シチズン時計（7762） – Notice of the 137th ordinary general meeting of shareholders

Ticker Code: 7762 June 6, 2022 NOTICE OF THE 137th ORDINARY GENERAL MEETING OF SHAREHOLDERS [Disclaimer: Please note that the following purports to be a translation from the original Japanese version prepared for the convenience of our shareholders with voting rights outside Japan for reference. In the case of any discrepancy between the translation and the Japanese original, the latter shall prevail.] Dear shareholders, We hereby notify you that the 137th Ordinary General Meeting of Shareholders of Citizen Watch Co., Ltd. (the “Company”) will be held as described below. Other than attending the meeting in person, you can exercise your voting right in either of the following ways. Please review “Reference Materials for the General Meeting of Shareholders” below and exercise your voting right by no later than 5:30 p.m. on Monday June 27, 2022. [Exercise of voting right in writing (by mail)] Indicate your approval or disapproval on the enclosed Voting Right Exercise Form and send it to us to arrive by the above deadline. [Exercise of voting right via the Internet] Please access the website (https://evote.tr.mufg.jp/) designated by the Company, follow the directions on the screen, and indicate your approval or disapproval by the above deadline. Note: Shareholders outside Japan shall not use these voting procedures. Very truly yours, Toshihiko Sato President and CEO Citizen Watch Co., Ltd. 6-1-12 Tanashi-cho, Nishitokyo, Tokyo If you attend in person, please submit the enclosed Voting Right Exercise Form to the reception desk. In case of any revision to the Reference Materials for the General Meeting of Shareholders, the Business Report, or Consolidated Financial Statements and Non-Consolidated Financial Statements, we will post the revision on our website. Our website https://www.citizen.co.jp/english/ir/stocks/meeting.html – 1 – 1. Time and Date: 10:00 a.m. on Tuesday, June 28, 2022 *The reception is scheduled to open at 9:00 a.m. 2. Place: 3. Agenda: Citizen Watch Tokyo Works, Conference Room 6-1-12 Tanashi-cho, Nishitokyo, Tokyo Items to be reported: Item 1: Item 2: Business Report, Consolidated Financial Statements, and Audit Report on the Consolidated Financial Statements by the Independent Auditors and Audit & Supervisory Board for the 137th term (April 1, 2021 to March 31, 2022) Report on the Non-consolidated Financial Statements for the 137th term (April 1, 2021 to March 31, 2022) Appropriation of Surplus Partial Amendments to the Articles of Incorporation Election of Nine (9) Directors Election of Two (2) Audit & Supervisory Board Members Items to be resolved: (Item 1 to Item 4) Item 1: Item 2: Item 3: Item 4: (Item 5 to Item 9) Item 5: Item 6: Item 7: Item 8: Item 9: Information about countermeasures to prevent the spread of the novel coronavirus disease (COVID-19) Partial Amendments to the Articles of Incorporation Partial Amendments to the Articles of Incorporation Partial Amendments to the Articles of Incorporation Dismissal of a Director Dismissal of a Director From the perspective of preventing the spared of the COVID-19, we strongly recommend to exercise your voting right in advance in writing or via the Internet as much as possible and refrain from attending this General Meeting of Shareholders in person, regardless of your health conditions. The number of seats available has been limited. For this reason, we may refuse entry to the venue to some shareholders. Shareholders who do not wear a mask and who appear to be unwell may be refused entry. We intend to conduct the proceedings of this General Meeting of Shareholders in a shorter time. The aforementioned measures may be updated according to the situation of the spread of infection or what the government or other institution will announce, etc. If you attend the meeting in person, please check our website provided on page 1. – 2 – Reference Materials for the General Meeting of Shareholders Company Proposal Item 1: Appropriation of Surplus The Company considers the distribution of profits to shareholders to be an extremely important management issue of the Company. The Company has made it a fundamental policy to keep the average of the “shareholder return ratio” (which is the percentage of total amount of dividends and treasury shares purchased to profit attributable to owners of parent for the fiscal year under review) at 60% or more on a three-year basis. As for the year-end dividend for the current fiscal year, considering the balance between dividend payments based on consolidated results and stable dividend payments, the Company proposes a payment of 9.00 yen per share as shown below. This payment, combined with the interim dividend of 9.00 yen per share, will bring the total annual cash dividend for this fiscal year to 18.00 yen per share. 1. Type of dividend Cash 2. Allotment and total amount of dividend 9.00 yen per common share of the Company Total amount of dividends: 2,687,303,439 yen 3. Effective date of dividends from surplus June 29, 2022 (Reference) 135th (FY2019) 136th (FY2020) 137th (current term) (FY2021) Dividend (millions of yen) (annual cash dividend per share) (yen) Amount of treasury shares purchased (millions of yen) Total (millions of yen) 3,752 (12) 2,999 6,752 1,565 (5) – 1,565 Profit attributable to owners of parent (millions of yen) (16,667) (25,173) 5,504 (18) 7,155 12,660 22,140 – 3 – Company Proposal Item 2: Partial Amendments to the Articles of Incorporation 1. Reasons for amendments Accompanying the enforcement of the revised provisions provided for in the proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019) on September 1, 2022, since the provision for Internet Disclosure and Deemed Provision of Reference Materials for the General Meeting of Shareholders, Etc. (Article 15 of the current Articles of Incorporation) will no longer be required, it will be deleted. A provision stipulating that the Company shall take measures for providing information that constitutes the content of reference materials for the general meeting of shareholders, etc. in electronic format and a provision to limit the scope of the items to be stated in the paper-based documents to be delivered to shareholders who requested the delivery of paper-based documents will also be established. In addition, accompanying the aforementioned new establishment and deletion, supplementary provisions regarding the effective date, etc. will be established. (Underlined portions indicate amendments.) Proposed Amendments (Deleted) 2. Contents of amendments The proposed amendments are as follows: Current Articles Article 15 (Internet Disclosure and Deemed Provision of Reference Materials for the General Meeting of Shareholders, Etc.) When the Company convenes a general meeting of shareholders, if it discloses information that is to be stated or presented in the reference materials for the general meeting of shareholders, business report, non-consolidated financial statements and consolidated financial statements through the internet in accordance with the provisions prescribed by the Ministry of Justice Order, it may be deemed that the Company has provided this information to shareholders. (Newly established) Article 15 (Measures for Providing Information in Electronic Format, Etc.) 1. When the Company convenes a general meeting of shareholders, it shall take measures for providing information that constitutes the content of reference materials for the general meeting of shareholders, etc. in electronic format. 2. Among items for which the measures for providing information in electronic format will be taken, the Company may exclude all or some of those items designated by the Ministry of Justice Order from statements in the paper-based documents to be delivered to shareholders who requested the delivery of paper-based documents by the record date of voting rights. – 4 – Current Articles (Newly established) Proposed Amendments (Supplementary Provisions) 1. The deletion of Article 15 (Internet Disclosure and Deemed Provision of Reference Materials for the General Meeting of Shareholders, Etc.) of the pre-amended Articles of Incorporation and the establishment of the new Article 15 (Measures for Providing Information in Electronic Format, Etc.) of the amended Articles of Incorporation shall be effective from September 1, 2022, which is the date of enforcement of the revised provisions provided for in the proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019) (hereinafter referred to as the “Date of Enforcement”). 2. Notwithstanding the provision of the preceding paragraph, Article 15 (Internet Disclosure and Deemed Provision of Reference Materials for the General Meeting of Shareholders, Etc.) of the pre-amended Articles of Incorporation shall remain effective regarding any general meeting of shareholders held on a date within six months from the Date of Enforcement. 3. These Supplementary Provisions shall be deleted on the date when six months have elapsed from the Date of Enforcement or three months have elapsed from the date of the general meeting of shareholders in the preceding paragraph, whichever is later. – 5 – Company Proposal Item 3: Election of Nine (9) Directors The terms of office of all of the present nine (9) Directors will expire at the conclusion of this General Meeting of Shareholders, and the Company proposes to elect nine (9) Directors. The candidates for the positions of Director are as follows: No. Name Position and areas of responsibility in the Company Attribute of candidate 1 Toshihiko Sato President and CEO 2 Toshiyuki Furukawa 3 Yoshitaka Oji 4 Keiichi Nakajima Director 5 Shinji Shirai Director Managing Director Managing Director In charge of Corporate Planning Division, Accounting Department, Public & Investor Relations Department and IT Management Department Senior General Manager of Watch Business Division [For reelection] [For reelection] [For reelection] [For reelection] [For reelection] 6 Yoshiaki Miyamoto Director [For reelection] Senior General Manager of Manufacturing Technology Center, Watch Business Division Group Risk Management, General Manager of General Affairs Division and in charge of Personnel Division, CSR Department and Environmental Management Department 7 Toshiko Kuboki 8 Yoshio Osawa Outside Director Outside Director 9 Katsuhiko Yoshida – [For reelection] [Outside] [Independent] [For reelection] [Outside] [Independent] [For new election] [Outside] [Independent] – – – – – Attendance at Board of Directors meetings 17/17 (100%) 17/17 (100%) 17/17 (100%) 17/17 (100%) 17/17 (100%) 17/17 (100%) 17/17 (100%) 17/17 (100%) – – 6 – No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held April 1981 August 2009 April 2012 June 2015 April 2016 April 2016 October 2016 October 2016 Joined the Company General Manager of R&D Division of the Company President of CITIZEN FINETECH MIYOTA CO., LTD. (currently CITIZEN FINEDEVICE CO., LTD.) Director of the Company Director of Citizen Watch Co., Ltd. Responsible for Production, General Manager of Product Development Division, and in charge of Quality Assurance Department of Citizen Watch Co., Ltd. Responsible for Watch Production of the Company Senior General Manager of Product Development Division and in charge of Quality Assurance Department of the Company In charge of Product Division and Quality Assurance Department of the Company President of Citizen Watch Manufacturing Co., Ltd. Managing Director of the Company Senior Managing Director of the Company President and CEO of the Company (present) 9,531 Reasons for nominating the candidate for Director In light of Mr. Toshihiko Sato’s achievements and experience in running the Citizen Group’s devices and components business, as well as being responsible for the watch production, the Company believes that he will continue to play a leading role in increasing the corporate value of the Citizen Group and nominated him as a candidate for Director. Attendance at Board of Directors meetings 17/17 (100%) 1 Toshihiko Sato (November 16, 1955) For reelection April 2017 April 2017 June 2017 April 2018 April 2019 – 7 – No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held April 1986 April 2009 July 2010 June 2011 April 2015 April 2015 June 2016 June 2016 June 2016 Joined the Company Manager of Investor and Public Relations Department of the Company Deputy General Manager of Corporate Planning Division of the Company General Manager of Corporate Planning Division of the Company Director of Citizen Watch Co., Ltd. General Manager of Management Planning Division and in charge of Accounting Department of Citizen Watch Co., Ltd. Director of the Company General Manager of Corporate Planning Division of the Company In charge of Accounting Department and Public & Investor Relations Department of the Company (present) In charge of IT Management Department of the Company (present) In charge of Corporate Planning Division of the Company (present) Managing Director of the Company (present) 7,631 Reasons for nominating the candidate for Director In light of Mr. Toshiyuki Furukawa’s achievements in formulating the Citizen Group’s management strategy as General Manager of the Company’s Corporate Planning Division and achievements and experience being in charge of the Corporate Planning Division, Accounting Department, etc. as Director of the Company after being involved in the Company’s investor dialogue and public relations strategy as Manager of the Company’s Investor and Public Relations Department, the Company believes he will continue to play a leading role in increasing the corporate value of the Citizen Group and nominated him as a candidate for Director. Attendance at Board of Directors meetings 17/17 (100%) Toshiyuki Furukawa (January 19, 1963) For reelection October 2016 April 2021 April 2022 2 – 8 – No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held April 1986 August 2005 June 2011 August 2011 July 2012 April 2015 June 2016 June 2016 October 2016 October 2016 April 2017 June 2017 April 2019 April 2019 April 2019 April 2020 January 2021 April 2021 April 2022 April 2022 Joined the Company Assigned to Marketing Department, Watch Business Division of the Company (assigned to Singapore) General Manager of Business Administration Department, Administration Division of Citizen Watch Co., Ltd. General Manager of Business Management Department, Strategic Planning Division of Citizen Watch Co., Ltd. General Manager of Management Planning Division of Citizen Watch Co., Ltd. General Manager of Corporate Planning Division of the Company Operating Officer of Citizen Watch Co., Ltd. Deputy General Manager of Product Development Division of Citizen Watch Co., Ltd. Operating Officer of the Company Deputy Senior General Manager of Product Development Division of the Company Deputy Senior General Manager of Watch Business Division of the Company Director of the Company Senior General Manager of Product Development Division of the Company Senior General Manager of R&D Center of the Company Senior General Manager of Watch Development Division of the Company In charge of Watch Development Division of the Company In charge of R&D Center of the Company Senior General Manager of Watch Business Division and in charge of Movement Division of the Company Managing Director of the Company (present) Senior General Manager of Watch Business Division of the Company (present) 13,008 Reasons for nominating the candidate for Director In light of Mr. Yoshitaka Oji’s experience in promoting the management strategy in the Citizen Group’s watches business as the General Manager of the Corporate Planning Division of the Company and its subsidiary and his achievements in promoting the product development of watches and clocks at the Company after being involved in the sales of watches and clocks at the Company’s overseas subsidiary, the Company believes he will continue to contribute to the promotion of the Citizen Group business and nominated him as a candidate for Director. Attendance at Board of Directors meetings 17/17 (100%) 3 Yoshitaka Oji (November 23, 1963) For reelection – 9 – No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held June 2010 April 2008 March 2008 April 1982 March 2001 August 2004 June 2008 June 2008 June 2008 March 2009 Joined the Company President of Citizen Machinery Asia Co., Ltd. General Manager of Corporate Planning Division of CITIZEN PRECISION MACHINERY CO., LTD. President of Citizen (ZIBO) Precision Machinery Co., Ltd. Senior General Manager of Administration Center of CITIZEN MACHINERY CO., LTD. President of Citizen Machinery Asia Co., Ltd. President of Citizen Machinery Vietnam Co., Ltd. Director of CITIZEN MACHINERY CO., LTD. Outside Director of Miyano Machinery Japan Inc. (Currently CITIZEN MACHINERY CO., LTD.) Operating Officer of CITIZEN MACHINERY CO., LTD. Operating Officer of CITIZEN MACHINERY MIYANO CO., LTD. (Currently CITIZEN MACHINERY CO., LTD.) Director and Operating Officer of CITIZEN MACHINERY MIYANO CO., LTD. President of CITIZEN MACHINERY MIYANO CO., LTD. (present) Director of the Company (present) Reasons for nominating the candidate for Director Mr. Keiichi Nakajima has mainly been involved in the Citizen Group’s machine tools business, driving the Citizen Group’s overall machine tools business as President of CITIZEN MACHINERY CO., LTD., and in light of his achievements and experience in promoting the Company’s business strategy, the Company believes he will continue to contribute to the promotion of the Citizen Group business and nominated him as a candidate for Director. April 2012 April 2011 April 2013 June 2013 23,398 Attendance at Board of Directors meetings 17/17 (100%) Keiichi Nakajima (August 14, 1958) For reelection 4 – 10 – No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held November 2013 President of SUNCITI TRADING DONGGUAN 10,978 March 1984 April 2010 June 2011 April 2013 April 2013 August 2013 October 2013 April 2016 October 2016 October 2016 April 2017 June 2017 June 2017 April 2019 April 2019 April 2022 Joined Miyota Precision Co., Ltd. (Currently CITIZEN FINEDEVICE CO., LTD.) President of Guangzhou Most Crown Electronics Ltd. Operating Officer of Citizen Watch Miyota Co., Ltd. Operating Officer of Citizen Watch Co., Ltd. General Manager of Product Development Department, Technical Development Division of Citizen Watch Co., Ltd. Deputy Senior General Manager of Technical Development Division of Citizen Watch Co., Ltd. Deputy General Manager of Product Development Division of Citizen Watch Co., Ltd. LTD. President of Sunciti Manufacturers Ltd. Operating Officer of the Company Deputy Senior General Manager of Product Development Division of the Company Senior General Manager of Product Division of the Company Director of the Company (present) In charge of Quality Assurance Department Senior General Manager of Manufacturing Technology Division President of Citizen Watch Manufacturing Co., Ltd. (present) Senior General Manager of Manufacturing Technology Center, Watch Business Division of the Company (present) Reasons for nominating the candidate for Director In light of Mr. Shinji Shirai’s experience in managing the Company’s subsidiaries manufacturing watches and clocks and his achievements in promoting the manufacturing of watches and clocks as well as technologies and product development relating to such products at the Company and its subsidiaries after being involved in the manufacturing of watches and clocks at such subsidiaries, the Company believes he will continue to contribute to the promotion of the Citizen Group business and nominated him as a candidate for Director. Attendance at Board of Directors meetings 17/17 (100%) Shinji Shirai (August 7, 1960) For reelection 5 – 11 – No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Yoshiaki Miyamoto (February 3, 1963) For reelection 6 No. 7 Toshiko Kuboki (February 26, 1960) For reelection Candidate for Outside Director August 1990 April 2009 Joined the Company Deputy General Manager of Business Administration Department, Administration Division of Citizen Watch Co., Ltd. December 2010 Deputy General Manager of Strategic Planning April 2012 April 2014 April 2017 April 2017 June 2017 June 2018 April 2019 Department, Planning Division of Citizen Watch Co., Ltd. President of Citizen Watch Manufacturing (Thailand) Co., Ltd. President of Citizen Watch Europe GmbH Senior Operating Officer General Manager of General Affairs Division of the Company (present) Group Risk Management and in charge of Personnel Division of the Company (present) Director of the Company (present) In charge of CSR Department and Environmental Management Department of the Company (present) Reasons for nominating the candidate for Director In light of Mr. Yoshiaki Miyamoto’s experience in managing the overseas subsidiaries responsible for watch and clock sales and achievements in the Group Risk Management, the General Affairs Division and the Personnel Division as Director of the Company after promoting startup of new plants at Citizen Group’s overseas subsidiaries engaging in manufacturing of watches and clocks, the Company believes he will continue to play a leading role in increasing the corporate value of the Citizen Group and nominated him as a candidate for Director. April 1987 Registered as an attorney-at-law February 2002 Conciliation commissioner of Tokyo Family Court April 2009 April 2012 (present) Retirement Benefit Examination Committee member of Board of Audit of Japan (present) Visiting Professor of Graduate School of Law, Chuo University (present) December 2013 Municipal Board of Education member of Chuo-ku, June 2015 June 2015 June 2016 Tokyo Outside Director of Qol Co., Ltd. (Currently Qol Holdings Co., Ltd.) (present) Outside Auditor of Kyodo News (present) Outside Audit & Supervisory Board Member of the Company June 2019 Outside Director of the Company (present) December 2021 Chuo-ku Specially Appointed Civil Servant Remuneration, etc. Council Member (present) Reasons for nominating the candidate for Outside Director and role expectations The Company intends to have Ms. Toshiko Kuboki assume supervisory functions in the appointment of the Company’s President and CEO and processes such as the determination of officer compensation from an independent and objective position, in addition to utilizing her professional point of view as an attorney-at-law and her experience as an outside director of another company to check and supervise the Company’s management. The Company therefore again nominated her as a candidate for Outside Director. While she has not been involved in the management of a company aside from her position as an Outside Director or Outside Audit & Supervisory Board Member, the Company deems that she has thorough knowledge of corporate legal affairs as an attorney-at-law and will be able to properly perform her duties as Outside Director. – 12 – 9,495 Attendance at Board of Directors meetings 17/17 (100%) Number of the Company’s shares held 5,000 Attendance at Board of Directors meetings 17/17 (100%) No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held April 2003 April 2005 April 2007 April 2008 June 2008 April 2011 June 2013 April 2015 Corporate Officer and General Manager of Network Division of Sumitomo Corporation Executive Officer and General Manager of Network Division of Sumitomo Corporation Executive Officer and General Manager of Media Division of Sumitomo Corporation Managing Executive Officer and General Manager of Media, Network & Lifestyle Retail Business Unit of Sumitomo Corporation Representative Director and Managing Executive Officer of Sumitomo Corporation Representative Director and Senior Managing Executive Officer of Sumitomo Corporation Representative Director, President and Chief Operating Officer of SCSK Corporation Representative Director and President of SCSK Corporation Director and Chairman of the Board of SCSK Corporation Director of SCSK Corporation Outside Director of Canon Marketing Japan Inc. (present) Outside Director of the Company (present) 8 Yoshio Osawa (January 22, 1952) For reelection Candidate for Outside Director April 2016 April 2017 March 2018 June 2019 Reasons for nominating the candidate for Outside Director and role expectations The Company intends to have Mr. Yoshio Osawa assume supervisory functions in the appointment of the Company’s President and CEO and processes such as the determination of officer compensation from an independent and objective position, in addition to utilizing his considerable experience in and extensive knowledge of management to check and supervise the Company’s management. The Company therefore again nominated him as a candidate for Outside Director. Attendance at Board of Directors meetings 17/17 (100%) No. Name (Date of birth) Career summaries, position and areas of responsibility in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held June 2007 June 2012 March 2014 March 2015 October 2019 Executive Officer of Kao Corporation Managing Executive Officer of Kao Corporation Representative Director, Managing Executive Officer of Kao Corporation Representative Director, Senior Managing Executive Officer of Kao Corporation President of Japan Childcare Support Association (present) Reasons for nominating the candidate for Outside Director and role expectations In the belief that Mr. Katsuhiko Yoshida will utilize his considerable experience in and extensive knowledge of management to check and supervise the Company’s management, the Company newly nominated him as a candidate for Outside Director. 9 Katsuhiko Yoshida (April 5, 1954) For new election Candidate for Outside Director Notes: 1. “Citizen Watch Co., Ltd.” mentioned above in the career summary refers to the subsidiary that was newly incorporated in an incorporation-type split on April 2, 2007 and dissolved through being merged with the Company in October 1, 2016. 2. The number of the Company’s shares held includes the shares held through the stock ownership plan. 3. No conflict of interest exists between the Company and any of the above candidates. – 13 – – – 4. The Company, pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, has agreements with Ms. Toshiko Kuboki and Mr. Yoshio Osawa to limit their liability for damages under Article 423, paragraph (1) of the Companies Act, in order to enable them to fully perform their duties as Outside Directors as expected, and if their reelection is approved at the meeting, the Company intends to continue these agreements. The amount of their total maximum liability for damages under such agreements is the higher of 10,000,000 yen or the minimum liability amount provided for under the relevant laws and regulations. If the election of Mr. Katsuhiko Yoshida is approved at the meeting, the Company, pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, will enter into an agreement with him to limit his liability for damages under Article 423, paragraph (1) of the Companies Act, in order to enable him to fully perform his duties as Outside Director as expected. The amount of his total maximum liability for damages under such an agreement will be the higher of 10,000,000 yen or the minimum liability amount provided for under the relevant laws and regulations. 5. The Company has entered into a directors and officers liability insurance policy as provided for in Article 430-3, paragraph (1) of the Companies Act with an insurance company. The insurance policy will cover damages and litigation expenses incurred in cases where an insured receives a claim for damages arising from the performance of duties (including nonfeasance). However, there are exemptions from coverage such as damages arising from an illegal act by the insured with full knowledge of its illegality. If each candidate assumes the office as Director, each of them will be included as an insured in the policy. Insurance premiums are borne by the Company, and the insureds do not bear any of the premiums. In addition, when the policy is renewed next, the Company plans to renew the policy with the same terms. 6. The candidates Ms. Toshiko Kuboki, Mr. Yoshio Osawa, and Mr. Katsuhiko Yoshida are candidates for Outside Directors of the Company. The Company has appointed Ms. Toshiko Kuboki and Mr. Yoshio Osawa, as Independent Officers defined by the Tokyo Stock Exchange and registered them with the Exchange as such. The Company intends to appoint Mr. Katsuhiko Yoshida as Independent Officer defined by the Tokyo Stock Exchange and registered him with the Exchange as such. The terms of office of Ms. Toshiko Kuboki and Mr. Yoshio Osawa as Outside Director will be three (3) years at the conclusion of this General Meeting of Shareholders. 7. The candidate Mr. Katsuhiko Yoshida will assume the position of Outside Director of Kawasaki Heavy Industries, Ltd., if he is elected as that company’s Outside Director at that company’s 199th Ordinary General Meeting of Shareholders to be held on June 24, 2022. – 14 – Company Proposal Item 4: Election of Two (2) Audit & Supervisory Board Members The term of office of Audit & Supervisory Board Member Mr. Noboru Akatsuka will expire and Mr. Yoshio Takada will resign at the conclusion of this General Meeting of Shareholders. The Company proposes to elect two (2) Audit & Supervisory Board Members. The candidates for the position of Audit & Supervisory Board Member are as follows. Regarding this item, the consent of the Audit & Supervisory Board has been obtained. No. Name (Date of birth) Career summaries, position in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held April 1981 May 2005 Joined Dai-Ichi Kangyo Bank, Limited. General Manager of Asia Corporate Banking of Mizuho Corporate Bank, Ltd. (Currently Mizuho Bank, Ltd.) October 2007 General Manager of Overseas Business Promotion April 2008 April 2009 June 2011 March 2016 April 2016 June 2018 Division of Mizuho Corporate Bank, Ltd. General Manager of Corporate Banking Division No. 18 of Mizuho Corporate Bank, Ltd. Executive Officer of Mizuho Corporate Bank, Ltd. Managing Executive Officer of Century Tokyo Leasing Corporation Counselor of Century Tokyo Leasing Corporation Chairman of Fujitsu Leasing Co., Ltd. Full-time Audit & Supervisory Board Member (Outside) of the Company (present) 4,850 Noboru Akatsuka (June 7, 1958) For reelection Reasons for nominating the candidate for Audit & Supervisory Board Member Attendance at Mr. Noboru Akatsuka has been managing banks and companies for many years and has extensive knowledge and experience thereof, and the Company believes he will continue to utilize such knowledge and experience to the audit of the Company and is suitable for the position of Outside Audit & Supervisory Board Member. Board of Directors meetings 17/17 (100%) Attendance at Audit & Supervisory Board meetings 13/13 (100%) 1 – 15 – No. Name (Date of birth) Career summaries, position in the Company, and significant concurrent roles held at other corporations Number of the Company’s shares held April 1986 April 2007 August 2011 April 2012 March 2014 August 2014 April 2017 April 2019 Joined the Company General Manager of Accounting Department, Administration Division of Citizen Watch Co., Ltd. General Manager of Accounting Department of Citizen Watch Co., Ltd. Executive Officer of Citizen Jewelry Co., Ltd. Director of ROYAL TIME CITI CO., LTD. Representative Director and President of ROYAL TIME CITI CO., LTD. Director of ROYAL TIME CITI CO., LTD. Director of Citizen Watch Manufacturing Co., Ltd. (present) Reasons for nominating the candidate for Audit & Supervisory Board Member Mr. Kazunori Yanagi has experience in managing a subsidiary of the Company as President after mainly being involved in the accounting area at the Company and holding several managerial positions in accounting departments of the Company’s subsidiaries. In the belief that he will utilize such experience in audits of the Company, the Company newly nominated him as a candidate for Audit & Supervisory Board Member. 6,752 Kazunori Yanagi (February 3, 1963) For new election “Citizen Watch Co., Ltd.” mentioned above in the career summary refers to the subsidiary that was newly incorporated in an incorporation-type split on April 2, 2007 and dissolved through being merged with the Company in October 1, 2016. 2. The number of the Company’s shares held includes the shares held through the stock ownership plan. 3. No conflict of interest exists between the Company and any of the above candidates. 4. The Company, pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, has an agreement with Mr. Noboru Akatsuka to limit his liability for damages under Article 423, paragraph (1) of the Companies Act, in order to enable him to fully perform his duties as Audit & Supervisory Board Member as expected, and if his reelection is approved at the meeting, the Company intends to continue the agreement. The amount of his total maximum liability for damages under such agreements is the higher of 10,000,000 yen or the minimum liability amount provided for under the relevant laws and regulations. If the election of Mr. Kazunori Yanagi is approved at the meeting, the Company, pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, will enter into an agreement with him to limit his liability for damages under Article 423, paragraph (1) of the Companies Act, in order to enable him to fully perform his duties as Audit & Supervisory Board Member as expected. The amount of his total maximum liability for damages under such an agreement will be the higher of 10,000,000 yen or the minimum liability amount provided for under the relevant laws and regulations. 5. The Company has entered into a directors and officers liability insurance policy as provided for in Article 430-3, paragraph (1) of the Companies Act with an insurance company. The insurance policy will cover damages and litigation expenses incurred in cases where an insured receives a claim for damages arising from the performance of duties (including nonfeasance). However, there are exemptions from coverage such as damages arising from an illegal act by the insured with full knowledge of its illegality. If each candidate assumes the office as Audit & Supervisory Board Member, each of them will be included as an insured in the policy. Insurance premiums are borne by the Company, and the insureds do not bear any of the premiums. In addition, when the policy is renewed next, the Company plans to renew the policy with the same terms. 6. The candidate Mr. Noboru Akatsuka is a candidate for Outside Audit & Supervisory Board Member of the Company. The Company has appointed him as Independent Officer defined by the Tokyo Stock Exchange and registered him with the Exchange as such. 2 Notes: 1. – 16 – (Reference) Criteria on Independence of Outside Officers The Company deems that an Outside Director or Outside Audit & Supervisory Board Member of the Company (“Outside Officer”) or a candidate for Outside Officer possesses independence such that the interests of the Outside Officer or candidate for Outside Officer are unlikely to have conflict with the interests of general shareholders if, after the Company investigates to practically possible and reasonable extent, one or more of the following criteria do not apply with respect to the said individual. (1) A party who is now or was previously an officer (excluding the Company’s Outside Director or Outside Audit & Supervisory Board Member) or an employee of the Citizen Group (the “Citizen Group” refers to the group of companies made up of the Company and its subsidiaries; hereinafter the same). (2) A party whose major business partner is the Company (Note 1) or an executive of such party (“executive” refers to an executive as defined in Article 2, paragraph (3), item (vi) of the Enforcement Regulations of the Companies Act (Order of the Ministry of Justice No. 12 of 2006); hereinafter, the same). (3) A major business partner of the Company (Note 2) or an executive of such party. (4) A consultant, accounting professional, or legal professional who receives cash or other financial benefits of 10 million yen or higher as payment from the Citizen Group for reasons other than Director’s or Audit & Supervisory Board Member’s remuneration (if the party receiving such financial benefits is an incorporated entity, association or other organization, then a person belonging to such organization). (5) A party receiving donations of cash or other financial benefits of 10 million yen or higher from the Citizen Group (if the party receiving such donation is an incorporated entity, association or other organization, then a person belonging to such organization). (6) A party directly or indirectly holding 10% or more of the total number of voting rights held (7) by the Company’s shareholders or an executive of such party. In the case that an officer or employee of the Citizen Group is serving as an outside officer at another company, an officer or employee of the company other than the aforementioned outside officer. (8) A person to whom any of the criteria (2) through (7) applied in the most recent fiscal year or the past three fiscal years of the Company. (9) A spouse or relative within the second degree of kinship of a person to whom any of the criteria (1) through (8) applies. Notes: 1. “Party whose major business partner is the Company” refers to a party whose sales to the Citizen Group makes up 2% or more of the consolidated net sales of the party’s group (“group” refers to the group of companies made up of the party, its parent, and its subsidiaries; hereinafter the same). 2. “Major business partner of the Company” refers to a party whose group provides the Citizen Group with sales amounting to 2% or more of the consolidated net sales of the Company. – 17 – (Reference) proposed are as follows. Toshihiko Sato Toshiyuki Furukawa Yoshitaka Oji Keiichi Nakajima Shinji Shirai Yoshiaki Miyamoto Toshiko Kuboki Yoshio Osawa Katsuhiko Yoshida ● ● ● ● ● ● ● ● The role expectations for each Director in the nominees listed in this Convocation Notice of Meeting are elected as Skill matrix of Directors Name Corporate Management / Management Strategy Sales / Marketing / DX R&D / Technology Global Business HR Development / Diversity Finance / Accounting ESG / Sustainability ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Notes: Up to three items are listed as the role expectations for each Director. – 18 – Item 5 through Item 9 are proposals from a single shareholder (number of voting rights: 337; hereinafter referred to as the “Proposing Shareholder”). The following contents of proposals and reasons for proposals are the original text as submitted by the Proposing Shareholder in each place, except for amendments made with the prior consent of the Proposing Shareholder for purposes such as clarifying the contents of the proposals. Shareholder Proposal Item 5: Partial Amendments to the Articles of Incorporation 1. Contents of proposal 2. Reasons for proposal Director remuneration is, in principle, not disclosed individually. This is because the disclosure of individual Director’s remuneration is an important issue from, the perspective of increasing management transparency. In addition, this is because it is an issue for consideration when shareholders elect or dismiss individual Directors. Furthermore, only the total amount of Directors’ remuneration and number of personnel paid is disclosed, and unclear descriptions such as the policy for determining individual Director’s remuneration, etc. is completely inadequate as materials for consideration of election or dismissal itself. Opinion of the Board of Directors of the Company Objection The Board of Directors objects to this proposal for the following reasons: The Company appropriately discloses matters pertaining to Director’s compensation, etc. in the BUSINESS REPORT in accordance with laws and regulations. Additionally, necessary information for considering proposals for the election of Directors is appropriately disclosed in the Reference Materials for the General Meeting of Shareholders in accordance with laws and regulations. The Company has established the Compensation Committee as a voluntary institution. The majority of the Committee members are Outside Directors and the Chairperson is an Outside Director selected by mutual election by Committee members. To improve the transparency of Directors’ compensation, etc., the Committee determines the content of Directors’ compensation, etc. The Board of Directors judges that the addition of the proposed provision to the Articles of Incorporation is unnecessary and is therefore against this proposal. – 19 – Shareholder Proposal Item 6: Partial Amendments to the Articles of Incorporation 1. Contents of proposal 2. Reasons for proposal Hold a fair and clear general meeting of shareholders. This is because when a general shareholder asks a question there has been multiple occasions of intimidation of the questioner through successive obstructions of the question. In addition, in the event that it is difficult for the Chair to provide an accurate response to the shareholder’s question, it is desirable for a suitable responsible officer to be designated as the person to respond with a response that as polite and clear as possible, but this has been completely inadequate. Furthermore, it would be desirable if the method for voting on proposals at the general meeting of shareholders, which is a company’s highest decision-making body, should not be an unclear method with transparency such as applause, but conducted with the understanding of shareholders in attendance by indicating the approval ratio (%) of each proposal including the results of votes exercised up until that day and the status of shareholders in attendance on the day. Opinion of the Board of Directors of the Company Objection The Board of Directors objects to this proposal for the following reasons: With respect to how the General Meeting of Shareholders is managed, the Company will continue striving to manage the proceedings in an appropriate manner, including the designation of who will answer a shareholder’s question, selecting the voting method and disclosing the voting results. The reason for the proposal states that “there has been multiple occasions of intimidation of the questioner through successive obstructions of the question.” However, this has not been the case. However, the Proposing Shareholder misconceived statements made by the Chairman as statements made by people other than the Chairman. We explained this misunderstanding to the Proposing Shareholder and have already received their understanding. The Board of Directors judges that the addition of the proposed provision to the Articles of Incorporation is unnecessary and is therefore against this proposal. – 20 – Shareholder Proposal Item 7: Partial Amendments to the Articles of Incorporation 1. Contents of proposal The Board of Directors, should in principle, abolish concurrently held position of Chief Executive Officer and Chairperson of the Board of Directors and appoint an Outside Director as Chairperson. 2. Reasons for proposal This is because the appointment of an independent Outside Director who does not conduct operations as Chairperson will result in fairer Board of Directors’ resolutions and improve the supervision of corporate management and governance impact from the perspectives of increasing corporate value and protecting shareholders’ rights. Opinion of the Board of Directors of the Company Objection The Board of Directors objects to this proposal for the following reasons: The Company recognizes that there is a debate to be had about separating the roles of Chairman of the Board of Directors and Chief Executive Officer. However, at present, the President and CEO, who has a thorough understanding of the Company’s business, serves as Chairman of the Board of Directors and management is checked and supervised by highly independent Outside Directors, who comprise one-third of the Board, and the Company deems this arrangement to be appropriate. The Company has established the Nomination Committee as a voluntary institution. The majority of the Committee members are Outside Directors and the Chairperson is an Outside Director selected by mutual election by Committee members. To improve the transparency concerning the election of the President and CEO, etc., the President and CEO is elected by a resolution of the Board of Directors based on a proposal by the Committee. The Board of Directors judges that the addition of the proposed provision to the Articles of Incorporation is unnecessary and is therefore against this proposal. – 21 – Shareholder Proposal Item 8: Dismissal of a Director 1. Contents of proposal Require Mr. Toshihiko Sato to be dismissed as Director. 2. Reasons for proposal This is because corporate value has unfortunately been impaired since Mr. Toshihiko Sato assumed the office of Representative Director and President, with the total market capitalization almost always below shareholders’ equity (corporate liquidation value). Opinion of the Board of Directors of the Company Objection The Board of Directors objects to this proposal for the following reasons: The President and CEO, Toshihiko Sato, has fulfilled his role as leader by achieving a swift recovery in business results amid the rapidly changing business environment due to the spread of COVID-19 and other factors. As he is expected to continue playing a leading role in increasing the corporate value of the Citizen Group, there is no reason for his dismissal and the Board of Directors is against this proposal. – 22 – Shareholder Proposal Item 9: Dismissal of a Director 1. Contents of proposal Require Mr. Yoshiaki Miyamoto to be dismissed as Director. 2. Reasons for proposal This is because of his unfortunate lack of risk management as the person responsible for the operations of the general meeting of shareholders as General Manager of General Affairs Division. If to cite supplementary issues, it is that he made general shareholders feel uncomfortable at the general meeting of shareholders, and he was provocative towards shareholders concerning shareholder proposals. Opinion of the Board of Directors of the Company Objection The Board of Directors objects to this proposal for the following reasons: As stated in the opinion given by the Board of Directors of the Company in response to Item 6, this proposal is based on a misunderstanding of the Proposing Shareholder. Therefore, there are no grounds for this proposal and the Board of Directors is against it. – 23 – BUSINESS REPORT From April 1, 2021 to March 31, 2022 (Attachments) I. MATTERS RELATING TO THE CURRENT SITUATION OF THE GROUP 1. Review of Operations During the fiscal year under review, the Japanese economy faced an increasingly uncertain situation partly due to the spread of new variants and a shortage of parts, mainly semiconductors, offsetting signs of a gradual recovery from the impact of COVID-19. In addition, in North America and Europe, where concern had also been growing over a decline in consumer spending due to the resurgence of COVID-19 and the higher price, the economy remained on a recovery path overall. In Asia, economic activity remained weak, reflecting not only an economic slowdown due to uncertainties over restrictions on economic activities in the Chinese market, but also recoveries varied in other Asian regions, depending on to what extent infections were under control. In this environment, the Citizen Group has implemented a range of initiatives, such as facilitating the growth of the watches business and machine tools business, promoting sustainable management and strengthening compliance in quality, with a view not merely to continue manufacturing as in the past, but to address the challenge of new, unique value creation. The consolidated results for the fiscal year under review recorded increases in both sales and profit, with net sales of 281.417 billion yen (up 36.2% year on year) and operating profit of 22.273 billion yen (operating loss of 9.551 billion yen in the previous fiscal year). Ordinary profit was 27.342 billion yen (ordinary loss of 4.143 billion yen in the previous fiscal year), and profit attributable to owners of parent was 22.140 billion yen (loss attributable to owners of parent of 25.173 billion yen in the previous fiscal year). Consolidated Results Net sales Operating profit Ordinary profit Profit attributable to owners of parent 281.417 22.273 27.342 22.140 (Billions of yen) (up 36.2% year-on-year) (operating loss of 9.551 in the previous fiscal year) (ordinary loss of 4.143 in the previous fiscal year) (loss attributable to owners of parent of 25.173 in the previous fiscal year) Net sales by segment for the fiscal year under review were as follows: [Watches] With respect to sales of Citizen brand watches in the domestic market, the Company released new products, including a mechanical model of the top-of-the-line brand, The CITIZEN, and the mechanical watch brand, CITIZEN Series 8, which were highly rated. However, sales recovered by only a small degree amid a weak recovery in consumption due to repeated infection prevention measures and other factors. Looking at the overseas market, in the North American market, sales at physical stores such as jewelry chains and department stores, as well as online sales, remained strong, helped by a recovery in consumer spending amid negative factors such as chaotic logistical conditions and sharp inflation. Sales remained stable in the European market as well, against the backdrop of a shift toward the resumption of economic activities, although the pace of recovery has slowed somewhat recently. In the Asian market, the pace of recovery – 24 – gradually declined due to the deterioration of business sentiment although the Chinese market secured a year on year increase in sales. In addition, other Asian economies had a moderate recovery trend albeit at different levels depending on the COVID-19 situation. Sales of Bulova brand watches increased with substantial growth both online and at physical stores in the mainstay North American market. Sales of movements increased thanks to growth in sales of high value-added analog quartz movements in North America and other markets in addition to steady sales of mechanical movements. As a result, the watches segment as a whole posted an increase in sales with net sales of 131.072 billion yen (up 37.1% year on year) as a result of accelerating efforts to strengthen EC sales and promoting product development suitable for distribution, although the impact of the COVID-19 pandemic persisted. Operating results also improved to profit of 10.305 billion yen (operating loss of 8.192 billion yen in the previous fiscal year), mainly due to the recovery of sales in overseas markets and the contribution of the effects of business structural reforms instituted in fiscal 2020. [Machine Tools] In the domestic market, revenue increased as strong orders continued to be received from a wide range of industries, including those associated with semiconductors, construction machinery and housing equipment, offsetting a slow recovery in sales of automobile-related products, despite delays in deliveries caused by the global shortage of parts. Looking at overseas markets, sales grew in the Chinese market, led by strong sales particularly of products related to medical equipment, communications and automobiles. Also, in the European market, sales rose significantly in Germany and Italy in particular, reflecting solid demand for automobile-related products. In Americas, sales also increased based on continuously active capital expenditure, primarily for products related to medical equipment. As a consequence, the machine tools segment as a whole posted net sales of 81.011 billion yen (up 73.4 % year on year), driven by an increase in products equipped with the low-frequency vibration-cutting (LFV) technology the Company had been developing for some time. Furthermore, operating profit increased to 12.591 billion yen (up 328.9 % year on year) due to significant growth in sales following the strong market conditions. [Devices and Components] Among precision machining components, sales of automotive parts increased despite difficult conditions due to the impact of production reductions by car manufacturers in response to the global shortage of semiconductors. Sales of switches decreased due to a fall in sales for smartphone-related products, which was affected by customers’ inventory adjustment. In terms of opto-devices, sales of LED chips increased with a steady rise in sales of in-vehicle LEDs and LEDs for lighting, offsetting a decline in orders for LED chips for amusement products. In other components, demand for quartz devices continued to increase in a broad range of areas given the popularization of IoT products and progress in digitization, and sales of small motors related to medical care and semiconductors also remained solid. Consequently, overall sales of other components increased. As a consequence, net sales of the devices and components segment as a whole increased to 50.045 billion yen (up 9.0 % year on year). Operating profit increased to 2.864 billion yen (compared with an operating loss of 0.493 billion yen in the same period of the previous – 25 – fiscal year), attributable to the contribution of recovering sales. [Electronic and Other Products] Sales of information equipment increased, led by growth in sales of POS printers and bar code printers mainly in the European and Japanese markets along with the resumption of economic activities, although sales of photo printers decreased, partly due to the delay in parts supply, despite a recovery trend in demand. Revenues from healthcare products increased as sales of thermometers remained firm, although there was a lull in the special demand for thermometers. The strong performance of blood pressure monitors, which were increasingly used by individuals due to growing health consciousness, were another contributing factor. As a result of these developments, the Electronics and Other Products Business recorded an increase in revenue and an increase in profits, with net sales of 19.288 billion yen (up 4.9% year-on-year) and operating profit of 1.172 billion yen (up 197.5% year-on-year). Note: The difference between each segment’s operating profit of 26.934 billion yen in total and that of 22.273 billion yen (the Company’s operating profit) is a miscellaneous expense used to write off transactions between each segment and not reported to each segment. [Sales by Business Segment] Business segment Watches Machine Tools Devices and Components Electronic and Other Products Total Amount (Millions of yen) 131,072 81,011 50,045 19,288 281,417 Notes: The rate of the sales in the overseas to the gross sales is 73.6%. Percentage of total (%) 46.6 28.8 17.8 6.9 100.0 Change from the previous fiscal year (%) 37.1 73.4 9.0 4.9 36.2 2. Financing Not applicable 3. Capital Expenditures Capital expenditures during the fiscal year totaled 10.770 billion yen. The major expenditures of which are as follows: (1) (2) (3) (4) 3.371 billion yen for production facilities in Watches 3.431 billion yen for production facilities in Machine Tools 3.277 billion yen for production facilities in Devices and Components 0.381 billion yen for production facilities in Electronic and Other Products 5. Acquisition or Disposition of Shares, Other Equity Interests, or Share Acquisition Rights 4. Important Corporate Restructuring Not applicable of Other Companies Not applicable – 26 – 6. Challenges Going Forward The Company, based on its Corporate Philosophy of “Loved by citizens, working for citizens,” drew up a vision of how the Citizen Group could be to enable growth to deal with a sustainable society and a digital society with a view to 2030. We then used backcasting to set five materiality: Respond to climate change and contribute to a recycling-oriented society; Contributing to high quality life; Providing solutions in industry; Improve job satisfaction and cultivate human resources; and Fulfilling social responsibility. We then stated the Group’s medium-term management vision of “Crafting a new tomorrow” to realize our long-term vision and formulated the 3-year Medium-term Management Plan 2024 covering the period from FY2022 (fiscal year ending March 31, 2023) to FY2024 (fiscal year ending March 31, 2025). We aim to take on the challenge of creating new, unique value and to be known around the world for reliability, security and emotion that will bring about a better world. To achieve the Group’s medium-term management vision, we will tackle the following key strategies contained in this Medium-term Management Plan. 1. Strategies of business portfolio The watches business and machine tools business will remain as the core businesses that drive the Group’s growth, and we will aim for further growth by strategically investing our management resources. With the devices business and electronics and other products business, we will aim for stable growth while promoting refining and targeting of the businesses and products. In addition, we will also make progress in exploring new business areas with growth potential. The strategies by business in this Medium-term Management Plan are as follows: a) The watches business uses the same vision that is stated for the Group Vision of “Crafting a new tomorrow,” and will tackle three key strategies of Global brand strategy; Premium brands and mechanical watches strategy; and Continued enhancement of user contact points and use of data, through clarifying the brand image in the global market and improving the customer experience. We will strategically invest in management resources, while improving profitability and promoting sustained growth as a core business that drives the Group. b) The Machine Tools Business is taking initiatives for establishment of business foundations with an eye toward achieving net sales of 100 billion yen, differentiating by leveraging processing technologies, expansion of areas where automation/labor-saving measures are applied to create world-leading production innovation solutions and to create our position as “a new manufacturer. Aiming to achieve further growth by enhancing sales and service systems in Asia, where further growth is anticipated. c) The Devices and Components Business is aiming to establish firm competitiveness through selection and concentration of products in line with market changes, improvements in earnings power and business expansion in fields where the Company’s strengths can be used to their utmost. The auto parts business, which utilizes the Citizen Group’s strength in compact metal processing technologies, is aiming to expand high value-added products and EV parts and develop fields other than auto parts. The Opto-devices Business is aiming for expansion of high-efficiency, long-life, environmentally products such as LEDs for lighting. d) The Electronics and Other Products Business is aiming to secure stable profits by firmly looking at the Citizen Group’s strengths, undertaking selection and – 27 – concentration of business and product and bolstering productivity and rationalization. 2. Promoting the DX strategy and cultivating human resources The DX vision is stated as “Become a Corporate Group That Will Continue to Create and Enhance Value from the User Perspective” and incorporates three key initiatives: Transformation to a highly profitable structure through business process transformation; Creating new user value by changing products and services; and Reforming corporate culture. to a highly profitable structure “Transformation through business process transformation” incorporates initiatives for Increasing operational efficiency and sophistication, Sophistication of decision making through the use of data, and Evolution of manufacturing with the use of digital technology.” Creating new user value by changing products and services” incorporates initiatives for providing new user experience and building a new business model. We state the human resources vision as “Each indi