REPORT 2024

NIPPON SIGNAL REPORT 2024

Nippon Signal’s Value Creation

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Group Philosophy

Our Mission

Our Vision

We help realize a more secure

We strive to become a global company

and comfortable society

by pursuing world-leading technologies

through superior technologies

with ingenuity and passionthat provide safety and reliability.

to inspire our customers’ Kando.** Kando is a Japanese word that describes the sense of awe
and the emotion you feel when experiencing something
beautiful and amazing for the first time. It is the moment
when your expectations are exceeded – you feel Kando.

Our Values

1. Emphasize “safety and reliability” above all.
…… Mono-zukuri (Manufacturing)
2. Strive to improve customer value by taking thecustomer’s perspective.
…… Koto-zukuri (Business)
3. Take on challenges for your own growth.
…… Hito-zukuri (Education)
4. Preserve the environment and contribute to thedevelopment of local communities…… Machi-zukuri (CSR)
5. Have dreams and share them…… Michi-zukuri (Creation of the future)

Our Code of
Conduct:
Six Commitments

1. Working for Customers’ Kando
2. Fair Corporate Activities
3. Proper Information Disclosure andCommunication with Society
4. Respect for Human Rights and Creation of aGood Working Environment
5. Environmental Protection and Proactive Social
Contribution Activities
6. Proper Management of Company Assets andInformation

CONT E NTS
Nippon Signal’s Value Creation

Sustainability Initiatives

Editorial Policy

Nippon Signal’s Main Business Domains ………………… 03
Value Creation Process ……………………………………… 05

Nippon Signal’s Materiality ……………………………… 35
E Environment
Response to TCFD (Task Force on Climate-related
Financial Disclosures) ……………………………………… 39
FY2024 Quality, Environment & Safety Policies ………… 49
S Society
Human Resource Investments …………………………… 54
CSR (Social Contribution) Activities ……………………… 61
G Corporate GovernanceCorporate Governance …………………………………… 62
Corporate Executives ……………………………………… 69

The Group publishes NIPPON SIGNAL REPORT for its customers, shareholders, investors, and other stakeholders, to provide
comprehensive updates on the Group’s management strategy, business activities, performance results, and financial and nonfinancial information.
In preparing these reports, the International Integrated Reporting Framework of the International Integrated Reporting Council and
the Guidance for Collaborative Value Creation released by the Japanese Ministry of Economy, Trade and Industry were referenced,
and we aim to ensure ease of understanding with regard to our business model, value creation, and ESG (environmental, social andgovernance) initiatives that form their basis.
In the NIPPON SIGNAL REPORT 2024, we have created content focused on the relationship between our business activities andthe Sustainable Development Goals (SDGs) relevant to us, in order for more people to better understand our enhancement ofcorporate value by means of social contribution through products and services that we promote.

Nippon Signal’s Vision and Growth Strategy
Top Interview ………………………………………………… 07
New Medium-Term Management Plan “Realize-EV100” … 13
Business Report …………………………………………… 21
Board Member Messages ………………………………… 23
Feature: AFC (Automatic Fare Collection) Business … 25
Automatic Operation …………………………… 29
Global Network ………………………………… 31
Research and Development ……………………………… 33

01

NIPPON SIGNAL CO., LTD.

Data Section

Note on Forward-Looking Statements

History of Innovation ………………………………………… 71
Financial and Non-Financial Highlights …………………… 73
Corporate Data ……………………………………………… 75

NIPPON SIGNAL REPORT contains statements on the future plans, forecasts, and prospects of the Group. They reflect thepredictions made by us and are based on the information available at the time this report was published. Please note that they
may differ from the actual results due to the progress and circumstances surrounding future business activities.

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Value Creation

Nippon Signal’s Value Creation

Nippon Signal’s Main Business Domains

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Works of Group Companies

Nursing care robots

Magnetic resonance imaging units

Computed Tomography

Solar power generation

Users can step on this equipmentfrom the back, a novel riding style,to enjoy free mobility.

Providing leading-edge medical devices
that use magnetic force to capture
cross-sectional images of a living bodyto support high-precision diagnoses.

Providing leading-edge medical
devices that detect microscopic
lesions with high clarity using advanced digital technology.

Contributing to accelerating the
spread of clean energy by installing
solar power generation systems onbuilding rooftops.

From railways and stations to the cities,
and Japan to the world.
The Group strives to pursue outstanding technology for “safety and reliability,” while expanding our businesslocations.
As a company supplying a wide range of solutions to support safety and comfort, we contribute to the evolution of infrastructure.

Transport Infrastructure business

Railway Signal Systems

Smart Mobility Systems

AFC

R&S

Automatic Fare Collection (AFC) Systems

Railway Signal Systems

Remote monitoring system

Interlocking control panel

Automatic operation (conventional line trains)

Communications-Based Train Control (CBTC) systems

Platform safety monitoring systems via image analysis

Platform screen doors

Automatic passenger gatesMultilingual ticket vending machines

Cloud-based systems to collect,
accumulate, and analyze information on railway facilities, areas
along train lines, and services
using wayside IoT networks andonboard imaging systems.

A device that links signals andpoint machines in train station
premises to secure safe operationof trains.

We have been developing an automatic train operation device that allows safe and stable transportation onconventional lines, which has led to
the realization of GoA2.5*1 on the JR
Kyushu Kashii Line in March 2024.

Train control systems using wireless communication, to reduce
system life-cycle cost.

A system to detect hazard on
station platforms using image
processing devices attached toexisting surveillance cameras.

We ensure safety and security on
platforms, with a wide range ofplatform screen doors to fit various
types of stations and vehicles.

We participate in verification tests
for gates that let passengers
through with facial recognition or
tap-to-pay credit cards, which is a
step toward future applications ofticketless passenger gates.

We provide clear and user-friendly
multilingual automatic ticket vending machines and information display systems for stations.

Smart Mobility Systems

Railway Signal Systems

AFC

Robotics and Sensing (R&S)

Water-resistant point machines

Slope failure prediction technologies

Bus Rapid Transit (BRT)*

Automatic operation (cars)

Parking lot management systems

Security gatesMultiple handling vehicle*3

Automatic floor cleaning robots

We strengthened the water-resistant functionof simplified water-resistant railway point
machine by improving the cover. This has
enabled steady operation even when the upper part of a point machine is under water.

Systemization of “location” prediction for slope failure, to protect
transportation infrastructure fromtorrential rain.

Delivered a traffic right control
system for alternating traffic inbus-only road sections for Kyushu
Railway Company

A system that connects signal information with cars using 5G toassist smooth preliminary decelerations and starting preparations.

We provide a range of devices andsolutions, including the PARKLOC® system and network-linked
payment machines.

We provide total security environments that are people-friendly,
from entry and exit systems forpeople and vehicles, to office security.

Humanoid robots for work atheight aimed at eliminating
heavy-lifting work from railway
maintenance operations and improving its efficiency.

These robots clean floors unattended, accurately detecting peripheral obstacles using lasers andultrasound sensors.

Automatic X-ray baggage checking equipment

Ground penetrating radars

Body scanners

This checking equipment adopting
world’s first compact X-ray source
precisely and speedily detects thepresence of dangerous items.

Detecting underground cavities andburied objects using undergroundsensing technology that applies radio
wave and communication technologies.

Automatically detects prohibited
items concealed on a person walking through the scanner.

2

Smart Mobility Systems

03

ICT Solution business

R&S

Traffic lights

Pedestrian supporting applications

Mobile Virtual Network Operator (MVNO)

Controlled by traffic signal controllers to indicate red, green or yellow
signals to drivers and pedestrians.

We support people with visual impairment and senior citizens tocross intersections safely using asmartphone.

Network provision service business. An exclusive closed dual
system wireless network service
that utilizes common lines.

NIPPON SIGNAL CO., LTD.

*1 GoA2.5 is a grade of automated train
operation in which an attendant, who is
not a driver, is present in the cab of thefirst car.
*2 BRT stands for Bus Rapid Transit System.

*3 Developed jointly with West Japan Railway
Company and Man-Machine Synergy
Effectors, Inc.
NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Value Creation

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Value Creation Process
The Group is engaged in new value creation to contribute to “solving social issues” and “advancing infrastructure,” through value chains founded on “safety and reliability,” while keeping an eye on global
environmental changes.
We aim to achieve sustained growth by accelerating the process of development and real-world implementation of products that are suited to the market needs, carrying out business structure reforms,
and strengthening our business foundation.

INPUT

Business Activities

OUTPUT

As of March 31, 2024

Value chain
Financial capital

82.8
Interest-bearing debts 18.7
Shareholders’ equity

Manufactured capital

Capital investment

Intellectual capital

R&D expenses

4.3
2.9

Railway Signal
Systemsbillion JPY

Construction
work andmanagement

Safetyand
Reliability

Number of employees

Smart Mobility
Systems

Manufacturing

Others(services, overseas)

Automatic Fare
Collection (AFC)
Systems

2,946

Human capital investments(non-consolidated)

90

Contribution to the SDGs

billion JPY
Maintenanceservices

Human capital

Value provided to society

Development
and design

Marketingbillion JPY

billion JPY

OUTCOME(Station Network Systems)

million JPY

Social and relationship capital

Growth Strategy

Long-Term and Medium-Term Management Plans

P13
Robotics andSensing (R&S)

Nippon Signal operation coverage

30 countries and regions

Strengthening the Foundation Underpinning Sustained Growth

Sustainability Initiatives

P35
P35

05

NIPPON SIGNAL CO., LTD.

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Top Interview

With the Medium-Term Management Plan (Realize-EV100)
as our new goal, we will uphold safety and reliability as
an enterprise engaged in social infrastructure andcontinue to be a sustainable growth company

Hidehiko Tsukamoto
President and Chief Executive Officer

Q.

How do you rate the Company’s performance up to the previous
fiscal year?

A.

Amid soaring prices of raw materials and an unstableinternational situation, we were able to accelerate thedevelopment and real-world implementation of new products.

In addition to difficulties in sourcing some components, such as semi-conductor chips, and soaring
raw materials prices, we have faced harsh circumstances due to the unstable international situation, including the coup in Myanmar and Russia’s invasion of Ukraine. Nevertheless, we pursued
management based on the concept of “Supporting the Next Stage of Infrastructure.” We accelerated the development and real-world implementation of products in new businesses. In theTransportation Infrastructure area, this included the Haga-Utsunomiya LRT railway system, automatic
operation on the JR Kyushu Kashii Line, and CBTC*1 with the use of carriage information deviceson the Seibu Tamagawa Line, while in the ICT Solutions area, we won orders for MaaS cloud-based
payment systems and humanoid heavy machinery robots. In the Smart Mobility Systems area, we
worked on a new solution in the form of a subscription business for MVNO*2 services for the police.
In terms of the expansion of our business overseas, we won large orders for the Cairo Metro Line 4(railway signal system, platform screen doors), the Manila Subway Line (railway signal system), theDelhi Metro Line 8 (railway signal system), and the double-tracking of the Huadong Line (railway
signal system) in Taiwan. We will continue to promote our global business this fiscal year.
On the other hand, in the post-COVID-19 era, there has been a dramatic change in the movementof people and goods on the social infrastructure that we are engaged in, and the transportation
revenues of the railway operators that are our major customers are not expected to return to preCOVID-19 levels. There has also been a sharp increase in the need for investment that will help
reduce fixed costs and improve operational efficiency with the use of DX. Customers’ needs havealso become much clearer than we envisaged when we formulated the previous Medium-Term
Management Plan (24 Medium-Term Management Plan). Against the backdrop of such changes inthe business environment, we have formulated a new Medium-Term Management Plan (28 Medium-Term Management Plan) “Realize-EV100” and have determined to put the combined strengthof the entire Nippon Signal Group toward the achievement of this plan.
*1 CBTC: Communications-Based Train Control, a signal safety technology that controls train operation by using communications between trains and waysideequipment*2 MVNO: Mobile Virtual Network Operator Network provision service business07

NIPPON SIGNAL CO., LTD.

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Top Interview

Q.

What are the priority initiatives in 28 Medium-Term Management
Plan “Realize-EV100”?

A.

Our priority initiatives are to realize 3 things: the Next Stage of
New Business and New Products, the Next Stage ofInternational Business, and the Next Stage of Manufacturing.

In 28 Medium-Term Management Plan, we have declared a target of realizing consolidated net
sales of 150.0 billion yen, ROE of 10% or more, and ROIC of 9% or more. From this fiscal year, we
will promote ROIC-oriented management to address the realization of management that is conscious of cost of capital and stock price. In addition to numerical targets, we have presented specific scenarios for what we will do and by when within the company, and we will aim to realize 28
Medium-Term Management Plan through further promotion of new DX-based businesses, the deployment of decarbonization solutions, and the improvement of manufacturing efficiency.
Our top priorities within that are to realize 3 key next stages. The first is to realize the Next Stage of
New Business and New Products. We will promote the expansion of sales of new products, suchas CBTC for domestic market, automatic operation on railways (GoA2.0*1 and GoA2.5*2), and humanoid heavy machinery robots, and the deployment of new DX-based services, such as CBM*3,(MaaS cloud-based payment service), MVNO, solar power services, and infrastructure inspections using drones.
The second is to realize the Next Stage of International Business. We will aim to win orders for 2ndphase projects overseas, such as the extension and double-tracking of completed projects, expand our markets in India, Africa, and Taiwan, and improve profitability.
Finally, the third is the Next Stage of Manufacturing. We will work on areas such as establishing a
manufacturing system suitable for the DX era, such as wireless and networked systems, the manufacture of equipment that can stand up to the force of disasters, the strengthening of manufacturing
capabilities by bringing manufacturing in-house within the Group in the medium term, and the maximization of Group value.
Basic Concept of “Realize-EV100”

In addition to these three approaches, we have endorsed the TCFD and, in our aim to halve greenhouse gas emissions by 2030 and reach net zero emissions by 2050, the initiatives include productdevelopment that is conscious of reducing environmental impact, such as compact, energy-saving
devices, the widespread adoption of eco-label products, the reduction of CO2 emissions in manufacturing processes, and the introduction of clean energy.

Q.
A.

What is the short-term management plan for this fiscal year?
This fiscal year, as the first year of 28 Medium-Term
Management Plan, we will particularly focus our efforts on the
Next Stage of Manufacturing.

In our efforts up to last fiscal year, we conducted activities to propose and win orders for new products in each area, based on the concept of “Next Stage Accelerating Real-world Implementation,”and achieved a certain measure of success. With rapid changes in the social environment expected, based on the concepts that we have adopted to date, we must move forward with the real-world implementation of new products and services together with our customers in Japan andoverseas.
On the other hand, faced with drastic changes such as difficulties in securing semiconductor chips
and other components due to the COVID-19 pandemic, soaring consumer prices, and rising laborcosts, our ability to address these changes is inadequate, and issues in manufacturing, such as theincrease in inventory assets and the deterioration of cost ratios, have been brought into sharp relief.
As such, this fiscal year, as the first year of the new Medium-Term Management Plan, we will focus
particular efforts on the Next Stage of Manufacturing. Specifically, (1) by upgrading our core system, we will strive for the visualization of progress in manufacturing and improvements in operational efficiency, optimize production lead times, improve cost ratios, and curb inventory assets, in ourefforts to streamline manufacturing and improve profitability. (2) We will also strive to improve profitability by standardizing drawings and re-using design assets, centered on international projects.

– Goals to Realize by Our 100th Anniversary –Previous year (FY2022)

Realize 3 things

Net sales
Next Stage of
New Businessand New Products
New business through DX
Labor-saving products
Decarbonization solutions

Next Stage ofInternational Business

Next Stage of
Manufacturing

Expansion of India, Africa, andTaiwan markets
Increase of profitability
Strengthening of local capability

Increasing design andmanufacturing efficiency
Reinforcing human resourcesin software
Optimization of efficiency of
the whole group*1 GoA2.0 is a level of automated train operation in which there is a driver on board who can switch to manual operation in an emergency.
*2 GoA2.5 is a level of automated train operation in which an attendant, who is not a driver, is present at the head of the train.
*3 CBM: Condition Based Maintenance, a predictive maintenance approach in which maintenance is carried out only when deemed necessary according tocondition-based criteria.

09

NIPPON SIGNAL CO., LTD.

85.4

billion JPY

Results (FY2023)

98.5

billion JPY

Targets (FY2024)

100.0

billion JPY

Operatingmargin

6.0

6.9

8.0

ROE

4.6

5.7

5.8

Equity ratio

61.2

%

%

%

%

%

58.6

%

%

%

Around60%

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Top Interview

Q.

What are the drivers of sustainable growth?

Q.

Please send a message to our stakeholders.

A.

What is needed for sustainable growth is “human resources.”
In addition to bringing new energy through dialogue with employees
and customers, we will also work on human resources development.

A.

To meet the expectations of our stakeholders, we will create
innovation that transcends the boundaries of our businesses andgrow on a global scale.

For Nippon Signal to grow sustainably in these unpredictable VUCA* times, in addition to developing our people, we must create workplace environments that are brimming with diversity to make iteasier for every individual employee to demonstrate their abilities and create a culture in which ourpeople can work with a sense of reward. The Nippon Signal Group is working to ensure diversity
through such means as increasing the recruitment of non-Japanese employees and female engineers. One way of building a rewarding workplace culture is our emphasis on dialogue.
Last fiscal year, I started creating opportunities to hold direct dialogues with employees of various
age groups and with employees at our overseas bases, as a way of revitalizing internal communication. The new discoveries and insights that these dialogues have imparted are being used to improve day-to-day operations in a kind of virtuous circle.
We have also reinstated the various in-house events (e.g. sports days and staff trips) that had been
put on hold during the COVID-19 pandemic. The experience of transcending boundaries between
divisions and departments and cooperating with each other while passing a baton has, I feel,helped to foster a sense of unity.
We are also placing efforts into the Railway Festival, an event in which we open up our Kuki Plant
to the general public, as an important opportunity for interaction with the local community. The
Railway Festival staff come up with proposals for activities themselves and attract large numbers ofvisitors to the event every year. By taking that autonomy and passion of our employees on board
and putting them to use in day-to-day strategies, I hope to foster self-awareness and a sense of
reward in those staff as members of the Nippon Signal Group.
Further, in human resources development, we are placing efforts into the development of specialist
personnel with initiatives such as software knowledge and skills contests, technical forums whereengineers gather to present outcomes, and participation in the Skills Competition.
I also want every one of our employees to declare their own intentions to solve social issues and to
take on the challenge of realizing those intentions without being afraid of risks. I believe that bringing together those intentions and taking on challenges alongside their colleagues will help our people to work with vitality and connect to their own continued growth and the growth of the company.
To realize 3 things of the new Medium-Term Management Plan, we will enhance diversity within thecompany, with no regard to nationality, gender, or other attributes, to realize sustainable growth.
*VUCA: Acronym for four words “volatility, uncertainty, complexity, and ambiguity,” representing a state of unpredictability that is changing at a dizzying pace.

11

NIPPON SIGNAL CO., LTD.

The Nippon Signal Group has long walked
side-by-side with our stakeholders as wesolved social issues in infrastructure. We willcontinue to value dialogue and cooperation
with our many and varied stakeholders, including our customers, shareholders and investors,
government organizations, local communities,
and academic institutions.
Our stakeholders, who are important partnersof the Nippon Signal Group, are making efforts
and addressing the solutions of social issues
every day. As a united force, the entire Nippon
Signal Group will work together with our stakeholders and continue to create innovation andmake growth investments that transcend theboundaries of our businesses for the resolutionof social issues.
In 28 Medium-Term Management Plan , in termsof management that is conscious of investors,
we will conduct well-balanced growth investments and returns of profits to stakeholders,
while securing financial stability. We will also
pursue appropriate information disclosures inour ongoing quest to be a global company withsustainable growth.
I hope you will continue to hold expectations of
the Nippon Signal Group’s further advancement toward the future and that you will lend
us your unwavering support.

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

2021

2022

21 Medium-Term Management Plan

2023

24 Medium-Term Management Plan

2024

2025

Nippon Signal Group’s Vision

2026

2027

2028

28 Medium-Term Management Plan “Realize-EV100”

100th Anniversary*

Supporting infrastructure evolution with safety and comfort

Our goal

To become a corporation group respected around the world as an infrastructure provider of the DX era

Realization ofa super smart society*Date established: December 27, 1928

Focus areas to date

New Medium-Term Management Plan “Realize-EV100”(FY2024-FY2028)

Automatic
operation

Robots

CBM

Security

Cashlesspayment

Medical andnursing care

Basic Concept of “Realize-EV100” – To Be Realized by the 100th Anniversary of the Foundation –Realize 3 things

Next Stage of
New Business and New Products

Next Stage ofInternational Business

Next Stage of
Manufacturing

New business through DX
Labor-saving products
Decarbonization solutions

Expansion of India, Africa,
and Taiwan markets
Increase of profitability
Strengthening of local capability

Increasing design andmanufacturing efficiency
Reinforcing human resources insoftware
Optimization of efficiency of thewhole group

Human capital

Sensing
robotics
International Businesses

Businesses supported by Nippon Signal Group
With our mission of helping to realize a more secure and comfortable society through superior
technologies that provide safety and reliability, we aim to provide products and solutions for the socialand daily life infrastructure of the next generation.

O&M Disaster prevention
and mitigation

RobotsIT Parking
Station

Safety on platforms

Decarbonization solutions

SDGs activities

FY2023 (results)

FY2024FY2028Net sales

98.5billion JPY

100.0billion JPY

150.0billion JPY

ROE

5.7%

5.8%

10% or higher

ROIC

4.6%

5.0%

9% or higher

NIPPON SIGNAL CO., LTD.

Smart city
Low-carbon
society*1 O&M: Operation and Maintenance Operation and maintenance management

Numerical Targets

13

Smart
Mobility
MaaS

Safety Security Comfort Reliability

BRT

Automatic operation
CBTC

Environmental target: Reduction of greenhouse gas emissions (compared with 2013)

Smart
O&M*1

“One-stop solution provider” connected by networks

Realization of sustainability management

IR and SR conscious ofinvestors and share price

Data Section

Anniversary

Vision-2028 “Evolution 100”
2020

Sustainability Initiatives

100 thLong-Term Management Plan

2019

Nippon Signal’s Vision and Growth Strategy

50% reduction by 2030 and net zero by 2050

ANSHIN Center

Security
MedicalTraffic lights
networking

Automatic
operation
Payment

Maintenance

Cooperation, cross-section, and integration among businesses and the Group companies
Safer and more comfortable

Total support for mobility

Realize MaaS that supports the transformation of public transport

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

New Medium-Term Management Plan “Realize-EV100”

Progress status of the Previous Medium-Term Management Plan (24 Medium-Term Management Plan)

Background of formulation of the new Medium-Term Management Plan (28 Medium-Term Management Plan)
Changes in external environment

Supporting the Next Stage of Infrastructure
Collaborative value creation with customers, expansion of international business, and strengthening of profitability

Segment

Results

Railway Signal
Systems

 eal-world implementation of CBTC for domestic market
R(Toei Oedo Line, Seibu Tamagawa Line) and developmentof CBM
Launch of Utsunomiya LRTSmart Mobility
Systems

1 operation,

2 devices and

3 DX, decarbonization

4 Aging infrastructure

3 Wireless,networking

4 labor-saving on

mobility
5 Seamlessneeds

6 of cyber-terrorist

cloud-based
5 MaaS,
payment

private6 Securecloud

unmanned stations

weather events, etc.)

Increased frequency
crimesPriority Initiative (1) Next Stage of New Business and New Products

Targeting new markets with future growth potential, we will promote the development of core technologies

Sales expansion of MVNO

and the real-world implementation of new products, and aim for business growth through share acquisition.

NIPPON SIGNAL CO., LTD.

150.0

Net sales of new business and new products
Net sales of existing businesses and existing products(Billion yen)

35.0

100.0
15.0

115.0

85.0

 rders for large-scale projects in Egypt, Philippines,O
India, Taiwan, etc.

FY2022 (results)

15

maintenance work eal-world implementation of KURU LINK (Hitahikosan
R
Line BRT) and automatic operation (Kesennuma Line BRT)

Sales ratio of new businessand new products

FY2024FY202815%

23%

Segment

ROE

Preventive maintenance, rders and sales of X-ray baggage checking
OequipmentInternational

Operating marginsystems

Increased demand for safety and convenience

Orders for heavy machinery robots

Net sales

Disaster-resistant

2 (earthquake, extreme

 eal-world implementation of cloud-based parking lot
Rpayment system

R&S

Automatic

Force of disasters

1 Labor shortage

Priority initiatives in the new Medium-Term Management Plan (28 Medium-Term Management Plan)Introduction of cashless payment system and devices
to railway operators

AFC

Growing needs

85.4billion JPY
6.0%
4.6%

FY2023 (results)

FY2024 (forecast)

Railway Signal Systems

CBTC, Automatic operation, O&M services, etc.

Smart Mobility Systems

Automatic operation, Vehicle-infrastructure coordination,
MVNO, etc.

AFC

Cloud-based payment, cloud-based parking lots, etc.

FY2024 (Previous Medium-Term
Management Plan target)

98.5billion JPY 100.0billion JPY 130.0billion JPY
6.9%
5.7%

8.0%
5.8%

11.0%
10.0%

Products

3D sensor market
R&S

Heavy machinery robot market

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Sustainability Initiatives

Nippon Signal’s Vision and Growth Strategy

Data Section

New Medium-Term Management Plan “Realize-EV100”

Priority Initiative (2) Next Stage of International Business*

Non-financial Information (ESG Initiatives)
Reduction of CO2 emissions from products
1) Products of lower power consumption2) Increased maintainability of products
3) Provision of energy saving solutions, etc.

China
Bangladesh

8.0billion JPY

13.0

Taiwanbillion JPY

Africa10.0

billion JPY

20.0

billion JPY

India

23.0

billion JPY

Other

8.0

E

billion JPY

Southeast Asia

30.0

Total

billion JPY

Labor-saving
Streamlining

CBM

Automatic
operationC lean electric power procurement
Introduction of solar power generation, etc.
Emission control in business activities

Robot

Decarbonization
solutionsPlant

100.0 billion JPY or more

OfficeTowards decarbonization

Nippon Signal’s initiatives for decarbonization (conceptual image)*Image of net sales in the Nippon Signal’s international business by area during 28 Medium-Term Management Plan (FY2024 - FY2028)

Priority Initiative (3) Next Stage of Manufacturing

S

Manufacturing in the era of software first
Visualization andefficiency improvementwith data utilization

Promotion of in-houseproduction of core technologies
within the Group

Development of design
and manufacturing talent

Optimization of manufacturing
across the GroupHR system reforms andIncreasing digital literacy

Systematic and continual training

Business development taking root inpromoting diverse working styles

through reskillingof model skills and engineers

overseas regions and job creation

Increasing engagement of employees and improving the ratio of male taking childcare leave
Continue and strengthen community-based efforts of contribution to society

G

Business management using ROIC, evaluation and review of business portfolio to achieve once or more PBR
Dialogue with shareholders and investors, review of cross-held shares, establishment of BCP and risk management

Major Initiatives of Human Resources Strategy

Human Resources Vision of Nippon Signal Group
Aim to secure stable supply and quality in individual plants and to improve profitability

Promote recruitment and development of humanresources centering around fail-safe technology toadapt to the drastically changing external environmentand realize global business development.

