ANNUAL REPORT

2022

Osaki Electric Co., Ltd. Annual Report 2022

Contents
03

Financial Highlights

04

Message from the Chairman and President

05

Management Policy

07

Business update
08
10
10
11
12

17

Business Performance
Overview of Consolidated Financial Position
Cash Flows
Business Environment and Responses to Business Challenges
Corporate GovernanceConsolidated Financial Statements
18

Consolidated Balance Sheets

20
21
22
24
25
38

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 Report42

Companies

43

Stock Information

44

Investor Information

2

Osaki Electric Co., Ltd. Annual Report 2022

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

U.S. dollars

2018

2019

2020

2021

2022

78,780 ¥82,089 ¥90,069 ¥76,255

Operating income

5,544

4,299

3,691

Profit attributable to owners of parent

2,666

1,806

Total assets

85,785

Total equity
Number of employees

2022

For the year:
Net sales¥¥

76,184$ 622,469

2,684

1,277

10,437

1,197

482

(658)

(5,378)98,314

97,962

90,98991,222745,340

57,92458,881

58,63758,88757,611

470,721

2,960

3,383

3,557

3,129

2,961

At year-end:

Yen

U.S. dollars

Per share of common stock:
Profit¥54.63 ¥

36.95 ¥

24.47 ¥

9.84¥

(13.42)$(0.10)Cash dividends

20.00

20.00

20.00

20.00

20.00

0.16

Equity958.80974.95956.44950.37936.607.65

Notes: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥122.39=U.S.$1
the approximate Tokyo foreign exchange market rate as of March 31, 2022

Business segments Smart meters & solutions in Japan: Smart meters, Instrument VCT, Energy solutions, Distribution panels
Smart meters & solutions overseas: Smart meters, Energy solutions
Production equipment: Sensor devices assemble equipment
Real estate: Real estate leasing

Net sales

Operating income(Millions of yen)

(Millions of yen)

Profit attributable toowners of parent

1,806

2,666

1,197

(658)

482
1,277

2022

2,684

76,184

2021

3,691

4,299

76,25582,08978,78090,0695,544(Millions of yen)

2018

2019

2020

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

3

Osaki Electric Co., Ltd. Annual Report 2022

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 accelerates global enterprise—an effort marked by bringing the global manufacturer of smart
meters EDMI into our fold in 2012. OSAKI’s business operation now spans over 100 countries across Japan,
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 OSAKI Group, arecommitted 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 abetter tomorrow.

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

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

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Osaki Electric Co., Ltd. Annual Report 2022

The forward-looking statements in this document are of matters best assumed by OSAKI (hereafter as “OSAKI” or “theCompany”) as of June 27, 2022.

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 toenergy. The Group strives to pursue advanced technologies for energy solutions, to create new values which willcontribute to a better society.

2. Medium- to Long-Term Management Strategies and Issues to Be Addressed
Based on the stringent results for the fiscal year ended March 2022, the Company will strive to improve profits byenhancing our business portfolio management in the short- to medium-term. Specifically, the Company will expand its
energy management business by utilizing our measurement technologies while maintaining a strong position of smart
meter business in Japan. Overseas, we are increasing the ratio of solutions business, which combines smart meters andhead-end systems, from a sales mix centered on smart meters in order to improve profitability. At the same time, shifting
to solutions business will mitigate the anticipated impact of component shortages.
In the mid- to long-term, we will contribute to the decarbonization of society by providing various energy solutions andservices in response to the global trend towards building a sustainable society.
Strategies based on management policies
ⅰ. Developing value-added smart meters and expanding energy solutions (Japan)
・Accelerate R&D and reinforce manufacturing framework for next-generation smart meters and explore added
value for new smart meters.
ⅱ.

Developing new products and services (Japan)
・Collaborate with various partners to accelerate technology development and reinforce marketing・Leverage management resources and reinforce framework to create and market new products and services
・Focus on solution business including one-stop services for decarbonization and GX or the green transformation,and contribute toward building a sustainable society.

ⅲ.

Expanding global business (outside Japan)
OSAKI Group will execute the following measures in the regions of focus including Oceania, Europe withparticular focus on UK, and emerging countries in Asia and the Middle East.
・Expand solution services for higher profitability and lower component shortage risk・Accelerate the next-generation hardware/software development
・Reinforce supply chain managementⅳ.

Building resilient group operations
・Build strong teams by training and allocation
・Strengthen a group-wide risk control
・Elevate financial soundness and allocate group resources
・Strengthen sustainability activities

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Osaki Electric Co., Ltd. Annual Report 2022

3. Mid-term Management Plan
(Millions of yen)
Fiscal Year ending
March 31, 2023
Forecast

Fiscal Year ending
March 31, 2024
Outlook

Fiscal Year ending
March 31, 2025
OutlookNet sales

80,00083,00085,000Operating income

1,000

2,800

4,000

Ordinary Income

1,100

2,900

4,100

Profit attributable toowners of parent

1,500

1,600

2,600

ROE

3.5%

3.5%

5.5%

Fiscal Year ending
March 31, 2027
Target

8.0% or more

4. Dividend policy
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.2, 2021

491

10.00

Annual general shareholders meeting resolutionof June 28, 2022

482

10.00

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Osaki Electric Co., Ltd. Annual Report 2022

Business update
08

Business Performance10

Overview of Consolidated Financial Position

10

Cash Flows11

Business Environment and Responses to Business
Challenges
Corporate Governance

12

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Osaki Electric Co., Ltd. Annual Report 2022

Business update

1. Business Performance (Fiscal year ended March 31,2022)(1) Highlight of Operating Results of This Fiscal Year・ Consolidated sales decreased by 0.1% year on year to ¥76.2 billion. Operating income declined by 52.4% to ¥1.28
Billion. Net loss attributable to owners of parent was ¥0.66 billion in contrast to ¥0.48 billion in profit in theprevious fiscal year.
・ In Japan, sales of smart meters and smart locks decreased compared to the previous fiscal year, where smart locks
for rental properties recorded good shipments. Profits decreased year on year, due to sales decrease as well as
lower profitability caused by a rise in raw material prices.
・ In the overseas, shipments to Oceania and UK increased compared to the previous fiscal year since many
restrictions caused by the spread of COVID-19 virus have been lifted. Sales for Iraq (Kurdistan Regional
Government), which pushed up the sales in the previous year, declined with its demand subsided. All in all, sales
and profits increased year on year.

Consolidated Financial Results(Millions of yen)
Fiscal Year ended Fiscal Year ended
March 31, 2021 March 31, 2022

YoY Change
AmountInitialForecasts%

76,25576,184(71)(0.1)%

Smart meters & solutions in Japan48,19346,006(2,186)(4.5)%

Smart meters & solutions overseas

27,30130,0682,766+10.1%

Production equipment

960

692

(268)

(27.9)%

Real estate

553

553

0

+0.1%

Adjustment(753)(1,137)(384)－

17,34222.7%
14,65719.2%

16,37521.5%
15,097
19.8%

(967)

(1,407)

Net sales

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

Changes from Initial
Forecasts
Amount%83,000(6,815)(8.2)%(52.4)%

3,500(2,222)(63.5)%(1.8)pt

4.2%(5.6)%(10.29)pt

440

+3.0%
＋0.6pt

2,684

1,277

Smart meters & solutions in Japan

3.5%
3,136

1.7%
1,225

(1,910)(60.9)%

Smart meters & solutions overseas

(467)

58

525

－

Production equipment

(264)

(282)

(17)

－

Real estate

270

271

0

+0.2%

Adjustment

9

4

(5)

(54.6)%

2,888

1,189

(1,698)(58.8)%

3,300(2,110)(64.0)%

Profit attributable to owners of parent

482

(658)

