4. Business Results(1) Business Results for the Fiscal Year Ended March 31, 2022
During the fiscal year ended March 31, 2022 (the period from April 1, 2021 to March 31, 2022),
the outlook for the Japanese economy was still uncertain. Although there were continuing signs ofa recovery on the whole, there were differences between strong and weak sectors. The COVID-19
pandemic continued to greatly impact the economy in Japan and overseas. While a wide array of
infection control measures were implemented and vaccination was accelerated to mitigate thepandemic, new variants have spread. In addition, shortages of semiconductors and various
materials had an increasing impact on the supply chain. The global situation is increasingly
uncertain as the Russia-Ukraine situation deteriorates.
Given these economic conditions, there was a strong drive for investment as a whole in thebusiness domain where NEC Networks and System Integration Corporation (hereinafter "NESIC")
operates. Meanwhile, shortages of semiconductors and materials delayed product procurement insome areas in recent periods.
There was continuously brisk demand for workstyle innovation in the enterprise market triggeredby COVID-19 control measures including teleworking. At the same time there was a shift ofinvestment destinations to "new normal" workstyles using cutting-edge technologies such as cloudcomputing, artificial intelligence (AI), Internet of Things (IoT), robotic process automation (RPA)
and other digital transformation (DX)1 technologies. Among telecom carriers, capital investment
was robust in the migration to fifth generation (5G) cellular networks and the improvement ofcommunication quality. Their 5G-related investments started. For national and local governments
and public interest-related organizations, the investment in the realization of the GIGA school
initiative which was concentrated in the previous fiscal year has settled. However, a recovery ofinvestments in the transportation and traffic sector, such as roads and airports, was seen, and thesystem investment for the sophistication of urban infrastructure such as firefighting, disasterprevention, video transmission and community antenna television (CATV) has continued.
Workstyle innovation in central and local governments has also become apparent. Outside Japan,
circumstances remained uncertain. Due to measures and regulations combating COVID-19 andthe political situations in some regions, investment plans and projects were postponed or delayed.
In this market environment, amid the reaction to the GIGA school-related special demand which
greatly contributed to the results in the previous fiscal year, the NESIC Group was adverselyimpacted by the shortages of semiconductors and materials. This disrupted the procurement ofproducts and materials necessary for systems integration and construction, resulting in a delay inrecording sales. In Myanmar, construction was delayed and material procurement costs rose dueto political instability. Meanwhile, we took positive actions in the main business domains we focus
on, such as workstyle innovation based on DX technologies and infrastructure development for
telecom carriers for 5G services, with a view towards continuous business growth.
In the Medium-Term Management Plan announced in May 2019, Beyond Borders 2021, weaimed to be a “communication services orchestrator” that would produce new value for society
using our strengths and in collaboration with our partners. We saw the resolution of social issues
and the wave of technological innovation as opportunities to expand business and focused on atransition to a new business model and the creation of new business towards the digital and 5Gera.
In the workstyle innovation business we started in 2007, our goal will be to implement newworkstyles that inspire innovation ahead of the times to provide a variety of innovative workstylesolutions based on our achievements in our own practices. We have been actively using DX
technologies for that purpose. In October 2019, we downsized our head office and began
distributed work practices utilizing teleworking and satellite offices. Proposals leveraging thissystem and our strengths in technologies and expertise enabled us to step up our efforts to serve
enterprises as well as national and local governments to answer their workstyle innovation needs.
－1 －In addition, we have been utilizing co-creation with our partners to accelerate the development ofsolutions for workstyles in the new normal that feature increased efficiency and creativity. We havealso 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. NESIC has
been recognized as a DX certified operator by the Ministry of Economy, Trade and Industry's DX
Certification initiative in recognition of its companywide action to acceleration of DX through theactivities mentioned above.
In the 5G business, we worked to build closer strategic partnerships with telecom carriers. InNovember 2020, we established the Basic Technology Development Center as a place to cultivate
human resources, to evaluate and verify new technologies and to create new services. It obtaineda full local 5G experimental radio wave transmitter license. Using the facility, we furtheraccelerated demonstration trials with a view toward commercialization to accelerate the creation ofservices for workstyle innovation and the development of pleasant and fulfilling communities using
local 5G technologies. In addition, we accelerated preparation for the future full-scale investment in
5G technologies. For example, we constructed new partnerships related to 5G technologies toincrease our ability to provide services. We will continue to accelerate our business development,
taking advantage of our strengths in building infrastructure, such as base stations in the 5G areaand core networks, and digital services for enterprises.
As a result, the Group posted the following consolidated results for the fiscal year under review:

Net sales¥310,334 million 8.5% decrease year on year

Operating income¥23,181 million 9.3% decrease year on year

Ordinary income¥23,550 million 7.6% decrease year on year

Net income attributable¥15,021 million 4.6% decrease year on year

to owners of the parent＜Reference＞
Orders received¥336,759 million 0.0% decrease year on year

