VALUE CREATIONINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

History of Co-Creation of Value(Billions of yen)
800

History of Nishimatsu

1999
Concluded a technicalcooperation agreement withToda Corporation

 Net sales (left axis)
Operating income (right axis)

700

2002
Acquired Group-wide
ISO 9001/ISO 14001 certification(Japan)

600
500

1980
Opened Singapore Sales
Office400

2016
Certified as an
Eco-First
Company

2012
Commenced industry-academia collaboration with
Tamagawa University(LED farms)

2019
Selected as a 2019
Health and Productivity
Management Brand, a firstfor a General Contractor(Billions of yen)32

2021
Concluded a capitaland business allianceagreement with
ITOCHU Corporation

28
24
20
16

1962
Opened Hong Kong
Branch

300
200

2009
Inauguration of New
Nishimatsu to Reform
Corporate Culture

1874
Founded

100

12

1963
Listed on the First Section of theTokyo Stock Exchange

Nishimatsu-Vision 2027
Medium-Term
Management Plan 2020

Medium-Term
Management Plan
2023

Nishimatsu-Vision 2030

8

Medium-Term
Management Plan
2025

4
0

0

1850

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2023

2030

Major Events
1872
1945
Japan’s first
End of WW2
railroad opened(Shinbashi to
Yokohama)

1960s
Period of higheconomic growth

1973
Oil shock

Late 1980s
Trade friction

Early 1990s
Collapse of Japan’s
economic bubble

1995
Great Hanshin
Earthquake

2008
Bankruptcy ofLehman Brothers(2008 financial crisis)

2011
Great East Japan
Earthquake

2020
COVID-19 Pandemic

Nishimatsu Construction’s Cultivated Technologies and Experience
The Spirit of Our Founding

1850 to 1926

1927 to 1944

1945 to 1968

1969 to 1989

1990 onwards

Historical Backdrop and Nishimatsu Construction’s Role

Kaei, Meiji and Taisho Eras

Showa Era / Prewar

Showa Era / Postwar

Late Showa Era

Heisei Era to the Present

In the roughly 150 years since its establishment in 1874,
the Company has been involved in the construction ofnumerous public facilities, such as roads, railroads, anddams, and high-rise buildings both in Japan and overseas, based on the strength of its advanced technological capabilities. Bringing to bear the wisdom that
overcomes hardships, the spirit of being dedicated to
improving social infrastructure and providing a safe andcomfortable living environment is still today passed downfrom generation to generation. We are currently working
to expand our range of business domains to include
urban redevelopment, as well as environment andenergy, and are contributing to the development of society by providing important structures and services.

Keisuke Nishimatsu, the Company’s founder, was born in
1850, the third year of the Kaei Era, in Anpachi-gun in
Mino Province, now Gifu Prefecture Japan. This area isknown as the Waju Region, and being surrounded by theKiso, Nagara, and Ibi rivers, since ancient times it has
been prone to flood damage. It is quite possible thatthese circumstances had something to do with setting
the founder off at an early age on the path to becoming acivil engineer. After building Nishimatsu into a leading
subcontractor of the Hazama Corporation, Keisuke
handed over the reins of the Company to his eldest son,
Kojiro. In 1914, when Nishimatsu was awarded the solecontract for the construction of the new 12th construction section of the Kyushu-Miyazaki Line, Kojiro charged
ahead, risking the fate of the Company’s independent
foundation to complete the Construction.

In 1929, Nishimatsu Gumi, a limited partnership, wasestablished to become a corporate entity. In 1931, theCompany relocated its headquarters from Kyoto to Tokyoand expanded its sales base to eastern Japan. In 1935,
following the death of Kojiro Nishimatsu, Yoneshichi
Hayashi became the second president of the Company.
In 1937, construction began on a large dam that would
block the Yalu River, a major river on the China-North
Korean border, and the Company became involved in theconstruction of the Manchurian side, the right bank, ofthe river. The construction of the Yalu River Dam, said tobe Asia’s preeminent dam at the time, is representativeof the Company’s prewar work.

