Integrated Report 2023

INTRODUCTION

At a Glance
Consolidated Net Sales

Consolidated Operating Income

連結売上高& Real Estate

Urban Development

Civil Engineering
Business

Business, etc.

¥119.8 billion¥32.4

連結営業利益Urban Development& Real EstateBusiness, etc.

Civil Engineering
Business¥7.7 billion¥10.3

billionbillionFY2022
Consolidated
Net Sales

FY2022
Consolidated
Operating Income¥339.7¥12.6
billionbillion

Building Business

従業員数International
Business¥187.4 billion

連結営業利益Building Business-¥5.4 billion

Domestic
Business¥28.1billion ¥311.6 billion
External Evaluations

FTSE Blossom Japan Sector
Relative Index

SCIENCE BASED TARGETS

CDP DISCLOSURE INSIGHTACTION

S&P/JPX Carbon Efficient
Index

JHEP CERTIFIEDWELL PLATINUM
2021

WELL HEALTH-SAFETYDX Certification

従業員数

Number of 従業員数
Employees

ROE

6.4

Corporate*

29.0

Civil Engineering
Business

101

%

1,214

Urban Development& Real EstateBusiness, etc.

Capital to Assets Ratio

235%

As of March 31,
2023
Number of Employees

3,201

D/E Ratio

1.1* Corporate: The number of employees in theadministrative departments of Nishimatsu
Construction Co., Ltd. Headquarters

times

Building
Business

1,651International
Business

Domestic
Business

365

2,836

Contents
INTRODUCTIONSUSTAINABILITYDATA SECTION

36

Sustainability

37

Identifying Materiality64 	Eleven-year Major Financial andNon-financial Data

38

Environmental Initiatives

VALUE CREATION

44

Human Resource Strategy

8	History of Co-Creation of Value

46

10 	Nishimatsu Construction’s Model for
Co-Creation of Value47

12 	Material Issues, Opportunities and Risks

50

1456 	External Director Roundtable Discussion

2

Nishimatsu Construction’s Corporate
Philosophy/Vision

4 	Message from the President

Financial and Non-Financial Highlights

STRATEGY16 	Review of FY2022 and Medium-Term
Management Plan 2023
17

Medium-Term Management Plan 2025

Health and Productivity Management
Quality Management48 	Safety, Human Rights, Supply Chain

60

66

ESG Data

68

IR Activities

69

Investor FAQ/Statement of Authenticity

70

Terminologies

71

Corporate Outline and Stock Status

Corporate GovernanceCompliance61 	Risk and Opportunity Management62 	Board of Directors andAudit and Supervisory Committee18 	Message from the General Manager ofthe Management Division
20

Domestic Civil Engineering Business

22

Domestic Building Business

24

International Business

26

Asset Value-Added Business28 	Regional Environmental Solutions Business
30

Technology Development

32

Nishimatsu DX Vision & Road Map

34 	Special Feature: Collaboration with
ITOCHU Corporation
35	Special Feature: Measures that Bring
Solutions to Social Issues
NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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INTRODUCTION

Nishimatsu Construction’s Corporate Philosophy/VisionCorporate Philosophy 

Establish a sustainable society for people
to live with peace of mind, providing
worthwhile structures and services

Nishimatsu-Vision 2030 
Amid a rapidly changing social and business environment, we have dug deep into the will andstrength we have cultivated to date and reexamined our value in society. To us, business activities
are value creation activities. Out of a desire to expand areas of co-creation and provide people
with security, vibrancy and bonds between people, we have revamped our long-term vision andestablished Nishimatsu-Vision 2030: A company with overall capabilities that works together tomake regions and communities that are naturally safe and vibrant. To coincide with this new
vision, we have formulated Medium-Term Management Plan 2025, with FY2023 as its starting year.

The Thoughts Reflected in Our Vision
Since our founding in 1874, we have been involved in the development of social infrastructure
in Japan and overseas, helping to create a safe and secure society.
The driving forces behind those achievements are our respect for people and the pride we feel insupporting social infrastructure.
Society is constantly changing and its values are becoming increasingly diverse.
How will the lives of people change in the future?
Even in the midst of change, we want to work together with people,
companies and local communities to envisage regions and communities
that naturally provide people with safety, excitement and vibrancy.
We will hone our ability to rebuild social functions by drawing upon the enterprising spirit,
tenacity and self-discipline required to take on new challenges.
We will solve social issues with our own hands.
To shape a sustainable society in which people can live with peace of mind.

2

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

NishimatsuVision 2030
A company with overallcapabilities that works
together to make regions andChanging social andcommunities that are naturallybusiness environment

safe and vibrantNishimatsuVision 2027

Our will
Pride in supporting social infrastructureTransforming into a
company with overallcapabilities thatprovides new value

Ensuring the security of people,
including ourselves and our families
Creating growthresources
 ense of contribution and self-fulfillment
S+

Our strengths
The ability to develop social
infrastructure he ability to bring together a diverse
Trange of skills to fulfill goalsValue Creation Activities and Reform Program We will expand our value creation activities from developing social infrastructure to rebuilding social functions, providing
security, vibrancy and bonds between people.
To promote value creation activities, we will implement a Reform Program.
Value creation activities

Value provided to society

Rebuilding of social functions
EnergySocial Infrastructure
Development
Civil
Construction International
Engineering
Building

Regional
Environmental
Solutions *Environmental
protection

Asset Value-Added *Disaster prevention
and safety

Social andurban functions

Real estatedevelopment

Reforming our mindsets
and actions

Strengthening ourorganizational abilities

SafetyPeople can naturally
feel safe

Vibrancy

Provides excitement

Bonds

Connections between
people create newvalue

Creating growth
resources

Reform Program*Asset Value-Added Business (formerly Urban Development & Real Estate Business)*Regional Environmental Solutions Business (formerly Environmental and Energy Business)

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

3

INTRODUCTION

Message from the President

Nobutoshi Takase
Representative Director and President

Reforming the mindsets and actions of employees throughnationwide dialogue is essential to realizing our long-term vision.
Drawing on lengthy deliberations on our will and strengths by all staff, from management to young employees,
we established Nishimatsu-Vision 2030 as a revamped long-term vision.
Even in the midst of substantive changes in value systems and societal attitudes, we will work together
with people, companies, and local communities to envisage regions and communities that naturally provide
people with safety, excitement, and vibrancy.
To realize our new vision, we will vigorously promote value creation activities through internal and external
collaboration and implementation of the Reform Program. To this end, I am traveling throughout the nation
to talk to employees as an important first step in reforming mindsets, actions, and our corporate culture.

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Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGY

Formulating Nishimatsu-Vision 2030

SUSTAINABILITYDATA SECTION

Internal and External Coordination Essential for
Rebuilding Social Functions

Revamping Our Long-Term Vision in Response to

In addition to our efforts to develop social infrastructure, we

Unexpected Changes in the Business Environment

have decided to ramp up measures for rebuilding social func-

The social and business environment has changed dramati-tions by engaging in value creation activities, which arecally since we formulated Nishimatsu-Vision 2027 in 2018. In

designed to realize our new vision. Recognizing that social

addition to changes in global conditions owing to such factors

functions encompass such areas as social and urban func-

as the COVID-19 pandemic and conflict in Ukraine, our oper-

tions, disaster mitigation and safety, energy, and real estate

ating environment was notably impacted by the great-development, we will work together to address the issues ander-than-expected sharp rise in commodity prices. In light ofneeds of communities. To this end, the Civil Engineering andthe advances in AI technology and other changes that took

Building Businesses, which develop social infrastructure, theplace at a pace that was entirely unprecedented when we for-

Asset Value-Added Business (formerly the Urban

mulated our previous vision, we recognized the critical need

Development & Real Estate Business), which focuses on real

to once again review our long-term vision.

estate and development, and the Regional Environmental

In this review of our vision, we were especially careful to

Solutions Business (formerly the Environmental and Energy

involve employees in the formulation process and incorporate

Business), which addresses regional needs centered on

specific details to ensure that employees sufficiently “buy in,”renewable energy, must work together more closely thanwhich we recognize is essential to bringing the vision to

ever. Moreover, collaboration with external resources outside

fruition.

of Nishimatsu Construction is also essential to meet any andAfter analyzing the business environment in which the

all challenges and needs. Further progress in cooperating with

Company operates, we called for members to take part in aplayers in other industries is also required. Though these inter-study group around September 2022 to consider and deliber-

nal and external collaboration efforts have yielded positive

ate on the Company’s future vision. Staff from management

results to date, I strongly believe that we must expand the cir-to the Company’s younger employees came together to dis-cle of cooperation if we are to achieve even greater results.

cuss at length changes in the social and business environment as well as express their own will and comment on what

The Reform Program That Underpins Internal andthey saw as the Company’s strengths. Based on these delib-

External Coordination

erations, we revamped our vision and announced details of

Our new vision includes the Reform Program, which encom-

Nishimatsu-Vision 2030 in February 2023.

passes reforming our mindsets and actions, strengthening ourorganizational abilities, and creating growth resources, newly

A Company with Overall Capabilities That Works

incorporated in a bid to put internal and external coordination

Together to Make Regions and Communities That Are

into action. Put simply, the Reform Program entails reforming

Naturally Safe and Vibrant

the Company’s corporate culture. Nishimatsu Construction

Though even the things we once took for granted havetakes great pride in its experience, achievements, and long

become more difficult as of late, Nishimatsu Construction has

history of providing value through the development of social

maintained a commitment to providing peace of mind as ainfrastructure. While this is clearly a positive aspect, one could

matter of course throughout its 150-year history. Accordingly,

argue that this track record has contributed to the Company

we have helped bring vitality to society through businessadopting an overly cautious approach toward taking on newactivities that are finely attuned to the community and region.

challenges. Looking at each of the Reform Program’s constit-

As the basis of our overarching will, we will continue to holduent parts, reforming our mindsets and actions entails instill-on to this commitment. Even in the midst of substantive

ing in employees a heightened awareness toward taking onchanges in value systems and societal attitudes, we will work

challenges and linking this awareness to concrete action.

together with people, companies, and local communities toStrengthening our organizational abilities necessitates bringing

build communities that naturally provide people with safety

together a wide range of values, knowledge, and experienceand vibrancy. I am convinced that the Company’s strength lies

to enhance and demonstrate the ability to work together

not only in its ability to develop social infrastructure, but also

toward a common goal. Taking the aforementioned into consid-

in its ability to bring together a diverse range of skills to fulfill

eration, we will assess the need for reorganization, if necessary,

goals. Moving forward, we will significantly leverage theseto create a sense of unity within the Company. Finally, in orderstrengths to realize our new vision.

to create growth resources, we must develop human

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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INTRODUCTION

Message from the President

resources who are able to take on new challenges and create

Other collaborations include comprehensive partnershipthe time for them to do so. Lack of manpower is becoming

agreements with local governments, cooperation with various

the number one issue not only for our Company, but also forcompanies in renewable energy projects, and progress in thethe corporate sector as a whole. On a collective basis, wehotel business in cooperation with the Okura Hotel Group.

must optimize construction site tasks and promote DX while

While we have made some progress, we still believe that we

generating resources for the future. Looking ahead, we willneed to further expand collaboration and step up our efforts.

vigorously promote value creation activities through internaland external collaboration and the implementation of the

Toward Implementation of Medium-Term Management

Reform Program, and as a result, aim to provide society with

Plan 2025

the three values of security, vibrancy, and bonds.

One of the key themes of Medium-Term Management Plan
2025, the first three years of Nishimatsu-Vision 2030, is to

Toward Realizing Nishimatsu-Vision 2030

improve profitability. From a profit perspective, earnings continue to be significantly affected by the surge in construction

Looking Back On the Medium-Term Management Plan

material prices. We anticipate that the impact on the Building

2023

Business will cause earnings to deteriorate through to

Nishimatsu Construction decided to revamp its Medium-Term

FY2024. Learning from the recent sharp rise in commodity

Management Plan one year in advance in conjunction with its

prices, we have revised our order policy in the Building

review of its vision. In FY2021, the first year of our Medium-

Business. Adhering strictly to this policy, we will promote theTerm Management Plan 2023, results exceeded targets

shift to construction projects that improve earnings and return

despite the lingering effects of the COVID-19 pandemic andto a state of normalcy over the three years of the Medium-

the trend toward higher commodity prices from the second

Term Management Plan.

half of the fiscal year. In specific terms, operating income

Another major theme is the application of regulations limit-

came in at 23.5 billion yen compared with the target of 21 bil-ing overtime hours, which will begin in FY2024. Even before

lion yen. However, FY2021 and FY2022’s fortunes were in

the new plan, we have taken a number of actions in this area,

sharp contrast. In the Building Business, where most orders

including setting up departments to back up worksites,

are from the private sector, price hikes were especiallyencouraging outsourcing, and utilizing DX tools, and we aremarked in design and construction projects amid significantly

now in the final stages of these efforts. Buffeted by a harshhigher construction materials prices. Taking into accountbusiness environment, we are currently in a now-or-never sit-

these price hikes from the time orders were received, throughuation. The construction business is labor-intensive, meaning

the detailed design period, to the start of construction, profit-

people are the key source of our business activities. Japaneseability deteriorated substantially. Operating income fell signifi-

society faces a declining population, and the construction

cantly to 12.6 billion yen, owing to additional constructionindustry, without exception, is confronting a shortage of labor.

costs incurred in the overseas civil engineering business.

This is a situation impeding any simple enhancements to our

Regarding collaborations with partner companies from dif-own employee base, and we feel it is necessary to engage

ferent industries, one of the basic policies established underthe entire supply chain in exploring and implementing specificMedium-Term Management Plan 2023, collaborative mea-

measures on how to best maintain construction systems

sures under the capital and business alliance agreement withgoing forward.

ITOCHU Corporation (hereinafter referred to as “ITOCHU”)

We are well aware that the three years of Medium-Termhave begun to move forward. In particular, we have alreadyManagement Plan 2025 are vital to rebuilding the Company’s

achieved a certain level of success in Circular Real Estatefoundation as we engage in the value creation activities identi-

Business Model Collaboration, and we will continue to con-fied in Nishimatsu-Vision 2030. Moving forward, we will imple-

sider and work on collaboration for many more projects inment measures to enhance our corporate value as a company

Japan and abroad. Construction-related projects are increas-capable of sustainable growth.

ing, and in addition to orders for public-private partnershipprojects, there is also an increasing number of collaborative
projects with ITOCHU-affiliated companies. As far as the pro-Nationwide Dialogue with Employees toCreate a More Open Organization

curement of construction materials is concerned, transaction

6

volumes are also increasing due to initiatives that are benefi-

Nishimatsu Construction entered into discussions with its

cial to both parties.

employees from May of 2022 as a first step in reforming

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Dialogue rules:• Participants are to refer to each other using honorifics• Participants are to speak freely when expressing theirown opinions• Participants are to refrain from objecting to or interrupting others while talking• Participants are to help create a facilitative atmosphere(nodding, positive reinforcement, listening with a smile)• Participants are to express their interest and ask
questions• Participants are to express their opinion at least once

mindsets and actions, a key component of the Company’s
Reform Program, which itself underpins efforts to realize
Nishimatsu-Vision 2030. With this first step to reform our corporate culture, our goal is to engage in dialogue with all
employees over several years. We have set an initial target of
1,000 employees for FY2023, starting with those in the

Sustainability Management

pre-management age group who will become the next generation of leaders. Aiming to deepen cooperation among busi-

The main thrust of Nishimatsu-Vision 2030 is to provide sus-

nesses and improve openness among divisions, we set up

tainable value to society, which is in turn the very essence ofgroups with 10 employees from diverse positions and estab-Nishimatsu’s sustainability management. In order tolished our own rules for dialogue.

strengthen its sustainability management, Nishimatsu

The themes selected for our dialogue were “worthwhile

Construction reorganized its sustainability promotion system

structures and services” and “a sustainable society for peoplein April 2023. Established as an advisory body to the Board of

to live with peace of mind,” key components of the

Directors, the new Sustainability Committee will deliberate on

Company’s corporate philosophy that are familiar to employ-sustainability issues related to both society and the Company

ees. The opinions I heard from our younger employees in thisin order to identify solutions. Simultaneously, this committee

dialogue are truly diverse. From our conversations, I havewill review the Company’s materiality based on its corporate

gained a strong sense of the broad new insights and values

philosophy and revamped long-term vision.

being created by our employees. On the topic of worthwhile
structures and services, employees offered up multifaceted

To Our Stakeholders

stakeholder viewpoints, expressing opinions based on diverse
value systems. With respect to the topic of a sustainable soci-Each stakeholder, whether they are a shareholder, employee,

ety for people to live with peace of mind, several employeesfamily member of an employee, or a partner company or otheroffered their thoughts on contributing to society, thepeer company, will have a different value that they cherish theCompany’s survival, and their own work styles. Through dia-most. The challenge at hand is how to identify and incorpo-

logue with our employees, I was struck by the somber duty

rate each of these values, which are becoming increasingly

they have taken on to create and realize the Company’s future

diverse, and how to ensure equitable and positive action

vision, as well as by the fulfillment from their work and thebased on these. Human resources are important manage-pride they take in their work as Nishimatsu employees.

ment capital, especially as we look to our future growth andKnowing that our Company culture cannot be changed over-sustainable development. With this in mind, training and moti-night, I will continue putting one foot in front of the other,vating employees through various means, including raisingemboldened by each of my colleagues’ aspirations.

wages, is a critical issue that must be addressed. As we work
toward achieving our established goals, I would ask for thecontinued support and understanding of all stakeholders.

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Integrated Report 2023

7

VALUE CREATION

History of Co-Creation of Value(Billions of yen)
800

History of Nishimatsu
 Net sales (left axis)
Operating income (right axis)

700
600
500

1980
Opened Singapore Sales
Office400

1962
Opened Hong Kong
Branch

300
200

1874
Founded100

1963
Listed on the First Section of theTokyo Stock Exchange

0

1850

1965

1970

1975

1980

1985

1990

Major Events
1872
1945
Japan’s first
End of WW2
railroad opened(Shinbashi to
Yokohama)

1960s
Period of higheconomic growth

1973
Oil shock

Late 1980s
Trade friction

Early 1990s
Collapse of Japan’s
economic bubble

Nishimatsu Construction’s Cultivated Technologies and Experience
The Spirit of Our Founding

1850 to 1926

1927 to 1944

Historical Backdrop and Nishimatsu Construction’s Role

Kaei, Meiji and Taisho Eras

Showa Era / Prewar

In the roughly 150 years since its establishment in 1874,
the Company has been involved in the construction ofnumerous public facilities, such as roads, railroads, anddams, and high-rise buildings both in Japan and overseas, based on the strength of its advanced technological capabilities. Bringing to bear the wisdom that
overcomes hardships, the spirit of being dedicated to
improving social infrastructure and providing a safe andcomfortable living environment is still today passed downfrom generation to generation. We are currently working
to expand our range of business domains to include
urban redevelopment, as well as environment andenergy, and are contributing to the development of society by providing important structures and services.

Keisuke Nishimatsu, the Company’s founder, was born in
1850, the third year of the Kaei Era, in Anpachi-gun in
Mino Province, now Gifu Prefecture Japan. This area isknown as the Waju Region, and being surrounded by theKiso, Nagara, and Ibi rivers, since ancient times it has
been prone to flood damage. It is quite possible thatthese circumstances had something to do with setting
the founder off at an early age on the path to becoming acivil engineer. After building Nishimatsu into a leading
subcontractor of the Hazama Corporation, Keisuke
handed over the reins of the Company to his eldest son,
Kojiro. In 1914, when Nishimatsu was awarded the solecontract for the construction of the new 12th construction section of the Kyushu-Miyazaki Line, Kojiro charged
ahead, risking the fate of the Company’s independent
foundation to complete the Construction.

In 1929, Nishimatsu Gumi, a limited partnership, wasestablished to become a corporate entity. In 1931, theCompany relocated its headquarters from Kyoto to Tokyoand expanded its sales base to eastern Japan. In 1935,
following the death of Kojiro Nishimatsu, Yoneshichi
Hayashi became the second president of the Company.
In 1937, construction began on a large dam that would
block the Yalu River, a major river on the China-North
Korean border, and the Company became involved in theconstruction of the Manchurian side, the right bank, ofthe river. The construction of the Yalu River Dam, said tobe Asia’s preeminent dam at the time, is representativeof the Company’s prewar work.

Taking Action and Solving Social Issues
Building
an infrastructure base
 Developing domestic and international infrastructureRiver flood disasters caused by typhoons and torrential
rains, and contributing to economic base Dam construction, tunnel development



Major Events
Founder Keisuke Nishimatsu

1850 	Founder Keisuke Nishimatsu was born
1874 	Foundation of Nishimatsu
1903 	Keisuke Nishimatsu withdrew from civil engineering operations
1906 	Period of cooperation with Hazama Corporation.
Conclusion of 39 regulations
1914 	Nishimatsu awarded sole contract for constructionof 12th construction section of Kyushu-MiyazakiLine. A fateful construction project

The Waju Area (Gifu Prefecture) circa 1980

1916 	Company name changed to Nishimatsu Gumi
1926 	Nippon Chisso Hiryo K.K. (Chosen Hydroelectric)
constructed the Poseun River Power Plant waterway (3rd and 4th construction sections)

8

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Integrated Report 2023

1927 	Nippon Chisso Hiryo K.K. (Chosen Hydroelectric)
constructed Hunnam Factory
1929 	Established limited partnership Nishimatsu Gumi
1931 	Nishimatsu Gumi headquarters transferred toTokyo1932 	Established the Manchuria Dalian Branch Office
1933 	Chosen Nagatsu River Hydroelectric Power Plant
waterway and dam construction
1935 	With passing of Kojiro Nishimatsu, Yoneshichi
Hayashi became the Company’s second president
1937 	Established Nishimatsu Gumi Co., Ltd.
1940 	Established Manchuria Nishimatsu Gumi

INTRODUCTIONVALUE CREATION

1999
Concluded a technicalcooperation agreement withToda Corporation

STRATEGY2009
Inauguration of New
Nishimatsu to Reform
Corporate Culture

SUSTAINABILITY

2016
Certified as an
Eco-First
Company

2012
Commenced industry-academia collaboration with
Tamagawa University(LED farms)

2002
Acquired Group-wide
ISO 9001/ISO 14001 certification(Japan)2019
Selected as a 2019
Health and Productivity
Management Brand, a firstfor a General Contractor

DATA SECTION(Billions of yen)32

2021
Concluded a capitaland business allianceagreement with
ITOCHU Corporation

28
24
20
16
12

Nishimatsu-Vision 2027
Medium-Term
Management Plan 2020

Medium-Term
Management Plan
2023

Nishimatsu-Vision 2030

8

Medium-Term
Management Plan
2025

4
0

1995

2000

2005

1995
Great Hanshin
Earthquake

2010
2008
Bankruptcy ofLehman Brothers(2008 financial crisis)

2015

2020

2011
Great East Japan
Earthquake

2023

2030

2020
COVID-19 Pandemic

1945 to 1968

1969 to 1989

1990 onwards

Showa Era / Postwar

Late Showa Era

Heisei Era to the PresentWith Japan’s loss of the war, the Company lost all of its
foreign assets and most of its operating base. Amid suchconditions, in 1945 the Company established its Morioka
Branch, and in the following year, branches in Nagoya
and Hiroshima, which in addition to the existing branch in
Kumamoto, gave it a four-branch network to relaunch its
business. In 1948, the Company changed its name to
Nishimatsu Construction Co., Ltd. The construction of the
Arase Dam in Kumamoto Prefecture in 1953 was theCompany’s first mechanized construction project. In
1960, the Company won the business to construct agovernment office complex in Tokyo’s Otemachi District,and although Nishimatsu Construction lacked experiencein large-scale construction projects at the time, it overcame a broad field of obstacles to complete the project.

In 1969, the Company constructed the Keiyo Railway
Line’s Haneda-Oki Tunnel using the world’s firstlarge-section slurry shield tunneling method. The success of this construction project led to a surge in thenumber of applications of this method in Japan. The
construction of the Japanese-style annex to the State
Guest House in Tokyo (Yushintei) in 1972 brought
together traditional and modern techniques under strict
construction management. The Gassan Dam in
Yamagata Prefecture, which began construction in 1988,
is one of the largest gravity concrete dams in Japan, andwas completed in 2001 using the RCD method with abelt conveyor system and other techniques.

In 1998, the Company established the Aikawa TechnicalResearch Institute (Aiko-gun, Kanagawa Prefecture),
which houses a device that can recreate the shaking ofJapan’s Great Hanshin-Awaji Earthquake to clarify themechanism behind the damage to buildings as a resultof the powerful shocks and vibrations caused by thatearthquake. In 2015, the Company became the firstJapanese general contractor to establish a joint venturein Laos. In FY2022, the Company opened Hotel JAL City
Toyama, Nishimatsu Construction’s first foray into thehotel business.

 
Postwar reconstruction Tackling the challenges of mechanization and largescale construction

High economic growth Honing techniques, responding to diverse needs

Earthquake damage, rising social demands
 Providing buildings that are safe and secure Building a sustainable foundation for society Redevelopment of social functions1946 	Constructed Japan’s first rock-fill dam, Ishibuchi
Dam, on the Kitakami River (Iwate Prefecture)1971 	Constructed Hong Kong container yard. Received
UK civil engineering international award

1998 	Established the Aikawa Technical ResearchInstitute1948 	Company name changed to Nishimatsu
Construction Co., Ltd.

1984 	Won order for Singapore subway construction

2003 	Nishimatsu Construction, in Japan’s first PFI project, participated in Esaka Minami Parking Service

1953 	Constructed the Arase Dam (Kumamoto
Prefecture), a model for mechanized construction
1960 	Constructed a government office complex inTokyo’s Otemachi District.
1961 	Constructed Amagasaki Steel Plant Sakai steelmaking plant. Honored with the BCS award in1964
1965 	Adopted the freezing method on the
Kanasugibashi section of the No. 1 Line, Toei
Subway1967 	Constructed the world’s largest bowling alley(at the time)

1984 	Constructed Nagai River Bridge on the Kan-Etsu
Expressway. Japan’s tallest bridge pier rises.
1984 	Constructed ultra-high-rise building in Thailand
1986 	Tsubayama Dam (Wakayama Prefecture) received
the Minister of Health, Labour and Welfare Awardof Excellence1987 	Constructed the Daimon Dam (Yamanashi
Prefecture). Received the 1986 Outstanding Civil
Engineering Achievement Award from the Japan
Society of Civil Engineers
1988 	Won order for the Tate’s Cairn Tunnel on Build,
Operate, Transfer (BOT) project basis
1988 	Commenced construction of Tsukiyama Dam(Yamagata Prefecture), one of Japan’s largest
gravity concrete dams

2015 	Became the first Japanese general contractor toestablish a joint venture in Laos	Formulated a new corporate slogan, “Successfully
Building a Better Future”
2017 	Started the Company’s first commercial facility development and operation business, “hareno terrace ”
2022 	Opened Hotel JAL City Toyama, Nishimatsu
Construction’s first foray into the hotel business	Acquired certification from the SBT initiative fortargets at reduction of greenhouse gas emissions
	Certified by the Ministry of Economy, Trade andIndustry as a “DX Certified Business Operator”

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

9

VALUE CREATION

Nishimatsu Construction’s Model for Co-Creation of ValueBusiness Model

InputsESG/SDGs management
Human CapitalMarketing human resources■ 

Project Planning

Training investment costs per
employee ¥90,000■ 

and Proposal

Research and Information
GatheringNumber of employees globally
3,201

■ 

Intellectual Capital
Research and development
costs ¥2.03 billion■ Technical human resources■ 

Research andManufactured Capital
Number of offices Japan 51■ Ability to propose
plans

Development

Technology
development
capability

Overseas 10
Number of construction sites

■ 

Brand

263


Construction
technologies(As of March 31, 2023)
Construction track record

Environmental
technologies■ 

The things
we value

Trusting relationships
CustomerPartner companies
Supply chain

 ocial and Relationship
S
CapitalUser

N-NET (Nishimatsu
Subcontractor’s Network) 
1,027 companies■ 

Trusting relationships with customers and end users

Financial base■ 

Asset Management

Nishimatsu’s brand power■ Management

Natural Capital
Energy usage 914 thousand GJ■ 

and Operation
Construction

Financial Capital
Total capital ■ ¥ 156.1 billion

Interest-bearing debt

■ 

¥ 168.3 billion

External Environment

10

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Material Issues→P.12

Nishimatsu-Vision 2030

→P.2

Corporate Philosophy→P.2

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITY

Outputs
Domestic Civil Engineering
Business

Outcomes→P.20

Mountain and shield tunneling

Human Capital

→P.44

Number of training participants (non-consolidated) 
6,393 (total)

■ 

■

Infrastructure renovation■ 

Offshore wind power generation projects■ 

Employee satisfaction (non-consolidated)3.65 (5-level evaluation)■

Smart construction sites■ 

Domestic Building Business

DATA SECTION→P.22

Intellectual Capital
Number of patents owned 

259

■

Logistics facilities, facilities applying
design and construction technologies■ 

Environmental facilities (waste incineration
plants)■ 

Reception of Orders
and Investment

Urban redevelopment projects

Manufactured Capital
Number of new projects started 203

■ 

■



Smart construction sites■ (Contract amount of ¥50 million or more)

Planning and
DesignInternational BusinessS ocial and Relationship
Capital→P.48→P.24

 umber of occupational injuries requiringNfour or more days of absence from work
11 (8 less than in previous fiscal year)■

ODA construction projects■ Construction projects for foreigncompanies■ 

Number of certified Nishimatsu meisters  118■Ministry of Land, Infrastructure, Transport andTourism construction evaluation Score (average) 
76.3

■

Asset Value-Added Business

→P.26

In-house development business/Equity
investment business■ 

Percentage of S/A ratings in customer
surveys 
96.5%

■

Urban redevelopment projects/Land readjustment projects■ 

Procurement

Natural Capital

International Business■ 

Investment management business/
Property management business

■ 

→P.64

Reduction of CO2 emissions■9,200 t-CO2

Responding to decarbonization(Renewable energy, diesel fuel combustion
improvers, N-TEMS, etc.)

