Mid-term Management Plan

2020
January 30, 2018
NEC Corporation
http://www.nec.com/en/global/ir
Mid-term Management Plan 2020

1. Looking back at the “Mid-term Management Plan

2018” and new Mid-term Management Directions
2. Reform of Profit Structure
3. Achievement of Growth
4. Restructuring of Execution Capabilities
5. Summary
Supplement: Mid-term Plan by Segment

* Net profit refers to net profit attributable to owners of the parent for the same period.
１. Looking Back at the “Mid-term Management Plan
2018” and New Mid-term Management Directions
Transformation into a Social Value Innovator
The “Mid-term Management Plan 2018” aimed for the
“Reorganization of Profit Structure” and “Getting Back on the Track
to Growth” in order to realize the transformation into a
Social Value Innovator

5 © NEC Corporation 2018

Transforming into a Social Value Innovator
Technology Development

NEC the WISE IoT Platform

Cyber Security AI Biometrics IoT & Network
Established Security Operation Center(SOC) Established AI technology brand Established biometric product brand Announced IoT strategy
est. June 2016 est. July 2016 est. November 2017 est. July 2015
■Co-Creation,
■Case studies on social value creation and Collaborative research

Safer Cities Lifeline Industry NEC Future International

Creation Forum
& Public Services Infrastructure Eco-System Sports Events
Tokyo Sumitomo Electric Collaborative research
South Wales Police Stock Exchange, Inc. Industries, Ltd. such as AI
Osaka University, AIST,
The University y of Tokyo

Blockchain mounting
Collaboration by SBI Holdings,
A safe and Efficient and Efficient and SBI BITS, NEC

Secure event secure AI trade fair inspection International

standardization activities
experience review service support with AI FIWARE Foundation as
a platinum member

6 © NEC Corporation 2018

 Achievements and Challenges from the “Mid-term Management Plan 2018”

Cost reduction efforts have progressed mostly on track,

while existing businesses underperformed significantly
Operating profit
（Billions of yen）
Mid-term Management Plan 2018
 Reform underperforming businesses 150.0
Reorganization of profit structure and unprofitable projects
Establish profit structure for generating 5% operating profit ratio  Business process optimization project
 Optimization of development and
manufacturing functions
Status Mostly on track for cost reduction targets 91.4

60.0
 Focus on key businesses
Getting back on the track to - Safety business 41.8
growth - Global carrier network business
- Retail IT service business

FY2017/3 FY2019/3
FY2016/3 Result FY2018/3 MTP
Status Evidently underperformed in existing businesses Result Forecast
Target
* Forecasts and targets as of January 30, 2018
7 © NEC Corporation 2018
Profit structure reorganization plan at time of MTP formulation and current progress

Cost reduction efforts have progressed mostly on track,

while existing businesses underperformed significantly

150.0 （Billions of yen） 2019/3 MTP 2018/3

Target Forecast
(3 years) (2 years)
Structural reform for smart
+24.0 +14.0
+58.6
energy
Mostly on track for
Prevent new unprofitable projects +13.0 +11.0 cost reduction targets

91.4
Back office efficiency +25.0 +14.0
Further reinforce:
・Improvement of fixed costs
Cost/ IT cost efficiency +10.0 +12.0
・Optimization of production system
91.4 Optimization of development and
manufacturing functions +10.0 +5.0
-31.4
Reorganization of profit structure +82.0 +56.0
Evidently underperformed in
Changes in business mix -23.4 -77.4 existing businesses
Impact of suspension from
contract bidding process
-10.0 Difficulty in achieving business growth
60.0
Changes in business mix, etc. -23.4 -87.4

FY2016/3
+58.6 -31.4 FY2018/3 Forecast
Result *Forecasts as of January 30, 2018
8 © NEC Corporation 2018
Mid-term Management Policies
Implement fundamental reform of profit structure, including reduction
of fixed costs, to be able to carry out investments needed to get
back on the track to growth
Reform of profit structure
 SGA (Personnel expense reduction/cost cutting)
 Business structure (Telecom carrier business/ Energy business)
 Production system
Achievement of growth
• Securely capture growth opportunities in Japan market
 Japan • Shift to service business
• Focus on safety business as the growth engine
 Global • Reorganize global structure supporting growth

Restructuring of execution capabilities

 Pursuing the creation of customer value by leveraging the latest technologies

 Restructuring of personnel system to enable employees to maximize their capabilities

