SMILE145－ SEIKO MILESTONE 145 －Mid-Term Management Plan (FY2022 - FY2026)
May 10, 2022

Contents

1. Review of the 7th Mid-Term Management Plan
2. Environment Recognition for the Future

3. Positioning and Ideals of “SMILE145”
4. Value Creation Story for the years leading up to 2031
5. Growth Strategy
6. Financial Policy and Cash Allocation
7. Group-Wide Management Targets■Abbreviations used in this document
・SWC
・SII
・NPC
・SSOL
・STC
・GS
・GB

：SEIKO WATCH CORPORATION：Seiko Instruments Inc.
：SEIKO NPC CORPORATION：SEIKO Solutions Inc.
：SEIKO Time Creation Inc.
：Grand Seiko：Global Brands
1

INTRODUCTION
Group Purpose and Group 10-year vision2

Introduction
GROUP PURPOSE
As a company trusted by society,we will constantly pursue innovation,
inspiring people everywhere, andcreating a future full of smiles.
CORPORATE PHILOSOPHY
A Company that is Trusted by Society

GROUP SLOGANSEIKO Moving ahead. Touching hearts.
Ideals leading up to the 150th Anniversary of our founding in 2031

GROUP 10-YEAR VISION
Leveraging analog & digital synergies to offer products and services
that contribute to the creation of sustainable societies,
connecting people, things, and time throughout the world
3

REVIEW
7th Mid-Term Management Plan

4

Review of the 7th Mid-Term Management Plan
■FY2021(Final FY) Targets and Results (Consolidated)

7th Mid-Term Management Plan (FY2019 - FY2021)

Basic Policies

Target“With everyone fully committed and focused,
We will invest aggressively in scenarios for the future.
Backed by the strength of the SEIKO brand, our precision
technologies and ability to propose solutions
Will provide us with the sustained growth.”

Net Sales(Consolidated)(Billions of yen)
300.0

285.0

Net sales

FY2021

TargetProfit attributableto owners ofparent237.3

Operatingprofit

14.2

8.7

(%)

5.0%

3.7%

Net interestbearing debt

FY2021

12.5

6.4

40.0%

36.7%

Approx.72.0

90.9

Equity Capital
Ratio

Operating Profit(Consolidated)(Billions of yen)(Billions of yen)

Equity Capital Ratio

15.0

ActualMTP

Actual

250.0

60.0%

MTP

12.0

Target

50.0%

40.0％

200.0

285.0
150.0

40.0%

9.0

237.3
239.1

14.2

30.0%

34.4%

34.9%

FY19

FY20

36.7%

6.0

202.6

100.0

8.7
3.0

50.0

6.1

20.0%
10.0%

2.1
0.0

0.0

FY19

FY20

FY21

0.0%

FY19

FY20

FY21

FY21

5

Review of the 7th Mid-Term Management Plan: Results and Challenges by Business

Watches

Business Activities

Electronic
Devices

Systems
SolutionsTime
Creation/
WAKO
Management
Foundation

Company-wide

Basic Policies

Results• Accelerate Global Brands (GB) strategy toincrease sales in the U.S. and Asia as well asin Japan• Investment in advertising, manufacturing andafter-sales service• GB Sales doubled, mainly in the U.S. and Asia
• Successful digital marketing, especially overseas• Integration of product development, procurement
and manufacturing functions• Introduced new after-sales services for GS• Reform business models of domestic
businesses• Develop new business domains• Diversify manufacturing sites• Build CRM and OMO to provide highquality customer experiences• Shift key product portfolio targeting growthmarkets• Carry out investments and strengthen
management in new growth areas• Increased sales in growth areas (medical andautomotive)• Established systems to increase production of
precision components, etc.

