Seiko Group CorporationTSE: 8050

Consolidated Financial Statements for the six months ended September 30, 2024

Nov 15, 2024 at 4:53 AM UTC · Issued by Seiko Group Corporation

Consolidated Financial Results for the Second Quarter (Interim Period)

of the Fiscal Year Ending March 31, 2025 (from April 1, 2024 to September 30, 2024)

(Under Japanese GAAP)

November 12, 2024

Company name:

SEIKO GROUP CORPORATION

Listing: Tokyo

Securities code:

8050

URL: https://www.seiko.co.jp/en/

Representative:

Shuji Takahashi, President

Inquiries:

Masanobu Minami, General Manager, Accounting Department

Telephone: +81-3-3563-2111

Scheduled date to file interim securities report

: November 12, 2024 (in Japanese)

Scheduled date to commence dividend payments

: December 5, 2024

Supplementary material for the interim period financial results

: Available

Interim financial results briefing

: Scheduled (for institutional investors and analysts)

(Yen amounts are rounded down to the nearest million, unless otherwise noted.)

1. Interim consolidated financial results for the fiscal year ending March 31, 2025

(1) Consolidated operating results (cumulative)

(Percentages indicate year-on-year changes.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Interim Period ended

Millions of yen

September 30, 2024

151,001

15.0

13,351

63.6

12,833

38.8

8,667

38.0

September 30, 2023

131,295

1.1

8,160

(7.8)

9,247

(3.3)

6,281

18.7

Note: Comprehensive income

For the Interim

Period ended

September 30, 2024:

7,729

million

[(51.9%)]

For the Interim Period ended September 30, 2023:

16,062 million

[22.1%]

Basic earnings

Diluted earnings

per share

Interim Period ended

Yen

September 30, 2024

212.40

September 30, 2023

152.13

(2) Consolidated financial position

Total assets

Net assets

Equity-to-asset ratio

As of

Millions of yen

September 30, 2024

374,240

157,252

41.4

March 31, 2024

376,262

151,334

39.6

Reference: Equity

As of September 30, 2024

155,094

million

As of March 31, 2024

149,100

million

2. Cash dividends

Annual dividends per share

First quarter-end

Second quarter-end

Third quarter-end

Fiscal year-end

Total

Fiscal year ended

Yen

March 31, 2024

37.50

42.50

80.00

Fiscal year ending

45.00

March 31, 2025

Fiscal year ending

45.00

90.00

March 31, 2025

(Forecast)

Note: Revisions to the forecast of

cash dividends most

recently announced: None

3. Consolidated financial forecast for the fiscal year ending March 31, 2025 (From April 1, 2024 to March 31, 2025)

( Percentages indicate year-on-year changes.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share

Fiscal year ending	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
March 31, 2025	306,000	10.5	18,000	22.1	18,000	13.2	11,500	14.4	281.68

Note: Revision to the financial forecast most recently announced: None

* Notes

(1) Sinificant Changes in the scope of consolidation during the period: Not applicable

Newly included: Not applicable

Excluded: Not applicable

Adoption of accounting treatment specific to the preparation of interim consolidated financial statements: Not applicable
Changes in accounting policies, changes in accounting estimates, and restatement

i) Changes in accounting policies due to revisions to acounting standards and other regulations	: Applicable
ii) Changes in accounting policies due to other reasons	: Not applicable
iii) Changes in accounting estimates	: Not applicable
iv) Restatement	: Not applicable

(Note) Refer to Changes in accounting policies, (4) Notes to Quarterly Consolidated Financial Statements, 2. Interim Consolidated Financial Statements and Major Notes, for detail.

Number of issued shares (common shares)
1. Total number of issued shares at the end of the period (including treasury shares)

As of September 30, 2024	41,404,261	shares /	As of March 31, 2024	41,404,261	shares
ii) Number of treasury shares at the end of period	559,238				639,870
As of September 30, 2024	shares /	As of March 31, 2024	shares
iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)
Interim Period ended September 30, 2024		40,807,714	shares
Interim Period ended September 30, 2023		41,288,186	shares

(Note) For the purpose of calculating the number of treasury shares at the end of period and the average numbers of shares outstanding during the period, treasury shares held in the Board Benefit Trust (BBT) are included in the treasury shares deducted in the calculation.