Regional Environmental Solutions
Business
→P.28

■

■ 

Renewable energy business■ 

Financial Capital

→P.18

Dividend payout ratio TSR 

■

90.4%+58.5% (5 years)

Community creation■ 

Medium-Term Management Plan 2025

→P.17

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

11

VALUE CREATION

Material Issues, Opportunities and Risks
Nishimatsu Construction has recognized changes in the external environment surrounding the Company
and our stakeholders, and has identified the material business challenges that we should address basedon an understanding of both opportunities and risks. We are formulating and implementing specificmeasures to address the identified materiality while contributing to the SDGs and creating business andsocial value.
Step1
Value provided to society

External environmental changes

Global environmental
changes

Security

Step2

Global warming
 estruction of the naturalD
environment and declining
biodiversity

Main opportunities

Increased natural disasters

Increased demand for buildings with low GHG emissions
Increased demand for adoption of renewable energy emand for the development
Dof social infrastructure(civil engineering infrastructure
and buildings) for disaster prevention and mitigation

Main risks
Health hazards (e.g., heatstroke) and decreased productivity at construction
sites due to risingtemperatures
Increased costs due to carbon pricing
Risks related to tighter environmental laws andregulations
Risks related to preserving
biodiversity

Social changes

Vibrancy








 eterioration of social
D
infrastructure(civil engineering infrastructure & buildings)◆ Increased demand to

Decreased demand for newbuildings due to ethicalthinking

extend the lifespan of social
infrastructure(civil engineering infrastructure and buildings)◆ Development of smart cit- alling birthrate and aging
F
populationies, compact cities, risingdemand for new services

 oncentration of populaCtion in urban areas andrural depopulation◆ Increased demand for oexistence with infecC
tious diseases◆ Increased demand forFood and water shortages



Decreased demand for construction and real estatebusiness hange of generationC(to Generation Z)

Widening disparity

Increased demand for construction and real estatebusiness cceptance of diversityA(diversity & inclusion)



Bonds



Declining demand for offices
due to diversification of work
stylesbuildings compatible with
the new normal

e-commerce-related facilities due to the expansion of
the e-commerce market

 ull-fledged development
F
of DX



 rowing importance ofG
corporate governance iversification of needs forDconstruction-related services
New services through DX ew manufacturing throughN
DX

Supply chain infrastructurerisks
Decrease in the number ofskilled laborers in the construction industry, decline inconstruction capabilities due
to increased age of skilledlaborers
Rising prices of materials,
equipment and energy

Risks due to weakening
human resources base
Cybersecurity risks
Lost opportunities due todelayed DX

12

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATION

Step3

Superior environmental technology
Diverse services

SUSTAINABILITYDATA SECTION

Step4
Material issues

Appealing work styles

STRATEGY

Measures

Contribution to SDGs

Initiatives for carbon neutrality

Establishment of ZEB technology
Renewable energy business
Wooden construction technologiesZERO30

Preserving biodiversity andcreating a recycling-oriented
society

Promoting 3R activities
Initiatives to preserve biodiversity

Building sustainable social
infrastructure(civil engineering infrastructure
and buildings)

Continuous efforts for tunnel projects with a highlevel of difficulty
P.20
Initiatives for renewable energy-related
construction
P.21, 28
Utilization of BIM (consistent use from design,
construction, maintenance and management)

P.22
Improving technical capabilities for civil engineering
infrastructure renovation
P.30
Unmanned and automated tunnel construction

P.30

Providing comfortable
construction-related services
for users

Expand initiatives in real estate growth fields P.26
Asset management
P.26
Land readjustment projects/Urban redevelopment
projects
P.26
Participation in PPP/PFI projects
P.28
Community development
P.28

Creating rewarding
workplaces
Creating safe construction
sites

Ensuring thorough compliance andrisk management

P.22, 34
P.28
P.31
P.38

P.41
P.41

Human resource development
P.44
Diversity and inclusion
P.45
Reducing the number of overtime hours
P.46
Health and productivity management
P.46
Preventing occupational accidents
P.48
Training programs that support training skilledconstruction laborers
P.49

Quality managementCompliance
Risk and opportunity management
Information security

P.47
P.60
P.61
P.61

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

13

VALUE CREATION

Financial and Non-Financial Highlights
Financial
Net sales (consolidated)

Gross profit margin (consolidated)(Billions of yen)

(%)

400

15

391.6
349.3

336.2

300

323.7

13.5

12.4

339.7

11.2

11.8
9.9

10
200
5
100

0
(FY)

0
2018

2019

2020

2021

2022

2018

(FY)

2019

2020

2021

2022

Net sales increased 4.9% year on year, to 339.7 billion yen. Although revenue fell in the Company’s non-consolidated construction business, themain factors for the increase were a significant upswing in operating revenues from the sales business in the Urban Development & Real EstateBusiness and other businesses, and an increase in the amount of completed construction projects at overseas construction subsidiaries.

Gross profit decreased significantly from the previous fiscal year on a
downturn in the gross profit margin, which fell 3.6 percentage points year
on year, to 9.9%. In addition to the deteriorating profitability of domestic
building projects due to soaring material costs and other factors, theCompany was severely impacted by additional costs incurred due toconstruction issues in overseas civil engineering projects.

Operating margin (consolidated)

Capital efficiency (ROE) (consolidated)

(%)

(%)

9

12

9.9

7.3

7.1

6.5

6

6.2

9.5
8.5

8.5

8

6.4
3.7
3

4

0
(FY)

0
2018

2019

2020

2021

2022

2019

2020

2021

2022

While net sales increased, the gross profit margin deteriorated and generaland administrative expenses rose 871 million yen compared with theprevious fiscal year, resulting in an operating margin of 3.7%, down 3.6
percentage points year on year. We will steadfastly implement the Earnings
Improvement Plan of Medium-Term Management Plan 2025 to improve
profitability.

Due to the significant decrease in profit attributable to owners of the parent,
ROE fell 2.1 percentage points compared with the previous fiscal year, to6.4%. We will work to achieve ROE of 8% or more by achieving operating
income of 22.0 billion yen, which is the target set under Medium-Term
Management Plan 2025.

Net assets/equity ratio (consolidated basis)

Investments in technology, human resources and ICT (non-consolidated)(Billions of yen)

250

200

42.3

(%)

(Millions of yen)

50

2,000

40

199.2

207.5

150

31.7

29.0

100

20

50

10
0

0
2018

2019

 Net assets (Left scale)  

2020

2021

2022

Equity ratio (Right scale)

Although the equity ratio declined due to the purchase of 54.3 billion yen of
the Company’s own shares in FY2021, the ratio continues to trend at alevel that does not pose a problem in terms of financial soundness. We will
implement appropriate financial strategies to ensure that we can continue
to maintain a healthy financial condition while making aggressive
investments for growth.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

599

1,748
1,500

30

156.1

157.7

(FY)

2,038

43.6

39.6
199.3

14

2018

(FY)

1,000

1,506

1,377

336

219
762 919

1,177

1,533

358

393

1,217

969 1,190

994

2021

2022

835

889

2019

2020

1,366

500

0
(FY)

2018

 Research and development costs  Human resources investment
 ICT operation and maintenance    ICT growth investment
Investments in ICT growth amounted to 599 million yen. To cope with theshortage of engineers and skilled workers as well as the regulations that limit
overtime work that will come into effect in FY2024, we are working to improve
operational efficiency by applying ICT technology. We are also increasing ourinvestment in human resources and expanding measures to enhance
employee performance, including health and productivity management andthe Nishimatsu Employees’ University.

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Non-Financial
Environmental Data
Global warming prevention
Nishimatsu Group’s CO2 emissions(Scope 1 and 2)
Nishimatsu Group’s CO2 emissions(Scope 3)
Nishimatsu Group’s CO2 emissions(Scope 3) Category 11
Creating a recycling-oriented society
Final percentage of construction waste
sent for landfill disposal*
Water usage volume in the domestic
business (Total)
Water usage volume in the international business (Total)

FY2020

FY2021

FY2022

Targets(t-CO2)

70,21062,65043,030(t-CO2)

3,928,700

3,237,500

2,776,700(t-CO2)

3,191,800

2,481,200

1,847,600

FY20302,328,000 t-CO2

(%)

2.2

2.4

2.4

FY2025Less than 3%(m3)

948,100

647,700

723,100—(m3)

84,800365,800

373,600—

FY203031,700 t-CO2—* Final percentage of waste sent for landfill disposal: Excludes “industrial waste containing asbestos” and “specially controlled industrial waste”

Social Data
FY2020

Basic information
Number of employees (consolidated)
Number of employees(non-consolidated)
Human resource development
Training costs

Ease of work and productivity
Personnel turnover rate
(career-track positions)
Percentage of employees working overtime*2 exceeding 45 hours per month
Percentage of worksites achieving 7 days
off per 4 weeks(civil engineering sites)(building sites)
Remote work usage ratio
Supply chain
Employment ratio of certified
Nishimatsu meisters and senior
forepersons under the program forhigh-caliber technicians
Construction Career Up Card scan rate

FY2022

Targets(Persons)

3,060

3,106

3,201

—

(Persons)

2,762

2,794

2,804

—

(Millions of yen)

291

345

356

—

0 (0%)

3 (0.3%)4 (0.4%)FY2025 2% or above

17.5

17.8

18.5

FY2025 20% or above

6.1

17.6

55.6

From FY2024 100%

1.96

2.37

2.45

2.3% (legal employmentrate) or above

(%)

19.7

62.3

69.1

FY2025

80%

(%)

1.83

2.05

2.68

FY2025Less than 1.5%

(%)

21.3

22.7

17.2

FY2023

5% or below

(%)

65.4

63.5

77.1

(%)
(%)

65.4
—

61.1
55.5

64.5
45.6

FY2025

100%

(%)

—

63.7

60.6

FY2025

100%

(%)

—

24.0

46.7

FY202590%

Diversity and inclusion(Persons) (%)
Number of female managers
Percentage of female workers(%)(career-track positions)
Percentage of male employees taking(%)
childcare leave(career-track positions, general positions)*1
Employment percentage of persons(%)
with disabilities
HealthPercentage of patients receiving periodic full examination health checkups

FY2021—*1 Includes leave associated with the Post-birth Papa Leave System (effective October 2022)*2 Total work hours - fixed working hours (8 hours per day)NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

15

STRATEGY

Review of FY2022 and Medium-Term Management Plan
2023
Nishimatsu Construction positioned Medium-Term Management Plan 2023 (FY2021-2023) as a transition
period for becoming a company with overall capabilities and focused on efficiently undertaking investment for growth and improving corporate value on a sustainable basis based on the foundation built
during the three years of Medium-Term Management Plan 2020 (FY2018-2020).

1. Organic Partnerships on Various Projects
Overseas development business: Construction of the Grand Nikko Bangkok Sathorn hotel commenced, and is scheduled to open for business in 2025
(Urban Development & Real Estate Business × International Business)
Student dormitory project: Began operation of Keio University Shonan Fujisawa Dormitory and
Takanawa Dormitory, and scheduled to begin operation of Miraisozojuku project(Urban Development & Real Estate Business × Domestic Building Business)
PFI project: Received order for funeral hall PFI project in Kurashiki City
(Environment and Energy Business × Domestic Building Business)

2. Initiative for the Realization of a Decarbonized Society
Medium-Term
Management
Plan 2023:
Basic Policies

Wood biomass power generation business: The subsidiary Sanyo-Onoda Green Energy Co., Ltd.
was established, and is scheduled to begin operations in FY2024.
Geothermal power generation business: A hot spring binary power plant began operation in the
town of Oguni in Kumamoto Prefecture’s Aso District.
Medium-to-large sized wooden buildings: Individual rating was jointly acquired fromThe Building Center of Japan for the medium-to-large-sized wooden construction method.

3. Collaboration with Partners from Other Industries
Formed a capital and business alliance agreement with ITOCHU
Collaboration with ITOCHU (Shibata General Gymnasium Development Project, Hotel JAL City Toyama)
Formed a comprehensive partnership agreement for the realization of a decarbonized society with alocal government in Kyushu

4. Shareholder Returns
Provided stable annual dividends of 221 yen per share for FY2021 and FY2022
Based on the shareholder return policy under Medium-Term Management Plan 2023, in FY2021
treasury shares valued at 54.39 billion yen were acquired

FY2022
Initial Performance
End Results
Targets

FY2021Results

Finance16

Net sales¥323.7 billion¥338.5 billion¥339.7 billion

Operatingincome¥23.5 billion¥24.0 billion¥12.6 billion

FY2021

FY2022

ROE

8.5%

6.4%

Capital to assets
ratio

31.7%

29.0%

1.1

1.1

Dividend payout
ratio

70.8%

90.4%

Annual dividend
per share

¥221

¥221

D/E ratio

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Factors behind the significant
deterioration in operating income: oaring material prices in theS
Domestic Building Business Construction issues and soaring
material and energy costs in theInternational BusinessINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Medium-Term Management Plan 2025
Under Nishimatsu-Vision 2030, we will pivot from construction project-focused social infrastructure development,
and aim to expand and grow the rebuilding of social functions in areas covered by the Group’s value creation activities through growth of the Asset Value-Added and the Regional Environmental Solutions Businesses.
From FY2023 to FY2025, the Company will improve earnings in the Building Businesses and International (civilengineering) Businesses and focus on medium- to long-term initiatives aimed at achieving Nishimatsu-Vision 2030.
 Regional Environmental Solutions Business Asset Value-Added
 Construction

Net sales (consolidated) ¥370.0 billion

billion or¥35.0 above

Operating income (consolidated) ¥22.0 billion
23.5
FY2025
Performance
Targets¥22.0 billion
12.6

2021

2022

Nishimatsu-Vision 2023

2023

2024

2025 (FY)

Nishimatsu-Vision 2027

Nishimatsu-Vision 2030

Financial Indicators

FY2025
Financial
Indicators

2030

Medium-Term Management Plan 2025

FY2025

FY2030

ROE
Capital to assets ratio
D/E ratio

10% or more

Approx. 30%

35% or more

Approx. 1.5 times

Approx. 1.0 times

FY2023-FY2025 70%

Dividend payout ratio

Investment classifications

8% or more

Major investments

GX Community creation

Renewable energy
Community creation

Asset value-added

Five growth areas

FY2023-FY2025

FY2023-FY2030¥40.0 billion¥70.0 billion

FY2025Investment
Plan

Investment ¥110.0 billion
Recovery ¥40.0 billion¥150.0 billion

Management foundation
Human resources
development
DX
Technologicaldevelopment, etc.

Development and cultivationof human resources, DX

Research and development
in construction field

Investment ¥250.0 billion
Recovery ¥100.0 billion¥10.0 billion

Labor savings, workplace environment improvement, infrastructure renovation, environment, etc.

¥120.0 billion

Total

Awaken individual strengths (the ambition, persistence, and autonomy of individuals) and maximize organizational strengths

ReformProgramReforming ourmindsets and actions

Strengthening ourorganizational abilities

Creating growth
resources

NISHIMATSU CONSTRUCTION CO., LTD.

P.44

Integrated Report 2023

17

STRATEGY

Message from the General Manager of the Management
Division
We will focus on improving profitability while
promoting investment in growth sectors tocontinuously provide more stable returns toshareholders.
Yuichi Kono
Representative Director and Executive Vice President,
General Manager of the Management Division,in charge of Investor Relations

Looking Back On Medium-Term
Management Plan 2023

our value creation activities. First, in the area of GX and community creation, we will invest 40 billion yen, mainly in the
renewable energy activities undertaken by the Regional

In FY2022, the second year of Medium-Term Management Plan

Environmental Solutions Business (formerly the Environmental

2023, earnings in the Domestic Building Business and Overseas

and Energy Business). Currently, we are focusing on small-

Civil Engineering Business deteriorated significantly due to thescale hydraulic power generation, woody biomass power gen-surge in construction material prices and other factors.

eration, geothermal power generation, biogas power

Construction orders received, including those from subsidiaries,

generation, and pumped-storage power generation projects.

increased 1.9% year on year, to 340.3 billion yen. Net sales

Next, we will continue to promote a circular reinvestment

climbed 4.9% year on year, to 339.7 billion yen owing mainly tomodel in the Asset Value-Added Business (formerly the Urban

the increase in real estate business. On the earnings front, how-Development & Real Estate Business) and plan to invest 110

ever, operating income decreased 46.4% compared with thebillion yen and recover 40 billion yen for a net investment ofprevious fiscal year, to 12.6 billion yen owing to such factors as

70 billion yen. In pushing forward asset strategies, we will

the downturn in gross profit on completed construction contracts

work to build a competitive portfolio by investing in five growthfor domestic building and overseas projects. Ordinary income

areas (working spaces, residences, tourism and entertain-

declined 43.9%, to 13.1 billion yen, and profit attributable toment, lifestyle support and healthcare, and data centers andowners of the parent fell 36.1%, to 9.6 billion yen. Nishimatsu

logistics). Our focus will be on development projects con-Construction reported a poor operating performance with profit

ducted jointly with ITOCHU, as well as land readjustment,

falling below 10 billion yen for the first time since FY2014.

urban redevelopment, and overseas development projects.

As far as key financial indices are concerned, ROE dropped
2.1 percentage points compared with the previous fiscal year,
to 6.4%. The Company’s equity and D/E ratios came in at

We also plan to launch a private REIT in FY2023 and increase
its asset size to around 100 billion yen by FY2027.
Moreover, we will actively invest in human resources devel-

29.0% and 1.1x, respectively. None of these indices reachedopment, DX, technological development, and other areas toour targets.

improve corporate value on a sustainable basis. In addition to

Due to the difficulties encountered in achieving the performance targets and financial indices identified in Medium-Term
Management Plan 2023 owing to this prevailing operating environment, we reviewed our numerical targets and formulated
Medium-Term Management Plan 2025, which ends in FY2025.

Making Investments in Growth of 120
Billion Yen on a Cumulative Basis OverThree Years

18

TSR
(%)

200

150

100

50

0

Under Medium-Term Management Plan 2025, we will make(Year/Month) 2017/3

investments totaling 120 billion yen over three years to expand   Nishimatsu Construction      TOPIXNISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

2018/3

2019/32020/32021/32022/32023/3

INTRODUCTIONVALUE CREATIONSTRATEGY(Billions of yen)

Investment classifications

FY2022 results

FY2023-FY2025

GX and community
creation

1.5

40.0

Asset value-added

27.5

70.0
Investment 110.0
Recovery

40.0

SUSTAINABILITYDATA SECTION

between financing, redemption, and investment. Moreover, we will
look to maintain financial soundness by separating and managing the balance sheets of our Construction and Asset ValueAdded Businesses, and by developing financial strategies for
each.
Nishimatsu Construction has already implemented a dividend payout ratio of 70% and a large-scale purchase of its

Human resources development / DX / Technologicaladvances, etc.

4.3

10.0

Total investment

33.3

120.0

own shares, and is now managing the Company with financial
leverage in mind. Looking at its stock price as of the end of
August 2023, however, the Company’s P/B ratio currently
stands at slightly less than 1.0. We will gradually improve thepromoting DX through the Nishimatsu Employees’ University,

profitability of our Domestic Building and Overseas Civil

which is responsible for human resources development andEngineering Businesses based on the Earnings Improvement

training, and creating smart construction sites, we will work to

Plan of Medium-Term Management Plan 2025 to achieve a

improve productivity in the Construction Business and develop

return on capital in excess of the cost of capital. Furthermore,high added-value buildings through the development of

we intend to maintain and improve our stock price earnings

labor-saving technologies such as operator-less construction

ratio by proactively disclosing information on our path toand technologies for ZEB and ZEH. We will invest 10 billion

future growth. Through these means, we aim to achieve a P/B

yen over three years to strengthen these management founda-

ratio of at least 1.0.

tions and develop technologies in the construction field.

Financial Strategy Under Medium-Term
Management Plan 2025

Shareholder Return Policy
Comprehensively taking into consideration the operating environment and the Company’s results, Nishimatsu Construction

The financial index targets of Medium-Term Management Plan

has adopted the basic policy of providing stable and continu-

2025 are to maintain an ROE of at least 8%, an equity ratio ofous returns to shareholders while upgrading and expanding

approximately 30%, and a D/E ratio of approximately 1.5x. With

internal reserves. The Company’s dividend payout ratio, which

our investments in growth expected to bear fruit in two to three

was set at 70% or more during the period of the previous

years at the earliest, we will raise medium- to long-term funds

Medium-Term Management Plan, is set at 70% until FY2025,

while keeping financial costs low through such ESG financing as

the final fiscal year of Medium-Term Management Plan 2025.

the sustainability link bonds issued recently. We will also imple-

First, we will focus on improving profitability and promotement appropriate financial strategies, keep a close eye on inter-

investment in growth areas to realize more stable returns to

est rate trends going forward, and maintain a balanceshareholders on an ongoing basis.

Initiatives to enhance
corporate value
Return on capital (ROE)
improvement
measures

Achievement of Medium-Term Management Plan 2025
• Improving the profitability of the Domestic Building and Overseas Civil Engineering Businesses based on the Earnings Improvement Plan of Medium-Term
Management Plan 2025 and fulfilling this Plan are prerequisites to improving ROE.
Financial leverage-oriented management• In accordance with Medium-Term Management Plan 2025, in addition to investments in growth using interest-bearing debt, the Company is engaging in
financial leverage-oriented management that encompasses such factors as a consolidated dividend payout ratio of 70% and other shareholder returns.
ROE and ROIC management on a Group-wide and segment basis• Implement balance sheet management by segment from FY2023• Refine analyses and evaluation through ROE and ROIC management on a Group-wide and segment basis

Enhance corporate value (PBR
improvement
measures)
Measures tomaintain andimprove theCompany’s
stock priceearnings ratio

Promote sustainability management• Established the Sustainability Committee while pursuing initiatives to achieve sustainability-oriented management• Further strengthen the provision of information regarding sustainability while aiming for a higher share price through improvements in the Company’s ESG
rating and selection as an ESG stock
Further reduce cross-shareholdings• The Company’s policy is to hold only those equities that are necessary in terms of business operations as cross-shareholdings, and to reduce any other equities except in special circumstances. Improve asset and capital efficiency through continued reduction.
Enhance information disclosure to investors• We will enhance information disclosure to investors by disclosing details not only concerning our Construction Business, but also the path to future growth in our
Asset Value-Added and Regional Environmental Solutions Businesses, as well as the results of collaboration with partners in other industries, such as ITOCHU.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

19

STRATEGY

Domestic Civil Engineering Business

Significance of the Civil Engineering Division
Infrastructure construction to create a sustainable society in whichpeople can live with peace of mind
Nishimatsu Construction’s Civil Engineering Division utilizes its technologies, which havebeen acquired over 150 years, to build social infrastructure, such as roads, railways, power
facilities, and dams. By utilizing this knowledge for development of seamless consolidated
national land and disaster prevention measures in preparation for the future of Japan given its
declining population, we will contribute to carrying out Japan’s national spatial plans andbuilding resilient national infrastructure. Further fine-tuning our strength in tunnel technology
to make use of underground space, we will continue to take on challenges in new fields such as
renovations and offshore wind power. In addition to promoting DX by creating “smart construction
sites,” we will make headway in strengthening our organizational capabilities.

General Manager ofCivil Engineering Division

Makoto Isshiki

As the difficult order environment is expected to continue for

Looking Back On Medium-Term Management
Plan 2023

some time, from now on we will increase the number of bids
we make and strengthen our bidding system for public works.
The ratio of completed private sector construction projects

Having considered large-scale government construction, renovation construction and land readjustment projects, and thein Japan has remained at 22–23% over the past two years.

development of automation technology for tunnel construction

Although we received orders for large-scale construction workas our strategic initiative fields, and further having adopted

at the end of FY2022, we will continue to focus on renewal

investments and measures for growth, the Civil Engineering

work and land readjustment projects.
With respect to the development of automation technology

Business has been engaged in business activities underMedium-Term Management Plan 2023. In FY2022, we com-

for tunnel construction, we are conducting on-site trials of apleted construction projects for tunnels, dams, sluices, andremote operation system for each construction machine andother public sector works, and large-scale solar power gener-

working on improvements while incorporating feedback fromation facilities in the private sector. Generally, good progress

the site. We will continue to develop this system toward thewas made with public construction projects in FY2022, andgoal of automating construction.

overall net sales and operating income for the Civil

Issues and Initiatives Toward Achieving
Nishimatsu-Vision 2030 and Medium-Term
Management Plan 2025

Engineering Business were roughly in line with initial plans.
Orders received were 102.4 billion yen (target: 110 billion
yen) in FY2021 and 107.5 billion yen (target: 115 billion yen) in
FY2022, thus slightly short of the initial plan for the second
consecutive year. In addition to mainly tunnel construction,

In Nishimatsu-Vision, we aim to solidify the foundations of thedam construction, and Shinkansen viaduct construction, we

Civil Engineering Business and strengthen our personnel andalso received orders for private land readjustments, Linear

organizational capabilities, targeting net sales of 110 billion

Shinkansen viaduct construction and other projects.

yen and gross profit of 17 billion yen in FY2025. This period

Orders received (non-consolidated basis)

Net sales (non-consolidated basis)(Billions of yen)(Billions of yen)

Gross profit/Gross profit margin(non-consolidated basis)

150(Billions of yen)

30

150

145.2

120

102.4

120

107.5 110.0

90

90

60

60

30

30

115.4

25

108.4

106.4

100.0

0

0
(FY)

2020

2021

2022

2023

(Forecast)

(FY)

（%）

15.0
18.8

15.5

18.0

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

12

15.0

2021

2022

2023

(Forecast)

(FY)

9
6

5

3

0

2020

15

10

0

2020

2021

2022

 Gross profit (left axis)
Gross profit margin (right axis)

20

18

16.9

13.4

20
15

17.4

2023

(Forecast)INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Materiality and Medium-Term Management Plan 2025 Priority Measures
Materiality

Building sustainable social
infrastructure (civil engineering infrastructure andbuildings)

Creating rewarding
workplaces

Priority Measures

Initiatives

Strengthen personnel andorganizational capabilities• Increase staffing of bidding departments by 20% (compared withFY2022) and utilize external resources• Form teams for comprehensive evaluation analysis and exploration,
streamline proposals

Take on challenges in new fields• Develop and improve technologies for tunnel lining refurbishment• Promote the development of technologies for road slab replacement• Take part in offshore wind power generation projects

Develop new production systems•P romote DX to accelerate smart construction site activities

will serve as a stepping stone for our transformation into afields, and private sector facility upgrades. We also plan tocompany with comprehensive capabilities.

increase sales of land readjustment projects through horizontal

New construction work ordered by government offices is
expected to increase slightly or remain flat. We will continue tocollaboration with the Asset Value-Added Business Division.
In April 2024, overtime cap regulations will be applied to theposition tunnel construction as the core of the Civil

construction industry. We have long been implementing aEngineering Business, leverage our existing technology andrange of initiatives to reform work styles to reduce long work-

track record, and maintain our sales scale by strengthening

ing hours, and we will continue these efforts and make further

our system for large-scale and highly complex construction

improvements. Therefore, in addition to developments in con-projects. In particular, we will promote automation in mountainstruction technology, we will promote DX using ICT technolo-

tunnel and shield tunnel construction to bring about improve-gies such as BIM/CIM and AI to further improve on-sitements in productivity while optimizing staffing, aiming toefficiency. As most of the carbon dioxide emitted from con-achieve high profitability.

struction sites is emitted by civil engineering operations, we

We will allocate management resources to disaster preven-will also focus on environmental measures in accordance withtion and mitigation-related construction, which is expected to

the ZERO30 road map by utilizing electricity from renewable

increase in the years to come, infrastructure upgrades andenergy sources and implementing energy conservation

renewable energy-related construction, which are growing

measures.