• Overseas expansion of some businesses• Enhance incubation functions••• Achieved 24 consecutive quarters of year-onyear growth in both revenue and profit• Increased profitability, operating profit margin
grew by approx. 4 percentage points• Implemented M&As (2 companies)• Accelerate activities to create new
businesses• Acquire human resources with industry
knowledge• Accelerate M&As

• Selection and concentration, and reinforcementof the foundation to contribute to the brand andfurther growth• Developed a high-end marionette product“Rondeau”• Opened the GS Boutique Flagship Wako

• Shift to products with high-added-value• Strengthen SDG initiatives• Enhance corporate communication• Recruit, cultivate, and leverage diverse humanresources• Started SDG activities• Enhanced outbound communications (PR andIR)• Increased the ratio of women in managerial
positions from 10.9% to 13.5%**As of October 2021

• Management system suited to a VUCA
(volatile, uncertain, complex, andambiguous) era• Continue to enhance governance• Promote utilization of human resources•

Improve sustainable growth and reliability of business
Create business structure resilient to environmental
changes and shift to high added value throughdiversification
Continuously transform practices and strengthenorganizational structure

Challenges

6

ENVIRONMENT RECOGNITION
FOR THE FUTURE

7

Environment Recognition for the Future
Changing Demographic Composition, Heightened
Geopolitical Risks

・Aging population and falling birth rates,
Alternation of generations
・Increase in world population
 Expansion of medical andhealth-related markets
 Difficulty in securing human resources

Environmental Problem

・Climate change
・Recycling-oriented society Growing environmental awareness Decarbonization, tighter
environmental regulations

In a VUCA (volatile, uncertain, complex, andambiguous) era, where many discontinuouschanges are occurring, we will contribute tosolving social issues through our business.
Evolution of Electronics Technology and Digitization

Support for the New Normal and after COVID-19

・Society 5.0
・Automation, robotization

・Diversification of lifestyles and values

 DX deepening Improved business efficiency

 Demand for high-added-value
products
 Fusion of Real and Virtual8

POSITIONING AND IDEALS OF“SMILE145”
A New Mid-Term Management Plan (FY2022-FY2026)

9

Positioning of “SMILE145”
150th Anniversary of our Founding(2031)

Group 10-Year Vision

145th Anniversary of our Founding(2026)

By 2026, we aim to become”A solutions company that offers
high-added-value products andservices that create excitement andgenerate substantial profits.”

SMILE145

Seiko Milestone 145
A New Mid-Term Management Plan
(FY2022-FY2026)

Five-year plan aimed at the 145th anniversaryof Seiko’s founding, formulated by backcastingfrom the Group 10-Year Vision10

Ideals of “SMILE145”
By 2026, we aim to become“A solutions company that offers high-added-value products and services
that create excitement and generate substantial profits.”

Basic Policy
MVP Strategy
Moving: excitement
Valuable: high-added-value
Profitable: substantial profits







Business strategy in line with a value creation story that solves social issues
Shift to high-added-value products and services with a focus on improving
profitability
Develop businesses focused on DtoC and a market-driven approach with leveraging
digital transformation (DX)
Build new business models and domains, and achieve ambidextrous
management through the acceleration of Group-internal synergies and open
innovation
Support employees in taking on challenges, and build an organizational culture
and systems that turn failure into value
11

VALUE CREATION STORYFOR THE YEARS LEADING UP TO 2031

12

Value Creation Story for the years leading up to 2031
SEIKO PURPOSE

Sustainability Policy

As a company trusted by society,we will constantly pursue innovation,
inspiring people everywhere, andcreating a future full of smiles.

Starting with its Statement of Purpose,
the Seiko Holdings Group will strive to use its business activities,
which aim to create WITH, to realize the Group’s steady growth andcontribute to the development of a sustainable society.

