Medium-term Management Planfrom FY2018 to FY2020『NSD ～ TO THE NEXT STAGE』
Original Plan Published on May 10, 2018

Copyright 2018 NSD CO., LTD.

Approach to new technologies
NSD will celebrate the 50th anniversary on April 2019, the second year of this medium-term
management plan. During the past 50 years, we have greatly appreciated our customers’ support, in awide range of sectors, such as financial, service, manufacturing, and telecommunications.
Looking ahead to the future, aggressive efforts towards developing our capabilities in new technologies
are key words, as stated in NSD’s management philosophy “always explore state-of-the-art ITtechnology”. Recent trend of digitalization is progressing rapidly and our customers are trying toincorporate these trend and change even their business model. Under these circumstances, in order torespond to these customers’ movements, we need to explore and develop new technologies which areessential for our customers, in the system development which is NSD’s core business. Also instrengthening the system services business, we develop new businesses through learning newtechnologies and creating solutions by collaboration with user companies, as well as through M&A andstrategic alliance.
Although the digital revolution makes the performance accumulated by the Japanese IT industry
antiquated, NSD takes this change as an opportunity, and aims to be a company which push forward“the Future for Human and IT” to contribute for sustainable society based on our business origin, themutual-beneficial with employees, customers and shareholders. With these things in mind, weformulated our three year medium-term management plan which starts on April, 2018.
NSD will pay commemorative dividend for 50 th anniversary on the Fiscal year ending March
31, 2020 as gratitude for all the support from shareholders. NSD intends to continue our efforts
to contribute to development of the society. Thank you.
May 10, 2018
NSD CO., LTD
President & CEO
Yoshikazu Imajo
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Results of Previous Medium-term Management Plan (Policies)
Strengthen the NSD brand power by enhancement of the custom made1.software development

NSD has enhanced the custom made software development to strength the NSD
brand name as IT strategic partner with customers in various sectors.
NSD increased Net Sales in this business from 341 billion yen to 454 billion yen,also achieved 10.0% of the annual growth rate during these 3 years.

2.Enhance the software development as a service solution
NSD has promoted enhancement of the software development as a service solution, and has
established multiple strong pillars of income to reform business structure.
Healthcare IT
HR IT
Educational IT:Started to provide CAReNA*1, as a telehealth care management service tosupport lifestyle modification by medical fitness in collaboration with medicalcorporation.
:Enhanced HR package promotion and seeking synergy effect by M&A.
:Started to provide electronic-portfolio system, ManaBOX*2 foractive and independent learning of students.

3. Actively seeking M&A opportunities
Promote M& A actively in the software development as a servicesolution.
・Signed the strategic alliance with Pro-ship on November, 2017
・Acquired Japan Job Posting Service on December, 2017.
*1)Sy s tem that medical trainer prov ides exerc is i ng guidance for each us ers bas ed on their phy s ical andmental conditions .
*2)Sy s tem that s tudents can inv ent their learning proces s by regis te r in g all relate d items s uch asas s ignmen t, learning proces s , deliv e ra bl e s and apprais al.

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Results of Previous Medium-term Management Plan (Figures)【Original Plan】【Results】(¥ Million)

Results

FirstYear

SecondYear

ThirdYearFirst Year

SecondYear

ThirdYear

2015/3

2016/32017/3

2018/3

2016/32017/3

2018/3

Net Sales

42,99046,50048,00050,00051,58555,23458,080OperatingIncome

5,144

5,600

5,800

6,100

6,378

7,173

7,918

Operating Income
margin(%)

12.0%

12.0%

12.1%

12.2%

12.4%

13.0%

13.6%

Ordinary
Income5,326

5,7005,900

6,200

6,456

7,300

8,119

Net Income

2,973

3,500

3,800

4,100

3,110

4,543

5,368

ROE(%)

6.9%

--

8.0%

7.5%

10.8%

12.1%

1.Achieved 10.5％ of the annual growth rate in Net Sales during 3 years.

2.Achieved 15.5％ of the annual growth rate in Operating Income during
the same period. Both Operating Income margin and ROE are significantly
improved.
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Changes in the environment around NSD
Progress of new technologies

AI

Artificial Intelligence

IoT

Internet of Things

Customers’ strategic IT technologies are highly
advancing and accelerating.
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Enhancement of capability for
new technologies are essential.

Goal for long-term and after 3 years---------------------Goal for long-term-------------------Be a company to propose

the Future for Human and IT

・Evolve, deepen and modernize our outstanding business .
・Ability of valuable proposals for customers.
・corporate culture that employees can exercise theircreativity.

---------------------Goal after 3 years--------------------１. Be a company having outstanding business in variousbusiness area
・Be a company to be able to propose solutions throughthe network in new technology area.
・Establish a reputation in healthcare IT business.

２.Accelerate to create NSD’s uniqueness in the systemdevelopment.
・Original advantage + performance using new technologies
Copyright 2018 + enhancement of ability to proposal.

Basic Strategies
Seek additional growth
opportunities in new businessand new technologies.
Improve adaptability of newtechnologies in systemdevelopment.

