Annual Report 2017 Table of contents Previous Page Next Introduction ◀◀◀ ◀ 1 ▶ Table of Contents About Japan Display Inc. (JDI) 1 Introduction JDI develops, manufactures and delivers displays to the global 4 Consolidated Financial Data market that are essential in creating a visual interface capable of Message from the CEO transmitting large amounts of information instantaneously and 6 linking people to the world at large. JDI’s products are used in Overview by Application Category 11 smartphones and other mobile devices, automotive electronics, Feature which are becoming increasingly intelligent, digital cameras and 13 The Key Persons of Technology Development other consumer electronics, medical equipment and industrial Talk About JDI’s Development Scene and Its equipment. They are highly regarded in these diverse fields in Future Prospect the global market. Feature JDI’s By fully capitalizing on its advanced technological capabilities Technology Development of Dialogue Development 1 14 FULL ACTIVE™ to address needs and resolve issues in rapidly changing markets, Yuji Hayashi Hirokazu Morimoto development capabilities to innovate and create new markets, User Guide production know-how, and other management resources, JDI Feature JDI’s Continually overturning convention Technology Navigation Button Dialogue Development 2 through development of new display aims to fulfill its vision — “To deliver an exciting Live Interface 17 technologies to people around the world, thereby creating new value,” while Table of Kazutaka Nagaoka Akio Takimoto contents Previous Page Next evolving as an enterprise indispensable for people worldwide. ESG Activities Conducted by JDI ◀◀◀ ◀ 4 ▶ 22 Human Resources 23 Disclaimer for Forward-Looking Statements Environmental Activities Move to the Current page number Information concerning industry or market trends, or matters such as economic conditions, table of contents 26 Social Contribution Activities contained in this Annual Report was prepared based on data available at the time of preparation 28 of such information. The Company makes no warranties regarding the authenticity, accuracy, Move to the previous page 29 Corporate Governance reasonableness and comprehensiveness of posted information. Information on the Group’s plans, estimates, forecasts, and expectations, as well as all other information concerning the future, Move to the next page Directors and Company Auditors 34 is solely the expression of the Company’s judgment or opinions at the time of preparation of Link Button Financial Data such information. Actual business performance, financial conditions, and other results may differ 36 significantly from information in this Annual Report or conclusions drawn from such information, Corporate Profile Links marked with this icon will because of changes in personal consumption or other economic conditions in Japan or elsewhere, open a new window. 38 Stock Information currency exchange conditions, trends in smartphone or other electronic device markets, the 40 management orientation of key customers, fluctuations in raw material prices, or other factors. Table of Introduction contents Previous Page Next ◀◀◀ ◀ 2 ▶ Roadmap for the Medium-Term Management Plan Just between you Simultaneously promote structural reforms (scrap) and transformation of earnings structure (build) and the world FY2016 FY2017 FY2018 FY2019 Establish FULL ACTIVE™ LCD and Structural reforms / Management To contribute to the realization of a prosperous society by delivering beauty automotive display as pillars of Transformation of earnings structure and accomplish Philosophy and excitement to the world's people through leading-edge technology. earnings structure JDI aims to contribute to the enrichment of peoples’ lifestyles and cultures by developing and delivering to OLED development the world beautiful displays which generate surprise and excitement using state of the art technology. Complete in one year Operating incom Slogan Let’s create new value via Live Interfac Over 40 billion yen The aim is to deliver an exciting Live Interface to people and have it become a living interface with people Push through (Operating income margin of 5%) around the world, thereby creating new value. Scrap structural reforms Free cash flow Reduce excess production capacity Over 30 billion yen Code of 1. Creation: Being creation professionals Achieve breakeven sales of Conduct Prioritize imagination and creativity, and create actual value from progressive ideas. 