Environment
Recognition
Acceptance ofdiversity•

Change of thecommunication

•

•

•

Digitization
progresses
Aging populationand falling birth
rates
Climate change

Leveraging analog & digital synergies
to offer products and services that
contribute to the creation of sustainable
societies, connecting people, things,
and time throughout the world

Approaches to Social Issues for Value Creation(Opportunities & Risks)•

GROUP 10-YEAR VISION

SMILE

Well-being

Inclusion

Trust

Harmony

A Better LifeFor All People

Certainty andTrust

Harmony with
the Earth

What We Aim to be in 2026

Growth Strategies
Five Group Core
SDGs
Strategies

HR

DX

R&D

Branding

Corporate Philosophy
A Company that isTrusted by SocietyGroup Slogan
SEIKO Moving ahead.
Touching hearts.

Spirit of the Founder
Always one step aheadof the restThree Strategic Domains
Emotional Value
Solutions

Four Business Opportunities
Emotional
Consumption
Society 5.0

Systems
Solutions

Devices Solutions

By 2026, we aim to become“A solutions company that offers highadded-value products and services
that create excitement and generate
substantial profits.”

Wellness
Society/
Environment

MVP Strategy
Moving: excitement
Valuable: high-added-value
Profitable: substantial profits

13

GROWTH STRATEGY

14

GROWTH STRATEGY
Five Group Core Strategies

15Group Core Strategy: SDGs (Materiality)
Sustainability
PolicyStarting with its Statement of Purpose,
the Seiko Holdings Group will strive to use its business activities, which aim to create WITH,
to realize the Group’s steady growth and contribute to the development of a sustainable society.

WITH

Materiality (Key Issues)

Well-being

Contribute to greater job satisfaction and active participation by diverse
individuals
Implement initiatives for respecting human rights

A Better Life

Inclusion
For All People

SDGs

Promote mental and physical health and achieve social welfare
Cultivate and support the next generation
Contribute to the creation of a safe, secure, and inclusive social
infrastructure
Contribute to a prosperous society through support for culture and sports
Contribute to local communities

Trust
Certainty and Trust

Provide high-quality products and services that are trusted by society
Promote responsible procurement and supply chain
Strengthen corporate governance and the compliance structure
Implement initiatives for climate change and decarbonization

Harmony
Harmony with the Earth

Help to realize a recycling-oriented society
Coexist and harmonize with nature
16

Group Core Strategy: SDGs (Implement initiatives for climate change and decarbonization)
Measure Develop and promote a decarbonization roadmap
 Develop businesses to take advantage of
decarbonization opportunities

 Specific initiatives to reduce CO2 emissions
1. Review/improve manufacturing processes
2. Introduce/renew high-efficiency equipment

Long-term targets for reducing CO2 emissions

3. Expand use of renewable energy• FY2026 : SCOPE1&2 25％ reduction from 2020 level• FY2030 : SCOPE1&2 42％ reduction from 2020 level
SCOPE325％ reduction from 2020 level

4. Provide environmentally friendly products, services, andsolutions• Aim to achieve carbon neutrality by 2050.

6. Collaborate with suppliers and customers

5. Develop technologies related to energy and resourcesavingBusiness locations with renewable energy
Morioka Seiko Instruments Inc.
盛岡セイコー工業

WAKO Co., Ltd.

Seiko Instruments (Thailand) Ltd.
Seiko Instruments Thailand

17

Group Core Strategy: Human Resource
Basic Policy

Build an organizational culture and systems
that turn failure into value, with human-resource development
as a pillar of its growth strategy, by improving engagement and promoting diversity

Sustainable growth and developmentof the GroupDX human resource development andentrepreneur development
・Develop business leaders with a management perspective
Support employee growth・Develop an environment and measures that encourage our human

Human Resource
Development
Improve
Engagement

PromoteDiversity

Human Resource Strategy Targets (FY2026)•••

Human Resource Development

Improve engagement indicesMid-career hiring rate
From 42.5% (April 2022) to 50.0%
Ratio of women in managerial positions
From 13.5% (October 2021) to 20.0%

resources and organizations to grow autonomously

Improve Engagement
・Conduct Engagement survey and clearly prioritize issues

Promote Diversity
Hiring and promoting the active participation ofdiverse human resources
・Strengthen and enhance mid-career / experts / foreign nationals
hiring, etc.
18Group Core Strategy: DX
Basic Policy

Make full use of digital technology and data to create high-added-value businessthat is customer-centric and that places an emphasis on the customer experience

BtoC biz.

