A Future for People and IT

Integrated
Report2022
Apr. 1, 2021 – Mar. 31, 2022

Long-Term Vision

A Company that offers
a “Future for People and IT”
The IT infrastructure that supports society embodies
the dreams and aspirations of many people,
including our customers. At the same time, the very
best systems embrace the strong will of engineers torealize people’s dreams and aspirations. To appreciatesuch thoughts, NSD aims to be a Company that offers
a “Future for People and IT.”

NSD in Numbers*1

Established in

Net sales¥

71.1 bn

ROE

15.7 %
Employees

3,560

1969

Operatingincome¥11.4 bn

Dividend
payout ratio

52.3 %SE ratio*2

95.3 %*1 The above figures are based on fiscal 2021 results.
*2 The ratio of system engineers to non-consolidated employees.
*3 The turnover ratio among non-consolidated employees.

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NSD Co., Ltd. Integrated report 2022

Operatingmargin16.0 %
Total returnratio

86.3 %
Turnoverratio*3

2.9 %IndexValue Creation in the NSD Group04 Growth Trajectory

14 Value Creation Process

06 President’s Message

16 Financial and Non-Financial Highlights

12 Value Provided by the NSD Group to Society

Operations Supporting Value Creation
18 Core Business of the NSD Group

24 Business Strategy by Segment: Solution Business

20 Business Strategy by Segment:

26 Special Feature: The Future Ambitions of the NSD

System Development BusinessGroup’s Research of Advanced Technology

Initiatives to Support Sustainable Growth
30 Sustainability Management

42 Governance Initiatives

32 Materiality

Corporate Governance

34 Environmental Initiatives

Compliance
Data Privacy & Security

Climate Change & Energy Management

Quality Management

Waste Management

Return of Profits to Shareholders

Environmental Management System

36 Social Initiatives
Human Resource Development

Management System

52 Outside Directors’ Messages

Health and Productivity Management
Diversity & Inclusion
Supply Chain Management
Contributing to Society
Social Innovation with IT

Corporate Information & Data
54 Key Financial & Non-Financial Data

56 Company Information

Editorial Policy

Disclaimer

This integrated report touches on important financial andnon-financial information while highlighting topics that we wantto convey to shareholders, investors, and other stakeholders,so that they have a better understanding of the initiatives
undertaken by the NSD Group to continuously enhance
corporate value. For more information, please visit our website.

This report is intended to provide information on the NSD
Group’s efforts to enhance corporate value, and is notintended to solicit the purchase or sale of shares. Any
forward-looking statements in this report, such as performance
forecasts, are based on information available to the Group andthe outlook at the time that this report was produced. NSD
makes no promise that it will achieve these forward-looking
statements which may also be subject to change without priornotice. NSD shall not be responsible for any damages resulting
from the use of this report.

Reporting Period: April 1, 2021 to March 31, 2022
(This report includes some information
pertaining to after the reporting period)
Reporting Scope: NSD Co., Ltd., and NSD Group companies

NSD Co., Ltd. Integrated report 2022

03

Value Creation in the NSD Group

Growth Trajectory

Times have changed, but the founder’sthoughts in the founding prospectus
have been passed down through thegenerations of NSD’s corporate culture
as a management philosophy
Founding Prospectus

To be an extremely unique entity thatcombines practice and research, andwhich also includes the establishment oftrue computer science
Management Philosophy

1991

To contribute to the sound development ofsociety by pushing the boundaries ofIT technology to create and provide new
solutions beneficial to people and society

Certified as a systems
integrator by the Ministryof International Tradeand Industry (now the
Ministry of Economy,
Trade and Industry)

1991
Over 2,000 employees

1988
Listed on the 2nd
Section of the Osaka
Securities Exchange

1969

04

NSD Co., Ltd. Integrated report 2022

23.8 billion¥

4.1 billion

1984
Over 1,000 employees

NSD established as
Nippon System
Development Co., Ltd.
(Original company
name in Japanese)

1969

¥

1980

1990

2019
Established NSD
Advanced Technology
Research InstituteCo., Ltd.

2010

2015

Changed name to
NSD Co., Ltd.

Acquired NMSystems
Co., Ltd. as a subsidiary*

2001

2012

2017

Over 3,000 employees

Established NSD
International Inc., andRenbenxindong
Technology Ltd.

Acquired Japan Job
Posting Service, Inc.
as a subsidiary*

1999

2007

2014

Listed on the 1st
Section of the Tokyo
Stock Exchange

Shareholders Relation
Service, Inc. launched
operations

Established Chengdu
Renbenxindong
Technology Ltd.

2022
Acquired Trigger Inc.
as a subsidiary
Net sales¥

71.1 billion* The two companies
merged in 2018
under the name
StellaS Co., Ltd.

2001
Acquired FSK Co., Ltd.
as a subsidiary¥

41.7 billion

Operating income¥¥

11.4 billion

7.0 billion

2000

2010

2021
* Figures for 1998 and earlier are non-consolidated figures.
NSD Co., Ltd. Integrated report 202205

Value Creation in the NSD Group

President’s Message

We will share the benefits of growth withall our stakeholders by steadily implementing
the four basic strategies of the medium-term
management plan.
Yoshikazu Imajo
President & CEO

is your view of the current
Q. Whatbusiness environment
surrounding the NSD Group?

Responding to the demands for DX as
an infrastructure company essential
to society
In recent years, we have seen rapid advances in AI andother cutting-edge technologies, giving exponential
growth to the boundaries of how information technology
can be used. And in the past few years during the
pandemic, as society as a whole has shifted to a newnormal where working from home and contactlessinteractions have become ever more widespread, therole of IT has become increasingly important.
Until several years ago, IT played a role mainly interms of improving the quantity and speed of existing
operations, for example, improving business productivity
or ease-of-use. In recent years however, advances in
cutting-edge technologies, such as AI, have made it
possible to solve problems in unprecedented ways,
contributing to the development of society in qualitative
terms, such as by creating new businesses andtransforming lifestyles. Against this background, theradical change that is digital transformation (DX) has, aswith the demands of the times, spread to every cornerof society, so much so that IT is now deemed to be a
critical infrastructure of society.
The NSD Group’s management philosophy is tocontribute to the sound development of society bypushing the boundaries of IT technology to create andprovide solutions beneficial to people and society. Now
that IT technology has advanced and the scope of its
use has expanded and deepened, it is time for the NSD
Group to contribute to the development of society more
broadly. While leveraging our unique role and place inthe world, NSD will seek to grow sustainably together
with society.

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NSD Co., Ltd. Integrated report 2022

do you think the mediumQ. How
term management plan has

development business, we set out to strengthen oursolution business, launching initiatives to build a second
earnings base. We did this to take advantage of new
growth opportunities stemming from the shift away fromthe age of system ownership to system utilization.
Also, under the previous medium-term plan fromfiscal 2018, as the spread and expansion of cuttingedge technologies such as AI and IoT became more ofa reality, we positioned strengthening new technologicalareas as a fresh measure, and defined the newtechnology domains of the system development
business and the solution business as new corebusiness, focusing on them as future growth drivers.

gone so far?

Achieving a lean profit structure andclarifying our intended business model
The current medium-term management plan (mediumterm plan) is the fourth plan I have formulated aspresident of the Company. Looking back at the two
medium-term plans from fiscal 2012 and fiscal 2015, as
well as expanding and developing our mainstay system

Performance trends (over the three medium-term management plans)
Net sales (¥ billion)

1st

12.2%

Operating income (¥ billion)

2nd

12.0%

12.0%

12.4%

Operating margin

3rd
13.0%

13.6%
12.1%

14.0%

6.0%
366

402

6.9%
429

44

48

51

FY2012FY2013

FY2014

7.5%
515

552

580

14.7%

14.9%

13.8%

13.7%

650

661

12.6%

10.8%
7.5%

619

ROE

79

86

98

71

95

63

FY2015FY2016FY2017FY2018FY2019FY2020Key issues in the medium-term management plans
Strengthen the solution business
Improve capability to produce
new technologies

Evaluation from the market
Market capitalization (¥ billion)

Year-end stock price (¥)

1,458
1,066

1,147

916
790
408

723

1,288

488

483

587

FY2012FY2013

1,841

690

1,440

1,085

885

832

804

FY2014FY2015FY2016FY2017FY2018FY2019FY2020*1 The Company implemented a two-for-one stock split on January 1, 2020. The stock prices before fiscal 2018 in the graph above show the amounts
corresponding to one share after the stock split.
*2 Market capitalization is calculated based on the number of shares in circulation excluding treasury stock.

NSD Co., Ltd. Integrated report 2022

07

Value Creation in the NSD Group
President’s Message

Through these three medium-term plans, althoughstill not enough, we have been able to move away fromthe business model of NSD as just a contracted
developer to one where the solution business forms
the second pillar. And in the system development
business, the direction we have taken of strengthening
new technology domains has been widely communicatedto everyone in the NSD Group. So, with these past
three medium-term plans I believe we have been able
to make our new business model and the direction weshould be heading known to all.
In terms of business performance over the nine
years of the three medium-term plans, net sales
increased from 34.4 billion yen in fiscal 2011 to 66.1
billion yen in fiscal 2020, while operating income
increased from 3.3 billion yen to 9.8 billion yen. Overall,
we saw significant growth with net sales growing by 1.9
times and operating income 2.9 times. In addition to thisquantitative growth, we were able to significantly improve
our earning power with our operating margin increasing
significantly from 9.8% to 14.9% and ROE up from
4.7% to 13.7%, creating a more lean profit structure.
The continued growth of these business results andthe future potential of the IT business have been rated
highly by the market with NSD’s market capitalization
having increased approximately fivefold from 29 billion
yen to 145.8 billion yen.

are the aims of the current
Q. Whatmedium-term management plan?
Aiming to be a corporate Group with net
sales over 100 billion yen
The current medium-term plan, which started in fiscal
2021, continues the direction of the previous plan while
having the aim to be a Group with net sales exceeding
100 billion yen in five years time. To achieve this goal,or new stage of growth for the NSD Group, we need to
improve the quality and quantity of the businesses thatserve as its foundation. This is why we have formulated
four basic strategies (page 9) in the current mediumterm plan and are making every effort to achieve them.
NSD’s strength in the system development businessis that we can provide extensive and long-term support
for the development of large-scale systems for ourcustomers by leveraging our wealth of businessknowledge. In the medium-term plan, we will further
refine this strength, and in light of the accelerating needfor DX, we will actively work on development in thedomains of new technologies and DX to achievesustainable growth in the system development business.
In addition, although the solution business
continues to grow, we need to make further advances
to achieve our goal of making it the second earnings
pillar for the Company. This is why, in the current

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NSD Co., Ltd. Integrated report 2022

medium-term plan, we will not only strengthen sales ofexisting solutions, but also focus more on developing
new solutions. The use of new technologies will play apart in this. With the NSD Advanced Technology
Research Institute at its core, we have built acollaborative system with investment from customers topromote research and development into newtechnologies that meet the needs of various industries
from a frontline perspective.
Under the current medium-term plan, the newtechnologies and DX-related system development
business, as well as the solution business, have been
defined as the two key areas for NSD. By concentrating
our management resources, we intend to grow net sales
2.5 times from 18 billion yen in the final year of theprevious medium-term plan to 45 billion yen in the final
year of the current plan. To make this a reality, we not
only need organic growth but we also need to look at
M&A. During the period of the current medium-term
plan, we plan to invest 20 billion yen into M&A. By doing
so, we expect to further boost our solution business.
To achieve net sales of 100 billion yen, it is vital that
we establish new core business as “real” core businessso that we can reap the rewards gained through M&A.
And as three years for our previous medium-term plans
was thought to be too short, we have decided toextend the period for the current medium-term plan tofive years.

is your assessment of
Q. Whatthe first year of the current
medium-term plan?

Net sales, new core business net sales,
and operating income all exceeded
projections
Although business activities were somewhat limited due
to restrictions on movement owing to the pandemic inOverview of the medium-term management plan (FY2021–FY2025)
Basic strategies

Five-Year Goals(1) Achieve sustained growth in the systemdevelopment business

To have a corporate Group of businesses withstrengths in specific fields in multiple domains(2) Greater focus on new technologies and DX
business to build up results

To have a corporate culture that adds auniquely NSD touch to systems development(3) Expand size of the solution business into
a second pillar of the Company

To have a group of IT engineers who create business
transformation together with our customers(4) Stronger efforts for the SDGs and ESG

Specific strategies(1) Systemdevelopment· Strengthen ability to win projects from customers and greater responsiveness in upstream
processes to that end· Build up results in new technologies and DX business· Win new business in domains such as administrative digitalization by the government and 5G/6G· Secure the human resources needed to drive growth(2) New technology
and DX· Develop AI products (e.g. location information solutions, image analysis, voice recognition),
expand sales base, and speed up business development· Deepen collaboration and co-create with customers, expand outside networks in new technology field· Promote sharing of knowledge and expertise from across specialist departments to each divisionin the Company· Train engineers in new technologies and DX, expand training and incentive systems to add moreengineers and improve their technical skills(3) Solution
business· Accelerate expansion of business scale by acquiring existing products and brands through M&A· Further strengthen sales capabilities for HR products (ORDIA, JobSuite) and educational
products (MANA BOX)· Develop and commercialize new services in the field of shareholder services· Accelerate the rollout of leading healthcare brand (CAReNA) in Japan and overseas(4) SDGs/ESG· Establish promotional organization within the Company· Formulate KPIs and build a system to routinely check their progress

Consolidated performance targets
Net sales (¥ billion)

New core business net sales (¥ billion)

16.0%

Operating margin

ROE

16.5%

16.0%

15.8%

15.3%

15.3%

15.0%

15.7%

14.3%

Operating income (¥ billion)

1,000

13.7%
750

711

700

790

265

235

305

450

220
100

114

120

125

150

FY2021
Projected

FY2021Results

FY2022
Projected

FY2023
Projected

FY2025
Projected

NSD Co., Ltd. Integrated report 202209

Value Creation in the NSD Group
President’s Message

the first half of fiscal 2021, during the first year of thecurrent medium-term plan, the number of new
infections dropped in the second half, bringing a return
to a more normal business environment. In addition to
the resumption of postponed projects there was active
investment in new IT applications including DX. As aresult, net sales, new core business net sales, andoperating income all exceeded projections, marking asmooth start to the first year of the medium-term plan.
In light of this overachievement, we made an upwardrevision to our targets in May 2022 for the second yearof the plan and beyond.
In terms of strengthening our business structure,
we set up the Advanced Technology Strategic Business
Unit with the aim of strengthening our field of advanced
technology. This business unit oversees the NSD
Advanced Technology Research Institute, which is
responsible for product planning, and the Advanced
Technology Business Division, which is responsible forcommercial development. Through close cooperation
between both these pillars, we will accelerate ourplanning and development efforts.
In terms of performance, net sales were 71.1 billion
yen, an increase of 5.0 billion yen from fiscal 2020. Of
this, net sales in new core business increased by 5.5billion yen year on year to 23.5 billion yen thanks tosignificant growth in the new technologies and DXrelated systems development business, helping to serve
as a driver for growth. As for profitability indicators, theoperating margin was 16.0% and ROE was 15.7%,
improving by 1.2 points and 2.0 points respectively
from fiscal 2020, further improving profitability.

challenges do you face in
Q. Whatachieving the medium-term planand further growth in the future,and how will you overcome them?

NSD has three challenges:
securing system engineers, developing
self-starters, and accelerating
solutions development
To achieve the goals of the medium-term plan, I believe
the Company faces two challenges from a short- to
medium-term perspective and one for medium- tolong-term growth.
The first issue we need to resolve in the short tomedium-term is securing system engineers. The
shortage of system engineers in the IT industry has
been apparent for several years, and dealing with thisproblem has become an increasingly important issue.
Up to now, NSD has adopted a principle of hiring new
graduates and has trained system engineers in-house.
At present, as the business continues to expand at an

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NSD Co., Ltd. Integrated report 2022

ever greater pace, we are recruiting more mid-careerhires who are able to be immediate assets for theCompany, but we still need to increase employee
numbers. In light of this situation, we have set up
offices in regions other than where our main offices arelocated and have begun initiatives to recruit the besttalent in those areas. For instance, we opened the
Sendai Business Site in August 2022 and theHiroshima Business Site in December. Finding systemengineers this way through such a local recruitment
drive has proved to be a powerful means of bolstering
our workforce.
With the increasing number of people now working
from home because of the pandemic, we have also
seen issues in terms of training new employees.
Communication, which is not normally a problem when
it is face-to-face, can be difficult in a work-from-homeenvironment. These difficulties in terms of communication
especially when training new employees are a major
stumbling block to learning, so it is vital to come up
with more inventive training programs and on-the-job
training to implement more effective personnel
development measures as the circumstances dictate.
The second short- to medium-term challenge is tofurther accelerate the development and provision of
new solutions. Many of the NSD Group’s solutions arequite niche and we have a large share of these nichemarkets, but the scale of the market for each solution
is not so great. This is why, in addition to steadily
growing individual solutions, it is crucial that weseamlessly bring new products and services tomarket. As part of these efforts, the NSD Advanced
Technology Research Institute (in charge of planning)
and the Advanced Technology Business Division (incharge of development) mentioned above are working
in lockstep. For example, as well as an active
exchange of personnel between the two organizations,highly experienced employees from within the Group
come together to pool their ideas and resources. In
addition, we are actively looking at M&A as a means todevelop new solutions and shorten our time to market.
The medium- to long-term issue for NSD is thedevelopment of human resources who are actively
able to take on challenges. NSD’s strength lies in ourability to accurately understand customer needs,
combined with our wealth of business knowledge andtechnical capabilities required to meet these needs. As
IT evolves day by day and the business environment
undergoes major changes, and at an ever greater
pace, it is vital that we have, in addition to our current
strengths, human resources with autonomy who areable to demonstrate their creativity to generate new
business. As mentioned earlier, the purpose of
establishing the NSD Advanced Technology ResearchInstitute and the Advanced Technology Business
Division was to strengthen our ability to respond to
new technologies. But not only this, by creating
opportunities for engineers from both inside andoutside the Company to interact, it was also hopedthat a new culture of spontaneous business ideas andchallenges for new technologies would be born. The
NSD Advanced Technology Research Institute is now
in its fourth year. I feel that our younger employees are
gaining experience and that a free, more open-mindedstyle of work is taking root. Going forward, I would liketo expand this way of working to other businessdivisions, and incorporate the process of taking onchallenges into our personnel assessment system.

recent years, non-financial
Q. Ininitiatives
such as sustainability

and ESG have become thebenchmarks by which corporate
value is assessed. Please tell us
about some of these initiatives.

