ANNUAL REPORT

2021

Osaki Electric Co., Ltd. Annual report 2021

Contents
03

Financial Highlights

04

Message from the Chairman and President

05

Management Policy

07

Present status of Business
08
10
10
11
12

17

Business Performance
Overview of Financial Condition for This Fiscal Year
Cash Flows
Business Environment and Responses to Business Challenges
Corporate GovernanceConsolidated Financial Statements
18

Consolidated Balance Sheets

20
21
22
24
25
30

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

33

The Companies

34

Stock Information

35

Investor Information

2

Osaki Electric Co., Ltd. Annual report 2021

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

U.S. dollars

2017

2018

2019

2020

2021

86,159 ¥78,780 ¥82,089 ¥90,069Operating income

7,692

5,544

4,299

Profit attributable to owners of parent

3,803

2,666

Total assets

92,206

Total equity
Number of employees

2021

For the year:
Net sales¥¥

76,255$ 688,788

3,691

2,684

24,251

1,806

1,197

482

4,356

85,78598,314

97,962

90,989821,869

55,34757,92458,881

58,63758,887531,910

3,078

2,960

3,383

3,557

3,129

At year-end:

Yen

U.S. dollars

Per share of common stock:
Profit¥80.65 ¥

54.63 ¥

36.95 ¥

24.47

¥

9.84

$

0.08

Cash dividends

20.00

20.00

20.00

20.00

20.00

0.18

Equity913.09958.80974.95956.44950.37

8.58

Notes ： U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥110.71=U.S.$1
the approximate Tokyo foreign exchange market rate as of March 31, 2021

Business segments Smart meters & solutions in Japan: Watt-hour meters, Instrument VCT, Energy Solutions, Distribution panels
Smart meters & solutions overseas: Watt-hour meters, Energy Solutions
Production equipment: Sensor devices assemble equipment
Real estate: Estate for rent

Net sales

Operating income(Millions of yen)

(Millions of yen)

Profit attributable toowners of parent

1,806

482

1,197

2,684

4,299

76,255

3,691

5,544

2,666

7,692

90,06982,08978,78086,1593,803(Millions of yen)

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

3

Osaki Electric Co., Ltd. Annual report 2021

Message from the Chairman and President

TO OUR SHAREHOLDERS

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

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

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

4

Osaki Electric Co., Ltd. Annual report 2021

The forward-looking statements in this document of matters best assumed by OSAKI Group (hereafter as “OSAKI” or “theGroup”) as of June 23, 2021, the date of Independent Auditor’s Report in P30-32.

Management Policy

1. Basic Corporate Policy
The OSAKI Group’s corporate vision is to be a “Global Energy Solution Leader” that takes on social challenges related
to energy. The Group strives to challenge for advanced technologies, create new values and be responsible for better
society through our energy solutions.

2. Medium- to Long-Term Management Strategies and Issues to Be Addressed
Business environment surrounding OSAKI Group is changing, both in and out of Japan. Impact of COVID-19 virus
infection is expected to remain awhile, and the Group will concentrate on controlling risks and improving profits. In mid
to long-term, recognizing the importance of decarbonized emission, the Group will concentrate its management
resources to providing solutions that will help save energy and cut carbon emission.
Under the aforementioned business environment, OSAKI Group will apply its meter and control technology cultivatedfrom electric meter business, to energy related solutions and services in building profitable and sustainable businessfoundation. Moreover, the Group will focus its resources to build environment sustainable society.
Strategies based on Management Policies
ⅰ. Developing value-added smart meters and expanding energy solutions (Japan)
・Accelerate R&D for next-generation smart meters expected to launch in FY2024 and explore added value for
new smart meters・Select market that leverages OSAKI’s strength in energy solutions, and expand businesses related to energy
management and labor saving to increase market shareⅱ.

Developing new products and services (Japan)
・Leverage management resources and reinforce framework to create and market new products and services
・Collaborate with various partners to accelerated technology development and reinforcing marketingⅲ.

Expanding Global Business (outside Japan)
OSAKI Group will execute the following measures in the focus regions including Oceania, Europe with particularfocus on UK, and emerging countries in Asia, the Middle East and Africa.
・Expand solution services that connects hardware and software
・Establish global development framework to accelerate next-generation hardware/software development
・Reinforce production structure and decentralize manufacturing sites for BCP

ⅳ.

Building resilient group operations
・Strengthen corporate governance and risk control
・Elevate financial soundness
・Build strong teams by training and allocation

5

Osaki Electric Co., Ltd. Annual report 2021

3. Mid-term Management Plan
(Millions of yen)
Fiscal Year ending
March 31, 2022
Forecast

Fiscal Year ending
March 31, 2023
Outlook

Fiscal Year ending
March 31, 2024
OutlookNet sales

83,00085,00088,000Operating income

3,500

5,000

5,500

Ordinary Income

3,300

4,900

5,500

Profit attributable toowners of parent

3,000

2,800

3,500

ROE

6.5%

6.0%

7.0%

Fiscal Year ending
March 31, 2026
Target8,000 or more

9.0% or more

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

Dividend per Share(Yen)

Board of directors’ resolution of Nov.4, 2020

490

10.00

Annual general shareholders meeting resolutionof June 25, 2021

490

10.00

6

Osaki Electric Co., Ltd. Annual report 2021

Present status of Business
08

Business Performance10

Overview of Financial Condition for This Fiscal
Year
Cash Flows

10
11
12

Business Environment and Responses to Business
Challenges
Corporate Governance7

Osaki Electric Co., Ltd. Annual report 2021

Present status of Business

1. Business Performance (Fiscal year ended March 31,2021)(1) Highlight of Operating Results of This Fiscal Year・ Consolidated sales were down by 15.3% year on year to ¥76.3billion. Operating income declined by 27.3% to¥2.68 billion. Profit attributable to owners of parent declined by 59.7% to ¥0.48 billion.
・ In Japan, sales declined mainly due to the expansion of COVID-19 virus infection in the midst of the peak out
period in demand for smart meters. Sales of energy management systems declined from customers restraining
investments largely due to the impact of COVID-19 virus infection. Profits, however, increased year on year, fromcost reduction efforts.
・ In the overseas, installation of smart meters was slower-than-expected due to lockdowns associated with the
spread of COVID-19 virus. Orders for Iraq (Kurdistan Regional Government) and Cambodia projects, which
recorded a temporary increase in orders in the same period of the previous fiscal year, declined year on year. As aresult, sales and profits declined.

