Financial Results for FY2020/3
May 8, 2020
Yushi Ushijima, President
NEC Networks & System Integration Corporation(TSE：1973, NESIC)Agenda１．Financial Results
２．Progress of“Beyond Borders 2021” Plan

１．Financial Results
２．Progress of“Beyond Borders 2021” PlanFY2020/3 Financial Summary▐ Record high in all of O/R, sales & profits
 Profitability was improved by enforced business capability
in addition to increased sales(¥ Bn.)FY2019/3

ChangeForecasts
as at Jan 29, 2020

Old recordOrders received

284.7

305.0

+7%

295

299.1
15/3

Sales277.9303.6+9%

300

292.2
15/3

Gross margin

17.2%

17.9%+0.7pt

ーーOperating income

12.8

16.25

+3.5

15.0

16.16

(4.6%)(5.4%)+0.8pt

(5.0%)

ー

0.0

3.4

-3.4ー

ー

8.9

9.4

+0.5

9.0

8.9

(to sales)(3.2%)(3.1%)-0.1pt

(3.0%)ーROE

8.7%

8.8%+0.1pt

Free cash flows

2.8

6.2

+3.4

(to sales)
Extraordinaryloss

Net income
attributable to owners of the parent

4FY2020/3© NEC Networks & System Integration Corporation 2020

15/3

19/3

FY2020/3 Orders Received by Segment¥ Bn.

▐ Digital Solutions(DSL)
305.0 +7%

287.8

284.7

Orders from almost all industries
were strong with a focus onworkstyle innovation area
ーDX business proceeded beyond the plan

DSLNWIESSOthers

588.9

112.5
104.2

▐ Network Infra.(NWI)
Both of telecom. carriers businessand social/public infra. * increased

82.3
81.0

110.2

+8%

89.0 +10%

90.5

93.5

6.4

9.0

10.0

FY18/3

FY19/3

FY20/3+3%*Firefighting/disaster prevention systems,
video/CATV, transportation, etc.

▐ Engineering & SupportServices (ESS)Domestic construction* increased© NEC Networks & System Integration Corporation 2020

*Firefighting/disaster prevention systems,etc.

FY2020/3 Net Sales by Segment¥ Bn.

▐ Digital Solutions(DSL)
303.6 +9%
267.9

277.9
110.0

DSL88.4

99.8

84.0

NWI

76.0

80.4

ESS

96.5

90.4

7.0

7.4

10.3

FY18/3

FY19/3

FY20/3

Others

6+10%+4%

Workstyle innovation area andnetwork for hotels increased▐ Network Infra.(NWI)
Sales for social/public infra.
increased－Sales for telecom. carriers was flat as aresult of recovery in 2H▐ Engineering & SupportServices (ESS)
99.4+10%© NEC Networks & System Integration Corporation 2020

All of domestic construction*,overseas business andmaintenance/operation businessincreased*Mega-solar and networks for firefighting, etc.

FY2020/3 Operating Income by Segment¥ Bn.
（margin）

16.2 +3.5（5.4%）(+0.8pt)

11.1

DSL

NWI

ESS

Others/Eliminations

6.8

・Profit increased due to improved fixed cost
efficiency as a result of higher net sales

12.8（4.6%）

11.0（4.1%）

8.4+2.6(10.0%) (+1.5pt)(8.5%)(7.7%)

5.3

5.9(7.0%)(7.4%)

7.0

7.2(7.2%)-8.0(7.9%)-8.8

Digital Solutions (DSL)

9.2

+3.3

(11.0%) (+3.6pt)

Network Infra. (NWI)

・Profit increased due to dissolving loss
projects in addition to higher net sales
and the reorganization effect**Resource efficiency enhancement,enhanced PJ management etc.

Engineering & Support
6.3(6.3%) (-1.6pt)
Services (ESS)-0.9

・ Profit decreased due to increased lossproject cost

-10.3

-1.5

-Profitability improved excluding impacts above

Others/Elimination
FY18/3
7FY19/3

FY20/3© NEC Networks & System Integration Corporation 2020

・Growth expenses increased(Office realignment, etc.)

FY2021/3 Full Year Forecast

The spread of the COVID-19 coronavirus may affect ourshort-term performance. Due to the significant level of
uncertain factors, we are currently examining our business
forecasts.

Meanwhile, we have decided to leave the forecasts
undecided. They will be announced promptly as soon
as we are ready to present reasonable forecasts.

8© NEC Networks & System Integration Corporation 2020

FY2021/3 Business Environments / Basic Policy Businesses are expected to deterioratesignificantly due to the COVID-19 coronavirus.
 There is the delay in projects due to confusion in
the supply chains and the restricted access toworkplaces.

GeneralEnterprises/Public

Telecom
carriers
Governments

 There is concern about client companies reducing ICT
investments because of the deterioration of business.
 Demand related to teleworking and work-style reform isincreasing sharply.
- Signs of adopting remote lecturing in the education area.
There is gradual progress in the migration to 5G.

Communication traffic is increasing because of teleworking.

There is concern about delay in bidding items



Investments remain steady with respect to measures toprevent/reduce disasters.

Focus on solutions for social challenges
Cost control9© NEC Networks & System Integration Corporation 2020

Dividends
Increasing the corporate value through growth investment
and continuing to increase shareholder return based on stabledividend at the same time.

▐ Taking DOE (dividend on equity ratio) into account.
 FY20/3 Year-end dividend of ¥42 per share,
an increase of ¥2 from the plan (annual dividend of ¥82)
 FY21/3: TBD. Planning to disclose with financial forecasts

Increase for the 13th year in a rowDividends
per share

60

(¥)

45
1477
FY07/3102022252628
1414101114131011111330

64

32

70
35

7274

78

82

36

37

40

423637

38

40

17/3

18/3

19/3

20/3

26
19・・・・© NEC Networks & System Integration Corporation 2020

30

32

35

Yearend

TB
DInterim

21/3

Stock Split▐ Resolution to conduct a three-for-one stock split,with the record date set for May 31, 2020*

PurposeTo establish an environment where investors can invest moreeasily and seek to improve the liquidity of the Company’s sharesand expand the investor base through the reduction of the price
per investment unit.
Method of the stock split

Total number of outstanding shares
before the stock split

OutlineOne common share will be split into three shares.

49,773,807 shares

Total number of outstanding shares
after the stock split(Increase in the number of shares)

149,321,421 shares(99,547,614 shares)

Record date

May 31, 2020*

Effective dateJune 1, 2020

*The record date will be May 29, 2020, because the shareholder registry administrator has a day off on May 31.

11© NEC Networks & System Integration Corporation 2020

１．Financial Results
２．Progress of“Beyond Borders 2021” PlanSocial Value Creation Model
Vision for society

Value to society

An inclusive and sustainable society
created through communications

 Create environments in which everyone can work more vigorously Develop pleasant and plentiful communities with cutting-edge
technologies
 Provide robust services that underpin safety and security inevolving society

Digital

Focusing areas

×5G

Value creation
model
Self-implementation

NESIC

HW/SW

Nation-wide
capability

NetworkCloud

13Co-creation withpartners

Cutting-edge
technology© NEC Networks & System Integration Corporation 2020

Technology& credibility

Start-ups

Biz creation
capability
Customes

ICT/facility
partners

Summary of Progress in Mid-Term Management Strategy
The current Mid-Term Management Plan is being
implemented in preparation for the “Digital x 5G” era.
Digital5G
Business
capability

Results

14

Made achievements in workstyle innovation and DX.

Making steady progress in preparation for a fullscale start.
Making better-than-expected progress on theimprovement of ability as an organization and efficiency.
Making progress ahead of schedule on improvements in
actual results despite the negative factor of the lossmaking mega-solar plant project.

© NEC Networks & System Integration Corporation 2020

Progress in Growth Strategy: Digital Domain
Enhancing efforts to address social challenges such as
over-concentration in Tokyo and the facilitation ofinnovations by leveraging DX.

Core stance

Evolution of value to beprovided

Shift in business models

Progress in technologies

Work-style innovation
Evolution of businesses

Shift to a service provisiontype model

Strengthening of the DX
domain that supportsbusinesses

Proposal of new workstyles by using
leading-edge technology andembracing innovation

Improvement of profitability throughconstant value enhancement(Recurring)Expansion of businesses throughthe establishment of cloud-based
ecosystems

Practice of distributed work

Sales from services in DSL

Development of DX platforms toconnect cloud-based services(October 2019)

Progress

Opening of the Nihonbashi
Innovation Office(February 2020)

Number of visitors foroffice inspection
Exceeded 60,000 on a cumulative basis

As planned
15+10%© NEC Networks & System Integration Corporation 2020

DX-related orders

6 billion yen
FY19/3

FY20/3*Greater than
expected

Driven by Zoom

*Non-consolidated

As planned

Solid progressProgress in Growth Strategy: Digital Domain (Topics)▐ High-level business continuity through distributed work
Maintain the balance of business continuity and productivity
through full-scale implementation of digital/cloud technologies(The impact of the state of emergency on companies’ internal operations remained immaterial even after theannouncement.)

Create a standard for workstyles in Japan.
Mechanism that supports distributed work:
Digitalization
Improve efficiency in operations andproduction.
Minimize face-to-face sessions byadopting paperless work.
Facilitation of epaper
AI-OCR/RPA collaboration
Visualization ofmanagement

Bundling cloud services

Open and straightforward
communicationAutomate operation processes throughdata collaboration.

Eliminate organizational
barriers/Communicate directly with thetop management

Facilitation of esignatures

DocuSignDX platform that bundles cloudservices

Visualization ofemployee
locations

KloudSpot16© NEC Networks & System Integration Corporation 2020

Face-to-faceCommunication tool

Business chat toolProgress in Growth Strategy: Digital Domain (Topics)
Open & flat communication
Vacant HQ OfficeCommunication with new recruits
17© NEC Networks & System Integration Corporation 2020

Progress in Growth Strategy: Digital Domain (Topics)▐ Response toteleworking demand
Recent demand trend

Teleworking relatedinquiries sharply
increased in March(Increases fromlevels in February)

Online-based
inquiries

5 times

Orders*

6 times

The number of newcustomers also increased.
*Zoom related orders

18「とにかくZoom」というニーズ© NEC Networks & System Integration Corporation 2020

Future initiatives
 Provision of the Company’s
expertise to support teleworking
Acquisition of more newcustomers through Zoom

 Deepen businesses withcompanies that adopt Zoom
Enhancement of peripheralproducts, security and network

 Expansion of sales togovernments and educational
institutions
A fallback plan for a decline in ICTinvestment by general companies

Progress in Growth Strategy: 5G Domain
Making steady progress in preparation for full-scale
investments in 5G
Deepen businesses with telecomcarriersCore stance

Increase market share in the basestation business
Deepen businesses through KNSI, a joint venture
established with KDDI
*K&N System Integrations

KNSI’s sales
DoubledProgress

Signs of recovery since thesecond half of FY2020/3.

Enhance efforts because it is an area inwhich full-layer system integration
capabilities are utilized.
Overall strength to deal with a range ofundertakings including the building ofinfrastructure (from core network to basestations) and provision of services.

Strengthen demonstration experimentand proposal-making initiatives.
･Regional BWA*BWA: Broadband Wireless Access

The market share has been
rising steadily.
FY19/3

FY20/3Adjusting Plan

19Local 5G© NEC Networks & System Integration Corporation 2020

･Cable operators･ICT related to disaster prevention
and reduction
As planned

Progress in Growth Strategy: 5G Domain (Topics)
5G Laboratory: Construction of a new facility to develop 5Gfocused personnel and validate technologies.

▐(Scheduled for completion in the summer of 2020)
 Implementation of technical training
by using actual equipment
・Base stations and core networks (virtual networks)
・The number of wireless technology engineers will be
increased fourfold by 2023.

 Provision of 5G validation/BPO services
・Services for the whole process including consulting,Training
Development ofsolutions

20Openinnovation
Showcasing

license application, systems integration and system
operation.
・Validation/BPO services for telecom carriers andvendors Creation of solutions© NEC Networks & System Integration Corporation 2020

Strengthening Business Capability to Support Growth Strategies
Making better-than-expected progress in efforts tostrengthen business capacity on an all NESIC basis

Core stance

Improvement of resource
efficiency

Work-style innovation

Optimization of the effect oforganizational realignment

Improvement of productivity
by using DX

Increased the levels of resource efficiency and project quality.
Improved the efficiency of fixed costs.
Gross margin

Sales per person

Progress

17.9%

Up

17.2%

FY17/3 FY18/3 FY19/3 FY20/3

Solid progress© NEC Networks & System Integration Corporation 2020

8%

Net sales: up 9%
Number of employees(consolidated): up 1%

16.5% 16.5%

21(YoY change)Progress in Growth Strategy: Financials
ToplineMake a shift to the top line over the ¥300 bn.

Solid progress exceeding the planNet sales¥277.9 bn.
FY2019/3

Profit¥303.6 bn.

¥310 bn.

FY2020/3

FY2022/3 target

Shift profitability to the industry level (FY22/3 is a check point)

Making progress ahead of schedule on improvements in actual
results despite the loss by mega-solar plant project.
Operationincome¥12.8 bn.

Excluding lossby mega-solar

22¥20 bn.

(4.6%)(5.4%)(6.5%)FY2019/3

FY2020/3

FY2022/3 target

Excluding loss
by mega-solar

ROE¥16.2 bn.

8.7%

8.8%

FY2019/3

FY2020/3© NEC Networks & System Integration Corporation 2020

10%+
FY2022/3 target

Lastly

This is a year of preparation to make a leap.

Ready to Jump
We will build a foundation for further growth while
prioritizing our response to social challenges.

23© NEC Networks & System Integration Corporation 2020

APPENDIX

24© NEC Networks & System Integration Corporation 2020

2020/3 Balance Sheet（¥ Bn.）Cash and cash equivalents
Notes & accounts receivable
InventoriesOthersDiff.

4.0
5.90.00.9

Noncurrent Assets

181.0
35.1

191.8
38.4

10.8
3.3

Assets

216.2

230.2

14.1

Others

41.1
6.4
61.1

43.1
8.7
64.9

2.0
2.3
3.9

Liabilities

108.6

116.7

8.2

109.0

114.5

5.5

-4.1

-4.1

0.0

2.7

3.1

0.4

Liabilities & Net Assets

107.6
216.2

113.5
230.2

5.9
14.1

Owner's Equity Ratio

48.5%

47.9%

-0.6ptCurrent Assets

Notes and accounts payable
Loans

Shareholders' equity
Accumulated othercomprehensive income
Non-controlling interests

Net Assets

25

End of Mar/19 End of Mar/20
54.4
58.3
107.2
113.1
13.2
13.2
6.3
7.3

© NEC Networks & System Integration Corporation 2020

FY2020/3 Cash Flows（￥Bn.）

Opr.CF+18.6-1.7+23.3+2.5+9.4+22.6+4.8+8.4+12.9

Inv.CF-2.6-3.4-5.5

-3.9

-2.8

-2.7

-2.8

-5.6

-6.7

19.9

17.8

15.9

6.6
-1.3

-5.

33.5

12/3

26

26.2
13/3

2.0

38.0 32.8 35.4

14/3

15/3

© NEC Networks & System Integration Corporation 2020

16/3

2.8

6.2

FCF

51.4 49.2 47.9 49.6 Net cash

17/3

18/3

19/3

20/3

Cautionary Statement
Forecasts and targets 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 that a 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 this Company’s group, as well as pressure
to lower prices and ability to cope with the market in response to intensifiedcompetition.
Factors affecting results are not limited to the ones mentioned above.
NESIC has changed the reportable segments from the FY March 2020
according to the reorganization at April 2019. The segment figures for the FY
March 2018 and FY March 2019 in these slides were reclassified for disclosure
to reflect the changes in this event.

27© NEC Networks & System Integration Corporation 2020

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29© NEC Networks & System Integration Corporation 2020