COMPANY RESEARCH AND ANALYSIS REPORTNIPPON SYSTEMWARE CO., LTD.
9739
Tokyo Stock Exchange Prime Market

11-Jul.-2022
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.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

https://www.nsw.co.jp/english/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Summary of the FY3/22 results....................................................................................................................

01

2. FY3/23 results forecasts..............................................................................................................................

02

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

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company profile.. ................................... ......................................................................................................

03

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

04■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 06
1. The Company’s features........................ ......................................................................................................

06

2. Business description. . ..................................................................................................................................

06■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. Summary of the FY3/22 results....................................................................................................................

09

2. Overview by segment............................ ......................................................................................................

10

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

13■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 15• FY3/23 results forecasts..............................................................................................................................

15■Medium- to long-term growth strategy------------------------------------------------------------------------------------------------ 16
1. Reflecting on the former medium-term management plan. ..........................................................................

16

2. Summary of the new medium-term management plan and priority measures. ............................................

16

3. Plans by segment........................................................................................................................................

19

4. Initiatives for “DX FIRST”.............................................................................................................................

20■Shareholder returns policy-------------------------------------------------------------------------------------------------------------------------------- 22■Information security policy------------------------------------------------------------------------------------------------------------------------------- 23

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.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

https://www.nsw.co.jp/english/■ Summary
FY3/22 results set new record highs. Aiming for further growth
based on the “DX FIRST” and “co-creation” concepts in the new
medium-term management plan
NIPPON SYSTEMWARE Co., Ltd., <9739> (hereafter, also “the Company”) is an independent IT solutions provider
listed on the Prime Market of the Tokyo Stock Exchange (hereafter, TSE) and an engineering group in which engineers
account for nearly 90% of all employees. It is strengthening and expanding all of its businesses, and also with a view
to business development in the future. From FY3/23, it has changed its four business categories to the following
segments; Enterprise Solutions, Service Solutions, Embedded Solutions, and Device Solutions. Centered on digitaltechnologies such as IoT*1 and AI that utilize the synergies between its businesses, it is working on co-creating
customer value through realizing DX*2. Toward taking a major leap forward to a new stage, it plans to change its
company name to NSW Inc. on August 3, 2022.
*1	Abbreviation of Internet of Things. It refers to various objects, including home electronic appliances and sensors, being
connected on a network to not only collect information, but also to carry out remote monitoring and control. It is utilized
for product development and marketing.
*2	A bbreviation of Digital Transformation. This refers to initiatives by companies for business transformation to createbusiness models and transform business processes by utilizing new digital technologies.

1. Summary of the FY3/22 results
In the FY3/22 consolidated results, net sales were ¥43,452mn (up 10.6% year on year (YoY)), and operating profit
was ¥4,919mn (up 17.2%), setting new record highs and moreover recording increased sales and profits for the
10th consecutive period. The strong results were also higher than the initial forecasts, with net sales up by 3.5%
and operating profit up by 14.4%. In particular, in the IT Solutions business, there were multiple orders from national
and local governments for subsidy application systems projects, which contributed greatly to the results. In Product
Solutions, higher sales and profits were secured mainly in the communication and equipment fields in the embedded
development business, and the high profit margin was maintained. Conversely, in Service Solutions, sales increased
significantly, mainly of cloud infrastructure services, but profits declined mainly due to the upfront investment tostrengthen the structure toward business expansion and responses to unprofitable projects. ROA was 14.5% (up1.1 percentage points (pp)) and the equity ratio was 72.0% (down 0.3pp), which are significantly higher than the
averages of the telecommunication industry companies listed on the TSE 1st section, and the Company continues
to maintain extremely high profitability and financial soundness. It increased the dividend per share by ¥10 YoY foran annual dividend of ¥50 (interim dividend of ¥20, period-end dividend of ¥30) and is paying full consideration to
returning profits to shareholders.

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

01 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Summary

2. FY3/23 results forecasts
For the consolidated results in FY3/23, which is the first fiscal year of the new medium-term management plan,
the Company is forecasting net sales of ¥45,000mn (up 3.6% YoY) and operating profit of ¥5,000mn (up 1.6%)
and expects new record highs for both net sales and operating profit. But operating profit is forecast to increaseby only a small amount because of the absence of the special demand for subsidy application systems projects
in the previous period and also as it will continue to conduct strategic investment. Profits are forecast to increasesignificantly in Service Solutions and to be basically unchanged YoY in Embedded Solutions and Device Solutions,but to decrease slightly in Enterprise Solutions. Based on the above, the Company plans to pay an annual dividend
per share of ¥50 (interim dividend of ¥25, period-end dividend of ¥25), the same as in the previous fiscal year.
However, the Company has a strong tendency to initially announce conservative forecasts, so at FISCO we thinkthat ultimately profits may increase more than forecast.
3. Medium-term management plan
In the previous medium-term management plan (FY3/20 to FY3/22), the Company set numerical goals for FY3/22
including net sales of ¥43bn, operating profit of ¥4bn, an operating profit margin of 9.3%, and DX-related net salesof ¥10bn, and it achieved every goal. In the new medium-term management plan (FY3/23 to FY3/25), its fundamental
policy is to achieve the sustainable growth of both society and companies through digital transformation – evolving
to become a SIer that co-creates business with customers through technologies and knowledge, and based on
the “DX FIRST” and “co-creation” concepts, it has set the priority strategies of pursuing customer value throughrealizing DX, strengthening profitability through selection and concentration, and conducting strategic investment
for growth in the future. The plan’s management goals include net sales of ¥50,000mn (compound annual growthrate (CAGR) of an increase of 4.8%) and an operating profit margin of 11%. It intends to achieve higher sales andprofits by progressing the business policies for the four business segment structure it has newly started and themeasures for “DX FIRST.” In conjunction with this, it will also prioritize measures for sustainability as it has done in
the past. Going forward, attention shall be given to the progress it makes for the medium-term management plan.
Key Points
With an eye to business development in the future, has changed its business categories to four segments
for the business promotion structure, and toward taking a leap forward to a new stage, plans to change thecompany name to NSW Inc.
• In FY3/22, orders for various subsidy application systems project contributed and the results set new record
highs, with sales and profits increasing for the 10th consecutive period• Forecasting higher sales and profits in FY3/23 as well, but in a typical year tends to set conservative initial
forecasts• In the new medium-term management plan, has set the priority strategies of pursuing customer value throughrealizing DX, strengthening profitability through selection and concentration, and conducting strategic
investment for growth in the future, and it is aiming for net sales of ¥50,000mn and an operating profit marginof 11% in FY3/25•

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

02 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Summary㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕(¥mn)

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Source: Prepared by FISCO from the Company’s financial
 results■ Company profile
Aims to create and provide excellent systems to enrich society
1. Company profile
In the Company Group, based on its “Humanware By Systemware” corporate philosophy that expresses its desire
to leverage to the greatest possible extent the individuality, sensibility, and creativity of each and every employee
to create excellent systems that will enrich society, the Company has set the “NSW Way” as its code of conduct,
which involves always seeing ahead of the times, customer-centric business concepts, ideas for utilizing humanresources that leverage their potential to the greatest extent, a spirit of self-reliance and a polite, humble and sincere
corporate culture, and a corporate vision that contributes to 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 development; andNSW WITH Co., Ltd., a special subsidiary for the employment of people with disabilities that provides general agency
services and support services.

