Oki Electric Industry : Report 2022.

The people of OKI, true to the company's "enterprising spirit," are committed to creating superior network solutions and providing excellent information and communications services globally to meet the diversified needs of communities worldwide in the information age.

OKI REPORT 2022

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VALUE CREATION STORY

OKI GROUP VALUES

The "OKI Group Action Principles" we enacted in September 2016 give formal expression to values shared by all OKI Group executives and employees. Amid large changes in the business environment, we seek to embed these principles as extensively as we can into our practices with the commitments expressed in the "OKI Group Charter of Corporate Conduct" and the "OKI Group Code of Conduct" as the cornerstones of our corporate activities. We seek to realize our corporate philosophy by striving to embody our vision.

Corporate Philosophy

The people of OKI, true to the company's "enterprising spirit," are committed to creating superior network solutions and providing excellent information and communications services globally to meet the diversified needs of communities worldwide in the information age.

Vision

The OKI Group helps create a safe and convenient infrastructure for customers and society as a whole through the key Japanese concepts of "Mono-zukuri" and "Koto-zukuri."

*Mono-zukuri: manufacturing

*Koto-zukuri: creation of solutions and services

Action Principles
Act with integrity
Challenge and drive change
Perform with speed and agility		Corporate
Be passionate, and determined to succeed
Proactively encourage excellence as "Team OKI"		Philosophy
OKI Group Charter of Corporate Conduct/		Vision
OKI Group Code of Conduct
OKI Group Charter of Corporate Conduct
CSR activities OKI Group must accomplish based
on its corporate philosophy		Action Principles
OKI Group Code of Conduct
Codes of conduct executives and employees
must conform to in accordance to OKI Group
Charter of Corporate Conduct	Charter of Corporate Conduct/
		Code of Conduct

CONTENTS

VALUE CREATION STORY

1	OKI Group Values	5	The OKI Group's Value Creation Process
3	The Path to Value Creation	7	Financial and Non-Financial Highlights

MANAGEMENT MESSAGE

9 Message from the CEO

15 Message from the CFO

11 Message from the COO

VALUE CREATION STRATEGY

17	Progress of Medium-Term Business Plan	27	Overview of Operations
	2022 and the Way Forward		27	At a Glance
19	Innovation Management System
	29	Solution Systems Business
21	Initiatives for Resolving Social Issues		31	Components & Platforms Business
25	Technology Strategy	33	DX Strategy

VALUE CREATION FOUNDATION

34	Sustainability Initiatives of the OKI Group	47	Corporate Governance
37	Human Resource Management		51 A Conversation between the COO
41	Consideration for the Environment		and an Outside Director
53	Risk Management/Compliance
45	Quality- and Production-Related Initiatives
54	Information Security
46	Supply Chain Initiatives
55	Management
DATA SECTION
57	ESG Data	63	Consolidated Statements of Changes in Net Assets
59	Consolidated Balance Sheets	64	Consolidated Statements of Cash Flows
61	Consolidated Statements of Income	65	Notes to Consolidated Financial Statements

62 Consolidated Statements of Comprehensive Income

93 Investor Information

94 Company Profile

Editorial Policy

OKI Report 2022 has been created with the aim of deepening the understanding of investors and other stakeholders regarding the OKI Group's efforts aimed at sustainable growth. More detailed information is reported on our website, so please see that as well. Please note that in the editing of this report, we referred to the "International Integrated Reporting Framework" of the International Integrated Reporting Council (IIRC), and "Guidance for Collaborative Value Creation" from the Ministry of Economy, Trade and Industry.

	Targeted Organizations		Targeted Period
Oki Electric Industry Co., Ltd. and its domestic and international consoli-	FY2021 (April 1, 2021 to March 31, 2022)
dated subsidiaries	Some portions include information pertaining to April 2022 and after.
Note that when the scope differs from the above, this has been individually
mentioned.

Forward-looking Statements

This report contains forward-looking statements concerning the OKI Group's future plans, financial targets, technologies, products, services and perfor- mance. These forward-looking statements represent assumptions and beliefs based on data and calculation methods currently available to OKI as of the date of publication, and therefore they are not a guarantee of future accuracy. Also, these forward-looking statements, which include our analysis and forecasts, are not a guarantee of future performance or outcomes. These statements involve business risks and uncertainties. Due to various factors, actual results may differ from those discussed in this document.

