[Translation]
Note: This document has been translated from a part of the Japanese original for reference purposes
only. In the event of any discrepancy between this translated document and the Japanese original,
the original shall prevail.
(Stock Exchange Code 8050)
June 7, 2019
To Shareholders with Voting Rights:
Yoshinobu Nakamura
President
SEIKO HOLDINGS CORPORATION
5-11, Ginza 4-chome, Chuo-ku, TokyoNOTICE OF
THE 158TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 158th Ordinary General Meeting of Shareholders of
SEIKO HOLDINGS CORPORATION (the “Company”). The meeting will be held for the purposes
described below.
If you are unable to attend the meeting, you can exercise your voting rights in writing, or via theInternet. Please review the attached Reference Documents for the General Meeting of Shareholders,and exercise your voting rights in either of the methods described on pages 2 and 3 by 6 p.m. on
Wednesday, June 26, 2019, Japan time.
1. Date and Time:Thursday, June 27, 2019, at 10 a.m. Japan time
(The reception desk will open at 9 a.m. Japan time.)

2. Place:

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

3. Meeting Agenda:
Matters to be reported:

The Business Report, Non-consolidated Financial Statements,
Consolidated Financial Statements and results of audits by the
Accounting Auditor and the Board of Corporate Auditors of theConsolidated Financial Statements, for the Company’s Fiscal Year
Ended on March 31, 2019 (from April 1, 2018 to March 31, 2019)

Proposals to be resolved: Proposal 1: Distribution of Surplus
Proposal 2: Election of Eleven (11) Directors
Proposal 3: Election of Two (2) Corporate Auditors
4. Decisions Concerning Convocation
(1)

(2)

Should you choose to exercise your voting rights via a proxy, you may designate a shareholder
other than yourself, who is entitled to vote with respect to the Company, as your proxy. Insuch case, please have the proxy submit a power of attorney together with your Voting Rights
Exercise Form to the reception desk.
Should you diversely exercise your voting rights, please notify the Company in writing to thiseffect, together with the reason thereof, at least three days prior to the date of the General
Meeting of Shareholders.

-2Regarding disclosures on the Internet◎

Among the documents to be provided with this Notice, the following items are posted on the
Company’s website (at the URL provided below) via the Internet pursuant to laws andregulations and Article 16 of the Articles of Incorporation of the Company; therefore, they are
not included in the documents attached hereto:(i)“Consolidated Statements of Changes in Equity” and “Notes to Consolidated Financial
Statements” for Consolidated Financial Statements(ii)“Non-Consolidated Statements of Changes in Equity” and “Notes to NonConsolidated Financial Statements” for Non-Consolidated Financial Statements
The Consolidated Financial Statements and Non-Consolidated Financial Statements that theBoard of Corporate Auditors and the Accounting Auditor have audited contain theConsolidated Statements of Changes in Equity, Notes to Consolidated Financial Statements,
Non-Consolidated Statements of Changes in Equity and Notes to Non-Consolidated Financial
Statements as posted on the Company’s website.

◎

Should any of the Reference Documents for the General Meeting of Shareholders, Business
Report, Consolidated Financial Statements or Non-consolidated Financial Statements require
revisions, the revised versions will be posted on the Company’s website (at the URL provided
below).
The Company’s
WebsiteEnglish: https://www.seiko.co.jp/en/ir/,
Japanese: https://www.seiko.co.jp/ir/

Notice regarding Exercise of Voting Rights
Voting rights may be exercised by any of the means described below. Shareholders are requested toreview the Reference Documents for the General Meeting of Shareholders before exercising voting
rights.
Shareholders attending the meeting in person
Date and time of the meeting: Thursday, June 27, 2019, at 10 a.m., Japan time
When attending the meeting, please submit the enclosed Voting Rights Exercise Form at thereception desk. Please also bring this convocation notice.
Shareholders not attending the meeting in person
Exercise of voting rights in writing (by mail):
Deadline: Must reach the Company by 6 p.m. on Wednesday, June 26, 2019, Japan time
Please indicate your votes for or against the proposals on the enclosed Voting Rights Exercise Formand return the same so that it is received by the deadline for exercising voting rights.
Exercise of voting rights by electromagnetic means (via the Internet):
Deadline: By 6 p.m. on Wednesday, June 26, 2019, Japan time
Please refer to the Notice regarding Exercise of Voting Rights through the Internet provided on thenext page, access the Company’s designated voting website (https://soukai.mizuho-tb.co.jp/), andenter your votes for or against the proposals in accordance with the screen instructions.

-3Notice regarding Exercise of Voting Rights via the Internet
1.

Exercise of voting rights via the Internet(1)

Voting rights may be exercised through the Company’s designated voting website (atthe URL provided below), in lieu of exercising voting rights in writing. When voting
via the Internet, you should log in by using your voting rights exercise code andpassword displayed on the right-hand side of the enclosed Voting Rights Exercise
Form, and enter your votes in accordance with the screen instructions. Please note thatyou will be required to change your password when you log in for the first time toensure security.
Voting Website

(2)
(3)
(4)
(5)

https://soukai.mizuho-tb.co.jp/

The deadline for exercising voting rights is 6 p.m. on Wednesday, June 26, 2019,Japan time, and votes must be entered by the above deadline. Please exercise yourvoting rights promptly.
If you exercise a voting right both in writing and via the Internet, the vote submitted
through the Internet will be taken as the valid vote. If you exercise a voting rightmultiple times via the Internet, the vote last submitted will be taken as the valid vote.
The password (including the password that may be changed by a shareholder) is valid
only for this general meeting of shareholders. A new password will be issued at thetime of convocation of the next general meeting of shareholders.
Please note that shareholders are responsible for any expenses incurred for accessing
the Internet.

Notes:▪
The password is a means to verify the identification of the person casting the vote.
Please note that the Company will not ask for your password.
▪
If a wrong password is entered a certain number of times, it will be locked and may nolonger be used. If you have had your password locked, please take the procedures inaccordance with the screen instructions.
▪
Although the operationability of the voting website is checked with a general Internet
access device, you may not be able to use the voting website depending on the device
you use to access the website.
2.

Contact information
If you have any questions, please contact Stock Transfer Agent Department, Mizuho Trust &Banking Co., Ltd., the shareholder register administrator.
(1)

Inquiries regarding the operation of the voting website:(Toll free, accessible only in Japan) 0120-768-524 (9:00 - 21:00 on weekdays)(2)

Other inquiries regarding administration of shares:(Toll free, accessible only in Japan) 0120-288-324 (9:00 - 17:00 on weekdays)(For reference)
Institutional investors may use the electronic proxy voting platform operated by ICJ, Inc.

-4[Translation]
Reference Documents for the General Meeting of Shareholders
Agenda of the Ordinary General Meeting of Shareholders

Proposal 1: Distribution of surplus
The Company has a policy to provide consistent dividend payments while considering theconsolidated business results for the year under review and taking into account the enrichment ofinternal reserves to strengthen our management foundation. Based on this policy, with regard to
the year-end dividend for the fiscal year under review, we hereby propose to distribute the surplus
as described below.
Matters related to the year-end dividend(1) Type of dividend assets
Cash(2) Allotment of dividend property to shareholders and its total amountAmount per common share: 37.5 yen
Total amount of dividends: 1,550,426,175 yen
Note:

As the Company has already paid an interim dividend of 37.5 yen per share, the annual
dividend for the 158th fiscal year will be 75 yen per share.

(3) Effective date of distribution of surplus
June 28, 2019

-5Proposal 2: Election of Eleven (11) Directors
The Company proposes the election of eleven (11) Directors, as the terms of office of all eleven (11)Directors will expire at the closing of this General Meeting of Shareholders.
The candidates for Director are as follows.
Candidate
No.

Name

Positions and responsibilities at the Company

1

Reappointed

Shinji
Hattori

Chairman & Group CEO

2

Reappointed

Yoshinobu
Nakamura

President

3

Reappointed

AkihiroOkuma

Executive Director in charge of Secretariat,
Human Resources, General Affairs, and IT
Planning

Reappointed

Hiromi
Kanagawa

Director in charge of Public Relations,Sports Branding, and Corporate Culture
General Manager of the Corporate Culture
Department

4

5

Reappointed

ShimesuTakizawa

Director in charge of Finance & Corporate
Strategy Planning and Long-Term
Management & Technology Strategy
General Manager of the Finance &Corporate Strategy Planning Department

6

Reappointed

Kazuhiko
Sakamoto

Director in charge of Accounting
General Manager of the Accounting
Department

7

Newly
Appointed

MakotoIchimura

Senior General Manager, Secretaries Officeand General Affairs Department
General Manager of the Secretaries Office
General Manager of the Long-Term
Management & Technology Strategy
Department

8

Reappointed

Shuji
Takahashi

Director in charge of Watches Business

9

Reappointed

Tetsu
Kobayashi

Director

10

Newly
Appointed

Tsuyoshi
NaganoOutside Director
Independent Director

―

11

Newly
Appointed

YasukoTerauraOutside Director
Independent Director

―

-61.