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

03 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Company profile

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 established, an overwhelming large percentage of transactions were with the
NEC <6701> Group, but alongside the expansion of the customer base, this percentage has fallen to just around
15% of net sales in FY3/21, and every year the scope of customers for transactions is widening, including that theSony Group <6758> accounts for more than 10%. The Chinese subsidiary mainly covers Japanese companies thatare 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 2,337 employees and nearly 90% of its workforce
comprising of engineers as of the end of FY3/22. Mr. Shoji Tada has served as the President and Representative
Director since April 2013.
2. History
The Company started in 1966 as an independent software house, with a software development business and an
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, its business areas have expanded, including that it started asystems integration business in 1990, a data center business in 1998, a cloud service business in 2009, and an
IoT/M2M business in 2013.
During this period, the Company changed its name to NIPPON SYSTEMWARE CO., LTD., in 1982. It began theover-the-counter trading of its shares in 1996 and opened the Yamanashi IT Center in August 1998 with the funds
obtained from the market. It was listed on the TSE 2nd Section in April 1999, its listing was upgraded to the TSE
1st Section in March 2000, and it celebrated the 50th anniversary of its establishment in FY3/16. In April 2022, itslisting was changed to the Prime Market following the TSE’s reorganization of market categories. Moreover, towardtaking a leap forward to a new stage, it plans to change its company name to NSW in August 2022. In the newly
started medium-term management plan, it is aiming to achieve the sustainable growth of both society and companies
through digital transformation.

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

04 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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.

August 2021
April 2022

Acquired all the shares of Kohwa System Corporation and made it a subsidiary (currently, a wholly-owned consolidated subsidiary)
Absorption merger of Kohwa System Corporation
Listing changed to the TSE Prime Market following the TSE’s market reorganization

Source: Prepared by FISCO from the Company’s website

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

05 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

https://www.nsw.co.jp/english/■ Business overview
While leveraging the Company’s features to the greatest possible
extent, aims for further development in the four business areas andthe DX-related business1. The Company’s features
The Company conducts four solutions businesses– Enterprise Solutions, Services Solutions, Embedded Solutions,and Device Solutions and it is aiming to expand DX-related business that leverages the technological synergies fromthese businesses. Its major strength is that it has technologies and expertise for both software and for hardware.
The Company’s strengths include its accumulated industry and business expertise and systems-construction
capabilities that it has cultivated in the Enterprise Solutions business in various industrial fields; service coordination
capabilities and a foundation to provide infrastructure and platforms such as cloud environments in the Services
Solutions business; product development capabilities, including for embedded software and LSI* design and image
processing technologies, in the Embedded Solutions and the Device Solutions business. The Company’s major
strength is that it has a core structure that enables it to support the DX sought by customers, centered on digitaltechnology such as IoT and AI that leverages those synergies, and its policy is to utilize all these strengths for growthin the future.
*	Abbreviation of Large-Scale Integration. It refers to a large-scale integrated circuit that incorporates many electronic
components, such as transistors, diodes, resistors, and capacitors, into one semiconductor chip.

2. Business description
Looking at net sales and operating profit by segment in FY3/22, the IT Solutions business provided 34.3% of net
sales and 40.0% of operating profit; these figures are 27.3% and 10.7% for the Service Solutions business, and38.4% and 49.3% for the Product Solutions business, respectively. It is considered that the reasons why the Product
Solutions business provides the highest percentages of net sales and operating profit and has a relatively highprofit margin is that the technological barriers to enter this business are high and that there are few independentcompanies of the same size as the Company conducting this business. Also, in the IT Solutions business, in addition
to the effects of the higher sales, the Company’s various initiatives, including improving profitability and limiting
unprofitable projects, are proving successful and it is working to improve profits. Conversely, it seems the reason
why the profit margin in the Service Solutions business is relatively low is that it became an independent segmentfrom FY3/20 and is conducting upfront investment, including strengthening the structure toward business expansion
and developing new services.

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

06 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Business overview

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¥43,452mn㻠㻥㻚㻟㻑㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼕㼚㼚㼑㼞㻕㻦¥4,919mn

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Source: Prepared by FISCO from the Company’s financial resultsIn order to strengthen and expand each business and also with an eye to business development in the future, in
April 2022 the Company reorganized its business promotion structure, changing from the former three businesssegments to four segments. Also, the name of the former IT Solutions was changed to Enterprise Solutions, while
Product Solutions was divided into Embedded Solutions and Device Solutions. Both the category and name ofService Solutions remained unchanged.
Changes to the reporting segments

Source: The Company’s results briefing materials

The Enterprise Solutions business provides operations-related solutions. Utilizing 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.

