Fuyo Lease Group Integrated Report2023

Contents

About Us

Top Message

Shared Value Story

Strategy & Action

Fuyo Lease Group’s Mission, Vision and Values

To achieve sustainable growth, we have established
a common Mission / Vision for the group and values
for each group company.

MissionOur
responsibilities
and raison d’etre

The group that anticipates social changes and takes on the challengeof yet unseen issues
The group that is trusted by customers and works together tosolve social issues

VisionThe group that grows with employees by supportingthe challenges and growth of each employee

What we want to become

Corporate Slogan

The Group mission defines the Group’s raison d’etre
and the Group Vision defines a medium- to long-term
ideal to achieve from the perspectives of “society,”“customers” and “employees;” the particularly
important stakeholders for advancing business.”
The Group also stipulates Value for each Group
company as a guiding principle to achieve the Vision.
The Group culture expressed in Mission, Vision andValue is shared, and while responding to changes
in the external environment, all Group directors
and employees will display their capabilities in theworkplace and the Group will work in unity as it aims
to create value.

Shared Value
Story● Fuyo Lease Group Basic Compliance

Strategy &ActionInternal Control System● Basic Policy on Systems to Support
Sustainable Value Creation

Policy● Fuyo Lease Group Environmental

About Integrated Report 2023
The report will center on progress of the first year of the Medium-Term
Management Plan Fuyo Shared Value 2026, contain a fuller description ofvalue creation toward realization of the Fuyo Lease Group’s Mission, Vision
and Value, and newly include the Fuyo Vision Stories as a feature at the
beginning. From the perspective of giving equal emphasis to financial andnon-financial information, in addition to disclosures from a financial aspect,
the report will also disclose sustainability-related policies and systems inplace, as well as our relationships with stakeholders, human capital, climatechange, human rights, biodiversity and the promotion of a circular society,from a variety of perspectives.

01

Scope of Reporting
Fuyo General Lease Co., Ltd., its 65 consolidated subsidiaries and 18
affiliate companies

Reference Guidelines
International Financial Reporting Standards Foundation“International Integrated Reporting Framework”(published in January 2021)

Value Creation Process

11

Materiality

12

Creating Peace of Mind in Health andWelfare through Business Support forCommunity Medical Institutions

13

Creating New Value Creation Times in
Business

15

Contributing to a Decarbonized Society

17

Medium-Term Management Plan Fuyo
Shared Value 2026

19

Financial and Non-Financial Highlights

21

Message from Senior Financial Officer

23

Status of Initiatives to Enhance Social Value

25
27

Circular Economy

28

refer to the Fuyo Vision Stories pages.

BPO/ICT

29

Mobility

30

Healthcare

31

Real Estate32

Aircraft

33

New Domains and Incubation

34

P13〜18The Fuyo Lease Group Code of Corporate Conduct
stipulates the six basic policies to support realizationof Mission, Vision and Value.

Editorial Policy*The report also includes some information pertaining to fiscal year 2023.

07

Energy and Environment

PolicyReporting Period
Fiscal year 2022 (April 2022 - March 2023)

05

practice and works to create new value. For details, please

Management

Purpose of this Report
Since fiscal year 2018, Fuyo Lease Group has integrated its CSR Reportand Annual Report into an Integrated Report. This report is designed to provide information on our financial and non-financial activities in an integrated
manner to help our shareholders, investors, and other stakeholders assess
the Group’s value comprehensively. We also aim to showcase the foundation of all our activities for value creation which will help stakeholders better
understand our future corporate values.

Fuyo Lease Group Network

The Fuyo Lease Group puts the Mission, Value and Value into

● Corporate Governance Guidelines● Fuyo Lease Group Human Rights

03

Value Creation by Business Area

Policy● Basic Policy for Establishing the01

History of Value Creation

Fuyo Vision Stories

Guiding principles

Fuyo Lease Group Code of Corporate Conduct

Mission Vision Value

Top Message

Value“Go Where No One
Has Gone Before.”

Financial Section &Corporate Date

Contents
About Us

Expand business domains and promote further evolution in
our relentless attempt to create new value, which in turncontributes to realizing a prosperous society andsustainable growth.

Corporate
GovernanceManagement

Date of Issuance
September 2023
Note on Forward-Looking Statements
This report contains forward-looking statements, such as future plans andstrategies, that are based on currently available information. These expectations and projections are subject to a number of risks and uncertainties that
could cause actual results to differ materially from those anticipated. These
uncertainties include, but are not limited to social and economic conditions,market demand and competition, laws and regulations, interest rates, andcurrency exchange rates.
Independent Assurance
Fuyo General Lease Co., Ltd. has engaged Ernst & Young ShinNihon LLC
to perform assurance of selected environmental and social data in order toassure credibility of reported figures. The data subject to the third-party assurance is indicated with .

Corporate
Governance

CSV Management

35

Stakeholder Engagement

37

Human Capital

38

DX Strategy

42

Climate Change Response

43

Initiatives for Respect for Human Rights /Initiatives related to Biodiversity

46

Initiatives to Realize a Circular Society

47

Community Contribution

48

Board Members

49

Message from an Outside Director

51

Corporate Governance53

Risk Management

58

Compliance System

60

Independent Assurance Report

61

Financial
Financial Section
Section &Stock Information
Corporate Data Participation in Initiatives

62
131
132

Fuyo Lease Group Integrated Report 2023

02

History of Value Creation

About Us

Fuyo Lease Group’s History of Value
Creation

Top Message

Shared Value Story

Strategy & Action

2020

Ordinary profit (billions of yen)(Consolidated basis)

Established Fuyo General Lease (Taiwan) Co., Ltd.

2022

2021

The Fuyo Lease Group has continued expanding business since the foundation of Fuyo General Lease Co., Ltd. in 1969
through a growth strategy built around the ability to propose solutions, M&A and diversification of business domains
around a core of value creation. Amid a rapidly changing external environment, the Group will continue to grow sustainably
by utilizing the problem-solving abilities it has cultivated until now and based on the concept of CSV (creating shared value)
to produce results from a financial aspect as well as simultaneously achieving value creation from a non-financial aspect
through resolving social issues.
2014
Made Aircraft Leasing
and Management Limited(ALM) a consolidated
subsidiary

2019
Made NOC Outsourcing & Consulting Inc.
a consolidated subsidiary

Made INVOICE INC. aconsolidated subsidiary

Made Accretive Co., Ltd.
a consolidated
subsidiary

2021
Made
WorkVisionCorporation a
consolidated
subsidiary

Made Human Centrix Co., Ltd. a
consolidated subsidiary

2023
Made Pacific Rim Capital, Inc. a
consolidated subsidiary¥3,000.0
billion2,704.52018
2017

Financial Section &Corporate Date

Operating assets: Consolidated (billions of yen)

Made YAMATO LEASE CO., LTD. a consolidated subsidiary

Established a directly controlled base in Thailand
Fuyo General Lease (Thailand) Co., Ltd.

Corporate
GovernanceManagement

2,555.9

2,565.9

2,384.0¥75.0

2,262.8

2,172.6

billion2,047.4

1,867.2
1,730.5
59.7

1,599.2

Listed on the 1st Section of the Tokyo Stock
Exchange (2004)

52.7
48.0

2004

44.0

Listed on the 1st Section of
the Tokyo Stock Exchange
December

39.1
35.2
31.4

843.9
29.2
25.4

Otemachi Building (1969)

26.5

16.5

1969

Medium-Term
Management Plan

EstablishedFuyo General
Lease Co., Ltd.
2.9
-0.023

1970

2005

1970

Fuyo Lease
GrowthStrategy

Promotion of Sustainability

Environment

2013

Developed business centered on the benefits of leasing as a means to rationalize and streamline corporate
management
Listing on the First Section of the Tokyo Stock Exchange(2004) allowed us to operate more freely and engage innew businesses

Value Creation 300

2015

2014

2016

2016

2018

2019

Frontier Expansion 2021

2020

2017

2021

2021

Expanded frontiers by going beyond the existing boundaries
of finance leasing

Evolved and advanced the leasing business, keeping in
mind “value creation by solving customers’ problems”

Positioned Real Estate, Energy & Environment, Medical & Welfare,
Aircraft and Overseas as Strategic Areas, and concentrated our management resources

Began pivoting away from the finance leasing field by developing Strategic Areas, such as aircraft and real estate,
to build a highly profitable business portfolio

Promoted the expansion of new business areas such as business process outsourcing (BPO) and Mobility through proactive M&A strategies.

Started operation on the first solar power generation
project (2013)

Conclusion of the first deal for building a hotel usinghydrogen energy (2016)･Promoted energy saving / energy management

Participated in RE100, committed to converting to using renewableenergies (2018)
Announced carbon neutrality targets (2021)
Launched the Fuyo Zero Carbon City Support Program (2020)･Started in-house reduction initiatives, full-fledged initiatives in
the renewable energy business tarted handling building leases for elderly care homesS(2016)

Promoted initiatives to make BPO companies Group companies, growing the BPO business (2018 onward)･Started taking on projects focused on creatingsocial value･Expanded to business fields other than leasing･Started providing BPO business solutions for labor shortages andwork style reforms

Conclusion of the first deal for real estate lease withowned land (2012)･Engaged in improving social infrastructure utilizing
leasing functions

2022(Fiscal years
2027 ended
March)

2023

Fuyo Shared Value 2026

2022

2026

Fiscal years

Aiming to achieve simultaneous resolution of social issues anddelivery of economic value through the CSV strategy
Promoting simultaneous achievement of social value and corporate
value while focusing on the concept of CSV
Aiming to achieve sustainable and stable profit growth through strategic
allocation of management resources in line with changes in society
Strengthening initiatives to invest in human resources and DX

Advanced stronger collaboration among Group companies
ESCO-related results topped 100 facilities and cumulative value of ¥10 billion (2014)

 onclusion of the first deal for an operating lease with anCowned aircraft (2011)2017

Strengthened earning capabilities by creating value for clients

Started operation on the first deal in the ESCO business(2006)･Started response to environmental issues

Societyandpeople2014

Set contribution to CO2 emissions reduction as KPI (2022)
Participated in wind power generation in the United Kingdom (2022)
Achieved 500 MW of power generation capacity through renewableenergies (2023)
Launched circular economy lease initiative (2023)･Promoted contribution to emissions reduction through business･Promoted initiatives to achieve a circular economy

Started region-specific healthcare fund initiatives (2023)
Made the video production business Human Centrix Co., Ltd. a Groupsubsidiary (2022)･Promoted initiatives for joint venture-type projects･Expanded range of provided services under the slogan“creation of value creation time”* Calendar year unless otherwise noted

03

Fuyo Lease Group Integrated Report 2023

04

Fuyo Lease Group Network

About Us

Fuyo Lease Group Network

Top Message

Shared Value Story

Strategy & Action

Consolidated: 3,437/Non-consolidated: 816(as of March 31, 2023)

Headquarters

Kojimachi Garden Tower, 5-1-1, Kojimachi,Chiyoda-ku, Tokyo
102-0083, Japan

Number of
employees

EstablishedMay 1, 1969

Line of business Leasing and installment sales of IT equipment, office equipment,

Paid-in capital¥10,532 million (Number of shares outstanding: 30,288,000 shares)

industrial machinery/machine tools, commercial/service equipment,
medical devices, transportation equipment (ships, aircraft,
automobiles, etc.), civil engineering and construction machinery,etc., commercial loans and other financial services, leasing of realestate and consultative services, etc.

Shares listed on Prime Market of the Tokyo Stock Exchange (ticker: 8424)

Domestic Group Companies

Overseas Group Companies

Fuyo Auto Lease Co., Ltd.

Sharp Finance Corporation
モビリティ
ビジネス

Through auto leasing, Fuyo Auto Lease streamlines complicated operations relating to customers’ vehicles and provides total support for
rationalizing management.

サーキュラー
モビリティ
エコノミー
ビジネス

Fuyo General Lease (USA) Inc.

一般リース・
エネルギー
一般リース・
一般リース・
一般リース・
一般リース・
サーキュラー
モビリティ
エネルギー
モビリティ
モビリティ
サーキュラー
サーキュラー
サーキュラー
エネルギー
エネルギー
エネルギー
モビリティ
サーキュラーエネルギー
BPO／ICT
BPO／ICT
ICT
BPO
BPO
／
／ICT
ICT
BPO／ICT
医療福祉
不動産 BPO／航空機
不動産
医療福祉
医療福祉
航空機
医療福祉
不動産
不動産
不動産 航空機
航空機
医療福祉
ファイナンス環境
ファイナンス
ファイナンス
ファイナンス
ファイナンス
エコノミー
ビジネスビジネス
ビジネス
環境 エコノミー
エコノミー
エコノミー環境 医療福祉
環境
環境
ビジネス
エコノミー
環境 航空機INVOICE INC.
モビリティ
ビジネス

サーキュラー
エコノミー

エネルギー
環境

サーキュラー
エコノミー

エネルギー
環境

BPO／ICT

医療福祉

モビリティ
サーキュラー
一般リース・エネルギー
航空機 エコノミー
ビジネス
ファイナンス 環境

BPO／ICT

医療福祉

BPO／ICTINVOICE’s offering includes business customers combined billing services that help reduce costs and improve productivity.

eXtreak, inc.

NOC Outsourcing & Consulting Inc.
モビリティ
ビジネス

サーキュラー
エコノミー

エネルギー
環境

医療福祉

不動産

モビリティ
ビジネス

サーキュラー
エコノミー

エネルギー
環境

BPO／ICT

医療福祉

不動産

航空機

一般リース・
ファイナンス

モビリティ
ビジネス

サーキュラーエコノミー

BPO／ICT

医療福祉

eXtreak provides IT facility services to companies including design,
construction, and building of IT infrastructure and facility-related maintenance.

エネルギー
環境

BPO／ICT

一般リース・
ファイナンス

航空機

モビリティ
ビジネス

エネルギー
環境

BPO／ICT

医療福祉

WorkVision provides a full range of IT solutions centered on cloud service
and package service that covers planning, development and sales tooperation, maintenance and other services.

Human Centrix Co., Ltd.

FUJITA Co., Ltd.
医療福祉

Human Centrix provides services from planning and production to distribution related to video services for business use, supporting companies toimprove communication efficiency, marketing and DX promotion.

エネルギー
環境

航空機

モビリティ
一般リース・
ビジネス
ファイナンス

不動産

航空機

モビリティ
一般リース・
ビジネス
ファイナンス

不動産

航空機

一般リース・
ファイナンス

不動産

航空機

サーキュラー
エコノミー

エネルギー
環境

BPO／ICT

医療福祉

不動産

航空機

一般リース・
ファイナンス

サーキュラー
エコノミー

エネルギー
環境

BPO／ICT

医療福祉

不動産

航空機

航空機

一般リース・
ファイナンス

FGL Techno-Solutions Co., Ltd.
BPO／ICT

モビリティ
ビジネス

Aqua Art provides tropical fish tanks (aquariums), which replicate thenatural environment, for rent with comprehensive maintenance systems.

エネルギー
環境

BPO／ICT

医療福祉

航空機

一般リース・
ファイナンスFuyo General Lease (HK) Limited provides financial services to companies expanding into East Asia except for Japan.

モビリティ
ビジネス

エネルギー
環境

サーキュラーエネルギー

サーキュラー
エコノミー

エネルギー
環境

モビリティ
サーキュラー
エネルギー
エネルギー
／ICT
医療福祉
ビジネス BPO
エコノミー
環境
環境

FGLGROUP Business Service CO., Ltd.
エネルギー
環境

BPO／ICT

医療福祉

航空機

一般リース・
ファイナンス

Yokogawa Rental & Lease Corporation
サーキュラー
エコノミー

エネルギー
環境

サーキュラー
不動産

一般リース・
エネルギー
サーキュラーエネルギー
航空機モビリティ
BPO／ICT
医療福祉 環境
不動

医療福祉

不動産

一般リース・

エネルギー 一般リース・
BPO／ICT
航空機

モビリティ
医療福祉

医療福祉

不動産

航空機

一般リース・
ファイナンスBPO／ICT

医療福祉

不動産

航空機

一般リース・
ファイナンス

モビリティ
ビジネス

サーキュラー
エコノミー

モビリティ

サーキュラーエネルギー

BPO／ICT

航空機

ビジネス
環境
FGL Aircraft
USA isエコノミー
based in Torrance,
California and conducts aircraft
leasing for mainly North American airline customers.

一般リース・
ファイナンス

Pacific Rim Capital, Inc.

Aircraft Leasing and Management Limited provides comprehensive
aircraft services including aircraft lease marketing, aircraft management,
post-lease aircraft sales.

モビリティ

サーキュラー
エコノミー

エネルギ
環境

モビリティ

サーキュラー
エコノミー

エネルギ
環境

Pacific Rim Capital conducts operating leases for material handling ビジネス
equipment centered in the U.S., Canada, Mexico and Europe.

PLIC Corp., Ltd.

一般リース・
ファイナンスBased in Canada, TDF Group Inc. engages in rental, leasing, and sales ofpickup trucks in North America.

エネルギー

BPO／ICT

医療福祉

不動産

航空機

一般リース・

ファイナンス
環境
PLIC Corp.
provides logistics solutions in Thailand, including
forklift ビジネス
rental with maintenance and automated warehousing system implementation
consultations, sales and installations.

BPO／ICT
不動産

医療福祉 一般リース・
不動産
航空機

FGL Aircraft Ireland Limited

ファイナンスFGL LeaseUp Business Service handles the paperwork
for Fuyo Lease's
lease expiration projects on behalf of Fuyo Lease.

Overseas
network

Aircraft Leasing and Management Limited
TDF Group Inc.

Fuyo General Lease (Thailand) Co., Ltd.
PLIC Corp., Ltd.

Fuyo General Lease (HK) Limited
Fuyo General Lease (China)
Co., Ltd.

FGL GROUP Management Service Co., Ltd.
不動産

FGLGROUP Business Service handles shared services related to thesales administration of each Fuyo Lease Group company and non-life
insurance agency business.

モビリティ
ビジネス

航空機

ファイナンス環境
ファイナンスビジネス
エコノミー
環境 ビジネス
エコノミー
Fuyo General Lease (Thailand)Co., Ltd. provides
financialservicestocompanies expanding into Thailand

Pacific Rim Capital, Inc.

サーキュラー
エコノミー

不動産

医療福祉

FGL LeaseUp Business Service Co., Ltd.

FGL Circular Network engages in recycling resources by buying andselling Fuyo Lease's properties with expired leases and used properties
owned by customers.

モビリティ
ビジネス

BPO／ICT

FGL Aircraft USA Inc.
BPO／ICT

Based in Dublin, FGL Aircraft Ireland Limited offers aircraft leases toairlines in Europe and Asia.

モビリティ
ビジネス

航空機

Fuyo General Lease (Thailand) Co., Ltd.

Fuyo General Lease (Taiwan) Co., Ltd. provides financial services tocompanies expanding into Taiwan.

サーキュラー
エコノミー

一般リース・

不動産

ファイナンスエコノミー
環境Fuyo General
Lease (Asia)
Pte. Ltd. provides financial services to companies expanding into Southeast Asia.

一般リース・
サーキュラーエネルギー
モビリティ
一般リース・サーキュラー
モビリティ
サーキュラーエネルギー
モビリティ
サーキュラーBPO／ICT
BPO／ICT
医療福祉
不動産 医療福祉エネルギー
航空機 不動産
航空機 医療福祉
BPO／ICT
ファイナンス
エコノミー
ビジネス
エコノミー
ファイナンス不動産ビジネス 環境 エコノミー
環境 ビジネス
エコノミー
環境

モビリティ
ビジネス

BPO一般リース・
／ICT
医療福祉

Fuyo General Lease (Asia) Pte. Ltd.
不動産

TDF Group Inc.

FGL Techno-Solutions Co., Ltd provides equipment sales, outsourcing
helpdesk services, kitting and construction and other technical services
in ICT-related fields.

FGL Circular Network Co., Ltd.

サーキュラー
エコノミー

エネルギー
航空機

ファイナンス環境
ファイナンスBased in Shanghai, Fuyo
GeneralLease (China) Co., Ltd. offers leases
tocompanies expanding their businesses into China.

Based in New York and Los Angeles, Fuyo General Lease (USA) Inc.
provides financial services to customers located in the Americas.

Aircraft Leasing and Management Limited
モビリティ
一般リース・
ビジネス
ファイナンスFUJITA specializes in replacing medical equipment in addition to buying
and removing second-hand medical equipment. FUJITA also assists hospitals and clinics close medical practices.

Aqua Art Co., Ltd.
サーキュラー
エコノミー

不動産

Fuyo General Lease (China) Co., Ltd.
一般リース・
モビリティ
サーキュラー
医療福祉モビリティ
不動産サーキュラー
航空機 エネルギー
BPO／ICT ビジネス
医療福祉 エコノミー
不動産
ファイナンス
ビジネス
エコノミー
環境

FGL Aircraft Ireland Limited
不動産

In addition to new and used truck leasing, procurement and sales, thecompany also offers services to assist transport companies with management issues.

モビリティ
ビジネス

医療福祉

WorkVision Corporation
一般リース・
サーキュラー
航空機モビリティ
ファイナンスビジネス
エコノミー

BPO／ICT

Fuyo General Lease (Taiwan) Co., Ltd.

NOC Outsourcing & Consulting offers high quality BPO services tocustomers. The company provides customers with support to increase
their work efficiency and reduce costs in human resources, accounting,administrative, IT, and other operations.

YAMATO LEASE CO., LTD.
サーキュラー
エコノミー

不動産

一般リース・エネルギー
モビリティ
サーキュラー航空機
ファイナンス 環境
ビジネス
エコノミー

Fuyo General Lease (HK) Limited

一般リース・
エネルギー
一般リース・
モビリティ
サーキュラーエネルギー
一般リース・
モビリティ
サーキュラー
エネルギー
BPO
／ICT
医療福祉
不動産 BPO／ICT
航空機
BPO
／ICT
医療福祉
医療福祉 不動産 不動産 航空機 航空機
ファイナンス
環境 ビジネスビジネス
ファイナンスエコノミー
ファイナンス
エコノミー 環境
環境

Accretive provides highly convenient financial services, focusing mainly
on factoring business for nursing care and medical receivables.

モビリティ
ビジネス

不動産

As a good partner of sales companies, Sharp Finance offers financial
services solutions, which include leasing items for sales promotions.

Accretive Co., Ltd.
サーキュラー
エコノミー

Financial Section &Corporate Date

Fuyo General Lease Co., Ltd.

The Fuyo Lease Group has a network of Group companies in Japan and overseas that provide a wide range of services.
We are working to enhance our online portal sites and broaden our contact with customers.

モビリティ
ビジネス

Corporate
GovernanceManagement

モビリティ
ビジネス

サーキュラーエネルギー

BPO／ICT

医療福祉

不動産

航空機

一般リース・

Fuyo General Lease (USA) Inc.

エコノミー
環境
FGL GROUPManagement
Service handles shared services relatedファイナンス
tohuman resources and administrative work for all Fuyo Lease Group companies.

MerryBiz Inc.
一般リース・
医療福祉
ファイナンス

モビリティ
サーキュラーエネルギー
BPO／ICT
医療福祉
不動産
航空機BPO／ICT

ビジネス
エコノミー
環境
Yokogawa Rental & Lease offers rental
servicesfor measuring
instruments and IT equipment. Since it holds one of the largest stocks ofequipment in the industry. It can respond quickly to the needs of customers.

不動産

航空機

一般リース・
ファイナンス

モビリティ
ビジネス

サーキュラー
エコノミー

エネルギー
環境

BPO／ICT

MerryBiz offers professional accountants from across Japan who handle
accounting tasks remotely and online as “virtual accounting assistants.”

Fuyo General Lease (Asia) Pte. Ltd.

Fuyo General Lease (Taiwan)Co., Ltd.

FGL Aircraft USA Inc.

医療福祉

不動産

航空機

一般リース・
ファイナンスDomestic
network

Value creation withcustomers throughextensive customer
contact

We are working to enhance our online contact points to improveaccessibility to the services the Fuyo Lease Group provides. Feel free
to access them anytime.
For medical, dental clinics and nursing care providers (Sharp Finance)
Medical LIVES

https://medicallives.com/

Fuyo Mediwel Support

https://www.fuyo-mediwel-support.jp/

Factoring service for business operators (Accretive)
https://accretive-factoring.jp/

Energy & Environment

BPO/ICT

Healthcare

Aircraft

For transport business operators (YAMATO LEASE)

Mobility

Real Estate

General lease andFinancinghttps://tramachi.yamatolease.co.jp/

Circular Economy

Business legend:

05

Fuyo Lease Group Integrated Report 2023

06

Message from the President

About Us

Top Message

Shared Value Story

Strategy & Action

Progress of the Medium-Term Management
Plan Fuyo Shared Value 2026 andFuture Challenges

Top Message

We aim to create value
centered on trust and CSV
as we move toward our
vision for 2030.
President andChief Executive Officer

Hiroaki Oda

Five Years of Strengthening Our Corporate
Foundation
The Fuyo Lease Group has achieved steady growth over the
past five years since the previous Medium-Term Management
Plan. This growth of approximately double the ordinary profit
has been supported by the strengthening of the Fuyo Lease
Group’s unique sales capabilities and of our corporate foundation.
For me, the real pleasure of the job is establishing a good
rapport with customers through repeated proposals and successfully completing projects that are useful to them. Repeatedly and thoroughly, every time the occasion arises, I tell our
employees that in order to build a pipeline with our customers,
we should know our customers well and gain their trust by

07

listening to their concerns, continuing to offer our wisdom, andkeep making proposals until they are satisfied with our services.
Each and every one of our employees has become familiar withthese guiding principles, and as they gain experience working
on their own, they are now able to provide solutions that truly
address our customers’ business challenges.
To achieve the goal of strengthening our sales capabilities, we added a company that provides BPO services to theGroup, and in addition to the business fields of human resources, accounting, general affairs, and sales, we also provide training and other video creation services for business use, which
has strengthened our sales style which maintains an ongoingcustomer pipeline. At the same time, the BPO service itself
became a major pillar of business and enabled us to strive foreven higher goals.

In fiscal 2022, we launched our Medium-Term Management
Plan Fuyo Shared Value 2026. The plan fully incorporates theconcept of CSV (Creating Shared Value), which aims to improve
corporate value by addressing social issues through business.
This is the Fuyo Lease Group’s growth strategy, which aims toachieve strong and sustainable profit growth by equally pursuing financial (corporate value) and non-financial (social value)
targets.
For business domains that drive growth, we will intensively
invest management resources in the domains of Mobility andCircular Economy for strategic growth enabled by capturing
tectonic social changes and in Energy & Environment, BPO/
ICT, and Healthcare for accelerated growth enabled by capturing market trends, with the aim of realizing dramatic growth inprofits.
In fiscal 2022, the first year of the plan, we achieved record-high business results and surpassed those of fiscal 2021.
This was mainly the result of steady advancements throughbusinesses in the business domains that we have positioned as
growth drivers. We achieved both quality and quantity by improving ROA and increasing operating assets, realized steadyprofit growth while improving profitability, and were able to passthrough the first year of the plan at a steady pace, which I thinkis highly commendable.
Looking ahead, there is a strong tailwind in the Energy & Environment domain, as exemplified by the agreement reached at
the G7 Summit by a total of seven countries to aim to introduce
three times the amount of solar power and seven times theamount of offshore wind power compared to 2021 by 2030.

Corporate
GovernanceManagement

Financial Section &Corporate Date

Collaborations with partners both within Japan and overseas
are proceeding in various formations, and we will work on
expanding business further.
In the Healthcare domain, business operators’ funding issues
have surfaced since the termination of subsidies related to
COVID-19, and the digitalization of operations is being delayed. We will combine the Group’s BPO functions and healthcare-related services and contribute to earnings improvements
and the streamlining of operational duties. In fiscal 2022, weparticipated in the creation of a region-specific healthcare fund,but the construction and maintenance of medical and nursing
infrastructure is an important societal topic. We will work tosolve societal issues through methods including collaboration
with regional financial institutions that support local areas.
In the Circular Economy domain, determining how to establish a highly profitable business model and achieve economic
value along with social value will become an important topic.
We have now released a “Circular Economy Lease,” which isa product that works to promote the realization of a circularsociety together with customers. Although the current scopeof the lease is limited to items such as personal computers, wewill work to expand the scope and simultaneously create bothsocial and economic value.
In the Mobility domain, rather than simply pursue short term
EV figures, we will work to build a coalition with alliance partners in preparation for the expansion of the EV market. Overseas, we will expand business on a global basis in the logistics
domain by turning our equity-method affiliate Pacific Rim Capital into a consolidated subsidiary. In addition, looking toward
the expansion of these new business domains, we will strongly
promote collaboration with partner companies and strengthen
insufficient functions.

Three Growth Drivers and Seven Business Domains
Rising Transformation

Accelerating Transformation

Growing Performance

Energy & Environment
Mobility

Circular
EconomyReal Estate
BPO/ICT

Aircraft

Healthcare

Fuyo Lease Group Integrated Report 2023

08

Message from the President

We aim for value creation and sustainablegrowth centered on trust and CSV.
Since becoming president, I have strongly transmitted a message of wanting to become a corporate group that is trusted.
At the same time, we clarified our Mission, Vision and Values,
and worked to improve the awareness of each and every employee. In the past year, we held Group-wide workshops, considered overlaying each individual employee’s vision onto theGroup’s Vision, and deepened their understanding of the Vision
as something personal. Additionally, in order to implement the
Values that serve as our action guidelines to achieve the Vision,
we have repeatedly conveyed the “10 RM Practices” (see chart
below), which will lead to concrete actions, and I feel that thishas enabled us to begin sharing a direction and a specific wayof moving forward.
We will deepen understanding of the relationship between
our Mission of contributing to realizing a prosperous society
and sustainable growth and our daily operating activities.
Achieving our Values and feeling that they connected to the
Vision has led to an increase in the number of people who
see the Vision as something personal, but I would also like topersistently talk about the Mission beyond that.
In order for the Group to continually develop, we must simultaneously pursue economic and social value, earn the trust ofcustomers and society, and become a necessary presence. I
believe that our ideal vision means value creation and sustainable growth centered on trust and CSV.

A Corporate Group That Is Trusted

Expand business domains and promote further evolution in
our relentless attempt to create new value,
which in turncontributes to realizing a prosperous society
and sustainable growth.

About Us

Initiatives for human resources development
and DX: Human resources development means
cultivating trust, and spending 300% of ourmoney and physical energy on development
To those of us in the service business, people are the mostimportant asset, and the thing that we must spend the mostamount of physical energy on is development. The humanresources sought by Fuyo Lease are, to sum it up, people
who are trusted. Although we have set a target to increase theper-person human resource development-related expenses to300% of the fiscal 2021 level within five years, it is important
to triple the physical strength of people spent on training andlearning in addition to the monetary amount. Those at the top
will spend three times the amount of physical energy themselves, and those who come to understand will become missionaries who spread the message to spend physical energy.
That is why I believe people who value trust will grow.
That is not a unilateral process. For example, it is important
to listen carefully to what young employees are thinking, and todeepen dialogue while responding appropriately. I feel that byengaging in so-called “bouncing off ideas” conversations with
employees, they will be able to grow and relationships of trust
will be built between us, while at the same time I will become
able to organize my own thoughts and gaining new ideas.

Top Message

Shared Value Story

Strategy & Action

The same applies to diversity. By “bouncing off ideas” withpeople in different positions with different values, we canbecome aware of new ways of thinking and learn. Listening to
the voices of various people including women and foreigners
will result in the promotion of diversity and lead to the discovery and understanding of new social value. That is also a very
valuable concept for the development of CSV which the Groupcherishes.
There are two aspects to DX initiatives, which are “DX forcustomers” and “In-house DX.” “DX for customers” is highly
compatible with BPO/ICT, and is capable of meeting customers’ DX needs in combination with the functions of affiliatedGroup companies. Meanwhile, in businesses that solve customers’ burdensome tasks, we must promote “In-house DX,”
shorten lead times, streamline operational tasks and create
new value to increase profit. We will visualize internal operational processes, identify the issues, and proceed with digitalization. To do that, I think it is important to work on improving
the awareness of each individual Group employee and to makeeach of them view the Mission as something personal.

Management

Corporate
Governance

Financial Section &Corporate Date

To our Stakeholders: We aim to solve social
issues and simultaneously achieve value
extending into the future andsustainable growth
The Medium-Term Management Plan fully incorporates theconcept of CSV, which aims to jointly improve corporate value
by solving social issues through business. The growth strategyof the Fuyo Group is to aim for robust and sustainable profit
growth by pursuing financial goals, or corporate value, andnon-financial goals, or social value, equally. The plan declares
our aim to develop our business, expand into new businessareas, and pursue sustainable growth as a company while solving social issues. By firmly executing the current Medium-Term
Management Plan, we will achieve growth as a company andmove forward toward our mission almost like walking continually towards the horizon.
Going forward, we will continue to increase the trust of ourshareholders, customers, partners, and employees who are our
stakeholders, build win-win relationships, and aim to be “Fuyo
Lease, which is trusted and always chosen.” We hope that you
will look forward to the future of the Fuyo Lease Group.

Employee job satisfaction

Value creationand trust

MissionOur responsibilities
and raison d’etre

Vision*RM : Relationship Management

Perceiving
the ideal vision as
something personal

What we want to become

Value
Guiding principles

Daily awarenessand conduct

10 RM* Practices
1.

Always from the customer’s
perspective

2.

Gain their trust

3.

Learn all there is to know

4.

Information is life

5.

Move swiftly

6.

Envision scenarios

7.

Be the commander

8.

Create a human network

9.

Improve yourself

10. Create your specialty field

09

Fuyo Lease Group Integrated Report 2023

10

Value Creation Process/Materiality

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Fuyo Lease Group’s Value Creation Process

Materiality

The Fuyo Lease Group's value creation process, which emphasizes CSV (Creating Shared Value: the simultaneous
realization of corporate value and social value) management, is to achieve sustainable profit growth while solving social
issues in the areas of “environment” and “society and people” through business in various domains. To achieve the vision
for 2030 under this process, the Medium-Term Management Plan Fuyo Shared Value 2026 concentrates investment ofmanagement resources on the growth drivers selected from the multiple business domains the Group possesses and isengaged with emphasis on organizational and structural support for sustainable value creation, such as human resource
investment and DX, and building partnerships with customers.

We have identified materiality as an important item in relation to the key elements of the value creation process ofenvironment, society and people, organizational and structural support for sustainable value creation and value creation
through partnerships. Non-financial KPI and targets for fiscal 2026, the final year of the medium-term management plan,
have been set for each materiality issue, and we monitor progress while moving forward on each materiality issue.

Materiality Definition Process

Fuyo Lease Group Vision for

2030

Considering
important issues“Realize a prosperous society and contribute to sustainable growth”

Energy & Environment

Circular Economy

BPO/ICTWe help achieve a
decarbonized society
globally throughenergy-related businessdomestically and overseas

We help achieve a circularsociety through business asa Circular Economy
Platformer

We are a leading company
in creating value creation
time for customers throughbusiness process services(BPS)

Medium-Term Management Plan

Mobility Business / Real
Estate / Aircraft
We are a solution provider thathelps solve social issues indomains such as automobiles,
logistics, real estate and aircraft.

Healthcare

Human Capital

We support maximizing
the value of medical welfare
providers’ management
resources and help toimprove the quality ofdomestic medical andnursing care

Our employees havediverse personalities,
abilities and skills,
which they display totheir maximum extent
and work healthily
and happily

CSV

Corporate Value

Setting
non-financial KPI

During discussions* on drawing
up the medium-term management plan, we positioned
non-financial issues with equal
weighting to financial issues anddiscussed the suitability of each
non-financial issue while taking
into account a long-term strategy.

As KPIs to monitor the progress of each important issue,
we have set appropriate indicators and goals in alignment
with the Medium-Term Management Plan Fuyo Shared
Value 2026.

* Discussions were carried out in a
multi-layered manner throughout fiscal
2021, with outside directors taking part indiscussions over several occasions.

Discussed by the Board of
Directors and approved by
the Board of Directors basedon the opinions of outside
directors.

Revisions are made as needed based on feedback from the Board of Directors or executive management.

Non-Financial
goals

The Fuyo Lease Group’s eight important issues (materiality) to create social value and realize CSV by carrying out our business aredescribed below.

Social Value

Placing equal weight on corporate value and social value

Contribution to the realization of a decarbonized society
Environment

Growth Drivers

Contribution to the realization of a circular society

Transformation Zone

Sustainable profit growth
Improved financial health
Sustained and improved
capital efficiency

Discussion andapproval at theBoard of Directors

Fuyo Lease Group’s Materiality

Fuyo Shared Value 2026

Achieving sustainable growth by resolving social issues through human growth and dialog while at the same time delivering economic value

Financial
goals

While drawing up the medium-term management plan,we specified the 2030 Visionof each business domain and,back casting from this, identified important issues where
there are strong needs to createsocial value and business
opportunities.

Discussions in eachdomain and atmanagement level

Energy & Environment

P27

Circular Economy

P28

BPO/ICT

P29

Mobility

P30

Healthcare

P31

Solving Social Issues
Environment

Delivery of reassurance by ensuring health and welfare
Society and people

Society and People

Creation of new value creation time

Performance Zone
Real Estate

P32

Aircraft

P33

Organizational and structural support for sustainable value creation
Investment in human resources & DX

Value creation through partnerships

Strategic human resources development
Organizational and structural support
for sustainable value creation

Diversity and inclusion
Health and productivity management, work-life balance

Value creation through partnerships* For non-financial KPI and fiscal 2026 goals, please see the Materiality pages

Value creation through partnerships
P25-26

Customers

11

Fuyo Lease Group Integrated Report 2023

12

Feature: Fuyo Vision Stories

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Fuyo Vision Stories

Society, Customers
Get to know stories of the Fuyo Lease Groupʼs value creation from the perspective of society, customand Employees

From Customers and Society

ers and employees

Creating Reassurance about Health and Welfare through Business Support for Regional
MedicalFuyo
Institutions
Vision Stories
社会・お客様・社員

Creation of a Healthcare Fund Specializing in the Tohoku region
Creating Reassurance for People’s Health and Welfare throughFinancing and Business Support for Regional Medical Institutions

We would like to utilize the Fuyo Lease Group's extensive knowledge
and wide range of solution menus to face the healthcare issues faced by the communityand be close to our customers.
The 77 Bank, Ltd.
General Manager, Consulting Promotion Division (currently General Manager, General Planning & Coordination Division)

Shigeru Tanabe

When we launched this fund, we were attracted by the Fuyo

expertise it could provide, explanations inside the bank wereLease Platform Concept, which was able to provide for asmoothly organized.

varied selection of solutions tailored to the situations faced

Population decline and the progression of

by healthcare providers. So, we approached Fuyo Lease as a

the aging of society are social issues sharedbusiness partner that could share our philosophy.

throughout Japan. We will cooperate withThe Fuyo Lease Group, The 77 Bank, Ltd. and Nihon Keiei Group pooled their respective expertise and resources,

Setting up a fund with three companies jointly investing was

the Fuyo Lease Group to make this initiativeand established the Tohoku Healthcare Support Co., Ltd. on April 6, 2023, to operate Japan’s first fund specializ-

the first time our bank had done such a thing, but when Fuyo

a model case and leading indicator for all of

Lease provided with a detailed and speedy explanation ofJapan, and help to create or revitalize local

the values and such things as its wealth of knowledge andcommunities.

ing in local communities, and on April 28, 2023, formed the Tohoku Healthcare Support No.1 Fund for the healthcare field in the Tohoku region to provide optimal solutions to the various management issues confronting medical
and nursing care providers in regional areas.

A Scheme to Achieve Stakeholder Value Creation
sion of the regional medical care base, solution of management
issues for operators and acquisition of new earning opportunities for the Fuyo Lease Group make it an initiative that brings
new value to all stakeholders.

The Fuyo Lease Group not only provides financial support
through the fund, we also offer full Fuyo Lease platform services owned by the Group and help medical care providers tosolve management issues.
Provision of reassurance through the maintenance and expan-

Solve management issues

Medical and nursing
care providers in
the Tohoku region
Issues in the Tohoku region

FinancialsupportDecrease in the working-age
population
Aging population

Issues for medical care providers

through the fundSuccession problem caused by aging(Solution Provision)

77 Bank Group

Various services utilizing financial
services and the 77 Group network

Nihon Keiei GroupManagement consulting expertise

Fuyo Lease Group

Healthcare-related products andservices

Fuyo Leasing Platform
Finance and Business Support: Provide One-Stop Products and Services through the Group and Alliance Partners
Equipment/facilities

Sanamedi

WorkVision

CB Holdings

Electronic medical record
iPad medical interview anddocument systemmanagement

JSH

Alliance Partners(Former company name:
Japanese Organization for
Medical Device Development)(Including facility ownership)

Removal/transportation/
disposal and buying/selling of used equipment

Fuyo Lease

FGL Circular Network

Financing

FUJITA

Accretive
Factoring of medical andnursing care fee receivables
Healthcare BPO

Used medical equipment
purchase
Disposal of leftovermaterials

The Fuyo Lease Group provides solutions through collaboration between sales representatives in charge of major companies
and areas, who deepen their understanding of needs through relationships of trust with customers, and dedicated divisions,
support divisions and Group companies, who constantly think of new ideas and propose solutions. Developing people who arecapable of providing these types of services is the source of the cherished value creation of the Fuyo Lease Group.
From Person in Charge, Dedicated Divisions

Rebuilding aging facilities etc.

Management
solutions

Sales Divisions and Dedicated Divisions Collaborated toProvide Value to Customers and Society

BPO/energy saving,amenities

INVOICE
Compilation of
the hospital’s
web communication
environment
Telecommunications andutility billing management

From Person in Charge of Sales in Tohoku Area

Deputy General Manager, Healthcare Advisory & Business Division

Deputy General Manager, Tohoku Branch

Hiroyuki Hyodo

Osamu Hatakeyama

This was the first time Fuyo Lease had been involved ininvestment in a fund operating company, and with the cooperation of everyone inside and outside of the Company, wecleared issues one by one and made it through to closing.
The Tohoku Branch also build a relationship of deep trustwith The 77 Bank, and even though the situation was always changing, we were able torespond smoothly.
Leveraging the knowledge gained from operating a fund specializing in local communities,
we will expand and provide a selection ofsolutions for problems facing business operators in response to a super-aging society.

In 2018, after considering the significance of the Tohoku
Branch and the sales strategy of establishing relationships
with local financial institutions, we formed the internal projectteam, Team Tohoku, in conjunction with Group companies
and the dedicated divisions in the head office.
To be a business partner in regional financial institutions’efforts to create local communities, we needed to build
grass-roots relations, gains customers’ trust and always put ourselves in customers’ situations and think
about what we could do for them.
We don’t want to stop at just this initiative, but join
those from regional financial institutions that share
the philosophy of creating local communities andcontinue to work to solve social issues.

From Officer in Charge of Sales

Group companies and alliance partners
Managing Executive Officer, East Japan & Chubu Area Officer

Vision of Value Creation and Non-Financial Targets(¥100 million)

We will deliver reassurance by ensuring health and welfare
through solutions that resolve the management issues faced by
medical welfare providers.
By tackling this as a key issue, we will contribute to the sustainable realization of a prosperous society and a healthy life forall people.

13

Non-Financial
Targets

2022/3Result2023/3Result2027/3
TargetManagement
support-related
financing in medical
and welfare markets *

233

217

560

Takeshi Kodaira

I feel that the key point in concluding this project was themulti-layered relationships built up between members of thesales divisions, dedicated divisions, support divisions and Group
companies.
I expect that the successful experience this time will lead tomany realizations among employees responsible for sales andthat will connect to further growth. We want to provide environments that encourage people to continue to take on challenges,"Go Where No One Has Gone Before," and support employees’
further growth.
Last year, the Fuyo Lease Tohoku Branch celebrated its 50th
anniversary of opening. Gathering the resources of the Fuyo
Lease Group, rooting ourselves in the local communityand continuing to turn our attention to issues facing
communities, we will help to energize creation of local
communities and other communities.

* The balance of operating assets for financing related to FPS Medical (factoring for medical
and nursing care receivables by Accretive) and business succession.

Fuyo Lease Group Integrated Report 2023

14

Feature: Fuyo Vision Stories

About Us

Shared Value Story

Top Message

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Fuyo Vision Stories

Society, Customers
Get to know stories of the Fuyo Lease Groupʼs value creation from the perspective of society, customand Employees
ers and employees

Services are being utilized for a variety of applications, such as for customers or for
in-house use
Case studies of service introduction

Creating Time for New Value Creation in BusinessFuyo Vision Stories

社会・お客様・社員
Editinga company’s
message into a video format andtransmitting it online helps to drastically reduce communication
costs and significantly improve productivity.
Human Centrix provides video production solutions forbusiness use.

Videos contain a large amount of information compared to text or static images, which is
why the market is becoming aware of streamlining of operational processes through theuse of videos.
Human Centrix, a member of the Group, provides a service designed to create time forour customers' value creation. Our new solution to enhance operational efficiency
supports our customers’ DX efforts.

Value Creation through Video Production and Transmission Service

Marubeni Real Estate Development Co., Ltd.
Administration Department

Hiring Representative

HIROSHIMA GAS Co., Ltd.
General Manager of Sales Promotion
Department

Tsuyoshi Miyamoto

We were introduced to Human Centrix and received a proposal as we were in the middle of considering renewing
our video for company introduction sessions targeting
new graduates on the occasion of moving our headquarters in October 2022.
From the stage when I initially heard their presentation, I
felt that they would be able to put together a video thatwould vividly capture our company’s appeal and our workplace environment, and we decided to proactively consider their proposal.
Amid a tight schedule, the process frommeeting to filming
went smoothly, which
resulting in the delivery of a stylish andimpactful video that I
was satisfied with.

For customers living in all-electrified housing, a video
was produced that advertises the benefits of city gas
in an aim to propose a switch to city gas.
At Human Centrix, everything from video planning to
production is internalized, so they responded quickly, andthe video was made just as we had envisioned in a shorttime frame.
Additionally, we sought to increase
viewership by attaching a QR code*for the video to fliers left in customers’
mailboxes, which I strongly feel has led
to an increase in opportunities stemming from the video.

* QR Code is a registered trademark of DENSO WAVE
INCORPORATED.

Values Generated by Human Centrix
We solve the various managerial issues faced by companies
through video (digitalization) and transmission (going online).
Through the use of video and transmission, we support reductions to communication costs and improvements to productivity.
We provide both production and distribution, breaking
through industry conventions (outsourcing) by offering a
one-stop service.
We provide videos of uniform quality with short delivery times using
our know-how backed by a track record of over 50,000 video
productions.

Based on the concept of “easy to understand,” we create
videos that are highly practical and accurately reflect thecustomer's issues.
Videos are capable of conveying a large amountof information, and are optimal for improving
complex operational processes.

Effectively transmit uniform information to many people andimprove convenience

Service recipient

External

Service recipient

Hiring and education

Operational cost reduction

Broadening appeal to those in
the digital native generation
Conveying the reality andeliminating the gap between theimage of the company before
joining and after

Making speech and text
explanations easier tounderstands

Sales tools

Enhancing the proficiency
through in-house training, etc.
Reducing handling of inquiries
Reducing operational costs suchas for group training

15

Online seminars
Video transmission platforms
Video catalogue services
Online seminar meeting spaces

SPO (Studio Process Outsourcing) Service
This is an internalized support service which involves creating a digital studioin a customer’s vacant space, stationing highly specialized staff members, andcarrying out planning, filming, editing and transmission from the same viewpoint
as the customer.

the subsidiary and our division to the attendees ina way that was incredibly easy to understand.
By outsourcing the video production, I avoided
burdening my subordinates with work outside of
their specialized areas, and was able to make ahigh-quality video just like I had pictured, so I am
satisfied.