Contributing to SDGs (construction completed in FY2022)
Received Japan Society of Dam Engineers
technology award for contributions to technological development

Construction of Biratori Dam body (Phases 1 to 3), partof Saru River Dam Comprehensive Development Project
Nishimatsu Construction undertook the construction of thedam body for a concrete gravity dam with a levee height of
55 m, a crest length of 350 m, and a levee volume of
178,000 m3 in Biratori Town, Hokkaido Prefecture. As rarebirds of prey were confirmed to be inhabiting the area, wegave consideration to the breeding season (suspension of

construction work and periods to allow the birds to become
accustomed to our presence), carefully selected equipment
and machinery color schemes (use of low-luminosity paint),
and adjusted lighting angles for night operations. Having
achieved flood control, the maintenance of normal runningwater functions, and the supply of tap water, this project
received the 2022 Technology Award from the Japan
Society of Dam Engineers in recognition of its significant
contribution to the development of dam technology.

Construction of large-scale solar power
generation facility, including site
preparation

Construction of solar power generation facility in
Minamiyamashiro, Kyoto Prefecture, andShimagahara, Mie Prefecture

Dam body construction at the Biratori Dam

Nishimatsu Construction carried out the site preparation andpanel installation work for a large-scale solar power generation facility construction project that straddles the Kyoto-Mie

Large-scale solar power generation facility that straddles Kyoto-Mie
prefectural border

prefectural border. In addition to a development area ofapproximately 80 hectares, an earthworks volume of
approximately 2.9 million m3, 15 regulating ponds, andlarge-scale river channel replacement, the scale of construction included the installation of approximately 140,000
solar panels. The facility’s power generation capacity isapproximately 60.5MW, which is equivalent to approximately
15,000 ordinary households. The reduction in CO2 emissions is equivalent to that of 8,000 ordinary households,
contributing to the realization of a decarbonized society.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

21

STRATEGY

Domestic Building Business

Leveraging our strengths in design and construction to establish differentiating factors in our fields of specialization
Rebuilding our portfolio, achieving a transformation to a high-profit corporate structure
In the Building Business, we are working to deepen dialogue with customers and improve ourplanning and proposal capabilities, develop sales by fully making use of our internal and external
relationships, and establish differentiating factors in our fields of specialization that leverage ourstrengths in design and construction. We will achieve a transformation to a high-profit corporate
structure by building a portfolio that remains unaffected by the ebb and flow of economic tides.
We will further solidify the social infrastructure development capabilities that we have been cultivating, seeking improvements in customer satisfaction and continuing to grow as a company
with comprehensive capabilities by working together toward the rebuilding of social functions.

General Manager of
Building Division

Kazutoyo Hamada

results, the following tasks remained: (1) In logistics facilities,

Looking Back On Medium-Term Management
Plan 2023

even in the fierce competition for orders, becoming able toreceive orders at appropriate profit levels; (2) For environmen-

In FY2022, construction profitability worsened as a result oftal facilities (incineration plants), collecting medium- to long-soaring material prices, leading to a significant decrease interm business information and systematically cultivating

operating income. As a result of having reviewed our risk

people with experience in design and construction; and (3) In

countermeasures and switched to placing emphasis on profit-

urban redevelopment projects, although we have been able toability midway through the period, our target for orders

demonstrate our strengths by leveraging our overall capabili-

received was not achieved. In addition to internal restructuringties, we must also handle price fluctuations in the businessand continuing negotiations with customers regarding con-plan over the long term.
From front loading that utilizes BIM, which is one of our pri-struction work affected by price increases, we worked to minimize the risk from price fluctuations on future construction

ority measures, I am sensing a positive effect in reducing pro-orders. Of all construction projects completed in FY2023,

duction costs by improving construction efficiency and believe

54% remain affected by price increases. However, it isthat the results will take visible shape in Medium-Term

expected that this will decrease to 27% in FY2024 and to 4%

Management Plan 2025. Construction of our Company facil-in FY2025, and business performance is expected to continue

ity, which was designed using advanced ZEB technology,

improving.

was completed in FY2022. Going forward, we will conduct avariety of quality and performance verifications and aim to

While the individual initiatives focused on as priority areas

establish our environmental design technology.

under Medium-Term Management Plan 2023 achieved certain

Orders received (non-consolidated basis)

Net sales (non-consolidated basis)(Billions of yen)(Billions of yen)

Gross profit/Gross profit margin(non-consolidated basis)

200
150

164.9

183.3

175.0

170.0
180

100

120

50

60

172.0

30

2020

2021

2022

2023

(Forecast)

(FY)

9.6

10

9.5

8

174.5

20

17.9

16.3

4.9

2.2
2021

2022

2023

(Forecast)

(FY)

0

2020

2021

2022

 Gross profit (left axis)
Gross profit margin (right axis)

22

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

2

3.7

0

2020

6

11.0 4

10

0

0
(FY)

225.0
187.5

（%）

(Billions of yen)

240

2023

(Forecast)INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Materiality and Medium-Term Management Plan 2025 Priority Measures
Materiality

Building sustainable social
infrastructure (buildings)

Creating rewarding
workplaces

Priority Measures

Initiatives

Improve capabilities to develop plansand proposals• Improvements to planning departments and planning design departments: Engage in deeper dialogue with customers to propose optimum plans that include costs

Fully utilize internal and external relationships to engage in sales• Form alliances with partners in different industries (ITOCHU Group,etc.)• Strengthen internal coordination in urban redevelopment projects

Establish differentiating factors in priority fields• Data centers and refrigerated/frozen goods warehouses: Application oflogistics facility design and construction technologies• Environmental facilities (waste incineration plants): Pass on andimprove design and build technologies with extensive track records,
leverage relationships with plant operating companies

Develop new production systems• Promote DX to accelerate smart construction site activities

Issues and Initiatives Toward Achieving
Nishimatsu-Vision 2030 and Medium-Term
Management Plan 2025

planning and design departments will be actively involved
from early project stages. We will propose optimal plans,
which will include cost controls, by delving more deeply into
customer needs. In addition to creating synergies with part-In addition to working to transform to a high-profit corporateners in different industries, including the ITOCHU Group, we

structure to achieve Nishimatsu-Vision 2030, we will engage

will promote horizontal collaboration within the Company on

our capabilities in creating worthwhile structures —that is, oururban redevelopment and land readjustment projects. We will

sales, planning, design, and construction capabilities—andalso focus on data centers as an area in which we can ascer-

involve the relevant people while bringing together diverse

tain customer needs and capture market share by leveraging

capacities and further strengthening our abilities to achieve ourthe expertise we have cultivated through the design and con-goals. By establishing ZEB and wooden construction technol-

struction of logistics facilities. In environmental facilities, weogies, we will respond to social issues such as climate change

aim to secure stable orders by passing on technology andand decarbonization. Evolving from our Building Division, we

strengthening relationships with plant companies. Additionally,

will also contribute to the growth of our Asset Value-Added

we will promote DX in building new production systems that

Business and Regional Environmental Solutions Business.

will contribute to improved productivity, such as developing IT

As part of our efforts to transform to a high-profit corporate

solutions for on-site inspections.

structure under Medium-Term Management Plan 2025, theContributing to SDGs (construction completed in FY2022)
Local community-based 3R activities win
Grand Prize at the 2022 Kinki Region
Construction Recycling Awards

View of exterior on northeast side of factory

Takuma Co., Ltd. Harima Factory reconstruction
This project involved rebuilding a factory in Takasago City,
Hyogo Prefecture, operated by Takuma Co., Ltd., which
manufactures biomass boilers and other products.
For this construction project, we implemented 3R activities that included: Reduce (reducing waste generation by
utilizing BIM, reducing wood waste generation by using steel
molds); Reuse (reuse of construction soil on site and atother sites, reuse of existing stone walls and gutter iron covers); and Recycle (internal use of construction sludge, thorough separation of industrial waste, a public-private
partnership agreement for horizontal recycling of plastic
bottles). We also worked to reduce CO2 emissions by utilizing energy-saving heavy construction machinery and adding
combustion accelerators to heavy construction machinery
fuel. In recognition of these efforts, in February 2023 we
received the Grand Prize at the 2022 Kinki Region

Construction Recycling Awards, hosted by the Kinki
Regional Construction & Demolition Waste Measure Liaison
Council.
Other initiatives implemented that are grounded in local
community interests included: installing citizens’ awareness
SDGs signs jointly with Takasago City; the holding of on-site
lectures on community development SDGs; participating in
local food loss reduction activities; and a food donation charity
event in aid of the Takasago City Children’s Cafeteria.

Sign to increase SDGs awareness

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

23

STRATEGYInternational BusinessRestructuring markets and mitigating business risks while expanding ourInternational BusinessIn the civil engineering field, we are leveraging the underground construction experience wehave cultivated over the years to expand our efforts in ODA construction. In the building
field, we are promoting localization in Thailand, Laos, and Vietnam, and strengthening our
implementation structure for receiving orders from foreign-affiliated companies. To
strengthen collaboration between business divisions, the Asset Value-Added Business
Division is responsible for the construction of hotel businesses that are being promoted
overseas. As a project that will contribute to the rebuilding of local social functions, we arealso aiming to participate in a pumped storage power generation project in Australia in collaboration with the Regional Environmental Solutions Business Division.

General Manager of International
Division

Yoshikuni Nakano
COVID pandemic. Contrastingly, in the civil engineering busi-

Looking Back On Medium-Term Management
Plan 2023

ness we received an order for tunnel construction in
Singapore and secured completed construction revenue as

Under the Medium-Term Management Plan 2023’s focus on

the progress of construction exceeded plans. As a result, theODA projects for transportation infrastructure in newly entered

International Business as a whole achieved its operating profit

countries, the civil engineering business received an order fortarget. In early 2022, however, material and energy prices

the construction of a subway tunnel in the Philippines. In

soared due to the conflict between Russia and Ukraine,

anticipation of gaining projects in a newly entered country, we

increasing construction costs. In addition to construction proj-

also established a preparatory office and put in place prelimi-

ect delays and project cancellations brought about by thenary investigation and preparation systems in Australia. In the

weak yen, operating income for FY2022 was significantly

building business, we began construction for an in-house

lower than planned due to additional costs incurred caused

development project in Bangkok in June 2022 as part of ourby construction issues in Singapore and a deterioration inefforts in building projects. Regarding local- and foreign-affili-

profit.

ated clients, we worked to increase orders from local clients,

Issues and Initiatives Toward Achieving
Nishimatsu-Vision 2030 and Medium-Term
Management Plan 2025

including CP ALL Public Company Limited. With an eye
toward localization, we have also established a training centerin Thailand and commenced training sessions for local staff
and partner companies.
As for our business results, in FY2021 the building business

Under Medium-Term Management Plan 2025, we will imple-

fell below plan targets due to the impact of the prolonged

ment priority measures designed to mitigate market environ-

Orders received (non-consolidated basis)

Net sales (non-consolidated basis)(Billions of yen)(Billions of yen)

Gross profit/Gross profit margin(non-consolidated basis)

50

20

42.2

40

44.8
15

30

25.0

10

（%）

(Billions of yen)

2.0

19.2
14.6

16.5

20

1.0
0

11.6

10

0.8

0.5

0.5

4.6

0

5

3.0 0

0.5

20
10
0
(FY)

2.0
2020

2021

2022

2023

(Forecast)

(FY)

5

-1.5

0

-3.0

-15.4
-2.2

2020

2021

2022

2023

(Forecast)

(FY)

2020

2021

2022

 Gross profit (left axis)
Gross profit margin (right axis)

24

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

-15

2023

(Forecast)-30

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Materiality and Medium-Term Management Plan 2025 Priority Measures
Materiality
Southeast Asia
Construction of transportation infrastructure

Expanding business at
existing locations andsecuring stable profits

Priority Measures

Initiatives

Strengthen implementation structure
for ODA construction projects• Aim rapidly to build an implementation structure with local partners
based on past cases• Conduct risk analyses, aim to receive construction orders in
Bangladesh• Continue surveys in Indonesia, Vietnam, etc

Strengthen systems to work on construction projects for foreign-affiliatedcompanies• New construction management system through promotion of
localization• Construction system based on collaboration with local partners• Achievement of one-stop solutions through collaborations with engineering companies• Ongoing efforts in building construction using in-house development
projects as a footholdIn the building business, although construction investment

ment risks while securing stable profits.
In international bids for civil engineering projects, priceby Japanese-affiliated companies has slowed due to factors

competition with overseas contractors is intensifying forthat include the weaker yen, construction investment by

underground infrastructure projects at existing bases such as

foreign-affiliated companies has remained steady. Up to now,

Hong Kong and Singapore. Furthermore, profits have deterio-

our orders have largely been from Japanese-affiliated compa-

rated due to rising prices brought about by the soaring mate-nies, and we have been influenced by their trends. In the

rials and energy prices and the emergence of construction

years to come, however, we will promote collaboration withrisks, making it necessary to review the structure and scale oflocal partners, localize our organization, and establish a new

the business. Going forward, we will specialize in tunnel con-construction management system by which to strengthen

struction, in which we possess a high degree of technologicalconstruction for foreign-affiliated companies and thesuperiority, and strive to mitigate market environment risks. In

horizontally-linked hotel business. Establishing a one-stopthe ODA market, where efforts are being strengthened, there

solution through collaboration with specialized contractors

are also concerns about the impact on business due to differ-and engineering companies, we are working to set ourselvesences in legal systems and business practices in newly

apart from local competitors by responding to demand notentered countries. We will therefore focus on winning con-

only for design and construction but also for facility mainte-

struction orders while quickly building a framework for work-nance and management, which will lead to expanding ouring with local partners and conducting risk analyses.

customer base.

Contributing to SDGs (construction completed in FY2022)
Construction of food processing manufacturing facility in Vietnam
Contributing to food supply to meet population growth

Kowa General Foods (Vietnam) Co., Ltd. factory
construction work
In Vietnam, we have constructed a processed food manufacturing and supply factory capable of providing a stablesupply of safe food. In this country where the population has
exceeded 100 million and is continuing to grow, awarenessof food safety is increasing as people become more healthconscious. During this construction project, we significantly
reduced the use of forming materials (wood) by pre-casting
the columns and also worked to reduce construction
byproducts by using most of the excavated soil as backfill.

Singapore subway infrastructure
construction

The Keppel Station tunnel on Singapore subway’s Circle Line

Contributing to improved lifestyle
conveniencesystem Circle Line began in 2002, with the subway route
extended several times since. In the sixth and final stage of
construction, we undertook construction of the tunnel thatconnects the existing system to the current terminal station.
Construction of this tunnel began in 2017 and concluded in
May 2023, completing a loop line of 40 km that, as its namesuggests, forms a complete circle.

Keppel Station tunnel construction on Singapore’s
subway Circle Line
Kowa General Foods (Vietnam)’s factory

Construction of Singapore’s urban mass rapid transit (MRT)NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

25

STRATEGY

Asset Value-Added BusinessAt astounding speed, creating living spaces that excite users(1) Embracing customer-oriented ideas, working to expand our solid customer base by
globally creating exciting assets (living spaces that excite users).
(2) Actively expanding value-added business investments with a focus on growth areas,
creating a system for sustainable growth based on a circular reinvestment model.
(3) As professionals, each and every one of us aims to fine tune our talents and remain a
top-notch producer of exciting projects.
General Manager ofAsset Value-Added Business Division

Yoshiyuki Sawai
In the residence sector, we are also engaged in the busi-

Looking Back On Medium-Term Management
Plan 2023

ness of university student dormitories. In this business, we areproposing one-stop solutions that include planning and devel-

Together with making active investments based on an asset

opment, design and construction as well as subsequent own-

strategy that has focused on growth areas, under Medium-ership, management and operation by a Group company. In

Term Management Plan 2023 we have been working to

addition, for Keio University’s Shonan Fujisawa Campus H

enhance profitability and improve asset efficiency by evolving

Village, which began joint operation in March 2023, we areinto the circular reinvestment model through timely asset

actively incorporating environmentally friendly initiatives such

replacements. At the same time, we have been strengthening

as solar power generation facilities and storage batteryorganic collaboration with our Building Business Division while

equipment.
In FY2022, we also started the formation of private placement

aiming to expand the Group’s revenue.

funds, taking steps toward the circular reinvestment model.

Our efforts during the plan period in the hotel business,
which is one of our key assets in the tourism and entertain-

Issues and Initiatives Toward Achieving
Nishimatsu-Vision 2030 and Medium-Term
Management Plan 2025

ment area, include the opening of the Korinkyo boutique hotel(Kanazawa City) and Hotel JAL City Toyama (Toyama City) in
FY2021 and of the Prince Smart Inn Hakata (Fukuoka City) in
FY2022. We are currently engaged in the hotel business not
only in Japan but also overseas, with the Grand Nikko

Under Medium-Term Management Plan 2025, we will steadily

Bangkok Sathorn scheduled to open in the Thai capital ofbuild up our revenue base, evolve into the circular reinvest-

Bangkok in 2025.

ment model, and contribute to the Building Business, thereby

Net investment

Net sales (consolidated basis)

Gross profit/Gross profit margin(consolidated basis)(Billions of yen)

70.0

70

(Billions of yen)

30
20
10

18.6
10

10.9

15

26.2

2021

2022 2023-2025(Plan)

(FY)

45

40.6

10

17.4

9.6

5

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

9.8

0

2020

30

15

4.7

2021

2022

2023

(Forecast)

(FY)

0

2020

2021

2022

 Gross profit (left axis)
Gross profit margin (right axis)

26

37.6

7.0

11.9

0

2020

40.1

34.2

9.5

0
(FY)

28.2

20

（%）

(Billions of yen)

30

2023

(Forecast)INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Materiality and Medium-Term Management Plan 2025 Priority Measures
Materiality

Providing user-friendly
construction-related
services

Priority Measures

Initiatives

In-house development business/
Equity investment business• Investment in growth fields asset strategy• Customer network creation

Urban redevelopment projects/Land
readjustment projects• Establishment of a model for horizontal collaboration × cross-industry
collaboration• Formation of businesses that fully utilize newly created real estate

Overseas Business• Stable growth through high efficiency, risk diversification and carefully
selected investments

Investment management business/
Property management business• Expansion of assets under management by Nishimatsu AssetManagement Co., Ltd.
• Strengthening of PBM functions of Nishimatsu Jisho Co., Ltd.

Responding to decarbonization• Implementation of ZERO30 road map

achieving sustainable growth for the Nishimatsu Construction

businesses in developed country markets and growth mar-Group.

kets, and expand our scope for earning revenue. In addition,

Our asset strategy aims to build a portfolio with a competi-

we will strive to expand business opportunities and increase

tive advantage by creating exciting assets through investment

profitability for the Nishimatsu Group by organically collaborat-in growth areas and timely asset replacements.

ing with the Civil Engineering Business Division and theSpecifically, while speeding up the preparation and com-

Building Business Division, for example by organizing land

mercialization of in-house development projects, we will

readjustment projects and urban redevelopment projects. We

actively engage in equity investment development projects.

will also strengthen our investment management, property

Our plan is to form a private REIT in FY2023 and further

management, and building management operations acrossincrease the speed of capital recovery, making net invest-

the Group. We will contribute to the realization of a decarbon-

ments of 70 billion yen in five key asset areas over threeized society by making our owned properties energy efficient

years. In overseas business, we will also increase capital effi-

and renewable energy-oriented, and by promoting specifica-

ciency, focusing on real estate investment and developmenttions that meet the ZEB Ready standards for new properties.

Contributing to SDGs
Adopting cutting-edge technologies anduniversal design to create comfortable
spaces for everyone

Prince Smart Inn Hakata
We planned a hotel that would take full advantage of thelocation potential of the
Hakata exit area of Hakata
Station and satisfy domestic
travel and growing inboundtourism demand.
As we took universal
design into consideration andproactively incorporated ICT
and AI technologies to support human activity, the hotel
provides increased
Prince Smart Inn Hakata

convenience for guests and a comfortable working environment for its employees. An open space on the premises thatcan be used by people other than hotel guests also serves
as an everyday rest area.

Safe and secure housing that isenvironmentally friendly and equippedwith disaster response equipment

To enhance preparedness for earthquakes and other natural disasters, the dormitories are fully equipped with emergency storage batteries and disaster relief supplies. In theevent of a disaster, this campus village can also serve as anevacuation center, making it a residence with safety andpeace of mind.

Keio University Shonan Fujisawa Campus H Village
Keio University’s first on-campus student dormitory projectprovides a place for students from Japan and overseas tolive in and engage in international exchange.
This project has received CASBEE Kanagawa A Rank rating as a result of the environmentally friendly measurestaken, such as the rooftop installation of solar panels to
supply electricity.

Keio University Shonan Fujisawa Campus H Village

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

27

STRATEGY

Regional Environmental Solutions Business

Aiming for further business co-creation through proposal and implementation of solutions to regional issues

General Manager of Regional
Environmental Solutions Business Division

Masakazu Hosokawa

From Nishimatsu-Vision 2030 and Medium-Term Management Plan 2025, our businessname has been changed from the Environmental and Energy Business to the Regional
Environmental Solutions Business. Building on the renewable energy and town development businesses that we have been involved in until now, the Regional Environmental
Solutions Business aims to co-create further business by working closely with urban andregional areas and proposing and implementing solutions to the issues they are facing. Up
until now, our Company’s business activities have focused on social infrastructure development such as civil engineering and building projects. Going forward, in addition to social
infrastructure development projects, we will make the expansion of value creation activities
an important policy and work to ensure that the Regional Environmental Solutions Businessplays a part in growth strategy business and becomes a new Nishimatsu strength.

Looking Back On Medium-Term Management
Plan 2023

2. Collaboration with Partners from Other Industries• Formed a Comprehensive Partnership Agreement for the
Realization of a Decarbonized Society with a local govern-

In the Regional Environmental Solutions Business, we havement in Kyushu

been able to achieve the following results mainly through3. O rganic Partnerships on Various Projects

co-creation with local governments and partners in other•P PP/PFI businessindustries, which we have built up through our civil engineer-

Kurashiki City central funeral hall facility maintenance projecting and building business, and collaboration with other divi-(representative company)

sions in our Company.

Tohoku University research base facility improvements project

1. Initiatives for the Realization of a Decarbonized Society

New funeral hall maintenance and operation project in• Wood biomass power generation business: Established in

Osaki City

April 2022, subsidiary Sanyo-Onoda Green Energy Co., Ltd.
is scheduled to begin operations in FY2024• Geothermal power business: A hot spring binary power

As mentioned above, although we made progress in accumulating track records and know-how, the amount of invest-

plant began operation in the town of Oguni in Kumamoto’s

ment was lower than planned as most of the projects were

Aso District → P.35

small-scale. Going forward, in addition to establishing an initiative framework to increase the number of high-quality projects, we will also aim to strengthen organizational
cooperation.

We will leverage renewable energy projects and community
development projects as a foothold to work closely with local
communities, and aim to create local business by proposing andimplementing measures to solve the issues faced by urban andregional areas.

Step 2: C ommunity
Based

Step 1: Entry Point
Listen to local feedback
and operate a businessthat reflects it

28

NISHIMATSU CONSTRUCTION CO., LTD.

Establish roots in local
communities using business
operation as a foothold, cultivate
an in-depth understanding of
local characteristics, and build
relationships of trust

Integrated Report 2023

Co-creation with diverse
stakeholders• Local governments• Local companies• Local community residents• Partners from other industries

Step 3: Proposal
Identify issues unique tothe region and propose
solutions

Step 4: Solving Issues
Implementing solutions to
issuesCreating local industry• Measures to deal withaging infrastructure• Job creation• Waste disposal

Linked expansion

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Materiality and Medium-Term Management Plan 2025 Priority Measures
Materiality

Priority Measures

Initiatives

Carbon neutral initiatives

Active business investment• Collaborating with local governments and partner companies to formbusinesses• Making use of internal and external relationships to gather project
information• Expanding projects with multiple local governments using the comprehensive partnership agreement with a local government as a model• CVC investment in/M&A of companies whose businesses are on track(later stage)

Providing user-friendly
construction-related
services

Development of high added-value
businesses• Introduction of pioneering technologies through collaboration between
academia and industry, and investment in venture companies• Effective use of experts and the knowledge of co-creation partners

Issues and Initiatives Toward Achieving
Nishimatsu-Vision 2030 and Medium-Term
Management Plan 2025

power generation business in Oguni Town, Aso District,
Kumamoto Prefecture. In December 2022, we took over
operations of a hot spring binary power plant from a local
business. Through this power plant, we will supply stable

To achieve profitability by FY2030, as set forth in Nishimatsu-

renewable energy to the local community. Although we are

Vision 2030, for Medium-Term Management Plan 2025 we will

still at the beginning with Step 1, we aim to use this long-es-

focus on two key measures: proactive business investment

tablished community power plant to coexist and associate

and high added value in our business. In particular, we plan to

symbiotically with the local community and build a sustainable

invest approximately 40 billion yen in growth over three years,

local recycling society by returning surplus heat and hot waterwith the period up to FY2025 being that of proactive businessgenerated from power generation projects to the local com-

investment. I would like to use this investment to grow ourmunity and contributing to its further development. Throughrenewable energy and urban development businesses.

business operations that are deeply rooted in the local com-

Specifically, we are considering a growth scenario as

munity, we will also aim to identify local issues and propose
and implement solutions to them.

shown in the diagram at the bottom left.
One example from our growth scenario is our geothermal

Contributing to SDGs
Using solar power generation installation
business as a gateway to proposing solutions to resolving local issues

Munakata City Tourism and Local Product CenterWe were selected as a business operator in a power purchase agreement (PPA) project to install solar panels on theroof of a tourism and local product center in Munakata City,
Fukuoka Prefecture. The project duration is planned to be
20 years starting from 2023, and the expected power generation and CO2 emission reduction amounts are 120,000
kWh/year and 35.9 t-CO2/year, respectively, contributing to
the reduction of local CO2 emissions by the supply of clean
energy. We also aim to use this project as a starting point to
identify local issues in Munakata City and to propose solutions to resolve them.