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

07 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Business overview

Service Solutions provides IT services and IoT & AI services. IT services are a variety of services that support
customers’ systems, from servers and network designs that maximize systems’ performance and the constructionof secure environments, through to highly reliable management and monitoring by urban- and suburban-type data
centers. Also, the IoT & AI services utilize their strength of enabling total coordination, from devices through tothe cloud, and based on the Toami IoT cloud platform, support customers’ creation of new business value, fromcollecting data through to its analysis and utilization.
Embedded Solutions develops embedded systems and provides edge device solutions. In embedded systems
development, the Company responds to demand for product diversification, increased efficiency and improved
design quality and for smart products by using the embedded technologies it has cultivated for app, middlewareand driver development as a result of developing a wide range of products for the automotive and industrial sectors,
amongst others. In addition, in edge device solutions, it proposes optimal IoT environments to customers that keep
down costs from small starts through its abundant design and development capabilities that enables it to respondin-house, for from embedded apps through to LSI, and through alliances with various sensor and device vendors.
Device Solutions develops LSI and FPGA (integrated circuits in which the purchasers and designers can set theconfiguration after manufacturing). It provides solutions according to requirements, including for high-level designs,
logic designs and verification, logical synthesis, layout designs, manufacturing, and testing. It is responding forlower-power consumption designs and advanced processes in various fields, such as for image processing andcommunication controls.
The Company conducts business by combining its expertise in the above-described four segments. The businessfield for which there are major expectations to become a new pillar of earnings is the DX-related business that iscentered on digital technologies, such as IoT and AI. It currently conducts business in such a way that earnings from
DX-related business are included in the earnings of each existing segment. For the IoT & AI services in the Service
Solutions business, it is utilizing its strength of enabling total coordination, from devices through to the cloud, andcentered on the Toami IoT cloud platform, it is supporting customers’ creation of new business value, from collecting
data through to its analysis and utilization.
The Company’s Toami has a track record of introductions into more than 100 companies in total, mainly for therealization of IoT-accessible products. The number of alliance partners has also grown to more than 30 companies
and it provides it in more than 30 countries worldwide. Inquires for related services, such as for an analysis service
to effectively utilize the data collected through IoT, are also strong. Toami is being utilized by companies including
Panasonic Holdings Corporation <6752>, Nipron Co., Ltd., EXEO Group <1951>, Tohoku Energy Service Co, Inc.,
Watanabe Electric Industry Co., Ltd., Renesas Electronics Corporation <6723>, NEC Networks & System Integration
Corporation <1973>, RION Co., Ltd. <6823>, and Japan Radio Co., Ltd.
Another example of the utilization of DX are projects to realize remote monitoring of installed equipment and to
improve end user convenience. For companies that are manufacturing solar panels and storage batteries nationwide,
the Company has installed remote monitoring support systems, which allows end users that are using solar panels
and storage batteries to monitor information on installed equipment via the cloud (remote operations are also partiallypossible). Additionally, users can control the storage batteries automatically based on weather information, and use
them efficiently. This remote information monitoring is confirmed not only by the services users, but by the companies
as well, which leads to opportunities to investigate methods of further effectively utilizing equipment and operation
methods. Other examples include an information and communication company that has reduced the work time toless than one-tenth of the previous work time through the automation of a reimbursement system, a major cosmetics
manufacturer that has automated its inspection work through image analysis using AI, and a major home appliancemanufacturer that has realized smooth maintenance by using sensor data to detect signs of equipment failure.

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

08 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Business overview

Realizing the remote monitoring of installed equipment

Source: The Company’s website■ Results trends
In FY3/22, results set new record highs, and sales and profits
increased for the 10th consecutive period
1. Summary of the FY3/22 results
In FY3/22, although the severe conditions partially remained in the Japanese economy due to the impact of the
COVID-19 pandemic, a movement toward a recovery could be seen alongside the restart of economic activities.
However, the future remains uncertain because of new waves of COVID-19 caused by virus variants, and also dueto the supply shortages of semiconductors and electronic parts, the rising prices of raw materials and crude oil, andthe occurrence of new causes for concern such as the Ukraine situation. On the other hand, companies are being
required to implement growth strategies not seen before, including reforming business models and optimizing value
chains, and in the information services industry, demand for IT investment, centered on DX, has been trending solidly.
In this sort of environment, the Company entered into the final year of its medium-term management plan thatset forth the “DX FIRST” concept, and by utilizing to the greatest extent the features of its three businesses, of IT
Solutions, Service Solutions, and Product Solutions and strengthening coordination between each of the businesses
and developing services that utilize digital technologies such as IoT, AI, 5G/local 5G, it focused on business development that supports companies’ digital transformation, including reforming these companies’ business models
and optimizing their management cycles.

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

09 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Results trends

As a result, in the Company’s FY3/22 consolidated results, net sales were ¥43,452mn (up 10.6% YoY), operating
profit was ¥4,919mn (up 17.2%), ordinary profit was ¥5,025mn (up 18.5%), and profit attributable to owners of parent
was ¥3,469mn (up 25.5%). So sales and profits grew significantly to set new record highs, and moreover sales andprofits increased for the 10th consecutive period. The strong results were also higher than the initial forecasts, net
sales by 3.5% and operating profit by 14.4%, In particular, in the IT Solutions business and the Service Solutions
business, multiple orders from national and local governments for subsidy application systems projects contributed
to the results. This can be said to be a result of the Company’s horizontal development of various subsidy application
systems that utilize the track record and expertise it has accumulated over the last seven or eight years, including
for manufacturing subsidy application systems. The reason why the increase rate of profit attributable to owners ofparent was particularly high was a rebound to the elimination of loss on compensation for damage that was recorded
under extraordinary losses in the previous period. Overall, supported by the demand that has been solid in the IT
industry as a whole, the Company succeeded in securing a wide range of customers and can be highly evaluatedfor achieving significant increases in sales and profits.
FY3/22 consolidated results(¥mn)
FY3/21

FY3/22

YoY

Vs. forecast

Results% of net
sales

Forecast

Results% of net
sales

Increase(decrease)% change

Increase(decrease)

Net sales

39,282100.0%

42,00043,452100.0%

4,169

10.6%

1,452

3.5%

Operating profit

4,197

10.7%

4,300

4,919

11.3%

721

17.2%

619

14.4%

Ordinary profit

4,240

10.8%

4,340

5,025

11.6%

784

18.5%

685

15.8%

Profit attributable toowners of parent

2,765

7.0%

2,950

3,469

8.0%

704

25.5%

519

17.6%

% change

Note: FY3/22 plan targets are from initial forecast announced on May 10, 2021
Source: Prepared by FISCO from the Company’s financial results, results briefing materials, and results supplemental materials

IT Solutions business contributed greatly to the strong results
2. Overview by segment
The following section reviews results by business segments.
(1) IT Solutions businessIn the IT Solutions business, net sales were ¥14,896mn (up 12.8% YoY), operating profit was ¥1,968mn (up51.6%), and the operating profit margin was 13.2% (up 3.4pp). Net sales trended strongly for systems development for government offices and public organizations and equipment sales for the retail industry. Operating profit
increased greatly alongside the increase in sales and also from the contribution of a highly profitable project.
Compared to the forecasts, net sales were 4.9% and operating profit was 40.6% higher than forecast, and thissegment’s excellent results contributed significantly to the Company’s strong results.

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

10 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Results trends

Breaking down net sales, business solutions’ net sales were ¥4,552mn (up 11.4% YoY). For the manufacturing
and logistics industries, the Company progressed business conversion toward business expansion, and sales
of ERP*1 and PLM*2-related businesses trended firmly. In addition, sales for the retail industry increased, mainlyof store-related systems. In finance and public sector solutions, net sales were ¥7,597mn (up 17.8%). Sales
increased including from subsidy application systems projects for government offices and public organizations
and the expansion of existing customers’ projects. For the finance and insurance industries, sales increased
including of vehicle insurance-related systems development for non-life insurers. In systems equipment sales,
sales increased of semi-self-checkout systems and POS-related for the retail industry, mainly in 1H, and as aresult, net sales were ¥2,745mn (up 2.9%).
*1	Systems that centralize companies’ management resources and utilize them for management decision making in realtime.
*2	Management of the product lifecycle.

