Measures for integrated reporting
The Fujikura Group dispatches and discloses its corporate information through various media on a range of occasions as part of its effort to fulfill its social responsibility. In December 2013, the International Integrated Reporting Council (IIRC) published the first version of the International Integrated Reporting Framework after making necessary deliberations. The Framework was established for reasons including the following: (1) conventional annual reports on short-term financial information do not provide investors making long-term investments in pension funds and others with necessary information about the long-term sustainability of investee companies; and (2) for investors to predict the future of companies, nonfinancial information on CSR activities conducted by the companies is important.The essential part of CSR is to meet the expectations of society by promptly identifying social changes and social needs through communication with stakeholders.In consideration of this fact, we thought it necessary to implement measures in line with this Framework, which indeed shows what stakeholders strongly want companies to do, although it needs to be improved by the addition of more specific details to the reporting standards and it does not provide the assurance standards for integrated reports.We therefore discussed how to deal with the new information disclosure guidelines on integrated reporting.As a result, we decided to create a "CSR Integrated Report" in fiscal 2014 instead of the conventional "CSR Report" and to structure it by taking necessary steps to ensure clear accountability in line with the Framework.
The Fujikura Group renamed its CSR Report to the CSR Integrated Report in 2014.This report newly features the Fujikura Group’s response to the international taxation rules created through efforts made by the Organization for Economic Cooperation and Development (OECD) to address the issues in international taxation that have received global attention with the leak of the Panama Papers. As we progress steadily forward with initiatives in accord with Integrated Report guidelines, our desire is to fulfill our responsibility for integrated reporting accountability, taking grounded and certain steps in shaping our future how it should be.
[Steps to the decision on the integrated reporting policy]
Integrated reporting and thinking
In the International Integrated Reporting Framework announced by the International Integrated Reporting Council (IIRC) in December 2013, integrated reporting is defined as "a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation," and an integrated report is defined as "a concise communication about how an organization's strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long-term." In order to promote such communication, corporate groups need to fully identify which of their financial and nonfinancial information is important.
Also in the Framework, integrated thinking is defined as "the active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects," and as thinking that "leads to integrated decision-making and actions that consider the creation of value over the short, medium and long term." An integrated report is created based on integrated thinking.
In order to create the CSR Integrated Report 2015, the Fujikura Group extensively reviewed these definitions and conducted examinations to enhance information disclosure, specifically to provide both financial and nonfinancial information in the report in a manner that helped shareholders and investors evaluate and make investments in the Group over the short, medium and long term.
Measures for the enhancement of integrated reporting
The Fujikura Group has been disclosing information to a range of stakeholders on various occasions and through a variety of media tools to fulfill its corporate social responsibility. In line with its CSR policies, the Group made an organizational decision to meet investors' requests for a new type of information disclosure, and began implementing measures for integrated reporting in fiscal 2014. The Fujikura Group CSR Committee is making efforts to enhance its integrated reporting, for which the Committee also refers to the new G4 Sustainability Reporting Guidelines, Japan's Stewardship Code, Corporate Governance Code, and the FTSE4Good Index Series (London Stock Exchange), which is one of the ESG investment products.
Reference to international standards and guidelines
The Fujikura Group refers to the following documents to enhance its integrated reporting.
|1||New G4 Sustainability Reporting Guidelines|
|2||Stewardship Code and Japan's Stewardship Code|
|3||Corporate Governance Code|
|4||FTSE4Good Index Series, London Stock Exchange|
|5||United Nations Millennium Declaration and Millennium Development Goals (MDGs)|
|6||Revised EICC Code of Conduct (v.5.0)|
|7||Ten Principles of the United Nations Global Compact|
|8||ISO 26000 international standard on social responsibility|
|9||United Nations Principles for Responsible Investment (PRI)|
|10||Environmental Reporting Guidelines 2012, Japanese Ministry of the Environment|
|11||Carbon Disclosure Project (CDP)|
|12||GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard|
Working with international taxation rules set by international organizations
■International organization efforts
With the leak of the Panama Papers in April 2016, the international community turned its eyes to tax avoidance practices and began discussing the importance of international taxation rules. At the heart of these discussions about tax evasion issues is BEPS (base erosion and profit shifting), a practice by which multinational companies reduce their tax burden by utilizing international taxation gaps and loopholes As shown in the following timeline, the BEPS Project was launched at the 2012 OECD International Tax Conference. The final report (the 15-item BEPS 2015 Action Plan) was announced at the G20 Finance Ministers meeting held in October 2015.
[BEPS project timeline]
■Response by the Fujikura Group
As an entity expanding its business globally, our Group has collected BEPS information on a continuous basis and established a consulting contract with a tax accountant corporation in preparation for taxation rules compliance.
Extracted from the "3. Management Policies" of "Consolidated Financial Results (Japanese Accounting Standards) for the Fiscal Year Ended March 31, 2016"
1. Fundamental company management policy
Through our technologies and relationships, we aim to be an enterprise modeled on the creation of customer value. Having formulated the 2020 Medium-term Management Plan starting in the 2016 and ending in the 2020 fiscal years, we present the following three points as our fundamental policy.
- Promotion of healthy growth with a focus on profitability
- Acceleration of renewal and forward movement aiming to be an enterprise modeled on the creation of customer value
- Establishment of corporate governance as we make environmental and social contributions while increasing corporate value
2. Target management indicators
Oriented on continuous improvements in profitability as one of our priority management issues, we’re aiming for sales of 900 billion yen, an operating profit on sales ratio of 7.0% or more, a ROE of 10% or more, and a D/E ratio of 40 to 60 (0.66) in the 2020 financial year as a medium-term management goal.
