[Translation]
June 8, 2020
To Shareholders with Voting Rights:

Disclosures on the Internet pursuant to Laws and Regulations and the Articles of Incorporation
regarding the Notice of the 159th Ordinary General Meeting of Shareholders

 “Overview of the system to ensure proper operations andthe implementation status thereof” for the Business Report
I. Overview of a resolution to establish systems to ensure the proper
operations of the Company･･･････････････

Pages 1

II. Overview of the implementation status of the system to ensure
proper operations･･･････････････

Pages 5

 Consolidated Financial Statements
Consolidated Statements of Changes in Equity･･･････････････

Pages 8Notes to Consolidated Financial Statements･････････････････

Pages 9 Non-Consolidated Financial Statements
Non-Consolidated Statements of Changes in Equity･･･････････

Pages 22

Notes to Non-Consolidated Financial Statements･････････････

Pages 23

The above-mentioned documents are provided to our shareholders by posting on the Company’s
website (English: https://www.seiko.co.jp/en/ir/) (Japanese: https://www.seiko.co.jp/ir/) via theInternet pursuant to laws and regulations and Article 16 of the Articles of Incorporation of theCompany.

SEIKO HOLDINGS CORPORATION

-1-

Systems and policies of the Company
I.

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

System to ensure that the duties of Directors and employees are executed in compliance with laws andregulations and the Articles of Incorporation
In order for Directors and employees to comply with corporate ethics, laws and regulations, and internal
rules, the Company shall establish the “Basic Principles of Corporate Ethics” and the “Action Guidelines
for Corporate Ethics” to thoroughly ensure their compliance with corporate ethics and laws andregulations, as follows:
1)

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

2)

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

3)

The Company shall develop a system where any Director or employee who finds any actionsuspected of violating the laws and regulations can promptly report it to the “Corporate Ethics
Committee”, and establish a “Corporate Ethics Helpline” as means for transmitting information.

4)

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

(2)

System to store and manage information regarding execution of the duties of Directors(i)Pursuant to the “Internal Document Management Rules”, the Company shall record information
regarding execution of the duties of Directors in a document or electromagnetic medium, andproperly store and manage it.

(ii)

Directors and Corporate Auditors may inspect such document or medium at any time pursuant to
the “Internal Document Management Rules”.

-2-

(3)

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

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

(ii)

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

(iii)

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

(4)

System to ensure that the duties of Directors of the Company and its subsidiaries are efficiently executed(i)

The Company shall develop a Mid-Term Management Plan as the target to be shared by Directors
and employees of the Company Group. It shall also review the progress of annual budgets
consisting of the plan quarterly using the management accounting method, and discuss andimplement remedial measures therefor, thereby promoting the efficiency of operations.

(ii)

In order to respect autonomous and independent management of its subsidiaries while
contributing to the proper and efficient operation of the Group management, the Company shalldevelop basic management rules therefor. It shall also establish the “Management Council”
comprising standing Directors of the Company and respective President of major subsidiaries, toshare the management policy and management information of the Group.

(iii)

The Company shall clarify the assignment of duties among the Directors, and the responsibility
and authority of each division/department, thereby securing the efficient execution of duties.

(5)

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

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

(ii)

Each subsidiary shall share the “Basic Principles of Corporate Ethics” and the “Action Guidelines
for Corporate Ethics” established by the Company, and manage its operations pursuant to them.

-3-

The Company shall set forth the rules for reporting any violation of laws and regulations by any
subsidiary, and assist its subsidiaries to develop their internal reporting systems.
(iii)

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

(iv)

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

(v)

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

(6)

Matters related to employees to assist the duties of Corporate Auditors(i)

There shall be a system where the Internal Audit Department will assist the duties of Corporate
Auditors.

(ii)

Employees posted to the Internal Audit Department shall not concurrently hold duties related tothe execution of operations.

(iii)

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

(7)

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

-4-

(ii)

The Company shall develop a reporting system where if any Director, Corporate Auditor or
employee of a subsidiary finds any material violation of laws and regulations or internal rules
regarding the execution of operations of the Company or the subsidiary, or any fact likely tosignificantly damage the Company, he/she or the person who was reported by him/her shall report
it to the Company’s Corporate Auditors.

(iii)

The Company shall develop necessary systems so that the person who made the report in thepreceding two paragraphs might not be treated disadvantageously because of having made suchreport.

(iv)

In conducting internal audits, the General Manager of the Internal Audit Department shallcooperate with Standing Corporate Auditors in advance, and make efforts to report importantmatters to Standing Corporate Auditors in a timely manner. In addition, the General Manager
shall report the results of internal audits to Standing Corporate Auditors without delay, andregularly report them to the Board of Corporate Auditors.

(8)

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

The Company shall ensure a system where, besides the Internal Audit Department, the General
Affairs Department, the Finance & Accounting Department and the Corporate Strategy &Planning Department will assist audits by Corporate Auditors from time to time based on
respective instructions of Corporate Auditors.

(ii)

The Company shall ensure that Corporate Auditors will attend important meetings andcommittees established to ensure proper operations, and to be held in a timely manner, by the
Board of Directors.

