COMPANY RESEARCH AND ANALYSIS REPORTNIPPON SYSTEMWARE CO., LTD.
9739
Tokyo Stock Exchange First Section

5-Jul.-2021
FISCO Ltd. Analyst

Nozomu Kunishige

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Summary of the FY3/21 results....................................................................................................................

01

2. FY3/22 results forecasts..............................................................................................................................

01

3. Medium-term management plan............ ......................................................................................................

02■Company Profile--------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company Profile.................................... ......................................................................................................

03

2. History................................................... ......................................................................................................

03■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 04
1. The Company’s strengths............................................................................................................................

04

2. Business Description............................. ......................................................................................................

05■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. Summary of the FY3/21 results....................................................................................................................

08

2. Segment overview.......................................................................................................................................

09

3. Financial condition and management indicators. .........................................................................................

11■Outlook for the future-------------------------------------------------------------------------------------------------------------------------------------------- 13• FY3/22 results forecasts..............................................................................................................................

13■Medium- to long-term growth strategy------------------------------------------------------------------------------------------------ 14
1. Medium-term management plan goals and strategies. ................................................................................

14

2. Priority measures for the final fiscal year of the medium-term management plan. .......................................

15■Shareholder Returns Policy----------------------------------------------------------------------------------------------------------------------------- 19■Information Security Policy------------------------------------------------------------------------------------------------------------------------------ 20

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/█ SummarySales and profits increased in a ninth straight year in FY3/21,
promotes DX in the medium-term management plan and is roughly
on track to reaching goals
NIPPON SYSTEMWARE Co., Ltd., <9739> (hereafter, also “the Company”) is an independent IT solutions provider
founded in 1966, and it is in an engineering group in which engineers account for nearly 90% of all employees. It conducts three solutions businesses; IT Solutions, Services Solutions, and Product Solutions. The Company’s biggest
strength is its backbone to support the realization of Digital Transformation (DX), which is a business transformation
measure to create business models and to change business processes by using new digital technologies. It does
so through utilization of synergy between its three businesses on the axes of AI and the Internet of Things (IoT),
which connects items such as home appliances and sensors over a network as a way to undertake not only datacollection, but also remote monitoring and control and use in product development and marketing. The Company
hopes to fully leverage these strengths to achieve the growth strategy.
1. Summary of the FY3/21 results
In FY3/21 consolidated results, the Company booked ¥39,282mn in net sales (+2.6% YoY) and ¥4,197mn inoperating profit (+8.7%) despite a difficult business environment affected by the COVID-19 pandemic. This was avery upbeat outcome with operating profit exceeding guidance by 19.9%. The Product Solutions business delivered
higher sales and profits with healthy momentum in the devices development business amid growth in the semiconductor market. The IT Solutions business, meanwhile, incurred a decline in sales because of a lull in the development
phase in some projects and opportunity losses stemming from money-losing projects in the previous fiscal year,
though profit improved on decline in money-losing projects. The Services Solutions business increased sales mainly
in digital solutions business but posted lower profit due to reinforcement of operations aimed at expanding businessand other outlays. The equity ratio climbed to 72.3% (vs. 70.0% at the end of FY3/20), which is significantly higher
than the average for the telecommunications industry on the TSE 1st Section (33.7% average at the end of March
2020). The Company continues to maintain extremely sound finances. It raised the dividend from ¥30 in FY3/20 to¥40 (with a ¥20 interim dividend and ¥20 period-end dividend). FISCO has a favorable view of management’s stanceof bolstering shareholder return, even in a difficult business environment, while also carrying out growth strategies
and sustaining healthy finances.
2. FY3/22 results forecasts
In FY3/22 consolidated guidance, the Company targets ¥42,000mn in net sales (+6.9% YoY) and ¥4,300mn inoperating profit (+2.4%). With tailwind from ongoing expansion of demand driven by DX advances and new workstyleand business activities that rapidly took hold due to COVID-19 impact, it intends to continue strategic investmentswith the aim of being the best partner for customers in DX efforts and also strengthen the business foundation forachieving future growth. FISCO expects the Company to ultimately increase profit more than planned because it
typically discloses conservative guidance at the start of the fiscal year. The Company plans to pay a ¥40 dividendon par with the previous year.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Summary

3. Medium-term management plan
In the medium-term management plan (FY3/20 to FY3/22), under the slogan “DX FIRST,” the policy is to transformthe Company itself into “a value-creation company.” As priority measures in FY3/22, the final fiscal year, the Company
aims to promote full-self and semi-self checkouts and electronic shelf tags solutions in the IT Solutions business, DX
solutions and services utilizing the latest technologies in the Services Solutions business, and 5G (5th-generation
mobile communication systems) and local 5G technology in the Product Solutions business. Initial numerical goals in
the plan were ¥43bn in net sales and ¥4bn in operating profit, including expansion of DX-related sales to ¥10bn. In
FY3/22 guidance, meanwhile, the Company targets ¥42bn in net sales, which is slightly less than the medium-term
management plan’s goal, but upside in operating profit. DX-related sales rose from about ¥2.8bn in FY3/20 toroughly ¥4bn in FY3/21, and the Company hopes to book ¥10bn in FY3/22 on higher sales of DX services andreinforcement of DX partners.
Key Points
Is developing three solutions business, and its strength is that it has a backbone that can support customers’
realization of DX through utilizing the synergies from these businesses, on the axes of IoT and AI• Sales and profits rose in a ninth straight fiscal year and operating profit beat guidance by 19.9%, despite adifficult business environment with the COVID-19 pandemic, in FY3/21• Forecasts higher sales and profits in FY3/22, though takes a conservative stance, due to continuation ofstrategic investments and reinforcement of the business foundation toward further growth• Targets ¥42bn in sales (including ¥10bn in DX-related sales) and ¥4bn in operating profit in FY3/22 with a slogan
of DX FIRST in the medium-term management plan, expects to roughly achieve the goals through promotion ofpriority measures•

