Citizen Watch : REPORT (Integrated Report) 2023 for viewing （ ）

INTEGRATED REPORT

CITIZEN REPORT

2023

Corporate Philosophy

Loved by citizens, working for citizens.

CITIZEN's corporate philosophy, "Loved by citizens, working for citizens" is

to deeply contribute to the lives of people around the world through the manufacturing of products that are loved and trusted by citizens.

CITIZEN CALIBRE 16

The first pocket watch completed using a proprietary design in 1924, It was named"CITIZEN"by the mayor of Tokyo at the time in the hope that it would be widely loved by citizens for a long time.

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CITIZEN Forest was created under the concept of being able to work both indoors and outdoors. At Tokyo Works, we planted 215 trees and created a space that is richly endowed with nature, attracting local birds and insects. This space won a 2021 Good Design Award.

Table of Contents

03 Value Creation Story

05 History of the CITIZEN Group

07 Message from

the President & CEO

11 Watches

15 Machine Tools

1. Devices and Components
2. Electronic and Other Products
3. Financial Strategies

23 Financial and Non-financial Highlights

1. Identifying Material Issues

1. Sustainable Management
2. Environment
3. Employees
4. Customers
5. Business Partners
6. CITIZEN OF THE YEAR
7. Corporate Governance

36 Message from

an Outside Director

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CITIZEN Group's Value Creation Story

MaterialityInputs

Sustainable management

Provide sustainable products	Outcomes	Vision

Risks and

Opportunities

(Awareness of

the External Environment)

Responding to climate change and contributing to a recycling-oriented society

Contributing to high-quality life

Providing solutions in industry

Increasing job

satisfaction and

cultivating human resources

Fulfilling social responsibility

Financial Capital

Total assets���.�

billion yen Net assets���.� billion yen

Intellectual Capital

Number of patents that the�Group,���holds more than

Number of trademarks that the�Group,���holds more than

Manufactured Capital

Amount of capital investment ��.� billion yen

Production system centered on Japan, China, and Thailand

Social Capital

Global supply chain network

Human Capital

Number of employees ��,���

Natural Capital

Total energy consumption
�,���,���GJ
Water intake	�,���,���㎥
Recycling rate	��％

(as of March ����

)

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Changes in

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mobility

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population

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Product

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planning

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Research and

Design

development

Miniaturization

Sales and

Automation

CITIZEN's

Precision

Procurement

after-sales

Technology

Technical

Processing

services

Capabilities

Low Power

Sales

Consumption

Production

Logistics

Corporate

Sustainability

governance

Risk management

promotion system

B

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usiness founda

Watches				Corporate Philosophy
				Loved by citizens,
				working for citizens.
	Give customers	Engage in business
	activities that reduce
	excitement and high	environmental impact	Improve each other
	satisfaction
Machine tools	Solve customers'		through business
problems and		activities
	contribute		Achieve sustainable
	to business success	Environment	growth
	Customers	Reliability	Business	CITIZEN Group
		Partners	long-term vision
Devices and components		Emotion Security		Crafting a
			new tomorrow
	Employees		Community
	Provide growth		Solve social issues
	opportunities	Shareholders	Create jobs and
	Realize job satisfaction	increase development
	and employee	and Investors	in communities
	friendliness	Improve shareholder
Electronic and other products		value

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History of the CITIZEN Group

1910	1920	1930	1940	1950	1960	1980	1990	2000	2010	2020

Watches

Top class share in the U.S. middle-range market

A global leader in movement sales

1918

Shokosha Watch Research Institute, the predecessor of Citizen Watch Co., Ltd.,was established

1924

First pocket watch

1931

[CITIZEN F],

CITIZEN's first wristwatch

1956

The first shock-resistant watch movement made in Japan [Parashock]

1970

The world's first titanium wristwatch

[X-� Cosmotron Chronometer]

1993

The world's first multi-bandradio-controlled watch

[Cal. ����]

2011

The world's first watch capable of receiving satellite signals [Eco-Drive Satellite Wave]

2021

Mechanical models featuring a completely new mechanical movement

[The CITIZEN]

Machine Tools

A leading world share

for small and midsized CNC automatic lathes

1952

First domestically produced watch with calendar [Calendar]

1959

The first fully waterproof watch made in Japan [Parawater]

1976

The world's first solar- powered analog watch [Crystron Solar Cell]

2008

Acquisition of

Bulova Corporation shares

2012

Acquisition of

Prothor Holding SA shares

2016

The world's thinnest

light-powered watch with a movement just � mm thick [Eco-Drive One]

Acquisition of

Frederique Constant shares

1936

Internalized manufacturing of precision machinery for watch production [AL-�]

1961

External sales of machine tools commenced

1986

Sliding headstock type NC automatic lathe long-selling model [L��]