Sustainability as the cornerstone ofmanagement
In recent years, we have seen more and more urgent andpressing issues. These include climate change, a socalled global climate crisis, and a falling working-age
population due to both aging and declining populations indeveloped countries. Amid such circumstances, nonfinancial initiatives, or environmental, social, andgovernance (ESG) factors, are attracting attention as ameans for companies to contribute to a sustainable
society, and as an important management strategy that
supports corporate growth over the medium to long term.
Based on our management philosophy, the NSD
Group has contributed to sustainability through our
corporate activities by creating solutions that contributeto the sound development of society. However, in lightof the increasing urgency and severity of social issues
related to sustainability, we have decided to further

strengthen ESG initiatives as one of our basic strategies
in the current medium-term plan, consolidating theseideas in our Sustainability Declaration.
Moreover, for NSD to effectively help build asustainable society, we must promote initiatives thatreflect our strengths, management issues, and industry
characteristics from among a wide range of issues.
From this perspective, we have identified material
issues for all ESG factors, environmental, social, andgovernance, and compiled and published our policies
for addressing these issues, along with measures andtarget indicators, etc. In terms of initiatives on thesematerial issues, we will not only solve the issues weface, for example, reducing power consumption,
improving the working environment, and better
governance, but as an IT company, I believe we needto solve the issues faced by our customers andsociety by providing solutions that make use of
information technology.

what message do you
Q. Finally,
have for all NSD stakeholders?
Continuing to grow by contributing toa sustainable society
Now that IT has become a social infrastructure, I recognizethat using the power of IT to meet the diverse needs ofour customers is inseparable from resolving all the
many different social issues.
By positioning our goal to help build a sustainable
society as a medium- to long-term growth strategy, we
will continue to solve each individual issue throughdialogue with our employees, customers, shareholders,and investors, growing as a Company that offers a“future for people and IT.”NSD Co., Ltd. Integrated report 2022

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Value Creation in the NSD Group

Value Provided by the NSD Group to Society

Solving social issues with the power of IT by
supporting smart living and DX in various industries
As an independent system integrator, NSD solves social issues by developing systems
and providing solutions based on our business knowledge and technical capabilities
built up over more than half a century.

System Development
FinanceOur main customers are banks, trustbanks, insurance companies, securities
companies, and credit card companies.
We are supporting a wide range of
operations, from core systems such asbank accounts and information systems
to industry-specific systems such assystems to calculate insurance
premiums and online trading systems
for securities companies.

Telecommunication
Our main customers are major
telecommunications carriers, fromlandlines to mobile phones. As well as
being involved in the development of coresystems such as contract management
systems and billing calculation systems,
we are also supporting the developmentof services that utilize cloud computing
and apps, which are increasing against
the backdrop of improvements incommunication technologies such as 5G.

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NSD Co., Ltd. Integrated report 2022

Service
We support a wide range of customers,from news organizations to schools andresearch institutes. For example, fornews organizations, we are working ona system that provides full support forreporting work, from managing interview
schedules to creating news reports andprogram progress charts, as well as asystem that supports the reporting ofelections and marathon races.

Transportation
Our main customers are airlines,
railway companies and transportationcompanies. For airlines and railway
companies, we are supporting general
operations with reservation,
maintenance, attendance management,
and other systems, and fortransportation companies, we aresupporting operational efficiencies withsystems that centrally manage thestatus of shipments and deliveries.

Manufacturing
We support customers in a wide range offields, from electronics and automobiles
to food and pharmaceuticals. We aresupporting improvements in productivity invarious production processes with productsupply and demand systems that
automatically calculate supply and demand
forecasts by product, and production
management systems that manage
everything from production planning toparts procurement, manufacturing
instructions, and cost accounting.

Public Organizations
Our main customers are central
government agencies, local
governments, and affiliated organizations.
Utilizing our expertise cultivated throughsystem development at many publicagencies, we are supporting operational
efficiencies by systematizing government
offices and making modifications in linewith system revisions, as well as
providing a one-stop portal for
administrative procedures.

NSD Strengths Supporting a “Future for People and IT”

1 Stable customer baseFor more than half a century since our founding in 1969, NSD has worked on system development for many customers, including
financial institutions, manufacturers, and social infrastructure companies. At the same time, we have built a relationship of trust withour customers and established a business model for receiving orders on an ongoing basis. These so-called “lifelong customers” can besaid to be the Group’s greatest strength.

2 Outstanding technical capabilities
For over half a century, NSD has accumulated a wealth of business knowledge and expertise through the development of a wide variety
of systems for many customers. In more recent years, we have been refining our ability to apply cutting-edge technologies such as AI,
IoT, and robotic process automation (RPA) to business, with a focus on creating and providing solutions that solve business issues incollaboration with customers mainly at the NSD Advanced Technology Research Institute.

3 Human resources that inspire trust
At NSD we have around 3,000 highly specialized engineers who can meet the diverse needs of our customers, from individual
consulting to mission-critical large-scale system development. We also develop our employees into true professionals by improving not
only their technical capabilities but also their human capabilities. Having such employees helps to build relationships of trust withcustomers, creating a virtuous business cycle.

Solution
Human Resources
We provide a variety of solutions in thefield of human resources, fromrecruiting new graduates and midcareer workers to employing
dispatched workers. We provide
solutions that support everything fromrecruitment marketing to selection
progress management, as well as
solutions that centrally manage theseries of operations required for
employing dispatched workers.

Security

Healthcare

In addition to designing and building
secure network environments, we
provide a variety of solutions that
address security risks such as
information leaks and unauthorizedaccess. For example, as Japan moves
away from PPAP, a common file-sharing
method using password protection, weare helping to support this initiative by
providing solutions that can safely
transmit and receive large amounts ofhighly confidential data.

We provide solutions that support
health and productivity management,
as well as solutions that support highly
specialized medical practice. With one
smartphone, the remote health support
service can perform everything fromsending out health information toregistering and checking data such as
weight, blood pressure, and blood
sugar levels, making it an ideal tool for
health and productivity management.

The Use of Advanced Technology
for the “Future of People and IT”

Facialrecognition

Speaker
identification

With the rapid trend toward digitalization, customer
demands for the use of advanced technologies are
growing. At NSD, we are working to meet the needsof our customers and solve social issues bydeveloping solutions that utilize advanced
technologies in collaboration with our customers. We
are planning and developing next-generation products
tailored to the market based on careful marketing
research, as well as the fundamental technologies wehave researched to date, such as natural language
analysis, image analysis, and voice analysis.

VoiceanalysisImage
analysisNaturallanguage
analysis

Objectdetection

NSD Co., Ltd. Integrated report 2022

13

Value Creation in the NSD Group

Value Creation Process

NSD aims to build a sustainable society and continuously improve
corporate value by using IT to solve various social issues thatarise as a result of changes in the external environment

External
Environment

Materiality

Management
Resources

Management
Philosophy
VisionWorsening climatechange problem

PeopleEnvironment
Reducing impact
on global
environment• Professional humanresources• Opportunities to take onchallenges• Comfortable working

Sustained growth in
the systemdevelopment busines

environments

Evolution of
IT technology• Trustworthy business
partners

SocietyLack of IT humanresources

Greater cyber risks

Fall in working-age
population due todeclining birthrate
and aging population

Contributing to
the developmentof society using
the power of IT
Creatinga workplace
where diverse
human resources
can thrive withjob satisfaction

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NSD Co., Ltd. Integrated report 2022

• Extensive businessknowledge and expertise

Governance

Financial IT• Advanced technology

expertise andapplication capabilities• Solid management system
Customer Base

• Solid customer baseconsisting of diverse
industries and businesscategories

Strengthening
the foundation for
the Company’s
existence
More diversity

Technology &Expertise

Industry &Infrastructure IT
IT Infrastructure
Construction
Solution Business• Co-creation in advanced
technology fields

Finance• Strong financial base
• Stable cash flow

Foun
Human Resourc

The NSD Group contributes to the sound development of society bypushing the boundaries of IT technology to create and provide new
solutions beneficial to people and society, while viewing coexistence andco-prosperity with employees, customers, and shareholders as the very
essence of our corporate activities.

A Company that offers a “Future for People and IT”

ssCreating Economic Value¥ 71.1 billion• Net sales:• Operating income: ¥ 11.4 billion• Net income attributableto owners of the parent: ¥ 7.8 billion

Business Strategies
Expand advanced technology
and DX-related businesses

Value Provided to Society

Make the solution
business a second pillar of
the Company• ROE:

15.7%(Fiscal 2021 results)

Creating Social Value

Effective use of M&A

Employees• Growth and careerdevelopment

Business Activities• A healthy and rewarding
work environment

SystemConsulting

SoftwareDevelopment

Advanced
Technology
DX

IT
Infrastructure
Development

Providing
SolutionsP. 21

Customers

P. 22• Sustained growth• Innovation
Business Partners

P. 23

Maintenance &Operation

P. 24• Value creation throughco-creation• Fair and equitabletransactions
Shareholders• Improvement and return ofshareholder value• Highly transparent

ndation to Support Sustainable Growth
Supply Chain Management

e Management
Governanceinformation disclosureand dialogue

Communities• Solutions that supportsocial infrastructure• Employment opportunities

NSD Co., Ltd. Integrated report 2022

15

Value Creation in the NSD Group

Financial and Non-Financial Highlights

Financial Indicators
Net Sales

Operating Income / Operating Margin

Net sales (millions of yen)

58,08061,944

Operating income (millions of yen)

66,18465,06371,188Operating margin (%)

7,918

8,654

11,414
9,545

16.0

14.7

13.6
FY2017FY2018FY2019FY2020

FY2021Net Income Attributable to Owners of the Parent /Net Income per Share
Net income attributable to owners of the parent(millions of yen)
Net income per share (yen) *1

5,368

5,817

FY201714.0
FY2018FY2019FY2020

FY2021

Shareholders’ Equity / Return on Equity (ROE)7,823

ROE (%)

51,194

6,373

6,314

14.9

Shareholders’ equity (millions of yen)

48,611
46,898
99.37

63.38

FY2017

9,842

69.65

FY2018FY2020

FY2021Market Capitalization /Total Shareholder Return (TSR)

12.1

12.6

FY2017FY2018

15.7

13.8

13.7

FY2019FY2020

FY2021

Shareholder Returns
170,657

Market Capitalization (millions of yen)
TSR: NSD (%)
TSR: TOPIX including dividends (%)

44,437

80.10

78.21

FY201945,368145,822

Dividend per share (yen) *1 *2
Dividend payout ratio (%) *2
Total return ratio (%) *2
137.5

297.0
106,697

114,789

91,693
138.2

66.3

246.9

115.9

110.0

FY2017FY2018

141.5

144.3

99.6

FY2019

67.7
58.8

191.8
167.2

77.1

FY2020

FY2021

41.0

43.1

26

30

FY2017FY2018

52.4

46

42

FY2019FY2020*1: Per share indicators are based on the number of shares after the Company’s stock split executed on January 1, 2020.
*2: Fiscal 2019 indicators are calculated to include the Company’s 50th anniversary commemorative dividend (14 yen per share).

16

NSD Co., Ltd. Integrated report 2022

86.3
52.3
52

FY2021

Non-Financial Indicators
Employees

Female Ratios

Number of employees

Employees (%)

3,522
3,428

Managers (%)

3,560
16.7

3,467

17.0

17.6

3.5

3.5

FY2018FY2019

18.7

19.3

3,379

4.7

5.4

1.2
FY2017FY2018FY2019FY2020

FY2021

Average Years of Service / Turnover Ratio
Average years of service

FY2017

FY2020

FY2021

Average Monthly Overtime Hours /Ratio of Paid Vacation Days Taken
Average monthly overtime hours

Turnover ratio (%) *3

15.0

Ratio of paid vacation days taken (%)

20.8

14.8

19.4

19.9

14.6

19.0
17.0

14.3
14.0
3.5
FY201770.1
2.8
FY20183.8FY20192.6

2.9

FY2020

FY2021

Number of IT credential holders
Number of PMP®*4 credential holders

2,585

2,547

72.4
59.9

Number of Employees with IT Credentials

2,563

73.8

FY2017FY2018FY2019FY202063.3

FY2021CO2 Emissions
CO 2 emissions (total for NSD + subsidiaries in Japan) (t-CO 2e)

2,528

2,523

1,398

1,341

1,280

1,273
1,026

311

308

312

284

316

FY2017FY2018FY2019FY2020

FY2021FY2017FY2018FY2019FY2020

FY2021*3: Calculated excluding mandatory retirements and persons using the Company’s early retirement incentive program.
*4: Project Management Professional (PMP)® is a registered trademark of the US-based Project Management Institute.
NSD Co., Ltd. Integrated report 2022

17

Operations Supporting Value Creation

Core Business of the NSD Group

Helping customers to strengtheninternational competitiveness using
IT and other new technologies
Osamu Yamoto
Director,
Senior Managing
Executive Officer
COO
Since its founding, NSD’s core business has beensystem development. With a strong customer base,
NSD has grown by supporting customers’ business
operations with the power of IT. Currently, we areworking to make the solution business our second
pillar of the Company, after the system development
business, in order to strengthen and stabilize ourmanagement base.
In recent years, corporate in Japan is facing theimportant tasks of promoting in DX and redeveloping
legacy systems to ensure its survival in international
markets. Moreover, IT is considered a promisingsolution to Japan’s declining working-age population
resulting from the country’s changing demographics.
For this reason, there are growing expectations anddemand for IT. Amid this, NSD commands its extensive
operational knowledge gained through long-standing
relationships with customers and its ability toincorporate advanced technology and other IT into
practical business settings with the aim of helping
customers to strengthen their international
competitiveness with IT as well as achieving
sustainable growth together with customers.

In our medium-term management plan runningfrom fiscal 2021 to fiscal 2025, we have defined thesystem development business related to newtechnology and DX and the solution business as our
new core business. We are now working to expand
these businesses quantitatively and enhance them
qualitatively. As for the system development business
related to new technology and DX, the Technology &Process Support Department and Advanced
Technology Business Division support development
departments not only from technical aspects but also
exploring innovation in development processes tostrengthen development capabilities using newtechnology as a company-wide effort. In the solution
business, the NSD Advanced Technology ResearchInstitute and the Advanced Technology Business
Division identify customer needs in terms of advanced
technology through collaboration, promote planningand commercialization of new solutions, and expand
our product lineup.
Through these efforts, our financial performance infiscal 2021, the first fiscal year of the medium-term
management plan, was commendable. Driven by the

System Development Business
Financial IT

Industry &Infrastructure IT

IT Infrastructure
Construction

Solution BusinessNSD
NSD Advanced Technology Research InstituteJapan

StellaS
FSK
Shareholders Relation
Service

Trigger

Overseas18

NSD International
Chengdu Renbenxindong
Technology

NSD Co., Ltd. Integrated report 2022

Renbenxindong
Technology

growth of this new core business, net sales reached71.1 billion yen, compared to the forecast of 70 billion
yen, and operating income totaled 11.4 billion yen,
compared to the forecast of 10 billion yen. Looking

ahead, we will refine our IT capabilities, including in
advanced technology, and further enhance NSD’s value
by contributing to customers’ sustained growth.

System Development BusinessWe provide comprehensive system services based on
customer needs, from system planning and design todevelopment and operational support post installation.

Furthermore, our system development businesscomprises the three segments of financial IT, industry &infrastructure IT, and IT infrastructure construction.

Financial IT
We provide software development and system
consulting mainly for financial services customers,such as banks, insurers, and securities companies.
For customers in banking, we provide continuous
development and maintenance of IT systems,
information systems external connection systems, andmarket systems focused on accounting. For insurers

and securities companies, we offer extensive
development and maintenance services, from coresystems to peripheral systems.
This segment continues growing as one of NSD’score businesses, harnessing our strength ofoperational knowledge and expertise underpinned byour long-standing relationships with customers.

Industry & Infrastructure IT
We provide software development and system
consulting to customers in a wide range of industries,
including manufacturing, telecommunications,transportation, and the public sector.
We have long-standing relationships with customers
in the telecommunications, transport, and electricity andgas sectors supporting social infrastructure. We
understand the core business processes unique to eachindustry and develop software supporting the very heartof business while sharing our customers’ vision andmanagement strategies.
We also maintain long-standing relationships withcustomers in the manufacturing and services industries.
This enables us to address customer needs using
proposal and technical capabilities based on our wealthof experience.

IT Infrastructure Construction
We provide one-stop services for IT infrastructure andnetworks construction, system consulting, and system
maintenance and operation to a broad range ofcustomers, including financial institutions and the
public sector.
Centered on cloud technology, we offer a host of
products and services utilizing our strength as anindependent systems integrator, spanning from various
branded servers to storage, network equipment, thelatest operating systems, and middleware. We help
customers to build out their infrastructure environment
by resolving various cost issues while ensuring thehighest level of quality.