Responses for the realization of management conscious of capital costs and share price
The Company will conduct well-balanced growth investments and returns of profits to shareholders, while securing soundness of capitaland financial strategies. We will strive for investments in R&D, the establishment of production systems, and the development of humanresources, among others, with the aim of establishing a stable earning
structure and management base from a long-term perspective, as
well as strengthening our financial position. For shareholders, under abasic policy on appropriation of surplus of continuing stable dividends
and implementing returns of profits based on performance, we have
set immediate targets of a consolidated dividend payout ratio of 30%
or higher and a lower-limit indicator DOE of 2.0% in principle.
We will also advance improvements on both the earnings and equity
fronts in our efforts to enhance PBR and ROIC.
 s an indicator for the realization of PBR of 1.0 or higher, we willA
plan for ROE of 10.0%* or higher.
We will set a target of ROIC of 9.0%* or higher against an expected WACC of 6.0%.
(*Numerical targets for the final year of the Medium-Term Management Plan)
We review our cross-shareholdings every fiscal year, taking into consideration their necessity for purposes such as growth investment andbusiness alliances, and we will continue to reduce such holdings.
17

NIPPON SIGNAL CO., LTD.

Trends in Dividend Per Share and Payout Ratio
41%
37%

36%

34%

30% or higher
Lower-limit indicator DOE 2.0%

25%

26

Dividend per share (Yen)
Payout ratio

Payout ratio

27

27

27

2.0

2.0

1.9

2.1

Total dividends (Bil ion yen) 1.63 1.68 1.68 1.68 1.93

21 Medium-Term 24 Medium-Term
Management Plan Management Plan

Sense ofmission
Challenging
Co-creation
spiritability

Philosophy

Nippon Signal Group Philosophy

Organizational
strength

Increase of engagement

Diversity

DE&I* promotion

Individual
strengths

Human resources management
based on continuity and change

Address issues to find solutions through coordinationof efforts in each layer.
*DE&I: Diversity, Equity and Inclusion

Major Initiatives of Human Resources Strategy

31

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027

DOE (%)* 2.0

Self-discipline

Basic Concept of Human Resources Strategy

Realize-EV100

Increase of engagement

DE&I promotion

Human resources management based on continuity and change

Ensuring quality and volume of employees

Offering diverse opportunities to show great performance

Inheritance of technologies including fail safe

Maintaining physical and mental healthFlexible work style

Activating organization through common
objectives, better communications andincreased motivation

Participation of womenParticipation of global talent

Inheritance of manufacturing technologies
Recruitment and development of DX
human resources*DOE (Dividend on consolidated net assets) = Total annual dividend ÷
Average consolidated net assets during the period
NIPPON SIGNAL REPORT 2024

18

Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Sustainability Initiatives

Nippon Signal’s Vision and Growth Strategy

Data Section

New Medium-Term Management Plan “Realize-EV100”

Railway Signal Systems

AFC Business

VisionVisionCo-creation partners beyond the relationship with customers

Real (facilities/services) innovation to “Realize motivation for mobility”

Main Strategies

Main Strategies

Expanding markets of next-generation traffic signal safety system
 C ontribute to labor-saving and decarbonization by expanding CBTC for domestic market, automatic operation,
and O&M solutions markets
Realize high-level QCD by standardizing product composition

Expansion of ABT*1 solution which leads user/business operator services

Product strategy for co-creation of customer’s structural reform Provide railway signal safety systems in line with changing market needs through transformation from hardware to software Simplify railway signal safety systems and enhance maintenance capabilities by building fail-safe networks Increase in market share with enhanced line-up of platform screen doors and contribution to labor-saving with CBM

Develop systems for the survival of public transport in regional areas Reduce equipment and achieve labor-saving through packaging

On-vehicle equipment

Analysis

Digital ticket
information

round

Above-gnsectiotion

round sec

Underg

VOBC
Processing unit

DMI

Relay unit

Cab

Depot section

Brake equipment

User+ Digital ticket

Pick up

Open/closeticket gate

CBTC

Ticket vending machines
Ticket selling site

Automatic Operation

Cloud
server

Vehicle detection
information

Issue

Users

O&M Solutions

Transmit availability
information

Cloud
server

Detection of
platform status

Field
equipment data

Nippon Signal ANSHIN Center

Cloud-based payment system

Smart Mobility

R&S Business

VisionVisionPredictive monitoring of
platform screen doors
Notify cloud of
platform status

Station monitoring system

Change settlement/
availability notice

Gateless vehicle
recognition

Bird’s-eye
cameraCloud-based parking lot systems

One-stop solution provider for road traffic

Create products having overwhelming competitiveness in robotics and sensing segments to win the position of market leader

to solve issues of business operators

Main Strategies

Strive to establish our robots as de facto standard for work at height

Main Strategies

Activities for dissemination of automatic operation

 Downsize heavy machinery robots and promote a de-facto standard by enhancing tools for work at height Solving issues of local governments and operators through real-world implementation of KURU LINK.

Expand service robot market by launching promotion activities

 Promoting the dissemination of automatic operation with smart poles and I2X devices

 Establish brand as a manufacturer of service robots, such as cleaning robots, security robots, and AMR

Building an environment for easier mobility through MaaS-related services

Win the position of market leader with cutting-edge technology in sensing segment Increasing number of cashless terminals and high-speed PICS installed and expanding BLE*-based services Win the position of market leader through early realization of mass-production of competitive new LiDAR, by
combining cutting-edge technologies and our proprietary technologies

Contribution to reduction of fixed costs by enhancing transmission wireless system for traffic signals (MVNO)
Strategic Products “KURU LINK & I2X (vehicle-infrastructure coordination)”
User

Control center

Book vehicle
dispatch withsmartphone

Timetable generation
Vehicle operation
management

Ground equipment control

Strategic Products “Heavy machinery robots,” “next-gen 3D LiDAR,” etc.

Coordination with transportation infrastructure through vehicle-infrastructure coordination

Example of laser ranging Image

Crosspoints
Parking lots

Self-driving
vehicle control

KURU LINK

19

Platform monitoringby each camera

Judge

TCMS
(Train Control and Management System)

Door control unit

Main control equipment Tacho-generator

Cloud
serverExamination

CBM Alert
Other vehicles
systems

VRSSC Strengthening business capabilities through MSS*2 collaboration tailored to users

ANSHIN Center Services

WRS

SRS

Provision of a cloud-based parking lot system

Strategic Products “Cloud-based payment systems,” “station monitoring systems” and “cloud-based parking lot systems”

AntennaSRS

WRS

Provision of a system for safe and unmanned (laborsaving) station*1 ABT: Account Based Ticketing, a ticketing system for travel that uses unique IDs*2 MSS: Mobility Service Server, a cloud-based parking lot system

Strategic Products “Next-generation railway signal safety system”
Ground equipment High-value-added ticket gate that supports various authentication methods such as credit card, QR, and facial recognition*BLE: Bluetooth Low Energy, a short-range wireless communications technology
A power-efficient mode of communication that is part of Bluetooth
NIPPON SIGNAL CO., LTD.

Notifying avehicle and thedriver of theexistence of apedestrian

I2X

Self-driving
assistance throughcommunications
between vehicle andinfrastructure atintersections, etc.

Heavy machinery robots

Next-gen 3D LiDARNIPPON SIGNAL REPORT 2024

20

Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Sustainability Initiatives

Nippon Signal’s Vision and Growth Strategy

Data Section

Business Report
FY2023 Transport infrastructure business
Orders received (¥ million)(¥ million)

47,037

Segment profit

53,936

6,212

5,267

5,119

FY2022

FY2023

FY2021

FY2022

FY2023

FY2021

FY2022

Orders received (¥ million)(¥ million)

44,01845.3%

Smart Mobility
Systems

Main Business Field· Automatic Train Control (ATC) system· Automatic Train Stop (ATS) system· Centralized Traffic Control (CTC) system· Electronic interlocking system· Level crossing protection device· Display device· SPARCS (Communications-Based Train
Control System), etc.

Main Business Field· Traffic control system· Traffic signal controller· Traffic light· Mobile Virtual Network Operator (MVNO)· P edestrian Information
Communication Systems (PICS), etc.

For Smart Mobility Systems, particularly Road Traffic
Safety Systems, we received orders for and recorded sales of traffic control systems and parking meters. We also actively participated in various
automated driving demonstration projects, providing products and technologies that contribute to the“Vehicle-Infrastructure Cooperative System” linking
automated vehicles with traffic lights and roadside
sensors.
Going forward, we will continue to work on realizing
the Vehicle-Infrastructure Cooperative System andautomatic operation services and develop new
solution businesses, including wireless communication-based systems using MVNO (network provision
service business).

Net sales(¥ million)

55,564

Segment-basis
sales ratio

FY2023

Railway Signal
Systems

In Railway Signal Systems, we received orders forand recorded sales of Automatic Train Control systems, interlocking systems, Communication-Based
Train Control systems and other products for railway operators in the domestic market.
We are currently developing automated driving systems using the existing signal safe products currently in use in regional railroads. We will focus ondeveloping products which contribute to our customers’ labor-saving.
In overseas markets, we received orders for and recorded sales of Railway Signal Systems in Taiwan,
India, and other countries.
Especially, in Taiwan, we have successfully received
orders for the renewal of electronic interlocking system, and the renovation of transformers, electric
power monitoring control system, and telecommunication system for the Huadong Line where ourvalue was recognized for the system already implemented. We continuously realize improvement of
convenience for citizens and ease traffic congestion, and we are committed to contribute to making
the city more comfortable and safer by taking fulladvantage of our experience of working in many
countries.

NIPPON SIGNAL CO., LTD.

48,831

61,672

FY202121

Net sales

83,002

Segment-basis
sales ratio

54.7%

FY2023 ICT Solution business

35,69137,391

FY2021

FY2022

FY202336,216

38,418FY2021

FY2022

Segment profit

44,600

FY2023(¥ million)

3,991
3,300

3,320

FY2021

FY2022

FY2023

Automatic Fare
Collection (AFC)
Systems

Robotics &Sensing(R&S)

Main Business Field· Automatic passenger gate
· Automatic ticket vending machine· Automatic fare adjustment machine· Platform screen door
· Gated parking lot management system· Centralized payment PARK-LOC® parking
lot management system· Security gate, etc.

Main Business Field· Robotics· 3D Laser Ranging Image Sensor· Ground-Penetrating Radar (EMS)· OA device (maintenance), etc.

In AFC Systems, particularly Station Service Network Systems, we received orders for and recorded
sales of platform screen doors, ticket vending machines, passenger gates, parking lot equipment andother products in the domestic market. For train
stations, while diversifying a lineup of platform
screen doors, we are also proactively engaged insales promotion of our platform monitoring system
which is working with our 3D laser ranging image
sensors. The system detects trains on tracks andthe status of door openings and alerts passengers,which contributes to both labor-saving and higher
reliability in safety.
In overseas markets, we received orders for and recorded sales of AFC systems and platform screen
doors in Bangladesh, Egypt, and other countries.
For upcoming initiatives, in anticipation of full-scale
development of MaaS (Mobility as a Service), a
seamless mobility linkage between not only railroad
services and automobiles but also diverse mobility
options, we will create new businesses, including
the provision of new products compatible with payment systems in the new smart mobility society andthe provision of services linked to various terminals
using the service linkage platform “iDONEO.”

In R&S field, which focuses on robotics and sensing, we received orders for and completed sales of
3D laser ranging image sensors to be installed inplatform screen doors and construction and agricultural equipment, X-ray baggage checking equipment for the speedy detection of the presence of
dangerous items, and other products. Based on thebasic concept of fail-safe, we will contribute to realizing a future society in which humans and robots
work together by integrating the latest robotics
technologies with our core technologies, such as
sensors and image analysis, which we have cultivated through our past experience.

NIPPON SIGNAL REPORT 2024

22

Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Board Member Messages

Building the foundations of sustained operationfor over 100 years

Director andExecutive Vice President
Executive Vice President andExecutive Officer
In charge of business administration, In
charge of Mono-zukuri, and Responsible
for TQM Promoting Dept.

I am in charge of manufacturing, which is the foundation of Nippon Signal’s business activities and business administration that will realize the sustainable enhancement of corporate value. In the area of manufacturing, to reach the Next Stage of Manufacturing , wewill aim to improve product quality to a standard that will give us recognition as a brand.
To establish the Nippon Signal brand, we will need to enhance the quality of individual
employees’ work and boost our ability to improve operations. All employees have a clear
understanding of Nippon Signal’s raison d’etre represented in our corporate philosophy,
and their own roles therein, and they engage diligently in their day-to-day work. In thisway, we will realize various goals, such as the streamlining of operations, maximum use ofgroup resources, securing of appropriate profits, returns to stakeholders, and reinvestment in growth. In doing so, we will enhance the value of the Nippon Signal brand.
In my other area of responsibility of business administration, I will focus on the management of internal and external risks, as well as human resource development. We will workto establish an environment in which our people can shine through various initiatives, suchas pursuing comfortable working environments for employees, raising their motivation,and cultivating a corporate culture in which employees accept diversity and help eachother. By making the outcomes of our “manufacturing prowess” even greater in this way,
we will build the foundations that will allow us to survive until the 100th anniversary of our
foundation and beyond for another 100 years.

*1 Next stage Train Control System*2 Mobile Virtual Network Operator … Network provision service business*3 Infrastructure-to-Everything …Vehicle-infrastructure coordination

23

NIPPON SIGNAL CO., LTD.

After the COVID-19 pandemic, business structural reforms, including the promotion of DX, haveprogressed, and the state of the social infrastructure market is on the verge of fundamental
change. This fiscal year, the first year of the new Medium-Term Management Plan “Realize-EV100,” Nippon Signal will accelerate its shift from goods to services and the real-world implementation of products in new areas. We are endeavoring to give shape to initiatives that will
provide a foothold toward our 100th anniversary in 2028.
Under these circumstances, the basic policy of the Osaka Branch Office that I oversee is thetransformation and implementation of business structures, including DX promotion, in the social
infrastructure market. All employees are sharing what actions they need to take, such as thebolstering of front loading, the promotion of activities that extend across businesses and organizations, and the enhancement of information sensitivity to be victorious in market competition.
All branches are pursuing activities of this kind.
The Osaka Branch Office, which is based in the Kansai region, soon to host the Expo 2025
Osaka, Kansai, Japan, is fortunate to have more opportunities than other regions for the reform
and implementation of business structures. While remaining strongly conscious of this fact, we
will continue to propose theories from new perspectives, without being swayed by conventional frameworks, and untiringly pursue business structure reforms and new value creation.

Data Section

HIRANO Kazuhiro
Director andManaging Executive Officer
Chief General Manager, Osaka Branch Office,and Responsible for western Japan area

Promoting solutions with the latest DX

GOTO Ryuichi
Director andManaging Executive Officer

Aim to become a solution provider for the DX age
Nippon Signal has committed to our stakeholders to become an infrastructure provider
for the DX era that will support “infrastructure evolution” safely and comfortably. To realize
our vision, we will pursue initiatives to capture a position as a provider of one-stop solutions through co-creation with customers, deploy new product businesses across theGroup, with the Business Innovation Promotion Department playing the central role as
leader of in-house innovation, and build IT systems that will allow employees to handle
their work without stress.
In the area of technology and R&D of which I am in charge, we have set “continuing toprovide IT systems that support transportation infrastructure” as our mission. Transportation infrastructure must not only be robust to ensure safety and reliability; it must also becompatible with existing systems and user-friendly. Equipping the latest IT systems withthese characteristics will mark the true worth of Nippon Signal.
We have already started the real-world implementation of transportation infrastructure
products that have anticipated the DX era, including NTCS*1, MVNO*2, and I2X*3. In thearea of ICT solutions, we will further advance the development of IT systems that support
ease of mobility, based on the concepts of high security and robotics. In this way, we willcontinue our endeavors to secure our leading position in each domain.

Sustainability Initiatives

Business structural reform from new perspectives

The Group began its new Medium-Term Management Plan “Realize-EV100” in FY2024.
Here are messages from our board members that embody Nippon Signal’s vision and growthstrategy for the realization of the new Medium-Term Management Plan.

FUJIWARA Takeshi

Nippon Signal’s Vision and Growth Strategy

Deputy in charge of business management, In charge of Utsunomiya Plant,
Responsible for ICT Solution business, andResponsible for branch offices

ICT Solution business’s product range supports various social infrastructure businesses, including railway operators. Ticket vending machines, passenger gates, and platform screen
doors seen in railway stations, security gates in office buildings, and parking lot systems
realize the safe, comfortable movement of people.
NS cloud-based MaaS has realized ABT*1 systems that use today’s digital technologies tolet passengers purchase tickets with a smartphone and travel smoothly anywhere. The services we offer use a variety of media, including IC cards, QR codes, and even credit cards.
On the other hand, we are also working to reduce the burden and costs of infrastructure
maintenance imposed on operators, concentrating our efforts on the development of various robots and the realization of CBM*2.
In our new Medium-Term Management Plan “Realize-EV100,” with our aims of comfortable
travel that makes users smile, with the aims of lightening the burden on operators by making system maintenance easier, and offering systems that have less environmental impact,
based on the safe and reliable technologies that we have cultivated to date, we will leverage the mechatronics and sensing technologies in which we excel to promote solutions
that use the latest in DX.
You may look forward to the services of Nippon Signal’s ICT Solution business that arehighly reliable and offer greater convenience.
*1 ABT: Account Based Ticketing, a ticketing system for travel that uses unique IDs*2 CBM: Condition Based Maintenance, a system for effective and efficient maintenance based on the condition of the equipment

Raise consciousness of reform to be victorious in
global competition
SAKAI Masayoshi
Director and
Deputy Chief Executive Officer
In charge of business management,
Responsible for Kuki Plant, Responsible fortransport infrastructure business, In
charge of technology, research anddevelopment, and Responsible for GroupIT Strategy Dept.

With the end of COVID-19 pandemic, the business environment surrounding Nippon Signal
has changed significantly. In addition to the changing business of our clients, particularly
railway operators, the way that people work is also changing. Meanwhile, investors are turning an increasingly severe gaze on Nippon Signal. Under these circumstances, there is a
growing number of issues that we must address as a company listed on the Prime Market.
They include contribution to the SDGs, the promotion of ESG-oriented management andhuman capital management, and further, corporate management that emphasizes cost ofcapital. We will engage in management that is conscious of our investors and our stock
price, including the improvement of our PBR (price-to-book ratio), which has fallen below 1.
Nippon Signal faces a turning point at which, unless we accomplish transformation, we willbe left behind. As well as holding steadfastly to Nippon Signal’s founding spirit of “safety
and reliability,” I hope to be involved in management with a strong will to not merely react tochange, but anticipate it. As a Board Member with experience outside the Company, refusing to be content with merely following precedent, I will encourage Nippon Signal’s transformation and contribute to the sustainable enhancement of corporate value.

HORIE ToruManaging Executive Officer
Responsible for business administration,
General Manager, Global Strategy
Division

NIPPON SIGNAL REPORT 2024

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Nippon Signal’s Vision and Growth Strategy

Feature:Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

AFC (Automatic Fare Collection) BusinessAlongside the evolution of station infrastructure
and automatic fare collection system

Popularization period 1960s - 1980s

Among the various solutions that support transportation infrastructure provided by Nippon Signal,
automatic fare collection systems at train stations have become the most familiar presence formany users. From the past to the present, and onward to the future. This feature article presents
our initiatives in AFC which continue to evolve while incorporating market needs and newtechnologies.

The history of the development of automatic passenger gates can also
be described as the history of ticket data writing and reading technologies.
In 1971, the Congress of Japan Railway Cybernetics established standards for magnetic tickets and station codes, paving the way for thewidespread adoption of automatic fare collection systems on railroads
in Japan. However, even with the establishment of these standards,
writing and reading technologies in those early days were far less stable
than they are today. For actual operation to be considered, various
technical barriers needed to be overcome. The systems needed to enable accurate, smooth ticket gate operations to cope with the commuter rush that was starting to become a serious social issue in the Tokyo
metropolitan area around that time. For example, the same machines
had to be able to handle both commuter passes and Edmondson railway
tickets (the standard size of train tickets used by railways around theworld, including Japan). In addition, if simply inserting a ticket into theautomatic passenger gate at a slight angle were to cause errors, disruptions to the flow of people in the same aisle would be a frequent occurrence. For this reason, technology to prevent this problem needed
to be developed.

The Dawn 1927 Japan’s first automatic passenger gates
The first automatic passenger gates in Japan are thought to be theturnstile gates that were introduced on a section of the Teito Rapid
Transit Authority (currently Tokyo Metro) from Asakusa Station to Ueno
Station in 1927. With flat-rate fares, passengers could enter the station
by inserting a coin directly into the turnstile and pushing the rotatingarm. Tickets were hard cards that had the information printed on themin advance, and its position was merely to assist humans (ticket clerks).
It was about 40 years later, during Japan’s rapid growth period, that automatic passenger gates began to be introduced on a large scale.
In 1966, commercial trials of automatic passenger gates were conducted at Kintetsu Abenobashi Station, and the operation of automatic passenger gates started on a commercial line the following year with the
opening of Hankyu Kitasenri Station. At the time, because of different
information processing methods were used for regular train tickets andcommuter passes, they were each handled by separate, dedicatedautomatic passenger gates. The method of processing information
contained in regular tickets, such as section and fare, involved reading
the different lengths of a magnetic bar code on the back of the ticket.
For commuter passes, Hole-punched type (the optical punch holemethod) was used, in which information on stations and validity periods
was input by punching holes in the center of the pass.

Advances in data writing and reading technologies

Edmondson railway ticket

Japan’s first full-scale automatic fare collection system

Turnstile passenger gates

Commercial trial at Kintetsu Abenobashi Station

Nippon Signal was one of the first to research and develop automatic
passenger gates in the late 1960s. In 1966, we concluded a technological partnership with an American company, Advanced Data System(ADS), and in 1969, we sold four automatic passenger gates to Tokyo
Monorail Co., Ltd. In December 1971, we sold on Japan’s first full-scale
automated fare collection system (ticket issuing, examination of ticket,
fare adjustment) that was introduced on the Sapporo Municipal Subway
in the lead-up to the Sapporo Winter Olympics. With 104 passenger
gates, 88 ticket vending machines, 21 fare adjustment machines, 24
money exchange machines, 14 monitoring devices, 14 recording devices, and 7 commuter pass issuing machines, this system tested thepracticality of a total automatic fare collection system using tickets andcommuter passes with information recorded magnetically. Because thissystem was developed when the Congress of Japan Railway Cybernetics was still in the process of considering unified standards, the systemused Our original specifications for the size and recording methods oftickets and commuter passes. For the commuter passes, the medium
used to record the magnetic information was an envelope with one
transparent side, and a piece of paper with the period and section forwhich the pass was valid printed on it, which was inserted into the envelope. When the pass was renewed, the paper pass was replaced,
and the magnetic information was rewritten on the medium. Even in an
era in which people’s lives were becoming more affluent amid Japan’ssoaring economic growth, this system adopted an environmentallyfriendly mechanism of re-using the magnetic medium.

Sapporo Municipal Subway passenger gate

Hole-punched type commuter pass

25

NIPPON SIGNAL CO., LTD.

NIPPON SIGNAL REPORT 2024

26

Nippon Signal’s Vision and Growth Strategy

Feature:Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

AFC (Automatic Fare Collection) BusinessAlongside the evolution of station infrastructure andautomatic fare collection system

Expansion Period 1990s - 2000s
Automatic passenger gates spread throughout the Tokyo metropolitan area
In 1 9 9 0, the use of automatic passenger gates picked up
even further pace. The East Japan Railway Company was
pursuing a project of installation within a 100-km area of theTokyo metropolitan area. Because the railroads in the Kanto
area had a complex network of mutual through services andtrain lines, the introduction of automatic passenger gates
took longer than in the Kansai area. However, the establishment of new magnetic recording methods paved the way
for their introduction at more stations.
As the conversion to automatic passenger gates in stationsin the Tokyo metropolitan area progressed, one challenge
remained. That was the automation of transfer gates between railway companies. Transfer gates presented the difficulty of having to process two commuter passes or tickets
issued by different railway companies. Nippon Signal quickly
developed a product that enabled correct processing by inserting two tickets or commuter passes held by one passenger into the machine together, on top of the other.

Tokyo Station in 1990

In 1995, progress was being made in the introduction of automatic passenger gates for the Shinkansen. The automatic
passenger gates for the Shinkansen required advanced
functions that conventional lines did not have. They needed
to be able to process a combination of up to four tickets, including the basic fare ticket, express ticket, and reserved
seat ticket, at high speed. Nippon Signal successfully
achieve the development of Shinkansen passenger gatesand delivered them to many stations.

A massive fare payment network unlike any seen around the world
With the 2000 appearance of “Passnet,” which allowed
passengers to travel on the Kanto region’s 17 major railways with a single card, the use of magnetic card tickets
spread. After that, when “PASMO,” a common IC card
ticket, was launched by the major private railways, subways, and bus services in the Tokyo metropolitan area in
2007, mutual usage with “Suica,” the East Japan Railway
Company’s own IC card ticket, began, and the era of IC
card tickets leading up to the present day started.
At the time, 57 railway operators and bus operators(currently: 26 railway operators and 76 bus operators)
participated in “PASMO,” making it a massive fare payment network unlike any seen around the world. The

automatic fare collection system these operators usedneeded to accommodate extremely complex fare calculations, including approximately 3 quintillion (10 16 )combinations of stations and the different fare structuresof all the operators. Nippon Signal established a specialist fare verification center (Fare Network Center), which
verified approximately 1.3 billion fare variations, andworked on the establishment of basic technologies thatwould allow passengers to use PASMO with peace ofmind. Our involvement in the success of PASMO is asource of great pride for Nippon Signal as a company
that aims to support the evolution of infrastructure.

