NIHON KOHDENREPORT 2023

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

1

Contents
Nihon Kohden’s Value

2
3

Quality4・・・・・・・・・・・・・・・・・・・・・・・・   

Management Philosophy

・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・  

Trajectory of Nihon Kohden

・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・  

Financial and Corporate Data

Improving Safety and Reliability

50
51

Ensuring Fair Trade Practices

56

Financial / Non Financial Summary・ ・・・・・・・・・・・・・・・・・・・・ 98

・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

・ ・・・・・・・・・・・・・・・・・・・・・・・・・・

Introduction of Nihon Kohden’s Business・ ・・・・・・・・・・・・・・・  5
Main Products of Nihon Kohden・ ・・・・・・・・・・・・・・・・・・・・・・・・  6

Message from Director Responsible for Accounting

・ ・・・

Human Rights/Human Resources

Corporate Value Creation Model・ ・・・・・・・・・・・・・・・・・・・・・・・・  7
Value Creation Compass toward 2030・ ・・・・・・・・・・・・・・・・・・  8

Initiatives to Enhance the Value of Human Capital・ ・・・・   68・・・・・   Management’s Discussion and Analysis・ ・・・・・・・・・・・・・・ 102
Company Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 104

Vision towards 2030 for the Future・・・・・・・・・・・・・・・・・・・・・・・ 9

Environment

Progress of Three-year Business Plan・ ・・・・・・・・・・・・・・・・・ 1276
Environmental Philosophy and Policy・ ・・・・・・・・・・・・・・・・・・ 77

Message from Management・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・ 16

Environmental Management・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・ 79

・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Disclosure Based on TCFD Recommendations・ ・・・・・・・・ 82

Sustainability

20
・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・
21
Sustainability Policy
・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Stakeholder Engagement・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 29

Governance30
Enhancing Corporate Governance・ ・・・・・・・・・・・・・・・・・・・・・ 31
・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Board of Directors・ ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 37
Message from Outside Directors・・・・・・・・・・・・・・・・・・・・・・・・ 39
Ensuring Thorough Compliance・・・・・・・・・・・・・・・・・・・・・・・・・ 42
Strengthening Risk Management・ ・・・・・・・・・・・・・・・・・・・・・・ 45

96
97

Overview by Product Category (Consolidated)・・・・・・・・・ 101
60
・・・・・・・・・・・・・・・・・・・・・・・・・・・・・  61
Respect for Human Rights

Nihon Kohden’s DHS (Digital Health Solutions) Vision・・・・ 11

・ ・・・・・・・・・

Water Resource Conservation・ ・・・・・・・・・・・・・・・・・・・・・・・・・ 87
Providing Environmentally Friendly Products・・・・・・・・・・・・ 88

Enhancing Information Disclosureand Shareholder Return

89
Enhancing Information Disclosure and Shareholder Return・・・・ 90
・・・・・・・・・・・・・・・・・・・・

External Evaluation・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 93

Nihon Kohden’sContributions to the Community

94
・・・・・・・
95
Nihon Kohden’s Contributions to the Community
・・・・・・・

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NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

2

Nihon Kohden’s Value
Nihon Kohden’s business and products are continuing toprovide safety and security with our total support for medical
practice, including emergency care, testing, diagnosis,
treatment, rehabilitation, and home care.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

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Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

3

Management Philosophy

We contribute to the world by fighting disease
and improving health with advanced technology,
and create a fulfilling life for our employees.
At the time of founding
Nihon Kohden started with only twelve staff

Founder Yoshio Ogino

ME (Medical Electronics or Medical Engineering) is the union of medicine and engineering.
ME is a common abbreviation in recent years but the founders of Nihon Kohden began working inmedical electronics around 1945, long before this phrase was born.

With the unshakable conviction that “curing disease is something that transcends politics
and national borders, and we will never have any regret putting all our energy into this goal.”Nihon Kohden produced a number of state-of-the-art medical electronic equipment.

The neuromuscular tissue of a small bird was the impetus behind the founding of Nihon
Kohden.
The late Dr. Yoshio Ogino, founder of Nihon Kohden, was doing research in electrical engineering
when one day he happened to see an experiment involving stimulation of the neuromuscular tissue
of a small bird. He was struck by the wonder of biology and remarked that “to measure part of aliving body requires several hundred times the sensitivity and at least two decimal places morethan the equipment developed by the leading electrical engineering experts in Japan.”He wondered if it might be possible to apply a higher level of engineering to the subtleties of
biology and study the human body.
And furthermore, if this union of medicine and engineering could be used for saving human life.
With this powerful inspiration, he studied medicine and in August 1951 founded Nihon Kohden.

As medicine evolved, Nihon Kohden’s products branched out into many areas. However, theoriginal vision did not change and it still inspires the Company’s engineers.
Medical electronic equipment developed by the Company has been used in clinical practice inmore than 120 countries and saved a lot of lives of patients.
We continue to leverage its core strengths: capacity to develop technologies rooted in medical
practice; broad client base inside and outside Japan; high-quality products and services, anddevelopment, production, sales, and service systems to support them; and powerful brandcultivated over many years. Moving forward, the Company will continue to create and provide
value for patients and medical professionals, contributing to the world by fighting disease andimproving health with advanced technology.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

4(¥billion)
200.0

Trajectory of Nihon Kohden
December 1951
Launched the world’s first all AC-powered direct-writing
electroencephalograph, the ME-1D

April 1967
Launched Japan’s first intensive care monitor, the ICU-80

October 2021

Takuo Aoyagi, PhD, received American Society ofAnesthesiologists Honorary Member Award

Central patient monitoring system for monitoringvital signs of multiple patients

Birth of an electroencephalograph driven
by a battery-less AC power source thatchanged the world
Most of the EEG devices in use in Japan at thattime were imported devices powered by a battery
to avoid interference from AC noise. These
products had problems with battery exhaustion
during patient examinations causing theinterruption of recording and failure to record
important EEG phenomenon. Maintenance of thebattery was also another problem. The ME-1D,featuring reduced noiseinterference andimproved operability,
enabled more effective
EEG testing andcontributed to reductionof the burden on
patients/medical staff.

Since its foundation in August 1951, Nihon Kohden has grown steadily by tackling healthcare issues andcontributing to society through the development, production, sales, and service of medical devices.

150.0

In October 2021, Nihon Kohden engineer, thelate Takuo Aoyagi, PhD, received the Honorary
Member Award from the American Society ofAnesthesiologists (ASA). The award celebrates aphysician, scientist, or eligible member, who has
attained outstanding eminence in anesthesiology
or related fields. The award has been presented
to seven individuals over the past 40 years, and
Dr. Aoyagi is the first Japanese person to receive
this award.

The intensive care monitor allowed medical staff tocentrally monitor the EEG, ECG, blood pressure, heartrate, respiration rate and body temperature of up to 8
patients. This monitoring system consists of a central
monitor at the nurse station and bedside monitors inpatient rooms.
As a result, medical workers became able to noticechanges in a patient’s condition and record vital signs at
the nurse station, which has contributed to improving thequality and safety of medical care and reducing theburden on medical workers.

100.0

FY2022

FY2000Net Sales

Net Sales

FY1970¥66.7 billion

Net Sales¥¥¥

206.6 billion
Domestic Sales

Domestic Sales

4.4 billion

50.0

135.7 billion¥70.8 billion

59.4 billion¥7.3 billion¥

Overseas Sales

Overseas Sales

1950

1960

1970

1980

1990

2000

2010

2020

March 1952
Launched the world’s first electric
ophthalmodynamometer, theMOB-1.

September 1960
Launched Japan’s first multipurpose monitoring recorder(polygraph),the RM-150.

March 1974
Applied for patent in Japan for theworld’s first pulse oximetry.

February 1984
Launched the world’s first all
telemetry fetal monitor,
the OMF-7201.

December 1990
Launched Japan’s first digital ECG
telemetry monitor, the WEP8430/8440.

May 2003
Launched the world’s firstmainstream-method CO2 sensor to
be used for non-intubated patients.

August 2018
Launched the world’s first midrange bedside monitor that candisplay echo images by connecting
an ultrasound probe, the CSM-1700.

February 2022
Launched the Japan’s first fully
automatic AED produced in Japan,
the AED-3250.

June 1955
Launched the world’s firstelectrocardiograph with electronic
recording, the MC-1C.

August 1965
Launched Japan’s first batterypowered defibrillator,
the MDV-1.

November 1976
Launched the world’s firsttelemetry systems, the WEP-6000.

April 1985
Launched the world’s firstcombined respiration monitor,
the OMR-7101.

March 1991
Launched the world’s first digital
multi-parameter telemetry bedsidemonitor, the BSM-8502.

June 2009
Launched the Japan’s first
automated external defibrillator,
the AED-2100.

June / September 2019
Launched the Company’s firstventilators, the NKV-330 and
NKV-550.

July 2022
Launched the Company’s first
patient monitor specialized forneonatal resuscitation, theNRM-1300 BreathCue, in Japan.

0

NIHON KOHDEN REPORT 2023

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Nihon Kohden’s Contributions
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Introduction of Nihon Kohden’s Business

Financial andCorporate Data

5

Station, airport, gym,
large commercial facilitiy, etc.
AED

Nihon Kohden is a manufacturer of medical equipment.
Nihon Kohden’s business and products are continuing to provide safety and security with our total support for
medical practice, including emergency care, testing, diagnosis, treatment, rehabilitation, and home care.

AED

Ward, ICU, Operating room

Nurse station
80

80

97

80

Patient monitor
Ventilator

Laboratory
80
80

Patient monitor

98

Defibrillator

除細動器Electroencephalograph

Emergency room

Electrocardiograph

Waiting room
80
AED
80

Patient monitor

Defibrillator

AED

Hematology
analyzer

NIHON KOHDEN REPORT 2023

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Environment

Main Products of Nihon Kohden
AEDs
An AED delivers an electric shock to the heart whenventricular fibrillation is occurring to restore it to its
normal rhythm. Nihon Kohden provides the only
AEDs developed and manufactured in Japan*.
Nihon Kohden is working to realize a society inwhich everybody can use an AED without hesitationand so increase the lifesaving rate.
A s of March 2023

Electroencephalographs
The electroencephalograph is indispensable fordiagnosing epilepsy, cerebrovascular accidents, sleep
disorders, and other neurological conditions. Nihon
Kohden’s electroencephalographs have a high market
share worldwide. One product attracting attention is an
EEG headset that can easily measure brain waves
even in challenging environments, such as in intensive
treatment or in emergencies. It enables rapid diagnosis
and treatment and is an important tool to improvesurvival rates and prognosis of patients.

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

6

Ventilators

Pulse oximeters

Our first in-house ventilators
were launched in 2019.
Through unique technologies
and a variety of ventilation
modes, these devices provide
safe artificial respiration
management suitable for various
medical settings. We also
develop our original masks
which fit the skeletal structure ofpatients. These masks aim at
improving quality of life (QOL) for
patients by improving the fit withthe face and patient comfort.

An SpO2 probe continuously measures theoxygen saturation (SpO2) of arterial blood
without blood sampling. The principle wasinvented in 1974 by the late Dr. Takuo Aoyagi,
who passed away in 2020, a Nihon Kohden
engineer. This revolutionary technology thatenables painless and continuous
measurement in real time is now
indispensable for monitoring patient
conditions in clinical settings around theworld.

CO2 sensors

Bedside monitors
Bedside monitors continuously display vital signs such as ECG (electrocardiogram), bodytemperature, SpO2 (arterial oxygen saturation), and NIBP (non-invasive blood pressure).
These devices are deployed in various medical settings such as operating rooms, intensive
care units, and general wards. Nihon Kohden offers a wide range of bedside monitors,
from simple monitors for family doctors to in-hospital transport monitors and advanced
monitoring systems with centralized monitoring functions.

Electrocardiographs

In-vitro diagnostic equipment

The electrocardiograph, the most common testing
equipment for diagnosing heart disease, is widely usedin various medical settings. Nihon Kohden supports
medical professionals in the diagnosis of heart disease
with equipment designed for ease of handling andcapable of customization according to site and test
specific requirements. Nihon Kohden’s
electrocardiographs provide users with digitized
examination data and a variety of analytic information
based on our unique technology.

In the IVD field, we have developed blood cell counters anddevices that measure HbA1c, an indicator of diabetes, aswell as CRP*1 and ESR*2, which indicate the degree of
inflammation in the body. We also develop and produce
various in-house reagents. We will continue to explore
unique technologies that enable accurate measurementwith a small amount of blood, as well as operability andfunctionality that support medical professionals.
1 CRP: C-reactive Protein.
2 ESR: Erythrocyte Sedimentation Rate.

cap-ONE is a CO2 sensor developed forsafer respiratory management whichmeasures the amount of CO2 in expiration.
Weighing only 4 g, this ultra-compact andlightweight sensor can also be used withnewborn babies. In addition, we havedeveloped a mask that permits CO2
measurement while supplying oxygen,
which reduces the burden on patients andcontributes in reducing medical costs.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Corporate Value
Creation Model

Sustainability

Governance

Human Rights/
Human Resources

Quality

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

7

Realization of the Company’s
Management Philosophy

Through its business activities based on its Management Philosophy, Nihon
Kohden is working to address social issues and offer value to society as well as
attain sustainable development and enhance the corporate value of the Group.

OperatingmarginLong-term Vision

Overseas
sales ratio

15% 45%INPUT2030 VALUE CREATION COMPASS

Main Investment Capital

Of which, Overseas 1,641 people(As of March 31, 2023)





Proactive R&D investment
R&D costs¥

6.2 billion  Innovative technologicaldevelopment capabilities●(FY2022)

Recycling rate

97.4%
(FY2022)

in
g
in
at

a

M

A powerful brandcultivated overmany years

D

s

2

ic

5.88 t-CO /¥100 million

ist

CO2 Emissions per unit of salesatNatural CapitalSt(As of March 31, 2023)&

114 sales offices
26 group companies
Over120 countries

Broad client baseinside and outside
Japan

Al

Areas in which
products deployed(Operating income margin)(10.2%)

s
on
uti
l
o
lue byhS
Digital Healt


Human Capital●

Job creation●

Fostering a corporate
culture in which employees
take pride in contribution to
healthcare and to our mission

10%Intellectual Capital●

Net Sales

Composition ratio¥ 43.2 billion

21.0%

The ECG-3250
ElectrocardiographPatient Monitors
Net Sales

Composition ratio¥ 80.8 billion

39.1%

The CNS-2101
Central Monitor

Net Sales

Composition ratio¥ 44.4 billion

21.5%

The AED-3250
Automated External
Defibrillator

Social Capital
Improving quality of life
(QOL) for patients● Improving resuscitation rates by
expanding access to AEDs

Natural Capital

Net Sales

Composition ratio¥ 38.0 billion

18.4%

The MEK-9200
Automated
Hematology Analyzer

Realizing a carbon-freesociety

Production Capital●

Other Medical Equipment

Technology such as AI andgreen technology, that is thesource of value co-creation●●

Treatment Equipment

Cr
ea
te v
a

Investment funds for sustainablegrowth● Return to shareholders¥13.8 billion

Net income(FY2022)

Number of bases in Japan and overseas
Overseas¥20 billion

Operating income

Financial Capital●

Physiological Measuring
Equipment

13 items

Manufacturing Capital/
Social Capital
In Japan(32.0%)

Results in FY2022(FY2022)

Number of new products
released¥63 billion(Overseas Sales Ratio)

ROE





Intellectual Capital●

Capacity todeveloptechnologies
rooted in medical
practiceAccelerating digitalization● Changes in logistics
environment● Response to newwork-styles● Tighten laws/regulations
●

5,751

Number of employees

High-quality
products andservices supported
by integrated
development,
production, sales,and service




Trends in Medical
Device Industry

Diverse employees¥134 billion

Domestic Sales




●

¥197 billion

Overseas Sales

Increases in medical
expenses● Ensuring quality of
medical care●

Creating social value

Sales(FY2022)●

Medical Issues



370%

Current ratio



Demographic changes● Changes in structure ofdiseases● Climate change/Natural
disasters

Targets of the Three-year
Business Plan
FY2023 ending March 2024

Sound financial structure

Human CapitalSocial Issues

OUTCOME

Financial Capital
●







Social and Medical
Issues Addressedby Nihon Kohden

OUTPUT

Value chain which pursues
the highest level of quality inthe world

NIHON KOHDEN REPORT 2023

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Environment

Enhancing Information Disclosureand Shareholder Return

Value Creation Compass toward 2030
Toward Better Patient Outcomes and Improving the Economy of Medical Care
The Value Creation Compass is our new value creation model that represents how Nihon Kohden will work to solve medical
and social issues by 2030. Nihon Kohden will combine our original technologies and clinical expertise with advanced
technology in collaboration with global partners, to create valuable solutions that help solve issues in clinical sites.

● Patient outcomes and economy of medical care

We aim to create value that addresses global medical issues of achieving better patient outcomes and improving the
economy of medical care.
● Suitable solutions for each disease and clinical site

We aim to provide the optimal care cycle solution for each patient, from examination, diagnosis, and treatment to homecare.
● HMI technology and medical equipment

HMI technology is one of our core strengths and serves as an important touchpoint with patients throughout their clinicaljourney. HMI technology and medical equipment give us access to patients and clinical sites which enable us to create
value.
● Value creation from data gathered through clinical sites

Nihon Kohden will develop a data integration platform and pioneer algorithms to create new value from information. Vital
sign data, IoT data and EMR information will be integrated as a big data. Algorithms for clinical prediction models will be
developed using AI and data analysis.
● Real time loop to respond to clinical needs

By combining HMI technology and medical equipment used in the medical field, and new algorithms created from big data
analysis, we provide solutions that can respond to clinical needs in real time.

HMI: Human Machine Interface

Nihon Kohden’s Contributions
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Financial andCorporate Data

8

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

GovernanceVision towards 2030 for the Future

Accessible

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

9

Nihon Kohden will combine our original technologies and clinical expertise with advanced technology in collaboration
with global partners to create valuable solutions that help solve issues in clinical sites.

Accessible

Patient oriented

Intelligent

QualityIntelligent

Connected

Optimized

How do we bridge the final distance between AEDs
and people to save every life possible?

Can we eliminate human error in operating rooms withadvances in technology?

We have been working to widely deploy AEDs to improve thesurvival rate.
But still we have challenges to address; training for first
responders, reducing fears about AED use, sensing technology
for early detection of cardiac arrest, a mobile app-based
volunteer first responder network, and utilization of on-scene
data and vital signs. We aim for a future in which the number ofsudden cardiac deaths is one-third of the current level, throughstep by step efforts to reduce the psychological and physicalbarriers to AED use.
We are working hard to achieve a future where everyone canuse AEDs without hesitation.

Surgery is a beacon of hope for patients who want to live.
However, human error in operating rooms is still a cause ofdeath. Especially in emerging countries, the mortality rates due
to human error are estimated to be 100 to 1,000 times higher
than in developed countries. We believe we will be able to solve
this serious issue. Utilization of patients’ vital signs and stableanesthetic management may be able to reduce the mortality rate
due to human error to one-hundredth of the current level.
Our aim is improving the safety of surgery by developing
advances in technology and delivering these technologies
beyond national borders to patients all over the world.

NIHON KOHDEN REPORT 2023

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Vision towards 2030 for the Future

Patient oriented

Connected

How do we design ICUs where patients can recover inpeace and with dignity?

Can we connect medicine and life, so that people canenjoy their time wherever they desire?

ICUs are intended to save patients’ lives and help them make anearly recovery. However, can patients really recover in peace,surrounded by a lot of machines and tubes?
Our ideal room offers patients a place to rest not only theirbodies but also their mind. The changes in patients’ conditions
can be appropriately monitored to provide treatment at earlystages. The temperature of the bed and the room brightness canalso be comfortably adjusted according to the patients’conditions. We aim to design such an optimal environment foreach patient and realize ICUs that are friendly to patients,
families, and medical workers.

Patients feel anxious even when they want to go home; “Mycondition may get worse because I won’t be able to receive thesame treatment as when I was in hospital.” or “Emergency
situations may cause a burden for my family.” Providing
homecare with the same quality as hospital care will enable theearly prediction and prevention of deteriorative conditions suchas heart failure. Since many people live with illnesses in aging
population, we aim to reduce the burden on patients, theirfamilies and hospitals by reducing readmission rates.
We will continue to watch over the daily lives of people
recovering from illness to help them enjoy their time wherever
they desire.

Optimized

How can we create a medical system with both
quality and efficiency so that patients, families, andhealthcare professionals all thrive?
Hospitals are working on improving their productivity andmanagement. Medical workers want to spend as much time as
possible for patients. Our goal is a “Win-Win” relationship in
which everyone is happy. We collect and utilize the data frommedical devices deployed in hospitals to allocate resources
appropriately and optimize operation of the devices.
This will enable medical workers to concentrate on patients andimprove patient outcomes. As a result, patients can smoothly
return to their daily lives after a short hospital stay.
We aim to increase the “satisfaction with medical care” of all
stakeholders by helping hospitals improve efficiency.

NIHON KOHDEN REPORT 2023

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Environment

Enhancing Information Disclosureand Shareholder Return

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to the Community

Financial andCorporate Data

11

Nihon Kohden’s DHS (Digital Health Solutions) Vision
Impact of technological innovation

Remotemonitoring

Medical device
data integration

Algorithmic
medicine

Nihon Kohden is promoting the DHS (digital health solutions) Vision to realize its Long-term Vision toward 2030, BEACON 2030.
Currently, we are investigating the creation of new customer value to solve specific issues in two areas: DHS Vision for Acute
Care and DHS Vision for Regional Medical Care.

Decision-making
supportUnder the DHS vision for acute care, we aim to provide application and services that utilize patients’ vital sign data and medical
device information in step with technological advances. In the area of medical device data integration, we will develop a platform
for data input, including the use of new technologies such as medical device connectivity and wearable devices to obtainpatients’ vital sign data. In the area of remote monitoring, we will contribute to the development of telemedicine by enabling
medical professionals to recognize, judge, and intervene with patients at a distance, in line with the progress of network
technology and cloud computing. We plan to utilize the information acquired using the technologies of medical device data
integration and remote monitoring to gradually develop solutions that only Nihon Kohden can provide.

Monitoring of
critical conditions

Time to mainstream adoption

DHS Vision for Acute Care

DATA
Prehospital
Testing and Diagnosis
Semi-automated Monitor installedin ambulance
defibrillator
ECG

EEG

Surgery and treatment

Ventilator

Defibrillator

ICU and Ward
Home care
Patient monitor
Holter ECG
monitorMedical and long-termcare network system

DHS Vision for Regional Medical Care

Telemetry system

Nihon Kohden’s core technology is the Human Machine Interface, which is its unique data acquisition technology and the basis
for utilizing data such as patients’ vital signs. Going forward, we will create solutions that contribute to improving patient
outcomes and economy of medical care by enhancing our data collection capabilities, strengthening our data analysis
technologies and our ability to create algorithms, and integrating the HMI technology and medical equipment with network
technologies such as remote monitoring.
Under the DHS vision for regional medical care, given Japan’s declining birthrate and aging population, there is a growing needfor a system that accepts high-risk patients from acute care hospitals to second line hospitals and convalescent hospitals. We
aim to realize our DHS vision to support regional medical care by providing an IT system platform that links regional medical care
support hospitals and general practitioners, leading to early detection and intervention for diseases.

NIHON KOHDEN REPORT 2023

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Financial andCorporate Data

12

Progress of Three-year Business Plan
In its Three-year Business Plan, BEACON 2030 Phase I, which started in April 2021, Nihon Kohden
strengthens its business foundation toward realizing its Long-term Vision BEACON 2030. To embracesustainability across business and corporate activities, which is the basic policy of BEACON 2030 Phase I,
we are working to ensure strict compliance and strengthen group governance, improve the profitability ofexisting businesses and make strategic upfront investments, and establish global supply chain
management and strengthen core functions of operations. The following is an overview of the progress of
FY2022, which was the second year of this plan.

Management Philosophy

Long-term Vision

We contribute to the world by fighting disease andimproving health with advanced technology
and create a fulfilling life for our employees.

Create a better future for people and healthcare by solving global
medical issues
Targets for FY2029

Three-year
Business Plan

Core Values

Operating margin:

Basic Policy in Three-year Business Plan
Embrace sustainability across business and corporate activities

Management

Ensure strict compliance and strengthen group governanceto reinforce the management structure

Business

Improve the profitability of existing businesses and obtain the
resources to invest strategically for sowing seeds of new growth

Operations

Establish global supply chain management and strengthen corefunctions of operations to lay a foundation for global growth

15% Overseas sales ratio: 45%

Apr. 2027 - Mar. 2030

: Realize BEACON 2030

Apr. 2024 – Mar. 2027

: Invest for growth

Apr. 2021 – Mar. 2024

: Strengthen foundation

Core Values are shared by Nihon Kohden staff worldwide, which
help to connect them and contribute to promoting our Management
Philosophy, Long-term Vision, and Three-year Business Plan.

Targets for FY2023 ending March 2024 (consolidated)
Sales ¥

197billion

Operating income(Operating income margin)

Integrity / Humbleness / Diversity / Initiative / Customer Centric / Goal Oriented / Creativity

Domestic
sales

¥

¥

134 billion

20 billion (10.2%)

Overseas
¥
sales

ROE

63 billion

10%

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Progress of Three-year Business Plan

Review of Progress in FY2022
In FY2022, we worked on continuing to supply products globally by implementing reforms to its supply
chain management to respond to the product supply issues due to the shortage of semiconductors andthe Shanghai lockdown. As a result, Nihon Kohden posted record highs in sales in FY2022. Operating
income exceeded its original forecast. Domestic sales decreased due to a reactionary decline in demandfor patient monitors and ventilators, large numbers of which had been installed to treat COVID-19
patients in FY2021. On the other hand, sales of Physiological Measuring Equipment and hematology
instruments increased favorably as the number of testing and surgical procedures showed a recovery
trend and capital expenditure by medical institutions resumed. Internationally, there were loss ofbusiness opportunities and delays in supplying new models due to the product supply issues in the firsthalf of FY2022. In the second half of FY2022, sales recovered thanks to the launch of new mid-range
bedside monitors and a mask-type ventilator in the U.S. and yen depreciation.

The Company posted record highs in sales.
Operating income also exceeded its original forecast.

206.6 billion

Sales ¥FY202021.1billion

Operating income ¥FY2021

Overseas Sales Ratio

31.3%

33.5%

Consumables andServices Sales Ratio

43.0%

44.2%

Gross Profit Margin

51.2%

53.2%

(Reference) In-house sales ratio

69.5%

72.7%

■ Favorable currency effects■S ales increased on a comparable basis, exclud-ing the reactionary decline of COVID-19-related
demand and impact of product supply issues■S ales of catheters and sensors increased, as

the number of testing and surgical procedures
showed a recovery trend■H igher prices of components■U nfavorable product mix

FY2022

FY2023 Targets

34.3%

32.0%

47.3%

48% or more

51.3%

50% or more

72.4%

In FY2023, which is the final year of this plan, the Company aims at achieving a highly profitablestructure that can regularly secure a gross profit margin of 50% or more and an operating income
margin of 10% or more. As higher prices of components, utility costs, and personnel expenses are
expected, the Company will implement reforms to its supply chain management and optimize its selling
prices.

Embracing Sustainability across Business and Corporate Activities
To foster an organizational culture that promotes sustainability as the essence of our business, we haveheld a total of 28 Sustainability Discussions globally since October 2022 in which approx. 3,000
employees have participated. In addition, we disclosed information in accordance with the TCFD
recommendations and identified key human rights issues.
For further details, please refer to the Sustainability page.

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Progress of Three-year Business Plan

Management: Ensure Strict Compliance and Strengthen Group GovernanceBusiness: Improve the Profitability of Existing Businesses and Obtain the Resources
to Invest Strategicallystructure through the creation of high customer value, improvement of productivity, and the timely
launch of new products. In FY2022, we introduced a patient monitor specialized for neonatal
resuscitation and an EEG amplifier with enhanced network capabilities in Japan, and an ECG withbuilt-in wireless LAN both in Japan and internationally. In the U.S., we launched mid-range bedsidemonitors and a mask-type ventilator. In certain overseas markets, we also introduced a mid-range
ventilator developed by Nihon Kohden OrangeMed, Inc., in the U.S. Internationally, the Company
strengthened its business structure. The Company decided to reorganize its U.S. subsidiaries into aholding company structure, and acquired Software Team Srl in Italy, a software development and sales
company which collects data and alarms from medical devices such as patient monitors and forwards tomobile phones.

To improve the profitability of existing businesses, we introduced in-house products and services withhigh customer value. As a common policy across all businesses, we aim to realize a highly profitable

New Products Introduced in FY2022

To ensure strict compliance, we have implemented recurrence prevention measures in response to thecompliance matter that occurred in Japan in January 2021 and will continue to monitor the progress of
their implementation. To strengthen our group governance, we promoted implementation of the Global
Business Management Policy and started to develop a sophisticated company-wide risk management
framework. For further details, please refer to the Ensuring Thorough Compliance page.

Improve Profitability of Existing Businesses
Home care

Emergency care

Diagnosis

Surgery/
Treatment

Hematology
Instruments

SensorTechnology

Treatment
Equipment
Business

Consumables and Services Business●

Improve productivity
Establish a new common design
platform● Promote standardization and common
parts● Ensure strict lifecycle management●

Timely launch of new products
Achieve the highest level of quality inthe world● Enhance R&D and QA/RA structures●

DHS (Digital Health Solutions)

Establishment of a highly
profitable structure

Cardiology
Products

Patient
MonitorBusiness

Promote digital health solutions
Enhance cybersecurity measures● Expand the provision of medical
device remote monitoring system(MD Linkage)●

Common measuresacross all businesses

Diagnostic Equipment Business

Neurology
Products

Create high customer value

Rehabilitation

The NRM-1300,
Resuscitation monitor forneonates, only in JapanThe EEG-1260,
Electroencephalograph, only in JapanThe ECG-3250,
Electrocardiograph, inJapan and internationally

Acquired Software Team Srl, Italy in November 2022

The NKV-440, Ventilator, incertain overseas markets

AED use detection and notification
service by AED Linkage, only in JapanNIHON KOHDEN REPORT 2023

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Financial andCorporate Data

Progress of Three-year Business Plan

Operations: Establish Global Supply Chain Management and Strengthen Core
Functions of Operations
As part of our efforts to establish global supply chain management, we started construction of a newreagent factory in India in September 2022. In March 2023, we acquired a new plant site in
Tsurugashima City, Saitama Prefecture. The site is located close to the Advanced Technology Center(Tokorozawa City, Saitama Prefecture) and the Eastern Japan Logistics Center (Sakado City, Saitama
Prefecture). We will strengthen collaboration between the R&D, production, and logistics departments.
To establish a global information system, we completed the linkage of backbone systems in overseas
subsidiaries to the head office network. As part of our corporate digital transformation (CDX), we started
introducing PLM/MES*1 systems.
We also strengthened compliance with the latest laws and regulations for medical devices as well as
establishing a PSIRT*2 to enhance the security of our products and services and strengthen our
response to security incidents.