Solution business
Using technological development capabilities honed insoftware development, we develop and provide
proprietary software products from the standpoint of
resolving business and social issues.
We offer an extensive lineup of solutions, fromhighly ubiquitous security software to packages for
specific industries and healthcare solutions.

In recent years, we are also focusing on developmentof solutions using advanced technology. We areworking to plan and develop next-generation products
tailored to the market based on careful marketing
research, as well as the fundamental technologies wehave researched to date, such as natural language
analysis, image analysis, and voice analysis.

NSD Co., Ltd. Integrated report 2022

19

Operations Supporting Value Creation

Business Strategy by Segment: System Development BusinessSupporting the acceleration of DX insociety based on understanding ofvarious customers’ operations
We are working to resolve customers’ challenges by utilizing our operational knowledge andexpertise built up through many years of business dealings with customers since our founding.
In recent years, we are using advanced technology to address the new needs of customers
with the power of IT tailored to changes taking place today while maintaining legacy assets.

Strengths in System Development Business• In-depth operational knowledge and expertise gained from many years of businessdealings with customers in a number of industries and sectors• Ability to apply AI, IoT and other advanced technology in actual business settings• Around 3,000 engineers with advanced expertise• Solid customer base centered on major blue-chip companies

Opportunities / Risks
Opportunities

Risks• Growing need for next-generation systems• Tougher competition in the DX market• Price reduction in downstream processes

following acceleration of DX in society• Advancements in innovation driven by
5G / 6G• Growing investment in labor saving andautomation solutions amid Japan’s
declining working-age populationof software development• Shortage of open system engineering
talentBasic Strategies

Achieve sustainable growth of the system development business byadapting to changes in the operating environment

Specific
Strategies

20• S trengthen ability to win projects from customers, and greater responsiveness in
upstream processes to that end• B uild up results in new technologies and DX business•Win new business in domains such as administrative digitalization by the government
and 5G/6G•Secure the human resources needed to drive growth

NSD Co., Ltd. Integrated report 2022

Financial IT
Segment Overview
We provide software development and system
consulting for financial services customers, such as
banks, insurers, and securities companies.

Main examples of development• Banking: accounting systems (deposits, forex,

lending, etc.) and information systems (customer
information file and anti-money laundering)• Trust: pension management systems and securities
agency systems• Securities: online trading systems and order-taking
systems• Insurance: policy management systems and sales
support systems• Credit cards: credit information management systems
and e-commerce payment systems

Vision in the Medium-Term Management Plan

• Accurately respond to the diverse needs of customers from legacy systems tosystems that utilize new technology, and further deepen our business relationships

In recent years, the banking system has beentransitioning to next-generation systems, giving rise tostrong demand for reconfiguring legacy systems into
more flexible systems.
NSD has many years of experience developing
and maintaining key customer systems andunderstands every aspect of these systems.

In addition to this knowledge, we will support
customers’ DX and further deepen our relationships byfocusing on development of engineers who can handle
open system development from upstream processes,
such as new development environments, method
designs, and framework studies.

FY2021 Results
In fiscal 2021, segment net sales increased 7.3% year
on year to 22,307 million yen and operating income
rose 11.0% to 3,991 million yen.
Sales for insurance companies declined as largescale projects peaked, but sales and profits for the
Financial IT segment as a whole increased as a resultof a steady expansion in orders from major banks andcredit card companies, partly due to the renewal ofcore systems, including next-generation accounting
systems, and the resumption of projects that had been
postponed due to the pandemic.

•Net Sales•Operating Income / Operating Margin

Net sales (millions of yen)

20,36820,56020,79022,307

Operating income (millions of yen)
Operating margin (%)

3,117

3,398

3,597

3,991
17.9

17.3
16.5
15.3

FY2018FY2019FY2020

FY2021FY2018FY2019FY2020

FY2021NSD Co., Ltd. Integrated report 2022

21

Operations Supporting Value Creation
Business Strategy by Segment: System Development BusinessIndustry & Infrastructure IT
Segment Overview
We provide software development and system consulting tocustomers in manufacturing, telecommunications,transportation, and the public sector.

Main examples of development• Service: election reporting system• Transportation: operations plan management system• Manufacturing: product supply-demand management system• Telecommunication: calling rate management system• Commerce: order management system• Electricity: power rate management system• Construction: design management system
Vision in the Medium-Term Management Plan

• Improve response capabilities to new technology and DX projects by working with
the Advanced Technology Strategic Business Unit
• Increase orders in new fields utilizing 5G / 6G
In the industry & infrastructure IT segment, we dobusiness with customers in a wide range of industries,
and there is growing demand for new technology andDX across all these industries.
At NSD, the Advanced Technology Strategic
Business Unit is exploring innovation in thedevelopment of new technology and DX. It is also
improving responsiveness of our software developmentby sharing technologies within the company

horizontally and vertically. In addition, we will focus on
training open system engineers to meet the various
needs of our customers.
As the need for services that address large capacity
and low latency utilizing 5G and 6G technology is
expected to increase in the future, we will improve ourexpertise and technology related to telematics services
with the aim of increasing orders in new fields.

FY2021 Results
In fiscal 2021, segment net sales increased 7.2% year
on year to 32,509 million yen and operating income
rose 18.6% to 5,569 million yen.
Sales for the electricity, gas and water sector
declined as large-scale projects peaked, but sales

and profits for Industry & Infrastructure IT as a wholeincreased as a result of steady expansion in orders in
the manufacturing, service and transportation sector
due to greater appetite for IT investment and orders
from new customers.

•Net Sales•Operating Income / Operating Margin

Net sales (millions of yen)

28,24829,88030,33932,509Operating income (millions of yen)
Operating margin (%)

4,483

4,750

5,569

4,694
17.1

FY201822FY2019NSD Co., Ltd. Integrated report 2022

FY2020

FY202115.9

15.9

FY2018FY201915.5

FY2020

FY2021IT Infrastructure Construction
Segment Overview
We provide services for IT infrastructure and networks construction,system consulting, and system maintenance and operation to abroad range of customers, including financial institutions and the
public sector.

Main Services• Planning and procurement: consulting services and IT Infrastructureservice sales support• Design, construction, and implementation: design and build-up
support of cloud, platforms, networks, storage, virtualization
infrastructure and security, and application development support• Operation and maintenance: system management and maintenanceservices, system operation services, life cycle management services,and help desk services

Vision in the Medium-Term Management Plan

• Foster technical skills and talent mobilization leading non-functional requirements
mainly using cloud technology• Expand new business to help companies transit away from legacy systems andpromote government digitalization
The key to sustainable growth in the IT infrastructure field
is improving our responsiveness to virtualization
technology, cloud use, operation automation, and othertechnologies following the needs of today. We will crossfunctionally share knowledge and expertise with theAdvanced Technology Strategic Business Unit and the
NSD Advanced Technology Research Institute to enhance
our technical skills and mobilization capabilities.

In addition, there is a growing movement bycompanies to break away from legacy systems and bygovernment to promote digitalization. This necessitates
response to non-functional requirements such as security
and scalability on a different level than before. To makethe best proposals for these requests, we will focus on
improving our consulting capabilities in addition toenhancing our technical skills as mentioned above.

FY2021 Results
In fiscal 2021, segment net sales increased 16.2%
year on year to 9,353 million yen and operating
income rose 30.1% to 1,518 million yen.
Sales and profits increased as a result of steadily
linking orders to breaking away from legacy systems andresponding to digitalization such as infrastructure
construction projects for government agencies and cloud
projects for banking, insurance, and securities. The
segment also saw an increase in orders for businessprocess outsourcing projects from local governments.

•Net Sales•Operating Income / Operating Margin

Net sales (millions of yen)

9,353
6,915

7,730

Operating income (millions of yen)
Operating margin (%)

8,052
982

14.2
FY2018FY2019FY2020

FY2021FY2018

1,117

1,518

1,166
16.2

14.5

14.5

FY2019FY2020

FY2021NSD Co., Ltd. Integrated report 2022

23

Operations Supporting Value Creation

Business Strategy by Segment: Solution Business

Offering solutions unique to NSD that
address both business and social issues
Using technological development capabilities honed in softwaredevelopment, we develop and provide proprietary software products
from the standpoint of resolving business and social issues.
We offer an extensive lineup of solutions to resolve customer challenges,
from highly ubiquitous security software to packages for specificindustries and healthcare solutions.

Strengths in the Solution Business• Wealth of technical skills gained from software development• Ability to apply AI, IoT and other advanced technology in actual business settings• Ability to gain insight into customer needs using a solid customer baseOpportunities / Risks
Opportunities

Risks• Growing appetite to invest in solutions

driven by the acceleration of DX in society• Rising demand for security solutions amid
growing cyber risks• Increasing health awareness as the
population ages

• Tougher competition and lower prices

caused by the emergence of competing
solutions• Greater competition to acquire advanced
IT talent

Basic Strategies

Expand size of the solution business into a second pillar of the Company• A ccelerate expansion of business scale by acquiring existing products and brands
Specific
Strategies

24

through M&A• F urther strengthen sales capabilities for human resource-related products (ORDIA,
JobSuite) and education-related products (MANA BOX)• D evelop and commercialize new services in the field of shareholder services• A ccelerate the rollout of leading healthcare brand (CAReNA) in Japan and overseas

NSD Co., Ltd. Integrated report 2022

Solutions
Human Resource Solutions

JobSuite

ORDIA

One-stop solutions in human resourcesCore business management solutions exclusive tostaffing services

We provide a number of one-stop solutions in human resources,from creation of recruitment websites and recruitment marketing
using advertisements to progress management involving theselection of new graduate and mid-career recruits.

Linking with a variety of peripheral systems, we support
companies with staffing management and progress managementof recruitment unique to their industry, along with attendance andsalary management tailored to various employment contract
types, all as a one-stop solution.

Logistics Solutions

Rental Business Support Solutions

MIMERIT

i-Rent Plus

Business warehouse management solutions forinventory control and billing

Rental business solutions compatible with various
business conditions and sizes

We assist companies with detailed management functions suchas individual product identification and traceability required for
quality assurance.

Our solutions feature functions tailored to each industry, fromstreamlining daily operations such as billing to managing
inventory levels and transactions and analysis functions.

Shareholder Benefit Program Services

Security Products

GoodP

eTransporter

Complete outsourcing services for shareholder
benefits programs

Secure file-sharing system

We provide a complete lineup of support required to implement a
shareholder benefits program, including program planning,provision, administrative tasks such as ordering products forshareholders, and handling inquiries from shareholders.

The system ensures large files and highly confidential
information can be sent and received securely. It can also belinked with email, encryption, and traceability solutions,
supporting customers not only with file transmission, but also
additional value-added functions.

Medical and Healthcare Solutions

CAReNA

GluKetto

Remote health support service using smartphone app

Service using visualization of blood sugar trends toimprove living habits

We provide a health and productivity promotion platform via
smartphone app covering all aspects, from implementation ofhealth measures for all employees to health guidance toindividuals using medical fitness.

This service records a person’s daily blood sugar levels using ameasurement device to visualize the relationship with living
habits. It informs users about how blood sugar readings areaffected by their daily eating routine to support them in making
changes and improving their living habits.

FY2021 Results
In fiscal 2021, segment net sales increased 2.2% year
on year to 7,257 million yen and operating income rose
5.5% to 604 million yen.
The segment posted higher sales and profits owing
to steady sales of human resource solution ORDIA andsales growth of security products in response to themove away from PPAP, a common file-sharing method
using password protection, which offset decreased
sales in shareholder benefits services owing to theadoption of new accounting standards for revenue
recognition and the recoil from hardware upgrades for
local governments in the previous fiscal year.

•Net Sales•Operating Income / Operating Margin

Net sales (millions of yen)

6,524

7,134

7,098

7,257

Operating income (millions of yen)
Operating margin (%)

572

604

8.1

8.3

FY2020

FY2021

494

6.9
120
1.9
FY2018FY2019FY2020

FY2021FY2018FY2019NSD Co., Ltd. Integrated report 2022

25

Operations Supporting Value Creation

SpecialFeatureThe Future Ambitions of the NSD Group’s
Research of Advanced Technology

With the rapid speed of innovation in advanced technology including AI, IoT, data analysis, cloud computing,augmented reality (AR), virtual reality (VR), and blockchain, today, the world requires further improvements in
productivity and business model transformation brought about by digital transformation (DX). The NSD Group is
promoting such transformation alongside its customers, focusing on research of advanced technology with aneye on five and ten years down the road. Mr. Hidetaka Kikawada, who heads up the NSD Group’s research anddevelopment of advanced technology, below discusses more about the Group’s current situation and future.

Hidetaka Kikawada
Director and Managing Executive Officer, NSD Co., Ltd.
Head of Advanced Technology Strategic Business Unit
In charge of Market Development Business Division
In charge of Social Platform Division
President & CEO, NSD Advanced Technology Research Institute Co., Ltd.

Our Research of Advanced Technology to Date
Aiming for Grounded Research on
Advanced Technology Together
with Customers
Before I talk about the NSD Group’s initiatives andoutcomes in advanced technology, I would like to begin
by discussing our approach to and structure forresearch and development.
First, NSD’s success over the past half a century has
been made possible by our constant focus on thecustomer and our efforts to work alongside customers inenhancing technology, expertise and quality. Today, theGroup’s workforce has grown to some 3,500 employees,
but our fundamental approach to research anddevelopment remains unchanged. Of course, the needs ofour customers and technology, however, have become
even more sophisticated over the years. Especially
recently, the pace of innovation in advanced technology
symbolized by AI is speeding up, making business modeltransformation driven by DX a vital component ofcompanies’ future growth prospects. Amidst this, topromote business using a wide range of advanced
technologies, it is important to ensure that we have theprevailing technological knowledge and competence toturn this knowledge into reality for our customers.
Therefore, in 2017 when the social implementation of AI
first began in earnest, NSD established the AI Utilization
26

NSD Co., Ltd. Integrated report 2022

Promotion Office and initiated its efforts to gather
information and conduct research on advanced
technology. NSD Advanced Technology Research InstituteCo., Ltd. was established in 2019 after this office wasspun off into a standalone company.
A major characteristic of the NSD Group’s researchand development is identifying advanced technology
themes for commercialization in several years’ time andthen carrying out R&D from investigative research tosolution provision through the corporation of the NSD
Advanced Technology Research Institute, with its
research function, and NSD’s Advanced Technology
Business Division, which promotes commercialization
focused on development. General R&D sometimes
begins from basic research on elemental technologies
with a time horizon of 10 to 20 years in the future. In
the case of the NSD Group, we consider research anddevelopment as one approach to increasing the future
value of customers, as has been the case throughout
our history.
Additionally, to achieve this objective, the NSD
Advanced Technology Research Institute has establisheda unique business structure unlike any other company.
We engage in R&D through partnerships with customers
harnessing our strength of long-lasting relationships oftrust with major corporations in each industry. Of course,
we have our own proprietary R&D, too. Essentially, we
work with investee companies to focus on appliedresearch underpinning solutions to management issues
and future concepts. This entails grounded research ofadvanced technology benefiting actual business
operations while carefully exploring the usefulness ofeach advanced technology in-house. To further speed up

our advanced technology initiatives, NSD established theAdvanced Technology Strategic Business Unit in October
2021, further strengthening collaboration between the
Advanced Technology Business Division and the NSD
Advanced Technology Research Institute.

Our Current Research of Advanced Technology
Creating Myriad Outcomes through
Co-Creation with Partner Companies
Regarding research outcomes to date, the NSD
Advanced Technology Research Institute is now in its
fourth year since inception and it has already achieved
solid progress in the form of products and services now
in use around the world; not to mention its involvement
in an increasing number of demonstration experiments.
The themes of advanced technology are expanding
outward to include AI-driven image analysis, natural
language analysis, user interface (UI), AR, VR, andblockchain. In terms of analysis systems powered by AI,
we are developing our own algorithms based on thecharacteristics of machine learning for each customer
issue. Also, we are pursuing speed and scalability in thedevelopment and operation of IT systems harnessing
agile development and microservice architecture.
Within these activities, we receive many customer
needs in image analysis and natural language analysis,
and we have established a strong level of technology,
expertise, and knowledge. The use of technology where

work processes involving visual confirmation with the
naked eye, such as movements of goods and people in
the factory, product finishing, people’s expressions
during interviews, are switched over to camera footage
for analysis using a proprietary AI algorithm is set togrow going forward.
These solutions are made possible by coretechnologies established through our own proof ofconcept (PoC). We also on occasion establish research
themes based on ideas gained from the challenges
facing customers. During the commercialization
process, the NSD Advanced Technology ResearchInstitute works with the Advanced Technology Business
Division to provide solutions unique to the NSD Groupand adopt methods based on teamwork withcustomers as partners. In recent years, the number ofjoint research projects is also on the rise. We greatly
value co-creation sharing our technology, knowledge,
and expertise with partners.
In terms of outcomes, even in collaboration
between the NSD Advanced Technology ResearchInstitute and the Advanced Technology Business
Division, we are making greater progress with personnel•Structure of Actions for Advanced Technology
Customers

NSD
Advanced Technology
Strategic Business Unit

Investeecompanies

Membercompanies

Generalcompanies

NSD Advanced Technology
Research Institute

Advanced Technology
Business Division(Existing IT development
departments)
3,000 system engineers(SE)

Market Development Business Division (solution sales)• Investee companies

Internetworking & Broadband Consulting Co., Ltd. (IBC), Iwatsu Electric Co., Ltd., Nippon Telegraph and Telephone
West Corporation, Signpost Corporation (in alphabetical order)• Member companies

JR Kyushu System Solutions Inc., Konoike Transport Co., Ltd., Lenovo Enterprise Solutions LLC, Lenovo Japan LLC,
Marubeni Corporation, Marubeni Information Systems Co., Ltd., T&D Information System Ltd. (In alphabetical order)

NSD Co., Ltd. Integrated report 2022

27

Operations Supporting Value Creation
The Future Ambitions of the NSD Group’s Research ofAdvanced Technology

exchanges than expected and have sped up
development by combining each other’s technologies.
For example, in response to IT modernization* issues
faced by customers of the Advanced Technology
Business Division, the NSD Advanced Technology

Research Institute retains an extensive collection ofelemental technologies useful as possible solutions.
Personnel exchanges between the two organizations
help to speed up solutions to customers’ modernization
issues. This collaborative process also increases the•Examples of Technology and Research
Image analysis
Object (kinetic) detection
analysis
Identification ofuniqueness

UI, VR, AR
Voice and gesture UI
Utilization of VR andAR, etc.