Transformation Period 2010 - Present
Next-generation automatic passenger gates that are smart and multifunctional
The method of data storage used for railway tickets haschanged over the years from paper tickets to magnetic
tickets and onto contactless IC cards. Further, in recent
years, the use of digital tickets using QR codes has become increasingly widespread.
There are great expectations that the accommodation of
QR codes by passenger gates will lead to the revitalization of local communities through greater convenience of
public transport through MaaS (Mobility as a Service) andcollaborations with other services, such as shopping andrestaurants, in areas along the railway lines. Nippon Signal has already delivered to railway operators in various
parts of Japan QR code reader terminals that enableticketless train travel. These terminals let passengers
pass through the passenger gates by tapping a QR code
displayed on their smartphones. Nippon Signal not only
makes the terminals, but has also worked on “Yoka Tabi
Signal.com,” a portal site for digital ticket sales. We havedeveloped and operated a service in which passengers
who have registered as members of this site can purchase a digital ticket by selecting the stations where they
will board and leave the train, and travel on the trains byreading the QR code on the ticket screen.
Nippon Signal is currently proceeding with the development of a “multi-authentication passenger gate” to meetthe further needs for convenience and safety. This passenger gate supports four types of authentication method, namely transportation IC cards (Suica, PASMO, etc.),
QR codes, cEMV (contactless Europay, Master, Visa)

credit cards, and facial recognition. The adoption of multiple authentication methods will provide benefits for both
the railway operators and their patrons. For example, QR
codes will expand the potential for rolling out services incollaboration with nearby facilities and events, cEMV
credit cards will increase the convenience for travelers
from overseas, and facial recognition will offer the convenience of being able to pass through the passenger gatewith one’s face alone, as well as providing detection of
suspicious individuals and a deterrent effect against terrorist incidents.
Nippon Signal is also working on the development of the“passenger gate of the future.” This stylish, futuristic passenger gate would allow hands-free entry and exit withthe use of Bluetooth, and it also features a traffic information system using 3D images. Also, by adapting the milli-wave radar angle estimation technology that we havecultivated in the area of railway signals, we have realized
the comfortable use of passenger gates with the use of
speedy information processing. Moreover, this passenger
gate of the future has a variety of ingenious features designed to accommodate the labor shortages that are becoming a serious social issue, such as the adoption ofblock construction to ease the burden of installation.
Nippon Signal will continue to contribute to the future
evolution of automatic passenger gates, while capturing
the changing needs of railway operators, passengers,
and local communities.

Multi-authentication passenger gate

Passenger gate of the future

Taking Japan’s high-quality station infrastructure to the world
In the 2000s, while providing Japanese railways with the latest automatic passenger gates, fare adjustment machines,
and automatic ticket vending machines that supported
magnetic cards and IC card tickets, Nippon Signal concentrated its efforts on global business expansion. Starting with
the Beijing Subway (China) in 2003, we delivered automatic
ticket issuing equipment to a number of overseas railways,
primarily in Asia. With a track record spanning half a century,a certainty of quality, and innovation, Nippon Signal’s automatic passenger gates have been well received overseas,
and they are now in service in the Chennai Metro (India) andthe Dhaka Mass Rapid Transit (Bangladesh). Local culture
27

NIPPON SIGNAL CO., LTD.

has been taken into consideration in the automatic passenger gates installed overseas. In the Chennai Metro, a pincer
system has been adopted that acts as a barrier to control
passenger entry. This system stops passengers from passing through in a way thatis not seen in Japan. The
tickets are also in a stylethat suits local needs,
such as plastic coinshaped IC media andsingle-use IC cards.
Dhaka Mass Rapid Transit

NIPPON SIGNAL REPORT 2024

28

Nippon Signal’s Vision and Growth Strategy

Feature:Automatic Operation

Automated operation of conventional railway lines(GoA2.5, GoA2.0) forms the foundation for maintaining
and developing the railway transportation network.
Conventional line trains fulfill important roles as the transportation that connects regions and as
infrastructure that supports local economies. Based on years of accumulated signal safety technology, Nippon Signal has realized automatic operation of conventional line trains throughcollaboration with the Kyushu Railway Company (JR Kyushu) and the Railway Technical ResearchInstitute (RTRI). In March 2024, JR Kyushu started the “GoA2.5 Autonomous Operation” on the
Kashii Line (Saitozaki to Umi section), marking the first time in Japan that a staff member otherthan the driver is stationed at the front of the vehicle.

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Concept of automatic operation system developed

Automatic
Operation
Capability

Concept behindprevious automatic
operation systems

ATS-DK-based
automatic
operation system

ATO

High-performance
ATO [FS-ATO]

 as noH
security
functionProtection
DeviceFunctionHas
excellent
reliability

POINT

ATS-DK as a certain
Hlevel of reliability

GoA2.0
Link informationneeded forautomatic
operation frominformation of ATS
Track Antenna

Create adatabase ofnecessary
information fromoperation log

Additional equipment

Realize
automatic
operation
without changing
existing
equipment

Relay unit

FS-ATO as reliability andHfail-safe performanceequivalent to aprotective device

ATC

Data Section

Existing equipment

Has fail-safe
performance as securityHfunction

Sustainability Initiatives

Traffic lights
ATO DBAim for safety
equivalent
to ATC as[comprehensive
system]ATS
Transceiver
ATS Pick Up
ATS Track Antenna

Tacho-generator

Existing ATS receives signals from track antenna
Realize automatic operation by installing database ofnecessary information for automatic operation in FS-ATO

Expectations for automatic operation for conventional line
As the working population decreases due to the rapid aging of society, a shortageof drivers has become an urgent problem in the Japanese railway industry. Under
these circumstances, there is a need for automatic operation systems that will
enable safe and accurate transportation services without skilled drivers. The introduction of automatic operation systems will brings various benefits that contributeto maintaining high-quality transportation services. These include reducing thecosts associated with training drivers, expanding opportunities for diverse personnel, including the elderly, and lessening the effort required to arrange staffs.

Features of newly-developed automatic operation systems
In collaboration with JR Kyushu and RTRI, Nippon Signal has been working on the development of automatic operation systems
since 2017, in anticipation of the future of railway infrastructure. A prototype model was completed in 2019. For approximately
three years after that, we worked to perfect the system by conducting test runs and verification operations with commercial trains.
In the test runs, all functions required for automatic operation were checked, including the accuracy of braking control andstop positions under various conditions, such as rain, snow, and assumptions of full occupancy. In the verification operations using commercial trains, new functions were developed to improve safety, based on events that occur in actual
operations. For example, a slip prevention mode was added to prevent a wheel slip due to snow.
The value of the system, whose development Nippon Signal was involved in, includes making automatic operation possible onrailway lines that have both ATS (Automatic Train Stop) control and level crossings. The use of previous automatic operation
systems had been limited to railway lines without level crossings, that had platform screen doors installed at each station, andfor which ATC (Automatic Train Control) had been adopted, based on standards established by the national government.
ATC ensures safety by constantly transmitting control information to moving trains via the rails. On the other hand, ATStransmits control information only at points where track antenna is installed. ATC is believed to be safer and more reliable
than ATS. The automatic operation system installed on the Kashii Line, as a comprehensive system with ATS at its core,ensures safety on a par with ATC through the combination of ATS-DK (automatic train operation device) and a newly developed FS-ATO that has fail-safe performance and security function.

Accelerate widespread adoption by working on two types of automatic operation (GoA2.5 and GoA2.0)
Automatic operation realized by the system whose development Nippon Signal was involved in is called GoA2.5. Gradesof Automation (GoA) are standards that indicate the level of automated train operation (with GoA4 referring to completely
driverless operation). At GoA2.5, the train is operated automatically from its departure at one station to its stop at the next
station with the press of a button by an automatic operation attendant. As there is no driver on board, the attendant onboard will conduct emergency stop procedures in the event of an emergency. This is Japan’s first commercial operation at
GoA2.5 level on a line that has both ATS control and level crossings.
In March 2024, Nippon Signal started automatic operation at GoA2.5 level on the JR Kyushu Kashii Line, and at the sametime, launched verification operations at GoA2.0 level on the JR Kyushu Kagoshima Line (section between Orio and Futsukaichi stations). Unlike GoA2.5, GoA2.0 is a level of semi-automated train operation in which a driver is on board the train.
This allows the driver to make manual interventions flexibly according to the situation, while the train’s speed is controlled
automatically. It also has additional features, such as allowing
automatic operation control after manual intervention and theability to simplify wayside equipment. Given such benefits interms of safety and costs, there are great expectations that
GoA2.0 will be applied to key sections of main lines.
Going forward, Nippon Signal, together with JR Kyushu andother railway operators, will continue to promote and advance
GoA2.5 and GoA2.0 automatic operation systems and to expand the lines on which these systems are introduced.

*1 GoA2.0 is a level of automated train operation in which there is a driver on board who can switch to manual operation in an emergency.
*2 GoA2.5 is a level of automated train operation in which an attendant, who is not a driver, is present at the head of the train.

Steps toward realization of automatic operation on conventional lines
2017

Selected as manufacturer of automatic operation concept

Aug. 2022 - Aug. 2023

2019
Prototype model completed and test runs started
	Night test runs started at the Kokura General Rolling Stock Center and on the Kashii Line(section between Saitozaki and Kashii stations) hird-party committee “ATS-DK-based GoA2.5 Automatic Operation System
T
Realization Review Committee”

Mar. 2023

Began GoA2.0 test runs on Kagoshima Line (67.4-km section between Akama and Kurume stations)Jun. 2023

Received SAKATA Memorial Award (Grand Prize) from Japan Railway Engineers’ Association

Dec. 2020

Mar. 2024

Mar. 16: Began GoA2.5 (commercial operation) and GoA2.0 (verification operation)
GoA2.5 commercial operation on the Kashii Line: Began automatic operation on entire 25.4-km line
GoA2.0 verification operation on main line: Section between Orio and Futsukaichi stations(section controllable by the device: 151.6-km section between Mojiko and Arao stations)
Realized the longest GoA2.0 section on a single line in Japan

Verification runs started (December 24, 2020)
Transitioned to phase of verification operations with commercial trains
Kashii Line (12.9-km section between Kashii and Saitozaki stations)Feb. 2022
Verification operations section extended	Verification runs began on Kashii Line (25.4-km section between Saitozaki and Umi stations)29First realized inJapan
Conventional lines(with level crossings)
Automatic operation
World’s first
operation with ATS

NIPPON SIGNAL CO., LTD.

NIPPON SIGNAL REPORT 2024

30

Nippon Signal’s Vision and Growth Strategy

Feature:Nippon Signal’s Value Creation

Sustainability Initiatives

Nippon Signal’s Vision and Growth Strategy

Data Section

Global Network

Main Themes of International Businesses

Received orders in succession for renewal of conventional rail in Taiwan andPhase 2 projects of urban transportation systems in India and Indonesia

Initiatives

1. Promotion of megacities strategy leveraging overseas subsidiaries
2. Receipt of definite orders and smooth implementation of
Phase 2 projects in cities where the Group already operates
3. Expansion of maintenance businesses rooted in individual regions

We will strive to enhance profitability through various efforts,from the performance of projects to ongoing business development through maintenance services, extension projects andPhase 2 projects on existing railways and market development, as well as business development rooted in megacities.

In January 2024, we received a construction order for double-tracking, equipment renewal, and renovation of a conventional line in Taiwan (Huadong Line: Hualien to Chihben),where Nippon Signal’s electronic interlocking system and other equipment have long
been in operation.
We also received orders, one after another in March and April, 2024, for signal systems
on extension sections as part of Phase 2 projects of Ahmedabad Metro (commenced fullline operation in October 2 0 2 2) and of Jakarta MRT (commenced full-line operation in
March 2019), for both of which Nippon Signal had delivered signal systems.
The continued adoption of our systems shows each of these clients’ high appreciation forthe steady operation of our systems delivered to date. We will draw on the experience wehave accumulated on existing sections to implement these projects efficiently while giving
highest priority to safety, and contribute to creating safe and comfortable cities by improving the convenience of local residents and easing traffic congestion.

Our international businesses began with the export of level crossing gates to the State Railway of Thailand in 1946, andwe now provide Japanese transport infrastructure to 30 countries and regions. We will continue to aggressively pursue
the development of our global network and contribute to the economic development of countries around the world, withfocus on our railway signal systems, AFC systems, PSD systems, and traffic signal systems that have been adopted in
major cities including the Delhi Metro Line 8, for which SPARCS, our CBTC system, was adopted in 2018 and upgradedto a fully unattended operation in 2020.

30 countries and regions
Egypt

TurkeyCairo Metro Line 4
Signal and PSD systems

Automatic Fare
Collection Systems

Railway Signal Systems

Bangladesh

Dhaka
MRT Line 6

Turkish Railways

MyanmarThailand

China

MyanmarRailways
Traffic control
system in Yangon

State Railway ofThailand
Bangkok
Red Line

Beijing Subway
Line 15
Beijing Subway
Airport Express LinePSD

Beijing Subway
Line 13China State Railway
Group Co., Ltd.

Jakarta Mass Rapid Transit (MRT)SPARCS wayside radio antenna

Smart Mobility Systems

Beijing Subway Line 15
SPARCS

Beijing Subway Line 13
Automatic passenger gates

Liberia

Traffic signal
equipment in Monrovia

Izmir
suburban line

Dhaka MRT Line
6 SPARCS

Izmir suburban line operation
management system

Dhaka MRT Line
6 PSD

Korea

Busan
Metro
Gimpo
GoldlineUK
Nippon Signal
Bangladesh
Pvt. Ltd.

UgandaSpain

Traffic signal
equipment in Kampala

United States

Gwangju Metropolitan
Rapid Transit
Parking system
for Rep. of Korea

Iran

Gimpo Goldline SPARCS

Iraq
Pakistan
Beijing Nippon Signal Co., Ltd.
Taipei Office

Algeria
Cairo Office

UAE

Saudi Arabia

Yangon Office

Dubai
Monorail

India

Tanzania

IndianRailways
Chennai
MetroBengaluru Traffic
signal systems

Nippon Signal
India Pvt. Ltd.

Delhi Metro Line 8
Ahmedabad
Metro

TaiwanDhaka Office

Australia

South Africa

New Zealand

Chennai Metro Automatic Delhi Metro Line 8
ticket vending machines SPARCS

Railways inIndonesia
Jakarta Mass Rapid
Jakarta Mass Rapid
Transit (MRT)Transit (MRT) SPARCS

TaiwanConventional Rail
TaiwanHigh Speed Rail

Manila Office

Indonesia

Ahmedabad Metro
SPARCS

PanamaNippon Signal Technology Taiwan Co., Ltd.

VietnamPhilippines

Line 1 of the Ho Chi
Minh Urban Railway

Manila Subway
Line Signal system

Taiwan MRT
Circular Line
Parking system
for Taiwan

BrazilTaiwan High Speed Rail

Conventional Rail

Taipei Station CTC Center

AFC systems

Argentina

Argentine Railways(ADIF, SOFSE)
Jakarta Mass Rapid Transit (MRT)
automatic passenger gate

Roca Line

Roca Line Interlocking system*CBTC: Communications-Based Train Control*SPARCS: Simple-structure and high-Performance ATC by Radio Communication System

31

NIPPON SIGNAL CO., LTD.

NIPPON SIGNAL REPORT 2024

32

Nippon Signal’s Vision and Growth Strategy

Nippon Signal’s Value Creation

Research and Development

In the new Medium-Term Management Plan for 2028, we aim to realize new value creation by evolving our core technologies through innovation on the base of sensing technology that interweaves electromagnetic waves.
Existing products

FutureSensing technologies that interweave electromagnetic waves, and image analysis using AI,
have been positioned as shared foundational technologies for the Company. We will use themto create various new products for achieving ongoing business growth as we move ahead towards 2028 (100th anniversary) and contributing to the resolution of social issues.

Biosensing applications

Labor-saving in abnormality
monitoring/inspection(images, sounds, etc.)

Inspection vehicle
× AI

White canedetection

Platform monitoringHigh security
devices

LS railway crossing
obstacle detectorE lectrical equipment Under development
diagnosis
2DLS platform monitoring

Image
processing unit -ray security
Xbaggage scanners

We are developing a next generation CBTC radio equipment that utilizes software defined radio technology and is smaller
and uses less power than conventional models.

Adaptable to CBTC for direct train service between two railways with the software-based
implementation of filtering, modulation, and demodulation, the core functions of radio equipment
Small CBTC radio equipment

Filtering, modulation, and demodulation realized with software

Problem with conventional radios

By reducing analog circuits

Downsizing and energy saving

Wireless specifications are fixed

Introduction ofsoftwaredefined radio
technology

Feasible with a single hardware

Compatible with a range of wireless specifications
With software updates

Accommodates upgrading of functions and performance
33

NIPPON SIGNAL CO., LTD.

Body scanner(terahertz applied technology)

X-ray baggage check

CBTC small radio equipment(X-ray applied technology+ AI/image analysis)

Low frequency(low frequency reflective
sensing)

CBTC radio equipment

MEMS sensor(wireless distance measurement)(3D distance measurement)

Sensing technology that interweaves electromagnetic waves

High frequency

We established a new outdoor driving/adjustment test facility at
the Kuki Plant for the purposes of actual vehicle driving
demonstration for the customers of SPARCS (Nippon Signal’s
CBTC), checking of system configuration, and employee training
on installation and testing/adjustment of equipment.

Body scanners

2DLS wayside monitoring

Wireless/Sensing Technologies

Large in size

BLE gate(Bluetooth angle ofarrival estimation)

Outdoor Driving/Adjustment Test Facility for CBTC
Under development*Realized with the same cameraand hardware

Traio, CBM(AI, image analysis)

Stations/public spaces

Camera installed on the dashboard in train driver’s cab

Camera(detection in darkness/at
long range)(software defined radio)

Past

LeavingsignalForward monitoring(downsizing, high resolution)(cloud-based payment
technology)

Ground penetrating radar

Obstacle warning
signal detection

MVNO-5G

Milli-wave radar

We are engaged in developing products including Station Platform Safety Monitoring Support Systems that utilize image
analysis of video from cameras installed at stations, automatic luggage checking equipment that uses X-ray images toautomatically determine hazardous items inside luggage, and crew support systems that detect signs from obstruction
warning signal devices of level crossing obstructions based on image analysis of images from cameras positioned at thefront of the train.

Forward monitoring(crew support) × AI

Newly developed products(robustness and regularity ofcommunications)

MaaS platform

TracksUnder development(bioscience)

AI/Image Analysis Technologies

Crossings

Data Section

Core Technology Evolution

We will focus on labor-saving for transportation infrastructure through digital transformation (DX), as wellas on themes that lead to energy conservation and CO2 reduction to create a decarbonized, recyclingoriented society, and accelerate the development of new solutions and products.
Basic Policy

Sustainability Initiatives

Nippon Signal’s Vision and Growth Strategy

Intellectual Property Initiatives[Acquisition of Intellectual Property]
Nippon Signal promotes the acquisition of intellectual property linked
with its business strategy to achieve the real-world implementation of
new business and new products that meet the changing needs ofcustomers, with the aim of creating new businesses. Specifically, weare expanding our intellectual property, including patents, with a focus
on such areas as automation for railways, automation on the road,
MaaS (Mobility as a Service) and settlement, and eco-friendly. We arealso pressing ahead with the acquisition of intellectual property
concerning the shared foundational technologies for our business(sensing, wireless, and network technologies and AI/image analysis
technologies).
[Rewards for Employee Inventions]
Nippon Signal has established a system to reward inventions made byemployees, in accordance with the provisions on employee inventionsin the Patent Act. To increase the incentive toward employee inventions,bonuses are paid at the time of invention, at the time of patentregistration, and when the invention contributes to profit.

Number of Intellectual Property Acquired Number of applications
FY2021

FY2022

FY2023

47
41
27

12

26
15

9
3

14

14

14

14

Automationon the road

MaaS andsettlement

Ecofriendly

12

8
Automation
for railways

NIPPON SIGNAL REPORT 2024

34

Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

Nippon Signal’s Material Issues

Basic Policy on CSR

The Group will balance social and corporate values through five types of zukuri (a Japanese word

We hope to realize a more secure and comfortable society for people around the world, and “Our Mission” in the Group
Philosophy sets out the idea.

Group
Philosophy

SDGs

Details:P61

for creation) or business activities to achieve the United Nation’s 17 Sustainable Development

Environmental Policy

Goals (SDGs) to Transform Our World and the Group Philosophy.

Social contributions and disaster relief
through products and services

Reduction of environmental
impacts to create adecarbonized, recyclingoriented society

Group
Philosophy

SDGs

We provide eco-friendly products and services, and also reduce the environmental impact throughout the product life
cycle, from product development to final disposal, to achieve a synergy between business activities and environmental
protection efforts.
Details:

Health Management

P49

Group
Philosophy

SDGs

Under the Health Declaration made on April 1, 2022, Nippon Signal has launched initiatives on health management
designed to fulfill our social responsibility based on our corporate philosophy of “safety and reliability,” and to continue toadvance as a company with sustainable growth.
Promotion of social
welfare1

Transportation
infrastructuredevelopment anddisaster relief
support2

Mono-zukuri(Manufacturing)

Nippon Signal Group Philosophy

Details:

Basic Policy on Information Security

P57

Group
Philosophy

SDGs

The Group is engaged in group-wide information security initiatives under this Basic Policy, with the aims of protecting theinformation assets of the Group from accidents, disasters, criminal acts, and other threats, and of responding to the trustof our customers and society.
Details:

https://english.signal.co.jp/environment/information_security/

Our Mission
We help realize a more secure and comfortable society through superior
technologies that provide safety and reliability.

Basic Policy on Internal Control System

Our Vision

Michi-zukuri

We strive to become a global company by pursuing world-leading
technologies with ingenuity and passion to inspire our customers’ Kando.

(Creation of the
future)Koto-zukuri(Business)

Our Values

1. Emphasize “safety and reliability” above all. ...... Mono-zukuri (Manufacturing)
2. Strive to improve customer value by taking the customer’s perspective. ...... Koto-zukuri (Business)
3. Take on challenges for your own growth. ...... Hito-zukuri (Education)
4. Preserve the environment and contribute to the development of local communities. ...... Machi-zukuri (CSR)
5. Have dreams and share them. ...... Michi-zukuri (Creation of the future)3

Our Code of Conduct: Six Commitments

5
Active global
partnership

Environmental preservation

1. Working for Customers’ Kando
2. Fair Corporate Activities
3. Proper Information Disclosure and Communication with Society
4. Respect for Human Rights and Creation of a Good Working Environment
5. Environmental Protection and Proactive Social
Contribution Activities
6. Proper Management of Company
Assets and Information

Hito-zukuri

Machi-zukuri
(CSR)

4

(Education)

Construction of platforms inwhich diverse employees areable to feel empowered in their
work

SDGs

Group
Philosophy

1. System to ensure that the execution of duties by Directors and employees complies with laws and regulations and the
Articles of Incorporation
2. System for the storage and management of information concerning the execution of duties by Directors
3. Rules and other systems for management of risks of loss
4. System to ensure that the execution of duties by Directors is conducted efficiently
5. System to ensure appropriateness of business operations of the Group comprising the Company and its subsidiaries
6. Matters regarding Directors and employees assigned to assist the Audit and Supervisory Committee in their duties andmatters regarding the independence of such Directors and employees from the Directors (excluding Directors who are
Audit and Supervisory Committee Members)
7. System for Directors, employees, etc. of the Company and the Group companies to report to the Company’s Audit andSupervisory Committee, and other systems regarding reports to the Audit and Supervisory Committee
8. Policy on processing of expenses arising from the execution of duties by the Audit and Supervisory Committee
9. Other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively
Details:

Policy for Determining Remuneration, etc.
for Individual Directors

SDGs

P66

Group
Philosophy

The remuneration of Directors (excluding Directors who are Audit and Supervisory Committee Members) is decided undera remuneration scheme to provide Directors with healthy incentive to pursue medium-to-long-term improvements incorporate value while also accomplishing short-term performance targets. Remuneration for each Director is set at an
Details:P66
appropriate level, based on their responsibilities.
Support for high-quality education,
cultural activities, and women in theworkplace

Basic Approach on Eliminating Anti-social Forces
and Status of Establishment of Such Approach

SDGs

Group
Philosophy

From the perspective of practicing social justice, the Group will have no relationship with anti-social forces whatsoever ineither direct or indirect ways. In the event that the Group is subjected to unreasonable demands from anti-social forces,
we will categorically reject such unreasonable demands, in coordination with relevant administrative organizations such as
the police and legal experts such as attorneys as necessary.

35

NIPPON SIGNAL CO., LTD.

NIPPON SIGNAL REPORT 2024

36

Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

Nippon Signal’s Material Issues

Social contributions and disaster relief

1 through products and services

for high-quality education, cultural activities,
5 Support
and women in the workplace

Group
Philosophy

SDGs

In recent years, the low birthrate and aging population, shrinking workforce,changing lifestyles, and environmental issues have become important issues inrural areas. The advantage of the ATS-DK*1 based automatic train operation
system (FS-ATO)*2 developed by Nippon Signal is that it can realize GOA2.5
automatic operation without a large initial investment, allowing trains to be
operated with staff onboard who are not drivers. It is expected that automationand mechanization of operation duties will enhance safety, reduce training
costs, and solve social issues such as the decline in workforce.

Reduction of environmental impacts to realize

2 a decarbonized, recycling-oriented society

SDGs

Group
Philosophy

SPARCS (Communications-Based Train Control System) can reduce CO2
emissions by approximately 70%* per annum compared with conventional train
control systems. The adoption of SPARCS began with the realization of acompletely Communications-Based Train Control System for Beijing Subway
Line 15 in 2011, followed by expansion into other countries including India,
Indonesia, South Korea, and Egypt. In 2024, we received order from the Gujarat
Metro Rail Corporation Limited of the state of Gujarat, India, for a set of signal
systems of Ahmedabad Metro Phase 2 project. We are also working hard to
win bulk orders in Japan for systems with automatic operation functions.
*Prerequisite Line types: Conventional railway line, steel wheels, double track
Number of carriages: 6 (total number of carriages)
Track length: 7.5 km
Stations: 4 (1 machine room) Intervals between transceivers: 300 m (number of track circuits: 50 tracks)

Transportation infrastructure development

SDGs

Construction of platforms in which diverse employees

6 Environmental preservation

SDGs

Group
Philosophy

Ever-increasing emissions of greenhouse gases (e.g., carbon dioxide, methane,chlorofluorocarbon) since the industrial revolution are having serious impacts on
the global environment, such as extreme weather events and global warming.
Nippon Signal is also expected to conduct its business activities in an environmentally-friendly manner. Nippon Signal is pushing forward activities that contribute to conservation of the global environment, such as the use of renewableenergy and forestry conservation, and continually engages in forestry activities,
with the Forest of Nippon Signal opened in Yaita City, Tochigi Prefecture.
We are also conducting private power generation with solar panels installed inits dormitories for unmarried employees, Signalio Nanasato and Signalio Utsunomiya.

