Nippon Signal Group

28 Medium-term Management Plan

Realize-EV100

Toward the 100th Anniversary of Foundation

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Nippon Signal Group Philosophy

Our Mission

Our Vision

Our Mission

We help realize a more secure and comfortablesociety through superior technologies thatprovide safety and reliability.

Our Vision

Our Values

We strive to become a global company bypursuing world-leading technologies withingenuity and passion to inspire ourcustomers.

Our Code of Conduct
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Businesses supported by Nippon Signal GroupOn our mission to “help realize a more secure and comfortable society through superior
technologies that provide safety and reliability,” we strive to provide products and solutions
involved in the next generation society and living infrastructure.

“One-stop solution provider” connected through networks
Maintenance
Automatic driving
CBTC*1

RobotsCarbon-freesolutionsPayment

IT Parking

BRT*2
Traffic signal
networks
Platform safety

Self-driving

Medicalcare
O&M*3
Disaster prevention
and mitigation

Security

ANSHIN Center

Cooperation, merger and working across borders of businesses and Group companies
Safer and more
comfortable

Total support oftransportation

Realizing MaaS to support transformation of public transportation
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*1 CBTC: Communication based train control system, *2 BRT: Bus rapid transit system, *3 O&M: Operation and maintenance management2

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Whole frame
100th anniversary*

Support “evolution of infrastructure” in a safe and comfortable way

Our aspiration

To become a business group esteemed by people around the world
as an infrastructure provider in the age of DX.

Long-term Management Plan “Vison-2028 EVOLUTION 100”
2019

2020

2021

21 Medium-termManagement Plan

2022

2023

2024

24 Medium-termManagement Plan

* Date of foundation: December 27, 1928

Areas focused in the past

2025

2026

Robot

Medical/nursing care

Security

Cashless2028

28 Medium-term Management Plan
Realize-EV100

Realization of Super Smart Society
Smart
O&M

Self-driving
CBM*1

2027

100th
anniversary

Smart city
Smart mobility
Low-carbon
MaaS
Sensingsocietyrobotics

Overseas business

Safety Security Comfort Reliability*1 CBM: Condition Based Maintenance, where maintenance is carried out based on condition criteria

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In establishing
Medium-termManagement Plan

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02 “Realize-EV100”

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Major activities toward
the 100th anniversary of
the foundation

In establishing Medium-termManagement Plan

02

“Realize-EV100”

03

Major activities toward the 100th
anniversary of the foundation

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the foundation

History of Innovation2011 – Present

Founding of the company and road tothe modernization of railway signals

With the blossoming of electronic
technology, launching of new businesses
towards the next generation

Sophistication of technologies andnurturing of the network businessAcceleration of overseas business andstarting a new long-term management plan

1906

1964

Opened Tokaido Shinkansen.

Shifted the focus from analog technology

Accelerated overseas business mainly in

Nippon Signal produced ATC*1 ,CTC*2 and so on

to digital technology – shift from hardware
to software.

developing countries including Asia.

Contributed to the realization of highdensity, complex railway inter-connection

corresponding to the MaaS mobility
Revolution and DX.

Nationalized the nationwide main
trunk lines.

1928

Founded Nippon Signal Co., Ltd.
by merging three companies
towards the modernization of*1 ATC: Automatic Train Control

railway signals.

●1931 Produced locally-made signals*2 CTC: Centralized Train Control●1972 Produced automatic ticket gates asJapan’s first integrated system.

Installed at Nihonbashi,

Focused on the system developmentthat supports the mobilization of 40
million passengers in metropolitan areas.

●2009 Commenced the order receiving andproduction of platform doors in fullscale.

●2011 Developed Japan’s first CBTC system“SPARCS”, Simple-structure andhigh-Performance ATC by Radio
Communication System.

