Nippon Telegraph & Telephone (NTT)

We will now start the briefing of NTT's financial results for the fiscal year ended March 31st, 2022. Thank you very much for attending today despite your busy schedules. I am Fujiki from the IR office and will be facilitating this session. First, I would like to introduce today's attending members. First of all, from NTT, Representative Member of the Board and President and CEO, Mr. Sawada, Representative Member of the Board, Senior Executive Vice President, Mr. Shimada, and from NTT Tokomo, Representative Member of the Board, President and CEO, Mr. Ii, Representative Member of the Board, Senior Executive Vice President, Mr. Hiroi. Today's briefing is streamed live online. We're also planning to stream the video on our website at a later date. Therefore, we seek your understanding beforehand. As for today's explanation materials, please refer to the presentation materials posted on our company website. On the first page of the materials, points to be considered is stated, so we kindly ask you to please go through them. After this, Sawada, President and CEO, will explain the overview of the financial results and receive your questions from the floor. Mr. Sawada, please go ahead.

Thank you very much. My name is Sawata. I want to provide you the highlights of the fiscal year 2021 financial results as well as talk about the forecast for fiscal year 2022. So we'd like to start with page four of this slide. This shows you the summary and the highlights of the consolidated results. We saw an increase in both upper income and upper income year-on-year. And operating income, operating revenue, and profit all reached record high. And profit exceeded 1 trillion yen for the first time in history. As for operating income, operating revenue, due to increased revenue, entity data, operating revenue increased 12.5 billion yen and reached 12,156.4 billion yen. Of the increased revenue, foreign exchange impact accounted for roughly 127 billion yen. As for operating income, as a result of increase in revenue, severe upgoes and cost reduction, operating income increased 97.72 billion yen year-on-year up to 1,768.6 billion yen. As a result of increasing profit linked to increase in operating income, as well as profit impact of minority shareholders after Dokom became its wholly owned subsidiary firm, and also one-off factors such as corporate tax, profit increased 264.9 billion yen year-on-year up to 1,181.1 billion yen. As for overseas operating income margin, this improved 3.3 point up to 6.3% due to increase in entity data revenue and also structural reform. The number is now 6.3%. In the following page, we show you some of the new segmentation that we are applying since this fiscal year. In January, in conjunction with the transfer of entity communications and comware to Docomo Group, what we did was to review the 21 fiscal year results. And we actually changed segmentation. So the bottom half on this chart indicates the new segment. We have created the integrated ICT segment by combining Docomo Communications and ComWare. And also, Engine Limited was taken to international communication business segment, combined with data communication business segment. So we now have four segments, as you can see. Integrated ICT business segment, regional communication business segment, global solution business, and others. Page six. This shows you The forecast summary by segment. Correction, the results by segment. The top shows revenue, bottom shows income. You'll find the entity that the global solutions business has seen very robust digital business. This has produced very positive results, as you can see. On the other hand, turning to operating income, across all segments, we saw increase in operating income across the board, as you can see. Let's now turn to page 8. This shows you the fiscal year 2022 forecast summary. Now, fiscal year 2022 is the year for the implementation toward achieving the mid-term financial target in fiscal year 23. Fiscal year 23 is the final year of the plan. So therefore, we are expecting increase in operating revenue, operating income, and also profit. And all indicators, including operating revenue, operating income, and profit, will all reach record high levels. We will see expansion in all these columns. That's for APS. on top of the increase in operating income and i'll talk about this later but as a result of new share repurchase we are anticipating 340 yen for fiscal year 2022 and turning to page nine we show you in the forecast summary by segment for fiscal year 2022 the top part shows operating revenue bottom shows operating income across all segments we are expecting increase in both operating revenue and operating income across the board, across all the segments. Next page, please. This is page 10. This is in small print, but this shows you forecast summary by company. This shows you the forecast summary for fiscal year 2022. On a non-consolidated basis, DOCOMO will see increase in both operating revenue and operating income for fiscal year 2022. Also this week, we announced about the combination of entities overseas business and entity limited. And this will start from October this year. So the plan for entity limited will include only that of the first half of this year for the purpose of forecast summary. Now, on the bottom, on the bottom of the page you will show your reference we show entity data prior to integration of overseas business entities limited for full full scare for your reference both expect increase about the operating revenue and operating income in particular for entities limited they're expecting fiscal year, they're expecting an increase in upper revenue of $165.3 billion year-on-year. In 2021, they had a lot of orders, but then because of semiconductor shortage, they were not able to translate that into business. But that profit will now be incorporated into fiscal year 2021. So orders are suddenly will come into play in fiscal year 2024 and 2020 limited. Turning to the next page, page 11. This shows you the operating income trend and operating revenue trend. This shows, too, on a quarterly basis, the trends of the operating revenue and operating income over the last couple of years. So right-hand side shows increased operating revenue and bottom shows increase. So therefore top right is the best. 18 is in blue. Public communications. went down to green in 29 because of the press reduction. Then we had the COVID-19. And in fiscal year 2020, we were in the yellow board. We started with declining both operating revenue and operating income, but we began to have quarterly improvement. Last year is in the red part. In the first quarter of the last year, we had increase in revenue but decline in profit. And we received many questions about whether or not we were on track. But then this was very much in line with our guidance and plan. At the end of the day, we were able to complete the year by exceeding our target and guidance. So where are we in terms of fiscal year 2022? This is the purple part. We're expecting increase in both operating revenue and income in fiscal year 2022. So let's turn to page 12.

This page is showing the progress overview of the medium-term financial targets. Overall, it is on track. The darker green color is showing achieving the target. In this chart, you see CapEx to sell. In FY21, it is below 13.5%, which is at the very bottom line. finished the fiscal year 13.1, so we have achieved the target. And second line from the top, overseas operating income margin, there were some concerns, I believe, but FY21, it doubled from 3.3%. It has jumped up to 6.3%. And FY22 forecast, it seems that at that year we'll be exceeding the 7.0%. So in FY22, we believe that we'll be able to achieve the target for FY2023. Where you see the red arrows is last autumn, we have revised upwards the financial targets, EPS and cost reductions. For EPS and FY 2021, we have achieved the 329, meaning that the original initial target 320 yen was achieved two years ahead of a schedule. And as for cost reduction, the initial target was 800 billion, but we have achieved. 840 billion FY 2021, two years ahead of a schedule. And FY 22 forecast is 930 billion, and the probability of achieving that is quite high. Next page, on page 13, we have summarized the shareholder returns. As for the Davidson forecast, We are expected to be 120 yen per share as the annual dividend, which is 5 yen increase from FY 2021. This was resolved in today's Board of Directors meeting. With this, we are expected to increase for the 12th consecutive year since FY 2011. Also, the Board today resolved to conduct share buyback of up to 400 billion yen in total. As already announced, the Japanese government has included in their budget to sell the shares that they hold of ours, and including buying from the open market. We are planning to conduct a share buyback of up to 400 billion yen. As for the topics, I will briefly go over them. Page 15, please. We are going to reorganize the holding company. We are going to establish the internal audit department and enhance the internal audit. And the head of our office, Ms. Fujiki, will be the head of the internal audit department. We would like to assign her to become the head of the internal audit department. And we will also be enhancing the global branding. And we will newly establish ION product design center. Regarding the third point, This is done in order to accelerate the commercialization of IOWN concept. So from the R&D stage, we are creating this organization to commercialize. And the next page is a new space business realization. This is something we have already announced. We are going to establish a joint venture company this July with Sky Perfect J-SAT. And we are going to build a space integrated computing network. Next page is promotion of sustainability. As for this, there are three themes, and we would like to embody all three themes. of these themes. And we have set the target, and this will be reflected to the director's compensation. First is greenhouse gas emission volume is going to be less than 3.075 million tons. And this is 34 percent reductions compared to FY2013. The progress is on track. And carbon neutral is 2030 for overall. It's 2040. We are moving on track. And as for B2B2X revenues, it seems that we will be able to achieve 600 billion yen. As for new female manager appointment rate, we are aiming to achieve 30%. FY21 result was 29%. As for the personnel matters, oh, okay. The next page, page 18. is showing the progress overview of the medium-term management strategy initiatives. I would like to skip that. And on page 19, I would like to explain about the personnel matters. And this summarizes the way of thinking regarding the personnel matters. As for the individual personnel announcements, please refer to the individual companies' press releases. At this time, regarding the personnel, reorganize the personal structure to establish a new management style and to further strengthen governance for the holding company. The number of members of the board will be increased from the current eight members to ten members, and out of that, five will be outside members of the board. I myself will be the representative director chairman, but I will become the chairman of the board of directors. So governance-wise, the executive side is four and the sixth will be on the governance side on the board. And in order to strengthen the corporate auditor system, one full-time outside corporate auditor will be added. And Rachel, of a female member of the board, audit and supervise the board members as senior vice presidents to be increased to over 30%. Internal control office will be reorganized into an internal audit department under the direct control of the president. And we also have established a new office in charge of economic security. The personnel, including the overall group, there are many areas that we have renewed, especially as for the holding company related matters, more than half. of the member of the board or the senior vice presidents were renewed. That is all from my side. Thank you.