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

Number of shares of the Company held: 2,279,289(2)Length of service as a Director: 12 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 12 out of 13 meetings (92.3%)(4)

Career, positions, and responsibilities(5)

April 1975

Joined Mitsubishi Corporation

July 1984

Joined Seikosha Co., Ltd. (currently Seiko Clock Inc. and Seiko
Precision Inc.)

January 1996

Director of Seiko Precision Inc.

June 2001

President of Seiko Precision Inc.

June 2003

President & CEO of SEIKO WATCH CORPORATION

June 2007

Director of the Company

June 2009

Executive Vice President of the Company

April 2010

President of the Company

October 2012

Chairman & Group CEO of the Company (to present)

June 2014

Outside Director of JAPAN POST INSURANCE Co., Ltd. (topresent)

June 2015

President & CEO of SEIKO WATCH CORPORATION

April 2017

Chairman & CEO of SEIKO WATCH CORPORATION (topresent)

Significant concurrent positions:
Chairman & CEO of SEIKO WATCH CORPORATION
Outside Director of JAPAN POST INSURANCE Co., Ltd.

(6)

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

(7)

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

-72.

Yoshinobu Nakamura (Date of Birth: October 21, 1949) (Reappointed)(1)

Number of shares of the Company held: 18,200(2)Length of service as a Director: 11 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities
April 1972

Joined Seikosha Co., Ltd. (currently Seiko Clock Inc. and Seiko
Precision Inc.)

June 2001

Director of Seiko Precision Inc.

June 2003

Director of the Company

June 2004

Executive Director & CFO of SEIKO WATCH CORPORATIONMarch 2008

President of Seiko Clock Inc.

June 2008

Director of the Company

December 2008

(5)

Senior Executive Director of the Company

May 2010

Senior Executive Director (Representative Director) of theCompany

October 2012

President of the Company (to present)

April 2018

Chairman of Seiko Instruments Inc. (to present)

Significant concurrent positions:
Chairman of Seiko Instruments Inc.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Yoshinobu Nakamura as a candidate for Director,
expecting him to perform full functions as a Board member in the decision-making to
execute important business and supervise the other Directors’ execution of their duties
by utilizing his wealth of experience and achievement, including the following: (i)having directed the Company Group’s management as President of the Company formany years; and (ii) mainly having promoted the business portfolio restructuring to
improve financial standing and maximize business income.

(7)

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

-83.

Akihiro Okuma (Date of Birth: September 9, 1960) (Reappointed)(1)

Number of shares of the Company held: 4,800(2)Length of service as a Director: 6 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities(5)

April 1984

Joined the Company

May 2010

Director of Seiko Clock Inc.

June 2013

Director of the Company

January 2015

Director and Managing Executive Officer of SEIKO Solutions Inc.

June 2016

Executive Director of the Company (to present)

January 2017

Outside Director of OHARA INC. (to present)

April 2017

Director and Executive Vice President of SEIKO Solutions Inc. (topresent)

April 2018

Executive Director in charge of Secretariat, Human Resources,
General Affairs, and IT Planning of the Company (to present)

April 2018

Director, Executive Vice President of Seiko Instruments Inc. (topresent)

Significant concurrent positions:
Director, Executive Vice President of Seiko Instruments Inc.
Director and Executive Vice President of SEIKO Solutions Inc.
Outside Director of OHARA INC.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Akihiro Okuma as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
been engaged mainly in human resource and general affairs as a member of theCompany Group since joining the Company; and (ii) currently being in charge of thesecretariat, human resources, general affairs, and IT planning as Executive Director of
the Company.

(7)

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

-94.

Hiromi Kanagawa (Date of Birth: September 30, 1962) (Reappointed)(1)

Number of shares of the Company held: 2,400(2)Length of service as a Director: 3 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities(5)

April 1985

Joined the Company

April 2012

General Manager, Sales & Marketing Department I, Sales &Marketing Division II, SEIKO WATCH CORPORATION

April 2014

Senior Vice President of SEIKO WATCH CORPORATION

June 2016

Director of the Company (to present)

April 2017

Director in charge of Public Relations, Sports Branding, andCorporate Culture of the Company (to present)

January 2018

General Manager, Corporate Culture Department of the Company(to present)

April 2019

Executive Director of SEIKO Time System Inc. (to present)

Significant concurrent positions:Executive Director of SEIKO Time System Inc.

(6)

Reasons for nomination as candidate for director:
The Company nominates Ms. Hiromi Kanagawa as a candidate for Director, expecting
her to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing her wealth of experience and achievement, including the following: (i) having
been engaged mainly in marketing as a member of the Company Group since joining
the Company; and (ii) currently being in charge of public relations, sports branding
and corporate culture as Director of the Company.

(7)

Special relationship of interest between the Company and the candidate for Director:
There is no special relationship of interest between the Company and Ms. Hiromi
Kanagawa.

- 10 5.

Shimesu Takizawa (Date of Birth: July 2, 1963) (Reappointed)(1)

Number of shares of the Company held: 1,100(2)Length of service as a Director: 3 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities(5)

April 1987

Joined the Company

August 1993

Seconded to SEIKO U.K. Limited

June 2010

General Manager, Finance & Accounting Department of theCompany

June 2016

Director of the Company (to present)

March 2017

General Manager, Corporate Strategy & Planning Department(currently Finance & Corporate Strategy Planning Department) of
the Company (to present)

April 2017

Director, Executive Vice President of Seiko Instruments Inc. (topresent)

June 2018

Director in charge of Finance & Corporate Strategy Planning andLong-Term Management & Technology Strategy of the Company(to present)

June 2018

Outside Director of Jedat Inc. (to present)

Significant concurrent positions:
Director, Executive Vice President of Seiko Instruments Inc.
Outside Director of Jedat Inc.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Shimesu Takizawa as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
been engaged mainly in finance & accounting, and corporate strategy planning as amember of the Company Group since joining the Company; and (ii) currently being incharge of finance & corporate strategy planning and long-term management &technology Strategy as Director of the Company.

(7)

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

- 11 6.

Kazuhiko Sakamoto (Date of Birth: November 6, 1965) (Reappointed)(1)

Number of shares of the Company held: 200(2)

Length of service as a Director: 1 year

(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 10 out of 10 meetings (100.0%)(4)Career, positions, and responsibilities
April 1988

Joined the Company

June 1994

Seconded to SEIKO Hong Kong Ltd.

April 2007

General Manager, Finance & Accounting Department of WAKO
Co., Ltd.

June 2010

General Manager, Corporate Strategy & Planning Department of
WAKO Co., Ltd.

July 2012

Senior Vice President of WAKO Co., Ltd.

June 2015

General Manager, Corporate Strategy & Planning Department of
the Company

March 2017

General Manager, Finance & Accounting Department (currently
Accounting Department) of the Company (to present)
Director in charge of Accounting of the Company (to present)
Director, Senior Vice President of Seiko Instruments Inc. (topresent)
Director, Executive Vice President of WAKO Co., Ltd. (topresent)

June 2018
July 2018
April 2019(5)

Significant concurrent positions:
Director, Senior Vice President of Seiko Instruments Inc.
Director, Executive Vice President of WAKO Co., Ltd.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Kazuhiko Sakamoto as a candidate for Director,
expecting him to perform full functions as a Board member in the decision-making to
execute important business and supervise the other Directors’ execution of their duties
by utilizing his wealth of experience and achievement, including the following: (i)having been engaged mainly in finance & accounting, and corporate strategy planning
as a member of the Company Group since joining the Company; and (ii) currently
being in charge of accounting as Director of the Company.

(7)

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

- 12 7.

Makoto Ichimura (Date of Birth: May 12, 1967) (Newly Appointed)(1)

Number of shares of the Company held: 100(2)

Length of service as a Director: ―(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: ―(4)

Career, positions, and responsibilities(5)

April 1991

Joined the Company

April 2010

General Manager, General Affairs Department of WAKO Co.,Ltd.

May 2013

General Manager, Secretaries Office of the Company

February 2015

General Manager, Public Relations & Secretaries Department of
the Company

June 2016

General Manager, Secretaries Office, and General Manager,
Corporate Strategy & Planning Department (currently Finance &Corporate Strategy Planning Department) (in charge of Planning)of the Company (to present)

April 2017

General Manager, Long-Term Management & Technology
Strategy Department of the Company (to present)

June 2018

Senior General Manager, Secretaries Office and General Affairs
Department of the Company (to present)

Significant concurrent positions:―(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Makoto Ichimura as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
been engaged mainly in secretariat, public relations, and corporate strategy planning
as a member of the Company Group since joining the Company; and (ii) currently
serving as Senior General Manager, Secretaries Office and General Affairs
Department of the Company and being involved in management of its groupcompanies.

(7)

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

- 13 8.