Gofukubashi, andSakurabashi intersections●1958
Commenced the production of parking meters

Commenced operation between KitaNijyuyonjo and Makomanai stations
within Sapporo City Transportation
BureauCommenced operation for Beijing
Subway Line 15.
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Issues railway operators are facing (60 years since the opening of the Shinkansen)

Change of lifestyle
Increase of workfrom home

Promotion oftransition to DX
Transition to networking
and cashless transactions

Decline of regular (fixed)
railway revenue

Transition from on-siteequipment to cloud

Approach of Nippon Signal

Approach of Nippon Signal● Supply of new materials
that contributes toreduction of fixed cost

● Labor saving by applying O&M● Cloud type settlement/parking station● Automatic ticket gates applying diverse
authentication methods

Revitalization of regions
Declining birth rate and aging
population/declining population
Braking the trend/avoidance of population
concentration in metropolitan areas

Approach of Nippon Signal● Sale of digital tickets linked withticket sites● Facility streamlining throughtransition of local railway lines
to BRT

Addressing
de-carbonization

Decline of working(production) population

Declaration of CO2 zero
emission by 2050

Expected number of birthin 2024: 720,000

Transition to power-saving and wirelessmodes by equipment downsizing

Population decline and aging
population

Approach of Nippon Signal

Approach of Nippon Signal● Market expansion of CBTC and MVNO
by transition to wireless mode
● Sales expansion of solar power
generation business● Expansion of introduction of automatic
operation technology into the society● Automation of station surveillance● Development of heavy machinery robot
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In establishing a new Medium-term Management Plan
(28 Medium-term Management Plan)
Nippon Signal Group Medium-term Management Plan “Next Stage 24” announced in May 2022 hasbeen implemented. Now we establish a new Medium-term Management Plan targeted for FY2028,
the year marking the 100th anniversary of the company foundation, taking into account the rapidchanges in business circumstances and customer needs occurred during the coronavirus pandemic.
Increasing needs

Changes in external environment
1 Labor shortage

1

Automatic driving,
unmanned station

2 Rampage of disasters

2

Disaster-resistantequipment and systems

3 DX, carbon-free

3 Wireless, networking

4 Deteriorating infrastructure

4

5 Needs for seamless mobility

5 MaaS, cloud-based payment

6 Increasing cyber terror crimes

6 Secure private cloud(earthquake, abnormal weather, etc.)

Preventive Maintenance,laborsaving in maintenance

Increasing demand for safety and convenience

28 Mid-term Management Plan Realize-EV100
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In establishing
Medium-termManagement Plan

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02 “Realize-EV100”

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Major activities toward
the 100th anniversary of
the foundation

In establishing Medium-termManagement Plan

02

“Realize-EV100”

03

Major activities toward the 100th
anniversary of the foundation

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28 Mid-term Management Plan “Realize EV-100”-- Toward the 100th Anniversary of Foundation -Basic concept
Realize 3 things
Next Stage of

Next Stage of

Next Stage of

New Business and
New ProductsInternational
Business

Manufacturing

New business withlaborsaving products
Carbon-free solutions

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

Increasing design and manufacturing
efficiency
Reinforcing human resources in software
Optimization of efficiencyof the whole group

Realize sustainable management
IR and SR keeping investors andstock price in mind

Human capital

SDGs activities
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Management target
2024/3(Result)

2025/3(Forecast)

2029/32029/3(Mid-term
Plan target)（中計目標）

Sales

98.5 B yen

100.0 B yen

150.0 B yen

ROE

5.7%

5.8%

10% or more

ROIC

4.6%

5.0%

9% or more

2024/3

Transport

Sales bysegment
ICT
solutions

2025/32029/3(Result)(Forecast)(Mid-term Plan target)

Railway signal

46.6 B yen

47.0 B yen

67.0 B yen

Smart mobility

7.3 B yen

8.0 B yen

15.0 B yen

Overseas portion oftransport

10.8 B yen

11.7 B yen

25.0 B yen

AFC

34.6 B yen

35.0 B yen

46.0 B yen

R&S

9.9 B yen10.0 B yen

22.0 B yen

Overseas portion of
ICT solutions

0.6 B yen

0.8 B yen

5.0 B yen

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In establishing
Medium-termManagement Plan

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02 “Realize-EV100”

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Major activities toward
the 100th anniversaryof the foundation

In establishing Medium-termManagement Plan

02

“Realize-EV100”

03

Major activities toward the 100th
anniversary of the foundation

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Realize. 1
Next Stage of New Businessand New Products

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Image of sales by increasing sales volume of new business and new products
in 28 Med-term Management Plan
We will strive to develop core technologies and implement new products in society
targeting new markets which are expected to grow in the future to gain market sharewith the aim of ensuring our business growth.
Image of sales in new business and new
products in 28 Med-term Management Plan
Sales of new business and new products
Sales of existing segments(B yen)

1,500
350

1,000
150

Percentage
of sales innew business

15%

Market size*

O&M service, etc.