(iii)

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

(iv)

If a Corporate Auditor requests that the Company pay expenses incurred in executing his/herduties, the Company shall promptly pay them unless the Company proves that they are notnecessary for the Corporate Auditor to execute his/her duties.

-5-

II.

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

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

The Company has established a Corporate Ethics Committee chaired by the President to discuss
corporate ethical issues and the system for compliance with corporate ethics, including thoserelating to its subsidiaries, and reports the result of discussions to the Board of Directors. The
Committee held three meetings during the fiscal year ended March 31, 2020.

(ii)

The Company has established a “Corporate Ethics Helpline” internally and at a law firm as acontact point to receive consultations or whistle-blowing from employees regarding violations oflaws and regulations within the Company. The Company has made sure all employees are wellinformed about how to use these helplines by posting them on the internal intranet anddistributing portable cards, etc.

(iii)

The Company regularly provides training sessions on corporate ethics to enhance awareness ofcompliance with corporate ethics and laws and regulations. During the fiscal year ended March
31, 2020, the Company provided training sessions titled “Crisis Management in the Event ofCorporate Scandals” for standing officers and “Prevention of Insider Trading” for employees.

(2)

Risk management system(i)

The Company has established the Risk Management Committee chaired by the President todiscuss the Company Group’s risk management system and various risk issues. The Committee
also reports the matters discussed thereat and important risks to be addressed horizontally withingroups to the Board of Directors. The Committee held four meetings during the fiscal year
ended March 31, 2020.
Further, the Company has established the Group Risk Management Committee consisting ofrespective standing Directors of the Company and Representative Directors of its subsidiaries,
and confirms and shares the risks and the counter-measures against them experienced by eachgroup company. The Committee held two meetings during the fiscal year ended March 31,
2020.

(ii)

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

-6-

(3)

System to ensure that the duties of Directors are efficiently executed(i)

The Company has determined the assignment of duties for each Director upon a resolution of theBoard of Directors, and the responsibility and authority of each division/department in accordancewith the “Duty Assignment Rules”.

(ii)

The Company has established a council called the “Strategic Conference for Management” where
the President and Executive Directors exchange opinions and share information with other
Directors, Corporate Auditors, or General Managers of divisions/departments when they decide
on and execute important matters relating to execution of their duties. The Strategic Conference
for Management held 44 meetings during the fiscal year ended March 31, 2020.

(iii)

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

(4)

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

Pursuant to the “Consolidated Business Management Rules”, the Company properly discusses
with its subsidiaries in advance regarding their business plan, annual budgets, and measures to
respond to important corporate ethical issues, receives reports on material business matters fromthem, and dispatches its officers or employees to subsidiaries, as necessary, to supervise and audit
them. As of the end of the fiscal year ended March 31, 2020, the Company has dispatched nine
Directors, two Corporate Auditors, and three employees.
Furthermore, the President of each subsidiary reports the execution status of its operations to theCompany’s Board of Directors as necessary; during the fiscal year ended March 31, 2020, fivesubsidiaries made such reports.

(ii)

Each division/department of the Company assists its subsidiaries to develop a system to comply
with corporate ethics and laws and regulations, and a system to comply with business operation
laws. During the fiscal year ended March 31, 2020, training sessions and briefings were held for
officers and employees of the Company’s subsidiaries to discuss topics such as “Crisis
Management in the Event of Corporate Scandals”, “Prevention of Harassment”, and “Act against
Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors”.

-7-

(5)

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

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

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

(iii)

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

-8[Translation]
Consolidated Statements of Changes in Equity(From April 1, 2019 to March 31, 2020)
Millions of yen
Shareholders' equity
Share capital

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

Retainedearnings

Capital surplus

10,000

7,245

Total
shareholders'equityTreasury shares

74,124-335

91,034-1-3,100
3,394
-1

8

8

0

0

7
-328

301
91,335-3,100
3,394

10,0007,245

29374,418Millions of yen
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Balance at beginningof period
Changes during period
Dividends ofsurplusProfit attributableto owners of parent
Purchase oftreasury shares
Disposal oftreasury stock byownership plan
trust
Other
Net changes in
items other thanshareholders' equity
Total changes during
periodBalance at end of
period10,099Deferred
gains orlosses onhedges-104

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

8,190

878

Total
NonRemeasurements accumulated controllingof defined
otherinterests
benefit plans comprehensive
income-876

18,186

Total net
assets1,194 110,415-3,100
3,394
-1
8
0

-4,612115--1,682-293-6,47228-6,443-4,612115--1,682-293-6,47228-6,142

5,486

11

8,190

-804

-1,16911,714

1,223 104,273(Note) The 0 million yen of “Other” under treasury shares represents changes due to a change in the ratio of
equity interests of the Company’s affiliates accounted for using equity method.

