[Translation]
June 9, 2022
To Shareholders with Voting Rights:

Disclosures on the Internet pursuant to Laws and Regulations and the Articles of Incorporation
regarding the Notice of the 161st Ordinary General Meeting of Shareholders

 “Overview of the system to ensure proper operations andthe implementation status thereof” for the Business Report
I. Overview of a resolution to establish systems to ensure the proper
operations of the Company･･･････････････

Pages 1

II. Overview of the implementation status of the system to ensure
proper operations･･･････････････

Pages 5

 Consolidated Financial Statements
Consolidated Statements of Changes in Equity･･･････････････

Pages 8Notes to Consolidated Financial Statements･････････････････

Pages 9 Non-Consolidated Financial Statements
Non-Consolidated Statements of Changes in Equity･･･････････

Pages 28

Notes to Non-Consolidated Financial Statements･････････････

Pages 29

The above-mentioned documents are provided to our shareholders by posting on the Company’s
website (English: https://www.seiko.co.jp/en/ir/) (Japanese: https://www.seiko.co.jp/ir/) via theInternet pursuant to laws and regulations and Article 16 of the Articles of Incorporation of theCompany.

SEIKO HOLDINGS CORPORATION

-1-

Systems and policies of the Company
I.

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

System to ensure that the duties of Directors and employees are executed in compliance with laws andregulations and the Articles of Incorporation
In order for Directors and employees to comply with corporate ethics, laws and regulations, and internal
rules, the Company shall establish the “Basic Principles of Corporate Ethics” and the “Action Guidelines
for Corporate Ethics” to thoroughly ensure their compliance with corporate ethics and laws andregulations, as follows:
1)

The President shall repeatedly convey the spirit of the “Basic Principles of Corporate Ethics” to
all Directors and employees to ensure that compliance with corporate ethics and the laws andregulations are the basis for every corporate activity.

2)

The “Corporate Ethics Committee” chaired by the President shall discuss corporate ethical issues
that might significantly affect the Company and its subsidiaries (the “Company Group”) andmatters related to revisions of the system to comply with corporate ethics, and report the results ofdiscussion to the Board of Directors.

3)

The Company shall develop a system where any Director or employee who finds any actionsuspected of violating the laws and regulations can promptly report such findings to the“Corporate Ethics Committee”, and establish a “Corporate Ethics Helpline” as a means forreporting information.

4)

The Company shall continuously provide training sessions on corporate ethics to Directors andemployees to foster and enhance their awareness of compliance with corporate ethics and laws
and regulations.

(2)

System to store and manage information regarding execution of the duties of Directors(i)Pursuant to the “Internal Document Management Rules”, the Company shall record information
regarding execution of the duties of Directors in a document or in an electromagnetic medium,and store and manage it properly.

(ii)

Directors and Corporate Auditors may inspect such document or medium at any time pursuant to
the “Internal Document Management Rules”.

-2-

(3)

Regulations and systems for loss risk management of the Company and its subsidiaries(i)

Pursuant to the “Risk Management Rules”, the Company shall set forth the basic policy for risk
management of the Company Group and develop a risk management system.

(ii)

The Company shall establish the “Risk Management Committee” chaired by the President inorder to build, develop and monitor risk management processes, including understanding businessrisks that might affect the activities of the Company Group, and identifying, analyzing, evaluating
and monitoring risks.

(iii)

The Risk Management Committee shall report the status of each risk to the Board of Directors,
regularly or as necessary, pursuant to the “Risk Management Rules”.

(4)

System to ensure that the duties of Directors of the Company and its subsidiaries are efficiently executed(i)

The Company shall develop a Mid-Term Management Plan as the target to be shared by Directors
and employees of the Company Group. It shall also review the progress of annual budgets
consisting of the said plan on a quarterly basis using the management accounting method, andpromote the efficiency of operation by considering and implementing an remedial measures forthe progress of annual budget.

(ii)

In order to respect autonomous and independent management of its subsidiaries while
contributing to the proper and efficient operation of the Group management, the Company shalldevelop basic management rules therefor. It shall also establish the “Management Council”
comprising standing Directors of the Company and respective President of major subsidiaries of
the Companies, in order to share the management policy and management information of theCompany Group.

(iii)

The Company shall clarify the Director’s assignment of duties, and the responsibility andauthority of each division/department, and secure the efficient execution of the Director’s duties.

(5)

System to ensure the proper operations of the Corporate Group comprising the Company and its
subsidiaries(i)

The Company shall assist its subsidiaries to develop a system to comply with corporate ethics,
and laws and regulations, and other systems to ensure their proper operations.

-3-

(ii)

Each subsidiary of the Company shall share the “Basic Principles of Corporate Ethics” and the“Action Guidelines for Corporate Ethics” established by the Company, and manage its operations
pursuant to them. The Company shall set forth the rules for reporting any violation of laws andregulations by any subsidiary, and assist its subsidiaries to develop their internal reporting
systems.

(iii)

Pursuant to the “Consolidated Business Management Rules”, the Company shall request that eachsubsidiary consult in advance with, and report to, the Company regarding significant
management-related matters, and whenever necessary, shall dispatch its officers or employees as
Directors or Corporate Auditors of the subsidiary so as to properly supervise and audit theoperation of subsidiary.

(iv)

Pursuant to the “Consolidated Business Management Rules”, each subsidiary shall report its
business results, financial position and other important matters to the Company, and whenevernecessary, the President of the relevant subsidiary shall report the execution status of theoperations to the Board of Directors of the Company.

(v)

The Company’s Internal Audit Department shall conduct internal audits on each subsidiary
regarding the execution status of the operations, compliance with laws and regulations, theArticles of Incorporation, and risk management.

(6)

Matters related to employees to assist the duties of Corporate Auditors(i)Internal Audit Department shall be responsible for assisting the duties of Corporate Auditors.

(ii)

Employees who are assigned to the Internal Audit Department shall not concurrently hold duties
related to the execution of operations.

(iii)

Regarding any transfer of the General Manager of the Internal Audit Department, the President
shall discuss with the Board of Corporate Auditors in advance, and shall respect the Board of
Corporate Auditors’ opinions.

(7)

System for reporting to Corporate Auditors(i)Each Director and employee of the Company shall regularly report to Corporate Auditors thestatus of finance, compliance with corporate ethics, risk management, and internal audits. If any
Director/employee finds any fact likely to significantly damage the Company or its subsidiaries,

-4-

any violation of laws and regulations or internal rules, he/she shall immediately report suchfindings to the Corporate Auditors of the Company.
(ii)

The Company shall develop a reporting system where if any Director, Corporate Auditor or
employee of a subsidiary finds any material violation of laws and regulations or internal rules
regarding the execution of operations of the Company or the subsidiary, or any fact which is likely
to significantly damage the Company, he/she or the person who was reported by him/her shallreport it to the Corporate Auditors of the Company.

(iii)

The Company shall develop necessary systems to ensure that the person who makes the report inaccordance with the preceding two (2) paragraphs might not be treated disadvantageously on the
grounds of having made such report.

(iv)

In conducting internal audits, the General Manager of the Internal Audit Department shallcooperate with Standing Corporate Auditors in advance, and make efforts to report importantmatters to Standing Corporate Auditors in a timely manner. In addition, the General Manager of
the Internal Audit Department shall report the results of internal audits to Standing Corporate
Auditors without delay, and regularly report such results to the Board of Corporate Auditors of theCompany.

(8)

Other systems to ensure that audits by Corporate Auditors are effectively conducted(i)

The Company shall ensure a system where, besides the Internal Audit Department, the General
Affairs Department and the Finance & Accounting Department shall assist audits by Corporate
Auditors from time to time based on respective instructions from Corporate Auditors.

(ii)

The Company shall ensure that Corporate Auditors attend important meetings and committees
which are established and held by the Board of Directors in a timely manner to ensure proper
operations of the Company.

(iii)

The President shall meet and consult with the Board of Corporate Auditors, as necessary, andexchange opinions regarding important management issues.

(iv)

If a Corporate Auditor requests that the Company pay expenses incurred in connection withexecuting his/her duties, the Company shall promptly reimburse such expenses unless theCompany proves that such expenses are not necessary for the Corporate Auditor to execute his/herduties.

-5-II.

Overview of the implementation status of the system to ensure proper operations(1)

System for compliance with corporate ethics and laws and regulations(i)

The Company has established a “Corporate Ethics Committee” chaired by the President to discuss
corporate ethical issues and the system for compliance with corporate ethics, including thoserelating to its subsidiaries, and reports the result of discussions to the Board of Directors. The
Committee held four (4) meetings during the fiscal year ended March 31, 2022.

