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    6701   JP3733000008

NEC CORPORATION

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11/09/2021 | 10:05pm EST

Integrated2021Report

(Financials)

Year ended March 31, 2021

Contents

002 Management's Discussion and Analysis

034 Consolidated Statements of Financial Position

036 Consolidated Statements of Profit or Loss

037 Consolidated Statements of Comprehensive Income

038 Consolidated Statements of Changes in Equity

039 Consolidated Statements of Cash Flows

041 Notes to Consolidated Financial Statements

100 Independent Auditor's Report

Note: As stated in the July 21, 2020 announcement, "NEC to Revise Operating Segments", starting from the first quarter of the consolidated financial results for the fiscal year ended March 31, 2021, the Company announced operating results using revised segments. Figures for the corresponding period of the previous fiscal year have been restated to conform to the new segments.

002

Management's Discussion and Analysis

Year Ended March 31, 2021 (Fiscal 2021)

Compared With the Year Ended March 31, 2020 (Fiscal 2020)

This section contains forward-looking statements concerning the NEC Group's analysis of financial condition, business results and cash flows. These statements are based on the judgment of the NEC Group as of March 31, 2021. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimated.

1. Business Overview and Key Business Drivers

The NEC Group implemented a variety of innovative changes that included a "Reform of profit structure," an "Achievement of growth" and a "Restructuring of execution capabilities" as outlined in the "Mid-term Management Plan 2020" announced in January 2018.

In the following sections, NEC reports the business results in five main segments: Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global.

Segment information is included in "Notes to Consolidated Financial Statements - Note 6. Segment Information".

2. Analysis of Fiscal 2021 Business Results

The world economy and the Japanese economy during the fiscal year ended March 31, 2021 both deteriorated significantly during the first quarter due to the effects of restrictions on personal movement and suspension of sales and production activities due to the global pandemic of the novel coronavirus (COVID-19) infections. Although the economy picked up slightly after the second quarter of the fiscal year ended March 31, 2021, it still remained slow.

Under these business conditions, the NEC Group worked on measures that included the "Reform of profit structure", the "Achievement of growth" and the "Restructuring of execution capabilities", as outlined in the "Mid-term Management Plan 2020" announced in January 2018.

In terms of the "Reform of profit structure", the NEC Group curbed unprofitable projects and low-profit projects that have traditionally been a factor in reducing profits, in addition to deconsolidation by selling a majority of the shares of NEC Display Solutions, Ltd., a subsidiary of the Company. Moreover, NEC Energy Solutions, Inc, a U.S.-based subsidiary responsible for the electricity storage system business, has promoted business portfolio reforms such as the reduction of business through the suspension of new orders, and as part of minimizing the impact of the COVID-19 infections on business performance, the NEC Group is reviewing and thoroughly reducing costs, actively cultivating new business opportunities under the "new normal", promoting asset reduction, such as the sale of land at the Sagamihara Plant and the sale of shares, and responding quickly and flexibly to rapidly changing business environments, while enhancing its ability to operate business in a stable manner.

As for the "Achievement of growth," the NEC Group has been promoting the integration of business operations of Northgate Public Services Limited and KMD Holding ApS into the NEC Group, which were acquired after 2018, and further acquisitions by both companies have strengthened the NEC Group's global digital government business. Furthermore, in December 2020, the NEC Group entered the digital finance field globally through the acquisition of Avaloq Group AG, a major Swiss financial software company.

NEC Integrated Report 2021

003

In the 5th generation mobile communication system (5G) domain, the provision of base stations to telecommunications carriers is in full swing, and in addition, strategic collaboration with various partners is being promoted. In June 2020, the Company agreed with Rakuten Mobile, Inc. to jointly develop a standalone 5G core network ranging from RAN to core network based on 5G communication technology. Furthermore, the Company agreed with Nippon Telegraph and Telephone Corporation ("NTT Corporation") on a capital and business alliance aimed at joint research and development of ICT products utilizing innovative optical and wireless technologies and global expansion, while also strengthening the medium to long-term business promotion system. In addition, in November 2020, the NEC Group established an Open RAN business development base in the United Kingdom and is participating in the UK Government-led demonstration project "NeutrORAN" utilizing 5G Open RAN, while also expanding activities for international growth.

Moreover, as the COVID-19 infections continued to spread worldwide, the NEC Group has worked on social value creation through offering business solutions utilizing its digital technologies such as biometrics and AI. For example, from July 2020, five major airports in Hawaii, U.S.A., began introducing infectious disease control solutions from the NEC Group that combine biometrics and video analysis technologies with thermal cameras in order to realize safe and secure travel for tourists and business travelers and safety measures for local residents.

Regarding the "Restructuring of execution capabilities", the NEC Group took measures to create customer value by utilizing the latest technology and worked on reforms to maximize the power of its employees. As part of creating customer value utilizing the latest technology, NEC utilized a new research and development mechanism called "co-creation R&D" in which issues and technologies are brought together by industry, government and academia for research and development. Furthermore, in September 2020, BIRD INITIATIVE, Inc. was established by six companies in different industries, including NEC, in order to carry out new businesses such as research and development related to digital technology, contract research, consulting, and investment. Next, as a reform to maximize the power of employees, the "NEC Way" was revised in April 2020, in order to clarify the significance of the company's existence and show the connection between the company's positions and each person's values and actions as an axis that all NEC Group employees should share. In July 2020, the NEC Group started a digital office project to support new ways of working with digital transformation (DX), and the Company has launched a variety of system demonstration experiments using digital technologies, such as biometric authentication and video analytics, at NEC headquarters. In addition, in order for employees with diverse values and lifestyles to continue to grow and work with peace of mind, in October 2020, the Company established NEC Life Career, Ltd., to support the independent career development of employees and ensure the placement of the right people in the right places at the right time.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

NEC Corporation published this content on 10 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2021 03:04:09 UTC.


© Publicnow 2021
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Sales 2022 3 035 B 26 332 M 26 332 M
Net income 2022 78 430 M 681 M 681 M
Net Debt 2022 107 B 928 M 928 M
P/E ratio 2022 15,1x
Yield 2022 2,28%
Capitalization 1 217 B 10 563 M 10 556 M
EV / Sales 2022 0,44x
EV / Sales 2023 0,38x
Nbr of Employees 114 714
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Mean consensus OUTPERFORM
Number of Analysts 14
Last Close Price 4 465,00 JPY
Average target price 6 810,71 JPY
Spread / Average Target 52,5%
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Managers and Directors
Takayuki Morita President, CEO & Representative Director
Nobuhiro Endo Deputy General Manager-Mobile Network Business
Motoo Nishihara Manager-Cloud System Research Laboratories
Hiroshi Kodama Chief Information Officer
Shinobu Obata Chief Legal & Compliance Officer
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