Results trends
Net sales (left)

Operating profit (right)

(¥mn)

(¥mn)

50,000

5,000
4,197

4,300

3,860

40,000

4,000

3,354
2,940

30,0003,000

20,00033,502

36,107

38,27339,28242,00010,000

2,000

1,000

0

0
FY3/18

FY3/19FY3/20FY3/21

FY3/22 E

Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/█ Company Profile
Aims to create and provide excellent systems to enrich society
1. Company Profile
The Company Group’s basic management policy is to “Realize a highly profitable corporate structure” based on its
corporate philosophy of “Humanware By Systemware,” which expresses its desire to “create and provide excellent
systems to enrich society.”
In addition to the Company itself, the Company’s Group consists of three wholly-owned consolidated subsidiaries;
NSW TECHNOSERVICES Co., Ltd., which conducts businesses including system development and infrastructure
construction; in China, NSW China Co., Ltd., which conducts businesses including embedded software development; and NSW WITH Co., Ltd., a special subsidiary for the employment of people with disabilities that provides
general agency services and support services. In January 2018, NIHON SOFTWARE ENGINEERING Co., Ltd., which
conducts a systems integration business and other businesses, was made a subsidiary. The Company absorbed
this entity and brought it under the Services Solutions business in April 2020.
The Company’s business base is located to the west of Tokyo, but it has customers throughout the country, including
government offices and public organizations, and also many major companies, such as in the manufacturing anddistribution industries. When it was first establishment, an overwhelming large percentage of transactions were with
the NEC <6701> Group, but alongside the expansion of the customer base in recent years, this percentage has fallen
to just under 20% of net sales, and every year the scope of customers for transactions is widening. The Chinese
subsidiary mainly covers Japanese companies that are entering-into the local Chinese market. Additionally, it opened
the Taiwan office (representative office) in April 2018, and this office seeks to recruit customers and conducts local
surveys in the Taiwanese market, a global site for semiconductor production, assembly, and testing.
The Company Group is an engineering group with a total of 2,290 employees and nearly 90% of its workforce
comprising of engineers as of the end of March 2021. Mr. Shoji Tada has served as the President and Representative
Director since April 2013.
2. History
The Company Group started in 1966 as an independent software house, with a software development business andan outsourced computing business. Subsequently, in 1968 it started an operation management services business,and in 1978, a development business for firmware and logic circuits, which led to its current Product Solutions
business. Alongside the evolution of IT technologies, it started a systems integration business in 1990, a datacenter
business in 1998, a Cloud service business in 2009, and an IoT/M2M business in 2013, and its business areas
have expanded.
During this time, in 1982 the Company changed its name to its current name of NIPPON SYSTEMWARE Co., Ltd.
It began the over-the-counter trading of its shares in 1996 and opened the Yamanashi IT Center in 1998 with thefunds obtained from the market. In 1999 it was listed on the TSE 2nd Section, in 2000 its listing was upgraded to
the TSE 1st Section, and in FY3/16 it celebrated the 50th anniversary of its establishment. The Company is targeting
further advances through its role as a leader in realizing customer DX in the current medium-term management plan.
The Company’s stock is likely to move to the Prime Market in April 2022 accompanying revisions to TSE market
categories.

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Company Profile

History
August 1966

Established the Business Computing Center in Minato Ward, Tokyo. Commenced software development and outsourced
computing activities

October 1968

Commenced operation management service activities

December 1975

Acquired own building (present site of Head Office)February 1976

Became a member of Japan Software Industrial Association (now Japan Information Technology Service Industry Association)

June 1978

Commenced development activities related to firmware and logic circuits

June 1980

Launched a business for the sale of office computers and office-automation equipment

March 1982

Changed the company name to NIPPON SYSTEMWARE CO., LTD.

March 1986

Established the Osaka Branch (now the Osaka Office) in Osaka City. Strengthened regional development.

September 1986
February 1990
August 1990
April 1996

Started construction of the new Head Office building
Started the systems integration business
Established Nippon Technowave Co., Ltd., as a wholly owned subsidiary
Stock registered as over-the-counter with the Securities Dealers Association of Japan

October 1997

Obtained ISO 9001 certification, an international assurance of quality

August 1998

Established the Yamanashi IT Center. Launched the datacenter business

April 1999
March 2000
July 2002
September 2002
February 2005
March 2007
April 2007
October 2007
September 2009

The Company is listed on the TSE 2nd Section.
The Company is designated to the TSE 1st Section.
The outsourcing business to manage and control customers’ information systems achieved the requirements to be certified in the
ISMS (Information Security Management Systems) assessment scheme.
Established NSW SALES CO., LTD.
Obtained ISO 14001 certification, an international environmental management standard
Obtained ISO/IEC27001, an international standard for Information Security Management Systems
Certified by the Ministry of Health, Labour and Welfare as a corporation promoting measures to support the development of thenext generation
Obtained ISO/IEC20000, an international standard for IT service management systems
Launched the Cloud service business

October 2009

Established NSW WITH CO., LTD. (currently a wholly-owned consolidated subsidiary)

April 2010

Established NSW China Co., Ltd. (currently, a wholly-owned consolidated subsidiary)

May 2013

Launched the IoT/M2M business

July 2013

Changed the name of NIPPON TECHNOWAVE CO., LTD., to NSW TECHNOSERVICES CO., LTD., after the merger with NSW
SALES CO., LTD.

January 2018

Acquired all the shares of NIHON SOFTWARE ENGINEERING Co., Ltd., and made it a subsidiary

April 2018

Established the Taiwan Office in Taiwan.

April 2020

Absorbed NIHON SOFTWARE ENGINEERING Co., Ltd.

