INTEGRATED REPORT 2017

offering valued financial

combining the Group’s total strength.

ndeavor to further enhance the2. EGroup’s
reputation and credibility
among shareholders and in the market.

services which lead to future
prosperity.

How the Group should be
and stakeholders the Groupshould consider
Clients

Shareholders Employees

Society3.

Strive to create a dynamic corporate
culture full of energy and vitality inwhich proactive, ambitious humanresources are fostered and promoted.

with the law and its spirit,
4. Comply
and aim to be a Group which always
recognizes its social responsibility andsecures understanding and sympathy
from society.

Mindset of each employee
Action Guidelines

The Three Cs

VisionValue-creating company tackling challenges together with clients

Focus Area

High expertise andextensiveofanagement an
rn m
dc
etu
orp
k-r
or
ris

Enhanceme
ntBusiness strategy
according to changes

Well-balanced

in social and industrial

Medical and Healthcare
Case Study

Focus Area

structurerod u

c tivit ya n d p r o m o ti o n o f ac ti v eparSustainable increases ofcorporate value and shareholder
returns

Case Studyp.

Society

Creation of productive and high-quality
employment opportunities

Focus Areati c i

Solving social issues andpracticing corporate social
responsibility through ourbusinesses

Global(Aircraft/Overseas Subsidiaries)
Case Study

12p.

Focus Area

Prosperous living

Employees

Strong fundraisingTechnology

baseTransformationof businessmodels driven
by Industry 4.0

technological advancement

Increase in
Corporate Value
11

io n

al p

pat

ti o nContribution to industrial and

10p.

Environment and Energyof dportfolio
Global warming

Sustainable economic development

9

Shareholders

tale nt

clientsp.

Focus Area

iv e r s e

with large andmid-sized corporate

Advancementof globalization

Resource andenergy shortage

Case Studyclients’ issues

Strong relationship
Maturity ofdomestic market

Providing flexible and a wide
variety of services to meetclients’ needs

Core Businesses

Business Promotion Structureknow-how to solve
Labor shortagedue todecreasing
labor force

Fifth Mid-term Management Plan

Accumulation of financial assets, know-how and strengths

p.

21–30

Creation of environment andsystems where all employees
are provided with a meaningful
and engaging workplace.
Maintenance of healthy
global environment

Growth Strategy of the IBJ Leasing Group

President’s Commitment ............................................................. 16
Fifth Mid-term Management Plan (FY2017 – FY2019)............

21

Review of Operations ........................................................................................ 31
Funding Status .................................................................................................. 33

16 President’s Commitment
Hiroshi Motoyama
President and CEO

CSR Management for Supporting Growth
CSR of the IBJ Leasing Group ........................................................................... 35
Corporate Governance and Internal Control....................................................... 37
List of Directors, Auditors and Executive Officers ............................................... 39
Message from Outside Directors........................................................................ 40
Compliance and Risk Management ................................................................... 41
Recruitment and Development of Human Resources ......................................... 43
Promotion of Work-Life Balance and Diversity ................................................... 45
Communication with Shareholders and Investors............................................... 46
Environmental and Social Activities .................................................................... 47

This report contains the IBJ Leasing Group’s financial information as well as non-financial
information including management strategies, environment, social and corporate governance (ESG) to help stakeholders have a better understanding of the Group’s businessactivities. When we edited this Report, we referred to certain guidelines including “International <IR> Framework” issued by the International Integrated Reporting Council (IIRC),
and explained the Group’s value-creating activities over the medium to long-term in aneasy-to-understand and simple manner.

of the IBJ Leasing
35 CSRGroup
Shin Kuranaka
Senior Managing Director
Chief CSR Officer

This report covers the entire IBJ Leasing Group.

Website: www.ibjl.co.jp/
Integrated Report (Japanese and English)

Fulfill corporate social
responsibility
Details

Securities Report

Reporting Period
From April 2016 to March 2017 (including some activities that occurred outside this period)
Entities Covered

Composition of communication tools

Financial information
IBJ Leasing Company, Limited

Aging population
with lowbirthrate

Value provided
to society

Clients

Value Creation Together with ClientsContribution to solving issues

Overview

Flow for realization of the vision

01

Strengths of the IBJ Leasing Group

Editorial Policy

Fifth Mid-term Management Plan

Tackle new businessdomains transcending theframework of financing

Value
brought tostakeholders
Social issues

Management’s Discussion and Analysis ............................................................ 49
Business Risks and Other Risks ........................................................................ 52
Consolidated Financial Statements .................................................................... 53
Corporate Information........................................................................................ 85
Stock Information .............................................................................................. 87

From April 2017, the IBJ Leasing Group has started to implement the Fifth
Mid-term Management Plan covering a three-year period.
Under this plan, the Group will utilize its accumulated business know-how andfinancial strengths to actively promote businesses with higher profitability.

Promote business together
with clients as their partner

Value Creation Together with Clients 1 [Core Business (Real Estate)] ............ 09
Value Creation Together with Clients 2 [Medical and Healthcare] ................... 10
Value Creation Together with Clients 3 [Environment and Energy] ................. 11
Value Creation Together with Clients 4 [Aircraft] ............................................ 12
Financial and Non-financial Highlights ................................................................ 13
Operational Highlights........................................................................................ 15

Consolidated Financial Data and Corporate Information

Challenge Change Create

Thorough client-oriented
approach

Value Creation Process of the IBJ Leasing Group ..... 07

eracontributes to society by

to customers’ needs and1. Respondprovide precise and prompt services by

07 Value Creation Process
f op

DesiredFutureImage of the
IBJ LeasingGroup

We aim to be a Group which

Trajectory of the IBJ Leasing Group ................................................................... 03
Business Overview ............................................................................................ 05

e nt oManagement Policy

Business of the IBJ Leasing GroupIm prove m

Corporate Philosophy

CONTENTS

nce
erna
gov
ate

The IBJ Leasing Group aims to make a further
leap forward by taking on challenges forenhancing corporate value and achieving value
creation for stakeholders.

Report for Shareholders

Report on Corporate
Governance

Financial Results(Japanese and English)

CSR Activities (Website)

Non-financial information

Notes concerning Future Forecast
This report contains management policies and futurebusiness performance based on the information on
hand at the time of the preparation of this report.
These statements may contain certain risks and uncertainties, and as such do not guarantee that suchpolicies and performance will be achieved. Pleasebe advised that any predictions for the future madein this report may differ significantly from the actual
results due to various factors.
IBJ Leasing Company, Limited

02

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Trajectory of the IBJ Leasing Group
IBJ Leasing Co., Ltd. was established in 1969 as a general leasing company under an initiative by The Industrial
Bank of Japan, Ltd. (now Mizuho Bank, Ltd.), with the participation of major companies representing Japanese industries. The IBJ Leasing Group, which has proactively developed its operations in leasing and installment sales—
the financing of physical items—operates as a multimodal financial services group that provides services forcorporate clients in Japan and overseas. In addition to financing related to capital expenditure, including industrial
and factory equipment, information and communication equipment and medical equipment, we are expanding thescope of our business activities by proposing a wide range of solutions that meet clients’ increasingly diversified
needs, through initiatives in a broad range of financial sectors and through M&A activities.

2000

Historyof OurBusiness

1990(1969~2016)

1969
1969 IBJ Leasing Company is establishedunder the initiative of The Industrial
Bank of Japan, Ltd. as a pioneer ofvessel financing

2010

1972 Begins vendor leases of construction equipment as a pioneer in that field
1982 Begins full-scale information equipment sales
business
1985 Undertakes Japan’s first rolling stock leasing

History of
Growth1992 Krung Thai IBJ Leasing Co., Ltd., an overseas
subsidiary, is established in Thailand (now anequity method affiliate)1998 PNB-IBJL Leasing and Finance Corporation,
an overseas subsidiary, is established in
Philippines (now an equity method affiliate)1998 Begins full-scale business in structured
finance1999 Acquires shares of Nissan Leasing Co., Ltd.
(subsequently merged into IBJ Leasing in2015)

Contract Execution Volume in Leasing and Installment Sales
Contract execution volume in leasing and installment sales
Investments in leased plant and equipment in Japan*

456.4(Billions of yen)

465.5

2000 Business department specializing in medical and welfare services
is established.
2000 Acquires shares of Saison Auto Lease Systems Co., Ltd. (now IBJ
Auto Lease Company, Limited as a consolidated subsidiary).
2001 Acquires shares of Universal Leasing Co., Ltd. (now a consolidated
subsidiary).
2004 Shares listed on the Second Section of the Tokyo Stock Exchange.
2005 Designated an issue on the First Section of the Tokyo Stock Exchange
2006 Acquires shares of Dai-ichi Leasing Co., Ltd. (now a consolidated
subsidiary).
2008 IBJ Leasing (China) Ltd., an overseas subsidiary, is established in
China (now a consolidated subsidiary).

Operating Assets

372.4

353.4
313.3

328.6
1,031.2

03

IBJ Leasing Company, Limited

953.7

256.5
7,101.7

216.2 221.6

1,608.7

236.5

11,144

1,092.2

9,025

8,984
985.0

11,60910,531

1,263.1

7,981

935.2 928.6

8,920

7,799
7,019

813.5

5,444.4

5,591

4,168.2

4,724.8

4,413.2

4,510.6

4,116.1
4,405.8

12,414

1,343.0
1,211.3

7,121.3
6,342.0(Millions of yen)

1,432.3

384.9

279.7
6,808.6

Net Income Attributable to Owners of the Parent

475.7
1,581.0(FY2004 – FY2016)

The IBJ Leasing Group has met increasingly diversified
and sophisticated client needs changing with the times
and grown to the current stage by expanding the scopeof our business activities on the basis of insight and knowhow it accumulated through leasing and installment
services.
Going forward, we, as a multimodal financial services
group that provides services for corporate clients, aim to
expand our business base and revenue opportunities toachieve further growth by challenging ourselves together
with clients beyond the framework of conventional
financing.

(Billions of yen)2010 PT. IBJ VERENA FINANCE, an overseas subsidiary, is established inIndonesia (now a consolidated subsidiary).
2011 Acquires shares of Siemens Financial Services K.K (its businessabsorbed into IBJ Leasing and then dissolved in 2013).
2012 Acquires shares of Toshiba Group’s financial services company forcorporations (now IBJL-TOSHIBA Leasing Company, Limited as aconsolidated subsidiary).
2012 Environmental Business Promotion Division is established.
2016 IBJ Air Leasing Limited (now a consolidated subsidiary) is established for the IBJ Leasing Group to enter the aircraft operatinglease business.

4,841.1

4,296

4,721.3

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

3,348

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016*Source: Lease Statistics (FY2016) by Japan Leasing Association

IBJ Leasing Company, Limited04

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Business Overview
The IBJ Leasing Group comprises IBJ Leasing, 26 consolidated subsidiaries and three equity-method affiliates (asStrengths of the IBJ Leasing Groupof March 31, 2017). Centered on this structure, we provide wide-ranging financial services, including leasing, installment sales and loans by utilizing our understanding of equipment and extensive financial expertise. In addition
to Japan, the IBJ Leasing Group meets the diverse needs of clients overseas, centering on Asia, with Group comHigh expertise andpanies cooperating to offer the best solutions.

extensive knowhow to solve
clients’ issues

Strongrelationship withlarge and midsized corporate

Well-balanced

Strong fundraising

portfoliobaseclients

The IBJ Leasing Group’s Businesses

Other

2%

FY2016Gross profit

Leasing and Installment Sales

74%¥39.2 Billion
Financing24%

By leveraging our extensive know-how of equipment and highly sophisticated financial solutions, the IBJ Leasing Group
has a strength of proposal-based sales to solve clients’ accounting, financial and business issues, which allows us to build
strong relationships with large and mid-sized corporate clients. Furthermore, with regard to our operating assets, in addition to the areas of industrial and factory equipment, transportation equipment and construction equipment, which are our
specialties since inception, we have recently focused on the industries based on domestic demand such as distribution andretailing, food and beverages, medical and healthcare which are expected to expand in market size due to changes in theJapanese industrial structure, as well as increasing the ratio of dealing in fields, namely commercial and service equipment,
medical equipment and real estate, to form a well-balanced portfolio.
As far as funding is concerned, we have a wide range of business relationships with over 100 financial institutions including city banks, regional banks and insurance companies, and have established a low-interest-rate, stable funding base bymaking use of direct funding, such as commercial paper and corporate bonds, from the financial market.

Major Group Companies

Leasing and Installment Sales

Domestic Group Companies

Finance Leasing, Operating Leasing,
Auto Leasing, Other

Specialized Financing,
Corporate Finance

IBJL-TOSHIBA Leasing Company, Limited

The leasing business provides a financial service in which theCompany purchases machinery and equipment that clients
have selected, and leases them to clients.
We provide structured leases and other high-value-addedleases to satisfy the sophisticated and diverse requirementsof clients.

We provide a range of services, including specialized financing to deliver cash flow through real estate, aircraft, vessels
and other items, as well as factoring, business finance andother types of corporate financing, to meet the diverse financing requirements of clients.

Dai-ichi Leasing Co., Ltd.

Installment sales constitute a financial service through which
the Company purchases machinery and equipment thatclients have selected, as with leasing, and sells them on an
installment basis over the term of the contract.
Products and Services
Leasing

Finance Leasing
Operating Leasing
Leasing with an Option to Buy
Vendor Leasing
Structured Leases

Auto Leasing
RentalInstallment Sales
Environmental Solutions

IBJ Leasing Company, Limited

Real Estate Leasing
Aircraft Leasing
Simple Financing
Package Leasing
Variable Leasing

General leasing (Major business domains: Toshiba Group and sales financing for its products)

General leasing (Major business domains: The Dai-ichi Life Group customers)

Universal Leasing Co., Ltd.
General leasing (Major business domains: Sankyu Group)

Products and Services

Installment Sales

05

Financing

Real Estate-Related Financing
Aircraft Financing
Vessel Financing
Factoring
General Loans
Liquidization of Occupancy Guarantee Deposits
Liquidization of Medical Fee Reimbursement Receivables
Entrusted Payments

Juhachi Sogo Lease Co., Ltd.*
General leasing (Major business domains: Juhachi Bank customers)

IBJ Auto Lease Company, Limited
Auto leasing

KL Lease & Estate Co., Ltd.
Building leasing

KL & Co., Ltd.
Used equipment sales

Overseas Group Companies
IBJ Leasing (China) Ltd.
Overseas subsidiary in China

PT. IBJ VERENA FINANCE
Overseas subsidiary in Indonesia

IBJ Leasing (UK) Limited
Overseas subsidiary in UK

Krung Thai IBJ Leasing Co., Ltd.*
Overseas subsidiary in Thailand

PNB-IBJL Leasing and Finance Corporation*
Overseas subsidiary in the Philippines

IBJ Air Leasing Limited
Aircraft operating leases

IBJ Air Leasing (US) Corp.
Aircraft operating leases

KL Office Service Company, Limited
Office services*An equity-method affiliate

IBJ Leasing Company, Limited

06

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Value Creation Process of the IBJ Leasing GroupThe IBJ Leasing Group strives to enhance its corporate value and create value provided to stakeholders and society by solving social issues through our business activities by offering financial ser-Value

vices that incorporate the clients’ perspectives.

brought tostakeholders
Strengths of the IBJ Leasing Group

Aging population
with lowbirthrate

Focus Area

High expertise andextensiveofEnhanceme
nt

anagement an
rn m
dc
u
t
orp
-re
k
or
ir s

according to changes

structureera

ti o nGlobal warming

al p

rod u

c tivit yca n d p r o m o ti o n o f ati v e

ti c
par

i

Case Study

Focus Area

Contribution to industrial andtechnological advancement

10p.

Increase in
Corporate Value
11

Sustainable increases ofcorporate value and shareholder
returns

Environment and Energy
Case Studyp.

Society

employment opportunities
Solving social issues andpracticing corporate social
responsibility through ourbusinesses

Global(Aircraft/Overseas Subsidiaries)
Case Study

12p.

Prosperous living

Employees

Strong fundraising

Accumulation of financial assets, know-how and strengths

Creation of productive and high-quality

Focus Area

Focus Area

base

Transformationof businessmodels driven
by Industry 4.0

Medical and Healthcare

io n

f op

portfolioof de nt oWell-balanced

tale nt

in social and industrial

Im prove m

Advancementof globalization

Business strategy

9

Shareholders

iv e r s e

mid-sized corporatep.

Sustainable economic development

Focus Area

nce
erna
gov
ate

with large andclients

Resource andenergy shortage

Case Studyclients’ issues

Strong relationship

Providing flexible and a wide
variety of services to meetclients’ needs

Core Businesses

Business Promotion Structureknow-how to solve
Labor shortagedue todecreasing
labor force

Maturity ofdomestic market

Clients

Value Creation Together with ClientspatSocial issues

Value provided
to society

Technology

Fifth Mid-term Management Plan

p.

21–30

Creation of environment andsystems where all employees
are provided with a meaningful
and engaging workplace.
Maintenance of healthy
global environment

Contribution to solving issues
07

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

08

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Value Creation Together with Clients 1[Core Business (Real Estate)](Billions of yen)

250

Since the IBJ Leasing Group started full-scale operations of the real estate leasing business in 1993, we have undertaken a large number of financing projects forcommercial facilities, distribution facilities and office buildings, etc.
With the decreasing birthrate and population aging in Japan, the needs ofreal estate businesses have increasingly diversified, supported by promotion of
medical and healthcare fields and a steady increase in hotel construction on theback of inbound demand, among other things. Going forward, we will continue toexpand our business into fields where social needs are growing by leveraging ouraccumulated expertise.

219.3
196.6

200

150

With the advancement of aging society, the role of the medical and healthcare fields in society is becoming increasingly important.

134.9

The IBJ Leasing Group is promoting real estate business activities in cooperation with real estate developers

100

and provision of service businesses in partnership with medical equipment manufacturers, etc., as well as financing
50

0services for equipment so as to meet a wide variety of clients’ needs in the medical and health care fields.
FY2014FY2015FY2016

Building Lease for Distribution CenterIn the Japanese real estate market, thanks to the upcoming 2020
Tokyo Olympics, financing needs for real estate such as office buildings,
commercial facilities and distribution facilities are increasing.
The IBJ Leasing Group provides various financing schemes including
real estate leasing to a wide range of relevant parties, from clients who
are users of real estate to landlords and construction companies, leveraging our abundant experience and high expertise in order to meet theirdiversified needs.
In particular, through our alliance with major store developer Daiwa
House Industry Co., Ltd., we have built an excellent business relationship with the Daiwa House Group, and have a track record of manydifferent real estate leasing services such as store leasing as well as
distribution facilities and childcare facilities.
Daiwa Logistics CO., LTD. is expanding its business as an expert
in housing logistics and logistics for buildings and building materials,
and supports businesses of clients in terms of logistics as a strategic
logistics company, based on accumulated know-how and a successful
track record. Recently, for Komono Local Office, Mie Branch (a distribution center) constructed by Daiwa Logistics for distribution of electricalequipment, we proposed a building lease scheme through an introduction by Daiwa House Industry, based on the client’s business plan.

Feedback

Daiwa Logistics CO., LTD.

Leasing for medical equipment and LED lighting due to relocation and construction of a new hospital

Contribute to the provision of enhanced medical
services by presenting optimal proposals

Utilization of Building Lease for aDistribution Warehouse

Client’s

Consolidated Financial Data and Corporate Information[Medical and Healthcare]

Case Study
Case Study

CSR Management for Supporting Growth

Value Creation Together with Clients 2

Operating Assets ofReal Estate Business

Growth Strategy of the IBJ Leasing Group

Client Overview

Daiwa Logistics CO., LTD.
Location: Osaka City, Osaka
Businesses: Logistics of buildings and building materials,
distribution and retail logistics and office support
Business Offices: Head Office, Tokyo Branch and 43 locations
nationwide (as of April 1, 2017)
Number of vehicles: 500 (as of March 31, 2017)

Executive Officer, General Manager of Business Promotion Department Mr. Takeyuki Yoshikawa

Daiwa Logistics CO., LTD. supports the business growth of its clients through logistics, andas part of this service, we planned to construct a logistics center in Komono-cho.
As for the construction of this logistics center, IBJ Leasing proposed a building lease
scheme corresponding to our needs. We are truly grateful that they provided us with themost optimal solutions for issues, including cash flows from holding real estate and funding
and financial matters, through their abundant experience and expertise.

In the context of a changing social structure, needs for medical services
as well as nursing care and preventive care are expected to increase.
Under these circumstances, to help the elderly in Japan maintain dignity
and to provide support for their independent living, the government has
been working to put in place a “Community-based Integrated Care System,” under which housing, medical care, nursing care, preventive careand living assistance are provided in an integrated manner in a familiar
community, with the target year set at 2025 when the baby boomers
will have be aged 75 or above.
Sensing these changes in the social structure, the IBJ Leasing Grouphas been contributing to the enhancement of the medical and nursing
care systems in Japan by providing service businesses through alliances with medical equipment manufacturers, in addition to financing for
facilities and equipment and real estate, based on accumulated financial
expertise. Social Medical Corporation Kenseikai supports local medicalcare services through operating its 30 facilities in Santama area, with
Tachikawa Sogo Hospital at the core. When Kenseikai recently relocatedTachikawa Sogo Hospital to a new location where the hospital was
newly built in the aim of providing more fulfilling medical care services,
we liaised with Siemens Healthcare K.K. to provide Siemens’ CT scan
instruments and angiographic instruments on a maintenance leasing
contract. In addition, regarding LED lighting for the new hospital, we
also presented a proposal using a cost simulation regarding the benefits of installation, after which Kenseikai decided to adopt them on aleasing contract.

Client’s

Feedback

Social Medical Corporation Kenseikai

Client Overview

Social Medical Corporation Kenseikai
Establishment: June 1954
[Tachikawa Sogo Hospital]
Location: Tachikawa City, Tokyo
Number of beds: 291
Number of clinical departments: 32

Head of Administration Mr. Motoshi Masuko

IBJ Leasing provided us various proposals from an early stage of selection of medical equipment. Due to the use of their maintenance leasing services, we were able to equalize monthly
payments and stabilize our cash flow by including maintenance fees in the leasing fees
beforehand.
On top of that, when we had the LED lighting installed, IBJ Leasing presented multiple
simulations in consideration of lighting time per installation location. We are very thankful that
we were able to install medical equipment and lighting in our new hospital in the most optimal
manner as IBJ Leasing presented a scheme which brought us the most merit.

09

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

10

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Value Creation Together with Clients 3

Value Creation Together with Clients 4[Environment and Energy][Aircraft]

Amid the growing importance of environmental activities on a global scale, the IBJ Leasing Group provides clientswith support for installation of environmental and energy-related equipment to help promote social efforts in conserving the environment and energy.
We provide clients with highly value-added products and services not only through financing services including
leasing, but also through agent services for applications in relation to various types of subsidies and alliance with
manufactures and engineering companies.

There has been an increase in the number of travelers all over the globe and50

a global expansion trend in demand for air travel, which are partly due to ad-

40vancement of globalization and participation of LCC into the market due to30

Balance of Operating Assetsof Aircraft Business60

the liberalization of the airline industry, among other factors.
The IBJ Leasing Group is helping to address the growing demand foraircrafts by providing airline companies in the world with services including
aircraft leasing and aircraft-backed loans or financing secured by engines.

Case Study(Billions of yen)

56.3

37.5

39.7

20
10
0

FY2014FY2015FY2016Equipment leasing for freezer warehouse
Case Study

Installation of refrigeration equipment withnatural refrigerants using subsidies
Previously, a lot of freezer and refrigeration equipment used fluorinatedrefrigerants which contribute heavily to the greenhouse effect, a primarycause of global warming. However, in recent years, energy-saving
equipment has been developed using natural refrigerants (such as water, air, ammonia and carbon dioxide) which is not only energy efficient
but contributes much less to the greenhouse effect.
In the course of international efforts to prevent global warming, as
part of promotion of global warming countermeasures, the Ministry of
the Environment is now conducting a subsidy program (Subsidy for
Natural Refrigerant Equipment) to promote the uptake of energy-saving
natural refrigerant equipment at freezer and refrigerated warehouses.
We are committed to helping our clients to expand their businessactivities and contribute to preservation of the global environment bypresenting to our clients proposals for capital investment using the said
program.
When CHUGAI FROZEN WAREHOUSE CO., LTD which carries out
warehousing business, was going to replace cooling equipment in theirfreezer warehouse, we proposed leasing services taking advantage of
the Subsidy for Natural Refrigerant Equipment, and they adopted it.
CHUGAI FROZEN WAREHOUSE CO., LTD was able to reducegreenhouse gas emissions as well as the amount of energy consumption by installing highly energy efficient equipment using natural refrigerants.

Client’s

Feedback

11

Consolidated Financial Data and Corporate Information

IBJ Leasing Company, Limited

Initiatives in the Aircraft Business

Expansion of Business Areas Using
Experience and Know-How

Client Overview

CHUGAI FROZEN WAREHOUSE CO., LTD
Location: Yokohama City, Kanagawa
Business: Warehousing
Warehouse area: 5,346 m2
Major products handled: Frozen food, fruit juice, etc.

As aircraft industry has significant technological spillover effects on a wide
range of supporting industries, this industry has been a focus of attention as
an effective industry for creating a more sophisticated industrial structure. In
addition, its market size is also on an expansionary trend, and the numberof aircrafts in service across the world is expected to increase by 1.8 times*
from around 22,000 units in 2016 to around 39,000 units in 2036 due to expansion of demand for aircrafts worldwide and introduction of new types ofaircrafts which are highly economical.
We have broadened our knowledge through our aircraft business initiatives over more than thirty years since we first started aircraft financing
in 1982. In addition to initiatives including loans to prominent airlines andoperating leasing companies where aircraft are used as collateral, we commenced the aircraft operating lease business, establishing an operating subsidiary as a joint venture with U.S. aircraft leasing company Aircastle Limitedin February 2016. In fiscal 2016, under this aircraft operating lease business,
we executed operating leasing of four aircrafts for airlines in Europe, theUnited States and Asia.
The IBJ Leasing Group will respond to the increasing demand for aircraftby further promoting its traditional financing-type business as well as its
newly commenced business of owning aircraft.
*From “Worldwide Market Forecast 2017-2036” by Japan Aircraft Development Corporation

Schematic Diagram

IBJ Leasing Co., Ltd.
CHUGAI FROZEN WAREHOUSE CO., LTD

Director Mr. Eizo Onishi

We are committed to business operations that are conscious of harmony with society, andas part of this policy, we are promoting the installation of environmentally friendly equipment.
We have been concerned with the negative environmental impact of fluorocarbon gas usedin cooling equipment in warehouses for some time and were thinking of replacing the coolingequipment in our warehouses with equipment that uses natural refrigerants.
Under these circumstances, IBJ Leasing proposed to us that we use the subsidy program.
As we formed a partnership with IBJ Leasing at the initial stage of discussion of this project,
we were able to obtain meticulous support for tasks such as establishing the introduction
plan and preparing an application for the subsidy. It was a great help for us. Furthermore,
we were able to achieve a reduction in our utility costs by introducing highly energy efficientequipment, which we believe enables us to realize harmony between our business and society.