9 © NEC Corporation 2018

Business Portfolio Directions

Reform Japan
Sustain Growth
Telecom Carrier Global
Business ICT Service Business
Drive growth by establishing
Transform business model,
Energy Business and create and capture new over-100B-yen scale businesses
growth opportunities
Reform business Japan
structure Social Infrastructure
Business Category
Implement investments to
gain competitive edge and
solidify profit structure
Leader
Japan
Platform Business
Enhance competitiveness
while ensuring optimization Business synergy
（Technologies, Customers, Solutions)

Common platforms for service business

10 © NEC Corporation 2018

Mid-term Management Targets

Achieve 5% profit ratio to be a sustainable company

FY2017/3 FY2018/3 FY2021/3
(Billions of yen)
Results Forecasts Targets

Revenue 2,665.0 2,830.0 3,000.0

Operating profit 41.8 60.0 150.0

(Operating profit ratio) 1.6% 1.8% 5.0%

Net profit 27.3 40.0 90.0

Free cash flows * 99.0 100.0 * 100.0

Return on Equity (ROE) 3% 5% 10%

＊M&A excluded * Forecasts and targets as of January 30, 2018

11 © NEC Corporation 2018

 Mid-term Management Targets

Establish a structure to generate

5% operating profit ratio sustainably
（Billions of yen）
3,000.0
2,665.0 2,830.0
Profit Structural reforms
Personnel expense reduction
＋43.0B yen
＋30.0B yen

+60.0 structure
Cost cutting, business process optimization

5.0%
＋13.0B yen
reform Issues Business improvement +17.0B yen
150.0
International * ＋20.0B yen
Safety business +12.0B yen

2.1％
+90.0 +30.0 Business others +8.0B yen

1.6％
60.0
growth Japan * ＋10.0B yen
41.8
FY2017/3 FY2018/3 FY2021/3
Results Forecasts * Improvement of underperforming businesses is
Targets included in “Structural reforms"

* Forecasts and targets as of January 30, 2018

12 © NEC Corporation 2018
２. Reform of Profit Structure
Enforce reforms in 3 areas, and establish a “globally
competitive profit structure.”

・Personnel expense reduction/cost-cutting

・Telecom carrier business, Energy business

・Reorganization of factories in Japan

14 © NEC Corporation 2018

 Personnel expense reduction/ Cost
SGA cutting
Reduce fixed costs, including personnel expenses, and realize a profit
structure that enables continuous investments for transformation
into a service business
Personnel  Personnel reduction by 3,000 through
expenses structural reforms
-30.0B yen Back office functions, hardware business area

 Fixed property costs

Optimize office floors through flexible work styles, etc.
Costs  IT costs
Accelerate standardization of company-wide IT systems and
-13.0B yen in-house digital transformation
 Marketing costs
Review budget use and reinforce digital marketing

15 © NEC Corporation 2018

 Business Structure Telecom Carrier Business

Strengthen software & services to match market changes

Japan International
Position as key area while
Accelerate shift in skills and
revising strategy and
Software and partnering to adapt to
Growth business structure,
services changes in customer
setting TOMS business as a
investments
core driver

Optimize resources in Withdraw from/ scale-

Improve Network
profitability accordance with down low-profit
infrastructures
revenue scale businesses

16 © NEC Corporation 2018

 Business Structure Telecom Carrier Business

Deploy the network strengths cultivated in the telecom market to other areas
Respond to the diversifying network needs and offer integrated services that cover products from devices and applications

New network business in the IoT/5G era

Software &
Construction, Transportation Police
Partnering
services
Applications &
services
Business applications/ Data ×
Value analysis
・Knowhow across wide-
Proposition ・・・
Added-value services NEC’s total ranging industries
・AI analytics
Optimized network capability ・Biometrics
Network Current Wi-Fi LPWA
・Security
infrastructures main business LTE 5G ×
area
NW
strengths
Telecom Carrier Enterprise Public

Customer Segment

17 © NEC Corporation 2018

 Business Structure Energy Business

From a multi-directional operation approach, focus on energy SI business

Aim for growth under a new management structure
Aim for break-even in FY2019/3 for NEC Energy Solutions

To date（Multi-directional operation） From now on（Focus on energy SI business）

 Revolutionize management with the appointment of
Energy Business

Energy SI business the new CEO

 Realize growth through new financing and alliance
NEC Energy Solutions
schemes
 Capture growth opportunities such as those
Utility ICT business presented by the Electricity system reform in
Japan
 Discontinue in-house development and
Small-scale storage batteries manufacturing, while continuing
（components）business maintenance and support

