Good afternoon! Iʼm Tokuo Yamamoto, CFO of NEC Networks& System Integration Corporation, which we call NESIC.
Thank you for joining us today for this briefing.

1Here is our agenda.
First, I will provide a summary of our company, then talkabout our business model, and our opportunities for the next
growth.

2Whatʼs NESIC?

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This chart shows our history.
NESIC was born as a telecom engineering company about 60
years ago.
According to the development of technologies, our businesshave been gradually expanded into systems integration andrelated services such as system operation and outsourcing
services. As a listed company we have over 30 years history,
and according to the expansion of our business our industrial
category was changed from construction to information &communication 6 years ago.

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I will explain the history of NESIC in a little more detail.
1953, our birth year, was the year when NHK started Japanʼsfirst television broadcasts, and current KDDI was established.
In other words, NESIC was born at the dawn ofcommunication in Japan.
We started out developing Japanʼs broadcast and telecom
infrastructure, such as the installation of television
broadcasting equipment and the installation of telephoneswitchboards, as shown in the pictures.

5In sixties, our business expanded to the worldwide telecom
infrastructure.
As shown in this slide, we have installed satellite earth station
on Mt. Everest and have contributed to live TV coverage fromthe top of Mountain.

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Alongside the dramatic development of telecom technology inthe 1990s, we also contributed to the start-up of new telecom
services, including mobile phones and the Internet, and also
expanded system integration business for officecommunication network. We can say that it is the era when
we became a system integrator.

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And today....., we have also been involved in the constructionof social infrastructure, including the installation of digitalterrestrial broadcasting equipment on Tokyo Skytree and thedevelopment of a submarine seismometer system.
Moreover, our stage has spread as far as space. We have been
involved in the operation and control of numerous satellites. It
was one of our staff members who RE-discovered the
Hayabusa, when it lost all its trace.
Hayabusa succeeded in collecting samples of asteroid Itokawa,first in the world,
We are working for the operation of Hayabusa-second, too,
but I hope we do not have an opportunity to re-discover it this
time.

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For offices, not only integration of ICT systems, we also focus
on the work-style innovation solution, including office facilities
and design to enhance the productivity of employees.

9It is, therefore, fair to say that NESIC is a company which has
been developed by continually supporting all kinds ofcommunications across a wide range of fields.

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In fact, although NESIC is positioned as 8 th largest system
integrator in Japan as a whole,in networking, it holds the top position in Japanese ICT service
industry.

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I will show our business model, next.

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Our business model has 4 points:
1st: We DO business for various customers, private companies,
telecom carriers and governments.
2 nd: We can provide them variety of services related to ICT,such as consulting, system integrations, maintenanceoperation, and outsourcing services, utilizing our strong
service & support bases.
3 rd: We also have total facility management knowhow throughtelecom construction experience, including office facilities anddesign.
and 4 th: In addition, we have good financial position.
As a result, we are proud of leading position in the Japanese
network market, as I explained earlier.

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This is our sales by segment. It is well balanced, based on our
broad customer base. And this gives our performance somestability against environmental change in each field.

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Through our Enterprise Networks business, we primarily offer
ICT solutions to corporate offices. We offer ICT services
including corporate network operation and monitoring, BPO
services such as the operation of contact centers, as well as
solutions that innovate working styles, which I will explain
about later.

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Carrier networks business is the business mainly for telecom
carriersʼ public networks, from installation and maintenance ofmobile base stations to system integration or configuration ofcore networks.
In addition, for non-carrier customers, we offer services thatutilize the high reliability-technical skills we have acquired in
the provision of services to telecom carriers,
and which also leverage our relationships with these carriers.
Recently, the provision of WiFi and other services at hotels andschools has become a booming market, and the field also
shows healthy prospects for businesses such as IoT.

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In the Social Infrastructure business, we provide systems that
support safety, security and convenience through networks.
One example is the fire and ambulance service network.
For the emergency call system, we develop command centerand radio systems to ensure that ambulances, fire trucks andpersonnel are dispatched promptly and appropriately. Recently,
we have also developed services to support emergency calls inseven languages including English, Spanish and Chinese toensure the wellbeing of overseas visitors who suddenly fall ill inJapan.
In the disaster prevention field, we provide radio systems andinformation terminals that allow authorities to deliver disasterand evacuation information to many people at once.

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These graphs show numerical data on our businessperformance over the past ten years.
There are peaks and troughs that correspond to fluctuationsin the business environment.
However, as I have explained, as we operate across a wide
range of business domains and deal with a diverse range ofcustomers, we have managed to achieve relatively stablebusiness performance. For instance, during the Lehman
Shock, it became difficult to sell to the private sector but wewere propped up by our business with the public sector, andafter the Great East Japan Earthquake, the sharp drop-off inpublic sector business was offset by strong performance in thearea of telecom carriers. In fact, since our founding, there has
NOT been a single year in which we have operated in the red.

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Second point is our services infrastructures. We are able toprovide ICT services as a management cycle, from consulting,integration, maintenance and outsourcing services.
It is our intense service and support bases nation-wide thatdifferentiates our business model.
For an example, we can send support staff and necessary
parts to our customers in just an hour almost wherever they
are in Japan. It is the service quality NESIC is proud of,through the experience of mission critical public network
business.

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Another clear differentiation compared to other system
integrators, lies in our know-how and installation capabilities
for office, electrical and other facilities.
These skills have been built through our infrastructure
construction business, leading to the creation of new business.
One of such examples is our work-style innovation
solution ”EmpoweredOffice.”

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EmpoweredOffice is a solution to support creative work-styles
through a combination of ICT, office facilities and design.
Information and communication systems are a necessary partof changing the way we work, but it can be hard to bring aboutchange through those aspects alone. By combining ICT with
office facilities and design, working styles can be innovated in a
way that makes full use of information and communications.

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To coincide with the relocation of our head office in 2010, we
incorporated these working style innovation a company-widebasis, and began to propose the solution to customers byhaving them witness the results first-hand.
Traditionally, offices were “swamped,” in the sense that they
were inundated with paper. These offices later transformed
into waste-free “slim” offices. In fact, floor space was reduced
by around 40%, power consumption was cut by 50%, andpaper usage was significantly decreased by 60%. Meanwhile,by effectively utilizing the time that had been saved, sales
staff, for instance, increased the time spent for clients by
10%. Thereafter, the improvements were deployed nationwide
and new tools were developed. As a result, offices now
transcend the traditional barriers of distance.
In other words, in an office that is economical, ecologicaland empowered, we have produced a “4E” office where eachevery employee is able to enjoy way to work.

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Fourth point is our financial position. Through increased
profitability, we have built solid financial strength. Using thisstrength, we have executed three M&As in these five years.
We are ready to use our financial position for further growth.

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Return to shareholders is regarded as a priority management
issue. Building upon a robust financial base, our dividend
policy is to offer stable dividends that take the DOE into
account.
For the current fiscal year, we plan to offer an annual dividendof 72 yen per share, and in doing so mark tens years ofconsecutive dividend increases.
Moving forward, we will continue to strengthen profitability
while striking a good balance with growth investments, inorder to product a return that all our shareholders will findsatisfactory.

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Next, I will explain about our business opportunities for the
next growth.

25First, allow me to explain the current situation.
I noted that our business performance was relatively stable,
but we have suffered the two-pronged damage where
investment by telecom carriers has bottomed out, and thedigitalization of fire & ambulance radio systems that has seena significant uptick in recent years has dropped off. As aresult, unfortunately we forecast decreased sales and profits
for two consecutive periods.
However, at the start of the current period the special demand
for fire and ambulance service radio has ended, and we will
not be impacted in the same way in following periods.
Moreover, we believe that investment by telecom carriers has
already bottomed out this period.
Therefore we will move in the direction of
re-growth from the following fiscal year onwards.

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Letʼs take a look at the medium-term business environment facing thecompany.
We expect the market for domestic telecom carriers to continue its slump
for the meantime, but in the enterprise and social infrastructure fields, we
believe that business opportunities will expand.
In the enterprise ICT market, we expect growth accompanied by a shift
from traditional selling-out-type system integration to a service provision
format.
At the same time, in response to the demands of society, we believe
working styles innovation is getting more and more important.
Also, as noted at the bottom, investment in hotels and tourism-related
facilities will undergo revitalization due to jump in the number of foreign
visitors to Japan on the heels of the Cool Japan campaign.
Meanwhile, in the social infrastructure market, we expect investment toproceed strongly on the domestic front with the national resilience,
regional revitalization, the Olympic Games and so on. On the overseas
front, investment in communications infrastructure has also picked up,
primarily in the ASEAN region.
In short, the market opportunities for NESIC will expand across threefields, 1) market opportunities by the ongoing switch to services, 2)
investment related to domestic infrastructure and 3) market
opportunities due to globalization.

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This is our basic policy for mid-term growth.
In line with the business opportunities I just mentioned,
we will concentrate on the areas of services, infrastructure andglobal business with the aim of top line expansion.
In conjunction with this, to further strengthen our businesscapabilities, we will actively pursue investment to support
growth while further stepping up our past efforts aimed at
cutting costs and enhancing management efficiency.

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These are the areas of focus in our mid-term plan.
For the service business, in addition to services related toinnovating working styles that I mentioned earlier, we will
target cyber security to keep networks safe and secure, andalso work to expand businesses with a focus on IoT withMVNO and so on.
In the infrastructure business, we will focus on areas expected
to experience active investment, such as broadcasting, cable
television and disaster prevention.
In terms of global business, we will concentrate on ASEANbased outbound businesses as overseas operations, whilebolstering efforts aimed at inbound businesses such as hotels,
airports and tourism, where investment is set to increase
thanks to higher numbers of foreign visitors to Japan.
Now I would like to provide a supplementary explanation of
the main businesses we will focus on.

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First, I would like to touch on services that related toinnovating the way we work.
In Japan, the office relocation market is expanding due to theconstruction of large new buildings, and it support the demand
to improve their offices. The government is also asking
businesses to reduce overtime and is promoting the utilizationof women and seniors towards developing a society built on
the collective participation of its people. In this way, there is a
growing need to innovate working styles through the use of
telecommuting in addition to offices.
NESIC develops pioneering services through in-house
implementation to refine the proposals we present tocustomers. For instance, when it comes to telecommuting,
we have considered the results of our own in-housedemonstration tests to determine how to implement
telecommuting while utilizing the positive aspects of Japanesework-styles, and this has strengthened our consultation
abilities, including with regard to personnel systems.
We plan to expand EmpoweredOffice sales to54 billion yen to
fiscal March 2019.
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This is one of the work-style improvement tools we havedeveloped through in-house implementation.
Using projection mapping technologies that have become
popular in art installations, we have created an environmentthat makes it seem as if offices far away from one another inOsaka, Tokyo and elsewhere are right next to each other.
Distance offices can engage in communication while sharing
the atmosphere that can only be experienced by being in thesame office.
The solution has attracted attention even from outside theprivate companies. For instance, schools are using this solution
for lessons connecting with another class in rural area orisland. It was also used in demonstration testing ofcommunication between Tokyo and Kansai by ministers aheadof the Kansai relocation of the Agency for Cultural Affairs.

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Cyber security is one business area with strong future prospects.
When networks being used in all sorts of scenarios including
telecommuting, it goes without saying that security has become
increasingly important. At the same time, cyber attacks havebecome more sophisticated, and it has become difficult to ward off
attacks using only conventional security equipment.
NESIC maintains the Network Total Operation Center, a 160-seatfacility staffed by 300. The center operates the networks ofnumerous enterprise customers, and conducts security monitoringas part of the service. This kind of value-rich structure is one of
NESICʼs unique strengths, and unlike firms focused purely on
security, we are able to provide a host of services that include an
immediate response to abnormal activity.
The NEC Group intranet, which links more than 100 thousandpeople, is also among the users of the center. Leveraging engineers
with vast experience and know-how who undertake comprehensive
analysis of security equipment logs as one of our strengths, we are
striving to expand this business.
We are planning double cyber security sales in 3 years to 6 billion.

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Broadcasting and cable television is one of the priority
businesses in the infrastructure field.
Targeting the Tokyo Olympics 2020, we believe thedevelopment of next-generation 4K broadcasting will advance.
Since 4K broadcasts require large bandwidth, the data coming
down from satellites needs to be re-transmitted via cable
television. However, half of the cable television networks inJapan still use coaxial cable, and these companies shifting
their networks to fiber represents a business opportunity for
NESIC. There have already been gradual developments toswitch to fiber in anticipation of 4K, and these moves will
accelerate going forward.
As infrastructure sales including disaster prevention systems
and transportation networks, we target 46 billion yen in fiscal
march 2019.

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In terms of overseas business, we plan to expand our operations
using overseas subsidiaries as a base.
For example, in Saudi Arabia we have developed a good
relationship with Saudi Aramco and provide networks for its
petroleum refineries.
Among these endeavors, in the medium-term we see
infrastructure building in the ASEAN region as a big market.
Particularly in Thailand, there is a demand for the development ofhigh-speed mobile networks such as LTE, and we will seek toexpand our business while taking advantage of relationships with
AIS, such as with the installation of fiber optic lines for 3G. In
addition, since making a full-scale entry into Myanmar in April
2015, we have achieved steady results in the areas of basestations and solar power generating systems. Based on thesedevelopments, in 2016 we formed a joint venture company withlocal firms and are striving to further expand the business.
Our mid-range overseas sales target is 30 billion yen.

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Lastly, inbound businesses. In part thanks to the Japanese
governmentʼs Cool Japan policy, a record 24 million tourists
visited Japan in 2016, and this number is expected to risemoving forward.
Facilities that provide related services such as hotels andairports represent business opportunities for NESIC.
We aim to increase inbound business sales to 14 billion yen.

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The business opportunities for NESIC include all of the
scenarios presented here, starting with the airports
where tourists arrive from overseas, and including thebuses, sightseeing spots, the hotels, shopping, andtransportation by train.

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Among these opportunities, system and services for hotels are
already booming.
NESIC has a track record of doing business with many hotels
thanks to its leading market share in the development of
telephone systems in Japan. In addition to targeting thiscustomer base to sell infrastructure equipment such as Wi-Fi
and room control systems that control all the equipment in aroom from lights and blinds to air conditioning, we provide awide range of “hospitality” oriented products aimed at hotel
guests, including hotel information distribution services, room
service utilizing self-traveling robots, and services to introduce
hotels with the use of 3D content. There are plans for new
construction of an additional 40,000 guest rooms, and thesebusiness endeavors will expand even further.
As a common service platform for these inbound businesses,
NESIC owns a seven-language multi-lingual service acquired
through M&A, and we will continue to develop and provide
new services while taking advantage of our strengths in suchareas.

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These are our mid-term targets based on the strategies I haveoutlined.
While we expect business performance in the current year toexperience a decline in revenue and income, from thefollowing fiscal period when the specific factors causing thedecline will be eliminated, we aim to return to a growthtrajectory and achieve record results.

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In closing, I would like to summarize some key points that weretouched on today.
1. NESIC is a company that has grown in step with thedevelopment of communications, and is one of Japanʼs leading
companies in the communications field.
2. There are business opportunities in which NESIC can leverage
its strengths, and we will strive to make use of these strengths togrow again.
3. Using the strength of our operating base, we have achieved
stable business performance even in a fluctuating environment.
This has allowed us to provide stable dividends. For the current
fiscal year we plan to increase dividends for the tenth consecutive
fiscal year.
I would be happy if you keeps at least these 3 points in mind.
Thank you for your attention.

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