Overview of Aircastle Limited
Aircastle is the leading aircraft leasing company listedon the New York Stock Exchange, owning 200 aircrafts*
and boasting a wide network in the industry as well as
strengths such as high capabilities in aircraft management,
both of which have been acquired through their businesses
with 72 airline companies* globally.
(*As of March 31, 2017)

Aircastle Group

75% equity stake

25% equity stake
Aircraft leasing subsidiary

Aircraftownership

Operating lease

Leading airlines
IBJ Leasing Company, Limited

12

Business of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Financial and Non-financial Highlights
Consolidated Financial Results
FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016

Revenues

350,423

341,320

298,707

263,598

256,059

270,066

352,492

354,779

353,733

364,174

429,405

Gross profit before funding costs

34,15536,351

38,18136,72036,54936,57944,27043,00541,60944,80344,904

For the year: (Millions of yen)

Funding costs

7,627

9,849

10,105

7,213

5,459

5,286

6,596

6,426

6,338

6,361

5,697

Gross profit

26,52726,501

28,076

29,50631,09031,29337,67336,57935,271

38,441

39,206

Selling, general and administrative expenses

12,861

14,956

21,32018,24815,646

20,601

23,007

19,877

17,325

20,86821,244

Operating income

13,666

11,544

6,755

11,257

15,444

10,691

14,665

16,701

17,946

17,573

17,962

Net income attributable to owners of the parent

8,984

7,799

3,348

7,019

9,025

4,296

8,920

10,531

11,144

11,60912,414

Total assets

1,132,989

1,195,336

1,076,150

1,017,099

1,028,020

1,332,963

1,372,246

1,462,183

1,551,704

1,718,720

1,752,284

Operating assets

1,031,249

1,092,247

984,981935,223

928,633

1,211,268

1,263,116

1,343,046

1,432,299

1,581,025

1,608,718

699,874

698,861596,869

553,541

546,185

755,139780,234

809,499878,693

958,353

950,318

At year-end: (Millions of yen)

Lease
Installment sales receivable*

117,595

121,989

120,373

107,487

94,514112,243

113,939

133,267

153,910

147,455

137,820Loans

209,399

243,304

233,687

237,414

241,925

295,008

320,143

359,530

361,067

377,933

348,085

4,379

28,091

34,05036,77946,00848,876

48,79840,74938,627

97,283

172,493

Operational investment securities
Long-term receivables

3,062

2,920

9,470

14,082

10,397

19,15318,502

11,404

8,947

10,3933,331

Interest-bearing debt

987,677

1,057,295

927,454868,631877,629

1,133,481

1,176,464

1,226,274

1,309,951

1,465,584

1,492,438

Equity54,94357,42855,994

63,342

69,392

74,71784,905

109,840

123,297

132,786

141,755

Per share data: (Yen)243.82212.2391.90

193.91

249.33118.71

246.43264.75261.32272.20291.081,456.98

1,534.45

1,509.00

1,709.86

1,889.18

1,954.63

2,218.77

2,458.28

2,764.23

2,978.61

3,202.27

33.00

38.00

40.00

44.00

46.00

48.00

50.00

54.00

56.00

60.00

64.00

Return on equity (ROE)

17.7

14.2

6.0

12.0

13.9

6.2

11.8

11.4

10.0

9.5

9.4

Return on assets (ROA)

1.3

1.0

0.6

1.2

1.6

0.9

1.1

1.2

1.3

1.1

1.1

Equity ratio

4.7

4.7

5.1

6.1

6.7

5.3

5.9

7.2

7.6

7.4

7.8

Net income
EquityDividends (non-consolidated basis)

Key indicators: (%)*After subtraction of deferred profit on installment sales

Non-Financial Highlights (non-consolidated basis)
Number of employees (non-consolidated basis)
Male

Female600
500(Number of persons)

537
162

400

375

573
184

389

594
201

393

200
100

13

FY2014FY2015

IBJ Leasing Company, Limited(Fresh graduates hired in FY2016)

53

%

300

0

Female employment rate

FY2016

We aim to achieve the target rate of female employees to be hired set at 40%
in the “General Business Owner Action
Plans under the Act of Promotion of
Women’s Participation and Advancementin the Workplace” and focus our efforts indeveloping an environment where female
employees can participate more actively
in the workplace, as well as in proactively
hiring female employees.

Annual rate of paid leave taken

61%

No. of environmentally-friendly equipment transactions(Compared to FY2015)

106%

Average in financial and insurance industries: 49%*

Excluding projects arising from special factors

In order to promote work-life balanceof employees, we encourage employees to take paid leave aside from introducing premium Friday.

We are committed to contributing toenvironmental conservation by handling transactions for environmentallyfriendly equipment.

*Source: “General Survey on Working Conditions 2016” by the Ministry of Health, Labourand Welfare

Reuse rate*

No. of IR activities*

68%

We are contributing to the formation ofa recycling-oriented society by practicing the 3Rs (Reduce, Reuse and Recycle) through re-leasing and disposingof equipment for which the lease term
has expired.
*Reuse rate = Number of equipment sold ÷
Number of equipment for which the lease termor re-lease term has expired

51

times

We strive to have our corporate value
assessed properly by actively launching IR activities.
*Total number of individual meetings with institutional investors, financial results briefing
sessions, and briefing sessions for individual
investors.
IBJ Leasing Company, Limited

14

Business of the IBJ Leasing GroupOperational Highlights
February 2016

2016

January

February

March

Entry into the aircraft operating lease businessAs we position the aircraft-related business, whose market continues to expand, as a focus area, weestablished IBJ Air Leasing Limited, which is dedicated to providing aircraft operating leases, througha joint venture with a leading U.S. aircraft leasing company, Aircastle Limited. The IBJ Leasing Groupis expanding its business areas by launching a new aircraft owning business in addition to the existing financing-type business.

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Growth Strategy of the IBJ Leasing Group
President’s Commitment 16
Fifth Mid-term Management Plan (FY2017 – FY2019) 21
Review of Operations 31
Funding Status 33

April 2016

Establishment of Diversity Promotion Division

April

With the aim of developing the organization-wide initiative to promote the advancement of womenwhich started in fiscal 2014, and establishing a culture of diversity within the IBJ Leasing Group, weestablished the Diversity Promotion Division within our Personnel Department. The Diversity Promotion Division will work to create structures where each employee can maximize his/her capabilities
and work alongside others and build internal awareness focused on respecting differences in perspectives and values.

May
April 2016

Support for Areas Affected by the 2016 Kumamoto Earthquakes

June

We donated 10 million yen as our corporate contribution to support the earthquake victims and torestore the affected areas. Also, we sent monetary donations from the Group employees and watersupplies.

Aiming to make afurther leap, looking
to the next 50 years

July
May 2016

Acquisition of an auto leasing business from a Thai leasing company

August

An auto leasing business was acquired from a Thai leasing company, KTB Leasing Co., Ltd., for the
purpose of expanding our base of operations in Thailand. On top of our existing finance leasing, wehave started to deal in new services in our auto leasing business such as leasing with maintenanceservices.

President and CEO

September
September 2016

OctoberNovember

Setup of a credit line by a subsidiary in Indonesia together with the Japan
Bank for International Cooperation (JBIC) intending to support overseas
business development by medium-sized companies and SMEs.
A credit line was set up with JBIC to support Japanese companies to enter into overseas markets.
The funds provided by this financing scheme are used as capital for finance leasing for Indonesian-based subsidiaries of medium-sized Japanese companies and SMEs.

October 2016

DecemberHolding a lecture at the Promotion of Advancement of Women Seminar
A lecture about the Company’s activities in relation to promotion of advancement of women was heldat the Promotion of Advancement of Women Seminar hosted by the JMA Management Center Inc.

15

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

16

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

President’s Commitment“We aim to solve social issues and enhance
corporate value by ramping up new businessstrategies.”

P7-8

IBJ Leasing Company, Limited was established in 1969 as a general leasing company
under an initiative by The Industrial Bank of Japan, Ltd. (now Mizuho Bank, Ltd.), withcapital participation of major companies representing Japanese industries in responseto tremendous demand for capital investment by the industries.
The Company is not just a provider of means of procuring funds, but it has also
developed strength in offering solutions for issues related to balance sheets and business strategies through leasing, etc. for clients mainly in the manufacturing sector,
thereby contributing to the development of industries. We have also contributed tothe advancement of society through new initiatives ahead of our competition, someof which include the early involvement in vessel and rolling stock leasing as well as invendor finance program for construction machinery since the early days of the leasing
industry.
At present, the Group develops new solutions to leverage its business know-how
in relation to equipment, meeting a broad range of client needs and achieving continuous and steady profit growth, while expanding our business domains by way ofactively leveraging M&As and overseas development tailored to the clients’ expansion
to foreign markets.

With our vision under the Fourth Mid-term Management Plan for three years fromfiscal 2014 through fiscal 2016 as “a multimodal financial services group fully intune with needs and trends of the times, uniquely positioned to grow with clients,”
we executed our businesses to achieve the targets of “¥1,500.0 billion for balanceof operating assets” and “¥12.0 billion for net income attributable to owners of theparent.”By taking advantage of a high degree of freedom which is unique to a leasing
company, we employed three strategies: “expanding real estate business,” “entry into
aircraft operating lease business” and “initiatives for the increasingly sophisticated anddiversified financing” such as for syndicated loans, as new drivers for profit growth
IBJ Leasing Company, Limited

Operating Assets(Billions of yen)

1,700

1,581.0

1,600

Fifth Mid-term Management Plan, Looking to the Next
50 Years’ Growth

Summary of the Fourth Mid-term Management Plan

17

R esults of the Fourth Mid-termManagement Plan

1,608.7

1,500

History of the IBJ Leasing Group
Value Creation Process of
the IBJ Leasing Groupattuned to the needs of the time, and achieved a significant increase in those sales
records. As a result, in the final year of the plan, fiscal 2016, both targets were met
and we recorded ¥1,608.7 billion in operating assets and ¥12.4 billion in net income
attributable to owners of the parent, the highest in our history.

The Fifth Mid-term Management Plan aims to make a leap forward toward our 50th
anniversary coming in the final year of the plan, where we will take on challenges tocreate further value for all stakeholders.
We will proactively develop the plans of “cultivating core businesses by leveraging
knowledge concerning equipment” and “initiatives in ‘new focus areas’ in tune withchanges of social and industrial structures,” which are more profitable, by making useof business know-how and financial strengths gained from implementing the Fourth
Mid-term Management Plan, while we will further expand our businesses centered onleasing and installment sales for large- and mid-sized corporate clients.
As for the “core businesses,” by taking advantage of our strong relationship withlarge and mid-sized corporate clients, we will promote not only our specialty of financial solutions but also our “new business strategies” as our clients’ partner in the promotion of their businesses, while seeking to expand new revenue opportunities suchas fee income. We will also make efforts to broaden our business areas with a view tofurther expansion of real estate business, by leveraging our accumulated knowledge
and collaboration with our major partners.
With regard to “new focus areas,” as society is at a major turning point, we haveselected 4 areas: “medical and health care,” “environment and energy,” “global,” and“technology,” based on the theme of solving social issues such as changes in social
and industrial structures. We have a commitment to make our portfolio more sophisticated and take on challenges for “new focus areas” by taking proper risks backed by
our financial strengths.
By promoting these strategies, aiming to achieve the targets of “¥15.0 billion in net
income attributable to owners of the parent,” “10% ROE,” and “maintaining 20% ormore dividend payout ratio” by the final fiscal year of the plan, we also intend to further
increase values to be provided to our stakeholders, namely, “shareholders,” “clients,”“society” and “employees.”

1,432.3
1,400

1,300

0

FY2014FY2015FY2016

Fourth Mid-term Management Plan

Net Income Attributable to
Owners of the Parent (Billions of yen)
13

12.4
12

11

11.6
11.1

10

9

0

FY2014FY2015FY2016

Fourth Mid-term Management Plan

Fifth Mid-term Management
Plan
P21-30FY2019 Targets (on a consolidated basis)
Net income attributable toowners of the parent¥15.0

BillionDividend payout ratio

ROE

10

%

Maintaining

20%

or moreIBJ Leasing Company, Limited

18

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

President’s Commitment

CSR Management for Supporting Growth
To live up to the trust and expectations of all its stakeholders, the IBJ Leasing Group
views corporate social responsibility (CSR) as the basis of business management
and aims to realize a sustainable society and improve corporate value. To this end,
we believe that it is important to build a relationship of trust with stakeholders while
paying close attention to their views and opinions. To protect the rights and interestsof stakeholders, corporate governance must function effectively and transparency inmanagement must be increased. Therefore, we will continue to strive for strengthening the internal management structures, i.e. managing the Board of Directors in an
effective manner, ensuring strict compliance across the board, developing risk management systems.
To achieve sustainable corporate growth, we also recognize that it is critical toretain personnel with a diverse array of perspectives and values based on a variety ofexperiences and skills, while providing all employees with a meaningful and engaging
workplace. As such, we will seek side-by-side improvement of “operational productivity” and “diversity” driven by system investments and reforms in operational processes
and develop an environment where every employee can perform at his/her full potential by working on the enhancement of a work-life balance.

CSR ofthe IBJ Leasing GroupP35-36

Shareholder Returns
Policy on Shareholder Returns

Annual Dividend per Share
80

60

56

60

64

40

20

0

19

FY2014FY2015

IBJ Leasing Company, Limited

FY2016(Yen)

The Company’s basic policy on shareholder returns is to pay dividends in accordancewith business performance in an attempt to improve profitability. At the same time, asa characteristic of a financial services industry, the amount of shareholders’ equity is
one of the important factors to increasing corporate value. Therefore, we intend to pay
dividends while maintaining a balance between shareholder returns and shareholders’equity. We plan to continue paying steady dividends.
Retained earnings are effectively utilized as funds for future growth in an attempt tofurther expand our business base and increase ROE over the medium to long term.
In line with this policy, in fiscal 2016 we continued to increase shareholder returns
by raising the dividend ¥4, to ¥64 per share.
In the Fifth Mid-term Management Plan, we set a target of dividend payout ratio to“maintain 20% or more.” We set this target based on the belief that it is also essential to keep sufficient retained earnings so that we can engage in sound risk-taking inorder to improve profitability and increase corporate value. Under this policy, we expect to raise the dividend per share an additional ¥2 in fiscal 2017, to ¥66 per share,amounting to the 16th consecutive year of dividend increases.

Mission and Desired Future Image of
the IBJ Leasing GroupIn the Fifth Mid-term Management Plan, upholding the vision of “Value-creating company tackling challenges together with clients,” the Group believes that we have unlimited opportunities to contribute to society by meeting the needs of clients througha myriad of services, while solving social problems and making social contributions,based on value creation backed by promotion of partnerships with clients. In order toachieve further growth and social contribution, it is important for us to create a prosperous future, as well as contribute to society and bring about sustainable growth by
way of value co-creation with clients, changing ourselves in tune with changes of thetimes.
The IBJ Leasing Group will continue to strive for the realization of a sustainable society and enhancement of corporate value by offering financial services that incorporate the clients’ perspectives.

Value Creation Together
with Clients
P9-12“We aim to be a Group which contributes
to society through offering financial
services that incorporate the clients’perspectives and take on challenges forvalue creation for all stakeholders.”

IBJ Leasing Company, Limited

20

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Further Leap

Fifth Mid-term Management Plan (FY2017 – FY2019)
To make a further leap toward the upcoming 50th anniversary of the Company’s foundation in December 2019,
we started to implement the Fifth Mid-term Management Plan. We will secure new revenue drivers by entering
into business domains transcending the framework of financing, and will challenge ourselves to achieve further value creation while also fulfilling our corporate social responsibility.

50th

Anniversary ofFoundation2019

Summary of the Fourth Mid-termManagement Plan (from fiscal 2014 to fiscal 2016)
By taking advantage of a high degree of freedom which is unique to a leasing
company, the IBJ Leasing Group saw steady growth supported by revenue
drivers that reflected changes in society (real estate business, aircraft leasing
business and specialized financing).

Overview of the Fifth Mid-termManagement Plan (from fiscal 2017 to fiscal 2019)
VisionThe targets for the final fiscal year, ¥1,500 billion in operating assets and ¥12.0
billion in net income attributable to owners of the parent, were both achieved,
thus leading to the 4th consecutive year of record breaking profit.

Net Income Attributable to
Owners of the Parent

Value-creating company tacklingchallenges together with clients

Operating Assets

FY2016 Results

FY2016 Results¥12.4 Billion¥1,608.7 Billion

TargetTarget¥12.0 Billion¥1,500.0 Billion

2017

Flow for realization of the vision
Thoroughclient-oriented
approachPromote business
together with clientsas their partner

Tackle new businessdomains transcending
the framework offinancing

Fulfill corporatesocial responsibility

Value brought to stakeholders

Clients

Shareholders

Society

Employees

Providing flexible and awide variety of services tomeet client needs

Sustainable increases ofcorporate value andshareholder returns

Solving social issues andpracticing corporatesocial responsibility
through our businesses

Creation of environmentand systems where all
employees are provided
with a meaningful andengaging workplace.

FY 2019 Targets (on a consolidated basis)
Net income attributable toowners of the parent

2014
21

IBJ Leasing Company, Limited¥15.0

BillionROE

Dividend payout ratio

10

Maintaining

%

20

%

or moreFor Business Strategies and Reinforcement of Management Base
IBJ Leasing Company, Limited

22

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Business Strategies and Reinforcement of Management Base (Overview)Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Continuing Focus Area

Business Strategies
Contract Execution Volume
by Customer Size

Basic Policy

Focus Area

We will make further progress in our existing businesses, centered on leasing and installment sales, for large
and mid-sized corporate clients. We will actively promote more profitable businesses by leveraging our business know-how and financial strengths acquired from implementing the previous Mid-term Management
Plan.

Cultivating Core Businesses

We will thoroughly delve into the continuing focus areas (core businesses) by using our knowledge and experience about equipment, while embarking on marketing emphasizing high added value and differentiation tofurther increase profitability.
We will make portfolio management more sophisticated with proper risk taking reflecting our financial
strengths and have a commitment to new focus areas corresponding to changes in social and industrial
structure.

1. Core Business (continuing focus areas)

SMEs

15.6%

The IBJ Leasing Group has established strong relationships with our clients, especially with large and mid-sized companies. Coupled with theexisting proposal-centered financial solutions, we will seek to expand
new revenue opportunities such as fee income, driving “new businessstrategies” where we serve as our clients’ partner in the promotion of
their businesses. As new business strategies for the aforementioned
initiatives, we will develop activities to “support clients’ commercial distribution,” “jointly promote service business with clients” and “promote
JVs with clients.”

Mid-sized
company

12.1%

FY2016
Contract
Execution
VolumeLargecompany

72.3%

Large companies: c apital stock equal to or over
¥1 billion
Medium-sized companies: c apital stock between¥100 million and ¥1 billion
SMEs: capital stock equal to or less than ¥100 million(Excluding contracts to SPCs, etc.)

In addition to leasing and installment sales for capital investment, we will develop more profitable businesses conducive to business expansion of clients, by using our strong relationship with large and mid-sized corporate clients.
Besides, with the view of expanding real estate business, we are willing to take on challenges for new business do-

New Business Strategies

Support clients’ commercial distribution

mains with store leasing and bridge projects as stepping stones.

2. New Focus Areas
In order to continue growth with our clients by responding to their needs amid major changes in social and industrial structures, we have chosen the following four areas as our new focus areas: “medical and healthcare,”“environment and energy,” “global,” and “technology.” We will carry out management strategies with accurate un-

Jointly promote service business with clients

derstanding of market trends in each area.
Response to Changes in Social Structure

Response to aging with low birthrate in Japan

Medical and healthcare

Promote JVs with clients
Response to global issues, such as population increase andglobal warming

Environment and energy

Support for companies’ overseas development and capture
opportunities associated with overseas economic growth

GlobalResponse to Changes in Industrial Structure

Respond to businesses leading Industry 4.0

Technology

Reinforcement of Management Base
For the purpose of supporting growth in continuing focus areas and new focus areas, we will focus on creating anorganizational structure that allows us to take on new challenges and transformation. At the same time, we will further reinforce our management base so that we are able to properly manage risk-taking and returns.

Strengthening risk and return management: risk management, portfolio management andintegrated operation of financial ALM
Resource strategy: Promotion of diversity and improvement of operational productivity
23

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

24

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

New Focus Area
Focus Area

Focus Area

Further Expand Real Estate Business
Leveraging accumulated knowledge and cooperation with prominent
partners, we will ramp up efforts in fields where there will be an increasein social needs, such as health care, child care, and hotels. Furthermore, we will work on making investments in overseas real estate anddevelopment projects in cooperation with domestic companies. We
plan to increase our operating assets in this field from around ¥220 billion at the end of fiscal 2016 to ¥350 billion at the end of fiscal 2019.

Balance at theend of FY2019¥350
Balance at theend of FY2016¥220 billion

New

Medical and Healthcare

Contract execution
volume in FY2019¥55

billion

As we expand the scope from conventional “hospital” sales centering
on financing for medical equipment to “community-based integrated
care system” and “data health and health management,” we are pushing forward with our efforts in providing service business in collaboration
with healthcare-related partners and medical equipment manufacturers
as well as in cultivating real estate business in collaboration with realestate developers. We intend to increase our contract execution volume
in this field from around ¥30 billion in fiscal 2016 to ¥55 billion in fiscal
2019.

billionContract
execution volume
in FY2016¥30 billion

Investment

	Data health and health management
field

Overseas real estate, development projects, etc.

Leasing

Expand the scope of the business by addressing fields
where social needs are increasing, such as hotels,
healthcare and childcare

Bridge scheme

Building leasing in collaboration with major store developers

25

	Community-based integrated
care system field	Public health insurance + Public
long-term care insurance business
Hospital field	Public health insurance
business	Medical equipment, vehicles,etc.

	Fee-based home for the elderly,
housing for the elderly withsupportive services, rental
assistive devices, etc.

	Business for services not coveredby public insurances	Nursing robots, use of IoT etc.,
health service, etc.

Service-based business

Real estate businessContinuing
Focus

IBJ Leasing Company, Limited

Continue emphasis on bridge schemes targeting REITs byleveraging strong relations with prominent partners

Equipment finance

IBJ Leasing Company, Limited

26

Growth Strategy of the IBJ Leasing Group

Focus Area

Business of the IBJ Leasing Group

Focus Area

New

Environment and Energy

Contract execution
volume in FY2019

We will strive to extensively capture demand associated with clients’investment in environment and energy saving in collaborations, etc. with
manufacturers and engineering companies. Along with further promoting
subsidy business which we excel at and enhancing energy saving consulting functions, we will drive our efforts forward to develop new business models such as ESCO* and project financing for power business.
We plan to increase our contract execution volume in this field fromaround ¥18 billion in fiscal 2016 to ¥50 billion in fiscal 2019.

¥50

billionGrowth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

New

Global (Aircraft/Overseas Subsidiaries)
As for aircraft, we will consider starting business related to engines, parts and other aircraft peripherals while working on the operating leasing business as the core business. By also promoting conventional aircraft-backed collateralized loans, we plan to see
a two-fold increase in operating assets from ¥56 billion at the end of fiscal 2016 to ¥110 billion at the end of fiscal 2019.
With regard to overseas subsidiaries, we will aim to develop full-scale businesses with non-Japanese companies. Besides
active marketing to reach prominent local companies, we will expand business dealings with them by partnering with Japanesecompanies in vendor financing. We will endeavor to achieve an increase in operating assets in this field from around ¥66 billion at
the end of fiscal 2016 to ¥120 billion at the end of fiscal 2019, while also considering M&As and asset purchases.

Contract
execution volume
in FY2016¥18 billion*ESCO business: business in which the cost required for refurbishment for energy saving iscovered by the reduction in utility cost.

AircraftApproaches and fields

Further promoting subsidy
business

Setting up of JVs as operating companies

Capturing demand in overseas markets

Balance at the endof FY2016

Balance at the endof FY2019

Balance at the endof FY2016

Balance at the endof FY2019

Responding to ESCO and energy service contracts

Capturing demand from municipalities¥56 billion¥110 billion¥66 billion¥120 billion

Investing in renewable energy funds andbridge financing

Consider starting “new business”

Using project financing
etc.

Air conditioners and boilers
LED lighting
Distribution of CO2 emission rights

Engine and parts leasing and
PDP financing,* etc.

Expand the “aircraft operating lease business”

Merchandise
Natural refrigerant equipment

Overseas Subsidiaries

Co-generation
Energy-saving machine tools
Batteries

Power-related businesses

Photovoltaic power generation Power transmission and distribution

Aircraft-backed collateralized loans

Non-organic growth through
M&As
Expanding business transactions with
non-Japanese companies through collaboration
with Japanese companies in vendor financing

Strengthen sales to prominent
local companies
Primarily with clients of our JVs and of Japanese companies

Wind power generation
Small-scale hydroelectric/biomass power generation

Geothermal power generationetc.

Fee business Amount in FY2016 ¥8.8 billion
Japanese Operating Lease (JOL)

Amount in FY2019 ¥12.0 billion

Transactions with Japanese companies*PDP (Pre-Delivery Payment) financing: financing meeting the needs for partial advance payment of aircraft manufacturing cost

27

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

28

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Reinforcement of Management Base
Focus Area

Strengthening of Risk-Return Management

New

Technology

Under the plan, we will aim to make a leap toward the future by ramping up efforts to advance new businesses, while continuing
the expansion of core businesses. To this end, in addition to “resource strategy” to be described later, a more sophisticated portfolio management which enables proper risk-taking is essential. We will reinforce a structure for appropriate risk-return management by integrated operation of “risk management,” “portfolio management” and “financial ALM.”

While business models of companies are expected to change due to the emergence of Industry 4.0, We will capture business
opportunities from an early stage while responding to the technological progress of IoT, AI, etc. Along with providing solutions
which quickly reflect change in the industrial structure, that is, the shift from “sales to services,” we will promote business development through collaboration with pioneering companies in each field.

Integrated operation of business portfolio and financial ALM
for appropriate risk-return management
Risk management

Change in the industrial structure

Business opportunities

Solutions

Sensing stage

Increase in investment insensing devices

IoT

Investment in communications
equipment/systems

Sales financing for devices andAI systems

Big Data

Investment in data centers in linewith the increasing needsfor data storage and utilization

Services in collaboration with
IoT suppliers, etc.

AI

Investment in data analytics systems
Investment in development ofmachine learning functions

Discovery of potential needsby business matching

Stage for offering services

Financial solution needs ofservice providers

Portfolio management

Financial ALM

Financing solutions attuned tobusiness models

Real estate leasing for data
centers, etc.

Resource Strategy
Recognizing that advancement of even more diverse human resources in the workplace is essential to expand our businessunder the plan, we position promotion of diversity as a key management strategy. We also optimize administrative processes
and IT systems throughout the Group to improve operational productivity.
Through this “promotion of diversity” and “improvement of operational productivity,” we aim to realize a more flexible androbust organization capable of tackling new challenges and transformation.