Electrode business To be Divested

NEC Energy Devices

18 © NEC Corporation 2018

 Reorganization of production in
Production
Japan (NEC Platforms)

Reorganize the global value chain and reorganize factories in Japan

Step1 Step2 Step3

Inter-factory
BU optimization
collaboration
Shift to Global “One Factory”

 Standardize production processes and

NEC Network Products NEW systems for all factories worldwide
integration (April 2011) NEC Platforms
 Production based on the latest factory in
inauguration
(April 2017) Thailand, which makes use of factory IoT
NEC Platforms
and AI
integration (July 2014)
 Maximize efficiency through partial
NEC Nagano, aggregation of 9 factories in Japan
NEC Saitama
 Downsize indirect personnel

19 © NEC Corporation 2018

３. Achievement of Growth
 Net revenue
（Billions of yen）

Japan: Pursue various growth opportunities towards 2020. 3,000.0B

yen
Global: Aim to become a category leader 2,830.0B (+2.0%)
in the safety business yen
890.0B
Inter- yen
national 730.0B
(+6.8%)
yen
・Business growth seizing on
market inflection points
・Business model transformation
2,110.0B
yen
・Focus on to expand the safety Japan 2,100.0B
yen (+0.2%)
business
(aim to realize “NEC Safer Cities”)
・Shift to dedicated operating
structure for global business FY2018/3 FY2021/3
Forecast Target
・Accelerate M&A *(CAGR)
* Forecasts and targets as of January 30, 2018
21 © NEC Corporation 2018
 Business growth seizing on market
Japan inflection points

Realize growth mainly in three areas based on NEC’s

“global-best” technologies Japan growth areas +85.0B yen FY18/3-FY21/3

Society 5.0 Main growth areas International Sports Events

Build safe, secure, and abundant “Safer Cities”

Build public safety, digital government, healthcare, work style transformation, and
other platforms that enable people to live abundantly

Formation of a sustainable,
Safe and comfortable connected cars
smart supply chain
Provision of NEC’s technologies and resources in AI, IoT,
Food supply and demand optimization, traffic and networks to increasingly sophisticated onboard
alleviation, cashless transactions, non-stop systems
factories and plants

NEC the WISE IoT Platform Bio-IDiom Network

AI Biometrics Security Network services
22 © NEC Corporation 2018
 Japan Business model transformation

Offer solutions for solving social issues as services through

partnering with customers
Food supply/ Optimized Prevention Rationalization Infrastructure Disaster Urban
demand energy use of illegal of social deterioration prediction & surveillance
optimization transactions welfare costs countermeasures detection

Co-creation
program Service business 2,000* DX specialists

Common business platforms

Bio-IDiom

NEC the WISE IoT Platform *Increase from current 1,000

members by FY2021/3
23 © NEC Corporation 2018
 Global Becoming a global category leader

Set Safety as a core growth engine,

while gradually expanding business domain
Criminal investigation, immigration Continue
Safety Public Safety control, airports, etc.

Administrative platforms, citizen Focus

Digital Government services, etc.
・
・
・

Accelerate growth by reviewing strategy and

Global
Carrier
business structure
Networks ►Focus on the software and service area with high market growth rate
with TOMS competitiveness and ecosystem
►Shift to business structure centered on Netcracker
Continue reinforcement of solutions
Retail ► Reinforce IT service lifecycle management solutions
IT Service ► Reinforce solutions that provide new value
(1)Omni-channel, (2)Recognition-based payment, (3)Operational efficiency,
(4)Facility and equipment management
24 © NEC Corporation 2018
 Focus on safety business as a growth
Global engine

Set Safety Business as an engine for global growth,

and aim to become the global category leader
Shift to a business model with high profit margin while realizing growth,
and achieve operating profit ratio of over 5% and EBITDA ratio of over 20%.

