Integrated Report 2020 NEC Way The NEC Way is a common set of values that form the basis for how the entire NEC Group conducts itself. Within the NEC Way, the “Purpose” and “Principles” represents why and how as a company we conduct business, whilst the “Code of Values” and “Code of Conduct” embodies the values and behaviors that all members of the NEC Group must demonstrate. Putting the NEC Way into practice we will create social value. Editorial Policy Reporting Period NEC has published integrated annual reports containing both financial and non-financial information since 2013. Starting in April 1, 2019 to March 31, 2020 (hereinafter referred 2018, having defined its materiality, NEC has changed the name of the report to the“Integrated Report.” to as “Fiscal 2020.” Any other fiscal years are referred Integrated Report 2020 comprises four chapters, respectively titled Business Strategy and Vision, Business Activities, to similarly) This report also includes information Management Foundation, and Corporate Data. obtained after this reporting period. Business Strategy and Vision describes the progress of the Mid-term Management Plan 2020 and our initiatives to create value based on the NEC Way, such as implementation of our priority themes from an Environmental, Social and Governance Scope of Report (ESG) perspective, or “materiality.” Business Activities includes a message from the CFO and introduces the management NEC Corporation and its consolidated subsidiaries strategies for each of our segments. Management Foundation introduces the Company’s initiatives in support of sustainable management. NEC will keep endeavoring to provide increasingly transparent and continuous information while incorporating feedback from various stakeholders. 01 NEC Corporation Integrated Report 2020 Purpose Contents Business Strategy and Vision NEC creates the social values of safety, security, 03 What’s NEC fairness and efficiency to promote a more sustainable world where everyone has the 05 NEC's Value Creation Journey chance to reach their full potential. 07 Message from the President 15 Value Creation Process Principles 17 Feature: DX Initiatives in Response to the New Normal The Founding Spirit of “Better Products, Better Services” 21 Respecting Human Rights Uncompromising Integrity and 23 Sustainably and Socially Literate Respect for Human Rights Human Resources Relentless Pursuit of Innovation 27 Environmental Action with a Particular Focus on Climate Change 31 Innovation Management Code of Values Business Activities Look Outward. See the Future. 33 Message from the CFO Think Simply. Display Clear Strategy. 37 Performance Highlights Be Passionate. Follow through to the End. Move Fast. Never Miss an Opportunity. 39 At a Glance Encourage Openness. Stimulate the Growth of All. 41 Review of Operations 41 Public Solutions Business 43 Public Infrastructure Business Code of Conduct 45 Enterprise Business 1. Basic Position 47 Network Services Business 2. Respect for Human Rights 49 Global Business 3. Environmental Preservation 4. Business Activities with Integrity Management Foundation 5. Management of the Company’s Assets and Information 51 Corporate Governance Consultation and Report on Doubts and 57 Uncompromising Integrity and Concerns about Compliance Respect for Human Rights 58 Messages from an Outside Director and an Outside Audit & Supervisory Board Member 59 Directors and Audit & Supervisory Board Members Reference Guidelines Other Related Information • ISO 26000 • Earnings Releases/Annual Securities Report 61 Cross-Company Corporate Strategy • GRI Standards • Corporate Governance Report Promotion Framework • United Nations Global Compact • Sustainability Report • International Integrated Reporting Council’s • Information Security Report “International Integrated Reporting Framework” Corporate Data • Japan’s Ministry of Economy, Trade and Industry’s 63 Financial Section “Guidance for Collaborative Value Creation” 66 Non-Financial Section 67 Corporate Overview NEC is a signatory to the United Nations Global Compact. NEC Corporation Integrated Report 2020 02 What’s NEC Establishment Number of employees*3 Longstanding relationships of trust with customers Approximately 1899 110,000 Market capitalization Revenue*2 Public Solutions Business 15% Public Infrastructure Business 22% Composition of Enterprise Business 18% revenue Network Services Business 16% Global Business 16% Others 13% Approximately 1.5 trillion yen 3,095.2 billion yen Owner’s equity ratio*3 Inclusion in the CDP Rate of contribution to Climate Change and CO2 emission reductions Water A List across the whole supply chain*2 Approximately 29.2% A List 5.2 times 03 NEC Corporation Integrated Report 2020 What’s NEC R&D expenses*2 Number of cases of Ratio of male and serious