01

HDS REPORT 2023

■ Introduction

The management philosophy of Harmonic Drive Systems consists of four pillars: “Respect for the Individual,” “A MeaningfulCompany,” “Coexistence and Co-prosperity,” and “Contribution to Society.” Atsuo Tokoro, the first president, played a
key role in establishing them. “Respect for the Individual” is placed in the first place. In “Coexistence and Co-prosperity,”
employees are listed at the top of stakeholders. As a premise of “A Meaningful Company,” it doesn't have any meaning if ouremployees cannot work happily. To fulfill the philosophy of “Contribution to Society,” our employees’ jobs must be protected.
Thus, our management philosophy put employees at the core and this is the foundation of all our activities.

In the past, I had to cut staff due to deteriorating business. I thought about the departing employees and cried. I will neverforget that moment. I believe the most important thing for the management is that each employee can perform at their fullpotential. I tell them that they need to pursue their individual happiness. As the description of “Respect for the Individual”
shows, we aspire to be a company where employees come first. I worked in Germany for a long time and learned thatrecognizing individuality and understanding differences are keys to good management. We share our management
philosophy with the heads of our group companies outside Japan. At the same time, we encourage them to establish unique
identities of their own by recognizing their individualities under our global common product, HarmonicDrive®. To realize it,
we need to have a solid foundation and be deeply rooted in it.

Looking back, we went through a hard time during the 1970s when we were going through repeated trial and error topromote HarmonicDrive®, the main product of our group. At the time, we thought of HarmonicDrive® merely as a speed
reducer. However, we didn’t realize the product’s strengths. As a result, we could only sell it for limited uses. In suchcircumstances, one day, an engineer in a German printing machine manufacturer came to us to find whether HarmonicDrive®
could be used for precise positioning. With this as a trigger, product usage started to expand. The HDS Group has a long
history of advancing our business model of customizing HarmonicDrive®, our core product, by listening and responding
seriously to requests from such customers. It has been firmly rooted in our corporate culture for more than 50 years since ourfoundation.

Cha irpe rs on of the Boa rd of Dire ctors
Mitsumasa Ito

HDS Group’s
Values and Aspirations

Materiality to Achieve
Aspirations

Sustainability
Supporting Action
Strategies

Sustainability
Management

Data and Company
Information■ Contents / Editorial Policy / Information Disclosure
ContentsI nf o r ma ti o n D i scl o su r e S y s t e m
Sustainability Information

Financial Information

02 Contents / Editorial Policy / Information Disclosure

HDS Group’s Values and Aspirations

Company Guide

03 Values and Aspirations

Integrated Report

05 Message from the CEO

Corporate Website
IR information (Corporate website)● Securities Report, Quarterly Report● Financial Results, Presentation ofBusiness Results● Investors' Guide● Materials for briefing sessions forindividual investors●01 Introduction

Sustainability information(Corporate website)● Information on products, technologies,exhibitions (Corporate website)● Corporate Governance Report

Access our website for detailed information including financialinformation, such as Financial Results, Presentation of Business Results,
as well as sustainability information.

Investor Relations | Harmonic Drive Systems
Sustainability | Harmonic Drive Systems
Harmonic Drive Systems 50th anniversary

35 Message From Person in Charge of Sustainability Promotion
37 Efforts on Global Environment
39 Measures to Address Climate Change
41 Provision of Products and Services That Meet Customer

Expectations

11 Materiality to Achieve Aspirations

42 Message From Officer in Charge of Supply Chains

13 Value Creation Process

43 Interview With Officer in Charge of Human Resources
45 Employee Roundtable Discussion●Our website

Sustainability Supporting Action Strategies

Strategies to Achieve Aspirations
15 Interview With Representative Director
17 Message From Officer in Charge of Financial Affairs

48 Interview With Officer in Charge of Public Relations

Sustainability Management

19 Interview With Officer in Charge of Intellectual Capital

49 Outside Directors Roundtable Discussion

21 Interview With Chief of Harmonic Drive Laboratory

52 Corporate Governance23 Interview With Officer in Charge of

58 Stakeholder Engagement

Manufacturing Capital
25 Interview With Officer in Charge of Domestic Sales
26 Interview With Officer in Charge of Overseas Sales
27 Corporate History and History of Value Creation
29 At a glance
31 Financial Highlights
32 Sustainability Information Highlights
33 Past Medium-Term Management Plans
34 Overview of Current Medium-Term Management Plan

59 Directors and Executives

Data and Company Information
61 Sustainability Data
63 Financial Data for the Past 11 Years
65 Financial Data
66 Global Network
67 Corporate overview
68 Stock Information

Editorial Policy
This publication, HDS Report 2023, is the first integrated report issued by the Harmonic Drive Systems Group (HDS Group). It deepens the understanding of wide-ranging stakeholders, including
shareholders and investors, by explaining not only the medium- to long-term economic value generated by the HDS Group, but also other factors of the Group, including the management philosophy,
long-term vision, and business models, the capital and strengths forming the source of the Group’s competitive edge, and the sustainability promotion system, in order to improve the Group’s socialand environmental value. In compiling this report, we referred to IFRS Foundation’s International Integrated Reporting Framework, the Ministry of Economy, Trade and Industry’s “Guidance forCollaborative Value Creation,” and other relevant guidelines.

Scope of reporting
Entities reported: Harmonic Drive Systems and its Group companies included in the scope of consolidation and those accounted for by the equity method.
Period reported: this report covers mainly fiscal 2022 (from April 1, 2022, to March 31, 2023). Notes, etc., are inserted where any other period is mentioned.
Terms used to refer to the Company and its Group: In this report, “HDSI” or the “Company” refers to Harmonic Drive Systems alone, while “HDS Group” or the “Group” is used to refer to theCompany and its Group companies.

Notes on forward-looking statements
Forecasts and outlook regarding future financial results indicated in this integrated report are what the Company judged as reasonable based on currently available information. Note that suchforecasts contain risk and future uncertainty, and actual achievements and financial results may differ from them.

HDS REPORT 202302