Further enhancement of humanresource and capability oforganization.
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Specific Strategies

１.System development
・Improve adaptability of newtechnologies for customers whoadvances digitalization
・Enhance proposal by
improving consulting ability
・Enhance project monitoringprocess to detect problems early.
・Training young PM and PL toenhance the level of NSD

２.New business / newtechnology

・Extend NSD’s experiencethrough collaboration and cocreation.
・Use human resources
effectively
・Advance M&A actively toextend business opportunity
in new areas.
３.Human resource
development / organization
・Develop human resources
who can act autonomouslywith high ownership andadaptability.
・Form the corporate culture
to take advantage of humanresources

5.M&A/Alliance・Promote by specialized
department
・Promote strategy innew business and newtechnology area

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4.Business partner
・Form partnership withbusiness partner from longterm perspective.
・Build networks with venture
capitals and startup usercompanies.

Target Figures

Fiscal year ending March 31, 2021
Net Sales

63billion yen

Operating
Income marginMore then13％

Net Sales from New
core business10※1billion yen

ROEMore then11％※1 New core business consists of system developmentusing new technologies, system services and products.

～Planning aggressive investment to new business and new technologies.
(¥ Million)2018/3
Results

Net Sales

2019/32020/32021/358,08060,00061,50063,000New core business

5,595

6,600

7,800

10,000Operating Income

7,918

8,100

8,300

8,500

Operating Income
margin(%)

13.6

13.5

13.5

13.5

Ordinary Income

8,119

8,200

8,400

8,600

Net Income

5,368

5,500

(※2) 5,300

5,700

ROE(%)

12.1

11.8

10.9

11.3

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※2 Extraordinary losses about 500 million yen isplaned to be accounted as anniversary event cost.

Factors for achievement of the plan

Net Sales (billion yen)

＜New core business＞
630
63580
58

Factor① ＋２.０Enhancement of the system service.

Factor② ＋0.５

10

新コア事業 ※1

New core business ※15.5

Seek additional growth opportunities innew business and new technology area.

Factor③ ＋0.５

Enhancement of the system products.

Factor④ ＋１.５

既存事業 ※2

Improvement of the adaptability of newtechnologies in the system development

Original Business ※2

2018/3
2018/3Copyright 2018

2021/32021/3※1 New core business consists of systemdevelopment using new technologies,
system services and products.
※2 Original business consists of the systemdevelopment (exclude factor ④) and IT
service business such as operation andmaintenance.

Details of New core business factors

Factor① Enhance the system service
・Healthcare・HR
・Educational IT～Regarding the remote health support service “CAReNA”, in addition to health guidance
functions in cooperation with medical corporations, we expand services for all employees byexpanding functions such as health points andincentives.
～Develop business model taking advantage of visualization service of blood sugar level.
～ Realization of synergy effect among group companies and development of new solutions.
～ Expansion of E-portfolio “ManaBOX” through collaboration with major learning cram schools.

Factor② Seeking additional growth opportunities
in new business and new technology area

・ Newly established Advanced Technology Promotion Division, actively put resources into new technology areas.
・ Taking advantage of our development capabilities, we will develop new business models through the discoveryof venture companies by specialized departments of M&A and alliance, utilization of venture funds, andcollaboration with user companies.

Factor③ Enhancement of the system products
・ Strengthen and improve group sales structure, promote cross-selling.
・ Development of new products through technical collaboration with other companies.
・ Strengthen product lineup, develop new solution.

Factor④ Improve the adaptability of new technologies
in the system development・Respond to changes in needs of customers who promptly digitize, improve capability for new technologies forcustomers.
・Improve consulting capabilities and enhance proposal capabilities from upstream processes.
・New cultivation based on RPA etc. by sales division across each business division.
・Speeding up PM / PL development with increase of projects and raising overall skill level.

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Shareholder Returns

Basic strategies
1.Maintein consolidated dividendpayout ratio, 40% or more.
2.Actively return profits to shareholders, judging businessperformance and stock price trends comprehensively.
・The consolidated payout ratio kept 40% or more by increasing dividends every year
during the previous medium-term management plan.(2016.4 – 2018.3)
・Repurchased own shares, about 4.2 billion yen in total 4 times, during the same period.

In commemoration of the 50 th anniversary in the fiscal year ending march 31,
2020 the following memorial dividend is scheduled.

①Consolidated dividend payout ratio is 50% or more.
(commemorative dividend 10%＋usual dividend 40% or more)②Furthermore, the total dividend amount increased
by 500 million yen

・Because we plan to post an extraordinary loss of about 500 million yen as an annual event
cost, same amounts will be increased in dividend as a commemorative dividend for theshareholders.

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NSD’s efforts～In addition to the business activities, NSD is engaged in following activities.
○Social contribution
・A donation menu is prepared for the shareholder benefit plan, and NSD serves as a window for shareholdersand contributes activities.
～Result of FY 2017：Donated to Great East Japan Earthquake, the Kumamoto earthquake andZabun award.

○Sponsorship
・NSD agree with children to experience programming from an early stage and sponsors “Children’sprogramming contest” held by PCN (Programming Clun Network).
・NSD sponsored International Convention of Nordic Skiing for disabled skiers.

○Support for disabled people
・NSD operates farms with disabled people in Yatsugatake southern foot, Yamanashi prefecture.
10 disabled people work in the farms.
・36 disabled people doing simple tasks at head office and brunches. In addition, visually impaired
person works at massage room at head office.

○Health and productivity management

・In order to improve the health and productivity of our employees, we are making various efforts such as

shortening working hours, reducing overtime hours, setting up an employee massage room, health point
system with our own product CAReNA. As a result, it was certified as a health business superior corporation2018 (White 500).

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