Annual Report 2014 Annual Report 2014 Year ended March 31, 2014 NEC will transform into a “Social Value Innovator” in an aim to build an affluent and equitable society which makes efficient use of resources and where people lead safe and secure lives. Solutions for Society Focusing on fundamental issues Value innovation Open innovation Partnering Consulting System integration Outsourcing Core ICT technologies BIGDATA, SDN, Cloud foundation, etc. New value Editorial Policy Due to growing interest in non-financial information among Reporting Period Reference Guidelines stakeholders in recent years, the need for the integrated corporate April 1, 2013 to March 31, 2014 • ‌Global Reporting Initiative (GRI) disclosure of financial and non-financial information has been (This report also includes information “Sustainability Reporting increasing. NEC has published an integrated annual report that obtained after this reporting period.) Guidelines 3.1” provides both financial and non-financial information since 2013. • ‌United Nations Global Compact By exchanging opinions with the International Integrated Reporting Scope of Report • ‌ISO 26000 Council (IIRC), institutional investors, customers and other related NEC Corporation and persons, NEC will continue to provide clearer and more useful its Consolidated Subsidiaries information going forward. NEC Corporation 01 Annual Report 2014 I B Contents usiness R Business Report/Management Policies I eport/Management Policies 03 MessagefromthePresident 07 Progresson“Mid-termManagementPlan2015” II Business Activities for Value Creation 13 PerformanceHighlights 15 AtaGlance 17 ReviewofOperations 25 ContributetoSustainableGrowthinMyanmar throughCommunicationsInfrastructure 27 UtilizeICTtoEnhanceDisasterResponse CapabilitiesintheASEANRegion Value for society II 28 RealizeSaferBusOperationsinHongKong B 29 PromoteRenewableEnergywithEnergy usiness Safety StorageSystems Ensuring a wide range 30 ReduceCO2throughSavingEnergyatDataCenters A ctivities for of safety, from individual Safety 31 ImproveCustomerServicesatRailwayStations to country III Business Foundation to Support Value Creation V 33 StakeholderEngagement alue Creation Security 35 EmpoweringOurPeople Serving society and 37 EarningCustomerTrust the earth Security 38 AddressingClimateChangeandEnvironmental Preservation 39 R&DandIntellectualPropertyStrategy Efficiency 41 CorporateGovernance Realizing sustainable growth 43 RiskManagementandCompliance Efficiency III 44 MessagesfromOutsideDirectorand B OutsideCorporateAuditor usiness Foundation to Support 45 DirectorsandCorporateAuditors Equality 47 BusinessExecutionStructure Closing the social divide 49 OverseasBusinessExecutionStructure and eliminating inequality Equality IV Corporate Data 50 FinancialSection 59 Non-FinancialSection V 60 CorporateOverview alue Creation EVALUATION BY EXTERNAL PARTIES •DowJonesSustainabilityAsiaPacificIndex IV Corporate Data • FTSE4GoodGlobalIndex • EuronextVigeoWorld120Index Other Related Information •CorporateSocialResponsibility •Earningsreleases/annualsecurities (CSR) report •AnnualEnvironmentalReport •CorporateGovernanceReport •InformationSecurityReport •ETHIBELPIONEER&EXCELLENCE •SocialContributionActivities • MS-SRI MorningstarSocially • oekomratedasPrime ResponsibleInvestmentIndex NECisasignatorytothe UnitedNationsGlobal Compact. NEC Corporation Annual Report 2014 02 MESSAGEFROMTHEPRESIDENT Sustainable Development AtNEC,weensurecontinualdevelopmentofthe NECGroupandcontributetoasustainablesociety byimplementingTheNECWay,acohesiveframe- workthatoutlinestheNECGroup’smanagement practicesandoperations. NECisworkingtorealize“aninformationsociety friendlytohumansandtheearth”asassertedinthe NECGroupVision2017,basedonNEC’sCorporate Philosophy.Withbeliefthatenterprisesmustcon- tributetothewell-beingofsociety,everyoneatNEC iscommittedtomeetingcompliancestandardsin dailybusinessoperationsandputtingintopractice theNECGroupCoreValues.Indoingso,theNEC Groupaimstosolvesocialandenvironmental issueswhichaffectpeople’slives.Wearealso committedtomaintainingactivedisclosureof activitiesandchallenges,aswellastokeeping opencommunicationswithstakeholderstoimprove ouroperationsandbuildrelationshipsoftrust. Oneoftheongoingpracticesbeganin2005, whenNECbecameasignatorytotheUnited NationsGlobalCompact(UNGC).NECcontinuesto conductcorporatebusinessactivitiesincompliance withthetenprinciplesintheareasofhumanrights, labor,theenvironment,andanti-corruptionbasedon theUNGCframework.Lookingahead,wewillstrive toaddresssocialissuesfromaglobalperspective bycontributingtoarangeofUN-formulatedinitia- tivesdirectedatdevelopingasustainablesociety. Theconceptofinnovationtakesonaveryimpor- tantmeaninginthecontextofNEC’seffortstosolve socialissues.Tobeaninnovativecompany,itisvital