Revenue outside Japan

Measures to realize growth

200.0B yen
 Shift to new business model
based on 3 platforms
 Expand business domain
50.0B yen through advanced safety
solutions
 Accelerate M&A
FY2018/3 FY2021/3 Target
* Targets as of January 30, 2018
25 © NEC Corporation 2018
 New business model and business
Global
areas based on 3 platforms
Shift from an individual SI sales business,
to a business model based on platforms
Expand business area through advanced safety solutions

Police Tax Public

housing
Health
care
Airports Transport Education
…

New business model based on 3 platforms Payment, collection

Event management
Asset management

Common business Horizontally deployable common Maintenance

platform business functions Operations control

…

Analysis Analysis of data, future forecasts Bio-IDiom

platform

In-house data Purchase data

Data Collection and integration of data
platform Open data

26 © NEC Corporation 2018

 Shift to dedicated operating
Global
structure for global business
To accelerate growth of global business, centralize business
responsibilities and authorities, and improve management speed
and reduce costs.
Business to expand
Business to expand globally from Japan
primarily in global market
Japan / Global customers Global customers  Rapid decision-making
through “One Management”
scheme for global business
Enterprise Global
 Intensified investments on
Business Business Unit
Unit core businesses
Netcracker
Country NEC Energy Solutions  Elimination of layered cost
Affiliate structure

 Accelerating profitability of
Safety global business through

TOMS

Energy
selection of business

27 © NEC Corporation 2018

 Global Accelerate M&A

Continue to pursue M&A opportunities to fast-track global growth

Continue to set 200B-yen* allotment for inorganic strategies.
（* includes 70.0B yen allotted for acquisition of NPS in January 2018)

‐ High profitability in business catering to UK public

sector
‐ No. 7 in local government IT market in UK

Further investments will be pursued within a scope that will not

undermine the financial structure, based on the cash flow for the
next 3 years.
Investments will be directed at a growth engine centered on safety
business.

28 © NEC Corporation 2018

 Aim to realize NEC Safer Cities:
leveraging biometrics and AI technologies
Digital Smart
Public Safety
Government Transportation ･･･

Prevention of
identity theft
Detection of
fraud
Educational Government
institutions agencies buses
Trends analysis

Transportation
･･･
Event IC card
forecasting

Railways
Improvement of
Healthcare
Public
citizen services
services
housing

Safety & Security + Efficiency & Equality

29 © NEC Corporation 2018

４. Restructuring of Execution Capabilities
Create a business foundation
for ensuring true growth

・Pursue the creation of customer value by

leveraging the latest technologies

・Restructuring to enable employees to

maximize their capabilities

31 © NEC Corporation 2018

 Strengthening of
business development Pursuing the creation of customer value
capability by leveraging the latest technologies
Anticipate customer needs and accelerate monetization of
competitive technologies
Promotion of solutions development via
Break away from the self-sufficiency mindset
co-creation
 Open research and solution development that In market-oriented collaboration with government, enterprises, and
incorporate academic collaboration, venture companies, other partners:
OSS, and other company technologies  Promotion of co-creation/PoC of Solutions for Society
AI-based [Digital Hospitality] Endoscopic image analysis ・Value Co-creation Center (Japan) *For successive
expansion
Co-creation with Joint research with
Kitahara Neurosurgical Institute National Cancer Research ・Advanced Center for Experimentation (Singapore)

 Incubation through diverse schemes, such as venture In collaboration with external innovation ecosystem:
capital investment, spin-out, carve-out, etc.  Accelerate commercialization of core technology
Drug discovery Smartphone-based
convenience store payment service ・Establish a new company responsible for incubation in
Establishment of CYTLIMIC, inc. Joint investment with SMBC
North America
Creation of new social value beyond existing
 Software product delivery service in collaboration
frameworks
with global vendors outside NEC channels
In collaboration with various stakeholders:
Object fingerprint Advanced Analytics
authentication technology  Strengthening of public relations functions
（Government, international institutions, standardization bodies,
Services on GE Predix Inspection solution services NGOs/NPOs, etc.)

32 © NEC Corporation 2018

 Organization with
the capacity to carry out Restructuring to enable employees to
actions to completion maximize their capabilities

Introduce schemes to enable carrying out actions to completion, and

enhance “execution capability”

Define the management’s responsibilities and authorities more clearly

Introduce mechanism to strengthen management’s commitment to results

Encourage innovative actions and challenges

Introduce an evaluation and compensation system for rewarding those who take action

Accelerate diversification of the NEC Group

Actively hire and appoint human resources with diverse talents into executive and
other positions

33 © NEC Corporation 2018

5. Summary
Mid-term Management Policies
Implement fundamental reform of profit structure, including reduction
of fixed costs, to be able to carry out investments needed to get
back on the track to growth
Reform of profit structure
 SGA (Personnel expense reduction/cost cutting)
 Business structure (Telecom carrier business/ Energy business)
 Production system
Achievement of growth
• Securely capture growth opportunities in Japan market
 Japan • Shift to service business
• Focus on safety business as the growth engine
 Global • Reorganize global structure supporting growth