Net sales decreased 8.5% year on year, to ¥310,334 million. Sales related to GIGA school
projects and mega solar projects tumbled after their significant contribution in the previous year
and another decrease in sales was due to delays in product procurement because of thesemiconductor and materials shortages. On the other hand, sales rose in information andcommunication technology (ICT) services related to workstyle innovation based on DX
technologies and infrastructure development for telecom carriers. Orders received were ¥336,759
million yen, almost unchanged from the previous fiscal year. Orders in areas related to DX/workstyle innovation and those from telecom carriers increased and we actively worked in thetransportation, traffic and other sectors where investments were sluggish in the previous fiscalyear. This compensated for a major reactionary decline in orders related to GIGA school projects.
Operating income was down 9.3% year on year to ¥23,181 million, ordinary income down 7.6%
to ¥23,550 million and net income attributable to owners of the parent down 4.6% to ¥15,021
million. These figures were impacted by shortages of semiconductors and materials and theposting of losses due to the stagnation of a project due to the political unrest in Myanmar. On theother hand, while increasing our resources for new business creation with the goal of future
growth, we made continued progress increasing the strength of our business through the shift ofthe business model from systems integration based on hardware products to providing higher
value-added solutions using DX technologies and through rigid cost-cutting measures including
improved resource efficiency and stricter project management.
The fiscal year under review was the final fiscal year of the medium-term management plan－2 －announced in 2019. It set targets of ¥310,000 million in net sales, ¥20,000 million in operating
profit, 6.5% in operating profit margin and higher than 10% in return on equity (ROE) for the fiscal
year ended March 31, 2022. The results surpassed all of these targets.
Operating results by business segment were as follows:（Million yen）

Net sales by business segment
Engineering &DigitalNetworkSolutions

Infrastructures

Support Services

OtherTotal

business

Fiscal 2022.3

110,344

96,426

98,116

5,446

310,334

Fiscal 2021.3

125,960

89,232

114,089

9,827

339,109

Increase or (decrease)(15,615)

7,193(15,972)(4,380)(28,774)

Ratio ofincrease/(decrease) (%)(12.4)

8.1(14.0)(44.6)(8.5)（Million yen）

Reference: Orders received by business segment
Engineering &DigitalNetwork

Solutions

Infrastructures

Support Services

OtherTotal

business

Fiscal 2022.3

121,729

100,889

109,927

4,213

336,759

Fiscal 2021.3

128,301

95,338103,718

9,518

336,877

Increase or (decrease)(6,572)

5,551

6,208

(5,305)(118)

Ratio ofincrease/(decrease) (%)

(5.1)

5.8

6.0

(55.7)(0.0)

1. Digital Solutions businessAlthough there was an expansion of ICT services related to workstyle innovation based on DX
technologies that is our focus, net sales decreased 12.4% year on year to ¥110,344 million reflecting thedeconsolidation of a group company which had been consolidated until the first quarter of the previous
year in addition to the impact of decreased net sales of a consolidated subsidiary related to GIGA school
projects.
2. Network Infrastructures businessNet sales rose 8.1% year on year to ¥96,426 million, reflecting the considerable expansion of sales fortelecom carriers and the growth of the social and public infrastructure sector despite the impact ofdelayed product procurement due to the shortages of semiconductors and materials.
3. Engineering & Support Services businessNet sales declined 14.0% year on year to ¥98,116 million due to decreased net sales related to mega
solar and GIGA school projects and the impact of delayed product procurement due to thesemiconductor and materials shortages although the transportation and traffic sector increased.

－3 －<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 other

Digital 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 public

Infrastructuresnature 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(2) Outlook for the Fiscal Year Ending March 31, 2023
We forecast that consolidated results in the fiscal year ending March 31, 2023 (April 1, 2022 to March31, 2023) will be as shown below.

Net sales¥330 billion

6.3% increase year on year

Operating income¥26.0 billion

12.2% increase year on year

Ordinary income¥26.0 billion

10.4% increase year on year

Net income attributable¥15.3 billion

1.9% increase year on year

to owners of the parent
For the fiscal year ending March 31, 2023, we foresee that demand will stay strong in the ICT market.
On the other hand, uncertainties will linger due to the impact of COVID-19 and the shortages ofsemiconductors and other materials, the deterioration of global conditions, and other issues. In theenterprise market, demand for "new normal" workstyles based on digital technologies will continue
to grow. This trend is expected to spread to the public sector. It is forecast that telecom carriers will
make buoyant capital investments in full-scale 5G services. National and local governments andpublic interest-related organizations will invest solidly to increase the sophistication of urban
infrastructure for purposes including disaster prevention. The DX of community development andother initiatives will gradually gain momentum.
In light of the business environment described above, we have formulated the consolidated
financial forecast for the fiscal year ending March 31, 2023. According to the forecast, we will－4 －increase our growth power and earnings capability to increase net sales and income by accelerating
efforts in the domains of DX and 5G and other next-generation networks, creating new markets thatcombine these domains and bolstering value based on consulting to be provided to customers amid
concerns about the deterioration of foreign exchange rates, distribution and business confidence
resulting from future changes in global circumstances.

(3) Profit Distribution Policy and Dividends for the Fiscal Year Ended March 2022
and the Fiscal Year Ending March 2023
We view the distribution of a reasonable share of profits to shareholders as one of our top
management priorities, and make every effort to reinforce the Company’s managementfoundation, strengthen its financial standing, and increase its earning capacity. While we also
place a great deal of importance on increasing our corporate value through growth byaccelerating strategic investment such as M&A, strengthening the business foundation andcreating new businesses that will allow us to expand our future areas of focus, we strive tocontinually meet the expectations of our shareholders in our profit distribution.
Regarding the dividends per share for the fiscal year ended March 31, 2022, from theperspective above, we will increase the year-end dividend per share ¥5.00 from the previous
forecast to ¥24.00 to increase shareholder returns in view of equity capital being higher thanforecast and good progress in the increase of the strength of the business. This combined with
the interim dividend already paid brings our annual dividend to ¥43.00 per share, which is anincrease of ¥8.00 from the previous year.
For the fiscal year ending March 31, 2023, we will pay more dividends per share: an annual
dividend of ¥46.00 a share, an interim dividend of ¥23.00 and a year-end dividend of ¥23.00.

Dividends per share (¥)
InterimYear end

Total

FY March 2022

19.00

24.00

43.00

FY March 2023 (Forecast)

23.00

23.00

46.00

－5 －