(ii)

The Company has established a “Corporate Ethics Helpline” internally and appointed a law firm
as a reception to receive consultations or reports from employees regarding violations of laws andregulations within the Company. The Company has made sure all employees are well informed
about how to use these helplines by posting them on its intranet and distributing portable cards,
etc.

(iii)

The Company regularly provides training sessions on corporate ethics to enhance awareness ofcompliance with corporate ethics and laws and regulations. During the fiscal year ended March
31, 2022, the Company provided training sessions on “Conduct Risks” for standing officers and“Compliance Infraction Prevention” for employees.

(2)

Risk management system(i)

The Company has established the “Risk Management Committee” chaired by the President todiscuss the Company Group’s risk management system and various risk issues. The Committee
also reports to the Board of Directors the matters discussed thereat and important risks which
require the Company Group to take comprehensive measure. The Committee held four (4)meetings during the fiscal year ended March 31, 2022.
Further, the Company has established the “Group Risk Management Committee” consisting ofrespective standing Directors of the Company and Presidents of its subsidiaries, and confirms andshares the risks and the counter-measures against them experienced by each group company.
The Committee held three (3) meetings during the fiscal year ended March 31, 2022.

(ii)

Regarding responses when risks occur, the “Crisis Management Manual” sets out for theCompany’s basic policy therefor and measures to respond to respective risks, such as natural
disasters.

-6-

(3)

System to ensure that the duties of Directors are efficiently executed(i)

The Company has determined the assignment of duties for each Director upon a resolution of theBoard of Directors, and the responsibility and authority of each division/department in accordancewith the “Duty Assignment Rules”.

(ii)

The Company has established a council called the “Strategic Conference for Management” where
the President and Executive Directors exchange opinions and share information with other
Directors, Corporate Auditors, or General Managers of divisions/departments when they decide
on and execute important matters relating to execution of their duties. The Strategic Conference
for Management held forty-six (46) meetings during the fiscal year ended March 31, 2022.

(iii)

The Company has provided the “Consolidated Business Management Rules” for the execution of
the operations of its subsidiaries in order to perform its management and support functions fromthe viewpoint of consolidated management.

(4)

System to ensure the proper operations of the Company Group(i)

Pursuant to the “Consolidated Business Management Rules”, the Company properly discusses
with its subsidiaries in advance regarding their business plan, annual budgets, and measures to
respond to important corporate ethical issues, receives reports on material business matters fromthem, and dispatches its officers or employees to subsidiaries, as necessary, to supervise and audit
them. As of the end of the fiscal year ended March 31, 2022, the Company has dispatched nine(9) Directors, two (2) Corporate Auditors, and sixteen (16) employees.
Furthermore, the President of each subsidiary reports the execution status of its operations to theBoard of Directors of the Company as necessary. During the fiscal year ended March 31, 2022,
five (5) subsidiaries made such reports.

(ii)

Each unit of the Company assists its subsidiaries to develop a system to comply with corporate
ethics and laws and regulations, and a system to comply with business operation laws. During
the fiscal year ended March 31, 2022, training sessions and briefings were held for officers andemployees of the Company’s subsidiaries to discuss topics such as “Conduct Risks” and“Compliance Infraction Prevention”.

-7-

(5)

System to ensure that audits by Corporate Auditors are effectively conducted(i)

The Internal Audit Department holds a regular meeting once a month with Standing Corporate
Auditors and reports the performance status of internal audits.

(ii)Standing Corporate Auditors attend important meetings such as the “Strategic Conference forManagement”, “the Risk Management Committee”, and the “Corporate Ethics Committee”, etc.

(iii)

The President attends the Board of Corporate Auditors’ meetings to exchange opinions and gather
information relating to material business issues.

-8[Translation]
Consolidated Statements of Changes in Equity(From April 1, 2021 to March 31, 2022)
Millions of yen
Shareholders' equity
Share capital

Balance at beginning of period
Cumulative effects of changes inaccounting policies
Restated balance
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Disposal of treasury stock byownership plan trust
Other
Net changes in items other thanshareholders' equity
Total changes during period
Balance at end of period

Retainedearnings

Capital surplus

10,000

7,245

Total
shareholders'equityTreasury shares

75,909-315-1,182
10,0007,245-1,18274,727-315

91,657-1
0-2,067
6,415
-1
0

24

24

0

0

23
-292

4,371
96,028-2,0676,415-010,000-0
7,245

92,8394,348
79,075

Millions of yen
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Balance at beginningof period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes during period
Dividends ofsurplusProfit attributableto owners of parent
Purchase oftreasury shares
Disposal oftreasury shares
Disposal oftreasury stock byownership plan
trust
Other
Net changes in
items other thanshareholders' equity
Total changes during
periodBalance at end of
period10,431

Deferred
gains orlosses onhedges-133

Revaluation
reserve for
land

8,190

Foreigncurrencytranslation
adjustment

1,055

Total
NonRemeasurements accumulated controllingof defined
otherinterests
benefit plans comprehensive
income-687

18,856

Total net
assets1,387 113,082-1,182

10,431

-133

8,190

1,055

-687

18,856

1,387

111,900-2,067
6,415
-1
0
24
0

511

-198

-

4,061

807

5,182

170

5,352

511

-198

-

4,061

807

5,182

170

9,723

10,942

-331

8,190

5,116

120

24,0381,557 121,624(Note) The 0 million yen of “Other” under treasury shares represents changes due to a change in the ratio of
equity interests of the Company’s affiliates accounted for using equity method.

-9[Translation]
Notes to Consolidated Financial Statements
1.

Notes to Important Matters that are the Basis for Preparation of Consolidated Financial
Statements(1)

Matters relating to scope of consolidation
Number of consolidated subsidiaries: 61
SEIKO WATCH CORPORATION, Morioka Seiko Instruments Inc., Seiko Instruments Inc.,SEIKO Solutions Inc., SEIKO Time Creation Inc., WAKO Co., Ltd., Grand Seiko Corporationof America, Seiko Watch of America LLC, SEIKO U.K. Limited, SEIKO Hong Kong Ltd.,SEIKO Manufacturing (H.K.) Ltd., SEIKO Manufacturing (Singapore) Pte. Ltd., Dalian Seiko
Instruments Inc., Seiko Instruments Trading (H.K.) Ltd., Seiko Instruments (Thailand) Ltd.,SEIKO Precision (Thailand) Co., Ltd., and others.
Seiko Clock Inc. ceased to exist through an absorption-type merger with the Company’s
consolidated subsidiary, Seiko Time Systems Inc. as the surviving company on April 1, 2021.
The surviving company, Seiko Time Systems Inc. changed its corporate name to SEIKO TimeCreation Inc. on the same date.
Total System Engineering Co., Ltd. was included in the scope consolidation from the 3rdquarterly consolidated accounting period due to the acquisition of its shares.
Non-consolidated subsidiaries:
AOBA WATCH SERVICE Co. Ltd. and others are of a small scale in terms of net sales, total
assets, profit and loss, and retained earnings, and none of them have any material impact on
the consolidated financial statements. Therefore, they were excluded from the scope of
consolidation.

(2)

Matters relating to the application of the equity method
Number of affiliates accounted for by the equity method:
5
SEIKO OPTICAL PRODUCTS CO., LTD., OHARA INC., and others.
Non-consolidated subsidiaries and affiliates not accounted for by the equity method:
AOBA WATCH SERVICE Co. Ltd. and others have a minimal impact on the consolidated net
income and loss and retained earnings and are of little significance. Therefore, the equity
method has not been applied to these companies.