7 Active global partnership

Group
Philosophy

Nippon Signal is pursuing solutions that support transportation infrastructurethat people can use with peace of mind and in comfort, even in a future where
the aging population with a low birth rate and labor shortages have progressed.
We have collaborated with West Japan Railway Company to develop part ofour “Traio” platform that uses IoT technology to provide remote monitoring,
automation of inspections, and CBM. With this system, we realize nextgeneration operation and maintenance (O&M) that enables work to be done
without having to travel to the site. In addition, regarding disaster relief support,
we contribute to the commercialization of BRT using sections on the JR
Hitahikosan Line, which had been hit by the Northern Kyushu Torrential Rain.

4 are able to feel empowered in their work

Group
Philosophy

As the main supporter of the Pacific Music Festival (PMF), Nippon Signal
co-sponsors this international educational music festival for fostering young
musicians founded by Leonard Bernstein, a distinguished conductor andcomposer of the 20th century. We also co-sponsor Bolero: Plaza of Children’s Dream, a project organized by world-renowned pianist, Michie Koyama, to support recovery efforts from the Great East Japan Earthquake.
Nippon Signal supports the “from Saitama to the World” scholarships system (organizer: Saitama Center for Go Global Students) and has implemented the NIPPON SIGNAL Global Challenge Scholarships for aspiring
young people challenging themselves overseas.

*1 ATS-DK: JR Kyushu’s signal protective system. This system performs continuous speed checks.
*2 FS-ATO: High-performance automatic train operation device with reliability and fail-safe performance equivalent
to a protective device.

3 and disaster relief support

SDGs

Group
Philosophy

SDGs

Achieving SDGs requires global partnerships with countries, corporations,citizens, and academic institutions across the globe. Nippon Signal operates
projects in 30 countries and regions, and we contribute to the creation of
infrastructure in countries across the globe, mainly in Asia, by providing train
control systems, AFC (Automated Fare Collection system), platform screen
doors, and other products. We also actively network with people in emerging
countries, such as those in Asia and Africa, and facilitate the creation ofbusiness partners and talent development, in an effort to support thedevelopment of these countries.

SDGs

Group
Philosophy

We provide human rights training on a regular basis with the aim of creating anorganization that does not violate human rights in our increasingly globalized
corporate activities and supply chains. We are also working to enhance ourstaff dormitories as part of the creation of an environment in which our employees can work energetically. Signalio Nanasato and Signalio Utsunomiya are ourstudio dormitories for unmarried employees that accommodate diverse individuals, where younger employees of diverse gender and nationalities live. A corporate childcare facility, Signalio Kids, is attached to Signalio Utsunomiya tosecure an environment that will allow employees to surmount changes in theirlife stages and continue to work with peace of mind.

8 Promotion of social welfare

SDGs

Group
Philosophy

Nippon Signal Group recognizes that, as a corporate group involved in transport
infrastructure of a highly public nature, we should be a group that can help save lives in theevent of an unexpected accident or a disaster. We are continuing our scheme to encourage
officers and employees of Group companies in Japan to obtain lifesaving skill certifications
issued by local fire authorities. Nippon Signal continues to be a co-sponsor of the Gold
Concert, a music contest for people with disabilities, presenting the Nippon Signal Award to
grand prize winners. We donate a portion of the proceeds from our Railway Festival tosupport the reconstruction from the Great East Japan Earthquake. We also collect donations
around the date of the anniversary of our founding each year under a matching gift* scheme.
We have made donations to many organizations including the Japanese Foundation forCancer Research, Saitama Rehabilitation Center, and Saitama Adapted Sports Association.
*Matching gift is a system where the Company adds a certain contribution to the amount of donations
made by employees and donates the sum.

37

NIPPON SIGNAL CO., LTD.

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

E Environment
Response to TCFD (Task Force on Climate-related
Financial Disclosures)

Initiatives for Environment Beneficial Products, R&D

The Nippon Signal Group contributes to a sustainable society through environmentally friendly manufacturing, facilities that emit less greenhouse gases when in use, and popularization and maintenance ofrailways that are the means of transportation with low environmental load.
As part of such initiatives, the Nippon Signal Group declared its support of the Task Force on Climate-related Financial Disclosures (TCFD) on December 23, 2021, recognizing that climate change affects sustained growth. We will carry out the following initiatives in accordance with the TCFD recommendations.

Save labor, automation

OfficeAutomatic cleaning robots
Robot control
Security

Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB) to discuss matters on climate-related
disclosures. The Task Force recommends firms and other entities to grasp and disclose the risks and opportunities that climate change poses on their business.

Railway

Streamline equipment, save labor on
maintenance work
Automatic operation
Reduce CO2 by accelerating and decelerating less frequently
CBTC (SPARCS, etc.)
Reduce CO2 by eliminating power consumption of track circuits
Upgrade the functions of on-site equipment(IoT, disaster prevention)
CBM, robotization of maintenanceRoad traffic safety

Automate operation, reduce
environmental impact
BRT, LRT
MVNO, PICS
I 2V (vehicle-infrastructure
coordination)

Extend parts life (reduction of waste) by optimization of maintenanceIntegrate and streamline safety equipment

Trends in CO2 Emissions
Trends in emissions from business activities (Scopes 1 and 2) (Nippon Signal, non-consolidated)

Facilitate the shift from private vehicles to public transportation (makepublic transportation convenient, and establish a system to maintainpublic transportation amid labor shortages)(Unit: tons)

5,000
4,000

4,015

3,947

3,739

3,700

3,851

4,051

3,917

3,714

3,546

3,000

2,656

2,000
1,353
Parking

1,000
0Shift towards full automationand cashless payments
FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

The Group has been gradually shifting to the use of green electricity since FY2022, which has resulted in a significant
decrease in emissions.
Trends in emissions from business activities (Scopes 1 and 2) (Group companies)

FY2022

FY2023(Unit: tons)

500
448
400

420
356

338

300

256
219

200
106

100

36
0

Nisshin Electronics Service Co., Ltd.

Tochigi Nisshin Co., Ltd.

9

Nisshin Industry Co., Ltd. Yamagata Nisshin Electronics Co., Ltd. Asahi Electronics Co., Ltd.

7

6

Nisshin Tokki Co., Ltd.

We keep track of CO2 emissions of Group companies and take action to reduce them. Emissions decreased significantly
at the companies that have completed the shift to green electricity.

39

NIPPON SIGNAL CO., LTD.

Automatic parking, car allocationR educe CO2 emitted when driving to look
for a parking space

C loud-based management ofvehicle license plate numbers
Reduce CO2 emissions at the time of manufacturing
and disposal by reducing servers and terminal
equipment through the introduction of clouds

 emote monitoring, shift toRcashless payments

Nippon Signal’s social responsibility
Consider decarbonization in view of thewhole product life cycle
Procurement (green procurement, fair trade, etc.)
Manufacturing (use of green energy)
After-sales (recycling)
Achievement of a circular economy

Station

Save labor, shift to
cashless payments
Payment, recognition
Reduce paper use hift to thin clientS
computing
Reduce CO 2 emissions at the time of
manufacturing and disposal by reducing
terminal equipment

Platform monitoring, CBM(Abbreviations)
CBTC: Communications-Based Train Control, a signal safety technology that controls train operation by using communications between trains and wayside equipment.
CBM: Condition Based Maintenance, a predictive maintenance approach in which maintenance is carried out only
when deemed necessary.
Bus Rapid Transit, a bus system that ensures shorter travel time and punctuality and increases transportation caBRT:
pacity by combining articulated buses, public transportation priority systems, bus only roads, bus lanes, etc.
Light Rail Transit, a track-based transportation system that adopts low-floor vehicles as well as improved tracks
LRT:
and tram stops, resulting in superior features in terms of easiness of getting on and off, punctuality, shorter travel
time, and comfort.
MVNO: Mobile Virtual Network Operator
PICS: Pedestrian Information and Communication Systems, systems that support safe transit by providing information
about names of intersections, the status of traffic lights for pedestrians, etc., which is made possible through mutual exchange of information between communication devices installed at intersections and other locations andmobile devices owned by pedestrians.
Infrastructure to Vehicle, infrastructure- to-vehicle communications.
I2V:

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

E Environment
Disclosure in Accordance with TCFD Recommendations

Strategy Based on Scenario Analyses

Governance
Board of Directors
The Nippon Signal Group regards the addressing of climate change as a signifReport
Approve
icant sustainability challenge. Our Company-wide Environmental Committee,
chaired by the Executive Officer in charge of environment and involving heads
Company-wide Environmental Committeeof each site, manages the process in accordance with the targets and plans
Chair: Executive Officer responsible for TQM
for each fiscal year. The Board of Directors provides supervision based on theInstructreports on matters and progress.
The Company-wide Environmental Committee and its chair are accountable for
Sites
climate-related matters.
[Company-wide Environmental Committee/Board of Directors]
The Company-wide Environmental Committee met four times in total during FY2023. Information disclosed in relation to
the TCFD and important matters deliberated by the Company-wide Environmental Committee were reported to the Boardof Directors four times in total.
Important matters reported to the Board of Directors were revision of the Environmental Policy and establishment of theEnvironmental Action Guidelines, a plan to increase in stages the number of companies participating in the Company-wide
Environmental Committee in accordance with the TCFD, and the results of the 6th Stage Environmental Action Plan.
[Climate-related monitoring]
The outcomes of climate-related monitoring are sent from divisions and departments to the Environmental Secretariat ofsites and affiliated companies and reported from the Environmental Secretariat of sites to the TQM Promoting Department.
The TQM Promoting Department reports them to the Executive Officer responsible for TQM Promoting Department, andmatters of particular importance are reported at the Board of Directors meetings. Monitoring instructions are given throughthe route opposite to reporting.

According to our analysis, the changes in society to keep the temperature rise below 1.5°C will bring about carbon taxationand other legislation, changes in market needs, and other changes, and will push up demand for the Nippon Signal Group’s
decarbonization solutions. If the temperature increases by 3-4°C, there will be a rise in physical risks associated with severe
disasters caused by climate change, and it may seriously affect the Nippon Signal Group’s supply chain including our own
offices and plants. Our analysis also suggests that there will be a rise in demand for disaster-resistant products.
We reviewed the scenario analysis published in FY2023, and added specific figures for large financial impacts in relation to
the environment. Some items were added in accordance with changes in the environment.
Near term : –FY2024, Mid term : –FY2030, Long term : FY2030–, Underlined : Risks that have large financial impacts, Red : Added items

Transportation and
Employeedeliverycommuting
Other: Capital goods, fuel and energy related activities not includedin Scope 1 or 2, waste, business travel, leased assets

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NIPPON SIGNAL CO., LTD.

Use of fuelUse of electricity

End-of-life treatment of
products
Other: Transportation and delivery, processing of soldproducts, leased assets, franchises, investments

Near termSustained high electricity costs

Continue to save energy and use renewable energy

Additional costs arising from having to make environment-related capital investments ahead ofscheduleMake capital investments while saving energy

Increased competition in environmental performance(products with greater environmental impact will losecompetitive power)
Failure to respond appropriately will lead to the loss oftrust in society and business opportunities
Rise in costs for adapting to circular economyR educe environmental impact of Nippon Signal’s main products in accordance with SBT Scope 3*2
Develop products and services that will help reduce GHG emissions
Support TCFD and conduct scenario analyses, disclose information in accordance with the framework*1 Long-term targets for GHG emissions reduction (SBT Scope 3) will be presented in the 6th Stage Environmental Action Plan
*2 SBT, or Science Based Targets, are the GHG emissions reduction targets required under the Paris Agreement. Scope 3 covers indirect emissions.

4°C Scenario
Risks

Implications for Nippon Signal

Responses of Nippon Signal

Physical risks

Increased
severity andsharp rise in thefrequency ofnatural disasters

Scope 3Use of products

Mid term

Rapid change inprocurement andinvestment
behaviors aimed
at adecarbonizedsocietyDownstream

Scope 2E xpand decarbonization policy to Group companies
Shift to products with reduced hardware use
Present Green Procurement Guidelines including those in linewith the Framework Convention on Climate Change and keep
track of compliance

Regional
epidemic ofinfectious
diseases

Near term

Raw materials

Company

Scope 1R ise in business costs (carbon tax, emissions trading)R ise in purchasing prices led by the transfer of costsof materials (iron, plastic), etc. to the prices (2)

Long
term

Carbon tax on
suppliers,
introduction ofemissionstrading systemW ind and flood damage to production basesS uspension of parts supply due to supply chain disruptionR estriction on outdoor work due to extreme heat, risein air conditioning costs

B usiness continuity planning: disaster preparedness at production
bases, manufacture of same product at multiple production bases,
diversifying suppliers, securing means of transportationS ecure in-house power generation and power storage capacityImprove outdoor work environments (roofs, spot air conditioning, etc.)

Mid term

Upstream

Scope 3

Substantial increase in electricity costs (1)T he 6th Stage Environmental Action Plan: systematically secure green electricity to achieve a green energy procurement
rate of 60% as the Nippon Signal GroupDrive energy saving efforts and use of renewable energy (introducing energy-efficient equipment and power generation
facilities) towards achieving GHG emissions reduction targets*1 (6th Stage Environmental Action Plan)D ecline in new capital investments due to customers being hit by disastersD ecrease in new infrastructure developments due toincreased costs for disaster preparednessD evelop disaster-resistant products (waterproof, etc.)P ropose MaaS and other optimal means of transit that takeadvantage of existing infrastructure facilitiesD ecline in operation rates of existing infrastructure due tochanges in areas that are susceptible to disasters

P ropose systems that can be maintained at low costsD ecline in operation rates of production plants including
parts factories
Reduction of production due to disruption in parts supplyA utomate production processes, utilize IT for business talks
S ecure parts and product inventoryD ecline in new capital investments due to weaker dominance of public transportationD evelop products for use against infectious diseases (temperature check, traceability, etc.)

Mid term/
Long
Long term Near term term

Indicators and Targets (Life Cycle CO2 Emissions)
The Nippon Signal Group will work on the reduction of greenhouse gases based on Scopes 1 to 3 set by the SBT Initiative.
In particular, we will measure Scope 3 emissions for each category and make efforts to reduce GHG emissions, particularly
those related to the use and end-of-life treatment of our products, with activities starting in the early design stages.

Responses of Nippon Signal

Near
term

Risks
Transition risks

Strategy (Scenarios Adopted)
In considering scenario analyses, we have consulted AR6 SSP1-1.9 and SSP5-8.5 of the Intergovernmental Panel on Climate Change (IPCC) and set two scenarios, namely, (1) a world in which the average temperature rise in 2100 is below
1.5°C (1.5°C Scenario), and (2) a world in which the average temperature rise in 2100 is 4°C (4°C Scenario).
Risk Management[Process for managing climate-related risks]
The Nippon Signal Group sorts out, evaluates, and manages climate-related risks listed below, deliberates their validity at
the Company-wide Environmental Committee, and reports them to the Board of Directors.
a) Transition risks (policy and regulations, market, technology, users’ behavioral changes)b) Physical risks (natural disasters, infectious diseases, temperature rises)[Process for evaluating climate-related risk management]
As with other conventional risks, we multiply the probability of occurrence by the scale of damage to judge the severity ofnear-, mid-, and long-term risks in the 1.5°C and 4°C scenarios respectively. We judge the urgency of response inaccordance with the severity.
[Decision-making process for mitigating, transferring, accepting, or controlling climate-related risks]
Instructions are given to the Nippon Signal Group’s sites after decisions are made by the Company-wide Environmental
Committee (Board of Directors if the matter is of particular importance).
The sites make specific decisions, led by their Environmental Committee Members. Coordination between sites andreporting on each site’s decisions take place at Environmental Secretariat meetings, to which the TQM Promoting
Department serves as the secretariat.
Decisions made by each site are made known to divisions and departments by Environmental Committee Members.

Implications for Nippon Signal

Mid term/Long
term

1.5°C Scenario

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

E Environment
Opportunities
Near
term

Adopt energy-saving designs for existing products

Mid term/
Long termR ise in orders to replace existing products for the purpose of decarbonization
Increased requests for proposals for decarbonization
solutions

 ecarbonization plan consisting of design improvement andDchange of products (including discontinuing products)
Offer solutions that will help reduce GHG emissions

Near
term

 ise in orders for products for securing substituteR
power source in case of power failure and products
to prepare for flooding

 enerate solar power and develop products with storage batG
teriesDevelop waterproof products for outdoor use

Mid term/
Long term

Create and expand
new businesses

Rise in orders for energy-saving products (3) ise in orders to replace existing products followingRcustomers’ works to strengthen infrastructureIncreased requests for proposals for solutions that enable speedy recovery from disasters

 evelop products that can stay functional during a disasterDDevelop products that contribute to speedy recovery from disasters

Near
term

Expand sales ofsolutions that will
help counter
infectious
diseases (newnormal)Responses of Nippon Signal

Increase in bookings and payments made through channels other than counters and ticket machinesE xpand sales of ticket gates that support mobile bookings andpayments

Mid term/
Long term

Expand sales of
products andsolutions that
support thestrengthening ofcustomers’
infrastructure

Implications for Nippon Signal

Increased requests for proposals for solutions that enable capturing of congestion information and equalizingof the flow of peopleIncreased requests for proposals for solutions that enable full automation of site works

 evelop and propose solutions to capture the flow of peopleD
and forecast congestion
Develop and propose remote monitoring and operation solutions

Mid term/
Long term

Opportunities

Expand sales of
products andsolutions that
supportcustomers’
decarbonization
effortsIncreased requests for proposals for disaster detection
solutions evelopment plan for technologies to detect disaster occurD
rence to infrastructure(1) Nippon Signal and six Group companies that engage in manufacturing and maintenance used 9,761 MWh of electricity
in FY2023. Our electricity costs remain at a high level mainly due to electricity contract rate hikes, since the electricity
contract rates rose significantly around FY2022. If we use the same amount of electricity, electricity costs will be 80
million to 100 million yen higher than those in 2021 or earlier (including approximately eight million yen for a special
contract for CO2-free electricity).
(2) As steelmaking using electric furnaces, hydrogen reduction steelmaking, and plastics made from raw materials containing CO2, among others, become widespread, materials produced from processes that involve high costs but low
environmental load are expected to become common. In addition to price fluctuations caused by supply and demandbalance, material prices may increase due to environmental measures taken.
(3) In our mainstay Railway Signal Systems business, we develop SPARCS, a communication-based train control (CBTC)
system, and roll it out to Railway operators in Japan and overseas. With lower electricity consumption and reduced
hardware equipment, SPARCS can reduce CO2 emissions by approximately 7 0% compared with conventional train
control systems. This system has been in operation since 2012 on the Beijing Subway Line 15. Being adopted by Delhi
Metro and Jakarta Mass Rapid Transit (MRT), among other railway operators, it first became widespread overseas. Orders and inquiries have been increasing in Japan as well, with orders received in 2019 for installation on the Toei Subway Oedo Line. Sales is expected to rise further due to the support for decarbonization and environmentally friendly
products.
Results of Impact Review by Scenario Analysis[Products and services]To reduce greenhouse gases throughout the life cycle, we will drive forward the development of products with reduced
hardware use. This includes concentrating equipment, removing cables (going wireless), and supporting payments thatuse general-purpose devices.
We will drive forward the development of disaster-resistant products in response to increase in disasters due to abnormal
weather. Such products include waterproof products and products that come with batteries or power generation equipment to cope with power outages.
[Supply chain/Value chain]We will diversify suppliers and secure means of transportation to prepare for damage to parts manufacturing plants anddisruption to logistics caused by disasters due to abnormal weather. This includes design and development using parts
that can be procured from multiple suppliers.
We will drive forward the development of products and systems that help maintain social infrastructure at the time of disasters and contribute to speedy recovery.
43

NIPPON SIGNAL CO., LTD.

[Investment related to R&D]
A 21.0-billion-yen investment in R&D has been planned and being made based on the Nippon Signal Group 28 Medium-term Management Plan (management plan for FY2024–FY2028). We focus on CBM, automatic operation, payment
and recognition, and robots that resolve issues in achieving a decarbonized society. All of these contribute to greenhousegas reduction by allocating limited human and physical resources efficiently.
[Business operation]
We mainly engage in businesses that support infrastructure for railways, which are environmentally friendly means oftransportation.
Manufacturing and use of our products cause little direct greenhouse gas emissions. We use green electricity for manufacturing and strive to adopt energy-saving designs.
Shown below are our main manufacturing sites’ hazard maps for flood and inundation. No factory or site is at a particularly hazardous location that affects business continuity.
*Source: Hazard Map Portal Site
Kuki Plant

Utsunomiya Plant

Ageo Factory

No inundation risks.

Inundation below floor level(0.2–below 0.5 m)
O ther inundation (0–below
0.2 m)[Flooded roads, etc.]
Classified as inundation risks of
0.2–below 0.5 m inundation forthe building area.

Hazard map

Site hazard level

Inundation of 1.0–below 2.0 m
Inundation of 2.0–below 3.0 m
Classified as inundation risks of
1.0–below 2.0 m inundation forthe building area (hazard level 3)
and 2.0–below 3.0 m inundation
for the regulating reservoir (hazard level 4).

Kuki Plant: Relationship between the maximum inundation level and building height
Kuki Plant building
Building foundation altitude(11 m)
Maximum inundation height(10.7 m)Maximum inundation level (2.0 m)

0.2 m

Foundation
Building ground altitude (10.8 m)

The building will not be affected by inundation because the building groundaltitude is higher than the
maximum inundation height.

Lowest ground altitude(8.7 m)[Transition risks, physical risks, and climate-related opportunities in value and degree of impact]Transition risks
Soaring electricity prices have had the largest impact and are likely to have a significant impact in the future as well. Additional electricity costs amount to approximately 50 million yen for Nippon Signal (non-consolidated) and 10 million yen forGroup companies that engage in manufacturing. If we are unable to sufficiently pass them on to product prices or makeup for them in another way, there is a risk of downward pressure on the profit.
The Nippon Signal Group will continue to strive for energy saving, and electricity procurement will be reviewed from time
to time in light of social circumstances and other factors.
Physical risks
Disasters on our manufacturing sites may temporarily cause risks of a significant impact, such as suspension of manufacturing and shipping. Nippon Signal’s manufacturing lines, however, can flexibly produce a wide variety of products in small
quantities and are therefore expected to recover at a relatively early stage.
To prepare for the case where our suppliers and logistics networks are affected by a disaster, we promote the use of general-purpose products and diversification of suppliers.

NIPPON SIGNAL REPORT 2024

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

E Environment Opportunities
We are expanding sales of waterproof products, products with batteries, products with emergency power switching functions, and other products that respond to physical risks. The demand for such products is expected to grow further. For
example, we recorded a certain amount of sales of waterproof point machines and traffic lights with batteries in FY2023.
Products that respond to physical risks in a broad sense include cableless systems and remote monitoring systems, thedemand for which is also expected to grow further.
[Capital allocation to (capital investment in) climate-related risks and opportunities]
Aiming to operate using 100% green electricity, the Nippon Signal Group is shifting to green electricity procurement. By
May 2023, the following manufacturing sites have completed the shift to green electricity.
Nippon Signal
Start of green electricity
procurement

Additional cost (unitprice)

Electricity use in FY2023 (MWh)Additional cost in FY2023(thousand yen)

Kuki Plant

October 2022

0.83 yen/kWh

2,871

2,383

Ageo Factory

October 2022

0.83 yen/kWh

783

650

Utsunomiya Plant

May 2023

0.83 yen/kWh

2,495

2,070

Start of green electricity
procurement

Additional cost (unitprice)

Electricity use in FY2023 (MWh)Additional cost in FY2023(thousand yen)Group companies

Nisshin Tokki Co., Ltd.

March 2022

0.7 yen/kWh

215

179

Asahi Electronics Co., Ltd.

January 2023

0.83 yen/kWh

96

79

Yamagata NisshinElectronics Co., Ltd.

April 2023

1.1 yen/kWh

753

828

Other manufacturing sites will gradually shift to 100% green electricity as well.
If all manufacturing companies of the Nippon Signal Group procure 100% green electricity, estimated additional costs will
be as follows:[Access to capital]
We do not invest in businesses that directly emit greenhouse gases.
Emissions from main supply chain CO2 (Scope 3) categories and calculation method
We have estimated CO2 emissions from categories that are thought to account for a large portion of total emissions fromthe Nippon Signal Group’s corporate activity. The estimates will be reviewed going forward.

(Unit: tons)

FY2013 (estimated)

FY2022

FY2023

FY2030 (target)

Scope 1

1,000

683

787

300 (-487)

Scope 2

4,000

1,665

566

0 (-566)

Scope 3

238,800

188,499

230,214

120,400 (-109,814)

Category 1
Category 2

100,000
3,500

83,894
3,036

123,259
3,247

61,500 (-61,759)
2,500 (-747)

Category 4

2,000

1,715

1,355

1,000 (-355)

Category 5

500

457

362

400 (target achieved)

Category 6
Category 7
Category 11
Category 12
Category 13
Other
Total

400
800
80,00030,000021,600243,800

350
663
59,66530,834479
10,000231,567300 (-50)
500 (-163)
25,500 (-34,165)
20,200 (-10,634)
500 (target achieved)
8,000 (-2,000)
120,700 (-110,867)

17,000190,847[Calculation methods for Scope 3]
The Group calculates its CO2 emissions using the methods shown below. (Use of electric vehicles and fuelefficient vehicles
Shift to green electricity
Reduction of CO2 emissions at the time of
product use, reduction of raw materials
Resource saving, green procurement
Green procurement
Improvement of transportation
efficiency, introduction eco-friendly cars
Use of online meetings
Eco-driving, use of public transportation
CBTC, power and resource saving
Resource saving
Improvement of operational efficiency
50% reduction from FY2013: Calculated,: Not calculated)

Additional cost (estimated unit price)

Electricity use (MWh) (Actual annual
use in FY2023)

Estimated annual additional cost(thousand yen)

Nippon Signal (3 sites*1)

1 yen/kWh

6,148

6,148

Scope 3

Details

Group companies thatengage in manufacturing*2

1 yen/kWh

1,064

1,064

Category 1

Raw materials

Calculated based on purchases for each internally set item groupTotal

1 yen/kWh

7,212

7,212

Category 2

Capital goods

Calculated based on the value of actual capital investment (items that can be assessed based
only on monetary value are used)*1 Kuki Plant, Utsunomiya Plant, Ageo Factory*2 Nisshin Electronics Service Co., Ltd., Yamagata Nisshin Electronics Co., Ltd., Nisshin Tokki Co., Ltd., Tochigi Nisshin Co., Ltd., Nisshin Industry Co., Ltd.,
Asahi Electronics Co., Ltd.
*3 Additional cost (unit price) may change depending on social circumstances.
Changes in additional costs due to the introduction of power generation facilities and other factors are not included.