Restructuring of execution capabilities

 Pursuing the creation of customer value by leveraging the latest technologies

 Restructuring of personnel system to enable employees to maximize their capabilities

35 © NEC Corporation 2018

Business transformation towards an operating profit ratio of 5%

Reform Japan
Sustain Growth
Telecom Carrier Global
Business ICT Service Business
Drive growth by establishing
Transform business model,
Energy Business and create and capture new over-100B-yen scale businesses
growth opportunities
Reform business Japan
structure Social Infrastructure
Business Category
Implement investments to
gain competitive edge and
solidify profit structure
Leader
Japan
Platform Business
Enhance competitiveness
while ensuring optimization Business synergy
（Technologies, Customers, Solutions)

Common platforms for service business

36 © NEC Corporation 2018

Sustainable Management Towards maximizing economic and social value

Mid-term Management Directions Value to be realized:

Social Issues

Reform of profit structure Economic value

Operating profit ratio 5.0%
Realization of  Japan [Transformation of business]
growth  Global [Focus on safety business] Social value
Contribute to
 Getting a head start on the latest
Extract from global megatrends

technologies and pursuing the SDGs

Restructuring of creation of customer value Formulate priority
execution capability  Restructuring to enable theme and KPI from
employees to maximize their ESG viewpoint
capabilities (FY2019/3 1H)

Priority themes from an ESG perspective Co-

Human
Technology
resource creation
AI technologies Biometrics technologies

Bio-IDiom Privacy
Security

37 © NEC Corporation 2018

Supplement: Mid-term Plan by Segment
 Mid-term Management Plan by Segment
(Billions of yen)
Revenue CAGR
FY18/3
Operating profit/loss
-FY21/3

2830.0 3000.0
2665.0 150.0
987.0
+2.0％ 76.0
パブリック
766.2 955.0 41.9 60.0
Public
38.0
エンタープライ
424.0 パブリック
Public 33.2 53.0
Enterprise
ズ 408.6 405.0 エンタープライ 40.0
テレコムキャリ Enterprise 39.7 34.0
580.0 ズ
テレコムキャリ
Telecom Carrier
ア
600.4 570.0 18.1 13.0
Telecomシステム
Carrier
ア 50.0
プラットフォー
System Platform 29.6 32.0
システム
700.0 他, 0.0 ム 8.0
プラットフォー
System Platform 719.8 710.0 その他
Others -20.0 -15.0
ム
-62.0
その他
Others 170.0 190.0 309.0 Adjustment
消去・配賦不能 -58.7 -57.0

FY17/3 FY18/3 FY21/3

(Forecast) (Target) FY17/3 FY18/3 FY21/3
(Forecast) (Target)
* Forecasts and targets as of January 30, 2018
40 © NEC Corporation 2018
 Public

(Billions of yen)
▌Revenue
955.0
987.0 CAGR  Increase by securing opportunities for
FY18/3
Revenue -FY21/3 solving social issues, despite contraction of
existing ICT market
766.2 +1.1％
‐ Healthcare
‐ City management
76.0 ‐ Public safety

Operating 53.0
profit
▌Operating profit
33.2 7.7%
5.5%  Improve due to a sales increase and
Operating 4.3% minimizing unprofitable projects
profit
Ratio

FY17/3 FY18/3 FY21/3

(Forecasts) (Targets)

* Forecasts and targets as of January 30, 2018

41 © NEC Corporation 2018
 Enterprise

(Billions of yen)
▌Revenue
CAGR
Revenue FY18/3  Growth in key areas
408.6 405.0
424.0 -FY21/3
‐ Automotive
‐ Manufacturing
+1.5％
‐ Retail
Operating ‐ Transportation IC card
profit
39.7 38.0
34.0
Operating
profit
▌Operating profit
9.7% 9.0%
Ratio 8.4%  Improve profitability while continuing
investments in new areas

FY17/3 FY18/3 FY21/3

(Forecasts) (Targets)

* Forecasts and targets as of January 30, 2018

42 © NEC Corporation 2018
 Telecom Carrier

(Billions of yen)
▌Revenue
CAGR
Revenue FY18/3  Expand business in software & services area
-FY21/3
with high market growth
600.4
570.0
580.0 - Revise strategies and business structure and
accelerate growth centering on TOMS business
+0.6％

Operating 40.0
profit
▌Operating profit
18.1
Operating 13.0 6.9%
 Optimize resources in accordance with
profit revenue volume
Ratio 3.0% 2.3%  Turn to black in
FY17/3 FY18/3 FY21/3 Mobile Backhaul business
(Forecasts) (Targets)

