NRI Business Outline(FY March 2021)
(Update: August. 2020)
Nomura Research Institute, Ltd.
1Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
About NRI 1
Medium-Term Management Plan (2019-2022)2
Recent Achievements3
Dividends and Shareholder Information4
Reference5
2Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Corporate Information
Research Department, Nomura Securities
Computer Department,Nomura Securities
Nomura Research Institute Nomura Computer Systems
(Forerunner)
Established 1965 Established 1966
(Forerunner)
Merged 1988
Listed on the 1st Section of Tokyo Stock Exchange(TSE)(Securities Code: 4307)
(Corporate Data)
Nomura Research Institute, Ltd.
Capital JPY 21,175,164 K
Chairman and President & CEO, Member of the board
Shingo Konomoto
Number of employees(consolidated)
13,761(As of end-June, 2020)
(FY March 2020 Financial Results)Consolidated sales JPY 528.8 billion
Consolidated operating profit JPY 83.1 billionDec. 2001
Spun offSpun off
3Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Business Performance
0
20
40
60
80
100
0
100
200
300
400
500
600
700 Sales Operating Profit
Global Financial Crisis
Listed on 1st
section of TSE
FY
Collapse of Japan’s bubble economy
Sales(JPY billion)
Operating Profit(JPY billion)
Burst of Japan’s Dot-com bubble
77.9 90.3 00.3 10.3 20.3 23.3(e)21.3
(e)
4Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Financial HighlightsFY 10.3 11.3 12.3 13.3 ・・・ 17.3 18.3 19.3 20.3 21.3(e)
Sales 338,629 326,328 335,554 363,891 424,548 471,488 501,243 528,873 540,000EBITDA*1 70,992 69,094 74,027 86,567 88,933 101,223 108,846 117,419 -Operating Profit 40,077 38,426 43,152 43,967 58,514 65,138 71,442 83,178 83,000Profit attributable to owners of parent 21,856 23,188 32,920 28,612 45,064 55,145 50,931 69,276 84,000
EPS(JPY)*2 112 119 168 145 181 228 21672 109.35 98.96
DPS(JPY) *2 52 52 52 52 80 90 9030 32 34
Total Assets 363,368 380,032 402,784 432,222 628,944 643,117 612,192 533,151 -Shareholders’ Equity 220,237 231,074 258,276 290,818 447,297 432,674 425,032 287,153 -(%)
OPM 11.8 11.8 12.9 12.1 13.8 13.8 14.3 15.7 15.4ROE 10.3 10.3 13.5 10.5 10.7 12.9 12.3 20.3 -ROA 11.4 10.8 11.4 11.0 9.7 10.3 11.5 14.8 -EBITDA Margin 21.0 21.2 22.1 23.8 20.9 21.5 21.7 22.2 -Equity Ratio 60.3 60.5 63.8 66.9 69.1 65.2 67.1 50.9 -(Personnel)
Employee Group(Consolidated) 6,263 6,594 6,881 7,738 11,605 12,708 12,578 13,278 -(Year end) NRI(Non-consolidated) 5,314 5,560 5,739 5,823 6,003 6,130 6,297 6,353 -
(JPY million)
*1 EBITDA(FY10.3 – FY17.3) = operating profit + Depreciation and amortization + goodwill amortizationEBITDA(FY18.3 – FY20.3) = operating profit + Depreciation and amortization + goodwill amortization + loss on retirement of fixed assets
*2 NRI conducted 1-for-1.1 stock splits of common shares effective of October 1, 2015, and January 1, 2017. Also, NRI conducted a 1-for-3 stock split of common shares effective July 1, 2019. Earnings per share (EPS) and Dividends per share (DPS) has not been retroactively restated for the stock splits, except for the italicized figures in the second row under the FY19.3 column.
5Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
IT Services Competitive Landscape (Japan)
Financial Results for FY March 2020(JPY million)
System Integrator Hardware vendor
Source: NRI, based on each company’s financial results, as of July 2020
Code Company name Sales OP OPM Sales per employee
OP peremployee
4307 NRI 528,873 83,178 15.7% 39.83 6.26 9613 NTT DATA CORPORATION 2,266,808 130,937 5.8% 17.01 0.98
4739 CTC (ITOCHU Techno-Solutions Corporation) 487,018 41,667 8.6% 55.29 4.73
3626 TIS Inc. 443,717 44,839 10.1% 22.47 2.27
9719 SCSK Corporation 387,003 42,326 10.9% 27.68 3.02
8056 Nihon Unisys, Ltd. 311,554 26,139 8.4% 39.78 3.33
2327 NSSOL (NS Solutions Corporation) 274,843 28,387 10.3% 41.39 4.27
6702 FUJITSU LIMITED*1 3,163,200 248,500 7.9% 28.45 2.23
6501 Hitachi, Ltd.*2 2,099,426 249,412 11.9% 28.75 3.41
6701 NEC Corporation*3 1,411,256 109,613 7.8% 39.13 3.03
*1 Technology Solutions segment*2 IT segment*3 Public segment + Enterprise segment
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IT Services Competitive Landscape (Japan)
Comparisons of Sales and Operating Profit Margin
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300
● FY March 2019 (Result)
TIS
・・・ 1,800
NTT DATA
CTC(ITOCHU Techno Solutions)
SCSK
NSSOL(NS Solutions)
NRI
Nihon Unisys
1,900 2,000 2,100 2,200Sales (JPY billion)
Operating Profit Margin (%)
7Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
IT Services Competitive Landscape (Global)
EBITDA Margin Comparison
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY2015 FY2016 FY2017 FY2018 FY2019
NRIIBM
CognizantAccentureCapgemini
(%)
(Note) Based on earnings closed in the following months, respectively.Accenture: Aug.; IBM, Cognizant, Capgemini: Dec.; NRI: Mar. next year
(Source) Competitors’ data were obtained from Speeda
8Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Sales by Segment
Financial IT Solutions51.7%
Other Financial8.2%
Banking9.6%
Insurance12.6%
Securities21.3%
Distribution12.6%
Manufacturing, Serviceand Other 21.1%
Industrial IT Solutions 33.7%
IT Platform Services 7.2% Consulting 7.3%
Asset management, etc.
Data center operation & management Creation of IT platforms and networks Information security services
Management consulting Systems consulting
FY Mar.2020Consolidated Sales
JPY528.8billion
Sales by Customer
FY20.3
Nomura Holdings12.3%Seven & i Holdings9.9%
9Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Sales by Service
More than 60% of sales derived from low-risk, recurring revenue streams
0
100
200
300
400
500
FY10.3 FY11.3 FY12.3 FY13.3 ・・・ FY17.3 FY18.3 FY19.3 FY20.3 FY21.3(e)
Sales (JPY billion)
Consulting Product sales System development (new)
System development(enhancement)
System management• Outsourcing Services• Shared-online Services
Less than 40% of sales is tied to business cycles
More than 60% is recurring revenue with stable growth
Management consulting Systems consulting Consulting on upstream
system development
Consulting Services18.3%
Product Sales3.5%
3rd party hardwareand software
System Development & System Application Sales30.6%
Systems integration Software packages developed by NRI Customized add-ons to off-the-shelf packages
BPO and other outsourcing services Shared-online services
(About 20%)
System Management & Operation Services47.6%
Note: Ratios are for total sales on FY March 2020.
・・・
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Solid Customer Base (Financial Sector)
Nom
ura Securities
THE STAR
I-STAR
T-STAR
BESTWAY
MS&AD
Holdings
Sony Life Insurance
Mitsubishi U
FJ Morgan
Stanley Securities
e-JIBAI
Seven Bank
Bank Asset Managementand OthersSecurities Insurance
FundWeb
Nom
ura AM
Nom
ura Trust & Banking
JIS&T
Tokyo Marine G
roup
Japan Post Insurance
ValueDirect
SBI Securities
e-AURORA
(Client names: Not disclosed)
Shared-Online
Services
System Operation
(outsourcing)
System Integration
Consulting
Note: ・The names below represent a portion of NRI’s client base. All names disclosed have been done so with client consent.・Numbers in blue as of end-Mar. 2020.
75 clients28 clients
20 clients
117 clients
81 clients
Market Share: 80%
NRI solutions manage around 50% of total transactions on
Tokyo Stock Exchange.
Market Share: 80%
Advisory Platform 14 clients
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Solid Customer Base (Non-Financial Sector)
Fuji Xerox
ManufacturingDistribution
Onw
ard Kashiyama
Kumon
Institute of Education
KOKU
BU G
RO
UP
Eisai
Ageless 80
Seven-Eleven Japan
KDD
I
SAPPOR
O H
oldings
PermaDocument
Ajinomoto G
roup
7-Eleven, Inc.(U.S.)
Shiseido Com
pany
Global SCM Solution
Marubeni
BICC
AMER
A
(Client names: Not disclosed)
Recruit
Japan Airlines
TRU
SCO
NAKAYAM
A
MITSU
BISHI ESTATE
SUZU
KEN
Service
Shared-Online
Services
System Operation
(outsourcing)
System Integration
Consulting
804 clients
Note: ・The names below represent a portion of NRI’s client base. All names disclosed have been done so with client consent.・Numbers in blue as of end-Mar. 2020.
12Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
NRI’s Vertically Integrated Business Model
Consulting
System Development
System Management and Operation Outsourcing
Shared Online Services(roll out horizontally to multiple clients)
Navigation
Solutions
Client’s business pain pointsClient’s needs
Client’s needs
Client’s needs
Stage 1
Stimulate client’s needs
Stimulate client’s needs
Stimulate market needs
Stage 2
Stage 3
Stage 4
Accumulate NRI expertise about the customer industry
Stage 1 to Stage 3: NRI helps identify and resolve client pain points via services including consulting, system development, and system management and operation.
Stage 4: Leveraging industry expertise and know-how accumulated through system development for individual clients, NRI develops proprietary shared online services and rolls out the services horizontally to other clients in that industry. NRI is also entrusted with outsourcing for peripheral work processes (BPO services).
Utility services(Bundle in BPO services)
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Shared-Online ServicesPackaged solutions developed by NRI for key customer industries
Shared-online services
Brokerage A
<NRI’s data centers>
Mutual Fund B Bank C
Clients
Trust Bank D
THE STAR BESTWAY
…
…
Hosted on NRI’s data centers as a SaaSservice (=ASP)
Complex regulatory reforms reflected speedily through system updates
Clients select the functions they need from a menu of service offerings
Comprehensive back-office systems for retail securities 75 clients
Comprehensive back-office systems for wholesale securities 28 clients
Trust asset management systems for mutual funds and asset management firms
81 clients
Account management system for mutual fund over-the-counter sales
117 clients
THE STAR
BESTWAY
T-STAR
I-STAR
Examples of Shared-online services * As of end-Mar. 2020
※ ASP : Application Service ProviderSaaS : Software as a Service
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NRI Data CentersSupporting operation outsourcing, shared online services, etc.
Osaka Data CenterCompletion: 1992Total floor area: 18,695 m2
Reception capacity: 10,000 KVA
Yokohama Data Center ⅡCompletion: 2007Total floor area: 15,888 m2
Reception capacity: 15,000 KVA
Yokohama Data Center ⅠCompletion: 1990Total floor area: 20,480 m2
Reception capacity: 10,000 KVA
Tokyo Data Center ⅠCompletion: 2012Total floor area: 38,820 m2
Reception capacity: 40,000 KVA
Osaka Data Center ⅡCompletion: 2016Total floor area: 15,000 m2
Reception capacity: 7,500KVA
【Tokyo】 【Osaka】
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Depth in Human Resources: NRI + Partners (in Japan & China)
SubcontractorsN
RI G
roup employees
Head count:13,761*
Management Consultants Systems Consultants Application Engineers Technical Engineers, etc.
Head count: 7,500
Offshore DevelopmentPartners in China
Partners in Japan
20 partners in 20 regions Head count: 5,000
0
5,000
10,000
15,000
10.3 11.3 12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3(1Q)
Subcontractors(Head count)
Partnersin Japan
Partnersin China
* As of end-June. 2020
(FY)
320 301266 288 290 291
327
391 379
483
0
100
200
300
400
500
600
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3(1Q)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
12.3 13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3(1Q)
New grad. hires in Apr.
NRI (non-consolidated)
Subsidiaries
NRI subsidiaries overseasNRI Group (global) New grad. hires(Head count)
Employees(Head count) (Head count)
(FY)(FY)
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CAPEX and D&ACAPEX forecast to be JPY38.0 billion
14.8 11.2 8.320.2
13.6 16.15.6 6.6
13.0
16.1 22.6 22.7
28.0
25.0 22.0
20.6 21.8
25.0
42.4
34.1
25.8
32.5
28.4
31.930.4 30.4
31.0
0.0
10.0
20.0
30.0
40.0
0.0
20.0
40.0
60.0
80.0
13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3(e)
31.0 33.8
Tangible Asset Intangible Asset
31.026.2
48.3
Depreciation and Amortization
Investments in intangible assets
Enhance functionality of shared online services
Invest in developing digital IPetc.
Investments in tangible fixed assets
Enhancing cloud service infrastructure capabilities, etc.
38.6 38.2
CapitalExpenditures(JPY billion)
CAPEX and D&ADepreciation &
Amortization(JPY billion)
(FY)
28.4
38.0
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R&D ExpensesBolster business development to achieve Vision 2022
Current R&D Themes
(FY)
Business development Companywide business development efforts
Strategic business exploration
Technology assessments and development, etc
.
Investigate research Working on social recommendations
Studies on advanced technologies, etc.