Selected for JOGMEC subsidy project forresource survey towards implementation ofgeothermal power generation

Geothermal resources survey of Mt. Usu
Munakata City Tourist and Local Product Center

The geothermal resource survey that our Company is conducting in the southern area of Mt. Usu, Date City,

Geothermal resources survey of Mt. Usu

Hokkaido, has been selected for the 2023 Japan Oil, Gas
and Metals National Corporation (JOGMEC) subsidy project.
This study aims to assess the amount of resources for geothermal power generation available in the area. Once theamount of resources has been confirmed and the viability ofthe business determined, our policy will be to drill geothermal wells and construct and operate a power plant. This is
expected to lead to decarbonization and the creation ofindustry and employment through the effective use of local
resources.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

29

STRATEGYTechnology Development

In working to achieve Nishimatsu-Vision 2030, the Technical Research Institute has taken the lead indeveloping technologies intended for infrastructure renovation and smart construction sites, as well as
those that contribute to decarbonization and a recycling-oriented society.
Moving forward, we will continue to develop and provide new technologies that both support social
infrastructure and create the future.

Renewal of infrastructures
Renewing tunnels without regulating traffic
We undertook the Project of technology development of
renewal of the mountain tunnel lining for the Hokuriku
Expressway from Central Nippon Expressway Company
Ltd. (FY2021-FY2022) and conducted the technology
development work.
Assuming the renewal works of tunnel lining would be
carried out while the traffic was in service, we developed
the technologies of Cutting of existing lining, Design and
Manufacturing of protectors, and Cast in-situ concrete.
Finally, the requirements by the client were fully satisfied.
Moreover, we conducted the transport test of tunnel

lining shutter using a multi-axis trolley assuming the condition that expressway would be allowed to be closed onenight. The availability of delivery of tunnel lining shutterroughly one kilometer
Lining renewal
Renewed lining
conceptual diagram
away from the site
concrete
Rock bolt
was verified andconfirmed.
Existing lining
cut line
We leverage theseresults and aim toProtector
receive the orders for
actual projects in the
future.

Water jet cutting was used to develop A life-size collision test used to develop Completed development pouring forthe technology to cut the existing lining the protective work technology
renewed lining technology

Slide form transport test using a
multi-axis trolley

Smart construction sites
Accelerating initiatives to enable operator-lessmountain tunnel construction
In order to improve safety and reduce labor requirements
for underground operations during mountain tunnel projects, we are developing Tunnel RemOS, an operator-lessconstruction system for mountain tunnels, with a practicalapplication target of FY2027.
During the first phase of the project, we sought todevelop the remote-control systems (underlying technologies) for each of the seven main construction machinetypes, including wheel loaders, drill jumbos, and shotcretemachines. We have already completed development of thewheel loader remote-control system (Tunnel RemOS-WL),
and are conducting on-site tests for actual operations.

During the second phase, we will effectively combineeach of these underlying technologies with the aim of organizing a comprehensive system that enables the entire construction to be operator-less and automated.
Remote-control operations room

Remotely operated wheel loader

Wireless
communication

On-site tests for the wheel loader remote-control system (Tunnel RemOS-WL)

30

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Technologies for decarbonization
Developing AAM* Concrete as a new
cement-free construction material

production by more than 70% compared with conventional
concrete, offers excellent strength development and freezethaw resistance, and can also be used for onsite construction and precast concrete products. This material was
jointly developed with JFE Steel Corporation, Tohoku
University, and Nihon University.

Completely free of any cement, AAM Concrete instead uses
blast furnace slag, a byproduct generated during the steel
making process, as the powder and fine aggregate, and auniquely formulated alkali solution to drive the reaction andcuring process. AAM Concrete is a new construction material that reduces CO2 emissions at the time of concrete

Concrete fluidity

Placing (bucket)*AAM: Alkali Activated Materials

Placing (agitator car’s shoot)We received an individual rating from the Building
Center of Japan for a medium- to large-sizedwooden construction method for realizing
medium- and large-scale wooden buildings
Against the backdrop of growing interest in the SDGs, expansion of ESG investments, activity to promote the use of timber resources, and the increasing availability of high-strength
wooden building materials, medium- to large-sized woodenbuildings have been attracting attention in recent years.
The Building Technique Research and Development Group,in which Nishimatsu Construction participates, developed amedium- to large-sized wooden construction method using a
hybrid approach primarily based on a wooden framework, which
received an individual rating from the Building Center of Japan in

Precast concrete block

October 2022. By applying this method, we have enabled theconstruction of wooden buildings up to ten stories tall.
This method applies a steel rod insertion and adhesive
bonding joint construction technique that was newly developed
for the post and beam joint sections. The method also incorporates high-strength shear walls made of laminated veneer
wooden panels, thereby dramatically increasing earthquake
resistance compared to conventional wooden buildings.
The development of this method progressed through a
joint research and development project with the Building
Technique Research and Development Group, represented
by ICHIURA HOUSING & PLANNING ASSOCIATES CO.,LTD. Going forward, we will promote the application of thismethod in the actual construction of properties.
Rigidity and strength testing forthe post and beam joint section
A strength test loading jack wasused to apply a horizontal force(equivalent to the force of anearthquake) to the post and beam
joint section as part of a test to
confirm the rigidity and strength ofthe post and beam joint section.
Rigidity and strength testing forshear walls
A loading jack was used to apply
a horizontal force (equivalent to
the force of an earthquake) to theshear walls as part of a test to
confirm the rigidity and strengthof the shear walls.

Medium- to large-sized wooden building construction method for which an evaluation has been acquired

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

31

STRATEGY

Nishimatsu DX Vision & Road Map

Certified in July 2022

The DX certification system certifies that a company is ready to transform its business digitally(DXReady), including the formulation of a visionand the development of a strategy and system
for realization of DX.

2030 and Beyond “We will Innovate Spaces Digitally”
Nishimatsu Construction will create security, vibrancy, and bonds between people at worksite “spaces,” “spaces”
related to workstyles, and “spaces” that create and use buildings, real estate, and energy. In this way we will transformthese into unconventional “spaces.” At the same time, we will provide these “spaces” to all those involved,
including our employees, partner companies, and customers, as well as to society, communities, and towns.

Knowledge Data
Technical Data

Business Data

Promoting Climate
ReformExternal Data

Autonomous DX
Promotion Culture

Sharing Our Vision

Organically Linked andExpanding Cooperation

A “Workstyle” Where Every Individual Can Play an Active
Role in the Fusion of the Virtual and the Real
Together with the aim of creating an “I” that allows each individual to have a sense of fulfillment
in their work, we will create growth resources by ensuring everyone demonstrates a high levelof performance while maintaining a good work-life balance.

Workstyle DX that Guarantees Both Job Comfort and Job Satisfaction
While Maximizing Capabilities
Step 1: 2023-2026

Step 2: 2027-2030

Workstyle DX that enhances engagement

Workstyle DX that maximizes capabilities

Concept
Job Comfort
Job Satisfaction

32

Goals

Work comfortably (flexible hours)
Freely select one’s work location
Share what needs to be done withcolleagues
Play an active role in various situations
Work under conditions that ensure health
Learn on one’s own
Feel appreciated by customers and theCompany

NISHIMATSU CONSTRUCTION CO., LTD.

Freeing up
time
Ability towork withpeace-ofmind
Ability to
improveoneself
and feelappreciatedIntegrated Report 2023

Concept

Goals

Ability to focus on
creative workGood
work-life
balance

Ability to take on
the challenge ofcreative work

Ability tomaximizeone’scapabilities

Security

Culture that Promotes
Autonomous DX
We will promote autonomous DX
initiatives by improving transformation skills through an individualtransformation mindset andchallenges

Organic Linkage andExpanding Cooperation
We will discover new opportunities
for taking on challenges throughinformation cooperation acrossorganizations, and further expand
our network through cross-organizational initiatives

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITY

See the Company’s website for details regarding our approach to DX.

DATA SECTION

WEB https://www.nishimatsu.co.jp/dx/

Smart “Construction sites” with Synced/Integrated On-site Capabilities
We aim to create “smart (highly efficient) construction sites” that are able to correctly understand past and present conditions using
data and technology, and predict the future (evolve), while applying digital technologies to further improve (deepen) the on-site capabilities that we have acquired thus far, through which we will support social infrastructure.

Development of new production systems
Digitization

Digitalization

DX

Digitalize operations andimprove productivity

Enhance management throughdigital business reforms

Create value through the integrationof the real and digital worlds

Synced with the provisionof value

Design and Planning DX

Shift to proposal-type front loading
BIM/CIMenhancements

BIM/CIM use

Fully automated construction and management

4D/5D
New value proposal-typesimulations

Construction management thatpredicts the future of work
Convert tacit to
explicit knowledge

Integrated
management

Integrate QCDSEM
management systems

2030

tion
truc
C o nsAutomated
Digitalized andremote QCDSEM

Shift to remote-controlled
and automated construction

Convert worksites tofactories through supply
Build a supply
chain collaboration

chain platform

Remote-controlled

na
Ma

ge
me
nt

Forward-looking proposals 2035~

Shift to fabrication

2025

2023
(current)

DX
Construction DX

Businesses that Create New Services and Spaces in the Ecosystem
We will create an ecosystem that circulates data on construction, energy, and real estate in order to create new businesses thatprovide customers and society with unconventional and ideal spaces, and to contribute to the rebuilding of social functions.

Maximizing regional value and creating vibrancy by multiplying the creation of physical spaces withthe creation of experiences2023~2025 Create vibrant spaces through the combination of business and digital tools

2030~

Business Concept

Create convenient, comfortable
spaces to revitalize regional economic activity

Provide content support for regional vitality

Create attractive lifestyles andamusements in virtual spaces

Create new experiences through a combination of the
Metaverse and AR/MR

Fully understand regions and provide secure lifestyles

Improve efficiency of space management costs

Provide urban planning services offering a variety of physical spaces andexperiences that revitalize regions

Promote DX in the creation of physical spaces and human resources by the construction industry,
aim for industry-wide quality improvements and supply capacity increases
2023~2025 Provide know-how possessed by the construction industry in creating physical spaces and human resources
Business Concept

Bring manufacturing up to date andinstill construction DX

Reduce workloads in the construction industry

Increase the population involved inconstruction and raise performance

Improve the working environment and solve the technicalskill succession problem

Build an ecosystem to optimize thesupply chain

Improve the flow of operations involved in transporting
construction materials and equipment, etc.

2030~

Provide a fully digital construction
platform for training, worksites, materials, and construction equipment, etc.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

33

STRATEGYSpecial Feature

Collaboration with ITOCHU Corporation

Through collaboration with ITOCHU Corporation (hereinafter referred to as “ITOCHU”) and the ITOCHU
Group, and by combining each other’s management resources and know-how, Nishimatsu Construction
will go beyond the boundaries of construction and provide people with security, vibrancy, and bonds.

Collaboration Topic 1

Office version of Yukarela all-air floor radiant air-conditioning system jointly developed
Nishimatsu Construction has jointly developed an office version of the Yukarela all airblown floor radiant heating and cooling system with DAIKEN Corporation (hereinafterreferred to as “DAIKEN”), an ITOCHU Group company.
Going forward, we will work with DAIKEN to verify the product’s energy efficiency andcomfort, while aiming to find practical applications.

100
100

carpetingTile Tile
carpetingCooling/heat
OA flooringCooling/heat
OA flooring
dissipation
dissipation

Cold/warm
Cold/warm

air from
air conditioner
air from
air conditioner

490 490
500 500

10 10
Increases
surfacearea area
Increases
surface
Increases
conductivity
Increases
conductivity

Trials in Aikawa Technical Research Institute’s
ZEB technology demonstration space
We completed the renovation work of the elemental technology demonstration space at Aikawa Technical ResearchInstitute in March 2023, with the goal of strengthening ZEB
design capabilities was completed in March 2023. For thisrenovation, we installed a different air-conditioning technology
in each of the office spaces, for which the usage patterns wereassumed to be different. From now on, the plan is to undertake the verification of their energy efficiency and comfort.

Exterior view of Aikawa TechnicalResearch InstituteYukarela air-conditioning system
While transmitting heat to the OA
flooring by flowing air under thefloor, solar radiation load is reduced
by releasing it into the office fromrecirculating ports near windows

Collaboration Topic 2

Hotel development project "ASAI Kyoto" attracted Dusit International
Aiming to expand its Asset Value-Added Business, Nishimatsu
Construction is investing in tourism-related assets as a growtharea on which to focus.
Kyoto is one of the most popular tourist cities in the world,
and we have been actively exploring business opportunities
there. Planning to remain competitive over the long term, theCompany and the ITOCHU Group attracted Japan’s firsthotel brand from Dusit International (hereinafter referred to as“Dusit”), Thailand’s leading hospitality company, and ASAI
Kyoto Shijo opened in June 2023. Thailand is also known as

34

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

a country that is pro-Japan, and the number of visitors toJapan is expected to increase further in the years to come.
Dusit is also committed to realizing a sustainable industry inThailand, where the tourism industry is well-developed, byoperating an educational business aimed at training thehuman resources involved in the hospitality industry. The
fusion of Japanese and Thai tradition and culture provided
by this hotel will add value, and we are aiming for ASAI
Kyoto Shijo to become the hotel of choice for people fromaround the world.
In the years to come, we will continue to collaborate with
ITOCHU, which is developing a range of businesses both
domestically and internationally, to create businesses that are
in line with Nishimatsu Construction’s asset investment
strategy.

INTRODUCTION

Special Feature

VALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Measures that Bring Solutions to Social Issues

We are committed to supplying stable renewable energy to the region and contributing to the further
development of local communities.

Geothermal power generation (Waita Green Energy Geothermal Power Plant)
Operations commence at the hot springs binary power generation plant
Nishimatsu Construction has launched a geothermal power
generation project in Oguni Town, Kumamoto Prefecture. This
project took its first steps after we obtained the business of a
hot springs binary power plant that had been owned by
Ishimatsu Noen Limited (Head office: Oguni Town, Aso
District, Kumamoto Prefecture; President: Yuji Ishimatsu) .
This hot springs binary power plant will make effective use of
surplus steam from the hot spring wells. As the first project inour geothermal power generation business, we will acquire
expertise in the development and operation of geothermal
power plants coexisting with local communities, and position
this facility as a pilot project to promote further geothermal
development projects. In addition, since there is excess steam
to be utilized, we plan to conduct various initiatives as aworksite that acquires know-how for future geothermal development, including demonstrations of smaller-scale binary
power generation and field trials for the utilization of excess
heat and excess hot water. We will continue to develop geothermal power projects as a purely domestic baseload powersource, taking advantage of Japan’s potential as one of theworld’s preeminent countries in terms of volcanic resources.

Power generation plant overview
Name: Waita Green Energy Geothermal Power Plant
Location: 2
 831-1 Nishisato, Oguni Town, Aso District,
Kumamoto Prefecture
Power generation type: Hot springs binary power generation
Rated power output: 4
 9kW

Building a Regional Recycling-Oriented Society

Co-Creation and Coexistence with Local Communities

In our efforts to build a regional recycling-oriented society, we are planning to provide surplus hot water generated from hot springs binary power generation to
Circulife, Inc., a company that taps the unused resourceof Oguni cedar trees to produce wooden thread-derived
herb dyes. Under the Nishimatsu Construction version of
the zero-emission city concept, we aim to realize aregional recycling-oriented society by returning excess
heat and hot water to local industries and supplying
stable renewable energy to the region.

With the aim of implementing this as a long-term project inOguni Town over a period of 10 to 20 years, our goal is toposition the power plant as a member of the community,
and to contribute to the further development of the town
while working with it in close cooperation to co-create andcoexist with its residents.
Together with the local neighborhood association, weare engaged in activities to support the community. This
includes covering aqueducts used for local agriculture andother purposes with metal plates that prevent sedimentfrom blocking water passage.

Herb-dyed products provided by Circulife

Installation of metal plates on local aqueducts in collaboration with thelocal neighborhood association

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

35

SUSTAINABILITY

Sustainability

We developed a sustainability promotion system in April 2023 with the aim of establishing a sustainable
society for people to live with peace of mind, as is written in our corporate philosophy.
We will strengthen our sustainability management to help solve social problems as a member ofsociety.

Sustainability promotion system

Consult

Make final
decision

Board of Directors

Sustainability Committee
ReportSupervise

ReportApprove
Make policy

President and General Managers Meeting
Make policy

ERM
Specify targets, etc.
Identify risks andevaluate

ReportRisk and Opportunity Management Committee

Give instructions

Specify targets, etc.
Identify risks andevaluate

Give instructions

Environmental Committee

ReportGive instructions

Plan, design
PromoteImplement

Risk and Opportunity Management Committee

We established the Sustainability Committee as an advisory

We established the Risk and Opportunity Management

body to the Board of Directors. It consists of outside experts,

Committee after revamping the existing Group-wide risk andexternal directors, and internal directors. Incorporating theopportunity management system. The Committee is com-diverse values of internal and external committee members,

posed of the assistant general managers of each business

the Committee discusses and reports on Group-wide sustain-

division, and operates and monitors the risk and opportunity

ability issues in response to inquiries from the Board ofmanagement system in current business activities, which

Directors. These issues include materiality from a long-term,

includes identifying risks and opportunities at the Group-wide

multi-stakeholder perspective as well as the risks and oppor-

management level based on the policy for addressing

tunities associated with materiality.

materiality.

In the first year of its establishment, the Sustainability
Committee has worked to identify materiality, set materialitylinked KPIs, and formulate a sustainability policy.

36

ReportClimate change/Biodiversity, etc.
Issues related to environment, andrisks and opportunities

Group-wide sustainability issues, risks,
opportunities (non-environmental)

Sustainability Committee

ReportNISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

 See P.61

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Identifying Materiality

The Company formulated a new long-term vision in February 2023, and in April, revised its corporate
philosophy. In order to realize Nishimatsu-Vision 2030, we are working to identify key issues to beaddressed with the aim of evolving existing materiality into a new materiality based on our new corporate philosophy and long-term vision.

Identification Process
We will establish an identification process that is acceptableinterviews and employee awareness surveys. We aim to com-to our stakeholders, encompassing a variety of global andplete this identification process in autumn 2023.

other perspectives, while making use of management
References for potential issues to be considered

SelectIssues to Be
Considered

1

The World Economic Forum (WEF)
Global Risks Report 2023

2

Sustainable Development Goals (SDGs)

3

Sustainability Accounting Standards Board (SASB)
standards

26 items

4

SASB Materiality Map by Industry

24 items

5Issues identified using external frameworks

75 items

6

Issues identified in the Medium-Term
Management Plan, etc.

16 items

31 items
169 items

Total 341 items
Integrate and aggregate these 341 issues to 84

Evaluate opportunities and risks regarding the 84 issues for society and the Company
Evaluateand Reduce
Issues to Be
Considered

The evaluation results are organized along two axes, “importance to society”
and “importance to the Company,” and extract 13 issues

The 13 issues were identified as the most important based on management
interviews and employee awareness surveys, as well as stakeholder opinions

Identify
Materiality

After deliberation by the Sustainability Committee, issues are reported to
the Board of Directors, which makes decisions on them

Decide on Expression

The Risk and Opportunity Management Committee implements risk and opportunity management froma long-term perspective at the Group-wide management level based on the identified materiality.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

37

SUSTAINABILITY

Environmental Initiatives

Today’s world is faced with climate-change issues that leave no time to waste, which has led to a growing movement unifying the environment, society, and the economy. Similarly, various initiatives are picking up speed with theaim of realizing a circular economy and a nature positive approach, both of which are seen as essential elements forachieving carbon neutrality. Nishimatsu Construction has also raised initiatives for carbon neutrality as an important
issue that it must undertake with priority in order to achieve sustainable growth. We have formulated Zero30 Road
Map 2023 in June 2023 as our plan for reducing CO2 emissions, we are also advancing activities that consider our
relationship with resource circulation and biodiversity. Based on the implementation of environmental management
systems that comply with ISO14001, we are committed to addressing other global standards, such as participatingin the RE100, acquiring SBT certification, and disclosing information related to climate-related risks and opportunities
in accordance with the TCFD. In this way, we will continue to meet the expectations of our stakeholders throughvarious efforts intended to pass on a healthy, sustainable global environment to future generations.

Past and Future Environmental Management Efforts

FY2015• Formulated Medium-Term
Management Plan 2017(accelerated initiatives tobecome a leader in environmental management)

FY2017FY2018FY2019FY2020

FY2021

FY2022• Received Japan’s Ministerof Land, Infrastructure,
Transport and Tourism
Award as part of the 3R
Promotion Merit Awards• Achieved a 100% usage
rate for e-Manifests atconstruction sites (first fora general contractor)• Participated in the Japan
Climate Initiative (JCI)• Received certification as
an official sponsor of the
ICRI International Year of
the Reef• Began responding to CDP• Renewed our Eco-First
Mission• Received an A- rating in
the CDP Climate Change
scoring category• Received Japan’s Ministerof the Environment Award
for Climate Action (ProductDevelopment andCommercialization
category)• Formulated Zero 30 Road
Map 2021 as our plan for
reducing CO2 emissions
from construction activities• Participated in RE100• Participated in JCLP

• Formulated SBT for theGroup and received SBT(WB2ºC) certification• Disclosed climate-related
information based on the
TCFD recommendations• Received Japan’s Ministerof Land, Infrastructure,
Transport and Tourism
Award as part of the 3R
Promotion Merit Award forthe 2nd time
• Participated in the 30by30
Alliance

FY2016• Acquired Eco-First
Company certification

Major Initiatives During FY2023

Initiatives Scheduled for FY2024•F ormulated Zero 30 Road Map 2023: Updated our CO2

reduction plan and expanded our energy generation
business•P roactively disclosed environmental conservation activities(1) Formulated Nishimatsu Climate-related Information
2023, compliant with our TCFD recommendations.
Revised our governance system, and updated

response measures for risks and opportunities(2) Responded to CDP• Responded to the questionnaire for water security andforests in addition to that for climate change• Applied for external awards, including the Reduce, Reuse,
and Recycle (3R) Promotion Merit Award• Renew our Eco-First Mission• Contribute to 30 by 30• Acquire certification for SBT 1.5ºC

FY2030• Achieve the Zero30 Road Map

FY2050• Achieve carbon neutrality

Zero30 Road Map 2023 (Carbon Neutrality: Indicators and Targets)
Formulating Zero30 Road Map 2023
Under Zero30 Road Map 2021, we aimed to reduce Scope 1 and2 emissions to which the Domestic Construction Business is subject. And since its formulation we have steadily reduced emissions, emitting 50,200 t-CO2 in FY2021 against a target of at
most 60,500 t-CO2 and emitting 32,700 t-CO2 in FY2022 against
a target of at most 63,300 t-CO2. More recently we formulated
Zero30 Road Map 2023 as a new CO2 reduction plan that covers
the entire Group in line with the new Nishimatsu-Vision 2030 andMedium-Term Management Plan 2025. The new Road Map also
conforms to international standards by, for example, expanding
the target from the Domestic Construction Business to all businesses, including the International Business.
Zero30 Road Map 2023 includes reduction targets regarding
CO2 emissions for all of the Group’s business activities, as well as
energy generation targets for the renewable energy business. The
Road Map was also formulated with a target achievement year of

38

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

FY2030 in working towards achieving carbon
neutrality in 2050. The first target aims to
reduce the Group’s Scope 1 and 2 emissions(CO2 emissions from directly owned or controlled sources) by 54.8% compared withFY2020 [Target 1]. In order to achieve thistarget, we plan to fully engage in energy conservation activities, aswell as introduce diesel fuel combustion improvers, N-TEMS, anda high standard of renewable energy power (77% by FY2030).
The second target covers Scope 3 Category 11 emissions (CO2emissions coinciding with energy use during building operation
after completion and delivery), and aims to reduce emissions by
27% compared with FY2020. Primarily, we plan to promote andexpand Net Zero Energy Building (ZEB) standards for properties
we design and construct [Target 2].
The third target covers renewable energy generation led by the
Regional Environmental Solutions Business, and has been set toINTRODUCTIONVALUE CREATIONSTRATEGY

a level (40,000 t-CO2) that exceeds the remaining emissions(31,700 t-CO2) at the time target 1 is achieved. Here, we plan to
deploy solar, biomass, small-scale hydroelectric, geothermal, andother forms of renewable energy generation throughout the

SUSTAINABILITYDATA SECTION

country in an effort to provide green energy to society. And we
aim for the CO2 reduction effects from renewable energy generation to equal the remaining Scope 1 and 2 emissions at the earliest possible stage prior to FY2030 [Target 3].

CO2 Emissions and Energy Generation in FY2030
Vision for target 1 (Scope 1 and 2) and target 3 (energy generation)

FY2030 Vision for target 2 (Scope 3 Category 11)

FY2030 (Target year/Vision)
Remaining Emissions

FY2020 (Base year/Actual Results)
Reduction Breakdown

Energy Generation✱ Base year (FY2020) emissions: 3,192,000 t-CO2
Scope 3 Category 11: CO2 emissions
coinciding with energy use during
the building operation stage after delivery

Estimated emissions*: 78,600 t-CO2
Scope 1: CO2 from fuel consumption
Fuel efficiency improvements forconstruction equipment: (8,500 t-CO2)

FY2020 remaining emissions:70,200 t-CO2

Energy conservation, diesel fuelcombustion improvers: (1,600 t-CO2)

Remaining emissions ❶:23,500 t-CO2

Zero 30 Road Map 2023
target 1:
Scope 1+2 as comparedto FY2020

54.8% REDUCTION
Scope 2: CO2 from power consumption

Zero 30 Road Map 2023
target 3:

ZEB promotion and expansion:(863,000 t-CO2)

Implement renewable energy
generation exceeding theremaining emissions at the earliest

Zero 30 Road Map 2023
target 2:

Reduce Scope 3 Category 11
emissions by 27% comparedwith FY2020

possible stage prior to FY2030

Energy factor reduction: (9,200 t-CO2)
Renewable energy generation:

Remaining emissions:

108,000 MWh

2,328,000 t-CO2

Introduction of renewable energy:

Total remaining emissions (❶+❷):(27,300 t-CO2)

31,700 t-CO2

CO2 reduction effect: Equivalent to

N-TEMS, etc.: (400 t-CO2)

40,000 t-CO2

Remaining emissions❷:

8,200 t-CO2*Estimated emissions: Estimated CO2 emissions in the case where no action is taken through FY2030. The portion reduced under the direction of the Company is accounted for by energy
conservation and diesel fuel combustion improvers, N-TEMS, etc., and the introduction of renewable energy (approximately -29,300 t-CO2)[Reference] About Scope 3 Category 11

Scope 1: 0.7%

Scope 3 refers to indirect CO2 emissions that occur upstream anddownstream from a business, as opposed to CO2 directly emitted
by the business activities (Scope 1 and 2) of the business operator.
Scope 3 is classified into 15 categories. In regard to the emissionsof the Group falling under Scope 1, 2, and 3, Scope 1 and 2
together account for less than 2% of the total, whereas Scope 3
Category 11 (CO2 emissions coinciding with energy use duringbuilding operation after completion and delivery) accounts for thelargest portion at 65.5%.
WEB

Scope 3 Category 13: 0.8%

Scope 2: 0.8%
Scope 3 Category 1: 26.0%

Scope 3 Category 12: 1.1%

Scope 3 Category 2: 3.2%

Ratio of Scope 1, 2,
and 3 Emissions for
FY2022
Scope 3 Category 11: 65.5%

Scope 3 Category 3: 0.2%
Scope 3 Category 4: 0.9%
Scope 3 Category 5: 0.6%
Scope 3 Category 6: 0.01%
Scope 3 Category 7: 0.04%

See the Company’s website for details related to Zero30 Road Map 2023.
https://www.nishimatsu.co.jp/eng/esg/environment/

Comparison of the Reduction Levels in Zero30 Road Map
2023 Versus the SBT 1.5ºC Certification Criteriaof acquiring certification under the 1.5ºC criteria defined by the
SBT initiative, which can be considered the de facto international

standard. In the case of a base year of FY2020 and a target year
of FY2030, the SBT 1.5ºC certification criteria require a reductionin Scope 1 and 2 emissions of at least 42%, and a reduction in
Scope 3 emissions of at least 25%. The reduction levels set by
the Group are ambitious in that they exceed both of these.