Establish Global Supply Chain Management□ Establish global information

system● ompleted linkage of backbone
Csystems in overseas subsidiaries
to head office network□ Started introducing PLM/

MES systems

Reduce workload and costs bypromoting DX in R&D and production departments●□ Construction of a new reagent factory

plant in India(Construction: Started in September 2022 and planned to becompleted in Summer 2023, Operation: Planned to start in
Summer 2024)□ Acquired a new plant site in

Tsurugashima City, Saitama Prefecture(Acquired a new plant site in March 2023, Construction: Planned
to start in Spring 2024 and be completed in Spring 2025,
Operation: Planned to start in 2026)

Manufacturing consumables such as
sensors and R&D of automated production technology●1P LM: Product Life-cycle Management,
MES: Manufacturing Execution System
2P
 SIRT: Product Security Incident Response Team

Strengthen Core Functions of Operations□ Enhance cybersecurity of

the internal IT infrastructure●

Unified groupware globally□ Strengthen compliance with the latest

laws and regulations throughout the
product life cycle

 eceived IVDR* certification in Europe inR
August 2022
● Post-market surveillance●□ Established PSIRT●IVDR: In Vitro Diagnostic Medical Device Regulation

 nhance cyber security of products andE
services, and strengthen our response to
security incidents

15

NIHON KOHDEN REPORT 2023

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16

Message from Management
Introduction –To all stakeholders –Entering the final stage of
BEACON 2030 Phase I, we willcontinue to steadily strengthen
our foundation to realize ourLong-term Vision.

We would like to express our sincere gratitude to your continued understanding and support of thecorporate activities of the Nihon Kohden Group. The world is entering a new period of turmoil, withthe protracted situation in Ukraine and heightened geopolitical risks. Because we live in such an era,
I have reaffirmed that our social mission as a medical equipment manufacture is stable supply ofhigh-quality and high-performance medical equipment that protect patients’ lives around the world
as well as contributing to the realization of a society in which everyone can live with peace of mind.
“Curing disease is something that transcends politics and national borders, and we will never have
any regret putting all our energy into this goal.” These words from our founder reflect his strong
desire to be a cornerstone in building a peaceful world by taking on the challenge of overcoming
disease, as commonly desired by all humanity in the chaotic postwar world of 70 years ago.
Based on our Management Philosophy inherited from the time the Company was founded, we aim torealize a sustainable society and enhance corporate value of the Company by working together withall stakeholders to create a better future for people and healthcare by solving global medical issues.

Review of FY2022
Representative Director
President and CEO

In FY2022, in response to product supply issues caused by the shortage of semiconductors and theShanghai lockdown, all employees worked together to continue product supply by changing designs
using alternative components and temporarily increasing product and component inventories. As aresult, consolidated net sales reached a record high and operating income exceeded the initial plan.
Although there was a reactionary decline in COVID-19-related demand from FY2021 both in Japanand internationally, demand for our products, consmables and services remained steady in Japandue to the establishment of healthcare systems to respond to emerging infectious diseases, and thepromotion of work style reforms for medical staff. Internationally, there are moves toward thedevelopment of post-COVID-19 healthcare systems in each country, and demand for medical
equipment that contributes to improving the quality and efficiency of medical care remains steady.

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Message from Management

Progress of the Three-year Business Plan (Major Initiatives and Results for
FY2022)■

Basic Policy in Three-year Business Plan, BEACON 2030 Phase I

Embrace sustainability across business and corporate activities

Management

Ensure strict compliance and strengthen group governanceto reinforce the management structure

Business

Improve the profitability of existing businesses and obtain the
resources to invest strategically for sowing seeds of new growth

Operations

Establish global supply chain management and strengthen corefunctions of operations to lay a foundation for global growth

In FY2022, the second year of our Three-year Business Plan, we worked toward strengthening ourbusiness foundation by promoting measures from the three standpoints of management, business,and operations to realize our Long-term Vision.

[Management] Focus on thorough compliance as a top priority
In response to the compliance matter that occurred in 2021, we have worked over the past two years
to introduce the recurrence prevention measures, based on our firm pledge to never allow a similar
incident to occur. All recurrence prevention measures, such as a donation website and website fordealers, have been introduced and implemented. We will continue implementing recurrence
prevention measures and monitoring the progress of their implementation. In accordance with the
Ethical Company Declaration, we will foster an organizational culture that values ethical behavior
above all else and strive to grow into a company that is trusted by society.

First
half

Secondhalf● Reviewed applications received through the donation website● Established website for dealers (due diligence, pledge to comply with laws, andannouncement of whistle-blowing channel)● Conducted compliance training by outside experts● Conducted compliance study sessions in each division[Business] Introduce new products with high customer value
To improve the profitability of existing businesses, we worked to strengthen the ventilator business,
which led to an increase in our presence during the COVID-19 pandemic. In FY2022, we started
production and sales of a mask-type ventilator, the NKV-330, in the U.S. and launched a new midrange ventilator, the NKV-440, in Thailand. The first two types of in-house ventilators, the NKV330/550, were widely installed in clinical practice around the world during the COVID-19 pandemic,
contributing to the treatment of many patients.
In our patient monitoring business, we launched mid-range bedside monitors, the CSM-1500/1700

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Message from Management

series, with enhanced cyber security functions in the U.S. market. Our first resuscitation monitor forneonates, the NRM-1300, was also introduced in Japan. This monitor was developed in the project
which supports R&D of medical devices/systems and healthcare by the Japan Agency for Medical
Research and Development (AMED). It assists to support appropriate bag valve mask ventilation for a
newborn infant who is not breathing.
In the creation of new businesses, we are working to expand our product portfolio in the area ofdigital health solutions (DHS) amid the accelerating DX in medical fields. In November 2022, weacquired Software Team Srl, Italy, a provider of alarm management solutions. In April 2023, we
reorganized our U.S. subsidiaries into a holding company structure to strengthen our governancestructure and operations in the U.S. business, which is driving our growth.

[Operations] Promote business process reform in R&D, production, and logistics
departments
A groupware was introduced throughout Group companies as part of efforts to improve the efficiencyof Group-wide operations and strengthen the security of internal IT systems. To supply highly
competitive products in a timely manner, we started introducing PLM/MES* systems and are working
to build a system to centrally manage information related to the product lifecycle from R&D,
production, and post-market response after shipment.
To strengthen our global supply chain management (SCM), we acquired a site for a new plant for
consumables in Tsurugashima City, Saitama Prefecture, in March 2023. The plant will be used as a
production site for consumables such as sensors, for which demand is expected to further increasein the future, and as an R&D center for automated production technology. Tsurugashima City is
located close to the Advanced Technology Center (Tokorozawa City, Saitama Prefecture) and theEastern Japan Logistics Center (Sakado City, Saitama Prefecture); therefore, our R&D, production,and logistics departments will work together to expand and upgrade the production and supply
system.
PLM: Product Life-cycle Management, MES: Manufacturing Execution System

Toward FY2023, the final year of the Three-year Business Plan
FY2023 is the final year of the Three-year Business Plan, BEACON 2030 Phase I. We will promotestrengthening our foundation, the theme of Phase I, improve the profitability of existing businesses, andcultivate new business areas.
In April 2023, the Company newly established the Corporate Quality Management Operations by
integrating the Quality Control Division, Global Quality Management Division, and Product Quality
Control Division. We will establish a system of supervision and instructions in quality management andbuild a consistent quality management system throughout the Group, from quality measures to postmarketing monitoring. In addition, the Strategic Technology Division was newly established under theStrategic Technology Operations, and the Production Engineering Division was incorporated into theStrategic Technology Operations. To address increasingly complex supply chain issues, it is important
to develop strategic design concepts such as promoting standardization and common parts at thedesign stage. Therefore, we will strengthen cross-divisional functions in common technology, production
technology, regulatory affairs, and cyber security measures.
We are also actively engaged in human capital management. In April 2023, we introduced a new rolebased personnel system for general employees. We will
utilize a personnel evaluation system and human resource
development program based on our globally shared Core
Values to improve the engagement of each employee. In
addition, a talent management system will be implemented
to build a foundation for utilizing human capital
information. Given current concerns about higher prices ofcomponents and utility costs as well as the businessdeterioration of medical institutions due to a shortage of
medical professionals and higher interest rates, demand
for solutions that contribute to improving the quality andefficiency of medical care is increasing around the world.
We will strengthen our foundation by improving

NIHON KOHDEN REPORT 2023

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Message from Management

organizational productivity, expanding our product portfolio, and enhancing our solution proposals. We
also promote transformation into a highly profitable structure that can regularly secure a gross profit
margin of 50% or more and an operating income margin of 10% or more.

Education

Raise awareness throughout the community by providing sustainability education opportunities not only to employees, but also to medical institutions, distributors, and suppliers.

Foster a Corporate Culture that Promotes Sustainability as the Essence of Our
Business

Healthcare

Contribute to the promotion of sustainability of medical institutions
and healthcare systems by providing technologies and services in
addition to solving medical issues through our business.

Environment

Strive to solve environmental issues by developing environmentallyfriendly products and building an ecosystem that includes productcollection and recycling.

In FY2022, the newly established Sustainability Promotion Team played a central role in various
activities. I have facilitated the Sustainability Discussions for all employees, which have been held 28
times and attended by more than 3,000 employees. I was very impressed by the high level of awarenessof sustainability among employees around the world and their strong desire to contribute to local
communities through our corporate activities. Through the panel discussion, we gained an awareness of
issues common to all companies from the three perspectives of education, healthcare, and environment.
For example, from an environmental perspective, the participants in the Sustainability Discussions
expressed opinions that in order to provide customers with solutions that lead to environmental
measures, we should develop products that take the environment and sustainability into considerationfrom the design stage as well as creating an ecosystem that includes used product collection andrecycling. In particular, hundreds of thousands of AEDs are installed around the world each year, manyof which are discarded at the end of their service life without ever being used. I believe that if many of
our employees are keenly aware of this issue and we can create an ecosystem that not only supplies
products but also collects them for reuse or recycling, we can further increase the customer value of our
AEDs.
We plan to develop our awareness of these issues into specific action plans, which will be reflected in
the sustainability promotion targets in the next Medium-term Business Plan.

Continue to Pay Stable Dividends over the Long Term
Nihon Kohden recognizes that returning profits to shareholders is one of management’s mostimportant tasks. The basic policy on distribution of profits and dividends is to maintain stable andcontinuous dividend payments while retaining necessary reserves for future business expansion.
Based on the business performance in FY2022, the Company decided to increase the ordinary
year-end dividend by 21 yen from the previous forecast of 20 yen per share to 41 yen per share. As aresult, the full-year dividend for FY2022 was 61 yen per share, including the interim dividend of 20
yen per share.
In consideration of business performance, the full-year dividend for FY2023 will be 61 yen per share.
I appreciate your continued support.

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Sustainability
We aim to realize a sustainable society and increase
our corporate value by further strengthening
the coordination between business strategy andsustainability strategy, and creating both economic
and social value.

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As a medical equipment manufacturer, Nihon Kohden strives to contribute to a sustainable society and enhance its corporate value, by taking on thechallenges of solving social issues such as fighting disease and improving health through its business and corporate activities.

Sustainability at Nihon Kohden
In recent years, activities aimed at achieving the UN Sustainable Development Goals (SDGs) have beenpromoted in order to respond to various cross-border social issues. The medical care we are involved inis becoming more and more complex due to various problems such as the aging society in developed
countries, rising medical costs, lack of basic medical care in emerging countries, and widening medical
disparities.
Under these circumstances, Nihon Kohden defined 12 sustainability key issues (material issues) to beaddressed through business and corporate activities. The Company also incorporated these nonfinancial
targets into its Three-year Business Plan, BEACON 2030 Phase I, in order to contribute to global social
issues and SDGs.

Nihon Kohden’s management has set KPIs (Key Performance Indicators) and assigned departments foreach materiality. We aim to realize a sustainable society and increase our corporate value by further
strengthening the coordination between business strategy and sustainability strategy, and creating both
economic and social value.

The Process of Defining Material Issues
For further details on the process of defining 12 material issues, please refer to our website.

https://www.nihonkohden.com/sustainability/nk_sustainability/policy.html#process_materiality

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Sustainability Policy

Material Issues and KPIs
The targets, results, and rates of progress for each KPI are shown in the table below.
Materiality

KPI

TargetNote

Results in FY2021

Results in FY2022
Number of AEDs sold:
119k units (Rate of progress 62%)
Japan 50k units
Overseas 69k units

Number of AEDs sold in the world[Target]Cumulative number of products sold for 3
years worldwide: Over 350k unitsーNumber of AEDs sold:
100k units (Rate of progress 29%)
Japan 51k units
Overseas 49k units

Utilization rate of AEDs inJapan and the U.S.

[Actual]Actual utilization rate of AEDs in Japan andthe U.S. for 3 years(No numerical target (follow-up item))Utilization rate is the rate of out-of-hospital cardiac
arrests responded to by laypersons using AEDs
(all AEDs, including our products).
Data cited from: Fire and Disaster Management
Agency of the Japan Ministry of Internal Affairs andCommunications website, U.S. AHA journals, etc.

Utilization rate in CY2021:
Japan 4.2%
U.S. 9.0%

Utilization rate in CY2022:
Japan 4.1%
U.S. 10.2%

Promote training in epilepsy diagnosis inIndonesia[Target]Start operations at four local education
centers by the end of FY2023

ーStarted operations:
0 centers

Started operations:
0 centers
Conducted six out of the total 23
lectures. Continue discussions to
educate 4 physicians.

Number of educational seminars held,
hosting countries, participants (including
online programs)[Target]・ Cumulative number of hosting countries
for 3 years: Over 5 countries (North
America, Latin America, Europe, Asia,
Middle East)・ Cumulative number of participants for 3
years:
Over 100kー・ Number of hosting countries:
3 countries(Rate of progress 60%)
・ Number of participants:
28k(Rate of progress 28%)

・ Number of hosting countries:
4 countries(Rate of progress 100%)・ Number of participants:
57k(Rate of progress 86%)

Improve resuscitation
rates by expanding
access to AEDs

Provide educational
opportunities for
medical professionals
in emerging countries

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Sustainability Policy

Materiality

Automatic control of
medical equipment

Develop and provide
sensors which are
gentle on the patient

Create a peacefulpatient environment
with advanced alarm
technology

Contribute to care forpatients with heart
failure, brain
disorders, andinfection

KPI

TargetNote

R&D investment in a robotic anesthesia
system(*)

ーR&D investment in closed-loop control ofventilators(*)

ーR&D investment in new sensors(*)

ー

Number of products sold that have
esCCO*1, synECi18*2, and iNIBP*3
installed[Target]Cumulative number of products sales for 3
years worldwide:
Over 85k units

R&D investment in improved alarm
algorithms for patient monitors(*)

Number of hospitals that utilize alarm
reports*4 for improving workflow in Japanand the U.S.

[Target]Cumulative number of new contract
hospitals for 3 years:
Japan Over 240 hospitals
U.S. Over 25 hospitalsーR&D investment in early warning scores(*)

ー

R&D investment in new parameters andalgorithms for heart failure care

(* )

ー

ー

Results in FY2021

Results in FY2022

Number of products sold:
34k units(Rates of progress 40%)
Japan 15k units
Overseas 18k units

Number of products sold:
30k units(Rate of progress 75%)
Japan 13k units
Overseas 17k units

Number of new contract
hospitals:
86 hospitals
Japan 84 hospitals(Rate of progress 35%)
U.S. 2 hospitals(Rate of progress 8%)

Number of new contract
hospitals:
179 hospitals
Japan 179 hospitals(Rate of progress 100%)
U.S. 0 hospitals(Rate of progress 8%)ーNIHON KOHDEN REPORT 2023

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Sustainability Policy

Materiality

Improve productutilization rate byremote monitoring

Eliminate healthdisparities throughtelemedicine

KPI

TargetNote

Results in FY2021

Results in FY2022
・ Number of connected models:
6 models(Rate of progress 86%)
(MEK-1301/02/03, MEK91/9200, NKV-330)
・ Number of newly connectedunits:
675 units(Rate of progress 25%)

Number of MD Linkage*5 sold andconnected models[Target]・ Cumulative number of connectedmodels for 3 years worldwide:
Over 7 models
・ Cumulative number of connected units
for 3 years worldwide:
Over 5k unitsー・ Number of connected models:
5 models(Rate of progress 71%)
(MEK-1301/02/03, MEK91/9200)
・ Number of newly connectedunits:
566 units(Rate of progress 11%)

Number of advance notifications before
trouble with products occurs[Actual]Actual cumulative number of notificationsfor 3 years(No numerical target (follow-up item))

Only in Japan

Number of notifications:
1,973 cases

Number of notifications:
686 cases

Number of network-oriented products
sold like LAVITA*6[Target]Cumulative number of contract hospitals
for 3 years:
Over 600 hospitals

Only in Japan

Number of contract hospitals:
149 hospitals(Rate of progress 25%)

Number of contract hospitals:
166 hospitals(Rate of progress 53%)

R&D investment in realization of remotesupport for ICUs(*)

ー

Employee satisfaction[Target]FY2021:
Establish operational policy and start survey(Only in Japan)
FY2022:Publication of survey results and subsequent
implementation of ongoing surveysーConducted survey ofapproximately 4,400 all
employees in Japan

Improved 1.4 point compared to
FY2021Develop human resources who can
succeed globally[Target]Cumulative hours of education for 3 years:
Over 45 hours per person

House of education by job level provided by the
Phoenix Academy (Human Resources Development
Center). This training content will enable new
employees and managers to acquire the knowledge
and skills required for each level.

Education hours per person:
18.6 hours(Rate of progress 41%)

Education hours per person:
18.2 hours(Rate of progress 82%)

Foster a corporate
culture of pride incontributing tohealthcare

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

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Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

25

Sustainability Policy

Materiality

KPI

Note

Results in FY2021

Results in FY2022

Japan
1. C
 onducted the second survey
with more detailed andexpanded items to be
surveyed
2. Improved 1.3 points comparedto FY2021
U.S.
Improved 12 points compared to
FY2021Net Promoter Scores[Target]Japan
FY2021:
Set up a system and start the survey
FY2022:
1. Conducted the second survey with moredetailed and expanded items to be
surveyed
2. Maintain and improve scores
U.S.
Strive to achieve a 1-point improvement
every yearーJapan:Started the survey
U.S.
Improved 12 points compared to
FY2020

Number of recalls[Actual]Cumulative number of products recalled
for 3 years(No numerical target (follow-up item))

We have set and are working on achieving a quality
target of “zero recalls for 200 days or more.”

6 cases

2 casesEstablish and strengthen complianceprograms of the Group[Target]Zero occurrence of serious incidents of
non-complianceー

1 case (Japan)

0 caseEstablish and promote the Global
Business Management Policy in overseas
subsidiaries[Actual]Monitoring implementation of the Global
Business Management Policy for
managers of all overseas subsidiaries overthe next 3 years(No numerical target (follow-up item))ーEstablished and started
operating the Global Business
Management Policy

Continued implementation ofvarious measures

Strengthen internal control over domestic
sales[Actual]Introduce system controls for pre-orderprocesses and monitor their application(No numerical target (follow-up item))ーIntroduced and started operating
the system controls

Continued implementation of the
global compliance programmeasuresPursue the highest
level of quality in theworld across the value
chain

Ensure strict
compliance andstrengthen group
governanceTargetNIHON KOHDEN REPORT 2023

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Enhancing Information Disclosureand Shareholder Return

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to the Community

Financial andCorporate Data

26

Sustainability Policy

Materiality

Realize a carbon-freesociety

KPI

TargetNote

Results in FY2021

Results in FY2022

ー・ CO2 emissions:
34.1% reduction compared to
FY2020・ Collect and disclose CO2
emissions:Preparing for third-party
verification

・ CO2 emissions:
38.7% reduction compared to
FY2020・ Collect and disclose CO2
emissions:Preparing for third-party
verification, including system
implementation

・ Number of models:
75 series
・ Sales ratio of environmentfriendly products:
19.1%

FY2022:
0.7% reduction compared to
FY2020CO2 emissions[Target]・ FY2023: 15.2% reduction compared to
FY2020 per unit of sales (ISO 14001
certified sites, Scope 1, 2)・ Collect and disclose CO2 emissions forthe whole group by end of FY2023(Scope 1, 2, 3)

Number of models and sales ratio ofenvironment-friendly products[Actual]・ Number of models in next 3 years(No numerical target (follow-up item))[Target]・ Cumulative sales ratio of products for 3
years worldwide:
Over 20%ー・ Number of models:
63 series
・ Sales ratio of environmentfriendly products:
19.9%

Amount of waste from disposal of
products and parts[Target]FY2023:
8% reduction of products and parts
retirement compared to FY2020

ーFY2021:
21.3% reduction compared to
FY20201. e
 sCCO (estimated Continuous Cardiac Output): Nihon Kohden’s unique technology which can estimate cardiac output continuously based on ECG and pulse waves obtained from pulse oximetry. Previously, cardiac output could not be measured without inserting a catheter into the pulmonary artery. But now, with routinely monitored
parameters, non-invasive and continuous estimates can be made without pain or strain on the patient.
2. S ynthesized 18-lead ECG: Synthesized 18-lead ECG uses the 12-lead ECG waveforms to mathematically derive the waveforms of the right chest leads (V3R, V4R, V5R) and back (V7, V8, V9). The measurement procedure is the same as the standard 12-lead ECG but more information can be obtained. 18-lead synthesized ECG is
expected to be useful in detecting right ventricular infarction and posterior infarction.
3. iNIBP (non-invasive blood pressure measurement algorithm): Nihon Kohden’s unique non-invasive blood pressure measurement algorithm using a linear inflation technology that completes the measurement while the cuff is inflating. This algorithm was developed with the concept of reducing the burden and stress of patients andmedical personnel involved in blood pressure measurement as much as possible. Compared to previous measurement methods, it can measure faster and does not apply more pressure than necessary, reducing the burden and stress on the patient.
4. A larm report: This is a report that objectively evaluates the type and frequency of alarms based on alarm information from telemetry systems and central monitors. This report is expected to contribute to improving the medical environment by reducing the occurrence of false alarms.
5. M
 D Linkage (Medical device remote monitoring system): This is a network system that automatically sends error messages and self-test information generated by medical devices to our server via a remote terminal. By automatically detecting equipment abnormalities and failures and notifying us, we can respond quickly andcontribute to reducing product downtime.
6. L
 AVITA (Medical and nursing care network system): This is a network system that can easily collect patient vital data, automatically send it to a cloud server, and share information in real time with various people such as medical workers and social workers. By collaborating with various medical institutions through LAVITA, it ispossible to provide the support needed for comprehensive community care.
(*) We have not set individual investment target figures for each KPI, but the cumulative three-year investment target for the whole Nihon Kohden Group is expected to be approximately 20 billion yen.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

27

Sustainability Policy

Sustainability Promotion Structure

Sustainability Promotion Structure Chart

Board of Directors / Management Council
Advisory Board
Providesmanagementwith advice
that reflects
external
perspectives● Three external
experts●

AdviceTo promote sustainability, Nihon Kohden has established the Sustainability Promotion Committee,
composed of the president, operating officers, and general managers, and Sustainability Promotion
Meeting, composed of the representatives of 17 divisions. In July 2021, Nihon Kohden also establishedthe Advisory Board consisting of three external experts to incorporate outside perspectives onsustainability activities.
The Sustainability Promotion Committee holds a meeting twice a year and formulates the policies anddirections. The Sustainability Promotion Meeting is held four times a year to establish and promoteannual plans based on the policies and directions formulated by the Sustainability Promotion Committee
and reports on the progress of those plans to the Sustainability Promotion Committee. Members of the
Sustainability Promotion Meeting, who represent the departments in charge of each materiality, reporton the progress of sustainability activities and exchange opinions with other members at regularmeetings. The Company strives to implement sustainability activities in its daily business operations, inclose coordination with the Compliance Committee, Quality Control Committee, and Environmental
Committee. The Advisory Board Meeting is held twice a year to discuss and advise on overallsustainability promotion.
Furthermore, in order to raise awareness of the SDGs within the Company, we take actions such as
educating employees in Japan and overseas through webinars.

Sustainability Promotion
Committee
Compose of the president, operating
officers, and general managers● Formulate basic policy● Identify issues and discuss measures● Discuss and formulate KPIs●

Sustainability Promotion Meeting

Compliance
Committee

Quality Control
Committee

Environmental
Committee

Cooperate

Formulate and promote annual plans● Training and awareness-raising●

Business Units and Subsidiaries●

Implementing progress management of annual plans●

Training and awareness-raising

External Sustainability Advisors

Hikaru Kobayashi

Kuniko ShojiMika Takaoka

Adviser
Research Center for Advanced
Science and Technology
The University of Tokyo

Professor
School of Health Innovation
Kanagawa University of Human
Services

Professor
Head of Department of BusinessCollege of Business
RIKKYO UNIVERSITYNIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

28

Sustainability Policy

Holding Advisory Board Meetings

Providing Opportunities for Education and Training on Sustainability

At the third Advisory Board Meeting held in December 2022, we received advice on the environment andhuman rights at Nihon Kohden, as well as measures to promote sustainability and raise awarenessamong employees. In particular, our Sustainability Discussions, held for all employees both in Japan andinternationally, were highly evaluated for their effectiveness and originality.

To foster awareness of sustainability promotion among all employees, Nihon Kohden provides training
on sustainability when employees join the Company. In FY2022, one training session for new employees
and two training sessions for mid-career hires were held, with a total of 194 employees attending.
We also conduct e-learning education on sustainability to all executives and employees once a year inJapan. In FY2022, an educational video by outside director Hidemitsu Sasaya, a professor at Platform
for Arts and Science, Chiba University of Commerce, was distributed to further promote understanding.
In FY2022, 4,051 participants took the course through webinars and 497 participants with paper-basedmaterials.

Holding Sustainability Discussions
To foster a corporate culture in which sustainability is the core of its business activities, Nihon Kohden has
held the Sustainability Discussions for all employees (28 sessions with over 3,000 participants in Japan andinternationally from October 2022 to March 2023). We aim
to quickly build a structure in which every employee has asense of ownership and commitment to promotesustainability toward creating a better future for people andhealthcare, as stated in our Long-term Vision, BEACON
2030.
Several employees who expressed positive opinions onsustainability in a preliminary questionnaire were selected
as panelists, regardless of position or age. The President
Discussion in Tokyo
himself served as a facilitator to exchange opinions onsustainability, including how Nihon Kohden can contributeto the sustainability of its customers.
Participating employees commented: “Thinking aboutsustainability from various angles made me realize manythings,” and “I realized the importance of making further
contributions to society through my daily work.” We willcontinue to accelerate our efforts to promote sustainability.
Discussion in Mexico

Joined UN Global Compact
In July 2015, Nihon Kohden signed on to the United
Nations Global Compact. By engaging in corporate
activities that adhere to the Ten Principles of the United
Nations Global Compact in four areas of human rights,
labor, the environment, and anticorruption, Nihon Kohden
seeks to earn the trust of society and to contribute to asustainable society.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Growing as a Company and Establishing Trust

29

Nihon Kohden’s Stakeholder Engagement Initiatives

To realize the Company’s Management Philosophy, Nihon Kohden is committed to creating value withall stakeholders, including customers, shareholders, investors, business partners, local communities,
and employees, in all aspects of our business, such as products, services, technology, financial
strength, quality of employees, and other points. In planning and promoting sustainability initiatives, we
also work to grow as a company that establishes trust and be well recognized by all our stakeholders. In
addition to its citizenship activities and information disclosure through its business activities, Nihon
Kohden also leverages the opinions and requests of stakeholders in its future business activities as partof its efforts to be a trusted member of society.
In April 2023, Nihon Kohden established a Multi-Stakeholder Policy to govern our efforts regarding
returns to employees and consideration for our business partners.

Stakeholder

Patients

Customers

Main Communication Method● Daily sales activities● Call center

Customers● Net promoter score survey

Response to customer complaints

Open and fair trade● Human rights due diligence

Identification of human rights risks inbusiness transactions● Questionnaire of sustainable● General shareholders meetings

Expectations for Nihon Kohden● Earnings presentations● Company briefings● Events for individual investors● Self-enumeration system● Level-specific training sessions

Employees● Labor-management council meetings● Consultation counter● Employee satisfaction survey● Company newsletters and intranet

Employees

Local Communities

Disclosure and offer of adequate
information of products and services● Daily procurement activities

procurement

Business
Partners

Quality improvement of products andservices
Enhancement of customer satisfaction● Website for investors

Local
Communities

Offer of products and services with safety
and security● Academic seminars

Sustainable opportunities for
dialogue and disclosure of
information to the market

Shareholders andInvestors

Main Responsibility and Issues● Customer satisfaction survey● ME (medical electronics) workshops

Business Partners

Mutual Understanding throughDialogue with Our Stakeholders

Environment

Financial andCorporate Data

Nihon Kohden operates its business that places importance on all the Company’s stakeholders.
The Company also aims to maintain and develop a sound relationship with stakeholders by proactive communication.