(1,140)－3,000(3,658)－Net income per share（yen）

9.84(13.42)(23.26)

－

ROE

1.0%

(1.4)%―(2.4)pt

Operating income
Ratio to sales

Ordinary income(2.5)pt

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Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Sales by Region (Excluding intercompany sales)(Millions of yen)
Fiscal Year ended
March 31, 2021

Fiscal Year ended
March 31, 2022

YoY Change
Amount%Japan

49,64147,048(2,592)(5.2)%

Overseas

26,614

29,135

2,520

+9.5%

Oceania

9,154

10,642

1,487+16.3%

Europe8,952

11,351

2,398+26.8%

Asia

4,803

6,069

1,265

+26.3%

Others

3,703

1,071

(2,631)(71.1)%

76,25576,184(71)(0.1)%¥106.76/USD¥109.90/USD

Total
Average exchange rate(2) Outlook for the Fiscal Year ending March 31, 2023
・Sales of smart meters & solutions in Japan are expected to increase due to a sales recovery in smart meter, whichwere negatively impacted from a worldwide shortage of electronic components, and an increase in sales of energy
management system and services, which were affected by the spread of COVID-19 virus. Profits are expected toincrease, although limited in amount. This is due to an anticipated rise in material costs, including non-iron metals,
despite an expected increase in sales.
・As for the smart meters & solutions overseas, Oceania is expected to show steady growth. However, overall sales are
expected to decrease mainly due to a decrease in shipments to U.K. from difficulty to procure electronic
components. Profits are expected to decline from sales decrease as well as an anticipated rise in material costs andshipping expenses.
・All in all, consolidated sales for the fiscal year ending March 31, 2023 are expected to increase by 5.0% to 80,000
million yen. Operating income and ordinary income are expected to decrease by 21.7% to 1,000 million yen and7.5% to 1,100 million yen respectively. Profit attributable to owners of parent includes extra gain from sale ofoverseas subsidiary as announced on March 30,2022, and expected to increase to 1,500 million yen from loss of
658 million yen recorded in the fiscal year ended March 31, 2022.
・The dividend plan for the fiscal year ending March 31, 2023 is 20 yen per share per annum.
Consolidated Forecast(Millions of yen)
Fiscal Year ended March Fiscal Year ending March
31, 2022 Actual
31, 2023 Forecast

YoY Change
Amount%Net sales

76,18480,000

3,815

+5.0%

Smart meters & solutions in Japan

46,00650,000

3,993

+8.7%

Smart meters & solutions overseas

30,06829,000(1,068)(3.6)%

Others

1,246

2,100

853

+68.5%

Adjustment(1,137)(1,100)37－

Operatingincome

1,277

1,000

(277)

(21.7)%

Smart meters & solutions in Japan

1,225

1,500

274

+22.4%

Smart meters & solutions overseas

58

(700)

(758)

－

Others

(11)

200

211

－

4

－

(4)

(100.0)%Ordinary income

1,189

1,100

(89)

(7.5)%

Profit attributable to owners of parent

(658)

1,500

2,158

－

Adjustment

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Osaki Electric Co., Ltd. Annual Report 2022

2. Overview of Consolidated Financial Position
Total assets at March 31, 2022 were 91,222 million yen, a 233 million yen increase from March 31, 2021. This was
mainly due to an increase in inventory by 450 million yen and construction in progress by 412 million yen, while
notes and accounts receivable decreased by 450 million yen.
Total liabilities were 33,610 million yen, a 1,509 million yen increase from March 31, 2021.This was mainly due toan increase in other current liabilities by 514 million yen, and notes and accounts payable – trade and electronicallyrecorded obligations – operating by 386 million yen.
Net assets were 57,611 million yen, a 1,276 million yen decrease from March 31, 2021. This was mainly due to adecrease in retained earnings by 1,648 million yen, while foreign currency translation adjustments increased by 451
million yen.
(Millions of yen)

As of March 31, 2021

As of March 31, 2022

YoY Change

Total assets

90,98991,222233

Total liabilities

32,101

33,6101,509

Total equity

58,88757,611(1,276)Equity ratio

51.2%

49.6%

(1.6)pt.

3. Cash Flows
Cash and cash equivalents at the beginning of the period were 15,335 million yen, a 680 million yen increase
from the beginning of the previous fiscal year ended March 31, 2021.
(Millions of yen)

Fiscal Year ended
March 31, 2021

Fiscal Year ended
March 31, 2022

YoY Change

Cash flows from operating activities

10,503

4,422(6,080)Cash flows from investing activities(1,187)(1,219)(31)

Cash flows from financing activities(6,939)(2,934)

4,005

Cash and cash equivalents at end of year

14,654

15,335680(1) Cash flows from operating activities
Net cash provided by operating activities for the year ended March 31, 2022 was 4,422 million yen. This was
mainly due to the recording of 1,114 million yen in income before income taxes and minority interests, 2,536
million yen in depreciation and amortization, 1,240 million yen in decrease in notes and accounts receivable –trade, and the decrease in inventories in the amount of 353 million yen which offset the decrease in cash fromincome taxes paid in the amount of 1,343 million yen.
(2) Cash flows from investing activities
Net cash used in investing activities for the year ended March 31, 2022 was 1,219 million yen. This was mainly
due to payments for property, plant and equipment in the amount of 2,444 million yen.
(3) Cash flows from financing activities
Net cash used in financing activities for the year ended March 31, 2022 was 2,934 million yen. This was mainly
due to a decrease in short-term and long-term loans payable overseas by 568 million yen, dividends paid to
non-controlling interest in the amount of 1,639 million yen, and payments for repurchase of its own stock in theamount of 406 million yen.
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Osaki Electric Co., Ltd. Annual Report 2022

4. Business Environment and Responses to Business Challenges(1) Important Accounting Policy
OSAKI Group consolidated financial statements are prepared based on the accounting principles generally
accepted in Japan. When preparing 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 may vary from these estimates due to uncertainties specific to estimates.
(2) Earnings Analysis for the Current Fiscal YearIn the fiscal year ended March 2022, sales and operating income in the smart meters & solutions in Japan andoverseas were below the initial forecasts due to the worldwide shortage of electronic components.
In Japan, sales for the energy management services and smart locks for rental properties were severely impacted
by the spread of COVID-19 Virus.
Furthermore, net income fell significantly below the initial forecasts due to a postponement of the sale ofoverseas consolidated subsidiaries, which was anticipated in the initial forecasts at the beginning of the year. The
extraordinary gain from the sale will be recorded in the first quarter of the fiscal year ending March, 2023.
As a result, consolidated net sales and profits are as below.

Fiscal Year ended
March 31, 2022

ActualChanges from
Initial PlanYoY Change
Amount%Amount%Net sales

76,184(71)(0.1)％(6,815)(8.2)％

Operatingincome

1,277(1,407)(52.4)％(2,222)(63.5)％

Ordinary income

1,189(1,698)(58.8)％(2,110)(64.0)％

Profit attributable to owners of parent(658)(1,140)―(3,658)―(3) Capital Sources and Capital Liquidity
The capital required for Group operating activities are mainly covered by cash inflows from operating activities.
At the same time, we also maintain liquidity by using bank to meet obligations when necessary.
Capital resources are invested in increasing added value of smart meters and solution services, to elevate
corporate value over the next few years.
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 for sustainable growth of the Group as well as to enhanceshareholder returns.

