Annual Report 2017

Annual Report 2017 Year ended March 31, 2017 Contents Editorial Policy NEC has published integrated annual reports containing both financial and non-financial information since 2013. Annual Report 2017 comprises six chapters respectively entitled Profile Profile, Commentary on Management Strategy, Business Model, Business Activities for Social Value Creation, Initiatives Supporting 01 Orchestrating a brighter world Sustainable Management, and Corporate Data. 02 Contents Chapter I profiles NEC. Chapter II provides commentary from the President and CFO concerning our approach to enhancing corporate 03 Performance Highlights value over the medium/long term and revision of Mid-term Management Plan 2018. Chapter III highlights our strengths, the 05 At a Glance value we offer and examples of our social value creation initiatives. Chapter IV provides an overview of each of our segments and information on our overseas operations. Chapter V discusses Commentary on corporate governance and other ESG initiatives that support Management Strategy sustainable management, including environmentally. NEC will keep endeavoring to provide increasingly transparent and 07 Message from the President useful information in response to guidance from the International 12 Mid-term Management Plan 2018 Integrated Reporting Council (IIRC) and feedback from institutional Progress and Formulation of investors and various other stakeholders. People around the world today face a host of global challenges: terrorism and Next Mid-term Management Plan Reporting Period 15 Message from the CFO April 1, 2016 to March 31, 2017 (hereinafter referred to as “Fiscal 2017.” Any other fiscal years would be referred to similarly) cybercrime that threaten their everyday security; environmental issuees such as This report also includes information obtained after this reporting period. Business Model Scope of Report NEC Corporation and its Consolidated Subsidiaries intensification of natural disasters due to climate change; scarcity of energy, 17 Our History Reference Guidelines food and water resources; population growth in developing countries, 19 The NEC Group’s Vision of • ISO 26000 Social Value Creation • Global Reporting Initiative (GRI) 21 Social Value Creation Process “Sustainability Reporting Guidelines 4.0” aging populations in developed countries, burgeoning urban populations and • United Nations Global Compact 23 Innovation Management widening interregional disparities. 25 Social Value Creation Initiatives Business Activities for Social Value Creation NEC is committed to resolving these challenges with its ICT assets, especially AI NEC is a signatory to the United Nations Global Compact. 29 Review of Operations Other Related Information and IoT technologies, and new business models developed collaboratively with 39 International Business Structure • Earnings Releases/Annual Securities Report • Corporate Governance Report • Corporate Social Responsibility (CSR) customers and partners. Initiatives Supporting • Annual Environmental Report Sustainable Management • Information Security Report • Social Contribution Activities 41 Initiatives Supporting Sustainable Management Evaluation by External Parties (As of July 2017) Through these activities, NEC will create social value in the form of safety, security, 42 Corporate Governance RobecoSAM Sustainability Award efficiency and equality, all of which are prerequisites for an abundant society for all 45 Ensuring Compliance 46 Messages from an Outside Director and an Audit & Supervisory Board FTSE4Good Index Series Euronext Vigeo people, in the aim of realizing a bright, hope-filled future in concert with people World 120 Member and countries across the globe. 47 Directors and Audit & Supervisory Board Members 49 Cross-company Corporate Strategy ETHIBEL PIONEER STOXX Global ESG Promotion Framework & EXCELLENCE Leaders Index This mission is embodied in NEC’s Brand Statement: Orchestrating a brighter world. 51 Human Rights and Diversity 53 Further Promotion of Environmental Management Contributing to the Morningstar Socially Responsible EcoVadis Realization of a “Sustainable Earth” Investment Index Corporate Data 56 Financial Section MSCI ESG Leaders Indexes THE INCLUSION OF NEC Corporation IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT 63 Non-Financial Section CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF NEC Corporation BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE 64 Corporate Overview PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES. 01 NEC Corporation Annual Report 2017 NEC Corporation Annual Report 2017 02 Performance Highlights Performance Highlights NEC Corporation and Consolidated Subsidiaries Profile For the