3.6 3.9
4.2
5.1 5.6
5.1
3.6
4.34.0
0
2
4
6
13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3(e)
R&D costs by year
(JPY billion)
18Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
About NRI 1
Medium-Term Management Plan (2019-2022)2
Recent Achievements3
Dividends and Shareholder Information4
Reference5
19Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
There are significant needs for NRI consulting and IT services
Many companies are struggling with their own DX The “2025 Digital Cliff” impeding companies’ DX
There are companies in Japan that have yet to produce results with their DX, due to conflicts of interest with their existing business, and lack of IT personnel
Overall consulting and IT services capabilities are being tested
8.712.8 31.6 38.4 8.6
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source) “Corporate IT Trends Survey 2018” by the Japan Users Association of Information Systems (JUAS)
Implemented(produced results)
Implemented(verifying effects)
Considering
Interested but not considering
Not interested(and not considering)
Status of digitalization initiatives (N=1061)
53.1%
Outdated, slow core systems in black box state shackle the DX of a company
IT structure reforms cannot wait
Source) Created based on “Overcoming of ‘2025 Digital Cliff’ Involving IT Systemsand Full-fledged Development of Efforts for DX” by METI
Current 2025 2030
• Competitive stagnation
• Depleted human resources
• Lost business opportunities
etc.
2025D
igital Cliff
• System maintenance takes up 90% of company IT budget
• IT personnel shortage of 430,000
• Old OS, ERP, etc., no longer supported
20Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Vision2022 Expansion Strategy(1) Create & expand DX business by co-creating value with our customers(2) Accelerate globalization by obtaining new customers & IP(3) Enhance & enlarge our core business by expanding business platforms
& modernizing customer systems
Illustration of business developmentGlobal expansion
Asia Pacific
New OverseasBusiness
Domestic
Existing business models New business models
(1) Create & expandDX business
(2) Accelerate globalization
(3) Enhance & enlargecore businesses
Shift core businesses
to DX
Greater Customer Numbers & Business Growth
21Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
NRI strengths match recent trends in DXGrowth Strategy:DX
NRI strengths
New business model“As a Service”
New servicesin ecosystems
Integrate realand digital
sHigh quality business platforms
to support customers entering new businesstypes and offering new services
Con-Solution®(*) to be a value co-creation partner
for customers
f s
Data analytics mainly throughconsulting, and capability to build
from front office to e-commerce core systems
Main DX initiatives of customers
*Con-Solution: A business model in which consulting and solutions run side by side with customers from the planning and concept stages,creating business while repeating the process of hypothesis testing
22Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Be our customers’ DX partner, and expand business continuouslyGrowth Strategy: DX
• Comprehensive support from building business models to building systems• Commit to the business of customers, and share the risks and rewards
Build cross-industry platforms that seek ecosystems
• Optimize customer business infrastructure through better modernization,• managed services, security, etc.
Enhance infrastructure such as cloud, security
DX2
.0D
X1.0
Business modeltransformation
Processtransformation
Infrastructuretransformation
• Deliver D2C (direct to customer) through the optimal mix of packages and individual development
• Achieve cost reductions and generate agility through shared online services
Digitalize business models, make IT resources more efficient
DX2.0: DX to transform business models themselves
DX1.0: DX that helps transform business processes(including business platforms and cloud)
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The paradigm shift resulting from the pandemic could give rise to new business opportunities
Impact of COVID-19
Business continuity Make operations fully digital and bolstering clients’ intranet infrastructure in
preparation for full telecommuting Launch non-contact services such as unmanned registers on sales floors Fully rebuild global supply chains (drive further decentralization, or conversely,
bring supply chains back to Japan)
Digital transformation of business models (DX) Bolster e-commerce business (consolidating inventory, more sophisticated call
centers, optimal deliveries, etc.) Shift to the As a Service model (subscription-based, MaaS, etc.) Strengthen non-face-to-face channels at financial institutions (new services in the
front office domain, etc.)
Voice of the customer
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Expand business base, centered on external growth in Australia and North America
Growth Strategy: Global
[Australia]
[Asia, Europe]
[North America]
[Functions of global headquarters]
• Seek to be a top-10 Australian IT services company by around FY2020
• Achieve additional external growth in fields where synergies can be anticipated
• Expand outsourcing business geared toward financial institutions, with NVANTAGE at the core
• Further expand consulting for Japanese and local companies in locations throughout Asia
• Formulate global strategies and support their execution
• Work together with regional controlling companies such as NRI Australia, and strengthen governance of overseas subsidiaries
• Acquire high added value IP of companies with advanced technologies and expertise
14.6 18.9
43.553.0
100.0
3.5% 4.5%
9.2%10.6%
2015 16 17 18 2022
Overseas sales(billion yen)
Overseas sales ratio
Level of M&A investment (4 years): At least 50 billion yen
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Increase and enhance human resources to support growth strategyGrowth Strategy: Human Resources
Bolster hiring
Bolster new graduate hiring: Bolster promotions, etc. Bolster mid-career hiring: Further improve systems of
working conditions for the hiring of more specialists, etc.