* Forecasts and targets as of January 30, 2018

43 © NEC Corporation 2018
 System Platform

(Billions of yen)
Revenue ▌Revenue
CAGR
719.8 710.0 700.0 FY18/3
-FY21/3
 Shift to offering platforms that support
business transformation from the offering
-0.5％
of conventional ICT products
‐ AI
50.0 ‐ IoT × Image analysis
Operating ‐ Cyber security
profit

29.6 32.0 7.1%

Operating
▌Operating profit
profit
4.1% 4.5%  Structural reform of production in Japan
Ratio
 Improve profitability through
business model transformation
FY17/3 FY18/3 FY21/3
(Forecasts) (Targets)

* Forecasts and targets as of January 30, 2018

44 © NEC Corporation 2018
 Others

(Billions of yen)
▌Revenue
CAGR
FY18/3  Expand safety business
-FY21/3
‐ Accelerate M&A
‐ Expand business area
 Focus on global energy SI business
- Divest from the electrodes business, and
309.0 discontinue development and production of small
Revenue energy storage system

170.0 190.0 +17.6％

▌Operating profit/loss
8.0  Profit contribution of safety business and
2.6% energy business
Operating
profit - 7.9%
Ratio
- 11.8%
Operating -15.0
-20.0 profit/loss

FY17/3 FY18/3 FY21/3

(Forecasts) (Targets) * Forecasts and targets as of January 30, 2018
45 © NEC Corporation 2018
Cautionary Statement with Respect to Forward-Looking Statements
This material contains forward-looking statements regarding estimations, forecasts, targets and plans in relation to the results of operations, financial conditions and other
overall management of the NEC Group (the “forward-looking statements”). The forward-looking statements are made based on information currently available to NEC and
certain assumptions considered reasonable as of the date of this material. These determinations and assumptions are inherently subjective and uncertain. These
forward-looking statements are not guarantees of future performance, and actual operating results may differ substantially due to a number of factors.

The factors that may influence the operating results include, but are not limited to, the following:
• Effects of economic conditions, volatility in the markets generally, and fluctuations in foreign currency exchange and interest rate
• Trends and factors beyond the NEC Group’s control and fluctuations in financial conditions and profits of the NEC Group that are caused by external factors
• Risks arising from acquisitions, business combinations and reorganizations, including the possibility that the expected benefits cannot be realized or that the transactions
may result in unanticipated adverse consequences
• Developments in the NEC Group’s alliances with strategic partners
• Effects of expanding the NEC Group’s global business
• Risk that the NEC Group may fail to keep pace with rapid technological developments and changes in customer preferences
• Risk that the NEC Group may lose revenue due to problems with the production process or due to its failure to adapt to demand fluctuations
• Defects in products and services
• Shortcomings in material procurement and increases in delivery cost
• Acquisition and protection of intellectual property rights necessary for the operation of business
• Risk that intellectual property licenses owned by third parties cannot be obtained and/or are discontinued
• Risk that the NEC Group may be exposed to unfavorable pricing environment due to intensified competition
• Risk that a major customer changes investment targets, reduces capital investment and/or reduces the value of transactions with the NEC Group
• Risk that the NEC Group may be unable to provide or facilitate payment arrangements (such as vendor financing) to its customers on terms acceptable to them or at all,
or risk that the NEC Group’s customers are unable to make payments on time, due to the customers’ financial difficulties or otherwise
• Risk that the NEC Group may experience a substantial loss of, or an inability to attract, talented personnel
• Risk that the NEC Group’s ability to access the commercial paper market or other debt markets are adversely affected due to a downgrade in its credit rating
• Risk that the NEC Group may incur large costs and/or liabilities in relation to internal control, legal proceedings, laws and governmental policies, environmental laws and
regulations, tax practice, information management, and human rights and working environment
• Consequences of natural and fire disasters
• Changes in methods, estimates and judgments that the NEC Group uses in applying its accounting policies
• Risk that the NEC Group may incur liabilities and losses in relation to its retirement benefit obligations

The forward-looking statements contained in this material are based on information that NEC possesses as of the date hereof. New risks and uncertainties come up from
time to time, and it is impossible for NEC to predict these events or how they may affect the NEC Group. NEC does not intend to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

Note: In this presentation, the accounting periods of the fiscal years for March 31, 2017 and 18 were referred as FY17/3 and FY18/3 respectively. Any other fiscal years
would be referred similarly.
46 © NEC Corporation 2018