650 billion yen 2. Challenge: Boldly grappling with changes Set high goals, and even when confronted with difficulties, tackle them with full force in the spirit of challenge. Accelerate establishment of 3. Responsibility: Accomplishing with responsibility and tenacity mass-production technology and Carry out decisions without giving up. 4. Swiftness: Aiming for top speed commercialization of OLED Commit to working in a speedy and timely manner. Build Aim to become a leading company in the OLED space, deploying both evaporation and printing technologies 5. Customer-centered: Planning and creating with customers Everything starts with understanding the customer’s perspective. We aim to think and create with Establish partnerships with global companies customers. 6. Fairness: Being open and fair Shift resources to growth areas Act truthfully and fairly with a high level of transparency. Strengthen growth areas (automotive, industrial, new business) 7. Harmony: Contributing to the global environment and society Implement an in-house company system according to business Implement corporate activity which aims to contribute to society and gives consideration to the global attributes environment. Table of Introduction contents Previous Page Next ◀◀◀ ◀ 3 ▶ Pioneering the future of displays by high-added-value technology and creativity JDI’s business fields in the display market Smartphones/ tablets Automotive Electronic shelf labels etc. Medical JDI’s current JDI’s future business fields business fields LTPS LCDs Fingerprint Digital authentication Reflective LCDs cameras OLED displays Smartphones/ Medical tablets LTPS LCDs Wearable High-resolution devices notebook PCs Digital Automotive cameras VR/AR Signage JDI’s strengths World’s No. 1 LTPS technology for displays (high resolution, low power consumption, narrow bezels, etc.) Outstanding product lines and strong relationship with world’s first-class customers JOLED, a leading printing OLED technology firm, as a Group company Table of contents Previous Page Next Consolidated Financial Data ◀◀◀ ◀ 4 ▶ (Millions of yen) Major Performance Indicators 2014.3 2015.3 2016.3 2017.3 Net sales 614,567 769,304 989,115 884,440 Operating income 27,624 5,147 16,710 18,502 Operating income margin(%) 4.5 0.7 1.7 2.1 Ordinary income (loss) 19,072 1,864 (12,934) (8,871) Net income (loss) attributable to owners of parent 33,918 (12,270) (31,840) (31,664) Comprehensive income (loss) 38,267 (1,211) (37,478) (36,321) Net assets 405,144 402,626 365,249 327,085 Total assets 758,975 831,622 813,861 915,631 Interest-bearing debt 102,519 83,513 77,325 135,199 Cash flow from operating activities 39,707 73,320 151,442 112,004 Cash flow from investing activities (122,915) (96,346) (181,156) (142,592) Cash flow from financing activities 151,990 (24,971) (6,098) 55,663 Ending balance, cash and cash equivalents 141,390 94,643 55,077 82,247 Net assets per share (yen) 673.28 666.92 603.83 540.16 Net income per share (yen) 135.09 (20.42) (52.94) (52.65) Other Performance Indicators Shareholders’ equity ratio (%) 53.3 48.2 44.6 35.5 ROA (Return on Assets) (%) 4.5 (1.5) (3.9) (3.5) ROE (Return on Equity) (%) 16.9 (3.0) (8.3) (9.2) EBITDA 90,279 75,708 93,661 100,836 Note: Figures are rounded down to the nearest million yen. Table of Consolidated Financial Data contents Previous Page Next ◀◀◀ ◀ 5 ▶ Net sales Operating income Ordinary income (loss) Net income (loss) (Millions of yen) (Millions of yen) (Millions of yen) attributable to owners of the parent Mobile devices Automotive and Non-Mobile (Millions of yen) 27,624 19,072 33,918 989,115 884,440 769,304 16,710 18,502 614,567 1,864 (12,934) (12,270) (31,840) (31,664) 838,143 728,641 476,616 615,052 5,147 137,951 154,252 150,971 155,798 (8,871) 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 Net assets / Total assets Cash flow Shareholders’ equity ratio ROA/ROE (Millions of yen) (Millions of yen) (%) (%) Net assets Total assets Operating cash flow Investing cash flow Free cash flow ROA ROE 915,631 151,442 16.9 831,622 813,861 112,004 758,975 73,320 53.3 39,707 48.2 44.6 35.5 4.5 (83,208) 405,144 402,626 365,249 (23,026) (29,714) (1.5) (3.9) (3.5) 327,085 (30,588) (96,346) (142,592) (122,915) (181,156) (3.0) (8.3) (9.2) 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 EBITDA Capital expenditure Depreciation and amortization R&D expenses (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) 186,353 90,249 23,252 93,661 100,836 80,852 90,279 133,412 70,854 75,708 121,477 64,193 15,748 15,989 108,429 13,907 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 2014.3 2015.3 2016.3 2017.3 Table of contents Previous Page Next Message from the CEO ◀◀◀ ◀ 6 ▶ My name is Nobuhiro Higashiiriki and I am serving as Chairman and CEO of Japan Display Inc. JDI’s predecessors are the display operations of the six Japanese companies that had led Japan’s display industry: Sony Corporation, Toshiba Corporation, and Hitachi, Ltd., and going further back, Panasonic Corporation, Seiko Epson Corporation, and SANYO Electric Co., Ltd.