Target 1: Scope 1+2

Target 2: Scope 3 Category 11

The CO2 reduction levels in the Road Map were set with the intent(t-CO2)(t-CO2)70,0003,300,000

60,000

SBT 1.5ºC assumption
3,000,000

50,00040,00042% reduction

30,00020,000

Our CO2 emissions declined significantly in FY2022
given that the renewable energy introduction rate
greatly exceeded expectations. This trend will potentially continue into FY2023 and beyond.
In FY2023, the number of buildings delivered is
expected to increase, which is anticipated to temporarily increase CO2 emissions to a significant degree.

2,700,000
SBT 1.5ºC assumption
2,400,000

Zero 30 (Nishimatsu Construction target)

54.8% reduction
2,100,000

10,000027% reduction

1,800,000(FY) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
❋ Zero30 Road Map 2021: Domestic Construction Business

25% reduction
Zero 30 (Nishimatsu Construction target)(FY) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Zero30 Road Map 2023: All businesses

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

39

SUSTAINABILITY

Environmental Initiatives
Carbon Neutrality Initiatives
Introducing New Diesel Alternative Fuels to Reduce Scope 1
Emissions
Nishimatsu Construction’s Scope 1 CO2 emissions are primarily
due to the use of diesel fuel to operate construction equipment. In
order to reduce these emissions, we have used biodiesel fuelsand diesel fuel combustion improvers in the past, yet we haveconcerns, such as manufacturer assurances and quality consistency. For this reason, we have investigated the potential of newdiesel alternative fuels.
In FY2022, we began introducing GTL (CO2 emissions reduction of 8.5%) and RD/Renewable Diesel (zero CO2 emissions) as
new fuels on a trial basis. We will confirm the feasibility of introducing each, including their reliability as fuels, before rolling out
their use Group-wide.

Moreover, as we transition to renewable energy, we are also
considering a scheme that uses some of the power from renewable energy generation undertaken by the Regional Environmental
Solutions Business for use in business activities conducted by theCompany (in-house renewable energy generation andconsumption).
As it currently stands, the renewable energy introduction rate
for FY2022 reached approximately 24% for the Group as a whole.
Nishimatsu Construction Renewable Energy Introduction Plan
(GWh)

 Actual  Plan

80.00

60.00

40.00

20.00

0
(FY)

Comparative Investigation of GTL
Versus Diesel in Terms of Fuel
Efficiency when Used in Lighting
Generators(Chubu Branch, Kachigawa
Yamada Worksite Office)RD Use Impression and Fuel
Efficiency Investigation in an
Excavator(Kanto Architectural Regional
Headquarters, Keio Fujisawa Branch
Office)Shifting to Renewable Energy to Reduce Scope 2
Emissions
We are increasing the rate of renewable energy introduction byleveraging renewable energy options provided by power companies corresponding to RE100, as well as FIT non-fossil
certificates.
To get a reduction of 27,300 t-CO2 by FY2030, we plan toachieve a renewable energy introduction rate of 80% for theDomestic Building Business, 60% for the International Business,and 100% for activities conducted by the Asset Value-Added
Business, Group company businesses, and offices. These
efforts will realize an introduction rate of roughly 77% for theGroup as a whole.

Tunnel construction site using renewable energy for 100% of construction
power (Shikoku Branch, Fubahara Tunnel Branch Office)40

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

2020

2021

2022

2023

2025

2028

2030

Promoting ZEB Design to Reduce Scope 3 Emissions
To reduce Scope 3 Category 11 emissions (CO2 emissions coinciding with energy use during building operation after completionand delivery), which account for the largest part of total Scope 1,
2, and 3 emissions, we are promoting ZEB design for properties
that we design and construct. Likewise, we are working to perfecttechnologies to ensure design capabilities that reduce the primaryenergy consumption of buildings, excluding energy generation, by
75% (Nearly ZEB standard) for office building projects in FY2027.
These design capabilities include construction planning that considers energy efficiency, improved insulation performance, theintroduction of energy-saving facilities, and effective use of unharnessed energy. Along with receiving our first ZEB certification for adesign and construction project order, in FY2022, we also renovated our Technical Research Institute in a manner that demonstrates our ZEB design technology.

Landcube Ageo (warehouse, steel construction, four above ground stories,
total floor area: 39,859m2)❋ Received our first ZEB Certification for a design and construction projectorder. In addition, we have 10 successful ZEB Ready projects and fivesuccessful ZEH projects (including those scheduled to receive
certification)

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Circular Economy x Carbon Neutrality
Thorough Waste Sorting - Compliance with the Plastic
Resource Circulation Act
To form a circular economy, we have put activities to ensure
waste sorting and to avoid final disposal at the core of our activities regarding the handling of construction by-products generated
at construction sites. Similarly, we have Nishimatsu Construction
Waste Sorting Rules as a unique effort, have built sorting yards,
and thoroughly manage construction by-product sorting together
with partner companies in an effort to keep the final landfill disposal rate below 3%, which we have achieved each year.
Although various issues with plastics have grown increasingly
severe in recent years, one particular problem is the high degreeof thermal recycling that continues to be used to recycle plastic
waste. Following the enactment of the Plastic Resource
Circulation Act in April 2022, we began conducting oral surveys ofindustrial waste disposal companies regarding the potential ofshifting from existing thermal
recycling methods to bothmaterial recycling and chemical
recycling methods in working
towards a circular economy
and carbon neutrality.
Sorting Activity Based on the
Nishimatsu Waste Sorting Rules

Nature Positive x Carbon Neutrality
Construction that Considers Ecosystem Conservation
Nishimatsu Construction recognizes that having consideration forplants and animals helps to conserve ecosystems and forests,
and that this relationship ultimately contributes to achieving carbon neutrality through carbon fixation, for example. We therefore
engage in biodiversity preservation activities from various
approaches.
To minimize the impact of construction works on ecosystems,
we conduct biodiversity preservation activities at all of our construction sites. At the Minami Koma Worksite Office of the Kanto
Civil Engineering Regional Headquarters, for example, we areadvancing construction in a way that considers plants and animals that live in the habitat around the worksite, namely by using
earth-toned colors for temporary structures and by installing
detours for small animals because the construction site is locatedin the mountains.

Temporary fencing using earth tones(Kanto Civil Engineering Regional
Headquarters, Minami Koma
Worksite Office)Gutter staircase for small animals(Kanto Civil Engineering Regional
Headquarters, Minami Koma
Worksite Office)

JHEP Certification Renewal (Japan Habitat Evaluation andCertification Program)
JHEP certification is the only certification system in Japan thatquantitatively evaluates and certifies initiatives to maintain or
improve the biodiversity value before and after a project is implemented. Nishimatsu Construction received JHEP certification in2017 for the Keio University Hiyoshi International Dormitory that
we manage. This dormitory received a rank of AA+ when it wasrecertified in 2022 in recognition of the ongoing effectiveness ofthe design and construction approach’s consideration of biodiversity. This Dormitory is therefore expected to continue serving as
an important node in the ecosystem network of the city center.
We will continue aiming to achieve nature positivity in terms ofboth design and construction.

Managed by Nishimatsu
Construction, Keio University
Hiyoshi International Dormitory wasrecertified by JHEPThe original ecosystem of theregion is being preserved by selecting seedlings that grow naturally in
the Kanto Region

TOPIC
Reduce, Reuse, and Recycle (3R) Promotion Merit Award
Nishimatsu Construction aims to eliminate all construction waste generated at every construction site in working towards a circular economy. As part of the Reduce, Reuse, and Recycle (3R)
Promotion Merit Award, in FY2022 the Sapporo Branch Ishikari Shinko Nishi Branch Office(project name: Ishikari Shinko Nishi Project) received the Minister of Land, Infrastructure,
Transport and Tourism Award and the West Japan Regional Headquarters Harima Architectural
Branch Office received the Chairman’s Award. We have received awards as part of this programa total of 21 times since FY2016. We will continue to promote efforts to eliminate all construction waste in an effort to create a circular economy.

Panorama of the Ishikari Shinko Nishi Construction Project.
Award Theme: Proactive 3R activities for construction workin a large-scale industrial park subject to various restrictions

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

41

SUSTAINABILITY

Environmental Initiatives
Nishimatsu Climate-related Information 2023 - Disclosures in Line with the TCFD
Recommendations The Group recognizes that addressing climate change is an
important management issue for promoting our business activities,
and therefore endorsed the TCFD recommendations in June
2021. Likewise, we have disclosed climate-related information
since June 2022. More recently, as part of Nishimatsu

Climate-related Information 2023 (June 2023), we revised parts ofour governance and risk management systems along with someof the assumptions for our scenario analyses. We also updated
response measures to climate-related risks and opportunities, andreviewed our indicators and targets.

See the Company’s website for details on Nishimatsu Climate-related Information 2023.
WEB https://www.nishimatsu.co.jp/eng/esg/environment/climate.html

Governance and Risk Management
Supervisory
Level

Board of Directors
Supervises enterprise risk management and opportunity management

HighestExecutive
Level

President & General Managers Meeting
Confirms and approves Group-wide risk and opportunity

ReportReportConsult
ReportSustainability
Committee(Advisory Body)

Approval/Instruction

Approval/Instruction

Risk and Opportunity Management Committee
Third Tier

Progress Status Monitoring

Nishimatsu Construction has an Environment Committee (SecondTier) as a meeting body to discuss climate-change response(identify climate-related risks and opportunities, formulate specificresponses, manage targets, etc.), and expanded the role of theprevious meeting body above this committee in the hierarchy (theInternal Control Committee) by reorganizing it as the Risk andOpportunity Management Committee (Third Tier) in April 2023.
With the Risk and Opportunity Management Committee, we haveintegrated our climate change response with Enterprise Risk
Management (ERM), thereby forming a structure that reports to
the President & General Managers Meeting (highest executive
level). As in the past, the Board of Directors provides oversightafter deliberations by the President & General Managers Meeting,and offers instructions as necessary. We engage in climate-related risk and opportunity management twice per year throughthe above process.

Confirms risk response and opportunity realization measures for all departments
Integrated with ERM
ReportApproval/Instruction

ReportApproval/Instruction

Environment Committee(Working Group: Global Environment Subcommittee)
SecondTier

Confirms risk response measures for
all departments

Confirms opportunity realization measures for
all departments

Centralizes risk response measures foreach department

Centralizes opportunity realization measuresfor each department

Instruction

Confirms and determines assessment details

Instruction
ReportFirst Tier

Head Office Departments
Identify and assess risks and opportunities and plan response measures

Response
measures, reportprogress

Strategy
Assumptions for scenario analysis
In anticipation of a highly uncertain future coinciding with the transition to a decarbonized society, as part of Nishimatsu Climaterelated Information 2023 we conducted scenario analyses for aworld in which temperatures rise 1.5ºC and 4ºC compared topre-industrial temperatures covering every business activity conducted by the Group. We also revised the time frames, with shortterm now covering up to FY2025 as the period addressed by the
Medium-Term Management Plan, medium-term covering FY2026
to FY2030, and long-term covering FY2031 to FY2050.

Risk and opportunity extraction
The Head Office departments (First Tier) identified and extracted
climate-related risks and opportunities, at which point the upper
tiers (Tier 2 and above) assessed these using the three scales ofLikelihood of Occurrence, Qualitative Impact if they become manifest, and Quantitative Impact, ultimately determining the important
issues.

Climate-related Risks
Risk Category
Legal and
Regulatory
Transition Risk
Technical

Physical Risk

42

Chronic Risk

Impact Period

Applicable Scenarios

Introduction of Carbon Tax (cost increase)

Risk Details

Medium/Long

1.5ºC

Delayed technological response to wooden high-rise construction trends (sales decrease)

Medium/Long

1.5ºC

Decline in manpower caused by rising temperatures →Delayed response to the shift to precast (sales decrease)

Medium/Long

1.5ºC/4ºC

Decrease in labor productivity caused by rising temperatures →Loss of sales opportunities coinciding
with longer construction times (sales decrease)

Medium/Long

1.5ºC/4ºC

Decrease in labor productivity caused by rising temperatures →Higher construction costs (costincrease)

Medium/Long

4ºC

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Climate-related Opportunities
Opportunity Category
Resource Efficiency

Products and Services

Resilience

Opportunity Details
Response to demand for decarbonization in real estate properties (energy-savings, ZEB-compliance,
renewable energy use) (sales increase)
Increasing demand for building ZEB-compliancy (sales increase)
Expansion of projects related to renewable energy (sales increase)
Greater demand for energy generation-related projects (solar power, small-scale hydroelectric, woody biomass, geothermal, biogas) (sales increase)
Greater demand for decarbonization related urban development projects (smart grid, electricity storage
related technologies) (sales increase)
Rapid recovery response to increasingly severe natural disasters (sales increase)
Increase in disaster prevention and mitigation related projects (sales increase)

Impact Period

Applicable Scenarios

Short/Medium/Long

1.5ºC

Medium/Long
Medium/Long

1.5ºC/4ºC
1.5ºC

Short/Medium/Long

1.5ºC

Medium/Long

1.5ºC

Short/Medium/Long
Medium/Long

1.5ºC/4ºC
1.5ºC/4ºC

Analysis time frame (FY): Short-term: 2020 - 2025 Medium-term: 2026 - 2030 Long-term: 2031 - 2050

Financial Impact Analysis (overview)
In regard to the risks and opportunities that we ultimately determined
to be important issues, we verified the financial impacts for FY2030
and FY2050 (for both 1.5ºC and 4ºC scenarios) using FY2021
operating income as the basis for impact assessment. As a result,when including recovery through responses to risks and opportunities, the negative impact of climate-related factors on our financial standing (operating income) was found to be limited to 5%.
Nishimatsu Climate-related Information 2023 more specificallyillustrates the variation in impact value using waterfall charts.

Business Impact Responses and Their Relationship with
Nishimatsu-Vision 2030 and Medium-Term Management
Plan 2025
Nishimatsu Construction has incorporated forward-looking
responses regarding climate-related risks and opportunities into
our management strategy, and is working to strengthen our
response to internal and external challenges related to climatechange through ongoing investigations.

Business Impact Responses and Their Relationship with Nishimatsu-Vision 2030 and Medium-Term Management Plan 2025
Impact on Business

Construction
Business

Loss of sales opportunities due to a delayedtechnological response to wooden high-rise
construction
Loss of sales opportunities coinciding withlower labor productivity caused by risingtemperatures
Rising construction costs coinciding with lower
labor productivity caused by rising temperatures
Loss of sales opportunities due to a delayed
response to the shift to precast in preparation
for less manpower caused by risingtemperatures
Higher sales due to the increasing need for building ZEB-compliancy
Higher sales from renewable energy-related
projects
Higher sales from rapid recovery response toincreasingly severe natural disasters

Higher sales from disaster prevention and mitigation related projects
Asset ValueAdded
Business

Higher sales from responding to decarbonization
demand for real estate properties (energy-savings,
ZEB-compliancy, renewable energy use)

Regional
Environmental
Solutions
Business

Higher sales from energy generation related
business
Higher sales from decarbonization related urban
development projects (smart grid, electricity
storage related technologies)
Higher business costs due to the introduction ofcarbon taxes.

Group-wide

Financial Impact

Response

Relationship with Nishimatsu-Vision 2030 andMedium-Term Management Plan 2025

1.5ºC

4ºC





–





–

∙D
 evelop large-scale precast technologies∙A ccumulate construction experience and expand orders





Promote the development of technologies forroad slab replacement∙ Conduct demonstrations of ZEB-compliancy at our facilities∙ Design, construct, and operate demonstration facilities thatoffer 75% energy savings

Develop high added-value buildings: ZEB/ZEH∙ Implement initiatives for wind power generation projects

–Take part in offshore wind power generation
projects









∙ Acquire fire resistance technologies for wood materials∙ Work to make wood construction practical (small/medium
scale→high-rise construction)∙D evelop and test construction robot technologies∙D evelop autonomous and labor-saving tunnel construction
technologies∙ Construct a rapid response system for emergencies∙ Strengthen procurement capabilities for emergency materials,
equipment, and manpower through collaborations withpartners∙ Implement construction technologies based on the application of autonomous construction technologies∙ Maintain and improve construction capacity for projects
related to disaster prevention and mitigation, including rainwater main construction using the shield method∙ Promote ZEB compliancy and energy savings for newbuildings∙ Make energy-saving investments in existing real estate properties and engage in asset replacement∙ Actively use renewable energy options

Acquire pioneering construction technologies:
Wood construction technologies∙ Increase Construction Business productivity:
Automated tunnel construction, construction
RX (robotic transformation)∙ Promote smart construction sites utilizing DX––∙ Existing properties: Promote energy savings(equipment upgrades), promote the shift torenewable energy∙ New properties: Promote specifications thatmeet ZEB Ready standards
PPA business, power generation business(small-scale hydroelectric, geothermal, woody
biomass, etc.)–∙ Promote the energy generation business–∙ Actualize EMS projects and demonstrate storage batteries
with local government partners

–

Deploy comprehensive partnership agreement
projects with multiple local governments∙ Introduce and develop CO2 reducing technologies for theconstruction stage∙ Promote the introduction of renewable energy and decarbonized fuels–

Zero30 Road Map

Risks: (small)/(medium)/(large)

We will contribute to solutions for social issues by appropriately
advancing efforts to realize climate-related opportunities throughthe reduction, transfer, and avoidance of climate-related risks in

Opportunities: (small)/(medium)/(large)

an ongoing manner. At the same time, we will ensure resilience as
a company as a means of connecting to sustainable growth.

Indicators and Targets
The Group has defined greenhouse gas emissions (Scope 1, 2,
and 3) as an indicator used to manage climate-related risks andopportunities, and formulated Zero30 Road Map 2023 regarding

the related targets. For details, see P. 38 Zero30 Road Map 2023
(Carbon Neutrality: Indicators and Targets).

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

43

SUSTAINABILITY

Human Resource Strategy
Basic Approach to Human Resources
To put our corporate philosophy into practice and realize ourview each of our employees as capital and take measures tovision, we share the following basic values: an enterprisingcontinuously increase the value of our human capital. Basedspirit, a feeling of gratitude, and an ethical attitude. We haveon the concept that the Company and the employees arealways been grateful to our stakeholders and committed topartners who enhance each other, we will gather employees

high ethical standards.

with diverse values, knowledge, and experience, and foster

This stance will not change in the future, but in order to provide

higher expertise and management skills. We also provide aa higher level of diverse value to our stakeholders amid thework environment in which each individual can maximize theirincreasing speed of social and environmental change, we must

talents in a manner not bound by conventional norms.

Human Resource Strategy
To expand our value creation activities from social infrastruc-

The Reform Program based on our human resource strategy

ture development to the rebuilding of social functions as a

Reforming ourmindsets andactions

Strengthening
our organizational abilities

Development of Nishimatsu
Employees’ UniversityPromoting dialogue between
officers and employeespart of efforts to generate new business opportunities, we will
set the direction of our human resource strategy and pursue
specific initiatives based on the three frameworks of reforming
our mindsets and actions, strengthening our organizational
abilities, and creating growth resources, which comprise theCreating
growthresources

Reform Program outlined under Nishimatsu-Vision 2030 and

Promoting diversity

Medium-Term Management Plan 2025.

Commencing operation of theTalent Management System

Revitalizing workplacecommunication









To create an environment in which all of our employees canmaximize their potential, we will also continuously work tomaintain and promote employee health, reduce long working
hours, and prevent employee turnover, as well as promote theuse of flexible work systems, such as flextime systems.

Creating an environment inwhich diverse human resources
can maximize their abilities



Initiatives based on the Human Resource Strategy Development of Nishimatsu Employees’ University
In addition to cultivating advanced technical skills, theCompany launched the Nishimatsu Employees’ University in2019 in order to foster employees able to accurately respondto changes in society with a broad perspective. The university
defines the abilities that Nishimatsu employees should possess
as resourcefulness, basic knowledge, and expertise. The university has offered a series of courses to provide systematiclearning opportunities in each of these areas. By FY2022, wedeveloped a training system centered on a standard course foryoung employees to develop their professional skills. Going forward, we will provide a higher level of education and create amechanism for employees to learn independently. In addition,
we will provide training programs to cultivate a spirit of taking
on challenges and growth in new fields.
Developing an expert course
In Medium-Term Management Plan 2025, we will establish an
expert course for mid-career and higher employees in an effort tocontinuously improve the system to enhance employee abilities
and pass on skills.

44

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Developing DX Human Resources
To develop DX human resources, we provided basic education on
DX until FY2022. In FY2023, we will open a new DX Faculty toprovide more advanced education with the aim of fostering digitaltalent who can provide new value to companies by utilizing cutting-edge digital technology.
Systems for employees to learn independently
We introduced a credit system in some faculties and courses fromFY2022 that shows the accumulation of competencies acquired by
the employees themselves as a mechanism to ensure that employees steadily develop their skills. In the current fiscal year, we will continue to introduce this credit system and develop a mechanism thatallows employees with high motivation for growth to learn independently, including a flexible curriculum selection system.
Developing candidates for management-level positions
To contribute to our sustainable growth and medium- to longterm corporate value enhancement, we have been implementing
the Next Generation Management Development Plan since
FY2021. Looking ahead, we will develop a system for the continuous training of young management personnel who will become
candidates for management-level positions.

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Nishimatsu Employees’ University System
Grade

Resourcefulness

Basic knowledge

Education Faculty

General Education Faculty

Civil Engineering Faculty

Building Faculty

ExpertiseInternational Faculty Five other faculties

Business skill (Ability to formulate tasks,
ability to accomplish tasks)

Corporate philosophy,business, medium-term
plan, etc.

CIM, professional engineer
preparation, research, etc.

BIM, architecturalpreparation andresearch, etc.

Overseas civil engineering, building,research, etc.

Reskilling
Matters related toissues in response tosocial change

Officers
Grades 1-4

Training for those promoted to 4th grade

5th gradeTraining for those promoted to 5th grade

6th gradeTraining for those promoted to 6th grade

7th gradeTraining for those promoted to 7th grade

8th gradeTraining for those promoted to 8th grade

SDGs
Training for
mid-career hires

Expertise training for mid-career and higher employees(expert course)

New employee training

Visible areas Performance in role (position)

Compliance
ICT literacy
and related training

Expertise training for young employees(standard course)

New employee follow-up training

Nishimatsu employee skills

Overseas on-site workshops Commencing operation of the talent management
systemWe took steps to introduce a talent management system in
FY2021 to maximize the abilities of our diverse array of personnel. We finished building this system in FY2022. Going for-

 Performance in grade

By Business
Division/
Department

 ExpertiseCommon to all employees

Elements that make up human resources

Literacy, leadership, and education necessary for future
management
Plan for the development of
the next generation ofmanagement

Deepening research and exploring new areas ineach field to further enhance corporate value

9th grade10th grade

Management(Succession plan) Basic knowledge Resourcefulnessward, the system will incorporate data on the requirements forP lanning, design, construction management, management maintenance, etc.
 ompany: Corporate philosophy, ESG, finance, ICT literacy, etc.
CBusiness: Nishimatsu’s business (business activities, markets,
organization, profit structure, proprietary technologies, etc.)
Construction: Safety, quality, cost, process, environment, etc.
A bility to formulate tasks, ability to accomplish tasks, ability toutilize human resources, ability to interact with people, etc.

each position as well as the abilities, skills, and experience of
employees, using this data for optimal placements and effective human resource development.

 Initiatives for revitalizing workplace communication
Maximizing the talents of all employees requires the creation of aworkplace culture with a high degree of psychological safety andwhere diverse opinions and ideas are freely and openly exchanged.
To this end, from FY2023 we will provide educational oppor- Promoting dialogue between officers and employees

tunities for employees to improve their communication skills

Starting in FY2023, officers led by the President began visiting

and have introduced one-on-one meetings in workplaces.

business sites nationwide to engage in dialogue withphilosophy and the direction of the Company has enabled us Creating a workplace where a diverse array of
employees can maximize their talents

to share a common direction while developing personnel who

To enable our diverse human resources to maximize their abilities,

can take on challenges with an open mind.

we have been promoting initiatives to create an environment that

employees. Exchanging opinions about the corporate

allows flexible work styles, as well as to manage and promote the Promoting Diversity

health of our employees, such as the introduction of a flextime sys-

We are actively recruiting women for career-track positions

tem, expansion of support systems for balancing work and child-and as mid-career hires to create a more dynamic organiza-

care, and reduction of total work hours. Particularly in terms oftion where people with diverse abilities, skills, and values canmeasures to support a better balance between work and childcare,

come together and mutually enhance each other. Fromin October 2022 we established the Post-birth Papa Leave System

FY2020, we have set a target of increasing the percentage of(paid) in accordance with revisions to the applicable laws to develop

females hired for career-track positions to 20% of all career-an environment that facilitates the participation of male employees.

track recruitments. Since then, the number of women weThis childcare leave system allows male employees to take up to 20

have hired has been close to our target. As a result, the num-days in addition to annual paid leave, as a way to create an environ-ber of female career-track positions has increased to 6.5% ofment where men can easily participate in childcare. As a result, theall career-track positions. Although the number of female

percentage of male employees taking childcare leave reachedmanagers is still low at 0.4% of all management-level posi-

55.6%, significantly higher than the 17.6% in FY2021.

tions, the number of female managers is increasing year by

Looking ahead, we will continue to promote the use of various

year, and we are steadily pursuing initiatives for diversity.

systems and implement measures to enable employees to maximize their abilities.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

45

SUSTAINABILITY

Health and Productivity Management
Employee happiness is the source of corporate vitality, and the foundation of happiness is health
We believe that the happiness of employees is the source ofsubsidies for women’s cancer screening, providing physical andenergy for sustainable corporate growth, and that good health ismental consultations by medical staff, free smoking cessation

the source of this happiness. To achieve this, we recognize that

programs, and introducing a system to visualize working hours,

the loss of work opportunities due to illness is a management

etc. We were evaluated and certified as among the “White 500”

issue, and aim to improve productivity by preventing it. Therefore,

Certified Health & Productivity Management Outstanding

we are promoting health and productivity management®* by com-

Organizations (large enterprise category) promoted by thebining measures aimed at improving employee health awarenessNippon Kenko Kaigi and Japan’s Ministry of Economy, Tradefrom the four perspectives of physical health, mental health, healthand Industry in recognition of our efforts to continuously improve

literacy, and long working hours, with measures in which medical

these and other measures. This was the fifth consecutive time

professionals are directly involved with employees.

we received this designation since FY2018.
Based on the idea that the Company is responsible for sup-We are implementing a host of specific measures. This
includes establishing subsidies for medical checkups (including

porting the health of employees, we will continue to promote

optional examinations) (similar subsidies are available for depen-

health and productivity management by strengthening ourdent spouses), putting forward recommendations for complete

occupational health system and taking measures to encour-

medical examinations after regular health checkups, providing

age employee awareness of health maintenance.

Promotion system chart
Chief Health Officer (CHO)
President Takase

President and General Managers’ Council

Participation*T his is a management-level body that makes decisions atregular sessions

Report and Consultation
Report and request approval

Various discussions, coordination and cooperation on promotion of health management
Disseminationof healthproductivity
management
policies

Healthpromotioncenter

Health insurance
association

Dissemination of various informationand implementation of measures

Implementationof measures

Human Resources
Department

General Manager ofBranch Office and Healthand Safety Committee

Workers’ union“Drop-off” for employees and fostering a culture of health in the workplace

Nishimatsu Construction Employees* Health and productivity management® is a registered trademark of Non-Profit Organization Kenkokeiei

Topic
Veggie Score™* measurement sessions are held at the employee cafeteria at our
Head Office
In cooperation with the health insurance association of which we are a member, we held a Veggie Score™ measurement session in
the employee cafeteria at our Head Office (Toranomon Hills Business Tower). The employee cafeteria provides a well-balanced menu
on a daily basis, and the results show that many employees meet the standard for vegetable intake compared to the average
Japanese person.
This event provided an opportunity for employees toreevaluate their thinking about the content of their meals.
We will continue to hold various events related to
employee health to raise health awareness among all
employees.
* Veggie Score™: Numerical score of vegetable intake using the Veggie
Meter®, a device that measures the amount of skin carotenoids.