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

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

Matters relating to scope of consolidation
Number of consolidated subsidiaries: 60
SEIKO WATCH CORPORATION, Seiko Instruments Inc., Morioka Seiko Instruments,
SEIKO Solutions Inc., Seiko Clock Inc., WAKO Co., Ltd., Grand Seiko Corporation ofAmerica, Seiko Watch of America LLC, SEIKO U.K. Limited, SEIKO Hong Kong Ltd.,
Dalian Seiko Instruments Inc., Seiko Instruments (Thailand) Ltd., Seiko Instruments
Singapore Pte. Ltd., SEIKO Precision (Thailand) Co., Ltd., and others.
Chino Watch Co., Ltd. was included in the scope of consolidation from the 3rd quarterly
consolidated accounting period due to the acquisition of its shares. Grand Seiko Europe
S.A.S., Seiko Instruments Trading (H.K.) Ltd., and SII Electronic Devices Singapore Pte. Ltd.
were included in the scope of consolidation from the 4th quarterly consolidated accounting
period due to their establishment.
Non-consolidated subsidiaries:
AOBA WATCH SERVICE Co. Ltd. and others are of a small scale in terms of net sales, total
assets, profit and loss, and retained earnings, and none of them have any material impact on
the consolidated financial statements. Therefore, they were excluded from the scope of
consolidation.

(2)

Matters relating to the application of the equity method
Number of affiliates accounted for by the equity method:
6
SEIKO OPTICAL PRODUCTS CO., LTD., OHARA INC., ABLIC Inc., and others.
Non-consolidated subsidiaries and affiliates not accounted for by the equity method:
AOBA WATCH SERVICE Co. Ltd. and others have a minimal impact on the consolidated net
income and loss and retained earnings and are of little significance. Therefore, the equity
method has not been applied to these companies.

(3)

Standards and methods for evaluating significant assets(i) Inventories
Basically stated at cost using the movingaverage method (for values stated on the balance
sheet, writing down the book values in response
to decreased profitability)(ii) Securities
Available-for-sale securities
Securities with market valueMarket value method based on the market priceas of the consolidated closing date (differencesin valuation are included directly in net assets
and the costs of securities sold are calculatedusing the moving-average method)
Securities without market value
Stated at cost using the moving-average method(iii) Derivatives
Market value method

- 10 (4)Depreciation methods for significant depreciable assets(i) Property, plant and equipment
As for domestic consolidated companies, basically(excluding leased assets and rightthe straight-line method is used for buildings
of-use assets)(excluding equipment attached to buildings), andthe declining-balance method for those other thanbuildings (except that the straight-line method isused for the equipment attached to buildings, andstructures that were acquired on or after April 1,
2016); as for consolidated subsidiaries outside
Japan, basically the straight-line method is used.
As for domestic consolidated companies, a usefullife and a residue value are basically evaluatedusing the same standards as set forth in the
Corporation Tax Act.
(ii) Intangible assets (excluding
The straight-line method is used. A useful life isleased assets)
basically evaluated using the same standards as set
forth in the Corporation Tax Act. However, as forsoftware for in-house use, the straight-line method
is used with a usable period of 5 years.
(iii) Leased assets
Leased assets relating to finance The same depreciation method as applied to thelease with transfer of ownershipproperty, etc. owned by the Company is used.
Lease assets relating to financelease without transfer of ownership(iv) Right-of-use assets(5)

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

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

- 11 (v) Provision for loss on lease
contracts(vi) Provision for gift certificate
exchange losses(vii) Provision for stock benefits(viii) Provision for retirement
benefits for directors (and otherofficers)(ix) Provision for loss on businesswithdrawal(x) Provision for environmental
measures(6)

To provide for the loss expected to incur during thenon-cancellable periods, an amount equivalent to
the portion of rents for the real estate deemed likely
to be non-performing up to the expiry of leaseagreements is posted.
In order to prepare for possible losses relating togift certificates collected after cancelling their
inclusion in liabilities, provision is made for an
estimated redemption amount according to thehistorical percentage of collection of such gift
certificates.
The Company has posted an estimated amount, asof the end of the consolidated fiscal year underreview, for the obligation to deliver shares, as aprovision for the delivery of its shares to its
Executive Directors in accordance with the Rules
for Delivery of Shares to Officers.
Some of the domestic consolidated companies
passed a resolution to discontinue their respective
directors’ retirement benefit systems during the
fiscal year ended March 2005 and that ended
March 2014. Accordingly, the amount of
retirement benefits for incumbent officers is posted
corresponding to the terms of office till the end of
the Ordinary General Meeting of Shareholders
during the relevant consolidated fiscal year.
To provide for the loss relating to the businesswithdrawal, which arose in the past but is expected
to incur in future, an estimated amount of such loss
is posted.
In order to prepare for possible expenditure aimed
at future environmental measures, an estimatedamount to be incurred is posted.

Accounting standards for significant income and expenses
Accounting standards for the amount of completed work and cost of completed work
Regarding the portions of work that were definitely completed by the end of the consolidated
fiscal year under review, a percentage-of-completion method is used, and for other portions ofwork, a work-completion method is used.