BtoB biz.

INNOVATION

・Improve customer experience through OMO(Online Merges with Offline) measures
・Customer-oriented digital marketing

・B2B digital sales
・Marketing enhancement

・Create new business models
・Reform business models

Digitalization

Business Systems

Infrastructure/Security

・Digitalization and automation ofbusiness processes

・Develop and upgrade the businesssystems operated by Group companies

・Sophisticated IT operations
・Enhance our system architecture
・Response to security incidents

19Group Core Strategy: R&D
Basic Policy

Further evolve its technology and create new value
by combining its long-cultivated technological philosophy of“Craftsmanship, Miniaturization and Efficiency”* with digital technology
Value provided

 Development of devices and equipment to support excitement, high-added-value, and highly profitableproducts and services
 Consolidation and deepening of technical expertise to realize the solutions company
・Contribution to expansion of the luxury/premium domain

Initiatives

・Strengthening the Society 5.0 field・Manufacturing innovation in line with SDGs such as
contributions to process rationalization, resource
conservation, labor saving, etc.
・Further promotion of new business creation and synergies
among businesses
・Human resource development and improvement ofdevelopment capabilities* “Craftsmanship” creates new value based on our advanced techniques and know-how.
“Miniaturization” reduces product size through precision processing and high-density assembly technologies.
“Efficiency” promotes the most efficient use of all resources including energy.

■Reinforcement of R&D structure
Seiko Holdings' R&D and production technology
development functions will be spun off to establish a
new R&D company, Seiko Future Creation Inc., in
July 2022.
By spinning off the functions responsible for thedevelopment infrastructure across the group, we will
accelerate the MVP strategy for SMILE145 by
speeding up decisions and activities.

20

Group Core Strategy: Branding
Seiko will face social issues with the aim of enriching the hearts of people
around the world, and create a future full of smiles
through our social, technical, and emotional value.

Branding
Strategy

Three axes of value that support Seiko’s branding strategy
Technical
value

SocialA brand that stays one step ahead of the rest
through technology, while innovating andtirelessly taking on new challenges

A brand that contributes to a sustainable society

value

Emotionalvalue

A brand that offers excitement and smiles
to people around the world through emotional value

Technical value

Social value
Emotional value

Initiative

・Sports timekeeping, sponsorships and Seiko athletes (Ex. World Athletics Championships, Tokyo Marathon, New Team Seiko)・Music events, sponsorships and support (Ex. Concert to Support Eastern Japan)
・Support for the development of the next generation (Ex. Seiko Exciting school on ‘Time and Timepieces,’ ‘Sports’ and ‘Environment,’
Seiko Summer Jazz Camp)・Strengthen communication of emotional value mainly in the Watches and WAKO businesses

21

GROWTH STRATEGY
Four Business Opportunities

22

Growth Strategy: Four Business Opportunities
Foundation Domain

Emotional Consumption
Develop businesses targetingcustomers who focus on products
and services that appeal more
directly to the emotions and senses

Expansion Domain

Wellness
Develop businesses oriented toward
offering products and services that
improve people’s quality of life (QOL)
from sports, healthcare, and medical
perspectives

Society 5.0
Develop businesses that contribute todevelopment of the digital society, byoffering devices and ICT products andservices related to a high-level
integration of cyberspace and physicalspace

Society / Environment
Develop businesses that solve
challenges for the development ofsociety, such as helping to build
infrastructure for each industry involved
in social development, and contributing
to the global environment
23