(3)

Standards and methods for evaluating significant assets(i) Inventories
Basically stated at cost using the movingaverage method (for values stated on the balance
sheet, writing down the book values in response
to decreased profitability)(ii) Securities
Available-for-sale securities
Securities other than shares, etc.
Market value method based on the market pricethat do not have a market priceas of the consolidated closing date (differencesin valuation are included directly in net assets
and the costs of securities sold are calculatedusing the moving-average method)
Shares, etc. that do not have aStated at cost using the moving-average methodmarket price- 10 Investment Limited Partnership(iii) Derivatives(4)

Depreciation methods for significant depreciable assets(i) Property, plant and equipment
As for domestic consolidated companies, basically(excluding leased assets and rightthe straight-line method is used for buildings
of-use assets)(excluding equipment attached to buildings), andthe declining-balance method for those other thanbuildings (except that the straight-line method isused for the equipment attached to buildings, andstructures that were acquired on or after April 1,
2016); as for consolidated subsidiaries outside
Japan, basically the straight-line method is used.
The estimated economic life reflecting the usable
period, the actual period of use, and other factors
for each asset is used for a useful life.
(ii) Intangible assets (excluding
The straight-line method is used. As for software
leased assets)
for in-house use, the straight-line method is usedwith a usable period of 5 years.
(iii) Leased assets
Leased assets relating to finance The same depreciation method as applied to thelease with transfer of ownershipproperty, etc. owned by the Company is used.
Lease assets relating to financelease without transfer of ownership(iv) Right-of-use assets(5)Stated on a net basis equivalent to equity
interests, based on the most recent financial
statements available according to the financial
reporting date stipulated in the partnershipagreement
Market value method

The straight-line method is used with a useful lifeof the lease period and with a residue value of zero.
The straight-line method is used with a useful lifeof the lease period and with a residue value of zero.

Accounting standards for significant allowances and provisions(i) Allowance for doubtful accounts In order to prepare for possible losses on
uncollectible receivables held, estimateduncollectible amounts are posted: for general
receivables, according to the historical percentage
of uncollectibles, and for doubtful receivables,
considering the probability of collection.
(ii) Allowance for investment loss of In order to prepare for possible losses oninvestments to subsidiaries and affiliates, an
subsidiaries and affiliates
amount deemed necessary is provided after
considering the financial position of each company
and based on a respective review. The allowance
for investment loss of subsidiaries and affiliates of
4 million yen is directly reduced from the amountof investment securities.
(iii) Provision for bonuses
In order to prepare for payment of bonuses to
employees, a provision is made based on theestimated bonus payments, which are attributable
to the consolidated fiscal year under review.

- 11 (iv) Provision for goods warranties(v) Provision for loss on lease
contracts(vi) Provision for businessrestructuring(vii) Provision for stock benefits(viii) Provision for retirement
benefits for directors (and otherofficers)

To provide for warranties of the goods sold at someof the consolidated subsidiaries outside Japan,
respective estimated amount based on the pastexperience is posted.
To provide for the loss expected to incur during thenon-cancellable periods, an amount equivalent to
the portion of rents for the real estate deemed likely
to be non-performing up to the expiry of leaseagreements is posted.
The Company has posted an estimated amount oflosses expected to be incurred in the future as aresult of business restructuring.
The Company has posted an estimated amount, asof the end of the consolidated fiscal year underreview, for the obligation to deliver shares, as aprovision for the delivery of its shares to the
Executive Directors in accordance with the Rules
for Delivery of Shares to Officers.
Some of the domestic consolidated companies
passed a resolution to discontinue their respective
directors’ retirement benefit systems during the
fiscal year ended March 2005 and that ended
March 2014. Accordingly, the amount of
retirement benefits for incumbent officers is posted
corresponding to the terms of office till the end of
the Ordinary General Meeting of Shareholders
during the relevant consolidated fiscal year.

- 12 (6)

Accounting standards for significant income and expenses(i) Watches Business

The Company Group manufactures, sells, andprovides repair services for its own products as thewholesale of watches, and provides retail services,
including other companies’ products, as the retailof watches.
With regard to the time of satisfaction of
performance obligations for the wholesale ofwatches, the Company Group applies thealternative treatment prescribed in Paragraph 98 of
the “Implementation Guidance on AccountingStandard for Revenue Recognition” (hereinafter,
the “Revenue Recognition Implementation
Guidance”), and recognizes revenue at the time of
shipment, if the period between the shipment andthe transfer of control of products to customers is
primarily a normal period of time for domestic
sales. For other transactions, including export sales,
revenue is recognized when risks are transferred tocustomers based on terms of contracts with eachcustomer. For the retail of watches, revenue isrecognized when products are delivered tocustomers.
For transactions in which returns are expected at
the time of sale, such amounts are not recognized
as revenue, but are estimated based on historicalexperience and recognized as a liability for returns.
For transactions in which the Company Group acts
as an agent, revenue is recognized at a net amount.
For transactions in which the Company Group acts
as the principal, revenue is recognized at a grossamount.
The Company Group generally receives
consideration for transactions in the Watches
Business within one to three months from the time
when performance obligations are satisfied, and thereceivables arising from contracts with suchcustomers are not adjusted for significant financial
components.

- 13 (ii) Electronic Devices Business(iii) Systems Solutions Business

The Company Group manufactures and sells
products related to electronic devices, precision
devices, and printing devices.
The Company Group applies the alternative
treatment prescribed in Paragraph 98 of the
Revenue Recognition Implementation Guidance,and recognizes revenue at the time of shipment, if
the period between the shipment and the transfer ofcontrol of products to customers is primarily anormal period of time for domestic sales. For othertransactions, including export sales, revenue isrecognized when risks are transferred to customers
based on terms of contracts with each customer.
The Company Group generally receives
consideration for transactions in the Electronic
Devices Business within one to three months fromthe time when performance obligations are
satisfied, and the receivables arising from contracts
with such customers are not adjusted for significant
financial components.
The Company Group develops and sells products
for businesses related to system, IoT, andsettlement, and provides maintenance services for
products sold and made-to-order software services.
With regard to the time of satisfaction of
performance obligations for the sale of products,
revenue is recognized when products are delivered
to customers or when customers inspect the
products. For maintenance services, revenue isrecognized over the period the services areprovided, as performance obligations are deemed tobe satisfied over time, since the Company Group
provides uniform services over the contract period.
For the provision of made-to-order software
services, revenue is recognized based on the degreeof progress toward satisfying performanceobligations, as performance obligations are deemed
to be satisfied over a certain period of time. The
degree of progress is measured based on thepercentage of costs incurred to the end of eachfiscal year of the total expected costs.
The Company Group generally receives
consideration for transactions in the Systems
Solutions Business within one to six months fromthe time when performance obligations are satisfied(in some cases, advance payments are received
based on contracts), and the receivables arisingfrom contracts with such customers are notadjusted for significant financial components.

- 14 (7)Standards for translation of significant foreign currency-denominated assets or liabilities into
Japanese yen
Foreign currency receivables/payables are translated into yen using the spot foreign exchange
rate on the consolidated closing date, and translation differences are treated as income or loss.
The assets and liabilities of subsidiaries outside Japan are translated into yen using the spot
foreign exchange rate on the consolidated closing date; income and expenses are translated
into yen using an average market rate during the period, and translation differences areincluded in “Foreign currency translation adjustment” and “Non-controlling interests” of the“Net assets”.

(8)Significant hedge accounting methods(i) Hedge accounting method(ii) Means of hedging and hedged
items(iii) Hedging policy(iv) Assessment of hedge effectiveness(9)

Deferred hedge accounting is employed.
However, regarding domestic consolidated
companies, basically deferral hedge accounting(“furiate-shori”) is employed for foreign
currency receivables/payables with forward
exchange contracts or the like, and with regard
to interest-rate swaps that meet the requirements
for exceptional accounting (“tokurei-shori”),
exceptional accounting is employed.
Forward exchange contracts and foreign
currency deposits to hedge foreign exchangerate fluctuation risks regarding foreign currencydenominated trade payables and receivables; andinterest-rate swaps to avoid fluctuation risks
regarding borrowings on floating interest rates.
Forward exchange contracts, foreign currency
deposits and interest-rate swaps are hedged to
avoid exchange- and interest-rate fluctuation
risks present in hedged items in accordance with
the internal rules of the respective companies,
and no speculative transactions are conducted.
For interest-rate swaps, hedge effectiveness is
assessed by analysis of the percentage between
the accumulated cash flow changes of hedged
items and the accumulated cash flow changes bymeans of hedging. However, the assessment ofhedge effectiveness is omitted if the material
conditions of the means of hedging and thehedged items are the same.

Accounting for employees’ retirement benefits
In order to prepare to pay retirement benefits to employees, the net defined benefit liability isposted based on the estimated amount of retirement benefit obligations minus the amount ofplan assets as of the end of the consolidated fiscal year under review. To calculate retirement
benefit obligations, the benefit formula method is adopted as a method to attribute theestimated retirement benefits to the periods up to the end of the consolidated fiscal year underreview. The actuarial differences that resulted are recognized in the following consolidated
fiscal year by the straight-line method over various periods (5 to 8 years) that are not morethan the average remaining service period of employees at the time of the accrual of adifference. Prior service costs are basically recognized by the straight-line method overvarious periods that are not more than the average remaining service period of employees at
the time of the accrual thereof. Unrecognized actuarial differences and unrecognized prior- 15 service costs after tax effect adjustment are posted in “Remeasurements of defined benefit
plans”, “Accumulated other comprehensive income” in “Net assets”.
(10)

Matters relating to application of consolidated taxation system
Consolidated taxation system is applied.