(7)

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

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

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

Accounting for employees’ retirement benefits
In order to prepare to pay retirement benefits to employees, the net defined benefit liability isposted based on the estimated amount of retirement benefit obligations minus the amount ofplan assets as of the end of the consolidated fiscal year under review. To calculate retirement
benefit obligations, the benefit formula method is adopted as a method to attribute theestimated retirement benefits to the periods up to the end of the consolidated fiscal year underreview. The actuarial differences that resulted are recognized in the following consolidated
fiscal year by the straight-line method over various periods (5 to 9 years) that are not morethan the average remaining service period of employees at the time of the accrual of adifference. Prior service costs are basically recognized by the straight-line method overvarious periods that are not more than the average remaining service period of employees at
the time of the accrual thereof. Unrecognized actuarial differences and unrecognized priorservice costs after tax effect adjustment are posted in “Remeasurements of defined benefit
plans”, “Accumulated other comprehensive income” in “Net assets”.

(10)

Matters relating to accounting for consumption taxes, etc.
Consumption taxes and local consumption taxes payable by domestic consolidated companies
are accounted for by the tax exclusion method.

- 13 (11)Matters relating to application of consolidated taxation system
Consolidated taxation system is applied.

(12)

Adoption of tax effect accounting for the transition from the consolidated taxation system tothe group tax sharing system
As for the items subjected to the transition to the group tax sharing system established underthe “Act on Partial Revision of the Income Tax Act, etc.” (Act No. 8 of 2020), as well as theitems reviewed under the non-consolidated taxation system in conjunction with the transition
to the group tax sharing system, domestic consolidated companies excluding a few exceptions
have not adopted the provisions of Paragraph 44 of the “Implementation Guidance on Tax
Effect Accounting” (ASBJ Guidance No. 28, issued on February 16, 2018) in accordance withthe treatment under Paragraph 3 of the “Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to the Group Tax
Sharing System” (PITF No. 39, issued on March 31, 2020). The amounts of deferred tax assets
and deferred tax liabilities are calculated based on the provisions of the Income Tax Act
before the revision.

(13)

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

- 14 2.

Notes to Changes in Accounting Policies
Consolidated subsidiaries outside Japan, excluding the U.S., have adopted IFRS 16 “Leases”
from the beginning of the fiscal year under review. As a result, right-of-use assets and leaseobligations are recognized in all leases in principle, for the lease transactions as lessees.
In adopting IFRS 16, the Company has adopted a method approved as a transitional measure,
whereby the cumulative impact of the adoption of the standard is recognized on the date ofadoption. There is no impact on retained earnings at the beginning of the fiscal year underreview.
As a result of the adoption of the standard, property, plant and equipment, current liabilities
and non-current liabilities have increased by 4,302 million yen, 1,010 million yen and 3,349
million yen, respectively. The impact on the profit or loss for the fiscal year under review isminimal.

3.

Notes to Changes in Presentation Method(Consolidated balance sheet)(1)“Lease obligations” which were included in “Other” under “Non-current liabilities” in theprevious fiscal year are separately itemized in the fiscal year under review due to its increased
financial significance.
“Lease obligations” in the previous fiscal year are 1,246 million yen.

(2)

“Provision for stock benefits” which was included in “Other provisions” under “Non-current
liabilities” in the previous fiscal year is separately itemized in the fiscal year under review due
to its increased financial significance.
“Provision for stock benefits” in the previous fiscal year is 89 million yen.
(Consolidated statements of income)(1)“Foreign exchange losses” that were included in “Other” under “Non-operating expenses” inthe previous fiscal year are separately itemized in the fiscal year under review due to its
increased financial significance.
“Foreign exchange losses” in the previous fiscal year are 79 million yen.

4.

Notes to Consolidated Balance Sheet(1)

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

28 million yen
387 million yen
415 million yen

- 15 Secured obligations
Accounts payable - other
Gift certificates (Current
liabilities; Other)
Total
(2)

0 million yen
73 million yen
73 million yen

Guarantee obligation
The Company has guaranteed borrowings extended to its employees from financial
institutions, as follows.
Employee (housing fund)4 million yen(3)

Amount of discount on negotiable instruments receivable(4)

Land for business use was revaluated pursuant to the “Act on Revaluation of Land” (Act No.
34 promulgated on March 31, 1998), and valuation differences which correspond to taxes areposted as “Deferred tax liabilities for land revaluation” of “Liabilities” and the balance thereofis posted as “Revaluation reserve for land” of “Net assets”.
(i)647 million yen

Method of revaluation

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

Date of revaluation:

March 31, 2001

(5)

Out of investment securities, 425 million yen is for lending stock.

(6)

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

28,500 million yen
24,600 million yen
3,900 million yen

- 16 5.