25.0 (B yen)

Smart mobility

Automatic driving,
Infrastructure To
Vehicle , MVNO, etc.

25.0 (B yen)AFC

Cloud-based payment,
Cloud-based parking
space, etc.

50.0 (B yen)

3D sensor market

20.0 (B yen)

Market of heavymachinery-type robot

10.0 (B yen)2029/323%

Product

Railway system

1,150

850

2025/3

Segment

R&S*Market size in FY2028 (estimated by Nippon Signal)
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Railway system businessOur vision

Co-creation partners beyond the relationship with customers
Primary measures

Sales
42.0 B yen
target35.3 B yen<1> Expanding markets of next generation traffic signal safety system
Expansion for communications-based train Control (CBTC), automatic driving, O&M solutions, etc.

<2> Product strategy for co-creation of customer’s structural reform<3> Development of a system for continuation of local public
transportation

2025/32029/3Strategic product “Next generation railway signal safety system”
CBTC

Automatic driving

O&M Solution
Service provided by
ANSHIN Center
Analysis

Detailed
analysis
Alarm

On-siteequipment
data

User
Nippon Signal “ANSHIN Center”

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Next-Generation Railway System
Promoting development of the system towards everchanging society and the future of the railway
Full lineup of railway signalling systems capable of flexibly
responding to the situations ranging from cities to regions

Backbone system that
supports the nextgeneration railway system

Transition of PRC
equipment to cloud

Traio cloud

Cloud PRC

Control room
Checking train positions in real time

GNSS position
location system
Support of operation
automation

Automatic train
operation system

Wireless train control with abundant
overseas performance records

CBTC subset
Next-generation railway signallingsystem for local railways

Service point

Station A
StationB

Axle-detecting block
systemDetection of trains by counting
the number of axles

New level crossing
gateRail breakage detection
deviceRail breakage detection by
return current

New point machine

Automatic train operation
support system
Establishment of operation
conditions for introduction of
automatic train operation

Integrated interlocking
systemCableless/relay-less

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Smart mobility businessOur vision

One-stop solution provider for road traffic to solve issues of business operators
Primary measures

Sales target<1> Activities for dissemination of automatic driving
Promoting the dissemination of automatic driving and solving issues faced by
local governments and business operators through its implementation in society.

8.0 B yen

<2> Building an environment for easier mobility
through MaaS-related services.

2025/315.0 B yen

2029/3Strategic product ”Kuru Link (automatic driving system),” “I2X (Infrastructure To Vehicle)”

Kuru Link
User
Taxi booking
using asmartphone

I2X
Control center• Preparing atimetable• Vehicles driving
control

Ground equipment control

Coordination with the transport infrastructure
through road-vehicle coordinated driving

Notifying a vehicle andthe driver of theexistence of a pedestrian

Self-driving support at a
cross-point, etc. by roadvehicles communications

Cross-pointP

Parking lot

Automatic driving vehicles
controlSupport for watching
children and anticrime
measures

Notice of evacuationroute in the event ofdisaster

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Future vision for Social Implementation of Smart Mobility
Contributes to the "reduction of operator fixed cost" and "reduction ofsocial loss of traffic accidents" through the Smart Mobility Platform
Service
operator

Present
Strengthof NS

Construction
company

FuturePoliceLocalcommunity

Establishment of
next-generation network

MVNO

BLE

KuruLink

I2X

Payment

One-stop
solution

Supports "traveling"on street
Leading the industry
through the bi-directional
communication between
infrastructure and vehicle

Automobile
manufacturer

DriverPedestrianSocietyingeneralCopyright © NIPPON SIGNAL CO.,LTD. All Rights Reserved.

