Financial Results for the Fiscal Year
Ended March 2015
May 8, 2015
Masao Wada, President
NEC Networks & System Integration Corporation(TSE: 1973, NESIC)AgendaI.FY 2015/3 Financial Results
II.FY 2016/3 Forecasts
III.Progress of Medium-TermBusiness Plan
IV.Strategies for Future GrowthPage 1ⓒ NEC Networks & System Integration Corporation 2015

I.FY 2015/3 Financial Results
II.FY 2016/3 Forecasts
III.Progress of Medium-TermBusiness Plan
IV.Strategies for Future Growth*We have reviewed its operational structure, aiming to enhance it by restructuring it in accordance with markets. In FY15/3, we have changed the contents of business segments, and construction
work for carriers, including the construction of mobile communications base stations, has been transferred from Social Infrastructure segment to Carrier Networks segment, among other changes.
Segment information for FY13/3 and FY14/3 have been changed to reflect the change in the content of business segments

Page 2ⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Basic Policy (From the presentation slides for the FY14/3 results at May 8,2015)▌Topline growth Enterprises Networks
・ Accelerating growth in EO Business including regional expansion
・ Expanding business using common businessplatforms such as SCM platform and contact center platform Carrier Networks
・Cultivating carrier market focusing on technical outsourcing buz
・Pursuing business synergy with NEC Magnus Communications

 Social Infrastructure
・Proactively capturing public investment business opportunities▌Profitability enforcement
 Cost innovation
 Streamlining SG&A

▌Conduct business giving top priority to compliance
Page 3ⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Financial Summary▌Achieved medium-range targets for net sales, operating income, and operating
margin a year ahead of schedule and set new records.
 Net income decreased year-on-year due to the reversal of deferred tax assets
corresponding to amendments to the taxation system and extraordinary losses,
such as expenses for office integration associated with the reorganization ofsubsidiaries.
(Billion Yen)

Page 4

FY14.3

FY15.3

ChangePrevious
Forecasts

Orders Received

280.1

299.1

+7%

295

Net Sales

270.3

292.2

+8%

285

Operating Income

14.4

16.2

+1.7

15

(to Sales)(5.3%)(5.5%)+0.2pt

(5.3%)Net Income

8.3

7.8

-0.5

9.0

(to Sales)(3.1%)(2.7%)-0.4pt

(3.2%)

ROE

9.6%

8.7%

-0.9ptFree Cash Flows

17.8

-1.5

-19.3

ⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Orders Received/Sales by Segment▌Both orders and sales increased due to robustEnterprises Network and Social Infra. businesses
 ICT investment recovery, FF&DP networks business expansion
and the effect of M&A executed the previous fiscal year Decline in Carrier NW sales due to the curbing of investment by telecom carriers

Sales

Orders(Billion yen)
+16%

+7%

299.1

280.1

Other

241.3

Social Infra.

17.7

17.6

18.6
94.9

+5% 99.8

75.7

+15%

292.2

270.3
235.7
18.8

19.5

18.6

82.6 +17%

96.8

74.1

Carrier
Networks

65.8

Enterprises
Networks

82.2

91.8 +15% 105.3

FY13/3

FY14/3

Page 5+8%

74.7 +2%

76.4
64.9

FY15/378.0

78.3-2% 76.6

90.8 +9% 99.3

FY13/3
FY14/3
FY15/3
FF: fire fighting, DP: disaster preventionⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Enterprise Networks Business▌Orders and sales achieved substantial increases,
capturing the ICT investment recovery opportunity EmpoweredOffice business remained strong (Sales +13%* ) * Including QAC.
 Orders and sales increased for almost all industries
Orders Received

105.3 +15%

(Billion Yen)

82.2

Sales

91.8

90.8
55.1

+24%

78.0

44.6

43.9

SI/Con- 43.4
struction
Services 38.7
FY13/3
Page 699.3 +9%49.8 +13%

39.9

47.3

50.2

FY14/3

FY15/3+6%
38.0

FY13/3ⓒ NEC Networks & System Integration Corporation 2015

46.9

49.4

+5%

FY14/3
FY15/3
QAC: Q and A Corporation

FY2015/3 Carrier Networks Business▌Decline in sales due to the impact of telecom carriers’ decreased CAPEX Consolidation of NEC Magnus Communications (Orders/Sales + ¥10 Bn in 1H)
 The mobile BTS business decreased with the termination of platinum band
(Sales -20%)
 Orders for Services declined sharply, mainly due to the block posting of long-term
maintenance projects in the previous fiscal year