Solving Customer Issues

Internal manuals

Video transmission

Video production
Presentations
Case study interviews
 ow-to instructions
Hand manuals

In-house

IR and shareholder meetings

A service lineup for handling diverse needs

Products and services
Branding
Promotion
 ompany introducC
tions and facility tours
Exhibitions
SeminarsIR
HiringEducational training

A subsidiary (SFC ASSET MANAGEMENT) under
our department’s jurisdiction received an internal
company award, so I requested the productionof a business introduction video that would bescreened at the award ceremony.
During this special occasion attended by executives and employees of each Group company, I
felt that we were able to promote the initiatives of

Customers

Broadening appeal/Improving
product image
Improving customer satisfaction

Kanji Nakamura

Yujiro Yoshizawa

Use the reduced time and cost to improve efficiency further

Making content of explanations
uniform

Human Centrix
Chief Executive Officer

Sumitomo Forestry Co., Ltd.
General Manager of North America Business Department,
Global Housing, Construction and Real Estate Division

Vision for Creating Time for Customers’
Value Creation for Customers

From Executive Officers in Charge of SalesManaging Executive Officer in charge of Western Japan Area

Managing Executive Officer in charge of Tokyo Metropolitan Area

Hitoshi Nitami

Keiichi Kawabata

Our sales representative accurately assessed the environmental changes in Hiroshima Gas’ sales promotions, andwere able to bridge that assessment to a service proposal
matched to their needs.
Every day, we roleplay in presentations that imagine interactions between young sales representatives and customers. We envision various scenarios and conduct
research so that we can make thebest proposals.
I will support the efforts of young
employees so that they can improve
themselves and become partners
trusted by customers.

In response to the inquiry from the Sumitomo Forestry
Group, our sales representative collaborated with HumanCentrix and was able to propose an optimal service.
We aim to become a trusted partner by proposing optimal
solutions while always addressing customers’ concerns from their perspective.
We will do our best to develop independent human resources who can envision
scenarios on their own and help ourcustomers to solve their problems.

Fuyo Lease Group Integrated Report 2023

16

Feature: Fuyo Vision Stories

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Fuyo Vision Stories

Society, Customers
Get to know stories of the Fuyo Lease Groupʼs value creation from the perspective of society, customand Employees
ers and employees

Towards the Realization of a Decarbonized Society
Fuyo Vision Stories

社会・お客様・社員
Realizing
decarbonizationof customers and society by providing
various services to reduce CO2 emissions

The Company has been promoting the reduction of CO2 emissions by providing customers with services since
establishing its first solar power plant and joining the renewable energy business in February 2013. In September
2018, we became the first general lease company in Japan to participate in RE100, and now aim to simultaneously
achieve carbon neutrality for the Group and RE100 by 2030.
We will promote a decarbonized society through efforts for our Group and services for customers and society.

Decarbonization of Customers and Society
FY

Participated in RE100, which promotes renewable energy

2012

Started renewable energy generation businessEndorsed TCFD

2018

Transformed the Group’ s head office topractically operate on renewable energy

2019

Started Fuyo 100% Renewable Electricity Declaration
Support Program
Started a PPA Service that directly delivers renewable energy
to customers

Declaration to achieve carbon neutrality and RE100 by 2030

2020

Started Fuyo Zero Carbon City Support Program

Began full-scale transition to EV and FCV for company vehicles
Earned an A- in the CDP Climate Change Report

2021

Participated in offshore wind power generation project overseas(U.K.)

Promotion of
Decarbonization

Achieve Carbon Neutrality & RE100

2022

2026
*Scopes 1&2

2030

Contribute todecarbonization
through businessSet and promote
non-financial
targets

Renewable Energy Projects on a Global Scale .K. Offshore wind powerUgeneration project(Off the coasts of England and Scotland)

U.K. Large-scale grid battery
project

Contribution to CO2 reduction

500,000 t-CO2/year

The amount invested in the
promotion of decarbonization

Total of ¥300.0 billion
over five years

Renewable energy power
generation capacity
Percentage of owned
EVs or FCVs
Transaction volume under the
decarbonization promotion
financing

1,000MW30%
Total of ¥12.0 billion
over five years

2013 Began a domestic solar power generation
project
2021 P articipated in a U.S.-based solar power
generation project2022 P articipated in a U.K.-based offshore wind
power generation project2023 G eneration capacity of the renewable energy
generation projects involving the Groupsurpasses 5000MW

 .S. Solar power generation projU
ect in Texas
U.S. Solar power and onshore
wind power fund investment
EU Solar power, wind
power, and hydropower
fund investment

Japan Renewableenergy generation
project
Approx. 100 sites

Thailand Solar power PPA
venture project17

Taiwan Solar power project fundinvestment

The Group works actively on a system called Power Purchase Agreement, or PPA, as a decisive resource to promote theintroduction of renewable energy by customers. This is a system in which the Company owns and manages power generationequipment in spaces such as within grounds and on building rooftops, and provides the generated electricity to users of the
facility’s electricity for a fee.

Installed PPA on the rooftop of TEIKOKU SEN-I’s
Kanuma Plant
Fuyo Lease became involved with TEIKOKU SEN-I CO.,Ltd. during the construction of the new building of Kanuma
Plant by handling the installation of solar power generationequipment on the rooftop. The green power generated isutilized in the company’s manufacturing processes, which
contributes to the company’s shift to renewable energy.
From Customers

Roadmap to Decarbonization
Decarbonization of the Fuyo Lease Group

Supporting Customers’ Introduction of Renewable Energy

Service Overview Installs, operates and maintains solar power
generation equipment free of charge

TEIKOKU SEN-I CO., Ltd.’ sKanuma Plant
Solar panels
Fuyo General Lease Co., Ltd.

Green power:
Electricity generated fromCO2-free energy sources suchas solar, wind power, or biomass

Green power
supply contract
Image of completed building

Pays for amount ofelectricity used

Purchases generated
electricity

From Executive Officers in Charge of SalesTEIKOKU SEN-I CO., Ltd. Vice President

Fuyo General Lease Co., Ltd. Managing Executive Officer

Tatsuru Okamura

Masaki Gonda

As a company that conducts disaster prevention business, we view measures against greenhouse gas effects
as a critical issue. We have set a goal of reduction CO2emissions by 30% by 2030 and are promoting a conversion to renewable energy. We were able to swiftly
receive a proposal from Fuyo General Lease for solving
our issues and requested a PPA scheme located on the rooftop attached to the newly
constructed building of Kanuma Plant,
which is our main factory. We were able
to begin operation in July of this year
and have also received proposals
aimed at further decarbonization, forwhich we are incredibly grateful. Going forward as well, I hope they will
enhance collaboration even further
as a reputable business partner.

We helped with the PPA located on the rooftop of the
Kanuma Plant as a solution for converting to renewableenergy, which is a managerial issue faced by TEIKOKUSEN-I. The company has set even higher targets aimed
at decarbonization, so we will continue to propose themost effective measures based on
various scenarios and commit full
effort in order to be of service.
We constantly face challenges fromthe customer’s perspective. We
will devote full effort to developing
employees who can swiftly provide
complete proposals and contributeto customers’sustainable growth.

Supporting the Social Implementationof Advanced EV Technology throughInvestment in EV Motors Japan

Creating a Carbon Credit through a
Forestry Fund Investment

In December 2022, we made an investment in EV Motors Japan
Co., Ltd. which conducts development manufacturing and sales
focused on EV for commercial use.
EV Motors Japan harnesses technology such as its in-housedeveloped motor control system, which greatly reduces electricity consumption and battery deterioration, and the developmentof lightweight vehicles which solve the issue of cruising distance.
Develops commercial EVs for mass production equipped with aworld-class low electricity consumption rate, long battery lifespan, and safety features.
Our investment is scheduled to be allocated toitems such as fundingfor construction of massassembly plants, andresearch and development
required for the development of trial vehicles and
EV Community Bus (Launched in spring 2021)
demo vehicles in order toaccurately address market
demand.

In July 2023, we made an investment as 1 of 10 Japanese companies in Eastwood Climate Smart Forestry Fund I, a forest fundof ¥60.0 billion total formed by Eastwood Forests, LLC, which
is an American forestry asset management company under the
Sumitomo Forestry Group.
In the U.S., where markets and systems are advancing ahead ofother regions, we will conStructure of Forestry Fund
tribute to the realizationof a decarbonized society
by creating high-quality
Investorcarbon credits throughCash distribution
appropriate forest manInvestment
Carbon credit
distribution
agement, and increase theFundsvalue of forests as natural
capital, which includes theForestry
Forestry
Forestry
maintenance of biodiversiassets
assetsassetsty and the preservation of
CarbonCompenTimber Compencredit
sationsationsales
water resources.
sales
Timberconsumers(Sawmills, etc.)

Carbon credit
consumers(Airline companies, etc.)

Fuyo Lease Group Integrated Report 2023

18

Medium-Term Management Plan Fuyo Shared Value 2026

About Us

Medium-Term Management Plan Fuyo Shared Value 2026
The five-year Medium-Term Management Plan Fuyo Shared Value 2026 that started in fiscal 2022 is a management strategy
to be realized through achieving sustainable growth by resolving social issues through human growth and dialog while atthe same time delivering economic value with a basis on our core management principle of Creating Shared Value (CSV).
The plan takes an approach that weighs financial (corporate value) and non-financial (social value) equally, flexibly
allocates management resources in response to changes in society and aims to expand business, centered on sevenbusiness domains categorized into three growth drivers, as well as moves forward on establishing organizational andstructural support for sustainable value creation. By executing this plan, we will take on the challenge of creating newvalue toward realizing a prosperous society and aim to be a corporate group that continues growing strong under adrastically changing external environment.

Overview of Fuyo Shared Value 2026
Medium-termManagement Plan Vision

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Progress toward Achievement of Financial and Non-Financial Targets
Financial Targets
Item

FY2022 Result

Non-financial targets (excerpts)
FY2026 Target

Materiality

Item

FY2022 Result

FY2026 Target¥75.0billion

Contribution to therealization of adecarbonizedsociety

Contribution to CO2
volume reduction

220,000 t-CO2/
year

500,000

100%

100%

¥59.7 billion

Ordinary profit

2.27%

2.5%

Contribution to
the realization of acircular society

Percentage ofreturned items thatare reused or
recycled

Shareholders’equity ratio

11.6%

13-15%Creating new value
creation timeWork hours savedby our customers

180,000 hours(compared to
FY2021)

ROE

11.1%

10% or more

Strategic humanresourcesdevelopment

Human resources
development-related
expenses(non-consolidated)

188%(compared to
FY2021)

ROA
Ratio of ordinary profit
to operating assets

Fuyo Shared Value 2026

t-CO2/year

1million hours(compared to FY2021)

300%(compared to FY2021)* For progress on all initiatives for non-financial targets, please refer to Initiatives to Improve Social Value (Materiality) on

Achieving sustainable growth by resolving social issues through human growth and dialog whileat the same time delivering economic valueP25-26 .

Business Domain (Growth Driver) Highlights
RT Rising Transformation

Financial
targets

Corporate value

Enhancing corporate value

Business domains (growth drivers)
RT

Sustainable profit growthBalanced business bases
Improved financial healthAT

GP

Social value

Rising Transformation
Mobility, Circular Economy

Accelerating Transformation
Energy & Environment, BPO/ICT, Healthcare

Society and People
Bringing of wellbeing andconvenience to social life
Creating new value creation time
Delivery of reassurance by ensuring
health and welfare

Growing Performance
Real Estate, Aircraft

Strategic human resources development
Diversity and inclusion, health andproductivity management
P38-41DX

Enhancing corporate value

Contribution to the realization ofa decarbonized society
Contribution to the realization ofa circular society

Organizational and structural support for sustainable value creation
Investment
in human
resources

Business domains

Environment

Maintaining of capital efficiency
Stable shareholder returns

Non-financial
targets

Mobility

Circular Economy

P30

P28

Business domains

P42

steady progress, making for a good start toward achieving themanagement targets by fiscal 2026, the final year of the medium-term management plan.
In particular, in Energy & Environment, which has been positioned as a growth driver, we expanded our business in the19

growing renewable energy market, centered on Europe and the
U.S. and contributed toward realization of a decarbonized society through participation in one of the world’s largest offshore
wind power generation projects in the United Kingdom and thelaunch of commercial operations of a large-scale solar power
station in the U.S. In BPO/ICT we have expanded our selectionof solutions to support customers in achieving their business
transformations and moved forward on broadening our business domains by making a consolidated subsidiary of HumanCentrix Co., Ltd., which has strengths in commercial video
production for BtoB companies.

Circular Economy

We achieved steady profit growth due tofactors including surging prices for used cars
accompanying a semiconductor shortage andprecise response to changes in the market
environment. Ordinary profit increased to ¥5.7
billion (up 73% year on year).

We launched Circular Economy Leases tocontribute to realizing a circular society byprolonging product life and recycling.

Enhancing corporate value

Energy &Environment

BPO/ICT

Healthcare

P29

P31

P27

In fiscal 2022 we made progress on expanding business centered on the business domains positioned as growth drivers,
achieved balanced profit growth and improved profitability
with ordinary profit of ¥59.7 billion (up ¥7.0 billion year onyear), which was a record high for the sixth consecutive year,
and ROA of 2.27% (up 0.21 percentage points). Non-financial
targets such as contributions to CO2 reductions also madeMobility

AT Accelerating Transformation

Provision of advanced services,business process streamlining

Progress on the Medium-Term Management Plan in FY2022

Creating social value

Creating social value

Energy & Environment

Energy & Environment

Ordinary profit increased to ¥2.0 billion (up 27%
year on year) as we expanded the renewableenergy business in such ways as taking part inone of the world’s largest offshore wind power
generation projects in the UK.

Our renewable energy power generation capacity,
including overseas, was 515 MW (up 62% year onyear), and we contributed to expanding renewableenergy supply on a global basis.

BPO/ICT

Healthcare

We made our IT operations outsourcing menu
more sophisticated and strengthened our service
provision structure through such ways as businesscollaboration with alliance partners.

We formed a region-specific healthcare fund tosupport medical and nursing care providers andsupported construction of a stable healthcare
foundation for communities.

Enhancing corporate value

Creating social value

GP Growing Performance
Business domains

Real Estate
P32

Aircraft
P33

Real Estate

Aircraft

Through business management aware of risk
returns we maintained profitability and accumulated
assets, increasing ordinary profit to ¥22.2 billion (up
10% year on year).

Formed the first Japan-style operating leases
with sustainability linked loans (SLL) for airline
companies, helping to promote decarbonization in
the airline industry.

Fuyo Lease Group Integrated Report 2023

20

Financial and Non-Financial Highlights

About Us

Top Message

Strategy & Action

Shared Value Story

Corporate
GovernanceManagement

Financial Section &Corporate Date

Financial and Non-Financial Highlights
Financial targets

Corporate value

Net sales

Non-financial targets

Ordinary profit/Profit attributable to owners of parent

688.7billion

Ordinary profit

59.7billion¥¥(+13.2% year on year)

38.9 billion

800.0

Installment sales
740.3

712.3

657.8

618.1

600.0

Financing and other

183.5

100.4

CO2 emissions (Scope 1, 2)

1,715 t-CO(+14.9% year on year)

80.0

76.8
30.1

9.7%

494.6

11.00

8.25

59.7

581.8

44.0

39.1

20.0

2,000

(t-CO2/100 millions of yen)

0.36

38.9
29.6

5.50

2,016

1,971

1,904

0.29

33.9

1,283

1,197

0.28

1,414

1,000

1,455

0.25

0.22

872

500
0

0
2019/32020/32022/32021/32023/30
2019/3(FY)

Net sales was ¥688.7 billion (up 4.7% year on year) as expansion ofbusiness domains moved forward, centered on Real Estate, Energy& Environment and BPO/ICT.
Real estate leasing and overseas renewable energy initiatives contributed to this growth.

2020/32021/32022/32023/3603

2019/32020/32021/3Operating assets

Annual dividend

2,704.5 billion

2.27%(+5.4% year on year)(+0.21 points from the end of previous FY)¥

Leases (left axis)(Billions of yen)

3,000.02,400.0

2,555.9

2,262.8
1.76%

1,800.0

2,384.0 1.94%

1.90%

602.0

691.9

96.0

78.4

ROA (right axis)

2,565.9
808.3

759.0
83.5

(up 1.2 percentage points year on year)

2.5

400

30.0

1.5

320

1.0

22.3%

23.5%

25.2%

343
26.4%

285
240

240
160

24.3%

188

1,613.6

1,713.3

1,691.6

1,688.20
2019/32020/32021/32022/32023/3

24.0
18.0

205

6.0

0

0

0

The balance of operating assets was ¥2,704.5 billion (up 5.4% year
on year) as asset accumulation progressed, centered on Energy& Environment, Real Estate and Aircraft. ROA also continued to
improve, reaching 2.27% (up 0.21 percentage points year on year)
due to the accumulation of profitable assets.

21

2020/32021/32022/32023/32023/3

120

0

0

(FY)

The Fuyo Lease Group has a basic policy of working to distributeprofits to shareholders by continuing to pay stable dividends overthe long term. The annual dividend for fiscal 2022 was ¥343 (up ¥58
year on year). This continues the trend of dividend increases every
year since the company went public in 2004. The payout ratio also
increased, reaching 26.4% (up 1.2 percentage points year on year).

85,577149

150,000
318

283

100,000

229

69,514

210,782

50,0000

2019/3(FY)

2020/32021/32022/32023/3(FY)

Rate of taking annual paid leave (non-consolidated)

30.9%

100
93.5

130

30

40

113
79

36

20

The paid leave utilization rate has increased as a result of employees'
awareness of the need to improve their work styles to become more
efficient and productive, and employees have taken their paid leave
more autonomously and systematically.

2019/310

00
2019/32020/32021/32022/32023/3

60

72.0
66.3

40

21.1
11.5

68.4

30
30.9

29.5

27.5

82.3

80

50

141

93.5 %

(%)

(%)

150
120

Health and productivity management, work-life balanceMateriality

Percentage of female employees
in management positions(Employees)

9080

2019/30.1

Percentage of female employees in management positions (right axis)
Number of female employees in management positions (left axis)

12.0

0.5

(FY)

240

153,442

147,574

Organizational and structural support for sustainable value creation60
600.0 1,564.8

0.2

Diversity and inclusion

141

Payout ratio (right axis)
(%)

52.8

1,200.0

Materiality(yen)

2.27% 2.0

360

558

2022/3200,000* Applies to investments and project financing, etc., made in the Renewable Energy Generation
Business (power generation capacity is calculated based on ownership ratio or share).

Number of female employees inmanagement positions(%)

2,704.5

2.06%
963.6

66.1

(up ¥58 year on year)
Annual dividend (left axis)

Installment sales (left axis)

Financing and other (left axis)

0.3

Number* and percentage of female employees
in management positions (non-consolidated)

26.4%

220,155

9,373*1 Scope 1: Direct emissions from the use of fuel for company vehicles, natural gas, etc.
Scope 2: Indirect emissions from the use of purchased electricity, etc.
*2 Covers Fuyo General Lease and consolidated subsidiaries (To see all companies covered,please refer to footnote 2 on p.43)*3 For calculation methods, please refer to *1 and *3 on p. 43.

Payout ratio

343

¥

480

(t-CO2)250,000

The renewable energy business is making steady progress in Japan andoverseas. In fiscal 2022, we expanded efforts, particularly in Europe andthe U.S., and participated in the solar and wind power businesses, andmade investments in renewable energy funds (solar, wind, hydro, etc.).
As a result, generation output scale and CO2 emissions reduction
contribution due to the increase in business.

Annual dividend/Payout ratio

ROA

0.4

2

CO2 emissions and CO2 emission intensity increased in fiscal 2022
compared to the previous fiscal year due to the addition of Group
companies. However, CO2 emissions and CO2 emission intensity are on a
downward trend due to the sequential implementation of measures related
to decarbonization, such as the use of renewable energies in tenanted
offices and switching to use electric vehicles (EV) as company cars.

Non-financial targets
Operating assets/ROA

584

0

(FY)

Ordinary profit was ¥59.7 billion (up 13.2% year on year) and profit
attributable to owners of parent was ¥38.9 billion (up 14.9% year onyear); a record high for the sixth consecutive year for ordinary profit,
and an eighth consecutive year of record highs for profit attributable to owners of parent. In addition to the growth of net income inbusiness domains positioned as growth drivers, a contribution alsocame from non-operating income items such as the share of profit ofentities accounted for using equity method.

688

600

1,157

2.75
707

（MW）

0.5

220,155 t-CO

CO2 emissions reduction
CO2 emissions reduction
contribution due tocontribution due to renewable
other business (right axis)
energy power generation (right axis)
Green energy supply (output) (left axis)

515

1,715

1,500

515MW

¥ billion

CO2 emissions (Scope 2) (left axis)

CO2 emission intensity (right axis)(t-CO2)

48.0

26.2

25.5

2

CO2 emissions reduction contribution(output)

0.25 t-CO /2

CO2 emissions (Scope 1) (left axis)

Contribution to the realization of a decarbonized society

Materiality

Renewable energy power
generation capacity*

CO2 emission intensity

2,500

52.7

558.6

500.1

11.1%

(%)

10.2%

60.0

40.0

479.6

ROE (right axis)
10.6%

10.0%

688.7

400.0

200.0

Ordinary profit (left axis)

41.6

34.2

38.2

65.7
33.6

198.5

(Billions of yen)Contribution to the realization of a decarbonized society

Materiality

Profit attributable to owners of parent (left axis)
Leases(Billions of yen)

Renewable energy power generation capacity (output) /CO2 emissions reduction contribution

CO2 emissions (Scope 1, 2) *1 *2 *3 / CO2 emission intensity

Profit attributable to owners of parent¥(+4.7% year on year)

Social value

2020/32021/32022/32023/3(FY)(FY)

In fiscal 2022, we provided women with opportunities to experiencevarious role models in such ways as holding informal exchanges withthe president and directors, D&I seminars held by women in executive
management, and discussion meetings with senior employees as efforts
to spark career improvement motivation and to foster corporate culture.
* Regarding the result for fiscal 2019, we revised human resources systems in July 2019. This
included reclassifying senior leaders (a position equivalent to the position of section chief)
as managers. As a result, the number and percentage of female employees in management
positions increased year on year.

Materiality

Percentage of improvement inengagement indicators (consolidated)*

3.48

3.48

(2001)(2002)* For the definition of the percentage of improvement in engagement indicators, please refer to*7 on p. 26.

Fuyo Lease Group Integrated Report 2023

22

Message from Senior Financial Officer

About Us

Aiming for sustainable growth throughbusiness portfolio restructuring
Senior Managing Director

Yusuke Kishida

Under Medium-Term Management Plan, Fuyo Shared Value 2026, started in fiscal 2022, we aim to drive further expansion
and evolution in our business domains as we significantly restructure the Fuyo Lease Group’s business portfolio byintensively allocating management resources to growth areas (Transformation Zone), where we identify and focus onchanges in social structure and market trends. Through these activities, we are restructuring our business portfolio by
shifting from a Mt. Fuji-like model comprising a “single tall mountain” – i.e., a single core business focused on traditional
leasing from past years – to a mountain range-like model with “multiple peaks” – i.e., one that has multiple growth engines.
We are determined to establish a business foundation that enables sustainable growth without being affected by changes
in the external environment, while simultaneously solving social issues and increasing corporate value in the future.

(1) Business Portfolio Restructuring
Under the medium-term management plan, in Real Estate
and Aircraft, which are defined as core areas (Growing Performance), we will aim for stable growth and strive to improve
profitability even in a fiercely competitive environment byadvancing further differentiation. Based on this foundation,in growth areas (Mobility, Energy & Environment, BPO/ICT,and Healthcare businesses), our basic strategy is to raise theweight of growth areas relative to the ordinary profit of thewhole Group from 19% in fiscal 2021 to around 33% in theplan’s final year. We have steadily bolstered the earnings baseof growth areas through the clear-cut allocation of management resources in accordance with the medium-term management plan. As a result, a measure of success has begun

to show in our consolidated financial results for fiscal 2022.
Additionally, in the process of advancing restructuring, we havefurther accelerated global business expansion initiatives, suchas converting an independent North American operating lease
company in the Mobility field into a consolidated subsidiary. In
the Energy & Environment field, we also participated for the firsttime in an offshore wind power generation project in the U.K.
and signed an agreement to invest in a European renewableenergy business fund. These initiatives truly signify that we aremaking steady strides toward realizing our corporate slogan,“Go Where No One Has Gone Before,” by taking on challenges
to achieve business portfolio restructuring.

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date(2) Improving the Stability of the Fund Procurement Structure and Diversifying Procurement
Methods Further
In our financial strategy, we are pushing ahead with efforts todiversify fund procurement methods in order to address eachof our main priorities, which are as follows: increase the weightof long-term funding to stabilize fund procurement; strengthen
our ability to procure foreign currency in response to an increase in foreign currency-denominated assets in each business field; and procure quasi-equity funds that help to improve
our resistance against risks.
We implemented three main initiatives in fiscal 2022. The firstinitiative was to substantially increase procurement throughESG finance by bringing the CSV approach into fund procurement activities. Specifically, we procured funds totaling approximately ¥130.0 billion through ESG finance in fiscal 2022,
as a result of raising funds through methods implemented forthe first time by a lease company. Examples of these methods
include Positive Impact Finance through a syndication method
covering all activities for achieving the non-financial targets
established by the Group in its medium-term management planand sustainability-linked loans with engagement dialogue withfinancial institutions, which cover evaluations of the Group’s
sustainability strategy and other related activities, including circular economy leases. The second initiative saw us continue toactively procure funds using the Euro MTN foreign bond facility
in response to an increase in foreign currency-denominatedoperating assets in each field, including growth areas that are
positioned as a Transformation Zone. As for the third initiative,
the Company issued hybrid securities (unsecured bond withsubordination agreement) for the first time, with the aim ofsubstantially enhancing shareholders’ equity and resistanceagainst risks without share dilution. Through these initiatives,
we believe that we have increased our financial soundness,while augmenting the active allocation of management resources to growth areas. In addition, our issuer ratings/outlook by
rating agencies have been improving due to positive evaluations of factors such as the growth of our business domains
and improvement in our financial soundness, which we havepromoted since the previous medium-term management plan.

Fund Procurement through ESG Finance
KPIs of Positive Impact Finance
Results of initiatives in fiscal 2022
Positive Impact Finance(including renewal type)
Sustainability linked loans(DBJ – with engagement dialogue)

All non-financial targetsof the medium-term management plan

Amount procured
Approx.
¥KPI/SPTs of sustainability linked loans

130.0 billion

Improvement in percentage of waste plastics
that are recycled*, leading toMizuho Eco Financethe realization of a circular society*Material and chemical recycling

Ordinary Profit by Growth Driver

Mobility

BPO/ICT

59.7

52.7

Circular
EconomyHealthcare

Real Estate

Aircraft(Billions of yen)

75.0

Energy &Environment

Transformation

25.0

13.0

10.0

General Leasingand Financing

Growing Performance

30.0

26.4

21.7

21.0

20.3

20.0

FY2021

FY2022

FY2026
RisingTransformation

19%
40%

Ordinary
profitAccelerating
Transformation
General leasing
and financing

27%

33%

The Group aims to simultaneously achieve the medium-term
management plan’s financial and non-financial targets throughbusiness portfolio restructuring. We made a steady start on
most of the plan’s targets in fiscal 2022, the plan’s first year. In
terms of financial targets, ordinary profit, ROA, and the shareholders’ equity ratio all exceeded the plan. In addition, ROE
increased 0.5 percentage point from the previous fiscal year to
11.6% as we worked to operate with a keen awareness of thecost of capital. Furthermore, we made considerable progresson our non-financial targets through initiatives to solve social
issues, including realizing a decarbonized society and a circular society. Turning to shareholder returns, we will continue to
strive for a dividend payout ratio of 30% or more, which is ourtarget for the final year of the plan, by achieving sustainableearnings growth through steady implementation of the medium-term management plan overall.

Trend in Financial Indicators
30% or more

Dividend
payout ratio

25.2%

26.4%

10.6%

11.1%

19.6%
10% or more

9.2%
2.5%

2.3%

ROE

2.1%

1.6%

¥75.0
billionROA¥59.7
billion¥52.7
billion¥2.0¥31.4
trillionbillionOrdinary
profit¥52.7billion¥2.6
trillion¥2.7
trillion¥3.0
trillion

Ordinary profit
Operating assets¥75.0billion

FY2021 FY2022

FY2016

41%
40%

23

(3) Progress on Management Targets and Shareholder Returns

Previous medium-term
management plan

Growing Performance

Frontier Expansion 2021

Medium-term
management plan

FY2026(plan)

Fuyo Shared Value 2026

Fuyo Lease Group Integrated Report 2023

24

Initiatives to Improve Social Value

About Us

Initiatives to Improve Social Value (Materiality)

Top Message

Delivery of reassurance byensuring health and welfare

Expand business domains and promote further evolution in ourrelentless attempt to create new value
Anticipate social changes and take on the challenge of yet unseen social issues

Society and People
Contribute to the sustainablerealization of a prosperous society
and a healthy life for all people

Creating new value creation time

Value creation through partnerships

Encourage employees to keep taking onchallenges and growing so that theGroup can grow together with employees

In fiscal 2022, we generally made steady progress in all items. In particular, the amount of financing handled for the promotion of
decarbonization under Fuyo Zero Carbon City Support Program increased significantly due to widespread use among customers
and there are now more than 300 companies or organizations using it. Regarding the percentage of EVs and FCVs, we are moving
forward on building a collaborative structure with alliance partners for expansion of the EV market and plan to grow in the second
half of the medium-term plan period.

Amount invested in promoting decarbonization*1
Contribution to the realizationof a decarbonized society

Contribution to the realizationof a circular society

FY2022 Results

FY2026 Targets

220,000
t-CO2/year

500,000 t-CO /553 rooms

Management support-related financing inmedical and welfare markets*5¥ 21.7 billion

Work hours saved by our customers

180,000 hours

5-year cumulative total

1,330rooms¥ 56.0 billion

1million hours

compared to FY2021

Non-Financial KPI

FY2022 Results

FY2026 Targets

Human resource
development-related expenses

Human resource development-related expenses(non-consolidated)

188%

300% compared toPercentage of female employees in management
positions (non-consolidated)

30.9%

35%

100%

100%

100%

100%

Rate of taking paid leave (non-consolidated)

93.5%

90%

Rate of taking the +Friday system(non-consolidated)

89%

No quantitative target¥56.4 billion

year

Percentage of improvement in engagement
indicators*7 (consolidated)

3.48

No quantitative target

5-year cumulative total¥ 300.0 billion

Renewable energy power generation capacity*2

515MW

1,000MW

Percentage of Group vehicles that are EVs or
FCVs(percentage held by Fuyo Auto Lease)

0.7%

30%

Amount of financing handled for the promotionof decarbonization*3¥5.3 billion

Percentage of returned items that are reused or
recycled*4

100%

Percentage of materials/chemicals containedin waste plastics (from returned items) that arerecycled*4

24.7%

Health and productivity
management,
work-life balance

Percentage of eligible male employees who havetaken childcare leave*6(non-consolidated)
Percentage of employees aged 35 or over who
have had a health examination(non-consolidated)

FY202125-year cumulative total¥ 12.0 billion

100%*6 Childcare leave taken percentage is calculated as the ratio of the number of employees who took childcare leave during the relevant fiscal year to the number of employees eligible for childcare
leave during the relevant fiscal year (number of people who had a child within the fiscal year).
*7 In the employee opinion survey, eight questions (five-point assessment scale) that represent engagement as defined by the Fuyo Lease Group (a relationship in which each employee links theCompany's growth to their own growth and they contribute to each other's growth), and the average response value was measured."

Value creation through partnerships
In fiscal 2022, in the EV domain, we concluded a capital and business agreement with EV Motors Japan Co., Ltd., a Japanesecommercial EV startup, and began to collaborate.
Materiality

Non-Financial KPI100%*1 Applies to investments in renewable energy facilities, energy-saving facilities, electric vehicles (including charging equipment), batteries, hydrogen and ammonia-related facilities, CO2 separation
and recovery technologies (CCUS, DAC), circular-related facilities, ZEB/Green buildings, SAF and start-up companies.
*2 Applies to investments and project financing, etc., made in the Renewable Energy Generation Business (power generation capacity is calculated based on ownership ratio or share)*3 Covers the Fuyo Zero Carbon City Support Program and the Fuyo 100% Renewable Electricity Declaration Support Program*4 Applies to leased (rental) assets returned to the Hachioji Technical Center of FGL Circular Network Co., Ltd.

25

Number of new rooms provided at elderly care
homes

FY2026 Targets

Materiality

Diversity and inclusion

CO2 emissions reduction contribution

FY2022 Results

In fiscal 2022, each item made steady progress.

Organizational and structural support
for sustainable value creation

Non-Financial KPI

Non-Financial KPI

Organizational and structural support for sustainable value creation

Environment

Materiality

Financial Section &Corporate Date

*5 The balance of operating assets for financing related to FPS Medical (factoring for medical and nursing care receivables by Accretive) and business succession.

Venture investment and incubation

Gain the trust of customers and work together
with them to create value

Corporate
GovernanceManagement

In fiscal 2022, we made steady progress in both the number of new rooms at elderly care facilities and work hours saved by ourcustomers. Management support-related financing in medical and welfare markets saw users fall short of target due to factors
including augmented public support against the backdrop of the COVID-19 pandemic.
Materiality

Realizing a prosperous society andcontributing to sustainable growth

Environment

Strategy & Action

Society and People

Progress on important issues (materiality) to create social value through business under the Medium-Term Management Plan Fuyo
Shared Value 2026 is as follows.

Contribute to the realizationof a sustainable global
environment

Shared Value Story

Value creation throughpartnerships

Investment in venture companies that havetechnologies and services that will create newsocial value

FY2022 Results
Investment Record● JSH Co., Ltd.
● EV Motors Japan Co., Ltd.
● Japan Wind Tunnel Manufacturing Inc.
● H.I.F. Co., Ltd.

Fuyo Lease Group Integrated Report 2023

26

Value Creation by Business Area

About Us

Energy & Environment
AT

Top Message

Shared Value Story

Strategy & Action

RTManaging Executive Officer

Accelerated growth enabled by capturing market trends

Rising Transformation
Managing Executive Officer

Strategic growth enabled by capturing tectonic social changes

Hiroaki Ando

Miki Sasaki

ュラーミー

Fuyo Lease Group’s Strengths

エネルギー■ Investment and finance in energy■ Extensive experience in power generation businesses that can be utilized in areas such as business
BPO／ICTinvestment and医療福祉businesses
project finance, following entry in thesolar power generation business航空機
in 2012
不動産
環境
electricity supply (PPA) services■ Green■ Cooperative framework covering a diverse array of alliance partners in the PPA business,■ Energy-saving equipment / subsidy
leases■ ESCO business■ Storage battery business

Main Services

Fuyo Lease Group’s Strengths

Lease)
一般リース・
モビリティ
サーキュラー■ Circular Economy Lease (CEエネルギー■ Expertise and knowledge concerning the reuse and recycling of tangible property, obtained fromBPO
／ICT
handling a massive
amountof lease assets (equipment)over many years
医療福祉
不動産■ Used asset buying service
ファイナンスエコノミー
ビジネス
環境 ■ Possesses infrastructure and networks that connect■ Used PC buying service
the value chains of the manufacturing

energy conservation, and energy storage fields, which supports the decarbonization efforts ofcustomers

Plans under Fuyo Shared Value

2026

Vision for

to invest a cumulative total of ¥300.0 billion over the 5
1 Aim
years through fiscal 2026 to promote decarbonization

2030

2 MW of renewable energy power generation capacity■ Serve as a frontrunner that contributes to resolving
climate change and other environmental issues inbreaking ground in the new Energy & Environment
business domainon the challenge of developing new businesses that
3 Takewill emerge and grow as a result of structural transformation in the energy industry, such as the grid storage battery
business

sector (forward logistics) and the reuse and recycling sector (reverse logistics)

2026

The Fuyo Lease Group made progress on increasing its overseas operating assets. This growth in overseas operating assets
was supported by participation in two offshore wind power
generation projects in Europe, specifically the Beatrice Offshore
Windfarm (total generation capacity of 588 MW) off the coast of
Scotland, and the Hornsea One Offshore Wind Power Plant (total
generation capacity of 1,218 MW) off the coast of England. In
the U.S., we started commercial operation of Cutlass Solar (total
generation capacity of 140 MW), which is a solar power generation project in Texas operated as a joint project with ENEOS
Corporation and
Ordinary Profit and ROA in the Energy &Advanced Power
Environment Domain
AG. In Japan, theOrdinary profit (Billions of yen) ROA (%)
Samegawa Aono
Solar Power Plant
2.0%(total generation
1.9%
1.8%
capacity of 40 MW)
5.0started commercial
operation in Fukushima Prefecture.

2.02023/32027/3 (FY)(planned)

27

2030

■ Serve as a Circular Economy infrastructure company
that transcends the leasing businessbroadening the range of eligible equipment and improving
resource circulation capabilities.

Become a Circular Economy Platformer■ Contribute to achievement of Japan as a recycling-oriented nation through our Circular Economy businessa 100% recycling rate of waste plastics (excluding
2 Achieve
thermal recycling) and create new value using such exper-	CE Lease will contribute to the circulation of resources inJapan	Promoting the circulation of resources simultaneously generates satisfactory economic benefits

tise and knowledge
to be a Circular Economy Platformer by transforming
3 Aim
the CE infrastructure and network developed through theleasing business into an ecosystem

Main Accomplishments

2022/3

Vision forsales of CE Lease as a core product that allows
1 Expandcustomers to easily take part in resource circulation by

FY2022 in Review

1.6

航■ Insights into global trends in the circular economy market through CE initiatives such as the
Ellen MacArthur Foundation.

Plans under Fuyo Shared Value■ Serve as a global company that helps give rise to a
decarbonized society by engaging in a broad range ofenergy-related businesses on a large scale in Japanand overseas

Increase the supply of renewable energy, targeting 1,000

Financial Section &Corporate Date

Circular Economy

Accelerating Transformation

Main Services

Corporate
GovernanceManagement

FY2022 in Review

TOPICSTOPICS

Main Accomplishments

Participation in One of the World’s Largest Offshore Wind Power
Generation Projects in the U.K.
We participated in the Hornsea 1 offshore wind farm, which is located approximately 120 km off the east coast of England and has a total generation
capacity of 1,218 MW. Participation in such projects will enable us to drive
the expansion of
our renewableenergy business by
gaining knowledgeof the most recent
industry trends andobtaining expertise.

■The Fuyo Lease Group launched Circular Economy (CE)
Lease as a new service. With CE Lease, we seek to achieve
extended product life and better resource recycling by steadily
reusing and recycling lease assets. Customers can contributeto the circular economy through this product. In addition, weare donating a certain percentage of the proceeds from ourlease transactions to organizations that promote the circular
economy in order to support their activities.
Conceptual Diagram of Circular Economy Lease
Rawmaterials

Purchase Phase
Reuse

Reuse &
Recycling
Effective Use Phase

Use

The period during which
Fuyo Lease holds theasset as a leased asset
and the customer uses
the asset under lease.

Issues Ahead and Response Measures
Issues Ahead

Response Measures

Strengthen our operating baseto promote global business expansion

Strengthen collaboration with overseas sites
and increase alliance partner companies

Develop skilled professionals
with insights into the energy &environment industry and overseas fields

Dispatch personnel to partner companies anddevelop human resources through educationand training programs

recycling operators.
How the Waste Recycling Service Works (Conceptual Diagram)
Reduce waste and CO2 emissions
by converting waste into resources

Waste

Recycling workby partnercompanies

Recycledresources

FGL Circular
Network

Production

Regenerate

The Fuyo Lease Group provided waste recycling services to Kamogawa Sea
World. Fish entrails generated in the process of producing feed are recycled
as fish feed such as fishmeal and fish oil in cooperation with resource■We aim to improve the percentage of materials/chemicals contained in waste plastics (from returned PCs) that are recycled,
without relying on incineration. In fiscal 2022, we raised thispercentage to 24.7% by dismantling and disassembling ITC
equipment returned to Hachioji Technical Center into individualcomponent materials and transferring the items to resource
recycling operators.

Acquisition andprocessing of calculation
data in the recycling process
and CO2 conversion• Data related to recycling
Provide data
related torecycling work
(visualization)

results• Data related to reduced

CO2 emissions resulting
from recycling work

Issues Ahead and Response Measures
Issues Ahead

Response Measures

Expand the coverage of CE
Lease

Increase the scope of eligible properties suchas equipment and devices for which resource
circulation is assured.

Reduce costs further in therecycling process

Revise work flows and rigorously pursue efficiency

Improve the waste plastic
recycling rate

Establish ties with multiple recycling companies
capable of taking in mixed plastics

Fuyo Lease Group Integrated Report 2023

28

ギー

Value Creation by Business Area

About Us

BPO/ICTAT

Top Message

Strategy & Action

Shared Value Story

RT

Managing Executive Officer

Accelerated growth enabled by capturing market trends

Rising Transformation
Managing Executive Officer

Strategic growth enabled by capturing tectonic social changes

Hiroaki Ando

■ Business process consulting

Fuyo Lease Group’s Strengths

一般リース・
ファイナンス■ Provides a unique service menu, including integrated billing for telecommunications and public■ Provides total solutions based on consulting with a vast array of BPO services tailored to a

BPO
／ICTBPO services医療福祉 variety of needs不動産■ Comprehensive■ Integrated billing services(telecommunications and public utility bills)■ Video production and distribution
services■ PC-LCM services■ ICT outsourcing

航空機

utility bills, and commercial video production and distribution targeting corporate presentationneeds■ Provides a well-developed service menu to address various outsourcing needs, with ownershipof approximately 1.90 million PCs Group-wide.

Plans under Fuyo Shared Value

2026

Vision for

reduce the workload of customers (save1 Successfully
customers 1 million work hours compared to fiscal 2021)

2030■ Serve as the most trusted company in solving the
problem of shortages of IT professionals

Establish a framework to provide Business Process Service(BPS) by strengthening links between BPO and DX-related
consulting and various BPO services

Atsushi Mizuguchi
Main Services

Fuyo Lease Group’s Strengths

Vehicles area
framework that can provide financing and related services for a broad range of vehicles
モビリティ
サーキュラー■ Possesses aエネルギー■ Auto leases
from passenger cars to trucks, along with Group
companies
Fuyo Auto Lease Co.,医療福祉
Ltd. and YAMATO
BPO／ICT
One-stop EV services■
ビジネス
エコノミーLEASE CO., LTD. 環境■ Self-driving vehicle services
Logistics area
■ Logistics and material handlingequipment financing services■ Management support solutions fortransportation companies■ Conducting business globally together with overseas Group companies centered on Pacific Rim
Capital, Inc., which became a consolidated subsidiary

2026

2030

vices and other means■ A company that solves decarbonization and othersocial issues through social application of various
technological innovations in the general vehicles area

cost increases, in collaboration with partner companies suchas the Yamato Group and IGUAZU Corporation■ A solution provider that works to solve issues suchas workstyle reforms together with Group companies and partner companies in Japan and overseas
in the logistics area

total support for the logistics industry, which faces
2 Promoteissues such as the 2024 problem, personnel shortages, andFY2022 in Review

putting them in high-value-added work through IT system
operations outsourcing and facilitating DX.

TOPICS

Main Accomplishments

FY2022 in Review

In the BPO field, in addition to making Human Centrix, a business-use video production and distribution company, and eXtreakinc., a telecommunications line construction company, consolidated subsidiaries, we strengthened our capabilities through collaboration with partner companies that provide highly specialized
services. We also made progress on measures to establish new
businesses using AI in collaboration with alliance partners.
In the ICT field, we steadily accumulated collaboration projects
leveraging synergies
with WorkVision CorOrdinary Profit and ROA in the BPO/ICT
Businessporation. The number
ROA is based on results in the ICT business.
of units handled in the
PC-LCM service has
Ordinary profit (Billions of yen) ROA (%)
been increasing and5.4%
is expected to growfurther, against the
8.5
backdrop of factors
such as expanding
1.7%
outsourcing needs in
1.5%
the information system
sector. As a result of
3.5
3.4
advancing these efforts
to improve profitability,
ordinary profit for fiscal
2022 increased to2022/3 2023/3
2027/3 (FY)¥3.5 billion.
(planned)

Vision for

to increase the percentage of EVs or FCVs held by Fuyo
1 Aim
Auto Lease to 30% through the provision of one-stop EV ser-customers’ workstyle reforms by releasing valuable
3 Support
corporate IT professionals from non-core operations andMain Accomplishments

不■ Expanding to new domains such as EVs for commercial use, automotive batteries, and selfdriving vehicles, through collaboration with partner companies including EV Motors Japan Co.,Ltd.

Plans under Fuyo Shared Value■ Become a leading company that provides the Business Process Service (BPS), a total solution utilizing
outsourcing and DX of processes

by providing BPO services and facilitating DX, thereby
increasing productivity

2

Financial Section &Corporate Date

Mobility

Accelerating Transformation

Main Services

Corporate
GovernanceManagement

TOPICS
Concluded a Business Alliance Agreement with AKARI
Inc., a Startup Originating from the University of Tokyo
We will work to improve processing speed, augment the accuracy of processing capacity, and expand the contracted services domain by combining
our BPO services and AKARI’s AI solutions. We will support the streamliningof corporate business
operations through newjoint businesses thatutilize algorithms and AI
technologies, including
the use of large-scalelanguage models (LLMs)
such as ChatGPT.