Information Disclosure System

Financial Information		Non-Financial Information

• OKI Report  https://www.oki.com/en/ir/data/ar/news.html

• Website: Investor Relations	• Website: Sustainability
https://www.oki.com/en/ir/	https://www.oki.com/en/sustainability/
• Financial Results	• Corporate Governance Report
https://www.oki.com/en/ir/data/results/	https://www.oki.com/en/ir/corporate/governance/

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VALUE CREATION STORY

THE PATH TO VALUE CREATION

For over 140 years since its founding, OKI has been delivering a succession of advanced products and services underpinned by the Company's "enterprising spirit" to meet the needs of society.We will continue our efforts to realize a comfortable and affluent tomorrow for everyone by creating values that contribute to the resolution of social issues.

Delivering OK! to your life.

For details on OKI's history, please visit the websites below.

• Historyhttps://www.oki.com/en/profile/history/
• The 120-Year History of Oki Electric https://www.oki.com/en/profile/history/120y.html
• 130th Anniversary Column: OKI and the Changing Timeshttps://www.oki.com/en/130column/

1881 (14th year, Meiji Era) Kibataro Oki established Meikosha, Ltd.

Japan's postal, telegraph, and telephone services all started in the early Meiji era, when Kibataro Oki founded Meikosha, Ltd., and one by one evolved to become our present information communication system. In the early days of telecommunications, Kibataro recognized the future of telegraphs

1881 Meikosha, Ltd. established by Kibataro Oki. Japan's first domestically produced telephone

developed and displayed at the National Industrial Exhibition

1896 Japan's first domestically produced in-line multiple telephone switchboard delivered to

Naniwacho Branch Telephone Office in Tokyo and put into operation

1902 First Japan-made magnetic parallel multiple telephone switchboard delivered to Nagasaki

Telephone Office

1918 100% Japan-madecommon-battery telephone switchboard delivered to Takanawa Telephone

Office in Tokyo

1930 First in-houseAEI-type automatic exchange delivered to Nakano Telephone Office in Tokyo

1950 Mass production of the Type-4 telephone -a symbol of Japan's reconstruction-began

1953 Page printing telegram "Teletypewriter" released

1961 Computer equipped with first Japan-made core memory released

1962 Order received from Honduras to construct a telecommunications network

1963 Mass production of Type-600 telephone began. Shipped a total of 3.9 million such phones by 1971

1969 "OKITAC®-4300" minicomputer released

1971 D10 electronic telephone switchboard delivered

to Nippon Telegraph and Telephone Public Corporation

1975 Agreement concluded with US-based Bell Laboratories to jointly develop a cellular car phone

1976 "OKIFAX 7100" digital thermal facsimile machine released

Teletypewriter

1980 "if800 series" of personal computers released

1981 World's first LED printer developed

1982 World's first cash-recycling ATMs, the "AT-100 series," released

1985 Integrated production of car/mobile phones began by Oki Telecom Group of Oki America Inc.

1986 Japanese-English automatic translation system "PENSEE" released

1996 Computer-Telephony Integration System "CTstage®" released

Japan's first VoIP system released

1998 ISO 14001 certification acquired for all OKI production bases

printer

2000 World's first millimeter wave optical fiber wireless transmission system for ITS road-vehicle

communication systems successfully developed

2002 EMS business began

2003 Next-generation Aeronautical Telecommunication Network (ATN) router delivered to

the United States Federal Aviation Administration (FAA)

2005 Real-time earthquake disaster prevention system developed

2006 World's first dissimilar-materialthin-film-bonding technology, "epifilm bonding,"

successfully mass-produced at the practical level

2008 "COREFIDO" series of printers and Multifunction Printers (MFPs) released for the Japanese market with

the industry's first free five-year warranty

2009 "ATM-Recycler G7," a cash-recycling ATM capable of handling the paper money of multiple

countries, developed for the worldwide market

2010 Participated in the United Nations Global Compact

2014 "River Monitoring System" that uses a 920 MHz band multi-hop wireless network developed

2019 Expressed support for the TCFD

AI Edge Computer "AE2100" released

"AI Edge Robot," a service robot that helps resolve labor shortages, developed

2020 "Hygienic Touch Panel™," which enables non-contact screen operation, developed

2021 "Innovation Strategy" until 2030 announced

2022 Honjo Plant H1 building completed as Japan's first "ZEB" certified large-scale production facility

New DX Strategy announced

and telephones and worked hard to develop them. Four years after the phone was brought in from the United States, he succeeded in developing Japan's first domestic telephone.

