FUYO LEI\SEFuyo Lease Group Integrated Report

2018
Full ReportCorporate Slogan

Go where no one has gone before
We b eli e ve.
Leasing is not just about lending things.
It's about lending inspiration, intelligence and a sense of wonder.
We b eli e ve.
We embrace challenges, because they are the fountain of new business.
We b eli e ve.
Meeting expectations is our duty. Exceeding them is our profession.
We b eli e ve.
Succeeding is easy when times are good, but true partners are there even in the hard times.
We ac t .
To open up new business opportunities in this country, we will take the first bold step.
We will expand the frontier of leasing.
We are Fuyo L ease.
Our corporate slogan, Go where no one has gone before, embodies the Fuyo Lease Group's mission of sincerely
responding to customers needs and providing them with solutions that exceed their expectations, as well as ourcommitment to pioneering new business frontiers.

Management Philosophy• We support corporate activities through our leasing business with view to contributing todevelopment of the society.
• We maintain customer's first philosophy, providing best services.
• We aim to earn high marks from shareholders and markets while pursuing creativity and innovation.
• We create a challenging and rewarding workplace where employees think and act on their own.

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Fuyo Lease Group Integrated Report 2018

CONTENTS
Message from the President

Editorial Policy
Purpose of this report

P3

Since FY 2018, Fuyo Lease Group has integrated its
CSR Report and Annual Report into an Integrated

Overview and History of Fuyo Lease GroupP7

Our Business

P9

Report. This report is designed to provide informationon our ﬁnancial and non-ﬁnancial activities in an

integrated manner to help the readers assess theGroup's value comprehensively. We also aim to
showcase the foundation of all our activities for

Financial Highlights

P11

Medium-term Management Plan

P13

Value Creation Story

P15

value creation which will help stakeholders better
understand our future corporate values.

ESG information published on the web toReporting period
Materiality

Fiscal year 2017 (April 2017 - March 2018)

P17*The report also includes some information pertaining to ﬁscal 2018.

Special Feature 1 ESCO business

Scope of reporting

P19

Fuyo General Lease Co.,Ltd., its 46 consolidated subsidiaries
Special Feature 2 Accretive

P21

Business Segments Overview

P23

and 4 afﬁliate companies

Reference guidelines
International Integrated Reporting Framework Ver. 1.0
released by the International Integrated Reporting Council(IIRC)

Foundation for Value Creation

P33

Environmental Report

P36

Date of issuance
November, 2018

Note on forward-looking statements
Social Report

P62

Corporate Governance

P90

This report contains forward-looking statements, such as
future plans and strategies, 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

Each Group Company's Environmental
and Social initiatives

P39

Financial Section

P131

Report of Independent Auditors

P175

Stock Information

P176

anticipated. These uncertainties include, but are not limited
to social and economic conditions, market demand andcompetition, laws and regulations, interest rates, andcurrency exchange rates.

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Fuyo Lease Group Integrated Report 2018

Message from the President
Our goal is to“go where no one has gone before”
through continuously expanding the frontiersby creating simultaneouslysocial and corporate value.
President & Chief Executive Officer

Yasunori Tsujita

Expanding Frontiers
venture into new business fields in this ever-changing
world, we will continue to leverage our unique strengths inorder to live up to our corporate slogan: “Go where no one
has gone before.”

We are now in the second year of “Frontier Expansion
2021,” our five-year Medium-term Management Plan
launched in April 2017. As the name implies, “Frontier
Expansion 2021” aims to expand our business operations
into untapped markets. Although it is not always easy to

Fiscal Year 2017 Review
the Japan Leasing Association), the Fuyo Lease Groupsaw profits hit record highs, due partly to the terminationand expiration of large-scale leases in addition to theaccumulation of operating assets such as real estateleases. “Frontier Expansion 2021” got off to a good startwith total revenues increasing 16.4% year-on-year to reach¥590.2 billion, operating profit up 13.9% to total ¥32.6
billion, and ordinary profit up 12.2% to total ¥35.2 billion.

During FY 2017 Japan’s economy remained on a gradual
recovery track as corporate earnings and the nation’s job
market improved. Overall, the global economy also grewsteadily, despite concerns about US trade policies andgeopolitical risks.
While domestic lease transaction volume in FY 2017(ending March 31, 2018) decreased 2.9% year-on-year
to total ¥4,875.9 billion (according to data released by

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Fuyo Lease Group Integrated Report 2018

Concentrating Management Resources and Enhancing Corporate Value
us to identify the areas that generate stable profit and theareas where we should concentrate our management
resources to step things up.
We also use return on assets (ROA) as a key metric to
identify businesses we should consider withdrawing from
if the ROA underperforms. Specifically, in FY 2017, weenhanced operating efficiency by consolidating all small
vendor leasing programs, for which we lacked adequate
resources, into Sharp Finance Corporation, our subsidiarywith vendor leasing know-how.

In order to select Strategic Areas and concentrate on themas we look toward the future, we have introduced theconcept of zone management. Zone management entails
segmenting business operations into four zones that aremanaged individually. More specifically, we have plugged
our operations into an Incubation Zone where the objective
is to create new business options, a Transformation Zone
where the objective is to expand our incubated businesses,a Performance Zone where the objective is to deliver
results in existing businesses, and a Productivity Zone
where the objective is to increase productivity. This helps

Disruptive Innovations

Sustaining Innovations
Performance Zone
(Deliver results from existing businesses)

Transformation Zone (Grow new businesses)

Revenue Performance

Payout period :2–3 years

Strategic Areas

Overseas

AircraftReal EstateCore Areas

Energy/Environment
Medical/Social Welfare
New Domains
Accretive
Asset Value/Business Value

Enabling Investments

Frontier

Group

Auto Leases
Vendor Leases

Frontier
Expansion
2021

Domestic Corporate
Finance

Payout period:
Every year

New Domains
Corporate Department

E.g. Investment in an R & D-driven
venture company
Incubation Zone (Develop new businesses)

Payout period:
During the
Medium-term
Plan

Productivity Zone (Boost productivity)
Reference: Zone to Win: Organizing to Compete in an Age of Disruption(Written by Geoffrey A. Moore, translated by Kiyoshi Kurihara)

We will quickly identify the needs of an ever-changing world and businessenvironment, and use our business operations to provide solutions for problems
facing society to simultaneously create social and corporate value.
change and a declining birthrate coupled with an aging
population, in various ways by leveraging our products andfinancial services.
After realizing that our business activities resonate withthe principles of the United Nations Global Compact, we
gladly expressed our support bybecoming a signatory in January
2018. We believe that supporting
the Ten Principles of the UN Global
Compact and putting them into
practice will lead directly to thegrowth of our company.

The Fuyo Lease Group works continuously to build new
business models in response to changes in the social
environment with the aim of achieving sustainable growth.
We believe this requires identifying social issues andcultivating future markets where we can find solutions. We
are putting this idea into practice in two of our Strategic
Areas specified in “Frontier Expansion 2021,” i.e., Energy/
Environment and Medical/Social Welfare businesses,
based on the concept of Creating Shared Value (CSV),
which involves creating corporate value in a way that also
creates value for society. Our strength lies in the ability
to help solve pressing social problems, such as climate

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Fuyo Lease Group Integrated Report 2018

Message from the President

Our strategies for Energy/Environment, as well as Medical /Social Welfare businesses, aim at achieving sustainable growth,
while solving the social issues facing Japan.
playing field has forced some leasing companies to throw
in the towel. There is no way to provide value or earn anappropriate profit in this kind of competitive environment
with individual, isolated services alone (i.e. dots). The
only way out of this quagmire is to find a way to connect
the dots so they form lines, and then turn those lines intoplanes so we can enhance our services, while forging astrong foundation for the Medical/Social Welfare businessin line with “Pursue Group Synergies,” one of the Three
Strategic Axes under “Frontier Expansion 2021.” Someof the initiatives we are working on include providing
equipment and system lessees with facility relocation
know-how, as well as selling and buying used equipment.
As part of this strategy, in January 2017, we acquired acontrolling stake in Accretive Co., Ltd., which specializes
in factoring medical service fees, etc., and in April 2018,
we acquired FUJITA Co., Ltd., a reseller of used medical
equipment. Our initiatives are completely in synch withthe principles and practices of the Integrated Community
Care System promoted by the Ministry of Health, Labor andWelfare, and should not only boost our bottom line, butalso help solve problems facing Japan, including its rapidly
aging population.
The Healthcare Advisory Office, set up in August 2018,enabled us to offer solutions that integrate a wide rangeof products and services available across our corporategroup. We will continue to work hard to create group-wide
synergies in the Medical /Social Welfare business.

As the need to reduce greenhouse gas (GHG) emissions
is being addressed across the globe, Japan has been
exposed to the negative externalities of nuclear power,
which has resulted in calls for an urgent energy shift. The
Fuyo Lease Group is actively working to reduce indirect
GHG emissions through its financial services, such as
project financing for renewable energy power companies,
as well as through product offerings, including rental andleasing of energy efficient equipment. Furthermore, theFuyo Lease Group directly contributes to the reductionof GHG emissions by growing its solar power business.
The Fuyo Lease Group operates solar power businessin 30 locations across Japan, aiming to increase operating
assets to ¥34 billion (i.e., to double in comparison to theend of FY 2016) by the end of FY 2021, while maintaining
an ROA of 6.0%. The Fuyo Lease Group is steadily improving
the financial results, for example, by launching the largest
solar power plant in our portfolio in FY 2017. To further
demonstrate our commitment to the set policies, we joined
RE100, a business initiative which aims to source 100%
renewable energy to power business activities, a first for acomprehensive leasing company in Japan. We anticipate
more opportunities to collaborate with our stakeholders
including customers.
In the Medical/Social Welfare business, we are
implementing the “dot-line-plane strategy” for healthcare
and nursing care services. It has become common practiceto lease or rent expensive medical equipment, and more
and more companies are entering the market. The crowded

We aim to bring out the best in each of our employees.
We believe that securing personnel with outstanding
expertise is a prerequisite for the sustainable growth ofour business operations. Besides, we must ensure that
we maintain a diverse array of resources so that we canbetter respond to an increasing social diversity and giveour people the kind of expertise that will enable us to stayahead of the pack. That is why we are building a talentpool that enables us to assign the right person to the rightjob regardless of their sex, age, or nationality. In FY 2017,
we established the Diversity Promotion Office to pick up
the pace of recruitment, employment, and empowermentof employees from across the entire spectrum.

Typically for a non-manufacturing company, ourgreatest asset is people. We firmly believe that providing
employees with an environment where they canconcentrate on their jobs and do their best within
the limited amount of time they have is a shortcut tohelping them reach their full potential, and is essential
for maximizing the company’s performance. When
implementing work-style reforms, we engage employees
in the discussion in order to gain better understandingof their perspective. One example of these reforms is
the introduction of staggered hours that led to a gradualreduction of actual hours worked.

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Fuyo Lease Group Integrated Report 2018

We nurture a corporate culture where each employee has a sense of ownership,
and that makes us competitive.
shared values instilled through these practices takeroot throughout the organization, we create a numberof opportunities to talk directly with employees, suchas financial presentations for employees and meetings
with staff at our different locations across the globe. As
the president of the company, I will continue to keep
the lines of communication open in order to drive home
the idea of “staying flexible and taking on impossible
challenges to expand operations,” which is part of our
mission statement.

All employees must join hands to continually take on
new challenges if we are to sharpen our competitiveedge in this tough operating environment. We
formulated “Frontier Expansion 2021” using a bottomup approach that involved all our employees. We use
ROA, not ROE, as a performance indicator becausew e w a n t to r a i s e e a c h e m p l o y e e ’ s a w a re n e s s o f
performance improvement by directing their attention
towards profitability of the company relative to operating
assets through efficiency. In order to ensure that the

Toward long-term profit distribution to shareholders and sustainable growth
In the light of our current financial standing andkey performance indicators, we paid dividends for
FY 2017 (ending March 31, 2018) at a payout ratioof 20.1% and project that the dividend for FY 2018(ending March 31, 2019) will be 156 yen, up 10 yen
year-on-year, with a payout ratio of 20.5%. We will
work to return profits to shareholders by continuing
to pay stable dividends on a long-term basis, whilestrengthening our operating foundation and financial
health, through enhancing shareholders' equity, as wemove ahead with business strategies, such as M & A,
designed to achieve growth.
We are committed to going beyond our
stakeholders’ expectations as we work to expand
our business horizons with the focus on leasing andfinancing, while adapting to changes in society.
We will continue to devote ourselves to becoming
a company that continues to offer value through amultifaceted approach.

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Fuyo Lease Group Integrated Report 2018

Overview and History of Fuyo Lease GroupThe Fuyo Lease Group seeks direct feedback from customers and is fully committed
to customer support in order to resolve management issues, including those related tocapital expenditure and improving work efficiency, as well as making customers' dreams
come true.

1969-

19901994 ・Established Aqua Art Co., Ltd.
1995 ・Established Fuyo Network Service Co., Ltd.
1996 ・Established Fuyo Lease Sales Co., Ltd.
1999 ・Established Nihon Credit Lease Corporation,a joint venture with NICHIIGAKKAN CO., LTD.

1969 ・Established with a capital of 100
million yen
1973 ・Established FGL Service Co., Ltd.
1987 ・Established Fuyo Auto Lease Co., Ltd.
・Established Yokogawa Rental & Lease
Co., Ltd., a joint venture with Yokogawa
Electric Corporation

FGL Service Co., Ltd.

Aqua Art Co., Ltd.

At the headquarters of Fuyo Lease, FGL Service handles thevarious administrative functions of the Fuyo Lease Group andthe non-life insurance agency business.

Aqua Art operates a rental business for tropical ﬁsh tanks, which
replicate the natural environment. Aquariums with tropical ﬁsh andaquatic plants are offered under a comprehensive maintenancesystem.

Fuyo Auto Lease Co., Ltd.

Fuyo Network Service Co., Ltd.

Fuyo Auto Lease streamlines complicated operations relating tocustomers' vehicles and provides total support for rationalizing
management.

Fuyo Network Service sells ICT equipment and software, offers
technical services, including kitting and making various settings,
builds network servers, and erases data, as well as reselling
second-hand PCs.

Yokogawa Rental & Lease Co., Ltd.

Fuyo Lease Sales Co., Ltd.

Yokogawa Rental & Lease offers multi-vendor rental services formeasuring instruments and IT equipment. It always responds
quickly to the diverse needs of customers with an inventory of
cutting-edge equipment ranking at the top level in the industry.

Fuyo Lease Sales handles all of the clerical tasks for leased
assets after their leases expire, as well as sales of used assets.
It also buys and sells customer-owned used assets.

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Fuyo Lease Group Integrated Report 2018

Company name

Fuyo General Lease Co., Ltd.

Headquarters

3-3-23, Kanda-Misaki-cho, Chiyoda-ku, Tokyo 101-8380, Japan

EstablishedMay 1, 1969

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

Shares listed on

First Section of the Tokyo Stock Exchange (ticker : 8424)

Number of employees

Consolidated : 1,715 Non-consolidated : 689 (as of March 31, 2018)

Sales operation

Domestic : Head office sales department and 16 regional sales offices
Overseas : 7 branches altogether from the 6 subsidiaries●

Line of business●●●Leasing and installment sales of IT equipment, office equipment,
industrial machinery/machine tools, commercial /service equipment,
medical devices, transportation equipment (ships, aircrafts,
automobiles, etc.), civil engineering and construction machinery, etc.
Commercial loans and other financial services
Leasing of real estates
Consultative services, etc.

2000-

2010-

2001 ・Merged with YTB Leasing Company, Limited
2002 ・Merged with Yasuda Lease Co., Ltd.
・Succeeded lease and financial business spunoff from Fuyo General Development Co., Ltd.
2004 ・Listed on the First Section of the Tokyo
Stock Exchange
2008 ・Made Sharp Finance Co., Ltd., a consolidated subsidiary2012 ・Conducted an absorption-type merger ofsubsidiary Japan Mortgage Co., Ltd.
2014 ・Acquired Aircraft Leasing and Management
Limited as a consolidated subsidiary2017 ・Made Accretive Co., Ltd. a consolidated subsidiary2018 ・Made MAICA, which owns TDF (Canada),
an equity-method affiliate.
・Made FUJITA Co., Ltd. a consolidated subsidiary

Nihon Credit Lease Corporation

Accretive Co., Ltd.

Nihon Credit Lease leases nursing care equipment, such as
wheelchairs and electric beds.

Accretive provides highly convenient services, such as theconsignment of business operations, focusing mainly on
factoring business for medical and nursing care receivables.

Sharp Finance Co., Ltd.

TDF Group Inc.

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

Based in Canada, TDF rents, leases, and sells pickup trucks inNorth America.

Aircraft Leasing and Management Limited(ALM)

FUJITA Co., Ltd.
Fujita has expertise and experience in the one-stop contract
business, which ranges from demolition and removal to purchaseand sales of large second-hand medical equipment. In addition, it
also sells the latest equipment such as MRI, CT, and ultrasonicequipment, as well as second-hand medical equipment.

ALM provides comprehensive services related to aircraft
including marketing for aircraft leasing, aircraft management,
sales of aircraft after leases expire, and advisory services.

8

Fuyo Lease Group Integrated Report 2018

Our Business
Description of Business Operations in Each Segment
In addition to our core business focused on leasing information
technology and office equipment, industrial machine tools,
and others, we lease real estate, transportation equipment,
and medical equipment (plus sales of assets after expiration or
termination of their leases), as well as offer installment sales ofcommercial equipment, manufacturing equipment, hospital
equipment and other equipment across the globe.

Leasing andInstallment
Sales

Leasing
We provide finance leases where we buy machinery or
equipment the client needs and rent it to them for a relatively
long term at a fixed rate in addition to the operating lease
where the asset is leased at a rate calculated on the basis of
the value of the asset minus the residual estimated value at theend of the lease.
Installment sales
An installment sale is an arrangement where we buy
machinery or equipment on behalf of our clients who will pay us
back in installments over an extended period of time. We offer
installment sales when the client wants to acquire an asset thatis not suitable for leasing due to tax reasons or simply when theclient wants to own an asset.

We offer a wide range of financing programs tailored to ourclients' needs, including various types of loans and factoring
options, in order to help fulfill their capital needs.

Financing

Financing programs
If a client is looking to invest in equipment or liquidate,acquire, or develop real estate, we offer financing programs,
such as nonrecourse loans, to help fulfill their capital needs.
Factoring
We buy our clients’ receivable accounts to help them meettheir immediate cash needs and improve their cash flow.

Segment Overview■ Executed contract volume ■ Operating assets

Gross proﬁt(Billions of yen)(Billions of yen)

2,500

50
43.6

2,000

38.0
35.4

40.4

40

34.9

1,500
1,275.730

1,589.5

1,497.7
1,372.8

1,311.4

1,000
500
0

20

469.3

467.0

512.4

586.1

613.5

10
0

2014/3 2015/3 2016/3 2017/3 2018/3■ Executed contract volume ■Operating assets

Gross proﬁt(Billions of yen)(Billions of yen)

1,000

12.5
10.1

800

10.0

7.9
600

7.5

6.7
5.8

5.6

528.7

472.6

400

559.6
487.9

5.0

404.1
317.8

200

2.5

247.8
191.8

184.0

121.4

0

We also work in the areas of energy and the environment, in
addition to serving as an anonymous association in various
business ventures.
Solar power generation
Since launching the solar power generation business in
2012, we have opened numerous large-scale solar power plants
throughout Japan that continuously supply renewable energy.

Other

Japanese operating lease
Our aircraft operating lease (rental) business offers great
opportunities for investors. We employ the expertise we havegained over the years to work for our clients with a wide rangeof solutions designed to meet their exact needs, including
everything from anonymous associations to aircraft ownership
options.
In addition to aircrafts, we also offer investment opportunities
in ships, marine containers, and more.

9

2014/3 2015/3 2016/3 2017/3 2018/3

0■ Executed contract volume ■ Operating assets

Gross proﬁt(Billions of yen)(Billions of yen)

30

9.0
7.5

25

7.0

6.9

6.7

20

6.0
19.7

5.9

18.0

15
10

17.2

4.5
3.0

11.6

5

5.7
4.0

0

7.5

6.3

7.1

1.5
0.2

3.6

2014/3 2015/3 2016/3 2017/3 2018/3

Fuyo Lease Group Integrated Report 2018

0

Activities during the Last Fiscal Year
●

●

●

●

●

Strengths of Fuyo General Lease

Real Estate : Operating assets increased sharply year on year
because we launched large contracts in collaboration with leading
developers and companies operating multiple stores.

●

Medical /Social Welfare : We worked together with our partners on
joint initiatives that focused on business alliances and investments,
including building leases for welfare and nursing care facilities.

●

Aircraft: We made leasing arrangements for aircraft of our own andexecuted our first engine operating lease, steadily expanding thescope of the business.
●

Overseas : We obtained excellent non-Japanese assets byacquiring local companies, such as a Canadian pickup truck rental
and leasing company, which became an equity-method affiliate.
Core Areas : In regards to Domestic Corporate business, we haveachieved multifaceted business transactions in real estate andoverseas business as a result of our proposal to introduce a widearray of solutions addressing customer needs. Our Vendor Leases
business also enjoyed growth as a result of the expansion ofpartnerships with major dealers. In our Auto Leases business, joint
efforts with Group companies and business partners pumped up
the value of contracts signed, which has resulted in a year on year
increase in the number of vehicles in our inventory.

●●

Financing programs● The accumulation of non-recourse financing and the steady
growth of investments (e.g. investment funds) led to an increase in
the operating assets of our financing business.

Aircraft : Aircraft expertise gained while expanding operations
to become the first in the industry to make inroads into Ireland,
the primary aircraft market, in 1999, and from acquiring UKbased ALM in 2014.
Overseas : Extensive customer base built on the Mizuho
Group's network, as well as a steady track record of operating
businesses in the US and Hong Kong for approximately 30 years.
Core Areas : Customer base dominated by large corporations
built on the Mizuho Group's network and high capability tomake proposals to address customer needs. Our venderleasing business has a high market share and firm business
relations with business partners.

Financing programs
Ability to provide services tailored to customers’ needs byleveraging various financing programs, including not only
conventional corporate loans but also fund investments andbusiness-related investments as well as investments andlending positioned as balance sheet solutions.

Factoring● Delivering unique factoring services, which integrate ourfinancial and outsourcing businesses in addition to factoring
services specialized for medical and nursing-care institutions
in cooperation with our business alliance partners.

Accretive leveraged our network to forge partnerships withfinancial institutions and signed new contracts mainly with
regional banks, which resulted in an increase in transactions withmedical and nursing care institutions.

Solar power generation
Operational performance record with 30 solar power plants inJapan (as of end of March 2018). Our organizational structure,
which allows us to provide one-stop services for customers
from the development of the plants to its operation.

Solar power generation● Our new solar power plant went into operation in fiscal 2017,
which means we are now operating 30 solar power plants acrossJapan and generating 102 MW of electricity.
●

Medical /Social Welfare : A proven track record of providing
leases for elderly homes in collaboration with partnercompanies, despite the greater difficulties these types offacilities pose in comparison to leases for commercial facilities,
as well as one-stop services provided through our group-widebusinesses.

●

Factoring● The volume of executed contracts has soared since we madeAccretive a consolidated subsidiary in January 2017. We are
expanding the frontiers of our operations through its factoring
service for medical receivables as well as other services.
●

Real Estate : First in the industry to offer real estate leases,
outstanding product development capability, and a broad realestate leasing customer base.

●

We are looking forward to launching our largest solar projectin Fukushima, and are currently making arrangements to start
construction in the summer of 2018.

Japanese operating lease● Know-how gained from years of project arrangement
experiences. Good relationships with investors and stablecustomer base.

Japanese operating lease● The substantial customer demand enabled us to execute theorigination and distribution of new leasing arrangements in aconstant manner.

Capital turnover business● Ability to structure securitized products using various
methods and schemes including the securitization of leasereceivables. Broad customer base consisting mainly offinancial institutions.

Capital turnover business
Capital turnover business, which seeks to improve capitalefficiency through the liquidation of Fuyo Lease's operating
assets, launched a specialized unit to arrange liquidation projects
and deliver sales presentations to investors mainly from financial
institutions.

●

10

Fuyo Lease Group Integrated Report 2018

Financial Highlights
Executed contract volume

Operating assets

1,105.0 billion yen

2,168.7 billion yen(+32.5% year on year)(+6.1% from the end of previous FY)

ROA

1.67%
(+0.06 points from the end of previous FY)■ Leases■Installment sales■Financing and other■ Leases(Billions of yen)

1,200

■Financing and other

(%)

2.5

491.5

2,043.6

2,000

800
665.0
594.8

198.1

125.5
71.7
397.6

400

70.2
396.8

248.0

703.6
191.1

62.7
523.4

58.8
453.6

49.9
563.6

1,863.5

1,599.2
1.64%

1,727.1
1.59%

1.63%

1,500

323.5

1,000

123.0
1,152.8

415.7
134.8
1,176.5

490.6
128.8
1,244.0

834.2

600

127.9
1,369.8

579.2

2015/3

2016/32017/3115.1
1,474.4

1.0

0.0
2015/3

2016/3590.2 billion yen

35.2 billion yen(+16.4% year on year)(+12.2% year on year)

590.2
29.9

600

400

61.1
364.3

472.3
18.5
65.2
388.6

493.7
19.9

21.9 billion yen(+9.9% year on year)■Financing and other(Billions of yen)

441.7
16.3

2018/3

Ordinary profit

Profit attributable toowners of parent

500

2017/3Operating assets rose 6.1% from the end of the previous fiscal year
to total 2,168.7 billion yen, while ROA increased 0.06 points fromthe previous fiscal year end to reach 1.67%. This uptick was theresult of steadily implemented strategies aimed at accumulating
high-quality assets to improve ROA.

Total revenue■Installment sales

1.5

0.5

2014/3

2018/3

2.0

1.67%

0
2014/3The executed contract volume soared 32.5% year on year to top
one trillion yen for the first time, due largely to contracts signedby Accretive.

300

545.9
1.61%

2,168.7500

200■ Leases

ROA

2,500

1,105.0

1,0000■Installment sales(Billions of yen)

507.0
21.5

53.8

62.3

420.0

423.2

■ Ordinary proﬁt■ Proﬁt attributable to owners of parent

ROE(Billions of yen)

(%)

40

49.1

9.2%

9.2%

10.0

8.6%

511.2
30

7.7%

35.2

7.4%
29.2

7.5

31.4

26.5

25.4
20

20.0

21.9

5.0

17.5

200
10

100
0
2014/3

2015/3

2016/32017/30

2018/3

Total revenue soared 16.4% year on year to reach 590.2 billion yen
due to growing sales driven by bridge financing contracts, as we
acquired a number of operating assets, such as real estate leases.

13.0

14.2

2014/3

2015/3

2.5

2016/32017/3

2018/30

Ordinary profit increased 12.2% year on year, hitting a record highfor the first time since the fiscal year ended March, 31, 2012, andprofit attributable to owners of parent also hit a record high for thesecond year in a row due to higher total profits as a result of growing
lease revenues, consolidation of Accretive, and other factors.
11

Fuyo Lease Group Integrated Report 2018

Total assets

Net assets

2,430.8 billion yen

282.6 billion yen(+5.7% from the end of previous FY)(+9.0% from the end of previous FY)■ Total assets■ Net assets

Equity ratio(Billions of yen)(Billions of yen)

3,000

(%)

300

282.6

15

10.2%

10

259.2
2,300.1
2,000

1,851.9

2,430.8

2,113.4

1,987.6

200

1,000

0

2014/3

2015/3

2016/32017/30

2018/3■ Short-term loans

9.9%

38.3%

2015/3

2016/32017/3

2018/30

7.3 billion yen(+3.0% year on year)■CP■Corporate bonds

Direct ﬁnancing ratio

38.2%

2,000

476.9

2014/3

Capital costs and yield on funding*

34.3%

1,373.9
70.0
148.6
307.7

5

1,965.0 billion yen■Long-term loans(Billions of yen)

1,528.9
80.0
130.0
374.7

1,680.1
60.0
123.8
393.2
666.7

33.4%
1,850.9
90.3
107.3
419.7

34.1%
1,965.0
110.0
85.9
473.7

■ Capital costs

Yield on funding(%)(Billions of yen)

40

10

1.0

(%)

30

8

0.8

20

6

0.6

0.52%
0.47%

777.0

828.0
10

4

0

2

0.45%

0.42%

0.40%

0.4

533.6
6.8

500
0

9.8%

(+6.2% from the end of previous FY)■ Securitization of lease receivables

1,000

9.8%

The equity ratio rose 0.3 point from the previous fiscal due to anincrease of the operating assets with an aim to improve ROA.

Funding balance

1,500

10.1%

202.6

100

Due to an increase in operating assets, total assets rose 5.7% fromthe end of the previous fiscal year to reach 2,430.8 billion yen.

2,500

222.5

232.5

370.7

410.6

436.5

456.6

467.3

2014/3

2015/3

2016/32017/3

2018/30

2014/3

6.6

6.9

7.1

7.3

2015/3

2016/32017/3

2018/30.2
0.0* Formula for calculating yield on funding:(Capital cost - non-operating interest income + non-operating interest
expense + bond issuance cost) /average fund balance ×100%

Due to an increase in operating assets, the funding balance rose
6.2% from the end of the previous fiscal year.

Yield on funding continued to decline and an increase in thecapital cost remained 3.0%.

12

Fuyo Lease Group Integrated Report 2018

Medium-term Management Plan (FY2017-FY2021)
VisionFrontier Expansion 2021: “Go where no one has gone before”
Aiming to be a corporate group that moves into uncharted business and continues to expand the frontiergone before,” and by untiring challenges of new businessfields and business models in order to expand the frontierof our business portfolio.

The Fuyo Lease Group aims to achieve strong sustainablegrowth amid the significantly changing businessenvironment surrounding the domestic leasing businessby fulfilling the corporate slogan of “Go where no one has

Overview of Strategies and Goals
Operating Assets
2,043.6 billion yen

2,168.7 billion yen

Interim Goal

Target Value

2,300.0〜2,400.0 billion yen

2,500.0 billion yen

TargetPerformance
Indicators

2.0%
1.7〜1.8%
ROA
1.61%
Ordinary
Profit31.4
billion yen

2017 / 3

Business
Strategy

Strategic
Area

Real Estate

Core
Areas

• Domestic Corporate

1.67%

50.0
billion yen

38.0〜42.0
billion yen

35.2
billion yen

2018 / 3

Medical/Social Welfare• Finance

2020 / 3

Energy/Environment

Aircraft

2022 / 3

Overseas

New Domains• Vendor Leases • Auto Leases

Management Strategy**Strategies to strengthen the management foundation
which supports the execution of business strategies

Key Performance Indicators and Progressplan, we saw both operating assets and ROA increase year
on year after acquiring a number of quality assets suchas real estate leases. In addition, as ordinary income hit arecord high since the fiscal year ending March 31, 2012,
our performance is off to a good start. We will continue tomove ahead with our business operations with the aim ofachieving our set targets.

We have set performance targets for operating assets,
return on assets (ROA), and ordinary profit for the fiscal
year ending March 31, 2022, the final year of the current
five-year Medium-term Management Plan, in addition to
the interim targets set for the fiscal year ending March
31, 2020, the plan’s third year. During the fiscal year that
ended March 31, 2018, which was the first year of the
13

Fuyo Lease Group Integrated Report 2018

Selection and Concentration in
Strategic Areas

2 Challenge the Frontier
One of our core efforts in terms of entering new
businesses and expanding our business domain is to plant
new business seeds, cultivate them, and have them bear
fruit during the Medium-term Management Plan period.
Through businesses focusing on asset value risk-taking,which is a unique area of expertise for us as a leasing
company, as well as businesses relying on businessvalue for further expansion of the frontier, we will advanceour highly-competitive businesses that go beyond ourconventional framework of relying on corporate risk, andbuild a foundation for improving profit-earning capabilities
and achieving sustainable growth.

Frontier Expansion 2021 is comprised of a businessstrategy centered on the business promotion side andof a management strategy centered on bolstering themanagement foundation that supports the businessstrategy.

Business Strategy
After establishing six Strategic Areas and four Core
Areas of focus, we have formulated individual strategies
and policies to target the focus Areas.
Strategic Areas

Core Areas

Areas positioned as growth drivers
and designated for concentrationof management resources

Areas designated for market(customer base) maintenance andexpansion through efficient sales
operations through activities suchas intra-Group collaboration

Real Estate

Domestic Corporate

Medical/ Social Welfare

Finance

Energy/Environment

Vendor Leases

Aircraft

Auto Leases

Results in FY 2017 :We leveraged our network to forge partnerships with financial
institutions and make further progress with FPS Medical service(Factoring for medical receivables and nursing care receivables).
New contracts signed particularly with regional banks, resulted in an
increase in transactions with medical and nursing care institutions.

3 Pursue Group Synergies

Overseas

Group companies will do more to utilize the capabilitiesof other group companies to solve customers’ problems
or apply their own capabilities on customers of othergroup companies to ensure effective and efficient sales.
In particular, we will drastically boost our businessperformance by linking the capabilities and the customer
bases of Fuyo General Lease, which excels in business withlarge companies, with Sharp Finance, which is centered on
the retail side, and Accretive, which links large companies
with small- and medium-sized companies through its
factoring platform.

New Domains

Management Strategy
The following have been established as strategies tostrengthen the management foundation that supports theexecution of business strategies.
Bolster ability to address new risks in conjunction withthe frontier expansion▶ Strengthen corporate functions and boost productivity▶ Enhance the governance system in order to demonstrate
Fuyo Lease Group’s capabilities▶

Pursue Group Synergies

Three Strategic Axes

Products and services (functions)

Keeping our focus concentrated on the three Strategic
Axes of our business and management strategies, we aim
to achieve the targets set in Frontier Expansion 2021.

Sharp
Finance

Fuyo
General Lease

Fuyo
Auto Lease

Accretive

1 Selection and Concentration in Strategic Areas
Following a comprehensive evaluation of factors
such as future business prospects as well as the Group’s
strengths and business foundation, we have set six fields
as strategic business fields that we can expect mostpromising growth.

Marketing of Group company products in the markets of all Group companies

Maximization of Group synergies through efficientand effective sales operations

Results in FY 2017 :In our Real Estate operations, we are steadily building up highquality assets through winning large contracts and expanding
the scope of our activities. In our Energy/Environment operations,
we saw our largest solar power plant start its operations in thisyear. In our Medical/Social Welfare operations, we made progressin collaboration with our partners through business alliancesand joint investments. In our Aircraft operations, we focused onbuilding up our fleet while carefully selecting contracts in thisincreasingly overheated market.

Customers of the Group companies

Results in FY 2017 :We started full-scale cross-selling of products and services
among our group companies, and significantly increased personnel
exchange among the companies to further promote cross-selling.
This initiative has resulted in good results in our real estate leasing,insurance agency, vendor leasing, and automobile leasing operations.

14

Fuyo Lease Group Integrated Report 2018

Value Creation Story
The Fuyo Lease Group finds risks and opportunities from social changes and issues, and is motivatedto solve the issues by providing various solutions. Our group's value creation story is to go beyond our
stakeholders' expectations through sustainable value creation drawing on our distinctive resources
and strengths.

Changes and Issues in Society

Resources and Strengths

Social environment

Social andrelationship capital

Diversification in values

Extensive non-banking
experience and network

Adapting totechnological innovations

Mizuho Group's large andpowerful information network

Fuyo Lease Group's Core Businesses

Real Estate

Development of an
information society

Human capital

Declining birthrate andaging population

Develop human resources withhigh motivation and discipline

Rural depopulation
Talent shortage and addressing
work-style reforms

Secure human resources withprofessional expertise

Growing importance topromote diversity

Manufactured capital

Economic environment
Fluidization andmulti-polarization of
the world economy
Changes in the interest
rate environment
Progression of corporate
globalization

Lease assets that form thefoundations for creating
added value

Medical/Social
WelfareStrategic Areas

Sophistication of healthcare

Energy/Environment

Aircraft

Overseas

Intellectual capital
Extensive knowledge andknow-how covering a wide
range of operations
Strong information systems

New Domains

Changes in accounting
standards
Increase in demand frominbound travelers

Financial capital
Stable financial base andcore capital

Climate change

Natural capital

Natural disasters

Air, soil, minerals, water, andforests

Core Areas

Natural environment

Domestic
Corporate

Finance

Vendor Leases

Auto Leases

Resource depletion

15

Fuyo Lease Group Integrated Report 2018

Consolidated
Management Goals

FY 2017 Actual

FY 2019 Interim Target

FY 2021 Target(FY ended Mar. 2018)(FY ending Mar. 2020)(FY ending Mar. 2022)¥2,168.7 bn¥2,300.0〜2,400.0 bn¥2,500.0 bn¥35.2 bn

¥38.0〜42.0 bn¥50.0 bn

1.67 %

1.7〜1.8 %2.0 %Operating assets
Ordinary profit
ROA (Ordinary profit on
operating assets)

Business Achievements

Contribution to Solutions

Operating assets for building leasing
Real Estate¥362.0billionOptimizing operating
efficiency and costs

Operating assets for Medical /Social Welfare
Medical/Social
Welfare¥66.3
Solar power generation

Energy/Environment

30

locations
nationwide

Paving the way forinnovation

billion
Output102

MW

Operating assets for Aircraft leasing
Aircraft¥97.6

billionImproving healthcare,nursing care, andwelfare services

Overseas operating assets
Overseas¥87.1

billion *1
Creating a better working
environment andpromoting diversity

Accretive’s receivables turnover
New
Domains

Industrial developmentin accordance withchanges in society¥230.0billionDeveloping humanresources withprofessional expertise

Domestic
Corporate

Operating assets for leasing
Finance

VendorLeases¥1,474.4

billion *2

Contributing to a moresustainable global
environment

Operating assets for financing¥559.6billion *2

Development oflocal economies

Auto Leases*1 Operating assets for overseas subsidiaries (excluding aircraft leases) *2 Operating assets of the entire Fuyo Lease Group

16

Fuyo Lease Group Integrated Report 2018

Materiality
In order to realize a sustainable society, the Fuyo Lease Group has identified issues to be solved
through the Group's businesses as Material Issues (important issues to be addressed), taking into
consideration their impacts on society and stakeholders with reference to the SDGs proposed by theUnited Nations. We will contribute to creating a prosperous and sustainable society by enhancing
shared values between society and companies through our efforts along with identified Materiality.

Identifying Materiality
STEP

1

STEP

2

Identifying issues

STEP

Based on the SDGs, we created a list of issues
relevant to our corporate group from a global
standpoint. We then conducted an external
environment analysis referring to ESG indexes
to identify issues which could influence ourgroup.

Assessing materiality from thestakeholders’ point of view

3

STEP

We quantitatively analyzed the magnitudeof the impact that the issues identified in
Step 1 could have on our company from theviewpoint of investors and other stakeholders.

4

Assessing materiality for our business operations
We conducted an internal environment analysis on the issues
identified in Step 1 while giving due consideration to our
Medium-term Management Plan, Code of Corporate Conductand other guidelines. The analysis evaluated how big acontribution each of our businesses could make to solving theseissues and the potential impact on our financial performance.

Identifying priority issues
After prioritizing issues in light of Steps 2 and 3, we
identified priority issues. Finally, the top management
reviewed and approved the identified priority issues.

KPIs and Targets of Materiality (Creation of Shared Value through Business Activities)
Material Issues (Materiality)

Relevant SDGs

Themes of Initiatives

Promoting health and wellbeing

・Expand access to elderly nursing care andsocial welfare services
・Support medical institutions with their management
・Improve access to medical services
・Promote affordable and high-quality medical devices
・Promote cutting-edge healthcare technologies

Diversity and work-style reform

・Improve work-style to pursue efficiency and productivity
・Promote work-life balance
・Empower women in workplaces and develop diverse
human resources with strengths

Responding to climate change issues
and renewable energy

・Expand supply of renewable energy
・Support activities on decarbonization
・Assist activities to promote renewable energy

Achieving economic growth andfulfilling work

・Support corporate activities through leasing business,
contribution to social development
・Improve management efficiency, overcome labor
shortage, and address work-style reforms

Developing safe and livable cities andproviding transportation

・Promote environmentally friendly urban scape andresidential space
・Contribute to expanding the volume of safe andinexpensive transportation

Contributing to the creation ofa circular society

・Promote 3Rs (reduce, reuse, and recycle) for leased
assets after the end of their lease period

17

Fuyo Lease Group Integrated Report 2018

Materiality for Fuyo Lease Group
Following the Materiality identification process shown to the left, we identified Goal 3, 5, 7, 8, 11, 12,
and 13 as the most important strategic goals.

Materiality for stakeholders

Areas where the level ofmateriality is high forstakeholders, but is limited
for our Group

Areas where the level ofmateriality is relatively
high for stakeholders,
but is limited for our Group

Areas where the level of materiality is high bothfor stakeholders and for our Group

Areas where the level of materiality is relatively
high for stakeholders and is high for our Group

Materiality for our businesses

KP I s

FY 2017 Results

Targets¥66.3 billion

FY 2021 target : ¥80 billion

Rate of taking annual paid leave

68.0%

FY 2021 target : 80%

Improvement of working environment fordevelopment of the next generation

Maintain the Platinum Kurumin certification

Number of female managers

32

Appointment of 40 female managers
by FY 2020

Clean energy supply (output)

102MWdc

FY 2021 target : 200MWdc

Operating assets of solar power business¥19.7 billion

FY 2021 target : ¥3.4 billion−

2030 target : 50%
2050 target : 100%

¥2,168.7 billion

FY 2021 target : ¥2,500 billion

Operating assets of Medical /Social Welfare
businesses

Proportion of renewable energy to the electricity
usage by the Group for its business activities
Operating assets

Assist customers to improve productivity and to shift to high-value added
businesses by providing high-quality BPO services.

Expansion of BPO business
Operating assets of real estate leases¥362 billion

FY 2021 target : ¥480 billion

Operating assets of aircraft leases¥97.6 billion

FY 2021 target : ¥280 billion

24

FY 2021 target : 70

70,036 units

FY 2021 target : 100,000 units

Number of aircraft owned by the Group
Number of used leased items sold*Reduce industrial waste and ensure proper disposal

Reduce waste through effective use of the limited resources, and ensure
proper disposal of generated waste.

* The number of used leased items sold from warehouses of Fuyo Lease Sales (Tokyo 3R Center, Kansai and Kyushu regions)

18

Fuyo Lease Group Integrated Report 2018

Special Feature 1 ESCO businessWorking with
Partner Companies
to Protect theEnvironment

Saiseikai Niigata Daini Hospital with our ESCO service

Climate Change Initiatives

technology, equipment, and personnel, as well as funding.
Because customers pay ESCO service fees out of theactual energy cost savings generated through the service,
they can reduce their energy consumption at virtually no
expense, and cut costs over the long run. The service also
warrants customers from any losses suffered in the event
they do not achieve energy cost savings.
As an energy service company, Fuyo Lease provides full
support to help customers meet their energy-saving needs
through partnerships with companies across a wide range
of industries.

Growing greenhouse gas emissions are fueling theimpacts of climate change felt across the globe. The 2015
signing of the Paris Agreement, an international framework
for reducing greenhouse gas emissions and supporting
other climate change related actions beyond 2020, as wellas other similar initiatives, have spurred countries aroundthe world to combat climate change. Japan’s business
community is now implementing initiatives to reducegreenhouse gas emissions with the aim of achieving thetarget set by the Japanese government to cut greenhousegas emissions by 26% from the 2013 level by 2030.
Fuyo Lease recognizes that climate change is a criticalissue and has positioned Energy/Environment as key
Strategic Areas in its Medium-term Management Plan as it
works to contribute to the solutions this problem throughits business operations. One such business operation is
the ESCO service where we work with various partners toprovide services that leverage our financial strength, andability to propose solutions and assess their credibility. Useof renewable energy, as well as environmentally-friendly
products and services, have become more important
than ever since the Great East Japan Earthquake. Our
ESCO service helps customers save energy, while cutting
greenhouse gas emissions.

How the ESCO Service Works
Before using
the ESCO service

After using
the ESCO service
Customer’s profit
ESCO's dividendInterest rate
Repayment
Initial cost

Utility expenses

Utility expenses

The ESCO Service and Role of Fuyo Lease
The ESCO (Energy Service Company) service provides
everything needed to improve energy efficiency, including
19

Fuyo Lease Group Integrated Report 2018

For this ESCO service project, we are aiming to improveenergy efficiency with the following targets.

Initiatives in FY 2017
Providing the ESCO service toSaiseikai Niigata Daini HospitalFuyo Lease, working jointly with Japan Facility Solutions,Inc., have started to provide the ESCO service to Saiseikai
Niigata Daini Hospital.
Saiseikai Niigata Daini Hospital is a regional medicalcare support hospital providing high-quality acute medicalcare while working closely with other medical facilities in
the area. Aiming to provide patients with all the medical
services they need locally, the hospital provides expert
care in its respective departments and refers patients toother local medical care facilities once their conditions
become stable.
The hospital wanted to replace its aging heating system,so they decided to used our ESCO service to not only
replace the old heating system but also to integrate thecontrols of the cold and hot water pipes in the hospital’s
two buildings and the HVAC pumps. This integration
enabled the hospital to maximize its energy savings.
The hospital also switched to LED lighting, which led tofurther energy conservation, as well as the side benefit ofenhancing the overall hospital environment, including in its
office spaces.

TargetPrimary energy reduction

13,933 GJ / year
(Reduction rate: 18.8%)

CO2 emission reduction

736 t-CO2 / year
(Reduction rate: 17.7%)

Air-cooled heat pump chiller introduced as part of our ESCO service(heat source equipment for ventilation)

VOICE
About three years ago Saiseikai Niigata Daini Hospital was looking for a partner, who could help us not just replace
our aging equipment but also to help overhaul the entire facility because the buildings were nearly 20 years old.
While the solutions offered by other companies aiming for solving immediate problems or addressing only
certain issues, the ESCO service offered by Fuyo Lease and Japan Facility Solutions was designed to optimize andimprove the efficiency of the entire facility over the medium
to long term. Their service was also the best plan in terms of
cost and that is why we chose the service.
I hope the ESCO energy-saving system will enhance theoverall energy efficiency of our buildings and contributeto conserving the environment. The system just went into
operation this April and we have not calculated the annual
energy cost savings yet, but I have received some great
feedback from hospital workers. They say it has mademanaging equipment easier and that the LED lighting has
made the place brighter. I am looking forward to seeing evenmore positive results.
Social Welfare Organization Saiseikai Imperial Gift
Foundation, Inc.