Orders Received(Billion Yen)

74.7

Sales

76.4

+2%

65.8
SI/Con47.5
struction

Services

Page 778.3

76.6 -2%

59.8

58.8

-2%

18.4

18.5

17.8

-4%

FY13/3

FY14/3

FY15/3

64.9
54.4

18.2

20.3

FY13/3

FY14/359.3+9%17.1 △16%
FY15/346.5ⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Social Infrastructure Business▌Orders and sales increased, backed by an increasein public investment
FF&DP networks business (Bn ¥) Active digitalization PJ of FF radio network.
-Orders started to decrease in 2H.
-FF control station PJ will continue.
 Orders for overseas infrastructure installation
increased(+¥ 4 billion).

Orders
13
1H

17
2H

14/3

Orders Received(Billion Yen)

94.9

80.5

6

2H

1H

15/3

14

12

2H

1H

14/3

22
2H

15/3

96.8 +17%

18.9

19.1

19.2

FY13/3

FY14/3

FY15/3

82.6

+6%
55.2

Services

Page 81H

899.8 +5%
74.1

75.8

23

Sales

75.7
SI/Construction 56.8

Sales

+1%

18.9

63.7

19.0

77.8 +22%

19.0

±0%

FY13/3
FY14/3
FY15/3
FF: fire fighting, DP: disaster preventionⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Operating Income/Loss by Segment
14.4
12.5

Total

16.2 ▌Increased operating income（5.5%）（5.3%）

Social Infrastructure（5.3%）

・Profits increased due to the growth ofsales.

(Billion Yen)

8.2
7.1
Social Infra. （9.6%）
Carrier NW

5.9（9.9%）

OthersElimination

Page 9（8.3%）

9.6（9.9%）

6.6

7.1（8.5%）（9.2%）

7.1

7.2（9.1%）

Enterprises
6.5
NW

in all three major segments（7.8%）

0.8（7.2%）（2.3%）

0.4（4.3%）（1.0%）

-7.5

-8.3

-7.9

FY13/3

FY14/3

FY15/30.2

Carrier Networks
・Profits increased due to an improvement in
the cost of sales ratio, despite a decrease insales.
・An acquired subsidiary also contributed to
profits.

Enterprises Networks
・Profit increased by offsetting the higher costof sales ratio due to changes in the projectmix with the sales increase.
Improved by streamlining administrative
staff costs, despite an increase in service
platform development costs.

ⓒ NEC Networks & System Integration Corporation 2015

End of FY2015/3 (March 2015) Balance Sheet▌Owner’s equity ratio decreased by half 0.5 points due to higher total assets
resulting from expanded accounts receivable and inventories at term-end
associated with an increase in large-scale projects.
(Billion Yen)

End of 14/3

Diff.

Cash and cash equivalents

44.4

39.0

-5.5

Notes and accounts receivable

96.0

113.9

17.9

Inventories

8.2

10.1

2.0

other

8.8

8.1

-0.7

157.4
31.7
189.1

171.1
30.9
202.0

13.7
-0.8
12.9

Notes and accounts payable

43.2

48.7

5.5

Loans

6.4

6.2

-0.3

Other

50.3

53.0

2.7

Liabilities

99.9

107.8

7.9

91.2

94.4

3.3

-3.7

-1.9

1.8

1.7

1.6

0.0

Liabilities & Net Assets

89.2
189.1

94.2
202.0

5.0
12.9

Owner's Equity Ratio

46.3%

45.8%

-0.5ptCurrent Assets
Noncurrent Assets

AssetsShareholders' equity
Valuation and translation
adjustments
Minority interests

Net Assets

Page 10End of 15/3

ⓒ NEC Networks & System Integration Corporation 2015

FY2015/3 Cash Flows▌FCF decreased from the previous first nine months due tothe timing of cash collection and the increase in Social
Infrastructure projects with long work schedules.
(Billion Yen)

50
40
30

33.5

32.8
26.2

24.5

Net Cash※

19.3

20
10

38.0

17.8

15.9

14.2

0

-3.5

△10
△20

Page 11

FY10/3

FY11/3-1.5-5.2
FY12/3

FY13/3

FY14/3

ＦＣＦ

FY15/3※Net Cash = Cash & cash equivalent – interest bearing debt
ⓒ NEC Networks & System Integration Corporation 2015

Progress of Compliance Enforcement Measures▌Executed group-wide compliance enforcement
measures to prevent recurrent of fraud as planned
Measures