The interim financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
Proper use of earnings forecasts, and other special matters

(Cautionary statements with respect to financial forecast)

The financial forecasts which appear in this report have been prepared based solely on the information which was available to the Company as of the date on which the report was released and the Company does not in any way guarantee the achievement of the forecasts. Actual results may differ significantly from the forecasted figures due to a number of factors. For assumptions used in the financial forecasts and instructions to use the financial forecasts, refer to (3) Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2025 (FY2024), 1. Business Results.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period FY2024

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Contents

1. Business Results

(1)	Overview	4
(2)	Financial Condition	6
(3)	Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2025
	(FY2024)	8

2. Interim Consolidated Financial Statements and Major Notes

(1)	Interim Consolidated Balance Sheets	9
(2)	Interim Consolidated Statements of Income and Comprehensive Income	12
(3)	Interim Consolidated Statements of Cash Flows	14
(4)	Notes to Interim Consolidated Financial Statements	16
(Going concern assumption)	16
(Significant changes in shareholder's equity)	16
(Changes in accounting policies)	16
(Segment information)	17

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period of FY2024

Page 4/18

1. Business Results

(1) Overview

During the interim (six-month) accounting period ended September 30, 2024, the Japanese economy has shown a recovery trend in personal consumption despite inflationary pressures, and demand from inbound tourists has also continued to recover steadily.

In the overseas economy, the United States has maintained moderate growth driven primarily by consumption, while Europe has been gradually recovering since the interest rate cut in June. In China, the housing market continues to deteriorate, and the real GDP growth rate has slowed compared to the beginning of the year.

(Millions of yen)

	Interim Period	Interim Period	Interim Period	Variance	Variance
	of FY2022	of FY2023	of FY2024
	① - (a)	① - (b)
	(a)	(b)	①

Net sales	129,921	131,295	151,001	21,080	19,706
Operating profit	8,847	8,160	13,351	4,503	5,191
%	6.8%	6.2%	8.8%	2.0pt	2.6pt
Ordinary profit	9,567	9,247	12,833	3,265	3,585
%	7.4%	7.0%	8.5%	1.1pt	1.5pt
Profit attributable to owners of parent	5,292	6,281	8,667	3,375	2,386
%	4.1%	4.8%	5.7%	1.6pt	0.9pt
Exchange rate (v. JPY)
USD	134.0	141.1	152.8	18.8	11.7
EUR	138.8	153.5	166.0	27.3	12.6

Amid these circumstances, in the Emotional Value Solutions Business, the Watches Business for the Japanese domestic market and the Wako business have significantly increased sales, driven by robust personal consumption and the inbound tourists demand. The Watches business for overseas markets also grew, particularly with the Seiko brands among the Global Brands, resulting in net sales exceeding the same period previous fiscal year. The Device Solutions Business has been recovering from an adjustment phase for some products since the fourth quarter of the previous fiscal year, with net sales surpassing the same period previous fiscal year. The System Solutions Business continued to benefit from diversification and the expansion of stock businesses, achieving higher net sales year on year.

As a result, the Group's consolidated net sales for the interim accounting period were 151.0 billion yen (a 15.0% increase year on year). Domestic net sales totaled 80.9 billion yen (a 20.4% increase), while overseas net sales were 70.0 billion yen (a 9.3% increase), with overseas net sales accounting for 46.4% of the total net sales.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period of FY2024

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Advertising and promotion expenses for the interim period increased by approximately 10% year on year, and selling, general, and administrative expenses increased by 4.5 billion yen year on year. Operating profit, driven by the Emotional Value Solutions Business, increased by 5.1 billion yen to

billion yen (a 63.6% increase year on year). Non-operating income and expenses deteriorated due to foreign exchange losses associated with the appreciation of the yen, resulting in ordinary profit of

billion yen (a 38.8% increase year on year), 3.5 billion yen higher than the same period previous fiscal year. As a result, profit attributable to owners of parent increased by 2.3 billion yen to 8.6 billion yen (a 38.0% increase year on year).
The average exchange rates for the interim accounting period were 152.8 yen per US dollar and 166.0 yen per euro.

Results by Segment

Results for each segment are as follows:

a. Emotional Value Solutions Business (EVS Business)

Net sales in the EVS Business increased by 11.7 billion yen, or 13.0%, year on year to 101.7 billion yen.