Source: Prepared by FISCO from the Company’s website█ Business overview
IT Solutions, Services Solutions, and Product Solutions as corebusinesses and aims to create an innovative future with IoT and AI
leveraging these technology synergies
1. The Company’s strengths
The Company Group conducts three solutions businesses–IT Solutions, Services Solutions, and Product Solutions–and it is aiming to create an innovative future with IoT and AI that leverage the technological synergies from thesebusinesses. Its major strength is that it has technological expertise for both software and for hardware.

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Business overview

The Company’s strengths include its accumulated industry and business expertise and systems-construction
capabilities that it has cultivated in the IT Solutions business in various industrial fields; a foundation for the provisionof infrastructure and platforms, such as service coordination capabilities in the Services Solutions business andfor the Cloud environment; product development capabilities, including for embedded software and LSI design in
the Product Solutions business; and technological development capabilities, such as for image processing. The
Company’s major strength is that it has a backbone that can support the realization of DX that its customers wantthat leverage these technologies’ synergies on the axes of IoT and AT, and its policy is to utilize all these strengths
for growth in the future.
The Company’s strengths

Source: Reprinted from the Company’s results briefing materials

2. Business Description
Looking at net sales and operating profit by segment in FY3/21, the IT Solutions business provided 33.6% of net
sales and 30.9% of operating profit, the Services Solutions business 26.4% of net sales and 13.4% of operating
profit, and the Product Solutions business 40.0% of net sales and 55.6% of operating profit. Key reasons for the largepresence of the Product Solutions business and its relatively high profitability are significant technological barriers
to entry and the small number of companies in this business as an independent firm at the Company’s scale. On
the other hand, the profit margins in the IT Solutions business and the Services Solutions business are relatively low
due to the impact of reducing dependency on designated industries and operations in order to suppress the effectsof economic conditions to a minimum, and the handling of business across different industries and operations.

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.

5-Jul.-2021

9739 Tokyo Stock Exchange First Section

https://www.nsw.co.jp/english/

Business overview

Net sales and operating profit by segment (FY3/21)

40.0%

30.9%

33.6%

Net sales (outer):¥39,282mn,
operating profit (inner):
55.6%¥4,197mn

IT Solutions
Service Solutions
Product Solutions

13.4%

26.4%
Source: Prepared by FISCO from the Company’s results briefing materials
The IT Solutions business, which provides operations-related solutions, is comprised mainly of business solutions,finance and public sector solutions, and systems equipment sales. Based on the business expertise cultivatedover many years, such as for the manufacturing, distribution, finance and insurance industries, and for government
offices, the Company provides optimized solutions for its customers, from consulting through to systems design,development, maintenance, and operations.
The Services Solutions business was previously under the IT Solutions business, and the Company converted it toan autonomous segment at the start of the current medium-term management plan in FY3/20. The content of thisbusiness is the provision of IT services, and it is comprised mainly of the digital solutions and Cloud infrastructureservice businesses. The Company supports customer systems with a wide range of services, such as IoT and AI services, Web site and EC construction, and other common solutions for all industries, public-cloud and private-cloudenvironment building services (delivering data and software to users over the network), housing services at its own
data center (the Company houses servers from customers, which basically means housing computers that provide
a service), hosting services (renting servers that it owns to customers), and comprehensive management services
that handle from operation design to construction and management of customer information systems.
In the Product Solutions business, the Company develops the embedded systems that are installed in electronic
devices and other equipment, and also develops LSI and FPGA, and this business is comprised of the embedded
development and device development businesses. In embedded systems development, the Company responds
to demand for product diversification, increased efficiency and improved design quality by using embedded technologies it has cultivated for app, middleware and driver development as a result of developing a wide range of
products for the automotive and industrial sectors amongst others. It also provides various solutions for the transition
to smart products. In addition, in LSI and FPGA development, it designs LSI (Large Scale Integration: integrated
circuits into which many electronic components such as transistors, resistors, and capacitors are integrated into
one semiconductor chip), including for image processing and communications-related, and boards (the design ofelectronic circuit boards). It provides high-level designs, logic designs and verification, logic integration, layout design,and solutions according to customer’s requirements, from manufacturing through to testing. It can also respond torequests for low-power designs and advanced processes in every field.

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Business overview

There are high expectations that DX business based on IoT & AI solutions will become the Company’s new pillarof earnings by integrating expertise in the three existing businesses. It is a business to provide IoT & AI services
and edge devices solutions in a new field that only started in 2013. Therefore, it has not yet reached the stage ofrecording earnings as an independent segment, and the current situation is that its earnings are included in theexisting businesses. In IoT & AI services, the Company utilizes its strength of being able to provide total coordination,from devices through to the Cloud, to supports its customers’ creation of new business value, from the accumulationof data through to analysis and utilization, based on Toami, its IoT Cloud platform. Also, in edge device solutions,the Company proposes an IoT environment that is optimized for each customer from a small start that keeps costs
down, using its abundance of designs that are compliant not only with its own embedded applications but also with
LSI, and also its development capabilities and alliances with vendors of various types of sensors and devices. The
Company Group is promoting new services based on these IoT & AI solutions and working to expand DX-related
business under the existing medium-term management plan.
The Company’s Toami solution is steadily gaining in market recognition mainly for “realization of IoT-accessible
products.” More than 100 companies cumulatively have adopted this solution, and alliance partners have expanded
to over 30 companies. This solution is available in over 30 countries worldwide. Inquiries for related services, suchas analysis service that makes more effective use of data collected through IoT, have risen too recently. An exampleof Toami deployment is Panasonic’s <6752> IoT for real-time monitoring of commercial projector operations, early
discovery of issues, and improvement of service quality with maintenance at suitable timing. Remote monitoring ofcommercial projectors provides real-time data on operating conditions and issues. Positive effects of this monitoringare early discovery of decline in display quality due to equipment problems and operational trouble, replacement ofconsumables at suitable timing in accordance with operating conditions, improved quality in maintenance throughreal-time monitoring, and collection and accumulation of information that contributes to better product quality. Other
customers utilizing Toami are NTT DOCOMO, INC., Nipron Co., Ltd., Tohoku Energy Service Co., Inc., Watanabe
Electric Industry Co., Ltd., NEC Networks & System Integration Corporation <1973>, RION Co., Ltd. <6823>, andJapan Radio Co., Ltd.
Toami deployment example: Panasonic system conceptual image

Remote monitoring system

Power-source voltage,
video input signal, air
supply/exhaust
temperature, etc.