Ordinary profit increased substantially to ¥5.7 billion, reflecting contributions
from increased gain on sales of used cars due to a favorable used car market
and the share of profit of entities accounted for using the equity method
associated with overseas Group companies. In the general vehicles area,
we concluded a capital andOrdinary Profit and ROA in the Mobility
business agreement with EV
Motors Japan, a company spe- Business
Ordinary profit (Billions of yen) ROA (%)
cialized in the development and3.4%
manufacture of electric vehicles
for commercial use. With this
7.0
5.7
agreement, we created new
2.5%
business opportunities that
1.9%
leverage EV Motors Japan’s
expertise in EVs for commer3.3
cial use and batteries, and wesecured competitive advantages in the field of EVs forcommercial use. In the logistics
area, we brought the GREENFORK service (see the TOPICS
section) to market.
2022/3 2023/3
2027/3 (FY)(planned)

Issues Ahead and Response Measures
Issues Ahead

Fuyo Lease Group’s Mobility Business

Bringing GREEN FORK Forklift Lease to Market
We started providing a forklift lease with guaranteed lead-acid battery
operation during the lease period. Through the use of a reusable battery, theservice contributes to the reduction of operating costs through the stable
operation of forklifts, as well as the reduction of environmental impacts suchas CO2 emissions and hazardous waste.
Previous operation

Streamline the contracted services frameworkfor BPO services through internal DX

Pursue progressive service
development in response toadvancing DX needs

Propose new ways to streamline operations
through the use of AI and data

Enhance the service menu
so that it can address diverse
customer needs

Select and collaborate with partner companies
and establish high-quality service frameworks

Vehicle lease period
Battery life

Battery life
• Replace the battery with a new one that iscompatible with the vehicle• Lease expires with a usable battery still installedin the vehicle• Battery operation during the lease periodof the vehicle is guaranteed

Issues Ahead and Response Measures
Issues Ahead

Response Measures

Improve the percentage of EVs
or FCVs

Strengthen sales centered on one-stop EV
services

Loss of earnings opportunities
due to external factors suchas supply shortages of newvehiclesReduce the impact of the supply shortages of
new vehicles by simultaneously implementing
leasebacks and used vehicle sales

Further expand cross-sellingin collaboration with overseas
Group companies

Explore opportunities for synergistic collaboration with Group companies in the logistics area

(0.7% as of the end of FY2022)

RenewableenergyResponse Measures

Scale up services to meet thegrowing demand for BPO

Operating through GREEN FORK

Vehicle lease period

EV buses
Self-driving vehicles

Logistics warehouses

Electric vehicles (EVs)Storage batteries

GREEN FORK29

Fuyo Lease Group Integrated Report 2023

30

Value Creation by Business Area

About Us

Healthcare
AT

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Real Estate

Accelerating Transformation

GP

Managing Executive Officer

Accelerated growth enabled by capturing market trends

Growing Performance
Managing Executive Officer

Stable growth in core areas

Atsushi Mizuguchi
Main Services

医療福祉service一般リース・menu encompassing various leases covering medical
モビリティ
サーキュラー■ Possesses an expansiveエネルギー
and nursing
care equipment and large-scale nursing carefacilities／
as wellas business
BPO
ICT
不動産
航空機
医療福祉
ファイナンス
ビジネス
エコノミー
環境
succession and turnaround financing

Plans under Fuyo Shared Value

1■ Provides BPO services that contribute to the more efficient management of medical
and nursing care businesses and ESCO and energy services that raise the energy
efficiency of facilities

Main Services■ Real estate finance lease■ Real estate operating lease■ Real estate non-recourse loan
■ Real estate equity investment■ Private REIT investment

不動産

Fuyo Lease Group’s Strengths

航空機■ Purchase and dispose of medical equipment from a wide range of medical institutions
spanning clinics to large hospitals, thereby contributing to the circular economy

2026

Vision for

Support the creation of 1,330 new rooms at nursing carefacilities for the elderly over a 5-year period in collaboration with alliance partners, in anticipation of the super-aging of society

2030

companies and alliance partners to address management
issues for each development stage of medical and nursing
care businesses■ A company that realizes both the solution of medical and nursing care issues (non-financial value)and profit growth that capitalizes on market trends(financial value) at a high level

Provide a wide range of information and products useful tosolving management issues faced by medical businesses
through a Group-wide website

Against the backdrop of a challenging environment for medical
and nursing care providers and dispensing pharmacies due tomeasures to address COVID-19, we maintained ordinary profit at
the same level as in the previous fiscal year owing to continued
efforts to promote the Fuyo Lease Platform Concept to solve theissues faced by these businesses with one-stop solutions. Despite
rising construction costs, we provided 553 new rooms by addressing the growing social need for new nursing care facilities for theelderly through real estate leases for nursing care facilities. Furthermore, together with The 77 Bank, Ltd. and Nihon Keiei Group,
we reached agreement on arranging Japan’s first Region-Specific
Healthcare Fund, which
Ordinary Profit and ROA in the Healthcare will provide various
means of financial
Business
support to address
Ordinary profit (Billions of yen) ROA (%)
management issues
3.3%
faced by medical andnursing care providers
4.5
in the Tohoku region.
2.0%
2.0%
We saw steady growthin orders received forbilling management
BPO services for
1.8
1.8
home healthcare andnursing care providers,
operational consulting
for large hospitals andremoval of leftover
2022/3 2023/3
2027/3 (FY)materials from closed(planned)
hospitals.

31

in highly difficult projects head on over many years■ Active in a vast array of business domains with highly specialized individuals at the industry s
top level, obtained by expanding new areas and developing new schemes, with aspirations toattain differentiation and pioneer a blue ocean

1
2
3

2026

Vision for

Promote priorities such as developing new products
and services by conducting extensive collaboration withcustomer divisions and other dedicated divisions, with thegoals of expanding business domains and developing newschemes
Expand collaboration with partner companies throughsales activities based on solution proposals, with a particular emphasis on promoting community contribution
through partnerships with regional financial institutions andregional infrastructure companies
Contribute to realizing a prosperous society by implementing CSV through such means as environmentally friendly
real estate aimed at realizing a decarbonized society

FY2022 in Review
Main Accomplishments

一般リース・
ファイナンス■ Advanced operational skills and expertise in real estate leasing and finance built up by engaging■ Possesses trusted relationships and information pipelines developed through the accumulation of
genuine and timely responses to sophisticated project consulting from the customer s viewpoint

Plans under Fuyo Shared Value■ A company that contributes to improvement in
the quality of medical and nursing care in Japanby helping to maximize the value of management
resources (people, tangible assets, funds, time,
information) held by medical and nursing careproviders and dispensing pharmacies

digital transformation (DX) in medical and nurs2 Implement
ing care by providing solutions in collaboration with Group3

Hidesumi Okubo

Fuyo Lease Group’s Strengths■ Medical and nursing care equipment and facility leases■ ESCO and energy services business for medical institutions■ Operational consulting and BPO for hospitals andnursing care facilities■ Factoring of medical, nursing care, and dispensing
pharmacy receivables■ Business succession financing■ Purchase and disposal of used medical equipment

CT

Financial Section &Corporate Date

2030

■ Realize stronger profitability and stable profit
growth by differentiating and raising the sophistication of the real estate lease and finance business■ Achieve growth in the customer base by providing
strategic solutions to social issues such as decarbonization and Corporate Real Estate (CRE) needs** Corporate Real Estate (CRE) needs: needs and issues related to corporate
value-enhancing strategies that effectively use the customer s real estate,such as finding effective uses for idle land and turning assets into off-balance
sheet items through sales and leasebacks.

FY2022 in Review

TOPICS
Contributing to Disaster Recovery through the Removal of Leftover
Materials at JA Fukushima Kouseiren Futaba Kosei Hospital
We helped the town of Futaba in Fukushima Prefecture to recover by properly
sorting and disposing of all leftover materials (medical equipment, medicinesand chemicals, infectious substances, furniture, fixtures, implements, anddocuments, etc.), which were long untouched at a hospital within the government-designated difficult-to-return zone due to the impact of the accident
at the Fukushima Daiichi Nuclear Power Station of Tokyo Electric Power
Company Holdings, Incorporated (TEPCO).

BeforeAfter

Issues Ahead and Response Measures
Issues Ahead

Response Measures

Respond to the financing
needs of medical professionals
following the end of financial
support policies related to
COVID-19

Provide a diverse array of financial services tosupport the needs of medical businesses

Address the permanent shortage of personnel faced byhome healthcare and nursing
care providers

Raise efficiency by bolstering personnel andadvancing DX in nursing care BPO services

Address the energy-saving
needs of hospitals in response
to soaring energy costs

Strengthen sales activities for services such asenergy-saving facility leases for businesses

TOPICS

Main Accomplishments
In fiscal 2022, amid a highly uncertain outlook for the real estatemarket due to factors such as the monetary policies of the central
banks of Japan and the U.S., market conditions for office buildings,
and business cycles and inflation trends in Japan and abroad,we moved forward with efforts focused on high quality projects
through such means as providing strategic solutions including CRE
proposals utilizing Net Zero Energy House (ZEH) and strengthening
collaboration with partner companies. As a result, the operating
asset balance and ordinary profit both increased by 10%, even as
ROA was maintained at the same level. In addition, we made every
effort to realize a prosperous society by implementing CSV through10 projects to contributeto realizing a decarbonOrdinary Profit and ROA in the Realized society (acquisition
Estate Businessof environmental cerOrdinary profit (Billions of yen) ROA (%)
tifications and ZEH), 1
2.3%
2.3%
2.3%
project to contributeto the enrichment and23.0
convenience of daily life
22.2
20.3
in society (PPP*) and 6
projects to contribute topeace of mind in healthand welfare (real estateleasing in the healthcare
domain).

2022/32023/32027/3 (FY)(planned)* Public Private Partnership (PPP):an approach in which the public
and private sectors work together
to provide public services throughprojects such as the redevelopmentof government office buildings andthe management and operation of
infrastructure facilities.

Participation in Kobe City Hall Building No.2 Redevelopment Project
The city of Kobe selected aconsortium of eight companies,
including Fuyo General Lease
Co., Ltd., as development contractors for this project througha public call for proposals. This
redevelopment will re-establish
city hall functions, as well as
contribute to the creation of
local community vitality.
This rendering is a conceptual image provided as part of a proposal in April 2022,
and it is subject to change in the future.

Issues Ahead and Response Measures
Issues Ahead

Response Measures

Respond in light of trends in thehighly uncertain real estate market

Continuously monitor market conditions andimplement timely and appropriate responses

Respond following revisions tolease accounting standards

Accurately grasp customer issues and needs
associated with revisions to the standards andpropose and provide services and solutions thatmeet those needs

Fulfill responsibilities to property
ownersPrevent unforeseen situations by raising thesophistication of property management, throughsuch means as commissioning independent
professional surveys of factors such as building
deterioration and the status of legal complianceand interviewing property management companies and tenants about the state of management.

Fuyo Lease Group Integrated Report 2023

32

Value Creation by Business Area

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

New Domains and Incubation

AircraftGP

We will thoroughly explore markets that might emerge in the future and potential customer issues and then advance M&A andcapital and business alliances with companies that have unique technologies and expertise.

Growing Performance
Managing Executive Officer

Stable growth in core areas

Yukihiro Sawada
Main Services

産

航空機

一般リース・
ファイナンス■ Aircraft operating leases/financing■ Japanese Operating Lease with Call Option*(JOLCO)■ Japanese Operating Lease (JOL)■ Aircraft fleet management and resale■ Business investment (investment in peripheralbusinesses)

DomainFuyo Lease Group’s Strengths■ Established an extensive track record through arrangement of more than 300 leases
for airlines around the world since the launch of our aircraft business in the early daysof the aircraft leasing industry■ Possesses aircraft operating lease arrangement and solutions delivery capabilities,
developed through hands-on business experience

BPO■ Embraces a culture that encourages members to confront customer management
issues and societal challenges, as well as actively participate in new domains, while
keeping aircraft operating leases as a base

Investment
TimingBusiness
Form

Partner

Description

Jan. 2017

Subsidiary

Accretive

Acquired the company, which mainly provides factoring business for medical and nursing care receivables,
to strengthen BPO services.

Jun. 2018

Investment

MerryBiz

Invested in the company, which provides the accounting administrative service Virtual accounting assistants”.

Oct. 2018

Subsidiary

INVOICEAcquired the company, which provides integrated billing services, as a consolidated subsidiary to expand
services that contribute to improving our clients’productivity.

Aug. 2019

SubsidiaryNOC Outsourcing &Consulting

Acquired the company, which offers a broad range of outsourcing services and has high-level consultancy
functions, as a consolidated subsidiary to accelerate the expansion of BPO services.

Oct. 2022

Subsidiary

Human Centrix

Acquired the company, which is engaged in commercial video planning, production and distribution for
BtoB companies, as a consolidated subsidiary, to provide further support for resolving issues in customers’
increasingly sophisticated and complex business processes.

Feb. 2023

Subsidiary

eXtreak

INVOICE acquired the company, which provides LAN installation work and other IT facility services, as aconsolidated subsidiary. Integrating the company with INVOICE’s expertise will enable the supply of onestop solutions for telecommunication environments.

Jun. 2021

Investment

HmcommInvested in the company, which provides voice recognition technology services and anomaly sound detection services that utilize AI.

Oct. 2021

Subsidiary

WorkVision

Acquired the company, which provides a wide range of IT solutions, primarily cloud packages, and are
integrating it into BPO services to build a framework for responding to increasingly advanced and complex
customer needs.
Invested in the company, which develops robotic surgical assistant systems in Japan.

* Fuyo General Lease Co. Ltd. arranges JOLCOs as a business activity, thereby providing its investor clients with the option to invest their funds in such aircraft leases.

Plans under Fuyo Shared Value

2026

Vision for

an asset turnover-type business that maintains
1 Advance
the soundness of self-owned assets by realizing a balance

ICT■ Create synergies by expanding our product lineup
through alliances in peripheral aircraft businesses,
while keeping aircraft operating leases as the coreof our businessbetween stable recurring revenue and non-recurring revenue from asset sales

2

2030

Strive to further strengthen sales capabilities to investors
through efforts to develop and sell new operating leaseproducts, in addition to JOLCO and JOL■ Contribute to the development of the aviationindustry and the establishment of global
transportation and logistics infrastructure, while
helping to solve social issues, through new aircraft
fields (such as sustainable aviation fuels (SAF) andair mobility)

engagement in peripheral fields and new
3 Strengthenareas, such as aircraft part-out and freighter conversion inaccordance with the aircraft lifecycle

Healthcare

FY2022 in Review
Main Accomplishments
In fiscal 2022, we purchased 5 new aircraft and sold 1 aircraft aspart of our asset turnover-type business. As a result, we currently possess 49 aircraft. In addition, the establishment of our firststaffed site in the U.S. contributed to an increase in orders from
U.S. airlines.
Consequently, ordinary profit increased significantly from ¥1.5
billion in fiscal 2021 to ¥4.2 billion, as the COVID-19 pandemic-related delay in collecting overdue lease fees was resolved,
and a weaker yen contributed positively. Efforts were also madeto expand new business fields, such as the P2F business, which
involves converting
Ordinary Profit and ROA in the Aircraft
passenger aircraft
Business
into freighter aircraft
Ordinary profit (Billions of yen) ROA (%)
and leasing them out.
Our Ireland-based
2.4%
subsidiary signed the
7.0
2.0%
Sustainability Charter
issued by Aircraft
Leasing Ireland, an
4.2
aircraft leasing industry
0.7%
association, in order topromote such efforts
1.5
to resolve environmental issues, such as thecreationof a circular
2022/3 2023/3
2027/3 (FY)(planned)
economy.

33

TOPICS
Concluded a Lease Contract with a Sustainability Linked Loan

Energy &Environment

We concluded a Japanese Operating Lease contract with a Sustainability
Linked Loan (SLL) linked to the decarbonization target of France-based
Société Air France S.A. (Air France). As the first initiative of its kind for an
airline company,
i t re c e i v e d t h e
Global Lease of
the Year award at
an aviation industry conference.
Mobility

Credit photo: Clément Alloing for Air France

Issues Ahead and Response Measures
Issues Ahead

Response Measures

Respond to rising interest inenvironmental issues in theaviation industry

Accelerate environmentally friendly initiatives,
such as leases with Sustainability Linked Loans(SLLs)

Enhance specialized humanresources supporting businessexpansion and development of
new business fields

Promote the recruitment and training of globallyminded human resources with a degree ofhigh specializationPromote the recruitment andtraining of globally minded human resources
with a degree of high specialization

Aircraft

Other他

Aug. 2017

Investment

RIVERFIELD

Feb. 2018

Investment

CREWT Medical Systems

Mar. 2018

Investment

Lily MedTech

Invested in the company, which is developing a breast cancer inspection system using medical ultrasoundtechnology.

Apr. 2018

Subsidiary

FUJITA

Acquired the company, which is capable of providing one-stop services, including everything from thedisposal to buying of used medical equipment, to enable the development of new products and services.

Mar. 2019

Investment(formerly Japanese Organization
for Medical Device Development)

Apr. 2020

Investment

THINKCYTE

Invested in the company, which conducts research and development for a next-generation cell isolation
system using AI.

Jan. 2021

Investment

CB Holdings

Invested in the company, which engages in M&A in the medical, welfare, and dispensing pharmacy industries, and provides opening support, management consulting, and news distribution services.

Jun. 2022

Investment

JSH

Invested in the company, which provides employment support services for people with disabilities and athome psychiatric healthcare services.

Sanamedi

Invested in the company, which is developing“IMOvifa™,”an automated visual field analyzer.

Invested in the company, which provides support for the commercialization of state-of-the-art medical
technologies.

Jun. 2018

Investment

Exergy Power Systems

Mar. 2019

Investment

NExT-e Solutions

Invested in the company, which provides cutting-edge battery control devices and management systems.

Feb. 2020

Investment

Girasol Energy

Invested in the company, which develops maintenance management platforms for photovoltaic power
generation equipment.

Oct. 2020

Investment

Tsubame BHB

Invested in the company, launched out of the Tokyo Institute of Technology, which is developing manufacturing technology for the distributed production of ammonia under low-temperature, low-pressure conditions.

Jul. 2021

Establishment

S-Solar Generation Thailand

Established a joint venture with the Thai subsidiary of Sharp Energy Solutions Corporation to sell electricity
in Thailand under a PPA.

Oct. 2021

Investment

i GRID SOLUTIONSInvested in the company, which is engaged in energy management, Virtual Power Plant (VPP), and electric
power supply businesses.

Mar. 2018

Investment

TDF Group

Invested in the company, which operates a rental, leasing, sales, and dealership business for pickup trucks
in North America.

Jan. 2019
Jan. 2023

Investment
Subsidiary

Pacific Rim Capital

Invested in the company, which handles operating leases for material handling equipment in North America,
in January 2019, and acquired the company as a consolidated subsidiary in January 2023.

Mar. 2020

Investment

HiBot

Invested in the company, which develops robotics technologies used in extreme environments for infrastructure maintenance, piping inspections, etc.infrastructure maintenance, piping inspections, etc.

Apr. 2020

Subsidiary

YAMATO LEASE

Acquired the company, which mainly provides truck leasing and other financing services to transportationcompanies, to expand the business domains of logistics, transportation and used vehicles.

Nov. 2020

Investment

A.L.I. Technologies

Invested in the company, which develops and is expanding an industrial drone services and air mobility
business.

Apr. 2021

Investment

3D Printing Corporation

Aug. 2021

Investment

REXEV

Invested in the company, which is building EV car sharing and EV management systems.

Jan. 2022

Investment

PLIC

Invested in the company, which provides logistics solutions in Thailand, including a forklift rental service
and consultation on the introduction of automated warehouse systems.

Jul. 2022

Investment

Japan Wind Tunnel
Manufacturing

Invested in the company, which manufactures and sells compact, low-cost wind tunnel testing equipment.

Dec. 2022

Investment

EV Motors Japan

Invested in the company, which specializes in the development, manufacture, and sale of electric vehicles
for commercial use (buses, trucks, and trikes, etc.)

Aug. 2020

Investment

Airbus Ventures Fund III LP

Invested in this fund, established to invest in start-up companies with innovative technology in the aerospace field.

Oct. 2017

Establishment

GAP FundApr. 2019

Partnership

UTokyo IPC Startup
Incubation ProgramMay 2019

Investment

Synspective

Dec. 2022

Investment

H. I. F.

Invested in the company, which develops and manufactures next-generation energy storage systems.

Invested in the company, which provides various product services utilizing 3D printing technology.

Established Japan’s first industry-academia collaborative GAP Fund in cooperation with the Tokyo Instituteof Technology and Innovations and Future Creation Inc.
Became a supporter of a startup incubation program organized by UTokyo Innovation Platform Co., Ltd.
(UTokyo IPC). Fostered startups through financing and business partnerships as a partner company.
Invested in the company, which offers one-stop solutions using satellite-based observation data.
Invested in the company, which provides various financial services leveraging AI, including credit assessment services, receivables purchasing, and receivables guarantees.

Fuyo Lease Group Integrated Report 2023

34

CSV Management

About Us

Fuyo Lease Group’s CSV Management

Top Message

Shared Value Story

Strategy & Action

The Fuyo Lease Group has adopted CSV (Creating Shared Value) as its core management principle. This
long-term growth management strategy.

Board of Directors
Report(at least once a year)

Oversight

President and Chief Executive Officer

By promoting CSV management, we will also address sustainability issues.

Deliberation and report

Approval

CSV Promotion Office

Executive Committee(secretariat)

Deliberation andapproval

Discussion

Approach to CSV Management

CSV Promotion Committee

As climate change, resource problems, and a host of social issues are growing more serious, the business environment is changing
rapidly, leading to change in the requirements of stakeholders and the role that the Fuyo Lease Group is expected to play. ThroughCSV management, the Group aims to realize social value (resolution of social issues) and corporate value (profit growth) simultaneously in order to help resolve major issues facing society as represented by the Sustainable Development Goals (SDGs). Moreover,by continuously creating new value from a CSV perspective, we will be able to grow sustainably even in an uncertain business environment, helping to increase the Group’s corporate value over the medium to long term, and ultimately realizing the Group’s mission.
Through management centered on CSV, the Fuyo Lease Group will resolutely strive to create new value by further expanding andCorporate
Governance

Financial Section &Corporate Date

CSV Promotion System
CSV Promotion Structure

approach aims to achieve sustainable growth by addressing social issues and is promoted as a medium- toManagement(Chairman: Executive Officer,
Head of Management Departments)

Report on initiatives
and progress

Reflection in the business strategies
of each division and company (CSV promotion)

Departments, offices, branch offices andgroup companies

Cooperation

To promote sustainability and CSV-related initiatives, the Groupestablished the CSV Promotion Committee, which is chaired by
the executive officer who is head of management departments,and has members made up of the heads of major departmentsin the corporate division and heads of departments responsible for each business domain. The committee formulates,
promotes, and monitors strategies, indicators, and targets
related to important issues concerning sustainability and CSV,
and discusses matters such as materiality and progress on
non-financial targets in the Medium-term Management Plan.
The content of discussions and reports of the committee aresubmitted to the Executive Committee for deliberation, and theoverall sustainability and CSV policy for the Group, and the status of progress, are reported at least once a year to the Boardof Directors.

Major discussion and reports of the CSV Promotion Committee (fiscal 2022)

evolving its business domains, contributing to the realization of a prosperous society and sustainable growth.

Topic for discussion
July
2022

The Fuyo Lease Group’s CSV Management Concept

Mission Our responsibilities and raison d’ etre
Expand business domains and promote further evolution
in our relentless attempt to create new value,
which in turn contributes to realizing a prosperous
society and sustainable growth.

Realize increased corporate value and sustainable growth overthe medium to long term
Contribute to a sustainable society by creating social value

Fuyo Lease Group’ s CSV Management
Growing sustainably through business while also achieving social value
Becoming a provider of good solutions to social issues as part of a systemthat aims for a better society

Creation of shared value through business
Achieving corporate value = corporate profits(1) Main response items in the fiscal 2022 Integrated
Report(2) The Fuyo Lease Group’s value creation story andmateriality (important issues to be addressed)(3) Report on environmental performance for fiscal 2021

January
2023(1) Progress on non-financial targets and expected final
results(2) Progress of management strategies in the Medium-termManagement Plan

March
2023

(1) Expected full-year performance on non-financial targets(2) Revised plan for fiscal 2023

Understanding of CSV in the GroupTo enable all Group employees to understand and empathizewith the CSV approach and put it into practice in their daily
work, we conducted a training program with workshops at all
Group companies. Details of the program that we implemented
are shown in the following table. We will continue to promote
CSV throughout the Group while monitoring the level of understanding and implementation.

Achieving social value = solving issues

A workshop in progress

Initiatives to Promote CSV Understanding, Empathy, and Practice
Implementation of the“Let’s CSV!”training program for promoting CSV
understanding, empathy, and practice.For Fuyo General Lease employees.

Building a system of human resources,organizations and governanceneeded to realize CSV management and sustainable value creation

Fiscal 2020●

e-learning for understanding CSV for all employees.

●

CSV strategy workshop for all office managers.

●

Organizational and Structural Support for Sustainable Value Creation
Realizing sustainable growth through CSV management requires a system of human resources, organizations and governance tobe built. The Fuyo Lease Group has formulated “Basic Policy on Systems that Support Sustainable Value Creation,” which includes
responding to climate change, respect for human rights, human resource strategy to enhance value, contributing to the community,
approach to risk, and ensuring compliance. Through the implementation of this policy, we are building a strong foundation for promoting CSV management.

35

Workshops for thinking about the connection between one s own work
and CSV held by office managers at all offices.

Fiscal 2021

Expansion of the above programs to all Group company employees inJapan.
Workshop to promote understanding of the Mission, Vision and Value.
(Group companies in Japan)

Fiscal 2022●

In-house level of understanding of CSV andthe Mission, Vision, and Value (MVV)*

4.38(On a five-point scale)

Deeperunderstanding of
the Group Vision
was achieved
through workshop
participation*A verage evaluation from a five-point evaluation survey ofparticipants after completing the workshop.

Fuyo Vision × My Vision (A workshop to deepen understanding of andempathy for the Group's Vision by comparing it to the visions of individual
employees) For all employees of Group companies in Japan

Fuyo Lease Group Integrated Report 2023

36

Stakeholder Engagement / Human Capital

About Us

Toward the Creation of Shared Value with Our
Stakeholders

Business
partners

・Sales activities that customers trust

・Various training systems
・Communication through thehuman resources and welfare
systems
・Intranet and internal social networking system
・Employee awareness survey
・Whistleblower hotline
・Employee union

・Strategic human resources
development
・Diversity and inclusion
・Health and productivity management,
work-life balance
・Employee awareness survey
・Office Day event with family
participation

・Climate change response
・Contribution to a circular economy

・Commitment to decarbonization
through RE100 and carbon

・Initiatives to reduce CO2 emissions

・Conservation of biodiversity

neutral declaration
・Participation in initiatives (Japanucts and services
・A trustworthy business partner

・Personal growth and job satisfac-

Employees

Main initiatives

・Daily sales activities
・Participation in trade fairs etc.
(BPO/ICT)・Activities through remote channels(certain Group companies)
・Website・High-quality, high-efficiency prod-

Customers

Engagement methodtion・Comfortable workplace environment
・Respect for human rights
・Healthy lifestyle

Climate Leaders Partnership, Ellen
MacArthur Foundation)

NaturalEnvironment

・Daily sales activities
・Social contribution activities

services-Reduction of the Fuyo Lease Group’s emissions-Contribution to CO2 emissions reduction
through business・Promotion of a circular economy-Business opportunities that contribute to acircular society-Waste reduction through business activities-Zero-waste activities

・Biodiversity-In-house breeding of fish and aquatic plants
for business-Cultivation of endangered species-Biodiversity education

・Resolution of social issues andcreation of social value throughLocal
Communities

Shareholders
and Investors

business・Social contribution to local
communities

・Medium- to long-term increase incorporate value
・Timely and appropriate disclosureof financial and non-financial
information

・Daily sales activities
・Social contribution activities- Donations- Volunteering

・Work with customers through sales
activities to create further social value・Social contribution activities-Donations 	Support for commercializationof basic research	Support for students aspiring
to become artists-Volunteering Supporting the next
generation of children

・General Meeting of Shareholders
・Financial results briefings
・Integrated Reports
・Individual dialogue with investors

Fuyo Vision Stories

and that build value with them・Development of employees who can
propose and provide appropriate

Shared Value Story

P13-18

Value Creation by Business Area

P27-34
Human CapitalP38-41

Human CapitalP38-41

Initiatives for Respect for Human
Rights

P46

Fuyo Vision Stories

P13-18
Value Creation by Business Area

P27-34
Climate Change Response

P43-45Initiatives to Realize a Circular Society

P47

The Fuyo Lease Group believes that its people, i.e.,
its employees, are its greatest asset, and serve as thefoundation for the Group’s sustainable value creation.
Based on this belief, we are actively investing in our humanresources.
Our efforts related to investment in human resources
are based on the following three pillars: strategic humanresources development, diversity and inclusion, and healthand productivity management & work-life balance.
In addition, we regularly measure employee engagement
and strive to improve it.

P46
Fuyo Vision Stories

P13-18
Value Creation by Business Area

P27-34
Community Contribution

37

Green Bonds

Sustainability-linked bonds

FY2020

FY2021

Summary
Declaration Support Program, and the Fuyo Zero Carbon City Support Program (2020 –)・Received Gold Prize (2020) and Special Prize (2022) at the ESG Finance Awards Japan・First sustainability-linked bond issued by a financial institution in Japan・Increased the renewable energy ratio in electricity consumption and set target for theamount of financing handled for the promotion of decarbonization

Sustainability-linked loan with engagement ・Set quantitative targets for both social aspect (number of BPO service provision companies)
and environmental aspects (amount of financing handled for the promotion of decarbonizadialoguetion)・Allocated to solar power plants, green buildings (environmental aspect), and facilities for the
Sustainability bond (Fuyo CSV bond)elderly (social aspect)

Positive impact finance (loan)

FY2022Three pillars ofFuyo Lease Group’ s
investment in humanresources

Diversityand inclusion

・The overall non-financial targets set forth in the Medium-Term Management Plan were used
to evaluate impacts and set KPIs

・Third time executing a loan on this scheme

Sustainability-linked loan with engagement ・Set targets for material and chemical recycling rates for waste plastic (from returned items)
to evaluate circular economy strategies, etc.
dialogue* Key Performance Indicator (KPI): An important indicator for measuring an organization s level of attainment of a target.
* Sustainability-linked loans with engagement dialogue: Loans in which the Development Bank of Japan Inc. engages in
dialogue with the borrower to support the setting of appropriate sustainability performance targets (SPTs) that contributeto increasing the borrower s level of sustainability management, while accompanying the borrower by engaging in periodic
dialogue throughout the loan period to support achievement of the SPTs.

Health and productivity
management &work-life balance

Be able to maximize a diverse
array of individuality, talent,
and abilities

Develop a healthy and vibrantwork environment

To live up to our corporate slogan of Go Where No One Has
Gone Before, the Fuyo Lease Group has encouraged its
employees to be autonomous human resources who think forthemselves, act proactively, and are committed to personal
growth. In the future, employees will be encouraged to develop into human resources with high levels of expertise in eachbusiness domain and the ability to create high added value ineach area, in order to achieve the medium-term management
plan through fiscal 2026 with CSV at the core, and to realize

the Mission and Vision for 2030 and beyond. To maximize our
support for employees development into the human resources
we seek, we are actively investing in human resources, with atarget of increasing human resource development expenses(non-consolidated) 300% by fiscal 2026 compared to fiscal
2021.
Human resource development expenses increased 188% in
fiscal 2022 and are projected to increase 210% in fiscal 2023.

The Human Resources We Seek
Human
resources
with high levelsof expertise

resources who think
for themselves,act proactively,
and are committed topersonal growthin each business domain
and the ability to createhigh added value
in each area

P48

・Allocation to the Fuyo RE Action Support Program, the Fuyo 100% Renewable Electricity

FY 2019

Address increasingly diverse andsophisticated businessdomains

Autonomous
human・Online General Meeting of Shareholders
・Revitalization of financial results briefings
・Enhancement of disclosure in the
Integrated Report
・Investor relations and shareholder
relations meetings
・Enhancement of sustainability-related Sustainable finance performance isdisclosure (TCFD, human capital)presented in the following table
・Disclosure of initiatives to procure
funds through sustainable financeCategory

Strategic humanresources development

Initiatives related to Biodiversity

Main Fund Procurement through Sustainable Finance (FY 2019–2022)
Execution
PeriodFinancial Section &Corporate Date

Strategic human resources development

Developing Autonomous Human Resources with a Commitment to Personal Growth
We will increase the autonomy of human resources throughinitiatives to improve the leadership skills of supervisors and tofoster self-awareness among employees.

Promotion of Sustainable Finance through Engagement with Investors and Financial Institutions
Sustainable finance refers to borrowing
and bond issuances for which sustainability-related initiatives are disclosed
using specific strategies, indicators andtargets. The Group views this as animportant mode of engagement withinvestors and financial institutions, andactively engages in various forms offund procurement. In fiscal 2022, we
worked mainly on a scheme for evaluating overall non-financial targets set
forth in the Medium-Term Management
Plan Fuyo Shared Value 2026.

Corporate
GovernanceManagement

Strategy & Action

Human Capital

The Fuyo Lease Group provides various opportunities for engagement with stakeholders.
By understanding various social issues and stakeholders expectations for the Group accurately and in a timely manner,and by promoting Creating Shared Value (CSV), we aim to contribute to the realization of a prosperous society andsustainable growth.
Interest and expectations for theCompany

Top Message

Measures

Outline of Measures

Introduced an internalcoaching certificationacquisition program

Provided training for management-level employees. Trainees
learned coaching skills to help their subordinates gain
autonomy. 36 people participated in the training.

Introduced a cafeteria plan(from 2022)

Began subsidizing the cost of employees’ autonomous
learning, including the costs of attending English conversation
schools and business schools, and participating in seminars.

Introduced career consulting(from 2023)

Career consultants, both internal and external, support theautonomous and self-directed career and skill development of
employees.

Establish a High Degree of Specialization in Each Business Domain
In order to develop human resources who can address increasingly diverse and sophisticated business domains and createhigh added value, we have classified our skills structure into 3
levels*. Programs that strengthen specialized knowledge, particularly at Levels 2 and 3, are being intensively developed andexpanded.
Notably, in the language field of Level 2, we have started toprovide training in which young employees work remotely on issues with overseas business people, in order to develop humanresources capable of creating high added value in overseas
businesses. In fiscal 2022, 24 employees participated in thistraining. All employees are taking part in e-learning to obtainbasic knowledge of the digital transformation (DX) field, which isa key theme of the current medium-term management plan. At
Level 3, employees enhance their specialization through suchmeans as a system of incentive payments for the acquisition ofcertifications designed for each business domain and secondment to partner companies.
* Skills structure

Level 3Specialized skills that are the source of high added value
in each business domain, including energy, BPO, andhealthcare

Level 2Skills that are essential and fundamentally needed toenhance the creation of added value in all business domains, such as language, DX, and cutting-edge finance

Level 1

Knowledge of subjects such as accounting, tax, andlaw essential to lease and finance, and general businessskills such as communication and critical thinking

Fuyo Lease Group Integrated Report 2023

38

Human Capital

About Us

Top Message

Shared Value Story

Management

Strategy & Action

Corporate
Governance

Financial Section &Corporate Date

Health and Productivity Management

Initiatives to Promote Diversity andInclusion

Human Resources Division
General Manager,
Diversity Planning & Promotion Office

The Fuyo Lease Group believes that providing a healthy andsafe work environment where employees can work energetically will invigorate the organization and increase productivity. We
consider both investment in the health of our employees (efforts

to maintain their health) and human resources development to
be investments in human capital. Consequently, we promotestrategic health and productivity management based on a
management perspective.

Nami Tsujimoto

Diversity and Inclusion

Maintaining the Health and Productivity of Employees

The Fuyo Lease Group believes that diversity in human resources is a key growth driver. Bringing together different
strengths, viewpoints, and values generates the innovation thatcreates new value, and leads to sustainable growth. We areworking to promote diversity and inclusion with the goal of cre-ating a workplace where every employee can maximize their fullpotential, increase their expertise, and work comfortably andfeel job satisfaction regardless of age, sex, nationality, sexual
orientation, gender identity, race, ethnicity, disability or mode ofrecruitment.

Promoting Women’s Participation in the Workforce
Notably, with regard to women’s participation in the workforce,
we are developing an environment in which female employees
can demonstrate their abilities to the fullest extent even morethan before. In the medium-term management plan, we havepositioned promoting women’s participation in the workforce
as a crucial human resources strategy. For this, we have set

high numerical targets, specifically a ratio of women in new
graduates hired of 40% and a percentage of female employees
in management of 35%. We will focus on further promoting
women’s participation in the workforce by further enhancing
and strengthening the various initiatives we have taken to date.
Main Initiatives

In fiscal 2022, we identified employee disease prevention andearly detection of disease as a priority issue for health and productivity management. We lowered the age at which employees can receive a complete medical checkup with no out-ofpocket expenses from 40 or over to 35 or over, and all eligible
employees received a complete medical checkup.
In addition, we believe that creating an environment in which female employees can maximize their abilities without interrupting
their careers will drive the Group’s growth. Based on this belief,
Performance
Indicator

FY2021

FY2022

FY2026
TargetPercentage of
employees aged 35
or over who have hada health examination(non-consolidated)

86%

100%

100%

we began holding online seminars to increase understanding of
women’s health issues. From fiscal 2023, we have been holding individual consulting sessions guided by a female doctor
three times a month for all female employees of the Group.
In recognition of these efforts, the Company was certified asa 2023 Health and Productivity Management Outstanding
Organization (large enterprise category), following on from its
certification in fiscal 2021.

● Step up follow-up support for female employees (con-tinue to conduct individual interviews and provide skill
development opportunities)● Provide female employees with opportunities for interac-tion with the president, executives, and division heads
FY2017
Platinum Kurumin Certification

FY2021
Eruboshi Certification (2 Stars)● D&I seminars with external female executives serving as

Left: Chikako Yamaoka, CEO, Yamaoka Medical International Co., Ltd.
Right: M ariko Akimoto, Obstetrics and gynecology specialist, occupational health physician
certified by the Japan Medical Association

instructors● Hold roundtable meetings with senior female-employee

colleagues

Work-life Balance

Main Results and Targets

Performance
Indicator
Ratio of women in new
graduates hired(non-consolidated)
Percentage offemale employees inmanagement positions(non-consolidated)
Gender wage gap*
(non-consolidated)
Career lecture by female executive

FY2021

FY2022

FY2026
Target

52.6%

53.5%

40%

29.5%

30.9%

35%

65.1%

66.5%

̶

* The gender wage gap is the ratio of women’s average annual wages to men’s average annual
wages for all employees, combining regular and non-regular employees. There is no wage
gap between men and women for the same work. The gender wage gap is caused by differences in the proportion of employees in each job category, certification, and age.

To ensure that all employees can autonomously achieve awork-life balance, we strive to build an employee-friendly working environment where employees can enhance the quality ofboth life and work, through such means as maintaining andimproving their health, expanding their knowledge and insight,
and pursuing personal development.
To this end, we have been promoting workstyles with a clearMain Initiatives and Systems● +Friday (Plus Friday): employees can designate one of the

Fridays each month as a half-day workday● Refresh Day: each employee designates one day every

week when they can leave early● Flexible work hours: a system that allows employees tostart work anytime between 7:00 and 11:00 and work for 7
hours and 20 minutes

Inclusion in the Workplace
We are working to increase understanding of diversity andinclusion in the workplace by implementing measures such asproviding e-learning about hiring LGBTQ people and people withdisabilities to all Group employees and group training on thoseissues to division heads, executives and human resources managers. As a result of implementing these initiatives, we received a39

Bronze rating on the PRIDE Index 2022,
an assessment indicator for efforts toaddress sexual minorities in the workplace. PRIDE Index 2022 was developed by work with Pride, a voluntaryorganization.

● Annual paid leave: employees are encouraged to take an-nual paid leave, with 1-2 business days of leave scheduled
between weekends and holidays as bridge holidays.

cut balance that allow for individual autonomy and high productivity by introducing unique initiatives and encouraging theacquisition of annual paid leave. In this way, we are correcting
long working hours and creating an environment that allows
employees to work according to their own lifestyles, regardlessof circumstances such as childcare or nursing care.

Performance
Indicator
Percentage of eligible
male employees
who have taken
childcare leave(non-consolidated)
Rate of taking paidleave(non-consolidated)
Rate of taking the+Friday system *(non-consolidated)

FY2021

FY2022

FY2026
Target

110%

100%

100%

82.3%

93.5%

90%

89.4%

89.0%

̶

* The percentage of people who took the +Friday system at least once a year among employees as of the fiscal year-end (excluding those on leave, retirees, and mid-career hires during
the fiscal year). Excludes workers at seconded sites and overseas subsidiaries that do nothave the +Friday system.

Fuyo Lease Group Integrated Report 2023

40

Human Capital / DX Strategy

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

DX Strategy
Under the philosophy of Creating Shared Value (CSV), the Fuyo Lease Group simultaneously pursues
the resolution of diverse social issues and the provision of economic value through its business operations.
As technological advances spur society’s shift to digitalization, we introduce digital technologies andthe value we provide to society continues to adapt to the changing external environment.
In this way, we aim to create shared value over the long term.

Engagement
The Fuyo Lease Group defines engagement as “a relationshipin which each employee links the growth of the company withhis or her own growth, and contributes to their mutual growth.”
The Group measures indicators of engagement through employee opinion surveys and monitors trends in those indicators.
Considering increasing engagement to be important for creating social value and corporate value, we implemented the Job
FA System (a system that allows employees with “Free Agent”(FA) rights to convey their career and track record to departments to which they want to be transferred, and in principle,
allows them to be transferred if needs are aligned). Meanwhile,
we are expanding systems and environments in which older
employees can actively participate.

Contributing
to growth

Acquisition of DX Certification

Engagement
Company

Employeesof the Ministry of Economy, Trade and Industry on September 1, 2022.

Contributing
to growth* An initiative that provides national recognition for companies that comply with the basic elements of the Digital Governance Code, based on the Act on Facilitation of Information Processing.

● Among our group companies, in addition to WorkVision which previously acquired

Percentage of improvement in engagement indicators*(consolidated)

3.48(2021)(2022)

Pacific Rim Capital, Inc. (PRC)

Pacific Rim Capital (PRC) is a Group company engaged in thecommitment to diversity and services as a supplier.

operating lease business for material handling equipment in

In its recruitment process, PRC maintains an unbiased approach

North America.

to factors such as race, gender, and age. In appointing and

PRC employs an ethnically diverse workforce and holds a Minori-

assigning personnel, PRC assesses aptitude based on factors

1

ty-Controlled Company certification* administered by the Nation2

including skills, experience, and behavioral traits. This process

al Minority Supplier Development Council ("NMSDC")* , which

ensures diversity and makes it the source of the Company’s com-

promotes support for minorities.

petitiveness, allowing the Company to respect different points ofIn the U.S., which values diversity, some companies use thisview, and generate innovative ideas through mutual understanding

certification as one of their selection criteria for suppliers, andand teamwork.

it has served as the basis for business relationships between
many major blue-chip companies that support the certification’s
purpose and PRC. In fact, Walmart Inc., the largest retailer in the
U.S., included PRC in its Supplier Inclusion Impact Report 2021
(a report introducing diversity initiatives) in recognition of PRC’s

it, Sharp Finance Corporation acquired DX Certification on October 1 2022.

3.48* In employee opinion surveys, eight questions (five-point assessment scale) that represent
engagement as defined by the Fuyo Lease Group (described in the text to the left are
extracted), and the average response value were measured.

Making Diversity a Source of Competitiveness● Fuyo General Lease acquired DX Certification under the DX Certification Initiative**1 NMSDC: National Minority Supplier Development Council
	The National Minority Supplier Development Council was founded in the U.S.
in 1972 to facilitate business between minority-owned businesses and major
corporations. It has more over 1,700 corporate members, including major
corporations, and is headquartered in New York.
*2: Minority-Controlled Company	A certification given to companies managed by people who are members of
ethnic minorities.

Strategy1Efforts to Expand New
Business Domains

Strategy2

Delivery of Enhanced Value
through Advanced Product /Service Offerings

Strategy3

Digital Support for Sales
Activities

4
Drastic Streamlining andStrategy

At a Halloween party in the office41

Advancement of Business
Operations, Flexible
Workstyles, and Business
Processes Reformation

Strategic
TargetProgress

Strategic
TargetProgress

Strategic
TargetProgress

Strategic
TargetProgress● Support recurring and subscription business models and othermeans of business development
To build a new business that generates continuous revenue, we are in
the process of establishing a new IT infrastructure foundation, includinginternal core systems. Additionally, a business model study is underwaywith manufacturers and other customers in mind.

● Develop and expand cloud solutions● Support partner companies developing DX products
In October 2022, Human Centrix Co., Ltd., which operates a video
production and streaming business, joined the Fuyo Lease Group.
The addition of this company has strengthened the Group’s structure
for resolving issues using diverse digital solutions for the increasingly
high-level and complex business processes of our customers.

● Advance the sales support system● Advance marketing through data coordination and analysis
We have started work on renewing our in-house sales management
system, to provide a platform that will support sales activities contributing to new business creation and improved customer service. In January 2023, we established the CRM Renewal Project Team envisioning
ways to ensure the system's regular use after its introduction.

● Streamlining of internal business processes utilizing digital means● Reskilling of IT and DX personnel
With a view to increasing digital literacy, we launched a DX/
e-learning program for all officers and employees in October 2022.
We will continue to visualize employees’ skill levels through in-houseassessments, and we plan to develop training options specific tooperation domains and skill levels.

Fuyo Lease Group Integrated Report 2023

42

Climate Change Response

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Financial Section &Corporate Date

Corporate
Governance

Climate Change Response
Decarbonization of Customers and Society

The Fuyo Lease Group’s Strategy for Decarbonization
Addressing climate change and decarbonization is an important business opportunity for the Group, which focuses on andhas expertise in businesses related to renewable energy, and isa core area of CSV, where it can simultaneously achieve a highlevel of realizing social value and corporate value.
In the medium-term management plan, we set contributing to
the realization of decarbonized society as an important issue(materiality), and made a declaration to reduce CO2 emissions
through business activities. Also, for information disclosures
based on the recommendations of the Task Force on Cli-

mate-related Financial Disclosures (TCFD), we have unveileda strategy based on the dual wheels of decarbonization of theGroup as a form of risk reduction and decarbonization of customers and society as a business opportunity.
The Group will achieve sustainable growth by demonstrating its
competitive edge in this domain.

Decarbonization of Customers and Society(Materiality KPI)

* All of the Fuyo Lease Group’s information
disclosures based on TCFD recommendations
can be viewed through our Company’s website.

Risk and Opportunity Related to Climate Change

P45

Risk reduction

Seizing business opportunities

Decarbonization of the Group

Decarbonization of customers and society

Decarbonization of the Group

Indicators/
Targets

Strategy

We decided that we needed to carry out initiatives voluntarily,
and in 2018 became the first general lease company in Japanto participate in RE100.
In fiscal 2022, we implemented renewable energy at several
domestic locations, and introduced six EVs as company sales
vehicles.
We will continue to reduce the Group’s greenhouse gas emissions primarily by introducing renewable electricity to offices
and converting company sales vehicles to EVs.