Promote employee skills
transfer and development
Strategically develop business designers, data scientists, and other such personnel
Skills transfer and development for application/platform personnel to support DX strategy
Promote employee success
Promote diverse workstyles (diversity, participation and advancement of women and senior personnel, etc.)
More development partners
Get more development partners which have technologies and expertise in areas such as DX
2018 2022New graduate hires About 300 Stable expansionMid-career hires About 100 Double
Increase of 1,000 staff or more (at NRI alone) over four years
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NRI Group Sustainability Management PolicyValue co-creation initiatives
NRI Group GrowthNRI Group Growth
NRI Group Sustainability Management
Building sustainable futuresBuilding sustainable futures
Solving social issues through value co-creation (CSV)
【Vision2022 Numerical Targets】
Consolidated Operating Profit (JPY billion)Consolidated Operating Profit Margin (%)Overseas Sales (JPY billions)ROE (%)
Co-create a thriving future societyby driving new value.
Co-create an ideal societyby effectively utilizing its resources.
Co-create a safe and secure society
by advancing its infrastructure.
Corporate Philosophy “Dream up the future”
100
14 or more
100
14*
Materiality for sustainable growth
Compliance with laws, regulations and risk management to increase
trust from society
Management of the informationsystems that form social
infrastructure
Reduction of environmentalimpact for preserving global
environment
Provision of opportunities for all kinds of professionals to take on
challenge
* Aiming for higher capital efficiency as continuing from the previous term
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Important Indexes *Monitored on a quarterly basis
Value co-creation initiatives
“—” means undisclosed
Social value Medium to long-term measures Key indexes Results in FY March 2020
Co-create a thriving future society by driving new value.
Provide social recommendations and system proposals
Number of appearances in major media publications*1 122
Promote DXDX-related sales 308 billion yen
Overall scale of DX 2.0 business −
Create new business models Number of business partnerships (joint ventures, local government agencies supported, etc.) 4
Co-create an ideal societyby effectively utilizing its resources.
Contribute to reforms for the greater good Size of orders received for operational reform consulting −
Expand services in business platforms Business platform sales 103.6 billion yen
Generate environmental benefits for clients through business platforms
Client CO2 emission reductions through shared online services*2 83,299 tons
Help build IT infrastructure to create an ideal society Scale of cloud and data center services business −
Co-create a safe and secure society by advancing its infrastructure.
Help upgrade the social infrastructure Scale of business for the public sector −
Contribute to information security Amount invested in security, safety, and peace of mind 5.7 billion yen
Maintain the quality of systems in operation Number of systems failures −
(Overall) Facilitate long-term CSV activities Amount of contributions to the NRI Dream Up the Future Fund
(Launches in FY March 2021)*3
*1: Articles that contain photos of or at least two paragraphs about NRI*2: CO2 emissions reduction: Difference between the estimated amount of CO2 emissions if the client werenot to use the business platform and their actual emissions (assuming use of the platform)*3: Amount of contribution in the first year (FY March 2021) is predicted to be 830 million yen
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14.6 18.9 43.5 53.0 61.0100.0
58.3 58.5 65.1 71.4 76.0
100.0
-30
-10
10
30
50
70
90
110
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1,000.0
2015 2016 2017 2018 2019 2020 2021 2022
Numerical targets (consolidated)Medium-Term Management Plan (2019-2022)
421.4 424.5 471.5 501.2 530.0
670.0 or more
Vision2022Medium-Term Plan (2019-2022)Medium-Term Plan (2016-2018)
Operating profit
SalesOverseas sales
FY2018 actual FY2022 targetSales 501.2 670.0 or moreOperating profit 71.4 100.0Operating profit margin 14.3% 14% or moreDX-related sales ratio*1 About 60% About 75%Overseas sales 53.0 100.0EBITDA margin 21.7% 20% or moreROE 12.3% 14%
(Non-percentage numbers below are in units of billion yen)
*1 Ratio of consolidated sales
*2 Aiming for higher capital efficiency as continuing from the previous term*2
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About NRI 1
Medium-Term Management Plan (2019-2022)2
Recent Achievements3
Dividends and Shareholder Information4
Reference5
30Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Zero Major Unplanned Project Losses(1) Production Innovations (Improve productivity in areas of strength in Japan)
Before launch: Proposal and Estimate Review MeetingDuring project: Supervision by Project Risk Management Department
Project supervision at NRI
in each division
Project Risk Management Department
31Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Expanded Base of Business Operations through M&A in Australia and North America
(2) Dramatic Expansion of Global Business (From Asia to the World)
Name ProfileBrierley + Partners(U.S. Joined NRI Group in 2015)
• Brierley LoyaltyWare®, an integrated loyalty program solution.