Consolidated Financial Results(Millions of yen)
Fiscal Year ended Fiscal Year ended
March 31, 2020 March 31, 2021

YoY Change
AmountInitialForecasts%

Changes from Initial
Forecasts
Amount%90,06976,255(13,813)(15.3)%

Smart meters & solutions in Japan

51,842

48,193(3,648)(7.0)%

Smart meters & solutions overseas

37,462

27,301(10,160)(27.1)%

Others

1,905

1,514

(391)

(20.6)%

Adjustment(1,141)

(753)

387

－

19,67721.8%
15,986
17.7%

17,34222.7%
14,65719.2%(2,334)(11.9)%

3,691

2,684

(1,006)

Smart meters & solutions in Japan

4.1%
3,013

3.5%
3,136

122

＋4.1%

Smart meters & solutions overseas

440

(467)

(907)

－

Others

210

6

(204)

(97.1)%

Adjustment

27

9

(17)

(63.8)%

Ordinary income

3,544

2,888

(656)

(18.5)%

1,600

1,288

＋80.5%

Profit attributable to owners of parent

1,197

482

(714)

(59.7)%

100

382＋382.3%

Net income per share（yen）

24.47

9.84

(14.63)(59.8)%

ROE

2.5%

1.0%

―

(1.5)pt

Net sales

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

80,000(3,744)(4.7)%(27.3)%

1,500

1,184

＋79.0%(0.6)pt

1.9%+0.9pt(1,328)(8.3)%＋1.5pt+1.6pt8

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Sales by Region (Excluding intercompany sales)(Millions of yen)
Fiscal Year ended
March 31, 2020

YoY Change

Fiscal Year ended
March 31, 2021

Amount%Japan

53,47549,641(3,834)(7.2)%

Overseas

36,593

26,614(9,979)(27.3)%

Oceania

9,422

9,154

(268)

(2.8)%

Europe

9,558

8,952

(605)

(6.3)%

Asia

8,841

4,803

(4,037)(45.7)%

Others

8,770

3,703

(5,067)(57.8)%

90,06976,255(13,813)(15.3)%¥109.05/USD¥106.76/USD

Total
Average exchange rate(2) Outlook for the Fiscal Year ending March 31, 2021
・Consolidated forecast for FY2021 is ¥83 billion (8.8% increase year on year) in net sales, 3.5 billion yen (30.4%
increase year on year) in operating income, and 3.0 billion yen (522.0% increase year on year) in profit attributableto owners of parent.
・In Japan, smart meters business expects tough environment with low demand and severe price competition in the
midst of the peak out period until demand picks up in Fiscal 2024. Products and services including energy
management systems, smart locks for rental property are expected to see an increase in sales as the impact fromCOVID-19 is expected to decrease. Profits are expected to decline from lower utilization rates for smart meterproduction as well as an expected increase in SG&A expenses from FY2020, where costs were severely cut in the
midst of COVID-19 pandemic.
・In the overseas, both sales and profit are expected to increase, mainly due to steady growth in Oceania by providing
high profit solution services, and an increase in shipments for the UK project.
・Outlook for profit attributable to owners of parent includes extraordinary gain from the transfer of shares in aconsolidated subsidiary.
・The Dividend plan for the FY2021 is 20 yen per share per annum.

Consolidated Forecast(Millions of yen)
Fiscal Year ended March Fiscal Year ending March
31, 2021 Actual
31, 2022 Forecast

YoY Change
Amount%Net sales

76,25583,000

6,744

+8.8%

Smart meters & solutions in Japan48,19349,700

1,506

+3.1%

Smart meters & solutions overseas

27,301

32,5005,198+19.0%

Others

1,514

1,400

(114)

(7.5)%

Adjustment

(753)

(600)

153

－

Operatingincome

2,684

3,500

815

30.4%

Smart meters & solutions in Japan

3,136

2,500

(636)

(20.3)%

Smart meters & solutions overseas

(467)

1,000

1,467

－

Others60(6)(100.0)%Adjustment

9

－

(9)

(100.0)%

2,888

3,300

411

14.3%

482

3,000

2,517

522.0%

Ordinary income
Profit attributable to owners of parent

9Osaki Electric Co., Ltd. Annual report 2021

2. Overview of Financial Condition for This Fiscal YearAs of the end of the consolidated fiscal year ended March 31, 2021, total assets decreased 6,973 million yen (YoY)
to 90,989 million yen. Cash and deposits increased 1,984 million yen, inventories increased 806 million yen, while
notes and accounts receivable-trade decreased 4,175 million yen, inventories decreased 4,835 million yen.
Total liabilities decreased 7,223 million yen (YoY) to 32,101 million yen. Notes and accounts payable-trade andelectronically recorded obligations-operating decreased 683 million yen, short-term and long-term loans payable
decreased 5,739 million yen in overseas.
Net assets increased 250 million yen (YoY) to 58,887 million yen. Retained earnings decreased 498 million yen,while unrealized gains on securities increased 400 million yen, non-controlling interests increased 460 million yen.
(Millions of yen)

As of March 31, 2020

As of March 31, 2021

YoY Change

Total assets

97,962

90,989(6,973)

Total liabilities

39,324

32,101(7,223)

Total equity

58,63758,887250

Equity ratio

47.8%

51.2%

+3.5pt.

3. Cash FlowsThe balances of cash and cash equivalents for the consolidated fiscal year under review decreased 2,288 million
yen (YoY) to 14,654 million yen.
The status of cash flows for the consolidated fiscal year under review and major factors are as follows.
(Millions of yen)

Fiscal Year ended
March 31, 2020

Fiscal Year ended
March 31, 2021

YoY Change

Cash flows from operating activities(394)

10,503

10,897

Cash flows from investing activities(4,120)(1,187)

2,932

Cash flows from financing activities

328(6,939)(7,268)12,366

14,654

2,288

Cash and cash equivalents at end of year

(1) Cash flows from operating activities
Cash flows from operating activities resulted in 10,503 million yen of net cash gained.. Major factors included
depreciation of 2,749 million yen, impairment losses of 357 million yen, goodwill amortization of 197 million
yen, an decrease of 3,530 million yen in accounts receivable-trade, an decrease of 4,265 million yen in
inventories, a decrease of 476 million in accounts payable-trade, 1,264 million yen in other decreased capital,
and 1,383 million yen in income taxes paid.
(2) Cash flows from investing activities
Cash flows from investing activities resulted in 1,187 million yen in net cash used. Major factors included thepurchase of property, plant, and equipment of 1,332 million yen and 500 million yen in income for long-term
deposits.
(3) Cash flows from financing activities
Cash flows from financing activities resulted in 6,939 million yen of net cash used. Major factors include an
decrease of 5,207 million yen in short-term and long-term loans payable in overseas, and 1,473 million yen in
dividend payments including non-controlling interests.
10

Osaki Electric Co., Ltd. Annual report 2021

4. Business Environment and Responses to Business Challenges(1) Important Accounting Policy
OSAKI Group consolidated financial statements are created based on Japanese generally accepted accounting
principles. When creating these consolidated financial statements, we apply various factors deemed reasonable
based on past earnings and current conditions to make estimates and judgments. However, actual results mayvary from these estimates due to uncertainties specific to estimates.
(2) Earnings Analysis of This Fiscal Year
In Japan, smart meter business remained solid and overall sales were in line with the initial year forecast. Profits
were better than expected from cost reduction efforts. In our newly challenging areas, many collaborative efforts
were taken in the “OPELO series”, or smart lock business. In aspects of research, the company launched fieldtests using local 5G, in efforts to apply the outcome to the development of value-added smart meters.
In the global market (outside Japan), sales were largely impacted from lockdowns associated with the spread of
COVID-19 virus, resulting in lower-than-expected results compared with the initial year forecast. While efforts
were made to reduce costs, profits fell short of the forecast from devaluation of inventory. New initiatives aretaken to shift to solution-oriented business model and reinforcing R&D structure. In addition, the Group began
to decentralize manufacturing sites as risk management measures, including outsourcing.
As a result of the above, consolidated net sales and profits are as on the Table below.