3. Medium-term company management strategies and issues to be addressed
As the growth strategy incorporated in our aforementioned 2020 Medium-term Management Plan, we will promote the following four points.
Ⅰ. Deepening strategic customers
Through close contact with strategic customers, we will develop our business further and capture new business opportunities.
Ⅱ. Accelerating the creation of new business
We will strengthen the new business promotion structure, with a focus on orienting to automotive industries, industrial equipment, and medical equipment as priority areas.
Ⅲ. Open innovation
Supplementing the pieces missing from our portfolios and the value chain, we will create new customer value and accelerate the promotion of technological development, business development, and business growth.
Ⅳ. Reforming business and innovating business structure
We will strive to respond to corporate governance and codes, improve the quality and speed of decision-making for diversified business areas, and strengthen our management foundations.
FY 2015 outcomes
In the FY 2015, the Japanese economy showed a trend toward gradual recovery with improvements in corporate performance and employment conditions as well as a shift in foreign exchange towards a cheaper Japanese yen. Meanwhile, overseas the US showed a shift toward stability with increased personal consumption and housing investment, and China began to demonstrate a clear sense of deceleration in economic growth. For the Group’s performance in the fiscal year ending March 31, 2015, sales increased by 2.6% from the previous fiscal year to 678.5 billion yen, operating income increased by 30.1% to 32.6 billion yen, and recurring profit increased by 16.8% to 24.6 billion yen. Although sales slumped owing to a decline in the price of copper (the raw material for industrial electric wiring) and the economic slowdown in China and South America affected automotive wiring harness sales, strong sales of FPC (Flexible Printed Wiring Board) for smartphones and an overall trend toward a cheaper yen in foreign exchange boosted income. Though operating income was negatively affected by the decrease in sales of automotive wiring harnesses as well as an increase in costs due to soaring expenditures for personnel expenses overseas, overall a cheaper yen, increased sales through our electronics business and FPC in particular, and improved productivity caused a significant increase in profit.
Much of our FPC manufacturing base was devastated by the 2011 flooding in Thailand, but by 2013 we had recovered and restored our manufacturing capacity there. With FY 2015, we can safely say that we’ve recovered in terms of earnings. While declaring non-operating income of 2.7 billion yen, recurring profit came in at 24.6 billion yen as a result of declaring non-operating expenses totaling 10.7 billion yen, including an equity-method investment loss of 4.4 billion yen due to poor performance by VISCAS Corporation, in which the Group has a 50% stake. Though there was 2.7 billion yen of extraordinary income from the sale of investment securities, etc., net income attributable to parent company shareholders decreased by 800 million yen to 11.3 billion yen as a result of the posting 6.3 billion yen in business structure and improvement costs with the restructuring of VISCAS Corporation together with 10.1 billion yen of other extraordinary losses.
Under the basic strategies of concentrating management resources in growth areas and strengthening manufacturing structures, the Group (the Company and its consolidated subsidiaries) carried out an investment of 31.9 billion yen in capital expenditures (base figure receiving tangible and intangible fixed assets).
Capital investment made in fiscal 2015
|Energy & Telecommunication Systems Company||6.8 billion yen|
|Electronics Business Company Electronics Business Company||15.1 billion yen|
|Automotive Products CompanyAutomotive Products Company||6.0 billion yen|
|Other||4.0 billion yen|
|Total||31.9 billion yen|
Information by in-house company
|Reportable segment||Main products|
|Energy & Telecommunication Systems Company||Power cables, telecommunication cables, aluminum wires, enameled wires, optical fibers, optical fiber cables, telecommunication components, optical components, fiber optic equipment, and network equipment, etc. (and installation of the equipment)|
|Electronics Business Company||Flexible printed circuits, electronic wiring, HDD components, various kinds of connectors, etc.|
|Automotive Products Company||Automotive wire harnesses and other automotive components|
|Real Estate Business Company||Real estate rental, etc.|
Fiscal Year Ended March 31, 2016 (April 1, 2014 - March 31, 2016)
(Unit: Million yen)
|Power & Telecommunication Systems Company||Electronics Business Company||Automotive Products Company||Real Estate Business Company|
|Sales||Sales to outside customers||366,271||140,477||139,276||10,663||4,821||661,510||-||661,510|
|Other items||Depreciation and amortization||9,330||10,358||3,286||1,924||714||25,614||2,117||27,732|
|Increase in tangible fixed assets and intangible fixed assets||7,948||7,262||5,075||182||762||21,231||3,406||24,637|
Return to shareholders
Fujikura Ltd. is committed to the stable payment of dividends and aims to return profit to shareholders at a total return ratio of about 20% in consideration of business performance, the dividend payout ratio, and the necessary reserve for future business development. The Company aims to pay dividends twice a year as its basic policy, and decisions on year-end dividends and interim dividends are made at the annual general meeting of shareholders and at a meeting of the Board of Directors, respectively.
As for internal reserves, Fujikura Ltd. effectively uses them as a managerial resource for future growth businesses and for the rationalization of the existing businesses in principle.
Fujikura Ltd. provides that the Board of Directors can make a decision to pay interim dividends with September 30 as the record date in its articles of incorporation.
The following shows the dividends for the current fiscal year:
|Date of resolution||Total payment amount (millions of yen)||Dividend per share (yen)|
| Oct. 29, 2015
(Meeting of the Board of Directors)
|Jun. 29, 2016
(Annual general meeting of shareholders)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes of the Consolidated Financial Statements