fiscal years ended or year-end as of March 31 NEC Electronics The consumer PC Stopped the Consolidated Japan Divested NEC Divested NEC Key Management Measures Corporation became an business became an development of new Aviation Electronics Mobiling, Ltd. BIGLOBE, Ltd. equity-method affiliate equity-method affiliate smartphones Industry, Limited l Measures to optimize business portfolio n Measures to grow business and strengthen financial foundation 3,583.1 Revenue Fiscal year ended March 31, 2011 (Billions of yen) l Made NEC Electronics Corporation, a semiconductor 3,115.4 business currently Renesas Electronics Corporation, 3,036.8 3,071.6 3,043.1 into an equity-method affiliate 2,935.5 2,821.2 2,824.8 2,665.0 Fiscal year ended March 31, 2012 2,890.0 l Made the consumer PC business into Revenues of the current businesses 2,730.0 an equity-method affiliate 2,630.0 2,600.0 2,550.0 128.1 n Acquired Global View S.A., a video surveillance 114.6 106.2 107.3 services business in Argentina 91.4 73.7 Fiscal year ended March 31, 2013 50.9 57.8 n Acquired the business support system business of 41.8 U.S.-based Convergys Corporation Operating profit n Acquired the IT service business of Australia-based CSG Limited Millions of yen Percent change Fiscal year ended March 31, 2014 2010 2011 2012 2013 2014 2015 2016 2016 2017 2017/2016 l Divested all of NEC’s stakes in NEC Mobiling, Ltd., JGAAP IFRS currently MX Mobiling Co., Ltd., a mobile phone Revenue . ¥3,583,148 ¥3,115,424 ¥3,036,836 ¥3,071,609 ¥3,043,114 ¥2,935,517 ¥2,821,181 ¥2,824,833 ¥2,665,035 –5.7% sales business International revenue . 712,886 479,349 481,492 483,118 569,172 586,844 603,169 603,135 570,967 –5.3 l Stopped the development of new smartphones International revenue ratio (%) �� 19.9 15.4 15.9 15.7 18.7 20.0 21.4 21.4 21.4 Fiscal year ended March 31, 2015 Operating profit . 50,905 57,820 73,742 114,647 106,193 128,084 107,306 91,418 41,838 –54.2 l Divested all of NEC’s stakes in NEC BIGLOBE, Ltd., currently BIGLOBE Inc., an internet service provider Net profit (loss) attributable to in March, 2014 owners of the parent �� 11,428 (12,518) (110,267) 30,434 33,742 57,302 68,749 75,923 27,310 –64.0 n Made NEC Fielding, Ltd., providing operation and maintenance service for IT systems, into a wholly Cash flows from operating activities . 134,816 33,660 83,857 143,748 94,124 87,917 97,829 97,829 92,525 –5.4 owned subsidiary Cash flows from investing activities �� (41,241) (146,244) (49,706) (101,742) (38,893) (47,510) (32,202) (32,202) 6,425 — n Established NEC Solution Innovators, Ltd. in a reorganization of seven software development Free cash flows . 93,575 (112,584) 34,151 42,006 55,231 40,407 65,627 65,627 98,950 50.8 subsidiaries n Established NEC Platforms, Ltd. R&D expenses �� 275,970 176,514 161,968 151,676 142,723 134,205 123,995 123,602 109,319 –11.6 in a reorganization of four hardware development Capital expenditures and manufacturing subsidiaries (property, plant and equipment) �� 83,098 52,850 41,980 45,614 98,708 37,425 36,347 36,347 31,472 –13.4 n Established NEC Management Partner, Ltd. in a reorganization of four back office operation Depreciation subsidiaries (property, plant and equipment) �� 111,167 62,097 53,306 51,167 45,167 48,518 44,879 50,493 49,853 –1.3 n Completed acquisition of an energy storage system business for electric power companies and established Per share data (in yen): NEC Energy Solutions, Inc. in North America Net profit (loss) attributable to Fiscal year ended March 31, 2016 owners of the parent . 5.04 (4.82) (42.44) 11.71 12.99 22.05 26.45 29.22 10.51 –64.0 n Transferred administrative staff functions and shared Cash dividends . 4.00 0.00 0.00 4.00 4.00 4.00 6.00 6.00 6.00 IT assets from NEC to NEC Management Partner, Ltd. (Business Process Optimization Project) Total assets . 2,937,644 2,628,931 2,557,570 2,580,966 2,505,329 2,620,652 2,493,441 2,528,904 2,683,996 6.1 Owner’s equity . 790,904 757,054 656,956 710,666 695,949 823,650 792,092 769,827 854,264 11.0 Fiscal year ended March 31, 2017 (fiscal year under review) Return on equity (%) . 1.6 – – 4.5 4.8 7.5 8.5 9.5 3.4 n Acquired Brazilian IT security company Arcon Owner’s equity ratio (%) . 26.9 28.8 25.7 27.5 27.8 31.4 31.8 30.4 31.8 Informatica S.A. Interest-bearing debt �� 729,548 675,798 692,734 603,451 575,151 520,778 480,987 479,523 466,946 –2.6 n Consolidated Japan Aviation Electronics Industry, Limited Debt-equity ratio (times) �� 0.92 0.89 1.05 0.85 0.83 0.63 0.61 0.62 0.55 Notes: 1. Net profit (loss) attributable to owners of the parent per Number of consolidated subsidiaries . 310 283 265 270 258 232 217 217 238 share is calculated based on the weighted-average number of shares outstanding during each period.

Load more