(11)

Adoption of tax effect accounting for the transition from the consolidated taxation system tothe group tax sharing system
Domestic consolidated companies excluding a few exceptions will make a transition from theconsolidated taxation system to the group tax sharing system from the following consolidated
fiscal year. As for the items subjected to the transition to the group tax sharing systemestablished under the “Act on Partial Revision of the Income Tax Act, etc.” (Act No. 8 of2020), as well as the items reviewed under the non-consolidated taxation system inconjunction with the transition to the group tax sharing system, such domestic consolidated
companies have not adopted the provisions of Paragraph 44 of the “Implementation Guidanceon Tax Effect Accounting” (ASBJ Guidance No. 28, issued on February 16, 2018) inaccordance with the treatment under Paragraph 3 of the “Practical Solution on the Treatment
of Tax Effect Accounting for the Transition from the Consolidated Taxation System to theGroup Tax Sharing System” (PITF No. 39, issued on March 31, 2020). The amounts ofdeferred tax assets and deferred tax liabilities are calculated based on the provisions of the
Income Tax Act before the revision. From the beginning of the following consolidated fiscal
year, the Company plans to apply the “Practical Solution on the Accounting and Disclosure
Under the Group Tax Sharing System” (PITF No. 42, issued on August 12, 2021), which
provides for the accounting treatment and disclosure of income taxes, local income taxes, andtax effect accounting, when the group tax sharing system is adopted.

(12)

Method and period of amortization of goodwill
Goodwill is equally amortized for 5 to 20 years; minor goodwill is entirely amortized upon
accrual.

- 16 2.

Notes to Changes in Accounting Policies(Application of the Accounting Standard for Revenue Recognition, etc.)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, issued on March 31, 2020; hereinafter, the “Revenue Recognition
Accounting Standard”), etc., effective from the beginning of the fiscal year under review, andrecognizes revenue in the amount expected to be received in exchange for promised goods orservices at the time when control of these goods or services is transferred to customers.
Accordingly, as a result of determining the role of the Company Group (as an agent or aprincipal) in providing goods or services to customers, the Company has changed its method
to recognize revenue at a net amount, for transactions in which it is determined that theCompany Group acted as an agent. In addition, for transactions in which the Company Group
acts as the principal, the Company has changed its method to recognize revenue, which had
previously been recognized at a net amount after deducting the amount equivalent tocommissions for distributors from the amount to be received from the customers, at a grossamount. In sales transactions in which goods are expected to be returned, the Company does
not recognize revenue at the time of sales, but instead recognizes the amount of compensation
for merchandise and finished goods that are expected to be returned as refund liabilities in“Other” under “Current liabilities”, and the assets that are recognized as the right to recovermerchandise and finished goods from customers at the time of settlement of refund liabilities
as return assets in “Other” under “Current assets”.
The application of the Revenue Recognition Accounting Standard, etc. is subject to thetransitional treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition
Accounting Standard. The cumulative effect of the retroactive application of the new
accounting policy, assuming that it has been applied to periods prior to the beginning of the
fiscal year under review, is added to or subtracted from retained earnings at the beginning of
the fiscal year under review, and the new accounting policy is applied from the beginningbalance.
In addition, “Notes and accounts receivable - trade,” which had been presented under “Current
assets” in the Consolidated Balance Sheet of the previous fiscal year, has been included in“Notes receivable - trade”, “Accounts receivable - trade”, and “Contract assets” from the fiscal
year under review, while “Other”, which had been presented under “Current liabilities” in theConsolidated Balance Sheet of the previous fiscal year, has been included in “Contract
liabilities” and “Other” from the fiscal year under review.
As a result, compared with the figures before the application of the Revenue Recognition
Accounting Standard, etc., accounts receivable - trade decreased by 396 million yen, contract
assets increased by 343 million yen, merchandise and finished goods decreased by 4 million
yen, raw materials and supplies increased by 27 million yen, other under current assets
increased by 1,313 million yen, investment securities increased by 26 million yen, deferred tax
assets increased by 358 million yen, accounts payable - other decreased by 39 million yen,contract liabilities increased by 6,311 million yen, other under current liabilities decreased by
3,610 million yen, and balance at end of period of retained earnings decreased by 993 million
yen in the Consolidated Balance Sheet for the fiscal year under review. In the Consolidated
Statements of Income for the fiscal year under review, net sales increased by 2,834 million
yen, cost of sales decreased by 282 million yen, and selling, general and administrative
expenses increased by 2,881 million yen. As a result, operating profit increased by 235 million
yen, and ordinary profit and profit before income taxes increased by 299 million yen,respectively.

- 17 As the cumulative effect was reflected in net assets at the beginning of the fiscal year underreview, balance at beginning of period of retained earnings in the Consolidated Statements of
Changes in Equity decreased by 1,182 million yen.
Net assets per share for the fiscal year under review decreased by 24.09 yen, and net income
per share and diluted earnings per share increased 4.52 yen, respectively.
(Application of the Accounting Standard for Fair Value Measurement, etc.)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, issued on July 4, 2019; hereinafter, the “Fair Value Measurement
Accounting Standard”), etc., effective from the beginning of the fiscal year under review. In
accordance with the transitional treatment provided for in Paragraph 19 of the Fair Value
Measurement Accounting Standard and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, issued on July 4, 2019), the Company will
apply the new accounting policy prescribed by the Fair Value Measurement AccountingStandard, etc. into the future. However, this application has no impact on the consolidated
financial statements. In addition, the Company includes notes on matters relating to
breakdown, etc. of market values of financial instruments by level in the “Notes to Financial
Instruments”.
3.

Notes to Changes in Presentation Methods(Consolidated statements of income)“House rent and other rental revenues” under “Non-operating income” that were separately
itemized in the previous fiscal year are included in “Other” under “Non-operating income” inthe fiscal year under review due to its decreased financial significance.
“House rent and other rental revenues” in the fiscal year under review are 135 million yen.

4.

Notes to Accounting Estimates(1)

Valuation of inventories(i)Amounts posted in the consolidated financial statements for the fiscal year underreview
Watches BusinessElectronic Devices Business
Systems Solutions BusinessTime Creation, WAKO andother Businesses
Adjustment
Consolidated total(ii)

45,313 million yen
17,269 million yen
4,860 million yen
6,267 million yen-662 million yen
73,048 million yen

Information useful for understanding the content of accounting estimates

The Company Group evaluates inventories by writing down book values based on a decreasein profitability.

- 18 For products, etc. of each business company exceeding a given holding period and volume thatare no longer part of the normal operating cycle, a decrease in profitability is reflected througha systematic write-down method, which has been determined mainly based on past sales anddisposal results.
However, products, etc. that are considered to be still in the process of the normal operating
cycle in light of recent sales results and future sales estimates, despite exceeding a given
holding period and volume, are exempted from systematic write-downs, in whole or in part.
The Watches Business handles products, etc. directly related to personal consumption.
Consequently, the business results and profitability of products, etc. are strongly affected byeconomic trends in Japan and overseas, especially personal consumption. The business results
and profitability of products, etc. of the Electronic Devices Business are affected by trends ofdemand for electronic devices, etc. in Japan and overseas. Economic trends and personal
consumption may fluctuate considerably due to factors that are out of the Company Group’s
control, and thus are difficult to predict. Accordingly, in determining a systematic write-down
method to reflect a decrease in profitability, significant judgments and assumptions areincorporated. Furthermore, determining whether products, etc. that are exempted fromsystematic write-downs are no longer in the process of the normal operating cycle also entails
significant judgments.
These estimates entailing judgments and assumptions may be affected by future trends inpersonal consumption and may significantly affect the amount of inventories in the
consolidated financial statements for the following consolidated fiscal year.
(2)

Valuation of deferred tax assets(i)Amount posted in the consolidated financial statements for the fiscal year underreview
Deferred tax assets(ii)

2,200 million yen

Information useful for understanding the content of accounting estimates

Deferred tax assets are posted if they are judged to be recoverable by making reasonableestimates of when future taxable income will occur and its amount based on business plans,
etc. Such estimates may be affected by changes in uncertain economic conditions, etc. in the
future. If the actual timing of when the taxable income occurs and its amount differ from theestimates, it may significantly affect the amount of deferred tax assets in the consolidated
financial statements for the following consolidated fiscal year.
(Accounting estimates associated with the spread of the novel coronavirus)
Although it is still difficult to predict when the novel coronavirus will be contained, theCompany has made accounting estimates of the recoverability, etc. of deferred tax assets,based on an assumption that economic activities will recover in Japan and overseas from thefollowing consolidated fiscal year onward.