Promotion of diversity

Improvement of operational productivity

Advancement of diverse human resources in workplaces

Double the performance xpansion of systems to support a balanceE
between work and child-rearing/nursing care trengthening of corporate system planning
S
functionIntroduction of a flexible employment system(employment type) nification of administrative processes andU
IT systems throughout the Group

Expansion of education and training systems

 ophisticated management data analysis
S
environment

Realize a more flexible and robust organization capable of tacklingnew challenges and transformation
29

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited30

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Review of Operations
In fiscal 2016, the Japanese economy showed a gradual recovery trend partially owing to modest growth of theworld economy, and capital investment remained steady against the backdrop of an improvement in corporate
earnings and other factors. In the leasing industry, leasing transaction volumes remained almost at the same level
as the previous fiscal year.
Under these circumstances, the IBJ Leasing Group continued to make efforts to successfully implement the
Fourth Mid-term Management Plan for the three years from fiscal 2014 through fiscal 2016. In line with our visionof being “a multimodal financial services group fully in tune with the needs and trends of the times, uniquely positioned to grow with clients” as expressed in the plan, we conducted our businesses to achieve the final-yeartargets of “¥1,500 billion in operating assets” and of “¥12.0 billion in net income attributable to owners of the parent.” By consistently promoting the basic strategies and achieving increases in assets and profitability, we haveachieved both of the targets, where the operating assets in fiscal 2016 amounted to ¥1,608.7 billion and the net
income attributable to owners of the parent amounted to ¥12.4 billion.

Leasing and Installment Sales
In terms of results by equipment type, for “industrial
and factory equipment,” although we continued to capture
large-scale capital investment projects by large companies,
contract execution volume was down. In “information andcommunication equipment,” contract execution volume wasdown as there was a lot less activity in large-scale capital
investment by major telecommunications companies which
occurred during the previous fiscal year. In “transportationequipment,” performance grew due to execution of aircraft
operating leases. “Medical equipment” contracts decreased
due to sale of a consolidated subsidiary, Toshiba Medical
Finance Co., Ltd. in April 2016. “Real estate” projects
expanded significantly due to increase of land and building
leases for stores, etc. as well as bridge projects for REIT
offered by major business operators.

Contract Execution Volume

Operating Assets(Billions of yen)(Billions of yen)

500

1,200

400

300

200

456.4
24.8
66.7
35.8
30.3
54.7
42.9
73.1

100

0

31

117.9

FY2014

IBJ Leasing Company, Limited

10.0

36.3
30.2
39.1
47.1
93.8

110.3

FY2015

1,105.8
1,032.6

1,088.1

1,000

10.2
28.5
35.9

11.2

800

13.3
600

61.6
78.9

400

98.8

200

FY2016companies. For both “specialized financing” and “aircraft
financing,” due to our strict risk-return management in executing projects, although contract execution volume wasdown, the balance was up. In terms of “real estate financing,” we continued to curtail activities involving non-recourse
loans, while increasing bridge schemes targeting REITs. As aresult, both execution volume and balance grew significantly.
In “vessel financing,” we concentrated on acquiring excellent
assets while monitoring risks carefully.

Contract Execution Volume

Operating Assets
Factoring Specialized financing Vessel financing
Aircraft financing Real estate financing(Billions of yen)(Billions of yen)

700

600

599.8
47.4

600
500

486.8

400

43.8
389.0

21.5
16.6
15.9

82.3
437.2

616.4
77.2
17.7
15.2

70.5

520.6
500

12.8
10.2

71.7

300

31.3
79.7

200

100.2

100

116.8

300
200
100
0

FY2014FY2015FY20160

FY2014

104.9

84.0
33.8
63.0

37.1
50.3
192.3

150.8

143.7

135.9

FY2015FY2016The IBJ Leasing Group supports corporate global expansion

non-Japanese companies such as full-fledged entry into

through the provision of numerous financial services, contin-

auto leasing business in Thailand and increasing leasing touously focusing on Asia. We currently operate business sites

medical institutions in China.

in China, Thailand, Indonesia and the Philippines, and we

In the aircraft-related business, one of our focus areas,

have established an Asia Desk in Thailand, through which wewe executed operating leases for four aircrafts through ourare making efforts to expand sales in Singapore, Vietnam,

aircraft leasing subsidiary, a joint venture with a leading U.S.

Myanmar and other ASEAN countries where we have noaircraft leasing company, Aircastle Limited. We expandedbusiness sites.

our business areas by embarking on the business of owning

In fiscal 2016, we enhanced our business infrastructure
FY2014

399.7

400

445.6

by steadily capturing financing needs for capital investment
0

475.2

GlobalIndustrial and factory equipment Information and communication equipment
Transportation equipment Construction equipment Medical equipment
Commercial and service equipment Office equipment Real Estate Other
475.7
25.9
121.6

In fiscal 2016, the Group’s contract execution volume in thefinancial sector increased ¥16.6 billion (2.8%) year on yearto ¥616.4 billion. Operating assets rose ¥45.4 billion (9.5%)
year on year to ¥520.6 billion.
By segment, in “factoring,” we continued to pursue securitization of receivables and other factoring businesses. In“specialized financing,” we executed syndicated loans in collaboration with major financial institutions and hybrid financing, etc. In “aircraft financing,” we provided loans secured byaircrafts to prominent overseas airlines and operating lease

Factoring Specialized financing Vessel financing
Aircraft financing Real estate financing

In leasing and installment sales, in fiscal 2016, contract
execution volume amounted to ¥475.7 billion, up ¥10.2
billion (2.2%) year on year, and operating assets amounted
to ¥1,0 8 8.1 billion, down ¥1 7.7 billion (1.6%) year on year.
Capital investment projects by our clients, mainly large andmid-sized companies, increased as a result of enhancing ourcomprehensive proposal-based sales efforts which target clients who were seeking solutions or having potential needs.
We continued to enhance our targeted approach toward
distribution, retailing and other businesses based on internal
demand where the need for funds was expected. We also
pushed store equipment projects which make use of environment and energy-related subsidies and collaborated withmajor store developers to expand real estate leasing for landand buildings for stores.

465.5
24.0
74.6

Financing

FY2015FY2016

aircraft in addition to traditional financing targeting aircraft
and engines.

by Japanese companies and by reinforcing initiatives toward
IBJ Leasing Company, Limited

32

Growth Strategy of the IBJ Leasing Group

Business of the IBJ Leasing Group

Funding Policies

Funding in Fiscal 2016

The IBJ Leasing Group offers wide-ranging financial services
to meet customers’ needs through funding that ensures stability and curtails costs. The Group also raises funds basedon its annual cash plans and in a flexible manner that responds to fluctuations in the financial environment based on
its asset liability management (ALM) policies.
When procuring funds, we use a combination of borrowings from financial institutions and raising funds in themarket, thereby achieving a balance between short- andlong-term funding. We borrow funds from more than 100
financial institutions, including city banks and regional banks,
as well as insurance companies, and we maintain stabletransactions with these institutions through relationshipmanagement.
The Company obtains funding from financial markets
through the issuance of commercial paper and corporate
bonds and the securitization of lease receivables. In addition
to ourselves, IBJL-TOSHIBA Leasing also issues commercial
paper. IBJ Leasing has an issue limit of ¥400.0 billion, and
IBJL-TOSHIBA Leasing of ¥150.0 billion.
With regard to ALM operations, the Company’s Portfolio
Management·ALM Committee consisting of members who
are officers in charge of relevant departments holds monthly
meetings to analyze, among other things, financing meansthat are most suitable for the portfolio composition, current
interest rate trends and their future outlook. We also perform
detailed analyses of the impact of interest rate volatilities on
the present value of assets and liabilities, using indicatorssuch as delta and value at risk (VaR). We have formulated
ALM policies based on these analyses, and work to ensuresmooth funding and cost control by flexibly implementing
those policies in day-to-day operations.

Looking at yen interest trends in fiscal 2016, although there
were temporary rises in long-term interest rates against the
backdrop of positive trend toward economic recovery, interest rates remained low amid the continued negative interest
policy of the Bank of Japan.
In this environment, the IBJ Leasing Group procured
funds in a flexible manner by borrowing funds from financial
institutions and in the market through issuing commercial
paper and corporate bonds. We also conducted groupwide
ALM management to lower funding costs. As a result of
these moves, in line with the expansion of operating assets,
the Group’s interest-bearing debt increased ¥26.8 billion
compared with the previous year, to ¥1,492.4 billion. Funding costs, on the other hand, decreased ¥700 million year on
year, and the funding costs ratio continued falling, to 0.36%.

Interest-bearing Debt

Funding Costs/Funding Costs Ratio
Short-term debt

Securitized bonds and receivables

Funding costs

CSR of the IBJ Leasing Group 35

Recruitment and Development of Human Resources 43

Corporate Governance and Internal Control 37

Promotion of Work-Life Balance and Diversity 45

List of Directors, Auditors and Executive Officers 39

Communication with Shareholders and Investors 46

Message from Outside Directors 40

Environmental and Social Activities 47

Compliance and Risk Management 41   Funding costs ratio(Billions of yen)

1,600

(%)

8

1,465.6
456.3

1.00

1,492.4
433.8

1,310.0
422.2

6.3

1,200

6.4

6

114.9
97.5

Consolidated Financial Data and Corporate Information

Commercial paper(Billions of yen)800

CSR Management for Supporting Growth

CSR Management for Supporting GrowthFunding Status

Long-term borrowings

Growth Strategy of the IBJ Leasing Group

364.4

5.7

0.75

135.1
312.7
4

336.5

0.46

0.50

0.42
0.36

610.8
530.0
400

0

33

453.8

FY2014

IBJ Leasing Company, Limited

0.25

2

FY2015FY20160

FY2014FY2015FY20160.00

IBJ Leasing Company, Limited

34

CSR Management for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

CSR of the IBJ Leasing GroupWe will achieve sustainablegrowth together with society,Corporate social responsibility (CSR) is the basis of theGroup’s business activities. We aim to realize a sustainable society and increase corporate value by fulfilling

every stakeholder.

gaining trust from various stakeholders including “clients,”

Shin Kuranaka

society by offering valued financial services which leadmanagement of equipment, insurance, and overseas busi-

to future prosperity. Under the policy, we have a commit-

nesses, are closely connected with economy, society andment to major stakeholders in terms of the management

environment in various aspects, and on the other hand, dif-

policy, and we will continue to build trust by realizing thatferent kinds of changes have recently been taking place incommitment. Furthermore, we consider it necessary

Japan as well, following the theme of “sustainability.” These

to improve transparency of management, making cor-days, companies must proactively respond to new develop-

porate governance effectively function. We have madements such as environmental regulations getting stricter year

tremendous efforts to strengthen internal management

after year, corporate governance reforms, and work style

structures, including effective management of the board

reforms, which are required by society. For this purpose, itmeeting, strict compliance, and developing risk management

is essential to amass capabilities to adjust ourselves to any

structures.

changes, by enhancing non-financial assets, namely, corporate governance and compliance.

We also see human resources as precious management
assets. While we naturally respect our employees as humanThus far, we have continued business activities with cor-beings and ensure that their basic human rights are protect-porate social responsibility (CSR) as the basis in operatinged, we have strived to develop an environment where thebusinesses. We are compelled to fulfill not only economic our

personality of each employee is leveraged and capabilities

responsibilities such as fair pursuit of interest and security

can be demonstrated to the fullest, by promoting efforts inof employment as well as legal responsibility to comply withdiversity. Additionally, we are working on enhancing work-life

laws and regulations, but we have the ethical responsibili-balance to drive forward organizational efforts for creating aties of not acting against social rules and respecting humanworking environment where each employee feels job satis-rights. We do believe that fulfilling all those corporate respon-faction and, at the same time, can work with comfort andsibilities for every stakeholder leads to the Group’s sustain-

efficiency.

able growth.

social responsibilities through our business activities and“shareholders,” “society” and “employees.”

Businesses of the IBJ Leasing Group, including financing,

ety, we aspire to foster a stronger corporate structure, by

stakeholders, namely the “clients,” “shareholders,” “soci-listening to various opinions from every stakeholder andety” and “employees,” say and build trust relationships with

continually making improvements. Going forward, the Group

each of them. The IBJ Leasing Group upholds the corporate

will continue working toward the realization of a sustainable

policy that we aim to be a Group which contributes tosociety and enhancement of corporate value.

Shareholders

Society

Value Creation Process of the IBJ Leasing Group
P7-8

Employees

Stakeholders

Responsibilities to be fulfilled by the Group

Clients

Contribute to the development of clients’ business activities by providing
optimal solutions tailored to changes inthe times and environment.

Shareholders

Enhance corporate governance and ensure transparency of corporate activities
through fair, timely and appropriate information disclosure.

Society

In order to continue to be a company needed by soci-To this end, it is critical for us to listen to what our major

IBJ Leasing Company, Limited

Clients

highly valuing dialogue with

Senior Managing Director,
Chief CSR Officer

35

CSR Activities

Employees

Promote social contribution activities
and environmental initiatives based on
ISO14001 in an organizational and continuous manner and contribute to therealization of sustainable society throughbusiness.
Respect the human rights of each employee, secure and cultivate humanresources with diverse perspectives andvalues and conduct organizational management to create a vibrant environment
in which employees feel satisfied with
their jobs.

Reference Pages

Value creation together with clients

P9-12

Corporate governanceP37-40ComplianceP41-42

Information disclosure policy

P46

 peration of environmentalOmanagement system

P47

Social contribution activities

P47

 ecruitment and development ofRhuman resources

P43-44Work-life balance

P45

Promotion of diversity

P45

IBJ Leasing Company, Limited

36

CSR Management for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Corporate Governance and Internal Control
Internal Audit Department

Corporate Governance
Basic Approach
To enhance corporate value consistently over the long term, the
IBJ Leasing Group recognizes that it is essential to ensure effective corporate governance, meaning a framework governingbusiness activities centered on a closely regulated relationshipbetween shareholders and management, and that the basic objective for corporate governance is to put in place an environment
to ensure this.

Outline of Corporate Governance Structure (As of June 30, 2017)
Form of organization
Company with auditors
Number of directors
9, of whom 3 are outside directors
Number of auditors
4, all of whom are outside auditors
Term of office of directors
2 years
Executive officer system
AdoptedNumber of meetings held 19 times
Board ofDirectors
Attendance rate of directors 100%
meetings inAttendance rate of100%
FY2016
corporate auditors
Audit Committee Number of meetings held 14 times
meetings inAttendance rate of100%
FY2016
corporate auditors
Structure of compensation forWith regard to the compensation for
directors
directors excluding outside directors, itis performance-based corresponding totheir positions and responsibilities. As
for the compensation for outside directors, it is fixed monthly corresponding totheir responsibilities.
Independent auditors
Deloitte Touche Tohmatsu LLC

The Board of Directors and Executive Officers
The Company’s Board of Directors currently has nine members, ofwhom three are independent outside directors. This arrangement
helps ensure the appropriateness of the supervisory function anddecision making by the board.

The Company has adopted an executive officer system to ensure rapid and efficient execution of business in accordance with
Board of Directors decisions, and delegates authority for businessexecution to the chief executive officer and executive officers. The
Company determines the executive officer with approval authority
for each business operation, clearly defines the authority of theexecutive officers, and has established an advisory body to support the decisions of executive officers with approval authority andensure mutual supervision among them.

Auditors and Audit Committee
The Company has adopted a “company with auditors” system
consisting of four auditors, all of whom are outside statutory auditors. The Audit Committee audits directors’ decision-making
activities at Board of Directors meetings and other occasions, aswell as the Company’s entire business operations, to ensure that
directors fulfill their legal duties, such as duty of prudence, fiduciary duties and ensuring that business operations are conducted
properly.
To ensure the effectiveness of audits, corporate auditors attend
important meetings, including Board of Directors meetings andExecutive Committee meetings, and also have regular meetings
with representative directors to exchange views on important
audit-related issues. Corporate auditors also cooperate closelywith the Audit Department, an internal audit department, toensure efficiency, and regularly receive reports from this department
regarding the plans and results of audits. Furthermore, the Audit
Committee holds regular meetings with independent auditors tomaintain close cooperation with them, listen to their reports on
audit activities, and exchange information to raise the efficiency
and quality of auditing.
Shigeaki Katayama, Outside Standing Auditor, and Takehito
Miyaguchi, also Outside Standing Auditor, have both engaged
in financial operations for many years and possess appropriate
financial and accounting knowledge.

The Company’s Audit Department is responsible for conducting
internal audits. To ensure the independence of this function, thedepartment reports directly to the president. The Audit Department conducts internal audits on the entire Company organization as well as consolidated subsidiaries to ensure efficiency
and appropriate conduct in business operations and compliancemeasures, and to give specific advice, recommendations andsuggestions regarding the improvement of business operations.
The Audit Department coordinates corporate auditors andindependent auditors as necessary. Audit results are periodicallyreported to the Board of Directors, which determines, based onthese results, whether improvements to systems, organizations
and regulations are necessary for the avoidance of various risks.

Compensation for directors
The maximum total amount of compensation to be paid to all directors has been set based on the resolution of the General Meeting of Shareholders. With regard to the compensation for directors
excluding outside directors, it is performance-based corresponding to their positions and responsibilities (combination of fixedmonthly compensation and performance-based compensationreflecting performance assessment in consideration of their contribution to the Company’s medium to long-term performance).
As for the compensation for outside directors, it is fixed monthly

Title

Name

Takao
KomineOutsidedirector

Corporate Governance Structure

Masatoshi
Kiriyama

General Meeting of Shareholders (Shareholders)

Audit

Supervision

Control Bodies
Chief Executive Officer (President)

Credit Committee
Business Committee

Chief Risk Management Officer (CRO)
Executive Officers

Portfolio Management/ALM Committee

Chief Information Officer (CIO)
Compliance
Division

New Product Committee
IT System/Investment Committee

Audit Department

Operating Units

Administrative Units

Legal Division

Chief Compliance
Officer (CCO)

Significant concurrent positions outside
the Company (As of June 30, 2017)

Compensation paid

Directors excluding outside directors*

8¥238 million

Corporate auditors excluding outside auditors

1¥ 22 million

Outside officers

5¥ 57 million* This includes 3 directors who resigned on or prior to March 31, 2017.

Internal Control
The IBJ Leasing Group regards it as a key management responsibility to maintain and ensure the appropriate operationof a system that ensures proper conduct of business operations, and to work toward strengthening internal control.
Under the Companies Act, the Group is required to strengthen
its internal control system, and to this end, IBJ Leasing andeight domestic Group companies have formulated basic policies to ensure proper and effective operation. Furthermore,regarding internal control on financial reporting pursuant to
the Financial Instruments and Exchange Act, the Group maintains and implements a structure to ensure reliability of its
financial reports.

Takehito
Miyaguchi
OutsideauditorReasons for appointment

Board of Directors meetings:
19 out of 19 meetings

We expect that his abundant experience and broad
insight in economic, industrial and commercial policy
would be reflected in the management of the Company.

(Assumed office in June 2017)—

We expect that his abundant experience and broad
insight acquired through executing business operations
Advisor, Mitsubishi Corporation
at a general trading enterprise, including corporate adManaging Director, Toyo Bunko
Outside Director, Senko Group Holdings Co., Ltd. ministration, overseas businesses and public relations
would be reflected in the management of the Company.

—

We expect that he would make use of his abundant
experience and broad insight in corporate management in carrying out the Company’s audit operations.

—

We expect that his abundant experience and broad
insight acquired through corporate management at
financial institutions, including executing business
operations overseas would be reflected in carrying out
the Company’s audit operations.

(Full-time)

President and Representative Director,
We expect that he would make use of his abundant
Kouji
Corporate Pension Business Service Co., Ltd. experience and broad insight in corporate manageShimogama Outside Director, Mito Securities Co., Ltd.
ment in carrying out the Company’s audit operations.

ShinichiTakahashi

Attendance at meetingsof Board of Directors /Audit Committee

Trustee, Research Advisor, Japan Center for Economic Research We expect that he would make use of his abundant
Chairman, Institute for Research on Household Economics experience and broad insight in financial policy andProfessor, Department of Regional Development, Taisho University specialized academic fields.

(Full-time)

Cooperation

Audit

Advisory Committees
Executive Committee

Shigeaki
Katayama

Accounting
Audit Independent Auditors(Audit Firm)

Audit Committee(Outside Auditors (all))Number of recipients

Concurrent Positions Outside the Company, Reasons for Appointment and Other Relevant Matters Concerning Outside Directors and Outside Auditors

YasuyukiSugiuraBoard of Directors(Directors / Outside Directors)

corresponding to their responsibilities. The amount of compensation for each director is determined by the method adopted by the
resolution of the Board of Directors.

Attorney, Nishimura & Asahi

We expect that he would make use of his abundant
experience and high expertise as an attorney in carrying out the Company’s audit operations, and also that
he would contribute to raising the level of corporate
governance of the Company.

——(Assumed office in June 2017)

Board of Directors meetings:
19 out of 19 meetings
Audit Committee meetings:
14 out 14 meetings—(Assumed office in June 2017)

Board of Directors meetings:
19 out of 19 meetings
Audit Committee meetings:
14 out 14 meetings—(Assumed office in June 2017)

Cooperation
Legal Advisors

37

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

38

CSR Management for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

List of Directors, Auditors and Executive Officers
Board of Directors

President and CEO

Deputy President

Senior Managing Director

Hiroshi Motoyama

Katsuji Nagatsu

Shin Kuranaka

April 2004

April 2002

March 2006 General Manager, Career Development Division of Mizuho
Corporate Bank, Ltd.
May 2007 General Manager, Human Resources Department of Mizuho
Financial Group, Inc.
April 2009 Executive Officer, General Manager, Human Resources
Department of Mizuho Financial Group, Inc.
April 2010 Executive Managing Director of Mizuho Bank, Ltd.
April 2013 Senior Managing Executive Officer of the Company
June 2013 Senior Managing Director, Senior Managing Executive Officer of
the Company (present position)

April 2007
April 2009
June 2011
June 2016

Executive Officer, General Manager of IT & Systems Planning
Division of Mizuho Corporate Bank, Ltd.
Managing Executive Officer, Head of Strategic Planning Group,
Head of IT, Systems & Operations Group of Mizuho Financial
Group, Inc.
Director of Mizuho Financial Group, Inc. (up to June 2009)
Deputy President & Representative Director, Chief Auditor ofMizuho Corporate Bank, Ltd.
President & Representative Director of Mizuho Securities Co.,Ltd.
President and CEO of the Company (present position)

April 2004
April 2007
April 2008
April 2012
April 2013
April 2015
June 2017

General Manager, Toyama Corporate Banking Division of Mizuho
Corporate Bank, Ltd.
General Manager, Nihonbashi Corporate Banking Division ofMizuho Corporate Bank, Ltd.
Executive Officer, General Manager of Corporate Banking
Division No. 14 of Mizuho Corporate Bank, Ltd.
Managing Executive Officer of Mizuho Bank, Ltd.
Managing Executive Officer of the Company
Senior Managing Executive Officer of the Company
Deputy President Executive Officer of the Company
Deputy President, Deputy President Executive Officer of theCompany (present position)

Managing Director

Managing Director

Shinichiro Maruyama

Masaya Hamamoto

Akira Ueda

April 2010

April 2011

May 2001

June 2012
June 2013
April 2015
June 2015
April 2017

General Manager, Corporate Banking Division No. 14 of Mizuho
Corporate Bank, Ltd.
Executive Officer, General Manager of the Corporate Business
Unit (Large Corporations)Executive Officer, General Manager of Planning Department of the Company
Director, Executive Officer, General Manager of Planning
Department of the Company
Managing Director, Managing Executive Officer, General
Manager of Corporate Planning Department of the Company
Managing Director, Managing Executive Officer, General
Manager of Business Co-ordination Department of the Company
Managing Director, Managing Executive Officer of the Company(present position)

July 2013
April 2014
April 2015
June 2015
April 2016
April 2017

General Manager, Osaka Corporate Banking Division No.1 ofMizuho Corporate Bank, Ltd.
General Manager, Corporate Banking Division No. 5 of Mizuho
Bank, Ltd.
Executive Officer, General Manager of Corporate Banking
Division No. 5 of Mizuho Bank, Ltd.
Executive Officer of the Company
Director, Executive Officer, General Manager of Corporate
Planning Department of the Company
Managing Director, Managing Executive Officer, General
Manager of Corporate Planning Department of the Company
Managing Director, Managing Executive Officer of the Company(present position)

Deputy General Manager, Business Co-ordination Departmentof the Company
December 2001 General Manager, Corporate Business Department (Tokyo
Regional No. 2) of the Company
March 2005 General Manager of Personnel Department of the Company
April 2006 Executive Officer, General Manager of Personnel Department of
the Company
April 2012 Managing Executive Officer, General Manager of Personnel
Department of the Company
June 2016 Managing Director, Managing Executive Officer of the Company(present position)

Outside Director

Outside Director

Outside Director

Takao Komine

Masatoshi Kiriyama

Yasuyuki Sugiura

July 1969
June 1998
July 1999

April 1972
June 1989

April 1978 Joined Mitsubishi Corporation
March 1998 General Manager, Washington Office of Mitsubishi International Corporation
April 2004 General Manager, Coordination Department of Mitsubishi Corporation
April 2006 Chief Financial Officer and Senior Vice President for Corporate
Department, New York Office of Mitsubishi International Corporation
April 2008 General Manager, Corporate Communications Department of
Mitsubishi Corporation
April 2009 Senior Vice President, General Manager of Communications
Dept., Corporate Planning Department of Mitsubishi Corporation
April 2012 President & CEO, New York Office of Mitsubishi International Corporation
April 2013 Executive Vice President of Mitsubishi Corporation
President & CEO, New York Office of Mitsubishi Corporation (Americas)
April 2016 Advisor of Mitsubishi Corporation (present position)
June 2016 Director, Toyo Bunko
June 2017 Managing Director, Toyo Bunko (present position)
Director of the Company (part-time) (present position)

Joined the Economic Planning Agency
Director General, Prices Bureau of Economic Planning Agency
Director General, Research Bureau of Economic Planning
AgencyJanuary 2001 Director General, National and Regional Planning Bureau of
Ministry of Land, Infrastructure and Transport
April 2003 Professor, Graduate School of Social Science, Hosei University
June 2009 Outside Director (part-time) of the Company (present position)
April 2010 Research Advisor, Japan Center for Economic Research
May 2012 Trustee, Research Advisor, Japan Center for Economic Research(present position)
December 2014 Chairman, The Institute for Research on Household Economics(present position)
April 2017 Professor, Department of Regional Development, Taisho
University (present position)
IBJ Leasing Company, Limited

Joined the Ministry of International Trade and Industry
Head of the Commerce, Industry and Labor Department ofMiyazaki Prefecture
June 1992 Director, Consumer Goods Industrial Bureau of the Ministry ofInternational Trade and Industry
June 2000 Head of 4th Department of Legislative Bureau of the House ofCouncillors
December 2005 Head of Research Office of the Committee on Audit, the Houseof Councillors
August 2009 Auditor, Energy Conservation Center, Japan
April 2011 Professor, Department of Law, Teikyo University
June 2015 Senior Managing Director, Japan Chemical Exporters andImporters Association
June 2017 Director of the Company (part-time) (present position)

