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2021 REPORT ANNUAL GROUP YAMAHA

Published in November 2021	https://www.yamaha.com/en/
Printed in Japan

Annual Report 2021

PUBLICATION OF ANNUAL REPORT 2021

The Yamaha Group publishes integrated reports to communicate its approach toward medium- to long-term value creation to its shareholders, investors, and other stakeholders. Since issuing our first integrated report in 2018, we have continued to incorporate the feedback received from readers each year in order to improve our reports and thereby better facilitate understanding regarding the Group's various initiatives.

• The global COVID-19 pandemic has brought massive changes to society, the economy, and people's lifestyles. In this unprecedented environment, we sought to propose more enriching lifestyles to people around the world through our business activities and to improve corporate value by fulfilling our social responsibilities. This integrated report is designed to help readers understand these efforts.
• Annual Report 2021 was prepared while referencing the Integrated Reporting Framework of the Value Reporting Foundation (formerly the International Integrated Reporting Council) and the Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation: ESG Integration, Non-Financial Information Disclosure, and Intangible Assets into Investment released by the Ministry of Economy, Trade and Industry. Summarizing the policies we adopt on a Groupwide basis, this report was created thanks to the cooperation of each division of the Company. As such, I believe the creation process and the content of this report to be appropriate.
• Going forward, we will utilize our integrated reports as engagement tools as we pursue con- structive dialogue with our stakeholders. It is our hope that these reports help our stakeholders feel confident about our efforts to realize a sustainable society and elicit their understanding and support of our long-term corporate value creation.

September 2021

Takuya Nakata

Director, President and Representative Executive Officer

YAMAHA PHILOSOPHY

The Yamaha Philosophy expresses the core framework of the Yamaha Group's management and consists of

four elements: the Corporate Philosophy, Customer Experience, Yamaha Quality (criteria for quality),

and Yamaha Way (mindset and manners).

We utilize the Yamaha Philosophy as a foundation to draw from, try to think from the customer's viewpoint, and consistently provide high-quality products and services that exceed the expectations of our customers, and to create excitement and cultural inspiration together with people around the world.

PROMISES TO STAKEHOLDERS

The entire Yamaha Group shares promises to our stakeholders-customers, shareholders, the people who work with Yamaha, and society-working to improve the satisfaction of

each stakeholder and making effective use of our management resources to achieve sustainable

growth in order to maximize its corporate value.

Customer-Oriented and Quality-Conscious Management

Yamaha fully satisfies its customers by offering quality products and

services that incorporate new and traditional technologies

as well as refined creativity and artistry.

Transparent and Sound Management

Yamaha delivers proper returns to shareholders by ensuring a solid business performance

and achieves lasting development through transparent and sound management.

Valuing People

Yamaha strives to be an organization where each person's individuality and creativity

are respected and all can demonstrate their full potential through their work.

Harmony with Society

Yamaha is a good corporate citizen that contributes to the development of society, culture,

and the economy by observing laws, demonstrating high ethical standards,

and endeavoring to protect the environment.

BRAND PROMISE

A feeling of enthusiastic excitement lives in sound and music,

through playing or simply listening. We at Yamaha want to inspire peoples' passion

and help them make a step forward to express their individuality, emotion and creativity.

Make Waves

Just a few notes or a simple melody can send out ripples that trigger an emotional bond with another person.

Sound and music have a transformational impact on individuals and the world around us.

The "Make Waves" concept focuses on our passions and what matters most to people, namely,

expressing themselves and making an impact, to progress personally

as a listener and player, and to come together with others.

Yamaha is committed to empowering people to "Make Waves" with their sound and music.

Yamaha Group Annual Report 2021		01

Key Points of Annual Report 2021

Annual Report 2021 provides details on Yamaha's progress during the second year of its Make Waves 1.0 medium-term management plan. It also offers information on concrete initiatives for creating social value while leveraging the accumulated strengths and technologies of the Yamaha Group and identifying business risks and opportunities based on the perspective of medium- to long-term growth. We encourage readers to focus on the following key points to help deepen their understanding of the content of this report.

CONTENTS

I. Value Creation by Yamaha	04

IV. Corporate Governance	76

Value

POINT 1

Creation of New Value through

Sound and Music

POINT 2

Progress in the Second Year

of Make Waves 1.0

and Initiatives in the Final Year

POINT 3

Enhancement of Sustainability

Management

Fully leveraging the technologies and sensibilities centered on sound and music that Yamaha has continued to cultivate since its founding, we aspire to cater to new demand and to help resolve the social issues arising in the contemporary business environment and to create new value that enriches people's lives.