- 19 5.

Notes to Consolidated Balance Sheet(1)

Assets provided as security and secured obligations
Assets provided as security
Cash and deposits
Deposits (Investments andother assets)Total

31 million yen
383 million yen
414 million yen

Secured obligations
Gift certificates (Contract
liabilities)
Total
(2)

320 million yen
320 million yen

Guarantee obligation
The Company has guaranteed borrowings extended to its employees from financial
institutions, as follows.
Employee (housing fund)1 million yen(3)

Amount of discount on negotiable instruments receivable(4)

Land for business use was revaluated pursuant to the “Act on Revaluation of Land” (Act No.
34 promulgated on March 31, 1998), and valuation differences which correspond to taxes areposted as “Deferred tax liabilities for land revaluation” of “Liabilities” and the balance thereofis posted as “Revaluation reserve for land” of “Net assets”.
(i)

944 million yen

Method of revaluation

Land for business use was evaluated based on the main-street land price set forth in Article 2,
item 4 of the “Order for Enforcement of the Act on Revaluation of Land (Cabinet Order No.
119 promulgated on March 31, 1998), and that land without a main-street land price was
evaluated based on the assessed value of fixed assets as set forth in item 3 thereof, withreasonable adjustment.
(ii)

Date of revaluation:

March 31, 2001

(5)

Out of investment securities, 406 million yen is for lending stock.

(6)

Loan commitment agreement
The Company has concluded loan commitment agreements with two banks in order to carryout efficient funding of working capital. The balance of unused line of credit, etc. under theloan commitment agreements at the end of the consolidated fiscal year under review is asfollows.
Total amount of loan commitment
Borrowing balance
Balance

33,500 million yen
12,900 million yen
20,600 million yen

- 20 6.

Notes to Consolidated Statements of Income“Loss on the spread of infectious disease” under extraordinary losses in the fiscal year underreview is mainly for fixed costs incurred during the suspension of operations and business.

7.

Notes to Consolidated Statements of Changes in Equity(1)

Matters relating to type and total number of issued shares, and type and number of treasury
shares(Thousands of shares)
Number of
Number ofshares decreased shares at the end
during theof theconsolidated
consolidated
fiscal year under fiscal year underreview
review

Number ofshares at the
beginning of theconsolidated
fiscal year underreview

Number ofshares increased
during theconsolidated
fiscal year underreview

Issued shares
CommonsharesTotal

41,404――

41,404

41,404――

41,404

Treasury shares
Commonshares (Note)
Total

175

0

15

160

175

0

15

160

(Note) The number of common shares held as treasury shares at the end of the consolidated fiscal year
under review includes 78 thousand shares of the Company held in the Board Benefit Trust (BBT).
0 thousand shares of increase in common shares held as treasury shares is due to the purchase of
fractional shares.
15 thousand shares of decrease in common shares held as treasury shares is due to the disposal of the Company
shares through the Board Benefit Trust (BBT), the demand for sale of fractional shares, and a change in the ratioof equity interests of affiliates accounted for using equity method.

- 21 (2)Matters relating to dividend(i)Amount of dividend paid

Resolution
Ordinary
GeneralMeeting of
Shareholders on
June 29, 2021
Board ofDirectors
meeting on
November 9,
2021

Type ofsharesTotal dividend(million yen)

Dividend pershare (yen)Common
share

1,033

25.00

March 31,2021

June 30, 2021

Common
share

1,033

25.00

September 30,
2021

December 6,
2021

Record date

Effective date

(Note 1) The total amount of dividend approved by a resolution of the Ordinary General Meeting of
Shareholders on June 29, 2021 includes a dividend of 2 million yen payable for the Company shares
held in the Board Benefit Trust (BBT).
(Note 2) The total amount of dividend approved by a resolution of the Board of Directors meeting on
November 9, 2021 includes a dividend of 1 million yen payable for the Company shares held in the
Board Benefit Trust (BBT).
(ii)

Dividend for which the record date falls in the consolidated fiscal year under review
but the effective date comes after the end of that consolidated fiscal year
Total
SourceDividend
Type ofdividend
Effective
Resolutionforper share
Record dateshares(million
date
dividend(yen)
yen)
Ordinary
GeneralCommonRetained
March 31,
June 30,
Meeting of
1,033
25.00
Share
earnings
2022
2022
Shareholders on
June 29, 2022
(Note) The total amount of dividend proposed for approval by a resolution of the Ordinary General
Meeting of Shareholders on June 29, 2022 includes a dividend of 1 million yen payable for theCompany shares held in the Board Benefit Trust (BBT).
8.

Notes to Financial Instruments(1)

Matters relating to status of financial instruments
The Company Group raises funds (mainly borrowing from banks) necessary in light ofrespective business plans of business companies. Temporary surplus funds are invested in
more safe financial assets.
Notes and accounts receivable - trade (which are operating receivables) are exposed tocustomers’ credit risks; as such, the Company controls each customer’s due date and balance,
and understands major customers’ credit status. Exchange-rate fluctuation risks for foreign
currency operating receivables due to the Company’s global development are almost set off by
the risks resulting from foreign currency operating payables, some of which are hedged using

- 22 forward exchange contracts. Investment securities are mainly shares of customers, andexposed to market price fluctuation risks.
Most of the notes and accounts payable - trade (which are operating payables) are due within
one year. Borrowings and bonds payable are mainly to raise funds for operating transactions,and interest-rate swaps are used to hedge part of exchange-rate fluctuation risks of borrowings.
Derivatives include forward exchange contracts to hedge exchange-rate fluctuation riskspresent in foreign currency receivables/payables, and interest-rate swaps to hedge fluctuation
risks of interest rates payable on borrowings.
(2)

Matters relating to market value, etc. of financial instruments
Amounts posted on the Consolidated Balance Sheet, market values, and the corresponding
differences between the two as of March 31, 2022, are as follows. Shares, etc. that do not havea market price are not included in the table below. Notes to cash are omitted. Deposits, notes
receivable - trade, accounts receivable - trade, accounts receivable - other, notes and accounts
payable - trade, electronically recorded obligations - operating, short-term borrowings, andaccounts payable - other are omitted, as these are settled within a short time frame andtherefore have a market value approximate to their book value.
(Millions of yen)Amounts posted on
the Consolidated
Balance Sheet (*)

Market value(*)

16,884
22,826

13,36922,826-3,514
-

(150)

(149)

-0

(23,719)(23,732)

12

(300)

(299)

-0

(28,752)(28,754)

2

(631)

-

(1) Investment securities(i) Shares of subsidiaries andassociates(ii) Available-for-sale securities(2) Current portion of bonds payable(3) Current portion of long-termborrowings(4) Bonds payable(5) Long-term borrowings(6) Derivatives(*) Items posted as liabilities are enclosed in brackets.