Fiscal Year ended
March 31, 2021

ActualChanges from
Initial Forecasts

YoY Change
Amount%Amount%Net sales

76,255(13,813)(15.3)％(3,744)(4.7)％

Operatingincome

2,684(1,006)(27.3)％

1,184+65.7％

Ordinary income

2,888

(656)

(18.5)％

1,288

80.5％

482

(714)

(59.7)％

382+382.3％

Profit attributable to owners of parent(3) Capital sources and capital liquidity
The capital required for Group operating activities mainly comes from capital earned through cash flows fromoperating activities. At the same time, we also maintain liquidity through capital procurement using bank loans
when capital is needed to cover a period prior to the collection of receivables.
Our main capital demands to strengthen corporate value are as follows.
-Increasing the added value of smart meters, and creating new products and businesses in Japan-Increasing the competitiveness of products and services overseas, and establishing a global development
system.
We engage in Group capital financing to promote the effective use of Group capital and increase capitalefficiency. At the same time, we engage in capital procurement based on comprehensive evaluations of timing,and interest rate trends in domestic and overseas markets. We also consider the impact on our financial indicatorssuch as our equity ratio, and ROE.
Management resources are used towards investments in growing overseas businesses, establishing new
businesses, and increasing the added value of smart meters as well as to enhance shareholder returns.

11

Osaki Electric Co., Ltd. Annual report 2021

5. Corporate Governance(1) Fundamental Approach to Corporate GovernanceOsaki Electric recognizes that the enhancement of corporate governance is essential in terms of achieving
management's goal of enhancing corporate value. The Group is committed to serving the interest of our
stakeholders. Moreover, the Osaki Group will further improve management efficiency and transparency, and aim
for fair management practices.
(2) Overview of Corporate Governance Organization
Osaki Electric adopts a statutory auditor system. We have established a Board of Corporate Auditors,
which serves as a management oversight function through an auditing system that includes
outside corporate auditors. The Board of Auditors consists of four members, of whom two are independent
auditors to maintain objectivity and provide external monitoring functionality over management activities. One of
the statutory auditors has served as Director of Accounting at the Company and holds considerable knowledge offinance and accounting.
The Company introduced an executive officer system on June 25, 2020. With the introduction of thesystem, the Board of Directors will focus its source to making management decisions and overseeing operations,with aim to shifting its role to direct group governance. Under Representative Directors’ supervision, theappointed executive officers execute their business operations with clear authorities and responsibilities. The
Company aims to enhance maneuverability of the operations and further elevates corporate value.
Accordingly, members of the Board have reduced from 15 to 7, of whom, 2 are independent Directors. The
introduction of an executive officer system to clarify supervisory and executive functions, and theresulting reduction in the number of directors, is a system that enables outside directors to
exercise their functions even more. We believe that this will further strengthen the oversightfunction of the Board of Directors and contribute to the enhancement of the corporate value of theGroup as a whole.
In accordance with the “Statutes Partially Revising the Companies Law” (2014 Statute No. 90) instituted on May
1, 2015, the Company executed agreements, based on Article 427, Section 1 with the non-executive directors andauditors that limit liability for compensation of damages provided in Article 423, Section 1 of the Companies Law.
Authorization of such limited liability based on the agreements is restricted to good intentions and no serious
negligence in the execution of duties that caused the liability imposed on the subject director or auditor, and theamount of limited liability for compensation of damages is set at the statutory figure.
In addition, the Company signed an officer liability insurance policy as set forth in Paragraph 1 of Article 430-3 of
the Companies Act with an insurance company. Going forward, all loss or damages incurred from a claim against
the insured during insurance coverage period will be covered by the insurance. However, there is a set of
conditions where the insurance does not cover the damage, such as act of violations against laws or regulations by
the insured while he or she is fully aware of the act.
Insured persons include, directors, corporate auditors and executive officers of the Company. All expenses related
to the insurance, including premiums, are covered by the Company.
In principle, the board of directors holds monthly meetings and convenes further if necessary. This practice allows
the board to respond dynamically to management environment changes and service efficient operations.
As the assisting function to the board meeting, management meetings attended by senior directors (not including
independent directors) are held weekly in principle, in order to conduct decision-making for daily businessexecution and to deliberate management issues. In addition, with the introduction of the executive officer system,a monthly executive officer meeting is held to enhance operations and functionalities.
On February 13, 2019, we established a Nomination and Remuneration Advisory Committee to serve as anadvisory body to the Board of Directors whose purpose is to improve the fairness, transparency, and objectivity ofprocedures related to nominations and compensation. In fiscal 2020, the committee met eight times in total todiscuss nomination in April and remuneration in May and June, the introduction of a new executive compensation
system in September, October, November, February, and March.
12

Osaki Electric Co., Ltd. Annual report 2021

Overview of the Nomination and Compensation Advisory Committee
1. Structure(1) Comprised of three or more members who are directors and statutory auditors, the majority of which shall be
appointed from among the independent outside directors and independent outside auditors.
(2) The committee chairperson shall be appointed from among the independent outside directors.
2. RoleOf the following matters, the Committee shall debate on matters presented for advice by the Board of Directors
and issue a response to the Board of Directors(1) Matters concerning the appointment or removal of directors and statutory auditors(2) Standards of independence for outside officers(3) Matters concerning the appointment or removal of the representative director(4) Matters concerning the appointment or removal of directors and executive officers(5) Policy on determining director and executive officers compensation systems and amounts(6) Details of individual compensation for directors and executive officers(7) Matters concerning limits on compensation amounts for directors and auditors(8) Other matters deemed necessary by the Board of Directors
In regard to compliance, the compliance committee is established to oversee compliance to all laws andregulations and social norms, and to set forth the code of practice and compliance manual at Osaki Group
companies to instill the purposes of compliance. The committee also issues the Osaki Group ComplianceHandbook to promote compliance awareness and maintain compliance organizations. Concerning legal andaccounting matters, moreover, the committee receives appropriate advice from experts such as legal counseland certified public accountants to satisfy legal compliance.
Diagram of the Corporate Governance System
General shareholders' meeting
Reporting