GROWTH STRATEGYOur Three Strategic Domains

24Our Three Strategic Domains▶Aims of our Three Strategic Domains(1) Establish management unified by a common purpose, which aims to create businesssynergies through a purpose-driven approach(2) Innovate into a business model that solves social issues through DX(3) Create a distributed business structure that responds to the risk of changes
in the business environment

Devices Solutions
DomainSystems Solutions
Domain・SWC: Watches, watch movements
・STC: Clocks, system clocks
・WAKO: High-end jewelry, apparel, fashion accessories
・SII: Quartz crystals, micro batteries, materials, printers,
precision turned parts
・NPC: Sensors, crystal oscillator ICs

・SSOL: Wireless communications equipment, information

Basic PolicyGroup Purpose

Emotional Value Solutions
Domainnetwork systems, data services,computer performance management software

25

Growth Strategy: Emotional Value Solutions Domain

EVS ： Emotional Value Solutions Domain
Vision

SWC / STC / WAKO

 Create products and services with high functional, emotional, and social value, with asense of beauty and meticulous attention to detail that excite customers
 Improve our brand and corporate value by selling products that are partners for life, andcan be enjoyed together in times of joy, through a superior customer experience

Target value(FY2026)

Operating Profit 14.5 - 15.0 billion yen
MVP Ratio*
60 ％*Growth areas as % of EVS domain sales

Operating Profit(billions of yen)
18.0

14.5 - 15.0•

Social
Needs

•
•
•

MVP
Strategy••

Polarization of personal consumption (increasing expectations for
products with high-added-value)
Growing interest in ethical consumption
Changes in purchasing behavior focusing on “experiences”

15.0

Offer products and services that create excitement and pursue highadded-value
Evolution of CX (Customer Experience)
Enhanced data utilization through DX (CRM (Customer RelationshipManagement System))

6.0

12.0

9.7
9.0

8.3

3.0

・・・

0.0
FY21

FY22

FY26

26

Growth Strategy: Emotional Value Solutions Domain (Watches Business)
Watches Business KPI(FY2026)

GB Ratio*Over 85%*Percentage of GB sales to total completed watches sales

Global Brands (GB) Strategy
We are developing globally brands that have "technical capabilities" anda "special story" and deliver "joy and excitement" to our customers.
Global Brands (GB)Grand Seiko (GS)PROSPEXASTRON

Presage

King Seiko

SEIKO 5 Sports

27

Growth Strategy: Emotional Value Solutions Domain (Watches Business)
Watches
Business
Main measures

1. Expansion of high-end products business (luxury domain) centered around GS• Creation of products with high emotional value• Strengthen and expand directly-managed boutiques and e-commerce• Enhancement of global after-sales service system

Grand Seiko Boutique

After-Sales Service

Kodo

Paris

Flagship WAKO

Masterpiece Collection28

Growth Strategy: Emotional Value Solutions Domain (Watches Business)
Watches
Business
Main measures

2. Expansion of mid-range products business (premium domain) by GB• Strengthen high-added-value products with superior functionality and design• Strengthen and expand directly-managed boutiques and e-commerce

Seiko PROSPEX
Boutique29

Growth Strategy: Emotional Value Solutions Domain (Watches Business)
3. Provide excitement to people and society through superior customer experience

Watch
Business
Main measures•

Creation of high-quality, high-added-value customer experiences through digital
CRM and acquisition of loyal customers
Launch of Seiko House Ginza•

Customer Journey with CRM

Blog
Conversation
With a friend

Customer
SupportID Registration
After-sales service

Approval

Product
Registration
Interests・Information
gathering

PersonaNews app／SNS

Buy

Reviews
and Blogs

Digital Advertising
PR,
TV

SNS

Real Stores

Onlineadvertisement

Real Stores
EC siteUse

Seiko House Ginza

Loyal Customer

CRM (Point of contact, Marketing, Communication)•

From the Wako Building in Ginza 4-chome, Seiko
conveys Japanese technology and the spirit ofJapanese craftsmanship to the future, and Seiko's
attitude of moving forward with society.