Outside Standing Auditor

Outside Standing Auditor

Outside Auditor

Outside Auditor

Shigeaki Katayama

Takehito Miyaguchi

Kouji Shimogama

Shinichi Takahashi

February 2003 General Manager, Milan Branch of Mizuho
Corporate Bank, Ltd.
March 2004 General Manager, Market Business Operations
Division of Mizuho Corporate Bank, Ltd.
January 2005 General Manager, Operations Planning
Division of Mizuho Corporate Bank, Ltd.
April 2007 General Manager, IT & Systems Planning
Division of Mizuho Corporate Bank, Ltd.
April 2008 Executive Officer, General Manager of IT& Systems Planning Division of Mizuho
Corporate Bank, Ltd.
April 2011 Managing Executive Officer, Head of IT
Department of Mizuho Securities Co., Ltd.
June 2014 Senior Managing Director of Nippon
Securities Technology Co., Ltd.
June 2015 Standing Auditor of the Company (present
position)

April 2005

April 1979

April 1984

General Manager, Beijing Branch ofMizuho Corporate Bank, Ltd.
June 2007 Executive Officer of Mizuho Corporate
Bank, Ltd.
Deputy Chairman & President of Mizuho
Corporate Bank (China), Ltd.
June 2012 Senior General Manager of Mizuho
Corporate Bank, Ltd.
Chairman of Mizuho Corporate Bank
(China), Ltd.
October 2015 Adviser of Mizuho Research Institute Ltd.
Adviser of Mizuho Bank (China), Ltd.
June 2017 Standing Auditor of the Company (present
position)

April 2007
April 2011
April 2012
April 2014
June 2014
April 2015
June 2017

Joined The Dai-ichi Mutual Life Insurance
Company
Executive Officer, Head of Investment
Division of The Dai-ichi Mutual Life
Insurance Company
Managing Executive Officer, Head ofInvestment Division of The Dai-ichi Life
Insurance Company, Limited
Managing Director of DIAM Co., Ltd.
Deputy President and Representative Directorof Corporate Pension Business Service Co., Ltd.
Auditor of the Company (present position)
President and Representative Director of
Corporate Pension Business Service Co.,
Ltd. (present position)
Outside Director of Mito Securities Co.,
Ltd. (present position)

Joined the Dai-ichi Tokyo Bar Association
Nishimura & Asahi (present position)
September 1990 Joined Simpson Thacher & Bartlett LLP(New York office)June 1991 Joined New York State Bar Association
September 1996 Statutory Auditor, Lloyd’s Japan Inc.
April 2001 Liquidator, Daihyaku Mutual Life Insurance
Company
June 2017 Auditor of the Company (present position)

Corporate Executive Officers
Managing
Executive
Officers

Managing Director

April 2012

39

Corporate Auditors

Noriyuki Yukawa
Katsuhiko Yoshida
Hironobu Yamaguchi
Hidehiko Kamata
Kunimoto Wakasugi
Tetsuya Norimatsu

Executive
Officers

Toshiyuki Kamimura
Kozo Shino
Hiroshi Yoshida
Yoshiyasu Mizutomi
Katsuzumi Orihashi
Chihiro Tokiyasu

Yutaka Sasaki
Toshikazu Ishizaka
Hiromichi Koyata
Noboru Otaka
Asao Tsumuji
Yasushi Hara

Message from Outside Director
After years of work as a governmental official (at the Economic Planning Agency, current
Cabinet Office), I started teaching at a university, and I still do. Over the course of my career,I, as an economist, have always observed and discussed issues and policies related to Japanese economy as a whole. I have never worked in the private sector, nor am I an expert on
financial issues. However, I believe that my participation as outside director mattes a lot, all
the more because of this background.
In my opinion, outside directors are called for to convey issues and social movements thatare difficult to be noticed from inside the company and to enable the company to develop
and implement management strategies in response to changing times by checking thecompany’s management with an outside set of eyes, so to speak. When discussing regional development which I am currently working on, terms such as “outsiders, the youth andtricksters” often come up. This means that in order to vitalize a regional community, it is necessary to accept talent from outside, create an environment where young people can play
an active role, and sometimes to have those who start something outrageous. I think thatoutside directors are expected to perform functions as “outsiders”.
Based on this belief, I hope that I can help IBJ Leasing to achieve further developmentwith knowledge and experience I’ve accumulated.

Takao Komine

Professor, Department of Regional Development, Taisho University

IBJ Leasing Company, Limited

40

CSR Management for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Compliance and Risk Management
Compliance
The IBJ Leasing Group regards strict compliance as essential tothe creation of a stable management base. On this understanding,the Group complies with laws and regulations and practices honest and fair business activities in accordance with the norms ofsociety. To ensure the trust and confidence of society, the Groupis firmly committed to maintaining strict compliance.

Compliance Structure
The Company has formulated Compliance Regulations to ensurecompliance, appointed a chief compliance officer (CCO), and established the Compliance Division. Furthermore, each department
general manager functions as the department-level head of compliance, and is tasked with supervising and enforcing its practice.
In addition, the Audit Department examines and assesses thecurrent state of compliance in each department. The Company
has created a system in which necessary measures are taken
based on reports from the Audit Department. As internal reporting
systems, the Company has set up a compliance hotline structure
and maintains internal and external reporting lines via attorneys toenable all of its employees to report potential violations directly to
the Compliance Division and/or the corporate auditors. The Company has also formulated Rules on the Protection of Whistleblowers to protect reporters.

Compliance Awareness Activities
The Group has formulated The Corporate Code of Conduct of IBJ
Leasing Group, which sets out concrete action guidelines for directors and employees, as well as published a Compliance Manual, a guidebook describing key rules and regulations that mustbe followed to ensure full compliance within all business operations. The Compliance Manual is also available on the corporate
intranet so that directors and employees can refer to it easily inthe course of their daily work.
Furthermore, every year the Group arranges a Compliance
Program, a set of concrete hands-on activities that raises awareness of compliance issues through education and training for
general managers, as well as stratified training and/or e-learning.

As financial services become more diversified and sophisticated,the various risks that arise from business operations grow increasingly complex. In this environment, the IBJ Leasing Group recognizes that precise monitoring and analysis as well as proper
control and management of these risks is exceedingly important for
maintaining or increasing the soundness of business operations,and is strengthening and streamlining its risk management system
accordingly.
For the various risks involved in the business operations of the
IBJ Leasing Group (e.g., credit risk,1 market risk,2 operational risk,
system risk, legal risk, etc.), each operational department sets up
its own management methods, systems and procedures according to the characteristics of the risks it faces, and carries out its
own internal risk management.
Recently, we have quantified the risks of fluctuations in value(excluding marketable products), such as the estimated residual
value in the operating leases and the inherent risk involved in realestate-related financing (the risk of fluctuations in value of the realestate at the time of expiry of the agreement), and incorporated
them into our risk management framework.
In addition, to realize the goal of becoming a multiple financial
services company and expand our specialized financing services,
we are aware that further enhancement of our risk management
system, for example, monitoring and handling the various risks

41

IBJ Leasing Company, Limited

inherent in transactions, etc., will be more important than ever.
Thus we are strengthening our risk management. For example,
when we start handling new products and developing new businesses, we thoroughly review the identification and evaluation of
inherent risks made by the New Product Committee, whose members include executives in charge of administrative units.
Keywords Explained
1 Credit risk is the risk of loss associated with the inability to collect lease
payments, installment payments, or loan principal and interest as contracted, due to factors such as bankruptcy or deterioration of financial
position of the debtor.
2 Market risk is the risk of incurring loss as a result of a decline or disappearance in, or total loss of, the value of the Company’s financial assets
and liabilities attendant on market price fl uctuations (interest rates, stock
prices, foreign exchange rates, etc.).

Meanwhile, our approach to credit portfolio management isbased on the use of statistical methods to calculate the potential
for losses related to credit risk. To that end, each month we calculate the expected loss (EL, i.e., credit cost), which is the averageloss anticipated over the next year, and the unexpected losses (UL,
i.e., credit risk amount), which is the maximum amount of any additional loss in excess of the EL.
As for expected losses, our stance is to cover an expected loss
from income gained through credit transactions, and we use thisamount as a reference value when estimating the cost of credit forour income plan as well as when arranging deals. Concerning unexpected losses, if an unexpected loss is incurred, our stance is tocover it from our equity capital, which we monitor in relation to thepreallocated risk capital, and report to the Board of Directors on amonthly basis.

Market Risk Management Structure

Credit Risk Management Structure

Risk Management
Risk Management Activities

In other words, we define our risk tolerance as the amount of risk
capital, calculated by subtracting equity capital and part of retained income as reserves reported for the maintenance of the Company fromshareholders’ equity. By allocating this risk capital to credit risk, market
risk and other risks, we control losses incurred from any unforeseen
situation within manageable limits, thereby maintaining our financial
stability.
Key aspects, such as the amount of risk capital to be allocatedfor each financial risk, are determined as a part of the fiscal year’s
management plan at the Board of Directors meetings, and specificoperating policies are determined through resolutions by their advisory
bodies, and reflected in business operations. Within such a framework,
the Risk Management Department, which is independent from thebusiness and treasury departments, monitors operations periodically tomeasure risks. The results of this monitoring are reported to the Boardof Directors on a monthly basis.

The IBJ Leasing Group aims to minimize credit costs by optimizing
its credit management structure at all stages of each transaction,from entrance to exit, regarding credit risk of our clients.
Firstly, at the initial stage of deal execution under our “client
credit rating system,” we grant a credit rating for each debtor,
conduct a strict credit screening for each debtor when reviewing
a deal, and, to avoid excessive concentrations of credit, manage
credit limit by using our “credit monitoring systems by ratings.”
Next, during the contract period, we apply asset self-assessment rules, which are as stringent as those employed by megabanks, in accordance with the Financial Services Agency’s“Financial Inspection Manual,” and also implement write-offs andprovide reserves based on the assessment results. We diversify
risks by offsetting risks with risk assets, and we continuously improve our asset quality to control the risks of whole assets.
Also, we periodically follow up on non-performing assets andmake debt collection of assets for which we have already provided
reserves to facilitate final disposal of nonperforming assets.

The IBJ Leasing Group establishes basic policies based on market environments, financial strength, etc. at the Board of Directors
meeting each year to properly control risks in line with financial
operations. In addition, ALM operating policies based on the basic
policies, various credit lines for transactions, and loss limits, etc.,
are determined on a monthly basis at the meetings of the Portfolio
Management/ALM Committee, whose members include executives
in charge of relevant departments. Through these measures, the IBJ
Leasing Group strives to maintain stable earnings by controlling risk.
Also, in terms of organizational structure, in order to provide effective checks and balances, we have established clearly defined dividing lines between departments handling market operations (“front
office”) and departments providing back-office administration (“backoffice”), and an independent risk management department dedicated to risk management has been established.
Furthermore, risk-related analyses are reported monthly at meetings of the Portfolio Management/ALM Committee as well as thoseof the Board of Directors.

Risk Management Framework Centered on Allocation of Risk Capital
Directors / Outside Directors

Allocation of risk capital

Decides on important matters
Reporting, proposal ofcountermeasures

Capitalsurplus

Portfolio Management/ALM Committee

Integrated Risk Management Structure
The IBJ Leasing Group places an extremely high priority on the integrated monitoring and control of total financial risk, including credit
risk and market risk, which consists of interest rate risk and the risk offluctuations in share prices or exchange rates. Thus we incorporate
an integrated risk management structure in accordance with that of
the mega-banks into our management policies in order to improve thesoundness and stability of our business. Specifically, we quantify various risk factors and employ integrated and centralized control systems
to ensure that our total risk exposure remains below the required percentage of our shareholders’ equity (i.e., our financial strength).

Operation and execution to meet the basic policies
Reporting, proposal ofcountermeasures

A reserve
needed tomaintain the
Company as
an ongoing
concernCorecapitalReporting, proposal ofcountermeasures

Risk measurement
Expected loss (EL)
Unexpected loss (UL)
Delta
Value at risk (VaR)

Reserve for new
business activities

Monitoring
Monitoring line
ALM-related delta plan
Loss-cut level, etc.

Retainedearnings

Market risk
Credit risk
Other risks offluctuation in value

Provisionallyallocated
capital
Allocated
capitalNote: The colored box on the right side of the chart above is not intended to denote the relative size of risk allocated to each risk category.

IBJ Leasing Company, Limited

42

CSR Management for Supporting GrowthBusiness of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Recruitment and Development of Human Resources
Hiring Fresh Graduates, Mid-career Workers and Persons with Disabilities
We believe that future of the IBJ Leasing Group depends on
people with different personalities who perform at their full potential,
think together, act together and develop together.

15

1.5

10

1.0

5

0.5

0

FY2014FY2015FY2016FY20170.0Management training
Selective management training
Manager training
Human assessment training

Administrative job leader training

Administrative job training

Mid-level manager training

Secondment

Administrative training
Follow-up training

Follow-up training

New employee training (Introduction, OJT, operational)

New employee training (Introduction, OJT, operational)Internship Program
Chief Assistant System

Career Enhancement Conversion System
This is a system for changing employment type from general positions to career-track positions. This system is intended to help
employees to demonstrate their potential capabilities to the fullest
extent and to form their own new career path independently, andat the same time to revitalize their workplace by increasing employees’ motivation to work.

Acceptance of Trainees from Overseas

43

IBJ Leasing Company, Limited

Financial analysis lecture

The Company has a “Chief Assistant” position which plays a leading role among general staff.

VOICE

Compulsory
courseCareer Enhancement System

The Company has implemented an Internship Program in order togive students a better understanding of the leasing industry.
In this Program, students will have opportunities to learn,among other things, operations of leasing companies, their social
contributions, and characteristics of the Company, and to havefirst-hand experience of proposal-based sales through sales roleplaying and group workshops among students.
Furthermore, at a round-table talk with our young staff, students will deepen their understanding of the Company by listening
to first-hand impressions of our young staff based on their actual
experiences.

Since 1988, the Company has accepted one foreign student asa trainee every year. Under this system, a foreign student can experience a series of operations for a period of one year at various
departments in the Company centering around the International
Department, by working as an assistant for sales projects, preparing contract-related documents and other materials or performing
other duties.
Although nationalities of trainees vary, this program always
offers a great opportunity to both trainees and employees of
the Company to understand each other’s culture and customs
through active communication during and after work.

Evaluator training

Language training

17

Other

e-Learning

2.03%

External management seminar
2.0

Course for self-development

20

Correspondence
Courses

Operational skill training

General positions

Career design training

22

2.07%

Stratified training
Career-track positions

Optional training

18

(%)
2.5

External lecture to acquire specialized knowledge

2.16%

Employment rate of persons with disabilities

Sales skill improvement training

20

Fresh graduates employedoptional training and correspondence courses to support employees to improve themselves and to encourage them to acquire
qualifications.

Training Program Diagram

IBJ Leasing’s Past record(Persons)25

The IBJ Leasing Group has established detailed training programs such as operational skill training programs including stratified training based on each employee’s development level andInstructor training

Based on its policy to conduct fair and impartial pre-employment
screening, the IBJ Leasing Group promotes recruitment of diverse
talent including fresh graduates, as well as mid-career workers withvarious background and persons with disabilities.

Human Resources Development Programs

International Department

Ann Listerud
It has been almost a year since I first participated in the Internship Program of IBJ Leasing. With the support of people around me
including my superiors, I enjoyed learning know-how on financing
as well as Japanese business culture. By participating in a wide
range of training sessions in the Business Department, I also had
an opportunity to experience a variety of industries such as construction equipment and aircraft, and this was a great opportunity
for me to deepen my understanding of management strategies ofJapanese companies. My Japanese language skills have also improved since I started this program, and this was a most rewarding
year for me. I would like to use my experience and knowledge I
earned at IBJ Leasing after returning to my own country.

Conversion to Direct Employment

The Company encourages temporary staff to be employed directly by the Company in view of their performance at the relevant department and their desires, with the expectation that they will playa more active role.

Open Recruitment System
Under this system, employees may voluntarily apply for a job for a
specific operation or project.
This system encourages motivated employees to take on achallenge and provides a place to play an active role.

Job Rotation
The IBJ Leasing Group has adopted a job rotation system toallow employees to experience various job duties to foster
human resources not only with expertise but also with diverse
work experiences.
Job rotation aims to make employees discover their hidden
talent and capabilities, through experiencing various job duties
and utilize knowledge and skills they earned through such experiences when carrying out their new duties.
When reassigning or allocating employees, the IBL Leasing
Group also takes into consideration employees’ desires expressed through self-assessment, in addition to the request for
staff allocation from each department.

VOICE

Automobile Transport Equipment Department

Eimi Inadate
I was transferred from the Department where
my primary duty was to formulate rules for
the Company’s administrative work, to theBusiness Department. I currently work asa sales assistant. At my current Department, I have many opportunities to have direct contact with our clients, and now I know theimportance of daily communication with clients and sales staff. I try
to respond to our clients’ requests smoothly and carry out administrative procedures correctly by using knowledge on administrative
rules, etc., I gained at my previous Department.
I will continue to absorb various things and provide my support
for sales activities.

IBJ Leasing Company, Limited

44

CSR Management for Supporting GrowthBusiness of the IBJ Leasing Group

Promotion of Work-Life Balance and Diversity

Growth Strategy of the IBJ Leasing GroupWe are certified as a Company Providing Active
TOPICS
Support for Raising the Next Generation of Children.
In February 2 0 1 3, the Company was certified for the second time after
2007 by Director General of Tokyo Labor Bureau as a Company Providing Active Support for Raising the Next Generation of Children under the
Act on Advancement of Measures to Support Raising Next-Generationof Children (nick name, Kurumin) and acquired the
Next-Generation Certification Logo.

Employees who took maternity leave and/or child care leave
FY2014FY2015FY201611

11

14

Next-Generation
Certification Logo(nick name: Kurumin)

Disclosure Policy

Also, if any employee faces the situation where he/she needs
to care for their family member, our nursing care leave system
will allow the employee to take a nursing care leave up to threemonths per eligible family member.

The Company discloses information to the public on a consolidated basis of the IBJ Leasing Group to protect rights and interests of shareholders and other stake holders. Timely, properand fare disclosure of information will ensure transparency of theFlow of company information

VOICE

Verification

Credit Risk Management Department
Board of Directors and otherdecision-making bodies

Er iko N a ka nis hi
Seeing my superiors actively
work, maintaining a balance
between work and child-rearing
after giving birth, I decided to use
this system. I was a little worried
if I could balance work and child-rearing, but with heartfelt supportof people around me, I was able to return to work smoothly. WhileI was on leave, I had a wonderful time with my child, and I am very
grateful for that.

Department responsible for handling information(Information Handling Manager)∙ Collection of information concerning the
IBJ Leasing Group∙ Grasping and managing information in an
integrated fashion∙ Judgment on whether or not informationneeds to be disclosed∙ Execution of disclosure operations

Decisions madeFinancial results

Each department

Company information of
the IBJ Leasing Group

Subsidiaries

P ha sePhase

environment where all employees, both female and male employees, can work comfortably and play a more active role.

theme, and presents proposals to the management as to the measures to be taken, not only to promote the advancement of women,
but to realize diversified ways of working by all employees.
Phase

Phase

From October 2014 to May 2015

From June 2015 to December 2015

From October 2016 to February 2017

From October 2017 to March 2018

Reforms in female employees’ working styles

Career support for women in career-track positions“Reforms in working styles” from the management’s perspective

Launch of “SAKURA People”

Expansion of work domains for female
members of the general staff
Proposal to establish a system for careerconversion, etc.

Establishment of program to support career design
Proposal for invigoration of job rotation, etc.

Establishment of Diversity Promotion Division

From April 1, 2016 to present

Initiatives
45

Establishment of system for career conversions, offeringtablet loan to employees who take maternity leave or childcare leave, etc.

Based on the belief that people are human resources the Diversity
Promotion Division is working to create cooperative structuresand build internal awareness and maximizing each employee’s
capabilities.
TOPICS Lecture held at Women’s Advancement Promotion Seminar

Annual Dividend per Share

(yen)

54

56

60

Training for management staff, career design training forfemale employees in career-track positions, child care andnursing care seminar for employees

Seminar hosted by the JMA
Management Center Inc.

Once

Individual meeting with institutional investors, etc.

48 times

The Company has a shareholders benefit plan to show ourappreciation to shareholders.
The reference date of this plan is
March 31 each year.

If shares are held for two consecutive years or longer*
A ¥3,000 book card is given out toeach shareholder who holds 1 unit
(100 shares) or more shares.

20

0

Company design
pre-paid book card

Shareholders Special Benefit Plan

40

At the lecture

Briefing session for individual investors

64

promoting advancement ofAdvancement of Women

Twice

80

50

women at the Promotion of

Financial results briefing session

Shareholders Benefit Plan

The basic policy of the Company on dividends is to realize dividends
based on the business performance of the Company while improving its earning capacity in due consideration of balance between
return of profits to shareholders and securing shareholders’ equity.

60

the Company’s activities inRecord of IR Activity in FY2016

Shareholder Return Policy

Kuranaka gave a lecture on

P ro vi si o n o f t r a in in g a n d s e m in a r s

IBJ Leasing Company, Limited

The basic stance of the Company regarding IR activities is tocontinuously disclose information in a fair, timely and appropriatemanner and to enhance communication with shareholders andinvestors, to enable their further understanding about the Company and fair evaluation of the Company’s corporate value. The
Company holds briefing sessions to explain financial results toinstitutional investors and analysts and individual meetings withdomestic and overseas investors on a regular basis, as well as
annual company information sessions for individual investors.

Dividend Policy

In October 2016, Director

Va ri o us m e a s u re s

Securities
Exchange, etc.

Reporting to the Board of Directors

Proposal for streamlining of operations Appointment of employees in management
Career formation support, etc.
position in each department and office
as a leader of “reform in working style”

Diversity Promotion Division
In April 2016, the Diversity Promotion Division was establishedto systematically promote advancement of diversified humanresources based on know-how and achievement from the Project Team to Promote the Advancement of Women, SAKURA.

Information
disclosure

Active IR Activities

SAKURA, a Project Team to Promote the Advancement of Women
In October 2014, we established a cross-departmental team, the
SAKURA project team, to promote the advancement of women.
This team conducts activities at each phase under a different

Company’s corporate activities. A system to disclose information
accurately and promptly in a positive manner is also in place andproperly implemented.

Legal department

Initiatives to Promote Diversity
The IBJ Leasing Group supports female employees for their skill
improvement and career development, and encourages theiradvancement, making every effort to create systems and work

Consolidated Financial Data and Corporate Information

Communication with Shareholders and Investors

Systems to Support Childbirth, Child-rearing and Nursing CareThe IBJ Leasing Group has adopted various support systems
including those for child birth and child-rearing to support employees for achieving work-life balance.
Our child care leave system allows an employee to take a leave
up to two years, and an employee who returns to work will be able
to work shorter hours until their child enters elementary school.

CSR Management for Supporting Growth

FY2012FY2013

FY2014FY2015FY2016

A ¥4,000 book card is given out toeach shareholder who holds 1 unit
(100 shares) or more shares.

* Shareholders who hold 1 unit (100 shares) or more shares for two consecutive years or longer are those who are recorded in the shareholder registry on
the record date (March 31) by the same shareholder number as that on therecord date of the previous fiscal year.
IBJ Leasing Company, Limited46

CSR Management for Supporting GrowthBusiness of the IBJ Leasing GroupThe IBJ Leasing Group ensures that the environmental management system (PDCA cycle) is operated properly. To this end,
the Chief CSR Officer oversees the Environmental Management
Officer who is responsible for the management of environmental
activities as a whole, and the Department responsible for environmental management of the Company and the Operating Officer
of Environmental Management of each Group company promote
activities to achieve the environmental goal.

Consolidated Financial Data and Corporate Information

Management’s Discussion and Analysis 49

Implementation of Environmental Management System

Organizational Structure of Environmental Management System

CSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Environmental and Social Activities

The Company and eight Group companies have been awarded
a certification for the international standard for environment, ISO
14001 Certification.

Growth Strategy of the IBJ Leasing Group

Business Risks and Other Risks 52
Basic Environmental Policy
We strictly comply with environmental laws and regulations andcontinuously improve our environmental conservation activities withour corporate social responsibility in mind at all times.
We strive to balance environmental conservation and economic
development by developing and providing goods and services that
contribute to environmental conservation.
We properly manage equipment for which lease terms have expired,promote recycle and reuse, and thereby contribute to building a recycling-oriented society.
We make every effort to understand environmental impact eachbusiness activity will make, and to reduce environmental load andprevent pollution.

Consolidated Financial Statements 53
Corporate Information 85
Stock Information 87

Main Environmental Purposes and Targets
Environmental target -Annual target Results

Business

Increase dealings of environmentally-friendly equipment

8% increase from FY2015 results(excluding results due to special factors)

98% achieved

Realize new products and services that contribute toenvironmental conservation

Promote environmentally-friendly business group-wide

Proposal materials prepared
Study sessions, etc. held

Promote 3R by purchasing used equipment

8% increase from FY2015 results

79% achieved

Sustainable contribution to building a recycling-oriented society

Achieve reuse rate* of 60% or more

Reuse rate 68% achieved

Offices

FY2016 target

Expired and Used Equipment

Environmental Purposes - Medium-term target -Ensure disposal in compliance with laws and regulations and Regularly investigate industrial waste disposal businessselect law-abiding recycling business operators
operators used group-wide

Implemented group-wide

Reduce the amount of paper used

Maintain average monthly level(sheets used per person) of FY2013-FY2015

5% reduction from target

Reduce consumption of electric power

Maintain average monthly level of FY2013-FY2015

5% reduction from target* Reuse rate means a rate calculated by: Number of equipment sold ÷ Number of equipment for which lease term or re-lease term has expired

Social Contribution Activities
Support for Gold Ribbon Campaign
The Gold Ribbon Campaign is organized and promoted by anaccredited NPO, Gold Ribbon Network, to support children withcancer. Pediatric cancer is the primary cause of death due todisease in children in Japan. However, as the number of pediatriccancer patients is far less than adult cancer patients, researchand development of treatment and medication for pediatric cancer has been slow. The IBJ Leasing Group has installed vending
machines in its Head Office, by which a portion of sales proceeds
will be donated to support the Gold Ribbon campaign.