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Osaki Electric Co., Ltd. Annual Report 2022

5. Corporate Governance(1) Fundamental Approach to Corporate Governance
The OSAKI Group recognizes that the enhancement of corporate governance is essential in terms of achieving
management's goal of enhancing corporate value. We are committed to serving the interest of our stakeholders.
Moreover, the OSAKI Group will further improve management efficiency and transparency, and aim for fairmanagement practices.
(2) Overview of Corporate Governance Organization
OSAKI adopts a corporate auditor system. The Board of Auditors, which includes independent auditors, oversees
management activities of the group. 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.
The Company introduced an executive officer system on June 25, 2020. With the introduction of the system, theBoard 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, the appointed executive
officers execute their business operations with clear authorities and responsibilities. The Company aims toenhance maneuverability of the operations and further elevates corporate value.
Accordingly, members of the Board have reduced from 15 to 6, 2 of whom are independent Directors. The
introduction of an executive officer system to clarify supervisory and executive functions, and the resulting
reduction in the number of directors, is a system that enables independent directors to exercise their functions evenmore effectively. We believe that this will further strengthen the oversight function of the Board of Directors andcontribute to the enhancement of the corporate value of the Group as a whole.
In accordance with the “Statutes Partially Revising the Companies Law” (2014 Statute No. 90), the Company
executed agreements, based on Article 427, Section 1 with the non-executive directors and auditors that limit
liability for compensation of damages provided in Article 423, Section 1 of the Companies Law. Authorization ofsuch limited liability based on the agreements is restricted to good intentions and no serious negligence in theexecution of duties that caused the liability imposed on the director or auditor in subject, and the amount 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. Important matters
are discussed at the Management Council prior to the board meetings, in aim to deliver meaningful discussions
and clarify decision-making processes. 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 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, a monthly executive officer meeting is held toenhance operations and functionalities. As for group governance, a monthly group management meeting is held
between OSAKI Electric and ENEGATE Co., Ltd., and EDMI Limited.
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 2021, the Committee met eight times in total todiscuss an introduction and management of restrictive stock and performance-linked compensation system, in
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Osaki Electric Co., Ltd. Annual Report 2022

addition to nomination.
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 compensation systems for directors and executive officers 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 was established to oversee compliance with 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 requirements.
In regard to sustainability, the Sustainability Promotion Committee was established to systematically promote
the Group's response to sustainability, contribute to the sustainable development of a society and conserving theenvironment, and aims for sustainable corporate growth through the reduction of the Group's risks and the
expansion of profit opportunities. The Committee, which is chaired by the President and Representative
Director, promotes and evaluates the Group's sustainability initiatives, and the content of the committee'sdeliberations is reported to the Board of Directors as appropriate.

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Osaki Electric Co., Ltd. Annual Report 2022

Diagram of the Corporate Governance System

Generalmeetingof Shareholders
ReportingBoard ofAuditors
Internal Auditors

Nomination andRemuneration
Advisory
Committee

Auditing Board of Directors

Independent Auditors

Internal Directors
Independent
Directors

Consultation
Supervision

Auditors

President and COO
Compliance committee
ReportingAccounting
Auditor

Auditing

Sustainability Promotion

Management

Committee

Audit Office

Management
Meeting

Legal
Counselors

Executive Officers
Internal
Auditing
Corporate DivisionInternal
Auditing

Groupcompanies

1. Organization of Internal Control System
Based on the Companies Law and its enacted rules, we have established the following basic policy forstructuring our internal control system, and maintain the system accordingly to secure proper operational duties.
a) Systems 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 conducts internal audits of the Company and those subsidiaries with no internal
audit department in accordance to schedule, audits the appropriateness and efficiency of duties, and makes 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.
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Osaki Electric Co., Ltd. Annual Report 2022

* 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, Sustainability, Quality Control,
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. The company shallinstruct to all subsidiaries to induce comparable system and establish an organization that delivers theappropriate 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 without
its own internal audit office through an internal audit. The office reports the results periodically at board
meetings of the Company, where improvement measures will be deliberated and decided.
d) Systems 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 directors (not including independent
directors) weekly to conduct multi-faceted studies and discussions over management issues that affect thecorporate Osaki Group.
* Execution of daily duties at the Company and its subsidiaries shall be based in accordance with occupational
duty authority rules and internal approval process rules.
e) Reporting systems to the Company regarding executing duties by board members of subsidiaries of theCompany* 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.

15

Osaki Electric Co., Ltd. Annual Report 2022f) 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 system to corporate 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.
h) 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 2022

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

38

Independent Auditor’s Report42

Companies

43

Stock Information

44

Investor Information17

Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Balance Sheets
March 31, 2021, and 2022
Thousands of
U.S. dollars

Millions of yen
ASSETS

2021

Current assets:
Cash and cash equivalents (Note 3)

¥

2022

Deposits (Note 3)

12,502
4,722

Notes and accounts receivable - trade

17,887---

17,436

142,469

Merchandise and finished goods

6,220

6,031

49,283Work in process

2,175

3,165

25,864

Raw materials and supplies

7,262

6,911

56,470

Other current assets

2,770

3,234

26,431

Notes and accounts receivable - trade, and contract assets

¥

2022

11,8573,546$

96,883
28,977

Allowance for doubtful accounts

(450)

(530)

(4,336)

Total current assets

53,09051,653422,043

Non-current assets:
Property, plant and equipment
Buildings and structures

22,98323,253

189,991

Less-accumulated depreciation(13,998)(14,372)(117,434)

Total buildings and structures

8,985

8,880

72,556

Machinery, equipment and vehicles

14,576

15,344125,377

Less-accumulated depreciation(11,547)(12,346)(100,880)

3,028

2,998

24,497Land

12,483

12,830104,829

Leased assets

3,702

3,527

28,819Less-accumulated depreciation

Total machinery, equipment and vehicles(1,578)(1,681)(13,741)

Total leased assets

2,123

1,845

15,077

Construction in progress

113

526

4,302

Other fixed assets

7,090

7,303

59,675Less-accumulated depreciation(6,369)(6,613)(54,040)

Total other fixed assets
Net property, plant and equipment

720

689

5,635

27,45527,770226,898

191--

Intangible assets
Goodwill
Other intangible assets

988

868

7,092

1,180

868

7,092

Investment securities (Note 6)

5,067

5,229

42,724

Defined benefit asset

1,384

1,525

12,466

Deferred tax assets

1,293

1,372

11,215

Other assets

1,518

2,805

22,926

Total intangible assets
Investments and other assets

Allowance for doubtful receivables
Total investments and other assets
Total non-current assets
TOTAL

(1)

(3)

(27)

9,262

10,93089,30537,898¥90,98939,568¥91,222

323,296$745,340

See notes to consolidated financial statements

18

Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Balance Sheets
March 31, 2021, and 2022
Thousands of
U.S. dollars

Millions of yen
LIABILITIES AND EQUITYCurrent liabilities:
Notes and accounts payable - trade2021¥

Electronically recorded obligations - operating

2022

7,270
2,632

¥

2022

7,324
2,965

$

59,84524,228

Short-term loans payable (Note 5)

559

6,926

56,595

Accrued income taxes

722

502

4,108

Provision for bonuses

1,505

1,656

13,534

23

48

395

Provision for directors’ bonuses
Provision for product warranties
Other current liabilities
Total current liabilities

156

473

3,865

6,089

6,604

53,963

18,962

26,502

216,538

Non-current liabilities:
Long-term loans payable (Note 7)

6,210

-

-

Lease obligation

1,648

1,612

13,171

49

42

350

Provision for directors’ retirements benefits
Provision for repairs

14

21

171

Defined benefit liability

2,346

2,479

20,261

Deferred tax liabilities

2,119

2,154

17,600

Other non-current liabilities

751

798

6,525

Total non-current liabilities

13,1397,108

58,080Total liabilities

32,101

33,610274,619

7,965

7,965

65,084Equity:Shareholders’ equity
Common stock (Note 9)
Capital surplus

8,750

8,750

71,500Retained earnings

27,31925,670209,747

Treasury stock (Note 10)
Total shareholders’ equity

(140)