(631)

Difference(Note)
Unlisted shares (posted as 142 million yen on the Consolidated Balance Sheet), shares ofunlisted subsidiaries and associates (posted as 3,292 million yen on the Consolidated Balance
Sheet), and Investment Limited Partnership (posted as 391 million yen on the Consolidated
Balance Sheet) are shares, etc. that do not have a market price. As such, these items are notincluded in (1).
(3)

Matters relating to breakdown, etc. of market values of financial instruments by level
Market values of financial instruments are classified into the following three levels based on
the observability and materiality of inputs used to calculate market values.
Level 1 market value: Market value calculated using (unadjusted) quoted prices in active
markets for identical assets or liabilities

- 23 -

Level 2 market value: Market value calculated using directly or indirectly observable inputs
other than Level 1 inputs
Level 3 market value: Market value calculated using significant unobservable inputs
When multiple inputs that have a significant impact on the calculation of market value areused, market value is classified into the level with the lowest priority in the calculation ofmarket value among the levels to which those inputs belong.
(i)

Financial assets and financial liabilities that are recognized on the Consolidated
Balance Sheet at market value(Millions of yen)
Market value
Classification
Level 1
Level 2
Level 3Total
(1) Investment securities
Shares22,82622,826(6) Derivatives
(631)
(631)
(*) Items posted as liabilities are enclosed in brackets.
(ii)

Financial assets and financial liabilities that are not recognized on the Consolidated
Balance Sheet at market value(Millions of yen)
Market value
Classification
Level 1
Level 2
Level 3Total
(1) Investment securities
Shares of subsidiaries and13,36913,369associates(2) Current portion of bonds
149
149
payable(3) Current portion of long-term
23,732
23,732borrowings(4) Bonds payable

-

299

-

299

(5) Long-term borrowings-

28,754-28,754(Note) Valuation methods used for the measurement of market value and a description of inputs(1) Investment securities:
Listed shares are valued using quoted prices. Since listed shares are traded in active
markets, their market value is classified as Level 1 market value.
(2) Current portion of bonds and (4) Bonds payable:
The market value of bonds payable, which are issued by subsidiaries, is calculated bydiscounting the total amount of principal and interest by an interest rate that takes into
account the remaining term and credit risk of the bonds. It is classified as Level 2 market
value.
(3) Current portion of long-term borrowings and (5) Long-term borrowings:
The market value of long-term borrowings is calculated by taking into account theremaining term of the bonds and discounting the total amount of principal and interest by
the assumed interest rate that would be applied when new borrowings are conducted. It isclassified as Level 2 market value. The market value of long-term borrowings that are
subject to exceptional accounting treatment for interest-rate swaps is calculated by taking

- 24 into account the remaining term of the bonds and discounting the total amount of principal
and interest, which is treated as one with the interest-rate swap in question, by a logicallyestimated interest rate that would be applied when similar borrowings are conducted.
(6) Derivatives:
The market values of interest-rate swaps and forward exchange contracts are calculatedusing observable inputs such as interest rates and foreign exchange rates. They areclassified as Level 2 market values.
Derivatives conducted through exceptional accounting treatment of interest-rate swaps aretreated as being one with the long-term borrowings under the relevant hedge. As such, themarket value of such transactions is presented as being included in the market value for the
long-term borrowings concerned.
9.

Notes to Leased Property
The Company and some of its subsidiaries own real property for lease and others in Tokyo andother regions. Income or expenses from the leased property during the fiscal year ended
March 2022 was 133 million yen (rent income was posted as non-operating income andexpenses are posted as non-operating expenses), and gain on sales of non-current assets was 8
million yen (posted as non-operating income).
The amount posted on the Consolidated Balance Sheet, major changes during the consolidated
fiscal year under review, market value on the consolidated closing date, and the calculation
method of such market value are as follows:(Millions of yen)Amounts posted on the Consolidated Balance Sheet
Balance at the
beginning of theconsolidated fiscal
year under review
17,191(Note 1)
(Note 2)

(Note 3)

Amount ofincreases/decreases
during theconsolidated fiscal
year under review-918

Balance at the end of
the consolidated
fiscal year underreview

Market value on the
consolidated closing
date

16,272

18,972

Amounts posted on the Consolidated Balance Sheet were the acquisition costs
minus accumulated depreciation and accumulated impairment loss.
Of the change during the consolidated fiscal year under review, the amount of
increases mainly consists of the acquisition of rental real estate (532 million
yen) and an increase in the rate of rent (272 million yen). In addition, theamount of decreases mainly consists of the reclassification of leased property
from rental real estate to commercial real estate (1,391 million yen) and thesale of rental real estate (180 million yen).
Calculation method of market value
Basically the amount based on a real-estate appraisal report prepared by a realestate appraiser.

- 25 10.

Notes to Per-Share Information
Net assets per share
Net income per share(Calculation basis) Profit attributable to owners ofparentProfit attributable to owners ofparent, available to common shares
Average number of shares during
the fiscal year under review

2,911.17 yen
155.56 yen
6,415 million yen
6,415 million yen
41,240 thousand
shares(Note 1) For the purpose of calculating the net income per share, the treasury shares remaining
in trust posted as treasury shares in the “Shareholders' equity” section are included in
the treasury shares deducted in the calculation of the average number of shares during
the fiscal year under review. For the purpose of calculating the net assets per share,
the treasury shares so remaining in trust are included in the treasury shares deductedfrom the total number of shares issued and outstanding at the end of the fiscal year
under review.
For the purpose of calculating the net income per share, the average number oftreasury shares, so deducted, during the fiscal year under review was 82 thousand
shares, and for the purpose of calculating the net assets per share, the number oftreasury shares, so deducted, as at the end of the fiscal year under review was 78
thousand shares.
11.

Notes to Revenue Recognition(1)

Information regarding disaggregated revenue arising from contracts with customers
Information by type of goods or services(Millions of yen)Time
Creation,
WAKO
Total
and otherBusinesses(Note 2)

Reported segments
Watches
Business

Electronic
Devices
Business

102,077---

102,077

Retail of watches (Note 1)
Electronic devices(Quartz crystals, micro
batteries, etc.)
Precision devices(Precision turned parts, etc.)

23,666---

23,666-

19,909--19,909-14,472--

14,472Printing devices
System-related(Including IT performance
management)
IoT-related
Settlement-related
Other

-

17,427--

17,427--

15,254-

15,254-

12,864

13,166
5,992-

27,313

13,166
5,992
40,177Wholesale of watches (Note1)

Systems
Solutions
Business

- 26 Transactions with othersegments
Revenue arising from contracts
with customers
Revenues from externalcustomers-2,669-6,505-1,901-3,685-14,762

123,074

58,16832,511

23,627

237,382

123,074

58,16832,511

23,627

237,382

Information by region(Millions of yen)
Reported segments

Japan
The Americas
EuropeAsia and others
Revenue arising from contracts
with customers
Revenues from externalcustomers(Note 1)
(Note 2)

(2)

Watches
Business

Electronic
Devices
Business

Systems
Solutions
Business

53,391
17,042
17,09935,54017,863
5,513
7,263
27,52832,174
261
29
45

Time
Creation,WAKO
and otherBusinesses(Note 2)
20,974
1,515
92
1,044

123,074

58,16832,511

23,627

237,382

123,074

58,16832,511

23,627

237,382

Total

124,403
24,332
24,48564,160The wholesale of watches is classified as manufacturing, sales, and repair
services for the Company’s own products. The retail of watches is classified asretail services including other companies’ products.
Although portions of rental revenues from real estate are included, they areincluded in “Revenue arising from contracts with customers” due to its low
financial significance.

Useful information in understanding revenue
Useful information in understanding revenue is as described in “Notes to Important Mattersthat are the Basis for Preparation of Consolidated Financial Statements, (6) Accounting
standards for significant income and expenses”.

(3)

Information in understanding the amounts of revenues in the fiscal year under review and thefollowing fiscal years(i)Balance, etc. of contract assets and contract liabilities(Millions of yen)
Fiscal year under review
Balance at theBalance at the
beginning of theend of the fiscal
fiscal year
year
Contract assets
82
343
Contract liabilities
4,599
6,574

Of the amount of revenue recognized in the fiscal year under review, the amount included in
the balance of contract liabilities at the beginning of the fiscal year was 2,540 million yen.

- 27 (ii)Transaction prices allocated to remaining performance obligations

The Company has applied the practical expedient to notes on transaction prices allocated toremaining performance obligations. Contracts with an initially expected term of one year orless are not included in the notes. The performance obligations primarily relate to the Systems
Solutions Business. The total transaction prices allocated to remaining performanceobligations and the period in which the Company expects to recognize the amounts as revenue
are as follows.

One year or lessOver one year, two years or lessOver two years, three years or lessOver three years
Total
12.

(Millions of yen)
Fiscal year under review
568
764
573
596
2,502

Presentation of Amounts
In the Consolidated Balance Sheet, Consolidated Statement of Income, Consolidated
Statements of Changes in Equity, and Notes to Consolidated Financial Statements, any amountless than one million yen is discarded.