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㼠㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㻵㼀㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟(¥mn)

㻿㼥㼟㼠㼑㼙㼟㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻲㼕㼚㼍㼚㼏㼑㻌㼍㼚㼐㻌㼜㼡㼎㼘㼕㼏㻌㼟㼑㼏㼠㼛㼞㻌㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㻔㼘㼑㼒㼠㻕㻮㼡㼟㼕㼚㼑㼟㼟㻌㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕㻝㻤㻘㻜㻜㻜

㻔㻑㻕㻝㻤㻚㻜㻝㻠㻘㻤㻥㻢
㻝㻡㻘㻜㻜㻜

㻝㻡㻚㻜㻝㻟㻘㻞㻜㻞
㻞㻘㻣㻠㻡㻌㻝㻟㻚㻞㻌㻝㻞㻘㻜㻜㻜

㻞㻘㻢㻢㻥㻌㻥㻘㻜㻜㻜㻥㻚㻤㻌㻠㻘㻜㻤㻢㻌

㻝㻞㻚㻜㻠㻘㻡㻡㻞㻌

㻢㻘㻜㻜㻜

㻟㻘㻜㻜㻜

㻥㻚㻜
㻢㻚㻜

㻣㻘㻡㻥㻣㻌

㻢㻘㻠㻠㻣㻌㻜㻟㻚㻜㻜㻚㻜㻲㼅㻟㻛㻞㻝

㻲㼅㻟㻛㻞㻞

Source: Prepared by FISCO from the Company’s results
 briefing materials(2) Services Solutions businessIn the Service Solutions business, net sales were ¥11,854mn (up 14.2% YoY), operating profit was ¥525mn(down 6.8%), and the operating profit margin was 4.4% (down 1.0pp). Net sales increased in sales of the cloudenvironment building service and the BPO* service. Conversely, operating profit decreased because of the upfront
investment to strengthen the structure toward business expansion, and also due to unprofitable projects, suchas some projects that required more personnel than was expected and so cost of sales increased. As a result,compared to the forecasts, net sales were 4.9% higher than forecast but operating profit was 19.1% lower thanforecast. This segment was made an independent business segment in FY3/20, so it appears that a little time will
be needed before it gets on track and contributes to the Company’s total results.
*	Abbreviation of Business Process Outsourcing. Refers to outsourcing some business processes as a batch to a specialist.

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11 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Results trends

Breaking down net sales, digital solutions’ net sales were ¥2,941mn (up 4.9%). For web and e-commerce, orders
trended strongly, mainly from existing customers, but sales decreased because of the impact of the sales deceasesof some projects. For IoT and AI, on the one hand IoT-related license sales were strong, but an opportunity loss
occurred in order to respond to some unprofitable projects. Net sales of the cloud infrastructure service were
¥8,912mn (up 17.7% YoY). For the cloud, sales of subsidy application help desk projects and cloud migration
projects were strong, while for infrastructure and other services, sales of data linkage and BPO services wereexcellent.

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㼠㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㻿㼑㼞㼢㼕㼏㼑㼟㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟(¥mn)

㻯㼘㼛㼡㼐㻌㼕㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻌㼟㼑㼞㼢㼕㼏㼑㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕㻰㼕㼓㼕㼠㼍㼘㻌㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㻔㼘㼑㼒㼠㻕㻔㻑㻕㻝㻤㻘㻜㻜㻜

㻝㻤㻚㻜㻝㻡㻘㻜㻜㻜

㻝㻡㻚㻜㻝㻝㻘㻤㻡㻠

㻝㻞㻘㻜㻜㻜

㻝㻜㻘㻟㻤㻜

㻥㻘㻜㻜㻜㻞㻘㻤㻜㻡㻌

㻝㻞㻚㻜㻞㻘㻥㻠㻝㻌

㻢㻘㻜㻜㻜
㻟㻘㻜㻜㻜

㻥㻚㻜

㻡㻚㻠㻌
㻤㻘㻥㻝㻞㻌
㻠㻚㻠㻌㻣㻘㻡㻣㻡㻌

㻢㻚㻜
㻟㻚㻜

㻜

㻜㻚㻜
㻲㼅㻟㻛㻞㻝

㻲㼅㻟㻛㻞㻞

Source: Prepared by FISCO from the Company’s results briefing materials(3) Product Solutions businessIn the Product Solutions business, net sales were ¥16,701mn (up 6.4% YoY), operating profit was ¥2,425mn(up 3.8%), and the operating profit margin was 14.5% (down 0.4pp). Net sales increased mainly because of thegrowth in the communication and equipment fields in the embedded development business. Operating profit,
while being maintained a high level, increased only slightly, mainly due to a rebound to a highly profitable projectin the previous period. Compared to the forecasts, net sales were 1.2% and operating profit was 7.8% higher
than forecast. This segment continues to maintain the highest profit margin, which as previously explained isconsidered to be because the technological barriers to enter this business are high and there are few independentcompanies of the same size as the Company conducting it.
Breaking down net sales, embedded development net sales were ¥9,715mn (up 9.4% YoY). In equipment anddevices, sales increased of broadcasting-related and payment terminals-related; in communications, sales grew of
5G/local 5G, and next-generation communication-related development and evaluation work; and in mobile, sales
increased including of app development for carriers. However, in automotive, although sales increased in the newareas, including CASE*1 and ADAS*2 related, they decreased in the existing area of IVI-related (next-generation
in-vehicle infotainment systems). Conversely, device development net sales were ¥6,986mn (up 2.5%). Despite
the global semiconductor supply shortage, sales of LSI design and development were strong.
*1	Acronym of Connected, Autonomous, Shared, and Electric. It refers to next-generation vehicle technologies and newservices.
*2	Abbreviation of advanced driver-assistance systems. It is the collective term for systems that support the driver’s driving,such as vehicle collision detection and position judgment systems.