(487)

(3,980)43,89541,900342,352

Accumulated other comprehensive income
Unrealized gains on investment securities

988

1,119

9,148

Foreign currency translation adjustments

1,216

1,667

13,625Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights (Note 11)
Non-controlling interests
Total equity
TOTAL
See notes to consolidated financial statements

¥

514

549

4,485

2,718

3,336

27,259509
11,764509
11,865

4,163
96,94558,88790,98957,611
91,222

470,721$ 745,340
,140

¥

19

Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Statements of Income
Years ended March 31, 2021, and 2022
Thousands of
U.S. dollars

Millions of yen
2021

Net sales
Cost of sales
Gross profit¥

76,25558,913

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

¥

2022
¥

2022

76,18459,808$622,469
488,672

17,342

16,375

133,796

14,657

15,097

123,359

2,684

1,277

10,437

25
146

21
155

178
1,273

459

206

1,684

132

144

1,182

764

528

4,319

384

288

2,354

55

191

1,566

120

136

1,117

560

616

5,038

2,888

1,189

9,717

357

74

610

357

74

610

2,530

1,114

9,107

1,174

952

7,782

(81)

61

500

1,093

1,013

8,282

1,437

100

824

955

759

6,203

(658)

$ (5,378)

482¥

See notes to consolidated financial statements

20

Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Statements of Comprehensive Income
Years ended March 31, 2021, and 2022
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
Comprehensive income
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

2021

2022

2022

¥ 1,437

¥ 100

$ 824

400
(490)
330
240
¥ 1,678
723
955

131
451
34
617
¥ 718
(40)
759

1,071
3,688
285
5,045
$ 5,870
(333)
6,203

21

Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Statements of Changes in Equity
Years ended March 31, 2021, and 2022
Millions of yen
Shareholders’ equity
Common stock

Balance at March 31, 2020

¥

7,965

Retainedearnings

Capital surplus
¥

8,750

¥

Treasury stock

27,818¥(223)

Total shareholders’equity¥44,312

Cash dividends paid

(979)

(979)

Profit attributable to owners of parent

482

482

Disposal of treasury stock (Note 10)

(1)

82

80

27,319(140)

43,895

Net changes of items other than shareholders’ equity

Balance at March 31, 2021

7,965

8,750

Cumulative effects of changes in accounting policies(7)

Restated balance

7,965

8,750

(7)

27,312(140)

43,888Cash dividends paid

(981)

(979)

Loss attributable to owners of parent

(658)

482

Purchase of treasury stock
Disposal of treasury stock (Note 10)

(1)

(406)

(406)

59

58

Net changes of items other than shareholders’ equity

Balance at March 31, 2022

¥

7,965

¥

8,750

¥

25,670

¥

(487)

¥

41,900Thousands of U.S. dollars
Shareholders’ equity

Balance at March 31, 2021

Common stock

Capital surplus

Retainedearnings$$$

65,08471,500

Cumulative effects of changes in accounting policies

Treasury stock

223,218$(1,151)

Total shareholders’equity$(57)

Restated balance

65,08471,500358,651(57)

223,160(1,151)

358,593

Cash dividends paid

(8,022)(8,022)

Loss attributable to owners of parent(5,378)(5,378)Purchase of treasury stock (Note 10)
Disposal of treasury stock (Note 10)(11)(3,317)(3,317)489

477

Net changes of items other than shareholders’ equity

Balance at March 31, 2022$

65,084$71,500$209,747$(3,980)$342,352

22

Osaki Electric Co., Ltd. Annual Report 2022
Millions of yen
Accumulated other comprehensive income
Unrealized gains on
investment
securities

Balance at March 31, 2020¥

587

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

1,706

¥

183

¥

Stock
Acquisitionrights

2,477

¥

544

Non-controll
ing interests¥ 11,303

Total
equity¥ 58,637

Cash dividends paid

(979)

Profit attributable to owners of parent

482

Disposal of treasury stock (Note 10)80

Net changes of items other than shareholders’ equity

400

(490)

330

240

(34)

460

666

Balance at March 31, 2021

988

1,216

514

2,718

509

11,76458,887

Cumulative effects of changes in accounting policies(7)

Restated balance

988

1,216

514

2,718

509

11,76458,880Cash dividends paid

(981)

Loss attributable to owners of parent(658)

Purchase of treasury stock (Note 10)(406)

Disposal of treasury stock (Note 10)58

Net changes of items other than shareholders’ equity

Balance at March 31, 2022

131
¥

1,119

451
¥

1,667

34
¥

549

617
¥

3,336

-

101

718

509

¥ 11,865¥ 57,611

Stock
AcquisitionrightsNon-controll
ing interests

Total
equity$ 96,119$ 481,148¥

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

Balance at March 31, 2021

$ 8,076

Foreign
Remeasurements Total accumulated
Currencyof defined other comprehensive
Translation
benefit plansincomeadjustments$ 9,937$ 4,200$ 22,214$

4,163

Cumulative effects of changes in accounting policies
Restated balance

(57)
8,076

9,937

4,200

22,214

4,163

96,119481,090

Cash dividends paid

(8,022)

Loss attributable to owners of parent(5,378)Purchase of treasury stock (Note 10)(3,317)

Disposal of treasury stock (Note 10)477

Net changes of items other than shareholders’ equity

Balance at March 31, 2022

1,071

3,688

285

5,045

$ 9,148$ 13,625$ 4,485$ 27,259

$

-

826

5,871

4,163

$ 96,945$ 470,721

23

Osaki Electric Co., Ltd. Annual Report 2022

Consolidated Statements of Cash Flows
Years ended March 31, 2021, and 2022
Thousands of
U.S. dollars

Millions of yen
2021
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

¥

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

¥

2022

2022

1,114
2,536
74
203
31
115
22
315
(6)
133
(90)
7
(177)
288
55
1,240
353
36
(379)
179
(288)
(1,343)
4,422$ 9,107
20,721
610
1,660
254
941
183
2,579
(49)
1,088
(741)
57
(1,452)
2,354
455
10,137
2,889
298(3,097)1,467(2,354)(10,976)
36,135

Cash 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 sales of membership
Payments for long-term deposits
Proceeds from refund of long-term deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:(1,332)
10
(350)
8
500
(24)
(1,187)(2,444)7(256)
0
2(1,000)2,500(28)(1,219)(19,971)63(2,097)0
20(8,170)20,426(231)(9,961)

Increase (decrease) in short-term loans payable, net
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)(5,181)
(26)
(258)
(979)
(494)
0
(6,939)(87)
2,288
12,366

(558)
(10)
(319)
(981)
(658)
(406)
0
(2,934)411
680
14,654(4,565)(82)(2,611)(8,020)(5,377)(3,317)
0(23,975)
3,362
5,560
119,738