• Emerged as 2020 SPARK Matrix Leader in the Customer Loyalty Solutions Market by Quadrant Knowledge Solutions
Cutter Associates(U.S. Joined NRI Group in 2016)
• Research and consulting services in the U.S. asset management industry.
• Solid customer base including over 200 firms such as asset managers, insurance companies and pension funds.
ASG(Australia. Joined NRI Group in 2016)
See next page for more details
NVANTAGE(India. Established in 2018)
• NVANTAGE, a joint venture with Nomura Holdings, provides ITO+BPO services for international financial players, starting in 2Q 2018.
AUSIEXAustralian Investment Exchange Limited(Australia. In the process of acquiring shares)
• Enter back-office operations services in Australia’s growing wealth management market and, in the future, aim to be part of Australia’s direct finance market infrastructure
• AUSIEX is part of the CBA* group, which provides IT and operations services in the back-office domain to major financial institutions in Australia * Commonwealth Bank of Australia Limited: One of the four largest banks in Australia, and listed on the Australian stock exchange
32Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Built Foundations for Global Business (ASG)(2) Dramatic Expansion of Global Business (From Asia to the world)
Providing end-to-end services that enable customers’ digital transformation and innovation
Government
50%
Financial19%
Telecommunications
9%
Construction/Resource
s8%
Other15%
ITmanaged services
38%
Solution26%
Advisory22%
M&T(human resource
dispatching)14%
6 locations* in Australia, approx. 1,500 employees*,
Sales of Over AUD 400 mil*.
Business portfolio(as of June 2020)
Salesby service
Sales by customer
sector
*: as of end-Mar. 2020
ASG BRISBANE1ICT:Joined ASG
in November 2019
ASG SYDNEYSMS:Joined ASG
in September 2017
ASG ASG CANBERRAGroup10:Joined ASG
in March 2020ASG ADELAIDE
ASG MELBOURNE
33Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Initiatives Aimed at DX2.0(3) Creating Business Value (Business IT and Con-Solutions)
Initiatives Outlines
KDDI Digital Design(Established Dec 15, 2017)Capital: JPY 7 billion (KDDI: 51%, NRI: 49%)
• Joint venture with KDDI to support DX of companies• Total support from the drafting of business strategies to
commercial verification, developing the systems and building the network infrastructure needed, to management
TECHNIUM(Established Jan 9, 2018)Capital: JPY 300 million (DMG Mori: 66.6%, NRI: 33.4%)
• Joint venture with DMG Mori.• Leverages digital technologies to enhance utilization of plant
production equipment.
NDIAS(Established Dec 3, 2018)Capital: JPY 100 million (Denso: 50%, NRI Secure: 50%)
• Cybersecurity joint venture between Denso and NRI Secure Technologies.
• Detect and diagnose security risks of in-vehicle electronic products.
JAL Digital Experience(Established Feb 4, 2019)Capital: JPY 475 million (JAL: 51%, NRI Group: 49%)
• Provide customers with a unique digital experience for tourism and everyday lifestyle purposes, by combining Japan Airline’s customer base and hospitality expertise with NRI’s capabilities in data analytics and artificial intelligence.
BOOSTRY(Established Sep 2, 2019)Capital: JPY 1,175 million (Nomura HD: 66%, NRI : 34%)
• Joint venture with Nomura Holdings.• Leverage blockchain technology to develop a new STO*
platform where securities and other rights can be exchanged as tokens.
34Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
About NRI 1
Medium-Term Management Plan (2019-2022)2
Recent Achievements3
Dividends and Shareholder Information4
Reference5
35Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Maintain Stable DPS while Aiming for Payout Ratio of 35%Shareholder Returns
Period of acquisition Number of shares acquired Cost of shares acquired
Nov. 2005 4.32 million (9.6% of shares issued) Approx. JPY47.5 billionFeb. 2008 4.93 million (2.2% of shares issued) Approx. JPY15.0 billionMay to June 2008 4.64 million (2.1% of shares issued) Approx. JPY11.9 billionApril to June 2016 2.47 million (1.0% of shares issued) Approx. JPY10.0 billionJul. to Dec. 2017 11.45 million (4.6% of shares issued) Approx. JPY50.0 billionMay to Nov. 2018 5.54 million (2.2% of shares issued) Approx. JPY30.0 billionJul. 2019 101.91 million (13.5% of shares issued) Approx. JPY160.0 billion
Share buyback
FY 13.3 14.3 15.3 16.3 17.3 18.3 19.3 20.3 21.3(e)
DPS*1¥52 ¥56 ¥70 ¥80 ¥80 ¥90 ¥90 ¥96
After Stock Split
¥32 ¥34Payout ratio 36.6% 35.9% 36.5% 41.1% 42.4% 39.1% 41.5% 27.9% 34.8%
Dividends
Policy on Treasury Stock Holdings*2
Generally, NRI seeks to cap any treasury stock holdings at 5% of total shares issued and cancel any surplus (above that 5%).*2 NRI announced on April 27, 2016.