  Management Vision and Value Creation Story (Pages 10-11), Special Feature: Enactment of Yamaha's Value Creation Story (Pages 12-15), Strategies by Business and Function (Pages 58-75)

The changes to social structures triggered by the COVID-19 pandemic have been accelerating the digitization trend as well as the diversification of values. In the final year of the Make Waves

1.0 medium-term management plan, we will continue to move forward with key strategies of the plan as we prepare for the next plan on our quest to achieve our management vision of "Becoming an Indispensable, Brilliantly Individual Company."

  Message from the President (Pages 20-27), Make Waves 1.0 Medium-Term Management Plan (Pages 28-37), Corporate Strategies (Pages 38-57)

Having established the Sustainability Committee in January 2021, the Yamaha Group is advancing discussions on the direction of its sustainability activities and monitoring the status of these activities. Through this approach, we will accelerate climate change response, human rights, diversity and inclusion, and a wide range of other initiatives aimed at contributing to the realization of a sustainable society.

  Sustainability Management (Pages 42-49)

Yamaha's Path of Ambition	06
Yamaha's Business	08
Management Vision and Value Creation Story	10
Special Feature:	12
Enactment of Yamaha's Value Creation Story
Performance Highlights	16
II. Management Strategy	18

Message from the President	20
Make Waves 1.0 Medium-Term Management Plan	28
Review and Progress of the Medium-Term

Directors	78
Composition of the Board of Directors	80
Executive Officers, Operating Officers,
and Audit Officers	82
Message from an Outside Director	83
Corporate Governance	84
Risk Management	94
Compliance	96
V. Financial and Corporate Information	98

Yamaha by Creation

Strategy Management

Disclosure Structure

Website	Objective	Annual Report 2021

	Gaining information on Yamaha and its product and services	Learning about Yamaha's value creation activities		of Yamaha's management, business, and function strategies	Learning about Yamaha's ESG initiatives			I. Value Creation by Yamaha
Overall Corporate Activities	Developing an understanding			II. Management Strategy
Corporate Website: https://www.yamaha.com/en/	Viewing financial and		III. Strategies by Business
	and Function
	non-financial data
	IV. Corporate Governance
	V. Financial and Corporate
	Information
About Us								andNon-Financial Information
https://www.yamaha.com/en/about/							Integration of Financial
• Corporate Profile	◎	○		○
• Product Information
• Business Activities
• Research and Development
Information for Investors
https://www.yamaha.com/en/ir/
Securities Reports		◎		◎	○	◎

Corporate Governance Reports

In this integrated report, we

have prioritized the inclusion of

Sustainability Information

important information, particularly

that pertaining to theYamaha

https://www.yamaha.com/en/csr/

Group's ongoing value creation.

For a wider and more compre-

Sustainability Reports

◎

◎

◎

hensive range of information on

subjects such as environmental,

Environmental and Social Data

social, and governance (ESG)

topics, please refer to our

corporate website.

02 Yamaha Group Annual Report 2021

Management Plan	28
Approach to Formulating the Medium-Term	29
Management Plan
Major Medium-Term Management Plan Measures for	30
Accomplishing Our Management Vision
Corporate Strategies	38
Financial Strategies and Enhancement	38
of Management Foundations
Sustainability Management	42
Environment	44
Human Rights	48
Human Resources	50
Digital Transformation	52
Branding	54
Design	56
III. Strategies by Business and Function	58

Strategies by Business	60
Musical Instruments Business	60
Audio Equipment Business	64
Industrial Machinery and Components Business	66
Strategies by Function	68
Research and Development	68
Production	72
Sales	74

11-Year Summary	100
Financial Review	102
Consolidated Financial Statements and Notes	106
Independent Auditor's Report	147
Main Networks	152
Stock Information	154
Company Information	155

Scope of This Report

Information in this report covers 65 companies (as of March 31, 2021): Yamaha Corporation, its 60 consolidated subsidiaries, and its 4 affiliates. In cases where it is necessary to specify the scope of reporting, this report lists the applicable institution individually.

Reporting Period

This report primarily covers fiscal 2021 (April 1, 2020 to March 31, 2021). However, certain sections of this report include information from April 1, 2021, and onward.