15,335$ 125,299¥

14,654¥

See notes to consolidated financial statements

24

Osaki Electric Co., Ltd. Annual Report 2022

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 in Japan and prepare financial statements accordingly. Foreign subsidiaries maintain financial accounting books according toaccounting principles generally accepted in their country of presence and prepare financial statements accordingly.
(1) Important Matters Forming the Basis for Preparation of Consolidated Financial Statements
Scope of consolidation
The consolidated Financial Statement as of March 31, 2021 include the accounts of the Company and its 33 subsidiaries. Principal Consolidated
Subsidiaries are described in the Companies section. The list increased by one company due to the establishment of a new overseas subsidiaryand decreased by two companies due to the liquidation of an overseas subsidiaries.
Disclosure about the application of the equity method
The Company does not account for Tohoku Electric Meter Industry Co., Inc. as an associate even though 20 percent of the voting right is owned
because it is clear that the Company will not be able to exercise significant influence over the determination of the company's financial andoperating or business policies based on an agreement with the parent company of the company.
Accounting periods of consolidated subsidiaries
Of the consolidated subsidiaries, the fiscal year-end date of 24 consolidated subsidiaries including Osaki United International Pte. Ltd. is
December 31. In preparing the consolidated financial statements, the Company uses the financial statements as of that date, and makes necessary
adjustments for significant transactions which occurred between their fiscal year-end date and the consolidated fiscal year-end date.
(2) 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.
(3) 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.
(4) 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.
(5) Marketable Securities
Securities other than shares that do not have a market value are calculated using the fair value method based on the quoted market value on thelast day of the fiscal period (with the entire amount of valuation differences inserted directly into net assets, and the cost of sales calculated using
the moving average method). Shares that do not have a market value are calculated using the moving average cost method.
(6) Inventories
Finished products and work in process are stated mainly at acquisition cost using 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 arestated at acquisition cost using the 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 using the moving average method (asset values on the balance sheet arecomputed by the book value write-down method based on decreased profitability).
(7) Derivative
Financial derivative transactions are recognized using the market value method.

25

Osaki Electric Co., Ltd. Annual Report 2022
(8) 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 using the declining balance method for the Company and Japanese subsidiaries and thestraight-line method for foreign subsidiaries.
(9) Intangible Assets
Intangible assets (excluding lease assets) are amortized using the straight-line method. Software used by the Company internally is amortizedover the usable period (5 years).
(10) Leases Assets
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 is the straight-line method that sets the lease
period as the service life and the residual value as zero. The financial statements of overseas consolidated subsidiaries are prepared in accordancewith 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 balance sheets, andthe straight-line method is used for depreciation of the capitalized right-of-use assets.
(11) 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.
(12) Provision for Bonuses
A provision is recorded on the basis of expected disbursement amounts in order to prepare for payment of employee bonuses.
(13) Provision for Directors’ Bonuses
A provision is recorded on the basis of expected disbursement amounts in order to prepare for payment of director bonuses.
(14) Provision for Product Warranties
A provision is recorded on the basis of past disbursement experience in order to prepare for expenses disbursed in the after-market servicing ofproducts.
(15) Provision for Directors’ Retirements Benefits
The disbursement required is recorded in accordance with internal rules in order to prepare for retirement benefits disbursed to directors.
(16) Provision for Repairs
A provision is recorded to this consolidated fiscal year in order to prepare for expenses of the scheduled maintenance for owned facilities.
(17) Accounting Method of Retirement Benefits
Method of allocating projected retirement benefit obligation to periods
In calculating retirement benefit obligations, the benefit formula basis is used to attribute expected retirement benefits to the periods up to the endof this consolidated fiscal year.
Method of recording actuarial gains and losses
Actuarial gains and losses are calculated by the straight-line method based on the number of years (10 years) within the average remaining
service period of employees at the time of occurrence for each consolidated fiscal year from the next consolidated fiscal year.
Actuarial gains and losses of certain consolidated subsidiaries are fully expensed when it occurs.
Adoption of simplified accounting method by small enterprises, etc.
Certain consolidated subsidiaries apply a simplified accounting method to calculate net defined benefit liability and retirement benefit expenses,
which uses the retirement benefit obligation as the amount that would be required if all employees voluntarily terminated their employment at
the end of the fiscal year.

26

Osaki Electric Co., Ltd. Annual Report 2022
(18) The standards for recognition of significant revenues and expenses
OSAKI Group recognizes revenue based on the following five-step approach:
Step 1: Identify Contracts with Customers
Step 2: Identify Performance Obligations in the Contracts
Step 3: Calculate the Transaction Price
Step 4: Allocate the Transaction Price to Performance Obligations in the Contract
Step 5: Recognize Revenue when the Company Satisfies Performance Obligations
The Company manufactures and sells watt-hour meters and distribution panels etc., and for such product sales, it is determined that theperformance obligation will be satisfied because the customer obtains control over the product at the time of delivery of the product, and we
recognize the revenue.
However, for domestic sales of goods or products, revenue is recognized at the time of shipment except for some, because the period from thetime of shipment to the time when control of the goods or products is transferred to the customer is normal.
For construction contracts, revenue is recognized over a period of time as performance obligations are satisfied.
The measurement of progress related to the satisfaction of performance obligations are based on the percentage of construction costs incurred by
the end of each reporting period to total expected construction costs. If the degree of progress cannot be reasonably estimated, revenue isrecognized on a cost recovery method only for the portion of costs incurred that is expected to be recovered.
The Company applies alternative treatment for construction contracts with very short construction period and recognizes revenue when the
Company fully satisfies its performance obligations rather than recognizing revenue over a period of time.
Revenue is recognized for the consideration promised in contracts with customers, net of discounts, rebates and returns.
In addition, for buy-sell transactions, the Company does not recognize revenue on the transfer of the goods to be paid, and does not recognize
any extinguishment of such assets because the Company is substantially obligation to repurchase the goods to be paid, and it is recognized as
inventory.
(19) Translation standard for the significant monetary assets and liabilities denominated in foreign currencies to Japanese yen
Foreign currency-denominated monetary receivables and payables are translated into yen at the spot exchange rate on the consolidated closing
date, and the translation difference is treated as profit or loss.
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the rates of exchange in effect at the balance sheet date,
and the differences arising from translation is recognized as gains and losses. Assets and liabilities of overseas subsidiaries are translated into
Japanese yen at the spot exchange rate on the balance sheet date of the relevant subsidiaries and others. Revenues and expenses are translated
into Japanese yen at the average exchange rate for the period. Translation differences are included in foreign currency translation adjustments andnon-controlling interests in net assets.
(20) Significant hedge accounting method
Hedge accounting method
For interest rate swaps, if the requirements for special treatment are met, it is adopted. When an interest rate swaps meet certain conditions, thenet interest amount to be paid or received under the contract is recognized as special treatment.
Hedge instruments and hedged items(Hedge instruments) Interest rate swaps(Hedge items) Interest on loan payables
Hedging policy
The Group Companies enter into interest rate swaps to hedge interest rate risk of loan payment and identify hedge items on acontract-by-contract basis.
Hedge effectiveness assessment method
Assessment of effectiveness is omitted if the criteria for special treatment of interest rate swaps are met.
(21) The amortization method and amortization period of goodwill
Goodwill is amortized on a straight-line basis over 10 years. However, if the amount is immaterial, it is fully amortized during the fiscal year inwhich this occurs.
(22) Scope of funds in consolidated statements of cash flows
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments that are readily convertible to cash and subject
to an insignificant risk of change in value with original maturities of three months or less from the date of acquisition.

