Financial Results for the 1Hfor the FY ending March 2022
November 1, 2021

Yushi Ushijima, President

NEC Networks & System Integration Corporation(TSE: 1973, NESIC)© NEC Networks & System Integration Corporation 2021

AgendaI. Results for the 1H FY2022/3
II.Forecasts for the FY2022/3
III.Update of Strategic Areas

I. Results for the 1H FY2022/3

1H FY2022/3 Summary（¥ Bn.）
1H
FY2021/3

1H
FY2022/3

ChangeForecasts
as at Jul.29

 Orders/sales

Orders received

177.9

165.9-7%

165

Net sales

151.2

141.0-7%147

Decreased due to special impacts*
but the strategic areas** grew as expected(Gross margin)

16.6%

19.3%

+2.7pt

-SG&A

18.4

19.6

-1.2

-

Operating income

6.7

7.6

+0.9

8.7

(to sales)(4.5%)(5.4%)+0.9pt

(5.9%)Net income

4.0

4.7

+0.7

5.5

(to sales)(2.6%)(3.3%)+0.7pt

(3.7%)

Free cash flows

14.4

13.6

-0.8

attributable to owners of the parent4© NEC Networks & System Integration Corporation 2021

Record high profits as 1H

Except for special impacts

Orders:+11％, Sales:+3％
Backlog: +15%
* reactionary fall of big projects (GIGIA school & mega-solar) of theprevious year and the impact of a subsidiary to have been
unconsolidated** DX/workstyle innovation, telecom carrier business Profits
Profitability improved due to sales mix
and efficiency improvements while
increasing SG&A****** resource enhancement for new business development

Factor Analysis of YoY Change
While growth strategy went well as plan, net sales was temporarily affected by semiconductor shortage
and the shift to service provision model.
Profit grew thanks to improved sales-mix and efficiency with SG&A increase

Orders received

Net sales

Operating income（¥ Bn.）
Profitability

improvement

177.9
GIGAschool
Approx.
- 27.0Unconsolidated
affiliate*
Approx. -1.5

165.9
DX/telecom etc.
Approx.
+16.5*Impact of a subsidiary that to havebeen unconsolidated from 2Q
FY2021/3～～
1H FY21/3
5

151.2
(-7%)

(higher valueadded,improvedefficiency, etc.)

GIGA
schoolApprox.
-6.0
Mega-solar
Approx.
-6.5
Unconsolidated
affiliate*
Approx. -1.5

+1.8

DX/telecom etc.
Approx.
+ 4.0

Sales
increase ofDX/telecometc. +0.7141.0(-7%)

GIGASchool
Approx.
-0.4
SG&A
Approx.
-1.2

7.6(5.4%)

6.7(4.5%)～～～～～～～～～～

1H FY22/3

1H FY21/3

1H FY22/3

1H FY21/3

1H FY22/3© NEC Networks & System Integration Corporation 2021

Orders Received/Net Sales by Business Model
Expanded service provision model
Orders received（¥ Bn.）

SI/construction
Service177.9

125.9

51.9

165.9

151.2

141.0

-17％

(+6%)

+17％

(+21%)

1HFY21/3
6Net sales© NEC Networks & System Integration Corporation 2021

104.9

61.0
1HFY22/3

63％

99.337％( ): excluding special impacts (p4)51.9
1HFY21/3-15％(-2%)+9％(+12%)

84.4

60％

56.5

40％

1H
FY22/3

1H FY2022/3 Orders Received by Segment（¥ Bn.）

177.9
151.7
71.3

DSL

55.4

▐ Digital Solutions (DSL)-７%

 Decreased due to the impacts of GIGA school(-14) and un-consolidation of a subsidiary (-1.5)

165.9 (＋11％)

 DX/workstyle innovation-related businesses
continuously grew (DX for governments/
municipalities expanded)-13%
62.2 （＋12％）▐ Network Infrastructures (NWI)
47.6

49.6

54.3-５%51.9 （＋25％）

NWI

45.3

ESS

46.6

Others

4.4

4.7

2.3

FY20/3
1H

FY21/3
1H

FY22/3
1H7© NEC Networks & System Integration Corporation 2021

 Business for telecom carriers drove the growth- Penetration as a partner progressed+４%▐ Engineering & Support Services (ESS)( ): excluding specialimpacts (P4)

 Decreased by reactionary fall of GIGA school (-13)
 Increased construction business in Japan(transport/traffic etc.)

1H FY2022/3 Net Sales by Segment（¥ Bn.）▐ Digital Solutions (DSL)
151.2
136.3

DSL

56.7
53.2

141.0 -７%

52.4-８%

 Reactionary fall of GIGA school (-1.0) and unconsolidation of a subsidiary (-1.5) impacted
 Lead-time has been longer according to shift toservice-provision model▐ Network Infrastructures (NWI)
NWI

38.1
35.5

51.6

42.8

41.6

Others

6.0

4.9

3.5

FY20/3
1H

FY21/3
1H

FY22/3
1H© NEC Networks & System Integration Corporation 2021

 Business for telecom carriers drove the growth- Social/public infrastructures also increased▐ Engineering & Support Services (ESS)

ESS

8+12%

42.3-18%

 Decreased due to the impacts of GIGA school(-5.0) and mega-solar projects (-6.5)*increased by 7% except these impacts

 Semiconductor shortage started to appear

1H FY2022/3 Operating Income by Segment(¥ Bn.)( ): to sales

6.7

4.4

5.3

4.8(8.9％)

NWI

Others/Elimination

9(9.3％)

2.2+3(10.6％)(+1.3pt)

2.8+6

1.8(5.8％)

2.2

3.5

3.4(5.3％)(+0.9pt)

5.6(6.5％)(5.2％)

ESS(5.4％)+9(4.5％)(3.2％)

DSL

7.6(6.7％)(8.1％)-4.4-4.2-4.2

FY20/3
1H

FY21/31HFY22/31H© NEC Networks & System Integration Corporation 2021(+0.7pt)‐０▐ Digital Solutions (DSL) Due to progress of business model change,profitability improved(to Service+SI provision model)▐ Network Infrastructures (NWI)
 Effect of sales increase and improved sales mix
led to profit growth(+1.4pt)+0▐ Engineering & Support Services (ESS) Almost flat from the previous 1H recovering sales
decrease by decrease in provision for loss formega-solar PJ

II. Forecasts for the FY2022/3

*Forecasts as at October 29, 2021

FY2022/3 Forecasts(¥ Bn.)
FY21/3
ActualOrders received

336.9

FY22/3
Forecast

330

Change-2％（＋8％*）Net sales

339.1

320

Operating income

25.6

26.0

＋0.4(to sales)(7.5%)(8.1%)+0.6pt

Net income

15.7

16.0

+0.3

(4.6%)(5.0%)(to sales)
11© NEC Networks & System Integration Corporation 2021

Aiming at sustainable growth by theimprovement of sales mix-6%（＋7％*）

attributable to owners of the parent

No change from theinitial forecasts
 Although the continuous impact ofsemiconductor shortage is a concern,
we will accelerate strong NWI business Continuing investment in new businessdevelopment such as resourceenhancement+0.4pt * growth rate excluding special impacts (p4)

*Forecasts as at October 29, 2021

FY2022/3 Forecasts by Segment

Modified segment forecasts considering on the 1H results
Orders received(¥ Bn.)Net sales( ): to sales

330

330

Operating income

320

320

26.0

26.0

(8.1％)

DSL

120+3123

DSL116-3113

DSL(8.1％)

14.0-0.5

10.0+1.0

12.0

-0.5

(12.1％)NWIESS
Others100

102

NWI96+5101

NWIESS100
10April 29
forecasts

12+2-5100ESS98

5Others

10

Revisedforecasts© NEC Networks & System Integration Corporation 2021

April 29
forecasts

-1

97

-1

9
Revisedforecasts

Others/Elimination(10.4％)

13.5(11.9％)

11.0(10.9％)

11.5(12.2％)(11.9％)

-10.0

-10.0

April 29
forecasts

Revisedforecasts

*Forecasts as at October 29, 2021

Dividend（※予想値は、2021年1月29日現在のものです）

Dividend/share（¥）(Forecast)

38

35
Year-end
Interim

26.0

27.3

Planning dividend increase
for the 15th year un a row(Forecast)

19

Interim: ¥19 per share as planned

Year-end: planning ¥19 per shareas the initial plan
194.7

FY07/313* The results for the fiscal years ended March 2020 and prior thereto
presented below reflect the three-for-one stock split conducted onJune 1, 2020・・・・© NEC Networks & System Integration Corporation 2021

22/3

III. Update of Strategic Areas

Digital Area
DX Orders Received¥13Bn

Customer base expanded togovernments
Leveraging our strength such as DX/work-style innovation knowhow through self-implementation, telework environment
development

Doubled¥6Bn

1H
FY21/3151H
FY22/3© NEC Networks & System Integration Corporation 2021

1H results

Saitama Prefecture, Toyama Prefecture,
National Tax Agency, etc.

To expand

Expansion to other prefectures/agencies &creation of solution model to smaller
governments such as cities, towns and villages(Telework environment, cloud services)

Approach to local-government-network
resilience demand(LGWAN-ASP services, telework environments)

Digital Area (Case for Local Government)
ClientSaitama Prefecture
Introduction of digitalization tools

OutlineKey Point16© NEC Networks & System Integration Corporation 2021

Development of multi-cloud environment fortelework, paperless-work and active intra/interoffice communication and related licenses
・Web communication tool・Software for paper-less-walk・File-management system
・Authentication service (IDaaS)

etc..

NESIC’s DX know-how through selfimplementation and operation-easy
proposal

Digital Area (Future Work-Style)Hybrid work amalgamating “real” & “virtual”
Working-style evolution for
innovation

Re-designing work-style

Humandevelopment

Team work

Co-creation

Enhancing tools forhybrid work
e.g. One Globe OfficeHybrid work

Telework environment

Feeling-sharing
everywhereDX
Working-processtransformation

RealPresenceOfficeHume

BeyonddistanceSatellite

2015~

Telework
17

VirtualDistributed work

© NEC Networks & System Integration Corporation 2021

Hybrid work

オフィスワーカー・テレワーカーをAs if every global member wereグローバルでつなぎ、あたかもworking at the same place
同じ空間で働く環境を構築

5G Area

Preparing for full-scale investment in 5G as planned
Carriers’ infrastructure

Local 5G

Build closer ties with carriers(as strategic partner)

Create services for solving social issues
through POCs

 Cultivate new customers (suchas Rakuten) with the use ofexisting assets

 Rising KNSI’s position
Business with higher value increased
YoY

Net sales：35％up*K&N System Integrations Corporation (KNSI) is a joint
venture with KDDI Corporation.

18© NEC Networks & System Integration Corporation 2021

 Progress in the community
building field– Selected 3 projects for MIC’s“POCs to Solve Social Issues”(3 out of 26 are our PJs)
 Acquired 5G license

Strengthening of businessfoundations
5G resource development

 Use of Basic Tech. Center/ 5G Lab.
5Gresource

Beyond 300(Target：approx. 400by Mar. 2022）

5G Area (Local 5G)
Accelerating the service creation to solve social issues in thecommunity building field~ 3 projects selected for MIC’s POCsSubjects

19

Outline of POC

Productivity
improvement ofprimary industryProductivity & safety
for forestry works inmountain area

Tourism/disasterprevention

Tourism safety
information system(Mt. Fuji)

Public events

Execution of events atlarge sites with safety &security© NEC Networks & System Integration Corporation 2021

・Efficient work by remote
operation
・Safety management using AI& high-resolution visual systems
・Safety monitoring・Alert service
・Visitor-flow analysis

etc.

・Experiment for post-Covid 19
events at Yokohama

Ultimately

We will actively seek innovation without fearing change orfailure with a view to realizing an inclusive and sustainable
society based on communication.
20© NEC Networks & System Integration Corporation 2021

APPENDIX

21© NEC Networks & System Integration Corporation 2021

1H FY2022/3 Balance Sheet (September 2021)（¥ Bn.）End of Mar/21

End of Sep/21

68.4
124.6
11.5
7.3

80.0
94.7
11.5
9.2

11.6
-29.9
0.0
1.9

211.8
38.5
250.3

195.4
40.0
235.4

-16.4
1.5
-14.9

Others

46.8
10.1
66.3

33.3
11.7
60.6

-13.6
1.6
-5.6

Liabilities

123.2

105.6

-17.6

126.1

127.7

1.6

-2.4

-1.7

0.7

3.4

3.8

0.4

Liabilities & Net Assets

127.1
250.3

129.9
235.42.7-14.9

Owner's Equity Ratio

49.4%

53.5%+4.1pt

Cash and cash equivalents
Notes and accounts receivable, and contract assets
Inventories
OthersCurrent Assets
Noncurrent Assets

Assets
Notes and accounts payable
Loans

Shareholders' equity
Accumulated othercomprehensive income
Non-controlling interests

Net Assets

22© NEC Networks & System Integration Corporation 2021

Diff.

1H FY2022/3 Cash Flows（¥ Bn.）

Oper.CF

+19.1

+3.6

+13.3

-8.5

+14.2

-5.8

+14.1

-1.2

+17.1

+0.3

+16.2

Inv.CF-1.2

-1.5

-1.6

-1.2

-2.7

-2.9-3.3-3.4

-2.7

-1.6

-2.6

17.9

11.7

FCF

11.5

2.1

13.6

-1.3

-4.6

-8.7

-9.7

14.4

10.8

1000

51.7

51.4

1H

2H

FY17/32361.049.2

1H
FY18/3© NEC Networks & System Integration Corporation 2021

2H

58.8

47.9

1H
FY19/3

2H

56.4

49.6

1H

2H

FY20/3

61.7

58.3

1H

2H

FY21/368.3

1H
FY22/3

Net cashCautionary Statement
Forecasts and targets of results mentioned in this document are future estimates and arethus 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 thoseprojected. 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 intensified competition.

Factors affecting results are not limited to the ones mentioned above.
The figures related to special impacts (mega-solar, GIGA school and an unconsolidatedaffiliate) are shown in round numbers.
There were inter-segment transfer of some businesses and other changes in April 2020.
Segment information for the FY 2020/3 has been recalculated to reflect the change in thecontent of business segments.

24© NEC Networks & System Integration Corporation 2021

NEC Networks & System Integration Corporation will be committed to increasing
customer value by redesigning future communications from the user's perspective.

nesic
25

© NEC Networks & System Integration Corporation 2021

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