Saiseikai Niigata Daini Hospital

Akira Kitsu, Director of Administration

20

Fuyo Lease Group Integrated Report 2018

Special Feature 2 Accretive
Improving Community Medical and Nursing-care
Services through our Factoring Service
for Medical and Nursing-care Receivables

Issues with Frontline Medical andNursing-care Services in Japan

provide such service. Accretive accommodates diverse
needs that are unique to the industry and is capable ofoffering proposals even for challenging cases that major
financial institutions find difficult to handle. For instance, whena medical institution experiences a decline in medical fees
received, due to events such as a revision to the payment
system for medical fees and the abrupt departure of a
doctor, the institution loses its financial stability. Accretive
can contribute to improving the institution’s cash flows by
providing funds at an early stage.
Funds acquired through FPS Medical can be usedas day-to-day working capital and as a financial source
for securing personnel, which helps to solve short-term
financial problems. In addition to securing short-term funds,
Accretive also plays a role in reviving community healthcare services by assisting medical institutions to improvetheir financial conditions so that the institution becomes
eligible to receive loans from regional and other banks.

With the increasing shortage of doctors in rural areas,
concentration of doctors in large hospitals, and a lack offrontline nursing-care staff and facilities due to a super-aging
society, among other factors, the environment surrounding
medical and nursing-care services is changing radically.
Health care on the ground faces a lot of issues, as many small
and medium-sized hospitals and nursing-care facilities that
support community health care are facing financial difficulties.
Fuyo Lease Group positions “Medical / Social Welfare” asone of the Strategic Areas in its Medium-term Management
Plan, and is intensively investing management resourcesin this field. In 2017, Fuyo converted Accretive Co., Ltd.
(hereinafter referred to as Accretive) into a subsidiary andfurther improved systems for promoting FPS Medical* forfactoring service for medical and nursing care receivables.
With this move, we are confident that the Fuyo Lease Groupwill be able to contribute further to solving various issues
related to medical and nursing care services in the field.

Flow of Flexible Payment Service*FPS stands for Flexible Payment Service.

Claim medical fees, etc.

Roles Played by FPS Medical

National healthinsurance
associations andpayment funds(Medical fee
payment
organizations)

Medical institutions,nursing-careproviders, etc.

FPS Medical is the service enabling medical institutions andnursing-care providers to convert receivables, which Accretive
purchases from national health insurance associations,payment funds, and other medical fee payment organizations,
into cash before their due dates. Accretive knows the industry
inside out and has accumulated the expertise needed to

Accretive
Earlier
payment

21

Payment of
medical fees, etc.
（Payment date inregular case）

Fuyo Lease Group Integrated Report 2018

Expanding Network through Group
Synergies

Upcoming Activities and our Vision
While expanding FPS Medical by leveraging the customer
base of the Fuyo Lease Group, Accretive provides its
market with one-stop services that integrate the functionsof the Fuyo Lease Group, which include leasing medical
devices and purchasing and selling of used medical
devices, resulting in increased convenience to thecustomers.
Besides, Accretive is working to strengthen its
management consulting function for medical institutions
in coordination with the Healthcare Advisory Office, which
was set up in Fuyo Lease in August 2018. In the future,
Accretive aims to further enhance the corporate value ofthe Fuyo Lease Group and solve problems in society byboosting group synergies and establishing FPS Medical
as its core business.

In addition to providing services in Tokyo and Osaka, which
are traditional centers of its business activities, Accretive
has launched new business alliances with regional banks,
shinkin (credit association) banks, and other local financial
institutions across the country through leveraging thecustomer base of the Fuyo Lease Group. Consequently,
Accretive serves customers nationwide, and the numberof contracts it handles has more than doubled, with thebalance of purchased accounts receivables rising 2,620
million yen (83%) from the end of FY2016. Furthermore,
Accretive differentiates the features and applications of its
services to clarify its role for customers, in order to avoid
competition with financial institutions, thereby building
complementary relationships with them.
In addition, Accretive has strengthened its businessapproach to nursing-care facilities, including intensive-care
old people’s homes, as a new field for its services. Many
nursing-care facilities face difficulties of retaining staff due
to the shortage of care workers, while the number of people
seeking residential care is growing. We think it is also
possible to offer FPS Medical to improve their cash flow,which eventually enables them to secure personnel.

VOICE
We often see customers who are having difficulty in financing day-to-day business activities. Whenthey told us “We were able to pull out of a management crisis thanks to Accretive and can continue
to contribute to community health care,” we fully felt the importance of our services. Besides, serving
customers in disaster areas in Fukushima, who are experiencing shortages of medical institutions due torelocation, we strongly feel the potentialof our services on the issues that theseareas are suffering. We are determined tocontinue supporting as many customers as
possible in making their businesses stablethrough FPS Medical, which will contributeto make our customers smile.

Sales Department, Accretive Co., Ltd.
(From left) Manager Yosuke Kosaka,
Deputy Managers Fuki Sadamori
and Mai Hayakawa

22

Fuyo Lease Group Integrated Report 2018

Business Segments Overview

Six Strategic Areas

Real Estate

Analysis of
Current Status

We provide unique solutions by leveraging our product development capability
and track record of launching industry first real estate leases, such as Space
Leases, which reduce the cost burden on tenants who have to pay expensive
security deposits when renting space in a building adjacent to a train station or
in a shopping center, as well as Building Leases that use fixed-term commercial
leasehold contracts.

Market Environment
Expectations of more effectively using assets are rising as needs
for using idle real estate continue to rise
More retailers and companies operating multiple stores are looking atprime real estate locations
An increasing number of redevelopment projects are driving up
the need for real estate leases

Strengths
Know-how obtained as a real estate leasing pioneer anda broad range of transactions with real estate leasing customers
Access to more extensive and more diverse channels for obtaining information onland through alliances with construction companies and others across Japan
Making proposals using information on land we have obtained
enables us to take the initiative in more projects

Challenges
Expanding alliances to enhance the acquisition of information on land
Improving relationships and increasing business transactions with companies
operating multiple stores through the utilization of land information
Strengthening the Risk Management System
Developing human resources with high degree of specialization

23

Fuyo Lease Group Integrated Report 2018

FY 2017 Overview and Outlook
our operations. At the same time, we will move forwardwith group-wide initiatives that make the most of the realestate leases offered by our subsidiary, Sharp Finance.

In FY 2017, operating assets increased sharply year
on year as we signed large contracts in collaboration
with leading developers and companies operating
multiple stores. We will continue to steadily acquire
operating assets to achieve our goals.

Segment Results and Targets
Operating assets and ROA for Real Estate leasing■ Operating assets

Growth Strategies under Frontier Expansion 2021

ROA

(Billions of yen)

(%)

500

The value of real estate contracts increased more than
threefold during the previous Medium-term Management
Plan period due to an increasing number of large
contracts, growing demand for budget hotels, and thelaunch of initiatives aimed at nursing homes. During thecurrent Medium-term Management Plan period, we aim
to increase operating assets, which initially stood at 240
billion yen, twofold over the five year plan by discoveringneeds through incorporating land information andworking even closer with real estate developers. We will
also work on real estate financing, while investing in REITs
and real estate with the aim of expanding the frontiers ofTarget value

5

480.0
400

4

Interim goal

362.0

380.0

300

200

3
240.2
1.9

1.8

2.0

2.2

100

0

2

1

17/3

18/3

20/3

22/3

0

* ROA is estimated based on managerial accounting methodologies.

Achievements
Primetree Akaike, Seven & i Group’s Large-scale
Shopping Mall

Large Real Estate Lease Signed Jointly with
Developer

We were awarded a building lease contract for Primetree Akaike,a shopping mall in Aichi Prefecture’s Nisshin City operated by
Ito-Yokado Co., Ltd. and Seven & i Create Link Co., Ltd.
Situated on a sprawling property measuring more than 40,000
square meters, the shopping mall is a four-level large-scalecommercial facility housing about 180 tenants. This is the largest
building lease we have ever signed.
The shopping center features a number of popular shops,
including the anchor tenant Ito-Yokado along with retailers
opening at their first locations in Aichi Prefecture. It also boasts
various other facilities, such as community spaces that local
residents can use for get-togethers and other activities, astate-of-the-art movie complex, a food court, and more, which
supports the growth of the local community and enriches the
lives of the residents.

In May 2017, we acquired TOC Minato Mirai, a commercial
complex located in Yokohama City’s Minato Mirai, from TOC
Co., Ltd. Situated adjacent to Sakuragicho Station, a gateway
to the Minato Mirai 21 area, TOC Minato Mirai is a largecommercial complex housing the Colette Mare shopping
center, a hotel, offices, movie theaters, and a fitness gym. We
earned this major contract by working together with our close
partner and developer, Hulic. We will continue to work withmore developers with the aim of winning large contracts andexpanding our Real Estate business.

Budget Hotel Building Lease in Nihonbashi Koamicho
We have signed a building lease with West Japan Railway Daily
Service Net Company for Via Inn Tokyo Nihonbashi (tentativename), a budget hotel the company plans to open in Tokyo’s
Nihonbashi district in the fall of 2019.
The hotel is located just a 4-minute walk from Ningyocho
station on the Toei Asakusa Line, which provides direct accessto Haneda and Narita International Airports. It is also close
to tourist destinations that are popular among international
travelers, such as Asakusa and Tokyo Skytree. It is a convenient
location for both business and sightseeing.
Working to meet the needs of budget hotel operators, whowant to invest in hotel facilities that will accommodate thegrowing number of international travelers visiting Japan, we
provide building leases for budget hotels, which have opened
or are scheduled to open near Kyoto station and Nagoya
station as well as in Kawasaki and Shinagawa. We will step up
our efforts to provide building leases for budget hotels and help
operators open hotels that are convenient for business travelers
as well as tourists.

Primetree Akaike

24

Fuyo Lease Group Integrated Report 2018

Business Segments Overview

Six Strategic Areas

Medical/Social Welfare
Analysis of
Current Status

We offer a wide range of services, which include leasing medical equipment,
buying and selling pre-owned medical equipment as well as factoring for
medical receivables and nursing care receivables. We are also focusing on
building leases for welfare and care facilities.

Market Environment
Growing need for nursing care and medical services in a super-aged society
Shortage of facilities where elderly people can live with peace of mind
Growing need for financing including leases, as medical equipment employing
state-of-the-art technologies for higher performance becomes more expensive

Strengths
One-stop services through our group-wide businesses, including Fujita and Accretive,
are helping to build an Integrated Community Care System
A track record of providing leases for elderly homes through collaborations withpartner companies, despite their greater difficulty compared to leases for commercial
facilities

Challenges
Strengthening our consulting functions to help hospital operators solve management
problems
Further developing human resources as we expand the scope of operations
Expanding network through the reinforcement of alliances with medical equipment
manufacturers and related industries

25

Fuyo Lease Group Integrated Report 2018

FY 2017 Overview and Outlook
In FY 2017, we worked together with our partners
on joint initiatives that focused on business alliances
and investments, including building leases for
welfare and nursing care facilities. We will continue
to enhance our capability to provide customers with
one-stop services as we aim to enhance the value
we provide.

Growth Strategies under Frontier Expansion 2021
Our Medical business will focus on expanding the scopeof our frontiers by launching consulting services designed
to put hospital operations and business managementback on track, working with Fujita to leverage its expertisein selling and buying pre-owned medical equipment, andcapitalizing on Accretive’s factoring service for medical
receivables. In the area of Social Welfare (nursing care),we became the first in the industry to start building leases
for nursing care facilities, such as nursing homes for theelderly, during the period of the previous Medium-termManagement Plan. We will move ahead by capitalizing on
our strong ties with nursing care industry giants, such as
the Nichii Group.

Achievements
Senior Housing Complex in Kachidoki Completed

Fujita Co., Ltd. Becomes a Consolidated Subsidiary

Fuyo Lease served as a financer for the AIP K achidoki
Ekimae Building, Japan’s first urban senior housing complex
incorporating medical and commercial facilities. Completed
in April 2017, the building houses Nichii Home Kachidoki, aprivate for-profit nursing home, which is its anchor tenant, a
medical mall consisting of a number of clinics and pharmacies
as well as a supermarket and more. It fulfills the needs of seniorcitizens who want all the convenience of living in an urban
center plus peace of mind.

In April 2018, we acquired additional shares in Fujita Co.,
Ltd., with which we signed a capital and business allianceagreement in December 2016, thus making it a consolidated
subsidiary.
Fujita’s strengths lie in its ability to provide one-stop services,
including everything from disassembly and removal to buying
and selling pre-owned large medical devices such as MRI
scanners, CT scanners, and X-ray equipment. Since signing
the capital and business alliance agreement, we have worked
steadily with Fujita on a wide number of projects where weleveraged each other’s customer and sales networks, andcooperated in buying and selling pre-owned medical equipment
after their leases expired. We expect to create further synergies.
We plan to enhance the development of lease productsthat incorporate the future value of assets, provide renovation
support services for hospitals when they relocate or build a newbuilding, and more.

AIP Kachidoki Ekimae Building

Healthcare Advisory Office Created :Launching Consultation Services to Assist Medical
Corporations with Operations
We established the Healthcare Advisory Office under our
Medical & Welfare Division in August 2018.
The Healthcare Advisory Office mainly provides consulting
services to hospital operators and helping them solve theproblems they face. It aims to offer various solutions employing
the Fuyo Lease Group's wide range of products and service
functions.

26

Fuyo Lease Group Integrated Report 2018

Business Segments Overview

Six Strategic Areas

Energy/Environment

FY 2017 Overview and Outlook

Our operations in the areas of Energy and the Environment
focus on solar power generation and the ESCO service.
We provide services that promote renewable energy andenergy conservation to expand operations, while protecting
the Earth’s environment.
Analysisof Current
StatusMarket Environment
Growing demand for renewable energy fueled bynational obligations to reduce greenhouse gas
emissions, as well as greater expectations of thebusiness community and the role it should play

In FY 2017, we saw our largest solar power plant
go into operation and our existing plants maintainstable operations. Although the ROA of the overallbusiness declined due to upfront investments
on sites under development, the profitability ofexisting plants remained high. We will continue towork on expanding operations in accordance with
our Medium-term Management Plan.
Growth Strategies under Frontier Expansion 2021
In the solar power generation business, 29 large-scalesolar power plants (known as mega-solar power plants)
were in operation during the previous Medium-termManagement Plan period, supplying enough green
energy to power about 23,000 homes. Under the current
Medium-term Management Plan, we plan to operate large
solar power plants that are several times the size of ourexisting plants, in order to supply twice as much electricity
as now by the final year of the Medium-term Management
Plan. We will step up efforts in the ESCO business incollaboration with our partners, who are industry leaders,
while working on new energy businesses and others to
expand the frontiers of our operations.

Development and sales of energy- andresource-saving equipment and technologies
are creating more leasing opportunities
Rising environmental awareness among large
corporations as ESG evaluation becomes common
practice and supply chains become more global

Strengths
Ability to offer optimal solutions to customers byusing know-how gained through our own solar
power generation businessA track record of providing a number of ESCO andES* services jointly with leading partner companies

Segment Results and Targets
Operating assets and ROA for solar power generation business

Challenges■ Operating assets

Entering the wind power, geothermal, biomass,and other renewable energy markets

ROA(Billions of yen)

(%)

40

* Under the ESCO service, customers pay a service fee when theactual energy cost savings generated through the service exceed apredetermined energy saving target agreed upon with the customer. Under
the ES service, the customer pays a predetermined service fee and keeps
the full amount of energy cost savings generated through the service.

30

6.1

Interim goal

Target value

6.0

34.0
6.0

29.0
5.1

20
17.2

6
4

19.7

10
0

8

2

2017/3

2018/32020/32022/30* ROA is estimated based on managerial accounting methodologies.

Achievements
Consolidated Subsidiary Tomioka-Sugiuchi Solar Starts Commercial Operation of Solar Power Plant
24,780,000 kWh, making it our largest solar power plant. This
output is equivalent to the total annual power consumption of
approximately 6,880 typical homes *2.

On March 1, 2018, our consolidated subsidiary, TomiokaSugiuchi Sol ar Ltd., started commercial operation of its
Tomioka-Sugiuchi Solar Power Plant located in Tomiokamachi, Futaba District, Fukushima Prefecture. The solar power
plant has an installed capacity of approximately 25.05 MWDC *1 with an estimated annual power output of approximately*1 DC: direct current*2 Calculated at 3,600 kWh per household.

27

Fuyo Lease Group Integrated Report 2018

Six Strategic Areas

Aircraft

FY 2017 Overview and Outlook

Since signing the first lease in 1985, we have provided morethan 200 aircraft leasing arrangements for airline companies
across the globe. In 1999, we became the first in theindustry to expand into the primary aircraft market in Dublin,
Ireland. We also executed a lease for aircraft owned by ourcompany in 2009 and acquired UK-based ALM in 2014 withthe aim of expanding our operations.
Analysisof Current
StatusMarket Environment
Increasing of business opportunities based on
global growing needs of aircraft
Overheated market due to an increasing
number of players

Strengths
Enhanced organizational structure as a result of
the 2014 acquisition of ALM, a British company
specializing in aircraft-related services andmarketing
Aircraft know-how accumulated since 1985
A portfolio with greater liquidity mainly
consisting of narrow-body aircraftIn FY 2017, we made leasing arrangements foraircraft owned by our company and executed our
first engine operating lease, steadily expanding
the scope of the business. We will continue tobuild up our fleet of aircraft, while maintaining our
ROA by carefully selecting projects.
Growth Strategies under Frontier Expansion 2021
Leasing arrangements for aircraft owned by ourcompany grew to 19 during the previous Mediumterm Management Plan period. We aim to increase thenumber of aircraft leased per year by ten, so that the
number of company-owned aircraft reaches 70 by the
final year of the Medium-term Management Plan. We
will accelerate the pace of acquiring operating assets
by working on packaged contracts, under which
multiple aircraft are leased, expanding the scope ofairlines and equipment covered, and strengthening
our organizational structure.

Segment Results and Targets
Operating assets and ROA for aircraft leasing■ Operating assets

ROA(Billions of yen)

(%)

300

Challenges
Strengthening business on package contract basis(multiple aircraft leasing) and enlarging the numberof airline companies with which to do business

Target value 5

280.0

240

Interim goal

210.0

180
1.9

120

Stable planning and sales of products forinvestors including JOLCO*

1.9
60*Japanese Operating Lease with a Call Option

0

75.1
2017/3

97.6

2018/3

2.0

4
3

2.3

2
1

2020/32022/30* ROA is estimated based on managerial accounting methodologies.

Achievements
ANA Holdings Signs a Lease for Four Airbus A321neo
and about a 7% longer range than conventional models*.
All four aircraft, for which leases were signed, are already inoperation in the route network of All Nippon Airways Co., Ltd.,ANAHD’s core airline company.

In August 2017, ANA Holdings Inc. (ANAHD) signed a leasefor four A321neo, a new aircraft from France-based Airbus, tobe the first to bring the aircraft to Japan. The A321neo (withneo standing for new engine option) is equipped with Pratt &Whitney’s latest engine. Also equipped with large wingtip devices
called Sharklets, the aircraft features 15% higher fuel efficiency* According to Airbus data

28

Fuyo Lease Group Integrated Report 2018

Business Segments Overview

Six Strategic Areas

Overseas

FY 2017 Overview and Outlook

As the domestic leasing market shrinks, we aim to increase
our overseas locations mainly in North America and Asia
by leveraging our network to attain organic growth, whilebuilding up high-quality assets through investments,
acquisitions, and alliances with local companies to achieve
inorganic growth.
Analysisof Current
StatusMarket Environment
Financing needs are growing overseas as moremanufacturers relocate their production bases
outside Japan
Leasing companies are aggressively expanding
overseas as the domestic leasing market shrinks

Strengths
Customer base built on the Mizuho Group's network
A steady track record of operating businesses in the
US and Hong Kong for about 30 years, during which
we have developed an extensive customer base

In FY 2017, we obtained excellent non-Japanese
assets by acquiring local companies. In the future,
we will continue to expand our Overseas operations
through inorganic growth and other strategies.
Growth Strategies under Frontier Expansion 2021
Our Overseas business segment saw its operating
assets almost double during the period of theprevious Medium-term Management Plan, andwe will pick up the pace of obtaining assets evenfurther. We will continue to focus on expanding nonJapanese businesses mainly in North America andAsia, as we did under the previous Medium-termManagement Plan. Over the medium-term, we willseek inorganic growth through M&A and capitalalliances with the aim of achieving an additional 1.5fold increase in operating assets by the final year of
the Medium-term Management Plan.

Segment Results and Targets
Operating assets and ROA for Overseas businesses(Business of overseas subsidiaries excluding aircraft leasing)

Challenges■ Operating assets

Expanding our business with a focus on M&A andcapital alliances

ROA(Billions of yen)

Target value

120

Interim goal

120.0

110.0

Developing human resources with high degreeof specialization and strengthening the humanresource development system as we expand thescope of operations

90

Expanding non-Japanese business in North
America and Asia

30

84.1

87.1

1.8

1.5

1.5

60

0

(%)

2.0

1.0
0.6

0.6

2017/3

2018/30.5

2020/32022/30* ROA is estimated based on managerial accounting methodologies.

Achievements
Canada's Pickup Truck Rental and Leasing Company Becomes Fuyo Lease’s Equity-method Affiliate
and resource development industry as well as firms and local
governments involved in infrastructure projects.
The aquisition of shares will enable us to combine know-how
Marubeni has gained through its pickup truck rental and leasing
businesses in North American with our fundraising ability andleasing industry know-how as we aim to grow the business further
and create synergies over the medium to long term.

Fuyo Lease acquired a 50% stake in Marubeni Auto Investment(Canada) Inc., a subsidiary of Marubeni Corporation, whichowns TDF Group Inc., a pickup truck rental and leasing
company in Canada, and made it an equity-method affiliate.
TDF provides mainly corporate clients with comprehensive
vehicle-related solutions, including pickup truck rental, leasing,and sales. Since its establishment in 1978, TDF has built a solid
business foundation, providing services to the Canadian energy

29

Fuyo Lease Group Integrated Report 2018

Six Strategic Areas

New Domains

FY 2017 Overview and Outlook

One of the Strategic Areas specified in Frontier Expansion
2021, New Domains collectively refer to as new businessinitiatives as well as expanding the scope of our businesses.
We will work to expand the frontiers of our operations
focusing on non-asset businesses.
Analysisof Current
StatusIn FY 2017, we focused on providing Accretive
solutions to Fuyo Leasing Group customers
and sought partnerships with state-of-the-art
research and development companies, as wellas invested in them. We will continue to work
on expanding our operations with the focus on
non-asset businesses.

Market Environment
Needs for work efficiency and productivity
improvements are growing due to labor shortage
and work-style reforms
Development of new technology such as IoT,
robots, Artificial Intelligence (AI), and Big Data

Strengths
Solid business foundation built on the
Fuyo Lease Group's nationwide network

Challenges

Growth Strategies under Frontier Expansion 2021
Working to launch new businesses and expand
the scope of our operations, we will specificallyconcentrate on Accretive’s factoring services andnew business initiatives based on M&A as well as
capital and business alliances, development ofleasing programs that factor in used asset sales andthe residual values of assets, asset securitization,
and accounting services using FLOW Cube+ which
was jointly developed with SAP Japan.

Delivery of BPO* service with high added-value
Initiatives in new business areas with potential for
future growth*BPO: Business Process Outsourcing

Achievements
We are working to expand our business frontiers through corporate alliances and investing in companies andorganizations working to develop cutting-edge technologies or intellectual properties with the aim of securing
preferential rights to sales and partnerships in the future.
Business Form

Partner

Description

Establishment

GAP FundEstablished a fund designed to provide financial assistance to universities in order to help them overcome
hurdles (i.e. gaps) when commercializing intellectual properties or technologies they own. It is Japan’s first fundcreated through an industry-academia collaboration.

Alliance

Optical Comb, Inc.

Formed a business alliance for promoting sales of a non-contact 3D scanner employing Nobel Prize-winning
optical comb technology.

Investment

Riverfield Inc.

Invested in the company, which developed Japan’s first robotic surgical assistant system with the aim ofcreating a leasing and sales promotion partnership.

Investment

CREWT Medical
Systems, Inc.

Signed a capital and business alliance agreement with the company, which developed the world's first headmounted visual field inspection device, to support its sales activities.

Investment

Lily MedTech Inc.

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

Subsidiary

Fujita Co., Ltd.

Capable of providing one-stop services, including everything from removal to sales of pre-owned medical equipment.
The consolidation of Fujita will enable us to develop new products and services.

Investment

Exergy Power Systems Inc.

Investment

MerryBiz Inc.

Invested in the company, which provides accounting services using virtual accounting assistants.

Subsidiary

INVOICE Inc.

Reached a mutual agreement among the related parties to acquire the company, which provides combined
billing service to expand our services that contribute to the improvement of our customers’ productivity.

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

30

Fuyo Lease Group Integrated Report 2018

Business Segments Overview

Four Core Areas

Domestic Corporate
This is a Core Area that supports Fuyo Lease.
In addition to conventional leases, such as for information and office equipment as well as
commercial facility leases, we offer a wide range of services that include leasing arrangements andstrategic financial solutions tailored to customers’ needs.
Analysisof Current
StatusMarket Environment

FY 2017 Overview and Outlook

Shrinking market due to declining leasetransaction volumes, and declining
profitability due to intensifying competition
Demand for leases as a means of raising funds
declining as customers’ financial health improves

Strengths
Ability to offer strategic financial solutions inaddition to leasing services

Challenges

In FY 2017, as a result of offering a wide rangeof solutions tailored to customers’ businessneeds, we were able to enter into various typesof transactions, including real estate contracts
as well as various overseas transactions. We
will continue to increase transactions throughcross-selling with group companies and offeringsolutions to improve clients’ profitability.
Growth Strategies under Frontier Expansion 2021

Strengthening our ability to offer solutions
by promoting teamwork among the Group
companies, and creating new business
opportunities by business matching
Improving profitability by differentiating
ourselves from competitors

Solutions are our specialty and we will continue
to enhance our offerings by targeting corporate
customers of our group companies. At the same time,
we are streamlining and downsizing our organization
as we shift the workforce to Strategic Areas in orderto optimize the allocation of personnel. Specifically,
we have consolidated all vender leasing and small
factoring operations at our subsidiaries and abolishedsome specialized departments.

Four Core Areas

Financing
In addition to conventional corporate loans, we provide a wide array of services, including fundinvestments and business-related investments as well as investments and lending positioned as balance
sheet solutions.
Analysisof Current
StatusMarket Environment

FY 2017 Overview and Outlook

Market overheated due to low interest rate
strategies of regional banks and others since theintroduction of the negative interest rate policy

Strengths
Various financing programs built on our
track record in various fields and tailored tocustomers’ needs
Mizuho Financial Group's network

Challenges
Optimizing the risk-return tradeoff by offering awide array of services

In FY 2017, we launched a council to investigate
fund investments that successfully help
boost operating assets. We will continue toaccumulate the know-how needed to further
improve profitability.
Growth Strategies under Frontier Expansion 2021
We will shift our focus to more profitable areas, while
maintaining an appropriate risk-return tradeoff. Thiseffort will center on investments in funds, businessrelated investments, and investment and lending
positioned as balance sheet solutions.

Developing the information infrastructure to
support sophistication of the monitoring related
to fund investments

31

Fuyo Lease Group Integrated Report 2018

Four Core Areas

Vendor Leases
As a partner to dealers of office, information, medical, and other equipment and machinery, we focus onproviding financial service solutions that help vendors sell their products. We are continually working toenhance our ability to offer solutions, such as those designed to help companies start a business in thehealthcare market, with the aim of creating new markets.
Analysisof Current
StatusMarket Environment

FY 2017 Overview and Outlook

Oligopolistic market dominated by theindustry’s leading companies
Developing systems for managing cash flows,
credit screening, and other functions forsmall- and medium-sized companies, who are
the primary customers, making it difficult toenter the market because most transactions
are high-volume and small size

Strengths
Large market share and market recognition

In FY 2017, we saw alliance transactions
increase as a result of forming more partnerships
with major dealers and promoting allianceswith medical equipment manufacturers. We
will continue to work on strengthening our
non-asset businesses, such as debt collection
services, while increasing transactions with ourexisting vendor clients.
Growth Strategies under Frontier Expansion 2021

An organizational structure with locations
across Japan that enables us to meet the exact
needs of customers
An established operating base and years ofexpertise gained in the healthcare market

Challenges
Further expanding the range of sales partners,
and promoting vendor business by extending
information channels

We will seek further growth of the Vendor Leases
business, operated by Sharp Finance, mainly by
expanding the range of partners we work withand shifting resources to the Tokyo metropolitan
area. We will also focus on leveraging the group’s
strengths by offering real estate leases, factoring
services, and other products and know-how
available from our group companies to Sharp
Finance’s customers.

Expanding non-asset (fee-based) business initiatives

Four Core Areas

Auto Leases
We offer a wide range of services including auto financing, maintenance, insurance, and safe driving
education as well as administrative support, and will continue to expand our operations by leveraging
synergies among group companies.
Analysisof Current
StatusMarket Environment

FY 2017 Overview and Outlook

Number of vehicles owned by the auto leasing
industry as a whole is expected to rise in an
expanding market

Strengths
Providing high value-added leasing arrangements,
under which customers can outsource
administrative work related to the purchase,management, and maintenance of automobiles
Partnerships with about 6,300 repair shops
across Japan to provide safe and wellmaintained vehicles

In FY 2017, the number of vehicles in ourinventory inched up year on year, while the valueof contracts signed through joint efforts with ourgroup company, Sharp Finance, soared 47% year
on year, indicating the good progress of our intragroup collaboration. Looking ahead, we aim toboost our business performance even further
by increasing the number of vehicles in ourinventory and building up operating assets.
Growth Strategies under Frontier Expansion 2021

Challenges
Expanding the customer base by strengthening
cooperation within the Fuyo Lease Group
Developing unique products and differentiating
ourselves from competitors throughcollaborations with partner companies

32

We will leverage synergies among our groupcompanies to expand the Auto Leases business. In
particular, we will approach Sharp Finance’s retailclient base and further strengthen coordination
with Fuyo Lease.

Fuyo Lease Group Integrated Report 2018

Foundation for Value Creation
Foundation for Value Creation
The Fuyo Lease Group aims to solve social issues through its business operations as it paves the way to a sustainable society
and sustainable business growth, while responding to the expectations of its stakeholders. This section outlines the initiatives
that are behind creating this kind of value.

Stakeholder Dialogue
as the bridge that brings us closer to stakeholders, and weuse it to ensure that we live in harmony with people from allwalks of life.

We believe that communicating with stakeholders is the
key to accurately understanding various social issues andthe role we are expected to play. We see communication

Customers

Our management philosophy is to “always give first priority to the customer and provide the best
service.” In putting that philosophy into practice we work to enhance the level of satisfaction of all ourcustomers, including users of our leasing services.

Suppliers andpartners

We work together with suppliers of leased assets, business partners, and vendors to build and maintain
fair and equal relationships that serve as fertile ground upon which everyone involved can grow.

Shareholders

Our basic policy is to return stable profits to shareholders on a long-term basis. We also disclose
information in a timely, appropriate, and fair manner to ensure the transparency of our operations.

Industryorganizations andcompetitors

We work with competitors to enhance the leasing business, improve services, and share information,for example, through the initiatives undertaken by the Japan Leasing Association.

Communities

We value communication with people, companies, and other organizations not only in the areas where
we operate but also with a host of communities that lie beyond, and engage in community-based
activities as a responsible corporate citizen.

Natural environment

To address environmental issues, we actively implement environmental initiatives through our businessactivities and strive to minimize our environmental footprint.

National government,
administrative
authorities, etc.

We maintain appropriate relationships with the government of Japan, relevant ministries and agencies,
and local governments. We also maintain sound relationships with the central governments andadministrative authorities of countries where our overseas subsidiaries operate.

Financial institutions

We raise funds necessary for our operations by maintaining strong relationships of trust with financial
institutions.

Employees and theirfamilies

We work to create a safe, happy, and vibrant workplace environment for our employees. In addition,
we are building a better occupational environment where all employees can find their own optimal
work-life balance and enhance the quality of both life and work.

33

Fuyo Lease Group Integrated Report 2018

Our Thoughts on CSR

Practicing CSR based on our Management Philosophy
Based on our Management Philosophy, the Fuyo Lease Group focuses on supporting "corporate activities throughour leasing business with view to contributing to development of the society" as the foundation of CSR activities
that need to be prioritized and addressed. We are working together as a group to carry out these activities.

Contributing to the society through leasing business
We use various ﬁnancial functions including leases to support customers' capital investments to solve environmental and social issues. We also contribute to the creation of a closed loop society through the 3Rs (reduce,reuse, recycle) of assets whose leases have expired.

Through the use of various ﬁnancial functions, we support customers' capital
investments to solve environmental and social issues
Fuyo Lease supports customers' capital investments through the use of various ﬁnancial functions, which leads tosolving of the various issues society faces.
We support environmentally-friendly, healthy, and safe lives. For example, in regards to the environmental impact,
we engage in the leasing of energy-saving equipment, renewable energy equipment, leasing eco-cars and the
ESCO (Energy Service Company) service among others. In regards to support for social life, we lease medical
equipment, food-related equipment, aircraft, railroad equipment, and disaster prevention- and crime prevention-related equipment.

34

Fuyo Lease Group Integrated Report 2018

Promote 3Rs for assets whose leases have expired and contribute to
the creation of a closed loop society
We contribute to the creation of a closed loop society by promoting the reduction of industrial waste, as well as
the reuse and recycling of equipment and machinery that have been returned after the end of their lease periods.

35

Fuyo Lease Group Integrated Report 2018

Environmental Report

Environmental Philosophy/
Environmental Policy
Environmental Philosophy
The Fuyo Lease Group acts with care to preserve the global environment based on its management philosophyof "supporting our customers' business activities, and contributing to the community through the leasing business,"and promotes activities to address environmental issues in line with its environmental policy.

Environmental Policy
1. Protecting the global environment through leasing businessWe endeavor to provide products and services that contribute to protecting the global environment inour business activities, including leasing, rental, and ﬁnancial business.

2. Promoting resource and energy saving activities
We are aware of the environmental burdens associated with business activities and endeavor to engage
in resource and energy saving activities and green procurement.

3. Contributing to the development of a recycling society
We promote the reuse and recycling of goods no longer leased, restrict the generation of waste,
and ensure proper disposal of waste.

4. Complying with environmental laws
We comply with environment-related laws and agreements to which the Fuyo Lease Group has agreed.

5. Establishing an environmental management system
We promote continuous improvement of an environmental management system and endeavor to prevent
environmental pollution by setting environmental targets.

36

Fuyo Lease Group Integrated Report 2018

Environmental Management

Environmental management system
Within the Fuyo Lease Group, the President of Fuyo General Lease serves as Chief Executive Oﬃcer, and the Director responsible for the Corporate Communication Division serves as Environmental Control Oﬃcer. The Group hasan environmental management system structure that covers the Fuyo Lease Group companies.
Environmental management system structure

Acquired ISO14001 cer tiﬁcation
Fuyo Lease and Fuyo Lease Group companies acquired ISO14001 See Glossary certiﬁcation for their main businessoﬃces in July 2006, passed a transitional assessment in June 2017, conducted in response to a revision of thecertiﬁcation standard, and passed a renewal audit for the fourth time in June 2018.
The current scope of certiﬁcation is described below. In order to practice environmentally conscious management, we will continue striving to robustly implement our environmental management system.

37

Fuyo Lease Group Integrated Report 2018

ISO14001: 2015 scope of the acquired certiﬁcation
・Fuyo General Lease: Head Oﬃce and Osaka branch (engaged in leasing business, installment sales, ﬁnancing,and other ﬁnancial service operations)
・Fuyo Lease Sales: Head Oﬃce and Tokyo 3R Center (processing re-leasing contracts as an agent, selling anddisposing of lease-expired properties, and purchasing and selling used properties)
・Fuyo Network Service: Head Oﬃce (selling computers, software and networking devices)
・FGL Service (engaged in non-life insurance agent business, contract sales administration, and contracted generalaﬀairs operations)

ISO14001: 2015
Management System Certiﬁcate

Appendix 1

Internal environmental audit and external audit
The Fuyo Lease Group strives to continuously improve its environmental management system through activities
such as internal environmental audits and external audits.

Internal environmental audit
Initially, after the introduction of the environmental management system, all the departments, oﬃces, branches
and Group companies were subject to an internal environmental audit every year. Over time, the environmental
management system was spread throughout all of the Group companies. Therefore, since FY 2012, we have been
conducting internal environmental audits on about half of the departments, oﬃces, branches, and Group companies every year in rotation.
Furthermore, since FY 2015, we have not been conducting internal environmental audits on departments thatreceived an external audit in the relevant ﬁscal year.

38

Fuyo Lease Group Integrated Report 2018

Audited departments and audit results
FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

19
departments/
oﬃces

19
departments/
oﬃces

9
departments/
oﬃces

23
departments/
oﬃces

14
departments/
oﬃces

Branches

3 branches‑‑

1 branches‑

Group companies

3 companies

1companies

None

3 companies

1 companies

Major nonconformance

None

None

None

None

None

Minor nonconformance

None

None

None

None

None

Opportunities for
improvement*

None

None

None

None

None

Good performance

2 cases

5 cases

2 cases

None

None

Head Oﬃce
Departments/
Oﬃces* Opportunities for improvement: advice on making future improvements

External audit
In June 2018, we received an external audit for ISO14001 certiﬁcation. This was the fourth renewal audit.
We will continue making improvements by taking into consideration the audit results and advice we receive.

External audit results
Audit results

June 2014

June 2015

June 2016

June 2017

June 2018

Strong point

2 cases

1 case

None

None

None

Good point

4 cases

6 cases

2 cases

1 case3 casesNone

3 cases

2 cases

3 cases

1 case

None

None

None

None

None

Opportunities for
improvement*
Findings for
improvement*Opportunities for improvement: advice on making future improvements

39

Fuyo Lease Group Integrated Report 2018

Environmental education
The Fuyo Lease Group regularly provides environmental training to deepen the understanding of the environmental management system and to increase environment-related knowledge and skills.
The following table shows the implementation status for FY 2017.

Implementation status of environmental education (FY 2017)
PeriodNumber of Participants

Environmental e-learning

April 2017 - May 2017

999 employees

Tokyo 3R Center Training Program

June 201734 employees

Sanden Forest Biodiversity Training ProgramMay 2017

Training

Employee
Training

new employees
37 employees

In FY 2017, we conducted an environmental e-learning program targeting
all employees to increase their knowledge of the latest environment-related information and environmental laws, and also implemented theTokyo 3R Center Training Program targeting new employees and others
who were interested, under which they had an opportunity to visit sites
practicing 3R for lease-expired properties, in order to increase theirunderstanding of the Group's environmental measures.
Since FY 2013, Fuyo Lease has introduced a new active learning module
on biodiversity to the new employee training program as part of environ-Tokyo 3R Center Training Program

mental education.

P ro m o t i n g t a k i n g t h e Ec o Te s t
The Fuyo Lease Group is encouraging its employees to take the Certiﬁcation Test for Environmental Specialists,
Eco Test, in order to increase their environmental awareness.
In FY 2017, 11 employees passed the test, and as of the end of March 2018, a total of 279 employees have passed
the test.

Promoting environmental education
Learning about biodiversity at Sanden Forest
Since FY 2013, Fuyo Lease has introduced an active learning module to the new employee training program in order to help participants learn about biodiversity as part of theirenvironmental education. With the full cooperation of Sanden Co., Ltd., which has a
25-percent share of the global market for car air-conditioner compressors, we organizeda visit to Sanden Forest's Akagi Plant for new employees in May each year between 2013
and 2018. The number of new employees who visited the plant was 19 in 2013, 20 in2014, 30 in 2015, 30 in 2016, 35 in 2017, and 37 in 2018. Leasing company employees
learned about biodiversity, which they usually do not have an opportunity to experience.

40

Fuyo Lease Group Integrated Report 2018

Sanden Forest, located at the foot of Mt. Akagi in Gunma Prefecture, established in 2002, is the ﬁrst major private
plant using the neo-natural river reconstruction method* under the concept of the "harmonious coexistence of
manufacturing plants and the natural environment." Half of the site area, which is about ﬁfteen times that of Tokyo
Dome (a landmark in Tokyo for baseball games and various events, equivalent to 46,755㎡), has been developed
as a forest, and ongoing surveys have conﬁrmed that biodiversity in the area has improved. In the training
program, employees observe various environmental measures incorporated in the production processes of theplant and then take a stroll around the surrounding forests and biotope. New employees learn about theadvanced environmental activities of Sanden Co., Ltd. on-site in the training program, which provides a valuable
experience for them to recognize the signiﬁcance of environmentally conscious business activities.
* Neo-Natural River Reconstruction Method: this is a method for manually creating the ﬁrst stage of a process where nature restores an ecosystemusing its original resilience.

Sanden Forest's Akagi Plant

Environmental Risk Management
In addition to ensuring compliance with laws and regulations concerning waste disposal, we conduct on-site
surveys of companies contracted to dispose lease-expired properties in order to reduce environmental risks
related to waste disposal.

Proper disposal of lease-expired properties
Fuyo Lease complies with laws such as Waste Disposal and Public Cleaning Law and appropriately disposes oflease-expired properties that cannot be reused.
Furthermore, in addition to systematically conducting surveys to examine the waste disposal approaches andrecycling activities performed by contracted disposal companies, we also thoroughly manage and utilize the
manifests* of industrial waste management.
* Manifest: a document or electronic data for examining whether waste has been disposed of appropriately. Waste generating business operators are
required by the Waste Management Act to issue and collect, or register a manifest in order to conﬁrm proper disposal of waste.

For more details, please refer to the appropriate waste disposal approaches being adopted by Fuyo Lease Group
companies and Fuyo Lease Sales, which have been contracted by our Company to perform back-oﬃce tasks.

Compliance with environmental laws and regulations
Inspection Result

cases

Violation of law

None

Environment-related complaints

None

41

Fuyo Lease Group Integrated Report 2018

The Fuyo Lease Group, through various environmental education activities, strives to ensure that all its oﬃcers andemployees comply with environmental laws and regulations. Furthermore, the Group regularly conducts compliancechecks concerning environmental laws and regulations, whereby the status of compliance with the environmental
laws and regulations is conﬁrmed. The FY 2017 compliance checks, covering the period between February 2017 andJanuary 2018, were inspected in February 2018. In the checks, it was conﬁrmed that there were no cases constituting
a violation of laws and regulations, and that there were no cases involving environment-related complaints. Similarly,
in previous years, there were no cases constituting violation of environmental laws and no cases involving environment-related complaints.

Obtained the highest ranking in the DBJ Environmental Rating for the seventh consecutive year
In FY 2017, as in the previous ﬁscal year, the Company
obtained the highest ranking in the DBJ Environmental Rating*assigned by Development Bank of Japan, Inc. for the seventh
consecutive year for its exceptionally advanced environmentally conscious approach.
The Company was highly rated for its initiatives which aligns
with its management philosophy to contribute in creating a
recycling-oriented society by taking advantage of the special
characteristics of the leasing business. Speciﬁcally, the initiatives include the Company's activities to: (1) in line with areview of its Medium-term Management Plan, the Company has reviewed key issues and KPIs andidentiﬁed a wide range of key issues covering not only environmental aspects but also social topics
through discussions with the management; (2) raised customers' environmental awareness byproposing a PC Eco & Value Lease by communicating not only the eﬀects of reducing cost burden
when using the service but also the eﬀects of reducing the environmental impact through the reuse
lifecycle; and (3) reduced its environmental impact by streamlining the handling of expired leases andrentals, and centralizing logistics, which was achieved by consolidating the functions previously located in the Fukagawa Technical Center with the Tokyo 3R Center.
The Company will continue to promote its management strategy and CSR management strategy in
an integrated manner and will actively disclose the results.
* DBJ Environmental Rating is a rating system developed by the Development Bank of Japan, Inc. for the rating companies
based on the level of their environmental management practices. Based on this, companies can receive loans from the bank at preferential
interest rates according to their respective ratings.

Glossar y

ISO140 01
ISO14001 is a global standard for environmental management system speciﬁcations established by
the International Organization for Standardization. The International Organization for Standardization, headquartered in Switzerland, is a private organization that creates international standards.

42

Fuyo Lease Group Integrated Report 2018

Fuyo Lease Group Key Environmental
Targets and Results(FY 2017 results and FY 2018 targets)
The Fuyo Lease Group strives to achieve its
environmental targets.
Evaluation: ◯ target achieved, × target not achieved

Global warming countermeasures
Companies

Objectives

FY 2017 targets

FY 2017 results

Evaluation

FY 2018 targets

Fuyo General
Lease &FGL Service

Participating inJapan Leasing
Association's
voluntary action
plan on global
warming

Participate in
low-carbon society
action plan in theleasing industry
Reduce electricity
consumption per ﬂoor
area at Fuyo General
Lease head oﬃce by
20% in FY 2030
compared with thebase year (FY 2009)

Compared with
FY 2009 52.7%
reduction〇

Participate in the
Low-carbon Society
Action Plan of theleasing industry
Reduce electricity
consumption per
ﬂoor area at Fuyo
General Lease headoﬃce by 20% in FY
2030 comparedwith the base year
(FY 2009)

Fuyo General
Lease &
Fuyo Group
companies*1

Reduce greenhousegas emissions

Maintain FY 2010
level of CO2
emissions (t-CO2)

Compared with FY2010 1.1% increase×

Maintain FY 2010
level of CO2
emissions (t-CO2)

Protecting the global environment through leasing businessCompanies

Objectives

FY 2017 targets

Fuyo General
Lease

Acquireenvironmentallyfriendly assets

Invest 12 billion yen inacquiring energy-eﬃcient and environmentally-friendly assets

Sign agreements for
PC Eco & Value
Leases and PC
rental services

Invest 5 billion yen inacquiring assets for
PC Eco & Value
Leases and PC rental
services43

FY 2017 results

Evaluation

FY 2017 targets¥17.0 billion〇

Invest 13 billion yen
in acquiring
energy-eﬃcient andenvironmentally-friendly assets¥4.7 billion

×

Invest 5 billion yen
in acquiring assets
for PC Eco & Value
Leases and PC rental
services

Fuyo Lease Group Integrated Report 2018

Promoting resource and energy saving activities
Companies

Objectives

FY 2017 targets

FY 2017 results

Evaluation

Fuyo General
Lease &
Fuyo Group
companies*１

Reducing power
usage

Maintain FY 2010
level of electricity
consumption (kWh)14.3% reduction
compared with
FY 2010〇Maintain FY 2010
level of electricity
consumption (kWh)Reducing photocopier paper
consumption

Maintain FY 2010
level of photocopierpaper consumption(estimated based on
sheets purchased)

10.1% reduction
compared with
FY 2010○Maintain FY 2010
level of photocopierpaper consumption(estimated basedon sheets
purchased)

Fuyo General
Lease,
Fuyo Auto Lease &Aqua Art

Reducing company
vehicle fuelconsumption

Maintain FY 2010
level of company
vehicle fuel consumption (l)31.9% reduction
compared with
FY 2010〇Maintain FY 2010
level of company
vehicle fuelconsumption (l)Fuyo General
Lease &
Fuyo Group
companies*１

Promoting purchaseof green stationery
supplies

Maintain FY 2010
level of green
stationery supplies(%)

13.3% reduction

×Maintain FY 2010
level of green
stationery supplies(%)

Evaluation

FY 2018 targets

compared with
FY 2010

FY 2017 targets

Contributing to the development of a recycling society
Companies

Objectives

FY 2017 targets

Fuyo Lease Sales

Promoting reduce,reuse, recycle (3Rs)

60,000 units ofsecondhand property
sales at three centers(Tokyo 3R, Kansai,
Kyushu)FY 2017 results

70,036 units〇

70,000 units

Complying with environmental laws
Companies

Objectives

FY 2017 targets

FY 2017 results

Evaluation

FY 2018 targets

Fuyo General
Lease &
Fuyo Group
companies*１

Comply withenvironmental
laws and regulations

Assess compliancewith environmental
laws and regulations

Assessedcompliance,
no infringements
or problems〇

Assess compliancewith environmental
laws and regulations*1 Scope: all domestic locations of Fuyo General Lease and Group companies including Fuyo Auto Lease, Fuyo Network Service, Fuyo Lease Sales, FGL Service, and Aqua Art.

44

Fuyo Lease Group Integrated Report 2018

Establishing an environmental management system
Companies

Objectives

FY 2017 targets

FY 2017 results

Evaluation

FY 2018 targets

Fuyo General Lease's
head oﬃce andOsaka branch,
Fuyo Lease Sales,
Fuyo Network Service,
FGL Service

Maintain ISO 1
4001 certiﬁcation

Transition to ISO
14001:2015 andmaintain certiﬁcation

Pass transitional
assessment
accompanying
standard revisionin June 2017,transition to
ISO14001: 2015
and maintaincertiﬁcation〇

Maintain ISO14001:
2015 certiﬁcation

Group-wide *2

Prepare CSR
Report andengage inexternal
communication

Release 12th CSR
Report (booklet andonline)Presented in
September 2017,
External
communication
implementation○

Engage in external
communication

Release 1st Integrated
Report (booklet andonline)Engage in external
communication*2 The scope of all Group companies is all domestic business oﬃces/plants of Fuyo General Lease, Sharp Finance, Fuyo Auto Lease,
Accretive, Fuyo Network Service, Fuyo Lease Sales, FGL Service, and Aqua Art.

45

Fuyo Lease Group Integrated Report 2018

Climate Change Initiatives

Basic Approach
Today, climate change is a universally recognized problem,and increasing greenhouse gas emissions are making it worse.
As the Paris Agreement, an international framework for climate action beyond 2020, and other initiatives give momentum
to eﬀorts to reduce greenhouse gas emissions across the globe, renewable energy along with environmentally-friendly
products and services are more important than ever. Activities to cut greenhouse gas emissions are also underway in theJapanese business community. Recognizing the impact of climate change on the business environment, the Fuyo Lease
Group is working toward climate change mitigation by reducing greenhouse gas emissions in our operations.
Examples of the risks and opportunities that the Fuyo Lease Group perceives climate change will bring about are as follows:・Impact on business results due to regulations such as carbon tax and major
regulatory changes (medium-to-long term)
Risks

・Restrictions on business activities due to damage to social infrastructure etc.
resulting from an increase in natural disasters (medium-to-long term)
・Decline in revenues from electricity sales in the mega-solar business due tothe impact of unseasonal weather (medium-to-long term)
・Increase in demand for renewable energy (medium-to-long term)
・Increase in demand for leasing energy-saving properties, etc. (medi-

Opportunities

um-to-long term)
・Increase in demand for environmentally-friendly products and services(medium-to-long term)

As with the other environmental issues, we have established a system for managing climate change countermeasures with the CEO (President of Fuyo Lease) and the Environmental Control Oﬃcer (Head of the Corporate Communications Division).

Initiatives to Reduce Greenhouse Gas Emissions
The Japan Leasing Association has formulated a voluntary low-carbon society action plan, which Fuyo Lease hassigned on to as a member company.
The Fuyo Lease Group is making eﬀorts to conserve the environment at all our locations by setting targets that lower
our CO2 emissions and energy consumption, and work to reduce power usage, as well as our company vehicles' fuelconsumption and exhaust emissions. In addition, we joined RE100, a business initiative which aims to source 100%
renewable energy to power business activities, the ﬁrst member among comprehensive leasing companies in Japan.
The Group's goal is to power our own operation with 50% renewable energy by 2030 and 100% by 2050.

46

Fuyo Lease Group Integrated Report 2018

Total CO2 Emissions (Scope 1, 2)*1 *3

Total CO2 Emissions (adjusted)(Scope 1, 2)*2 *3

Electricity Consumption *3

Total Gasoline Consumed byCompany Vehicles*3*1 Total CO2 emissions were calculated with the emission factors speciﬁed by the government based on the Ministerial Ordinance Concerning
GHG emissions Associated with Business Activities of Speciﬁed Emitters (The emissions associated with electricity are calculated with the actual
emission factors issued by power transmission and distribution business operators of where our regional operations and oﬃces are located).
Please note that Fuyo Lease and each Group company are not included in the speciﬁed emitters. Our scope 1 and 2 emissions were 770 t-CO2
and 1,304 t-CO2 respectively.
*2 Total CO2 emissions (adjusted) were calculated with the emission factors speciﬁed by the government based on the Ministerial OrdinanceConcerning GHG emissions Associated with Business Activities of Speciﬁed Emitters (The emissions associated with electricity are calculated
based on the adjusted annual emission factors issued by power transmission and distribution business operators of where our regional
operations and oﬃces are located).
*3 Data coverage: all domestic locations of Fuyo General Lease. All domestic locations of Fuyo Auto Lease, Fuyo Network Service, Fuyo Lease
Sales, FGL Service, and Aqua Art as for the Group companies. Figures for Sharp Finance and Accretive include all of their domestic locations.
Figures of and before March 2017 do not include Sharp Finance and Accretive as their data collection began in FY 2017.

Energy Conservation via Products and Services
We have partnered with energy-saving equipment manufacturers, construction companies, and companies in othervarious sectors to help customers save energy through the ESCO service and other programs. The ESCO service
provides everything needed to improve energy eﬃciency, including technology, equipment, personnel, and funding,and achieves energy conservation without compromising a customer's current environment or convenience. As the
ESCO service provider, we receive a portion of the actual energy cost savings generated through the service ascompensation. In addition, we help our customers reduce costs and CO2 emissions by introducing various energy
saving solutions tailored to their energy usage. Examples of the solutions include energy-saving control and operational improvement for air-conditioning systems and LED lightings, and subsidized leasing.

47

Fuyo Lease Group Integrated Report 2018

Promotion of Renewable Energy
As climate change risks increase, the renewable energy market continues to grow with a focus on solar, wind,biomass, small and medium hydro, and geothermal power to promote zero-carbon energy society. In 2012, Fuyo
Lease launched a solar power generation business through its subsidiary. As of March 2018, we supply enoughrenewable energy to power about 30,000 homes by operating large-scale solar power plants (mega-solar power
plants) at 30 locations throughout Japan.
We also leverage the know-how gained through our power generation business to oﬀer a host of power generation equipment installation plans that meet a wide array of customer needs. Those include everything fromlarge-scale power plants to rooftop solar panels of distribution warehouses and other commercial facilities, oroﬀ-grid schemes for home consumption. Along with various ﬁnancing options, we introduce them to customers
with the aim of taking the use of renewable energy to new heights.

Initiatives in the Solar Power Business
In March 2018, Fuyo Lease started commercial
operation of the Tomioka-Sugiuchi Solar Power Plant,
located in Tomioka-machi, Fukushima Prefecture. We
are also promoting the construction of mega-solar
power plants in two further locations in Naraha-machi, Fukushima Prefecture and Shichigashuku-cho,Miyagi Prefecture. The new mega-solar plants arelarge-scale power plants nearly ten times larger thanconventional ones, and it is expected that the electricity supplied by the three plants combined will
be equivalent to the power consumption of approximately 17,000 households.*2
Fukushima Prefecture, which suﬀered signiﬁcant damage due to the Great East Japan Earthquake
and the nuclear power plant accident, is aiming to be a pioneering region in terms of renewableenergy and has set a vision to generate at least 100% of primary energy demand within the prefecture using renewable energy by around 2040.
Our mega-solar plants are already operating in three locations in Fukushima Prefecture. Goingforward, our solar power business plans are to continue promoting the establishment of mega-solar
plants in the prefecture to help achieve this vision.
*1 A large-scale solar power plant with output of at least 1MW (megawatt = 1,000kW)*2 Calculated based on 3,600kW per household

48

Fuyo Lease Group Integrated Report 2018

Environmental Performance

Energ y／CO₂*1
Electricity Consumption

Total Gasoline Consumed byCompany Vehicles

Total CO₂ Emissions (Scope 1, 2)*2

Total CO₂ Emissions(adjusted) (Scope 1, 2)*3

CO₂ emissions (Scope 1, 2, 3)CO₂ emissions (t-CO₂)
2015/3

2016/32017/3

2018/3 ☑

Ratio of total CO₂
emissions（2018/3）

Scope 1

159

154

163

770

0.043%

Scope 2

1,128

1,062

1,108

1,304

0.074％

Scope 3 *4

1,243,298

1,420,896

1,639,334

1,768,197

99.883％

Total CO₂ emissions

1,244,585

1,422,112

1,640,605

1,770,271

100%

49

Fuyo Lease Group Integrated Report 2018

*4
CO₂ emissions（Components of Scope 3）CO₂ emissions（t-CO₂）
Category
2015/3
1. Purchased goods
and servicesー2016/3ー2017/3ー2018/3 ☑

Composition ratios
in total CO₂ emissions(Fiscal 2017)

Calculation method/remarks

The Company handles a wide range of products.

ーTherefore, it is diﬃcult to identify the amount for eachproduct and inﬂuence CO₂ emissions reductions, andthus this category is currently excluded from the scopeof calculations.
However, all purchased goods for lease are included in"2. Capital goods."

2. Capital goods

1,242,316 1,420,000 1,638,389 1,767,060

99.936%(Purchase amount × Emission intensity) + (Amount oflease contracts executed × Emission intensity *)3. Fuel- andenergy-related
activities not includedin Scope 1 or 2

98

4. Transportationand distribution(upstream)

ー

96

102

207

0.012%

Consumption of electricity and fossil fuels in
calculating Scope 1 and 2 emissions × Emission
intensity *ーーProducts are distributed directly from manufacturers,ーand therefore it is diﬃcult to identify forms oftransportation from manufacturers to customers, aswell as to inﬂuence CO₂ emissions reductions. As such,
this category is currently excluded from the scope of
calculations.

225

214

294

0.017%

CO₂ emissions by method of treatment ×

5. Waste generated inoperations

312

6．Business travel

201

203

221

223

0.013%

7．Employee commuting

371

372

408

412

0.023%

8． Leased assets(upstream)Not
applicableNot
applicableNot
Not
applicable applicable

Energy consumption in rented oﬃces is included in

9．Transportationand distribution(downstream)Not
applicableNot
applicableNot
Not
applicable applicable

There are no applicable emissions since the Company

10．Processing ofsold products

NotapplicableNot
applicableNot
Not
applicable applicable

There are no applicable emissions since the11．Use ofsold productsーー

Emission intensit y *ー

Number of employees × Emission intensit y *Number of employees by classiﬁcation of city ×
Number of business days × Emission intensity *calculating Scope 1 and 2 emissions.

bears transportation costs in the entire logistics process.

Company does not handle intermediate products.

The Company handles a wide range of products andー

it is diﬃcult to identify usage conditions of eachproduct at the customer location, and thus thiscategory is currently excluded from the scope of
calculations.

12．End-of-life
treatment ofsold products

ー

ー

ー

The Company handles a wide range of products andー

it is diﬃcult to identify waste disposal conditions ofeach product at the customer location, and thus thiscategory is currently excluded from the scope of
calculations.

13．Leased assets(downstream)

ー

ー

ー

The Company handles a wide range of products andー

it is diﬃcult to identify usage conditions of eachleased product at the customer location, and thus
this category is currently excluded from the scope of
calculations.

14．Franchises

15．Investments

NotapplicableNot
applicableーー

There are no applicable emissions since the Company

Not
Not
applicable applicableー

has no franchise.

ーIt is diﬃcult to identify amounts by investment
division, and thus this category is currently excluded
from the scope of calculations.

Total CO₂ emissions

1,243,298 1,420,896

1,639,334 1,768,197

100%*Emission intensity: "Emission intensity database forcalculating greenhouse gas emissions oforganizations throughout the supply chain (ver.2.5)"by the Ministry of the Environment; for emission
intensity of gasoline classiﬁed as Category 3, "Carbon
Footprint Communication Program, Basic Databasever.1.01 (domestic data)"

50

Fuyo Lease Group Integrated Report 2018

*1 Data coverage: all domestic locations of Fuyo General Lease. All domestic locations of Fuyo Auto Lease, Fuyo Network Service, Fuyo Lease Sales, FGL Service, and Aqua Art as for the Group
companies. Figures for Sharp Finance and Accretive include all of their domestic locations. Figures of and before March 2017 do not include Sharp Finance and Accretive as their data collection
began in FY 2017.
*2 Total CO₂ emissions were calculated with the emission factors speciﬁed by the government based on the Ministerial Ordinance Concerning GHG emissions Associated with Business Activities ofSpeciﬁed Emitters (The emissions associated with electricity are calculated with the actual emission factors issued by power transmission and distribution business operators of where our regional
operations and oﬃces are located). Please note that Fuyo Lease and each Group company are not included in the speciﬁed emitters.
*3 Total CO₂ emissions (adjusted) were calculated with the emission factors speciﬁed by the government based on the Ministerial Ordinance Concerning GHG emissions Associated with Business
Activities of Speciﬁed Emitters (The emissions associated with electricity are calculated based on the adjusted annual emission factors issued by power transmission and distribution business
operators of where our regional operations and oﬃces are located).
*4 Scope 3 emissions are calculated for all calculable categories based on "Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain (Ministry of the Environment,
Ministry of Economy, Trade and Industry)." The scope of calculations is the Fuyo Lease Group.

Waste
Volume of Industrial Waste
Generated*5*6

Volume of Waste Generated*7*5 Data coverage: all domestic locations of Fuyo General Lease and Fuyo Lease Sales.

*6 The volume of industrial wastes is calculated by the calendar year.

*7 Data coverage: Fuyo General Lease/Headquarter (including FGL Service) *8 All volume of waste paper is dissolution-processed.

Water Consumption*9
Water Consumption*9 The scope of calculations is Fuyo General Lease Co., Ltd. / Head Oﬃce (including FGL Service Co., Ltd.) and Aqua Art Co., Ltd.

51

Fuyo Lease Group Integrated Report 2018

Oﬃce Supplies
Quantity of photocopierpaper purchased*10

Percentage of green stationery
supplies*11*10 The scope of calculations is all domestic business operations of Fuyo General Lease Co., Ltd., Fuyo Auto Lease Co., Ltd., FGL Service Co., Ltd., Fuyo Lease Sales Co., Ltd., Aqua Art Co., Ltd. andFuyo Network Service Co., Ltd. All domestic business operations of Sharp Finance Co., Ltd. and Accretive Co., Ltd. Figures for Sharp Finance Co., Ltd. and Accretive Co., Ltd. before March 2017 are
not provided as the Company started compiling data for these companies from Fiscal Year 2017.
*11 The scope of calculations is all domestic business operations of Fuyo General Lease Co., Ltd., Fuyo Auto Lease Co., Ltd., FGL Service Co., Ltd., Fuyo Lease Sales Co., Ltd., Aqua Art Co., Ltd. andFuyo Network Service Co., Ltd. All domestic operations of Accretive Co., Ltd. are included in the scope of calculations from Fiscal Year 2017.

52

Fuyo Lease Group Integrated Report 2018

Environmental Accounting

Publishing the Results of Environmental Activities
by Introducing the Environmental Accounting System
The Fuyo Lease Group focuses eﬀorts not only on improving its environmental performance but also on proposing
services useful for enhancing the environmental performance of customers.
In addition, the Group has introduced environmental accounting* with the aim of conducting a quantitative assessmentof the results of its environmental activities and reporting the results of the assessment to customers and other stakeholders in an easy-to-understand format.
In Fiscal 2017, the Group expanded the scope of calculations for environmental accounting to include Sharp FinanceCo., Ltd. and Accretive Co., Ltd. As a result, it became clear that fuel consumption by company cars had increased andthat CO2 emissions were no longer being reduced. On the other hand, leasing of environmentally friendly properties,
which are included in the scope of calculations for environmental accounting, increased, and we made a contribution
to CO2 emissions reduction by customers (estimates by the Company) that exceeded the results of the previous ﬁscal
year.
* Environmental accounting: Environmental accounting is a procedure that allows a company to identify the cost of environmental conservation during
the normal course of business, identify beneﬁt gained from such activities, provide the best possible means of quantitative measurement and support
the communication of its results.

Environmental Accounting for Our Environmental Conservation Measures*1
The Company identiﬁes the costs and economic beneﬁts associated with environmental conservation activities
in accordance with policies stipulated in the "Environmental Accounting Guidelines" of Japan's Ministry of theEnvironment, in order to assess the Fuyo Lease Group's environmental conservation initiatives.
-：No applicable data is available.

×：Not recorded in the Environmental Accounting

53

Fuyo Lease Group Integrated Report 2018

Fiscal 2017
Environmental preservation costs
Activity

Environmental objective

Economic eﬀects
of environmental
preservation"Reduction in CO2
Reduction in
activities (tenemissionsvolume ofthousand yen)
(ton-CO2)*2"
waste discharge (ton)Eﬀects of environmental
preservation

Investment(ten thousand yen)

Expenses(ten thousand yen)

0

0

−231

-

−2,244

×

0

0

-

×

Reducing use of paper forcopying and printing

×

×

-

−6.8

-94

Reducing fuel consumption andexhaust emissions of company cars

×

126.6

−607

-

−3,468Establishing a prudent administration
system for the disposal ofgoods no longer leased

×

18,495*3-

249 *４82,407

Acquiring, maintaining andexpanding ISO14001
Certiﬁcation by the Group

×

3,705

×

×

×

Providing environmental
education on a regular basis

×

×

×

Publishing information on
environmental activities
through CSR reports, etc.

×

×

×

Reducing

Introducing energy-saving
equipment, eco-friendly
oﬃce activities, etc.

electricity
use

Promoting resources

Purchasing green
electric powersaving and energy
saving activities

Contributing to thedevelopment of arecycling society

Establishing anenvironment
management
systemContributing to local
environmental education *5

Total

×

491

×

×

×

×

22,818−838

242

76,601

Fiscal 2016
Environmental preservation costs
Activity

Environmental objective

Economic eﬀects
of environmental
preservation"Reduction in CO2
Reduction in
activities (tenemissionsvolume ofthousand yen)
(ton-CO2)*2"
waste discharge (ton)Eﬀects of environmental
preservation

Investment(ten thousand yen)

Expenses(ten thousand yen)

0

0

-45

-

60

×

0

0

-

×

Reducing use of paper forcopying and printing

×

×

-

-0.2

45

Reducing fuel consumption andexhaust emissions of company cars

×

105.3

-10

-

28

Establishing a prudent administration
system for the disposal ofgoods no longer leased

×15,750 *3

-

236*４

72,945Acquiring, maintaining andexpanding ISO14001
Certiﬁcation by the Group

×

2,788

×

×

×

Providing environmental
education on a regular basis

×

×

×

Publishing information on
environmental activities
through CSR reports, etc.

×

×

×

Reducing

Introducing energy-saving
equipment, eco-friendly
oﬃce activities, etc.

electricity
use

Promoting resources

Purchasing green
electric powersaving and energy
saving activities

Contributing to thedevelopment of arecycling society

Establishing anenvironment
management
systemContributing to local
environmental education *5

Total

×

1,058

×

×

×

×

19,701-55

236

73,07854

Fuyo Lease Group Integrated Report 2018

Fiscal 2015
Environmental preservation costs
Activity

Environmental objective

Economic eﬀects
of environmental
preservation"Reduction in CO2
Reduction in
activities (tenemissionsvolume ofthousand yen)
(ton-CO2)*2"
waste discharge (ton)Eﬀects of environmental
preservation

Investment(ten thousand yen)

Expenses(ten thousand yen)

0

0

66

-

173

×

0

0

-

×

Reducing use of paper forcopying and printing

×

×

-

-0.4

-65

Reducing fuel consumption andexhaust emissions of company cars

×

52.4

5

-

350

Establishing a prudent administration
system for the disposal ofgoods no longer leased

×

15,749 *3

-

237*４

49,984

Acquiring, maintaining andexpanding ISO14001
Certiﬁcation by the Group

×

2,858

×

×

×

Providing environmental
education on a regular basis

×

×

×

Publishing information on
environmental activities
through CSR reports, etc.

×

×

×

Reducing

Introducing energy-saving
equipment, eco-friendly
oﬃce activities, etc.

electricity
use

Promoting resources

Purchasing green
electric powersaving and energy
saving activities

Contributing to thedevelopment of arecycling society

Establishing anenvironment
management
systemContributing to local
environmental education *5

Total

×

1,247

×

×

×

×

19,90771

236

50,442

Fiscal 2014
Environmental preservation costs
Activity

Environmental objective

Economic eﬀects
of environmental
preservation"Reduction in CO2
Reduction in
activities (tenemissionsvolume ofthousand yen)
(ton-CO2)*2"
waste discharge (ton)Eﬀects of environmental
preservation

Investment(ten thousand yen)

Expenses(ten thousand yen)

0

0

89

-

131

×

0

0

-

×

Reducing use of paper forcopying and printing

×

×

-

2.8

2

Reducing fuel consumption andexhaust emissions of company cars

×

0.9

33

-

204

Establishing a prudent administration
system for the disposal ofgoods no longer leased

×

18,015*3-293*４51,810Acquiring, maintaining andexpanding ISO14001
Certiﬁcation by the Group

×

2,852

×

×

×

Providing environmental
education on a regular basis

×

×

×

Publishing information on
environmental activities
through CSR reports, etc.

×

×

×

Reducing

Introducing energy-saving
equipment, eco-friendly
oﬃce activities, etc.

electricity
use

Promoting resources

Purchasing green
electric powersaving and energy
saving activities

Contributing to thedevelopment of arecycling society

Establishing anenvironment
management
systemContributing to local
environmental education *5

Total

×

680

×

×

×

×

21,548122296

52,14755

Fuyo Lease Group Integrated Report 2018

Fiscal 2013
Environmental preservation costs
Activity

Environmental objective

Economic eﬀects
of environmental
preservation"Reduction in CO2
Reduction in
activities (tenemissionsvolume ofthousand yen)
(ton-CO2)*2"
waste discharge (ton)Eﬀects of environmental
preservation

Investment(ten thousand yen)

Expenses(ten thousand yen)

0

0

-140

-

-99

×

0

0

-

×

Reducing use of paper forcopying and printing

×

×

-

0.7

-25

Reducing fuel consumption andexhaust emissions of company cars

×

52.9

10

-

1

Establishing a prudent administration
system for the disposal ofgoods no longer leased

×

19,449 *3-

270 *４42,211

Acquiring, maintaining andexpanding ISO14001
Certiﬁcation by the Group

×

2,892

×

×

×

Providing environmental
education on a regular basis

×

×

×

Publishing information on
environmental activities
through CSR reports, etc.

×

×

×

Reducing

Introducing energy-saving
equipment, eco-friendly
oﬃce activities, etc.

electricity
use

Promoting resources

Purchasing green
electric powersaving and energy
saving activities

Contributing to thedevelopment of arecycling society

Establishing anenvironment
management
systemContributing to local
environmental education *5

Total

×

567

×

×

×

×

22,961-130

270

42,088*1 The scope of calculations through Fiscal 2016 was Fuyo General Lease Co., Ltd., Fuyo Auto Lease Co., Ltd., Fuyo Network Service Co., Ltd., Fuyo Lease Sales Co., Ltd., FGL Service Co., Ltd. and Aqua
Art Co., Ltd.; the scope of calculations for Fiscal 2017 was expanded to all domestic business operations of eight companies, which are the above six companies plus Sharp Finance Co., Ltd. and
Accretive Co., Ltd.
*2 CO2 emissions reduction is calculated using the CO2 emission factor stipulated in the "Ministerial Ordinance on Reporting of Greenhouse Gas Emissions by Speciﬁed Emitters."(CO2 emissions from electricity are calculated using the actual CO2 emission factor for each ﬁscal year of general power transmission and distribution business operators which supply electricity inareas where business operations and oﬃces that are included in the scope of calculations are located.)*3 Costs associated with reuse and recycling processes and costs associated with management of industrial waste disposal operators*4 The economic beneﬁts of reusing and recycling PCs and TFT-LCD panels.
*5 The costs incurred in presenting AQUA ART (interior aquarium) on gratuitous rent to local kindergartens, etc. to support environmental education

56

Fuyo Lease Group Integrated Report 2018

Environmental Accounting for Global Environmental
Conservation Through the Leasing Business
The Fuyo Lease Group conducts business activities that contribute to global environmental conservation in its
core business of the leasing business and estimates the social eﬀects of these activities (economic beneﬁts tocustomers) using the Group's own calculation method.
-：No applicable data is available.

×：Not recorded in the Environmental Accounting

Fiscal 2017
Activity

Environmental objective

Promoting theEnvironmentally

Protecting thepurchase offriendly assets*2

globalenvironmen-

environment
throughtally friendlyassetsEco-cars*3

leasing

Promoting the conclusion ofbusiness

PC Eco & Value lease contracts
Promoting project ﬁnancing
such as renewable energy

Provision of environment-related
products and services*1

Reduction in CO2 emissions by customers throughour environment-related products and services (estimate)*4
Reduction in CO2 emissions(ton-CO2/year) *5

Reduction in volume ofwaste discharge (ton)¥4.4 billion

47,429×

7,618 vehicles

10,342

×

49,521×263*6¥0.3 billion

1,503

×

×

59,274263

Total

Fiscal 2016
Activity

Environmental objective

Promoting theEnvironmentally

Protecting thepurchase offriendly assets*2

globalenvironmen-

environment
throughtally friendlyassetsEco-cars*3

leasing

Promoting the conclusion ofbusiness

PC Eco & Value lease contracts
Promoting project ﬁnancing
such as renewable energy

Provision of environment-related
products and services*1

Reduction in CO2 emissions by customers throughour environment-related products and services (estimate)*4
Reduction in CO2 emissions(ton-CO2/year) *5

Reduction in volume ofwaste discharge (ton)¥2.7 billion

19,127

×

6,252 vehicles

8,375

×

55,244×

288*6¥0.5 billion

2,825

×

×

30,327

288

Total

57

Fuyo Lease Group Integrated Report 2018

Fiscal 2015
Activity

Environmental objective

Promoting theEnvironmentally

Protecting thepurchase offriendly assets*2

globalenvironmen-

environment
throughtally friendlyassetsProvision of environment-related
products and services*1

Eco-cars*3

leasing

Promoting the conclusion ofbusiness

PC Eco & Value lease contracts

Reduction in CO2 emissions by customers throughour environment-related products and services (estimate)*4
Reduction in CO2 emissions(ton-CO2/year) *5

Reduction in volume ofwaste discharge (ton)¥3.4 billion

29,592×

5,360 vehicles

7,167

×

39,775×

230 *6¥2.5 billion

13,927××

50,686230

Promoting project ﬁnancing
such as renewable energy

Total

Fiscal 2014
Activity

Environmental objective

Promoting theEnvironmentally

Protecting thepurchase offriendly assets*2

globalenvironmen-

environment
throughtally friendlyassetsProvision of environment-related
products and services*1

Eco-cars*3

leasing

Promoting the conclusion ofbusiness

PC Eco & Value lease contracts
Promoting project ﬁnancing
such as renewable energy

Reduction in CO2 emissions by customers throughour environment-related products and services (estimate)*4
Reduction in CO2 emissions(ton-CO2/year) *5

Reduction in volume ofwaste discharge (ton)¥2.3 billion

22,056

×

4,747 vehicles

6,352

×

50,640×

348*6¥1.6 billion

8,756

×

×

37,164348

Total

Fiscal 2013
Activity

Environmental objective

Promoting theEnvironmentally

Protecting thepurchase offriendly assets*2

globalenvironmen-

environment
throughtally friendlyassetsProvision of environment-related
products and services*1

Eco-cars*3

leasing

Promoting the conclusion ofbusiness

PC Eco & Value lease contracts

Reduction in CO2 emissions by customers throughour environment-related products and services (estimate)*4
Reduction in CO2 emissions(ton-CO2/year) *5

Reduction in volume ofwaste discharge (ton)¥3.5 billion

33,878×

6,072 vehicles

7,979

×

82,570×

458*6¥1.1 billion

6,219

×

×

48,076458

Promoting project ﬁnancing
such as renewable energy

Total*1 Figures for contract amounts and number of units, etc. contracted from Fiscal 2013 to 2017

*2 The subject of calculations is Fuyo General Lease Co., Ltd. Of properties Fuyo General Lease has deﬁned as environmentally friendly properties, and economic beneﬁts are calculated forco-generation equipment, energy saving equipment and air conditioning equipment.
*3 The subject of calculations is Fuyo Auto Lease Co., Ltd. Of properties Fuyo Auto Lease has deﬁned as eco-cars, and economic beneﬁts are calculated for low-emission gas vehicles, hybrid cars, LPG
powered cars and electric vehicles.
*4 Economic beneﬁts are estimated based on the relationship between price of general equipment and its beneﬁts and may diﬀer from actual beneﬁts.
*5 CO2 emissions reduction is achieved by customers per year through environmentally friendly properties (projects). If customers continue to use the lease properties (projects) in the following ﬁscal
year and beyond, the same amount of economic beneﬁts as the previous ﬁscal year will be generated.
*6 The economic beneﬁts generated assuming that all the PCs for which lease agreements were concluded from Fiscal 2013 to 2017 are reused.

58

Fuyo Lease Group Integrated Report 2018

List of Environmentally Conscious Products
and Services
Environmentally conscious products and services
Through leasing and ﬁnancing, we support capital investments for achieving energy-savings.
Fuyo Lease has extensive unique backup systems, including systems that use various subsidy systems and supplier referrals.

Energy-saving equipment and subsidy-based leaseWe oﬀer energy-saving measures through leases.

Please check the website for details. https://www.fgl.co.jp/service/energy.html

E SCO (Energ y Ser vice Company) ser vice
As an ESCO operator, we support total energy-saving activities.
Please check the website for details.

https://www.fgl.co.jp/service/esco.html

Financing for renewable energ y co mpanies
We provide various ﬁnancing services in the renewable energy ﬁeld.
Please check the website for details.

https://www.fgl.co.jp/service/energy̲f.html

Sol ar loan
We oﬀer loans covering purchasing and installation costs of solar power generation systems.
Please check the website for details.

https://www.fgl.co.jp/service/solar̲loan.html

Sol ar power generatio n business
We oﬀer optimal equipment implementation plans for items ranging from large-scale power plants to
Please check the website for details. https://www.fgl.co.jp/service/solar.html
small-scale solar panels.

Services promoting 3Rs and contributing to the environment
Through 3Rs (Reduce, Reuse, Recycle), we contribute to establishing a closed-loop society and provide economic
advantages to our customers.
We oﬀer a variety of services, such as reusing PCs whose leases have expired as well as buying used assets owned
by customers.

PC Eco & Value leaseWe oﬀer leases for personal computers in the pursuit of economic and ecological beneﬁts.
Please check the website for details.

https://www.fgl.co.jp/service/ecovalue.html

Personal computer rent al
We oﬀer a rental system that ﬂexibly responds to technological innovations in rapidly changing personal computers.
Please check the website for details.

https://www.fgl.co.jp/service/pcrental.html

Used personal computer purchasing ser vice
We purchase used personal computers.

Please check the website for details.

https://www.fgl.co.jp/service/pctrade.html

Used asset s purchasing ser vice
We purchase redundant equipment and idle assets. Please check the website for details. https://www.fgl.co.jp/service/chukai.html
Please check the website for "Fuyo General Lease" product / service list ".

59

https://www.fgl.co.jp/service/list.html

Fuyo Lease Group Integrated Report 2018

Green Bonds

Fuyo Lease has issued green bonds (unsecured straight bonds) through apublic oﬀering in the Japanese domestic market.
Green bonds are receivables, which are issued by companies and local governments to fund green projects (businesses with environmental beneﬁts, which includes renewable energy, building and retroﬁtting of energy-saving
structures, and prevention and management of environmental pollution).
Through the issue of green bonds, Fuyo Lease is diversifying its fund raising methods in addition to further promoting initiatives to address the problem of climate change, including the spread of renewable energy, and contributing to the realization of a sustainable society.

Outline of the Green Bond
Name

Fuyo General Lease Co., Ltd. No.17 unsecured corporate bonds (limited to corporate
bonds with a special agreement on the same priority) (Green Bond)

Application period

October 26, 2018

Payment dateNovember 2, 2018

Issue duration

5 years

Issuance amount
Coupon rate

Use of proceeds

Ratings

10 billion yen
0.210%
The capital raised through the Green Bond will be used for the redemption ofcommercial paper issued to fund existing solar power generating facilities owned by
the Company's subsidiary and for capital investment in solar power generating
facilities under construction by the Company's subsidiary.
Japan Credit Rating Agency, Ltd. (JCR): A
Rating and Investment Information, Inc. (R&I): A-

Third-party assessment of green bond eligibility
JCR green bond rating
Fuyo General Lease acquired a third-party rating from the Japan Credit Rating Agency, Ltd. (JCR) of Green 1,
the highest score in the JCR Green Bond Rating system with regards to green bond eligibility.
Please check the website for details.

https://www.fgl.co.jp/csr/environment/pdf/rating.pdf

60

Fuyo Lease Group Integrated Report 2018

Ministry of the Environment Financial Support Programme for Green Bond Issuance
The acquisition of a third-party rating makes the bond eligible for a subsidy fromthe Japanese Ministry of the Environment 2018 Financial Support Programme for Green Bond Issuance.
Financial Support Programme for Green Bond Issuance (Ministry of the Environment)
Please check the website for details. http://greenbondplatform.env.go.jp/support/subsidy.html

List of Notiﬁcation of Decisions to Grant the Subsidy (Ministry of the Environment)
Please check the website for details. http://greenbondplatform.env.go.jp/support/subsidy-decision-notiﬁcation.html

Announcement of investment in the Green Bond
These are the investors who have announced that they will invest in the Green Bond.

List of investors who have announced investment (Japanese alphabetic order)(As of October 26, 2018)
・Oita Bank Co., Ltd.
・Saitama Medical University
・The Sugamo Shinkin Bank・Tokio Marine Asset Management Co., Ltd.
・Nippon Densetsu Kogyo Co., Ltd.
・Higashi-Nippon Bank, Ltd.
・Sumitomo Mitsui Trust Asset Management Co., Ltd.
・Mitsubishi UFJ Kokusai Asset Management Co., Ltd.
・Mitsubishi UFJ Trust and Banking Corporation
・The Rokinren Bank

Repor ting
Allocation of capital raised
It is planned to allocate the capital raised through the Green Bond to the redemption of commercial paper issued
to fund existing solar power generating facilities owned by the Company's subsidiary and to capital investment insolar power generating facilities under construction by the Company's subsidiary.

Eﬀect on improving the environment
The total annual eﬀect on reduction of CO2 emissions from the eligible projects covered by the Green Bond will be
51,650 tons and total annual electricity generated will be 98,428MWh.
(Theoretical value based on output standard as of October 26, 2018)

61

Fuyo Lease Group Integrated Report 2018

Social Report

Improving Customer Satisfaction

To improve customer satisfac tion
The Fuyo Lease Group strives to provide services that can ﬂexibly and promptly respond to the diverse needs of customers by setting its Management Philosophy as "maintain customer's ﬁrst philosophy, providing best services."

Providing the FLOW data ser vice, which
contributes to improving customers'
administrative eﬃcienc y
Fuyo Lease provides FLOW, a proprietary data service for managing lease
contracts online as one of the services that provide added value to customers.
FLOW has the advantage of improving the administrative eﬃciency of online
viewing and downloading of contract information and accounting referencematerials, and also completing contract termination procedures.
In addition, as a new service, we began oﬀering the FLOW Cube+, a cloud-based ﬁxed asset management system,
which enables customers to prepare ﬁnancial statements which portray the actual situation (physical asset
management) while keeping customers' labor and costs down.
With the FLOW Cube+, we can respond to changes in taxation and accounting systems in ﬁxed asset management, and match information and accounting books of physical assets that are needed for strengthening internal
controls, which contributes to improving the reliability of ﬁnancial reporting.
We also respond promptly to the new lease standard of the International Financial Reporting Standard (IFRS),IFRS16, which is becomes applicable from January 2019.
Please check the website for details.
https://www.fgl.co.jp/service/ﬂow.html
https://www.fgl.co.jp/service/ﬂowcube.html

Responses to ﬁnancial ADR system
The Financial ADR System (Alternative Dispute Resolution System in the area of ﬁnance) was established in April 2010 toresolve ﬁnancial issues quickly, ﬂexibly, and conveniently. Under the System, certain providers of ﬁnancial services are
obliged to conclude a basic contract with an institution on the performance of procedures, if there is a designated disputesettlement institution, and to take grievance and dispute resolution measures if there is no designated dispute settlement
institution.
With regard to the money lending business, we concluded a basic contract on the performance of procedures with thedesignated dispute settlement institution, and took grievance and dispute resolution measures for the Type 2 ﬁnancial
instruments business, which does not have a designated dispute settlement institution.
Please check the website for details.

https://www.fgl.co.jp/adr.html

62

Fuyo Lease Group Integrated Report 2018

Concept of IR

Basic Approach
Fuyo Lease has been listed on the First Section of the Tokyo Stock Exchange since December 2004 and strives fortimely, appropriate and fair disclosure of information to all stakeholders, including shareholders and investors, inorder to ensure the transparency of the management structure.
Fuyo Lease also provides a variety of opportunities and methods to actively communicate with shareholders andinvestors.

Disclosure Polic y
Fuyo Lease has set out its Disclosure Policy as the basic policy on the disclosure of information to facilitate theaccurate understanding and evaluation of the Company by stakeholders. The Disclosure Policy is published on thecorporate website.
It is made public on the website (https://www.fgl.co.jp/ir/disclosurepolicy.html).

Communication with Our
Shareholders and Investors

General M eeting of Shareholders
At Fuyo Lease, considering the convenience of our shareholders, we hold a general meeting of shareholders earlyin order to avoid the day on which meetings are concentrated, as well as dispatch the notice of convocation earlyand post it on our websites. Besides, in order to enhance the convenience of our shareholders in exercising theirvoting rights, we have made it possible for them to exercise the rights on the Internet.
Because we take the view that the general meeting of shareholders is a place for communicating with our shareholders, we aim for an open meeting, explaining reports in an easy-to-understand manner using images, charts,and tables.

63

Fuyo Lease Group Integrated Report 2018

Booklet s containing the Repor t on Annual
Business Result s and the Repor t on Interim
Business Result s for shareholders
At Fuyo Lease, business activities are summarized in booklets containing the Report on Annual Business Results
and the Report on Interim Business Results in an easy-to-understand manner. These booklets are sent to ourshareholders every half year.

Website IR Information
At Fuyo Lease, we have established the IR Information page on our website to convey the latest IR information inan easy-to-understand manner.
In addition, we also provide the IR information e-mail distribution service for free. Through this service, notiﬁcations to e-mail registrants is sent when the new IR information is posted online.

Financial result s brieﬁng s
Fuyo Lease holds ﬁnancial results brieﬁngs for institutional investors and analysts twice a year in May and November. We also have individual meetings with analysts. In ﬁscal 2017, we conducted meetings with a total of 46
companies.

Shareholder Returns andStatus of Shares

Basic Polic y on Shareholder Returns
The basic policy of the Fuyo Lease Group is to enhance shareholders' equity with the aim of reinforcing the management base and ﬁnancial structure, taking performance and management targets into consideration, while striving forthe long-term, stable return of proﬁts to shareholders.
In response to constant support from our shareholders, Fuyo Lease has also introduced a shareholder beneﬁt planwith the aim of increasing the appeal of investing in the Company's shares and increasing the number of long-term
shareholders.

64

Fuyo Lease Group Integrated Report 2018

Shareholder Beneﬁt Plan and Plan - linked
D onations
To implement the aforementioned goals for the introduction of the shareholder beneﬁt plan, Fuyo Lease oﬀers
rewards worth ¥3,000 for shareholders who have owned shares for less than two years and ¥5,000 for those whohave owned shares for at least two years in addition to a system that oﬀers the choice of book vouchers or
catalog gifts as beneﬁts.
Our Management Philosophy is to support

corporate activities through our leasing business with view tocontributing to development of the society". As such, in addition to the shareholder beneﬁt plan, we have introduced a scheme in partnership with our shareholders whereby we donate an amount equivalent to 10% of shareholder beneﬁts to organizations involved in social contribution activities.
In ﬁscal 2017, we donated ¥2.81 million each to the Kumamoto Castle disaster recovery assistance fund organized
by Kumamoto City and the Save the Children Children's Fund at Save the Children Japan.
In ﬁscal 2018, we donated ¥2.54 million each to the support fund for disaster volunteer and NPO activities (Donations for disasters due to Typhoon No. 21 in 2018 and Hokkaido Eastern Iburi Earthquake, organized by theCentral Community Chest of Japan) and the Save the Children Children's Fund at Save the Children Japan.

65

Fuyo Lease Group Integrated Report 2018

D onation ac tivities
Fiscal year

Donation recipient (outline of donation)

Amount (yen)Fiscal 2011

Japanese Red Cross Society (Great East Japan Earthquake/donation for disaster area)

2,594,500

Fiscal 2012

Central Community Chest of Japan (Great East Japan Earthquake/support for volunteer

2,959,600

and NPO activities)

Fiscal 2013

4,233,900

Japan Association of Corporate Executives IPPO IPPO NIPPON Project Phase 5(Great East Japan Earthquake/provision of learning equipment to aﬀected senior high schools)

Fiscal 2014

2,249,550

Japan Association of Corporate Executives IPPO IPPO NIPPON Project Phase 7(Great East Japan Earthquake/provision of learning equipment to aﬀected senior high schools)

Japanese Red Cross Society

2,249,550(2014 West Africa Ebola Relief Fund)

Total
Fiscal 2015

4,499,100
2,561,900

Japan Association of Corporate Executives IPPO IPPO NIPPON Project Phase 9(Great East Japan Earthquake/provision of learning equipment to aﬀected senior high schools)

2,561,900

Central Community Chest of Japan(Donations for disasters, including torrential rain due to Typhoon No. 18 in 2015)

Total
Fiscal 2016

Kumamoto City

5,123,800
2,615,800(Kumamoto earthquake/Kumamoto Castle disaster recovery assistance fund)Japanese Red Cross Society

2,615,800(Middle East Humanitarian Crisis Relief Fund)

Total
Fiscal 2017

5,231,600
2,815,850

Kumamoto City
(Kumamoto earthquake/Kumamoto Castle disaster recovery assistance fund)2,815,850

Save the Children Japan(Save the Children Children's Fund)

Total
Fiscal 2018

Central Community Chest of Japan (Donations for disasters due to Typhoon No. 21 in 2018

5,631,700
2,615,800

and Hokkaido Eastern Iburi Earthquake/support fund for disaster volunteer and NPO activities)

Save the Children Japan

2,615,800(Save the Children Children's Fund)

Total

5,231,600

We report the recipients of donations and the amounts donated on the corporate website every autumn.
（https://www.fgl.co.jp/ir/beneﬁt.html）

66

Fuyo Lease Group Integrated Report 2018

Stock Information (A s of September 30, 2018)
・ Number of shareholders: 11,854
・ Number of shares outstanding: 30,288,000 shares

Breakdown of Shareholders

Number of Shareholders

Number of Shares held (in thousands)

Financial Institutions

76

12,104

Other domestic ﬁrms

135

10,904Foreign Shareholders

242

5,364

Individuals and others

11,401

1,916(including treasury share)(treasury share included)

Approach to Social Contributions

Basic approach to social contributions
Recognizing close ties with our neighbors, the Fuyo Lease Group hopes to play the role of a good corporate citizen who
contributes to the development of local communities. Furthermore, we emphasize improving shared values with thecommunity and contribute to society as a part of our business strategy.
Based on this approach, the Group has established a social contribution policy and is engaged in activities that alignwith the policy. In our social contribution policy, and in accordance to the New Domains of our Group's Strategic Areas,academic activities and research that support science and technology in ways that can be commercialized, and consideration of the environment that leads to accelerating activities in the ﬁelds of Energy and the Environment are target
areas for social contributions.
67

Fuyo Lease Group Integrated Report 2018

Social Contributio n Polic y (excerpt)■ A r t i c l e 3 (Ta rg e t a re a s f o r s o c i a l c o n t r i b u t i o n s)

■ A r t i c l e 4 (I m p l e m e n t a t i o n c r i t e r i a)

Engage in the following subject areas:

Decide implementation according to the following criteria:

1. Environment

1. Obtaining the understanding of society

2. Contributions to local communities

Approaches that are highly public and receive

3. Academic activities and research
4. Support for areas aﬀected by disasters

a broad public understanding
2. Using our characteristics
Approaches that use our know-how,products, and services

In addition, the Group's mission is to "seriously respond to customers' needs and provide solutions that exceed their
expectations." Because we believe that it is important for employees to gain awareness about regional issues and needs,
we have introduced a volunteer leave system to promote social contribution activities by employees. In FY 2017, twoemployees used the system.

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Fuyo Lease Group Integrated Report 2018

Social Contribution Activities throughour Core BusinessE xamples of ac tivities
Seventh AQUA A RT D esign Co mp etitio n
A q u a d e S m i l e s o c i a l c o n t ri b u t i o n a c t i v i t i e s , w h i c h u s e a n
i n te ri o r a q u a ri u m
Fuyo Lease has been holding the AQUA ART Design Competition continuously as part of Aqua de Smile social contribution activities implemented with its
group company, Aqua Art Co., Ltd. Participants in the AQUA ART Designcompetition, who are students majoring in art and design at Tokyo Metropolitan Kogei High School and Tokyo Designer Gakuin College located near the
Fuyo Lease head oﬃce, compete in creating interior aquarium space designs
and decor. Excellent pieces of work are exhibited at commercial facilities
where they are enjoyed by many people. In FY 2018, the seventh time the

A snapshot of the students fromthe Production Group of Tokyo
Metropolitan Kogei High Schoolwith their work that was exhibitedin the lobby of Tokyo Dome Hotel(summer 2018)

competition was held, students studying at the Tokyo Communication Art
College also participated in the competition. An exhibition, co-hosted with
Tokyo Dome Hotel Co., Ltd., took place between July 26 and August 5,
where six excellent pieces of the participants' work were exhibited inlocations such as the hotel lobby. The phenomena of buoyancy and water
ﬂow, which do not exist in a normal space, were skillfully used in creation of
the works and many were painstakingly created with eﬀorts to incorporate
measures for preventing problems such as ﬁsh getting stuck and not being
able to get out. The aquarium designed under the theme of summer, which

Creating a prototype layout

looked creative and exciting, attracted many visitors, including children andtheir parents. The best piece of work was selected with a vote by the generalpublic, and an award ceremony was held after the summer vacation.

O ﬀ e ri n g a n o n - d e m a n d l e s s o n s e r v i ce a s p a r t o f
e nv i ro n m e n t a l e d u c a t i o n a c t i v i t i e s f o r c h i l d re n re ce i v i n g
a n a q u a ri u m a s a d o n a t i o n
The Aqua de Smile initiative was launched by donating (renting out free ofcharge) an interior aquarium, AQUA ART, to recipients such as nurseryschools and maternal and child life support facilities with the expectation of
showing tropical ﬁsh to children living in cities thus making the children smileand providing a healing eﬀect.

On-demand lesson for school
children provided by our staﬀ

In order to better support children who receive an aquarium as a donation,as part of environmental education activities, our staﬀ members organize
on-demand lessons for them every summer.
AQUA ART is always there for the children, and they are very interested in the
habits and characteristics of tropical ﬁsh. Each lesson is received with smiles
and good spirits as the children learn about ecosystems in a quiz format andthen take part in fun events.

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Fuyo Lease Group Integrated Report 2018

Hosting internships for conveying thesigniﬁcance of work and providing work
experience to students who will be leading
the nex t generation
In order to convey the signiﬁcance of work to undergraduate and graduate
students who will be leading the next generation, Fuyo Lease provides
internships through which the students can deepen their understanding ofGroup work session for winterinterns

the leasing business and experience actual work in the industry.
The eighth internship program, held in FY 2017, was carried out over a periodof nine days in total between December and February, with the participationof 210 students. The program consisted of a lecture on the basics of leasing,as well as group work on creating contract documents and leasing. It also
included an informal gathering where students exchanged opinions with our
staﬀ members on, for example, job challenges and diﬀerences between

Presentation by summer interns

students and professionals.
Students participating in the program made comments such as: "the programgave me an opportunity to not only understand the leasing business but also to think about the meaning of work" and"the group work gave me an opportunity to listen to opinions that I would have never come up with, and it was also
useful to hear advice from HR." A similar internship program is scheduled for FY 2018.

In August 2018, a summer internship program was also held with the participation of many international students.

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Fuyo Lease Group Integrated Report 2018

Community & Environmental
Contributions - Donation Activities

E xamples of ac tivities
Introduction of Welfare and Nursing-care
Training Program for young employees as partof a CSR training program
Fuyo Lease introduced the Welfare and Nursing-care Training Program foryoung employees in FY 2013 in cooperation with NICHIIGAKKAN CO., LTD., aleading nursing-care business company.
During the training program held in FY 2017, after carrying out lectures on

Simulated experience of elderly
person's motor function withvarious protectors

topics such as "Actual situations of the aging society and the Long-term Care
Insurance System", "Nursing-care responding to those who require support
and nursing-care", and "Understanding dementia", we conducted a simulated
experience based on elderly people's motor functions with the use of equipment replicating the capabilities of their eyes, ears, hands, and knees.
Additionally, we provided created opportunities to experience wheelchairassistance and other similar situations.
Based on this training program, we hope that young employees will better

Wheelchair assistance experience

understand the situation surrounding the aging society, and will also be able
to help elderly people in everyday life situations, such as in trains andcrowds. We plan to continue this training program in the future.

Beautifying the City Activity at Shinjuku
Station's west exit
Fuyo Lease Tokyo Sales Department 3 (formerly Shinjuku Branch) is engaged
in local cleanup activities at Shinjuku Station's west exit.
On February 15, 2018, four employees participated in the Litter Prevention
and Road Smoking Prohibition Campaign at Shinjuku Station's west exit.
Additionally, Garbage Zero Day was planned to be carried on May 30, 2018
in Shinjuku Ward but was canceled due to rain.

It was a very cold day on February
15th. The participants wore a lot ofclothes to keep warm.

Participation in FIT Charity Run 2017
The Fuyo Lease Group has participated in the FIT Charity Run (Financial
Industry in Tokyo For Charity Run) every year since 2009.
The FIT Charity Run is a charity event aimed at supporting non-proﬁt organizations engaged in community-based activities. The event is organized byﬁnancial service companies in Tokyo, which gather and hold fund-raising
activities.
The 13th FIT Charity Run 2017 was held on December 10, 2017 at the neigh-The participants had an enjoyable
run on a calm day.

boring roads of Meiji Memorial Picture Gallery and Meiji Jingu Gaien. A totalof 23 employees from the Group participated in the 10-km run.

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Fuyo Lease Group Integrated Report 2018

Inviting the local community to Fukuoka
Yahuoku! DomeAt Fuyo Lease, we have purchased Mecenat seats of the baseball stadium
Fukuoka Yahuoku! Dome and invited people from the community welfare
facilities and young people in sports since FY 2012.
From the purchased Mecenat seats, people can see the full schedule ofoﬃcial games of the Fukuoka Softbank Hawks. Annually, twenty seats are

Fukuoka Yahuoku! Domedesignated as Mecenat seats at the ﬁrst base inﬁeld side.

People who attended this activity have been very pleased. We will continue
to make use of these seats to maintain friendships with local communities in
the future.

Mecenat seats

D o nation ac tivities
Ac t u al d o n a t i o n s (u n i t : te n t h o u s a n d ye n)
FY 2014

FY2013

FY 2016

FY 2015

FY 2017

423

450

512

1,096

563

50

50

50

50

50

1,604

1,603

103

123

125

Others

112

41

31

18

42

Total

2,189

2,144

696

1,287

780

Disaster aﬀectedarea support
Environment
Cultural Arts andAcademic Research

A c t i v i t i e s o f Fu yo H e a r t f u l Fu n d 10 0
Within the Fuyo Lease Group, we established the Fuyo Heartful Fund 100 in
November 2010 for employees to contribute to society through donations.
Directors, oﬃcers and employees who join the fund donate 100 yen a month,
300 yen for directors and oﬃcers, from their salaries as donation funds. The
accumulated funds are donated to groups that develop activities including in
the areas of environmental conservation, local community contribution,
academic and research support and support for areas aﬀected by disasters.
In FY 2017, we donated 600,000 yen to support humanitarian projects at four
disaster-aﬀected areas, with 150,000 yen donated to each through this fund.

S u p p o r t f o r t h e n e x t g e n e ra t i o n
The Fuyo Lease Group actively supports children, who make up the next generation. In FY 2017, we supported activities
to protect the rights of children through donations to Save the Children, an international NGO. In addition, as an activity
to support the steady growth of children, we continue to cooperate with schools and maternal and child support
facilities.
※ For details, please refer to "Social Contribution Activities through our Core Business" and "Donation activities".

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Fuyo Lease Group Integrated Report 2018

Donation of used stamps
The Fuyo Lease Group collects postage stamps that have been used at oﬃces and employees' homes, and donates themto groups promoting support cooperation in health and medical areas overseas. In FY 2017, we collected and donatedabout 2 kg of used stamps.

Actual donation of used stamps and prepaid cards
FY 2013
Used stamps

2,041g

FY 2014

FY 2015

2,612g

FY 2016

1,843g73

2,600g

FY 2017
2,016gFuyo Lease Group Integrated Report 2018

Respect for Human Rights
人権の尊重

Basic Approach
The Fuyo Lease Group encourages respect for human rights in accordance with international norms such as the
Universal Declaration of Human Rights, and we have listed Respect for Human Rights in the Fuyo General Lease
Group Code of Corporate Conduct. We have stipulated that we will act with respect for the dignity and basic
human rights of all people and build a corporate culture with respect for human rights at its core. In achieving thisgoal, we implement initiatives aimed at encouraging respect for human rights, with reference to the United
Nations Guiding Principles on Business and Human Rights and other sources. The Group has zero tolerance for all
forms of discrimination and harassment on the basis of sex, nationality, race, ethnicity, religion, disability, or any
other grounds.
Moreover, based on a recognition that particular consideration is required for the human rights of children, theFuyo Lease Group has endorsed the international norms in The Children's Rights and Business Principles of
UNICEF and works to protect and advance the rights of children who may be involved in its business.

Initiatives to Encourage Respect for Human Rights
We assess human rights risks in our business, and the Audit Oﬃce and General Aﬀairs Department conduct
regular employee interviews in order to prevent violations of human rights. We have also established mechanisms
to ensure more reliably that impacts on human rights are controlled, including conducting checks each time there
are changes to the structure of new projects.
In addition, we have set up internal and external whistleblower hotlines that allow anonymous reporting andguarantee that all reports will be treated as conﬁdential in order to promptly detect any infringements of compliance or the Code of Corporate Conduct in the area of human rights, including bullying and harassment.
In FY 2017, three reports were received through the hotlines. In each case, we contacted the related parties to
conﬁrm the facts and conducted investigations promptly with due care to protect whistleblowers against detrimental treatment. For the cases conﬁrmed to be misconducts, measures were taken according to corporate
regulations, and all cases have been resolved. We will reinforce our compliance training of FY 2018 to prevent any
recurrences.

Building Positive Employer- Labor Rel ations
The Fuyo Lease Group recognizes freedom of association and collective bargaining rights as the rights of its
employees. While complying with laws and regulations and promoting these rights, we strive for appropriate
communication between employers and employees. The percentage of Group employees who belong to a labor
union is 50.4%.

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Fuyo Lease Group Integrated Report 2018

Promoting Appropriate Labor Standards
The Fuyo Lease Group strives to comply with laws and regulations on labor standards such as working hours andpay but also to make the working environment even better in order to ensure consideration for human rights. Not
only do we strive to limit long working hours and guarantee a living wage in our oﬃces in Japan, but we also carryout checks at our overseas sites as necessary to maintain high standards to ensure the retention of excellent
employees.
In ﬁscal 2017, there were no infringements of labor-related laws and regulations.

Human Rights Awareness Training
The Fuyo Lease Group continually provides human rights awareness training in its grade-speciﬁc training, which
includes training for new employees and training for newly appointed deputy managers with the aim of creating
workplaces with a fundamental respect for human rights. We have also distributed the Human Rights AwarenessLeaﬂet and the Code of Corporate Conduct mini-booklet to all employees to raise their awareness of the Fuyo
Lease Group's approach on human rights and labor and the importance of respecting them.
Further, we provide training upon promotion for employees appointed at or above a certain level of management
position to enable them to respond appropriately when there are reports of incidents and consultations involving
human rights, including bullying and harassment.

75

Fuyo Lease Group Integrated Report 2018

Human Resource Development and人権の尊重
Recruitment

Basic approach
Within the Fuyo Lease Group, our basic hiring policy is to keep the selection process fair, impartial, unbiased, andnon-discriminatory. We also provide opportunities for all employees to independently achieve personal growth,
while respecting each other's personalities.
In order to ensure that the working conditions of employees are always focused on the levels of their abilities,
achievements, and job responsibilities, Fuyo Lease revised its personnel system in January 2013 with the aim ofcreating a rewarding workplace where every employee can work with motivation.
Furthermore, with the extensive branch network of Fuyo Lease Group in Japan and overseas, Fuyo Lease ispromoting local employment and personnel recruitment in an eﬀort to respect the culture in each local area,
strengthen networks and create jobs.

Providing fair and impartial evaluations
In order to ensure more impartial evaluations, Fuyo Lease revised its evaluation system in January 2013, in linewith a revision of the personnel system. Furthermore, in FY 2017, in response to ongoing, increasingly diverse andcomplex operations, the Company partially revised its performance evaluation system. The aim was to understand the performance of each employee in more detail and appropriately reﬂect that performance in evaluations,
thereby increasing employees' awareness of their contribution to the departments and the Company.
The performance evaluation system, which is reﬂected in their bonuses, is designed so that we can also focus on
the processes required for generating results. This is achieved by clarifying each employee's roles and performance expectations by their departments in the process of managing objectives (PDCA cycle) and integrating
their performance evaluations with the evaluation system.
In evaluating ability and motivation, which are reﬂected in pay rises and promotions, we review the scope ofabilities and motivation to be evaluated by clarifying what abilities are required for fulﬁlling their respective roles.
We provide evaluation training for employees who have been newly appointed as evaluators, to promote understanding of the objectives and purposes of our evaluation system. In addition, we work to enhance communication between evaluators and those being evaluated, and to improve the transparency of and conﬁdence in theevaluation process.

76

Fuyo Lease Group Integrated Report 2018

Various trainings and self-development programs
Training programs are provided after joining theCompany to learn the basics of leasing andacquire practical knowledge
An extensive knowledge of areas including legal aﬀairs, tax and accounting, ﬁnance, products, and industry trends is required for the leasing
business. In order to ensure that new employees joining Fuyo Lease cansteadily increase the level of their knowledge and improve, new employees have opportunities to learn the basics of leasing and acquire practical knowledge during their ﬁrst two years in the Company throughvarious training programs taught by lecturers from inside and outside theYoung employees working on
tasks given by the training
programCompany.
Since FY 2017, the Company has been conducting new hire training, career training, and management training
jointly with Fuyo Lease Group. As the basis for achieving the initiative of pursuing group synergies, which is set out
in the Medium-term Management Plan, the Company holds training programs to help employees understand thebusinesses of each company and share their cultures.
To boost employees' motivation, the Company has a self-development program oﬀering an extensive lineup of
courses including correspondence courses (about 100 courses), e-learning, and a course encouraging employees
to acquire qualiﬁcations.
Please check the website for details.

https://www.fgl.co.jp/saiyou/step/

Motivation support program that responds to employees' motivation
Under the concept of fully supporting employees who are motivated and willing to take on the challenge of fulﬁllingthe corporate slogan of "Go where no one has gone before," Fuyo Lease has been carrying out the Fuyo Motivation
Support Program since FY 2013.
With a view to further globalizing the leasing business, Motivation Support Program A encourages employees to enroll
in an English conversation school and improve their English skills. Furthermore, Motivation Support Program B encourages generalist track employees
to enroll in a business school in order to enhance their abilities to think,exercise leadership, and manage, as well as improve their abilities to formulate management strategies and marketing skills.
In FY 2016, Motivation Support Program C was newly established. In order toexpand the job scope and enhance the job performance of clerical track
employees, the Company encourages them to attend open seminars on, forexample, improving operations, time management, and leadership communication. The Company has also started providing support for attending ahalf-day seminar for working mothers.
In FY 2017, the average number of hours of education and training spent oneach employee was 34.5 hours. Responding to the motivation of employees,
the Company will continue to expand the system.

77

Natsuki Nishioka, an employee(standing in front of a whiteboard) shows an expression ofrelief after ﬁnishing her
presentation in a voluntary
workshop at Globis Management
SchoolFuyo Lease Group Integrated Report 2018

Self-assessment system
Fuyo Lease has a self-assessment system in place for promoting the autonomous and continuous development of
employees' skills. Once every year, individual employees submit a Self-assessment and Career Development form fordeclaring to the Company a list of abilities they have managed to improve, whether they have managed to expand thescope of their jobs, what kind of self-development eﬀorts they are making and what areas of experience they would liketo build upon for their own development. The Company uses information on the declaration form to understand each
employee's plan for career development, and reﬂects it in its personnel measures.
Furthermore, in FY 2014, in an eﬀort to encourage employees to actively make use of various self-development programs,
the Company newly established the Skill Development Plan for giving feedback to each employee on their current
progress while attending various seminars.

Internal recruitment system
Fuyo Lease has a Trainee System and Internal Recruitment System in place
for supporting active career development. Furthermore, in FY 2018, the Job
Posting System was introduced and launched to give employees the chance
to take on the challenge of doing a job that interests them.
The Trainee System is being applied in the overseas trainees' program andalso the training programs of various departments such as credit decisions
making and aircraft leasing departments.
Every year, the Company dispatches about eight overseas trainees per year
to its Group companies in the US and Hong Kong, as well as the overseas

A trainee dispatched to China(at that time)

branches of ﬁnancial institutions. As a result, by getting involved in their
day-to-day operations locally, the Company aims to increase the level of the
trainees' basic knowledge and linguistic abilities to engage in international
ﬁnancial transactions.
As of the end of FY 2017, eight trainees had been dispatched to locations
such as Hong Kong, the United States, and the United Kingdom.
The Job Posting System was introduced in April 2018 as a framework forproviding opportunities for each employee to develop by autonomously
enhancing their knowledge and skills. In the system, the Company has job

A trainee dispatched to New York,
United States (at that time)

posts it oﬀers, such as for department/branch manager, president of aﬃliated companies, specialized business departments, and credit departments.

Course transfer system
In order to respond to the diversifying needs of employees in relation to employment and skill development, Fuyo Leasehas the Course Transfer System in place, which allows them to switch from clerical to generalist career tracks, or viceversa. Between April 2011 and April 2018, six employees were transferred to their new career track taking advantage ofthis system.

Full-time employee challenge system
In April 2014, in order to further develop skills and expand the job scope of highly capable and motivated contract
employees, Fuyo Lease introduced a new system of hiring contract employees meeting certain requirements as full-time
employees.
Between the introduction of the system and April 2018, a total of eight contract employees had been hired as full-time
employees, and are working in the ﬁeld of administration or sales administration.
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Fuyo Lease Group Integrated Report 2018

Promoting Diversity
人権の尊重

Basic approach
Under the corporate slogan of "Go where no one has gone before," Fuyo Lease strives to develop and promote
people with diverse values and ideas in order to oﬀer solutions surpassing customers' expectations.
In today's society where values and needs are becoming more diverse, the Fuyo Lease Group believes that diversity is a key growth driver. Attracting and retaining highly talented people, regardless of their sex, age, or otherfactors, is crucial for being able to continually create new value. As we work to enhance the value of our corporategroup, we focus on developing human resources with an emphasis on making our company a better workplace,so that all of our employees can realize their full potential as they hone their professional skills.
The Diversity Promotion Oﬃce opened its doors in October 2017 to strengthen our organizational capability forcreating a workplace where all employees can realize their full potential, regardless of gender.

VOICE

Regarding diversity as the driver of growth, Fuyo Lease has worked
on a range of activities related to the promotion of diversity in thepast, and we established the Diversity Planning & Promotion Oﬃce
in October 2017 to further promote diversity. We will promote initiatives aiming at becoming a company where it is easy for diverse
human resources to work regardless of gender diﬀerences andnationality, and which can support participation and advancement.
Yukiko Kurosawa

General Manager,
Diversity Planning & Promotion Oﬃce
General Aﬀairs Division

In FY 2017, we organized the Balancing Work with Nursing Care
Seminar and the Balancing Work with Childcare Seminar in order tosupport employees providing nursing care for family members andto promote a balance between work and caring for children.

Going forward, we will continue striving to promote diversity so that we can meet the diversifying needsof customers by achieving ﬂexible work-styles for individual employees and maximizing the use of eachof their abilities.

Empowering female employees in the workplace
Towards creating a workplace environment where female employees
can exercise their abilities and participate more than ever:〜Preparing and promoting an action plan for promoting
the participation of female employees in the workplace〜
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Fuyo Lease Group Integrated Report 2018

We see empowering women in the workplace as a management priority and are taking steps towards creatinga work environment where women can fulﬁll their potential and play a more active role than ever.
Our initiatives for empowering women focus on four speciﬁc areas: recruitment, human resources development,
organizational culture reforms, and work-life balance.
O u t l i n e o f G e n e ra l Em p l oye r Ac t i o n Pl a n
Target period

December 5, 2014 through March 31, 2020

Goals

1. Aim for a female ratio of 30% in recruiting new graduates
2. Achieve a 1.5-fold increase (40 females) in the number of managerial female
employees by 2020 from 2014, the year when the target was set

List of activities

1. Increase recruitment of women
2. Clarify training policy
3. Provide support for developing the careers of managerial candidates
4. Host career lectures
5. Reduce overtime working hours
6. Reform corporate culture
7. Relax the criteria for using the shorter working hour system
8. Promote male employees to take childcare leave, etc.

Increasing the recruitment of female new graduates:
outline of female employees' work-styles
In the course of FY 2017 recruitment activities, the Company revised its information brochure for new graduates who areinterested in joining the Company, and in the course of FY 2018 recruitment activities, the Company revised its recruitment
website in order to facilitate students to visualize what it is like for female employees to work at Fuyo Lease. The revised
brochure and website introduce the Company's female employees working in various functions, explain the scope of theirjobs and careers, and how they are managing their work and child care. Furthermore, in order to communicate more withfemale students, the Company set up booths at events for female students.

Conducting a three-party interview to support the career plan of each female
eneralist track employee
The Company regularly conducts a three-party interview for all female generalist track employees in which eachfemale generalist track employee is interviewed by her departmental manager and a staﬀ member from GeneralAﬀairs Department. Individual career plans are designed based on issues and a future vision for supporting eachindividual's development. Furthermore, in order to appoint female managers, the Company provides support forenhancing their abilities and skills through training by organizing opportunities for female employees to attend
external seminars on subjects such as management skills and leadership.

Career Lectures for female employees
We hold career lectures by inviting external lecturers as an opportunity for female employees to think about anddesign their future careers. We have held four lectures since February 2015. The latest lecture was held in March
2018, and targeted employees taking childcare leave to provide advice about their careers upon re-entering theworkplace.

80

Fuyo Lease Group Integrated Report 2018

Theme and content of lecture
Career Lecture

Date

Theme
What it means for women to continue working: thinking about their future careers

1st Lecture

February 2015

2nd Lecture

July 2015

Creating a comfortable workplace

3rd Lecture

Januar y 2017

Diversity and time management

4th Lecture

March 2018

How to balance work and childcare

Working group activities toward creating a better workplace
Since January 2015, we have been running a working group for employees with the aim of creating a workplace that is more welcoming forfemale employees to get actively involved in, and allows them toenvision their careers over the medium and long term.
The third working group has been running since December 2016. It
focuses on initiatives for reforming work-styles and promoting diversity,
which go beyond past initiatives. The group members have discussed
creating a program for supporting employees in balancing work andnursing care.
In fact, several programs have been established through the discussions.
For example, a program called +Friday (Plus Friday) introduced in February 2017 is one of them, which allows
employees to leave work at 3:00 p.m. on any Friday of their choice once every month. The Staggered Hours
Program introduced in May 2017 is another program that was born out of the working group's discussions. This
program oﬀers four diﬀerent work schedules with earlier and later starting and ﬁnishing times, in addition to thenormal working hours, so that employees can choose the schedule that is most suitable to their needs, for activities such as childcare or family nursing care duties, as well as their lifestyles.

Handout on creating a workplace that considers

Leaﬂet giving information on the childcare support

Childcare Support Guidebook

everyone's needs (a partial excerpt) created bysystem (excerpt)

created by the ﬁrst working groupthe second working group

81

Fuyo Lease Group Integrated Report 2018

Childcare support
In response to the enforcement of the Act for Measures to Support the Development of the Next Generation in 2005, we established the General Employer
Action Plan in accordance with the Act, and had been working on creating abetter working environment under the initiative to support the development of
the next generation.
As a result, the Company has implemented an action plan that is in conformity
with the Act on Advancement of Measures to Support Raising Next-Generation
Children. At the same time, in recognition of being an employer who complies
with the standards by providing support for maintaining a work-life balance, theCompany has been certiﬁed by the Tokyo Labor Bureau in FY 2017 for the sixth

Platinum Kurumin logo marktime, following FY 2007, 2009, 2011, 2013, and 2015, and has received a next-generation certiﬁcation logo (known as Kurumin Logo) with six stars from the Ministry of Health, Labour and Welfare.
Furthermore, in FY 2017, the Company received a special certiﬁcation called the Platinum Kurumin, which isawarded to Kurumin-certiﬁed companies working on higher level initiatives.
In an eﬀort to further promote the initiative of supporting a work-life balance under the Action Plan: Stage 7"
launched in April 2017, the Company has been aiming to achieve over 80 percent and over 70 percent, respectively, for the percentages of male employees who take childcare leave and employees who take annual paid leave.
In FY 2017, the percentage of male employees who took childcare leave was 44 percent, corresponding to sevenout of 16 male employees whose spouses gave birth, and therefore surpassed the target of over 30 percent set
out in the Action Plan: Stage 6 launched in April 2015. Four out of four female employees took childcare leave.
In the Action Plan: Stage 6, the Company established the target of over 60 percent for the percentage of employees taking annual paid leave. The actual percentage was 61.9 percent in FY 2015, 68.9 percent in FY 2016, and68.0 percent in FY 2017, surpassing the target in each respective year.

Employee's comment: Mitsuhiro Uekusa,
Business Creation Department"I am doing my best to care for my child using
the childcare-related system."
I took special leave twice. The ﬁrst leave was childbirth leave forfathers when my wife gave birth, and the other leave was childcare
leave after my wife returned home from her parents' home upongiving birth. During my leave, I was able to dedicate myself to caring
for my child without any worries because the Company is encouragI am doing my best to care for my ﬁrst
child with my wife.

ing male employees to take childcare leave, and due to the understanding of my boss and colleagues. Besides the childcare leavesystem, there is also a system where the Company gives congratulatory childcare goods for the birth ofa new baby, and I think the Company is supportive of child rearing. I would like to continue working
eﬃciently by taking advantage of, for example, the Staggered Working Hours system, while spending timewith my family.

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Fuyo Lease Group Integrated Report 2018

Initiatives based on the Action Plan: Stage 7 (April 2017 - March 2022)
In order to create a workplace environment and culture where each employee can balance work with family life,
the Action Plan has been established, described below, so that employees can review their work-styles autonomously and actively according to their own lifestyles, while having satisfaction in their work and being willing totake on challenges.
Description
・Promoting independent and active

Numerical targets
・Percentage of male employees who take childcare leave or similar.:working styles
・Encouraging male employees to

80% or more April 2021 - March 2022 (1 year)
・Percentage of employees who take annual paid leave: 70% or moretake a more active role in parenting

April 2020 - March 2021 (1 year)

・Reducing total working hours
・Oﬀering diverse career path options

Supporting employees with caregiving responsibilities
In order to eliminate the worries of many employees who are likely to care for elderly family members in the
future, a seminar on nursing care was held in January 2018, with over 170 employees participating, where theylearned about balancing work and nursing care. The company provides both information about nursing care andsupport to employees with caregiving responsibilities.

Employing people with disabilities
We are also working to hire people with disabilities.
In addition to the longstanding recruitment of mid-career employees, the Company has started recruiting new
graduates since FY 2015. In recruiting people with disabilities, the Company decides, with considerations to thecharacteristics of their disabilities and the jobs they want, the sections and jobs where they are to be assigned
after joining the Company, as well as their working hours. The company also makes eﬀorts to improve and giveconsideration to the working environment to ensure they can fulﬁll their potential.
As of the end of FY 2017, the percentage of people with disabilities employed by Fuyo Lease was 2.3 percent,meeting the mandatory employment rate.

Elderly employment (reemployment after retirement)
In response to the enactment of the revised Act for Stabilization of Employment of Older Persons in April 2013,
Fuyo Lease reviewed the past continuous employment system and introduced a revised system, which allows, inprinciple, all employees who are reaching retirement age to continue working until the age of 65 if they wish.
As of the end of FY 2017, there were 37 employees still employed after retirement. Using their knowledge andexperience acquired over many years, they are working in the functions of, for example, debt collection, making
credit decisions, and remarketing leased properties.

83

Fuyo Lease Group Integrated Report 2018

Promoting "Work-Style Reforms"
人権の尊重

Basic approach
Working with the goal of making people's jobs more challenging and fulﬁlling, Fuyo Lease is striving to build a betterworking environment where all employees can ﬁnd their own optimal work-life balance and enhance the quality ofboth life and work through activities such as maintaining and improving their health, gaining new knowledge and experiences and attaining personal.
As part of these activities, we have been implementing work-style reforms across our corporate group since FY 2014.
In FY 2017, in accordance with the new guidelines of the Ministry of Health, Labour and Welfare, we worked toaccurately grasp working hours, promoted measures to prevent overwork, and incorporated the comments of employees through working groups, in which employees can participate to create a better working environment. Consequently, we promoted the introduction of various mechanisms and programs based on these activities.

Refresh Day
In FY 2018, we continued to hold Refresh Day (no overtime day), which is scheduled for every Wednesday inprinciple, and Summer Refresh Period, which is scheduled for two weeks in August.

＋Friday
To encourage a review of each employee's work-style, from February 2017, we introduced the +Friday (Plus Friday)
program, in which the employee can select any Friday once every two months to go home early at 3:00 p.m. From
January 2018, we expanded the implementation of this program to once a month.

Employee's comment: Yoko Hoshino,
Energy/Environment Business Division"It's a good opportunity to separate work andprivate life."
I use the time freed up by +Friday as an opportunity to go and see
a movie, a favorite pastime of mine, and to go out with my husband,
who has days oﬀ on weekdays. In the past, I struggled with balancing work and housekeeping, but by being able to secure free timeeven once a month, I feel I can have some downtime and it also
I am refreshed by using the time after
3:00 p.m.

increases my motivation to work from the next week. In the future,
I would like to take advantage of this program, not only for myhobbies but also for lessons on cultural activities.

84

Fuyo Lease Group Integrated Report 2018

Staggered hours program
We have established a new program that encourages a shift to an autonomous and active work-style by allowing
employees to use their own discretion in managing time and work. Depending on their lifestyle, and not only forreasons such as childcare and nursing care, the Staggered Hours Program lets us select from among four work patterns
that advance or postpone when we start and end work outside of the normal working hours. This, along with the
Discretionary Labor Program, was introduced and implemented from May 2017.

Employee's comment: Keijiro Miyazono,
Real Estate Finance Business Division"Using the program, I have more time to spend
with my children."With the Staggered Hours Program, I chose to start work at 9:30
a.m., which is 30 minutes later than the regular starting time. I use
the time in the morning to have breakfast with my children andprepare them for the nursery school. Because my wife is also working, I hope to share housekeeping and childcare responsibilities as
I can now spend time with my children
on weekdays as well.

much as possible. But, until now, I had felt sorry to have to leave
everything on weekday mornings to my wife. Because I have beenable to take charge of the morning childcare due to staggered attendance, my wife is also very pleased.
In addition, by having more time to spend with my children, I am also happy that I can experience mydaughter growing up gradually day by day.

Employee's comment: Yuki Nukui,International Business Promotion Division"I can now use time in a way that suits mylifestyle."
With the Staggered Hours Program, I chose a work pattern to startworking at 8:30 a.m., which is 30 minutes earlier than the regularstarting time, and I leave work at 4:50 p.m. Because I leave work 30
minutes early, I use the time to take lessons at an English conversation school using the personal development support program, inorder to study for qualiﬁcations, and to practice golf, which is myTime to study a foreign language andfor acquiring a qualiﬁcation has become
available every day

hobby. As a result, the time after work is being used better than
before. Because working hours have become uneven, I feel that not
only the people who use this program beneﬁt, but also others
beneﬁt from a spreading company-wide awareness of ﬁnishing work
exactly at a ﬁxed time and going home.

85

Fuyo Lease Group Integrated Report 2018

Increased paid leave take-up rate
We have been encouraging employees to take their annual paid leave (annual holidays), such as by establishing a system
in FY 2011 that encourages taking consecutive days of leave in summer and winter. From FY 2016, we introduced theFive-day Consecutive Annual Leave system, aiming at improving the rate at which career-track employees take leave,
because they have particularly low rates of taking annual leave. As a result, the annual leave-taking rate for FY 2016 was
68.9%, a 7.0 point increase compared to the previous year, and approximately the same level, or 68.0%, was achieved
in FY 2017.
In the future, we aim to attain an annual leave taking rate of 70% or more, which is the target of the Action Plan: Stage
7 (from the period of April 2017 to March 2022) pursuant to Act on Advancement of Measures to Support Raising
Next-Generation Children. In the ﬁnal year of the Medium-term Management Plan (FY 2021), we will work toward achieving a rate of 80% or more.

Employee
人権の尊重 Health Management

Basic approach
Fuyo Lease believes that creating a working environment where employees can work healthily, safely, and energetically will
revitalize the company and lead to improved productivity.
Based on this idea, the Health Committee, set up under the Industrial Safety and Health Act, meets once a month to maintainand improve the health and safety standards of the workplace.

Health examination
Health examinations for employees are held once a year. The general periodic health examination take-up rate for
FY 2017 was 97.5%.

Mental health care
Fuyo Lease has been conducting stress checks since 2010, in order to maintain and improve employees' mental health.
With mandatory stress checks, the implementation system and method were discussed again this year by the HealthCommittee. Since establishing internal regulations, we have been carrying out activities with ﬁve aﬃliated companies
since May 2016.
Employees receive stress checks on the Web and, after about a month, they can check the results of evaluations given
by industrial physicians, who are the implementers of the Web check. When doing so, we encourage employees who
have been assessed to be highly stressed to have a medical interview with an industrial physician, and take necessary
work-related measures based on the results of the interview.
In addition to stress checks stipulated in the Industrial Safety and Health Act, employees and their families can consult
specialist counselors. The results are not disclosed to the company, because we consider the privacy protection needsof individuals.
86

Fuyo Lease Group Integrated Report 2018

Employee Data

Employee Data
Fuyo Lease Group consolidated data
Number of employees (persons)
End of FY 2013
Number of
employees

End of FY 2014

1,521

End of FY 2015

1,542

End of FY 2016

1,559

End of FY 2017

1,703

1,715

Fuyo Lease non-consolidated data
Number of employees (persons)
End of FY 2014

End of FY 2016

End of FY 2015

End of FY 2017

Male

Female

Total

Male

Female

Total

Male

Female

Total

Male

Female

Total

Generalist track

452

30

482

455

38

493

467

40

507

458

53

511

Clerical track

2

147

149

3

146

149

0

152

152

0

149

149

Temporaryemployees

27

11

38

19

9

28

26

4

30

24

5

29

Total

481

188

669

477

193

670

493

196

689

482

207

689

Number of new graduates employed (persons)
FY of joining
Fuyo Lease

FY 2013

FY 2014

FY 2015

FY 2016

Total

16

19

26

28

31

35

Male

12

13

19

20

18

20

Female

4

6

7

8

13

15

87

FY 2016

FY 2015

Fuyo Lease Group Integrated Report 2018

Number of new graduates employed (persons) and retention rate after 3 years (%)
FY of joining
Fuyo Lease

FY 2011

FY 2012FY 2013

FY 2014

FY 2015

Generalist track

12

17

16

16

26

Clerical track

1

1

0

3

0

Total

13

18

16

19

26

Retention rate of
employees 3 years
after joining Fuyo Lease

100

94.4

87.5

94.7

100 ☑

Number of employees leaving (persons)/reasons for leave/turnover rate (%)
FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Generalist track

6

4

5

6

11

Clerical track

3

4

1

1

3

Total

9

8

6

7

14

Voluntary resignation

7

5

3

6

9

Mandatory retirement

1

0

2

1

2

Other

1

3

1

0

3

Turnover rate

1.3

1.1

0.8

1.0

1.9 ☑

※ The turnover rate includes voluntary resignations, mandatory retirement and other reasons for leaving (e.g. relocation). It does not include
employees who have been re-employed on a contractual basis leaving at the end of their contracts.

Average age (age)/average length of service (years)/average salary (thousand yen)/Rate of paid leave taken (%)
End of FY 2013

End of FY 2014

End of FY 2015

End of FY 2016

End of FY 2017

Age

41.4

41.9

41.7

41.5

41.4

Length of service

15.9

16.3

16.6

16.4

14.7

Annual salary

8,222

8,293

8,366

8,410

8,454

Rate of paid leave taken

59.1

58.5

61.9

68.9

68.0 ☑

Number of female managers and assistant female managers (persons) / rate (%)
End of FY 2013

End of FY 2014

End of FY 2015

End of FY 2016

End of FY 2017

Female managers

25

25

27

29

32 ☑

Proportion of female managers

7.9%

8.1%

9.0%

9.1%

9.9%

88

Fuyo Lease Group Integrated Report 2018

End of FY 2013

End of FY 2014

End of FY 2015

End of FY 2016

End of FY 2017

Female assistant managers

2９

31

33

38

42

Proportion of female assistantmanagers

29.6%

27.0%

26.8%

27.9%

28.4%

Number of trainees sent overseas (persons)
End of FY 2013
Number of employees sent
overseas

End of FY 20142

End of FY 20153

End of FY 2016

End of FY 2017

5

5

8

Number of employees who used the career track shift system (persons)

Number of users

Apr. 2014

Apr. 2015

Apr. 2016

Apr. 2017

Apr. 2018

0

2

1

1

1

Number of employees converted from contractors to full-time employees under the Full-time employee
challenge system (persons)

Number of users

Apr. 2014

Apr. 2015

Apr. 2016

Apr. 2017

Apr. 2018

0

4

1

0

3

Other employee data
End of FY 2013

Number of employees taking
child care leave (persons)

End of FY 2014

End of FY 2015

End of FY 2016

End of FY 2017

4

8

9

10

4

Rate of employees receiving
regular medical check-ups (%)*1

99.7

99.8

97.5

99.0

97.5

Employment rate of persons
with physical/intellectual
disabilities (%)

2.0

2.0

1.8

2.2

2.3 ☑

Number of industrial accidents(number of cases)*2

4

2

2

1

1

※1

Regularly provided medical check-ups are categorized into general medical examination for employees of less than 35 years of age, medical
examination for adult diseases for employees between 35 years of age and less than 40 years of age, and comprehensive medical
examination for employees of 40 years of age or above.
※2 Accidental injuries due to falling in the street while commuting, all of which are minor injuries.

89

Fuyo Lease Group Integrated Report 2018

Corporate Governance
Our Approach to Corporate Governance

Strengthening Corporate Governance

The Fuyo Lease Group places strong emphasis on creating
and maintaining relationships with all stakeholders,
including shareholders, customers, employees, and local
communities. We believe that the fundamental objectiveof corporate governance is to perform business activities
with sincerity and fairness in line with our management
philosophy.
To achieve sustainable growth and increase corporate
value over the medium to long term, we have established
our own Corporate Governance Guidelines which alignwith the purpose and spirit of the Japan’s Corporate
Governance Code. These Guidelines serve as thefoundation for our corporate governance framework,
operating policies and other management policies, towhich we adhere to in everything we do.

Fuyo Lease has implemented various initiatives aimed atstrengthening corporate governance.
Year

2008

Initiative

Objective

Introduced
performance-based
compensation andstock compensationtype stock options

To strengthen links
between directors’
remuneration andtheir performance andshareholder value

Reduced the term of
two years to one year

To increase opportunities
to build shareholder
confidence

Increased the numberof independent outside
directors from one to two

To strengthen the
management oversight
structure

Established the
Corporate Governance
Guidelines

To comply with theJapanese Corporate
Governance CodeSet up the Nomination
and Remuneration
Advisory Committee

To ensure independence
and objectivity inthe decision-making
process for matters suchas appointments andremuneration

Started analyzing andevaluating the overall
effectiveness of theBoard of Directors

To verify the effectivenessof the roles and functionsof the Board of Directors
and to make ongoing
improvements

2011 office of a director from

Corporate Governance Structure
2015

Fuyo Lease has established a Board of Corporate Auditors,
which includes two outside corporate auditors who are
independent from our company. In addition, in order toenhance the supervisory function of the Board of Directors,
we have also appointed three independent outside directors,
who provide oversight and advice on the execution ofbusiness operations from an external perspective.
Furthermore, to improve management efficiency and
expedite decision-making by separating the management
oversight function from the execution of operations, wehave adopted the executive officer system.

2016

Corporate Governance Structure
General Meeting of Shareholders(Cooperation)

Consultation
Nomination and Remuneration
Board of Directors: 9 directors
Advisory Committee:(including 3 independent
Recommendation
4 members (including 3
outside directors)
independent outside directors)

Board of Corporate Auditors:
4 corporate auditors(including 2 independent
outside corporate auditors)

Oversight on theexecution ofbusiness(Cooperation)
Accounting auditor(Cooperation)

Internal Audit Division

ReportExecutive Committee

Internal audit

Control

Financialaudit

Approval

Planning and reporting on programs

Compliance Committee

Implementing andadvocating programs

Operational execution units (departments, offices, branch offices, group companies)

90

Fuyo Lease Group Integrated Report 2018

Establishment of the Corporate
Governance Guidelines

auditors, remuneration of directors, determining who willbe the next Chief Executive Officer, and analysis andevaluations of the overall effectiveness of the Board of
Directors, and reports its findings to the Board of Directors.

In conformity with the purpose and spirit of the JapaneseCorporate Governance Code, Fuyo Lease has established
our own Corporate Governance Guidelines, which provide
a foundation for corporate governance framework,
operating policies, etc. The Corporate Governance
Guidelines set out the framework, operating policies, roles,
and responsibilities of different supervisory and executivefunctions, in addition to our basic approach to corporate
governance. To achieve sustainable growth and increase
our corporate value over the medium to long term, we
adhere to these guidelines in everything we do across the
Fuyo Lease Group.

Board of Corporate Auditors
Our Board of Corporate Auditors is composed of four
auditors, including two full-time, who are also independent
outside corporate auditors, and two part-time auditors.
According to the audit plan formulated by the Board of
Corporate Auditors, each corporate auditor audits executionof operations by directors by attending important meetings,
reviewing important documents, examining operations andassets, and reviewing the audit findings of the independentaccounting auditor and the internal audit department among
other relevant activities. Corporate auditors closely workwith the Internal Audit and Internal Control Departments
to conduct audits in order to enhance audit quality.
In fiscal 2017, the Board of Corporate Auditors met
eleven times.

Board of Directors
The Board of Directors consists of nine directors, including
six inside directors and three independent outside directors.
The Board of Directors deliberates and makes decisions onimportant management issues, as well as matters specified
in laws and regulations, the Articles of Incorporation,and the Regulations governing the Board of Directors.
The Board of Directors also oversees the execution ofoperations by Directors and Executive Officers.
In FY 2017, the Board of Directors met ten times.

Executive Committee
The Executive Committee is composed of Executive
Officers with positions of managing executive officer orhigher, the heads of the Management & Planning Division,
General Affairs Division, and Business & Planning Division
as well as the Presidents of affiliated companies. Full-time
corporate auditors also attend meetings of the Committee
on a regular basis.
As a general rule, the Executive Committee meets at least
once a month to make decisions on operating activities andimplementation of measures delegated to the President &CEO, and to discuss important issues concerning internal
controls. Its aim is to improve the quality of management
decisions and to speed up decision-making.
In fiscal 2017, the Executive Committee met nineteen times.

Nomination and Remuneration Advisory
Committee
Fuyo Lease has set up the Nomination and Remuneration
Advisory Committee under the Board of Directors in order
to eliminate arbitrariness in decision-making processes andto maintain a highly transparent management structure.
The committee consists of four members, including three
independent outside directors and an inside director.
The committee mainly deliberates on topics such as
the selection of candidates for directors and corporate

Attendance at Board and Committee meetings (attendance in FY 2017 by board members, as of June 22, 2018)
Name

Position

Attendance at Board meetings

Takashi Sato

Director and Chairman(Representative Director)

Board of Directors : 10 /10

Yasunori Tsujita

President and Chief Executive
Officer (Representative Director)

Board of Directors : 10 /10 Nomination and Remuneration Advisory Committee : 4/4

Shozo Kazama

Director and Deputy President(Representative Director)

Board of Directors : 10 /10

Shinya Aizawa

Senior Managing Director

Board of Directors : 10 /10

Yoriaki Takebe

Senior Managing Director- (Elected in June 22, 2018)

Soichi Hosoi

Managing Director

Board of Directors : 10 /10

Nobuya Minami

Director

Board of Directors : 10 /10 Nomination and Remuneration Advisory Committee : 4/4

Seiichi Isshiki

Director

Board of Directors : 10 /10 Nomination and Remuneration Advisory Committee : 4/4

Hideo Ichikawa

Director- (Elected in June 22, 2018)

Kiyoyuki Takashima

Full-Time Corporate Auditor

Board of Directors : 10 /10 Board of Corporate Auditors : 11/11

Shigeru Suda

Full-Time Corporate Auditor

Board of Directors : 8/8 Board of Corporate Auditors : 8/8 (Elected in June 23, 2017)

Teruhiko Numano

Outside Corporate Auditor

Board of Directors : 10 /10 Board of Corporate Auditors : 11/11

Yoshihiro Jinnai

Outside Corporate Auditor

Board of Directors : 7/8 Board of Corporate Auditors : 7/8 (Elected in June 23, 2017)91

Fuyo Lease Group Integrated Report 2018

Corporate GovernanceCompliance Committee

The results of the analysis and evaluation for fiscal 2017
are as follows.

Fuyo Lease has set up a Compliance Committee chairedby the Chief Compliance Officer. The heads of relevant
planning and administrative departments, representative
directors of subsidiaries in Japan, and heads of overseas
subsidiaries’ relevant departments serve as full-timecommittee members. The administrative functions of thecommittee are carried out by the Legal & Compliance
Division. The Compliance Committee meets quarterly to
discuss and decide issues related to compliance systems
and implementing annual compliance plans. Based on its
discussions and decisions, the Committee submits reports
and recommendations to the Executive Committee andthe Board of Directors, and takes measures to develop andenhance compliance systems.

Evaluation method
We conducted a questionnaire survey among all
Directors and corporate auditors, as well as interviews withthem on an as needed basis. Following the discussions andrecommendations by the Nomination and Remuneration
Advisory Committee, which consists mainly of independent
outside directors and assisted by the corporate lawyer, theBoard of Directors carried out the analysis and evaluationof the results.
Results
While the Board of Directors met all evaluation criteria,
including size, composition, functions and roles, as well as
operation, and was found to be effective, we concluded
that we must still steadily implement measures to improve
the functions of the Board of Directors, make those
activities part of our daily operations, and continuallyreview the Board’s functions.

Internal Audit
The internal audit function is administered by theInternal Audit Division (staffed by four employees). The
Internal Audit Division conducts operational audits of all
departments, offices, branch offices, and major subsidiaries,
and plays a part in ensuring that internal controls arefunctioning in addition to examining their effectiveness.
The results of these audits of operations are reported to the
President & CEO and corporate auditors every time they
are conducted and periodically to the Board of Directors
and the Executive Committee.

Progress on issue identified last fiscal year
Last fiscal year we found that the Board of Directors
needed to make further efforts to promote more active
discussions and to take a closer look at matters discussed
through activities such as reviewing information to
be included in documents. In response, we added
supplementary material to the Board of Directors meeting
documents in August 2017, and confirmed that as a resultof this the effectiveness of the Board was improved.

Analysis and Evaluation of theEffectiveness of the Board of Directors

Newly identified issues
We found that, in addition to appointing more outside
directors and auditors from different backgrounds, theBoard of Directors needs to bring more perspectives tothe boardroom, narrow down discussion points, andenhance reporting on risk management and corporate
governance trends.

At Fuyo Lease, we analyze and evaluate the overall
effectiveness of the Board of Directors every year. The Boardof Directors makes further efforts to enhance its functionsin the light of the results of the analysis and evaluation withthe aim of continually improving its effectiveness.

Roles expected of outside directors and outside corporate auditors and reasons for appointment
Name

Reason for appointment

NobuyaMinamiHaving served as the president of Tokyo Electric Power Company, Incorporated (until his retirement in 2002), Nobuya Minami has
held numerous important positions during his career, including outside corporate officer of listed companies and chairman of otherincorporated organizations. We believe that he will help enhance the effectiveness of the decision-making and oversight functionsof the Board of Directors from a position that is independent from our company’s management by drawing upon his extensive
experience and wealth of knowledge.

SeiichiIsshiki

Seiichi Isshiki has served as representative director and president of JX Nippon Oil & Energy Corporation, director of JX Holdings,
Inc., and president of ENEOS Celltech Co., Ltd. We believe that he will help enhance the effectiveness of the decision-making andoversight functions of the Board of Directors from a position that is independent from our company’s management by drawing on his
extensive experience and wealth of knowledge.

Hideo
Ichikawa

Currently serving as representative director and chairman of the board and formerly representative director and president at Showa
Denko K.K., Hideo Ichikawa has years of experience in corporate management. We believe that he will help enhance the effectivenessof the decision-making and oversight functions of the Board of Directors from a position that is independent from our company’s
management by drawing upon his extensive experience and wealth of knowledge.

Teruhiko
NumanoWe believe that Teruhiko Numano will conduct audits appropriately from an objective standpoint based on the expertise he has
gained as a jurist and a lawyer and provide us with highly professional legal advice. He is also well versed in business litigation cases
as a lawyer and has considerable financial and accounting knowledge.

Yoshihiro
JinnaiHaving served as senior managing executive director at Sompo Japan Insurance Inc. and president of Audatex Japan (nowCognivision, Inc.), Yoshihiro Jinnai should be able to conduct audits appropriately from an objective standpoint by drawing upon his
extensive experience and wealth of knowledge.

92

Fuyo Lease Group Integrated Report 2018

Director Qualifications andNomination Procedures

actual amount of performance-based compensation
depends on our consolidated performance, such as
operating assets and ordinary profit, as well as an individual
director’s contribution to our financial performance, among
other factors.
The ratio between the base salary and the variable pay
plan is set at 1 to 0.6 based on the average compensation
ratio used by listed companies. The variable pay planconsists of performance-based compensation and stockcompensation, and the ratio between the two is set at 5 to
7 in the light of the characteristics of the revenue structureof the leasing business to provide higher incentives on a
medium- to long-term basis.
The introduction of the Board Benefit Trust (BBT) wasapproved at the Annual General Meeting in June 2018,
in order to motivate board members to help boost ourcompany’s performance and corporate value over the
medium to long term by making the link between theircompensation and our equity value even clearer, so theyshare not only the benefits of a higher share price but also
the risk of a decline in value with shareholders.
Directors’ compensation is discussed by the Nomination
and Remuneration Advisory Committee in order to ensuretransparency and objectivity in determining the amounts.
Compensation for outside directors and corporate auditors
consists only of fixed compensation because short-term
incentives and equity compensation are not really applicable.

1. Policy and procedures for nominating director
and corporate auditor candidates
Our Corporate Governance Guidelines sets forth thequalifications of directors and corporate auditors, as wellas the procedures for nominating candidates for these
positions. Under these guidelines, a director or corporate
auditor candidate must possess an outstanding personality,a wide breadth of knowledge, abilities, experience, andhigh ethical standards. The guidelines also specifies thatcandidates be nominated regardless of factors such assex, age, and nationality, with the aim of achieving greater
diversity. In order to ensure fairness and transparency inthe nomination process, the selection of candidates for
directors and corporate auditors is finalized by the Boardof Directors following a discussion by the Nomination andRemuneration Advisory Committee. Selection of corporate
auditor candidates is finalized by the Board of Directors
upon consent of the Board of Corporate Auditors.
2. Independence standards for outside directors
and outside corporate auditors
Independence standards for outside directors andoutside corporate auditors are stipulated in the Corporate
Governance Guidelines in line with the independence
standards prescribed in the Guidelines Concerning ListingManagement, etc. established by the Tokyo Stock Exchange.

Internal Control System
Board Remuneration

Fuyo Lease has instituted an internal control system across
our corporate group to ensure compliance with all relevantlaws and the articles of incorporation, capability to respondto various risks in a timely and appropriate manner, andto ensure transparency and efficiency of operations, inaddition to ensuring the reliability of financial reports, etc.
Our Internal Audit Department, corporate auditors,
and independent auditor share information about audit
findings to monitor the status and operation of the internal
control system. The status of the internal control system
operation is reported to the Board of Directors during ameeting held at the end of each fiscal year, and continuous
improvements are made in the light of the audit findings.

Fuyo Lease believes that enhancing the link between
shareholder value and remuneration of the Board of
Directors will boost their morale and motivate them toimprove our financial performance and share price, leading
us towards our goals of ensuring stable performanceand growth, while enhancing our corporate value.
That is why we have introduced variable pay programs
such as performance-based compensation and stockcompensation in addition to a base salary, which isprovided as fixed compensation.
We determine base sal aries in the light of ouremployees’ salaries, average market salaries for directors,
our financial standing, and other relevant factors. The
Board Remunerations

Remuneration amount (millions of yen)
Officer classification

Total amount(millions of yen)Basicremuneration

Stock-based
remuneration(Stock option)

Performance-linked
remuneration(Annual bonuses)

Number of
directors

Directors(excl. Outside Directors)

289

188

64

37

6

Board of Corporate
Auditors members(excl. Outside Auditors)

44

44

-

-

3

Outside Directors

39

39

-

-

5

Note: 1. The above remuneration amount and number of directors include those who resigned by the end of FY 2017.
2. The above performance-linked remuneration comprises the amount, which shall be recorded in the fiscal year.
3. The above Stock-based remuneration comprises the amount calculated on the basis of a fair value of stock warrant issued and shall be recorded in the fiscal year.
4. At the 39th Annual General Meeting of Shareholders held on June 25, 2008, Fuyo Lease approved the resolution to pay accrued retirement benefits associated with the abolishment of
the retirement benefits system for directors. The estimated amount as of the end of the fiscal year is 9 million yen (outside directors). The payment is made at the time of their retirement.

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Corporate Governance

Board Members (As of June 26, 2018)
Takashi Sato Director and Chairman (Representative Director)
Apr. 1977
Mar. 2006
May 2009

Joined The Fuji Bank, Limited.
Managing Executive Officer of Mizuho Corporate
Bank, Ltd. (retired in March 2009)
Deputy President and Executive Officer of
the Company

June 2009
Nov. 2009
Apr. 2016

Director and Deputy President Deputy President
and Executive Officer Representative Director
President and Chief Executive Officer
President and Executive Officer
Director and Chairman
To present

Yasunori Tsujita President and Chief Executive Officer (Representative Director), Nomination and Remuneration Advisory Committee Chairman
Apr. 1981
Apr. 2013

June 2013

Joined The Fuji Bank, Limited.
Deputy President-Executive Officer ofMizuho Financial Group, Inc. (until June 2013)
Deputy President-Executive Officer ofMizuho Bank, Ltd. (until November 2013)
Deputy President-Executive Officer ofMizuho Corporate Bank, Ltd. (until July 2013)
Managing Executive Officer ofMizuho Trust & Banking Co., Ltd. (until April 2014)
Managing Executive Officer ofMizuho Securities Co., Ltd. (until April 2014)
Deputy President-Executive Officer, Member ofthe Board of Directors (Representative Director) of
Mizuho Financial Group, Inc. (until June 2014)

Nov. 2013

June 2014

Apr. 2015
May 2015
June 2015
Apr. 2016

Deputy President-Executive Officer, Member ofthe Board of Directors of Mizuho Bank, Ltd.
(until March 2015)
Member of the Board of Directors
and Deputy President & Executive Officer(Representative Executive Officer)of Mizuho Financial Group, Inc. (until March 2015)
Member of the Board of Directors(retired in June 2015)
Deputy President and Executive Officer of
the Company
Director and Deputy President Deputy President
and Executive Officer Representative Director
President and Chief Executive Officer President
and Executive Officer
To present

Shozo Kazama Director and Deputy President (Representative Director)
Apr. 1979
Mar. 2006
Apr. 2009

May 2010

Joined The Fuji Bank, Limited
Executive Officer, General Manager of Shinbashi
Branch of Mizuho Bank, Ltd.
Managing Executive Officer, General Manager ofBusiness Unit of Mizuho Research Institute Ltd.
(retired in April 2010)
Senior Managing Executive Officer of the Company

June 2010
Apr. 2014
Apr. 2018

Senior Managing Director
and Senior Managing Executive Officer
Representative Director
Director and Deputy President
Deputy President and Executive Officer
To present

Shinya Aizawa Senior Managing Director
Chairman & CEO of Fuyo General Lease (USA) Inc., Chairman of Fuyo General Lease (HK) Limited, Chairman and Representative Director of Fuyo General
Lease (China) Co., Ltd., Director of FGL Aircraft Ireland Limited, Chairman/Director of Fuyo Aviation Capital Europe Limited

Apr. 1982
Apr. 2010

May 2011

Joined The Fuji Bank, Limited
Executive Officer, General Manager of Internal Audit
Division of Mizuho Corporate Bank, Ltd.
(retired in April 2011)
Managing Executive Officer of the Company

June 2011
Apr. 2018

Managing Director
and Managing Executive Officer
Senior Managing Director
and Senior Managing Executive Officer
To present

Yoriaki Takebe Senior Managing Executive Officer
Apr. 1978
Apr. 2005

June 2009

Joined The Yasuda Trust & Banking Co., Ltd.
Executive Officer, General Manager ofReal Estate Planning Division ofMizuho Trust & Banking Co., Ltd.
Executive Managing Director(retired in April 2011)

Apr. 2011
Apr. 2013
Apr. 2018
June 201894

Executive Officer, General Manager of Business
Promotion Division I of the Company
Managing Executive Officer
Senior Managing Executive Officer
Senior Managing Director
To present

Fuyo Lease Group Integrated Report 2018

Soichi Hosoi Managing Director
Apr. 1983
Apr. 2013

Joined The Fuji Bank, Limited
Executive Officer, General Manager of Financial
Planning Division of Mizuho Financial Group, Inc.
(retired in April 2014)
Executive Officer, General Manager of Financial
Planning Division of Mizuho Bank, Ltd.
(retired in April 2014)

Apr. 2014
June 2014

Executive Officer, General Manager of Financial
Planning Division of Mizuho Corporate Bank, Ltd.
(until July 2013)
Managing Executive Officer of the Company
Managing Director
and Managing Executive Officer
To present

Nobuya Minami

Outside Director, Nomination and Remuneration Advisory Committee member
President of Global Industrial and Social Progress Research InstituteOutside Audit & Supervisory Board Member of Fuji Media Holdings, Inc.

Apr. 1958
June 1999

Joined Tokyo Electric Power Company, Incorporated
Director and President

Oct. 2002
June 2005

Adviser (retired in March 2012)
Director (part-time) of the Company

To present

Seiichi Isshiki Outside Director, Nomination and Remuneration Advisory Committee member
Apr. 1972
June 2012

Joined Nippon Oil Corporation
Representative Director,
President of JX Nippon Oil & Energy Corporation
Director of JX Holdings, Inc.

June 2014

June 2015

Advisor of JX Nippon Oil & Energy Corporation(currently JXTG Nippon Oil & Energy Corporation)(retired in June 2016)
Director (part-time) of the Company To present

Hideo Ichikawa

Outside Director, Nomination and Remuneration Advisory Committee member
Representative Director, Chairman of the Board of Showa Denko K.K.

Apr. 1975
Jan. 2011

Joined Showa Denko K.K.
Representative Director, President,
Corporate Officer and Chief Executive Officer (CEO)Jan. 2017
June 2018

Representative Director, Chairman of the Board(current position)
Director (part-time) of the Company To present

Kiyoyuki Takashima Full-time Audit & Supervisory Board Member
Apr. 1979
Apr. 2011
Apr. 2012

Joined the Company
General Manager of Shinjuku Branch
Executive Officer, General Manager ofShinjuku BranchOct. 2014
June 2016

Executive Officer, General Manager ofTokyo Business Division III
Full-time Audit & Supervisory Board Member of
the Company To present

Shigeru Suda Full-time Audit & Supervisory Board Member
Apr. 1981
Aug. 1999
Mar. 2009

Joined the Company
General Manager of International Division
General Manager of Internal Audit Division

June 2017

Full-time Audit & Supervisory Board Member of
the Company
To present

Sep. 2005

Vice-President of Nihon University,and Dean of Nihon University College of Law
Vice-President of Nihon University
Retired from the position as Vice-President of
Nihon University
Retired from professorship at Nihon University
College of Law

Teruhiko Numano Part-time Audit & Supervisory Board Member
Apr. 1973
July 2003
June 2005

Registered as attorney-at-law
Assistant professor, Nihon University College of Law
Trustee of Nihon University,and Dean of Nihon University College of Law
Part-time Audit & Supervisory Board Member of
the Company
To present

July 2006
Aug. 2006
Apr. 2011

Yoshihiro Jinnai Part-time Audit & Supervisory Board Member
Oct. 1978
Apr. 2010
Apr. 2011
Apr. 2012

Joined The Yasuda Fire and Marine Insurance Co., Ltd.
Associate Director, General Manager,
1st Production Department
Executive Officer, General Manager,
Hokkaido Regional Headquarters
Managing Executive Officer, General Manager,
Hokkaido Regional Headquarters

95

Mar. 2013
June 2013

June 2017Retired from the position as
Managing Executive Officer
President, Japan Audatex Co. Ltd.
(now “Cognivision Inc.”)
until the retirement in June 2017
Part-time Audit & Supervisory Board Member of
the Company To present

Fuyo Lease Group Integrated Report 2018

Code of Corporate Conduct

Chapter 1 Basic Policy of Fuyo General Lease Group
1．Social Responsibilities and Public Missions
Always bearing in mind the signiﬁcance of our social responsibilities and public missions, we commit ourselves to sound business
management based on the principle of self-responsibility as a ﬁnancial business group that consists mainly of listed companies.
We endeavor to communicate closely with society, and to align our corporate conduct with social norms.

We have considerable social responsibilities and public missions as a ﬁnancial business group that consists mainly of listed companies. We must be aware that we are required to fulﬁll both our social responsibilities and public missions, and the purpose of a
private company at a high level.
First of all, we are expected to take social responsibilities, including economic, legal, ethical, and social contribution responsibilities, as follows;
Economic responsibilities such as pursuing reasonable proﬁts, securing employment and eﬃcient management;
Legal responsibilities to comply with laws and regulations as a member of society;
Ethical responsibilities to respect human rights and act in line with social norms; andSocial contribution responsibilities as a good corporate citizen that supports and grows with society.

To fulﬁll these social responsibilities and public missions, it is essential to gain the unwavering trust of our customers and society
through the Group's sound and appropriate business operations.

While great eﬀort and time are required to gain the trust of our customers, that trust can be lost in an instant. A ﬁnancial businessgroup's loss of trust can lead to a reduction of trust in the entire ﬁnancial system.

We declare that we always bear in mind the signiﬁcance of our social responsibilities and public missions, and commit ourselves
to sound business management based on the principle of self-responsibility. Furthermore, through activities such as public
relations activities, we endeavor to actively communicate with society at all times, and to ensure that our activities are fair andtransparent in line with social norms.

2．Implementation of Customer First Principles
We put our customers ﬁrst and provide services at the highest quality to our customers.
We believe that gaining the trust of our customers is the basis for gaining the trust of shareholders, local communities, and allother stakeholders.
We need to appreciate that we engage in ﬁnancial service businesses centered on lease businesses in which we put our customers ﬁrst; in other words, our ongoing development is derived from our customers' prosperity.

"Putting our customers ﬁrst" means that every single director and employee considers how he or she can serve as the mostreliable consultant for our customers and provide the best services that meet the needs of our customers at all times. The
accumulation of such daily eﬀorts can lead to us gaining the trust of our customers and appropriate proﬁts.

We can exist as a corporation only after gaining a proﬁt. Then, by using the proﬁt to make new investments and create newservices, we can further enhance the trust of our customers.

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In other words, "putting our customers ﬁrst" and gaining the trust of our customers is the basis of secure and sound business
management, which results in gaining the trust of other stakeholders.

Moreover, "putting our customers ﬁrst" does not mean that we accept all requests from our customers or provide services withno thought to proﬁt. We should never forget that "putting our customers ﬁrst" does not conﬂict with "earning proﬁts," but rather
the two are connected to each other.

3．Compliance with Laws and Rules
We strictly comply with all laws and regulation, and carry out fair and honest business activities in line with social norms.
We respect local customs and cultures, as well as international standards and local laws in each region of the world.

We place ensuring compliance as the foundation of our Management Principle, based on which we strictly comply with all laws andregulations, and perform fair and honest business activities in line with social norms.

It is not our policy to achieve this principle by merely avoiding violations of laws and regulations. Instead, always bearing social norms
in mind, we act with a high level of self-discipline based on fully understanding the intent, purpose, and background of the establishment of laws and rules.

We also comply with international standards and foreign countries' laws and regulations, and respect the local customs and cultures,
as well as Japanese laws and regulations and social norms as a ﬁnancial business group, that provide services to overseas customers.

As laws, regulations, and social norms change with the times, we strive to accurately understand the underlying social trends.

If we violate laws or regulations or act against social norms, we would be not only held legally liable but would also be exposed tosevere criticism from society. In addition, we could lose trust, our most valuable asset, which could, in some cases, shake the coreelements of our business management.

4．Respect for Human Rights
We act with respect for the dignity and fundamental human rights of all persons, including our customers, directors, andemployees, and establish a corporate culture with a spirit that fully respects human rights.

Today, respect for human rights is a global standard of conduct. We are required to be strongly aware that we shall not engage in,or allow others to engage in, discrimination or harassment for any reason (including based on factors such as gender, nationality, race,
ethnicity, religion and disability). Moreover, we take due care to protect privacy of others because we have many opportunities toaccess information of various individuals.

The basic concept of respecting for human rights is to respect other people as human beings and to "put yourself in another person's
shoes." To conduct bearing this concept in mind is an extremely important platform for providing an energetic and great work
environment for our employees, and to gain the trust of our customers.

We should be vigilant of human rights and never forget that we act with the highest respect for the human rights of all persons. Basedon this recognition, we actively work on improving every single employees' awareness of human rights.

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5. Blocking Relationships with Anti-social Forces
We block any relationships with anti-social forces that pose a threat to the order and safety of civil society.

We block any relationships with anti-social forces.
We do not provide any products or services to anti-social forces. We conduct an appropriate investigation before entering intotransactions in order to prevent any transactions with anti-social forces. If a counterparty to a transaction is found to be an anti-social
force after entering into a transaction, we will promptly cancel such transaction.

We take organizational actions.
If a relationship with an anti-social force is found, the top management will be promptly notiﬁed and we will take organization-wide actions.

We cooperate with external expert organizations.
We closely cooperate with external expert organizations such as the police, the National Center for the Elimination of Boryokudan(anti-social forces), and lawyers on an ongoing basis, and address issues with due care for the safety of our directors and employees.

We will not hesitate to take legal measures and respond with a ﬁrm attitude.
We respond to anti-social forces with a ﬁrm attitude in both criminal and civil aspects as necessary and do not conduct any backdoor
transactions in response to unreasonable demands or attacks such as intimidation.

Chapter 2 Basic Attitude of Fuyo General Lease Group
1 ．Basic At titu de toward Customers
We always endeavor to provide satisfaction to customers, gain their trust and establish long-term conﬁdential relationships.
We strive to fully understand our customers and serve our customers faithfully.
We provide suﬃcient information to our customers and the highest level of comprehensive ﬁnancial services.
We strictly manage customers' assets.
We endeavor to improve ourselves to possess excellent insights, as well as expertise and skills, to make ourselves useful to customers.

We act based on the principle of "putting our customers ﬁrst" and always aim to provide the highest level of comprehensive
services that satisfy the needs of our customers. To this end, we should be aware that all of our activities lead to providing satisfaction to our customers and gaining their trust. We also note the following items in performing acts in order to establish a long-term
conﬁdential relationships with our customers.

First, it is important to know our customers well. We collect suﬃcient information on our customers by carefully listening
and closely observing our customers.
We accurately understand the needs of our customers by putting ourselves in a customer's shoes.
We provide adequate information based on accurate knowledge and provide services that meet the needs of our customers through making the most of our ability to provide comprehensive ﬁnancial services.
We fulﬁll our promises to customers, and perform fair and honest business activities.
We always bear in mind that we store our customers' valuable assets with due care and strictly manage information of ourcustomers.
While it is important to become acquainted with customers, we do not oﬀer nor receive entertainment or gifts that deviate
from social norms or conduct any acts, such as cash loans, that may create an excessively familiar relationship with ourcustomers.
We strive to improve ourselves to possess deep insights, as well as expertise and skills, to make ourselves useful to customers, and actively try to create and develop new business areas.

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2 . Basic At titude toward Shareholders
To gain the trust of our shareholders, we endeavor to protect and increase our corporate assets.
We enhance and reinforce our internal control system by performing proper accounting and eﬀective internal audits.
In order to communicate accurate business information to shareholders, we actively disclose information and improve thetransparency of business management.

We keep our shareholders' valuable funds with due care as a joint-stock corporation.

Therefore, to respond to our shareholders' trust and expectations, we endeavor to promote the protection and expansion of ourgroup's assets and to maximize our proﬁtability.

In order to gain widespread understanding and trust from our shareholders, we maintain the accuracy and reliability of our ﬁnancial
and tax accounting procedures, and monitor whether they function properly and eﬀectively under a strict internal control system.
Moreover, we will further reinforce our independent internal audit functions and improve the internal control system.

To those ends, we aim to achieve an "open management" style that is trusted by the markets through actively disclosing appropriate
information in a timely manner through opportunities such as the general meetings of shareholders, as well as focusing on IR activities
and maintaining a close two-way communications with shareholders.

3．Basic At titu de toward Lo cal Communities
We perform functions as a good corporate citizen who grows with local communities.
We actively perform social contribution activities.
We are aware that activities related to environmental issues are mandatory requirements for the existence and operations of acorporation and perform such activities voluntarily and proactively.

Through the corporate actions and activities of our individual directors' and employees', we have a deep involvement with the local
communities upon which our existence relies. Therefore, we conduct business activities while harmonizing our Group's proﬁts withthe beneﬁts of society, and perform these functions as a "good corporate citizen" who contributes to the development of local
communities. Furthermore, in order to respond to social changes over time, we endeavor to closely communicate with society andrespectfully listen to the opinions of society to ensure that our activities conform to social norms and meet the expectations ofsociety.

We regard engaging in social contribution activities as one of our social responsibilities and engage in activities in various ﬁelds. In
addition, we actively disclose our corporate attitude and actual activities through media such as the disclosure materials in order togain the understanding of society. Moreover, we actively support volunteering activities carried out by our directors and employees.

Today, environmental issues are not limited to preventing conventional industrial pollution but extends to issues common to all
humankind such as the disposal of waste, nature conservation, and preservation of the global environment.

We acknowledge that we have a social responsibility to voluntarily and actively address environmental issues, and promote thefulﬁlment of both economic development and environmental preservation.

4．Basic At titude toward Employees
We help our employees lead more prosperous and fulﬁlling lives, and secure a comfortable and safe work environment for our employees.
We create workplaces where workers respect each other and no discrimination or harassment takes place.

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While responding to the diversiﬁcation of workers' values, we are required to establish various employment and working forms and vacation
systems under which workers can lead more prosperous and fulﬁlling lives, and ensure that each worker can exercise his or her individuality andachieve personal growth.

In order to address these challenges, we will create an attractive, free, and open-minded workplace where workers can feel that their duties areworthwhile. We also strive to improve workers' sense of ethics through education and training on compliance, and comply with labor laws andregulations, as well as caring for health and safety in the workplace.

Our basic philosophy is to respect human nature and protect fundamental human rights. Discrimination and harassment are acts that violate
human rights, which demotivate workers, disrupt order in the workplace, and lead to a deterioration of the work environment. We do not permit
any acts of discrimination and harassment in any forms and for any reasons. We work to create a sound work environment where workers
respect the human rights of other workers and understand each other.

It is our basic policy to conduct fair and impartial employment screenings without discrimination. In conducting employment screenings of
employees, we make judgments based on the individual's abilities and qualiﬁcations without any discrimination.

5．Basic Attitude toward Suppliers and Competitors
In purchasing goods and services and ordering systems, we make decisions that are objectively based on factors such as quality,
convenience, and price, and maintain sound and transparent relationships with suppliers without engaging in acts that can be regarded as creating excessively familiar relationships.
We require our suppliers to understand the Fuyo General Lease Group Code of Corporate Conduct.
We make eﬀorts to approach corporate conduct with common sense, and engage in free competition in a fair and transparent manner.
Suppliers
In purchasing goods and services and ordering systems, we select suppliers by objectively and comprehensively considering factors
such as quality, convenience of service, price, and reliability.

Regarding relationships with suppliers, we maintain sound and transparent relationships without engaging in acts that can be regarded as creating an excessively familiar relationship. To this end, we do not ask or receive any entertainment or gifts in contraventionof our internal rules.

Moreover, in order to maintain our credibility, we require our suppliers to understand the Fuyo General Lease Group Code of Corporate Conduct.

Competitors
Due to the globalization of corporate activities and the expansion of a borderless economy, it is increasingly important to conduct
corporate activities in compliance with competition rules in the market.

As basic rules that are essential for the sound development of a free economic society, many countries have established laws suchas anti-monopoly acts for the purpose of maintaining and promoting fair and free competition. It is our responsibility to comply withthese laws, including with the philosophy behind such laws.

We promote complete compliance with laws and will not engage in any illegal acts or pursue proﬁts through unreasonable means.
Furthermore, we will not conduct any unfair competitive acts such as formation of a cartel or abuse of an advantageous position.

In accordance with the principle of self-responsibility, we carry out fair, transparent, and free competition based on our self-sustaining
and independent spirit, which is a precondition of the market economy system.

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6. Basic At titude toward Politics and Government
We maintain sound and appropriate relationships with politics and government.

Many countries have established laws to regulate the participation of corporations in the political activities of political parties andpolitical oﬃces.

Public oﬃcials, for example, government oﬃcials, have duties entrusted to them by citizens as servants of all citizens. Thus, government oﬃcials are required to maintain ethics pertaining to their duties. Laws and regulations also require administrative systems to
be fair and transparent.

Moreover, with respect to foreign public oﬃcials, domestic laws, mainly in OECD countries, have been developed pursuant to ensure
fair competition in international business activities.

Based on the recognition of this environment regarding relationships with politics (political parties and political oﬃces) and government (supervisory agencies, etc.) inside and outside Japan, we maintain sound and transparent relationships without engaging inacts that can be regarded as creating an interdependent relationship or an excessively familiar relationship.

To this end, we comply with laws and regulations and never oﬀer illegal political contributions or provide beneﬁts. In particular, weﬁrmly maintain our attitude of avoiding any suspicious acts with respect to relationships with public oﬃcials; as the saying goes, "don't
straighten your cap under a plum tree (raising hands might seem as if one is attempting to steal the fruit above)."

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Chapter 3. Action Guidelines for All members of
the Fuyo Lease Group
1．Maintaining Order in the Workplace
Each employee acts independently and autonomously with high ethical standards.
We cooperate and work with each other while respecting human rights and individuality to build an open-minded workplace.
We eliminate empty formalities and obscure practices, etc.

Independence and rigorous ethical standard
We will work independently and autonomously with a rigorous ethical standard in carrying out our duties, and act based on athorough understanding of not only the wording of laws, regulations and rules, but also the spirit thereof, while conforming to social
norms. Furthermore, we faithfully exercise our work authorities without exceeding those bounds, and strive to report, communicate
and consult promptly.

We are aware that the results of our actions are entirely our own responsibility, and act accordingly. It is unacceptable to violate therules, regardless of the reasons behind them whether it was for the beneﬁt of the company, a superior or a customer.

Respect for human rights and individuality
We respect each other's human rights and individuality, and do not engage in any form of discrimination. We also do not engage insexual harassment or any other forms of harassment.

Teamwork and performance of work duties
Although it is expected that each employee acquires expert knowledge and skills relating to their ﬁeld to perform their work duties,
that alone is not enough. An organization is based on the cooperation and teamwork of each and every employee. It is a mistake toact of your own accord and disrupt teamwork, thinking that you can do something by yourself. We bring together each individual's
expertise and value teamwork to provide the best service to our customers.

Open-minded workplace
We create an open-minded workplace where employees can freely discuss anything without fearing their managers or superiors.

Elimination of rituals and obscure practices, etc.
We do not engage in acts based on formal courtesies (rituals) or obscure practices, etc. between directors and employees. For
example, it is unnecessary for directors and employees to exchange mid-year and year-end seasonal gifts, etc. Instead, we prioritize
our basic policy of "putting our customers ﬁrst".

In addition, directors and employees do not engage in money lending or solicitation of personal goods, etc. among themselves
without due cause.

No personal activities in the workplace
We do not engage in unauthorized personal activities such as political and religious activities during working hours or within thecompany's facilities.

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2．No Personal Use of Company Assets
We do not use company assets (expenses, goods, and know-how, etc.) for private purposes.

Company assets are loaned or provided to us for the purpose of carrying out business and should not be used for private purposes.
Expenses
As directors and employees of the Financial Services Group, we always act with awareness that great care is required in dealing withmoney. We do not use or divert company expenses for private purposes.

Conversely, employees should make sure to charge for even small work-related expenses, such as transportation expenses when goingout for work purposes.

In this way we are able to get into the habit of distinguishing between business and personal expenses.

Goods
Company goods (novelty items and oﬃce supplies, etc.) are not to be used for private purposes. In order to discipline ourselves, we should
think and act in a way that treats any ﬁxtures as company assets. Also, we refrain from using company telephones and computers (e-mailand Internet) etc. for personal use unrelated to the performance of work duties.

Know-how, etc.
We recognize that intangible items such as the Group's know-how, etc. are company assets, and do not use them outside of our work.

3．Appropriate Information Management
We obtain external information by legitimate means and do not disclose any personal information or nonpublic information concerning customers that we acquired in the performance of our work, or any conﬁdential information about the Group itself. In addition,
information obtained is used only for work purposes, and not for private interests such as insider trading, etc.
We respect intellectual property rights, including patent rights and copyrights.
We will strive to actively create and share knowledge to increase customer satisfaction.
In performing our work we will handle all manner of diﬀerent information. Strict and appropriate management is required for all informationthat we obtain through work, such as customers' personal and nonpublic information, conﬁdential information concerning the Group itself
and information held by others.

In addition, due to advances in the IT (information technology) revolution, there is increased risk of external information leakage, intrusion
into the company system by external parties etc., therefore the management of electronic information has also become increasingly
important.

Obtaining information
We obtain external information by legitimate means, such as through authorized channels, and by paying compensation as necessary. We
do not obtain conﬁdential information by means that breach laws and regulations, or without obtaining consent from the relevant person.

Conﬁdentiality
法令に基づく正当な理由がある場合や本人の同意がある場合を除き、業務上知り得た情報はその業務上の目的にのみ使用し、他に漏らさないよう慎重に管理します。特に、取引先は、私たちが秘密を他に漏らさないことを信頼してお取引をして下さいます。取引先の秘密を守ることは業務の基本です。

No unauthorized use, etc.
We do not engage in illegal investment activities such as insider trading, etc. or pursue personal interests by using nonpublic information
which we obtained through work. Moreover, we do not destroy, counterfeit, tamper with, or illegally use the company's information.

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Preventing leakage of information due to carelessness
It goes without saying that we do not intentionally leak information, but care must also be taken to prevent leakage due tonegligence. For example, in performing our daily work we properly manage documents and keep our desks orderly, as well as lockcabinets etc. We refrain from conversation that leads to information leaks not only when in transit and at restaurants, but also in
elevators and cafeterias, etc. within the company. We also do not leak conﬁdential information to our families.

Disposal of information
We dispose of information that is no longer required, in accordance with company rules.

Joining or leaving the company
We do not use any secrets obtained while working at a previous place of employment at all, even if it is a document, etc. created by
we made ourselves. Also, after leaving the company, we do not disclose secrets obtained while employed at the company to any
other party. We do not use any intellectual property belonging to the company after leaving the company, even if we created it
ourselves while a director or employee of the company.

Information disclosure
We disclose company information in accordance with the prescribed rules. When asked for interviews from external press oranalysts, we consult with our managers or public relations department and follow their instructions.

Protection of privacy
When handling personal information we make sure it is truly necessary to conduct our work, that it is obtained in a legal and fair way,
and used and managed in a way which protects privacy at all costs.

Respect for intellectual property rights
We do not use information for which another party holds intellectual property rights (patent rights, copyrights and trademark rights,etc.), in principle, unless the consent of the relevant person has been obtained. We give due consideration not to infringe copyrights
particularly for information obtained from magazines, literature and the Internet, etc.

Meanwhile, in order to maintain the company's competitive edge, we will protect our company's intellectual property, which includes
patents, copyrights, trademark rights, ﬁnancial technology knowledge and know-how, and experience and knowledge acquired
through our work.

Using information within the GroupWe recognize that the Group itself has a wealth of knowledge and information, and actively utilize such information within the Group
while paying attention to conﬁdentiality obligations, etc. to enhance customer satisfaction and the Group's competitiveness.

4．No Conﬂicts of Interest
We act to ensure that the interests of the company or our customers are not harmed due to our own interests.
We do not use our status in the company for the interests of anyone other than the company.

We always act with the interests of the company or our customers as our top priority. We are careful not to put ourselves in situations
where we may be seen as acting in our own interests. Even when we have done nothing wrong, we need to be careful that othersaround us may perceive that there is a conﬂict of interests. We are responsible for being faithful to our duties at the company and do
not engage in any personal investment or business that may prevent us from making reasonable judgments to optimize the company's interests.

Use of status
We do not accept personal beneﬁts by using our work duties or the status thereof. We also do not seek personal advantages from

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any third party. For example, we will never use our work duties or status thereof to request entertainment or goods, or cooperation
with personal activities such as political or religious activities. Also, we do not personally receive remuneration or commissions fromour customers or their employees, etc., or engage in money lending or borrowing.

Competing position
We do not place ourselves in a position where we compete with the company. We do not assume positions as directors or employees of other rival companies, or engage in activities such as promoting or supporting the sales activities of other rival companies.

Transactions involving relatives, etc.
We avoid engaging in transactions involving our family, close relatives and friends, etc. This is due to the fact that, compared to general customers, we are more prone to getting into a situation of having to provide some advantages.

5．Appropriate Personal Conduct
We do not conduct any acts that harm or damage the company's credibility or honor, not only as a part of our work duties, butalso outside of work.
We observe the Road Traﬃc Act not only as a part of our work duties, but also outside of work, and as a matter of course do
not drink drive, or make another person drink drive.
When engaging in private activities outside the company we participate in a personal capacity, and do not use the company
name or our position title without due cause.
We do not engage in any other business without permission.

In principle the company does not usually get involved in or interfere with private activities. However, if there is a risk of damaging thecompany's honor and interests, even private activities may be subject to disciplinary action.

We believe that the trust vested in us by customers and society is the foundation of our business. Therefore, even in private activities
that are separate from work, we are careful not to damage this trust and are rigorous in ensuring we conduct ourselves appropriately.

Leading sound personal lives
We are constantly aware that we are members of the Financial Business Group, and try to lead sound personal lives to avoid falling
into economic collapse due to speculative behavior, or taking out guarantees or money lending and borrowing, etc. exceeding
individual capabilities.

No drink driving
We fully recognize the tragedy of traﬃc accidents caused by drink driving, and absolutely do not drink drive ourselves, or allow others
to do so.

Distinction between public and private lives
We do not abuse the Group's company name or our job titles, and avoid harming the company's honor and interests in order to gain
personal beneﬁts, etc. We clarify whether those activities are conducted as directors or employees of our company, or whether they
are private activities so as to avoid any misunderstandings.

No other businessWe do not work at other companies or conduct business without permission. This is because holding concurrent posts is prohibitedby laws and regulations, or there may be conﬂict of interests.

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6．Social Media Policy (Appropriate Personal Conduct 2)
We will not disclose conﬁdential information within and outside the company as a matter of course, or personal information andinformation obtained in the course of business regarding customers.
We recognize the existence of an unspeciﬁed number of people with diverse values, and do not transmit information that iscontrary to the facts, or that could be misunderstood by, or cause discomfort to the receiving person.
We recognize that our own opinions and views could be perceived to be the views and opinions of the company, so we strive
to behave in a way beﬁtting of a member of the company.
We always keep in mind to make respectful remarks, and respond calmly when criticized by other persons.
We comply with various laws and regulations and try not to infringe any third party intellectual property rights and privacy onsocial media.
In recent years, social media that allows general individuals to disseminate information and exchange opinions, etc. on the Internet
have been developing rapidly due to the spread of smartphones and other technology.

Examples of popular social media include blogs, YouTube, Twitter and Facebook, etc.

Meanwhile, there has been a succession of issues caused by information disseminated on social media.

There are many cases where information (remarks) that were casually posted developed into an incident, and the personal information of the person (employee) who posted the information was disclosed on the net, with even the person's workplace (company)
becoming the target of criticism.

In order to prevent such issues, the company has established a social media policy (moderate personal activities 2) as our basic
stance for employees' use of social media.

In addition, as with the moderation in personal activities mentioned in the preceding paragraph, even personal use of SNS may besubject to disciplinary action if there is a risk of damaging the company's honor and interests.

Naturally, posting personal opinions on social media from the company's internal networks is restricted by the systems.

Characteristics of social media
They can be accessed by an unspeciﬁed number of users with diverse values
The speed of information dissemination is fastOnce information is posted it is almost impossible to erase
Even if a person posts anonymously, there is a high probability that the person who posted the comment will be identiﬁed

Using the "Fuyo General Lease Group Code ofCorporate Conduct"
Please keep the following points in mind when conducting compliance based on the "Fuyo General Lease Group Code ofCorporate Conduct".

Application
The "Fuyo General Lease Group Code of Corporate Conduct" forms the core of the Compliance Manual, and as there arecommentaries on laws and regulations in the Compliance Manual, please use them together.
The "Fuyo General Lease Group Code of Corporate Conduct" may be diﬃcult to understand, so please consult with yourmanager ﬁrst if you have any doubts. If you are still unsure or if it is diﬃcult to consult with your manager, please make sure to
resolve any issues by reporting the matter to, and consulting with the compliance oﬃcer in charge.

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Application overseas
In cases where the "Fuyo General Lease Group Code of Corporate Conduct" does not conform to the laws and social normsof each country, the laws and social norms of the relevant country will take precedence.

Penal regulations
If an employee violates the "Fuyo General Lease Group Code of Corporate Conduct", they may be subject to disciplinary
action in accordance with the company's rules of employment.
Executive oﬃcers may be subject to disciplinary action in accordance with the company's policies.
Directors and corporate auditors may be punished in accordance with laws and regulations such as the Companies Act inJapan, and in countries other than Japan, they may be punished in accordance with the laws and regulations of the relevant
country.
In addition, the company may take legal action if an oﬃcer or employee's violation is serious.

"Quick test": Questions to ask yourself"Fuyo General Lease Group Code of Corporate Conduct" sets forth the company's basic stance on compliance and particularly
important matters. However, it does not provide comprehensive coverage of all matters. There may be additional requirements.

If you encounter an issue that is not mentioned here, or an issue that is diﬃcult for you to ﬁnd answers for by yourself, you should ﬁrst
read the "Fuyo General Lease Group Code of Corporate Conduct" again to gain a proper understanding of the provisions, and thenask yourself the following ﬁve questions. If you still have diﬃculty in deciding, please do not hesitate to consult your manager or acompliance oﬃcer.

1. Do I think the act is correct?
2.Will I harm anyone by doing that act?
3.Would I be ashamed if my family members and friends found out about the act, or if it were reported in newspapers or magazines?
4.If another person did that act, what would I think of that person?
5.Am I ignoring my conscience?

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"Fuyo General Lease Group's Three Principles ofCompliance and Standards of Compliance"（1）What is "compliance"?
In the Group, "compliance" means "to comply with laws, regulations and rules, and to carry out honest and fair corporate activities
that do not go against social norms".

（2）Three Principles of Compliance
The Group's Three Principles of Compliance are as follows;a．To fully recognize that insuﬃcient compliance could shake our management base, and to uphold thorough compliance as abasic principle of management.
b．Promote world-class compliance systems in global ﬁnancial and capital markets as a powerful Japanese market player.
c．To widely build trust among members of society and be highly regarded by shareholders and markets by carrying out thoroughcompliance.

(3) Compliance standards
The Compliance Manual is a detailed manual for directors and employees to ensure thorough compliance, and sets forth ourcompany's "Compliance Standards".

Since compliance is the responsibility of each oﬃcer and employee, we carry out the work fully understanding the purpose, objectives as well as the background of laws, regulations and rules, etc., and when checking the status of compliance, if there are any
doubts in light of laws, regulations and rules, etc. we are required to correct such issues by ourselves.

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Risk Management and Compliance System
proposals that satisfy customers’ diverse and latent needs.
Nevertheless, the Group’s business results could be
affected by trends in corporate capital expenditure.

Risk Management
Our Approach to Risk Management andRisk Management System

Impact of Credit Risk on Business Results
The business of the Fuyo Lease Group involves extending
credit to counterparties over the medium to long term,with lease agreements averaging around five years.
Consequently, there is a risk that difficulty will arise incollecting lease payments from a counterparty that files
for bankruptcy or experiences other serious issues during
the leasing period.
To minimize potential losses associated with credit
risk, the Fuyo Lease Group quantitatively assesses
and monitors credit risk in its portfolio while working tomaintain and improve the soundness of assets in addition
to screening and monitoring the creditworthiness of
individual counterparties. The Group also conducts selfassessments of its assets in accordance with standards
applied by banks and other financial institutions basedon Industry Audit Committee Report No. 19, “Temporary
Treatment for Accounting and Auditing of Application of
the Accounting Standards for Financial Instruments in
the Leasing Industry,” issued by the Japanese Institute ofCertified Public Accountants (JICPA). Accordingly, Fuyo
Lease sets aside an allowance for doubtful receivables
in its balance sheets, for which it calculates an amount of
estimated losses based on bad debts recorded in previous
financial years under a general allowance as well as an
amount of estimated uncollectable payments of individual
counterparties under specific allowances for doubtfulreceivables and borrowers in bankruptcy or reorganization.
The Group also monitors the creditworthiness of a
specified group of large-lot borrowers and reports theresults periodically to management.
N e v e r t h e l e s s , d e p e n d i n g o n f u t u re e c o n o m i ctrends, newly arising bad debts caused by worsening
creditworthiness of counterparties could adversely
impact the Group’s business results.

As stipulated in the Fuyo Lease Group risk management
regulations, we have established a risk management
system at our locations across the globe in order tomanage risks based on their particular risk characteristics
and importance. Risks to be managed are categorized into
credit, market (such as interest rate fluctuation risk), liquidity(such as cash flow risk), administrative, system, legal,
human, reputation, and other risks (including ESG risks).
Each type of risk is managed by a designated department.
The Board of Directors and the Executive Committee
receives updates on risk management, discusses risk
management policies according to the characteristics
a n d i m p o r t a n c e o f e a c h r i s k , a n d e v a l u a te s t h eeffectiveness of risk management. The Asset and Liability
Management (ALM) Committee meets on a regular basis
to appropriately manage and control market and liquidity
risks. These efforts enable us to continually improve ourrisk management system.
In addition, we have a system in place for responding
to emergencies. In the event of a large-scale disaster or
emergency, the emergency response headquarters under
the direction of the president will take measures necessaryfor ensuring safety and continuity of our operations inaccordance with the Emergency Preparedness Regulations.

Risk Factors in Business Operations
Listed below are the main factors that could pose a risk
to the development of the Group’s business and have asignificant impact on the decisions of investors.
The forward-looking statements here represent the
judgment of the Group’s management as of the datethat its annual securities report was submitted (June 26,2018). The following is not an exhaustive list of all the risks
that could affect investment in the Company’s shares.

Impact of Changes in factors such as Interest Rates, Exchange
Rates and Share Prices, and Financing on Business Results
The Fuyo Lease Group procures funds to purchaseproperties for leasing or for installment sales to customers
and to purchase the business assets owned by the Group
mainly from financial institutions and markets. Moreover,in addition to owning foreign currency-denominatedassets such as aircraft, the Group carries out investment
through securities investments and funds.
The Fuyo Lease Group not only monitors the market
conditions, but also strives to manage risks appropriately by
constantly monitoring the gap between asset management
and financing, managing risks associated with interest
rate fluctuations (market risk), and holding Asset-Liability

Impact of Capital Expenditure Trends and Other
Changes on Business Results
The lease transactions and installment sales handled by
the Fuyo Lease Group are two means by which customers
finance capital expenditures, and there is generally apositive correlation between the amount of private sector
capital expenditure and lease capital expenditure.
The Fuyo Lease Group is focusing on expanding its
customer base and increasing contracts by making various

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8 Other Business Risks

Management Committee meetings, where policies on future
funding and other activities are discussed and deliberated.
Because of its sound financial standing, the Company has
obtained good ratings from multiple credit rating agencies.
Nevertheless, future interest rate, exchange rate, shareprice and financing trends could adversely impact theGroup’s business results. Moreover, if a rating agency wereto lower the Company’s rating, it would be difficult for
the Company to procure necessary funds in appropriate
ways, as access to commercial paper and other preferredfinancing methods would be limited. In such an event,
the Company may have to borrow from banks at higher
interest rates than would normally apply, which could
adversely affect the Fuyo Lease Group’s business results.

The Fuyo Lease Group faces a number of businessrisks other than those listed above. The risks include
administrative risk resulting from inadequate administrative
processing, systems risk caused by breakdowns,
malfunction, or other issues involving computer systems
due to cyberattacks, and human risk that includes
difficulties in securing and developing the necessary
human resources. They also include asset and residual
value risk, meaning the risk of a decline in the value of
owned assets such as real estate or the residual value ofleased assets becoming lower than initial assessments.
Moreover, compliance risk could materialize if failure tocomply with laws and regulations or social norms leads toa loss of social credibility. There is also country risk related
to the political and economic environment in the overseas
countries where the Fuyo Lease Group has expanded its
business operations. In addition, revenues from electricity
sales in the Group’s mega solar business could fall below
projections due to unfavorable weather conditions.

4 Competitive Environment in the Leasing Industry
The various businesses in which the Fuyo Lease Groupis engaged, and the leasing business in particular, areexposed to intense competition that includes financial
institutions in addition to the leasing industry.
The Fuyo Lease Group endeavors to differentiate itself
from the competition and enhance its competitiveness bystrengthening its ability to deliver value-added services
that contribute to greater convenience for customers.
However, intensification in competition could have an
adverse effect on the Group’s business results.

Compliance System
Our Approach to Compliance andCompliance System

5 Impact of Changes in Regulatory Systems on
Business Results

At the Fuyo Lease Group, ensuring compliance is afundamental principle of management. We work tostrengthen and enhance our compliance system,
which enables us to operate with integrity and fairness
by conforming to relevant 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 thewhistleblower system on the basis of the Fuyo General
Lease Group's Code of Corporate Conduct. In order tomaintain 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 and the Executive
Committee before being submitted to the Board of Directors
for approval. Findings and progress of the programs arereported to the Board of Directors on a semi-annual basis.
We will continue our group-wide activities including
conducting compliance practices and complianceeducation, and streamlining our compliance systems
across the Group to improve their effectiveness.

The Fuyo Lease Group operates its business activities
based on current laws, tax regulations, accounting
standards, and other regulatory systems. The Group’sbusiness results could therefore be affected by any
significant future changes in these systems.
6 Risks Related to Strategic Partnerships andCorporate Acquisitions
The Fuyo Lease Group may form strategic partnerships
with other companies, acquire other companies, orundertake related actions to expand operations andachieve business growth. While management exhaustively
examines the implications of forming a strategic partnershipor acquiring another company, if business activities do notproceed as originally expected following the partnership or
acquisition due to changes in the operating environment
or other factors, the Group’s business results could be
adversely affected.
7 Risks from Natural Disasters or Other Causes

Fuyo General Lease Group Code ofCorporate Conduct

The Fuyo Lease Group has established various measures
to ensure business continuity as well as life and safetyin times of emergency, such as disasters, accidents, andinfectious disease epidemics. However, unforeseen
circumstances, such as damage to key social infrastructure,
could restrict the Group’s business activities and affect its
business results.

The Fuyo Lease Group has formulated the Fuyo
General Lease Group Code of Corporate Conduct, which
specifies the basic policies and position of the entire
group as well as behavioral guidelines for the employeesof the Group.

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We conduct training programs and offer e-learning
courses to employees to enhance the effectiveness of
the Code of Corporate Conduct. These programs andcourses ensure that all employees are aware of its policies
and guidelines, and evaluation of the training is regularly
reviewed.

consultation with the Whistleblower Hotline wheneverthey have any suspicions. Support is also available
anonymously.
In FY 2017, the Company made no political donations.

Compliance Training
Fuyo Lease emphasizes training programs for all
employees that are designed to ensure compliance.
Our training programs include workplace compliancetraining and e-learning on insider trading regulations
for all Group employees, as well as group training
conducted by external instructors for directors, heads ofdepartments, offices and branch offices, presidents ofGroup companies, and departmental compliance officers
who are appointed from each department or company toraise compliance awareness and ensure compliance.

Whistleblower Hotline
The Fuyo Lease Group operates a whistleblower
hotline.
In addition to the in-house compliance hotline,
we provide a consultation service desk through a
cooperating law firm. Employees are informed of these
services via posters placed inside the company, andportable information cards distributed to all groupdirectors and employees. Concerned individuals can
immediately seek consultation or report whenever theydetect any violations of the law, the Code of Corporate
Conduct and other corporate regulations, harassment
cases, misconduct in information management or otherpotential infringements. The whistleblower systems
accept anonymous reports to protect whistleblowers.
At the Fuyo Lease, full-time corporate auditors areappointed to accept reports from the Group companies,
and the cooperating law firm is available for reports fromthe overseas affiliated companies.
In FY 2017, three reports were received through the
hotline. In each case, we contacted the related parties
to confirm the facts and conducted investigations
promptly with due care to protect whistleblowers
against detrimental treatment. For the cases confirmed
to be misconducts, measures were taken according tocorporate regulations, and all cases have been resolved.
We will reinforce our compliance training of FY 2018 toprevent any recurrences.

Compliance Training (FY 2017)
Group training and workplace training
Subject# ofsessionEntry level

Introduction to compliance,
Fuyo General Lease Group Code ofCorporate Conduct, Unreasonable
demand, Credit information, Attributeinformation, Fraud prevention

2

2nd year employee(Generalist track)

Information management,
Personal information protection

1

5th year employee(Generalist track)

Response to accidents and troubles

1

Newly appointed
head of department/
branch office

Issues to be understood as
responsible officers to ensurecompliance1

Newly appointed
assistant manager/
section chief

Prevention of power harassment,
sexual and maternity harassment

2

All employees

Proper use of e-mail andpostal services

1

Participant

Prohibition of Corruption and Bribery
The prohibition of misconduct, including collusion,
cartels, abuse of superior position, inappropriate
entertainment and gifts, and illegal political donations isclearly stipulated in Chapter 2 “5. Basic Attitude toward
Suppliers and Competitors" and “6. Basic Attitude toward
Politics and Government," and Chapter 3 “2. No Personal
Use of Company Assets" and “4. No Conflicts of Interest"of the Fuyo General Lease Group Code of Corporate
Conduct. We prohibit corruption, including bribery, andany actions that could be suspected of being corrupt.
The Management Committee and Board of Directors ofFuyo Lease oversee these policies and their management
status and receive periodic reports from the Compliance
Committee.
In order to prevent corruption and bribery and bringabout its early detection, the Company implementscompliance audits in addition to identifying businesses,
intermediaries and business partners that are high risk in
the flow of its operations and avoiding involvement withthem. We inform all Group employees about the Codeof Corporate Conduct and the prohibition of corruption
and bribery, and encourage them to report to and seek

E-Learning
Participant

Subject# ofsessionDirectors,head of department/
office/branch office,compliance officer,
entry level

Regulation for Insider Trading(E-Learning material of the Japan
Exchange Group)2

All employees

Code of Corporate Conduct andgeneral issues on compliance2

Initiatives to Prevent Financial Crime
The Fuyo Lease Group has taken initiatives to prevent
financial crime such as money laundering and provisionof funds for terrorism. The lease and financing businesses
ensure due diligence with regards to business partners,
such as carrying out checks at the time of transactions inaccordance with the revised Act on Prevention of Transfer
of Criminal Proceeds. We have established a system toavoid involvement and complicity in financial crime not
only in Japan but also in transactions outside Japanthrough means such as referring to government target

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lists related to measures to combat terrorist financing ineach country.

Prevention of Insider Trading
At the request of the Tokyo Stock Exchange, Fuyo
Lease has joined the J-IRISS*, which aims to prevent
unfair trading and to maintain the transparency andimpartiality of the market.
* J-IRISS (Japan-Insider Registration & Identification Support
System): A system operated by the Japan Securities Dealers
Association by which listed companies register informationon their officers and securities firms periodically compare thisinformation on officers with their customer information withthe aim of checking for unfair trading before it happens andeliminating it as much as possible.

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Information Security

Information Securit y
The Fuyo Lease Group has established an information management system based on work content, and strictly
manages customer information.
The following group companies have acquired the Privacy Mark Glossary given to business operators who havebeen deemed appropriate for the handling of personal information, and ISO27001 certiﬁcation Glossary , which is a
global standard for information security management systems. By continuously improving our management
systems based on these standards, we are working to further improve reliability.

Privacy Mark Registration Certiﬁcate

Sharp Finance Co., Ltd.
Sharp Finance is a leasing company that has its strengths in theretail market for small retail leasing, such as developing vendor
leasing in collaboration with dealers for small- and medium-sizedenterprises.
Since 2006, the company has been granted the Privacy Mark by
JIPDEC.

Fuyo Lease Sales Tokyo 3R Center
Fuyo Lease Sales focuses on Fuyo Lease's lease expiration processing business, and on purchasing and sales of used assets.
The Tokyo 3R Center was opened in March 2013 as a base to recycle assets whose leases have expired and for used
assets. In June 2013, it acquired ISO27001 certiﬁcation for the Information Security Room (ISR), which serves as the guideline for operations such as deleting data saved in second-hand information equipment and checking their operational
status. In March 2018, the scope of the ISO27001 certiﬁcation was expanded to the entire Tokyo 3R Center.
ISO27001 Management System Registration Certiﬁcate

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Fuyo Network Service
Fuyo Network Service is engaged in the sales of information equipment, and is providing support for the introduction
and operation of the equipment and for activities such as erasing sensitive data. In January 2010, Fuyo Network
Services acquired ISO27001 certiﬁcation for the entire company.
ISO27001 Management System Registration Certiﬁcate

Accretive
Accretive provides solution services such as ﬁnancial services and accounting administration. In March 2006, it
acquired ISO27001 certiﬁcation for the entire company.
ISO27001 Management System Registration Certiﬁcate

Glossary

Privacy MarkThe Privacy Mark is given to business operators that handle personal information appropriately by conforming to the standards set
in the Japanese Industrial Standard of JIS Q 15001: 2006 Personal Information Protection Management System - Requirements.

ISO270 01
ISO27001 is a global standard for the speciﬁcation of information security management systems established by the International
Organization for Standardization.

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Each Group Company's Environmental and Social initiatives

Sharp Finance

Overview of Sharp FinanceProﬁleSharp Finance is a leasing company that has its strengths in the retail market for small leases, such as developing
vendor leasing in collaboration with dealers for small- and medium-size enterprises.

Company proﬁleEstablishedMay 1982

Capital3 billion yen

Shareholders

Fuyo General Lease (65%)

Sharp Corporation (35%)

Various leasing businesses, credit sales business, real estate rental business, and insurance
Business Activities

agency businessFuyo General Lease and Sharp Finance have combined their expertise to meet diversiﬁed and sophisticatedcustomer needs.

Contributing to the environment through theintroduction of LED lighting equipment
From a sales representative
Currently, I work at the Tokyo Daiichi Branch, and in collaboration with Independent Incubator Co., Ltd., a facilities
and equipment dealer, we advise customers on the utilization of energy-saving products.
LED lighting devices are gaining popularity as an energy-saving lighting alternative to conventional lighting, due tothe fact that LEDs' power consumption is about one-third of ﬂuorescent tubes. Moreover, they are not only saveenergy but also have long lives, so the use of LED lighting saves a lot of time previously used for maintenance.
Our customer Mokunansha Tomita Hospital, a medical institution, was established in Okazaki City, Aichi Prefecture over 100 years ago. Over time, the hospital has developed its community-based medical activities as a hospital trusted by local people.
Recently, the existing lighting system in the Preventative Medicine and Rehabilitation ward that had been in placesince the ward's opening in July 2012 was replaced with LED lighting through a lease system from our company.
Hospitals need appropriate lighting equipment to maintain a comfortable medical care environment but the large
amount of energy used by such a system is a problem.
LED lighting was introduced to cover the whole building from the entrance to the back courtyard. As a result, thehospital achieved its energy-saving goals, and we obtained high praise because the brighter hospital has made iteasier to work for those working in the building.
We want to continue advising our customers about the advantages of LED lighting in the future.

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Fuyo Auto Lease

Outline of Fuyo Auto Lease
ProﬁleFuyo Auto Lease reduces complicated operations related to customers' cars and supports a total rationalizationof management.adt

Company proﬁleEstablished

January 1987

Capital

240 million yen

Shareholders

Business Activities

Fuyo General Lease (100%)
Handling of automobile leasing/installment/sales, car maintenance/repair/service, refuelingcards/ETC cards

Reducing the environmental impacts of business activities
Based on Fuyo Lease Group's Environmental Policy, Fuyo Auto Lease strives to reduce environmental impacts
company-wide. Above all, in the core auto leases business, we are working on environmental activities at allstages from the start of a lease lasting until the end of a lease.

Environmental activities in the Auto Leases business

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Contributions to customers
Drive recorder suggestions
At Fuyo Auto Lease, we assist customers to prevent accidents by suggesting that they install a drive recorder.
A drive recorder is an in-vehicle camera device that records items like the time, the location, forward image, acceleration, turn signal operation and brake operation for approximately twelve seconds before and after a large
impact.
Characteristics of drive recorder
The driver can conﬁrm objectively review driving behavior that is likely to cause a near-miss or a traﬃc accident.
Drivers can understand their own driving behavior, improve their awareness of safe driving by reﬂecting on theiractions, and prevent traﬃc accidents.

Suggestions for telematics
Fuyo Auto Lease supports customer's operation management and accident prevention through telematics proposals.
"Telematics" is a blend word that combines "Telecommunication" and "Informatics." It refers to a service or a system thatprovides information by combining a communication system with a moving vehicle, such as an automobile. By installing a dedicated in-vehicle unit, we can acquire various information and understand/analyze a driving situation.

Holding safe driving seminars
Fuyo Auto Lease holds safe driving seminars so that customers can use vehicles safely and securely. In FY 2017,
we held 96 seminars for major companies, medium-sized companies, and small to mid-sized companies, whichwere attended by a total of 1,924 participants. At the seminars, we provided the attendees with lectures, paper
tests, video training programs, and driving aptitude tests using equipment.

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Fuyo Lease Group Integrated Report 2018

Contributions to society
Assisting children orphaned from traﬃc accidents
Fuyo Auto Lease aims to contribute to society generally, even in areas outside the scope of business.
In addition, in FY 2017, continuing from the previous year, we donated funds to support children orphaned bytraﬃc accidents.
Results of support provided from FY 2013 to 2017
Details of Activities

Donation

Donated funds from our employees/company to the Scholarship FoundFY 2013

740,000 yen

ation for Traﬃc Accident Orphans
Donated funds from our employees/company to the Scholarship Found-

FY 2014

FY 2015

210,000 yen

ation for Traﬃc Accident Orphans
Donated funds from our employees/company to the Scholarship Found-

210,000 yen

ation for Traﬃc Accident Orphans

FY 2016

Donated funds from our employees/company to the Scholarship Found-

210,000 yen

ation for Traﬃc Accident Orphans

FY 2017

Donated funds from the company to the Scholarship Foundation for Tra-

200,000 yen

ﬃc Accident Orphans

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Fuyo Lease Group Integrated Report 2018

Accretive

Overview of Accretive
ProﬁleAccretive purchases receivable accounts that arise from the delivery of goods and services, provides ﬁnancial services that support
cash ﬂow of supplying companies by providing cash early, and in addition to supporting business eﬃciency also oﬀers businessprocess outsourcing (BPO) services such as accounting administration to clients including retail business operators.

Company proﬁleEstablished
CapitalShareholders

May 1999
1,224 million yen
Fuyo General Lease (69.15%)

Don Quijote Holdings Co., Ltd. (26.15%) (as of December 31, 2018)

Financial services centering on the purchases of accounts receivables, BPO services such as accBusiness Activities

ounting administration

Cambodia support activities
In October 2017, in collaboration with its Cambodian subsidiary Accretive Service (Cambodia) Co., Ltd., Accretive conducted exchange meetings at elementary schools in Takeo province, Cambodia to provide guidance on hygiene and to donate
goods such as clothing, stationery, and daily necessities collected from employees at each base in Japan.
10 employees from Japan visited the local elementary schools. The exchanges with the children were helpful in understanding the current local situation and its issues, namely, that the educational environment in Cambodia's rural areas islacking due to factors such as equipment and funding shortages.
We will continue to participate in activities that improve this environment little by little in the future.

We handed stationeries directly to about 120 elementary school students

Teaching hand-washing with soap

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Fuyo Lease Group Integrated Report 2018

Playing together using a donated long rope

Commemorative photographApproach to Positive Oﬀ Motion
Accretive agrees with the aims of the Positive Oﬀ -movement advocated by the Japan Tourism Agency to realize
more meaningful leisure activities of employees and theirfamilies.
This movement sees "holiday = oﬀ" as "forward-looking = positive." Each employee can proactively declare theirplans to take paid leave, and as a result of going out and traveling during leisure time becomes refreshed bothmentally and physically, which enhances self-improvement, and contributes to economic revitalization.
Accretive is introducing a system that allows annual paid leave to be acquired in hourly units. The Company isengaging in awareness-raising activities with posters to promote the new system and is endeavoring to improve
working environments and create an atmosphere that makes it easier to take a vacation.

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Fuyo Network Service

Outline of Fuyo Network Service
ProﬁleFuyo Network Service provides technical services such as selling ICT equipment and software, providing technicalservices including assembly, conﬁguration and data erasure, and reselling used PCs based on the company-wide
ISO 27001 security standards certiﬁcation.

Company proﬁleEstablished
CapitalShareholders

Business Activitiesv

April 1995
40 million yen
Fuyo General Lease (100%)
Selling servers/PCs/peripherals, performing assembly/installation services, selling used PCs, constructing network systems

Promoting the reuse of used PCs
Fuyo Network Service's Hachioji Technical Center accepts about 4,000 used computers per month (approximately 50,000 computers in a year) that have been used in the PC Eco & Value leases and PC Rental provided by Fuyo
Lease. After this, the company re-commodiﬁes (reuses) them.
In the recycling process for customers who would like to employ used computers, we pre-install oﬃcial Windows
OS in collaboration with a MAR operator (Microsoft Authorized Refurbisher PC operator), as well as take appropriate measures such as erasing existing data and checking the operational status of the computer.

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Fuyo Lease Sales

Outline of Fuyo Lease Sales
ProﬁleFuyo Lease Sales handles administrative work for Fuyo Lease's lease expiration cases and sales of used property.
It also purchases and sells property owned by customers.

Company proﬁleEstablished
CapitalShareholders

Business Activities

April 1996
10 million yen
Fuyo General Lease (100%)Administrative work related to re-leasing contracts, administrative work related to the sale/disposal of lease-end properties, second-hand trade

Saving resources and reducing waste through the 3Rs
Fuyo Lease Sales is responsible for processing Fuyo Lease's lease property, whose lease contract has expired, andimplementing the 3Rs (reduce: reduce waste generation; reuse: reusing; recycle: recycling) under the Environmental Policy of Fuyo Lease Group.

Fuyo Lease Sales Operations and Promoting the 3Rs

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Fuyo Lease Group Integrated Report 2018

Tokyo 3R Center
The former Tachikawa Reuse Center, which has been reusing (re-commodifying) valuable items such as personal
computers and printers whose leases have expired, was renamed the Tokyo 3R Center in March 2013, before
being relocated to Hachioji, Tokyo and expanded. At the Tokyo 3R Center, we reuse and recycle not only lease-expired property but also for used assets we buy from other companies.
In October 2017, one of Fuyo Lease Group companies, Fuyo Network Service, relocated its technical center to theTokyo 3R Center and started joint operations. The company mainly reuses used PCs.
In the operations of the Center, we are building an occupational health and safety management system and areworking to prevent industrial accidents.
Every year, we receive advice from experts on health and safety diagnosis from the Japan Industrial Safety and
Health Association, and are making improvements based on the received advice.

Appropriate disposal of waste
Property for which a lease has expired and cannot be reused are discarded. Going above and beyond simply
complying with the Waste Disposal and Public Cleaning Law (Waste Management Act), as a waste generating
business operator, we keep close track of every piece of waste we dispose of through an electronic manifest*
system. We conduct on-site inspections of waste disposal contractors according to an annual schedule.
* Electronic manifest digitization rate (penetration rate) as announced by the government: 53% (FY 2017)Management of outsourcers

Management of reports

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Examples of intermediate processing plants
Waste is transported to an intermediate processing plant and is reduced in quantity and volume by processes
such as crushing. As a result, a lot of waste is now being recycled at the intermediate processing plant.
KANAME KOGYO Co., Ltd.
Shikahama Recycling Center of KANAME KOGYO Co., Ltd. is an intermediate
processing factory established in September 2000. It is responsible forcrushing and recycling mixed waste generated in the Tokyo metropolitan
area.
In 2002, it obtained ISO14001: 1996 certiﬁcation, and in 2010 it acquired
Industrial Waste Expert certiﬁcation under Tokyo's excellent industrial waste
processing company certiﬁcation system. In 2011, it acquired certiﬁcation as
an Excellent Industrial Waste Processing Company.
In December 2017, it was listed on the Second Section of the Tokyo Stock
Exchange.

Shikahama Recycling Center,
KANAME KOGYO Co., Ltd.

The company publishes a waste information magazine called the KANAME
Environmental News for waste-generating business operators and carries
out activities such as free business consultations and workshops. The
company is working to expand the appropriate disposal of waste.
Re-Tem Corporation
Tokyo Plant of Re-Tem Corporation, which was completed and started
operations in 2005, is the newest plant, and is part of the Tokyo Super
Eco Town being built in the Tokyo Bay area as part of Japan's urban
renewal project. It recycles 100% of various wastes, mainly metal
waste, discharged in the Tokyo metropolitan area.

Tokyo Plant, Re-Tem Corporation

Example of ﬁnal disposal site
The ﬁnal disposal of waste is shifting to recycling processes due to the lack of ﬁnal disposal sites for landﬁlling.

ECO KEIKAKU CO., LTD.
ECO KEIKAKU CO., LTD.'s Yorii Eco-Space and Arashiyama Eco-Space are
the only private facilities certiﬁed by the Ministry of the Environment underthe Act on Promotion of Development of Speciﬁed Facilities for the
Disposal of Industrial Waste as comprehensive recycling facilities contributing to improved recycling rates.
Both facilities, which are capable of accepting waste items totaling over 20
diﬀerent item types, are actively involved in developing new technologies
such as material recycling, in order to meet various needs. The plants use
mainly thermal recycling with a total processing capacity of 155.8 t a day.
Fuyo Lease periodically visits the company's disposal facility and disposal

Yoriii Eco Space, ECO KEIKAKU CO., LTD.

site to conﬁrm the on-site conditions, to exchange information and to build
relationships that can help both companies to improve environmental
awareness.

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FGL Service

Outline of FGL service
Proﬁle
FGL Service handles various administrative functions of the Fuyo Lease Group and the non-life insurance agency
business in Fuyo Lease Head Oﬃce.

Company proﬁleEstablished
CapitalShareholders
Business Activities

May 1973
70 million yen
Fuyo General Lease (100%)
Entrusted administrative business and non-life insurance agency businessBusiness of receiving and shipping environmentallyfriendly documents
Documents are frequently exchanged between Fuyo Lease's HeadOﬃce, Branch Oﬃces and Fuyo Lease Group companies.
Since FY 2006, when we acquired ISO14001 Certiﬁcation, we havebeen working on reducing packaging materials of the FGL Service, on
behalf of the receiving and shipping business.
By using dedicated nylon bags or duralumin cases, we receive andship documents while using almost no paper envelopes or cardboard
boxes.
Dedicated eco bags and eco cases

Achieving paperless application of movable insurance
In a leasing company, except for special cases, almost all leased properties are covered by movable general insurance. For this reason, a huge number of insurance application forms are required, and we used to printout 4,000
to 5,000 pages of forms each month. However, we achieved paperless operation by converting insurance applications into electronic information starting from FY 2012.

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Contributing to the environment through products, donatingused stamps
At Fuyo Lease Group, we collect stamps used in oﬃces and employees'
households.
Collected used stamps are sorted and organized by the FGL Service andthen donated to NGOs that support activities in the ﬁeld of health andmedical care. The stamps are mainly used for support activities in areas
where overseas health and medical care is not suﬃcient.
In FY 2017, about 2.0 kg of stamps were collected and donated to theTokyo Oﬃce of Japan Overseas Christian Medical Cooperative Service.
We carefully organize used stamps that arecollected for donation

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Fuyo Lease Group Integrated Report 2018

Aqua Art

Overview of Aqua Art
ProﬁleAqua Art was established in March 1994 as a wholly-owned subsidiary of Fuyo Lease. It operates a rental businessfor tropical ﬁsh tanks, which replicate the natural environment.

Company proﬁleEstablishedMarch 1994

Capital50 million yen

Shareholders
Business Activities

Fuyo General Lease (100%)
Manufacture, sale, rental, and maintenance of ornamental aquarium

AQUA ART interior aquarium
AQUA ART is a product that directly reproduces the structure of the natural world in an aquarium using realcreatures. The food chain in the aquarium provides a balanced aquarium, and the staﬀs of Aqua Art carry out
maintenance precisely to maintain that balance.
AQUA ART is familiar to a wide range of people from small children to the elderly as an interior aquarium installed
at locations such as oﬃces, shops, hospitals, and schools.
(1) Providing people and communities a relaxing space
AQUA ART comprehensively provides a fascinating viewing experience, and a moment to meet the wonder ofnature through colorful ﬁsh and aquatic plants in exceptionally clear water that gives peace of mind.
(2) Education on nature
AQUA ART is a unique system that reproduces the food chain directly in an aquarium with actual living ﬁsh andaquatic plants. It is ideal for children learning about the mechanics of the natural world.

Cycle system of AQUA ART

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Fuyo Lease Group Integrated Report 2018

Contributing to the environment through products
Since June 2011, Aqua Art has been changing the lighting of AQUA ART aquariums from conventional ﬂuorescenttubes to LEDs, achieving high energy-savings. Very little electricity is used for lighting the aquarium, but we arepromoting this measure so that it helps to achieve even small energy savings.
Since July 2013, we have been installing only LED lighting in new aquariums. By the end of August 2018, we had
installed 800 LED lamps in about 690 aquariums.
Preparing a variety of LED lightings according to the size of the aquariums

Contributing to society through products
In 2003, we started an initiative to donate the AQUA ART interior aquarium as a standalone product to provide
environmental educational material for local kindergartens and nursery schools.
The laughter and cheerful facial expressions that can be found in kindergartens after setting up the aquarium havecreated positive emotions among Aqua Art employees, contributing not only to communities, but also to themotivation each employee.
Since 2012, in cooperation with Fuyo Lease, donation targets have included maternal and child support facilities
and work support facilities for people with disabilities in Tokyo and its neighboring prefectures. The number ofdonations totaled 14 at the end of March 2018.
We will continue to make eﬀorts to help even a little to heal the hearts of everyone at facilities in the future.

AQUA ART aquarium donated to local kindergartens, and maternal and child support facilities

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Fuyo Lease Group Integrated Report 2018

Financial
SectionFinancial Information
Financial Position and Management Goals

P132

Financial Statements
Consolidated Balance Sheets

P134

Consolidated Statements of Income

P136

Consolidated Statements of Comprehensive Income

P137

Consolidated Statements of Changes in Net Assets

P138

Consolidated Statements of Cash Flows

P141

Notes to Consolidated Financial Statements

P142

Report of Independent Auditors

P175

131

Fuyo Lease Group Integrated Report 2018

Financial Informationor 16.3% year on year, to ¥512,156 million, and gross profit
in the Lease and Installment Sales segment increased by¥3,020 million, or 6.7%, year on year, to ¥48,141 million.
This result was mainly due to the steady accumulation ofoperating assets in finance leases and operating leases in
addition to a significant contribution from the expiration oflarge-lot real estate leases and the increase in lump-sum
recorded sales for bridge-type contracts, and the impact ofthese factors was similar at each profit level.

Financial Position andManagement Goals
Financial Position and Results of Operations
In FY 2017, the fiscal year ended March 31, 2018, theJapanese economy continued a trend of moderate recovery
backed by strong corporate earnings and improved
employment conditions. Overseas economies also continued
to experience steady economic expansion despite concern
over the impact of U.S. trade policies and geopolitical risks.
According to the Japan Leasing Association, the total
volume of lease transactions in Japan’s leasing industry
in FY 2017 came to ¥4,875.9 billion, a decrease of 2.9%
compared to the previous fiscal year.
In this environment, the Fuyo Lease Group launched
Frontier Expansion 2021, its new five-year Medium-termManagement Plan, in April 2017. In FY 2017, the first fiscal
year of the plan, the Group steadily implemented thebusiness and management strategies outlined in the plan,
aiming to be a corporate group that continually expands
the frontiers of its business portfolio and clears the way to
new business fields by fulfilling the corporate slogan of“Go where no one has gone before”.
As a result of these efforts, newly executed contract
volume in FY 2017 totaled ¥1,105,028 million, up 32.5% year
on year. Consolidated operating assets (after subtracting thedeferred profit on installment sales) as of March 31, 2018,
totaled ¥2,168,728 million, up ¥125,163 million, or 6.1%,
from the end of the previous fiscal year.
The total assets amounted to ¥2,430,838 million, up¥130,748 million, or 5.7%, from the end of FY 2016. This
increase is due to a steady increase in operating assets,
which increased by ¥125,163 million from the end of theprevious fiscal year to ¥2,168,728 million, an increase of
6.1% year over year.
The funding balance stood at ¥1,964,954 million, an
increase of 6.2% year on year, mainly due to the issuanceof unsecured straight bonds amounting to ¥20,000
million during the fiscal year under review.
On the profit front, the Company reported total revenuesof ¥590,201 million, up 16.4% year on year, operating profitof ¥32,609 million, up 13.9% year on year, ordinary profit of¥35,200 million, up 12.2% year on year, and net profit attributableto owners of parent of ¥21,944 million, up 9.9% year on year.

▶

▶

Other

The Other segment’s revenues jumped by ¥5,588 million,
or 49.7% year on year, to ¥16,839 million in FY 2017.
Cost of sales increased by ¥5,775 million, or 132.6%
year on year, to ¥10,130 million, and gross profit in theother segment declined by ¥187 million, or 2.7% year
on year, to ¥6,708 million. This result was mainly due tothe contribution from the Solution business at Accretive
Co., Ltd., which became a consolidated subsidiary, anddecreases in premium revenue and warranty fee revenue.
Operating profit, ordinary profit and profit
attributable to owners of parent
In Leases, the Company steadily expanded the balance of
operating assets through the accumulation of operating
assets focused on real estate leases. In Financing, in addition
to the consolidation of Accretive, the Company successfully
accumulated assets with a focus on profitability, steadily
expanding both the balance of operating assets and profits.
Meanwhile, in the area of funding costs, under the current
interest rate environment, the Company strived for low
interest rate fund procurement. In terms of costs, such as
personnel expenses, the Company managed to maintaincosts largely on level with the previous fiscal year when
the cost increase due to the consolidation of Accretive Co.,
Ltd. is excluded. There were no major changes in bad debt
expenses, which were maintained at a favorable level. As
a result, ordinary profit totaled ¥35,200 million, an increaseof 12.2% year on year, and profit attributable to owners ofparent stood at ¥21,944 million, up 9.9% year on year.

Financial Position and Results ofOperations by Segment
Revenues, cost of sales and gross profit▶

Financing

Financing segment revenues totaled ¥13,063 million in FY
2017, an increase of ¥2,783 million, or 27.1%, year on year.
Cost of sales increased by ¥134 million, or 507.9%, to ¥160
million, and gross profit in the Financing segment rose
¥2,649 million, or 25.8%, to ¥12,902 million. This result was
mainly due to the steady accumulation of operating assets
in the Financing segment in addition to the increase inprofit due to short-term revolving-type factoring at Accretive
Co., Ltd., which became a consolidated subsidiary.

Lease and Installment Sales

Net assets and equity ratio

In FY 2017, Lease and Installment Sales segment revenues
increased ¥74,828 million, or 15.4% year on year, to¥560,298 million. Cost of sales increased by ¥71,807 million,

Total shareholders’ equity was ¥208,397 million, up 9.4%
year on year, mainly owing to an increase in retained
132

Fuyo Lease Group Integrated Report 2018

Financial Information

the end of the previous fiscal year, mainly due to increases
in short-term loans and long-term loans from banks andother financial institutions. Direct financing increased
8.5% from the end of the previous fiscal year to ¥669,565
million, mainly due to the issuance of commercial paperand bonds. As a result, the funding balance at the endof the fiscal year under review increased 6.2% from theend of the previous fiscal year to ¥1,964,954 million. The
percentage of direct financing stood at 34.1%, up 0.7
points compared to the end of the previous fiscal year.
The main demand for working capital at the Fuyo
Lease Group other than the purchase of lease assets
and properties for installment sales to customers and thepurchase of operational investment securities comesfrom operating expenses and selling, general andadministrative expenses.
As of March 31, 2018, the balance of interest-bearing
debt, including borrowings and lease obligations, stoodat ¥2,000,289 million, up 5.2% from the end of fiscal year.
Moreover, cash and cash equivalents at the end of the
fiscal year under review totaled ¥54,062 million.
At the end of the fiscal year under review, the Company
had concluded overdraft agreements and loan commitment
agreements with 75 correspondent financial institutions. Thebalance of executed loans amounted to ¥419,867 million, andthe balance of unexecuted loans stood at ¥481,836 million.

earnings. As a result, total net assets came to ¥282,574
million at the end of the fiscal year under review, up ¥23,381
million, or 9.0%, compared to the end of the previous fiscal
year. As a result of accumulating operating assets with
an awareness of return on assets (ROA), the equity ratio
improved by 0.3 percentage points from the end of theprevious fiscal year to 10.2%.

Cash FlowsThe analysis of cash flows for FY 2017 is as follows.
Cash flows from operating activities
Operating activities in FY 2017 used net cash of ¥100,667
million, a decrease compared to the net cash used of¥154,028 million in the previous fiscal year. The majorchanges included an increase in profit before income taxes,
increases in loss on retirement of property for lease due todisposal of property for lease and cost of property for leasesales, and increases in cash outflows for lease receivables
and investment assets, loans, and purchase of lease assets
due to the steady accumulation of operating assets.
Cash flows from investing activities
Investing activities in FY 2017 used net cash of ¥9,428
million, an increase compared to the net cash used of ¥4,897
million in the previous fiscal year. The main changes included
an increase in cash outflows for the purchase of assets forsolar power plant projects in the Energy/Environment area,
which is a strategic area, and the purchase of the shares ofMarubeni Auto Investment (CANADA) Inc., which became
an equity-method affiliate of the Company.

Management policy, management
strategy and objective indicators
used for evaluating progress towards
management goals
The Medium-term Management Plan, Frontier Expansion
2021, aims to expand the frontiers of our business portfolio
through robust and sustainable growth by constantly
challenging new business areas and business models.
To this end, it is important to steadily build operating
assets and enhance profitability in order to achieve better
performance. From this point of view, we have defined
operating assets, ordinary profit, and return on assets (ROA)
as our three management goals.
On the basis of steadily accumulating operating assets,
both sales and profit showed favorable performanceexceeding the previous year’s results. In particular,
ordinary profit increased 12.2% from the previous year torecord a new high.
Regarding stock, we were able to steadily increase
operating assets by 6.1% from the end of the previous
consolidated fiscal year while improving return on
assets (ROA) by 0.06 points from the end of the previous
consolidated fiscal year.

Cash flows from financing activities
Financing activities in FY 2017 provided net cash of¥113,549 million, a decrease compared to the net cash
provided of ¥157,674 million in the previous fiscal year.
The main changes in indirect financing included a
decrease in proceeds from long-term loans from banks andother financial institutions, and an increase in cash outflows
due to repayments of long-term loans to banks and otherfinancial institutions. In direct funding, the main changes
included an increase in proceeds from the issuanceof commercial paper, a decrease in proceeds from theissuance of bonds, a decrease in cash outflows due tothe redemption of bonds, and decreases in proceedsfrom securitized lease receivables and cash outflows fromrepayments for securitized lease receivables.

Financial Policy
The Fuyo Lease Group has set a basic policy of ensuring
the liquidity required for business operations and stable
funding sources.
The Fuyo Lease Group raises funds through indirect
financing using borrowings from financial institutions anddirect financing from the markets for its working capitaland equipment funding.
At the end of the fiscal year under review, indirect
financing amounted to ¥1,295,388 million, up 5.0% fromManagement
Goals(Consolidated)
OperatingAssets

FY 2017
Result¥2,043.6 bn ¥2,168.7 bn

Ordinary
ProfitReturn on
assets (ROA)133

FY 2016
ResultInterim Goal Target Value(FY 2019)(FY 2021)¥2,300〜¥2,400 bn¥2,500 bn¥31.4 bn

¥35.2 bn

¥38〜42 bn¥50 bn1.61 %

1.67 %

1.7〜1.8 %2.0 %Fuyo Lease Group Integrated Report 2018

Consolidated Balance Sheets
Fuyo General Lease Co., Ltd. and Consolidated Subsidiaries
March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 1)Millions of yen

Assets

2018

2018

2017

Current assets:
Cash and deposits (Notes 2 and 8)￥

Marketable securities (Notes 2, 3 and 5)

54,822￥50,990$517,194

174,036

145,343

1,641,858

Installment sales

116,697

129,663

1,100,924

Financing

380,555

383,373

3,590,143

1,113,085

1,060,579

10,500,804

Trade receivables (Notes 2 and 5):

Lease
Other

2,396

3,189

22,613

Allowance for doubtful receivables(2,806)(3,519)(26,475)

Deferred tax assets (Note 11)

2,771

2,533

26,148Other

35,20032,053332,084

1,876,761

1,804,206

17,705,293

Unconsolidated subsidiaries and afﬁliates

14,976

8,029

141,289

Other investment in securities

748,463

Total current assets

Investments and other assets:
Investment in securities (Notes 2, 3 and 5)
79,33775,420Claims provable in bankruptcy, claims provable in rehabilitation and other

1,022

879

9,650

Other investments

46,50547,928438,729

Deferred tax assets (Note 11)

679

642

6,414

Allowance for doubtful receivables

(445)

(356)

(4,202)142,076

132,544

1,340,343

3,540,682

Total investments and other assets

Property and equipment, at cost less accumulated depreciation:
Leased assets (Note 4)

375,312

320,637

Advances on purchases of property and equipment for lease

3,504

11,73033,062

Own-used assets (Note 4)

21,55618,137203,365

Total property and equipment

400,373

350,505

3,777,109

Intangible ﬁxed assets:
Software leased to customers

373

572

3,525

Goodwill

6,226

7,797

58,741

Other

4,201

4,208

39,632

10,801

12,578101,898

Total intangible ﬁxed assets

Deferred assets:
Deferred organization expenses
Business commencement expenses
Total deferred assets
Total assets:

0

0

3

825

253

7,791

826

254

7,794

￥ 2,430,838￥ 2,300,090$ 22,932,437

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets

2018

2018

2017

Current liabilities:
Short-term borrowings (Notes 2 and 5)￥

959,940￥

897,820$

9,056,044

Current portion of long-term debt (Notes 2 and 5)

271,719

245,183

2,563,396

Lease obligations (Notes 2 and 5)

34,87349,728

328,997

Notes and accounts payable ‒ trade26,46430,174

249,661

Income taxes payable

5,880

5,511

55,475

Deferred tax liabilities (Note 11)

130

134

1,233

Advances received from customers

7,772

7,704

73,325

Deferred proﬁt on installment sales

1,625

1,812

15,334

Other

22,77017,574

214,8131,331,177

1,255,645

12,558,278

Long-term debt (Notes 2 and 5)733,293

707,928

6,917,862

Deferred tax liabilities (Note 11)

16,79014,806

158,400

Net deﬁned beneﬁt liability (Note 12)

1,703

1,887

16,067

Guarantee deposits from customers

60,46157,001

570,396

Other

4,837

3,629

45,640817,086785,252

7,708,365

2,148,264

2,040,897

20,266,643

99,360Total current liabilities

Long-term liabilities:

Total long-term liabilities
Total liabilities

Contingent liabilities (Note 6)
Net assets:
Shareholdersʼ equity (Notes 16, 19 and 20):
Common stock, without par value
Authorized: 100,000,000 shares
Issued: 30,287,810 shares in 2018 and 2017

10,532

10,532

Capital surplus

10,416

10,416

98,269Retained earnings

187,673

169,9421,770,503

(224)

(342)

(2,119)208,397

190,548

1,966,013

39,26535,314

370,432

(92)

(109)

(873)

Foreign currency translation adjustments

1,551

2,137

14,638Remeasurements of deﬁned beneﬁt plans

(10)

(47)

(96)

40,71437,294384,101

924

842

8,719

Less, treasury stock, at cost ‒ 64,939 shares in 2018 and 99,224 shares in 2017
Total shareholdersʼ equity

Accumulated other comprehensive income
Net unrealized gains (losses) on available-for-sale securities
Deferred gains (losses) on hedges

Total accumulated other comprehensive income

Subscription rights to shares
Non-controlling interests

32,53730,506306,961

Total net assets

282,574

259,192

2,665,794￥ 2,430,838￥ 2,300,090$ 22,932,437

Total liabilities and net assets

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Consolidated Statements of Income
Fuyo General Lease Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 1)Millions of yen

2018

2018

2017

Revenues:
Lease and installment sales￥

560,298￥

485,470$

5,285,837

Financing

13,063

10,280Other

16,83911,251

158,864590,201

507,001

5,567,941

512,156

440,349

4,831,669

160

26

1,517

Other

10,1304,355

95,574

Interest expense

7,340

7,125

69,253

Total revenues

123,240

Costs:
Lease and installment sales
Financing

Total costs

529,789

451,856

4,998,013

Gross proﬁt

60,41255,145569,928

Selling, general and administrative expenses

27,802

26,510262,289

Operating proﬁt

32,60928,634

307,639

Interest and dividend income

1,556

1,636

14,682

Interest expenses

(363)

(312)

(3,432)Equity in earnings of afﬁliates

753

456

7,106

Bad debt recovered

118

285

1,117

Reversal of allowance for doubtful receivables

103

149

977

Reversal of provision for loss on guarantees

127

262

1,207

Gain on sale of marketable and investment securities

0

466

1

Loss on sale of marketable and investment securities

̶

(0)

̶

Other income (expenses)

Other, net

224

265

2,119

35,13031,844331,416

Current

10,965

10,051

103,447

Deferred

(92)

(511)

(872)

Total

10,872

9,540

102,575

Proﬁt after income taxes

24,25722,304

228,841

Proﬁt before income taxes
Income taxes (Note 11)

Proﬁt attributable to non-controlling interests

2,312

Proﬁt attributable to owners of parent￥

21,944

21,8192,330￥

19,974$207,022

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Consolidated Statements of Comprehensive Income
Fuyo General Lease Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 1)Millions of yen

2018
Proﬁt after income taxes

￥

2018

2017

24,257￥22,304$

228,841

Other comprehensive income
Net unrealized gains (losses) on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment

3,957

3,076

9

26

89

(586)

(272)

(5,532)37,332Remeasurements of deﬁned beneﬁt plans

80

51

757

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

(14)

211

(140)

3,445

Total other comprehensive income

Comprehensive income

32,506

3,092￥

27,702￥25,397$

261,347￥

25,364￥23,042$

239,286(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

2,338

2,354

22,061

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Consolidated Statements of Changes in Net Assets
Fuyo General Lease Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017
Year ended March 31,2018
Shareholdersʼ equity
Number ofshares ofcommon stock

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costTotal
shareholdersʼ
equityMillions of yen

Balance at beginning of year

30,287,810￥ 10,532￥ 10,416￥ 169,942￥ (342) ￥ 190,548

Cash dividends(4,167)(4,167)

Proﬁt attributable to owners of parent

21,94421,944Purchase of treasury stock
Disposal of treasury stock

(45)

(0)

(0)

118

73

Net changes of items other than shareholdersʼ equity
Balance at end of year

30,287,810￥ 10,532￥ 10,416￥ 187,673￥ (224) ￥ 208,397

Year ended March 31,2018
Accumulated other comprehensive income
Net unrealized
gains onavailable-forsale securities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment

Total
Remeasure- accumulated
ments
other
of deﬁned comprehensive
beneﬁt plansincomeMillions of yen

Balance at beginning of year

￥ 35,314￥ (109)￥ 2,137￥ (47)￥ 37,294

3,951

17

(586)

37

3,419

￥ 39,265￥ (92)￥ 1,551￥ (10)￥ 40,714

Cash dividends
Proﬁt attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than shareholdersʼ equity
Balance at end of year

Year ended March 31,2018

Balance at beginning of year

Subscription
rights toshares

Noncontrollinginterests

Total
net assets￥ 842￥ 30,506￥ 259,192

Cash dividends(4,167)

Proﬁt attributable to owners of parent

21,944Purchase of treasury stock(0)

Disposal of treasury stock73

Net changes of items other than shareholdersʼ equity
Balance at end of year

81

2,031

5,532

￥924

￥ 32,537￥ 282,574

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Year ended March 31,2018
Shareholdersʼ equity
Commonstock

CapitalsurplusTreasurystock,
at costRetainedearnings

Total
shareholdersʼ
equityThousands of U.S. dollars (Note 1)

Balance at beginning of year

$ 99,360$ 98,269$ 1,603,231$ (3,234) $ 1,797,626

Cash dividends(39,318)(39,318)

Proﬁt attributable to owners of parent

207,022207,022

Purchase of treasury stock
Disposal of treasury stock

(432)

(7)

(7)

1,122

690

Net changes of items other than shareholdersʼ equity
Balance at end of year

$ 99,360$ 98,269$ 1,770,503$ (2,119) $ 1,966,013

Year ended March 31,2018
Accumulated other comprehensive income
Net unrealized
gains onavailable-forsale securities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment

Total
Remeasure- accumulated
ments
other
of deﬁned comprehensive
beneﬁt plansincomeThousands of U.S. dollars (Note 1)

Balance at beginning of year

$ 333,156$ (1,038)$ 20,167$ (448)$ 351,837

37,276165(5,529)352

32,264(873)$ 14,638(96)$ 384,101

Cash dividends
Proﬁt attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than shareholdersʼ equity
Balance at end of year

$ 370,432$$

Year ended March 31,2018
Subscription
rights tosharesBalance at beginning of year

$ 7,953

Noncontrollinginterests$ 287,794

Total
net assets$ 2,445,210

Cash dividends(39,318)

Proﬁt attributable to owners of parent

207,022

Purchase of treasury stock(7)

Disposal of treasury stock690

Net changes of items other than shareholdersʼ equity
Balance at end of year766

19,16752,197$ 8,719$ 306,961$ 2,665,794

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Year ended March 31,2017
Shareholdersʼ equity
Number ofshares ofcommon stock

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costTotal
shareholdersʼ
equityMillions of yen

Balance at beginning of year

30,287,810￥ 10,532￥ 10,416￥ 153,366￥ (401) ￥ 173,913

Cash dividends(3,379)(3,379)Proﬁt attributable to owners of parent

19,974

19,974Purchase of treasury stock
Disposal of treasury stock

(18)

(0)

(0)

59

41

Net changes of items other than shareholdersʼ equity
Balance at end of year

30,287,810￥ 10,532￥ 10,416￥ 169,942￥ (342) ￥ 190,548

Year ended March 31,2017
Accumulated other comprehensive income
Net unrealized
gains onavailable-forsale securities

Deferred
gains(losses)on hedges

Foreigncurrencytranslation
adjustment

Total
Remeasure- accumulated
ments
other
of deﬁned comprehensive
beneﬁt plansincomeMillions of yen

Balance at beginning of year

￥ 32,230￥ (187)￥ 2,416￥ (232)￥ 34,226

3,084

77

(278)

185

3,068

￥ 35,314￥ (109)￥ 2,137(47)￥ 37,294

Cash dividends
Proﬁt attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than shareholdersʼ equity
Balance at end of year￥

Year ended March 31,2017

Balance at beginning of year

Subscription
rights toshares

Noncontrollinginterests

Total
net assets￥ 722￥ 23,670￥ 232,531

Cash dividends(3,379)Proﬁt attributable to owners of parent

19,974Purchase of treasury stock(0)

Disposal of treasury stock41

Net changes of items other than shareholdersʼ equity
Balance at end of year

120

6,835

10,025￥842￥ 30,506￥ 259,192

See accompanying notes to the consolidated ﬁnancial statements.

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Fuyo Lease Group Integrated Report 2018

Consolidated Statements of Cash Flows
Fuyo General Lease Co., Ltd. and Consolidated Subsidiaries
Years Ended March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 1)Millions of yen

2018

2018

2017

Cash ﬂows from operating activities:
Proﬁt before income taxes￥

35,130￥31,844$331,416

Adjustments for:
Depreciation and amortization

32,37732,765

305,448

Loss on retirement of leased assets and cost of leased assets sales

70,364

10,923663,813

(622)

(367)

(5,869)Interest and dividend income(1,556)(1,636)(14,682)

Interest expenses

7,704

7,437

72,684

(0)

(466)

(1)

(753)

(456)

(7,106)

Decrease in allowance for doubtful receivables

Gain on sales of marketable and investment securities, net
Equity in earnings of afﬁliates
Amortization of goodwill and negative goodwill

1,571

1,328

14,822

Increase in trade receivables(65,488)(86,747)(617,814)

Purchase of leased assets(149,448)(131,628)(1,409,891)

Decrease in trade payables(18,077)(20,847)(170,539)

4,852

19,28345,776(83,945)(138,567)(791,943)

Other, net
SubtotalInterest and dividend income received

1,361

1,393

12,846

Interest expenses paid

(7,857)(7,313)(74,124)

Income taxes paid

(10,226)(9,541)(96,476)(100,667)(154,028)(949,697)

Proceeds from sales and redemption of marketable and investment securities

2,604

2,992

24,567

Payments for purchase of marketable and investment securities(7,501)(693)(70,764)̶

(8,159)̶

(5,862)(1,468)(55,305)

Net cash used in operating activities

Cash ﬂows from investing activities:

Purchase of shares of subsidiaries resulting in change in scope of consolidation
Payments for purchase of property and equipment for own use
Other, net
Net cash used in investing activities

Cash ﬂows from ﬁnancing activities:

1,330

2,431

12,550(9,428)(4,897)(88,952)

Increase in short-term borrowings, net

62,662

34,437591,157

Proceeds from long-term debt

318,241

364,194

3,002,276

Repayments of long-term debt

(282,268)(266,777)(2,662,909)

Proceeds from issuance of bonds

20,00040,000188,679

Redemption of bonds(300)(10,150)(2,830)Cash dividends paid

(4,168)(3,379)(39,325)

(617)

(649)

(5,822)

113,549

157,674

1,071,226

47

406

448

Other, net
Net cash provided by ﬁnancing activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

3,500

(844)

33,025

Cash and cash equivalents at beginning of year

50,561

51,406476,998

Cash and cash equivalents at end of year￥

54,062￥50,561$510,023

See accompanying notes to the consolidated ﬁnancial statements.

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Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(1) Basis of Presentation
Fuyo General Lease Co., Ltd. (the “Company”) and its domestic consolidated subsidiaries maintain their books of account in conformity
with generally accepted accounting principles in Japan, and its foreign consolidated subsidiaries maintain their books of account inconformity with those of their countries of domicile.
The accompanying consolidated ﬁnancial statements have been compiled from the consolidated ﬁnancial statements prepared by
the Company as required under the Financial Instruments and Exchange Act of Japan and have been prepared in accordance withgenerally accepted accounting principles in Japan, which are different in certain respects as to the application and disclosure requirementsof International Financial Reporting Standards.
The amounts in US dollars presented in the ﬁnancial statements are translated from the amounts in Japanese yen at the exchange rateof ¥106 to US$1.00, in effect at March 31, 2018, solely for the convenience of overseas readers. Therefore, this does not imply that thoseamounts in yen can be converted into equivalent amounts in US dollars at this or any other exchange rate. The amounts, which areindicated in millions of yen, are rounded down by truncating the ﬁgures below one million. As a result, the totals may not add up exactly.

(2) Principles of Consolidation
The accompanying consolidated ﬁnancial statements include the accounts of the Company and all companies controlled directly or
indirectly by the Company. Companies over which the Company exercises signiﬁcant inﬂuence in terms of their operating and ﬁnancial
policies have been included in the consolidated ﬁnancial statements on an equity basis. All signiﬁcant intercompany balances andtransactions have been eliminated in consolidation.
For ﬁscal years ended March 31, 2018 and 2017, consolidated accounting covered the parent company and 46 and 45 subsidiaries,
respectively. A total of 4 and 3 afﬁliated companies are accounted for under the equity method and incorporated into the consolidated
ﬁnancial statements for ﬁscal years ended March 31, 2018 and 2017, respectively.
Investments in the non-consolidated subsidiaries or afﬁliates for which the equity method has not been applied are evaluated using
the cost method.
With regard to the equity method afﬁliates whose closing dates differ from the consolidated closing date, the ﬁnancial statements ofthese companies for their respective ﬁscal years have been applied.
Regarding the closing dates of the consolidated subsidiaries, the closing date of 20 companies is December 31, that of 14 companies
is March 31, and that of 12 companies is January 31 for the current year.
Financial statements of the respective subsidiaries for the respective ﬁscal years, with necessary adjustments in material activities
transacted during the periods up to the consolidated closing date, have been reﬂected in the consolidation.
Of the acquisition costs of newly consolidated subsidiaries, portions exceeding their net assets as of the dates when the Company
acquired control are recorded as goodwill and will be amortized using the straight-line method over 20 years or less, except for
immaterial amounts.

(3) Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into yen at the exchange rates prevailing at the balance
sheet dates, except for assets and liabilities hedged by forward foreign exchange contracts.
All revenues and expenses associated with foreign currencies are translated at the exchange rates prevailing when such transactions
were made. The resulting exchange gains and losses are credited or charged to income.
The accounts of the foreign subsidiaries are translated at the exchange rates prevailing at the balance sheet dates, except for thecomponents of net assets. The components of net assets are translated at their historical exchange rates. The resulting exchange
differences are included in the foreign currency translation adjustments account in net assets.

(4) Cash and Cash Equivalents
The Company and its subsidiaries consider all highly liquid investments with a maturity of three months or less when purchased to be
cash equivalents.

(5) Lease Accounting
Revenue and cost of ﬁnance leases are recognized when each lease payment becomes due.
Revenue from operating leases is based on the monthly amounts of lease payments due under lease agreements over the leaseagreement periods. The monthly lease payments corresponding to each period are allocated to revenue from operating leases forthat period.

(6) Installment Sales
Revenue and cost of installment sales are recognized when each installment payment becomes due.

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(7) Interest Expenses
Interest expense is allocated to cost of sales and other expenses based on the balances of the respective operating assets, which consist
principally of accounts receivable and leased assets, and other assets.
Interest expense classiﬁed as cost of sales is stated net of interest income.

(8) Securities
All securities are classiﬁed as available-for-sale securities.
Marketable available-for-sale securities are carried at fair market value and unrealized gains or losses are reported as a separate
component of net assets, net of the related deferred income taxes.
Other securities without available fair market values are stated at values determined using the moving-average cost method.
The cost of securities sold is determined based on the moving-average method.
When a signiﬁcant decline in fair value below cost of an individual security is deemed to be other than temporary, the carrying valueof the individual security is written down to fair value.

(9) Depreciation and Amortization
Depreciation of leased assets is computed primarily by the straight-line method based on the lease term of the respective assets.
Depreciation of assets leased under ﬁnance leases not involving title transfer is computed by the straight-line method based on thelease term of the respective assets and assuming a residual value of zero.
Depreciation of own-used assets is computed by the declining balance method. However, some domestic and overseas consolidated
subsidiaries apply the straight-line method for depreciation of buildings (excluding facilities attached to buildings) acquired on andafter April 1, 1998 and facilities attached to buildings and structures acquired on and after April 1, 2016.
The estimated useful lives of own-used assets are principally as follows:
Buildings

3 to 50 years

Furniture and equipment

3 to 20 years

Computer software intended for internal use is amortized by the straight-line method over the estimated useful lives (5 to 10 years).

(10) Allowance
Allowance for doubtful receivables
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, the analysis of debtorsʼ ﬁnancial positions forclassiﬁed loans and claims in bankruptcy. With respect to the bankruptcy claims, an estimated uncollectible amount is directly deductedfrom the amount of claims. The direct deduction totaled ￥1,923 million in the ﬁscal year ended March 31, 2017 and ￥2,072 million($19,555 thousand) in the ﬁscal year ended March 31, 2018.

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 general receivables, the analysis of individual
receivables with respect to classiﬁed loans in addition to bankruptcy claims.

Provision for loss on guarantees
To cover possible losses on guarantees, the Company provides an allowance for estimated loss, taking into consideration the ﬁnancial
condition of the providers of the ﬁnancial guarantees as well as other factors.

Provision for automobile maintenance costs
To cover future payments for automobile maintenance costs that are required in speciﬁc lease transactions and maintenance services,a provision for estimated cost is recorded for the ﬁscal year ended March 31, 2017.

(11) Deferred Assets
Deferred organization expenses
Organization expenses are amortized by the straight-line method within ﬁve years after the date of founding.

Business commencement expenses
Business commencement expenses are amortized by the straight-line method within ﬁve years after the business commencement date.

Bond issuance cost
Bond issuance cost is expensed upon payment.

(12) Income Taxes
The temporary differences between the book value of assets and liabilities recognized for accounting and those for tax purposes arerecorded as deferred tax assets (liabilities) to account for future income taxes.

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Fuyo Lease Group Integrated Report 2018

(13) Consumption Taxes
Transactions are recorded exclusive of consumption taxes and local consumption taxes.

(14) Retirement Beneﬁts
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 forthe period up to the end of the ﬁscal year under review (March 31, 2017).

Actuarial differences and prior service cost
With respect to prior service cost, the Company expenses the entire amount of it in the ﬁscal year of occurrence, but one of the Companyʼsdomestic consolidated subsidiaries amortizes it by the straight-line method over a period within the average remaining service years for
employees at the time of recognition (10 years), starting from the ﬁscal year of occurrence.
With respect to actuarial differences, the Company expenses the entire amount of them in the ﬁscal year of occurrence, but one of theCompanyʼs domestic consolidated subsidiaries amortizes them by the straight-line method over a period within the average remaining
service years for employees at the time of recognition (10 years), starting from the ﬁscal year following the ﬁscal year of occurrence.

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.

Simpliﬁed accounting method
Certain domestic consolidated subsidiaries use simpliﬁed accounting methods in relation to the calculation of the net deﬁned beneﬁt
liability and the net periodic pension cost. In the case of the termination allowance plan, retirement beneﬁt obligations are recorded as
the amount to be paid under voluntary retirement as of the 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.

Directorsʼ and audit & supervisory board members' retirement beneﬁts
The Company records the entire amount of retirement beneﬁts to directors and audit & supervisory board members, which are requiredby the internal corporate policy at the end of the consolidated ﬁscal year.

(15) Derivatives and Hedging Activities
With regard to foreign currency-related derivative ﬁnancial instruments, the Company uses forward foreign exchange contracts. With
regard to interest rate-related instruments, the Company uses interest rate swap contracts and interest rate cap contracts.
The Company uses currency-related derivatives and interest rate-related derivatives for risk management purposes, not for
speculative investment purposes.
The Company uses currency-related derivatives 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-related derivatives for the purposeof hedging risks associated with interest rate ﬂuctuations that affect its borrowings.
The Company uses derivatives, in accordance with its internal “Basic Policy for Managing Market and Liquidity Risks,” for the
purpose of hedging risks associated with interest-rate and foreign currency ﬂuctuations arising from its sales and ﬁnancial operations.
Derivative ﬁnancial instruments are stated at fair value.
Under the exceptional treatment of hedge accounting, the interest rate swaps that qualify as hedge transactions and meet speciﬁcmatching criteria are not remeasured at market value, but the differentials paid or received under the swap agreements are recognized
and included in interest expense or income.

(16) Per Share Information
Basic earnings per share is computed by dividing earnings attributable to common stock by the weighted average number of common
stock outstanding during the ﬁscal year under review.

(17) Recently Issued Accounting Standards Not Yet Adopted
・Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, revised on February 16, 2018, Accounting Standards
Board of Japan)
・Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, ﬁnal revision on February 16, 2018,
Accounting Standards Board of Japan)(1) Outline
In relation to transferring the practical guidelines on tax effect accounting from the Japanese Institute of Certiﬁed Public Accountants(JICPA) to Accounting standards Board of Japan (ASBJ), these were partially amended in the points mentioned below.
<Revision of main handlings of account processing>・Accounring treatment for taxable temporary difference in relation to equity in subsidiaries on standalone ﬁnancial statements
・Accounring treatment for recoverability of deferred tax assets with respect to entities deﬁned as (Category 1)

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Fuyo Lease Group Integrated Report 2018

(2) Scheduled date of adoption
The Implementation Guidance on Tax Effect Accounting and the Implementation Guidance on Recoverability of Deferred Tax Assets
will be adopted as of the beginning of the ﬁscal year ending in March 31, 2019.
(3) Impact of adoption of such accounting standards
The impact of the adoption of the Implementation Guidance on Tax Effect Accounting and the Implementation Guidance on
Recoverability of Deferred Tax Assets on the consolidated ﬁnancial statements is currently under evaluation.
・Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 30, 2018, ASBJ)
・Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 30, 2018, ASBJ)(1) Outline
International Accounting Standard Board (IASB) and Financial Accounting Standard Board (FASB) have jointly developed
comprehensive accounting standards for revenue recognition and announced Revenue from Contracts with Customers (IFRS 15
for IASB and Topic 606 for FASB). As IFRS 15 is effective from the ﬁscal year commencing on or after January 1, 2018 and Topic
606 is effective from the ﬁscal year commencing after December 15, 2017, ASBJ has developed comprehensive accounting
standard together with its implementation guidance.
The fundamental policy of ASBJ in developing accounting standards for revenue recognition is the new accounting standard thatwould be consistent with IFRS 15. Alternative accounting treatment considering practices in Japan would be added to the extent not tocause inconsistency with IFRS 15.
(2) Scheduled date of adoption
The changes will be applied from the beginning of the ﬁscal year ending in March 31, 2022.
(3) Impact of adoption of such accounting standards
The impact of the adoption of the Accounting Standard for Revenue Recognition and its implementation guidance on the consolidated
ﬁnancial statements is currently under evaluation.

2. FINANCIAL INSTRUMENTS
The position in respect of ﬁnancial instruments for the ﬁscal year ended March 31, 2018, was as follows.

(1) Policy on ﬁnancial instruments
The Fuyo Lease Group is engaged in leasing and installment transactions for machinery and equipment and ﬁnancial transactions suchas the provision of operating loans. The Group uses direct and indirect ﬁnancing to procure funds for purchasing assets to lease or to sellthrough installment sales and for providing operating loans to customers. The Groupʼs indirect ﬁnancing mainly consists of loans fromﬁnancial institutions, and its direct ﬁnancing includes issuing bonds payable, commercial, paper and securitization of receivables. As theGroup 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.
Derivative transactions are only used for mitigating currency and interest rate risks and are not used for speculative purposes.

(2) Financial instruments and their risks
Lease receivables, investment assets, and operating loans are trade receivables due from customers and subject to credit risks associatedwith customer default. Foreign currency-denominated receivables and payables arising from overseas business are subject to risks
associated with foreign currency ﬂuctuations.
Marketable securities and investment securities include business partnersʼ shares, bonds, and investments in limited partnership.
Those investments are subject to credit risks associated with the issuers and market risks.
Bonds payable, commercial paper, lease obligations, long-term loans, and payables under ﬂuidity long-term lease receivables andinstallment sales trade 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 Companyʼs ability to obtain funding and result in losses. A portion of long-term loans
have ﬂoating interest rates and are therefore subject to interest rate risks.
The Company uses foreign currency-related derivative contracts 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 risks
associated with interest rate ﬂuctuations that affect borrowings.

(3) Risk management system for ﬁnancial instrumentsi) Management of credit risks (default risks)
The Companyʼs 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, the Company uses a credit risk measurement method, identiﬁes on a timely basis thelocation and size of credit risks, and responds adequately as necessary.

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The Companyʼs 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 customers, 3) maintenance and enhancement ofrisk asset soundness, 4) enhancement of protection against doubtful receivables and implementation of measures related to collectionof those receivables, and 5) guidance and support for the Companyʼs ofﬁces and afﬁliated companies. The department also rates
debtors based on their ﬁnancial status 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, andself-assessment and recognition of adequate credit allowances based on the self-assessments. Further, the department regularly
monitors the status of the Companyʼs main customers, 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.

ii) Management of market risks (risks associated with foreign exchange rates and interest rates)
The Companyʼs market risk management rules and procedures are prescribed in its internal "Basic Policy for Managing Market andLiquidity Risks."
Market risks are controlled by comprehensively examining various factors such as ﬁnancial position (revenues and shareholdersʼ
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 Companyʼs ALM Committee meets once a month as a general rule, and on an ad-hoc basis as needed, to review and examine
practical measures related to market risk management and to monitor performance. At the monthly meeting, the ﬁnance division
reports on matters related to market risk management, including the status of market risk control, interest rate prospects, market
environment developments, and hedge transactions.
The Companyʼs consolidated subsidiaries are subject to the Companyʼs "Basic Policy for Managing Market and Liquidity Risks."(i) Interest rate risk management
The Company comprehensively manages interest rate risk using ALM. The ALM Committee ascertains and monitors the status of ALM
operations and discusses future direction and strategy based on the Companyʼs ALM policies.

(ii) Foreign exchange risk management
The Company manages foreign exchange risk on a case-by-case basis, using foreign exchange forward contracts as a general rule.

(iii) Price ﬂuctuation risk management
With regard to marketable securities and investment securities, the Company regularly monitors the market values of these securities
as well as the ﬁnancial status of issuers and continuously reviews its outstanding position considering market conditions and its
relationship with the issuers.

(iv) Derivatives contracts
With regard to derivatives, the Company uses forward foreign exchange transactions for the purpose of hedging risks associated withforeign currency ﬂuctuations that affect its foreign currency-denominated receivables and payables. The Company uses interest rate
swap transactions for the purpose of hedging risks associated with interest rate ﬂuctuations that affect its borrowings.
The Companyʼs ﬁnance division is authorized to engage in and manage derivative contracts, in accordance with internal regulations
and individuals authorized on job responsibilities and pursuant to the approval of the Companyʼs president (CEO) or ofﬁcer in chargeof the ﬁnance division.
The Companyʼs consolidated subsidiariesʼ derivative-related transactions are subject to the Companyʼs internal regulations "Basic
Policy for Managing Market and Liquidity Risks." In accordance with the Companyʼs "Regulations on Managing Associated Companies,"
the Companyʼs consolidated subsidiaries report to the Company on derivative-related transactions. These reports explain the subsidiaryʼs
policy on engaging in the transaction, provide a validation of the transactionʼs objective, and detail the derivative transactionʼs status,
counterparties, outstanding positions, and unrealized gains/losses.

(v) Quantitative information on market risk
The major types of ﬁnancial instruments affected by interest rate risk, the Groupʼs main risk factors, are “Installment sales tradereceivables,” “Lease receivables and investment assets,” “Accounts receivable - operating loans,” other marketable securities recorded
under “Marketable securities and investment in securities,” “Bonds payable,” “Long-term loans from banks and other ﬁnancial
institutions,” "Payables under ﬂuidity long-term lease receivables and installment sales trade receivables,” and interest rate swaps
included in “Derivative contracts.” The Group performs quantitative analysis in managing the risk of interest rate ﬂuctuations. Thisquantitative analysis incorporates the potential change in value of these ﬁnancial assets and liabilities based on a reasonab le rangeof 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 March 31, 2018, a 10 basis point (0.1%)
change in interest rates would result in a ¥3,566 million ($33,650 thousand) change in the fair value of these ﬁnancial assets andliabilities. This potential change in value is based on the assumption that all risk factors other than interest rates remain constant anddoes not incorporate the effects of correlation between interest rates and the other risk factors. If interest rates ﬂuctuate beyond theassumed reasonable range, the value of these ﬁnancial assets and liabilities may be affected by more than the Group has estimated.

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iii) Management of liquidity risks associated with funding (risks of failure to pay on due date)
The Companyʼs management system and rules for liquidity risks are prescribed in its internal "Basic Policy for Managing Market andLiquidity Risks."
With regard to liquidity risks (funding risks), the Companyʼs 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 summarizes information from each division to determine the impact on the
Companyʼs funding activities. The division also adequately controls liquidity, enhances capital efﬁciency, and optimizes liquidity risks andfunding costs.
Funding is measured by adequately monitoring economic conditions and market environments. Liquidity risks are allocated to
management categories by level of funding and managed based on predetermined response policies and implementation standards foreach category.
The Companyʼs ﬁnance division also monitors consolidated subsidiariesʼ funding status and takes appropriate action as necessary
based on that status.

(4) Supplementary explanation of matters related to fair values of ﬁnancial instruments
The fair value of a ﬁnancial instrument represents its market value or a reasonably calculated value if a market value is not available.
Because calculations involve variable inputs, the results of calculations may vary depending on what premises and assumptions areused. Contract amounts and other derivative transaction data presented in the notes on derivative transactions are nominal contract
amounts or notional amounts used in calculations and do not indicate the amount of exposure.
Fair values of ﬁnancial instruments as of March 31, 2018, are listed in the table below. Financial instruments for which estimation offair value is impracticable are not included. Financial assets and liabilities not included in the table are omitted from disclosure as they
are of less importance in terms of value.
The following table presents the carrying value and fair value of ﬁnancial instruments at March 31, 2018 and 2017. The following table
does not include ﬁnancial instruments for which it is extremely difﬁcult to determine the fair value.

Year ended March 31, 2018
Carrying value(A)

Fair value(B)(B) - (A)Millions of yen

Cash and deposits*1,2￥

Installment sales trade receivables*2

54,822￥

54,822￥

̶

115,049

116,427

1,377

Lease receivables and investment assets*2

1,097,681

1,133,028

35,346

Accounts receivable - operating loans*2

295,579

299,753

4,173

Marketable securities and investment in securities
Other marketable securities

226,948

226,948

̶Total assets￥ 1,790,082￥ 1,830,980￥ 40,898

Short-term loans from banks and other ﬁnancial institutions

￥

￥

￥

467,340

467,340̶Commercial paper

473,700

473,700

Lease obligations (current liabilities and long-term liabilities)

35,33535,335̶

Bonds payable (current portion included)

110,000

109,628(371)

Long-term loans from banks and other ﬁnancial institutions (current portion included)

828,047

833,397

5,349

Payables under ﬂuidity long-term lease receivables and installment sales
trade receivables (current portion included)

66,96567,02661￥ 1,981,389￥ 1,986,429

￥

̶

￥

Total liabilities

̶

5,039

Derivative contracts*3

Derivative contracts not accounted for as hedges￥

Derivative contracts accounted for as hedges

̶

￥

(0)
￥

Total derivative contracts

147

(0)

(202)
￥

(202)

̶
(202)

￥

(202)

Fuyo Lease Group Integrated Report 2018

Year ended March 31, 2018
Carrying value(A)

Fair value(B)(B) - (A)Thousands of U.S. dollars

Cash and deposits*

1,2$

517,194$

517,194$̶Installment sales trade receivables*2

1,085,376

1,098,376

13,000

Lease receivables and investment assets*2

10,355,487

10,688,947

333,460

Accounts receivable - operating loans*2

2,788,488

2,827,860

39,372

2,141,023

2,141,023

̶Total assets$ 16,887,568$ 17,273,400$ 385,832

Short-term loans from banks and other ﬁnancial institutions$ 4,408,874$ 4,408,874$

4,468,868

4,468,868

333,358

333,358

̶

Bonds payable (current portion included)

1,037,736

1,034,234(3,502)Long-term loans from banks and other ﬁnancial institutions (current portion included)

7,811,772

7,862,243

50,471

631,750

632,327577$ 18,692,358$ 18,739,904$

47,546̶$̶

Marketable securities and investment in securities
Other marketable securities

Commercial paper
Lease obligations (current liabilities and long-term liabilities)

Payables under ﬂuidity long-term lease receivables and installment sales
trade receivables (current portion included)
Total liabilities

̶̶

Derivative contracts*3
Derivative contracts not accounted for as hedges$

Derivative contracts accounted for as hedges

̶

$

(8)
$

Total derivative contracts(1,914)(8)$(1,914)(1,906)$(1,906)

Year ended March 31, 2017
Carrying value(A)

Fair value(B)(B) - (A)Millions of yen

Cash and deposits*1,2￥

Installment sales trade receivables*2

50,990￥50,990￥̶

127,823

129,812

1,989

Lease receivables and investment assets*2

1,047,512

1,077,947

30,435

Accounts receivable - operating loans*2

305,549

309,3103,760

Marketable securities and investment in securities
Other marketable securities

206,090

206,090̶Total assets￥ 1,737,966￥ 1,774,151￥ 36,185

Short-term loans from banks and other ﬁnancial institutions

￥

￥

￥

456,620456,620̶Commercial paper

419,700

419,700

Lease obligations (current liabilities and long-term liabilities)

49,77049,770̶

Bonds payable (current portion included)

90,30090,047(252)

Long-term loans from banks and other ﬁnancial institutions (current portion included)

777,008

782,838

5,830

Payables under ﬂuidity long-term lease receivables and installment sales
trade receivables (current portion included)

85,80486,512708￥ 1,879,203￥ 1,885,489

￥

(9)

￥

Total liabilities

̶

6,286

3

Derivative contracts*

Derivative contracts not accounted for as hedges￥

Derivative contracts accounted for as hedges

(9)

￥

(14)
￥

Total derivative contracts

(24)

(407)
￥

(417)

̶
(393)

￥

(393)

*1. Net of deferred proﬁt on installment sales*2. Net of speciﬁc and general allowances for doubtful accounts related to installment sales trade receivables, lease receivables and investment assets, and operating loans*3. Net receivables/payables arising from derivative contracts are carried at net amounts. Those for which the net outstanding balance is a payable appear within parentheses.

148

Fuyo Lease Group Integrated Report 2018

Note: 1. Calculation method for fair value of ﬁnancial instruments and matters related to derivative contracts

Assets(1) Cash and deposits
The fair values of deposits that have no maturity are based on their book values, which closely approximate their fair values.

(2) Installment sales trade receivables
Fair values are calculated by discounting uncollected receivables at the rate applied to new contracts. The Company calculates the fairvalues of doubtful receivables by subtracting estimated losses on bad debts from their carrying values as of the balance sheet date. The
resulting amount closely approximates the doubtful receivablesʼ fair values. Estimated losses on bad debts are calculated based on
estimated cash ﬂows or estimated net realizable value covered by collateral or guaranty.

(3) Lease receivables and investment assets
Present values of lease receivables and investment assets are calculated by subtracting major administrative and maintenance expenses
from the total of uncollected lease receivables and lease payment receivables. The Company calculates the fair values of doubtfulreceivables by subtracting estimated losses on bad debts from their carrying values as of the balance sheet date. The resulting amountclosely approximates the doubtful receivablesʼ fair values. Estimated losses on bad debts are calculated based on estimated cash ﬂows
or estimated net realizable value covered by collateral or guaranty.
Lease receivables and investment assets under sublease contracts are recorded on the consolidated balance sheets before interest
deductions. The amount recorded as the fair value is the balance sheet carrying value. The difference between (a) the carrying value oflease receivables and investment assets under sublease contracts and (b) their fair valued calculated by discounting at the rate applied
to new contracts is ¥466 million ($4,399 thousand).

(4) Accounts receivable - operating loans
Fair values of ﬂoating-rate operating loans are based on their book values. Market rates are reﬂected in the rates on ﬂoating-rate operatingloans with only a short time difference, so their book values closely approximate their fair values as long as the borrower credit status does
not change materially after loan issuance. Fair values of ﬁxed-rate operating loans are calculated by discounting total principal andinterest for each borrower at the rate applied to new contracts. The Company calculates the fair values of doubtful receivables by subtracting
estimated losses on bad debts from their carrying values as of the balance sheet date. The resulting amount closely approximates the
doubtful receivablesʼ fair values. Estimated losses on bad debt are calculated based on estimated cash ﬂows or estimated net realizablevalue covered by collateral or guaranty.

(5) Marketable securities and investment in securities
Fair values are based on amounts obtained from relevant ﬁnancial and other institutions.

Liabilities(1) Short-term loans from banks and other ﬁnancial institutions, (2) Commercial paper
Fair values of short-term loans from banks and other ﬁnancial institutions and commercial paper are based on their book values
because they are settled over the short-term, so their book values closely approximate their fair values.

(3) Lease obligations (current liabilities and long-term liabilities)
Lease obligations are stated on the consolidated balance sheets before interest deductions. The amount recorded as the fair value istheir carrying value on the balance sheets. The difference between the carrying value of lease obligations and their fair value calculatedby discounting at the rate applied to new contracts is ¥264 million ($2,497 thousand).

(4) Bonds payable (current portion included), (5) Long-term loans from banks and other ﬁnancial institutions (current
portion included), (6) payables under ﬂuidity long-term lease receivables and installment sales trade receivables (current
portion included)
Fair values of ﬂoating-rate loans and payables in these categories are based on their book values. Market rates are reﬂected in the rates
on these loans and payables with only a short time difference, and the Companyʼs credit status has not changed materially sinceissuance, so their book values are deemed to closely approximate their fair values. To calculate the fair values of ﬁxed-rate loans andpayables in these categories, the instruments are ﬁrst allocated to categories according to maturity terms. Total principal and interestfor each category is discounted at a notional rate that is assumed would apply to borrowing in the same amount.

149

Fuyo Lease Group Integrated Report 2018

Note: 2. Financial instruments whose fair values are deemed extremely difﬁcult to determine

March 31, 2018
Millions of yen

Thousands of
U.S. dollars￥$

Other securities
Unlisted shares*1
Afﬁliated companiesʼ shares / associated companiesʼ shares*1

5,773

54,466141,289

14,976Preferred securities / beneﬁcial interest in trusts*1

1,600

15,094

Investments in limited investment partnerships*2

19,052

179,738￥

41,402$

390,587*1. We do not disclose the fair values of these shares because their market values are not available and it is deemed extremely difﬁcult to determine their fair values.
*2. Within investments in limited investment partnerships, we do not disclose the fair values of partnership assets consisting of investments whose fair values
are deemed extremely difﬁcult to determine.

Note: 3. Redemption schedule by term for monetary claims and securities with maturity after March 31, 2018

March 31, 2018
Over one year
and within
ﬁve years

Within one year

Over ﬁve years
and within
ten years

Over ten years

Millions of yen

Cash and deposits￥

54,822

￥

̶

̶

￥

￥

̶

Installment sales trade receivables

47,44465,405

2,526

1,321

Lease receivables and investment assets

332,063

610,646

123,925

32,086

Accounts receivable - operating loans

63,180168,694

57,2207,309

Marketable securities and investment in securities
Available-for-sale securities with maturities
15

̶

̶

̶

1,166

34,504

3,115

533

̶

̶

̶

̶

Bonds (government)
Bonds (corporate)
Bonds (other)
Other
Total

￥

32

36,837498,725￥ 916,088

7,914￥

194,702

5,587￥

46,837

March 31, 2018
Over one year
and within
ﬁve years

Within one year

Over ﬁve years
and within
ten years

Over ten years

Thousands of U.S. dollars

Cash and deposits$

517,194

$

̶

$

̶

$

̶

447,586

617,037

23,83912,463

Lease receivables and investment assets

3,132,674

5,760,813

1,169,111

302,705

Accounts receivable - operating loans

596,046

1,591,462

539,821

68,953

Installment sales trade receivables

Marketable securities and investment in securities
Available-for-sale securities with maturities
142

̶

̶

̶

11,001

325,514

29,387

5,032

Bonds (government)
Bonds (corporate)

̶

̶

̶

̶

310

347,520

74,662

52,714$ 4,704,953$ 8,642,346$ 1,836,820

Bonds (other)
Other
Total

150

$

441,867

Fuyo Lease Group Integrated Report 2018

Note: 4. Repayment schedule by term for bonds, long-term debt, and other interest-bearing debt after March 31, 2018.

March 31, 2018
Over one year Over two years Over three years Over four years
and within
and within
and within
and within
two years
ﬁve years
four years
three years

Withinone yearOver ﬁve
years

Millions of yen

Short-term loans from banks and other ﬁnancial
institutions￥ 467,340

￥

̶

̶

￥

̶

￥

̶

￥

̶

￥

Commercial paper

473,700

̶

̶

̶

̶

̶

Lease obligations(current liabilities and long-term liabilities)

15,359

8,806

5,268

2,950

1,320

1,630

Bonds payable (current portion included)

20,00020,00020,00030,00010,00010,000Long-term loans from banks and other ﬁnancial
institutions (current portion included)

221,381

192,871

154,630

129,395

67,32162,447

Payables under ﬂuidity long-term lease receivables
and installment sales trade receivables(current portion included)

30,33816,477

13,959

2,048

3,050

1,090

￥1,228,120￥ 238,155￥ 193,858￥ 164,395￥ 81,692￥ 75,168

Total

March 31, 2018
Over one year Over two years Over three years Over four years
and within
and within
and within
and within
two years
ﬁve years
four years
three years

Withinone yearOver ﬁve
years

Thousands of U.S. dollars

Short-term loans from banks and other ﬁnancial
institutions
Commercial paper$ 4,408,874 $

̶ $

̶

$

̶

$

̶

$

̶

4,468,868

̶

̶

̶

̶

̶

Lease obligations(current liabilities and long-term liabilities)

144,901

83,08549,69827,83912,456

15,379Bonds payable (current portion included)

188,679

188,679

188,679

283,019

94,34094,3402,088,502

1,819,538

1,458,779

1,220,717

635,107589,130

286,215

155,445

131,696

19,32928,77910,285$ 11,586,039 $ 2,246,747 $ 1,828,852$ 1,550,904$ 770,682$ 709,134

Long-term loans from banks and other ﬁnancial
institutions (current portion included)
Payables under ﬂuidity long-term lease receivables
and installment sales trade receivables(current portion included)
Total

3. MARKETABLE SECURITIES AND INVESTMENT IN SECURITIESMarketable securities and investment in securities as of March 31, 2018 and 2017, consisted of the following:Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

Current:
Bonds

￥

Other

110,536￥

63,499108,200$

37,142

1,042,802
599,056￥

174,036￥

145,343$

1,641,858￥

73,413￥67,562$

692,581

Non-current:
Shares
Bonds

̶

15

̶

Other

5,923

7,842

55,882￥

151

79,337￥75,420$748,463

Fuyo Lease Group Integrated Report 2018

The carrying values and aggregate fair value of securities with determinable market values at March 31, 2018 and 2017, were as follows:
March 31, 2018
Cost orbook value

Unrealized
gains

Fair value

Millions of yen

Available-for-sale securities:
Shares

Unrealized
losses￥

16,534￥53,553236￥￥

69,852

Bonds

108,0202,531

14110,536

Other

45,7101,067

218

46,559

Cost orbook value

Unrealized
gains

Unrealized
lossesFair value

March 31, 2017

Millions of yen

Available-for-sale securities:
Shares￥16,310￥48,456￥219￥

64,547

Bonds

106,3891,917

91108,215

Other

32,429897

̶33,326

Cost orbook value

Unrealized
gains

Unrealized
lossesFair value

March 31, 2018

Thousands of U.S. dollars

Available-for-sale securities:
Shares$155,987$

505,222

$

2,227

$

658,982

Bonds

1,019,063

23,880141

1,042,802

Other431,226

10,071

2,059

439,238

Available-for-sale securities whose fair values are not readily determinable as of March 31, 2018 and 2017, were as follows:
Carrying value

Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

Available-for-sale securities:
Shares

￥

Other

3,561

￥

22,864

3,014$

11,65833,599215,700

Proceeds from sales of available-for-sale securities and resultant gross realized gains and losses for the years ended March 31, 2018 and2017, were summarized as follows:
Carrying value

2018
Proceeds

Thousands of
U.S. dollars

Millions of yen

￥

2018

2017
2

￥

1,107

$

21

Realized gain

0

466

1

Realized loss

̶

0

̶

Impairment loss on securities:
No impairment loss recorded on securities for the consolidated ﬁscal years ended March 31, 2017 and 2018.
The Company recognizes the impairment loss where the decline in the period-end price is greater than or equal to 50% of the acquisitioncost. Where the decline in the period-end price is between 30% and less than 50% of the acquisition cost, the company may recognize
impairment loss, taking into consideration the credit rating of the issuer, the materiality of the amount, and the likelihood of the securities
recovering in price, as well as the analysis of the level of market price by looking at the gap between the book value and thehighest/lowest price during the ﬁscal years ended March 31, 2017 and 2018.

152

Fuyo Lease Group Integrated Report 2018

4. ACCUMULATED DEPRECIATION FOR PROPERTY AND EQUIPMENT
Accumulated depreciation of property and equipment for the ﬁscal years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Leased assets￥

158,405

Own-used assets

2018

2017
￥

5,342

162,901
4,296$

1,494,392
50,402

5. SHORT-TERM BORROWINGS AND LONG-TERM DEBT AND PLEDGED ASSETS
The breakdown of short-term borrowings as of March 31, 2018 and 2017, were as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Short-term loans from banks and other ﬁnancial institutions

467,340

Weighted-averageinterest rate

2018

2017

4,408,874

0.42％

Commercial paper

473,700

419,700

4,468,868

0.04％

Payables under securitized lease receivables

18,90021,500178,302

0.11％

Total

959,940

897,820

9,056,044―

Lease obligations

34,87349,728

328,997―

9,385,041―

Thousands of
U.S. dollars

Weighted-averageinterest rate￥

994,814￥￥￥456,620

947,549$$

The breakdown of long-term debt as of March 31, 2018 and 2017, were as follows:

Millions of yen

2018
Bonds payable

110,000

2018

2017

1,037,736

0.27％Long-term loans from banks and other ﬁnancial institutions

828,047

777,008

7,811,772

0.53％

Payables under ﬂuidity long-term lease receivables
and installment sales trade receivables

66,96585,804

631,750

0.53％

￥

Total

￥

90,300$1,005,013

953,1129,481,258

̶

271,719

245,183

2,563,396―

733,293

707,928

6,917,862―

Less current portion
Lease obligations
￥

462

41

4,361

―

733,755

707,970

6,922,223―￥$

The projected long-term debt servicing amount by ﬁscal year, as of March 31, 2018, was as follows:Year ending March 31,

2019Millions of yen￥

Thousands of
U.S. dollars

271,719$ 2,563,396

2020

229,348

2,163,662

2021

188,590

1,779,154

2022

161,444

1,523,064

2023

80,372758,2272024 and thereafter

73,538

693,755￥ 1,005,013$ 9,481,258

153

Fuyo Lease Group Integrated Report 2018

As of March 31, 2018, the following assets were pledged as collateral for current and long-term obligations of ￥34,278 million ($323,383
thousand).
Thousands of
U.S. dollars

Millions of yen

Lease receivables and investment assets￥

25,645

Accounts receivable ‒ other loans to customers

$

4,096

Lease and other trade receivables

241,938
38,647

13

128

Lease and other contract receivables

4,894

46,171

Lease assets

14,096

132,985￥

48,746$459,869

Besides the above, the Company maintains, as guarantee deposits for its sales operations, deposits of ￥15 million ($142 thousand) ininvestment securities. As third-party security for bank loans taken out by customers, the Company maintains deposits of ￥38 million($361 thousand) in installment sale receivables and ￥652 million ($6,156 thousand) in investment securities. The Company maintains
deposits of ￥3 million ($28 thousand) in investment securities for the purpose of sales transactions.

6. COMMITMENTS AND CONTINGENT LIABILITIESContingent liabilities at March 31, 2018 and 2017, were as follows:(1) Guarantees provided on borrowings of business partners etc.
Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

As a guarantor of indebtedness of:
Marubeni Auto Investment (Canada) Inc.

￥

2,059

AEON Mall Co., Ltd.

1,245

IBM Japan Credit LLC *1

￥

―

$

19,431

1,473

11,752
9,532

1,010

733

JAPAN SECURITIZATION CORPORATION *1

818

829

7,722

AEON RETAIL CO., LTD.

769

810

7,262

MONEY PARTNERS CO., LTD.

499

499

4,715

Sumitomo Mitsui Banking Corporation *1

365

365

3,443

JCAM AGRI. CO., LTD.

249

254

2,352

XYMAX ALPHA Corporation *1

229

256

2,164

Japan Drilling Co.,Ltd.

―

3,998

―

Employees

40

54

384

21,259Others￥28,547

19,556￥

28,832200,562$

269,319*1. The Company has guaranteed loans held by IBM Japan Credit LLC and others.

(2) On both March 31, 2018 and 2017, one of the Companyʼs domestic consolidated subsidiaries engaged in business guarantee
operations which resulted in it becoming a credit guarantor of a total of ￥64,573 million ($609,183 thousand) and ￥72,215 million
in indebtedness with respect to general customers and other entities.
(3) The Company, as a lender, entered into loan commitment agreements as of March 31, 2018 and 2017 amounting to ￥900 million($8,491 thousand) and ￥3,920 million, respectively. The loans provided under these credit facilities as of March 31, 2018 and 2017
amounted to ￥106 million ($1,006 thousand) and ￥2,338 million, respectively. Many of the facilities may expire without being
utilized and the loans provided are subject to periodic reviews of the borrowers' credit standing.

154

Fuyo Lease Group Integrated Report 2018

7. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Major components of selling, general and administrative expenses for the ﬁscal years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Bad debts expenses

￥

432

2018

2017
￥

444

$

4,078

Employees' salaries, allowances and bonuses

10,652

10,201

100,493

Provision for bonuses

16,111

1,707

1,607

Provision for directors' bonuses

139

141

1,316

Retirement beneﬁt expenses

688

802

6,498

Provision for directors' retirement beneﬁts
Welfare expenses

32

35

311

2,525

2,380

23,83012,536

Rent expenses

1,328

1,254

Depreciation of own-use assets

1,251

1,200

11,802

Amortization of goodwill

1,571

1,328

14,822

8. CASH AND CASH EQUIVALENTS
The main components of cash and cash equivalents at March 31, 2018 and 2017, were as follows:
Relationship between cash and cash equivalents at the end of year and cash and deposits stated on the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen

2018
Cash and deposits￥

Time deposits with maturity of over three months

54,822￥(760)

Cash and cash equivalents￥

155

54,06220182017
50,990$(429)￥

50,561

517,194(7,171)$510,023

Fuyo Lease Group Integrated Report 2018

9. COMPREHENSIVE INCOME
The components of other comprehensive income for the ﬁscal years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

Net unrealized gains (losses) on available-for-sale securities
Gains or losses arising during the year

￥

￥

5,701

Reclassiﬁcation adjustments to proﬁt or loss

5,049

$

53,788

(0)

(434)

(0)

Amount before income tax effect

5,701

4,615

53,788

Income tax effect(1,744)(1,538)(16,456)

￥

Total

￥

3,957

3,076

$

37,332

Deferred gains (losses) on hedges
Gains or losses arising during the year

7

22

Reclassiﬁcation adjustments to proﬁt or loss

6

14

59

Amount before income tax effect

13

37

128

Income tax effect

(4)

(11)

(39)

Total

9

￥

Foreign currency translation adjustments

￥

26

￥

(272)

(586)

Gains or losses arising during the year
Total

(586)

￥

69

89

$

(272)

(5,532)$(5,532)Remeasurements of deﬁned beneﬁt plans
Gains or losses arising during the year

204

160

Reclassiﬁcation adjustments to proﬁt or loss

(89)

(86)

(840)

Amount before income tax effect

115

73

1,091

Income tax effect

(35)

(22)

(334)

￥

Total

￥

80

51

1,931

$

757

Share of other comprehensive income of entities accounted for using equity method
Gains or losses arising during the year
Reclassiﬁcation adjustments to proﬁt or loss

(17)

198

(164)

2

12

24

Total

￥

(14)

￥

211

$

(140)

Total other comprehensive income

￥

3,445

￥

3,092

$

32,506

10. DERIVATIVES
Fair values, etc., of derivatives contracts as of March 31, 2018 and 2017, were as follows:(1) Derivative contracts to which hedge accounting is not applied
Millions of yen

2018

Thousands of U.S. dollars

2018

2017

Contract
amount(over one year)

Fair value

Contract
Unrealizedgain
amountFair value(over one year)(loss)

￥ ―

￥ ̶

￥ ̶

Unrealized
Contractgain
amount(over one year)(loss)

Fair value

Unrealized
gain(loss)

￥ (9)

$ ―

$ ―

―

―

$ ―

$ ―

Foreign exchange forward
contracts:
Buying

￥ 408

￥ (9)

(―)

(―)

$ ―
(―)

Interest rate swap contracts:
Fixed rate payment,
ﬂoating rate receipt

̶

̶

̶

200

￥ ―

￥ ―

￥ 608

(0)

―

￥ (9)

￥ (9)

$ ―

(―)

(―)
￥ ―

(0)

(―)

The fair values are based on the amounts presented by relevant ﬁnancial and other institutions.

156

Fuyo Lease Group Integrated Report 2018

(2) Derivative contracts to which hedge accounting is applied
Millions of yen

2018

Contract
amountThousands of U.S. dollars

2017

2018

(over one year) Fair value

Contract (over one year) Fair value
amountContract
amount(over one year) Fair value(―) ￥￥ 7,700 ￥ (1,200) ￥ (14)

$ 11,321$

Principle treatment
Interest rate swap contracts:
Fixed rate payment,
ﬂoating rate receipt￥ 1,200

￥

(0)

(8)

(―) $

Exceptional treatment ofinterest rate swaps
Interest rate swap contracts:
Fixed rate payment,
ﬂoating rate receipt

33,389￥34,589(28,865)(393)

314,995￥ 57,230 ￥(35,515) ￥(407)$ 326,316(202)￥(28,865) ￥(202)

49,530(34,315)(272,313)(1,906)$ (272,313) $ (1,914)

The fair values are based on the amounts presented by relevant ﬁnancial and other institutions.

11. INCOME TAXES
Earnings of the Company and its domestic consolidated subsidiaries are subject to various taxes. The statutory tax rate for both years
ended March 31, 2018 and 2017, were 30.9%.
The respective breakdowns of total deferred tax assets and deferred tax liabilities by major item, as of March 31, 2018 and 2017,
were as follows:
Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

Deferred tax assets:
Allowance for doubtful receivables

￥

1,713

￥

1,826

$

16,170Tax loss carried forward

869

1,055

Guarantee deposits from customers

754

680

8,199
7,117

Reserve for bonus payments

526

488

4,964

Accrued expenses

648

5

6,121

Net deﬁned beneﬁt liability

473

500

4,469

Loss on devaluation of investment securities and other items

364

363

3,434

326

249

3,076

Other

1,946

1,729

18,365

Subtotal gross deferred tax assets

7,623

6,899

71,915Less valuation allowance

(474)

(441)

(4,475)

7,148

6,458

67,440Enterprise taxes

Total deferred tax assets

Deferred tax liabilities:
Net unrealized gain on available-for-sale securities￥

Gain on revaluation of investment securities and others(17,354)￥(15,607)$(163,717)(1,267)(1,305)(11,956)

Depreciation

(661)

(351)

(6,240)Gain on transfer of receivables

(506)

(650)

(4,777)

Foreign subsidiary's unitary tax

(327)

―

(3,085)

Other
Total deferred tax liabilities￥

Net deferred tax liabilities

(502)

(308)

(4,736)(20,618)(18,223)(194,511)(13,469)￥(11,765)$(127,071)

The respective breakdowns of major items that constituted the material difference between the statutory tax rate and the effective tax
rate for the ﬁscal years ended March 31, 2018 and 2017, were as follows:
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reﬂected in the accompanying
Consolidated Statements of Income for the years ended March 31, 2018 and 2017, were not presented as the difference is less than 5%of the effective statutory tax rate.

157

Fuyo Lease Group Integrated Report 2018

12. RETIREMENT BENEFITS(1) Overview of the Company Groupʼs retirement beneﬁts plan
The Company has a deﬁned-beneﬁt corporate pension fund plan (established by the Company Group) 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 plan is the only fund type and provides a lump-sum payment or pension based on theemployeesʼ ﬁnal salary points and lengths of service. Furthermore, certain deﬁned-beneﬁt corporate pension plans have retirement
beneﬁt trusts.
The deﬁned-beneﬁt corporate pension fund plan (established by the Company Group) which is a 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 thevalue of plan 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 deﬁnedcontribution pension plan, under which employees are participants, is funded by the contributions based on the participant's plancourse and eligibility.
Some of the domestic consolidated subsidiaries have a deﬁned-beneﬁt corporate pension plan and a termination allowance plan asits deﬁned-beneﬁt pension system.
Some of the domestic consolidated subsidiaries, which have a deﬁned-beneﬁt corporate pension plan and a termination allowanceplan, use simpliﬁed accounting methods for calculation of net deﬁned beneﬁt liability and net periodic pension cost. 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 thelatest pension funding programs.
The Company and some of its domestic consolidated subsidiaries may make lump-sum payments of premium retirement beneﬁts
to some employees at their retirement.

(2) Deﬁned-beneﬁt pension plan (excluding pension plans using the simpliﬁed accounting methods)i) Reconciliation of retirement beneﬁt obligations
Thousands of
U.S. dollars

Millions of yen

2018
Retirement beneﬁt obligations at beginning of year

￥

2018

2017

10,89010,400￥$102,744

Service cost

572

586

5,403

Interest cost

55

52

523

Actuarial gains/losses incurred

45

30

426

(321)

(178)

(3,028)

1

(0)

11

Retirement beneﬁts paid
Other
Retirement beneﬁt obligations at end of year￥

11,244

10,890￥$106,079ii) Reconciliation of plan assets
Thousands of
U.S. dollars

Millions of yen

2018
Plan assets at beginning of year

￥

9,637

2018

2017
￥

9,168

$

90,923

Expected return on plan assets

268

242

2,530

Actuarial gains/losses incurred

93

(47)

878

Contribution from employer

470

442

4,438

Retirement beneﬁts paid

(303)

(167)

(2,867)￥

Plan assets at end of year158

10,165

￥

9,637

$

95,902

Fuyo Lease Group Integrated Report 2018

iii) Reconciliation of retirement beneﬁt obligations and plan assets at end of ﬁscal year and net deﬁned beneﬁt liability andnet deﬁned beneﬁt asset recorded in the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen

2018
Retirement beneﬁt obligations for funded pension plans

￥

2018

2017

11,244

10,890￥$106,079(10,165)(9,637)(95,902)

1,078

1,253

10,177―――

Net assets/liabilities recorded in the consolidated balance sheets

1,078

1,253

10,177

Net deﬁned beneﬁt liability

1,132

1,392

10,685Net deﬁned beneﬁt asset

(53)

(139)

1,078

1,253

Plan assets
Retirement beneﬁt obligations for unfunded pension plans

Net assets/liabilities recorded in the consolidated balance sheets

￥

￥

(508)
$

10,177iv) Breakdown of net periodic pension costThousands of
U.S. dollars

Millions of yen

2018
Service cost

572

￥

2018

2017
586

￥

$

5,403

55

52

523

Expected return on plan assets

(268)

(242)

(2,530)

Amortization of actuarial loss

67

151

634

Amortization of prior service cost

0

0

6

(42)

(41)

(403)

Interest cost

Other
Net periodic pension cost for deﬁned-beneﬁt pension plan

385

￥

507

￥

$

3,633

v) Remeasurements of deﬁned beneﬁt plans
The breakdown of remeasurements of deﬁned beneﬁt plans was as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Prior service cost

0

￥

0

￥

115

Actuarial differences
Total

115

￥

2018

2017

73

￥

6

$

73

1,085
$

1,091

ⅵ) Remeasurements of deﬁned beneﬁt plans
The breakdown of remeasurements of accumulated deﬁned beneﬁt plans was as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Unrecognized prior service cost￥

Unrecognized actuarial differences

―

￥

83

Total

￥

159

83

2018

2017
0

$

198
￥

198

―
785

$

785

Fuyo Lease Group Integrated Report 2018

ⅶ) Plan assets(i) Breakdown of plan assets
Major components of total plan assets and their proportion were as follows:

2018

2017

Bonds

37

Shares

18

%

32

%

19

Cash and time deposits

49General account

30

30

Other

11

10

Total

100

100

Note: The total includes retirement beneﬁts trust established for corporate pension plan at 5% in the ﬁscal year ended March 31, 2018 and 5% in the ﬁscal year ended March 31, 2017.

(ii) Estimation of expected long-term rate of return on plan assets
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 expected future long-term rate of return on various components of plan assets.

ⅷ) Basis for actuarial calculation
Major basis for actuarial calculation

2018

2017

Discount rate

0.37〜0.98

Expected long-term rate of return

2.50〜2.88%

2.50〜2.69

0.37〜0.98

Expected salary increase rate

1.37〜3.82

1.37〜3.82%(3) Deﬁned-beneﬁt pension plans using the simpliﬁed accounting methodsi) Reconciliation of net deﬁned beneﬁt liability for the pension plans using the simpliﬁed accounting methods
Thousands of
U.S. dollars

Millions of yen

2018
Net deﬁned beneﬁt liability at beginning of year

￥

352

2018

2017
305

￥

Net periodic pension cost

54

52

Retirement beneﬁts paid

(5)

(5)

￥

Net deﬁned beneﬁt liability at end of year

401

352

￥

$

3,324
516
(56)

$

3,784

ii) Reconciliation of retirement beneﬁt obligations and plan assets at end of ﬁscal year and net deﬁned beneﬁt liability andnet deﬁned beneﬁt asset recorded in the consolidated balance sheets
Thousands of
U.S. dollars

Millions of yen

2018
Retirement beneﬁt obligations for funded pension plans￥

Fair value of plan assets

427

2018

2017
￥

379

$

4,029

(130)

(118)

(1,231)
2,798

296

261

Retirement beneﬁt obligations for unfunded pension plans

104

90

986

Net assets/liabilities recorded in the consolidated balance sheets

401

352

3,784

Net deﬁned beneﬁt liability

401

352

3,784

Net deﬁned beneﬁt asset

̶

̶

̶

Net assets/liabilities recorded in the consolidated balance sheets

￥

401

￥

352

$

3,784

iii) Net periodic pension cost
In the ﬁscal year ended March 31, 2018 and 2017 net periodic pension cost calculated with the simpliﬁed accounting methods amounted
to ¥54 million ($516 thousand) and ¥52 million, respectively.

160

Fuyo Lease Group Integrated Report 2018

(4) Deﬁned-contribution pension plan
In the ﬁscal year ended March 31, 2018 and 2017 the amount required to be contributed by the Company to the deﬁned-contribution
pension plan amounted to ¥80 million ($761 thousand) and ¥78 million, respectively.

(5) Multi-employer type of pension plan
In the ﬁscal year ended March 31, 2018 and 2017 the amount required to be contributed to the deﬁned-beneﬁt corporate pension fundplan (established by the Company Group) of multi-employer type of pension plan amounted to ¥168 million ($1,588 thousand) and¥164 million, respectively. The contribution is accounted for in the same manner with a deﬁned-contribution pension plan.
The following summarizes the most recent funded status of the multi-employer welfare pension plan at March 31, 2018 and 2017:
Thousands of
U.S. dollars

Millions of yen

2018
Amount of plan assets￥

10,710￥(2,203)Retirement beneﬁts under pension funding programs

9,298

￥

12,914

Difference

2018

2017
$

101,044$(20,790)

12,320(3,022)￥

121,834

At March 31, 2018 and 2017 the liability for retirement beneﬁts for directors and corporate auditors amounted to ¥169 million($1,598 thousand) and ¥142 million, respectively.

13. LEASE TRANSACTIONS
Details of leases as lessee at March 31, 2018 and 2017, were as follows:
Operating leases
Thousands of
U.S. dollars

Millions of yen

2018
Future lease payments￥

Amount of above due within one year

3,924

2018

2017
￥

5,530

990

$

1,484

37,022
9,345

Details of leases as lesser at March 31, 2018 and 2017, were as follows:(1) Breakdown of lease investment assets
Thousands of
U.S. dollars

Millions of yen

2018
Portion of lease receivables￥ 1,021,163

Portion of estimated residual value
Rental revenues attributable to ﬁnancing income
Lease investment assets

￥

2018

2017
￥

934,481$

9,633,622

12,147

9,891

114,601(115,582)(86,723)(1,090,405)

917,728￥

857,649$

8,657,818(2) Projected amounts of lease receivables to be collected after March 31, 2018 (consolidated)Year ending March 31,

2019

Thousands of
U.S. dollars

Millions of yen￥

54,714$

516,179

2020

44,563

420,4092021

39,517

372,8102022

26,437

249,4152023

11,694

110,3292024 and thereafter

14,792

139,552

161

Fuyo Lease Group Integrated Report 2018

(3) Projected amounts of lease payment receivables on lease investment assets to be collected after March 31, 2018 (consolidated)Year ending March 31,

Millions of yen

2019

￥

Thousands of
U.S. dollars

310,666$ 2,930,812

2020

211,211

1,992,566

2021

150,226

1,417,232

2022

103,825

979,483

2023

80,928763,479

2024 and thereafter

164,3051,550,050(4) Operating leases
Thousands of
U.S. dollars

Millions of yen

2018
Future lease payments￥ 240,735

Amount of above due within one year

2018

2017
￥

47,382

221,690$ 2,271,089

50,225447,003

Details of sublease transactions for the ﬁscal years ended March 31, 2018 and 2017, were as follows.
Lease receivables, assets, and obligations under sublease transactions that are carried on the consolidated balance sheets before
interest deductions
Thousands of
U.S. dollars

Millions of yen

2018
Lease receivables and investment assets￥

Lease obligations (current liabilities)

31,736

2018

2017
￥

47,96034,782$

299,396

49,676328,141

14. STOCK OPTIONSStock option expenses and gains on expiration of unexercised stock options for the ﬁscal years ended March 31, 2018 and 2017
Thousands of
U.S. dollars

Millions of yen

2018
Selling, general and administrative expenses (stock-based compensation expenses)

￥

154

2018

2017
￥

159

$

1,455

Details of stock option for the ﬁscal year ended March 31, 2018, was as follows:(1) The Company

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 stock: 57,800
sharesCommon stock: 84,600
sharesCommon stock: 61,300
sharesGrant 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)

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Fuyo Lease Group Integrated Report 2018

Stock options for 2011

Stock options for 2012

Stock options for 2013

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 stock: 54,800
sharesCommon stock: 73,000
sharesCommon stock: 42,000
sharesGrant 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)

Stock options for 2014

Stock options for 2015

Stock options for 2016

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 stock: 35,500
sharesCommon stock: 28,600
sharesCommon stock: 34,700
sharesGrant 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)

Stock options for 2017Class 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 stock: 22,200
sharesGrant 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 corporate auditor
2 Converted to number of shares
3 No vesting conditions attached
4 Requisite service period is undetermined
5 Notwithstanding the above, if a stock acquisition rights holder loses his/her position as director, auditor, or executive ofﬁcer of the Company during the above term,
he/she may exercise the rights within ﬁve years of the ﬁrst anniversary of the day immediately after losing his/her position.

163

Fuyo Lease Group Integrated Report 2018

(2) Consolidated subsidiaries

Stock options for 2016

Stock options for 2017Class and number of grantees (Note 1)

Directors of consolidated
subsidiaries: 2

Directors of consolidated
subsidiaries: 2

Number and type of stock options (Note 2)

Common stock: 7,400 shares

Common stock: 6,900 shares

Grant dateJuly 28, 2016

July 5, 2017

Vesting conditions(Note 3)(Note 3)Requisite service period(Note 4)(Note 4)

Exercise period

July 29, 2016 ‒July 28, 2046(Note 5)

July 6, 2017 ‒July 5, 2047(Note 5)

Notes:
1 Excluding directors who serve as audit committee members and outside directors
2 Converted to number of shares
3 No vesting conditions attached
4 Requisite service period is undetermined
5 Notwithstanding the above, if a stock acquisition rights holder loses his/her position as director of the Company during the above
exercise period, he/she may exercise the rights in a lump sum within 10 days (or the preceding business day if the 10th day falls ona holiday) from the day following the day when he/she loses his/her position.

Volume and status of stock options for the ﬁscal year ended March 31, 2018, was as follows.
(1)Number of stock optionsi) The Company

Stock options for 2008

Stock options for 2009

Stock options for 2010

Previous ﬁscal year-end

̶

̶

̶

Granted̶̶̶Expired̶̶̶

Vested̶̶̶Balance unvested

̶

̶

̶

6,700

23,00027,600

̶

̶

̶

2,700

7,600

4,200

̶

̶

̶

4,000

15,40023,400Stock options for 2011

Stock options for 2012

Stock options for 2013

Previous ﬁscal year-end

̶

̶

̶

Granted̶̶̶Expired̶̶̶

Vested̶̶̶Balance unvested

̶

̶

̶

36,20056,00033,700

̶

̶

̶

7,600

9,700

2,600

Pre-vesting (shares)

Post-vesting (shares)
Previous ﬁscal year-end
VestedExercised
ExpiredBalance unexercised

Pre-vesting (shares)

Post-vesting (shares)
Previous ﬁscal year-end
VestedExercised̶̶̶

28,60046,30031,100

ExpiredBalance unexercised

164

Fuyo Lease Group Integrated Report 2018

Stock options for 2014

Stock options for 2015

Stock options for 2016

Previous ﬁscal year-end

̶

̶

̶

̶

Granted̶̶̶

22,200

Expired

̶

̶

̶

̶

Vested̶̶̶

22,200

Balance unvested

̶

̶

̶

̶

Stock options for 2017Pre-vesting (shares)

Post-vesting (shares)
33,50028,60034,700̶

Vested̶̶̶

22,200Exercised

̶

̶

̶

̶

Expired

̶

̶

̶

̶

33,50028,60034,70022,200Stock options for 2016

Stock options for 2017

Previous ﬁscal year-end

Balance unexercisedii) Consolidated subsidiaries

Pre-vesting (shares)
Previous ﬁscal year-end̶̶Granted̶

6,900

Expired̶̶

Vested̶6,900

Balance unvested̶̶

Post-vesting (shares)
7,400

̶

Vested̶

6,900

Exercised̶̶Expired

̶

̶

7,400

6,900

Previous ﬁscal year-end

Balance unexercised(2)Unit pricei) The Company

Stock options for 2008

Stock options for 2009

Stock options for 2010

1

1

1

Average stock price at exercise (yen)

5,280

5,651

5,372

Fair value at grant date (yen)

1,610

1,668

2,218

Stock options for 2011

Stock options for 2012

Stock options for 2013
1
6,096
3,556

Exercise price (yen)11Average stock price at exercise (yen)

6,254

5,885

Fair value at grant date (yen)

2,449

1,943

Exercise price (yen)Stock options for 2014

Stock options for 2015

Stock options for 2016

Stock options for 2017

Exercise price (yen)

1

1

1

1

Average stock price at exercise (yen)

̶

̶

̶

̶

3,584

4,653

4,606

6,840

Fair value at grant date (yen)ii) Consolidated subsidiaries

Stock options for 2016

Stock options for 2017

Exercise price (yen)11Average stock price at exercise (yen)

̶

̶

319

348

Fair value at grant date (yen)165

Fuyo Lease Group Integrated Report 2018

Estimation method for fair value of stock options for the ﬁscal year ended March 31, 2018, was as follows.
(1) The Companyi) Evaluation method: Black-Scholes modelii) Main base data and estimation methods

Stock options for 2017
Expected volatility (Note 1)

27.23

Expected remaining contractual life (Note 2)

4.25 years%

Expected dividend (Note 3)

2.51

%

Risk-free interest rate (Note 4)(0.093)%

Notes:
1. Calculated based on actual stock prices over the past four years and three months (July 14, 2013 ‒ October 13, 2017).
2. Calculated based on the assumption that stock options are exercised in the middle of the exercise period, because the Company does nothave sufﬁcient data to reasonably estimate otherwise.
3. Calculated based on the actual dividend paid in the most recent ﬁscal year.
4. Risk free interest rate is the yield on Japanese government bonds over a period equivalent to the expected remaining contractual life.

(2) Consolidated subsidiariesi) Evaluation method: Black-Scholes modelii) Main base data and estimation methods

Stock options for 2017
Expected volatility (Note 1)

75.87

Expected remaining contractual life (Note 2)

15.00 years%

Expected dividend (Note 3)

1.09

%

Risk-free interest rate (Note 4)

0.324

%

Notes:
1. Calculated based on actual stock prices (December 24, 2004 ‒ July 5, 2017).
2. Calculated based on the assumption that stock options are exercised in the middle of the exercise period, because the Company does nothave sufﬁcient data to reasonably estimate otherwise.
3. Calculated based on the actual dividend paid in the most recent ﬁscal year.
4. Risk free interest rate is the yield on Japanese government bonds over a period equivalent to the expected remaining contractual life.

The Company used the actual number of expired options to estimate the number of vested options, because it is generally difﬁcult toreasonably estimate how many options will expire in the future.

15. RELATED PARTY TRANSACTIONSThe Companyʼs transactions with related parties during ﬁscal years ended March 31, 2018 and 2017, were as follows:
All the amounts below refer to Hulic Co., Ltd., our major shareholder.
Thousands of
U.S. dollars

Millions of yen

2018
Purchase of operating assets￥

Interest income received

31,503

2018

2017
￥

̶

̶

$

297,199101̶The ending balances of the Companyʼs transactions with related parties at March 31, 2018 and 2017, were as follows:
Thousands of
U.S. dollars

Millions of yen

2018
Loans receivable￥

Accrued income

̶
̶

166

2018

2017
￥

21,00010$̶̶Fuyo Lease Group Integrated Report 2018

16. SHAREHOLDERSʼ EQUITYThe Companies Act provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal
reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the common stock account. Such
distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met, butneither the capital reserve nor the legal reserve is available for distributions.

17. REAL ESTATE LEASING BUSINESSThe Company and some of its consolidated subsidiaries own commercial facilities for lease and ofﬁce buildings (including land) for
lease in Tokyo and other regions. Net lease income from these assets amounted to ￥2,056 million ($19,401 thousand) and 1,876
million (lease income and lease cost were generally recorded as net sales and cost of sales, respectively) for the ﬁscal years ended
March 31, 2018 and 2017, respectively.
The carrying value on the consolidated balance sheets, net change, and fair value are as follows:
Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

Carrying value
Beginning of year￥

132,049￥

65,977$

1,245,749

Net change

44,716

66,071

421,852

End of year

176,765

132,049

1,667,601

186,482￥ 141,443

Fair value
End of year￥$

1,759,267

Notes:
1. The carrying value on the consolidated balance sheet is the amount after deduction of accumulated depreciation from historical cost.
2. The increase of carrying value is mainly attributable to the purchase of real estate of ￥104,036 million ($981,473 thousand) and ￥72,667 million, in the ﬁscal years ended
March 31, 2018 and 2017, respectively.
3. The fair value of properties is mainly estimated based on income approach in accordance with Real Estate Appraisal standards as of March 31, 2018. For other properties,
the Company reasonably estimated the fair value based on income approach or market approach while the Company used their carrying value as the fair value for certain
properties.

18. SEGMENT INFORMATION(1) Overview of reportable segments
The Fuyo Lease Groupʼs reportable segments are components of the Group about which separate ﬁnancial information is available.
These segments are subject to periodic examinations to enable the Companyʼs board of directors to decide how to allocate resources
and assess performance.
The Fuyo Lease Group is primarily engaged in leasing and installment sales. Based on the major types of transactions handled,
operations are divided into three reportable segments, namely the Lease and Installment Sales segment, the Financing segment, andthe Other segment.
The Lease and Installment Sales segment conducts leasing of IT and ofﬁce equipment, industrial machinery, and other assets(includes the sale of off-lease assets upon lease expiration or termination) and sells commercial/service equipment, production
facilities, medical devices, and other assets on an installment basis. The Financing segment is mainly engaged in commercial lending
and investment in marketable securities for ﬁnancial income. The Other segment primarily engages in environmental-related
businesses and forms tokumei-kumiai (silent partnership) arrangements.

167

Fuyo Lease Group Integrated Report 2018

(2) Revenues, income/loss, assets, liabilities, and other items by reportable segment
Year ended March 31, 2018
Lease
Installment

Financing

Total

Millions of yen

Operating revenues
Revenue from customers

Other

￥

560,298

13,063￥

16,839￥590,201

839

2,073

846

3,759

561,137

15,137

17,686593,961Intersegment revenue and transfers
Total revenues￥

Operating proﬁt￥

29,705

￥

8,605

￥

4,438

￥

Segment assets￥ 1,619,503￥

677,427￥

36,926￥ 2,333,858

￥

￥

̶

￥

42,749Other items
Depreciation

31,126￥

31,126
1,571

324

57

̶

̶

̶

̶

157,674

̶

3,648

161,323

Amount invested in equity‒method afﬁliates
Increase in tangible ﬁxed assets and intangible ﬁxed assets

̶

1,189

Amortization of goodwill

Year ended March 31, 2018
Lease
Installment

Financing

Total

Thousands of U.S. dollars

Operating revenues
Revenue from customers

Other$ 5,285,837

Total revenues

123,240$$

158,864$

5,567,941

7,916

19,5647,990

35,4705,293,753

142,804

166,854

5,603,411

Intersegment revenue and transfers
Operating proﬁt$

Segment assets$ 15,278,340

280,241

81,181$

41,872$$ 6,390,823$

348,366$ 22,017,529

̶

$

$

403,294

Other items
Depreciation$

Amortization of goodwill

293,646

̶

$

293,646

3,061

543

̶

̶

̶

̶

1,487,494

̶

34,422

1,521,916

Amount invested in equity‒method afﬁliates
Increase in tangible ﬁxed assets and intangible ﬁxed assets$

11,21814,822

Year ended March 31, 2017
Lease
Installment sales

Financing

Total

Millions of yen

Operating revenues
Revenue from customers

Other

￥

485,470￥

10,280￥

11,251￥

507,001

950

1,469

691

3,112

486,420

510,114

Intersegment revenue and transfers

11,74911,943Operating proﬁt￥

28,717

6,964

3,678

39,360

Segment assets￥ 1,552,310

646,179

26,7312,225,221

Total revenues

Other items
Depreciation￥

31,564̶￥̶

￥31,564

1,189

81

57

̶

̶

̶

̶

127,061̶

247

127,308

Amortization of goodwill
Amount invested in equity‒method afﬁliates
Increase in tangible ﬁxed assets and intangible ﬁxed assets

￥

168

1,328

Fuyo Lease Group Integrated Report 2018

(3) Difference and analysis between reportable segmentsʼ total income/loss and income/loss reported on the consolidated
statements of income (adjustments)
Thousands of
U.S. dollars

Millions of yen

2018

2018

2017

Operating revenues
Reportable segments total￥

Eliminations

593,961￥

Operating revenues reported on the consolidated statements of income

510,114$

5,603,411(3,112)(3,759)(35,470)￥

590,201￥

507,001$

5,567,941￥

42,749￥39,360$403,294

IncomeReportable segments total
Eliminations(2,077)(1,876)

Corporate￥

32,609(77,955)(8,648)(8,263)Operating proﬁt reported on the consolidated statements of income(17,700)￥

28,634$

307,639

AssetsReportable segments total￥ 2,333,858￥ 2,225,221$ 22,017,529

96,98074,868914,908￥ 2,430,838￥ 2,300,090$ 22,932,437

￥

￥

$

Corporate
Total assets reported on the consolidated balance sheets
Other items
Depreciation
Reportable segments total
Adjustment

31,126

Amounts reported on the consolidated ﬁnancial statements

31,564

293,646
11,802

1,200

1,251
￥

32,377￥32,765$

305,448

￥

1,571

￥

1,328

$

14,822

Amortization of goodwill
Reportable segments total
Adjustment
Amounts reported on the consolidated ﬁnancial statements

￥

̶

̶

̶
1,571

￥

̶

￥

1,328

$

̶

$

14,822

Amount invested in equity-method afﬁliates
Reportable segments total￥

Adjustment
Amounts reported on the consolidated ﬁnancial statements̶
136,8317,566

14,504￥

14,504

￥

7,566

$

136,831￥

161,323￥

127,308$

1,521,916

Increase in tangible ﬁxed assets and intangible ﬁxed assets
Reportable segments total
Adjustment
Amounts reported on the consolidated ﬁnancial statements￥

163,536

20,883

1,220

2,213
￥

128,529$

1,542,799

Notes:
1. Depreciation adjustments mainly represent depreciation on own-used assets.
2. Adjustments for amount invested in equity-method afﬁliates mainly represent the amount of funds invested in equity-method afﬁliates.
3. Adjustments on increases in tangible ﬁxed assets and intangible ﬁxed assets mainly represent capital investment in own-used assets.

169

Fuyo Lease Group Integrated Report 2018

(4) Tangible ﬁxed assets
Thousands of
U.S. dollars

Millions of yen

2018
Japan

￥

North America and Latin America

2018

2017

304,630￥ 268,756$ 2,873,875

10,596

4,823

99,96979,343

71,140748,524

EuropeIreland
Other
Other items
￥

Total

1

1

11

5,801

5,782

54,730400,373￥ 350,505$ 3,777,109

Note:
1. The ﬁgures shown are presented according to the respective geographic locations 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, Republic of Panama
Europe: United Kingdom, Ireland
Asia: China, Malaysia, Thailand

19. NET ASSETS PER SHARE
Net assets per share are computed based on the net assets available for distribution to the shareholders of common stock (i.e., net
assets excluding minority interests) and the number of shares of common stock outstanding on each balance sheet date.
U.S. dollars

Yen

2018
Net assets￥ 8,242.50

2018

2017
￥ 7,547.33

$

77.76

20. BASIC EARNINGS PER SHARE
The reconciliation of the differences between basic and diluted basic earnings per share (“EPS”) for the year ended March 31, 2018 was
as follows:Year ended March 31, 2018

Millions of yen

Thousands ofsharesBasic earnings

Weighted average
sharesYen

U.S. dollars
EPS

Basic EPS
Basic earnings available to common shareholders￥

21,944

Effect of dilutive securities warrants

30,209￥ 726.41$

6.85￥ 719.99

$

6.79

269

Diluted EPS
Basic earnings for computation￥

21,944170

30,478

Fuyo Lease Group Integrated Report 2018

21. SUBSEQUENT EVENTS
Cash dividends
The following appropriations of retained earnings of the Company, which are not reﬂected in the accompanying consolidated ﬁnancial
statements for the year ended March 31, 2018, were approved at a shareholdersʼ meeting held on June 22, 2018:

Millions of yen

Thousands of
U.S. dollars￥$

Appropriations:
Cash dividends of ￥78 ($0.74) per share

2,357

22,239Introduction of Board Beneﬁt Trust (BBT)At the Board of Directors meeting held on May 16, 2018, the Company resolved to introduce a new stock-based remuneration planor Board Beneﬁt Trust (BBT) (the “Plan”) for the Companyʼs 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.”. The Company submitted the proposal regarding the Plan to the 49th
Annual General Meeting of Shareholders held on June 22, 2018 (the “General Meeting of Shareholders”) and received approval.
1. Background and Purpose of the Plan
The Board of Directors of the Company resolved to submit the Proposal to the General Meeting of Shareholders to introduce the Plan
under the conditions approved by the shareholders. The introduction of the Plan aims further raising the incentives for the Directors,
etc. to contribute to improving medium and long term performance and enhancing corporate value, by making the linkage between
the Directorsʼ remuneration and the Companyʼs equity value even clearer, in other words, by making that the Directors, etc. not only
share the beneﬁts of the share price rising but also share the risks of the share price declining with the shareholders.
Upon the resolution of the Board of Directors to introduce the Plan, the Nomination and Remuneration Advisory Committee,
which majority of the members are independent outside directors, held deliberations and submitted a report acknowledging thevalidity of the Plan.
This Proposal requests approval for the new stock-based remuneration to Eligible Directors which separates from the upper limitof the cash remuneration for the Companyʼs directors (up to ¥500 million per annum, comprising up to ¥360 million per annum in“basic remuneration” for the Companyʼs directors and up to ¥140 million per annum in “performance-linked remuneration (annual
bonus)” for the Companyʼs directors, excluding outside directors) approved at the 39th Annual General Meeting of Shareholders
held on June 25, 2008.
At the 39th Annual General Meeting of Shareholders held on June 25, 2008, the Company also has received approval for theamount up to ¥120 million per annum for “stock-based remuneration-type stock options” for the Eligible Directors, which
separates from the aforementioned upper limit on cash remuneration, and has been in place until the 49th General Meeting of
Shareholders. However, subject to the approval and adoption of this Proposal, the Company plans to stop to provide them with theformer remuneration for “stock-based remuneration-type stock options.” However, subscription rights to shares that have been
granted but not yet exercised will be effective in the future.

171

Fuyo Lease Group Integrated Report 2018

2. Overview of the Plan

(1)Overview of the Plan
The Plan is a stock-based remuneration plan, under which the Companyʼs shares will be acquired by a trust (the trust to beestablished under the Plan is referred to hereinafter as the “Trust”) using funds that the Company will contribute, and the Companyʼsshares and cash equivalent to the market price of the Companyʼs shares (the “Companyʼs share, etc.”) will be provided to the
Directors, etc. from the Trust in accordance with the Regulations for Provision of Shares to Ofﬁcers established by the Company.
In principle, the Companyʼs shares, etc. will be provided to the Companyʼs Directors, etc. on their retirement.

＜Structure of the Plan＞(i)Establishment of the Regulations for Provision of Shares to Ofﬁcers[Entrustor]
The Company(ii)Entrustment ofmoney

Directors, etc.

(iv) Granting of points(v)Non-exercise of
voting rights(iii)Acquisition ofshares[Trustee]Mizuho Trust & Banking Co., Ltd.
(Re-entrusted to: Trust & Custody
Services Bank, Ltd.)

Trust Administrator
Instruction on non-exercise
of voting rights(vi)Provision of theCompanyʼs shares, etc.

Acquisition ofright to receive
beneﬁts[Beneﬁciary]
Retired Directors, etc. who fulﬁll
the beneﬁciary requirements(i) The Company will obtain approval for remuneration for ofﬁcers at this General Meeting of Shareholders and will establish theRegulations for Provision of Shares to Ofﬁcers within the scope of the framework approved at this General Meeting of
Shareholders.
(ii) The Company will entrust money within the limit for which approval was received at this General Meeting of Shareholders
described in (i).
(iii) The Trust will acquire shares of the Company through the stock market on which the Companyʼs shares are listed or by
subscribing for treasury shares disposed of by the Company using the money entrusted as described in (ii) as the funds.
(iv) The Company will grant points to the Directors, etc. in accordance with the Regulations for Provision of Shares to Ofﬁcers.
(v) In accordance with the instruction of the trust administrator, which is independent of the Company, the Trust shall not exercise
the voting rights of the shares of the Company within the Trust account.
(vi) The Trust will provide the persons who have retired from ofﬁce of Directors, etc. and fulﬁll the beneﬁciary requirements asprescribed in the Regulations for Provision of Shares to Ofﬁcers (the “Beneﬁciaries”) with the Companyʼs shares in proportion
to the number of points that have been granted to the Beneﬁciaries. However, if the Directors, etc. satisfy the requirements asprescribed in the Regulations for Provision of Shares to Ofﬁcers, the Trust will provide them with cash equivalent to the market
price of the Companyʼs shares instead of the Companyʼs shares for a certain proportion of the points.

(2)Persons eligible for the PlanThe Eligible Directors and the Executive Ofﬁcers of the Company(3)Trust period
From August 2018 (planned) until the expiration of the Trust (With regard to the trust period for the Trust, no speciﬁc expiration date
will be set, and the Trust will continue as long as the Plan continues. The Plan will terminate due to reasons that include the delistingof the Companyʼs shares and the abolition of the Regulations for Provision of Shares to Ofﬁcers.)

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(4)Trust amount (amount of remuneration, etc.)
Subject to the approval of this Proposal at the General Meeting of Shareholders, the Company will introduce the Plan for the threeﬁscal years starting from the ﬁscal year ending March 31, 2019 until the ﬁscal year ending March 31, 2021 (the relevant period of threeﬁscal years is referred to hereinafter as the “Initial Plan Period” with each period of three ﬁscal years after the Initial Plan Period beingreferred to as the “Plan Period”) and for each subsequent Plan Period. In order to provide, under the Plan, the Companyʼs shares, etc.
to the Directors, etc., the Company will contribute money as outlined below to the Trust as funds for the acquisition of the Companyʼsshares by the Trust.
Firstly, at the commencement of the Trust Period as in (3) above, the Company will contribute money up to ￥950 million (which
includes ￥360 million as the portion for the Eligible Directors) as the funds required for the Initial Plan Period.
In addition, after the Initial Plan Period, the Company will make additional contributions to the Trust up to ¥950 million (which
includes ¥360 million as the portion for the Eligible Directors) for each Plan Period, in principle, until the termination of the Plan.
However, in the case of making additional contributions, if the Companyʼs shares (excluding the Companyʼs shares corresponding to
the points granted to the Directors, etc. for each immediately preceding Plan Period and provision of the Companyʼs shares to the
Directors, etc. is not completed) and money remain in the Trust (such shares and money are collectively referred to as the “Remaining
Shares, etc.”), the total amount of the Remaining Shares, etc. (the amount for the Companyʼs shares shall be the book value at the end
day of the immediately preceding Plan Period) and additionally contributed money shall not exceed ¥950 million (which includes¥360 million as the portion for the Eligible Directors).
The Company will provide timely and appropriate disclosure when it decides to make additional contributions. In addition, theBoard of Directors will make the necessary arrangements in the event that the necessary funds (trust amount) which are the portion
for the Executive Ofﬁcers for each Plan Period the Company will contribute to the Trust exceed the upper limit (the Board of
Directors will do likewise regarding the upper limit for the portion of the points granted to the Executive Ofﬁcers in (6) below).

(5)Method of acquisition of the Company ʼs shares and the number of shares to be acquired
The acquisition of the Companyʼs shares by the Trust will be implemented through the stock market on which the Companyʼs sharesare listed or by subscribing for treasury shares disposed of by the Company with the money contributed as in (4) above as the funds.
A maximum of 300,000 shares (which include 114,000 shares as the portion for the Eligible Directors) shall be acquired in the Initial
Plan Period. The Company will provide timely and appropriate disclosure concerning the details of the acquisition of the Companyʼsshares by the Trust.

(6)Calculation method for the number of the Company ʼs shares, etc. to be provided to the Directors, etc.
Each ﬁscal year, the number of points determined as per the Regulations for Provision of Shares to Ofﬁcers will be granted to the
Directors, etc. The maximum total number of points per ﬁscal year to be granted to the Directors, etc. shall be 100,000 points (which
include 38,000 points as the portion for the Eligible Directors).
The points granted to the Directors, etc. shall be converted to one common share of the Company for one point upon theprovision of the Companyʼs shares, etc. as in (7) below. (However, if there is a share split, allotment of shares without contribution,
an integration of shares, etc., with regard to the Companyʼs shares, after the approval of this Proposal, the upper limit on the numberof points, the number of points granted, and the conversion ratio shall be adjusted in a reasonable manner proportional to therelevant ratio, etc.)
These calculations and the trust amount were determined taking into consideration a comprehensive view of the current level of
remuneration for ofﬁcers and the trend in the number of the Directors, etc. as well as the future prospects thereof and other factors.
The number of points of a Director, etc. which will be used as the basis for the provision of the Companyʼs shares, etc. described in(7) below shall, in principle, be the number of points granted to the Director, etc. until the time of his/her retirement from ofﬁce(points calculated in this manner are hereinafter referred to as the “Conﬁrmed Number of Points”).

(7)Provision of the Companyʼs shares, etc.
If a retired Director, etc. fulﬁlls the beneﬁciary requirements as prescribed in the Regulations for Provision of Shares to Ofﬁcers, inprinciple, the Director, etc. will be provided from the Trust with the number of the Companyʼs shares that corresponds to the Conﬁrmed
Number of Points stipulated in accordance with (6) above after his/her retirement from ofﬁce by following the prescribed beneﬁciary
vesting procedures. However, if the Director, etc. satisﬁes the requirements as prescribed in the Regulations for Provision of Shares toOfﬁcers, the Trust will provide him/her with cash equivalent to the market price of the Companyʼs shares instead of the Companyʼsshares for a certain proportion of the points. The Trust may sell the Companyʼs shares in order to make the monetary provisions.

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(8)Exercise of voting rights
Based on instructions from the trust administrator, none of the voting rights of the shares of the Company within the Trust accountshall be exercised. By using this method, the Company intends to ensure neutrality toward management of the Company with regard
to the exercise of the voting rights of the shares of the Company within the Trust account.

(9)Treatment of dividends
The Trust will receive the dividends for the shares of the Company within the Trust account, and the dividends will be used for theacquisition of shares of the Company or the trust fees for the trustees relating to the Trust. In the case of the termination of the Trust,dividends, etc. remaining within the Trust shall be granted to the Directors, etc. in ofﬁce at that time in proportion to the number ofpoints that each of them possesses.

(10)Handling of the termination of trust
The Trust will terminate for reasons such as the delisting of the Companyʼs shares or the abolition of the Regulations for Provision of
Shares to Ofﬁcers. Of the residual assets in the Trust on its termination, it is planned that the Company will acquire all of theCompanyʼs shares without consideration, which will then be cancelled by resolution of the Board of Directors. Of the residual
assets in the Trust on its termination, cash, excluding the cash provided to the Directors, etc. in accordance with (9) above, will be
paid to the Company.
Overview of the Trust
1. Name: Board Beneﬁt Trust (BBT)
2. Entrustor: The Company
3. Trustee: Mizuho Trust & Banking Co., Ltd. (Sub-trustee: Trust & Custody Services Bank, Ltd.)
4. Beneﬁciary: Retired Directors, etc. who fulﬁll the beneﬁciary requirements stipulated in the Regulations for
Provision of Shares to Ofﬁcers
5. Trust administrator: A third party without a conﬂict of interest with the Company will be selected
6. Type of trust: Entrustment of money other than money in trust (third-party beneﬁt trust)
7. Date of conclusion of the trust agreement: August 2018 (scheduled)
8. Date of money entrustment: August 2018 (scheduled)
9. Trust period: From August 2018 (scheduled) until the expiration of the Trust(No speciﬁc expiration date will be set, and the Trust will continue as long as the Plan continues.)
Corporate bond issuance
The company issued straight bonds as follows:(1) Issue name: Fuyo General Lease Co., Ltd., No. 16 unsecured straight bond(2) Issuance amount: ¥15,000 million(3) Issuance date: April 27, 2018(4) Issue price: ¥100 per ¥100 of face value(5) Coupon rate: 0.210% per year(6) Redemption date: April 27, 2023
(7) Purpose: To fund capital investments

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Report of Independent Auditors

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Stock Information (As of March 31, 2018)
Stock Overview
Total number ofauthorized shares

100,000,000 shares

Number of shares
outstanding

30,288,000 shares

Share unit number

100 shares

Number of shareholders

12,937

Individuals and others(including treasury share)

6.9 %Foreign
Shareholders

18.3 %

Number of Shareholders

Number of shares held
(in thousands)■ Financial Institutions

66

11,709■ Other domesitic firms

154

10,945■ Foreign Shareholders

209

5,531

Financial
Institutions

Breakdown of Shareholders

38.7 %

Other domestic firms

36.1%■ Individuals and others(including treasury share)

12,5082,102(treasury share included)

Major Shareholders (Top 10)
Number of shares held
(in thousands)

Shareholding ratio(%)

Hulic Co., Ltd.

4,218

13.96

Meiji Yasuda Life Insurance Company

2,261

7.48

Retirement Benefit Trust managed by Mizuho Trust & Banking Co., Ltd. (Marubeni
Corporation account); Trust & Custody Services Bank, Ltd. as a Trustee of Retrust

1,512

5.00

Sompo Japan Nipponkoa Insurance Inc.

1,002

3.32

Azbil Corporation

1,000

3.31

The Master Trust Bank of Japan, Ltd. (Trust Account)

979

3.24

Japan Trustee Services Bank, Ltd. (Trust Account)

958

3.17

Mizuho Bank, Ltd.

907

3.00

BBH FOR FIDELITY PURITAN TR : FIDELITY SR INTRINSICOPPORTUNITIES FUND

550

1.82

Japan Trustee Services Bank, Ltd. (Trust Account 5)

431

1.43

Shareholders

Annual dividend per share (Yen)

130

146

156

100
74

2014/380

2015/3

2016/32017/3

2018/3

2019/3(Forecast)

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Fuyo Lease Group Integrated Report 2018

3-3-23, Kanda-Misaki-cho, Chiyoda-ku,
Tokyo 101-8380, Japan
Phone: +81-3-5275-8800
https://www.fgl.co.jp/eng/
For inquiries about "Integrated Report 2018," please contact:
Corporate Communication Division
Phone: +81-3-5275-8891
E-mail: fuyo-ir@fgl.co.jp