Stakeholder Engagement

Shareholders
andInvestors

Nihon Kohden’s Contributions
to the Community● Volunteer activities in local communities● Participation in local events

Promotion of sustainable procurement
Enhancement of corporate value
Appropriate shareholder returns
Timely and appropriate disclosure
Response to Social Responsible Investment
Respect for human rights and promotionof proper labor practices
Development and utilization of humanresources
Securement of occupational health andsafetyIncrease in job satisfaction
Respect for diversity of human resources
and work style
Participation and contribution to local
communities

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

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Governance

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Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

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to the Community

Financial andCorporate Data

30

GovernanceWe enhance corporate governance by establishing amanagement structure aiming at improving thesoundness, transparency, and efficiency ofmanagement.

NIHON KOHDEN REPORT 2023

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Sustainability

Governance

Enhancing Corporate Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

31

Nihon Kohden strives to strengthen its corporate governance with the aim of continually enhancing its corporate value.

Message from Operating Officer

Basic Views on Corporate GovernanceAs the operating officer in charge of strengthening governance andpromoting the development of a risk management framework, I believethat my role is to build a management structure that aims to improve thesoundness, transparency, and efficiency of management, and to preventthe occurrence of fraud and reduce risk by continuously strengthening
corporate governance.
I will also work to realize a sustainable society and enhance mid- tolong-term corporate value of the Company by strengthening dialogue
with our stakeholders and building a solid and trusting relationship withthem.
It is important for us to continue to raise compliance awareness, upgrade
our risk management framework, and strengthen internal controls. We willcontinue to make company-wide efforts to transform ourselves into a
global organization centered on operational excellence*.
We appreciate your continued support.

To realize the Company’s Management Philosophy, Nihon Kohden aims at achieving sustained growthand establishing reliance as a company that is highly evaluated by the customers, shareholders, clients,and society in all aspects including products, sales, service, technology, financial strength, quality of
employees, and other points.
In order to realize this management basic policy and increase corporate value over the mid- to longterm, the Company recognizes that enhancing corporate governance, by establishing a management
structure aiming at improving the soundness, transparency, and efficiency of management, is an
important management issue.

Fumio Izumida
Operating Officer,
General Manager of Corporate
Strategy Division

 perational excellence: Building and thoroughly refining a company’s competitive advantage by increasing the effectiveness and efficiency of businessO
activities to create its corporate value.

Corporate Governance Structure
Nihon Kohden has adopted a Company with an Audit & Supervisory Committee structure to achieve thefollowing: enhancement of supervisory functions, improvement of soundness and transparency ofmanagement, and acceleration of management decision making. The Company currently has four
independent outside directors, who comprise over one-third of the Board of Directors. The Company
takes measures such as appointment of independent outside directors and introduction of an operating
officer system as well as cooperation among the Audit & Supervisory Committee, the Internal Auditing
Department, and the Accounting Auditor. The Company believes the management monitoring functions
work sufficiently.
The Company registered four outside directors as independent directors, who have no conflict ofinterest between general shareholders and them, to the Tokyo Stock Exchange. Outside directors attend
the important meetings such as the Management Council as necessary. They also provide opinions froman objective and neutral standpoint if necessary and supervise the Company’s management.

NIHON KOHDEN REPORT 2023

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Human Rights/
Human Resources

Enhancing Information Disclosureand Shareholder Return

Environment

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

32

Enhancing Corporate Governance■ Board of Directors
The Board consists of a total of eleven directors (including one female director), eight directors excluding
Audit & Supervisory Committee members (including two outside directors) and three Audit & Supervisory
Committee members (including two outside directors). The Board has monthly meetings to resolve
matters pursuant to the Companies Act and makes decisions on the conduct of important business for
the Nihon Kohden Group as well as supervises directors’ performance of their duties.

■■ Audit & Supervisory Committee
The Audit & Supervisory Committee consists of three directors, including two outside directors and one
full-time member. Each Audit & Supervisory Committee member conducts audit activities in accordancewith the audit policy, audit plan, and division of duties established by the Audit & Supervisory
Committee. Each Audit & Supervisory Committee member attends the important meetings such as theManagement Council and audits the performance of duties by directors by investigating the conduct ofbusiness operations and status of assets at the Company’s main offices as well as reports on audit
results from the Internal Auditing Department. The Audit & Supervisory Committee cooperates with the
Accounting Auditor and the Internal Auditing Department. The full-time member of the Audit &Supervisory Committee has many years of experience in finance and accounting departments andpossesses a considerable degree of knowledge about finance and accounting.

For further details on the corporate governance, please refer to our website.

https://www.nihonkohden.com/information/philosophy/governance/governance_structure.html

Corporate Organization and Internal Control System

Shareholders Meeting
Appointment/
Dismissal

Appointment/Dismissal

Appointment/Dismissal

Board of Directors Meeting(11 members)

Cooperate

Audit & Supervisory
Committee(1 corporate director,
2 outside directors)

Accounting Auditor

Management Council
The Management Council, at which directors and operating officers attend, are held once or twice amonth in order to undertake the management activities based on the policy approved by the Board aswell as aiming at prompt decision making and flexible business operation. The Company has introduced
an operating officer system that provides a clear segregation between managerial decision making andsupervisory functions on the one hand and the execution of operations on the other, and there are
sixteen operating officers (including two female operating officers) who are not serving concurrently as
directors.
■

Nomination & Remuneration Committee
The Company has established a Nomination & Remuneration Committee, which is a voluntary advisorycommittee under the Board, to ensure the transparency and objectivity of the management. All threecommittee members and the committee chair are appointed from outside directors. The Nomination &Remuneration Committee deliberates on the proposal of the candidates, remuneration of directors, andsuccession plans in response to requests from the Board, and submits the proposals to the Board.

Audit

Directors, excluding Audit & Supervisory
Committee members(6 corporate directors, 2 outside directors)

Representative Directors
Management Council
ReportConsultation
Proposal

Nomination &Remuneration Committee
Risk Management
Committee
Sustainability Promotion
Committee
Compliance Committee
Quality Control
Committee

Audit
Cooperate

Operating Officers

ICT Committee

Internal Auditing
Department

Business Units/Subsidiaries

Environmental
Committee

Internal AuditNIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

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Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

33

Enhancing Corporate Governance

Board of Directors Evaluation

Audit & Supervisory Committee Evaluation

Nihon Kohden conducted self-evaluations of all directors in an anonymous survey related to the size andcomposition of the Board and its operations. The Company also discussed the results of evaluation andissues for further improvements.
As a result of the evaluation, it was confirmed that the structures necessary to enable appropriate
performance of the Board’s supervisory functions have been established in terms of size, composition,and operations of the Board. It was also concluded that the Board operates effectively with an open
atmosphere that enables inside and outside directors to engage in candid discussions.
In FY2022, based on the results of the FY2021 evaluation results, the Company reviewed its operation
methods of Meetings and has held Meetings of the Management Council and the Board of Directors on
different dates to ensure sufficient time for deliberation at the Board. The Company also strengthened
support for outside directors by increasing the number of free discussion meetings for the exchange of
opinions among outside directors. At the same time, the Board members shared the following issues:
the need for further discussion on corporate governance, risk management, and succession planning aswell as further reinforcement of the support systems for outside directors.
In addition to continuing past improvement measures, the Company will continue to consider appointing
female and foreign directors on the Board. Based on FY2022 evaluation results, the Company willdevelop a company-wide sophisticated risk management framework in FY2023. The Board of Directors
will discuss important risks and response policies which will be identified by the newly established Risk
Management Committee. The Company will also strengthen support for outside directors by enhancing
and improving provision of information such as product and business presentations. In addition, theCompany will strengthen its implementation of sustainability management and disclose of information tofurther enhance dialogue with each stakeholder.
The Company will continue to improve overall effectiveness of the Board aiming at sustained growth ofcorporate value and for an enhancement of corporate governance.

To improve the reliability and quality of the Audit & Supervisory Committee’s activities, Nihon Kohden
started analyzing and evaluating the overall effectiveness of the Committee in FY2022. The aim is to
identify issues and areas for improvement, leading to initiatives to improve the Committee’s
effectiveness. A summary of the results of the first year’s evaluation is as follows. The results confirm
that the Committee has been effective overall.
After the items and contents of the evaluation were explained to all directors serving as Audit &Supervisory Committee members, their evaluations and opinions were collected through discussions,and they discussed the evaluation of the Committee’s effectiveness, as well as any other issues andfuture improvement measures.
As a result of the evaluation, it was confirmed that the structures necessary for the appropriate
performance of the Audit & Supervisory Committee’s functions have been established, in terms of thesize, composition, and operations of the Committee, and also that the effectiveness of audits has been
ensured. It was also concluded that the Audit & Supervisory Committee operates effectively, with anopen atmosphere that enables inside and outside members to engage in candid discussions. On theother hand, regarding audits of the effectiveness of IT governance and information systems, while it wasobserved that the full-time Audit & Supervisory Committee member participates in important meetings
such as ICT Committee meetings and conduct monitoring through reports at Board of Directors
meetings, the Committee has not fully verified company-wide IT strategies, investment plans, ormeasurements of the effectiveness of investment results. Therefore, the Committee members shared theneed to deepen the Committee’s involvement in strengthening IT governance as an issue going forward.
In FY2023, based on the FY2022 evaluation results, the Committee will consider taking actions such as
conducting interviews with divisions in charge of IT systems and information security, verifying the risk
management framework and the status of IT investments and their effects. The Company will makeongoing efforts to improve the overall effectiveness of the Audit & Supervisory Committee to enhanceaudit reliability and audit quality with the goal of continuously increasing corporate value andstrengthening corporate governance.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

34

Enhancing Corporate Governance

Changes in Corporate Governance Structure
2007

Introduction of the Operating Officer System
Reduce the number of directors stipulated in
Improvement of the Articles of Incorporation from 18 to 12
Transparency
Change of the director terms of office to one
in Management
year to clarify management responsibility

2008

Process of Nominating and Dismissing Directors

2010

2012

2014

2015

2016

Since 2007
Since 2007

Since 2007

Start of initiatives for compliance with the
Corporate Governance CodeAppointment of outside directors

Increase in the ratio of outside directors to
one-third or more

Establishment of the Internal Auditing
Department

00Since before 2000

Establishment of the Nomination &Remuneration Committee
Termination of retirement benefit plan for
directors
Introduction of the restricted stock
remuneration scheme
Start of the effectiveness evaluation of theBoard of Directors
Initiatives for
Corporate
Value
Enhancement

Establishment of the CSR Promotion Committee(currently, the Sustainability Promotion
Committee) and the rules of the Committee
Publication of the integrated report (Nihon
Kohden Report)
Establishment of the Advisory Board
consisting of external sustainability advisors

2019

2020

2021

2022

Director nomination is considered based on the following matters: the Board is well balanced inknowledge, experience, and abilities as a whole; the Board can make appropriate and quick decisions;and individual directors have excellent character, insight, and high ethical standards. The nomination
policy of directors (excluding Audit & Supervisory Committee members) is stipulated in the Corporate
Governance Guideline and of Audit & Supervisory Committee members is stipulated in the AuditingStandards conducted by the Audit & Supervisory Committee. The dismissal policy of directors is
stipulated in the Corporate Governance Guideline.

1

2

4

In accordance with the policy above, nominations and dismissals of directors, which are submitted to a
general shareholders meeting, are proposed by the Nomination & Remuneration Committee, which is avoluntary advisory committee under the Board, and are approved by the Board.

Nomination of Outside Directors
The Company appoints outside directors who meet the independence criteria set by the Tokyo Stock
Exchange and have a wealth of knowledge and experience in their fields, and can provide advice andsupervise the management from their objective and neutral position.

Establishment of the J-SOX Promotion
Committee and the rules of the Committee

Remuneration

2018

Nomination and Dismissal of Directors

Appointment of one female outside director

Strengthening The number of outside directors (persons)of Supervisory
FunctionTransition to a Company with an Audit &Supervisory Committee

2017

Since 2007

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

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Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

35

Enhancing Corporate Governance

Remuneration of Directors
Nihon Kohden has established the policy on determining the amounts and methods of calculation of
directors’ remuneration which would further link with performance and shareholder value as well as aiming
at the transparency in management and ensuring growth and profitability in mid- to long-term. The methodfor determining the policy is established through resolution by the Board of Directors based on a report of
the Nomination & Remuneration Committee, which is a voluntary advisory committee under the Board.
Remuneration of directors shall be linked to shareholder value so as to function effectively as anincentive for continuously improving the Company’s corporate value. Remuneration of each director
shall be determined at an appropriate level based on their respective responsibilities.
Remuneration of directors (excluding Audit & Supervisory Committee members and outside directors)
shall consist of a base salary as fixed monthly compensation, bonuses as performance-based
compensation reflecting short-term business performance, and restricted stock remuneration as anincentive to continuously improve the Company’s corporate value over the mid- to long-term.
Remuneration of Audit & Supervisory Committee members and outside directors, who are responsible
for supervisory functions, shall consist of the fixed monthly compensation only.
■ The fixed monthly compensation
The fixed monthly compensation shall be determined based on the director’s position, responsibilities,
and years served as director, comprehensively taking into consideration the level of other companies,
the Company’s business performance, and the level of employee salaries.

■ Performance-based bonuses
Performance-based bonuses shall reflect key performance indicators (KPI) to raise awareness of the need to
improve the Company’s business performance in each fiscal year. The target performance indicators andtheir values shall be in line with the medium-term business plan and set at the time of the formulation of theplan. The target values shall be reviewed as appropriate in accordance with the report of the Nomination &Remuneration Committee in response to environmental changes. The degree of achievement of the target
values shall be used as a common evaluation index for all directors. Individual evaluations shall be conductedaccording to each director’s area of responsibility. The amount of bonuses shall be calculated based on avariable payment rate of 0% to 200% and the bonuses shall be paid at a fixed time each year.

Restricted stock remuneration
As regards restricted stock remuneration, the Company shall, in principle, allot shares of the Company’scommon stock every year, after concluding an agreement on allotting restricted stock between the
Company and each director (excluding Audit & Supervisory Committee members and outside directors).
The number of shares of restricted stock to be allotted shall be determined based on the position of theallottee. To encourage the sharing of value with shareholders over the mid- to long-term, the transfer
restriction period shall be from the grant date of the restricted stock to the date when each director
retires from the position of director or operating officer.

■ he ratio by types of compensation for directors (excluding Audit & Supervisory CommitteeTmembers and outside directors)
The ratio by types of compensation for directors shall be reviewed by the Nomination & Remuneration
Committee, based on the remuneration levels of benchmark companies whose business scale is similar
to the Company. The weighting of performance-based compensation shall be higher for the higher
positions. While respecting the report by the Nomination & Remuneration Committee, the Board of
Directors shall determine the details of remuneration for each director within the range of the ratio bytypes of compensation indicated in the report. The amount of remuneration shall be determined byresolution of the Board of Directors, which shall have the authority to determine the amount of basic
salaries for each director as well as the evaluation and allocation of performance-based compensation
based on the performance of the business for which each director is responsible. The Board of Directors
shall consult the Nomination & Remuneration Committee on the draft remuneration plan and obtain areport from the Committee to ensure that the Board exercises its authority appropriately. The Board of
Directors shall also resolve the number of shares to be allocated to each director as restricted stock
remuneration based on the report of the Nomination & Remuneration Committee.

■

The remuneration of Audit & Supervisory Committee members
The remuneration of Audit & Supervisory Committee members shall consist of fixed monthly
compensation only from the perspective of placing importance on the independence and objectivity ofmanagement. The amount of remuneration for each Audit & Supervisory Committee member isdetermined by consultation among the Audit & Supervisory Committee members.

■

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

36

Enhancing Corporate GovernanceDirector Skills Matrix

Total Amount of Remuneration of Directors in FY2022

Category

Directors (excluding Audit& Supervisory Committee
members and outside directors)

Total amount of remuneration by type (million yen)Totalamount of
remuneration
Fixed monthly Performance-based Restricted stock(million yen)compensationcompensation
remuneration

Number of
directors(persons)

All eleven directors utilize their knowledge, experience, and abilities to make decisions and supervise thebusiness executions in order to realize the Long-term Vision and the Three-year Business Plan.
In addition to the expertise and experience of each director, all directors are engaged in management fromthe perspective of sustainability. The Company will continue its efforts to further strengthen sustainability.
Name

340

Directors (Audit & Supervisory
Committee members excluding
outside directors)

25

Outside directors

43

221

25

43

84

ー

ー

35

ー

ー

8

1

5

(Note) T he number of directors receiving restricted stock remuneration is six. (One non-resident of Japan is not eligible for payment).
The 65th general shareholders meeting held on June 28, 2016 approved the following:i) with respect to the amount of remuneration to directors of the Company excluding directors serving as Audit & Supervisory Committee members,
total amount shall be within the limit of 400 million yen (including the amount of remuneration to outside directors which shall be within the limit of 30
million yen),ii) w ith respect to the amount of remuneration to directors serving as Audit & Supervisory Committee members, total amount shall be within the limit of
80 million yen.
The 69th general shareholders meeting held on June 25, 2020 approved the following:
The maximum amount of monetary compensation receivables to be paid to directors (excluding directors serving as Audit & Supervisory Committee
members and outside directors) in respect of restricted stock shall be within the limit of 100 million yen.

Title

Corporate
GlobalManagement Experience

Sales/
Marketing

Finance/ Human Resources/
Production/ Legal/Risk
Human Resource ESG/SDGs
R&D
Management Accounting/
M&A
Development●●

Hirokazu
Ogino

Representative Director,
President and CEO●

TakashiTamuraRepresentative Director,
Executive Operating
Officer●

Tadashi
Hasegawa

Corporate Director,
Executive Operating
Officer

Eiichi
TanakaCorporate Director,
Senior Operating
Officer●●●

Yasuhiro
Yoshitake

Corporate Director,
Senior Operating
Officer●●●

Hiroyuki
SatakeCorporate Director,
Senior Operating
Officer

KanakoMuraoka

Outside Director,
Nomination & Remuneration
Committee Member●

Hidemitsu
SasayaOutside Director●

Shigeru
HirataCorporate Director,
Full-time Audit &Supervisory Committee
Member

●

●

●

●

●

●

Kazuo
Shimizu

Committee Member
Outside Director,
Audit & Supervisory
Committee Member,
Nomination & Remuneration
Committee Member

●

●

●

●

●

●
●

●

●

Outside Director,

Audit & Supervisory
ShigeruCommittee Member,
Kawatsuhara Nomination & Remuneration

●

●

●

●

●

●

●

NIHON KOHDEN REPORT 2023

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Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

37

Board of Directors

11

9

10

2

4

5

1

6

8

3

7

1 Hirokazu Ogino

2 Takashi Tamura

3 Tadashi Hasegawa

4 Eiichi Tanaka

Representative Director

Representative Director

Corporate Director

Corporate Director

President and CEO

Executive Operating Officer,
In Charge of Domestic Business Operations

Executive Operating Officer,
General Manager of Global Corporate Administration Operations, Chief Compliance Officer

Senior Operating Officer,
General Manager of US Operations

Served as Director for 11 years
Attendance at Board Meetings 18/18 (100%)
Date of birth May 28, 1970
Apr. 1995 Joined the Company
Apr. 2007 President of Nihon Kohden Europe GmbH
Apr. 2011 General Manager of Marketing Strategy
Department
Jun. 2011 Operating Officer
Jun. 2012 Corporate Director and Operating Officer
Apr. 2013 General Manager of International Operations
Jun. 2013 Corporate Director and Senior Operating Officer
Oct. 2013 CEO of Nihon Kohden America, Inc.
Jun. 2015 Representative Director, President and COO
Jun. 2017 Representative Director, President and CEO(current position)

Served as Director for 15 years
Attendance at Board Meetings 18/18 (100%)
Date of birth March 22, 1959
Apr. 1983 Joined the Company
Apr. 2003 President of Nihon Kohden Kansai Corporation
Apr. 2007 General Manager of Sales Operations
Jun. 2007 Operating Officer
Jun. 2008 Corporate Director and Operating Officer
Apr. 2011 General Manager of International Operations
Apr. 2013 General Manager of Service Business Division
Apr. 2014 General Manager of Customer Service Operations
Jun. 2015 Corporate Director and Senior Operating Officer
Apr. 2016 General Manager of Sales Operations
Jun. 2017 Representative Director and Executive Operating
Officer (current position)

Served as Director for 8 years
Attendance at Board Meetings 18/18 (100%)
Date of birth June 17, 1959
Apr. 1983 Joined The Saitama Bank Ltd.
Jun. 2009 Operating Officer of Saitama Resona Bank Limited
Jun. 2011 Senior Operating Officer of Saitama Resona Bank Limited
Jun. 2013 Corporate Director and Senior Operating Officer of
Saitama Resona Bank Limited
Mar. 2014 Retired as Corporate Director and Senior Operating Officer of
Saitama Resona Bank Limited
Apr. 2014 Joined the Company
Jun. 2014 Operating Officer and responsible for Internal Auditing Department
Jun. 2015 Corporate Director and Senior Operating Officer
Apr. 2017 Chief Compliance Officer (current position)
Apr. 2020 General Manager of Global Corporate Administration Operations(current position)
Apr. 2022 Corporate Director and Executive Operating Officer (current position)

Served as Director for 6 years
Attendance at Board Meetings 18/18 (100%)
Date of birth July 15, 1962
Apr. 1985 Joined the Company
Apr. 2002 General Manager of Marketing & Business
Development Department
Oct. 2003 President of Nihon Kohden America, Inc.
Apr. 2008 General Manager of General Affairs and Human Resources Department
Jun. 2008 Operating Officer
Apr. 2011 General Manager of Accessories & Consumables Business Operations
Apr. 2013 Corporate Director & Senior Operating Officer of
Nihon Kohden Tomioka Corporation
Apr. 2014 President of Nihon Kohden Tomioka Corporation
Apr. 2017 General Manager of Import Business Operations
Jun. 2017 Corporate Director and Operating Officer
Apr. 2019 General Manager of Corporate Strategy Division
Apr. 2020 General Manager of US Operations (current position)
Apr. 2022 Corporate Director and Senior Operating Officer (current position)

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

5 Yasuhiro Yoshitake

Sustainability

Governance

Quality

Human Rights/
Human Resources

6 Hiroyuki Satake

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

7 Kanako Muraoka

8 Hidemitsu Sasaya

Outside Director

Outside Director

Independent Director

Corporate Director

Corporate Director

Senior Operating Officer,
General Manager of International Business Operations

Senior Operating Officer, In charge of Strategic Technology Operations,Technology Development Operations, R&D, and Regulatory Affairs

Served as Director for 6 years
Attendance at Board Meetings 18/18 (100%)
Date of birth March 20, 1966
Apr. 1988 Joined the Company
Oct. 2003 President of Nihon Kohden Europe GmbH
Apr. 2007 General Manager of Sales Promotion Division,
International Operations
Apr. 2008 Managing Director of Nihon Kohden Trading(Shanghai) Co., Ltd.
Apr. 2011 General Manager of China Operations
Jun. 2011 Operating Officer
Apr. 2013 General Manager of Asia and Middle East Operations
Apr. 2015 General Manager of International Business
Operations (current position)
Jun. 2017 Corporate Director and Operating Officer
Feb. 2019 President and CEO of Nihon Kohden America, Inc.
Apr. 2022 Corporate Director and Senior Operating Officer(current position)

Served as Director for 1 year
Attendance at Board Meetings 13/13 (100%)
Date of birth April 22, 1958
Apr. 1984 Joined the Company
Apr. 2009 General Manager of Engineering Department 2 ofBiomedical Instrument Technology Center
Apr. 2014 General Manager of Engineering Department 2 ofBiomedical Instrument Business Operations
Oct. 2016 CTO of Defibtech, LLC
Apr. 2017 General Manager of Biomedical Instrument Business
Operations
Jun. 2017 Operating Officer
Apr. 2020 Senior Operating Officer and General Manager ofTechnology Development Operations
Apr. 2022 General Manager of Strategic Technology Operations
Jun. 2022 Corporate Director and Senior Operating Officer(current position)

Served as Director for 3 years
Attendance at Board Meetings 18/18 (100%)
Date of birth April 26, 1965
Apr. 1988 Joined Mitsubishi Corporation
Apr. 1993 Registered as an attorney (Daini Tokyo Bar
Association), Joined Anderson & Mōri (currently
Anderson Mōri & Tomotsune)
Oct. 1999 Joined Mori Sogo
(currently Mori Hamada & Matsumoto)Apr. 2020 Joined Kowa Law Office (to present)
Jun. 2020 Outside Director of the Company (current position)
Mar. 2021 Outside Director of FUJIYA CO., LTD.
(current position)

9 Shigeru Hirata

10 Shigeru Kawatsuhara

11 Kazuo Shimizu

Outside Director

Independent Director

Financial andCorporate Data

Outside Director

Independent Director

Corporate Director(Full-time Audit & Supervisory Committee Member)

Audit & Supervisory Committee Member

Audit & Supervisory Committee Member

Served as Director for 2 years
Attendance at Board Meetings 18/18 (100%)
Attendance at Audit & Supervisory Committee Meetings 22/22 (100%)
Date of birth May 12, 1961
Apr. 1985 Joined the Company
Apr. 2011 General Manager of General Affairs & Human
Resources Department
Jun. 2011 Operating Officer
Apr. 2014 General Manager of Human Resources Department
Apr. 2016 General Manager of Finance Department
Apr. 2020 Deputy General Manager of Global Corporate
Administration Operations and General Manager ofFinance Department
Jun. 2021 Corporate Director (Full-time Audit & Supervisory
Committee Member) (current position)

Served as Director for 7 years
Attendance at Board Meetings 18/18 (100%)
Attendance at Audit & Supervisory Committee Meetings 22/22 (100%)
Date of birth February 14, 1952
Apr. 1975 Joined Toko, Inc.
Apr. 2002 Senior Manager of Sales Department 1, Sales
Operations, Toko, Inc.
Apr. 2004 General Manager of Sales Center, Toko, Inc.
Jun. 2005 Corporate Director and General Manager of Sales
Center, Toko, Inc.
Apr. 2008 President of Toko, Inc.
May 2014 Chairman of Toko, Inc.
Mar. 2015 Senior Advisor of Toko, Inc.
Apr. 2016 Part-time Advisor of Toko, Inc.
Jun. 2016 Outside Director (Audit & Supervisory Committee
Member) of the Company (current position)

Served as Director for 3 years
Attendance at Board Meetings 18/18 (100%)
Attendance at Audit & Supervisory Committee Meetings 22/22 (100%)
Date of birth May 16, 1959
Apr. 1983 Joined Nippon Yusen Kabushiki Kaisha
Oct. 1989 Joined Asahi Audit Corporation(currently KPMG AZSA LLC)
Oct. 1992 Joined Shimizu Susumu Certified Tax Accountant
OfficeMar. 1993 Registered as a certified public accountant
May 1994 Registered as a certified tax accountant
Jan. 2003 Joined Ernst & Young Shinnihon Tax(currently Ernst & Young Tax Co.)
Sep. 2013 Joined Shimizu Accounting Office (to present)
Representative Partner of Ryoh-koh Audit Corporation(current position)
Jun. 2020 Outside Director (Audit & Supervisory Committee
Member) of the Company (current position)

38

Independent Director

Served as Director for 1 year
Attendance at Board Meetings 13/13 (100%)
Date of birth May 24, 1953
Apr. 1977 Joined the Ministry of Agriculture and Forestry(currently the Ministry of Agriculture, Forestry and
Fisheries)
Jul. 2005 Councillor, the Ministry of the Environment
Aug. 2006 Minister’s Secretariat, the Ministry of Agriculture,
Forestry and Fisheries
Jul. 2007 Director-General of the Kanto Regional Forest Office
Mar. 2008 Retired the Ministry of Agriculture, Forestry and Fisheries
May 2008 Joined ITO EN, LTD.
Jul. 2010 Corporate Director of ITO EN, LTD.
Jul. 2014 Managing Executive Officer of ITO EN, LTD.
Dec. 2018	Representative Director of Office Sasaya Co., Ltd.
(current position)
Apr. 2019 Retired as Advisor of ITO EN, LTD.
Apr. 2019 Visiting Professor at the Graduate School of Information& Communication (currently the Graduate School ofSocial Design)
Apr. 2020 Professor at Platform for Arts and Science,
Chiba University of Commerce (current position)
Jun. 2022 Outside Director of the Company (current position)

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Message from Outside Directors

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

39

The following are messages from the four outside directors and the overview of meetings of outside directors to exchange
opinions.

I will strive to create a structure thatenhances governance and compliance toimprove corporate value and support global
expansion of the Company.
Kanako Muraoka
Outside Director
Kowa Law Office

Faced with the difficulties posed by a changing economic environment, including the uncertain global
situation and higher prices of components and resources, in FY2023, Nihon Kohden entered the final
year of its Three-year Business Plan, BEACON 2030 Phase I. Regarding one of the key strategies
outlined in the Three-year Business Plan, “Ensure strict compliance and strengthen group governance,”
we continue to be required to address a range of issues in line with the globalization of management.
From an attorney’s perspective, I will strive to help Nihon Kohden make further progress throughdiscussions at the Board of Directors meetings while constantly reviewing governance and compliancefrom an external standpoint. Moreover, M&A is an effective tool in global business development. I willleverage my experience of involvement in several M&As to consider each deal as a director of Nihon
Kohden and support its global expansion.

I will contribute to the Company as asustainability expert so that management can
respond appropriately to acceleratingchanges.
Hidemitsu Sasaya
Outside Director
Representative Director of Office Sasaya Co., Ltd.
Professor at Platform for Arts and Science, Chiba University of Commerce

Due to the need to coexist with COVID-19, full-scale Green Transformation (GX), and the Ukraine crisis,
people’s awareness of health, the environment, and safety is changing dramatically. In these times ofdrastic and accelerating changes, it is becoming increasingly important for companies to respond
appropriately to the rules and regulations regarding sustainability that are fast becoming mainstream.
We need to accurately address ESG and the SDGs, through measures such as business and humanrights initiatives and ensuring compliance in our domestic and international supply chains, as well as
TCFD and human capital-related disclosures. Everybody in Nihon Kohden needs to work together toensure we address both sides of an issue: searching for opportunities and avoiding various risks. As asustainability expert, I will use my knowledge and experience to meet the demands of a wide range ofstakeholders, including investors.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

40

Message from Outside Directors

Management competence will be tested in the
post-COVID-19 world. As an outside director,
I will work diligently to supervise the management
and provide appropriate advice covering
compliance, the environment, and other matters.