Category 3

Fuel and energy related activities
not included in Scope 1 or 2

Category 4

Upstreamtransportation anddelivery

Estimated by calculating the emissions from Group companies’ transportation based on thefuel consumption method and including emissions from other companies’ transportation
based on the ratio of transportation costs

Capital investments related to energy saving
In FY2023, we made the following capital investments related to energy saving.
Installed energy-saving shields to and applied heat insulation paint around outdoor units

Category 5

Waste generated inoperations

Calculated based on the volume of industrial waste and general waste (calculated by using
the data for incineration services)

Category 6

Business travel

Emissions from business travel by company owned cars are included in Scope 1, and those from businesstravel by other means are calculated based on the number of employees (10 business trips per year)
Calculated only for car commuting based on the commuting distance and using the emission
coefficient for gasoline (commuting 24 days per month, fuel efficiency of 20 km/ℓ)

Whetheremissions arecalculated

Calculation method and grounds

Expected to be small due to increased use of green energy

Location

TimingCost

Energy-saving effect(catalogue value)

Category 7

Employee commuting

Nippon Signal Co.,
Ltd. Kuki Plant

May–June 2023

Approx. 10 million yen

Approx. 10%

Category 8

Upstream leased
assetsCategory 9

Downstream transportationand delivery

Estimated to be small because most are delivered to locations of use and little delivery is done
by customers

Category 10

Processing of soldproducts

Estimated to be small because most are delivered as finished products and little processing isdone by customers

Category 11

Use of sold products

Calculated by quantifying lifetime electricity consumption, based on each product group’s
electricity consumption (when in standby mode and in operation), operation rate, andestimated life expectancy (all products are powered by electricity)

Although accurate results cannot be calculated due to differences in outside
temperatures and other environmental conditions, energy use was lower thanthat of other sites despite extreme heat in summer 2023. We therefore believe that a certain level of energy-saving effect has been achieved.
In FY2024, we will make the same investments at other sites.

Energy-saving shields

Heat insulation paint(white part)

Installed a heat exchange ventilation system

Emissions from leased vehicle fuel are included in Scope 1, and those from other leased
assets are not calculated (estimated to be small)

Location

TimingCost

Energy-saving effectCategory 12

End-of-life treatment ofsold products

Calculated based on the mass of each product group (calculated by using the data forincineration services)

Nippon Signal Co., Ltd.
Utsunomiya Plant

August–September 2023

Approx. 2 million yen

2.6 kl (crude oil equivalent)

Category 13

Downstream leased
assetsCalculated by quantifying annual electricity consumption, based on each product group’s electricity consumption(when in standby mode and in operation) and operation rate (all products are powered by electricity)[Acquisition/Sale]
No large-scale business acquisitions or sales are scheduled, and no significant impact of acquisitions/sales on direct orindirect environmental data is expected.
45

647
56,12925,621

Reduction measures

NIPPON SIGNAL CO., LTD.

Category 14

Franchises

No franchise systems in place

Category 15

Investments

No large-scale investments in projects that emit greenhouse gases*Greenhouse gas (GHG) emissions are calculated for CO2 only. We will calculate methane (CH4) emissions when clearer data becomes available on leakage at thetime of fossil fuel mining and other emissions that indirectly affect us. (Nippon Signal’s business does not have any direct links to emissions from livestock, etc.)
NIPPON SIGNAL REPORT 2024

46

Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

E Environment[Calculation formulas]
CO2 emissions are calculated based on the calculation formulas and examples below.
Scope 3

Details

Calculation formula and example

Category 1

Raw materials[Purchases for each internally set item group × Emission coefficient]
Example: Sheet metal stamped products (onboard, small equipment) 10,000,000 yen × Can and sheet
metal products 0.00971 = 97,100 kg = 97.1 t

Category 2

Capital goods[Purchase price of non-current assets × Emission coefficient for the closest item]
Example: Preparation of equipment for online meetings 1,000,000 yen × Communications machinery andrelated equipment 0.00272 = 2,720 kg = 2.72 t

Category 4

Upstreamtransportation anddelivery

Each site { Each partner company ( Fuel used by each vehicle model category × Emission coefficientfor each vehicle model category) / Share of partner companies’ transportation costs}
Example: Utsunomiya Plant: Partner Company A: Fuel used by gasoline light cargo vehicles 4 kℓ ×
Emission coefficient for gasoline light cargo vehicles 2.32 = 9.28 t
Utsunomiya Plant: CO2 emissions from all partner companies 600 t / Share of partnercompanies 0.8 (80%) = 750 t

Waste generated
in operations

Each site ( Volume of each type of waste × Emission coefficient for each type of waste)
Example: Kuki Plant: Plastic waste 30 t × Incineration services: Industrial waste: Plastic waste 2.55 = 76.5 t

Category 6

Business travel

Number of employees × Average number of business trips per year × Emission coefficient
Example: 1,000 employees × 10 business trips on average × Average for all business trips 0.030 = 300 t

Category 7

Employeecommuting[Commuting distance of car commuters × 2 (round-trip) × 24 (commuting days per month) × 12
(months per year) / 20 (fuel efficiency: 20 km/ℓ) × Emission coefficient for gasoline cars]
Example: One-way commuting distance 30 km × 2 × 24 × 12 / 20 × Emission coefficient 0.00232

Use of soldproducts

Each product [{Electricity consumption when in standby × (1 - operation rate) + electricity consumption
when in operation × operation rate} × 24 (hours) × 365 (days) × Estimated life expectancy × Number of
shipments] × Emission coefficient for each electricity supplier
Example: Automatic ticket gates: {0.2 kW when in standby × 0.5 + 0.4 kW when in operation × operation
rate 0.5} × 24 × 365 × 7 (estimated life expectancy) × Number of shipments 50 × Emission
coefficient for each electricity supplier (national average) 0.00435 400 t

Category 5

Category 11

Category 12

Category 13

End-of-life treatmentof sold products

Downstream
leased assets

2t[Each product (Mass × Emission coefficient for incineration services* × Number of shipments)]
Example: Fare adjustment machines: 0.2 t × Incineration services 0.0472 × 50 0.47 t
Each leased product [{Electricity consumption when in standby × (1 - operation rate) + electricity
consumption when in operation × operation rate} × 24 (hours) × 365 (days) × Number in operation] ×
Emission coefficient for each electricity supplier
Example: Transceivers: 0.02 kW when in operation × operation rate 1 × 24 × 365 × Number of shipments
500 × Emission coefficient for each electricity supplier (national average) 0.00435 381 t[CO2 emissions in 2023]
CO2 emissions increased in 2023 mainly due to an increase in raw material purchases (Scope 3, category 1). The significant increase from the previous fiscal year is attributable to the improvement of the business environment, which has returned to normal from the difficulty in obtaining raw materials due to semiconductor shortages in the previous fiscal year.
As indicated in the calculation methods and calculation formulas, emissions are calculated by multiplying purchases byemission coefficients. Increased purchases therefore results in increased CO2 emissions according to the calculation.
Going forward, we intend to change the method and calculate based on mass instead of monetary value. We will also
hold dialogues and track the status of green energy adoption and other measures taken by suppliers, based on which wewill calculate emissions accurately and strive to reduce emissions.
Waste Management
Waste reduction is included in the 6th Stage Environmental Action Plan (see pages 52 and 53), and waste volume is managed with targets in place. We strive to reduce the volume of final disposal by reducing and reusing packaging materials
and pallets, looking for collection service operators capable of higher-level recycling (material recycling instead of thermal
recycling), and taking other measures.
The Nippon Signal Group will not only continue to strive for waste reduction in business operations but also take action to
reduce Nippon Signal products that are disposed of as waste, such as extending product life and making products smaller, lighter, and cableless. This also leads to the reduction of life-cycle greenhouse gas (GHG) emissions that fall under
SBT’s Scope 3, category 12 (end-of-life treatment of sold products).

47

NIPPON SIGNAL CO., LTD.

Digitalization of Industrial Waste Manifests and Introduction of Waste Management System (Software)
Effective from FY2024, the Group has digitalized its industrial waste manifests*1 and introduced Waste Management System (software). This ensures the storage of manifests on the JWNET*2 server. The introduction of Waste Management
System prevents missed updates of disposal operators’ permits and contracts, ensuring compliance.
In addition, the Nippon Signal Group will centrally manage general waste and valuables as well and work on the reductionof CO2 emissions from waste and increase in the recycling rate.
*1 A system where businesses that discharge industrial waste issue specific documents and appropriate disposal of industrial waste is tracked by managing
the documents.
*2 Japan Industrial Waste Information Center, which operates the digital manifest system.

Water Management
Shown below is our water use in FY2023.

(Unit: m3)

Water supply

Well water(groundwater)

Grey water(recycled water)Industrial watersupply

31.5

22.5

0

0

Nippon Signal Co., Ltd.

Total water intake Total wastewater

54.0

54.0

*No wastewater is treated in-house. All wastewater is discharged untreated to third parties (sewers).

The Group will continue to strive for water saving and take action to conserve diverse water resources. The Companywide Environmental Committee deliberates on water management as well.

Green Energy Procurement
The Nippon Signal Group is gradually shifting to the use of green energy. In addition to using 100% green electricity, we
will improve the efficiency of, as well as shift to electricity from, other types of energy and take other measures, thereby
reining in green-house gas emissions.

Nippon Signal Co., Ltd. Kuki Plant
Ageo Factory
Utsunomiya Plant

Timing of green electricity
introduction

CO2 emissions reduced in
FY2023* (t)October 2022

1,407

October 2022

384

May 2023

1,222

Nisshin Tokki Co., Ltd.

March 2022

92

Asahi Electronics Co., Ltd.

January 2023

47

April 2023

344

Yamagata Nisshin Electronics Co., Ltd.

*C alculated by multiplying theamount of electricity used after the
introduction of green electricity by
the emission coefficient for theplan before the introduction*The building owner of the Nippon Signal head office has completed the transition to 100% green electricity.

Introduction of Environmental Management System (Software)
We have introduced Environmental Management System (software) to centrally manage the Group’s environmental information and outcomes of environmental activities. The system has been in operation since July 2023.
The Environmental Management System (software) manages the following matters.
CO2 Emissions (Scopes 1 to 3)
Energy use (electricity, gas, petroleum)
Water use (water intake, wastewater)
Waste volume
InputsInformation from other internal
systemsPurchase of parts, shipping of products
Technical information (productelectricity consumption, etc.)
Information on commuting,business travel, etc.
Logistics information
Waste management information, etc.

Outputs
Environmental
Management System(software)

TCFD reports/IR
 ct on Rational UseAof Energy
Environmental
Committee materials

NIPPON SIGNAL REPORT 2024

48

Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

E Environment

FY2024 Quality, Environment & Safety Policies
Quality, Environment & Safety Policies
Basic Policy
We strive to become a global company by pursuing world-leading technologies with ingenuity and passion to inspire ourcustomers’ Kando.
PolicyTo materialize the basic framework for the 28 Medium-term Management Plan, “Support the next stage of infrastructure,”
the Group will achieve all persons’ safety and high-quality products and services through process optimization. We will
also contribute to the achievement of a sustainable society, and aim to win reliability from people around the world.
As a premise for ensuring quality, we will establish a culture where we do not conceal, do not turn a blind eye, and create
an atmosphere that allows employees to speak up.

Environmental Management
Our environmental efforts represent the essence of our business activities.
Environmental Philosophy
Nippon Signal promotes initiatives to protect and improve the environment in an effort to create a better world for everyone
and build a more comfortable society through safe and reliable technology.

Revision of the Environmental Policy
Our Environmental Policy has been in place since 2 0 0 2. We have revised the Environmental Policy to align it with the
TCFD’s initiatives, for which we declared support in December 2021.
Environmental Policy
We provide eco-friendly products and services, and also reduce the environmental impact throughout the product life cycle, from product development to final disposal, to achieve a synergy between business activities and environmental protection efforts.
 e make clear and disclose the impact of our business activities on the environment and the impact of the environW
ment on our business activities1, while curbing environmental pollution and improving our sustainable environmental
management system.
 e comply with legal regulations related to the environment, as well as agreements with stakeholders. In addition, weW
set ambitious targets that meet expectations from society and engage in sustainable economic activities by achieving
the targets.
In product research and development, we calculate² to the extent possible and minimize the environmental load of theprocess from manufacturing and procurement to disposal. In addition, we promote the development of products andservices that support activities of low environmental load, giving back our expertise to a wider society.
 o realize the aims of this environmental policy, we conduct risk assessments on future environmental impacts3 basedTon cutting-edge findings. We establish the highest goals and targets for protecting the environment within achievable
technical and financial limits and conduct periodic reviews to ensure continued improvement.
 e roll out this policy as part of educational and awareness-raising activities and disclose the policy to the generalWpublic as well, in order to enhance each employee’s awareness toward the environment and encourage them to implement the policy proactively.
[Explanation]
1. We make clear not only the impact of our business activities on the environment (transition risks and opportunities) but also the impact of
the environment on our business activities (physical risks and opportunities).
2. We calculate and disclose life cycle CO2 emissions based on Scopes 1 to 3 set by the SBT initiatives.
3. We identify, assess, and manage future environmental impacts.

49

NIPPON SIGNAL CO., LTD.

Establishment of the Environmental Action Guidelines
Along with the revision of the Environmental Policy, we established the Environmental Action Guidelines, which set out
specific environmental initiatives of Nippon Signal. We have thus made clear what each employee should do to solve social issues related to the environment.
Environmental Action Guidelines
We make clear the impact of our business activities on climate change, and set and take action toward greenhouse gas emissions targets that are in line with containing future global temperature rise within 1.5°C of pre-industrial levels. In the meantime,
we incorporate climate change into our BCP as part of business activities and contribute to solutions to such issues throughour products and services, so that we can adapt to climate change and maintain a safe and comfortable life in society.
We make clear the impact of our business activities on natural ecosystems. We minimize the destruction of ecosystems in development projects related to our business activities.
We protect water, as well as forest resources that nurture water. We neither take in large volumes of water that affectlocal lives nor discharge such volumes of wastewater that exceed treatment and recovery capacity. We take appropriate measures to prevent logging and development related to our business activities from causing natural disasters.
We strive to prevent chemical substances from causing environmental impacts (air, water, and soil pollution), as well as
damaging the health of all persons including our employees. We conduct risk assessments always based on the latest
information, and promptly take measures, such as banning the use or handling with care. We also disclose informationand take appropriate measures on chemical substances used in the past, once environmental impacts become clear.
We set our eyes on a recycling-oriented society, and as a general rule, develop and design products on the premisethat they will be recycled. We use common parts and adopt designs that are easy to disassemble, as well as establish
systems for a circular economy in logistics, packaging, maintenance, and services.
We engage in resource and energy saving activities. To use finite resources efficiently, we extend product life, carry out optimal maintenance and replacement, and promote development activities for the achievement of functions with less hardware resources and energy.
In procuring and purchasing necessary resources, we check for and ban hazardous substances, and preferentially procure
and purchase materials, parts, and products that have less environmental load, taking into account transportation as well.
We provide environmental education in accordance with fields and position levels, so that each employee can carry out
environmental conservation activities expected from society.
To achieve the Environmental Policy more effectively, we hold dialogues with suppliers and customers, where information including
calculated environmental load is exchanged and value including targets is shared. We cooperate closely with government agencies,
local communities, and relevant organizations, and actively participate in environmental conservation activities in society as a whole.
We actively disclose environment-related information to achieve a secure society.
[Explanation]
Each item in the Environmental Action Guidelines respectively aims to meet the following expectations from society.
Response to global warming (TCFD)
Biodiversity
Protection of water and forest resources
Management of chemical substances
Recycling-oriented society (circular economy)
Energy saving and resource saving
Green procurement
Environmental education
Cooperation with customers and suppliers
Information disclosure

Structure
In order to promote the fusion of environmental conservation activities and environmental management, the Group has
been operating an Environmental Management System based on ISO 14001, through the Company-wide Environmental
Committee, comprised of representatives from five production facilities and chaired by the Executive Officer responsible
for TQM Promoting Department.
To accelerate decarbonization, three consolidated Group companies that engage in production joined the Company-wide
Environmental Committee in the fiscal year ended March 31, 2023, and one consolidated Group company that engages
in maintenance in the fiscal year ending March 31, 2025. In order to achieve the provision of eco-friendly products andservices, we aim to reduce environmental impact from the developmental stage onward, make continual improvements
based on the PDCA cycle, and be a sustainable growth company.
Environmental Audit
We regularly implement internal and external audits to verify compliance with, and the effectiveness of, the Environmental
Management Systems.
Internal audit: Regularly implemented audits based on audit guidelines
External audit: Annual audits by ISO certification institutions; no cases of nonconformance were found in the audit
conducted in the fiscal year ended March 31, 2024.
Environmental Risk Management
After identifying environmental risks posed by the business operations at specific sites, emergency response training is
conducted regularly to help us avoid and mitigate risks.
Environmental Compliance
Information on environmental laws and ordinances is managed and shared, and periodic checks are implemented to confirm
compliance. In the fiscal year ended March 31, 2024, there were no legal violations or accidents related to the environment.

NIPPON SIGNAL REPORT 2024

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

E Environment
Quality Management
We engage in business activities based on our Group Philosophy: “We help realize a more secure and comfortable society
through superior technologies that provide safety and reliability.” We determine priority matters and quality targets for eachfiscal year, in accordance with our quality policy. We operate a quality management system based on ISO 9001, throughour Company-wide QA Committee, chaired by the Executive Officer responsible for TQM Promoting Department. Each division and department engages in quality enhancement by establishing a quality management plan based on the priority
matters and making efforts for continual improvement based on the PDCA cycle.

Eco Test and QC Exam
We encourage our employees to take the Certification Test for Environment Specialists (Eco Test)*1 and acquire rank 3 orhigher certification in the Quality Control Examination (QC Exam)*2 with the aim of raising their awareness of, and helping
them acquire knowledge on, the environment and quality. Employees who have passed the Eco Test or acquired rank 3 orhigher certification in the QC Exam both exceeded 70% by the fiscal year ended March 31, 2024.
*1 Eco Test: A test scheme organized by the Tokyo Chamber of Commerce and Industry through which people aim to acquire knowledge on environmental issues*2 QC Exam: An examination scheme organized by the Japanese Standards Association through which knowledge on quality management is evaluatedSocial Contribution to the Environment
RQMS Management
1

RQMS (Railway Quality Management System; ISO/TS22163:2017 ) is a quality management system standard for the rail
industry. It includes the requirements appropriate for the railway market, in addition to the requirements of ISO 9001:2015.
Nippon Signal attained certification in the fiscal year ended March 31, 2020.
We passed the periodic review in the fiscal year ended March 31, 2024 and the certification remains valid.
[Explanation]
1. ISO/TS 22163:2017 transitioned to ISO 22163:2023 on July 25, 2023. We underwent the periodic review in the fiscal year ended March
31, 2024 based on the standard before the transition.

Green Procurement Guidelines
Based on its environmental policy of providing eco-friendly products and services, Nippon Signal enacted the Green Procurement Guidelines in 2005. When purchasing commercially available electric and electronic components or items withdesignated specifications from manufacturers or suppliers, we select and preferentially procure raw materials and components that are friendly toward the environment while also taking into account quality, price, and delivery date. The Green
Procurement Guidelines are updated regularly to comply with the latest versions of the Act on the Assessment of Releases of Specified Chemical Substances in the Environment and the Promotion of Management Improvement, the EU’s RoHS
Directive, the REACH regulation, and other rules.
In addition, we encourage suppliers to acquire certification for Environmental Management Systems, conduct green procurement, and manage and eliminate the use of regulated chemical substances from the perspective of supply chain management.
Responsible Procurement of Minerals
The Nippon Signal Group Philosophy Code of Conduct states, “As a member of the international community, we will nothave involvement whatsoever with forced labor or child labor.” This is applicable to procurement decisions as well.

 lobal Environment Protection andG
Volunteer Activities
Each office (head office, branch offices, plants,
affiliated companies, etc.) of the Nippon Signal Group carries out unique global environment protection and volunteer activities.
 orestry activities at the Forest ofF
Nippon Signal
In 2019, we opened the Forest of Nippon
Signal in Tochigi Prefecture, home to the Utsunomiya Plant. We planted 2,700 wild cherry trees in the first year. Forest conservation
activities have taken place on a constant basis, including tree planting, weeding, andother tree growing activities in the spring of
the fiscal year ended March 31, 2024.
Global environment protection activity

Site

Voluntary cleaning of areas around sites

Kuki Plant, Utsunomiya Plant, Ageo
Factory, head office, branch offices, etc.

Food drive*, where employees collect food items and donate them to children’s
cafeteria and other organizations

Ageo Factory, Osaka Branch Office

Maintenance of roadside flower beds, participation in flower planting

Kyushu Branch Office

Picking up of garbage around tourist sites, cleaning of railway facilities (station buildings)

Yamagata Nisshin Electronics Co., Ltd.

*Food drive: An activity where the organizer collects unused leftover food items and donates them to food bank organizations, local welfare facilities and organizations, etc.

Environment & Quality Education and Awareness Raising

Environmental Performance

Nippon Signal conducts regular training for internal environmental and quality auditors to ensure appropriate environmental activities and improve quality management.
Environmental and Climate Change Education
With the understanding that all employees should proactively address environmental issues (especially climate change),
we will implement level- and division/department-specific education programs. In the fiscal year ended March 31, 2024,
three education program sessions took place.
Topic

Learn about the necessity of environmental initiatives, social
trends, and Nippon Signal’s environmental activities

September
21, 2023

Product assessment
education

Deepen the understanding of product assessment(environment) that improves corporate value, and takeadvantage of the understanding in conducting business

Design divisions
anddepartments

January–
March 2024

Seminar for a thoroughlearning of the basics ofdecarbonized procurement

Learn about the calculation of environmental load related to
procurement, as well as examples of activities carried out incooperation with suppliers, and become able to promotedecarbonization

Material(procurement)
divisions anddepartments

NIPPON SIGNAL CO., LTD.

Environmental targets

Environmental indicators

Energy use reduction rate

Intended target

New employee education
Basics of decarbonizationand the SDGs

April 13,2023

51

PurposeSince the fiscal year ended March 31, 2006, the Group has continued to formulate environmental action plans, based on which
it has pursued reductions in environmental impacts. We have reviewed the 5th Stage Environmental Action Plan (FY2019–
FY2021) and have been promoting the 6th Stage Environmental Action Plan since the fiscal year ended March 31, 2023.

New employees

1 Decarbonization

Green energy procurement rate

Target2

 eduction in industrial wasteR
generated
Sorting of industrial waste

FY2023

1% or more reduction fromthe previous fiscal year

Result

5.3%

-3.7%

Target

20% or higher/year as the Group

40% or higher/year as the Group

38.5%

76.9%

100% achievement rate

100% achievement rate

Achieved at six sites

Achieved at six sites

Target

0.5% or more in emission units
from the previous fiscal year

0.5% or more in emission units
from the previous fiscal year
29.4%

ResultTarget ontribution to the environment
Cby improving business operations Result

Reduction inand sorting ofindustrial
waste
generated

FY2022

1% or more reduction fromthe previous fiscal year

Result18.7%

Target100% achievement rate

100% achievement rate

ResultAchieved at five sites

Achieved at four out of five sites

NIPPON SIGNAL REPORT 2024

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Sustainability Initiatives

Nippon Signal’s Value Creation

Environmental targets

3

4

Products

Environmental indicators

FY2022

 romotion of regionalP
environmental activities
Environmental/SDGs education

CO2 emissions from (Nippon
Signal) products and systems

FY2023

Target Four times or more a year at each site Four times or more a year at each site
ResultAchieved at all sites(148 times in total)

Achieved at all sites(111 times in total)

TargetFour times a year

Four times a year

ResultConducted four times

Conducted four times

TargetDiscussion on calculation
formulaMeasurement (Disclosure ofcalculation formulas: only
those related to products)

ResultCalculated emissions for major
categories in SBT Scope 3

Disclosed in the Integrated
Report[FY2023 Results]
In the fiscal year ended March 31, 2024, energy use increased by 3.7% from the previous fiscal year, despite the target of
1% or more reduction. This is due to extreme heat in the summer and an increase in production compared with the previous fiscal year. CO2 emissions, however, decreased significantly as Nippon Signal’s manufacturing sites (Kuki Plant, Utsunomiya Plant, and Ageo Factory) have been powered by 100% green electricity since May 2023.
We will strive for energy saving in the fiscal year ending March 31, 2025 by making capital investments for better air conditioning and heating efficiency.
We achieved most of the other targets.

Reduction of the Environmental Impact from Our Products
Eco-Label Products
We rank products by our level of eco-friendliness. Products that meet our internal criteria have been approved as ecolabel products. Multiple eco-label products are approved every year, and the system has produced certain results, suchas ripple effects of ideas on other products. While keeping the eco-label system, we have launched new initiatives toachieve a 46% reduction of greenhouse gases (SBT Scopes 1 to 3) throughout the product life cycle by 2030 and carbon
neutrality by 2050.
We will calculate life cycle CO2 emissions for each product group and prioritize high-emission products in taking measures.
Our activities will take the following directions, in addition to making products smaller and lighter and saving energy, which
we have been pursuing in developing eco-label products.
Details

Contribution to the reduction of greenhouse gas emissions

1

Hardwareless/Generalpurpose products

Reduce Categories 1 and 1 2 emissions, which account for a substantial proportion of SBT
Scope 3 emissions, to zero; and achieve a significant reduction of Category 11 emissions

2

Circular economy

Achieve reduction by converting SBT Scope 3 Category 12 emissions to Category 5
emissions, which Nippon Signal can control, and by replacing former products that have highenvironmental impacts

3Power generation andpower storage

Contribute to a decarbonized society although not reducing SBT Scope 3 emissions

External Evaluation of ESG
CDP
In 2023, we received a B (Management) score from the CDP* in the climate category. This is above the average score of
C (Awareness) in the electrical and electronic field.
We will continue to actively disclose environmental information to investors, carry out activities that are lacking, and aim to
be a company whose environmental load is even lower than society expects.
*CDP: An international environmental non-profit organization (NGO) established in the UK in 2000. It sends questionnaires to major companies around theworld on behalf of investors, analyze and evaluate (rank) the answers, and disclose the results. Approximately 23,000 companies (approximately 2,000Japanese companies) answered in 2023, which exceeds two-thirds of global market capitalization.