Decarbonization of theGroup (Medium-term
environmental targets)
RE100 target*

2030(Percentage of energy used thatis renewable energy)

50%

100%

CO₂ emissions*Compared to FY2020

Achievement ofcarbon neutrality(Scope 1 and 2)

30% reduction

CO2 emissions (Scope 1 and 2) *1 *2 *3
Scope1（MWh）

Scope2

3,000

General electric power

Renewable energy

4,500

1,904

1,971

2,016

3,249

1,197

3,000
1,715

1,283

2,599

1,414
872

1,157

2,884

0

2019/3688
2020/3

603

584

558

2021/32022/3

1,500

3,249

2,599

2023/3

Total of ¥300.0 billion over five years

Renewable energy power generation
capacity

515MW

1,000MW

Percentage of Group vehicles that are
EVs or FCVs

0.7%

30%

Amount of financing handled for thepromotion of decarbonization¥5.3 billion

Total of ¥12.0 billion over five years● Renewable energy equipment (PPA, storage batteries)● EV and FCV lease and various kinds of managerial andoperational support● Energy-saving device leases (air conditioners, LED
lights, hot water supply equipment)● Products that comply with the Act on Promoting Green
Purchasing

Fuyo Zero Carbon City Support ProgramThis is a program to support the decarbonization of zero-carbon cities, which refers to municipalities that have declared agoal of effectively zero CO2 emissions by 2050. It serves as
one form of decarbonization promotion finance. More than 300
organizations nationwide have already taken advantage of thisprogram, and it was selected as a project certified for its excellent efforts in the Ministry of the Environment’s FY2023 ESG
Leasing Promotion Project.
Zero Carbon City
Declaration

2019/3Financial support
for decarbonization

Municipalities

Companies

2,688

2020/32021/32022/32023/3(FY)*1 CO2 emissions are calculated using the emission coefficient specified in the Ministerial Ordinance on Calculation of Greenhouse Gas Emissions Emitted by Specified Emitters. (Calculations concerning domestic electric power use the annual adjusted emission coefficients for general power transmission and distribution businesses that supply power in the regions where the offices towhich the calculations apply operate. Calculations concerning overseas electric power use the emission coefficients of the specific country published by the International Energy Agency (IEA))
However, Fuyo General Lease and companies of the Fuyo Lease Group are not considered to be specified emitters.
*2 The statistics are collected from all domestic offices of Fuyo General Lease Co., Ltd., Fuyo Auto Lease Co., Ltd., FGLGROUP Business Service CO., Ltd., FGL GROUP Management Service Co.,
Ltd., FGL Circular Network Co., Ltd., FGL LeaseUp Business Service Co., Ltd., Aqua Art Co., Ltd., FGL Techno-Solutions Co., Ltd., Sharp Finance Corporation, Accretive Co., Ltd., INVOICE INC.,
FUJITA Co., Ltd., NOC Outsourcing & Consulting Inc., YAMATO LEASE CO., LTD., WorkVision Corporation, and Human Centrix Co., Ltd. as well as overseas affiliates and subsidiaries including
Fuyo General Lease (USA) Inc., Fuyo General Lease (China) Co., Ltd., Fuyo General Lease (HK) Limited, Fuyo General Lease (Asia) Pte. Ltd., Fuyo General Lease (Taiwan) Co., Ltd., Fuyo General
Lease (Thailand) Co., Ltd., FGL Aircraft Ireland Limited, Aircraft Leasing and Management Limited, FGL Aircraft USA Inc., and Pacific Rim Capital, Inc. For the Fuyo Lease Group companies, figuresfrom before the figures began to be recorded are not indicated.
*3 Electricity usage has been estimated for some locations. The estimation method is based on multiplying the area of the site subject to estimation by the electricity consumption per area of the Fuyo
Lease head office, the entire building of the site subject to estimation, or the head office of the site subject to estimation.

43¥56.4 billion

2,884

0
(FY)

Amount invested in promoting
decarbonization

We will actively work on large-scale, overseas renewable energy power generation business, and increase our contributions
to the reduction of emissions. In fiscal 2022, we promoted
large-scale overseas projects, resulting in a renewable energy
power generation capacity of 515MW.

1,596

2,030
707

500,000 t-CO2 /year

Renewable Energy Power Generation
1,723

1,455
1,000

220,000 t-CO2 /year

4,411
3,625

2,000

CO2 reduction contributions

Examples of leases and services

Electricity used *2 *3

tricity supplied by renewable energy power generation businessare defined as CO2 reduction contributions, which are set as a
non-financial target along with the amount of funds invested toachieve the target. In addition, we have set breakdown targets
for each of the major items in order to increase the effectiveness of our efforts.
FY2026 Targets

We will meet customers’ various decarbonization needs byproviding leases and services.

2024

Indicators/
Targets

FY2022 Results

Support for Customers Decarbonization*The scope includes Fuyo General Lease and its consolidated subsidiaries.

（t-CO2）The Group is working to reduce CO2 emissions through the
installation and replacement of renewable energy and energy-saving equipment and devices for its customers, positioning
this as an important contribution to reduction that the leasing
business can make.
These emission reductions and emission reductions from elec-

StrategyManagement and Supervision of Climate-related Risks and Opportunities
We established a CSV Promotion Committee through which
we formulate, promote, and monitor strategies, indicators andtargets concerning critical issues related to climate change.
Deliberations and report details are discussed by the Executive
Committee and reported to the Board of Directors once a year
or more.

Governance

Risk
Management

Climate-related risks are managed under an integrated risk
management system. When a critical risk occurs, it is swiftly
reported to the Corporate Planning Division, which supervises
the risk management activities, from which point the Corporate
Planning Division gives appropriate guidance regarding risk
management to the department in charge of managing the risk.

Fuyo Lease Group Integrated Report 2023

44

Climate Change Response / Initiatives for Respect for Human Rights / Initiatives related to Biodiversity

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Initiatives for Respect for Human Rights
Key Risks and Opportunities Related to Climate Change
In order to quantitatively measure the financial impact of climatechange and the transition to a decarbonized society, a scenario
analysis was conducted based on two climate change scenarios: the 1.5°C scenario and the 4°C scenario (During the 1.5°C

Strategy

scenario analysis, partial data from the 2 °C scenario was used
for items on which external information was lacking). As a resultof analysis, we identified the following climate-related risks andopportunities (partial list).

Key Risks and Opportunities Related to Climate Change* For a complete view of risks and opportunities, please refer to “Information disclosure based on the TCFD recommendations” on our website.

The Fuyo Lease Group engages in business and human rights as a key
policy for CSV management.
We recognize that respect for human rights is a responsibility which
companies must fulfill and a major prerequisite for conducting businessactivities.
Through CSV management, which will simultaneously solve social issues
and improve sustainable corporate value, the Group will promote initiatives
aimed at respecting human rights in order to become a company that istrusted by its customers, partner companies and communities.

General Manager of Group
Legal & Compliance Division

Rika Ayano

Effect on our operations
Category

Business summary

Time span

Impact by scenario
1.5°C

4°C

Minor

Minor

Company-wide
Transition Introduction of a carbon tax
risks(policies and legal regulations)

Risk of increase of costs for the achievement of RE100 and carbon neutrality due to the introduction of a carbon tax

Medium term
to long term

Real EstatePhysicalrisks

Increasingly serious natural disasters(acute)Risks of rise in insurance premiums after increase and intensification ofnatural disasters

Short term tolong term

Minor

Minor

Energy & Environment
Institutional changes of energy
Transition
purchase systems (FIT, FIP), etc.
risks(policy and legal restrictions)
Rise in demand for renewableenergyOpportu- (products, services and markets)
nitiesBusiness opportunities brought by
new technologies, new systems, etc.
(products, services and markets)

Risks of decrease in revenue from electric power sales, increase in operational costs, etc. in the event of unexpected institutional changes
Increase of initiatives for domestic renewable energy projects
Increase of initiatives for overseas renewable energy projects
Increase of initiatives for new areas of business such as secondary energy

Short term tolong term
Short term tolong term
Short term tolong term
Short term tolong term

Opportunities

Rise in demand for electric vehicles(markets)
Rise in demand for services related
to electric vehicles(products and services)

We acknowledge that our business activities may have a negative impact on human rights, and formulated
the Fuyo Lease Group’s Human Rights Policy (hereinafter “the Policy”) in May 2022 in order to clarify ourstance as a company that respects human rights. In accordance with the Policy, we will help to realize asociety in which human rights are respected through our business activities. The Policy has been determinedby a resolution of the Board of Directors following deliberation by the Executive Committee.

Human Rights Due Diligence
MediumMedium

Major

Major

Major

MediumMajor

MediumMobility
Transition Stricter regulation of CO2 emissions
risks(policy and legal restrictions)

The Fuyo Lease Group’s Human Rights Policy

Risks of decrease in demand for the lease of conventional diesel and gasoline-powered vehicles due to a decrease in demand for gasoline-powered
vehicles following the tightening of CO2 emissions regulations, etc.

Medium term
to long term

MediumMinor tomedium■ Promotion of one-stop services with electric vehicles■ Promotion of partnership with car manufacturers and dealers and alliance strategies with power companies, trading firms, etc.
■ Building a maintenance network■ Promoting FCV before other companies do

Short term tolong term

MediumMediumWe launched an initiative for human rights due diligence basedon the Policy. Through inquiries made to business units andinterviews with partner companies, we identify issues that havea negative impact on human rights in our business, and implement countermeasures according to the degree of risk severity.
By continually implementing this kind of process every term, we
will work to prevent and mitigate human rights risks.

* The Fuyo Lease Group’s
Human Rights Policy canbe viewed on our Company
homepage.

Human Rights Due Diligence Process

1
4

Human rights impact
evaluation

Identify human rights risks in businessand evaluate the degree of severity
and impact

Information disclosure
Disclose the status of initiatives forhuman rights risks on the corporatewebsite, etc.

23Prevention andmitigation measures
Formulate and implement prevention andmitigation measures for human rights
risks based on the evaluation results

Monitoring
Periodically monitoring the efficacy of
the risk countermeasures which were
implemented

Initiatives related to Biodiversity
Aqua Art Co., Ltd. offers aquarium layouts with tropical fish and aquatic plants for rent.

Aircraft
Transition Changes in the business environrisks
ment (market)

Opportunities

Introduction of new technologies
related to aircraft and the formationof a new market(products and services)

Risks of decrease in profit resulting from the resale prices of old model
aircraft after the termination of the lease period alongside the shift tofuel-efficient aircraft

Medium term
to long term

Medium■ Receiving inquiries regarding existing products and increasing profitability through investment in and cooperation and synergy with peripheralbusinesses■ Venture capital investment and cooperation in new areas of technology(sustainable aviation fuel (SAF), hydrogen/electric/eVTOL (electric verticaltakeoff and landing) aircraft, etc.)

Medium term
to long term

MediumDefinition of timeline [Short term]: present–2025 [Medium term]: 2026–2030
Definition of impact (monetary impact on our consolidated gross profit in 2030)[Long term]: 2031–2050[Major]: greater than 3 billion yen

Impact on the Group’s Business and Countermeasures
The scenario analysis showed that the impact of climatechange risks on the Group’s business is limited under both the
1.5°C and 4°C scenarios, and that opportunities are greater. In
order to appropriately manage the identified risks and maximize
business opportunities, these analysis results are reflected in
the non-financial targets and strategy for each business in the45[Medium]: 100 million yen– 3 billion yen

Minor

MediumA Natural Ecosystem in an Aquarium Tank

Contributed to Biodiversity Education

Within the aquarium tank, microorganisms decompose leftover
fish food and waste, which are used as fertilizer to produce
oxygen through photosynthesis by the growing aquatic plants,
purifying the water and keeping the fish healthy. In this manner,a natural ecosystem cycle is reproduced in the tank.

We presented visiting lectures based on
the theme of biodiversity to 120 elementary school students from lower gradesin Tokyo. These lectures were introduced in a special edition of the Yomiuri
SGDs Newspaper: Life and the SDGs.
In 2022, we held a summer aquarium-themed event at Nagareyama
A visiting lecture at an elementary
schoolOtakanomori S.C. and Tamagawa
Takashimaya S.C. and hosted an entertaining exhibition that enabled children
to create fond memories of summer.
The event communicated the fun of observing and learning about living organisms through activities such as a stamp
rally to complete a fish encyclopedia andpanels on fish trivia focused on learning.
This event offered not only the enjoyment of an aquarium but
also opportunities to think about the environments where fish
live.

Promote In-house Breeding
for Fish and Aquatic Plants[Minor]: Smaller than 100 million yen

Strategy

Medium-Term Management Plan “Fuyo Shared Value 2026.”
By concentrating managerial resources on decarbonization, we
will promote business growth through the expansion of renewable energy power generation projects and increased financing
for EVs and FCVs.

Aqua Art launched the SDGs-Related Project and establisheda system to provide a certain
quantity of fish and aquatic
In-house bred African butterfly cichlid
plants through the in-house
breeding of tropical fish suchas platies, guppies, corydoras, and African butterfly cichlids,
as well as reusing and cultivating aquatic plants brought backfrom maintenance work.
Succeeded at Breeding an Endangered Species
In the fall of 2020, we succeeded at breeding the Japaneserosy bitterling, a freshwater fish unique to Japan.

Fuyo Lease Group Integrated Report 2023

46

Initiatives to Realize a Circular Society / Community Contribution

About Us

Shared Value Story

Initiatives to Realize a Circular Society

Community Contribution

Initiatives from Both Business and In-house Aspects

Basic Approach

The Fuyo Lease Group has made the contribution to the realization of a circular society one of its important issues (materiality)
in business activities and develops infrastructure, services andmore to achieve a circular economy as a business strategy. As
an in-house initiative we are conducting Zero Waste Activities,
promoting each and every individual employee to act with consideration for the environment. In doing so, we are promoting
both business strategy and in-house initiatives toward achieving a circular society.

for EarthEnvironment
Contribute to
the realization ofa decarbonizedsociety

Contribute to the realization of a sustainableglobal environment
Business Energy &strategy Environment

Mobility etc.

In-house
initiative

RE100

Contribute to
the realizationof a circularsocietyBusiness Circular
strategy economy
In-house
initiative

Zero waste

Acting with consideration for the environment
Environmental issues

Reducing Waste through Business Activities
To contribute to the realization of a circular economy as a leasing company that handling various products, we aim to achieve
the Group's returned lease properties* and waste plastic*
derived from returned properties are completely recycled by
FY2026, the final year of the medium-term management plan.
While collaborating with Group companies, we are working todevelop an infrastructure that will enable reuse and recyclingof returned properties and to develop channels for resource
recycling.

Materiality KPIFY2022
Results

FY2026
Targets

Percentage of returned items
that are reused or recycled*

100%

100%

Percentage of materials/
chemicals contained in waste
plastics (from returned items)
that are recycled*

Strategy & Action

24.7%

100%

Supporting Commercialization for
Basic Research

Support for Students Aiming to
Become Artists

We established Japan’s first industry-academia collaborative
GAP Fund in cooperation with the Tokyo Institute of Technology
and Innovations and Future Creation Inc. in October 2017. Up
until now, 17 projects have been selected, of which two haveresulted in creating startup companies.
From July 2023 we started operating Fuyo Mirai GAP Fund under a new framework and will continue to support commercialization and product development of cutting-edge technologies
in the future.

In 2021, we established the Fuyo Joshibi Venus Fund with
Joshibi University of Art and Design to support students aiming
to become artists, providing them with exhibition venues formore people to become familiar with their works.
In March 2023, we held the fund’s first exhibition in the Sumitomo Fudosan Kojimachi Garden Tower where the Group head
office is located. Going forward, we plan to gradually expand
the exhibitions to other spaces provided by our customers who
support the ideas behind the fund.

A Fund intended to fill the“GAP” to commercialization
GAP
Number of selected
projects: 17*A pplies to leased (rental) assets returned to the Hachioji Technical Center of FGL Circular Network Co., Ltd.

Zero Waste Activities aim to minimize the amount ultimately generated as waste by reducing the amount of
trash generated from offices and recycling it as a resource. We believe zero waste is the exit part of consumption in a circular economy, and we conduct our activities in relation to the Circular Economy domain.
We are moving forward to contribute to the creation of a circular society.

Start-up companies
External licensing
Joint development of
products and services

Commercialization

Research
results

Development of products and services
using the technology
Funding(for creation of prototypes,
etc.)Tokyo Instituteof Technology

Office of
ResearchandInnovation

Joint business agreement

Innovations andFuture Creation Inc.
Funding
AdviceCreator Kokoro Seo with her work, “Minato.”

Horizontal Recycling of PET bottles

Volunteer Participation in Chiyoda City
Cleanup

Supporting the Next Generation ofChildren

We are taking part in a bottle-to-bottle initiative taking used

We took part in Chiyoda City Cleanup Day, with volunteers

PET bottles and recycling them into new PET bottles. At thecollecting trash from around the head office area before theGroup’s head office, individual employees place separated

start of work. Participants walked around differently from their

PET bottles in a transparent container for collection and theseusual commutes and came to many realizations, for example,

are then recycled to be used as new PET bottles. There areseeing trash hidden insigns of people engaging proactively, such as the receipt ofshrubbery and recog-

ideas regarding methods for the activity.

nizing once again that

Fuyo General Lease makes donations every year linked to theshareholder benefit program. Since 2017, we have continued
our donations in support of Save the Children Japan, which
supports children in pursuit of a world where the rights of allchildren are realized and no one is left behind. In fiscal 2022, as
one aspect to solve the problem of child poverty in Japan, we
donated to the <Children's Food Support Box>, which targets
households raising children who are experiencing prolonged
and serious economic difficulties from due to the spread of
COVID-19 and soaring prices. We are working to support thegrowth of children who will lead the next generation.
This year, some employees also volunteered to help with FoodBox for Children packing and shared the realization that support is delivered through the backing provided by various typesof people.

Ra

2 Processed into balesw

3 Crushed,macleanedand made
into flakes

t e rials

1
Separated
PET bottles areplaced in the
Bottle-to-Bottle
container

Circular
EconomyCon s u m pt

io nplastic waste does
not decompose. This
activity contributed tobeautification of the

n
ctio
du
ro

Recycling

P

Produced intopre-forms(molded into thepre-PET bottle stage)community and at thesame time enhanced

4
Turned into
new PET bottle
products

Financial Section &Corporate Date

The Fuyo Lease Group believes it is essential to strengthen partnerships with external stakeholders through contributions to thecommunity to continue to develop sustainably together with society. In particular, we support the environment, the academic andresearch fields, and culture and art fields with a focus on developing human resources for the next generation who will become ourcustomers and employees in the future.

Laboratory /researchers

Bottle-to-Bottle Horizontal Recycling PET bottle resource circulation

Corporate
GovernanceManagement

GAP FundPromotion of Zero Waste Activities

47

Top Message

environmental awareness.
Volunteer trash collection©Save the Children
Volunteers pack the Food Box for Children boxes.

Fuyo Lease Group Integrated Report 2023

48

Board Members

Board Members

About Us

As of June 23, 2023

Top Message

Shared Value Story

49

1 Yasunori Tsujita

2 Hiroaki Oda

3 Soichi Hosoi

President and Chief Executive Officer (Representative Director)

Director and Deputy President (Representative Director)

Apr. 1981 Joined The Fuji Bank, Limited
June 2013 Deputy President-Executive Officer,
Member of the Board of Directors (Representative Director) of Mizuho Financial
Group, Inc. (until June 2014)
Nov. 2013 Deputy President-Executive Officer,
Member of the Board of Directors ofMizuho Bank, Ltd. (until March 2015)
June 2014 Member of the Board of Directors,
Deputy President and Executive Officer(Representative Executive Officer) of
Mizuho Financial Group, Inc. (until March2015)
Apr. 2015 Member of the Board of Directors ofMizuho Financial Group, Inc. (retired inJune 2015)
May 2015 Vice President and Executive Officer of
the Company
June 2015 Director and Deputy President, Vice
President and Executive Officer, Representative Director of the Company
Apr. 2016 President and Chief Executive Officer,
President and Executive Officer, Representative Director of the Company
Apr. 2022 Director and Chairman of the Company(current position)

Apr. 1986 Joined The Fuji Bank, Limited
May 2009 General Manager of Kanda Corporate Division of Kanda Branch of Mizuho Bank,
Ltd.
June 2011 General Manager of Kudan Division No.1
of Kudan Branch of Mizuho Bank, Ltd.
Apr. 2013 General Manager of Corporate Banking
Division No.11 of Mizuho Corporate
Bank, Ltd.
Apr. 2014 Executive Officer, General Manager ofCorporate Banking Division No.11 ofMizuho Bank, Ltd. (retired in April 2016)
May 2016 Managing Executive Officer of the Company
Apr.2021 Deputy President and Executive Officer of
the Company
June 2021 Director and Deputy President, Vice
President and Executive Officer, Representative Director of the Company
Apr. 2022 President and Chief Executive Officer,
President and Executive Officer, Representative Director of the Company(current position)

Apr. 1983		Joined The Fuji Bank, Limited
Apr. 2013 Executive Officer, General Manager ofFinancial Planning Division of Mizuho Financial Group, Inc. (retired in April 2014)
		 Executive Officer, General Manager ofFinancial Planning Division of Mizuho
Bank, Ltd. (retired in April 2014)
		 Executive Officer, General Manager ofFinancial Planning Division of Mizuho
Corporate Bank, Ltd. (until July 2013)
Apr. 2014 Managing Executive Officer of the Company
June 2014 Managing Director, Managing Executive
Officer of the Company
Apr.2020 Senior Managing Director, Senior Managing Executive Officer of the Company
Apr.2022 Director and Deputy President, Vice President and Executive Officer, Representative Director of the Company (current
position)

Corporate
GovernanceManagement

Financial Section &Corporate Date

4 Keiji Takada

5 Yusuke Kishida

6 Seiichi Isshiki

Director and Deputy President (Representative Director)

Senior Managing Director

Director

Apr. 1984 Joined The Fuji Bank, Limited
Apr. 2010 General Manager of Corporate Banking
Division No.13 of Mizuho Corporate
Bank, Ltd. (retired in March 2012)
Apr. 2012 General Manager of Corporate Business
Division of the Company
Apr. 2014 Executive Officer, General Manager ofCorporate Business Division of the Company
Apr. 2016 Managing Executive Officer of the Company
Apr. 2020 Senior Managing Executive Officer of theCompany
June 2020 Senior Managing Director, Senior Managing Executive Officer of the Company
Apr. 2022 Director and Deputy President, Vice President and Executive Officer, Representative Director of the Company (current
position)

Apr. 1986 Joined Fuji Bank, Limited
Apr. 2012 Deputy General Manager, Financial
Planning Department of Mizuho Financial
Group, Inc.
Deputy General Manager, Planning Admin		
istration Department of Mizuho Bank, Ltd.
		 Deputy General Manager, Financial Planning Department of Mizuho Corporate
Bank, Ltd.
July 2013 General Manager, Internal Audit Department of Mizuho Financial Group, Inc. (leftoffice in March 2016)
Apr. 2016 Administrative Officer, General Affairs
Division of the Company
Apr.2018 Executive Officer, General Manager of Financial Planning Division of the Company
Apr.2021 Managing Executive Officer of the Company
Apr.2022 Senior Managing Executive Officer of theCompany
June 2022 Senior Managing Director, Senior Managing Executive Officer of the Company(current position)

Apr. 1972 Joined Nippon Oil Corporation
Apr. 2008 Representative Director of ENEOS Celltech
Co., Ltd.
June 2012 Representative Director, President of JX
Nippon Oil & Energy Corporation (currently
ENEOS Corporation)
		 Director of JX Holdings, Inc. (currently ENEOS
Holdings, Inc.)
June 2014 Advisor of JX Nippon Oil & Energy Corporation (currently ENEOS Corporation) (retired inJune 2016)
June 2015 Director of the Company (current position)

OutsideIndependent

7 Hideo Ichikawa

8 Masayuki Yamamura

9 Hiroko Matsumoto

Director

Director

Director

OutsideIndependent

Apr. 1975 Joined Showa Denko K.K (currently
Resonac Holdings Corporation)
Jan. 2011 Representative Director, President,
Corporate Officer and Chief Executive
Officer (CEO) Showa Denko K.K (currently
Resonac Holdings Corporation)
Jan. 2017 Representative Director, Chairman of
the Board Showa Denko K.K (currently
Resonac Holdings Corporation)
June 2018 Director of the Company (current position)
Mar. 2020 Director, Chairman of the Board ofShowa Denko K.K (currently Resonac
Holdings Corporation)
Jan. 2022 Director of Showa Denko K.K (currently
Resonac Holdings Corporation)
Mar. 2022 Corporate advisor of Showa Denko K.K(currently Resonac Holdings Corporation)(current position)

Director and Chairman

Strategy & Action

OutsideIndependent

Apr. 1978 Joined Nippon Telegraph and Telephone
Public Corporation
June 2008 Executive Vice President, General
Manager of Tokyo Branch of NIPPONTELEGRAPH AND TELEPHONE EASTCORPORATION
June 2009 Executive Vice President, Senior Executive Manager of Network Business
Headquarters of NIPPON TELEGRAPH
AND TELEPHONE EAST CORPORATION
June 2012 President, Representative Director of
NIPPON TELEGRAPH AND TELEPHONE
EAST CORPORATION
June 2018 Counselor to the President of NIPPONTELEGRAPH AND TELEPHONE EASTCORPORATION (current position)
June 2019 Director of the Company (current position)

OutsideIndependent

Apr. 1983 Joined Toshiba Corporation
Apr. 2012 Head of Strategic Design Promotion
Division of Design Center of Toshiba
Corporation (retired in March 2014)
		 Specially appointed professor at Joshibi
University of Art and Design
Apr. 2014 Professor of Joshibi University of Art and
Design (current position)
June 2015 Director of Aisys, Inc. (retired in May 2019)
June 2017 Head of Career Support Center of Joshibi
University of Art and Design (retired in
May 2019)
June 2019 Head of Department of Art and Designof Joshibi University of Art and Design(retired in May 2021)
		 Administrator of Joshibi University of Art
and Design (current position)
June 2021 Vice-President of Joshibi University of Art
and Design (current position)
Head of Research Institute of Joshibi Uni		
versity of Art and Design (current position)
		 Director of the Company (current position)

10 Yoshito Tsuruta

11 Masaharu Nakamura

12 Takashi Yonekawa

Full-time Audit & Supervisory Board Member

Full-time Audit & Supervisory Board Member

Audit & Supervisory Board Member

Sep. 1988 Joined the Company
Apr. 2008 General Manager of Finance Division of
the Company
Apr. 2015 Executive Officer, General Manager ofFinance Division of the Company
June 2020 Full-time Audit & Supervisory Board
Member of the Company (current position)

Apr. 1985 Joined the Company
Oct. 2001 Inspector, Credit Division of the Company
Oct. 2012 Deputy General Manager, Credit Divisionof the Company
Apr. 2017 Director and General Manager, Credit
Division of the Company
Apr. 2019 Executive Officer and General Manager,
Real Estate Planning Division of the Company
Apr. 2021 Executive Officer and General Manager,
Group Internal Audit Division of the Company
Apr. 2022 Counselor of the Company
June 2022 Full-time Audit & Supervisory Board
Member of the Company (current position)

Apr. 1982 Joined Yasuda Fire and Marine Insurance Co.,
Ltd. (currently Sompo Japan Insurance Inc.)
Apr. 2016 Director, Managing Executive Officer, Headof Kansai Division I of Sompo Japan Nipponkoa Insurance Services Inc. (currently
Sompo Japan Insurance Inc.)
Apr. 2018 Senior Executive Officer, Head of Kansai
Division I of Sompo Japan Nipponkoa Insurance Services Inc. (currently Sompo Japan
Insurance Inc.)
Apr. 2020 Vice-President and Executive Officer, Sompo
Japan Insurance Inc. (retired in June 2020)
June 2020 Audit & Supervisory Board Member of TPR
Co., Ltd. (current position)
July 2020 President of Yasuda Nipponkoa Health
Insurance Union (current position)
		 Chairman of Tokyo Federation of National
Federation of Health Insurance Societies(current position)
June 2021 Outside Audit & Supervisory Board Memberof the Company (current position)

13 Hiroshi Imoto
Audit & Supervisory Board Member

OutsideIndependent

Apr. 1981 Joined the Export-Import Bank of Japan(currently the Japan Bank for International Cooperation)
Oct. 2008 General Manager of International
Management and Planning Division andManager of International Management
and Planning Division’s Management
and Planning Office of Japan Bank forInternational Cooperation
Jan. 2011 Director General for Western Japan ofJapan Bank for International Cooperation
July 2011 Western Japan Representative for Industry Finance Department of Japan Bankfor International Cooperation
Apr. 2012 Full-time Corporate Auditor of Japan
Bank for International Cooperation (retired
in June 2016)
June 2021 Outside Audit & Supervisory Board Member of the Company (current position)

8

10

4

1

Independent

13
6

12

Outside

7

2
9

11

3
5

Fuyo Lease Group Integrated Report 2023

50

Message from an Outside Director

About UsTo achieve the Fuyo Lease Group’s ideal state,
I will accurately anticipate
future possibilities and risks and fulfill
my role as an Outside Director.

Top Message

Shared Value Story

Strategy & Action

Fuyo Lease Group’s business.
Amid these changes, in addition to immediate businessresults and execution of strategies, the Board of Directors had
more opportunities to discuss medium- to long-term strategies
and the possibilities of new business strategies, which I feel
has led to more substantive discussion.
For the Medium-Term Management Plan, Fuyo Shared Value
2026, in particular, I was able to take part in discussions fromthe initial examination stage. I heard from general managers
from various domains and was presented with the opportunity
for discussion about the formulation of business domain strategies, and I feel I was able to engage in the Group’s strategy
formulation process.
I highly commend the significant change of separating thechair of the Board of Directors from the position of president,
which is the ultimate position of responsibility for management.
Conventionally, the president had been in charge of chairing
the Board of Directors, so while facilitating agenda proceedings, the president would also have to answer questions from
Directors and Audit & Supervisory Board Members, now that
there is a system where a non-executive officer is the chair,discussion has become more interactive as the chair can makesuggestions to those executing management. Looking back at
my personal experience working as a chief executive officer at
Showa Denko K.K (currently Resonac Holdings Corporation), I
thought it was extremely important to separate the supervisory
functions and execution functions for the Board of Directors
to function sufficiently, so I think the Company has changed tohave sounder Board of Directors operations.

Outside Director

Hideo Ichikawa

Five years have passed since I assumed the position of Outside Director of the company. Since I took on this position,
there have been three areas where I have strived to fulfill my role as an Outside Director.
Firstly, I have continuously provided stimulation to those executing management, conveying opinions from the perspectiveof shareholders and investors to achieve medium- to long-term targets and maximize corporate value. Next, I advise froman external perspective, leading to discussion not bound by the Group’s internal conventions. Finally, I recognize the signsof non-compliance and issue accurate warnings.

A More Effective Board of Directors with a
Deeper Long-term Perspective
Looking back over the past five years, I feel that the effectiveness of the Company’s Board of Directors has markedly
improved.
Firstly, the lineup of Outside Directors, which had previously
been comprised entirely of people from the energy or materials fields, has now been expanded to include those with51

backgrounds in telecommunications and, since last year, in
education, thereby increasing the diversity of knowledge andcareer histories and creating a system that makes it possible
to discuss issues from a variety of perspectives than before.
Furthermore, briefings for Outside Directors have become more
substantial, and there are more opportunities for direct dialogue
with people on the front lines, such as the general managers
and deputy managers of the departments making proposals,
which has deepened Outside Directors’ understanding of the

Looking at the First Year of the New Management System as an Outside Director

Management

Corporate
Governance

Financial Section &Corporate Date

An Upcoming Challenge with Great Expectations of an Unprecedented PlaceThe Fuyo Lease Group has expanded its business domains
significantly beyond the general leasing business, and there
is a significant challenge in creating new domains within thewide blue ocean after emerging from the fierce competitionof existing markets. The BPO and Mobility businesses havebroadened those possibilities but taking on the challenge toleap even further is crucial.
The key to achieving that is development and utilization ofhuman resources. More than ever before, we are required toacquire and develop talented human resources on our own. In
addition to increasing experienced hires, it is indispensable todevelop human resources with diverse strengths by advancing personnel transformation, such as the utilization of female
employees and bold selection of younger employees. Furthermore, regarding management class human resources, it would
be useful to discuss succession plans for the medium- to longterm future in settings such as the Nomination and Compensation Advisory Committee.
For even further developments it is important that we ask
ourselves where the Group’s source of competitiveness lies,
and entrench that. We should continue to pursue how to develop unique business models and acquire a unique competitiveedge, and the Fuyo Lease Group should expand its businessbeyond leasing into new and uncharted domains.
The Board of Directors should also take a more macro
perspective in discussion to identify “Where No One Has Gone
Before.” I hope to do my part by presenting possible ideas andinsight.

President Oda assumed the position of president last year.
Looking at the management over this past year, President Oda
has made some highly impressive statements with impact and I
feel he has the ability to spread his philosophy among individual
employees. Top management want to make all kinds of statements, but always conveying the same message is extremely
important to spread the thoughts of top management among
employees. The president and other members of the executive
management team have continued to communicate activities
to raise employees' awareness in a variety of settings, and I
feel that the awareness of CSV, of “resolving social issues whileat the same time delivering economic value,” has taken deeproot among employees.
To achieve sustainable growth as a corporate group and gain
recognition from society, in addition to achieving performancetargets, it is essential to clearly position the creation of social
value through business as a management indicator, steadily
implement strategies and continue to clearly communicate
initiatives and results both internally and externally.

Fuyo Lease Group Integrated Report 2023

52

Corporate Governance

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Corporate GovernanceCorporate Governance Approach and Structure

Strengthening Corporate Governanceand spirit of the Japan’s Corporate Governance Code. These
Guidelines serve as the foundation for our corporate governance framework, operating policies and other management
policies, to which we adhere in everything we do.
Fuyo General Lease (Fuyo Lease) employs the format of a company with an Audit & Supervisory Board. It has two Outside
Audit & Supervisory Board Members who are independent fromour company. In addition, to further improve the supervisory
function of the Board of Directors, four Independent Outside
Directors are appointed to supervise and advise on executionof operations from an outside perspective.

The Fuyo Lease Group places strong emphasis on creating andmaintaining relationships with various stakeholders, including
shareholders, customers, employees, and local communities.
We believe that the fundamental and most important objectiveof corporate governance is to perform business activities withsincerity and fairness in line with the Group’s Mission, Vision
and Value and to achieve the management targets outlined in
the Group’s Medium-Term Management Plan, Fuyo Shared
Value 2026 for fiscal years 2022 through 2026.
To achieve sustainable growth and increase corporate value
over the medium to long term, we have established our own
Corporate Governance Guidelines which align with the purpose

Our Approach to Corporate GovernanceCorporate Governance Structure (Fuyo General Lease Co., Ltd)Fuyo Lease has implemented various initiatives aimed at strengthening corporate governance. Initiatives from 2015 onward are as
follows.
Year

Initiative

Objective

2015● Increased the number of Independent Outside Directors from one to two● Established the Corporate Governance Guidelines● Set up the Nomination and Remuneration Advisory Committee● To strengthen the management oversight structure● To comply with the Japanese Corporate Governance Code● To ensure independence and objectivity in the decision-making process● Started analyzing and evaluating the overall effectiveness of the Board● To verify the effectiveness of roles, functions, etc. of the Board of Di-

2018● Increased the number of Independent Outside Directors from two to three● Introduced a stock compensation plan (Board Benefit Trust, BBT)

● To strengthen the management oversight structure● To strengthen links between Board Remuneration, shareholder value,

2019● Released an English version of the Corporate Governance Report● Began reporting annual internal audit results and annual plans and poli-● To enhance external disclosure related to corporate governance● To expand reporting lines for internal audits2021● Increased the number of Independent Outside Directors from three to four
● Revised Corporate Governance Guidelines● To strengthen the management oversight structure● To comply with the revised Japanese Corporate Governance Code● Appointed a non-executive Director as chair of the Board of Directors● Separation of execution and supervision

2016

2022

General Meeting of Shareholders
Selection anddismissal

Selection anddismissal

Selection anddismissal

Audit & Supervisory
Board

Board of Directors

4 Executive Directors & 5 Directors otherthan Executive Directors(Chairperson is a Internal Director otherthan Executive Directors)(Cooperation)and comprised the Nomination and Remuneration Advisory Committee
of non-executive Directors● Regarding indicators used for the calculation of performance-linked
compensation based on the new medium-term management plan,changes were made to financial items and non-financial items wereadded.

Board of Directors

Nomination andConsultion
Remuneration
Advisory Committee

ReportReportComprises only Directors other than
Executive Directors(Chairperson is a Internal Director otherthan Executive Directors)

ReportAccounting Auditor

Oversight
ReportGroup Internal
Audit Division

President &Chief Executive
OfficerApprove plansand policy

Board of Directors
Operations OfficeBusiness Execution
FunctionInternal Committees
Compliance Committee
CSV Promotion Committee

FY2022

12

The Group
Internal Audit
Division Committee

Executive
Committee

Financial
Audit

Funds Investment Council
New Business Council…Internal Directors and Audit & Supervisory Board Members…Outside Directors and Audit & Supervisory Board Members● To ensure the achievement of financial and non-financial targets in the

new medium-term management plan

Fiscal 2022

Attendance rate

100

5

100

meetings%

The Board of Directors is chaired by a non-executive internal Director and at least one-third of theboard members are Independent Outside Directors. Additionally, non-executive Directors makeup at least half of the board, ensuring a separation
between execution and supervision. The Boardof Directors deliberates and decides on importantmatters such as management plans and risk management, as well as matters stipulated by laws
and regulations, and supervises the execution ofduties by Directors and Executive Officers throughmonthly management reports and regular reports
for each business domain.

meetings

Audit & Supervisory Board
FY2022

13%

Fuyo Lease has set up the Nomination and Remuneration Advisory Committee as a voluntary advisory
body of the Board of Directors to ensure objectivity
and independence in the process of determining
nomination of officers, remuneration, etc. The members and Chair of the Committee are non-Executive
Directors. The Committee deliberates on the nomination of candidates for appointment as Directors or
Audit and Supervisory Board members or removal
thereof, remuneration for Directors, succession
plans for President & CEO, and the analysis andevaluation of overall effectiveness of the Board of
Directors. The Committee then reports its findings to
the Board of Directors. The content of such findings
is determined based on the consent of all memberspresent at the meeting, or when such consent may
not be obtained, on the consent of a majority of themembers present at the meeting.

meetings

Attendance rate

100%

According to an audit plan prepared by the Audit& Supervisory Board, each Audit & Supervisory
Board Member audits the execution of duties
by Directors by attending important meetings,
inspecting important documents, examining
operations and assets and by hearing the audit
findings of the Group Internal Audit Division. Audit& Supervisory Board Members work closely with
the Group Internal Audit Division and internal
control departments to enhance audit quality. At
the request of an Audit and Supervisory Board
member, an employee (a staff member from theBoard of Directors Operations Office) has been
appointed to assist them.

Internal Committees

System Strategy Committee
Internal audit

and achievement status of the Medium-term Management Plan

Attendance rate

Business Risk Review Committee
ALM Committee

rectors and to make ongoing improvements

Nomination and Remuneration
Advisory Committee

DX Strategy Promotion Committee

Business Execution Units(Executive Officers, Divisions, Branches and Group Companies)

53

cies to the Board of Directors

Audit(Cooperation)(Cooperation)of Directors

for matters such as nomination and remuneration

Compliance Committee

The Compliance Committee discusses matters related to the promotion of compliance systems and the formulation of compliance programs (annual plan).

CSV Promotion Committee

The CSV Promotion Committee directs CSV promotion and deliberates on materiality planning, etc.

DX Strategy Promotion
Committee
Business Risk Review
Committee

The DX Strategy Committee directs overall DX strategies and deliberates on the development of frameworks for the promotion of the strategies and necessary IT
systems and the formulation of sales strategies.
Business Risk Review Committee deliberates on projects that have a significant influence on management and policies for initiatives regarding business models
and monitors the status of business risk, including credit risk.

ALM Committee

ALM Committee deliberates on specific measures for market risk management, including interest rates, foreign exchange and price fluctuations and monitors
market risk situations.

System Strategy
Committee

System Strategy Committee discusses and promotes overall strategies for the Company’s IT systems.

Funds Investment Council

The Funds Investment Council deliberates on the establishment of investment limits regarding investment projects related to funds and monitors management
status.

New Business Council

New Business Council deliberates on new projects that may generate new business fields.

The Group Internal Audit
Division Committee

The Group Internal Audit Division Committee shares information, advises Group companies and promotes collaboration among the Group Internal Audit Divisions…Chairperson

Fuyo Lease Group Integrated Report 2023

54

Corporate Governance

About Us

Shared Value Story

Strategy & Action

Initiatives to Improve the Effectiveness of the Board of Directors

Director Qualifications and Nomination Procedures

Fuyo Lease is engaged in a number of initiatives to ensure
active and substantial discussions at its Board of Directors’
meetings. Regarding the analysis and evaluation of the overall
effectiveness of the Board of Directors, the Company conducted a questionnaire with all Directors and Audit & Supervisory
Board Members as the target audience and held interviews as olicy and procedures for nominating and removing
P
Directors and nominating candidates for Audit & Supervisory Board Member
Our Corporate Governance Guidelines set forth procedures fornominating and removing Directors in addition to the qualifications of Audit & Supervisory Board Members and procedures
for nominating Audit & Supervisory Board Member candidates.
Under these guidelines, a Director or Audit & Supervisory Board
Member candidate must possess an outstanding character,a wide breadth of knowledge, abilities, experience, and highethical standards. The guidelines also specify that candidates
be nominated regardless of factors such as sex, age, andnationality, with the aim of achieving greater diversity. To ensure
fairness and transparency in the nomination process, the selection of candidates for Directors and Audit & Supervisory Board

necessary. After deliberations and reporting by the Nomination
and Remuneration Advisory Committee (the Company’s corporate lawyers assist the secretariat for the Committee), of which
Independent Outside Directors comprise the majority, the results of the analysis and evaluation were resolved by the Boardof Directors.

Evaluation process (corporate lawyers assist the secretariat)
Assessment Criteria

Conduct a questionnaire with all
Directors and corporate auditors

etc. of the Board of
1 Composition,
Directors
2 Roles of the Board of Directors
3 Operation of the Board of Directors
for supporting Outside
4 Frameworks
Directors
5 Summary

1
5
Formulation and implementationof response policies based on
evaluation results

PDCA
cycle

4

2
Interviews conducted
as necessary■ Changed the Chairperson of the Board of Directors from being the President and Chief Executive Officer, the top execution
position to a non-executive Director(The Director and Chairperson, a non-executive internal Director, assumed the role of the Chair of the Board of Directors
following passage of a resolution by the Board.)

Position, etc. and status ofexecution of duties

Yasunori
Tsujita

Director and Chairman
Chairperson of the Board of
Directors

Chairperson

Soichi
Hosoi
Keiji
Takadament and the need to better provide information to Outside
Directors.

Years in
office8 years

Finance(bank/leasing)

2 years

Finance(bank/leasing)

9 years

Finance(bank/leasing)

3 years

Finance(leasing)

1 yearFinance(leasing)

President and Executive Officer
Director and Deputy President(Representative Director)
Vice President and Executive
Officer
Director and Deputy President(Representative Director)
Vice President and Executive
Officer
Senior Managing Director
Senior Managing Executive
Officer
Director

SeiichiIsshikiOutside

Hideo
Ichikawa

OutsideMasayuki
Yamamura

OutsideHirokoMatsumoto■ Conducted a management audit to measure the degree of Mission, Vision and Values prevalent within the Group.

Future Issues and Initiatives

YusukeKishidaPresident and Chief Executive
Officer (Representative Director)

Independent

Director
Independent

Director
Independent

Corporate
management(industry)

Finance andaccounting

Global business

●

●

●

●

Member

8 years

Member

5 years

Chemicalmanufacturing

Member

4 years

Telecommunications
and technology

Member

2 years

Resources and energy●

Internal
control andmanagement

●

●

●

●

●

●

●

●

●

●

●

Human
resourcesdevelopment

●

●

●

IT andtechnology

●

●

●

●

●

●

●

●

●

■ The Board of Directors received reports and deliberated on the progress status updates from each business domain,achievement status of each non-financial target and progress of the DX strategy, etc.

We recognized as issues that need to be addressed as continuing to advance the succession plan, enhancing deliberation
further on medium- to long-term themes and CSV manage-

Name

Nomination andRemuneration Advisory Committee

HiroakiOda■ Transferred authority to execution by reviewing the criteria for submission stipulated in the Regulations governing the Boardof Directors.

■ Conducted Outside Director workplace inspection tours (twice in total) that had been delayed by the impact of the
COVID-19 pandemic.

Independence standards for Outside Directors andOutside Audit & Supervisory Board Members
Independence standards for Outside Directors and Outside
Audit & Supervisory Board Members are stipulated in the
Corporate Governance Guidelines in line with the independence standards prescribed in the Guidelines Concerning
Listing Management, etc. established by the Tokyo Stock
Exchange.
2(A maximum of four are listed)

Audit & Supervisory
Board Members

Further enhanced information provision to Outside
Directors

Members is finalized by the Board of Directors following a
discussion by the Nomination and Compensation Advisory
Committee, which is comprised of majority Independent
Outside Directors. Selection of Audit & Supervisory Board
Member candidates is finalized by the Board of Directors
upon consent of the Audit & Supervisory Board.

Areas Particularly Expected to Contribute■ Started initiatives in the Nomination and Remuneration Advisory Committee to advance succession planning.

Steady progression wasmade on the Medium-Term
Management Plan andfurther deepening of CSV
management

Financial Section &Corporate Date

The chart below shows the areas where each Director and Audit & Supervisory Board Member is particularly expected to contribute significantly. This takes into account their expertise and experience, etc., to steadily implement and achieve the goals of theMedium-Term Management Plan.

Director

Further improvement of
the Board of Directors’
functions

Details

Corporate
GovernanceManagement

Skills Matrix

The effectiveness of the Board of Directors
was confirmed as its size, composition, functions, roles, operation, and all other evaluation
items were recognized to be appropriate. It
is necessary to continue to steadily promoteand further establish measures to improve
the functions of the Board of Directors andto constantly review the Board of Directors in
response to changes in the internal and external environment.

Deliberation and report by the
Nomination and Remuneration
Advisory Committee

Issues in Previous Fiscal Year1

Evaluation Results

3

Analysis andevaluation by the
Board of Directors

55

Top Message

Director
OutsideIndependent

University education andindustry-government-academia partnership andproduct design●

YoshitoTsuruta

Full-time Audit & Supervisory
Board Member

3 years

Finance(leasing)

Masaharu
Nakamura

Full-time Audit & Supervisory
Board Member

1 yearFinance(leasing)

Takashi
Yonekawa

Audit & Supervisory
Board Member
Outside Independent

2 years

Finance(insurance)

Hiroshi
Imoto

Audit & Supervisory
Board Member
Outside Independent

2 years

Finance(international finance)

●

●

●

●

●

●

●

●

●

●

●

●

●

(Note) 1. The above table does not show all the insight and experience held by each Director and Audit & Supervisory Board Member.
		 2. Of the 13 Directors and Audit & Supervisory Board Members, 12 are male and 1 is female. Years in office are calculated based on the number of months.

Fuyo Lease Group Integrated Report 2023

56

Corporate Governance / Risk Management

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Risk Management
Director Remuneration
Fuyo Lease has a basic policy to link Director remuneration tocorporate performance and shareholder value to boost theirmorale and motivate them to improve the Company’s financial
performance and share price, ensuring stable performanceand growth, while enhancing corporate value. Regarding
determination of remuneration for individual Directors, thebasic policy is to set it at an appropriate level, taking into
account each Director's respective responsibilities and otherfactors. The Company has introduced performance-linked
compensation and stock-based compensation (Board Benefit
Trust (BBT)) as variable compensation systems, in addition
to base compensation provided as fixed compensation. The
amount of performance-linked compensation is determinedbased on factors such as consolidated performance, degree ofcontribution to Company performance and efforts to address
medium- to long-term management issues. Performancelinked compensation is determined according to consolidated
business performance and contribution made by each officer
to the performance. The stock compensation plan is designed
to further clarify the link between officers’ compensation andthe value of the Company’s shares and to further raise officers’
awareness of contributing to improving business performanceand increasing corporate value over the medium to long term.
Taking into consideration the average ratio of remuneration inlisted companies and other factors, the ratio of remunerationand the breakdown of variable compensation are as shown inthe chart below. Directors’ remuneration is discussed by the
Nomination and Compensation Advisory Committee to ensure
greater transparency and objectivity. Internal Directors who do
not execute operations are paid fixed compensation and stockbased remuneration, while Audit & Supervisory Board Members
and Outside Directors who have supervisory functions are paid
fixed compensation only because the concept of performancebased compensation and stock compensation is not suitable
for the nature of their duties. Fuyo Lease stipulates in its
internal rules that if a Director causes significant damage to
the Company or engages in inappropriate conduct, etc., theDirector will be subject to a reduction or non-payment of theirbase compensation or performance-based compensation, or
cancelation of their right to receive stock compensation.