I will supervise risk-taking by executive
management and contribute to enhancing thecorporate value of the Company.

Shigeru Kawatsuhara

Kazuo Shimizu

Outside Director(Audit & Supervisory Committee Member)

Outside Director (Audit & Supervisory Committee Member)
Shimizu Accounting Office, Representative Partner of Ryoh-koh Audit Corporation

FY2023 is the final year for strengthening the foundation in the Three-year Business Plan, BEACON 2030
Phase I. In the past few years, COVID-19-related demand and the weak yen have had a positive impact
on the Company’s sales and income. On the other hand, the increased inventories to respond to theshortage of parts and the Ukraine crisis, as well as higher prices of components and logistics costs,
have scarred the Company. I believe that this year, in the post-COVID-19 world, managementcompetence will be tested more than ever before. We expect our recurring business to increase due tothe increased installations of medical equipment. However, while it is essential to respond to tightening
regulations on medical equipment in various countries, keep a close eye on the political situation, andmanage risks, we need to achieve the goals of the Three-year Business Plan and strengthen thefoundation for the next phase. To achieve those goals, I will work diligently to supervise the management
and provide appropriate advice covering compliance, the environment, and other matters, as an outside
director.

In FY2022, as the Company flexibly responded to the shortage of parts and higher prices of resources
due to Russia’s prolonged invasion of Ukraine, Nihon Kohden achieved operating results that exceeded
its plan. Meanwhile, we have shifted our U.S. subsidiaries into a holding company structure and aresteadily developing overseas markets, reforming supply chain management, and enhancing
management efficiency and group governance. During this period of change, it is especially important to
identify and manage risks from a global perspective. As a member of the Audit & Supervisory
Committee, I will supervise the soundness of the directors’ execution of their duties and keep a close
eye on the effective functioning of the compliance and governance structure both in Japan andinternationally. I will also make recommendations to ensure that executives take appropriate risks,
contribute to healthcare and society through technology, and increase the corporate value of theCompany.

NIHON KOHDEN REPORT 2023

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Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

41

Message from Outside Directors

Meetings of Outside Directors to Exchange Opinions
Overview
Nihon Kohden has been holding regular meetings for outside directors to exchange opinions and build acommon understanding since FY2016.
■

Aims

With a membership composed entirely of independent outside directors, thesemeetings are held on a regular basis and are designed to exchange opinions
and build common understanding from an independent and objective
standpoint. The meetings aim at encouraging outside directors to engage inlively discussions at the Board Meetings.

Members

Four independent outside directors, including two members of the Audit &Supervisory Committee

Dates for Meetings

In FY2022, two meetings were held in May and December.

AgendaMay. The results of the evaluation of the effectiveness of the Board of Directors
Dec. Update on the progress in improving the Board’s effectivenessContent of Meetings
Regarding the main agenda item, “The results of the evaluation of the effectiveness of the Board of
Directors,” the board members exchanged their opinions on the following topics.

■

FY2022● Review of the term of office of outside directors● Establishment of a structure to promote foreign nationals to executive positions● Enhancement of briefings to outside directors● Consideration of the Nomination & Remuneration Committee’s reporting to the Board of Directors

In addition, since FY2021, we have held free discussions, to exchange opinions without setting limits onthemes. Three discussions were held in FY2022, and discussions are also scheduled to be held threetimes in FY2023. The meetings are very meaningful as they allow outside directors to freely debate andshare each other’s recognition on various topics such as Nihon Kohden’s corporate culture, theglobalization of human resources, and the effectiveness of the Corporate Governance Code.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Ensuring Thorough Compliance

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

42

We practice fair and legitimate businesses activities with high ethics.

Message from Operating Officer

Our Compliance Policies

Since 2017, as the Chief Compliance Officer, I have focused on
developing a compliance promotion structure, employee training, andfostering a corporate culture.
We regularly send compliance-related messages and information to
Divisional/Local Compliance Officers in each division and subsidiary inJapan and internationally. I have also established channels to receive
direct reports from these officers, working closely with them to promoteand ensure compliance. To realize our Management Philosophy andLong-term Vision, we have established Integrity, a higher-level concept ofcompliance, as one of our Core Values, which are the common standards
Tadashi Hasegawa
that connect our employees around the world. Through various training
Corporate Director,
Executive Operating Officer,
programs, we are working to raise awareness of and promote thoroughGeneral Manager of Global
compliance in the execution of our business activities. Furthermore,
Corporate Administration
Operations,compliance has been added to personnel evaluation items to enhance
Chief Compliance Officer
the effectiveness of our compliance efforts.
For fostering a corporate culture, President Ogino stated, “No violation of compliance is acceptable in
Nihon Kohden Group. When faced with making a choice between unlawful act for profits and ethicalchoices in compliance with laws in our daily business activities, I believe we will choose compliancewithout question and hesitation.” With this clear message, we strive to foster a corporate culture thatplaces the highest importance on compliance.
In FY2022, we achieved our target of zero occurrence of serious incidents of non-compliance to ensure
strict compliance and strengthen group governance, a basic policy of our Three-year Business Plan andone of our key material issues for sustainability. In addition to not allowing any serious complianceviolations to occur, we will continuously work resolutely to ensure that Nihon Kohden comprehensively
adheres to compliance requirements and continues to be a company widely trusted by society, thereby
enhancing the corporate value of the Company.

Nihon Kohden and all of its subsidiaries are fully committed to a program of sound ethics and rigorous
legal compliance. Aside from being the “right” thing to do, these principles ensure that Nihon Kohden does
not lose one of its most valued assets—the trust of customers, business partners, and stakeholders.
Nihon Kohden’s commitment to ethical and responsible actions is embodied by its Charter of Conduct andCode of Ethics and Conduct.

Compliance Organizational Framework
The Company has a global compliance program
effective in all regions in which it conducts
business. In order to ensure thoroughcompliance, the Company has created theCompliance Organizational Framework as shownin the figure on the right:
The Compliance Committee is an organizationconsisting of directors, officers, and senior
managers designated by the Board of Directors.
The Compliance Committee ensures andenhances compliance by the followings:

Board of Directors
Management Council
Compliance Committee
Chief Compliance Officer
Divisional/Local Compliance Officers(i) Establishing and amending the Company’s compliance policies;(ii) Supervising, evaluating, assessing, reviewing, and continuously improving the complianceprogram of the Company;(iii)Coping with important compliance issues; and(iv)Assessing and implementing responses to other compliance matters.

NIHON KOHDEN REPORT 2023

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Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

43

Ensuring Thorough Compliance

The Chief Compliance Officer (CCO) is responsible for management, operation, and implementation of
the compliance program throughout the Company. The Divisional and Local Compliance Officers are
empowered and authorized to implement, ensure, and enhance the compliance program in each divisionor subsidiary. The CCO carefully selects these individuals and regularly communicates with them toverify that global policies are implemented.

Compliance Training
Every year, the Company conducts compliance training for all executives and employees at theworkplace level in each division and subsidiary in Japan and overseas (Approximately 5,600 participants
in FY2022). Executives and employees first conduct self-study using prescribed materials to check theirlevel of understanding. Next, we read the materials and discuss it with colleagues in order to deepen
their understanding of compliance. As necessary, Local Compliance Officers in overseas subsidiaries
provide additional training in accordance with local laws, regulations, and policies in each country. In
addition, compliance study sessions are held in each division according to business such as
harassment, Pharmaceutical and Medical Device Act, and sales activities. Furthermore, since FY2021,
compliance training by outside experts has been held on selected compliance risk topics of highimportance for all executives such as managers of domestic branch offices and domestic business
operations.

Internal Reporting System
Nihon Kohden forbids all forms of retaliation
against individuals who make reports throughtheir supervisors or an internal hotline service ingood faith. However, to alleviate any concerns on
the part of the employees making reports, theCompany accepts anonymous reports. In
response to the revised Whistleblower Protection
Act, which took effect in Japan on June 1, 2022,
the Company has established new rules tostrengthen the protection of whistleblowers andfurther enhance its internal reporting system.

Internal Reporting Hotline

Compliance Committee
ReportFeedback

Internal Reporting Hotline(internal and external channels)
ReportFeedback

Nihon Kohden Group Employees

Preventing Corruption
The Nihon Kohden Code of Ethics and Conduct prohibits any act of illegal bribery or corrupt act towards
Japanese and foreign public officials and ensures compliance with laws and regulations preventing
corruption in every region in which Nihon Kohden engages in business, including bribery- andcorruption-related laws in Japan, the Foreign Corrupt Practices Act (FCPA) in the United States, and theBribery Act in the United Kingdom. Furthermore, Nihon Kohden has established the Anti-Corruption
Policies, which prescribe detailed rules and procedures to prevent bribery, and ensures thoroughadherence thereto. The Company also asks business partners, including overseas distributors, tounderstand and cooperate with Nihon Kohden’s anti-corruption efforts and provides them with the
Nihon Kohden Code of Ethics and Conduct and educational materials related to anti-corruption.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

44

Ensuring Thorough Compliance

Initiatives for Global Compliance

Formulate and Implement Measures to Prevent Recurrence of Bribery Case

Nihon Kohden introduced the Global Compliance Program in 2017 and is working to ensure thoroughcompliance throughout the Group, including overseas sales subsidiaries. In FY2022, we held training for
managers of overseas sales subsidiaries and quarterly online meetings for Local Compliance Officers
and issued newsletters. We also conducted risk assessments for all overseas subsidiaries to confirm thestatus of implementation of the Global Compliance Program and identify risks to be addressed in the
future, in order to achieve zero occurrence of serious incidents of non-compliance. In the Three-year
Business Plan, we will establish more robust compliance structure by addressing the following
initiatives: to ensure strict compliance and strengthen group governance and to strengthen internal
control over domestic sales.

In response to the bribery case involving a former employee of the Company that occurred in Japan in
January 2021, meetings of the Committee for Implementation and Management of Recurrence
Prevention Measures, which includes outside members of the Investigation Committee, were held tentimes. All recommendations of the Investigation Committee have been introduced and implemented.
From FY2023, the Compliance Committee will replace the Committee for Implementation andManagement of Recurrence Prevention Measures in monitoring the status of the establishment andimplementation of preventive measures and ensuring strict compliance.

For further details regarding compliance, please refer to our website.

https://www.nihonkohden.com/sustainability/governance/compliance.html

1. Strengthening of Governance(1) Review of the organization● Established the Compliance & Legal Department in
the Global Corporate Administration Operations(April 2021)

Formulated the Global Business Management Policy
As the role of our overseas subsidiaries has become more important under transforming into a global
high-value-added company, we have worked to strengthen the organizational risk management
capabilities of each company. In October 2021, we formulated the Global Business Management Policy
to support risk management related to finance and accounting, personnel and labor affairs, compliance,
and internal information security, with the aim of preventing occurrence and recurrence of fraud andmisconduct, and started implementation in 24 overseas subsidiaries of the Company. We will
periodically review and enhance the contents of the Policy and work closely with each company toensure its effective application.

●

Established the Compliance Department in theSales Operations in Japan (Currently Domestic
Business Operations) (April 2021)● Domestic sales branch offices− Strengthened administrative functions(Sequential implementation in progress)− Strengthened reporting lines to the Chief
Compliance Officer(Compliance Officers’ meeting: held semi-annually)(2) Review of the procedures for considering donations● Applications received through the donation website
were reviewed by an organization that is independentof sales divisions (Conducted quarterly)(3) Strengthening of internal controls● Application of IT controls to pre-order processes(Introduced in November 2021/Now operating successfully)(4) Establish mutual check procedures with dealers(Completed in October 2022)

Mutual pledge to comply with laws
Periodic questionnaires● Establish a whistle-blowing channel for third parties●●

2. Review of the Employee Performance
Evaluation System●

Included compliance in evaluation items for
performance evaluation(Management positions: June 2021/General employees: October 2021)

3. Thorough Compliance Education●

Domestic sales branch offices− Improved education programs for managers(Training by outside experts: held once a year)− Increased the amount of specific and practicaltraining contents(Continued to implement)

4. Monitoring
Periodic internal compliance awareness surveys● (February 2021, February 2022, February 2023)

Ensure that all employees are aware of the internalreporting hotline● (Newly established lawyer hotline: February 2022)

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Strengthening Risk Management

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

45

Nihon Kohden strives to make improvements to risk management to ensure it can respond appropriately to various business risks.

Message from Operating Officer
I believe that my role as the operating officer in charge of risk management is
to visualize as much as possible the risks that could become obstacles to
Nihon Kohden’s sustainable growth and enhancement of corporate value, anddevelop and implement countermeasures before the risks become apparent,
as well as building and strengthening an advanced company-wide risk
management structure to minimize losses.
The risks a company faces are not only those inherent within the company, but
nowadays are also more broadly defined, including cyber risks and geopoliticalrisks. I will actively supervise the Risk Management Divisions and the RiskRelated Committees to control the manifestation of risks and conduct various
Fumio Izumida
drills to ensure that we can take appropriate actions against external risks such
Operating Officer,
General Manager of Corporate
as geopolitical risks in accordance with the Business Continuity Plan (BCP).
Strategy Division
Through these activities, we aim to ensure the smooth conduct of our businessactivities and contribute to realizing our Long-term Vision and achieving thetargets of the Three-year Business Plan. We appreciate your continued support in these endeavors.

The risks present in the execution of business activities have been classified into nine types, and the Risk
Management Divisions and Risk-Related Committees have been assigned to each risk type. The Risk
Management Divisions provide training and support to operating divisions and subsidiaries with regard to theirassigned risk types, and report the system improvement and promotion status to the Risk Management
Supervisory Division. The Risk-Related Committees report to the Board of Directors and Management Council
on matters including assessments of management system appropriateness, validity, and effectiveness for
related risk types. The Internal Audit Department reports to the Representative Directors and the Board of
Directors on risks discovered during audits. In FY2023, the Company will develop a company-widesophisticated risk management framework. The Board of Directors will discuss the important risks andresponse policies identified by the newly established Risk Management Committee.
Risk Management Framework
ReportReport

The Board of Directors is responsible for establishing basic policies concerning risk management in overall
Group business operations, and ascertaining the improvement and promotion status of the Group-wide risk
management framework. The Risk Management Supervisory Divisions are tasked with improving andpromoting the overall risk management system of the Nihon Kohden Group.

Internal Audit Department

Risk Management Framework

Risk Management Committee

Management Council

Sustainability Promotion
Committee

Implementation of risk
management andreporting on status of
implementation

Risk Management
Supervisory Divisions
Risk Management
DivisionsAudit

Risk-Related Committees

Representative Director

Direction

Approach to Risk Management
To ensure the sound and smooth operation of business, Nihon Kohden has established a management
framework to prevent risks in overall business operations and has prescribed methods for dealing withrisks when they occur.

Board of Directors

Operating Divisions andSubsidiaries

ReportAssessment of theeffectiveness of the
management systems
for each risk, etc.

Compliance Committee
Personal Information Protection
Committee
Quality Control Committee
Environmental Committee
Information Disclosure
Committee
Disaster Prevention
Management Committee
ICT Committee

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46

Strengthening Risk Management

Self-Assessment of Risk Management
Nihon Kohden’s offices, subsidiaries, and the departments in the head office conduct self-assessmentof risk management regarding compliance and others using divisional inspection sheets. The Risk
Management Supervisory Division verifies the progress of risk management system implementation andfuture responses, and reports the results of the self-assessment to the Board of Directors. Overseas
subsidiaries also report to the Board of Directors on the development and progress of their risk
management systems and measures to strengthen the implementation. In addition, the Company
provides education on risk management to its executives and employees to ensure that they are fully
aware of the importance of risk management.
In FY2022, we introduced groupware and a security monitoring environment equivalent to that of thehead office to our overseas subsidiaries in Asia and the Middle East. We also strengthened measuresagainst system risks by conducting targeted attack training emails and information security educationfor overseas employees. Additionally, as a countermeasure to human rights risks, we analyzed theresults of the questionnaire survey on human rights and related issues conducted in FY2021 using an
outside consultant, identified human rights risks in the Company, and formulated measures to reduce
those risks. We will systematically reduce risks by continuing to conduct monitoring of Group companies
and suppliers in Japan and internationally.

Risk Types
Risk

Description

Compliance Risks

Risk of losses due to failure to comply with laws and regulations, etc.

Quality Control Risks

Risk of losses due to problems related to the safety or reliability of our products or services

System Risks

Risk of losses due to failure, malfunction, or unauthorized use of networks andcomputer systems used in internal IT infrastructure, products, and services

Disaster and Accident Risks

Risk of losses due to interruption of business operations caused by disasters or accidents

Environmental Risks

Risk of losses due to occurrence of environmental pollution, etc., caused by insufficiency
in reduction of environmental impact or prevention of environmental pollution

Financial and Accounting
Risks

●

●

 isk of losses due to change in value of assets held, which is caused by changes inRmarket environment and credit standing of business partners, etc.
Risk of losses due to inappropriate accounting practices

Risk Types

Information Disclosure Risks

Risk of losses due to inappropriate disclosure of information

The Risk Management Regulations, which set forth the basic policies for risk management, classify risks
into the nine types of risk shown in the right table.

Strategic Risks

Risk of losses due to incorrect business strategies

Human Rights Risks

Risk of being liable for compensatory damages or decrease in its corporate value due
to human rights violations by the Company or its business partners

Response in the Event of a Risk
The response to be taken when a risk occurs has been set forth in the regulations established for eachrisk type.

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47

Strengthening Risk Management

Disaster Risk Management

Human Rights Risk Management

Basic Approach
Medical equipment on which people’s lives depend needs to be supplied continually and smoothly evenin the event of a large-scale disaster. As a medical equipment manufacturer, Nihon Kohden has
formulated a Business Continuity Plan (BCP) to ensure the continued supply of products and services
while ensuring the safety of employees and their families in the event of a large-scale disaster. We also
conduct periodic company-wide education and training in relation to disaster preparedness and the
BCP.
In FY2022, the Company conducted evacuation drills, safety confirmation drills, as well as desktop
exercises (online joint training and review) at domestic sales branch offices, to ensure that employees
take appropriate action in the event of an emergency in accordance with the Disaster First Response
Manual.
The Nihon Kohden Group operates its business activities throughout Japan and around the world. In theevent of natural disasters and shortages of water or other resources associated with climate change,terrorism, war, or the spread of infectious diseases in each region, the procurement of parts, the supplyof products, and sales and service activities may be disrupted, which could have an impact on theoperating results and financial condition of the Nihon Kohden Group. The Company procures raw
materials and parts used for its products not only in Japan but also around the world. In the event of a
supply issue at a supplier, the Company takes measures, including the consideration of alternative parts,
to ensure that the production of its products is not affected.

■■

For further details, please refer to our website.

https://www.nihonkohden.com/sustainability/governance/disaster_management.html

Basic ApproachTo appropriately manage human rights risks, such as unfair discrimination or harassment, poor working
environments, unfair wages, excessive work, slave labor, forced labor, and child labor, we establishedthe Nihon Kohden Group Human Rights Policy and Human Rights Policy Rules in December 2020. We
also aim to foster a corporate culture of pride in contributing to healthcare, one of our key material
issues for sustainability. As part of these efforts, in order to conduct corporate activities with greater
consideration for human rights risks in accordance with the Human Rights Policy, we have worked to
implement human rights due diligence and build a structure for its implementation. The newly
established Human Rights Due Diligence Implementation Project has conducted a human rights risk
assessment questionnaire within the Company and for our suppliers. Based on the results of the FY2022
questionnaire, we conducted a human rights risk assessment considering the impact on management of
human rights issues and identified key human rights issues and human rights risks. As a result of theassessment of the impact of human rights issues, we will periodically reevaluate the important humanrights issues identified to prevent or mitigate negative impacts.

For further details, please refer to the human rights and human resources pages and our website.

https://www.nihonkohden.com/sustainability/social/rights.html

NIHON KOHDEN REPORT 2023

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48

Strengthening Risk Management

Information System Risk Management
Basic Approach
The Nihon Kohden Group utilizes various IT systems in its overall business and strives to manage
information by implementing security and backup measures, and preventing the leakage of confidential
and personal information. The Company also takes various security measures to protect its products
and services that use communication networks. To enhance the security of its products and services
and strengthen its response to security incidents, the Company established a PSIRT (Product Security
Incident Response Team) in April 2022. The Company has also established and implemented a Product
Security Policy in May 2023.

■

For further details, please refer to our website.

https://www.nihonkohden.com/sustainability/governance/info_management.html

Obtaining Third-Party Certification
To further enhance information security, Nihon Kohden has also obtained outside certification. We
obtained PrivacyMark certification in July 2005, and obtained Information Security Management System(ISMS) JIS Q 27001 (ISO/IEC 27001) certification in January 2015; the scope includes management andoperation of remote service facilities for Nihon Kohden Group system products.

■

Nihon Kohden Corporation obtained
PrivacyMark certification fromJIPDEC.

NIHON KOHDEN REPORT 2023

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49

Strengthening Risk Management

Product Security Policy
To realize our quality policy: “To have the customers feel continuous satisfaction with their purchase of
Nihon Kohden products”, Nihon Kohden has established and is implementing a basic policy to ensure
cyber security throughout the total product life cycle from development to production, sales, and aftersales service.

■

1. Compliance with Laws and Regulations

Response as a Medical Equipment Manufacturer
As a medical equipment manufacturer, Nihon Kohden focuses on product risk control to avoid accidents
related to its products. In addition to the rules for normal operation, we have stipulated the rules andreporting line in case of an accident.
In order to prevent an accident and communicate quickly when an accident takes place, we haveestablished a system to collect a broad range of information from clinical practice quickly and accurately
as well as a framework for disseminating information.

Nihon Kohden complies with all applicable laws and regulations of each country and region.

2. Structure

Nihon Kohden has established a product security structure and takes appropriate actions including providing
necessary information and alerts to our customers and all other stakeholders.

3. Education

Nihon Kohden provides education and training on product security to all executive officers and employees
throughout the Nihon Kohden Group in a timely manner, with the goal of increasing their awareness of productsecurity.

4. Product Development

Nihon Kohden develops plans for ensuring security throughout the total product life cycle of each product. We
also design and manufacture our products to minimize cybersecurity risk.

5. Post-market response

Nihon Kohden collects information on security vulnerabilities affecting our products in a timely manner as well as
implementing risk management and other appropriate measures to evaluate, eliminate, and control cybersecurity
risk and other risks.

6. Information Sharing and Disclosure

Nihon Kohden shares security information required by our customers as appropriate, including information about endof life of medical equipment, the status of our response to vulnerabilities, recovery procedures, and mitigation andremedial measures. We also provide coordinated disclosure of security vulnerability information in a secure mannerby cooperating with government agencies and Information Sharing Analysis Organizations (ISAOs) as necessary.

24/7 customer service
Send error messages andmaintenance information automaticallyCustomers

The measures in this security policy by themselves are not sufficient to protect patients’ and customers’
information and financial assets from cybersecurity threats. In addition to the above measures, Nihon
Kohden asks our customers for their cooperation in taking their own measures to ensure productsecurity. A comprehensive and multi-layered security strategy including Nihon Kohden’s contributions
as part of its own security measures is required to protect patients’ and customers’ information andfinancial assets from cybersecurity threats.

Confirmation by call

Preventive/
Urgentmaintenance

Nationwide
sales offices &field services

Nihon Kohden
Server/Call Center

Consider response measuresin collaboration with field services

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50

Quality
As a manufacturer of medical equipment which areresponsible for saving lives, we aim to supply
products and services that provide customers withsafety and peace of mind.

NIHON KOHDEN REPORT 2023

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Improving Safety and Reliability

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51

As a manufacturer of medical equipment which are responsible for saving lives, we aim to supply products and services thatprovide customers with safety and peace of mind.

Message from Operating Officer

Quality Policy and Quality Targets

The role of the Operating Officer in charge of Quality Management is toprovide safe and effective medical equipment and services to customers
by supporting and providing guidance to individual departments, such as
R&D, production, sales, and maintenance, based on the Quality
Management System (QMS) required of medical equipment
manufacturers by laws and regulations related to medical equipment ineach country.
To ensure that the world envisioned in Nihon Kohden’s Long-term Vision,
BEACON 2030, underpins and realizes “high quality as a matter ofcourse,” I will develop a system that enables the Group to maximize its
Yoshiyuki Fujita
functions. As shown in our QMS, in Corporate Quality Management
Operating Officer,
General Manager of Corporate
Operations, which was newly established in April 2023, three divisions
Quality Management Operations
share the duty to “maintain and enhance the QMS,” “build quality into
medical equipment and services,” and “contribute cross-functional QMSof the Group companies,” while mutually sharing information and providing feedback to management.
All employees of the Nihon Kohden Group work to achieve the quality targets set by each department
based on our Management Philosophy. Minimizing the number of repairs and recalls will help provide
customers with safety and peace of mind when using our medical equipment and services.
Unfortunately, two software recalls were conducted in FY2022. Although the recalls did not result in thereplacement or disposal of products or parts, I realize that quality improvement is also a sustainability
promotion activity that contributes to reducing CO2 emissions. We will continue our efforts to realize ourLong-term Vision through sophisticated quality activities throughout the entire Nihon Kohden Group.

Medical devices used in advanced medical care require the highest level of quality and safety. Nihon
Kohden has set the following quality policy.

Quality Policy
To have the customers feel continuous satisfaction with their purchase of Nihon Kohden products.

In FY2022, Nihon Kohden conducted two product recalls, causing inconvenience to those in clinicalpractice. We are making company-wide efforts to prevent any reoccurrence and are pursuing theworld’s highest quality levels throughout the entire value chain.
In FY2023, we will take actions to achieve the following quality targets.
(1) We will build a global quality management system to strengthen regulatory compliance and postmarketing monitoring in each country.
In response to the increasing demand for high-quality medical devices at the global level, Nihon Kohden
has strengthened its regulatory compliance in each country where its products are sold, improved its
global post-marketing monitoring, and enhanced its QMS in April 2023. Under the new structure, we willthoroughly collect and deploy information on medical device-related laws and regulations in each country
to shorten the time required for global product registration and ensure the timely supply of products. We
will also continue to improve our post-marketing monitoring system and use the information obtained to
improve internal processes and provide feedback to design teams to improve the quality of our products
and services more rapidly.
Cyber-attacks on medical institutions have been increasing in recent years and are posing a growing
threat. In addition to cyber-risk mitigation measures and the early detection of security incidents, we haveestablished a PSIRT (Product Security Incident Response Team) to provide appropriate support for earlyrecovery in the event of a security incident. We will continue to strengthen our cyber security response.

NIHON KOHDEN REPORT 2023

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52

Improving Safety and Reliability(2) We will improve customer service as well as software and manufacturing quality to pursue
customer value.
To enhance services for our customers, we will work to improve daily operations, increase efficiency andspeed, and respond to customer feedback in an appropriate and timely manner. In addition to thirdparty evaluations of software design, we will work to reduce product failures after shipment by analyzing
problems in the product manufacturing process and taking measures to prevent their recurrence.
Nihon Kohden has obtained ISO 9001:2015 certification for its quality management system and ISO
13485:2016 certification for its medical devices and in vitro diagnostics. The Company has also obtained
numerous certifications and accreditations including the Medical Device Single Audit Program (MDSAP)*
certification. Our Reliability Center has obtained laboratory accreditation in accordance with ISO
17025:2017. In addition, the Company has responded to the Medical Device Regulation (MDR) effectivein May 2021 and the In Vitro Diagnostic Medical Device Regulation (IVDR) effective in May 2022 inEurope.
 DSAP is a program to realize a single survey on the compliance and validity of QMS surveys introduced by medical device regulatory authorities inMfive countries: U.S., Canada, Brazil, Australia, and Japan.

(3) We will work to shorten downtime and reduce failure rates to achieve high product availability.
To increase the utilization rates of products used by our customers, we will work to reduce the failure
and re-repair rates. We will also promote the prompt provision of replacement devices in the event ofmalfunctions and the reduction of delivery times of repair parts and repair times.
(4) We will work on human resource development to achieve quality targets and pursue customer
value.
To achieve the above quality targets and pursue customer value, we will develop human resources by
providing practical training across all Nihon Kohden departments.

NIHON KOHDEN REPORT 2023

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53

Improving Safety and Reliability

Strengthen Our Global Quality Management System

ISO 9001/ISO 13485 Certification in the Nihon Kohden Group

Nihon Kohden is working to strengthen its quality management system and regulatory affairs functions
for obtaining approval in each country in order to supply products globally in a timely manner.

ISO 9001
Quality Management
System

ISO 13485
Medical Device Sector
Standard

Certification Date

Certification Date

January 1995

February 2003

Nippon Bio-Test Laboratories Inc.

May 2014-

Nihon Kohden OrangeMed, Inc.

-

June 2019

Nihon Kohden America, LLC-

March 2016

Defibtech, LLC-

February 2004

Neurotronics, LLC-

October 2009

Nihon Kohden Digital Health Solutions, LLC-

June 2022

Nihon Kohden Europe GmbH

November 1995

November 1995

Nihon Kohden Firenze S.r.l.

December 1995

December 1999

July 2013

July 2013

December 1995

December 2003-

April 2015

Nihon Kohden India Pvt. Ltd.

August 2018

August 2018

Nihon Kohden Middle East FZEJuly 2020

June 2020

Quality Management System
Nihon Kohden Corporation*
President

Direction

Quality Control
Committee

ReportConsultation

Corporate Quality Management Operations(Global Quality Management Division, Quality Control Division, Product Quality Control Division)
Direction

Report​Product
Sales andOverseas
Development Production
Service
Purchased
Logistics
Sales
Departments Departments
Department
Department Department
Companies
GeneralGeneralManagers of Managers ofDevelopment Production

GeneralManager of
Product
Purchased

GeneralManager ofDomestic
Sales
Department

Quality
Quality
Control
ControlCommittees Committees
inin
Departments Departments

Quality
ControlCommittee
inDepartment

Quality
ControlCommittee
inDepartment

Overseas
Production
Companies

Overseas
Development
Companies

GeneralManager ofService/
Maintenance

GeneralManagers ofOverseas
Sales

GeneralManagers ofOverseas
Production

GeneralManagers ofOverseas
Development

Quality
ControlCommittee
inDepartment

Quality
ControlCommittees
in Overseas
Sales
Companies

Quality
ControlCommittees
in Overseas
Production
Companies

Quality
ControlCommittees
in Overseas
Development
Companies

Software Team Srl
Shanghai Kohden Medical Electronic Instrument Corp.
Nihon Kohden Malaysia Sdn. Bhd.