Auditors' meeting
Internal Auditors
Outside Auditors

Auditing

Board ofDirectors
Meeting

Inquiry

Nomination andRemuneration
Advisory
Committee

Management

President and COO
Compliance committee

Reporting

CertifiedPublicAccountants

Auditing

Management

Management
Meeting

Auditing Office

LegalCounselors

Executive Officers
Internal
Auditing

Corporate DivisionInternal
Auditing
Group companies

13

Osaki Electric Co., Ltd. Annual report 2021

1. Organization of Internal Controls System
Based on the Companies Law and its enactment rules, we have established fundamental policy for structuring theinternal controls system, and maintain the system accordingly to secure proper operational duties as follows:a) An organization that secures conformance to the law and articles of incorporation with respect to the
execution of duties by directors and employees of the Company and its subsidiaries* The Company establishes the compliance committee, which sets forth the code of practice and compliancemanual at the Osaki Group companies. The company also issues and promotes the Osaki Group ComplianceHandbook so that officers and employees of the Company and its subsidiaries observe the law, the articles ofincorporation, internal company rules, and social norms.
* Based on management rules of the Osaki Group, the Company shall plan and implement various measures toenhance the effectiveness of the internal controls system at each subsidiary and provide guidance and support tothe subsidiaries.
* The Internal Auditing Office implements the internal audits of the Company and those subsidiaries with nointernal audit department in accordance to schedule, audits the appropriateness and efficiency of duties, andmakes efforts for reinforcement and improvement of the compliance organization.
* Through appropriate operations of the helpline system, the Osaki Group shall devise early detection andcorrection to violations of the law and unlawful conduct by officers and employees, and thus apply efforts toreinforce the compliance organization.
* The Osaki Group shall conduct operations based on the basic internal controls policy related to financial reportingand secure the reliability of financial reporting required by the Financial Instruments and Exchange Law.
* As a member of society, Osaki Group, based on its code of practice, shall refrain from holding any relations with
anti-social forces that threaten the order and safety of civil society, and shall respond to any eventuality with aresolute attitude.
b) Organization for storing and managing information related to the execution of duties by directors of theCompany* The Company shall record information and documents related to the execution of duties by directors on paper orelectromagnetic media and appropriately stored and managed in accordance with the board of directors meeting
rules and internal corporate rules.
* Directors and statutory auditors of the Company are entitled to have access to these documents during businesshours.
c) Rules and other organizations related to managing the risk of loss of the Company and its subsidiaries* At the Company, each department, as well as each committee (Compliance, Quality Control, Environmental
Conservation, Product Liability, Export Administration) of the Company, shall identify, analyze, and assess
risks according to the Risk Management Rules and the Basic Policy for Risk Management, and prepare a Risk
Map. Any recognized risk shall have necessary countermeasures instituted to reduce such a risk. At any
subsidiary, the Company shall instruct the arrangement of a comparable organization and establish anorganization that delivers the appropriate information to the Company in the event of any unforeseen
developments.
* The Internal Auditing Office audits the risk management status of the Company and those subsidiaries with nointernal audit office through an internal audit. The office reports the results periodically at board meetings of theCompany, where improvement measures will be deliberated and decided.

14

Osaki Electric Co., Ltd. Annual report 2021d) Organization to secure efficient execution of duties by directors of the Company and its subsidiaries* The Company establishes goals of the Company and entire Osaki Group shared by directors at the beginning ofeach year and prepares a specific annual operating plan to achieve the goals. Furthermore, the achievement of
the goals is reviewed monthly and quarterly. Feedback of the results to departments of the Company andsubsidiaries secures effectiveness and efficiency of operations.
* The Company convenes the board of directors’ meetings monthly in principle, and otherwise as necessary to
respond efficiently to dynamic changes in the management environment of Osaki Group.
* In principle, the Company convenes management meetings composed of internal directors weekly to conductmulti-faceted studies and discussions over management issues that affect the corporate Osaki Group.
* Execution of daily duties at the Company and subsidiaries shall be based in accordance with occupational duty
authority rules and internal approval process rules.
e) Organization concerning reporting to the Company regarding matters associated with executing duties
by board members of subsidiaries of the Company* Based on operating management rules of the Osaki Group, every subsidiary of the Company bears theobligation of reporting important management matters associated with a said subsidiary to the Company.
* For subsidiaries within Japan, the Company in principle convenes group management council meetings to
discuss business performance and other necessary matters of such subsidiaries. Major subsidiaries outside Japan
periodically report business performance and other important management issues to the board of directors of theCompany.

f) Items regarding employee status, employee independence from directors, and securing effectiveness of
direction given to the said employee, whenever a statutory auditor of the Company requests placementof an employee for assistance in the auditor’s duties.
* Dedicated employees shall be placed to assist the duties of the auditors.
* Such employees that assist the duties of the auditor shall not hold any co-duties in a post to execute operations of
the Company, shall conduct their duties under the auditor's direction and command, and shall submit to transferswith the consent of the auditor.
g) Reporting organization to statutory auditors by director or employee of the Company or by a director,
statutory auditor, or employee of a subsidiary of the Company (including anyone who received a reportfrom the foregoing), the organization to assure no unfavorable treatment as a consequence of suchreporting to anyone who provides such reporting* Whenever a director, employee, or subsidiary’s statutory auditor in the Osaki Group learns, in regard to executionof duties, of any facts concerning significant violation of the law or articles of incorporation, facts of
unlawfulness, or facts that may impose significant damages to the Osaki Group, the Company shall secure anorganization that reports such matters to the statutory auditors of the Company without delay.
* The Company shall secure an organization where, in addition to items prescribed by law, directors, employees,
and subsidiaries’ statutory auditors in the Osaki Group shall report items that may have a serious effect on theOsaki Group, the implementation status of internal audits, and notifications regarding the group helpline systemand their details to the statutory auditors of the Company without delay.
* The Osaki Group shall refrain from imposing any unfavorable treatment like discharge or anything else to
informants, for reasons of informing through the helpline system.

15

Osaki Electric Co., Ltd. Annual report 2021h) Items concerning policy associated with expenses incurred and liabilities processed in the execution ofduties by statutory auditors of the Company* The directors of the Company shall execute necessary budgetary measures for the expenses associated withauditing, in order to secure smooth audits by the statutory auditors.
i) Organizations to otherwise secure effective auditing by statutory auditors of the Company* The board of directors of the Company shall secure the attendance of statutory auditors to board meetings,
management meetings, and other important meetings of the Company in order to secure appropriateness ofoperations.
* The representative director of the Company shall secure opportunities to regularly exchange opinions with thestatutory auditors.

16

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Financial Statements

18

Consolidated Balance Sheets

20

Consolidated Statements of Income

21

Consolidated Statements of Comprehensive Income

22

Consolidated Statements of Changes in Equity

24

Consolidated Statements of Cash Flows25

Notes to Consolidated Financial Statements

30

Independent Auditor’s Report

33

The Companies

34

Stock Information

35

Investor Information17

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Balance Sheets
March 31, 2020, and 2021
Thousands of
U.S. dollars

Millions of yen
ASSETS

2020

Current assets:
Cash and cash equivalents (Note 3)

¥

2021

10,517¥2021

Deposits (Note 3)

2,421

12,502
4,722$

112,927
42,659Notes and accounts receivable - trade

22,063

17,887

161,573

Merchandise and finished goods

7,847

6,220

56,190Work in process

2,559

2,175

19,649Raw materials and supplies

10,086

7,262

65,595

Other current assets

2,016

2,770

25,021

Allowance for doubtful accounts

(531)

(450)

(4,072)

Total current assets

56,98053,090479,545

Buildings and structures

22,751

22,983

207,599

Less-accumulated depreciation(13,547)(13,998)(126,439)

Total buildings and structures

9,204

8,985

81,159Non-current assets:
Property, plant and equipment

Machinery, equipment and vehicles

14,662

14,576

131,664

Less-accumulated depreciation(10,800)(11,547)(104,305)

Total machinery, equipment and vehicles
Land

3,861

3,028

27,35812,483

12,483112,762

Leased assets

3,717

3,702

33,444Less-accumulated depreciation(1,395)(1,578)(14,260)