As stipulated in the Fuyo Lease Group risk management
regulations, we have established a risk management approachat our locations across the globe to manage risks based on
their particular risk characteristics and importance. Risks
to be managed are categorized into credit, market (suchas interest rate fluctuation risk), liquidity (such as cash flowrisk), administrative, system, legal, human, reputation, andother risks. Each type of risk is managed by a designateddepartment.
The Board of Directors and the Executive Committee receive
updates on risk management, discuss risk management
policies according to the characteristics and importance ofeach risk, and evaluate the effectiveness of risk management.
The Asset and Liability Management (ALM) Committee meetson a regular basis to appropriately manage and control
market and liquidity risks. These efforts enable us to establish
an appropriate risk management approach, prevent theoccurrence of risks, and minimize their impact when they domaterialize.
For risk events that may affect the Group’ business, the Group
has sought to comprehensively identify risks facing eachGroup business, considered the scale and characteristics of
the identified risks while making sure to include risks in eachbusiness domain, such as economic downturns, market
fluctuations, and downturns in individual markets.
In addition, as a risk governance system for the entire
group, we have established a "“Three-Line Defense System”
based on risk management by each business unit (first line),risk management by the risk control department and thedepartment in charge of risk (second line), and verification by
the internal audit department (third line).
The designated risk management division formulates a basic
policy for managing risks identified as targets, and conducts
an appropriate analysis, evaluation and measurement ofrisks according to the size and characteristics of the relevantbusiness and risk profiles. In addition, the designated risk
management division monitors the status of risks held from an
independent perspective, reports the results of monitoring to
the Executive Committee, etc., and implements supervision ofsales and marketing divisions with an approach geared to thesituation. Moreover, the risk control division has establishedintegrated risk management systems to promote risk
management by comprehensively identifying and evaluating
risks by risk category, and to control risks with the scope ofmanagement capabilities.

Internal Director Remuneration Composition

Base compensation
Base compensation is determined with reference
to the general level of remuneration for employees
and Directors, as well as Fuyo Lease’s business

1 0.7

Variablecompensation

Performance-linked
compensation

conditions and other factors.

Risk Management System
Board of Directors
ALM Committee

Stock compensation

Executive Committee

5

New Business Council

7
After a Director retires upon fulfilling therequirements for receiving benefits, the BBT
will provide benefits in the form of Company
shares acquired by the BBT in accordancewith the Director's position and term of officeat the time of retirement.
(A certain percentage of the Company’s
shares will be paid in cash at the market priceequivalent in lieu of Company shares.)

Compliance Committee

Funds Investment Council
System Strategy Committee

Risk Management Departments

Director Remuneration (FY 2022)

Operational Risks
Breakdown of remuneration

Officer classification

Total amount

Number of
Directors
Applicable

Basiccompensation

Performance-linked
compensation

Non-monetarycompensation¥360 million¥228 million¥54 million¥76 million

11¥48 million¥48 million

－

－

4

¥66 million¥66 million

－

－

5

¥21 million¥21 million

－

－

4

CreditRisks

MarketRisks

Liquidity
Risks

Administrative
Risks

System Risks

Human Risks

Reputational
Risks

Other Risks

Residual
Value Risks

Legal Risks

ClimateChange Risks

Directors
Outside Directors
Audit & Supervisory
Board Members

Outside Audit & Supervisory
Board Members

Group Internal Audit Division

Performance-linked compensation is determined based on consolidated performanceand each individual's contribution to performance.
Indicators related to performance-linked
compensation■ Financial items: ordinary profit, ROA,
shareholders’ equity ratio and ROE (consolidated basis)■ Non-financial items: Amount invested inpromoting decarbonization and expenses
related to human resources development(non-consolidated basis)

Business Risk
Review Committee

Departments, Offices, Branch Offices and Group Companies(Notes) 1. Performance-linked compensation is the amount that should be recorded as expenses in fiscal 2022.
2. Non-monetary compensation is a Board Benefit Trust (BBT). The amount of the BBT is the amount that should be recorded for the fiscal year under review based on the number of points
granted or expected to be granted during the fiscal year.

57

Fuyo Lease Group Integrated Report 2023

58

Risk Management / Compliance

About Us

Risks in Business Operations
Listed below are the main factors that could pose risks to thedevelopment of the Group’s business and have a significant
impact on the decisions of investors. The forward-looking
statements here represent the judgment of the Group’s man-agement as of the date that its annual securities report was
submitted (June 27, 2023). The following is not an exhaustive
list of all the risks that could affect investment in the Company’s
shares.

Risk Factors in Business Development
Risks relating to changes in capital expenditure trends andother factors

Credit risks

Risks relating to changes in factors such as interest rates,
exchange rates, share prices and financing

Risks relating to changes in regulatory systems

Risks relating to strategic partnerships and corporate acquisitions

Risks from natural disasters or other causes

Risks relating to business strategies
Decline in the value of assets in Real Estate,
Aircraft, and Mobility businesses
Changes in the amount of power generated in the renewable energy
generation business
Delays in delivery and deterioration of business quality in BPO services
Changes in overseas political and economic
conditions in overseas business

Risks relating to overall business operations
Administrative risks
System risks
Human risks relating to developing and securing human resources
Compliance risks

Other medium- and long-term risks

Cyber security risks and information security risks

Climate change risks* Please refer to our annual securities report for details on each section.

Response to Risks
The Fuyo Lease Group assumes various risks that may arise in the course of business development and is implementing measures
to counter these risks. Details of the business risks for the Group are disclosed in our annual securities report, and major countermeasures are described below.

Risks Related to Information Security
With unauthorized access to information via the Internet aswell as cyber-attacks increasing daily and becoming moresophisticated, the Group recognizes that information security
risks are an important management issue. In order to establish
a strict information management system for the entire Group,
data is strictly controlled by our information security manager
in accordance with detailed rules, including the Confidential
Information Management Rule. Additionally, each employee isthoroughly informed of the Management of Information Assets
and Respect for Intellectual Property Rights section included in
the Fuyo Lease Group Basic Compliance Policy as well as thePrivacy Policy, and we have implemented level-specific information security training programs. In fiscal 2022, we provided
training on confidential information management and personal
data protection to 1st year employees (Generalist track).

Risks Related to Disasters, etc.
The Fuyo Lease Group has developed a system for responding
to emergencies. In the event of a large-scale disaster or emergency, the emergency response task force under the directionof the president will take measures necessary for ensuringsafety and continuity of our operations in accordance with the
BCP Fundamental Principle and the Emergency Preparedness
Regulations. We also conduct regular drills to promote the minimization of damage and ensure business continuity. Moreover,in fiscal 2020, we standardized disaster stockpiles at all Group
companies following the relocation of our headquarters andidentified the highest priority business operations in our Group
companies. In fiscal 2021, we launched a liaison meeting for
information sharing with the persons in charge of disaster pre-59

vention at our Group companies and have been strengthening
collaboration for disaster response within the Group by holding
meetings four times a year.

COVID-19
Against the backdrop of the spread of COVID-19, the Group’s
Board of Directors and Executive Committee discussed ways
to deal with infection risks in business activities and the impact of these risks on business performance. To deal with therisk of infection in our business activities, we established the
COVID-19 Emergency Response Task Force under the direction of the President, and we engaged in initiatives based on
the Group’s Basic BCP Principles. We ensured that all employees and directors understood and adhered to rules for preventing infection, such as mobile working, working from home, flexible working hours, reducing overtime, monitoring health andavoiding commutes when unwell. If we found the event of aconfirmed or suspected COVID-19 case in the Group, we also
promptly reported the incident within the company, responded
by consulting and receiving medical examinations from medical
institutions and giving instructions to remain at home, and performed the required cleaning and disinfection. These initiatives
ensured that we prevented the spread of COVID-19 and did
our utmost to keep our employees and their families healthy,
as well as prioritized the prevention of negative effects on thebusiness continuity of our customers. In accordance with thereclassification of COVID-19 under the Infectious Disease Control Law, the COVID-19 Emergency Response Task Force was
disbanded as of May 8, 2023, and the records of its activities
and other information were reported to the Board of Directors.

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Compliance
Our Approach to Compliance and Compliance
System
At the Fuyo Lease Group, ensuring compliance is a fundamental
principle of management. We work to strengthen and enhance
our compliance system, which enables us to operate withintegrity and fairness by not violating social norms, while strictly
complying with all laws and regulations.
We promote compliance throughout the Group by stipulating various regulations, procedures, and manuals, conducting compliance education, and enhancing the whistleblower system on thebasis of the Fuyo Lease Group Basic Compliance Policy. In orderto maintain and further improve our compliance systems, we
implement and carry out compliance programs every fiscal year.
Issues associated with the compliance programs are discussed
at the Compliance Committee, chaired by a Director and Deputy
President (Representative Director), and the Executive Committee
before being submitted to the Board of Directors for approval.
Findings and progress reports of the programs are reported to
the Board of Directors on a semi-annual basis and Directors
provide supervision on the promotion of compliance. In addition,
the Group Internal Audit Division conducts an annual audit of important issues in terms of compliance, such as legal compliance,
and the results are used to improve initiatives and strengthen thesystem.
We will continue our group-wide activities including conducting
compliance practices and compliance education and streamlining our compliance systems across the Group to improve theireffectiveness.

regulations for all Group employees (including dispatch andcontract employees), as well as group training conducted byexternal instructors for directors, heads of departments, offices
and branch offices, presidents of Group companies, and departmental compliance officers. ** A compliance officer is appointed for each department or company to raise complianceawareness and ensure compliance.

Compliance Training (FY2022)
Group training and workplace training
Participant

Subject

Introduction to compliance, Fuyo Lease GroupNew employees Basic Compliance Policy, exclusion of anti-social forces
1st year
Confidential information management, Peremployee (gen- sonal information protection, Prevention oferalist track)harassment, Insider trading regulations
4th year
employee (gen- Response to accidents and trouble
eralist track)
Newly appointed heads ofRequired compliance understanding of mandepartments/
agers
branch offices
Newly appointed assistant
Prevention of power harassment, sexual andmanagers/sec- maternity harassment
tion chiefs

The Fuyo Lease Group has formulated the Fuyo Lease Group
Basic Compliance Policy, which specifies the basic policies andposition of the entire group as well as behavioral guidelines forthe employees of the Group. We conduct various training activities including e-learning programs to increase the effectivenessof the policy and instill the policy among our employees.
Furthermore, the policy strictly prohibits the forging of collusive
ties with political and administrative authorities and business
partners, and the private use of the company’s assets. In fiscal
2022, no infringements related to corruption were found in theGroup. Additionally, no employees were dismissed or subjected
to disciplinary action due to corruption.
Fuyo Lease Group Basic Compliance Policy
1	Compliance with Laws andRules
2 Respect for Human Rights
3	Commitment to Environmental Issues
4 Fair Business Activities
5 Risk Management
6	Management of Information

Assets and Respect forIntellectual Property Rights
7	Appropriate Disclosure ofInformation
8	Avoidance of Relations with
Anti-Social Forces
9	Political Involvement; Government Relations* Please refer to our website for detailed contents.

Compliance Training
The Group emphasizes employee training programs that aredesigned to ensure compliance. Our training programs include
workplace compliance training and e-learning on insider trading

1
1
1

2

2

All employees(Including
contract and dispatch employees
and part-timeworkers)

Directors
and heads ofdepartments/
offices/branch
officesPrevention of power harassment

1

Prevention of harassment (sexual, power,
discrimination related to pregnancy)

1

E-Learning
Participant

Fuyo Lease Group Basic Compliance Policy# of sessions

Subject# of sessions

Directors, headsof departments/
Regulation for insider trading (e-learning maoffices/branch
offices, compli- terial of the Japan Exchange Group)
ance officers,
new employees

2

All employees

1

General issues on compliance

Whistleblower Hotline
The Fuyo Lease Group operates whistleblower hotlines.
In addition to the in-house compliance hotline, we provide
a consultation service desk through a cooperating law firm.
These services are available on a regular basis and guidance
to these services is always posted on the company’s intranet
bulletin board. Concerned individuals can immediately seek
consultation or report whenever they detect any violations of
the law, the Code of Corporate Conduct and other corporate
regulations, harassment cases, misconduct in information management or other potential infringements. The whistleblower
systems accept anonymous reports to protect whistleblowers.
At Fuyo Lease, full-time corporate auditors are appointed toaccept reports from the Group companies, and the cooperating law firm is available for reports from the overseas affiliatedcompanies.
In fiscal 2022, 10 reports were received through the hotline.
In each case, we contacted the relevant parties to confirm
the facts, conducted investigations promptly with due care toprotect whistleblowers from detrimental treatment, and handled
the cases appropriately by means such as seeking advice fromlawyers.
Fuyo Lease Group Integrated Report 2023

60

Independent Assurance Report / Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Corporate
Governance

Financial Section &Corporate Date

Independent Assurance Report

Translation

The following is an English translation of an independent assurance report prepared in Japanese and is for information
and reference purposes only. In the event of a discrepancy between the Japanese and English versions, the Japaneseversion will prevail.

July 24, 2023

TO:
Mr. Hiroaki Oda
President and Chief Executive Officer
Fuyo General Lease Co., Ltd.

Independent Assurance Report

Takefumi Kawasaki
Yuji Ozawa
Engagement Partner
Ernst & Young ShinNihon LLC, Tokyo, Japan

We, Ernst & Young ShinNihon LLC, have been commissioned by Fuyo General Lease Co., Ltd (hereafter the “Company”) andhave carried out a limited assurance engagement on the Key Environmental and Social Indicators (hereafter the “Indicators”) of
the Company and its major subsidiaries for the year ended March 31, 2023 as included in the Fuyo Lease Group’s Integrated
Report 2023 (hereafter the “Report”). The scope of our assurance procedures was limited to the Indicators marked with thesymbol "✓" in the Report.
1.

2.

3.

4.

The Company’s Responsibilities
The Company is responsible for preparing the Indicators in accordance with the Company’s own criteria, which it determinedwith consideration of Japanese environmental regulations as presented in the Report. Greenhouse gas (GHG) emissions are
estimated using emissions factors, which are subject to scientific and estimation uncertainties given instruments for measuring
GHG emissions may vary in characteristics, in terms of functions and assumed parameters.
Our Independence and Quality Control
We have met the independence requirements of the Code of Ethics for Professional Accountants issued by the International
Ethics Standards Board for Accountants, which is based on the fundamental principles of integrity, objectiveness, professional
competence and due care, confidentiality, and professional behavior.
In addition, we maintain a comprehensive quality control system, including documented policies and procedures for compliancewith ethical rules, professional standards, and applicable laws and regulations in accordance with the International Standard on
Quality Management (ISQM) 1 issued by the International Auditing and Assurance Standards Board.
Our responsibilities
Our responsibility is to express a limited assurance conclusion on the Indicators included in the Report based on the procedures
we have performed and the evidence we have obtained.
We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements:
Assurance Engagements Other than Audits or Reviews of Historical Financial Information - (“ISAE 3000”) (Revised), and withrespect to GHG emissions, the International Standard on Assurance Engagements: Assurance Engagements on Greenhouse Gas
Statements (“ISAE 3410”), issued by the International Auditing and Assurance Standards Board. The procedures, which we have
performed according to our professional judgment, include inquiries, document inspection, analytical procedures, reconciliation
between source documents and Indicators included in the Report, and the following:• Making inquiries regarding the Company’s own criteria which it determined with consideration of Japanese environmental
regulations, and evaluating the appropriateness thereof;• Inspecting relevant documents with regard to the design of the Company’s internal controls related to the Indicators includedin the Report, and inquiring of personnel responsible thereof at the Company visited;• Performing analytical procedures concerning the Indicators included in the Report at the Company visited; and• Testing, on a sample basis, underlying source information concerning the Indicators included in the Report and conducting
relevant re-calculations at the Company visited.
The procedures performed in a limited assurance engagement are more limited in nature, timing and extent than a reasonableassurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is lower than would havebeen obtained if we had performed a reasonable assurance engagement.

Financial Section
Financial and Non-Financial Data (10 years)

P63

Consolidated Financial Statements
Consolidated Balance Sheets

P65

Consolidated Statements of Income and Statements of Comprehensive Income

P67

Consolidated Statements of Changes in Equity

P69

Consolidated Statements of Cash Flows

P72

Notes to Consolidated Financial Statements

P74

Independent Auditor’s Report

P125

Conclusion
Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the
Indicators included in the Report have not been measured and reported in accordance with the Company’s own criteria that it
determined with consideration of Japanese environmental regulations.

The Consolidated Financial Statements on page 65 to page 124 and the Independent Auditor’s Report on the financial statements on page 125 to page 129 were firstpublished on the Company's website on September 12, 2023 and are republished in this document as a restatement of the Consolidated Financial Statements asamended on September 29, 2023.

61

Fuyo Lease Group Integrated Report 2023

62

Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Corporate
Governance

Financial Section &Corporate Date

Financial and Non-Financial Data (10 years)
Financial Data (consolidated)
2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3

Net sales (billions of yen)

441.7

472.3

493.8

507.2

590.3

618.1

712.3

740.3

657.8

688.7

Cost of sales (billions of yen)

394.5

423.7

442.6

451.9

529.8

551.4

636.0

657.5

569.0

591.3

Gross profit (billions of yen)

47.2

48.6

51.2

55.3

60.5

66.7

76.3

82.7

88.9

97.3

Selling, general and administrative expenses (billions of yen)

24.0

24.0

26.7

26.5

27.8

31.0

34.9

38.2

42.8

45.8

Operating profit (billions of yen)

23.2

24.6

24.5

28.8

32.7

35.7

41.4

44.6

46.0

51.6

Ordinary profit (billions of yen)

25.4

26.5

29.2

31.4

35.2

39.1

44.0

48.0

52.7

59.7

Profit attributable to owners of parent (billions of yen)

13. 0

14.2

17.5

20.0

21.9

25.5

26.2

29.6

33.9

38.9

Total assets (billions of yen)

1,851.9

1,986.8

2,113.1

2,300.1

2,430.5

2,593.0

2,752.6

2,979.3

2,949.7

3,149.7

Operating assets (billions of yen)

1,599.2

1,730.5

1,867.2

2,047.4

2,172.6

2,262.8

2,384.0

2,555.9

2,565.9

2,704.5

Interest-bearing debt (billions of yen)

1,500.1

1,629.8

1,750.3

1,900.7

2,000.3

2,122.7

2,251.7

2,446.7

2,377.6

2,521.7

202.6

222.5

232.5

259.2

282.6

295.0

311.8

344.8

374.2

409.4

9.8

10.1

9.9

9.9

10.2

10.1

10.0

10.2

11.3

11.6

Executed contract volume (billions of yen)

594.8

666.9

703.8

834.2

1,105.1

1,187.2

1,359.7

1,343.9

1,384.4

1,530.8

ROA (Ratio of ordinary profit to operating assets) (%)

1.64

1.59

1.62

1.60

1.67

1.76

1.90

1.94

2.06

2.27

OHR (%)

49.8

48.7

51.2

47.1

45.2

45.3

44.0

43.9

44.8

45.3

Cash flows from operating activities (billions of yen)(85.2)(165.4)(151.5)(154.3)(104.4)(80.0)(108.8)(35.1)

89.0(24.1)Cash flows from investing activities (billions of yen)

(1.1)

(1.1)

(1.2)

(4.6)

(5.7)

(9.4)

(11.2)(6.0)(15.7)(12.4)Cash flows from financing activities (billions of yen)

62.6

147.3

150.3

157.7

113.5

105.5

127.8

63.4

(101.5)84.0

Cash and cash equivalents at end of period (billions of yen)

72.3

54.0

51.4

50.6

54.1

69.9

77.4

98.8

72.0

121.2

429.49470.14579.17661.80726.41

844.69871.95986.181,130.52

1,299.27

74

80

100

130

146

188

205

240

285

343

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3

1,148

1,269

1,199

1,253

2,043

1,904

1,971

2,016

1,455

1,715

Scope1 (t-CO2)*1

192

159

153

163

770

707

688

603

584

558

Scope2 (t-CO2)*

956

1,110

1,045

1,089

1,273

1,197

1,283

1,414

872

1,157

0.31

0.33

0.30

0.32

0.36

0.36

0.29

0.28

0.22

0.25

23

58

86

86

111

149

229

283

318

515

Number of employees (Employees)

1,521

1,542

1,559

1,703

1,715

1,960

2,416

2,637

3,189

3,437

Retention rate of employees after 3 years*3(non-consolidated) (%)

87.5

94.7

100

85.7

100

94.3

89.7

88.9

—

—

Number of employees (non-consolidated) (Employees)

660

669

670

689

689

704

715

759

798

816

Turnover rate* (non-consolidated) (%)

1.3

1.1

0.8

1.0

1.9

1.9

1.8

Number of female employees in management positions(non-consolidated) (Employees)

25

25

27

29

32

Percentage of female employees in management
positions (non-consolidated) (%)

7.9

8.1

9.0

9.1

Employment rate of the disabled (non-consolidated) (%)

2.0

2.0

1.8

Rate of taking annual paid leave (non-consolidated) (%)

59.1

58.5

61.9

Net assets (billions of yen)
Equity ratio (%)

Basic earnings per share (yen)Dividends per share (yen)Non-Financial Data (consolidated)

CO2 emissions (Scope1,2) (t-CO2)*11

CO2 emission intensity(Scope1,2) (t-CO2 / 100 millions of yen)

Green energy supply* (Output) (MW)
2

4

63

1.7

1.9

2.2

36

5

79*

113

130

141

9.9

11.5

21.1*

27.5

29.5

30.9

2.2

2.3

2.3

2.1

2.4

2.2

2.3

68.9

68.0

68.4

66.3*6

72.0

82.3

93.5

*1 Covers Fuyo General Lease and consolidated subsidiaries (To see all companies covered, please refer to footnote 2 on p.43) For calculation methods, please refer to *1 and *3 on p. 43.
*2 Applicable investments made in the Renewable Energy Generation Business, project financing, etc. (power generation capacity is calculated based on ownership ratio or share)*3 Percentage of employees who joined the Company in the applicable fiscal year and remain employed as of April three years thereafter.
*4 Turnover rate includes separations due to personal reasons, reaching retirement age, and other reasons including transfer. This does not include rehired employees who left the company due toexpiration of their contracts.

5*5 In July 2019, our human resources system was revised to classify senior leaders (a position equivalent to the position of section chief) as managers. As a result, the number of female managers
and the percentage of female employees in management positions increased year on year for the fiscal year ended March 31, 2020.
*6 Due to restrictions on the number of employees coming to work in conjunction with the spread of COVID-19, actual data on paid leave for eight Fuyo General Lease (USA) Inc. employees is notincluded.

Fuyo Lease Group Integrated Report 2023

64

Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

Consolidated financial statements
Consolidated balance sheets
Thousands of U.S. dollars

Millions of yen
Notes As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

Notes As of March 31, 2023

3¥

121,227¥

72,157$

Payables under securitization of lease receivables

8

33,916584,81145,000393,529
306,000
24,200Current portion of long-term payables under securitization oflease receivables

3, 8

5,628

16,50842,145

7,500
7,359
699
3,002
210
21
4
24
–
67,122
1,479,030

10,827
8,145
810
2,811
200
205
3
31
1
48,564
1,451,473

56,164
55,1105,238
22,487
1,573
162
34
184
–
502,639
11,075,563

316,397829,614
8,725
272
18,4303,122

227,137
779,458
15,197
530
17,122
2,974

2,369,308
6,212,482
65,342
2,037
138,012
23,382

378

160

2,831

606
314
365
4,147
78,898
1,261,272
2,740,303

410
476
440
3,825
76,256
1,123,990
2,575,464

4,540
2,354
2,739
31,055590,823
9,444,903
20,520,466

10,532
1,902
306,782(2,067)317,149

10,532
7,278
277,361(2,463)292,70978,86914,2502,297,305(15,481)2,374,942

36,000(4,608)17,936
163
49,492541
42,253
409,437
3,149,740

38,547(3,932)5,509(0)40,124650
40,754374,2392,949,704

269,589(34,507)134,3171,223
370,622
4,058
316,409
3,066,031
23,586,497

907,799

Notes and accounts payable - trade
Short-term borrowings

Installment receivables

3

53,491

66,877400,564

Lease receivables and investments in leases

3890,8021,019,764

6,670,680

Accounts receivable - other loans to customers

3, 7

328,697
118,529

316,633
114,4432,461,419
887,595

Operational investment securities

2454,966

323,0213,406,968

33,21023,344

248,692

26,17224,807

195,986

Lease liabilities

72,69866,556544,392

Income taxes payable
Deferred profit on installment sales

Operating loans

Other operating assets
3

Other
Allowance for doubtful accounts
Total current assets(2,672)(2,717)(20,011)2,097,123

2,024,888

15,704,083

1,3,7

Advances for purchase of assets for lease
Total assets for lease
1, 3

Construction in progress
1

Total property, plant and equipment

797,218

671,643

5,969,883

839

15,111

6,286

798,057

686,754

5,976,169

29,40731,801

220,214

10,732

4,673

80,369

3,872

3,754

29,001

842,070

726,984

6,305,754

Intangible assets

Provision for bonuses

Provision for loss on guarantees
Asset retirement obligations
Other

138

195

1,038

Other intangible assets

Bonds payable
Long-term borrowings

3, 7Long-term payables under securitization of lease receivables

3, 8

Deferred tax liabilities
Retirement benefit liability

27,986

21,234

209,571

Other

11,116

9,367

83,245

Provision for retirement benefits for directors(and other officers)

Total other intangible assets

39,10230,602292,816

Provision for share awards for directors (and other officers)
Provision for maintenance costs

39,24130,797

293,854

125,286439

120,259539

938,198
3,292

523

88

3,917

Deferred tax assets

2,897

2,976

21,698

Other

41,74042,554

312,572

(231)

(331)

(1,732)

170,656

166,087

1,277,944

Capital surplus

1,051,968

923,869

7,877,551

Retained earnings

Total intangible assets
Investments and other assets
2, 3Distressed receivables
Retirement benefit asset

Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets

4

1

32

Business commencement expenses

645

944

4,831

Total deferred assets

649

945

4,863

Organization expenses

Total assets¥

3,149,740¥

2,949,704$

23,586,497¥

35,441
568,563
30,000328,958
371,000
29,400$253,983
4,379,295
336,978
2,946,905
2,291,448
181,219

Non-current liabilities

Goodwill

The accompanying notes are an integral part of these statements.

3

Total current liabilities

Lease liabilities

Assets for lease

Investment securities

3, 7Commercial papers

Provision for future lease payments

Assets for leaseOwn-used assets

Current portion of bonds payable
Current portion of long-term borrowings

Provision for share awards for directors (and other officers)

Property, plant and equipment

Other operating assets¥

Provision for bonuses for directors (and other officers)

Non-current assets

Assets for lease

As of March 31, 2023

Current liabilities

Current assets

Accounts receivable - lease(Note I)As of March 31, 2022

Liabilities

AssetsCash and deposits

Thousands of U.S. dollars

Millions of yen(Note I)

Provision for loss on guarantees
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities

Net assets
Shareholders’ equity
Share capital

Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

¥

¥

$

The accompanying notes are an integral part of these statements.

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Consolidated statements of income and statements of comprehensive income
Consolidated statements of income
Notes

Net sales

1

Cost of sales

3(Note I)

FY2022

FY2021

FY2022(April 1, 2022 - March 31, 2023)(April 1, 2021 - March 31, 2022)(April 1, 2022 - March 31, 2023)¥

Gross profit
Selling, general and administrative expenses

Thousands ofU.S. dollars

Millions of yen

2

Operating profit

688,655

5,156,921

Profit568,988

4,428,176

Other comprehensive income

97,31688,858728,746

Valuation difference on available-for-sale securities

45,75542,824

342,635

Deferred gains or losses on hedges

51,561

46,034

386,111

Foreign currency translation adjustment$

Non-operating income
Interest income

78

13

586

Dividend income

2,357

2,332

17,652

437

–

3,277

Foreign exchange gains

252

268

1,892

6,028

3,293

45,142

Recoveries of written off receivables

95

1,743

716

Reversal of provision for loss on guarantees

81

121

610

Other

575

514

4,307

9,906

8,289

74,182Gain on investments in investment partnerships
Share of profit of entities accounted for using equity method

Total non-operating income

Thousands ofU.S. dollars

Millions of yen

Notes

591,338¥

657,847

Consolidated statements of comprehensive income(Note I)

FY2022

FY2021

FY2022(April 1, 2022 - March 31, 2023)(April 1, 2021 - March 31, 2022)(April 1, 2022 - March 31, 2023)¥

40,876¥36,476$306,100(2,529)(6,297)(18,945)

(687)

(742)

(5,147)

12,464

7,910

93,335Remeasurements of defined benefit plans, net of tax

163

26

1,228

Share of other comprehensive income of entities accounted
for using equity method

26

808

200

Total other comprehensive income
Comprehensive income

9,437

1

1,705

70,671¥50,314¥38,181$

376,771¥

48,307¥35,583$361,749

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

2,006

2,597

15,023

The accompanying notes are an integral part of these statements.

Non-operating expenses

1,017

775

7,616

Bond issuance costs

78

34

587

Foreign exchange losses

–

430

–

Interest expenses

Loss on investments in investment partnerships

100

40

751

Distributions of profit or loss on silent partnerships

458

266

3,433

114

52

855

1,768

1,600

13,242

59,69952,723447,051

Gain on sale of investment securities

64

840

481

Gain on transition of retirement benefit plan

–

10

–

Other

–

73

–

Total extraordinary income

64

924

481

Loss on valuation of investment securities

256

357

1,923

Loss on step acquisitions

85

2

641
10,107

Other
Total non-operating expenses
Ordinary profit
Extraordinary income

Extraordinary losses

Loss on liquidation of subsidiaries and associates

5

1,349

–

Impairment losses

3

0

642

6

4

41

40

308

Loss on disposal of non-current assets

–

9

–

Total extraordinary losses

1,734

1,052

12,985

Profit before income taxes

58,02952,595434,547

Income taxes - current

16,65817,052

124,743

Loss on revision of retirement benefit plan

494

(933)

3,704

17,152

16,119128,447

Profit40,87636,476306,100

Profit attributable to non-controlling interests

1,936

2,589

Income taxes - deferred
Total income taxes

Profit attributable to owners of parent¥

38,939¥33,886

14,503$

291,597

The accompanying notes are an integral part of these statements.

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Consolidated statements of changes in equity
FY2022 (From April 1, 2022 to March 31, 2023)

FY2021 (From April 1, 2021 to March 31, 2022)(Millions of yen)

(Millions of yen)

Shareholders equity
Share capital

Balance at beginning of period¥

Capital surplus

10,532 ¥Retained earnings

7,278 ¥

Shareholders equity
Treasury shares

277,361 ¥Total shareholders
equity(2,463) ¥Share capital

292,709

Changes during period

Balance at beginning of period¥

Capital surplus

10,532 ¥Retained earnings

6,197 ¥

Treasury shares

251,320 ¥Total shareholders
equity(1,912) ¥Dividends of surplus(9,425)(9,425)

Dividends of surplus(7,824)(7,824)

Profit attributable to ownersof parent

38,93938,939Profit attributable to ownersof parent

33,88633,886–

Purchase of treasury shares

302

Disposal of treasury shares(5,376)

Purchase of shares of
consolidated subsidiaries

Purchase of treasury shares(93)

Disposal of treasury shares
Purchase of shares of
consolidated subsidiaries

396(5,376)

Change in ownership interestof parent due to transactions
with non-controlling interests–

Net changes in items otherthan shareholders’ equity

Balance at end of period

(646)

(646)

95

74

(20)

–

Change in ownership interestof parent due to transactions
with non-controlling interests

1,081

1,081

Net changes in items otherthan shareholders’ equity–

Total changes during period¥

10,532 ¥(5,376)29,420396

24,440Total changes during period

1,902 ¥

306,782 ¥(2,067) ¥317,149

Balance at end of period–¥

10,532 ¥1,081

26,041(551)

26,571

7,278 ¥

277,361 ¥(2,463) ¥292,709(Millions of yen)

(Millions of yen)

Accumulated other comprehensive income
Deferred gains
Valuationordifference onlosses onavailable-forhedges
sale securities

Balance at beginning of period ¥38,547 ¥Foreigncurrencytranslation
adjustment(3,932) ¥Remeasurements ofdefinedbenefit plans

5,509 ¥

Accumulated other comprehensive income
Total
accumulated Share acquisition rights
othercomprehen-sive income(0) ¥40,124 ¥650 ¥Non-controllinginterests

Deferred gains
Valuationordifference onlosses onavailable-forhedges
sale securities

Total net
assets40,754 ¥ 374,239

Changes during period

Balance at beginning of period ¥44,833 ¥Foreigncurrencytranslation
adjustment(2,656) ¥Remeasurements ofdefinedbenefit plans(3,698) ¥Total
accumulated Share acquisition rights
othercomprehen-sive income(50) ¥

38,427 ¥Noncontrollinginterests

704 ¥Total net
assets39,527 ¥ 344,796

Changes during period(9,425)

Dividends of surplus(7,824)

Profit attributable to ownersof parent

38,939Profit attributable to ownersof parent

33,886

Purchase of treasury shares–

Purchase of treasury shares(646)

Disposal of treasury shares

302

Disposal of treasury shares

74(5,376)

Purchase of shares of
consolidated subsidiaries–

Dividends of surplus

Purchase of shares of
consolidated subsidiaries
Change in ownership interestof parent due to transactions
with non-controlling interests–

Change in ownership interestof parent due to transactions
with non-controlling interests

1,081

Net changes in items otherthan shareholders’ equity(2,546)(675)

12,426

163

9,368

(108)

1,498

10,757

Net changes in items otherthan shareholders’ equity(6,285)(1,276)

9,208

50

1,697

(53)

1,227

2,871

Total changes during period(2,546)(675)

12,426

163

9,368

(108)

1,498

35,197

Total changes during period(6,285)(1,276)

9,208

50

1,697

(53)

1,227

29,44236,000 ¥(4,608) ¥17,936 ¥163 ¥49,492 ¥541 ¥42,253 ¥ 409,437

38,547 ¥(3,932) ¥5,509 ¥

(0) ¥40,124 ¥650 ¥40,754 ¥ 374,239

Balance at end of period

69

266,138

Changes during period¥

Balance at end of period¥

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Consolidated statements of cash flows
FY2022 (From April 1, 2022 to March 31, 2023)

Thousands of U.S. dollars(Note I)

Millions of yen(Thousands of U.S. dollars) (Note I)
Notes

Shareholders equity
Share capital

Balance at beginning of period$

Capital surplus

78,869 $Retained earnings

54,508 $Treasury shares

2,076,993 $Total shareholders
equity(18,447) $FY2021

FY2022(April 1, 2021 - March 31, 2022)(April 1, 2022 - March 31, 2023)

Cash flows from operating activities

2,191,923

Changes during period

Profit before income taxes
Depreciation of assets for lease¥

58,02940,595¥52,595$434,547

46,175

303,999

Dividends of surplus(70,583)(70,583)

Loss on retirement of assets for lease and cost of property forlease sales

Profit attributable to ownersof parent

Depreciation of other operating assets

2,559

2,522

19,170291,597

291,597

Depreciation

2,739

2,336

20,518

Amortization of goodwill

1,619

1,405

12,1290642

6Increase (decrease) in allowance for doubtful accounts

(601)

(406)

(4,506)

Increase (decrease) in provision for bonuses and bonuses for
directors (and other officers)

167

8

1,253

0

0

7

207

5

1,557

12

177

90

(162)

(94)

(1,217)–Purchase of treasury shares(702)

Disposal of treasury shares
Purchase of shares of
consolidated subsidiaries

2,966

2,264

(40,258)(40,258)

Change in ownership interestof parent due to transactions
with non-controlling interests–

Net changes in items otherthan shareholders’ equity–

Total changes during period
Balance at end of period$(40,258)

78,869 $14,250 $Foreigncurrencytranslation
adjustment

Balance at beginning of period $ 288,660 $ (29,448) $Increase (decrease) in provision for maintenance costs

2,297,305 $(15,481) $2,374,942

Increase (decrease) in provision for loss on guarantees

(81)

(121)

(610)

Increase (decrease) in retirement benefit liability

405

46

3,033

Loss (gain) on valuation of short-term and long-term investment
securities

256

357

1,923

Total accumulated other Share acquisition rights
comprehen-sive
income(1) $ 300,471 $Non-controllinginterests

Total net
assets4,873 $ 305,188 $ 2,802,455

Changes during period(70,583)

Dividends of surplus
Profit attributable to ownersof parent

291,597

Purchase of treasury shares–

Disposal of treasury shares

2,264

Purchase of shares of
consolidated subsidiaries(40,258)

Change in ownership interestof parent due to transactions
with non-controlling interests–

Net changes in items otherthan shareholders’ equity(19,071)

Total changes during period(19,071)

Balance at end of period(5,059)(5,059)93,05893,058$ 269,589 $ (34,507) $ 134,317 $The accompanying notes are an integral part of these statements.

Increase (decrease) in provision for retirement benefits for
directors (and other officers)
Increase (decrease) in provision for share awards for directors(and other officers)

680,249

183,020

Remeasurements ofdefinedbenefit plans

41,259 $Increase (decrease) in provision for future lease payments

152,268

2,966

Accumulated other comprehensive income
Deferred gains
Valuationordifference onlosses onavailable-forhedges
sale securities

Impairment losses

90,840220,312(Thousands of U.S. dollars) (Note I)

1,224
1,224

70,15270,152

1,223 $ 370,622 $

(816)
(816)

11,221
11,22180,557

Interest and dividend income(2,435)(2,345)(18,238)

Capital costs and interest expenses

11,965

10,15589,601

Loss (gain) on investments in investment partnerships and silent
partnerships
Share of loss (profit) of entities accounted for using equity
methodLoss (gain) on sale of short-term and long-term investment
securities

(152)

(228)

(1,141)(6,028)(3,293)(45,142)

(64)

(840)

(481)

Loss on liquidation of subsidiaries and associates

10,107

1,349–

Loss (gain) on disposal of non-current assets

41

40

308

Decrease (increase) in installment receivables

13,291

17,55599,534

Net decrease (increase) in lease receivables and investments inleases136,887

90,527

1,025,070

Decrease (increase) in accounts receivable - lease

1,892

7,307

14,169Decrease (increase) in operating loans(6,633)(3,678)(49,677)

Decrease (increase) in accounts receivable - other loans tocustomers(4,030)3,449(30,178)

Decrease (increase) in operational investment securities(131,708)(39,812)(986,283)

Purchase of assets for lease(216,032)(220,598)(1,617,733)(6,244)(4,821)(46,762)(3,257)Purchase of other operating assets

263,576

Decrease (increase) in retirement benefit asset

(434)

(23)

4,058 $ 316,409 $ 3,066,031

Decrease (increase) in distressed receivables

100

18

751

Decrease (increase) in guarantee deposits(1,223)

4,302(9,165)

Increase (decrease) in trade payables(1,770)1,265(13,256)

Increase (decrease) in lease liabilities(3,194)(3,873)(23,920)

Increase (decrease) in guarantee deposits received

2,021

3,420

15,139Other, net

16,507(1,315)

123,616

695

115,128

5,211

3,510

2,706

26,284

SubtotalInterest and dividends received

71

FY2022(April 1, 2022 - March 31, 2023)

Interest paid

(11,382)(10,209)(85,240)

Income taxes refund (paid)(16,972)(18,650)(127,096)

Net cash provided by (used in) operating activities(24,149)

88,974(180,841)

Fuyo Lease Group Integrated Report 2023

72

Financial Section

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Thousands of U.S. dollars(Note I)

Millions of yen
Notes

FY2022

FY2021

FY2022(April 1, 2022 - March 31, 2023)(April 1, 2021 - March 31, 2022)(April 1, 2022 - March 31, 2023)

Cash flows from investing activities
Purchase of own-used assets(2,676)(2,179)(20,041)

Purchase of investment securities(9,177)(12,163)(68,725)

Proceeds from sale and redemption of investment securities

1,309

1,543

9,804

Purchase of shares of subsidiaries resulting in change in scope of
consolidation

2(2,397)(3,589)(17,956)

Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation

2

348

–

2,609

Other, net

200

718

1,502

(12,393)(15,669)(92,806)

Net increase (decrease) in short-term borrowings

6,414(1,850)48,037

Net increase (decrease) in commercial papers(65,000)(99,200)(486,746)

Net cash provided by (used in) investing activities

Proceeds from long-term borrowings

459,699

353,067

3,442,414

Repayments of long-term borrowings(357,873)(336,531)(2,679,897)(5,200)(700)(38,940)

Net increase (decrease) in payables under securitization of leasereceivables
Proceeds from securitization of lease receivables

4

42

33

Repayments of payables under securitization of lease receivables(17,351)(42,054)(129,932)

Proceeds from issuance of bonds

110,000

64,530823,723

Redemption of bonds(30,000)(30,000)(224,652)

Purchase of treasury shares

–

(646)

–

302

74

2,264

Purchase of shares of subsidiaries not resulting in change inscope of consolidation(6,869)–(51,442)Dividends paid

(70,583)

Proceeds from disposal of treasury shares(9,425)(7,824)

Dividends paid to non-controlling interests

(281)

(288)

(2,105)

Other, net

(377)

(154)

(2,830)629,346

Net cash provided by (used in) financing activities

84,042(101,534)

Effect of exchange rate change on cash and cash equivalents

1,735

1,433

12,996

Net increase (decrease) in cash and cash equivalents

49,235(26,796)368,696

Cash and cash equivalents at beginning of period
The accompanying notes are an integral part of these statements.

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Notes to consolidated financial statements
I. Basis of presentation
Fuyo General Lease Co., Ltd. (the “Company”) and its domestic consolidated subsidiaries maintain their books of account in conformity withgenerally accepted accounting principles in Japan, and its foreign consolidated subsidiaries maintain their books of account in conformity withthose of their countries of domicile.
The accompanying consolidated financial statements have been compiled from the consolidated financial statements prepared by theCompany as required under the Financial Instruments and Exchange Act of Japan and have been prepared in accordance with generally
accepted accounting principles in Japan.
Japanese yen amounts, which are indicated in millions of yen, are rounded down by truncating the figures below one million. As a result,
the totals do not necessarily agree with the sum of the individual amounts. The amounts in US dollars presented in the consolidated financial
statements are translated from the amounts in Japanese yen at the exchange rate of ¥133.54 to US$1.00, in effect at March 31, 2023, solely
for the convenience of overseas readers. Therefore, this does not imply that those amounts in yen can be converted into equivalent amounts in
US dollars at this or any other exchange rate.

1. Scope of consolidation

Cash flows from financing activities

Cash and cash equivalents at end of period

Top Message

71,957
1¥

121,192

98,753¥

71,957

538,843$907,539(1) Number of consolidated subsidiaries: 65 companies
Names of significant consolidated subsidiaries:
Fuyo Auto Lease Co., Ltd.
YAMATO LEASE CO., LTD
Sharp Finance Corporation
Accretive Co., Ltd.
INVOICE INC.
FGLGROUP Business ServiceCO., Ltd.
FGL GROUP Management Service Co., Ltd
FGL LeaseUp Business Service Co., Ltd.
Fuyo General Lease (USA) Inc.
Fuyo General Lease (HK) Limited
Fuyo General Lease (Asia) Pte. Ltd.
Fuyo General Lease (China) Co., Ltd.
FGL Aircraft Ireland Limited
In the fiscal year ended March 31, 2023, FGL LeaseUp Business Service Co., Ltd. was included in the scope of consolidation because it
succeeded to the lease expiration processing business through an incorporation-type company split from Fuyo Lease Sales Co., Ltd., andHuman Centrix Co., Ltd. and Pacific Rim Capital, Inc. were included in the scope of consolidation due to the Company’s acquisition of
their shares. Pacific Rim Capital, Inc. was excluded from the scope of application of the equity method due to its inclusion in the scope of
consolidation.
In addition, Fuyo Network Service Co., Ltd. was excluded from the scope of consolidation since it was dissolved as a result of an absorptiontype company split following restructuring of the ICT business and others in the Group.

(2) Non-consolidated subsidiaries
Reason for exclusion from the scope of consolidation
Among the non-consolidated subsidiaries, 153 companies including FK Ignicion Leasing Ltd. are mainly business operators, etc. of leasing
businesses conducted through silent partnerships. Their assets and gains or losses are effectively not attributable to such subsidiaries or are
immaterial, so they have been excluded from the scope of consolidation pursuant to Article 5, paragraph (1), item (ii) of the Regulation on
Terminology, Forms and Preparation Methods of Consolidated Financial Statements.

(3) Special purpose entities subject to disclosure
For an overview of special purpose entities subject to disclosure, overview of transactions using special purpose entities subject to disclosure,amount of transactions with special purpose entities subject to disclosure, etc., see “Information on special purpose entities.”

2. Application of equity method(1) Number of associates under the equity method: 18 associates
Names of significant associates:
Yokogawa Rental & Lease Corporation
Marubeni Fuyo Auto Investment (CANADA) Inc.
In the fiscal year ended March 31, 2023, the Company made additional acquisitions of shares in Pacific Rim Capital, Inc. and excluded it fromthe scope of application of the equity method, while including it in the scope of consolidation.

(2) Non-consolidated subsidiaries and associates which the equity method was not applied
Reason the equity method was not applied to the companies
Among the non-consolidated subsidiaries, 153 companies including FK Ignicion Leasing Ltd. are mainly business operators, etc. of leasing
businesses conducted through silent partnerships. Their assets and gains or losses are effectively not attributable to such subsidiaries or are
immaterial, so they are excluded from the scope of being accounted for using the equity method. Investments in these companies are valued at
cost.

73

Fuyo Lease Group Integrated Report 2023

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Financial Section(3) With regard to the entities accounted for using equity method whose balance sheet dates differ from the consolidated balance sheet date, the financial statements of these companies for their respective fiscal years have been
applied.

3. Fiscal year ends of consolidated subsidiaries
Among the consolidated subsidiaries, 24 overseas consolidated subsidiaries including Fuyo General Lease (USA) Inc. have balance sheet datesof December 31, while 12 domestic consolidated subsidiaries including General Incorporated Association C·C·S Holding have balance sheet
dates of January 31. Financial statements of the respective subsidiaries as of the respective closing dates, with necessary adjustments withregard to material activities transactions during the periods up to the consolidated balance sheet date, have been reflected in the consolidation.
The financial statements of F.O. Aerial Leasing Ltd. and four other companies are based on the provisional settlement of accounts conducted
as of the consolidated balance sheet date.
The closing date of other consolidated subsidiaries is the same as the consolidated balance sheet date.

4. Summary of significant accounting policies(1) Standard and method of valuation of significant assets
1) Securities
		Other securities
		 Securities other than shares without a market price, etc.
		 Fair value method based on market price, etc. on the consolidated balance sheet date		Note that the cost of securities sold is computed based on the moving-average method. The entire net unrealized gains or losses arebooked directly as net assets.
		 Shares without a market price, etc.
		 Stated at cost determined by the moving-average method		The amortized cost method is applied to the difference between the acquisition cost and the amount of bonds where interest rateadjustment is recognized.
2) Derivative financial instruments
Fair value method(2) Depreciation and amortization
1) Assets for lease	Mainly amortized over the lease agreement period using the straight-line method with the residual value being the estimated amount to berealized when the lease agreement period ends		 Note that an additional amount is booked as depreciation for the estimated amount of loss on disposal of assets for lease due tocancellation of lease agreements or customer insolvency, etc.
2) Other operating assets
	Straight-line method
3) Leased assets
	Leased assets under finance leases that do not transfer ownership	Amortized over the lease agreement period using the straight-line method with no residual value4) Own-used assets
	Declining balance method		 However, the straight-line method is applied to buildings (excluding facilities attached to buildings) acquired since April 1, 1998 and facilities
attached to buildings and structures acquired since April 1, 2016, and is applied for overseas consolidated subsidiaries.
		 The estimated useful lives of own-used assets are principally as follows:		 Buildings
3 to 50 years		 Equipment
2 to 20 years5) Other intangible assets
Straight-line method
		 Computer software intended for internal use is amortized by the straight-line method over the estimated useful lives (5 to 10 years).