Including Nihon Kohden Tomioka in the scope of certification.

NIHON KOHDEN REPORT 2023

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54

Improving Safety and Reliability

Net Promoter Score (NPS) Surveys
One of the material issues in sustainability at Nihon Kohden is to pursue the highest level of quality in theworld across the value chain. We set Net Promoter Score* as a KPI and started the survey in FY2021. In
FY2022, we conducted the second survey. The overall NPS survey score in FY2022 improved by 1.3
points to -4.0 from -5.3 points in FY2021.
In terms of individual scores, the score for Contribution to Operational Efficiency improved by 0.1 points
and the score for Cost-effectiveness of After-sales Service worsened by 0.2 points, indicating that
improvement is needed. Through the NPS survey, we will make continuous improvements by analyzingareas that need improvement and taking measures to address then, including those areas that havebeen highly evaluated by our customers. As a partner to medical institutions and medical professionals,
we will continue to work together with them to solve healthcare issues.
The NPS® survey is conducted to quantify the degree of attachment to and trust in a company or brand, which has traditionally been difficult to measure,in order to evaluate the customer’s experience at the point of contact with the company and apply it to improvements through future business activities.
Since the NPS® survey has a high correlation with business growth rates, it is used by listed companies in the U.S. and Europe and is attracting attention
in Japan as a new indicator alongside customer satisfaction.
NPS® is calculated by the following method.
Customers were asked to rate the service on a 10-point scale, with 9 to 10 being “promoters,” 7 to 8 being “passives,” and 0 to 6 being “detractors.” The
percentage of promoters (%) to the total number of respondents was subtracted from the percentage of detractors (%), and the resulting number is the
NPS value, which is expressed between -100 and +100.
NPS® is a registered trademark of Bain & Company, Fred Reichheld, and Satmetrix Systems (now NICE).
Net Promoter System, Bain & Company’s Website
https://www.bain.com/consulting-services/customer-strategy-and-marketing/customer-loyalty/

NPS Survey Results in FY2022 (Overall Score)
0

20

40

21.7

■ Promoters

60

52.5

■ Passives

Corporate Image and Contribution to Customer
Value
Brand image

Technologicaldevelopment
capability

7.8

7.7

7.5

Contribution tooperational
efficiency

7.7

7.1

7.6

7.7

Contribution to
medical use

Product quality,
stability, anddurability

Intention tocontinue to use

7.8
Product functionality,
performance,and ease of use

FY202210-point scale for each item

FY2021

Satisfaction with Sales and Services
Cost-effectiveness ofafter-sales services
Repair response in theevent of a failure andpromptness in arranging foran alternative device

Product costeffectiveness

8.1

NPS
-4.0

25.7

■ Detractors

NPS Survey Results in FY2022 (Individual Scores)

Contribution to
medical safety

（％）
100

80

Support such as
explanation ofoperation after
purchase of
products

Degree ofunderstanding ofcustomer needs

7.5

7.1

Ability to propose
appropriate products
and services

7.5

Adherence todelivery deadlines
and provisionof necessary
information whenneeded

7.8

7.5

7.8

of obtaining
7.4 Ease
information on
products andservices

7.8
Support at the timeof installation

7.7
7.9

Ease of making inquiries

7.7

Ease of understanding
explanations

Abundance ofknowledge

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55

Improving Safety and Reliability

Support for Customers’ Safety Management

Employee Safety

Nihon Kohden not only strives to improve the quality and safety of its products, but also supports
customers’ safety management and helps spread medical technologies, to ensure safety after delivery of
the product.
In Japan, Nihon Kohden deploys specialized safety managers nationwide who have received
accreditation as Medical Device Information Communicators (MDIC)*. We also organize safety
workshops to ensure that customers use our products correctly. In FY2022, as in the previous fiscal
year, it remained difficult to hold face-to-face workshops in the resurgence of the COVID-19. We held
remote workshops and provided safety information needed in clinical practice using educational
materials such as DVDs and slide presentations with voice-overs.
(FY2022 results: 716 workshops, educational materials provided to 261 facilities)

Nihon Kohden has established the Safety and Health Committee to promote accident prevention andthe development of a healthy environment in compliance with the Labor Standards Act and the Industrial
Safety and Health Act. At monthly meetings, the Safety and Health Committee deliberates on health andsafety proposals submitted by each department as well as activities for safety and health improvement.
In addition to the Safety and Health Committee, the Company has also established the Infectious
Disease Prevention Committee to facilitate activities to prevent infectious diseases. The Infectious
Disease Prevention Committee has executed employee training, surveys, discussions, and awarenessregarding infection prevention raising. Company vehicles used by employees are equipped with collision
avoidance assist systems, lane departure warning systems, automatic high-beam switching systems,
and drive recorders as standard equipment, and studless tires are provided as needed. In addition, foremployees who work in areas subject to severe cold weather, we promote the reduction of traffic
accidents by arranging for cold-weather-specification vehicles. In response to the introduction of
mandatory pre- and post-driving alcohol checks and record-keeping, all of our domestic sales offices
use alcohol checkers to check and record alcohol consumption.

Main workshop topics●

Safety workshops for use of patient monitors, defibrillators, and ventilators
Safety workshops for electrical safety, safety management of medical devices, and alarm reportfor patient monitors● DIC is an accreditation program established by the Japan Society of Medical Instrumentation (JSMI) to cultivate personnel who can contribute to patientMsafety and the improvement of healthcare quality.

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Sustainability

Ensuring Fair Trade Practices

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We aim to achieve fair business practices across the entire value chain including our business partners as full participants.

Message from Operating Officer

Approach to Sustainable Procurement

Nihon Kohden’s mission is to sustainably provide much-needed medical
equipment to customers around the world. To this end, a stable supply ofparts and components from all suppliers is essential.
While the procurement of electronic components such as semiconductors
has been difficult due to the COVID-19 pandemic, we have been able tocontinue to procure parts and components thanks to the exceptional
consideration and cooperation of many of our suppliers. This has allowed
us to continue to provide much-needed medical equipment to medical
facilities worldwide. I would like to express my sincere appreciation to our
suppliers.
Yutaka Inano
We also ask our suppliers to cooperate with our annual questionnaire
Operating Officer,
President of Nihon Kohden
survey to deepen their understanding of the Nihon Kohden Procurement
Tomioka Corporation
Policy and the Nihon Kohden Sustainable Procurement Standards. Goingforward, based on the survey results, we will further deepen our mutual
understanding with our suppliers and build strong relationships of trust with them, while continuing todevelop and provide superior products, thereby contributing to the support of medical professionals andthe healthcare system.
We, Nihon Kohden, promise to continue to grow and develop together with our business partners.

Nihon Kohden strives to practice sound and fair purchasing and achieve fair trade across the value
chain including our business partners. We also promote sustainability while giving due consideration to
the environment and society. To further reinforce sustainability in procurement, we conduct in-housetraining on sustainable procurement and disseminate the concept to our business partners for gaining
their cooperation.

Procurement Policy and Procurement Standards
We have formulated the Nihon Kohden Procurement Policy and the Nihon Kohden Sustainable
Procurement Standards for the purpose of widely disseminating and instilling our stance on
procurement both internally and externally. The Nihon Kohden Procurement Policy represents our basic
policy on procurement. The Nihon Kohden Sustainable Procurement Standards indicate items that we
expect our business partners to observe with regard to sustainability, and we aim to build a good
relationship with our business partners and realize a truly affluent and sustainable society.
In April 2023, we made a Partnership Building Declaration to build new partnerships by promoting
collaboration, coexistence, and co-prosperity with business partners in our supply chain and othervalue-creating businesses partners.
For further details, please refer to our website.

https://www.nihonkohden.com/sustainability/engagement/suppliers/fairness.html

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

57

Ensuring Fair Trade Practices

Adherence to the Nihon Kohden Sustainable Procurement Standards
Nihon Kohden provides regular compliance training to all of its employees to ensure they have correctunderstanding and awareness of sound and fair business practices. Departments involved in
procurement provide annual training on specific laws and regulations affecting their operations, such as
the Fair Competition Code and the Act against Delay in Payment of Subcontract Proceeds. In FY2022,
58 people attended these training sessions.
Nihon Kohden requests business partners to conduct self-assessment on their environmental andquality activities, and, moreover, checks business partners’ understanding of and adherence to the
Nihon Kohden Sustainable Procurement Standards through their answers to the Sustainability
Questionnaire conducted every year. Opinions expressed through the Questionnaire are fed back to
procurement departments and utilized to realize fair and responsible procurement.

Results of the Sustainability Questionnaire in FY2022
In FY2022, we asked 100 of our business partners to answer our Sustainability Questionnaire and weregrateful to receive cooperation from all of them. The questionnaire consisted of 22 questions in six areas:
legal compliance and fair operating practices, human rights, quality, the environment, information
management, and sustainability. In terms of questions about legal compliance and fair operating practices,and human rights, initiatives and implementation were underway, planned or under consideration in morethan 90% of our business partners. In previous questionnaires, multiple business partners reported thatthey have engaged in social contribution initiatives. We continue to work with our business partners todeepen mutual understanding of our sustainable procurement standards and ensure fair trade practices.

■

0

20

40

Legal compliance andfair operating practices

1 5

98

2

79

Quality

7

73

Information management

8

14

65

The environment■ Initiatives and implementation underway

(%)
100

80

94

Human rights

Sustainability

60

57■ Initiatives planned or under consideration

16
12

15

6
5
14

27

■ No initiatives or introductions

1
1■ No relation

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Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

58

Ensuring Fair Trade Practices

Identification of Key Suppliers
Nihon Kohden has identified the following suppliers as key suppliers: suppliers of orders with large
purchase amounts, suppliers who provide parts for major and strategic models, and suppliers who
provide non-substitutable parts.
Results of the Supplier Questionnaire in FY2022
In FY2022, we conducted a Supplier Questionnaire for approx. 76 suppliers both in Japan andinternationally and got responses.
The results of the survey revealed significant differences in the status of initiatives among suppliers.
While many suppliers are working to build systems and implement various measures in the areas of
Human rights, Quality, and Governance, many are facing challenges in the area of the Environment,such as climate change response initiatives and environmental data acquisition.

■

Supplier Questionnaire Content
Theme

Question

Sustainability
Promotion

1. Basic policy on sustainability promotion
2. Promotion system for sustainability
3. Signing and participating in sustainability-related organizations or initiatives

Environment

1. Establishment and operation of environmental management systems as the basic policyon environmental initiatives
2. Appropriate management in place to ensure compliance with environmental laws andregulations
3. Identification of cases of non-compliance
4. Reduction of Green House Gas emissions
5. Reduction of chemical substances specified by laws and regulations in manufacturing
processes and products
6. Initiatives for waste reduction activities
7. Sustainable and efficient use of resources (energy, water, raw materials, etc.)
8. Management of wastewater and exhaust and reduction of air, soil, and water pollution
9. Initiatives to reduce water consumption
10. Initiatives for biodiversity conservation

Human Rights

1. Basic policy on human rights
2. Promotion system for respect for human rights
3. Identification of cases of non-compliance4. Identification and assessment of risks regarding respect for human rights in operations
5. Prohibition of forced labor practices or acts and hiring of underage children
6. Management of night work and hazardous work
7. Appropriate management of foreign workers
8. Prohibition and appropriate management of discrimination and harassment
9. Prohibition and appropriate management of discrimination in employment
10. Appropriate management of employment of persons with disabilities
11. Proper wage payment and compliance with laws and regulations
12. Appropriate management of working hours
13. Appropriate measures regarding the right to organize, collective bargaining, andcollective action
14. Establishment of consultation and reporting channel for human rights

Measures to reduce risks
For suppliers with low scores, we are considering taking actions such as providing feedback on thesurvey results and requesting improvements. Additionally, several suppliers have reported events in theareas of Health and Safety and Information Security that have the potential to develop into serious
incidents or accidents. In those cases we will promptly confirm the facts and support the supplier intaking appropriate corrective measures.

■

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

Ensuring Fair Trade Practices

Theme

Quality

Question
1. Establishment and operation of quality management systems as the basic approach toquality and safety of products and services
2. Identification of cases of non-compliance3. Compliance with the safety standards specified by laws and regulations
4. Responsible marketing and advertising
5. Supplier’s responsibility for the supply chain
6. Advance measures and response procedures for responding to emergency situations
7. Advance measures and response procedures for handling a recall or complaint

Theme

Information
Security

Question
1. Promotion system for information security
2. Identification of cases of non-compliance
3. Initiatives to protect personal information
4. Defensive measures including protection against cyber-attacks

For further details, please refer to our website.

https://www.nihonkohden.com/sustainability/engagement/suppliers/nk_procurement.html

Health and Safety

1. Establishment of policy on health and safety
2. Promotion system for health and safety
3. Identification of occupational accidents and illnesses
4. Identification of cases of non-compliance
5. Appropriate management and the implementation of necessary safety measures inworkplace
6. Assumption of emergency situations such as disasters and accidents, and necessary
responses
7. Implementation of health management

Governance

1. Building internal control system
2. Board of Directors Evaluation

Compliance

1. Compliance with applicable laws and regulations
2. Identification of cases of non-compliance
3. Establishment of reporting channel for misconduct
4. Appropriate management to avoid inappropriate behavior toward antisocial forces
5. Appropriate management to avoid improper actions against intellectual property rights

59

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

60

Human Rights/
Human Resources
We respect the human rights of all stakeholders and strive
to foster a corporate culture in which employees take pridein their contribution to healthcare and to our mission.

NIHON KOHDEN REPORT 2023

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Sustainability

Respect for Human Rights

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Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

61

We strive to contribute to a sustainable society by promoting respect for human rights.

Message from Operating Officer

We conduct employee satisfaction surveys to foster a corporate culture of pride in contributing tohealthcare, which is one of material issues for sustainability in the Three-year Business Plan. The
FY2021 survey was conducted for approximately 4,400 employees in Japan. The ratio of positive
respondents was higher for Empathy with Vision and Value, while the ratio of positive respondents was
relatively lower for Career Support. We conducted a similar survey in FY2022 as well as holding
meetings by department to explain the survey results and implementing measures to improvesatisfaction levels in each department. In addition to continuing the survey, we plan to promote groupwide initiatives, introduce case studies on efforts to improve satisfaction in each department, and initiate
surveys at overseas subsidiaries. We are committed to creating a work environment that is comfortable
and rewarding.

My role as the operating officer in charge of human resources is toachieve sustainable growth for Nihon Kohden by realizing diversity inemployees and work styles.
To achieve this goal, we need to create comfortable and fulfilling
workplaces, and I am focusing on the following four initiatives.

Promoting work style reforms through increased engagement
Promoting diversity & inclusion● Implementing human rights due diligence● Promoting anti-harassment measures and restraining misconduct●●

Kenji Furukawa
Operating Officer,
Deputy General Manager of
Global Corporate Administration Operations,
General Manager of Human
Resources Department

Under the Three-year Business Plan, BEACON 2030 Phase I, we areworking to foster a corporate culture of pride in contributing to healthcare,by introducing a new personnel system and expanding our international
training program based on the Core Values of the Company. In terms ofsustainability promotion, we have identified human rights and human resources as one of 12 material
issues to be addressed and are working to resolve these issues through our corporate activities.

Regarding human rights due diligence, we have developed an internal structure to identify, prevent, andmitigate negative impacts on human rights. In FY2021, we conducted a questionnaire survey at eachcompany of the Nihon Kohden Group in Japan and overseas, as well as at our suppliers. In FY2022, we havecreated a risk map based on the questionnaire survey results to evaluate and identify human rights risks at
Nihon Kohden. We will continue our efforts to reduce human rights risks, establish internal and externalreporting channels and response processes and structures, conduct ongoing questionnaire surveys at Group
companies and suppliers in Japan and overseas, and provide internal awareness training.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

62

Respect for Human Rights

Basic Approach to Respect for Human Rights
The Nihon Kohden Charter of Conduct, which the Company and its executive officers and employees
have a duty to abide by, states that we have respect for human rights at all times. The Nihon Kohden
Code of Ethics and Conduct sets out the ethical and responsible actions we will take to guarantee
respect for human rights. In July 2015, Nihon Kohden signed the UN Global Compact. We arecommitted to contributing to a sustainable society through promoting initiatives in accordance with theTen Principles of the UN Global Compact in the four areas of human rights, labor, the environment, andanti-corruption.
Recently, society is paying more attention to corporate responsibility and respect for human rights inaccordance with the globalization of corporate activities. As it is essential for Nihon Kohden to respect
the human rights of stakeholders, we established the Nihon Kohden Group Human Rights Policy inDecember 2020. Nihon Kohden strives to contribute to a sustainable society by promoting efforts torespect human rights based on this policy.
For further details on the Nihon Kohden Group Human Rights Policy, please refer to our website.

In addition to supporting the Children’s Rights and Business Principles (CRBP), Nihon Kohden provides
products and services that contribute to the protection of children’s rights and ensure their safety
through its business activities. To protect the right to life under the Convention on the Rights of theChild, we have developed and provide electrodes and sensors that are gentle enough for the delicate
skin of low-birth-weight infants to support their health and growth.
We will continue our efforts to protect children’s rights by providing electrodes with friendly designs that
reduce the anxiety of children suffering from diseases and by promoting the adoption of our resuscitation
monitor for neonate to reduce the mortality rate and serious
sequela of newborn babies.
 he United Nations Global Compact, the Convention on the Rights of the Child, the Children’s
T
Rights and Business Principles, the Convention Concerning the Prohibition and Immediate
Action for the Elimination of the Worst Forms of Child Labor (ILO Convention No. 182), etc.

The Vitrode N, Disposable Electrode
The TL-273T/274T, Disposable SpO2 probe

https://www.nihonkohden.com/sustainability/social/rights.html

Basic Approach to the Rights of the ChildAs children are socially vulnerable and their rights are easily violated, special protection and care must
be prepared for them. It is important that the entire society supports them by recognizing that they havethe same rights as adults so that they can expand their future possibilities and grow up healthy.
In support of the UN and ILO conventions* on children’s rights, Nihon Kohden respects the rights ofchildren by not allowing child labor. The Nihon Kohden Group Human Rights Policy defines our basic
approach to respecting the human rights of all people, including children. The Nihon Kohden Sustainable
Procurement Standards explicitly state that we pledge not to engage in child labor, and we are working
to prevent the labor of anyone under the minimum working age throughout our value chain, including ourbusiness partners.

■

The NRM-1300, Resuscitation monitor for neonate,
BreathCue

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

63

Respect for Human Rights

Human Rights Due Diligence

Human Rights Impact Assessment/Human Rights Risk Assessment
In promoting sustainability initiatives, Nihon Kohden engages with all of its stakeholders, including
customers, shareholders and investors, business partners, local communities, and employees.
Therefore, human rights risks are also expected to include a wide variety of issues such as
discrimination or harassment based on race or gender, overwork, child labor, the leak of personal
information, and environmental pollution.
We focused on approximately 30 human rights issues for impact assessment based on the United
Nations Global Compact, the ILO Declaration on Fundamental Principles and Rights at Work, theStakeholder Engagement Program of the Caux Round Table Japan Committee, and the Handbook forManagement that Respects Human Rights formulated by the Japan Business Federation (KEIDANREN).
In the FY2022 analysis, we evaluated these 30 human rights issues by stakeholder on two axes,
severity*1 and likelihood of occurrence*2, based on the results of past questionnaire surveys.

■

Nihon Kohden has established a human rights due diligence structure to identify, prevent, and mitigate
negative impacts on human rights.
In FY2021, as part of our efforts to strengthen the promotion of sustainability management, we conducted
a questionnaire survey about the environment, human rights, quality, and governance at each company of
the Nihon Kohden Group in Japan and overseas, as well as at our suppliers. We have also confirmed thestatus of human rights-related efforts, identified relevant issues, and formulated a three-year road map.
In FY2022, based on the results of the questionnaire survey, we evaluated human rights risks and identified
key human rights issues, taking into account their impact on our business.
Since the situation surrounding human rights is constantly changing, we will continue our efforts to obtainthe latest human rights information and standards, and periodically review our procedures and ourprioritization of issues related to human rights as necessary.

1 Severity: Evaluates the extent of the impact of a human rights risk when it occurs, and the time and cost required to remediate the risk after it occurs.
2 Likelihood of occurrence: Evaluates the likelihood that a human rights risk will occur.

Overview of Our Human Rights Due Diligence52Disclosure of
information

1

Identifying and assessing
negative impacts on
business relationships

Developing a
Human Rights
Policy andRoadmap

4
Tracking implementation
status and results

3
Preventing and mitigating
negative impacts

Human rights awareness and education
Establishing a grievance mechanism

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

64

Respect for Human Rights

Identification of human rights risks
As a result of the evaluation of the impact of approximately 30 human rights issues, we have identified“Excessive and unreasonable working hours” as well as “Sexual harassment, power harassment, andharassment related to pregnancy, childcare, and nursing care, etc.” as the Group’s key human rights issues.
We will regularly reevaluate these critical human rights issues to prevent or mitigate negative impacts.
■

Identified human rights risks

❶

Large

⓫

❿

❼ ❻

❷

❾

❹

We recognize that items that were not identified as key human rights issues are also human rights issues
that need to be monitored on an ongoing basis.
We also evaluated the impact of human rights issues on Customers/Patients, Local communities/Society,and Suppliers/Partners, and identified key human rights issues affecting these groups.

Executives/
Employees❷ Excessive and unreasonable working hours❸ Sexual harassment, power harassment, and harassment related to pregnancy,
childcare, and nursing care, etc.

❸⓬

❶ Sexual harassment, power harassment, and harassment related to pregnancy,
childcare, and nursing care, etc.

❹ Discrimination regarding age, nationality, race, religion, ideology, creed, disability,
gender, sexual orientation, gender identity, etc.
Suppliers/Partners❺ Excessive and unreasonable working hours❻ Forced labor of foreign and immigrant workers, etc.

Severity❺➐ Child labor, night work for young workers, and hazardous work❽

❽ Unfair working conditions and wages❾ Inappropriate management of personal information
Customers/Patients

Executives/Employees
Suppliers/Partners⓫ Accidents and health hazards due to the misuse of products

Customers/Patients
Local communities/SocietyLocal communities/
SocietySmall
Low❿ Lack of safety of products and services due to inadequate quality checks andinspections

Likelihood of occurrenceHigh⓬ Environmental pollution and adverse effects on the living environment

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

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Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

65

Respect for Human Rights

Measures to reduce risks
As measures to reduce and mitigate human rights risks, we will continue to monitor domestic andoverseas Group companies and suppliers, and systematically work to reduce risks.
At domestic and overseas Group companies, we will promote risk reduction efforts concerning
excessive and unreasonable working hours and sexual harassment, power harassment, and harassment
related to pregnancy, childcare, and nursing care, etc., which we have identified as key human rights
issues.

■Risk

MeasureExcessive andunreasonable working
hours

To reduce excessive and unreasonable working hours, such as long working hours andcontinuous work, we started full-scale operation of the Flextime System and Teleworking
System in January 2023 to promote flexible work styles and improve productivity. We also
monitor monthly overtime hours and continuously implement necessary measures toreduce the risk of long working hours, such as issuing reminders and guidance todepartments that exceed the standards related to the long working hours.

Sexual harassment,
power harassment,harassment related topregnancy, childcare,and nursing care, etc.

In addition to conducting harassment education through e-learning for all executives andemployees, we provide harassment training on how to handle harassment reporting andconsultation is conducted annually for all newly appointed managers. By continuing thesetraining programs, we will reduce the risk of harassment.

■ Monitoring by questionnaire survey
As a measure to reduce and mitigate human rights risks, Nihon Kohden has conducted annual
questionnaire survey and monitoring of Group companies and suppliers in Japan and overseas.
Going forward, we will identify domestic and overseas Group companies as well as suppliers with highlevels of risk based on the key human rights issues identified in FY2022 and the results of eachquestionnaire. We will also conduct on-site audits and provide feedback on the results of the surveys
and collaborate to create remediation plans to systematically reduce risks.
For further details on the results of the Supplier Survey in FY2022, please refer to the Ensuring Fair
Trade Practices page.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

66

Respect for Human Rights

Initiatives to Respect Human Rights

Structure
Nihon Kohden’s human rights initiatives are
discussed by the Sustainability Promotion
Committee, which is chaired by the
President, and the results of the discussions
are reported to the Board of Directors. The
Corporate Strategy Division and the Human
Resources Department play a central role in
the implementation of human rights
initiatives within the Company.

■

Deliberative
body

Sustainability Promotion Committee(Key human rights-related matters discussed by
the Committee are submitted to and reported to
the Board of Directors in accordance with theStandards for Procedures for Requesting
Deliberations and Making Decisions.)

Considerations for Social Minorities
Nihon Kohden is committed to eliminating discrimination against LGBT people (sexual minorities) andother social minorities as well as realizing a comfortable and fulfilling work environment that recognizes
diversity.

■

Secretariat

Corporate Strategy Division, Human Resources
Department

Consultation Counter and Internal Reporting System
Nihon Kohden has established a harassment consultation counter and internal reporting system toprovide consultation on human rights issues, including sexual harassment, power harassment, maternity
harassment, and labor issues for Sexual minorities, including LGBT and foreign employees. Employees
can use the consultation counter and reporting system anonymously, and the privacy of the person
requesting the consultation is handled strictly and discreetly to protect them from any unfavorable
treatment. In addition, in order to provide relief to the person requesting the consultation, we conductfact-finding investigations with the consent of the person requesting the consultation themselves. If thefacts are confirmed, we take remedial measures, such as instructing the parties involved to remediate
the situation and to improve the work environment, and providing education to prevent a recurrence.
The information is also shared at quarterly meetings of the Compliance Committee, wherecountermeasures are discussed.
In addition, we are discussing the establishment of a consultation counter for customers and suppliers.

■

Human rights Education and Training for Enployees
Nihon Kohden has conducted workplace training and e-learning education for all executives andemployees to prevent harassment and ensure compliance with labor-related laws and regulations, aswell as to promote understanding of human rights risks and human rights policies.
We also strive to prevent human rights abuses through training for newly appointed managers that
includes a lecture on preventing harassment as well as procedures for responding to harassment reports
and consultations. In addition, we prohibit discrimination on the basis of gender identity and sexual
orientation, and deepen employees’ understanding of LGBT people and other sexual minorities throughthe Company Newsletter.
The number of executives and employees who have participated in human rights training in FY2022 was
4,485.

■In accordance with the Nihon Kohden Group Human Rights Policy, we are working to prevent all formsof discrimination and harassment.
In FY2022, no human rights violations or harassment leading to disciplinary dismissal from employment
occurred.

NIHON KOHDEN REPORT 2023

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Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

67

Respect for Human Rights

In the Supply Chain
Nihon Kohden is committed to respecting human rights throughout the supply chain, including ourbusiness partners. We created the Nihon Kohden Procurement Policy and the Nihon Kohden
Sustainable Procurement Standards and request our business partners to prohibit child labor and forcedlabor.
In order to ensure the compliance with our Nihon Kohden Sustainable Procurement Standards, we strive
to communicate with our business partners. We also ask all our suppliers every three years to answer
our Sustainability Questionnaire that consists of 22 questions in six areas, including human rights. By
their answers to these questions, we have confirmed their awareness and compliance with the Nihon
Kohden Sustainable Procurement Standards. Opinions expressed through the Questionnaire are fed
back to our procurement departments and utilized to realize fair and responsible procurement.

Initiatives through Product Development
Aiming to create an environment in which anyone can save a life by using an AED, Nihon Kohden has
developed AEDs that can be used by people with hearing impairment or deafness, and people whose
native language is not Japanese.
We have obtained the Ear Mark certification from the All Japan Association of Hard of Hearing andLate-Deafened People (Zennancho) for our AEDs with color screens that display illustrations andmessages so that they can be used by people with hearing impairment or deafness. Our AEDs aredesignated as models in schools for the deaf and deployed at municipal facilities. In Japan, where
globalization is rapidly progressing, we have worked to promote the adoption of bilingual AEDs withvoice prompts both in Japanese and English, and to create an environment in which foreign nationals
can also use an AED to save a life in case of emergency.
The AED-3100 is optionally available in 17 languages* and provides voice prompts alternately inJapanese and other languages. This AED is being increasingly adopted by companies that employ alarge number of people whose native language is not English.

■

 anguages supported: English, Chinese, Korean, Taiwanese, Danish, German, French, Italian, Spanish, Brazilian Portuguese, Turkish, Russian, Dutch,
L
Indonesian, Vietnamese, Arabic, and Thai.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Initiatives to Enhance
the Value of Human Capital

Governance

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Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data68

We believe that each employee’s ability to maximize their potential and fully demonstrate their capabilities leads to sustainable personaland organizational growth. We will foster an organizational culture in which diverse human resources can play an active role.

In its Management Philosophy, Nihon Kohden aims to create a fulfilling life for our employees. We
believe that each employee’s ability to maximize their potential and fully demonstrate their capabilities
leads to sustainable personal and organizational growth. We will foster an organizational culture in which
diverse human resources can play an active role. We aim to promote the sustainable growth ofindividuals and organizations, improve productivity, and create new value through human resource
investments including human resource development and workplace environment improvement.
To realize the Long-term Vision, BEACON 2030, it is important for employees working at Nihon Kohden
to have a sense of satisfaction and pride in contributing to healthcare, to act autonomously, and tocontinue to take on new challenges. As a foundation for the Company and employees to meet eachother’s expectations, we introduced a new personnel system, human resources development programs,
and various systems to realize flexible work styles, to increase employee engagement and foster anorganizational culture that leads to more challenges and growth.

Basic Approach to Human Resource Development
In an ever-changing medical environment, Nihon Kohden strives to become the beacon that lights thepath forward to the future of people and healthcare around the world through creating new values withthe philosophy we have upheld since our founding. With strong passion in our hearts, Nihon Kohden
aims at realizing our Long-term Vision for 2030. Human resources are essential for realizing our Longterm Vision and the source of value creation for Nihon Kohden. We will recruit human resources whoshare Nihon Kohden’s Management Philosophy and Long-term Vision, and embody its Core Values(Integrity / Humbleness / Diversity / Initiative / Customer centric / Goal oriented / Creativity). We will
also endeavor to create environments that foster employees with high ethical standards, ambition,
curiosity, and empathy who can autonomously and continuously grow and undertake the challengesof new value creation.