Disclaimer on Forward-Looking Statements

The forward-looking statements such as data and forecasts included in this report are based on assumptions and information available at the time of publication and are subject to change due to various factors. These statements are not guarantees that Yamaha will achieve its targets and forecasts or realize its anticipated future business results. In addition, the content of this report may be changed without prior notice. Accordingly, Yamaha cautions readers not to place undue reliance on these forward- looking statements, which are valid only as of the date thereof,

and undertakes no obligation for any negative impact caused by the use of this report.

Names, including those of products and services, used in this report are trademarks or registered trademarks of Yamaha Corporation or of the respective rights holders.

Yamaha Group Annual Report 2021		03

Function and Business by Strategies

Governance Corporate

Information Corporate and Financial

O U R V A L U E C R E A T I O N

I. Value Creation by Yamaha

Yamaha's Path of Ambition	06
Yamaha's Business	08
Management Vision and Value Creation Story	10
Special Feature:
Enactment of Yamaha's Value Creation Story	12
Performance Highlights	16

Yamaha by Creation Value

04		Yamaha Group Annual Report 2021	Yamaha Group Annual Report 2021		05

YAMAHA'S PATH OF AMBITION

The origins of the Yamaha Group date back to 1887, when company founder Torakusu Yamaha repaired an imported reed organ. Since then, Yamaha has aimed to create excitement and

1980

Advancement of Technology

Yamaha promoted the in-house production of semiconductors with the aim of improving the sound quality of its digital musical instruments. This process led the Company to develop new digital musical instruments and audio equipment with proprietary LSIs, thereby greatly expanding the scope and geographical breadth of its operations. The Company adopted its current name of Yamaha Corporation in conjunction with its centennial anniversary in 1987, becoming a global company in both name and substance.

DX7 digital synthesizer

SILENT™ Series

cultural inspiration together with people around the world while centering its business on sound and music. This spirit has continued to live on in the Yamaha Group throughout the course of its history that spans over 130 years, granting it strength and constantly driving it toward growth.

1887

1887

Domestic Production of Musical Instruments Beginning with Organ Repair

Following the repair of a single organ, Company founder Torakusu Yamaha succeeded in creating domestically produced organs in Japan. This success prompted him to establish Nippon Gakki Co., Ltd. (currently Yamaha Corporation), and commence the domestic manufacture of pianos. Through this undertaking, he created the foundations for the musical instruments business that is the core business of Yamaha today, while also proposing the culture of enjoying musical instruments to the people of Japan. This is the point of origin of Yamaha's Corporate Philosophy: "With our unique expertise and sensibilities, gained from our devotion to sound and music, we are committed to creating excitement and cultural inspiration together with people around the world."

	The three tuning forks of the Yamaha brand logo repre-
	sent the cooperative relationship that links the three
Origin of Yamaha's Competitiveness	pillars of our business-technology, production, and
Symbolism of the Yamaha Brand	sales. They also evoke the robust vitality that has
forged our reputation for sound and music the world
	over, a territory signified by the enclosing circle. In
	addition, the mark symbolizes the union of three essen-	Founder Torakusu Yamaha

tial musical elements: melody, harmony, and rhythm. The spirit of our founder expressed in this logo lives on today, spurring us forward to continue enhancing the Yamaha brand.

20001990

2010

	Yamaha has amassed acoustic technologies in tandem with technological progress since its
Origin of Yamaha's Competitiveness	founding. By combining these technologies with digital technologies, we have been able to
create new products that are distinctively Yamaha. Digital technologies were embraced not
Value-Creating Combination of
only in product development but also in production activities, massively increasing produc-
Acoustic and Digital Technologies	tion efficiency and greatly contributing to today's acceleration of digital transformation.