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AFC businessOur vision

Real (facilities/services) innovation to “Realize motivation for mobility”
Primary measures<1> Expansion of ABT* solution which leads user/business operator services
High-value-added ticket gate that supports various authentication methods such as
credit card, QR, and facial recognition<2> Provision of a system for safe and unmanned (laborsaving) station<3> Provision of a cloud-based parking space system*ABT: Account Based Ticketing, which is a ticket system using unique IDs

Salestarget34.2 B yen
2025/341.0 B yen

2029/3Strategic products “cloud-based payment system,” “station monitoring system” and“cloud-based parking space system”
Cloud-based payment system
Digital ticket
information

User+ Digital ticket

Judge

Open/closeticket gate

NotifyCloud
server
Issue

Station monitoring system

Ticket-issuing machine

Platform monitoringby each camera• Detection of falling• Detection of
platform situation

Ticket selling site

Cloud-based parking space system
Transmit seat availability
information

Cloud
server
Proactive
monitoring of
platform doors

Cloud
serverChange settlement/
availability notice

Vehicle detection
information
Gateless vehicle
recognition

満 空
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Smart AFC System

By promoting the development of both “cloud” and “terminal”, establish the absolute advantage andaccelerate the implementation of the system within the society.

Major services made available by the NS-MaaS platform
Use of points

Credit card
authorization

Sales site coordination

Use of digitaltickets

Face recognition

Digital ticket
registration/issuance

Remoteoperation

Sales
consolidation

Visualization of ticket
sales/utilization status

CBM (Remotemonitoring/
operation)

Disasterprevention/
Security detection

NS-MaaS
platform
MSS
By establishing a platform and connecting
them with various terminals, improve thecompetitive strength of the "sites(terminals)" owned by Nippon Signal.
StationRailway operator
Destination

Departing point

Car number
identification device

New flap

Low-cost new
pay station

New Passenger gate

New platform door

Multi-reader

Station monitor*MSS: Mobility Service System - Cloud type parking station payment system: Brand name of the digital ticketing service of Nippon Signal that realizes people
mobilization suitable for the new age with “One ID”

High flap gate

Entry/exit
management
system

KIOSK
terminal

Backflow
prevention
gate

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R&S businessOur vision

Create products having overwhelming competitiveness in robotics
and sensing segments to win the position of market leader
Primary measures<1> Strive to establish our robots as de facto standard for work atheight<2> Expand service robot market by launching promotion activities<3> Win the position of market leader with cutting-edge technology insensing segment

Sales target

22.0 B yen
Robotics
segment
Sensing
segment

10.0 B yen

Others*2025/32029/3* Others include sales operations outside the Group including medical equipment and solar power generation business.

Strategic products “heavy machinery robot,” “next generation 3DLiDAR,” etc.
Heavy machinery robot

Next generation 3DLiDAR
Ranging image

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Medium-termManagement Plan

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Major activities toward
the 100th anniversaryof the foundation

Realize. 2
Next Stage of International
Business

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Targets by region for overseas business*1

China
8.0 B yen
Bangladesh
13.0 B yen
Africa10.0 B yen

India
23.0 B yen

Taiwan20.0 B yen

Southeast Asia
30.0 B yen

Others
8.0 B yenOver 100 billion yen in total*1 Image of sales of our overseas business by region during the periodof 28 Medium-term Management Plan (FY2024 to FY2028)

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03

Overseas businessOur vision

To be a global company that contributes to de-carbonized society andinfrastructure development, and inspires people in the world
Primary measures<1> Realize world-class competitiveness by using digital technologies<2> Provide smart maintenance services through O&M services<3> Increase earnings through business development rooted in strategic
countries and regions<4> Establish new overseas branches in new markets to conduct activities toenter the rail and transportation markets

Strategic countries andregions
Focus our efforts on the following
countries and regions where ourcompany has branches:

Sales target

30.0 B yen

12.5 B yen
2025/3
March/2025

2029/3
March/2029

Strategic products “CBTC,” “overseas O&M service,”“overseas traffic signals,” etc.
Overseas O&M service
Overseas traffic signals

StationIndia, Bangladesh, Southeast Asia,
Taiwan, China, Africa, etc.