Introduced a New Personnel System
With a view toward realizing our Long-term Vision for 2030, we are promoting the development of
human resources who embody our Management Philosophy, Long-term Vision, and Core Values as wellas aiming to establish a human resource management system that is globally consistent and coherent.
In April 2021, we introduced a new role-based personnel system for managers and established anexpert course to facilitate the promotion of highly skilled persons, in addition to a management course todevelop management level employees.
In April 2023, we also introduced a new personnel system for general employees. Through a role grading
system based on the size of the work roles expected of each employee, we will create opportunities for
ambitious and skilled employees to actively take on challenges and grow themselves. Along with theintroduction of a new personnel system for general employees, we also extended the retirement age to
65 in stages and revised the reemployment system.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

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Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

69

Initiatives to Enhance the Value of Human CapitalInternational Training Program
One of material issues for sustainability to realize our Long-term Vision is to “Foster a corporate cultureof pride in contributing to healthcare,” and we have set “Development of human resources who can
succeed globally” as a KPI for this in the Three-year Business Plan. The target is set at 45 hours or moreof education per person for a cumulative total of 3 years. The results in FY2021 and FY2022 were 18.6
hours and 18.2 hours per person, respectively. A total of 393 people attended leadership training in
FY2022.
The International Training Program is a program designed to provide employees with the experience,
knowledge, and adaptability they will need to be successful globally. Through the program, we provide
employees with the opportunities for long-term study at overseas language schools, on-the-job training
at overseas offices, practical training at overseas research institutions or companies, and study atoverseas universities or research institutions. Due to the COVID-19 pandemic, the program was not
implemented in FY2020 and FY2021. In FY2022, for the first time in three years, four employees studied
abroad for approximately one year.
As of April 2023, 22 foreign employees work at offices in Japan, and 47 Japanese employees* work atoverseas offices.
We will continue to expand and enhance this program to develop more global human resources witheven more advanced skills.
Excluding Japanese employees hired locally.

Voice

Nihon Kohden’s contribution to global medical care I realized throughthe International Training Program (Overseas Challenge Program)I have been in charge of Regulatory Affairs (RA), which involve product registration and compliancewith the laws and regulations in various countries to provide medical equipment internationally.
I applied for this training program because I thought it was essential to have a good grasp of theworldwide situation and to improve my own abilities to comply with regulations, which arebecoming stricter every year, and register products promptly.
During the training, I was involved in RA operations and productregistration applications in the U.S. While discussing andreviewing the U.S. laws and regulations as well as streamlining
business processes with local staff, I learned that information
sharing and close communication between Japan and the U.S.
are of the utmost importance. I also learned firsthand thatproviding the safer and more secure medical equipment requiredby the market will lead to a better future for people and healthcare
and the creation of value.
By utilizing the knowledge and experience gained from thisYuki Onotraining program, I will fulfill my responsibilities to register
Global Regulatory Strategy
Section,products as soon as possible and accurately disseminate
Regulatory Affairs
information within the Company on regulatory trends in various
Administration Department,
Clinical Development &countries. I also aim at contributing to medical care and creating
Regulatory Affairs Division
value for Nihon Kohden.

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70

Initiatives to Enhance the Value of Human Capital■ Management Philosophy Training at Overseas Subsidiaries
We believe that it is important for employees of the Nihon Kohden Group with different backgrounds fromvarious cultures and languages around the world to act in accordance with common goals and Core Values.
Nihon Kohden provided educational materials to the entire group and started an education program about
its Management Philosophy throughout the Group in 2019. Each employee can systematically learn about
the history of the Company’s foundation, Management Philosophy, and Core Values. The program provides
an opportunity for employees to deepen theirunderstanding of the Company culture andrecognize the value and meaning of their jobs. In
addition to the education program about its
Management Philosophy, Nihon Kohden has also
developed various unique measures in each country
to promote understanding of its Core Values andinstill Nihon Kohden’s DNA.
The Global HR meeting has been held biannually
since FY2021, bringing together human resourcesand education managers from each Group company
Core Value Awards held in Brazil
to share each country’s unique measures for
spreading the Management Philosophy and Core
Values, as well as to discuss new employee training
and the fostering of corporate culture. In December
2022, Nihon Kohden established the Core Values
Promotion Project in Japan through an internal open
recruitment system. The project members fromvarious divisions and job categories are studying“how to help employees around the world
understand and practice the Core Values,” and arecreating and developing measures to achieve thisOnline Global HR Meetingsgoal.

As a measure to strengthen governance in terms of human resources, we formulated the Global Human
Resources Management Guidelines in March 2022. All Group companies follow the same policies andstandards for personnel management to avoid personnel management risks. The Human Resources
Department at the Nihon Kohden Head Office and the human resource managers of each Group company
hold individual meetings so that each HR department can function effectively as a partner for thedevelopment of business activities. In addition to making improvements in areas that do not conform to theseguidelines, we will establish a structure for each HR department to collaborate on a global basis throughregular communication.
■

Core Values

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Initiatives to Enhance the Value of Human Capital

Diversity & Inclusion Promotion
PolicyBy respecting diversity and creating a workplace environment in which each individual candemonstrate his/her full potential, we seek to improve job fulfillment, create new value, invigorate
the organization, and enhance corporate value.

Nihon Kohden has established Diversity as one of its Core Values and promotes diversity & inclusion torealize its Long-term Vision, BEACON 2030. We develop the new potential of our teams by leveraging
diversity based on empathy and trust. We respect the individuality of each person and strive to create
workplace environment where a diverse range of people can work with vigor and enthusiasm, regardless ofgender, age, disability, nationality, race, other diverse attributes, values, or work styles.

Promotion of Women’s Participation and Career Advancement
In accordance with Act on the Promotion of Women’s Active Engagement inProfessional Life, Nihon Kohden has formulated an action plan andpromoted the development of a workplace environment in which womencan play an active role. Nihon Kohden has also promoted initiatives torealize a comfortable and fulfilling work environment for not just
women but all employees of Nihon Kohden, so that each employee candemonstrate their abilities to the fullest. We obtained the Women’sParticipation Promotion Act certification mark called Eruboshi from the
Minister of Health, Labour and Welfare in 2021.

■

We formulated an action plan for 5 years from April 1, 2021 to March 31, 2026 and set a target ofincreasing the ratio of female managers to at least 12% and the ratio of male employees taking childcare
leave to at least 30%.
The ratio of female managers in FY2022 was 8.6% in the parent company, which was an increase of 0.7
points from the previous fiscal year. Female executives account for 11.1% of all executives (1 female
outside director and 2 female operating officers).
To encourage male employees taking childcare leave, prior to the revised Child Care and Family Care
Leave Law which is being enforced in stages from April 2022, we worked to raise awareness within the
Company by publishing information on the rate of childcare leave taken in the Company Newsletter,
together with interviews with male employees who have taken childcare leave and an overview of the law
revision. In addition, we have formulated a new guidebook for male employees to help them balancechildcare and work. We have also decided to subsidize a part of an employee’s wage for the first month ofchildcare leave starting from FY2022. As a result of these efforts, the ratio of male employees taking
childcare leave in FY2022 was 38.9%, exceeding the Company’s target. Additionally, we have introduced
a spousal maternity leave system as our unique system to support male childcare, and the combined
take-up rate of this system with childcare leave was 81.4%. We will continue to develop an environment
where any employee who wishes to take childcare leave can do so, regardless of their workplace or job
category.

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72

Initiatives to Enhance the Value of Human Capital

Women’s Activity Promotion Program
To achieve a 12% ratio of female managers, in FY2022, we started the Women’s Activity Promotion
Program for female employees at the leadership level who are candidates for management positions.
The program is designed to help female employees think about their career development, including theoption of management positions, by addressing time and physical factors related to childcare and other
responsibilities and psychological factors related to job experiences and work environment.
First, guidance for supervisors of female employees was provided by the Human Resources Department
and an external expert so that they could talk about their expectations for the target participants in theirown words, effectively support their growth, and follow up on any concerns about their work. Then, thetraining program for the target participants are provided three times by the external expert and they
discussed each other on the themes of career design, improvement of management skills, and life
design.

■Mentor System
Since FY2015, Nihon Kohden has established a mentoring program covering mainly newly appointed
managers and other female employees in mid-career. Mentors with extensive knowledge and industry
experience help them resolve career development issues and support their personal growth. The
program aims to help expand female employees’ horizons and strengthen their internal networks
through dialogue with mentors, as well as develop their humanity, judgment, and leadership skills, andmotivate them to set themselves more ambitious goals. The program has been expanded to include
male employees since FY2021 to support the career development of a larger number of humanresources.

Networking EventsIn FY2021, we have established the Beacon Terrace, an employee exchange meeting led by female
employees who volunteered to participate. By connecting employees across divisions, the group aims to
expand and improve their perspectives and strengthen their company network as well as co-create
value in their respective work while fostering an organizational culture that encourages the active
participation of diverse human resources.
In FY2022, five exchange meetings were held, each on a different theme, such as Job Satisfaction,
Women in Management, and Balancing Work and Childcare. A total of 105 people participated.
We plan to continue to hold these meetings for the free and vigorous exchange of opinions.

■■Exchange of opinions on the theme of balancing childcare and work

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Initiatives to Enhance the Value of Human Capital■

TopicsTargets and Results for Ensuring Diversity in Core Human Resources
リスクの定義Current status

TargetAchievement period

8.6%

12% or more

April 2026

1 female director,
2 female operating
officers

4 persons or more

April 2026

The ratio of female directors andoperating officers

11.5%*4

30% or more

End of June 2030

The ratio of foreign nationals in CXO*3 orhigher positions at overseas subsidiaries

53.3%

50% or more

Maintain the current
status

The ratio of mid-career hires inmanagement positions*1

42.6%

40% or more

Maintain the current
statusHolding a Seminar on Unconscious Bias Management(As of March 31, 2023)

The ratio of female managers*1

In October 2022, Nihon Kohden held a diversity promotion seminar for supervisors entitledUnconscious Bias Management. The seminar has been held three times for the managers ofdomestic sales branches and area services. For the first time, this fourth seminar was attended
by 115 managers in each R&D department. Through a lecture and work on the impact of
unconscious bias on people and organizations, participants were able to confront their own
unconscious bias. It also provided an
opportunity for managers who do not normallyinteract with each other to share their workplacesituations.
We will continue to implement training programs
to promote diversity & inclusion, aiming torealize a workplace environment where eachand every employee can play an active role
freely and vigorously without being constrainedby unconscious bias or prejudice.
Unconscious Bias Management Training

For further details on human resource development, diversity & inclusion promotion, and work-life balance, please refer to our website.

https://www.nihonkohden.com/sustainability/engagement/employees.html

Appointment of female directors andoperating officers*2

1 Employees at the parent company and domestic sales branches.
2 Directors and operating officers at the parent company.
3 C-suite such as CEO, COO, CTO, CFO.
4 As of June 30, 2023.

Differences in Wages between Male and Female Workers
Ratio of Women’s Wages to Men’s Wages in FY2022 There are no gender differences in the Company’s wage
structure or system. However, there are differences
Total workers
69.8%
between men and women in terms of job classifications
and management ratios, resulting in differences in
Permanent employees
74.7%
wages. In order to realize the Company’s goal of “anPart-time and fixed-term
91.2%
organization where each individual can maximize theircontract employees
potential and fully demonstrate his/her full potential,” weParent company only. The figure is calculated in accordance with thewill work on measures to promote diversity & inclusion,
provisions of the “Act on the Promotion of Women’s Active
Engagement in Professional Life” (Act No. 64 of 2015).
such as increasing the ratio of female managers.
■

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Initiatives to Enhance the Value of Human Capital

Reforming Working Styles

Programs to Support Work-life Balance

Nihon Kohden has been implementing Working Style Reforms to enable greater flexibility in work styles,
improve the work-life balance of employees, and maximize results without relying on long working
hours. In FY2022, the annual paid leave usage rate was 49.6%. In addition to legally mandated paid
leave, Nihon Kohden offers its unique paid leave program such as Accumulated Paid Leave Programand Special Paid Leave Program. In FY2022, the number of non-mandated paid leave days taken per
employee was 2.8 days.
The Good Job Award, which gathers examples of initiatives that lead to improved productivity andwork-life balance in each department, has been held annually since FY2019, and we have continuously
improved productivity throughout the Company. There were many applications in FY2022 as well, andthe efforts to revitalize the organization and improve operational efficiency by using the groupware werehighly evaluated. As a new initiative to enhance employee engagement, we also collected episodes ofsatisfaction and pride in contributing to healthcare and shared them with all employees as anopportunity to reaffirm the significance of working for Nihon Kohden. Many episodes were received,
including episodes in which an employee reaffirmed the significance of working for the Company when
they encountered our products in use at a medical institution where the employee or their family werereceiving treatment.

In FY2022, with a view to new ways of working in the post-COVID-19 world, we expanded various
systems such as the Flextime System and Teleworking System to promote flexible work styles. We havealso introduced a system where the Company subsidizes a part of an employee’s wages for the firstmonth of childcare leave. We focus on promoting the use of childcare leave by employees, including
male employees. We are also reviewing various allowances in accordance with the introduction of the
new personnel system.

Trophies for the Good Job Award

Newly Established and Revised Systems in FY2022
Systems and Initiatives

Content

Flextime System

A system where employees can manage their own daily working hours. Employees canbe exempted from working core hours depending on business necessity.

Teleworking System

A system where employees can work at home or a place similar to home regardless of
the reason. This system is available for all employees. The previous Work at Home
System, which was applicable only for specific reasons, was abolished.

Refresh Day

The program aims to encourage employees to make effective use of the time before andafter work for personal relaxation, by setting aside days with shorter working hours.

Abolition of designatedCasual Days

The previous Casual Days (Wednesdays and Fridays) were abolished to allow
employees to work in workplace appropriate attire regardless of the day of the week.

Wage Subsidies during
Childcare Leave

A system where the Company subsidizes a part of an employee’s wages for the firstmonth of childcare leave, in addition to the childcare leave benefits fromunemployment insurance.

Good Job Award ceremony
For further details on programs to support work-life balance, please refer to our website.

https://www.nihonkohden.com/sustainability/engagement/employees/reform.html

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75

Initiatives to Enhance the Value of Human Capital

Employee Satisfaction Survey■ The Ratio of Positive Respondents
Nihon Kohden has set Employee satisfaction as a KPI in order tofoster a corporate culture of pride in contributing to healthcare,
FY2022
FY2021
which is one of material issues for sustainability in the ThreeEmpathy with Vision and Values
year Business Plan. In FY2022, as the survey in FY2021, an
76%
73%
59%
employee satisfaction survey was conducted for all 4,400
Workplace
Motivation
employees of the Nihon Kohden Group in Japan. The ratio ofEnvironment
positive responses was calculated for all 46 items in eight
56%
70%
categories. As a result of company-wide and departmental
CareerLeadership /SupportOrganizational
measures implemented based on the results of the FY2021
Management
survey, we surpassed the FY2021 levels in all eight categories in
72%
78%
FY2022. In particular, Empathy with Vision and Values andOrganizational
Human Relations /Human Relations/Solidarity continued to show higher levels of67%
CultureSolidarity
Evaluation /satisfaction. On the other hand, the ratio of positive respondents
Compensation
for Career Support and Workplace Environment was still
relatively lower, albeit higher than in FY2021. We will share the survey results and employee opinionswith all executives, and continue to implement related measures on both a company-wide anddepartmental basis.

Health Management of Employees
To help our employees realize an optimal work-life balance, we have introduced a regular health examination
system, established a medical office staffed by industrial physicians, and implemented a stress management
testing to ensure that employees can engage in their work in a mentally and physically healthy way. We areworking to build a system that allows us to identify employee health risks early and provide appropriate support.
With the aim of further improving the health of employees and their families, we have increased the amountof partial coverage of expenses for optional tests during annual health examinations (health support
payment) since FY2021, added temporary employees to the list of eligible employees, and expanded thescope of coverage to include family health examinations for dependents of employees.

We will continue to promote initiatives to realize a healthy society. The employee absence rate was 0.5% in
FY2022.
Examples of health support payment
Various cancer examinations, stomach examinations, osteoporosis examinations, hepatitis virus
examinations, abdominal ultrasound examinations, brain examinations, dental examinations,comprehensive medical examinations, smoking cessation outpatient services, etc.

Harassment Prevention Initiatives
Nihon Kohden aims to contribute to the world by fighting disease and improving health with advanced
technology and to continue to be an ethical company that is widely trusted by society. In its EthicalCompany Declaration, the Company declares that Nihon Kohden respects the human rights of all
people, and do not discriminate or commit any acts which infringe on the personality or dignity of anindividual. The Company also strives to prevent harassment by clearly prohibiting it in the Nihon Kohden
Code of Ethics and Conduct, Nihon Kohden Group Human Rights Policy, and Employment Regulations.
In order to prevent harassment and quickly resolve it when it occurs, we have established an internal
consultation counter as well as an external consultation counter which anyone can feel free to consult,and we respond appropriately to consultations. At the time of consultation, we make every effort toensure that the privacy of the consultees and actors is strictly observed, and that they are informed thatthey will not be treated unfavorably in any way for reasons such as the content of the consultation or
their cooperation in confirming the facts. In FY2022, there were 11 harassment consultations and 16
grievance consultations.
In response to the enforcement of the Power Harassment Prevention Law in June 2020, we have also
conducted regular e-learning programs regularly for both general employees and managers to ensure aproper understanding of the revised law and harassment.
We will continue to implement e-learning in FY2023 and aim to complete 100% implementation bystrengthening progress checks. Harassment training is also provided to newly appointed managers toensure proper understanding of harassment and to prevent its occurrence.

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Environment
We strive to realize our environmental philosophy
and a carbon-free society through our business activities and the actions of our employees.

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We enhance the environmental activities through our business activities and the actions of employees to realize asustainable and carbon-free society.

Message from Operating Officer
My role as the Operating Officer in charge of environmental affairs is tostrengthen our environmental activities through our business and corporate
activities and our employees’ actions to realize a sustainable and carbonfree society. As efforts to achieve a carbon-free society expand, theenvironmental issues that companies must address are becoming
increasingly important. In light of the global movement toward carbon
neutrality and the Japanese Government’s declaration that it plans toachieve carbon neutrality by 2050, we have set realization of a carbon-freesociety as one of material issues for sustainability in our Three-year
Business Plan. We have also set medium- to long-term environmental
targets. We are committed to solving environmental issues by leveraging
technologies gained through development and production of medical
equipment and by strengthening our decarbonization efforts.

Environment

Acquisition of SBT Certification
In preparation for obtaining Science Based Targets (SBT) certification, we developed procedures forcalculating our CO2 emissions and made preparations for third-party verification in FY2022. In addition
to promoting energy conservation in our business activities, we have worked to reduce CO2 emissions
throughout our supply chain by providing environmentally friendly products and cooperating with ourbusiness partners in the supply chain.

■

Disclosure based on TCFD recommendations
As addressing climate change is one of the most critical social issues facing global society and one of
the most significant management issues for us, Nihon Kohden expressed its support for the Task Forceon Climate-related Financial Disclosures (TCFD) in May 2022 and disclosed climate-related financial
information in July 2022. Nihon Kohden will address climate change with integrity to realize a carbonfree society as stated in our material issues and disclose information in line with the TCFD
recommendations.
To realize a carbon-free society, we have set “CO2 emissions,” “Number of models and sales ratio ofenvironment-friendly products,” and “Amount of waste from disposal of products and parts,” as KPIs.
We will continue to provide environmentally friendly products and cooperate with our business partners
in the supply chain. We will also identify environmental issues and work on countermeasures through theestablishment of SBT targets.
■

Kenji Furukawa
Operating Officer,
Deputy General Manager of
Global Corporate Administration
Operations,
General Manager of Human
Resources Department

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Environmental Philosophy and Policy

Environmental Philosophy

Established: September 1, 2015

4. Promote environmental education
In regard to environmental issues, we promote appropriate education and educational activities
to deepen the insight of our employees and stakeholders and enable individual productivity
improvements to be linked to environmental improvement activities.

In its business activities and the actions of its employees, Nihon Kohden works towards theconservation and qualitative improvement of the earth’s priceless environment so that all people
can enjoy a healthy environment.

Environmental Policy

Established: April 1, 2017

Based on its Management Philosophy and the Environmental Philosophy, Nihon Kohden will continuously
improve its environmental management systems to enhance its environmental performance. The
environmental policies are as follows:
1. Provide environmentally friendly products
In carrying out development, manufacturing, marketing, after sales service, and support for
medical electronic devices, we provide environmentally friendly products and services.
We contribute to reduction of greenhouse gas emissions and to sustainable use of limited
resources by realizing energy and resource savings, and eliminating the use of hazardous
substances throughout the product life cycle.
2. Promote energy conservation and reduction of waste in business activities
In all of our business activities, we continually work together with our supply chain to introduce
low-carbon and high-efficiency technologies, and improvement activities, strive to promoteenergy conservation, reduce waste through the 3R’s of reduce/reuse/recycle, reducegreenhouse gas emissions over the medium- to long-term, and prevent environmental pollution.
3. Comply with environmental laws, regulations, ordinances, and agreements
In all of our business activities, we comply with all laws, regulations, ordinances, andagreements that concern the environment in Japan and overseas, and carry out our
responsibilities to stakeholders such as responding to issues such as climate change, water
resource protection and conservation of biodiversity as a global company.

Environmental Management System Certification
ISO 14001
The Tomioka Factory obtained ISO 14001:1996 certification in October 2001 and underwent atransitional review for ISO 14001:2004 in October 2005. Our head office and production department
were integrated and registered for joint certification in January 2007. In 2017, we completed thetransition to ISO 14001:2015 and underwent expansion inspections at the Advanced Technology Centerand the Tomioka Second Factory.
The Asaka Office and the Eastern Japan Logistics Center obtained new certification in 2019 and in
January 2022, respectively. Currently, we conduct environmental activities at the Ochiai/Tokorozawa
Site: head office and development divisions; Tsurugashima Site: distribution of consumables and repair
and maintenance of medical electronic equipment; Kawamoto Site: development of consumables andsafety/reliability testing of medical electronic equipment; and Tomioka Site: manufacturing and spareparts supply.

■

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Environmental Management
Medium- to Long-term Environmental Targets <The entire Nihon Kohden Group>

Established: April 1, 2023

In conjunction with the Japanese Government’s declaration that it will pursue carbon neutrality by 2050,
we have set environmental targets for FY2023, FY2030, and FY2050.
We work to realize a carbon-free society by reducing CO2 emissions in our business activities andproviding environmentally friendly products.
Environmental Target for FY2050● We aim at zero greenhouse gas emissions throughout the entire product life cycle (carbon neutrality
by 2050) by reducing greenhouse gas emissions from business activities, providing environmentallyfriendly products, and cooperating with business partners in the supply chain.
Environmental Target for FY2030● We will set environmental targets for FY2030 based on SBT*1 and take action to achieve them withthe aim of realizing carbon neutrality by 2050. (These targets will be revised when the target values
based on SBT are finalized.)(We are aiming at a 46% reduction compared to FY2013 within the scope of ISO 14001 certification.)● As a response to water resource protection, we will set and achieve targets based on anunderstanding of water usage of the entire Nihon Kohden Group.
1 Science Based Targets are greenhouse gas emissions reduction targets set by each company for 5 to 10 years in the future in line with the levels sought
under the Paris Agreement.

Environmental Targets for FY2023

Established: April 1, 2023

<The entire Nihon Kohden Group>
1. A
 s a response to climate change, the following targets have been set based on material issues and
KPIs for sustainability:
1) Reduce CO2 emissions per unit of sales by 15.2% compared to FY2020.
<Target: Scope 1 and 2*2 within the scope of ISO 14001 certification>2) Measure and disclose CO2 emissions for the entire Group by FY2023. <Target: Scope 1, 2, and 3*2>
2. A
 s a response to water resource protection, we will work on the effective use of water resources.

<The scope of ISO 14001 Certification Only>
1. Enhance production efficiency and reduce environmental impact by improving operational efficiency
Reduce environmental impact, including energy use, CO2 emissions, and waste emissions
generated throughout the product life cycle (Scope 1, 2, and 3*2), by setting specific targets in linewith the operations of each site and division and raising productivity.
2. Reduce environmental impact and prevent pollution in our business activities
2-1. E stablish calculation standards in order to achieve third-party certification of CO2 emissions(Scope 3).
2-2. Promote the development of environmentally friendly products and achieve targets based on
product assessment plans and evaluation tables for all newly developed products.
2-3. Reduce defect rates and reduce CO2 emissions in production processes. (Target values are
based on environmental targets at the Tomioka and Kawamoto sites.)
2-4. Manage water usage linked to production volume to reduce the volume of water consumed in
the production process. (Tomioka site)
3. Continuously reduce energy consumption and CO2 emissions in our business activities torealize a carbon-free society
3-1. In consideration of the increase in sales and production, limit the year-on-year increase inenergy use on a per unit basis and CO2 emissions on a per unit basis to 1.6% and 2.0%,
respectively.
3-2. Establish an operational structure utilizing an environmental information management system
to improve the accuracy of data on energy use and resource inputs by the Nihon KohdenGroup and set base data for SBT certification.
4. Contribute to creating a recycling-oriented society
Promote the 3R’s of reduce/reuse/recycle and achieve the following:
In consideration of the increase in sales and production, limit the year-on-year increase in total
waste emissions to 0.8%, improve waste emissions on a per unit basis by 2.0% year-on-year,
and achieve a recycling rate of 97.2% or more.
2 Scope 1: All direct emissions from the Company’s use of fuel.
Scope 2: Indirect emissions from the use of energy (mainly electricity) produced by other companies.
Scope 3: Other indirect emissions in the Company’s supply chain.

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Environmental Management

Environmental Management System (EMS)

Green Procurement■ Group

As part of our efforts to provide environmentally friendly products to the market based on theEnvironmental Philosophy of the Nihon Kohden Group, we promote procurement of parts, materials, andfinished products which have a low environmental impact according to the following policy (green
procurement).

President
Environmental Management
System Evaluation Committee

Environmental Manager

1. Prioritize purchasing from suppliers conducting ambitious environmental conservation activities
while also excelling in areas that include quality, pricing, delivery times, and services

Environmental Committee

2. Prioritize the purchase of toxic substance-free products
Environmental
Proposal Review Board

Subcommittee
Environmental Management
Committee Administration Unit

Internal Environmental Auditor

Non-production Sites

Production Sites

Ochiai / Tokorozawa Site

Tomioka Site

Tsurugashima Site

Kawamoto Site

■ SiteEnvironmental Activities
Manager

Environmental
Activities Promotion Unit
Environmental Management
Administration Unit

For further details on requests to our suppliers, environmental conservation, and evaluation of chemical substances,
please refer to our website.

https://www.nihonkohden.com/sustainability/environment/green.html

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

81

Environmental Management

Targets and Results of the Environmental Management Program
Environmental Goal
1. Enhance production efficiency andreduce environmental impact byimproving operational efficiency

2. Reduce environmental impact
and prevent pollution in ourbusiness activities

Four ISO 14001 certified sites (Ochiai/Tokorozawa, Tomioka, Kawamoto, Tsurugashima). Attainment Rates: ✓✓✓100% attainment ✓✓At least 80% attainment ✓Less than 80% attainment

FY2022 Targets
Reduce environmental impact including energy use, CO2 emissions, and waste emissions
generated throughout the product life cycle (Scope 1, 2, and 3), by setting specific targets in linewith the operations of each site and division and raising productivity.

2-1. Establish calculation standards in order to achieve third-party certification of CO2 emissions
from the provision of environmentally friendly products (Scope 3).
2-2. Promote the development of environmentally friendly products and achieve targets basedon product assessment plans and evaluation tables for all newly developed products.
2-3. Reduce defect rates and CO2 emissions in production processes.
2-4. Manage water usage linked to production volume to reduce the volume of water consumed
in the production process.

3. Continuously reduce energy
consumption and CO2
emissions in our businessactivities to realize a carbonfree society

3-1. In consideration of the increase in production of some specific consumables such as reagentsand electrode pads, limit the year-on-year increase in energy use on a per unit basis to 2.3%
and improve CO2 emissions on a per unit basis by 0.6% year-on-year.
3-2. Collect data on energy use and resource inputs by overseas Group companies and set basedata for SBT certification.

4. Contribute to creating a
recycling-oriented society

Promote the 3R’s of reduce/reuse/recycle and achieve the following:
In consideration of the increase in production of some specific consumables such as reagents andelectrode pads, limit the year-on-year increase in total waste emissions and waste emissions on a
per unit basis to 2.5% and 1.1%, respectively, and achieve a recycling rate of 97.1% or more.

Attainment
Rate

Result✓✓At each site (Ochiai/Tokorozawa, Tomioka, Kawamoto, and Tsurugashima), we
worked to improve productivity based on operational targets and promoted reduction
in environmental impact.

✓

We achieved the targets in three of the four themes.
2-1. We established calculation rules for third-party certification of CO2 emissions.
We have also been reviewing the evaluation criteria for environmentally friendly
products based on life cycle assessment.
2-2. We achieved the targets established based on the product assessment plans
and evaluation tables through our efforts to develop new environmentallyfriendly products that conserve resources, save energy, and recycle resources.
2-3. We achieved the target. The initial failure rate was lower than the previous fiscal
year at both the Tomioka site and the Kawamoto site.
2-4. We are setting annual targets for the amount of water required for reagent production,
as well as monitoring water intake and water discharge and properly managing themso that they do not exceed the planned amounts at the Tomioka site.

✓✓

3-1. W e promoted the expanded use of renewable energy sources to reduce CO2
emissions. We also improved the operation of air conditioning systems andproduction equipment at each business site in response to the Cool Biz and Warm
Biz campaigns as well as renovated facilities in accordance with our medium- tolong-term plan. We achieved the targets, reflecting a 3.3% reduction in energy use
on a per unit basis and a 6.9% reduction in CO2 emissions on a per unit basis
compared to the previous fiscal year.
3-2. We have completed collecting energy and input resource data from overseas
Group companies. In order to set science-based targets, we are in the process of
finalizing the basic data.