*1 NRI conducted 1-for-1.1 stock splits of common shares effective October 1, 2015 and January 1, 2017, and a 1-for-3 stock split of common shares effective July 1, 2019. But dividends per share (DPS) have not been retroactively restated for these stock splits.
36Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Shareholder CompositionOwnership by Nomura Holdings Group
Shareholders Ratio ofShareholding
Nomura Holdings, Inc. 16.63%Nomura Facilities, Inc. 10.55%JAFCO Co., Ltd. 6.17%NRI Group Employee Stock Ownership Association 4.54%The Master Trust Bank of Japan, Ltd.(Trust Account) 3.99%Nippon Life Insurance Company 3.86%State Street Bank and Trust Company 505223 3.10%Japan Trustee Services Bank, Ltd.(Trust Account) 3.00%National Mutual Insurance Federation of Agricultural Cooperatives 2.10%
JPMorgan Chase Bank 385632 1.87%Top 10 Total 55.81%Overseas Shareholders 29.2%
Major Shareholders (As of end-Mar. 2020)
55.1%*
23.1%
33.4%
August 2003secondary
offering
November 2005share buyback
(TOB)
*Includes Nomura Land and Building Co., Ltd.
Note: NRI treasury stock holdings excluded from the list above.NRI treasury stock included in calculations of ownership percentages.
August 2019share buyback
(TOB)
End-March 2020 27.2%
37Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Strong Financial Structure Balance Sheet Management
Financial Indicators
Cash and cash equivalents• Required funds on hand equivalent to 2-3 months of sales
Investment securities and business andnon-business assets• Cross shareholdings will be held within the confines of
raising corporate value (and subject to validation of efficiency based on capital cost and other factors) and sold if the rationale to hold diminishes.
• For business assets, the decision to invest or exit will be based on hurdle rates based on capital costs, operating profit margin and other factors.
• We will generally not own office assets.• We treat non-continuous assets immediately.
Interest-bearing debt (bonds payable/loans)• Cap on net D/E ratio: 0.3 times• Maintain net interest-bearing debt below EBITDA (Priority on
credit rating)
Retirement benefit assets/liabilities• Manage retirement benefit trust assets and liabilities on the
balance sheet to advance stability in retirement system assets
Equity• Suitable capital level considering asset efficiency and capital
efficiency• Recognize capital efficiency for achieving both growth and
returns• Retain treasury stock at about 5% of total issued shares
Assets Liabilities
Net assets
AssetsLiabilities
Net assets
(JPY million)
FY 14.3 15.3 16.3 17.3 18.3 19.3 20.3Cash and cash equivalents 92,792 140,567 154,949 152,051 158,303 123,200 100,778Cash and cash equivalents +Investments for the purpose of fund management 133,350 169,023 206,031 192,028 185,882I 152,743 104,842
Interest-bearing debt 55,044 68,319 64,609 58,619 81,680 60,883 107,410Net interest-bearing debt ▲78,306 ▲100,703 ▲141,422 ▲133,408 ▲104,202 ▲91,860 2,568Debt-to-Equity ratio (times) 0.17 0.18 0.16 0.13 0.19 0.15 0.40Net Debt-to-Equity ratio (times) - - - - - - 0.02Capital adequacy ratio (%) 70.4 65.6 66.2 69.1 65.2 67.1 50.9
38Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Strong Financial Structure
Acquisition of New Rating Acquired the rating from S&P Global Ratings in Sep 2018, strengthening NRI’s presence
and creditworthiness overseas
RatingRating JGB NRI Peer companies
Hitachi Fujitsu NEC
InvestmentGrade
AAAAA+AAAA-A+ ○A ○ ○A-
BBB+ ○BBBBBB- ○
Speculative Grade
BB+BBBB-
【Comparisons with JGB and Peers】As of Jul. 2020
Date of Rating AnnouncementSeptember 18, 2018
A(Forecast:Stable)
39Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
About NRI 1
Medium-Term Management Plan (2019-2022)2
Recent Achievements3
Dividends and Shareholder Information4
Reference5
40Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Numerical targets (sales by topic)Medium-Term Management Plan (2019-2022)
By growing DX business, expand the ratio of DX-related sales: About 40% (2015, rough estimate) → 60% (2018) → 75% (2022)
Domestic salesother than DX
Business platforms
501.2
670.0 or more
FY2018 FY2022
(billion yen)
DX-related sales
Overseas sales100.0
(Including external growth)
Roughly 75% ofconsolidated salesOverseas
Consolidated salesof roughly 60%
DX-related sales
・Consulting other than DX・On-premise software development・BPO services etc.