•

A workshop where visitors can experience the highlevel of Seiko’s craftsmanship will be opened toprovide a place for all watch lovers to gather.

Fans・Support
Emailmagazine

Experience30

Growth Strategy: Devices Solutions Domain
DS ： Devices Solutions Domain

 Offer the high functionality and quality demanded by society, with devices solutions thatare created through technical innovation

Vision Realize Society 5.0 (resolution of social issues by integrating cyberspace and physicalspace)

Target value(FY2026)

Operating Profit
MVP Ratio*

7.5 - 8.0 billion yen
60 ％*Growth areas as % of DS domain sales

SocialNeeds

MVP
Strategy

SII / NPC•••

Realization of CPS (Cyber Physical System)
Building a safe and secure society
Realization of a recycling-oriented society•

Actively deploy to growth markets in the digital economy (information andcommunication devices, automotive, IoT, etc.)
Expand sales to the green economy market by leveraging technologies
for miniaturization, lower power consumption, and long lifetime
Accelerate product development in wellness and social/ environmental
fields••Operating Profit(billions of yen)
10.0

7.5 - 8.0
8.0

6.0

5.6

5.8

4.0

2.0

・・・
0.0

FY21

FY22

FY26

31

Growth Strategy: Devices Solutions Domain
 MVP Strategy
Society 5.0
Digital Economy

Sophisticated value
demanded bysociety

Valueprovided(Strategic
technology)

Miniaturization, Lower power,
Longer life,

High precision, High reliability

Safe/SecureHigh precision/Highfunctionality(Miniaturization, lower power, etc.)

Increase in data volume

Environmentally Friendly

Expansion of IoT-related
devices
Increased automation
Diversification of lifestyles
Promotion of solutions tosocial issues, etc.

Key Strategic
Markets
Data center relatedInformation andcommunication devices
EV/autonomous driving

Green Economy
SDGs

Main MVP product lines






Micro batteries, high-performance metals
Miniature quartz crystals
Inkjet printheads
Miniature Ball Bearing
Sensorsetc.

Direction of the next generation MVP
product lines

Quartzcrystals

Inkjet printheads

Open innovation, along with strengthening thedevelopment of the next generation

Logistics/DX

1. Social Environment／Modular Products

Cashless

2. Manufacturing DX
3. Services（maintenance, analysis, etc.）

Wellness market, etc.

Microbatteries

Miniature Ball
Bearings
Sensors (Encoders)32Growth Strategy: Systems Solutions Domain

SS ：Systems Solutions Domain

SSOL Achieve sustainable growth by offering social innovation through one-stop ICT solutions
Vision Increase the value of customers, society, and the Group by continuously offering value inline with customer needs

Target value(FY2026)

Operating Profit
MVP Ratio*

6.5 - 7.0 billion yen
73 ％*Stock Business as % of Marginal Profit in the SS domain•

SocialNeeds••

Increasing complexity and lack of transparency in society,
Diversification of values
Transition from a seller’s market to prioritizing buyers and users
Accelerating Digital Shift

8.0

•
•
•

Further advance the transition to the stock business
Diversify further through M&As and alliances
Expansion of DX Platforms

6.5 - 7.0

6.0

4.5
4.0

MVP
Strategy

Operating Profit(billions of yen)
10.0

3.9

2.0

・・・

0.0
FY21

FY22

FY26

33

Growth Strategy: Systems Solutions Domain
 Stock Business
Strengthen business sustainability
and management credibility

 Diversification
Maximize earnings from existing businesses and launch new businesses to achievesustained growth

Stock Business as % of Marginal Profit

73%
60%

FY21

Advanced Manufacturing

Financial
Digitization

Smart Safety

Digitalization of
Healthcare

FY26

34

Growth Strategy: Multiplicative Business Creation(Technologies)

