4. Business Results(1) Business Results for the 1H for the Fiscal Year Ending March 31, 2022
During the first half under review (the period from April 1, 2021 to September 30, 2021), thecircumstances surrounding the Japanese economy remained uncertain due to the COVID-19
pandemic, following the repeated declaration of states of emergency. With many measures inplace to prevent infection underway, including a vaccination campaign, the overall economy
showed signs of a recovery. However, the social developments surrounding COVID-19 still hasa significant impact on the economic situation in Japan and overseas. In addition, the impactof the shortage of semiconductors on the supply chain is increasing and weighing on economicactivity. The severity of the impact differed depending on the industrial sector.
In 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 the COVID-19 pandemic varied, with some areas
more affected than others and the semiconductor shortage leading to product procurement
delays. However, the ICT market as a whole has been strong.
In the enterprise market, companies maintained a high level of investment in workstyleinnovation, including the introduction of teleworking in the wake of measures to prevent COVID19 infection. Companies actively invested in new workstyles using cutting-edge technologies
such as cloud computing, artificial intelligence (AI), Internet of Things (IoT), robotic process
automation (RPA) and other digital transformation (DX) technologies, for the new normal
caused by the COVID-19 pandemic. Among telecom carriers, capital investment was robust in
migration to the fifth generation (5G) cellular networks and improvement in communicationquality. Their 5G investments started, including the installation of base stations. For nationaland local governments and public interest-related organizations, the investment in therealization of the GIGA school initiative which was concentrated in the previous fiscal year hassettled. However, a recovery of investments in the transportation and traffic sector was seen,
and the system investment for the sophistication of urban infrastructure such as firefighting,disaster preparedness, broadcasting, video transmission and community antenna television(CATV) has continued. Workstyle innovation in central and local governments has also becomeapparent.
In this market environment, the NESIC Group took positive actions in the main businessdomains we focus on, workstyle innovation based on DX technologies and infrastructuredevelopment for telecom carriers for 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 a wave of technological innovation as an opportunity for business expansion and arefocusing on a shift to a new business model and business creation based on digital and 5Gcommunication.
Following this concept, in the workstyle innovation business we started in 2007, our goal
will be to implement new workstyles that inspire innovation ahead of the times to provide avariety of innovative workstyle solutions based on our achievements in our own practices. We
have been actively using DX technologies for that purpose. Since October 2019, we havedownsized our head office, and have been distributing staff across satellite offices near Tokyo,
within 30 minutes of their homes as part of this initiative. We have been carrying out business
operations centered on telecommuting using this distributed system and technology to prevent
COVID-19 infection. Leveraging our expertise in new ways of working based on our own

practices, we aim to establish our position as our customers' strategic partner by proposing
solutions and we have actively responded to our customers' needs for new ways of working
that use DX technology and introduce teleworking. In addition, we have been utilizing DX
technologies and co-creation with our partners to accelerate the development of solutions forworkstyles in the new normal that feature increased efficiency and creativity. We have also
started a demonstration hybrid work experiment to enable us to leverage both "real" work
environments in the office and "virtual" work environments that are remote or online. For the5G business, we have strengthened our relationships with the telecom carriers that are ourstrategic partners to build closer ties with them. In November 2020, we established the BasicTechnology Development Center to cultivate human resources, evaluate and verify newtechnologies and create new services. It obtained a license for a local 5G experimental radiostation. We bolstered our infrastructure in preparation for the future full-scale investment in 5G
technologies. We will continue to accelerate the development of our business, taking
advantage of our strengths in building infrastructure, such as 5G base stations and core
networks, and in digital services for enterprises.
As a result, the Group posted the following consolidated results for the first half for the
fiscal year under review:

Net sales
Operating income
Ordinary income
Net income attributableto owners of the parent＜Reference＞
Orders received¥140,961 million¥7,621 million¥7,889 million¥4,703 million

6.8% decrease year on year
13.2% increase year on year
16.4% increase year on year
18.6% increase year on year