46

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Quality Management

For 150 years, the Company has been engaged in the business of building social infrastructure andstructures that form the foundation of people’s lives. For us, quality is the foundation of our business, so
we will continue to place the highest priority on quality and work to improve quality to meet the expectations of our customers and society.

Policy on Quality
Based on its corporate philosophy, Nishimatsu Construction will(2) Improving Customer Satisfactiondeliver valuable buildings and services through an ongoing com-

We will accurately identify the increasingly diverse needs of

mitment to earn the trust of customers and other stakeholders.

customers, thoroughly pursue manufacturing excellence that(1) Providing Trusted Buildings and Services

surpasses the expectations of customers and the world,
and aim to elevate customer satisfaction as a reliable entity.

Each employee will hone their skills with pride in being a specialist, undertake the work before them with rigorous care(3) Continual system improvementthat remains faithful to the basics, and deliver buildings andWe will continually improve our quality management sys-

services that are worthy of society’s trust and expectations.

tem to achieve quality targets.

Quality Management System
In the civil engineering and building divisions, we have establishedsystem at each stage of sales, design, construction, and after-a Building Quality management system based on ISO 9001, andsales service to achieve our quality policy of Providing Trusted

are working to ensure quality and continuously improve the

Buildings and Services and Improving Customer Satisfaction.

Quality control systems in construction projects
To prevent issues from recurring based on lessons learned

through a consistent work flow from design to construction

from past construction defect cases, we assure quality

and after-sales service following delivery.

Completion inspection

Administrative inspection

In-house inspection

In-house voluntary inspection

After sales service
liaison meeting

DeliveryCompletion

Administrative midterm
inspection

Stage inspection by
construction supervisor

Self-inspection prior to stage
inspection

Completion inspection

In-house inspection prior tocompletion inspection

Inspection by the client(interim technical inspection, inspection of previously completed sections)In-house inspection prior to inspection

Periodic quality patrols for construction
management

Verification of quality confirmation
personnel, etc.

Daily management of construction
progress(including confirmation of client phase)

Construction
management inresponse to inspections

During construction

Daily management ofconstruction progress

Plan confirmation meetings

Briefing on the main purposeof the design

On-site construction
management

Pre-construction

Quality control
support services

Basic design and implementation drawings

Diagram inspection and design review

Identification of important matters

Organize customer and legal requirements, relevant laws and regulations, and internal standards

Construction work

Design stage*

Determination of who approves, is
responsible for, and is in charge of quality,
work progress, and photographic control

Preparation of construction plans

Issuance of design documents

Design verification

Design review (meetings)

Daily construction
management
Preparation of design documents

Preparation of design brief (requirements verification)

Civil Engineering

Quality control flow

Quality patrols by engineering, building construction,and equipment construction sections

*In the case of design and construction by Nishimatsu

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

47

SUSTAINABILITY

Safety, Human Rights, Supply Chain
Building safe construction sites
Ideals outlined in Nishimatsu-Vision 2030

“Compassion and consideration throughout the workplace” isour safety slogan. Based on this slogan, we focus on risk

Establishing Nishimatsu as a brand of safety

management at the planning and implementation stages along

Target: Frequency rate of injuries requiring four or more days ofabsence from work: 0.2 or below

with the training of supervisors who are key personnel for
safety management at our worksites in order to ensure that all
people working there can do so safely and with peace of mind.
quency rate of injuries was 0.49. With this, we achieved ourtarget for FY2023 of less than 0.5 a year early.
Frequency rate and future targets

Safety management based on the priorities of risk assessment

1.5

Firmly embed safety rooted in prioritizing issues
Making safety a priority from the top down

1.04
0.75

0.5

0.67

1. Mitigate risks at the planning phase

0.79
0.49

0.72

E.g., reduce high elevation work by taking a unit-focused
approach

0.50

Priority ranking

1.02

1

0.20
0

2016 2017 2018 2019 2020 2021 2022 2023 2030 (FY)No. of attendees in supervisor ability
improvement training (FY2022)
North Japan
Supervisor ability improvement
training

162

To achieve our ideal, we will implement the following initiatives:• Firmly embed safety management rooted in prioritizing issues• Establish a legal compliance framework through repeated education• Ensure health by creating a safe and comfortable workplace environment• Boost the skills of safety leaders and establish a system for fosteringskill leaders of the next generation

Although there was one fatal accident in FY2022, the fre-

Kanto Civil
Kanto
West Japan
Engineering Architectural
82

182

2. Engineering measures

E.g., use what is called “preceding handrail frame” scaffolding;use machinery with collision prevention features

3. Management countermeasures
E.g., measures to prevent unauthorized entry; training & drills

KyushuTotal

4. Personal protective equipment
countermeasures

108

801

E.g., protective glasses, safety belts

267

Measures1&2
come first

Safetymeasurescurrently being
widelyimplemented

Addressing Human Rights Issues
priorities to address.

The Nishimatsu Group believes that the fundamental human(1) Adequate management of working conditions and provi-rights of all people involved in its business should be
respected. Based on the United Nations’ Guiding Principles

sion of a comfortable working environment

on Business and Human Rights, the Group formulated the(2) Prohibition of harassment and discrimination

Nishimatsu Group Human Rights Policy in March 2023 and is(3) Human rights of foreign workers in domestic operations
In addition, we have established a human rights due

promoting initiatives for respecting human rights.

diligence process and are continually working to improve it.

Through dialogue with stakeholders and consultations withexternal experts, we identified the following items as the main48

Commitment
Formulate and Implement Policy
Formulate and revise a human rights policyImplement human rights-conscious procurement
Reflect in the procurement policy and procurement guidelines

Impact assessment



Assess human rights impact
Assess human rights risk
Conduct internal surveys on human rights initiatives once a year
Identify human rights risks (revise humanrights risk map)AnnualcycleMonitoring and information disclosure
Periodically disclose information
Monitor the progress of the Company’s
human rights efforts and disclose the results
in reports, websites, etc.



NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Corrective measures
Take corrective measures based on humanrights impact assessment results
Consider and implement an improvementplan

Set up and operate Nishimatsu Hotline(Reporting desk)

Implement training on human rights

Human rights due diligence process

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Co-creation with the supply chain Training and support of skilled construction workers•

Promote digital education (Buildee usage method and theJapan Construction Retirement Allowance Systemelectronic usage)•

Utilize digital communication (dedicated website and direct Undertake various activities with Nishimatsu
Subcontractor’s Network (N-NET), a central
organization among affiliates that collaborate with
us in construction activitiesbulletin board function)

Hold N-NET Growth Strategy Meetings (examples of
initiatives listed below)  • Subsidy for the purchase of air-conditioned clothing towork safely and comfortably

The prime contractor and specialty contractors cooperate mutually to perform construction work. Specialty con-  • Introduction of business chat “direct” to stimulate

tractors consist of individual skilled construction workers
and their supervisors. We believe that training and support

communication  • Introduction of Koteizu to centrally manage

are important, and are working to improve digital skills as
one of these measures.

process information  • Improve brochure production and website to support
recruitment activities Promote the use of the Construction Career Up
System (CCUS)•Joint participation in various CSR activities (activities in
FY2022 below)

Expand and enhance programs for high-caliber techni-  • Hirose River 10,000 People Project (Tohoku branch)cians (awards and certification programs)  • Clean Beach Ishikari Beach Cleanup Activities(Sapporo branch)

Due to a declining and aging workforce and harsh working conditions, it is becoming increasingly difficult to secure  • Nishimatsu Forest woodland preservation activities

workers in the construction industry. Until now, the amount(Kanto Civil Engineering Division)of income generated by what qualifications and how much  • Clean Ota River Activities (Chugoku branch)experience one had, had been unclear in the industry.

  • Aso Mizukake terraced paddy revitalization activities

Against this backdrop, we are working to alleviate theshortage of skilled workers by developing our own(Kyushu Division)  • Kuma River Cleanup Activities (Kyushu Division)

high-caliber technician system that is linked to the CCUS
and competency evaluation systems promoted by Japan’s
Ministry of Land, Infrastructure, Transport and Tourism.

Held various study sessions and seminars  • Labor hour seminars by the labor & human resources
office (total of 7)  • Invoice seminars by tax accountant firms (total of 4)  • Information security briefings by our instructors (totalof 10)  • Invitations to civil engineering symposia and technicalinstitute presentations sponsored by the Company(since FY2015)

High-caliber technician system and CCUS relationshipNishimatsu Meister(3,000 yen/day)Goldtechnology.
Through various measures, we will build a strong rela-

Senior Foremen(2,000 yen/day)
Next generation senior foremen(1,000 yen/day)
Candidates for Nishimatsu
foremen(500 yen/day)

We believe that further cooperation will be necessary to
introduce the latest construction methods and digitaltionship of trust that goes one step beyond mere construction cooperation.

Silver

Blue

White

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

49

SUSTAINABILITY

Corporate Governance

Strengthening corporate governance is one of the highest priority management issues that we are tackling at Nishimatsu Construction. In FY2016, we transitioned into a company with an Audit andSupervisory Committee and worked to ensure the efficacy of the oversight functions of the Board bybringing in Audit and Supervisory Committee members as part of the Board. In addition, from FY2022 to
FY2023, we worked to revise the composition of the Board of Directors and ensure its diversity, and, toincrease corporate value from a sustainability perspective, we established a Sustainability Committee
and a Risk and Opportunity Management Committee. We will continue to strive to further strengthen our
corporate governance system.

Basic philosophy
The basic policy of the Company is to improve its corporate

value over the medium to long term. Based on this policy, wegovernance and maintain good and stable relationships withwill create structures that lead to the acceleration of deci-

its stakeholders over the long term, in order to achieve sus-

sion-making and the strengthening of supervision by thetainable growth of the Company and increase its corporate

Board of Directors and our business execution systems.

Corporate Governance System
General Meeting of Shareholders
Elect

Consult/Report(4) Nomination and Compensation
Committee

Coordinate
Consult/Report(5) Sustainability Committee(1) Board of Directors

Audit, etc.

Consult/Report(6) Corporate Value Enhancement
Committee(2) Audit and Supervisory
Committee
ReportReportSupervise/
Give instructions(3) President and General
Managers Meeting(7) Compliance Committee

Give instructions

ReportGive instructions
Audit/Instruct/Train

Approve/
Give instructions/Report

ReportManagement Meeting

Compliance Promotion Department

Audit

Report/Suggest(8) Risk and Opportunity
Management Committee
Give instructions

Give instructions Report

Report/Suggest

Divisions and Group Companies

Secretariat of the Audit andSupervisory Committee(10) Investment
Committee

Accounting auditor

Report/Suggest

50

Elect

Elect

Coordinate

Report(9) Environment
Committee

Give instructions

Audit Unit

Coordinate

ReportInternal audit

Accounting audit(1) B oard of Directors

Makes decisions on basic management policies and other important management matters, and supervises the execution of duties by directors.
In addition to matters stipulated by laws and regulations and the Articles of Incorporation, the Board of Directors deliberates and decides onmatters stipulated in the rules of the Board of Directors.

(2) A udit and Supervisory Committee

Conducts audits of execution of duties by directors and other duties stipulated by laws and regulations.

(3) P resident and General Managers
MeetingAmong the proposals to be submitted to the Board of Directors, it conducts preliminary deliberations mainly on important matters for sustainablegrowth, decides on specific measures related to the execution of such proposals after they are resolved by the Board of Directors. It alsodecides or deliberates on some individual matters related to business execution.

(4) N omination and Compensation
Committee

Deliberates on the nomination of candidates for directors, with the aim of contributing to the establishment of an appropriate management system. It also deliberates on individual compensation for directors and executive officers with the aim of ensuring objectivity and transparency
regarding compensation decisions.

(5) S ustainability Committee

Investigates and deliberates on matters regarding the policies for responding to materiality and environmental changes (risks and opportunities)
linked to materiality from a long-term perspective and from a multi-stakeholder standpoint.

(6) C orporate Value Enhancement
Committee

Deliberates on corporate governance, capital policy and other important management matters in consultation with the Board of Directors.

(7) C ompliance Committee

Responds to various issues regarding compliance.

(8) R isk and Opportunity
Management Committee

Appropriately manages risks and opportunities from a long-term perspective, as well as risks and opportunities involved in current businessactivities.

(9) E nvironment Committee

Extracts, identifies, and assess climate-related risks and opportunities, and reports to the Risk and Opportunity Management Committee.

(10) Investment Committee

Investigates the propriety of plans related to investment projects based on the Company’s capital strategy, and reports the investigation results
and points at issue to the Board of Directors and to the President & General Managers Meeting.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Composition of the Board of Directors and the Audit and Supervisory Committee
The Company’s Board of Directors comprises six executive

information and communications company). As such, all of these

directors and five directors who are Audit and Supervisory

external directors possess specialized knowledge in fields con-Committee members. Five of the executive directors are generalsidered to be important for business management.

managers and one is an external director (who has management

Currently, the percentage of external directors on the Board

experience at a listed company). The Audit and Supervisoryof Directors is 45.5% and the percentage of female directors is

Committee comprises one full-time internal director and four

18.2%. Going forward, we will continue verifying the skill sets ofexternal directors (one has experience at a general trading com-those on the Board of Directors and will work to improve thepany, one is a certified public accountant, one has management

efficacy of the Board.

experience at a listed company, and one has experience at an
Board of Directors (11)
Executive Directors (6)Audit and Supervisory Committee (5)(5 General Managers, 1 external director)(1 internal director, 4 external directors)

President

General Manager ofAsset Value-Added
Business Division

General Manager ofCivil Engineering
Division

General Manager ofManagement Division

General Manager of
Building Division

External Director

External Director
Internal Director (Full-time(Audit and Supervisory
Audit and Supervisory
Committee)
Committee Member)

External Director(Audit and Supervisory
Committee)

Percentage ofexternal directors

45.5% (5/11 people)
Percentage offemale directors

External Director(Audit and Supervisory
Committee)

18.2% (2/11 people)

External Director(Audit and Supervisory
Committee)

Changes in the Percentage of External Directors on the Board of Directors

15

22.2

10

2

22.2
2

22.2

22.2

2

22.2

2

2

27.3

27.3

27.3

27.3

3
1

3
1

3
1

3
1

7

7

7

7

5
0

7

7

7

7

7

2011
2012
2013
2014
2015
2016
2017
2018
 Internal Director  External Director  Internal Director (Audit and Supervisory Committee)
Percentage of external directors

33.3

40.0

40.0

45.5

(%)
50
40
30

4

3
1

1

5

5

3
1
1
5

4
1
1
5

2019
2020
2021
2022
2023
 External Director (Audit and Supervisory Committee)

20
10
0

Changes to Corporate Governance

Organization design

Composition of theBoard of Directors

Through to FY2019
June 2016
Transitioned to a company with an
Audit and Supervisory Committee

June 2009
Established the Nominating
Committee and Compensation
Committee as voluntary advisory
bodiesJune 2009
External directors: 2 (22.2%)

Strengthen business execution
systemJune 2016
External directors: 3 (27.3%)

July 2019
Established President and General
Managers Meeting

Through to FY2022
March 2021
Established the Corporate Value
Enhancement Committee

FY2023 and beyond
April 2023
Established the Sustainability
Committee

June 2020
External directors: 3 (33.3%)
June 2021
External directors: 4 (40.0%)
July 2021
Established the Investment Committee

June 2023
External directors: 5 (45.5%)

FY2021
Began operation of performance-linked
compensation and stock compensation
FY2021
Began operation of the Company
President Succession Plan, etc.

Officer compensation system
Company President
Succession Plan,
etc.

ComplianceInternal control
Risk management

FY2008-FY2009
Established the Internal Control
Committee
Established the Nishimatsu Hotline
whistleblowing system
Established the Compliance
Committee

FY2015
Established the Workplace Hotline
outside counseling service
FY2019Registration of WCMS certification for
the whistleblowing system

Crossshareholdings

FY2015
Formulated policy on retention andreview of cross-shareholdings

FY2018Formulated cross-shareholdings
reduction policy

April 2023
Established the Risk and Opportunity
Management Committee

FY2020 onward
Reduced cross-shareholdings(ongoing)

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

51

SUSTAINABILITY

Corporate GovernanceSelection Criteria for Director Candidates
Supervisory Committee) who are judged to be capable of• Candidates for director shall be selected from those whohave a wealth of knowledge, experience, and competence,

auditing and supervising appropriately, with emphasis onand excellent character and high ethical standards.

their expertise and background, will be appointed.

• Candidates for executive director shall be appointed from•C andidates for external director will be selected with anamong people who have extensive knowledge and experi-emphasis on independence, and those with specialized

ence in the Company’s business, or who have superior

knowledge and experience in corporate management areknowledge of finance and accounting, etc.

selected. We also take into consideration the diversity of
the Board of Directors.

• People who are candidates for director (Audit andReasons for Appointing External directors
PositionFull Name

Reason for appointment

External Directors

Hidetaka Matsuzaka

Mr. Matsuzaka possess a wealth of experience during his tenure at Osaka Gas Co., Ltd., and has a broad insight cultivated as Representative Director of the company. We
have appointed him as an external director because we believe he is an appropriate person who can supervise our management from an objective point of view.

External Directors(Audit and Supervisory
Committee members)

Jun Ikeda

Mr. Ikeda possesses a wealth of experience from his work at Mitsubishi Corporation and also has wide ranging knowledge from serving as Representative Director andPresident of a subsidiary of the company. Since June 2016, he has fulfilled the role of Director and Audit and Supervisory Committee member, monitoring and supervising
Nishimatsu Construction’s management from an independent stand point. For these reasons, we deem him to be the appropriate talent for auditing and supervising
Nishimatsu Construction’s management from an objective point of view and appointed him an external director and an Audit and Supervisory Committee member.

External Directors(Audit and Supervisory
Committee members)

Noriko Suzuki

Ms. Suzuki possesses specialized knowledge as a certified public accountant and has a wealth of experience related to accounting in the real estate industry. Since June
2021, she has fulfilled the role of director and Audit and Supervisory Committee member, monitoring and supervising Nishimatsu Construction’s management from an independent stand point. For these reasons, we deem her to be the appropriate talent for auditing and supervising Nishimatsu Construction’s management from an objective pointof view and appointed her an external director and an Audit and Supervisory Committee member.

External Directors(Audit and Supervisory
Committee members)

Toshihiro Kubo

Mr. Kubo possesses a wealth of experience during his tenure at Kubota Corporation, he also possesses a wide range of knowledge cultivated as Representative Director of
Kubota Corporation. We have appointed him as an external director who is a member of the Audit and Supervisory Committee because we believe he is an appropriate person
who can supervise our management from an objective point of view.

External Directors(Audit and Supervisory
Committee members)

Yayoi Ito

In addition to her wealth of experience gained during her tenure at NTT Data Corporation and other companies, Ms. Ito possesses extensive knowledge of ICT. For these reasons, we deem her to be the appropriate talent for auditing and supervising Nishimatsu Construction’s management from an objective point of view and appointed her anexternal director and an Audit and Supervisory Committee member.

Board of Directors’ skill set
 Male Female External
Expertise and Experience Criteria for Directors
ConstrucUrban
tion tech- developnology &ment &
quality
Real estate

PositionFull name

Corporate
management

Representative Director andPresident

Nobutoshi Takase







Representative Director

Makoto Isshiki







Representative Director

Yuichi Kono

Director

Yoshiyuki Sawai

Director

Kazutoyo Hamada

External director(Independent)

Hidetaka Matsuzaka

EnvironmentNoriko Suzuki

External directors (Audit
and Supervisory Committee
members) (Independent)

Toshihiro Kubo



External directors (Audit
and Supervisory Committee
members) (Independent)

Yayoi Ito

NISHIMATSU CONSTRUCTION CO., LTD.



Executive Vice President, General Manager ofManagement Division and General Manager of
Human Resource Strategy Office, in charge ofRegional Environmental Solutions Business
Division and in charge of Investor Relations

Managing Officer, General Manager of
Building Division


















Representative Director, Osaka Gas Co., Ltd.



Executive Officer, Mitsubishi Corporation,
Representative Director, Mitsubishi Shoji
Foodtech Co., Ltd.



Certified Public Accountant, KPMG AZSA LLC
Senior Manager

Representative Director, Kubota Corporation

Head of the Business Planning Promotion Office,NTT Data Corporation, Executive Officer, SG
SYSTEMS CO., LTD.







Integrated Report 2023

Executive Vice President, General Manager ofCivil Engineering Division and Safety &Environment Division

Senior Managing Officer and General Manager
of Asset Value-Added Business Division* The above list does not exhaustively cover all of the knowledge and experience possessed by each director.

52







External directors (Audit
and Supervisory Committee
members) (Independent)

Nomination
Committee Internal Directors: Main roles
and ComExternal Directors: Career and qualifications
pensationDirector (Full-time Audit andSupervisory Committee
Hiroshi Yaguchi
member)Jun Ikeda

GlobalChief Executive Officer and PresidentExternal directors (Audit
and Supervisory Committee
members) (Independent)

Legal, GovTreasury,
ernance,
Accounting, Risk man- Digital & IT
Financeagement,
ComplianceINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Director Compensation
O verview of our director compensation(excluding Audit and Supervisory Committee members)

short-term incentive, and partly in stock, as a long-term incen-

Compensation for directors (excluding Audit and Supervisory

and the stock portion is conferred every June in the form ofCommittee members and other directors who are externalconversion points for the Board Benefit Trust. When a director

directors) comprises base compensation and performance-

retires from his or her position as director, cumulative points arelinked compensation. Compensation for external directors

converted into shares of stock and delivered to the beneficiary.

(excluding those who are Audit and Supervisory Committee

The ratios of base compensation and performance-linked com-

tive. The cash portion is paid as a bonus in July of each year

pensation are appropriately determined taking into accountmembers) shall be limited to base compensation.
Base compensation, as fixed (monthly) compensation deter-

Nishimatsu Construction’s management strategies, business envi-

mined in accord with the director’s position, is calculated taking intoronment, and the level of difficulty of achieving job responsibilities

account Nishimatsu Construction’s employees’ salary levels, stan-and targets, while also referencing relevant changes at other com-

dard salary levels in the business community, and other factors.

panies in our industry. Within performance-linked compensation,

Performance-linked compensation fluctuates according to thethere is generally a one-to-one ratio of cash-based compensation

degree to which performance targets were met. It includes ato stock-based compensation. Furthermore, for stock-based

base level of compensation in accord with each director’s posi-compensation, a minimum level is set that is the same as the min-tion, with this base level multiplied by a performance-linked coef-

imum level for performance-linked compensation.
Based on these policies, the President drafts a preliminary

ficient to calculate the final amount. To calculate the final
amount, evaluation indices covering the director’s contribution to

proposal, then consults with the Nomination andcorporate value are set for each position and job title, and theCompensation Committee, whose input is taken into accountdegree to which performance targets were met, as well as year-

and decided on by the Board of Directors (Base compensa-

on-year performance are evaluated each fiscal year.

tion and performance-linked compensation are determined in

Performance-linked compensation is paid partly in cash, as a

March and June, respectively, each year).

Compensation details
Category
Performance-linked indicesBase compensation―
Short-term
Performance- (Medium-Term Management Plan 1st and 2nd years)
incentives
linked bonus •Group-wide performance (net sales, operating income, profit attributableto owners of parent)•Business division performance (orders, profits, safety performance,
Performance- quality performance, etc.)
linked equity
Long-term(Medium-Term Management Plan final year)
compensaincentives•Medium-Term Management Plan published values (net sales, gross profit,
tion (Board
operating income, ROE, capital to assets ratio, dividend payout ratio)
Benefit Trust)•Business division performance (orders, profits, safety performance,
quality performance, etc.)

Overview of payment method
Base amount paid in cash
Amount calculated by multiplying the base amount by aperformance-linked coefficient, paid in cash

Points conferred (calculated by multiplying the base amount by aperformance-linked coefficient); cumulative points converted into an equivalent amount of stock when the director retires

Compensation conceptual image
High

Compensation

Performance-linked bonus
Performance-linked equity
compensation
Base compensation
80%

100%

120%

Degree of performance achievementHigh Overview of compensation for directors who are
Audit and Supervisory Committee members

Supervisory Committee members, as well as the standard

Directors who are Audit and Supervisory Committee members

sation is determined through discussions among all directors

receive only base compensation that takes into consideration

who are Audit and Supervisory Committee members.

salary levels in the business community. Said base compen-the compensation of directors who are not Audit and

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

53

SUSTAINABILITY

Corporate GovernanceDirectors’ compensation (FY2022)
Performance-linked Performance-linked
compensationcompensation
Total amount of(cash-based(non-cash-based compensation, etc.
compensation)compensation)

Category

Paid personnel

Base
compensation

Directors (excluding Audit and Supervisory Committee
members)

6¥170 million¥11 million¥21 million

External Director

1¥7 million--¥7 million

Directors (Audit and Supervisory Committee Members)

6¥48 million--¥48 million¥204 million

External Directors

5¥31 million--¥31 million

Total

12

¥219 million¥11 million¥21 million¥252 million

External Directors

6¥39 million--¥39 million*1 The total amount of performance-linked compensation (cash-based compensation) indicates the amount of provision for directors’ bonuses in FY2022. In addition, the total amount of
performance-linked compensation (noncash-based compensation) indicates the amount of provision for directors’ stock benefits in FY2022 based on the “Board Benefit Trust (BBT)”, a
performance-linked stock compensation plan that uses a trust.
*2 The above includes two directors (Audit and Supervisory Committee) who retired at the conclusion of the 85th Annual General Meeting of Shareholders on June 29, 2022.

Analysis and evaluation of the effectiveness of the Board of Directors
To confirm whether the Board of Directors is appropriately ful-

Nishimatsu Construction conducted an evaluation of thefilling its duties of promoting sustainable corporate growth andeffectiveness of the FY2022 Board of Directors from February

increasing medium- to long-term corporate value, we analyze

to April 2023. An overview of the evaluation process, evalua-and evaluate the Board’s effectiveness once a year and strivetion results, and initiatives going forward is given below.

to strengthen and improve its functions.

1

Evaluation process2

Overview of evaluation results

Led by the Audit and Supervisory Committee, all directors were given a survey that consisted of six subjects, namely theroles and functions of the Board of Directors, the composition and size of the Board of Directors, the operation of theBoard of Directors, collaboration with audit organizations, relationship with the external directors, and relationship withshareholders and investors. The six subjects listed above also include items reported to the Board of Directors by the
Audit and Supervisory Committee regarding the effectiveness evaluation of the Board of Directors from the previous year.
To ensure anonymity, statistical compilation for the survey was entrusted to a third-party organization, then the Audit
and Supervisory Committee analyzed and reviewed the data before making a report to the Board of Directors.