27

Osaki Electric Co., Ltd. Annual Report 2022
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 ¥122.39 = U.S.$1, the approximate current rate on Tokyo Foreign Exchange Market at March 31, 2022,
has been used for the purpose of presentation of the U.S. dollar amounts in the accompanying consolidated financial statements.
3. Significant Accounting Estimates①Provision for product warranties(Amounts Recorded in the Consolidated Financial Statements)

Millions of yen
As of March, 31
Provision for product warranties

¥

2021
156

¥

2022
473

Thousands of
U.S. dollars
2022
$
3,865

(Information on the description of significant accounting estimates related to the identified items)
The Group Companies provide an allowance for warranty costs in an amount that is expected to be incurred in the future to cover warranty costs
related to products and services sold.
The amount of compensation is calculated based on reasonably expected amounts based on the quantity of the product and defect handling costetc.
(Impact on the consolidated financial statements for the next consolidated fiscal year)
The estimates are uncertain and may differ from actual amounts incurred due to changes in circumstances and may require additional recording
or reversal in the next consolidated fiscal year.
②Impairment of Fixed Assets(Amounts Recorded in the Consolidated Financial Statements)

Smart meters & solutions in Japan

Millions of yen

As of March, 31
Property, plant and equipment
Intangible assets
Impairment loss

2021¥

Production equipment

2022¥

17,856864
74

Millions of yen

As of March, 31
Property, plant and equipment
Intangible assets
Impairment loss

17,095
987
325

¥

2021
1,302
31

¥

2022
1,284
2
-

Thousands of
U.S. dollars
2022$ 145,897
7,060
610

Thousands of
U.S. dollars
2022$
10,494
22-(Information of the descriptions for significant accounting estimates related to the identified items)
Impairment losses are recognized for product groups that are identified as having indications of impairment and whose total undiscounted future
cash flows are less than the book value at the end of the this consolidated fiscal year.
If an impairment loss is required to be recognized, the book value is reduced to the recoverable amount, and the amount of the reduction isrecorded as an impairment loss.
The recoverable amount is measured based on the value in use or the net realizable value.
Value in use is estimated by considering rational asset use plans based on the annual plan and the medium-term management plan in the current
use of the asset.
The net realizable value is calculated based on the real estate appraisal value or equivalent method for real estate, and for other fixed assets
such as machinery and equipment, it is calculated based on the memorandum value in consideration of transaction cases.
(Impact on the consolidated financial statements for the next fiscal year)
The estimates may be affected due to uncertain future fluctuations in economic conditions, and if the actual amount of cash flows differs fromthe estimates, it could have a significant impact to the consolidated financial statements for the next consolidated fiscal year.

28

Osaki Electric Co., Ltd. Annual Report 2022
4. 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¥

2021
12,502
4,722
17,225(2,570)14,654¥2022
11,857
3,546
15,404(68)
15,335

Thousands of
U.S. dollars
2022$
96,883
28,977
125,860(561)
125,299

5. Lease
Sublease transaction, and the amount before deduction of interest equivalent amount recorded in the consolidated balance sheet

Thousands of
U.S. dollars
2022

Millions of yen
As of March, 31
Investments in leases
Current assets
Investments and other assets

2021
¥

2022

299
592

¥

387
882

Lease obligation
Current liabilities
Non-current liabilities

2021
¥

2022

299
588

¥

3,163
7,212

Thousands of
U.S. dollars
2022

Millions of yen
As of March, 31

$

386
881

$

3,153
7,199

The amounts of future lease payments under non-cancelable operating leases at March 31, 2022 and 2021 were as follows:

Millions of yen
As of March, 31
Due within one year
Due after one year
Total

2021
¥

2022
37
15
52

¥

¥

2
0
3

¥

Thousands of
U.S. dollars
2022
$
22
4
$
26

6. 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

2021
¥

1,985
3,303
1,318

2022
¥

1,985
3,467
1,481

Millions of yen
As of March, 31
Investments in non-public companies and others

¥

2021
1,763

¥

2022
1,761

Thousands of
U.S. dollars
2022$

16,22428,33012,105

Thousands of
U.S. dollars
2022$
14,39329

Osaki Electric Co., Ltd. Annual Report 2022
7. 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

2021
¥

549
9
559

2022
¥

25
6,901
6,926

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

2021
¥

6,210
9
9
6,210

2022
¥

6,901
6,901
-

Thousands of
U.S. dollars
2022
$

208
56,38656,595

Thousands of
U.S. dollars
2022$

56,38656,386-

8. Accrued Retirement Benefits

General outline of retirement benefit plans
The Company and certain domestic consolidated subsidiaries have defined benefit corporate pension plans and retirement lump-sum payment
plans as defined benefit plans. In addition, we and certain of our domestic consolidated subsidiaries participate in multi-employer corporate
pension fund plans. The plans are accounted for in the same manner as the defined contribution plans because the amount of plan assets
corresponding to the Company's contributions cannot be reasonably calculated.
The retirement lump-sum payment plans of certain consolidated subsidiaries calculate net defined benefit liability and retirement benefit
expenses using the simplified method.
In addition, certain domestic and overseas consolidated subsidiaries have defined contribution plans, and some domestic consolidated
subsidiaries participate in the smaller enterprise retirement allowance mutual aid.
Defined benefit plan except plans applying the simplified method(a)Movements in retirement benefit obligations:

Millions of yen
As of March, 31
Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
OthersBalance at end of year

¥

¥

2021
4,847
342
18
19
(266)
(3)
4,958

¥

¥

2022
4,958
340
17
(36)
(261)
5
5,023

Thousands of
U.S. dollars
2022$
40,510
2,782
145
(295)
(2,138)42$41,046(b)Movements in plan assets:

Millions of yen
As of March, 31
Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
OthersBalance at end of year

¥

¥

2021
3,620
14
547
138
(133)
4,186

¥

¥

2022
4,186
16
132
136
(139)
4,333

Thousands of
U.S. dollars
2022$
34,209
136
1,079
1,115
(1,136)$35,40430

Osaki Electric Co., Ltd. Annual Report 2022(c)Reconciliation from retirement benefit obligations and plan assets to net defined benefit liabilities (assets) in the consolidated balance sheet:

Millions of yen
As of March, 31
Funded defined benefit obligations
Plan assets
Unfunded defined benefit obligations
Net of liabilities and assets of consolidated balance sheet

¥

¥

2021
2,802
(4,186)(1,384)
2,155
771

¥

¥

2022
2,807
(4,333)(1,525)
2,216
690

Millions of yen
As of March, 31
Net defined benefit liabilities
Net defined benefit assets
Net of liabilities and assets of consolidated balance sheet

¥
¥

2021
2,155
(1,384)
771

¥
¥

2022
2,216
(1,525)
690

Thousands of
U.S. dollars
2022$
22,937(35,404)(12,466)
18,108$
5,641
Thousands of
U.S. dollars
2022$
18,108(12,466)$
5,641(d)Breakdown of retirement benefit cost:

Millions of yen
As of March, 31
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Total

¥

¥

2021
342
18
(14)
(51)
294

¥

¥

2022
340
17
(16)
(117)
223

Thousands of
U.S. dollars
2022
$
2,782
145
(136)
(963)
$
1,827

(e) Breakdown of remeasurements of defined benefit plans (before tax effect):

Millions of yen
As of March, 31
Actuarial gains and losses
Total

¥
¥

2021
(476)
(476)

¥
¥

2022
(50)
(50)

Thousands of
U.S. dollars
2022
$
(411)
$
(411)

(f) Breakdown of accumulated remeasurements of defined benefit plans (before tax effect):

Millions of yen
As of March, 31
Unrecognized actuarial gains and losses
Total

¥
¥

2021
(740)
(740)

¥
¥

2022
(791)
(791)

Thousands of
U.S. dollars
2022$(6,465)$(6,465)(g) Allocation of plan assets as a percentage of total plan assets:①Plan assets comprise

Equity securities
Debt securities
General account
Others
Total

2021
39%
37%
23%
1%
100%

2022
39%
37%
22%
2%
100%

②Long-term expected rate of return
In determining the long-term expected rate of return, the Company takes into consideration present and expected asset allocation and present andexpected long-term rate of return arising from various plan assets.