Create new businesses from the perspective of(Markets)(Business models)

Tech × Data × Model

Expansion Domain

EVS
Emotional
products

SS
ICT&DX

Wellness
Ex. Medical, Healthcare, Sports

Multiplicativesynergy

DS

R&D

Highprecision

SensormodulesSociety /Environment

New Business
Creation

Ex. Facility, Environment

Synergies from connecting areas(businesses) and multiplying strengths
35Group-wide Business Portfolio Strategy＊The size of the bubble represents net sales.

Development
Businesses

GrowthBusinesses

New Business Domain

SSOL

Net sales growth potential（Growth rate over 5 years）

Wellness
Society/Environment

SII

SWC
NPC

Core
Businesses

STC
WAKO
Unprofitable
Businesses

Basic
Businesses

ROIC (return on invested capital)
36

FINANCIAL POLICY AND
CASH ALLOCATION

37

Financial Policy and Cash Allocation
Financial Policy

Cash Allocation

Cash Allocation Approach(A) Increase our growth investment capabilities byimproving the gross profit margin(B) Make investment to establish sustainability(C) Improve the financial constitution based on
capital costs(D) Shareholder return policy based on capital costs

5 years
before priorinvestment
operating CF
Over 130.0(A)

GrowthInvestment
Over 100.0(B)

Improvement offinancial constitution(billions of yen)

Growth Investment
Areas•BrandingOver 20.0•Manufacturing Facilities
Over 50.0•Investment in new area
development*
Over 30.0*R&D, M&A, DX, Human
Resources, etc

Over 15.0 (C)(B) Investment Policy for Establishing Sustainability
 Active investment based on sales growthpotential and an ROIC Establishment of a stable revenue base
 Taking on the challenges of new businessdomains

Shareholder
returnOver 15.0 (D)Aiming to further increase operating CF before investments
to invest in growth, improve financial strength, and further
increase shareholder returns.
38

GROUP-WIDE MANAGEMENT TARGETS

39

Group-Wide Management Targets
Consolidated Management Indicators (KPI)
ESG Indicator

Financial Index

FY2026

Consolidated operating profit

18.0 - 20.0 Billion yen

Consolidated gross profit
margin (GP%)+ 5.0 percentage points

Consolidated ROIC
(Return on invested capital)*(compared to FY2021)

FY2026

Reducing CO2
emissions

SCOPE1・2

25% down*1

Increased Engagement Score*2*1 CO2 emission reduction rate compared to FY2020*2 Engagement survey to begin in FY2022

Over 6.5%*ROIC = (Ordinary income after income taxes + Interest expense) / (Interest bearing debt +Net assets)

Management Indicators
by Domain (KPI)

FY2026
EVS

DS

SS

Cons.

Operating profit

14.5 - 15.0 Billion yen

7.5 - 8.0 Billion yen

6.5 - 7.0 Billion yen

18.0 - 20.0 Billion yen

Gross profit margin (GP%)+ 5.0% pt. or more

+ 5.0% pt. or more

+ 5.0% pt. or more

+ 5.0% pt.

ー

ー

ー

Over 6.5%

ROIC
MVP ratio(*Growth areas as % of DS domain sales)

60％

60%

73%

ー
40

Appendix

41

(Appendix) SDG Materiality and Key Actions
WITH

Well-being
A Better Life

Inclusion
For All People

Trust
Certainty and
TrustMateriality
Contribute to greater job satisfaction and active participation
by diverse individuals

Develop human resources as a pillar of our growth strategy, and work to improveengagement and promote diversity

Implement initiatives for respecting human rights

Conduct thorough investigations regarding human rights

Promote mental and physical health and achieve social
welfareDevelop products to enter medical and healthcare businesses

Cultivate and support the next generation

Support the growth and development of the next generation through hands-on
events, classes, etc.