- 28 [Translation]
Non-Consolidated Statements of Changes in Equity(From April 1, 2021 to March 31, 2022)
Millions of yen
Shareholders' equity
Capital surplus
Retained earnings

Balance at beginning of
periodChanges during period
Dividends of surplus
ProfitPurchase of treasury
shares
Disposal of treasury
shares
Disposal of treasury
stock by ownershipplan trust
Net changes of items
other than shareholders'equityTotal changes during
periodBalance at end of period

SharecapitalLegalcapitalsurplus

OthercapitalsurplusTotal
capitalsurplus10,000

2,378

4,246

6,625

-0

Other
Total
retained
Treasury sharehol
earnings
Legal
Total
ders'
retained Retained retained shares
equityearnings earnings earnings
brought
forward121

21,18921,310-2,067
3,257-2,067
3,257

-0

-288

37,646-2,067
3,257

-1

-1

0

0

24

24

−

−

-0

-0

−

1,190

1,190

23

1,213

10,000

2,378

4,246

6,625

121

22,37922,500-265

38,860Millions of yen
Valuation and translation adjustments

Balance at beginning of period
Changes during period
Dividends of surplus
ProfitPurchase of treasury shares
Disposal of treasury shares
Disposal of treasury stock byownership plan trust
Net changes of items otherthan shareholders' equity
Total changes during period
Balance at end of period

Valuation
Deferred gains
Total valuation Total net assets
difference on
Revaluation
or losses on
and translation
available-forreserve for land
hedgesadjustments
sale securities
9,792
-133
8,190
17,84955,495-2,067
3,257
-1
0
24
341

69

−

411

411

341
10,134

69
-64

−
8,190

411
18,2601,624
57,120- 29 [Translation]
Notes to Non-Consolidated Financial Statements
1.

Notes to Significant Accounting Policies(1)Standards and methods for evaluating securities(i)

Shares in subsidiaries and affiliates:
Stated at cost using the moving-average method(ii)

Available-for-sale securities:
Securities other than shares, etc. that do not have a market price:
Market value method
Shares, etc. that do not have a market price:
Mainly stated at cost using the moving-average method

(iii)

(2)

Standards and methods for evaluating derivatives
(i)

(3)

(4)

Investment Limited Partnership:
Stated on a net basis equivalent to equity interests, based on the most recent financial
statements available according to the financial reporting date stipulated in thepartnership agreement

Derivatives:
Market value method

Depreciation methods for non-current assets(i)

Property, plant and equipment (excluding leased assets):
The straight-line method is used for buildings (excluding equipment attached tobuildings), and equipment attached to buildings, and structures acquired on or after
April 1, 2016, and the declining-balance method for other property, plant andequipment. For a useful life, the estimated economic life is used, which reflects theusable period, actual period of use, and other factors for each asset.

(ii)

Intangible assets (excluding leased assets)
The straight-line method is used. As for software for in-house use, the straight-line
method is used with a usable period of 5 years.

(iii)

Leased assets
Lease assets relating to finance lease without transfer of ownership:
The straight-line method is used with a useful life of the lease period and with aresidue value of zero.

Accounting standards for significant allowances and provisions(i)

Allowance for doubtful accounts:
In order to prepare for possible losses on uncollectible receivables held, estimateduncollectible amounts are posted: for general receivables, according to the historicalpercentage of uncollectibles, and for doubtful receivables, considering the probabilityof collection.

- 30 -

(5)

(ii)

Provision for bonuses:
In order to prepare for payment of bonuses to employees, a provision is made based on
the estimated bonus payments, which are attributable to the fiscal year under review.

(iii)

Allowance for investment loss of subsidiaries and associates:
In order to prepare for possible losses on investments to subsidiaries and associates, anamount deemed necessary is provided after considering the financial position of eachcompany and based on a respective review. The allowance for investment loss of
subsidiaries and associates of 4 million yen is directly reduced from the amount ofshares of subsidiaries and associates.

(iv)

Provision for stock benefits:
The Company has posted an estimated amount, as of the end of the fiscal year underreview, for the obligation to deliver shares, as a provision for the delivery of its sharesto the Executive Directors in accordance with the Rules for Delivery of Shares to
Officers.

Accounting standards for income and expenses
The Company’s revenues consist of dividend from subsidiaries and associates, management
fee income, and royalty income. Among these, management fee income represents theCompany’s obligations to perform services related to consolidated management andmanagement of each associate based on contracts with each associate. Royalty income
represents the Company’s obligations to license the use of trademarks based on contracts withassociates.
The performance obligations for such management fee income and royalty income arerecognized as revenue according to the contract period.

(6)

Hedge accounting method(i)

Hedge accounting method
Deferred hedge accounting is employed. However, with regard to forward exchange
contracts and the like that meet the requirements for deferral hedge accounting(“furiate-shori”), deferral hedge accounting is employed; with regard to interest-rate
swaps that meet the requirements for exceptional accounting (“tokurei-shori”),
exceptional accounting is employed.

(ii)

Means of hedging and hedged items:
Forward exchange contracts and foreign currency deposits to hedge foreign exchangerate fluctuation risks regarding foreign currency-denominated trade payables andreceivables and the like; and interest-rate swaps to avoid fluctuation risks regarding
borrowings on floating interest rate.

(iii)

Hedging policy
Forward exchange contracts, foreign currency deposits and interest-rate swaps arehedged to avoid exchange- and interest-rate fluctuation risks present in hedged items
in accordance with the Company’s internal rules, and no speculative transactions are
conducted.

(iv)

Assessment of hedge effectivenessHedge effectiveness is assessed by analysis of the percentage between theaccumulated cash flow changes of hedged items and the accumulated cash flowchanges by means of hedging. However, the assessment of hedge effectiveness is

- 31 omitted if the material conditions of the means of hedging and the hedged items are
the same.
(7)

Application of consolidated taxation system
Consolidated taxation system is applied.

(8)

Adoption of tax effect accounting for the transition from the consolidated taxation system tothe group tax sharing system
As for the items subjected to the transition to the group tax sharing system established underthe “Act on Partial Revision of the Income Tax Act, etc.” (Act No. 8 of 2020), as well as theitems reviewed under the non-consolidated taxation system in conjunction with the transition
to the group tax sharing system, the provisions of Paragraph 44 of the “Implementation
Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, issued on February 16, 2018)
are not adopted in accordance with the treatment under Paragraph 3 of the “Practical Solution
on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation
System to the Group Tax Sharing System” (PITF No. 39, issued on March 31, 2020). The
amounts of deferred tax assets and deferred tax liabilities are calculated based on theprovisions of the Income Tax Act before the revision.
From the beginning of the following fiscal year, the Company plans to apply the “Practical
Solution on the Accounting and Disclosure Under the Group Tax Sharing System” (PITF No.
42, issued on August 12, 2021), which provides for the accounting treatment and disclosure ofincome taxes, local income taxes, and tax effect accounting, when the group tax sharing
system is adopted.

2.

Notes to Changes in Accounting Policies
Application of the Accounting Standard for Revenue Recognition, etc.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, issued on March 31, 2020; hereinafter, the “Revenue Recognition
Accounting Standard”) and the “Implementation Guidance on Accounting Standard for
Revenue Recognition” (ASBJ Guidance No. 30, issued on March 26, 2021), effective from the
beginning of the fiscal year under review, and recognizes revenue in the amount expected tobe received in exchange for promised goods or services at the time when control of thesegoods or services is transferred to customers. This application has no impact on the financial
statements.
Application of the Accounting Standard for Fair Value Measurement, etc.
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, issued on July 4, 2019; hereinafter, the “Fair Value Measurement
Accounting Standard”), etc., effective from the beginning of the fiscal year under review. In
accordance with the transitional treatment provided for in Paragraph 19 of the Fair Value
Measurement Accounting Standard and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, issued on July 4, 2019), the Company will
apply the new accounting policy prescribed by the Fair Value Measurement AccountingStandard, etc. into the future. However, this application has no impact on the financial
statements.

- 32 3.

Notes to Accounting Estimates
Evaluation of deferred tax assets(1)

Amount posted in the financial statements for the fiscal year under review
Deferred tax liabilities

3,685 million yen

As stated in “5. Notes to Tax Effect Accounting” of the Notes to Non-Consolidated Financial
Statements, deferred tax assets of 856 million yen and deferred tax liabilities of 4,541 million
yen are presented after offsetting.
(2)

Information useful for understanding the content of accounting estimates
Deferred tax assets are posted if they are judged to be recoverable by making reasonableestimates of when future taxable income will occur and its amount based on business plans,
etc. Such estimates may be affected by changes in uncertain economic conditions, etc. in the
future. If the actual timing of when the taxable income occurs and its amount differ from theestimates, it may significantly affect the amount of deferred tax assets in the financial
statements for the following fiscal year.
As stated in “1. Notes to Significant Accounting Policies (7),” the Company has applied theconsolidated taxation system. Accordingly, estimates for the income tax portion have been
made for the entire consolidated taxation group.
(Accounting estimates associated with the spread of the novel coronavirus)
Although it is still difficult to predict when the novel coronavirus will be contained, theCompany has made accounting estimates of the recoverability, etc. of deferred tax assets,based on an assumption that economic activities will recover in Japan and overseas from thefollowing fiscal year onward.