Based on the survey results, the Audit and Supervisory Committee reported to the Board of Directors to the effect that it
must immediately advance systematic initiatives towards solving the issues to be considered and improvement points thatwere discovered during the survey (the major issues to be considered are listed below).
(1) Discussions on instilling the Corporate Philosophy and long-term vision(2) Discussions and deliberations by, and reports to the Board of Directors(3) Operations regarding the Board of Directors(4) Materials used by the Board of Directors(5) Training for executives

3

54

Initiatives going forward
In light of the above reports, the responsible director will formulate matters to be deliberated and their schedule for theyear, which will be actively discussed by the Board of Directors.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Strategic shareholdings
 Policy regarding reducing strategic shareholdings

have transactions with the issuing company, what the status

We have made it our policy to hold shares of companies

is of obtaining construction and other information, anddeemed necessary for our business operations and, unless

whether there are other special circumstances, then makes athere are other extenuating circumstances, to reduce ourreport to the Board of Directors. The Board of Directors

holdings of companies that do not meet this criterion.

receives and reviews these reports and makes final decisions
on whether the holding is appropriate, then discloses theWith regard to determining whether to hold specific strategic

results of their decision.

shareholdings, the President and General Managers Meeting
carefully surveys and reviews each fiscal year whether we Status of reduced strategic shareholdings
Number of companies whose shares are held and their total amounts on the balance sheet
82nd term(FY2018)

83rd term(FY2019)84th term(FY2020)85th term(FY2021)86th term(FY2022)

Number of companies
Number that are publicly listed

152
75

141
64

103
26

102
25

103
24

Total amount on the balance sheet (million yen)
Total amount of publicly listed stocks (million yen)

70,632
66,70551,26147,33438,38334,25731,227
27,05528,154
24,13826

25

24

Category(million yen)
80,00065,00075

6466,70550,000  Number of publicly listedcompanies
 A mount on the balance sheet(listed stocks)

47,33435,00020,00034,25782th term

83th term

84th term

24,13827,05585th term

86th term Policy regarding the exercise of voting rights forstrategic shareholdings

or against proposals while also taking into consideration

Nishimatsu Construction’s criteria for the exercise of voting

exercise particularly careful discretion and judgment in therights for strategic shareholdings is as follows:case of proposals for corporate restructuring (such as(1) In principle, we will exercise voting rights on all proposals.

mergers), presenting retirement bonuses to officer(s) at a(2) From the perspective of increasing the medium- to long-company with poor operating results, a capital increase

term corporate value of the company whose shares arethrough third-party allocations, adopting takeover defense

held as strategic shareholdings, we will make decisions formeasures, and the like.

the operating circumstances of that company. We will

Compliance with the Corporate Governance Code
Nishimatsu Construction implements each and every principle

initiative policy regarding each principle of the Corporateof the Corporate Governance Code. For details on the

Governance Code, see the Company’s website.

Initiatives on Corporate Governance by Nishimatsu Construction Co., Ltd.
Corporate Governance Report
WEB https://www.nishimatsu.co.jp/eng/company/governance.html

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

55

SUSTAINABILITY

External Director Roundtable Discussion

Toshihiro Kubo

Jun Ikeda

Noriko Suzuki

Hidetaka Matsuzaka“I think that my role is to make waves.”
As Nishimatsu Construction works toward achieving sustainable growth, four external
directors speak about their current analysis and specific issues.
External directors Matsuzaka and Kubo, a year has
passed since your appointments. What are yourthoughts on the operation of Nishimatsu Construction’s
Board of Directors’ meetings? Also, external directors
Ikeda and Suzuki, how do you see Nishimatsu
Construction’s changes and challenges thus far?
External Director Hidetaka Matsuzaka: Upon assuming
my position, I stated that I would like to confirm four points toimprove Nishimatsu Construction’s fundamental competencies, which form the foundation for creating flexibility in ideas
and actions. Those four points were: (1) Are employees thinking in terms of overall optimization rather than individual optimization, and are they able to put their ideas across in aneasy-to-understand manner?; (2) Is there a culture in which
corporate information is shared within the Company andquestions are freely discussed?; (3) Is work simplified? Are
employees taking on new challenges and showing growth?;and (4) Are there shared goals, and are the business portfolio,
the impacts of risks, and measures for said risks clearly
understood? I think there is a need for the Company to continue to strengthen its efforts in these areas.
External Director Toshihiro Kubo: In a rapidly changing
business environment, what is required is a system in which
management can quickly ascertain the situation on the
ground and make the necessary decisions, but I think there
are still some shortcomings in terms of that kind of system.
Currently, efforts are being made to improve the ascertainingof business progress and the speeding up of responses, and I

56

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTION

External
Director

Jun
Ikeda
External
Director

NorikoSuzuki
External
Director

Toshihiro
Kubo
External
Director

Hidetaka
Matsuzaka

VALUE CREATION

Mr. Ikeda has extensive experience in business managementat Mitsubishi Corporation, both domestically and internationally, and in corporate management at companies like
Mitsubishi Shoji Foodtech Co., Ltd. He was appointed as anexternal director of the Company in June 2016. He mainly
provides advice related to overall management and new
businesses.
In addition to her expertise as a certified public accountant,
Ms. Suzuki has extensive experience in accounting in the realestate industry. She was appointed as an external director of
the Company in June 2021. She mainly provides advice infinance, accounting, and real estate matters.
Mr. Kubo has experience in environment-related businesses
and corporate divisions at Kubota Corporation. He has extensive experience in corporate management as Representative
Director of Kubota Corporation. He was appointed as an external director of the Company in June 2022.
Mr. Matsuzaka has extensive experience in business management at Osaka Gas Co., Ltd, both within and outside Japan,
and in corporate management as the Representative Directorof Osaka Gas Co., Ltd. He was appointed as an external
director of the Company in June 2022.

am watching closely to see how the Company can accomplish change over the year ahead. I also believe that discussions on management issues from a variety of perspectives
should be made more active.
External Director Jun Ikeda: With the addition of Messrs.
Matsuzaka and Kubo, two people with management experience, I feel that the direction and atmosphere of discussions
at Board of Directors’ meetings has changed significantly. A
strong herd instinct exists in the construction industry, andthere is a tendency to avoid making major changes ahead ofother companies. At the Company’s Board of Directors’
meetings, however, the external directors have a particularly
strong sense of crisis in this area and are emphasizing theneed for rapid change and its implementation.
External Director Noriko Suzuki: At Board of Directors’
meetings, Messrs. Matsuzaka and Kubo often make

STRATEGYSUSTAINABILITYDATA SECTION

statements based on their experience from having been deeply
involved in corporate management, and I think they are also asource of stimulating inspiration for the internal directors.
Because Nishimatsu Construction is a company that takes
itself very seriously, the Company takes its time to carefully
implement and make improvements to address pressing issues
from the outset. At recent Board of Directors’ meetings, I havegained a strong sense that there has been a positive shift inmindset with regard to how to reflect and implement candid
recommendations.

What points do you keep in mind to improve effectiveness when speaking at Board of Directors’ meetings?
Please also discuss the role you think that external
directors should play.
Suzuki: I believe that one of the important roles of an external
director, and something that I am persistently conveying, is tounderstand that what might appear to be common sense for
a company is not necessarily the same as common sense forsociety as a whole, and there may be cases in which what acompany is doing may differ from society’s rules. I believe thatbearing this in mind will help create an environment that
guards against cases of fraud, prevents scandals from arising,
and will also lead to stronger governance.
Ikeda: The most important role of an external director is to beable to convey information, even if that information makes forharsh listening. A company will never be able to change if only
pleasant things are said. Because the construction industry is
closed, it is increasingly useful for external directors to relate
their experiences from other industries to Nishimatsu
Construction. I always speak out at the Company’s Board of
Directors’ meetings because I do not want people to repeat
the same mistakes that I experienced.
Kubo: Although external directors cannot make comments
relating to business operations as such, their advantage isthat they can see things without any preconceptions. For
example, if there are any inefficiencies in the management
decision-making process of which people inside a company
are not aware, I point them out every time.
Matsuzaka: I think that my role is to make waves. Up until
the time a company reaches a final decision, you need tokeep bringing to light conceivable situations at that point intime. The role of a board of directors is to make decisions
after having considered all the options, and thus I also speakfrom opposing viewpoints to confirm that this has been done.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

57

SUSTAINABILITY

External Director Roundtable Discussion

Ikeda: In making a final decision, it is very important that theprocess leading up to decision-making is clarified. I requestthat the materials used at Board of Directors’ meetings also
include detailed explanations of the process, not just theconclusions.

Matsuzaka: It is being said that there will be a further decline
in Japan’s population over the years to come, and that cities
in the regions will themselves decline. In such places, I think it
is important to think about what kinds of mechanisms andsystems will be necessary to bring about business continuation over the long term concerning investments in geothermal
power generation and wood biomass power generation projects. The securing of profits is important as long as theCompany works as a business, and sustainability issues must
be considered with this view in mind.
Suzuki: Sustainability management does not produce immediate results and thus evaluating initiatives in relation to business profits is also beset with difficulties. While repeatedly
facing challenges and admitting to failures, I believe it is necessary for the Company to make steady efforts from a
medium- to long-term perspective, isn’t it?

Under the new Medium-Term Management Plan, anemphasis has been placed on sustainability, including

What are your thoughts on the expertise and skills thatmention of “revising the structure of the Board of

directors should possess and on the introduction of

Directors and ensuring diversity based on skillsets

ESG-linked, performance-based compensation? Also,

mindful of sustainability management” as part of theplease provide us with your thoughts on humanCompany’s governance initiatives. Please tell us yourresource development at Nishimatsu Construction,

thoughts on the ESG initiatives.

including of the next generation of management
personnel.

Ikeda: I think that the E and S in ESG represent the construction industry itself. A construction company’s business is tobuild social infrastructure, and thus the industry cannot survive without awareness of S. Inevitably, construction is also
accompanied by environmental destruction, and Nishimatsu
Construction has been responding to E and S aspects
through its business for 150 years. The Company’s ESG initiatives will be more persuasive if this is considered as a starting point. Contrastingly, with regard to G, since construction
is an industry that comprises construction sites, I believe that
Nishimatsu Construction will need to earnestly begin building
and improving its governance from now on.
Kubo: The Company is currently promoting reviews of sustainability issues, but I think the important thing is for all
employees to identify issues that will have a significant bearing
over the medium to long term and to organize them from theperspective of the SDGs. This is because I believe that, firstand foremost, the perspectives of employees who are
involved in business operations on the front lines on a day-today basis should be utilized. In order for Nishimatsu
Construction to continue to grow in line with changes in theexternal environment and internal conditions, I hope that all
employees will be satisfied with this approach.

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NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Suzuki: Although Nishimatsu Construction possesses
strengths such as integrity and high technical capabilities,
there are quite a few things that are lacking and parts thatneed to be changed, and the Company must respond to thechanging times while maintaining a balance between the two.
In the years to come, it will be desirable for directors to havethe skills to integrate these aspects, but I think there is a needto discuss how best to reflect this in the compensation
system.
Ikeda: The Company introduced performance-linked compensation in 2021 and starting in the current fiscal year will
incorporate non-financial indicators such as safety and quality
into the compensation calculation criteria for its directors(P.53). We will continue to work on linking executive compensation to ESG indicators. Personnel are one of the mostimportant management resources, and it is my belief that systems need to be designed with ESG considerations in mind,
not just for executive compensation.
Kubo: Internal directors in particular require knowledge ofmanagement. In contrast, from the perspective of increasing
the diversity of a board of directors, it is desirable for people

INTRODUCTIONVALUE CREATIONSTRATEGYwith diverse expertise to be appointed as external directors.
The newly appointed external director also possesses expertise in ICT, so I think the Company’s Board of Directors will be
more balanced. The content of the performance-based compensation has already been elaborated. However, as it has
only been a short time since its introduction, we are currently
at the stage of reviewing and making adjustments, and I thinkincorporating ESG indicators will form the next step.

SUSTAINABILITYDATA SECTION

Matsuzaka: With regard to the development of management
personnel, we have been implementing a program called the
Next Generation Management Development Plan since 2021.
There is a need to utilize this program to raise the level of thecandidate pool that will shoulder the responsibility as the next
generation of management. In addition, having taken steps, suchas transferring young employees to positions outside theCompany and bringing in external human resources as executive
officers and directors, I recommend creating a system that forms
a well-balanced and deeper pool of management personnel.
Ikeda: In the sense that their customer bases are derived
from all industries, general contractors themselves represent avery wide-ranging industry. Were a company to take advantage of this, it would be able to build a wide range of connections. To develop human resources who can shoulder
responsibility and be involved in management in the years tocome, I would like to see the Company actively sending
young employees to work outside the Company and build asystem in which they can gain management experience.

Message from the Appointed External Director

Utilizing IT-related insight and diverse work experience
for management and DX promotion
My name is Yayoi Ito and I have been appointed as an external director. I am
extremely humbled to be taking on such a heavy responsibility. After having graduated from the department of mathematics, I have been involved in IT-related fields formany years. Having had long-term experience as a system integrator in particular, in
addition to SE and consulting, I possess experience in a wide range of tasks, including sales management, marketing, project management, new business creation andcommercialization, alliances and collaborations with overseas companies, business
External Director

Yayoi Ito
In addition to a wealth of experience gainedplanning, human resources and training, and organizational management. The projects I have handled range from small to large scale, and I have experience in a variety
of industries, including the public sector, utilities, and logistics.

during her tenure at NTT DATA Corporation

Utilizing my past experience in a variety of aspects, I hope to be particularly usefuland other companies, Ms. Ito possesses

for management and Nishimatsu Construction’s DX promotion. Going forward, I am

extensive knowledge of ICT. She wasdetermined to actively absorb industry knowledge and do my best.

appointed as an external director of theCompany in June 2023.

I gratefully look forward to your continued support as I work toward the further development of Nishimatsu Construction.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

59

SUSTAINABILITY

Compliance

Our view of compliance is not limited to the observance of laws, rules, and various regulations, but also
serves as the foundation (corporate culture and climate) that allows us to conduct sustainable businessactivities based on the trust and confidence of all stakeholders in accordance with our Company Motto
and Corporate Philosophy. Based on this concept, we are working to improve compliance awarenessamong every officer and employee through various measures that include in-house training.

BasiccompliancepolicyCompliance is a priority for corporate development

Compliance is the philosophy andmission to observe laws and ethics.

Have the courage to take action.

If you do not change things now, they won’t ever change.

Be courteous in behavior.

What you find offensive is what others find even more offensive.

Act with a sense of justice.

If you lose your composure for even a moment, the Company will cease
to exist in an instant.
* The Company’s compliance policy covers all Group employees and partner companies.

Compliance Promotion System
Group-wide promotion system

Whistleblower system “Nishimatsu Hotline”

In 2009, we established the Compliance Committee with theaim of providing support and guidance, and ensuring thatcompliance is practiced by Group officers and employees.
To provide a third-party perspective, we appoint a personfrom outside the Company to chair the Committee. The
Compliance Committee meets once a month to discuss various compliance-related issues and conducts compliancetraining to maintain and improve the compliance system. In
addition, the Compliance Committee chair also attends Boardof Directors meetings to report on the details of responses tovarious issues and make recommendations.
The Compliance Promotion Department takes theinitiative in promoting compliance as the secretariat of theCompliance Committee, playing a role in educating officers
and employees about the activities of the Committee.
The heads of each division at the Head Office, the generalmanagers at each regional headquarters, and the presidents
of affiliated companies have been appointed as the people incharge of compliance. They raise awareness about and publicize compliance, as well as conduct training for officers andemployees in the organizations they run.

We have set up the Nishimatsu Hotline as an internal whistle
blower system to improve our corporate culture and deter andpromptly address wrong doing. A reporting desk has also
been set up for our partner companies, and the system allows
anonymous reporting and provision of information.
We distribute compliance cards to all Group officers andemployees to ensure that they are well informed about the
Nishimatsu Hotline.

Counseling service “Workplace Hotline”
We have set up the “Workplace Hotline,” a counseling service
where employees can easily seek advice about mental anxiety
or human relations in the workplace.

Number of calls to the Nishimatsu Hotline andWorkplace Hotline
Category(Number of reports)

FY2018FY2019FY2020

FY2021

FY2022

Nishimatsu Hotline

20

30

33

28

45

Nishimatsu Workplace Hotline

21

16

12

12

8

Initiatives to Promote Compliance
Compliance training
We carry out ongoing career-level-specific training ande-learning to improve compliance awareness, eliminate
harassment, and boost understanding and dissemination of
the whistleblowing system. Especially since FY2021, we havebeen conducting stratified online training covering all levels
from managers to younger employees. In FY2022, we conducted training for assistant managers based on events thathave occurred internally in recent years as the subject matter.

Compliance audit
Every year, we conduct Compliance Audits of all regional
headquarters, each division at the Head Office, and Group

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NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

companies throughout Japan to assess the status of
responses to risks that have occurred or are expected tooccur in each department, as well as the details of initiatives
and activities aimed at raising compliance awareness.

Officer, employee compliance awareness survey
We conduct Compliance Awareness Surveys of all officers
and employees (including temporary workers) every two
years. We are improving our training and educational activities by understanding the current situation from the resultsof the survey and changes over time and by analyzing
issues and problems.

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Risk and Opportunity Management

The Group recognizes that risk and opportunity management is an important issue for fulfilling its social
responsibility, realizing Nishimatsu-Vision 2030 and achieving its Medium-Term Management Plan. To
ensure proper Group-wide risk management, we reviewed our existing management system andrevamped it into a risk management system that includes a long-term perspective.

Group-Wide Risk and Opportunity Management System and Activities
The Risk and Opportunity Management Committee manages
risks and opportunities from a long-term perspective and foreach business activity in accordance with the Committee’s
rules, etc.
To comprehensively manage Group risks and opportunities,
we have designated specific departments to be responsible
for the management of individual risks and opportunities
aggregated by the Committee. The Committee monitors andassesses the effectiveness of preventive and detective risk
and opportunity management, and also makes recommendations for corrective action to each department responsible forrisk and opportunity management if problems are found.
The Committee reports to the President and General
Managers Meeting and the Board of Directors regarding thedepartments responsible for management of risks and opportunities, the management system, and the status of management.

Risk Management System
Board of Directors
President and General Managers Meeting
Approve /instruct

ReportRisk and Opportunity Management Committee






 isk and Opportunity Management
R
Committee Rules
Risk & Crisis Management Rules
Basic Risk Management ManualGroup-wide Risk Management Manual<Administrative Department> Corporate Planning OfficeSustainability Promotion Department
 Audit Unit

Evaluate efficacy
Request corrective action

ReportDepartments responsible for risk management

Risk and Opportunities from a Long-Term Perspective(1) Identification of risks and opportunities at the Group-wide management level basedon materiality and reflecting them in business strategies(2) Examine and promote specific actions for sustainability (establish priorities, promotion
structures, roadmaps)(3) Monitor specific actions for sustainability

Supervise /instruct

ReportRisks and opportunities in business activities(1) D evelop processes for risk and opportunity management (identify and review risks
and opportunities, verify and review of hypotheses)(2) M onitor risk and opportunity management systems* Please see our securities reports regarding business and other risks.

Information security risk management

Prevention measures

Information security system(1) Technical measures Reinforcing measures against computer virus counter andunauthorized access Visualizing and controlling cloud service use(2) Personnel measures
C onducting security training and targeted e-mail drills
H aving outside experts assess security and investigate risk
Countermeasures in the event of an incident
C onducting incident response training, including for management
R einforcing cyber resilience for early recovery of systems

Cyber attacks are not just a risk for our Company, and ransomware and other attacks must be addressed across theentire supply chain. In FY2022, we held a workshop on

Technical countermeasures

Malicious
attacker

AttackRestorequickly

Our system
Reinforce
security

Detect /block
AttackBusinessapplication

Detect /block

Instruct

Officers and employees

ICT System Department

information security for our subcontractor’s network, N-NET.
Going forward, the entire Group, including N-NET, will continue to improve information security mainly by conducting
targeted e-mail training and security education.

Crisis Management
Team

The Group is in possession of important business information
as well as personal information and confidential information
related to our business partners. Various measures are being
implemented to prevent loss of social credibility due to information leaks and economic losses.

ReportPersonnel measures

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

61

SUSTAINABILITY

Board of Directors andAudit and Supervisory Committee (As of June 29, 2023)
 Directors

Nobutoshi Takase

Makoto Isshiki

Yuichi Kono

Representative Director and President

Representative Director
General Manager of Civil Engineering Division
General Manager of Safety & Environment Division

Representative Director
General Manager of Management Division
General Manager of Human Resource Strategy Office
In charge of Regional Environmental Solutions BusinessIn charge of Investor Relations

Apr. 1980	Joined the Company
Jun. 2011	Director, Managing Officer
Apr. 2018	Representative Director and President;
Chief Executive Officer and President(to present)

Apr. 1984	Joined the Company
Jun. 2016	Director, Senior Managing Officer
Apr. 2018	Representative Director and Executive Vice
President (to present)

Apr. 1980	Joined the Company
Jun. 2015	Director, Managing Officer
Apr. 2021	Representative Director and Executive Vice
President (to present)

Number of Company shares held
9,540 shares
Attendance at Board Meetings
15 out of 16 (94%)

Number of Company shares held
26,120 shares
Attendance at Board Meetings
16 out of 16 (100%)

Number of Company shares held
11,500 shares
Attendance at Board Meetings
16 out of 16 (100%)

 Audit and Supervisory Committee Members

Hiroshi Yaguchi

Jun Ikeda

Noriko Suzuki

Director (Audit and Supervisory Committee Member)(Full-Time)

External Director(Audit and Supervisory Committee Member)

External Director(Audit and Supervisory Committee Member)

Apr. 1979	Joined the Company
Jun. 2020	Director (Full-time Audit and Supervisory
Committee Member) (to present)

Apr. 2006	Executive Officer, Mitsubishi Corporation
Jun. 2009	President and Representative Director,
Mitsubishi Shoji Foodtech Co., Ltd.
Nov. 2012	President and CEO, Mitsubishi Corporation
Life Sciences Limited, President and CEO,KOHJIN Life Sciences Co., Ltd.
Jun. 2016	External Director (Audit and Supervisory
Committee Member) of the Company(to present)		Outside Director, SODA NIKKA CO., LTD.
(to present)

Oct. 2008	Senior Manager, KPMG AZSA LLC
Oct. 2015	Part-time audit staff, KPMG AZSA LLC
Apr. 2020	Supervisory Director, Frontier Real Estate
Investment Corporation (to present)
Jun. 2021	External Director (Audit and Supervisory
Committee Member) of the Company(to present)

Number of Company shares held
3,700 shares
Attendance at Board Meetings
16 out of 16 (100%)
Attendance at Audit and Supervisory
Committee Meetings 15 out of 15 (100%)

Number of Company shares held 0 shares
Attendance at Board Meetings
16 out of 16 (100%)
Attendance at Audit and Supervisory
Committee Meetings 15 out of 15 (100%)62

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Number of Company shares held 0 shares
Attendance at Board Meetings
16 out of 16 (100%)
Attendance at Audit and Supervisory
Committee Meetings 15 out of 15 (100%)INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Yoshiyuki Sawai

Kazutoyo Hamada

Hidetaka Matsuzaka

Director
General Manager of Asset Value-Added Business
Division

Director
General Manager of Building Division

External Director

Mar. 2006	Executive Officer of Mizuho Bank, Ltd.
Jun. 2010	Director of the Company
Apr. 2019	Director, Senior Managing Officer(to present)

Apr. 1987	Joined the Company
Jun. 2020	Director, Managing Officer (to present)

Apr. 2015	Representative Director; Executive Vice
President, Osaka Gas Co., Ltd.
Apr. 2019	Director and Chairman, OG Capital Co.,
Ltd. (to present)
Jun. 2019	Advisor, Osaka Gas Co., Ltd. (to present)
Jun. 2020	Outside Director, HIROSHIMA GAS CO.,LTD. (to present)		Outside Director, Nanto Bank, Ltd.
(to present)
Jun. 2022	External Director of the Company(to present)

Number of Company shares held
7,720 shares
Attendance at Board Meetings
16 out of 16 (100%)

Number of Company shares held
5,360 shares
Attendance at Board Meetings
16 out of 16 (100%)

Number of Company shares held
Attendance at Board Meetings
10 out of 11 (91%)

Toshihiro Kubo

Yayoi Ito

External Director(Audit and Supervisory Committee Member)

External Director(Audit and Supervisory Committee Member)Jul. 2014	Representative Director and Executive Vice
President, Kubota Corporation
Jun. 2021	Chairman of the Osaka Federation of Health
Insurance Societies (to present)		Vice Chairman, National Federation of
Health Insurance Societies (to present)
Jun. 2022	External Director (Audit and Supervisory
Committee Member) of the Company(to present)

Apr. 2008	Head, Business Planning and Promotion
Office, Public Administration Systems
Section, NTT DATA Group Corporation
Jun. 2021	Outside Director, KANADEN
CORPORATION (to present)
Jun. 2021	Outside Director, SUMIKEN MITSUI ROAD
CO., LTD. (to present)
Jun. 2023	Outside Director, JAPAN POST HOLDINGS
Co., Ltd. (to present)
External Director (Audit and Supervisory
Committee Member) of the Company(to present)

Number of Company shares held 0 shares
Attendance at Board Meetings
11 out of 11 (100%)
Attendance at Audit and Supervisory
Committee Meetings 10 out of 10 (100%)

Number of Company shares held

0 shares0 shares* The number of shares of the Company held includes the number of shares to be delivered under the stock compensation plan.
* The attendance at the Board Meetings and the Audit and Supervisory Committee Meetings indicates the attendance for FY2022.
NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

63

DATA SECTION

Eleven-year Major Financial and Non-financial Data
Fiscal Year (years ended March 31)

2013

2014

2015

2016

(Millions of yen)

258,216

320,594

345,853

304,764

Net sales(Millions of yen)

253,250

314,638

342,989

308,826

Gross profit(Millions of yen)

15,615

17,96322,76931,104

Operating income(Millions of yen)

2,666

4,738

8,710

16,184

Ordinary income(Millions of yen)

4,307

6,106

9,938

16,290(Millions of yen)

3,411

5,586

9,220

14,598

Total assets(Millions of yen)342,974

374,399

386,469

351,334

Interest-bearing liabilities(Millions of yen)

52,907

58,13553,91853,175

Net interest-bearing debt

(Millions of yen)

4,942

4,933

16,34625,271

Shareholders’ equity(Millions of yen)

111,853

117,540

122,367

134,190

Financial data (Consolidated)
Construction Business orders received
Profit and loss statement (fiscal year) Profit attributable to shareholders of theCompany
Balance sheet (end of fiscal year)

Cash flow (fiscal year)
Cash flows from operating activities(Millions of yen)

9,776

3,129

(10,448)

4,120

Cash flows from investing activities(Millions of yen)

(10,770)(3,246)(1,236)(9,688)Cash flows from financing activities(Millions of yen)

6,536

3,750

(5,701)(2,960)Cash and cash equivalents at end of year

(Millions of yen)

47,86553,05237,422

27,903

Profit attributable

(yen)

61.55

100.80166.45263.55

Dividends

(yen)

20

30

50

80

Dividend payout ratio

(%)

32.5

29.8

30.0

30.4

Shareholders’ equity(yen)

2,302.75

2,419.10

2,669.20

2,775.30

ROE

(%)

2.8

4.3

6.5

9.7

Capital to assets ratio

(%)

37.2

35.8

38.3

43.8

D/E ratio(times)

0.4

0.4

0.4

0.3

Net D/E ratio(times)

0.0

0.0

0.1

0.2

2,557

2,648

2,678

2,704

Amounts per share

Ratio

Non-financial data
Number of employees (consolidated)
Number of employees (non-consolidated)
CO2 emissions per unit from construction*

3

Final percentage of construction waste sent
for landfill disposal(excluding asbestos-containing industrial waste materials
and specially controlled industrial waste)*1, 3

2,309

2,385

2,424

2,467

(t-CO2/
100 million yen)

33.7

32.1

32.0

31.8

(%)

—

6.8

5.0

3.1

0.9

1.0

1.0

1.1

Frequency rate of injuries*2(occupational injury rate)*1 F inal percentage of construction waste sent for landfill disposal: Before the fiscal year
ended March 31, 2019, excludes construction sludge and special substances suchas specified substances.
From the fiscal year ended March 31, 2019, includes construction sludge andexcludes special substances such as specified substances.

64

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

*2 Expresses the rate of occurrence by the number of fatalities and injured workers fromoccupational accidents per one million actual work hours.
*3 Calender year data for the fiscal years ended March 31, 2013 to March 31, 2019.