✓✓✓

We achieved the targets. The total waste emissions decreased by 3.6% and thewaste emissions on a per unit basis decreased by 4.2% compared to the previous
fiscal year due to improved production efficiency and reuse of resources, and therecycling rate was 97.4%.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

82

Disclosure Based on TCFD Recommendations
Endorsement of TCFD Recommendations
Nihon Kohden defined sustainability key issues (material issues) to be addressed through business andcorporate activities. The Company also incorporated these non-financial targets into its Three-year
Business Plan, BEACON 2030 Phase I, in order to contribute to addressing global social issues andSDGs. As addressing climate change is one of the most critical social issues facing global society andone of the most significant management issues for us, Nihon Kohden expressed its support for therecommendations by the Task Force on Climate-related Financial Disclosures (TCFD) in May 2022 anddisclosed related information in July 2022. We will address climate change with integrity to realize acarbon-free society as stated in our material issues and disclose information in line with the TCFD
recommendations.
For the full text of the Nihon Kohden Group’s disclosure in line with the TCFD
recommendations, please refer to our website.

https://www.nihonkohden.com/sustainability/environment/tcfd.html

Notice regarding disclosure of information in line with TCFD recommendations (press release)https://www.nihonkohden.com/news/22071202.html

Governance
To promote sustainability, Nikon Kohden has established the Sustainability Promotion Committee andSustainability Promotion Meeting. In July 2021, Nihon Kohden has also established the Advisory Board
consisting of external experts to incorporate outside perspectives on sustainability activities including
measures to address climate change.
The Sustainability Promotion Committee holds a meeting twice a year and formulates the policies anddirections including measures on climate change. The president, who is the chairman of the Sustainability
Promotion Committee, has the authority to evaluate and manage measures to mitigate climate change,
and regularly reports to the Board of Directors about the progress and evaluation of the annual plan. The
Board of Directors supervise the Company’s measures on climate change. The Sustainability Promotion

Meeting is held four times a year to establish and promote annual plans based on the policies anddirections formulated by the Sustainability Promotion Committee and reports on the progress of thoseplans to the Sustainability Promotion Committee. Based on its Three-year Business Plan, Nihon
Kohden’s management has set material issues and KPIs related to sustainability and assigned
departments for each materiality. Members of the Sustainability Promotion Meeting, who represent the
departments in charge of each materiality, report on the progress of sustainability activities andexchange opinions with other members at regular meetings. The Advisory Board Meeting is held twice ayear to discuss and advise on overall sustainability promotion, including actions on climate change.

Strategy
To understand the impact of climate change on business activities in Japan and internationally, Nihon
Kohden has analyzed risks and opportunities mainly by management and members of the Sustainability
Promotion Committee and Sustainability Promotion Meeting. Based on analysis of a 1.5°C and 2°Cscenario as well as a 4°C scenario, we have identified transitional and physical risks and opportunities
over the short-term to FY2023, medium-term to FY2026, and long-term to FY2029.* We have also
examined the business impact and possible countermeasures.
 2°C scenario is to limit the global average temperature increase to 2°C above pre-industrial levels.
A
A 1.5°C scenario is to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit thetemperature increase to 1.5°C above pre-industrial levels.
A 4°C scenario estimates the global average temperature increase to be 4°C above pre-industrial levels.

NIHON KOHDEN REPORT 2023

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Human Resources

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Enhancing Information Disclosureand Shareholder Return

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to the Community

Financial andCorporate Data

83

Disclosure Based on TCFD Recommendations

The outlook with a 1.5°C to 2°C scenario - Potential impact of climate change on our businessIn the medical industry, demand for environmentally friendly products and digital health solutions will
increase because of strengthening laws and regulations and increasing customer awareness of theneed to realize a carbon-free society. Costs are expected to increase as a result of the need to meetthis demand, but further business opportunities are expected if our response is handled properly.
In our analysis of the 1.5°C to 2°C scenario, we made assumptions about how the strengthening of carbon-freepolicies in each country and region in response to climate change would affect the industries we are involved with.
With the development of a carbon-free society, we can expect tighter regulations in each country and region,
including carbon taxes and emissions trading. Since our medical equipment manufacturing is mainly assemblyline production, we do not emit a large amount of greenhouse gases (GHG) on our own, but our suppliers doemit a certain amount of GHG in their parts manufacturing process. If carbon pricing and environmental
labeling, including parts, become mandatory in the future, and the impact of such labeling expands, there is arisk that it will become difficult to provide medical equipment to customers at stable prices. In particular, theintensification of these initiatives in Europe may affect our ability to achieve the 45% overseas sales ratio
targeted in our Long-term Vision, BEACON 2030.
In addition, as we work to reduce CO2 emissions, we plan to introduce equipment and technologies using
renewable energy and energy conservation, as well as relocate to high-efficiency offices. We expect thecorresponding costs to continue to increase. On the business front, we expect an increase in R&D and capital
investment to realize digital health solutions with low environmental impact, as well as higher prices for raw
materials such as resins used in product housings and restrictions on the use of certain substances. In addition,
there is a risk of lost sales opportunities if the development of environmentally friendly products, for which
demand is expected to grow in the future, is delayed, or if we are unable to meet the conditions for tender on
medical equipment from an environmental perspective.
On the other hand, the increase in the cost of dealing with a carbon-free society is expected to be temporary, andtherefore costs are expected to decrease in the long-term perspective. For example, cost reductions from reducing
part counts, optimizing components, improving productivity and shortening lead times can all be expected. As oneof material issues and KPIs for sustainability, we have set a target of the sales ratio of environmentally friendly
products to be 20% or more (cumulative total for three years from FY2021), and are strengthening development ofenvironmentally friendly products. We believe that by expanding our efforts to realize a carbon-free society, we can
avoid worsening financing conditions and divestment by financial institutions and investors.
■

The outlook with a 4°C scenario – Potential impact on our business due to climate change
In a society where carbon-free policies are not progressing well and extreme natural disasters areintensifying, it is expected that the healthcare system will need to be strengthened, especially in theareas of disaster medicine and emergency medicine. On the other hand, the procurement of parts, thesupply of products, and sales and service activities may be disrupted significantly.
In our analysis of the 4°C scenario, it is assumed that carbon-free policies will not be strengthened in eachcountry and region in response to climate change, average temperatures will continue to rise, and physicalrisks will increase as natural disasters become more severe.
The Nihon Kohden Group operates its business activities throughout Japan and around the world. In theevent of natural disasters and shortage of water or other resources associated with climate change, or the
spread of infectious diseases in each region, the procurement of parts, the supply of products, and sales
and service activities may be disrupted, which could have a profound impact on the operating results andfinancial condition of the Nihon Kohden Group.
On the other hand, in the medical field where we provide our products and services, the importance ofdisaster medicine and emergency medicine is likely to increase even further due to the increase in natural
disasters and infectious diseases caused by climate change. Society demands that medical equipment,
which is vital to human life, continue to be supplied smoothly and operate stably even in the event of alarge-scale disaster. We have contributed to enhancing healthcare systems around the world by providing
defibrillators that are robust and durable even in times of disaster, telemetry systems and ventilators that
contribute to infection control. In recent years, by providing IT system solutions and promoting the Digital
Health Solution vision, we have been working to improve productivity in clinical practice and reduce indirect
CO2 emissions through the effective use of medical resources.
■

Assumptions for eachscenario analysis

1.5°C to 2°C scenario

4°C scenario

Social dimensions

We assume that social changes, as part of a
global carbon-free initiative which limits theaverage temperature increase to 1.5 to 2°C, will
result in changes in laws and regulations, andtechnological innovation, affecting ourbusiness.

We assume that extreme disasters andinfectious diseases will increase and affect ourbusiness due to a 4°C increase in the averagetemperature, even though the Paris Agreement
and various policies to reduce greenhousegases will be implemented.

Reference

Transition risks: IEA (International Energy Agency): STEPS (The Stated Policies Scenario),
NZE (Net Zero Emissions by 2050), SDS (Sustainable Development Scenario)
Physical risks:  IPCC (Intergovernmental Panel on Climate Change), SSP2 (Shared Socioeconomic
Pathways), RCP4.5, RCP6.0, RCP8.5 (Time period is 2030 to 2050)

NIHON KOHDEN REPORT 2023

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Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

84

Disclosure Based on TCFD Recommendations

1.5°C to 2°C scenario
Major Risks and Opportunities

4°C scenario
Business
Time
Impact horizon

Proposed Countermeasures

Introduction of carbon tax and emissions trading
Risk: Loss of sales opportunities in environmentallydeveloped markets
Risk: Deterioration in earnings due to higher
carbon prices
Risk: Legislation for use of renewable energy andreduction of electricity use

Longterm・ Use of renewable energy to reduce CO2
emissions・ Adoption of energy-efficient production
facilities

Increase in demand for environmentally friendly
products
Risk: Loss of sales opportunities due to notmeeting customer requirements
Opportunity: Sales opportunities due to increased
demand for relevant products

Shortterm・ Strengthening the development ofenvironmentally friendly products・ Selection of low environmental impact
parts and delivery methods

Increase in demand for digital health solutions
with low environmental impact
Risk: Increase in investment costs for R&D andcapital equipment
Risk: Decrease in competitiveness whencompanies with superior climate changesolutions enter the market
Opportunity: Business opportunities throughintegration and analysis of vital sign data andclinical support applications

・ Reduction of CO2 emissions throughpromotion of telemedicine and tele-ICU
Short- tomedium- ・ Creation of business opportunities
term
through new initiatives such as
automatic control of medical equipment

Higher prices for raw materials such as resin
used in product housings
Risk: Higher production costs・ Adoption of common platforms in product
Short- todevelopment and production processes
longCost reduction by reducing part counts
・
 
term
and optimizing components

Stakeholder assessment
Risk: Deterioration of financing conditions anddivestment by financial institutions andinvestors

・ Establishment of environmental targets
such as CO2 emissions reduction
Medium・ Improvement of evaluation by external
termorganizations through enhanced
information disclosure

Major Risks and Opportunities: Gradual increase in impact

Business
Time
Impact horizon      : Not changing much

Proposed Countermeasures

Extreme natural disasters such as torrential rains
and floods
Risk: Significant disruption to product supply,
sales and service activities
Risk: Disruption to health and safety of employees
and their families・ Business Continuity Plan (BCP) for theentire supply chain・ Reducing risks by securing raw
Short- tomaterial suppliers, supply systems,
and transportation routes; providing
longterm
support to suppliers; and purchasingfrom multiple suppliers・ Relocation of offices with high floodrisk

Insufficient supply of water and other resources
Risk: Stagnation in production of products andconsumables that use water and otherresources

・ Reuse of water resources discharged in
Short- tothe production of hematology reagents
longDevelopment and provision of products
・
 
term
that use less water resources

Increase in infectious diseases
Risk: Suspension of production, delays in supply
chain, disruption of healthcare systems
Opportunity: Enhancement of healthcare systems
for disasters and emergencies

・ Expansion of product supply, sales andservice structures
・ Focus on medical equipment and DX in
medical fields
・ Promotion of multi-plant operation

Shortterm

NIHON KOHDEN REPORT 2023

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Human Resources

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Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

85

Disclosure Based on TCFD Recommendations

Risk Management

Metrics and Targets

For further details on the overall risk management of the Nihon Kohden Group’s operations, please referto the Strengthening Risk Management page.
A cross-organizational TCFD response project was initiated and has been operated since October 2021
to identify and assess climate change risks affecting the Nihon Kohden Group. Climate change risks andresponse measures identified in the TCFD response project have been discussed and approved by the
Sustainability Promotion Committee and its progress has been managed and reported to the Board of
Directors.
Nihon Kohden considers the risk of losses due to interruption of operations caused by disasters or
accidents and the risk of losses due to occurrence of environmental pollution, etc., caused byinsufficiency in reduction of environmental impact or prevention of environmental pollution to be its
business risks. In the event of natural disasters and shortages of water or other resources associatedwith climate change, terrorism, war, or the spread of infectious diseases in each region, the procurementof parts, the supply of products, and sales and service activities may be disrupted, which could have an
impact on the operating results and financial condition of the Nihon Kohden Group. We procure raw
materials and parts used for our products not only in Japan but also around the world. In the event of a
supply issue at a supplier, we take measures, including the consideration of alternative parts, to ensurethat the production of our products is not affected. In addition, we have formulated a BusinessContinuity Plan (BCP) and conduct periodic company-wide education and training to ensure thecontinued supply of products and services in the event of a large-scale earthquake.

To realize a carbon-free society, which is one of material issues in the environment for sustainability, we
set KPIs for CO2 emissions, the number of models of environmentally friendly products and the sales
ratio of such products, and the amount of waste from disposal of products and parts.
To reduce CO2 emissions, we have set Medium- to Long-term Environmental Targets and arepromoting initiatives to achieve them. Furthermore, as part of our efforts to promote energy conservationin our business activities, we have been gradually switching to renewable energy sources since FY2017,at those of our major offices with high-voltage power contracts. In FY2022, we changed the electricity
contracts for all buildings at the Nishiochiai Office as well as the Advanced Technology Center, theKawamoto Office, the Asaka Office, and 53 domestic sales branch offices. We aim to switch to 100%
renewable energy sources at all of our domestic offices to by 2030.
To address the risk of flooding at our offices and improve energy efficiency, we relocated three domestic
offices in FY2022 and plan to relocate 10 domestic offices by FY2023. We will also set the targets andpromote to strengthen measures to improve water use efficiency at our production sites.
In addition, as a contribution to society through its business activities, Nihon Kohden focuses on
manufacturing environmentally friendly products, such as energy-saving, compact and lightweight
products, and aims to achieve a cumulative sales ratio of 20% or more for environmentally friendly
products for three years. In FY2022, we achieved a sales ratio of 18.2% for environmentally friendly
products.
In terms of the amount of waste from disposal of products and parts, we aim at 8% reduction of
products and parts retirement in FY2023 compared to FY2020. In FY2022, we reduced them by 0.7%
compared to FY2020.
We will continue to provide environmentally friendly products and cooperate with business partners inthe supply chain to clarify our environmental issues and promote measures through the establishment of
SBT targets.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

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Governance

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Human Resources

Quality

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

86

Disclosure Based on TCFD Recommendations

FY2020

FY2021

Water Intake (ｍ3)

FY2022

FY2020

FY2021

FY2022

Scope 1（t-CO2）

4,684

4,797

4,539

Water supply

Scope 2（t-CO2）

7,610

5,874

4,828

Greenhouse gas emissions（t-CO2）

12,294

10,672

9,367

Energy Saving

Total input energies（GJ）

246,771245,486

240,393

Waste Reduction

Total waste emissions（t）

710.5

759.4

732.5

Water Discharge (ｍ3)In-house recycling rate (%)

96.9

97.3

97.4

Sewerage

38,40637,26539,7387

4

4Rivers

8,775

9,007

8,186

0

0

0

47,181

46,27247,923Global Warming
Prevention

Environmentally
Friendly Products

New registration of environmentally friendly
products (registrations)

The figures for Global Warming Prevention and Energy Saving are the combined totals for the Scope of ISO 14001 certification, including the parent
company, and domestic sales branches.
The figures for Waste Emissions are for the scope of ISO 14001 certification, including the parent company. The figures for Environmentally Friendly
Products are the number of product series launched in that fiscal year.
Scope of ISO 14001 certification: Ochiai and Tokorozawa site, Tomioka site, Tsurugashima site, Kawamoto site, Fujioka site. (The Fujioka site was
excluded from the scope of ISO 14001 certification in FY2021 due to the closure of the office.) (The Ochiai and Tokorozawa site includes the EasternJapan Logistics Center from FY2021.)

57,81160,85862,657

Surface water of rivers and lakes

0

0

0

Other (such as rainwater, seawater,
well water, spring water)

0

0

0

57,81160,85862,657

Total amount

Other (such as watering the groundsurface)
Total amountFY2020

FY2021

FY2022

The figures for Water Intake and Water Discharge are the combined total for the scope of ISO 14001 certification, including the parent company, and thedomestic sales branches.

NIHON KOHDEN REPORT 2023

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Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

87

Water Resource Conservation
Initiatives for Using Water Resources in Water-stressed Areas
Nihon Kohden has identified water-stressed areas in each region in which the Company operates andevaluated risks accordingly. We utilized the Aqueduct Water Risk Atlas published by the World
Resources Institute (WRI) and have confirmed that 18 sites are in relatively water-stressed areas
compared to other regions. Although no water-related issues have occurred in water-stressed areas at
this time, we will continue to appropriately comply with local regulations and work on proper andefficient use and safe supply of water.
We are currently collecting data at some overseas non-production sales subsidiaries where we have notbeen able to obtain actual values.
Americas

U.S., Mexico, Brazil (6 sites)

EuropeGermany, Italy, U.K., Spain (5 sites)

Asia

India, UAE, South Korea, China (7 sites)

Water Management Plan
Nihon Kohden’s mother factory, Nihon Kohden Tomioka, which produces reagents for hematology
analyzers, accounts for 46% of the Company’s total water intake. Nihon Kohden Tomioka strives tomake effective use of water resources by setting annual targets for the amount of water required forreagent production, as well as monitoring water intake and water discharge and properly managing
them so that they do not exceed the planned amounts.

TopicsNihon Kohden has set the realization of a carbon-free society as one of material issues forsustainability in its Three-year Business Plan and strengthened its efforts. To solve this issue,
we are working to improve productivity in each business process, promote energy conservation
measures, expand the introduction of renewable energy, and replace company vehicles withhybrid vehicles. We aim to achieve a sales ratio of 20% or more for environmentally friendly
products, and we achieved 18.2% in FY2022. We will continue to provide environmentallyfriendly products, recycle existing products, and develop new products that are easy to recycle.
By introducing a new system to manage energy data and other environmental information atdomestic and overseas sites as well as cooperating with our business partners in the supply
chain, we will continue to reduce CO2 emissions over the entire life cycle of our products. We
will also further promote measures to solve environmental issues such as climate change andresource recycling.

NIHON KOHDEN REPORT 2023

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to the Community

Financial andCorporate Data

88

Providing Environmentally Friendly Products
As part of its contribution to society through its
business activities, Nihon Kohden is committed
to reducing our environmental impact bydeveloping environmentally friendly products.
We launched 4 new environmentally friendly
products in FY2022.

■ The NRM-1300, Resuscitation Monitor for Neonate, BreathCue■ The ORG-2100, Wireless Central Unit

The NRM-1300 is a medical equipment that monitors parameters specific to neonatal
resuscitation, such as electrocardiogram (ECG), arterial blood oxygen saturation (SpO2),
and respiratory flow (Flow)/ airway pressure (Paw). It provides visual supports to medical
professionals with flashing LED lights to ensure proper positive pressure ventilation andassistance in breathing for newborns in suspended animation who cannot breathe
spontaneously immediately after birth. As this product is compact, lightweight, andpowered by batteries that are universally available regardless of the power supply
conditions in each country, it can be used in a wide variety of installation and operating
environments. Through the widespread use of this product, we aim to reduce neonatal
mortality and serious aftereffects, thereby contributing to the achievement of the SDGs.

The ORG-2100 is a medical equipment that wirelessly receives vital signs such as ECG
and blood pressure of up to 16 patients in a single unit and transmits them to a central
monitor. This product analyzes vital signs received to determine if an alarm is necessary
and transmits alarm information to the central monitor. It supports medical institutions toimprove operational efficiency by linking with hospital information system, and sharing
vital signs and alarm information on a network.

Environmental Considerations

Environmental Considerations

The NRM-1300 is 90.7% smaller and 64.6% lighter per unit compared to earlier
models. The number of parts used was reduced by 72.8%. Power consumption
was also reduced by 3.3%, resulting in energy conservation. Lead-free solder was
adopted to comply with the RoHS Directive.

The ORG-2100 is 92.1% smaller and 88.6% lighter per unit compared to earlier
models. By reviewing the raw materials used, the recyclability rate of the productincreased to 82.6% from 60.0% for the earlier model. Lead-free solder was
adopted to comply with the RoHS Directive.

NIHON KOHDEN REPORT 2023

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Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
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Financial andCorporate Data

89

Enhancing Information
Disclosure andShareholder Return
Our management is highly transparent through appropriate
information disclosure and we strive for stable long-term returns
to shareholders.

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Enhancing Information Disclosure and Shareholder Return

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

90

Our management is highly transparent through appropriate information
disclosure and we strive for stable long-term returns to shareholders.

Shareholder Returns Policy

Shareholder and Investor Engagement

Nihon Kohden recognizes that returning profits to shareholders is one of management’s most importanttasks. The basic policy on distribution of profits and dividends is to maintain stable and continuous
dividend payments while retaining necessary reserves for future business expansion. The priority for
distribution of profits is: i) investment necessary for future business expansion used in R&D investments,
capital investments, M&A or alliances, and development of human resources, ii) dividends, and iii) sharebuybacks. The Company sets a target consolidated dividend payout ratio of 30% or more. Sharebuyback is considered in a flexible manner, taking into account comprehensively future businessdeployment, investment plan, retained earnings, and stock price level. Based on its businessperformance in FY2022, the Company decided to increase the full-year dividend by 21 yen from theprevious forecast to 61 yen. Additionally, the Company acquired ¥999 million of own shares in May andJune 2022 and cancelled 500 thousand shares of treasury shares in June 2022.

■ General shareholders’ meeting
We hold our general shareholders’ meeting on a date that does not conflict with those of othercompanies to ensure that shareholders can attend. On the day of the meeting, we exhibit medical
devices and explain the features to shareholders. At the shareholders’ meeting held in June 2023, we
exhibited a fully automatic AED, a resuscitation monitor for neonate, and a mask-type ventilator. We
have posted a video of the presentation by the Chairman on the day on our website.
For foreign shareholders, convocation notices (including a business report), notice of resolutions, andvoting results are translated into English and posted on the external website.

Information Disclosure Policy
The Nihon Kohden Corporate Charter of Conduct requires that we aim for highly transparent management
by fair and proper disclosure of corporate information to shareholders and society. We disclose Nihon
Kohden Group-related information in a timely, appropriate, fair, and easy-to-understand manner. We seek
to deepen understanding and trust from all stakeholders and gain appropriate evaluation of the Company.

Earnings presentations / Business strategy briefing
Nihon Kohden holds financial results briefings (interim and full-year results) for securities analysts andinstitutional investors and organizes teleconferences (1st and 3rd quarters) where we discuss theCompany’s performance and strategy. Videos of the presentations, materials, and Q&A summaries areposted on our website and made available to all shareholders and investors. From May 2020, allfinancial results briefings were held by conference calls or online in order to prevent the spread of
COVID-19. In March 2023, the Company held a small online meeting with an officer and persons incharge of the ventilator business.
■

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Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

91

Enhancing Information Disclosure and Shareholder Return

Company briefings and events for individual investors
We hold Company briefings for individual investors so that they cansee our management strategy and business operations and extend
their long-term support. In FY2022, we held one in-person meetingand two online meetings while taking into account the status of
COVID-19. We also updated Nihon Kohden’s video series on our
website.

Relationship with Shareholders and Institutional Investors
The President, general manager of the Corporate Strategy Division, and persons in charge of IR havemeetings with institutional investors in Japan and overseas by making visits to investors, accepting visits
as requested, and by phone.

■■

In-person meeting held in Osaka with thecooperation of the Securities Analysts Associationof Japan

Online meeting distributed by Nikko Investor
Relations

TopicsStatus of Dialogue with Shareholders
In FY2022, the Company had around 250 meetings with institutional investors, including around
100 meetings with shareholders. The topics of the dialogues were quarterly financial results andforecasts, as well as medium- to long-term growth strategies, capital policies, and initiatives tostrengthen corporate governance and embrace sustainability.

Relay Investor Feedback to Management
The Corporate Strategy Division, which bears responsibility for IR activities, relays the views ofshareholders and investors through dialogue to the management and relevant departments forsharing and using information.

Comments from individual shareholders
Nihon Kohden conducts an annual shareholder survey with the aim of improving communications
with shareholders and bolstering our IR activities. Some of the comments we received in thelatest survey are as follows:●

Although the global situation is severe, I hopethat all employees will make a concerted effort
to support the development of the Company.

●

As the Company that invented the pulse
oximeter, I look forward to the Company’scontribution to society and medicine.

●

I hope the Company will accelerate the expansion of its
business globally.

●

I expect the Company to secure earnings and pay stabledividends.

●

The shareholder newsletters are simple and easy to read.

●New products were well explained with pictures for better
understanding.

For further details on the status of dialogue with shareholders and institutional investors, please refer
to our website.

https://www.nihonkohden.com/sustainability/engagement/investors/communication.html

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

92

Enhancing Information Disclosure and Shareholder Return

Number of Dialogues with Institutional andIndividual Investors in FY2022

Change in Dividend per Share andConsolidated Dividend Payout Ratio

Consolidated Payout Ratio・■ Dividend per Share■ Special Dividend ■ 70th Anniversary Commemorative Dividend

●

(yen)
80

(%)
160

67
60

55

40

20

35

35

35

29

33

33

35

35

27

30

15

●

61

120
●

13

20

80

39

35
26

40

24

30％

0

0

●

Nikkei Average (yen)35,0005,000

The Master Trust Bank of Japan, Ltd. (trust account)

13,480

16.02

Number of responses to annual shareholder survey:

Custody Bank of Japan, Ltd. (trust account)

4,567

5.42

572

Saitama Resona Bank, Ltd.

4,193

4.98

Company briefings for individual investors (3 sessions):
Live viewing: Approx. 280 viewers,
In-person: Approx. 80 attendees

State Street Bank and Trust Company 505103

2,887

3.43

JP Morgan Chase Bank 385151

2,341

2.78

Nihon Kohden’s introduction video series for individual investors:

JP Morgan Chase Bank 380055

1,998

2.37

Approx. 700 views

AVI Global Trust PLC

1,771

2.10

RBC IST 15 PCT NON LENDING ACCOUNT - CLIENT ACCOUNT

1,523

1.81

MUFG Bank, Ltd

1,325

1.57

Nihon Kohden Employee Shareholding Association

1,272

1.51

Treasury Stock

Financial Institutions

4,104k shares

30,678k shares

4.7%・
17,5002,500

Individuals andOthers9,932kshares

11.2%
0

0
’13

’14

’15

’16

’17

’18

’19

’20

’21

’22

’23

Effective April 1, 2015, each share of common stock was split into two shares. For the above
share prices, trading values before the split date have also been adjusted retroactively.

Number of Shares
Shareholding Ratio(Thousands of(%)
shares)Approx. 250 meetings including approx.
100 meetings with shareholders

Ownership Breakdown (as of March 31, 2023)

Nihon Kohden (yen)Shareholders

Meetings with institutional investors and securities analysts:

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

Change in Share Price

Major Shareholders (as of March 31, 2023)

Foreign Investors

40,059k shares

45.4%

34.8%

Financial Instrument
Business Operators

717 k shares

0.8%

Other Domestic
Companies

2,737k shares

3.1%(Note) The above list excludes Nihon Kohden’s treasury stock of 4,104 thousand shares. Each shareholding ratio is calculated excluding treasury stock.

TopicsIn December 2022, Nihon Kohden was selected as the highest AAA grade for its website in the2022 All Japanese Listed Companies’ Website Ranking Survey by Nikko Investor Relations Co.,
Ltd. In this survey, Nikko Investor Relations evaluated 169 items from the following three pointsof view: understandability, usability/accessibility, and variety of
information. The survey targeted the websites of all 3,926 listedcompanies and was announced as a ranking.
Nihon Kohden will continue to enhance the Company IR site andwork to improve IR activities by disclosing timely and easy-tounderstand information to shareholders and investors.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

External Evaluation

Sustainability

Governance

Quality

Human Rights/
Human Resources

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data93

We are working to enhance our corporate value by strengthening our efforts to promote sustainability and enhancing information disclosure.

External Evaluation
FTSE4Good Index Series, FTSE Blossom Japan, and FTSE Blossom Japan Sector
Relative Index*1
Created by the global index provider FTSE Russell, the FTSE4Good Index Series,
FTSE Blossom Japan, and FTSE Blossom Japan Sector Relative Index aredesigned to measure the performance of companies demonstrating strong
Environmental, Social and Governance (ESG) practices. FTSE Russell evaluatescompanies in the areas of corporate governance, health and safety, anticorruption,and climate change, and its constituent companies meet various criteria related toenvironment, society, and corporate governance.
Nihon Kohden, as a result of assessment according to the FTSE Russell ESG rating
criteria, has been a constituent of the FTSE4Good Index Series and the FTSE
Blossom Japan for four consecutive years since 2017 and for two consecutive
years since 2022, respectively.
The Company has also become a constituent of the FTSE Blossom Japan Sector
Relative Index for two consecutive years since 2022, which is designed by FTSE
Russell to measure the performance of Japanese companies demonstrating
relatively excellent ESG practices in each sector.
■ 

MSCI ESG Leaders Indexes*2
The MSCI ESG Leaders Indexes are ESG comprehensive index
created by MSCI and designed to represent the performance ofcompanies that have high Environmental, Social andGovernance (“ESG”) ratings relative to their sector peers.
Nihon Kohden has been selected as a constituent of the MSCI ESG Leaders Indexes for eight
consecutive years since 2016.
■

Environment

The MSCI Japan Empowering Women (WIN) SelectIndex*2
The MSCI Japan Empowering Women Index (WIN) isa stock price index created by MSCI and iscomposed of companies that promote high level of gender diversity and women’s participation andadvancement in the workforce. Nihon Kohden has been selected as a constituent of The MSCIJapan Empowering Women (WIN) Select Index for four consecutive years since 2020.
■ 

ISS ESG Corporate Rating
The ISS ESG Corporate Rating is a sustainability rating by ISS ESG, theresponsible investment arm of Institutional Shareholder Services Inc., aworld’s leading proxy advisory firm. The rating is based on ESG(Environment, Social, and Governance) factors.
Nihon Kohden has been rated as “Prime” in the Health Care Equipment &Supplies industry in 2021.