・Business platforms,STAR, BESTWAY, T-STAR, etc.
・DX consulting, Analytics, D2C, CRM, Digital marketing
・SCM reforms, Operational efficiency improvements using TRAINA, RPA, etc.
・Cloud, Security, Managed services, etc.
41Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Leverage strength in finance BPFsto expand clientele and services across industry types
Medium-Term Management Plan (2019-2022) Growth strategy: Business platform
In addition to expanding core businesses, provide new business platforms for entering other industries
Structure changes in Financial industry
Number of usersFew Many
Per-person financial assets
Many
Few
Face-to-face-only and internet-only financial institutions• For wealthy people (excess funds) with
extensive financial knowledge• Finance service charges are main revenue source
New entrant companies from other industries
• For the general public with little financial knowledge (small funds)
• Various revenue sources such as points, advertising income, etc.
Expand core businesses
• High quality shared online services• Outsourcing, mainly BPO (business
process outsourcing)• New services for digital assets
Launch new services
• Lean services through APIs• Services for small funds products• Managed services for IT assets
NRI’s Strategy
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Comprehensive support for the diversified system platforms that accompany the shift to cloud
Medium-Term Management Plan (2019-2022) Growth strategy: Cloud
Managed services: Optimize and comprehensively support overall systems on behalf of customer IT departments
Enhanced security: Deliver high levels of security catered to multiple system platforms
Multi-cloud services: Offer integrated services to customers which use multiple cloud platforms
Technology to support app development: Development and application of digital IP (common components of apps, digital development kits, etc.)
Managed services
Customer
Security
Public cloud
Private cloud
On-premises
Multi-cloud Service
Generate agility and optimize cost by modernizing legacy systems,developing cloud-native apps, etc.
Technology to supportapp development
43Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
Information Security Business
NRI SecureTechnologies, Ltd.・Started as NRI’s first internal venture・Established in 2000・532 employees (as of April 2020)
・Net sales have grown to about 20 billion yen
Three Business Domains Emerging technologies for new threats
IoT / ICS (Industrial Control System)
FinTech/Blockchain
Vehicle systems security assessment Acquisition support of Achilles certification
First company to provide “Blockchain Assessment” in Japan
Consulting Services
Cybersecurity Services
Solution Business
High-quality and convenient, self-developed software
Security Assessment and Penetration Testing(IT system vulnerability check using technology from the
perspective of cyber attackers) MSS and SOC as a Service
(24/7 monitoring and managing services for protecting IT systems from cyber attackers)
Security measure PDCA support from expert consultants Support program for cultivation and certification (GIAC, CISSP)
of security personnel
Secure SketCH as a GRC management platform
GRC (Governance, Risk and Compliance)
Unique log analysis using machine learning for the detection accuracy for unknown malware
AI/ ML (machine learning)
Multi-Cloud Security Cloud Access Security Broker (CASB), a solution which supports
security measures in multi-cloud environments
44Copyright(C) Nomura Research Institute, Ltd. All rights reserved.These materials were prepared for the sole purpose of providing information to use as reference in making investment decisions, and are not intended as a solicitation for investment.
ESG Track Record
NRI is included in all four ESG indexes selected by the GPIF
S&P/JPX Carbon Efficient Index
「Dow Jones Sustainability World Index」 For two consecutive years
(Asia Pacific Index: for four consecutive years)
FTSE Blossom Japan Index
Evaluations Inclusion in ESG indexes
Corporate Governance of the Year for FY2017 - Tokyo Metropolitan Governor’s Award -(Japan Association of Corporate Directors)
Platinum Kurumin(Minister of Health, Labour and Welfare)
Note: THE INCLUSION OF Nomura Research Institute, Ltd IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Nomura Research Institute, Ltd BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.
Good health business superior corporation (White 500) (Nippon Kenko Kaigi)
Nadeshiko Brand 2019For four consecutive years(METI and TSE)
A List(CDP)
Supplier Engagement Leaderboard
(CDP)
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NRI Group Worldwide Locations
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