4.

Notes to Non-Consolidated Balance Sheet, Statements of Income, and Statements of Changes
in Equity(1)

Accumulated depreciation of Property, plant and equipment(2)

Monetary claims, monetary debts and transactions with subsidiaries and associates(i)
Short-term receivables
55,694 million yen(ii)
Short-term payables
8,147 million yen(iii)
Long-term receivables
5,882 million yen(iv)Long-term payables
1,615 million yen(v)
Operating revenue
11,679 million yen(vi)Operating expenses
5,877 million yen(vii) Transactions other than operating transactions
11,977 million yen(3)

Revaluation of land for business use

10,655 million yen

Land for business use was revaluated pursuant to the “Act on Revaluation of Land” (Act No.
34 promulgated on March 31, 1998), and valuation differences which correspond to taxes areposted as “Deferred tax liabilities for land revaluation” of “Liabilities” and the balance thereofis posted as “Revaluation reserve for land” of “Net assets”.

- 33 -

(4)(i)

Method of revaluation:
Land for business use was evaluated based on the main-street land price set forth in
Article 2, item 4 of the “Order for Enforcement of the Act on Revaluation of Land
(Cabinet Order No. 119 promulgated on March 31, 1998), and that land without amain-street land price was evaluated based on the assessed value of fixed assets as set
forth in item 3 thereof, with reasonable adjustment.

(ii)

Date of revaluation:

March 31, 2001

Notes to lending stock
Out of shares of subsidiaries and associates, 46 million yen is for lending stock.

(5)

Loan commitment agreement
The Company has concluded loan commitment agreements with two banks in order to carryout efficient funding of working capital. The balance of unused line of credit, etc. under theloan commitment agreements at the end of the fiscal year under review is as follows.
Total amount of loan commitment
Borrowing balance
Balance(6)33,500 million yen
12,900 million yen
20,600 million yen

Notes to Statements of Income“Reversal of allowance for investment loss of subsidiaries and affiliates” under “Extraordinary
income” consists of reversal of provision for loss of subsidiaries and associates (1,380 million
yen) and reversal of provision of allowance for doubtful accounts for subsidiaries andassociates (302 million yen).
In addition, “Loss on the spread of infectious disease” under extraordinary losses is mainly for
fixed costs incurred during the suspension of business.

(7)

Notes to Statements of Changes in Equity
Type and number of treasury shares at the end of the fiscal year under review
Common shares
139,482 shares
The number of shares above includes 78,800 shares of the Company held in the Board Benefit
Trust (BBT) as a result of the introduction of the BBT plan.

- 34 5.

Notes to Tax Effect Accounting
Breakdown by major reason for incurring deferred tax assets and deferred tax liabilities
Deferred tax assets
Provision for bonuses
Allowance for doubtful accounts
Loss on valuation of shares insubsidiaries
Allowance for investment loss of
subsidiaries and associates
Impaired loss on non-current assets
Assets for adjustment of profit and loss
due to transfer
Long-term accounts payable - other
Loss carried forward
Other
Deferred tax assets - subtotal
Valuation-related reserves concerning loss
carried forward
Valuation-related reserves concerning thesum of deductible temporary differences
Valuation-related reserves-subtotal
Deferred tax assets - total
Deferred tax liabilities
Assets for adjustment of profit and loss
due to transfer
Valuation difference on available-for-salesecurities
Other
Deferred tax liabilities - total
Net deferred tax assets (liabilities)

143 million yen
1,786 million yen
8,202 million yen
1 million yen
713 million yen
1,197 million yen
8 million yen
2,406 million yen
197 million yen
14,656 million yen-1,628 million yen-12,171 million yen-13,800 million yen
856 million yen
20 million yen
4,472 million yen
48 million yen
4,541 million yen-3,685 million yen

Other than the above items, “deferred tax liabilities” concerning “revaluation reserve for land”
was 3,614 million yen.

- 35 6.

Notes to Transactions with Related Parties(1)

Parent company and major corporate shareholders

Attributes Name of company

Ratio of voting
rights held (%)

Relationshipwith related
partyContent oftransaction(Direct)
Major
10.8
shareholder
Property
Property
Sanko Kigyo K.K. (Closer parties or(company,lease-in, etc. lease-inagreed parties)
etc.)
6.2

(2)

Transaction
amount(million yen)

Item

Term-endbalance(million
yen)

609

−

−

Item

Term-endbalance(millionyen)

Subsidiaries and associates, etc.

Ratio of holding Relationship
Attributes Name of company of voting rights, with related
etc. (%)
party

SEIKO WATCHCORPORATION(direct) 100.0

Interlocking
directorate

Content oftransaction
Royalty
incomeManagement
fee income

WAKO Co., Ltd.

(direct) 100.0

Interlocking
directorate

Property
lease-out

Shirakawa EstateCo., Ltd.

(direct) 100.0

Interlocking
directorate

Property
lease-in
Property
lease-in

Subsidiary
Seiko Instruments(direct) 100.0
Inc.

Interlocking
directorate

SEIKO Solutions
Inc.

(direct) 100.0

Interlocking
directorate

SEIKO TimeCreation Inc.

(direct) 100.0

Interlocking
directorate

Property
lease-out
Personnel
expenses forsecondedindividuals
Property
lease-out
Underwritingof capitalincrease

Transaction
amount(million yen)Accounts
1,841 receivable otherAccounts
1,257 payable other279

AccruedincomeAccounts
195 payable otherAccounts
501 payable other

1,105
2
−
0
97

Accruedincome69

Accounts
1,594 payable other

127

691

Accruedincome

38

7,775

−

−

223

(Note) Transaction terms and policies to determine them
1)
The terms for property lease-in are determined based on the same standards as forgeneral transaction terms after considering market price. In the Statements ofIncome, the property rents payable are offset with property rents receivable.
2)
Royalty income is determined based on the standards similar to general transaction
terms.
3)
Management fee income is determined by mutual consultation between the Company
and a directly consolidated subsidiary, taking into consideration the nature of its
business.
4)
Regarding property rents receivable, those of owned property leased out for businessuse are determined linked to relevant income, and those leased out as office or the like- 36 are determined based on a professional valuation. In the Statements of Income,property rents receivable are offset with property rents payable.
However, for properties leased out to WAKO Co., Ltd. for business use, the Company
reduced or exempted the rent linked to income, taking into consideration the impact of
the closed period due to the spread of the novel coronavirus and other factors only forthe fiscal year under review.

7.

5)

Regarding personnel expenses for seconded individuals, personnel expenses
corresponding to the seconded individuals are paid based on a secondment agreement.

6)

The underwriting of capital increase is the contribution-in-kind of loans receivablethrough the debt equity swap method.

Notes to Per-Share Information
Net assets per share
Net income per share(Calculation basis) Profit
Profit available to common shares
Average number of shares during the fiscal
year under review

1,384.23 yen
78.94 yen
3,257 million yen
3,257 million yen
41,261 thousand shares(Note 1) For the purpose of calculating the net income per share, the treasury shares remaining
in trust posted as treasury shares in the “Shareholders' equity” section are included in
the treasury shares deducted in the calculation of the average number of shares during
the fiscal year under review. For the purpose of calculating the net assets per share,
the treasury shares so remaining in trust are included in the treasury shares deductedfrom the total number of shares issued and outstanding at the end of the fiscal year
under review.
For the purpose of calculating the net income per share, the average number oftreasury shares, so deducted, during the fiscal year under review was 82 thousand
shares, and for the purpose of calculating the net assets per share, the number oftreasury shares, so deducted, as at the end of the fiscal year under review was 78
thousand shares.
8.

Notes to Companies subject to Restriction on Consolidated Dividend
The Company will become a company subject to restriction on consolidated dividend fromwhen the last day of the fiscal year under review is the last day of the last fiscal year.

9.

Presentation of Amounts
In the Non-Consolidated Balance Sheet, Non-Consolidated Statements of Income, NonConsolidated Statements of Changes in Equity, and Notes to Non-Consolidated Financial
Statements, any amount less than one million yen is discarded.