Examples of Commercialization Solutions
Tracking Navi
Tracking Navi visualizes people’s movements in factories and other facilities.
This applied solution combines the autonomous navigation technology of
the National Institute of Advanced Industrial Science and Technology (AIST)
with NSD’s weight reduction technology. It analyzes people’s movements inreal time to create more productive work floor layouts and determine work
procedures. Since it does not require large
numbers of sensors, Tracking Navi has earned
a strong reputation from customers for its
reduced maintenance and cost performance.

TeA-L/Right
TeA-L/Right helps to promote correct handwashing practices. It uses AI toanalyze handwashing to determine whether they are using the correct
procedure and methods. It keeps handwashing records, which can be usedas proof for hygiene control checks or comparison with work performance.
Since it can also determine compliance with a customer’s specifichandwashing procedure and methods, TeA-L/
Right can be used in a number of settingsrequiring strict handwashing practices, suchas food factories and restaurants.

Solution Supporting Meeting Minutes Preparation Process(to be announced soon)Using voice recognation technology and speaker identification technology,
this solution can transcribe the spoken words of each speaker into text andalso insert bookmarks at important junctures of the voice file using one
stamp, making it easier to prepare meeting minutes and review the details ofa meeting. The system is also convenient since only the minute taker needs
to install the app. It can be used to transcribe text for both in-person andonline meetings, ensuring compatibility with any work style.

28

NSD Co., Ltd. Integrated report 2022

Natural language
analysis
Voice and soundanalysisSpeaker identification
and word vectoring

Other fields
Blockchaintechnical skills and expertise of employees of theAdvanced Technology Business Division, while
employees of the NSD Advanced Technology ResearchInstitute are able to gain a keen sense of customers’
needs and cultivates their insight of frontline operations.
As a result, the NSD Group has been able to create thispositive cycle, giving rise to a greater ability to address
modernization issues.
* Modernization: Revamping aging legacy systems based on current
needs. This is an important action considered the first step forcompanies to achieve DX.

NSD’s advanced laboratory

The Future of Our Research of Advanced Technology
Accelerating Commercialization and
Human Resource Development,
Paving the Way for NSD’s Technology
in the Future
Our future measures can be found in the “new technology
and DX” section of our current medium-term
management plan.

• D evelop AI products (e.g. location information

solutions, image analysis, voice recognition),
expand sales base, and speed up businessdevelopment• D eepen collaboration and co-create withcustomers, expand outside networks in newtechnology field• P romote sharing of knowledge and expertisefrom across specialist departments to eachdivision in the Company• T rain personnel in new technologies and DX,
expand training and incentive systems to
add more personnel and improve theirtechnical skills
When it comes to number one, development of AI
products, we hope to release a constant stream ofunique NSD solutions such as Tracking Navi and TeA-L/
Right. Additionally, we are making progress with theplanning and development of solutions proposing new
ways of utilizing AI, and we hope to release these during
the period of the current medium-term management plan.
As for number two, collaborate/co-create andexpand outside networks in new technology fields, we
intend to respond flexibly by constantly opening thedoor to new possibilities with not only existing partners,
but IT venture companies as well. For example, we are
hosting personnel from the research fields of AIST.
In regard to number three, sharing knowledge andexpertise internally, we are working to step up
collaboration between NSD Advanced Technology
Research Institute and business divisions within NSD,

such as the Financial Business Division, the Social
Infrastructure Business Division, and the Industrial
Business Division. Although unrelated to this sharing,customers have applauded our efforts to sharetechnology, knowledge, and expertise through personnel
exchanges with partners as I mentioned earlier, and we
intend to continue these arrangements to further
enhance the continuity of our research activities.
As for number four, develop and train humanresources and expand incentives, we will further
enhance recruitment and development of talent fromthe standpoint of strengthening our management base.
The NSD Advanced Technology Research Institutecontinues to hire graduate students with researchexperience in AI. With three to four years of practicalexperience, they have demonstrated the ability todeliver exceptional results. In research forcommercialization, we sometimes co-create withcustomers, which I believe is a great motivator for our
employees. To ensure that we can quickly provide theright answer to the required solutions, we will focus onbuilding up our work environment where our employees
can gain various types of experience. As for incentives,too, we will explore and implement the best framework
for increasing employee motivation and satisfaction.
Unlike NSD’s existing businesses, our culture starts
from investigative research and development and ourteam has many younger employees, so I feel that ourculture is symbolized by a free spirit where people
speak their minds and actively engage in discussion. As
our people bring this culture to the other 3,500
employees of the NSD Group, we hope to help create a
corporate culture that is more ambitious and open to
tackling new challenges.
Since its founding, NSD has grown on the back of
its strong reputation among its many customers fortechnical prowess and sincerity in business. I believethat this spirit remains the same as it is passed down totoday’s generation of employees. We will pass down thistradition to the next generation of talent, as we continue
working to ensure NSD is a corporate group essential tosociety in the future because of its development andsocial implementation of advanced technology.
NSD Co., Ltd. Integrated report 2022

29

Initiatives to Support Sustainable Growth

Sustainability Management

Improving the effectiveness ofsustainability management tocontribute to a sustainable society
and increase corporate value

The NSD Group’s management philosophy is tocontribute to the sound development of society bycreating and providing solutions beneficial to people
and society, while viewing coexistence and coprosperity with employees, customers, andshareholders as the very essence of its corporate
activities. Solving the varied and increasingly
problematic social issues related to sustainability withthe power of IT to help build a sustainable society is
precisely the point of our management philosophy andis something we simply must do. To resolve theseissues, the NSD Group has identified the following
materiality items and is working to address them.
Firstly, as an IT company, we believe that it is our
mission to leverage NSD’s strengths in technologicalcapabilities and wealth of business knowledge to solve
not only our own issues but also those of our customers.
We are therefore striving to solve social issues under themateriality item of social innovation with IT.
At the same time, since human resources are themost crucial asset for supporting these initiatives, werecognize that developing talent is also the mostHideshi Maekawa

Director, Senior Managing
Executive Officer
Head of Corporate
Service Division
Head of Corporate
Planning Division
In charge of Healthcare
Business Division

important materiality item. As such, we are developing
diverse human resources into true professionals. In
addition, we are actively working on employee health,job satisfaction, and diversity and inclusion. We aremaking every effort to create a workplace where diverse
human resources can thrive with job satisfaction. For
example, we are reducing overtime hours, we have a fairpersonnel system, and we are promoting the active
participation of women in the workplace.
Environmental issues such as climate change andwaste are also important issues, hence we are working
to reduce the amount of power used in our offices,moving to a paperless office, and we are reusing andrecycling our computers.
We also recognize that corporate governance andcompliance are important foundations for corporate
management. We will therefore cement these systems
to build an unshakable management foundation.
Through our sustainability initiatives, the NSD Groupwill create new value needed to solve social issues,
aiming for sustainable growth together with society as a
Company that offers a “future for people and IT.”Management Structure•WeSustainability
have established the Sustainability

30

NSD Co., Ltd. Integrated report 2022

Information
disclosure

Stakeholders

Management Committee to oversee oursustainability activities.
General managers fromdepartments within the Corporate
Planning Division and Corporate Service
Division serve as members of thecommittee, which is chaired by the
President & CEO. The committee is
responsible for gathering information,
promoting cross-functional actions, aswell as planning and implementing
sustainability activities.

Board of Directors
ReportSupervision

Sustainability Management
Committee
Communication

ReportSupervision &monitoring

Each Section of NSD and
Subsidiaries

Sustainability Declaration
Recognizing that the realization of a sustainable society is essential,
we fulfill our social responsibilities by contributing to the sound development of society to create
and provide new solutions beneficial to people and society, viewing coexistence and co-prosperity
with employees, customers, and shareholders as our very essence of our corporate activities.
We simultaneously strive for our sustainable growth by promoting ESG initiatives.

Sustainability Initiatives Implemented by NSD

E• Environmentally friendly business activities such as
the use of renewable energy

Target CO 2 Emissions
FY2030: 827t-CO 2 e(35% reduction compared to FY2020 levels)
FY2050: 356t-CO 2 e(72% reduction compared to FY2020 levels)

S• Providing opportunities for skill development• Promoting women’s advancement in the workplace• Creating a comfortable working environment that
respects diversity

Target Overtime hours• Solving social issues by creating and providing solutions• Taking on sustainability challenges together with

Maintain less than 20 hours

business partners

TargetTargetRatio of paid vacation
days taken

Ratio of male with childcare leave

75% or more

FY2025: 30% or moreG

TargetRatio of female
employees

TargetRatio of women in
management positions

FY2025: 20% or more

FY2030: 10% or more

• Highly effective supervision and transparent
management decisions• Business execution that leads to efficientand sustainable growth• Fostering and enforcing an awarenessaround compliance

NSD Co., Ltd. Integrated report 2022

31

Initiatives to Support Sustainable GrowthMateriality

Identifying materiality items and promoting
Group-wide initiatives
From among a wide range of ESG-related issues, we have identified materiality items based on
the strengths of the NSD Group and industry characteristics and promote initiatives toeffectively help build a sustainable society.

Materiality Identification Process
In identifying materiality, we carried out the process with the advice of outside experts, based on
the two perspectives of “importance for stakeholders” and “importance for the Group.”

Step 1

List issues facing
the NSD Group

Issues and the voices of each stakeholder (shareholders, customers,
employees, etc.) that each department or affiliated company should deal
with are identified by means of questionnaires and interviews.

Step 2Create materiality
proposal

While receiving advice from a third party (external expert), eachmateriality item is prioritized and organized in the form of a map.
(See the Materiality Map below)

Step 3

Verify the validity ofthe materiality proposal

The Sustainability Management Committee takes the lead in discussing
the validity of content and priorities of each item of materiality.

Step 4

Identify materiality

Final decision after deliberation by the Board of Directors.
(See the NSD Group’s Materiality on the next page)•Materiality Map
Environmental materiality

Importance for stakeholders

Social materiality

Compliance

Governance materiality

Job Satisfaction for Employees
Diversity & Inclusion
Energy Management
Climate Change
Waste Management

Responsible
Provision of AI
Supply Chain Management

Water

Biodiversity

Contribution to Local Communities

Importance for the NSD Group32

NSD Co., Ltd. Integrated report 2022

Corporate Governance
Human Resource Development
Data Privacy & Security
Social Innovation with IT
Health and Productivity
Management

NSD Group’s Materiality
Materiality

Measures

Climate Change
Energy Management• Thorough environmental management based on ISO 14001• Environmentally friendly initiatives

Waste Management• Reducing waste by going paperless and recycling computers, etc.

E

• S kills development through extensive training systems andHuman Resource
Development

practical guidance· Improving technical skills as engineers (from the basics to
exploring advanced technologies)· Improving human skills as members of society

Health andProductivity
Management• P roviding an environment where employees can work safely and in

Job Satisfaction for
Employees• Providing opportunities for employees to develop their skills• Having a fair personnel system that rewards contribution

S

good health• S teady rollout of initiatives for women’s advancement in the
Diversity & Inclusion

workplace• C reating a comfortable working environment that respects employee
diversity

Supply Chain
Management

Social Innovation
with IT

Corporate
Governance• E ncouraging equal and fair dealings with business partners• S haring and taking on sustainability challenges together withbusiness partners• S olving social issues by creating and providing solutions that use
advanced technologies• A Board of Directors that supports highly effective supervision andtransparent management decisions• O fficer remuneration system to support business execution that
leads to efficient and sustained growth• F ostering and enforcing an awareness around compliance throughG

regular training sessions

Compliance• E stablishing a verification system to ensure fair trade and prevent
corruption• Preventing compliance violations, etc. by way of a whistleblowing hotline
Data Privacy &Security• I mproving employee literacy on information security• S trengthening security through measures against cyberattacks, andvulnerability diagnostics, etc.

NSD Co., Ltd. Integrated report 2022

33

Initiatives to Support Sustainable Growth

Environmental Initiatives
NSD recognizes that the conservation of the earth’s environment is one of the issues
for management. In an effort to limit our impact on the environment, the NSD Groupis working to reduce energy consumption and waste derived from our businessactivities in accordance with our Environmental Policy.
NSD will contribute to a better, more prosperous global environment in collaboration
with our customers and business partners across various industries.

Environmental Policy
To create a sustainable society, the NSD Group will, in accordance with theGroup’s Sustainability Declaration, systematically and continuously work toconserve the earth’s environment, including tackling the problem of climatechange, helping to build a better, more prosperous global environment incollaboration with customers and business partners across various industries.
1. W
 e will help conserve the global environment by reducing the impact our business activities,
services, and products have on the environment.
2. W
 e will clarify and comply with all environmental laws, regulations, and agreements associatedwith our business activities, as well as the requirements of our customers and local communities.
3. W
 e will actively work to save resources and reduce waste by recycling to reduce the impact
our offices have on the environment.
4. W
 e will establish an environmental management system and set environmental targets,
reviewing them regularly to make continuous improvements. We will also deliver educationand promote activities on environmental issues to raise awareness among each and every
employee on the environment.

Climate Change & Energy Management
Tackling Climate Change
In order to address the increasingly serious issue of
global climate change, NSD has positioned climatechange and energy management as one of its material
items, and is working to reduce greenhouse gas (CO2)emissions by setting medium- to long-term targets inline with the framework of the Paris Agreement.
We conduct business with customers in a wide
range of industries, and so we recognize theimportance of predicting the impact that climatechange, which brings more abnormal weather, storms
and flood damage, will have on our business activities.
Based on this understanding, we will analyze the risks
and opportunities that climate change poses to ourbusiness and we will disclose all such information.
34

NSD Co., Ltd. Integrated report 2022

Reducing Greenhouse Gas (CO2) Emissions
Since NSD is mainly engaged in software development
and does not have facilities, such as data centers, thatuse large amounts of energy, the Group’s direct CO2
emissions are very small. For this reason, we aim to
reduce CO2 emissions by attempting to cut down on
the amount of electricity and air conditioning we use in
our offices. As such, we have set and are working
toward long-term targets of a 35% reduction by fiscal
2030, ending March 31, 2031, and a 72% reduction by
fiscal 2050 (compared to fiscal 2020 levels).
CO 2 emissions in fiscal 2021 were 1,026 t-CO 2e,a 19.4% reduction compared to fiscal 2020 (baseyear) and down approximately 26.6% compared tofiscal 2017.

•CO emissions reduction targets•CO emissions

2(t-CO 2 e)

1,273

35%
reduction

2

72%
reduction(t-CO 2 e)

1,398

1,341

1,280

1,273
1,026

827

356
FY2020( base year )FY2030FY2050FY2017FY2018FY2019FY2020

FY2021

Note: CO2 emissions calculation formula: Electricity consumption ateach site x Emission factor at each site

Renewable Energy and LED Lighting
NSD has few in-house facilities with many of its
offices rented in office buildings. Since it is difficult
for us to introduce renewable energy and LED lighting
by ourselves when implementing initiatives in our
offices, we are making requests to the building
management companies at each of our sites to switch

to renewable energy CO 2-free energy tariffs and tochange to LED lighting.
We have already switched to renewable energy
power at our head office and Nagoya branch office.
LED lighting has also been installed at our head
office, cutting the amount of lighting energy used byabout half.

Waste Management
NSD has been working to reduce waste, mainly withthe recycling of computers that are no longer used inits business. We recognize that the reuse andrecycling of waste and resources through separation is
one of the issues of conserving the environment.

We will continue to actively work to reduce wasteby going paperless and through maintaining a 100%
reuse/recycling rate of computers in order to reducethe impact our offices have on the environment.

Environmental Management System

Sustainability Management
Committee

Board of Directors

EMS Promotion Teameach department of the Company and works to improveand enhance the Company’s environmental measuresby sharing information with customer and business
partner contact points.
* Environmental Management System

Shareinformation

Chief Environmental Officer(Chief General Manager ofCorporate Service Division)

Direct andsupervise

Environmental
Manager

Direct andsupervise

Secretariat

ReportGatherinformation
Customer & Business Partner
Contact Points

All Departments
Department
Environmental Managers
Department Environmental
Promotion Officers

Customers & Business Partners

In order to ensure our environmental initiatives arecarried out, NSD has established an EMS* Promotion
Team under the Sustainability Management Committee,
led by the Chief General Manager of Corporate Service
Division as Chief Environmental Officer. The EMS
Promotion Team supervises the status of initiatives in

NSD Co., Ltd. Integrated report 2022

35

Initiatives to Support Sustainable GrowthSocial Initiatives
Recognizing that our employees are our greatest asset, NSD strives to; operate a fairpersonnel system that rewards contribution; provide ample and well-suited
opportunities for skill development; create a comfortable working environment, and;create a workplace where diverse human resources can thrive with job satisfaction.
These initiatives are being promoted not only within the Company but throughout thewhole supply chain.
We are also aiming for coexistence and co-prosperity with society by actively
engaging in social innovation and social contribution with IT.