31

Osaki Electric Co., Ltd. Annual Report 2022(h) Actuarial assumption:

2021
0.4%
0.4%

Discount rate
Expected rate of return on plan assets

2022
0.4%
0.4%

Defined benefit plan applying the simplified method(a) Movements in net defined benefit liabilities for plans applying the simplified method:

Millions of yen
As of March, 31
Balance at beginning of year
Retirement benefit cost
Payment of benefits
Balance at end of year

¥

¥

2021
172
17
190

¥

¥

2022
190
76
(3)
263

Thousands of
U.S. dollars
2022
$
1,557
622
(27)
$
2,153

(b)Reconciliation from retirement benefit obligations and plan assets to net defined benefit liabilities (assets) in the consolidated balance sheet:

Millions of yen
As of March, 31
Funded defined benefit obligations
Plan assets
Unfunded defined benefit obligations
Net of liabilities and assets of consolidated balance sheet

2021
¥

¥

2022

190
190

¥

263
263

¥

Millions of yen
As of March, 31
Net defined benefit liabilities
Net of liabilities and assets of consolidated balance sheet

¥
¥

2021
190
190

¥
¥

2022
263
263

Thousands of
U.S. dollars
2022
$

$

2,153
2,153

Thousands of
U.S. dollars
2022
$
2,153
$
2,153

(c) Retirement benefit expenses are calculated using simplified accounting method. The amount recorded in the previous consolidated fiscal year
was 17 million Japanese yen and this consolidated fiscal year was 76 million Japanese yen ($622 thousand).
Defined Contribution Plan
The amounts required to be contributed to the defined contribution plan are 426 million Japanese yen and 446 million Japanese yen ($3,647
thousand) for the years ended March 31, 2021 and 2022, respectively.

9. Common Stock
Changes in common stock for the fiscal years ended March 31, 2021, and 2022, 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

2021

2022

100,000,000

100,000,000

49,267,180
49,267,180

49,267,180
49,267,180

32

Osaki Electric Co., Ltd. Annual Report 2022
10. Treasury Stock
Changes in treasury stock as of March 31, 2021, and 2022, are as follows.

Ordinary shares
Beginning of the year
Changes during the year
Purchase of shares less than one unit and acquisition oftreasury shares by resolution of the Board of Directors
Disposal by exercising stock acquisition rights
Grant of transfer-restricted stock compensation
End of the year

2021

2022

346,162

218,762-

842,386(127,400)
218,762(92,901)
968,247

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

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

¥

2021
509

¥

2022
509

Thousands of
U.S. dollars
2022
$
4,163

12. Selling, general and administrative expenses
Major components of selling, general and administrative expenses comprise the following:

4,643

Thousands of
U.S. dollars
2022$
37,943

745

895

7,315

20

62

512

Retirement benefit expenses

214

243

1,991

Provision for directors’ retirements benefits

15

8

65

Provision for repairs

6

6

54

Millions of yen
As of March, 31
Employee salaries and bonuses
Provision for bonuses
Provision for directors’ bonuses

2021¥

Allowance for doubtful accounts

Research and development expenses

2022

4,557

¥

-2

44

364

2,900

3,043

24,8702022
3,043

Thousands of
U.S. dollars
2022$
24,87013. Research and Development Expenses
Research and development expenses comprise the following:

Millions of yen
As of March, 31
Selling, general and administrative expenses

¥

2021
2,900

¥

33

Osaki Electric Co., Ltd. Annual Report 2022
14. Income taxes
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities are as follows:

Thousands of
U.S. dollars
2022

Millions of yen
2021
Deferred tax assets:
Loss carried forward*

¥

2022
¥

1,396

$

2,096

17,131

Defined benefit liability

716

756

6,184

Provision for bonuses

377

390

3,188

Accrued expenses

341

328

2,680

Impairment losses

303

251

2,052

Inventories

227

179

1,466

Long-term accounts payable

157

162

1,323

Stock acquisition rights

156

156

1,274

Investment securities

152

152

1,242

Provision for product warranties

46

143

1,171

Membership

105

104

850

Others

586

642

5,245

Subtotal

4,567

5,362

43,812

Valuation allowance on tax losses carried forward*(1,396)(2,037)(16,644)

Valuation allowance on total deductible temporary differences(1,505)(1,554)(12,697)

Subtotal(2,902)(3,591)(29,342)

Total deferred tax assets

1,665

1,771

14,470

Deferred tax liabilities:
Land valuation margin(1,608)(1,608)(13,142)

Defined benefit asset

(424)

(467)

(3,817)

Unrealized gains on investment securities

(329)

(361)

(2,957)

Others

(129)

(114)

(937)

(2,491)

Total deferred tax liabilities¥

Net deferred tax liabilities(2,552)¥(825)(20,854)$(781)(6,384)*Tax losses carried forward and associated deferred tax assets by expiration period:
Millions of yen
2021
Due inOne Yearor Less

Valuation allowance

68
(68)

¥ 236
(236)

Deferred tax assets--

Tax losses carried forward*¥

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

¥

¥

115
(115)
-

Due after
Four Years
throughFive Years

Due after
Five Years
Total

80
(80)

¥ 136
(136)

-

-

¥

757
(757)

¥ 1,396(1,396)--*Tax losses carried forward are multiplied by the normal effective statutory tax rate.

34

Osaki Electric Co., Ltd. Annual Report 2022
Millions of yen
2022
Due inOne Yearor Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years
Total

Valuation allowance

¥ 230
(230)

¥ 129
(129)

¥ 117
(117)

¥ 150
(150)

¥ 69
(69)

Deferred tax assets

-

-

-

-

-

Tax losses carried forward*¥ 1,399(1,339)59¥ 2,096(2,037)59*Tax losses carried forward are multiplied by the normal effective statutory tax rate.

Thousands of U.S. Dollars
2022
Due inOne Yearor Less

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years
Total$ 1,880$ 1,054$ 961$ 1,229$ 571$ 11,433$ 17,131

Valuation allowance(1,880)(1,054)(961)(1,229)(571)(10,947)(16,644)

Deferred tax assets

-

-

-

-

-

486

486

Tax losses carried forward**Tax losses carried forward are multiplied by the normal effective statutory tax rate.

35

Osaki Electric Co., Ltd. Annual Report 2022
15. Segment Information
The business of the Company and its consolidated subsidiaries is divided into the following four categories.
Smart meters & solutions in Japan:
Smart meters, Energy solutions, Instrument VCT, Distribution panels
Smart meters & solutions overseas:
Smart meters, Energy solutions
Production equipment:
Sensor devices assemble equipment
Real estate: Real estate leasing

Millions of yen
2021
Reporting Segments

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

Smart meters &solutions in Japan

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

Production
equipment

Real estate

¥

¥

Total

960
0
960
(264)

448
105
553
270

¥ 76,255
753
77,0092,675

Adjustment

Consolidated¥¥ 76,255
76,255
2,684

(753)
(753)
9

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 assetsof 325 million yen and 31 million yen are respectively recognized and booked as an extraordinary loss.

Millions of yen
2022
Reporting Segments

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

Smart meters &solutions in Japan

Smart meters& solutions
overseas¥ 45,983
23
46,006
1,225¥ 29,095
972
30,06858

Production
equipment

Real estate

¥

¥

657
35
692
(282)

448
105
553
271

Total

Adjustment

Consolidated¥ 76,184
1,137
77,321
1,272¥(1,137)(1,137)4¥ 76,184
76,184
1,277

The segment income is adjusted by intersegment transaction eliminations.
For the Smart meters & Solutions in Japan Business, an impairment loss of fixed assets of 74 million yen are recognized andbooked as an extraordinary loss.