Total leased assets

2,322

2,123

19,183

Construction in progress

132

113

1,028

Other fixed assets

7,552

7,090

64,044Less-accumulated depreciation(6,804)(6,369)(57,537)

Total other fixed assets

747

720

6,507

28,752

27,455247,999

Net property, plant and equipment
Intangible assets
Goodwill
Other intangible assets
Total intangible assets

405

191

1,728

1,030

988

8,932

1,435

1,180

10,660Investments and other assets
Investment securities (Note 4)

4,612

5,067

45,773

Defined benefit asset

876

1,384

12,507

Deferred tax assets

1,237

1,293

11,686

Other assets

4,070

1,518

13,712

(2)

(1)

(16)

Allowance for doubtful receivables
Total investments and other assets

10,793

9,262

83,663

Total non-current assets

40,98137,898342,323

TOTAL¥

97,962¥

90,989$821,869

See notes to consolidated financial statements

18

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Balance Sheets
March 31, 2020, and 2021
Thousands of
U.S. dollars

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

2020¥

Electronically recorded obligations - operating

2021

7,529

¥

3,057
5,925

Short-term loans payable (Note 5)

2021

7,270
2,632

$

65,67423,780559

5,054

Accrued income taxes

912

722

6,528

Provision for bonuses

1,748

1,505

13,597

21

23

216

Provision for directors’ bonuses
Provision for product warranties

29

156

1,417

6,710

6,089

55,00725,93418,962

171,277

Long-term loans payable (Note 5)

6,583

6,210

56,092

Lease obligation

1,807

1,648

14,891

33

49

442

Other current liabilities
Total current liabilities
Non-current liabilities:

Provision for directors’ retirements benefits
Provision for repairs

7

14

126

Defined benefit liability

2,276

2,346

21,195

Deferred income liabilities

1,932

2,119

19,146

Other non-current liabilities

748

751

6,786

Total non-current liabilities

13,39013,139118,681

Total liabilities

39,324

32,101

289,958

7,965

71,951

Capital surplus

7,965
8,750

8,750

79,043Retained earnings

27,81827,319246,767

Equity:Shareholders’ equity
Common stock (Note 6)

Treasury stock (Note 7)
Total shareholders’ equity

(223)

(140)

(1,273)44,31243,895

396,489

Accumulated other comprehensive income
Unrealized gains on investment securities

587

988

8,928

Foreign currency translation adjustments

1,706

1,216

10,986

Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights (Note 8)
Non-controlling interests
Total equity
TOTAL
See notes to consolidated financial statements

¥

183

514

4,643

2,477

2,718

24,557544
11,303509
11,764

4,602
106,260

58,637
97,962

58,88790,989531,910$ 821,869
,140

¥

19

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Statements of Income
Years ended March 31, 2020, and 2021
Thousands of
U.S. dollars

Millions of yen
2020

Net sales
Cost of sales
Gross profit¥

Selling, general and administrative expenses
Operating income
Non-operating income:Interest income
Dividend income
Foreign exchange gain
Subsidy income
OthersNon-operating expenses:
Interest expenses
Loss on retirement of non-current assets
OthersOrdinary income
Extraordinary losses:
Impairment losses
Income before income taxes and non-controlling interests
Income taxes
Current
DeferredProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

90,06970,392

2021¥$

688,788532,141

19,677

17,342

156,646

15,986

14,657

132,395

3,691

2,684

24,251

28
162

25
146

230
1,326

56

-

-

31

459

4,150

267

132

1,195

545

764

6,903

503

384

3,473

105

77

700

84

98

893

692

560

5,066

3,544

2,888

26,087

70
70

357
357

3,229

3,474

2,530

22,857

1,376

1,174

10,612

(92)

(81)

(738)

1,283

1,093

9,874

2,190

1,437

12,983

993
¥

2021

76,25558,913

1,197

3,229

955
¥

482

8,626
$

4,356

See notes to consolidated financial statements

20

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Statements of Comprehensive Income
Years ended March 31, 2020, and 2021
Thousands of
U.S. dollars

Millions of yen

ProfitOther comprehensive income
Unrealized gains on investment securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted for using
equity method
Comprehensive income
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

2020

2021

2021

¥ 2,190¥ 1,437$ 12,983

(824)
(57)
(172)

400
(490)
330

3,617
(4,427)
2,985

(0)

-

-

(1,055)¥ 1,135
141
993

240
¥ 1,678
723
955

2,175
$ 15,158
6,532
8,626

21

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Statements of Changes in Equity
Years ended March 31, 2020, and 2021
Millions of yen
Shareholders’ equity
Common stock

Balance at March 31, 2019

¥

7,965

Retainedearnings

Capital surplus
¥

8,750

¥

Treasury stock

27,669Cumulative effects of changes in accounting policies

¥

(223)

Total shareholders’equity¥(69)

Restated balance

7,965

8,750

44,162(69)

27,599(223)

44,093

Cash dividends paid

(978)

(978)

Profit attributable to owners of parent

1,197

1,197

Purchase of treasury stock (Note 7)

(0)

(0)

(223)

44,312

Net changes of items other than shareholders’ equity

Balance at March 31, 2020

7,965

8,750

27,818Cash dividends paid

(979)

(979)

Profit attributable to owners of parent

482

482

Disposal of treasury stock (Note 7)

(1)

82

80

Net changes of items other than shareholders’ equity

Balance at March 31, 2021

¥

7,965

¥

8,750

¥

27,319

¥

(140)

¥

43,895

Thousands of U.S. dollars
Shareholders’ equity

Balance at March 31, 2020

Common stock

Capital surplus

Retainedearnings$$$

71,951

79,043

Treasury stock

251,273$(2,014)

Total shareholders’equity$400,253

Cash dividends paid

(8,849)(8,849)Profit attributable to owners of parent

4,356

4,356

Disposal of treasury stock (Note 7)

(13)

741

728

Net changes of items other than shareholders’ equity

Balance at March 31, 2021$

71,951$

79,043$

246,767$(1,273)$

396,48922

Osaki Electric Co., Ltd. Annual report 2021

Millions of yen
Accumulated other comprehensive income
Unrealized gains on
investment
securities

Balance at March 31, 2019

¥

1,412

Foreign
Remeasurements Total accumulated
Currencyof defined other comprehensive
Translation
benefit plansincomeadjustments
¥

1,763

¥

356

¥

Stock
Acquisitionrights

3,532

¥

474

Non-controll
ing interests¥ 10,710

Cumulative effects of changes in accounting policies

Total
equity¥ 58,881(69)

Restated balance

1,412

1,763

356

3,532

474

10,71058,812

Cash dividends paid

(978)

Profit attributable to owners of parent

1,197

Purchase of treasury stock (Note 7)(0)

Net changes of items other than shareholders’ equity

(824)

(57)

(172)

(1,055)

69

592

(393)

Balance at March 31, 2020

587

1,706

183

2,477

544

11,30358,637

Cash dividends paid

(979)

Profit attributable to owners of parent

482

Disposal of treasury stock (Note 7)80

Net changes of items other than shareholders’ equity

Balance at March 31, 2021

400
¥

988

(490)
¥

1,216

330
¥

514

240
¥

2,718

(34)