Human Resource Development
In order to respond to changes in the businessenvironment, such as with the ever-advancing cuttingedge technologies and rapid progress in digitaltransformation, NSD not only conducts a range oftechnical training programs so that employees canacquire the leading-edge technological skills, but also
provides human skills training that encourages employees
to be self-starters. In this way, NSD enhances both thetechnical and human capabilities of its workforce.
In addition to such training programs, NSD nurtures
employee growth through the practice of assigning theright person to the right job.
Training to Improve Technical Skills
NSD conducts training for employees based on theirposition and experience in the Company. The training is
aimed at giving employees the basics of systems
development and project management, including risk
management training and drawing up project plans for
systems development.
We also have some elective training programs so that
employees can improve on their skills. This type of training
seeks to provide employees with system development
skills related to trends in technology, new technologies
and digital transformation-related businesses, as wellas the project management skills required for therespective roles and positions of the employee. In fiscal
2021, we conducted training on various topics such as
Agile Development—Testing and Quality, and theFoundations of Web Application Development withSpring Boot. We also provide our employees with
opportunities to participate in a variety of training
programs, including external group training, SEcollege(a course for system engineers), and e-learning courses.
Aiming to give and help employees improve theirproject management skills, NSD also encourages
employees to obtain Project Management Professional(PMP)®* certification which is granted to those who havea certain level of experience,education, and knowledge in project
management. The purpose of thistraining is to help those employees
who are expected to go on topromote projects acquire the rightkind of project management expertise.
* T he PMI ® ATP logo is a registered trademark of the ProjectManagement Institute, Inc.
* P MP ® is a registered trademark of the US-based ProjectManagement Institute.

Training to Improve Human Skills
NSD conducts training for employees based on theirposition and experience in the Company to help themdevelop their human skills around the idea of becoming
self-starters. Such training includes facilitation andcoaching, vision formation, and strengthening value
proposition capabilities. By combining these programswith on-the-job training to encourage employees ingaining the job knowledge and expertise as well as the
skills specific to each workplace, we help support thegrowth of our employees with respect to every
individual’s unique characteristics.
We also conduct training on specific topics tofoster an awareness of compliance issues, ensure athorough understanding on information security, andimprove leadership skills for junior employees.

Health and Productivity Management Initiatives
For each and every employee to fully demonstrate theircapabilities and play an active role, they must be
physically and mentally healthy and have a fulfilling private
life. The Chief Health & Productivity Management Officer
is the president. The top officer responsible for planning36

NSD Co., Ltd. Integrated report 2022

and implementing initiatives is the officer in charge ofhuman resources. The Human Resources Department
promotes health and productivity management incooperation with the Healthcare Business Division and
the NSD health insurance association.

rganizational structure for promoting health•Oandproductivity management•Trends in average years of service
Male

Chief Health & Productivity
Management Officer (President)

14.9

Officer in charge ofhuman resources
Human Resources
Department

Female

15.3

15.5

15.8

16.1

Healthcare Business
Division

Collaboration

Health & productivity
management staff

NSD health insurance
association

9.5

10.1

10.3

10.3

10.6

FY2018FY2019FY2020

FY2021

Health Counseling Room,
Industrial physician,Health nurse

FY2017

Health promotion and disease prevention
NSD strives to help improve employees’ lifestyle habits andhealth literacy, and prevent mental and physical illnesses.
We have also put into place a consultation systemstaffed by industrial physician, health nurse and healthstaff of the Human Resources Department. Dependingon the results of their health exam, an employee mayundergo ongoing medical follow-up or may be
encouraged to take more thorough examinations.
 alancing work with childcare, nursing careBand medical treatment
NSD has created a considerate system so that
employees bringing up children can continue to work
comfortably with peace of mind. As well as establishing asystem that surpasses the requirements of Japaneselaw, such as allowing childcare leave to be extended until
the end of April of the fiscal year following the date thechild reaches the age of two, and allowing employeeswith children to work shorter hours until the child finishes
elementary school, we provide support for employees
returning to work and provide information even duringchildcare leave. We have established a corporate culture
where employees can feel free to take childcare leaveand NSD follows up with them when they return to work.
As a result, the percentage of female employees taking
childcare leave has been 100% since
FY2000, when we began taking thisstatistic. We also encourage male
employees to take childcare leave,with the number of male employees
doing so, on the rise.

•Ratio of employees taking childcare leave
Male (%)

100

Female (%)

100

100

We have also created a system where employees
can balance work and caring for family members bytaking leave or working shorter hours. Industrial
physicians and public health nurses counsel employees
who are being treated for cancer, cardiac diseases, orbrain diseases and share information with their bosses.
In this way, we help employees being treated for a
medical condition balance treatment and work.
We have developed an environment where
employees can continue to work, and as a result, theaverage years of service of both male and female
employees have been increasing.
 educing long overtime hours and creating anRenvironment where employees can feel free totake paid leave
NSD aims to achieve average overtime hours of 20
hours or less and employees taking 75% or more of
their paid leave. We strive to reduce overtime hours andcreate an environment where employees can feel free totake paid leave.
We allow employees to take half-day leave and takeleave by the hour. We also provide leave for meritorious
long service. We provide a variety of leave options sothat each employee can take leave flexibly in ways thatare convenient for them. As a result, employees took
more than 70% of their paid leave from FY2017 toFY2019 (the government’s target is 70% by 2020).
In FY2020 and FY2021, the percentage of paid
leave taken by employees was below 70%, reflecting a
reduction in the frequency of people going out andrestrictions on everyday life due to the pandemic.
rends in average monthly overtime hours (non•Tstatutory)
and the percentage of paid leave taken
Average monthly overtime hours
Paid leave taken (days)
Percentage of paid leave taken (%)

100

100

70.1

73.8

72.4
59.9

20.8

2.8

2.3

FY2017FY20189.0
FY201917.3
FY202026.2

FY2021

19.4

19.9

13.5

14.2

13.9

FY2017FY2018FY2019

17.0

63.3

19.0

11.7

12.4

FY2020

FY2021NSD Co., Ltd. Integrated report 2022

37

Initiatives to Support Sustainable GrowthSocial Initiatives

Diversity & Inclusion
NSD strives to create and maintain a comfortableworking environment, creating a workplace where
diverse human resources can play an active role withjob satisfaction, regardless of gender, sexual
orientation, age, educational background, race,
ethnicity, nationality, ideology, beliefs, or physical,
intellectual, or mental disability.
 fforts to promote women’s advancement inE
the workplace
In order to promote the active participation of womenin the workplace, NSD has set a target of increasing
the ratio of female employees to 20% or more by
fiscal 2025 and to 10% or more for women in
management positions by fiscal 2030. Our recruitment
activities are based on the policy of ensuring that atleast 40% of all new graduates hired each year are
women. Our aim is to increase the ratio of female
talent, including in management positions as core to
the Company’s human resources, by increasing theratio of female employees.

•Ratio of women
2018

2019

2020

2021

2022

Employees(March 31)

16.7%

17.0%

17.6%

18.7%

19.3%

Managers(March 31)

1.2%

3.5%

3.5%

4.7%

5.4%

2018

2019

2020

2021

2022

27.0%

30.9%

37.2%

35.7%

32.3%

New graduate
hires(joined April 1)

As part of our efforts in recruiting new graduates, we
provide opportunities for female students to come andspeak with female employees of different age groups
and careers helping to give them an idea of what theircareer could be like after joining the Company. We
have also set up a page on our website introducing
some of our female engineers and managers in aneffort to provide more information.

38

NSD Co., Ltd. Integrated report 2022

 reating a Workplace Where Diverse HumanC
Resources Can Thrive
Diversity in the workforce and equal opportunity
initiatives
As well as enhancing some of our benefits programs,
including the accrual leave system and return-to-workinterviews, to support a balance between childcare,nursing care, medical treatment and employment, NSD
is actively working to foster an internal culture thatmakes it easy to benefit from such systems with, forexample, messages from senior management,
educational booklets, and seminars on work-life balance.
D&I training
NSD carries out training on diversity and inclusion in aneffort to create a workplace free from discrimination.
Furthermore, we respect the diversity of our employees
and promote mutual understanding through e-learning
programs and educational booklets on LGBTQ issues.
Human Rights Initiatives
NSD supports international norms on human rights
stipulated in the UN’s International Bill of Human Rights
and the International Labour Organization’s ILO
Declaration on Fundamental Principles and Rights at
Work. In compliance with laws and regulations, we
respect the basic labor rights of workers to act
collectively, bargain collectively, and the right to organize.
At any time in or outside of the workplace, we will
not engage in any behavior or make any remark that
violates human rights, and we will not discriminate on
the basis of gender, sexual orientation, age, educational
background, race, ethnicity, nationality, ideology,
beliefs, or physical, intellectual, or mental disability.
In addition, we do not tolerate forced labor or childlabor under any circumstances.

Supply Chain Management
NSD’s business operations are supported by manybusiness partners. We recognize that further
deepening cooperation with these business partners
will be vital to our efforts to achieve a sustainable
society. To this end, as well as engaging in equal andfair business transactions, we are actively promoting
work style reforms together with our business
partners, with focus on telework and reducing working
hours by streamlining business processes.
Sustainable Procurement Guidelines
To work with our business partners toward the realizationof a sustainable society, we created guidelines, withreference to the Code of Conduct created by the
Responsible Business Alliance, an industry coalition
dedicated to corporate social responsibility in global
supply chains, to outline the matters in which we expect
our business partners to engage. As such, we haverequested that our business partners understand andimplement our Sustainable Procurement Guidelines.

In addition, we have established the Sustainability
Procurement Guidelines to clarify our approach. We
are also working to inform business partners about
our approach to sustainability through a dedicatedcontact desk.
Creating a comfortable work environment for our
diverse workforce
NSD is also working to foster workplaces that are
comfortable and offer diverse work styles for ourbusiness partners, too, in much the same way as ourown employees.
During the pandemic, we quickly expanded our
network equipment for remote connections toestablish a telework environment accessible also tobusiness partners.
We are working to prevent long working hours by
sharing working hour data with the managers of ourbusiness partners and discussing ways to increase theefficiency of business processes. Each procurement
department uses an IT system to carefully monitor theworking hours of dispatched workers in particular toensure compliance with Article 36 of the Labor
Standards Act.
Training support for business partners
NSD offers the same IT training programs provided to its
new employees to the new employees of its business
partners, too, to help enhance their IT skill level.

I nitiatives to Deepen Collaboration with
Business Partners
Fair and equitable business transactions
Whenever we commence business dealings with a
new business partner, the Development Support
Department reviews the transaction to ensurecompliance with laws.
We have also established a whistleblower hotlinethat is accessible by our business partners in an effort
to prevent fraud and scandals.

Rigorous information security countermeasureswith business partners
To maintain good supply chains, it is vital to have a highdegree of awareness on information security matters sothat measures can be continuously taken.
NSD assesses new business partners based on its
Information Security Policy to make sure that they havean appropriate information security management
system in place. If they fail to satisfy our requirements,
we may refuse to do business with them.
Additionally, every year we provide information
security training to our business partners to foster
understanding of and ensure compliance with ourInformation Security Policy.

Regular sharing of information with senior
management of business partners
The understanding and cooperation of business
partners are vital to achieving a sustainable society.
NSD visits its business partners regularly to holddialogue with senior management so as to gain theirunderstanding about our approach to sustainableprocurement and request their active involvement inour sustainability activities.

NSD Co., Ltd. Integrated report 2022

39

Initiatives to Support Sustainable GrowthSocial Initiatives

Contributing to Society
Developing Talent in IT for the Future
As an initiative to develop talent to lead the way
forward in information technology, NSD supports
activities to foster creativity as well as programmingcourses for children.
Sponsor of the All Japan KOSEN ProgrammingContestThe contest invites technical college students fromnational, public, and private schools nationwide tosubmit programs and source codes with the aim tosupply the very best talent to the IT industry.
(Organized by the Japan Federation of KOSEN
Association)
Sponsor of the PCN Kids Programming Contest
The contest invites elementary and junior high school
students from across Japan to participate in games,
online programming, digital crafts, and more, providing
children with the opportunity to take on new
challenges and create new things.
(Organized by the Programming Club Network (PCN))

In conjunction with the opening of our Sendai office,we donated to a growth industry promotion project run
by Sendai City, showing our support for regional
revitalization initiatives that back the development of IT
human resources and promote the IT industry throughindustry-academia-government collaboration.
Initiatives to support disaster-affected areas
In the wake of the Great East Japan Earthquake, in
addition to providing network diagnostic services* freeof charge and gifting money to affected areas, NSD
passed on donations from employees to the WestJapan Heavy Rain Disaster Relief Fund, helping toprovide disaster relief and assist with recovery fromnatural disasters.
* A service that quickly collects and analyzes the communication
status of network equipment and work devices such as the servers,
switches and routers of companies in disaster-stricken areas, andthen makes proposals for system recovery and business continuity.

Social Contribution through a Shareholder Benefit
Program
NSD offers shareholder benefits that allow
shareholders to select preferential products from a
product catalog. With this shareholder benefit
program, we have established the following donation
options as a way for our shareholders to contribute.

•Supporting IT education for the children of the future•Supporting children’s cafeterias•Support for disaster areas•Support for developing countries•Support for medical workers and medical
institutions fighting the pandemic

Photo courtesy of PCN

Sponsor of CyberSakura
CyberSakura is an educational program aimed at
fostering future talent in cybersecurity. The programaims to improve literacy in computers, networks, andsecurity for junior high and high school students
nationwide through practice sessions where students
can gain practical experience, as well as competitions
where students compete for the highest score.
(Organized by L community)
Contributing to Local Communities
Regional revitalization initiatives
In addition to our main offices in Tokyo, Osaka,
Nagoya, and Fukuoka, NSD is branching out toregional areas, opening offices in Sendai andHiroshima from 2022. With this expansion into regional
areas, we are responding to the needs of thosechoosing to remain in their communities, creating
employment opportunities in local areas, as well as
helping to develop and provide work for IT engineers.
40

NSD Co., Ltd. Integrated report 2022

Social Innovation with IT
The rise of new technologies in recent years, such as AI
and IoT, has led to the use of big data and businessdigitalization. Information technology, therefore, not only
helps to improve operational efficiency but also plays arole in creating new businesses.
Against this backdrop, NSD makes full use of newtechnologies in developing systems for customers,
helping to solve through digital transformation (DX), themany different problems customers face.
Through the development and provision of solutions
and products, NSD is working to solve many of the issues
common to its customers with the following key DXs.

DX of work sites such as factories and warehouses
In order to improve operational efficiency at worksites, such as in factories and warehouses, it isnecessary to have a number of different
constructs in place beyond merely trusting to ourintuition or experience. These can include
accurate and unbiased data for analyzing the
movement of workers, data visualization to better
understand the information, and digital means toshare work site conditions.
By visualizing the data of workers’ locational
information through the use of autonomous

navigation technology, Tracking Navi provides ananalysis tool that helps to create layouts toensure safety, reduces congestion and shortens
walking distances at work sites. With Tracking
Navi it is possible to dramatically improve work
efficiency and worker safety.

DX of health management
Amid the demand for health and productivity
management, it is essential for companies toactively encourage, and for employees to willingly
take part, so that health management measures canbe publicized and take root. Moreover, as working
from home becomes more widespread, there is aneed for a new way of health management notconstrained by work location or working hours.
CAReNA provides the solution where
information on health measures can be shared,

vital data such as weight, blood pressure, blood
glucose levels, and step count can be registered,and health check surveys can be carried out allwith a single app on a smartphone. CAReNA canalso be used as a platform for companies andemployees to communicate with each other.

DX of school education
School education is also beginning to movetoward digitalization, as seen in programming
education becoming a compulsory subject in aneffort to develop future talent in IT. The use of IT
in education has various advantages, forexample, education can be provided regardlessof location, and learning processes andoutcomes can be recorded and shared.
MANA BOX is a learning portfolio that enables
information sharing among teachers, students,
and parents by centrally managing learning
objectives, learning processes, assignments, andlearning outcomes for each subject, as well as
self-assessments, evaluations from teachers, andevaluations from other students.
Schools that were among the first to start tointroduce digitalization in educational settings
were able to continue to provide education
without closing even during the pandemic.

NSD Co., Ltd. Integrated report 2022

41

Initiatives to Support Sustainable Growth

Governance Initiatives
NSD Group recognizes that both corporate governance and compliance are criticalcomponents of company management.
We will continue to strive to maintain and strengthen relevant systems to further
solidify the foundation for NSD’s existence.
As an IT company, NSD is focused on enhancing data privacy and security as well as
improving quality management.

Corporate Governance
NSD’s basic approach to corporate governance is toearn the trust of our shareholders and investors byapplying the principles and provisions of ourManagement Philosophy and Basic Management
Policy towards accelerating decision-making, clarifying
management responsibilities, enhancing andstrengthening our compliance structure, and by
engaging in timely and appropriate information
disclosure. We believe that a firm corporate
governance structure is the foundation that will enable
us to secure appropriate profits and make sustainable
increases to our corporate value.