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

Number of shares of the Company held: 3,200(2)Length of service as a Director: 6 years(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 13 out of 13 meetings (100.0%)(4)Career, positions, and responsibilities
April 1980

Joined the Company

April 2004

General Manager, Merchandising Department II of SEIKO
WATCH CORPORATION

February 2011

Senior Vice President of SEIKO WATCH CORPORATION

June 2012

Director, Senior Vice President of SEIKO WATCHCORPORATION

June 2013

Director of the Company

April 2014

Director, Executive Vice President of SEIKO WATCHCORPORATION

June 2015

Director, Senior Executive Vice President of SEIKO WATCHCORPORATION
Executive Director of the Company

June 2016
April 2017
April 2017(5)

Director in charge of Watches Business of the Company (topresent)
President & COO & CMO of SEIKO WATCH CORPORATION(to present)

Significant concurrent positions:
President & COO & CMO of SEIKO WATCH CORPORATION(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Shuji Takahashi as a candidate for Director, expecting
him to perform full functions as a Board member in the decision-making to execute
important business and supervise the other Directors’ execution of their duties byutilizing his wealth of experience and achievement, including the following: (i) having
been engaged mainly in public relations and promotion, marketing, and merchandising
as a member of the Company Group since joining the Company; and (ii) currently
being engaged in management direction as President & COO & CMO of SEIKO
WATCH CORPORATION.

(7)

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

- 14 9.

Tetsu Kobayashi (Date of Birth: January 17, 1960) (Reappointed)(1)

Number of shares of the Company held: 4,400(2)Length of service as a Director: 1 year

(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: 10 out of 10 meetings (100.0%)(4)Career, positions, and responsibilities(5)

April 1982

Joined Daini Seikosha Co., Ltd. (currently Seiko Instruments
Inc.)

March 2005

Executive General Manager, Corporate Strategy Division of
Seiko Instruments Inc.

June 2007

General Manager, Watch Movement Division of Seiko
Instruments Inc.

March 2008

Senior Vice President of Seiko Instruments Inc.

July 2009

Executive General Manager, Watches Business Headquarters of
Seiko Instruments Inc.

October 2010

Director of Seiko Instruments Inc.

October 2014

President of Seiko Precision Inc.

February 2018

Chief Executive Vice President of Seiko Instruments Inc.

April 2018

President of Seiko Instruments Inc. (to present)

June 2018

Director of the Company (to present)

Significant concurrent positions:
President of Seiko Instruments Inc.

(6)

Reasons for nomination as candidate for director:
The Company nominates Mr. Kobayashi as a candidate for Director, expecting him to
perform full functions as a Board member in the decision-making to execute importantbusiness and supervise the other Directors’ execution of their duties by utilizing his
wealth of experience and achievement, including the following: (i) having been
engaged in planning, development, production, and sales in the Watches Business andthe Electronic Devices Business of Seiko Instruments Inc. as a member of theCompany Group since joining the Company and having a broad range of knowledge
and experience regarding its businesses; and (ii) currently being engaged inmanagement direction as President of Seiko Instruments Inc.

(7)

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

- 15 10.

Tsuyoshi Nagano (Date of Birth: November 9, 1952)(Newly Appointed) (Outside Director) (Independent Director)(1)

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

Length of service as a Director: ―(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: ―(4)

Career, positions, and responsibilities
April 1975

Joined Tokio Marine & Fire Insurance Co., Ltd.

June 2003

Executive Officer and General Manager of Nagoya Production
Dept. III, Tokai Division of Tokio Marine & Fire Insurance Co.,
Ltd.

October 2004

Executive Officer and General Manager of Nagoya Production
Dept. III of Tokio Marine & Nichido Fire Insurance Co., Ltd.

June 2006

Managing Executive Officer of Tokio Marine & Nichido Fire
Insurance Co., Ltd.

June 2008

Managing Director of Tokio Marine & Nichido Fire InsuranceCo., Ltd.

June 2008

Director of Tokio Marine Holdings, Inc.

June 2010

Senior Managing Director of Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Senior Managing Director of Tokio Marine Holdings, Inc.

June 2011
June 2012
June 2012
June 2013
June 2013
April 2016
(5)

Executive Vice President of Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Executive Vice President of Tokio Marine Holdings, Inc.
President & Chief Executive Officer of Tokio Marine & Nichido
Fire Insurance Co., Ltd.
President & Chief Executive Officer of Tokio Marine Holdings,
Inc. (to present)
Chairman of the Board Tokio Marine & Nichido Fire InsuranceCo., Ltd. (to present)

Significant concurrent positions:
President & Chief Executive Officer of Tokio Marine Holdings, Inc. (scheduled toassume the office of Chairman of the Board in June 2019)
Chairman of the Board Tokio Marine & Nichido Fire Insurance Co., Ltd. (scheduled
to retire in June 2019)(6)

Reasons for nomination as candidate for Outside Director:
The Company nominates Mr. Tsuyoshi Nagano as a candidate for Outside Director,
expecting him to provide valuable comments for the Company’s Board of Directors
from an objective perspective based on his knowledge and experience cultivated in his
career as a management member of corporations over many years, and to perform
appropriate supervisory functions.

- 16 (7)Special relationship of interest between the Company and the candidate for Outside
Director and the candidate’s independence from the Company:
There is no special relationship of interest between the Company and Mr. Tsuyoshi
Nagano.
Mr. Nagano is currently serving as President & Chief Executive Officer of Tokio
Marine Holdings, Inc. (scheduled to assume the office of Chairman of the Board inJune 2019). The Tokio Marine Group and the Company Group have transactions
related to insurance contracts. However, these transactions constitute less than one
percent of consolidated ordinary income (equivalent to consolidated net sales) of
Tokio Marine Holdings, Inc. and the Company’s consolidated net sales, and is thus
insignificant. In addition, the Company Group has borrowed funds from the Tokio
Marine Group. However, the amount of such borrowings constitutes less than one
percent of consolidated total assets of Tokio Marine Holdings, Inc. and the Company,
and is thus insignificant.
Mr. Tsuyoshi Nagano satisfies the requirements of an independent director under therules of the Tokyo Stock Exchange, and will be reported thereto as an independent
director if his appointment is approved at this Ordinary General Meeting of
Shareholders.

Note:

If the election of Mr. Tsuyoshi Nagano is approved at this Ordinary General Meetingof Shareholders, the Company plans to execute an agreement with him that limits his
liability for damages under Article 427, paragraph 1 of the Companies Act. The limiton the liability for damages under the said agreement will be the minimum limit ofliability prescribed in Article 425, paragraph 1 of the Companies Act.

- 17 11.

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

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

Length of service as a Director: ―(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: ―(4)

Career, positions, and responsibilities(5)

April 2000

Registered as an attorney

October 2006

Certified as a New York State attorney

March 2010

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

June 2014

Outside Director of Neturen Co., Ltd. (to present)

June 2018

Outside Director of Japan Asset Marketing Co., Ltd. (to present)

Significant concurrent positions:
Partner Attorney of Endeavour Law OfficeOutside Director of Neturen Co., Ltd.
Outside Director of Japan Asset Marketing Co., Ltd. (scheduled to retire in June 2019)(6)

Reasons for nomination as candidate for Outside Director:
The Company nominates Ms. Yasuko Teraura as a candidate for Outside Director,
expecting her to provide valuable comments for the Company’s Board of Directors
from an objective perspective based on her many years’ of experience and deep insightin the legal profession and to perform appropriate supervisory functions.
Although Ms. Teraura does not have any previous experience of being involved incorporate management other than through serving as an Outside Director, theCompany has determined that she is capable of appropriately performing the duties ofan Outside Director based on the aforementioned reasons.

(7)

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

Note:

If the election of Ms. Yasuko Teraura is approved at this Ordinary General Meeting of
Shareholders, the Company plans to execute an agreement with her that limits her
liability for damages under Article 427, paragraph 1 of the Companies Act. The limiton the liability for damages under the said agreement will be the minimum limit ofliability prescribed in Article 425, paragraph 1 of the Companies Act.

- 18 Proposal 3: Election of Two (2) Corporate Auditors
The Company proposes the election of two (2) Corporate Auditors, as the terms of office of two (2)Corporate Auditors, Mr. Yoshiaki Yamauchi and Mr. Yoshiro Aoki, will expire at the closing of this
General Meeting of Shareholders.
The Company has obtained consent from the Board of Corporate Auditors with regard to this proposal.
The candidates for Corporate Auditors are as follows.
1.

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

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

Length of service as a Corporate Auditor: ―(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: ―Attendance at the Board of Corporate Auditors meetings during
the fiscal year ended March 31, 2019: ―(4)

Career and positions
April 1976

(5)

Joined Arthur Andersen (currently KPMG AZSA LLC)

September 1980

Registered as a certified public accountant

September 1992

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

September 2011

Vice President (Audit Division) of KPMG AZSA LLC

July 2015

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

July 2016

Outside Director of TOPPAN FORMS CO., LTD. (to present)

March 2017

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

June 2018

Audit & Supervisory Board Members (External) of AjinomotoCo., Inc. (to present)

Significant concurrent positions:Certified public accountant
Outside Director of TOPPAN FORMS CO., LTD.
Outside Audit & Supervisory Board Member of Kao Corporation
Audit & Supervisory Board Members (External) of Ajinomoto Co., Inc.