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

2017

2018

2019

2020

2021

2022

2023

360,186

380,378

348,045

376,088313,437

333,974

340,392

315,228

284,412349,318

391,621336,241

323,754339,757

42,25940,42543,42343,93839,761

43,772

33,71925,25922,752

24,92825,313

20,95023,54012,61525,44623,54825,98525,83821,561

23,497

13,176

19,21016,914

18,784

18,721

17,166

15,103

9,648

385,674

381,355

466,327

497,045472,440

477,613513,623

42,84443,306

86,167

121,909

115,039

160,039

168,396

3,817

10,80754,69475,44971,269112,917

114,669

147,697

158,256

171,828

184,803

196,158

145,459

144,294

40,763

13,570(15,882)

14,1204,907

41,24334,747(13,945)(15,422)(23,633)(20,147)

5,302(22,532)(27,450)(15,039)(4,918)38,555

20,952(12,653)(16,074)(2,365)39,02632,49931,47346,45943,574

47,12153,726348.15308.52343.39342.24313.83312.34244.43

105

95

105

105

105

221

221

30.2

30.8

30.6

30.7

33.5

70.8

90.4

3,057.35

3,348.41

3,605.62

3,599.01

3,765.62

3,833.71

3,770.77

11.9

9.6

9.9

9.5

8.5

8.5

6.4

43.5

48.0

42.3

39.6

43.6

31.7

29.0

0.3

0.2

0.4

0.6

0.6

1.1

1.1

0.0

0.1

0.3

0.4

0.3

0.7

0.8

2,740

2,825

2,920

3,005

3,060

3,106

3,201

2,504

2,536

2,606

2,684

2,762

2,794

2,804

24.2

18.1

16.1

15.9

20.1

17.1

11.1

2.9

2.7

2.1

2.2

2.2

2.4

2.4

0.7

0.7

1.0

1.0

0.8

0.8

0.5

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

65

DATA SECTION

ESG Data
FY2022 Sustainability Activity Targets and Evaluations
ESG

New
value

Activity
status

Implementation of the ZERO30
Roadmap

5

Total CO2 emissions from business activities(1) CO2 reduction during construction: 4,572t-CO2(2) CO2 emissions other than fromconstruction: 1,194t-CO2

4

133%

Implementation of biodiversity
preservation activities

5

No. of activities implemented

All worksites

4

133%

Maintain the final percentage of
waste sent for landfill disposal at
3% or lower

5

Final percentage of construction waste sent for
landfill disposal

2.1% or lower

2

67%

Promote environmentally friendly
design and construction

3(1) Introduction of ZEB elemental technology into
our own buildings, no. of tests(2) Reduction of CO2 emissions in the fiscal year (%)(3) No. of certifications acquired under various certification systems(1) At least one ZEB elemental technology to be installed in the
Company’s properties(2) CO2 reduction effect of 25% or more
(3) Acquisition of at least one certification from various evaluation systems

3

60%

Convert NCO properties to LED
illumination

4

No. of NCO properties that have switched to LED
lighting

Finish switching 4 floors to LEDs

3

80%

Promote energy-saving/creatingbuildings

3

No. of installations of energy-saving equipment in
the Company’s real estate

One installation per year of energysaving equipment at a property
which started operation in or after
FY2022

3

60%

Develop environmental technologies to create new value

4

No. of practical environmental technologies developed (technologies/year)

3 technologies or more/year

1

27%

5

No. of mistakes costing 5 million yen or more
(1) No. of cases (2) Total loss amount(1) 4 cases or less(2) 100 million yen or less

4

133%

Gain high evaluations fromclients (Civil Engineering)

5

Ministry of Land, Infrastructure, Transport andTourism’s (1) Average score for the year in construction result evaluations (2) Target construction
achievement rate that clears target score
Questionnaire evaluations upon completion of private-sector projects (3) S/A evaluation acquisition
rate (4) No. of S evaluations acquired(1) Average: 80 or higher(2) 80%(3) Gain 90% or higher(4) 1 item or more for each site

2

67%

Significantly reduce construction
defects (Building)4

Total annual expenditures on defect repairs (¥100
million/year)¥730 million/year

3

80%

Gain high evaluations fromclients (Building)4

Questionnaire evaluations upon completion ofprivate-sector projects (1) S/A evaluation acquisition rate (2) No. of S evaluations acquired(1) Gain 97% or more
(2) 1 item or more for each site

2

53%

2

40%

Environment

E

Environment

Improve Company evaluations(Civil Engineering)

Client satisfaction(quality)SocietyS
Client satisfaction(services)

Technology

Indices for measuring achievement

Numerical target

No. of technical training sessions
held, no. of high-rise building
study groups held, no. of items
identified by quality patrols

3

Items requiring improvement identified in quality
patrols, etc.

(1) Technical training sessions: 8times/year (2) High-rise building
study groups: 3 times/year(3) Quality patrol implementation rate
(implemented/planned): 100%
(4) No. of quality items indicated: 1.0
cases/time or less (building
management)

Promote maintenance and renovation works business (Civil
Engineering)4

No. of renovation construction orders

3 orders or more received by eachregional headquarters

3

80%

100% BIM involvement in all large
logistics facility properties

4(1) BIM process rate (%)(2) No. of properties for which BIM is utilized(design  production design  construction)(1) Large logistics facility (S construction) design and construction properties: 100%; condominium (RCconstruction) design and construction properties: 20% (2) 1 or more
properties

3

80%

Promote one-stop business(Urban Development)

4

No. of PM or BM contracts with Nishimatsu Jisho
Co., Ltd.

3 PM or BM contracts/year

4

107%

Cross-industry collaboration andprovision of new services (value)

5

No. of collaborative projects

2 projects formed

4

133%

Investment in start-up companies

3

Investment¥600 million/year

1

20%

1

20%

Infrastructure business field

3(1) No. of PPP/PFI projects received(2) Progress of smart city projects(1) 2 or more projects (2) Oki Town
Zero Carbon Grid Project in Oki Town
 Subsidy applied for October 2022;
operation started October 2023

Initiatives in environment andenergy-related business3(1) No. of new rooftop PPA projects (2) No. of newsmall hydropower projects (3) Woody biomass
progress (4) No. of new biogas (methane fermentation) projects (5) No. of new geothermal projects(1) 3 projects (2) 3 projects (3)Establishment of Sanyo Onoda subsidiary (4) 2 projects (5) Start of 1
survey120%Initiatives in plant factories

3(1) Tamagawa factory net sales(2) Ichihara factory closure progress(1) Tamagawa factory sales of 74 million yen (2) Policy for Ichihara factory disposal method decided

3

60%

OKIPPA-related business3(1) OKIPPA net sales(2) OKIPPA GREEN net sales(3) Progress of cloud ear mushroom business(1) OKIPPA sales: 76 million yen(2) OKIPPA GREEN sales: 5 million yen(3) Establishment of “Nishimatsuversion container”

1

20%

Promote core technology development that supports theConstruction Business5

No. of practical technologies developed per year

10 technologies or more/year

2

67%

Technology development for resilience relating to disaster prevention/mitigation and recovery
technology, etc.

3

No. of technological development starts (cases per
3-year medium-term management plan)

1 technology or more per 3-year
medium-term management plan

4

80%

4

DX planning (1) No. of new transformation projects
started (2) Existing project target progress rate(3) Target KPI achievement rate for each project
ICT system (4) No. of new projects started(5) Annual downtime of system infrastructure(6) No. of security incidents(7) No. of improvements and proposals/support(1) 2 projects (2) 100% (3) 70%(4) 5 projects (5) Less than 10 hours(6) 0 incidents at Level 3 or above,less than 3 incidents at Level 2(7) 25 improvement proposals

4

93%

Thoroughly promoting DX throughdata utilization

66

Achievement Achievement
level
score

Activity details

SDGs

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTION

ESG

New
value

SDGs

Communication

Human
resource
development

VALUE CREATIONSTRATEGYSUSTAINABILITY

Work
environment

SafetySupplychain

Riskmanagement
Appealing
work styles
Governance

GInternal
control

Compliance

Achievement Achievement
level
score

Activity details

Activity
statusIndices for measuring achievement

Distribute accurate and detailed
information to potential investors

5

No. of interviews with potential investors, sell-side
analysts, etc.

60 or more interviews

2

67%

Engagement with shareholders
and investors

5(1) No. of dialogues with shareholders and investors(2) Approval rate for proposals at the General
Meeting of Shareholders(3) Dividend payout ratio(4) PBR(1) No. of dialogues: 5 or more
(2) Average approval rate for proposals at the General Meeting of
Shareholders: 85% or higher(3) Dividend payout ratio: 70%(4) PBR: 1x

2

67%

Actively promote and continuesocial contribution activities

2

No. of social contribution activities implemented per
50/year
year

3

40%

Train local staff and young
employees (International)

3(1) No. of local overseas staff participating in training (2) No. of participants in overseas on-site
workshops

360%

Securing diverse humanresources and creating anenvironment where they can
maximize their abilities

2(1) No. of proposals and implementation of measures(1) 3 proposals
to secure diverse human resources and utilize their(2) 5 business departments
abilities (2) No. of business divisions and departments that have developed various training plans227%

Promote work environment
improvements (civil engineering
worksites)

2(1) Worksite closure rate(2) Overtime working hours(1) Worksite closure rate: 8 closed
sites = 60% or higher; 7 closed sites= 80% or higher (2) 7 or more times
for 45 hours per month and 720 ormore hours per year (legal violation)
6% or lower

2

27%

Promote work environment
improvements (building worksites)3(1) Overtime working hours(2) Holiday use rate(1) 7 or more times for 45 hours permonth and 720 or more hours per
year (legal violation) 6% or lower(2) Use of Company-designated holidays (121 days) or more: 80%

240%

Promote work environment
improvements (international)

3

For Japanese employees working overseas:(1) Percentage of employees taking leave to return
home(2) Average duration of paid leave taken(1) 100% (2) 4 days

2

40%

Create a workplace that is motivating and comfortable

4(1) Voluntary resignation rate (2) 3-year turnover rate(3) Employee satisfaction (4) No. of employees hired(5) No. of women in career-track positions(6) Employment percentage of persons with disabilities(7) Paternity leave take-up rate (8) Percentage of
employees exceeding overtime target based on total
working hours (9) Paid leave use rate(10) Follow-up medical checkup attendance rate(1) Less than 1.5%
(2) 10% or lower(3) 3.83 or higher(4) 130 new graduate/mid-career hires(5) 170 or more (6) 2.3%
(7) 60% (8) 8% or lower(9) 70% or higher (10) 60% or higher

2

53%

Improve safety management
standards

5(1) Frequency rate for injuries requiring four days ormore of absence from work
(2) Frequency rate for injuries requiring 1 day ormore of absence from work

(1) 0.6 or lower(2) 1.0 or lower

3

100%

SocietyS

DATA SECTION

Numerical target(1) Cumulative total of 130 people(2) 10 or more people

Zero deaths5

No. of deaths

0

1

33%

Provide a safe workplace environment (International)

4

Frequency rate for injuries requiring four days ormore of absence from work

0.6 or lower

4

107%

Expanding training support for
High-Caliber Technician Training
Program

4

Worksite retention rate of Nishimatsu Meisters andSenior Forepersons

60% or higher

380% Continuously improve business
continuity plans to formulate
highly effective plans andenhance and strengthen management systems Improve crisis managementawareness and response abilityof all executives and employees

4

(1) E
 arly response rate for safety confirmation(2) B CP training for emergency headquarters(3) B CP training for all executives and employees(1) Daytime weekdays: 90% within 3
hours after alarm; Nighttime andholidays: 90% within 6 hours afteralarm(2) Twice a year(3) Twice a year

253%

Appropriately promote risk
management

4

Progress of risk management initiatives

High-risk items with “A” evaluation: 0
items

2

53%

Enhance corporate governance

4

Implementation status of the Corporate
Governance Code (after revision)

All items implemented (fullcompliance)

380%

Practice compliance management
in response to social changes

3

Overall Compliance Awareness Survey score

FY2023 long-term target: 1.35 or
higher

3

60%

4

Awareness survey (awareness of hotline use) score

FY2023 long-term target: 1.10 or
higher3

80%

3

Awareness survey (evaluation of understanding oftraining) score

FY2023 long-term target: 1.07 or
higher3

60%

Effectively operate the whistle
blowing system
Actively implement compliancetraining

Activity Status
5: The activity was adopted Group-wide and its continuation for the medium tolong term is assured.
4: A system for the activity was created, and the activity was rolled out throughout
the Group.
3: An effective activity was implemented, and a system for the activity has beencreated in business divisions.
2: The activity was implemented, but a system for the activity was not created inbusiness divisions.
1: The activity was implemented, but only partially.
0: A specific activity target was established, but the activity was not implemented.

Achievement Score(Based on Achievement Level)
4: Achievement rate of 120% or
higher
3: Achievement rate of 100% to119%
2: Achievement rate of 60% to99%
1: Achievement rate of 59% or
lower

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

67

DATA SECTION

IR Activities
Status of dialogue with shareholders
Through constructive dialogue with our shareholders, we aim

are set out below.

to achieve Nishimatsu Construction’s sustainable growth andShareholders’ opinions and concerns ascertained throughenhance its corporate value over the medium to long term.

dialogue are fed back to the management team as necessary,

At dialogue meetings, the President, the director in charge

and important matters are reported to the Board of Directors.

of investor relations (who is also the general manager of theReports received from securities company analysts are also

Management division), and the general managers of the

fed back to management as necessary, and the status ofStrategy Management Office and the Corporate Planninginvestor and shareholder relations activities is also reported to

Department serve as speakers and interact with shareholders.

management on a monthly basis.

In order to enhance dialogue on specific topics, such as sus-

We reflect shareholder opinions obtained through dialogue

tainability or voting rights, managers from respective depart-in our management policies as appropriate. In FY2022, we

ments also attend these sessions.

comprehensively determined the balance between growthinvestments and shareholder returns in Medium-Term

The results of dialogue in FY2022, an overview of theshareholders with whom we held dialogue, the main themes

Management Plan 2025 on the basis of the opinions obtainedof dialogue, and matters that were of interest to shareholders

through dialogue with shareholders.

Dialogue Results

Overview of shareholders with whom we held dialogue
Numberof times

Major Nishimatsu attendees

Individual interviews

59

General Manager of the Management Division,
General Manager of the Strategy Management Office,General Manager of the Corporate Planning
Department, heads of ESG-related departments, etc.

Small meetings

6

President, General Manager of the Management
Division, General Manager of the Strategy
Management Office, etc.

Financial results
briefings

2

President, General Manager of the Management
Division, General Manager of the Strategy
Management Office, etc.

Long-term vision/
Medium-Term
Management Plan
briefing session

1

President, General Manager of the Management
Division, General Manager of the Strategy
Management Office, etc.

Category

Location

Investment style

Overseas

Domestic

Value

Growth

24%

76%

11%

48%

Alternative

41%

Main themes of dialogue and matters of interest to shareholders
Item

68

Dialogue themes and matters of interest to shareholders

Business environment, growthstrategy, performance outlook,business risks

 Measures to improve profits in the Domestic Building Business and areas to focus on in the future Measures to improve profits in the Overseas Civil Engineering Business Growth strategies for the Asset Value-Added Business and Regional Environmental Solutions Business Progress of synergies with ITOCHU Corporation, our capital and business alliance partner Impact of 2024 overtime cap regulations on business performance Measures to deal with risk of price increases, such as costs of materials and labor costs

Financial strategy, growthinvestment, shareholder
returns Balance between growth investment and shareholder returns
 How to utilize treasury shares held

Sustainability, human resource
strategy, climate change
response Wage hikes Human resource strategy
 Employee engagement disclosure Turnover rate, composition by age, ensuring diversity, rate of men taking childcare leave, etc.
 Future direction of climate change-related disclosures

Corporate governance Requests for further reduction of cross-shareholdings Formulation and implementation of president succession plan Review of the officer compensation system (evaluation indicators and performance-linked compensation ratio) Board of Directors’ skill sets and diversity Qualifications and number of concurrent positions held by external directors
 Role and positioning of the Nomination and Compensation Committee

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Investor FAQ
Q1

Q3

What do you think is important for raising stock prices

Please tell us about your response to the overtime work

and improving PBR?

cap regulation that will be come into effect from April 2024.

To improve earnings, it is our belief that we must steadily

Up to now, we have advanced the establishment of a new

implement Medium-Term Management Plan 2025 andbackup department, the promotion of outsourcing, andachieve a return on capital that exceeds the cost of capi-

the utilization of DX tools. Going forward, we will continue

tal. We will also actively disclose information on our path

to consider and work on specific measures designed totoward future growth and strive to raise and maintain ourmaintain our construction system.

stock price/earnings ratio.

( P.6 Message from the President)( P.19 Message from the General Manager of theManagement Division

Q4
In Medium-Term Management Plan 2025, what was theQ2reason behind changing the shareholder return policy

Please tell us about the progress made in your capitalfrom “consolidated dividend payout ratio of 70% orand business alliance with ITOCHU Corporation.

more” to “consolidated dividend payout ratio of 70%?”

We have received orders for public-private partnershipThis was to ensure a consistent, more stable return ofprojects with ITOCHU Corporation, including collaboration on

profits to our shareholders. During the course of Medium-a circular real estate business model. The transaction amount

Term Management Plan 2025, we will focus on improving

for construction material procurement is also increasing. We

earnings and promote investment in growth fields.

will aim for further collaborative synergies in the years to come.

( P.19 Message from the General Manager of the( P.6 Message from the President, P.34 Special Feature)

Management Division)

Statement of Authenticity
On the publication of Nishimatsu Construction Co., Ltd. Integrated Report 2023
To help our stakeholders gain a better understanding of the Group’s initiatives, we have been
engaging in dialogue with our stakeholders by issuing a Corporate Report since FY2017 andan Integrated Report since FY2021.
Integrated Report 2023 provides a detailed explanation of the long-term vision NishimatsuVision 2030, which has been renewed with an eye toward 2030, and Medium-Term
Management Plan 2025, which was formulated with FY2023 as its first year. We also worked
to enhance the disclosure of ESG information, which provides the foundation for medium- tolong-term growth, including our efforts to address the environment and climate change,
human resource development policies, and corporate governance.

Yuichi Kono
Representative Director, Executive
Vice President
General Manager of the Management
Division
General Manager of the Human
Resources Strategy Office
In charge of the Regional
Environmental Solutions BusinessIn charge of Investor Relations

This report was produced mainly by the Corporate Planning Department of the Strategy
Management Office in cooperation with many relevant departments. As the person in chargeof overseeing the production of this report, I hereby declare that the process of creating thisreport was fair and that its content is accurate. I hope that this report will assist a wide rangeof stakeholders, including shareholders and investors in further deepening their understanding of Nishimatsu Construction’s value creation initiatives.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

69

DATA SECTION

Terminologies
Terms

70

Meaning

30by30 Alliance

An alliance of companies, local governments, and organizations working to achieve the goal of effectively conserving
at least 30% of the land and ocean as healthy ecosystems by 2030 (30 by 30). Under the Alliance, efforts are being
made to expand protected areas domestically and to certify areas that have been preserved mainly by companies as
Other Effective area-based Conservation Measures (OECMs).

3R

Reduce, Reuse, and Recycle. Three specific ways to reduce final waste in order to create a resource-recycling society.

AR

Augmented Reality. Technology that adds digital information to the real world by viewing it through smartphones, tablets, or sunglass-type AR glasses.

BIM/CIM

Building Information Modeling (BIM)/Construction Information Modeling (CIM). A 3D model with information that canbe used in construction operations.

Existing lining cutting

Partial removal of the existing lining to provide the necessary space to renew the concrete lining.

Front loading

To intensively study in advance changes in specifications, etc. that are likely to occur in later processes during the initial process in order to improve quality and shorten the construction period. In the BIM approach, a typical example, a
3D building model is created at the design stage and attribute information is added, aiming to improve and solve
problems in advance through simulation and verification at each stage of design, construction, operation, etc.

LiningThe (arch) concrete built over the interior surface of a tunnel.

Lining renewal work

This refers to constructing new lining by partially removing the existing lining that has cracks or leaks made mainly by
the traditional tunneling method.

MR

Mixed Reality. A further development of AR. By wearing the MR device, digital information can be displayed according
to the user’s position and movement, and the user can directly manipulate the digital information. This technology
allows multiple people to experience it at the same time.

Multi-axis trolley

Tire-type trolleys are used to transport heavy structural parts. One example is their use for the transportation of bullet
trains by road.

N-TEMS

Nishimatsu Tunnel Energy Management System. A system for reducing energy use by controlling demand for contrarotating ventilation fans and dust collectors during mountain tunnel excavation. N-TEMS facilitates the reduction ofventilation equipment power consumption by around 40%.

PFI

Private Finance Initiative. This is one type of public private partnership as defined by Japan's Private Finance Initiative
Act, and is a method of utilizing the funds, management and technical capabilities of the private sector for the construction, maintenance, management, and operation of public facilities.

PPA

Power Purchase Agreement. A service in which a company that owns and manages photovoltaic power generationequipment (PPA operator) installs the equipment in a space provided by the facility owner, such as a site or roof, anddistributes the power generated there to the power consumers of the facility for a fee.

PPP

Public Private Partnership. The government and the private sector cooperate in the construction, maintenance, management, and operation of public facilities, utilizing the creativity and ingenuity of the private sector to achieve efficientuse of fiscal funds and administrative efficiency.

RE100

An international coalition of companies committed to 100% renewable energy for electricity used in their businessactivities by 2050. As a minimum interim target, Japanese companies are encouraged to use 60% renewable energy
in 2030 and 90% in 2040.

Renewed lining

New linings (cast-in-situ, formwork: tunnel lining shutter) made by lining renewal method.

SBT

Science-Based Targets. Its governing initiative, the Science-Based Targets initiative, is encouraging companies to set
greenhouse gas emission reduction targets based on scientific evidence in order to achieve the goals of the Paris
Agreement. The 1.5ºC target requires a reduction level of at least 42% for Scope 1+2 and 25% for Scope 3 compared to the base year (2020) over a 10-year period.

TCFD

Task Force on Climate-related Financial Disclosures (TCFD). This task force recommends that companies develop
climate-related governance and risk management systems, as well as understand and disclose the financial impact
of climate change. Companies listed on the Prime Market of the Tokyo Stock Exchange are effectively required
to respond.

Tunnel lining shutter

A formwork used to construct a lining. Mobile formwork is often rail-based.

ZEB

Net Zero Energy Building (ZEB). Significant energy savings have been achieved by controlling energy load throughadvanced architectural design, proactively utilizing natural energy, and introducing highly efficient equipment systems.
In addition, the aim of ZEB is to achieve an annual primary energy consumption balance of zero by introducing renewable energy.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

INTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Corporate Outline and Stock Status
Corporate Outline

Stock Status (As of March 31, 2023)

Registered Name Nishimatsu Construction Co., Ltd.
Head Office	Toranomon Hills Business Tower 17-1,
Toranomon 1-chome, Minato-ku, Tokyo,105-6407, Japan

Total number of authorized shares 160,000,000
Total number of issued shares
55,591,502	(including 15,893,798 sharesof treasury stock)
Number of shareholders
41,209Representative	Nobutoshi Takase, Representative Director andPresident

Shareholder Distribution

Founded	1874
Established	September 20, 1937
Paid-up Capital	¥23,513,643,819
Number of Employees	Non-Consolidated: 2,804
Consolidated: 3,201 (As of March 31, 2023)

Treasury stock
15,893,798
28.6%

Individuals andothers
16,987,805
30.6%

Regional Headquarters and Branch Offices
Domestic Offices
North Japan Regional Headquarters (Sendai-shi)

Sapporo Branch (Sapporo-shi)

Kanto Civil Engineering Regional Headquarters (Minato-ku, Tokyo)
Hokuriku Branch (Niigata-shi)
Kanto Architectural Regional Headquarters (Minato-ku, Tokyo)
West Japan Regional Headquarters (Osaka-shi)

Chubu Branch (Nagoya-shi)

Chugoku Branch (Hiroshima-shi)

Shikoku Branch (Takamatsu-shi)

Kyushu Regional Headquarters (Fukuoka-shi)

Okinawa Branch (Naha-shi)Financial institutions
11,758,311
21.1%

Overseas companies
3,881,369
7.0%

Securities companies
1,074,672
1.9%

Other domestic companies
5,995,547
10.8%

Major Shareholders (Top ten shareholders)Name

Shares held Shareholding(Thousands) ratio (%)

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

5,230

13.18

ITOCHU Corporation

4,022

10.13

Custody Bank of Japan, Ltd. (Trust account)

2,152

5.42

Meiji Yasuda Life Insurance Company

  915

2.31

Nishimatsu Construction Employee Stock Ownership Association

  869

2.19

Mizuho Bank, Ltd.

  614

1.55

Sumitomo Realty & Development Co., Ltd.

  612

1.54

Custody Bank of Japan, Ltd. (Trust account 4)

  612

1.54

Thai Nishimatsu Construction Co., Ltd. (Thailand)

Mizuho Trust & Banking Co., Ltd.

  600

1.51

Nishimatsu Vietnam Co., Ltd. (Vietnam)

STATE STREET BANK WEST CLIENT – TREATY 505234

  480

1.21

Nishimatsu Real Estate & Development (Asia) Pte. Ltd. (Singapore)*S hareholding ratio is calculated after deducting 15,893,798 shares of treasury stock.
Treasury stock does not include 225,300 shares of the Company held by the Board
Benefit Trust (BBT).

Overseas Offices
Singapore OfficeVietnam Offices

Malaysia Office

Myanmar Office

Philippines Sales Office

Main Subsidiaries
Nishimatsu-Jisho Co., Ltd. (Minato-ku, Tokyo)
Nishimatsu Asset Management Co., Ltd. (Minato-ku, Tokyo)

Bangkok Sathorn Hotel Management Co., Ltd. (Thailand)

Third-party Assurances
To increase the reliability of the information disclosed in this report, we have obtained assurances of the following data from Sustainability
Accounting Co., Ltd.
Matters covered by assurances Group CO2 emissions in Japan and overseas

P.15, 64, 65

 Percentage of females in management-level positions

P.15

 Percentage of males taking childcare leave

P.15

 Occupational injury frequency rate

P.48, 64, 65

 Editorial Policy Referenced Guidelines

This report is an instrument for dialogue with our stakeholders.
The purpose of this report is to deepen stakeholders’ understanding of our value co-creation process with stakeholders
and possibly improve our corporate value, as well as ourefforts to address materiality (priority issues) in order to realize
our corporate philosophy of “Creating a sustainable society
and environment where people can live with peace of mind.”

In producing this report, we refer to the “Integrated Reporting <IR>” of the IFRSFoundation, the International <IR> Framework, the “GRI Standards” of the Global
Reporting Initiative (GRI), the “Environmental Reporting Guidelines” issued by the
Ministry of the Environment, and the “Guidance for Collaborative Value Creation”
formulated by the Ministry of Economy, Trade and Industry of Japan.

 Coverage
Information on the activities of Nishimatsu Construction Co., Ltd. and its consolidated subsidiaries.

 Forward-Looking Statements
This report includes forecasts of future results regarding the Group’s outlook,goals, plans, and strategies. These statements reflect our judgment and analysis
concerning existing information and various trends available at the time of writing.
Actual results may differ from these forecasts due to various factors.

 Applicable Period
April 1, 2022, to March 31, 2023 (including some information after April 1, 2023).

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

71

Inquiries:
Nishimatsu Construction Co., Ltd.
Sustainability Promotion Department, Strategy Management Office
Toranomon Hills Business Tower,
17-1, Toranomon 1-chome, Minato-ku, Tokyo,105-6407 Japan
https://www.nishimatsu.co.jp/eng/
Certified as an
Eco-First Company
by the Minister ofthe Environment

Nishimatsu Construction
supports COOL CHOICE