Big data

Monitor advance signs of accidents

Sensors that indicate the operating situation
Real-time data transmission

Dedicated gateway equipment

High-brightness projectors

Source: The company’s web site

We encourage readers to review our complete legal statement on “Disclaimer” page.

07 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/█ Results trends
Posted higher sales and profits beating period-start guidance, evenwith COVID-19 impact on some projects, in FY3/21
1. Summary of the FY3/21 results
The Japan economy faced uncertain conditions in FY3/21 amid rising prospect of needing time to bring COVID19 under control due to multiple waves of COVID-19 infection spread. In the information services industry, theCompany’s sector, despite some cautiousness such as corporate delays and curtailments of IT investments related
to economic downturn, demand for services and solutions that support “With Corona” and “After Corona” conditions rapidly increased and DX initiatives that substantially alter business and work processes utilizing IoT, AI, 5G(5th-generation mobile communications system; supports fast, high-capacity communication and simultaneousconnections by many devices)/local 5G, and other digital technologies have been accelerating.
Amid these conditions, based on the medium-term management plan (FY3/20 to FY3/22), the Group sought toexpand business and improve profitability by integrating knowledge and knowhow from a wide range of industries
and business areas that it accumulated over many years with the latest digital technologies and contribute tocustomer business model innovation and work process reforms.
Thanks to these efforts, in FY3/21 consolidated results, the Company booked ¥39,282mn in net sales (+2.6% YoY),¥4,197mn in operating profit (+8.7%), ¥4,240mn in ordinary profit (+8.8%), and ¥2,765mn in profit attributable toowners of the parent (+3.6%), a ninth straight year of sales and profit gains, and also lifted operating profit margin
to 10.7% (+0.6ppt). In particular, it substantially beat period-start targets by 19.9% in operating profit and 1.6ppt inoperating profit margin. Even though orders activity stalled in 1H because of COVID-19 impact, sales still improved
for the year with a recovery in 2H. Operating profit increased on higher sales, reduction of money-losing projects,
and lower SG&A expenses, including cutback in transportation costs during the COVID-19 pandemic. FISCO hasa favorable view of the Company’s achievement of higher sales and profits, despite difficult business conditions,aided by its broad customer base.
FY3/21 consolidated results(¥mn)
FY3/20FY3/21

YoY

Vs. forecast

Results% of net
sales

Forecast

Results% of net
sales

Increase(decrease)% change

Increase(decrease)

Net sales

38,273100.0%

38,50039,282100.0%

1,009

2.6%

782

2.0%

Operating profit

3,860

10.1%

3,500

4,197

10.7%

337

8.7%

697

19.9%

Ordinary profit

3,898

10.2%

3,540

4,240

10.8%

342

8.8%

700

19.8%

Profit attributable toowners of parent

2,668

7.0%

2,400

2,765

7.0%

97

3.6%

365

15.2%

Note: FY3/21 plan targets from disclosure on July 27, 2020
Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

08 20% change

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Results trends

Achieved profit gains in IT Solutions and Product Solutions
businesses
2. Segment overview
The following section reviews results by business segments.
(1) IT Solutions business
The IT Solutions business posted ¥13,202mn in net sales (-1.6% YoY), ¥1,298mn in operating profit (+7.7%), and9.8% operating profit margin (+0.8ppt). It incurred a decline in sales because of a lull in the development phasein some projects and opportunity losses stemming from money-losing projects in the previous fiscal year, thoughprofit improved on decline in money-losing projects and other factors. Segment results overshot guidance by
2.3% in net sales and 23.6% in operating profit. Profit improvement in this segment contributed significantly tohealthy earnings, similar to the Product Solutions business.
In the sales breakdown, financial and public sector solutions recorded ¥6,447mn in sales (+1.1% YoY). Despite
decline in government ministry and agency and public organization sales on backlash from major projects in theprevious fiscal year, financial and insurance industry sales rose on system transition projects and an automobile
insurance-related system development project. Business solutions booked ¥4,086mn in sales (-14.4%). While
manufacturing sales strengthened mainly on package-related and existing customer projects, retail and logistics
sales weakened because of opportunity losses from impact of money-losing projects (stalled operating activities,etc.) in the previous fiscal year and a lull in development on some other projects. The Company largely dealt withmoney-losing projects during the previous fiscal year. Furthermore, system equipment sales had ¥2,669mn insales (+17.9%) on increase in semi-self checkouts for retailers (with these checkout systems, store staff handle
product scanning and customers pay using a payment machine located next to the scanning register).

Net sales and operating profit margin trends
in the IT Solutions business
Systems equipment sales (left)
Business solutions (left)
Finance and public sector solutions (left)
Operating profit margin (right)(¥mn)
15,000(%)
15.0

13,415

13,202

12,000

2,263

2,669

9,000

9.0
4,774

4,086

9.8

6,000
3,000

9.0
6.0

6,378

6,447

FY3/20FY3/210

3.0
0.0

Source: Prepared by FISCO from the Company’s results briefing materials



12.0



We encourage readers to review our complete legal statement on “Disclaimer” page.