With Japan’s loss of the war, the Company lost all of its
foreign assets and most of its operating base. Amid suchconditions, in 1945 the Company established its Morioka
Branch, and in the following year, branches in Nagoya
and Hiroshima, which in addition to the existing branch in
Kumamoto, gave it a four-branch network to relaunch its
business. In 1948, the Company changed its name to
Nishimatsu Construction Co., Ltd. The construction of the
Arase Dam in Kumamoto Prefecture in 1953 was theCompany’s first mechanized construction project. In
1960, the Company won the business to construct agovernment office complex in Tokyo’s Otemachi District,and although Nishimatsu Construction lacked experiencein large-scale construction projects at the time, it overcame a broad field of obstacles to complete the project.

In 1969, the Company constructed the Keiyo Railway
Line’s Haneda-Oki Tunnel using the world’s firstlarge-section slurry shield tunneling method. The success of this construction project led to a surge in thenumber of applications of this method in Japan. The
construction of the Japanese-style annex to the State
Guest House in Tokyo (Yushintei) in 1972 brought
together traditional and modern techniques under strict
construction management. The Gassan Dam in
Yamagata Prefecture, which began construction in 1988,
is one of the largest gravity concrete dams in Japan, andwas completed in 2001 using the RCD method with abelt conveyor system and other techniques.

In 1998, the Company established the Aikawa TechnicalResearch Institute (Aiko-gun, Kanagawa Prefecture),
which houses a device that can recreate the shaking ofJapan’s Great Hanshin-Awaji Earthquake to clarify themechanism behind the damage to buildings as a resultof the powerful shocks and vibrations caused by thatearthquake. In 2015, the Company became the firstJapanese general contractor to establish a joint venturein Laos. In FY2022, the Company opened Hotel JAL City
Toyama, Nishimatsu Construction’s first foray into thehotel business.

Taking Action and Solving Social Issues
Building
an infrastructure base
 Developing domestic and international infrastructureRiver flood disasters caused by typhoons and torrential
rains, and contributing to economic base Dam construction, tunnel development 
Postwar reconstruction Tackling the challenges of mechanization and largescale constructionHigh economic growth Honing techniques, responding to diverse needs

Major Events
Founder Keisuke Nishimatsu

1850 	Founder Keisuke Nishimatsu was born
1874 	Foundation of Nishimatsu
1903 	Keisuke Nishimatsu withdrew from civil engineering operations
1906 	Period of cooperation with Hazama Corporation.
Conclusion of 39 regulations
1914 	Nishimatsu awarded sole contract for constructionof 12th construction section of Kyushu-MiyazakiLine. A fateful construction project

The Waju Area (Gifu Prefecture) circa 1980

1916 	Company name changed to Nishimatsu Gumi
1926 	Nippon Chisso Hiryo K.K. (Chosen Hydroelectric)
constructed the Poseun River Power Plant waterway (3rd and 4th construction sections)1927 	Nippon Chisso Hiryo K.K. (Chosen Hydroelectric)
constructed Hunnam Factory

1946 	Constructed Japan’s first rock-fill dam, Ishibuchi
Dam, on the Kitakami River (Iwate Prefecture)1971 	Constructed Hong Kong container yard. Received
UK civil engineering international award