Execution

Revision of accounting -Concentrated financial function of subsidiaries on NESIC-Standardized financial process& financing processGroup-wide personnel
rotation-Executed personnel rotation for staff members of NESIC
group

Enforcement ofcompliance education-Provided periodic training for the directors and auditors ofsubsidiaries-Provided periodic compliance education for each layer of
hierarchy

Enforcement of inhouse & outside audits-Strengthened the internal auditing section and audit items-Conducted full-spec audit by auditing company to major
subsidiaries

Enforcement of groupmanagement-Reorganized subsidiaries in Japan (Feb. & Apr., 2015)-Established a new division to control the group companies(Apr. 2014)

Page 12ⓒ NEC Networks & System Integration Corporation 2015

I.FY 2015/3 Financial Results
II.FY 2016/3 Forecasts
III.Progress of Medium-TermBusiness Plan
IV.Strategies for Future GrowthPage 13ⓒ NEC Networks & System Integration Corporation 2015

FY2016/3 Business Environment▌Though varying in strength from one business field to the next, the businessenvironment is solid largely due to the recovery of business confidence
following the slowdown brought on by the consumption tax hike.

Enterprises Networks-ICT investment in Japan remains on the trend towards recovery,
backed by the economic recovery

Carrier Networks-There is a trend towards the curbing of telecom carriers’ CAPEX,
particularly in base stations-New service fields such as MVMO and M2M have become active

Social Infrastructure-Public investment in safety and security, such as the strengthening of
national infrastructure, is robust-Activation of investment in infrastructure development in preparation forthe 2020 Olympics is expected
Page 14ⓒ NEC Networks & System Integration Corporation 2015

FY2016/3 Forecasts▌Seeking to achieve record high resultsthat exceed the medium-term targets.
(Billion yen)
FY15/3

FY16/3
Forecasts

ChangeMidium term
targets

Orders Receipts

299.1

300

+0%

-

Net Sales

292.2

295

+1%

290

Operating Income

16.2

16.5

+0.3

16

(to Sales)(5.5%)(5.6%)+0.1pt

(5.5%)Net Income

7.8

9.5

+1.7

-

(to Sales)(2.7%)(3.2%)+0.5pt-*Forecasts as at April 28, 2015
Page 15ⓒ NEC Networks & System Integration Corporation 2015

FY2016/3 Basic Policy▌Execution of operations, giving top priority to compliance▌Completion of the medium-term business plan
◆Achieve FY16/3 forecasts revised upward from medium-term goals
by all means Topline growth・Expand enterprises business and reap the benefits of growthinvestments
 Higher profitability
・Promote total cost innovation activities and the reduction of
procurement/logistics costs through SCM innovation, etc.
・Streamline SG&A

▌Strengthening of group management
Page 16ⓒ NEC Networks & System Integration Corporation 2015

FY2016/3 Sales Forecast by Segment▌Even with the digitalization of FF radio network peaking out (-9),
growth will be maintained by expanding Enterprise NW (+8),
broadcast/public/space(+4), and overseas infrastructure(+2), etc.

295Social Infra.
(Billion yen)

OthersSocial Infra.
Carrier
NW
Enterprises
NW

292.2
19.5

-Sales will decrease in the FF&DP network
business-Sales will increase in broadcast/public/space andoverseas infra. businesses

19

95

-2%

74

-3%

107

+8%

Carrier NW

96.8
76.6

-Sales will decrease due to the curbed CAPEX of
telecom carriers-Sales will increase in the technical outsourcing
business

Enterprises NW

99.3-EmpoweredOffice business will continue to grow,actively responding to the recovery in ICT
investment

FY16/3(Forecast)

FY15/3
FF: fire fighting, DP: disaster prevention
Page 17+1%ⓒ NEC Networks & System Integration Corporation 2015(*Forecasts as at April 28, 2015)

Dividend Plan(*Forecasts as at April 28, 2015)▌Increasing dividends in step with improvements
in profitability based on stable dividend policy
FY15/3: Year-end dividends: ¥32 per share (Full year ¥64) as planned
FY16/3: Planning increased dividends of ¥70 per share

Dividend pershare (¥)