¥165,922 million

6.7%

decrease year on year

Net sales decreased 6.8% year on year, to ¥140,961 million. The decrease was due to adecline in sales related to mega solar and GIGA school projects, which significantly
contributed in the previous year, as well as delays in product procurement due to thesemiconductor shortage. However, sales rose in our main businesses including ICT services
related to workstyle innovation based on DX technologies and infrastructure development for
telecom carriers. Orders received were ¥165,922 million, we were able to confine the decline
to 6.7% as the year-on-year comparison. The decrease that was a reaction to theconcentration of GIGA school projects in the previous fiscal year was almost recovered mainlyby the expansion of businesses such as the DX and workstyle innovation fields andinfrastructure development for telecom carriers.
Despite the impact of the decrease in net sales and increase in selling, general andadministrative expenses associated with the reinforcement of resources related to the creationof new businesses for future growth, profit increased reflecting business model innovation
moving forward from network systems integration based on hardware products to the provisionof solution services using DX technologies focused on solving customer issues, which
increased our businesses greater added value and higher profitability, while there was also apositive impact from the continued thorough measures to improve profitability throughresource efficiency improvement and tight project management.
Operating income rose 13.2% year on year to ¥7,621 million, ordinary income
increased 16.4% to ¥7,889 million and net income attributable to owners of the parent

increased 18.6% to ¥4,703 million, and we achieved record-high first half income figures.

Operating results by business segment were as follows:（Million yen）

Net sales by business segment
DigitalSolutionsNetworkInfrastructures

Engineering& SupportServicesOtherTotal

1H Fiscal 2022.3

52,39442,75942,2983,508

140,961

1H Fiscal 2021.3
Increase or (decrease)
Ratio ofincrease/(decrease) (%)

56,71238,08351,551

4,858

151,205(4,318)4,676(9,252)(1,349)(10,244)

(7.6)

12.3

(17.9)(27.8)(6.8)

Reference: Orders received by business segment
DigitalSolutions（Million yen）

NetworkInfrastructures

Engineering& Support
Services

Other

Total

1H Fiscal 2022.3

62,164

49,632

51,872

2,252

165,922

1H Fiscal 2021.3

71,26047,57754,331

4,721

177,890

Increase or (decrease)
Ratio ofincrease/(decrease) (%)(9,096)2,054(2,458)(2,468)(11,968)(12.8)

4.3(4.5)(52.3)(6.7)

1. Digital Solutions businessAlthough there was an expansion of the ICT services related to workstyle innovation
based on DX technologies that is our focus, net sales decreased 7.6% year on year to¥52,394 million reflecting the removal of a group company which had been consolidated
until the first quarter of the previous year, from consolidation, and the impact of postponedsales associated with the shift to a service-providing business model.
2. Network Infrastructures businessNet sales rose 12.3% year on year, to ¥42,759 million, reflecting the expansion of bothareas for the social and public infrastructure and for telecom carriers.
3. Engineering & Support Services businessNet sales declined 17.9% year on year to ¥42,298 million due to decreased net sales
related to mega solar and GIGA school projects and the impact of the semiconductor
shortage.

<Outline of Business Segments>
Business Segment

Digital Solutions

Network Infrastructures
businessEngineering & SupportServices business

OthersDescriptions of Main Businesses
System integration related to ICT platform and outsourcing/cloudservices for business of enterprises and other customers and provisionof solutions/services that are helpful for customers’ business
transformation by using cutting-edge/digital technologies , and contact
center services
Provision of system integration/services related to network
infrastructures of a public nature with the required high reliability, andthe development/manufacture and sales of network equipment, andprovide system integration for telecom carriers, central and local
governments and social infrastructures service providers.
Construction business in Japan and abroad, provision of support
services such as maintenance and operations/monitoring related to ICT
systems/services provided by the Company and operations ofcompany-wide service infrastructures, in addition to technical support
using these.
Sales of purchased equipment(2) Outlook for the Fiscal Year Ending March 31, 2022
In our business domain a solid business environment is expected mainly in our areas of focus,
such as demand in DX/workstyle innovation-related fields centered on teleworking and capital
investment for 5G, however, there are some uncertain factors such as the impact of COVID-19
and the semiconductor shortage.
In light of the environment described above, we have not changed the consolidated financial
forecast for the fiscal year ending March 31, 2022.
Net sales
Operating income
Ordinary income
Net income attributableto owners of the parent¥320 billion¥26 billion¥26 billion¥16 billion

5.6% decrease year on year
1.7% increase year on year
2.0% increase year on year
1.6% increase year on year