Contribute to the creation of a safe, secure, and inclusive
social infrastructure

Create and provide digital solutions to help realize a new age of society, where all
people and goods are connected

Contribute to a prosperous society through support for
culture and sports

Promote sports, music, and cultural activities that enrich people's lives and enhance
our corporate value

Contribute to local communities

Support activities in local communities that promote social revitalization at all ourfacilities, both inside and outside Japan

Provide high-quality products and services that are trusted
by society

Develop high-quality, high-added-value products and services by leveraging thestrengths of each business domain to increase sustainable business activities

Promote responsible procurement and supply chain

Establish and operate a sustainable supply chain management system that
addresses social issues, including human rights and the environment

Strengthen corporate governance and the compliancestructure

Maintain and improve corporate governance and compliance operations based on
respect for all relevant laws and regulations

Implement initiatives for climate change and decarbonization

Plan and promotion of reduction measures in line with the SHD Group's long-termgoal of reducing CO2 emissions

Realization of a recycling-oriented society

Create and expand lineup of environmentally friendly products and services /Promote 3Rs (Reduce, Reuse, Recycle)

Coexist and harmonize with nature

Aim for coexistence with nature by increasing activities to conserve biodiversity andnatural capital in each of our business locations

Harmony
Harmony with
the Earth

Key Actions

SDGs

42

(Appendix) ESG

Environmental

・Disclosure under the TCFD (Task Force on Climate-related Financial Disclosures)
Seiko Holdings Group expressed its support for the recommendations made by the Task Force on Climate-related
Financial Disclosures (TCFD) in October 2021. The Group will disclose information based on the recommendations of the
TCFD during FY2022.

・Approach to International Initiatives
The Group will actively promote membership in international initiatives such as SBT (Science-based targets), RE100(Renewable Energy 100%), etc.
■International initiatives that have expressed endorsement as of May 2022

United Nations Global Compact

The Valuable 500

43(Appendix) ESG

SocialThe Seiko Holdings Group has established and revised three policies: "Procurement," "Human Rights," and"Environment," which support the Sustainability Policy.

Sustainability Policy
Procurement Policy/
Procurement Guidelines(Based on the establishment of the
Human Rights Policy Scheduled to berevised during FY2022)

Human Rights Policy

Environmental Policy（Established in May 2022）（Revised in December 2021）

・Human Rights Policy
As a key action of the materiality "Initiatives to ensure respect for human rights,” establishment of a due
diligence system in FY2022, to be operational from FY2023.

44

(Appendix) ESG•

Governance

Revision of compensation system for officers*1
Revise the compensation system for officers to strengthen incentives, ensure competitive compensationlevels, and ensure the effectiveness of the mid-term■In the case of a representative director
management plan Expand the proportion of performance-based
compensation
 KPIs for performance-linked compensation arelinked to KPIs in the mid-term management plan

Current

Basic compensation

Bonuses

After revision

Consolidated ROIC and non-financial KPIs
added as KPIs for performance-based compensation.

Performance-based
compensation Expansion*1. To be revised on July 1, 2022
0%

•

Stock
Compensation

20%

40%

60%

80%

100%

Increase ratio of outside directors*2
Increase in the number of outside directors and introduction of the executive officer system increased the ratioof outside directors

Internal directors : -3 persons (from 9 to 6)
Outside directors : +1 person (from 2 to 3）

Ratio of outside directors
increases to 1/3*2. To be formalized following approval at the Annual General Meeting of Shareholders (to be held on June 29, 2022) and the Board of Directors Meeting45

*The forecasted results which appear in this presentation are basedon the information which we have obtained as of now, and on certain
assumptions deemed reasonable. As a result, actual results, etc. may
differ significantly from the forecasted figures due to a wide range offactors.
*Numbers are cut off to the unit indicated, unless otherwise specified.

46

47