1998 	Established the Aikawa Technical ResearchInstitute1929 	Established limited partnership Nishimatsu Gumi

1948 	Company name changed to Nishimatsu
Construction Co., Ltd.

1984 	Won order for Singapore subway construction

2003 	Nishimatsu Construction, in Japan’s first PFI project, participated in Esaka Minami Parking Service

1931 	Nishimatsu Gumi headquarters transferred toTokyo1932 	Established the Manchuria Dalian Branch Office

1953 	Constructed the Arase Dam (Kumamoto
Prefecture), a model for mechanized construction

1933 	Chosen Nagatsu River Hydroelectric Power Plant
waterway and dam construction

1960 	Constructed a government office complex inTokyo’s Otemachi District.

1935 	With passing of Kojiro Nishimatsu, Yoneshichi
Hayashi became the Company’s second president

1961 	Constructed Amagasaki Steel Plant Sakai steelmaking plant. Honored with the BCS award in1964

1937 	Established Nishimatsu Gumi Co., Ltd.
1940 	Established Manchuria Nishimatsu Gumi

1965 	Adopted the freezing method on the
Kanasugibashi section of the No. 1 Line, Toei
Subway1967 	Constructed the world’s largest bowling alley(at the time)

8

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Earthquake damage, rising social demands
 Providing buildings that are safe and secure Building a sustainable foundation for society Redevelopment of social functions



1984 	Constructed Nagai River Bridge on the Kan-Etsu
Expressway. Japan’s tallest bridge pier rises.
1984 	Constructed ultra-high-rise building in Thailand
1986 	Tsubayama Dam (Wakayama Prefecture) received
the Minister of Health, Labour and Welfare Awardof Excellence1987 	Constructed the Daimon Dam (Yamanashi
Prefecture). Received the 1986 Outstanding Civil
Engineering Achievement Award from the Japan
Society of Civil Engineers
1988 	Won order for the Tate’s Cairn Tunnel on Build,
Operate, Transfer (BOT) project basis
1988 	Commenced construction of Tsukiyama Dam(Yamagata Prefecture), one of Japan’s largest
gravity concrete dams

2015 	Became the first Japanese general contractor toestablish a joint venture in Laos	Formulated a new corporate slogan, “Successfully
Building a Better Future”
2017 	Started the Company’s first commercial facility development and operation business, “hareno terrace ”
2022 	Opened Hotel JAL City Toyama, Nishimatsu
Construction’s first foray into the hotel business	Acquired certification from the SBT initiative fortargets at reduction of greenhouse gas emissions
	Certified by the Ministry of Economy, Trade andIndustry as a “DX Certified Business Operator”

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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VALUE CREATIONINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Nishimatsu Construction’s Model for Co-Creation of ValueBusiness Model

Inputs

Outputs

ESG/SDGs management

Domestic Civil Engineering
Business

Human Capital

Mountain and shield tunnelingMarketing human resources
Training investment costs per
employee ¥90,000■ 

Project Planning■ 

and Proposal■ 

Research and Information
GatheringNumber of employees globally
3,201

■ 

Smart construction sites

Research and development
costs ¥2.03 billion→P.22

Intellectual Capital
Number of patents owned 

Logistics facilities, facilities applying
design and construction technologies

Technical human resources

Environmental facilities (waste incineration
plants)■ 

Research andManufactured Capital

Ability to propose
plans

Development

Japan 51

Reception of Orders
and Investment

Technology
development
capability

Urban redevelopment projects■Smart construction sites

263

Construction
technologies(As of March 31, 2023)
Construction track record

Environmental
technologies■ 

The things
we value

DesignTrusting relationships

International Business umber of occupational injuries requiringNfour or more days of absence from work
11 (8 less than in previous fiscal year)■

ODA construction projects

Customer

Construction projects for foreigncompanies■ 

Partner companies

Number of certified Nishimatsu meisters  118

■

User

Asset Value-Added Business

N-NET (Nishimatsu
Subcontractor’s Network) 
1,027 companies

■ 

→P.26

In-house development business/Equity
investment business■ 

Asset Management

Percentage of S/A ratings in customer
surveys 
96.5%

■

Urban redevelopment projects/Land readjustment projects■ 

Financial base■ 

Nishimatsu’s brand power

Procurement■ Management

Natural Capital

International Business■ 

Investment management business/
Property management business■ 

Energy usage 914 thousand GJ

Ministry of Land, Infrastructure, Transport andTourism construction evaluation Score (average) 
76.3