Corporate governance structure
NSD has adopted an Audit & Supervisory Board
structure. In addition to the General Meeting of
Shareholders and directors, our corporate bodies
include Board of Directors, Audit & Supervisory Board,
Audit & Supervisory Board members, and accounting
auditors. We also have established various committees,
including a Governance Committee as an advisory bodyto the Board of Directors, a Management Meeting andExecutive Meeting as deliberation bodies for the
President & CEO, and various committees such as
Sustainability Management Committee and Risk
Management Committee subordinate to the Board of
Directors. To accelerate decision-making by the Boardof Directors and strengthen auditory functions, we also
have adopted an executive officer system to promote
dynamic business execution.
Board of Directors
The Board of Directors is comprised of sevendirectors, of which three are outside directors. The
Board of Directors convenes, as a general rule, atleast once per month to decide on important mattersrelated to management and business execution, as
well as to monitor the status of the execution of duties
by each director. Board of Directors meetings areattended by three Audit & Supervisory Board
members, who confirm the legality of decision making
and the execution of duties by directors.

General Meeting of Shareholders
Elect/Dismiss

Management/
Supervision
Business Execution

42

Board of Directors

Elect/Dismiss

Audit & Supervisory Board
Audit

Governance Committee

President & CEO
Management Meeting
Executive Meeting

Executive Officers
Each Section of NSD

NSD Co., Ltd. Integrated report 2022

Sustainability Management Committee
Audit Office
Audit

Subsidiaries

Elect/Dismiss

Accounting Auditor
Audit

Risk Management Committee
Compliance Committee
Information Security Committee

Audit & Supervisory Board and Audit &Supervisory Board members
The Audit & Supervisory Board is comprised of one
full-time Audit & Supervisory Board member and twooutside Audit & Supervisory Board members. The Audit& Supervisory Board members audit the status of theexecution of duties by directors and the internal controls
system by attending Board of Directors meetings andother important meetings as well as by examining thestatus of business and assets. The Audit & Supervisory
Board determines audit policy and the division of duties
for Audit & Supervisory Board members, and holds
regular meetings to discuss the audit results of each
Audit & Supervisory Board member.
Governance Committee
We have established a Governance Committee as anadvisory body to the Board of Directors to ensure
fairness, transparency, and objectivity in decisionmaking conducted by the Board of Directors. The
Governance Committee is chaired by the President &CEO, and is comprised of a total of four members: thePresident & CEO and three outside directors. The
Committee provides advice and recommendations to
the Board of Directors based on deliberations ofvarious matters, including the nomination and removalof directors and Audit & Supervisory Board members
and remuneration systems for directors, and decides
on matters delegated by the Board of Directors.
Management Meeting and Executive Meetings
We have established a Management Meeting andExecutive Meeting as deliberation bodies for the
President & CEO.
The Management Meeting is chaired by the
President & CEO, and is comprised of a total of eight
members: seven directors (including three outside
directors), and the Full-time Audit & Supervisory Board
member. The Management Meeting convenes at least
one per month to deliberate and report on importantmatters related to management, including
management plans and management strategy.
The Executive Meeting is chaired by the President &CEO, and are comprised of a total of 12 members: sevendirectors (including three outside directors), the full-time
Audit & Supervisory Board member, and four executive
officers. The Executive Meeting is convened at least
one per month to deliberate and report on importantmatters related to business execution, including budget
creation and the status of implementation.
Various committees
As organizations under the Board of Directors, we haveestablished the Sustainability Management Committee,
which addresses the SDGs and ESG issues crossfunctionally, and the Risk Management Committee,
which manages risks facing the entire company.
Also, as an organization under the Risk
Management Committee, we established theCompliance Committee, which addresses complianceviolations and formulates measures to prevent these
violations, and the Information Security Committee,

which establishes company-wide security
countermeasures and formulates regulations, such as
the information security policy.

Officer Remuneration
Policy and details of director remuneration
The remuneration of NSD’s directors is calculated basedon the roles and responsibilities of each position, while alsoemphasizing links with performance in order to strengthen
the incentive for enhancing the Company’s performance.
Therefore, director remuneration consists of baseremuneration as fixed remuneration, bonus as short-term
incentive-based remuneration, and stock remuneration
as medium- to long-term incentive-based remuneration.
The ratio of incentive-based remuneration to total
remuneration of each individual director is at least 30%.
However, outside directors, who occupy a positionof independence from business execution and who areresponsible for the supervision of management, only
receive base remuneration, which is fixed remuneration,
because performance-linked remuneration is not suited
to their role.
Base Remuneration
Base remuneration is paid monthly as fixed
remuneration for the performance of duties. It is paid
according to the base remuneration table following
the roles and responsibilities of each position.
Bonus
Bonuses are paid annually as short-term incentivebased remuneration for achieving the businessplan for each fiscal year.
They are calculated by reflecting the performanceand qualitative evaluation results in the standard
bonus amount prescribed by position following thebonus calculation standards. Performance
evaluations use net sales, operating profit,
ordinary profit and net profit (consolidated basis)
as financial indicators for appropriately reflecting
performance in each year under evaluation. The
ratio calculated based on the rate of achievementof these targets is used as an evaluation indicator.
Qualitative evaluations consider the directors’roles, implementation of responsibilities, and theiractivities for the year under evaluation that cannot
be assessed using financial indicators.
Stock Remuneration
Stock remuneration provides an incentive forcontinuously enhancing the Company’s corporate
value and promotes shared value between
directors and shareholders. It comprises restricted
shares issued annually as medium- to long-term
incentive-based remuneration.
Procedures for approving director remuneration
The details and procedures for approving director
remuneration are stipulated in the Policy on
Remuneration for Directors and Executive Officers.
This policy is determined by the Board of Directors
based upon deliberations held at meetings of theGovernance Committee.
NSD Co., Ltd. Integrated report 2022

43

Initiatives to Support Sustainable Growth
Governance Initiatives•Total Remuneration for Each Officer Category (FY2021)
Category

Payment amount(thousandsof yen)Total amount for each type of remuneration(thousands of yen)
Fixed
Performance-linked
Non-monetary
remuneration
remuneration
remuneration

Number ofrecipients

Directors(Outside directors)

157,323

118,500

27,20011,623

7(25,200)(25,200)

(—)

(—)

(4)

Audit & Supervisory Board
members (Outside Audit &Supervisory Board members)

28,80028,800(13,200)(13,200)

—

—

Total

186,123

147,300

27,20011,6233(2)
10*1. Director remuneration does not include salary paid to directors who serve concurrently as employees.
*2. F ixed remuneration is the amount of base remuneration paid during the fiscal year ended March 31, 2022, performance-linked remuneration is theamount of bonus with the fiscal year as an eligible period, and non-monetary remuneration is the amount of stock remuneration incurred as an
expense during the fiscal year.

The Governance Committee, entrusted by the Boardof Directors, approves the basic remuneration table,bonus calculation standards and standard bonus
amount, and stock remuneration threshold amountbased on this policy.
With regard to bonuses, executive directors
conduct performance and qualitative evaluations of
those eligible for payment through consultation, andformulate a plan for the amount of bonuses for eachindividual. The Governance Committee verifies theappropriateness of this individual-specific payment
proposal and resolves the total amount of payment atmeetings of the Board of Directors.

Internal Controls Systemsystem in compliance with the Basic Policy on
Establishment of Internal Controls System establishedunder the provisions of the Companies Act and theRegulations for Enforcement of the Companies Act.
We report the status of the system and its
implementation to the Board of Directors every fiscal
year as part of our assessment of the internal controls
system as a whole, and when required, we make
improvements to the system.
Additionally, we have established the GovernanceCommittee as an advisory body to the Board of
Directors. This committee ensures fairness,transparency and objectivity in decisions made by the
Board of Directors and works to strengthen NSD’s
corporate governance.

NSD has established and operates an internal controls

Compliance
NSD recognizes that compliance forms an important
foundation of its corporate activities. Accordingly, we
have established the NSD Group Code of Conduct andthe NSD Group Behavioral Guidelines, and havedeveloped a compliance structure. In addition, throughtraining and other means, we strive to increaseawareness of compliance among officers and employees
and to carefully abide by laws and regulations.

Compliance Structure
NSD has established the Compliance Committee under
the Risk Management Committee, which carries out
company-wide cross functional risk management.
The Compliance Committee is chaired by the
President & CEO and consists of members including
related officers and department managers. It strives toensure employee compliance with laws and regulations
through response to compliance violations and theformulation of preventive measures.
Following the changing operating environment andincreasingly diverse and complex nature of businessactivities, it is becoming even more important to foster
44

NSD Co., Ltd. Integrated report 2022

awareness of legal compliance among employees andincrease their compliance literacy. Toward this end, weare actively working to enhance our training andawareness program on compliance.

Compliance Training
NSD considers compliance training to be a mandatorycomponent of training on its Risk Management Rules.
Every year, we provide comprehensive training to
officers and employees and also offer separate training
sessions as needed.
The training curriculum is expansive and covers ahost of subjects from laws and regulations to labor
management and harassment.

 ompliance and Workplace Harassment
C
Hotlines
From the standpoint of ensuring the effectiveness of ourcompliance structure and in an effort to prevent
compliance violations and harassment in the workplace,
NSD has established a compliance hotline andharassment hotline allowing all individuals involved inthe NSD Group’s operations, including officers,
employees and business partners, to submit a report orshare a concern without fear of reprisal.
Each hotline has both internal and external (lawoffice) contact points, providing an environment wherereports or consultations can be made without hesitation.

 nsuring Fair Trade and Preventing
E
Corruption
Ensuring Fair Trade
The NSD Group Code of Conduct and the NSD Group
Behavioral Guidelines both require that our actions
abide by correct corporate ethics and comply with
relevant laws and regulations, including Japan’s Unfair
Competition Prevention Act and Anti-Monopoly Act.
Prior to commencing business dealings with a newcustomer or business partner, we review the transaction
to ensure compliance with various laws and ordinances,such as Japan’s Subcontractor Act and Temporary
Staffing Services Act.
Actions to Prevent Corruption
We engage in fair business activities following social
norms and comply with anti-corruption laws andregulations, including Japan’s Unfair Competition
Prevention Act.
The NSD Group Code of Conduct prohibits
business entertainment and gift giving, along with
provision of improper money, goods, benefits, or othereconomic benefits to public officials and those in similar
positions. Through compliance training, we ensure thatappropriate action is taken in all relevant situations.

Data Privacy & Security
As an IT company responding to the era of digitaltransformation, NSD is working on data privacy andsecurity as one of our most important challenges inorder to earn the trust of customers and society.
Recognizing information security incidents such asleaks and unlawful disclosure of information as majorrisks for corporate management, we strive to safely
and securely handle (maintainconfidentiality, integrity, and availability)
information assets, including personal
information, as a company that
handles important information forcustomers and employees.

Basic Policy on Information Security
To maintain the confidentiality, integrity, and availabilityof all information assets, thereby earning the trust ofcustomers and society, NSD has established its Basic
Policy on Information Security in an effort to ensure
the security of information.
Moreover, specific measures are stipulated in the
Information Security Standards and Information
Security Procedures as sub-provisions of the Basic
Policy on Information Security to ensure that measuresare effective.

3. We will comply with laws and regulations
regarding information security and theprotection of personal information.
4. We will inspect and audit our compliancewith the information security policy in aneffort to operate it appropriately.
5. We will continuously ensure the effectivenessof our information security policy in response
to social and technological changes.

 stablishment of an Information Security
E
Management System
NSD has established the Information Security
Committee under the Risk Management Committee tostrengthen information security. The committee regularly
assesses information security risks facing the company
as a whole, put in place preventive measures, andreports on the status of compliance with rules.
Moreover, we are taking physical measures bydeveloping systems such as equipment and functions
to prevent the risk of information leaks, malware andother virus infections, as well as unauthorized accessto the Internet and e-mails.

Employee Training on Information Security
Basic Policy on Information Security
1. We will establish and comply with aninformation security policy in order to protect
information assets from the threats of disaster,
damage, negligence, and willful intent.
2. We will make our employees aware of theimportance of information security andensure that they are fully aware of our policy
so that they can handle information assets
appropriately.

Every year, NSD carries out training for employees on
the Company’s rules and risks. Furthermore, we
regard problems related to information security that
occur on a daily basis outside NSD as issues of ourown. As such, we verify whether there are any similar
problems within the Company, and make them known
to all employees. When laws and regulations such as
the Act on the Protection of Personal Information arerevised, we provide education to employees to ensure
thorough compliance with such laws and regulations.

NSD Co., Ltd. Integrated report 2022

45

Initiatives to Support Sustainable Growth
Governance Initiatives

Cyber Attack Countermeasures

unauthorized access and malware infection.
Furthermore, we are working to strengthen security byproviding targeted attack countermeasures, firewalls,
web content filtering, and an intrusion prevention
system (IPS).
As targeted email attacks are evolving andbecoming even more sophisticated, we will strengthen
our defenses and provide training and education toeliminate human vulnerabilities.

In addition to information leaks and cyberattacks byhackers, the risks of organized terrorist cyberattacks
from other countries, such as ransomware demanding
money and the shutting down of vital infrastructure,
have recently come to the fore.
In light of these heightened security risks, NSD
outsources vulnerability assessments of internal andexternal systems to a third-party in order to prevent

Quality Management
Department are given exclusive responsibility, andtogether with the departments in charge ofdevelopment, work on quality assurance activities.

To provide quality that satisfies our customers, NSD
aims to improve quality and productivity by way of acontinuous implementation of the PDCA cycle throughthree initiatives: quality management based on quality
guidelines, process improvements through the rollout
of a standard process, and training for improving ourtechnical skills.
We have established the Quality Support
Department as a specialized unit in charge of quality
management, and the Technology & Process Support
Department as a specialized unit in charge of process
improvements and technical skills training.

 rocess Improvement Through Rollout ofP
a Standard Process
As part of our efforts for process improvement, wehave established an NSD standard process which is
being rolled out across the Company.
By using the NSD standard process, we areworking to standardize the work procedures andtemplates used at the development site.
Furthermore, NSD has adopted Capability Maturity
Model Integration (CMMI)* as an improvement modeland created an NSD standard process by imparting
our experience and achievements in CMMI theory.

 uality Management based on
Q
Quality Guidelines
Based on quality guidelines, NSD evaluates andimproves quality in every phase and process, fromproject estimates to delivery. For projects over acertain size, members of the Quality Support* CMMI is a framework developed at Carnegie Mellon University’s
Software Engineering Institute to improve software development
processes.

•Project flow for quality evaluation and improvement
Project launch

Design through to testing (implemented for each process)On start-up

Joint
review• Quality improvement
supportNSD Co., Ltd. Integrated report 2022

Create quality
views report

Joint
review

Selfinspection
during process

Decision on
process
start-up• Collection and evaluationof quality performance data

3/4 complete

Create quality
evaluation
reportComplete

Make checks using
quality evaluation report(final version)

Quality Support
Department

46

Create quality
views report

1/2 complete

Make checks using
milestone checklist

Joint
review

Make checks
using process start-up
check sheet

Development
departments

Createproject plan

1/4 complete

Create projectcompletion reportCreateperformancedata report

SubmitDecision on
processtransition

Create quality
evaluation
reportCompletion

Achieving QCD+CE
At NSD, we define the successful elements of a
project in terms of achieving the five elements
QCD+CE, and we proceed with a project with theseelements in mind.
We define the three basic elements of projectsuccess as: Quality, ensuring the quality demanded by
the customer; Cost, achieving the target productivity;
and Delivery, meeting not only the delivery date to thecustomer but also the completion of each process. We
have also defined two additional elements of projectsuccess as an organization: Customer satisfaction;
and Employee satisfaction; upskilling of project
members. At NSD, our aim is to ensure we achieve allthese five elements in every project.

•The five elements of project success
Employee
Satisfaction

Customer
Satisfaction(Improving technical skillsof project members)(Improving the level ofcustomer satisfaction)

Project
Success

Cost

Delivery(Achieving productivity)

Quality(Sticking to process anddelivery date)(Ensuring required quality)

Return of Profits to Shareholders
Positioning the return of profits to shareholders as themost important task of management, NSD actively
returns profits to shareholders based on its policy toshare outcomes of the Group on a consolidated basiswith its shareholders.
NSD’s basic policy is to achieve a total return ratioof at least 70% (announced in May 2021). We return atleast 50% of net income attributable to owners of theparent as dividends and buy back shares equivalent toat least 20% of this amount.

In fiscal 2021, we achieved a total return ratio of
86.3% (dividend payout ratio of 52.3%) as a result ofproviding total shareholder returns of ¥6.7 billion,
comprising dividends of ¥4.0 billion and sharebuybacks of ¥2.6 billion.
Furthermore, we aim to hold treasury stock
amounting to around 10% of total shares issued. If thisnumber exceeds 15%, it is our policy to retire treasury
stock in the subsequent fiscal year to reduce it backto around 10%.

•Dividend Per Share* and Dividend Payout Ratio•Total Payout of Dividends and Share Buybacks

Year-end dividend (yen)Commemorative dividend marking
NSD’s 50th anniversary (yen)Dividend payout ratio (including interim dividend) (%)

Year-end dividend (millions of yen)
Commemorative dividend marking
NSD’s 50th anniversary (millions of yen)
Share buybacks (millions of yen)
Total return ratio (%)

137.5
4,999

14

86.3

77.1
58.8
41.0

43.1

26

30

FY2017FY2018

52.4

52.3

67.7

66.3
1,999

32

FY201942

FY2020

1,362

1,132

2,196

2,484

2,550

FY2017FY2018FY201952

FY2021* The per share dividend amount is based on the number of shares
after the Company’s stock split executed on January 1, 2020.

2,699

989

3,326

FY20204,048

FY2021*1 A
 mounts of share buybacks and total return ratio indicate theacquisition amount and total return ratio for the period from April to
March the following year.
*2 N
 SD retired 1 million shares of treasury stock in December 2019,2.344 million shares of treasury stock in March 2022, and 3 million
shares of treasury stock in September 2022.