53

NIPPON SIGNAL CO., LTD.

Data Section

Sustainability Initiatives

S Society

E Environment

Socialcontribution
related to theenvironment

Nippon Signal’s Vision and Growth Strategy

Human Resource Investments
Percentage of Female Workers in Managerial Positions, Percentage of Male Workers Taking Childcare
Leave, and Differences in Wages between Male and Female Workers
Nippon Signal
Fiscal year under review
Differences in wages between male and female workers(*3)

Percentage of female workers
in managerial positions(*1)

Percentage of male workers
taking childcare leave(*2)

All workers

Regular workers

Part-time andfixed-term workers

3.8%

92%

70.8%

75.5%

71.2%

*1. The percentage has been calculated based on the provisions of the Act on the Promotion of Women’s Active Engagement in ProfessionalLife (Act No. 64 of 2015). Women account for 14.8% of all workers. Secondees to other companies are excluded, while secondees fromother companies are included.
*2. The percentage of workers taking childcare leave, etc. or leave for the purpose of childcare under Article 71-4, Item 2 of the Ordinance for
Enforcement of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other
Family Members (Ordinance of the Ministry of Labor No. 25 of 1991) has been calculated based on the provisions of the Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (Act No. 76 of 1991).
Secondees to other companies are included, while secondees from other companies are excluded.
*3. The percentage has been calculated based on the provisions of the Act on the Promotion of Women’s Active Engagement in Professional Life(Act No. 64 of 2015). Equal wages are paid for equal work regardless of gender, and the pay gap derives from differences in male-to-female ratio for the number of workers in each rank. Secondees to other companies are excluded, while secondees from other companies are included.

Consolidated Subsidiaries
Fiscal year under review
Differences in wages between male and female workers(*3)

NamePercentage of female
workers in managerial
positions(*1)

Percentage of maleworkers taking childcare
leave(*2)

All workers

Regular workers

Part-time andfixed-term workers

Nisshin Electronics
Service Co., Ltd.

3.6%

100%

51.7%

77.6%

61.8%

*1. The percentage has been calculated based on the provisions of the Act on the Promotion of Women’s Active Engagement in ProfessionalLife (Act No. 64 of 2015). Women account for 6.7% of all workers. Secondees to other companies are excluded, while secondees from othercompanies are included.
*2. The percentage of workers taking childcare leave, etc. or leave for the purpose of childcare under Article 71-4, Item 2 of the Ordinance for
Enforcement of the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other
Family Members (Ordinance of the Ministry of Labor No. 25 of 1991) has been calculated based on the provisions of the Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members (Act No. 76 of 1991).
Secondees to other companies are included, while secondees from other companies are excluded.
*3. The percentage has been calculated based on the provisions of the Act on the Promotion of Women’s Active Engagement in Professional Life(Act No. 64 of 2015). Equal wages are paid for equal work regardless of gender, and the pay gap derives from differences in male-to-female
ratio for the number of workers in each rank. Secondees to other companies are excluded, while secondees from other companies are included.

Basic Policy
The source of the Group’s value creation lies in human resources. Our Values in the Group Philosophy include Hito-zukuri(education), and we are committed to developing human resources who take on challenges for their own growth.
Our priorities for the fiscal year ended March 31, 2024 were “diverse workstyles for a next-generation HR system reform,”“development of personnel for digital transformation (DX) through reskilling and development of young and mid-level
employees to nurture next-generation leaders,” and “health management that invigorates the organization by promoting
employee health and aims to improve corporate value by increasing productivity.”
Initiatives to Adopt Diverse Workstyles for a Next-Generation HR System ReformDiversity & Inclusion Initiatives
We are taking action to promote women’s active engagement by setting KPIs in the general employer action plan for thepercentage of women in managerial positions, number of women in engineer positions, and percentage of employees who
used the childcare leave system. While engineers, many of whom have engineering backgrounds, account for a substantial
proportion of our employees and the percentage of female employees is relatively small, we are working to improve theirretention rate and support career advancement by creating an environment that facilitates women’s active engagement.

NIPPON SIGNAL REPORT 2024

54

Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

S SocietyTo hire non-Japanese human resources, we actively recruit from Japanese universities that drive globalization andoverseas universities where a relatively high proportion of graduates join Japanese companies. Aiming to run anorganization where diverse human resources play an active role, we offer training programs for managerial employees that
focus on diversity management and harassment prevention.
To increase the diversity of our workforce, we recruit without setting quotas for arts and sciences backgrounds, and assign employees with arts backgrounds to engineering divisions and departments. Going forward, we will consider recruiting talented human resources through alumni contacts, introducing a system to rehire former employees, and introducing
a training program for Japanese employees to facilitate understanding of different cultures.
Initiatives to Promote Workstyles Unbound by Time or Location
We have introduced flexible working hours, staggered working hours, and remote working to allow employees to choose
from diverse options as to when and where to work, in accordance with changes in the social environment and their life
events. In addition, we introduced in October 2023 a new system that allows employees to choose to work only in specific geographic areas, advancing the creation of an environment where employees can choose their workstyles in accordance with personal circumstances. To promote such diverse workstyles and achieve organizational growth at the sametime, we consider it important to maintain and improve individual and organizational productivity. To this end, we promote
digitalization of business operations, web meetings, and other initiatives and work to establish a new workplace environment. In addition, we constantly monitor and control our systems, provide education and training, and conduct accident
drills as cybersecurity measures associated with digitalization.
Childcare Support Initiatives
By promoting flexible workstyles, we support balancing work and childcare and facilitate male employees’ participation inchildcare. Relevant systems were revised in July 2022 as described below.
 xpanded the scope of employees eligible to apply for restriction on overtime and holiday work and take leave toEtake care of the sick/injured
Expanded the scope of employees eligible for flexible working hours for childcare and flexible working hours before childbirth emoved core hours for employees who work by flexible working hours before childbirth or due to childcare, nursR
ing care, or doctor’s visits
To support employees who try to balance work andchildcare, we created “Guidebook to Support Balancing Work and Childcare” with input from parents in thecompany. The guidebook is distributed to employees
who became new parents. The contents include theflow from going through pregnancy to taking childcare
leave and returning to work, tips for sharing housework and choosing a day-care center, and recommendations for books on childcare.
Initiatives for Human Resources Development and Reskilling to Increase Corporate Value
Initiatives to Establish Corporate Culture
Working in line with its philosophy of safety and reliability, the Group seeks to remain a corporate group upon which society
relies. To achieve this aim, the Group must build relationships of trust with stakeholders, backed by the proper behavior ofeach staff member. The Group added Our Code of Conduct to Nippon Signal Group Philosophy to provide a foundation forthese relationships of trust. Our Code of Conduct serves as a standard of behavior to be followed by all officers and employees of the Group. The Group encourages all employees to respect laws, ordinances, and other rules. The Group is also
working to build an organization with the capacity to quickly discover problems on its own and address them. As part ofour initiatives, we regularly hold education programs for all employees, featuring case studies that offer lessons. This equips
participants with basic knowledge on safety and reliability necessary as Nippon Signal employees, as well as gives them
opportunities to think proactively about the impact of our products on society and bring back the findings to their work.
We set division- and department-specific targets based on company policies and share the targets at division and department meetings held every six months, so that all employees can drive forward management strategies. To achieve the division- and department-specific targets, each employee decides what they should do more of, based on individual targets
and competencies expected from each job function. In collaboration with managerial employees, they strive to materialize
what they have decided. In addition, we give awards to employees with outstanding achievements and employees who
have set examples for others. We also offer overseas training opportunities to high achievers in internal contests.

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NIPPON SIGNAL CO., LTD.

Initiatives to Enhance Digital Literacy of All Employees
We have set “Strengthening of development capabilities and establishment of design and production frameworks
adapted to DX” as a priority in our medium-term management plan and provided DX literacy education to all employees in the fiscal year ended March 31, 2023. In the fiscal year ended March 31, 2024, we identified improvement and reform themes at each department and promoted DX to address them. When recruiting, we put ourefforts into securing human resources who have backgrounds mainly in software, as well as AI, images, communications, and other fields that can contribute to DX.
Initiatives to Educate Young Employees
To train young employees, we evolved the conventional OJT system into our original “Tetsuatsu Program” in 2019.
The Tetsuatsu Program was named after the proverb, “Strike while the iron is hot (Tetsu ha atsui uchiniute).” It is an education program for new employees, where they gain a variety of experiences by taking advantage of their ability to thinkflexibly and learn quickly. In organizations that welcome new employees, managers become leaders, and assistant managers and buddies (senior colleagues) play their roles in supporting the growth of new employees. The team thus join forces for the task. Through this program, we aim to involve all the people around new employees in human resources
development and let themselves grow by being close to new employees.
Based on the idea described above, we roll out the Tetsuatsu Program with the following three objectives.

1.

2.

3.

Accelerate the growth curve of
new employees by letting them
gain a variety of experiences withthe guidance and support fromtheir team.

Create a system where the entire
team supports and develops new
employees.

Improve the engagement of theteam, including new employees.

In the fiscal year ended March 31, 2024, we implemented a program that include not only vertical interactions centeredaround managers but also horizontal perspectives, in order to create a culture of development and engagement acrossranks and departments.
Leadership Development
From the fiscal years ended March 31, 2023 to the fiscal years ended March 31, 2024, we held meetings where the President himself communicated the top management’s vision to employees in their third to fifth year at the Company as wellas to managerial employee candidates. This served as an opportunity for employees to increase motivation toward work,
broaden their horizons, and seek to improve their skills. To develop next-generation leaders, we also offered a training program for managerial employee candidates selected from each department, who are expected to assume managerial positions in a few years. The program covered such themes as broad views and perspectives, clarification of one’s vision, andvalue-adding planning and proposal within the organization or to customers, business partners, and other stakeholders.
To develop leaders, we work on the development of executives by making clear the requirements for executives and conducting training for the development of next-generation executives, which creates leaders who play an active role in the
future. In addition, we appoint future leaders as corporate managers of Group companies before promoting them to Nippon Signal’s management team members. We actively exchange personnel across the Group and strive to develop executives as the entire Group.
Reskilling and Relearning Initiatives
To facilitate employees’ self-development, we subsidize fees for correspondence courses and provide allowances to employees who have obtained official qualifications recommended by the Company. In April 2023, we expanded the scope of employees eligible for monthly allowances and increased the amount of such allowances, thereby raising pay for employees who
actively engage in self-development. To facilitate education that is necessary for work, we regularly expand the scope of official qualifications eligible for allowances based on interviews with each division and department. In addition, managerial employees learn the status of their subordinates’ self-development through development interviews and give advice as necessary.
As learning opportunities outside the Company, we have the My Vision Leave System for employees who have reached 55
years of age and worked for the Company for 10 years or longer, allowing them to think about their future and take the opportunity for self-improvement. We also have a system to send our employees to study at International University of Japan.

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

S SocietyIndicators and Targets

Health Management and Organizational Invigoration Initiatives
Promotion of Health Management

We have set the following KPIs to overcome personnel challenges to materialize our management strategy.

In April 2022, we formulated the Nippon Signal Group Health Declaration. Having focused our efforts on increases in the health checkup consultation andhealth guidance participation rates, sports events and exercising campaigns incollaboration with the Health Insurance Society to encourage employees to exercise regularly, and seminars to improve health literacy, we were recognized as
one of the Certified Health & Productivity Management Outstanding Organizations (large enterprise category) two years in a row from 2023.

KPI

Percentage of employees taking
childcare leave

Nippon Signal Group’s philosophy is to help realize a more secure and comfortablesociety through superior technologies that provide safety and reliability. Employees andtheir families, who support the Group’s activities, are irreplaceable assets, and it is mostimportant that they are healthy and empowered. The Company, employees, and the
Health Insurance Society will join forces and take active measures to create anenvironment where each and every employee and their families are physically andmentally healthy at work and live happy lives. Nippon Signal Group will press ahead withthe creation of an environment where employees can actively maintain and enhance theirhealth, and keep moving forward as a company that achieves sustainable growth.

80%

Male

FY202392%

Male

TargetMale

Target FY

50% or higher

FY2025

Female 100%

Female 100%

Female 90% or higher

3.7%

3.8%

5%

FY2019FY2019FY201917% increase

19% increase

20% increase

(48)

(49)

(50)

Number of non-Japaneseemployees hired

1

2

2

Every year

Training investment per
employee

64,228 yen

75,949 yen

90,000 yen

Every year

Percentage of employees engaging
in self-development

43.5%

50.2%

50%

Every year

Percentage of women in
managerial positions

Nippon Signal Group Health Declaration

FY2022

Number of women in engineer
positions(obtaining new official qualifications or taking correspondence courses)

FY2025

FY2025

Date of formulation: April 1, 2022

Hidehiko Tsukamoto
President and Chief Executive Officer,
Nippon Signal Co., Ltd.

Described below are our key initiatives.
(1) Physical healthWe will follow up after health checkups, increasing the specific health guidance participation rate and enhancing
health guidance offered by healthcare workers.
To encourage employees to exercise regularly, we will continue to hold sports events and roll out exercising
campaigns.
(2) Mental health
We will conduct stress checks, mental health seminars, etc. Measures will be taken for early detection and preventionof mental health issues, including follow-up on employees assessed as highly stressed.
(3) Future health
We will strengthen measures against smoking.
We will hold seminars to increase health literacy.
We will promote the use of our Healthcare Leave system
Initiatives to Increase Employee Engagement
Since 2021, we have conducted an employee awareness survey every year to improve employee engagement. The survey results are fed back to the management team and heads of divisions and departments, as well as used to identify issues to be resolved. We thus take advantage of the survey to set the agenda for the creation of a rewarding workplace.
The agenda for 2023 was strengthening communication across divisions and departments. We worked to increase employee engagement by supporting voluntary establishment of internal employee networks and taking other measures.

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NIPPON SIGNAL CO., LTD.

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Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

S Society
Major Initiatives
FURUHATA Yohei Receives the Order of the Rising Sun, Gold Rays with Rosette
FURUHATA Yohei, Adviser (former Representative Director
and Chairman) of Nippon Signal, received the Order of the
Rising Sun, Gold Rays with Rosette in the autumn 2023
Decoration Ceremony. The award honors outstandingachievements in society. His achievements as President of
Nippon Signal, Chairman of Japan Association of Signal Industries, and Deputy Chair of Japan-Africa Relations Committee of Japan Association of Corporate Executives,among others, were recognized.

National Skills Competition
By participating in the National Skills Competition, we facilitate the creation ofan organized and continuing educational base for “NS Meisters,” personnel able
to compete on a global stage and take charge of manufacturing for the future.
We participated in the electrical equipment assembly trade category. This category requires acquisition of broad knowledge and techniques in areas including electronic circuit design, circuit board design, program design, repair andmeasurement, etc. along with advanced soldering skills. We have been participating in the national competition each year since our first participation in 2016. The
competition requires not only a wide range of knowledge and skills but also mental strength, as well as the ability to make judgements and decisions. By offeringsuch experience, we aim to develop human resources who can proactively think,act, and grow.

Nippon Signal Employees Receive the Order of the Sacred Treasure, Silver Rays and the Sainokuni Young Meister Award
OHATA Katsuyuki from the Production Department of Kuki Plant received the Order of the Sacred Treasure, Silver Rays in
the autumn 2023 Decoration Ceremony. The award is given to those who fulfilled their duties and produced results, in lightof the complexity, difficulty, and responsibilities associated with duties of public nature. His long years of contribution tosociety through his work related to skills examinations was recognized. In addition, KAJIWARA Daisuke from the Production Department of Kuki Plant received the Sainokuni Young Meister Award. He has excellent skills that stand out among
young engineers below 30 years of age working in Saitama Prefecture, and was recognized as exemplary in job performance and daily life.

NS Skills Contest

Japan Association of Corporate Executives Internship Program
We took part in the Japan Association of Corporate Executives Internship Program for the seventh time in 2023, after the
first participation in 2017.
Our program offers an opportunity to learn about the basics of railway technology and unwavering pursuit of safety, fromthe perspective of manufacturing that supports transportation infrastructure.
Comments from the participants who learned from manufacturing sites included, “I was able to understand the meaningof ‘safety and reliability’ Nippon Signal aims for,” and “I gained substantial insight, which I hope to take advantage of inthinking about my future and getting into the real world.”

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NIPPON SIGNAL CO., LTD.

As part of our activities aimed at enhancing our technological capabilities
in manufacturing, and nurturing engineers and supervisors who will berole models for others, we hold NS Skills Contests.
The competition involves assembling and wiring, and we use our own
tasks, printed circuit boards, and other parts. New tasks are set every
year, as the competition also provides a development opportunity for human resources who plan the tasks.
To enhance manufacturing skills as the Group as a whole by increasing
opportunities to demonstrate skills and technologies acquired in day-today work and compete based on speed, accuracy, and aesthetics, wehave held the annual contest since 2013.

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

S Society

G Corporate Governance

CSR (Social Contribution) Activities

Corporate Governance

As a company involved in the transportation infrastructure business, which is closely linked to the lives ofthe public, Nippon Signal Group is highly aware of the importance of coexisting with society and is thus
inspired to conduct social contribution activities on a Groupwide basis.

Nippon Signal Group (the Group) has been working to improve the transparency of its decision-making
process and construct a corporate governance system that properly incorporates supervisory and check
functions.

Basic Policy on CSR Activities

Basic Policy

Basic Policy on Corporate Governance

We hope to realize a more secure and comfortable society for people around the world, and “Our Mission” in Nippon
Signal Group Philosophy sets out the idea. Offering valuable products and services to society through superior
technologies that provide safety and reliability and solving societal issues will create business opportunities, which will, in
turn, increase corporate value.
Taking advantage of the characteristics of our transportation infrastructure business, we will strive to contribute to society
consistently while appreciating our ties with stakeholders to help realize safe and comfortable lives for people in Japanand around the world. The maximum amount of expenditure for such activities is approximately 1% of our ordinary profit
and will be reviewed in accordance with the expansion of the business.

The Group’s basic policy in corporate governance is toconduct management that gives priority to and satisfies
all stakeholders while making contributions to society.
To genuinely implement these basics, the Group will
make ongoing management structural reforms that aim
to strengthen corporate governance. The Group will alsoenhance the management structure so that it can respond flexibly and swiftly to changes in the environment
surrounding management.

Nippon Signal (the Company) has transitioned to a Company with an Audit and Supervisory Committee, of which
the majority of members are Outside Directors, tostrengthen the monitoring functionality of the Board of
Directors. The Company aims to enhance its corporate
value by ensuring highly transparent management andfurther enhanced corporate governance by appointing
Directors who are Audit and Supervisory Committee
Members with voting rights.
The Company currently has a total of eleven Directors,
five, or about half, of whom are Outside Directors thathave also been designated as Independent Officers as
defined by Tokyo Stock Exchange, Inc. Of the four Audit
and Supervisory Committee Members, three, or a majority,
are Outside Directors, as required by laws and regulations.

Major Initiatives
Matching Gift

Corporate Governance System at a Glance (as of June 21, 2024)
Company with an Audit andSupervisory Committee

Organizational format

We have collected anniversary donations on the date of the anniversary of
our founding (February 16) since the fiscal year ended March 31, 1994, under a matching gift* scheme. In the fiscal year ending March 31, 2025, we
made a donation to Noto Railway, which suffered damage from the January2024 Noto Peninsula Earthquake, to support reconstruction. We also makeannual donations to the Japanese Foundation for Cancer Research.

Number of Directors (including Outside Directors)*Matching gift is a system where the Company adds a certain contribution to the amount of donations made by employees and donates the sum.

5 Outside Directors

11

Number of Audit and Supervisory Committee Members(including Outside Directors)

Donation to Areas Affected by the 2024 Taiwan Eastern Offshore Earthquake
After the Taiwan Eastern Offshore Earthquake occurred on April 3, we donated aid money to contribute to the reconstruction of affected areas
through early restoration of infrastructure.
Hualien County, where damage was particularly severe, is home to Nippon
Signal’s project to the double-tracking of the Huadong Line.

Co-sponsoring Bolero: Plaza of Children’s Dream and Booth Exhibition
Bolero: Plaza of Children’s Dream is a music event organized by Michie
Koyama, a pianist from Sendai. The purpose of the event is to let children
who experienced the Great East Japan Earthquake have dreams and hope.
Since the fiscal year ended March 31, 2024, we have not only co-sponsored the event but also continued our booth exhibition to further contribute to hito-zukuri (education) and machi-zukuri (CSR) for the future.

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Sustainability Initiatives

NIPPON SIGNAL CO., LTD.

4The Company has instituted an Executive Officer System
to accelerate and improve the efficiency of managerial
decision-making and to enable the flexible execution ofbusiness as well as the Group Business Planning Committee to enhance governance in the Group management.

3 Outside Directors

Term of Directors (excluding Directors who are
Audit and Supervisory Committee Members)

1 yearTerm of Directors who are Audit andSupervisory Committee Members

2 years

Has Executive Officer System
Advisory body to theBoard of Directors
Accounting Auditor

In order to enhance debate regarding the nomination of
officers and their remuneration, and raise the objectivity
and transparency of the decision-making process, theNomination and Remuneration Advisory Committee wasestablished as an advisory body to the Board of Directors. This committee is made up of a majority of Outside
Directors that are designated as independent directors.
The Company has also established the Advisory Board,which is an advisory body for Representative Directors.
This board consists of outside experts with sophisticatedand specialized knowledge on business management.

Yes

Nomination and Remuneration
Advisory Committee
Grant Thornton Taiyo LLC

The decisions on significant matters regarding the Company are based on two procedures: a request for decision and a resolution by the Board of Directors. These
procedures are set out in the standards for reference formulated by the Board of Directors.
The Board of Directors deliberates on matters requiring a
resolution under laws, regulations or the Articles of Incorporation, and important matters related to business operation, including the formulation of short- and medium-term
management plans. It also decides on matters stipulated
under the Board of Directors regulations and the standards
for reference. In addition, the Group Business Planning
Committee carries out deliberation and reporting related tothe execution of duties under short- and medium-term
management plans of the Group companies.
Executive Officers make up the Committee of Directors, avenue for discussions and reports on the execution ofduties based on short- and medium-term management
plans. Executive Officers are also delegated authority forbusiness execution.
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Sustainability Initiatives

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Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

G Corporate GovernanceCompetence Required of Directors (Knowledge, Experience, and Capabilities)(Reference) Criteria for Independence of Outside Officers

The Group aims to remain to be a provider that supports infrastructure evolution with safe and trustworthy solutions. In
order to lead sustainable business growth, the Company selects as Directors those who possess strong acumen andexperience as a corporate manager, deep insight into technological development surrounding the Company, capabilities
to drive the expansion of business domains conducted on a global scale, and expert knowledge that contributes tocorporate governance.
[Directors selected from within the Company]
The Company selects those who possess strong acumen for overall management, with knowledge of the businessenvironment surrounding the Company and the industries it belongs to, understanding of the Company’s strengths andissues through manufacturing, technological research and development, marketing, and sales activities, and experience inmanagement administration such as accounting, legal affairs, and risk management.
[Outside Directors]
The Company selects those who can provide advice on management strategies and perform an effective supervisory
function on management by drawing on advanced and specialized knowledge and experience in fields other than theGroup’s business domains, while appropriately ensuring well-rounded diversity. In addition, to fully incorporate views fromobjective and independent standpoints into corporate management, candidates for Outside Directors need to satisfy therequirements for independent directors/auditors as stipulated by Tokyo Stock Exchange, Inc. Furthermore, they accountfor one-third or more of all Directors and at least one of them need to have corporate management experience at anothercompany.
The skills matrix of the Company’s Board of Directors is as follows.
Knowledge, Experience, and Capabilities the Company’s Directors Possess
Name

StatusCorporate
management

Finance andaccounting

Risk Management
Legal affairs

Globalexperience

Technology/
R&D

TSUKAMOTO Hidehiko Representative
Director

Sales/
Marketing

1. A person who is, or has been in the past 10 years, a business executor(*1) or Non-executive Director at the Group (i.e. the Company or its subsidiaries).
2. Any person (party) who has fallen under any of the following items (1) to (8) in the past three years.
(1) A party for whom the Group is a major business partner(*2) or a business executor of such party(2) A major business partner of the Group(*3) or a business executor of such partner(3) A consultant, accounting professional, or legal professional who has received a significant amount of money(*4) or other property from the Group other thanofficer remunerations (if a party who receives such property is a corporation, association, or any other entity, a party who belongs to the relevant entity)(4) A current major shareholder(*5) of the Group or a business executor of such shareholder(5) A business executor of a corporation of which the Group is a current major shareholder(*5)(6) A person who belongs to the appointed audit firm for the statutory audit of the Group(7) A business executor of an entity whose Outside Officer is also a business executor of the Group person, an officer or other business executor of a corporation, association, or any other entity who receives a large amount of donation or grant(*6) from the Group(8) A
3. If a person who falls under 1. or 2. above is a key person(*7), close relatives (spouse, first or second degree relatives) of such person
4. A person who has assumed the office of Outside Officer for more than eight years in total(*1) A business executor refers to a person who executes the duties of a Director (excluding an Outside Director), Executive Officer, or employees, etc.
(*2) A party for whom the Group is a major business partner refers to a party who has business transactions with the Group, with total amount of sales inany of the fiscal year within the last three fiscal years exceeding 2% of the consolidated net sales of such business partner.Such business partner shall
include its parent company and important subsidiaries if such business partner is a corporation.
(*3) A major business partner of the Group refers to a party with whom the Group has business transactions, with total amount of sales in any of the fiscal
year within the last three fiscal years exceeding 2% of the consolidated net sales of the Group, or a party who has made a loan to the Group in theamount at 2% or more of the consolidated total assets of the Company at the end of the most recent fiscal year. Such business partner shall include
its parent company and important subsidiaries if such business partner is a corporation.
(*4) A significant amount of money refers to the yearly average money exceeding 10 million yen over the three most recent fiscal years.
(*5) A major shareholder refers to a shareholder who holds, directly or indirectly, 1 0% or more of the total voting rights. Such major shareholder shall
include its parent company or important subsidiaries if such major shareholder is a corporation.
(*6) A large amount of donation or grant refers to a yearly average amount exceeding 10 million yen over the three most recent fiscal years.
(*7) A key person refers to a Director, Corporate Officer, Executive Officer, business executor who serves as a General Manager or in a higher rank, orbusiness executor who has authority equivalent to that of a General Manager or higher position.