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12 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Results trends㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㼠㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㻼㼞㼛㼐㼡㼏㼠㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟(¥mn)

㻱㼙㼎㼑㼐㼐㼑㼐㻌㼐㼑㼢㼑㼘㼛㼜㼙㼑㼚㼠㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕㻝㻤㻘㻜㻜㻜
㻝㻡㻘㻜㻜㻜
㻝㻞㻘㻜㻜㻜

㻰㼑㼢㼕㼏㼑㻌㼐㼑㼢㼑㼘㼛㼜㼙㼑㼚㼠㻌㻔㼘㼑㼒㼠㻕㻝㻢㻘㻣㻜㻝

㻝㻡㻘㻢㻥㻥㻝㻠㻚㻥㻌㻝㻠㻚㻡㻌㻢㻘㻥㻤㻢㻌

㻢㻘㻤㻝㻣㻌

㻔㻑㻕

㻝㻤㻚㻜
㻝㻡㻚㻜
㻝㻞㻚㻜

㻥㻘㻜㻜㻜

㻥㻚㻜

㻢㻘㻜㻜㻜

㻢㻚㻜

㻥㻘㻣㻝㻡㻌

㻤㻘㻤㻤㻝㻌
㻟㻘㻜㻜㻜

㻟㻚㻜

㻜

㻜㻚㻜
㻲㼅㻟㻛㻞㻝

㻲㼅㻟㻛㻞㻞

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

Extremely financially sound and profitable
3. Financial condition and management indicators
At the end of FY3/22, total assets increased ¥4,152mn on the end of the previous period to ¥36,813mn. This was
mainly due to increases of cash and deposits, notes and accounts receivable-trade, and work in process despite adecrease in merchandise. Total liabilities increased ¥1,254mn to ¥10,296mn, with the main items being increases
in accrued consumption taxes, accounts payable-trade, and provision for bonuses. Total net assets increased¥2,898mn to ¥26,516mn following the recording of profit attributable to owners of parent.
As a result of the above, the current ratio (current assets / current liabilities) rose 1.4pp on the end of the previous
period to 366.8%, and the Company’s short-term solvency is extremely high. Also, the fixed ratio (fixed assets /equity capital) declined 3.3pp to 33.5%. The procurement of fixed assets (such as equipment investment) is fully
covered by shareholders’ equity with no repayment deadlines, and the Company does not have any debt andcontinues to practice debt-free management. The equity ratio declined 0.3pp to 72.0% but is still greatly higher
than the average of the telecommunications industry companies on the TSE 1st section (average of 31.4% at theend of March 2021), and the Company can be evaluated as being highly financially sound. Also, ROE rose 1.5pp
to 13.8%. As the Company has a high equity ratio, this is below the average of the telecommunications industry
companies on the TSE 1st section of 24.3%, but ROA rose 1.1pp to 14.5% and is significantly higher than the
average of telecommunications industry companies on the TSE 1st section of 9.9%, so it can be said that its
profitability is also extremely high.

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13 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Results trends

Consolidated balance sheets and management indicators(¥mn)
End of FY3/21

End of FY3/22

Increase(decrease)23,98027,924

3,943

Cash and deposits

12,383

15,176

2,793

Notes and accounts receivable-trade and electronicallyrecorded monetary claims - operating

9,762

10,922

1,160

731

1,183

451

8,680

8,888

208

6,168

6,058

-110
161

Current assets

Work in process
Fixed assets
Property, plant and equipment

101

263

2,409

2,567

157

Total assets

32,66036,813

4,152

Current liabilities

6,563

7,613

1,049

Noncurrent liabilities

2,478

2,683

204

-

-

-

Total liabilities

9,042

10,296

1,254

Total net assets

23,61826,516

2,898

Current ratio (current assets / current liabilities)

365.4%

366.8%

1.4pt

Fixed ratio (fixed assets / equity capital)

36.8%

33.5%

-3.3ptEquity ratio

72.3%

72.0%

-0.3ptROE (return on equity)

12.3%

13.8%

1.5pt

ROA (return on assets)

13.4%

14.5%

1.1pt

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 FY3/22, the balance of cash and deposits increased ¥2,793mn at the end of the previous fiscal yearto ¥15,176mn. This was because expenditure, such as for acquisitions of property, plant and equipment and thepayment of dividends, was covered by the funds obtained from operating activities.
Looking at the cash flow conditions, net cash provided by operating activities was ¥3,732mn (an increase inincome of ¥1,733mn YoY). While the Company booked profit before income taxes, there were increases in notes
and accounts receivable - trade, depreciation, and accounts payable - trade, as well as recording of income taxes
paid. Conversely, net cash used in investing activities was ¥344mn (a decrease in expenditure of ¥239mn), withthe main items of purchase of shares of subsidiaries resulting in change in scope of consolidation. Net cash usedin financing activities was ¥607mn (an increase in expenditure of ¥86mn), which was mainly due to dividends paid.
Consolidated cash flow statements(¥mn)
FY3/21

FY3/22

Increase(decrease)

Cash flow from operating activities

1,998

3,732

1,733

Cash flow from investing activities

-583

-344

239

Cash flow from financing activities

-520

-607

-86

12,383

15,176

2,793

Cash and cash equivalents at the end of the fiscal period

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

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

14 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

https://www.nsw.co.jp/english/■ Outlook
Outlook for FY3/23, the first fiscal year of the new medium-term
management plan, is for record high net sales and operating profit• FY3/23 results forecasts
In FY3/23 in the information services industry, DX that utilizes IT for management and business model reforms will be
progressed in various industries and businesses, and in this situation, IT investment demand is expected to continue
to increase. The NIPPON SYSTEMWARE Group has formulated a new three-year medium-term management
plan with FY3/23 as its first fiscal year. In accordance with this medium-term management plan, it is expected toaccelerate business growth and reforms and work toward the realization of a sustainable society.
Based on the above, for the FY3/23 consolidated results, the Company is forecasting net sales of ¥45,000mn (up3.6% YoY), operating profit of ¥5,000mn (up 1.6%), ordinary profit of ¥5,040mn (up 0.3%), and profit attributable toowners of parent of ¥3,450mn (down 0.6%). Net sales and operating profit are expected to set new record highs,
but operating profit is forecast to increase by only a small margin, while the operating profit margin is expected to
decline 0.2pp to 11.1%. This is because of the absence of the special demand that was recorded in the previous
period for subsidy application systems projects, and its plans to continue to conduct strategic investment for growthin the future. Looking by segment, the forecasts are for profits to increase significantly in Service Solutions and to
be basically unchanged YoY in Embedded Solutions and Device Solutions, but to decrease slightly in Enterprise
Solutions. However, the Company has a strong tendency to initially announce conservative forecasts, and at FISCO
we think that ultimately profits may increase more than forecast.
FY3/23 consolidated results outlook(¥mn)
FY3/22