09 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Results trends(2) Services Solutions business
The Services Solutions business reported ¥10,380mn in net sales (+5.4% YoY), ¥564mn in operating profit(-10.5%), and 5.4% operating margin (-1.0ppt). In sales, digital solutions business expanded with IoT & AI,
RealWear, and other new services as drivers. Profit slipped on spending to strengthen operations for businessexpansion and other outlays. Segment results were roughly on track with guidance with upside of 1.8% in net
sales and 2.6% in operating profit. While the Company made this an autonomous segment in FY3/20, the Services
Solutions business has successfully ramped up new businesses and expanded into a segment that supports
overall results.
In the sales breakdown, cloud infrastructure service business sales totaled ¥7,575mn (+0.9% YoY). While housing
projects and infrastructure building projects declined in infrastructure and data center business, cloud businesshad an increase in public cloud (provision of servers and other cloud computing environment over the Internet)
transition projects and other related business and other services benefited from healthy data-related services.
Digital solutions sales totaled ¥2,805mn (+19.7%), an upbeat result, thanks to expansion of IoT and AI businessled by IoT system building projects and robust demand for RealWear industrial smart glasses. Web and EC-related
business sustained overall scale, despite backlash from large projects in the previous fiscal year, mainly bydeepening activities at existing customers.

Net sales and operating profit margin trends
in the Services Solutions business(¥mn)

Cloud infrastructure service (left)
Operating profit margin (right)

Digital solutions (left)

15,00015.0

12,00010,3809 , 853

9,000

2,805

2,343
6.4

6,000

3,000

(%)

5.4
7,509

7,575

FY3/20FY3/21

0

12.0

9.0

6.0

3.0

0.0

Source: Prepared by FISCO from the Company’s results briefing materials

(3) Product Solutions business
The Product Solutions business posted ¥15,699mn in net sales (+4.6% YoY), ¥2,335mn in operating profit(+15.4%), and 14.9% operating profit margin (+1.4ppt). In sales, devices development business was upbeat amid
growth in the semiconductor market. Profit increased mainly on the earnings boost from higher sales. Embedded
development delivered a profit gain on improvement in automotive margin after a setback in FY3/21. Segment
results overshot guidance by 1.9% in net sales and 22.9% in operating profit, and this segment fueled overall
healthy momentum. The Product Solutions business maintained the highest profitability primarily due to significant
technological barriers to entry and the small number of companies in this business as an independent firm at theCompany’s scale, as mentioned earlier.

We encourage readers to review our complete legal statement on “Disclaimer” page.

10 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Results trends

In the sales breakdown, embedded development had ¥8,881mn in sales (+1.5% YoY), despite a flat trend in
facility equipment like medical equipment and decline in mobile business, thanks to increases in CASE (a made-up
term referring to next-generation technology and new services), ADAS (advanced driving assistance system),and mobility in automotive and 5G/local 5G-related development and assessment in communications. Device
development sales rose substantially to ¥6,817mn (+9.1%) on increase mainly in image processing, the Company’s
strength, with expansion of development operations amid growth in the semiconductor market.

Net sales and operating profit margin trends
in the Product Solutions business
Embedded development (left)
Operating profit margin (right)(¥mn)

Device development (left)(%)

18,00015,00012,00018.0
15,69915,004

14.9

13.5

6,817

6,250

15.0
12.0

9,000

9.0

6,000

6.0
8,881

8,753
3,000

3.0

0

0.0
FY3/20FY3/21

Source: Prepared by FISCO from the Company’s results briefing materials

Is extremely financially sound
3. Financial condition and management indicators
Looking at financial conditions, total assets expanded ¥2,143mn YoY to ¥32,660mn at the end of FY3/21. While workin process declined, cash and deposits, notes and accounts receivable-trade, and products increased. Liabilities
totaled ¥9,042mn, dropping by ¥101mn. Despite increases in accounts payable-trade, retirement benefit liability,and provision for bonuses, provision for loss on construction contracts, advances received under other current
liabilities, and accrued consumption taxes declined. Net assets totaled ¥23,618mn, an increase of ¥2,245mn, withsupport from booking profit attributable to owners of the parent.
As a result of the above, the current ratio (current assets / current liabilities) increased by 44.1 percentage points (PP)on the end of the previous fiscal year to 365.4%, and the Company’s short-term solvency is extremely high. Also,
the fixed ratio (fixed assets / equity capital) was 36.8%, down 3.9 PP, and the procurement of fixed assets (suchas equipment investment) is fully covered by shareholders’ equity with no repayment deadlines, and the Company
Group does not have any debt and continues to practice debt-free management. Moreover, the equity ratio climbed
to 72.3% (70.0% in the previous fiscal year), which greatly exceeds the average for issues in the telecommunicationsindustry on the TSE 1st Section (33.7% in the end of March 2020), and the Company can be evaluated as being
extremely financially sound. Furthermore, the Company realizes high profitability as seen in indicators with ROE at
12.3% and ROA at 13.4%, significantly surpassing averages in the telecommunications industry on the TSE 1st
Section of 5.7% and 7.3%.

We encourage readers to review our complete legal statement on “Disclaimer” page.

11 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.