460

666

509

¥ 11,764¥ 58,887

Stock
AcquisitionrightsNon-controll
ing interests

Total
equity$ 102,099$ 529,650¥

Thousands of U.S. dollars
Accumulated other comprehensive income
Unrealized gains on
investment
securities

Balance at March 31, 2020

$ 5,311

Foreign
Remeasurements Total accumulated
Currencyof defined other comprehensive
Translation
benefit plansincomeadjustments$ 15,413$ 1,657$ 22,382$

4,915

Cash dividends paid

(8,849)Profit attributable to owners of parent

4,356

Disposal of treasury stock (Note 7)728

Net changes of items other than shareholders’ equity

Balance at March 31, 2021

3,617

(4,427)

2,985

2,175

$ 8,928$ 10,986$ 4,643$ 24,557

$

(312)

4,160

6,023

4,602

$ 106,260$ 531,910

23

Osaki Electric Co., Ltd. Annual report 2021

Consolidated Statements of Cash Flows
Years ended March 31, 2020, and 2021
Thousands of
U.S. dollars

Millions of yen
2020
Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment losses
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for directors’ retirements benefits
Increase (decrease) in defined benefit liability
Decrease (increase) in defined benefit asset
Increase (decrease) in provision for repairs
Interest and dividend income
Interest expenses
Loss on retirement of non-current assets(Increase) decrease in notes and accounts receivable - trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable - trade
Other, net
Interest and dividend received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

¥

3,474
2,905
70
201
(66)
19
20
(17)
(74)
22
(70)
7
(190)
503
105
(2,313)(968)(3,830)
1,415
192
(503)
(1,298)
(394)

¥

2021

2021

2,530
2,749
357
197
(54)
(222)
4
127
15
69
(31)
7
(172)
384
77
3,530
4,265
(476)
(1,264)174(382)(1,383)
10,503$ 22,857
24,837
3,229
1,783
(491)
(2,013)
36
1,155
136
631
(288)
63
(1,557)3,473
700
31,88938,531(4,308)(11,417)
1,573(3,458)(12,493)
94,870Cash flows from investing activities:
Payments for property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for intangible assets
Proceeds from sales of investment securities
Proceeds from refund of long-term deposits
Payments for long-term deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:(2,005)
46
(276)
176
(2,000)(60)(4,120)(1,332)
10
(350)
8
500
(24)
(1,187)(12,039)98(3,161)
81
4,516
(223)
(10,728)

Increase (decrease) in short-term loans payable, net
Proceeds from long-term loans payable
Repayments for long-term loans payable
Repayments of lease obligation
Cash dividends paid
Dividends paid to non-controlling interests
Payments for treasury stock (Note 7)
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year (Note 3))Cash and cash equivalents at end of year (Note 3)(3,124)
6,543(1,518)
(191)
(978)
(401)
(0)
328
130
(4,055)
16,422(5,181)
(26)
(258)
(979)
(494)
0
(6,939)(87)
2,288
12,366(46,804)(235)(2,335)(8,846)(4,464)
1(62,684)(789)
20,668111,702

14,654$ 132,371¥

12,366¥

See notes to consolidated financial statements

24

Osaki Electric Co., Ltd. Annual report 2021

Notes to Consolidated Financial Statements

1. Summary of Main Accounting Policies
Osaki Electric Co., Ltd., (“the Company”) and its Japanese subsidiaries maintain financial accounting books according to accounting principles
generally accepted as fair and proper in Japan and prepare financial statements accordingly. Foreign subsidiaries maintain financial accounting
books according to accounting principles generally accepted as fair and proper in their country of presence and prepare financial statements
accordingly.
(1) Fundamental Policy of Consolidation and Accounting Treatment of Investment in Affiliates
The consolidated financial statements of the Company include accounts of the Company and subsidiaries for which the Company owns a simple
majority or more of shares. Transactions, loans, and credits between consolidated companies are entirely eliminated.
(2) Foreign Currency Conversion
Monetary loans and credits in foreign currencies are converted into Japanese currency at the spot exchange rate on the consolidated financial
closing date, and conversion differences are treated as income or loss. The assets and liabilities of foreign subsidiaries are converted into
Japanese currency at the spot exchange rate on the financial closing dates of the respective subsidiaries, and revenues and expenses are converted
to Japanese currency according to the average rate during the fiscal period. The conversion differences are included under foreign currencytranslation adjustments and non-controlling interests in equity.
(3) Cash and Cash Equivalents
Cash and cash equivalents include amounts converted easily to their stated values with slight fluctuation risks in value resulting from any
variation in interest rate because of the short maturity period, and also high-liquidity investments that mature within three (3) months of theiracquisition date.
(4) Marketable Securities
Marketable securities with fair market value are stated at fair market value, based on the quoted market price on the last day of the fiscal period(All valuation differences are directly charged or credited to shareholders’ equity and the costs of securities sold are computed by the moving
average method). Securities without fair market value are stated at acquisition cost by being determined by the moving average method.
Held-to-maturity securities follow the amortized cost method.
(5) Inventories
Finished products and work in process are stated mainly at acquisition cost according to the moving average method or total average method(asset values on the balance sheet are calculated by the book value write-down method based on decreased profitability). Build-to-order products
are stated at acquisition cost by specific identification method (asset values on the balance sheet are computed by the book value write-down
method based on decreased profitability).
Raw materials and supplies are stated mainly at acquisition cost by the moving average method (asset values on the balance sheet are computedby the book value write-down method based on decreased profitability).
(6) Derivative
The financial derivative transaction follows the market value method.
(7) Property, Plant and Equipment
Property, plant and equipment are stated at acquisition cost. By following the method and the identical standard provided in the Corporate Tax
Law, depreciation expenses are computed mainly by the declining balance method for the Company and Japanese subsidiaries and thestraight-line method for foreign subsidiaries.
(8) Intangible Assets
Intangible assets follow the straight-line method; however, for software used by the Company, the straight-line method based on the usable
period (5 years) internally is applied.
(9) Leases
For financed lease transactions without ownership transfer, the accounting treatment refers to ordinary sale and purchase transactions. The
depreciation method of lease assets related to finance lease transactions without ownership transfer adopts the straight-line method that sets thelease period as the service life and the residual value as zero. The financial statements of overseas consolidated subsidiaries are prepared inaccordance with International Financial Reporting Standards (IFRS). However, from the current consolidated fiscal year, IFRS No. 16 “Leases”(hereinafter IFRS No. 16) has been applied. Regarding the lease lessee, in principle all leases are recorded as assets and liabilities on the balance25

Osaki Electric Co., Ltd. Annual report 2021
sheets, and the straight-line method is used for depreciation of the capitalized right-of-use assets.
(10) Allowance for Doubtful Accounts
To reserve against write-off losses for receivables, estimated uncollectable amounts are recorded according to historical write-off experience forgeneral receivables and collection potential for individual receivables with specific write-off concerns.
(11) Provision for Bonuses
Provision is recorded on the basis of expected disbursement amounts in order to prepare for payment of employee bonuses.
(12) Provision for Directors’ Bonuses
Provision is recorded on the basis of expected disbursement amounts in order to prepare for payment of director bonuses.
(13) Provision for Product Warranties
Provision is recorded on the basis of past disbursement experience in order to prepare for expenses disbursed in the after-market servicing ofproducts.
(14) Provision for Directors’ Retirements Benefits
Year-end disbursement required is recorded in accordance with internal rules in order to prepare for retirement benefits disbursed to directors(including executive officers).
(15) Provision for Repairs
Provision is recorded to this consolidated fiscal year in order to prepare for expenses of the scheduled maintenance for owned facilities.
(16) Accounting Treatment of Retirement Benefits
In calculating retirement benefit obligations, the method of attributing the projected amounts of retirement benefits up until the consolidated
fiscal year under review mainly refers to the benefit formula-based plan. For differences arising mathematically, proportionate amounts derived
by the straight-line method for the number of years (10) within the average remaining employment period of employees at the time of accrual
mainly for the respective consolidated fiscal year are expensed, beginning in the consolidated fiscal year following their accrual.
Some consolidated subsidiaries apply a simplified method to the calculation of liabilities associated with retirement benefits and the expenses ofretirement benefits where the self-determined disbursement required at year’s end for retirement benefits is established as the liability for
retirement benefits.