FY3/23

YoY
Increase(decrease)% change

100.0%

1,547

3.6%

11.1%

80

1.6%

5,040

11.2%

14

0.3%

3,450

7.7%

-19

-0.6%

Results% of net sales

Forecast% of net sales

Net sales

43,452100.0%

45,000Operating profit

4,919

11.3%

5,000

Ordinary profit

5,025

11.6%

Profit attributable toowners of parent

3,469

8.0%

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

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

15 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

https://www.nsw.co.jp/english/■ Medium- to long-term growth strategy
Aiming to achieve the sustainable growth of both society andcompanies through digital transformation
1. Reflecting on the former medium-term management plan
When formulating the former medium-term management plan (FY3/20 to FY3/22), the Company held the following
assumptions about the business environment. For the domestic economy, concerns about a slowdown from theimpact of overseas conditions, the consumption tax hike, and other factors are growing stronger, and it also believes
that efforts to improve productivity will become an urgent task against the backdrop of the promotion of workstylereforms and the decline of the working-age population. On the one hand, it expected the stable growth of the IT
industry, but on the other hand, its awareness was that the shortage of engineers was becoming even more serious
due to the strong demand and that it was essential to both respond to DX and to secure human resources. Basedon these assumptions, the Company aimed to become a strong value-creation-type company that was resilient toeconomic ups and downs, and it focused on building a solid business foundation and achieving business growth,
while at the same time, it worked to establish more autonomous, recurring revenue businesses that do not rely onhuman resources. Therefore, under the “DX FIRST” slogan, it set the policy of transforming the Company itself intoa value-creation company by contributing to its customers’ realization of DX.
Based on the above fundamental policy and priority strategies, the Company’s management goals for FY3/22
were for net sales and operating profit to grow to ¥43bn and ¥4bn respectively, and for DX-related net sales on ascale of ¥10bn. At the time it formulated the plan, it did not anticipate the business environment in FY3/21, of an
economic downturn due to COVID-19, but it still managed to achieve every goal for FY3/22, the plan’s final fiscal
year, including net sales of ¥43.4bn and operating profit of ¥4.9bn. Among them, for sales of DX-related that theCompany is focusing, sales increased to the target of ¥10bn, through replacements of core systems for customers’
DX promotion and installations of unmanned systems for the retail industry. This was supported by the rise in theawareness and utilization of DX in every industry and business and the acceleration of the shift to DX, and at FISCO,
we think that the changes to the business environment due to COVID-19 have become an opportunity to accelerate
the realization of DX.
2. Summary of the new medium-term management plan and priority measures
In May 2022, the Company formulated a new medium-term management plan to run for three years from April
2022 to March 2025. For the business environment in the future that served as the assumption for the forecasts,
spurred by COVID-19, the Company expects the domestic IT market to grow steadily from the rising needs for
digitalization and business reforms. Even within this situation, in terms of company size, DX will accelerate not only
in major companies but also in medium-sized companies and SMEs, and for industries, it will accelerate not only inthe manufacturing industry, but also in a wide range of other fields including the services and agriculture industries.
In the future also, DX is expected to drive market growth, and the Company’s business as well are expected to havebusiness environments that will enable them to grow even more, centered on DX. In addition, in order to respondto a society in which uncertainty is rising, such as due to climate change and geopolitical risks, the Company has
established contributing to social issues, including sustainability, as an important theme.

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

16 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Medium- to long-term growth strategy

In the new medium-term management plan, based on the fundamental policy of achieving the sustainable growthof both society and companies through digital transformation – evolving to become a SIer that co-creates businesswith customers through technologies and knowledge, the Company intends to expand its business area from theformer area of being a partner providing DX technologies to customers to a partner that promotes company reforms
together with customers and to accelerate business growth and reforms, while it also intends to work toward therealization of a sustainable society. In order to realize this fundamental policy, the Company aims to combine its
customers’ business transformations, alliance partners and digital technology with the knowledge it possesses
about devices, embedded technology, cloud and infrastructure technology, industries, and operations and promote
the concepts of “DX FIRST” and “co-creation” (meaning companies collaborating with their various stakeholders
to create new value together).
The specific priority strategies toward achieving the goals in the medium-term management plan are pursuingcustomer value through realizing DX, strengthening profitability through selection and concentration, and conducting
strategic investment for growth in the future. Also, the common strategies that will serve as the foundation on whichto progress the priority strategies are a human resources strategy, a partner and alliance strategy, and a digitalstrategy.
Overview of the medium-term management plan

Source: The Company’s results briefing materials

Below is a summary of the priority strategies that the Company is progressing.
(1) Pursue customer value through realizing DX
The Company is aiming for business expansion as a business-reforms partner, and in the digital area for which
there are major expectations for growth, it is creating a business that works together with customers to realize
their business reforms. A DX movement is advancing in customer companies, and in this situation, the Company
is being required to not only provide solutions and technologies, but also to play the role of being partner that
progresses and realizes reforms together with the customer. Therefore, it is further strengthening and deepening
its digital technologies, starting with the IoT and AI services it has worked on up to the present time, while it also
intends to expand the areas it responds to and to work on the co-creation of customer value through realizing DX.

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

17 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Medium- to long-term growth strategy(2) Strengthen profitability through selection and concentration
The Company plans to strengthen its business foundation by concentrating its resources into highly profitable
fields. Customers’ needs for IT services are diversifying and becoming more sophisticated, and in addition
to utilizing IT in order to increase work efficiency, needs are changing to strategic IT investment to increase acompany’s competitiveness. In order to respond accurately to these sorts of changes in the business environment
and to further solidify its business foundation, the Company is further expanding and developing the technologies
and expertise it has cultivated up to the present time and further growing its strengths. At the same time, it plans
to concentrate its resources into fields that are expected to grow in the future and that are highly profitable andto work on establishing a new stable earnings foundation toward the next stage of growth.
(3) Conduct strategic investment for growth in the future
The Company is acquiring technologies and conducting upfront investment in order to create new solutions andservices. Toward creating new solutions and service, it intends to actively invest in strategies such as acquiring
technologies and accumulating knowledge, securing and training human resources with the vitality to continuouslycompete for new value creation, and conducting M&A and forming alliances with other companies for businessexpansion in the future and to strengthen its business foundation.
By progressing the above priority strategies, in FY3/23, which is the plan’s first year, the Company is aiming fornet sales of ¥45,000mn (up 3.6% YoY), operating profit of ¥5,000mn (up 1.6%), ordinary profit of ¥5,040mn (up0.3%), and profit attributable to owners of parent of ¥3,450mn (down 0.6%). The management goals for the plan’s
final fiscal year of FY3/25 are net sales of ¥50,000mn (up 15.1% compared to FY3/22, CAGR of an increase of
4.8%) and an operating profit margin of 11%. Under the four-segment structure it started in FY3/23, it expects toachieve higher sales and profits through continuing to increase sales and maintaining the operating profit marginat about the same level as in FY3/22. But these are considered to be conservative forecasts showing the absolute
minimum goals that the Company is aiming for after three years, so attention shall be given to the progress it
makes in the future.