Participation in Eco Cap Campaign
The Eco Cap Campaign is a movement to deliver vaccines forcommunicable diseases to children in developing countries, using
proceeds from sales of PET bottle caps that will produce CO2 if
incinerated as general household waste. Those caps are separated and collected for recycling, and sold to recycling business47

IBJ Leasing Company, Limited

operators. With 800 caps (Eco Caps), vaccines for one child can bepurchased, and generation of around 6kg of CO2 can be prevented.
Since October 2010, the IBJ Leasing Group has put eco cap
collection boxes at various locations in the Head Office building
and each branch and has been actively promoting collection of
Eco Caps.
FY (accumulated) Number of caps collected (estimate) Converted to number of vaccines Converted to CO2
Vaccines for approximately 2,426.71kg
2010-2016
320,300 caps
384.65 children

Donation of PCs after Expiration of Lease Term
The Company donates, through the Japan Leasing Association,
PCs after expiration of lease term to educational institutions in
the areas affected by the Great East Japan Earthquake, NPOs
engaged in educational support, regional development and social
welfare activities, as well as special needs schools in various areas.
FY (accumulated)

Number of PCs donated2011-2016

93
IBJ Leasing Company, Limited48Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Management’s Discussion and Analysis
1. Overview of Business Performance
In fiscal 2016, the Japanese economy mostly showed gradual
recovery partially owing to modest growth of the world economy,
and capital investment remained steady against the backdropof improvement in corporate earnings and other factors. In theleasing industry, leasing transaction volumes remained almost at
the same level as the previous fiscal year. In the financial market,
amid the continued negative interest policy of the Bank of Japan,
although there were temporary rises in long-term interest rates
against the backdrop of positive trend toward economic recovery,
interest rates remained low.
As for profit and loss, contract execution volume increased,so have revenues, due to sales of large-scale lease equipment
for which lease terms have expired. The Group strived to raise
profitability by the acquisition of highly profitable projects infocus fields, achieving ¥39,206 million in gross profit, a 2.0% increase from the previous year. Ordinary income increased 1.2%
year on year to ¥18,789 million, by absorbing increases in credit
cost. Net income attributable to owners of the parent rose 6.9%
year on year to ¥12,414 million, a new high for the fourth year ina row, achieving the Fourth Mid-term Management Plan target of¥12,000 million.

In the aircraft-related business, an area of focus, we executed
operating lease for four aircrafts through our aircraft leasing subsidiary, a joint venture with a leading U.S. aircraft leasing company,
Aircastle Limited. We expanded our business areas by embarking
on the business of owning aircraft in addition to traditional financing targeting aircraft and engines.
As for the overseas business, in Asia where we have businesssites, we enhanced our business infrastructure by steadily capturing financing needs for capital investment by Japanese companies
and by reinforcing initiatives toward non-Japanese companies
such as full-fledged entry into automobile lease business in Thailand and increasing leasing to medical institutions in China.
Consequently, operating assets in leasing and installment sales
amounted to ¥1,088,139 million, down 1.6%, compared with theprevious year. Operating assets in the financing sector increased
9.5% year on year to ¥520,579 million. The total of operating assets amounted to ¥1,608,718 million, up 1.8%, compared withthe previous year. We met our operating asset target of ¥1,500.0
billion for the Fourth Mid-term Management Plan.
Balance of Operating Assets(Leasing and Installment Sales Sector)
1,200.0

2. Amount of Contracts Executed andOperating Assets

44.3

43.0

FY2012FY201344.8

44.9

FY2015FY2016

41.6

40.0
30.0
20.0
10.0
0

FY2014Gross Profit before Funding Costs and Write-offs by Segment

1,088.1(Millions of yen)
FY2013

FY2014FY2015FY2016

31,43930,27330,98831,062

Installment sales

2,799

2,654

2,446

2,531

2,102

Loans

6,921

6,644

7,096

7,429

7,124

600.0

Other

1,571

2,786

2,285

4,378

5,116

400.0

Elimination or corporate

(540)

(516)

(491)

(513)

(501)

44,27543,00841,60944,81444,904

1,032.6

800.0

Total

200.0
0

FY2012FY2013

FY2014FY2015

Balance of Operating Assets(Financing Sector)

FY2016(Billions of yen)

600.0

Funding costs
Funding costs decreased ¥664 million to ¥5,697 million year on
year. Interest-bearing debt rose in line with the increase of operating assets, but we promoted the raising of funds with lower interest rate to reduce funding costs.

520.6
475.2
400.0

368.9

400.3

Selling, general and administrative expenses
Personnel and facilities costs rose ¥165 million to ¥19,635 million
year on year.

399.7

200.0

0

FY2012FY2013

FY2014FY2015FY2016(Millions of yen)
FY2012FY2013

FY2014FY2015FY2016

Lease

307,601

305,738

372,265

391,567

421,393

Installment sales

64,836

79,116

84,11573,93854,267Loans

411,299445,807462,716534,324

513,782

Operational investment securities

20,514

7,006

24,03565,522

102,583

Total

804,252

837,669

943,134

1,065,352

1,092,027

Other income and expenses
Net other income decreased ¥169 million during the year to¥827 million.
Of this amount, other income declined ¥207 million year on
year to ¥1,229 million. This was due to equity in earnings ofassociated companies, which decreased ¥145 million.
Other expenses dropped ¥37 million to ¥402 million year on
year.

Extraordinary income and loss
As for extraordinary income and loss, extraordinary income was¥266 million and extraordinary loss was ¥201 million, recording
net extraordinary income of ¥65 million.
This extraordinary income was due mainly to the recording ofgain on sales of shares of a consolidated subsidiary, and extraordinary loss was due mainly to the recording of loss on devaluationof investment securities.
Funding Costs(Billions of yen)

8.0

6.6

6.4

6.3

6.4

FY2014FY2015

5.7

6.0

4.0

2.0

0

FY2012FY2013

FY2016(Millions of yen)
FY2012FY2013

FY2014FY2015FY2016

Lease

780,234

809,499878,693

958,353

950,318

Installment sales

113,939

133,267

153,910

147,455

137,820Loans

320,143

359,530

361,067

377,933

348,085

Operational investment securities

48,79840,74938,627

97,283

172,493

1,263,116

1,343,046

1,432,299

1,581,025

1,608,718

IBJ Leasing Company, Limited(Billions of yen)
50.0

33,522

942.8

Operating Assets

49

Gross Profit before Funding Costs and Write-offs

Gross profit before funding costs and write-offs
Gross profit before funding costs and write-offs increased ¥90
million year on year to ¥44,904 million, as we worked to augment
basic earnings potential through the quantity and quality of oursales portfolio.
The IBJ Leasing Group considers gross profit before funding
costs and write-offs to be useful supplemental information onrevenues for analyses of the Group’s business performance, anddiscloses this information voluntarily. Leasing business revenues
include the collection of the principal invested in lease receivables
and investments in lease as well as insurance premiums and taxes,
and revenues and costs are expressed as total amounts in the
consolidated statements of income. Installment sales revenues

FY2012894.2

Amount of Contracts Executed

Total

Revenues
Revenues increased ¥65,231 million year on year to ¥429,405
million, due to an expansion in contract execution volume and recording of proceeds from sales of large-scale lease equipment for
which lease terms have expired.

include the collection of the invested principal, and revenues andcosts are similarly expressed as total amounts. In contrast, loan
revenues are interest income only. Gross profit before funding
costs and write-offs is expressed as a net amount to facilitatecomparisons with the various forms of revenue. This figure matches
gross profit before credit costs and funding costs.

Lease

1,000.0

In leasing and installment sales, overall contract execution volumecontinued to expand, showing a 2.2% increase year on year, reaching ¥475,661 million. Capital investment projects by our clients,
mainly medium to large companies, increased by enhancing ourcomprehensive proposal-based sales efforts targeting clients who
were seeking solutions or having potential needs. We continued toenhance our targeted approach toward distribution, retailing andother businesses based on internal demand where need for funds
was expected. We also pushed store equipment projects taking
advantage of environment- and energy-related subsidies and collaborated with large-scale store developers to expand real estateleasing for land and buildings. Particularly in the real estate-related
business, our projects have further expanded due to growth ofbridge projects for REIT offered by major business operators.
In the financing field, overall contract execution volume increased 2.8% year on year to ¥616,366 million. We also engaged
in syndicate loans in and outside Japan in collaboration with major financial institutions as well as financing related to corporate
capital policies, and executed transactions such as securitizationof receivables that would provide solutions to our clients to solve
various issues related to diversification of funding and distribution
channels.

1,105.8(Billions of yen)

3. Results of Operations

IBJ Leasing Company, Limited

50

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Business Risks and Other Risks
Total credit costs
In the consolidated statements of income, the IBJ Leasing Group
records bad debt-related costs under cost of revenues, selling,
general and administrative expenses, other income and expenses
and extraordinary income and loss. Total credit costs are thesum of these items. Total credit costs in the year under review
increased ¥278 million year on year to ¥1,537 million due to large
credit cost incurred in the fourth quarter.

Total Credit Costs(Billions of yen)

6.0

3.9
3.0

1.3

0.8

1.5

1. Trends in Corporate Capital Investment andInvestments in Leased Plant and Equipment

0

Income taxes
Corporate taxes, current income taxes and deferred income taxes
amounted to ¥6,239 million. The effective tax rate was 33.1%.
Net income attributable to owners of the parent
As a result of the above efforts, net income attributable to ownersof the parent amounted to ¥12,414 million, an increase of ¥805
million from the previous year.

(2.0)
-3.0

FY2012FY2013

AssetsTotal assets as of the fiscal year-end amounted to ¥1,752,284
million, an increase of ¥33,563 million year on year. The status ofoperating assets is indicated on page 49 under the items “Amountof Contracts Executed and Operating Assets.”
Liabilities
Total liabilities as of the fiscal year-end amounted to ¥1,610,529
million, an increase of ¥24,595 million year on year. Of thisamount, interest-bearing debt rose to ¥1,492,438 million, an increase of ¥26,854 million year on year, due to the increase in operating assets. The ratio of financing from capital markets to total
financing was 38.1%.

FY2014FY2015FY2016Net Income attributable to Owners of the Parent(Billions of yen)
15.0

10.5

4. Assets, Liabilities and Equity

10.0

11.1

11.6

12.4

8.9

5.0

0

FY2012FY2013

FY2014FY2015Interest-bearing Debt

(Billions of yen)

1,600.0

1,200.0

1,465.6
1,176.5

1,226.3

FY2016

1,492.4

1,310.0

800.0

EquityTotal equity as of the fiscal year-end amounted to ¥141,755 million,
an increase of ¥8,968 million year on year. This increase stemmed
from income during the year.

400.0

0

FY2012FY2013

FY2014FY2015FY2016

5. Cash FlowsNet cash used in operating activities was ¥73,100 million. Thiswas due to capturing demand for financing needs, including domestic demand-focused capital investment and financing related
to corporate capital policies, as well as an increase in operating
assets.
Net cash used in investing activities was ¥487 million. This figure was due to factors including ongoing system investments.
Net cash provided by financing activities was ¥67,213 million.
This was due to an increase in debt funding including borrowings.
As a result of the above activities, the balance of cash andcash equivalents as of the fiscal year-end decreased ¥6,769 million year on year to ¥41,563 million.

The following factors constitute the principal business risks that have potential to affect the business results, stock
price and financial position of the IBJ Leasing Group. Forward-looking statements contained herein represent the
judgment of the IBJ Leasing Group as of June 23, 2017.

Equity / Equity Ratio(Billions of yen)

200.0

8

7.2%

7.6%

150.0

5.9%
100.0

109.8

123.3

7.4%
132.8

7.8%
141.8

4

84.9

50.0

0

6

2

FY2012FY2013

FY2014FY2015FY20160

In Japan, lease transactions are widely used as a fund procurement technique when companies undertake capital investments.
Trends in the amount of corporate capital investment and in theamount of investment in leased plant and equipment tend to follow the same underlying pattern, and the amount of investment inleased plant and equipment may be affected by trends in corporate capital investment.
Trends in the amount of contracts executed by the IBJ Leasing
Group, the amount of corporate capital investment and theamount of investment in leased plant and equipment do not always coincide. However, any significant decrease in the amountof corporate capital investment and the amount of investment inleased plant and equipment may affect the future business performance of the IBJ Leasing Group.

2. Interest Rate Fluctuation Risk and Effect ofChanges in the Funding Environment
Although many leasing fees and installment payments are basedon the interest rate levels prevalent at the time of agreements, andthe majority is fixed revenues, interest-bearing debt includes debt
with floating interest rates. Therefore, funding costs, which arepart of the cost and expenses, fluctuate. As a result, interest rate
fluctuations may affect the business performance of the IBJ Leasing Group. Also, while it is possible to reduce the effects of interest rate fluctuations by raising the weight of interest-bearing debt
with fixed interest rates, gross margins may contract since fixedrate interest is generally higher than floating-rate interest. Accordingly, the weighting and component ratios of interest-bearing debt
with fixed-rate interest and interest-bearing debt with floating-rateinterest may affect the business performance of the IBJ Leasing
Group.
The Group uses derivative transactions to hedge the risk ofsuch interest rate fluctuations. Specifically, we manage the matching ratio (setting the ratio of the portion of assets not subjected tointerest rate fluctuation risk by allocating liabilities and derivatives
with fixed-rate interest and floating-rate interest to assets with
fixed-rate and floating-rate yields) through the use of asset liability management (ALM) techniques. Accordingly, with respect totransactions subject to interest rate fluctuations, fluctuations inmarket interest rates may affect the business performance of the
IBJ Leasing Group.
The IBJ Leasing Group’s fund procurement methods includecommercial paper and other direct funding in addition to indirect
funding. Therefore, changes in the funding environment may affectthe procurement of funds.

Group assesses the appropriateness of entering into contracts
by conducting strict credit checks of each customer, and by assessing the future second-hand value of leased equipment. We
also strive to control and minimize credit risk within the operating
assets portfolio through quantitative monitoring of credit risks.
Moreover, in instances when a customer’s credit status has deteriorated and non-payment of leasing fees, etc., occurs, we work torecover as much as possible of the outstanding amount throughthe sale or transfer of leased equipment to other customers.
Furthermore, from the perspective of credit risk management,
we conduct self-assessments of assets in compliance with the
Financial Inspection Manual of the Financial Services Agency,
which is recommended by “Temporary treatment of accounting
and auditing on the application of accounting standard forfinancial instruments in the leasing industry.” (Report No. 19 of theIndustry Auditing Committee of the Japanese Institute of Certified
Public Accountants).
As a result, the portion of credit in “doubtful operating receivables and receivables, etc. equivalent to the foregoing” inthe year ended March 31, 2017 was ¥8,501 million. The Group
provides allowance against 100% of this amount and directlyreduces the entire amount as the amount deemed uncollectible.
Nonetheless, depending upon future economic trends, newbad debts caused by the deterioration of the credit status of companies may affect the business performance of the IBJ Leasing
Group.

4. Risk of Changes to Regulatory Systems
The IBJ Leasing Group provides comprehensive financial services,
mainly leases, rentals, installment sales and loans, in accordancewith current laws and regulations, tax systems and accounting
standards. Significant changes to such regulatory systems andstandards may affect the business performance of the IBJ Leasing Group.

5. Other Risks
Other risks that may affect the business performance of the IBJ
Leasing Group include price fluctuation risk (the risk of the estimated residual value of operating leases falling below the originally
anticipated level), operational risk (the risk of inappropriate processing of clerical work), systems risk (the risk of IT systems failure or incorrect operation), and compliance risk (the risk of illegal
or antisocial activities).

3. Credit Risk
Lease transactions involve the provision of credit to customers in
the form of leases over relatively long terms (averaging five years).
The initial expected profit is secured by collecting the full amountof leasing fees from the customer. Therefore, the IBJ Leasing
51

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

52

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Consolidated Financial Statements
Consolidated Balance Sheet
IBJ Leasing Company, Limited and Consolidated Subsidiaries
As of March 31, 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2016

2017

ASSETS

Marketable Securities (Notes 4 and 17)
Lease Receivables and Investments in Lease (Notes 5, 8, 16 and 17)

Lease

2017

41,563¥

48,332$

370,438

44

73

397

809,304

841,987

7,213,048

486

457

4,336

Short-term Borrowings (Notes 9 and 17)
Current Portion of Long-term Debt (Notes 8, 9 and 17)¥805,696¥875,615$ 7,180,893

155,509152,390

1,386,006

Lease Payable (Notes 16 and 17)

7,329

8,861

65,321

Accounts Payable - trade (Note 17)

53,40052,961475,943

Accrued Expenses

2,619

2,231

23,350

Income Taxes Payable

4,028

5,109

35,905

1,200

4,412

10,698Installment Sales

138,089

147,820

1,230,745

Deferred Profit on Installment Sales (Note 5)

268

364

2,395

Loans

205,206

225,006

1,828,931

Accruals for Debt Guarantees

68

36

607

Factoring

139,749

152,926

1,245,542

Other

3,130

—

27,896490,690531,320

4,373,355

172,493

97,283

1,537,376

Other
Total Receivables
Operational Investment Securities (Notes 4 and 17)

Total Current Liabilities

19,671

22,359175,328

1,045,764

1,119,232

9,320,541

Long-term Liabilities:

Deferred Tax Assets (Note 11)

1,874

1,102

16,706Long-term Debt (Notes 8, 9 and 17)

531,232

437,578

4,734,692

Prepaid Expenses and Other

53,76334,811

479,173

Deposits Received

25,62321,640228,373

Liability for Employees’ Retirement Benefits (Note 10)

2,533

2,823

22,579

—

27

—

5,375

4,630

47,910564,764

466,700

5,033,554

Common Stock
Authorized, 140,000,000 Shares;
Issued, 42,649,000 Shares as of March 31, 2017 and 2016

17,874

17,874

159,307

Capital Surplus

16,086

16,086

143,371Retained Earnings

94,31984,514

840,640

(1)

(0)

(9)

8,036

7,956

71,624

Allowance for Doubtful Receivables
Total Current Assets(3,130)(887)(27,898)

1,566,603

1,554,022

13,962,595

Leased Assets (Notes 5, 6 and 8)

236,482

219,146

2,107,684

Accumulated Depreciation(95,568)(102,912)(851,773)

Net Leased Assets

140,913116,233

1,255,911

Advances for Purchases of Leased Assets

Retirement Allowance for Directors and Audit & Supervisory
Board members
Other

Property and Equipment:

311

76

2,780

Own-used Assets

6,187

6,200

55,143

Accumulated Depreciation(3,200)(3,067)(28,523)

Net Own-used Assets

2,986

3,133

26,620Total Property and Equipment

144,211

119,443

1,285,311

Investments and Other Assets:

Total Long-term Liabilities
Commitments and Contingent Liabilities (Note 12)
Equity: (Notes 13 and 22)

Investment Securities (Notes 4 and 17)

20,34018,895

181,290

Investments in Unconsolidated Subsidiaries
and Associated Companies

Treasury Stock - at cost
583 shares as of March 31, 2017 and550 shares as of March 31, 2016

7,907

7,394

70,480

Accumulated Other Comprehensive Income:Long-term Receivables (Note 17)

3,331

10,39329,695

Unrealized Gain on Available-for-sale Securities

168

203

1,504

Deferred Gain (Loss) on Derivatives under Hedge Accounting

24

(174)

215

Foreign Currency Translation Adjustments

348

1,026

3,108

Goodwill
Intangible Leased Assets (Note 5)

101

131

905

Deferred Tax Assets (Note 11)

975

2,462

8,695

Defined Retirement Benefit Plans
Total

Other

8,987

9,152

80,099Allowance for Doubtful Receivables(343)(3,380)(3,065)41,46945,254

369,603

Total Investments and Other Assets
Total Assets
See accompanying Notes to Consolidated Financial Statements.

53

2016

Current Liabilities:¥

Receivables (Notes 5, 8 and 17):
Notes and Accounts

2017

LIABILITIES and EQUITYCurrent Assets:
Cash and Cash Equivalents (Note 17)

Thousands of
U.S. dollars (Note 1)

Millions of yen

IBJ Leasing Company, Limited¥ 1,752,284¥ 1,718,720$ 15,617,509

Non-controlling Interests
Total Equity
Total Liabilities and Equity

(116)

(249)

(1,038)

136,571

127,033

1,217,218

5,183

5,753

46,196

141,755

132,786

1,263,414¥ 1,752,284¥ 1,718,720$ 15,617,509

See accompanying Notes to Consolidated Financial Statements.

IBJ Leasing Company, Limited

54

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing Group

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2017

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2017
Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2016

2017

¥ 429,405¥ 364,174$ 3,827,144

Cost and Expenses

390,198

325,732

3,477,708

Gross Profit

39,20638,441

349,436

Revenues

Selling, General and Administrative Expenses (Note 14)

21,244

20,868

189,347

Operating Income

17,962

17,573160,089

Other Income (Expenses):
Interest Income
Dividend Income
Equity in Earnings of Associated Companies
Profit from Investments
Interest Expenses
Bond Issuance Costs
Gain on Sales of Fixed Assets
Gain on Sales of Investment Securities
Loss on Sales of Investment Securities
Loss on Devaluation of Investment Securities
Loss on Impairment of Long-lived Assets (Note 7)
Other — net

3
506
212
357
(268)
(106)
0
266
—
(162)
(39)
121

6
426
358
329
(330)
(100)
441
1
(25)
(26)
(5)
306

33
4,516
1,895
3,184
(2,390)
(953)
3
2,374
—
(1,445)
(350)
1,086

Income before Income Taxes

18,854

18,955

168,042

Income Taxes: (Note 11)
Current
Deferred

5,864
374

8,310
(1,499)52,272
3,334

6,239

6,811

55,606

12,615201¥ 12,414

12,144535¥ 11,609

112,436
1,793
110,643

Total
Net Income
Net Income attributable to Non-controlling Interests
Net Income attributable to Owners of the Parent

Yen

Amounts per Share of Common Stock (Notes 2(w) and 21)
Net Income attributable to Owners of the Parent per Share
Cash Dividends applicable to the fiscal year

CSR Management for Supporting Growth$

Consolidated Financial Data and Corporate Information

Thousands of
U.S. dollars (Note 1)

Millions of yen

2017

2016

¥ 12,615¥ 12,144

Unrealized Gain on Available-for-sale Securities

80

1,649

721

Deferred Gain (Loss) on Derivatives under Hedge Accounting

171

(397)

1,526

Foreign Currency Translation Adjustments

(526)

(528)

(4,696)

Defined Retirement Benefit Plans

132

(618)

1,182

Share of Other Comprehensive Loss in Associated Companies

(100)

(159)

(899)

(243)

(54)

(2,166)¥ 12,372¥ 12,090$ 110,270¥ 12,147¥ 11,616$ 108,270

224

473

2,000

Net Income

2017$ 112,436

Other Comprehensive Income (Loss): (Note 19)

Total Other Comprehensive Loss
Comprehensive Income
Total Comprehensive Income attributable to:
Owners of the Parent
Non-controlling Interests
See accompanying Notes to Consolidated Financial Statements.

U.S. dollars (Note 1)

2017

2016

¥ 291.08¥ 64.00¥ 272.20¥ 60.00

2017

$
$

2.59
0.57

See accompanying Notes to Consolidated Financial Statements.

55

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

56

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Consolidated Statement of Changes in Equity

Balance as of April 1, 2015

CommonStock42,648¥ 17,874

CapitalSurplus¥ 16,086

Retained
Earnings¥ 75,379

Treasury
Stock

¥ (0)

Unrealized Deferred
ForeignDefinedGain on(Loss) Gain
Currency Retirement
Available- on Derivatives
Translation
Benefitfor-sale under Hedge
Adjustments
Plans
Securities Accounting¥ 6,308¥ 206¥ 1,684

Noncontrolling Total Equity
Interests

Total¥ 5,407 ¥ 123,297

11,60911,609(2,473)(2,473)(0)(0)(2,473)(0)(0)

Changes in Scope ofConsolidation
Net change during year
42,648¥ 17,874¥ 16,086

Net Income attributable to
Owners of the Parent

¥ (0)

(380)

(658)

¥ (174)¥ 1,026(600)¥ 17,874¥ 16,086¥ 94,319

¥ (1)

79

198

(677)

¥ 8,036

¥ 24

¥ 348

353

12,414

12,414(2,558)(2,558)

(0)

(0)

(50)

(50)

(0)

Net change during year345

¥ 5,753 ¥ 132,786(50)

42,6487¥ (249) ¥ 127,033(2,558)(0)Changes in Scope ofConsolidation
Balance as of March 31, 2017

1,647
¥ 7,956

12,414

Cash Dividends Paid
Purchase of Treasury Stock¥ 84,514

132

(266)

¥ (116) ¥ 136,571

(570)

(836)

¥ 5,183 ¥ 141,755

Thousands of U.S. dollars (Note 1)
Accumulated Other Comprehensive Income

Balance as of March 31, 2016

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock$ 159,307$ 143,371$ 753,252$ (8)Net Income attributable to
Owners of the Parent

110,643

Cash Dividends Paid

(22,807)

Purchase of Treasury Stock$ 70,912$ (1,557)$ 9,150$ 51,280 $ 1,183,484

110,643

110,643(22,807)(22,807)

(1)

(1)

(448)

(448)

(448)

Net change during year712
$ 159,307

See accompanying Notes to Consolidated Financial Statements.

$ 143,371$ 840,640$ (9)$ 71,624$

1,772(6,042)215$ 3,108

Noncontrolling Total Equity
Interests

Total$ (2,223) $ 1,132,204(1)

Changes in Scope ofConsolidation
Balance as of March 31, 2017

Unrealized Deferred
ForeignDefinedGain on(Loss) Gain
Currency Retirement
Available- on Derivatives
Translation
Benefitfor-sale under Hedge
Adjustments
Plans
Securities Accounting

1,185

Thousands of
U.S. dollars (Note 1)

Millions of yen¥ 351 ¥ 117,890

11,609Cash Dividends Paid

Balance as of March 31, 2016

Consolidated Financial Data and Corporate Information

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2017
Millions of yen
Accumulated Other Comprehensive Income

Net Income attributable to
Owners of the Parent
Purchase of Treasury Stock

CSR Management for Supporting Growth

Consolidated Statement of Cash Flows

IBJ Leasing Company, Limited and Consolidated Subsidiaries
For the year ended March 31, 2017
Thousands
Number ofshares ofCommonStock
Outstanding

Growth Strategy of the IBJ Leasing Group(2,373)$ (1,038) $ 1,217,218(5,084)(7,457)$ 46,196 $ 1,263,414

2017

Cash Flows from Operating Activities:
Income before Income Taxes
Adjustments for:
Income Taxes Paid
Depreciation and Disposal of Fixed Assets
Equity in Earnings of Associated Companies
Profit from Investments
Loss on Impairment of Long-lived Assets(Decrease) Increase in Allowance for Doubtful Receivables
Increase (Decrease) in Accruals for Debt Guarantees(Gain) Loss on Sales of Marketable and Investment Securities
Loss on Devaluation of Marketable and Investment Securities
Gain on Sales of Fixed Assets
Change in assets and liabilities:
Increase in Lease Receivables and Investments in Lease
Decrease (Increase) in Receivables
Increase in Operational Investment Securities
Increase (Decrease) in Accounts Payable — trade
Purchases of Leased Assets
Proceeds from Sales of Leased Assets
Increase in Interest Payable
Other — net
Total Adjustments
Net Cash Used in Operating Activities¥

Cash Flows from Investing Activities:
Purchases of Own-used Assets
Proceeds from Sales of Fixed Assets
Purchases of Marketable and Investment Securities
Proceeds from Sales and Redemption of Marketable
and Investment Securities
Proceeds from Sales of Subsidiaries causing Changes
in Scope of Consolidation (Note 20)
Other — net
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Net (Decrease) Increase in Short-term Borrowings
Proceeds from Long-term Debt
Repayments of Long-term Debt
Cash Dividends Paid
Other — net
Net Cash Provided by Financing Activities
Foreign Currency Translation Adjustments on Cash andCash Equivalents
Net (Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Decrease in Cash and Cash Equivalents resulting
from Exclusion from Scope of Consolidation
Cash and Cash Equivalents at End of Year

¥

2016

18,854¥2017

18,955$

168,042(8,951)
10,891
(212)
(357)
39
(610)
31
(266)
162
(0)

(8,876)
10,454
(358)
(329)
5
1,096
(61)
24
26
(441)

(79,778)
97,076(1,895)(3,184)350(5,445)285(2,374)1,445(3)(8,855)31,863(75,383)
2,177(138,384)
104,750
21(8,870)(91,954)(73,100)(37,891)(12,431)(55,004)(8,905)(72,648)
21,145
7(4,936)(169,125)(150,170)(78,929)
283,989(671,867)
19,407(1,233,373)
933,604
194(79,062)(819,560)(651,518)(1,333)15(1,603)(2,245)
1,270
(490)

(11,884)
133(14,294)

61

1,100

545

2,546

—

22,696

(172)
(487)

139
(224)

(1,539)(4,343)(57,411)295,430(168,793)(2,558)546
67,21370,526
255,841(162,265)(2,473)(121)
161,507(511,687)
2,633,074(1,504,397)(22,807)
4,870
599,053

(342)

(237)

(3,055)(6,716)48,332

10,87537,457(59,863)430,772

(52)

—

(471)

41,563¥

48,332$

370,438

See accompanying Notes to Consolidated Financial Statements.