■

CDP Rating in the Areas of Climate Change and Water Security
In December 2022, Nihon Kohden received a B rating from the Carbon
Disclosure Project (CDP), a non-governmental organization that works
internationally to disclose information on environmental assessments, inthe areas of Climate Change and Water Security.

■

1F TSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Nihon Kohden Corporation has been
independently assessed according to the index criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series,
FTSE Blossom Japan and FTSE Blossom Japan Sector Relative Index. Created by the global index and data provider FTSE Russell, the Index isdesigned to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. FTSE4Good IndexSeries, FTSE Blossom Japan and FTSE Blossom Japan Sector Relative Index are used by a wide variety of market participants to create and assess
responsible funds and other products.
2T he inclusion of NIHON KOHDEN CORPORATION in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do
not constitute a sponsorship, endorsement or promotion of NIHON KOHDEN CORPORATION by MSCI or any of its affiliates. The MSCI indexes are theexclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

94

Nihon Kohden’sContributions to theCommunity
We strive to be a good corporate citizen respecting all
cultures and customs through active contribution to thecommunity.

REGIONAL CONTRIBUTIONNIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Nihon Kohden’s Contributions to the Community
Social Contribution to Local Communities
Greening Promotion Activities in Brazil
Nihon Kohden Brazil has designated every August as Sustainability Month. In FY2022, they distributed
tree seeds of various species native to Brazil to all employees and business partners in Brazil. The
President of Nihon Kohden Brazil commented, “With deforestation in the Amazon becoming an issue,
it is necessary for all people to work together to protect the Amazon forests and achieve sustainability.
Therefore, we wanted to share the importance of environmental protection not only with our
employees but also with our business partners. This little green initiative has also given us a sense ofpeace of mind.”
The Nihon Kohden Group will continue to promote environmental conservation activities as part of ourcontribution to society.

■

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

We strive to be a good corporate citizen respecting all cultures and customs through active
contribution to the community.

Donations to Support Earthquake Victims in Turkey and Syria
Nihon Kohden Group extends its deepest sympathies and condolences to all those who have suffereddevastation in Turkey and Syria due to the earthquake in February 2023.
Nihon Kohden Group donated ¥5 million through the Japan Committee for UNICEF to support thevictims of the earthquake.
We sincerely hope for swift recovery of the people and areas affected by the disaster.

■Received the Medal with the Dark Blue Ribbon for Our Support in Response to the Situation in Ukraine
In October 2022, Nihon Kohden received a Medal with Dark Blue Ribbon from the Japanese
Government for its donation to the Japan Committee for UNICEF (United Nations Children’s Fund) in
March 2022.
This donation was to support the humanitarian crisis in Ukraine*. The Medal with Dark Blue Ribbon isawarded to individuals and corporations who have donated private funds for the public good, and wasreceived through the Committee in December 2022.

■

Our support in response to the situation in Ukraine (Donation of relief fund) (Press release)https://www.nihonkohden.com/news/22033001.html

Tree seeds of Brazilian were origin
distributed

95

Business partners helping to grow the seeds that were distributed

Certificate of Merit for the Medal with Dark Blue Ribbon

We received the Medal with Dark Blue Ribbon through the Japan
Committee for UNICEF.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

Financial andCorporate Data
We aim at further growth while maintaining andstrengthening our stable financial base, even in thechanging business environment.

96

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

97

Message from Director Responsible for Accounting
Role of Director Responsible for Accounting
I believe that my role as the Director responsible for Accounting is tocontinuously enhance the corporate value of Nihon Kohden from afinancial perspective. The Director responsible for Accounting is also incharge of maintaining an appropriate balance between growth strategy
and a solid financial foundation while supporting the operation of risk
management and internal controls.
Aiming to further strengthen group governance throughout the entire
Nihon Kohden Group, I have promoted implementation of the Global
Business Management Policy and started to develop a sophisticatedcompany-wide risk management framework. In addition, through thepromotion of corporate digital transformation (CDX), we will reinforce thebusiness structure from a financial perspective, and further strive inmanagement to improve corporate value through sustainable growth.
I hope to enjoy your continued support in the future.

Additionally, the Company implemented share buybacks amounting to ¥999 million from May to June
2022 and cancelled 500 thousand shares of treasury shares in June 2022.

Setting of Financial Indicators

Tadashi Hasegawa
Corporate Director,
Executive Operating Officer,
General Manager of Global
Corporate Administration
Operations,Chief Compliance Officer

Approach to Cash Use and Profit Distribution Results
Nihon Kohden recognizes the return to shareholders of cash generated through its business activities as
one of its most important management policies. Regarding the distribution of cash, our basic policy is tomaintain stable and continuous dividends for all shareholders over the long term, bearing in mind the
securing of internal reserves necessary for future business expansion. Our priorities are i) investment
necessary for future business expansion used in R&D investments, capital investments, M&A or
alliances, and development of human resources, ii) dividends, and iii) share buybacks. We aim for a
consolidated dividend payout ratio of 30% or more. Also, our fundamental policy is to flexibly consider
buybacks of the Company’s shares, comprehensively taking into account factors such as futurebusiness expansion, investment plans, the level of cash held in reserve internally, and share price trends.
The year-end dividend per share for FY2022 increased by 21 yen from the initial forecast of 20 yen to 41
yen. As a result, the full-year dividend was 61 yen per share, including the interim dividend of 20 yen.

We use consolidated return on equity (ROE) as one of its management indicators to maximize corporate
value and shareholder value, and have set a target of 10% in our Three-year Business Plan, BEACON
2030 Phase I. The ROE for FY2022 was 10.6%.
To practice cost-conscious management, we have adopted NPV and IRR as investment decision criteria
and started evaluating new investment projects in FY2022. We set our target IRR at 10%, which
exceeds our cost of capital. The Board of Directors will verify the progress and effectiveness ofinvestment projects. To respond to increased demand due to the COVID-19 pandemic and the shortageof semiconductors, we have increased inventories of finished goods and parts. It has resulted in a longer
cash conversion cycle, 235 days in FY2022. In FY2023, we will optimize the inventory level and aim at
190 days, a similar level to FY2021. The medium-term target is 150 days, considering uncertainties in
the global business environment.
In order to achieve the target, we will focus on improving profitability by implementing the Three-year
Business Plan. We will also improve working capital by reducing cash conversion cycle, including
measures such as reduction of inventories and faster debt collection, as well as establishing investment
decision criteria and enhancing shareholder return.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Human Rights/
Human Resources

Quality

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

98

Financial / Non Financial Summary
April 2010 to March 2020

Long-term Vision

April 2021 to March 2030

The CHANGE 2020

BEACON 2030

April 2010

Medium-term Business Plan
(Millions of yen unless otherwise stated)

April 2013

SPEED UP Ⅲ

April 2017

Strong Growth 2017

April 2021

BEACON 2030 PhaseⅠ

TRANSFORM 2020

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Net sales

120,718

132,538

153,194

160,803

165,522

166,285

174,249

178,799

185,007

199,727

205,129

206,603

Operating income

12,027

13,484

17,547

15,921

16,43813,585

14,517

15,044

15,50327,09430,992

21,120

Income attributable to owners of parent*1

7,621

9,151

12,346

11,142

10,516

9,149

9,154

11,191

9,854

18,24323,435

17,110Current assets*2

82,742

95,181

106,515

118,389

112,929

119,235

120,687

132,211129,020

156,140

171,875

172,500

Current liabilities*2

30,71439,02841,24845,65442,90145,00644,601

48,34640,31950,60850,80446,568

Total assets*2

99,403116,800

130,917

146,755

144,270

152,806

157,910

169,717

167,786

193,030

210,201

216,728

Net assets

67,911

76,25688,51299,304

97,671

103,887

109,355

116,087

121,774

138,986

156,381

167,604

Cash flows from operating activities

7,559

13,1899,383

12,505

10,765

11,356

10,843

9,819

9,217

13,94525,699(2,513)

Cash flows from investing activities(2,338)(6,959)(4,421)(4,689)(7,802)(6,344)(3,346)(3,258)(4,607)(2,946)(4,303)(7,647)

Free cash flow

5,220

6,229

4,962

7,815

2,962

5,011

7,497

6,561

4,609

10,99921,396(10,161)

Fiscal year
Business results

Financial position

Cash flows

Cash flows from financing activities(2,726)(1,174)(3,436)(3,267)(9,488)(3,517)(4,628)(3,074)(3,054)(3,007)(7,300)(7,485)

Cash and cash equivalents

21,304

26,68328,80834,11327,28328,56031,28534,69735,91344,35660,09543,988Net income (Yen)*3

173.49208.31281.03126.83120.12106.81106.92131.43115.72214.21276.51203.28Dividends (Yen)*4

44.0

52.0

70.0

70.0

35.0

35.0

35.0

35.0

35.0

55.0

67.0

61.0

5,583

6,424

7,108

5,745

5,910

6,466

7,226

7,243

6,731

6,357

5,711

6,200

Per share information

Other
R&D costs
Number of employees (Persons)

4,057

4,360

4,495

4,616

4,776

4,934

5,031

5,169

5,357

5,531

5,639

5,751

Number of shares issued at end of year (Thousands of shares)*5

45,76545,76545,76545,76589,73089,73089,73088,73088,73088,73088,73088,230ROE (%)

11.7

12.7

15.0

11.9

10.7

9.1

8.6

9.9

8.3

14.0

15.9

10.6

Operating income margin (%)

10.0

10.2

11.5

9.9

9.9

8.2

8.3

8.4

8.4

13.6

15.1

10.2

Dividend payout ratio (%)

25.4

25.0

24.9

27.6

29.1

32.8

32.7

26.6

30.2

25.7

24.2

30.0

Key performance indicators

1 The figures for FY2014 or earlier periods represent net income.
2 Since the beginning of FY2018 ended March 31, 2019, the Company has applied the partial amendments to the Accounting Standard for Tax Effect Accounting(ASBJ No. 28, February 16, 2018). These accounting standards apply to FY2017 figures retrospectively.

3 Effective April 1, 2015, each share of common stock was split into two shares. The Company calculates net income per share on the assumption that the stock split was conducted at the beginning of FY2014.
4 Effective April 1, 2015, each share of common stock was split into two shares. The figures for FY2014 or earlier periods represent dividends per share based on the number of shares before the said stock split.
5 Effective April 1, 2015, each share of common stock was split into two shares.

NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Human Rights/
Human Resources

Quality

Governance

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

99

Financial / Non Financial Summary

Net Sales/Overseas Sales Ratio■ Net Sales(Billions of yen)
200

174.2

100

26.5

178.7

27.2

185.0

27.4

199.7

31.3

Operating Income/Operating Income Margin

205.1¥ 206.6
billion

(%)
40

33.5

13.6

20

0
FY2018FY2019FY2020

FY2021

15

8.4

8.4

14.5

15.0

15.5

27.0

15.1

30.9

(Billions of yen)

(%)

20

30

20

FY2018FY2019FY202014.0
10■ Capital Investment

9.9

10

8.3
23.4

7.2

6.7

6.3

5.7

9.1

11.1

9.8

FY2017FY2018FY2019FY2020

3.0

3.5

3.5 3.5

3.5 3.2

3.0

3.4■ Depreciation¥ 3.6
billion0
FY2017FY2018FY2019FY2020

FY2021

FY2022FY2018FY2019FY2020

FY2021

FY2022¥ 167.6
billion

138.9

121.7

0
FY2017

FY2022■ Net Income per Share

276.51150

106.92131.43

FY2018FY2019FY2020

FY2021

FY2022■ Dividends per Share■ Special Dividend

Payout Ratio (consolidated)■ 70th Anniversary Dividend

(Yen)
100

¥ 203.28

(%)
40

33
27

50

115.7235

0FY2017

156.3

Dividends per Share/Payout Ratio (consolidated)

214.21

3.4 3.3

0

FY2021Net Income per Share

(Yen)
300

5

109.3

116.0

167.7

10.6％

0

¥ 6.2
billion

5

100

210.2
193.0
169.7

■ Net Assets¥ 216.7
billion

18.2

¥ 8.2
billion

7.2

157.9

0

FY2022(Billions of yen)
10

(Billions of yen)
10

8.6
10

Capital Investment/Depreciation■ R&D Costs(Billions of yen)200

¥ 17.1billion20

10.2％

FY2021■ Total Assets

15.9

0FY2017

Total Assets/Net Assets

ROE

(%)

¥ 21.1billion0

FY2022

R&D Costs

8.3■ Income Attributable to Owners of Parent

Operating Income Ratio(Billions of yen)
30

34.3％

0
FY2017■ Operating Income

Overseas Sales Ratio

Income Attributable to Owners of Parent/ROE

35

30
35

26
55

30%

67
24

20

15
13

35

39

FY2020

FY202120¥ 61

0FY2017FY2018FY2019FY2020

FY2021

FY20220
FY2017FY2018FY2019FY2022NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Human Rights/
Human Resources

Quality

Governance

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

100

Financial / Non Financial Summary

Number of Employees (Consolidated)/Percentage
of Employees Working outside Japan■ Number of Employees   

5,169

5,751

5,639

5,531

5,357

Persons

(%)

(%)

40

10

8.6％
28.5

27.7

26.4

24.9

28.4

20

5

Employment Rate of Persons with Disabilities
(%)
5

28.5%
3,000

Employment Rate of Persons with
Disabilities*1

Percentage of Female Managers

Percentage of Employees Working outside Japan(Persons)
6,000

5,031

Percentage of Female Managers*1

6.7

7.2

7.9

7.6

7.3

4
3
2
1

0

0
FY2017FY2018FY2019FY2020

FY2021

Total Energy Consumption(Barrels of Oil Equivalent (BOE))*2■ Production Sites
(kL)
4,000

3,789

4,124
3,725

0

4,114

FY2018FY2019FY2020

FY2021

4,089 kL

3,655

■ Volume of Greenhouse Gas Emissions

2,316

2,511

(t-CO2)(t-CO2/¥100 million)

14,00020

12,743

12,25912,905

2,000

2,220

2,113 kL

8.19

8.36

7.49

6.59

FY2018FY2019FY2020

FY2021

FY2022

FY2021FY2018FY2019FY2020

FY2021

99.3
661.7

In-House Recycling Rate

500

99.3
638.9

96.9
710.5

97.3
759.4

97.4％
732.5 t

487.9

50

5.88

t-CO₂/¥100million

0
FY2017

FY2022

(%)

99.2

0
FY2017FY2019

100

9,367
10

8.7

0

FY2020

2.35％

(t)
1,000

12,2947,000

FY2018■ Total Waste Emissions

t-CO2

2,243

2.36

Total Waste Emissions/
In-House Recycling Rate*3

CO2 Emissions per Unit of Sales

10,6722,269

FY2017

FY2022

Volume of Greenhouse Gas Emissions/
CO2 Emissions per Unit of Sales*2

Non-production Sites

1.99

2.39

0
FY2017

FY20221.62

2.14

FY202200
FY2017FY2018FY2019FY2020

FY2021

FY2022

1 The percentage of female managers and employment rate of person withdisabilities are the combined totals for the parent company and thedomestic sales branches.
2 The figures for total energy consumption and volume of greenhouse gas
emissions/CO2 emissions per unit of sales are the combined totals for thescope of ISO 14001 certification, including the parent company, and thedomestic sales branches.
3 The total waste emissions/in-house recycling rate for FY2020 are
combined totals for the scope of ISO 14001 certification, including theparent company, and the Eastern Japan Logistics Center.

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Human Resources

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Enhancing Information Disclosureand Shareholder Return

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Financial andCorporate Data

101

Overview by Product Category (Consolidated)
Physiological Measuring
Equipment
Sales% change YoY¥ 43.2 billion +9.1%

This category includes electroencephalographs(EEG), evoked potential and electromyogrammeasuring systems, electrocardiographs (ECG),
polygraphs for cath lab, diagnostic information
systems, related consumables such as recording
papers, electrodes and EP catheters, andEEG-1260
maintenance services.
ElectroencephalographFY2022
Sales by
Product
Category

CNS-2101
Central Monitor(Billions of yen)

39.6

Sales of polygraphs for cath lab and EEGs achieved double-digit
growth and sales of ECGs also increased, while sales ofdiagnostic information systems decreased.

25

FY2021

FY2022

Sales of EEGs increased favorably, while sales of ECGs
decreased in all regions because there was an impact on local
production due to the lockdown in Shanghai.

Medical
Devices

47.3%

52.7%

Physiological
Measuring
Equipment

21.0%
Treatment Equipment
Sales% change YoY¥ 44.4 billion +2.5%

This category includes defibrillators, AEDs
(Automated External Defibrillators), ventilators,
pacemakers, anesthesia machines, cochlear
implants, related consumables such as AED
pads, batteries, ablation catheters, andmaintenance services.

International

50

45.1

43.3

44.4

Sales increased favorably, as sales of AEDs showed strong
growth in all regions, supported by steady demand. Sales ofventilators and defibrillators decreased, as demand to treat
COVID-19 patients has settled down.

MEK-9200
Automated Hematology Analyzer

18.4%
Japan

Japan

Sales decreased due to lower sales of ventilators and AEDs.
Demand for ventilators to treat COVID-19 patients has settled
down and replacement demand for AEDs was in trough. Sales ofdefibrillators, and sales of ablation catheters in other treatment
equipment increased favorably.

(Billions of yen)

Other Medical
Equipment

Sales decreased compared to FY2021 when demand increased.
Sales in all regions decreased on a local currency basis but sales in
the Americas and Europe increased on a yen basis.

This category includes hematology
analyzers, clinical chemistry analyzers,
ultrasound diagnostic equipment,
consumables such as test reagents, andinstallation and maintenance services.

21.5%
AED-3250
Automated External Defibrillator

Sales% change YoY¥ 80.8 billion -4.8%(Billions of yen)
100

78.8

84.8

80.8

FY2021

FY20220

FY2020Patient Monitors

39.1%

Treatment
Equipment

Sales decreased due to a reactionary decline of transmitters andtelemetry systems compared to FY2021 when demand increased.
Sales of clinical information systems increased favorably and salesof consumables such as sensors also increased.

Patient Monitors

50

International

FY2020International

0Consumables
and Services

Japan

37.5

43.2

Japan

50

This category includes patient monitors
such as central monitors, bedsidemonitors, wireless monitors, remote
access software and other equipment,
clinical information systems, related
consumables such as electrodes andsensors, and maintenance services.

Sales of installation and maintenance services for medical
devices and hematology instruments increased favorably, whilesales of locally purchased products decreased.

25

Other Medical Equipment
Sales% change YoY¥ 38.0 billion +2.3%(Billions of yen)

50

38.1

37.1

38.0

FY2020

FY2021

FY202225

FY2020

FY2021

FY2022

International

0

Sales of hematology analyzers and reagents increased
significantly in Latin America and Europe.

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Financial andCorporate Data

102

Management’s Discussion and Analysis
Business Environment

Sales by Region

The overall global economy showed signs of recovery due to the Living with COVID-19 policies taken byeach country. However, the global economic outlook remained uncertain due to higher prices of components
and resources, supply chain disruption, and tight monetary policy in the U.S. and Europe. In Japan, theburden on medical institutions fluctuated in accordance with the number of COVID-19 patients. Changes tothe healthcare system to respond to emerging infectious diseases and work style reforms for medical staff
were also implemented in conjunction with the medical treatment fee revision that occurred in April 2022.
Medical equipment companies were strongly required to provide solutions which contribute to infection
control measures as well as improving the quality and efficiency of medical care. Internationally, overall
demand for medical equipment which contributes to easing medical staff workload remained steady amid
the growing shortage of nurses especially in the U.S. and the U.K.

■

Review of Operations
FY2022 was the second year of the Three-year Business Plan, BEACON 2030 Phase I. The Company
formulated the basic policies of the plan as follows: i) Embracing sustainability across business andcorporate activities, ii) Ensuring strict compliance and strengthening group governance, iii) Improving the
profitability of existing businesses and making strategic upfront investments, and iv) Establishing global
SCM and strengthening core functions of operations.
The Company introduced a patient monitor specialized for neonatal resuscitation and an EEG amplifier
with enhanced network capabilities in Japan, and an ECG with built-in wireless LAN both in Japan andinternationally. In the U.S., the Company launched mid-range bedside monitors and a mask-type
ventilator. In certain overseas markets, the Company also introduced a mid-range ventilator developedby Nihon Kohden OrangeMed, Inc, in the U.S. Internationally, Nihon Kohden strengthened its businessstructure. The Company decided to reorganize its U.S. subsidiaries into a holding company structure,
and acquired Software Team Srl in Italy, a software development company which collects data andalarms from medical devices such as patient monitors and forwards to mobile phones. As a result of
these measures, overall sales for FY2022 increased 0.7% over FY2021 to ¥206.6 billion.

Japan
Nihon Kohden concentrated on enhancing sales activities which match each market; the acute care
hospital market, the small and mid-sized hospital market, and the clinic market. The Company also
focused on consumables and services business as well as strengthening its marketing and service
capabilities, creating customer value propositions that contributed to improving medical safety, patient
outcomes, and operating efficiency. Domestic sales decreased due to a reactionary decline in demandfor patient monitors and ventilators, large numbers of which had been installed to treat COVID-19
patients in FY2021. On the other hand, sales of Physiological Measuring Equipment and hematology
instruments increased favorably as the number of testing and surgical procedures showed a recovery
trend and capital expenditure by medical institutions resumed. Sales in the university and clinic market
increased, while sales in the public hospital and private hospital markets decreased. Sales of AEDs in
the PAD markets also decreased. As a result, domestic sales decreased 0.4% over FY2021 to ¥135.7
billion.
International
Sales increased on a yen basis due to yen depreciation, while sales in all regions decreased on acomparable basis. It was affected by a reactionary decline in sales of Patient Monitors and ventilators
compared to strong demand in FY2021 in regions where the spread of COVID-19 had resurged, as wellas the Shanghai lockdown from the end of March to the end of May 2022. In the Americas, sales in the
U.S. increased on a yen basis. Sales in Latin America decreased, mainly in Mexico and Chile. Sales in
Europe decreased on a comparable basis and increased on a yen basis. Sales in France and Spaindecreased, while sales in Germany and the U.K. increased favorably. Sales in Asia & Other decreased
due to the reactionary decline in Egypt, India, and Vietnam where sales showed strong growth in
FY2021. Sales also decreased in China, where patient monitors were installed due to the COVID-19
resurgence in December 2022, but not enough to cover the impact from the Shanghai lockdown. As aresult, international sales increased 3.0% over FY2021 to ¥70.8 billion.

■

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Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

103

Management’s Discussion and Analysis

Cost of Sales, SGA Expenses, Operating Income, and Income Attributable to
Owners of Parent Company
Cost of sales increased 4.8% over FY2021 to ¥100.6 billion. The gross profit margin deteriorated by 1.9
percentage points to 51.3% due to higher material and component prices and a change in the sales mix,
gross profit on sales decreased 2.9% over FY2021 to ¥105.9 billion. SGA expenses increased 8.6%
over FY2021 to ¥84.8 billion due to the strengthening of human resources, as well as an increase intraveling expenses resulting from the normalization of sales and service activities. The ratio of SGA
expenses rose 3.0 percentage points to 41.1%. R&D costs increased ¥0.5 billion year on year to ¥6.2
billion. The ratio of R&D costs to sales increased 0.2 percentage points to 3.0%. As a result, operating
income decreased 31.9% over FY2021 to ¥21.1 billion. Income attributable to owners of parent
decreased 27.0% over FY2021 to ¥17.1 billion.

Assets, Liabilities, and Equity
AssetsTotal assets at the end of FY2022 increased by ¥6.5 billion compared to the end of the previous fiscal
year. Current assets increased by ¥0.6 billion from the end of the previous fiscal year, mainly due to adecrease in securities (negotiable certificates of deposit) resulting from the purchase of inventories andfixed assets, as well as an increase in inventories of raw materials and products to ensure a stablesupply. Fixed assets increased by ¥5.9 billion compared with the end of the previous fiscal year, mainly
due to an increase in land and construction in progress for the acquisition of land for a new
Tsurugashima plant and construction of a new plant at Nihon Kohden India Pvt. Ltd.
■

Liabilities and Equity
Total liabilities decreased by ¥4.6 billion compared to the end of the previous fiscal year, mainly due to adecrease in accrued income taxes. Total net assets increased by ¥11.2 billion compared to the end of
the previous fiscal year, mainly due to an increase in retained earnings. Equity ratio increased by 2.9
percentage points to 77.3%.

■

Cash Flows
Funds used in operating activities totaled ¥2.5 billion (revenue of ¥25.6 billion in the previous fiscal year),This is mainly due to income before income taxes of ¥24.7 billion, an increase in inventories of ¥8.5
billion, an increase in trade receivables of ¥4.7 billion, a decrease in trade payables of ¥2.4 billion, andincome tax payments of ¥10.3 billion. Funds used in investing activities increased by ¥3.3 billion yearon-year to ¥7.6 billion. This is mainly due to the purchase of land, property, plant and equipment such as
promotional products, amounting to ¥7.4 billion. Funds used in financing activities increased by ¥0.1
billion year-on-year to ¥7.4 billion. This is mainly due to cash dividends paid of ¥5.7 billion and purchaseof treasury shares of ¥1.0 billion. Cash and cash equivalents at the end of FY2022 were ¥43.9 billion,
down ¥16.1 billion from the end of the previous fiscal year.

■

ROE
ROE in FY2022 was 10.6%, remaining above the target of 10%. The decrease from 15.9% in theprevious fiscal year was due to a decline in the net profit margin as a result of lower operating income.

■NIHON KOHDEN REPORT 2023

Nihon Kohden’s Value

Sustainability

Governance

Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

104

Company Information
Company Overview (as of March 31, 2023)

Subsidiaries: 31 companies (as of March 31, 2023)

Common NameNIHON KOHDEN

Official NameNIHON KOHDEN CORPORATION

Incorporated

August 7, 1951

Capital Stock¥7,544 million

Net Sales¥206.6 billion(Consolidated)(Fiscal year ended March 31, 2023)

Type of Business

Development, production, and salesof medical electronic equipment

Employees

5,751 persons(Consolidated)

Stock Overview (as of March 31, 2023)
Number of Shares Authorized

197,972,000 shares

Number of Shares Issued

88,230,980 shares

Number of Shareholders

6,326 persons

Sales and Promotion
Nihon Kohden America, Inc. *Nihon Kohden Mexico S.A. de C.V.
Nihon Kohden Latin America S.A.S.
Nihon Kohden Do Brasil Ltda.
Nihon Kohden Europe GmbH
Nihon Kohden Deutschland GmbH
Nihon Kohden France Sarl
Nihon Kohden Iberica S.L.
Nihon Kohden Italia S.r.l.
Nihon Kohden UK Ltd.
Nihon Kohden Singapore Pte LtdNKS Bangkok Co., Ltd. *Nihon Kohden Korea, Inc.
Development, Production, Sales, and Sales Promotion
Nihon Kohden Tomioka Corporation
Nippon Bio-Test Laboratories Inc.
Beneficks Corporation
Shanghai Kohden Medical Electronic Instrument Corp.
Defibtech, LLC
Nihon Kohden OrangeMed, Inc.
Nihon Kohden Malaysia Sdn. Bhd.
Nihon Kohden India Pvt. Ltd.
Nihon Kohden Middle East FZE
Nihon Kohden Firenze S.r.l.
Development of Medical Electronic Equipment and Software
Nihon Kohden Digital Health Solutions, Inc. *Advanced Medical Predictive Devices, Diagnostics and Displays, Inc. *Neurotronics, Inc. *Nihon Kohden Innovation Center, Inc. *Software Team Srl

Group General Affairs and Staffing
E-Staff Corporation
E-Staff Insurance Services Corporation
Other
RESUSCITATION SOLUTION, INC *Europe8

Subsidiaries

Americas11

Subsidiaries

Asia

7

Subsidiaries

Japan

5

Subsidiaries

In April 2023, Nihon Kohden America, Neurotronics, Nihon Kohden Digital Health Solutions, Advanced Medical
Predictive Devices, Diagnostics and Displays, and Nihon Kohden Innovation Center converted from corporations
to limited liability companies in each applicable U.S. jurisdiction. The Company also dissolved Resuscitation
Solution. Additionally, NKS Bangkok changed its name to Nihon Kohden (Thailand).

NIHON KOHDEN REPORT 2023

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Sustainability

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Quality

Human Rights/
Human Resources

Environment

Enhancing Information Disclosureand Shareholder Return

Nihon Kohden’s Contributions
to the Community

Financial andCorporate Data

105

Company Information

Editorial Policy

Nihon Kohden Website

Disclaimer

Nihon Kohden issues the integrated report inorder to communicate to stakeholders in areader friendly format. The Company aims atachieving a sustainable society and enhancing
its corporate value through its businessactivities.

Corporate Website
Please visit the following website for corporate
information about Nihon Kohden.

This report contains not only past or present facts related to
Nihon Kohden, but also forward-looking statements
including plans and forecasts as of the time of publication.
Forward-looking statements are assumptions or
determinations based on information available at the timesuch statements were made. Due to changes in various
conditions, the results of future business activities or events
may differ from those described in such statements.
We appreciate your kind understanding.

https://www.nihonkohden.com/index.html

Scope of Report
Organization This report covers 32 companiesof the Nihon Kohden Group, i.e.,
Nihon Kohden Corporation andits 31 consolidated subsidiaries(as of March 31, 2023).
Periodfrom April 1, 2022 to March 31,
2023*

Sustainability Page
Please visit the following website for Nihon Kohden’svarious activities to promote sustainability.

Publication Date

https://www.nihonkohden.com/sustainability.html

September 2023
(next publication: expected to be issued in September 2024)

How to publish

 artly including information on our activities performed before or afterP
the aforementioned period.

Integrated Report
Please visit the following website for past Nihon Kohden
Reports, CSR Reports, and Environmental Reports.
https://www.nihonkohden.com/sustainability/report-library.html
NIHON KOHDENREPORT 2023

Nihon Kohden has abolished the conventional production ofbound printed matter and limited it to publication on its
website since 2021. This is because, based on the current IT
environment with the Internet in place, we examined how topublish this report from the perspective of protecting limited
paper resources and reducing CO2 emissions during delivery
and transportation.

Published by
Corporate Strategy Division, Nihon Kohden Corporation