(3) Accounting method for deferred assets
1) Organization expenses
Organization expenses are amortized by the straight-line method within five years after the date of founding.
2) Business commencement expenses
Business commencement expenses are amortized by the straight-line method within five years after the business commencement date.
3) Bond issuance costs
Bond issuance costs are expensed upon payment.

(4) Accounting policy for significant allowances and provisions
1) Allowance for doubtful accounts
	To cover possible losses from bad debts, the Company sets aside an allowance for the estimated amount of doubtful receivables deemed
uncollectible. This allowance is based on historical default rates for general receivables and the individual analysis of debtors’ financial
positions for doubtful receivables, distressed receivables, etc.

75

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Financial Section &Corporate Date		 With respect to the bankruptcy claims, etc., an estimated uncollectible amount is calculated by directly deducting amounts expected to be
recovered from the amount of claims. The direct deduction totaled ¥7,314 million (U.S.$54,775 thousand) in the fiscal year ended March 31,
2023 and ¥5,393 million in the fiscal year ended March 31, 2022.
2) Provision for bonuses	To prepare for payment of bonuses to employees, a provision for the estimated payment amount borne in the fiscal year is recorded.
3) Provision for bonuses for directors (and other officers)	To prepare for payment of bonuses to directors, a provision for the estimated payment amount borne in the fiscal year is recorded.
4) Provision for future lease payments	To cover possible losses from future lease payment receivables for operating leases (subleases), a provision for the amount deemed
uncollectible is recorded. This provision is based on the historical default rates for normal claims, the analysis of individual receivables withrespect to classified loans in addition to bankruptcy claims, etc.
5) Provision for loss on guarantees	To cover possible losses on guarantees, etc., the Company provides an allowance for estimated loss, taking into consideration the financial
condition of the financial guarantees as well as other factors.
6) Provision for retirement benefits for directors (and other officers)	Since this equates to the benefits for directors and corporate auditors, the entire amount that would be required to be paid at the end of the
fiscal year is recorded according to internal regulations.
7) Provision for share awards for directors (and other officers)	To prepare for the provision of the Company’s shares, etc. to directors and other officers of the Company based on the Regulations for
Provision of Shares to Officers, the Company posts the estimated amount of share-based benefit obligation as of the end of the fiscal year.
8) Provision for maintenance costs	To cover future payments for maintenance costs that are required in specific lease transactions and maintenance services, a provision for
estimated cost is recorded by the Company.

(5) Retirement benefits
1) The method for attributing estimated retirement benefits for periods of employee service	For the calculation of retirement benefit obligations, the benefit formula method is used to attribute estimated retirement benefits for the period
up to the end of the fiscal year.
2) Actuarial differences and prior service cost	With respect to prior service cost, the Company and one of the Company’s domestic consolidated subsidiaries expense the entire amountof it in the fiscal year of occurrence, but one of the Company’s domestic consolidated subsidiaries amortizes it by the straight-line method
over a period (10 years) within the average remaining service years for employees at the time of recognition, starting from the fiscal year ofoccurrence.
		 With respect to actuarial differences, the Company expenses the entire amount of them in the fiscal year of occurrence, but three of theCompany’s domestic consolidated subsidiaries amortize them by the straight-line method over a period (5 to 11 years) within the averageremaining service years for employees at the time of recognition, starting from the fiscal year following the fiscal year of occurrence.
3) Unrecognized actuarial differences and unrecognized prior service cost	Unrecognized actuarial differences and unrecognized prior service cost after tax effect adjustments are recorded as remeasurements ofdefined benefit plans classified in accumulated other comprehensive income of net assets.
4) Simplified accounting method by small-scale businesses, etc.
	Certain domestic consolidated subsidiaries use simplified accounting methods in relation to the calculation of the retirement benefit liability
and the retirement benefit expenses. In the case of the termination allowance plan, retirement benefit obligations are recorded as the amountto be paid for voluntary retirement as of fiscal year-end. In the case of the corporate pension plan, retirement benefit obligations are recorded
as the amount of actuarial liability calculated under the latest pension funding program.

(6) Recognition of significant revenues and expenses
1) Accounting policy for sales and cost of sales arising from finance leases
	Sales and cost of sales are recorded when lease payments should be received.
2) Accounting policy for revenue from operating leases
	Based on the lease payments that should be received each month under the lease agreement based on the lease agreement periods,
recorded as lease payments corresponding to such transitional period.
3) Accounting policy for revenue from sale of leased properties	Recorded as sales revenue when leased properties are delivered to the customer and the performance obligation is satisfied.

(7) Standard for translation of significant foreign-currency-denominated assets or liabilities into Japanese yen	Foreign currency-denominated monetary receivables and payables are translated into Japanese yen at the spot exchange rate on the
consolidated balance sheet date, and exchange differences are treated as gains or losses.
		 Meanwhile, the assets, liabilities, income and expenses of overseas subsidiaries, etc. are mainly translated into Japanese yen at the spot
exchange rate on the consolidated balance sheet date, and exchange differences are recorded as foreign currency translation adjustment or
non-controlling interests of net assets.

(8) Significant hedge accounting methods	1) Hedge accounting
	Hedging activities are accounted for by the deferred hedge method. Interest rate swaps that satisfy the required conditions are subject toaccounting under exceptional treatment.

Fuyo Lease Group Integrated Report 2023

76

Financial Section	2) Hedging instruments and hedged items(a) Hedging instruments
Interest rate swaps, currency swaps and forward exchange contracts(b) Hedged items
Borrowings and forecast transactions in foreign currencies, etc.
3) Hedging policies
	The Company uses derivatives, in accordance with its internal “Basic Policy for Managing Market and Liquidity Risks,” for the purpose ofhedging risks associated with interest-rate and foreign currency fluctuations arising from its sales and financial operations.
4) Assessing hedge effectiveness	The assessment of hedge effectiveness of interest rate swaps is by the correlation between the change in aggregated amount of cash flow of
the hedging instruments and the change in aggregated amount of cash flow of the hedged items and other factors.
		 With regard to forward exchange contracts, when the principal terms for the hedged items and hedging instruments are substantially thesame, the hedge relationship is considered highly effective.
		With regard to interest rate swaps subject to accounting under exceptional treatment an assessment of hedge effectiveness is omitted.

(9) Amortization method and period of goodwill
Apart from immaterial amounts, goodwill is amortized by the straight-line method over a period not exceeding 20 years from the effective date.

(10) Scope of funds in consolidated statements of cash flows
 ash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, demand deposits and short-term investmentsCwith a maturity of three months or less from the date of acquisition, which are readily convertible into cash and have an insignificant risk ofchanges in value.

II. Significant accounting estimates
Of the accounting estimates made in preparing the consolidated financial statements for the fiscal year ended March 31, 2023, the items that
may have a significant impact on the consolidated financial statements for the following fiscal year are “Assets for lease (property, plant andequipment).”(1) Amount recorded in the consolidated financial statements
FY2022: ¥797,218 million (U.S.$5,969,883 thousand)
FY2021: ¥671,643 million(2) Information regarding significant accounting estimates for identified items
1) Method of calculation of amounts
	The Company records the acquisition cost of leased assets under operating leases less accumulated depreciation. Depreciation is calculated
mainly using the straight-line method with the lease agreement period as the depreciation period and the estimated disposal amount at theend of the lease agreement period as the residual value.
		 The estimated disposal amount is calculated based on the details of individual assets, individual contracts and other factors, taking into
account future cash flows, discount rates, and net sales values, etc.
		 Note that an additional amount is booked as depreciation for the estimated amount of loss on disposal of assets for lease due tocancellation of lease agreements or customer insolvency, etc.
		 In assessing impairment of assets for lease, the Company groups assets, and for asset groups whose profitability has declined significantly,
the book value of the assets for lease is written down to the recoverable amount, and the difference is recorded as an impairment loss.
2) Main assumptions used to calculate the amounts
	The main assumption is the “future cash flow” for estimating the “residual value.”		 Future cash flows are evaluated individually based on the contractual terms, etc. and conditions of each project. The “future cash flows”
for each individual lease contract are established based on external factors such as the economic environment, interest rate fluctuations, andcompetition in the market.
		 Although we are expecting the moderate recovery to proceed as economic and social activities normalize, we also anticipate thecontinuation of prevailing uncertainties such as rising geopolitical risk and instability of financial systems in Europe and North America, andcash flows derived mainly from leased properties will be affected to a certain extent. Although this situation is subject to uncertainty, theGroup has made estimates based on available information.
3) Impact on the consolidated financial statements for the following fiscal year	The main assumption, “future cash flow” for estimating the “residual value,” is subject to a high degree of estimation uncertainty, andany change in the assumptions used for the initial estimate may have a significant impact on the valuation of the assets for lease in the
consolidated financial statements for the following fiscal year.

III. Change in accounting policy
Application of Implementation Guidance on Accounting Standard for Fair Value Measurement
The “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021, hereinafter,“Fair Value Measurement Accounting Guidance”) has been applied from the beginning of the fiscal year ended March 31, 2023, and the
new accounting policy provided for by the Fair Value Measurement Accounting Guidance has been applied prospectively in accordance withthe transitional treatment stipulated in paragraph 27-2 of the Fair Value Measurement Accounting Guidance. As a result, evaluation of someinvestment trusts, which was previously performed using reference prices, has been changed to a method that uses net asset values per unit.

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Financial Section &Corporate Date

In the note regarding investment trusts in matters concerning the breakdown of financial instruments by fair value level and other matters in
Note XIII. “Financial instruments,” notes for the previous fiscal year have not been stated in accordance with paragraph 27-3 of the Fair Value
Measurement Accounting Guidance.

IV. New accounting standards and implementation guidances not yet applied• Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022)• Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No. 25, October 28, 2022)• Implementation Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022)(1) Overview
The “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28) and relevant implementation guidances(hereinafter, “ASBJ Statement No. 28, etc.”) were released in February 2018. While the transfer of authority for practical guidelines on tax effectaccounting at the Japanese Institute of Certified Public Accountants to the Accounting Standards Board of Japan was completed, it was
decided, in the process of the transfer, that the following two issues would be reviewed again after the release of ASBJ Statement No. 28, etc.
Now those issues were deliberated and announced.
• Classification of tax expenses (taxation on other comprehensive income)•	Tax effect on sale of shares of subsidiaries, etc. (shares of subsidiaries or shares of associates) in the case where the group taxation regime isapplied(2) Scheduled date of adoption
Effective from the beginning of the fiscal year ending March 31, 2025.

(3) Impact of adoption of such accounting standard and implementation guidances
The amounts that affect the consolidated financial statements by adopting the Accounting Standard for Current Income Taxes and related
implementation guidances are currently being evaluated.

V. Change in accounting estimates
For aircraft the Group owns as assets for lease, the Group in principle had estimated the disposal price when the lease contract expires basedon a useful life of 21 years and a residual value ratio that would make the residual value 10% of the acquisition price of those assets for leaseand set that as the residual value. From the beginning of the fiscal year ended March 31, 2023, the Group has revised the method to in principle
basing the estimate on a useful life of 25 years and a residual value ratio that would make the residual value 15% of the acquisition price, andthese changes shall be applied prospectively. For the aircraft held as assets for lease, under the new medium-term management plan that has
started in the fiscal year ended March 31, 2023, the Group has changed from a business model that holds equipment over a long period to abusiness model that switches equipment depending on the market environment, etc. In conjunction with this change, in the first quarter ended
June 30, 2022, the Group examined the useful life and residual value of aircraft based on data compiled from past transactions in aircraft leases
and a forecast of aircraft demand, etc., going forward, and changed to a useful life and residual value that are better matching with reality in lightof the long-term demand of aircraft and the extending length of years of service life.
As a result, operating profit, ordinary profit and profit before income taxes for the fiscal year ended March 31, 2023, increased by ¥2,065
million (U.S.$15,470 thousand) each than would have been the case using the previous method.

VI. Additional information
Board Benefit Trust (BBT) Plan
Based on the resolution reached at the 49th Annual General Meeting of Shareholders held on June 22, 2018, the Company has introduced a
new share-based payment plan or Board Benefit Trust (BBT) (the “Plan”) for the Company’s directors, excluding outside directors, (the “Eligible
Directors”) and executive officers who currently do not serve as directors (the “Executive Officers.” The Eligible Directors and Executive Officers
are hereinafter collectively referred to as the “Directors, etc.”).

(1) Overview of the transaction
The Plan is a share-based payment plan, under which the Company’s shares will be acquired by a trust (the trust to be established under thePlan is referred to hereinafter as the “Trust”) using funds that the Company will contribute, and the Company’s shares and cash equivalent to
the market price of the Company’s shares (the “Company’s share, etc.”) will be provided to the Eligible Directors from the Trust in accordancewith the Regulations for Provision of Shares to Officers established by the Company. In principle, the Company’s shares, etc. will be provided to
the Eligible Directors on their retirement.

(2) Treasury shares remaining in trust
The shares of the Company remaining in trust are recorded as treasury shares under net assets based on the book value in trust (excluding
the amount of incidental costs). The book value and the number of shares of treasury shares under the Plan are ¥1,061 million (U.S.$7,946
thousand) and 149,800 shares as of March 31, 2023 and ¥1,254 million and 177,100 shares as of March 31, 2022.

(3) Book value of borrowings recorded based on the gross method
Not applicableFuyo Lease Group Integrated Report 2023

78

Financial Section

About Us

VII. Notes for consolidated balance sheets*1 Accumulated depreciation for property, plant and equipment
Millions of yen

Assets for lease

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

195,748

167,973

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14,79812,423110,817

Upper limit on overdrafts and total loan commitments

Own-used assets

3,766

2,620

28,204

Balance of borrowings drawn
Difference

Millions of yen

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

1,300

1,300

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

1,250,007
575,084¥

674,922

1,033,097
522,819¥

510,278

9,360,544
4,306,460$

5,054,084*6 Contingent liabilities(1) Guarantees provided on borrowings, etc. of business partners, etc.

9,735

Millions of yen

Thousands of U.S. dollars

Investment securities (shares)

26,71529,095200,053(of which investment in joint ventures)(24,084)(27,874)(180,351)

Mizuho Bank, Ltd. (Note)

147,820

JAPAN SECURITIZATION CORPORATION (Note)

4,166

1,006

31,197

Cutlass Solar Partners LLC

2,249

–

16,842IBM Japan, Ltd. (Note)

1,556

1,625

11,654

Sumitomo Realty & Development Co., Ltd. (Note)

1,272

1,272

9,527

PLIC Corp., Ltd.

1,227

–

9,189

AEON Mall Co., Ltd.

19,739Investment securities (other)

13,388*3 Assets pledged as collateral and liabilities secured by collateral(1) Assets pledged as collateralMillions of yen

Cash and deposits

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

3,239

3,122

24,256

418

555

3,133

Lease receivables and investments in leases

11,946

13,77089,457

Accounts receivable - other loans to customers

1,791

3,427

13,414

78

106

584

Installment receivables

Accounts receivable - lease
Operating lease and other contract receivables

9,453

10,02170,795

Assets for lease (property, plant and equipment)

49,48752,327

370,586

Other operating assets (property, plant and equipment)

17,347

18,565

Total¥

93,762¥

101,897

129,908$

702,134

Note:	Besides the above assets pledged as collateral, the Company provided investment securities (¥602 million (U.S.$4,509 thousand) in the fiscal year ended March 31, 2023, ¥602
million in the fiscal year ended March 31, 2022) as third party security for bank loans taken out by business partners. The Company maintains deposits of investment securities (¥3
million (U.S.$22 thousand) and ¥3 million as of March 31, 2023 and March 31, 2022, respectively) for the purpose of sales transactions.

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

1,100

7,647

–

4,957

–

Employees (funds for purchasing housing)

2

3

22

23,83627,039178,497

Others(773 in the fiscal year ended March 31, 2023, 835 in the fiscal year
ended March 31, 2022)
Total

¥

78,900Current portion of long-term non-recourse borrowings

¥

¥

$

Long-term non-recourse borrowings

¥

6

51

62,55970,404

468,473

18

68

138

62,585¥70,479$As of March 31, 2022

As of March 31, 2023

¥

¥

$

12,685
4,067

¥

8,618

3,055
1,450

¥

1,605

94,99430,455$64,539Note that the above loan commitment agreements, a condition of lending is review of the borrower’s use of funds and credit standing, etc., so this does not necessarily mean the fullamount of loans will be extended.

Thousands of U.S. dollars

As of March 31, 2022

As of March 31, 2023

¥

5,408

¥

3,176

$

40,501¥35,111¥

34,516$

262,932

29,70331,340222,431

The assets corresponding to the non-recourse debt were as follows:
Millions of yen

Total

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

29,845
3,645

Assets for lease (property, plant and equipment)
Thousands of U.S. dollars

877,813

As of March 31, 2023

468,662

As of March 31, 2023

Balance of loans extended

Total

Accounts receivable - other loans to customers

Millions of yen$*7 Non-recourse debt included in borrowings were as follows:

Thousands of U.S. dollars*4		 Loan commitments in lending operations (as lender)
The unused credit balance, etc. in relation to loan commitment in lending operations was as follows:

Difference¥(2) One of the Company’s domestic consolidated subsidiaries engaged in business guarantee operations and the balance ofguarantees for borrowings of general customers and other entities was ¥25,061 million (U.S.$187,673 thousand) as of March
31, 2023 and ¥31,777 million as of March 31, 2022.

As of March 31, 2023

Long-term payables under securitization of lease receivables(current portion included)

Total loan commitments

117,223

Note: The Company has guaranteed loans, etc. held by Mizuho Bank, Ltd. and others.

As of March 31, 2022

6613,238

1,021

As of March 31, 2023

Long-term borrowings (current portion included)

Total

41,895

Millions of yen
Millions of yen

Other (current liabilities)

81,891

Pacific Rim Capital, Inc.

(2) Liabilities secured by collateral

79

Financial Section &Corporate Date

Corporate
GovernanceMillions of yen

1,465,844*2 Investment securities in non-consolidated subsidiaries and associates were as follows:

Management*5 Overdraft agreements and loan commitments (as borrower)
The Company has concluded overdraft agreements and loan commitment agreements with 77 correspondent financial institutions, etc. (77 in
the fiscal year ended March 31, 2022) for the efficient procurement of working capital. The unused balance, etc. at the end of the fiscal years
ended March 31, 2023 and 2022 based on these agreements was as follows:

Other operating assets

Operational investment securities (other)

Strategy & Action¥

33,49035,077–¥35,077

223,496
27,295$

250,791*8		 Payables under securitization of lease receivables, long-term payables under securitization of lease receivables
Payables under securitization of lease receivables and long-term payables under securitization of lease receivables include the amount of funds
raised through securitization of lease agreement receivables, etc.
Note that the balance of lease agreement receivables, etc. transferred through this was ¥51,584 million (U.S.$386,288 thousand) as of March
31, 2023 and ¥76,934 million as of March 31, 2022.

Fuyo Lease Group Integrated Report 2023

80

Financial Section

About Us

VIII.Notes for consolidated statements of income*1		 Revenue from contracts with customers
Net sales are not categorized separately and stated as revenue from contracts with customers and revenue from other sources. The amount ofrevenue from contracts with customers is disclosed in the consolidated financial statements in Note XXII. “Revenue recognition, 1. Information
on disaggregation of revenue from contracts with customers.”

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Strategy & Action*4		 The breakdown of loss on disposal of non-current assets is as follows.
Loss on retirement of non-current assets
Millions of yen
FY2022Millions of yen

Thousands of U.S. dollars
FY2021

FY2022

FY2022(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)¥

Provision of allowance for doubtful accounts

1,218

¥

2,620

$

378

3,356

Employees’ salaries, allowances and bonuses

16,757

14,949125,489

Provision for bonuses

2,521

2,802

18,883

204

200

1,530

1,059

975

7,933

Provision for bonuses for directors (and other officers)
Retirement benefit expenses

27

¥

11

5

13

43

–

9

–

7

Software
Total

41

¥

6
40

¥

FY2021 (From April 1, 2021 to March 31, 2022)
Not applicable

43

367

229

1,726

IX.Notes for consolidated statements of comprehensive income

Welfare expenses

3,947

3,425

29,558*1		 Reclassification adjustments and income tax effect relating to other comprehensive income

Rent expenses

2,719

2,384

20,362

Depreciation

2,739

2,336

20,518

Amortization of goodwill

1,619

1,405

12,129Minato-ku, Tokyo

AmountAmount(Millions of yen)(Thousands of U.S. dollars)

¥

0

6

$

Thousands of U.S. dollars
FY2021

FY2022(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)

Valuation difference on available-for-sale securities:¥(4,354)¥(8,355)$(32,607)

646

(717)

4,842

Amount before income tax effect(3,707)(9,073)(27,765)

Income tax effect

1,177

2,775

8,820

Reclassification adjustments to profit or loss

The Group classifies its asset groups based on offices, etc., as the minimum unit for generating cash flows. In addition, idle assets are groupedindividually.
With respect to the telephone subscription rights mentioned above, due to a decrease in dormitories and company housing, etc., for which
integrated telecommunication services for residential buildings are provided, one domestic consolidated subsidiary recorded an impairment loss
for the entire amount of the book value of telephone subscription rights classified as idle with a memorandum value of ¥1 and a market value ofzero in extraordinary losses.

Valuation difference on available-for-sale securities¥(2,529)¥(6,297)$(18,945)

Deferred gains or losses on hedges:(1,239)Gains or losses arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect(9,279)

342

415

2,563

(896)

(1,034)(6,715)

209

Income tax effect
Deferred gains or losses on hedges(1,449)

¥

(687)

¥

12,464

291
¥

(742)

¥

7,910

1,568
$

(5,147)$

93,335

Foreign currency translation adjustment:

FY2021 (From April 1, 2021 to March 31, 2022)
Location

Millions of yen
FY2022

Gains or losses arising during the year

Telephone subscription
rightsIdle assets

59
308

$

*5		 Loss on liquidation of subsidiaries and associates
FY2022 (From April 1, 2022 to March 31, 2023)
The amount of loss incurred due to the business liquidation of Saisai Seikatsu LLC, an equity-method associate of the Company, was recorded
in loss on liquidation of subsidiaries and associates.

49

Type

205

Leased assets

230

Use

$

Equipment

Provision for share awards for directors (and other officers)*3		 Impairment losses
The Group recorded impairment losses for the following asset groups:
FY2022 (From April 1, 2022 to March 31, 2023)

12,464

Gains or losses arising during the year
AmountForeign currency translation adjustment

Use

Type

Ireland

Assets for lease

Transportation equipment(aircraft)

Chiyoda-ku, Tokyo

Other intangible assets

Customer-related assets

641

Minato-ku, Tokyo

Idle assets

Telephone subscription rights

0(Millions of yen)

¥

2,048

The Group classifies its asset groups based on offices, etc., as the minimum unit for generating cash flows. In addition, idle assets are groupedindividually.
In regard to the above transportation equipment (aircraft), the expected future cash flows have declined for one overseas consolidated
subsidiary, so the book value of the assets for lease whose profitability has declined is written down to the recoverable amount, and the
impairment loss is stated as cost of sales. Further, the recoverable amount of such assets is calculated from the net sales value or the value in
use. In the case of using net sales value, the amount is based on the assessed value reasonably calculated by a third-party, and in the case ofusing value in use, the amount is calculated by the future cash flows discounted at a rate of 2.62% to 4.75%.
In regard to the customer-related assets, there are no longer expectations for revenue from some existing customers that were anticipated at
the time of acquisition of shares for one domestic consolidated subsidiary, so the value in use is evaluated at zero and deducted from the bookvalue. The amount of such reduction in assets is recorded in extraordinary losses as an impairment loss.
In addition, with respect to the telephone subscription rights mentioned above, due to a decrease in dormitories and company housing,etc., for which integrated telecommunication services for residential buildings are provided, one domestic consolidated subsidiary recorded an
impairment loss for the entire amount of the book value of telephone subscription rights classified as idle with a memorandum value of ¥1 and amarket value of zero in extraordinary losses.

81¥

Provision for retirement benefits for directors (and other officers)

Location

FY20229,122448

Bad debts expenses

Thousands of U.S. dollars
FY2021(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)

Buildings*2		Major components of selling, general and administrative expenses for the fiscal years ended March 31, 2023 and 2022, were as
follows:

Financial Section &Corporate Date

Corporate
GovernanceManagement

7,910

93,335Remeasurements of defined benefit plans, net of tax:

346

Gains or losses arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect

¥

2,597

(89)

(5)

(670)

257

39

1,927

(93)

Income tax effectRemeasurements of defined benefit plans, net of tax

44

163

(13)
¥

26

(699)
$

1,228

Share of other comprehensive income of entities accounted
for using equity method:
Gains or losses arising during the year

34

771

260

Reclassification adjustments to profit or loss

(7)

37

(60)

Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income

¥

26

¥

808

$

200

¥

9,437

¥

1,705

$

70,671

Fuyo Lease Group Integrated Report 2023

82

Financial Section

About Us

X. Notes for consolidated statements of changes in equity

Number of shares at the
beginning of the year
(Shares)

Increase

Decrease(Shares)(Shares)Number of shares at the
beginning of the year

Number of shares at theend of the year
(Shares)

30,287,810––

30,287,810

30,287,810––

30,287,810

361,957–

58,300303,657

361,957–

58,300303,657

Treasury shares
Total

Financial Section &Corporate Date

Corporate
GovernanceManagement

1. Type and total number of shares issued, and type and number of treasury shares

Issued shares

Common shares (Note)

Strategy & Action

FY2021 (From April 1, 2021 to March 31, 2022)

1. Type and total number of shares issued, and type and number of treasury shares

Total

Shared Value Story

Note: Total amount of cash dividends include cash dividends of ¥27 million (U.S.$208 thousand) for the Company’s shares held by Board Benefit Trust (BBT).

FY2022 (From April 1, 2022 to March 31, 2023)

Common shares

Top Message(Shares)

Increase

Decrease(Shares)(Shares)Number of shares at theend of the year
(Shares)Issued shares
Common shares
Total

30,287,810––

30,287,810

30,287,810––

30,287,810

290,885

85,572

14,500361,957

290,885

85,572

14,500361,957

Treasury shares
Common shares (Note)
Total

Notes: 1. T he number of common shares in treasury shares at the end of the year includes the 149,800 of the Company’s shares held by the Board Benefit Trust (BBT).
 he 58,300 decrease in the number of common shares in treasury shares was a 31,000 decrease due to the exercise of stock options and a 27,300 decrease due to provision
2. T
to the Board Benefit Trust (BBT).

Notes: 1. The number of common shares in treasury shares at the end of the year includes the 177,100 of the Company’s shares held by the Board Benefit Trust (BBT).
 he 85,572 increase in the number of common shares in treasury shares is due to an increase of 85,500 shares through the acquisition of treasury shares by the Board Benefit
2. T
Trust (BBT) and an increase of 72 shares through the acquisition of fractional unit shares.
 he 14,500 decrease in the number of common shares in treasury shares was a 9,400 decrease due to the exercise of stock options and a 5,100 decrease due to provision to
3. T
the Board Benefit Trust (BBT).

2. Share acquisition rights and treasury shares acquisition rights

2. Share acquisition rights and treasury shares acquisition rights

Componentof shareacquisitionrightsCategory

Reportingcompany(parent
company)

Type of shares
to be issued
upon exerciseof shareacquisitionrightsShare
acquisitionrights as
stock options–

Number of shares to be issued upon exercise of shareacquisition rights

Balance at theBalance at theend of the year
end of the year

(Shares)

Beginning of
the year

Increase–

Decrease–––(Thousands of
U.S. dollars)(Millions of yen)

End of the year

¥

541

$

4,058

Category

Reporting company(parent company)

3. Dividends

3. Dividends(1) Dividends paid

(1) Dividends paid

(Resolution)

Type of shares

Total amount ofcash dividends

Dividend per share(Yen)(Millions of yen)

June 23, 2022
Annual General Meeting of
Shareholders

Common shares

November 8, 2022
Board of Directors

Common shares

¥

4,665

¥

Effective date

Type of shares
to be issued
upon exerciseof shareacquisitionrightsBeginning of
the year

Increase

Decrease

End of the year

Shareacquisitionrights as stock
options

–

–

–

–

–

(Resolution)

Type of shares

Number of shares to be issued upon exercise of shareacquisition rights(Shares)

Total amount ofcash dividends

Dividend per share(Yen)(Millions of yen)

155

4,759

Record dateComponentof shareacquisitionrights158

March 31, 2022

June 24, 2022

September 30, 2022 December 7, 2022

June 23, 2021
Annual General Meeting of
Shareholders

Common shares

November 5, 2021
Board of Directors

Common shares

¥

3,912

¥

130

3,912

130

Balance atthe end of
the year(Millions of yen)¥

650

Record date

Effective date

March 31, 2021

June 24, 2021

September 30, 2021 December 6, 2021

Notes: 1. T otal amount of cash dividends which resolved at Annual General Meeting of Shareholders held on June 23, 2022, include cash dividends of ¥27 million for the Company’s
shares held by Board Benefit Trust (BBT).
2. T
 otal amount of cash dividends which resolved at Board of Directors held on November 8, 2022, include cash dividends of ¥23 million for the Company’s shares held by Board
Benefit Trust (BBT).

Notes: 1. T otal amount of cash dividends which resolved at Annual General Meeting of Shareholders held on June 23, 2021, include cash dividends of ¥12 million for the Company’s
shares held by Board Benefit Trust (BBT).
2. T
 otal amount of cash dividends which resolved at Board of Directors held on November 5, 2021, include cash dividends of ¥11 million for the Company’s shares held by Board
Benefit Trust (BBT).

(2) Dividends for which record date is in this fiscal year but the effective date for the dividends is in the following fiscal year(2) Dividends for which record date is in this fiscal year but the effective date for the dividends is in the following fiscal year

(Resolution)

Type of shares

Total amount ofcash dividends

Source of dividends Dividend per share(Yen)(Millions of yen)

June 23, 2023
Annual General
Meeting of
Shareholders

Common shares

¥

5,574

Retained earnings¥

Record date

Effective date

(Resolution)

Type of shares

Total amount ofcash dividends

Source of dividends Dividend per share(Yen)(Millions of yen)

185

March 31, 2023

June 26, 2023

June 23, 2022
Annual General
Meeting of
Shareholders

Common shares

¥

4,665

Retained earnings¥

155

Record date

Effective date

March 31, 2022

June 24, 2022

Note: Total amount of cash dividends include cash dividends of ¥27 million for the Company’s shares held by Board Benefit Trust (BBT).

(Resolution)

Type of shares

Total amount ofcash dividends

Source of dividends Dividend per share(U.S. dollars)(Thousands of U.S. dollars)

June 23, 2023
Annual General
Meeting of
Shareholders

83

Common shares$

41,746

Retained earnings

$

1.39

Record date

Effective date

March 31, 2023

June 26, 2023

Fuyo Lease Group Integrated Report 2023

84

Financial Section

About Us

XI. Notes for consolidated statements of cash flows*1 Relationship between cash and cash equivalents at end of period and cash and deposits stated on the consolidated balance
sheetsMillions of yen

Cash and deposits
Cash and cash equivalents

FY2022Current assets

121,227

Non-current assets¥

121,192¥

72,157¥

71,957$907,799$

907,539

(200)

(260)

Management

¥

9,829
9
21

Goodwill(8,416)

Current liabilities(1)

Non-current liabilities*2 Major components of assets and liabilities of a newly consolidated subsidiary due to acquisition of shares
FY2022 (From April 1, 2022 to March 31, 2023)
The following includes the breakdown of assets and liabilities at the time of acquisition and consolidation of Human Centrix Co., Ltd., and therelation between the acquisition cost of shares and net consideration paid for acquisition (net price).
Millions of yen

Current assets

¥

689

(21)

Valuation difference
Acquisition cost of shares

1,420

Acquisition cost up until the time control was obtained

(429)
2

Loss on step acquisitions

Thousands of U.S. dollars

Acquisition cost of additionally acquired shares

994$

Cash and cash equivalents

(39)

5,163

Non-current assets

106

801

Goodwill

776

5,816

Current liabilities

Difference: net consideration paid for acquisition

¥

(102)

(768)

–

–

Valuation difference

947

7,095

Acquisition cost of shares

2,418

18,107

Current assets

Cash and cash equivalents(380)(2,851)

Non-current assets

15,257

Goodwill

1,900

Current liabilities(2,662)

Non-current liabilities(2,267)

¥

2,037

$

The following includes the breakdown of assets and liabilities at the time of consolidation as a result of the additional acquisition of shares ofPacific Rim Capital, Inc. which had been an entity accounted for using equity method, and the relation between the acquisition cost of sharesand net consideration provided for the acquisition (net price).
Millions of yen

Current assets¥

Thousands of U.S. dollars

16,639$124,602

Non-current assets

5,121

38,355

Goodwill

7,483

56,042Current liabilities(11,732)(87,860)

Non-current liabilities(5,487)(41,096)

Non-controlling interests(1,110)(8,318)

(97)

(731)

Valuation difference
Acquisition cost of shares

10,81680,996

Acquisition cost up until the time control was obtained(8,398)(62,888)85641

Acquisition cost of additionally acquired shares

2,503

18,749Cash and cash equivalents(2,876)(21,542)

24

183

Loss on step acquisitions

Foreign currency translation adjustment
Difference: net consideration provided for acquisition

¥

(348)

$

The following includes the breakdown of assets and liabilities at the time of acquisition and consolidation of WorkVision Corporation, and therelation between the acquisition cost of shares and net consideration paid for acquisition (net price).
Millions of yen

¥

971
4,700

Acquisition cost of shares(2,066)

Cash and cash equivalents
Difference: net consideration paid for acquisition

5,328
1,427

Valuation difference

¥

2,633

XII. Lease transactions
As lessee
1. Finance leases (including intangible assets)
Finance lease transactions (including intangible assets) that do not transfer ownership
1) Details of leased assets
Mainly servers, network equipment and office equipment.
2) Depreciation method for leased assets
	The depreciation method for leased assets is described in “4. Summary of significant accounting policies (2) Depreciation and amortization”
under “Basis of presentation.”

2. Operating leases
Future lease payments required under non-cancellable operating leases(2,609)Millions of yen

Within one year
Total

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

700

¥

610

$

5,247

¥

1,107

¥

1,569

$

8,291

406

Over one year

85

955

Non-current liabilities

Difference: net consideration paid for acquisition

Financial Section &Corporate Date

Corporate
GovernanceMillions of yen(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)(34)

Strategy & Action

FY2021 (From April 1, 2021 to March 31, 2022)
The following includes the breakdown of assets and liabilities at the time of consolidation as a result of the additional acquisition of shares of
NIHON CREDIT LEASE CORPORATION which had been an entity accounted for using equity method, and the relation between the acquisition
cost of shares and net consideration paid for the acquisition (net price).

¥

Time deposits with maturity of over three months

Shared Value Story

Thousands of U.S. dollars
FY2021

FY2022Top Message

959

3,044

Fuyo Lease Group Integrated Report 2023

86

Financial Section

About Us

Shared Value Story

Strategy & Action

Management

Financial Section &Corporate Date

Corporate
GovernanceAs lessor

3. Sublease transactions

1. Finance leases

Lease receivables and investments in leases, and lease liabilities under sublease transactions on the consolidated balance sheets are before
interest deductions(1) Breakdown of investments in leases
Millions of yen

Lease receivables

As of March 31, 2022

As of March 31, 2023

¥

¥

$

803,166

938,940

18,911¥

Investments in leases

727,700

6,014,424

18,216(94,377)

Future interest income

141,617(108,680)¥

848,475(706,734)$

5,449,307(2) Estimated collectible amount of portion of lease receivables arising from lease receivables and investments in leases after the
consolidated balance sheet date(Millions of yen)

As of March 31, 2023
Within one year

Lease
receivables¥

53,443

Investments inleasesOver three years
and within four
years

Over one year and Over two years andwithin two years
within three years¥

267,799

28,834¥

169,510

27,152¥

125,628

28,582

Over four years andwithin five years¥

94,842

9,161

Over five years¥

42,834

102,550(Thousands of U.S. dollars)

Leasereceivables$

400,204

Investments inleasesOver three years
and within four
years

Over one year and Over two years andwithin two years
within three years$

2,005,387

215,923$

1,269,361

203,330$

940,759

214,038

Over four years andwithin five years$

710,219

68,605

Over five years$

320,760

214,890
767,938(Millions of yen)

As of March 31, 2022
Within one year

Lease
receivables¥

Investments inleases49,858296,135

Over three years
and within four
years

Over one year and Over two years andwithin two years
within three years¥

45,367
189,019¥

26,268132,196¥

18,502
97,788Over four years andwithin five years¥

15,889Over five years¥

55,352

28,465
168,447(3) For finance lease transactions that do not transfer ownership under lease agreements concluded prior to April 1, 2008, the appropriate
book value (net of accumulated depreciation or amortization) for the assets for lease as of March 31, 2008 is recorded as the price of theinvestments in leases at the beginning of the fiscal year.
	 In addition, the straight-line method is used for allocating to each period the equivalent amount of interest for such investments in leases forthe period remaining after the application of the accounting standards, etc.
	 Note that the consequent impact is omitted for both the fiscal years ended March 31, 2023 and 2022 because of immateriality.

2. Operating leases
Future lease payments required under non-cancellable operating leases
Millions of yen

Within one year
Total

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023¥

71,692¥60,926$536,862¥

393,010¥357,248$

2,943,020

321,318

Over one year

296,322

Lease receivables and investments in leases
Lease liabilities (current liabilities)

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

4,244
7,065

7,463
9,888

31,78752,913

XIII. Financial instruments
1. Status of financial instruments(1) Policy on financial instruments
The Group is engaged in leasing and installment transactions for machinery, equipment, etc. and financial transactions such as the provision ofoperating loans. The Group uses direct and indirect financing to procure funds for purchasing assets to lease or to sell through installment sales
and for providing operating loans to customers. The Group’s indirect financing mainly consists of loans from financial institutions, and its direct
financing includes issuing bonds payable, commercial papers and securitization of receivables. As the Group holds financial assets and financial
liabilities that are subject to interest rate fluctuation, assets and liabilities are comprehensively managed through asset-liability management (ALM)
to mitigate the negative impact of interest rate fluctuations.
Derivatives are only used for mitigating currency and interest rate fluctuation risks and are not used for speculative purposes.

28,696

As of March 31, 2023
Within one year

Millions of yen

Thousands of U.S. dollars

As of March 31, 2023

Estimated residual value

87

Top Message

2,406,159(2) Details of financial instruments and associated risks
Lease receivables and investments in leases, and operating loans are trade receivables due from customers and subject to credit risks
associated with customer default. Foreign currency-denominated receivables and payables arising from overseas business are subject to risks
associated with foreign currency fluctuations.
Operational investment securities and investment securities include business partners’ shares, bonds, and investments in limited partnerships,
etc. Those investments are subject to credit risks associated with the issuers and market price fluctuation risks.
Bonds payable, commercial papers, lease liabilities, long-term borrowings, and long-term payables under securitization of lease receivables
are used to procure funds for purchasing assets to lease or sell through installment sales to customers. These payables are subject to risks that
may compel the Company to procure funds with exceptionally high interest rates and to liquidity risks (funding risks) that may negatively affect
the Company’s ability to obtain funding and result in losses.
A portion of long-term borrowings have floating interest rates and are therefore subject to interest rate fluctuation risks.
The Company uses foreign currency-related derivatives to reduce risks associated with foreign currency fluctuations that affect foreign
currency-denominated receivables and payables. The Company uses interest rate-related derivatives to reduce interest rate fluctuation risks
that affect borrowings. Please refer to the aforementioned in “4. Summary of significant accounting policies (8) Significant hedge accounting
methods” under “Basis of presentation” in regard to hedge accounting methods for hedge accounting, hedging instruments and hedged items,
hedging policies and methods for assessing hedge effectiveness, etc.
(3) Risk management system for financial instruments
1) Management of credit risks (default risks, etc.)
The Company’s management system and rules for credit risks are prescribed in its internal “Basic Policy for Managing Credit Risks.”
For all transactions that involve credit risks such as leases, installment sales, selling and purchasing, financing, and guarantee operations,the Company uses a credit risk measurement method, etc., identifies on a timely basis the location and size of credit risks, and responds
adequately as necessary.
The Company’s credit risk department is engaged in the following duties: 1) daily monitoring of the effectiveness of the credit risk
management system, 2) screening and management of credit transactions involving business partners, 3) maintenance and enhancementof risk asset soundness, 4) enhancement of protection against doubtful receivables and implementation of measures related to collectionof those receivables, and 5) guidance, support, etc. for the Company’s offices and subsidiaries and associates. The department also rates
debtors based on their financial status, etc. and degree of credit risk (i.e., their ability to pay debts). The credit ratings are used for credit risk
management, portfolio investment and management, credit risk measurement, guidelines on pricing of individual credits, and self-assessment
and recognition of adequate credit allowances, etc. based on the self-assessments. Furthermore, the department regularly monitors the statusof the Company’s main business partners, manages payment-due dates and credit balances on a customer-by-customer basis, and closely
monitors customers to identify potential impediments to the collectability of receivables (e.g., due to worsening financial condition) and takes
steps to mitigate such impediments.
The effectiveness and appropriateness of credit risk management are examined through internal audits.
2) Management of market risks (risks associated with foreign exchange rates, interest rates, etc.)
The Company’s market risk management rules and procedures are prescribed in its internal “Basic Policy for Managing Market and Liquidity
Risks.”
Market risks are controlled by comprehensively examining various factors such as financial position (revenues and shareholders’ equity),balance between target revenues and risk levels, interest rate prospects, market environments, past results, and the level of risk management
for various risks. The Company manages its exposure to risks when deemed necessary for the purpose of reducing risks and expanding
revenues.
The Company’s ALM Committee meets once a month as a general rule, and on an ad-hoc basis as needed, to review and examine practicalmeasures related to market risk management and to monitor performance. At the monthly meeting, etc., the finance division reports on mattersrelated to market risk management, including the status of market risk control, interest rate prospects, developments of market environment,
Fuyo Lease Group Integrated Report 2023

88

Financial Section

etc., and hedge transactions, etc.
The Company’s consolidated subsidiaries are subject to the Company’s “Basic Policy for Managing Market and Liquidity Risks.”( i ) Interest rate fluctuation risk management
			The Company comprehensively manages interest rate fluctuation risks using ALM. The ALM Committee ascertains and monitors thestatus of ALM operations and discusses future direction and strategy based on the Company’s ALM policies.
( ii )Foreign exchange risk management
			The Company manages foreign exchange risk on a case-by-case basis, using forward exchange contracts as a general rule.
(iii)Price fluctuation risk management
			With regard to operational investment securities and investment securities, the Company regularly monitors the fair value of thesesecurities as well as the financial status of issuers and continuously reviews its financial position considering market conditions and its
relationship with the issuers.
(iv)Derivatives
			With regard to derivatives, the Company uses forward exchange contracts for the purpose of hedging risks associated with foreign
currency fluctuations that affect its foreign currency-denominated receivables and payables. The Company uses interest rate swap
contracts for the purpose of hedging interest rate fluctuation risks that affect its borrowings.
				 The Company’s finance division is authorized to engage in and manage derivatives, in accordance with internal regulations andindividuals authorized on job responsibilities and pursuant to the approval of the Company’s president (CEO) or officer in charge of thefinance division.
				 The Company’s consolidated subsidiaries’ derivative-related transactions are subject to the Company’s internal regulations “Basic
Policy for Managing Market and Liquidity Risks.” In accordance with the Company’s “Regulations on Managing Subsidiaries andAssociates,” the Company’s consolidated subsidiaries report to the Company on derivative-related transactions. These reports explain
the subsidiary’s policy on engaging in the transaction, provide a validation of the transaction’s objective, and detail the derivatives’ status,
counterparties, outstanding positions, and unrealized gains or losses.
(v) Quantitative information on market risk
			The major types of financial instruments affected by interest rate risk, the Group’s main risk factors, are “Installment receivables,” “Lease
receivables and investments in leases,” “Operating loans,” other marketable securities recorded under “Operational investment securities
and investment securities,” “Bonds payable,” “Long-term borrowings,” “Long-term payables under securitization of lease receivables,”and interest rate swaps contracts included in “Derivatives.” The Group performs quantitative analysis in managing the risk of interest
rate fluctuations. This quantitative analysis incorporates the potential change in value of these financial assets and liabilities based on areasonable range of potential interest rate movements. To calculate the potential change in value, the financial assets and liabilities are
split into fixed-rate and variable-rate categories. For the fixed-rate category, the Company allocates the book value of the instruments
into appropriate categories based on their interest-payment dates and applies an appropriate potential range of interest rate movements
to each category. Assuming all risk factors other than interest rates remain constant, as of the fiscal year-end, a 10 basis point (0.1%)
change in interest rates would result in a change of ¥4,030 million (U.S.$30,180 thousand) for the fiscal year ended March 31, 2023 anda change of ¥4,042 million for the fiscal year ended March 31, 2022 in the fair value of these financial assets and liabilities. This potentialchange in value is based on the assumption that all risk factors other than interest rates remain constant and does not incorporate theeffects of correlation between interest rates and the other risk factors. If interest rates fluctuate beyond the assumed reasonable range,
the value of these financial assets and liabilities may be affected by more than the Group has estimated.

About Us

Top Message

Shared Value Story

Strategy & Action(4) Supplementary explanation related to fair values, etc. of financial instruments
Because calculations of fair values of financial instruments involve variable inputs, the results of calculations may vary depending on what
premises and assumptions are used. Contract amounts and other derivatives data presented in “Derivatives” are nominal contract amounts ornotional amounts used in calculations and do not indicate the amount of exposure.