involvement female hires*1*2 with cartels and/or bid-rigging Male 73.3% 109.8 billion yen 0 cases Female 26.7% Ratio of female Ratio of employees Ratio of employees managers*3 returning after childcare with disabilities*1*5 leave*1*4 7.8% 97.5% 2.38% Number of patents*3 Technological capabilities Face recognition*6 Fingerprint recognition*7 Approximately Iris recognition*8 47,000 Global No. 1 *1 For NEC Corporation on a standalone basis *5 Based on the Act on Employment Promotion etc. of Persons with Disabilities as of June 1, 2020 *2 Actual results for the fiscal year ended March 31, 2020 *6 Ranked 1st five times in benchmark testing held by the U.S. National Institute of Standards and *3 As of March 31, 2020 Technology (NIST) *4 Ratio of employees returning to work who started childcare leave in fiscal 2018 *7 Ranked 1st eight times in benchmark testing sponsored by NIST *8 Ranked 1st in benchmark testing sponsored by NIST NEC Corporation Integrated Report 2020 04 NEC's Value Creation Journey Nippon Electric Company, Ltd. (NEC) was established in 1899 as Japan’s first joint venture with a foreign-owned company. In keeping with its founding spirit of “Better Products, Better Service,” NEC has continued to provide services using its distinctive technologies in addition to ICT equipment such as telecommunication equipment and computers. 1899 1977 Establishment of C&C Announced Nippon Electric Company The Founding Spirit of The integration of computers “Better Products, Better Services" and communications Create customer satisfaction and pleasure The aspiration of enabling people throughout the by consistently providing better products world to connect anytime, anywhere, and with anyone, and services. is aligned with the SDGs aspiration to “leave no one behind.” Announcement of Founder: Kunihiko Iwadare C&C at INTELCOM ’77 Network 1899 1928 1964 1970 1987 Nippon Electric Transmitted scenes of International satellite Japan's first satellite, Started manufacturing Company, Ltd. Imperial Accession TV broadcasts of the Osumi optical submarine established Ceremony of Emperor Tokyo Olympics relay equipment Hirohito IT 1954 1958 1974 1982 Begins Developed the first The ACOS Series 77 The PC-9801 research domestically produced mainframe computer personal computer into fully transistorized family is announced is announced computers NEAC-2201 computer AI 1960 1971 1984 Started development Fully automated postal Received an order in of optical character sorting system the U.S. for fingerprint recognition (OCR) matching services 05 NEC Corporation Integrated Report 2020 NEC's Value Creation Journey 2013 2020 Transformation into NEC Way a Social Value Innovator As the value expected by customers and society To mark the 120th anniversary of its changed from our tangible technologies and founding, in 2020 we defined our products to the intangible creation of value, we “Purpose" within the NEC Way as responded under Mid-term Management Plan “NEC creates the social values of safety, 2015 by declaring our intention to transform into security, fairness and efficiency to promote a Social Value Innovator. a more sustainable world where everyone has the chance to reach their full potential." NEC will redouble its business activities inspired by social issues, aiming to contribute to the achievement of the Sustainable Development Goals (SDGs) in 2030. 2007 2010 2016 2018 Ultra-compact radio Asteroid explorer Submarine cable Asteroid explorer communications “HAYABUSA" installation reaches HAYABUSA 2 system PASOLINK successfully over 250,000km, reached the secured top global returned to Earth enough to encircle asteroid Ryugu market share the earth six times NEC's strengths 2002 2012 2015 2020 developed The Earth Simulator, the Built ICT infrastructure Contributed to Started quantum computing world's fastest supercomputer for multiple stadiums implementation application services to date system for resolving global used in the Soccer of the Individual environmental problems, World Cup held in Number System is completed Brazil 2004 2009 2016 2018 2019 No. 1 in fingerprint No. 1 in facial Biometrics solutions Established the Entered the drug authentication*1 authentication *2 adopted in 70 countries biometric discovery business in total authentication specializing in brand, advanced Formulated the AI “Bio-IDiom” immunotherapy technology brand, using “NEC the WISE” “NEC the WISE” *1 Ranked 1st eight times in task assessment sponsored by the U.S. National Institute of Standards and Technology (NIST) *2 Ranked 1st five times in task assessment sponsored by NIST NEC Corporation Integrated Report 2020 06 Message from the President Today, people around the world are facing a time of great change. As the old era gives way to the new, NEC is transforming