2011

Citizen Machinery Co., Ltd., and Miyano Machinery Inc. merged

2013

Multi-station machining cell [MC��]

LFV Technology

2018

Friction bonding technology

	Electronic and	Units
	Other Products	(Billions of yen)
	20.4
Devices and	7％
Components	15％
44.7
	FY2022

Devices and Components

1990

Manufacturing of automotive parts commenced

2011

Highly efficient LED for lighting

[COB Series]

2013

Compact linear motor galvanoscanner [GVM Series]

Sales	50%	Watches
301.3	150.0

28％

Machine Tools 86.1

Other	Units
3.2	(Billions of yen)
Europe	Japan
62.2
	76.5

Application of precision processing technologies developed in the assembly of watch parts

1976

Production of crystal units and crystal oscillators commenced

1983

Mass production of the world's first surface-mounted chip LEDs commenced

	21%	25%
		FY2022
		Overseas
		sales ratio
		75%
U.S.	27%	26% Asia
80.4	78.8

Electronic

and Other Products

Application of small precision technology

1964		1983		1997		2007		2017
Expansion into the office		IC sensor electronic thermometer		Household-use		Digital thermal ink‐transfer		Thermal printer [CT-S���]
equipment field		[CT-��] featuring the world's first IC sensor		ultrasonic bath		photo printer for businesses		Achieves the industry's smallest height and width
				[SW����]		[CX Series]

CITIZEN, Eco-Drive, LFV, and CITIZEN OF THE YEAR are registered trademarks of Citizen Watch Co., Ltd.

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Message Message from the President & CEO

Crafting a new tomorrow

We aim to continue creating new value and never stop taking on new challenge as we work to embody our corporate philosophy:"loved by citizens, working for citizens."

Citizen Watch Co., Ltd.

President & CEO

Toshihiko Sato

Review of FY2022

FY2022 was the first year of our Medium-term Management Plan 2024. It was a year in which we implemented several measures based on our long-term Group vision of"Crafting a new tomorrow."As a result of these measures, our core Watches and Machine Tools businesses - in particular - remained resilient, performing beyond our plans and enabling us to strengthen the profit structure of each busi- ness. While risk factors such as soaring raw material prices and other cost increases re- main, the key over the next two years will be how quickly and reliably we can implement various measures.

In 2023, although some uncertainty remains, as exemplified by growing tensions over the ongoing conflict in Ukraine and the failure of U.S. banks, the once raging COVID-19 pandemic is finally nearing its end, and the movement toward reopening has begun to accelerate globally. Over the past year, we have been in a strongly defensive position, but looking ahead we will turn to the offensive as we aim for sustainable growth.

Sustainable Management to Realize Our Long-Term Vision

Since FY2019, the CITIZEN Group has been working to resolve social issues through its business activities under the banner of"sus-

tainable management."For the Citizen Group, sustainable management means not only providing good products and service but also expanding our business operations while earning the trust of stakeholders and working to sustainably increase corporate value - through management paying due care and consideration to social issues such as human rights and the global environment throughout our entire value chain.

In light of changes in the medium-to long- term business environment, the CITIZEN Group is leveraging its strengths and capital to address material issues (key issues for sustainable improvement of corporate value) in terms of both business activities and business foundation, and engaging in initiatives for growth.

Responding to Climate Change through Our Material Issues

In formulating our long-term Group vision, we have identified a set of material issues: key issues that the CITIZEN Group should address as priorities in the medium to long term. In particular, we have prioritized responding to climate change as the most important material issue for the CITIZEN Group. Strengthening efforts to combat climate change-such as the occurrence of abnormal weather conditions around the globe - has also become a pressing issue for companies.

The CITIZEN Group is working steadily toward achieving carbon neutrality by 2050, including facilitating the use of electricity derived from renewable energy sources and energy-saving activities, and aiming for net-zero effective greenhouse gas emissions from our factories and offices by 2050.

For example, the Group is gradually introducing solar power generation equipment at its manufacturing sites, both in Japan and overseas, and has switched to effectively CO2-free electric power derived from renewable energy for its domestic Citizen Watch sales offices. We will continue working actively to respond to climate change, such as by switching to renewable energy for locations throughout the Group, including overseas bases.

By FY2030, we will achieve our CO2 emission reduction targets for Scope 1 and 2 by 50.4% compared with FY2018, and Scope 3 (supply chain emissions) for Category 1 (CO2 emissions emitted in the course of activities up to and including the manufacture of purchased products and services) and Category 11 (use of products by consumers) by 30% compared with FY2018. The CITIZEN Group Environmental Targets 2030 (greenhouse gas emission reduction targets to be achieved by) have been recognized as having a scientific basis to achieve the targets of the Paris Agreement and have obtained SBT Initia- tive*1 certification.

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