57

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

58

Consolidated Financial Data and Corporate Information

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of IBJ Leasing Company, Limited (“IBJL”) and its consolidated subsidiaries(together with IBJL, “IBJL Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments
and Exchange Act and its related accounting regulations and in accordance with accounting principles generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to thecompany’s financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
In addition, certain reclassifications have been made in the 2016 consolidated financial statements to conform to the classifications
used in 2017.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which IBJL is incorporated andoperates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥112.20 to US$1.00, the approximate rate of exchange at March 31, 2017. The translations
should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any otherrate. The amounts indicated in millions of yen are rounded down by truncating the figures below one million. As a result, totals may not
add up exactly.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts of IBJL Group, which include IBJL-TOSHIBA Leasing Company, Limited,
Dai-ichi Leasing Co., Ltd., IBJ Auto Lease Company, Limited, IBJ Leasing (China) Ltd. and PT.IBJ Verena Finance.
The number of consolidated subsidiaries as of March 31, 2017 and 2016 was 26 and 22, respectively. The consolidated financial
statements for the year ended March 31, 2017 also include the accounts of IBJ Air Leasing (US) Corp. and 4 other companies, as they
were newly incorporated, as well as the accounts of Aircraft MSN 4126 LLC and 2 other companies of which IBJL acquired shares. The
accounts of Toshiba Medical Finance Co., Ltd. were excluded from the consolidated financial statements, as IBJL sold all of its sharesin it, and also excluded the accounts of 3 companies as they became immaterial.
The number of associated companies accounted for under the equity method as of March 31, 2017 and 2016 was 3. Investments
in associated companies consist of Krung Thai IBJ Leasing Co., Ltd., Juhachi Sogo Lease Co., Ltd. and PNB-IBJL Leasing and
Finance Corporation.
Astro Leasing International Co., Ltd. and 103 other subsidiaries are neither consolidated nor accounted for under the equity
method, as they are acting as operators under Tokumei Kumiai agreements and the leased assets and liabilities do not substantiallybelong to the subsidiaries. Achilles Line Shipping S.A. and 29 other subsidiaries are also not consolidated or accounted for under theequity method, as they are immaterial. I-N Information Systems, Ltd. and 2 other associated companies are not accounted for underthe equity method, as they are immaterial.
Upon consolidation, significant intercompany accounts and transactions have been eliminated. In addition, all significant unrealized
profit included in assets resulting from transactions within IBJL Group has also been eliminated.
The accounting standard for consolidated financial statements requires a company to consolidate all subsidiaries where thecompany controls the operations, irrespective of whether or not the company owns a majority of their shares. Control is considered toexist where the company has (a) the power to appoint or remove the majority of the Board of Directors or an equivalent governing body,and/or (b) the power to cast the majority of the votes at a meeting of the Board of Directors or an equivalent governing body.
The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date of acquisition isrecorded as Goodwill and is amortized on a straight-line basis over the estimated benefit period.
Implementation Guidance No. 15, “Implementation Guidance on Disclosures about Certain Special Purpose Entities,” issued by the
Accounting Standards Board of Japan (“ASBJ”) permits companies to avoid consolidation of certain Special Purpose Entities (“SPEs”)
that were established and are being operated for the purpose of securitization of receivables.
IBJL securitizes its lease receivables to diversify its funding sources and ensure stable funding. In the securitization structures, IBJL
uses SPEs that include Tokurei Yugen Kaisha and Kabushiki Kaisha. IBJL transfers the lease receivables to the SPEs in the securitization
structures. The SPEs procure funds, such as borrowings, backed by the transferred assets and these funds flow back to IBJL as sales
proceeds of the transferred assets. IBJL also provides collection services to the SPEs. A portion of the receivables is not transferredand is held by IBJL. These receivables held by IBJL are properly evaluated at the end of the fiscal year, and these are appropriatelyreflected in the consolidated financial statements.
As a result of securitizations, IBJL had 20 and 19 SPEs that were not consolidated under Guidance No. 15 as of March 31, 2017and 2016, respectively. Total assets (simply compiled amount) of such SPEs as of March 31, 2017 and 2016 were ¥160,191 million($1,427,728 thousand) and ¥164,381 million, respectively. Total liabilities (simply compiled amount) of such SPEs as of March 31, 2017and 2016 were ¥160,806 million ($1,433,213 thousand) and ¥165,080 million, respectively. IBJL owns no voting rights in most of theSPEs while some employees of IBJL serve as directors.
59

IBJ Leasing Company, Limited

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

The total amount of Lease Receivables and Investments in Lease transferred from IBJL to such SPEs in 2017 and 2016 was¥18,257 million ($162,727 thousand) and ¥17,212 million, respectively, with no gain/loss on the transfer of such receivables. IBJL holds
subordinated interests in such transferred receivables of ¥4,615 million ($41,140 thousand) and nil in 2017 and 2016, respectively. IBJL
recognized profit dividends of ¥46 million ($416 thousand) and ¥41 million, respectively, for the years ended March 31, 2017 and 2016,
and servicing fees received of ¥1 million ($16 thousand) with respect to the transactions with such SPEs for both of the years ended
March 31, 2017 and 2016. These amounts do not include transactions with SPEs that do not meet the criteria for off-balance-sheettransactions because IBJL treats these asset transfer transactions to the SPEs as financial transactions.

(b) Business Combinations
Business combinations are accounted for using the purchase method. Acquisition-related costs, such as advisory fees or professional
fees are accounted for as expenses in the periods in which the costs are incurred. If the initial accounting for a business combination
is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial
statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, which shall not
exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition
date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would haveaffected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for thebusiness combination had been completed at the acquisition date. The acquirer recognizes any bargain purchase gain in profit or loss
immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed havebeen identified after a review of the procedures used in the purchase price allocation. A parent’s ownership interest in a subsidiary mightchange if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interest is adjusted toreflect the change in the parent’s ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Any
difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted isaccounted for as capital surplus as long as the parent retains control over its subsidiary.

(c) Cash Equivalents
Cash Equivalents are short-term investments that are readily convertible into cash and exposed to insignificant risk of changes in value.
Cash Equivalents include time deposits, certificates of deposit, commercial paper and bond funds, all of which mature or become due
within three months of the date of acquisition.

(d) Lease Accounting
In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” which revised the previous
accounting standard for lease transactions. As a lessor, all finance leases that are deemed to transfer ownership of the leased property
to the lessee are recognized as Lease Receivables, and all finance leases that are deemed not to transfer ownership of the leased
property to the lessee are recognized as Investments in Lease. All other leases are accounted for as operating leases.
As a lessee, all finance leases that are deemed to transfer ownership of the leased property to the lessee are capitalized.

(e) Installment Sales
For installment sales contracts, Installment Sales Receivables are recognized for the principal equivalent portion of the total contract
amounts when properties are delivered. Interest equivalent amounts are recognized as Installment Sales when the related installment
receivables become due.
For sales-type contracts, Installment Sales and the corresponding Installment Cost of Sales are fully recognized when the property
is sold. Interest equivalent amounts applicable to the portion to be collected are deferred and recorded as Deferred Profit on Installment
Sales.

(f) Marketable Securities, Operational Investment Securities and Investment Securities
Marketable Securities, Operational Investment Securities and Investment Securities are classified as Available-for-sale Securities based
upon management’s intent. Available-for-sale Securities, which have a readily determinable fair value, are stated at fair value withchanges in net unrealized gain or loss, net of applicable income taxes, included directly in Equity (cost of securities sold is calculated by
the moving average method). Available-for-sale Securities, which do not have readily determinable fair value, are stated at cost.
Operational Investment Securities is held for the purpose of generating operational financial income. The income from Operational
Investment Securities is stated in Revenues in the Consolidated Statement of Income.

(g) Loans Receivables and Factoring Receivables
Loans to customers and receivables arising from factoring are included in Loans Receivables and Factoring Receivables, respectively.
Income from these receivables is recognized as Revenues.

IBJ Leasing Company, Limited

60

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information(h) Property and Equipment(p) Asset Retirement Obligations

1. Leased Assets
Leased Property and Equipment are initially accounted for at their acquisition costs and depreciated over the lease term by thestraight-line method to the residual value, which is an amount to be realized at the time when the lease contract is terminated.
2. Own-used Assets
Own-used Assets of IBJL and its domestic consolidated subsidiaries are stated at cost and depreciated over the following
estimated useful lives mainly by the declining-balance method:
Buildings
3-65 years
Fixtures and furniture
2-20 years

An asset retirement obligation is recorded for a legal obligation imposed either by law or contract that results from the acquisition,
construction, development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed
asset. The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement
and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of theasset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should be recognizedwhen a reasonable estimate of the asset retirement obligation can be made. Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of theliability. The asset retirement cost is subsequently allocated to expense through depreciation over the remaining useful life of the asset.
Over time, the liability is accreted to its present value each period. Any subsequent revisions to the timing or the amount of the original
estimate of undiscounted cash flows are reflected as an adjustment to the carrying amount of the liability and the capitalized amount of
the related asset retirement cost.

(i) Long-lived Assets
IBJL Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or
the net selling price at disposition.

(q) Accruals for Debt Guarantees
IBJL and certain domestic consolidated subsidiaries provide Accruals for Debt Guarantees for losses that might occur in relation toguarantees of the indebtedness of others, taking the debtors’ financial condition into consideration.

(r) Income Taxes(j) Intangible Assets
1. Leased Assets
Intangible Leased Assets are accounted for in the same way as Leased Property and Equipment.
2. Own-used Software
Own-used Software is amortized over the internally estimated useful lives (5 years) by the straight-line method.
3. Other Intangible Assets
Other Intangible Assets are stated at cost. Amortization of intangible assets by IBJL and its domestic consolidated subsidiaries ismainly computed by the straight-line method over the estimated useful lives.

IBJL and its domestic consolidated subsidiaries are subject to corporate tax, inhabitants’ taxes and enterprise taxes. Deferred income
taxes are recorded by the asset and liability method based on the differences between the tax bases of assets and liabilities and those
as reported in the consolidated financial statements, using enacted tax rates that will be in effect when the differences are expected toreverse.
IBJL and its domestic consolidated subsidiaries applied ASBJ Guidance No. 26, “Guidance on Recoverability of Deferred Tax
Assets,” effective April 1, 2016. There was no impact from this for the year ended March 31, 2017.

(s) Recognition of Revenues and Cost of Sales
Revenues and cost of sales relating to finance lease transactions are recognized when lease payments are received.

(k) Bond Issue Costs
Costs for bond issuance are expensed upon payment.

IBJL and certain domestic consolidated subsidiaries provide a reserve for future bonus payments to employees. This reserve ismaintained at the estimated amount payable after the year-end based on the services provided during the fiscal year.

1. Translation of foreign currency transactions
All monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates
at the balance sheet date. The foreign exchange gain and loss from translation are recognized in the Consolidated Statement of
Income as income or expenses.
Revenue and expense items arising from transactions denominated in foreign currencies are generally translated into Japanese
yen at the rates effective at the respective transaction dates.
2. Translation of foreign currency financial statements
The assets, liabilities, revenues and expenses of overseas consolidated subsidiaries are translated into Japanese yen at theexchange rates at the balance sheet dates of each subsidiary. Differences arising from such translation are shown in either Noncontrolling Interests or Foreign Currency Translation Adjustments under Accumulated Other Comprehensive Income in a separate
component of Equity.

(n) Reserve for Bonus Payments to Directors(u) Derivatives and Hedging Activities

IBJL and certain domestic consolidated subsidiaries provide a reserve for future bonus payments to executive officers. This reserve ismaintained at the estimated amount payable for the fiscal year.

IBJL Group uses derivative financial instruments to manage its exposures to fluctuations in foreign currency exchange and interest
rates. Interest rate swaps are utilized to manage interest rate risks associated with certain liabilities, including Long-term Debt. Shortterm Borrowings is utilized to reduce risks from fluctuations of foreign currency exchange rates associated with certain assets, including
Operational Marketable Securities. Interest rate and currency swaps are utilized to manage interest rate risks as well as foreign currency
risks. IBJL Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: a) all derivatives arerecognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in theConsolidated Statement of Income and b) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives
are deferred until maturity of the hedged transactions.
Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but
the differential paid or received under the swap agreements is recognized and included in interest expense.

(l) Allowance for Doubtful Receivables
Allowance for Doubtful Receivables is provided based on the estimated historical default rate for general trade receivables, and is basedon individual reviews for receivables from doubtful and legally bankrupt creditors.
The amounts of Long-term Receivables considered uncollectible, which include receivables from legally bankrupt creditors, weredirectly written-off. The amounts directly written-off were ¥8,501 million ($75,772 thousand) and ¥8,476 million at March 31, 2017 and2016, respectively.

(m) Reserve for Bonus Payments(o) Retirement and Pension Plans
IBJL and certain consolidated subsidiaries have a corporate pension plan and/or lump-sum severance payment plan as a defined
benefit retirement benefits plan as well as a corporate pension plan as a defined contribution retirement benefits plan. There are somecases in which extra retirement benefits are paid to employees when they retire.
IBJL and certain consolidated subsidiaries account for the liability for retirement benefits based on the projected benefit obligations
and plan assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis.
Actuarial gains and losses that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects and are recognized in profit or loss over 10 to 15 years no longer than the expected averageremaining service period of the employees. The discount rate is determined using a single weighted-average discount rate reflecting theestimated timing and amount of benefit payment.

61(t) Translation of Foreign Currency Assets and Liabilities

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

62

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth(2) Proceeds from sales of Available-for-sale Securities for the years ended March 31, 2017 and 2016 were ¥28 million ($255 thousand)and ¥19 million, respectively. Gross realized gains on these sales were ¥21 million ($193 thousand) and ¥1 million for the years
ended March 31, 2017 and 2016, respectively.

(v) Consumption Taxes
IBJL and its domestic consolidated subsidiaries are subject to Japanese consumption taxes. Japanese consumption taxes are
excluded from the transaction amounts.

(w) Per Share Information
Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average
number of common shares outstanding for the period, retroactively adjusted for stock splits. Cash dividends per share shown in theConsolidated Statement of Income are the amounts applicable to the respective fiscal years including dividends to be paid after the endof the year.

(3) IBJL Group recorded impairment losses on investment securities of ¥162 million ($1,445 thousand) and ¥26 million for the years
ended March 31, 2017 and 2016, respectively.

5. Operating Assets(1) Operating Assets as of March 31, 2017 and 2016 consisted of the following:
Millions of yen(x) Accounting Changes and Error Corrections
Under ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error Corrections,” and ASBJ Guidance No. 24,“Guidance on Accounting Standard for Accounting Changes and Error Corrections,” accounting treatments are required as follows: (1)Changes in Accounting Policies - When a new accounting policy is applied following revision of an accounting standard, the new policy
is applied retrospectively unless the revised accounting standard includes specific transitional provisions in which case the entity shallcomply with the specific transitional provisions. (2) Changes in Presentation - When the presentation of financial statements is changed,
prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates - Achange in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted
for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior-Period Errors - When anerror in prior-period financial statements is discovered, those statements are restated.

3. Accounting Change
Pursuant to an amendment to the Corporate Tax Act, IBJL and its domestic consolidated subsidiaries adopted Accounting Standards
Board of Japan Practical Issues Task Force No. 32 “Practical Solution on a change in depreciation method due to Tax Reform 2016”
and changed the depreciation method for building improvements and structures of Own-used Assets acquired on or after April 1, 2016,
from the declining-balance method to the straight-line method. The impact of this change on the consolidated financial statement was
immaterial.

4. Marketable Securities, Operational Investment Securities and Investment Securities(1) Available-for-sale Securities whose fair values are readily determinable as of March 31, 2017 and 2016 were as follows:
Available-for-sale Securities
Securities with carrying amounts exceeding acquisition costs

2017

Leasing: (*1)
Finance Lease
Operating Lease
Leasing total
Installment Sales (*2)
Loans and Factoring
Other
Total Operating Assets¥

809,304
141,014950,318
137,820
348,085
172,493¥ 1,608,718

Thousands of U.S. dollars

2017

2016

Acquisition
cost

Unrealized
gain (loss)

Carrying
amountAcquisition
cost

Unrealized
gain (loss)

Acquisition
cost

Unrealized
gain (loss)¥ 18,701¥ 11,460¥ 7,241¥ 12,904¥ 6,560¥ 6,344 $ 166,682 $ 102,142$ 64,540

4,049

4,000

49

2,048

2,000

61,371—
5,433¥ 89,555

57,061—
5,194¥ 77,715

4,310
—
238
¥ 11,839

53,150499
6,085¥ 74,688

48,361499
5,660¥ 63,081

48

Carrying
amount36,09035,651439

4,789 546,984 508,567
38,4170———424
48,423
46,295
2,128¥ 11,607 $ 798,179 $ 692,655 $ 105,524

Securities with carrying amounts not exceeding acquisition costs
Millions of yen

Thousands of U.S. dollars

2017

Equity Securities
Bonds
Corporate Bonds
Other
Total

63

IBJ Leasing Company, Limited

¥

¥

356

24,7881,965¥ 27,111

2016
Unrealized
gain (loss)

841,987
116,365
958,353
147,455
377,933
97,283¥ 1,581,025$ 7,213,048
1,256,816
8,469,864
1,228,350
3,102,369
1,537,376$ 14,337,959¥(*1) Leasing total consists of the aggregate of “Lease Receivables and Investments in Lease”, “Leased Assets” and “Intangible Leased Assets” on the Consolidated Balance
Sheet at the year-end.
(*2) Installment Sales represent “Installment Sales Receivables” less “Deferred Profit on Installment Sales” on the Consolidated Balance Sheet at the year-end.

(2) The total amounts of new contracts entered into during the years ended March 31, 2017 and 2016 were as follows:
Millions of yen

2017

Leasing:
Finance Lease
Operating Lease
Leasing total
Installment Sales (*1)
Loans and Factoring
Other
Total

¥

283,415
137,977
421,393
54,267513,782
102,583¥ 1,092,027

Thousands of U.S. dollars

2016

2017

318,80272,765391,567
73,938534,324
65,522¥ 1,065,352$ 2,525,984
1,229,749
3,755,733
483,670
4,579,170
914,290$ 9,732,863¥

IBJL and certain domestic consolidated subsidiaries own certain rental properties such as commercial facilities with land in Tokyoand other areas. Net rental income for these rental properties for the fiscal years ended March 31, 2017 was ¥2,993 million ($26,681
thousand). Rental income and operating expenses are mainly recognized as “Revenues” and “Cost and Expenses”, respectively.
Gain on sales of rental properties for the fiscal years ended March 31, 2017 was ¥1,018 million ($9,075 thousand). Proceeds fromsales of rental properties and costs are recognized as “Revenues” and “Cost and Expenses”, respectively, otherwise net gain on sales isrecognized as “Other Income (Expense)”.
The carrying amounts, changes in such balances and market prices of such properties are as follows:
Millions of yen
Carrying amount

Acquisition
cost

2017

6. Investment Property

2017

Carrying
amountCarrying
amountThousands of U.S. dollars

2016(*1) The amount of Installment Sales is shown as “Installment Sales Receivables” less “Deferred Profit on Installment Sales”.

Millions of yen

Equity Securities
Bonds
National and Local
Government Bonds
Corporate Bonds
Other
Other
Total

Consolidated Financial Data and Corporate Information

Carrying
amountAcquisition
cost

Increase

March 31, 2017

March 31, 2017

¥ 87,208¥ 8,445¥ 95,653¥ 99,310

Millions of yen

2017
Unrealized
gain (loss)

Carrying
amountAcquisition
cost

396

¥ (39)¥

919¥ 1,009¥ (89) $3,179 $

3,530

24,9002,087¥ 27,383

(111)
(121)
¥ (272)—741¥ 1,660—806¥ 1,816— 220,933 221,925(65)
17,51918,604¥ (155) $ 241,631 $ 244,059

Fair value

April 1, 2016

Carrying amount

Fair value

Unrealized
gain (loss)

April 1, 2015

Increase

March 31, 2016

March 31, 2016$

¥ 40,284¥ 46,923¥ 87,208¥ 91,134

(351)

(992)
(1,085)$ (2,428)

IBJ Leasing Company, Limited

64

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information(2) “Long-term Debt” as of March 31, 2017 and 2016 was as follows:

Thousands of U.S. dollars
Carrying amount

Fair value

April 1, 2016

Increase

March 31, 2017

March 31, 2017

$ 777,256$ 75,268$ 852,524$ 885,118

Millions of yen(*1) Carrying amount recognized in the Consolidated Balance Sheets is net of accumulated depreciation.
(*2) “Increase” during the fiscal year ended March 31, 2017 and 2016 primarily represents the acquisition of certain properties for ¥105,012 million ($935,936 thousand) and¥62,392 million, respectively.
(*3) Fair values of properties are mainly determined by appraisal reports issued by real estate appraisers.

7. Long-lived Assets
IBJL Group reviewed its long-lived assets for impairment as of March 31, 2017. As a result, certain consolidated subsidiaries recognized
an impairment loss aggregating ¥39 million ($350 thousand) as Other Expenses.
Impairment loss was recognized for the certain software relating to settlement business of the Web usage charge in the leasing
segment due to the termination of the business. The carrying amounts of the relevant assets were written down to the recoverable
amount for the year ended March 31, 2017. The recoverable amounts of the above assets are measured at the net selling price at
disposition. Impairment loss in 2016 was immaterial.

8. Pledged Assets
Assets pledged as collateral as of March 31, 2017 were as follows:
Millions of yen

2017

Lease Receivables and Investments in Lease
Loans Receivables
Leased Assets
Total

Thousands of U.S. dollars

2017¥ 15,060
2,244
13,524¥ 30,828$ 134,225
20,000120,535$ 274,760

Long-term Debt
Bonds payable
Long-term Debt from banks and otherfinancial institutions
Payables under securitized lease receivables
Total

2017

2016

¥ 58,000¥ 40,000

455,312
17,919¥ 531,232

Thousands of U.S. dollars

Weighted averageinterest rate

2017

2017

$

516,934

0.151~0.380%

397,578

4,058,047

0.60%—¥ 437,578

159,711$ 4,734,692

0.33%(*1) IBJL Group has entered into overdraft contracts with 65 financial institutions that provide IBJL Group with credit facilities amounting to ¥901,516 million ($8,034,902
thousand) and ¥689,861 million as of March 31, 2017 and 2016, respectively. The unused facilities maintained by IBJL Group as of March 31, 2017 and 2016 amounted to¥602,724 million ($5,371,879 thousand) and ¥331,319 million, respectively.
(*2) “Payables under securitized lease receivables” is a type of financing based on the law for the regulation of specific claims. The lease receivables sold under this law as ofMarch 31, 2017 and 2016 were ¥86,359 million ($769,690 thousand) and ¥59,001 million, respectively.
(*3) The aggregate annual maturities of “Long-term Debt” as of March 31, 2017 were as follows:
Millions of yen

Thousands of U.S. dollars

Years Ending March 31

2017

2017

2019
2020
2021
2022
2023 and thereafter
Total¥ 181,565
146,173
76,27755,877
71,338¥ 531,232$ 1,618,233
1,302,790
679,833
498,016
635,820$ 4,734,692

10. Retirement and Pension Plans
Outline of plans

Liabilities secured by the above assets as of March 31, 2017 were as follows:
Millions of yen

2017

Current Portion of Long-term Debt
Long-term Debt
Total

Thousands of U.S. dollars

2017¥ 1,809
24,529¥ 26,338$ 16,123
218,625$ 234,748

IBJL and certain consolidated subsidiaries have a corporate pension plan and/or lump-sum severance payment plan as a defined
benefit retirement benefits plan as well as a corporate pension plan as a defined contribution retirement benefits plan. There are somecases in which extra retirement benefits are paid to employees when they retire.

Defined benefit plan
(1) The changes in defined benefit obligation for the years ended March 31, 2017 and 2016, were as follows:
Millions of yen

9. Short-term Borrowings and Long-term Debt
(1) “Short-term Borrowings” as of March 31, 2017 and 2016 was as follows:
Millions of yen

Short-term Borrowings
Short-term Borrowings from banks andother financial institutions
Commercial Paper
Payables under securitized lease receivables
Total
Current Portion of Long-term Debt
Bonds payable
Long-term Debt from banks andother financial institutions
Total

65

IBJ Leasing Company, Limited

Thousands of U.S. dollars

Weighted averageinterest rate

2017

2017

2016

2017

¥ 312,715¥ 364,415$ 2,787,128

0.49%

433,800
59,180¥ 805,696

456,300
54,900¥ 875,615

3,866,310
527,455$ 7,180,893

0.03%
0.11%

¥

¥ 20,000$

Balance at beginning of year
Current service cost
Interest cost
Actuarial (gains) losses
Benefits paid
Other
Balance at end of year

Thousands of U.S. dollars

2017

2016

2017

¥ 6,550
369
25
(36)
(422)
(121)
¥ 6,364¥ 5,728
334
70
637
(220)
—
¥ 6,550$ 58,379
3,292
227
(328)
(3,765)(1,079)$ 56,726(*1) Certain consolidated subsidiaries that have lump-sum severance payment plans use the simplified method in determining the projected benefit obligations.

