Toshiba 2013 Annual Report Download - page 75

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TOSHIBA Annual Report 2013
SCOPE OF CONSOLIDATION
As of the end of March 2013, Toshiba Group (“the Group”) comprised Toshiba Corporation (“the Company”) and 590
consolidated subsidiaries and its principal operations were in the Digital Products, Electronic Devices, Social Infrastructure
and Home Appliances business domains.
Of the consolidated subsidiaries, 131 were involved in Digital Products, 44 in Electronic Devices, 290 in Social
Infrastructure, 56 in Home Appliances and 69 in Others.
The number of consolidated subsidiaries was 36 more than at the end of March 2012. 200 affiliates were accounted for
by the equity method as of the end of March 2013.
RESULTS OF OPERATIONS
NET SALES AND INCOME (LOSS)
The global economy remained uncertain. Although the United States continued to see gradual recovery, Europe has
entered a recession accompanied by deepening anxieties for sovereign debt. The slowdown in growth in emerging
economies, such as China and Southeast Asia, also had a negative effect. There are few prospects for immediate
improvement in sight. The downturn in Europe is expected to be prolonged, and it is possible that growth will slow in the
U.S. and China.
The Japanese economy has returned to a path of moderate recovery as yen depreciation has gathered pace since the
end of 2012, bringing with it a rise in stock prices. Although there are concerns for higher import costs due to the fall in
the yen, and declines in exports due to the sluggish global economy, the economy is expected to continue to recover.
In these circumstances, the Group, aiming to become a world-leading diversified electric and electronics provider and
looking ahead to changes in the business environment, promoted transformation of its business structure toward
securing autonomous growth by creating future markets. The Group is promoting Total Energy Innovation and Total
Storage Innovation to support realization of its Smart Community concept, strengthening its six focus businesses, and
making steady progress in continuing to develop world first and world No.1 products and services. The Group also
steadily advanced structural reforms, seeking to maximize synergies and rationalize operations by consolidating and
optimizing domestic and overseas facilities, and improving cost structures by optimizing global production and
procurement, in order to establish a business structure able to secure profit even at times of low growth.
The Group's consolidated net sales for the year ended March 31, 2013 were 5,800.3 billion yen ($61,705.1 million), a
decrease of 300.0 billion yen against the previous year. Although the Social Infrastructure segment including the Power
Systems and Social Infrastructure businesses, the Elevator and Building Systems business and the Medical Systems
business saw higher sales, as did the Home Appliances segment, overall sales were lower, due to divestiture of the LCD
business and lower sales in the Digital Products and Electronic Devices segments due to market downturns.
Consolidated operating income (loss) was 194.3 billion yen ($2,067.2 million), a decrease of 8.4 billion yen, mainly due to
the divestiture of the LCD business, although the Electronic Devices segments recorded a significant increase in operating
income and the Social Infrastructure segment and the Home Appliances segment also saw increases.
Income (Loss) from continuing operations, before income taxes and noncontrolling interests increased by 10.0 billion
yen to 155.6 billion yen ($1,654.8 million), a result that reflects improved currency exchange rates and the positive effect
of asset reductions, despite the impact of channeling 59.7 billion yen into promoting business restructuring for the future.
Net income (loss) attributable to shareholders of the Company increased by 7.4 billion yen to 77.5 billion yen ($824.8
million).
KEY PERFORMANCE INDICATORS
Following are the key performance indicators (“KPIs”) that the Management of the Group uses in managing its business.
Net sales and operating income are basic indicators to measure the business results of the Group. Operating income is
regularly reviewed to support decision-making in allocations of resources and to assess performance. Operating income
ratio (ratio of operating income to net sales) is also KPIs. To assess financial position of the Group, the Management
emphasizes shareholders' equity ratio (ratio of equity attributable to shareholders of the Company to total assets) and
debt-to-equity ratio. Investments including capital expenditure and investments & loans for M&A and R&D activity are
indispensable for growth of the Group and accordingly total investments and R&D expenditure are KPIs. To measure
efficiency of investments and business results, the Management uses ROI (return on investment) and ROE (return on
equity), respectively.