Financial Section &Corporate Date

Corporate
Governance2. Fair values, etc. of financial instruments
The book values, the fair values and their differences are as follows. Note that shares without a market price, etc. and investments inpartnerships, etc. are not included in the following table (See (Note)). In addition, cash and deposits, short-term borrowings, commercial papers
and payables under securitization of lease receivables are omitted from the notes because their fair value are close to their book value due tobeing settled in a short period of time.
As of March 31, 2023
Millions of yen
Book value (A)¥(1) Installment receivables*1,2

Fair value (B)52,532¥Difference (B) - (A)52,700¥167(2) Lease receivables and investments in leases*

889,386

923,198

33,811(3) Operating loans*2

327,937

330,5382,6012(4) Operational investment securities and investment securities*3

323,088

Other securities

323,088–

Total assets¥

1,592,945¥

1,629,525¥

36,580(1) Lease liabilities(current liabilities and non-current liabilities)

¥

7,772

¥

7,772

¥

–

(2) Bonds payable(current portion included)361,397

363,033

1,636(3) Long-term borrowings(current portion included)

1,223,144

1,224,536

1,391

14,353

13,685(668)(4) Long-term payables under securitization of lease receivables(current portion included)
Total liabilities¥

1,606,667¥

1,609,027

¥

2,359

¥

–

¥

–

¥

–

¥

412

¥

412

¥

–

Derivatives*

4(i) Hedge accounting not applied

412(ii) Hedge accounting applied
Total derivatives

412–

Thousands of U.S. dollars
Book value (A)$(1) Installment receivables*1,23) Management of liquidity risks associated with funding (risks of failure to pay on due date)
The Company’s management system and rules for liquidity risks are prescribed in its internal “Basic Policy for Managing Market and Liquidity
Risks.”
With regard to liquidity risks (funding risks), the Company’s finance division rigorously controls funding for ordinary operations. The division
prepares daily statements of cash receipts/disbursements and an outlook of weekly and monthly cash receipts/disbursements, analyzes
investment and cash receipt/disbursement data, and receives reports, etc. from each division to determine the impact on the Company’s
funding activities. The division also adequately controls liquidity, enhances capital efficiency, and optimizes liquidity risks and funding costs.
Funding is measured by adequately monitoring economic conditions, market environments, etc. Liquidity risks are allocated to management
categories by level of funding and managed based on predetermined response policies and implementation standards for each category.
The Company’s finance division also monitors consolidated subsidiaries’ funding status and takes appropriate action as necessary based onthat status.

Management

Fair value (B)393,385$

Difference (B) - (A)394,641$

1,257(2) Lease receivables and investments in leases*

6,660,078

6,913,269

253,192(3) Operating loans*2

2,455,722

2,475,203

19,481

2,419,416

2,419,416–

2(4) Operational investment securities and investment securities*

3

Other securities
Total assets$

11,928,600$

12,202,529$

273,929(1) Lease liabilities(current liabilities and non-current liabilities)$

58,202$58,202$–(2) Bonds payable(current portion included)

2,706,286

2,718,537

12,252(3) Long-term borrowings(current portion included)

9,159,386

9,169,807

10,421

107,486

102,481(5,005)(4) Long-term payables under securitization of lease receivables(current portion included)
Total liabilities$

12,031,360$

12,049,027$

17,667

$

–

$

–

$

–

$

3,087

$

3,087

$

–

Derivatives*4(i) Hedge accounting not applied

3,087(ii) Hedge accounting applied
Total derivatives

3,087

–

*1. Net of deferred profit on installment sales.
*2. Net of general and specific allowances for doubtful accounts related to installment receivables, lease receivables and investments in leases, and operating loans.
*3. Operational investment securities include investment trusts that have applied the treatment of regarding the net asset value per unit as the fair value in paragraph 24-3 and paragraph24-9 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021).
*4. Assets and liabilities arising from derivatives are carried at net amounts with amounts in parentheses representing a net liability position.

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Strategy & Action

Financial Section &Corporate Date

Corporate
GovernanceManagement

3. Matters concerning the breakdown of financial instruments by fair value level and other matters.

As of March 31, 2022

The fair value of financial instruments is categorized by the following three levels according to the observability and materiality of inputs used in
calculating fair value.

Millions of yen
Book value (A)¥(1) Installment receivables*1,2(2) Lease receivables and investments in leases*2(3) Operating loans*2

Fair value (B)65,802¥Difference (B) - (A)66,358¥556

1,018,101

1,063,189

45,088315,915

317,850

1,935(4) Operational investment securities and investment securities

252,407

Other securities

252,407–

Total assets¥

1,652,226¥

1,699,806¥

47,580(1) Lease liabilities(current liabilities and non-current liabilities)¥

11,357¥

11,357¥–(2) Bonds payable(current portion included)

257,137

255,693(1,443)(3) Long-term borrowings(current portion included)

1,108,416

1,116,617

8,200

31,706

31,695(10)(4) Long-term payables under securitization of lease receivables(current portion included)
Total liabilities¥

1,408,618¥

1,415,365

¥

6,746

¥

–

¥

–

¥

–

Derivatives*

3

Level 1 fair value: Fair value calculated from (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 fair value: Fair value calculated directly or indirectly using observable inputs other than Level 1 inputs
Level 3 fair value: Fair value calculated using significant unobservable inputs
If multiple inputs that materially affect the measurement of fair value are used, the fair value is categorized into the lowest priority level in fairvalue measurement among the levels of those inputs.
(1) Financial assets and financial liabilities recorded on the consolidated balance sheet at fair value
As of March 31, 2023
Millions of yen
Category

Fair value
Level 1

(380)(ii) Hedge accounting applied¥

Total derivatives

(380)

(380)
¥

(380)

–
¥

–

*1. Net of deferred profit on installment sales.
*2. Net of general and specific allowances for doubtful accounts related to installment receivables, lease receivables and investments in leases, and operating loans.
*3. Assets and liabilities arising from derivatives are carried at net amounts with amounts in parentheses representing a net liability position.
Note:	The amounts of shares without a market price, etc. and investments in partnerships, etc. recorded on the consolidated balance sheet are as follows, and not included in the information on fair value of financial instruments “Assets (4) Other securities.”

Millions of yen
As of March 31, 2023¥

Unlisted shares*

1

10,421¥

Bonds payable

10,058$Preferred securities / beneficial interest in
trusts, etc.

46,454

42,483

347,873

Investments in limited partnerships, etc.*2

200,288

138,332

1,499,839

¥

Total

¥

168,721

¥

8,609

¥

177,330

–

470

4,392

4,863

68,858––68,858

613

–

–

613

Investment securities
Investment trusts
Derivatives–

Interest rate-related
Total assets¥

Derivatives¥

69,472

169,814¥–¥

Total liabilities

623
¥

–
13,002¥¥–Foreign currency-related

210

¥

623
¥

252,289

¥

210

–
–

¥

210
210

¥

190,874

Thousands of U.S. dollars$

Category

78,037

Subsidiary’s shares / associates’ shares*

257,164–

As of March 31, 2023

1¥

Level 3Thousands of U.S. dollars

As of March 31, 2022¥

Level 2

Operational investment securities

Shares(i) Hedge accounting not applied

Total

Top Message

1,925,750*1. This equates to shares without a market price, etc., and is not subject to fair value disclosure in accordance with paragraph 5 of the “Implementation Guidance on Disclosures about
Fair Value of Financial Instruments” (ASBJ Guidance No. 19, July 4, 2019).
*2. Investments in partnerships, etc. is not subject to fair value disclosure based on paragraph 27 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31, June 17, 2021).

Fair value
Level 1

Level 2

Level 3

Total

Operational investment securities
Bonds payable$

Preferred securities / beneficial interest in
trusts, etc.

–

$

–

1,263,449

$

3,524

64,470$1,327,920

32,89436,418Investment securities
SharesInvestment trusts

515,640––

515,640

4,596

–

–

4,596

Derivatives–

Interest rate-related
Total assets$

Derivatives

$

4,666
$

$

1,271,639$–

Foreign currency-related
Total liabilities

520,236

–

–
$
$

1,580
$

97,365

1,580

4,666
$
$

–
$

1,889,240

–

1,580
$

1,580

(*) Investment trusts that have applied the treatment of regarding the net asset value per unit as the fair value in paragraph 24-3 and paragraph 24-9 of the “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021) are not included in the above table. The book value of investment trusts that have applied
the treatment in paragraph 24-3 is ¥29,736 million (U.S.$222,680 thousand), and the book value of investment trusts that have applied the treatment in paragraph 24-9 is ¥41,686
million (U.S.$312,162 thousand).

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As of March 31, 2022

As of March 31, 2022

Millions of yen

Millions of yen
Category

Category

Fair value
Level 1

Level 2

Level 3

Installment receivables¥–

Preferred securities / beneficial interest in
trusts, etc.

¥

108,665

–

¥

5,836

–

¥

114,501

5,597

5,597

Investment securities

68,358

Shares––

68,358Derivatives–

Interest rate-related
Total assets¥

Derivatives¥

68,358¥

108,762¥–¥

11,434¥¥

188,555
452

–
–

¥

25

(2) Financial assets and financial liabilities not recorded on the consolidated balance sheet at fair value
As of March 31, 2023
Millions of yen
Fair value
Level 1

Installment receivables¥

Level 2–¥

Level 3

–

¥

Total

52,700

Lease receivables and investments in leases––

923,198

Operating loans––

330,538

Total assets

¥

–

¥

Lease liabilities

¥

–

¥

¥

52,700923,198
330,538–¥

1,306,437

¥

7,772

¥

–

¥

1,306,437
7,772

Bonds payable–

363,033–

363,033

Long-term borrowings–

1,224,536–

1,224,536

Long-term payables under securitization oflease receivables–

13,685–

13,685–¥

Total liabilities¥

1,609,027–¥

394,641$¥

1,609,027

Thousands of U.S. dollars
Category

Fair value
Level 1

Installment receivables

$

$

–

Lease receivables and investments in leases

Level 3

–

$

–

–

Operating loans

$

–

$

Lease liabilities

$

–

$

Total

6,913,269–

Total assets

394,641
6,913,269

2,475,203

2,475,203–$

9,783,114$

58,202$–$

9,783,114
58,202

Bonds payable–

2,718,537–

2,718,537

Long-term borrowings–

9,169,807–

9,169,807

Long-term payables under securitization oflease receivables–

102,481–

102,481

Total liabilities

93

Level 2

–

$

–

$

12,049,027

$

–

$

–

¥

Level 3

–

¥

Total

66,358¥66,358

Lease receivables and investments in leases––

1,063,189

1,063,189

Operating loans––

317,850

317,850

Total assets

¥

–

¥

–

¥

1,447,399¥

1,447,399

Lease liabilities

¥

–

¥

11,357¥–¥

11,357

Bonds payable–

255,693–

255,693Long-term borrowings–

1,116,617–

1,116,617

Long-term payables under securitization oflease receivables–

31,695–31,695–0–0Interest rate-related
Total liabilities

¥

–

¥

1,415,365¥–¥

1,415,365478¥(*) Investment trusts, etc. to which transitional measures have been applied in accordance with Article 5, paragraph 6 of the Supplementary Provisions of “Cabinet Office Order Partially
Amending the Regulation on Terminology, Forms and Preparation Methods of Financial Statements” (Cabinet Office Order No. 9 of March 6, 2020) are not included in the above table.
The amount of investment trusts, etc. on the consolidated balance sheet is ¥63,949 million.

Category¥

Level 2Derivatives

–

25
478

¥

97
¥

452

–

Foreign currency-related–¥–Interest rate-related
Total liabilities

97

Fair value
Level 1

Total

Operational investment securities
Bonds payable

Financial Section &Corporate Date

Corporate
GovernanceManagement

12,049,027

Notes:
1. Explanation of evaluation techniques and inputs used in calculating fair value
Operational investment securities and investment securities
Operational investment securities and investment securities for which there are published market prices such as the stock exchange price or
prices provided by relevant financial institutions or information vendors, where the unadjusted market prices in active markets can be used, arecategorized as Level 1 fair value. This mainly includes listed shares.
If the market is not active, even if using published market prices, the items are categorized as Level 2 fair value. This mainly includes bonds
payable.
If the market price cannot be obtained, fair value is calculated by discounting total principal and interest, etc. by a rate calculated based on
an internal rating. Since significant unobservable inputs are used in the calculation, these are categorized as Level 3 fair value.
Investment trusts which have transaction prices in markets and for which unadjusted prices in active markets can be used are categorized
as Level 1 fair value. This mainly includes listed investment trusts. For investment trusts with no transaction price in markets, the fair value
is determined based on the net asset value per unit and other valuation methods. If there are no significant restrictions for which market
participants would demand compensation for the risk on cancellation or repurchase requests, the net asset value per unit is used as the fairvalue, and the investment trusts are categorized as Level 2 fair value. If there is any significant restriction for which market participants would
demand compensation for the risk on cancellation or repurchase requests, the investment trusts are measured with the net asset value
per unit regarded as the fair value, and are not categorized into any level in accordance with paragraph 24-7 and paragraph 24-12 of the
Implementation Guidance on Accounting Standard for Fair Value Measurement.
Installment receivables
Fair values are calculated by discounting uncollected receivables at the rate applied to new contracts. The Company calculates the fair valuesof doubtful receivables by deducting estimated losses on bad debts from their book values as of the consolidated balance sheet date. The
resulting amount closely approximates the doubtful receivables’ fair values. Estimated losses on bad debts are calculated based on estimatedcash flows or estimated net realizable value, etc. covered by collateral or guaranty.
Since the impact on unobservable inputs is material for all fair values, these are categorized as Level 3 fair value.
Lease receivables and investments in leases
Fair values of lease receivables and investments in leases are calculated by subtracting major administrative and maintenance expenses fromthe total of uncollected lease receivables and lease payment. The Company calculates the fair values of doubtful receivables by deducting
estimated losses on bad debts from their book values as of the consolidated balance sheet date. The resulting amount closely approximates
the doubtful receivables’ fair values. Estimated losses on bad debts are calculated based on estimated cash flows or estimated net realizablevalue, etc. covered by collateral or guaranty.
Since the impact on unobservable inputs is material for all fair values, these are categorized as Level 3 fair value.
Operating loans
Fair values of floating-rate operating loans are based on their book value. Market rates are reflected in the rates on floating-rate operatingloans in a short period of time, so their book value closely approximate their fair values as long as the borrower credit status does not changematerially after loan issuance. Fair values of fixed-rate operating loans are calculated by discounting total principal and interest for eachborrower at the rate applied to new contracts. The Company calculates the fair values of doubtful receivables by deducting estimated losses
on bad debts from their book values as of the consolidated balance sheet date. The resulting amount closely approximates the doubtfulreceivables’ fair values. Estimated losses on bad debts are calculated based on estimated cash flows or estimated net realizable value, etc.
covered by collateral or guaranty.
Since the impact on unobservable inputs is material for all fair values, these are categorized as Level 3 fair value.

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Lease liabilities
To calculate the fair values of lease liabilities, the instruments are first allocated to categories according to maturity terms. Total principal andinterest for each category is discounted at a notional rate that is assumed would apply to borrowing in the same amount.
Since the impact on unobservable inputs is immaterial, these are categorized as Level 2 fair value.
Bonds payable (current portion included), Long-term borrowings (current portion included), Long-term payables under
securitization of lease receivables (current portion included)
Fair values of floating-rate loans and payables in these categories are based on their book value. Market rates are reflected in the rates on theseloans and payables in a short period of time, and the Company’s credit status has not changed materially since issuance, so their book value
are deemed to closely approximate to their fair values. To calculate the fair values of fixed-rate loans and payables in these categories, theinstruments are first allocated to categories according to maturity terms. Total principal and interest for each category is discounted at a notional
rate that is assumed would apply to borrowing in the same amount.
Since the impact on unobservable inputs is immaterial for all fair values, these are categorized as Level 2 fair value.
Derivatives
Derivatives are over-the-counter (OTC) transactions, and calculated based on the price indicated by relevant financial institutions, etc. The main
inputs used in these evaluation techniques are interest rates and foreign exchange rates, etc. Since observable inputs are used, their fair value iscategorized as Level 2 fair value.
2. Information concerning Level 3 fair value for financial instruments recorded on the consolidated balance sheet at fair value(1) Quantitative information concerning significant unobservable inputs
As of March 31, 2023
Category

Evaluation techniqueSignificant unobservable inputs

Shared Value Story

Strategy & Action

Bonds payable

Profit and loss or othercomprehensive income forthe period
Beginning ofyear

Recordedin other
Recorded incomprehenprofit and loss
sive income(*1)

Net amountsof purchase,sale,issuance andsettlement

Preferred securities, etc.

Bonds payable$ 43,709 $– $(954) $ 21,716

41,915–

1,847$ 85,624 $– $Preferred securities,
etc.

Discount rate

6.50% - 15.43%

Total

Evaluation techniqueSignificant unobservable inputs

Scope of inputs

Discounted present
value method

Discount rate

2.00%

Preferred securities / beneficial
interest in trusts, etc.

Discounted present
value method

Discount rate

Beginning ofyear

Bonds payable

Recordedin other
Recorded incomprehenprofit and loss
sive income(*1)

Transfers to
Level 3 fairvalue (*2)

5.60% - 11.49%

Transfers fromLevel 3 fairvalue (*3)

End of year

Unrealized gains andlosses on financial
assets and financial
liabilities held on the
consolidated balance
sheet date among theamount recorded togains and losses
for the period

Operational
investment
securities
Bonds payable
Preferred securities,
etc.
Total

95

¥

5,836 ¥– ¥(127) ¥

2,900

5,597

–

246

(1,451)¥ 11,434 ¥

– ¥

119 ¥

1,448

¥

–

¥

–
¥

–

¥

–

¥

8,609

–

4,392

–

¥ 13,002

¥

–
–

¥

¥

Preferred securities /
beneficial interestin trusts, etc.

Millions of yen

Net amountsof purchase,sale,issuance andsettlement

$

$

–

$ 64,470–

32,894–$ 97,365

–
–

$

–

$

$

–
–

$

–

Recordedin other
Recorded incomprehenprofit and loss
sive income(*1)

Net amountsof purchase,sale,issuance andsettlement

Transfers to
Level 3 fairvalue (*2)

Transfers fromLevel 3 fairvalue (*3)¥¥

End of year

Unrealized gains andlosses on financial
assets and financial
liabilities held on the
consolidated balance
sheet date among theamount recorded togains and losses
for the period

Operational
investment
securities

Total

Beginning ofyear

End of year

(10,868)892 $ 10,849

Profit and loss or othercomprehensive income forthe period(2)	Reconciliation from the balance at beginning of year to the balance at end of year, unrealized gain and loss recognized in profit
and loss for the period
As of March 31, 2023
Profit and loss or othercomprehensive income forthe period

Transfers fromLevel 3 fairvalue (*3)

Millions of yen

Operational investment securities
Bonds payable

Transfers to
Level 3 fairvalue (*2)

As of March 31, 2022

As of March 31, 2022
Category

Unrealized gains andlosses on financial
assets and financial
liabilities held on the
consolidated balance
sheet date among theamount recorded togains and losses
for the period*1. Included in “valuation difference on available-for-sale securities” under “other comprehensive income” in the consolidated statement of comprehensive income.
*2. There were no transfers from Level 2 fair value to Level 3 fair value during the fiscal year. Note that in the case of a transfer, such transfer occurs on the final day of the accounting
period.
*3. There were no transfers from Level 3 fair value to Level 2 fair value during the fiscal year. Note that in the case of a transfer, such transfer occurs on the final day of the accounting
period.

2.55%

Discounted present
value method

Financial Section &Corporate Date

Operational
investment
securities

Scope of inputs

Discount rate

Corporate
GovernanceThousands of U.S. dollars

Operational investment securities
Discounted present
value method

Management¥

5,000 ¥

– ¥

36 ¥

800

3,403

–

437

1,756

8,403 ¥

– ¥

474 ¥

2,556

–
–

¥

–

¥

–

¥

5,836

–

5,597

–

¥ 11,434

¥

–
–

¥

–

*1. Included in “valuation difference on available-for-sale securities” under “other comprehensive income” in the consolidated statement of comprehensive income.
*2. There were no transfers from Level 2 fair value to Level 3 fair value during the fiscal year. Note that in the case of a transfer, such transfer occurs on the final day of the accounting
period.
*3. There were no transfers from Level 3 fair value to Level 2 fair value during the fiscal year. Note that in the case of a transfer, such transfer occurs on the final day of the accounting
period.

(3) Explanation of the fair value valuation process
The Group defines policies and procedures concerning the calculation of fair value in its accounting division and calculates fair value in thatdivision in line with such policies and procedures. The calculated fair value is verified at the accounting division or the standalone finance divisionon the validity of the evaluation technique and inputs used in calculating fair value and the appropriateness of the categorization of fair valuelevel.
When calculating fair value, a valuation model that can most appropriately reflect the nature, special characteristics and risk of the individual
assets is applied. In addition, if using a market price obtained from a third-party, the evaluation technique and inputs used are confirmed andthe validity of the price is verified by appropriate methods such as monthly trends analysis.
(4) Explanation concerning the impact on fair value if the significant unobservable inputs are changed
The discount rate, which is a significant unobservable inputs used in calculating fair value of items such as corporate bonds, is an adjustment
rate relative to standard market interest rates such as TIBOR and swap rates. It mainly comprises the risk premium, which is the compensation
required by market participants for the uncertainty of cash flows from financial instruments derived from credit risk. In general, a pronounced rise(fall) in the discount rate causes a pronounced fall (rise) in fair value.

–

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3. Information on investment trusts that have applied the treatment in paragraph 24-3 and paragraph 24-9 ofthe “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, June 17, 2021)

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4. Redemption schedule by term for monetary receivables and securities with maturity after the consolidatedbalance sheet dates
As of March 31, 2023

(1)	Reconciliation of investment trusts that have applied the treatment in paragraph 24-3 and paragraph 24-9 from the balance at
beginning of year to the balance at end of year

Millions of yen
Over one year andwithin five years

Within one year

As of March 31, 2023
Cash and deposits

Millions of yen

Category

Profit and loss or othercomprehensive income forthe period
Beginning ofyear

Recorded
Recorded inin otherprofit and loss comprehen(*1)
sive income(*2)

Investment trusts
whose investment
trust property is¥financial instruments(paragraph 24-3)

31,679 ¥Investment trusts
whose investment
trust property is realestate(paragraph 24-9)

31,138

Total

Amounts ofAmounts ofinvestment
investment
Net amounts trusts whose trusts whoseof purchase, net asset value
net asset
sale andper unit shall value per unit
redemption
be regarded
shall not beas the fair
regarded asvalue
the fair value

Unrealized gains andlosses on investment
trusts held on the
consolidated balance
sheet date among theamount recorded togains and losses forthe period

End of year

(1,949) ¥–¥–¥ 29,736

¥

–

9,294

–

–

41,686(550) ¥

1,810 ¥

7,344

¥

–

–

¥

–

¥

Beginning ofyear

Recorded
Recorded inin otherprofit and loss comprehen(*1)
sive income(*2)

Investment trusts
whose investment
trust property is$ 237,231 $financial instruments(paragraph 24-3)

Total

Amounts ofAmounts ofinvestment
investment
Net amounts trusts whose trusts whoseof purchase, net asset value
net asset
sale andper unit shall value per unit
redemption
be regarded
shall not beas the fair
regarded asvalue
the fair value

Unrealized gains andlosses on investment
trusts held on the
consolidated balance
sheet date among theamount recorded togains and losses forthe period

End of year

292,981

483,41774,95939,44369,422

229,174

26,496

3,603

–

–

–

–

8,621

27,69356,815

2,806

–

–

–

–

Operational investment securities andinvestment securities
Other securities with maturities

Bonds (other)

20,674¥–$–$ 222,680$–

131,639¥

899,026

48,180209,565¥

24,028¥71,420Thousands of U.S. dollars
Over one year andwithin five years

Cash and deposits$

Installment receivables
Operating loans

907,799$–

Over five years andwithin ten years$–

Over ten years$–

162,801

202,940

23,30911,5142,193,962

3,620,017

561,329295,372

519,863

1,716,152

198,418

26,986

Operational investment securities andinvestment securities
Other securities with maturities

–

–

–

–

64,562

207,382

425,458

21,019Bonds (government bonds)
Bonds (corporate bonds)

–

–

–

–

154,820985,772

360,795

179,937

Total$

4,003,807$

6,732,263

1,569,309$$

534,828

As of March 31, 2022
Millions of yen

233,180–

9,384

69,598––312,162

Cash and deposits$ 470,411 $(4,122) $ 13,554 $ 54,998

$

–

–

$

$ 534,842–$(2)	Breakdown of investment trusts that have applied the treatment in paragraph 24-3 by content of restrictions on cancellation asof the consolidated balance sheet date

The record date for cancellation is limited, and the interval is long.

Book value

Book value

Content of restrictions on cancellation(Millions of yen)¥

29,736(Thousands of U.S. dollars)$

222,680

Over one year andwithin five years

Within one year–

*1. Included in “Cost of sales” on the consolidated statement of income.
*2. Included in “valuation difference on available-for-sale securities” under “other comprehensive income” in the consolidated statement of comprehensive income.

¥72,157¥–

Over five years andwithin ten years¥–

Over ten years¥–

Installment receivables

29,30433,073

2,609

1,890

Lease receivables and investments in leases

314,971534,633

115,684

54,474

Operating loans

67,514

211,31233,5594,246

Bonds (government bonds)

–

–

–

–

Bonds (corporate bonds)–

28,41525,893

17,327

Bonds (other)

–

–

–

–

22,437

107,518

23,652

18,967

Operational investment securities andinvestment securities
Other securities with maturities

Other
Total

97

534,668

Bonds (other)

4,170 $ (14,599) $–Operating loans

Other(4,122) $¥Lease receivables and investments in leases

Lease receivables and investments in leases

Thousands of U.S. dollars

–

1,537

–

¥ 71,422¥

3,112

Within one year

¥ 62,818 ¥–
27,100

Total

1,253

¥

Over ten years

21,740Other–

121,227

Bonds (government bonds)

556 ¥Profit and loss or othercomprehensive income forthe period

Investment trusts
whose investment
trust property is realestate(paragraph 24-9)¥

Over five years andwithin ten years

Installment receivables

Bonds (corporate bonds)(550) ¥

Financial Section &Corporate Date

Corporate
GovernanceManagement¥506,386¥

914,953¥

201,399¥

96,906

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About Us

Top Message

Shared Value Story¥

584,811¥–

Over three years
and withinfour years

Over four years
and within
five years

Over five years

¥

¥

¥

¥

–

–

–

–

–

–

–

Payables under securitization oflease receivables

24,200

–

–

–

–

–

Lease liabilities

3,611

1,700

830

661

286

681

Bonds payable

45,00035,00089,37840,00096,67755,341Long-term borrowings

393,529298,565

222,578

116,692

119,918

71,860

5,628

2,931

3,983

491

423

895

¥ 1,362,780¥

338,197¥

316,771¥

157,845¥

217,304¥

128,779

Thousands of U.S. dollars
Over one year
and within
two years

Within one year

Short-term borrowings$ 4,379,295

Commercial papers
Payables under securitization oflease receivables$–

Over two years
and within
three years

Over three years
and withinfour years

Over four years
and within
five years

Over five years

$

$

$

$

–

–

–

–

2,291,448

–

–

–

–

–

181,219

–

–

–

–

–

Securities whose bookvalue exceeds theiracquisition cost1) G overnment bonds and local government
bonds, etc.
2) Corporate bonds

146,382

90,80955,572

1,691

2,093

(402)

–

–

–

140,307145,320(5,013)(2) Bonds
Securities whose bookvalue does not exceed
their acquisition cost1) G overnment bonds and local government
bonds, etc.
2) Corporate bonds3) Other–––(3) Other

34,70735,025(317)

176,706

Subtotal¥

Total

669,304

299,536

723,955

414,420(2) Bonds

2,946,905

2,235,772

1,666,756

873,840

897,994538,120

42,145

21,956

29,830

3,680

3,168

6,708

$ 10,205,037$ 2,532,554$ 2,372,112$ 1,182,009$ 1,627,259

Securities whose bookvalue exceeds theiracquisition cost

964,351

Millions of yen

568,563

¥

–

¥

¥

¥

¥

–

–

–

–

Commercial papers

371,000

–

–

–

–

–

Payables under securitization oflease receivables

29,400

–

–

–

–

–

Lease liabilities

4,316

3,043

1,639

749

579

1,028

Bonds payable

30,00045,00035,00042,24140,00064,896Long-term borrowings

328,958

296,393

199,744

117,71369,30896,298Long-term payables under
securitization of lease receivables

16,508

6,520

3,063

4,106

626

879

Total

99

¥

¥

1,348,747¥

350,957¥

239,447¥

164,810¥

110,515¥

182,439¥

Book value$273,249(5,732)¥

2) Corporate bonds

Acquisition cost

502,9731) G overnment bonds and local government
bonds, etc.

49,839$127,154

Difference$

375,819–––277,245274,824

2,421

–

–

–

3) Other

315,949

278,041

37,908Subtotal

1,096,167

680,019

416,148(1) Shares

12,667

15,678(3,011)–––

1,050,675

1,088,218(37,543)–––(3) Other
As of March 31, 2022

323,088

Thousands of U.S. dollars

Type262,094

Short-term borrowings

323

Subtotal

336,978

Over five years

36,700(1) Shares

Bonds payable

Over four years
and within
five years

37,023–

5,103Over three years
and withinfour years

–

5,062

2,142

Over two years
and within
three years

–

–

4,954

$

–

37,1296,222

Over one year
and within
two years

50,186–

12,733

Within one year

Difference¥

42,191

27,048

Total

16,9803) OtherLease liabilities

Long-term payables under
securitization of lease receivables¥(3) Other(1) Shares

Long-term borrowings

67,167(2) Bonds

306,000

Total¥(1) Shares–

Commercial papers

Long-term payables under
securitization of lease receivables

Acquisition cost

Millions of yen

TypeOver two years
and within
three years–

Book value

As of March 31, 2023

Millions of yen

Short-term borrowings

Corporate
Governance

1. Other securities

As of March 31, 2023

Within one year

Financial Section &Corporate Date

Management

XIV.Securities

5. Repayment schedule by term for bonds payable, long-term borrowings, and other interest-bearing debt
after the consolidated balance sheet dates.

Over one year
and within
two years

Strategy & Action(2) Bonds
Securities whose bookvalue does not exceed
their acquisition cost1) G overnment bonds and local government
bonds, etc.
2) Corporate bonds3) Other(3) Other
Subtotal

Total$

259,907262,282(2,375)

1,323,249

1,366,179(42,930)

2,419,416$

2,046,198$

373,218

Note: Shares without a market price, etc. and investments in limited partnerships, etc. are not included in the above table.

163,103

Fuyo Lease Group Integrated Report 2023

100

Financial Section

About Us

As of March 31, 2022

(1) Shares

Millions of yen
Book value¥

Acquisition cost

Strategy & Action

65,844¥

15,346¥50,498

Total loss

840

¥

–

–

–

2) Corporate bonds

–

–

–

3) Other–––

97,33895,7001,6383) Other–––(3) Other(3) Other

35,213

31,636

3,576

Total

Subtotal

198,396

142,683

55,713(1) Shares

2,513

2,864

(351)

2) Corporate bonds1) G overnment bonds and local government
bonds, etc.

–

–

–

17,163

17,400(236)3) Other–––(3) Other

34,33335,167(833)

54,01055,432(1,421)

2) Corporate bonds

Subtotal¥

252,407¥

198,115¥

54,291

Note: Shares without a market price, etc. and investments in limited partnerships, etc. are not included in the above table.

Millions of yen
Sales proceeds¥

70

Total gain¥

Total loss

64

¥

–

(2) Bonds
1) Government bonds and local government bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

–
–

¥

XV. Derivatives(2) Interest rate-related
As of March 31, 2023
Not applicable
As of March 31, 2022
Not applicable

–

–

–

2,476

98

–

2. Derivatives to which hedge accounting is applied–(1) Foreign currency-related
As of March 31, 2023

2,546

¥

525

162

¥

Thousands of U.S. dollars

Millions of yen

Total gain

Sales proceeds

$

1,322

During the fiscal year ended March 31, 2023, impairment loss recorded on securities amounted to ¥544 million (U.S.$4,079 thousand) (securities
classified as other securities, etc.: ¥544 million (U.S.$4,079 thousand)) and during the fiscal year ended March 31, 2022, impairment loss
recorded on securities amounted to ¥544 million (securities classified as other securities, etc.: ¥544 million).
The Company recognizes the impairment losses where the decline in the price at year end is greater than or equal to 50% of the acquisitioncost. Where the decline in the price is between 30% and less than 50% of the acquisition cost, the Company may recognize impairment losses,
taking into consideration the credit rating of the issuer, the materiality of the amount, the likelihood of the securities recovering in price, etc., aswell as the analysis of the level of market price by looking at the gap between the book value and the highest and lowest price and other data
during the fiscal years ended March 31, 2023 and 2022.

3) OtherType¥

3. Impairment losses on securities(3) Other

¥

481

3,640

(1) Foreign currency-related
As of March 31, 2023
Not applicable
As of March 31, 2022
Not applicable

FY2022 (From April 1, 2022 to March 31, 2023)
Type

2,480
¥

1. Derivatives to which hedge accounting is not applied

2. Other securities sold(1) Shares

¥

–

–

Total

Total gain

1,1601) Government bonds and local government bonds, etc.

–

(1) Shares¥(1) Shares

–

Total

Millions of yen
Sales proceeds(2) Bonds1) G overnment bonds and local government
bonds, etc.

(2) Bonds$

Total loss

481$

Hedge accounting

Type of contracts

Hedged item

Contract amount,etc.

Contract amount,etc. of over
one year

Borrowings

¥

¥

–

(2) Bonds

Fair value

Currency swap contracts

1) Government bonds and local government bonds, etc.

–

–

–

2) Corporate bonds

–

–

–

3) Other–––(3) Other

18,545

736

–

Total

Financial Section &Corporate Date

Corporate
GovernanceManagement

Type

Difference(2) Bonds

Securities whose bookvalue does not exceed
their acquisition cost

Shared Value Story

FY2021 (From April 1, 2021 to March 31, 2022)
Type

Securities whose bookvalue exceeds theiracquisition cost

Top Message$

19,070

$

1,217

$

Principle treatment

Receive yen, pay U.S. dollars

7,256

–

¥

(200)

¥

(210)

Currency swap contracts
Receive yen, pay Thai baht

1,134

Borrowings

¥

Total

–

8,391

¥

–

(10)

–
Thousands of U.S. dollars
Hedge accounting

Type of contracts

Hedged item

Contract amount,etc.

Contract amount,etc. of over
one year

Borrowings$

54,343$$62,835

Fair value

Currency swap contracts
Principle treatment

Receive yen, pay U.S. dollars
Receive yen, pay Thai baht

Total

101

–

$

(1,502)$(1,580)Currency swap contracts

8,493

Borrowings

–
$

–

(78)

Fuyo Lease Group Integrated Report 2023

102

Financial Section

About Us

Type of contracts

Hedged item

Contract amount,etc.

Contract amount,etc. of over
one year

Borrowings

¥

519

¥

–

¥

(25)

¥

519

¥

–

¥

(25)

Fair value

Currency swap contracts
Receive yen, pay Thai baht

Total(2) Interest rate-related
As of March 31, 2023

Millions of yen
Hedge accounting

Strategy & Action

Financial Section &Corporate Date

Corporate
GovernanceManagement

1. Overview of the Group’s retirement benefits plan
Millions of yen

Principle treatment

Shared Value Story

XVI. Retirement benefits

As of March 31, 2022

Hedge accounting

Top Message

Type of contracts

Hedged item

Contract amount,etc.

Contract amount,etc. of over
one year¥¥Principle treatment

Interest rate swap contracts:
Fixed rate payment, floating ratereceipt

Borrowings

Exceptional treatment
of interest rate swaps

Interest rate swap contracts:
Fixed rate payment, floating ratereceipt

Borrowings

8,243
¥

Total

51,84960,093

27,770Fair value

¥

7,423
¥

35,194623(Note)¥

623

The Company has a defined-benefit corporate pension fund plan (established by the Company and Group companies) and a defined-benefit
corporate pension plan as its defined-benefit system, and it also has a defined-contribution pension plan as its defined-contribution system.
The defined-benefit corporate pension fund plan is the only fund type and provides a lump-sum payment or pension based on the employees’
final salary points and lengths of service. Furthermore, certain defined-benefit corporate pension fund plans have retirement benefit trusts.
The defined-benefit corporate pension fund plan (established by the Company and Group companies) which is multi-employer type of pension
plan is accounted for in the same manner as a defined-contribution pension plan because it is not possible to reasonably estimate the value ofplan assets corresponding to the contribution of each company.
The defined-contribution pension plan was transferred from a termination allowance plan on November 1, 2009. The defined-contribution
pension plan, under which employees are participants, is funded by the contributions based on the participant’s plan course and eligibility.
Some of the domestic consolidated subsidiaries have a defined-benefit corporate pension plan and a termination allowance plan as its
defined-benefit pension system.
Some of the domestic consolidated subsidiaries, which have a defined-benefit corporate pension plan and a termination allowance plan, use
simplified accounting methods for calculation of retirement benefit liability and retirement benefit expenses. In the termination allowance plan,
retirement benefit obligations are recorded in the amount to be paid for voluntary retirement as of fiscal year-end. In the corporate pension plan,
retirement benefit obligations are recorded in the amount of actuarial liability calculated under the latest pension funding programs.
In the fiscal year ended March 31, 2022, a ¥9 million loss on revision of retirement benefit plan as a result of a change in the termination
allowance plan of one domestic consolidated subsidiary was recorded in extraordinary losses. In addition, due to the transition from the definedbenefit corporate pension plan to the defined contribution plan a ¥10 million gain was recorded in extraordinary income.
The Company and some of its domestic consolidated subsidiaries may make lump-sum payments of premium retirement benefits to some
employees at their retirement and certain situation.

2. Defined-benefit pension plan (excluding pension plans using the simplified accounting methods)(1) Reconciliation of retirement benefit obligations as of beginning of year and as of end of year

Thousands of U.S. dollars
Hedge accounting

Type of contracts

Principle treatment

Interest rate swap contracts:
Fixed rate payment, floating ratereceipt

Exceptional treatment
of interest rate swaps

Interest rate swap contracts:
Fixed rate payment, floating ratereceipt

Hedged item

Borrowings

Contract amount,
etc.

$

$

61,731

Borrowings

$

Total

388,270

Contract amount,etc. of over
one year

450,002207,958

263,551$

4,666(Note)$

4,666

Hedged item

Principle treatment

Interest rate swap contracts:
Fixed rate payment, floating ratereceipt

Borrowings

Exceptional treatment
of interest rate swaps

Interest rate swap contracts:
Fixed rate payment, floating ratereceipt

Borrowings

Total

Contract amount,etc.

¥

79,840Contract amount,etc. of over
one year¥

42,480¥95,478Fair value

50,518¥¥

12,217$99,878574

4,463Interest cost

69

65

522

Actuarial gains or losses

81

46

612

Retirement benefits paid

(618)

(535)

(4,631)

Decrease due to the transition to the defined-contribution
pension plan

–

(52)

–

Increase by the new consolidated subsidiary

–

1,023

–

¥

13,466¥

13,337$

100,844(2) Reconciliation of plan assets as of beginning of year and as of end of year

(Note)¥(354)

Thousands of U.S. dollars
FY2021

FY2022(354)

Note:	Since interest rate swaps which are subject to accounting under exceptional treatment of interest rate swaps are accounted for as part of borrowings that are hedged items, theirfair value is included in the relevant borrowings.

FY2022(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)¥

11,889¥11,731$89,034

Expected return on plan assets

221

212

1,658

Actuarial gains or losses

(195)

(55)

(1,465)Contribution from employer

853

480

6,394

Retirement benefits paid

(400)

(476)

(3,002)–(3)–

Decrease due to the transition to the defined-contribution
pension plan
Plan assets at end of year

103

13,337

Millions of yen

8,037
¥

¥

595

Plan assets at beginning of year

15,637

FY2022

Note: Service costs and interest costs are included in “Cost of sales” and “Selling, general and administrative expenses” on the consolidated statement of income.

Millions of yen
Type of contracts

FY2021Service cost

Retirement benefit obligations at end of year

As of March 31, 2022

Thousands of U.S. dollars(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)

Retirement benefit obligations at beginning of year

Note: Since interest rate swaps which are subject to accounting under exceptional treatment of interest rate swaps are accounted for as part of borrowings that are hedged items, theirfair value is included in the relevant borrowings.

Hedge accounting

FY2022

Fair value

55,593$

Millions of yen¥

12,368¥

11,889$92,618

Fuyo Lease Group Integrated Report 2023

104

Financial Section

About Us(3)	Reconciliation of retirement benefit obligations and plan assets at end of fiscal year and retirement benefit liability andretirement benefit asset recorded in the consolidated balance sheets
Millions of yen

Retirement benefit obligations for funded pension plans

Top Message

expected future long-term rate of return on various components of plan assets.

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

(8) Basis for actuarial calculation¥$

Major basis for actuarial calculation

Plan assets
Net assets or liabilities recorded in the consolidated balance sheets

Financial Section &Corporate Date

Corporate
GovernanceManagement

2) Estimation of expected long-term rate of return on plan assets

Thousands of U.S. dollars

13,337

Strategy & Action

	Expected long-term rate of return on plan assets is estimated based on current and expected future distribution of plan assets as well as current and¥13,466

Shared Value Story

100,844(12,368)(11,889)(92,618)

1,098

1,448

8,226

As of March 31, 2023

As of March 31, 2022%%

Discount rate

0.10 - 1.00

0.10 - 1.00

Retirement benefit liability

1,621

1,536

12,142

Expected long-term rate of return1.00 - 2.50

1.00 - 2.50

Retirement benefit asset

(523)

(88)

(3,917)

Expected increase in salary

1.28 - 3.75

1.28 - 3.75

Net assets or liabilities recorded in the consolidatedbalance sheets

¥

1,098

1,448

¥

8,226

$

3. Defined-benefit pension plans using the simplified accounting methods(4) Breakdown of retirement benefit expenses
Millions of yen

Thousands of U.S. dollars
FY2021

FY2022(1)	Reconciliation of retirement benefit liability for the pension plans using the simplified accounting methods as of beginning ofyear and as of end of year
Millions of yen

FY2022(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)

Service cost

¥

595

¥

574

$

4,463

69

65

522

Expected return on plan assets

(221)

(212)

(1,658)

Amortization of actuarial loss

140

135

1,051

Other

(54)

(66)

(410)

Interest cost

Retirement benefit expenses for defined-benefit pension plan

529

¥

495

¥

3,969

$

(5) Remeasurements of defined benefit plans
The components of items recorded in remeasurements of defined benefit plans, net of tax included in other comprehensive income were as
follows:

FY2022(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)

Actuarial gains or losses

¥

257

¥

39

Millions of yen

752$

10,772130

1,748

Retirement benefits paid

(170)

(87)

(1,280)–

Increase by the new consolidated subsidiary
Retirement benefit liability at end of year

¥

1,500

643
¥

1,438

–
$

11,239(2)	Reconciliation of retirement benefit obligations and plan assets at end of fiscal year and retirement benefit liability andretirement benefit asset recorded in the consolidated balance sheets
Millions of yen

Retirement benefit obligations for funded pension plans

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

649

540

4,865

482

374

3,617

Retirement benefit obligations for unfunded pension plans

1,017

1,063

7,623

Net assets or liabilities recorded in the consolidated balance sheets

1,500

1,438

11,239Thousands of U.S. dollars

Retirement benefit liability

1,500

1,438

11,239Net assets or liabilities recorded in the consolidatedbalance sheets$

Plan assets

1,927

As of March 31, 2023

¥

¥

$

(2,245)

¥

1,500

¥

1,438

$

11,239(3) Retirement benefit expenses(7) Plan assets
1) Breakdown of plan assets
Ratio of each major component of plan assets was as follows:
As of March 31, 2023

As of March 31, 2022

%

%

Bonds

38

37

Shares1617

Cash and deposits

55General account

31

31

Other

10

10

100

100

Total

¥

233

(1,248)

As of March 31, 2022

(42)

1,438

(165)

As of March 31, 2023

(299)

¥

Retirement benefit expenses(166)(6) Remeasurements of defined benefit plans
The components of items recorded in remeasurements of defined benefit plans, net of tax included in accumulated other comprehensive
income were as follows:

Unrecognized actuarial gains or losses

Retirement benefit liability at beginning of year

Thousands of U.S. dollars
FY2021

FY2022

FY2022(April 1, 2022 - March 31, 2023) (April 1, 2021 - March 31, 2022) (April 1, 2022 - March 31, 2023)

Note: Retirement benefit expenses are included in “Cost of sales” and “Selling, general and administrative expenses” on the consolidated statement of income.

Note: Retirement benefit expenses are included in “Cost of sales” and “Selling, general and administrative expenses” on the consolidated statement of income.

Millions of yen

Thousands of U.S. dollars
FY2021

FY2022Retirement benefit expenses calculated by simplified accounting method
FY2022 (April 1, 2022 - March 31, 2023):¥233 million (U.S.$1,748 thousand)
FY2021 (April 1, 2021 - March 31, 2022):¥130 million
Note: Retirement benefit expenses are included in “Cost of sales” and “Selling, general and administrative expenses” on the consolidated
statement of income.

4. Defined contribution plan
In the fiscal years ended March 31, 2023 and 2022 the amount required to be contributed by the Company and consolidated subsidiaries to thedefined-contribution pension plan amounted to ¥198 million (U.S.$1,485 thousand) and ¥155 million, respectively.
Note: The amounts are included in “Cost of sales” and “Selling, general and administrative expenses” on the consolidated statement of income.

Note: The total includes retirement benefits trust established for corporate pension plan at 4% in the fiscal year ended March 31, 2023 and 4% in the fiscal year ended March 31, 2022.

105

Fuyo Lease Group Integrated Report 2023

106

Financial Section

About Us

Top Message

Shared Value Story

5. Multi-employer type of pension plan

3. Details, number and status of stock options

In the fiscal years ended March 31, 2023 and 2022 the amount required to be contributed to the defined-benefit corporate pension fund plan(established by the Company and Group companies) of multi-employer type of pension plan amounted to ¥253 million (U.S.$1,899 thousand)and ¥244 million, respectively. The contribution is accounted for in the same manner with a defined-contribution pension plan.

(1) Details of stock options(1) Most recent funded status of the multi-employer welfare pension plan
Millions of yen

Amount of plan assets

As of March 31, 2022

As of March 31, 2023

As of March 31, 2022

As of March 31, 2021

As of March 31, 2022

¥

¥

$

Difference

17,742

16,327

18,433

Actuarial liability under pension funding programs

(690)

¥

17,759(1,431)¥$(5,173)(2) Premium contribution ratio for the Group’s contribution to multi-employer type of pension plan
FY2022: 14.869% (From April 1, 2022 to March 31, 2023)
FY2021: 14.624% (From April 1, 2021 to March 31, 2022)

Financial Section &Corporate Date

Stock options for 2008

Stock options for 2009

Stock options for 2010

Class and number of grantees(Note 1)

Directors of the Company: 8
Executive officers of theCompany: 16

Directors of the Company: 8
Executive officers of theCompany: 15

Directors of the Company: 7
Executive officers of theCompany: 17

Number and type of stock
options (Note 2)

Common shares: 57,800 shares

Common shares: 84,600 shares

Common shares: 61,300 shares

Grant date

October 15, 2008

October 15, 2009

October 15, 2010

Vesting conditions(Note 3)(Note 3)(Note 3)Requisite service period(Note 4)(Note 4)(Note 4)

Exercise period

October 15, 2008
– October 14, 2038(Note 5)

October 15, 2009
– October 14, 2039(Note 5)

October 15, 2010
– October 14, 2040(Note 5)

Class and number of grantees(Note 1)

Directors of the Company: 7
Executive officers of theCompany: 16

Directors of the Company: 8
Executive officers of theCompany: 16

Directors of the Company: 8
Executive officers of theCompany: 18

Number and type of stock
options (Note 2)

Common shares: 54,800 shares

Common shares: 73,000 shares

Common shares: 42,000 shares

Grant date

October 14, 2011

October 16, 2012

October 15, 2013

Vesting conditions(Note 3)(Note 3)(Note 3)Requisite service period(Note 4)(Note 4)(Note 4)

Exercise period

October 14, 2011
– October 13, 2041(Note 5)

October 16, 2012
– October 15, 2042(Note 5)

October 15, 2013
– October 14, 2043(Note 5)

Class and number of grantees(Note 1)

Directors of the Company: 7
Executive officers of theCompany: 18

Directors of the Company: 7
Executive officers of theCompany: 19

Directors of the Company: 7
Executive officers of theCompany: 21

Number and type of stock
options (Note 2)

Common shares: 35,500 shares

Common shares: 28,600 shares

Common shares: 34,700 shares

Grant date

October 15, 2014

October 15, 2015

October 14, 2016

Vesting conditions(Note 3)(Note 3)(Note 3)Requisite service period(Note 4)(Note 4)(Note 4)

Exercise period

October 15, 2014
– October 14, 2044(Note 5)

October 15, 2015
– October 14, 2045(Note 5)

October 14, 2016
– October 13, 2046(Note 5)

132,862
138,035

Corporate
GovernanceManagement

Since the Company resolved at the 49th Annual General Meeting of Shareholders held on June 22, 2018 to introduce the share-based payment
plan or Board Benefit Trust (BBT) for its directors and executive officers and abolished the share-based payment-type stock options plan, there
has been no new granting of stock options.