In the domestic watch market, robust personal consumption and demand from inbound tourists drove significant sales growth, particularly for Global Brands such as Grand Seiko and Seiko Prospex. Overseas, Seiko Presage led the growth, resulting in increased net sales compared to the same period previous fiscal year. Additionally, the external sales of watch movements grew steadily, resulting in increased net sales year on year.

Net sales in the Wako business increased year on year, supported by continued strong demand from inbound tourists. However, net sales in the Clock and Sports & Facility businesses decreased compared to the same period previous fiscal year.

Operating profit increased by 4.1 billion yen year on year to 13.6 billion yen (a 43.3% increase).

b. Devices Solutions Business (DS Business)

The DS business recorded net sales of 30.3 billion yen (a 9.8% increase year on year) and operating profit of 1.1 billion yen (a 373.6% increase year on year).

Net sales of micro batteries significantly increased, driven by the continued strong performance of silver oxide batteries for medical equipment. Additionally, net sales of quartz crystals, which had been recovering from an adjustment phase since around the fourth quarter of the previous fiscal year, and high-performance metals for semiconductor production equipment, which had been sluggish until the previous fiscal year, increased, leading to higher net sales and operating profit year on year.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period of FY2024

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c. Systems Solutions Business (SS Business)

The SS business recorded net sales of 23.5 billion yen (a 24.5% increase year on year) and operating profit of 2.3 billion yen (a 6.0% increase year on year).

The IoT-related business saw steady growth due to the expansion of the telematics business. Additionally, the security-related business expanded as a result of the synergy effects from the M&A conducted in the fourth quarter of the previous fiscal year. Consequently, the SS business achieved year-on year increases in both net sales and operating profit for the 34th consecutive quarter, compared to the same quarter of the previous fiscal year.

(2) Financial Condition

a. Status of Assets, Liabilities, and Net Assets -Assets-

At the close of the interim accounting period, total assets amounted to 374.2 billion yen, a decrease of 2.0 billion yen compared to the previous fiscal year-end, including the impact of exchange rates.

In current assets, cash and deposits increased by 0.8 billion yen, while notes and accounts receivable- trade, and contract assets decreased by 3.1 billion yen, resulting in a total decrease of 2.5 billion yen from the end of the previous fiscal year to 172.1 billion yen. In non-current assets, property, plant and equipment decreased by 0.8 billion yen, while investments and other assets increased by 1.3 billion yen, resulting in a total increase of 0.5 billion yen from the end of the previous fiscal year to 202.0 billion yen.

-Liabilities-

Regarding liabilities, short-term borrowings decreased by 7.1 billion yen, while long-term borrowings (including the current portion of long-term borrowings) increased by 6.9 billion yen, bringing the total borrowings to 117.5 billion yen. Electronically recorded obligations - operating decreased by 2.9 billion yen, and accounts payable - other decreased by 6.6 billion yen. On the other hand, notes and accounts payable - trade increased by 0.5 billion yen, income taxes payable increased by 0.6 billion yen, and provision for bonuses increased by 0.7 billion yen. As a result, total liabilities decreased by

7.9 billion yen from the previous fiscal year-end to 216.9 billion yen, including the impact of exchange rates.

-Net assets-

Regarding net assets, shareholders' equity increased by 7.1 billion yen, while the foreign currency translation adjustment decreased by 1.6 billion yen. As a result, total net assets increased by 5.9 billion yen from the end of the previous fiscal year to 157.2 billion yen.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period of FY2024

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b. Overview of Cash Flows

The balance of cash and cash equivalents at the end of the interim accounting period was 33.5 billion yen, an increase of 0.8 billion yen compared to the end of the previous fiscal year.

This was primarily due to the following factors:

-Cash flows from operating activities-

The net cash provided by operating activities was 11.5 billion yen, a decrease of 6.2 billion yen compared year on year (17.7 billion yen). This was the result of the Company posting profit before income taxes of 12.8 billion yen, adding depreciation of 7.0 billion yen, an increase in inventories of

2.1 billion yen (posted as a decrease), and a decrease in accounts payable - other of 5.8 billion yen (posted as a decrease.)

-Cash flows from investing activities-

Net cash used in investing activities resulted in a negative 6.7 billion yen, primarily due to purchase of property, plant and equipment amounting to 5.0 billion yen and purchase of intangible assets amounting to 1.6 billion yen, comparing to a negative 7.8 billion yen in the same period last year.

-Cash flows from financing activities-

Net cash provided by financing activities resulted in a negative 3.1 billion yen, primarily due to repayments of short-term and long-term borrowings and dividends paid, comparing to a negative 11.8 billion yen in the same period last year.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period of FY2024

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Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2025 (FY2024) During the interim accounting period, the EVS Business achieved significant increases in both net sales and operating profit compared to the same period previous fiscal year, while the DS and SS businesses also performed steadily. For the third quarter and beyond, although there are uncertainties in the business environment, including exchange rates, the Company has not revised the full-yearconsolidated earnings forecast. However, the full-year segment-specificforecast has been revised as follows.

■ Forecast for the consolidated business results for the year ending March 31, 2025 (FY2024)

(Billions of yen)

Fiscal year ending March 31, 2025

Net sales

306.0 10.5

			(Percentages indicate year-on-year changes.)
Operating profit		Ordinary profit		Profit attributable to		Basic earnings
						owners of parent		per share
	%			%			%		Yen
18.0	22.1	18.0	13.2	11.5	14.4	281.68

■ Forecasted results by segment for the year ending March 31, 2025 (FY2024)

(Billions of yen)	Net Sales	Operating Profit
Current	Previous	Current	Previous

Emotional Value Solutions Business	202.0	201.0	20.7	20.0
Devices Solutions Business	63.0	65.0	2.5	3.0
Systems Solutions Business	49.0	50.5	5.1	5.8
Total for reported segments	314.0	316.5	28.3	28.8
Others	1.0	1.0	0.1	0.1
Consolidated total	306.0	306.0	18.0	18.0

Note: Consolidated total represents figures after consolidation adjustment such as the elimination of inter-segment sales.

The forecasted results which appear in this report have been prepared based solely on the information which was available to the company as of the date on which the report was released. As a result, actual results may differ from the forecasted figures due to a number of factors, such as changes in the business environment in the future.

SEIKO GROUP CORPORATION

Consolidated Financial Statements: Interim Period of FY2024

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2. Interim Consolidated Financial Statements and Major Notes

(1) Interim Consolidated Balance Sheets

				(Millions of yen)

			As of March 31,	As of September
	2024	30, 2024

Assets
Current assets

Cash and deposits			32,683	33,529
Notes and accounts receivable - trade, and	45,496	42,349
contract assets

Inventories	84,382	84,904
Accounts receivable - other	4,377	2,541

Other	9,173	10,237
Allowance for doubtful accounts	(1,419)	(1,421)

Total current assets		174,694	172,141
Non-current assets

Property, plant and equipment
Buildings and structures	82,230	83,313

Machinery, equipment and vehicles			91,948	92,185
Tools, furniture and fixtures			42,617	42,859
Other			15,609	16,363
Accumulated depreciation	(172,067)	(175,012)

Land	54,144	54,162
Construction in progress	1,553	1,354

Total property, plant and equipment		116,037	115,226
Intangible assets

Goodwill	8,029	7,310
Other	10,159	10,850

Total intangible assets		18,189	18,161
Investments and other assets

Investment securities	56,374	57,552
Deferred tax assets	1,984	2,142
Other	9,131	9,138
Allowance for doubtful accounts		(148)	(121)
Total investments and other assets		67,341	68,711
Total non-current assets		201,568	202,099
Total assets		376,262	374,240

SEIKO GROUP CORPORATION

Consolidated Financial	Statements: Interim Period of FY2024
		Page 10/18
		(Millions of yen)

	As of March 31,	As of September
	2024	30, 2024
Liabilities
Current liabilities
Notes and accounts payable - trade	21,500	22,087
Electronically recorded obligations - operating	8,085	5,101

Short-term borrowings	64,350	57,209
Current portion of long-term borrowings	21,727	22,224

Accounts payable - other	15,291	8,683
Income taxes payable	4,678	5,300
Provision for bonuses	5,097	5,814
Other provisions	1,030	1,000

Asset retirement obligations	647	485
Other	23,050	23,142

Total current liabilities	165,460	151,050
Non-current liabilities

Long-term borrowings	31,674	38,084
Deferred tax liabilities	6,912	6,503

Deferred tax liabilities for land revaluation	3,614	3,614
Other provisions	732	798
Retirement benefit liability	6,135	6,154
Asset retirement obligations	494	507

Other	9,903	10,273
Total non-current liabilities	59,467	65,937
Total liabilities	224,927	216,987