(6)

Reasons for nomination as candidate for Outside Corporate Auditor:
The Company nominates Mr. Hideki Amano as a candidate for Outside Corporate
Auditor, expecting him to perform appropriate audit functions based on his many
years of experience and insight as a certified public accountant.
Although Mr. Amano does not have any previous experience of being involved incorporate management other than through serving as an Outside Director or an
Outside Corporate Auditor, the Company has determined that he is capable ofappropriately performing the duties of an Outside Corporate Auditor based on the
aforementioned reasons.

- 19 -

(7)

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

Note:

If the election of Mr. Hideki Amano is approved at this Ordinary General Meeting of
Shareholders, the Company plans to execute an agreement with him that limits his
liability for damages under Article 427, paragraph 1 of the Companies Act. The limiton the liability for damages under the said agreement will be the minimum limit ofliability prescribed in Article 425, paragraph 1 of the Companies Act.

- 20 2.

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

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

Length of service as a Corporate Auditor: ―(3)

Attendance at the Board of Directors meetings during the fiscal
year ended March 31, 2019: ―Attendance at the Board of Corporate Auditors meetings during
the fiscal year ended March 31, 2019: ―(4)

Career and positions(5)

April 1980

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

April 2007

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

April 2009Managing Executive Officer of Mizuho Bank, Ltd.

April 2011

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

June 2015

President of Chuo Fudosan K.K.

June 2018

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

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

(6)

Reasons for nomination as candidate for Outside Corporate Auditor:
The Company nominates Mr. Masatoshi Yano as a candidate for Outside Corporate
Auditor, expecting him to perform appropriate audit functions based on his knowledge
and experience cultivated in his career as a management member of corporations formany years.

(7)

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

- 21 auditor if his appointment is approved at this Ordinary General Meeting of
Shareholders.
Note:

If the election of Mr. Masatoshi Yano is approved at this Ordinary General Meeting of
Shareholders, the Company plans to execute an agreement with him that limits his
liability for damages under Article 427, paragraph 1 of the Companies Act. The limiton the liability for damages under the said agreement will be the minimum limit ofliability prescribed in Article 425, paragraph 1 of the Companies Act.

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

- 22 -

[Translation][Attached Documents]
Business Report for the Fiscal Year Ended March 2019 (From April 1, 2018 To March 31, 2019)1.

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

Business developments and results

During the fiscal year ended March 31, 2019, in the world economy, the U.S. economy expanded gradually,
supported by steady growth in employment and personal consumption. In the second half of the fiscal year,
exports were stagnant in Europe, due to growing destabilizing factors on the political and economic fronts. In
addition, uncertainty intensified in the global economy, due to various factors including signs of a slowdown in the
Chinese economy, which had seen continued stable growth, stemming from increasingly serious trade friction with
the U.S.
The Japanese economy continued on a gradual recovery track backed by improvement in the employment
environment and growth in personal consumption. However, uncertainty in the economic outlook is increasing
due to the impact of changes in the global economy since roughly December 2018.
For the fiscal year ended March 31, 2019, the Company reported consolidated net sales of 247.2 billion yen, a
year-on-year decrease of only 21.2 billion yen, or 7.9%, despite a decline in sales under the Electronic Devices
Business of approximately 25.0 billion yen, due to the impact of the exclusion of the semiconductor business fromthe scope of consolidation. On a per-segment basis, sales under the Watches Business, the Systems Solutions
Business and Others grew compared to the previous fiscal year. On an overall consolidated basis, domestic net
sales came to 139.9 billion yen (a year-on-year decrease of 2.1%), and overseas net sales were 107.2 billion yen (ayear-on-year decrease of 14.5%). Overseas net sales comprised 43.4% of net sales overall.
In terms of income as well, operating profit decreased only 1.4 billion yen compared to the previous fiscal year to
9.3 billion yen (a year-on-year decrease of 13.3%), despite a decline in operating profit under the Electronic
Devices Business of approximately 5.0 billion yen due to the impact of the exclusion of the semiconductorbusiness from the scope of consolidation. In addition, ordinary profit increased by 0.4 billion yen compared to theprevious fiscal year to become 11.4 billion yen (a year-on-year increase of 4.6%), as a result of improvement in
non-operating income and expenses mainly owing to an improved share of profit and loss of entities accounted forusing equity method and a decrease in interest expenses. Extraordinary income of 0.3 billion yen was posted, and,as a result, profit attributable to owners of parent minus income taxes and profit attributable to non-controllinginterests was 9.2 billion yen (a year-on-year decrease of 19.9%).

Results for each segment are as follows.

- 23 -

a. Watches BusinessNet sales under the Watches Business came to 141.7 billion yen, a year-on-year increase of 1.6 billion yen, or1.2%. Net sales of watches in Japan grew steadily for Grand Seiko. The Grand Seiko Boutique GINZA was
opened, which was the first Grand Seiko Boutique in Japan, and a women’s model featuring a new movement was
released, strengthening the lineup of watches for women. Prospex also continued to perform favorably, mainly indiver’s watches. On a distribution channel basis, sales to department stores, independent stores and outlets rosecompared to the previous fiscal year. On the overseas front, in the U.S., Grand Seiko grew significantly, andProspex also performed favorably. Meanwhile, net sales remained at the same level as the previous year, due to a
decline in sales of watches in the affordable price range. In Europe, although sales of watches in the affordable
price range were stagnant in the U.K., sales grew in Germany and other countries, mainly for Prospex. Sales ofProspex expanded steadily in Asia, as well. Net sales of watch movements declined year on year owing tostagnation in the market for watches in the affordable price range.
Operating profit was 10.3 billion yen, an increase of 31.5%, due to an increase in net sales of watches as well as
the effects of cost-reduction efforts carried out since the previous year.
b. Electronic Devices BusinessNet sales under the Electronic Devices Business came to 55.5 billion yen, a year-on-year decrease of 26.3 billion
yen, or 32.1%. Operating profit was 1.4 billion yen, a year-on-year decrease of 4.3 billion yen, or 75.6%. Net sales
and operating profit declined due to the exclusion of the semiconductor business from the scope of consolidationin January 2018. However, excluding that impact, earnings were up due to the favorable performance of products
including thermal mini printer mechanisms and precision components.
c. Systems Solutions BusinessNet sales under the Systems Solutions Business came to 30.8 billion yen, a year-on-year increase of 12.4%.
Operating profit was 2.4 billion yen, a year-on-year increase of 49.6%, marking significant growth in both net
sales and profit. Results were favorable due to factors including growth in demand for development of new
systems for the financial industry.
d. Others
Net sales under Others amounted to 28.3 billion yen, a year-on-year increase of 1.8%. Operating profit was 0.6
billion yen, a year-on-year increase of 26.6%. Among segments included in Others, net sales grew year-on-year
for the Wako Business and the Time Systems Business, while those for the Clock Business were down from theprevious fiscal year.

- 24 -

(2)
1)

Issues that need to be addressed by the Corporate Group
Sixth Mid-Term Management Plan (from the fiscal year ended March 31, 2017 through the fiscal year ended
March 31, 2019)

The fiscal year ended March 31, 2019 is the final year of the Company’s Sixth Mid-Term Management Plan,
which began in the fiscal year ended March 31, 2017. The plan and its achievement status are as described below.
1.

Long-term vision
The Seiko Holdings Group has established its long-term vision of what the Group aims to be
10 years in the future, based on the Group slogan, ‘SEIKO Moving Ahead, Touching Hearts’.
We aim to be a trend-setting and innovative global group that shares excitement with all our
stakeholders around the world by providing products and services that exceed the highest
expectations of our customers.

2.

Basic policy
The Company will “reinforce profitability and investment for growth,” and “reinforce themanagement foundation” to become a highly profitable group centered on the Watches Business.

3.

Reinforcing profitability and investment for growth(i)

The Watches Business will be steered toward further growth as the Group’s core business(profit expansion)(ii)

The Electronic Devices Business will generate profits by focusing management resourceson core business sectors (profitability improvement)(iii)

The Systems Solutions Business will reinforce its business foundation as a third mainstay
business (profitability reinforcement)(iv)

Other businesses will maintain their stable profit constitution (stabilization of
profitability)

4.

Reinforcing the management foundation(i)Reinforcing corporate communication(ii)

Continuing the basic policy for capital and financial measures(iii)

Reinforcing corporate governance(iv)

Reinforcing organizational and group functions, and continuing the basic policy for
personnel measures

- 25 -

5.

Target figures under the Sixth Mid-Term Management Plan(i) Consolidated income forecast(Billions of yen)
Mid-Term
Management Plan
FY2018ActualComparison vs.