toestablishadiverseculturewherepeoplefrom differentbackgroundswithdifferentideascancol- laborate.Inlinewiththis,NECparticipatedinthe MinistryofHealth,LaborandWelfare’sDeclaration ofPositiveAction,aninitiativeaimedatpromoting women’ssuccessintheworkplace,duringthe fiscalyearunderreview(theyearendedMarch31, 2014).Goingforward,NECwillpromoteinnovation Nobuhiro Endo President,NECCorporation aswellasgloballeaderswhowillleadinnovation toenhancesocietalvalue. NEC Corporation 03 Annual Report 2014 I Business Report/Management Policies Challenges NEC Accepts in Order to Achieve Sustainable Development How we aim to serve society Establish a safe and secure society Address climate change and Provide everyone the benefits environmental preservation of the digital society Build reliable information and communications infrastructure What we value in our business activities Strengthening Earning customer trust risk management and Empowering our people enforcing compliance •Degreeofinterestamongcustomers •TheNECWay andsocietyatlarge •Maximizingcorporatevalue •OpinionsonCSRactivities •Howbusinessactivitiescontributeto •SuggestionsbySRIresearchinstitutes societyandtheglobalenvironment,etc. •FormulationofCSRstandards,etc. Stakeholder Interests and NEC’s Perspective Social Concerns Market Environment Outlook and Long-term Prospects Lookingaheadtotheyear2050,theglobalpopula- torapideconomicgrowth.However,rapideconomic tionisforecasttoincreasefromsevenbilliontonine growthisalsoexpectedtocreatesocialissues billion.Asthishappens,theratioofurbanpopula- relatedtourbanizationandpopulationincreases. tionisprojectedtorisefrom50%to70%asurban- Inaddressingtheseissues,aninnovativesocial izationprogresses.Theshifttocitylivingwillboost infrastructurewillbeimperativetomaintaininga demandforenergy,food,waterandresources safeandsecuresocietywhilemakingefficientuse fasterthanpopulationgrowth,whichwillcontribute ofresources. NEC Corporation Annual Report 2014 04 Focus on Solutions for Society AttheNECGroup,withourfocuson“Solutionsfor Lookingahead,NECwillprovidenewsolutions Society,”weareleveragingourstrengthsininforma- andserviceswhicharemorediversifiedandsophis- tionandcommunicationstechnology(ICT)topro- ticated,usingtechnologiessuchasbigdata,cloud videnewsocialinfrastructurethatwillmakesociety andsoftware-definednetworking(SDN).Indoing safer,moresecure,efficientandafairplace,in so,IamconfidentthatthevalueNECofferstosoci- whichpeoplecanleadprosperouslives. etythroughICTwillelevate.Asanextstep,wewill NECalreadysuppliesavastarrayofadvanced implementquantitativeassessmentsofthesocietal ICT-basedsocialinfrastructure—trafficmanage- valueweprovide,andthenimplementinitiatives ment,firefightinganddisasterpreventionsystems, aimedatmaximizingthatvalue.Atpresent,oneof waterresourcemanagementsystems,seafloor thequantitativeindicatorsNEChasestablishedis seismographsandsystemsforelectronicmedical theamountofCO2emissionsreducedbytheIT records.Tothesesystems,weappliedourexten- solutionsweprovidetocustomersandsociety. siveline-upoforiginalsensing,next-generation Goingforward,wewillstrivetoexpandsolutions networkingandITplatformtechnologies,which forsocietytomaximizethecontributionswemake operateinenvironmentsrangingfromtheseafloor tosocietyfromabroaderperspective,thereby toouterspace.Weareproudtoprovidetheseinfra- maximizingtheirsocietalvalue. structureswhichplayanessentialroleinsupporting people’severydaylives. NEC’s solutions for society Space ResponsibleBusinessUnit: Public Enterprise TelecomCarriers SmartEnergy •Satellitecommunications •Earthobservation •DigitalTVtransmission •Seaflooropticalcables •Airtrafficcontrol •Diverse •Electronic •Seafloorseismographs •Fingerprintrecognition businesssystems •TVstudios government •Electronic •Watermanagement medicalrecords •Leakdetection •POS Dams/Water supply Airports Broadcasters Hospitals Companies Seafloor Government Retail stores Banks Broadcasting towers Fire departments Ports Distribution centers Rail Communications Roads Important facilities Factories Post offices Energy •Harborsurveillance •Railcommunications •Trafficmanagement •Facilitysurveillance •Logistics •Firefighting •Smartenergy •Underwatersurveillance systems •Productionmanagement •BankATMs •Postsortingmachines •Communicationssystems •Factorymanagement NEC ICT supporting social infrastructure and systems Next-generation network technologies High-performance, high-reliability core IT technologies Diverse sensor and human interface technologies NEC Corporation 05 Annual Report 2014 I Business Report/Management Policies Toward Achieving the “Mid-term Management Plan 2015” Inlinewiththe“Mid-termManagementPlan2015” Lookingback,thefirstyearofthe“Mid-term whichweannouncedinApril2013,wehave ManagementPlan2015”wasayearofpreparation declaredourcommitmenttotransformingNECinto