■

 ocial and Relationship
S
Capital■  ocial and Relationship
S
Capital→P.48

→P.24

■ 

Supply chain

Natural Capital(Contract amount of ¥50 million or more)

Planning and
Brand

Trusting relationships with customers and end users

Manufactured Capital
Number of new projects started 203

■ 

■ 

Overseas 10
Number of construction sites■ Reduction of CO2 emissions

Responding to decarbonization

Regional Environmental Solutions
Business
→P.28

■

and Operation

Renewable energy business¥ 156.1 billion

■ 

→P.18

TSR 

■

90.4%+58.5% (5 years)

Community creation

Interest-bearing debt
¥ 168.3 billion

External Environment

10

Financial CapitalDividend payout ratio 

■ 

■ 



9,200 t-CO2(Renewable energy, diesel fuel combustion
improvers, N-TEMS, etc.)■ 

Financial Capital
Total capital 

→P.64

■

Construction

■ 

259

■

■ 

■ 



Employee satisfaction (non-consolidated)3.65 (5-level evaluation)

■

■ 

Domestic Building Business

→P.44

Number of training participants (non-consolidated) 
6,393 (total)

Offshore wind power generation projects■ 

Human Capital■

Infrastructure renovation

Intellectual Capital

Number of offices 

→P.20

■ 

■ 

■ 

Outcomes

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Material Issues→P.12

Nishimatsu-Vision 2030

→P.2

Corporate Philosophy→P.2

Medium-Term Management Plan 2025

→P.17

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

11

VALUE CREATIONINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Material Issues, Opportunities and Risks
Nishimatsu Construction has recognized changes in the external environment surrounding the Company
and our stakeholders, and has identified the material business challenges that we should address basedon an understanding of both opportunities and risks. We are formulating and implementing specificmeasures to address the identified materiality while contributing to the SDGs and creating business andsocial value.

Value provided to society

External environmental changes

Global environmental
changes

Security

Step2

Global warming
 estruction of the naturalD
environment and declining
biodiversity

Step3
Main opportunities







Increased natural disasters

Increased demand for buildings with low GHG emissions
Increased demand for adoption of renewable energy emand for the development
Dof social infrastructure(civil engineering infrastructure
and buildings) for disaster prevention and mitigation

Main risks
Health hazards (e.g., heatstroke) and decreased productivity at construction
sites due to risingtemperatures
Increased costs due to carbon pricing
Risks related to tighter environmental laws andregulations

Step4
Material issues

Superior environmental technology

Step1

Vibrancy








extend the lifespan of social
infrastructure(civil engineering infrastructure and buildings)◆ Development of smart cit- alling birthrate and aging
F
populationies, compact cities, risingdemand for new services

 oncentration of populaCtion in urban areas andrural depopulation◆ Increased demand for oexistence with infecC
tious diseases◆ Increased demand forFood and water shortages



Decreased demand for newbuildings due to ethicalthinking

 hange of generationC(to Generation Z)

Widening disparity

Bonds◆ Increased demand to cceptance of diversityA(diversity & inclusion)

Decreased demand for construction and real estatebusiness

Declining demand for offices
due to diversification of work
styles

Initiatives for carbon neutrality

Preserving biodiversity andcreating a recycling-oriented
society

Promoting 3R activities
Initiatives to preserve biodiversity

Building sustainable social
infrastructure(civil engineering infrastructure
and buildings)

Continuous efforts for tunnel projects with a highlevel of difficulty
P.20
Initiatives for renewable energy-related
construction
P.21, 28
Utilization of BIM (consistent use from design,
construction, maintenance and management)

P.22
Improving technical capabilities for civil engineering
infrastructure renovation
P.30
Unmanned and automated tunnel construction

P.30

Providing comfortable
construction-related services
for users

Expand initiatives in real estate growth fields P.26
Asset management
P.26
Land readjustment projects/Urban redevelopment
projects
P.26
Participation in PPP/PFI projects
P.28
Community development
P.28





buildings compatible with
the new normal

e-commerce-related facilities due to the expansion of
the e-commerce market

 ull-fledged development
F
of DX



 rowing importance ofG
corporate governance iversification of needs forDconstruction-related services
New services through DX ew manufacturing throughN
DX

Supply chain infrastructurerisks
Decrease in the number ofskilled laborers in the construction industry, decline inconstruction capabilities due
to increased age of skilledlaborers
Rising prices of materials,
equipment and energy

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Creating rewarding
workplaces
Creating safe construction
sites

Risks due to weakening
human resources base
Cybersecurity risks
Lost opportunities due todelayed DX

12

Diverse services eterioration of social
D
infrastructure(civil engineering infrastructure & buildings)

Increased demand for construction and real estatebusiness

Appealing work styles

Contribution to SDGs

Establishment of ZEB technology
Renewable energy business
Wooden construction technologiesZERO30

Risks related to preserving
biodiversity

Social changes

Measures

Ensuring thorough compliance andrisk management

P.22, 34
P.28
P.31
P.38

P.41
P.41

Human resource development
P.44
Diversity and inclusion
P.45
Reducing the number of overtime hours
P.46
Health and productivity management
P.46
Preventing occupational accidents
P.48
Training programs that support training skilledconstruction laborers
P.49

Quality managementCompliance
Risk and opportunity management
Information security

P.47
P.60
P.61
P.61

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

13

VALUE CREATIONINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Financial and Non-Financial Highlights
Financial
Net sales (consolidated)

Non-Financial

Gross profit margin (consolidated)(Billions of yen)

Environmental Data

400

15

391.6
349.3

336.2

300

323.7

Global warming prevention
Nishimatsu Group’s CO2 emissions(Scope 1 and 2)
Nishimatsu Group’s CO2 emissions(Scope 3)
Nishimatsu Group’s CO2 emissions(Scope 3) Category 11

13.5

12.4

339.7

11.2

11.8
9.9

10
200
5
100

0
(FY)

0
2018

2019

2020

2021

2022

2018

(FY)

2019

2020

2021

2022

Net sales increased 4.9% year on year, to 339.7 billion yen. Although revenue fell in the Company’s non-consolidated construction business, themain factors for the increase were a significant upswing in operating revenues from the sales business in the Urban Development & Real EstateBusiness and other businesses, and an increase in the amount of completed construction projects at overseas construction subsidiaries.

Gross profit decreased significantly from the previous fiscal year on a
downturn in the gross profit margin, which fell 3.6 percentage points year
on year, to 9.9%. In addition to the deteriorating profitability of domestic
building projects due to soaring material costs and other factors, theCompany was severely impacted by additional costs incurred due toconstruction issues in overseas civil engineering projects.

Operating margin (consolidated)

Capital efficiency (ROE) (consolidated)(%)

Targets(t-CO2)

70,21062,65043,030

FY2030 31,700 t-CO2(t-CO2)

3,928,700

3,237,500

2,776,700—(t-CO2)

3,191,800

2,481,200

1,847,600

FY2030 2,328,000 t-CO2

Creating a recycling-oriented society
Final percentage of construction waste
sent for landfill disposal*
Water usage volume in the domestic
business (Total)
Water usage volume in the international business (Total)

(%)

2.2

2.4

2.4

(m3)

948,100

647,700

723,100—(m3)

84,800365,800

373,600

—

9.9

6.2

Basic information
Number of employees (consolidated)
Number of employees(non-consolidated)

9.5
8.5

8.5

8

6.4
3.7
3

4

0

0
2018

2019

2020

2021

2022

Human resource development
Training costs

2018

(FY)

2019

2020

2021

2022

While net sales increased, the gross profit margin deteriorated and generaland administrative expenses rose 871 million yen compared with theprevious fiscal year, resulting in an operating margin of 3.7%, down 3.6
percentage points year on year. We will steadfastly implement the Earnings
Improvement Plan of Medium-Term Management Plan 2025 to improve
profitability.

Due to the significant decrease in profit attributable to owners of the parent,
ROE fell 2.1 percentage points compared with the previous fiscal year, to6.4%. We will work to achieve ROE of 8% or more by achieving operating
income of 22.0 billion yen, which is the target set under Medium-Term
Management Plan 2025.

Net assets/equity ratio (consolidated basis)

Investments in technology, human resources and ICT (non-consolidated)(Billions of yen)

250

42.3

(Millions of yen)

50

2,000

40

199.2

207.5

150

31.7

29.0

1,000

20

100
50

10

0

0
2019

 Net assets (Left scale)  

2020

2021

2022

Equity ratio (Right scale)

Although the equity ratio declined due to the purchase of 54.3 billion yen of
the Company’s own shares in FY2021, the ratio continues to trend at alevel that does not pose a problem in terms of financial soundness. We will
implement appropriate financial strategies to ensure that we can continue
to maintain a healthy financial condition while making aggressive
investments for growth.

599

1,748
1,500

30

156.1

157.7

2018

2,038

43.6

39.6
199.3

(%)

1,506

1,377

336

219
762 919

1,177
835

1,533

358

393

1,217

969 1,190

889

1,366
994

500

0
(FY)

2018

2019

2020

FY2025 Less than 3%* Final percentage of waste sent for landfill disposal: Excludes “industrial waste containing asbestos” and “specially controlled industrial waste”

FY2020

7.3
6.5

6

(FY)

FY2022Social Data

12

7.1

200

FY2021

(%)

9

(FY)

FY2020

(%)

2021

2022

 Research and development costs  Human resources investment
 ICT operation and maintenance    ICT growth investment
Investments in ICT growth amounted to 599 million yen. To cope with theshortage of engineers and skilled workers as well as the regulations that limit
overtime work that will come into effect in FY2024, we are working to improve
operational efficiency by applying ICT technology. We are also increasing ourinvestment in human resources and expanding measures to enhance
employee performance, including health and productivity management andthe Nishimatsu Employees’ University.

Ease of work and productivity
Personnel turnover rate
(career-track positions)
Percentage of employees working overtime*2 exceeding 45 hours per month
Percentage of worksites achieving 7 days
off per 4 weeks(civil engineering sites)(building sites)
Remote work usage ratio
Supply chain
Employment ratio of certified
Nishimatsu meisters and senior
forepersons under the program forhigh-caliber technicians
Construction Career Up Card scan rate

FY2022

Targets(Persons)

3,060

3,106

3,201

—

(Persons)

2,762

2,794

2,804

—

(Millions of yen)

291

345

356

—

0 (0%)

3 (0.3%)4 (0.4%)FY2025 2% or above

17.5

17.8

18.5

FY2025 20% or above

6.1

17.6

55.6

From FY2024 100%

1.96

2.37

2.45

2.3% (legal employmentrate) or above

(%)

19.7

62.3

69.1

FY2025

(%)

1.83

2.05

2.68

FY2025 Less than 1.5%

(%)

21.3

22.7

17.2

FY2023 5% or below

(%)

65.4

63.5

77.1

(%)
(%)

65.4
—

61.1
55.5

64.5
45.6

FY2025

100%

(%)

—

63.7

60.6

FY2025

100%

(%)

—

24.0

46.7

FY202590%

Diversity and inclusion(Persons) (%)
Number of female managers
Percentage of female workers(%)(career-track positions)
Percentage of male employees taking(%)
childcare leave(career-track positions, general positions)*1
Employment percentage of persons(%)
with disabilities
HealthPercentage of patients receiving periodic full examination health checkups

FY202180%—*1 Includes leave associated with the Post-birth Papa Leave System (effective October 2022)*2 Total work hours - fixed working hours (8 hours per day)

14

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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