(2) The changes in plan assets for the years ended March 31, 2017 and 2016, were as follows:
Millions of yen——

155,509132,390

1,386,006¥ 155,509¥ 152,390$ 1,386,006

—%
0.45%

Balance at beginning of year
Expected return on plan assets
Actuarial gains (losses)
Contributions from the employer
Benefits paid
Other
Balance at end of year

Thousands of U.S. dollars

2017

2016

2017

¥ 3,726
54
133
219
(217)
(85)
¥ 3,831¥ 3,733
73
(225)
217
(72)
—
¥ 3,726$ 33,213
487
1,187
1,960
(1,939)(762)$ 34,146

IBJ Leasing Company, Limited66

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(3) Reconciliation between the liability recorded in the Consolidated Balance Sheet and the balances of defined benefit obligation andplan assets as of March 31, 2017 and 2016:
Millions of yen

Defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net liability arising from defined benefit obligation

Thousands of U.S. dollars

2017

2016

2017

¥ 4,014(3,831)183
2,349¥ 2,533¥ 4,082(3,726)356
2,467¥ 2,823$ 35,784(34,146)
1,638
20,941$ 22,579

Millions of yen

Asset for employees’ retirement benefits
Liability for employees’ retirement benefits
Net liability arising from defined benefit obligation

Thousands of U.S. dollars

2017

2016

2017

¥

¥

$

—
2,533
¥ 2,533—
2,823¥ 2,823—
22,579$ 22,579

2017

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses (gains)
Net periodic benefit costs

¥ 369
25
(54)
39
¥ 379

¥ 334
70
(73)
(47)
¥ 283

2017

$ 3,292
227
(486)
353
$ 3,386(*1) Service cost includes retirement benefits expenses of certain consolidated subsidiaries that use the simplified method.

(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for theyears ended March 31, 2017 and 2016, were as follows:
Millions of yen

2017

Actuarial gains (losses)
Total

Thousands of U.S. dollars

2016

¥ 191
¥ 191

¥ (909)¥ (909)2017$ 1,706$ 1,706(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit
plans as of March 31, 2017 and 2016, were as follows:
Millions of yen

2017

Unrecognized actuarial losses
Total¥ (194)¥ (194)

Thousands of U.S. dollars

2016¥ (386)¥ (386)

Discount rate
Expected rate of return on plan assets
Expected rate of future salary increases

2017

2016

0.30 - 0.47%
1.50%
4.01 - 9.27%

0.30 - 1.40%
1.97 - 2.50%
4.01 - 9.27%

Defined contribution plan
IBJL Group’s contributions to the defined contribution pension plan for the years ended March 31, 2017 and 2016, were both ¥58
million ($525 thousand).

11. Income Taxes
IBJL and certain consolidated subsidiaries are subject to a number of taxes based on income, which, in the aggregate, resulted ina normal effective statutory tax rate in Japan of approximately 30.9% and 33.1% for the years ended March 31, 2017 and 2016,
respectively.

Millions of yen

Thousands of U.S. dollars

2017

2016

2017

Deferred Tax Assets:
Allowance for Doubtful Receivables
Depreciation
Liability for Employees’ Retirement Benefits
Write-off of Securities
Accrued Enterprise Tax
OtherDeferred Tax Assets Subtotal
Valuation Allowance
Total Deferred Tax Assets¥ 2,447
592
397
222
98
3,383
7,142
(350)
6,791

¥ 2,456
703
487
196
337
3,715
7,896
(324)
7,572

$ 21,815
5,284
3,538
1,987
875
30,15563,654(3,123)60,531

Deferred Tax Liabilities:
Net unrealized gain on Available-for-sale Securities
Investments in Lease
Other
Total Deferred Tax Liabilities(3,488)(223)(240)(3,952)(3,453)(253)(366)(4,073)(31,093)(1,991)(2,144)(35,228)¥ 2,839¥ 3,498$ 25,303

Net Deferred Tax Assets

2017$ (1,736)$ (1,736)(7) Plan assets as of March 31, 2017 and 2016:a. Components of plan assets
Plan assets consisted of the following:
Domestic debt investments
Domestic equity investments
Foreign debt investments
Foreign equity investments
Insurance assets (general account)
Others
Total

Consolidated Financial Data and Corporate Information(8) Assumptions used for the years ended March 31, 2017 and 2016, are set forth as follows:

Thousands of U.S. dollars

2016

CSR Management for Supporting GrowthDeferred Tax Assets and Liabilities consisted of the following:(4) The components of net periodic benefit costs for the years ended March 31, 2017 and 2016, were as follows:
Millions of yen

Growth Strategy of the IBJ Leasing Group

2017

2016

17.1%
24.7
6.2
19.7
29.4
2.9
100.0%

14.8%
23.5
7.5
19.9
29.7
4.6
100.0%

Balance reported on the Consolidated Balance Sheets:
Millions of yen

Deferred Tax Assets:
Current Assets
Investments and Other Assets
Deferred Tax Liabilities:
Current Liabilities
Long-term Liabilities
Net Deferred Tax Assets

Thousands of U.S. dollars

2017

2016

2017

¥ 1,874975¥ 1,102
2,462$ 16,707
8,695

—
(11)
¥ 2,839(8)(58)¥ 3,498—(99)$ 25,303

b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return that are expected currently
and in the future from the various components of the plan assets.

67

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited

68Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing GroupA reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying
consolidated statement of income for the year ended March 31, 2017, with the corresponding figures for 2016, is as follows:
2017

Normal effective statutory tax rate
Inhabitants tax per capita levy
Permanent differences, such as entertainment expenses
Amortization of goodwill
Valuation allowance
Reduction of Deferred Tax Assets by lowering of statutory tax rate
Other — net
Actual effective tax rate

30.9%
0.2
0.5
0.1
0.2
—
1.2
33.1%

2016

33.1%
0.2
0.6
0.1
(0.3)
2.4
(0.2)
35.9%

12. Commitments and Contingent Liabilities(1) Commitments
IBJL had loan commitment agreements as of March 31, 2017 and 2016 of ¥4,562 million ($40,666 thousand) and ¥5,182 million,
respectively. The loans provided under these credit facilities as of March 31, 2017 and 2016 amounted to ¥2,606 million ($23,228
thousand) and ¥4,128 million, respectively. Many of these facilities expire without being utilized and the related borrowings are
subject to periodic reviews of the borrowers’ credibility. Any unused amount will not necessarily be utilized in full.
(2) Contingent Liabilities
Contingent Liabilities as of March 31, 2017 were as follows:
Millions of yen

2017

Guarantee Obligations with respect to operating activities (*1)
Other Guarantee Obligations
Total¥ 21,648
7,235¥ 28,884

Thousands of U.S. dollars

2017$ 192,949
64,488$ 257,437(*1) The amount includes bank loans and trade receivables provided by Mizuho Bank, Ltd. and others, which are guaranteed by IBJL.

13. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies
Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividends upon
resolution at the shareholders meeting. Additionally, for companies that meet certain criteria such as (1) having a Board of Directors,(2) having independent auditors, (3) having a Board of Audit & Supervisory Board members, and (4) the term of service of the directors
being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if IBJL has prescribed so in its articles of incorporation.
However, IBJL cannot do so because it does not meet (4) of the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to certain
limitations and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporationof the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase oftreasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after
dividends must be maintained at no less than ¥3 million.

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders
which is determined by a specific formula.

14. Selling, General and Administrative Expenses
Major components of Selling, General and Administrative Expenses were as follows:
Millions of yen

Provision for Doubtful Receivables
Accruals/(reversal) for Debt Guarantees
Salaries and Wages
Provision for Bonus Payments
Provision for Bonus Payments to Directors
Retirement Benefits Costs for Employees

Thousands of U.S. dollars

2017

2016

2017

¥ 1,529
37
7,501
572
62
438

¥ 1,063
(51)
7,542
626
72
342

$ 13,630
334
66,861
5,101
554
3,911

15. Segment Information
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures,” and ASBJ Guidance No. 20, “Guidanceon Accounting Standard for Segment Information Disclosures,” an entity is required to report financial and descriptive information about
its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified
criteria. Operating segments are components of an entity whose separate financial information is available and such information isevaluated regularly by the chief operating decisionmaker in deciding how to allocate resources and in assessing performance. Generally,
segment information is required to be reported on the same basis as is used internally for evaluating operating segment performanceand deciding how to allocate resources to operating segments.
(1) Description of reportable segments
The reportable segments of IBJL Group are those for which separate financial information is available and regular evaluation by IBJL
management is being performed in order to decide how resources are allocated among the IBJL Group.
IBJL Group provides total financial services to a wide range of customers from large companies to small and medium-sizedcompanies. IBJL Group has four business segments based on its services: “Leasing”, “Installment Sales”, “Loans” and “Other”.
The Leasing segment is engaged in leasing services (leasing and renting) for industrial machinery, transportation equipment
and information-related equipment (including sales of subject properties upon expiration or cancellation of lease agreements). The
Installment Sales segment is engaged in installment sales of production equipment, construction and engineering machinery, andcommercial equipment. The Loans segment is engaged in corporate finance, vessel finance and factoring services. The Other
segment is engaged in investing in securities that are held for the purpose of generating operational revenues, as well as engaged inassurance services.
(2) Methods of measurement for the amounts of sales, profit (loss), assets, liabilities and other items for each reportable segment(b) Increases / decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon
the payment of such dividends until the total of the aggregate amount of legal reserves and additional paid-in capital equals 25% ofcommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserves may be reversed without
limitation. The Companies Act also provides that common stock, legal reserves, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.

69

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited70

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(3) The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies”.
Information about sales, profit (loss), assets, liabilities and other items for the years ended March 31, 2017 and 2016 was
as follows:
Millions of yen

2017

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information(*2) The details of Reconciliations to Segment Assets as of March 31, 2017 and 2016 were as follows:
Millions of yen

Elimination of intersegment transactions
Corporate assets not allocated to the reportable segments
Total

Thousands of U.S. dollars

2017

2016

¥ (11,786)
32,922¥ 21,136¥ (10,571)
31,589¥ 21,0172017$ (105,048)
293,428$ 188,380

Reportable segment
Leasing

Sales:
Sales to external customers
Intersegment sales and transfers
Total
Operating Expenses
Segment Profit
Segment Assets
OthersDepreciation and Amortization
Capital Expenditures¥

Installment sales

Loans

406,161183
406,345
390,939
15,405¥ 10,432
227
10,660
10,295¥364¥¥ 1,016,920¥ 150,993¥ 378,731¥

9,105
138,384

¥

7,057
269
7,327
4,692
2,635

—
—

Total

Other

¥

5,753 ¥
95
5,849
1,876
3,973 ¥¥

Reconciliations (*1) (*2) (*3) Consolidated (*4)

429,405
777
430,182
407,803
22,378

¥

— ¥
(777)
(777)
3,639
¥ (4,416) ¥¥ 184,502 ¥ 1,731,148

—
—

—
—

429,405—
429,405
411,443
17,962¥ 21,136 ¥ 1,752,284

9,105
138,384

1,785
1,333

10,891
139,717

Sales:
Sales to external customers
Intersegment sales and transfers
Total
Operating Expenses
Segment Profit
Segment Assets
OthersDepreciation and Amortization
Capital Expenditures¥¥ 14,399
245
14,645
14,254¥390¥¥ 1,017,731¥ 161,756¥ 412,080

8,731
72,648

—
—

—
—

¥

¥

Total

Other

337,115322
337,437
320,931
16,506

7,478
275
7,754
6,529
1,224

¥

5,180 ¥
82
5,262
1,585
3,677 ¥

¥

2017
Japan

North America / Latin America

Asia

Total

¥ 126,555¥ 17,392¥ 263¥ 144,211

Thousands of U.S. dollars$ 1,127,942

Reportable segment
Loans

Millions of yen

Japan

2016
Installment sales(4) Information about Geographical Areas
Property and Equipment

2017

Millions of yen

Leasing(*3) Reconciliations of “Depreciation and Amortization” and “Capital Expenditure” are related to corporate assets not allocated to thereportable segments.
(*4) Segment Profits are reconciled to Operating Income in the Consolidated Statement of Income.

Reconciliations (*1) (*2) (*3) Consolidated (*4)

364,174925
365,099
343,301
21,798

¥

— ¥
(925)
(925)
3,299
¥ (4,225) ¥¥ 106,134 ¥ 1,697,702——

364,174—
364,174
346,601
17,573¥ 21,017 ¥ 1,718,720

8,731
72,648

1,721
2,245

North America / Latin America

Asia$ 155,017$ 2,352

Total$ 1,285,311(*1) Assets are classified by country or region based on the location of IBJL and consolidated subsidiaries.
(*2) Information by geographic segment of Property and Equipment is not presented for the year ended March 31, 2016, as domestic assets exceeded 90% of Total Property
and Equipment on the Consolidated Balance Sheet.
(*3) Information by geographic segment of Revenues is not presented as domestic sales exceeded 90% of Revenues in the Consolidated Statement of Income.

Impairment loss of long-lived assets per reportable segment:
Millions of yen

2017
Reportable segment
Leasing

Impairment loss

¥ 39

Installment sales

Loans

¥—

Other

¥—

10,45374,893¥—

Total

Adjustments

Consolidated

¥—

¥ 39

Adjustments

Consolidated

$—

$ 350

¥ 39

Thousands of U.S. dollars

2017
Reportable segment

Thousands of U.S. dollars

Leasing

2017

Impairment loss

Reportable segment
Leasing

Sales:
Sales to external customers
Intersegment sales and transfers
Total
Operating Expenses
Segment Profit
Segment Assets
OthersDepreciation and Amortization
Capital Expenditures

Installment sales$ 3,619,978 $1,638
3,621,616
3,484,311$ 137,305 $

92,982 $2,031
95,013
91,764
3,249 $

Loans

Total

Other

62,902 $2,405
65,307
41,81923,488 $Reconciliations (*1) (*2) (*3) Consolidated (*4)

51,282 $ 3,827,144
852
6,926
52,134
3,834,070
16,722
3,634,616
35,412 $ 199,454$ 9,063,464 $ 1,345,755 $ 3,375,502 $ 1,644,408 $ 15,429,129
81,1571,233,374

—
—

—
—

—
—

81,1571,233,374$— $ 3,827,144(6,926)—(6,926) 3,827,144
32,4393,667,055$ (39,365) $ 160,089$ 188,380 $ 15,617,509
15,918
11,884

97,075
1,245,258(*1) The details of Reconciliations to Segment Profit for the years ended March 31, 2017 and 2016 were as follows:
Millions of yen

Elimination of intersegment transactions
Administrative expenses not allocated to the reportable segments
Total

71

IBJ Leasing Company, Limited

Thousands of U.S. dollars

2017

2016

2017

¥

¥

$ (2,562)(36,803)$ (39,365)(287)(4,129)¥ (4,416)(295)(3,929)¥ (4,225)$ 350

Installment sales

$—

Loans

Other

$—

$—

Total

$ 350

Reportable segment information in 2016 is omitted as the amount of impairment loss was immaterial.
(5) Goodwill per reportable segment:
Not applicable

16. Lease Transactions
Operating Leases as lessee
The minimum rental commitments under non-cancellable operating leases at March 31, 2017 and 2016 were as follows:
Millions of yen

2017

Due within one year
Due after one year
Total

¥ 8
11
¥ 20

Thousands of U.S. dollars

2016

¥ 9
17
¥ 26

2017

$ 75
105
$ 180

IBJ Leasing Company, Limited

72

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(1) The net investments in lease were summarized as follows:
Millions of yen

Thousands of U.S. dollars

2017

2016

2017

¥ 769,756
1,744(28,207)¥ 743,293¥ 802,077
1,672(29,801)¥ 773,947$ 6,860,579
15,550(251,406)$ 6,624,723(2) Maturities of Lease Receivables for finance leases that were deemed to transfer ownership of the leased property to the lessee wereas follows:
Millions of yen

Thousands of U.S. dollars

2017

2018
2019
2020
2021
2022
2023 and thereafter
Total

2017

¥ 23,054
14,551
10,917
7,514
4,695
7,800
¥ 68,534$ 205,477
129,696
97,306
66,972
41,84869,525$ 610,824(3) Maturities of Investments in Lease for finance leases that were deemed not to transfer ownership of the leased property to thelessee were as follows:
Millions of yen

2018
2019
2020
2021
2022
2023 and thereafter
Total

Thousands of U.S. dollars

2017

2017

¥ 231,176
173,553
139,171
93,722
55,272
76,860¥ 769,756$ 2,060,400
1,546,826
1,240,385
835,316
492,624
685,028$ 6,860,579

Operating Leases as lessor
Future lease receivables under non-cancellable operating leases were summarized as follows:
Millions of yen

2017

Due within one year
Due after one year
Total

¥ 41,609
84,463¥ 126,073¥ 35,927
57,464¥ 93,392

2017$

370,854752,797$ 1,123,651

Among the receivables and obligations relating to the sub-lease transactions, the amounts before deducting interest equivalents andincluded in the Consolidated Balance Sheet as of March 31, 2017 and 2016 were summarized as follows:
Millions of yen

73

IBJ Leasing Company, Limited

Consolidated Financial Data and Corporate Information(1) Policy for financial instruments
IBJL Group provides comprehensive financial services, including leasing, installment sales and loans. From the perspective offinancial stability, IBJL Group diversifies its funding sources. In addition to the indirect funding from financial institutions, IBJL Grouputilizes direct funding such as issuing bonds, commercial paper and securitization of lease receivables. Further, IBJL Group has anintegrated Asset-Liability Management (ALM). Derivatives are used to avoid fluctuation risks such as interest rates and to securestable profits.
(2) Nature and extent of risks arising from financial instruments
Financial assets held by IBJL Group mainly consist of lease receivables and investments in lease, installment sales receivables,
loans receivables, and factoring receivables mainly due from domestic business companies. These assets are exposed to the credit
risks triggered by a contractual default of a counterparty to the transactions. In the case of deterioration in the credit conditionsof counterparties caused by a change in economic conditions or the environment, it is possible that the repayment of obligations
under the contract may not be performed. Marketable securities and investment securities, which are mainly comprised of stocks,
bonds, preferred equities and investments in partnerships, are exposed to market price fluctuation risks if they are exchange-tradedin addition to the credit risk of issuers. Transactions related to real estate finance are exposed to the risk of price fluctuations in thetargeted real estate.
Borrowings, bonds and commercial paper are exposed to the interest rate fluctuation risk for floating interest rate funding, andthe liquidity risk that ready access to funds may not be available due to a change in the financial market environment. An ALM
analysis is employed in order to make stable profit as well as to manage these funding risks.
Derivative transactions are mainly composed of interest rate swaps arranged as a part of ALM. IBJL Group enters into interest
rate swap transactions as a hedging instrument and applies hedge accounting to the interest rate fluctuation risk associated withinterest bearing debt such as bank loans. It is IBJL Group’s policy to utilize hedge transactions within the limit of the debt amount to
reduce interest rate risks and to improve cash flow from financial activities. The effectiveness of the hedge transactions are assessedby comparing the changes in the market price and cumulative cash flows between the hedging instrument and the hedged itemfrom the beginning of the hedge to the time of assessment.
(3) Risk management for financial instruments(a) Integrated risk management
IBJL Group places an extremely high priority on integrated monitoring and control of total financial risks, including credit risks andmarket risks which consist of interest rate risk and share price fluctuation risk. Thus, IBJL Group incorporates an integrated risk
management system into its management policy in order to improve the stability of the business. Specifically, IBJL Group manages
various quantified risks in an integrated fashion to control the total risk under a certain level of net equity (business capacity) of thecompany. In addition, a risk analysis is performed monthly, the results of which are reported to the Board of Directors.

Thousands of U.S. dollars

2016

Sub-lease transactions

Lease Receivable
Investments in Lease
Lease Payable

CSR Management for Supporting Growth

17. Financial Instruments and Related Disclosures

Finance Leases as lessor

Lease contract receivables
Estimated residual value
Interest income equivalents
Total

Growth Strategy of the IBJ Leasing Group

Thousands of U.S. dollars

2017

2016

2017

¥ 1,650
5,483
7,187

¥ 2,066
6,687
8,861

$ 14,711
48,87364,058(b) Credit risk management
IBJL Group aims to minimize credit costs by optimizing its credit management structure at all stages of each transaction, fromentrance to exit to manage the credit risks of business partners.
Firstly, at the initial stage of deal execution, IBJL Group assigns a credit rating to each debtor under its client credit rating
system and conducts a strict credit screening, makes judgments on contract arrangements based on the prospects of future valueof leasing assets and, from the perspective of the avoidance of excessive concentrations of credit, IBJL Group monitors its credit
administration ceiling by using its credit rating monitoring systems. Furthermore, when IBJL Group begins offering new services
or new products, IBJL Group thoroughly reviews the identification and evaluation of inherent risks made by the New ProductCommittee, whose members include executives in charge of control units. Any large contract or matter requiring complex risk
judgment is deliberated and decided by the Credit Committee, whose members include the representative director and executives
in charge of screening. By these means, IBJL Group reinforces risk management. Additionally, as an ongoing management measure
IBJL Group provides necessary write-offs or allowances in accordance with the self-assessment rules for assets conforming to thefinancial inspection manual published by the Financial Services Agency, as recommended by “Temporary treatment of accounting
and auditing on the application of accounting standard for financial instruments in the leasing industry”. Furthermore, regarding
credit risk management for the portfolio as a whole, through the quantification of the volume of the risk based on the credit ratingof business customers, IBJL Group endeavors to minimize credit costs. Also, IBJL Group periodically follows up on non-performing
assets and performs debt collection of assets for which IBJL Group has already provided reserves to facilitate final disposal of nonperforming assets.

IBJ Leasing Company, Limited

74

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information(c) Market risk management
IBJL Group establishes basic policies (e.g., funding policy, setting commercial paper program, hedging policy, securities trading
policy) at the Board of Directors that are designed based on market environments and financial strength meeting to control risks
in line with financial operations. In addition, monthly ALM operating policies based on these basic policies, position limits, and loss
limits, etc., are determined on a monthly basis at the ALM Committee meeting, whose members include executives in charge of
relevant departments, and IBJL Group strives to maintain stable earnings by controlling risk factors. Also, with regard to market
transactions, in order to maintain a mutual check system, IBJL Group separately established the risk control department that is
independent from departments that are responsible for executions or for approval of delivery settlement.

(iii) Derivative transactions
The derivative transactions carried out by IBJL Group mainly consist of interest rate swaps, entered as a part of ALM, to hedge
the interest rate risks. The operating policy of hedging is determined at the monthly ALM council to control the interest rate risk.
Also, from an operational control perspective, in order to ensure a proper review function, IBJL Group has an organizational
structure whereby the transaction execution department is clearly separated from the market risk control department, whichis responsible for evaluation of the effectiveness of hedging transactions, and the operations department, which is responsiblefor delivery settlement. For the use of derivative transactions, IBJL Group enters into such transactions only with major financial
institutions in order to mitigate counterparty risk.

(i) Interest rate risk management
In order to manage interest rate risk, IBJL Group monitors the matching ratio (i.e., proportion of assets that is not exposed tointerest rate risk without allocation of the matching fixed/floating interest bearing debt to entire assets) under ALM. Also, IBJL
Group quantifies the interest rate and maturity of financial assets and liabilities based on *BPV (Basis Point Value). IBJL Groupanalyzes and monitors them using statistical techniques such as *VaR (Value at Risk).
In addition, compliance with the internal rules etc. is managed by the risk control department.
Sensitivity to interest rate (10BPV) interest rate risk volume (VaR) figures in IBJL Group as of March 31, 2017 and 2016,
are as shown below. The Internal Models Approach applied to measure the VaR is based on the assumption that past pricefluctuations follow a normal distribution and the model calculates variance and covariance, based on which IBJL Groupestimates maximum losses statistically (variance/covariance method). From March 2017, the interest volatility measurement
method for the calculation of VaR was changed from using fluctuated rates to using fluctuated differences.

(d) Other price fluctuation risk management
The risk mainly consists of real estate price fluctuation risks for specified bonds, preferred shares, investments in partnerships andnon-recourse loans relating to a real estate finance vehicle. The risk is managed by estimating the fair value of real estate at exit andmonitoring the quantified risk for loss of principal.

Millions of yen

Sensitivity to interest rate (10BPV)Interest rate risk volume (VaR)

Thousands of U.S. dollars

2017

2016

2017

¥ (2,480)¥ 3,030¥ (2,230)¥ 3,160$ (22,103)$ 27,005

The VaR measurement method is as follows:
Variance-covariance model for linear risk
Quantitative criteria:(1) Confidence interval: 99%;(2) Holding period of 1 month; and(3) Historical observation period of one year(4) Supplemental explanation for quantitative information concerning market risk
Because quantitative information concerning market risk is based on statistical assumptions, the quantitative information may differ
depending upon the quantitative basis and measurement method assumed. Also, the quantitative information is a statistical result
based on certain assumptions. It is not intended to show the expected maximum losses. Because future market conditions may
differ considerably from past conditions, there are many limitations on the quantitative data that are estimated using observation
values of past data.
(Glossary)*BPV: BPV is one of the interest rate risk indices indicating the change in present value of subject assets or liabilities given a basis
point (0.01%) change in interest rates. IBJL Group adopts 10 basis points (0.1%) as the basis for change of value.
*VaR: VaR is a technique for estimating the probable maximum portfolio losses as a volume of risk when the market is affected
adversely based on the statistical analysis of historical data under a given time and probability (99% one-sided confidence
interval).

(ii) Price fluctuation risk management of securities such as stock
Relating to the price fluctuation risk of securities, the risk control department captures the volume of the risk using the VaR. In
addition, it monitors the status of compliance with our internal rules.
The VaR measurements in IBJL Group as of March 31, 2017 and 2016, are shown below. To measure the VaR, IBJL Group
created a model that shows the price fluctuation of each stock based on the stock price index fluctuation. IBJL Group adopted
the stock price fluctuation model that sets the stock price index fluctuation ratio represented by the risk factor of general market
risk. Also, the inherent fluctuation portion of each stock that is unable to be shown by the stock price index is set as a risk factor
of individual risk in our model.
Millions of yen

2017

Price variation risk of stock (VaR)(e) Liquidity risk management
IBJL Group manages liquidity risk by diversifying the method of funding and balancing its long-term and short-term funding needs,
depending upon the market environment.

Thousands of U.S. dollars

2016

¥0

(5) Supplemental explanation for fair values of financial instruments
Fair values of financial instruments are based on the quoted prices in active markets. If a quoted price is not available, anotherrational valuation technique is used instead. Such prices have been calculated using certain assumptions, and may differ if
calculated based on different assumptions.

2017

¥0

$0

(Note) The VaR value shown above reflects annual realized profit or loss (including impairment loss) and unrealized profit or loss, net of corporate income taxes.

The VaR measurement method is as follows:
Quantitative criteria:(1) Confidence interval: 99%;(2) Holding period of 1 month; and(3) Historical observation period of one year.
The market price at the measurement date is employed for marketable securities. The moving-average acquisition costs or theamortized costs are used for other securities. General market risk (risk of suffering losses due to stock market movement) andindividual risk (price variance risk due to factors associated with the issuer of stock) are calculated and combined. Individual risk
for non-marketable securities is calculated assuming a fluctuation ratio of 8%.