FY2018Plan

Net sales

310.0

247.2

-62.7

Operating profit

17.0

9.3

-7.6

Ordinary income

18.0

11.4

-6.5

12.5

9.2

-3.2

Net income attributable toowners of parent(ii) Net sales by segment(Billions of yen)
Mid-Term
Management Plan
FY2018Watches Business

ActualComparison vs.

FY2018

Plan

190.0

141.7

-48.2

75.0

55.5

-19.4

25.0

30.8

5.8

Others

30.0

28.3

-1.6

Consolidated total

310.0

247.2

-62.7

Electronic Devices
Business
Systems Solutions
Business(iii) Operating profit by segment(Billions of yen)
Mid-Term
Management Plan
FY2018Watches Business

ActualComparison vs.

FY2018

Plan

17.0

10.3

-6.6

2.5

1.4

-1.0

1.5

2.4

0.9

Others

1.0

0.6

-0.3

Consolidated total

17.0

9.3

-7.6

Electronic Devices
Business
Systems Solutions
Business

- 26 -

(iv) Balance sheet items(Billions of yen)
Mid-Term
Management Plan
FY2018Actual
FY2018Comparison vs.
Plan

Total assets

340.0

303.0

-36.9

Net assets

120.0

110.4

-9.5

Equity capital ratio

35.0%

36.0%

+1.0%

75.0

72.1

-2.8

Net interest-bearing
liabilities

6.

Looking Back on the Sixth Mid-Term Management Plan(i)

Reinforcing profitability and investment for growth
In the Watches Business, the Company worked to increase profit aiming for further growth as acore business of the Group. In the first year of the Sixth Mid-Term Management Plan, theCompany shifted to a marketing strategy to strengthen watches in the mid- to high-end range andlaunched a global brand strategy focused on Grand Seiko and Prospex. The mainstay Grand
Seiko was made an independent brand in 2017, and was exhibited for the first time as Grand
Seiko last year at Milan Design Week, the world’s largest design festival. Furthermore, Grand
Seiko Boutiques were opened in Japan, the U.S. and other countries. Sales expanded steadily asa result of various efforts in global markets, including the establishment of Grand Seiko
Corporation of America in 2018 in the U.S., the first time the name “Grand Seiko” has been
included in a company name. Prospex won the top prize in the sports watch category at theGrand Prix d’Horlogerie de Genève in 2018, steadily raising awareness of the brand in Japan andoverseas and resulting in substantial sales growth.
Although net sales and income deviated from forecasts in the last year of the Mid-Term
Management Plan due to major changes in the market environment that occurred in the first yearof the plan, profitability improved from the previous fiscal year as a result of reinforcing watches
in the mid- to high-end range and continued efforts to shrink costs.
In addition, with the aim of further growing the brand, the Company continued to makeinvestments for growth, including opening the Seiko Dream Square in Ginza as a center for
directly communicating the SEIKO brand to the world.
In the Electronic Devices Business, the Company sought to improve profitability amid stagnationin the ink-jet printer head business by reinforcing other areas in which the Company has strengths.
In the first half of the last year of the plan, performance was favorable mainly for high- 27 -

performance metal products for semiconductor manufacturing facilities, thermal mini printermechanisms and precision components. However, net sales and operating profit both fell below
the targets of the Mid-Term Management Plan due to sudden changes in the global market at the
beginning of the second half.
In the Systems Solutions Business, the Company reinforced the business foundation as the third
core business and made efforts to reinforce profitability. Sales in new areas increased and thestock-type business continued to expand, and net sales and operating profit were both well above
the targets of the Mid-Term Management Plan.
In the businesses included in Others, the Company made efforts to ensure stable profitability inorder to continue stable corporate earnings. Although the Company worked steadily to stabilize
profitability, operating profit did not meet the target figures for the last year of the Mid-Term
Management Plan.
(ii)

Reinforcing the management foundation
In order to reinforce corporate communication, the Company continuously engaged in PR andsocial contribution activities through sports and music under the Group slogan “SEIKO Moving
Ahead, Touching Hearts”. The Company worked to intensify IR activities and made proactive
efforts to improve the quality of dialogue with its shareholders and investors.
Regarding the policy for capital measures, the Company plans to distribute an annual dividend of
75 yen per share for the fiscal year ended March 31, 2019, aiming for continuous and stabledividends, which is a basic policy. In addition, the capital adequacy ratio improved to 36.0%,
achieving the target of the Mid-Term Management Plan. Regarding the policy for financial
measures, the Company made efforts to reduce interest-bearing liabilities, and as a result, net
interest-bearing liabilities were 72.1 billion yen, achieving the Mid-Term Management Plan target
by a wide margin.
In order to reinforce corporate governance, the Company continued striving to reinforce its
effective corporate governance system, and is implementing flexible risk management according
to changes in the business and environment.
In order to reinforce organizational and group functions, the Company integrated functions andmade organizational changes within the Group with the aim of expediting decision-making andincreasing operational efficiency. In order to develop diverse human resources, which is a basic
personnel policy, the Company raised global human resources and executive candidates who willlead the next generation, and made efforts to further all employees’ active participation andprovided a working environment that enables employees to work in very diverse ways.

- 28 -

2)

Seventh Mid-Term Management Plan (from the fiscal year ending March 31, 2020 through the fiscal year
ending March 31, 2022)

The Company formulated the Seventh Mid-Term Management Plan beginning in the fiscal year ending March 31,
2020, as described below.
1.

Long-term vision
The Seiko Holdings Group will continue the long-term vision also in the Seventh Mid-Term
Management Plan, established when the Sixth Mid-Term Management Plan was formulated,based on the Group slogan, “SEIKO Moving Ahead, Touching Hearts”.
We aim to be a trend-setting and innovative global group that shares excitement with all our
stakeholders around the world by providing products and services that exceed the highest
expectations of our customers.

2.

What the Seiko Holdings Group aims to be in FY2025
The Company has set out a more detailed image of what the Seiko Holdings Group aims to be in
FY2025 based on the long-term vision.
Being a leading global player, SEIKO continues to strive beyond all expectations.
Growing our fields of expertise and meeting challenges in new areas with the highest levelsof reliability.
Being expected by the world to create the future.
We will grow with our sophisticated structures and human resources, as a solid and unitedgroup.

3.

Basic policies of the Seventh Mid-Term Management Plan
Looking toward FY2025, the Company has set the following basic policies for this three-year
period with the aim of achieving the Seventh Mid-Term Management Plan.
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 sustained growth.

4.

Positioning of plan
The Sixth Mid-Term Management Plan was positioned as “continuing organization reform to takeon the aggressive approach,” and the Seventh Mid-Term Management Plan that will follow is
positioned as “aggressive approach.” The Company aims to win by stepping up investment for
further growth.

- 29 -

5.

Target figures under the Seventh Mid-Term Management Plan(i) Consolidated income forecast(Billions of yen)
Actual
FY2018

Mid-Term

Budgets

Management Plan(for reference)

FY2021FY2019Net sales

247.2

285.0

255.0

Operating profit

9.3

14.2

9.5

Ordinary income

11.4

16.0

11.5

9.2

12.5

9.5

Net income attributable toowners of parent(ii) Net sales by segment(Billions of yen)
Actual
FY2018Watches Business

Mid-Term

Budgets

Management Plan(for reference)

FY2021FY2019

141.7

165.0

148.0

55.5

63.0

55.0

30.8

35.0

32.0

Others

28.3

31.0

29.0

Consolidated total

247.2

285.0

255.0

Electronic Devices
Business
Systems Solutions
Business(iii) Operating profit by segment(Billions of yen)
Actual
FY2018Watches Business

Mid-Term

Budgets

Management Plan(for reference)

FY2021FY2019

10.3

14.5

11.5

1.4

3.0

2.5

2.4

3.0

2.5

Others

0.6

1.0

0.8

Consolidated total

9.3

14.2

9.5

Electronic Devices
Business
Systems Solutions
Business

- 30 -

(iv) Others(Billions of yen)
Mid-Term

ActualManagement Plan

FY2018Equity capital ratio

36.0%

40.0%
Roughly the

Net interest-bearing

72.1

liabilities(3)

FY2021same as thecurrent level

Financing
There are no matters of special note.

(4)

Capital expenditures
The Company invested 1,029 million yen in the Watches Business and 2,982 million yen in the Electronic
Devices Business primarily to reinforce and renew manufacturing and other facilities, and 1,018 million
yen in the Systems Solutions Business primarily to acquire software for marketing purposes, respectively.

(5)

Trends in assets and profit/loss
The operating results and assets in the fiscal year ended March 31, 2019 and the past three years are as
follows.
(i) Consolidated
Item(Millions of yen)
FY2015FY2016FY2017FY2018Net sales

296,705

257,115

268,529

247,293

Ordinary income

11,8796,671

10,911

11,41012,142

5,392

11,541

9,249

59

26

280

224

Total assets

329,115

328,857

305,297

303,036

Net assets

102,692

107,161

105,170

110,415

457

476

2,524

2,650

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

Net assets per
share
(Yen)

- 31 -

(ii) Non-consolidated
Item
Operatingrevenue
Ordinary
income(Millions of yen)
FY2015FY2016FY2017FY2018

11,984

10,361

11,237

11,301

4,393

2,324

3,308

2,691

Net income

3,370

3,271

3,763

3,719

Net income per
share
(Yen)

16

16

91

90

Total assets

147,145

161,853

179,269

176,640

Net assets

54,964

59,34656,03655,029Net assets per
share
266
288
1,359
1,334
(Yen)
Note 1 Net income per share is calculated on the basis of the average number of shares during the fiscal
year.
Note 2 Treasury shares are indicated as a deduction item on net assets, and the values of net income pershare and of net assets are calculated by deducting the number of treasury shares from theaverage number of shares during the fiscal year and the total number of issued shares,
respectively.
Note 3 The Company conducted a share consolidation by which five common shares have been
consolidated into one share as of October 1, 2017. Net income per share and net assets per
share for FY2017 are calculated as if said share consolidation was performed at the beginningof the current fiscal year.
Note 4 The Company has applied “Partial Amendments to Accounting Standard for Tax EffectAccounting” (Accounting Standards Board of Japan (ASBJ) Statement No. 28, February 16,2018) and relevant guidance from the beginning of the current fiscal year. Accordingly, thefigure for total assets for FY2017 has been retrospectively adjusted to reflect the application ofsaid accounting standard and relevant guidance.

(6)

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

- 32 -

(ii) Status of major subsidiaries
Company NameSEIKO WATCHCORPORATIONCRONOS INC.
Grand Seiko Corporation ofAmerica
Seiko Watch of America
LLC
SEIKO Hong Kong Ltd.

Paid-in Capital

CapitalDetails of Major BusinessContribution Ratio

Activities

5,000 million yen

100.0%

200 million yen

100.0%(*)

US$2,000

100.0%(*)

US$112,000

100.0%(*)

HK$129,300,000

100.0%(*)

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

Seiko Instruments Inc.

9,756 million yen

100.0%

precision instruments,
electronic devices, and otherproducts

Morioka Seiko Instruments
Inc.

1,000 million yen

100.0%(*)

Manufacturing watches
Manufacturing and sales of

Seiko Instruments (H.K.)
Ltd.

HK$128,700,000

100.0%(*)

precision instruments,
electronic devices, and otherproducts
Manufacturing and sales of

Seiko Instruments
Singapore Pte. Ltd.

S$32,288,000

100.0%(*)

precision instruments,
electronic devices, and otherproducts
Development, sales, etc. of

SEIKO Solutions Inc.

500 million yen

100.0%

information andtelecommunication systems,
etc.

Note:

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

- 33 -

(7)

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

Details of Business Activities
Manufacturing and sales

Main merchandise and products
Watches, watch movements
Quartz crystals, micro batteries andElectronic Devices Business

Manufacturing and sales

materials, printers, hard disk drive
components
Wireless communication equipment,

Systems Solutions Business

Manufacturing and sales

information network systems, dataservices, computer-performance
management software

Manufacturing, sales andOthers(8)other activities

Clocks, high-end jewelry, apparel,fashion accessories, systems clocks,
othersMajor business locations of the Corporate GroupThe Company has its headquarters in Chuo-ku, Tokyo, and the major location of each business is asfollows:
Business Segment(9)

Location

Watches Business

Chuo-ku, Tokyo

Electronic Devices Business

Mihama-ku, Chiba-shi, Chiba

Systems Solutions Business

Mihama-ku, Chiba-shi, Chiba

OthersChuo-ku, Tokyo

Status of employees of the Corporate GroupThe number of employees of the Company and its consolidated subsidiaries is 12,020 (a decrease of 13
from the previous fiscal year-end).

(10)

Major lenders and amounts borrowed
Lenders

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

35,824

Sumitomo Mitsui Banking Corporation

19,662

Aozora Bank, Ltd.

12,060- 34 -

2.

Matters related to the Company shares(1)

Total number of shares authorized to be issued(2)

Total number of shares issued and outstanding (including 59,563 treasury shares)

149,200,000 shares

41,404,261 shares(3)

Number of shareholders at the end of the fiscal year ended March 31, 2019(4)

Major shareholders (top 10)
Name

11,575

Number of shares

Percentage ofheldshares held
shares%Sanko Kigyo K.K.

4,436,500

10.7

Etsuko Hattori

3,613,908

8.7

Shinji Hattori

2,279,289

5.5

The Dai-ichi Life Insurance Company, Limited

1,800,000

4.4

Hideo Hattori

1,620,855

3.9

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

1,179,200

2.9Japan Trustee Services Bank, Ltd. (Trust Account 9)

1,037,400

2.5

GOLDMAN SACHS INTERNATIONAL

983,266

2.4

Japan Trustee Services Bank, Ltd. (Trust Account)

850,000

2.1

SHIMIZU CORPORATION

744,200

1.8

Note 1: Percentages of shares held have been calculated with treasury shares excluded and rounded to
one decimal place.
Note 2: The foregoing was stated based on the shareholders’ registry as of March 31, 2019.
The following Large Shareholding Report is available for public inspection; however, theCompany has not yet confirmed the number of shares substantially held by them as of March
31, 2019 and did not include them in the above.
Filer: Mizuho Bank, Ltd. and three joint holders
Filing date: March 25, 2019
Number of share certificates held: 2,254,527 shares
Percentage of share certificates held: 5.45%
3.

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

- 35 -

4.

Matters related to officers(1)

Name, etc. of Directors and Corporate Auditors (as of March 31, 2019)
Name

Position and responsibility

Significant concurrent positions at other entities

at the Company

Chairman & CEO of SEIKO WATCH
Shinji Hattori

Chairman & Group CEO

CORPORATION
Outside Director of JAPAN POST INSURANCE Co.,Ltd.

Yoshinobu
Nakamura

President
Executive Director in charge of

AkihiroSecretariat, Human Resources,

Okuma

General Affairs, and IT
Planning

Shuntaro Ishii

Executive Director in charge ofLegal & Intellectual Property

Chairman of Seiko Instruments Inc.
Director, Executive Vice President of Seiko Instruments
Inc.
Director, Senior Executive Vice President of SEIKO
Solutions Inc.
Outside Director of OHARA INC.
President of SEIKO Time System Inc.

Director in charge of Public
Hiromi
Kanagawa

Relations, Sports Branding, andCorporate Culture
General Manager of the
Corporate Culture Department
Director in charge of Finance &Corporate Strategy Planning

ShimesuTakizawa

and Long-Term Management

Director, Executive Vice President of Seiko Instruments& Technology Strategy

Inc.

General Manager of theOutside Director of Jedat Inc.

Finance & Corporate Strategy
Planning Department
Director in charge of
Kazuhiko

Accounting

Director, Senior Vice President of Seiko Instruments

Sakamoto

General Manager of theInc.

Accounting Department
Shuji

Director in charge of Watches

President & COO & CMO of SEIKO WATCH

Takahashi

Business

CORPORATION

Director

President of Seiko Instruments Inc.

Tetsu
Kobayashi

- 36 -

CarstenDirector

Fischer

Chairman of the Board (Representative Director) of

Nobuhiro

Director

Endo

NEC Corporation
Outside Director of Japan Exchange Group, Inc.

SeiichiStanding Corporate Auditor

MikamiHaruhiko

Outside Corporate Auditor of OHARA INC.

Standing Corporate Auditor

Takagi

Certified public accountant

Yoshiaki

Corporate Auditor

YamauchiOutside Audit & Supervisory Board Member of
STANLEY ELECTRIC CO., LTD.

Yoshiro Aoki

Corporate Auditor
President of the Cardiovascular InstituteTomoyasu

Corporate Auditor

Asano

Outside Auditor of Tokyu Fudosan Holdings
Corporation

Note 1: Mr. Carsten Fischer and Mr. Nobuhiro Endo, Directors, are outside directors set forth in Article 2,
item 15 of the Companies Act.
Note 2: Mr. Yoshiaki Yamauchi, Mr. Yoshiro Aoki, and Mr. Tomoyasu Asano, Corporate Auditors, areoutside company auditors set forth in Article 2, item 16 of the Companies Act.
Note 3: The Company has reported to the Tokyo Stock Exchange Mr. Carsten Fischer and Mr. NobuhiroEndo, Directors, and Mr. Yoshiaki Yamauchi, Corporate Auditor, as independent
directors/auditors.
Note 4: Mr. Seiichi Mikami and Mr. Haruhiko Takagi, Standing Corporate Auditors, have experience as
officers in charge of Finance & Accounting in the Company or its subsidiaries and havereasonable-degrees of knowledge about finance and accounting. Mr. Yoshiaki Yamauchi,
Corporate Auditor, is a certified public accountant, and has reasonable-degree of knowledge about
finance and accounting.
Note 5: Changes in Directors and Corporate Auditors of the Company during this fiscal year are as follows:(1)
Mr. Kazuhiko Sakamoto and Mr. Tetsu Kobayashi were newly appointed as Directors andassumed office at the 157th Ordinary General Meeting of Shareholders held on June 28,
2018.
(2)

Mr. Akio Naito, Director, resigned from office of Director at the close of the 157th
Ordinary General Meeting of Shareholders held on June 28, 2018.

Note 6: Changes in significant concurrent positions at other entities of Directors and Corporate Auditors of
the Company during and after this fiscal year are as follows:(1)
Mr. Shuntaro Ishii, Executive Director, retired from office of President of SEIKO Time
System Inc. and assumed office of President of WAKO Co., Ltd. as of April 1, 2019.

- 37 -

(2)

Ms. Hiromi Kanagawa, Director, assumed office of Executive Director of SEIKO Time
System Inc. as of April 1, 2019.

(3)

Mr. Kazuhiko Sakamoto, Director, assumed office of Director, Executive Vice Presidentof WAKO Co., Ltd. as of April 1, 2019.

(4)

Mr. Nobuhiro Endo, Director, retired from office of Outside Director of JAPAN POST
INSURANCE Co., Ltd. as of June 18, 2018 and assumed office of Outside Director ofJapan Exchange Group, Inc. as of June 20, 2018.

Note 7: The Company has a relationship (product transactions) with NEC Corporation at which Mr.
Nobuhiro Endo, Outside Director, has a concurrent position. The scale of such transactions isextremely small compared with the business scale of both companies.
There is no other special relationship of interest between the Company and the entities at which
Outside Directors or Outside Corporate Auditors hold concurrent positions.
(2)

Overview of agreements limiting liability

The Company entered into an agreement with each of Mr. Carsten Fischer and Mr. Nobuhiro Endo, Outside
Directors, and Mr. Yoshiaki Yamauchi, Mr. Yoshiro Aoki, and Mr. Tomoyasu Asano, Outside Corporate Auditors,
to limit liability for damages set forth in Article 423, paragraph 1 of the Companies Act, pursuant to Article 427,
paragraph 1 thereof. The upper limit of liability for damages under the agreement shall be that stipulated bylaws. The limitation on liability is permitted only when such Outside Directors or Outside Corporate Auditors
have acted in good faith and without gross negligence in performing their duties that caused the liability.
(3)

Amount of compensation, etc. for Directors and Corporate Auditors

Classification

Aggregate amount

Aggregate amount by type of compensation,of compensation,etc. (Millions of yen)

Number of
eligible

etc.

Basic

(Millions of yen)compensation

330

261

52

16

12

[19]

[19]

[-]

[-]

[2]

[Of which,

68

68

-

-

5

Outside Corporate

[28]

[28]

[-]

[-]

[3]

398

329

52

16

17

[48]

[48]

[-]

[-]

[5]

Director[Of which,Outside Directors]

Bonuses

Stockcompensation

officers

Corporate Auditor

Auditors]
Total[Of which, outside
officers]

Note 1: The forgoing includes one Director who retired from his office at the close of the 157th Ordinary
General Meeting of Shareholders held on June 28, 2018.

- 38 -

Note 2: Bonuses and stock compensation above are performance-based compensation (eligible recipients:
8 Executive Directors), and the amount shown in the above table is the amount of expense
recognized for the current fiscal year.
Note 3: The amount of compensation, etc. for Directors for which the amount received or the estimatedamount to be received in the current fiscal year has become evident, excluding the amount ofcompensation, etc. for Directors shown in the above table and the amount of compensation, etc.
reported in the corresponding section in the previous fiscal year, is as follows:(1) The amount of bonuses paid
Six Executive Directors:

5 million yen(2) The amount of stock compensation expense recognized
Six Executive Directors:

0 million yen

Note 4: Other than the above, one Outside Director is paid 4 million yen as advisory fee from theCompany’s subsidiary.
(4)

Matters related to outside officers
Main activities of outside officers
Classification

Name

Main activities

Director

Carsten Fischer

He attended all of the 13 Board of Directors meetings held
during the fiscal year ended March 31, 2019, and madenecessary remarks on discussion items and deliberation items,
mainly based on his broad experience through managing global
companies and as a marketing expert.

Director

Nobuhiro Endo

He attended 12 of the 13 Board of Directors meetings held
during the fiscal year ended March 31, 2019, and madenecessary remarks on discussion items and deliberation items,
mainly based on his broad experience through managing
companies.

Corporate Auditor

Yoshiaki

He attended 11 of the 13 Board of Directors meetings and all of

Yamauchithe 9 Board of Corporate Auditors meetings held during the
fiscal year ended March 31, 2019, and made remarks, asnecessary, mainly from the expert viewpoint of a certified public
accountant.

Corporate Auditor

Yoshiro Aoki

He attended all of the 13 Board of Directors meetings and 8 of
the 9 Board of Corporate Auditors meetings held during the
fiscal year ended March 31, 2019, and made remarks, asnecessary, mainly based on his broad experience throughmanaging companies.

- 39 -

Corporate Auditor

Tomoyasu Asano

He attended all of the 13 Board of Directors meetings and all of
the 9 Board of Corporate Auditors meetings held during the
fiscal year ended March 31, 2019, and made remarks, asnecessary, mainly based on his broad experience throughmanaging insurance companies.

5.

Matters related to the Accounting Auditor(1)

Name of the accounting auditor
KPMG AZSA LLC(2)Amount of compensation, etc. for the accounting auditor for the current fiscal year(i) Total amount of compensation, etc. for the services (auditing and attesting financial documents) set forthin Article 2, paragraph 1 of the “Certified Public Accountants Act (Act No. 103 of 1948)” payable by theCompany and its subsidiaries to the accounting auditor: 202 million yen(ii) Amount of compensation, etc. (out of (i) above) payable by the Company to the accounting auditor:
67 million yen(iii) Total amount of monies and other financial benefits payable by the Company and its subsidiaries to theaccounting auditor:

206 million yen

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

Reasons for the Board of Corporate Auditors’ agreement to the amount of compensation, etc. for theaccounting auditor
The Board of Corporate Auditors evaluated audit records during the fiscal year ended March 31, 2018,
and confirmed the content of the audit plan, the performance status of the auditing auditor, and rationale- 40 -of the estimate compensation during the fiscal year ended March 31, 2019; as a result, the Board of
Corporate Auditors agreed to the amount of compensation, etc. for the accounting auditor as set forth in
Article 399, paragraph 1 of the Companies Act.
(4)

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

(5)

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

6.

Systems and policies of the Company

I.

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

System to ensure that the duties of Directors 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.

- 41 -

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”.

(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 Business Plan as the target to be shared by Directors andemployees 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.

- 42 -

(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.
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.

- 43 -

(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.

(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.

- 44 -

(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.

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 two meetings during the fiscal year ended March 31, 2019.

(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, 2019, the Company provided training sessions titled “Prevention of Corporate Scandals” forstanding officers and “Prevention of Harassment” 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 within

- 45 -

groups to the Board of Directors. The Committee held four meetings during the fiscal year
ended March 31, 2019.
Further, the Company has established the Group Risk Management Committee consisting ofrespective Representative Directors of the Company and its subsidiaries, and confirms and shares
the risks and the counter-measures against them experienced by each group company. The
Committee held two meetings during the fiscal year ended March 31, 2019.
(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.

(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 46 meetings during the fiscal year ended March 31, 2019.

(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, 2019, the Company has dispatched nine
Directors, two Corporate Auditors, and two 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, 2019, six
subsidiaries made such reports.

- 46 -

(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, 2019, training sessions and briefings were held for
officers and employees of the Company’s subsidiaries to discuss topics such as “Prevention of
Corporate Fraud”, “Prevention of Harassment”, and “Act against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors”.

(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.

- 47 [Translation]
Consolidated Balance Sheet
As of March 31, 2019
Item
(Assets)
Current assets:
Cash and deposits
Notes and accounts receivable trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts receivable - other
Other
Allowance for doubtful accounts

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

Intangible assets
Goodwill
Other

Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts

Total assets

AmountItem

Millions of yen
Amount(Liabilities)(138,989) Current liabilities:
33,844
Notes and accounts payable - trade
Electronically recorded obligations 37,456
operating
38,119
Short-term loans payable
11,448Current portion of long-term loans
payable8,737
3,116
Accounts payable - other
7,419
Income taxes payable-1,153
Provision for bonuses
Provision for goods warranties
Provision for loss on lease contracts
Other provision
Other(164,047) Non-current liabilities:(88,640)
Long-term loans payable
71,913
Deferred tax liabilities
81,388Deferred tax liabilities for land
31,772
revaluation
1,820
Provision for loss on lease contracts-148,177
Provision for environmental
48,998measures924
Provision for gift certificate
exchange losses
Provision for long-term goods
warranties(17,247)
Provision for retirement benefits for
directors (and other officers)
8,289
8,957
Provision for loss on businesswithdrawal
Other provision
Retirement benefit liability(58,159)
Asset retirement obligations
45,913Other
4,243 Total liabilities
8,165 (Net assets)-163 Shareholders' equity:
Capital stock
Capital surplus
Retained earnings
Treasury shares
Accumulated other comprehensive
income:Valuation difference on available-forsale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit
plans
Non-controlling interests
Total net assets
303,036 Total liabilities and net assets(132,972)
26,4496,438
49,61019,69812,402
1,281
3,644
440
348
444
12,213(59,647)
35,106
2,451
3,614
1,483
349
155
82
36
32
97
10,602
888
4,748
192,620(91,034)
10,0007,245
74,124-335(18,186)
10,099
-104
8,190
878
-876
(1,194)110,415
303,036

- 48 [Translation]
Consolidated Statements of Income
From April 1, 2018
to March 31, 2019
Item
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Other
Non-operating expenses
Interest expenses
Other
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of memberships
Profit before income taxes
Income taxes - current
Income taxes - deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Millions of yen
Amount247,293
150,955
96,33886,943
9,394(4,794)
188
774
1,941
1,889
(2,777)985
1,791
11,410
(363)
257
106
11,774
2,409
35
9,329
79
9,249

- 49 [Translation]
Non-Consolidated Balance Sheet
As of March 31, 2019
Item
(Assets)
Current assets:
Cash and deposits
Prepaid expenses
Short-term loans receivable
Accounts receivable - other
Other

Non-current assets:
Property, plant and equipment
Buildings
Tools, furniture and fixtures
Land
Leased assets

Intangible assets
Leasehold right
Trademark right
Software
Other

Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Investments in capital
Long-term loans receivable fromsubsidiaries and associates
Claims provable in bankruptcy,
claims provable inrehabilitation and other
Long-term prepaid expenses
Guarantee deposits
Other
Allowance for doubtful accounts

Total assets

AmountItem

Millions of yen
Amount(Liabilities)
67,525 Current liabilities:
13,904
Short-term loans payable
378
Current portion of long-term loans
payable45,472
7,044
Lease obligations (current)
725
Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
Unearned revenue
109,115
Provision for bonuses
23,451 Non-current liabilities:
4,171
Long-term loans payable
811
Lease obligations (non-current)
18,460
Deferred tax liabilities
8
Deferred tax liabilities for land
revaluation
Provision for loss of subsidiaries andassociates
2,594
Provision for environmental measures
1,952
Provision for stock benefits
10
Asset retirement obligations (noncurrent)
611
20
Guarantee deposits
Other
Total liabilities(Net assets)
83,069 Shareholders' equity:
20,670Capital stock
Capital surplus
59,899Legal capital surplus
0
Other capital surplus
Retained earnings
10,071
Legal retained earnings
Other retained earnings
Retained earnings brought
33
forward12
Treasury shares
2,298 Valuation and translation adjustments:
236
Valuation difference on available-forsale securities-10,153
Deferred gains or losses on hedges
Revaluation reserve for land
Total net assets
176,640 Total liabilities and net assets

73,24047,811
19,082
1
2,577
443
13
3,018
214
78
48,37034,740
6
2,912
3,614
2,479
143
87
319
3,628
437
121,610
38,10910,000
6,625
2,378
4,246
21,793
121
21,672-309
16,920
8,918
-188
8,190
55,029176,640

- 50 [Translation]
Non-Consolidated Statements of Income
From April 1, 2018
to March 31, 2019

Item
Operating revenue
Dividend from subsidiaries and associates
Management fee income
Royalty income
Operating expenses
Operating profit
Non-operating income
Interest income
Dividend income
Other
Non-operating expenses
Interest expenses
Rental expenses on real estate
Other
Ordinary profit
Extraordinary income
Gain from forgiveness of consolidated tax payable
Extraordinary losses
Provision of allowance for investment loss of subsidiaries and affiliates
Profit before income taxes
Income taxes - current
Income taxes - deferred
ProfitMillions of yen
Amount(11,301)
6,420
2,078
2,802
9,275
2,025
(1,856)671
757
427(1,190)
884
207
97
2,691
(326)
326
(290)
290
2,727
-904
-88
3,719

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

Independent Auditor’s Report

May 13, 2019
KPMG AZSA LLC
Junichi Obi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Akira Nishino [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Osamu Takagi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
The Board of Directors
SEIKO HOLDINGS CORPORATION

We have audited the consolidated financial statements, comprising the consolidated balance sheets, theconsolidated statements of income, the consolidated statements of changes in shareholders’ equity andthe notes to the consolidated financial statements of SEIKO HOLDINGS CORPORATION for the
consolidated fiscal year from April 1, 2018 to March 31, 2019 in accordance with Article 444,
Paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with corporate accounting principles generally accepted in Japan, and fordesigning and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit
as independent auditor. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance as to whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence for the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditors consider internal control

- 52 relevant to the entity’s preparation and fair presentation of the consolidated financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the application thereof, and thereasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position and results of operations for the period covered by the aforementioned
consolidated financial statements of the corporate group comprising Seiko Holdings Corporation andits consolidated subsidiaries in conformity with corporate accounting principles generally accepted inJapan.
Conflicts of Interest
Our firm or its engagement partners have no interest in the Company which should be disclosed incompliance with the Certified Public Accountants Act.

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

May 13, 2019
KPMG AZSA LLC
Junichi Obi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Akira Nishino [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Osamu Takagi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
The Board of Directors
SEIKO HOLDINGS CORPORATION

We have audited the financial statements, comprising the balance sheets, the statements of income, thestatements of changes in shareholders’ equity and the notes to the financial statements, andaccompanying schedules thereto of SEIKO HOLDINGS CORPORATION for the 158th fiscal year
from April 1, 2018 to March 31, 2019 in accordance with Article 436, Paragraph 2, Item 1 of theCompanies Act.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements andaccompanying schedules thereto in accordance with corporate accounting principles generally
accepted in Japan, and for designing and operating such internal control as management determines isnecessary to enable the preparation and fair presentation of financial statements and accompanying
schedules thereto that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements and accompanying schedules
thereto based on our audit as independent auditor. We conducted our audit in accordance with auditing
standards generally accepted in Japan. Those standards require that we plan and perform the audit toobtain reasonable assurance as to whether the financial statements and accompanying schedules
thereto are free from material misstatement.
An audit involves performing procedures to obtain audit evidence for the amounts and disclosures in
the financial statements and accompanying schedules thereto. The procedures selected depend on the

- 54 auditors’ judgment, including the assessment of risks of material misstatement of the financial
statements and accompanying schedules thereto, whether due to fraud or error. In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fairpresentation of the financial statements and accompanying schedules thereto in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the application thereof, and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements and accompanying schedules thereto.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the financial statements and accompanying schedules thereto referred to above present
fairly, in all material respects, the financial position and results of operations for the period covered by
the aforementioned financial statements and accompanying schedules thereto in conformity withcorporate accounting principles generally accepted in Japan.
Conflicts of Interest
Our firm or its engagement partners have no interest in the Company which should be disclosed incompliance with the Certified Public Accountants Act.

- 55 [Translation]
Certified copy of audit report by the Board of Corporate Auditors

Audit Report
The Board of Corporate Auditors has deliberated on, prepared and submitted this Audit Report as
below, based on the audit reports made by the Corporate Auditors concerning the execution of duties
by Directors for the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019).
1.

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

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

(2)

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

Attending Board of Directors meetings and other important meetings to receive
reports regarding the execution of duties from Directors and employees, and requested
explanations as necessary. Each Corporate Auditor also inspected important decisionmaking documents and other materials, and examined the status of operations and thecondition of the assets of the Company. With regard to subsidiaries, the Corporate
Auditors communicated and exchanged information with directors and corporate
auditors thereof, and received reports on business from those subsidiaries asnecessary.

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

(iii)

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

In accordance with the aforementioned procedures, the Corporate Auditors reviewed the- 56 business report and accompanying schedules thereto, and the financial statements (nonconsolidated balance sheets, non-consolidated statements of income, non-consolidated
statements of changes in shareholders’ equity, and notes to non-consolidated financial
statements) and accompanying schedules thereto, and consolidated financial statements(consolidated balance sheets, consolidated statements of income, consolidated statements ofchanges in shareholders’ equity, and notes to consolidated financial statements) for the fiscal
year ended March 31, 2019.
2.

Results of audits(1)

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

(ii)

(iii)

(2)

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

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

(3)

Results of the audit of the consolidated financial statements
The methods and results of the audit by KPMG AZSA LLC, Accounting Auditor, are fair andreasonable.

May 14, 2019
Board of Corporate Auditors
Seiko Holdings Corporation
Seiichi Mikami [seal]
Standing Corporate Auditor
Haruhiko Takagi [seal]
Standing Corporate Auditor
Yoshiaki Yamauchi [seal]
Outside Corporate Auditor
Yoshiro Aoki [seal]
Outside Corporate Auditor
Tomoyasu Asano [seal]
Outside Corporate Auditor