Field
Traffic signal

Customer’shead office

Traio
cloud

Customer’s
officeMaintenanceLaunch sales activities for traffic signal products
combined with maintenance service for Africa
where population is growing.
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Realize. 3
Next Stage of Manufacturing

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Manufacturing for
traffic and transportation

Manufacturing for ICT

Traffic infrastructure in the world supported with DX

Software-first manufacturing

Kuki Plant

Utsunomiya Plant

Ageo Factory

ANSHIN Center (Kuki)

Visualization and increasing efficiency
using data

Development of human resources indesign and manufacturing

In-house production of core technology
within the Group

Group-wide optimization of
manufacturing

Aim to ensure stable supply and quality and an increase of profitability
at each plant
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Core technology evolution
Capture core technology evolution and new technology trend based on “Safety and Reliability”

GenerativeAI
AI/image analysis
Traio (CBM)

Mechatronics
Robotics
Sensing
Robust design/evaluation
Fail safe

Existing technology

MVNO
Wireless train
control

Developed products

New technological trend
Failureprediction
Drone control
Long-distancesensor
5G/6G
communication
Autonomous
Driving

Safety and Reliability

To software-firstand Kotozukuri(value creation)

Next generation products
to be developed
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Major activities toward
the 100th anniversaryof the foundation

To Realize Sustainable
Management

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Management keeping investors and stock price in mind
(1) PBR, ROICROE 10.0% or more is set as the target as
an index to achieve 1.0 times or more PBR.

PBR(Current state) PBR is around 0.6 to 0.7 times due
to sluggish ROE.

ROIC

PBR change (Unit: times)(Current state) ROIC is below WACC due to sluggish
NOPAT for an increase of capital invested.

ROIC / WACC change (Unit: %)PBR = ROE × PER

Decreased below once fromMarch 2016

1.1
1.0
0.9
0.8
0.7
0.6
0.5

ROIC 9.0% or more is set as the target
against assumed WACC 6.0%.

Around 0.6 to 0.7 times inrecent years

ROIC＝NOPAT / Invested capital

10.0
8.0

WACC

6.0
4.0

ROIC

2.0
0.0
15/3

16/3

17/3

18/3

ROE change (Unit: %)

19/3

20/3

21/3

22/3

23/3

PER change (Unit: times)
Below Prime market average

8.1
6.0

5.3

4.6

5.7

20/3 21/3 22/3 23/3 24/3

10.2 12.4 12.2

16.3

15/3

24/3

Prime
Market average

12.1

20/3 21/3 22/3 23/3 24/3

PBR: Price book-value ratio ROE: Return on equity PER: Price earning ratio
ROIC: Return on invested capital NOPAT: Net operating profit after tax
WACC: Weighted average cost of capital

16/3

17/3

18/3

NOPAT change (Unit: 1 B yen)

19/3

20/3

21/3

22/3

23/3

24/3

Invested capital change(Unit: 1 B yen)

Invested capital increases.

6.1
4.5

92.7 99.2
82.6 87.1 89.5

20/3 21/3 22/3 23/3 24/3

20/3 21/3 22/3 23/3 24/3

3.9

3.7

3.5

Stockholders’equityInterest-bearing
liabilities

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Major activities toward
the 100th anniversaryof the foundation(2) Capital/financial strategy
Cash allocation plan

Basic policy(accumulation during the Mid-term Management
Plan period)

We perform well-balanced management between
investment for growth and return of profit to shareholders
while maintaining financial soundness to ensuresustainability of the company.

We actively make investment in growth areas on a capital ofsales cashflow during the Mid-term Management Plan
period.

Ensure financial
soundness● Net worth ratio
50 – 60%

R&D investment
21.0 B yen

Sales CF80.0 B yen(*1)

Equipment
investment
45.0 B yen
M&A investment
10.0 B yen

Make investment
for growth● Investment for
Next Stage
76.0 B yen● Investment in
human capital

Return profit toshareholders● Stable and continuous
dividend payment

Other
fundraising(*2)

Return toshareholders*1: Before deduction of R&D cost
*2: Borrowing and sale of cross-held shares
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Major activities toward
the 100th anniversaryof the foundation(3) Activities to increase ROIC
Strive to increase ROIC through improvements in both aspects of profit/loss and capital.
Increase of
ROIC

Profit/loss improvement
Increase of
Increase ofprofitability
sales
Improvementof profit
marginCapital improvement
Increase of
efficiency

Reduction of
total assets
Increase ofcapitalefficiency

Increase of sales of new
business / new products
Expansion of sharein existing markets

Increase ofprofitability

Reduction of individual costs
Reduction of fixed costs /sales management cost
Reduction of inventories

Increase of
efficiency

Review of cross-held shares
Utilization of Group CMS*
Improvement of
Cash Conversion Cycle

Growthinvestment* CMS: A system to centrally manage financing conditions in the Group aimed to increase the financial accommodations efficiency within the Group.
(Cash Management System)
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01

In establishing
Medium-termManagement Plan

02 “Realize-EV100”

03

Major activities toward
the 100th anniversaryof the foundation(4) Dividend policy for surplus
In principle, the consolidated payout ratio of 30% or more and DOE of 2.0% as the lower limit index are our current targets.
(Yen)

Change of dividend per share and dividend payout ratio

50
40
30

34%

37%

41%

27

27

27

31

40%

Dividend payout ratio

30%

DOE as the lower limit index

20%30％ or more

20
10

配当性向
Dividend payout ratio

36%

25%

26

50%

1株あたりの配当金
Dividend per share

2.0%

10%

0

0%

20/3

21/3

22/3

23/3

24/3

DOE (%) *

2.0

2.0

2.0

1.9

2.1

Total amountof dividend

16.3

16.8

16.8

16.8

19.3

21 Mid-term Plan

24 Mid-term
Plan* DOE (Dividend on Equity)= Annual total of dividend / Consolidated average amount of net assets for the period

25/3

26/3

27/3

28/3

Realize-EV100
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01

In establishing
Medium-termManagement Plan

02 “Realize-EV100”

03

Major activities toward
the 100th anniversaryof the foundation

Non-financial information (ESG initiatives)

E

Environmentrelated targets

Participate in TCFD and endeavor to achieve 50% reduction of greenhouse effect gas emission(compared to the level in 2013) by 2030 and substantially zero emission by 2050.
Decarbonization efforts in Nippon Signal Group (image)

Reduction ofemission fromproducts

1) Products of lower power consumption,2) Increased maintainability of products,
3) Provision of energy saving solutions, etc.

Emission control inbusiness activities

Plant

Labor saving
Streamlining
CBM

S

Clean electric power
procurement, introduction ofsolar power generation, etc.

Autonomous
Driving

Robot

Carbon-freesolution

OfficeTowardzero carbon

Continue and strengthen community-based efforts of contribution to society
HR system reform andpromoting diverse
working styles

Increasing digital literacy
through reskilling

Systematic and continual
training of model skills
and engineers

Business development
taking root in overseas
regions and job creation

Increasing engagement of employees and improving the ratio of male employees who take childcare leaveG• Business management using ROIC, evaluation and review of business portfolio to achieve once or more PBR• Communications with shareholders and investors, review of cross-held shares, establishment of BCP and risk
management
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32

01

In establishing
Medium-termManagement Plan

02 “Realize-EV100”

03

Major activities toward
the 100th anniversaryof the foundation

Human capital strategy
1 Human capital envisioned by Nippon Signal Group
Promote recruitment anddevelopment of human capital
centering around fail-safe
technology to adapt to thedrastically changing external
environment and realize global
business development.

2 Basic concept of human capital strategy

Address issues to find solutions through coordination of efforts
in each layer.

Self-discipline
Sense ofmission

Challenging
spiritCo-creation
ability

3 Primary measures of human capital strategy
Increase of engagement● Ensuring quality and volume of
employees● Maintaining physical and mental
health● Activating organization throughcommon objectives, better
communications and increased
motivation

DE&I promotion● Offering diverse opportunities toshow great performance● Flexible work style● Participation of women● Participation of global talent

Philosophy

Nippon Signal Group’s
philosophy

Organizational
strength

Increase of engagement

Diversity

DE&I promotion*

Individual
strength

Human capital management
based on continuity and change* DE&I: Diversity, Equity and Inclusion

Human capital management
based on continuity and change● Inheritance of technologies including
fail safe● Inheritance of manufacturing
technologies● Recruitment and development of DX
human resources
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33

Precautions
Earnings forecasts and the like are based on information currently available to us andcertain assumptions that we believe reasonable. Actual results may differ due tovarious factors such as risks and uncertainties.

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