75

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited76

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(a) Fair values of financial instruments

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Methods for determining the fair values of financial instruments are as follows:
Millions of yen

2017

March 31,
Carrying
amountCash and Cash Equivalents
Securities (*1)
Available-for-sale Securities
Lease Receivables andInvestments in Lease (*2) (*3) (*4)
Installment Sales Receivables (*2) (*5)
Loans Receivables (*2)
Factoring Receivables (*2)
Long-term Receivables (*6)
Assets total¥

Fair value

41,563¥

41,5632016
Unrealized
gain (loss)¥—

Carrying
amount¥48,332

Fair value¥

48,332

Unrealized
gain (loss)¥—

116,666

116,666—

76,34976,349—797,650

816,496

18,846

831,588854,449

22,861

137,683
204,755
138,957
2,995¥ 1,440,271

140,478
215,655
140,6022,995¥ 1,474,458

2,795
10,9001,644—¥ 34,187

147,219
224,795
152,887
7,023¥ 1,488,195

150,982
237,208
154,797
7,023¥ 1,529,144

3,763
12,413
1,910—¥ 40,948

Short-term Borrowings
Lease Payable
Accounts Payable — tradeLong-term Debt (*7) (*8)
Liabilities total¥

805,696
7,329
53,400686,742¥ 1,553,168¥

805,669
7,381
53,310687,124¥ 1,553,487

¥

(26)
52
(90)
382
318

¥

875,615
8,861
52,961
589,968¥ 1,527,407¥

875,641
8,849
52,867592,026¥ 1,529,384¥

Hedge accounting is not applied (*9)
Hedge accounting is applied (*9)
Derivative transactions total

¥

¥

¥

—
—
—

¥

¥

¥

¥

136
(5)
131

¥

136
(5)
131

¥

¥

¥

108
(7)
100

¥

108
(7)
100

(25)
12
93
(2,057)¥ (1,977)

¥

—
—
—

(a) Cash and Cash Equivalents
The carrying values of bank deposits approximate fair values because of their short maturities.
(b) Marketable Securities, Operational Investment Securities and Investment Securities
The fair values of securities are measured at the quoted market price of the stock exchange for the equity instruments. The
fair values of bonds are measured at the quoted price obtained from the financial institution for the debt instruments, or are
determined by discounting the future cash flows, by credit risk categories for risk management, at an appropriate benchmark
rate such as an interbank market rate plus a credit spread. Fair value information for securities by classifications is included in
Note 4. Marketable Securities, Operational Investment Securities and Investment Securities.
(c) Lease Receivables and Investments in Lease
The fair values of Lease Receivables and Investments in Lease are principally determined by discounting the future cash flows(lease payments received less maintenance fees), by credit risk categories for risk management, at an appropriate benchmark
rate such as an interbank market rate plus a credit spread.
(d) Installment Sales Receivables
The fair values of Installment Sales Receivables are determined by discounting the future cash flows, by credit risk categories forrisk management, at an appropriate benchmark rate such as an interbank market rate plus a credit spread.
(e) Loans Receivables and Factoring Receivables
The fair values of Loans Receivables and Factoring Receivables are determined by discounting the future cash flows, by credit
risk categories for risk management, at an appropriate benchmark rate such as an interbank market rate plus a credit spread.

Thousands of U.S. dollars

2017

March 31,
Carrying
amountCash and Cash Equivalents
Securities (*1)
Available-for-sale Securities
Lease Receivables andInvestments in Lease (*2) (*3) (*4)
Installment Sales Receivables (*2) (*5)
Loans Receivables (*2)
Factoring Receivables (*2)
Long-term Receivables (*6)
Assets total$

370,438

Fair value$

370,438

Unrealized
gain (loss)$—

1,039,811

1,039,811—

7,109,182

7,277,156

167,974

1,227,122
1,824,912
1,238,479
26,702$ 12,836,646

1,252,034
1,922,065
1,253,138
26,702$ 13,141,344

24,912
97,153
14,659—$ 304,698

Short-term Borrowings
Lease Payable
Accounts Payable — tradeLong-term Debt (*7) (*8)
Liabilities total$ 7,180,893
65,321475,943
6,120,698$ 13,842,855$ 7,180,658
65,792475,140
6,124,106$ 13,845,696$$

Hedge accounting is not applied (*9)
Hedge accounting is applied (*9)
Derivative transactions total

$

$

$

$

1,219
(50)
1,169

$

1,219
(50)
1,169

$

(235)
471
(803)
3,408
2,841
—
—
—

(*1) Securities include Marketable Securities, Operational Investment Securities and Investment Securities.
(*2) Lease Receivables and Investments in Lease, Installment Sales Receivables, Loans Receivables and Factoring Receivables are stated net of Allowance for Doubtful
Receivables.
(*3) Investments in Lease are stated net of estimated residual value of lease assets for finance leases that are deemed not to transfer ownership of the leased property to
the lessee.
(*4) Unearned lease payments received are not included in Lease Receivables and Investments in Lease.
(*5) Installment Sales Receivables are stated net of Deferred Profit on Installment Sales.
(*6) Long-term Receivables are stated net of Allowance for Doubtful Receivables.
(*7) Current Portion of Long-term Debt is included.
(*8) Long-term Debt includes Payables under Securitized Lease Receivables.
(*9) Assets and liabilities incurred resulting from derivative transactions are netted. The net liability is presented in parenthesis.

77

IBJ Leasing Company, Limited(f) Long-term Receivables
The carrying values of Long-term Receivables at the balance sheet date (net of Allowance for Doubtful Receivables)
approximate fair values, because the Allowance for Doubtful Receivables is determined based on the amount that is expected
to be recovered from collateral and guarantees.
(g) Short-term Borrowings
Short-term Borrowings from banks and other financial institutions
The fair values of Short-term Borrowings from banks and other financial institutions are measured at the amount of principal
plus interest to be paid at maturity discounted at an appropriate benchmark rate such as an interbank market rate plus a credit
spread.
Commercial Paper
The fair values of Commercial Paper are measured at the amount of principal plus interest to be paid at maturity discounted at
an appropriate benchmark rate such as an interbank market rate plus a credit spread.
Payables under Securitized Lease Receivables
The fair values of Payables under Securitized Lease Receivables are determined by discounting the future cash flows at an
appropriate benchmark rate such as an interbank market rate plus spread for securitization.
(h) Lease Payable
The fair values of Lease Payable are principally determined by discounting the future cash flows at an appropriate benchmark
rate such as an interbank market rate plus a credit spread.
(i) Accounts Payable — trade
The carrying values of Accounts Payable - trade approximate fair value because they are settled within a short period. The fairvalues of long-term Accounts Payable are determined by discounting the future cash flows at an appropriate benchmark rate
such as an interbank market rate plus a credit spread.

IBJ Leasing Company, Limited78

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group(j) Long-term Debt
Bonds Payable
The fair values of Bonds Payable are measured at the amount of interest and principal to be paid at maturity discounted at an
appropriate benchmark rate such as an interbank market rate plus a credit spread.
Long-term Debt from banks and other financial institutions
The fair values of Long-term Debt from banks and other financial institutions are measured at the amount of interest andprincipal to be paid at maturity discounted at an appropriate benchmark rate such as an interbank market rate plus a credit
spread.
Payables under Securitized Lease Receivables
The fair values of Payables under Securitized Lease Receivables are determined by discounting the future cash flows at an
appropriate benchmark rate such as an interbank market rate plus spread for securitization.
(k) Derivatives
Fair value information for derivatives is included in Note 18.

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Thousands of U.S. dollars
Due after
one yearthrough
two years

Due in one
year or lessMarch 31, 2017

Cash and Cash Equivalents
Securities
Available-for-sale Securities Bonds
National and Local
government Bonds
Corporate Bonds
Other
Lease Receivables andInvestments in Lease
Installment Sales Receivables
Loans Receivables
Factoring Receivables
Total

$

370,438$

Due after
two years
throughthree years—$

Due after
three years
throughfour years

—

$

—

Due after
four years
throughfive years$

Due after
five years

—

$

—

—

17,825

17,825———

10,695
195,341—
85,97749,02076,646

225,490
26,789196,078
35,292

249,198
67,8842,186,469

1,629,385

1,297,920

879,231513,774

706,269

455,802289,863
1,066,769$ 4,575,377

325,616
342,493
50,753$ 2,452,049

224,294
274,091
35,610$ 1,975,406

125,719
390,667
31,042$ 1,678,938

57,694
155,520
24,523982,881

41,620376,297
36,845$ 1,478,113$(*1) Please see Note 9 for annual maturities of Long-term Debt.

(b) Carrying amount of financial instruments whose fair values cannot be readily determined
Millions of yen

Unlisted Stocks (*1) (*2)
Funds, Investments in Partnerships (*3)
Preferred Equities (*4)
Other (*4)

Thousands of U.S. dollars

2017

2016

¥ 10,428
45,6971,233
26,759¥ 10,232
23,594
1,233
12,235

18. Derivatives
Derivative transactions to which hedge accounting is not applied:2017$ 92,946
407,285
10,998238,502

Millions of yen

2017

At March 31,(*1) As unlisted stocks do not have quoted market prices in an active market and their fair values cannot be readily determined, they are excluded from the disclosure of market
value information.
(*2) The impairment loss on certain unlisted stocks for the year ended March 31, 2017 and 2016 was ¥162 million ($1,445 thousand) and ¥26 million, respectively.
(*3) Investments in funds and partnerships are excluded from the disclosure of market value information, as they are composed of financial instruments whose fair values
cannot be readily determined, such as unlisted stocks.
(*4) These financial instruments are excluded from the disclosure of market value information, as they do not have quoted market prices in an active market and fair values
cannot be readily determined.

Foreign currency
forward contracts:
Selling U.S.$
Buying U.S.$

Maturity analysis for financial assets and securities with contractual maturities

At March 31,

Contract
amountContract
amount due
after one year

¥ 3,585¥ 1,268¥ 2,317¥—2016
Fair value¥ 186¥ (49)

Unrealized
gain (loss)

Contract
amountContract
amount due
after one year

Fair value

Unrealized
gain (loss)¥ 186¥ (49)¥ 1,314¥—¥ 1,184
¥
—

¥ 108
¥ —

¥ 108
¥ —

Thousands of U.S. dollars

Millions of yen

March 31, 2017

Cash and Cash Equivalents
Securities
Available-for-sale Securities Bonds
National and Local
government Bonds
Corporate Bonds
Other
Lease Receivables andInvestments in Lease
Installment Sales Receivables
Loans Receivables
Factoring Receivables
Total

79

IBJ Leasing Company, Limited

Due in one
year or less

¥ 41,563

Due after
one yearthrough
two years¥—

Due after
two years
throughthree years

Due after
three years
throughfour years

Due after
four years
throughfive years

¥

¥

¥

—

—

—

Due after
five years

¥

—

—

2,000

2,000

—

—

—

1,200
21,917

—
9,646

5,500
8,599

25,300
3,005

22,0003,959

27,9607,616

245,32151,14032,522
119,691¥ 513,357

182,81736,53438,427
5,694¥ 275,119

145,626
25,16530,7533,995¥ 221,640

98,64914,10543,832
3,482¥ 188,376

57,645
6,473
17,4492,751¥ 110,279

79,243
4,669
42,2204,133¥ 165,844

Foreign currency
forward contracts:
Selling U.S.$
Buying U.S.$

2017
Contract
amountContract
amount due
after one year

Fair value

Unrealized
gain (loss)$ 31,960$ 11,308$ 20,653$—$ 1,660$ (441)$ 1,660$ (441)(*1) The fair value of derivative transactions is measured at quoted prices obtained from financial institutions.
(*2) The contract amounts which are shown in the above tables are the notional amounts of derivatives and do not measure IBJL’s exposure to credit or market risks.

Derivative transactions to which hedge accounting is applied:
Millions of yen

2017

At March 31,

Interest rate swaps(payment - fixed rate,receipt - floating rate)
Interest rate and currency
swaps(payment - fixed rate inIndonesian Rupiah, receipt- floating rate in U.S. dollars)

2016

Contract
amount due
after one year

Hedged item

Contract
amount due
after one year

Hedged item

Long-term
Debt¥ 104,991¥ 81,039¥ (94)

Long-term
Debt¥ 114,247¥ 103,284¥ (553)Long-term
Debt

¥

¥

¥ 89

Short-term
Borrowings,
Long-term
Debt

¥

¥

¥ 546

824

136

Fair
value

Contract
amountContract
amount

2,423

552

Fair
value

IBJ Leasing Company, Limited

80

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group2017
Contract
amountHedged item

Interest rate swaps(payment - fixed rate,receipt - floating rate)
Interest rate and currency
swaps(payment - fixed rate inIndonesian Rupiah, receipt- floating rate in U.S. dollars)

Contract
amount due
after one year

Millions of yen$ 935,757$ 722,274$ (845)Long-term
Debt

$

$

$ 794

1,213

(*1) The fair value of derivative transactions is measured at quoted prices obtained from the financial institutions.
(*2) The contract amounts which are shown in the above tables are the notional amounts of derivatives and do not measure IBJL’s exposure to credit or market risks.

Interest rate swaps to which specific accounting is applied:
The following interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not re-measured at market
value, however, the differential paid or received under the swap agreements is recognized and included in interest expense or income.
In addition, the fair value of such interest rate swaps in Note 17 is included in that of the hedged items (i.e., Long-term Debt).
Millions of yen

2017

At March 31,

Interest rate swaps(payment - fixed rate, receipt - floating rate)

2016

Hedged item

Contract
amountContract
amount due
after one year

Long-term
Debt¥ 67,428¥ 52,623

Thousands of U.S. dollars

2017

At March 31,

Interest rate swaps(payment - fixed rate, receipt - floating rate)

Consolidated Financial Data and Corporate Information

The components of other comprehensive loss for the years ended March 31, 2017 and 2016 were as follows:
Fair
value

Long-term
Debt

7,350

CSR Management for Supporting Growth

19. Other Comprehensive Income (Loss)

Thousands of U.S. dollars

At March 31,

Growth Strategy of the IBJ Leasing Group

Hedged item

Contract
amountContract
amount due
after one year

Long-term
Debt$ 600,965$ 469,019

Hedged item

Contract
amountContract
amount due
after one year

Long-term
Debt¥ 74,851¥ 60,639

Unrealized Gain (loss) on Available-for-sale Securities
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred Gain (Loss) on Derivatives under Hedge Accounting
Losses arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign Currency Translation Adjustments
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined Retirement Benefit Plans
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of Other Comprehensive loss in associates
Losses arising during the year
Reclassification adjustments to profit or loss
Total
Total Other Comprehensive Loss

Thousands of U.S. dollars

2017

2016

2017

¥ 1,235(1,119)
115
34
¥
80

¥ 2,993
(846)
2,147
497
¥ 1,649$ 11,012(9,980)
1,032
311
$
721

¥

(12)
276
264
93
171

¥ (970)
409
(561)
(163)
¥ (397)

$

(526)
—
(526)
—
(526)

¥ (528)—(528)—¥ (528)$ (4,696)—(4,696)—$ (4,696)

151
39
191
58
132

¥ (861)
(47)
(909)
(291)
¥ (618)$ 1,352
353
1,705
523
$ 1,182¥ (159)—¥ (159)

$

¥

(100)
—
(100)

¥

(243)

¥

$ (2,166)

¥
¥

¥
¥

¥
¥

(54)

(110)
2,468
2,358
832
$ 1,526

$

(899)
—
(899)

20. Supplemental Information of Cash FlowsThe assets and liabilities of Toshiba Medical Finance Co., Ltd (“TMF”) as of March 31, 2016 are as follows. TMF was excluded from theconsolidated financial statements this fiscal year, as IBJL sold all of its shares of TMF:
Millions of yen

2017

Current Assets
Property and Equipment & Investment and Other Assets
Current Liabilities
Long-term Liabilities
Non-controlling Interests
Gain on Sales of Stock
Proceeds from Sales of TMF
Cash and Cash equivalents of TMF
Net Proceeds

81

IBJ Leasing Company, Limited¥ 47,890
801(32,987)(10,490)(1,825)244
3,634(1,088)¥ 2,546

Thousands of U.S. dollars

2017$ 426,836
7,144(294,003)(93,497)(16,268)
2,181
32,393
9,697$ 22,696

IBJ Leasing Company, Limited82

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Independent Auditor’s Report
21. Per Share Information
Details of basic net income attributable to owners of the parent per share (“EPS”) for the years ended March 31, 2017 and 2016 wereas follows:
Millions of yen

Thousands ofsharesU.S. dollars

Millions of yen

Thousands ofshares2017

For the year ended March 31,

Basic EPS
Net income available tocommon shareholders

Yen

Net income
attributable toowners of theparentWeightedaverage shares¥ 12,414

42,648EPS¥ 291.08

Yen

U.S. dollars

2016$ 2.59Net income
attributable toowners of theparentWeightedaverage shares¥ 11,609

42,648EPS¥ 272.20$ 2.43

22. Subsequent Events
Appropriation of Retained Earnings
The following appropriation of Retained Earning at March 31, 2017, was approved at IBJL’s shareholders’ meeting on June 23, 2017:
Millions of yen

Year-end cash dividends, ¥34.00 ($0.30) per share

83

IBJ Leasing Company, Limited¥ 1,450

Thousands of U.S. dollars$ 12,924

IBJ Leasing Company, Limited84

Consolidated Financial Data and Corporate Information

Business of the IBJ Leasing Group

Corporate Information

Growth Strategy of the IBJ Leasing GroupCSR Management for Supporting Growth

Consolidated Financial Data and Corporate Information

Major Group Companies (As of August 31, 2017)

Corporate Profile (As of March 31, 2017)

Company Name

CompanyName

IBJ Leasing Company, Limited

Paid-in
CapitalHead
Office2-6 Toranomon 1-chome, Minato-ku, Tokyo 105-0001, Japan
Tel: +81-3-5253-6511 (main exchange)

Number ofConsolidated: 1,053; Non-consolidated: 594
Employees

Date ofDecember 1, 1969
Establishment¥17,874 million

Business
Integrated financial services
Description

Business Sites (As of August 31, 2017)

Paid-in Capital or Investment Business Activity

Ownership

IBJL-TOSHIBA Leasing Company, Limited
2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001¥1,520 million

General leasing

90%

Dai-ichi Leasing Co., Ltd.
2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001¥2,000 million

General leasing

90%

IBJ Auto Lease Company, Limited
2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001¥386 million

Auto leasing

100%¥50 million

General leasing90%¥10 million

Building leasing

100%

Head Office

2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001

Universal Leasing Co., Ltd.
5-3, Kachidoki 6-chome, Chuo-ku, Tokyo 104-0054

Sapporo Branch

2, Kita 1-jo Nishi 5, Chuo-ku, Sapporo, Hokkaido 060-0001

KL Lease & Estate Co., Ltd.

Sendai Branch

4-1, Ichiban-cho 2-chome, Aoba-ku, Sendai, Miyagi 980-0811

2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001

Corporate Business Dept. (Metropolitan Area No. 2)

65-2, Naka-cho 2-chome, Omiya-ku, Saitama, Saitama 330-0845

Niigata Branch

866, Rokuban-cho, Nishihori-dori, Chuo-ku, Niigata, Niigata 951-8061

KL & Co., Ltd.
2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001¥10 million

Used equipment
sales

100%

Toyama Branch

5-13, Sakurabashi-dori, Toyama, Toyama 930-0004¥10 million

Office services

100%

Shizuoka Branch

5-9, Miyuki-cho, Aoi-ku, Shizuoka, Shizuoka 420-0857

KL Office Service Company, Limited
2-6, Toranomon 1-chome, Minato-ku, Tokyo 105-0001

Nagoya Branch

Juhachi Sogo Lease Co., Ltd.*
4-18, Doza-machi, Nagasaki, Nagasaki 850-0841¥895 million

General leasing

17.3%

Osaka Business Dept.

11-11, Nishiki 1-chome, Naka-ku, Nagoya, Aichi 460-0003
659, Tearaimizu-cho, Nishikikozi-agaru, Karasuma-dori, Nakagyo-ku, Kyoto,
Kyoto 604-8152
1-1, Koraibashi 4-chome, Chuo-ku, Osaka, Osaka 541-0043

Kobe Branch

69, Kyomachi, Chuo-ku, Kobe, Hyogo 650-0034

Hiroshima Branch

1-22, Kamiyacho 2-chome, Naka-ku, Hiroshima, Hiroshima 730-0031

US$30,000
thousand

General leasing

100%

Takamatsu Branch

6-8, Bancho 1-chome, Takamatsu, Kagawa 760-0017

Fukuoka Branch

13-2, Tenzin 1-chome, Chuo-ku, Fukuoka, Fukuoka 810-0001

IDR176,250,000
thousand

General leasing

80%

US$1

Aircraft leasing75%

US$100Aircraft leasing

75%

GBP6,000thousand

General leasing

100%

Krung Thai IBJ Leasing Co.,Ltd.*
18th Floor, Nantawan Bldg., 161 Rajdamri Road, Lumpini,Pathumwan,
Bangkok 10330, Thailand

THB100,000
thousand

General leasing

49%

PNB-IBJL Leasing and Finance Corporation*
PNB Makati Center 5th Floor, 6754 Ayala Ave. corner Legaspi Street, Makati
City, Metro Manila, Philippines 1226

PHP600,000
thousand

General leasing

25%

Kyoto Branch

IBJ Leasing (China) Ltd.
(Shanghai Head Office)Room 08-10, 20F, Metro Plaza, No. 555, Loushanguan Road,
Changning District, Shanghai, PRC (200051)(Guangzhou Branch)
Room 1336, 13F Teem Tower, 208 Tianhe Road,
Tianhe District, Guangzho, PRC (510620)
PT. IBJ VERENA FINANCE
Sentral Senayan III, 13th Floor., Jl. Asia Afrika No.8, Gelora Bung Karno,
Senayan, Jakarta Pusat 10270, Indonesia

Sapporo Branch

IBJ Air Leasing Limited
Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda
IBJ Air Leasing (US) Corp.
160 Greentree Drive, suite 101 Street, in the City of Dover Country of Kent,
DE 19904, USA
Niigata Branch
Kyoto Branch
Kobe Branch

Toyama Branch

Sendai Branch

Corporate Business Dept.
(Metropolitan Area No. 2)

Takamatsu Branch
Hiroshima Branch

Head Office

Fukuoka Branch

IBJ Leasing (UK) Limited
Mizuho House 30 Old Bailey London EC4M 7AU, U.K.

*An equity-method affiliate
Shizuoka Branch
Nagoya Branch
Osaka Business Dept.

85

IBJ Leasing Company, Limited

IBJ Leasing Company, Limited86

Consolidated Financial Data and Corporate Information

The IBJ Leasing Group aims to make a further
Stock Information
leap
forward by taking on challenges forenhancing corporate value and achieving value
creation for stakeholders.
(As of March 31, 2017)

Stock Information

Number of Shares Authorized

140,000,000

Securities Code

8425

Number of Shares Issued

42,649,000
39,532

Shareholder Registry
Administrator

Mizuho Trust & Banking Co., Ltd.

Number of Shareholders
Stock Exchange Listing

Tokyo Stock Exchange, 1st section(Office Location)

Stock Transfer Agency Department,
Mizuho Trust & Banking Co., Ltd.
2–1, Yaesu 1-chome, Chuo–ku, Tokyo

Corporate Philosophy

Management Policy

Major Shareholders (Top 20)

DesiredFutureImageof thecontributes
tosocietyby
The Dai-ichi Life Insurance Company, Limited
IBJ Leasing
NISSAN
MOTOR
CO., LTD.
Retirement Benefit Trust Account, Group
offering
valuedfinancial

to customers’ needs and1. Respondprovide precise and prompt services by

We aim to be a Group which

Number of Shares Held
Shareholding Ratio*(1,000 shares)(%)
combining
the Group’s total strength.

Shareholders

2.

with the trustee being Mizuho Trust & Banking Co., Ltd., andre-trustee Trust & Custody Services Bank, Ltd.

services which lead to future
Mizuho Bank, Ltd.

How the Group should be
and stakeholders the Groupshould consider

prosperity.
UNIZO Holdings
Company, Limited.
Meiji Yasuda Life Insurance Company
DOWA HOLDINGS CO., LTD.

Japan Trustee Services Bank, Ltd. (Trust Account)
Clients

Shareholders Employees

Society

NIPPON STEEL KOWA REAL ESTATE CO., LTD.
The Kyoritsu Co., Ltd.

2,930
6.87
Endeavor to further enhance theGroup’s reputation and credibility
among1,750
shareholders and in 4.10
the market.

to create a dynamic3.81
corporate
1,626
3. Strive
culture full of energy and vitality in
3.62 humanwhich1,546
proactive, ambitious
resourcesarefosteredandpromoted.
1,251
2.93

1,120
with the law and2.62
its spirit,
4. Comply
and aim to be a Group which always
1,013
2.37
recognizes its social responsibility and2.28
secures975
understanding andsympathy
from society.
949
2.22

Japan Trustee Services Bank, Ltd. (TOSHIBA CORPORATION Retirement Benefit Trust
Account re-entrusted by the Mitsui Sumitomo Trust& BankingLtd.)employee
MindsetofCo.,
each

900

2.11

RBC ISB S/A DUB NON RESIDENT/TREATY RATE UCITS-CLIENTS ACCOUNT

825

1.93

The Master Trust Bank of Japan, Ltd. (Trust Account) Action Guidelines

791

1.85

720

1.68

720

1.68

681

1.59

Credit Saison Co., Ltd.

670

1.57

THE SHIGA BANK, LTD.

670

1.57

IINO KAIUN KAISHA, LTD.

666

1.56

STATE STREET BANK AND TRUST COMPANY

620

1.45

Sompo Japan Nipponkoa Insurance Inc.

600

1.40

The Three Cs

Tosoh Corporation

Fuji Heavy Industries Ltd. (now, SUBARU CORPORATION)

C

Change Create

Japan Trustee Services Bank, Ltd. (Trust Accounthallenge
5)Fifth Mid-term Management Plan

*Percentage of the total number of shares issued.

From April 2017, the IBJ Leasing Group has started to implement the Fifth
Stock Performance
Distribution of Shareholders
Mid-term Management Plan covering a three-year period.
Under this plan, the Group will utilize its accumulated
business know-how andStock price
Individuals
and Others(yen)financial strengths to actively promote businesses
with higher profitability.
3,500

Vision

3,000

13.7%

Financial
Institutions

39.4%

ForeignInvestors

Value-creating company tackling challenges
together with clients
14.8

2,500

%

2,000

Flow for realization of the vision

1,500
1,000
500Thorough client-oriented
0

1Q

approach
2Q

3Q

FY2014

4Q

1Q

Promote business together
with clients as their partner

2Q

3Q

FY2015

4Q

1Q

2Q

3Q

FY2016

4Q

Tackle new businessdomains transcending theframework of financing
Domestic
Corporations

29.9%
Leasing
LeasingCompany,
Company,
LimitedLimited01 87 IBJIBJ

Fulfill corporate social
responsibility

Financial
Instruments
Business
Operators

2.2%

IBJ Leasing Company, Limited
2-6 Toranomon 1-chome, Minato-ku, Tokyo 105-0001, Japanwww.ibjl.co.jp/en/

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