Notes to Consolidated Statements of Changes in Equity(1)

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

Number ofshares at the
beginning of theconsolidated
fiscal year underreview

Number ofshares increased
during theconsolidated
fiscal year underreview

Issued shares
CommonsharesTotal

41,404――

41,404

41,404――

41,404

Treasury shares
Commonshares (Note)
Total

188

0

5

183

188

0

5

183

(Note) The number of common shares held as treasury shares at the end of the consolidated fiscal year
under review includes 102 thousand shares of the Company held in the Board Benefit Trust (BBT).
0 thousand shares of increase in common shares held as treasury shares is due to the purchase of
fractional shares.
5 thousand shares of decrease in common shares held as treasury shares is due to the disposal of the Company
shares through the Board Benefit Trust (BBT) and a change in the ratio of equity interests of affiliates accounted
for using equity method.
(2)

Matters relating to dividend(i)Amount of dividend paid

Resolution
Ordinary
GeneralMeeting of
Shareholders on
June 27, 2019
Board ofDirectors
meeting on
November 12,
2019Type ofsharesTotal dividend(million yen)

Dividend pershare (yen)Common
share

1,550

37.50

March 31,2019

June 28, 2019

Common
share

1,550

37.50

September 30,
2019

December 5,
2019

Record date

Effective date

(Note 1) The total amount of dividend approved by a resolution of the Ordinary General Meeting of
Shareholders on June 27, 2019 includes a dividend of 4 million yen payable for the Company shares
held in the Board Benefit Trust (BBT).
(Note 2) The total amount of dividend approved by a resolution of the Board of Directors meeting on
November 12, 2019 includes a dividend of 3 million yen payable for the Company shares held in the
Board Benefit Trust (BBT).

- 17 (ii)

Dividend for which the record date falls in the consolidated fiscal year under review
but the effective date comes after the end of that consolidated fiscal year
Total
SourceDividend
Type ofdividend
Effective
Resolutionforper share
Record dateshares(million
date
dividend(yen)
yen)
Ordinary
GeneralCommonRetained
March 31,
June 29,
Meeting of
1,550
37.50
Share
earnings
2020
2020
Shareholders on
June 26, 2020
(Note) The total amount of dividend proposed for approval by a resolution of the Ordinary General
Meeting of Shareholders on June 26, 2020 includes a dividend of 3 million yen payable for theCompany shares held in the Board Benefit Trust (BBT).
6.

Notes to Financial Instruments(1)

Matters relating to status of financial instruments
The Company Group raises funds (mainly borrowing from banks) necessary in light ofrespective business plans of business companies. Temporary surplus funds are invested in
more safe financial assets.
Notes and accounts receivable - trade (which are operating receivables) are exposed tocustomers’ credit risks; as such, the Company controls each customer’s due date and balance,
and understands major customers’ credit status. Exchange-rate fluctuation risks for foreign
currency operating receivables due to the Company’s global development are almost set off by
the risks resulting from foreign currency operating payables, some of which are hedged using
forward exchange contracts. Investment securities are mainly shares of customers, andexposed to market price fluctuation risks.
Most of the notes and accounts payable - trade (which are operating payables) are due within
one year. Borrowings are mainly to raise funds for operating transactions, and interest-rate
swaps are used to hedge part of exchange-rate fluctuation risks.
Derivatives include forward exchange contracts to hedge exchange-rate fluctuation riskspresent in foreign currency receivables/payables, and interest-rate swaps to hedge fluctuation
risks of interest rates payable on borrowings.

(2)

Matters relating to market value, etc. of financial instruments
Amounts posted on the Consolidated Balance Sheet, market values, and the corresponding
differences between the two as of March 31, 2020, are as follows.
Items, for which ascertaining market values is extremely difficult, are not included in the tablebelow.

- 18 -

(Millions of yen)

(1) Cash and deposits

Amounts posted on
the Consolidated
Balance Sheet (*)
26,112Market value(*)

Difference

26, 112-(2) Notes and accounts receivable trade34,39734,397-(3) Accounts receivable - other

5,406

5, 406-

17,62014,795

9,115
14,795-8,504-(5) Notes and accounts payable trade(21,869)(21, 869)-(6) Electronically recorded
obligations - operating(6,495)(6,495)-(7) Short-term borrowings(59,140)(59,140)-(8) Current portion of long-termborrowings(16,843)(16,848)-5(9) Accounts payable - other(11,739)(11, 739)-(10) Long-term borrowings(33,637)(33,715)

-78

14

-

(4) Investment securities(i) Shares of subsidiaries andassociates(ii) Available-for-sale securities(11) Derivatives(*) Items posted as liabilities are enclosed in brackets.

14(Note 1)
Calculation methods for the market value of financial instruments and transactions involving
securities and derivatives(1) Cash and deposits, (2) Notes and accounts receivable - trade, and (3) Accounts receivable other:
These are settled within a short time frame and therefore have a market value nearly
equivalent to their book value; as such, these are posted according to their book value.
(4) Investment securities:
Equities are based on their value on exchanges.
(5) Notes and accounts payable - trade, (6) Electronically recorded obligations - operating, (7)Short-term borrowings, and (9) Accounts payable - other:
These are settled within a short time frame and therefore have a market value nearly
equivalent to their book value; as such, these are posted according to their book value.
(8) Current portion of long-term borrowings, and (10) Long-term borrowings:
The market value of long-term borrowings is calculated by taking into account the total
amount of principal and interest and discounting it by the assumed interest rate that would beapplied when new borrowings are conducted. The market value of long-term borrowings thatare subject to exceptional accounting treatment for interest-rate swaps is calculated by

- 19 discounting the total amount of principal and interest, which is treated as one with the interestrate swap in question, by a logically estimated interest rate that would be applied when similarborrowings are conducted.
(11) Derivatives:
Derivatives conducted through exceptional accounting treatment of interest-rate swaps aretreated as being one with the long-term borrowings under the relevant hedge. As such, themarket value of such transactions is presented as being included in the market value for the
long-term borrowings concerned.
(Note 2)Unlisted shares (posted as 402 million yen on the Consolidated Balance Sheet) and shares ofunlisted subsidiaries and associates (posted as 5,940 million yen on the Consolidated Balance
Sheet) have no market price, and it is recognized that ascertaining their market value isextremely difficult. As such, these items are not included in “(4) Investment securities”.
7.