5-Jul.-2021

9739 Tokyo Stock Exchange First Section

https://www.nsw.co.jp/english/

Results trends

Consolidated balance sheets and management indicators(¥mn)
End of FY3/20

End of FY3/21

Increase (decrease)

21,81523,9802,164

Cash and deposits

11,48812,383895

Notes and accounts receivable-trade

8,844

9,651

806

837

731

-105

8,701

8,680

-20

6,241

6,168

-73

117

101

-15

2,341

2,409

67

Total assets

30,516

32,6602,143

Current liabilities

6,789

6,563

-226

Noncurrent liabilities

2,354

2,478

124

-

-

-

Total liabilities

9,144

9,042

-101

Total net assets

21,372

23,6182,245

Current ratio (current assets/ current liabilities)

321.3%

365.4%

44.1ptFixed ratio (fixed assets / equity capital)

40.7%

36.8%

-3.9ptEquity ratio

70.0%

72.3%

2.3pt

ROE (return on equity)

13.2%

12.3%

-0.9ptROA (return on assets)

13.3%

13.4%

0.1pt

Current assets

Work in process
Fixed assets
Property, plant and equipment
Intangible assets
Investments and other assets(Interest-bearing debt)

Stability

Profitability

Source: Prepared by FISCO from the Company’s financial results and results supplementary materials

At the end of FY3/21, the balance of cash and deposits had increased ¥895mn at the end of the previous fiscal yearto ¥12,383mn. This was because expenditure, such as the payment of dividends and to acquire property, plant andequipment, was covered by the funds obtained from operating activities.
In cash flow trends, cash flow from operating activities was ¥1,998mn (decline of ¥1,888mn YoY). While theCompany booked a profit before income taxes, it also had increases depreciation and trade receivables, higher
inventory assets, and income taxes paid. Net cash used in investing activities, meanwhile, was ¥583mn (an increaseof ¥277mn YoY). This mainly reflected purchase of property, plant and equipment and payments of leasehold andguarantee deposits. Net cash used in financing activities totaled ¥520mn (up ¥28mn YoY) with dividend paid as
the main item.
Cash flow statements(¥mn)
FY3/20FY3/21

Cash flow from operating activities

3,887

1,998

-1,888Cash flow from investing activities

-306

-583

-277

Cash flow from financing activities

-492

-520

-28

11,48812,383895

Cash and cash equivalents at the end of the fiscal period

Increase (decrease)

Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/█ Outlook for the future
Forecasts higher sales and profits in FY3/22 amid continuation ofstrategic investments• FY3/22 results forecasts
In the information services industry in FY3/22, despite cautiousness such as corporate delays and curtailments of
IT investments at some companies in the near term, demand is likely to continue expanding for DX that uses IT inmanagement and business model reforms and also new workstyle and business activities that rapidly took hold due
to COVID-19 impact. With tailwind from these changes in the business environment, the Group intends to accelerateand strengthen business growth and reforms and implement initiatives as needed to address changes in conditions
with the aim of being the best partner for customers in DX efforts.
In FY3/22 consolidated guidance, the Company targets ¥42,000mn in net sales (+6.9% YoY), ¥4,300mn in operating
profit (+2.4%), ¥4,340mn in ordinary profit (+2.4%), and ¥2,950mn in profit attributable to owners of the parent(+6.7%). It targets higher sales and profits by continuing strategic investments to address anticipated changes inbusiness conditions and strengthening the business foundation for achievement of growth. In operating profit margin,
meanwhile, it projects a 0.5ppt YoY decline to 10.2% due to increase in SG&A expenses, including transportation
costs related to resumption of operating activities and advertising and promotion costs. FISCO expects results toexceed FY3/22 results to beat guidance, similar to FY3/21, considering disclosure of conservative period-starttargets.
FY3/22 consolidated results outlook(¥mn)
FY3/21

FY3/22

YoY
Increase(decrease)% change

100.0%

2,718

6.9%

10.2%

102

2.4%

4,340

10.3%

100

2.4%

2,950

7.0%

185

6.7%

Results% of net sales

Forecast% of net sales

Net sales

39,282100.0%

42,000Operating profit

4,197

10.7%

4,300

Ordinary profit

4,240

10.8%

Profit attributable toowners of parent

2,765

7.0%

Source: Prepared by FISCO from the Company’s financial results and results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/█ Medium- to long-term growth strategy
Aiming to be a company that guides customers to realizing DX
1. Medium-term management plan goals and strategies
The Company used the following assumptions for the business environment in formulation of the medium-term
management plan (FY3/20 to FY3/22). For the domestic economy, it projected slowdown from impact of overseas conditions, the consumption tax hike, and other factors. It also noted the importance of efforts to improve
productivity through promotion of workstyle reforms and decline in the working-age population. With these kindsof environmental changes in the background, customer companies’ measures for DX have become fully fledged,
and stable growth is forecast for the IT industry. On the other hand, alongside the solid demand, the shortage ofengineers is becoming even more serious, and the Company is aware that it will be necessary to both respond to
DX and to secure human resources.
Based on this outlook, the Group seeks to become a strong value-creating entity that is affected as little as possibleby fluctuations in the economy. Toward this, it is first aiming for net sales of around ¥50bn and to build a solid
business foundation. Also, for the time being it is focusing on achieving business growth, while also working on
establishing more autonomous, stock-type businesses that do not rely on human resources. During the plan’s three
years, the Company intends to transform the Company itself into “a value-creation company” by contributing to its
customers’ realization of DX with a slogan of “DX FIRST.”With this fundamental policy and in light of priority strategies, the Group’s initial plan goals were raising net sales
from ¥36.1bn in FY3/19 to ¥43bn in FY3/22, the final fiscal year, and operating profit from ¥3.3bn to ¥4bn. Withinthese amounts, DX-related net sales, as the total for the three business segments, are expected to increase toaround¥10bn. Overall, net sales are forecast to increase about ¥7bn over the three years, so it can be said that
key to achieving the targets in the medium-term management plan will be growing the DX-related businesses in
the near future.
Summary of the new medium-term management plan

Source: Reprinted from the Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.

5-Jul.-2021

9739 Tokyo Stock Exchange First Section

https://www.nsw.co.jp/english/

Medium- to long-term growth strategy

In FY3/21, despite a business environment not expected at the time of plan formulation of economic setback from the
COVID-19 pandemic, the Company sustained sales and profit gains in the two years through FY3/21 and operating
profit margin moved upward as well. Thanks to this outcome, the Company’s guidance for FY3/22, the final fiscal
year of the medium-term management plan, only expects modest shortfall versus the plan goal in net sales at¥42bn and forecasts upside in operating profit at ¥4.3bn (vs. ¥4bn) and operating profit margin at 10.2% (vs. 9.3%).
FISCO thinks change in the business environment from COVID-19 might provide a catalyst for the acceleration of
DX business promoted by the Group.

Net sales and operating profit trends and goals
Net sales (left)
Operating profit margin (right)(¥mn)

Operating profit (left)(%)

50,00012.5
10.1

40,000

10.7

10.2

9.3

10.0

9.3
30,00020,000

7.5

10,000

3,860

3,354

43,00042,00039,282

38,27336,107

4,197

5.0

2.5

4,300

4,000

FY3/22 E

FY3/22 (goal)00.0
FY3/19FY3/20FY3/21

Source: Prepared by FISCO from the Company’s results briefing materials
2. Priority measures for the final fiscal year of the medium-term management plan
The Company plans to implement the following priority measures for the business segments in the final fiscal yearof the medium-term management plan.
(1) IT Solutions businessIn the IT Solutions business, it plans to deploy full-self and semi-self checkouts and electronic shelf tag solutions
that address labor-saving and contactless needs in the distribution industry, expansion of ERP (system that
centrally manages corporate business resources and contributes to management decisions in real time) sales
and promotion of PLM and PDM (product information management system that centrally manages data related
to products and designs) deployment consulting, response to legacy-system modernization and migration in
the financial and insurance industry, and participation in digital government projects from public ministries andagencies.
Electronic shelf tagging is a solution that automates updating of prices on store shelves. Large companies havestarted rollouts, and this content is likely to exhibit market expansion. The Company supports significant gains inlabor savings, automation, and efficiency in customer store management by linking the POS system and online
shopping. For customers, this solution greatly alleviates tag switching burden and facilitates immediate pricechanges, reduces operational mistakes, such as tagging mistakes, and helps in dealing with manpower shortages.

We encourage readers to review our complete legal statement on “Disclaimer” page.

15 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Medium- to long-term growth strategy

Electronic tags

Source: Reprinted from the Company’s results briefing materials

Digital government refers to revisions of administrative services and reforms to the administration format itself
utilizing digital technologies based on collaboration between public and private sectors. This is one of the government’s core initiatives that addresses the national issue of an aging population and shrinkage in the working-age
population. The government plans to establish a Digital Agency as the command center for promoting digitalizationin the various agencies and ministries by fall 2021.
Through implementation of these measures, the Company aims to expand mainly distribution and manufacturingbusiness with FY3/22 targets of ¥14,200mn in net sales (+7.6% YoY), ¥1,400mn in operating profit (+7.8%), and9.9% operating profit margin (+0.1ppt).
(2) Services Solutions business
The Services Solutions business is the main segment in promotion of DX in strategic areas. In FY3/22, it isreorganizing technology provision divisions with the aim of further acceleration of DX-related business. In particular, it aims to develop the fast-growing market for utilization of corporate internal data and provide newvalue by connecting a variety of data, including the customer value chain. The Company also wants to expand
overall business by building a platform to realize this capability on the cloud and bolstering app development,
infrastructure building, and other services.
As rollout of a DX solution, the Company concluded a sales agent contract with US-based RealWear in August
2019 and started sales of RealWear industrial smart glasses as a first-tier platinum partner. RealWear displays
manuals and camera video on a compact monitor by the eyes and is also equipped with a voice recognition
feature that realizes total hands-free operation through voice instructions. It can provide applications suited tocustomers too. The Company’s data centers already implemented remote operation and monitoring services.
Through use of RealWear, the Company added remote task assistance service in which its staff handles tasks
based on instructions from remotely located customers and AI-driven automated operation service even during
the COVID-19 pandemic. It is actively making DX proposals for customer system operation work based on the
track record of DX utilization at its own data centers.

We encourage readers to review our complete legal statement on “Disclaimer” page.

16 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Medium- to long-term growth strategy

RealWear

Source: Reprinted from the Company’s results briefing
materials

Due to these initiatives, the Company targets ¥11,300mn in net sales (+8.9% YoY), ¥650mn in operating profit(+15.2%), and 5.8% operating margin (+0.4ppt) in FY3/22.
(3) Product Solutions business
Deployment of 5G and local 5G technology is a key for the embedded and devices development businesses
in FY3/22. Main opportunities are 5G/6G support in the communications area and local 5G as equipment inplant and farming areas. In the automotive area, it can be developed in the CASE domain for applications suchas automated driving, while in the mobile area, it aims for promotion of MaaS (Mobility as a Service). Devices
development business aims to broaden business scope through collaboration and cooperation with domestic
and overseas partners and pursuit of catch-up in cutting-edge technologies.
Promotion of MaaS

Source: Reprinted from the Company’s results briefing materials

Based on implementing these measures, the Company targets ¥16,500mn in net sales (+5.1% YoY), ¥2,250mn
in operating profit (-3.7%), and 13.6% operating margin (-0.7ppt) in FY3/22. This appears to be a cautious plan
because it factors in higher spending from resumption of sales activities and considering high profitability in
FY3/21.

We encourage readers to review our complete legal statement on “Disclaimer” page.

17 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Medium- to long-term growth strategy(4) DX-related business
For the DX-related business, which forms the core of this plan, the digital transformation that each company isworking on is understood to be “companies’ measures for business transformation, of creating business models
and changing business process by utilizing new digital technologies.” The policy is to define the DX-related
business in the Company as “providing solutions and service businesses that support the realization of DX basedon new digital technologies, such as IoT, AI,” and as a “business involving DX-related product development andtechnological development, such as edge computing.” It intends to contribute to transforming customers’ businessmodels and operations processes through combining the operations expertise and technological capabilities thatit has accumulated up to the present time with the various methods of realizing DX.
In DX-related initiatives, the Company focused in FY3/21, the second year of the plan, on expansion of IoT and
AI-related services for manufacturing and construction industries and creation of new services that combine
RealWear industrial smart glass and existing solutions. In 1H, sales stalled because of temporary suspensionof projects and inspection delays due to COVID-19 pandemic. Steady resumption of economic activities in 2H,
however, supported expansion to about ¥4bn in full-year sales, roughly on track with the plan. In FY3/22, thefinal fiscal year, the Company targets ¥10bn in sales on accelerated gains through reinforcement of IoT and AI
services focused on certain industries and strengthening local 5G-related business.
As specific DX service initiatives, the Company promotes a MaaS platform that centrally manages equipment anduser locations and states using mobile location information in Product Solutions and collaboration of the “digicell”
cell production assistance system, an existing solution, and RealWear industrial smart glasses in IT Solutions.
Furthermore, in Services Solutions, which promotes the Company’s DX-related business, it plans to realize
customer DX by strengthening collaboration with partners that possess highly specialized technology capabilities
in various areas to broaden DX partners and providing optimal solutions for customer needs.
DX-related results and goals

Source: Reprinted from the Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

18 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.

5-Jul.-2021

9739 Tokyo Stock Exchange First Section

https://www.nsw.co.jp/english/█ Shareholder Returns Policy
Raised the dividend in FY3/21 while striving to achieve a financial
strategy that addresses growth and financial soundness
The Company aims to realize a financial strategy that supports the growth strategy while sustaining financial
soundness. It wants to maintain a healthy capital level and achieve sustainable growth with ROE at 12% or above.
It also plans to continue making necessary investments in future growth and to invest in R&D, M&A and alliances,personnel training, and other areas. In shareholder return, meanwhile, the Company’s basic policy is paying stable
and continuous dividends that reflect its financial situation and earnings.
In FY3/21, the Company lifted the dividend to ¥40 (interim ¥20, period-end ¥20) and dividend payout to 21.6%,
versus FY3/20’s ¥30 and 16.8%. In FY3/22, it guides for a ¥40 dividend (interim ¥20, period-end ¥20), the same level
as the previous year, and 20.2% dividend payout. The Company wants to broaden business scope further in pursuitof ¥50bn in net sales. Since this process might involve fund outlays on M&A deals or alliances with other companies,
it is putting priority on business expansion for the future and efforts to maintain and enhance competitiveness over ahefty dividend hike. Meanwhile, FISCO favorably assesses the Company’s FY3/21 dividend hike as a decision thatfactored in shareholder return amid a difficult business environment.

Trends in the dividend and the dividend payout ratio
Period-end dividend (left)
Dividend payout ratio (right)(¥）

Interim dividend (left)
(%)

60.0

25.0
21.6

50.0

20.2

19.5
18.0

16.8

20.0
4 0 .04 0 .040.0

3 0 .030.0

2 5 .0

20.0

10.0

10.0

15.0

3 0 .0
20.0

12.5

15.0

15.0

17.5

15.0

FY3/18

FY3/19FY3/20

20.0
10.0

20.0

20.0

FY3/21

FY3/22 E

0.0

5.0

0.0

Source: Prepared by FISCO from the Company’s financial results
The Company has focused on corporate governance for some time and acknowledges quick and suitable decisions
and enhancing management transparency toward shareholders and investors as important corporate issues. It hence
suitably revises systems, such as adjusting the number of directors on the board, adopting an executive director
framework, and selecting outside directors. FISCO also positively assesses sustained efforts to reflect shareholder
and investor views in management through ongoing disclosure and IR activities.

We encourage readers to review our complete legal statement on “Disclaimer” page.

19 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

NIPPON SYSTEMWARE CO., LTD.
9739 Tokyo Stock Exchange First Section

5-Jul.-2021
https://www.nsw.co.jp/english/

Shareholder Returns Policy

The Company earnestly engages in environmental and social activities too. Based on a corporate motto of“Humanware By Systemware,” it provides meaningful systems, continuously promotes corporate activities that
contribute to realization of a sustainable society and environmental conservation, and pursues sustainable development goals (SDGs) advocated by the United Nations in business activities. Specifically, it contributes to customer
business activities and a sustainable society through provision of IT systems and services, promotes reduction ofenvironment burden in data centers and its own office and environmental conservation activities, sponsors sports,
music, and other areas, and engages in local and societal activities including cleaning and blood donations. ESG
investment, which selects stocks with emphasis on corporate initiatives in Environment, Social, and Governanceareas, is growing in importance globally and has considerable room to expand in Japan. FISCO expects interest in
the Company from this perspective as well because of its active contributions in environmental and social areas.
While the Company’s stock is listed on the TSE 1st Section, it is likely to move to the Prime Market in April 2022
accompanying TSE’s revisions to market categories.

█ Information Security Policy
Implements measures based on the Information Security Basic
PolicyThe Company has defined the Information Security Basic Policy to ensure the confidentiality, completeness, andavailability of the information assets that it holds and maintains in the course of conducting its businesses, and tosatisfy the trust placed in it by society. It is working to construct, maintain and improve a more advanced information
security management system.
In conducting its businesses, the Company Group handles a lot of customer data, so it pays close attention todata management. In particular, its datacenters, which accept systems and other assets from many customers,
have acquired ISMS (Information Security Management Systems) certification and conduct highly reliable andsafe operations. In addition, they are continuously implementing a range of measures such as PC encryption,
unauthorized access monitoring, e-learning education for employees, and targeted training drills. Going forward,
the policy is to further strengthen measures to prevent data from leaking out, should an unauthorized access occur.

We encourage readers to review our complete legal statement on “Disclaimer” page.

20 20

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
The intellectual property rights, including the copyrights to the main text hereof, the data
and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
distribution or the like of this report and any duplicate hereof without the permission of FISCO
is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp