4. Business Results(1) Business Results for the 1Q for the Fiscal Year Ending March 31, 2022
During the first quarter under review (the period from April 1, 2021 to June 30, 2021), theJapanese economy remained under uncertain circumstances. A state of emergency wasrepeatedly declared and that the end of the COVID-19 pandemic was still not in sight. Withdifferent anti-infection measures in place and a vaccination campaign underway, the economy
showed signs of an overall recovery. However, the trend of infections has a significant impact on
the Japanese and overseas economic situations. They differed in severity depending on theindustrial sector.
Under these economic conditions, in the information and communication technology (ICT)market, the business domain where NEC Networks & System Integration Corporation (hereinafter"NESIC") operates, the impact of COVID-19 produced varying impacts, with some areas more
affected than others. On the whole, NESIC attained solid results.
In the enterprises market, companies maintained a high level of investment in workstyleinnovation, such as the introduction of teleworking in the wake of measures against the COVID-19
pandemic. Investments in new work styles using cutting-edge technologies for the New Normal era
were actively made. These technologies include cloud computing, artificial intelligence (AI),Internet of Things (IoT), robotic process automation (RPA) and other kinds of digital transformation(DX). Among telecom carriers, capital investment was robust in migration to the fifth generation(5G) cellular networks and improvement in communication quality. Their 5G investments started,
including the installation of base stations. For central and local governments and public interestrelated organizations, investments in realization of the GIGA school initiative were finished after
intensive investments in the previous fiscal year. However, they continued to invest in systems forsophisticated urban infrastructure, such as firefighting and disaster prevention, broadcasting, video
transmission and community antenna television (CATV). Outside Japan, immigration control andother restrictions are still tight amid the spread of COVID-19 infections.
In this market environment, the NESIC Group took positive actions mainly in the area of work
style innovation based on DX technologies and in business fields we focused on, such asinvestments in infrastructure construction for telecom carriers with a view to 5G services.
Under the Medium-Term Management Plan, “Beyond Borders 2021,” announced in May
2019, we aim to be a “communication services orchestrator” that produces new social value
using our strengths and in collaboration with our partners. We consider solving social issues and awave of technological innovation as an opportunity for business expansion and are focusing on ashift to a new business model and business creation based on digital and 5G communication.
Under this concept, we will make active use of DX technologies. In the work-style innovation
business, which we started in 2007, we will aim to implement new working styles that will generateinnovation ahead of the times to provide a variety of solutions for work-style innovation based on
the achievements we make in our own practice. As part of this initiative, since October 2019, wehave been distributing head office staff to satellite offices near Tokyo, within 30 minutes of theirhomes. At present, we are carrying out business operations centering on telecommuting with theuse of the system and technology for distributed working as measures to prevent the spread of
COVID-19. Capitalizing on our strength in offering proposals for sharing with customers our newworkstyle expertise based on this practice, we actively promoted introduction of New Normal work
styles and teleworking with the use of DX technologies. In addition, we utilized DX technologies
and carried out co-creation with partners to speed up the development of solutions for newworkstyles with high efficiency and creativity matched with remote and online working. In the 5G
business, we worked to build closer ties in the form of strategic partnerships with telecom carriers.
In November 2020, we established the Basic Technology Development Center as a place tocultivate human resources, evaluate and verify new technologies and create new services. It newly
obtained a license for a local 5G experimental radio station. We bolstered the structure inpreparation for future full-scale investments in 5G technologies. We will continue to accelerate our－1 －business development, taking advantage of our strengths in building infrastructure, such as basestations in the 5G area and core networks, and in digital services for enterprises.
As a result, the Group posted the following consolidated results for the period under review:

Net sales¥67,662 million

0.4% increase year on year

Operating income¥2,950 million

192.5%

increase year on year

Ordinary income¥3,045 million

223.4%

increase year on year

Net income attributable¥1,653 million

405.8%

increase year on year

¥83,717 million

0.8%

decrease year on year

to owners of the parent＜Reference＞
Orders received

Net sales increased 0.4% year on year, to ¥67,662 million. While mega-solar projects saw salesdrop, sales rose in ICT services related to workstyle innovation based on DX technologies,
infrastructure construction for telecom carriers and other businesses we focused on. Orders
received were down 0.8% year on year to ¥83,717 million. A plunge in reaction to GIGA school
projects that concentrated in the previous fiscal year was covered mainly by the business of DX
and workstyle innovation and infrastructure construction for telecom carriers.
Profit increased. Business model innovation advanced from network systems integration basedon hardware products to the offering of solution services with DX technologies with a focus on
solving customers' issues, which increased higher value-added businesses with higher profitability,
while continued stringent measures to improve profitability through resource efficiency
improvement and tight project management also produced a positive effect. Operating income rose
192.5% year on year to ¥2,950 million, ordinary income up 223.4% to ¥3,045 million and net
income attributable to owners of the parent jumped 405.8% to ¥1,653 million. We thus marked
record-high first quarter income figures.
.
Operating results by business segment were as follows:（Million yen）

Net sales by business segment
Engineering &DigitalNetwork

Solutions

Infrastructures

Support Services

OtherTotal

business

1Q Fiscal 2022.3

25,317

19,851

19,8602,633

67,662

1Q Fiscal 2021.3

26,81916,61020,841

3,098

67,369

Increase or (decrease)(1,501)3,240(981)(465)

292(5.6)

19.5

(4.7)

(15.0)

0.4

Ratio ofincrease/(decrease) (%)－2 －（Million yen）

Reference: Orders received by business segment
Engineering &Digital

NetworkSolutions

Infrastructures

Support Services

OtherTotal

business

1Q Fiscal 2022.330,428

26,937

24,7191,631

83,717

1Q Fiscal 2021.3

34,03625,39822,152

2,771

84,359

Increase or (decrease)(3,608)

1,538

2,567

(1,140)(641)(10.6)

6.1

11.6(41.1)(0.8)

Ratio ofincrease/(decrease) (%)

1. Digital Solutions Business：
Corporate customers reduced system replacements while ICT services related to workstyleinnovation based on DX technologies we focus on expanded. Net sales were down 5.6% year on
year to ¥25,317 million, impacted by the removal of a group company from consolidation in thesecond quarter of the previous year.
2. Network Infrastructures Business：
Net sales increased 19.5% year on year to ¥19,851 million. In particular, sales from telecom
carriers expanded.
3. Engineering Support Services Business：
Net sales dropped 4.7% year on year to ¥19,860 million. It is due to a decline in sales frommega solar projects.

<Outline of Business Segments>
Business Segment

Descriptions of Main Businesses

Mainly system integration related to ICT platform andoutsourcing/cloud services for business of enterprises and otherDigital Solutions

customers and provision of solutions/services that are helpful forcustomers’ business transformation by using cutting-edge/digitaltechnologies , and contact center services
Mainly centered on telecom carriers, central and local governments
and social infrastructures service providers, provide system

Network

integration/services related to network infrastructures of a publicInfrastructuresnature with the required high reliability, and thedevelopment/manufacture and sales of network equipment, andprovide system integration.
Construction business in Japan and abroad, provision of support

Engineering &services such as maintenance and operations/monitoring related toSupport Services

ICT systems/services provided by the Company and operations ofbusinesscompany-wide service infrastructures, in addition to technicalsupport using these.

OthersSales of purchased equipment－3 －(2) Outlook for the Fiscal Year Ending March 31, 2022
In circumstances under which there is no prospect of seeing the end of the COVID-19 pandemic, inthe enterprises market, demand for DX and workstyle innovation including teleworking is growing inour business domain. A business model shift is expected to advance from network systems
integration based on hardware products to the offering of solution services with the use of DX
technologies for resolving customers' issues. Telecom carriers are beginning to make capital
investments towards 5G. As we build stronger trust with these customers, the area that we can coveris growing and that brings us new business opportunities. Accordingly, higher value-added andprofitable businesses are growing in the quarter under review. Profitability is improved to a higher
level than expected.
Under these circumstances, the consolidated financial forecast for the first half of fiscal year ending
March 31, 2022 has been revised upward, in light of the progress until the quarter under review, tonet sales of ¥147.0 billion, operating and ordinary income of ¥8.7 billion each, and net income
attributable to owners of the parent of ¥5.5 billion.
The full-year financial forecasts have been kept on hold from the announced figures shown below,
in view of factors for uncertainty in the exterior environment, such as the impact of COVID-19 andconcern about ICT products in short supply due to shortage of semiconductors. If we deem itnecessary to revise the forecast in the future, we will swiftly announce the revision.

Net sales¥320 billion

5.6% decrease year on year

Operating income¥26.0 billion

1.7% increase year on year

Ordinary income¥26.0 billion

2.0% increase year on year

Net income attributable¥16.0 billion

1.6% increase year on year

to owners of the parent－

4 －