Thousands of U.S. dollars

As of March 31, 2023

Strategy & Action(3) Supplementary explanation
The main reasons for the difference in (1) above are the balance of prior service obligations under pension funding programs (¥6,235 million(U.S.$46,691 thousand) in the fiscal year ended March 31, 2023, ¥6,741 million in the fiscal year ended March 31, 2022) and general reserve(¥3,728 million (U.S.$27,922 thousand) in the fiscal year ended March 31, 2023, ¥3,728 million in the fiscal year ended March 31, 2022).
The amortization method for prior service obligations in this system is even amortization of principal and interest over 20 years. Were forsome, unlikely reason, a shortage to occur for the balance brought forward, this would be dealt with through methods such as raising special
premiums as necessary based on the recalculation of the financial situation.
Since the amount of the special premiums is calculated by multiplying the amount of base salary at the time of premium contribution by thepremium rate prescribed in advance, the ratio in (2) above is not the same as the actual burden ratio.

XVII.Stock options, etc.
1. Stock options-related expenses were recorded in the following accountNot applicable

Stock options for 2011

2. Gains on expiration of unexercised stock options

Stock options for 2014
Millions of yen

Non-operating income (Other)¥

Thousands of U.S. dollars

FY2022

FY2021

FY2022(From April 1, 2022 toMarch 31, 2023)(From April 1, 2021 toMarch 31, 2022)(From April 1, 2022 toMarch 31, 2023)

–

¥

12

$

–

Stock options for 2012

Stock options for 2013

Stock options for 2015

Stock options for 2016

Stock options for 2017107

Class and number of grantees(Note 1)

Directors of the Company: 6
Executive officers of theCompany: 22

Number and type of stock
options (Note 2)

Common shares: 22,200 shares

Grant date

October 16, 2017

Vesting conditions(Note 3)Requisite service period(Note 4)

Exercise period

October 16, 2017– October 15, 2047(Note 5)

Notes: 1. Excluding outside directors and outside corporate auditors
2. Converted to number of shares
3. No vesting conditions attached
4. No provision for requisite service period
5. Notwithstanding the above, if a share acquisition rights holder loses
his/her position as director, corporate auditor, or executive officer of
the Company during the above term, he/she may exercise the rights
within a period of five years beginning on the day that exactly one
year has passed since the day immediately after the day on which theholder loses his/her position.

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108

Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Financial Section &Corporate Date

Corporate
Governance(2) Movement in stock options

XVIII. Tax effect accounting

The number of stock options that existed during the fiscal year ended March 31, 2023 is translated into the number of shares.
1) Number of stock options

1. The respective breakdowns of deferred tax assets and deferred tax liabilities by major item
Millions of yen

Stock options for 2008 Stock options for 2009 Stock options for 2010 Stock options for 2011 Stock options for 2012Pre-vesting (shares)
Previous fiscal year-end

–

–

–

–

–

Granted

–

–

–

–

–

Expired

–

–

–

–

–

Vested

–

–

–

–

–

Balance unvested

–

–

–

–

–

1,300

8,600

13,50018,60026,900

–

–

–

–

–

1,300

1,800

1,400

2,400

4,800

–

–

–

–

–

–

6,800

12,10016,20022,100

VestedExercised
ExpiredBalance unexercisedEnterprise taxes payable

Stock options for 2013 Stock options for 2014 Stock options for 2015 Stock options for 2016 Stock options for 2017Pre-vesting (shares)
Previous fiscal year-end

–

–

–

–

–

Granted

–

–

–

–

–

Expired

–

–

–

–

–

Vested

–

–

–

–

–

Balance unvested

–

–

–

–

–

16,80022,50020,20029,40020,000

–

–

–

–

–

4,200

3,300

3,200

6,700

1,900

–

–

–

–

–

12,60019,20017,00022,70018,100

VestedExercised
ExpiredBalance unexercised

Exercise price

¥

1

Yen

¥

1

¥

Yen

1

¥

¥

$

12,398Loss on valuation of investment securities, etc.

1,328

728

9,946

Guarantee deposits received

1,328

1,174

9,945

Retirement benefit liability

983

1,070

7,361

Provision for bonuses

914

855

6,851

Accrued expenses

760

983

5,697

Asset retirement obligations

657

566

4,923

Loss on liquidation of subsidiaries and associates

532

–

3,986

Non-deductible consumption tax

407

500

3,049

Revenue recognized for tax purposes

268

403

2,010

Prepaid expenses

258

412

1,932

Excess of depreciation

235

260

1,760

Gain on transfer of receivables

67

344

506

Tax loss carried forward

14

–

109

Share-based payment expenses

–

199

–

Valuation difference on available-for-sale securities

1

7,048

7,340

7,219

Fair value at grant date

1,610

1,668

2,218

2,449

1,943

Stock options for 2013 Stock options for 2014 Stock options for 2015 Stock options for 2016 Stock options for 2017

¥

1

Yen

¥

1

¥

Yen

1

¥

Yen

1

¥

2,895

1,943

21,683

15,169

11,778113,596

(123)

(120)

(922)

(123)

(120)

(922)

15,046

11,657

112,675¥

1

Average price per share at
exercise

7,391

7,537

7,592

7,855

7,548

Fair value at grant date

3,556

3,584

4,653

4,606

6,840

4. Estimation method for fair value of stock options
Not applicable

5. Estimation method for the number of vested stock options(17,859)¥(16,997)$(133,740)

Depreciation(4,473)(2,081)(33,498)

Foreign subsidiary’s unitary tax(2,814)(1,906)(21,077)

Intangible assets(1,940)(1,545)(14,531)

Gain on valuation of investment securities(1,148)(1,195)(8,597)

(824)

(942)

(6,172)Gain on transfer of receivables
Other

7,048

Yen

21,440

Deferred tax liabilities

7,048

Yen

554
1,779

Total deferred tax assets

Average price per share at
exercise

Exercise price

¥

2,863
1,655

Subtotal valuation allowance (Note)

Yen

1

¥

Excess of allowance for doubtful accounts

Valuation allowance related to total deductible temporary
differences

Stock options for 2008 Stock options for 2009 Stock options for 2010 Stock options for 2011 Stock options for 2012
Yen

As of March 31, 2023

Subtotal deferred tax assets

2) Unit priceYen

As of March 31, 2022

Other

Post-vesting (shares)
Previous fiscal year-end

As of March 31, 2023

Deferred tax assets

Post-vesting (shares)
Previous fiscal year-end

Thousands of U.S. dollars

Total deferred tax liabilities
Net deferred tax liabilities¥(1,518)(1,134)(11,374)(30,579)(25,803)(228,988)(15,532)¥(14,145)$(116,314)

Note: The amount of valuation allowance increased by ¥2 million (U.S.$16 thousand) from the previous fiscal year. This increase was mainly due to an increase of ¥1 million (U.S.$11
thousand) in valuation allowance for allowance for doubtful accounts at a consolidated subsidiary.

2.	The respective breakdowns of major items that constituted the material difference between the statutory
effective tax rate and the effective tax rate after adoption of tax effect accounting
As of March 31, 2023
The note is omitted, because the difference between the statutory effective tax rate and the effective tax rate after adoption of tax effectaccounting is less than 5% of statutory effective tax rate.
As of March 31, 2022
The note is omitted, because the difference between the statutory effective tax rate and the effective tax rate after adoption of tax effectaccounting is less than 5% of statutory effective tax rate.

The Company generally uses the actual number of expired options to estimate the number of vested options, because it is difficult to reasonably
estimate how many options will expire in the future.

109

Fuyo Lease Group Integrated Report 2023

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About Us

XIX. Business combinations, etc.

Top Message

Shared Value Story

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

6. Amount of assets received and liabilities assumed on the date of the business combination and their major
components

Business combinations through acquisition

1. Overview of the business combination

Millions of yen¥

Current assets(1) Names of acquired company and its business descriptions
Name of acquired company:

Human Centrix Co., Ltd. (hereinafter “HCX”)

Business description:

Business-use video production and distribution services forbusiness-to-business (BtoB) companies

689

801

Total assets

796

5,964

Current liabilities

102

768

–
102

¥

–
768

$

7.	Pro forma amounts of impact of the consolidated statement of income for the fiscal year ended March 31,
2023 assuming that the business combination was completed at the beginning of the fiscal year, and thecalculation method thereof(3) Date of the business combinations

Millions of yen

October 5, 2022

5,163

106

Total liabilities

In addition to enhancement of the service menu for support to increase work efficiency in the BPO services business, we are creating a highvalue added new service menu by combining the Group’s broad sales network and ability to propose solutions with HCX’s video production
and distribution services, to further support the solution of challenges in the increasingly sophisticated and complex operation processes ofcustomers.

$

Non-current assets

Non-current liabilities(2) Reasons for the business combinations

Thousands of U.S. dollars¥

Net sales

Thousands of U.S. dollars

622

$

4,665

(4) Legal form of the business combinations

Operating profit

113

Acquisition of shares by cash

Ordinary profit

129

973

Profit before income taxes

225

1,689

(5) Name of the companies after the business combination

98

Profit attributable to owners of parent

No change

852

734

Yen

¥

Basic earnings per share(6) Ratio of voting rights acquired
Ratio of voting rights held before the business combination date:–%

Ratio of voting rights acquired on the business combination date:

100.00%

Ratio of voting rights held after the acquisition:

100.00%(7) Primary basis for the determination of the acquirer

U.S. dollars

3.27

$

0.02

Method of calculating pro forma amountThe pro forma amount of the impact is the difference between net sales and profit or loss information calculated assuming that the businesscombination had been completed at the beginning of the fiscal year and net sales and profit or loss information in the consolidated statements
of income of the acquirer.
Please be advised that the notes stated above have not obtained audit certification.

It is because the Company acquired the shares in exchange for cash.

Business combinations through acquisition
2. Period for which operating results of the acquired company were included in the consolidated financial
statements
From October 1, 2022 to March 31, 2023

3. Acquisition cost of the acquired company and breakdown by type of consideration
Acquisition priceCash and deposits

Acquisition cost

¥2,418 million

U.S.$18,107 thousand¥2,418 million

U.S.$18,107 thousand

4. Details and amounts of main acquisition-related expenses
Compensation and fees, etc. to advisers, etc.: ¥141 million (U.S.$1,058 thousand)

5. Amount, cause, amortization method and period of goodwill recognized(1) Names of acquired company and its business descriptions
Name of acquired company:

Pacific Rim Capital, Inc.

Business description:

Operating lease business for material handling equipment (such as forklifts)
for corporate customers(2) Reasons for the business combinations
For the purpose of expanding the revenue base in North America and opening new business fields in the “Mobility” business domain(3) Date of the business combinations
January 6, 2023

(1) Amount of goodwill recognized(4) Legal form of the business combinations¥776 million (U.S.$5,816 thousand)Acquisition of shares by cash(2) Cause of goodwill(5) Name of the companies after the business combination

Goodwill was recognized due to the future excess earning power expected based on business expansion going forward.

No change(3) Amortization method and period(6) Ratio of voting rights acquired

Straight-line method over a period of 10 years

111

1. Overview of the business combination

Ratio of voting rights held before the business combination date:49.00%

Ratio of voting rights additionally acquired on the business combination date:

2.00%

Ratio of voting rights held after the acquisition:

51.00%

Fuyo Lease Group Integrated Report 2023

112

Financial Section

About Us

(7) Primary basis for the determination of the acquirer
It is because the Company acquired the shares in exchange for cash.

2. Period for which operating results of the acquired company were included in the consolidated financial
statements
Because March 31, 2023 is set as the deemed acquisition date, only the balance sheet has been consolidated. Since the acquired company
was an equity-method associate of the Company, its operating results from April 1, 2022 to March 31, 2023 were recorded as “share of profit
of entities accounted for using equity method.”

3. Acquisition cost of the acquired company and breakdown by type of consideration
Fair value of shares held immediately before thebusiness combination as of the businesscombination date
Acquisition price

Top Message

Shared Value Story

Strategy & Action

Management

Millions of yen¥

Net sales

5,865

Thousands of U.S. dollars$

Cash and deposits

Acquisition cost

¥2,503 million

U.S.$18,749 thousand¥10,816 million

U.S.$80,996 thousand

4. Details and amounts of main acquisition-related expenses
Compensation and fees, etc. to advisers, etc.: ¥102 million (U.S.$767 thousand)

5. Difference between the acquisition cost of the acquired company and the total amount of the acquisition
costs of the respective transactions leading to the acquisition

43,922

Operating profit

1,822

13,646

Ordinary profit

952

7,134

Profit before income taxes

952

7,134

212

1,589

Yen

U.S.$62,247 thousand

Financial Section &Corporate Date

9. Pro forma amounts of impact of the consolidated statement of income for the fiscal year ended March 31,
2023 assuming that the business combination was completed at the beginning of the fiscal year, and thecalculation method thereofProfit attributable to owners of parent¥8,312 million

Corporate
Governance¥

Basic earnings per share

U.S. dollars

7.08

$

0.05

Method of calculating pro forma amountThe pro forma amount of the impact is the difference between net sales and profit or loss information calculated assuming that the businesscombination had been completed at the beginning of the fiscal year and net sales and profit or loss information in the consolidated statements
of income of the acquirer. In addition, the calculation was made, net of “share of profit of entities accounted for using equity method” of theacquired company that was recorded in the fiscal year ended March 31, 2023.
Please be advised that the notes stated above have not obtained audit certification.

Transactions under common control etc.
Additional acquisition of subsidiary shares

Loss on step acquisitions: ¥85 million (U.S.$641 thousand)

6. Amount, cause, amortization method and period of goodwill recognized

1. Overview of the transaction(1) Amount of goodwill recognized(1) Name and business description of entity involved in business combination¥7,483 million (U.S.$56,042 thousand)
The amount of goodwill is the provisionally calculated amount, because the allocation of acquisition cost was not completed as of March 31,
2023.

Name of the entity: Kabushiki Kaisha GI Holdings
Business description:	Acquisition, holding and disposal of shares, investments and other equity and bonds of stock companies and othercorporations, purchase and sale of trust beneficiary rights, purchase of monetary claims, real estate investment,
securities investment, asset management business, solutions business, and other businesses(2) Cause of goodwill
Goodwill was recognized due to the future excess earning power expected based on business expansion going forward.

(2) Date of the business combinations
April 1, 2022

(3) Amortization method and period
Amortized over a period during which the effects of goodwill will be realized, using the straight-line method. The amortization period will be
determined based on results of the allocation of the acquisition cost.

(3) Legal form of the business combinations

7. Amount of assets received and liabilities assumed on the date of the business combination and their major
components(4) Name of the companies after the business combination

Millions of yen

Current assets¥

16,639Thousands of U.S. dollars$

124,602

Non-current assets

5,121

38,355

Total assets

21,761

162,957

Current liabilities

11,732

87,860Non-current liabilities

5,487

41,096

Total liabilities¥

17,220$128,955

Acquisition of shares from a non-controlling shareholder

No change(5) Other matters related to overview of transaction
The Company additionally acquired all shares held by the non-controlling shareholder. As a result of this additional acquisition of shares, theentity and its subsidiary, INVOICE INC., became wholly owned subsidiaries of the Company.

2. Overview of accounting treatment implemented
In accordance with the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, January 16, 2019) and the “Implementation
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10,
January 16, 2019), the Company treated the transaction as a transaction with a non-controlling shareholder among transactions under common
control, etc.

8. Allocation of acquisition cost
Because identification of identifiable assets and liabilities on the business combination date and determination of the fair value as well as
the allocation of the acquisition cost were not completed as of March 31, 2023, provisional accounting treatment was conducted based onreasonable information available at that time.

3. Matters concerning the additional acquisition of subsidiary shares
Acquisition cost and breakdown by type of consideration
Acquisition priceCash and deposits

Acquisition cost

¥6,869 million

U.S.$51,442 thousand¥6,869 million

U.S.$51,442 thousand

4.	Matters concerning a change in equity of the Company related to transactions with non-controlling shareholders(1) Main reasons for the change in capital surplus

113

Fuyo Lease Group Integrated Report 2023

114

Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Financial Section &Corporate Date

Corporate
GovernanceManagement

FY2021 (From April 1, 2021 to March 31, 2022)

Additional acquisition of subsidiary shares(2) Amount of capital surplus reduced by transactions with non-controlling shareholders

Millions of yen¥5,376 million (U.S.$40,258 thousand)Reportable segments
Lease and Installment
Sales

XX. Asset retirement obligations
This information has been omitted because of immateriality.

Financing

Other

Total

Revenue from contracts with customers
Revenue from sale of leased properties

XXI. Real estate leasing business
The Company and some of its consolidated subsidiaries own assets such as commercial facilities for lease and office buildings (including land)
for lease in Tokyo and other regions. Net lease income from these assets amounted to ¥9,184 million (U.S.$68,775 thousand) and ¥6,307
million (lease income and lease cost were generally recorded as net sales and cost of sales, respectively) for the fiscal years ended March 31,
2023 and 2022, respectively.
The book value on the consolidated balance sheets, net changes, and fair value of these assets are as follows:
Millions of yen

Thousands of U.S. dollars
FY2021

FY2022

FY2022(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

Book value¥

Beginning of year

397,170¥

344,843$2,974,171

Net change

103,446

52,326774,649

End of year

500,617397,1703,748,821¥

Fair value at end of year

512,182¥

409,458$

3,835,427

Notes: 1. The book value on the consolidated balance sheet is the amount after deduction of accumulated depreciation from acquisition cost.
 he increase of book value is mainly attributable to the purchase of real estate of ¥200,716 million (U.S.$1,503,043 thousand) and ¥174,318 million, in the fiscal years ended
2. T
March 31, 2023 and 2022, respectively.
 he fair value of properties is mainly estimated based on income approach in accordance with Real Estate Appraisal standards as of March 31, 2023. For other properties, the
3. TCompany reasonably estimated the fair value based on income approach or market approach while the Company used their book value as the fair value for certain properties.

XXII. Revenue recognition
1. Information on disaggregation of revenue from contracts with customers
FY2022 (From April 1, 2022 to March 31, 2023)
Millions of yen

Financing

118,898

¥

–

2,952

¥

–

43,720162,618

Total

121,851

25

40,741

470,334

22,1052,787¥

592,186

¥

Other

Total

Revenue from contracts with customers

22,131

43,529¥495,228¥

Basic information for understanding revenue from contracts with customers is described in “4. Summary of significant accounting policies (6)Recognition of significant revenues and expenses” under “Basis of presentation.”

XXIII. Segment information, etc.
Segment information
1. Description of reportable segments
The Group’s reportable segments are components of the Group for which separate financial information is available. These segments are
subject to periodic examinations undertaken to enable the Board of Directors of the Group to make decisions on allocating resources and toevaluate performance.
The Group is primarily engaged in leasing and installment sales, and its operations are divided into three reportable segments based on the
major types of transactions handled, namely the Lease and Installment Sales segment, the Financing segment, and the Other segment.
The Lease and Installment Sales segment conducts businesses including leasing of IT and office equipment, industrial machinery, andother assets (includes the sale, etc. of off-lease assets upon lease expiration or termination) and leasing of real estate, and sells commercial/service equipment, production facilities, medical devices, and other assets on an installment basis. The Financing segment is mainly engaged
in operating loans, investment in marketable securities for financial income, forming tokumei-kumiai (silent partnership) arrangements, etc. The
Other segment primarily engages in environmental-related businesses, fee handling, and BPO and mobility business, etc.

Measurements used in accounting for reportable segment are the same as those disclosed in “Basis of presentation.” Profit of reportablesegment is based on operating profit. Transactions with other segments are based on prevailing market prices.

181,659

3. Disclosure of sales, profit (loss), asset, liability, and other items for each reportable segment79

47,96851,280

FY2022 (From April 1, 2022 to March 31, 2023)

Total

184,891

79

47,968232,939

Other revenue

426,972

26,1282,614

455,715¥

Provision of services, etc.

Revenues from external customers¥

181,659

611,863¥¥–

26,208¥–50,583¥657,847

2. Basic information for understanding revenue from contracts with customers

3,232

Revenue from sale of leased properties

118,898

40,741Other revenue
Revenues from external customers¥

25

2. Explanation of measurements of sales, profit (loss), asset, liability, and other items for each reportable segment

Reportable segments
Lease and Installment
Sales

¥

Provision of services, etc.

¥¥

Millions of yen
Lease and Installment
Sales

688,655

Financing

Other

Total

Sales

Lease and Installment
Sales

Thousands of U.S. dollars

Revenues from external customers

Reportable segments

Transactions with other segments

Financing

Other

Total

Revenue from contracts with customers
Revenue from sale of leased properties$

1,360,338

$

–

$

–

$

1,360,338

24,205593

359,207384,005

Total

1,384,543

593

359,2071,744,343

Other revenue

3,197,334

195,664

19,5803,412,578

Provision of services, etc.

Revenues from external customers$

4,581,877$

196,257$

378,787$

5,156,921

Net sales

611,863¥

26,208¥50,583¥

688,655

741

3,584

2,742

7,069

612,605

29,79253,326

695,724

Segment profit¥

36,679¥18,605¥

10,106¥65,390

Segment assets¥

1,737,604¥

1,128,429¥

135,058¥

3,001,092

Other items

40,595–

3,138

43,734

Amortization of goodwill

49

324

1,246

1,619

Investments in entities accounted forusing equity method

–

–

–

–

Depreciation

Increase in property, plant andequipment and intangible assets

115

¥

¥

216,032

¥

–

¥

6,244

¥

222,276

Fuyo Lease Group Integrated Report 2023

116

Financial Section

About Us

Financing

Other

Total

$

4,581,877

$

5,556

¥

26,842

4,587,433

Net sales

196,257

378,787¥

20,540223,099

5,156,921
52,938399,327

5,209,859

Segment profit$

274,670$

139,324¥

75,680¥489,673

Segment assets$

13,011,865$

8,450,124¥

1,011,373¥

22,473,363

Other items

Millions of yen

Amortization of goodwill$

303,999–

23,500327,499

369

2,429

9,331

12,129––––1,617,733–$¥

46,762¥

1,664,495

FY2021 (From April 1, 2021 to March 31, 2022)¥

Transactions with other segments
Net sales

Financing

Other

Total

(11,319)(85,202)¥51,561¥

22,131¥

43,529¥657,847

1,230

3,488

2,127

6,847

593,416

25,62045,657

664,694

32,751¥

16,523

¥

8,779

¥

58,053

Segment assets¥

1,764,861¥

967,301¥

126,186¥2,858,349

Millions of yen¥

3,001,092¥

3,149,740

Thousands of U.S. dollars
FY2022

Total assets reported on the consolidated balance sheets¥

2,858,349¥

2,949,704

148,647

Corporate assets (Note)$

22,473,363$

23,586,497

91,354

1,113,135

Note:	Corporate assets include surplus funds (cash and deposits, etc.), long-term investment funds (investment securities) and assets related to administrative divisions that are not attributable to any reportable segment.

Amounts reported on the consolidated financial statements

Millions of yen

Thousands of U.S. dollars
FY2021

FY2022¥

Amortization of goodwill

70

324

1,010

1,405

Amounts reported on the consolidated financial statements

Investments in entities accounted forusing equity method

–

–

–

–

4,821

¥

¥

¥

51,034327,499$

343,687

16,188

Thousands of U.S. dollars
FY2021

1,619¥

FY2022

1,405

–
¥

1,619

$

12,129–
1,405¥

Millions of yen
FY2022–$

12,129Thousands of U.S. dollars
FY2021

FY2022(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

Reportable segments total¥

Amounts reported on the consolidated financial statements–¥

45,804

Adjustment

financial statements¥

Millions of yen

Investments in entities accounted
for using equity method

225,419

4. Description of nature of differences between amounts of reportable segments total and consolidated

45,895$(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

49,244¥49,244
1,789

FY2022

3,069

–

¥

2,161

Amortization of goodwill–¥

43,734

Note: Depreciation adjustments mainly represent depreciation on own-used assets.

46,175¥45,804–$42,075¥42,075–343,000$

343,000

Note: Adjustments for investments in entities accounted for using equity method mainly represent the amount of funds invested in entities accounted for using equity method.

Net sales

Millions of yen

Thousands of U.S. dollars
FY2021

FY2022

FY2022(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)¥

695,724¥(7,069)Eliminations
Net sales reported on the consolidated statements of income

386,111(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

Adjustment

Reportable segments total$

FY2021

FY2022

Reportable segments total

Other items

220,598

46,034¥

Note: Corporate expenses are mainly selling, general and administrative expenses that are not attributable to any reportable segment.

Reportable segments total¥¥

489,673(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

Segment profit

Depreciation$(11,377)

Operating profit reported on the consolidated
statements of income

FY2022

Sales

592,186

58,053

Corporate expenses (Note)

Adjustment¥¥(18,360)

Depreciation

Lease and Installment
Sales

Increase in property, plant andequipment and intangible assets

65,390(699)

Millions of yen

Revenues from external customers

FY2022(2,451)

Reportable segments total

Investments in entities accounted forusing equity method

Thousands of U.S. dollars
FY2021Eliminations

AssetsDepreciation

Financial Section &Corporate Date

Corporate
GovernanceManagement(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

Reportable segments total

Transactions with other segments

Increase in property, plant andequipment and intangible assets

Strategy & Action

FY2022

Sales
Revenues from external customers

Shared Value Story

ProfitThousands of U.S. dollars
Lease and Installment
Sales

Top Message¥

688,655664,694$(6,847)¥

657,847

5,209,859(52,938)$

5,156,921

Increase in property, plant and equipment
and intangible assets

Millions of yen

Thousands of U.S. dollars
FY2021

FY2022

FY2022(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 - March 31, 2023)

Reportable segments total¥

222,276¥

224,952

225,419¥

227,599

2,676

Adjustment
Amounts reported on the consolidated financial statements¥$

1,664,495$

1,684,536

2,179

20,041

Note: Adjustments on increase in property, plant and equipment and intangible assets mainly represent capital investment in own-used assets.

117

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Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Financial Section &Corporate Date

Corporate
GovernanceManagement

Information associated with reportable segments

Disclosure of impairment losses on non-current assets for each reportable segment

1. Information for each product or service

FY2022 (From April 1, 2022 to March 31, 2023)
Millions of yen

FY2022 (From April 1, 2022 to March 31, 2023)
This information is omitted as it is identical to that in segment information.

Lease and Installment
Sales

Impairment losses

FY2021 (From April 1, 2021 to March 31, 2022)
This information is omitted as it is identical to that in segment information.

¥–

Financing

¥

Other

–

¥

Corporate/ Elimination

0

¥

–

Total

¥

0
Thousands of U.S. dollars

Lease and Installment
Sales

2. Information for each region
FY2022 (From April 1, 2022 to March 31, 2023)

Impairment losses$–

Financing

$

Other

–

$

Corporate/ Elimination

6

$

–

Total

$

6

(1) Revenues from external customers
FY2021 (From April 1, 2021 to March 31, 2022)

It is omitted since revenues from external customers in Japan exceeds 90% of net sales on the consolidated statement of income.

Millions of yen(2) Property, plant and equipment
Millions of yen

Japan

¥

673,796

EuropeNorth America andLatin America¥

28,076

Ireland¥139,830

Asia

Other

¥

21

¥

$

5,045,653

EuropeNorth America andLatin America$

210,250

Ireland344¥$

1,047,106

Asia

Other

$

162

$

Impairment losses

¥

2,048

Financing

¥

Other

–

¥

Corporate/ Elimination

642

¥

–

Total

¥

842,070

Amortization and unamortized balance of goodwill for each reportable segment
FY2022 (From April 1, 2022 to March 31, 2023)
Millions of yen

Total

2,582

$

6,305,754

Lease and Installment
Sales

Balance at end of period

Notes: 1. The figures shown are presented according to the respective countries and regions of the Company and its consolidated subsidiaries.
 he following geographic categories primarily include the respective countries and regions shown below.
2. T
North America and Latin America: United States, Canada, Mexico
Europe: United Kingdom, Ireland
Asia: China, Taiwan, Singapore, Thailand

¥

7,631

Financing

¥

4,460

Other

¥

15,893

Corporate/ Elimination

¥

–

Total

¥

Balance at end of period$

57,148Financing$

33,402

Other$

119,020

Corporate/ Elimination

$

–

Total

$

FY2021 (From April 1, 2021 to March 31, 2022)
Millions of yen(2) Property, plant and equipment
Lease and Installment
Sales

Millions of yen

588,509

EuropeNorth America andLatin America¥

209,571

Note: The information about amortization of goodwill is omitted as it is identical to that in segment information.

It is omitted since revenues from external customers in Japan exceeds 90% of net sales on the consolidated statement of income.

¥

27,986
Thousands of U.S. dollars

Lease and Installment
Sales

FY2021 (From April 1, 2021 to March 31, 2022)(1) Revenues from external customers

Japan

2,690

Total

Thousands of U.S. dollars

Japan

Lease and Installment
Sales

21,895

Ireland¥

116,431

Asia

Other

¥

27

¥

Total

121

¥

726,984

Notes: 1. The figures shown are presented according to the respective countries and regions of the Company and its consolidated subsidiaries.
2. The following geographic categories primarily include the respective countries and regions shown below.
North America and Latin America: United States
Europe: United Kingdom, Ireland
Asia: China, Taiwan, Singapore, Thailand

3. Information for each of main customers

Balance at end of period¥

196

Financing

¥

4,784

Other

¥

16,252

Corporate/ Elimination

¥

–

Total

¥

21,234

Note: The information about amortization of goodwill is omitted as it is identical to that in segment information.

Information about gain on bargain purchase for each reportable segment
FY2022 (From April 1, 2022 to March 31, 2023)
Not applicable
FY2021 (From April 1, 2021 to March 31, 2022)
Not applicable

FY2022 (From April 1, 2022 to March 31, 2023)
	It is omitted since among the revenues from external customers, there are no specific customers accounting for 10% or more of net sales on
the consolidated statement of income.
FY2021 (From April 1, 2021 to March 31, 2022)
	It is omitted since among the revenues from external customers, there are no specific customers accounting for 10% or more of net sales on
the consolidated statement of income.

119

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Financial Section

About Us

Related parties

Top Message

Shared Value Story

Strategy & Action

Financial Section &Corporate Date

Corporate
GovernanceManagement

FY2021 (From April 1, 2021 to March 31, 2022)

1. Related party transactions(1) Transactions of the company reporting the consolidated financial statements with related parties
Parent company of the company reporting the consolidated financial statements and major shareholders (limited to companies, etc.), etc.

Type

Name

Location

Business
Capitalor(Millions of yen)occupation

Percentage
Relationsof votingwithrightsrelatedholding
parties

Transaction
details

Transaction
amount(Millions of yen)Account
title

Year-endbalance(Millions of yen)(held) (%)

FY2022 (From April 1, 2022 to March 31, 2023)

Type

Name

Location

Businessor(Millions of yen)occupation
CapitalPercentage
Relationsof votingwithrightsrelatedholding
parties

Transaction
details

Transaction
amount(Millions of yen)Account
title

Year-endbalance(held) (%)

Major
shareholder

Type

Hulic Co.,
Ltd.

Name

Chuo-ku,Tokyo

Location

Direct(Holdings)
5.3¥111,609

Capital(Thousands of
U.S. dollars)

Real estateleasingbusiness Direct (Held)
14.0

Businessor
occupationLeasetransactions

Lease
payments
received

Purchase ofoperating Purchase ofoperatingassetsassetsSale ofoperating
Sale ofassetsoperatingassetsPercentage
Relationsof votingwithrightsrelatedholding
parties¥67

Lease
receivables
andinvestments
in leases

Major
shareholder

Majorshareholder

Hulic Co.,Ltd.

Chuo-ku,Tokyo

Direct(Holdings)
5.3$835,772

Hulic Co.,Ltd.

Chuo-ku,Tokyo¥111,609¥17,259¥41,758

Real estateleasingbusiness Direct (Held)
14.0

Purchase ofoperating Purchase ofoperatingassetsassetsSale ofoperating
Sale ofassetsoperatingassets¥4,710¥63,012¥26,960¥2,559(2) Transactions of consolidated subsidiaries of the company reporting the consolidated financial statements with related parties¥65,740

Parent company of the company reporting the consolidated financial statements and major shareholders (limited to companies, etc.), etc.
FY2022 (From April 1, 2022 to March 31, 2023)
Not applicable

Transaction
details

Transaction
amount(Thousands of
U.S. dollars)

Account
title

Year-endbalance(Thousands of
U.S. dollars)

FY2021 (From April 1, 2021 to March 31, 2022)
Not applicable

2. Notes to parent company and significant associates
Leasepayments
received

Purchase ofReal estate
operating Purchase ofleasing
operatingassetsbusiness Direct (Held)
assets14.0
Sale ofoperating
Sale ofassetsoperatingassets$508

Lease
receivables
andinvestments
in leases(1) Parent company’s information$129,246

There is no parent company.
(2) Summary financial information for significant associates
There are no significant associates.

$312,705

XXIV. Information on special purpose entities
1. O
 verview of special purpose entities subject to disclosure and of transactions using special purpose entities subject to disclosure$492,287

Notes: 1. Lease transactions are concluded upon submission of estimates based on actual market conditions, and are subject to the same terms and conditions as general transactions.
 he purchase and sale of operating assets is determined based on the actual market price. The transaction amount records the total transaction amount that occurred in the
2. T
fiscal year ended March 31, 2023.

For the diversification of funding sources and stable financing, the Company promotes securitization of lease receivables, etc. The Company use
stock companies as special purpose entities.
When performing the securitization, the Company transfers the lease receivables, etc. to special purpose entities and receives the funds asproceeds from the transfer of the assets to the special purpose entity through a loan, etc.
As a result of the securitization, the Company has transactions outstanding with the following special purpose entities. The Company owns
shares, etc. with voting rights of the special purpose entities and the employees of the Company concurrently are assigned as corporate officer
positions by the entities.
Millions of yen

Total value of assets as of the latest balance sheet(without elimination of inter-company transactions)
Total value of liabilities as of the latest balance sheet(without elimination of intercompany transactions)Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

Three companies

Two companies

Three companies

Number of special purpose entities

121

Lease
receivables
andinvestments
in leases

Notes: 1. Lease transactions are concluded upon submission of estimates based on actual market conditions, and are subject to the same terms and conditions as general transactions.
 he purchase and sale of operating assets is determined based on the actual market price. The transaction amount records the total transaction amount that occurred in the
2. T
fiscal year ended March 31, 2022.

(held) (%)

Lease
transactions

Direct(Holdings)
5.3(Millions of yen)Leasetransactions

Lease
payments
received¥

21,557
21,550¥19,60819,603$

161,428
161,378

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Financial Section

About Us

2. Amount of transactions, etc. with special purpose entities subject to disclosure

Top Message

Shared Value Story

Strategy & Action

Management

4. Calculation basis of basic earnings per share and diluted earnings per share is as follows

FY2022 (From April 1, 2022 to March 31, 2023)

Millions of yen

Transferred assets (Note 1)¥

Lease receivables and investments in leases

2,817

$

76

AmountItem(Thousands of U.S. dollars)

Lease receivables and investments in leases¥

Major gain or loss

Amount of major transactions or thebalance as of the end of the fiscal year

Transferred assets (Note 1)

Basic earnings per share(Millions of yen)

Gain on transfer(Note 2)

$

574

¥

(Millions of yen)

Gain on transfer(Note 2)

15,996¥

141–

Profit attributable to owners of parent attributable tocommon shares

38,93933,886

291,597

Average number of shares during the period (thousands shares)

29,97029,97429,970

Diluted earnings per share

¥

–

$

–

190
–

158
–

XXVI. Subsequent events
Corporate bond issuanceFuyo General Lease Co., Ltd., No. 36 unsecured straight bond(2) Issuance amount:¥20,000 million (U.S.$149,768 thousand)(3) Issuance date:June 7, 2023

(4) Issue price:¥100 per ¥100 of face value(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 – March 31, 2023)(5) Coupon rate:

0.270% per year

¥

91.57

(6) Redemption date:June 5, 2026

(7) Use of proceeds:

To fund capital investments

U.S. dollars
FY2021

12,227.88¥

FY2022

11,121.96$

Basic earnings per share

1,299.27

1,130.52

9.73

Diluted earnings per share

1,292.42

1,123.38

9.68

Notes: 1. T reasury shares are deducted when calculating the number of common shares as of the fiscal year-end, used in the computation of the net assets per share and includes theCompany’s shares owned by the Board Benefit Trust (BBT). The number of treasury shares owned by the Board Benefit Trust (BBT) as of the fiscal year-end is 149,800 shares forthe fiscal year ended March 31, 2023 and 177,100 shares for the fiscal year ended March 31, 2022.
 reasury shares are deducted when calculating the average number of shares during the period, used in the computation of the basic earnings per share and includes the Com2. T
pany’s shares owned by the Board Benefit Trust (BBT). The average number of treasury shares owned by the Board Benefit Trust (BBT) during the period is 151,368 shares forthe fiscal year ended March 31, 2023 and 121,150 shares for the fiscal year ended March 31, 2022.
3. Calculation basis of net assets per share is as follows.

Millions of yen

Thousands of U.S. dollars

As of March 31, 2023

As of March 31, 2022

As of March 31, 2023

¥

¥

$

409,437

374,239

3,066,031

42,79541,405

320,467

541

650

4,058

42,25340,754316,409

Net assets attributable to common shares

366,642

332,834

2,745,565

Number of common shares as of the fiscal year-end used in
the calculation of net assets per share (thousands shares)

29,98429,92529,984

Of which, non-controlling interests–(1) Issue name:

FY2022

Of which, share acquisition rights¥

1. Fuyo General Lease Co., Ltd., No. 36 unsecured straight bondYenAmounts excluded from total net assets–
158

The Company issued straight bonds as follows:

XXV. Per share information

Total net assets

291,597

AmountItem

Notes: 1. The amount of transactions related to transferred assets is the book value as of the time of transfer.
2. Gain on transfer related to transferred assets is presented in net sales.

Net assets per share$

Major gain or loss

Amount of major transactions or thebalance as of the end of the fiscal year
(Millions of yen)¥

33,886–

Residual securities that are not dilutive and not included in
the calculation of diluted earnings per share

Lease receivables and investments in leases¥–

Increase in the number of common shares (thousands shares)

FY2021 (From April 1, 2021 to March 31, 2022)

Transferred assets (Note 1)

38,939Amount not attributable to common shareholders

Adjustments to profit attributable to owners of parent

Notes: 1. The amount of transactions related to transferred assets is the book value as of the time of transfer.
2. Gain on transfer related to transferred assets is presented in net sales.

123

Profit attributable to owners of parent(Thousands of U.S. dollars)

Gain on transfer(Note 2)21,095

FY2022(April 1, 2022 – March 31, 2023) (April 1, 2021 – March 31, 2022) (April 1, 2022 – March 31, 2023)

Amount

Item(Millions of yen)Thousands of U.S. dollars
FY2021

FY2022Major gain or loss

Amount of major transactions or thebalance as of the end of the fiscal year

Financial Section &Corporate Date

Corporate
Governance2. Fuyo General Lease Co., Ltd., No. 37 unsecured straight bond(1)Issue name:

Fuyo General Lease Co., Ltd., No. 37 unsecured straight bond(2)Issuance amount:¥20,000 million (U.S.$149,768 thousand)(3)Issuance date:June 7, 2023

(4)Issue price:¥100 per ¥100 of face value(5)Coupon rate:

0.435% per year(6)Redemption date:June 7, 2028

(7)Use of proceeds:

To fund capital investments

Fuyo Lease Group Integrated Report 2023

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Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Corporate
Governance

Financial Section &Corporate Date

Independent Auditor’s Report

125

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126

Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Corporate
Governance

Financial Section &Corporate Date

Independent Auditor’s Report

127

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128

Financial Section

About Us

Top Message

Shared Value Story

Strategy & Action

Management

Corporate
Governance

Financial Section &Corporate Date

Independent Auditor’s Report

129

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130

Stock Information / Participation in Initiatives

Stock Information

About Us

証券会社
Securities
companies

個人
Individuals

26名
22 shareholders
246千株
246,000 shares

22,07022,070名
shareholders
2,634千株
2,634,000
shares11%%

Total number ofauthorized share

100,000,000 shares

Number of shares
outstanding

30,288,000 shares

外国人
Foreign
Shareholders

Share unit number

100 shares

285名
2854,981千株
shareholders
4,981,000 shares

Number ofshareholders

Strategy & Action

Corporate
GovernanceManagement

Financial Section &Corporate Date

9
9%%

16
16%
%

22,622

Shared Value Story

Participation in Initiatives

As of March 31, 2023

Stock Overview

Top Message

金融機関
Financial
Institutions

39%%
39
41名

Breakdown of
Shareholders

41 11,758千株
shareholders
11,758,000 shares

その他国内法人
Other
domestic
firms

35
35%
%

200名
200
shareholders
10,669千株
10,699,000 shares

UNGC: United Nations Global Compact

TCFD: Task Force on Climate-related Financial
Disclosures

The United Nations Global Compact(UNGC) is a voluntary initiative inwhich companies and organizations
and organizations participate in thecreation of a global framework forsustainable growth by demonstrating
responsible and creative leadership.
We became a signatory in January
2018.

TCFD is a task force established by
the Financial Stability Board (FSB)
to provide a framework for climatechange related disclosures. In May
2019, the Company expressed its
endorsement of the TCFD Recommendations and has implemented
information disclosures based on therecommendations.

Ellen MacArthur Foundation

Financial Behavior Principles for the Formation of a
Sustainable Society

The Japan Circular Economy
Partnership (J-CEP)

The Principles for Financial Action forthe 21st Century were formulated as
the policy recommendation for financial
institutions seeking to fulfill their roles
and responsibilities in forming a sustainable society. Fuyo Lease signed theprinciples in June 2016.

A partnership in which companies
aiming to realize a sustainable society
work to promote a circular economy incollaboration with residents, governments, universities and other organizations. Fuyo Lease has been a member
since the time of J-CEP’s foundation in
October 2021.

RE100
Renewable Electricity 100

JCLP: Japan Climate Leaders’ Partnership

RE100 member companies commit
to a target of 100% renewable energy
use in their businesses by 2050. Fuyo
Lease became a member in September 2018, announced targets of 50%
renewable energy use by 2024 and100% by 2030.

Fuyo Lease became an executive
member of JCLP, a coalition of companies working toward a sustainable,
zero-carbon society, in December
2018. As well as engaging in ourown zero-carbon initiatives, we are
involved in a broad range of activities
that address climate change, such asproviding solutions that will help thetransition to a zero-carbon society,collaborating with global networks,
and making policy recommendations.

Major Shareholders (Top 10)
Shareholders

Hulic Co., Ltd.

Number of shares held

Shareholding ratio(in thousands)

(%)

4,218

14.0%

The Ellen MacArthur Foundation is aninternational charity with a mission toaccelerate the transition to a circular
economy. We became a Member of
the Foundation’s Network in November 2020 to acquire knowledge of thecircular economy and collaborate withother companies and organizations.

Principles for Financial Action for the
21st Century

The Master Trust Bank of Japan, Ltd. (Trust Account)

2,608

8.7%

Meiji Yasuda Life Insurance Company

2,555

8.5%

Retirement Benefit Trust managed by Mizuho Trust & Banking Co., Ltd. (Marubeni
Corporation account); Custody Bank of Japan, Ltd. as a Trustee of Retrust

1,512

5.0%

Custody Bank of Japan, Ltd. (Trust Account)

1,241

4.1%

Sompo Japan Insurance Inc.

1,002

3.3%

Inclusion in ESG-related Stock IndicesAzbil Corporation

1,000

3.3%

Mizuho Bank, Ltd.

907

3.0%

We are strengthening our environment, social, and governance(ESG) initiatives as well as progressing CSV activities to solve

NICHIREI CORPORATION

416

1.4%

Tokio Marine & Nichido Fire Insurance Co., Ltd.

400

1.3

Third-Party Evaluationsocial problems.
We have been evaluated by the following third-party organizations that mainly evaluate companies based on nonfinancial
information.

Evaluation of Our Initiatives

千代田区温暖化配慮行動計画書制度

The Company received theGold Award (Ministry of theEnvironment Award) in the bonds
category of the ESG FinanceAwards in fiscal 2019, and theSpecial Prize in the indirect
finance category in fiscal 2021.

We were recognized by the
Ministry of the Environment as
an excellent business under the
ESG lease business Certificationof Excellent Efforts.

Fuyo Lease was awarded ‘Grand
Prize’ under the evaluation of the
Chiyoda City Global Warming
Action Plan Initiate for 2021.

The Company’s “Fuyo Lease
Group Integrated Report 2020”
received the Excellence Award in
the Environmental Reporting category of the 24th Environmental
Communication Awards hosted
by the Ministry of the Environment
and Global Environmental Forum.

We received Platinum Kurumin
certification in fiscal 2017, which
is awarded to companies with
Kurumin certification that haveexecuted initiatives at a higher
standard.

Under the 2023 Certified Healthand Productivity Management
Organization (Large Enterprise
Category), we were recognizedby the Ministry of Economy,
Trade and Industry and Nippon
Kenko Kaigi (Japan HealthCouncil) as a listed company
carrying out excellent health andproductivity management.

In fiscal 2021, the Company was certified as an “Eruboshi” company
as it has met specific criteria (recruitment, continuous employment,
way of working including working hours, percentage of female managers, diverse career paths) for certification as an excellent company
promoting the advancement of women in the workplace, etc. under the
Act on the Promotion of Female Participation and Career Advancementin the Workplace.

We entered the PRIDE Index
2022, which assesses efforts
to make workplaces welcoming
to sexual minorities, and wereawarded Bronze certification.

Annual dividend per share (Yen)

390

400

(Forecast)

350

343

300

285

250
200

188

150
100

※

240

130

205

146

100

50
0
2016/3131

2017/3

2018/3

2019/32020/32021/32022/32023/32024/3(Forecast)* The inclusion of Fuyo General Lease in any MSCI Index, and the use of MSCI logos, trademarks, service marks or Index names herein, do not constitute a sponsorship, endorsement
or promotion of Fuyo General Lease by MSCI or any of its affiliates. The MSCI Indexes are theexclusive property of MSCI. MSCI and the MSCI Index names and logos are trademarks orservice marks of MSCI or its affiliates.

Fuyo Lease Group Integrated Report 2023

132

Kojimachi Garden Tower, 5-1-1, Kojimachi, Chiyoda-ku, Tokyo 102-0083, Japan
Phone: +81-3-5275-8800

https://www.fgl.co.jp/eng/

For inquiries about “Integrated Report 2023,” please contact: