliminations.

Millions of yen
2023
Reporting Segments

Year ended March 31
Sales to customers
Intersegment sales
Total sales
Operating income

Smart meters &solutions in Japan

Smart meters& solutions
overseas

Production
equipment

Real estate¥ 54,406
21
54,427
3,816¥ 33,620
992
34,613(1,886)

¥

¥

759
1
761
9

466
105
571
295

The segment income is adjusted by intersegment transaction eliminations.

Thousands of U.S. dollars
2023
Reporting Segments

Year ended March 31
Sales to customers
Intersegment sales
Total sales
Operating income

Smart meters &solutions in Japan

Smart meters& solutions
overseas

Production
equipment

Real estate$ 407,446
161
407,608
28,579$ 251,782
7,435
259,218(14,126)$ 5,690
13
5,704
70

$ 3,492
790
4,282
2,210

39

Osaki Electric Co., Ltd. Annual Report 2023

Independent Auditor’s Report

RSM Seiwa
Syosankan 4F
1-3-2, Iidabashi, Chiyoda-ku
Tokyo 102-0072, JAPANTo Board of Directors ofOsaki Electric Co., Ltd.

OpinionWe have audited the consolidated financial statements of Osaki Electric Co., Ltd and its subsidiaries (the Group), which
comprise the consolidated balance sheet as at March 31, 2023, and the consolidated statement of income, consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at March 31, 2023, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with accounting principles generally accepted in Japan (JGAAP).

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan (JGAAS). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Convenience Translation
Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 2 to the consolidated financial statements. Such U.S. dollar
amounts are presented solely for the convenience.

40

Osaki Electric Co., Ltd. Annual Report 2023

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Estimate of provision for product warranties
Details of Key Audit Matter and Reasons for
Determination
As described in the Note 3 to the consolidated financial
statements (significant accounting estimates), the Group
recorded a provision for product warranties of 576 million
Japanese yen mainly to prepare for product defects inconnection with products sold.
The Group estimated the future costs of repairs andrefurbishment, replacements, and compensation of
products sold resulting from defects based on currently
available information and recorded them as provision for
product warranties.
However, the contents of the provision for productwarranties are highly specific and has a significant impact
due to the progress of negotiations with customers. In
addition, estimates are highly uncertain because some ofthe product quantities, repairs and refurbishment costs,
replacement costs, and compensation costs used in theestimates have no historical experience and are calculatedusing assumptions. Accordingly, we chose the provision
for product warranties as a Key Audit Matter.

Audit Response
We performed the following audit procedures on the key
audit matters.
(1) Internal control assessments
・Checked that the cause analysis underlying theprovision was performed in a specialized department, andthe sales department performed an analysis-based estimate
and obtained appropriate intra-company approvals.
・Tested the existence and completeness of events subject
to provision for product warranties by reviewing of theminutes of the Board of Directors' meetings, the approval
documents and the quality report materials prepared by the
Quality Control Division.
(2) Assessment of reasonableness of estimated provision
for product warranties
・Checked and inquired about cost calculation materials,
external documents, negotiation materials with customers
and calculation basis in order to verify the validity of
estimates such as the quantities and costs, etc., for products
to be repaired and refurbished, replaced or compensated.
・Gained an understanding of the overview of productdefects and status of negotiations with customers byinquiring the managers of sales departments and reviewing
related documents to confirm the estimation method ofprovision for product warranties and reasonableness ofmanagement’s assumptions.
・Examined the appropriateness of the estimate of theprovision for product warranties for the current fiscal year
by comparing the estimated recorded amount with theactual amount in prior years, inquiring the responsible
persons in charge of sales departments regarding thereasons for the difference between the estimated amountand the actual amount, and examining related documents.

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Osaki Electric Co., Ltd. Annual Report 2023

Other Information
There is other information included in the Annual Report but are not a part of the consolidated financial statements and thus
not covered by our auditor’s report. Management is responsible for the preparation and presentation of such otherinformation. Those charged with governance are responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the reporting process for such other information.
In connection with our audit of the consolidated financial statements, our responsibility is to read such other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work wehave performed, we conclude that there is a material misstatement in such other information, we are required to report thatfact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordancewith JGAAP, and for such internal control as management determines is necessary to enable the preparation of 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 the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the directors’ performance of their duties with regard to thedesign, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with JGAAS
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with JGAAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
・Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
・Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

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Osaki Electric Co., Ltd. Annual Report 2023

・Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Group to cease to continue as a going concern.
・Evaluate the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and events in a mannerthat achieves fair presentation.
・Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed
pursuant to the provisions of the Certified Public Accountants Act of Japan.

Etsuo Kakehi
Designated Engagement Partner
Certified Public Accountant
Kakuro Tsuda
Designated Engagement Partner
Certified Public Accountant
RSM Seiwa
Tokyo, Japan
July 21, 2023

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the Group and RSM
Seiwa.
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Osaki Electric Co., Ltd. Annual Report 2023

Companies

COUNTRYJAPAN

COMPANYSEGMENTOSAKI ELECTRIC CO., LTD.

●ENEGATE CO., LTD.

●OSAKI ELECTRIC SYSTEMS CO., LTD.

●

IWATE OSAKI ELECTRIC CO., LTD.

●OSAKI PLATECH CO., LTD.

●OSAKI DATATECH CO., LTD.

●●OSAKI ESTATE CO., LTD.
SINGAPORE●

OSAKI UNITED INTERNATIONAL PTE. LTD.

●EDMI LIMITED

●

CHINA

EDMI (SHENZHEN) CO., LTD●

MALAYSIAEDMI ELECTRONICS SDN. BHD.

●

UNITED KINGDOMEDMI EUROPE LIMITED●

AUSTRALIAEDMI PTY LTD●● Smart meters & solutions in Japan● Smart meters & solutions overseas● Real estate*There are 16 consolidated subsidiaries other than those listed above.
*With respect to all of our shares in Osaki Engineering Co., Ltd., which had been classified as "Production equipment business"in the reportable segment, as a result of the sale on September 30, 2022, the Company was excluded from the scope of
consolidation.

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Osaki Electric Co., Ltd. Annual Report 2023

Stock Information(As of March 31, 2023)

Common Stock
Authorized:

100,000,000

Issued:49,267,180

Number of Shareholders

:

7,657

Stock Price and Trading Volume (Tokyo Stock Exchange)(Thousand Shares)(Yen)

36,0001,200

32,0001,000
28,000Stock Price (right)

24,000800

20,000600
16,000
Trading Volume (left)
12,000

400

8,000
200
4,000
0

0

Trading Volume (left)
Major Shareholders
Number of shares(Thousand shares)(%)

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

5,739

12.3

THE HONGKONG AND SHANGHAI BANKING

5,392

11.5

Custody Bank of Japan, Ltd. (Trust Account)

2,406

5.1

Osaki Electric cooperation company share holding commission

1,783

3.8

MUFG Bank, Ltd.

1,552

3.3

CORPORATION LTD - SINGAPORE BRANCH PRIVATEBANKING DIVISION CLIENTS A/C 8221-623793

Breakdown of Shareholders

Financial Institutions
Japanese Companies

32.5%

27.3%

Foreign Companies and Individuals
Individuals and Others

15.5%
24.7%

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Osaki Electric Co., Ltd. Annual Report 2023

Investor Information

Management (As of June 28, 2023)

Corporate Data (As of March 31, 2023)

REPRESENTATIVE DIRECTORS
Chairman and CEO
Yoshihide Watanabe
President and COO
Mitsuyasu Watanabe
Executive Vice President
Haruyuki Kawabata

Osaki Electric Co., Ltd.
Head Office10-2, Higashi-Gotanda 2-chome
Shinagawa-ku Tokyo 141-8646
JAPAN
Phone：81-3-3443-7171

DIRECTORSManaging Executive Officer
Ryuichi Ueno
Directors
Seiji Takashima (Independent)
Nobuhiro Kasai (Independent)
Shoko Kuroki (Independent)
CORPORATE AUDITORSStanding Auditor
Choichiro Hori
Auditors
Yutaka Hasegawa
Shigehiko Yamamoto (Independent)
Kumiko Kitai (Independent)
EXECUTIVE OFFICERS
Kazuo Nemoto
Takehiko Ota
Jun AbeToshiaki Takada
Hiroyuki Hatakeyama
Nobuyuki Ono
Hiroshi Takahashi
Isao Yoshino
Masaru Takahashi

Date of Founding
January 26th, 1937
Paid-in Capital¥ 7,965 million (US$ 65 million)
Stock Exchange Listings
Tokyo Stock Exchange
Independent Public Accountants
RSM Seiwa
Tokyo, Japan
Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
Transfer Agency Department
1-1, Nikko cho, Fuchu-shi,
Tokyo, Japan
Phone：81-42-204-0303
Mailing address：
Shin-TOKYO Post Office post office box No.29
137-8081, JAPANMitsubishi UFJ Trust and Banking Corporation
Transfer Agency Department

For further information, please contact/refer to:
Osaki Electric Co., Ltd.
Investor & Media Relations Department
https://www.osaki.co.jp/en/index.html
https://www.osaki.co.jp/en/profile/about/contact.html

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