Thousands of U.S. dollars
2022
Reporting Segments

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

Smart meters &solutions in Japan

Smart meters& solutions
overseas

Production
equipment

Real estate$ 375,710
193
375,904
10,014$ 237,725
7,949
245,675476$ 5,369288
5,658(2,308)$ 3,663
862
4,525
2,218

Total

$ 622,469
9,294
631,763
10,400Adjustment

Consolidated$$ 622,469
622,469
10,437(9,294)(9,294)36

36

Osaki Electric Co., Ltd. Annual Report 2022
16. Significant Subsequent Events
Transfer of shares and tangible assets in a Consolidated Subsidiary
The Company resolved at the meeting of the Board of Directors held on May 11, 2021, that its subsidiary EDMI Limited totransfer all shares in Quantum Automation Pte Ltd, a wholly owned subsidiary of EDMI, to Totech Corporation.
The transfer of all shares of Quantum Automation Pte Ltd. was complete on March 30, 2022, along with a transfer of all realestate property including the headquarters used by Quantum Automation.
1.Outline of the transfer(1) Name of the transferee
Totech Corporation(2) Date of transfer
March 30, 2022
(3) Name of parties involved in the event, business and relationships
A) Name: Quantum Automation Pte.
B) Business outline: Development, integration and maintenance of building automation systems
C) Business relationships: not applicable(4) Number of shares transferred, amount of sales by transfer, gain or loss on transfer, share ratio after the transfer
A) Number of shares transferred: 2,000,000 sharesB) Amount of sales by transfer: U.S. dollars equivalent to 4,000 million yen
C) Gain or loss on transfer: To be recorded as extraordinary gain from sale of a subsidiary in the amount of 1.73 billion yen in thefirst quarter ending June 30,2022
D) Share ratio after the transfer: -%2. Transfer of tangible assets(1) Location and contents of tangible assets
A) Location: 9 Senoko Drive Singapore 758197
B) Contents of tangible assets: real estate property(2) Gain or loss on transfer
To be recorded as extraordinary gain from sale of tangible assets in the amount of 0.28 billion yen in the first quarter ending June30, 2022(3)Outline of the transfereeA) Name: Quantum Automation Pte.
B) Business outline: Development, integration and maintenance of building automation systems
C) Business relationships: not applicable(4) Date of transfer:
March 23, 2022

37

Osaki Electric Co., Ltd. Annual Report 2022

Independent Auditor’s Report

RSM Seiwa
Syosankan 4F
1-3-2, Iidabashi, Chiyoda-ku
Tokyo 102-0072, JAPANTo Board of Directors ofOsaki Electric Co., Ltd.

OpinionWe have audited the consolidated financial statements of Osaki Electric Co., Ltd and its subsidiaries (the Group), which
comprise the consolidated balance sheet as at March 31, 2022, and the consolidated statement of income, consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at March 31, 2022, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with accounting principles generally accepted in Japan (JGAAP).

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan (JGAAS). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Convenience Translation
Our audit also included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 2 to the consolidated financial statements. Such U.S. dollar
amounts are presented solely for the convenience.

38

Osaki Electric Co., Ltd. Annual Report 2022

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Estimate of provision for product warranties
Details of Key Audit Matters and Reasons for
Determination
As described in the note 3 to the consolidated financial
statements (significant accounting estimates), the Company
recorded a provision for product warranties of 473 million
Japanese yen mainly to prepare for product defects inconnection with products sold.
The Company estimated the future costs of repairs,
refurbishment and replacements of products sold resulting
from defects based on currently available information andrecorded them as provision for product warranties.
However, the contents of the provision for productwarranties are highly specific and has a significant impact
due to the progress of negotiations with customers. In
addition, estimates are highly uncertain because some of the
product quantities, repairs, replacement costs andindemnification costs used in the estimates have nohistorical experience and are calculated using assumptions.
Accordingly, we chose provision for product warranties as
Key Audit Matters.

Audit Response
We performed the following audit procedures on key audit
matters.
(1) Internal control assessments
・Checked the cause analysis underlying the provision was
performed in a specialized department, and the sales
department performed an analysis-based estimate andobtained appropriate intra-company approvals.
・ Tested the existence and completeness of events subject
to provision for product warranties by reviewing of theminutes of the Board of Directors' meetings, the approval
documents and the quality report materials prepared by the
Quality Control Division.
(2) Assessment of reasonableness of estimated provision for
product warranties
・Checked and inquired about cost calculation materials,
external documents, negotiation materials with customers
and calculation basis in order to verify the validity of
estimates such as the quantities and costs, etc., for products
to be repaired or replaced.
・Understood the overview of product defects and status ofnegotiations with customers by inquiring the managers ofsales departments and reviewing related documents toconfirm the estimation method of provision for productwarranties and reasonableness of management’s
assumptions.

Other Matters
The consolidated financial statements of the Group for the year ended March 31, 2021, were audited by another auditor
who expressed an unmodified opinion on those statements on June 23, 2021.

Other Information
The other information comprises the information included in the Annual Report, but does not include the consolidated
financial statements and our auditor’s report thereon. Management is responsible for the preparation and presentation of theother information. Those charged with governance are responsible for overseeing the directors’ performance of their duties
with regard to the design, implementation and maintenance of the reporting process for the other information.
39

Osaki Electric Co., Ltd. Annual Report 2022

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordancewith JGAAP, 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, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the directors’ performance of their duties with regard to thedesign, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of 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 opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
JGAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with JGAAS, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
・Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
・Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
・Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. 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 opinion. Our conclusions are based on the audit evidence obtained up to the dateof 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 the disclosures,and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
40

Osaki Electric Co., Ltd. Annual Report 2022

・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, supervisionand performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance 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 thematter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.

Interest required to be disclosed by the Certified Public Accountants 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.

Etsuo Kakehi
Designated Engagement Partner
Certified Public Acountant
Kakuro Tsuda
Designated Engagement Partner
Certified Public Acountant
RSM Seiwa
Tokyo, Japan
July 22, 2022

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the Company and RSM
Seiwa.

41

Osaki Electric Co., Ltd. Annual Report 2022

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 estate42

Osaki Electric Co., Ltd. Annual Report 2022

Stock Information(As of March 31, 2022)

Common Stock
Authorized:

100,000,000

Issued:49,267,180

Number of Shareholders

:

8,500

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)

(%)

5,392

11.1

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

4,819

9.9

Custody Bank of Japan, Ltd. (Trust Account)

2,306

4.7

Osaki Electric cooperation company share holding commission

1,808

3.7

MUFG Bank, Ltd.

1,552

3.2

THE

HONGKONG

AND

SHANGHAIBANKINGCORPORATION LTD - SINGAPORE BRANCH PRIVATEBANKING DIVISION CLIENTS A/C 8221-623793

Breakdown of Shareholders

Financial Institutions

31.9%

25.3%

Japanese Companies
Foreign Companies and Individuals
Individuals and Others

16.8%
26.0%

43

Osaki Electric Co., Ltd. Annual Report 2022

Investor Information

Management (As of June 28, 2022)

Corporate Data (As of March 31, 2022)

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

Managing Executive Officer
Ryuichi Ueno

Paid-in Capital

Directors¥ 7,965 million (US$ 65 million)

Seiji Takashima (Independent)
Nobuhiro Kasai (Independent)

STATUTORY AUDITORSStanding Auditor
Choichiro Hori
Auditors
Yutaka Hasegawa
Shigehiko Yamamoto (Independent)
Kumiko Kitai (Independent)

EXECUTIVE OFFICERS
Kazuo Nemoto
Takehiko Ota
Jun AbeToshiaki Takada
Hiroyuki Hatakeyama
Nobuyuki Ono
Hiroshi Takahashi
Isao Yoshino

Stock Exchange Listings
Tokyo Stock Exchange
Independent Public Accountants
RSM Seiwa
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

44