NSD Co., Ltd. Integrated report 2022

47

Initiatives to Support Sustainable Growth
Governance Initiatives

Management System
Directors and Auditors

Yoshikazu
Imajo(Born October 13, 1961)

President & CEO

Hideshi
Maekawa(Born February 16, 1962)

Director
Senior Managing
Executive Officer

Osamu
Yamoto(Born February 20, 1963)

Director
Senior Managing
Executive Officer

Hidetaka
Kikawada(Born May 18, 1973)

Director
Managing
Executive Officer

ResumeApr. 1984
Apr. 2005

Joined NSD Co., Ltd. (NSD)
Executive Officer
Chief General Manager, Systems Division 1
Jun. 2006 Director & Executive Officer
Deputy Operating Officer
Jun. 2007 Managing Director & Executive Officer
Deputy Operating Officer
Apr. 2008 Senior Managing Director, COO
Apr. 2009 President & CEO, COO
Apr. 2011 President & CEO (present position)

ResumeApr. 1982
Apr. 2006

Joined NSD
Executive Officer
Head of Corporate Staffs DivisionJun. 2006 Director & Executive Officer
Head of Corporate Staffs Division
Apr. 2013 Director & Senior Executive Officer
Head of Public & Telecommunication Business Division
and Senior General Manager, IT Services Business Division
Apr. 2014 Managing Director
Head of IT Services Business Division
Apr. 2016 Senior Managing Director
Head of Industrial Business DivisionJun. 2017 Director, Senior Managing Executive Officer
Apr. 2018 Director, Senior Managing Executive Officer
Head of Corporate Administration Division
Apr. 2019 Director, Senior Managing Executive Officer
Head of Corporate Service DivisionJun. 2020 Director, Senior Managing Executive Officer
Head of Corporate Service Division
Head of Corporate Planning Division (present position)

NSD Co., Ltd. Integrated report 2022

Attendance record in FY2021
Meetings of the Board of Directors: 13/13
Governance Committee meetings: 4/4
Term of office: 16 years
Reasons for appointment
Mr. Hideshi Maekawa has extensive
experience and a proven track record withrespect to the business execution of ourcorporate service division and systemdevelopment division. This, together with
his insight for management as a director,
enables him to continue executing business,making decisions, and supervising theactivities of management appropriately.
Attendance record in FY2021
Meetings of the Board of Directors: 13/13
Term of office: 16 years

ResumeApr. 1987 Joined NSD
Sep. 2007 Executive Officer
Chief General Manager, Systems Division 5
Apr. 2014 Senior Executive Officer
Head of Public & Telecommunication Business DivisionJun. 2014 Director & Senior Executive Officer
Head of Public & Telecommunication Business DivisionJun. 2016 Managing Director
Head of Public & Telecommunication Business Division
Senior General Manager, Business Sales DivisionJun. 2017 Director, Managing Executive Officer
Head of Public & Telecommunication Business Division
Senior General Manager, Business Sales Division
Apr. 2018 Director, Senior Managing Executive Officer, COO(present position)

Reasons for appointment
Mr. Osamu Yamoto has extensive
experience and a proven track record withrespect to the business execution of oursystem development division and sales
division. This, together with his insight for
management as a director, enables him tocontinue executing business, making
decisions, and supervising the activities ofmanagement appropriately.

ResumeApr. 1998
Jul. 2015

Reasons for appointment
Mr. Hidetaka Kikawada has extensive
experience and a proven track record withrespect to the business execution of oursystem development division, advanced
technology strategic business division, as
well as our affiliated companies in Japanand abroad. This, together with his insightfor management, will enable him to
execute business, make decisions, andsupervise the activities of management
appropriately as a director.

Joined NSD
Chairman & CEO, Chengdu Renbenxindong
Technology Ltd.
Apr. 2017 Executive Officer
Chief General Manager, Public & Telecommunication
Business Division 1
Apr. 2018 Executive Officer
Chief General Manager, Advanced Technology
Promotion Division
Apr. 2019 President & CEO
NSD Advanced Technology Research Institute Co., Ltd.
(present position)
Oct. 2021 Managing Executive Officer
Head of Advanced Technology Strategic Business Unit
Jun. 2022 Director & Managing Executive Officer
Head of Advanced Technology Strategic Business Unit
(present position)

Note: Term of office represents the period as of June 2022.

48

Reasons for appointment
Mr. Yoshikazu Imajo has extensive experienceand a proven track record as President &CEO of the Company. This, together withhis deep insight for management, enables
him to continue executing business, making
decisions, and supervising the activities ofmanagement appropriately.

Attendance record in FY2021
Meetings of the Board of Directors: 13/13
Term of office: 8 years

Term of office: New appointment

Atsuhiro
Kawamata(Born August 14, 1961)

Director
Outside Director
Independent Officer

KumikoJinnouchi(Born February 16, 1967)

Director
Outside Director

ResumeApr. 1984 Joined Japan Tobacco Inc. (JT)Nov. 2005 Director, Business Planning Department,
Food Business Division
Jul. 2008 Senior Vice President, Head of China Division,
Tobacco Business Headquarters
Jan. 2015 President & CEO, TableMark Holdings Co., Ltd.
(Retired in December 2018)
President & CEO, TableMark Co., Ltd.
(Retired in December 2018)
Jan. 2019 Senior Vice President, Head of Food Business,
Food Business Planning Division, JT
Jan. 2020 Advisor, JT (present position)
Jun. 2020 Outside Director, NSD (present position)

Reasons for appointment
Mr. Atsuhiro Kawamata has extensive
experience, great insight into management,
and capability of supervision gained in Japanand overseas as a member of managementof a manufacturing company. Based on his
experience and insight, the Company
believes he will continue to provide advice
from an objective, extensive and highly
professional viewpoint at the Board of
Directors and the Governance Committee.

ResumeApril 1989 Joined The Sanwa Bank, Limited. (now MUFG Bank,Ltd.) (retired in June 1995)
Jan. 2002 Registered as an attorney-at-law (Dai-ni Tokyo Bar
Association)
Jan. 2014 Established Jinnouchi Law Offices
Representative Attorney-at-Law (present position)
Jun. 2019 Outside Director, NSD (present position)
Mar. 2022 Independent Corporate Auditor, AlphaPurchase Co., Ltd.
(present position)

Reasons for appointment
Ms. Kumiko Jinnouchi has extensive
experience and specialized expertise in all
aspects of legal affairs as an attorney-atlaw. Based on her experience and insight,
the Company believes she will continue toprovide advice from an objective,
extensive and highly professional
viewpoint at the Board of Directors andthe Governance Committee.

Independent Officer

Toru
Takeuchi(Born January 1, 1959)

Director
Outside Director
Independent Officer

KiyoshiKondo(Born September 19, 1954)

Full-Time
Audit & Supervisory
Board Member

Attendance record in FY2021
Meetings of the Board of Directors: 13/13
Governance Committee meetings: 4/4
Term of office: 2 years

Attendance record in FY2021
Meetings of the Board of Directors: 13/13
Governance Committee meetings: 4/4
Term of office: 3 years

ResumeApr. 1981 Joined Nitto Denko Corporation
Apr. 2002 General Manager of Accounting & Finance Department
Jun. 2010 Vice President, General Manager of Corporate
Accounting DivisionJun. 2011 Director, Vice President,
General Manager of Corporate Accounting DivisionJun. 2014 Director, Senior Vice President,
General Manager of Corporate Sector
Jun. 2015 Director, Executive Vice President,
General Manager of Corporate Strategy Sector
Jun. 2018 Director, Senior Executive Vice President(retired in June 2020)
June 2021 Outside Director, NSD (present position)

Reasons for appointment
Mr. Toru Takeuchi has extensive experience,
great insight into management, andcapability of supervision gained in Japanand overseas as a member of managementof a manufacturing company. Based on his
experience and insight, the Company
believes he will continue to provide advice
from an objective, extensive and highly
professional viewpoint at the Board of
Directors and the Governance Committee.

ResumeApr. 1977

Reasons for appointment
Mr. Kiyoshi Kondo has extensive
experience and a proven track record withrespect to the business execution of ourcorporate service division and has insight
into management. As a corporate auditor,
he has conducted audits on directors’
execution of operations as well as on theestablishment and implementation of theinternal control system. This enables him torender high-quality advice at the meetingsof the Board of Directors and the Audit &Supervisory Board.

Joined Toyo Trust and Banking Company, Limited(now Mitsubishi UFJ Trust and Banking Corporation)
Apr. 2006 Joined NSD
Executive Officer
General Manager, Public Relations Department
Jun. 2008 Director
Apr. 2011 Director & Executive Officer
General Manager, Office of President
Apr. 2013 Director & Senior Executive Officer
General Manager, Office of President
Apr. 2015 Managing Director
Jun. 2016 Full-Time Audit & Supervisory Board Member(present position)

Attendance record in FY2021
Meetings of the Board of Directors: 10/10
Governance Committee meetings: 3/3
Term of office: 1 year

Attendance record in FY2021
Meetings of the Board of Directors: 13/13
Meetings of the Audit & Supervisory
Board: 13/13
Term of office: 6 years

NSD Co., Ltd. Integrated report 2022

49

Initiatives to Support Sustainable Growth
Governance Initiatives

Kunio
Kawa
(Born July 16, 1955)

Audit & Supervisory
Board Member
Outside Audit &Supervisory
Board Member
Independent Officer

Norio
Hashizume(Born December 4, 1952)

Audit & Supervisory
Board Member
Outside Audit &Supervisory
Board Member
Independent Officer

ResumeNov. 1990 Joined Mitsubishi Gas Chemical Company, Inc. (MGC)
Jun. 2009 Executive Officer
General Manager, Corporate Planning Division, MGC
Jun. 2012 Director, Managing Executive Officer, MGC
Apr. 2015 Director, Senior Managing Executive Officer, MGC
Jun. 2015 Representative Director
Senior Managing Executive Officer, MGC
Apr. 2018 Director, MGC
Jun. 2018 Audit & Supervisory Board Member, MGC
Jun. 2020 Executive Advisor, MGC
Jun. 2022 Advisor, MGC (present position)
Audit & Supervisory Board Member, NSD(present position)

Reasons for appointment
Mr. Kunio Kawa has extensive experience,
great insight into management, andcapability of supervision gained as amember of management and as acorporate auditor of a manufacturing
company. Based on his experience andinsight, the Company believes he will
provide advice from an objective,
extensive and highly professional
viewpoint at the Board of Directors andthe Audit & Supervisory Board.

ResumeApr. 1975 Joined Nippon Kogaku K.K. (now NIKON Coporation)
Jun. 2003 General Manager of Financing & Accounting Department
Jun. 2005 Operating Officer
General Manager of Financing & Accounting Department
Jun. 2009 Director, Member of the Board, Operating Officer
General Manager of Financing & Accounting Department
Jun. 2010 Director, Member of the Board, Executive Officer
General Manager of Finance & Accounting Headquarters
Jun. 2015 Standing Corporate Auditor
Jun. 2016 Director
Full-Time Audit & Supervisory Committee Member
Jun. 2017 Counselor (retired in June 2020)
Jun. 2019 Audit & Supervisory Board Member, NSD(present position)
Jun. 2021 Outside Director, Aval Data Corporation (present position)

Reasons for appointment
Mr. Norio Hashizume has extensive
experience, great insight into
management, and capability ofsupervision gained as a member ofmanagement and as a corporate auditorof a manufacturing company. The
Company believes he will continue toprovide advice from an objective,
extensive and highly professional
viewpoint at the Board of Directors andthe Audit & Supervisory Board.

Term of office: New appointment

Attendance record in FY2021
Meetings of the Board of Directors: 12/13
Meetings of the Audit & Supervisory
Board: 13/13
Term of office: 3 years

The expertise of the members of the Board of Directors above is as follows.
Corporate
Management

IT

Legal &
Compliance

Yoshikazu Imajo
Hideshi Maekawa
Osamu Yamoto
Directors

Hidetaka Kikawada
Atsuhiro Kawamata
Kumiko Jinnouchi
Toru Takeuchi

Audit &
Supervisory
Board
Members

Kiyoshi Kondo
Kunio Kawa
Norio HashizumeNote: The table above does not represent all of the knowledge and experience held by each person.

50

NSD Co., Ltd. Integrated report 2022

Finance &Accounting

GlobalBusiness

Structures of Each Organization
Board ofDirectors

Position

Yoshikazu Imajo

President & CEO

Hideshi Maekawa

Hidetaka Kikawada

Director, Senior Managing
Executive Officer
Director, Senior Managing
Executive Officer
Director,
Managing Executive Officer

Atsuhiro Kawamata

Outside Director

Kumiko Jinnouchi

Outside Director

Toru Takeuchi

Outside Director

Kiyoshi Kondo

Norio Hashizume

Full-Time Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board member
Outside Audit & Supervisory
Board member

Satoshi Kiyota

Managing Executive Officer

Akio ShinnoManaging Executive Officer

Tatsuo Kawauchi

Executive Officer

Masataka Komatsu

Executive Officer

Osamu Yamoto

Kunio Kawa

: Chair

Audit &
Supervisory
Board

GovernanceCommittee

Management
Meeting

Executive
Meeting: Member

Executive Officers*
Names of executive officers who are not a director and their responsibilities are presented below.
Position

Responsibilities

Akio ShinnoManaging
Executive Officer
Managing
Executive Officer

Tatsuo Kawauchi

Executive Officer

Head of Development Support Division

Yoshihiko Kurihara

Executive Officer

General Manager of Corporate Planning Department, Corporate Planning DivisionAtsuji Kobayashi

Executive Officer

General Manager of Social Infrastructure Business Division 2, Industrial & Social Solution
Business Unit

Satoshi Kiyota

Head of Financial Business Unit
Head of Industrial & Social Solution Business Unit

Masataka Komatsu Executive Officer

General Manager of Healthcare Business Division

Kyoko Gondo

Executive Officer

General Manager of Financial Business Division 3, Financial Business Unit

Hajime Shinagawa

Executive Officer

General Manager of IT Infrastructure Business Division, Industrial & Social Solution Business Unit

Shingo Shinohara

Executive Officer

General Manager of Social Infrastructure Business Division 1, Industrial & Social Solution
Business Unit, and General Manager of Social Platform Division

Toshiya Shimura

Executive Officer

General Manager of Market Development Business Division

Masaru Sugiura

Executive Officer

General Manager of Industrial Business Division 2 and General Manager of EnterpriseBusiness Division, Industrial & Social Solution Business Unit

Shinji Suzuki

Executive Officer

General Manager of Financial Business Division 1, Financial Business Unit

Umon Takahashi

Executive Officer

General Manager of Advanced Technology Business Division, Advanced Technology Strategic
Business Unit

Shuji Takahashi

Executive Officer

General Manager of Industrial Business Division 1, Industrial & Social Solution Business Unit

Tsuyoshi Takeda

Executive Officer

General Manager of Financial Business Division 2, Financial Business Unit

Hideyuki Fujikawa

Executive Officer

In Charge of Human Resources Department and General Affairs Department, Corporate
Service Division

Kiyokimi Yagi

Executive Officer

General Manager of Corporate Secretary Department, Corporate Service Division* Executive officers as of October 1, 2022.