Notes to Leased Property
The Company and some of its subsidiaries own real property for lease and others in Tokyo andother regions. Income or expenses from the leased property during the fiscal year ended
March 2020 was 236 million yen (rent income was posted as non-operating income andexpenses are posted as non-operating expenses), gain on sales of non-current assets was 138
million yen (posted as extraordinary income) and loss on retirement of non-current assets was
179 million yen (posted as extraordinary losses).
The amount posted on the Consolidated Balance Sheet, major changes during the consolidated
fiscal year under review, market value on the consolidated closing date, and the calculation
method of such market value are as follows:(Millions of yen)Amounts posted on the Consolidated Balance Sheet
Balance at the
beginning of theconsolidated fiscal
year under review
15,583(Note 1)
(Note 2)

(Note 3)

Amount ofincreases/decreases
during theconsolidated fiscal
year under review
115

Balance at the end of
the consolidated
fiscal year underreview

Market value on the
consolidated closing
date

15,69815,601

Amounts posted on the Consolidated Balance Sheet were the acquisition costs
minus accumulated depreciation and accumulated impairment loss.
Of the change during the consolidated fiscal year under review, the amount of
increases mainly consists of an increase in the rate of rent (401 million yen)and the reclassification of leased property from commercial real estate torental real estate (383 million yen). In addition, the amount of decreases
mainly consists of the reclassification of leased property from rental real estate
to commercial real estate (450 million yen) and a decrease in the rate of rent
(119 million yen).
Calculation method of market value
Basically the amount based on a real-estate appraisal report prepared by a realestate appraiser.

- 20 8.

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

2,499.97 yen
82.36 yen
3,394 million yen
3,394 million yen
41,218 thousand
shares(Note 1) For the purpose of calculating the net income per share, the treasury shares remaining
in trust posted as treasury shares in the “Shareholders' equity” section are included in
the treasury shares deducted in the calculation of the average number of shares during
the fiscal year under review. For the purpose of calculating the net assets per share,
the treasury shares so remaining in trust are included in the treasury shares deductedfrom the total number of shares issued and outstanding at the end of the fiscal year
under review.
For the purpose of calculating the net income per share, the average number oftreasury shares, so deducted, during the fiscal year under review was 105 thousand
shares, and for the purpose of calculating the net assets per share, the number oftreasury shares, so deducted, as at the end of the fiscal year under review was 102
thousand shares.
9.

Notes to Significant Post-Balance Sheet Events(Transfer of shares of an affiliated company accounted for using equity method and posting ofextraordinary income)A subsidiary of the Company, Seiko Instruments Inc. (hereinafter “SII”) concluded a sharetransfer agreement on December 17, 2019, with MinebeaMitsumi Inc. (hereinafter“MinebeaMitsumi”) and Development Bank of Japan Inc. (hereinafter “DBJ”), to transfer all
the shares held in ABLIC Inc. (hereinafter “ABLIC”), an affiliated company accounted forusing equity method of the Company, to MinebeaMitsumi. In accordance with the agreement,
the shares of ABLIC Inc. were transferred on April 30, 2020.

(1)

Reason for the share transfer
In January 2016, SII transferred its semiconductor business to ABLIC (previous trade name:
SII Semiconductor Corporation), a semiconductor company jointly funded by SII and DBJ.
Initially, ABLIC was collaboratively managed by SII and DBJ, with a respective ownership
ratio of 60% and 40%. However, later in January 2018, SII transferred 30% of its ownership to
DBJ in pursuit of growth strategies.
In December 2019, an agreement was reached between MinebeaMitsumi, DBJ, and SII on thetransfer of all shares in ABLIC held by DBJ and SII to MinebeaMitsumi, with a view towardfurther enhancing the corporate value of ABLIC and expanding its business. Businesses
owned by MinebeaMitsumi have a great degree of affinity and complementarity with those
owned by ABLIC, potentially creating synergistic effects not limited to the semiconductor
field. Meanwhile, in the Seiko Holdings Group, this share transfer is believed to facilitate theeffective utilization of management resources and reinforcement of the managementfoundation, including investments with a view toward creating sustainable value.

- 21 Following this share transfer, ABLIC is no longer an affiliated company accounted for using
equity method of the Company.
(2)

Name of the company the shares to be transferred
MinebeaMitsumi Inc.

(3)

Name and business lines of the equity method affiliate to be transferred
Name:Business lines:(4)

ABLIC Inc.
Development, design, manufacture and sales of analog semiconductor
products

Timing of the share transfer
April 30, 2020

(5)

Number of shares for transfer, transfer price and status of shareholding before and after
transfer
Shareholding prior to transfer: 555,000 shares (Percentage of voting rights held: 30.0%)
Number of shares for transfer: 555,000 shares (Ratio to the number of shares issued: 30.0%)
Transfer price:
10,317 million yen (*)
Shareholding after transfer:
0 share (Percentage of voting rights held: 0.0%)(*) The transfer price refers to the price stated in the share transfer agreement concluded on
December 17, 2019. It has been agreed that the transfer price will be subject to adjustments
based on the financial data of ABLIC at the time of the share transfer, and that additional
payment of an amount not exceeding 450 million yen shall be payable to the Company,
depending on the business performance of the ABLIC Group during a certain period of
time.

(6)

Posting of extraordinary income
In association with this share transfer, 7.1 billion yen, which represents the combined amountof gain on sale of equity and the realized portion of unrealized income, is scheduled to beposted under extraordinary income in the first quarter of the fiscal year ending March 31,
2021. Of the extraordinary income, gain on sale of equity accounts for 3.8 billion yen, and therealized portion of unrealized income accounts for 3.3 billion yen. Such realized portion of
unrealized income corresponds to the amount realized through this share transfer, out of thegain on transfer of business that accrued in 2016 at the time of transfer, and that had been
eliminated in the consolidated financial statements.
In addition, of the extraordinary income, the amount of gain on sale of equity is subject tovolatility associated with adjustments of the transfer price, etc., as described in the marginal
remarks (*) of “(5) Number of shares for transfer, transfer price and status of shareholding
before and after transfer.”

10.

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

- 22 [Translation]
Non-Consolidated Statements of Changes in Equity(From April 1, 2019 to March 31, 2020)
Millions of yen
Shareholders' equity
Capital surplus
Retained earnings

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

SharecapitalLegalcapitalsurplus

OthercapitalsurplusTotal
capitalsurplus10,000

2,378

4,246

6,625

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

21,672

21,793-3,1003,124-3,1003,124-309

38,109-3,100
3,124

-1

-1

8

8

−

−

−

−

−

23

23

7

31

10,000

2,378

4,246

6,625

121

21,695

21,817-301

38,140Millions of yen
Valuation and translation adjustments

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

Valuation
Deferred gains
Total valuation Total net assets
difference on
Revaluation
or losses on
and translation
available-forreserve for land
hedgesadjustments
sale securities
8,918
-188
8,190
16,92055,029-3,1003,124-1
8-4,370-8−-4,379-4,379-4,370
4,547

-8
-196

−
8,190

-4,37912,541-4,34850,681

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

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

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

Available-for-sale securities:
Securities with market value:
Market value method based on the market price as of the closing date (differences invaluation are included directly in net assets and the costs of securities sold are
calculated using the moving-average method)
Securities without market value:
Stated at cost using the moving-average method(2)Standards and methods for evaluating derivatives
(i)

(3)

(4)

Derivatives:
Market value method

Depreciation methods for non-current assets(i)

Property, plant and equipment (excluding leased assets):
The straight-line method is used for buildings (excluding equipment attached tobuildings), and equipment attached to buildings, and structures acquired on or after
April 1, 2016, and the declining-balance method for other property, plant andequipment. A useful life and a residue value are evaluated using the same standards
as set forth in the Corporation Tax Act.

(ii)

Intangible assets (excluding leased assets)
The straight-line method is used. A useful life is evaluated using the same standards
as set forth in the Corporation Tax Act. However, as for software for in-house use,
the straight-line method is used with a usable period of 5 years.

(iii)

Leased assets
Lease assets relating to finance lease without transfer of ownership:
The straight-line method is used with a useful life of the lease period and with aresidue value of zero.

Accounting standards for significant allowances and provisions(i)

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

(ii)

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

- 24 -

(5)

(6)

(iii)

Provision for loss of subsidiaries and associates:
In order to prepare for possible losses exceeding the book value of investments to any
subsidiary or associate, an amount deemed necessary is provided for the loss
exceeding the amount of receivables from such subsidiary or associate.

(iv)

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

(v)

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

(vi)

Provision for environmental measures:
In order to prepare for possible expenditure aimed at future environmental measures,
an estimated amount to be incurred is posted.

Hedge accounting method(i)

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

(ii)

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

(iii)

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

(iv)

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

Accounting for consumption tax, etc.
Consumption taxes and local consumption taxes are accounted for by the tax exclusion
method.

- 25 (7)Application of consolidated taxation system
Consolidated taxation system is applied.

(8)

Adoption of tax effect accounting for the transition from the consolidated taxation system tothe group tax sharing system
As for the items subjected to the transition to the group tax sharing system established underthe “Act on Partial Revision of the Income Tax Act, etc.” (Act No. 8 of 2020), as well as theitems reviewed under the non-consolidated taxation system in conjunction with the transition
to the group tax sharing system, the provisions of Paragraph 44 of the “Implementation
Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, issued on February 16, 2018)
are not adopted in accordance with the treatment under Paragraph 3 of the “Practical Solution
on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation
System to the Group Tax Sharing System” (PITF No. 39, issued on March 31, 2020). The
amounts of deferred tax assets and deferred tax liabilities are calculated based on theprovisions of the Income Tax Act before the revision.

2.

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

Accumulated depreciation of Property, plant and equipment(2)

Monetary claims, monetary debts and transactions with subsidiaries and associates(i)
Short-term receivables
61,066 million yen(ii)
Short-term payables
6,520 million yen(iii)
Long-term receivables
11,987 million yen(iv)Long-term payables
1,610 million yen(v)
Operating revenue
11,717 million yen(vi)Operating expenses
2,928 million yen(vii) Transactions other than operating transactions
3,238 million yen(3)

Revaluation of land for business use

9,353 million yen

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

(4)

(i)

Date of revaluation:

March 31, 2001

(ii)

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

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

- 26 (5)Loan commitment agreement
The Company has concluded loan commitment agreements with two banks in order to carryout efficient funding of working capital. The balance of unused line of credit, etc. under theloan commitment agreements at the end of the fiscal year under review is as follows.
Total amount of loan commitment
Borrowing balance
Balance(6)28,500 million yen
24,600 million yen
3,900 million yen

Notes to Statements of Income“Provision of allowance for investment loss of subsidiaries and associates” under“Extraordinary losses” consists of provision of allowance for doubtful accounts for
subsidiaries and associates (1,846 million yen) and reversal of provision for loss of
subsidiaries and associates (1,086 million yen).

(7)

Notes to Statements of Changes in Equity
Type and number of treasury shares at the end of the fiscal year under review
Common shares
162,609 shares
The number of shares above includes 102,600 shares of the Company held in the Board
Benefit Trust (BBT) as a result of the introduction of the BBT plan.

3.

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

24 million yen
3,672 million yen
6,103 million yen
1 million yen
426 million yen
713 million yen
1,207 million yen
10 million yen
2,236 million yen
275 million yen
14,671 million yen-1,896 million yen-11,878 million yen-13,774 million yen
897 million yen

- 27 -

Deferred tax liabilities
Assets for adjustment of profit and loss
due to transfer
Valuation difference on available-for-salesecurities
Other
Deferred tax liabilities - total
Net deferred tax assets (liabilities)

20 million yen
2,007 million yen
66 million yen
2,094 million yen-1,196 million yen

Other than the above items, “deferred tax liabilities” concerning “revaluation reserve for land”
was 3,614 million yen.
4.

Notes to Transactions with Related Parties(1)

Parent company and major corporate shareholders

Attributes Name of company

Ratio of voting
rights held (%)

Relationshipwith related
partyContent oftransaction(Direct)
Major
10.8
shareholder
Property
Property
Sanko Kigyo K.K. (Closer parties or(company,lease-in, etc. lease-inagreed parties)
etc.)
6.2

(2)

Transaction
amount(million yen)

Item

Term-endbalance(million
yen)

1,067

Accruedexpenses

6

Item

Term-endbalance(millionyen)

Subsidiaries and associates, etc.

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

SEIKO WATCHCORPORATION

Content oftransaction

Transaction
amount(million yen)Accounts
receivable 2,198
other(direct) 100.0

Interlocking
directorate

Royalty
incomeSubsidiary WAKO Co., Ltd.

(direct) 100.0

Interlocking
directorate

Property
lease-out

699

Accruedincome94

Shirakawa EstateCo., Ltd.

(direct) 100.0

Interlocking
directorate

Property
lease-in

277

−

−

(Note 1) Transaction terms and policies to determine them
1)
The terms for property lease-in are determined based on the same standards as forgeneral transaction terms after considering market price. In the Statements ofIncome, the property rents payable are offset with property rents receivable.

1,074

- 28 2)
3)

Royalty income is determined based on the standards similar to general transaction
terms.
Regarding property rents receivable, those of owned property leased out for businessuse are determined linked to relevant income, and those leased out as office or the likeare determined based on a professional valuation. In the Statements of Income,property rents receivable are offset with property rents payable.

(Note 2) Transaction amounts do not include consumption tax, etc.; the term-end balance includes
consumption tax, etc.
5.

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

1,228.89 yen
75.77 yen
3,124 million yen
3,124 million yen
41,239 thousand shares(Note 1) For the purpose of calculating the net income per share, the treasury shares remaining
in trust posted as treasury shares in the “Shareholders' equity” section are included in
the treasury shares deducted in the calculation of the average number of shares during
the fiscal year under review. For the purpose of calculating the net assets per share,
the treasury shares so remaining in trust are included in the treasury shares deductedfrom the total number of shares issued and outstanding at the end of the fiscal year
under review.
For the purpose of calculating the net income per share, the average number oftreasury shares, so deducted, during the fiscal year under review was 105 thousand
shares, and for the purpose of calculating the net assets per share, the number oftreasury shares, so deducted, as at the end of the fiscal year under review was 102
thousand shares.
6.

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

7.

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