The "enterprising spirit" of Kibataro, who paved the way with his own technology and creativity, has been passed down inside the company and makes OKI what it is today.

Promotional poster for Meikosha, Ltd.

Type-600 telephone

OKITAC-4300

VoIP system

Cash-recycling

ATM

ATM-
Recycler G7	AI Edge Computer
	AE2100

AI Edge Robot

COREFIDO

Magnetic parallel multiple telephone switchboard

An early EMS factory

Hygienic Touch Panel

Values provided by OKI

Historical background and social issues

1881-

Contributing to the development of domestic telecommunications networks as a pioneer of the times

Dawn of industrial modernization Reconstruction after the Great Kanto earthquake

1950-

Working hard on post-war telecommunications network reconstruction Participating in a joint project of the public and

private sector to develop a domestically produced computer to lead the times as a comprehensive telecommunications manufacturer

Post-war reconstruction

Period of high economic growth

1980-

Celebrating the 100th anniversary, providing systems and products worldwide necessary for an advanced information society

Development of globalization

Spread of the Internet and the advancement of information society

2000-

Developing products and services that respond to needs based on our original technology in order to support social infrastructure in a broad sense

Changes in the social order and increasingly diverse values and needs

Increased awareness of the environment, human rights, etc.

2010-

Creating products that respond to new social needs, including disaster prevention and reduction

as well as non-contact/non-face-to-face products

One natural disaster after another and various social issues becoming apparent

Shift from MDGs* to SDGs

*MDGs (Millennium Development Goals): development goals for the year 2015 that were established to help resolve poverty problems and other issues in developing countries.

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VALUE CREATION STORY

THE OKI GROUP'S VALUE CREATION PROCESS

The OKI Group is utilizing our three strengths, "technological capabilities," "customer base," and "installed base*" of terminals in edge domains, as we engage in efforts to solve social issues with both Mono-zukuri and Koto-zukuri. Moving towards achieving SDGs in 2030 and the 150th anniversary of OKI's founding the following year, we aim for sustainable growth and the realization of a sustainable society.

*Installed base: A track record of providing device groups at edge domains, and solutions centered on those device groups

Management Resources		Business Model

Value Provided

▶P15-16

Financial capital

Total assets

• 369.2 billion

Manufacturing capital

Materiality

Creating social value

• Products and services that help solve social issues

Aging

Natural

Transportation

Environmental

Infrastructure

Disasters

Issues

Issues

Labor

Labor

Infectious

Shortages

Productivity

Diseases

Business Activities

Solution Systems

Business

P29

Sustainable growth through solving social issues

Capital expenditures

• 22.3 billion

▶P25-26

Intellectual capital

R&D expenses

• 11.5 billion

▶P37-40

Human capital

No. of consolidated employees

14,850

Installed base

INPUT

INPUT

Customer

base

Source of

value

Technological

capabilities

Components &	150th anniversary of company founding in 2031
Platforms Business

Delivering OK! to your life.

Value creation

P31(FY2021)

Vision

The OKI Group helps create a safe and convenient infrastructure for customers and society as a whole through the key Japanese concepts of "Mono-zukuri" and "Koto-zukuri."

▶P41-44

Natural capital

Energy consumption

425,000 MWh

Amounts are either for FY2021 or as of March 31, 2022

Acceleration of Changes

• Innovation
• Co-creationefforts
• M&A
• DX Strategy ▶P33

Materiality Strengthening management infrastructure

• Business activities that meet stakeholder expectations

• Business activities built on integrity

• Response to climate change

• HR management

• Strengthen the infrastructure that support Mono-zukuri

Operating		Shareholders'				Environmentally
		ROE		contributing
income		equity ratio
		1.9 %		product net
¥5.9 billion		29.1 %			sales ratio
						31 %
AI technician		Reduction of		Female management ratio
with practical		CO2 from sites
		3.6%(OKI)
skills		(Compared to FY2020)
		5.1%(OKI Group)
310		3.1 %

Corporate governance	P47
Corporate philosophy	P1

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VALUE CREATION STORY

FINANCIAL AND NON-FINANCIAL HIGHLIGHTS

Financial Highlights

Net Sales and Overseas Sales Ratio

	¥352.1billion 15.6%
(Billions of yen)						(%)
600						45
	438.0	441.5	457.2
400		392.9		30
			352.1
	26.8		19.7
200		22.6		15.2	15.6	15
0						0
(Ended March 31)	2018	2019	2020	2021	2022