㻹㼑㼐㼕㼡㼙㻙㼠㼑㼞㼙㻌㼙㼍㼚㼍㼓㼑㼙㼑㼚㼠㻌㼜㼘㼍㼚㻌㼠㼍㼞㼓㼑㼠㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㻌㻔㼞㼕㼓㼔㼠㻕(¥mn)
㻢㻜㻘㻜㻜㻜

㻝㻝㻚㻟㻌

㻝㻝㻚㻝㻌

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼘㼑㼒㼠㻕

㻔㻑㻕
㻝㻝㻚㻜㻌

㻡㻜㻘㻜㻜㻜㻝㻞㻚㻡㻝㻜㻚㻜㻠㻜㻘㻜㻜㻜

㻣㻚㻡㻟㻜㻘㻜㻜㻜
㻞㻜㻘㻜㻜㻜
㻝㻜㻘㻜㻜㻜

㻡㻜㻘㻜㻜㻜㻌

㻠㻡㻘㻜㻜㻜㻌

㻠㻟㻘㻠㻡㻞㻌

㻠㻘㻥㻝㻥㻌

㻡㻚㻜㻞㻚㻡㻡㻘㻜㻜㻜㻌

㻜㻜㻚㻜㻲㼅㻟㻛㻞㻞

㻲㼅㻟㻛㻞㻟㻌㻱

㻲㼅㻟㻛㻞㻡
㻔㼠㼍㼞㼓㼑㼠㻕

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

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

18 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Medium- to long-term growth strategy

3. Plans by segment
The plans by segment are described below.
(1) Enterprise Solutions
The Company will utilize its expertise in various industries to advance DX applications. It plans to promote
services for ESL, defective product detection, customer services, deliveries, and e-commerce sales linkage for the
distribution industry; ERP, digital production support, distribution reforms, and AI drawings for the manufacturingindustry; AI deliveries, image identification, robotics, and SCM for wholesalers for the logistics industry; cloud shift
and modernization for the finance industry; and responding to digital government policies for the public sector.
Through these measures, in FY3/25 it is targeting net sales of ¥17,000mn (up 14.1% compared to FY3/22) andan operating profit margin of 13% (13.2% in FY3/22).
(2) Services Solutions
The Company will strengthen approaches to customers’ DX departments and support the promotion of DX,
and also progress measures including expanding the areas it can respond to in the business model reforms
business, strengthening its response to cloud native, and expanding its data management areas. Through thesemeasures, in FY3/25 it is targeting net sales of ¥14,000mn (up 18.1% compared to FY3/22) and an operating
profit margin of 7% (4.4% in FY3/22). The costs used to strengthen structures and the unprofitable projects willcease to have an impact, so the outlook going forward is for profits to improve, while the operating profit margin
is also expected to rise.
(3) Embedded Solutions
The Company’s plans include creating services that utilize its existing embedded technologies, progressing
initiatives for the edge computing field, and strengthening efforts and expanding the businesses for growth fields
such as automated driving and 5G/6G. Through these measures, in FY3/25 it is targeting net sales of ¥10,000mn(up 13.5% compared to FY3/22) and an operating profit margin of 13.5% (13.8% in FY3/22).
(4) Device Solutions
The Company’s plans include expanding design services that are based on LSI development technologies, conducting development for the cloud design service businesses, and progressing the business with Deep Learningas the core. Through these measures, in FY3/25 it is targeting net sales of ¥9,000mn (up 14.0% compared to
FY3/22) and an operating profit margin of 14.5% (15.3% in in FY3/22). Although the operating profit margin is
forecast to decline, the profit margin is expected to be maintained at a high level.

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

19 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Medium- to long-term growth strategy㻾㼑㼟㼡㼘㼠㼟㻌㼠㼍㼞㼓㼑㼠㼟㻌㻔㼚㼑㼠㻌㼟㼍㼘㼑㼟㻌㼎㼥㻌㼟㼑㼓㼙㼑㼚㼠㻕㻱㼚㼠㼑㼞㼜㼞㼕㼟㼑㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻿㼑㼞㼢㼕㼏㼑㼟㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻱㼙㼎㼑㼐㼐㼑㼐㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟㻰㼑㼢㼕㼏㼑㻌㻿㼛㼘㼡㼠㼕㼛㼚㼟(¥mn)
㻢㻜㻘㻜㻜㻜

㻡㻜㻘㻜㻜㻜

㻡㻜㻘㻜㻜㻜
㻠㻟㻘㻠㻡㻞

㻠㻡㻘㻜㻜㻜

㻥㻘㻜㻜㻜㻠㻜㻘㻜㻜㻜

㻣㻘㻤㻥㻟

㻤㻘㻟㻜㻜

㻟㻜㻘㻜㻜㻜

㻤㻘㻤㻜㻤

㻥㻘㻝㻜㻜

㻞㻜㻘㻜㻜㻜

㻝㻝㻘㻤㻡㻠

㻝㻞㻘㻟㻜㻜

㻝㻠㻘㻤㻥㻢

㻝㻡㻘㻟㻜㻜

㻝㻣㻘㻜㻜㻜

㻲㼅㻟㻛㻞㻞

㻲㼅㻟㻛㻞㻟㻌㻱

㻲㼅㻟㻛㻞㻡
㻔㼠㼍㼞㼓㼑㼠㻕

㻝㻜㻘㻜㻜㻜

㻝㻜㻘㻜㻜㻜
㻝㻠㻘㻜㻜㻜

㻜

Source: Prepared by FISCO from the Company’s results
 briefing materials
4. Initiatives for “DX FIRST”
Based on its “DX FIRST” slogan, the Company is aiming to be a pioneering company for realizing customers’
DX, and one of the priority strategies in the medium-term management plan is to pursue customer value throughrealizing DX. For this DX, the Company has stated that it will utilize its digital technologies for customers’ businessmodels and business processes and work to create new value. In other words, by combining the work expertiseand technological capabilities it has accumulated up to the present time with various methods to realize DX, it will
provide solutions and services that support the realization of DX and will work on progressing customers’ businessmodel reforms and work process reforms together with customers.
To support customers’ realization of DX even during the COVID-19 pandemic, based on its digital technologies of
IoT, AI, and XR*, the Company has been providing various services and solutions through new developments andcollaborations with partners. In particular, in the XR field, non-face-to-face and contactless operations are rapidly
growing, and as a result, in regard to the target customers for the provision of DX services, the Company has also
entered into the construction industry, while centering on the manufacturing industries, and the number of customer
companies has grown rapidly by around three times since FY3/19 (average annual growth rate of around 45%).
*	Cross reality. It is the collective term for technologies that enable things not in the real world to be perceived by integrating
the real world and the virtual world.

The Company has previously focused on providing digital technologies, but in the future, it will not only provide
digital technologies, but also work on “DX FIRST” through “co-creation” by creating new value and business models
together with customers. Its policy is to respond to customers’ problems and business-reform needs by combining
the Company’s strengths, including the expertise, technologies, and knowledge it possesses, with the knowledgeof its partners and external digital technologies. Therefore, even more concrete results are expected going forward.