FUJIWARA Takeshi

Director

Corporate Governance System

SAKAI Masayoshi

Director

General Meeting of
Shareholders

HIRANO Kazuhiro

Board of Directors

President and CEO

Director

Nomination and Remuneration
Advisory Committee*1

Committee of
Directors

GOTO Ryuichi

Director

Audit and Supervisory
Committee

Group Business
Planning Committee

Company-wide QA
Committee*5

INOUE Yuriko

Director(Independent Outside)

Accounting Auditor

Advisory Board*2

Company-wide
Environmental Committee*6

Risk Management
Committee*3

Company-wide Information
Security Committee*7

Director
MURATA Yoshiyuki (Independent
Outside)and Supervisory
TOKUBUCHI Yoshitaka Audit
Committee Member
Audit and Supervisory

TOKUNAGA Takashi Committee Member(Independent Outside)
Audit and Supervisory

SUZUKI Masako Committee Member(Independent Outside)

Audit and Supervisory
AIZAWA Toshihiko Committee Member(Independent Outside)
Note: The skills matrix above shows the Directors’ expertise which the Company particularly expect them to exhibit.

63

Manufacturing

The Company prescribes the following criteria for the independence of Outside Officers to objectively determine the independence of Outside Officers. If an
Outside Officer falls under any of the following items, the Company determines that the Outside Officer is not sufficiently independent from the Company.
An Outside Officer designated as an Independent Officer as stipulated under Tokyo Stock Exchange, Inc. shall endeavor to maintain independence asprescribed in this Criteria until resignation. If the Outside Officer loses his/her independence, the Outside Officer shall notify the Company in advance (or assoon as possible after the event under unavoidable circumstances).

NIPPON SIGNAL CO., LTD.

Executive Officers

Divisions &Departments

Group Companies

Internal Audit
Dept.*4*1	Nomination and Remuneration Advisory Committee: Serves as an advisory body to the Board of Directors; consists primarily of Outside Directors, who raise thetransparency and objectivity of procedures regarding remuneration for officers or appointment of candidates for officers by participating in the decision process.
*2	Advisory Board: Serves as an advisory body to the Representative Directors; consists of outside experts with sophisticated and specialized knowledge on
business management who provide advice and suggestions on business management from an elevated perspective.
*3	Risk Management Committee: Controls compliance risks and all other types of risks under the direction of the Board of Directors; chaired by the President
and Chief Executive Officer.
*4	Internal Audit Department: Provides assistance with internal management control activities by auditing the management and operation processes; monitors
all managerial activities — such as purchasing, sales, and accounting — to provide information based on the monitoring results as well as advice andsuggestions on remediation and efficiency improvement.
*5	Company-wide QA Committee: Checks on the status of quality management in order to achieve company-wide quality improvement; chaired by the
Executive Officer responsible for TQM Promoting Department.
*6	Company-wide Environmental Committee: Promotes constant improvement of the company-wide environmental management system; chaired by the
Executive Officer responsible for TQM Promoting Department.
*7	Company-wide Information Security Committee: Works on IT governance, including appropriate use of information network systems and information assets;chaired by the Executive Officer responsible for Group IT Strategy Department.
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Sustainability Initiatives

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Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

G Corporate GovernanceTraining for Officers

Reason for nomination as Outside Director and an outline of expected roles
Grounds for Election

Concurrent Post(s)(as of June 21, 2024)

Number of Boardof Directors
Meetings Attended

INOUE
YurikoMs. INOUE Yuriko has high level of professional
knowledge and experience as an expert on intellectual property rights.
The Company has appointed her to continue
as Outside Director in expectation that advice
on its management and strategies including
corporate law and data governance will be
provided and an effective supervisory function
on management will be demonstrated.

Professor, Business Law Department, Graduate School of Law,
Hitotsubashi University
Outside Director, Dai-ichi Life
Holdings, Inc.

12 out of 13
meetings held 92%

MURATA
Yoshiyuki

Mr. MURATA Yoshiyuki has ample experience,
an impressive track record, and knowledge as abusiness manager. The Company has appointed
him to continue as an Outside Director so thatthese qualities will be applied within its businessadministration, and an effective supervisory
function on management will be demonstrated.

Representative Director andExecutive Vice President, Daiwa
House Industry Co., Ltd.
Outside Director, Fujita Corporation

TOKUNAGA
TakashiMr. TOKUNAGA Takashi possesses professional knowledge and abundant insight on risk
management. The Company has decided that
he will offer beneficial advice and opinions on
the Company’s management. The Company
has appointed him as an Outside Director who
is an Audit and Supervisory Committee Member in expectation that he will offer advice on its
management supervisory function by making
use of his capabilities in his specialized field.

SUZUKI
MasakoMs. SUZUKI Masako possesses a wealth ofexperience, achievements, and knowledge inthe management of human resources andhealth support service businesses. The Company has appointed her as an Outside Director
who is an Audit and Supervisory Committee
Member in expectation that she will offer advice on the Company’s management supervisory function based on her professional
experience and knowledge in management
developed through her career.

Outside Director, JAPAN POST
INSURANCE Co., Ltd.
External Director, Unite and Grow
Inc.

AIZAWA
Toshihiko

Mr. AIZAWA Toshihiko has ample experience,
an impressive track record, and knowledge asa business manager, management consultant,and professor of a graduate school of management. The Company has appointed him as
Outside Director who is an Audit and Supervisory Committee Member in expectation that
he will offer advice on management strategy
development, corporate restructuring, digitaltransformation, new business development,
etc., and demonstrate an effective supervisory
function on management.

Representative Director, TSUNAGU·Partners Co., Ltd.
Professor, Graduate School ofManagement, GLOBIS University
Representative Director, Quantum
Leaps Food Innovation Co., Ltd.

Name

Audit andSupervisory
Committee Member

Evaluation of the Board of Directors’ Effectiveness
The Company takes steps to periodically verify that the Boardof Directors is functioning effectively. Based on the findings ofthose verifications, an evaluation of the effectiveness of theBoard of Directors is performed to identify issues and promote
ongoing improvement activities.
In the survey conducted in February 2024, responses werereceived on items regarding measures for enhancing thestructure, operating procedures, and meeting discussions of
the Board of Directors.
The secretariat of the Board of Directors gathered and processed responses and submitted the results to the Board of
Directors for thorough discussion and analysis.

65

NIPPON SIGNAL CO., LTD.

The Company utilizes training by external organizations andholds biannual officer training sessions to help new Executive
Officers acquire the necessary skills for exercising high levelsof leadership and taking part in management.

In addition, officers are encouraged to actively take advantage of opportunities for further education, including inter-industry exchange forums and other external seminars.

Officer Remuneration
11 out of 13
meetings held 85%

10 out of 10
meetings held 100%

10 out of 10
meetings held 100%Through this process, it was determined that the Board of Directors was highly effective overall. This decision was prefaced on
the assessment that the Board of Directors was sufficiently diverse and balanced, that it engaged in free and open discussion,and that it was appropriately exercising its supervisory function.
In this year’s survey, although the overall rating was higher
than “mostly appropriate,” items regarding the “content (quality) and quantity of reference materials” and “sufficient time isgiven for discussion on important agenda items,” among others, were found to have room for improvement.
The Company will improve the quality of reference materials andstrive for more focused discussions and substantial deliberations
at meetings of the Board of Directors. The Company also aims
to enhance the effectiveness of the Board’s deliberations regarding medium-term management issues by providing more opportunities for dialogue between the Representative Director and the
Audit and Supervisory Committee as well as Outside Officers.

The remuneration of Directors (excluding Directors who are
Audit and Supervisory Committee Members) comprises fixedcompensation based on rank as well as performance-linked
compensation tied to both short-term performance and medium- to long-term performance. This scheme is employed toprovide Directors with healthy incentive to pursue medium- tolong-term improvements in corporate value while also accomplishing short-term performance targets. Remuneration foreach Director is set at an appropriate level, based on their responsibilities. Payments are made within the amounts decided
by resolution of the general meeting of shareholders and inaccordance with the policy approved by the Board of Directors, after consulting the Nomination and Remuneration Advisory Committee and taking into consideration the opinions of
the Audit and Supervisory Committee.
1. Matters on the Composition of Compensation
Fixed compensation is decided based on rank with consideration paid to the duties of given Directors, the highest level of
employee remuneration, and the remuneration levels of othercompanies.
Performance-linked compensation consists of two layers; one
linked to medium- to long-term performance and anotherlinked to short-term performance.
Compensation linked to medium- to long-term performance isdecided each year on an individual basis based on the rate ofaccomplishment of targets set for each Director (excluding Directors who are Audit and Supervisory Committee Members).
Compensation linked to short-term performance is calculatedby dividing the amount equivalent to 2.0%–2.5% of the ordinary profit of a given fiscal year among all Directors (excluding
Directors who are Audit and Supervisory Committee Members)
and Executive Officers. Ordinary profit has been selected as
the performance indicator because the Group considers the increase of profitability as a medium- to long-term challenge andthe Medium-Term Management Plan includes an ordinary profit
target.
The ordinary profit for the previous fiscal year, which had been
forecast to be 6,800 million yen, amounted to 7,893 million yen
in actuality. Outside Directors are only paid fixed compensationand not performance-linked compensation, considering thatthey bear supervisory function.
The Group does not have a stock compensation scheme at
the moment, as each officer purchases treasury shares every
month and on a constant level through the officers shareholding association, and the Company is taking a management approach that is conscious of the shareholders’ viewpoint.

2. Matters on Delegation of Authority to Determine Remuneration,etc. for Individual Directors (excluding Directors who are Audit
and Supervisory Committee Members)
In the fiscal year ended March 31, 2024, the Board of Directors decided at a meeting held on June 21, 2024, to delegate
the authority to determine the amount of remuneration for individual Directors (excluding Directors who are Audit and Supervisory Committee Members) to President and Chief
Executive Officer TSUKAMOTO Hidehiko. He has determined
the specifics. The authorities to determine the amount of fixedcompensation for each Director and to evaluate the achievement level of managerial goals to be reflected to performance-linked compensation have been delegated. Theseauthorities have been delegated because the Representative
Director is the appropriate person to evaluate the achievementlevel concerning managerial goals while overseeing the performance of the Company as a whole.
To ensure appropriate exercise of authority by the Representative Director, the Board of Directors takes into account theopinions of the Audit and Supervisory Committee and consults with the Nomination and Remuneration Advisory Committee about the original proposal and receives a report fromthe committee.
The Nomination and Remuneration Advisory Committee consists of three or more Directors and is chaired by a Representative Director. The committee is comprised of a majority of
Independent Outside Directors to ensure objectivity and appropriateness of its judgement.

Group Governance Structure
The Company dispatches Directors and Audit & Supervisory
Board Members to Group companies to help elect their Representative Directors, as well as offer guidance and supervision. The Company’s corresponding departments receive daily
reports on the financial standing and how businesses are being run at individual subsidiaries.
The Group Business Planning Committee holds quarterly
meetings, where it receives reports on the management, financial results, and risk management systems of the entire
Group and offers the necessary guidance.
Major Initiatives
Providing positive support, cultivating abilities and offering guidance for formulating strategies and improving management
Understanding the financial standing and progress in management plans at the Group Business Planning Committee
Conducting extraordinary audits when necessary

Internal Control System
The Company revised its Basic Policy on Internal Control
System, at a Board of Directors meeting held in April 2024, tomatch the new organizational format while carrying on thebasic ideas of the original policy. The Company will constantly
review the policy in its effort to create a more appropriate andeffective internal control system.

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

G Corporate Governance
The revised Basic Policy is as stated below.
1. System to ensure that the execution of duties by Directors and employees complies with laws and regulations and the Articles of Incorporation(1) The Board of Directors shall make decisions for the company on matters required by laws, regulations or the Articles of Incorporation, as well as on basic mattersconcerning execution of duties as stipulated by the Board of Directors regulations, and supervise the execution of duties by Directors and Executive Officers.
(2) By having more than one Outside Director continually, the Company shall strive to maintain and strengthen its supervisory function over the execution of duties by the Directors.
(3) The Company shall have a Committee of Directors, a body that deliberates and reports on the state of execution of business in accordance with short- and medium-term management plans, so as to build a structure that enables appropriate and efficient decision-making.
(4) Each member of the Audit and Supervisory Committee, under the auditing structure in which they cooperate with Accounting Auditors andinternal audit divisions/departments, shall offer opinions at Board of Directors meetings as needed and work alongside Outside Directors
who are not Audit and Supervisory Committee Members to keep a check on the Company’s decision-making.
(5) The Full-time Audit and Supervisory Committee Members shall regularly hold liaison meetings with chiefs of administrative and operational
divisions/departments to conduct audits of the status of specific business operations.
(6) Recognizing that compliance with laws and regulations is the “foundation of trust,” the Company shall provide strict ethical training basedon the Nippon Signal Group Philosophy to all internal officers and employees.
(7) The Company shall compile a Compliance Manual summarizing the key points to be noted in compliance and distribute it to all employees,
as well as regularly offer education/training sessions in order to make knowledge take root among them and to cultivate awareness.
2. System for the storage and management of information concerning the execution of duties by Directors(1) To ensure appropriate and secure storing of records on the execution of duties by Directors, the Company shall employ a storage systemthat minimizes the risk of destruction, etc. to the greatest extent possible.
(2) With regard to important documents related to the execution of duties by Directors such as the minutes of meetings of the Board of Directors, the Audit and Supervisory Committee, and the Committee of Directors, as well as documents circulated when requesting internal approval, the Company shall record the content in paper orelectromagnetic format and limit the persons who handle them so as to ensure higher security, in addition to making efforts for the preservation of information.
3. Rules and other systems for management of risks of loss
(1) In order for the Group to minimize damage to its management resources and to maintain continuous growth, and aiming to correctly identify, analyze, assess and appropriately manage risks, the Group shall establish the Risk Management Regulations.
(2) The Group shall have in place a Risk Management Committee, a body that oversees risk management of the entire Group under the directcontrol of the Board of Directors and chaired by the Representative Director.
(3) The Risk Management Committee shall instruct Group companies and all Company divisions to regularly identify, analyze, and evaluate risks. To address serious risks that are expected toemerge in the medium to long term, response meetings shall be held by direction of the Chair to take suitable measures. The Committee shall also take budgetary measures as needed.
4. System to ensure that the execution of duties by Directors is conducted efficiently(1) The Group shall have an Executive Officer system, based on the belief that separating management decision-making function and business execution function leads tofaster and efficient decision making in management and enables flexible business execution. Executive Officers shall make up the Committee of Directors, where they reporton their own business execution as well as learn about the progress of and check the appropriateness of business execution of other Executive Officers. Executive Officers
with titles shall also attend the meetings of the Board of Directors and present their opinions as needed or give report on matters of importance to business execution.
(2) The Representative Director shall set up an Advisory Board, which is the advisory body to the Representative Director consisting of outside
experts with sophisticated and specialized knowledge on business management, and seek its advice on the analysis of business activities
and risk management from an objective viewpoint.
(3) Various rules and regulations concerning approval authorities and procedures for requesting decisions shall be established in order to clearly define the roles and responsibilities of each division/department and individual employee. With regard to companywide themes, however,committees and project teams shall enter into proactive action and divisions/departments shall work together across boundaries to consider the theme in order to address the issues required by the management.
(4) Planning functions of the administrative divisions/departments shall be strengthened so as to facilitate the swift and efficient execution of duties by Directors.
5. System to ensure appropriateness of business operations of the Group comprising the Company and its subsidiaries(1) The Nippon Signal Group Philosophy shall be set up as a common philosophy of the Group aimed at enhancing corporate value and allowing the Group to contribute to international and local communities.
(2) The Company shall take the initiative to set direction for the Group and check the appropriateness of the entire Group in order to ensure
the appropriateness of business as a corporate group and to generate synergy.
(3) Corresponding departments shall receive daily reports on the financial standing and how businesses are being run at individual subsidiaries,
while officers are placed at subsidiaries to check that the subsidiaries are properly managed.
(4) The Group Business Planning Committee shall call on the representative directors of subsidiaries to attend its quarterly meetings, where it
receives reports on the management, financial results, and risk management systems of the entire Group and offers necessary guidance.
(5) The Company’s compliance helpdesks for whistleblowing (compliance hotlines) shall be set up with diversity promotion and diverse styles of working in mind, ensuring that whistleblowers do not suffer disadvantageous treatment, and both inside and outside of the company so that users may contact whichever suits them.
(6) An external lawyer who is independent of the Company’s management answers the calls to the internal compliance helpdesk for whistleblowing, which is alsoavailable to subsidiaries. This way, the Company can detect violation of laws across the Group at early stages and maintain sound workplace environments.
6. Matters regarding Directors and employees assigned to assist the Audit and Supervisory Committee in their duties and matters regarding theindependence of such Directors and employees from the Directors (excluding Directors who are Audit and Supervisory Committee Members)(1) Assignment or transfer of employees who assist in the duties of the Audit and Supervisory Committee shall be done with full consideration
to its purpose and taking into account the opinion of the Audit and Supervisory Committee.
(2) No Directors will be designated to assist in the duties of the Audit and Supervisory Committee.
(3) The employees assigned to assist in the duties of the Audit and Supervisory Committee shall follow the orders of the Audit and Supervisory
Committee with regard to its duties, and not take direction or orders from Directors who are not Audit and Supervisory Committee Members.
7. System for Directors, employees, etc. of the Company and the Group companies to report to the Company’s Audit and Supervisory
Committee, and other systems regarding reports to the Audit and Supervisory Committee(1) Directors, employees, etc. of the Company and Group companies shall make a report to the Audit and Supervisory Committee without delay on offence of laws or other matters that would seriously affect the Company and Group companies.
(2) Directors, employees, etc. of the Company and Group companies shall help the Audit and Supervisory Committee with their execution ofduties, give reports to them on business operations by having them attend the Board of Directors meetings and other important meetingsor providing them with materials, as well as exchange opinions with them from time to time.
(3) Directors ensure that persons who report something to the Audit and Supervisory Committee do not suffer disadvantageous treatment for having made such reports.
8. Policy on processing of expenses arising from the execution of duties by the Audit and Supervisory Committee
Processing of expenses arising from the execution of duties by the Audit and Supervisory Committee shall be carried out without delay by
the division/department in charge upon confirming the content of expenses claimed by the Audit and Supervisory Committee Members.
9. Other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively(1) The Representative Director shall hold regular meetings with the Audit and Supervisory Committee to exchange opinions on issues that need to beaddressed by the Company and issues concerning audits of the Audit and Supervisory Committee, among others.
(2) The Audit and Supervisory Committee Members shall attend and give opinion as needed at statutory meetings and other important meetings including those of the Committee of Directors, the Risk Management Committee, and the Group Business Planning Committee.
(3) The Audit and Supervisory Committee Members shall also attend meetings designed to cultivate awareness for business innovation and corporate
value improvement, such as presentations on the quality improvement of business operation by employees, to enhance the effectiveness of audits.

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NIPPON SIGNAL CO., LTD.

Dialogue with Shareholders and Investors
The Company avoids holding its General Meeting of Shareholders
on dates on which many companies hold their meetings to make iteasier for shareholders to take part in the General Meeting of Shareholders and to exercise their voting rights. Notices of convocation
are provided electronically well in advance on Tokyo Stock Exchange, Inc.’s website and the Company’s website along with disclosure of the English translation of proposals. In addition, theCompany facilitates the exercise of voting rights through the creation of an environment that enables the electronic exercise of voting rights through the use of a platform for said purpose, as well aslive streaming of the General Meeting of Shareholders.
The Company considers dialogue with shareholders and other investors to be one of the most important tasks for management. Accordingly, the Company has launched an investor relations section
on its website to disclose information in a timely and appropriatemanner. The Company organizes financial results briefings for institutional investors and posts the materials on its website, and creates other opportunities for constructive dialogue with investors inan effort to enhance its corporate value.

Cross-Shareholdings
The Company engages in cross-shareholdings when deemed necessary for purposes such as sustaining or enhancing business alliances or sales transactions, or maintaining financial transactions
and other collaborative business relationships.
The Company recognizes that it is desirable to keep cross-shareholdings at a minimum from the perspective of maintaining and improving corporate value. Based on this recognition, the Board of
Directors determines the rationality of individual holdings on an annual basis by evaluating the holding purpose, the associated gains
or losses, transaction volumes, counterparty performance, and future relationships. Those cross-shareholdings that are deemed tolack meaningfulness will be sold.
Voting rights attached to cross-shareholdings will be exercised byvoting in favor of proposals judged to contribute to corporate value
and against those judged to detract. Discussions with the counterparty will be arranged as necessary to discuss proposals.
The Company currently does not have uniform standards for exercising voting rights due to the need for comprehensive decisions that take
into account non-financial information pertaining to each company.
Should a company express its intent to sell shares of the Company’s stock possessed as a cross-shareholding, the Company will
respond appropriately and without implying that transactions will becurtailed or taking other steps to interfere with the sale.

Anti-Takeover Measures
To maintain and enhance both its corporate value and the common
value of shareholders, the Company established measures against
the acquisition of large quantities of its shares. These anti-takeovermeasures were approved by resolution at the Ordinary General
Meeting of Shareholders in June 2010 and put into place thereafter.
Following the expiration of these anti-takeover measures, resolutions
to extend the period of the measures were approved at the Ordinary
General Meetings of Shareholders held in June 2013, in June 2016,
in June 2019, and in June 2022.
For details about the anti-takeover measures, please see theCompany’s website (Japanese only).
https://www.signal.co.jp/ir/shareholder/

Risk Management Structure
The greatest risk to the Group is failing to maintain safety andreliability. To ensure that safety and reliability is always maintained,
the Company has established several regulations that clearly define
the boundaries of authority and responsibility. Group divisions work inline with these regulations as they take actions to control risks.

The Risk Management Committee, which is placed under the directcontrol of the President and Chief Executive Officer, is responsible forcountering actions that would impede sound corporate management
and addressing risks and compliance issues that threaten to damage
corporate value or those that a division cannot handle on its own.
The Risk Management Committee instructs all Company divisionsand Group companies to regularly identify, analyze, and evaluate
risks. To address serious risks that are expected to emerge in themedium to long term, response meetings are held by direction of the
Chair to take suitable measures.

Compliance Promotion Structure
Compliance promotion activities are advanced under the guidance of
the Risk Management Committee, which is chaired by the President
and Chief Executive Officer. In 2 0 1 0, the Compliance Manual was
created, and the Company began holding regular compliance training to spread and entrench compliance awareness.
In addition, the Company has set up compliance hotlines as compliance helpdesks for whistleblowing. In 2015, the Company added an
outside lawyer as a contact point.

Business Continuity Planning
The Group works on transport infrastructure that is indispensable tosociety. In contributing to society, the Group understands that it has
a responsibility to try to swiftly restore operations in the wake of anatural disaster, an act of terror, or any other calamity so that products and services can be provided.
For these reasons, the Group has formulated a Business Continuity
Plan (BCP) to cope with disasters and accidents such as largescale earthquakes. It takes into account many different risks suchas securing supply for materials and the procurement of fuel whileworking to restore operations. The Group will continue reviewing issues and working to improve its BCP.
With the spread of COVID-19, the Group has developed its Regulations on Response to Natural Disasters and Novel Infection and set
out provisions regarding employee safety and business continuity,
based on the expansion of international businesses and new work
styles such as telework.

Creation of the Earthquake Initial Response Manual
As part of the BCP, the Group has created the Earthquake Initial
Response Manual. It specifies initial response actions to be taken in
the event of a large-scale earthquake. The Group conducts regulardrills at individual locations to help quickly form a local response
headquarters and a voluntary fire brigade.

Establishment of Nippon Signal Group Philosophy and Our Code of Conduct
Principle 2.2 of Japan’s Corporate Governance Code, which wasformulated by Tokyo Stock Exchange, Inc., requires companies toformulate and put into practice a code of conduct that is to be followed by their staff members in Japan and other countries. The
Group’s corporate activities are supported by many different stakeholders, including customers, business partners, shareholders andinvestors, employees, and local communities. Working in line with
its philosophy of safety and reliability, the Group seeks to remain acorporate group upon which society relies. To achieve this aim, theGroup must build relationships of trust with stakeholders, backed
by the proper behavior of each staff member.
The Group added Our Code of Conduct to Nippon Signal Group
Philosophy in April 2016 to provide a foundation for these relationships of trust. Our Code of Conduct serves as a standard of behavior to be followed by all officers and employees of the Group.
The Group encourages all employees to respect laws, ordinances,and other rules. The Group is also working to build an organization
with the capacity to quickly discover problems on its own and address them.

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Sustainability Initiatives

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Data Section

Sustainability Initiatives

G Corporate GovernanceCorporate Executives (as of June 21, 2024)
Directors who are Audit and Supervisory Committee Members

Directors
Apr. 1982
May. 2005
Jun. 2006
Jun. 2010
Jun. 2014
Apr. 2015
Jun. 2016
Jun. 2020

TSUKAMOTO Hidehiko Apr. 2021
President and Chief
Executive Officer

Joined NIPPON SIGNAL CO., LTD.
General Manager of AFC Systems
Sales Dept. of AFC Systems Division
Executive Officer
Director,
Managing Executive Officer
Deputy Chief Executive Officer
Representative Director, Executive
Vice President and Chief Operating
OfficerPresident and Chief Executive Officer (to present)
Chief Executive Officer
President and Chief Executive Officer and Chief Operating Officer (topresent)

Apr. 1983
Jul. 2009
Jun. 2010
Apr. 2013
Jun. 2013
Apr. 2016
Apr. 2019
Apr. 2020

FUJIWARA Takeshi
Director and Executive
Vice President

Jun. 2020
Apr. 2022

Apr. 2024

Apr. 1985
Jun. 2014
Apr. 2016

Apr. 2020

SAKAI Masayoshi
Director

Apr. 2021

Jun. 2021
Apr. 2023
Apr. 2024

Joined NIPPON SIGNAL CO., LTD.
Chief General Manager of Kuki
Plant of Mono-zukuri Division
Executive Officer, Chief General Manager
of Research & Development Center ofTechnical Development Head Office, Chief
General Manager of Visionary BusinessCenterSenior Executive Officer, In charge of Research and Development, Chief General
Manager of R&D Section, Chief General
Manager of ANSHIN Center, General Manager of Safety Technology Research Dept.,
General Manager of Advanced Railway
System Development Section
Managing Executive Officer, Responsible
for Kuki Plant (to present), In charge ofTechnology, Research and Development (topresent), Chief General Manager of R&D
Section, General Manager of IP Management Dept., General Manager of Advanced
Railway System Development Section, Responsible for TQM Promoting Dept.
Director (to present)
Responsible for Railway System
Business, Responsible for Smart
Mobility Systems Division
Deputy Chief Executive Officer (to present)
In charge of business management, Responsible for transport infrastructure business, Responsible for Group IT Strategy
Dept. (to present)

Apr. 1983
May. 2011
Jun. 2014
Apr. 2019
Apr. 2020
Apr. 2021

HIRANO Kazuhiro
Director

Apr. 2022
Jun. 2022
Jun. 1992
May. 2011
Jun. 2014
Apr. 2019
Apr. 2020
Apr. 2023

Apr. 2024

GOTO Ryuichi
Director

Nov. 1993
Apr. 2004
Oct. 2010
Apr. 2018
Jun. 2018

INOUE Yuriko
Outside Director

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NIPPON SIGNAL CO., LTD.

Apr. 2020

Full-time Lecturer of Graduate
Schools for Law and Politics, The
University of Tokyo
Professor, Graduate School of Law,
Kobe University
Professor, Graduate School of International Corporate Strategy, Hitotsubashi University
Professor, Business Law Department, Graduate School of Law, Hitotsubashi University
Outside Director, NIPPON SIGNAL
CO., LTD. (to present),
Outside Director, Dai-ichi Life Holdings, Inc. (to present)
Professor, Business Law Department, Graduate School of Law, Hitotsubashi University (to present)

Jun. 2024

Apr. 2009
Apr. 2011
Apr. 2013
Jun. 2013
Apr. 2015
Jun. 2020
Jun. 2021

MURATA Yoshiyuki
Outside Director

Apr. 2022
Jun. 2022

Joined NIPPON SIGNAL CO., LTD.
General Manager of Private Railways Sales
Dept. of Railway Signal Systems Division
Executive Officer
Managing Executive Officer
Director
Chief General Manager of Sales
and Marketing Head Office
Responsible for Domestic Businesses and Branch Offices
Deputy Chief Executive Officer, Responsible
for Domestic and Overseas Businesses
and Branch Offices
Responsible for Smart Mobility
Systems Promotion Division
In charge of Business Management, Responsible for Transport Systems, Smart
Mobility Systems Promotion Division, andBranch Offices
Director and Executive Vice President (topresent) Executive Vice President and Executive Officer (to present) In charge ofbusiness administration, In charge of Mono-zukuri, Responsible for TQM Promoting
Dept. (to present)
Joined NIPPON SIGNAL CO., LTD.
Chief General Manager of Transport Information Systems Division
Executive Officer,
Chief General Manager of Railway
Signal Division of Business Division
Senior Executive Officer, Chief General
Manager of Railway Signal Division
Chief General Manager of Transport Systems Division
Managing Executive Officer (to present),
Responsible for Transport Systems, Chief
General Manager of Transport Systems Division and Responsible for Smart Mobility
Systems Promotion Division
Chief General Manager, Osaka Branch Office (to present),
Responsible for western Japan area (to present)
Director (to present)
Joined NIPPON SIGNAL CO., LTD.
General Manager of JR Sales Dept.
of Railway Signal Systems Division
General Manager of Chubu Branch
OfficeOfficer
Executive Officer, and Chief General Manager of AFC Systems Division
Managing Executive Officer (to present)
Responsible for Utsunomiya Plant (to present)
Responsible for AFC Systems Division andRobotics & Sensing Division
Deputy in charge of business management (to present)
Responsible for ICT Solution business andResponsible for branch offices (to present)
Director (to present)

President and Representative Director, Taisei Housing Corporation
Executive Officer, Taisei Corporation
Managing Executive Officer, Taisei
Corporation
Member of the Board, Taisei Corporation
President and Chief Executive Officer, Representative Director, Taisei
Corporation
Vice Chairman, Representative Director, Taisei Corporation
Outside Director, NIPPON SIGNAL CO.,LTD. (to present),
Director and Executive Vice President, Daiwa House Industry Co., Ltd.
Outside Director of Fujita Corporation (to present)
Representative Director and Executive Vice President, Daiwa House
Industry Co., Ltd. (to present)

Apr. 1982
Jul. 2006
Jun. 2008
May. 2011
Jun. 2011
Jun. 2014
Apr. 2018
Apr. 2019

TOKUBUCHI Yoshitaka Jun. 2021
Director (Full-time Audit
and Supervisory
Committee Member)

Jun. 2023

Apr. 2008
Sep. 2013
Oct. 2014
Aug. 2016
Apr. 2019

Outside Director (Full-time
Audit and Supervisory
Committee Member)Jan. 2020
Jun. 2023

Apr. 1972
Jul. 1983
Apr. 1999
Sep. 2004
Dec. 2007
Jun. 2010
Jan. 2016
Jun. 2016SUZUKI Masako
Outside Director (Audit
and Supervisory
Committee Member)Jul. 2019
Dec. 2019
Mar. 2023
Jun. 2023

Apr. 1985
Jul. 1995
Sep. 1999
Aug. 2000
Sep. 2002
May. 2006
Feb. 2007
Aug. 2009AIZAWA ToshihikoOutside Director (Audit
and Supervisory
Committee Member)

Chief Operating Officer TSUKAMOTO Hidehiko
Executive Vice President
and Executive Officer

FUJIWARA Takeshi

Deputy Chief
Executive Officer

SAKAI Masayoshi

Managing Executive HIRANO Kazuhiro
Officers

GOTO Ryuichi
HORIE Toru

Apr. 1986
Feb. 1998

TOKUNAGA Takashi

Joined NIPPON SIGNAL CO., LTD.
General Manager of Production
Control Dept. of Kuki Plant
Executive Officer, General Manager
of Corporate Strategy Dept.
Managing Executive Officer
Director
Deputy Chief Executive Officer
Chief General Manager of Business
Administration Division
Director and Executive Vice
President,
Executive Vice President andExecutive Officer(Full-time) Audit & Supervisory
Board Member
Director (to present)

Executive Officers and Deputy Executive Officers

Apr. 2010
Jun. 2012
Dec. 2020
Jun. 2024

Joined National Police Agency
First Secretary of Embassy of Japanin the People’s Republic of China
Professor of Graduate School of
Public Policy, The University of Tokyo
Chief of Aomori Prefectural Police
Headquarters
Councilor, Cabinet Secretariat
Deputy Director General of Commissioner
General’s Secretariat, National Police Agency
Deputy Secretary General, Headquarters for
Promoting Development of Specified Complex
Tourist Facilities Areas
Secretary General of Japan Casino
Regulatory Commission
Outside Director, NIPPON SIGNAL
CO., LTD. (to present)

Joined Nippon Yusen Kabushiki
KaishaJoined Temporary Center Inc.
Executive Officer of Pasona Inc.
D i r e c t o r, S e n i o r M a n a g i n g
Executive Officer of Pasona Inc.
Director, Senior Managing Executive
Officer of Pasona Group Inc.
Director, Vice President of Benefit
One Inc.
President of Benefit one Healthcare Inc.
Outside Director of JAPAN POST
INSURANCE Co., Ltd. (to present)
Executive Advisor of Pasona GroupInc.
President and Representative
Director of Pasona Force Inc.
Outside auditor of Unite and Grow
Inc. (to present)
Outside Director, NIPPON SIGNAL
CO., LTD. (to present)

Executive Officers

MIKUNI Hiroyuki
NAMIKI Yutaka
TAGAMI Hideaki
MACHIYAMA Shinichi
HIRAMOTO Masayuki
NAKAZAWA Mutsuo
FURUKAWA Satoru

Deputy Executive
Officers

MINAMI Junichi
FUJIMOTO Hiromasa
AOKI Yoshinori
UNO Masazumi
ISHIKAWA Tatsuya
IIZUKA Yuri
ISHIGE Takaharu

Joined COSMO OIL CO., LTD.
Joined Andersen Consulting(currently Accenture Japan Ltd.)
Joined Booz Allen Hamilton, Inc.
Joined Accenture Japan Ltd.
Executive Partner of Accenture
Japan Ltd.
Director of The Daiei, Inc.
Representative Director and Chief
Executive Officer of am/pm Japan
Co., Ltd.
Representative Director of
TSUNAGU Partners Co., Ltd. (topresent)
Professor of Graduate School ofManagement, GLOBIS University(to present)
Director of SPARX Group Co., Ltd.
Representative Director of
Quantum Leaps Food Innovation
Co., Ltd. (to present)
Outside Director, NIPPON SIGNAL
CO., LTD. (to present)

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Data Section

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

History of Innovation
Pursuit of New Pinnacles of Safety, Accuracy, Comfort, Speed and Volume
The history of Nippon Signal is also the history of a continuous pursuit of innovation, and the history of theevolution of Japan’s transportation infrastructure. Commitment to further innovation is the unchanging DNA
of the Group that has been passed down from our founding until today.

Value created by Nippon Signal
1928–1950s

1960s–1980s

1990s–2010s

2011–

Foundation of Nippon Signal andModernization of Railway Signals

Evolution of Electronics Technologies andStart of New, Forward-Looking Businesses

Technological Progress and Network
Business Development

Aiming to Mark the 100th Anniversary (2028) byBecoming a Corporate Group that the World Needs

The Railway Nationalization Act, promulgated in 1906, nationalized major thoroughfares throughout Japan, andtransportation demand saw a sharp spike thereafter. Nippon Signal Co., Ltd. was established in December 1928 via
a merger of three companies, and was tasked with modernizing and realizing domestic production of railway signals.

The opening of the Tokaido Shinkansen marked the beginning of a new era, and the Company’s electronics technologies proceeded to evolve in the Automatic Train Control(ATC) and Centralized Traffic Control (CTC) systems used
for the Shinkansen. We contributed to the development ofJapan’s transportation infrastructure by creating various new
products geared toward the needs projected to arise in the
future as post-Shinkansen businesses are developed.

The transition from analog technologies to digital technologies and from hardware to software enable Nippon Signal
to acquire technologies for realizing high-speed processingof massive quantities of data. With these technologies, we
contribute to the dense, on-time operation, and complex
interoperable equipment of railways, to support the mobility of 40 million people living and working in the Tokyo metropolitan area.

Leveraging the technological prowess it cultivated inJapan, Nippon Signal accelerates global expansion
efforts centered on Asian and other emerging countries. In these efforts, we are developing systems
compatible with the Mobility as a Service (MaaS) revolution and new digital transformation, as well as
solutions for addressing global warming, shrinking
workforce and other social issues.

1963

1998

Photograph: a mechanical interlocking system delivered to Kyoto Stationin 1914. Reproduced from a Mimura Factory postcard (Railway Museum collection).

1929

1931

1958

A technical collaboration agreement with General Railway Signal Company of the UnitedStates is concluded with theaim of achieving domestic production of world-leading signal
equipment.
Made-in-Japan traffic signal
equipment is produced and installed at the Nihonbashi, Gofukubashi, and Sakurabashi intersections.
Production of parking meters
commences.

1964

1970
1972

1984

Major events especially in the railway industry
1928–1950s
Opening of the section of the Tokyo Underground Railway between Asakusa andShimbashi
Opening of the section of the Osaka Municipal Subway between Namba and Tennoji
Establishment of the Teito Rapid Transit Authority (TRTA)
Opening of the Kanmon submarine tunnel, the world’s first undersea tunnel
Establishment of Japanese National Railways (JNR) (a railway business transferredfrom the Ministry of Transport)
Electrification of the Senzan Line is completed, and operation commences

71

NIPPON SIGNAL CO., LTD.

Production of Pasca 205 miniature commercial calculator commences.
ATC and CTC systems produced by Nippon Signal
are adopted for use on the segment of the Tokaido
Shinkansen Line connecting Tokyo Station andShin-Osaka Station.
Production of PARK-LOC® system commences.
Production of Japan’s firstcomprehensive automatedticket gate system commences and this system is installed
for use on the segment of the
Sapporo Municipal Subway
connecting Kita-Nijuyo-Jo Station and Makomanai Station.
An automatic boarding control system for aircraft isdeveloped.

1960s–1980s
Tokyo Monorail commences operation
The Tokaido Shinkansen Line commences operation
The Sanyo Shinkansen Line commences operation
Modernization of power is completed for JNR main lines (total abolition of steam
locomotives)
The Tohoku Shinkansen and Joetsu Shinkansen Lines commence operation
Privatization and division of JNR into each JR company
Opening of the Seikan tunnel (Seikan ferry services are abolished, and the TsugaruKaikyo Line commences operation)

2003

2007
2009
2009

Production of the Eco Scan ®
microelectromechanical system
optical scanner commences.
The Visionary Business Center is
Eco Scan®,established to facilitate themicroelectromechanicalcreation of new products andsystem optical scanner
new businesses.
Mutual use of common IC cards (Suica and PASMO)
commences, and Nippon Signal performs upgrades
to all automatic passenger gates.
The Overseas Division is established to boost
competitiveness in overseas markets.
Order-taking and manufacturing of platform screen
doors commence on a full scale.

2011

2017
2017
2018
2019
2021
2022
2024

1990s–2010s
Birth of the Tokaido Shinkansen “Nozomi”
The Yamagata Shinkansen (a mini-shinkansen running on converted narrow-gauge railway lines) commences operation
Driverless trains commence operation on the Tokyo Waterfront New Transit Waterfront Line (Yurikamome)
The Nagano Shinkansen (from Takasaki to Nagano; later part of the Hokuriku Shinkansen) commences operation
Okinawa Urban Monorail, the first railway in Okinawa since the end of the Second World War, commences operation
The Kyushu Shinkansen (from Yatsushiro to Kagoshima Chuo Station) commences operation
Toyama Light Rail commences operation
Taiwan High Speed Rail commences operation

The SPARCS (Simple-structure and high-Performance ATCby Radio Communication System), the first CommunicationsBased Train Control System in the world, is developed andput into use on the Beijing Subway Line 15.
The ANSHIN Center is established to provide IoT platform base functions.
SPARCS is installed on the Delhi Metro Line 8 (Magenta Line).
The CLINABO® automatic floor cleaning
robot is developed.
Nippon Signal participates in verification tests
and projects related to the provision of signal
information to self-driving vehicles.
Won the Award of Excellence of the Public
Construction Golden Quality Award in Taiwan. CLINABO®
Dhaka Mass Rapid Transit (MRT) Line 6 automatic floor
cleaning robotof Bangladesh commenced operation.
GoA2.5 automatic operation is realized on
the Kashii Line, Kyushu Railway Company.

2011–
The Kyushu Shinkansen (Kagoshima route) commences operation on all sections
Cruise Train “Seven Stars in Kyushu” commences operation
50th anniversary of the opening of the Tokaido Shinkansen
The Hokuriku Shinkansen (Kanazawa extension) commences operation
The Hokkaido Shinkansen commences operation
Okinawa Urban Monorail extension commences operation
Takanawa Gateway Station on JR Yamanote Line opens
The Nishi Kyushu Shinkansen (from Nagasaki to Takeoonsen) commences operation
Utsunomiya Light Rail commences operation
The Hokuriku Shinkansen Tsuruga extension commences operation
NIPPON SIGNAL REPORT 2024

72

Data Section

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Financial and Non-Financial Highlights (Years ended March)
Financial Data (¥ million)*3

2018*1

2015

2016

2017

2019

2020

2021

2022

2023

2024

Orders received*

99,713

83,25888,65999,581

113,347

118,604

85,18579,70999,063

138,566

Net sales*5

4

100,416

90,59382,134

83,77099,857

111,675

92,75585,04785,456

98,536

Operating income

8,377

7,162

4,269

2,061

7,000

8,912

5,713

5,390

5,112

6,824

Income before income taxes and minority interests

9,111

8,038

5,315

3,192

7,916

9,662

7,282

6,531

6,027

8,047

Net income attributable to owners of parent

5,413

4,994

3,500

2,051

5,306

6,584

4,916

4,503

4,075

5,346

R&D expenses

3,291

3,419

3,078

2,587

2,401

2,887

2,753

2,628

2,838

2,956

Capital investment

1,953

3,502

3,035

3,564

1,903

2,459

2,912

2,516

2,669

4,300

1,701

1,685

1,787

1,968

2,128

2,066

2,052

2,170

2,380

2,362

Total assets

120,573

121,434

124,298

127,322

137,643

137,971

141,356

134,086

146,019

165,295

Net assets

74,76479,801

79,252

79,401

82,13579,64884,69486,74089,351

96,821

Cash flows from operating activities

14,917

4,152

369

(305)

3,291

9,160

1,145

2,099

1,715

6,771

Cash flows from investing activities(2,774)(5,963)(1,013)(4,153)(2,437)(4,600)(1,911)(2,344)(3,597)(2,982)

Free cash flow

12,142(1,811)(644)(4,458)

854

4,560

(766)

(244)

(1,881)

3,788

Cash flows from financing activities(6,502)(1,412)

(492)

3,111

426

(4,367)1,354(6,750)

3,911

(338)

Depreciation and amortization(Yen)

Earnings per share (EPS)

79.37

73.24

51.59

31.42

81.29

103.34

78.82

72.21

65.34

85.71

Book value per share (BPS)

1,091.55

1,167.75

1,195.14

1,216.17

1,258.04

1,276.99

1,357.90

1,390.71

1,432.57

1,552.35

20

22

23

24

25*6

26

27

27

27

31

Return on equity (ROE)

7.7

6.5

4.4

2.6

6.6

8.1

6.0

5.3

4.6

5.7

Return on assets (ROA)

7.8

6.6

4.3

2.3

6.0

7.0

4.6

4.7

4.2

5.1

Equity ratio

61.8

65.6

63.8

62.4

59.7

57.7

59.9

64.7

61.2

58.6

Payout ratio

25.2

30

44.6

76.4

30.8

25.2

34.3

37.4

41.3

36.2

1,207

1,232

1,254

1,278

1,255

1,232

1,265

1,261

1,230

1,185

Average age of employees

41 yrs & 6 mos

41 yrs & 10 mos

41 yrs & 6 mos

41 yrs & 10 mos

42 yrs & 6 mos

42 yrs & 10 mos

42 yrs & 9 mos

42 yrs & 11 mos

42 yrs & 11 mos

43 yrs & 7 mos

Average length of service of employees

17 yrs & 9 mos

17 yrs & 11 mos

17 yrs & 2 mos

17 yrs & 1 mos

17 yrs & 4 mos

18 yrs & 3 mos

18 yrs & 2 mos

18 yrs & 3 mos

18 yrs & 10 mos

19 yrs & 3 mos

Dividend per share(%)

Non-Financial Data*3
Personnel Data
Number of Employees*7

Environmental Data*

8

Inputs
8,282

7,867

7,613

7,850

8,456

7,986

7,645

7,361

7,021

9,483

3

Gas (km )

311

285

310

332

347

349

309

296

289

291

Fuel (petroleum) (kl)

28.6

29.5

30.9

31.9

31.6

32.9

25.4

27.3

29.1

32.1

73

54

51

54

51

50.2

54.6

54.9

58.0

52.2

Electricity (1,000 kWh)

Water (km3)
Outputs

3,947

3,739

3,700

3,851

4,051

3,917

3,714

3,546

2,656

1,465

Wastewater (km3)

73

54

51

54

51

50.2

54.6

54.9

58.0

52.2

Non-industrial waste (tons)

269

223

206

218

262

264

224

196

183

181

CO2 (tons)

Industrial waste (tons)

447

412

292

394

324

364

253

248

149

110

Recycling rate (%)

98.8

99.0

99.4

99.5

99.6

99.4

99.3

99.2

98.8

98.1

*1
*2
*3

73

The Company has applied the Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28, February 16, 2018) fromthe start of fiscal 2019. Management indicators and other important data related to fiscal 2018 have been retroactively revised to reflect this newly applied
standard.
The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) from the start of fiscal 2022.
Management indicators and other important data related to the fiscal year ended March 31, 2022 and thereafter are those after the application of the said
accounting standards, etc.
Financial data is presented on a consolidated basis, while non-financial data is presented on a non-consolidated basis.

NIPPON SIGNAL CO., LTD.

*4
*5
*6
*7
*8

Orders received are exclusive of consumption tax and other taxes.
Net sales are exclusive of consumption tax and other taxes.
The dividend per share for the fiscal year ended March 31, 2019, which amounted to 25 yen, included a commemorative dividend of 1 yen for the 90th
anniversary of the foundation of Nippon Signal Co., Ltd.
The number of employees includes staff on loan from other companies to Nippon Signal, and excludes Nippon Signal staff on loan to other companies
and temporary employees.
The figures for the environmental data are those for the sites of Kuki Plant, Utsunomiya Plant, Ageo Factory, Yamagata Nisshin Electronics Co., Ltd. andNisshin Tokki Co., Ltd.
NIPPON SIGNAL REPORT 2024

74

Data Section

Nippon Signal’s Value Creation

Nippon Signal’s Vision and Growth Strategy

Sustainability Initiatives

Data Section

Corporate Data
Corporate Overview (as of March 31, 2024)
Name of Company:

Nippon Signal Co., Ltd.

Non-Consolidated Subsidiaries

Date Established:

December 27, 1928

Nisshin Enterprise Co., Ltd.

Paid-in Capital:¥10 billion

Nisshin Okabe Nikoh Co., Ltd.

President and CEO:TSUKAMOTO Hidehiko

Nisshin TECHNO Engineering Co., Ltd.

Number of Employees:

2,946 (consolidated)

Nisshin Hutech Co., Ltd.

Accounting Auditor:

Grant Thornton Taiyo LLC

Saitama Union Service Co., Ltd.

Dhaka Office

Manila Office

Cairo OfficeOsaka Branch Office
8F, Osaka Fukoku Seimei Building, 2-4 Komatsubara-cho, Kita-ku,
Osaka, Osaka 530-0018 Japan
Phone: +81-6-6312-3851 Fax: +81-6-6312-8597

Yokohama Techno Engineering Service Co., Ltd.

Overseas Offices
Taipei Branch

Domestic Offices and Plants
Head Office
Shin Marunouchi Building, 1-5-1 Marunouchi, Chiyoda-ku,
Tokyo 100-6513 Japan
Phone: +81-3-3217-7200 Fax: +81-3-3217-7300

Yangon Office

Hokumei Electric Industry Co., Ltd.
Beijing Nippon Signal Co., Ltd.

Kuki Plant
1836-1 Ooya, Aza, Ezura, Kuki, Saitama 346-8524 Japan
Phone: +81-480-28-3000 Fax: +81-480-28-3800

Nippon Signal India Pvt. Ltd.
Consolidated Subsidiaries

Nippon Signal Technology Taiwan Co., Ltd.

Nisshin Electronics Service Co., Ltd.

Nippon Signal Bangladesh Pvt. Ltd.

Hokkaido Branch OfficeSendai Nisshin Electronics Co., Ltd.

Utsunomiya Plant
11-2 Hiraide Kogyo Danchi, Utsunomiya, Tochigi 321-0905 Japan
Phone: +81-28-660-3000 Fax: +81-28-660-3033

Chubu Nisshin Electronics Co., Ltd.

Ageo Factory

Nisshin Industry Co., Ltd.

Hokkaido Branch Office Tohoku Branch OfficeNisshin IT Field Service Co., Ltd.

Tochigi Nisshin Co., Ltd.

Akita Office

Chubu Branch Office Kyushu Branch OfficeNisshin Tokki Co., Ltd.

Morioka OfficeMorioka Office Akita Office Saitama Office Tochigi OfficeNisshin Software Engineering Co., Ltd.
Nisshin Electric Construction Co., Ltd.

Kanazawa Office Yamanashi Office Shizuoka Office Mie Office

Yamagata Nisshin Electronics Co., Ltd.

Kyoto Office Hiroshima Office Shikoku Office Okinawa Office

Tohoku Branch Office

Sapporo Nisshin Electronics Co., Ltd.
Fukuoka Nisshin Electronics Co., Ltd.

Tochigi Office

Asahi Electric Co., Ltd

Kanazawa Office

Stock Information (as of March 31, 2024)
Number of Shares of Common Stock Issued: 68,339,704
Number of Shareholders: 13,554

Shareholder

Number of
Shares Held Investment(thousand) Ratio (%)

Shareholder Registration Agent: Mizuho Trust & Banking Co., Ltd.

The Master Trust Bank of Japan, Ltd. (trust account)

6,527 10.47

Fukoku Mutual Life Insurance Company

4,793

7.68

Stock Exchange Listings: Tokyo Stock Exchange, Prime Market

75

Kyoto Office

Major Shareholders

Distribution of Shares by Shareholder Category

Nippon Signal Group Employees Shareholding Association 4,056

6.50

Securities companies
1.07%

Treasury stock
8.73%

The Nippon Signal Trading-Partner

3,338

5.35

Mizuho Bank, Ltd.

2,200

3.53

Overseas
investors
15.56%

Individuals andothers in Japan
28.44%

West Japan Railway Company

2,050

3.29

GOVERNMENT OF NORWAY

1,828

2.93

Custody Bank of Japan, Ltd. (trust account)

1,486

2.38

Other companies
in Japan11.90%

Financial
institutions inJapan
34.30%MUFG Bank, Ltd.

1,372

2.20

Aioi Nissay Dowa Insurance Co., Ltd.

1,214

1.95

NIPPON SIGNAL CO., LTD.

*1 Fukoku Mutual Life Insurance Company has placed 730,000 shares of
Nippon Signal stock in a retirement benefit trust separate from theaforementioned shares it holds. It reserves the right to give instructions
on how to exercise related voting rights.
*2 5,968,382 treasury shares have been deducted for the purpose of calculating the investment ratio.

Yamanashi Office
Chubu Branch
OfficeSaitama Office
Head Office

Hiroshima Office Osaka Branch
OfficeMie Office
Kyushu Branch Office

Utsunomiya Plant
Kuki Plant
Ageo Factory

Shizuoka Office

Shikoku Office

Okinawa Office

For further details, please refer to our website.
https://english.signal.co.jp/aboutus/branch/
NIPPON SIGNAL REPORT 2024

76

NIPPON SIGNAL
Shin Marunouchi Building, 1-5-1 Marunouchi, Chiyoda-ku, Tokyo 100-6513 Japan
Phone: +81-3-3217-7200 Fax: +81-3-3217-7300 E-mail: info@signal.co.jp