NSD Co., Ltd. Integrated report 2022

51

Initiatives to Support Sustainable Growth

Outside Directors’ Messages
I will continue to support NSD as it grows into a Company that coexists
and prospers with society, while making the world a better place.
Atsuhiro Kawamata
Outside Director
Having been involved in management in the food industry formany years until I became an outside director at NSD, I had
the impression that many companies in the IT industry maderather cut-and-dried decisions. Yet, the corporate culture ofvaluing people has spread throughout NSD. A culture has
been established in which the more experienced employees
mentor the lesser experienced ones, giving them the tools tostand on their own two feet. As a result, I feel that theCompany has taken on one of the good points of Japanesecompanies in that the turnover rate is much lower than that ofother companies. At the same time, I think it is highly

commendable that NSD has been able to solidly improvebusiness performance, continuing to grow steadily.
As for governance, I believe that an appropriate system
has been built in line with the scale of the Company and theindustry, and that it is being operated very purposefully and ingood faith. For example, the Board of Directors is preceded by
the Management Meeting and the Executive Meeting, andbecause we are informed on the contents and points ofdiscussion raised in these meetings each time, we outside
directors are able to express our opinions, including our own
experiences, so I feel that we are able to have somewhat frank

Using my knowledge as a corporate attorney-at-law,
I will help to bring more lively, diverse discussions.
Kumiko Jinnouchi
Outside Director
I was appointed as an outside director in 2019 and this year
marks my fourth year, and I have come to the impression that
NSD’s management places great importance on building on
our daily efforts. This is my interpretation, but I think that thejob of IT that replaces the work process people deal with incomplex ways with a simple process called the binary system,
creates a disharmonious world unless we share not only theprocess of creating products and services, but also our values
and vision for the future with our customers. It is precisely
because NSD has been doing such work, accumulating logicaland practical experience together with its customers, that, I

believe, a culture of making improvements to every issue to
produce results, rather than seeking temporary solutions informulating management plans or solving daily problems, hastaken root here at NSD.
In terms of understanding the proposals that form thebasis for discussions at the Board of Directors, there is anenvironment where even I, as an IT novice, can give my
opinions freely by joining in with the Executive Meeting.
Moreover, executive officers closely in touch with the field canalso participate in these meetings, giving us all a realistic
sense of what it is like in the workplace. Comments andI will help to pass on the values of the management team so thatthe next generation can continue to work with pride.
Toru Takeuchi
Outside Director
I was appointed as an outside director of NSD in 2021 When I
began to take part in discussions at board meetings, the firstthing that impressed me was that all the directors andexecutive officers have a good understanding of every facet of
the Company outside of their normal working duties. NSD is acompany with a history of more than 50 years, and I believethat the current management team knows the Company
inside out as colleagues who have experienced the various
difficulties and failings over the course of the Company’s
significant growth. As a result, we have very clear-cut
discussions and decisions are made swiftly without any

52

NSD Co., Ltd. Integrated report 2022

misgivings. With such a management team leading thecompany, I feel a strong sense of security as an outside
director, knowing that decisions are made with confidence
and without ambiguity. Going forward, if we give more
opportunities to those in the workplace to participate inbriefings on proposals at the Board of Directors and othermeetings, we will be able to lay the foundation for the nextmanagement team. This in turn will allow us to systematicallymaintain our ability to make stable decisions.
As for governance, since NSD is managed by a team thathas grown the Company through its business, they have been

discussions. I also think that NSD’s attentiveness and diligenceis reflected in the fact that it keeps accurate records by taking
minutes of the meetings and circulating them to the attendees
for any clarification.
I believe that strengthening Group governance is what weneed to work on in order to further improve governance. NSD’s
medium-term management plan includes M&A as one of its
growth strategies. For M&A to succeed, it is important to focus
on how to govern the acquired company, so we need toestablish a system for that purpose. I also think it is importantfor management to visit the workplace for themselves so they
can see the employees’ motivation and awareness ofcompliance issues.
One other issue is the need to be conscious of whether
there is a gap between common knowledge inside and outside
the Company. For example, terms that are commonly usedwithin the Company may not be understood by people outside
the Company. I think we should start by reviewing these terms.
I believe that being able to explain what we are doing in words

that anyone can understand is important from the standpointof diversity as the Company continues to grow.
With regard to sustainability, we must determine what kindof similarities or connections there are between business andsociety, for instance, finding out what it is in NSD’s businessactivities that contributes to a more sustainable society. By
communicating that we want to create such a world, and that
NSD will do this for that purpose, thereby improving our
reputation, will, I believe, lead to a prosperous coexistencewith society.
Up until now, I feel that NSD has been a somewhat
behind-the-scenes player due to the very nature of thesystem development business, but I believe that the solution
business that we are currently focusing on has great potential
to make NSD’s name more widely known to the public. Goingforward, I too will continue to support NSD with greater
enthusiasm so that it can grow into a Company with thepower to change the world.

questions are also often reflected in the actual board meeting’s
agenda, so I believe that the effectiveness of the Board of
Directors will further increase if there are more suchopportunities in the future.
And, as there are several people on the Board of Directors
with management experience in different industries, discussions
are always extremely diverse. So I feel that decision-making thatconveys everybody’s opinions and queries helps to ensure theinterests of all our many different stakeholders. I believe that thisis the best aspect of NSD’s governance.
In such discussions, as an attorney-at-law specializing in
corporate legal affairs, I try to offer opinions from two
perspectives. On the one hand, I want to confirm what benefits
and risks will arise for various stakeholders, including
shareholders, when implementing the proposals that havebeen decided. Indeed, I believe that it is my basic mission as
an outside director to question the appropriateness andrationality of M&A, one of the Company’s growth strategies, by
asking, “Why this company?” And on the other hand, I try toverify from a legal point of view whether there is, at any time,
any discord between the decision-making and conventional
management policies, plans, and external announcements.
When formulating policies for the medium-term management
plan, I try to check every word until I am satisfied.
In this way, I would like to contribute to the diversity of theBoard of Directors by providing opinions from the perspectiveof an attorney-at-law. Another thing I would like to share is that
NSD has never asked me to give my opinion simply because I
am a woman. It may not be a job that is particularly influenced
by gender differences, but the experience gives me a strong
sense of the value of assessing people based on their day-today ability. In March 2022, NSD announced its Sustainability
Declaration. For NSD, people have always been the mostimportant asset for management. I personally would like tomake proposals for NSD to achieve sustainable growth, notonly for women’s active participation in the workplace, but also
to develop people’s skills, employee job satisfaction andhealth, and a return of profits to employees.

able to look after the Company without getting above
themselves ensuring that effective governance is in place. In
order to continue this kind of governance going forward, it isimportant to pass on the thinking of the current management
team. The president gives his thoughts on behalf of theCompany on all sorts of different scenarios, but with othermembers of the management team giving their own
interpretations and ideas, and putting these into practice, willallow their sense of values to be felt more closely, eventuallyshaping the corporate climate and culture. As an outside
director, I would like to leverage the expertise and experienceof all three of us to help strengthen governance and support
long-term growth from different perspectives.
With regard to sustainability management, I think it isimportant to ask ourselves where we place the starting pointof our corporate activities. In the Sustainability Declaration
announced in March 2022, we were able to clarify andpublicly maintain what NSD considers important and how wewant to contribute to society. To get our sustainability

management on track, it is vital that we continue to convey
the thoughts contained in the declaration both inside andoutside the Company. By clarifying what NSD itself should do
and what it wants to contribute to society through its businessactivities, I believe that we will be able to promote bothsustained growth for the Company and help build asustainable society.
Finally, I feel that NSD is a Company that values people
at every available opportunity. I hope that NSD will carry on
growing as a Company where employees can continue towork with peace of mind and with a sense of purpose. To that
end, I believe we need to not only improve our systems andframeworks but also instill the values I mentioned earlier. In
doing so, we will be able to develop the human resources
who will lead NSD into the future with the same aspirations tocreate a sustainable organization. I would like to help the
people who will lead the next generation so that they cancontinue to work with pride.

NSD Co., Ltd. Integrated report 2022

53

Corporate Information & Data
Key Financial Data (Consolidated)*1(Millions of yen)

FY2017FY2018FY2019FY2020

FY2021

Operating Results
Net sales
New core business net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income
Ordinary income
Net income attributable to owners of the parent
Orders received (System Development Business)
Order backlog (System Development Business)

58,080–46,172
11,907
3,989
7,918
8,119
5,368
46,415
9,423

61,944–
48,78013,164
4,509
8,654
8,756
5,817
48,99910,06865,063–
51,118
13,945
4,400
9,545
9,661
6,314
58,916
13,17566,18418,004
52,145
14,038
4,195
9,842
9,955
6,373
59,817
13,89571,18823,53755,35015,837
4,422
11,414
11,654
7,823
67,64017,581Net Sales by Segment (Sales to External Customers)
Financial IT––

20,56020,79022,307

Industry & Infrastructure IT––

29,74530,25332,299IT infrastructure Construction

–

–

7,650

8,052

9,347

Solution Business

–

–

7,107

7,087

7,233

Gross profit margin (%)

20.5

21.3

21.4

21.2

22.2

Operating margin (%)

13.6

14.0

14.7

14.9

16.0

Ratio of net income to net assets attributable to
NSD shareholders (ROE) (%)

12.1

12.6

13.8

13.7

15.7

Ratio of ordinary income to total assets (%)

15.5

15.9

17.6

17.6

19.0

Profitability IndicesFinancial Position
Current assets

34,12735,81939,65444,06848,206

Non-current assets

19,91920,058

14,23015,39015,067

Total assets

54,04655,87853,88559,45863,274Current liabilities

7,392

7,701

7,820

8,823

9,435

640

830

1,086

1,461

1,994

Non-current liabilities
Total liabilities

8,033

8,532

8,907

10,284

11,429Net assets

46,01347,34544,97849,173

51,844

Per Share Indices *2
Net income per share (EPS) (yen)

63.38

69.65

78.21

80.10

99.37

Net assets per share (yen)537.08566.36557.46613.71657.57560

Capital Expenditure, Depreciation & Amortization and Research & Development Expenses
Capital expenditure

213

314

553

689

Depreciation & amortization

443

468

427

423

492

Research & development expenses

65

157

155

118

184

Cash flows from operating activities

6,457

5,461

6,764

8,157

7,244

Cash flows from investing activities-5,822

-412

4,285

-658

-377

Cash flows from financing activities-3,321-4,556-8,569-3,628-6,146

Cash Flows

634

5,048

11,050

7,499

6,867

22,16822,681

25,172

29,02929,757

Dividend payout ratio (%)

41.0

43.1

58.8

52.4

52.3

Total return ratio (%)

66.3

77.1

137.5

67.7

86.3

Free cash flow
Cash and cash equivalents at end of period

Shareholder Returns *3

Stock Price Indicators
1,085.50

1,288.50

1,440.00

1,841.00

2,192.00

Market capitalization

91,693

106,697

114,789

145,822

170,657

Price-earnings ratio (PER) (x)

17.13
138.2
(115.9)

18.50
167.2
(110.0)

18.41
191.8
(99.6)

22.98
246.9(141.5)

22.06
297.0
(144.3)Year-end stock price (yen)Total shareholder return (TSR) (%)(Comparison index: TOPIX including dividends [%])54

NSD Co., Ltd. Integrated report 2022

Key Non-Financial Data
FY2017FY2018FY2019FY2020

FY2021

Personnel
Number of employees (consolidated)
Number of employees (non-consolidated)
Male
FemaleRatio of female employees (%)
Ratio of female managers (%)
Number of new graduate hires
Male
FemaleRatio of women in new graduate hires (%)
Number of mid-career hires
Male
FemaleTurnover ratio (%) *4
Average years of service
Male
FemaleAverage salary (yen)Average monthly overtime hours
Number of paid vacation days taken
Ratio of paid vacation days taken (%)

3,379
2,975
2,479
496
16.7
1.2
120
97
23
19.2
13
12
1
3.5
14.0
14.9
9.5
6,270,744
20.8
13.5
70.1

3,428
3,003
2,493
510
17.0
3.5
137
100
37
27.0
10
10
0
2.8
14.3
15.3
10.1
6,362,181
19.4
14.2
73.8

3,467
3,051
2,514
537
17.6
3.5
139
96
43
30.9
15
8
7
3.8
14.6
15.5
10.3
6,411,394
19.9
13.9
72.4

3,522
3,080
2,505
575
18.7
4.7
137
86
51
37.2
11
8
3
2.6
14.8
15.8
10.3
6,423,166
17.0
11.7
59.9

3,560
3,106
2,506
600
19.3
5.4
129
83
46
35.7
20
11
9
2.9
15.0
16.1
10.6
6,515,058
19.0
12.4
63.3

3
34

2
30

8
19

13
34

17
20

2.8
100

2.3
100

9.0
100

17.3
100

26.2
100

100

100

100

100

94.1

1
64

1
74

1
93

1
93

2
98

1

2

1

3

3

Number of employees taking childcare leave
Male
FemaleRatio of employees taking childcare leave (%)
Male
FemaleRatio of female employees returning fromchildcare leave (%)
Number of employees working reduced hours
due to childcare
Male
FemaleNumber of employees using the family care leavesystemNumber of employees working reduced hours
due to family care
Number of IT credential holders
Number of PMP ®*5 credential holders

2

1

1

3

2

2,563
311

2,585
308

2,547
312

2,528
284

2,523
316

1,398

1,341

1,280

1,273

1,026

0
0.0
2
33.3

1
16.7
2
33.3

1
16.7
3
50.0

1
16.7
3
50.0

1
14.3
3
42.9

2

2

2

2

2

66.7

66.7

66.7

66.7

66.7

Environment
CO 2 emissions (Scope 2) (t-CO 2 e) *6

Governance
Number of female directors
Ratio of female directors (%)
Number of independent outside directors
Ratio of independent outside directors (%)
Number of independent outside Audit &Supervisory Board members
Ratio of independent outside Audit & Supervisory
Board members (%)*1 T he Company changed reporting segments in fiscal 2019 following the elimination of the Real Estate Service Business segment. Figures forfiscal 2018 and prior are presented based on the data before this change.
*2 Per share indicators are based on the number of shares after the Company’s share split executed on January 1, 2020.
*3 F iscal 2019 indicators for dividend payout ratio and total return ratio are calculated to include the Company’s 50th anniversarycommemorative dividend (14 yen per share).
*4 The turnover rate is calculated excluding mandatory retirements and persons using the Company’s early retirement incentive program.
*5 P roject Management Professional (PMP ®) is an international credential granted by the Project Management Institute (PMI) to professionals who
possess certain experience, training and knowledge in project management. Furthermore, PMP® is a registered trademark of the US-based
Project Management Institute.
*6 C O 2 emissions cover the head office, branch offices, business sites, and subsidiaries in Japan and are calculated by multiplying electricity
usage of each business location by the emissions coefficient.

NSD Co., Ltd. Integrated report 2022

55

Corporate Information & Data
Company Information
Corporate Profile (As of March 31, 2022)Name

NSD Co., Ltd.

Established

April 8, 1969

Business lines

System Development Business(1) Planning, design and development of IT systems(2) Construction of IT infrastructure
Solution Business(1) Provision of services that utilize IT(2) Sales of software products

Capital7,205 million yen

Number of employees

3,560 (consolidated)

Head Office

WATERRAS TOWER, 2-101 Kanda-awajicho, Chiyoda-ku, Tokyo 101-0063, Japan
TEL: +81-3-3257-1130

Offices (As of December 1, 2022)
Head Office

WATERRAS TOWER, 2-101 Kanda-awajicho, Chiyoda-ku, Tokyo, Japan

Osaka Branch Office

DOJIMA AVANZA, 1-6-20 Dojima, Kita-ku, Osaka-shi, Osaka, Japan

Nagoya Branch Office

NAGOYA Lucent Tower, 6-1 Ushijimacho, Nishi-ku, Nagoya-shi, Aichi, Japan

Fukuoka Branch Office

Kyukan Jotenjidori Building, 1-13-1 Hakataekimae, Hakata-ku, Fukuoka-shi, Fukuoka, Japan

Sendai Business Site

AER, 1-3-1 Chuo, Aoba-ku, Sendai-shi, Miyagi, Japan

Hiroshima Business Site

HIROSHIMA TRAIN VERT BUILDING, 1-2-22 Kamiyacho, Naka-ku, Hiroshima-shi,
Hiroshima, Japan

Group Companies (As of October 1, 2022)
13 Group companies (9 subsidiaries and 4 affiliated companies)(Main subsidiaries)
Company name56

Address

Business lines

NSD Advanced Technology
Research Institute Co., Ltd.

Chiyoda-ku, Tokyo

Research and development of solutions using
advanced technology

StellaS Co., Ltd.

Chiyoda-ku, Tokyo

Provision of human resource solutions and business
warehouse solutions

FSK Co., Ltd.

Iwaki-shi, Fukushima

IT system development, operation, maintenance, andbusiness process support

Trigger Inc.

Chiyoda-ku, Tokyo

IT consulting, system development andoperational support

Shareholders Relation Service, Inc.

Chiyoda-ku, Tokyo

Provision of solutions related to shareholder benefits
and IR consulting for individual shareholders

NSD International, Inc.

New York State, USA

Development of IT systems and provision of solutions
to the US subsidiaries of Japanese companies

Chengdu Renbienxindong
Technology Ltd.

Chengdu, China

Offshore development and system development for
the Chinese subsidiaries of Japanese companies

Renbenxindong Technology Ltd.

Beijing, China

Provision of healthcare management services

NSD Co., Ltd. Integrated report 2022

Stock Information (As of September 30, 2022)
Stock exchange of listing

Prime Market of Tokyo Stock Exchange

Securities code

9759

Number of shares per
trading unit

100

Number of authorizedshares200,000,000

Number of issued andoutstanding shares

87,000,000

Number of shareholders

29,211

Administrator ofshareholder registry

Mitsubishi UFJ Trust and Banking Corporation 1-4-5, Marunouchi, Chiyoda-ku, Tokyo

Share Distribution by Type of Shareholder(As of September 30, 2022)
Type of shareholder

Ownership ratio (%)

Financial institutions

25.39%

Financial instruments firms

0.51%

Other corporations

11.20%

Foreign corporations, etc.

23.72%

Individuals and others

27.68%

Treasury shares

11.50%

Treasury shares

Financial institutions

11.50%

25.39%
Financial
instruments
firms

Individuals
and others

27.68%

0.51%

Ownership
ratio byshareholder
type

Other
corporations

Foreigncorporations,etc.

11.20%

23.72%

Major Shareholders (As of September 30, 2022)
Number of shares held
(thousands)

Ownership ratio (%)*

The Master Trust Bank of Japan, Ltd.

9,169

11.90

IPC Co., Ltd.

5,658

7.34

Northern Trust Co.
(Standing proxy: The Hongkong and Shanghai Banking
Corporation Limited Tokyo Branch)

4,362

5.66

State Street Bank and Trust Company(Standing proxy: The Hongkong and Shanghai Banking
Corporation Limited Tokyo Branch)

3,634

4.71

Custody Bank of Japan, Ltd.

3,627

4.71

State Street Bank and Trust Company(Standing proxy: Mizuho Bank, Ltd.)

3,399

4.41

The Nomura Trust and Banking Co., Ltd.

3,259

4.23

KD Associates, Ltd.

2,697

3.50

JP Morgan Chase Bank
(Standing proxy: Mizuho Bank, Ltd.)

2,461

3.19

NSD Employee Stock Ownership Association

2,251

2.92

Name

* Although the Company owns treasury stock (10,003 thousand shares), it is excluded from the calculation of ownership ratio.

NSD Co., Ltd. Integrated report 2022

57

MEMO

MEMO

NSD Co., Ltd.
WATTERAS TOWER, 2-101 Kanda-awajicho,
Chiyoda-ku, Tokyo, 101-0063, Japan
Tel: +81-3-3257-1130
https://www.nsd.co.jp/english/