2. U.S. Dollar Amounts
U.S. dollar amounts presented in the financial statements are solely for the reference of the reader. These translations should not be construed as
representations that the yen amounts actually represent or have been or could be converted into U.S. dollars. As the amounts shown in U.S.
dollars are for reference only, the rate of ¥110.71 = U.S.$1, the approximate current rate on Tokyo Foreign Exchange Market at March 31, 2021,
has been used for the purpose of presentation of the U.S. dollar amounts in the accompanying consolidated financial statements.

3. Cash and Cash Equivalents
Cash and cash equivalents comprise the following:

Millions of yen

As of March, 31
Cash and cash equivalents in the balance sheets
Deposits
Total
Deposits (with maturities of more than three months)
Cash and cash equivalents in the cash flow statements¥

2020
10,517
2,421
12,939(572)
12,366¥2021
12,502
4,722
17,225(2,570)14,654

Thousands of
U.S. dollars
2021$
112,927
42,659155,587(23,216)
132,37126

Osaki Electric Co., Ltd. Annual report 2021
4. Investment Securities
Investments securities comprise the following:

Millions of yen
As of March, 31
Available-for-sale securities
Acquisition cost
Fair value
Net unrealized gain

2020
¥

2021

1,992
2,845
852

¥

1,985
3,303
1,318

Millions of yen
As of March, 31
Investments in unconsolidated subsidiaries and affiliates
Investments in equity method affiliates
Investments in non-public companies and others

2020
¥

2021

1,766

¥

1,763

Thousands of
U.S. dollars
2021$

17,936
29,842
11,905

Thousands of
U.S. dollars
2021$
15,931

5. Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable and long-term loans payable comprise the following:

Millions of yen
As of March, 31
Short-term loans payable:
Unsecured
SecuredCurrent portion of long-term loans payable
Net short-term loans payable

2020
¥

2021

5,899
26
5,925

¥

549
9
559

Millions of yen
As of March, 31
Long-term loans payable:
Unsecured
SecuredLess current portion
Net long-term loans payable

2020
¥

2021

6,573
36
26
6,583

¥

6,210
9
9
6,210

Thousands of
U.S. dollars
2021
$

4,965
88
5,054

Thousands of
U.S. dollars
2021$

56,09288
88
56,092

6. Common Stock
Changes in common stock for the fiscal years ended March 31, 2020, and 2021, are as follows.

Total number of authorized shares:
End of the year
Total number of issued shares:
Beginning of the year
Changes during the year
End of the year

2020

2021

100,000,000

100,000,000

49,267,180
49,267,180

49,267,180
49,267,180

27

Osaki Electric Co., Ltd. Annual report 2021
7. Treasury Stock
Changes in treasury stock as of March 31, 2020, and 2021, are as follows.

Ordinary shares
Beginning of the year
Changes during the year
Purchase of shares less than one unit
Disposal by exercising stock acquisition rights
End of the year

2020

2021

346,095

346,16267
346,162(127,400)
218,762

8. Stock Acquisition Rights
Stock acquisition rights comprise the following:

Millions of yen
As of March, 31
Stock acquisition rights as the stock options

¥

2020
544

¥

2021
509

Thousands of
U.S. dollars
2021
$
4,602

28

Osaki Electric Co., Ltd. Annual report 2021
9. Segment Information
The business of the Company and its consolidated subsidiaries is divided into the following four categories.
Smart meters & solutions in Japan:
Watt-hour meters, Instrument VCT, Energy Solutions, Distribution panels
Smart meters & solutions overseas:
Watt-hour meters, Energy Solutions
Production equipment:
Sensor devices assemble equipment
Real estate: Estate for rent
Business segments –The Production Equipment Business and Real Estate Business have lower materiality from perspectives of profitability and total assets and are
therefore reported as Other Business.

Millions of yen
2020
Reportable Segments

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

Smart meters &solutions in Japan

Smart meters &solutionsoverseas¥ 51,819
23
51,842
3,013¥ 36,490
971
37,462440

Other Business

¥

1,759
146
1,905
210

Total

¥ 90,069
1,141
91,2103,664

Adjustment

Consolidated¥(1,141)(1,141)27¥ 90,069
90,0693,691

The segment income is adjusted by intersegment transaction eliminations.
For the Smart meters & Solutions in Japan Business, an impairment loss of fixed assets of 70 million yen are respectively recognizedand booked as an extraordinary loss.

Millions of yen
2021
Reportable Segments

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

Smart meters &solutions in Japan

Smart meters &solutionsoverseas¥ 48,16924
48,193
3,136¥ 26,678
622
27,301(467)

Other Business

¥

1,408
105
1,514
6

Total

¥ 76,255
753
77,0092,675

Adjustment

¥

(753)
(753)
9

Consolidated¥ 76,255
76,2552,684

The segment income is adjusted by intersegment transaction eliminations.
For the Smart meters & Solutions in Japan Business and the Production Equipment Business, an impairment loss of fixed assets of 325 million
yen and 31 million yen are respectively recognized and booked as an extraordinary loss.

Thousands of U.S. dollars
2021
Reportable Segments

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

Smart meters &solutions in Japan

Smart meters &solutionsoverseas

Other Business$ 435,092
223
435,315
28,331$ 240,976
5,625
246,601(4,223)$ 12,720
956
13,67654

Total$ 688,788
6,804
695,592
24,162Adjustment

Consolidated$$ 688,788
688,788
24,251(6,804)(6,804)88

29

Osaki Electric Co., Ltd. Annual report 2021

Independent Auditor’s Report

HARA AUDIT CORPORATION
264 Shin-Otemachi Bldg.
2-2-1, Otemachi, Chiyoda-ku
Tokyo 100-0004, JAPANTo the Shareholders and Board of Directors ofOsaki Electric Co., Ltd.
We have audited the accompanying consolidated balance sheets of Osaki Electric Company, Limited (“the Company”) andits consolidated subsidiaries as of March 31, 2020, and 2021, and the related consolidated statements of income,comprehensive income, changes in equity, and cash flows for the years ended March 31, 2020, and 2021, and the related
notes, all expressed in Japanese yen.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company and its consolidated subsidiaries as of March 31, 2020, and 2021, and the results of theiroperations and their cash flows for the years then ended in conformity with accounting principles generally accepted inJapan.
Also, in our opinion, the translated amounts in the accompanying consolidated financial statements translated into U.S.
dollars have been computed on the basis set forth in Note 2 to the consolidated financial statements.
Basis of Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under thesestandards are further described in the Auditor’s Responsibilities for the Audit of Consolidated Financial Statements sectionof our report. We are independent of the Group in accordance with ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of theconsolidated financial statements for this fiscal year.
These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of out
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters.
The Key Audit Matters
The Company recognized impairment loss on Property, plant and equipment (hereafter “P. P. E”) of 357 Million Japanese
Yen due to decrease in profitability of Watt-hour meter equipment.
Whenever there is any indication of impairment of assets or asset groups, an impairment test is required to be performed on
the assets or asset groups. In calculating the recoverable amount in the impairment testing, higher of either assets’ or asset
groups’ net market value or value in use is used. Net market value is assets or asset groups’ market value less cost of
disposal. Value in use is discounted present value of cash flow projection of assets or asset groups. The Company prepares
the cash flow projection based on business plan approved by management.
We choose Impairment loss on P. P. E. as Key Audit Matters because auditing impairment loss on P. P. E. need auditors
deep knowledge and accurate judgement as a professional because recoverable amount of P. P. E. can vary depending on
the key assumptions, cash flow projection and discount rate, which is judgmental.

30

Osaki Electric Co., Ltd. Annual report 2021

How the matter was addressed in our audit
We performed the following procedures on the key audit matters.
⚫ Tested the reasonableness of key assumptions used for calculating P. P. E.’s value in use by:・comparing Company’s cash flow projection period that is used to calculate value in use with remaining useful life of theassets in asset group.
・verifying the consistency of cash flow projection with Company’s four-year Mid-term Management Plan approved bymanagement.
・performing a retrospective review on key assumptions of the estimates in Mid-Term Management Plan in prior year.
・examining the reasonableness of discount rate used after 5 year from fiscal year end ( period after four year Mid-Term
Management Plan) reflected the management assessment on the uncertainty of future cash flow of that period.
⚫ Tested the reasonableness of adjustment made on past official appraisal report issued by official real estate appraiser
when calculating net market value of the property.
Responsibilities of Management, Auditors, and the Board of Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inconformity with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern and disclosing, as required by accounting principles generally accepted in Japan, matters related togoing concern. Auditors and the Board of Auditors are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibility in Auditing the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.
Misstatements can arise from fraud or error and are considered material, if individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of those consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan (hereafter, “JGAAP”), we exercise
professional judgement and maintain professional skepticism throughout the audit.
・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform auditing procedures respective to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the consolidated financial statements is not
expressing an opinion on the effectiveness of the Group’s internal control.
・Evaluate the appropriateness of accounting policies and its application, and the reasonableness of accounting estimatesand related disclosures made by management.
・Conclude on the appropriateness for management’s use of the going concern basis of accounting and whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as agoing concern based on the audit evidence obtained. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if suchdisclosures are inadequate, to modify our opinions. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
・Evaluate the overall presentation, structure, and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent underlying transactions and events in a mannerthat achieves fair presentation in accordance with JGAAP.
31

Osaki Electric Co., Ltd. Annual report 2021

・Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit of the consolidated financial statements. We remain solely responsible
for our audit opinion.
We communicate with the Auditors and the Board of Auditors regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We complied with provisions in Japan concerning professional ethics regarding independence as well as mattersreasonably considered to affect the independence of auditors as well as on details if safeguards are taken to remove or
reduce obstructing factors.
From the matters communicated with Auditors and Board of Auditors, we determine those matters that were of mostsignificant in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Interest Required to Be Disclosed by the Certified Public Accounts Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed
pursuant to the provisions of the Certified Public Accountants Act of Japan.

Tokyo, Japan
June 23, 2021

32

Osaki Electric Co., Ltd. Annual report 2021

The Companies

COUNTRYJAPAN

COMPANYSEGMENTOSAKI ELECTRIC CO., LTD.

●ENEGATE CO., LTD.

●OSAKI ELECTRIC SYSTEMS CO., LTD.

●

IWATE OSAKI ELECTRIC CO., LTD.

●OSAKI PLATECH CO., LTD.

●OSAKI DATATECH CO., LTD.

●●OSAKI ENGINEERING CO., LTD.

●OSAKI ESTATE CO., LTD.
SINGAPORE●

OSAKI UNITED INTERNATIONAL PTE.LTD.

●

EDMI LIMITED

●

CHINA

EDMI (SHENZHEN) CO., LTD●

MALAYSIAEDMI ELECTRONICS SDN. BHD.

●

UNITED KINGDOMEDMI EUROPE LIMITED●

AUSTRALIAEDMI PTY LTD●● Smart meters & solutions in Japan● Smart meters & solutions overseas● Production equipment● Real estate33

Osaki Electric Co., Ltd. Annual report 2021

Stock Information(As of March 31, 2021)

Common Stock
Authorized:

100,000,000

Issued:49,267,180

Number of Shareholders

:

5,807

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

36,0001,200

32,000Stock Price (right)

1,000

28,00024,000800

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

400

8,000
200
4,000
0

0
Trading Volume (left)

Major Shareholders
Number of shares(Thousand shares)(%)

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

4,438

9.0

Custody Bank of Japan, Ltd. (Trust Account)

3,739

7.6

HIKARI POWER LIMITED

2,930

5.9

GOVERNMENT OF NORWAY

2,009

4.0

Osaki Electric cooperation company share holding commission

1,754

3.5

Breakdown of Shareholders

Financial Institutions

27.1%

Japanese Companies

32.6%

Foreign Companies and Individuals
Individuals and Others

18.0%

22.3%

34

Osaki Electric Co., Ltd. Annual report 2021

Investor Information

Management (As of June 25, 2021)

Corporate Data (As of March 31, 2021)

REPRESENTATIVE DIRECTORS

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

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

DIRECTORS

Date of Founding
January 26th, 1937

Senior Managing Executive Officer
Kazuo Nemoto

Paid-in CapitalManaging Executive Officer¥ 7,965 million (US$ 71 million)

Ryuichi Ueno
Directors
Seiji Takashima (Independent)
Nobuhiro Kasai (Independent)

Stock Exchange Listings
Tokyo Stock Exchange

CORPORATE AUDITORSStanding Auditor
Choichiro Hori
Auditors
Toshio Yamanaka
Shigehiko Yamamoto (Independent)
Kumiko Kitai (Independent)

Executive Officers
Satoshi Komazawa
Atsumi Hatakeyama
Takehiko Ota
Jun AbeHiroyuki Hatakeyama
Noriyuki Tokumoto
Nobuyuki Ono
Hiroshi Takahashi
Toshiaki Takada

Independent Public Accountants
Hara Audit Corporation
Tokyo, Japan
Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
Transfer Agency Department
1-1, Nikko cho, Fuchu-shi,
Tokyo, Japan
Phone：81-42-204-0303
Mailing address：
Shin-TOKYO Post Office post office box No.29
137-8081, JAPANMitsubishi UFJ Trust and Banking Corporation
Transfer Agency Department

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

35