Next Growth Stage Arrived at through Selection and Concentration and Structural Reforms in Core Business

The following years were characterized by massive changes to the operating environ-
ment, including ongoing yen appreciation, a shift to digital technologies, the special-
ization of industries arising from the globalization trend, and global financial crises.	Active field control hall	VOCALOID™
Amid this change, Yamaha undertook selection and concentration of its diversified
acoustics design system
businesses to focus more on its core business centered on sound and music. This
move saw us reorganizing and consolidating domestic and overseas production and
sales bases, merging the diverse technologies we had accumulated thus far, and
acquiring overseas companies to accelerate growth. This was the start of business	Acquisition of overseas companies
reorganizations aimed at taking our business to the next growth stage.
Origin of Yamaha's Competitiveness	Yamaha proceeded to develop growth foundations in its core business while conducting
M&As. For example, Germany-based Steinberg Media Technologies GmbH, Austrian-based
Strengthening of Growth	L. Bösendorfer Klavierfabrik GmbH, and French-based Nexo S.A. were acquired in the 2000s.
Foundations and M&As in	These business combinations had a ripple effect that strengthened our foundations and
spurred the growth of our business. The benefits included the ability to merge our hardware
Core Business
and software in the music production field, the enhancement of our	presence in the premium

piano market, and the provision of comprehensive solutions in the audio equipment business.

Yamaha by Creation Value

1940

Resolution of Social Issues and Improvement of Corporate Value to Become an Indispensable, Brilliantly Individual Company

1950

Spread of Music Culture, Diversification of Business, and Expansion Overseas as a Comprehensive Musical Instrument Manufacturer

Inspired by a desire to communicate the joy of music to as many people as possible, Yamaha began efforts to promote the spread of music, such as organ classes (predecessor of the Yamaha Music School). Meanwhile, the technology and sensibilities cultivated through the manufacture of musical instruments was adapted to broaden product lines to include audio equipment and to develop new businesses such as motorcycles, which would lead to the creation of Yamaha Motor Co., Ltd., and also sports equipment.

• In 1958, Yamaha established its first overseas subsidiary in Mexico, marking the start of its global expansion as a comprehensive musical instrument manufacturer.

Yamaha has been engaged in an ongoing effort to establish a competitive edge and achieve improvements in profitability. Steps to this end have included transitioning from organizations based on business lines to organizations arranged by function. In addition, we have been optimizing prices while developing products with distinctive individuality and entering into new markets by merging our technologies. We have also been advancing global branding strategies, establishing the management vision of "Becoming an Indispensable, Brilliantly Individual Company" in 2016 and the brand promise of "Make Waves" in 2019. Furthermore, Yamaha is supplying new solutions that respond to recent changes in the social climate through sound and music. Examples of these solutions include the SYNCROOM online remote ensemble ­performance service, the Remote Cheerer powered by SoundUD remote cheering system, and the Distance Viewing next-generation live viewing service. By delivering these solutions, we aim to contribute to the resolution of social issues and improve corporate value.

SYNCROOM online remote	Distance Viewing next-
ensemble performance service	generation live viewing service

Yamaha Ginza Building	Charlie™ communication
reopened as an experience-	robot that matches its

1960
		Yamaha expanded its global sales network
	Origin of Yamaha's Competitiveness	with the establishment of Yamaha de México,
	S.A. de C.V., its first	overseas subsidiary in
	Laying of Groundwork
	Mexico, in 1958, and developed a production
1970	as a Global Company	basis in Taiwan in 1969. This groundwork
	served as a springboard for the aggressive
		overseas expansion of the Company begin-
	ning in the 1970s. Having quickly solidified its	global network, Yamaha was able to leverage this
	network to exhibit significant competitiveness, supporting the growth of the Company, which
	has more than 70% of its revenue generated overseas today.	Yamaha de México, S.A. de C.V.

2020

oriented brand shop in 2021 cadence to melodies

Origin of Yamaha's Competitiveness		The transition to organizations arranged by function
	allowed for the consolidation and cross-organizational
Creation of Synergies and		utilization of the previously separate management
Refinement of Strengths through		resources that had been accumulated thus far. We were
	thereby able to further refine our existing strengths,
Consolidation of Insight
	including our production technologies, which combine
		our craftsmanship with core and other technologies; our
music promotion, sales, and personal connection networks, which are several steps ahead of those of
competitors; and our healthy financial position.	Meanwhile, various unique, new products are being born

out of synergies between our various insight and technologies at the Innovation Center, established in 2018. Centered on the combination of technologies and sensibilities, Yamaha is able to heighten its

development capabilities in new sound and music fields that make use of physical sensibility evaluation	Innovation Center
technologies for quantifying sensibilities, material element technologies, artificial intelligence (AI) tech-
nologies, and elemental technologies. In this manner, we are capable of proposing new value.

06		Yamaha Group Annual Report 2021	Yamaha Group Annual Report 2021		07