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

20 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Medium- to long-term growth strategy

Realizing DX through the Company’s strengths and “co-creation”

Source: The Company’s results briefing materials(5) Initiatives for sustainability
The Company has been working on resolving the various social issues that change alongside the times throughits business activities that are based on its corporate philosophy of “Humanware By Systemware.” In the new
medium-term management plan as well, it is aiming to both grow as a company and to solve social issues, andits policy is to progress sustainability management (the realization of a sustainable society), including for ESG.
As its initiatives for the environment, in April 2013 the Company announced its environment policy in which itaims to reduce the environmental burden by providing solutions to increase efficiency and to save labor, while
it also working on other initiatives such as energy saving and resource-saving activities in offices. To give an
example, based on the projection to realize a low-carbon society formulated by the Japan Information Technology
Services Industry Association (JISA), it has set goals such as a 37.7% reduction in specific energy consumption
in fiscal 2030 for office buildings (compared to fiscal 2006), and a 7.8% reduction (same) for data centers. Also,
in February 2005, it acquired the Environment Management Systems ISO14001 certification from JSA Solutions
Co., Ltd., and every year since FY2010, it has published the report on measures for global warming based on a
Tokyo Government ordinance.
In relation to social issues, the Company is progressing diversity. Since its establishment, it values “humanware,”which means aspects such as individuality, sensibility, and creativity, and it places importance on the diversity,
personality, and individuality of its employees. It also works to build environments that are safe and comfortable
to work in and has implemented various measures to support a work-life balance for employees and to establish
various systems (establishing a flex-time system and other work-related systems, a system for the use of expired
paid leave, and a re-employment system for employees who left the company due to childbirth or other reasons).
These activities have been highly evaluated and since 2007, it has received the Kurumin certification that is basedon the Act on Advancement of Measures to Support Raising Next Generation of Children. It also actively employs
people with disabilities through its special subsidiary NSW WITH, and it is carrying out various work including
office-work support, technology support, facility-management support, and in-company massages.
The Company has focused on corporate governance in the past and acknowledges quick and suitable decisions
and enhancing management transparency toward shareholders and investors as important corporate issues. It
hence appropriately revises systems as needed, such as adjusting the number of directors on the board, adopting
an executive director system, and selecting outside directors. The Company also sustained efforts to reflect
shareholder and investor opinions in management through ongoing disclosure and IR activities.

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

21 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Medium- to long-term growth strategy

In recent years, there has been a global trend of focusing on Environment, Social, and Governance (ESG) investment, which involves selecting the issues of companies that prioritize initiatives toward ESG for investment, andin Japan as well, it seems there is plenty of room for growth in this area. In this sense, at FISCO we think it ishighly likely that attention will be focused on the Company that is actively working on environmental and social
contribution activities.

■ Shareholder returns policy
Stably continues to pay a dividend while striving to achieve afinancial strategy that addresses growth and financial soundness
The Company aims to achieve sustainable growth through realizing a financial strategy that addresses growth andfinancial soundness. It intends to maintain a healthy capital level and 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 conditionand earnings.
In FY3/22, the Company increased the dividend per share by ¥10 YoY and paid an annual dividend of ¥50 (interim
dividend of ¥20, period-end dividend of ¥30). The dividend payout ratio was 21.5%, which was higher than the
average of the telecommunications industry companies on the TSE 1st section in FY3/21 of 18.8%. It is aiming tofurther expand its business scope to net sales on a scale of ¥50bn, and in this process, it may invest funds in M&A
and alliances with other companies. Therefore, rather than significantly increasing the dividend, it is thought to beprioritizing business expansion for the future and aiming to maintain and improve its competitiveness. On the other
hand, it has continued to stably pay a dividend even within the harsh business environment, so it can be evaluatedfor its managerial decision to consider profit returns to shareholders.
For the FY3/23 dividend per share, the Company plans to pay an annual dividend of ¥50 (interim dividend of ¥25,
period-end dividend of ¥25), the same as in the previous fiscal year, for a forecast dividend payout ratio of 21.6%.
However, this dividend forecast is based on the conservative results forecasts, so at FISCO we think it may increase
the dividend depending on the final results.
In April 2022, the Company’s listing was transferred to the Prime Market in accordance with the TSE’s new market
categories. It intends to continue to strengthen governance and enhance information disclosure, and also to workto achieve sustainable corporate growth and to improve corporate value.

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

22 23

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

NIPPON SYSTEMWARE CO., LTD.

11-Jul.-2022

9739 Tokyo Stock Exchange Prime Market

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

Shareholder returns policy㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼠㼔㼑㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼍㼚㼐㻌㼠㼔㼑㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻼㼑㼞㼕㼛㼐㻙㼑㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕(¥)

㻵㼚㼠㼑㼞㼕㼙㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕
㻔㻑㻕

㻣㻜㻚㻜

㻞㻡㻚㻜
㻞㻝㻚㻢㻌

㻞㻝㻚㻡㻌

㻞㻝㻚㻢㻌

㻡 㻜 㻚㻜㻡 㻜 㻚㻜

㻝㻥㻚㻡㻌
㻡㻢㻚㻜

㻝㻢㻚㻤㻌
㻠 㻜 㻚㻜㻠㻞㻚㻜㻞㻜㻚㻜㻌㻟 㻜 㻚㻜㻟 㻜 㻚㻜㻌

㻝㻡㻚㻜
㻞㻡㻚㻜㻌

㻞㻜㻚㻜㻌

㻞㻤㻚㻜
㻝㻞㻚㻡㻌

㻞㻜㻚㻜

㻝㻜㻚㻜

㻝㻡㻚㻜㻌
㻟㻜㻚㻜㻌

㻝㻠㻚㻜
㻝㻣㻚㻡㻌

㻝㻡㻚㻜㻌

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜

㻞㻜㻚㻜㻌

㻞㻡㻚㻜㻌

㻜㻚㻜

㻡㻚㻜

㻜㻚㻜
㻲㼅㻟㻛㻞㻝

㻲㼅㻟㻛㻞㻞

㻲㼅㻟㻛㻞㻟㻌㻱

Source: Prepared by FISCO from the Company’s financial results■ Information security policy
Implements measures based on the Information Security Basic
PolicyThe Company has defined the Information Security Basic Policy in April 2009 to ensure the confidentiality, completeness, and availability of the information assets that it holds and maintains in the course of conducting its businesses,
and to satisfy 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 data centers, 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 training for targeted attacks. The policy is
to continue to further strengthen measures to prevent data from leaking out in the event of an unauthorized access.

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

23 23

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