Net Sales (left scale)

Overseas Sales Ratio (right scale)

Operating Income and Operating Profit Margin

			¥5.9billion	1.7%
(Billions of yen)							(%)
20							6.0
		17.5	16.8
15							4.5
10		4.0	3.7				3.0
		8.9
7.7
			2.3	5.9 1.7
5	1.8				1.5
0							0
(Ended March 31)	2018	2019	2020	2021*	2022

Operating Income (left scale)

Operating Profit Margin (right scale)

Non-Financial Highlights

	E Reduction of CO2 from Sites (Compared to FY2020)			E Environmentally Contributing Product Net Sales Ratio
		FY2021	3.1%				FY2021	31%(¥ 110.3billion)
			42%						50%
		FY2030 target				FY2030 target
		FY2050 target Net zero emissions
We revised our fiscal year 2030 targets in the OKI Environmental Vision	We reestablished a definition for environmental contribution as we aim to
2030/2050 to comply with the science-based targets for reducing greenhouse	create and expand environmentally contributing products, including products
gas emissions that are in line with the Paris Agreement (SBT).	that address climate change, in order to strengthen our environmental
						initiatives through our core business.

▶P41-44 CONSIDERATION FOR THE ENVIRONMENT

Profit Attributable to Owners of Parent and Return on Equity (ROE)	R&D Expenses
			¥2.1billion	1.9%					¥11.5billion
(Billions of yen)							(%)	(Billions of yen)
15			14.1				30	15
10		8.4					20			10.7	10.6	11.2	11.5
					10
		13.7					8.4
	5.9
5						10
	6.0	8.4		(0.8)	2.1			5
0			1.9	0
				(0.8)
-5							-10	0
(Ended March 31)	2018	2019	2020	2021*	2022		(Ended March 31)	2018	2019	2020	2021	2022

Profit Attributable to Owners of Parent (left scale)

ROE (right scale)

1. Employment Rate of Challenged People FY2021 2.44%

Employment rate of challenged people: The aggregate of seven special-subsidiary-applied Group companies in Japan

We are taking initiatives such as providing support during hiring and employment and establishing training systems so that challenged employees can be successful in various workplace environments.

1. Female Management Ratio

As of March 2022

OKI 3.6% OKI Group 5.1%

FY2022 target (OKI) 5%

OKI is taking efforts to develop female employees through workshops and workplace training so that such employees can seek out growth themselves, grow with a workstyle that allows them to maximize their capabilities, and form their own careers.

▶P37-40 HUMAN RESOURCE MANAGEMENT

1. AI Technician with Practical Skills

1. No. of People Who Participated Basic Innovation Training

Capital Expenditures and Depreciation

¥22.3billion ¥11.5billion

(Billions of yen)

25						22.3
20				19.2
15			14.2		16.3
	12.2	11.9	11.8
10	10.3	11.6	11.5

Free Cash Flow

¥(11.7)billion

(Billions of yen)

40
		29.5
20
	5.1	3.6	(11.7)
0	(5.7)

As of March 2022

310

Reached FY2022 target of

300

ahead of the target year

FY2021

8,163

Reached

FY2022 target of

6,000

ahead of the target year

Number of

applications for the "Yume Pro Challenge"

FY2021

254

（FY2020 147）

5
0
(Ended March 31) 2018	2019	2020	2021	2022

Capital Expenditures

Depreciation

Note: The shaded area(s) represent intangible assets

-20
(Ended March 31) 2018	2019	2020	2021	2022

*From the year ended March 31, 2022, overseas subsidiaries that apply IFRS changed how their Software-as-a-Service (SaaS) arrangements are accounted for. As a result, the figure for the year ended March 31, 2021 has been retroactively adjusted to reflect this change.

OKI is establishing a training system for AI technicians through education and practical training based on position and level in order to strengthen our capabilities in AI Edge, a technology of focus. As of March 2022, the number of "AI technicians with practical skills," which is the highest position, reached 300 ahead of the 2022 target fiscal year.

▶P25-26 TECHNOLOGY STRATEGY

In order to realize full participation innovation, OKI is developing human resources through innovation training for all positions as well as building an innovation management system. In fiscal year 2021, the number of people who participated the basic training reached 6,000 ahead of the 2022 target fiscal year. Its effects are evident in the number of applications for the "Yume Pro Challenge" business idea contest.

▶P19-20 INNOVATION MANAGEMENT SYSTEM

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