Planning increase forthe 9th year in a row

60
45

25

26

28

20

22

14

13

14

7
7

10
10

11
11

11

13

14

07/3

08/3

09/3

10/3

11/3

12/3

14

Page 18

64

70
（37%）

Payout ratio

35

30

32

30

32

35

14/3

15/3

16/3(Forecast)Yearend

26
19
13/3

ⓒ NEC Networks & System Integration Corporation 2015

InterimI.FY 2015/3 Financial Results
II.FY 2016/3 Forecasts
III.Progress of Medium-TermBusiness Plan
IV.Strategies for Future GrowthPage 19ⓒ NEC Networks & System Integration Corporation 2015

Progress of Medium-term Business Plan(*Forecasts as at April 28, 2015)▌Achieved the medium targets (sales and operating income & margin)
a year ahead of schedule Targeting ROE 10% in FY16/3
ＲＯＥ

5.7%

Operating Income(Margin)

8.8%

12.5
(5.3%)

9.6%

8.7%
16.2
(5.5%)

14.4(5.3%)

15(5.3%)

9.7(4.8%)

10%
16.5(Billion Yen)
(5.6%)
16(5.5%)

292.2

285

295

290

270.3
235.7

Sales

204.7

FY12/3
Page 20～～～～

FY13/3

FY14/3～～～～
FY15/3(Previous (Actual)
Forecast)ⓒ NEC Networks & System Integration Corporation 2015

～
～

～
～
FY16/3(Previous
Target)(Current
Forecast)Medium-Term Target (Net Sales by Strategic Area)(*Forecasts as at April 28, 2015)▌Strategic business areas are soundly growing
Sales

292.2
285

270.3
235.7

74

76

295
290

82

75

67

590

530
53

28.5

30

31

35

27
270
30
305
11
110

41

42

52

42

350
13
125

13.5

14

15

FY13/3

FY14/3

FY15/3
Forecast

Page 212,600

Actual35
45
16

FY16/3
Previous Current
TargetForecastⓒ NEC Networks & System Integration Corporation 2015

(Billion yen)

EmpoweredOffice Buz

Technical
Outsourcing
Buz
Infra. Buz
Overseas Buz

StrategicareasEmpoweredOffice Business▌Progress▌Sales(Billion Yen)

74

67

76

82
75

Development and launch of new solutions
SmoothSpace53
FY13/3 FY14/3

FY15/3

FY16/3

Forecast Actual Previous Current
Target Forecast▌StrategyMarket expansion
・Regional/public
・Further penetration into
office market

Services businessenforcement
・Total services combining
common platforms
・DC and cloud business
Page 22

・Realize casual and active communication
with distant office through the use of
projection-mapping technology to make it feellike everyone is on the same floorImproved evaluation from outsiders-Promoting business talks through the use of EO-offices.
8,000
6,000

<Accumulated visitors to NESIC HQ EO offices:
7200 companies>
Number of visitors
NESIC HQ relocation

4,000

Number of visitor
companies

2,000
0

07

08

09

10

ⓒ NEC Networks & System Integration Corporation 2015

11

12

13

14

Technical Outsourcing Business▌Sales▌Progress(Billion Yen)

28.5

30

31

35 35

*Service Delivery Operation Center

27

FY13/3 FY14/3

FY15/3

FY16/3

Forecast Actual Previous Current
Target Forecast▌StrategyFull usage of common
services platforms
 Further penetration into
telecom carriers market
Cultivation of enterprises
marketPage 23

Technical service using sDOC*
Approx.
is doing well.
¥５Bn （15.3)-Receiving orders for technicalBPO business from SI sales
companies, lease companies, andglobal manufacturers

Enhanced multi-lingual service system-Established a new company with multilingual contact center for seven languages
In addition to the FF market, targeting global
Japanese companies, government offices,municipalities, and hotels, etc.

※English, Chinese, Korean, Spanish, Portuguese, Thai and Russian※JV of QAC and Honyaku Center Inc. (TSE 2483)ⓒ NEC Networks & System Integration Corporation 2015

Infrastructure Business▌Sales▌Progress

52(Billion Yen)

42

41

42

45

30

FY13/3 FY14/3

FY15/3

FY16/3

Forecast Actual Previous Current
Target Forecast

 FF&DP network business-Sales remains high,driven by a backlog of Orders
orders, even thoughSales
orders have peaked out▌StrategyMobile BTS
・Regional expansion &share up

FF&DP network
・Share-up in FF&DP systembusiness

FF&DP network business

FY12/3 FY13/3 FY14/3 FY15/3 FY16/3
Forecast Mobile BTS business-Installation of outdoor BTSs
-20%
decreased along with telecom Platinum
band
carriers’ capex strategy
Outdoor
BTSs

Shifting resources toindoor BTSs area

Focusing on the expansion of
FF control stations, DP, andenvironment/energy fields

FF: fire fighting, DP: disaster prevention

Page 24ⓒ NEC Networks & System Integration Corporation 2015

IndoorBTSs+65%
FY14/3

FY15/3

Overseas Business▌Sales▌Progress(Billion Yen)

16
14
13 13.5

15

11
FY13/3 FY14/3

FY15/3

FY16/3

Forecast Actual Previous Current
Target Forecast▌Strategy
Telecom infra. businessexpansion centered on
Asia<Key fields>

THA: 3G for telecom carrier
PHI, SIN, IDN:
Disaster prevention, telecom
Network for railways

JOC business centeringon Asia
Page 25

Entered newly developing markets-Entered Myanmar, where investment in infrastructureis expected to expand⇒Yangon branch of NESIC Thailand (April 2015)
Target Markets-Telecom infra. centering on mobile-Public infra. such as railways, roads, airports, etc.

Expanded telecom infra. businessby further developing existing customers-Saudi Arabia:
Received orders for a project in the eastern area in
addition to the one in the western area
<Project outline>
Installation of measurement and control system for gas plant-Thailand:
3G network construction PJ for AIS is underwayⓒ NEC Networks & System Integration Corporation 2015

I.FY 2015/3 Financial Results
II.FY 2016/3 Forecasts
III.Progress of Medium-TermBusiness Plan
IV.Strategies for Future GrowthPage 26ⓒ NEC Networks & System Integration Corporation 2015

Strategies for Future Growth▌Basic policy is continuous growth byfocusing on growing fields
Operating income 12.5
(Margin)(5.3%)

14.4(5.3%)

9.7(4.8%)

16.2(5.5%)(Billion Yen)

16.5
(5.6%)

295
292.2
270.3
・・・

235.7

Sales
204.7
～
～

～
～

～
～

～
～

～
～

FY12/3

FY13/3

FY14/3

FY15/3

FY16/3

FY17/3～(Forecast)(Next medium-term)

Page 27ⓒ NEC Networks & System Integration Corporation 2015

Strategies for Future Growth▌Enforcing services business andexpanding infrastructure business- Total system integrator
covering from consulting to installation and services - Strategic investment(Investment in growth fields and alliances) Enforcement of common platforms(Platforms for installation, maintenanceand services businesses)
Page 28ⓒ NEC Networks & System Integration Corporation 2015

Strategy Map

Japan
Focus oninfra. market

New markets

 Focus on new technology and new service areas with growth potential, such as MVNO and SDN
 Strengthen areas in the infra. field that will activate business in Japan and overseas business,
predominantly in Asia
Enforcement and area expansion
Further cultivation of Infra. market(new and existing)of services businessOveraseas
Telecom infra.
Public infra.

urban infra. upgrading
Disaster prevention
4K,8K/CATVElectricity/energy
Olympic / Paralympic

BPO<ICT+non-ICT>

Next generation EO
Work style innovation

Telecom &social infra.

EO
Office innovation
Maintenanceservices

Existing businessContact center
Help-desk

Monitoring
SecurityMVNO
M2M/IoT

SDN

Multi
language

Focus onnew fields

Expansion of new tech., services, market
New technologies & new servicesⓒ NEC Networks & System Integration Corporation 2014

Page 29

In Closing

Completion of Medium-term
Business Plan
Business
GrowthOrganizational
GrowthHuman
GrowthConduct business giving top priority to compliance

Enhance shareholders value
Page 30ⓒ NEC Networks & System Integration Corporation 2015

NEC Networks & System Integration Corporationis committed to increasing customer value byredesigning future communications from the user’s
perspective.

nesic
Page 31ⓒ NEC Networks & System Integration Corporation 2015

SearchCautionary Statement

Forecasts of results mentioned in this document are future
estimates and are thus inclusive of risks and uncertain factors
since they are not based on definite facts. Please be aware thata variety of factors could cause actual results to differ
significantly from those projected. The major factors affecting
actual results include the economic climate and social trends
surrounding the business of this Company’s group, consumer
trends vis-a-vis systems and services provided by thisCompany’s group, as well as pressure to lower prices and ability
to cope with the market in response to intensified competition.
Factors affecting results are not limited to the ones mentioned
above.

Page 32ⓒ NEC Networks & System Integration Corporation 2015

http://www.nesic.co.jp/english/index.html

Page 33ⓒ NEC Networks & System Integration Corporation 2015