CSR

[ISO 26000 Core Subject] Organizational Governance

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, and created this second CSR Integrated Report with a strong commitment to achieving accountability through integrated reporting. To this end, we will take the necessary steps one by one in line with the Integrated Reporting Framework.

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.

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.

The Fujikura Group refers to the following documents to enhance its integrated reporting.

In fiscal 2005, the Company celebrated the 120th anniversary of its foundation, positioning that year as the inaugural year of its "Third 60 Years of Leadership." The Company adopted a new "Mission, Vision & Core Values" statement, which details its commitment to actively expand the corporate activities that "create value for customers" through "Tsunagu" (connection) technologies and contribute to the betterment of society by proactive, rapid-response management, while maintaining an emphasis on profitability.

The Company considers the continuous improvement of profitability as one of its top priority management goals, and aims to maintain an operating margin of at least 6.3% in fiscal 2015 as a medium-term management target.

The Company has formulated a Medium-term Management Plan 2015, which commences in fiscal 2011 and terminates in fiscal 2015.
The basic policies are as follows:
・ By spreading our strength of "Tsunagu" technologies globally, we aim to become a Group that "creates value for customers," who will be thankful to our products and services.
・ Accelerate the "metabolism" of the business structure to become the Group that creates value for customers.
・ Aggressively promote differentiation and "metabolism" while putting the utmost importance on profitability to become a Group achieving high returns.
・ With the above-mentioned basic management policies, we pursue consolidated net sales of 650.0 billion yen, an operating margin of at least 6.3% and a percentage of overseas sales of 60% or more.

Our growth strategies include:
(i) Consistently creating, and commercializing as quickly as possible, new technologies and products in areas with growth potential such as the environment and energy, cloud communication, and medical,nursing and healthcare towards our future growth and new market development. Thus, the "metabolism" as source of corporate existence and growth must be accelerated.
(ii) Expanding businesses in the rapidly growing overseas markets to accelerate our global development,and establish a business promotion system to achieve such a goal and increase revenues.
(iii) Proceeding with selection and concentration of management resources under a business restructuring program in response to the changing business environment such as growing overseas markets and a shrinking domestic market, etc.

Besides, we reformed organization and business structures to change ourselves to "successful business unit / group company which continue to win", which are additional countermeasures against the environmental changes. This is to reach the mid-term goal, and we continue reforms of operational formations and sizes. For example, we enhance in-house company system that was introduced to clarify business responsibility of each organization,change in business schemes and segments, optimize headcounts in the entire group, eliminate and consolidate business sites.
We plan to formulate the 2020 Mid-term Business Plan that is a five year plan from FY2016 to FY2020 by the end of FY2015.

Basic policy regarding selection of accounting standard
Considering comparability of consolidated financial statements among different periods and companies, the Group policy is to produce consolidated financial statements based on Japanese standard for the time being.
Regarding application of IFRS, our policy is to respond to it adequately, considering both domestic and overseas trends.

Owing to the stock price rise, depreciation of yen and other factors, Japanese economy in FY2014 continued to be gradually recovering. Regarding overseas economic conditions, US economy kept recovering as the employment situation has been steadily improving, although there was time that the economy was rather soft at the end of fiscal year due to the unfavorable weather and the strong dollar. Chinese economy was still growing as a whole because of the firm increase of individual consumption etc. even though the growth rate seemed to be slowing down.

Under these circumstances, the Fujikura Group's in-house companies achieved the following business results in fiscal 2014. The Power & Telecommunication Systems Company increased sales thanks to the expansion of demand in overseas markets and changes in foreign exchange rates, but decreased profit due to the intensification of competition and changes in the product category mix. The Electronics Business Company achieved a substantial increase in both sales and profit, driven by the expansion of demand for its products, mainly for flexible printed circuit (FPC) boards. The Automotive Products Company increased sales due to expanded overseas demand, but profit decreased as a result of cost increases caused by the launch of new automobile models as well as influence from some customers who reduced their production quantities.
　

The Fujikura Group's net sales totaled 661.5 billion yen, up 11.9% year on year, while operating income also increased by 23.2% to 25 billion yen. The Group's net income for the term was 12.2 billion yen, up 266.5% year on year.

In fiscal 2014, the Fujikura Group (Fujikura Ltd. and its consolidated subsidiaries) made a capital investment of 24.6 billion yen (on a basis of tangible and intangible assets received) under its basic strategies of "concentrating managerial resources in growth fields" and "enhancing craftsmanship in monozukuri (manufacturing)."

Fiscal Year Ended March 31, 2015 (April 1, 2014 - March 31, 2015)

Fujikura Ltd. is committed to the stable payment of dividends and aims to return profit to shareholders at a total return ratio of about 30% 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:

Annual Report2015

Annual Report2015

Annual Report2015

Annual Report2015

Annual Report2015

Annual Report2015